Schroder Japan Trust plc
Annual Report and Accounts
For the year ended
31 July 2023
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page a
Investment objective
The principal investment objective of the Company is to achieve
capital growth from an actively managed portfolio principally
comprising securities listed on the Japanese stock markets,
with the aim of achieving returns in excess of the TSE First
Section Total Return Index in sterling over the longer term.
Investment policy*
The Manager utilises an active stock driven investment
approach, drawing on Schroders’ extensive research resources
in Japan. The portfolio is principally invested in a broad range
of companies quoted on the Tokyo Stock Exchange, the
regional stock markets of Fukuoka, Hiroshima, Kyoto, Nagoya,
Niigata, Osaka and Sapporo and the Japanese over the counter
(OTC) market. Investments may also be made in companies
listed elsewhere but controlled from Japan or with a material
exposure to the Japanese economy. There are no constraints
on size of company or sector allocation. This flexibility will allow
the Manager to take advantage of changes in market
sentiment and in the domestic economic cycle as it develops.
The portfolio is mainly invested in equities but may also be
invested in warrants, convertibles and other derivative
instruments where appropriate. The Company may invest up
to 5% of its assets in securities which are not listed on any stock
exchange, but would not normally make such investment
except where the Manager expects that the securities will
shortly become listed on a Japanese stock market.
* Proposed amendment to the investment policy is set out on page 63.
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page b
Strategic Report
Governance Financial
Annual General Meeting
Annual Report and Accounts
for the year ended 31 July 2023
1
Strategic Report
Contents
Strategic Report
Financial Highlights 2
10 Year Financial Record 3
Chairman’s Statement 4
Investment Manager’s Review 6
Investment Portfolio 9
Strategic Report 11
Governance
Board of Directors 26
Directors’ Report 28
Audit and Risk Committee Report 31
Management Engagement Committee Report 33
Nomination Committee Report 34
Directors’ Remuneration Report 36
Statement of Directors’ Responsibilities 38
Financial
Independent Auditor’s Report 39
Income Statement 46
Statement of Changes in Equity 47
Statement of Financial Position 48
Notes to the Accounts 49
Annual General Meeting
Annual General Meeting – Recommendations 63
Notice of Annual General Meeting 64
Explanatory Notes to the Notice of Meeting 65
Definitions of Terms and Performance Measures 67
Shareholder Information Inside back cover
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 1
2
Schroder Japan Trust plc
Financial Highlights
Other financial information
31 July 31 July
2023 2022 % change
Shareholders’ funds (£’000) 302,460 281,429 +7.5
NAV per share (pence) 252.25 230.68 +9.4
Share price (pence) 234.00 202.00 +15.8
Share price discount to NAV per share* (%) 7.2 12.4
Gearing* (%) 9.5 11.1
Year ended Year ended
31 July 31 July
2023 2022 % change
Net revenue attributable to shareholders (£’000) 6,563 6,073 +8.1
Revenue return per share (pence) 5.41 4.97 +8.9
Dividend per share (pence) 5.40 4.90 +10.2
Ongoing Charges* (%) 0.94 0.92
Total returns for the year ended 31 July 2023
1
Source: Thomson Reuters.
2
The measure against which the Company compares its performance. The Benchmark is the TSE First Section Total Return Index in sterling terms.
+11.7%
Net asset value
(“NAV”) per share
total return*
+18.7%
Share price total return*
+9.4%
Benchmark
1, 2
(2022: +1.0%) (2022: –2.0%) (2022: –1.9%)
Some of the financial measures below are classified as Alternative Performance Measures, as defined by
the European Securities and Markets Authority and are indicated with an asterisk (*). Definitions of these
performance measures, and other terms used in this report, are given on page 67, together with
supporting calculations where appropriate.
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Annual Report and Accounts
for the year ended 31 July 2023
3
Strategic Report
At 31 July 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total assets (£’000)
1
202,254 243,135 270,783 310,493 333,130 318,944 279,365 323,180 318,321 336,950
Shareholders’ funds (£’000) 173,455 212,101 226,688 269,304 292,268 273,812 236,128 283,859 281,429 302,460
NAV per share (pence) 138.75 169.67 181.34 215.43 233.80 219.04 189.24 232.40 230.68 252.25
Share price (pence) 123.75 158.75 162.00 195.00 212.00 190.50 161.50 210.00 202.00 234.00
Share price discount to NAV
per share* (%) 10.8 6.4 10.7 9.5 9.3 13.0 14.7 9.6 12.4 7.2
Gearing* (%)
2
12.8 12.5 12.1 11.2 11.7 12.3 13.3 10.4 11.1 9.5
For the year ended 31 July 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Net revenue after taxation (£’000) 2,401 2,693 3,898 4,522 5,106 5,994 6,252 5,401 6,073 6,563
Net return per share (pence) 1.92 2.15 3.12 3.62 4.08 4.79 5.00 4.38 4.97 5.41
Dividend per share (pence) 1.80 2.00 2.80 3.50 4.00 4.70 4.90 4.30 4.90 5.40
Ongoing charges* (%)
3
1.36 1.09 1.11 1.00 1.00 1.03 0.92 0.89 0.92 0.94
Performance
4
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
NAV total return* 100.0 101.6 125.9 136.3 164.1 180.9 172.5 152.3 191.4 193.3 216.0
Share price total return* 100.0 100.8 131.2 135.7 166.0 183.6 168.1 146.1 195.3 191.4 227.2
Benchmark
5
100.0 99.8 117.5 135.9 158.7 174.2 175.9 165.2 195.1 191.3 209.3
1
Net assets plus borrowings used for investment purposes.
2
Gearing represents borrowings used for investment purposes, less cash, expressed as a percentage of net assets.
3
Ongoing charges represents the management fee and all other operating expenses excluding finance costs and transaction costs, expressed as a percentage
of the average daily net asset values during the year.
4
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 July 2013.
5
The Company’s Benchmark is the TSE First Section Total Return Index in sterling terms.
*Alternative performance measures.
10 year NAV, share price and benchmark total returns to 31 July 2023
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 July 2013.
NAV Total Return
Benchmark
Share Price Total Return
31 Jul 13 31 Jul 14 31 Jul 15 31 Jul 16 31 Jul 17 31 Jul 18 31 Jul 19
31 Jul 20 31 Jul 21 31 Jul 22 31 Jul 23
50
100
150
200
250
300
10 Year Financial Record
Definitions of terms and performance measures are given on page 67.
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 3
Performance
For my first annual statement
as Chairman, I am pleased
to report that for the year
under review our Manager’s
investment strategy has again
generated superior returns to
the Japanese stock market.
During the year ended 31 July
2023, the Company’s net asset
value (“NAV”) produced a total
return of 11.7%, outperforming
its benchmark index which
ended the year with a total
return of 9.4%. Meanwhile, the
Company’s share price produced a total return of 18.7%, as its
discount to NAV narrowed on the back of this encouraging
performance and improving sentiment towards the Japanese
stock market. The Company’s discount averaged 11.5% over
the year, compared to 11% in the year ended 31 July 2022.
Our Portfolio Manager, Masaki Taketsume, has remained
disciplined within a rising market and has positioned the
portfolio to exploit opportunities in under-valued companies.
The execution of this investment strategy has now resulted in
three years of outperformance against the Company’s
benchmark.
Further details about the Company’s investment strategy and
portfolio activity during the year can be found in the Portfolio
Manager’s review.
During the year, the Company changed its name to Schroder
Japan Trust plc. The Board decided to remove ‘Growth’ from the
Company’s name, to reflect more accurately the investment
approach of the Manager.
Continued action taken by the Board has begun to show signs
of bearing fruit. The Manager has produced excellent relative
performance over each of the last three financial years when
market conditions have remained challenging. He has achieved
this by adopting a clear, well defined investment strategy
centred on his disciplined bottom-up stock picking approach
which utilises Schroders’ resources on the ground in Japan. At
the same time, Schroders has concentrated its promotional
efforts on increasing the Manager’s profile and in helping to
raise awareness of his investment strategy and approach to a
wider audience.
The Board supported the Company by introducing a
conditional tender offer mechanism three years ago and has
continued to manage an active buy-back programme, with the
aim of assisting the reduction of volatility in the discount. The
sharp re-rating of the share price during the year, which is
reflected in an 18.7% total return, is indicative of the progress
that has been made.
Conditional Tender Offer
The Board continues to monitor the Company’s performance
against its tender performance target each year. The Company
has a target to deliver net asset value total return performance
of at least 2% per annum above the Benchmark over a four-
year period starting from 1 August 2020. Should this target not
be met, the Board will put to shareholders a proposal for a
tender offer of 25% of the issued share capital at a price equal
to the prevailing net asset value less costs. This would be
contingent on the next continuation vote of the Company at
the AGM in 2024 being successful.
The Manager has continued to deliver strong outperformance
during the third year of the performance target, delivering a
net asset value total return of 2.3% above the benchmark. As a
result, over three years, the Company has now returned 12.4%
on an annualised basis, which compares favourably to the
annualised 8.2% return from the TOPIX Total Return Index.
Discount and purchase of shares for
cancellation
The Board monitors the discount of the share price to net asset
value and, when necessary, implements a buyback
programme. During the year, the Company repurchased a total
of 2,096,597 shares for cancellation in line with this policy. The
Board will continue to monitor the discount and will buy back
shares when required. It is therefore seeking to renew the
share buyback authority granted at the Company’s AGM in
December 2022 to purchase up to 14.99% of the Company’s
issued share capital for cancellation. Should permission be
granted, the Board will continue to use these buyback powers.
Gearing
The Company continues to maintain both a term loan and
revolving credit facility. The gearing level was 11.1% at the start
of the period and ended at 9.5%, with an average gearing level
of 11.6%. Gearing had a positive effect on performance during
the year. The Company’s gearing continues to operate well
within its pre-agreed limit of 25% of net asset value.
Proposed change to the Investment
Policy to allow for the use of Contracts
for Difference
The Company is able to utilise traditional forms of bank debt
to finance investment but, in current conditions in the lending
markets, funding is more expensive to obtain. The Board
believes that it is in the best interests of Shareholders for the
Company to have the ability to employ alternative gearing
through the use of Contracts for Difference (CFDs). The cost of
using CFDs to increase investment exposure is currently lower
than the cost of traditional borrowing.
CFDs are defined as a contract between two parties which
stipulates that the buyer will receive from the seller, or the
seller will pay to the buyer, the difference between the value of
an asset at the time the parties enter into the contract and the
value at the time the contract is closed, depending on whether
the price of such asset increases or falls. The amount due under
the contract is held in cash within a collateral account, which is
updated on a daily basis. The Investment Manager already uses
CFDs for other accounts which it manages.
Chairman’s Statement
4
Schroder Japan Trust plc
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 4
Annual Report and Accounts
for the year ended 31 July 2023
5
Strategic Report
Chairman’s Statement
A resolution to amend the Company’s investment policy to
allow for investment in CFDs will be included in the Notice of
the Annual General Meeting.
Revenue and dividend
Revenue during the year increased from 4.97p to 5.41p per
share. In line with its stated policy, the Board will continue to
pay out substantially all income to shareholders. The Board has
therefore declared a final dividend for the year ended 31 July
2023 of 5.40p per share, representing an increase of 10% over
the final dividend paid in 2022. This dividend will be paid on 8
December 2023 to shareholders on the register on 3 November
2023 subject to approval by shareholders at the Annual General
Meeting (“AGM”) on 5 December 2023.
Ten years ago, the Board highlighted the growing contribution
from the yield paid by Japanese companies to the Company’s
own total return. At that time, it took action to ensure that it
could pay out to its shareholders substantially all the income it
received for each financial year.
Growth in yield has indeed been a feature of the market in
recent years and dividend income paid out to shareholders,
while still modest in terms of yield, has increased by 64.2% over
the 10 years to 31 July 2023.
Outlook
I have been involved in the Japanese equity market for over
forty years and have seen many false dawns when market
performance has failed to match up to investor expectations.
Over the last year, foreign investors have shown growing
interest in Japan and the market has performed well. Inevitably,
therefore, the question arises whether this performance will
continue. In other words, will it be different this time?
My fellow Directors and I continue to be excited about the
Company’s prospects, because we see two major developments
which should continue to drive equity performance over the
medium to long term. Firstly, corporate governance and stock
market reforms in recent years have stimulated a tectonic shift
in the attitude of many Japanese companies towards improving
returns for shareholders. Secondly, the reappearance of
inflation could signal the end of the deflationary spiral which
has, for example, constrained consumer spending in Japan over
the last two decades. The country’s central bank, the Bank of
Japan, has explicitly stated that its accommodative monetary
policy is being pursued to achieve sustained, stable 2% inflation.
Against this macroeconomic background, there remain
significant opportunities for our high conviction, bottom-up
strategy to identify and exploit market opportunities and drive
positive relative performance.
AJ Bell Investment Awards winner
I am very pleased to announce that the Company has recently
been notified that it is the winner of the 2023 AJ Bell Investment
Awards in the Japan Equity – Active category. Recognition of the
Company by a major provider of platform services to retail
clients should help to further increase our profile within the
retail investor community.
AGM and shareholder engagement
The AGM will be held at 1.00 pm on Tuesday, 5 December 2023.
Shareholders are asked to cast their votes by proxy. The
Manager will be presenting at a webinar separately from the
AGM on 5 December 2023 at 1p.m. and all shareholders are
encouraged to sign up on the Company’s website so that they
can hear the portfolio manager’s view and ask questions.
Shareholders can also sign up using this link:
https://www.schroders.events/sjg23. The Board would like
shareholders to get in touch via the Company Secretary with
any questions or comments, so that the Board can address
them in advance of the AGM. To email, please use:
amcompanysecretary@schroders.com or write to us at the
Company’s registered office address (Company Secretary,
Schroder Japan Trust plc, 1 London Wall Place, London EC2Y
5AU). For regular news about the trust, shareholders are also
encouraged to sign up to the Manager’s investment trusts
update by visiting the Company’s website.
Philip Kay
Chairman
28 September 2023
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 5
6
Schroder Japan Trust plc
Investment Manager’s Review
For the financial year to 31 July 2023, the Company’s net asset
value increased by 11.7%, while its benchmark rose by 9.4%.
1
Before we delve more deeply into the drivers of performance,
we would like to explain the investment philosophy and
approach that sits behind our decision-making. This should
provide some important context to help you understand why
the portfolio is positioned the way it is, and what you should
expect in terms of future performance.
Our investment approach
We believe the Japanese equity market ultimately acts
efficiently in reflecting the intrinsic value of companies. In the
short to medium-term, however, considerable inefficiencies are
frequently evident in individual stocks. These inefficiencies
provide repeatable opportunities to identify and invest in
undervalued stocks, with the aim of delivering a better return
than the market as a whole on a rolling three-to-five year view.
Our investment resource is entirely devoted to this aim,
focusing on individual company fundamentals to understand
the true worth of a stock and investing in a portfolio of 60-70
of the highest conviction ideas. These then tend to be held for
the long term, with value being realised as the market
gradually reflects their true value more efficiently.
Portfolio holdings tend to fall into three categories of
inefficiency:
1. Market misperception – companies with self-improving
credentials, with management initiatives to sustainably
enhance operational performance, being under-
appreciated by other investors.
2. Market oversight – undervalued companies, especially
among small and mid caps where research coverage is less
widespread, with strong and defendable business
franchises in niche product areas.
3. Short-term overreaction – ideas arising from abrupt but
transitory events which push valuations of quality
companies temporarily to unsustainably low levels.
Outside these three categories, the balance of the portfolio
represents “best in class” stocks with reasonable valuations.
The weighting given to each of these segments evolves over
time, but a reasonable exposure to each category ensures a
good level of diversification for the portfolio as a whole.
Meanwhile, the approach tends to result in a bias towards
value stocks
2
and smaller companies, as well as an overall focus
on quality.
The portfolio tends to exhibit a high “active share”, which
means that its constituents deviate significantly from the
benchmark index. Gearing (financial leverage) typically ranges
between 10% and 17.5%,
3
allowing shareholders to potentially
benefit even more as the inefficiencies we have identified
become more appropriately priced by the market.
Portfolio strategy
So, what does this mean for current portfolio strategy and
positioning? Currently, the biggest category within the portfolio
is market misperception which accounts for almost 40% of
assets. This includes companies such as Hitachi, Seven & I and
Toyota Motors, where we see the prospect of sustainable
improvements in returns from management efforts that are
not yet reflected in valuations.
In the case of Toyota, the market views the business as a
“dinosaur” in an industry that is rapidly shifting towards electric
vehicles (EV). We believe this to be a market misperception,
however, because the market underestimates Toyota’s
capabilities in EV. It has been accumulating knowledge and
technologies in EV since launching its first hybrid vehicle, the
Prius, in 1997. It is already profitable across its hybrid (HEV),
plug-in (PHEV) and battery (BEV) powered vehicle range and,
as it continues to reveal further details of its EV strategy, we
expect investors gradually to re-evaluate its competitive
strengths in EV, which should ultimately result in a deservedly
higher market multiple.
Almost 30% of the portfolio is in market oversights, such as
Fukushima Galilei and Hosokawa Micron, where we find highly
competitive smaller businesses trading at a significant discount
to their large cap and global peers. As the leading global
provider of high-quality powder manufacturing machines,
Hosokawa Micron is an excellent example of the type of
market oversights we are able to find in Japan. It dominates
its niche and is also benefiting from growing demand for its
high-quality powders, which are used in fast growing product
areas such as lithium-ion batteries. Nevertheless, its shares
trade at an unwarranted discount to the shares of similar
businesses elsewhere in the world.
14% of the portfolio is invested in short-term overreactions,
including out-of-favour technology opportunities such as
Nomura Research Institute (NRI) and Ibiden. These businesses
are beneficiaries of long-term structural tailwinds but their
shares were sold down aggressively – in our view, too
aggressively – last year. NRI is one of the highest quality IT
service companies in Japan. With its strong consulting
capabilities, it is well positioned to capture rising demand from
Japanese companies that are looking to digitally transform
their business models. Its growth prospects therefore continue
to look positive, but its valuation contracted significantly in
2022, during the widespread sell-off in technology and “growth
stocks” more generally. This looks like a classic short-term
overreaction to us, which we took advantage of by adding the
shares to the portfolio.
The remaining portfolio is invested in what we consider to be
best-in-class operators, such as Sumitomo Mitsui Financial
Group, Asahi Group Holdings, Orix, and NTT.
From a sector perspective, this results in a bias towards
Machinery, Glass & Ceramic Products, Other Financing
Business, and Information & Communication. As is typical, the
portfolio is also overweight towards small and mid cap stocks,
where valuations look particularly attractive as the domestic
Japanese economy recovers.
1 Source: Morningstar, cum-income NAV with dividends reinvested, 31 July 2023 data, net of fees. Past performance is not a guide to future performance
and may not be repeated.
2 The term “value stocks” refers to shares that appear to trade at a lower price than justified by company fundamentals, such as dividends, earnings, sales
and book value.
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 6
Annual Report and Accounts
for the year ended 31 July 2023
7
Strategic Report
Investment Manager’s Review
Recent performance drivers
Despite some weakness during the early months of the period
under review, the Japanese stock market has performed
strongly during 2023, reaching new 33-year highs in recent
months. In sterling terms, however, the market’s return was
reduced somewhat by yen weakness. Value stocks
outperformed growth stocks, but smaller companies generally
lagged against larger caps. Meanwhile, there was a beneficial
impact from the Company’s gearing, and helpful contributions
to relative performance also came from a range of individual
stocks as we explain below. On balance, these factors were
helpful to performance during the period, as reflected in the
positive NAV return and the modest outperformance of the
benchmark. Over three years, the Company has now returned
12.4% on an annualised basis, which compares favourably to
the 8.2% return from the TOPIX Total Return Index.
3
The strongest market influence came from developments in
monetary policy, with resilient inflation data and stronger wage
growth allowing the Bank of Japan (BOJ) to commence a
process of “policy normalisation”, which effectively marks the
end of a prolonged period of ultra-low interest rates and yield
curve control. This year’s market rally has been driven by
greater interest from foreign investors, attracted by positive
momentum in the Japanese macroeconomy and ongoing
expectations of corporate governance reforms.
Financial stocks generally performed well in this environment,
with the portfolio’s holdings in “mega bank” Sumitomo Mitsui
Financial Group and insurance company T&D Holdings
contributing positively. General trading companies also
performed well, perhaps buoyed by news that Warren Buffett
was building stakes in them. The portfolio holds a position in
Mitsui & Co, which contributed strongly to performance and is,
in our view, the most attractive of the general trading
companies, thanks to its more favourable shareholder
remuneration policy.
The biggest positive contribution to performance, however,
came from a short-term overreaction stock. Ibiden is a mid
cap electronic component maker, which specialises in providing
foundational materials used in the construction of powerful
central and graphics processing units (CPUs and GPUs). These
are heavily used in cloud computing and artificial intelligence
data centres. The exponential growth in these markets has
driven stronger-than-expected results from Ibiden, leading to
significant share price growth and a full recovery from last
year’s weakness which had allowed us to build a position in the
shares.
Meanwhile, Disco Corporation, which sits within the market
oversight category, also added value. Disco has a dominant
market share in providing equipment for integrated circuit (IC)
packaging, which is a process of enclosing semiconductors in
protective, high-performance casements. The added value of
IC packaging is becoming increasingly apparent in the
semiconductor industry and, as a result, Disco is currently
enjoying very significant volume growth as well as
commanding higher prices.
By contrast, Mitsui Fudosan, one of Japan’s largest property
groups, disappointed amid concern about how the change in
monetary policy may impact the Japanese property market.
Meanwhile, Kureha, a small cap speciality chemicals company,
and Aeon Financial Services, a small cap non-bank financial,
also detracted due to weaker earnings progress.
3 Source: Morningstar, cum-income NAV with dividends reinvested, 31 July 2023 data, net of fees. Past performance is not a guide to future performance
and may not be repeated.
Attribution – stock selection
12 Months to 31 July 2023
Top 5 contributors Portfolio weight Benckmark
1
weight Portfolio return Benchmark
1
return Total effect
Ibiden Co Ltd 1.8 0.1 99.2 99.2 +1.14
Mitsui & Co 2.8 1.1 75.4 75.4 +0.88
Sumitomo Mitsui Fg 3.7 1.3 52.7 52.7 +0.84
Disco Corporation 1.0 0.2 125.2 125.2 +0.59
T&D Holdings Inc 1.8 0.2 43.2 43.2 +0.48
Top 5 detractors Portfolio weight Benckmark
1
weight Portfolio return Benchmark
1
return Total effect
Mitsubishi Corp 0.0 1.1 0.0 70.5 –0.57
Mitsubishi Ufj Fin 0.0 1.8 0.0 42.8 –0.55
Mitsui Fudosan Co 1.6 0.4 –10.3 –10.3 –0.47
Kureha Corporation 1.2 0.0 –22.5 –22.5 –0.44
Aeon Financial Ser 1.2 0.0 –18.5 –18.5 –0.39
Past performance is not a guide to future performance and may not be repeated. The value of investment can go down as well as up and is not guar
anteed.
