## A Year of Growth ### Annual Report 2025 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. 2 AVI Japan Opportunity Trust plc / Annual Report 2025 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Annual Report / Welcome ## Annual Report 2025 ## AVI Japan Opportunity Trust plc (“AJOT” ### Net assets: AN ACTIVE APPROACH TO ## or “the Company”) invests in a focused INVESTING RESPONSIBLY ## £425 million* ## portfolio of quality small and mid-cap listed ### As an active investor, AVI considers all drivers relevant ### (2024: £212 million) ## companies in Japan that have a large to each company’s success, offering suggestions to ### enhance sustainable corporate value in consideration of all ## portion of their market capitalisation in cash ### Launch date: ### stakeholders and in the best long-term interest of our clients. ## or realisable assets. ### We aim to build strong relationships with the boards and ## 23 October 2018 ### management of our portfolio companies. Through constructive ### engagement, we encourage and expect them to take ### Annualised return: ### meaningful action in the context of long-term value creation. ## 9.7%** ### (2024: 8.9%) S c n r e i o e t n c i n r u g † t ### Ongoing Charges Ratio : s i p P o n s h u f o d r p t c r o h a s e o w e l i e u t | 1.4%*** | o | S | n | | --- | --- | --- | --- | | | f | | i | | | t | | v | r e ### (2024: 1.5%) o r P ’ s e G ‘ * As at 31 December 2025 & P ** Source: Morningstar, annualised return net of fees (in GBP) as at 31 December 2025 ’ h S ‘ i l *** As at 31 December 2025, includes management fee, marketing and administration o , costs. ’ s E o ‘ † For all Alternative Performance Measures, please refer to the definitions in the Glossary p g h on pages 76 and 77. n i y n f e D R A e p s l e s p p g e r o i n a a n c i c r i r r c h P e t h il F Read more about our ESG Perspective on pages 32 and 33 of the Annual Report. AVI Japan Opportunity Trust plc / Annual Report 2025 AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 01 01 ### Overview of the Year ### CONTENTS ## The portfolio is Strategic Report: Financial Statements: Company Performance 2 Statement of Comprehensive Income 56 ## well placed with a Company Overview 4 Statement of Changes in Equity 57 ## concentrated yet diverse | | Chairman’s Statement 6 | Balance Sheet 58 | | --- | --- | --- | | collection of high quality, | Case Study 8 | Statement of Cash Flows 59 | | | Our Top 10 Holdings 10 | Notes to the Financial Statements 60 | ## lowly valued companies, ### Investment Manager’s Report 12 Shareholder Information: ## with multiple levers Portfolio Construction 20 AIFMD Disclosures 75 AVI Japan Investment Team 21 Glossary (unaudited) 76 ## for re-ratings. | S | Strategic Report | | | | --- | --- | --- | --- | | | | Investment Portfolio 22 | Investing in the Company 78 | | | | Business Model 24 | Company Information 79 | Directors’ Duties 25 ### Reform in Full Bloom Key Performance Indicators 30 ESG Policy 32 Principal Risks and Uncertainties 34 ### Governance: Directors 36 The Company’s website, which can be found at Directors’ Report 37 www.ajot.co.uk, includes useful information on ### S Strategic Report Corporate Governance Statement 40 the Company, such as price performance, news, Directors’ Remuneration Report 45 monthly and quarterly reports, as well as previous Statement of Directors’ Responsibilities in Relation Annual and Half-Year reports. to the Annual Report and Financial Statements 48 ### Net Asset Value, Share Price Our Performance Report from the Audit Committee 49 @AVIJapan u/avi-ajot ### and Benchmark Independent Auditor’s Report 51 avi-japan-opportunity-trust | 220 | AVI Japan Opportunity Trust NAV TR | | | | | --- | --- | --- | --- | --- | | 200 | AVI Japan Opportunity Trust Share Price TR | | | | | | | +95% | S | Strategic Report | MSCI Japan Small Cap Index (£ adjusted total return) 180 +86% 160 140 +48% 120 100 80 60 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 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. 02 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Company Performance ## Performance Summary 31 December 2025 31 December 2024 31 December 2025 31 December 2024 Net Asset Value £425,291,000 £211,981,000 Net asset value per share 174.7p 155.4p Share price 172.0p 152.3p Net Asset Value per Share (total return) for the year* 14.7% 20.9% Discount (difference between share price and net asset value)* 1.6% 2.1% Share price total return for the year* 15.3% 19.9% Comparator Benchmark 2025 Year’s Highs/Lows High Low MSCI Japan Small-Cap Index (£ adjusted total return) 19.8% 6.2% Net asset value per share 186.6p 149.2p Portfolio Valuation* Net Cash as % of Market Cap 12.3% 21.2% Since 2 Net Financial Value as % of Market Cap 37.8% 48.4% 1 NAV TR (GBP) inception 2025 2024 2023 2022 2021 2020 2019 2018 2 | EV/EBIT | | 9.5x | 8.7x | | | --- | --- | --- | --- | --- | | FCF Yield | | 5.9% | 6.7% | AJOT 94.8% 14.7% 20.9% 15.8% -4.3% 12.3% -1.4% 19.0% -4.0% | | | Year to | | Year to | | MSCI Japan Small Cap 48.0% 19.8% 6.2% 6.9% -1.0% -1.4% 3.2% 14.7% -6.0% 31 December 2025 31 December 2024 Relative 46.8% -5.2% 14.7% 8.8% -3.4% 13.7% -4.6% 4.3% 2.0% Earnings and Dividends Profit/(loss) before tax £41.9m £38.6m 1 Since inception on 23 October 2018. Investment income £6.3m £4.8m 2 TheportfolioNFVandEV/EBITestimatesdiffertothereportedfiguresintheDecember2025Factsheetduetoapostperiod-end | Revenue earnings per share | 2.94p | 2.21p | | change in the NFV calculation for Mitsubishi Logistics. | | --- | --- | --- | --- | --- | | Capital earnings per share | 25.20p | 25.00p | | * ForallAlternativePerformanceMeasures,pleaserefertothedefinitionsintheGlossaryonpages76and77. | | Total earnings per share | 28.14p | 27.21p | | | | Ordinary dividends per share | 2.20p | 2.20p | | | | Special dividends per share | 0.60p | | – | | Ongoing Charge* Management, marketing and other expenses (as a percentage of average Shareholders’ funds) 1.4% 1.5% AVI Japan Opportunity Trust plc / Annual Report 2025 SR SR G G FS FS SI SI 03 ### Net Asset Value, Share Price* and Benchmark 220 200 +95% 180 +86% 160 140 +48% 120 100 80 60 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) ### Premium or Discount to Net Asset Value (%) 15 10 5 0 -5 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% -10 * For all Alternative Performance Measures, please refer to the definitions in the Glossary on pages 76 and 77. -15 6 ● ● ● AVI Japan Opportunity Trust plc / Annual Report 2025 Strategic Report / Company Overview # Finding Compelling Opportunities in Japan # 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. # 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 | | --- | --- | --- | | GDP¹ | $4.0m | 4th largest | | Population² | 123m | 1.5% | | Fortune Global 500 Companies | 38 | 7.6% | 1 World Bank Data (2024). 2 Source: International Monetary Fund (2025). ³ For definitions, see Glossary on pages 7b and 7f. # 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. ![img-0.jpeg](img-0.jpeg) From left to right: Shurōsō Shimizu, Luke Hutcherson, Nicole Takada Wood, Kiai Sakai 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. # 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. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 05 ### KEY PERFORMANCE OUR CORE VALUES ### WHAT DO WE INVEST IN? ### INDICATORS (“KPIs”) ### AJOT aims to achieve long-term capital growth ### by engaging with its concentrated portfolio of | | NAV Performance* (2025), 1 Year: | Discount/Premium* (2025): | | | --- | --- | --- | --- | | Japanese equities to unlock value. | | | Engaged | | Sector Breakdown (% of Portfolio)*: | | | Building relationships with companies, actively working | | | 14.7% (2024: 20.9%) | -1.6% | | together to improve shareholder value. Range during the period: Since Inception (“SI”) 94.8% (9.5)% 1.5% 9.7% SI Annualised ### Concentrated ### Ongoing Charges* (2025), Peer Group NAV Performance Our portfolio of 15-25 holdings means we devote ample resources to research and engagement ### 31 December 2025: (2025): for every investment. AVI Japan Opportunity 14.7% ## 1.4% (2024: 1.5%) 5.4% Baille Gifford Shin Nippon Nippon Active Value 17.6% Baillie Gifford Shin Nippon ### Long-term Consumer Durables and Apparel 22% A three to five-year horizon aligns our interests with Media and Entertainment 13% those of management. ### RESPONSIBLE INVESTORS Transportation 12% Capital Goods 9% | Technology Hardware and Equipment 8% | | What do we invest in? | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | h i p | P | | | | Health Care Equipment and Services | | | | d | s | u | r | | | | 7% | We believe that the integration of ESG | | a r | | | p o | Unique | | | | | | w | | | s e | | | | | | t e | | | | | | | Household and Personal Products 6% | | and sustainability considerations into our | S | | | | | | Discovering overlooked and under-researched Software and Services 5% investment strategy is not only integral investment opportunities to unlock long-term value. ’ | Telecommunication Services 5% | to comprehensively understanding each | G ‘ | | | | --- | --- | --- | --- | --- | | | | & | P | | | | investment’s ability to create long-term | ’ | h | | | Commercial and Professional Services 5% | | S | i l | | | | | ‘ | o | | | | | , | s | | | | value, but is also aligned with our values as | ’ | o | | | Real Estate Management and Development 4% | | E | p | | | | | ‘ | h | | | | responsible investors. | g | y | | | Materials 2% | | n i | | | | | | n | | Experienced | | | For further information please see | fi | | | | Pharmaceuticals, Biotechnology and Life Sciences 1% | | e | | | D Investing in the Japanese market for over pages 32 and 33. two decades, with a dedicated team in A s London and Tokyo. p p l e r o c i p a c r i n h P Managed at AVI. Visit the website at: * % of net assets. Data may not sum to 100% due to rounding. * Fordefinitions,seeGlossaryonpages76and77. www.assetvalueinvestors.com AVI Japan Opportunity Trust plc / Annual Report 2025 Strategic Report / Chairman's Statement # Chairman's Statement ![img-1.jpeg](img-1.jpeg) ## NORMAN CRIGHTON Chairman, Non-Executive Director The portfolio is well placed with a concentrated yet diverse collection of high quality, lowly valued companies, with multiple levers for re-ratings. ### 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 sell at close to NAV. It was pleasing to both boards that 66% 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 2.60p 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 2016 to take advantage of the highly attractive opportunity to invest in undervalued, 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. AVI Japan Opportunity Trust plc / Annual Report 2020 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 (ESM 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 ¥12.7 billion, 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 Sanse Takeichi 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. Takeichi 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 familiar 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 Careccord Genuity, to arrange a meeting. Norman Crighton Chairman 12 March 2026 ![img-2.jpeg](img-2.jpeg) ![img-3.jpeg](img-3.jpeg) Source / Wacom 08 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Case Study ## Reform in Full Bloom ### 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. ### Recent Governance Reform: ## 03. 2014 2018 2021 2023 2024 Stewardship Code Revised Corporate TSE Market METI revises TSE published a ### Increasing shareholder activism impact. Governance Code Structure Reform guidelines for list of companies Corporate Takeovers disclosing plans ## 04. ### Private equity firms targeting the Japanese ### market with dry powder. | | | 2012 | 2015 | 2020 | | 2022 | | 2023 | | | 2025 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 05. | Abenomics | | Introduced | METI M&A | Transition from | | TSE enhanced | | TSE mandates English | | | | | Introduced | | Corporate | Guidelines | First Section | | disclosure for | | | disclosure. FSA | | ### The Japanese government encouraging ### The rising sun reveals a new land- Governance Code to Prime companies in parent- reviewing Corporate ### unsolicited acquisition offers and capital Read more at: ### scape, the mountain holding quiet subsidiary relationships Governance Code efficiency enhancement. www.assetvalueinvestors.com/insight/the-corporate-governance-wave-in-japan-capitalising-on-change/ ### 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 SR G FS SI 09 policy changes such as the privatisations understood in Japan, not only by investors and Q It has been a time of real momentum ### KAZ SAKAI of Tecnos Japan and BEENOS, as well as asset owners, but also corporate managers ### for the Trust following the FJV asset disposals like the sale of large real across the market. ### Head of Japan Research ### combination, how do you plan estate holdings by TSI Holdings. We also ### Q Alongside another team member, ### saw progress in public engagement, including to keep driving change in 2026? ### you come from a management my appointment as an external director at A Following the increase in assets we have Synchro Food, and the approval of shareholder consultancy background, how been able to grow our existing positions, with proposals at Eiken Chemical. the aim of building an even higher conviction ### does this benefit AJOT’s active portfolio, and an even stronger base from ### Q You mention you were appointed engagement strategy? which to engage. We plan to further accelerate ### to the Board of Synchro Food. A Business-focused engagement sits at the constructive, business-focused engagement core of AJOT’s strategy. We focus not only on ### Is this a new approach for AVI’s with these portfolio companies in 2026. “traditional” areas of engagement like capital ### engagement strategy? | | | allocation, but also on improving corporate | Q | AJOT was launched in 2018 | | --- | --- | --- | --- | --- | | A | Engagement is a core part of our strategy, | | | | | | | value through operational improvements. It is | | in response to the corporate | and we see this as an extension of our open not uncommon for us to send 70+ pages of ### governance wave in Japan and the and transparent effort to bring about effective analysis on a company to the management ### corporate governance and the long-term evolution of reform there; seven years and/or the Board outlining our suggestions for ### development of a company. My aim is to on, are you still finding opportunities improvements. My background in management partner with the management with the goal ### consulting supports this approach. to capitalise on this? ### AVI’s engagement approach has been of promoting the common interests of all ### Q Do you have the resources you need A Yes, very much so. Japan’s governance reform ### developed over several decades, and shareholders. remains a work in progress, with initiatives such ### as a team to continue this approach, ### with recent corporate governance Q You have clearly had an extremely as the request from the Tokyo Stock Exchange ### or do you plan to expand? ### reforms providing a supportive backdrop, to have management focus on their cost ### active year. In addition to your together with AJOT’s increased AUM, our A We are a small, tight-knit team and take a of capital and share price, and the planned ### NED appointment, as Head of disciplined approach to hiring; it is important for revision of the Corporate Governance Code ### engagement with Japanese companies ### Japan Research you spoke at four us that new members are a good fit for not just in 2026. This continues to create meaningful ### has both evolved and intensified conferences in December alone – our culture, but also our investment process, opportunities for constructive, engagement- ### how important is this public-facing which is unique given our differentiated focussed investors like us. ### Q AJOT aims to achieve long-term approach to engaging company management ### side of your engagement work for ### capital growth by engaging with teams and the extensive level of research we ### AJOT? conduct. We do plan to continue expanding ### its portfolio of Japanese equities A We believe it is beneficial for responsible the team with individuals who fit these criteria, ### to unlock value; how successful investors to share their investment philosophy, and we are currently in the process of recruiting ### were you in 2025? especially in Japan where we invest, and this is a new Japanese investment analyst in 2026 to 1 On March 2023, Tokyo Stock Exchange, Inc. (“TSE”) requested often in response to requests from companies, bolster our resource and engagement efforts. that all listed companies on the Prime and Standard Markets take A We believe AJOT achieved a number of “action to implement management that is conscious of cost of meaningful successes in 2025. Several universities and other institutions. Our aim is capital and stock price”. ### The rising sun reveals a new land- companies took significant actions following to ensure that our long-term and sustainable 2 Tokyo Stock Exchange website, as of 19 February 2025. ### scape, the mountain holding quiet investment approach is clearly and accurately our engagement, including major capital 3 Toyo Keizai newspaper, April 2024. ### 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. 