Annual Report 2025
A Year of Growth
The rising sun reveals a new
landscape, Mount Fuji holds quiet
strength as the cranes chart widening
horizons. The scene signals AJOT’s
transition into a new phase, shaped
by the increased scale as a result of
the M&A activity during the year.
AN ACTIVE APPROACH TO
INVESTING RESPONSIBLY
As an active investor, AVI considers all drivers relevant
to each company’s success, offering suggestions to
enhance sustainable corporate value in consideration of all
stakeholders and in the best long-term interest of our clients.
We aim to build strong relationships with the boards and
management of our portfolio companies. Through constructive
engagement, we encourage and expect them to take
meaningful action in the context of long-term value creation.
AVI Japan Opportunity Trust plc (“AJOT”
or “the Company”) invests in a focused
portfolio of quality small and mid-cap listed
companies in Japan that have a large
portion of their market capitalisation in cash
or realisable assets.
Net assets:
£425 million*
(2024: £212 million)
Launch date:
23 October 2018
Annualised return:
9.7%**
(2024: 8.9%)
Ongoing Charges Ratio
†
:
1.4%***
(2024: 1.5%)
* As at 31 December 2025
** Source: Morningstar, annualised return net of fees (in GBP) as at 31 December 2025
*** As at 31 December 2025, includes management fee, marketing and administration
costs.
† For all Alternative Performance Measures, please refer to the definitions in the Glossary
on pages 76 and 77.
Annual Report / Welcome
Annual Report 2025
Read more about our ESG Perspective on pages 32 and 33 of the Annual Report.
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AVI Japan Opportunity Trust plc / Annual Report 2025
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AVI Japan Opportunity Trust plc / Annual Report 2025
CONTENTS
Strategic Report:
Company Performance 2
Company Overview 4
Chairman’s Statement 6
Case Study 8
Our Top 10 Holdings 10
Investment Manager’s Report 12
Portfolio Construction 20
AVI Japan Investment Team 21
Investment Portfolio 22
Business Model 24
Directors’ Duties 25
Key Performance Indicators 30
ESG Policy 32
Principal Risks and Uncertainties 34
Governance:
Directors 36
Directors’ Report 37
Corporate Governance Statement 40
Directors’ Remuneration Report 45
Statement of Directors’ Responsibilities in Relation
to the Annual Report and Financial Statements 48
Report from the Audit Committee 49
Independent Auditor’s Report 51
Financial Statements:
Statement of Comprehensive Income 56
Statement of Changes in Equity 57
Balance Sheet 58
Statement of Cash Flows 59
Notes to the Financial Statements 60
Shareholder Information:
AIFMD Disclosures 75
Glossary (unaudited) 76
Investing in the Company 78
Company Information 79
The Company’s website, which can be found at
www.ajot.co.uk, includes useful information on
the Company, such as price performance, news,
monthly and quarterly reports, as well as previous
Annual and Half-Year reports.
avi-japan-opportunity-trust
u/avi-ajot
@AVIJapan
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100
120
140
160
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200
220
+95%
+86%
+48%
Dec 18 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Jun 24 Jun 25Dec 19 Dec 20 Dec 21 Dec 22 Dec 23 Dec 24 Dec 25
S
Strategic Report
Overview of the Year
S
Strategic Report
Reform in Full Bloom
S
Strategic Report
Our Performance
The portfolio is
well placed with a
concentrated yet diverse
collection of high quality,
lowly valued companies,
with multiple levers
for re-ratings.
Net Asset Value, Share Price
and Benchmark
AVI Japan Opportunity Trust NAV TR
AVI Japan Opportunity Trust Share Price TR
MSCI Japan Small Cap Index (£ adjusted total return)
The rising sun reveals a new land-
scape, the mountain holding quiet
strength as the cranes chart widening
horizons. The scene signals AJOT’s
transition into a new phase, shaped by
increased scale and renewed capability
to pursue opportunity with greater
confidence.
AVI Japan Opportunity Trust plc / Annual Report 2025
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AVI Japan Opportunity Trust plc / Annual Report 2025
01
31 December 2025 31 December 2024
Net Asset Value £425,291,000 £211,981,000
Net Asset Value per Share (total return) for the year* 14.7% 20.9%
Share price total return for the year* 15.3% 19.9%
Comparator Benchmark
MSCI Japan Small-Cap Index (£ adjusted total return)
19.8% 6.2%
Portfolio Valuation*
Net Cash as % of Market Cap
Net Financial Value as % of Market Cap
2
EV/EBIT
2
FCF Yield
12.3%
37.8%
9.5x
5.9%
21.2%
48.4%
8.7x
6.7%
Year to
31 December 2025
Year to
31 December 2024
Earnings and Dividends
Profit/(loss) before tax
Investment income
Revenue earnings per share
Capital earnings per share
Total earnings per share
Ordinary dividends per share
Special dividends per share
£41.9m
£6.3m
2.94p
25.20p
28.14p
2.20p
0.60p
£38.6m
£4.8m
2.21p
25.00p
27.21p
2.20p
–
Ongoing Charge*
Management, marketing and other expenses
(as a percentage of average Shareholders’ funds) 1.4% 1.5%
31 December 2025 31 December 2024
Net asset value per share 174.7p 155.4p
Share price 172.0p 152.3p
Discount (difference between share price and
net asset value)* 1.6% 2.1%
2025 Year’s Highs/Lows High Low
Net asset value per share 186.6p 149.2p
1 Since inception on 23 October 2018.
2 TheportfolioNFVandEV/EBITestimatesdiffertothereportedfiguresintheDecember2025Factsheetduetoapostperiod-end
change in the NFV calculation for Mitsubishi Logistics.
* ForallAlternativePerformanceMeasures,pleaserefertothedefinitionsintheGlossaryonpages76and77.
Performance Summary
Strategic Report / Company Performance
NAV TR (GBP)
Since
inception 2025 2024 2023 2022 2021 2020 2019 2018
1
AJOT 94.8% 14.7% 20.9% 15.8% -4.3% 12.3% -1.4% 19.0% -4.0%
MSCI Japan Small Cap 48.0% 19.8% 6.2% 6.9% -1.0% -1.4% 3.2% 14.7% -6.0%
Relative 46.8% -5.2% 14.7% 8.8% -3.4% 13.7% -4.6% 4.3% 2.0%
AVI Japan Opportunity Trust plc / Annual Report 2025
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03
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* For all Alternative Performance Measures, please refer to the definitions in the Glossary on pages 76 and 77.
60
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100
120
140
160
180
200
220
+95%
+86%
+48%
Dec 18 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Jun 24 Jun 25Dec 19 Dec 20 Dec 21 Dec 22 Dec 23 Dec 24 Dec 25
AVI Japan Opportunity Trust NAV TR AVI Japan Opportunity Trust Share Price TR MSCI Japan Small Cap Index (£ adjusted total return)
-15
-10
-5
0
5
10
15
Dec 18 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Jun 24 Jun 25Dec 19 Dec 20 Dec 21 Dec 22 Dec 23 Dec 24 Dec 25
AVI Japan Opportunity Trust plc
Average Premium: 0.1%
Net Asset Value, Share Price* and Benchmark
Premium or Discount to Net Asset Value (%)
AVI Japan Opportunity Trust plc / Annual Report 2025
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AVI seeks to unlock this value through proactive
engagement with management and capitalising
on the increased focus on corporate governance,
balance sheet efficiency and returns to
Shareholders in Japan.
The companies in the portfolio are selected for their
high quality, whether having strong prospects for
profit growth or economically resilient earnings.
By investing in companies whose corporate value
should grow over time, AVI can be patient in its
engagement to unlock value.
Benchmark
The MSCI Japan Small Cap Index.
The Association of Investment Companies
(“The AIC”)
The Company is a member of The AIC.
Strategic Report / Company Overview
OUR PURPOSE
Discovering overlooked and under-researched
investment opportunities, utilising shareholder
engagement to unlock long-term value.
ABOUT ASSET
VALUE INVESTORS
The Company has appointed Asset Value
Investors Limited (“AVI” or the “Investment
Manager”) as its Alternative Investment
Fund Manager.
Asset Value Investors (“AVI”) has been investing in Japan
for over four decades. AVI focuses on undervalued
companies with resilient and growing earnings, that are
overlooked by investors due to non-fundamental factors.
By utilising 40 years of capital markets experience,
having analysed and met with hundreds of Japanese
companies across a wide variety of industries, AVI works
with management teams, making suggestions on how
to grow long-term corporate value and address share
price undervaluation.
AVI’s engagement focuses on four main areas of
improvement: capital efficiency, ESG, shareholder
communication and operational strategy. While
AVI seeks to work privately and collaboratively with
management teams, if progress is not made, AVI will
consider sharing its ideas with other shareholders in a
public forum.
COMPANY OBJECTIVES AND STRATEGY
AJOT aims to provide Shareholders with total returns in excess of the MSCI Japan
Small Cap Index in GBP (“MSCI Japan Small Cap”), through the active management
of a focused portfolio of equity investments listed or quoted in Japan, which have been
identified by Asset Value Investors Limited as undervalued and typically have a significant
proportion of their market capitalisation held in cash, listed securities and/or other
realisable assets.
From left to right: Shuntaro Shimizu, Luke Hutcherson, Nicola Takada Wood, Kaz Sakai
Capital Structure
As at 31 December 2025, the Company’s issued
share capital comprised 247,873,823 Ordinary
Shares of 1p each, of which 4,450,716 were held
in treasury and therefore total voting rights attached
to Ordinary Shares in issue were 243,423,107.
As at 11 March 2026 it comprised 247,873,823
Ordinary Shares, 26,800,429 of which were held in
treasury, and therefore total voting rights attached
to Ordinary Shares in issue were 221,073,394.
Japan Economic Snapshot:
Japan
Relative to
Global
GDP
1
$4.0tn 4th largest
Population
2
123m 1.5%
Fortune Global 500
Companies 38 7.6%
1 World Bank Data (2024).
2 Source: International Monetary Fund (2025).
* For definitions, see Glossary on pages 76 and 77.
Annual General Meeting
The Company’s Annual General Meeting (“AGM”) will be held at 11.30 a.m. on Tuesday, 5 May 2026 at
the offices of the Association of Investment Companies, 9th Floor, 24 Chiswell Street, London, EC1Y 4YY.
Shareholders will be able to submit questions to the Board and AVI ahead of the AGM and answers to these, as
well as AVI’s presentation, will be made available on the Company’s website. Please refer to the Notice of AGM
for further information and the resolutions which will be proposed at this meeting.
Finding Compelling Opportunities in Japan
AVI Japan Opportunity Trust plc / Annual Report 2025
04
KEY PERFORMANCE
INDICATORS (“KPIs”)
Discount/Premium* (2025):
-1.6%
Range during the period:
(9.5)%
1.5%
NAV Performance* (2025), 1 Year:
14.7% (2024: 20.9%)
Since Inception (“SI”) 94.8%
9.7%
SI Annualised
Ongoing Charges* (2025),
31 December 2025:
1.4% (2024: 1.5%)
Peer Group NAV Performance
(2025):
5.4%
Baillie Gifford Shin Nippon
Nippon Active Value 17.6%
AVI Japan Opportunity 14.7%
Baille Gifford Shin Nippon
OUR CORE VALUES
Engaged
Building relationships with companies, actively working
together to improve shareholder value.
Concentrated
Our portfolio of 15-25 holdings means we devote
ample resources to research and engagement
for every investment.
Long-term
A three to five-year horizon aligns our interests with
those of management.
Unique
Discovering overlooked and under-researched
investment opportunities to unlock long-term value.
Experienced
Investing in the Japanese market for over
two decades, with a dedicated team in
London and Tokyo.
Managed at AVI. Visit the website at:
www.assetvalueinvestors.com
What do we invest in?
We believe that the integration of ESG
and sustainability considerations into our
investment strategy is not only integral
to comprehensively understanding each
investment’s ability to create long-term
value, but is also aligned with our values as
responsible investors.
For further information please see
pages 32 and 33.
WHAT DO WE INVEST IN?
AJOT aims to achieve long-term capital growth
by engaging with its concentrated portfolio of
Japanese equities to unlock value.
Sector Breakdown (% of Portfolio)*:
Consumer Durables and Apparel 22%
Media and Entertainment 13%
Transportation 12%
Capital Goods 9%
Technology Hardware and Equipment 8%
Health Care Equipment and Services
7%
Household and Personal Products 6%
Software and Services 5%
Telecommunication Services 5%
Commercial and Professional Services 5%
Real Estate Management and Development 4%
Materials 2%
Pharmaceuticals, Biotechnology and Life Sciences 1%
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RESPONSIBLE INVESTORS
* % of net assets. Data may not sum to 100% due to rounding.
* Fordefinitions,seeGlossaryonpages76and77.
AVI Japan Opportunity Trust plc / Annual Report 2025
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Overview of the Year
On behalf of the Board of Directors (“the Board”) I am
pleased to present the Annual Report for 2025 for AVI
Japan Opportunity Trust Plc (“AJOT” or “Company”).
AJOT’s positive performance continued in 2025 with
a NAV return of +14.7% in GBP and +22.8% in JPY.
This compares to total return figures for our comparator
index, the MSCI Japan Small Cap Index, of 19.8% in
Sterling and 28.4% in JPY.
2025 was a transformative year with the transaction
between AJOT and Fidelity Japan Trust PLC (FJV)
which completed in the fourth quarter of the year. The
result of the long combination process was that many
FJV investors chose to join AJOT shareholders in the
journey we are currently on. Now the Company’s NAV
exceeds £400m (growing from c. £80m at IPO), the
Investment Manager has the ability to scale positions,
which strengthens the capacity for engagement with
portfolio companies.
For the third consecutive year, AJOT has delivered
double-digit sterling-based returns. The benchmark,
the MSCI Japan Small Cap Index, enjoyed strong
performance in 2025, propped up by the performance
of larger names that do not fall within AJOT’s investment
universe. The strategy continued to deliver numerous
positive engagement outcomes, with two companies
taken private and several meaningful share buyback
announcements during the year.
AJOT continues to adhere to the highest standards
of corporate governance, and the same rigorous
approach was taken to the combination of the two
companies. Since launch, AJOT has been grateful for
a supportive shareholder register, which has helped
keep the discount to NAV in low single figures. It was
important to the Board and the Investment Manager
that any new investors shared the desire to participate
in the future success of AJOT.
To achieve that, the Boards of AJOT and FJV designed
a structure that would meet those aims by allowing
those who wished to no longer be invested in Japan the
opportunity to exit at close to NAV. It was pleasing to both
boards that 68% of FJV shareholders chose to join AJOT.
I would like to thank the Board of FJV, especially Chair
David Graham and Sarah Macauley, for their help and
support throughout the entire process, as well as City of
London Investment Group plc for their help in prompting
the initial discussions between the two companies. It is
also important to recognise the work that AVI has done
in this entire process, including investing the new money,
while at the same time conducting our annual tender and
ensuring that the portfolio continues to perform.
For the second time since inception, in September the
AJOT Board visited Japan to meet with AJOT portfolio
companies alongside AVI’s Head of Japan Research,
Kaz Sakai, and Managing Director, Nicola Takada
Wood. In a highly productive week, the Board met
with 6 portfolio companies, consolidating relationships
with management as AVI continues its constructive
approach to engagement. It was clear to us that
management teams continue to be highly receptive to
AVI’s differentiated approach to engagement, which
includes a unique focus on operational improvements in
addition to traditional engagement areas.
AJOT and FJV Combination
The AJOT and FJV combination is expected to benefit
all Shareholders in several ways. The combination has
resulted in a more liquid and larger fund. The enlarged
fund will have increased capability to take influential
positions in companies where AVI has identified a
significant opportunity to unlock value through AVI’s
active engagement. AVI has agreed to a reduced
management fee of a tiered structure on assets
above £300m and will continue to reinvest 25% of the
management fee into AJOT shares. The new reduced
management fee structure and the economies of scale
will result in a reduced annual ongoing charge.
Much has been made in recent years of the fact that
many investment trusts are of insufficient scale to attract
wealth managers. The argument has been that smaller
investment trusts have insufficient liquidity to deal with
the ability to buy and sell in sufficient size required by
these entities. With the combination, and our ability to
issue shares at a small premium to NAV as well as our
twin features of robust buy backs and an annual tender
for up to 100% of shares in issue, we have addressed
those concerns. I would encourage any potential
investors to contact AVI and our joint brokers, Singer
Capital Markets and Canaccord Genuity, to discuss
how we can help you participate in the next phase of
AJOT’s growth.
Dividend
As provided for in the Prospectus at the IPO, the
Company intends to distribute substantially all the net
revenue arising from the portfolio. The Company paid
an interim dividend of 1.60p per share in December
2025, as well as a special interim dividend of 0.60p per
share, and the Board has elected to propose a final
dividend of 0.60p per share, bringing total dividends for
the year ended 31 December 2025 to 2.80p per share
(2024: 2.20p per share). Former FJV shareholders on
AJOT’s register at the dividend record date will also
receive the final dividend.
Investment Strategy
AJOT listed in October 2018 to take advantage of
the highly attractive opportunity to invest in under-
valued, over-capitalised Japanese small-cap equities
with strong underlying business fundamentals. Active
engagement and corporate action are the keys to
unlocking valuation anomalies and AJOT’s track -record
has demonstrated the potential absolute and relative
returns this approach can deliver.
The portfolio is
well placed with a
concentrated yet diverse
collection of high quality,
lowly valued companies,
with multiple levers for
re-ratings.
NORMAN CRIGHTON
Chairman, Non-Executive Director
Joined the Board in 2018
Strategic Report / Chairman’s Statement
Chairman’s Statement
AVI Japan Opportunity Trust plc / Annual Report 2025
06
Over seven years since launch, your Company has
performed well in the face of multiple headwinds:
underperformance of small-cap stocks (MSCI Small
Cap Japan has returned +48% compared to the MSCI
Japan’s +69% return, in GBP); a -31% depreciation
of the Japanese Yen which has detracted from
GBP returns; and a turbulent global environment
encompassing a pandemic, rapidly rising interest rates
and multiple geopolitical events. The Board remains
confident that AVI is well placed to continue executing
the strategy and that there are still plenty of mis-priced
investment opportunities to discover.
Share Discount and Issuances
As of 31 December 2025, your Company’s shares were
trading at a discount of -1.6% to NAV per share. The
Board monitors the premium/discount and carefully
manages it by periodically issuing or buying back
shares. During 2025, 110,674,880 new shares were
issued to shareholders of FJV as part of the combination
of the two trusts, while 3,625,000 shares were bought
back during the period. As of 31 December 2025,
247,873,823 shares were in circulation, a pleasing
increase from the 80,000,000 shares at AJOT’s launch.
The Directors believe that the performance of the
Company since IPO should be attractive to a larger
pool of investors and are exploring avenues to continue
to grow AJOT.
Realisation Opportunities
At the launch of the Company in October 2018, the
Prospectus published at that time stated that the
Directors may, at their discretion, offer a full or a partial
exit opportunity to Shareholders in October 2022
and every two years thereafter. The rationale behind
including the Exit Opportunity in the Prospectus was
to ensure that if the original investment thesis did not
generate the expected returns, or if circumstances
had changed to make Japan unattractive, then
Shareholders would be offered the opportunity to exit at
close to NAV if they wished.
Considering the Board’s keen focus on corporate
governance, the Board decided from October 2024 to
consider an Exit Opportunity on an annual basis (rather
than biennially), giving Shareholders a potential Exit
Opportunity in October 2026, and every 12 months
thereafter.
The redemption opportunity in 2025, allowing investors
to sell 100% of their share capital at a 2% discount
to net asset value (NAV), resulted in 11.05% of
Shareholders choosing to exercise the opportunity to
exit. The Board is aware that a number of shareholders
had positions in both FJV and AJOT. Following the
strong uptake of the combination of FJV holdings
into AJOT, the Board recognises some Shareholders’
requirements to rebalance their portfolio holdings in
the enlarged Company. At the time of the redemption
opportunity, AJOT shares traded at a -1.6% discount
(EGM date 9 January 2026).
Debt Structure and Gearing
As described in the Prospectus, the Board supports
the use of gearing to enhance portfolio performance.
The Company has a ¥6.6 billion debt facility, which was
fully drawn as at 31 December 2025 and net gearing
stood at +1.8%. Following the combination of FJV into
AJOT, the Company has successfully negotiated a new
¥12.7billion, two-year facility. This has been approved,
and is being reviewed by the Company’s legal counsel.
Outlook
The Tokyo Stock Exchange continues to pressure
companies to embrace corporate reform to unlock
the full potential of the Japanese market. The election
of Sanae Takaichi as leader of the Liberal Democratic
Party (and Prime Minister) in October 2025 and
subsequent resounding victory in the February 2026
general election, reinforces the effort seeking to
see companies enhance capital efficiency by either
reinvesting excess cash into their core business
operations or returning excess cash to shareholders.
Takaichi has also spoken of corporations reducing
latent cash balances by investing in their employees
through wage hikes, something that we believe would
be supportive of long-term corporate value. Whilst
acknowledging the current geopolitical situation
unfolding globally, it is at least encouraging that Japan
looks likely to have political clarity for the next four
years. Finally, the Financial Services Agency in Japan
is currently conducting a review of the Corporate
Governance Code, last reviewed in 2021, with the
aim of prompting a timelier enhancement of capital
efficiency.
Key tailwinds for the strategy include unwinding of
cross-shareholdings, increasing shareholder activism,
private equity firms targeting the Japanese market, and
the Japanese government encouraging unsolicited
acquisition offers.
The mounting pressure for corporate reform will
continue to grow in 2026. AJOT’s speciality in finding
undervalued companies with robust earnings and
using constructive engagement to unlock value
positions it well to benefit from the ever-improving
market environment. The portfolio is well placed
with a concentrated yet diverse collection of high-
quality, lowly valued companies, with multiple levers for
re-ratings. As a board, we are confident that AJOT can
build on its successful track record of engagement and
will continue to deliver attractive returns for investors.
AJOT’s portfolio companies currently have 38% of
their market cap covered by net cash and investment
securities and trade at a weighted average 9.5x
EV/EBIT multiple.
In the coming weeks I shall be meeting any institutional
investors who would like to sit down with me, and I
hope to see as many Shareholders as possible at our
AGM in May.
The Board and I remain available to all our Shareholders
– institutional and retail – who may wish to discuss an
issue or ask a question. As always, please feel free to
reach out to me directly (norman.crighton@ajot.co.uk)
or contact our joint brokers, Singer Capital Markets and
Canaccord Genuity, to arrange a meeting.
Norman Crighton
Chairman
12 March 2026
Source / Wacom
AVI Japan Opportunity Trust plc / Annual Report 2025
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The rising sun reveals a new land-
scape, the mountain holding quiet
strength as the cranes chart widening
horizons. The scene signals AJOT’s
transition into a new phase, shaped by
increased scale and renewed capability
to pursue opportunity with greater
confidence.
Strategic Report / Case Study
SEASON OF GROWTH
Evidence of corporate reform’s impact is
mounting, and we would argue that Japan is
not only already irrevocably transformed, but
that we are also well into a shift in corporate
culture which will have a long-term and far-
reaching impact on the Japanese market.
Tailwinds for Shareholder
Constructive Engagement
The market environment in Japan is more
attractive and supportive of a constructive
engagement strategy than previously, with
several key tailwinds, including the following:
01.
Further pressure from the TSE requesting
improved disclosure around capital efficiency.
02.
Unwinding of cross-shareholdings.
03.
Increasing shareholder activism impact.
04.
Private equity firms targeting the Japanese
market with dry powder.
05.
The Japanese government encouraging
unsolicited acquisition offers and capital
efficiency enhancement.
Recent Governance Reform:
Read more at:
www.assetvalueinvestors.com/insight/the-corporate-governance-wave-in-japan-capitalising-on-change/
Reform in Full Bloom
2018
Revised Corporate
Governance Code
2022
Transition from
First Section
to Prime
2023
METI revises
guidelines for
Corporate Takeovers
2024
TSE published a
list of companies
disclosing plans
2014
Stewardship Code
2021
TSE Market
Structure Reform
2015
Introduced
Corporate
Governance Code
2023
TSE enhanced
disclosure for
companies in parent-
subsidiary relationships
2025
TSE mandates English
disclosure. FSA
reviewing Corporate
Governance Code
2012
Abenomics
Introduced
2020
METI M&A
Guidelines
AVI Japan Opportunity Trust plc / Annual Report 2025
08
The rising sun reveals a new land-
scape, the mountain holding quiet
strength as the cranes chart widening
horizons. The scene signals AJOT’s
transition into a new phase, shaped by
increased scale and renewed capability
to pursue opportunity with greater
confidence.
AJOT aims to achieve long-term
capital growth by engaging with
its portfolio of Japanese equities
to unlock value; how successful
were you in 2025?
We believe AJOT achieved a number of
meaningful successes in 2025. Several
companies took significant actions following
our engagement, including major capital
KAZ SAKAI
Head of Japan Research
AVI’s engagement approach has been
developed over several decades, and
with recent corporate governance
reforms providing a supportive backdrop,
together with AJOT’s increased AUM, our
engagement with Japanese companies
has both evolved and intensified
1 On March 2023, Tokyo Stock Exchange, Inc. (“TSE”) requested
that all listed companies on the Prime and Standard Markets take
“action to implement management that is conscious of cost of
capital and stock price”.
2 Tokyo Stock Exchange website, as of 19 February 2025.
3 Toyo Keizai newspaper, April 2024.
policy changes such as the privatisations
of Tecnos Japan and BEENOS, as well as
asset disposals like the sale of large real
estate holdings by TSI Holdings. We also
saw progress in public engagement, including
my appointment as an external director at
Synchro Food, and the approval of shareholder
proposals at Eiken Chemical.
You mention you were appointed
to the Board of Synchro Food.
Is this a new approach for AVI’s
engagement strategy?
Engagement is a core part of our strategy,
and we see this as an extension of our open
and transparent effort to bring about effective
corporate governance and the long-term
development of a company. My aim is to
partner with the management with the goal
of promoting the common interests of all
shareholders.
You have clearly had an extremely
active year. In addition to your
NED appointment, as Head of
Japan Research you spoke at four
conferences in December alone –
how important is this public-facing
side of your engagement work for
AJOT?
We believe it is beneficial for responsible
investors to share their investment philosophy,
especially in Japan where we invest, and this is
often in response to requests from companies,
universities and other institutions. Our aim is
to ensure that our long-term and sustainable
investment approach is clearly and accurately
understood in Japan, not only by investors and
asset owners, but also corporate managers
across the market.
Alongside another team member,
you come from a management
consultancy background, how
does this benefit AJOT’s active
engagement strategy?
Business-focused engagement sits at the
core of AJOT’s strategy. We focus not only on
“traditional” areas of engagement like capital
allocation, but also on improving corporate
value through operational improvements. It is
not uncommon for us to send 70+ pages of
analysis on a company to the management
and/or the Board outlining our suggestions for
improvements. My background in management
consulting supports this approach.
Do you have the resources you need
as a team to continue this approach,
or do you plan to expand?
We are a small, tight-knit team and take a
disciplined approach to hiring; it is important for
us that new members are a good fit for not just
our culture, but also our investment process,
which is unique given our differentiated
approach to engaging company management
teams and the extensive level of research we
conduct. We do plan to continue expanding
the team with individuals who fit these criteria,
and we are currently in the process of recruiting
a new Japanese investment analyst in 2026 to
bolster our resource and engagement efforts.
It has been a time of real momentum
for the Trust following the FJV
combination, how do you plan
to keep driving change in 2026?
Following the increase in assets we have
been able to grow our existing positions, with
the aim of building an even higher conviction
portfolio, and an even stronger base from
which to engage. We plan to further accelerate
constructive, business-focused engagement
with these portfolio companies in 2026.
AJOT was launched in 2018
in response to the corporate
governance wave in Japan and the
evolution of reform there; seven years
on, are you still finding opportunities
to capitalise on this?
Yes, very much so. Japan’s governance reform
remains a work in progress, with initiatives such
as the request from the Tokyo Stock Exchange
to have management focus on their cost
of capital and share price, and the planned
revision of the Corporate Governance Code
in 2026. This continues to create meaningful
opportunities for constructive, engagement-
focussed investors like us.
Q
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AVI Japan Opportunity Trust plc / Annual Report 2025
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The top ten equity investments make up 70% of the
net assets*, with operating businesses spread across
a range of sectors.
* For definitions, see Glossary on pages 76 and 77.
Strategic Report / Our Top 10 Holdings
Focus on Small and Mid-cap Businesses
Top 10 Share of Net Assets
% of AJOT net assets
Top 10 70%
Other holdings 32%
102%
Eiken Chemical is a manufacturer
of medical diagnostics equipment,
operating a high-quality business with
a proven track record of growing sales.
Eiken Chemical holds a dominant
market position in colon cancer
screening, with an overwhelming
global market share in excess of
70%. Eiken Chemical is set to
experience structural growth from the
ageing population, and with an open
shareholder register, the company is a
potential takeover target.
03.
% of net assets
6.0%0.6%
EV/EBIT
21.5x
Source / Eiken Chemical Co Ltd
Raito Kogyo is a leading company
in the specialist construction
sector, with core operations in
slope construction and ground
improvement together comprising
over 70% of total sales. The company
holds the largest market shares in
these areas, with approximately 30%
in slope construction and 20% in
ground improvement. At the time
of our investment, Raito Kogyo had
achieved revenue growth at 2.4%
CAGR from FY13 to FY22, with the
operating profit margin consistently
exceeding 10% over recent years.
Raito Kogyo anticipates public project
demand providing a growth runway.
04.
% of net assets
5.9%
EV/EBIT
7.6x
Source / Raito Kogyo
Sharingtechnology operates one
of the largest life service matching
platforms in Japan, connecting a
variety of user needs with high-quality
services. With nearly 200 specialised
websites and over 6,000 external
service providers, the most frequent
services catered for include lost keys,
lawn mowing, and termite control.
There are several tailwinds to support
continued growth, including the
declining Japanese population and
the projected increase in the number
of single-person households.
05.
% of net assets
5.9%
EV/EBIT
11.4x
Source / SHARINGTECHNOLOGY INC
Mitsubishi Logistics is a third-party
logistics provider covering the entire
supply chain. The company is the
largest warehouse operator in Japan,
enjoys strong presence at all seven
of Japan’s major ports, and operates
an overseas air logistics business.
Mitsubishi Logistics remains
substantially overcapitalised, with
investment securities and real estate
accounting for over 100% of the
market cap.
01.
% of net assets
7.5%
EV/EBIT
2.9x
Source / Mitsubishi Logistics
Kurabo Industries (“Kurabo”) is
a diversified conglomerate with
significant real estate and investment
securities, which accounted for over
100% of its market cap at the time of
investment in early 2024, which has
subsequently fallen to 69% following
+189% share price appreciation.
Engaged in the textile, chemical,
advanced technology, food & service,
and real estate businesses, Kurabo
has achieved stable revenues, while
its operating margin has doubled
in recent years. In 2025, Kurabo
pleasingly shut down its largest
textiles plant, which had held back
Kurabo’s valuation.