The return may increase or decrease as a result of currency fluctuations.
Source: FactSet, GBP, Gross.
1
. Stocks mentioned are shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 7
Investment Manager’s Review
Portfolio activity
Our research team has continued to focus on individual stock
ideas where we can identify positive, company-specific drivers
for future performance. During the period, there were a
number of changes to the portfolio that reflect our ongoing
efforts to maintain an appropriate portfolio balance that
provides exposure to our highest conviction ideas.
One new idea that was introduced to the portfolio during the
year is Kyoritsu Maintenance, a small cap service company that
operates reasonably-priced hotels under the Dormy Inn brand.
We view the company as a key beneficiary of economic
reopening and the return of inbound tourists to Japan. This
bodes well for volume increases and potential price rises. The
Dormy Inn brand has a strong competitive position and the
company is maintaining higher occupancy and utilisation ratios
in its hotels. We do not believe the market fully acknowledges
the company’s existing strengths, nor does it appreciate its
growth prospects. Consequently, we initiated a position in June
as a new market oversight idea.
We also initiated a position in Mitsui Chemicals, a mid cap
diversified chemical company. For some time now, Mitsui
Chemicals has been engaged in the process of transforming its
business model and portfolio with the aim of improving
profitability and better insulating its financial performance from
the impact of the commodity cycle. We believe the company’s
strategy is sensible and comprehensive, and it is now beginning
to realise the benefits of this transformation. During the current
cyclical slowdown in its end markets, Mitsui’s earnings have
been much more resilient when compared to both history and
its peers. Nevertheless, the shares remain considerably
undervalued. A single digit price-earnings ratio and a price-to-
book ratio of less than one suggest the market has not yet
reflected the company’s positive transformation, making this a
new market misperception idea.
In terms of exits, we decided to take profits in Itochu and shift
the portfolio towards stocks that we view as more attractively
valued. Itochu has performed well for the portfolio, in part
perhaps thanks to the news that Warren Buffet had added to
his position in the shares.
We also sold out of East Japan Railway. We continue to view it
as a best-in-class stock in the Transportation & Logistics sector,
which is well-positioned to benefit from the reopening of the
domestic economy. However, the pace of its earnings recovery
has been held back by cost increases and regulatory
headwinds. In combination with a relatively solid share price
performance, we have concluded that its near-term earnings
recovery prospects are already reflected in the share price.
Meanwhile, we have several other positions that are more
directly exposed to the domestic reopening theme, so we
decided to reallocate capital towards those other positions in
which we have stronger conviction.
Outlook
We believe that the Japanese equity market currently provides
one of the most attractive opportunities, particularly for long-
term investors. Several developments that are unique to Japan
should combine to support sustained corporate earnings
growth and increasing valuation multiples in the years ahead.
From an economic perspective, we should see a continued
cyclical recovery following the lifting of Covid restrictions. More
importantly, after more than two decades of deflationary
pressure, the emergence of “positive” inflation, led by wage
growth, is immensely encouraging. Not all inflation can be
viewed as positive, but Japan is experiencing lower rates of
inflation than in many other parts of the world. This suggests
that the re-emergence of inflation in Japan can be viewed as an
opportunity rather than a threat.
Indeed, the implications of this positive inflation should not be
under-estimated for corporate Japan. This is an environment in
which Japanese companies can regain pricing power (the ability
to raise prices in response to inflation) which, when coupled
with improved consumer purchasing power through wage
increases, should drive healthy levels of corporate earnings
growth. An element of these higher profits can then be recycled
back into the economy through further wage increases, driving
a positive cycle of broader economic progress that has been
largely absent from Japan for a generation.
Meanwhile, corporate governance reforms are likely to remain
a structural driver of the Japanese equity market in the years
ahead. Historically, the structure of corporate Japan has been
dominated by the keiretsu system of cross-shareholdings and
close relationships between customers, suppliers, their banks
and competitors. This system has been increasingly criticised
from a governance perspective because it can lead to inefficient
capital allocation and poor decision-making. In recent years,
however, we have begun to see meaningful change, with
companies, investors and regulators such as the Tokyo Stock
Exchange, working together to raise corporate governance
standards, with the aim of improving returns and growth
prospects. The success of these initiatives is reflected in the
level of dividends and share buybacks from Japanese
companies. These have been rising steadily in recent years and
currently stand at record levels, but there remains scope for
considerable further positive progress as the corporate
governance revolution unfolds.
The Japanese stock market has reached multi-decade highs in
recent months in response to these positive domestic
developments. Nevertheless, the equity market as a whole
looks attractively valued when compared to other regions’
markets and in the context of history. Many listed Japanese
companies continue to trade below their book value despite the
ongoing corporate governance movement. This suggests the
market is not yet fully reflecting the progress that many
businesses are making to improve returns. We are confident
we can continue to find selective opportunities for businesses
to transform both their growth prospects and their market
rating through better capital allocation and by considering the
needs of all their stakeholders, shareholders included. These
opportunities remain concentrated at the lower end of the
market cap spectrum, where valuations are also even more
attractive, despite the high quality of many businesses and their
superior growth potential.
To conclude, there are many reasons to believe that we may be
entering a period of sustained outperformance from the
Japanese stock market. We are seeing renewed appetite for
Japanese equity from global investors and this demand should
continue to grow as the positive domestic story becomes better
understood. This represents a fertile environment for active,
high conviction stock pickers, and we are excited at the
opportunity that lies ahead for investors in the company.
8
Schroder Japan Trust plc
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 8
Annual Report and Accounts
for the year ended 31 July 2023
9
Strategic Report
Stocks in bold are the 20 largest investments, which by value account for 52.6% (2022: 49.6%) of total investments. All investments
are equities.
Investment Portfolio
As at 31 July 2023
£’000 %
Electrical Appliances
Hitachi 12,793 3.9
Ibiden 7,918 2.4
TDK 6,496 2.0
Ricoh 6,296 1.9
Nihon Kohden 3,747 1.1
Fujikura 989 0.3
Total Electrical Appliances 38,239 11.6
Machinery
Niterra 5,699 1.7
Amada 5,184 1.6
Disco 4,138 1.2
Kohoku Kogyo 3,763 1.1
Rheon 3,484 1.1
Tazmo 3,237 1.0
Nichias 3,230 1.0
Total Machinery 28,735 8.7
Transportation Equipment
Toyota Motor 15,510 4.7
Toyota Industries 4,452 1.3
Suzuki Motor 3,711 1.1
Isuzu Motors 2,714 0.8
Teikoku Piston Ring 822 0.2
Total Transportation Equipment 27,209 8.1
Chemicals
Nippon Soda 5,671 1.7
Mitsui 5,370 1.6
Hosokawa Micron 4,663 1.4
Aica Kogyo 4,518 1.4
Kureha Chemical 1,837 0.6
NOF 1,381 0.4
Total Chemicals 23,440 7.1
Wholesale trade
Mitsui & Co. 9,701 2.9
Fukushima Galilei 4,240 1.3
Trusco Nakayama 3,867 1.2
Doshisha 3,744 1.1
Total Wholesale Trade 21,552 6.5
£’000 %
Information and Communication
Nippon Telegraph and Telephone 13,226 4.0
Otsuka 4,781 1.4
Total Information and
Communication 18,007 5.4
Pharmaceutical
Takeda Pharmaceutical 7,944 2.4
Astellas Pharmaceutical 5,473 1.6
Ship Healthcare 3,198 1.0
Total Pharmaceutical 16,615 5.0
Securities and Commodity
Orix 9,859 3.0
Nomura Research Institute 5,664 1.7
Total Securities and Commodity 15,523 4.7
Insurance
T&D Holdings 8,114 2.4
Tokio Marine 7,162 2.2
Total Insurance 15,276 4.6
Construction
Infroneer 6,507 2.0
Nippon Densetsu Kogyo 4,642 1.4
Sanki Engineering 3,950 1.2
Total Construction 15,099 4.6
Precision Instruments
Rohm 6,633 2.0
Mimasu Semiconductors 4,499 1.4
SMC 3,853 1.2
Total Precision Instruments 14,985 4.6
Banks
Sumitomo Mitsui Financial 13,349 4.0
Total Banks 13,349 4.0
Other Products
Toho 3,475 1.0
Miura 3,457 1.0
Roland 2,925 0.9
Bandai Namco 2,837 0.9
Total Other Products 12,694 3.8
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 9
10
Schroder Japan Trust plc
Investment Portfolio
As at 31 July 2023
£’000 %
Retail Trade
Seven & i Holdings 9,131 2.8
Paltac 2,966 0.9
Total Retail Trade 12,097 3.7
Technology
NEC Systems 4,576 1.4
WingArc1st 3,358 1.0
Yokowo 2,406 0.7
Megachips 1,031 0.3
Total Technology 11,371 3.4
Foods
Asahi Breweries 9,624 2.9
Total Foods 9,624 2.9
Services
Recruit Holdings 6,757 2.0
Daiei Kankyo 2,776 0.8
Total Services 9,533 2.8
Real Estate
Park24 2,469 0.7
Kyoritsu Maintenance 2,358 0.7
Mitsui Fudosan 2,128 0.6
Total Real Estate 6,955 2.0
£’000 %
Glass and Ceramics
Asahi glass 4,967 1.5
Total Glass and Ceramics 4,967 1.5
Land Transportation
Sankyu 4,574 1.4
Total Land Transportation 4,574 1.4
Rubber Products
Bridgestone 3,740 1.1
Total Rubber Products 3,740 1.1
Other Financing Business
AEON Financial Services 3,581 1.1
Total Other Financing Business 3,581 1.1
Electric Power and Gas
Nippon Gas 3,446 1.0
Total Electric Power and Gas 3,446 1.0
Non-Ferrous Metals
Are Holdings 1,145 0.4
Total Non-Ferrous Metals 1,145 0.4
Total investments 331,756 100.0
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 10
Annual Report and Accounts
for the year ended 31 July 2023
11
Strategic Report
Strategic Report
Business model
The Company is a listed investment trust, that has outsourced its operations to third party service providers. The Board has
appointed the Manager, Schroder Unit Trusts Limited, to implement the investment strategy and to manage the Company’s assets
in line with the appropriate restrictions placed on it by the Board, including limits on the type and relative size of holdings which
may be held in the portfolio and on the use of gearing, cash, derivatives and other financial instruments as appropriate. The terms
of the appointment are described more completely in the Directors’ Report. The Manager also promotes the Company using its
sales and marketing teams. The Board and Manager work together to deliver the Company’s investment objective, as demonstrated
in the diagram above. The investment and promotion processes set out in the diagram are described in more detail below.
Investment
Investment process – an overview
The Manager’s Japanese equity investment philosophy is based on the belief that a competitive advantage can be gained from
in-house research which should translate into superior investment performance through disciplined portfolio construction.
The research focuses on long-term value creation and strength of franchise, targeting undervalued companies where the long-
term growth prospects are not fully priced in. The Manager prefers companies that can generate and sustain above average
returns on their capital, and also looks for opportunities in turnaround situations where companies can improve returns from
depressed levels.
The Manager uses a disciplined approach to managing the portfolio. It has a repeatable process that starts with research and
portfolio construction, and is supported by ongoing monitoring and portfolio control. The research is based on an extensive
programme of company meetings, over 2,400 each year.
The portfolio manager is Masaki Taketsume. Mr Taketsume has been part of Schroders since 2007.
•
Responsible for
overall strategy and
oversight including
risk management
• Activities centred
on the creation of
shareholder value
Investor
Value
• Manager implements
the investment strategy
by following an
investment process
• Support by strong
research and risk
environment
• Regular reporting and
interaction with the
Board
• Set objectives,
strategy and KPIs
• Appoint Manager
and other service
providers to achieve
objectives
• Marketing and sales
capability of the
Manager
• Support from the
Corporate Broker with
discount/premium
monitoring
Board is focused on
ensuring:
• that the fees
and Ongoing
Charges remain
competitive
• that the vehicle
remains attractive
to investors
Investment
Strategy
Promotion
Competitiveness
Board
• Oversee portfolio
management
• Monitor achievement
of KPIs
• Oversee the use of
gearing
• Oversee discount/
premium monitoring
and the provision of
liquidity through
buybacks and share
issuance
Oversight
The Strategic Report sets out the Company’s strategy for delivering the investment objective (set out on the
inside front cover), the business model, the risks involved and how the Board manages and mitigates those
risks. It also details the Company’s purpose, values and culture, and how it interacts with stakeholders.
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 11
12
Schroder Japan Trust plc
Management of the portfolio is “bottom up” and long-term: the screening process begins with fundamental company analysis
rather than shorter term macroeconomic impacts like changes in exchange rates. Given the long-term approach, portfolio
turnover tends to be low. A stock will not be bought unless the Manager has met the management of the company concerned.
Risk monitoring tools check that the bottom-up approach is on track.
Portfolio construction
An important part of the portfolio construction process is regular meetings to debate and receive peer group challenge. These
meetings provide a forum to discuss and debate investment views and strategy, together with stock positions and stock ideas,
and importantly, serve to ensure vigorous debate.
Portfolio construction for the Company is then the responsibility of the investment manager. His focus is on the highest conviction
stock ideas within the context of an appropriate risk management framework, while also setting, in conjunction with the Board,
the gearing of the portfolio.
Strategic Report
Disciplined and repeatable approach
Comprehensive
research
coverage of both
large and small
cap stocks
Monitored &
researched
Companies
graded 1-4
Analysts’
recommendations
Specialist fund
managers
meeting
Exchange of views
Portfolio
construction
Strongest stock ideas
Portfolio control &
monitoring
Schroders’
risk management
Stock selection Portfolio construction and risk management
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 12
Annual Report and Accounts
for the year ended 31 July 2023
13
Strategic Report
The Company’s Approach to ESG factors
Schroder Japan Trust plc is managed utilising our bottom-up approach driven by internal research produced by Schroder analysts
in Tokyo. Meetings with management are the bedrock of our research process and environmental, social and governance (ESG)
factors are integrated throughout. Our investment views are structured around a long-term assessment of quality and central to
this is an opinion on the sustainability of a company’s business model. These views are explicitly quantified by our analysts within
our Fair Value model for each stock under coverage. By forming a structural element within our Fair Value model, the positive
and negative scoring applied to ESG factors contribute symmetrically to our views of both downside risk and upside potential.
Within the Japanese equity market, where disclosure and analysis of ESG issues is still evolving, it is critically important for us to
identify, and differentiate between, early signs of positive change, even if these still appear modest in comparison to other
developed markets. By identifying strengths, weakness and changes in these areas, especially in governance, we believe we can
materially strengthen our understanding of companies and improve our investment decisions.
Our goal is long term outperformance of market benchmarks, measured over at least one market cycle or, in practice, 3 – 5 years.
We achieve this by focussing on long-term growth factors. This helps us form an opinion that often differs from the consensus
and then determines how much conviction we should have in our view. ESG factors are integral to understanding this
differentiation of our views.
Although our processes have evolved over time, we have always been committed to identifying quality factors, with a focus on
the long-term sustainability of company business models. ESG analysis is therefore a well-established, intrinsic part of our
investment process. The established processes allow the team to anticipate and adapt to the market environment and regulatory
changes, including successive revisions to the Corporate Governance Code in Japan.
Our principle of evolution and continuous improvement is designed to ensure that our processes remain forward-looking. The
introduction of the Japanese Stewardship Code in 2014 and the Corporate Governance Code in 2015, together with subsequent
revisions, is resulting in progressive improvements in corporate governance in Japan. Our commitment to stewardship and
corporate governance is evident in our analysis and in our discussions both internally and when interacting with company
management. Looking forward, we expect further regulation on company disclosures, particularly around succession planning
and increased transparency around the nomination process. As a result, we have already begun proactively engaging with
companies on these issues.
In principle, our ESG assessment is based on examining the quality of a company’s relationships with 6 stakeholders, but the
materiality of those stakeholders will differ depending on the industry and business model. Therefore, our analysts, who have an
in-depth understanding of the business model and its financial implications, are able to tailor their analysis of ESG factors in vie
w
of the sustainability of the business model and profit growth by companies. Individual analysts are primarily responsible for
financial forecasts and ESG assessment.
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minds. We believe that companies with a strong environmental, social and governance ethos tend to deliver better results for our
clients.’
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Sustainability at Schroders
A continuously evolving approach
Strategic Report
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 13
14
Schroder Japan Trust plc
Our views on Environmental and Social factors are initially determined using SustainEx, developed by Schroders to scientifically
combine external measures of both the harm companies can do and the good they can bring. The model arrives at an aggregate
measure of each firm’s Social and Environmental impact, allowing investors to target their ESG investments effectively. It quantifies
the extent to which companies are in credit or deficit with the societies to which they belong, and the risks they face if the costs
that they currently externalise are ultimately pushed into their own costs.
Together with SustainEx scores, the analyst’s views on ESG factors are quantified alongside fundamental financial factors within
our Fair Value model for each stock under coverage. Our conviction in each research idea is therefore impacted by a range of
factors which can be collectively viewed as the sustainability of the company’s business model.
One clear feature of our process is that these same factors are scored for each company under coverage which ensures
consistency and comparability of views across stocks and sectors. This also forces us to be explicit when our investment thesis
changes over time.
The process for establishing our Fair Value for each stock focuses on the broad factors circled below:
Behind those broad factors are a range of specific criteria which analysts explicitly score within the Fair Value Model. Specific
Sustainability factors and ESG criteria are included within the broader categories of “Management” and “Shareholders Value”,
detailed below:
Analysts are responsible for assigning the scores to each component within the fair value model, reflecting their understanding
of best practice within particular industries. To do this, analysts will draw on internal and external ESG information so they can
form an opinion and assign an overall score to the stock which will be discussed and challenged during subsequent discussion
within the broader team, including fund managers. This approach ensures our process is robust and consistent across sectors.
Fair value
EPS (FY3)
Analysts’ earnings forecasts
Market PER
(FY3)
Qualitative analysis
Premium/discount
Net cash adjustment Profit cycle adjustment
Quality ranking criteria
– Growth
– Quality of earnings
– Financial strength
– Management
– Shareholder focus
Growth Quality of Earnings Balance Sheet Management Shareholders Value
Valuation Premium/Discount driven by qualitative analysis
Growth Quality of Earnings Balance Sheet Management Shareholders Value
Valuation Premium/Discount driven by qualitative analysis
Growth Quality of Earnings Balance Sheet Management Shareholders Value
Valuation Premium/Discount driven by qualitative analysis
Growth Quality of Earnings Balance Sheet Management Shareholders Value
Valuation Premium/Discount driven by qualitative analysis
Growth Quality of Earnings Balance Sheet Management Shareholders Value
Valuation Premium/Discount driven by qualitative analysis
• 3-year-profit-growth
after FY3
• Relative growth to
market average
• Balance Sheet • Environment & Social
• Management & Strategy
• Track record of
Management
Scoring including ESG evaluation
• Transparency &
sufficiency in disclosure
to Investors
• Corporate Governance
• Financial policy -
Shareholder return,
Efficient allocation of
capital
• Accuracy of earnings
expectation and volatility
of earnings
• Transparency of
accounting, integrity of
reported earnings
• Reguation risk
• Proportion of recurring
earnings
• Dependency on major
customers/suppliers
Strategic Report
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 14
Annual Report and Accounts
for the year ended 31 July 2023
15
Strategic Report
Context is Schroder’s proprietary model providing a systematic framework for analysing a company’s relationship with its
stakeholders, the sustainability of its business model, and industry specific issues (such as regulations) allowing us to identify
market sector trends and insights. The resulting Context scores are sector relative, while SustainEx illustrates the potential ESG
risks and opportunities for each company relative to the benchmark, which fits well with our stock rating system.
In addition, while SustainEx is a rigorous numerical tool allocating potential ESG externalities across companies at a particular
point in time, Context can shed light on historical trends and indicate which companies are improving stakeholder relationships
relative to their peers. In that sense, Context can reflect analysts’ future forecasts on companies’ ESG issues. Analysts may ther
efore
use the output from Context when they feel it is necessary to override SustainEx scores.
In practice, by utilizing Context, each analyst is responsible for:
• Identifying the most important stakeholders (customers/employees/regulators/communities/suppliers/environment) for
each sector
• Identifying the key trends and issues for each stakeholder at a sector level and the prioritising the issues on which analysis
should focus
• Assessing the effectiveness of companies’ management of those issues through a combination of objective data and our
analysts’ knowledge of industries, companies and management teams
• Examining the strength of governance of each company, drawing on analysts’ experiences with management, ensuring
it is consistent with our voting principles and firm-wide views
Forming an overall view of the sustainability of companies’ business models, including views on management quality and
corporate governance and an assessment of stakeholder relationships. These are debated with the wider team, finalised and
incorporated into our stock valuation model.
G
o
v
e
r
n
a
n
c
e
G
o
v
e
r
n
a
n
c
e
Company
Employees
How do your employees perform?
How motivated is your team?
Suppliers
How exposed is your supply chain
to disruption risks? How strong are
your supplier relationships?
Environment
Have you put in place an
energy transition plan? Are you
managing operating impacts?
Regulators
How competitive is your market?
Are you paying a fair rate of tax?
Customers
How is your brand perceived?
What’s in your produce pipeline?
Communities
What support do you offer your local
community? Have you committed to
protect human rights?
ESG integration – CONTEXT framework
Stakeholder analysis provides insights into managing change
Source: Schroders
Strategic Report
176777 Schroders Japan Growth Fund Annual Report Pt1.qxp_176777 Schroders Japan Growth Fund Annual Report Pt1 28/09/2023 21:40 Page 15
16
Schroder Japan Trust plc
Active Ownership at Schroders
Schroders has a long history of engagement and active ownership and we have engaged with companies on ESG related matters
for the past two decades. As active investors we have always considered active ownership to be a key channel of influence on
management teams so that more sustainable practices are properly considered in managing the companies and assets in which
we invest on behalf of our clients. We aim to drive change that we believe should better protect and enhance the value of our
clients’ investments and we are committed to leveraging our influence as an investor to change how a company operates for the
better. These regular engagements form an important aspect of our role as stewards of our clients’ capital and allow us to deploy
capital in businesses with long-term sustainability of returns and shareholder value creation.