10 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Our Top 10 Holdings ## Focus on Small and Mid-cap Businesses Mitsubishi Logistics is a third-party Kurabo Industries (“Kurabo”) is ### The top ten equity investments make up 70% of the logistics provider covering the entire a diversified conglomerate with ### net assets*, with operating businesses spread across supply chain. The company is the significant real estate and investment ### a range of sectors. | largest warehouse operator in Japan, | securities, which accounted for over | | --- | --- | | enjoys strong presence at all seven | 100% of its market cap at the time of | | of Japan’s major ports, and operates | investment in early 2024, which has | | an overseas air logistics business. | subsequently fallen to 69% following | ### Top 10 Share of Net Assets | | Mitsubishi Logistics remains | | +189% share price appreciation. | | --- | --- | --- | --- | | | substantially overcapitalised, with | | Engaged in the textile, chemical, | | 01. | investment securities and real estate | 02. | advanced technology, food & service, | % of AJOT net assets | | | | | | accounting for over 100% of the | | and real estate businesses, Kurabo | | --- | --- | --- | --- | --- | --- | --- | --- | | | 102% | Top 10 70% | | Mitsubishi | market cap. | Kurabo | has achieved stable revenues, while | | Incl. gearing | | Other holdings 32% | | | | | its operating margin has doubled | | | | | | Logistics | | Industries | | | | | | 102% | | | | in recent years. In 2025, Kurabo | pleasingly shut down its largest % of net assets % of net assets textiles plant, which had held back 7.5% 7.3% Kurabo’s valuation. | | EV/EBIT | | EV/EBIT | | | --- | --- | --- | --- | --- | | | 2.9x | | 4.2x | | | * For definitions, see Glossary on pages 76 and 77. | | Source / Mitsubishi Logistics | | Source / Kurabo Industries Ltd | | | Eiken Chemical is a manufacturer | | Raito Kogyo is a leading company | | Sharingtechnology operates one | | --- | --- | --- | --- | --- | --- | | | of medical diagnostics equipment, | | in the specialist construction | | of the largest life service matching | | | operating a high-quality business with | | sector, with core operations in | | platforms in Japan, connecting a | | | a proven track record of growing sales. | | slope construction and ground | | variety of user needs with high-quality | | | Eiken Chemical holds a dominant | | improvement together comprising | | services. With nearly 200 specialised | | | market position in colon cancer | | over 70% of total sales. The company | | websites and over 6,000 external | | | screening, with an overwhelming | | holds the largest market shares in | | service providers, the most frequent | | | global market share in excess of | | these areas, with approximately 30% | | services catered for include lost keys, | | | 70%. Eiken Chemical is set to | | in slope construction and 20% in | | lawn mowing, and termite control. | | | experience structural growth from the | | ground improvement. At the time | | There are several tailwinds to support | | 03. | | 04. | | 05. | | | | ageing population, and with an open | | of our investment, Raito Kogyo had | | continued growth, including the | | | shareholder register, the company is a | | achieved revenue growth at 2.4% | | declining Japanese population and | | | potential takeover target. | | CAGR from FY13 to FY22, with the | | the projected increase in the number | ### Raito Kogyo SharingtechnologyEiken Chemical operating profit margin consistently of single-person households. exceeding 10% over recent years. % of net assets % of net assets % of net assets Raito Kogyo anticipates public project 6.0%0.6% 5.9% 5.9% demand providing a growth runway. | EV/EBIT | | EV/EBIT | | EV/EBIT | | | --- | --- | --- | --- | --- | --- | | 21.5x | | 7.6x | | 11.4x | | | | Source / Eiken Chemical Co Ltd | | Source / Raito Kogyo | | Source / SHARINGTECHNOLOGY INC | AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 11 | | Atsugi is an apparel manufacturer | | Wacom is the global leader of digital | | Synchro Food operates a service | | --- | --- | --- | --- | --- | --- | | | primarily known for producing | | pen solutions, and our investment | | matching platform for restaurants in | | | stockings, innerwear, and legwear for | | was premised on the increased | | Japan, with much of its sales coming | | | women. The company manufactures | | adoption of digital drawing and | | from job listings. The company | | | and retails under its own brands. | | writing. Wacom manufactures its | | operates “Inshokuten.com” which | | | Atsugi is substantially overcapitalised | | own branded tablets and sells | | provides an end-to-end business | | | with Net Financial Value accounting | | its technology to other electronic | | platform for restaurants, including | | | for over 100% of the market cap. | | device manufacturers. Although | | supplier search, accountant search, | | | | | the Branded Business segment | | interior design, food truck support | | 06. | | 07. | continues to face challenges, we are | 08. | and bulk ordering services. Synchro | | | | | confident that through shortening the | | Food is a high-quality business, with | | | | | product development cycle for entry- | | an operating margin of c.25% and | | Atsugi Wacom Synchro Food | | | level products and strengthening | | 5-year revenue annual growth of | | | | | e-commerce channels, Wacom can | | c.14%. However, capital allocation | | | | | further reinforce its position as the | | issues are holding the company back | | % of net assets | | % of net assets | | % of net assets | | | | | | global leader. | | from its true valuation potential. | | 5.9% | | 5.8% | | 5.4% | | | EV/EBIT | | EV/EBIT | | EV/EBIT | | | N/A | | 9.1x | | 23.0x | | | | Source / Antonia Guillem via iStock | | Source / Wacom | | Source / Mapo via iStock | | | Rohto is the largest skincare and | | Broadmedia mainly engages in online | | --- | --- | --- | --- | | | eye-drop manufacturing company | | education and IT service businesses. | | | in Japan, yet trades at a significant | | It is a leading player in Japan running | | | discount to peers. AVI believes | | online-learning secondary schools | | | that Rohto’s undervaluation can be | | with the brand name “Renaissance | | | explained by the lack of focus on | | High School Group,” allowing students | | | its core businesses, misleading IR | | to learn at their own pace remotely | | | communication, and lower allocation | | and to focus on their individual | | | to shareholder returns than its peers. | | learning interests. Broadmedia’s | | | Specifically, management needs to | | unique education curriculum allows | | 09. | | 10. | | | | reallocate its R&D spending from | | students to study e-sports, KPOP and | | | low-profit business areas such as | | programming, on top of the standard | ### Rohto | | the prescription drug business and | | arts/science curriculum. In addition to | | | --- | --- | --- | --- | --- | | Pharmaceutical | | Broadmedia | | | | | regenerative medicine business, | | operating online-schools, Broadmedia | | | | towards its high-value, high market | | operates an IT service business, | | | % of net assets | | % of net assets | | | | | share product lines, such as skin care | | specifically for distributing Akamai | | | 5.4% | | 4.2% | | | | | products. | | Technologies’ software and solutions | | | EV/EBIT | | EV/EBIT | to domestic clients. | Visit our investment platforms: | | 13.4x | | 12.1x | | www.assetvalueinvestors.com/ajot/how-to-invest/platforms/ | | | Source / Rohto Pharmaceutical | | Source / Broadmedia | | 6 AVI Japan Opportunity Trust plc / Annual Report 2020 Strategic Report / Investment Manager's Report # Manager's Commentary ![img-4.jpeg](img-4.jpeg) # JOE BAUERNFREUND Portfolio Manager 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. TGI 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 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 Bsu's institutional independence, Takaichi has been clear that monetary policy should remain aligned with the government's growth and fiscal strategy. Despite the Bsu's gradual move toward policy normalisation, the Yen has weakened to its lowest level since July 2024, shrugging off two role 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.20% 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 66% 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. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 13 ## Contributors ## 01 ## Kurabo Industries | Contribution (GBP) | % of net assets | | --- | --- | | 3.66% | 7.3% | | EV/EBIT | NFV/Market Cap | C ## 4.2x 69% 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. ### 01 Kurabo Industries 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 Indexed Share Price September, Kurabo announced it had completed the ¥6.0 billion buyback 300 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). 250 Across all AVI client funds, as of year-end, AVI controls 5.1% of the shares, 200 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 150 potential and maximise corporate value. 100 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). 50 Dec 24 Mar 25 Jun 25 Sep 25 Dec 25 Source / Kurabo Industries Ltd 14 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Investment Manager’s Report continued ## Contributors continued ## 02 ## Raito Kogyo | Contribution (GBP) | % of net assets | | --- | --- | | 2.73% | 5.9% | | EV/EBIT | NFV/Market Cap | C ## 7.6x 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. ### 02 Raito Kogyo 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 Indexed Share Price 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 200 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 150 price, and to year-end, the investment has returned an ROI of +24% for an 50 IRR of +40% (in JPY). Mar 24 Jun 24 Sep 24 Mar 25 Jun 25 Sep 25Dec 24 Dec 25 Source / Raito Kogyo 100 AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 15 ## 03 ## TSI Holdings | Contribution (GBP) | % of net assets | | --- | --- | | 2.05% | Exited | | EV/EBIT | NFV/Market Cap | C ## Exited Exited 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 03 TSI holdings 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. ### Indexed Share Price 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 400 generated an ROI of +92% for an IRR of +46% (in JPY). 300 0 200 Jul 22 Dec 22 Jul 23 Dec 23 Jul 24 Dec 24 Jul 25 Dec 25 Source / TSI Holdings 100 16 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Investment Manager’s Report continued ## Contributors continued Although the Branded Business segment continues to face challenges, we are confident that through shortening the product development cycle ## 04 05 and strengthening e-commerce channels, Wacom can further reinforce its position as the global leader. ## Tecnos Japan Wacom 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). | Contribution (GBP) | % of net assets | Contribution (GBP) | % of net assets | | | | --- | --- | --- | --- | --- | --- | | 1.75% | Exited | 1.63% | 5.8% | 04 Tecnos Japan | | | EV/EBIT | NFV/Market Cap | EV/EBIT | NFV/Market Cap | | | | | | | | Indexed Share Price | Tender offer | price at +39% premium ## Exited N/A 9.1x 12% CC Tecnos Japan was another notable contributor, adding +175bps as its Wacom was the fifth largest contributor to performance, adding +163bps as share price rose by +39% from the beginning of 2025 to the company’s its share price rose +12% over the year. privatisation in March 2025. Across all funds, AVI controls over 13% of the vote in Wacom, which is the An IT services company, Tecnos Japan is engaged in the business of global leader of digital pen solutions. Our investment is premised on the providing information technology services, especially the installation of increased adoption of digital drawing and writing, relative undervaluation, Enterprise Resource Planning (ERP) systems. Our investment thesis was and scope for improvement through engagement. Wacom manufactures 50 built on the track-record of high-quality earnings under the digitalisation trend its own branded tablets and sells its technology to other electronic device Mar 24 Jun 24 Jun 25Sep 24 Sep 25Dec 24 Mar 25 Dec 25 in Japan, with revenue growing at a +13% CAGR and operating margins manufacturers. consistently in the low double digits, in addition to the overcapitalised In May 2025, AVI launched a public campaign titled ‘Draw Wacom’s Future’, balance sheet that had net financial value equal to c.35% of the market cap. in which we highlighted several constructive suggestions, since then the ### 05 Wacom As per the regulatory news service announcement on 4 February, AVI share price has risen by +47%. We are concerned by the poor performing signed a tender agreement with Ant Capital Partners Co., Ltd. (the “Offeror”) Branded Business Segment, which has consistently posted losses since ### for AVI’s 10% stake in Tecnos Japan. The tender offer price of ¥1,155 per 2022. Indexed Share Price share represented a +39% premium to the undisturbed closing price on 4 Alongside the public campaign, we formally submitted shareholder February 2025. proposals to the AGM. These proposals called for appointment of an As the largest shareholder of Tecnos Japan, AVI has engaged extensively independent director, establishment of a Transformation Plan Supervisory with the company’s Board on ways to enhance corporate value and returns Committee, better handling of acquisition proposals, allowing shareholders to shareholders. Tecnos Japan serves as another example of how AJOT’s to determine the dividend at the AGM, a share buyback, and defining total 150 concentrated portfolio of asset-backed Japanese small-caps can benefit shareholder return as a metric to determine stock-based compensation for 200 from AVI’s active engagement strategy against a backdrop of rapidly internal directors. 