02.
% of net assets
7.3%
EV/EBIT
4.2x
Source / Kurabo Industries Ltd
102%
Incl. gearing
Mitsubishi
Logistics
Raito Kogyo SharingtechnologyEiken Chemical
Kurabo
Industries
AVI Japan Opportunity Trust plc / Annual Report 2025
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Visit our investment platforms:
www.assetvalueinvestors.com/ajot/how-to-invest/platforms/
Rohto is the largest skincare and
eye-drop manufacturing company
in Japan, yet trades at a significant
discount to peers. AVI believes
that Rohto’s undervaluation can be
explained by the lack of focus on
its core businesses, misleading IR
communication, and lower allocation
to shareholder returns than its peers.
Specifically, management needs to
reallocate its R&D spending from
low-profit business areas such as
the prescription drug business and
regenerative medicine business,
towards its high-value, high market
share product lines, such as skin care
products.
09.
% of net assets
5.4%
EV/EBIT
13.4x
Source / Rohto Pharmaceutical
Broadmedia mainly engages in online
education and IT service businesses.
It is a leading player in Japan running
online-learning secondary schools
with the brand name “Renaissance
High School Group,” allowing students
to learn at their own pace remotely
and to focus on their individual
learning interests. Broadmedia’s
unique education curriculum allows
students to study e-sports, KPOP and
programming, on top of the standard
arts/science curriculum. In addition to
operating online-schools, Broadmedia
operates an IT service business,
specifically for distributing Akamai
Technologies’ software and solutions
to domestic clients.
10.
% of net assets
4.2%
EV/EBIT
12.1x
Source / Broadmedia
Atsugi is an apparel manufacturer
primarily known for producing
stockings, innerwear, and legwear for
women. The company manufactures
and retails under its own brands.
Atsugi is substantially overcapitalised
with Net Financial Value accounting
for over 100% of the market cap.
06.
% of net assets
5.9%
EV/EBIT
N/A
Source / Antonia Guillem via iStock
Wacom is the global leader of digital
pen solutions, and our investment
was premised on the increased
adoption of digital drawing and
writing. Wacom manufactures its
own branded tablets and sells
its technology to other electronic
device manufacturers. Although
the Branded Business segment
continues to face challenges, we are
confident that through shortening the
product development cycle for entry-
level products and strengthening
e-commerce channels, Wacom can
further reinforce its position as the
global leader.
07.
% of net assets
5.8%
EV/EBIT
9.1x
Source / Wacom
Synchro Food operates a service
matching platform for restaurants in
Japan, with much of its sales coming
from job listings. The company
operates “Inshokuten.com” which
provides an end-to-end business
platform for restaurants, including
supplier search, accountant search,
interior design, food truck support
and bulk ordering services. Synchro
Food is a high-quality business, with
an operating margin of c.25% and
5-year revenue annual growth of
c.14%. However, capital allocation
issues are holding the company back
from its true valuation potential.
08.
% of net assets
5.4%
EV/EBIT
23.0x
Source / Mapo via iStock
Rohto
Pharmaceutical
Broadmedia
Atsugi Wacom Synchro Food
AVI Japan Opportunity Trust plc / Annual Report 2025
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unprofitable textile business, and Tecnos Japan receiving
a tender offer at a +39% premium to the undisturbed
share price.
AJOT also enjoyed a successful AGM season in June,
submitting shareholder resolutions to three companies.
Of particular note was a shareholder proposal which was
passed with a supermajority at Eiken Chemical, allowing
the dividend to be determined by resolution of a general
meeting of shareholders, in addition to a resolution of the
Board of Directors.
AJOT also submitted shareholder proposals at Wacom,
a company in which we launched a public campaign,
“Draw Wacom’s Future”, in May 2025. In September, we
were encouraged by the appearance of a constructive
investor on the shareholder register, and continue to
believe Wacom can reinforce its position as the global
leader in digital pen solutions.
Our second ongoing public campaign is with Rohto
Pharmaceutical (“Rohto”), launched in April 2025.
Despite its name, Rohto is frequently mischaracterised
as a pharmaceutical company; in reality, it is Japan’s
largest manufacturer of skincare products and eye drops,
yet it trades at a significant discount to relevant peers.
Consistent with our recommendations, the company
announced its first medium-term management plan in
May 2025 and has since outlined long-overdue pricing
increases across one of its core brands.
The latter half of 2025 combined a quieter period of
engagement results with an increasingly volatile macro
backdrop in Japan.
The election of Sanae Takaichi as leader of the Liberal
Democratic Party (and Prime Minister) in October 2025
and subsequent victory in the February 2026 general
election has triggered a sustained rally across the
broader market alongside renewed weakness in the
Yen. Takaichi’s policy agenda is perceived as supportive
of defence, energy, semiconductors and advanced
technology, resulting in a rally concentrated in Takaichi-
aligned sectors and large-cap exporters.
The latter has been further underpinned by yen
depreciation, reflecting expectations of fiscal stimulus
and continued accommodative monetary policy under
a Takaichi administration. This dynamic raises important
questions around the future evolution of the relationship
between the Bank of Japan and the new political
leadership.
While she has formally respected the BoJ’s institutional
independence, Takaichi has been clear that monetary
policy should remain aligned with the government’s
growth and fiscal strategy. Despite the BoJ’s gradual
move toward policy normalisation, the Yen has
weakened to its lowest level since July 2024, shrugging
off two rate hikes during that period. Given AJOT’s focus
on domestic smaller companies, the relative performance
to the index has suffered as a result.
We would reassure investors, however, that rather than
individual stock weakness over the last few weeks, we
are seeing a slow period of corporate activity as we wait
for several catalysts to develop. After a very strong start
to the year, followed by an active few weeks over AGM
season, we have taken advantage of a quiet period to
build up some positions and have been busy behind the
scenes, making several large ownership declarations
in recent months and significantly improving our
engagement position across the portfolio. How the next
few weeks or months of geopolitical events will play out is
anyone’s guess, and how that will affect global currency
markets and the Yen remains to be seen.
An example of this improved engagement position is
the EGM AVI called at Synchro Food. The EGM was
held by Synchro Food on 26 December 2025, having
initially received our request in October, a week after LIM
Japan Event Master Fund had made a separate EGM
request. The results of the EGM were highly positive, with
AVI’s Head of Japan Research, Kaz Sakai, successfully
appointed to the board as an independent director.
Additionally, two internal directors were dismissed,
with both a new CEO and Chairman stepping up
consequently.
On 9 December 2025, AVI announced its intention to
increase its combined stake across client funds from
c.29% to c.40% via tender offer, at a price of 2,200 Yen
per share, a 29% premium to the undisturbed share price
of Broadmedia. Although not covered by the timeframe
of this report, it is worth noting that the tender offer was
successfully completed in January, raising AJOT’s holding
of Broadmedia to 43% of outstanding shares
The examples of Synchro Food and Broadmedia
illustrate the broader range of tools now available to
the AVI investment team amid a more constructive
environment for engagement and activism in Japan. In
select situations, a more involved – and at times public –
approach can be an effective means of exerting greater
influence on company management, with the objective of
accelerating value-enhancing change.
November marked a significant milestone for AJOT
with the successful completion of the combination with
FJV. Approximately 68% of FJV shareholders elected
to roll into AJOT, providing a meaningful uplift in capital.
The team deployed this additional capital selectively,
adding to high-conviction existing holdings while initiating
positions in new investment ideas. The combination also
enhances the team’s ability to deploy capital at scale and
strengthens our capacity for constructive engagement
with portfolio companies.
The environment over the past few months has allowed
us to build positions while intensifying engagement with
portfolio companies. At year-end, AJOT held more than
5% of voting rights in nine names, accounting for 37% of
NAV. Combined with AVI’s holdings across other funds
which are invested in the same names, AVI holds more
than 5% of voting rights in 13 AJOT names, accounting
for 54% of NAV. We are particularly encouraged by the
appearance of other activists and like-minded investors
on the share registers of some of our portfolio companies
and look forward to seeing the results of the engagement
groundwork we have laid as we head into 2026.
JOE BAUERNFREUND
Portfolio Manager
Strategic Report / Investment Manager’s Report
Manager’s Commentary
2025 was another eventful year for AVI Japan
Opportunity Trust Plc (“AJOT” or “Company”), both in
terms of active engagement and latterly, welcoming
new shareholders into the Trust following the
combination with Fidelity Japan Trust PLC (FJV).
After a strong start to the year, AJOT’s performance
weakened in the second half of 2025, resulting in overall
underperformance for the year. Japanese equity markets
were again robust, and while AJOT delivered a positive
absolute return of +14.7%, relative performance lagged
the benchmark by -5.2% (in GBP).
In a tale of two halves, the Company was buoyed by
meaningful engagement success early in the year. TSI
Holdings, AJOT’s largest holding at the time, sold real
estate assets equivalent to 30% of its market cap. This
was followed by a 15.3% buyback, into which AJOT
sold its entire holding in July, successfully and neatly
closing the position after three years for an ROI of +92%.
Other positive results of our engagement were Kurabo
Industries announcing the restructuring of its aged and
AVI Japan Opportunity Trust plc / Annual Report 2025
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AVI Japan Opportunity Trust plc / Annual Report 2025
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AVI Japan Opportunity Trust plc / Annual Report 2025
12
Source / Kurabo Industries Ltd
Indexed Share Price
Dec 24 Mar 25 Jun 25 Sep 25 Dec 25
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150
200
250
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Contributors
Kurabo Industries (“Kurabo”) was the largest contributor, adding +366bps to
performance as its share price increased by +47% over the year.
Kurabo, established in 1888 as a textile manufacturer, has diversified its
operations over the years to include chemicals, advanced technology, food
and services, and real estate. Kurabo has a history of stable revenues and
has doubled its operating margin in recent years.
Much of our engagement with the company has focused on encouraging
management to direct resources towards the high-quality chemicals and
advanced technology segments, and away from the unprofitable textiles
business.
In March this year, the company announced plans in line with our
recommendations to close its largest and most unprofitable textile factory.
In May, Kurabo announced a new medium-term plan with increased
commitment to shareholder returns, which include a 4.0% DOE target and
¥20.0bn buyback plans. In a continuation of positive announcements, in
September, Kurabo announced it had completed the ¥6.0 billion buyback
program (7.3% of total shares) started in November 2024, and in November
it disclosed another ¥7.0 billion buyback program (6.0% of total shares).
Across all AVI client funds, as of year-end, AVI controls 5.1% of the shares,
with the company accounting for 7.3% of AJOT’s NAV. Our engagement
with Kurabo continues steadfast in 2026 to unlock the company’s full
potential and maximise corporate value.
To year-end, the investment has returned an ROI of +53% for an IRR of
+66% since being added to the portfolio in January 2024 (in JPY).
01
Kurabo Industries
Contribution (GBP)
3.66%
EV/EBIT
4.2x
% of net assets
7.3%
NFV/Market Cap
69%
C
01 Kurabo Industries
AVI Japan Opportunity Trust plc / Annual Report 2025
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02
Raito Kogyo
Contribution (GBP)
2.73%
EV/EBIT
7.6x
% of net assets
5.9%
NFV/Market Cap
25%
Source / Raito Kogyo
Indexed Share Price
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Mar 24 Jun 24 Sep 24 Mar 25 Jun 25 Sep 25Dec 24 Dec 25
Raito Kogyo was the second largest contributor, adding +273bps to
performance as its share price rose by +52% in 2025.
Raito Kogyo is a leading company in the specialist construction sector, with
core operations in slope construction and ground improvement – together
comprising over 70% of total sales. The company holds the largest market
shares in these areas, with approximately 30% in slope construction and
20% in ground improvement.
AVI’s engagement with the company to date has focused on enhancing
capital efficiency, corporate governance and shareholder communication.
During the year, AVI continued to build its stake in Raito Kogyo across AVI
funds, as we sought to step up our influence with the company and use
engagement to drive the necessary change to unlock value.
Raito Kogyo’s share price rise in 2025 was mainly driven by the positive
disclosure regarding shareholder returns in February, when the company
announced a 6.0% DOE/50% payout target and a ¥15.0 billion buyback
plan. This was followed by positive earnings announcements, with the
full-year results announcement in May showing +4% annual revenue
growth and +14% growth in operating income. As of the latest earnings
announcement in November 2025, operating income is forecast to grow
by a further +7% in the year ending March 2026, while the top line is set to
grow by +5%.
Held in the portfolio since March 2024, Raito Kogyo accounted for 5.9%
of AJOT’s NAV at year-end. We see significant upside to the current share
price, and to year-end, the investment has returned an ROI of +24% for an
IRR of +40% (in JPY).
Strategic Report / Investment Manager’s Report continued
Contributors continued
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02 Raito Kogyo
14
AVI Japan Opportunity Trust plc / Annual Report 2025
Source / TSI Holdings
Indexed Share Price
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300
400
Jul 22 Dec 22 Jul 23 Dec 23 Jul 24 Dec 24 Jul 25 Dec 25
TSI Holdings, was the third largest contributor, adding +205bps as its share
price rose by +0% from the start of 2025 to our exit in late July, when we
sold the remainder of our stake into the 15.3% share buyback completed
by the company. Earlier in the year, we also sold much our stake at a price
c.15% higher than the final exit price.
Our investment thesis was predicated on valuation of TSI Holdings’ real
estate assets, investment securities and net cash exceeding the market
cap at the time of investment, as well as their diversified brand portfolio and
diminishing founding family influence. Pleasingly, in line with our suggestions,
in April 2024 the company announced a mid-term plan focusing on
improving EBIT margin as well as optimising non-operating assets to
improve capital efficiency.
The apparel holding company enjoyed a period of very strong share price
performance to start 2025, having announced the sale of its former HQ
building for a value equal to c.30% of the market cap in mid-January.
Across all AVI client funds combined, we were the largest shareholder,
owning more than 10% of the shares at one stage. AVI engaged extensively
with management on ways to enhance operations, capital efficiency,
governance and shareholder communications.
Over the holding period from July 2022 to July 2025, the investment
generated an ROI of +92% for an IRR of +46% (in JPY).
03
TSI Holdings
Contribution (GBP)
2.05%
EV/EBIT
Exited
% of net assets
Exited
NFV/Market Cap
Exited
C
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AVI Japan Opportunity Trust plc / Annual Report 2025
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Mar 24 Jun 24 Jun 25Sep 24 Sep 25Dec 24 Mar 25 Dec 25
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Tender offer
price at +39%
premium
04
Tecnos Japan
04 Tecnos Japan
05 Wacom
05
Wacom
Tecnos Japan was another notable contributor, adding +175bps as its
share price rose by +39% from the beginning of 2025 to the company’s
privatisation in March 2025.
An IT services company, Tecnos Japan is engaged in the business of
providing information technology services, especially the installation of
Enterprise Resource Planning (ERP) systems. Our investment thesis was
built on the track-record of high-quality earnings under the digitalisation trend
in Japan, with revenue growing at a +13% CAGR and operating margins
consistently in the low double digits, in addition to the overcapitalised
balance sheet that had net financial value equal to c.35% of the market cap.
As per the regulatory news service announcement on 4 February, AVI
signed a tender agreement with Ant Capital Partners Co., Ltd. (the “Offeror”)
for AVI’s 10% stake in Tecnos Japan. The tender offer price of ¥1,155 per
share represented a +39% premium to the undisturbed closing price on 4
February 2025.
As the largest shareholder of Tecnos Japan, AVI has engaged extensively
with the company’s Board on ways to enhance corporate value and returns
to shareholders. Tecnos Japan serves as another example of how AJOT’s
concentrated portfolio of asset-backed Japanese small-caps can benefit
from AVI’s active engagement strategy against a backdrop of rapidly
increasing corporate activity in Japan.
Tecnos Japan was held in AJOT from April 2024 to March 2025, with the
investment generating a +62% ROI for a +109% IRR (in JPY).
Wacom was the fifth largest contributor to performance, adding +163bps as
its share price rose +12% over the year.
Across all funds, AVI controls over 13% of the vote in Wacom, which is the
global leader of digital pen solutions. Our investment is premised on the
increased adoption of digital drawing and writing, relative undervaluation,
and scope for improvement through engagement. Wacom manufactures
its own branded tablets and sells its technology to other electronic device
manufacturers.
In May 2025, AVI launched a public campaign titled ‘Draw Wacom’s Future’,
in which we highlighted several constructive suggestions, since then the
share price has risen by +47%. We are concerned by the poor performing
Branded Business Segment, which has consistently posted losses since
2022.
Alongside the public campaign, we formally submitted shareholder
proposals to the AGM. These proposals called for appointment of an
independent director, establishment of a Transformation Plan Supervisory
Committee, better handling of acquisition proposals, allowing shareholders
to determine the dividend at the AGM, a share buyback, and defining total
shareholder return as a metric to determine stock-based compensation for
internal directors.
During September, constructive yet active investor Kaname Capital
declared 5% ownership in Wacom, with the shares rising a further +5%
to month-end.
Indexed Share Price
Dec 21 Dec 22 Dec 23 Dec 24 Dec 25
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Contribution (GBP)
1.75%
EV/EBIT
Exited
% of net assets
Exited
NFV/Market Cap
N/A
Contribution (GBP)
1.63%
EV/EBIT
9.1x
% of net assets
5.8%
NFV/Market Cap
12%
CC
Although the Branded Business segment continues to face challenges,
we are confident that through shortening the product development cycle
and strengthening e-commerce channels, Wacom can further reinforce its
position as the global leader.
Added to the portfolio in August 2021, the company accounted for 5.8%
of AJOT’s NAV at year-end as a top ten holding. We see significant upside
through our constructive engagement and to year-end, the investment has
returned an ROI of +23% for an IRR of +11% (in JPY).
Contributors continued
Strategic Report / Investment Manager’s Report continued
AVI Japan Opportunity Trust plc / Annual Report 2025
16
06 Aoyama Zaisan Networks
07 Aichi Corp.
Detractors
06
Aoyama Zaisan
Networks
D
Aoyama Zaisan Networks (AZN) was the largest detractor, reducing
performance by -132bps as its share price fell by -17% in 2025.
AZN specialises in providing wealth management consulting services
across areas such as property, succession planning, corporate finance
and strategic management of individual assets. AZN is set to benefit from
the aging Japanese population as the need for inheritance and business
succession consulting is on the rise.
In December 2025, AZN revised its revenue guidance downwards by -11%
for FY2025 due to revenue from transactions at Advantage Club, AZN’s
real estate co-ownership platform, being pushed into later periods due to
the announcement of upcoming tax reform. While operating profit remained
unchanged at ¥3.85bn, the market perceived this as a negative signal
for future earnings potential, with the share price drifting -7% lower in the
following five trading days.
At the time we initiated our investment in March 2024, AZN’s stock price
had been flat for the previous five years, despite operating income that had
continued to grow steadily and non-operating assets that had expanded to
c.47% of its market cap as of the end of December 2023 (now c.35%).
AZN was added to the portfolio in March 2024, and at year-end accounted
for 3.1% of AJOT’s NAV. To date, the investment has returned an ROI of
+7% for an IRR of +7% (in JPY).
Contribution (GBP)
-1.32%
EV/EBIT
5.2x
% of net assets
3.1%
NFV/Market Cap
35%
07
Aichi Corp.
D
Aichi was the second largest detractor over the year, reducing performance
by -35bps as its share price declined by -11% from 2024 year-end to our
exit in late March 2025.
Aichi is a leading manufacturer of special purpose vehicles used in
construction in Japan, such as aerial work platforms. The company is a
listed subsidiary of Toyota Industries (TICO), and a possible candidate for
a takeover. We engaged with management in a friendly manner on various
corporate governance issues relating to its parent/subsidiary relationship.
AVI launched a public campaign titled ‘Taking Aichi Higher’ in May 2024,
urging Aichi and TICO to dissolve the listed subsidiary structure to address
the persistent undervaluation and unlock Aichi’s full potential. Addressing our
campaign, Aichi announced a new capital policy in March, in which TICO
would sell some of its Aichi stake to ITOCHU Corporation, and Aichi would
also buy back shares from TICO via tender offer, with a view to dissolving
the listed subsidiary structure. Following this announcement, we made the
decision to allocate capital to more promising ideas, as the parent/subsidiary
issue was at least resolved, although not in the manner that investors had
hoped.
Over our holding period from November 2019 to March 2025, the
investment period generated an ROI of +52% for an IRR of +18% (in JPY).
Contribution (GBP)
-0.35%
EV/EBIT
Exited
% of net assets
Exited
NFV/Market Cap
Exited
Indexed Share Price
Mar 24 Jun 24 Sep 24 Mar 25 Jun 25 Sep 25Dec 24 Dec 25
50
100
150
200
Indexed Share Price
Dec 19 Dec 20 Dec 21 Dec 23 Dec 24Dec 22 Dec 25
50
100
150
200
250
AVI Japan Opportunity Trust plc / Annual Report 2025
17
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Source / Mitsubishi Logistics
Indexed Share Price
Mar 25 Jun 25 Sep 25 Sep 25 Dec 25
70
80
90
100
110
120
Mitsubishi Logistics was the third largest detractor, reducing performance by
-31bps as its share price was roughly flat, returning +3%, as we added to
our stake during the year.
Mitsubishi Logistics is a third-party logistics provider covering the entire
supply chain. The company is the largest warehouse operator in Japan,
enjoys strong presence at all seven of Japan’s major ports, and operates an
overseas air logistics business.
The company has an ongoing share buyback programme, announced in
May 2025, to repurchase 9.2% of the shares (33m) by March 2026. In early
October, Mitsubishi Logistics announced the programme was only 27%
complete, and we hope management are taking advantage of the recent
share price weakness. The company announced its Q2 earnings on
31 October 2025, with full-year operating profit guidance revised downward
from ¥20.0 billion to ¥16.0 billion.
Mitsubishi Logistics remains substantially overcapitalised, with investment
securities and real estate accounting for more than 100% of the market cap.
We will continue to constructively engage with management to encourage
the timely liquidation of investment securities and rotation of real estate to
limit the accumulation of unrealised capital gains.
Mitsubishi Logistics was added to the portfolio in January 2025, and at
year-end accounted for 7.5% of AJOT’s NAV as the largest holding. To date,
the investment has returned an ROI of +3% for an IRR of +9% (in JPY).
* The NFV and EV/EBIT estimates differ to the reported figures in the December 2025 Factsheet
due to a post period-end change in the NFV calculation for Mitsubishi Logistics.
Strategic Report / Investment Manager’s Report continued
Detractors continued
0
08
Mitsubishi Logistics
Corp.
Contribution (GBP)
-0.31%
EV/EBIT*
2.9x
% of net assets
7.5%
NFV/Market Cap*
87%
D
09 Mitsubishi Logistics Corp.
AVI Japan Opportunity Trust plc / Annual Report 2025
18
Indexed Share Price
Dec 18 Dec 19 Dec 20 Dec 21 Dec 22 Dec 23 Dec 24 Dec 25
50
100
150
200
Indexed Share Price
Feb 25 Apr 25 Jun 25 Aug 25 Oct 25 Dec 25
90
100
110
120
130
09 Konishi
10 Wakamoto Pharmaceutical
09
Konishi
Konishi was another, albeit relatively minor detractor, reducing performance
by -30bps as its share price fell by -6% from year-end to the date we exited
our stake in July 2025.
Konishi is the manufacturer of the no.1 adhesive brand in Japan, ‘Bond’,
used in construction and civil engineering projects, as well as household
tasks. Moreover, the company manufactures industrial chemicals and
synthetic resins, as well as operating in the business of infrastructure
construction and repairs.
At the peak of our investment period, we were the largest shareholder in
the company, and we engaged closely with management, putting forward
a variety of suggestions to address the undervaluation. Over our near
seven-year holding period, despite revenue only growing at a modest +1%
annually, the operating margin increased from 5.6% in 2018 to 7.8% in
2025, as operating income grew at +6% annually.
Having held a position in AJOT since inception in October 2018, the
investment generated an ROI of +74% for an IRR of +13% (in JPY).
Contribution (GBP)
-0.30%
EV/EBIT
Exited
% of net assets
Exited
NFV/Market Cap
Exited
Contribution (GBP)
-0.26%
EV/EBIT
N/A
% of net assets
1.0%
NFV/Market Cap
93%
10
Wakamoto
Pharmaceutical
Wakamoto Pharmaceutical (“Wakamoto”), was the fifth largest detractor,
reducing performance by -26bps as its share price rose modestly by +4%
from the date we started adding to the position to 2025 year-end.
Wakamoto operates three pharmaceutical segments, including prescription
eyecare products, as well as sales of over-the-counter (OTC) medicines,
both in Japan and overseas. The prescription eyecare business is loss-
making and has been a consistent drag on Wakamoto’s operational
performance. In contrast, the OTC segments each enjoy positive operating
margins, with domestic sales particularly profitable.
Rohto Pharmaceutical, which accounts for 5.4% of AJOT’s NAV, is the
largest shareholder in Wakamoto, owning over 11% of the company’s
shares.
Following the Q1 earnings announcement for the financial year ending
March 2026 on 5th August, which showed the domestic OTC business
had generated an operating loss, the shares traded down -11% to 2025
year-end. Pleasingly, the November Q2 earnings announcement showed
the domestic OTC segment had returned to profitability, achieving a 10.9%
operating margin in H1.
Having held a position in AJOT since inception in February 2025, the
investment has so far generated an ROI of -5% for an IRR of -6% (in JPY) to
year-end.
D D
AVI Japan Opportunity Trust plc / Annual Report 2025
19
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AVERAGE VOTING OWNERSHIP OF
PORTFOLIO COMPANIES ACROSS ALL
AVI FUNDS
Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 Jun 24 Jun 25 Dec 25Dec 24Dec 23
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
The objective of AVI’s portfolio construction is to create a
concentrated position in 15-25 holdings, facilitating a clear
monitoring process of the entire portfolio.
PORTFOLIO VALUE BY SECTOR*
AVI picks stocks that meet our investment criteria and once we decide
to invest, a minimum position size of approximately 2% of the portfolio is
initiated. In determining position sizes, AVI is mindful of liquidity and the likely
timing of any catalysts to unlock value. A key consideration is the make-up
of the shareholder register, a proxy for how receptive management might be
to our suggestions. The portfolio is diverse in the industries within it, however,
we are sector agnostic and select investments based on quality and value.
2025 2024
Consumer Durables and Apparel 22% 22%
Media and Entertainment 13% 4%
Transportation 12% 0%
Capital Goods 9% 15%
Technology Hardware and Equipment 8%
3%
Health Care Equipment and Services
7%
11%
Household and Personal Products 6% 2%
Software and Services 5% 7%
Telecommunication Services 5% 3%
Commercial and Professional Services 5% 0%
Real Estate Management and Development 4% 6%
Materials 2% 15%
Pharmaceuticals, Biotechnology and Life Sciences 1% 0%
Consumer Discretionary, Distribution and Retail 0% 12%
EQUITY PORTFOLIO VALUE
BY MARKET CAPITALISATION
2025 2024
<£250mn 42% 29%
£250mn – £500mn 12% 32%
£500mn – £750mn 23% 30%
£750mn – £1bn 7% 3%
£1bn – £2.5bn 10% 4%
>£2.5bn
6% 2%
Dec 18 Dec 19 Dec 20 Dec 21 Dec 25Dec 24Dec 23Dec 22
40%
50%
60%
70%
100%
80%
TOP 10 CONCENTRATION
(% OF NET ASSETS)
Strategic Report / Portfolio Construction
* % of net assets. Data may not sum to 100% due to rounding.
AVI Japan Opportunity Trust plc / Annual Report 2025
20
Strategic Report / AVI Japan Investment Team
Portfolio Trading Activity
AJOT saw a total of 14 new listed companies enter the portfolio (in addition to five private companies
received as part of the combination with FJV). Meanwhile, 11 names exited the portfolio, two of which
followed tender offer bids (Beenos and Tecnos Japan). This resulted in higher apparent turnover
for the portfolio in 2025, at 69% compared to the annualised turnover of 38% since inception. The sale of
ETFs received in relation to the combination with FJV in late November further elevated turnover.
Adjusted for the aforementioned factors, turnover in 2025 was somewhat more in line with AJOT’s
historical average, at 48%. The targeted holding period for our strategy is typically three to five years,
however, this may be shortened by catalysts such as tender offers or share buybacks, often a result of
our active engagement approach.
The largest purchases over the period were predominantly in new positions entering the portfolio in 2025,
namely Mitsubishi Logistics, Synchro Food, Sanyo Shokai and Maruzen Showa Unyu. We also added
notably to existing stakes such as Raito Kogyo, Rohto Pharmaceutical, Kurabo Industries and Wacom.
The largest sales during 2025 were the ETFs received as part of the combination with FJV. Outside of
these, TSI Holdings, discussed previously, was the largest sale as we exited our position. We also exited
Beenos early in 2025 following receipt of advanced notice of a tender offer bid in November 2024.
Outlook
The combination of rising pressure from regulators and activists in 2025 presents a compelling
opportunity to unlock substantial value in small to mid-cap Japanese companies in 2026 and beyond.
With several key tailwinds and a deeply under researched market, our conviction in the strategy remains
as high as ever. We look forward to continuing our active engagement with companies to drive the
catalysts needed to grow long-term corporate value and generate significant alpha.
Joe Bauernfreund
Asset Value Investors Limited
12 March 2026
AVI JAPAN INVESTMENT TEAM
From left to right: Kaz Sakai (Head of Japan Research),
Joe Bauernfreund (Portfolio Manager), Luke Hutcherson
(Investment Analyst), Nicola Takada Wood (Managing Director
Japan), Shuntaro Shimizu (Senior Investment Analyst).
Not pictured: Ross McGarry (Senior Investment Analyst).
AVI Japan Opportunity Trust plc / Annual Report 2025
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* Please refer to Glossary on pages 76 and 77.
1 Estimates provided by AVI. For all Alternative Performance Measures, please refer to the definitions in the Glossary on pages 76 and 77.
2 The NFV and EV/EBIT estimates differ to the reported figures in the December 2025 Factsheet due to a post period-end change in the NFV
calculation for Mitsubishi Logistics.