The Company’s Active Ownership
Schroders’ Japanese equity team is committed to local stewardship activities in Japan and, in demonstration of this, we have been
signatories to the Japanese Stewardship Code since 2014. In 2015 we established our Stewardship Committee, chaired by Kazuhiro
Toyoda and including four further members from our team in Tokyo. The purpose of the committee is to engage with companies
on their ESG activities with the aim of encouraging best practice and influencing change over time.
The Stewardship Committee maintains a Focus List for engagement stocks, in consultation with the broader investment team.
There are currently 19 companies on the Focus List and a further 11 companies have been removed from the list during the
lifetime of the committee.
The prospects for improvement in these engagement stocks, within a stated timeframe, are judged against the ESG/Context
analysis that is integrated into the research output for other positions. The process is designed to ensure that our resources ar
e
focussed on positions with the greatest potential for positive impact within our portfolios. The relevant analyst will attend the
engagement meetings, ensuring that there is strong feedback within the process, which enables a robust debate on prioritisation,
time horizon and themes for engagement.
In addition to the Focus List engagement, the team initiated the programme of Climate Engagement upon the group wide
initiatives under Engagement Blueprint published in February 2022. The team started with 33 Japanese companies in 2022 and
we have been discussing with company management on their climate policy and its disclosure. In 2023, we expanded the list to
45 companies and continue to engage with them periodically to advocate Schroders approach and expectation and shared our
view on their climate disclosure including TCFD, and we have been trying to point out areas for improvement for individual
companies based on our research output.
The Stewardship Committee members are also responsible for all proxy voting and the committee will discuss any contentious
items. We are also in regular contact with the proxy voting team in London, which is responsible for voting for the Company, to
ensure that our views are aligned and that we are sending consistent messages to companies. All records are disclosed in Japan
locally and globally.
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17
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Engagement case studies
We share below three examples of engagements we have carried out with investee company management under our Stewardship
responsibilities.
Investment case: Toyota Industries
Source: Schroders, EIKON, Factset. As at 31 August 2023. Holding weight is of Schroder Tokyo Fund. Performance is not a guide to future performance and
may not be repeated. The securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.
We held intensive discussions with the company in March 2022, covering various topics related to the company’s environment,
social, and governance practices, and we raised issues outlined below. The key areas we have been focusing on with this company’s
management are:
1. Understanding their carbon emissions ambitions and how these will be achieved
2. Company improvements in diversity
3. Improving Board independence and quality
4. Broader governance issues
We have targeted these key areas as we believe they have the potential to impact future company performance and so want to
understand management's stance on the matters and action that may be taken.
1. Understanding their carbon emissions ambitions and how these will be achieved:
Our engagements with management have given us greater clarity on the challenges they face and the actions taken. In
terms of the environment, the company’s existing Co
2
emission target for CY2025 looks low. They have however already
met this CY2025 target in CY2020 according to CDP data. Looking further ahead, the company has set a CY2030 target of
a 50% reduction from CY2013 but they consider this to be a challenge rather than a target. They are also targeting Carbon
Neutral for CY2050, but the 25% reduction during the 5 years is quite a high hurdle to meet. On the solutions side,
Vandarlande, a logistics solution business owned by the company, has a new department for providing energy saving
solutions to their customers, and they are able to suggest solutions that meet their customer’s requirements. The company
is also developing an ammonia fuel.
2. Company management improvements in diversity:
In terms of social practices, the company’s female manager ratio was 1.6% in CY2020, and they aim for 2.4% in CY2025
and 3.6% in CY2030. They carry out an awareness survey questionnaire for each department and check survey results
from a union, but they do not do those for overseas employees. We engaged to understand what is being done to improve
this ratio.
3. Improving Board independence and quality:
We raised particular concerns over one external director who had been involved in a series of misconduct claims. We also
raised separating out the roles of CEO and Chairman as well as increasing female Directors. We continue to advise the
A
Japanese machine maker, originally, and still
actively, a manufacturer of automatic looms, it is the
company from which Toyota Motor Corporation
developed. It is the world's largest manufacturer of
forklift trucks measured by revenues.
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Schroder Japan Trust plc
importance of independent directors, especially as they are representatives for minority shareholders and that the
disclosure of officer compensation improves transparency of management.
4. Broader governance issues:
The company has long maintained cross-shareholdings well in excess of 20% of shareholders’ equity. It was advised that
cross holdings of stocks which belong to the Toyota Motor group should be gradually changed if necessary.
Looking at disclosure, we also discussed that more active disclosure and policy setting would enhance the current very
low MSCI rating (BB).
Initially, the IR Head had indicated that there weren't plans to improve in these governance areas. However, we had a follow up
discussion with the company in June 2023 and they confirmed that it has started to discuss these issues, driven by leadership of
Toyota Motor, which hopes to learn lessons from recent problems at Daihatsu.
In that sense, we will continue to actively engage with the management to make clear progress in terms of capital allocation
onwards.
Investment case: Sankyu
Source: Schroders, EIKON, Factset. As at 31 August 2023. Holding weight is of Schroder Tokyo Fund. Performance is not a guide to future performance and
may not be repeated. The securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.
Our engagement is primarily aimed at more active shareholder remuneration, including the establishment of a formal policy for
setting remuneration levels.
Since the Company’s balance sheet moved to a net cash position in 2017, we have been engaging with the management and the
investor relations (IR) team. We stepped up our efforts early in 2021 as we were aware the company was expected to announce
the new mid-term plan. Prior to this, in addition to the engagement meetings and regular management meetings, we also sent
a specific engagement letter to the management. The feedback from the company has been positive throughout and, after our
activities, the company announced a share buyback programme with its full-year results in May 2021.
In May 2022, the dividend forecast for FY22 was expected to remain at Y110 and there would be no share buybacks. However, in
June 2022, the CFO discussed strengthening shareholder returns based on the previously sent engagement letter, which was a
sign that the company was considering ways to increase shareholder value. In November 2022, the full-year company plan was
upwardly revised, and the full-year dividend forecast was raised to Y140 (pay-out 31.5%), indicating that the company was
performing well financially and was able to increase returns to shareholders. In December 2022, the CFO was informed of the
view that the response to climate change risks and the policy of returning profits to shareholders should be planned based on a
“backcast” from their long-term vision, which shows that the company is considering long-term sustainability and shareholder
value.
In January 2023, the long-term strategy for 2030 and the medium-term plan for 2026 were announced simultaneously, including
targets for CO2 emissions, the percentage of female managers, and capital policy. This shows that the company is committed to
sustainability and diversity, as well as returning profits to shareholders. In March 2023, a follow-up meeting on the medium-term
A Japanese engineering and construction and
logistics service provides. It mainly offers logistics
solution, plant engineering/installation services, and
on-site plant services.
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plan with the CFO was held, and it was conveyed that the contents of the medium-term plan were in line with the discussions
held so far and were evaluated accordingly. This indicates that the company is committed to following through with its plans and
keeping stakeholders informed.
Finally, in May 2023, at the FY22 final earnings announcement, the year-end dividend for FY22 was raised to Y80, and the annual
dividend was set at Y150. In addition, the dividend forecast for FY23 is Y168 with a pay-out ratio of 40%. Furthermore, a share
buyback of Y15 billion was announced, showing that the company is continuing to perform well financially and is committed to
returning profits to shareholders.
Investment case: Kureha
Source: Schroders, EIKON, Factset. As at 31 August 2023. Holding weight is of Schroder Tokyo Fund. Performance is not a guide to future performance and
may not be repeated. The securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.
Our small cap analyst and sustainable equity analysts met with the president and head of corporate IR in March 2022 as a kick
off engagement meeting for climate discussion. We explained Schroders’ approach and expectation and also listened to their
thoughts and plans.
In May 2022, Kureha made their first TCFD-aligned reporting. We appreciated the company’s detailed analysis on climate-related
risks and opportunities as well as their updated climate governance structure.
While Kureha made some progress over the years, we believe their mid-term target is still not aligned to the ambitions of the
Paris Agreement. The company is aware of the target being not ambitious enough, but still faces challenges due to its reliance
on the in-house coal-fired power plant.
We plan to continue our engagement with Kureha to understand how it can accelerate its actions and transition to net zero in
the best way possible.
Investment restrictions and spread of investment risk
The key restrictions imposed on the Manager are that: a) no more than 15% of the Company’s total net assets, at the date of
acquisition, may be invested in any one company; b) no more than 10% of the value of the Company’s gross assets may be invested
in other listed investment companies unless such companies have a stated investment policy not to invest more than 15% of
their gross assets in other listed companies; c) the Company will not invest more than 15% of its gross assets in other listed
investment companies or investment trusts; d) no more than 15% of the Company’s total net assets may be invested in open-
ended funds; and e) no more than 25% of the Company’s total net assets may be invested in the aggregate of unlisted investments
and holdings representing 20% or more of the equity capital of any company.
In accordance with the investment objective, the Company, while being invested in a single country, ensures that the objective of
spreading risk has been achieved through portfolio diversification (66 investments spread over 24sectors at 31July 2023), the
largest holding being Toyota Motor at 4.7%.
A Japanese manufacturer of specialty chemicals,
polymers and agrichemicals.
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Schroder Japan Trust plc
Promotion
The Company promotes its shares to a broad range of investors who have the potential to be long-term supporters of the
investment strategy. The Company seeks to achieve this through its Manager and corporate broker, which promote the shares
of the Company through regular contact with both current and potential shareholders as well as their advisers.
These activities consist of investor lunches, one-on-one meetings, regional road shows and attendances at conferences for
professional investors. In addition, the Company’s shares are supported by the Manager’s wider marketing of investment
companies targeted at all types of investors; this includes maintaining close relationships with adviser and execution-only
platforms, advertising in the trade press, maintaining relationships with financial journalists and the provision of digital
information on Schroders’ website. The Board also seeks active engagement with investors, and meetings with the Chairman are
offered to investors when appropriate.
Shareholders are encouraged to sign up to the Manager’s Investment Trusts update, to receive information on the Company
directly
https://www.schroders.com/en/uk/adviser/fund-centre/funds-in-focus/investment-trusts/schroders-investment-trusts/
never-miss-an-update/
.
Details of the Board’s approach to discount management and share issuance may be found in the Chairman’s Statement on
page4 and in the Annual General Meeting – Recommendations on page63.
Relations with shareholders
Shareholder relations are given high priority by both the Board and the Manager. The Company communicates with shareholders
through its webpages and the annual and half year reports which aim to provide shareholders with a clear understanding of the
Company’s activities and its results.
In addition to the engagement and meetings held during the year described in “Promotion” above, the Chairman of the Board,
committee chairs and the other Directors attend the AGM and are available to respond to queries and concerns from shareholders.
Key performance indicators (KPIs)
The Board reviews performance using a number of key measures, to monitor and assess the Company’s success in achieving its
objective. Further comment on performance can be found in the Chairman’s statement. The following KPIs are used:
• NAV performance;
• Share price discount;
• Share price premium; and
• Ongoing charges ratio.
Some KPIs are Alternative Performance Indicators (APIs), and further details can be found on page 2 and definitions of these
terms on page 67.
Purpose, Values and Culture
The Company’s purpose is to create long-term shareholder value, in line with the investment objective.
The Company’s culture is driven by its values: Transparency, Engagement and Rigour, with collegial behaviour and constructive,
robust challenge. The values are all centred on achieving returns for shareholders in line with the Company’s investment objective.
The Board is responsible for setting culture and communicating its values to its stakeholders by demanding high standards from
service providers in order to deliver excellent performance for shareholders. The Board also promotes the effective management
or mitigation of the risks faced by the Company and, to the extent it does not conflict with the investment objective, aims to
structure the Company’s operations with regard to all its stakeholders and take account of the impact of the Company’s operations
on the environment and community. Further details on ESG company engagement can be found on page 17.
Acting with high standards of integrity and transparency the Board is committed to encouraging a culture that is responsive to
the views of shareholders and its wider stakeholders. As the Company has no employees and acts through its service providers,
its culture is represented by the values and behaviour of the Board and third parties to which it delegates. The Board aims to fulfil
the Company’s investment objective by encouraging a culture of constructive challenge with all key suppliers and openness with
all stakeholders. The Board is responsible for embedding the Company’s culture in the Company‘s operations.
The Board recognises the Company’s responsibilities with respect to corporate and social responsibility and engages with its
outsourced service providers to safeguard the Company’s interests. As part of this ongoing monitoring, the Board receives
reporting from its service providers with respect to their anti-bribery and corruption policies; Modern Slavery Act 2015 statements;
diversity policies; and greenhouse gas and energy usage reporting.
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Responsible investment
The Company delegates to its Manager the responsibility for taking environmental, social and governance issues into account
when assessing the selection, retention and realisation of investments. The Board expects the Manager to engage with investee
companies on social, environmental and business ethics issues and to promote best practice. The Board expects the Manager to
exercise the Company’s voting rights in consideration of these issues.
The Company voted all of its proxy votes in line with the Manager’s corporate governance policy. This covered 1231 resolutions,
of which the Company voted against management recommendations or abstained in 6.42% of cases. Voting instructions are
considered on a case by case basis and are a result of continued engagement with the Company’s holdings. Where the Manager
believes the interests of minority shareholders are not adequately protected, they may look to vote against a variety of issues.
These can range from a lack of independence or diversity on Board’s pay packages which are not aligned with performance and
capital issuance requests which are not in minority shareholder interests.
In addition to the description of the Manager’s integration of ESG into the investment process and the details in the Manager’s
Review, a description of the Manager’s policy and its engagement with investee companies on these matters, can be found
on the Schroders website at
https://www.schroders.com/en/sustainability/active-ownership/voting/.
The Board notes that Schroders believes that companies with good ESG management often perform better and deliver superior
returns over time. Engaging with companies to understand how they approach ESG management is an integral part of the
investment process. Schroders is compliant with the UK Stewardship Code and its compliance with the principles therein is
reported on its website.
The Board has received reporting from the Manager on the application of its policy.
Corporate and Social Responsibility
Diversity
In accordance with the requirements of LR.9.8.6R, for the year ended 31 July 2023, the Company sets out data on the diversity of
the individuals of the Company’s Board and its executive management.
Table for reporting on gender identity
Number of
senior positions
Number of on the board Number in Percentage of
Board Percentage of (Chairman, CEO, executive executive
members the Board % CFO or SID)* management management
Men 2 40 1 n/a n/a
Women 2 40 0 n/a n/a
Other n/a n/a n/a n/a n/a
Not specified/prefer not to say 1 20 1 n/a n/a
Table for reporting on ethnic background
Number of
senior positions
Number of on the board Number in Percentage of
Board Percentage of (Chairman, CEO, executive executive
members the Board % CFO or SID)* management management
White British or other White (including
minority white groups) 3 60 1 n/a n/a
Mixed Multiple Ethnic Groups n/a n/a n/a n/a n/a
Asian/Asian British 1 20 0 n/a n/a
Black/African/Caribbean/Black British n/a n/a n/a n/a n/a
Other ethnic group, including Arab n/a n/a n/a n/a n/a
Not specified/prefer not to say 1 20 1 n/a n/a
* The FCA defines senior Board positions as Chairman, Chief Executive Officer (CEO), Chief Financial Officer (CFO) or Senior Independent Director. As an
investment trust with no executive officers, the Company has no CEO or CFO.
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Schroder Japan Trust plc
The Board has resolved that the Company’s year end date is the most appropriate date for disclosure purposes. Data collection
was done on a self-identifying reporting basis in a questionnaire which asked individuals to identify their gender identity and
ethnic background categories as set out in the required table. The Company is an investment trust and has no employees or
senior management.
As at 31 July 2023, the Company met the expected targets of 40% of the individuals on the Board being women and at least one
individual on its Board being from an ethnic minority background. The Board has adopted a diversity and inclusion policy. With
respect to recruitment of non-executive Directors, the Company has a strong commitment to appointing diverse candidates from
a broad range of backgrounds and across genders these behaviours are set out in the policy. The Company will encourage any
recruitment agencies it engages to find a diverse range of candidates that meet the objective criteria agreed for each appointment.
Appointments will always be based on merit. Candidates for Board vacancies are selected based on their skills and experience,
which are matched against the balance of skills and experience of the overall Board taking into account the criteria for the role
being offered.
Financial crime policy
The Company continues to be committed to carrying out its business fairly, honestly and openly operates a financial crime policy,
covering bribery and corruption, tax evasion, money laundering, terrorist financing and sanctions, as well as seeking confirmations
that the Company’s service providers’ policies are operating soundly.
Greenhouse gas emissions and energy usage
As the Company outsources its operations to third parties, it has no significant greenhouse gas emissions and energy usage to
report. Whilst the Company has a limited carbon footprint in respect of its day to day activities, the Board notes that the Investment
Manager recognises that environmental responsibility is core to its longer term business success, and actively integrates
environmental, social and corporate governance (ESG) issues when selecting investments for the portfolio.
Strategic Report
The Board’s commitment to stakeholders – section172 Companies Act 2006 statement
The Board has identified its key stakeholders as the Company’s shareholders and service providers. The Board notes the
Company has no employees and the impact of its own operations on the environment and local community is through the
impact its service providers have.
Engagement with key stakeholders assists the Board in meeting the obligation for Directors to act in a way that promotes the
success of the Company, taking into account their interests. This statement outlines this engagement and the impact on decision-
making where appropriate, and cross-refers to the decisions made by the Board during the year, detailed elsewhere in this
report.
As detailed in “Promotion” on page 20 and Relations with Shareholders on page 20, the Company engages with its shareholders.
The Board considered any feedback received by shareholders when making principal decisions during the year.
As detailed in “Purpose, Values and Culture” on page20, the Board engages with service providers, and receives regular
reporting, either directly, or through the Manager or Company Secretary, on performance and other matters. The effect of such
engagement, if relevant, is detailed in the Chairman’s Statement, Managers’ Review, Audit and Risk Committee Report and
Management Engagement Committee Report.
Principal decisions taken during the year were: (1) share buybacks, (2) the final dividend, (3) the change of the Company’s name
and (4) changes to the investment policy to allow for the use of CFD’s. When making these decisions the Board took into account
any feedback received from shareholders, either directly or through service providers and advisers. The Board also took into
account the views of its service providers, including the Manager. The Board is pleased to report any engagements were
constructive and led to positive outcomes, as detailed in the Chairman’s Statement and committee reports.
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Principal risks and uncertainties
The Board is responsible for the Company’s system of risk management and internal control and for reviewing its effectiveness.
The Board has adopted a detailed matrix of principal risks affecting the Company’s business as an investment trust and has
established associated policies and processes designed to manage and, where possible, mitigate those risks, which are
monitored by the audit and risk committee on an ongoing basis. This system assists the Board in determining the nature and
extent of the risks it is willing to take in achieving the Company’s strategic objectives. Both the principal risks and the monitoring
system are also subject to robust assessment at least annually. The last assessment took place in September 2023.
Although the Board believes that it has a robust framework of internal control in place this can provide only reasonable, and
not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk.
Actions taken by the Board and, where appropriate, its committees, to manage and mitigate the Company’s principal risks and
uncertainties are set out in the table below.
Emerging risks and uncertainties
During the year, the Board also discussed and monitored a number of risks that could potentially impact the Company’s ability
to meet its strategic objectives. These were political risk and climate change risk. The Board has determined they are not
currently, as detailed below, sufficiently material for the Company to be categorised as independent principal risks. The Board
receives updates from the Manager, Company Secretary and other service providers on other potential risks that could affect
the Company. The Board were mindful of emerging risks during the year including the escalation or expansion of the conflict
in Ukraine, rising inflation, the threat of a global recession and energy prices although they are not factors which explicitly
impacted the Company's performance.
Political risk includes the impact of geopolitical risk, regional tensions, trade wars and sanctions against companies. Currency
rates and borrowings drawn down by the Company, as well as markets generally, may be affected by geopolitical developments.
Currency rate and borrowings drawn down by the Company may be affected by geopolitical developments particularly in
relation to movements in sterling versus the yen. Note20 of the financial statements provides more information on the effect
of currency and market price movements.
Climate change risk includes how climate change could affect the Company’s investments, and potentially shareholder returns.
The Board notes the Manager has integrated ESG considerations, including climate change, into the investment process as
detailed in the Strategic Report. The Board will continue to monitor this.
*The “Change” column on the right highlights at a glance the Board’s assessment of any increases or decreases in risk during
the year after mitigation and management. The arrows show if the risks increased, decreased or remained the same.
Risk Mitigation and management Change*
Strategic
The Company’s investment objectives may become out of
line with the requirements of investors, resulting in a wide
discount of the share price to underlying NAV per share.
The appropriateness of the Company’s investment remit is
periodically reviewed and the success of the Company in
meeting its stated objectives is monitored.
The share price relative to NAV per share is monitored and
the use of buy back authorities is considered on a regular
basis.
The marketing and distribution activity is actively reviewed.
Proactive engagement with shareholders.
➔
The Company’s cost base could become uncompetitive,
particularly in light of open-ended alternatives.
The ongoing competitiveness of all service provider fees is
subject to periodic benchmarking against their competitors.
Annual consideration of management fee levels.
➔
Investment management
The Manager’s investment strategy, if inappropriate, may
result in the Company underperforming the market and/or
peer group companies, leading to the Company and its
objectives becoming unattractive to investors.
Review of the Manager’s compliance with its agreed
investment restrictions, investment performance and risk
against investment objectives and strategy; relative
performance; the portfolio’s risk profile; and whether
appropriate strategies are employed to mitigate any
negative impact of substantial changes in markets.
Annual review of the ongoing suitability of the Manager is
undertaken.
➔
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Schroder Japan Trust plc
Strategic Report
Risk Mitigation and management Change*
Financial and currency
The Company is exposed to the effect of market fluctuations
due to the nature of its business. A significant fall in
Japanese equity markets could have an adverse impact on
the market value of the Company’s underlying investments
and, as the Company invests predominantly in assets which
are denominated in yen, its exposure to changes in the
exchange rate between sterling and yen has the potential
to have a significant impact on returns.
The risk profile of the portfolio considered appropriate
strategies to mitigate any negative impact of substantial
changes in markets discussed with the Manager.
The Board considers overall hedging policy on a regular
basis.
➔
Custody
Safe custody of the Company’s assets may be compromised
through control failures by the Depositary.
The depositary reports on safe custody of the Company’s
assets, including cash, and portfolio holdings independently
reconciled with the Manager’s records.
The review of audited internal controls reports covering
custodial arrangements is undertaken.
Regular reports from the depositary on its activities,
including matters arising from custody operations is
received.
➔
Gearing and leverage
The Company utilises credit facilities. These arrangements
increase the funds available for investment through
borrowing. While this has the potential to enhance
investment returns in rising markets, in falling markets the
impact could be detrimental to performance.