75 125 increasing corporate activity in Japan. During September, constructive yet active investor Kaname Capital 150 Tecnos Japan was held in AJOT from April 2024 to March 2025, with the declared 5% ownership in Wacom, with the shares rising a further +5% 50 100 Dec 21 Dec 22 Dec 23 Dec 24 Dec 25 investment generating a +62% ROI for a +109% IRR (in JPY). to month-end. 100 AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 17 ## Detractors ### 06 Aoyama Zaisan Networks ## 06 07 ### Indexed Share Price ## Aoyama Zaisan Aichi Corp. ## Networks | Contribution (GBP) | % of net assets | Contribution (GBP) | % of net assets | | --- | --- | --- | --- | | -1.32% | 3.1% | -0.35% | Exited | | EV/EBIT | NFV/Market Cap | EV/EBIT | NFV/Market Cap | 50 ## 5.2x 35% D Exited Exited D Aoyama Zaisan Networks (AZN) was the largest detractor, reducing Aichi was the second largest detractor over the year, reducing performance performance by -132bps as its share price fell by -17% in 2025. by -35bps as its share price declined by -11% from 2024 year-end to our 07 Aichi Corp. exit in late March 2025. AZN specialises in providing wealth management consulting services across areas such as property, succession planning, corporate finance Aichi is a leading manufacturer of special purpose vehicles used in ### Indexed Share Price and strategic management of individual assets. AZN is set to benefit from construction in Japan, such as aerial work platforms. The company is a the aging Japanese population as the need for inheritance and business listed subsidiary of Toyota Industries (TICO), and a possible candidate for succession consulting is on the rise. a takeover. We engaged with management in a friendly manner on various corporate governance issues relating to its parent/subsidiary relationship. In December 2025, AZN revised its revenue guidance downwards by -11% for FY2025 due to revenue from transactions at Advantage Club, AZN’s AVI launched a public campaign titled ‘Taking Aichi Higher’ in May 2024, real estate co-ownership platform, being pushed into later periods due to urging Aichi and TICO to dissolve the listed subsidiary structure to address the announcement of upcoming tax reform. While operating profit remained the persistent undervaluation and unlock Aichi’s full potential. Addressing our unchanged at ¥3.85bn, the market perceived this as a negative signal campaign, Aichi announced a new capital policy in March, in which TICO for future earnings potential, with the share price drifting -7% lower in the would sell some of its Aichi stake to ITOCHU Corporation, and Aichi would following five trading days. also buy back shares from TICO via tender offer, with a view to dissolving 50 the listed subsidiary structure. Following this announcement, we made the At the time we initiated our investment in March 2024, AZN’s stock price decision to allocate capital to more promising ideas, as the parent/subsidiary had been flat for the previous five years, despite operating income that had issue was at least resolved, although not in the manner that investors had continued to grow steadily and non-operating assets that had expanded to hoped. c.47% of its market cap as of the end of December 2023 (now c.35%). 250 200 Over our holding period from November 2019 to March 2025, the AZN was added to the portfolio in March 2024, and at year-end accounted investment period generated an ROI of +52% for an IRR of +18% (in JPY). for 3.1% of AJOT’s NAV. To date, the investment has returned an ROI of 200 +7% for an IRR of +7% (in JPY). 150 150 100 100 Mar 24 Jun 24 Sep 24 Mar 25 Jun 25 Sep 25Dec 24 Dec 25 Dec 19 Dec 20 Dec 21 Dec 23 Dec 24Dec 22 Dec 25 18 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Investment Manager’s Report continued ## Detractors continued ## 08 0 ## Mitsubishi Logistics ## Corp. | Contribution (GBP) | % of net assets | | | --- | --- | --- | | -0.31% | 7.5% | | | EV/EBIT* | NFV/Market Cap* | | | 2.9x | 87% | D | 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% ### 09 Mitsubishi Logistics Corp. 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 Indexed Share Price 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 120 limit the accumulation of unrealised capital gains. 90 110 Mitsubishi Logistics was added to the portfolio in January 2025, and at 80 year-end accounted for 7.5% of AJOT’s NAV as the largest holding. To date, 100 the investment has returned an ROI of +3% for an IRR of +9% (in JPY). 70 * The NFV and EV/EBIT estimates differ to the reported figures in the December 2025 Factsheet Mar 25 Jun 25 Sep 25 Sep 25 Dec 25 Source / Mitsubishi Logistics due to a post period-end change in the NFV calculation for Mitsubishi Logistics. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 19 ### 09 Konishi ## 09 10 ### Indexed Share Price ## Konishi Wakamoto ## Pharmaceutical | Contribution (GBP) | % of net assets | Contribution (GBP) | % of net assets | | --- | --- | --- | --- | | -0.30% | Exited | -0.26% | 1.0% | | EV/EBIT | NFV/Market Cap | EV/EBIT | NFV/Market Cap | 50 ## Exited Exited D D N/A 93% Konishi was another, albeit relatively minor detractor, reducing performance Wakamoto Pharmaceutical (“Wakamoto”), was the fifth largest detractor, by -30bps as its share price fell by -6% from year-end to the date we exited reducing performance by -26bps as its share price rose modestly by +4% 10 Wakamoto Pharmaceutical our stake in July 2025. from the date we started adding to the position to 2025 year-end. Konishi is the manufacturer of the no.1 adhesive brand in Japan, ‘Bond’, Wakamoto operates three pharmaceutical segments, including prescription ### Indexed Share Price used in construction and civil engineering projects, as well as household eyecare products, as well as sales of over-the-counter (OTC) medicines, tasks. Moreover, the company manufactures industrial chemicals and both in Japan and overseas. The prescription eyecare business is loss- synthetic resins, as well as operating in the business of infrastructure making and has been a consistent drag on Wakamoto’s operational construction and repairs. performance. In contrast, the OTC segments each enjoy positive operating margins, with domestic sales particularly profitable. At the peak of our investment period, we were the largest shareholder in the company, and we engaged closely with management, putting forward Rohto Pharmaceutical, which accounts for 5.4% of AJOT’s NAV, is the a variety of suggestions to address the undervaluation. Over our near largest shareholder in Wakamoto, owning over 11% of the company’s seven-year holding period, despite revenue only growing at a modest +1% shares. annually, the operating margin increased from 5.6% in 2018 to 7.8% in Following the Q1 earnings announcement for the financial year ending 2025, as operating income grew at +6% annually. 90 March 2026 on 5th August, which showed the domestic OTC business Having held a position in AJOT since inception in October 2018, the had generated an operating loss, the shares traded down -11% to 2025 investment generated an ROI of +74% for an IRR of +13% (in JPY). 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. 130 200 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 120 year-end. 150 110 100 100 Feb 25 Apr 25 Jun 25 Aug 25 Oct 25 Dec 25 Dec 18 Dec 19 Dec 20 Dec 21 Dec 22 Dec 23 Dec 24 Dec 25 20 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Portfolio Construction The objective of AVI’s portfolio construction is to create a 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 ### concentrated position in 15-25 holdings, facilitating a clear ### AVERAGE VOTING OWNERSHIP OF initiated. In determining position sizes, AVI is mindful of liquidity and the likely ### monitoring process of the entire portfolio. ### timing of any catalysts to unlock value. A key consideration is the make-up PORTFOLIO COMPANIES ACROSS ALL of the shareholder register, a proxy for how receptive management might be ### AVI FUNDS 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. 12.0% 10.0% ### PORTFOLIO VALUE BY SECTOR* EQUITY PORTFOLIO VALUE ### BY MARKET CAPITALISATION 8.0% 6.0% 4.0% 2.0% ### TOP 10 CONCENTRATION | | 2025 2024 | | 2025 2024 | | | --- | --- | --- | --- | --- | | Consumer Durables and Apparel 22% 22% | | <£250mn 42% 29% | | (% OF NET ASSETS) | | Media and Entertainment 13% 4% | | £250mn – £500mn 12% 32% | | | | Transportation 12% 0% | | £500mn – £750mn 23% 30% | | | 100% Capital Goods 9% 15% £750mn – £1bn 7% 3% Technology Hardware and Equipment 8% 3% £1bn – £2.5bn 10% 4% 80% Health Care Equipment and Services 7% 11% >£2.5bn 6% 2% Household and Personal Products 6% 2% 70% Software and Services 5% 7% Telecommunication Services 5% 3% 60% Commercial and Professional Services 5% 0% Real Estate Management and Development 4% 6% Materials 2% 15% 50% Pharmaceuticals, Biotechnology and Life Sciences 1% 0% Consumer Discretionary, Distribution and Retail 0% 12% 40% Dec 18 Dec 19 Dec 20 Dec 21 Dec 25Dec 24Dec 23Dec 22 * % of net assets. Data may not sum to 100% due to rounding. Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 Jun 24 Jun 25 Dec 25Dec 24Dec 23 AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 21 ### Strategic Report / AVI Japan Investment Team ### 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). ### 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 22 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Investment Portfolio ### As at 31 December 2025 | | Stock Exchange | | % of | Cost | Market value | | % of AJOT | NFV/Market | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | 1 | | 1 | | Company | Identifer | investee company | | £’000* | | £’000 | net assets | capitalisation | | EV/EBIT | | 2 Mitsubishi Logistics 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 3,4 Amova Listed IDX Fund Topix TSE:1308 0.0% 30,059 30,461 7.2% 3,4 Nomura NF Topix 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 4,5 Sharingtechnology 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% * Please refer to Glossary on pages 76 and 77. 3 Investments acquired as part of the combination with FJV. 1 Estimates provided by AVI. For all Alternative Performance Measures, please refer to the definitions in the Glossary on pages 76 and 77. 4 These Exchange Traded Fund (“ETF”) holdings provided passive exposure to the Japanese equity market following the combination with FJV. 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 5 219,700 Sharingtechnology shares were acquired as part of the combination with FJV at a cost of £1,093,000. calculation for Mitsubishi Logistics. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 23 | | Stock Exchange | | % of | Cost | Market value | | % of AJOT | NFV/Market | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | 1 | | 1 | | Company | Identifer | investee company | | £’000* | | £’000 | net assets | capitalisation | | EV/EBIT | | Quick TSE:4318 2.3% 5,372 5,622 1.3% 31% 7.7 3,† Asoview Inc 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% 3,† Go VRN 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 3,† Studyplus Inc 1,862 1,988 0.5% 3,† The Iyell Co 1,669 1,736 0.4% Top 30 investments 395,815 432,368 101.7% 3,† Yoriso 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). 24 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Business Model ## Business Model Company Status Whereas it is not expected that a single holding Although there are no current plans to hedge investments How we Generate Returns (including any derivative instrument) will represent more denominated in JPY, the Investment Manager and the The Company is registered as a public limited company ### than 10% of the Company’s gross assets at the time of Board will periodically review this policy. 1 Value Growth under the Companies Act 2006 and is an investment investment, the Company has discretion to invest up to company under Section 833 of the Companies Act Material Changes to the Investment Policy When these two sources of returns occur 15% of its gross assets in a single holding, if a suitable 2006. It is a member of The AIC. simultaneously, an attractive compounding effect No material change will be made to the Company’s opportunity arises. enhances investment returns. The Company was incorporated on 27 July 2018 investment policy without Shareholder approval. In the No restrictions are placed on the market capitalisation and listed on the London Stock Exchange event of a breach of the Company’s investment policy, ### 2 Discount Tightening of investee companies, but the portfolio is weighted on 23 October 2018. the Directors will announce through a Regulatory towards small and mid-cap companies. The portfolio Information Service the actions which have been taken At the core of all AVI’s investments are attractive The Company has been approved as an investment normally consists of between 15 and 25 holdings to rectify the breach. businesses with durable earnings growth. trust under Sections 1158/1159 of the Corporation although it may contain a lesser or greater number of | Tax Act 2010. The Directors are of the opinion, under | | | | Compounding Effect | | --- | --- | --- | --- | --- | | | holdings at any time. | | 3 | | | advice, that the Company continues to conduct its | | HOW WE INVEST | | | The Company may invest in exchange traded funds, affairs as an Approved Investment Trust under the Occurs when the share price rises more than listed anywhere in the world, in order to gain exposure ### Investment Trust (Approved Company) (Tax) Portfolio Characteristics the NAV. to equities listed or quoted in Japan. On acquisition, no Regulations 2011. more than 15% of the Company’s gross assets will be 140 0% ### The Company qualifies as an Alternative Investment 1 Undervalued and Surplus Cash invested in other UK listed investment companies. Fund in accordance with the Alternative Investment The Company may also use derivatives for gearing and -20% Fund Managers Directive (“AIFMD”). | | efficient portfolio management purposes. | | Small to Mid-Cap Focused with suffcient | | | | --- | --- | --- | --- | --- | --- | | Investment Objective | | 2 | | 100 | -40% | | | The Company will not be constrained by any index | | liquidity | | | | The Company’s investment objective is to provide | benchmark in its asset allocation. | | | | | | Shareholders with a total return in excess of the | | | | | -60% | | | Borrowing Policy | | High Quality Businesses | | | | MSCI Japan Small Cap Index, through the active | | 3 | | | | | management of a focused portfolio of equity | The Company may use borrowings for settlement of | | | 60 | -80% | | investments listed or quoted in Japan which have been | transactions, to