Company
Stock Exchange
Identifer
% of
investee company
Cost
£’000*
Market value
£’000
% of AJOT
net assets
NFV/Market
capitalisation
1
EV/EBIT
1
Mitsubishi Logistics
2
TSE: 9301 1.5% 33,130 32,035 7.5% 87% 2.9
Kurabo Industries TSE: 3106 4.6% 21,838 31,089 7.3% 69% 4.2
Amova Listed IDX Fund Topix
3,4
TSE:1308 0.0% 30,059 30,461 7.2%
Nomura NF Topix
3,4
TSE:1306 0.0% 29,983 30,371 7.1%
Eiken Chemical TSE: 4549 6.5% 22,579 25,694 6.0% 15% 21.5
Raito Kogyo TSE: 1926 3.5% 21,785 25,283 5.9% 25% 7.6
Sharingtechnology
4,5
TSE: 3989 18.3% 21,296 25,169 5.9% 18% 11.4
Atsugi TSE: 3529 24.2% 20,573 24,929 5.9% 102%
Wacom TSE: 6727 4.8% 23,743 24,688 5.8% 12% 9.1
Synchro Food TSE: 3963 23.8% 19,210 23,187 5.4% -1% 23.0
Top 10 investments 244,196 272,906 64.0%
Rohto Pharmaceutical TSE: 4527 0.8% 22,696 22,868 5.4% 10% 13.4
Broadmedia TSE: 4347 23.9% 14,762 17,690 4.2% 35% 12.1
Aoyama Zaisan Networks TSE: 8929 7.0% 14,276 13,138 3.1% 35% 5.2
Sanyo Shokai TSE:8011 7.0% 12,170 13,132 3.1% 45% 12.7
Maruzen Showa Unyu TSE: 9068 1.5% 10,466 12,228 2.9% 20% 8.4
Ines TSE:9742 4.9% 9,594 9,445 2.2% 36% 14.8
Asiro TSE:7378 18.0% 9,091 9,294 2.2% 19% 6.1
Foster Electric TSE:6794 2.8% 8,953 8,871 2.1% 10% 7.3
DTS TSE: 9682 0.9% 6,676 8,572 2.0% 19% 9.9
Senshu Electric TSE:9824 1.6% 7,286 7,548 1.8% 40% 6.3
Top 20 investments 360,166 395,692 93.0%
Strategic Report / Investment Portfolio
As at 31 December 2025
3 Investments acquired as part of the combination with FJV.
4 These Exchange Traded Fund (“ETF”) holdings provided passive exposure to the Japanese equity market following the combination with FJV.
5 219,700 Sharingtechnology shares were acquired as part of the combination with FJV at a cost of £1,093,000.
AVI Japan Opportunity Trust plc / Annual Report 2025
22
Company
Stock Exchange
Identifer
% of
investee company
Cost
£’000*
Market value
£’000
% of AJOT
net assets
NFV/Market
capitalisation
1
EV/EBIT
1
Quick TSE:4318 2.3% 5,372 5,622 1.3% 31% 7.7
Asoview Inc
3,†
5,842 5,589 1.3%
Saxa TSE:6675 3.0% 4,766 5,341 1.3% 26% 8.2
Shin Etsu Polymer TSE: 7970 0.6% 3,272 4,389 1.0% 29% 8.4
Wakamoto Pharmaceutical TSE: 4512 8.6% 4,711 4,044 1.0% 93%
Go VRN
3,†
3,035 3,212 0.8%
SK Kaken TSE: 4628 0.3% 3,041 2,405 0.6% 79% 2.6
Kokuyo TSE: 7984 0.1% 2,079 2,350 0.5% 58% 6.2
Studyplus Inc
3,†
1,862 1,988 0.5%
The Iyell Co
3,†
1,669 1,736 0.4%
Top 30 investments 395,815 432,368 101.7%
Yoriso
3,†
546 543 0.1%
Total investments 396,361 432,911 101.8%
Other net assets and liabilities (7,620) (1.8%)
Net assets 425,291 100.0%
* Please refer to Glossary on pages 76 and 77.
1 Estimates provided by AVI. For all Alternative Performance Measures, please refer to the definitions in the Glossary on pages 76 and 77.
3 Investments acquired as part of the combination with FJV.
† Level 3 investment (see note 15).
AVI Japan Opportunity Trust plc / Annual Report 2025
23
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Strategic Report / Business Model
Company Status
The Company is registered as a public limited company
under the Companies Act 2006 and is an investment
company under Section 833 of the Companies Act
2006. It is a member of The AIC.
The Company was incorporated on 27 July 2018
and listed on the London Stock Exchange
on 23 October 2018.
The Company has been approved as an investment
trust under Sections 1158/1159 of the Corporation
Tax Act 2010. The Directors are of the opinion, under
advice, that the Company continues to conduct its
affairs as an Approved Investment Trust under the
Investment Trust (Approved Company) (Tax)
Regulations 2011.
The Company qualifies as an Alternative Investment
Fund in accordance with the Alternative Investment
Fund Managers Directive (“AIFMD”).
Investment Objective
The Company’s investment objective is to provide
Shareholders with a total return in excess of the
MSCI Japan Small Cap Index, through the active
management of a focused portfolio of equity
investments listed or quoted in Japan which have been
identified by AVI as undervalued and having a significant
proportion of their market capitalisation held in cash,
listed securities and/or realisable assets.
Investment Policy
The Company invests in a diversified portfolio of equities
listed or quoted in Japan which are considered by the
Investment Manager to be undervalued and where
cash, listed securities and/or realisable assets make up
a significant proportion of the market capitalisation. AVI
seeks to unlock this value through proactive engagement
with management and taking advantage of the
increased focus on corporate governance and returns to
shareholders in Japan. The Board has not set any limits
on sector weightings or stock selection within the portfolio.
Whereas it is not expected that a single holding
(including any derivative instrument) will represent more
than 10% of the Company’s gross assets at the time of
investment, the Company has discretion to invest up to
15% of its gross assets in a single holding, if a suitable
opportunity arises.
No restrictions are placed on the market capitalisation
of investee companies, but the portfolio is weighted
towards small and mid-cap companies. The portfolio
normally consists of between 15 and 25 holdings
although it may contain a lesser or greater number of
holdings at any time.
The Company may invest in exchange traded funds,
listed anywhere in the world, in order to gain exposure
to equities listed or quoted in Japan. On acquisition, no
more than 15% of the Company’s gross assets will be
invested in other UK listed investment companies.
The Company may also use derivatives for gearing and
efficient portfolio management purposes.
The Company will not be constrained by any index
benchmark in its asset allocation.
Borrowing Policy
The Company may use borrowings for settlement of
transactions, to meet ongoing expenses and may be
geared through borrowings and/or by entering into long-
only contracts for difference or equity swaps that have
the effect of gearing the Company’s portfolio to seek to
enhance performance.
The aggregate of borrowings and long-only contracts
for difference and equity swap exposure will not exceed
25% of NAV at the time of drawdown of the relevant
borrowings or entering into the relevant transaction, as
appropriate. It is expected that any borrowings entered
into will principally be denominated in JPY.
Hedging Policy
The Company does not hedge its currency exposure
using financial instruments such as derivatives, forward
contracts, or options.
Business Model
Portfolio Characteristics
Overcapitalised,
with signifcant net
fnancial value
1
1
Low EV/EBIT relative
to peers, typically
<10x
3
Suffcient average
daily traded value
2
Sector agnostic,
typically excluding
fnancial sector
4
c.3,900
Listed Japanese Companies
c.800
Companies in the AJOT Universe
Theoretical example of how returns are generated in an AJOT investment.
How we Generate Returns
When these two sources of returns occur
simultaneously, an attractive compounding effect
enhances investment returns.
At the core of all AVI’s investments are attractive
businesses with durable earnings growth.
Occurs when the share price rises more than
the NAV.
Although there are no current plans to hedge investments
denominated in JPY, the Investment Manager and the
Board will periodically review this policy.
Material Changes to the Investment Policy
No material change will be made to the Company’s
investment policy without Shareholder approval. In the
event of a breach of the Company’s investment policy,
the Directors will announce through a Regulatory
Information Service the actions which have been taken
to rectify the breach.
HOW WE INVEST
Undervalued and Surplus Cash
1
Small to Mid-Cap Focused with suffcient
liquidity
2
High Quality Businesses
3
Engagement Prospects
4
0%
-20%
-40%
-60%
-80%
Share price NAV Discount (%RHS)
140
100
60
1 Net Financial Value (“NFV”) = cash + investment securities – net debt – minority interest.
Value Growth
1
Discount Tightening
2
Compounding Effect
3
Defining our Universe
AVI Japan Opportunity Trust plc / Annual Report 2025
24
Strategic Report / Business Model continued and Directors’ Duties
Directors’ Duties
The Company has an independent Board of Directors
which has appointed AVI, the Company’s Investment
Manager, as Alternative Investment Fund Manager
(“AIFM”) under the terms of an Investment Management
Agreement (“IMA”) dated 6 September 2018. The
IMA is reviewed annually by the Board and may be
terminated by one year’s notice from either party
subject to the provisions for earlier termination as
stipulated therein.
The portfolio is managed by Joe Bauernfreund, the
Chief Executive Officer and Chief Investment Officer
of AVI. He also manages AVI Global Trust PLC, and
AVI’s open-ended and segregated portfolios across
Family Holding Companies and Japan strategies.
Mr Bauernfreund conducts regular visits to Japan,
engaging with prospective and current investments,
which he has done for over 15 years.
Management fees are charged in accordance with the
terms of the management agreement, and provided
for when due. During the year, as announced on
27 November 2025, the Company and the Investment
Manager agreed a new competitive management
fee structure. Effective from that date, the Investment
Management fee is calculated on the lesser of the
Company’s NAV or Market Capitalisation at a rate of 1%
per annum on the first £300 million; 0.95% over £300
million and up to £350 million; and 0.90% over £350
million, invoiced monthly in arrears. The IMA requires
AVI to invest not less than 25% of the management
fee in shares in the Company. Management fees paid
during the year were £2,222,000 and the number of
shares held by AVI is set out in note 16.
J.P. Morgan Europe Limited was appointed
as Depositary under an agreement with the Company
and AVI dated 6 September 2018 (the “Depositary
Agreement”). The Depositary Agreement is terminable
on 90 calendar days’ notice from either party.
JPMorgan Chase Bank, London Branch, has been
appointed as the Company’s Custodian under an
agreement dated 6 September 2018 (the “Custodian
Agreement”). The Custodian Agreement is terminable
on 90 calendar days’ notice from the Company or 180
calendar days’ notice from the Custodian.
MUFG Corporate Governance Limited was appointed as
corporate Company Secretary on 27 July 2018.
The current annual fee is £82,000 per annum excluding
any out of scope, such as project related, fees, which is
subject to an annual RPI increase. The agreement may be
terminated by either party on six months’ written notice.
Waystone Administration Solutions (UK) Limited has
been appointed to provide general administrative
functions to the Company. The Administrator receives
an annual fee of £139,000, which is subject to an annual
RPI increase. The agreement can be terminated by
either the Administrator or the Company on six months’
written notice, subject to an initial term of one year.
Overview
The Directors’ overarching duty is to act in good faith
and in a way that is the most likely to promote the
success of the Company as set out in Section 172 of
the Companies Act 2006 (“Section 172”). In doing so,
Directors must take into consideration the interests
of the various stakeholders of the Company, the
impact the Company has on the community and the
environment, take a long-term view on consequences
of the decisions they make, as well as aim to maintain a
reputation for high standards of business conduct and
fair treatment between the members of the Company.
Fulfilling this duty naturally supports the Company in
achieving its investment objective and helps to ensure
that all decisions are made in a responsible and
sustainable way. In accordance with the requirements of
the Companies (Miscellaneous Reporting) Regulations
2018, the Company explains how the Directors have
discharged their duty under Section 172 below.
To ensure that the Directors are aware of, and
understand, their duties, they are provided with the
pertinent information when they first join the Board,
as well as receive regular and ongoing updates and
training on the relevant matters. They also have
continued access to the advice and services of the
Company Secretary, and, when deemed necessary,
the Directors can seek independent professional
advice. The schedule of matters reserved for the Board,
as well as the terms of reference of its committees,
are reviewed on at least an annual basis and further
describe Directors’ responsibilities and obligations
and include any statutory and regulatory duties. The
Audit Committee has the responsibility for the ongoing
review of the Company’s risk management systems
and internal controls and, to the extent that they are
applicable, risks related to the matters set out in
Section 172 are included in the Company’s risk register
and are subject to periodic and regular reviews and
monitoring.
In preparing for provision 34 of the AIC Code, the
Audit Committee has reviewed and monitored the Risk
Matrix which informed the material controls required by
the Company in order to strengthen and maintain its
internal control framework.
Decision making
The importance of stakeholder considerations, in
particular in the context of decision-making, is taken
into account at every Board meeting. All discussions
involve careful consideration of the longer-term
consequences of any decisions and their implications
for stakeholders. Examples of decisions made by the
Board on this basis include the combination with FJV
as discussed on page 6, as the Directors carefully
considered the interests of Shareholders as a whole
in each step of the process, as well as considering
that the overall outcome of the transaction will deliver
benefits of scale to the Company’s Shareholders.
Another example was the buyback of 3,625,000
shares during the year under review in order to control
the discount, as the Board believes that this is in the
interest of Shareholders as a whole. The Board also
decided that it would be beneficial to visit Japan in
person, to meet with a variety of portfolio companies,
market participants and the Company’s Japanese
service providers. This visit further deepened the
Directors’ understanding of the opportunity set and of
how the Company can be best positioned to benefit
and thereby increased the Directors’ ability to fulfill their
responsibilities to stakeholders.
AVI Japan Opportunity Trust plc / Annual Report 2025
25
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Stakeholder Importance Board Engagement
Shareholders
Continued Shareholder support
and engagement are critical to the
existence of the Company and the
delivery of the long-term strategy of
the Company.
The Company has over 800 Shareholders, including institutional and retail investors. The Board is committed to maintaining open channels of
communication and to engaging with Shareholders in a manner which they find most meaningful, in order to gain an understanding of the views of
Shareholders. These include:
Annual General Meeting
The Company welcomes and encourages attendance and participation from Shareholders at the AGM. Shareholders have the opportunity to meet the
Directors and Investment Manager and to address questions to them directly. Shareholders who are unable to attend the AGM in person are offered
the opportunity to submit questions via email. The Investment Manager attends the AGM and provides a presentation on the Company’s performance
and the future outlook, which is made available on the Company’s website following the meeting. The Company values any feedback and questions it
may receive from Shareholders ahead of and during the AGM and will take action or make changes, when and as appropriate;
Publications
The Annual Report and Half-Year results are made available on the Company’s website and the Annual Report is circulated to Shareholders. These
reports provide Shareholders with a clear understanding of the Company’s portfolio and financial position. This information is supplemented by the
daily calculation and publication of the NAV per share and a monthly factsheet and quarterly reports which are available on the Company’s website and
the publication of which is announced via a Regulatory Information Service. Feedback and/or questions the Company receives from the Shareholders
help the Company evolve its reporting, aiming to render the reports and updates transparent and understandable;
Shareholder Meetings
Unlike trading companies, Shareholder meetings often take the form of meeting with the Investment Manager rather than members of the Board.
Shareholders are able to meet with the Investment Manager throughout the year and the Investment Manager provides information on the Company
and videos on the Company’s website and via various social medial channels. Feedback from all meetings between the Investment Manager and
Shareholders is shared with the Board. The Chairman, the Chairman of the Audit Committee or other members of the Board are available to meet
with Shareholders to understand their views on governance and the Company’s performance where they wish to do so. With assistance from the
Investment Manager, the Chairman seeks meetings with Shareholders who might wish to meet with him and Shareholders can contact him through
our broker, Singer Capital Markets;
Shareholder Concerns
In the event Shareholders wish to raise issues or concerns with the Directors, they are welcome to do so at any time by writing to the Chairman at
the registered office. Other members of the Board are also available to Shareholders if they have concerns that have not been addressed through the
normal channels; The Chairman engages with Shareholders by reaching out to major Shareholders on a regular basis and he makes himself available
for meetings with Shareholders when this is requested.
STAKEHOLDERS
The Board seeks to understand the needs and priorities of the Company’s
stakeholders and these are taken into account during all its discussions
and as part of its decision-making. The Board has discussed which parties
should be considered as stakeholders of the Company.
Following thorough review, it was concluded that, as the Company is an
externally managed investment company and does not have any employees
or customers, its key stakeholders comprise its Shareholders and service
providers. The section on the pages following discusses why these
stakeholders are considered of importance to the Company and the actions
taken to ensure that their interests are taken into account.
Strategic Report / Directors’ Duties continued
AVI Japan Opportunity Trust plc / Annual Report 2025
26
Stakeholder Importance Board Engagement
Shareholders continued
Exit Opportunities
The Directors may, at their discretion, offer Shareholders the opportunity to exit the Company at close to NAV on a regular basis. On 9 December
2025, the Company offered Shareholders the chance to tender some or all of their shares for sale at a two per cent. discount to NAV. The Company
had planned to offer Shareholders the Exit Opportunity in October 2025, however, this was delayed due to the combination with Fidelity Japan Trust
PLC’s (“FJV”) assets into the Company, as announced on 12 August 2025. Following the successful combination with the FJV assets, the former
shareholders of FJV were able to then participate in the Exit Opportunity which was subsequently approved at the general meeting held on 13 January
2026. 26,899,713 Ordinary Shares, representing approximately 11.05% of the Issued Capital excluding Shares held in treasury at that date, were
tendered and bought into treasury. In accordance with the Board’s decision in 2024 and in furtherance of the Board’s continued ongoing commitment
to corporate governance, the Directors expect to continue to offer Exit Opportunities to Shareholders annually with the next Exit Opportunity likely to
take place in October 2026;
Investor Relations updates
At every Board meeting, the Directors receive updates from the Company’s broker on the share trading activity, share price performance and any
Shareholders’ feedback, as well as an update from the Investment Manager on any publications or comments by the press. To gain a deeper
understanding of the views of its Shareholders and potential investors, the Investment Manager also undertakes regular Investor Roadshows. Any
pertinent feedback is taken into account when Directors discuss the share capital, any possible fundraisings or the dividend policy and actioned as
and when appropriate. The willingness of the Shareholders, including the partners and staff of the Investment Manager, to maintain their holdings
over the long-term period is another way for the Board to gauge how the Company is meeting its objectives and suggests the presence of a healthy
corporate culture.
Service Providers
The Investment Manager
Holding the Company’s shares offers
investors an investment vehicle
through which they can obtain
exposure to AJOT’s diversified
portfolio of small to mid-cap
Japanese equities. The Investment
Manager’s performance is critical for
the Company to successfully deliver
its investment strategy and meet its
objective to provide Shareholders
with a total return in excess of the
MSCI Japan Small Cap Index through
active management of the portfolio
and engagement with portfolio
companies.
Maintaining a close and constructive working relationship with the Investment Manager is crucial, as the Board and the Investment Manager both aim
to continue to achieve consistent, long-term returns in line with the investment objective. Important components in the collaboration with the Investment
Manager, representative of the Company’s culture, are:
• encouraging open discussion with the Investment Manager, allowing time and space for original and innovative thinking;
• the Chairman has frequent conversations with the Investment Manager to talk through any matters discussed by the Board between scheduled
meetings, as well as any matters raised by the Investment Manager;
• the IMA requires AVI to invest not less than 25% of the management fee in shares in the Company and to hold these for a minimum of two years which
ensures that the interests of Shareholders and the Investment Manager are well aligned;
• recognising the alignment of interests mentioned above, adopting a tone of constructive challenge, balanced with robust negotiation of the Investment
Manager’s terms of engagement if those interests should not be fully congruent;
• drawing on Board members’ individual experience and knowledge to support the Investment Manager in its monitoring of and engagement with
portfolio companies; and
• willingness to make the Board members’ experience available to support the Investment Manager in the sound long-term development of its business
and resources, recognising that the long-term health of the Investment Manager is in the interests of Shareholders in the Company.
AVI Japan Opportunity Trust plc / Annual Report 2025
27
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Stakeholder Importance Board Engagement
Service Providers continued
The Administrator, the
Company Secretary, the
Registrar, the Depositary, the
Custodian and the Corporate
Broker
In order to function as an
investment trust with an Equity
Shares (Commercial Companies)
listing on the London Stock Exchange,
the Company relies on a diverse
range of reputable advisers for
support in meeting all relevant
obligations.
The Board maintains regular contact with its key external providers and receives regular reporting from them, both through the Board and committee
meetings, as well as outside of the regular meeting cycle. Their advice as well as their needs and views are routinely taken into account. The Board
formally assesses their performance, fees and continuing appointment at least annually, to ensure that the key service providers continue to function at an
acceptable level and are appropriately remunerated to deliver the expected level of service. All key service providers are asked (in respect of a reporting
period) to complete a questionnaire regarding the matters discussed above, the results of which are discussed during a formal review of service providers
at the March Board meeting. The Audit Committee reviews and evaluates the control environment in place at each service provider and also requests
confirmation that key service providers have the relevant policies in place, including those on business continuity, cyber security, AI and fraud prevention.
Other Stakeholders
Lender
Availability of funding and liquidity
are crucial to the Company’s ability
to take advantage of investment
opportunities as they arise.
Therefore, the Company aims to demonstrate to lenders that it is a well-managed business, capable of consistently delivering long-term returns.
Proxy Advisers
Where relevant, the evolving practice
and support (or lack thereof) of proxy
adviser agencies are considered
by the Directors, as the Company
aims to build a good reputation and
maintain high standards of corporate
governance, which contribute to the
long-term sustainable success of the
Company.
When deemed relevant, the Company will engage with proxy advisers regarding resolutions that will be proposed to the Company’s Shareholders at AGMs
and, based on feedback received, incorporate changes to future Annual Reports to enhance disclosures.
Regulators
The Company can only operate with
the approval of its regulators who
have a legitimate interest in how the
Company operates in the market and
treats its Shareholders.
The Company follows voluntary and best-practice guidance, and regularly considers how it meets various regulatory and statutory obligations and how any
governance decisions it makes can have an impact on its stakeholders, both in the shorter and in the longer term.
Strategic Report / Directors’ Duties continued
AVI Japan Opportunity Trust plc / Annual Report 2025
28
CULTURE
The Directors agree that establishing and maintaining
a healthy corporate culture within the Board and in its
interaction with the Investment Manager, Shareholders
and other stakeholders, will support the delivery of
its purpose, values and strategy. The Board seeks to
promote a culture of openness, debate and integrity
through ongoing dialogue and engagement with its
service providers, principally the Investment Manager.
The Board strives to ensure that its culture is in line
with the Company’s purpose, values and strategy. The
Company has a number of policies and procedures
in place to assist with maintaining good corporate
governance, including those relating to diversity,
Directors’ conflicts of interest and Directors’ dealings
in the Company’s shares. The Board assesses and
monitors compliance with these policies, as well as the
general culture of the Board, regularly through Board
meetings and in particular during the annual evaluation
process (for more information see the performance
evaluation section on page 43).
The Board seeks to appoint the best possible service
providers and evaluates their service on a regular
basis as described on page 43. The Board considers
the culture of the Investment Manager and other
service providers, including their policies, practices
and behaviour, through regular reporting from these
stakeholders and in particular during the annual
review of the performance and continuing appointment
of all service providers.
ENVIRONMENTAL,
SOCIAL AND
GOVERNANCE MATTERS
As an investment trust without employees, the
Company’s own direct environmental impact is minimal
and as such, the Company is also not required to
report against the TCFD framework. The Company
has minimal direct greenhouse gas emissions to report
from its operations (2024: minimal), nor does it have
responsibility for any other emissions producing sources
under the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013 or the Companies
(Directors’ Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations 2018. Where
a large company does not consume more than 40,000
kWh of energy in a reporting period, it qualifies as a low
energy user and is exempt from reporting under these
regulations. This exemption applies to the Company.
The Company’s operations are delegated to third-party
service providers, and the Company has no employees.
The Board seeks assurances, at least annually, from
its suppliers that they comply with the provisions
of the UK Modern Slavery Act 2015 and maintain
adequate safeguards in keeping with the provisions of
the Bribery Act 2010, Economic Crime and Corporate
Transparency Act 2023 and Criminal Finances Act 2017.
The Directors do not have service contracts. For the
majority of the year, the Board comprised four Directors,
three males and one female. On 21 January 2025, it
was announced that Ekaterina (Katya) Thomson had
resigned with immediate effect as a Non-Executive
Director of the Company and as Chair of the Audit
Committee. Margaret Stephens was appointed to the
role of Chair of the Audit Committee. On 13 February
2025, it was announced that Andrew Rose and
Thomas (Tom) Yoritaka were to be appointed to the
Board as Independent Non-Executive Directors effective
12 February 2025. In December 2025, the Board took
steps to engage an external consultant to facilitate the
search for a new Director who may ultimately replace
the Chair of the Audit Committee. The Company has
engaged the services of external search consultant,
Trust Associates. At the time of writing this report,
the Board had not appointed a new Director. Further
information on the Board’s policy on diversity and
recruitment of new Directors is contained on page 43.
Both the Board and AVI recognise that social, human
rights, community, governance and environmental
issues have an effect on its investee companies. The
Board supports AVI in its belief that good corporate
governance will help to deliver sustainable long-term
Shareholder value. AVI is an investment management
firm that invests on behalf of its clients and its primary
duty is to produce returns for its clients. AVI seeks
to exercise the rights and responsibilities attached
to owning equity securities in line with its investment
strategy. A key component of AVI’s investment strategy
is to understand and engage with the management of
public companies. AVI’s Stewardship Policy recognises
that Shareholder value can be enhanced and sustained
through the good stewardship of executives and
boards. It therefore follows that in pursuing Shareholder
value AVI will implement its investment strategy through
proxy voting and active engagement with management
and boards. Further details on AVI’s environmental,
social and governance policy can be found on pages
32 and 33. AVI became a supporter of the Task Force
on Climate-related Financial Disclosures (“TCFD”)
in May 2021 and a signatory to the UN-supported
Principles for Responsible Investment (“PRI”) on 9 April
2021.
The PRI is the world’s leading proponent of
responsible investment which entails the following
commitments, developed by an international group
of institutional investors.
As institutional investors, we have a duty
to act in the best long-term interests of
our beneficiaries. In this fiduciary role,
we believe that ESG issues can affect
the performance of investment portfolios
(to varying degrees across companies,
sectors, regions, asset classes and
through time).
We also recognise that applying these Principles
may better align investors with broader objectives
of society. Therefore, where consistent with our
fiduciary responsibilities, Asset Value Investors
Limited commits to the following:
• to incorporate ESG issues into investment
analysis and decision-making processes;
• to be an active owner and to incorporate
ESG issues into our ownership policies and
practices;
• to seek appropriate disclosure on ESG issues
by the entities in which we invest;
• to promote acceptance and implementation of
the Principles within the investment industry;
• to work with the PRI Secretariat and other
signatories to enhance their effectiveness in
implementing the Principles; and
• to report on our activities and progress
towards implementing the Principles.
AVI became a signatory to the UN-supported
Principles for Responsible Investment (“PRI”)
on 9 April 2021.
AVI Japan Opportunity Trust plc / Annual Report 2025
29
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SR
* Returns are for the year to 31 December 2025.
1 For all Alternative Performance Measures, please refer to the definitions in the Glossary on
pages 76 and 77.
The Company’s Board meets regularly and at each meeting
reviews performance against a number of key measures.
In selecting these measures, the Directors considered the key objectives
and expectations of typical investors in an investment trust such as the
Company. These indicators are Alternative Performance Measures (“APMs”).
NAV Total Return Performance
1
1 Year*:
14.7%
Since Inception (“SI”) 94.8%
Benchmark 48.0%
The Directors regard the Company’s NAV total return as the overall
measure of value delivered to Shareholders by the Investment Manager
over the long-term. Total return reflects both the NAV growth of the
Company and also dividends paid to Shareholders. Since the launch on
23 October 2018, the Company’s NAV has increased by 95%, resulting
in an annualised return of 9.7%. The Investment Manager’s investment
style is such that performance is likely to deviate materially from that of
any broadly-based equity index. The Board considers the most useful
comparator to be the MSCI Japan Small Cap Index. Since the launch
on 23 October 2018, the benchmark has increased by 48%, resulting in
an annualised return of 5.6%. For the year ended 31 December 2025,
the Company’s NAV increased by 14.7% while the MSCI Japan Small
Cap Index increased by 19.8%. A full description of performance and the
investment portfolio is contained in the Investment Manager’s Report,
commencing on page 12.
Ongoing Charges
1
31 December 2025:
1.4%
The Board continues to be conscious of expenses and aims to maintain a
sensible balance between good service and costs. Each year, the Board
reviews in detail the costs incurred and ongoing commercial arrangements
with each of the Company’s key suppliers. The majority of the ongoing
charges ratio is attributed to the fees paid to the Investment Manager. This
fee is reviewed annually, and the Board believes that the cost is reasonable,
given the Investment Manager’s activist approach to fund management and
the resources required to provide the level of service. The Company adheres
to The AIC guidance in calculating its ongoing charges ratio.
Going Concern
The Directors have assessed the Company’s ability to continue as a going
concern based on detailed profit and loss and cash flow forecasts, covering
the period up to and including 31 March 2027. These forecasts have been
“stressed” for inflation, as well as a severe and sudden downturn in market
conditions, under which it is assumed that the investment portfolio will lose
45% of its value. Even under this extreme “stress” scenario, the Company has
adequate resources to continue in operational existence for the foreseeable
future (being a period of at least 12 months from the date these financial
statements were approved). The Directors also regularly assess the resilience
of key third-party service providers, most notably the Investment Manager
and Fund Administrator. The Directors do not have any concerns about the
financial viability of the Company’s third-party service providers.
Furthermore, the Directors are not aware of any material uncertainties
that may cast significant doubt upon the Company’s ability to continue
as a going concern, having taken into account liquidity of the Company’s
investment portfolio and the Company’s financial position in respect of its
cash flows, borrowing facilities and investment commitments (of which there
are none of significance) and please refer to the proposed Exit Opportunity
likely to be offered in October 2026 as discussed in the viability statement
below. Therefore, the financial statements have been prepared on a going
concern basis.
Peer Group NAV Performance Total Return
AIC Japanese Smaller Companies Sector*
5.4% Baillie Gifford Shin Nippon
Nippon Active Value 17.6%
AVI Japan Opportunity 14.7%
Strategic Report / Key Performance Indicators
Key Performance Indicators
Discount/Premium
1
Discount, 31 December 2025:
1.6%
The Board believes that an important driver of an investment trust’s discount
or premium over the long-term is investment performance. However, there
can be volatility in the discount or premium. Therefore, the Board seeks
Shareholder approval each year to buy back and issue shares with a view
to limiting the volatility of the share price discount or premium. During the
period under review, nil new shares were issued under the authorisation
granted at the AGM. During the year, 3,625,000 shares were bought back
into treasury under the authorisation granted at the AGM.
As at 12 March 2026, the Company had 247,873,823 shares in issue.
The Company has a successful discount control policy whereby if, under
normal market conditions, the four-month average share price discount
to NAV is greater than -5%, the Company will buy back shares with the
intention of reducing the discount to a level no greater than -5%. Since IPO,
the Company has bought back shares on 19 occasions under this policy.
The Board is aware of other investment trusts in The AIC Japanese Smaller
Companies Sector. Each investment trust has its own focus and strategy,
which will differ from the one implemented by AVI. The Company’s activist
approach aligns with the focus on corporate governance reform taking
place in Japan.
31 December 2024 1.5%
+1.5%Premium, High for the period
Discount, Low for the period -9.5%
AVI Japan Opportunity Trust plc / Annual Report 2025
30
Viability
The Directors believe five years to be a reasonable time horizon to consider
the continuing viability of the Company, reflecting a balance between a
longer-term investment horizon and the inherent shorter-term uncertainties
within equity. The Company is an investment trust whose portfolio is
invested in largely readily realisable listed securities and with some short-
term cash deposits.