Gearing is monitored daily and strict restrictions on
borrowings are imposed: gearing continues to operate
within pre-agreed limits so as not to exceed 25% of
shareholders’ funds.
➔
Accounting, legal and regulatory
In order to continue to qualify as an investment trust, the
Company must comply with the requirements of Section
1158 of the Corporation Tax Act 2010.
Breaches of the UK Listing Rules, the Companies Act or
other regulations with which the Company is required to
comply, could lead to a number of detrimental outcomes.
The confirmation of compliance with relevant laws and
regulations by key service providers is reviewed.
Shareholder documents and announcements, including the
Company’s published annual report, are subject to stringent
review processes.
Procedures are established to safeguard against the
disclosure of inside information.
➔
Service provider
The Company has no employees and has delegated certain
functions to a number of service providers, principally the
Manager, Depositary and Registrar. Failure of controls, and
poor performance of any service provider could lead to
disruption, reputational damage or loss.
Service providers are appointed subject to due diligence
processes and with clearly-documented contractual
arrangements detailing service expectations.
Regular reporting is provided by key service providers and
monitoring of the quality of their services provided. The
Directors also receive presentations from the Manager,
depositary and custodian, and the registrar on an annual
basis.
Review of annual audited internal controls reports from key
service providers, including confirmation of business
continuity arrangements and IT controls, and follow up of
remedial actions as required.
➔
Cyber
The Company’s service providers are all exposed to the risk
of cyber attacks. Cyber attacks could lead to loss of personal
or confidential information or disrupt operations.
Service providers report on cyber risk mitigation and
management at least annually, which includes confirmation
of business continuity capability in the event of a cyber
attack.
In addition, the Board received presentations from the
Manager, depositary and custodian, and the registrar on
cyber risk.
The Board noted that following the invasion of Ukraine by
Russia, cyber risk was assessed to be higher, and the Board
sought further assurance from its service providers that
they were able to manage the heightened threat.
➔
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Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service
providers, and ensures regular communication of the results of monitoring by such providers to the audit and risk committee,
including the incidence of significant control failings or weaknesses that have been identified at any time and the extent to
which they have resulted in unforeseen outcomes or contingencies that may have a material impact on the Company’s
performance or condition.
No significant control failings or weaknesses were identified from the audit and risk committee’s ongoing risk assessment
which has been in place throughout the financial year and up to the date of this report. The Board is satisfied that it has
undertaken a detailed review of the risks facing the Company and that an appropriate controls framework is in place.
A full analysis of the financial risks facing the Company is set out in note 20 to the accounts on pages 57 to 61.
Viability statement
The Directors have assessed the viability of the Company over a five year period, taking into account the Company’s position at
31 July 2023 and the potential impacts of the principal risks and uncertainties it faces for the review period. The Directors have
assessed the Company’s operational resilience and they are satisfied that the Company’s outsourced service providers will continue
to operate effectively, following the implementation of their business continuity plans.
A period of five years has been chosen as the Board believes that this reflects a suitable time horizon for strategic planning, taking
into account the investment policy, liquidity of investments, potential impact of economic cycles, nature of operating costs,
dividends and availability of funding.
In its assessment of the viability of the Company, the Directors have considered each of the Company’s principal risks and
uncertainties detailed on pages23 and 24 and in particular the impact of a significant fall in Japanese equity markets on the value
of the Company’s investment portfolio. The Directors also considered the beneficial tax treatment the Company is eligible for as
an investment trust. If changes to these taxation arrangements were to be made it would affect the viability of the Company to
act as an effective investment vehicle.
Whilst the Company's articles of association require that a proposal for the continuation of the Company be put forward at the
AGM in 2024, the Directors have no reason to believe such a resolution will not be passed by shareholders.
The Directors have considered the Company’s income and expenditure projections and the fact that the Company’s investments
comprise of readily realisable securities which can be sold to meet funding requirements if necessary and on that basis consider
that five years is an appropriate time period.
The Directors also considered a stress test in which the Company's NAV dropped by 50% and noted that, based on the assumptions
in the test, the Company would continue to be viable over a five year period.
Based on the Company’s processes for monitoring operating costs, the Board’s view that the Manager has the appropriate depth
and quality of resource to achieve superior returns in the longer term, the portfolio risk profile, limits imposed on gearing,
counterparty exposure, liquidity risk and financial controls, the Directors have concluded that there is a reasonable expectation
that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period of their
assessment.
Going concern
The Directors have assessed the principal risks, the impact of the emerging risks and uncertainties and the matters referred to
in the viability statement. Based on the work the Directors have performed, they have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue
as a going concern for the period assessed by the Directors, being the period to 31 October 2024 which is at least 12 months
from the date the financial statements were authorised for issue.
By order of the Board
Schroder Investment Management Limited
Company Secretary
28 September 2023
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Schroder Japan Trust plc
26
Board of Directors
Philip Kay
Status: Chairman
Length of service: 1 year – appointed a Director in March 2022
Experience: Dr Kay has over 40 years’ experience in the Japanese investment
market. He is a former Director of Fidelity Japan Trust plc and of Schroder Securities
Limited and of Smith New Court plc. He is currently Chairman of Hansard Global plc,
a London listed financial services business. He is also a Director of CQS Asian Macro
Fund.
Committee membership: Audit and Risk, Management Engagement (Chair) and
Nomination (Chair) Committees
Current remuneration: £40,000 per annum (effective from 1 July 2023)
Number of shares held: 18,627*
Helena Coles
Status: Independent Non-Executive Director
Length of service: 1 year – appointed a Director in March 2022
Experience: Ms Coles has over 20 years’ experience in emerging markets and Asian
equity investment, which includes co-founding a specialist investment boutique,
Rexiter Capital Management, part-owned by State Street Global Advisors. She has
held roles with Fidelity International and the Bank of England. Helena is currently a
non-executive Director of Shaftesbury Capital PLC and of JPMorgan Emerging
Markets Investment Trust plc and Independent Investment Advisor to the Joseph
Rowntree Charitable Trust.
Committee membership: Audit and Risk, Management Engagement and
Nomination Committees
Current remuneration: £30,000 per annum (effective from 1 July 2023)
Number of shares held: nil*
Alan Gibbs
Status: Senior Independent Non-Executive Director
Length of service: 7 years – appointed a Director in February 2016
Experience: Mr Gibbs worked for the Fleming Group, after which he helped set up
and run two Far Eastern brokerages before joining J.O.Hambro (latterly Waverton).
Mr Gibbs is now Chairman of the Burdett Trust and a member of the Advisory
Committee of the M&G Charibond Charities Fixed Interest Common Investment
Fund and a member of the Advisory Committee of the M&G Equities Investment
Fund for Charities.
Committee membership: Audit and Risk, Management Engagement and
Nomination Committees
Current remuneration: £30,000 per annum (effective from 1 July 2023)
Number of shares held: 150,000*
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Annual Report and Accounts
for the year ended 31 July 2023
Governance
27
Board of Directors
Angus Macpherson
Status: Independent Non-Executive Director
Length of service: 3 years – appointed a Director in February 2020
Experience: Mr Macpherson’s experience spans 30 years of working in corporate
finance and capital markets, with Noble, Merrill Lynch and Lazard in London, Asia,
New York and Edinburgh. He is currently the non-executive Chairman of Pacific
Horizon Investment Trust plc and the non-executive Chairman of Henderson
Diversified Income plc. Mr Macpherson is a non-executive directorship of Hampden
plc. In addition, he is a Director of Noble & Company (UK) Limited.
Committee membership: Audit and Risk, Management Engagement and
Nomination Committees
Current remuneration: £30,000 per annum (effective from 1 July 2023)
Number of shares held: 49,440*
Belinda Richards
Status: Independent Non-Executive Director
Length of service: 5 years – appointed a Director in January 2018
Experience: Mrs Richards is a former senior partner at Deloitte LLP. She is currently
a non-executive Director and the Chair of the audit and risk committee of Avast plc
and a non-executive Director of The Monks Investment Trust plc and Phoenix Group
Holdings plc. Mrs Richards is a former Director of Aviva UK Life and Pensions,
Balfour Beatty plc, Grainger plc, Jupiter Fund Management plc, Friends Life Group
plc and Wm Morrison Supermarkets PLC.
Committee membership: Audit and Risk (Chair), Management Engagement and
Nomination Committees
Current remuneration: £34,000 per annum (effective from 1 July 2023)
Number of shares held: 4,513*
*Shareholdings are as at 28 September 2023, full details of Directors’ shareholdings are set out in the Remuneration Report
on page 37.
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Schroder Japan Trust plc
28
Directors’ Report
The Directors submit their report and the audited financial
statements of the Company for the year ended 31July 2023.
Directors and officers
Chairman
The Chairman is an independent non-executive Director who
is responsible for leadership of the Board and ensuring its
effectiveness in all aspects of its role. The Chairman’s
significant commitments are detailed on page 26. He has no
conflicting relationships.
Company Secretary
Schroder Investment Management Limited provides company
secretarial support to the Board and is responsible for
assisting the Chairman with Board meetings and advising the
Board with respect to governance. The Company Secretary
also manages the relationship with the Company’s service
providers, except for the Manager. Shareholders wishing to
lodge questions in advance of the AGM are invited to do so by
writing to the Company Secretary at the address given on the
back cover or by email:
amcompanysecretary@schroders.com.
Role and operation of the Board
The Board of Directors, listed on pages 26 and 27 is the
Company’s governing body; it sets the Company’s strategy
and is collectively responsible to shareholders for its long-
term success. The Board is responsible for appointing and
subsequently monitoring the activities of the Manager and
other service providers to ensure that the investment
objective of the Company continues to be met. The Board also
ensures that the Manager adheres to the investment
restrictions set by the Board and acts within the parameters
set by it in respect of any gearing. The Strategic Report on
pages 11 to 25 sets out further detail of how the Board reviews
the Company’s strategy, risk management and internal
controls and also includes other information required for the
Directors’ Report, and is incorporated by reference.
A formal schedule of matters specifically reserved for decision
by the Board has been defined and a procedure adopted for
Directors, in the furtherance of their duties, to take
independent professional advice at the expense of the
Company.
The Chairman ensures that all Directors receive relevant
management, regulatory and financial information in a timely
manner and that they are provided, on a regular basis, with
key information on the Company’s policies, regulatory
requirements and internal controls. The Board meets at least
quarterly and receives and considers reports regularly from
the Manager and other key advisers and ad hoc reports and
information are supplied to the Board as required.
The Board is satisfied that it is of sufficient size with an
appropriate balance of diverse skills and experience,
independence and knowledge of the Company, its sector and
the wider investment trust industry, to enable it to discharge
its duties and responsibilities effectively and that no individual
or group of individuals dominates decision making.
The Board has approved a policy on Directors’ conflicts of
interest. Under this policy, Directors are required to disclose
all actual and potential conflicts of interest to the Board as
they arise for consideration and approval. The Board may
impose restrictions or refuse to authorise such conflicts if
deemed appropriate. No Directors have any connections with
the Manager, shared directorships with other Directors or
material interests in any contract which is significant to the
Company’s business.
Key service providers
The Board has adopted an outsourced business model and
has appointed the following key service providers:
Manager
The Company is an Alternative Investment Fund as defined by
the AIFM Directive and has appointed Schroder Unit Trusts
Limited (“SUTL”) as the Manager in accordance with the terms
of an Alternative Investment Fund Manager (“AIFM”)
agreement. The AIFM agreement, which is governed by the
laws of England and Wales, can be terminated by either party
on sixmonths’ notice or on immediate notice in the event of
certain breaches or the insolvency of either party. As at the
date of this report no such notice had been given by either
party.
SUTL is authorised and regulated by the FCA and provides
portfolio management, risk management, accounting and
company secretarial services to the Company under the AIFM
agreement. The Manager also provides general marketing
support for the Company and manages relationships with key
investors, in conjunction with the Chairman, other Board
members or the corporate broker as appropriate. The
Manager has delegated investment management,
administrative, accounting and company secretarial services
to another wholly owned subsidiary of Schroders plc,
Schroder Investment Management Limited. The Company
Secretary has an independent reporting line to the Manager
and distribution functions within Schroders. The Manager has
in place appropriate professional indemnity cover.
The Schroders Group manages £726.1 billion (as at 30 June
2023) on behalf of institutional and retail investors, financial
institutions and high net worth clients from around the world,
invested in a broad range of asset classes across equities,
fixed income, multi-asset and alternatives.
The Manager is entitled to a fee at the rate of 0.75% per
annum on assets up to and including £200million and 0.65%
per annum thereafter, charged on the net value of the
Company’s assets under management.
The management fee payable in respect of the year ended
31July 2023 amounted to £2,023,000 (2022:£1,998,000).
A marketing support fee of £50,000 per annum is also payable
to the Manager in respect of the promotion of the Company.
The Manager is also entitled to receive a fee for providing
administration, accounting and company secretarial services
to the Company. For those services, it receives an annual fee
of £90,000.
Details of all amounts payable to the Manager are set out in
note17 on page56.
The management engagement committee has reviewed the
performance of the Manager during the year under review and
continues to consider that it has the appropriate depth of
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Annual Report and Accounts
for the year ended 31 July 2023
Governance
29
resource to deliver above average returns over the longer term
and that the continuing appointment of the Manager on the
terms agreed remains in the best interests of shareholders as a
whole.
Depositary
HSBC Bank plc, which is authorised by the Prudential Regulation
Authority (“PRA”) and regulated by the FCA and the PRA, carries
out certain duties of a depositary specified in the AIFM Directive
including, in relation to the Company, as follows:
– safekeeping of the assets of the Company which are
entrusted to it;
– cash monitoring and verifying the Company’s cash flows;
and
– oversight of the Company and the Manager.
The Company, the Manager and the depositary may
terminate the Depositary Agreement at any time by giving
90 days’ notice in writing. The Depositary may only be
removed from office when a new Depositary is appointed by
the Company.
Revenue, final dividend and dividend
policy
The net revenue return for the year, before finance costs and
taxation, was £7,526,000 (2022: £6,975,000). After
deductingfinance costs and taxation the amount available
for distribution to shareholders was £6,563,000 (2022:
£6,073,000) equivalent to net revenue of 5.41p (2022:4.97p)
per ordinary share.
The Directors have recommended the payment of a final
dividend for the year of 5.40p per share (2022:4.90p) payable
on 8 December 2023 to shareholders on the register on
3November 2023, subject to approval by shareholders at the
Annual General Meeting on 5 December 2023.
The Board’s policy is to pay out substantially all the Company’s
revenue.
Compliance with the AIC Code of
Corporate governance
The Board has considered the principles and provisions of the AIC
Code of Corporate Governance (the “AIC Code”). The AIC Code
addresses the Principles and Provisions set out in the UK
Corporate Governance Code (the “UK Code”), as well as setting out
additional Provisions on issues that are of specific relevance to the
Company. The Board considers that reporting against the
Principles and Provisions of the AIC Code, provides more relevant
information to shareholders.
The AIC Code is available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adopts the
Principles and Provisions set out in the UK Code to make them
relevant for investment companies.
The Financial Conduct Authority requires all UK listed companies
to disclose how they have complied with the provisions of the UK
Code. This statement, together with the Statement of Directors’
Responsibilities, viability statement and going concern statement
set out on page 25, respectively, indicates how the Company has
complied with the principles of good governance of the AIC Code
and its requirements on internal control. The Strategic Report and
Directors’ Report provide further details on the Company’s internal
controls (including risk management), governance and diversity
policy.
The Board is satisfied that the Company’s current governance
framework is compliant with the AIC Code. The remuneration
policy and remuneration of non-executive Directors are
reviewed by the nomination committee and approved by the
Board. The Company has neither executive Directors or
employees, so does not apply the relating principles and
provisions.
Committees
In order to assist the Board in fulfilling its governance
responsibilities, it has delegated certain functions to
committees. The roles and responsibilities of these
committees, together with details of work undertaken during
the year under review, are outlined over the next few pages.
The reports of the audit and risk committee, nomination
committee and management engagement committee are
incorporated, and form part of, the Directors’ Report.
Other required Directors’ Report disclosures
under laws, regulations, and the Code
Status
The Company carries on business as an investment trust. Its
shares are listed and admitted to trading on the premium
segment of the main market of the London Stock Exchange. It
has been approved by HM Revenue & Customs as an
investment trust in accordance with section 1158 of the
Corporation Tax Act 2010, by way of a one-off application and
it is intended that the Company will continue to conduct its
affairs in a manner which will enable it to retain this status.
The Company is domiciled in the UK and is an investment
company within the meaning of section 833 of the Companies
Act 2006. The Company is not a “close” company for taxation
purposes.
It is not intended that the Company should have a limited life
but the Directors consider it desirable that the shareholders
should have the opportunity to review the future of the
Company at appropriate intervals. Accordingly, the articles of
association contain provisions requiring the Directors to put a
proposal for the continuation of the Company to shareholders
at the Annual General Meeting (“AGM”) in 2024 and thereafter
at five yearly intervals.
Share capital and substantial share
interests
As at 27 September 2023, the Company had 119,528,965
ordinary shares of 10p in issue. No shares are held in treasury.
Accordingly, the total number of voting rights in the Company
as at 27September 2023 were 119,528,965. Details of changes
to the Company’s share capital during the year are given in
note 14 to the accounts on page 54. All shares in issue rank
equally with respect to voting, dividends and any distribution
on winding up.
The Board noted that the Company’s shareholders
appreciated the Board’s discount management. The Board
agreed to request renewal of the authorities to issue and buy
back shares as described on page 4.
Directors’ Report
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Schroder Japan Trust plc
30
Directors’ Report
The Company has received notifications in accordance with the
Financial Conduct Authority’s (“FCA”) Disclosure Guidance and
Transparency Rule 5.1.2R of the following interests in 3% or more of
the voting rights attached to the Company’s issued share capital.
As at % of total
31 July voting
2023 rights
City of London Investment
Management Company Limited 32,360,632 26.94
1607 Capital Partners, LLC 21,935,856 18.04
Allspring Global Investments,
LLC 15,820,767 13.01
Global Investments Holdings 14,691,625 12.07
Wells Capital Management, Inc 6,277,080 4.98
Rathbone Brothers PLC 6,219,182 4.98
Lazard Asset Management LLC 5,926,190 4.74
Investec Wealth & Investment
Limited 5,786,222 4.74
Following the year end and at the date of this report, City of
London Investment Management notified the Company that
its holding decreased to 25.96%. Rathbones Investment
Management Ltd notified the Company of the increase in
shareholding to 5.02% driven by the all-share combination of
Rathbones Group Plc with Investec Wealth & Investment
Limited which completed on 21st September 2023. The other
figures remain the same.
Provision of information to the auditors
The Directors at the date of approval of this report confirm
that, so far as each of them is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
each Director has taken all the steps that he or she ought to
have taken as a Director in order to make himself or herself
aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.
Directors’ attendance at meetings
Four Board meetings are usually scheduled each year to deal
with matters including: the setting and monitoring of
investment strategy; approval of borrowings and/or cash
positions; review of investment performance; the level of
premium or discount of the Company’s shares to NAV per
share and promotion of the Company; and services provided
by third parties. Additional meetings of the Board are
arranged as required.
The number of scheduled and ad hoc meetings of the Board
and its committees held during the financial year, and the
attendance of individual Directors, is shown below. Whenever
possible all Directors attend the AGM.
Audit Management
Nomination and Risk Engagement
Director Board Committee Committee Committee
Anja Balfour
1
4/4 – 1/1 –
Helena Coles
2
6/6 1/1 1/2 1/1
Alan Gibbs 6/6 1/1 2/2 1/1
Philip Kay 6/6 1/1 2/2 1/1
Angus
Macpherson 6/6 1/1 2/2 1/1
Belinda Richards 6/6 1/1 2/2 1/1
1
Mrs Balfour resigned on 5 December 2022.
2
Ms Coles could not attend one audit and risk committee meeting held
during the year due to a clash of appointments noted prior to appointment.
The Board is satisfied that the Chairman and each of the other
non-executive Directors commits sufficient time to the affairs
of the Company to fulfil their duties.
Directors’ and officers’ liability insurance
and indemnities
Directors’ and officers’ liability insurance cover was in place for
the Directors throughout the year. The Company’s articles of
association provide, subject to the provisions of UK legislation,
an indemnity for Directors in respect of costs which they may
incur relating to the defence of any proceedings brought
against them arising out of their positions as Directors, in
which they are acquitted or judgment is given in their favour
by the court. This is a qualifying third party indemnity
provision and was in place throughout the year under review
and to the date of this report.
By order of the Board
Schroder Investment Management Limited
Company Secretary
28 September 2023
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Annual Report and Accounts
for the year ended 31 July 2023
Governance
31
Audit and Risk Committee Report
The responsibilities and work carried out by the audit and risk committee during the year under review are set out in the
following report. The duties and responsibilities of the committee, which include monitoring the integrity of the Company’s
financial reporting and internal controls, are set out in further detail below, and may be found in the terms of reference which
are set out on the Company’s webpages, https://www.schroders.com/japantrust.
All Directors are members of the committee. Belinda Richards is the Chair of committee and has significant audit experience.
The AIC Code permits the Chairman of the Board to be a member of the audit committee of an investment trust. The Board
has satisfied itself that at least one of the committee’s members has recent and relevant financial experience and that the
committee as a whole has competence relevant to the sector in which the company operates.
The below table sets out how the committee discharged its duties during the year. The committee met twice during the year.
Further details on attendance can be found on page 30. An evaluation of the committee’s effectiveness and review of its terms of
reference was completed during the year.
Significant issues identified during the committee’s review of the Company’s principal risks and uncertainties, and key matters
communicated by the auditor during its reporting are outlined in blue.
Approach
The committee’s key roles and responsibilities are set out below.
Risks and Internal Controls Financial Reports and Valuation Audit
Principal risks
To establish a process for identifying,
assessing, managing and monitoring
emerging and principal risks of the
Company.
Financial statements
To monitor the integrity of the financial
statements of the Company and any
formal announcements relating to the
Company’s financial performance and
valuation. To review the half year report.
Audit results
To discuss any matters arising from the
audit and recommendations made by
the auditor.
Emerging risks and uncertainties
To ensure a robust assessment of the
Company’s emerging and principal risks
and procedures are in place to identify
emerging risks, and an explanation of
how these are being managed or
mitigated.
Internal controls
To undertake a robust annual review of
the adequacy and effectiveness of
internal controls.
Going concern
To review the position and make
recommendations to the Board in
relation to whether it considers it
appropriate to adopt the going concern
basis of accounting in preparing its
annual and half-yearly financial
statements.
Auditors appointment, independence
and performance
To make recommendations to the Board,
in relation to the appointment, re-
appointment, effectiveness and removal
of the external auditor, to review their
independence, and to approve their
remuneration and terms of
engagement. Reviewing the audit plan
and engagement letter.