meet ongoing expenses and may be | | | | | Share price NAV Discount (%RHS) ### geared through borrowings and/or by entering into long- 4 Engagement Prospects identified by AVI as undervalued and having a significant Theoretical example of how returns are generated in an AJOT investment. proportion of their market capitalisation held in cash, only contracts for difference or equity swaps that have listed securities and/or realisable assets. the effect of gearing the Company’s portfolio to seek to ### Defining our Universe enhance performance. ### Investment Policy The aggregate of borrowings and long-only contracts ## The Company invests in a diversified portfolio of equities c.3,900 c.800 for difference and equity swap exposure will not exceed listed or quoted in Japan which are considered by the 25% of NAV at the time of drawdown of the relevant Listed Japanese Companies Companies in the AJOT Universe Investment Manager to be undervalued and where borrowings or entering into the relevant transaction, as cash, listed securities and/or realisable assets make up appropriate. It is expected that any borrowings entered ### 1 2 3 4 a significant proportion of the market capitalisation. AVI into will principally be denominated in JPY. seeks to unlock this value through proactive engagement | | | Overcapitalised, | | Suffcient average | Low EV/EBIT relative | | Sector agnostic, | | --- | --- | --- | --- | --- | --- | --- | --- | | with management and taking advantage of the | Hedging Policy | | | | | | | | | | with signifcant net | | daily traded value | to peers, typically | | typically excluding | | increased focus on corporate governance and returns to | The Company does not hedge its currency exposure | | 1 | | | | | | | | fnancial value | | | | <10x | fnancial sector | | shareholders in Japan. The Board has not set any limits | using financial instruments such as derivatives, forward | | | | | | | | on sector weightings or stock selection within the portfolio. | contracts, or options. | | | | | | | 1 Net Financial Value (“NFV”) = cash + investment securities – net debt – minority interest. AVI Japan Opportunity Trust plc / Annual Report 2020 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 N/AV 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 £138,000, 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 fulfil their responsibilities to stakeholders. 26 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Directors’ Duties continued Following thorough review, it was concluded that, as the Company is an ### STAKEHOLDERS externally managed investment company and does not have any employees or customers, its key stakeholders comprise its Shareholders and service ### The Board seeks to understand the needs and priorities of the Company’s providers. The section on the pages following discusses why these stakeholders and these are taken into account during all its discussions stakeholders are considered of importance to the Company and the actions and as part of its decision-making. The Board has discussed which parties taken to ensure that their interests are taken into account. ### should be considered as stakeholders of the Company. ### Stakeholder Importance Board Engagement Continued Shareholder support The Company has over 800 Shareholders, including institutional and retail investors. The Board is committed to maintaining open channels of and engagement are critical to the communication and to engaging with Shareholders in a manner which they find most meaningful, in order to gain an understanding of the views of existence of the Company and the Shareholders. These include: delivery of the long-term strategy of Shareholders Annual General Meeting the Company. 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. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 27 ### Stakeholder Importance Board Engagement 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 Shareholders continued 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 Holding the Company’s shares offers Maintaining a close and constructive working relationship with the Investment Manager is crucial, as the Board and the Investment Manager both aim investors an investment vehicle to continue to achieve consistent, long-term returns in line with the investment objective. Important components in the collaboration with the Investment through which they can obtain Manager, representative of the Company’s culture, are: The Investment Manager exposure to AJOT’s diversified • encouraging open discussion with the Investment Manager, allowing time and space for original and innovative thinking; portfolio of small to mid-cap • the Chairman has frequent conversations with the Investment Manager to talk through any matters discussed by the Board between scheduled Japanese equities. The Investment meetings, as well as any matters raised by the Investment Manager; Manager’s performance is critical for • 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 the Company to successfully deliver ensures that the interests of Shareholders and the Investment Manager are well aligned; its investment strategy and meet its • recognising the alignment of interests mentioned above, adopting a tone of constructive challenge, balanced with robust negotiation of the Investment objective to provide Shareholders Manager’s terms of engagement if those interests should not be fully congruent; with a total return in excess of the MSCI Japan Small Cap Index through • drawing on Board members’ individual experience and knowledge to support the Investment Manager in its monitoring of and engagement with active management of the portfolio portfolio companies; and and engagement with portfolio • willingness to make the Board members’ experience available to support the Investment Manager in the sound long-term development of its business companies. and resources, recognising that the long-term health of the Investment Manager is in the interests of Shareholders in the Company. 28 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Directors’ Duties continued ### Stakeholder Importance Board Engagement Service Providers continued In order to function as an The Board maintains regular contact with its key external providers and receives regular reporting from them, both through the Board and committee investment trust with an Equity 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 Shares (Commercial Companies) formally assesses their performance, fees and continuing appointment at least annually, to ensure that the key service providers continue to function at an The Administrator, the listing on the London Stock Exchange, acceptable level and are appropriately remunerated to deliver the expected level of service. All key service providers are asked (in respect of a reporting Company Secretary, the the Company relies on a diverse period) to complete a questionnaire regarding the matters discussed above, the results of which are discussed during a formal review of service providers Registrar, the Depositary, the range of reputable advisers for at the March Board meeting. The Audit Committee reviews and evaluates the control environment in place at each service provider and also requests Custodian and the Corporate support in meeting all relevant confirmation that key service providers have the relevant policies in place, including those on business continuity, cyber security, AI and fraud prevention. Broker obligations. Other Stakeholders Availability of funding and liquidity Therefore, the Company aims to demonstrate to lenders that it is a well-managed business, capable of consistently delivering long-term returns. are crucial to the Company’s ability to take advantage of investment Lender opportunities as they arise. Where relevant, the evolving practice When deemed relevant, the Company will engage with proxy advisers regarding resolutions that will be proposed to the Company’s Shareholders at AGMs and support (or lack thereof) of proxy and, based on feedback received, incorporate changes to future Annual Reports to enhance disclosures. adviser agencies are considered Proxy Advisers 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. The Company can only operate with The Company follows voluntary and best-practice guidance, and regularly considers how it meets various regulatory and statutory obligations and how any the approval of its regulators who governance decisions it makes can have an impact on its stakeholders, both in the shorter and in the longer term. have a legitimate interest in how the Regulators Company operates in the market and treats its Shareholders. AVI Japan Opportunity Trust plc / Annual Report 2020 # 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 Blibery 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. Principles for Responsible Investment AVI became a signatory to the UN-supported Principles for Responsible Investment ("PRI") on 9 April 2021. 30 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Key Performance Indicators ## Key Performance Indicators ### The Company’s Board meets regularly and at each meeting 1 1 ### Discount/Premium Ongoing Charges ### reviews performance against a number of key measures. ### Discount, 31 December 2025: 31 December 2025: 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”). | | 1.6% | | 1.4% | | --- | --- | --- | --- | --- | | | 1 | | +1.5%Premium, High for the period | 31 December 2024 1.5% | | NAV Total Return Performance | 1 Year*: | | | | Discount, Low for the period -9.5% The Board continues to be conscious of expenses and aims to maintain a ## 14.7% sensible balance between good service and costs. Each year, the Board The Board believes that an important driver of an investment trust’s discount Since Inception (“SI”) 94.8% reviews in detail the costs incurred and ongoing commercial arrangements or premium over the long-term is investment performance. However, there with each of the Company’s key suppliers. The majority of the ongoing can be volatility in the discount or premium. Therefore, the Board seeks Benchmark 48.0% charges ratio is attributed to the fees paid to the Investment Manager. This Shareholder approval each year to buy back and issue shares with a view fee is reviewed annually, and the Board believes that the cost is reasonable, to limiting the volatility of the share price discount or premium. During the The Directors regard the Company’s NAV total return as the overall given the Investment Manager’s activist approach to fund management and period under review, nil new shares were issued under the authorisation measure of value delivered to Shareholders by the Investment Manager the resources required to provide the level of service. The Company adheres granted at the AGM. During the year, 3,625,000 shares were bought back over the long-term. Total return reflects both the NAV growth of the to The AIC guidance in calculating its ongoing charges ratio. into treasury under the authorisation granted at the AGM. Company and also dividends paid to Shareholders. Since the launch on ### Going Concern As at 12 March 2026, the Company had 247,873,823 shares in issue. 23 October 2018, the Company’s NAV has increased by 95%, resulting The Directors have assessed the Company’s ability to continue as a going in an annualised return of 9.7%. The Investment Manager’s investment The Company has a successful discount control policy whereby if, under concern based on detailed profit and loss and cash flow forecasts, covering style is such that performance is likely to deviate materially from that of normal market conditions, the four-month average share price discount the period up to and including 31 March 2027. These forecasts have been any broadly-based equity index. The Board considers the most useful to NAV is greater than -5%, the Company will buy back shares with the “stressed” for inflation, as well as a severe and sudden downturn in market comparator to be the MSCI Japan Small Cap Index. Since the launch intention of reducing the discount to a level no greater than -5%. Since IPO, conditions, under which it is assumed that the investment portfolio will lose on 23 October 2018, the benchmark has increased by 48%, resulting in the Company has bought back shares on 19 occasions under this policy. 45% of its value. Even under this extreme “stress” scenario, the Company has an annualised return of 5.6%. For the year ended 31 December 2025, adequate resources to continue in operational existence for the foreseeable ### the Company’s NAV increased by 14.7% while the MSCI Japan Small Peer Group NAV Performance Total Return future (being a period of at least 12 months from the date these financial Cap Index increased by 19.8%. A full description of performance and the ### AIC Japanese Smaller Companies Sector* statements were approved). The Directors also regularly assess the resilience investment portfolio is contained in the Investment Manager’s Report, of key third-party service providers, most notably the Investment Manager commencing on page 12. AVI Japan Opportunity 14.7% and Fund Administrator. The Directors do not have any concerns about the 5.4% Baillie Gifford Shin Nippon financial viability of the Company’s third-party service providers. Nippon Active Value 17.6% 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 The Board is aware of other investment trusts in The AIC Japanese Smaller cash flows, borrowing facilities and investment commitments (of which there Companies Sector. Each investment trust has its own focus and strategy, are none of significance) and please refer to the proposed Exit Opportunity which will differ from the one implemented by AVI. The Company’s activist * Returns are for the year to 31 December 2025. likely to be offered in October 2026 as discussed in the viability statement approach aligns with the focus on corporate governance reform taking 1 For all Alternative Performance Measures, please refer to the definitions in the Glossary on below. Therefore, the financial statements have been prepared on a going pages 76 and 77. place in Japan. concern basis. AVI Japan Opportunity Trust plc / Annual Report 2020 # 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 the 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 the 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. 