The five-year time horizon takes into account that the Directors may, at the
Board’s discretion, offer Shareholders an opportunity to exit the Company
at close to NAV in October 2026 and every year thereafter under a revised
policy as originally announced in October 2024 (previously, every two years).
In December 2025, the Company announced it would offer Shareholders
the opportunity to tender some or all of their shares for sale. The Company
received applications from eligible shareholders to tender an aggregate of
26,899,713 shares, equivalent to 11.05% of the Company’s issued share
capital at that time.
The Board, together with its advisers, intends to canvass opinion from
Shareholders in the months leading up to October 2026 when making
the decision regarding any potential Exit Opportunity. However, the Board
does not currently expect a significantly higher percentage of Shareholders
to exercise this option to exit in 2026. The Directors have reviewed the
Shareholders of the Company, Shareholder feedback, the current market
position, and performance, in forming this expectation.
The following facts support the Directors’ view of the viability
of the Company:
• in the year under review, expenses (including finance costs and
taxation) were adequately covered by investment income and there is
no expectation that these expenses would significantly increase over
the next five years. In addition, cash flow forecasts have been prepared
and stress tested to simulate: a) inflation at 10% and b) a 50% fall in
the value of the investment portfolio. These forecasts illustrate that the
Company would continue to hold sufficient cash even under the most
severe stress scenarios;
• the Company’s investment portfolio is predominantly made up of
listed equities;
• On 28 March 2025, the Board successfully agreed with the Bank of
Nova Scotia, to increase its unsecured revolving credit facility to ¥6.6
billion (approximately £34.5 million at the exchange rate on that date).
The facility, originally established on 4 April 2019 with an initial limit of
¥1.465 billion and later increased to ¥2.93 billion, was structured to
provide the Company with flexible financing options and will expire on
2 April 2026. The Board maintains oversight and reviews the level of
the facility as performance evolves and this decision to increase its size
comes off the back of strong NAV growth over a sustained period of time
for the Company.
Following the drawdown of the additional funds, the Company’s
maximum gearing is expected to be approximately 15% of its net
assets, based on the total net assets as of 28 March 2025, and within
its investment policy restriction of not exceeding 25% of net asset value
at the time of drawdown. The Directors are of the view that, subject to
unforeseen circumstances, the Company will have sufficient resources to
meet the costs of annual interest and eventual repayment of principal on
this debt; and
• the Company has a large margin of safety over the covenants
on its debt.
The Company’s viability depends on the Japanese and the global economy
and markets continuing to function. The Directors also consider the
possibility of a wide-ranging collapse in corporate earnings and/or the
market value of listed securities. To the latter point, it should be borne in
mind that a significant proportion of the Company’s expenses are investment
management fees, which would reduce if the market value of the Company’s
assets were to fall. In arriving at its conclusion, the Board has taken account
of the potential effects of another global event (e.g. similar to the COVID-19
pandemic or the invasion of Ukraine) on the value of the Company’s assets,
income from those assets and the ability of the Company’s key suppliers to
maintain effective and efficient operations.
In order to maintain viability, the Company has a robust risk control
framework which follows the FRC guidelines and has the objectives of
reducing the likelihood and impact of: poor judgement in decision-making,
risk-taking that exceeds the levels agreed by the Board, human error or
control processes being deliberately circumvented.
Taking the above into account, and the potential impact of the principal risks
as set out on pages 34 and 35, the Directors have a reasonable expectation
that the Company will be able to continue in operation and meet its liabilities
as they fall due for a period of five years from the date of approval of this
Annual Report.
AVI Japan Opportunity Trust plc / Annual Report 2025
31
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OUR PURPOSE
Helping our clients to make the most
of their financial future.
The people at Asset Value Investors are committed
to leveraging our long heritage, stewardship
and expertise to make investing responsible,
accessible and profitable for everyone –
individuals, families, institutions, private companies,
and listed companies. Financial returns matter
and we recognise our position of influence in
questioning the practices of the companies we
invest in for a more sustainable future.
OUR PRINCIPLES
We are aligned with the PRI’s belief that
an economically efficient, sustainable
global financial system is a necessity for
long-term value creation.
Such a system will reward long-term responsible
investment and better align investors with the
broader objectives of society. AVI became a
signatory to the UN-supported Principles for
Responsible Investment (“PRI”) on 9 April 2021.
OUR PHILOSOPHY
We are fundamentally committed
to supporting long-term sustainable
businesses that will grow and participate
in the prosperity of the economy.
We believe that the integration of ESG and
sustainability considerations into our investment
strategy is integral to comprehensively understanding
each investment’s ability to create long-term value.
COLLABORATIVE
APPROACH
We recognise the value of collaborative
engagement in addressing collective
issues.
We continue to participate (since joining in 2023)
in CCLA’s collaborative initiative to improve
corporate approaches to workplace mental health
globally. In FY25, AVI also joined the International
Corporate Governance Network (ICGN) to
collaborate on advancing corporate governance
standards and sits on ICGN’s Japan Working
Group, reflecting our active stewardship and
engagement in Japan.
Corporate
Mental Health
Benchmark
DEFINING ‘E’, ‘S’ & ‘G’
Drawing on the World Economic
Forum’s “21 core metrics”, AVI has
identified the factors that we believe
are the most material and relevant
to our investments and developed a
bespoke ESG monitoring system to
track the performance and progress of
our portfolio companies against defined
ESG metrics.
E
We define Environmental sustainability within the
context of:
• Environmental Impact
• Tackling Climate Change
• Sustainable Management
S
Our Social focus is divided into:
• Dignity and Equality
• Wellbeing and Development
• Community Engagement
G
Our approach to Governance includes:
• Quality of Governing Body
• Corporate Strategy
• Ethical Behaviour
Strategic Report / ESG Policy
ESG Perspective
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ABOUT ASSET VALUE INVESTORS
It is our view that a responsible approach to the
environment, society and governance is key to long-
term sustainable businesses. This guiding principle is
embedded not only in our investment philosophy but in
how we manage Asset Value Investors as a company.
AVI’s 2025 emissions from commuting and
business travel:
114.8 tonnes CO
2
e
1,2
1 Calculated in accordance with GHG Protocol Standards (distance-based method).
2 Representing a 36% decrease in AVI commuting and business travel compared to the
previous year.
We believe that shareholders and stakeholders need not be in conflict.
Employees with equity ownership in AVI:
33.3%
People are the most important asset at AVI. We recognise that
our industry has traditionally been skewed towards a less diverse
workforce. We are actively challenging this.
Diversity of workforce:
2025
Number
2025
%
Male
13 57
Female
10 43
* Data as at 31 December 2025.
AVI Japan Opportunity Trust plc / Annual Report 2025
32
Investment Period
ESG monitoring system built into our proprietary
database to ensure ESG factors are considered
alongside financial analysis.
Ongoing ESG assessments of portfolio
companies’ performance against defined ESG
metrics. A scoring system is used to assess trends
and highlight potential areas for engagement.
Tailored questionnaires sent to all companies
based on our assessments to request additional
ESG information and promote improved
sustainability disclosure.
Ongoing controversy monitoring following a clear
engagement pathway if companies are flagged.
Constructive engagement with boards and
management to help sustainably increase
corporate value by building resilience to ESG risks
and promoting responsible business practices.
Pre-Investment
Exclusionary screening is not our guiding
framework, however there are certain exceptions
to this. AVI will not invest in a company with direct
involvement in tobacco, controversial weapons
and pornography, or companies that engage in
child labour or human exploitation as defined by
the relevant International Labour Organisation
Conventions.
Prior to investment we:
Assess a company’s exposure to ESG risks and
opportunities, including climate-related risks and
opportunities.
Identify whether the company is involved in any
actual or potential violations of international norms
and standards supported by ISS EGG’s Norm-
Based Research.
$
PROXY VOTING
As responsible, active stewards of capital, we
vote carefully and thoughtfully at every AGM.
AJOT 2025 Proxy Voting Record
100%
Total voted
100%
With management
72%
72%
Against management
28%
28%
Against ISS*
17%
17%
With ISS*
83%
83%
ENGAGEMENT BREAKDOWN
Percentage breakdown of total unique
ESG engagements (204) by individual
category during FY2025.
OUR STEWARDSHIP
Good stewardship should be viewed as
a continuous practice and is essential to
preserving and enhancing long-term value.
Active engagement is at the core of our investment
strategy and our ESG monitoring system plays an
important role in helping us to identify potential areas
of engagement. As long-term investors, our aim is
to build constructive relationships with the boards
and management of the companies in which we
invest, addressing issues and offering suggestions to
sustainably improve corporate value in consideration
of all stakeholders and in the best long-term interest of
our clients.
Controversy Monitoring
Supported by ISS Norms-Based Research, we also
closely monitor any controversies and potential violations
of international norms and standards associated with our
universe. Whilst our hope is that controversies do not
occur, they can be a marker of how well a company’s
policies are integrated into business operations and
culture, highlighting vulnerabilities or structural problems
and indicating where improvements can be made.
AVI became a signatory to the UN-supported
Principles for Responsible Investment (“PRI”)
on 9 April 2021.
* ISS (Institutional Shareholder Services) is an organisation
that provides proxy advisory services. While AVI utilises ISS’s
research, it has different voting policies and is not bound to
vote in line with ISS guidance where it feels the guidance
is not in shareholders’ best interests.
Governance
78%
78%
Environmental
6%
6%
Social
16%
16%
AVI Japan Opportunity Trust plc / Annual Report 2025
33
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Risk Area Controls and Mitigation Risk Level
Investment Objective
The Company may be unsuccessful in achieving its investment objective, leading to
a potential loss of demand for its shares.
The Company has a clearly defined strategy and investment remit. The portfolio is managed by a highly experienced Investment
Manager, supported by a strong team. The Board relies on the Investment Manager’s skills and judgement to make investment
decisions based on thorough research and analysis of individual stocks and sectors.
The Board regularly reviews the portfolio’s performance against the Company’s Benchmark Index, its competitors, and market
outlooks.
The Board adheres to high levels of corporate governance and shareholder engagement, ensuring that there is regular dialogue
with major investors, primarily through the Company’s broker and the Investment Manager; it follows up on any concerns while
regularly reviewing the discount control policy; and, at its discretion, offers an annual redemption opportunity.
Investment opportunities matching the criteria encapsulated in the investment
objective may become less available in the future.
The Board monitors the portfolio’s composition, performance and development. Should appropriate opportunities diminish, the
Board will consider the future of the Company and may recommend that the Company’s investments are sold, it is wound up and
cash returned to Shareholders.
Gearing
The use of borrowings by the Company has the effect of amplifying the gains or
losses the Company experiences.
A significant fall in portfolio value could cause gearing levels to exceed pre-set limits,
requiring the Company to sell investments at short notice.
The Board and the Investment Manager regularly review gearing, as well as the effect of interest rate movements on the Company’s
finances and the Company’s ongoing compliance with the loan covenants. Aggregate borrowings may not exceed 25% of net assets.
The Company has in place a two-year ¥6.6 billion (£31.3 million) unsecured revolving facility agreement which was increased on 28
March 2025 (from ¥2.93 billion) on the same terms. Interest is payable at a rate equal to TONAR plus 1.55%. As at 31 December 2025,
the facility is fully utilised. Interest is payable at a rate equal to TONAR plus 1.55%. As at 31 December 2025, gearing stood at 7.4%.
Reliance on the Investment Manager and Other Service Providers (including Loss of Key
Personnel, Investment Manager resignation or operational or business failure)
The Company has no employees and relies on a number of third-party service
providers, principally the Investment Manager, Registrar, Administrator, and Custodian/
Depositary. It is dependent on the effective operation of its service providers’ control
systems with regard to the security of the Company’s assets, dealing procedures,
accounting records and the maintenance of regulatory and legal requirements.
The Board carries out regular reviews of the delegated services to ensure their continued competitiveness and effectiveness, which
include assessment of the providers’ control systems, whistleblowing, anti-bribery and corruption policies and business continuity
plans.
The likelihood of this risk occurring has reduced during the year as the relationships with service providers have been proven over
the years since launch and the monitoring processes utilised by the Board are well established.
The Company is heavily reliant on the Investment Manager’s processes, both in
terms of making investment decisions and compliance with the investment policy.
The Investment Manager has an established investment process which has been proved to be successful by the strong long-term
track record. The Board evaluates the investment process and compliance with investment limits and restrictions in conjunction
with its portfolio review at every Board meeting.
Departure of some or all of the staff could prevent achieving investment objective. The
Investment Manager may resign giving 12 months’ notice any time and immediately
in certain circumstances and the Board may be unable to find an appropriate
replacement. Operational or business failure may result in the inability of AVI to continue
operating or to meet its obligations and duty of care, resulting in opportunity cost and
possible loss of shareholder assets during manager replacement.
The Investment Manager has sufficient personnel capable of maintaining the investment management function, should a key
person of the current team become unable to continue in their respective role. The Investment Manager informs the Board of any
staff changes and succession and development plans. The Board is highly experienced in both investment trusts and Japanese
fund managers, and is aware of other managers in the field and a 12 months’ notice period is expected to be sufficient for the
Board to appoint another manager. The Board has a regular dialogue with the Investment Manager and regular conversations with
other market participants and advisers.
The Board has a robust ongoing process for identifying, evaluating and managing the
emerging and principal risks and uncertainties faced by the Company, including those that
could threaten its business model, future performance, solvency or liquidity.
The Board considers the following as the principal risks
faced by the Company and the following controls are in
place to manage or mitigate these risks:
Risk Level Key:
Increased
Decreased
No Change
Strategic Report / Principal Risks and Uncertainties
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AVI Japan Opportunity Trust plc / Annual Report 2025
Risk Area Controls and Mitigation Risk Level
Cyber Security
The Company has limited direct exposure to cyber risk. However, the Company’s operations or
reputation could be affected if any of its service providers suffered a major cyber security breach.
The Board monitors the preparedness of its service providers in general and requests and reviews updates from key
service providers on cyber security and other matters. Following this review, the Board remained satisfied that the risk
is given due priority.
Portfolio Liquidity
The market for smaller Japanese stocks can be illiquid. The Company is exposed to the risk that
it will not be able to sell its investments at the current market value or on a timely basis, when the
Investment Manager chooses or is required to do so to meet financial liabilities.
The Investment Manager monitors trading volumes and prices, and looks to ensure that a proportion of the portfolio is
invested in readily realisable assets.
The Board also receives updates on the liquidity of the portfolio and the current level of liquidity of the Company on a
regular basis. Following review of the liquidity analysis, the Board considered that this risk has reduced during the year.
A realisation opportunity is offered annually, at discretion of the Board, with amounts available to shareholders depending
on portfolio valuation and liquidity at the time, which may be lower than expected especially in adverse market conditions.
Investor sentiment will be monitored by the Investment Manager and the Broker prior to each exit opportunity and the
Board will formulate the appropriate exit opportunity based on that feedback and communicate this to Shareholders in
advance. Both the format and the offering of the exit opportunity remain at the Board’s discretion. The Board operates
discount control mechanisms and undertakes ongoing investor engagement.
Foreign Exchange
The functional and presentation currency of the Company is Pounds Sterling. All investments
held and income derived from these investments are denominated in Japanese Yen. Certain
costs of the Company are impacted by the underlying value of the investments denominated in
Japanese Yen and converted to Pounds Sterling. The Company is subject to currency risk on
exchange rate movements between Pounds Sterling and Japanese Yen.
The Company does not hedge its currency exposure using financial instruments such as derivatives, forward
contracts, or options. However, the Investment Manager and the Board continuously monitor currency movements
and exposure.
The revolving credit facility is denominated in Yen and therefore the effect of Yen exchange rate movements on the
drawn down facility will be offset against the assets.
Global/Climate/Systemic/Conflict
Unforeseen global disruption, such as a conflict, pandemic, climate and nature change-related
event, geopolitical conflict or systemic technology failure, could lead to dramatically increased
market and Company share price volatility. Fraud and cyber security vulnerability could increase
for key service providers.
The Board continuously monitors global developments and their potential impact on the Company; it scrutinises the
performance of the Investment Manager and is aware of emerging risks and has a robust process for addressing
them. All key service providers are asked to provide updates on business continuity, anti-bribery and corruption, and
information security processes on an annual basis. The Board monitors the impact of global developments such as
conflicts on the portfolio.
Concentrated Share Register
Around 25% of the Company’s shares are held by two major Shareholders, City of London
Investment Management and Finda Telecoms Oy. A concentrated share register can potentially
present issues with regards to voting or liquidity.
The Investment Manager, the Company’s Brokers and the Board have a good understanding of the investor base
and have good lines of communication with investors in general and a direct communication channel with the major
Shareholders in particular.
Approval of Strategic Report
The Strategic Report has been approved by the Board and is signed on its behalf by:
Norman Crighton
Chairman
12 March 2026
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AVI Japan Opportunity Trust plc / Annual Report 2025
NORMAN CRIGHTON
Chairman, Non-Executive Director
TOM YORITAKA
Non-Executive Director
ANDREW ROSE
Non-Executive Director
Date of Appointment:
27 July 2018
External Appointments:
RM Infrastructure Income plc and Gore Street Energy
Storage Fund plc.
Experience and Contribution:
Norman Crighton is an experienced public company
director, having served on the boards of nine closed-end
funds and one operating company. Presently, Norman is
also non-executive chair of RM Infrastructure Income
plc and non-executive director of Gore Street Energy
Storage Fund plc.
Norman has extensive fund experience, having
previously been Head of Closed-end Funds at Jefferies
International and Investment Manager at Metage
Capital Limited, leveraging his 35 years of experience
in investment trusts. His career in investment banking
covered research, sales, market making and proprietary
trading, servicing major international institutional clients
over 15 years. His work in many countries included
restructuring closed-end funds, as well as several IPOs.
As a fund manager, Norman managed portfolios of
closed-end funds on a hedged and unhedged basis
covering developed and emerging markets.
Date of Appointment:
12 February 2025
External Appointments:
–
Experience and Contribution:
Andrew retired from Schroders in 2019 after a
distinguished 38-year career specialising in Japanese
equities. His career included 11 years in Tokyo over
three separate secondments, where he was involved in
various research and fund management responsibilities
across the market capitalisation spectrum. His specific
responsibilities included managing several open
and closed-end Japanese equity funds, as well as
institutional portfolios.
After retirement from full-time fund management,
Andrew served as a non-executive director and member
of the Audit and Supervisory Committee at Uhuru
Corporation in Tokyo for three years.
Andrew is a British citizen, fluent in reading and speaking
Japanese, and resides in the United Kingdom.
Date of Appointment:
5 September 2018
External Appointments:
Sequoia Economic Infrastructure Income Fund Limited.
Experience and Contribution:
Margaret has recently served on the board of Sequoia
Economic Infrastructure Income Fund Limited. She
previously served as non-executive board member
and chair of the audit and risk committee of VH Global
Energy Infrastructure plc and was a partner of KPMG
until 2016, having qualified as a Chartered Accountant
in 1988. From 2007, she played a key role in building
KPMG’s Global Infrastructure Practice, also leading
UK and international due diligence and structuring
services on major merger and acquisition transactions
and public private partnerships. Margaret was a
trustee director of the Nuclear Liabilities Fund and
chair of the audit committee until January 2024, non-
executive board member and chair of the audit and risk
assurance committee of the Department for Exiting the
European Union and was also a board trustee of the
London School of Architecture. Margaret is British and
resident in the United Kingdom.
MARGARET STEPHENS
Non-Executive Director
Date of Appointment:
12 February 2025
External Appointments:
Knowledgehook and SOAS University.
Experience and Contribution:
Tom is a venture capital investor, software executive,
and board member with over 30 years of experience in
the technology industry in the UK, North America and
Japan. He invests in early-stage technology and science-
backed startups, and working closely with founders and
co-investors, many of whom are leading venture capital
funds or C-suite executives of multinational companies.
He also sits on the Board of Trustees of SOAS University
of London, as well as on boards of various technology
industry organisations in the UK.
Previously, Tom served in software product and
corporate development executive roles at Cisco
Systems, Yahoo! and Microsoft in the US. Early in his
career, he worked as a strategy consultant at The
Boston Consulting Group in the US and Japan.
Tom is fluent in English and Japanese. He holds
dual British/American citizenship and resides in the
United Kingdom.
A NA N A N A N
Governance / Directors
Your Board
Committee membership
A
Audit Committee
N
Nomination and
Remuneration Committee
Committee Chair
36
AVI Japan Opportunity Trust plc / Annual Report 2025
The Directors present their report and the audited financial
statements for the year ended 31 December 2025.
The Investment Portfolio on page 22, the Corporate Governance Statement
on pages 40 to 44, Report from the Audit Committee on pages 49 and 50
and the Shareholder Information on pages 75 to 79 form part of the Report
of the Directors.
Directors
The current Directors of the Company are listed on page 36. Norman
and Margaret served throughout the review period. During the period,
Katya Thomson also served as a Director, resigning on 21 January 2025.
Andrew Rose and Tom Yoritaka were appointed as Directors with effect
from 12 February 2025.
As set out on page 43, the Board conducts an annual review of each
Director and of the Board as a whole. The Board considers all Directors
to contribute effectively, possess the necessary skills and experience, and
remain committed to their roles as Non-Executive Directors of the Company.
Following the performance review, it was agreed that all Directors would
stand for re-election. The Board recommends the re-election of each Director.
The Company has provided indemnities to the Directors in respect of
costs or other liabilities which they may incur in connection with any
claims relating to their performance or the performance of the Company
whilst they are Directors.
The beneficial interests of the current Directors and their connected persons
in the securities of the Company as at 31 December 2025 are set out in the
Directors’ Remuneration Report on page 47.
Share Capital
The Company’s share capital comprises Ordinary Shares with a nominal
value of 1p each. The voting rights of the shares on a poll are one vote for
each share held. There are no restrictions on the transfer of the Company’s
Ordinary Shares or voting rights, no shares which carry specific rights
with regard to the control of the Company and no agreement which the
Company is party to that affects its control following a takeover bid. To
the extent that they exist, the revenue profits of the Company (including
accumulated revenue reserves) are available for distribution by way of
dividends to the holders of the Ordinary Shares. Upon a winding-up,
after meeting the liabilities of the Company, the surplus assets would be
distributed to the Shareholders pro rata to their holding of Ordinary Shares.
At 31 December 2025, there were 247,873,823 Ordinary Shares of 1p each
in issue, of which 4,450,716 were held in treasury, and therefore the total
voting rights attaching to Ordinary Shares in issue were 243,423,107. In the
period from 1 January 2026 to 12 March 2026 26,899,713 Ordinary Shares
were bought back and held in treasury (these shares were bought back
under the Exit Opportunity as discussed later on this page) and therefore
the voting rights attaching to Ordinary Shares as at 12 March 2026 were
221,073,394.
The Directors intend to seek annual authority from Shareholders to allot new
Ordinary Shares, to disapply pre-emption rights of existing Shareholders
and to buy back Ordinary Shares for cancellation or to be held in treasury.
Issues of Shares
At the AGM held on 20 May 2025, the Company was granted authority
to allot up to 27,224,645 Ordinary Shares on a non-pre-emptive basis.
This authority is due to expire at the Company’s forthcoming AGM on
5 May 2026. As at 31 December 2025, the remaining authority to allot
Ordinary Shares under the authority granted at the AGM held on 20 May
2025 remained 27,224,645 Ordinary Shares. As at 11 March 2026, the
remaining authority had reduced to 22,674,645 following the issue of shares
from treasury on three occasions, being 200,000 shares on 6 February
2026, 4,000,000 shares on 26 February and 350,000 shares on 4 March
2026 (at a price of 181.50p, 190.30p and 183.00p per Ordinary Share
respectively and each at a premium to the prevailing net asset value).
In addition to the authority granted at the AGM held on 20 May 2025, at the
General Meeting held on 6 November 2025, the Company was authorised
to issue Ordinary Shares up to an aggregate nominal value of £1,600,000,
with this authority expiring on 31 December 2025. On 27 November 2025,
the Company announced that 110,674,880 new Ordinary Shares would
be issued (aggregate nominal value £1,106,749) to FJV shareholders as a
result of the completion of the combination with FJV. The conversion ratio
was 1.430780 Ordinary Shares in the Company for every FJV Share held
by an FJV shareholder rolling into AJOT, based on the Formula Asset Value
of each fund as at 20 November 2025 as valued by an independent valuer
(the mid-market price as at that date was 164.50p per Ordinary Share).
The additional capital was deployed progressively over several weeks into
existing and new portfolio companies in line with the Company’s investment
objective and policy. As of the end of January 2026, the FJV funds had
been fully deployed.
The Company has a block listing of Ordinary Shares to be listed to the
Official List of the FCA and admitted to trading on the equity shares in
commercial companies category.
Shares Buybacks Carried out During the Year
Date No of shares
Price paid
per share
(pence)
Total value
(£m)
% of total
issued
capital
31/12/2025 50,000 170.000 0.09 0.02%
30/12/2025 115,000 169.500 0.19 0.05%
29/12/2025 95,000 170.000 0.16 0.04%
22/12/2025 630,000 168.000 1.06 0.25%
15/12/2025 1,400,000 169.562 2.37 0.56%
12/12/2025 800,000 166.875 1.34 0.32%
10/04/2025 100,000 154.000 0.15 0.07%
07/04/2025 185,000 145.440 0.27 0.13%
27/02/2025 250,000 160.900 0.40 0.18%
Total 3,625,000 6.03 1.64%
Purchase of Shares
At the General Meeting held on 20 May 2025, the Company was granted
authority to purchase up to 14.99% of the Company’s Ordinary Shares in
issue as at the close of business on 1 April 2025, such authority to expire
on conclusion of the 2026 AGM. During the year, 3,090,000 Ordinary
Shares were bought back under this authority, for an aggregate amount
of £5,208,693 (nominal value £30,900, representing 1.27% of the called
up share capital as at the start of the period) under this authority in order
to control the discount. As at 31 December 2025, authority to buy back a
further 17,314,872 Ordinary Shares remained.
Sale of Shares from Treasury
At the AGM held on 20 May 2025, the Company was authorised to waive
pre-emption rights in respect of treasury shares, such authority to expire
on conclusion of the 2026 AGM. At the start of the year, 825,716 Ordinary
Shares were held in treasury. The Company bought back 3,625,000 shares
during the year, resulting in 4,450,716 shares being held in treasury as at
31 December 2025. Following the year end, a further 26,899,713 shares
were bought back and as at the date of this report, 26,800,429 shares were
held in treasury.
Governance / Directors’ Report
AVI Japan Opportunity Trust plc / Annual Report 2025
37
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Exit Opportunity (following the Year End)
At a General Meeting held on 13 January 2026 the Company was granted
authority to purchase up to 100% of the Company’s Ordinary Shares in
issue at the close of business on 10 December 2025, or such other number
as would be equal to the number of Ordinary Shares in issue immediately
prior to the commencement of the General Meeting on 13 January 2026.
The Company received applications from eligible Shareholders to tender
an aggregate of 26,899,713 shares, representing 11.05% of the issued
Ordinary Share capital, at a price of 173.7587p. The Ordinary
Shares bought back were held in treasury. For more information on
the Exit Opportunity please see page 70.
Cancellation of share premium account
On 27 November 2025, the Company announced the completion of
its combination with Fidelity Japan Trust PLC (“FJV”) pursuant to which
the Company acquired approximately £184 million of assets from FJV in
consideration for the issue of 110,674,880 new Ordinary Shares of 1p each
in the capital of the Company at 166.382531p per share. Following the
combination with FJV and as at 31 December 2025, the Company had
£246,040,000 standing to the credit of its share premium account and this
has increased further as a result of the issue of new Ordinary Shares since
31 December 2025.
The Company’s share premium account is a non-distributable reserve and
the Company is therefore unable to use it, among other things, for justifying
distributions to shareholders, including making purchases of its shares and
other distributions to shareholders, including the payment of dividends.
As at 31 December 2025, the Company had distributable reserves of
£138,356,000 and since that date has bought back 26,899,713 Ordinary
Shares pursuant to the tender offer referred to above.
Accordingly, in order to enhance the Company’s distributable reserves
position, the Company is seeking shareholder approval at the AGM
to cancel the Company’s share premium account. If approved by
shareholders, and subsequently by the Court, this will result in an increase
to the Company’s distributable reserves and thereby provide greater
flexibility to the Company in the future to make purchases of its shares and
other distributions to shareholders, including the payment of dividends.
Related Party Transactions
The Company’s related parties in the year were its Directors, the Investment
Manager and Finda Telecoms Oy as the Company’s largest Shareholders.
There have been no material transactions between the Company and
its Directors during the year and the only amounts paid to them were
in respect of expenses and remuneration for which there were no
outstanding amounts payable. Directors’ shareholdings are disclosed
on page 47.
In relation to the provision of services by the Investment Manager, other
than fees payable by the Company in the ordinary course of business
and the facilitation of marketing activities with third parties, there have
been no material transactions with the Investment Manager affecting the
financial position of the Company during the year under review. More
details on transactions with the Investment Manager, including amounts
outstanding at 31 December 2025 and shares held by AVI, are given in
note 16 on page 74.
Finda Telecoms Oy is deemed to be a significant shareholder holding in
the Company’s issued share capital. During the year under review, no
transactions took place between the Company and Finda Telecoms Oy.
Interests in Share Capital
At 31 December 2025, the following holdings representing more than
3% of the Company’s voting rights had been reported to the Company in
accordance with the Disclosure Guidance and Transparency Rules. This
information was correct at the date of notification, however it should be
noted that these holdings may have changed since notified to the Company
and may not therefore be wholly accurate statements of actual holdings as
at 31 December 2025. However, notification of any change is not required
until the next applicable threshold is crossed. For the sake of completeness,
other holdings which exceed 3% but where no notification has been
received, are also included.
Number of
Ordinary
Shares
Percentage of
voting rights
Finda Telecoms Oy 30,000,000 12.17%
City of London Investment Management
Capital Limited 48,154,534 19.53%
Hargreaves Lansdown 16,523,221 6.78%
Lazard Asset Management 13,668,682 5.61%
Interactive Investor (EO) 12,338,241 5.06%
Fidelity (platform) 9,711,303 3.99%
Wesleyan Assurance Society 7,495,241 3.04%
Between 31 December 2025 and 12 March 2026, Finda Telecoms Oy
notified the Company of a decrease in their voting rights to 9.24% and
City of London Investment Management Company Limited notified
the Company that their holding had decreased to 14.75%. No other
notifications of changes to interests in the Company’s share capital have
been received by the Company in the period specified above.
As at 31 December 2025, AVI Ltd & AVI employees owned
2,257,920 million shares.
Dividends
The Directors are proposing a final dividend of 0.60p per share for the year
to 31 December 2025. Subject to the approval of Shareholders at the
forthcoming AGM, the proposed final ordinary dividend will be payable on
22 May 2026 to Shareholders on the register at the close of business on
24 April 2026. The ex-dividend date will be 23 April 2026.
Financial Instruments
The Company utilises financial instruments, which comprise equity
investments, cash balances, receivables, payables and borrowings. The
risks identified arising from the financial instruments are market risk (which
comprises market price risk, interest rate risk and foreign currency risk),
liquidity risk and credit and counterparty risk. The Company may also enter
into derivative transactions to manage risk. The Board and Investment
Manager consider and review the risks inherent in managing the Company’s
assets which are detailed in note 15.