Ongoing risk review
Half year
report
Audit
planning
Audit
Annual
report
Post-audit
review
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
Service provider controls
Reviewing the operational controls
maintained by the Manager, depositary
and registrar.
Recognition of investment income
Considered dividends received against
forecast and the allocation of special
dividends to income or capital.
Effectiveness of the independent
audit process and auditor
performance
Evaluated the effectiveness of the
independent audit firm and process
prior to making a recommendation that
it should be re-appointed at the
forthcoming AGM. Evaluated the
auditor’s performance against agreed
criteria including: qualification;
knowledge, expertise and resources;
independence policies; effectiveness of
audit planning; adherence to auditing
standards; and overall competence was
considered, alongside feedback from the
Manager on the audit process.
Professional scepticism of the auditor
was questioned and the committee was
satisfied with the auditor’s replies.
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Schroder Japan Trust plc
32
Recommendations made to, and approved by, the Board:
As a result of the work performed, the committee has concluded that the annual report for the year ended 31 July 2023, taken as a
whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position,
performance, business model and strategy, and has reported on these findings to the Board. The Board’s conclusions in this respect ar
e
set out in the Statement of Directors’ Responsibilities on page 38.
Having reviewed the performance of the auditors as described above, the committee considered it appropriate to recommend the
firm’s re-appointment. Resolutions to re-appoint Deloitte LLP as auditor to the Company, and to authorise the Directors to determine
their remuneration will be proposed at the AGM.
Belinda Richards
Audit and risk committee Chair
28 September 2023
Application during the year
Risks and Internal Controls Financial Reports and Valuation Audit
Internal controls and risk management
Consideration of several key aspects of
internal control and risk management
operating within the Manager, depositary
and registrar, including assurance reports
and presentations on these controls.
Calculation of the investment
management fee and performance fee
Consideration of methodology used to
calculate the fees, matched against the
criteria set out in the AIFM agreement.
Auditor independence
Deloitte LLP has provided audit services to
the Company since it was appointed on
19June 2019.
The auditors are required to rotate the
senior statutory auditor every five years.
There are no contractual obligations
restricting the choice of external auditors.
This is the fifth year that the senior
statutory auditor, Chris Hunter has
conducted the audit of the Company’s
financial statements.
Interaction with the Financial Reporting
Council (“FRC”)
During the year, the FRC’s Audit Quality
Review (“AQR”) team selected Deloitte’s
audit of the Company’s 2022 financial
statements as part of their 2022-2023
annual review of audit firms which was
concluded on 6 June 2023. The AQR
identified limited improvements were
needed. The Committee subsequently
reviewed the FRC’s report, discussing it with
Deloitte and scrutinising Deloitte’s response
on how it would address the FRC’s limited
findings on future audits of similar
companies.
Compliance with the investment trust
qualifying rules in S1158 of the
Corporation Tax Act 2010
Consideration of the Manager’s report
confirming compliance.
Overall accuracy of the annual report
and accounts
Consideration of the draft annual report
and accounts and the letter from the
Manager in support of the letter of
representation to the auditor.
Audit results
Met with and reviewed a comprehensive
report from the auditor which detailed the
results of the audit, compliance with
regulatory requirements, safeguards that
have been established, and on their own
internal quality control procedures.
Principal risks
Reviewing the principal risks faced by the
Company and the system of internal
control.
Valuation and existence of holdings
Quarterly review of portfolio holdings and
assurance reports.
Meetings with the auditor
Met the auditors without representatives of
the Manager present. Representatives of
the auditors attended the committee
meeting at which the draft annual report
and accounts was considered.
Fair, balanced and understandable
Reviewed the annual report and accounts
to ensure that it was fair, balanced and
understandable.
Provision of non-audit services by the
auditor
The committee has reviewed the FRC’s
Guidance on Audit Committees and has
formulated a policy on the provision of
non-audit services by the Company’s
auditor. The committee has determined
that the Company’s appointed auditor will
not be considered for the provision of
certain non-audit services, such as
accounting and preparation of the financial
statements, internal audit and custody. The
auditor may, if required, provide other non-
audit services which will be judged on a
case-by-case basis.
The auditor did not provide any non-audit
services to the Company during the year.
Going concern and viability
Reviewing the impact of risks on going
concern and longer-term viability.
Consent to continue as auditor
Deloitte LLP indicated to the committee
their willingness to continue to act as
auditor.
Audit and Risk Committee Report
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Annual Report and Accounts
for the year ended 31 July 2023
Governance
33
The committee undertook a detailed review of the
Manager’s performance and agreed that it has the
appropriate depth and quality of resource to deliver
superior returns over the longer term.
The committee also reviewed the terms of the AIFM
agreement and agreed they remained fit for purpose.
The committee reviewed the other services provided by
the Manager and agreed they were satisfactory.
The committee reviewed the progress of the Company
with respect to the conditional tender offer conditions
and noted that for the financial year the Company had
delivered performance in excess over the conditions.
The annual review of each of the service providers was
satisfactory.
The committee noted that the audit and risk committee
had undertaken a detailed evaluation of the Manager,
registrar, and depositary and custodian’s internal
controls.
Application during the year
Oversight of the Manager
The committee:
• reviews the Manager’s performance, over the short-
and long-term, against the Benchmark, peer group
and the market.
• considers the reporting it has received from the
Manager throughout the year, and the reporting
from the Manager to the shareholders.
• assesses management fees on an absolute and
relative basis, receiving input from the Company’s
broker, including peer group and industry figures, as
well as the structure of the fees.
• reviews the appropriateness of the Manager’s
contract, including terms such as notice period.
• assesses whether the Company receives appropriate
administrative, accounting, company secretarial and
marketing support from the Manager.
Oversight of other service providers
The committee reviews the performance and
competitiveness of the following service providers on at
least an annual basis:
• Depositary and custodian
• Corporate broker
• Registrar
• Lender
The committee also receives a report from the
Company Secretary on ancillary service providers, and
considers any recommendations.
The committee notes the audit and the risk committee’s
review of the auditor.
Management Engagement Committee Report
The management engagement committee is responsible for (1) the monitoring and oversight of the Manager’s performance
and fees, and confirming the Manager’s ongoing suitability, and (2) reviewing and assessing the Company’s other service
providers, including reviewing their fees. All Directors are members of the committee.
Philip Kay is the Chair of the committee.
Its terms of reference are available on the Company’s webpages, https://www.schroders.com/japantrust.
Approach
Recommendations made to, and approved by, the Board:
• That the ongoing appointment of the Manager on the terms of the AIFM agreement, including the fee, was in the best
interests of shareholders as a whole.
• That the Company’s service providers’ performance remained satisfactory.
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Schroder Japan Trust plc
34
Selection and induction
• Committee prepares a job
specification for each role, and
an independent recruitment
firm is appointed. For the
Chairman and the Chairs of
committees, the committee
considers current Board
members too.
• Job specification outlines the
knowledge, professional skills,
personal qualities and
experience requirements.
• Potential candidates assessed
against the Company’s diversity
policy.
• Committee discusses the long
list, invites a number of
candidates for interview and
makes a recommendation to
the Board.
• Committee reviews the
induction and training of new
Directors.
Board evaluation and Directors’ fees
• Committee assesses each Director
annually.
• Evaluation focuses on whether each
Director continues to demonstrate
commitment to their role and provides a
valuable contribution to the Board during
the year, taking into account time
commitment, independence, conflicts and
training needs.
• Following the evaluation, the committee
provides a recommendation to
shareholders with respect to the annual
re-election of Directors at the AGM.
• All Directors retire at the AGM and their
re-election is subject to shareholder
approval.
• Committee reviews Directors’ fees, taking
into account comparative data and
reports to shareholders.
• Any proposed changes to the
remuneration policy for Directors are
discussed and reported to shareholders.
Succession
• The Board’s succession policy is
that Directors’ tenure will be for
no longer than nine years,
except in exceptional
circumstances, and that each
Director will be subject to
annual re-election at the AGM.
• Committee reviews the Board’s
current and future needs at
least annually. Should any need
be identified the committee will
initiate the selection process.
• Committee oversees the
handover process for retiring
Directors.
Nomination Committee Report
The nomination committee is responsible for (1) the recruitment, selection and induction of Directors, (2) their assessment
during their tenure, and (3) the Board’s succession. All Directors are members of the committee. Philip Kay is the Chair of the
committee. Its terms of reference are available on the Company’s webpages, https://www.schroders.com/japantrust.
Approach
Oversight of Directors
Selection
Induction
Annual
evaluation
Annual review
of succession
policy
Application
of succession
policy
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Annual Report and Accounts
for the year ended 31 July 2023
Governance
35
Nomination Committee Report
Recommendations made to, and approved by, the Board:
• That all Directors continue to demonstrate commitment to their roles, provide a valuable contribution to the deliberations
of the Board, remuneration of the Directors was appropriate and Directors remain free from conflicts with the Company
and its Directors, so should all be recommended for re-election by shareholders at the AGM.
• That Directors’ fees be increased to £40,000 for the Chairman, £30,000 for non-executive Directors and £34,000 for the
audit and risk committee Chair.
• That the Remuneration Report be put to shareholders for approval.
Application during the year
Board evaluation and Directors’ fees
• The Board evaluation was undertaken in
July 2023.
• The Chairman reported on the
effectiveness of the Board, himself and its
leadership following the internal
evaluation lead by the Chairman and
Senior independent Director where
appropriate.
• The committee also reviewed each
Director’s time commitment and
independence by reviewing a complete list
of appointments, including pro bono not
for profit roles, to ensure that each Director
remained free from conflict and had
sufficient time available to discharge each
of their duties effectively. All Directors were
considered to be independent in character
and judgement.
• The committee considered each Director’s
contributions, and noted that in addition to
extensive experience as professionals and
non-executive Directors, each Director had
valuable skills and experience, as detailed
in their biographies on pages 26 and 27.
• Based on its assessment, the committee
provided individual recommendations for
each Director’s re-election.
• The committee reviewed Directors’ fees,
using external benchmarking, and
recommended an increase in Directors’
fees, as detailed in the remuneration
report.
Selection and induction
• No new appointments were
made during the year.
Succession
• The committee reviewed the
succession policy and agreed it
was still fit for purpose.
• The committee considered
the future needs of the
Company and the effect of
individual Directors leaving and
whether this would create a
skills/knowledge/experiencegap.
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Schroder Japan Trust plc
36
Directors’ Remuneration Report
for the year ended 31 July 2023
Introduction
The following remuneration policy is currently in force and is
subject to a binding vote every three years. The next vote will
take place at the forthcoming AGM and the current policy
provisions will apply until that date. An ordinary resolution to
approve the Directors’ Remuneration Policy will be put to
Shareholders at the AGM (no changes are proposed). The
below Directors’ annual report on remuneration is subject to
an annual advisory vote. An ordinary resolution to approve
this report will be put to shareholders at the forthcoming
AGM.
At the AGM held on 23 November 2020, 99.95% of the votes
cast (including votes cast at the Chairman’s discretion) in
respect of approval of the Directors’ Remuneration Policy
were in favour, while 0.05% were against and 39,160 votes
were withheld.
At the AGM held on 5 December 2022, 99.96% of the votes
cast (including votes cast at the Chairman’s discretion) in
respect of approval of the Directors’ Remuneration Report
for the year ended 31 July 2022 were in favour, while 0.04%
were against and 13,544 votes were withheld.
Directors’ remuneration policy
The determination of the Directors’ fees is a matter
considered by the nomination committee and the Board.
It is the nomination committee’s policy to determine the level
of Directors’ remuneration having regard to amounts payable
to non-executive Directors in the industry generally, the role
that individual Directors fulfil in respect of Board and
committee responsibilities, and time committed to the
Company’s affairs, taking into account the aggregate limit of
fees set out in the Company’s articles of association. This
aggregate level of Directors’ fees is currently set at £200,000
per annum.
The Chairman of the Board and the Chair of the audit and risk
committee both receive fees at a higher rate than the other
Directors to reflect their additional responsibilities. Directors’
fees are set at a level to recruit and retain individuals of
sufficient calibre, with the level of knowledge, experience and
expertise necessary to promote the success of the Company
in reaching its short and long-term strategic objectives. Any
Director who performs services which in the opinion of the
Directors are outside the scope of the ordinary duties of a
Director, may be paid additional remuneration to be
determined by the Directors, subject to the previously
mentioned fee cap.
The Board and its committees exclusively comprise non-
executive Directors. No Director past or present has an
entitlement to a pension, and the Company has not, and does
not intend to operate a share scheme for Directors or to
award any share options or long-term performance incentives
to any Director. No Director has a service contract with the
Company. However, Directors have a letter of appointment.
Directors do not receive exit payments and are not provided
with any compensation for loss of office. No other payments
are made to Directors other than the reimbursement of
reasonable out-of-pocket expenses incurred in attending to
the Company’s business.
Implementation of policy
The terms of Directors’ letters of appointment are available for
inspection at the Company’s registered office address during
normal business hours and during the AGM at the location of
such meeting.
The Board did not seek the views of shareholders in setting
this policy. Any comments on the policy received from
shareholders would be considered on a case-by-case basis.
As the Company does not have any employees, no employee
pay and employment conditions were taken into account
when setting this policy and no employees were consulted in
its construction.
Directors’ fees are reviewed annually and take into account
research from third parties on the fee levels of Directors of
peer group companies, as well as industry norms and factors
affecting the time commitment expected of the Directors.
New Directors are subject to the provisions set out in this
remuneration policy.
Directors’ annual report on
remuneration
This report sets out how the Directors’ remuneration policy
was implemented during the year ended 31July 2023.
Consideration of matters relating
to Directors’ remuneration
Directors’ remuneration was last reviewed by the Board in
June 2023. The members of the Board at the time that
remuneration levels were considered were as set out on
pages26 and 27. Although no external advice was sought in
considering the levels of Directors’ fees, information on fees
paid to Directors of other investment trusts managed by
Schroders and peer group companies provided by the
Manager and corporate broker was taken into consideration
as was independent third party research.
Following the review of Directors’ fees by the nomination
committee. The nomination committee proposed an increase
to all Directors’ fees as detailed in its report. The new fees are
effective from 1July 2023. (Chairman £40,000, audit and risk
committee Chair £34,000, non-executive Directors £30,000).
The Board approved this recommendation.
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Annual Report and Accounts
for the year ended 31 July 2023
Governance
37
The information in the above table has been audited.
Change in annual fee
over years ended
31 July
2023 2022 2021 2020
Director % % % %
Philip Kay (Chairman) N/a N/a N/a N/a
Anja Balfour N/a 9.8 (1.2) (1.7)
Helena Coles N/a N/a N/a N/a
Alan Gibbs 0.5 7.5 – 2.1
Angus Macpherson 2.7 5.2 N/a N/a
Belinda Richards 2.0 4.5 – 5.2
Year ended Year ended
31 July 2023 31 July 2022
£’000 £’000 % change
Remuneration payable to directors 172 150 15.0
Distributions paid to shareholders:
Dividends
5,961 5,249
Share buybacks 4,359 –
Distributions paid to shareholders 10,320 5,249 96.6
Directors’ share interests
The Company’s articles of association do not require Directors
to own shares in the Company. The interests of Directors,
including those of connected persons, in the Company’s
ordinary shares of 10p each, at the beginning and end of the
financial year under review are set out below.
At 31 July At 31 July
2023 2022
Helena Coles nil nil
Alan Gibbs 150,000 150,000
Philip Kay 18,627 nil
Angus Macpherson 49,440 49,440
Belinda Richards 4,513 4,513
The information in the above table has been audited. There have been no
changes since the year end.
10-year performance of share price and
benchmark total returns
1
1
Source: Morningstar/Thomson Reuters.
Returned to 100 at 31 July 2013.
Definitions of terms and performance measures are provided
on page67.
Philip Kay
Chairman
28 September 2023
31 Jul 13 31 Jul 14 31 Jul 15 31 Jul 16 31 Jul 17 31 Jul 18 31 Jul 19
31 Jul 20 31 Jul 21 31 Jul 22 31 Jul 23
Benchmark
Share Price Total Return
0
50
100
150
200
250
Directors’ Remuneration Report
for the year ended 31 July 2023
Fees paid to directors
The following amounts were paid by the Company to Directors for their services in respect of the year ended 31July 2023 and
the preceding financial year. Directors’ remuneration is all fixed; they do not receive any variable remuneration. The
performance of the Company over the financial year is presented on page 2, under the heading “Financial highlights”.
Fees Taxable benefits
1
Total
2023 2022 2023 2022 2023 2022
Director £ £ £ £ £ £
Philip Kay
2
35,786 9,640 – – 35,786 9,640
Anja Balfour
3
13,534 38,000 2,464 3,327 15,998 41,327
Helena Coles
4
29,167 9,487 – – 29,167 9,487
Alan Gibbs
29,167 28,000 – 1,024 29,167 29,024
Angus Macpherson
29,167 28,000 – 404 29,167 28,404
Belinda Richards 33,167 32,100 – 404 33,167 32,504
Total 169,988 145,227 2,464 5,159 172,452 150,386
1
Comprise amounts reimbursed for expenses incurred in carrying out business for the Company, and which have been grossed up to include PAYE and
NI contributions.
2
Appointed as Director on 28 March 2022, and appointed Chairman on 5 December 2022.
3
Resigned as Chairman, and from the Board on 5 December 2022.
4
Appointed as a Director on 30 March 2022.
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Schroder Japan Trust plc
38
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law
and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 102 “The Financial Reporting Standard
applicable in the UK and Republic of Ireland”, and applicable
law). Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period. In preparing
the financial statements, the Directors are required to:
– select suitable accounting policies and then apply them
consistently;
– state whether applicable United Kingdom Accounting
Standards, comprising FRS 102, have been followed,
subject to any material departures disclosed and
explained in the financial statements;
– make judgements and accounting estimates that are
reasonable and prudent; and
– prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements and
the Directors’ Remuneration Report comply with the
Companies Act 2006.
The Directors are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Manager is responsible for the maintenance and integrity
of the webpage dedicated to the Company. Legislation in the
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
The Directors consider that the annual report and accounts,
taken as a whole, are fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Company’s performance, business model and strategy.
Each of the Directors, whose names and functions are listed in
the Board of Directors on pages26 and 27 confirm that, to the
best of their knowledge:
– the Company financial statements, which have been
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102 “The Financial
Reporting Standard applicable in the UK and Republic of
Ireland”, and applicable law), give a true and fair view of
the assets, liabilities, financial position and profit of the
Company; and
– the Strategic 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.
On behalf of the Board
Philip Kay
Chairman
28 September 2023
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Annual Report and Accounts
for the year ended 31 July 2023
39
Financial
Report on the audit of the financial statements
1. Opinion
In our opinion the financial statements of Schroder Japan Trust Plc (the ‘company’):
– give a true and fair view of the state of the company’s affairs as at 31 July 2023 and of its return for the year then ended;
– have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial
Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and the Statement
of Recommended Practice issued by the Association of Investment Companies in October 2019 “Financial Statements of
Investment Trust Companies and Venture Capital Trusts”; and
– have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
– the income statement;
– the statement of changes in equity;
– the statement of financial position; and
– the related notes 1 to 21.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of
Ireland” (United Kingdom Generally Accepted Accounting Practice) and the Statement of Recommended Practice issued by the
Association of Investment Companies (“SORP”) in October 2019 “Financial Statements of Investment Trust Companies and Venture
Capital Trusts”.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public inter
est
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We confirm that we have
not provided any non-audit services prohibited by the FRC’s Ethical Standard to the company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters The key audit matter that we identified in the current year was:
– Valuation and ownership of investments.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality The materiality that we used in the current year was £3.02m which was determined on the basis of
1% of net assets.
Scoping We performed our audit scoping based upon quantitative and qualitative risk assessment factors
for each account balance recorded as at 31 July 2023.
Significant changes In the prior year we did not rely on controls, but in the current year we relied on the relevant
in our approach controls over the valuation and ownership of investments established at the service provider.
There have been no other significant changes to our audit approach in the current year.
Independent Auditor’s Report to the Members of
Schroder Japan Trust plc
176777 Schroders Japan Growth Fund Annual Report Pt3.qxp_176777 Schroders Japan Growth Fund Annual Report Pt3 28/09/2023 21:44 Page 39
40
Schroder Japan Trust plc
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting
included:
– Considering as part of our risk assessment the nature of the company, its business model and related principal risks,
requirements of the applicable financial reporting framework and the system of internal control;
– Evaluating the underlying data and key assumptions used to make the assessment, and evaluating the directors’ plans for
future actions in relation to their going concern assessment;
– Assessing the liquidity and ability of the Manager to trade in the investment portfolio to cover operational expenditure as
appropriate; and
– Assessing the appropriateness of the directors’ going concern disclosure in note 1 to the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the company has applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors consider
ed
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Independent Auditor’s Report to the Members of
Schroder Japan Trust plc
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Annual Report and Accounts
for the year ended 31 July 2023
41
Financial
Valuation and ownership of investments
Key audit matter
description
The investments of the Company of £331.8m (2022: £313.5) make up 98.5% (2022: 97.9%) of total
assets of the Company at 31 July 2023.
There is a risk that the investments may not be valued correctly or may not represent the assets of
the Company. Given the nature and size of the balance and its importance to the Company, we have
considered that there is a potential risk of fraud in this area.
See the accounting policy in note 1(b) of the Financial Statements and note 10 of the Financial
Statements.
How the scope of our
audit responded to
the key audit matter
We performed the following procedures to address the key audit matter identified:
– inspected the internal controls report over the custodian and the administrator to obtain an
understanding of relevant controls;
– agreed 100% of the Company’s investment portfolio at the year end to confirmations received
directly from the depositary; and
– agreed 100% of the bid prices of quoted investments on the investment ledger at year end to
closing bid prices published by an independent pricing source.
Key observations Based on the work performed, we concluded that the valuation and ownership of investments were
recorded appropriately.
Independent Auditor’s Report to the Members of
Schroder Japan Trust plc
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
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Schroder Japan Trust plc
Independent Auditor’s Report to the Members of
Schroder Japan Trust plc
6. Our application of materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope
of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality £3.02m (2022: £2.81m)
Basis for 1% of net assets (2022: 1% of net assets)
determining
materiality
Rationale for the We have used net assets as our materiality benchmark as we consider it to be the most relevant
benchmark applied indicator of the company’s performance for the users of the Financial Statements, as well as being
a key driver of shareholder value.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial statements as a whole. Performance materiality was set at
70% of materiality for the 2023 audit (2023: 70%). In determining performance materiality, we considered the following factors:
a. The company’s structure and operating model.
b. The continuity in place within the business from the previous year with both management and the administrator.
c. The lack of changes to accounting policies during the current period which would require significant judgement.
d. Our experience from prior period audits, where there has not been a history of uncorrected misstatements or controls
deficiencies.
e. Quality of the control environment and our ability to rely on controls over the valuation and ownership of investments.