32 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / ESG Policy ## ESG Perspective ### OUR PURPOSE COLLABORATIVE DEFINING ‘E’, ‘S’ & ‘G’ ### ABOUT ASSET VALUE INVESTORS ### APPROACH ### Helping our clients to make the most Drawing on the World Economic ### It is our view that a responsible approach to the ### of their financial future. Forum’s “21 core metrics”, AVI has ### We recognise the value of collaborative ### environment, society and governance is key to long- ### identified the factors that we believe ### The people at Asset Value Investors are committed engagement in addressing collective ### term sustainable businesses. This guiding principle is ### to leveraging our long heritage, stewardship are the most material and relevant ### issues. ### embedded not only in our investment philosophy but in ### and expertise to make investing responsible, to our investments and developed a We continue to participate (since joining in 2023) ### how we manage Asset Value Investors as a company. ### accessible and profitable for everyone – bespoke ESG monitoring system to in CCLA’s collaborative initiative to improve ### AVI’s 2025 emissions from commuting and individuals, families, institutions, private companies, ### corporate approaches to workplace mental health track the performance and progress of and listed companies. Financial returns matter ### business travel: globally. In FY25, AVI also joined the International our portfolio companies against defined and we recognise our position of influence in | | | | | Corporate Governance Network (ICGN) to | ESG metrics. | | --- | --- | --- | --- | --- | --- | | | | 1,2 | questioning the practices of the companies we | | | | 114.8 tonnes CO | e | | | collaborate on advancing corporate governance | | | | 2 | | invest in for a more sustainable future. | | | standards and sits on ICGN’s Japan Working 1 Calculated in accordance with GHG Protocol Standards (distance-based method). Group, reflecting our active stewardship and ### E 2 Representing a 36% decrease in AVI commuting and business travel compared to the ### previous year. OUR PRINCIPLES engagement in Japan. We define Environmental sustainability within the We believe that shareholders and stakeholders need not be in conflict. Corporate ### We are aligned with the PRI’s belief that context of: Mental Health | Employees with equity ownership in AVI: | | Benchmark | | | --- | --- | --- | --- | | | an economically efficient, sustainable | | • Environmental Impact | | | global financial system is a necessity for | | • Tackling Climate Change | | 33.3% | long-term value creation. | | • Sustainable Management | Such a system will reward long-term responsible People are the most important asset at AVI. We recognise that investment and better align investors with the our industry has traditionally been skewed towards a less diverse ### S broader objectives of society. AVI became a workforce. We are actively challenging this. | | signatory to the UN-supported Principles for | | | | | S c | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | o n | | | r e e | | | | | | | | | | t i | | | n | | | | | | | | | u | c | | | | i n | | | Our Social focus is divided into: | | Diversity of workforce: | Responsible Investment (“PRI”) on 9 April 2021. | | t r | | | | | g | | | | | | | | n s | | h i p | P u | | o | f | | | | | | o | | d | s | r | p | | t | | | | | | c | | a r | | | o s | | h | | • Dignity and Equality | | | | | | w | | | e | | e | | | | | | l i o | e | | | | | | | u | | | | | o | t | | | | | | | n | | | | | t f | S | | | | | | | i v | | | | | r | | | | | | | | e | • Wellbeing and Development | | | OUR PHILOSOPHY | o | | | | | | | | r | | | | | P | ’ | | | | | | | s | | e G ‘ • Community Engagement & P ’ h ### We are fundamentally committed S ‘ i l , o ’ s E o ### to supporting long-term sustainable ‘ p g h ### n y G i ### businesses that will grow and participate n f e D | | | | | | in the prosperity of the economy. | | | | | | | | Our approach to Governance includes: | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2025 | 2025 | | | | | | | | | | | | | Number | | | % | We believe that the integration of ESG and | R | | A | | | | s | • Quality of Governing Body | | | | | | | | e | | p | p | | | l e | | | | | | | | | s | e | | r | | i p | | | | | | | | | | | a | | o a | | n c | | | | Male | | 13 57 | | | sustainability considerations into our investment | | r | | | c h | P r i | | | | | | | | | | | c h | | | | | n g | • Corporate Strategy | | | | | | | | | | | | | | r i | | | | | | | | strategy is integral to comprehensively understanding | | | | | | | il t e | | | Female | | 10 43 | | | | | | | | | | F | | • Ethical Behaviour each investment’s ability to create long-term value. * Data as at 31 December 2025. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 33 ### PROXY VOTING OUR STEWARDSHIP ENGAGEMENT BREAKDOWN ### Pre-Investment Exclusionary screening is not our guiding ### As responsible, active stewards of capital, we Good stewardship should be viewed as ### Percentage breakdown of total unique framework, however there are certain exceptions ### vote carefully and thoughtfully at every AGM. a continuous practice and is essential to to this. AVI will not invest in a company with direct ### ESG engagements (204) by individual ### preserving and enhancing long-term value. involvement in tobacco, controversial weapons ### category during FY2025. AJOT 2025 Proxy Voting Record Active engagement is at the core of our investment and pornography, or companies that engage in ### strategy and our ESG monitoring system plays an Governance child labour or human exploitation as defined by ### Total voted important role in helping us to identify potential areas the relevant International Labour Organisation of engagement. As long-term investors, our aim is Conventions. ## 78% ## 100% to build constructive relationships with the boards Prior to investment we: and management of the companies in which we 78% 100% Assess a company’s exposure to ESG risks and invest, addressing issues and offering suggestions to opportunities, including climate-related risks and ### sustainably improve corporate value in consideration Social ### Against management opportunities. of all stakeholders and in the best long-term interest of our clients. Identify whether the company is involved in any ## 16% ## 28% actual or potential violations of international norms ### Controversy Monitoring and standards supported by ISS EGG’s Norm- 16% Supported by ISS Norms-Based Research, we also 28% Based Research. closely monitor any controversies and potential violations $ ### Environmental ### With management of international norms and standards associated with our ### universe. Whilst our hope is that controversies do not Investment Period ## 6% ## 72% occur, they can be a marker of how well a company’s ESG monitoring system built into our proprietary policies are integrated into business operations and 6% database to ensure ESG factors are considered 72% culture, highlighting vulnerabilities or structural problems alongside financial analysis. and indicating where improvements can be made. ### Against ISS* Ongoing ESG assessments of portfolio companies’ performance against defined ESG * ISS (Institutional Shareholder Services) is an organisation that provides proxy advisory services. While AVI utilises ISS’s metrics. A scoring system is used to assess trends ## 17% research, it has different voting policies and is not bound to and highlight potential areas for engagement. vote in line with ISS guidance where it feels the guidance 17% is not in shareholders’ best interests. Tailored questionnaires sent to all companies based on our assessments to request additional ### With ISS* ESG information and promote improved sustainability disclosure. ## 83% Ongoing controversy monitoring following a clear engagement pathway if companies are flagged. 83% Constructive engagement with boards and | AVI became a signatory to the UN-supported | management to help sustainably increase | | --- | --- | | Principles for Responsible Investment (“PRI”) | corporate value by building resilience to ESG risks | | on 9 April 2021. | and promoting responsible business practices. | 34 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Strategic Report / Principal Risks and Uncertainties The Board has a robust ongoing process for identifying, evaluating and managing the The Board considers the following as the principal risks ### Risk Level Key: faced by the Company and the following controls are in ### emerging and principal risks and uncertainties faced by the Company, including those that ### place to manage or mitigate these risks:  Increased  Decreased  No Change ### could threaten its business model, future performance, solvency or liquidity. ### Risk Area Controls and Mitigation Risk Level Investment Objective The Company has a clearly defined strategy and investment remit. The portfolio is managed by a highly experienced Investment ###  The Company may be unsuccessful in achieving its investment objective, leading to Manager, supported by a strong team. The Board relies on the Investment Manager’s skills and judgement to make investment a potential loss of demand for its shares. 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 The Board monitors the portfolio’s composition, performance and development. Should appropriate opportunities diminish, the ###  objective may become less available in the future. 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 Board and the Investment Manager regularly review gearing, as well as the effect of interest rate movements on the Company’s ###  The use of borrowings by the Company has the effect of amplifying the gains or finances and the Company’s ongoing compliance with the loan covenants. Aggregate borrowings may not exceed 25% of net assets. losses the Company experiences. The Company has in place a two-year ¥6.6 billion (£31.3 million) unsecured revolving facility agreement which was increased on 28 A significant fall in portfolio value could cause gearing levels to exceed pre-set limits, 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, requiring the Company to sell investments at short notice. 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 The Board carries out regular reviews of the delegated services to ensure their continued competitiveness and effectiveness, which ###  Personnel, Investment Manager resignation or operational or business failure) include assessment of the providers’ control systems, whistleblowing, anti-bribery and corruption policies and business continuity The Company has no employees and relies on a number of third-party service plans. providers, principally the Investment Manager, Registrar, Administrator, and Custodian/ The likelihood of this risk occurring has reduced during the year as the relationships with service providers have been proven over Depositary. It is dependent on the effective operation of its service providers’ control the years since launch and the monitoring processes utilised by the Board are well established. systems with regard to the security of the Company’s assets, dealing procedures, accounting records and the maintenance of regulatory and legal requirements. The Company is heavily reliant on the Investment Manager’s processes, both in The Investment Manager has an established investment process which has been proved to be successful by the strong long-term ###  terms of making investment decisions and compliance with the investment policy. 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 The Investment Manager has sufficient personnel capable of maintaining the investment management function, should a key ###  Investment Manager may resign giving 12 months’ notice any time and immediately person of the current team become unable to continue in their respective role. The Investment Manager informs the Board of any in certain circumstances and the Board may be unable to find an appropriate staff changes and succession and development plans. The Board is highly experienced in both investment trusts and Japanese replacement. Operational or business failure may result in the inability of AVI to continue fund managers, and is aware of other managers in the field and a 12 months’ notice period is expected to be sufficient for the operating or to meet its obligations and duty of care, resulting in opportunity cost and Board to appoint another manager. The Board has a regular dialogue with the Investment Manager and regular conversations with possible loss of shareholder assets during manager replacement. other market participants and advisers. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 35 ### Risk Area Controls and Mitigation Risk Level Cyber Security The Board monitors the preparedness of its service providers in general and requests and reviews updates from key ###  The Company has limited direct exposure to cyber risk. However, the Company’s operations or service providers on cyber security and other matters. Following this review, the Board remained satisfied that the risk reputation could be affected if any of its service providers suffered a major cyber security breach. is given due priority. Portfolio Liquidity The Investment Manager monitors trading volumes and prices, and looks to ensure that a proportion of the portfolio is ###  The market for smaller Japanese stocks can be illiquid. The Company is exposed to the risk that invested in readily realisable assets. it will not be able to sell its investments at the current market value or on a timely basis, when the The Board also receives updates on the liquidity of the portfolio and the current level of liquidity of the Company on a Investment Manager chooses or is required to do so to meet financial liabilities. 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 Company does not hedge its currency exposure using financial instruments such as derivatives, forward ###  The functional and presentation currency of the Company is Pounds Sterling. All investments contracts, or options. However, the Investment Manager and the Board continuously monitor currency movements held and income derived from these investments are denominated in Japanese Yen. Certain and exposure. costs of the Company are impacted by the underlying value of the investments denominated in The revolving credit facility is denominated in Yen and therefore the effect of Yen exchange rate movements on the Japanese Yen and converted to Pounds Sterling. The Company is subject to currency risk on drawn down facility will be offset against the assets. exchange rate movements between Pounds Sterling and Japanese Yen. Global/Climate/Systemic/Conflict The Board continuously monitors global developments and their potential impact on the Company; it scrutinises the ###  Unforeseen global disruption, such as a conflict, pandemic, climate and nature change-related performance of the Investment Manager and is aware of emerging risks and has a robust process for addressing event, geopolitical conflict or systemic technology failure, could lead to dramatically increased them. All key service providers are asked to provide updates on business continuity, anti-bribery and corruption, and market and Company share price volatility. Fraud and cyber security vulnerability could increase information security processes on an annual basis. The Board monitors the impact of global developments such as for key service providers. conflicts on the portfolio. Concentrated Share Register The Investment Manager, the Company’s Brokers and the Board have a good understanding of the investor base ###  Around 25% of the Company’s shares are held by two major Shareholders, City of London and have good lines of communication with investors in general and a direct communication channel with the major Investment Management and Finda Telecoms Oy. A concentrated share register can potentially Shareholders in particular. present issues with regards to voting or liquidity. 