Governance / Directors’ Report continued
38
AVI Japan Opportunity Trust plc / Annual Report 2025
Annual General Meeting (“AGM”)
The AGM will be held on Tuesday, 5 May 2026 at the offices of the
Association of Investment Companies, 9th Floor, 24 Chiswell Street, London,
EC1Y 4YY. The Notice of Meeting and details of the resolutions to be put to
the AGM are contained in the circular sent to Shareholders with this report.
Directors’ Statement as to Disclosure of Information to Auditor
Each of the Directors, who were all members of the Board at the date of
approval of this report, confirms that to the best of his or her knowledge
and belief, there is no information relevant to the preparation of the Annual
Report of which the Company’s Auditors are unaware and he or she
has taken all the steps a Director might reasonably be expected to have
taken to be aware of relevant audit information and to establish that the
Company’s Auditors are aware of that information.
Listing Rule 6.6.4
Listing Rule 6.6.4 requires the Company to include certain information
specified in UK Listing Rules 6.6.1R in a single identifiable section of the
Annual Report or a cross reference table indicating where the information
is set out. The information required under Listing Rule 6.6.1(6) in relation to
Shares issued by the Company is set out on page 37.
Other Information
On 9 December 2025, the Company announced that it would offer
Shareholders the opportunity to tender some or all of their Shares for
sale. The Company has received applications from Eligible Shareholders
to tender in aggregate 26,899,713 Shares, equivalent to 11.05% of the
Company’s issued share capital at the Record Date (excluding Shares held
in treasury).
The Company released an announcement about the outcome of the Tender
Offer and General Meeting on 13 January 2026 and the Tender Price on
14 January 2026. Singer Capital Markets acquired the 26,899,713 validly
tendered Shares pursuant to the Tender Offer and all the tendered Shares
were to be held in treasury.
By order of the Board
For and on behalf of MUFG Corporate Governance Limited
Company Secretary
12 March 2026
AVI Japan Opportunity Trust plc / Annual Report 2025
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The Corporate Governance Statement forms part of the
Report of the Directors.
Applicable Corporate Governance Codes
The Company is committed to high standards of corporate governance.
This statement, together with the Statement of Directors’ Responsibilities
on page 48, indicates how the Company has applied, for the year under
review, the principles of recommended governance of the Financial
Reporting Council’s (“FRC”) 2024 UK Corporate Governance Code and
The AIC’s Code of Corporate Governance issued in 2024, (the “AIC
Code”), which complements the UK Code and provides a framework of
best practice for investment trusts. The Company has reported against the
2024 AIC Code for the year ending 2025 with the exception of provision 34,
which relates to internal controls and will be reported against in the Annual
Report for the year ending 2026.
The Board considers that reporting against the principles and provisions
of the AIC Code, which includes the UK Code, offers Shareholders
comprehensive information about the Company’s Corporate
Governance compliance.
The UK Code is available on the FRC website (www.frc.org.uk). The AIC
Code is available on The AIC’s website (www.theaic.co.uk) and includes an
explanation of how the AIC Code adapts the principles and provisions set
out in the UK Code to make them relevant for investment companies.
Statement of Compliance
The UK Code includes provisions relating to:
• the role of the chief executive;
• executive directors’ remuneration;
• management performance;
• remuneration and succession planning;
• workforce policies (including remuneration) and practices; and
• the need for an internal audit function.
For the reasons explained in the AIC Code, the Board considers that
these provisions are not relevant to the Company, being an externally
managed investment company with no employees. The Company has
therefore not reported further in respect of these provisions. The Board is
responsible for ensuring the appropriate level of corporate governance and
considers that the Company has complied with the principles and provisions
of the AIC Code during the year under review except as disclosed below:
• provision 14: No senior independent director has been appointed.
All the Directors have different qualities and areas of expertise on
which they lead, and concerns can be conveyed to another Director
if Shareholders do not wish to raise concerns with the Chairman or
the Chair of the Audit Committee. The Nomination and Remuneration
Committee Chair or any other Director will chair the Board or
Nomination and Remuneration Committee meeting when the annual
evaluation of the Chairman’s performance, his re-election or the
recruitment of his successor is discussed;
• provision 17: As all of the Directors are independent of the Investment
Manager, the Board is of the view that there is no requirement for a
separate management engagement committee. The Board as a whole
will review the terms of appointment and performance of the Investment
Manager and the Company’s other third-party service providers (other
than the Auditor who is reviewed by the Audit Committee);
• provision 23: Directors are not appointed for a specified term, as all
Directors are non-executive and the Board believes that a Director’s
performance and their continued contribution to the running of the
Company is of greater importance and relevance to Shareholders
than the length of time for which they have served as a Director of the
Company. Each Director is subject to the re-election provisions set
out in the Articles, which provide that a Director appointed during the
year is required to retire and seek election by Shareholders at the next
AGM following their appointment. Thereafter the Directors intend to
offer themselves for re-election annually but, under the Articles, are
only required to submit themselves for re-election at least once every
three years. Directors who have served for more than nine years will
be subject to annual re-election, provided that the Nomination and
Remuneration Committee and the Board remain satisfied that the
relevant Director’s independence is not impaired by their length of
service.
Role of the Board
A management agreement between the Company and the Investment
Manager sets out the matters over which the Investment Manager has
authority. This includes management of the Company’s assets and some
marketing services. The Board is collectively responsible for the success
of the Company and a formal schedule of matters reserved to the Board
for decision has been approved, which is available on the Company’s
website: www.ajot.co.uk. This includes strategy and management, Board
and committee membership and other appointments, appointment and
oversight of delegates, corporate structure and share capital, remuneration,
financial reporting and controls, company contracts, internal controls,
corporate governance and policies.
The Board is responsible for the approval of annual and half-year results
and other public documents and for ensuring that such documents
provide a fair, balanced and understandable assessment of the Company’s
position and prospects.
The Board’s role is to provide leadership within a framework of prudent
and effective controls that enable risk to be assessed and managed. It
is responsible for setting the Company’s standards and values and for
ensuring that its obligations to its Shareholders and other stakeholders are
understood and met. The Board sets the Company’s strategic aims (subject
to the Company’s Articles of Association, and to such approval of the
Shareholders in General Meeting as may be required from time to time) and
ensures that the necessary resources are in place to enable the Company’s
objectives to be met. The Articles of Association may only be amended by
way of a special resolution of shareholders.
The Board meets formally at least four times a year, with additional ad hoc
Board or Committee meetings arranged when required. The Directors have
regular contact with the Investment Manager and Company Secretary
between formal meetings. Full and timely information is provided to the
Board to enable it to function effectively and to allow Directors to discharge
their responsibilities.
At each meeting the Directors follow a formal agenda, which includes a
review of the Company’s NAV, share price, premium, financial position,
gearing levels, peer group performance, investment performance, asset
allocation and transactions and any other relevant business matters to
ensure that control is maintained over the affairs of the Company. The
Board monitors compliance with the investment restrictions required by the
FCA and s1158 of the Corporation Tax Act 2010, the Company’s objective,
investment, borrowing and hedging policies and reviews the investment
strategy. The Board regularly receives reports from the Investment Manager
on marketing and investor relations. The proceedings at all Board and
Committee meetings are fully recorded through a process that allows any
Director’s concerns to be recorded in the minutes.
Governance / Corporate Governance Statement
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AVI Japan Opportunity Trust plc / Annual Report 2025
Role of the Board continued
There is an agreed procedure for Directors to take independent professional
advice if necessary and at the Company’s expense. This is in addition to the
access that every Director has to the advice and services of the Company
Secretary, MUFG Corporate Governance Limited, which is responsible
to the Board for ensuring that Board procedures are followed, and that
applicable rules and regulations are complied with.
Board Composition
The Board is chaired by Norman Crighton, and consists of four
Non-Executive Directors. All members of the Board are regarded as
independent of the Investment Manager and the Chairman. The Directors
have a breadth of investment, financial and professional experience relevant
to the Company’s business and brief biographical details of each Director
are set out on page 36.
A review of Board composition and balance is included as part of the
annual performance evaluation of the Board, details of which may be
found below.
Diversity
The Directors recognise the benefits of Board diversity and continually
review the Board’s and individual Directors’ effectiveness. They aim to
balance knowledge of the Company, diversity and continuity in their
relationship with the Investment Manager. The Board has adopted a
Diversity Policy to ensure Directors bring a wide range of skills, knowledge,
experience, backgrounds, and perspectives. While the Board does not
set specific targets, diversity is considered when evaluating the skills,
knowledge and experience needed for each Board vacancy. The Board has
established objectives to achieve diversity:
• all Board appointments will be made on merit, in the context of the
skills, background, knowledge and experience that are needed for the
Board to be effective; and
• long lists of potential Non-Executive Directors should include diverse
candidates of appropriate merit.
The terms and conditions of Directors’ appointments are set out in formal
letters of appointment, copies of which are available for inspection on
request at the Company’s registered office during normal business hours
and at the Company’s AGM.
The Board notes the FCA’s rules on diversity and inclusion on company
boards included in Listing Rule 6.6.6R (9-11), which are as follows:
• At least 40% of individuals on the Board to be women;
• At least one senior Board position to be held by a woman; and
• At least one individual on the Board to be from a minority ethnic
background.
In accordance with Listing Rule 6 Annex 1R, the below tables, in
prescribed format, show the gender and ethnic background of the Directors
at the year end.
Gender identity
Number of
Board
members
Percentage
on the Board
Number
of senior
positions on
the Board*
Men 3 75% 1
Women 1 25% 1
Not specified/prefer not to say – – –
Ethnic background
Number of
Board
members
Percentage
on the Board
Number of
senior
positions on
the Board*
White British or other White
(including minority white
groups) 3 75% 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British 1 25% –
Black/African/Caribbean/
Black British – – –
Other ethnic group,
including Arab – – –
Not specified/prefer not to say – – –
* Listing Rule 6.6.6R(9) includes only the positions of chair, chief executive, senior independent
director and chief financial officer in this category. Other than the Chairman of the Board, the
Company does not have these roles, as it is an externally managed investment trust without
employees and therefore this target is not applicable. The Company has chosen to report
against this target by including the position of Audit Committee Chair as a senior position.
The data in the above tables was collected through self-reporting by the
Directors, who were asked to indicate which of the categories specified
in the prescribed tables were most applicable to them.
The Board is pleased to have met the targets for a senior position to be
held by a woman throughout the year and for at least one individual on the
Board to be from an ethnic minority background for the majority of the year
under review. The Board is conscious that the target of at least 40% of
individuals on the Board to be women is not currently met. This target will
be borne in mind during the upcoming recruitment discussed on page 43
although the recruitment will be carried out in line with the diversity policy
and appointments will continue to be made on merit.
Responsibilities of the Chairman, the Board and its Committees
The Chairman leads the Board and is responsible for its overall effectiveness
in directing the affairs of the Company. The Company has adopted a
document setting out the responsibilities of the Chairman, which is available
on the website: www.ajot.co.uk.
Tenure
Directors are generally initially appointed by the Board, until the following
AGM when, as required by the Company’s Articles of Association, they
will stand for re-election by Shareholders. Thereafter, a Director’s
appointment is subject to an annual performance evaluation and the
approval of Shareholders at each AGM, in accordance with corporate
governance best practice.
Under the Articles of Association, Shareholders may remove a Director
before the end of his or her term by passing a special resolution at a
meeting, and may by ordinary resolution appoint another person who is
willing to act to be a Director in his or her place. A special resolution is
passed if more than 75% and an ordinary resolution if more than 50% of the
votes cast, in person or by proxy, are in favour of the resolution.
In accordance with the above and the AIC Code, all Directors will stand for
re-election at the 2026 AGM. The contribution and performance of
the Directors seeking re-election was reviewed by the Nomination and
Remuneration Committee at its meeting in March 2026, assisted by the
report from the external Board evaluator, discussed on the following page,
and the Committee recommended the Directors’ continuing appointment
to the Board.
AVI Japan Opportunity Trust plc / Annual Report 2025
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Tenure continued
The Board has adopted a formal tenure policy for Directors based on
a continual review of performance. The Board does not believe that
length of service in itself necessarily disqualifies a Director from seeking
reappointment but, when making a recommendation, the Board takes
into account the ongoing requirements of the UK Corporate Governance
Code, including the need to refresh the Board and its Committees. It is
not anticipated that any of the Directors would normally serve in excess of
nine years. In exceptional circumstances, which would be fully explained to
Shareholders at the time, a one or two-year extension might be appropriate.
Similarly, it is not anticipated that the Chairman will normally serve in excess
of nine years. However, in exceptional circumstances, which would be fully
explained at the time, a one or two-year extension might be appropriate,
given the entirely non-executive nature of the Board and in particular where
the Chairman has not been appointed in his position for the entire duration
of his tenure as a Director. As with all Directors, the continuing appointment
of the Chairman is subject to ongoing review of performance, including a
satisfactory annual evaluation, annual re-election by Shareholders and may
be further subject to the particular circumstances of the Company at the
time he or she intends to retire from the Board.
Board Independence
All Directors are Non-Executive, have a range of other interests and are not
dependent on the Company itself. At the Nomination and Remuneration
Committee meeting in March 2026, the Directors reviewed their
independence and confirmed that all Directors remain wholly independent
of the Investment Manager. The Board has determined that all Directors
are independent in character and judgement and that their individual skills,
broad business experience and knowledge and understanding of the
Company are of great benefit to Shareholders.
There were no contracts subsisting during or at the end of the year in
which a Director of the Company is or was materially interested and which
is or was significant in relation to the Company’s business. No Director
has a contract of service with the Company and there are no agreements
between the Company and its Directors concerning compensation for loss
of office.
Directors’ Conflicts of Interest
The Company’s Articles of Association permit the Board to consider
and, if it sees fit, to authorise situations where a Director has an interest
that conflicts, or may possibly conflict, with the interests of the Company
(“situational conflicts”).
A schedule of interests for each Director is maintained by the Company and
reviewed at every Board meeting. The Board has a formal system in place,
in line with the Articles of Association for Directors, to declare any new
situational conflicts to be considered for authorisation by those Directors
who have no interest in the matter being considered. In deciding whether to
authorise a situational conflict, the non-conflicted Directors act honestly and
in good faith with a view to the best interests of the Company and they may
impose limits or conditions when giving the authorisation, or subsequently,
if they think this is appropriate. Any situational conflicts considered, and any
authorisations given, are recorded in the relevant meetings’ minutes and the
register of interests.
The prescribed procedures have been followed in deciding whether, and on
what terms, to authorise situational conflicts, and the Board believes that
the system it has in place for reporting and considering situational conflicts
continues to operate effectively. The Chairman has had no relationship
that may have created a conflict between his interests and those of the
Company’s Shareholders.
Induction and Training
On appointment, the Company Secretary provides all Directors with
induction training. The training covers the Company’s investment strategy,
policies and practices. The Directors are also given regular briefings on
changes in law and regulatory requirements that affect the Company and
the Directors. In November 2025, the Board members received training on
their Directors’ Duties under the Companies Act 2006 which was provided
by the Company Secretary. The Board also received training from an
external provider on inclusive working. It is the Chairman’s responsibility to
ensure that the Directors have sufficient knowledge to fulfil their role and
Directors are encouraged to attend industry and other seminars covering
issues and developments relevant to investment trust companies. Regular
reviews of Directors’ training needs are carried out by the Chairman by
means of the evaluation process described below.
The Directors have access to the advice and services of the Company
Secretary through its appointed representative, who is responsible for
general secretarial functions and for assisting the Company with compliance
with its continuing obligations as a company that falls under the Equity
Shares (Commercial Companies) category. The Company Secretary is also
responsible for ensuring good information flows between all parties.
Directors’ Insurance and Indemnifcation
Directors’ and Officers’ liability insurance cover was in place throughout
the year and remains in place at the date of this report. 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. The Company has granted indemnity to Directors
to the extent permitted by law in respect of liabilities that may attach to
them in their capacity as Directors of the Company.
Board Committees
The Board delegates certain responsibilities and functions to the Audit
Committee and the Nomination and Remuneration Committee. Both
Committees comprise all Directors. The terms of reference for these
Committees are available on the website www.ajot.co.uk or via the
Company Secretary.
A separate Management Engagement Committee has not been established
as the Board consists of only independent Non-Executive Directors. The
investment management agreement and performance of the Investment
Manager is reviewed by the Board as a whole on a regular basis, ensuring
that the terms are fair and reasonable and that its continuance, given the
Company’s performance over both short and longer terms, is in the best
interests of the Company and its Shareholders. The Board as a whole also
reviews the terms of appointment and performance of the Company’s other
service providers.
Audit Committee
The Audit Committee comprises all Directors. During the year under
review, the Audit Committee was chaired by Katya Thomson until January
2025, when she was succeeded by Margaret Stephens. Both Katya and
Margaret are chartered accountants. The other Audit Committee members
bring a combination of financial, investment and other experience gained
throughout their careers. The Board is satisfied that at least one of the Audit
Committee members has recent and relevant financial experience. The
Audit Committee as a whole is considered to have competence relevant
to the sector. All members of the Audit Committee are independent. The
Chairman of the Board is a member of the Audit Committee but, in line
with the AIC Code, does not chair it and was considered independent
upon appointment. The Chairman’s membership of the Audit Committee
is considered appropriate given his extensive knowledge of the Investment
Trust sector.
The Report of the Audit Committee, which forms part of this Corporate
Governance Statement, can be found on pages 49 and 50.
Governance / Corporate Governance Statement continued
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AVI Japan Opportunity Trust plc / Annual Report 2025
Nomination and Remuneration Committee
The Nomination and Remuneration Committee, consisting of all of the
Directors and chaired by Tom Yoritaka, meets at least annually.
The Nomination and Remuneration Committee is responsible for setting
Directors’ fees in line with the Remuneration Policy set out on page 45,
which is subject to periodic Shareholder approval. The Nomination and
Remuneration Committee is also responsible for ensuring that the Board
has an appropriate balance of skills and experience to carry out its duties,
to select and propose suitable candidates for appointment when
necessary and for making recommendations regarding the re-election of
existing Directors.
When considering succession planning and tenure policy, the Nomination
and Remuneration Committee bears in mind the balance of skills,
knowledge, experience, gender and diversity of Directors, the
achievement of the Company’s investment objective and compliance with
the Company’s Articles of Association and the AIC Code. The Nomination
and Remuneration Committee keeps the Company’s needs under
continual review and will make recommendations when the recruitment of
additional Non-Executive Directors is required. Once a decision is made to
recruit additional Directors to the Board, a formal job description is drawn
up, based on a review of the skills required to complement those of the
remaining Directors.
The Nomination and Remuneration Committee also reviews and
recommends to the Board the Directors seeking re-election and election.
Recommendation is not automatic and will follow an annual performance
evaluation of the Board, its Committees and individual Directors and
consideration of the Director’s independence. The evaluation of individual
Directors takes into account whether they have devoted sufficient time
and contributed adequately to the work of the Board and its Committees.
The evaluation of the Board and its Committees considers the balance
of experience, skills, independence, corporate knowledge, its diversity,
including gender, and how it works together.
The Nomination and Remuneration Committee met in March 2026 to
carry out its annual review of the Board, its composition and size and its
Committees, the results of which are detailed in the Performance Evaluation
paragraph on this page. Two of the current Directors have served for a
period of seven years. Their tenure is considered by the Nomination and
Remuneration Committee as part of the review of succession planning.
During the reporting period, the Company engaged the services of an
independent external consultancy with no connection to the Company,
Nurole Ltd, and successfully recruited two Non-Executive Directors:
Andrew Rose and Tom Yoritaka. Post the Year End, the Nomination and
Remuneration Committee has engaged Trust Associates to facilitate the
appointment of a new independent NED, with the potential to become
Audit Committee Chair, as part of succession planning in preparation
for Margaret Stephen’s retirement, to provide stability and continuity to
Shareholders. Other than also carrying out the Board performance review
in the year as described elsewhere on this page, Trust Associates has no
connection to the Company. Further changes are planned in the coming
years to refresh the entire Board, including the selection of a successor for
the Chairman of the Board. Further information on succession planning
and recruitment will be provided in future Annual Reports, as and when
appropriate.
Board and Committee Meeting Attendance
The table details the number of scheduled Board and Committee meetings
held during the year under review and the number of meetings attended by
each Director.
Director Board
Audit
Committee
Nomination and
Remuneration
Committee
Norman Crighton 4(4) 2(2) 2(2)
Margaret Stephens 4(4) 2(2) 2(2)
Andrew Rose 4(4) 2(2) 2(2)
Tom Yoritaka 4(4) 2(2) 2(2)
The number in brackets denotes the number of meetings each Director was
entitled to attend.
The Directors also met on an ad hoc basis during the year to undertake
business, such as discussing the combination of assets of the Company
with the assets of Fidelity Japan Trust PLC, approving the prospectus and
related documents as well as the 2025/2026 Exit Opportunity.
Performance Review
During the year, the Board engaged Trust Associates to carry out
an external performance review of the effectiveness of the Board, its
Committees, the Chairman and the Directors.
Trust Associates have interviewed the members of the Board, attended
a Board meeting, reviewed: 1) meeting packs; 2) terms of reference; 3)
the annual report; 4) and other relevant documents. Trust Associates
presented their findings to the Board in March 2026 and a number of
recommendations to help the Board recognise opportunities and issues,
look forward and facilitate change (where that is agreed), are set out below.
Summary of Trust Associates performance review fndings
Overall, the Board of AVI Japan Opportunity Trust Plc (AJOT) appears
to be functioning effectively. The Board had been highly engaged in the
successful combination of AJOT with the Fidelity Japan Trust, which
concluded at the end of 2025. Directors report a strategic focus on
ensuring that the fund continues to trade close to NAV, with a strong
emphasis on marketing and the offer of regular share buy backs and an
annual redemption opportunity. Gearing is moderate.
Directors appear to have a strong understanding of the investments
and to have a close but appropriately challenging relationship with the
investment manager. Board meetings appear to provide opportunities
for debate with every director feeling freely able to contribute. Directors
report that the Board’s suppliers provide a good service.
Succession planning will need to be a key focus of the Board over the
next year or so as two directors have been on the Board since IPO,
including the Chair. The Board will also need to discuss how it will
address the gender imbalance among directors.
The Board’s two committees appear to function effectively. Directors
could consider whether forming a Management Engagement
Committee could be useful.
AVI Japan Opportunity Trust plc / Annual Report 2025
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Internal Control
The Board has overall responsibility for the Company’s system of internal
control and for reviewing its effectiveness. The Audit Committee supports
the Board in continuously monitoring of the internal control and risk
management framework. Specific examples include the identification
of increased cyber risk during the combination with FJV. As a result, the
Board implemented new information security practices by mandating
password protection requirements in its communications. Another example
included the requirement for service providers to respond to annual due
diligence queries from the Company with a higher threshold of assurance
and declarations about its practices and internal controls within that
organisation. The Board has established an ongoing process for identifying,
evaluating and managing the principal and new or emerging risks faced by
the Company. The process accords with the FRC’s Corporate Governance
Code Guidance published on 29 January 2024, which incorporates the
FRC’s guidance on risk management and internal controls.
The risk management process and system of internal control were in
operation throughout the year and up to the date of this report. The system
is designed to meet the specific risks faced by the Company, considering
its reliance on its service providers and their internal controls. Therefore,
the system manages rather than eliminates the risk of failure to achieve
the Company’s business objectives providing reasonable but not absolute
assurance against material misstatement or loss.
In arriving at its judgement of the risks the Company faces, the Board,
through the Audit Committee, has considered the Company’s operations
in light of the following factors:
• the nature and extent of risks which it regards as acceptable for the
Company to bear within its overall business objective;
• the threat of such risks becoming reality;
• the Company’s ability to reduce the incidence and impact of risk on its
performance; and
• the extent to which third parties operate the relevant controls.
The Company maintains a risk matrix which identifies key risks faced by the
Company and has controls in place to mitigate those risks. The risks are
assessed based on their likelihood, the impact on the business if they occur
and the effectiveness of the controls in place to mitigate them. This risk
matrix is reviewed twice a year by the Audit Committee and as necessary at
other times.
The Directors confirm that they have carried out a robust assessment of the
Company’s emerging and principal risks as identified by the Board, which
are set out on pages 34 and 35, as well as the controls in place to manage
or mitigate those risks.
The Board reviews financial information produced by the Investment
Manager and the Administrator regularly. Most functions for the day-to-
day management of the Company are subcontracted, and the Directors
therefore obtain assurances and information, including internal control
reports, from key third-party suppliers regarding the internal systems and
controls operated in their respective organisations. During the year under
review, the Board also requested and reviewed updates from key service
providers on business continuity, cyber security and fraud prevention.
By the means of the procedures set out above, the Board confirms that
it has reviewed, and is satisfied with, the effectiveness of the Company’s
system of internal control for the year ended 31 December 2025, and to
the date of approval of this Annual Report and Financial Statements. In the
post reporting period, the Audit Committee has reviewed the declarations
required by its service providers in line with the provision 34 AIC Code
requirements, to provide further assurance to the Committee in its review of
internal controls in place.
During the course of its review of the system of internal control, the Board
has not identified nor been advised of any failings or weaknesses which
it has determined to be significant. Therefore, a confirmation in respect of
necessary actions has not been considered appropriate.
Internal Audit Function
As the Company is an externally managed investment company with day-
to-day management and administrative functions being outsourced to third
parties, and as the Company does not have Executive Directors, employees
or internal operations, the Board does not consider it necessary to establish
an internal audit function, as it believes the existing system of monitoring
and reporting by the third parties to be appropriate and sufficient.
Accountability and Relationship with AVI
The Statement of Directors’ Responsibilities in respect of the Financial
Statements is set out on page 48, the Independent Auditor’s Report on
pages 51 to 55 and the Viability Statement on page 31.
The Board has delegated contractually to external third parties, including
the Investment Manager, the management of the investment portfolio, the
custodial services (including the safeguarding of the assets), the day-to-day
accounting and cash management, company secretarial and administration
requirements and registration services. Each of these contracts was entered
into after full and proper consideration by the Board of the quality and
cost of the services offered, including the control systems in operation in
so far as they relate to the affairs of the Company. Further information on
management arrangements can be found on page 25.
The Board receives and considers regular reports from the Investment
Manager and ad hoc reports and information are supplied to the Board as
required. The Investment Manager takes decisions as to the purchase and
sale of individual investments. The Investment Manager also ensures that
all Directors receive, in a timely manner, all relevant management, regulatory
and financial information.
Representatives of AVI attend Board meetings, enabling the Directors
to probe further on matters of concern. The Board and the Investment
Manager operate in a supportive, co-operative and open environment.
Continued Appointment of the Investment Manager
The Board considers the arrangements for the provision of investment
management and other services to the Company on an ongoing basis.
In addition to the monitoring of investment performance at each Board
meeting, an annual review of the Company’s investment performance over
both the short and longer terms is undertaken.
Following an annual review, it is the Directors’ opinion that the continuing
appointment of AVI, the Investment Manager, on the existing terms, is in the
best interests of the Company and its Shareholders as a whole.
By order of the Board
For and on behalf of MUFG Corporate Governance Limited
Company Secretary
12 March 2026
Governance / Corporate Governance Statement continued
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AVI Japan Opportunity Trust plc / Annual Report 2025
Directors’ Remuneration Policy
The Remuneration Policy provides details of the remuneration policy for
the Directors of the Company. The unamended Remuneration Policy was
approved by Shareholders at the AGM of the Company held on 20 May
2025. The Remuneration Policy is outlined below. The Directors consider
the Remuneration Policy to remain fit for purpose and are proposing no
amendments.
The Company follows the recommendation of the AIC Code of
Corporate Governance that Non-Executive Directors’ remuneration
should reflect the time commitment and responsibilities of the role. The
Board’s policy is that the remuneration of Non-Executive Directors should
reflect the experience of the Board as a whole and be determined from time
to time at the Board’s discretion with reference to comparable organisations
and appointments.
All Directors are Non-Executive, appointed under the terms of letters of
appointment. There are no service contracts in place. The Company has no
employees. In line with the majority of investment trusts and the AIC Code,
there are no performance conditions attached to the remuneration of the
Directors as the Board does not consider such arrangements or benefits
necessary or appropriate for Non-Executive Directors.
The Board has set three levels of fees: one for a Director and additional
fees for the Chair of the Audit Committee and the Chairman of the Board.
Fees are reviewed annually in accordance with the above policy. Annual
fees are pro-rated where a change takes place during a financial year. The
fee for any new Director appointed to the Board will be determined on the
same basis.
In addition to the annual fee, under the Company’s Articles of Association,
any Director who is requested to perform services which, in the opinion of
the Board, go beyond the ordinary duties of a director, may be paid such
extra remuneration as the Board may in its discretion decide in addition
to or in substitution for any other remuneration that they may be entitled
to receive. Should any extra remuneration be paid during the year, details
of the events, duties and responsibilities that gave rise to the additional
Directors’ fees would be disclosed in the Annual Report. Directors are also
entitled to reimbursement of reasonable fees and expenses incurred by
them in the performance of their duties.
The approval of Shareholders would be required to increase the aggregate
annual Directors’ remuneration limit of £250,000, as set out in the
Company’s Articles of Association.
None of the Directors has any entitlement to pensions or pension-related
benefits, medical or life insurance schemes, share options, long-term
incentive plans, or performance-related payments. No Director is entitled
to any other monetary payment or any assets of the Company, except
in their capacity (where applicable) as Shareholders of the Company.
Directors’ Letters of Appointment expressly prohibit any entitlement to
payment on loss of office.
Directors’ and Officers’ liability insurance cover is maintained by the
Company, at its expense, on behalf of the Directors. The Company has also
provided indemnities to the Directors in respect of costs or other liabilities
they may incur in connection with any claims relating to their performance
or the performance of the Company while they are Directors.
The Company is committed to ongoing Shareholder dialogue. Any views
expressed by Shareholders on the fees paid to Directors will be taken into
consideration by the Board when reviewing the Directors’ Remuneration
Policy and during the annual review of Directors’ fees.
Report on Implementation
This Report is prepared in accordance with Schedule 8 of the Large
and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2008 as amended in August 2013. The report
also meets the relevant requirements of the Companies Act 2006 (the
“Act”) and the Listing Rules of the FCA and describes how the Board has
applied the principles relating to Directors’ remuneration. The Company’s
Auditors are required to report on certain information contained within
this report; where information set out below has been audited it is
indicated as such.
All Directors are Non-Executive, and the Company has no chief executive
officer or employees; as such some of the reporting requirements contained
in the Regulations are not applicable and have not been reported on,
including the requirement for a future policy table and an illustrative
representation of the level of remuneration that could be received by each
individual Director. It is believed that all relevant information is disclosed
within this report in an appropriate format.
The Board may amend the level of remuneration paid to individual Directors
within the parameters of the Remuneration Policy.