6.3. Error reporting threshold
We agreed with the Audit and Risk Committee that we would report to the Committee all audit differences in excess of £0.15m
(2022: £0.14m), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also
report to the Audit and Risk Committee on disclosure matters that we identified when assessing the overall presentation of the
financial statements.
7. An overview of the scope of our audit
7.1. Scoping
Our audit scope was determined by obtaining an understanding of the company and its environment, including internal controls,
and assessing the risks of material misstatement. Audit work to respond to the risks of material misstatement was performed
directly by the audit engagement team.
7.2. Our consideration of the control environment
We obtained an understanding of the relevant controls over the valuation and ownership of investments established at the service
provider including obtaining an understanding of the main IT systems used by the service provider which are ICON and HSS Fund
Trade Processing (“Markit EDM”). We were able to rely on these IT systems and relevant controls.
Net Assets £302m
Materiality £3.02m
Audit and Risk Committee
reporting threshold £0.15m
Net Assets
Materiality
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Annual Report and Accounts
for the year ended 31 July 2023
43
Financial
Independent Auditor’s Report to the Members of
Schroder Japan Trust plc
7.3. Our consideration of climate-related risks
In planning our audit, we have considered the potential impact of climate change on the business and its financial statements.
The company continues to develop its model for assessing and assigning an ESG score on existing and potential investments
based on assessment of the potential impacts of environmental, social and governance (“ESG”) related risks, including climate
change, as outlined on pages 13-19. As a part of our audit, we held discussions with management to understand the process of
identifying climate-related risks and the impact on the Company’s financial statements. We have read the ESG related disclosures
in the annual report to consider whether they are materially consistent with the financial statements and our knowledge obtained
in the audit.
8. Other information
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1.Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with
laws and regulations, we considered the following:
– the nature of the industry and sector, control environment and business performance including the design of the company’s
remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
– results of our enquiries of management, directors and the Audit and Risk Committee about their own identification and
assessment of the risks of irregularities, including those that are specific to the company’s sector;
– any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures
relating to:
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Schroder Japan Trust plc
Independent Auditor’s Report to the Members of
Schroder Japan Trust plc
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-
compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged
fraud; and
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
– the matters discussed among the audit engagement team and relevant internal specialists, including IT and financial
instrument specialists, regarding how and where fraud might occur in the financial statements and any potential indicators
of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud
and identified the greatest potential for fraud in the valuation and ownership of investments. In common with all audits under
ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions
of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules and
Investment Trust Tax Regulations.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements
but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty. This included
the requirements of the United Kingdom’s Financial Conduct Authority (FCA).
11.2.Audit response to risks identified
As a result of performing the above, we identified the valuation and ownership of investments as a key audit matter related to
the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the
specific procedures we have performed on the key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions
of relevant laws and regulations described as having a direct effect on the financial statements;
– enquiring of management and the Audit and Risk Committee concerning actual and potential litigation and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
– reading minutes of meetings of those charged with governance; and
– in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential
bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of
business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members,
including internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
– the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we
have not identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors' statement in relation to going concern, longer-term viability and that part of
the Corporate Governance Statement relating to the company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review.
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Annual Report and Accounts
for the year ended 31 July 2023
45
Financial
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
– the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 25;
– the directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the
period is appropriate set out on page 25;
– the directors' statement on fair, balanced and understandable set out on page 38;
– the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 23;
– the section of the annual report that describes the review of effectiveness of risk management and internal control systems
set out on page 23; and
– the section describing the work of the Audit and Risk Committee set out on pages 31 and 32.
14. Matters on which we are required to report by exception
14.1 Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not received all the information and explanations we require for our audit; or
– adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches
not visited by us; or
– the financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2 Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have
not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records
and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1 Auditor tenure
Following the recommendation of the Audit and Risk Committee, we were appointed by the board of directors on 10 April 2019
to audit the financial statements for the year ending 31 July 2019 and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and reappointments of the firm is 5 years, covering the years ending
31July 2019 to 31 July 2023.
15.2 Consistency of the audit report with the additional report to the Audit and Risk Committee
Our audit opinion is consistent with the additional report to the Audit and Risk Committee we are required to provide in accordance
with ISAs (UK).
16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Chris Hunter (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Edinburgh, United Kingdom
28 September 2023
Independent Auditor’s Report to the Members of
Schroder Japan Trust plc
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46
Schroder Japan Trust plc
2023 2022
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains/(losses) on investments held at fair value
through profit or loss 2 – 22,484 22,484 – (3,439) (3,439)
Net foreign currency gains – 3,920 3,920 – 2,076 2,076
Income from investments 3 8,766 – 8,766 8,208 – 8,208
Other interest receivable and similar income 3 20 – 20 3 – 3
Gross return/(loss) 8,786 26,404 35,190 8,211 (1,363) 6,848
Investment management fee 4 (607) (1,416) (2,023) (599) (1,399) (1,998)
Administrative expenses 5 (653) – (653) (637) – (637)
Net return/(loss) before finance costs
and taxation 7,526 24,988 32,514 6,975 (2,762) 4,213
Finance costs 6 (86) (200) (286) (81) (189) (270)
Net return/(loss) before taxation 7,440 24,788 32,228 6,894 (2,951) 3,943
Taxation 7 (877) – (877) (821) – (821)
Net return/(loss) after taxation 6,563 24,788 31,351 6,073 (2,951) 3,122
Return/(loss) per share 8 5.41p 20.45p 25.86p 4.97p (2.42)p 2.55p
The “Total” column of this statement is the profit and loss account of the Company. The “Revenue” and “Capital” columns represent
supplementary information prepared under guidance issued by The Association of Investment Companies. The Company has no
other items of other comprehensive income and therefore the net return/(loss) after taxation is also the total comprehensive
income for the year.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or
discontinued in the year.
The notes on pages 49 to 62 form an integral part of these accounts.
Income Statement
for the year ended 31 July 2023
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Annual Report and Accounts
for the year ended 31 July 2023
47
Financial
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31July 2021 12,214 7 287 3 91,540 173,298 6,510 283,859
Repurchase of the
Company’s own shares
for cancellation (14) – 14 – (303) – – (303)
Net (loss)/return after taxation – – – – – (2,951) 6,073 3,122
Dividend paid in the year 9 – – – – – – (5,249) (5,249)
At 31July 2022 12,200 7 301 3 91,237 170,347 7,334 281,429
Repurchase of the
Company’s own shares
for cancellation
(210) – 210 – (4,359) – – (4,359)
Net return after taxation – – – – – 24,788 6,563 31,351
Dividend paid in the year 9 – – – – – – (5,961) (5,961)
At 31July 2023 11,990 7 511 3 86,878 195,135 7,936 302,460
The notes on pages 49 to 62 form an integral part of these accounts.
Statement of Changes in Equity
for the year ended 31 July 2023
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48
Schroder Japan Trust plc
Statement of Financial Position
at 31 July 2023
2023 2022
Note £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 10 331,756 313,454
Current assets
Debtors 11 1,113 1,113
Cash at bank and in hand 4,081 5,626
5,194 6,739
Current liabilities
Creditors: amounts falling due within one year 12 (1,669) (1,872)
Net current assets 3,525 4,867
Total assets less current liabilities 335,281 318,321
Creditors: amounts falling due after more than one year 13 (32,821) (36,892)
Net assets 302,460 281,429
Capital and reserves
Called-up share capital 14 11,990 12,200
Share premium 15
7 7
Capital redemption reserve 15
511 301
Warrant exercise reserve 15
3 3
Share purchase reserve 15
86,878 91,237
Capital reserves 15
195,135 170,347
Revenue reserve 15 7,936 7,334
Total equity shareholders’ funds 302,460 281,429
Net asset value per share 16 252.25p 230.68p
These accounts were approved and authorised for issue by the Board of Directors on 28 September 2023 and signed on its
behalf by:
Philip Kay
Chairman
The notes on pages 49 to 62 form an integral part of these accounts.
Registered in England and Wales
Company registration number: 02930057
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Annual Report and Accounts
for the year ended 31 July 2023
49
Financial
Notes to the Accounts
for the year ended 31 July 2023
1. Accounting Policies
(a) Basis of accounting
Schroder Japan Trust plc (“the Company”) is registered in England and Wales as a public company limited by shares. The Company’s
registered office is 1 London Wall Place, London EC2Y 5AU.
The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice
(“UK GAAP”), in particular in accordance with Financial Reporting Standard (FRS) 102 “The Financial Reporting Standard applicable
in the UK and Republic of Ireland”, and with the Statement of Recommended Practice “Financial Statements of Investment Trust
Companies and Venture Capital Trusts” (the “SORP”) issued by the Association of Investment Companies in July 2022. All of the
Company’s operations are of a continuing nature.
The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation
of investments held at fair value through profit or loss. The Directors believe that the Company has adequate resources to continue
operating to 30November 2024, which is at least 12 months from the date of approval of these accounts. In forming this opinion,
the Directors have taken into consideration: the controls and monitoring processes in place; the Company’s level of debt and
other payables; the level of operating expenses, comprising largely variable costs which would reduce pro rata in the event of a
market downturn; and that the Company’s assets comprise cash and readily realisable securities quoted in active markets. In
forming this opinion, the Directors have also considered any potential impact of climate change, and the risk/impact of elevated
and sustained inflation and interest rates on the viability of the Company. The Company has additionally performed stress tests
which confirm that a 50% fall in the market prices of the portfolio would not affect the Board’s conclusions in respect of going
concern. Further details of Directors’ considerations regarding this are given in the Chairman’s Statement, Portfolio Managers’
Review, Going Concern Statement, Viability Statement and under the Emerging Risks and Uncertainties heading on page 23.
The Company has not presented a statement of cash flows, as it is not required for an investment trust which meets certain
conditions; in particular that substantially all of the Company’s investments are highly liquid and carried at market value.
The accounts are presented in sterling and amounts have been rounded to the nearest thousand.
The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 31July
2022.
Other than the Directors’ assessment of going concern, no significant judgements, estimates or assumptions have been required
in the preparation of the accounts for the current or preceding financial year.
(b) Valuation of investments
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and
capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance
with a documented investment strategy and information is provided internally on that basis to the Company’s Board of Directors.
Accordingly, upon initial recognition, the investments are designated by the Company as “held at fair value through profit or loss”.
They are included initially at fair value which is taken to be their cost, excluding expenses incidental to purchase which are written
off to capital at the time of acquisition. Subsequently the investments are valued at fair value, which are last traded prices as
quoted on the Tokyo Stock Exchange.
Investments that are unlisted or not actively traded are valued using a variety of techniques to determine their fair value; all such
valuations are reviewed by both the AIFM’s Fair Value Pricing Committee and by the Directors. No investments held at the current
or comparative year end have been valued using other techniques.
All purchases and sales are accounted for on a trade date basis.
(c) Accounting for reserves
Gains and losses on sales of investments are included in the income statement and in capital reserves within “gains and losses
on sales of investments”. Increases and decreases in the valuation of investments held at the year end are included in the income
statement and in capital reserves within “investment holding gains and losses”.
Foreign exchange gains and losses on cash and deposit balances and unrealised exchange gains and losses on foreign currency
loans are included in the income statement and in capital reserves.
(d) Income
Dividends receivable are included in revenue on an ex-dividend basis except where, in the opinion of the board, the dividend is
capital in nature, in which case it is included in capital.
Overseas dividends are included gross of any withholding tax.
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Schroder Japan Trust plc
Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the
cash dividend foregone is recognised in revenue. Any excess in the value of the shares received over the amount of the cash
dividend is recognised in capital.
Deposit interest outstanding at the year end is calculated and accrued on a time apportionment basis using market rates of
interest.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are allocated wholly to the revenue column of the income statement
with the following exceptions:
– The investment management fee is allocated 30% to revenue and 70% to capital in line with the Board’s expected long-
term split of revenue and capital return from the Company’s investment portfolio.
– Expenses incidental to the purchase or sale of an investment are charged to capital. These expenses are commonly referred
to as transaction costs and mainly comprise brokerage commission. Details of transaction costs are given in note10 on
page53.
(f) Finance costs
Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on an
accruals basis using the effective interest method in accordance with FRS 102.
Finance costs are allocated 30% to revenue and 70% to capital in line with the Board’s expected long-term split of revenue and
capital return from the Company’s investment portfolio.
(g) Financial instruments
Cash at bank and in hand may comprise cash and demand deposits which are readily convertible to a known amount of cash and
are subject to insignificant risk of changes in value.
Other debtors and creditors do not carry any interest, are short-term in nature and are accordingly stated at nominal value, with
debtors reduced by appropriate allowances for estimated irrecoverable amounts.
Bank loans and overdrafts are classified as loans and receivables and are initially measured at fair value and subsequently
measured at amortised cost. They are recorded at the proceeds received net of direct issue costs. Finance costs, including any
premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis using the effective
interest method.
(h) Taxation
The tax charge for the year is based on amounts expected to be received or paid.
Deferred tax is accounted for in accordance with FRS 102.
Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date. Deferred tax
liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it is
probable that taxable profits will be available against which those timing differences can be utilised.
Tax relief is allocated to expenses charged to the capital column of the income statement on the “marginal basis”. On this basis,
if taxable income is capable of being entirely offset by revenue expenses, then no tax relief is transferred to capital.
Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected to
reverse, based on tax rates that have been enacted or substantively enacted at the accounting date and is measured on an
undiscounted basis.
(i) Foreign currency
In accordance with FRS 102, the Company is required to determine a functional currency, being the currency in which the Company
predominantly operates. The Board, having regard to the currency of the Company’s share capital and the predominant currency
in which its shareholders operate, has determined that sterling is the functional currency and the currency in which the accounts
are presented.
Transactions denominated in foreign currencies are converted at actual exchange rates as at the date of the transaction.
Monetary assets, liabilities and equity investments denominated in foreign currencies at the year end, are translated at the rates
of exchange prevailing at the year end.
(j) Dividend payable
In accordance with FRS 102, the final dividend is included in the accounts in the year in which it is paid.
Notes to the Accounts
for the year ended 31 July 2023
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Annual Report and Accounts
for the year ended 31 July 2023
51
Financial
Notes to the Accounts
for the year ended 31 July 2023
(k) Repurchase of Ordinary Shares
The costs of repurchasing Ordinary shares including related stamp duty and transaction costs are taken directly to equity and
reported through the Statement of Changes in Equity as a charge on the share purchase reserve. Share repurchase transactions
are accounted for on a trade date basis.
The nominal value of Ordinary share capital repurchased and cancelled is transferred out of called up share capital and into the
capital redemption reserve.
2. Gains/(losses) on investments held at fair value through profit or loss
2023 2022
£’000 £’000
Gains on sales of investments based on historic cost 16,885 17,772
Amounts recognised in investment holding gains and losses in the previous year in
respect of investments sold in the year (17,909) (18,239)
Losses on sales of investments based on the carrying value at the previous balance sheet date
(1,024) (467)
Net movement in investment holding gains and losses 23,508 (2,972)
Gains/(losses) on investments held at fair value through profit and loss 22,484 (3,439)
3. Income
2023 2022
£’000 £’000
Income from investments:
Overseas dividends 8,766 8,208
Other interest receivable and similar income
Deposit interest 20 3
Total income 8,786 8,211
4. Investment management fee
2023 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 607 1,416 2,023 599 1,399 1,998
The basis for calculating the investment management fee is set out in the Report of the Directors on page 28 and details of all
amounts payable to the Manager are given in note 17 on page 56.
5. Administrative expenses
2023 2022
£’000 £’000
Administration expenses 305 316
Directors’ fees
1
170 145
Company secretarial fee
90 90
Marketing support fee
50 50
Auditor’s remuneration for audit services 38 36
653 637
1
Details of all amounts payable to Directors are given in the Remuneration Report on page 37.
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Schroder Japan Trust plc
Notes to the Accounts
for the year ended 31 July 2023
6. Finance costs
2023 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank loans and overdrafts 86 200 286 81 189 270
7. Taxation
2023 2022
£’000 £’000
(a) Analysis of charge for the year:
Irrecoverable overseas tax 877 821
Taxation 877 821
(b) Factors affecting tax charge for the year
The tax assessed for the year is lower (2022: higher) than the Company’s applicable rate of corporation tax for the year of 21%
(2022: 19%).
The factors affecting the tax charge for the year are as follows:
2023 2022
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return/(loss) before taxation 7,526 24,988 32,514 6,894 (2,951) 3,943
Net return/(loss) before taxation multiplied by the
Company’s applicable rate of corporation tax for the
year of 21% (2022: 19%)
1,562 5,206 6,768 1,310 (561) 749
Effects of :
Capital (gains)/losses on investments
– (5,545) (5,545) – 259 259
Income not chargeable to corporation tax
(1,840) – (1,840) (1,560) – (1,560)
Unrelieved expenses
278 339 617 250 302 552
Irrecoverable overseas tax 877 – 877 821 – 821
Taxation for the year 877 – 877 821 – 821
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £10,682,000 (2022: £9,947,000) based on a prospective corporation tax
rate of 25.0% (2022: 25%). The main rate of corporation tax increased to 25% for fiscal years beginning on or after 1April 2023.
This deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the composition
of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has been
recognised in the accounts.
Given the Company’s status as an Investment Trust Company, no provision has been made for deferred tax on any capital gains
or losses arising on the revaluation or disposal of investments.
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Annual Report and Accounts
for the year ended 31 July 2023
53
Financial
Notes to the Accounts
for the year ended 31 July 2023
8. Return/(loss) per share
2023 2022
£’000 £’000
Revenue return 6,563 6,073
Capital return/(loss) 24,788 (2,951)
Total return 31,351 3,122
Weighted average number of ordinary shares in issue during the year
121,214,425 122,078,782
Revenue return per share
5.41p 4.97p
Capital return/(loss) per share 20.45p (2.42)p
Total return per share 25.86p 2.55p
9. Dividends
Dividend paid and proposed
2023 2022
£’000 £’000
2022 final dividend of 4.90p (2021: 4.30p) paid out of revenue profits 5,961
1
5,249
2023 2022
£’000 £’000
2023 final dividend proposed of 5.40p (2022: 4.90p) to be paid out of revenue profits 6,475 5,978
1
The 2022 final dividend amounted to £5,978,000. However the amount actually paid was £5,961,000 as shares were repurchased and cancelled, after the
accounting date, but prior to the dividend Record Date.
The proposed dividend amounting to £6,475,000 (2022: £5,978,000) is the amount used for the basis of determining whether the
Company has satisfied the distribution requirements of Section 1158 of the Corporation Tax Act 2010. The revenue available for
distribution by way of dividend for the year is £6,563,000 (2022; £6,073,000).
10. Investments held at fair value through profit or loss
2023 2022
£’000 £’000
Opening book cost 264,723 243,965
Opening investment holding gains 48,731 69,942
Opening fair value
313,454 313,907
Analysis of transactions made during the year
Purchases at cost 85,094 69,606
Sales proceeds received
(89,276) (66,620)
Gains/(losses) on investments held at fair value 22,484 (3,439)
Closing fair value 331,756 313,454
Closing book cost
277,426 264,723
Closing investment holding gains 54,330 48,731
Closing fair value 331,756 313,454
All investments are listed on a recognised stock exchange.
The Company received £89,276,000 (2022: £66,620,000) from disposal of investments in the year. The book cost of these
investments when they were purchased was £72,391,000 (2022: £48,848,000). 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.
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Schroder Japan Trust plc
Notes to the Accounts
for the year ended 31 July 2023
The following transaction costs, mainly comprising brokerage commissions, were incurred during the year:
2023 2022
£’000 £’000
On acquisitions 23 16
On disposals 21 14
44 30
11. Debtors
2023 2022
£’000 £’000
Securities sold awaiting settlement 750 800
Dividends and interest receivable
338 295
Other debtors 25 18
1,113 1,113
The Directors consider that the carrying amount of debtors approximates to their fair value.
12. Creditors: amounts falling due within one year
2023 2022
£’000 £’000
Securities purchased awaiting settlement 951 1,177
Other creditors and accruals 718 695
1,669 1,872
13. Creditors: amounts falling due after more than one year
2023 2022
£’000 £’000
Bank loan 32,821 36,892
The bank loan is a yen 6.0billion three-year term loan from SMBC Bank International plc (formerly Sumitomo Mitsui Banking
Corporation Europe Limited), expiring in January 2025 and carrying a floating interest rate, calculated at the daily Compounded
Risk Free Rate, plus a margin. The loan is unsecured, but is subject to certain undertakings and restrictions, all of which have
been complied with. The Directors consider that the carrying amount of the loan approximates to its fair value.
In addition to the term loan detailed above, the Company has a yen 2.0billion credit facility available from Sumitomo Mitsui
Banking Corporation, London Branch, which was undrawn at the year end (2022: undrawn). Further details of the facility are given
in note20 on page 59.
14. Called-up share capital
2023 2022
£’000 £’000
Ordinary shares allotted, called-up and fully paid:
Opening balance of 122,000,562 (2022: 122,143,262) ordinary shares of 10p each
12,200 12,214
Repurchase and cancellation of 2,096,597 (2022: 142,700) shares (210) (14)
Closing balance of 119,903,965 (2022: 122,000,562) shares 11,990 12,200
176777 Schroders Japan Growth Fund Annual Report Pt4.qxp_176777 Schroders Japan Growth Fund Annual Report Pt4 28/09/2023 21:44 Page 54
Annual Report and Accounts
for the year ended 31 July 2023
55
Financial
Notes to the Accounts
for the year ended 31 July 2023
During the year, the Company purchased 2,096,597 of its own shares, nominal value £209,660, for cancellation, for a total
consideration of £4,359,000, representing 1.72% of the shares outstanding at the beginning of the year. The reason for these
share repurchases was to seek to manage the volatility of the share price discount to net asset value per share.