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 36 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Governance / Directors ### Committee membership Committee Chair A Audit Committee N Nomination and Remuneration Committee ## Your Board ### NORMAN CRIGHTON MARGARET STEPHENS ANDREW ROSE TOM YORITAKA ### Chairman, Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director | Date of Appointment: | Date of Appointment: | Date of Appointment: | Date of Appointment: | | --- | --- | --- | --- | | 27 July 2018 | 5 September 2018 | 12 February 2025 | 12 February 2025 | | External Appointments: | External Appointments: | External Appointments: | External Appointments: | | RM Infrastructure Income plc and Gore Street Energy | Sequoia Economic Infrastructure Income Fund Limited. | – | Knowledgehook and SOAS University. | Storage Fund plc. ### Experience and Contribution: Experience and Contribution: Experience and Contribution: Experience and Contribution: Andrew retired from Schroders in 2019 after a Tom is a venture capital investor, software executive, Margaret has recently served on the board of Sequoia Norman Crighton is an experienced public company Economic Infrastructure Income Fund Limited. She distinguished 38-year career specialising in Japanese and board member with over 30 years of experience in director, having served on the boards of nine closed-end previously served as non-executive board member equities. His career included 11 years in Tokyo over the technology industry in the UK, North America and funds and one operating company. Presently, Norman is and chair of the audit and risk committee of VH Global three separate secondments, where he was involved in Japan. He invests in early-stage technology and science- also non-executive chair of RM Infrastructure Income Energy Infrastructure plc and was a partner of KPMG various research and fund management responsibilities backed startups, and working closely with founders and plc and non-executive director of Gore Street Energy until 2016, having qualified as a Chartered Accountant across the market capitalisation spectrum. His specific co-investors, many of whom are leading venture capital Storage Fund plc. in 1988. From 2007, she played a key role in building responsibilities included managing several open funds or C-suite executives of multinational companies. KPMG’s Global Infrastructure Practice, also leading and closed-end Japanese equity funds, as well as He also sits on the Board of Trustees of SOAS University Norman has extensive fund experience, having UK and international due diligence and structuring institutional portfolios. of London, as well as on boards of various technology previously been Head of Closed-end Funds at Jefferies services on major merger and acquisition transactions industry organisations in the UK. International and Investment Manager at Metage After retirement from full-time fund management, Capital Limited, leveraging his 35 years of experience and public private partnerships. Margaret was a Andrew served as a non-executive director and member Previously, Tom served in software product and in investment trusts. His career in investment banking trustee director of the Nuclear Liabilities Fund and of the Audit and Supervisory Committee at Uhuru corporate development executive roles at Cisco covered research, sales, market making and proprietary chair of the audit committee until January 2024, non- Corporation in Tokyo for three years. Systems, Yahoo! and Microsoft in the US. Early in his trading, servicing major international institutional clients executive board member and chair of the audit and risk career, he worked as a strategy consultant at The Andrew is a British citizen, fluent in reading and speaking over 15 years. His work in many countries included assurance committee of the Department for Exiting the Boston Consulting Group in the US and Japan. Japanese, and resides in the United Kingdom. restructuring closed-end funds, as well as several IPOs. European Union and was also a board trustee of the Tom is fluent in English and Japanese. He holds As a fund manager, Norman managed portfolios of London School of Architecture. Margaret is British and dual British/American citizenship and resides in the closed-end funds on a hedged and unhedged basis resident in the United Kingdom. United Kingdom. covering developed and emerging markets. A NA N A N A N AVI Japan Opportunity Trust plc / Annual Report 2025 # Governance / Directors' Report # 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 her 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 Exh 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 £1,108,748) 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 voting into AUDIT, 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 | 169,582 | 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 £5,208,690 (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. AVI Japan Opportunity Trust plc / Annual Report 2025 # Governance / Directors' Report continued # 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 Laredown | 16,523,221 | 6.78% | | Lazard Asset Management | 13,668,682 | 5.61% | | Interactive Investor (EO) | 12,336,241 | 5.08% | | 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. Ari Japan Opportunity Trust plc / Annual Report 2020 # Annual General Meeting ("AGM") The AGM will be held on Tuesday, 5 May 2020 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 2020, 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 2020 and the Tender Price on 14 January 2020. 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 2020 40 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Governance / Corporate Governance Statement The Corporate Governance Statement forms part of the • provision 14: No senior independent director has been appointed. oversight of delegates, corporate structure and share capital, remuneration, All the Directors have different qualities and areas of expertise on financial reporting and controls, company contracts, internal controls, ### Report of the Directors. which they lead, and concerns can be conveyed to another Director corporate governance and policies. Applicable Corporate Governance Codes if Shareholders do not wish to raise concerns with the Chairman or The Board is responsible for the approval of annual and half-year results The Company is committed to high standards of corporate governance. the Chair of the Audit Committee. The Nomination and Remuneration and other public documents and for ensuring that such documents This statement, together with the Statement of Directors’ Responsibilities Committee Chair or any other Director will chair the Board or provide a fair, balanced and understandable assessment of the Company’s on page 48, indicates how the Company has applied, for the year under Nomination and Remuneration Committee meeting when the annual position and prospects. review, the principles of recommended governance of the Financial evaluation of the Chairman’s performance, his re-election or the Reporting Council’s (“FRC”) 2024 UK Corporate Governance Code and The Board’s role is to provide leadership within a framework of prudent recruitment of his successor is discussed; The AIC’s Code of Corporate Governance issued in 2024, (the “AIC and effective controls that enable risk to be assessed and managed. It • provision 17: As all of the Directors are independent of the Investment Code”), which complements the UK Code and provides a framework of is responsible for setting the Company’s standards and values and for Manager, the Board is of the view that there is no requirement for a best practice for investment trusts. The Company has reported against the ensuring that its obligations to its Shareholders and other stakeholders are separate management engagement committee. The Board as a whole 2024 AIC Code for the year ending 2025 with the exception of provision 34, understood and met. The Board sets the Company’s strategic aims (subject will review the terms of appointment and performance of the Investment which relates to internal controls and will be reported against in the Annual to the Company’s Articles of Association, and to such approval of the Manager and the Company’s other third-party service providers (other Report for the year ending 2026. Shareholders in General Meeting as may be required from time to time) and than the Auditor who is reviewed by the Audit Committee); ensures that the necessary resources are in place to enable the Company’s The Board considers that reporting against the principles and provisions • provision 23: Directors are not appointed for a specified term, as all objectives to be met. The Articles of Association may only be amended by of the AIC Code, which includes the UK Code, offers Shareholders Directors are non-executive and the Board believes that a Director’s way of a special resolution of shareholders. comprehensive information about the Company’s Corporate performance and their continued contribution to the running of the Governance compliance. The Board meets formally at least four times a year, with additional ad hoc Company is of greater importance and relevance to Shareholders Board or Committee meetings arranged when required. The Directors have The UK Code is available on the FRC website (www.frc.org.uk). The AIC than the length of time for which they have served as a Director of the regular contact with the Investment Manager and Company Secretary Code is available on The AIC’s website (www.theaic.co.uk) and includes an Company. Each Director is subject to the re-election provisions set between formal meetings. Full and timely information is provided to the explanation of how the AIC Code adapts the principles and provisions set out in the Articles, which provide that a Director appointed during the Board to enable it to function effectively and to allow Directors to discharge out in the UK Code to make them relevant for investment companies. year is required to retire and seek election by Shareholders at the next their responsibilities. Statement of Compliance AGM following their appointment. Thereafter the Directors intend to offer themselves for re-election annually but, under the Articles, are At each meeting the Directors follow a formal agenda, which includes a The UK Code includes provisions relating to: only required to submit themselves for re-election at least once every review of the Company’s NAV, share price, premium, financial position, • the role of the chief executive; three years. Directors who have served for more than nine years will gearing levels, peer group performance, investment performance, asset • executive directors’ remuneration; be subject to annual re-election, provided that the Nomination and allocation and transactions and any other relevant business matters to • management performance; ensure that control is maintained over the affairs of the Company. The Remuneration Committee and the Board remain satisfied that the • remuneration and succession planning; Board monitors compliance with the investment restrictions required by the relevant Director’s independence is not impaired by their length of • workforce policies (including remuneration) and practices; and service. FCA and s1158 of the Corporation Tax Act 2010, the Company’s objective, investment, borrowing and hedging policies and reviews the investment • the need for an internal audit function. Role of the Board strategy. The Board regularly receives reports from the Investment Manager For the reasons explained in the AIC Code, the Board considers that A management agreement between the Company and the Investment on marketing and investor relations. The proceedings at all Board and these provisions are not relevant to the Company, being an externally Manager sets out the matters over which the Investment Manager has Committee meetings are fully recorded through a process that allows any managed investment company with no employees. The Company has authority. This includes management of the Company’s assets and some Director’s concerns to be recorded in the minutes. therefore not reported further in respect of these provisions. The Board is marketing services. The Board is collectively responsible for the success responsible for ensuring the appropriate level of corporate governance and of the Company and a formal schedule of matters reserved to the Board considers that the Company has complied with the principles and provisions for decision has been approved, which is available on the Company’s of the AIC Code during the year under review except as disclosed below: website: www.ajot.co.uk. This includes strategy and management, Board and committee membership and other appointments, appointment and AVI Japan Opportunity Trust plc / Annual Report 2025 SR G G FS SI 41 Role of the Board continued • At least 40% of individuals on the Board to be women; The data in the above tables was collected through self-reporting by the There is an agreed procedure for Directors to take independent professional • At least one senior Board position to be held by a woman; and Directors, who were asked to indicate which of the categories specified advice if necessary and at the Company’s expense. This is in addition to the in the prescribed tables were most applicable to them. • At least one individual on the Board to be from a minority ethnic access that every Director has to the advice and services of the Company background. The Board is pleased to have met the targets for a senior position to be Secretary, MUFG Corporate Governance Limited, which is responsible held by a woman throughout the year and for at least one individual on the to the Board for ensuring that Board procedures are followed, and that In accordance with Listing Rule 6 Annex 1R, the below tables, in Board to be from an ethnic minority background for the majority of the year applicable rules and regulations are complied with. prescribed format, show the gender and ethnic background of the Directors under review. The Board is conscious that the target of at least 40% of at the year end. Board Composition individuals on the Board to be women is not currently met. This target will Number The Board is chaired by Norman Crighton, and consists of four be borne in mind during the upcoming recruitment discussed on page 43 Number of of senior Non-Executive Directors. All members of the Board are regarded as although the recruitment will be carried out in line with the diversity policy Board Percentage positions on independent of the Investment Manager and the Chairman. The Directors and appointments will continue to be made on merit. Gender identity members on the Board the Board* have a breadth of investment, financial and professional experience relevant Responsibilities of the Chairman, the Board and its Committees to the Company’s business and brief biographical details of each Director Men 3 75% 1 The Chairman leads the Board and is responsible for its overall effectiveness are set out on page 36. in directing the affairs of the Company. The Company has adopted a Women 1 25% 1 A review of Board composition and balance is included as part of the document setting out the responsibilities of the Chairman, which is available annual performance evaluation of the Board, details of which may be Not specified/prefer not to say – – – on the website: www.ajot.co.uk. found below. Tenure Diversity Number of Directors are generally initially appointed by the Board, until the following The Directors recognise the benefits of Board diversity and continually Number of senior AGM when, as required by