Statement from the Chair of the Nomination and Remuneration
Committee
Directors’ remuneration is determined by the Nomination and Remuneration
Committee, at its discretion, within an aggregate set amount per annum.
This aggregate ceiling had been set at £250,000 in the Company’s Articles
of Association and in the Remuneration Policy as approved on
20 May 2025.
The Nomination and Remuneration Committee comprises all Directors
and is chaired by Tom Yoritaka. Each Director abstains from voting on their
own individual remuneration. The Board has not been provided with advice
or services by any person in respect of its consideration of the Directors’
remuneration.
During the year the Board carried out a review of the level of Directors’
fees in accordance with the Remuneration Policy. As part of this review,
the Board considered the Company’s performance, the demands placed
on Directors’ time and the level of fees being paid to Non-Executive
Directors in the Company’s peer group. The review concluded that the fees
being paid were consistent with the market rates for the work performed.
Consequently, effective 1 January 2026, fees were adjusted in line with the
Consumer Price Index (“CPI”). Fees were increased to £50,000 (previously
£45,800) per annum for the Chairman, £43,300 (previously £41,700) per
annum for the Chairperson of the Audit Committee and £40,100 (previously
£38,600 per annum for other Directors. The Board is satisfied that the
changes to the remuneration of the Directors are compliant with the
Directors’ Remuneration Policy.
During the year, Norman Crighton received non-recurring additional
remuneration of £15,000 for the significant amount of work undertaken
by him to facilitate the combination with FJV. The Board used its
discretion when awarding this additional fee as, in line with the Company’s
Remuneration Policy, it considered this work to go beyond the ordinary
duties of a Director.
There have been no other major decisions on Directors’ remuneration or
any other changes to the remuneration paid to each individual Director in
the year under review.
Directors’ Emoluments (audited information)
Directors are only entitled to fixed fees at such rates as are determined
by the Board from time to time and in accordance with the Directors’
Remuneration Policy as approved by the Shareholders.
Governance / Directors’ Remuneration Report
AVI Japan Opportunity Trust plc / Annual Report 2025
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Directors’ Emoluments (audited information) continued
None of the Directors has any entitlement to pensions or pension-related benefits, medical or life insurance schemes, share options, long-term incentive plans, or performance-related payments. No Director is entitled to any other
monetary payment or any assets of the Company. Accordingly, the Single Total Figure table below does not include columns for any of these items or their monetary equivalents. Directors’ and Officers’ liability insurance is maintained
and paid for by the Company on behalf of the Directors.
In line with market practice, the Company has agreed to indemnify the Directors in respect of costs, charges, losses, liabilities, damages and expenses, arising out of any claims or proposed claims made for negligence, default, breach
of duty, breach of trust or otherwise, or relating to any application under Section 1157 of the Companies Act 2006, in connection with the performance of their duties as Directors of the Company. The indemnities would also provide
financial support from the Company should the level of cover provided by the Directors’ and Officers’ liability insurance maintained by the Company be exhausted.
The Directors who served during the year received the following emoluments:
Single Total Figure Table (audited information)
Fees paid* Taxable benefits Total
% change
2024-2025
% change
2023-2024
% change
2022-2023
% change
2021-2022
% change
2020-2021Name of Director 2025 2024 2025 2024 2025 2024
Norman Crighton
1
60,800 55,000 – – 60,800 55,000 10.5% 35.8% 8.0% 5.3% 1.8%
Margaret Stephens 41,531 38,000 – – 41,531 38,000 9.3% 8.3% 8.0% 6.1% 2.1%
Andrew Rose
2
34,097 – – – 34,097 – – – – – –
Tom Yoritaka
2
34,097 – 35 – 34,132 – – – – – –
Katya Thomson
3
2,245 41,000 – – 2,245 41,000 – 8.5% 8.0% 5.7% 1.9%
Yoshi Nishio
3
– 38,500 – – – 38,500 – 9.7% 8.0% 6.1% 2.1%
172,770 172,500 35 – 172,805 172,500 0.2% 16.2% 8.0% 5.8% 2.0%
* Excluding employer’s National Insurance Contribution.
1 Received additional non-recurring remuneration of £15,000 in 2025 in respect of the combination with FJV and £10,000 in 2024 in respect of meetings attended in Japan.
2 MrRoseandMrYoritakawereappointedwitheffectfrom12February2025.
3 Ms Thomson resigned on 21 January 2025 and Mr Nishio resigned on 30 September 2024. Mr Nishio received an additional, non-recurring remuneration in the sum of £10,000 in 2024 in respect of meetings attended in Japan.
Sums Paid to Third Parties (audited information)
None of the fees referred to in the above table were paid to any third party in respect of the services provided by any of the Directors.
Other Benefts
Taxable benefits – Article 105 of the Company’s Articles of Association provides that Directors are entitled to be reimbursed for reasonable expenses incurred by them in connection with the performance of their duties and attendance at
Board and General Meetings or any other meeting which they, as Directors, are entitled to attend.
Pensions-related benefits – Article 106 permits the Company to provide gratuities or pensions or similar benefits for Directors of the Company. However, no pension schemes or other similar arrangements have been established and no
Director is entitled to any pension or similar benefits.
Governance / Directors’ Remuneration Report continued
46
AVI Japan Opportunity Trust plc / Annual Report 2025
Performance
The chart below illustrates the total Shareholder return for a holding in the Company’s shares, as compared to the
MSCI Japan Small Cap (£ adjusted total return), which the Board has adopted as the measure for both the Company’s
performance and that of the Investment Manager for the year, over the period since inception of the Company.
Relative Importance of Spend on Pay
The table below shows the proportion of the Company’s income spent on pay.
2025
£’000
2024
£’000
Difference
£’000
Spend on Directors’ fees* 173 173 –
Distribution to Shareholders 4,314 3,033 1,281
Management fee and other expenses** 3,484 2,830 654
* As the Company has no employees the total spend on remuneration comprises only the Directors’ fees.
** Note: the items listed in the table above are as required by the Large and Medium sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 s.20, with the exception of the management fee and other expenses, which has been included because the
Directors believe it will help Shareholders’ understanding of the relative importance of the spend on pay. The figures for this measure are the
same as those shown in note 3 to the financial statements.
180
160
140
80
100
120
80
100
120
140
160
180
Oct 18 Apr 19 Oct 19 Apr 20 Oct 20
Apr 21 Oct 21 Apr 23 Oct 24Apr 24
+70%
+23%
Oct 23Apr 22 Oct 22
50
100
150
200
220
160
180
200
140
60
80
100
120
180
160
140
80
100
120
Oct 18 Oct 19 Oct 20
Oct 21 Oct 25Oct 24Oct 23Oct 22
60
80
100
120
140
160
180
200
220
+95%
+48%
Dec 18 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Jun 24 Jun 25Dec 19 Dec 20 Dec 21 Dec 22 Dec 23 Dec 24 Dec 25
Total Shareholder Return vs MSCI Japan Small Cap
Statement of Directors’ Shareholding and Share Interests (audited information)
Neither the Company’s Articles of Association nor the Directors’ Letters of Appointment require a Director to own
shares in the Company. The interests of the Directors and their connected persons in the equity and debt securities
of the Company at 31 December 2025 are shown in the table below:
Name of Director Ordinary Shares
Norman Crighton 26,575
Andrew Rose 60,000
Margaret Stephens 10,000
Tom Yoritaka –
Katya Thomson* 10,000
Total 106,575
* Ms Thomson resigned on 21 January 2025 and the holding above is as at the date of her resignation.
There have been no changes to Directors’ interests between 31 December 2025 and the date of this Report.
Statement of Voting at AGM
At the 2025 AGM, 42,151,847 votes (99.74%) were received voting for the resolution seeking approval of the
Directors’ Remuneration Report, 107,918 (0.26%) were against, none were at the Chairman’s discretion and 27,728
were withheld; the percentages of votes excludes votes withheld. In relation to the approval of the Remuneration
Policy which was most recently approved at the 2025 AGM, a total of 42,150,627 votes (99.74%) were received in
favour of the resolution, 109,138 votes (0.26%) were against, none were at the Chairman’s discretion, and 27,728
votes were withheld. The percentages of votes excludes votes withheld.
Annual Statement
On behalf of the Board and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations 2013, I confirm that the above Report on
Remuneration Implementation summarises, as applicable, for the year to 31 December 2025:
(a) the major decisions on Directors’ remuneration;
(b) any discretion which has been exercised in the award of Directors’ remuneration;
(c) any substantial changes relating to Directors’ remuneration made during the year; and
(d) the context in which the changes occurred and decisions have been taken.
A resolution to approve this Directors’ Remuneration Report will be proposed at the AGM to be held on 5 May 2026.
Tom Yoritaka
Chair of the Nomination and Remuneration Committee
12 March 2026
AVI Japan Opportunity Trust NAV TR MSCI Japan Small Cap Index (£ adjusted total return)
AVI Japan Opportunity Trust plc / Annual Report 2025
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The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with UK adopted international
accounting standards and applicable law and regulations.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors are required to prepare the
financial statements and have elected to prepare the Company financial
statements in accordance with UK adopted international accounting
standards. 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 for the Company for
that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• state whether they have been prepared in accordance with UK adopted
international accounting standards, subject to any material departures
disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis, unless it is
inappropriate to presume that the Company will continue in business; and
• prepare a Directors’ report, a strategic report and Directors’
remuneration report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that
are sufficient to show and explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements comply with the
Companies Act 2006.
They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities. The Directors are responsible for ensuring
that the Annual Report and Accounts, taken as a whole, are fair, balanced
and understandable and provide the information necessary for Shareholders
to assess the Company’s position and performance, business model
and strategy.
Website Publication
The Directors are responsible for ensuring the Annual Report and the
Financial Statements are made available on a website. Financial statements
are published on the Company’s website in accordance with legislation
in the United Kingdom governing the preparation and dissemination of
financial statements, which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Company’s website is the responsibility
of the Directors. The Directors’ responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Directors’ Responsibilities Pursuant to DTR4
The Directors confirm to the best of their knowledge:
• The Financial Statements have been prepared in accordance with
the applicable set of accounting standards, and give a true and fair
view of the assets, liabilities, financial position and profit and loss of
the Company.
• The Annual Report includes a fair review of the development and
performance of the business and the financial position of the Company,
together with a description of the principal risks and uncertainties that
they face.
In the opinion of the Board, the Annual Report and Financial Statements,
taken as a whole, is fair, balanced and understandable and it provides the
information necessary to assess the Company’s position and performance,
business model and strategy.
Directors’ Statement as to the Disclosure of Information to Auditor
All of the current Directors have taken all the steps that they ought to
have taken to make themselves aware of any information needed by the
Company’s auditors for the purposes of their audit and to establish that the
auditors are aware of that information. The Directors are not aware of any
relevant audit information of which the auditors are unaware.
For and on behalf of the Board
Norman Crighton
Chairman
12 March 2026
Governance / Statement of Directors’ Responsibilities in Relation to
the Annual Report and Financial Statements
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AVI Japan Opportunity Trust plc / Annual Report 2025
I am pleased to present the Audit Committee Report for the year ended
31 December 2025.
We met twice during the year and once following the year-end. The
Company’s Auditors are invited to attend meetings as necessary, and
representatives of the Investment Manager may also be invited.
Details of the composition of the Committee are set out in the Corporate
Governance Statement on page 42.
Responsibilities of the Committee
The Committee’s responsibilities are set out in formal terms of reference
which are available on the Company’s website and are reviewed at least
annually. The Committee’s primary responsibilities are set as follows:
• to monitor the integrity of the financial statements of the Company,
including its Annual and Half-Yearly reports and any other formal
announcements of the Company relating to its financial performance,
and to review and report to the Board on significant financial reporting
issues and judgements which those statements contain, having regard
to matters communicated to it by the Auditor;
• to review the Half-Yearly and Annual Reports;
• to review the Company’s internal financial controls and the internal
control and risk management systems of the Company and its third-
party service providers;
• to make recommendations to the Board in relation to the appointment
of the external Auditor and their remuneration;
• to review the scope, results, cost effectiveness, independence and
objectivity of the external Auditor;
• to develop and implement policy on the engagement of the external
Auditor to supply non-audit services and consider relevant guidance
regarding the provision of non-audit services by the external audit firm;
and
• to review circulars issued in respect of major non-routine and
corporate transactions.
Activities in the Year
During the year, the Committee has:
• considered and approved the combination with FJV;
• took advice in relation to and key steps were undertaken to prepare for
Provision 34 of the AIC Code;
• conducted a detailed review of the internal controls and risk management
systems of the Company and its third-party service providers;
• reviewed the service levels provided by the Company’s Custodian
and Depositary;
• considered the emerging and principal risks facing the Company and
the mitigating controls in place;
• carried out a detailed review of the external Auditor’s performance
during the 2024 audit;
• agreed the audit plan and fees with the Auditor in respect of the Annual
Report for the year ended 31 December 2025, including the principal
areas of focus;
• reviewed the Company’s Half-Yearly Report and financial statements,
discussed the appropriateness of the accounting policies adopted and
recommended these to the Board for approval;
• assessed whether it was appropriate to prepare the Company’s
financial statements on a going concern basis and made
recommendations to the Board. This review included challenging the
assumptions on viability of the Company and reviewing stress tests
focused on its ability to continue to meet its liabilities;
• considered the appropriate level of dividend to be paid by the
Company for recommendation to the Board; and
• examined in detail the methodology and assumptions applied in valuing
the assets of the Company.
Following the year end, the Committee has received and discussed
with the Auditor their report on the results of the audit and reviewed this
Annual Report and Financial Statements, discussed the appropriateness
of the accounting policies adopted and recommended these to the Board
for approval.
Signifcant Matters and Decisions
The Committee considered the following key issues in relation to the
Company’s financial statements during the year. A more detailed
explanation of the consideration of the matters set out below, and the steps
taken to manage them, is set out in the principal risks and uncertainties on
pages 34 and 35.
Valuation of Investments
The Committee considered the valuation of the investment portfolio. The
Company’s portfolio currently consists of mostly quoted investments, which
are valued by reference to their bid prices on the relevant exchange. The
Company engages an independent valuations services provider to conduct
independent valuation analysis of the unquoted investments. The service
provider determines appropriate and supportable inputs and assumptions
in view of the requirement under IFRS 13. The independent valuations
services provider documents a reconciliation of approaches where more
than one approach has been employed. The Investment Manager reviews
the valuation approaches taken considering the nature of the investment
being valued. The Investment Manager considers the appropriateness
of the data inputs and assumptions used in the valuation analysis. The
following information was reviewed to make certain assumptions:
• Historical financial information was reviewed to inform the assumptions
on financial metrics such as revenues and leverage ratios.
• Business plans and management presentations were reviewed to
inform the assessment of trends in growth and profitability.
General economic and industry trends and the impact they may have
are discussed and considered prior to recommending acceptance of the
valuation. Any illiquid investments will be valued by the Directors based on
recommendations from the Investment Manager.
Maintaining Internal Controls
The Committee has carefully considered the internal control systems,
by monitoring and reviewing the Risk Matrix and using that to inform the
material controls required to mitigate those risks identified. As the
Company relies heavily on third-party suppliers, the Committee monitors
the services and control levels of all of its suppliers on an ongoing basis, as
explained below.
Going Concern and Long-term Viability of the Company
The Committee considered the Company’s financial requirements for the
next 12 months and concluded that it has sufficient resources to meet its
commitments. Consequently, the financial statements have been prepared
on a going concern basis. The Committee also considered the longer-
term viability statement within the Annual Report for the year ended 31
December 2025, covering a five-year period, and the underlying factors and
assumptions which contributed to the Committee deciding that this was
an appropriate length of time to consider the Company’s long-term viability.
The Company’s viability statement can be found on page 31.
Governance / Report from the Audit Committee
AVI Japan Opportunity Trust plc / Annual Report 2025
49
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Internal Controls
The Committee carefully considers the internal control systems by
continually monitoring the services and controls of its third-party
service providers.
The Committee reviewed the risk matrix at both of its meetings held during
the year under review, updating it where appropriate. The results of this
ongoing process, as well as the principal risks identified and controls put
in place to manage or mitigate these risks, are detailed on pages 34 and
35 of this report. The Committee received a report on internal control and
compliance from the Investment Manager and the Company’s other key
service providers, and no significant matters of concern were identified.
The Company does not have an internal audit function. During the year,
the Committee reviewed whether an internal audit function would be of
value and concluded that this would provide minimal additional comfort at
considerable extra cost to the Company. While the Committee believes
that the existing systems of monitoring and reporting by third parties remain
appropriate and adequate, it will continue, on an annual basis, to actively
consider possible areas within the Company’s controls environment that may
need a detailed review.
Provision 34 readiness activities
A recurring item for the Committee has been the Company’s readiness
activities relating to changes brought by Provision 34 of the AIC Code.
To that end, during the reporting period, the Committee received regular
updates on steps being taken in the market to prepare for Provision 34
and as a result requested an update to its service provider questionnaires,
specifically addressing the effectiveness of the internal controls of third
parties. In the post reporting period following collation of the results were
presented to the Board and any matters of concern identified will be
monitored during 2026.
External Auditor
BDO LLP has been the Auditor to the Company since launch in 2018. No
tender for the audit of the Company has been undertaken. In accordance
with the Competitions and Markets Authority Order, a competitive audit
tender must be carried out at least every ten years. The Company is
therefore required to carry out a tender no later than in respect of the
financial year ending 31 December 2029. The Committee reviews the
continuing appointment of the Auditor on an annual basis and gives regular
consideration to the Auditor’s fees and independence, along with matters
raised during each audit.
The Audit Partner is due to rotate every five years. This is the fifth year the
current Audit Partner is in place. The Auditor has confirmed that a new
partner will be introduced following completion of the FY25 audit.
The Audit Committee specifically considered and discussed with the Auditor
the impact of the Exit Opportunity, the combination with FJV and preparation
for reporting under provision 34 of the AIC Code. Key audit matters raised
by the Auditor are detailed in their report on pages 51 and 52, as well as the
materiality threshold.
Audit Fees and Non-audit Services Provided by the Auditor
In accordance with the Company’s non-audit services policy, the Audit
Committee reviews the scope and nature of all proposed non-audit services
before engagement, to ensure that auditor independence and objectivity
are safeguarded. The policy includes a list of non-audit services which
may be provided by the Auditor provided there is no apparent threat to
independence, as well as a list of services which are prohibited. Non-audit
services are capped at 70.0% of the average of the statutory audit fees for
the preceding three years.
Information on the fees paid to the Auditor is set out in note 3 to the financial
statements on page 64.
Effectiveness of the External Audit
The Audit Committee monitors and reviews the independence and
effectiveness of the external audit carried out by the Auditor, including a
detailed review of the audit plan and the audit results report, and makes
recommendations to the Board on the re-appointment, remuneration
and terms of engagement of the Auditor. This review takes into account
the experience and tenure of the audit partner and team, the nature and
level of services provided, and confirmation that the Auditor has complied
with independence standards. During the year to 31 December 2025, the
Committee carried out a detailed review of the quality and effectiveness of
the 2024 audit.
The review was based on feedback requested from the Investment
Manager, the Administrator and the Company Secretary and discussions
with the Auditor. No issues were identified with regards to the effectiveness
of the external audit. The Board felt that the Auditor had demonstrated
appropriate professional scepticism by showing curiosity and challenge
by, among other things, actively questioning management explanations
throughout the course of the annual report process, including requesting
corroborating evidence rather than relying solely on representations provided
to the Auditor. Any concerns with effectiveness of the external audit process
are reported to the Board.
Independence and Objectivity of the Auditor
The Committee has considered the independence and objectivity
of the Auditor. £34,000 non-audit fees were paid to BDO LLP during the
year to 31 December 2025 (2024: £nil). The fees paid were in respect of
reporting accountant services provided in relation to the combination with
FJV. The Committee is satisfied that the Auditor has fulfilled its obligations to
the Company and its Shareholders and remains independent and objective.
Appointment of the Auditor
Following consideration of the performance of the Auditor, the services
provided during the year and a review of its independence and objectivity,
the Committee has recommended to the Board the reappointment of BDO
LLP as Auditor to the Company.
Margaret Stephens
Chair of the Audit Committee
12 March 2026
Governance / Report from the Audit Committee continued
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AVI Japan Opportunity Trust plc / Annual Report 2025
Report on the audit of the fnancial statements
Opinion
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s affairs as at
31 December 2025 and of its profit and cash flows for the year
then ended;
• have been properly prepared in accordance with UK adopted
international accounting standards; and
• have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of AVI Japan Opportunity Trust
plc (the ‘Company’) for the year ended 31 December 2025 which comprise
the Statement of Comprehensive Income, Statement of Changes in
Equity, Balance Sheet, Cash Flow Statement and Notes to the Financial
Statements, including a summary of material accounting policy information.
The financial reporting framework that has been applied in the preparation
of the financial statements is applicable law and UK adopted international
accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We remain independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. The non-audit services prohibited by the FRC’s
Ethical Standard were not provided to the Company and we remain
independent of the Company in conducting our audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors’
assessment of the Company’s ability to continue to adopt the going
concern basis of accounting included:
• Evaluating the appropriateness of the Directors’ method of assessing the
going concern in light of economic and market conditions by reviewing
the information used by the Directors in completing their assessment;
• Assessing the appropriateness of the Directors’ assumptions and
judgements made in their base case and stress tested forecasts
including consideration of the available cash resources relative to
forecast expenditure and commitments;
• Challenging the Directors’ assumptions and judgements made in their
forecasts by performing an independent analysis of the liquidity of the
portfolio; and
• We reviewed the Directors’ assessment of the potential impact of the
‘exit opportunity’ as well as the related disclosures presented.
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. However, because not all future events
or conditions can be predicted, this statement is not a guarantee as to the
Company’s ability to continue as a going concern.
In relation to the Company’s reporting on how it 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 considered it appropriate to adopt the going
concern basis of accounting in preparing the financial statements.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Overview
Key audit
matters
2025 2024
Valuation and ownership
of investments
N N
Materiality Company fnancial statements as a whole
£4.25m (2024:£2.12m) based on 1% (2024: 1%) of
net assets
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company
and its environment, the applicable financial reporting framework and the
Company’s system of internal control. We identified and assessed the risks
of material misstatement of the Company financial statements. We then
applied professional judgement to focus our audit procedures on the areas
that posed the greatest risks to the financial statements. We continually
assessed risks throughout our audit, revising the risks where necessary,
with the aim of reducing the risk of material misstatement to an acceptable
level, in order to provide a basis for our opinion.
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, including
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.
Governance / Independent Auditor’s Report
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AVI Japan Opportunity Trust plc / Annual Report 2025
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An overview of the scope of our audit continued
Key audit matters continued
Key audit matter How the scope of our audit addressed the key audit matter
Valuation and
ownership of
quoted & unquoted
investments
(Note 1 & 8)
We considered the valuation and ownership of investments to be
the most important audit area as investments represent the most
significant balance in the Financial Statements and underpin the
principal activity of the Company.
The investment portfolio at the year-end comprised of equity
investments.
There is a risk that the prices used for the listed investments held by
the Company are not reflective of fair value. We do not consider the
use of bid price as a proxy for fair value of listed investments to be
subject to significant estimation uncertainty.
Significant judgment may be required in determining the valuation
methodology for unlisted investments, and their valuations are subject
to estimation uncertainty.
There is also a risk of error in the recording of investment holdings
such that those records do not appropriately reflect the property of the
Company.
For these reasons and the materiality to the Financial Statements as a
whole, the valuation and ownership of listed and unlisted investments
are considered to be a key area of our overall audit strategy and
allocation of our resources and hence a Key Audit Matter.
We responded to this matter by testing the valuation and ownership of the whole portfolio of listed and unlisted investments.
In relation to the listed investments, we performed the following procedures:
• Confirmed the year-end bid price was used by agreeing to independently obtained, externally quoted prices;
• Assessed if there were contra indicators, such as liquidity considerations, to suggest bid price is not the most appropriate
indication of fair value by considering the realisation period for individual holdings;
• Recalculated the valuation by multiplying the number of shares held per the statement obtained from the custodian by the
share price; and
• Obtained direct confirmation of the number of shares held per equity investment from the custodian regarding all investments
held at the balance sheet date.
In relation to a sample of unlisted investments, we performed the following procedures:
• Considered the appropriateness of the valuation methodology applied by the AIFM under the International Private Equity and
Venture Capital Valuation (IPEV’) Guidelines and applicable accounting standards;
• Reviewed the valuations prepared by the management expert and challenged and corroborated the inputs to the valuation
with reference to management information on investee companies, market data and our own understanding of the investee
companies and assessed the impact of the estimation uncertainty concerning these assumptions; and
• Agreed the holdings to independent confirmation received from the underlying investee companies, to confirm ownership.
Where appropriate, we performed stress and reverse stress tests to determine materiality of possible movements in selected inputs.
Key observations:
Based on our procedures performed we did not identify any matters to suggest the valuation or ownership of the listed and unlisted
equity investments was not appropriate.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Company fnancial statements 2025 2024
Materiality £4,250,000 £2,120,000
Basis for determining materiality 1% of Net assets
Rationale for the benchmark applied As an investment trust, the net asset value is the key measure of performance for users
of the financial statements.
Performance materiality £3,187,500 £1,590,000
Basis for determining performance materiality 75% of materiality
Rationale for the percentage applied for
performance materiality
The level of performance materiality applied was set after having considered a number of factors including
the expected total value of known and likely misstatements and the level of transactions in the year.
Our application of materiality
We apply the concept of materiality both in planning and performing our
audit, and in evaluating the effect of misstatements. We consider materiality
to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the
basis of the financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Governance / Independent Auditor’s Report continued
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Reporting threshold
We agreed with the Audit Committee that we would report to them all
individual audit differences in excess of £212,500 (2024:£106,000). We also
agreed to report differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information
comprises the information included in the Annual Report other than the
financial statements and our auditor’s report thereon. 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.
Corporate governance statement
The UK Listing Rules sourcebook requires 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 Parent Company’s
compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance Statement
is materially consistent with the financial statements or our knowledge
obtained during the audit.
Going concern
and longer-
term viability
• 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 49; and
• The Directors’ explanation as to their
assessment of the Company’s prospects, the
period this assessment covers and why the
period is appropriate set out on page 50.
• The Directors’ statement on whether they have
a reasonable expectation that the Company will
be able to continue in operation and meet its
liabilities set out on page 50.
Other Code
provisions
• Directors’ statement on fair, balanced and
understandable set out on page 48;
• Board’s confirmation that it has carried out a
robust assessment of the emerging and principal
risks set out on pages 34 and 35;
• The section of the annual report that describes
the review of effectiveness of risk management
and internal control systems set out on
page 50; and
• The section describing the work of the Audit and
Risk Committee set out on page 49.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed
during the course of the audit, we are required by the Companies Act 2006
and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report
and Directors’
report
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 material
misstatements in the Strategic report or the Directors’
report.
Directors’
remuneration
In our opinion, the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Matters on
which we
are required
to report by
exception
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been
kept, or returns adequate for our audit have not
been received from branches not visited by us; or
• the financial statements and the part of the
Directors’ remuneration report to be audited are
not in agreement with the accounting records
and returns; or
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
AVI Japan Opportunity Trust plc / Annual Report 2025
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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.
Auditor’s responsibilities for the audit of the fnancial 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.
However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the Company and
management.
Extent to which the audit was 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:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Company and the industry in which it
operates;
• Discussion with the Investment Manager and those charged with
governance; and
• Obtaining and understanding of the Company’s policies and procedures
regarding compliance with laws and regulations;
we considered the significant laws and regulations to be Companies Act
2006, DTR rules, the principles of the AIC Code of Corporate Governance,
industry practice represented by the AIC SORP, the applicable accounting
framework, and the Company’s qualification as an Investment Trust
under UK tax legislation, as any non-compliance of this would lead to the
Company losing various deductions and exemptions from corporation tax.
Our procedures in respect of the above included:
• Agreement of the financial statement disclosures to underlying
supporting documentation;
• Enquiries of management and those charged with governance relating
to the existence of any non-compliance with laws and regulations;
• Reviewing minutes of meeting of those charged with governance
throughout the period for instances of non-compliance with laws and
regulations; and
• Reviewing the calculation in relation to Investment Trust compliance to
check that the Company was meeting its requirements to retain their
Investment Trust Status.
Fraud
We assessed the susceptibility of the financial statement to material
misstatement including fraud.
Our risk assessment procedures included:
• Enquiry with the Investment Manager, the Administrator and those
charged with governance regarding any known or suspected instances
of fraud;
• Obtaining an understanding of the Company’s policies and procedures
relating to:
– Detecting and responding to the risks of fraud; and
– Internal controls established to mitigate risks related to fraud.
• Review of minutes of meeting of those charged with governance for any
known or suspected instances of fraud; and
• Discussion amongst the engagement team as to how and where fraud
might occur in the financial statements.
Based on our risk assessment, we considered the areas most susceptible to
fraud to be management override of controls.
Our procedures in respect of the above included:
• In addressing the risk of management override of controls, we
performed the following:
– Performed a review of estimates and judgements made in the
unlisted investment valuations and considered whether the valuation
methodology applied is appropriate;
– Performed a review of estimates and judgements applied by the
Investment Manager in the Financial Statements to assess their
appropriateness and the existence of any systematic bias;
– Considered the opportunity and incentive to manipulate accounting
entries and target tested relevant adjustments made in the period end
financial reporting process;
– Reviewed for significant transactions outside the normal course of
business; and
– Performed a review of unadjusted differences, if any, for indications of
bias or deliberate misstatement.
Governance / Independent Auditor’s Report continued
to the Members of AVI Japan Opportunities Trust plc
54
AVI Japan Opportunity Trust plc / Annual Report 2025
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members who were all
deemed to have appropriate competence and capabilities and remained
alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through
collusion. There are inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and regulations is from
the events and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Other matters which we are required to address
We were appointed by the Board of Directors on 8 October 2018 to
audit the financial statements for the year ended 31 December 2019 and
subsequent financial periods. The period of total uninterrupted engagement
including retenders and reappointments is seven years, covering the years
ended 31 December 2019 to 31 December 2025.
Our audit opinion is consistent with the additional report to the Audit
committee.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
In due course, as required by the Financial Conduct Authority Disclosure
Guidance and Transparency Rule 4.1.15R - 4.1.18R, these financial
statements will form part of the Electronic Format Annual Financial Report
filed on the National Storage Mechanism of the FCA in accordance with
DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance
over whether the Electronic Format Annual Financial Report has been
prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
Chris Meyrick (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
12 March 2026
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
AVI Japan Opportunity Trust plc / Annual Report 2025
55
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For the year ended 31 December 2025 For the year ended 31 December 2024
Notes
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Income
Investment income 2 6,326 – 6,326 4,761 – 4,761
Gains on investments held at fair value 8 – 38,314 38,314 – 36,663 36,663
Exchange losses on currency balances – (1,692) (1,692) – (1,106) (1,106)
6,326 36,622 42,948 4,761 35,557 40,318
Expenses
Investment management fee 3 (239) (2,151) (2,390) (187) (1,684) (1,871)
Other expenses 3 (1,093) – (1,093) (959) – (959)
Proft before fnance costs and tax 4,994 34,471 39,465 3,615 33,873 37,488
Finance costs 4 (56) (504) (560) (30) (267) (297)
Exchange gains on revolving credit facility 4 – 2,948 2,948 – 1,422 1,422
Proft before taxation 4,938 36,915 41,853 3,585 35,028 38,613
Taxation 5 (644) (92) (736) (488) – (488)
Proft for the year 4,294 36,823 41,117 3,097 35,028 38,125
Earnings per Ordinary Share (pence) 7 2.94 25.20 28.14 2.21 25.00 27.21
The total column of this statement is the Income Statement of the Company prepared in accordance with UK-adopted international accounting standards. The supplementary revenue and capital columns are presented in accordance
with the Statement of Recommended Practice issued by the Association of Investment Companies (“AIC SORP”).