15. Reserves
Year ended 31July 2023
Capital reserves
Gains and Investment
Capital Warrant Share losses on holding
Share redemption exercise purchase sales of gains and Revenue
premium
1
reserve
1
reserve
1
reserve
2
investments
2
losses
3
reserve
4
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance 7 301 3 91,237 119,908 50,439 7,334
Losses on sales of investments based on
the carrying value at the previous balance
sheet date
– – – – (1,024) – –
Net movement in investment holding gains
and losses
– – – – – 23,508 –
Transfer on disposal of investments – – – – 17,909 (17,909) –
Realised exchange losses on cash and
short-term deposits
– – – – (150) – –
Exchange gains on foreign currency loan – – – – – 4,070 –
Management fee and finance costs allocated
to capital
– – – – (1,616) – –
Share repurchases for cancellation – 210 – (4,359) – – –
Dividend paid – – – – – – (5,961)
Retained revenue for the year – – – – – – 6,563
Closing balance 7 511 3 86,878 135,027 60,108 7,936
Year ended 31July 2022
Capital reserves
Gains and Investment
Capital Warrant Share losses on holding
Share redemption exercise purchase sales of gains and Revenue
premium
1
reserve
1
reserve
1
reserve
2
investments
2
losses
3
reserve
4
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening balance 7 287 3 91,540 100,043 73,255 6,510
Losses on sales of investments based on
the carrying value at the previous balance
sheet date – – – – (467) – –
Net movement in investment holding gains
and losses – – – – – (2,972) –
Transfer on disposal of investments – – – – 18,239 (18,239) –
Realised exchange losses on cash and
short-term deposits – – – – (354) – –
Exchange gains/(losses) on foreign currency loan – – – – 4,035 (1,605) –
Management fee and finance costs allocated
to capital – – – – (1,588) – –
Share repurchases for cancellation – 14 – (303) – – –
Dividend paid – – – – – – (5,249)
Retained revenue for the year – – – – – – 6,073
Closing balance 7 301 3 91,237 119,908 50,439 7,334
1
These reserves are not distributable.
2
These are realised (distributable) capital reserves which may be used to repurchase the Company’s own shares or distributed as dividends.
3
This reserve comprises holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised. An analysis has
not been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the Company’s o
wn shares) and those
that are unrealised.
4
The revenue reserve may be distributed as dividends or used to repurchase the Company’s own shares.
176777 Schroders Japan Growth Fund Annual Report Pt4.qxp_176777 Schroders Japan Growth Fund Annual Report Pt4 28/09/2023 21:44 Page 55
56
Schroder Japan Trust plc
Notes to the Accounts
for the year ended 31 July 2023
16. Net asset value per share
2023 2022
Net assets attributable to shareholders (£’000) 302,460 281,429
Shares in issue at the year end 119,903,965 122,000,562
Net asset value per share 252.25p 230.68p
17. Transactions with the Manager
Under the terms of the AlFM Agreement, the Manager is entitled to receive a management fee, a marketing support fee and a
company secretarial fee. Details of the AIFM agreement are given in the Report of the Directors on page 28. Any investments in
funds managed or advised by the Manager or any of its associated companies are excluded from the assets used for the purpose
of the management fee calculation and therefore incur no fee.
The management fee payable in respect of the year ended 31July 2023 amounted to £2,023,000 (2022: £1,998,000), of which
£535,000 (2022: £502,000) was outstanding at the year end. The marketing support fee payable to the Manager amounted to
£50,000 (2022: £50,000) of which £13,000 (2022: £13,000) was outstanding at the year end. The company secretarial fee payable
to the Manager amounted to £90,000 (2022: £90,000) of which £23,000 (2022: £23,000) was outstanding at the year end.
Outstanding amounts to the Manager are short-term in nature, these amounts are unsecured and not subject to interest charges.
18. Related party transactions
Details of the remuneration payable to Directors are given in the Remuneration Report on page 37 and details of Directors’
shareholdings are given in in the Report of the Directors on page 37. Details of transactions with the Manager are given in note17
above. There have been no other transactions with related parties during the year (2022: nil).
19. Disclosures regarding financial instruments measured at fair value
The Company’s financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio. The
Company currently holds no derivative financial instruments.
FRS 102 requires financial instruments to be categorised into a hierarchy consisting of the three levels below.
Level 1 – valued using unadjusted quoted prices in active markets for identical assets.
Level 2 – valued using observable inputs other than quoted prices included within Level 1.
Level 3 – valued using inputs that are unobservable.
Details of the valuation techniques used by the Company are given in note 1(b) on page 49.
At 31July 2023, all investments in the Company’s portfolio are categorised as Level 1 (2022: same).
The following table sets out the fair value measurements using the FRS 102 hierarchy at 31July:
2023
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial instruments held at fair value
through profit or loss
Equity investments 331,756 – – 331,756
2022
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial instruments held at fair value
through profit or loss
Equity investments 313,454 – – 313,454
176777 Schroders Japan Growth Fund Annual Report Pt4.qxp_176777 Schroders Japan Growth Fund Annual Report Pt4 28/09/2023 21:44 Page 56
Annual Report and Accounts
for the year ended 31 July 2023
57
Financial
Notes to the Accounts
for the year ended 31 July 2023
20. Financial instruments’ exposure to risk and risk management policies
The investment objective is set out on the inside front cover of this report. In pursuing this objective, the Company is exposed to
a variety of risks that could result in a reduction in the Company’s net assets or a reduction in profits available for dividends.
These risks include market risk (comprising currency risk, interest rate risk and market price risk), liquidity risk and credit risk.
The Directors’ policy for managing these risks is set out below. The Board coordinates the Company’s risk management policy.
The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set out below,
have not changed from those applying in the comparative year.
The Company’s classes of financial instruments are as follows:
– investments in shares of Japanese companies which are held in accordance with the Company’s investment objective;
– short-term debtors, creditors and cash arising directly from its operations; and
– a credit facility and a term loan, the purpose of which are to manage working capital requirements and to gear the
Company as appropriate.
(a) Market risk
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market
prices. This market risk comprises three elements: currency risk, interest rate risk and market price risk. Information to enable
an evaluation of the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, together with
sensitivity analyses where appropriate. The Board reviews and agrees policies for managing these risks and these policies have
remained unchanged from those applying in the comparative year. The Manager assesses the exposure to market risk when
making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an
ongoing basis.
(i) Currency risk
The Company’s functional currency and the currency in which it reports, is sterling. However the Company’s assets, liabilities and
income are almost entirely denominated in yen. As a result, movements in the exchange rate will affect the sterling value of those
items.
Management of currency risk
The Manager monitors the Company’s exposure to foreign currencies on a daily basis and reports to the Board, which meets on
at least four occasions each year. The Manager measures the risk to the Company of the foreign currency exposure by considering
the effect on the Company’s net asset value and income of a movement in the yen/sterling exchange rate. It is currently not the
Company’s policy to actively hedge against currency risk. However any yen denominated borrowing acts to reduce the exposure
of the Company’s portfolio to the yen/sterling exchange rate. Income is converted to sterling on receipt. The Company may use
short-term forward currency contracts to manage working capital requirements.
Foreign currency exposure
The fair value of the Company’s monetary items that have exposure to the yen at 31July are shown below. The Company’s
investments (which are not monetary items) have been included separately in the analysis so as to show the overall level of
exposure.
2023 2022
£’000 £’000
Debtors (securities sold awaiting settlement, dividends and interest receivable) 1,080 1,093
Cash at bank and in hand
694 1,363
Creditors (securities purchased awaiting settlement)
(951) (1,177)
Bank loans (including accrued interest payable) (32,833) (36,905)
Foreign currency exposure on net monetary items
(32,010) (35,626)
Investments held at fair value through profit or loss that are equities 331,756 313,454
Total net foreign currency exposure 299,746 277,828
The above year end amounts are broadly representative of the exposure to foreign currency risk during the current and
comparative year.
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58
Schroder Japan Trust plc
Notes to the Accounts
for the year ended 31 July 2023
Foreign currency sensitivity
The following tables illustrate the sensitivity of return after taxation for the year and net assets with regard to the Company’s
monetary financial assets, financial liabilities and exchange rates. The sensitivity analysis is based on the Company’s monetary
currency financial instruments held at each balance sheet date and assumes a 10% (2022: 10%) appreciation or depreciation in
sterling against the yen, which is considered to be a reasonable illustration based on the volatility of exchange rates during the
year.
If sterling had weakened by 10% this would have had the following effect:
2023 2022
£’000 £’000
Income statement – return after taxation
Revenue return
782 731
Capital return (3,221) (3,582)
Total return after taxation for the year (2,439) (2,851)
Net assets 29,975 27,783
27,536 24,932
Conversely if sterling had strengthened by 10% this would have had the following effect:
2023 2022
£’000 £’000
Income statement – return after taxation
Revenue return
(782) (731)
Capital return 3,221 3,582
Total return after taxation for the year 2,439 2,851
Net assets (29,975) (27,783)
(27,536) (24,932)
In the opinion of the Directors, the above sensitivity analysis is broadly representative of the current and comparative year.
(ii) Interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on variable rate
borrowings when interest rates are re-set.
Management of interest rate risk
Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Company’s gearing policy is to
limit gearing to 25% where gearing is defined as borrowings used for investment purposes, less cash expressed as a percentage
of net assets.
The possible effects on cash flows that could arise as a result of changes in interest rates are taken into account when the Company
borrows on the credit facility. However, amounts drawn down on this facility are for short-term periods and therefore exposure
to interest rate risk is not significant. The Company has a three year term loan which carries a floating rate of interest and which
is therefore exposed to interest rate changes.
Interest rate exposure
The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are
re-set, is shown below:
2023 2022
£’000 £’000
Exposure to floating interest rates:
Cash at bank and in hand
4,081 5,626
Creditors: amounts falling due after more than one year
Term loan (32,821) (36,892)
Total exposure (28,740) (31,266)
The floating rate assets consist of cash deposits on call. Sterling cash deposits at call earn interest at floating rates based on
Sterling Overnight Index Average (“SONIA”) rates (2022: same).
176777 Schroders Japan Growth Fund Annual Report Pt4.qxp_176777 Schroders Japan Growth Fund Annual Report Pt4 28/09/2023 21:44 Page 58
Annual Report and Accounts
for the year ended 31 July 2023
59
Financial
Notes to the Accounts
for the year ended 31 July 2023
The bank loan is a yen 6.0billion three-year term loan from SMBC Bank International plc, expiring in January 2025 and carrying
a floating interest rate, calculated at the daily Compounded Risk Free Rate, plus a 0.8% margin.
During the year, the Company extended its yen 2billion, 364 day credit facility arrangement with SMBC, to 10 May 2024. Under
the terms of the agreement, interest is payable at the “Compounded Reference Rate”, being the aggregate of the Daily Non-
Cumulative Compounded Risk Free Reference Rate plus the applicable Credit Adjustment Spread. The facility has not been utilised
in the current or prior year.
The above year end amounts are not representative of the exposure to interest rates during the year as the level of cash balances
has fluctuated. The maximum and minimum exposure during the year was as follows:
2023 2022
£’000 £’000
Maximum debit interest rate exposure during the year – net debt (35,502) (32,845)
Minimum debit interest rate exposure during the year – net debt (27,447) (29,697)
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.0% (2022: 1.0%) increase
or decrease in interest rates. This level of change is considered to be a reasonable illustration based on observation of current
market conditions. The sensitivity analysis is based on the Company’s monetary financial instruments held at the accounting date
and which are exposed to interest rate movements, with all other variables held constant.
2023 2022
1.0% increase 1.0% decrease 1.0% increase 1.0% decrease
in rate in rate in rate in rate
£’000 £’000 £’000 £’000
Income statement – return after taxation
Revenue return
(58) 58 (54) 54
Capital return (230) 230 (258) 258
Total return after taxation (288) 288 (312) 312
Net assets (288) 288 (312) 312
In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest
rate changes due to fluctuations in the level of cash balances and drawings on the credit facility.
(iii) Market price risk
Market price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the value
of the Company’s investments.
Management of market price risk
The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated with
particular industry sectors. The investment management team has responsibility for monitoring the portfolio, which is selected
in accordance with the Company’s investment objective and seeks to ensure that individual stocks meet an acceptable risk/reward
profile.
Market price risk exposure
The Company’s total exposure to changes in market prices at 31July comprised its portfolio of investments as follows:
2023 2022
£’000 £’000
Investments held at fair value through profit or loss 331,756 313,454
The above data is broadly representative of the exposure to market price risk during the year.
Concentration of exposure to market price risk
An analysis of the Company’s investments is given on page 9. The portfolio comprises securities listed on Japanese stock markets.
Accordingly there is a concentration of exposure to that country. However it should be noted that an investment may not be
entirely exposed to the economic conditions in its country of listing.
176777 Schroders Japan Growth Fund Annual Report Pt4.qxp_176777 Schroders Japan Growth Fund Annual Report Pt4 28/09/2023 21:44 Page 59
60
Schroder Japan Trust plc
Notes to the Accounts
for the year ended 31 July 2023
Market price risk sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decrease of
10% (2022: 10%) in the fair values of the Company’s investments. This level of change is considered to be a reasonable illustration
based on observation of current market conditions. The sensitivity analysis is based on the Company’s exposure to market price
risk through its portfolio of investments and includes the impact on the management fee but assumes all other variables are
held constant.
2023 2022
10% increase 10% decrease 10% increase 10% decrease
in fair value in fair value in fair value in fair value
£’000 £’000 £’000 £’000
Income statement – return after taxation
Revenue return
(65) 65 (61) 61
Capital return 33,025 (33,025) 31,203 (31,203)
Total return after taxation and net assets 32,960 (32,960) 31,142 (31,142)
Percentage change in net asset value
10.9% (10.9%) 11.1% (11.1%)
(b) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are
settled by delivering cash or another financial asset.
Management of the risk
Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meet
funding requirements if necessary. Short-term flexibility is achieved through the use of a credit facility. The Board’s policy is for
the Company to remain fully invested in normal market conditions and that the credit facility be used to manage working capital
requirements and to gear the Company as appropriate.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:
2023 2022
Within one One to two Within one Two to three
year years Total year years Total
£’000 £’000 £’000 £’000 £’000 £’000
Creditors: amounts falling
due within one year
Securities purchased
awaiting settlement
951 – 951 1,177 – 1,177
Other creditors and accruals
706 – 706 682 – 682
Creditors: amounts falling
due after more than
one year
Interest on term loan 263 123 386 295 434 729
Term loan – 32,821 32,821 – 36,892 36,892
1,920 32,944 34,864 2,154 37,326 39,480
(c) Credit risk
Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could
result in loss to the Company.
Management of credit risk
This risk is not significant and is managed as follows:
Portfolio dealing
The Company invests in markets that operates a “Delivery Versus Payment” settlement process which mitigates the risk of losing
the principal of a trade during settlement. The Manager continuously monitors dealing activity to ensure best execution, which
involves measuring various indicators including the quality of trade settlement and incidence of failed trades. Counterparties
must be pre-approved by the Manager’s credit committee.
176777 Schroders Japan Growth Fund Annual Report Pt4.qxp_176777 Schroders Japan Growth Fund Annual Report Pt4 28/09/2023 21:44 Page 60
Annual Report and Accounts
for the year ended 31 July 2023
61
Financial
Notes to the Accounts
for the year ended 31 July 2023
Exposure to the Custodian
The Custodian of the Company’s assets is HSBC Bank plc which has Long-Term Credit Ratings of AA- with Fitch and A1 with Moody’s.
The Company’s investments are held in accounts which are segregated from the Custodian’s own trading assets. If the the
Custodian were to become insolvent, the Company’s right of ownership of its investments is clear and they are therefore protected.
However the Company’s cash balances are all deposited with the Custodian as banker and held on the Custodian’s balance sheet.
Accordingly, in accordance with usual banking practice, the Company will rank as a general creditor to the Custodian in respect
of cash balances.
Credit risk exposure
The following amounts shown in the Statement of Financial Position, represent the maximum exposure to credit risk at the current
and comparative year end.
2023 2022
£’000 £’000
Current assets
Debtors – securities sold awaiting settlement,
dividends and interest receivable
and other debtors
1,113 1,113
Cash at bank and in hand 4,081 5,626
5,194 6,739
No debtors are past their due date and no provision has been made for impairment.
(d) Fair values of financial assets and financial liabilities
All financial assets and liabilities are either carried at fair value or the amount in the Statement of Financial Position is a reasonable
approximation of fair value.
21. Capital management policies and procedures
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding year.
The Company’s debt and capital structure comprises the following:
2023 2022
£’000 £’000
Debt
Bank loan 32,821 36,892
Equity
Called-up share capital 11,990 12,200
Reserves 290,470 269,229
302,460 281,429
Total debt and equity 335,281 318,321
176777 Schroders Japan Growth Fund Annual Report Pt4.qxp_176777 Schroders Japan Growth Fund Annual Report Pt4 28/09/2023 21:44 Page 61
62
Schroder Japan Trust plc
Notes to the Accounts
for the year ended 31 July 2023
The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise the capital
return to shareholders through an appropriate level of gearing. The Board’s policy is to limit gearing to 25%. Gearing for this
purpose is defined as borrowings used for investment purposes, less cash, expressed as a percentage of net assets.
2023 2022
£’000 £’000
Borrowings used for investment purposes, less cash 28,740 31,266
Net assets 302,460 281,429
Gearing
9.5% 11.1%
The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing
basis. This review includes:
– the planned level of gearing, which takes into account the Manager’s views on the market;
– the need to buy back shares for cancellation, which takes into account the share price discount;
– the opportunity for issues of new shares; and
– the level of dividend distribution in excess of that which is required to be distributed.
176777 Schroders Japan Growth Fund Annual Report Pt4.qxp_176777 Schroders Japan Growth Fund Annual Report Pt4 28/09/2023 21:44 Page 62
Annual Report and Accounts
for the year ended 31 July 2023
Annual General Meeting
63
Annual General Meeting – Recommendations
The Annual General Meeting (“AGM”) of the Company will
be held on Tuesday, 5 December 2023 at 1.00 p.m. The
formal Notice of Meeting is set out on page64.
The following information is important and requires your
immediate attention. If you are in any doubt about the
action you should take, you should consult an independent
financial adviser, authorised under the Financial Services
and Markets Act 2000. If you have sold or transferred all of
your ordinary shares in the Company, please forward this
document with its accompanying form of proxy at once to
the purchaser or transferee, or to the stockbroker, bank or
other agent through whom the sale or transfer was
effected, for onward transmission to the purchaser or
transferee.
Ordinary business
Resolutions 1 to 11 are all ordinary resolutions and ordinary
business. Resolutions 12 and 13 are ordinary resolutions and
special business. Resolution 1 is a required resolution.
Resolution2 invites shareholders to approve the final dividend.
Resolution 3 invites shareholders to approve the Directors
Remuneration Policy. Resolution4 concerns the Remuneration
Report set out on pages 36–37. Resolutions 5 to 9 invite
shareholders to re-elect each of the Directors for another year,
following the recommendations of the nomination committee,
set out on pages34 and 35 (their biographies are set out on
pages 26 and 27). Resolutions 10 and 11 concern the
re-appointment and remuneration of the Company’s auditors,
discussed in the audit and risk committee Report on pages31
and 32.
Special business
Resolution 12: change of investment
policy (ordinary resolution)
Resolution 12 set out in the Notice of AGM is an ordinary
resolution. The Board is proposing that the Investment Policy
be amended to allow the Company to use Contracts for
Difference (“CFDs”) to provide exposure to Japanese equities on
a geared basis as an alternative to utilising bank borrowings.
Derivatives (including CFDs) may currently only be used for
efficient portfolio management to protect the portfolio against
market risk. The Board will continue to monitor and review the
Company’s gearing level on an ongoing basis. It should be
stressed that the majority of the Company’s exposure to
Japanese equities will continue to be through direct investment,
not CFDs. The limits on exposure to individual companies and
groups will be calculated on the basis that the Company had
acquired the securities to which any CFD is providing exposure.
The proposed New Investment Policy is as follows:
“The Company may use gearing (including the use of CFDs) to
enhance performance but investment exposure will not exceed
125% of net asset value.”
Resolution 13: Directors’ authority to allot shares
(ordinary resolution) and Resolution14: power to
disapply pre-emption rights (special resolution)
The Directors are seeking authority to allot a limited number
of unissued ordinary shares for cash without first offering them
to existing shareholders in accordance with statutory pre-
emption procedures.
Appropriate resolutions will be proposed at the forthcoming
AGM and are set out in full in the Notice of AGM. An ordinary
resolution will be proposed to authorise the Directors to allot
shares up to a maximum aggregate nominal amount of
£597,644 (being 5% of the issued share capital as at
27September 2023). A special resolution will also be proposed
to give the Directors authority to allot securities for cash on a
non pre-emptive basis up to a maximum aggregate nominal
amount of £597,644 (being 5% of the Company’s issued share
capital as at 27 September 2023).
The Directors do not intend to allot shares pursuant to these
authorities other than to take advantage of opportunities in the
market as they arise and only if they believe it to be
advantageous to the Company’s existing shareholders to do so
and when it would not result in any dilution of NAV per share.
If approved, both of these authorities will expire at the
conclusion of the AGM in 2024 unless renewed, varied or
revoked earlier.
Resolution 15: authority to make market
purchases of the Company’s own shares (special
resolution)
At the AGM held on 5 December 2022, the Company was
granted authority to make market purchases of up to
18,261,923 ordinary shares of 10p each for cancellation. As at
27 September 2023 2,080,907shares have been bought back
under this authority granted on 5 December 2022 and the
Company therefore has remaining authority to purchase up to
16,181,016 ordinary shares. This authority will expire at the
forthcoming AGM.
The Directors believe it is in the best interests of the Company
and its shareholders to have a general authority for the
Company to buy back its ordinary shares in the market as they
keep under review the share price discount to NAV and the
purchase of ordinary shares. A special resolution will be
proposed at the forthcoming AGM to give the Company
authority to make market purchases of up to 14.99% of the
ordinary shares in issue as at the date of the Notice of the AGM.
The Directors will exercise this authority only if the Directors
consider that any purchase would be for the benefit of the
Company and its shareholders, taking into account relevant
factors and circumstances at the time. Any shares so purchased
would be cancelled or held in treasury for potential reissue. If
renewed, the authority to be given at the 2022 AGM will lapse
at the conclusion of the AGM in 2024 unless renewed, varied
or revoked earlier.
Resolution 16: notice period for general meetings
(special resolution)
Resolution 16 set out in the Notice of AGM is a special
resolution and will, if passed, allow the Company to hold
general meetings (other than annual general meetings) on a
minimum notice period of 14 clear days, rather than 21 clear
days as required by the Companies Act 2006. The approval will
be effective until the Company’s next AGM to be held in 2024.
The Directors will only call general meetings on 14 clear days’
notice when they consider it to be in the best interests of the
Company’s shareholders and will only do so if the Company
offers facilities for all shareholders to vote by electronic means
and when the matter needs to be dealt with expediently.
Recommendations
The Board considers that the resolutions relating to the above
items of special business are in the best interests of
shareholders as a whole. Accordingly, the Board unanimously
recommends to shareholders that they vote in favour of the
above resolutions and the other resolutions to be proposed at
the forthcoming AGM, as they intend to do in respect of their
own beneficial holdings.