the Company’s Articles of Association, they review the Board’s and individual Directors’ effectiveness. They aim to Board Percentage positions on will stand for re-election by Shareholders. Thereafter, a Director’s balance knowledge of the Company, diversity and continuity in their Ethnic background members on the Board the Board* appointment is subject to an annual performance evaluation and the relationship with the Investment Manager. The Board has adopted a approval of Shareholders at each AGM, in accordance with corporate Diversity Policy to ensure Directors bring a wide range of skills, knowledge, White British or other White governance best practice. experience, backgrounds, and perspectives. While the Board does not (including minority white Under the Articles of Association, Shareholders may remove a Director set specific targets, diversity is considered when evaluating the skills, groups) 3 75% 2 before the end of his or her term by passing a special resolution at a knowledge and experience needed for each Board vacancy. The Board has Mixed/Multiple Ethnic Groups – – – meeting, and may by ordinary resolution appoint another person who is established objectives to achieve diversity: willing to act to be a Director in his or her place. A special resolution is • all Board appointments will be made on merit, in the context of the Asian/Asian British 1 25% – passed if more than 75% and an ordinary resolution if more than 50% of the skills, background, knowledge and experience that are needed for the votes cast, in person or by proxy, are in favour of the resolution. Black/African/Caribbean/ Board to be effective; and Black British – – – In accordance with the above and the AIC Code, all Directors will stand for • long lists of potential Non-Executive Directors should include diverse re-election at the 2026 AGM. The contribution and performance of candidates of appropriate merit. Other ethnic group, the Directors seeking re-election was reviewed by the Nomination and The terms and conditions of Directors’ appointments are set out in formal including Arab – – – Remuneration Committee at its meeting in March 2026, assisted by the letters of appointment, copies of which are available for inspection on report from the external Board evaluator, discussed on the following page, Not specified/prefer not to say – – – request at the Company’s registered office during normal business hours and the Committee recommended the Directors’ continuing appointment and at the Company’s AGM. * Listing Rule 6.6.6R(9) includes only the positions of chair, chief executive, senior independent to the Board. director and chief financial officer in this category. Other than the Chairman of the Board, the The Board notes the FCA’s rules on diversity and inclusion on company Company does not have these roles, as it is an externally managed investment trust without boards included in Listing Rule 6.6.6R (9-11), which are as follows: 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. 42 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Governance / Corporate Governance Statement continued Tenure continued A schedule of interests for each Director is maintained by the Company and Articles of Association provide, subject to the provisions of UK legislation, The Board has adopted a formal tenure policy for Directors based on reviewed at every Board meeting. The Board has a formal system in place, an indemnity for Directors in respect of costs which they may incur relating a continual review of performance. The Board does not believe that in line with the Articles of Association for Directors, to declare any new to the defence of any proceedings brought against them arising out of their length of service in itself necessarily disqualifies a Director from seeking situational conflicts to be considered for authorisation by those Directors positions as Directors, in which they are acquitted or judgment is given in reappointment but, when making a recommendation, the Board takes who have no interest in the matter being considered. In deciding whether to their favour by the Court. The Company has granted indemnity to Directors into account the ongoing requirements of the UK Corporate Governance authorise a situational conflict, the non-conflicted Directors act honestly and to the extent permitted by law in respect of liabilities that may attach to Code, including the need to refresh the Board and its Committees. It is in good faith with a view to the best interests of the Company and they may them in their capacity as Directors of the Company. not anticipated that any of the Directors would normally serve in excess of impose limits or conditions when giving the authorisation, or subsequently, Board Committees nine years. In exceptional circumstances, which would be fully explained to if they think this is appropriate. Any situational conflicts considered, and any The Board delegates certain responsibilities and functions to the Audit Shareholders at the time, a one or two-year extension might be appropriate. authorisations given, are recorded in the relevant meetings’ minutes and the Committee and the Nomination and Remuneration Committee. Both register of interests. Similarly, it is not anticipated that the Chairman will normally serve in excess Committees comprise all Directors. The terms of reference for these of nine years. However, in exceptional circumstances, which would be fully The prescribed procedures have been followed in deciding whether, and on Committees are available on the website www.ajot.co.uk or via the explained at the time, a one or two-year extension might be appropriate, what terms, to authorise situational conflicts, and the Board believes that Company Secretary. given the entirely non-executive nature of the Board and in particular where the system it has in place for reporting and considering situational conflicts A separate Management Engagement Committee has not been established the Chairman has not been appointed in his position for the entire duration continues to operate effectively. The Chairman has had no relationship as the Board consists of only independent Non-Executive Directors. The of his tenure as a Director. As with all Directors, the continuing appointment that may have created a conflict between his interests and those of the investment management agreement and performance of the Investment of the Chairman is subject to ongoing review of performance, including a Company’s Shareholders. Manager is reviewed by the Board as a whole on a regular basis, ensuring satisfactory annual evaluation, annual re-election by Shareholders and may Induction and Training that the terms are fair and reasonable and that its continuance, given the be further subject to the particular circumstances of the Company at the On appointment, the Company Secretary provides all Directors with Company’s performance over both short and longer terms, is in the best time he or she intends to retire from the Board. induction training. The training covers the Company’s investment strategy, interests of the Company and its Shareholders. The Board as a whole also Board Independence policies and practices. The Directors are also given regular briefings on reviews the terms of appointment and performance of the Company’s other All Directors are Non-Executive, have a range of other interests and are not changes in law and regulatory requirements that affect the Company and service providers. dependent on the Company itself. At the Nomination and Remuneration the Directors. In November 2025, the Board members received training on Audit Committee Committee meeting in March 2026, the Directors reviewed their their Directors’ Duties under the Companies Act 2006 which was provided The Audit Committee comprises all Directors. During the year under independence and confirmed that all Directors remain wholly independent by the Company Secretary. The Board also received training from an review, the Audit Committee was chaired by Katya Thomson until January of the Investment Manager. The Board has determined that all Directors external provider on inclusive working. It is the Chairman’s responsibility to 2025, when she was succeeded by Margaret Stephens. Both Katya and are independent in character and judgement and that their individual skills, ensure that the Directors have sufficient knowledge to fulfil their role and Margaret are chartered accountants. The other Audit Committee members broad business experience and knowledge and understanding of the Directors are encouraged to attend industry and other seminars covering bring a combination of financial, investment and other experience gained Company are of great benefit to Shareholders. issues and developments relevant to investment trust companies. Regular throughout their careers. The Board is satisfied that at least one of the Audit reviews of Directors’ training needs are carried out by the Chairman by There were no contracts subsisting during or at the end of the year in Committee members has recent and relevant financial experience. The means of the evaluation process described below. which a Director of the Company is or was materially interested and which Audit Committee as a whole is considered to have competence relevant is or was significant in relation to the Company’s business. No Director The Directors have access to the advice and services of the Company to the sector. All members of the Audit Committee are independent. The has a contract of service with the Company and there are no agreements Secretary through its appointed representative, who is responsible for Chairman of the Board is a member of the Audit Committee but, in line between the Company and its Directors concerning compensation for loss general secretarial functions and for assisting the Company with compliance with the AIC Code, does not chair it and was considered independent of office. with its continuing obligations as a company that falls under the Equity upon appointment. The Chairman’s membership of the Audit Committee Shares (Commercial Companies) category. The Company Secretary is also is considered appropriate given his extensive knowledge of the Investment Directors’ Conflicts of Interest responsible for ensuring good information flows between all parties. Trust sector. 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 Directors’ Insurance and Indemnifcation The Report of the Audit Committee, which forms part of this Corporate that conflicts, or may possibly conflict, with the interests of the Company Directors’ and Officers’ liability insurance cover was in place throughout Governance Statement, can be found on pages 49 and 50. (“situational conflicts”). the year and remains in place at the date of this report. The Company’s AVI Japan Opportunity Trust plc / Annual Report 2025 SR G G FS SI 43 Nomination and Remuneration Committee During the reporting period, the Company engaged the services of an Performance Review The Nomination and Remuneration Committee, consisting of all of the independent external consultancy with no connection to the Company, During the year, the Board engaged Trust Associates to carry out Directors and chaired by Tom Yoritaka, meets at least annually. Nurole Ltd, and successfully recruited two Non-Executive Directors: an external performance review of the effectiveness of the Board, its The Nomination and Remuneration Committee is responsible for setting Andrew Rose and Tom Yoritaka. Post the Year End, the Nomination and Committees, the Chairman and the Directors. Directors’ fees in line with the Remuneration Policy set out on page 45, Remuneration Committee has engaged Trust Associates to facilitate the Trust Associates have interviewed the members of the Board, attended which is subject to periodic Shareholder approval. The Nomination and appointment of a new independent NED, with the potential to become a Board meeting, reviewed: 1) meeting packs; 2) terms of reference; 3) Remuneration Committee is also responsible for ensuring that the Board Audit Committee Chair, as part of succession planning in preparation the annual report; 4) and other relevant documents. Trust Associates has an appropriate balance of skills and experience to carry out its duties, for Margaret Stephen’s retirement, to provide stability and continuity to presented their findings to the Board in March 2026 and a number of to select and propose suitable candidates for appointment when Shareholders. Other than also carrying out the Board performance review recommendations to help the Board recognise opportunities and issues, necessary and for making recommendations regarding the re-election of in the year as described elsewhere on this page, Trust Associates has no look forward and facilitate change (where that is agreed), are set out below. existing Directors. connection to the Company. Further changes are planned in the coming years to refresh the entire Board, including the selection of a successor for When considering succession planning and tenure policy, the Nomination Summary of Trust Associates performance review fndings the Chairman of the Board. Further information on succession planning and Remuneration Committee bears in mind the balance of skills, Overall, the Board of AVI Japan Opportunity Trust Plc (AJOT) appears and recruitment will be provided in future Annual Reports, as and when knowledge, experience, gender and diversity of Directors, the to be functioning effectively. The Board had been highly engaged in the appropriate. achievement of the Company’s investment objective and compliance with successful combination of AJOT with the Fidelity Japan Trust, which the Company’s Articles of Association and the AIC Code. The Nomination Board and Committee Meeting Attendance concluded at the end of 2025. Directors report a strategic focus on and Remuneration Committee keeps the Company’s needs under The table details the number of scheduled Board and Committee meetings ensuring that the fund continues to trade close to NAV, with a strong continual review and will make recommendations when the recruitment of held during the year under review and the number of meetings attended by emphasis on marketing and the offer of regular share buy backs and an additional Non-Executive Directors is required. Once a decision is made to each Director. annual redemption opportunity. Gearing is moderate. recruit additional Directors to the Board, a formal job description is drawn Nomination and Directors appear to have a strong understanding of the investments up, based on a review of the skills required to complement those of the Audit Remuneration and to have a close but appropriately challenging relationship with the remaining Directors. Director Board Committee Committee investment manager. Board meetings appear to provide opportunities The Nomination and Remuneration Committee also reviews and for debate with every director feeling freely able to contribute. Directors Norman Crighton 4(4) 2(2) 2(2) recommends to the Board the Directors seeking re-election and election. report that the Board’s suppliers provide a good service. Recommendation is not automatic and will follow an annual performance Margaret Stephens 4(4) 2(2) 2(2) Succession planning will need to be a key focus of the Board over the evaluation of the Board, its Committees and individual Directors and next year or so as two directors have been on the Board since IPO, consideration of the Director’s independence. The evaluation of individual Andrew Rose 4(4) 2(2) 2(2) including the Chair. The Board will also need to discuss how it will Directors takes into account whether they have devoted sufficient time Tom Yoritaka 4(4) 2(2) 2(2) address the gender imbalance among directors. and contributed adequately to the work of the Board and its Committees. The Board’s two committees appear to function effectively. Directors The evaluation of the Board and its Committees considers the balance The number in brackets denotes the number of meetings each Director was could consider whether forming a Management Engagement of experience, skills, independence, corporate knowledge, its diversity, entitled to attend. Committee could be useful. including gender, and how it works together. The Directors also met on an ad hoc basis during the year to undertake The Nomination and Remuneration Committee met in March 2026 to business, such as discussing the combination of assets of the Company carry out its annual review of the Board, its composition and size and its with the assets of Fidelity Japan Trust PLC, approving the prospectus and Committees, the results of which are detailed in the Performance Evaluation related documents as well as the 2025/2026 Exit Opportunity. 