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.
There is no other comprehensive income, and therefore the profit for the year after tax is also the total comprehensive income.
The accompanying notes are an integral part of these financial statements.
Financial Statements / Statement of Comprehensive Income
For the year ended 31 December 2025
56
AVI Japan Opportunity Trust plc / Annual Report 2025
Ordinary
Share
capital
£’000
Capital
redemption
reserve
£’000
Share
premium
£’000
Special
reserve*
£’000
Capital
reserve*
£’000
Revenue
reserve**
£’000
Total
£’000
For the year to 31 December 2025
Balance as at 31 December 2024 1,372 36 64,255 70,653 73,223 2,442 211,981
Issue of Ordinary Shares 1,107 – 183,037 – – – 184,144
Expenses of share issue – – (1,252) – – – (1,252)
Tender Offer costs – – – (4) – – (4)
Ordinary Shares bought back and held in treasury – – – (6,077) – – (6,077)
Total comprehensive income for the period – – – – 36,823 4,294 41,117
Ordinary dividends paid – – – – – (4,618) (4,618)
Balance as at 31 December 2025 2,479 36 246,040 64,572 110,046 2,118 425,291
For the year ended 31 December 2024
Balance as at 31 December 2023 1,408 – 64,255 77,144 38,195 1,941 182,943
Tender Offer Ordinary Shares bought back and cancelled (36) 36 – (5,543) – – (5,543)
Tender Offer costs – – – (364) – – (364)
Ordinary Shares bought back and held in treasury – – – (584) – – (584)
Total comprehensive income for the period – – – – 35,028 3,097 38,125
Ordinary dividends paid – – – – – (2,596) (2,596)
Balance as at 31 December 2024 1,372 36 64,255 70,653 73,223 2,442 211,981
* Distributable reserves. Within the balance of the capital reserve, £71,666,000 (31 December 2024: £32,411,000) relates to realised gains which is distributable.
The remaining £38,380,000 (31 December 2024: £40,812,000) relates to unrealised gains on investments and is non-distributable.
** Revenue reserve is fully distributable.
The accompanying notes are an integral part of these financial statements.
Financial Statements / Statement of Changes in Equity
For the year ended 31 December 2025
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AVI Japan Opportunity Trust plc / Annual Report 2025
Notes
As at
31 December
2025
£’000
As at
31 December
2024
£’000
Non-current assets
Investments held at fair value through profit or loss 8 432,911 220,865
432,911 220,865
Current assets
Receivables 9 902 1,256
Cash and cash equivalents 28,236 5,403
29,138 6,659
Total assets 462,049 227,524
Current liabilities
Revolving credit facility 11 (31,304) –
Other payables 10 (5,454) (664)
(36,758) (664)
Total assets less current liabilities 425,291 226,860
Non-current liabilities
Revolving credit facility 11, 12 – (14,879)
Net assets 425,291 211,981
Notes
As at
31 December
2025
£’000
As at
31 December
2024
£’000
Equity attributable to equity Shareholders
Ordinary Share capital 13 2,479 1,372
Capital redemption reserve 36 36
Share premium 246,040 64,255
Special reserve 64,572 70,653
Capital reserve 110,046 73,223
Revenue reserve 2,118 2,442
Total equity 425,291 211,981
Net asset value per Ordinary Share –basic and diluted (pence) 14 174.71 155.44
Number of shares in issue excluding treasury 13 243,423,107 136,373,227
These financial statements were approved and authorised for issue by the Board of AVI Japan Opportunity Trust plc
on 12 March 2026 and were signed on its behalf by:
Norman Crighton
The accompanying notes are an integral part of these financial statements.
Registered in England & Wales No. 11487703
Financial Statements / Balance Sheet
For the year ended 31 December 2025
58
AVI Japan Opportunity Trust plc / Annual Report 2025
Notes
31 December
2025
£’000
31 December
2024
£’000
Reconciliation of proft before taxation to net cash inflow
from operating activities
Profit before taxation 41,853 38,613
Gains on investments held at fair value through profit or loss (38,314) (36,663)
Increase in other receivables (197) (434)
Exchange gains on revolving credit facility (2,948) (1,422)
Exchange losses on currency balances 1,692 1,147
Interest paid 466 283
Increase in other payables 250 25
Taxation paid (736) (488)
Net cash inflow from operating activities 2,066 1,061
Investing activities
Purchases of investments (255,407) (121,417)
Sales of investments 233,214 122,846
Net cash (outflow)/inflow from investing activities (22,193) 1,429
Financing activities
Dividends paid 6 (4,618) (2,596)
Issue of Ordinary Shares 13 37,542 –
Cost of share issues (1,190) –
Payments for Ordinary Shares bought back and held in treasury (5,989) (584)
Payments for Tender Offer Ordinary Shares bought back
and cancelled – (5,543)
Tender Offer costs (4) (364)
Drawdown of revolving credit facility 11 19,373 –
Interest paid (466) (283)
Cash inflow/(outflow) from fnancing activities 44,648 (9,370)
Increase/(decrease) in cash and cash equivalents 24,521 (6,880)
Notes
31 December
2025
£’000
31 December
2024
£’000
Reconciliation of net cash flow movement
Cash and cash equivalents at beginning of year 5,403 13,430
Exchange losses on currency balances (1,692) (1,147)
Exchange rate movements 4 –
Increase/(decrease) in cash and cash equivalents 24,521 (6,880)
Cash and cash equivalents at end of year 28,236 5,403
Dividends received 6,416 4,388
Interest paid 466 303
Interest received 7 –
The accompanying notes are an integral part of these financial statements.
Financial Statements / Statement of Cash Flows
For the year ended 31 December 2025
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AVI Japan Opportunity Trust plc / Annual Report 2025
1. General Information and Accounting Policies
AVI Japan Opportunity Trust plc is a public limited company incorporated on 27 July 2018 and registered in England
and Wales. The principal activity of the Company is that of an investment trust company within the meaning of
Sections 1158/1159 of the Corporation Tax Act 2010 and its investment approach is detailed in the Strategic Report.
The Company commenced trading and was listed on the London Stock Exchange on 23 October 2018.
The Company’s financial statements have been prepared in accordance with UK-adopted international accounting
standards and the AIC SORP.
Basis of Preparation
The financial statements of the Company have been prepared for the year ended 31 December 2025.
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by
The AIC, supplementary information which analyses the Statement of Comprehensive Income between items of
revenue and a capital nature has been prepared alongside the Statement of Comprehensive Income.
The Company invests in Japan with subsequent cash flows (dividend receipts and interest payments) being
received in Japanese Yen, however the Directors consider the Company’s functional currency to be Pounds Sterling
as the shares of the Company are listed on the London Stock Exchange, it is regulated in the United Kingdom,
principally having its Shareholder base in the United Kingdom, and pays dividend and expenses in Pounds Sterling.
The Directors have chosen to present the financial statements in Pounds Sterling rounded to the nearest thousand,
except where otherwise indicated.
Going concern
The financial statements have been prepared on a going concern basis and on the basis that approval as
an investment trust company will continue to be met. The Directors have made an assessment of the
Company’s ability to continue as a going concern and are satisfied that the Company has adequate resources
to continue in operational existence for a period of at least 12 months from the date when these financial
statements were approved.
In making the assessment, the Directors of the Company have considered the likely impacts of international and
economic uncertainties on the Company, operations and the investment portfolio. These include, but are not limited
to, geopolitical events and global economic uncertainties. The Directors also regularly assess the resilience of key
third-party service providers, most notably the Investment Manager and Fund Administrator.
The Directors noted that the Company, with the current cash balance and holding a portfolio of listed investments,
is able to meet the obligations of the Company as they fall due. The surplus cash enables the Company to meet
any funding requirements and finance future additional investments. The revolving credit facility (extended to 2 April
2026) is fully utilised at year end. The Company is able to repay the facility at its own discretion from available cash
and liquid investments. The Investment Manager assesses the exposure to risk when making each investment
decision, and monitors cash flows and the performance of the portfolio on a daily basis. The Company is a
closed-ended fund, where assets are not required to be liquidated to meet day-to-day redemptions.
The Directors have completed stress tests assessing the impact of changes in market value, inflation and income
with associated cash flows. In making this assessment, they have considered severe but plausible downside
scenarios and the impact on future cash flows as a result of this through to December 2030. The scenarios
included a 50% reduction in NAV during April 2026, an annual Tender Offer of 5% in October and a full repayment
of the revolving credit facility upon its maturity on 2 April 2026. The conclusion was that in a severe but plausible
downside scenario the Company could continue to meet its liabilities. Whilst the economic future is uncertain, and
the Directors believe that it is possible the Company could experience further reductions in income and/or market
value, and changes in expenses, the opinion of the Directors is that this should not be to a level which would
threaten the Company’s ability to continue as a going concern.
The Directors may, at their discretion, offer an Exit Opportunity to Shareholders on an annual basis. Following the
Exit Opportunity in January 2026, the next Exit Opportunity is expected to be made available to Shareholders
in October 2026, and every 12 months thereafter. The Board may, in its total discretion, elect not to operate the
Exit Opportunity in whole or in part if, in its reasonable opinion, it has become impractical or inappropriate without
materially harming the interests of Shareholders as a whole.
The Directors are not aware of any material uncertainties that may cast significant doubt on the Company’s ability to
continue as a going concern, having taken into account the liquidity of the Company’s investment portfolio and the
Company’s financial position in respect of its cash flows, borrowing facilities and investment commitments (of which
there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.
Segmental Reporting
The Directors are of the opinion that the Company is engaged in a single segment of business, being
investment business.
The Company invests in companies listed in Japan on recognised exchanges.
Accounting Developments
In the current year, the Company has applied a number of amendments to UK-adopted international standards that
are mandatorily effective for an accounting period that begins on or after 1 January 2025.
The updates incorporated:
• Lack of Exchangeability – Amendments to IAS21.
There are amendments to IAS/IFRS that will apply from 1 January 2026 as follows:
• Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7; and
• Annual Improvements to IFRS Accounting Standards.
There are amendments to IAS/IFRS that will apply from 1 January 2027 as follows:
• IFRS 18 Presentation and Disclosure in Financial Statements.
The Company is assessing the impact of these standards and intends to adopt them in the reporting period when
they become effective. The adoption of these standards impacts the Company’s accounting policy disclosures and
the presentation of the Financial Statements.
1
Financial Statements / Notes to the Financial Statements
For the year ended 31 December 2025
60
AVI Japan Opportunity Trust plc / Annual Report 2025
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
The preparation of financial statements in conformity with UK-adopted international accounting standards requires
management to make judgements, estimates and assumptions that affect the application of policies and the
reported amounts in the Balance Sheet, the Statement of Comprehensive Income and the disclosure of contingent
assets at the date of the financial statements. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results of
which form the basis of making judgements about carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The areas requiring judgement and estimation in the preparation of the financial statements relate to the determination of
the carrying value of unquoted investments at fair value through profit or loss. The policy for unquoted investments is set
out in the Investments section below. Further areas are recognising and classifying unusual or special dividends received as
either capital or revenue in nature; the recognition of expenses between capital and revenue; and the level of deferred tax.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of
the revision and future period if the revision affects both current and future periods. There are no further significant
judgements or estimates in these financial statements.
Investments
The investment objective of the Company is to provide Shareholders with a total return in excess of the MSCI
Japan Small Cap Index in GBP, through the active management of a focused portfolio of equity investments listed
or quoted in Japan which have been identified by the Investment Manager as undervalued and having a significant
proportion of their market capitalisation held in cash, listed securities and/or realisable assets.
The investments held by the Company are measured “at fair value through profit or loss”. All gains and losses are
allocated to the capital return within the Statement of Comprehensive Income as “Gains or losses on investments
held through profit or loss”. Also included within this heading are transaction costs in relation to the purchase or sale
of investments. When a purchase or sale is made under a contract, the terms of which require delivery within the
timeframe of the relevant market, the investments concerned are recognised or derecognised on the trade date.
All investments are designated upon initial recognition as held at fair value through profit or loss, and are measured
at subsequent reporting dates at fair value, which is the bid price. The Company derecognises a financial asset
only when the contractual right to the cash flows from the asset expire, or when it transfers the financial asset and
subsequently all the risks and rewards of ownership to another entity. On derecognition of a financial asset, the
difference between the asset’s carrying amount and the sum of the consideration received and receivable, and the
cumulative gain or loss that had been accumulated is recognised in profit or loss.
The Company engages an independent valuations services provider to conduct independent valuation analysis of
the unquoted investments. The service provider determines appropriate and supportable inputs and assumptions in
view of the requirement under IFRS 13. The independent valuations services provider documents a reconciliation of
approaches where more than one approach has been employed.
The Investment Manager reviews the valuation approaches taken considering the nature of the investment being
valued. The Investment Manager considers the appropriateness of the data inputs and assumptions used in the
valuation analysis.
All investments for which fair value is measured or disclosed in the financial statements are categorised within the
fair value hierarchy in note 15.
We considered it appropriate to present the below sensitivities performed on AVI Japan Opportunity Trust plc’s
unquoted investments that are valued using a market approach based on revenue multiples. The analysis
considered the impact of changes in the key unobservable input, namely the enterprise value to revenue multiples
(TEV/LTM revenue and, where applicable, TEV/FY+1 revenue) applied in the valuation. A sensitivity of ±10% was
applied to the selected multiples to assess the potential range of outcomes. The analysis indicates that a 10%
decrease or increase in the applied multiples would result in a corresponding decrease or increase in the estimated
fair value per share of the underlying investments, with movements broadly proportional to the change in the
multiples used. This reflects the reliance of the valuations on comparable market multiples and demonstrates that
the fair values are moderately sensitive to changes in the selected revenue multiples. The calculation of the analysis
was aided by an independent valuation service provider.
1
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AVI Japan Opportunity Trust plc / Annual Report 2025
1. General Information and Accounting Policies continued
Investments continued
Company
Valuation
approach
Total fair value
(mid-point)
- Based on
Q4’2025
Report
£’000
Key
unobservable
inputs Sensitivity
Total fair value
(mid-point) for +/-
10% move of key
unobservable input
£’000
Impact on
Value of Holding
within AJOT for +/-
10% move of key
unobservable input
£’000
Asoview
1
Market
Approach 5,589.3
TEV / LTM*
revenue multiple 10% 4,889.3 6,056.0 -700.0 466.7
Yoriso
2
Market
Approach 543.3
TEV / LTM*
revenue multiple 10% 490.9 592.9 -52.4 49.6
Go Inc.
3
Market
Approach 3,211.7
TEV / LTM*
revenue multiple
TEV / FY+1**
revenue multiple 10% 2,480.7 3,914.6 -731.0 702.9
iYell
4
Market
Approach 1,736.2
TEV / LTM*
revenue multiple
TEV / FY+1**
revenue multiple 10% 1,276.9 2,292.5 -459.3 556.3
Studyplus
5
Market
Approach 1,987.4
TEV / LTM*
revenue multiple
TEV / FY+1**
revenue multiple 10% 1,572.7 2,557.8 -414.8 570.3
*TEV/LTM: Total enterprise value / Actual revenue for the last twelve months.
**TEV/FY+1:Totalenterprisevalue/Forecastedrevenueforthenextfiscalyear.
1
Asoviewfairmarketvaluationisbasedonacalibratedmarketapproach.Thesensitivityanalysisappliesavariationof+/-10%tothechangeinthe
averageofcomparablecompanymultiplesbetweenthelatestfinancingroundandthevaluationdate.
2
Yorisofairvalueassessmentisbasedonmarketapproach.Thesensitivityanalysisappliesavariationof+/-10%totheselectedTEV/LTMRevenuemultiple.
3
GoIncfairvalueassessmentisbasedonamarketcalibrationapproach.Thesensitivityanalysisappliesavariationof+/-10%toi)themovementof
comparablecompanymultiplesbetweenthelatestfinancingroundandthevaluationdate,ii)thecompany-specificadjustmentfactorthatreflects
thecompany’sfinancialandoperationalperformancesincethelatestfinancinground,andiii)forecastedrevenueforthenextfiscalyear.
4
iYellfairvalueassessmentisbasedonamarketcalibrationapproach.Thesensitivityanalysisappliesavariationof+/-10%toi)themovementof
comparablecompanymultiplesbetweenthelatestfinancingroundandthevaluationdate,ii)thecompany-specificadjustmentfactorthatreflects
thecompany’sfinancialandoperationalperformancesincethelatestfinancinground,andiii)forecastedrevenueforthenextfiscalyear.
5
Studyplusfairvalueassessmentisbasedonamarketcalibrationapproach.Thesensitivityanalysisappliesavariationof+/-10%toi)themovementof
comparablecompanymultiplesbetweenthelatestfinancingroundandthevaluationdate,ii)thecompany-specificadjustmentfactorthatreflectsthe
company’sfinancialandoperationalperformancesincethelatestfinancinground,andiii)forecastedrevenueforthenextfiscalyear.
Foreign currency
Transactions denominated in currencies other than Pounds Sterling are recorded at the rates of exchange prevailing
on the date of transaction. Items which are denominated in foreign currencies are translated at the rates prevailing
on the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the
transaction is included as exchange gain or loss in the capital reserve or revenue reserve depending on whether the
gain or loss is capital or revenue in nature.
Cash and Cash Equivalents
Cash comprises cash in hand and balances held in interest bearing accounts revalued for exchange
rate movements.
For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents
as defined above.
Revolving Credit Facility
The revolving credit facility is shown at amortised cost and revalued for exchange rate movements. Any gain or loss
arising from changes in exchange rates is included in the capital reserve and shown in the capital column of the
Statement of Comprehensive Income.
Income
Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable
on equity shares where no ex-dividend date is quoted are brought into account when the Company’s right to
receive payment is established. Dividends from overseas companies are shown gross of any withholding taxes.
Irrecoverable withholding taxes are disclosed within taxation in the Statement of Comprehensive Income.
Special dividends are taken to the revenue or capital account depending on their nature. In deciding whether a
dividend should be regarded as a capital or revenue receipt, the Board reviews all relevant information as to the
reasons for the sources of the dividend on a case-by-case basis.
When the Company has elected to receive scrip dividends in the form of additional shares, rather than cash, the
amount of the cash dividend forgone is recognised as income. Any excess in the value of the cash dividend is
recognised in the capital column. All other income is accounted for on a time-apportioned accruals basis and is
recognised in the Statement of Comprehensive Income.
Expenses and Finance Costs
Expenses incurred directly in relation to arranging debt finance are amortised over the term of the finance. All
expenses and finance costs are accounted for on an accruals basis. On the basis of the Board’s expected long-
term split of total returns the Company charges 90% of its management fee and finance costs to capital.
Taxation
The charge for taxation is based on the net revenue for the year and takes into account taxation deferred or
accelerated because of temporary differences between the treatment of certain items for accounting and
taxation purposes.
The tax charge consists of overseas tax not recoverable.
1
Financial Statements / Notes to the Financial Statements continued
For the year ended 31 December 2025
62
AVI Japan Opportunity Trust plc / Annual Report 2025
1
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amount for financial reporting purposes at the reporting date. Deferred tax assets are
only recognised if it is considered more likely than not that there will be suitable profits from which the future reversal
of timing differences can be deducted. In line with the recommendations of the SORP, the allocation method used
to calculate the tax relief on expenses charged to capital is the “marginal” basis. Under this basis, if taxable income
is capable of being offset entirely by expenses charged through the revenue account, then no tax relief is transferred
to the capital account.
Dividends Payable to Shareholders
Dividends to Shareholders are recognised as a liability in the period in which they are paid or approved in general
meetings and are taken to the Statement of Changes in Equity. Dividends declared and approved by the Company
after the Balance Sheet date have not been recognised as a liability of the Company at the Balance Sheet date.
Capital redemption reserve
The capital redemption reserve represents non-distributable reserves that arise from the cancellation of shares.
Share Premium
The share premium account represents the accumulated premium paid for shares issued above their nominal
value less issue expenses. This is a reserve forming part of the non-distributable reserves. The following items are
taken to this reserve:
• costs associated with the issue of equity; and
• premium on the issue of shares.
Special Reserve
The special reserve was created by the cancellation of the share premium account by order of the court* and forms
part of the distributable reserves. The following items are taken to this reserve:
• Tender Offer costs and Tender Offer shares cancelled; and
• costs of share buybacks; and
• crediting the cost of share buybacks for shares reissued.
Capital Reserve
The following are taken to the capital reserve through the capital column in the Statement of
Comprehensive Income:
Capital reserve – other, forming part of the distributable reserves:
• gains and losses on the disposal of investments;
• issue expenses on revolving credit facility;
• exchange differences of a capital nature; and
• expenses, together with the related taxation effect, allocated to this reserve in accordance with the
above policies.
Capital reserve – investment holding gains, not distributable:
• increase and decrease in the valuation of investments held at the year end.
Revenue Reserve
The revenue reserve represents the surplus of accumulated profits and is distributable by way of dividends.
2. Income
31 December
2025
£’000
31 December
2024
£’000
Income from investments
Overseas dividends* 6,443 4,880
Bank and deposit interest 8 (3)
Exchange losses on receipt of income** (125) (116)
Total income 6,326 4,761
* Overseas dividends are shown gross.
** Exchange movements arise from ex-dividend date to payment date.
During the year ended 31 December 2025, the Company received an aggregate amount of £916,000 in respect of
TSI Holdings and Saxa special dividends. These dividends have been treated as capital returns and are recognised
as Gains on investments at fair value within the Statement of Comprehensive Income.
2
* The share premium account cancellation was completed following the registration of the court order on 4 June 2019.
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3
3. Investment Management Fee and Other Expenses
Year ended 31 December 2025 Year ended 31 December 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Management fee 239 2,151 2,390 187 1,684 1,871
Other expenses:
Directors’ emoluments – fees 173 – 173 173 – 173
Directors’ insurances and other expenses 18 – 18 20 – 20
Directors’ National Insurance Contributions 22 – 22 19 – 19
Auditor’s remuneration – audit services 58 – 58 58 – 58
Marketing 220 – 220 210 – 210
Printing and postage costs 32 – 32 29 – 29
Registrar fees 23 – 23 20 – 20
Custodian fees 50 – 50 26 – 26
Depositary fees 39 – 39 33 – 33
Advisory and professional fees 367 – 367 311 – 311
Regulatory fees 47 – 47 39 – 39
Irrecoverable VAT 6 – 6 – – –
Sundry expenses 38 – 38 21 – 21
Total other expenses 1,093 – 1,093 959 – 959
The management fee changed structure during the year following the combination of Fidelity Japan Trust PLC (“FJV”) assets into the Company. The revised structure is calculated on the lesser of the Company’s NAV or Market
Capitalisation at a rate of 1% per annum on the first £300 million; 0.95% over £300 million and up to £350 million; and 0.90% over £350 million. The management fee was previously calculated at a rate of 1% per annum on the lesser of
the Company’s NAV or Market Capitalisation. The Investment Manager will invest 25% of the management fee it receives in shares of the Company (through open market purchases) and will hold these for a minimum of two years.
During the year to 31 December 2025, £34,000 (2024: £nil) non-audit fees were paid to BDO LLP in respect of reporting accountant services provided in relation to the combination with FJV. This cost is part of the expenses of share
issue allocated to the Share premium account.
Financial Statements / Notes to the Financial Statements continued
For the year ended 31 December 2025
64
AVI Japan Opportunity Trust plc / Annual Report 2025
4. Finance Costs
Year ended 31 December 2025 Year ended 31 December 2024
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Revenue
return
£’000
Capital
return
£’000
Total
£’000
JPY revolving credit facility (56) (504) (560) (30) (267) (297)
Exchange gains on JPY revolving credit facility* – 2,948 2,948 – 1,422 1,422
* Revaluation of revolving credit facility.
Details of the revolving credit facility are set out in notes 10, 11 and 12.
5. Taxation
Year ended 31 December 2025 Year ended 31 December 2024
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Analysis of charge for the year
Overseas tax not recoverable* 644 92 736 488 – 488
Tax charge for the year 644 92 736 488 – 488
* Tax deducted on payment of overseas dividends by local tax authorities.
54
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5. Taxation continued
The tax assessed for the year is the standard rate of corporation tax in the United Kingdom of 25%. The differences are explained below:
Year ended 31 December 2025 Year ended 31 December 2024
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Return on ordinary activities after interest payable but before appropriations 4,938 36,915 41,853 3,585 35,028* 38,613*
Profit before taxation multiplied by the standard rate of corporation tax of 25% (2024: 25%) 1,234 9,229 10,463 896 8,757* 9,653*
Effects of:
– Tax – exempt overseas investment income (1,579) (229) (1,808) (1,192) – (1,192)
– Foreign exchange losses/(gains) not taxable – (314) (314) 1 (79)* (78)*
– Losses on investments and exchange losses on capital items – (9,350) (9,350) – (9,166) (9,166)
– Expenditure not deductible – – – – 2* 2*
– Excess management expenses carried forward 332 538 870 287 421 708
– Disallowed expenses 1 – 1 – – –
– Movement in non-trading loan relationship deficit not utilised 12 126 138 8 65* 73*
– Overseas tax not recoverable 644 92 736 488 – 488
Tax charge for the year 644 92 736 488 – 488
* 2024figuresupdatedforconsistency.
At 31 December 2025, the Company had unrelieved tax losses of £18,614,000 (31 December 2024: £14,585,000) that are available to offset future taxable revenue.
A deferred tax asset of £4,654,000 (31 December 2024: £3,646,000), which has been calculated using a corporation tax rate of 25% (2024: 25%), has not been recognised because the Company is not expected to generate sufficient
taxable income in future periods to utilise these tax losses.
Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an
investment trust company.
5
Financial Statements / Notes to the Financial Statements continued
For the year ended 31 December 2025
66
AVI Japan Opportunity Trust plc / Annual Report 2025
6. Dividends
31 December
2025
£’000
31 December
2024
£’000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2024 of 1.20p (2023: 0.85p) per Ordinary Share 1,630 1,193
Interim dividend for the year ended 31 December 2025 of 1.60p (2024: 1.00p) per Ordinary Share 2,173 1,403
Special interim dividend for the year ended 31 December 2025 of 0.60p (2024: nil) per Ordinary Share 815 –
4,618 2,596
Set out below are the interim and final dividends paid or proposed on Ordinary Shares in respect of the financial year, which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered:
31 December
2025
£’000
31 December
2024
£’000
Interim dividend for the year ended 31 December 2025: 1.60p (2024: 1.00p) per Ordinary Share 2,173 1,403
Special interim dividend for the year ended 31 December 2025 of 0.60p (2024: nil) per Ordinary Share 815 –
Proposed final dividend for the year ended 31 December 2025 of 0.60p (2024: 1.20p) per Ordinary Share 1,326* 1,630
4,314 3,033
* Based on shares in circulation on 12 March 2026.
6
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7. Earnings per Ordinary Share – Basic and Diluted
The earnings per Ordinary Share is based on the Company’s net profit after tax of £41,117,000 (year ended 31 December 2024: profit of £38,125,000) and on 146,133,122 (year ended 31 December 2024: 140,095,962) Ordinary
Shares, being the weighted average number of Ordinary Shares in issue during the year.
The earnings per Ordinary Share detailed above can be further analysed between revenue and capital as follows:
Year ended 31 December 2025 Year ended 31 December 2024
Revenue Capital Total Revenue Capital Total
Net profit (£’000) 4,294 36,823 41,117 3,097 35,028 38,125
Weighted average number of Ordinary Shares 146,133,122 140,095,962
Earnings per Ordinary Share – basic and diluted (pence) 2.94 25.20 28.14 2.21 25.00 27.21
There are no dilutive instruments issued by the Company.
8. Investments Held at Fair Value Through Profit or Loss
31 December 2025 31 December 2024
Equities
£’000
Unrealised Derivatives Liability
£’000
Total
£’000
Equities
£’000
Unrealised Derivatives Liability
£’000
Total
£’000
Financial assets held at fair value
Opening book cost 180,624 – 180,624 163,409 – 163,409
Opening investment holding gains 40,241 – 40,241 22,448 – 22,448
Opening fair value 220,865 – 220,865 185,857 – 185,857
Movement in the year:
Purchases at cost: Equities 406,400 – 406,400 121,626 – 121,626
Sales proceeds: Equities (232,668) – (232,668) (123,420) 139 (123,281)
– realised gains/(losses) on equity sales and close of total return swaps 42,005 – 42,005 19,009 (139) 18,870
Increase in investment holding (losses)/gains (3,691) – (3,691) 17,793 – 17,793
Closing fair value 432,911 – 432,911 220,865 – 220,865
Closing book cost 396,361 – 396,361 180,624 – 180,624
Closing investment holding gains 36,550 – 36,550 40,241 – 40,241
Closing fair value 432,911 – 432,911 220,865 – 220,865
87
Financial Statements / Notes to the Financial Statements continued
For the year ended 31 December 2025
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AVI Japan Opportunity Trust plc / Annual Report 2025
8. Investments Held at Fair Value Through Profit or Loss continued
Year ended
31 December
2025
£’000
Year ended
31 December
2024
£’000
Transaction costs
Cost on acquisition 149 69
Cost on disposals 99 65
248 134
Analysis of capital gains
Gains on sales of financial assets based on historical cost 42,005 18,870
Movement in investment holding (losses)/gains for the year (3,691) 17,793
Net gains on investments held at fair value 38,314 36,663
The Company received £232,667,000 (year ended 31 December 2024: £123,281,000) from investments sold
in the year. The book cost of these investments when they were purchased was £190,663,000 (year ended 31
December 2024: £104,411,000). These investments have been revalued over time and until they were sold, any
unrealised gains or losses were included in the fair value of the investments.
The Company has 14 investments of 3% or more of the equity capital of the investee companies, which are set out
in the table below.
Company
% of investee
company
Atsugi 24.2
Broadmedia 23.9
Synchro Food 23.8
Sharingtechnology 18.3
Asiro 18.0
Wakamoto Pharmaceutical 8.6
Aoyama Zaisan Networks 7.0
Sanyo Shokai 7.0
Eiken Chemical 6.5
Ines 4.9
Wacom 4.8
Kurabo Industries 4.6
Raito Kogyo 3.5
Saxa 3.0
9. Receivables
2025
£’000
2024
£’000
Trade receivables, prepayments and other debtors
Due from brokers 207 758
Other receivables and prepayments 695 498
902 1,256
No receivables are past due or impaired.