176777 Schroders Japan Growth Fund Annual Report Pt5.qxp_176777 Schroders Japan Growth Fund Annual Report Pt5 28/09/2023 21:45 Page 63
Schroder Japan Trust plc
64
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of
Schroder Japan Trust plc will be held on Tuesday, 5December
2023 at 1.00p.m. at 1 London Wall Place, London EC2Y5AU
to consider the following resolutions of which resolutions1 to
13 will be proposed as ordinary resolutions and resolutions14
to 15 will be proposed as special resolutions:
1. To receive the Report of the Directors and the audited
Accounts for the year ended 31July 2023.
2. To approve a final dividend of 5.40p per share for the year
ended 31July 2023.
3. To approve the Directors’ Remuneration Policy.
4. To approve the Directors’ Remuneration Report for the
year ended 31July 2023.
5. To approve the re-election of Alan Gibbs as a Director of
the Company.
6. To approve the re-election of Angus Macpherson as a
Director of the Company.
7. To approve the re-election of Belinda Richards as a Director
of the Company.
8. To approve the re-election of Helena Coles as a Director of
the Company.
9. To approve the re-election of Philip Kay as a Director of the
Company.
10. To re-appoint Deloitte LLP as auditors to the Company.
11. To authorise the Directors to determine the remuneration
of Deloitte LLP as auditors to the Company.
12. To consider, and if thought fit, pass the following
resolution as an ordinary resolution:
“THAT the Company's investment policy be amended by
expanding the current limit on gearing at 25% of
shareholders' funds to allow for the use of Contracts for
Difference (“CFDs”) to gain exposure to the Japanese
market, with a new restriction as follows:-
“The Company may use gearing to enhance performance
(including the use of CFDs) but investment exposure will
not exceed 125% of net asset value.”
13. To consider, and if thought fit, pass the following
resolution as an ordinary resolution:
“THAT in substitution for all existing authorities the
Directors be generally and unconditionally authorised
pursuant to section 551 of the Companies Act 2006 (the
“Act”) to exercise all the powers of the Company to allot
relevant securities (within the meaning of section 551 of
the Act) up to an aggregate nominal amount of £
597,644
(being 5% of the issued ordinary share capital, excluding
shares held in treasury, as at 27 September 2023) for a
period expiring (unless previously renewed, varied or
revoked by the Company in general meeting) at the
conclusion of the next Annual General Meeting of the
Company, but that the Company may make an offer or
agreement which would or might require relevant
securities to be allotted after expiry of this authority and
the Board may allot relevant securities in pursuance of that
offer or agreement.”
14. To consider and, if thought fit, to pass the following
resolution as a special resolution:
“That, subject to the passing of Resolution 13 set out
above, the Directors be and are hereby empowered,
pursuant to Section 571 of the Act, to allot equity securities
(including any shares held in treasury) (as defined in
section 560(1) of the Act) pursuant to the authority given
in accordance with section 551 of the Act by the said
Resolution 13 and/or where such allotment constitutes an
allotment of equity securities by virtue of section560(2) of
the Act as if Section 561(1) of the Act did not apply to any
such allotment, provided that this power shall be limited
to the allotment of equity securities up to an aggregate
nominal amount of £597,644 (representing 5% of the
aggregate nominal amount of the share capital in issue as
at 27September 2023); and provided that this power shall
expire at the conclusion of the next Annual General
Meeting of the Company but so that this power shall
enable the Company to make offers or agreements before
such expiry which would or might require equity securities
to be allotted after such expiry.”
15. To consider and, if thought fit, to pass the following
resolution as a special resolution:
“THAT the Company be and is hereby generally and
unconditionally authorised in accordance with Section701
of the Companies Act 2006 (the “Act”) to make market
purchases (within the meaning of Section693 of the Act)
of ordinary shares of 10p each in the capital of the
Company (“Share”) at whatever discount the prevailing
market price represents to the prevailing net asset value
per Share provided that:
(a) the maximum number of Shares which may be
purchased is 17,917,392, representing 14.99% of the
Company’s issued ordinary share capital as at
27September 2023 (excluding treasury shares);
(b)
the maximum price (exclusive of expenses) which may
be paid for a Share shall not exceed the higher of;
i) 105% of the average of the middle market
quotations for the Shares as taken from the
London Stock Exchange Daily Official List for the
five business days preceding the date of
purchase; and
ii) the higher of the last independent bid and the
highest current independent bid on the London
Stock Exchange;
(c) the minimum price (exclusive of expenses) which may
be paid for a Share shall be 10p, being the nominal
value per Share;
(d) this authority hereby conferred shall expire at the
conclusion of the next Annual General Meeting of the
Company in 2024 (unless previously renewed, varied
or revoked by the Company prior to such date);
(e) the Company may make a contract to purchase
Shares under the authority hereby conferred which
will or may be executed wholly or partly after the
expiration of such authority and may make a purchase
of Shares pursuant to any such contract; and
(f) any Shares so purchased will be cancelled or held in
treasury.”
16. To consider and, if thought fit, to pass the following
resolution as a special resolution:
“That a general meeting, other than an Annual General
Meeting, may be called on not less than 14 clear days’
notice.”
By order of the Board
For and on behalf of Registered Office:
Schroder Investment Management Limited 1 London Wall Place,
Registered number: 02930057 London EC2Y 5AU
28 September 2023
176777 Schroders Japan Growth Fund Annual Report Pt5.qxp_176777 Schroders Japan Growth Fund Annual Report Pt5 28/09/2023 21:45 Page 64
Annual Report and Accounts
for the year ended 31 July 2023
Annual General Meeting
65
1. Ordinary shareholders are entitled to attend and vote at
the meeting and to appoint one or more proxies, who
need not be a shareholder, as their proxy to exercise all or
any of their rights to attend, speak and vote on their behalf
at the meeting.
A proxy form is attached. If you wish to appoint a person
other than the Chairman as your proxy, please insert the
name of your chosen proxy holder in the space provided
at the top of the form. If the proxy is being appointed in
relation to less than your full voting entitlement, please
enter in the box next to the proxy holder’s name the
number of shares in relation to which they are authorised
to act as your proxy. If left blank your proxy will be deemed
to be authorised in respect of your full voting entitlement
(or if this proxy form has been issued in respect of a
designated account for a shareholder, the full voting
entitlement for that designated account). Additional proxy
forms can be obtained by contacting the Company’s
Registrars, Equiniti Limited, on 08000320641 or +44(0) 121
415 0207 for overseas callers, or you may photocopy the
attached proxy form. Please indicate in the box next to the
proxy holder’s name the number of shares in relation to
which they are authorised to act as your proxy. Please also
indicate by ticking the box provided if the proxy instruction
is one of multiple instructions being given. Completion and
return of a form of proxy will not preclude a member from
attending the Annual General Meeting and voting in
person.
On a vote by show of hands, every ordinary shareholder
who is present in person has one vote and every duly
appointed proxy who is present has one vote. On a poll
vote, every ordinary shareholder who is present in person
or by way of a proxy has one vote for every share of which
he/she is a holder.
The “Vote Withheld” option on the proxy form is provided
to enable you to abstain on any particular resolution.
However it should be noted that a “Vote Withheld” is not a
vote in law and will not be counted in the calculation of the
proportion of the votes ‘For’ and ‘Against’ a resolution.
A proxy form must be signed and dated by the shareholder
or his or her attorney duly authorised in writing. In the
case of joint holdings, any one holder may sign this form.
The vote of the senior joint holder who tenders a vote,
whether in person or by proxy, will be accepted to the
exclusion of the votes of the other joint holder and for this
purpose seniority will be determined by the order in which
the names appear on the Register of Members in respect
of the joint holding. To be valid, proxy form(s) must be
completed and returned to the Company’s Registrars,
Equiniti Limited, Aspect House, Spencer Road, Lancing,
West Sussex BN996DA, in the enclosed envelope together
with any power of attorney or other authority under which
it is signed or a copy of such authority certified notarially,
to arrive no later than 48 hours before the time fixed for
the meeting, or an adjourned meeting. Shareholders may
also appoint a proxy to vote on the resolutions being put
to the meeting electronically at www.sharevote.co.uk.
Shareholders who are not registered to vote electronically,
will need to enter the Voting ID, Task ID and Shareholder
Reference Number set out in their personalised proxy
form. Alternatively, shareholders who have already
registered with Equiniti’s Shareview service can appoint a
proxy by logging onto their portfolio at
www.shareview.co.uk using their user ID and password.
Once logged in, click
“view” on the “My Investments” page,
click on the link to vote, then follow the on-screen instructions
.
The on-screen instructions give details on how to complete
the appointment process. Please note that to be valid, your
proxy instructions must be received by Equiniti no later
than 1.00 p.m. on 1 December 2023. If you have any
difficulties with online voting, you should contact the
shareholder helpline on 08000320641 (or +44(0) 121 415
0207 for overseas callers).
If an ordinary shareholder submits more than one valid
proxy appointment, the appointment received last before
the latest time for receipt of proxies will take precedence.
Shareholders may not use any electronic address provided
either in this Notice of Annual General Meeting or any
related documents to communicate with the Company for
any purposes other than expressly stated.
Representatives of shareholders that are corporations will
have to produce evidence of their proper appointment
when attending the Annual General Meeting.
2. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006
to enjoy information rights (a “Nominated Person”) may,
under an agreement between him or her and the
shareholder by whom he or she was nominated, have a
right to be appointed (or to have someone else appointed)
as a proxy for the Annual General Meeting. If a Nominated
Person has no such proxy appointment right or does not
wish to exercise it, he or she may, under any such
agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights.
The statement of the rights of ordinary shareholders in
relation to the appointment of proxies in note 1 above
does not apply to Nominated Persons. The rights
described in that note can only be exercised by ordinary
shareholders of the Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only
those shareholders registered in the Register of Members
of the Company business at 6.30 p.m. on 1 December
2023, or 6.30 p.m. two days prior to the date of an
adjourned meeting, shall be entitled to attend and vote at
the meeting in respect of the number of shares registered
in their name at that time. Changes to the Register of
Members after 6.30 p.m. on 1 December 2023 shall be
disregarded in determining the right of any person to
attend and vote at the meeting.
4. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so by using the procedures described in the CREST
manual. The CREST manual can be viewed at
www.euroclear.com. A CREST message appointing a proxy
(a “CREST proxy instruction”) regardless of whether it
constitutes the appointment of a proxy or an amendment
to the instruction previously given to a previously
appointed proxy must, in order to be valid, be transmitted
so as to be received by the issuer’s agent (ID RA19) by the
latest time for receipt of proxy appointments.
Explanatory Notes to the Notice of Meeting
Schroder Japan Trust plc
66
Explanatory Notes to the Notice of Meeting
5. Copies of the terms of appointment of the non-executive
Directors and a statement of all transactions of each
Director and of his family interests in the shares of the
Company, will be available for inspection by any member
of the Company at the registered office of the Company
during normal business hours on any weekday (English
public holidays excepted) and at the Annual General
Meeting by any attendee, for at least 15 minutes prior to,
and during, the Annual General Meeting. None of the
Directors has a contract of service with the Company.
6. The biographies of the Directors offering themselves for
election and re-election are set out on pages26 and 27 of
the Company’s annual report and accounts for the year
ended 31 July 2023.
7. As at 27 September 2023, 119,528,965 ordinary shares of
10 pence each were in issue (no shares were held in
treasury). Therefore the total number of voting rights of
the Company as at 27 September 2023 was 119,528,965.
8. A copy of this notice of meeting, which includes details of
shareholder voting rights, together with any other
information as required under Section 311A of the
Companies Act 2006, is available from the Company’s
webpages,
https://www.schroders.com/japantrust.
9. Pursuant to Section 319A of the Companies Act 2006, the
Company must cause to be answered at the Annual
General Meeting any question relating to the business
being dealt with at the Annual General Meeting which is
put by a member attending the meeting, except in certain
circumstances, including if it is undesirable in the interests
of the Company or the good order of the meeting that the
question be answered or if to do so would involve the
disclosure of confidential information.
10. The Company’s privacy policy is available on its webpages.
https://www.schroders.com/japantrust. Shareholders can
contact Equiniti for details of how Equiniti processes their
personal information as part of the AGM.
176777 Schroders Japan Growth Fund Annual Report Pt5.qxp_176777 Schroders Japan Growth Fund Annual Report Pt5 28/09/2023 21:45 Page 66
Annual Report and Accounts
for the year ended 31 July 2023
Annual General Meeting
67
Definitions of Terms and Performance Measures
The terms and performance measures below are those
commonly used by investment companies to assess values,
investment performance and operating costs. Numerical
calculations are given where relevant. Some of the financial
measures below are classified Alternative Performance
Measures (“APMs”) as defined by the European Securities
and Markets Authority. Under this definition, APMs include
a financial measure of historical financial performance or
financial position, other than a financial measure defined
or specified in the applicable financial reporting
framework. APMs have been marked with an asterisk.
Net asset value (”NAV”) per share
The NAV per share of 252.25p (2022: 230.68p) represents the
net assets attributable to equity shareholders of £302,460,000
(2022: £281,429,000) divided by the number of shares in issue
of 119,903,965 (2022: 122,000,562).
The change in the NAV amounted to +9.4% (2022: -0.7%) over
the year. However this performance measure excludes the
positive impact of dividends paid out by the Company during
the year. When these dividends are factored into the
calculation, the resulting performance measure is termed the
“total return”. Total return calculations and definitions are given
below.
Total return*
The combined effect of any dividends paid, together with the
rise or fall in the share price or NAV per share. Total return
statistics enable the investor to make performance
comparisons between investment companies with different
dividend policies. Any dividends received by a shareholder are
assumed to have been reinvested in either the assets of the
Company at its NAV per share at the time the shares were
quoted ex-dividend (to calculate the NAV per share total return)
or in additional shares of the Company (to calculate the share
price total return).
The NAV total return for the year ended 31 July 2023 is
calculated as follows:
Opening NAV at 31/7/22 230.68p
Closing NAV at 31/7/23 252.25p
Dividend NAV on
received XD date XD date Factor
4.9p 3/11/22 228.35p 1.0214
NAV total return, being the closing NAV,
multiplied by the factor, expressed as a
percentage increase in the opening NAV: +11.7%
The NAV total return for the year ended 31 July 2022 is
calculated as follows:
Opening NAV at 31/7/21 232.40p
Closing NAV at 31/7/22 230.68p
Dividend NAV on
received XD date XD date Factor
4.3p 4/11/21 248.09p 1.0173
NAV total return, being the closing NAV,
multiplied by the factor, expressed as a
percentage increase in the opening NAV: +1.0%
The share price total return for the year ended 31 July 2023 is
calculated as follows:
Opening share price at 31/7/22 202.00p
Closing share price at 31/7/23 234.00p
Share
Dividend price on
received XD date XD date Factor
4.9p 3/11/22 200.5p 1.0244
Share price total return, being the
closing share price, multiplied by
the factor, expressed as a percentage
increase in the opening share price: +18.7%
The share price total return for the year ended 31 July 2022 is
calculated as follows:
Opening share price at 31/7/21 210.00p
Closing share price at 31/7/22 202.00p
Share
Dividend price on
received XD date XD date Factor
4.3p 4/11/21 223.00p 1.0193
Share price total return, being the
closing share price, multiplied by
the factor, expressed as a percentage
increase in the opening share price: –2.0%
Benchmark
The measure against which the Company compares its
performance. The Benchmark is the TSE First Section Total
Return Index in sterling terms.
Discount/premium*
The amount by which the share price of an investment trust is
lower (discount) or higher (premium) than the NAV per share.
If shares are trading at a discount, investors would be paying
less than the value attributable to the shares by reference to
the underlying assets. A premium or discount is generally the
consequence of supply and demand for the shares on the stock
market The discount or premium is expressed as a percentage
of the NAV per share. The discount at the year end amounted
to 7.2% (31 July 2022: 12.4%), as the closing share price at
234.00p (31 July 2022: 202.00p) was 7.2% (31 March 2022:
176777 Schroders Japan Growth Fund Annual Report Pt5.qxp_176777 Schroders Japan Growth Fund Annual Report Pt5 28/09/2023 21:45 Page 67
Schroder Japan Trust plc
68
Definitions of Terms and Performance Measures
12.4%) lower than the closing NAV of 252.25p (31 July 2022:
230.68p).
Gearing*
The gearing percentage reflects the amount of borrowings
(i.e.bank loans or overdrafts) which the Company has drawn
down and invested in the market. This figure is indicative of the
extra amount by which shareholders’ funds would move if the
Company’s investments were to rise or fall. Gearing is define
as: borrowings used for investment purposes, less cash,
expressed as a percentage of net assets. The gearing figure at
the year end is calculated as follows:
2023 2022
£’000 £’000
Borrowings used for investment
purposes, less cash 28,740 31,266
Net assets 302,460 281,429
Gearing 9.5% 11.1%
Leverage*
For the purpose of the Alternative Investment Fund Managers
(AIFM) Directive, leverage is any method which increases the
Company’s exposure, including the borrowing of cash and the
use of derivatives. It is expressed as the ratio of the Company’s
exposure to its net asset value and is required to be calculated
both on a “Gross” and a “Commitment” method. Under the
Gross method, exposure represents the sum of the absolute
values of all positions, so as to give an indication of overall
exposure. Under the Commitment method, exposure is
calculated in a similar way, but after netting off hedges which
satisfy certain strict criteria.
Ongoing Charges*
Ongoing Charges is calculated in accordance with the AIC’s
recommended methodology and represents the management
fee and all other operating expenses excluding finance costs
and transaction costs, amounting to £2,676,000 (2022:
£2,635,000), expressed as a percentage of the average daily net
asset values during the year of £286.2 million (2022:
£285.8million).
*Alternative performance Measures (“APMs”).
176777 Schroders Japan Growth Fund Annual Report Pt5.qxp_176777 Schroders Japan Growth Fund Annual Report Pt5 28/09/2023 21:45 Page 68
Shareholder Information
Webpages and share price information
The Company has dedicated webpages, which may be found at
https://www.schroders.com/japantrust. The webpages have
been designed to be utilised as the Company’s primary method
of electronic communication with shareholders. It contains
details of the Company’s ordinary share price and copies of
annual reports and other documents published by the
Company as well as information on the Directors, terms of
reference of committees and other governance arrangements.
In addition, the webpages contain links to announcements
made by the Company to the market, Equiniti’s shareview
service and Schroders’ website. There is also a section entitled
“How to Invest”.
The Company releases its NAV on both a cum and ex-income
basis to the market on a daily basis.
Share price information may also be found in the Financial
Times and on the Company’s webpages.
Association of Investment Companies
The Company is a member of the Association of Investment
Companies. Further information on the Association can be
found on its website,
www.theaic.co.uk.
Individual Saving Account (“ISA”) status
The Company’s shares are eligible for stocks and shares ISAs.
Non-Mainstream Pooled Investments
status
The Company currently conducts its affairs so that its shares
can be recommended by IFAs to ordinary retail investors in
accordance with the FCA’s rules in relation to non-mainstream
investment products and intends to continue to do so for the
foreseeable future. The Company’s shares are excluded from
the FCA’s restrictions which apply to non-mainstream
investment products because they are shares in an investment
trust.
Financial calendar
Half year results announced March
Financial year end 31 July
Annual results announced September
Final dividend paid December
Annual General Meeting December
Alternative Investment Fund Managers
(“AIFM”) Directive
Certain pre-sale, regular and periodic disclosures required by
the AIFM Directive may be found either in this annual report or
on the Company’s webpages.
The Company’s leverage policy and details of limits on leverage
required under the AIFM Directive are published on the
Company’s webpages.
Leverage
The Company’s leverage policy and details of its leverage ratio
calculation and exposure limits as required by the AIFM
Directive are published on the Company’s webpages and within
this report. The Company is also required to publish periodically
its actual leverage exposures. As at 31 July 2023 these were:
Leverage exposure Maximum ratio Actual ratio
Gross method 200.0% 121.9%
Commitment method 200.0% 120.8%
Illiquid assets
As at the date of this report, none of the Company’s assets are
subject to special arrangements arising from their illiquid
nature.
Remuneration disclosures
Quantitative remuneration disclosures to be made in this
annual report in accordance with FCA Handbook rule
FUND3.3.5 may also be found in the AIFM’s website
www.schroders.com/rem-disclosures, which will have the
information for the reporting period 31 December 2022.
Publication of Key Information Document (“KID”)
by the AIFM
Pursuant to the Packaged Retail and Insurance Based Products
(“PRIIPs”) Regulation, the Manager, as the Company’s AIFM, is
required to publish a short KID on the Company. KIDs are
designed to provide certain prescribed information to retail
investors, including details of potential returns under different
performance scenarios and a risk/reward indicator. The
Company’s KID is available on its webpages.
176777 Schroders Japan Growth Fund Annual Report Pt5.qxp_176777 Schroders Japan Growth Fund Annual Report Pt5 28/09/2023 21:45 Page 69
https://www.schroders.com/japantrust
Directors
Philip Kay (Chairman)
Helena Coles
Alan Gibbs
Angus Macpherson
Belinda Richards
Advisers
Alternative Investment Fund Manager
(“Manager”)
Schroder Unit Trusts Limited
1 London Wall Place
London EC2Y 5AU
Investment Manager and Company Secretary
Schroder Investment Management Limited
1 London Wall Place
London EC2Y 5AU
Telephone: 020 7658 3847
Registered Office
1 London Wall Place
London EC2Y 5AU
Depositary and Custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Lending Bank
Sumitomo Banking Corporation, London Branch
99 Queen Victoria Street
London EC4V 4EH
Corporate Broker
Winterflood Securities Limited
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London EC4R 2GA
Independent Auditor
Deloitte LLP
9 Haymarket Square
Edinburgh
EH3 8RY
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder Helpline 0800 032 0641*
Website:
www.shareview.co.uk
*Calls to this number are free of charge from UK
landlines.
Communications with shareholders are mailed to the
address held on the register. Any notifications and
enquiries relating to shareholdings, including a change of
address or other amendment should be directed to Equiniti
Limited at the address above.
Shareholder enquiries
General enquiries about the Company should be addressed to
the Company Secretary at the address set out above.
Dealing Codes
ISIN: GB0008022849
SEDOL: 0802284
Ticker: SJG
Global Intermediary Identification Number (GIIN)
7T0909.99999.SL.826
Legal Entity Identifier (LEI)
549300SSPK3AXNJOC673
The Company’s privacy notice is
available on its webpage.
176777 Schroders Japan Growth Fund Annual Report Pt5.qxp_176777 Schroders Japan Growth Fund Annual Report Pt5 28/09/2023 21:45 Page 70