10. Current Liabilities
2025
£’000
2024
£’000
Revolving credit facility 31,304 –
Trade payables, accruals and short-term borrowings
Management fees 338 170
Interest payable 147 61
Purchases for future settlement 4,765 287
Other payables 204 146
5,454 664
Total current liabilities 36,758 664
98 10
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11. Revolving Credit Facility
Year ended 31 December 2025 Year ended 31 December 2024
¥’000 £’000 ¥’000 £’000
Opening balance 2,930,000 14,879 2,930,000 16,301
Proceeds from amounts drawn 3,670,000 19,373 – –
Exchange rate movement – (2,948) – (1,422)
Closing balance 6,600,000 31,304 2,930,000 14,879
Maximum facility available 6,600,000 31,304 2,930,000 14,879
On 2 April 2024 the revolving credit facility (“the facility”) was renewed for a further two years to 2 April 2026, for a
total facility size of ¥2.9 billion (the facility size was increased to ¥6.6 billion on 28 March 2025). Interest charged
is the aggregate of the Margin 1.55% and the Daily Non-Cumulative Compounded Risk Free Rate (“RFR”) that
day payable bi-annually. RFR being the Tokyo Overnight Average Rate (“TONAR”) (previously where TONAR – the
reference rate was less than zero it was deemed to be zero). The current estimated aggregate interest rate is 2.03%
(previously 1.78%) and estimated effective rate 2.03% (previously 1.78%).
Commitment fees of 0.5% (previously 0.325% on undrawn balances if over 50% of the facility is drawn down,
0.375% if less than 50% is drawn down) are charged on undrawn balances payable quarterly. As at the date of
this report, the Company has fully utilised the facility.
Under the terms of the facility covenants, remaining the same, the net assets shall not be less than £75 million;
and the adjusted total net assets to borrowing ratio shall not be less than 4.5:1.
The facility is shown at amortised cost and revalued for exchange rate movements. Any gain or loss arising
from changes in exchange rates are included in the capital reserves and shown in the capital column of the
Statement of Comprehensive Income. Interest costs are charged to capital and revenue in accordance with the
Company’s accounting policies.
During the year ended 31 December 2024, costs of £18,000 were incurred in relation to the extension
of the facility.
12. Non-Current Liabilities
2025
£’000
2024
£’000
Revolving credit facility – 14,879
Total – 14,879
13. Share Capital
As at 31 December 2025
Ordinary Shares of 1p each
As at 31 December 2024
Ordinary Shares of 1p each
Allotted, called up and fully paid
Number
of shares
Nominal
value
£’000
Number
of shares
Nominal
value
£’000
Balance at beginning of year 137,198,943 1,372 140,836,702 1,408
Issue of Ordinary Shares 110,674,880 1,107 – –
Ordinary Shares bought back – Tender Offer – – (3,637,759) (36)
247,873,823 2,479 137,198,943 1,372
Treasury shares:
Balance at beginning of year 825,716 400,000
Buyback of Ordinary Shares into treasury 3,625,000 425,716
Balance at end of year 4,450,716 825,716
Total Ordinary Share capital excluding
treasury shares 243,423,107 136,373,227
During the year ended 31 December 2025, 110,674,880 Ordinary Shares (31 December 2024: nil) were issued for
a net consideration of £182,892,000 (31 December 2024: £nil), including nil Ordinary Shares issued from treasury
(31 December 2024: nil).
During the year, 3,625,000 Ordinary Shares (31 December 2024: 425,716) were bought back and placed in
treasury for an aggregate consideration of £6,077,000 (31 December 2024: £584,000).
Exit Opportunity
In 2024 the Company offered an Exit Opportunity, allowing eligible Shareholders to tender all or part of their
holdings. The Company received applications from eligible Shareholders to tender a total of 3,637,759 shares,
representing 2.58% of the issued Ordinary Share capital, at a price of 152.37 pence per share. These Ordinary
Shares were bought back and cancelled for an aggregate consideration of £5,907,000.
FJV Combination
On 27 November 2025, the Company announced the acquisition of approximately £184million of net assets for
FJV in consideration for the issue of 110,674,880 New Shares to FJV shareholders. The number of New Shares
to be issued was calculated based on an AJOT Formula Asset Value (“FAV”) per share of 166.382531 pence.
The net assets acquired comprised of £133,648,000 of quoted investments and £12,954,000 unquoted
investments and £37,542,000 of cash. Additionally, the Company received £275,000 as part of the exit charge
applied to FJV shareholders that elected to receive cash rather than shares in the Company. Note that this
transaction is not a business combination under the scope of IFRS 3.
131211
Financial Statements / Notes to the Financial Statements continued
For the year ended 31 December 2025
70
AVI Japan Opportunity Trust plc / Annual Report 2025
14. NAV per Ordinary Share
The NAV per Ordinary Share is based on net assets of £425,291,000 (31 December 2024: £211,981,000) and on
243,423,107 (31 December 2024: 136,373,227) Ordinary Shares, being the number of Ordinary Shares in issue
excluding treasury Shares at the year end.
31 December 2025 31 December 2024
NAV per
Ordinary
Share
Pence
Net asset
value
attributable
£’000
NAV per
Ordinary
Share
Pence
Net asset
value
attributable
£’000
Basic and diluted 174.71 425,291 155.44 211,981
15. Financial Instruments and Capital Disclosures
Investment Objective and Policy
The investment objective of the Company is to achieve a total return through a focused portfolio of investments,
particularly in companies whose share prices stand at a discount to estimated underlying NAV.
The Company’s investment objective and policy are detailed on page 24.
The Company’s financial instruments comprise equity investments, cash balances, receivables, payables and
borrowings. The Company makes use of borrowings to achieve improved performance in rising markets.
Risks
The risks identified arising from the financial instruments are market risk (which comprises market price risk, interest
rate risk and foreign currency risk), liquidity risk and credit and counterparty risk. The Company may also enter into
derivative transactions to manage risk.
The Board and Investment Manager consider and review the risks inherent in managing the Company’s assets
which are detailed below.
Market Risk
Market risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s
business. It represents the potential loss which the Company might suffer through holding market positions by way
of price movements, interest rate movements, exchange rate movements and systematic risk (risk inherent to the
market, reflecting economic and geopolitical factors). The Investment Manager assesses the exposure to market risk
when making each investment decision and these risks are monitored by the Investment Manager on a regular basis
and the Board at quarterly meetings with the Investment Manager.
Market Price Risk
Market price risk (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may
affect the value of investments.
Adherence to investment policies mitigates the risk of excessive exposure to any particular type of security or
issuer. The portfolio is managed with an awareness of the effects of adverse price movements through detailed
and continuing analysis, with the objective of maximising overall returns to shareholders. The assessment of market
risk is based on the Company’s portfolio as held at the year end. The Company has experienced volatility in the fair
value of investments during recent years due to geopolitical events. The Company has used 10% to demonstrate
the impact of a reduction/increase in the fair value of the investments and the impact upon the Company that might
arise from future events. This percentage in considered a reasonable estimate of a market movement, based on
historical fluctuations observed in the portfolio and broader market indices during periods of heightened uncertainty.
It is not intended to represent a forecast, but rather to demonstrate the potential effect of a substantial adverse or
favourable change in market prices.
The portfolio is managed with an awareness of the effects of adverse price movements through detailed and
continuing analysis with the objective of maximising overall returns to Shareholders. If the fair value of the
Company’s investments at the year end increased or decreased by 10%, then it would have had an impact on the
Company’s capital return through (losses)/gains on investments held at fair value, impacting profit/(loss) and the
NAV by £43,291,000 (31 December 2024: £22,086,000).
Foreign Currency
The value of the Company’s assets and the total return earned by the Company’s Shareholders can be significantly
affected by foreign exchange rate movements as most of the Company’s assets are denominated in currencies
other than Pounds Sterling, the currency in which the Company’s financial statements are prepared. Income
denominated in foreign currencies is converted to Pounds Sterling upon receipt. The JPY exchange rate
at 31 December 2025 was ¥210.835:£1 (31 December 2024: ¥196.915:£1).
Currency Risk
GBP
£’000
JPY
£’000
Total
£’000
At 31 December 2025
Receivables 416 486 902
Cash and cash equivalents 172 28,064 28,236
JPY revolving credit facility – (31,304) (31,304)
Payables (629) (4,825) (5,454)
Currency exposure on net monetary items (41) (7,579) (7,620)
Investments held at fair value through profit or loss – 432,911 432,911
Total net currency exposure (41) 425,332 425,291
1514
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AVI Japan Opportunity Trust plc / Annual Report 2025
15. Financial Instruments and Capital Disclosures continued
Currency Risk continued
GBP
£’000
JPY
£’000
Total
£’000
At 31 December 2024
Receivables 122 1,134 1,256
Cash and cash equivalents 13 5,390 5,403
JPY revolving credit facility – (14,879) (14,879)
Payables (316) (348) (664)
Currency exposure on net monetary items (181) (8,703) (8,884)
Investments held at fair value through profit or loss – 220,865 220,865
Total net currency exposure (181) 212,162 211,981
A 5% increase or decrease in foreign exchange rates has been used to illustrate the potential effect on net asset
value. This percentage is considered appropriate based on:
• Historical volatility of the relevant currencies;
• The nature of the Company’s foreign currency exposures, which are diversified and not concentrated in highly
volatile markets;
• Industry practice, where a 5% sensitivity is commonly used for similar investment companies.
A 5% rise or decline in Sterling against foreign currency denominated (i.e. non Pounds Sterling) assets and liabilities
held at the year end would have decreased/increased the net asset value by £21,266,000 (31 December 2024:
£10,608,000).
Interest Rate Risk
Interest rate movements may affect:
• the level of income receivable on cash deposits; and
• the interest payable on variable rate borrowings.
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken
into account when making investment decisions.
The exposure at 31 December of financial assets and financial liabilities to interest rate risk is shown by reference to
floating interest rates.
31 December
2025
£’000
31 December
2024
£’000
Exposure to floating interest rates
Cash and cash equivalents 28,236 5,403
JPY revolving credit facility (31,304) (14,879)
If the above level of cash and JPY revolving credit facility was maintained for a year, a 1% increase in interest rates
would decrease the revenue return and net assets by £31,000 (31 December 2024: £95,000). Management
proactively manages cash balances. If there was a fall of 1% in interest rates. The total effect would be a change in
profit/(loss) and the NAV, through a cost increase/revenue reduction, of £31,000 (31 December 2024: £95,000).
The estimated current interest rate chargeable on the revolving credit facility (the “facility”) is 2.03% and the
estimated effective interest rate 2.03%. The effective rate chargeable for a year on the current drawn down balance
of ¥6.6 billion is £635,000. Upon maturity on 2 April 2026, the facility will be extended for a further two years and
the facility size will increase to ¥12.7 billion.
Liquidity Risk
Liquidity risk is mitigated by the fact that the Company has £28,236,000 (2024: £5,403,000) cash at bank, the
assets are readily realisable, which can be easily sold to meet funding commitments and further short-term flexibility
is available through the use of bank borrowings. The current revolving credit facility is repayable on 2 April 2026,
or prior to that date at the discretion of the Company. Repayment may be completed through cash repayments,
further borrowings and/or disposal of investments. Unlisted investments, if any, in the portfolio are subject to liquidity
risk which is taken into account by the Directors when arriving at their valuation.
The Company is a closed-ended fund, assets do not need to be liquidated to meet redemptions, and sufficient
liquidity is maintained to meet obligations as they fall due.
The remaining contractual payments on the Company’s financial liabilities at 31 December 2025, based on
the earliest date on which payment can be required and current exchange rates at the Balance Sheet date
undiscounted amounts, were as follows:
In 1 year
or less
£’000
In more than
1 year but not
more than
2 years
£’000
Total
£’000
At 31 December 2025
Revolving credit facility 31,304 – 31,304
Payables (5,454) – (5,454)
25,850 – 25,850
15
Financial Statements / Notes to the Financial Statements continued
For the year ended 31 December 2025
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AVI Japan Opportunity Trust plc / Annual Report 2025
15. Financial Instruments and Capital Disclosures continued
Liquidity Risk continued
In 1 year
or less
£’000
In more than 1 year but not more
than 2 years
£’000
Total
£’000
At 31 December 2024
Revolving credit facility – (14,879) (14,879)
Payables (664) – (664)
(664) (14,879) (15,543)
Credit Risk
Credit risk is mitigated by diversifying the counterparties through which the Investment Manager conducts
investment transactions. The credit standing of all counterparties is reviewed periodically, with limits set on amounts
due from any one counterparty. As at 31 December 2025, cash was held with J.P. Morgan Chase Bank
(A2* Moody’s credit rating).
The total credit exposure represents the carrying value of cash and receivable balances and totals £29,138,000
(31 December 2024: £6,660,000).
Fair Values of Financial Assets
The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs
used in making the measurements.
The fair value is the amount at which the asset could be sold or the liability transferred in an orderly transaction
between market participants, at the measurement date, other than a forced or liquidation sale.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to
the fair value measurement of the relevant assets as follows:
• Level 1 – valued using quoted prices unadjusted in active markets for identical assets or liabilities.
• Level 2 – valued by reference to valuation techniques using observable inputs for the asset or liability other than
quoted prices included within Level 1.
• Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market
data for the asset or liability.
The table below sets out fair value measurements of financial instruments as at the year end, by the level in the fair
value hierarchy into which the fair value measurement is categorised.
Financial assets at fair value through proft
or loss at 31 December 2025
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Equity investments 419,957 – 12,954 432,911
419,957 – 12,954 432,911
Financial assets at fair value through proft
or loss at 31 December 2024
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Equity investments 220,865 – – 220,865
220,865 – – 220,865
Fair value of Level 3 investments
31 December
2025
£’000
31 December
2024
£’000
Opening fair value of investments – –
Acquisition 12,954 –
Closing fair value of investments 12,954 –
Investments classified within Level 3 are reviewed on a regular basis by the Investment Manager. As observable
prices are not readily available for the unquoted investments, the Directors have engaged an independent valuations
services provider to conduct independent valuation analysis of these investments. The service provider determines
appropriate and supportable inputs and assumptions in view of the requirement under IFRS 13. The independent
valuations services provider determines and documents a reconciliation of approaches where more than one
approach has been employed. Their observations and results are discussed with the Manager who reviews the
valuation analysis. The Manager consider the appropriateness of the valuation analysis as well as the valuation result
and determined the various methods and techniques are generally recognised as standard.
There have been no transfers during the year between Levels 1, 2 and 3.
Capital Management Policies and Procedures
The structure of the Company’s capital is described on page 70 and details of the Company’s reserves are shown in
the Statement of Changes in Equity on page 58.
The Company’s capital management objectives are:
• to ensure that it will be able to continue as a going concern;
• to achieve capital growth through a focused portfolio of investments, particularly in companies whose share prices
stand at a discount to estimated underlying NAV, through an appropriate balance of equity capital and debt; and
• to maximise the return to Shareholders while maintaining a capital base to allow the Company to operate
effectively and meet obligations as they fall due.
The Board, with the assistance of the Investment Manager, regularly monitors and reviews the broad structure of
the Company’s capital on an ongoing basis. These reviews include:
• the level of gearing, which takes account of the Company’s position and the Investment Manager’s views on
the market; and
• the extent to which revenue in excess of that which is required to be distributed should be retained.
15
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15. Financial Instruments and Capital Disclosures continued
Capital Management Policies and Procedures continued
The Company’s objectives, policies and processes for managing capital are set out in the Strategic Report. The
Company is subject to externally imposed capital requirements:
• as a public company, the Company is required to have a minimum share capital of £50,000; and
• in accordance with the provisions of Sections 832 and 833 of the Companies Act 2006, the Company, as an
investment company:
– is only able to make a dividend distribution to the extent that the assets of the Company are equal to at least
one and a half times its liabilities after the dividend payment has been made; and
– is required to make a dividend distribution each year such that it does not retain more than 15% of the
income that it derives from shares and securities.
These requirements are unchanged since last year and the Company has complied with these requirements at all
times since commencing trading on 23 October 2018.
16. Related Party Disclosures and Investment Management Fees
Fees paid to the Company’s Directors are disclosed in the Directors’ Remuneration Report on page 46 and in
note 3 on page 64.
The Company paid management fees to AVI during the year amounting to £2,222,000 (2024: £1,835,000). As at
the year end, £338,000 remained outstanding in respect of management fees (2024: £170,000). At 31 December
2025, AVI held 1,140,000 Ordinary Shares (2024: 1,890,000 Ordinary Shares) of the Company.
Finda Telecoms Oy and City of London Investment Management Company Limited (“City of London”), significant
Shareholders of the Company, are deemed to be related parties of the Company for the purposes of the Listing
Rules by virtue of their holding in the Company’s issued share capital. During the year under review, no material
transactions took place between the Company and Finda Telecoms Oy or City of London. As at 31 December
2025, Finda Telecoms Oy’s holding represented 12.17% of voting rights, as notified to the Company on
1 December 2025. Following the year end, on 15 January 2026, Finda Telecoms Oy informed the Company that
its holding had reduced to 9.24%. City of London informed the Company on 2 December 2025 that its holding
had increased to 19.53% of the voting rights. Since the year end, on 2 March 2026, City of London informed the
Company that its holding had reduced to 14.75%.
As at 12 March 2026, no further notifications have been received from either of the significant Shareholders.
17. Post Balance Sheet Events
On 9 December 2025, the Company announced that it would offer Shareholders the opportunity to tender some
or all of their Shares for sale. The Company announced on 13 January 2026 that it had received applications from
eligible Shareholders to tender an aggregate of 26,899,713 shares, representing 11.05% of the issued Ordinary
Share capital, at a price of 173.7587 pence. The tendered Shares were to be held in treasury.
Since the year-end, the Company has issued 4,550,000 Ordinary Shares from treasury for a net consideration of
£8,526,000.
171615
Financial Statements / Notes to the Financial Statements continued
For the year ended 31 December 2025
74
AVI Japan Opportunity Trust plc / Annual Report 2025
The Company’s AIFM is Asset Value Investors Limited.
The AIFMD requires certain information to be made available to investors in AIFs before they invest and requires
that material changes to this information be disclosed in the annual report of each AIF. Those disclosures that are
required to be made pre-investment are included within an AIFMD Investor Disclosure Document. This, together with
other necessary disclosures required under AIFMD, can be found on the Company’s website www.ajot.co.uk.
All authorised AIFMs are required to comply with the AIFMD Remuneration Code. The AIFM’s remuneration
disclosures can be found on the Company’s website www.ajot.co.uk.
Shareholder Information / AIFMD Disclosures
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AVI Japan Opportunity Trust plc / Annual Report 2025
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Alternative Performance Measure (“APM”)
An APM is a numerical measure of the Company’s current, historical or future financial performance, financial
position or cash flows, other than a financial measure defined or specified in the applicable financial framework.
The definitions below are utilised for the measures of the Company, the investment portfolio and underlying
individual investments held by the Company. Certain of the metrics are to look through to the investments held,
excluding certain non-core activities, so the performance of the actual core of the investment may be evaluated.
Where a company in the investment portfolio holds a number of listed investments these are excluded in order to
determine the actual core value metrics.
Comparator Benchmark
The Company’s Comparator Benchmark is the MSCI Japan Small Cap Index, expressed in Sterling terms. The
benchmark is an index which measures the performance of the Japan Small-Cap equity market. The weighting of
index constituents is based on their market capitalisation. Dividends paid by index constituents are assumed to be
reinvested in the relevant securities at the prevailing market price. The Investment Manager’s investment decisions
are not influenced by whether a particular company’s shares are, or are not, included in the benchmark. The
benchmark is used only as a yardstick to compare investment performance.
Cost
The book cost of each investment is the total acquisition value, including transaction costs, less the value of any
disposals or capitalised distributions allocated on a weighted average cost basis.
Discount/Premium (APM)
If the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is
calculated by subtracting the share price of 172.0p (2024: 152.3p) from the NAV per share of 174.7p (2024: 155.4p)
and is usually expressed as a percentage of the NAV per share, 1.6% (2024: 2.1%). If the share price is higher than
the NAV per share, this situation is called a premium.
The discount and performance are calculated in accordance with guidelines issued by The AIC. The discount is
calculated using the net asset values per share inclusive of accrued income.
Dry Powder
Refers to the amount of capital committed by investors to a Private Equity fund that the fund manager has not yet
called for investment.
Earnings Before Interest and Taxes (“EBIT”)
EBIT is equivalent to profit before finance costs and tax set out in the Statement of Comprehensive Income.
Enterprise Value (“EV”)
Enterprise Value reflects the economic value of the business by taking the market capitalisation less cash,
investment securities and the value of treasury shares plus debt and net pension liabilities.
Enterprise Value (“EV”)/Earnings Before Interest and Taxes (“EBIT”)
A multiple based valuation metric that takes account of the excess capital on a company’s balance sheet. For
example, if a company held 80% of its market capitalisation in NFV (defined under Net Financial Value/Market
Capitalisation), and had a market capitalisation of 100 and EBIT of 10, the EV/EBIT would be 2x, (100–80)/10.
Enterprise Value (“EV”) Free Cash Flow Yield (“EV FCF Yield”)
A similar calculation to free cash flow yield, except the free cash flow excludes interest and dividend income and is
divided by enterprise value. This gives a representation for how overcapitalised and undervalued a company is. If a
company were to pay out all of its NFV (defined under Net Financial Value/Market Capitalisation) and the share price
remained the same, the EV FCF Yield would become the FCF yield. For example, take a company with a market
capitalisation of 100 that had NFV of 80 and FCF of 8. The FCF yield would be 8%, 8/100, but if the company paid
out all of its NFV the FCF yield would become 40%, 8/(100–80). This gives an indication of how cheaply the market
values the underlying business once excess capital is stripped out.
Free Cash Flow (“FCF”) Yield
Free cash flow is the amount of cash profits that a business generates, adjusted for the minimum level of capital
expenditure required to maintain the company in a steady state. It measures how much a business could pay out to
equity investors without impairing the core business. When free cash flow is divided by the market value, we obtain
the free cash flow yield.
Gearing (APM)
Gearing refers to the ratio of the Company’s debt to its equity capital. The Company may borrow money to
invest in additional investments for its portfolio. If the Company’s assets grow, the Shareholders’ assets grow
Rif10ram!
situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact
performance in falling markets.
The gross gearing of 7.4% (31 December 2024: 7.0%) represents borrowings of £31,304,000 (31 December
2024: £14,879,000) expressed as a percentage of Shareholders’ funds of £425,291,000 (31 December 2024:
£211,981,000). The net gearing of 1.8% (31 December 2024: 4.5%) represents borrowings net of cash of
£7,620,000 (31 December 2024: £9,476,000) expressed as a percentage of Shareholders’ funds of £425,291,000
(31 December 2024: £211,981,000).
IRR
Internal rate of return.
NAV/Share Price Total Return (APM)
NAV total return is calculated by assuming that dividends paid out are re-invested into the NAV on the ex-dividend
date. This is accounted for in the “Effect of reinvesting dividends” line. The NAV used here includes debt marked to
fair value and is inclusive of accumulated income.
NAV total return over 1 year Page
31 December
2025
31 December
2024
Closing NAV per share (p) 174.7 155.5 a
Dividends paid out (p) 67 3.4 1.9 b
Effect of reinvesting dividends (p) 0.1 0.2 c
Adjusted NAV per share (p) 178.3 157.5 d= a+b+c
Opening NAV per share (p) 155.5 130.3 e
NAV total return (%) 14.7% 20.9% +(d/e)–1
Shareholder Information / Glossary (unaudited)
76
AVI Japan Opportunity Trust plc / Annual Report 2025
NAV/Share Price Total Return (APM) continued
Share price total return over 1 year Page
31 December
2025
31 December
2024
Closing price per share (p) 172.0 152.3 a
Dividends paid out (p) 67 3.4 1.9 b
Effect of reinvesting dividends (p) 0.1 0.2 c
Adjusted price per share (p) 175.5 154.3 d= a+b+c
Opening price per share (p) 152.3 127 e
Share price total return (%) 15.3% 21.5% +(d/e)–1
Net Asset Value (“NAV”)
The NAV is Shareholders’ funds expressed as an amount per individual share. Shareholders’ funds are the total
value of all of the Company’s assets, at their current market value, having deducted all liabilities and prior charges at
their par value, or at their asset value as appropriate. The total NAV per share is calculated by dividing the NAV by
the number of Ordinary Shares in issue.
Net Cash/Market Capitalisation
Net cash is equal to cash less debt. It is a measure of the excess cash on a company’s balance sheet and, by
implication, how much value the market attributes to the core operating business. Net cash = cash – debt. For
example, the implied valuation of the core operating business of a company trading with a net cash/market
capitalisation of 100% is zero.
Net Financial Value (“NFV”)/Market Capitalisation
Net Financial Value is equal to net cash, less minority interest, plus investment securities (less capital gains tax)
plus investment real estate assets (after tax). Net Financial Value (“NFV”) = cash + investment securities –
net debt – minority interest. A measure of the excess cash on a company’s balance sheet and, by implication,
how much value the market attributes to the core operating business. For example, the implied valuation of the core
operating business of a company trading with a NFV/market capitalisation of 100% is zero.
Ongoing Charges Ratio (APM)
The Company’s Ongoing Charges Ratio is its annualised expenses (excluding finance costs and certain non-
recurring items) of £3,451,000 (2024: £2,810,000) being investment management fees of £2,390,000 (2024:
£1,871,000) and other expenses of £1,093,000 (2024: £959,000) less non-recurring expenses of £32,000 (2024:
£20,000) expressed as a percentage of the average daily net assets of £248,400,000 (2024: £193,417,000) of the
Company during the year.
Portfolio Discount
A proprietary estimate of how far below fair value a given company is trading. For example, if a company with a
market capitalisation of 100 had 80 NFV and a calculated fair value of the operating business of 90, we would
attribute it a discount of -41%, 100/(90+80) –1. This indicates the amount of potential upside. The company trading
on a -41% discount has a potential upside of +69%, 1/(1–0.41).
Portfolio Yield
The weighted-average dividend yield of each underlying company in AJOT’s portfolio.
Return on Equity (“ROE”)
A measure of performance calculated by dividing net income by Shareholder equity.
ROE ex Non-Core Financial Assets
Non-core financial assets consists of cash and investment securities (less capital gains tax) less debt and net
pension liabilities. The ROE is calculated as if non-core financial assets were paid out to Shareholders. Companies
with high balance sheet allocations to non-core, low yielding financial assets have depressed ROEs. The exclusion
of non-core financial assets gives a fairer representation of the true ROE of the underlying business.
ROI
Return on investment.
Total Return – NAV and Share Price Returns
The combined effect of any dividends paid, together with the rise or fall in the share price or NAV. Total return
statistics enable the investor to make performance comparisons between investment trusts with different dividend
policies. Any dividends received by a Shareholder are assumed to have been reinvested in either additional shares in
the Company or in the assets of the Company at the prevailing NAV, in either case at the time that the shares begin
to trade ex-dividend.
Treasury Share
When a share is bought back it may be cancelled immediately or held (at zero value) as a Treasury Share. Shares
that are held in treasury can be reissued for cash at minimal cost. The Company will only reissue shares from
treasury at a price at or above the prevailing NAV per share.
Weight
Weight is defined as being each position’s value as a percentage of net assets.
Weighted-average Discount (APM)
The weighted-average discount is calculated as being the sum of the products of each holding’s weight in AJOT’s
portfolio times its discount.
AVI calculates an estimated sum-of-the-parts NAV per share for each holding in AJOT’s portfolio. This NAV is
compared with the share price of the holding in order to calculate a discount.
Weighted Average Shares (APM)
The weighted average shares outstanding is calculated by multiplying the outstanding number of shares after
each share issue and buy back of shares during the year with the time weighted portion. The total of the weighted
average of shares in issue excluding treasury shares during the year is 146,133,122.
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The Company’s Ordinary Shares are listed on the London Stock Exchange and can be bought directly on the
London Stock Exchange or through the platforms listed on www.ajot.co.uk/how-to-invest/platforms/.
Share Prices
The share price is published daily in The Financial Times, as well as on the Company’s website: www.ajot.co.uk.
Dividends
Shareholders who wish to have dividends paid directly into a bank account, rather than by cheque to their
registered address, can complete a mandate form for the purpose. Mandate forms may be obtained from Equiniti
Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA on request or downloaded from Equiniti’s
website www.shareview.com. The Company operates the BACS system for the payment of dividends. Where
dividends are paid directly into Shareholders’ bank accounts, dividend tax vouchers are sent to Shareholders’
registered addresses.
Change of Address
Communications with Shareholders are mailed to the last address held on the share register. Any change or
amendment should be notified to Equiniti Limited using the contact details given above, under the signature of the
registered holder.
Daily NAV
The daily NAV of the Company’s shares can be obtained from the London Stock Exchange or via the website:
www.ajot.co.uk.
Shareholder Information / Investing in the Company
78
AVI Japan Opportunity Trust plc / Annual Report 2025
Shareholder Information / Company Information
HOW TO INVEST
AJOT is a closed-ended investment trust with shares
listed on the London Stock Exchange and part of
the FTSE All-Share and FTSE Small Cap indices.
Shares in AJOT can be bought directly on the London
Stock Exchange or through investment platforms.
For more information visit: www.ajot.co.uk
AVI Japan Opportunity Trust plc / Annual Report 2025
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79
Directors
Norman Crighton (Chairman)
Andrew Rose
(Appointed 12 February 2025)
Margaret Stephens
Ekaterina (Katya) Thomson
(Resigned 21 January 2025)
Thomas (Tom) Yoritaka
(Appointed 12 February 2025)
Administrator
Waystone Administration Solutions
(UK) Limited
Broadwalk House
Southernhay West
Exeter
EX1 1TS
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Corporate Brokers
Singer Capital Markets
1 Bartholomew Lane
London
EC2N 2AX
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Custodian
J.P. Morgan Chase Bank
National Association
London Branch
25 Bank Street
Canary Wharf
London
E14 5JP
Depositary
J.P. Morgan Europe Limited
25 Bank Street
Canary Wharf
London
E14 5JP
Investment Manager and AIFM
Asset Value Investors Limited
2 Cavendish Square
London
W1G 0PU
Registered Offce
19th Floor
51 Lime Street
London
United Kingdom
EC3M 7DQ
Registrar and Transfer Offce
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Registrar’s Online Platform
www.shareview.co.uk
Registrar’s Shareholder Helpline
Tel. 0371 384 2030
Lines are open 8.30am to 5.30pm,
Monday to Friday.
Registrar’s Broker Helpline
Tel. 0906 559 6025
Calls to this number cost £1 per
minute from a BT landline, other
providers’ costs may vary. Lines are
open 8.30am to 5.30pm, Monday
to Friday.
Secretary
MUFG Corporate Governance Limited
Central Square
29 Wellington Street
Leeds
United Kingdom
LS1 4DL
Solicitors
Stephenson Harwood LLP
1 Finsbury Circus
London
EC2M 7SH
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