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. 44 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Governance / Corporate Governance Statement continued Internal Control The Directors confirm that they have carried out a robust assessment of the Accountability and Relationship with AVI The Board has overall responsibility for the Company’s system of internal Company’s emerging and principal risks as identified by the Board, which The Statement of Directors’ Responsibilities in respect of the Financial control and for reviewing its effectiveness. The Audit Committee supports are set out on pages 34 and 35, as well as the controls in place to manage Statements is set out on page 48, the Independent Auditor’s Report on the Board in continuously monitoring of the internal control and risk or mitigate those risks. pages 51 to 55 and the Viability Statement on page 31. management framework. Specific examples include the identification The Board reviews financial information produced by the Investment The Board has delegated contractually to external third parties, including of increased cyber risk during the combination with FJV. As a result, the Manager and the Administrator regularly. Most functions for the day-to- the Investment Manager, the management of the investment portfolio, the Board implemented new information security practices by mandating day management of the Company are subcontracted, and the Directors custodial services (including the safeguarding of the assets), the day-to-day password protection requirements in its communications. Another example therefore obtain assurances and information, including internal control accounting and cash management, company secretarial and administration included the requirement for service providers to respond to annual due reports, from key third-party suppliers regarding the internal systems and requirements and registration services. Each of these contracts was entered diligence queries from the Company with a higher threshold of assurance controls operated in their respective organisations. During the year under into after full and proper consideration by the Board of the quality and and declarations about its practices and internal controls within that review, the Board also requested and reviewed updates from key service cost of the services offered, including the control systems in operation in organisation. The Board has established an ongoing process for identifying, providers on business continuity, cyber security and fraud prevention. so far as they relate to the affairs of the Company. Further information on evaluating and managing the principal and new or emerging risks faced by management arrangements can be found on page 25. By the means of the procedures set out above, the Board confirms that the Company. The process accords with the FRC’s Corporate Governance it has reviewed, and is satisfied with, the effectiveness of the Company’s The Board receives and considers regular reports from the Investment Code Guidance published on 29 January 2024, which incorporates the system of internal control for the year ended 31 December 2025, and to Manager and ad hoc reports and information are supplied to the Board as FRC’s guidance on risk management and internal controls. the date of approval of this Annual Report and Financial Statements. In the required. The Investment Manager takes decisions as to the purchase and The risk management process and system of internal control were in post reporting period, the Audit Committee has reviewed the declarations sale of individual investments. The Investment Manager also ensures that operation throughout the year and up to the date of this report. The system required by its service providers in line with the provision 34 AIC Code all Directors receive, in a timely manner, all relevant management, regulatory is designed to meet the specific risks faced by the Company, considering requirements, to provide further assurance to the Committee in its review of and financial information. its reliance on its service providers and their internal controls. Therefore, internal controls in place. Representatives of AVI attend Board meetings, enabling the Directors the system manages rather than eliminates the risk of failure to achieve During the course of its review of the system of internal control, the Board to probe further on matters of concern. The Board and the Investment the Company’s business objectives providing reasonable but not absolute has not identified nor been advised of any failings or weaknesses which Manager operate in a supportive, co-operative and open environment. assurance against material misstatement or loss. it has determined to be significant. Therefore, a confirmation in respect of Continued Appointment of the Investment Manager In arriving at its judgement of the risks the Company faces, the Board, necessary actions has not been considered appropriate. The Board considers the arrangements for the provision of investment through the Audit Committee, has considered the Company’s operations Internal Audit Function management and other services to the Company on an ongoing basis. in light of the following factors: As the Company is an externally managed investment company with day- In addition to the monitoring of investment performance at each Board • the nature and extent of risks which it regards as acceptable for the to-day management and administrative functions being outsourced to third meeting, an annual review of the Company’s investment performance over Company to bear within its overall business objective; parties, and as the Company does not have Executive Directors, employees both the short and longer terms is undertaken. • the threat of such risks becoming reality; or internal operations, the Board does not consider it necessary to establish Following an annual review, it is the Directors’ opinion that the continuing • the Company’s ability to reduce the incidence and impact of risk on its an internal audit function, as it believes the existing system of monitoring appointment of AVI, the Investment Manager, on the existing terms, is in the performance; and and reporting by the third parties to be appropriate and sufficient. best interests of the Company and its Shareholders as a whole. • the extent to which third parties operate the relevant controls. By order of the Board The Company maintains a risk matrix which identifies key risks faced by the For and on behalf of MUFG Corporate Governance Limited 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. Company Secretary 12 March 2026 AIC Japan Opportunity Trust plc / Annual Report 2020 # Governance / Directors' Remuneration Report # 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 purposes 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. This report also meets the relevant requirements of the Companies Act 2008 (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 Crichton 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. AIR Japan Opportunity Trust plc / Annual Report 2020 # Governance / Directors' Remuneration Report continued # 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) | Name of Director | Fees paid^{1} | | Taxable benefits | | Total | | % change 2024-2025 | % change 2023-2024 | % change 2022-2023 | % change 2021-2022 | % change 2020-2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | | | | | | | Norman Oughton^{2} | 60,800 | 55,000 | - | - | 60,800 | 55,000 | 10.5% | 35.8% | 8.0% | 5.3% | 1.6% | | Margaret Stephens | 41,531 | 36,000 | - | - | 41,531 | 36,000 | 9.0% | 8.3% | 8.0% | 6.1% | 2.1% | | Andrew Rose^{2} | 34,097 | - | - | - | 34,097 | - | - | - | - | - | - | | Tom Yorlaka^{2} | 34,097 | - | 35 | - | 34,132 | - | - | - | - | - | - | | Katya Thomson^{2} | 2,245 | 41,000 | - | - | 2,245 | 41,000 | - | 8.5% | 8.0% | 5.7% | 1.9% | | Yoshi Nishio^{2} | - | 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% | $^{1}$ Excluding employer's National Insurance Contribution. $^{2}$ Perceived 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. $^{3}$ Mr Rose and Mr Yorlaka were appointed with effect from 12 February 2025. $^{4}$ Mr 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 Benefits 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. AVI Japan Opportunity Trust plc / Annual Report 2020 # 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. Total Shareholder Return vs MSCI Japan Small Cap ![img-5.jpeg](img-5.jpeg) # 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 c.20, with the exception of the management fee and other expenses, which has been included because the Directors' balance 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. # 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 48 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Governance / Statement of Directors’ Responsibilities in Relation to ### the Annual Report and Financial Statements The Directors are responsible for preparing the Annual Report and the Website Publication Financial Statements in accordance with UK adopted international The Directors are responsible for ensuring the Annual Report and the accounting standards and applicable law and regulations. Financial Statements are made available on a website. Financial statements are published on the Company’s website in accordance with legislation Company law requires the Directors to prepare financial statements for in the United Kingdom governing the preparation and dissemination of each financial year. Under that law the Directors are required to prepare the financial statements, which may vary from legislation in other jurisdictions. financial statements and have elected to prepare the Company financial The maintenance and integrity of the Company’s website is the responsibility statements in accordance with UK adopted international accounting of the Directors. The Directors’ responsibility also extends to the ongoing standards. Under company law the Directors must not approve the financial integrity of the financial statements contained therein. 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 Directors’ Responsibilities Pursuant to DTR4 that period. The Directors confirm to the best of their knowledge: In preparing these financial statements, the Directors are required to: • The Financial Statements have been prepared in accordance with the applicable set of accounting standards, and give a true and fair • select suitable accounting policies and then apply them consistently; view of the assets, liabilities, financial position and profit and loss of • make judgements and accounting estimates that are reasonable the Company. and prudent; • The Annual Report includes a fair review of the development and • state whether they have been prepared in accordance with UK adopted performance of the business and the financial position of the Company, international accounting standards, subject to any material departures together with a description of the principal risks and uncertainties that disclosed and explained in the financial statements; they face. • prepare the financial statements on the going concern basis, unless it is In the opinion of the Board, the Annual Report and Financial Statements, inappropriate to presume that the Company will continue in business; and taken as a whole, is fair, balanced and understandable and it provides the • prepare a Directors’ report, a strategic report and Directors’ information necessary to assess the Company’s position and performance, remuneration report which comply with the requirements of the business model and strategy. Companies Act 2006. Directors’ Statement as to the Disclosure of Information to Auditor The Directors are responsible for keeping adequate accounting records that All of the current Directors have taken all the steps that they ought to are sufficient to show and explain the Company’s transactions and disclose have taken to make themselves aware of any information needed by the with reasonable accuracy at any time the financial position of the Company Company’s auditors for the purposes of their audit and to establish that the and enable them to ensure that the financial statements comply with the auditors are aware of that information. The Directors are not aware of any Companies Act 2006. relevant audit information of which the auditors are unaware. They are also responsible for safeguarding the assets of the Company For and on behalf of the Board 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 Norman Crighton and strategy. Chairman 12 March 2026 AVI Japan Opportunity Trust plc / Annual Report 2025 SR G G FS SI 49 ### Governance / Report from the Audit Committee I am pleased to present the Audit Committee Report for the year ended Activities in the Year Valuation of Investments 31 December 2025. During the year, the Committee has: The Committee considered the valuation of the investment portfolio. The Company’s portfolio currently consists of mostly quoted investments, which We met twice during the year and once following the year-end. The • considered and approved the combination with FJV; are valued by reference to their bid prices on the relevant exchange. The Company’s Auditors are invited to attend meetings as necessary, and • took advice in relation to and key steps were undertaken to prepare for Company engages an independent valuations services provider to conduct representatives of the Investment Manager may also be invited. Provision 34 of the AIC Code; independent valuation analysis of the unquoted investments. The service Details of the composition of the Committee are set out in the Corporate • conducted a detailed review of the internal controls and risk management provider determines appropriate and supportable inputs and assumptions Governance Statement on page 42. systems of the Company and its third-party service providers; in view of the requirement under IFRS 13. The independent valuations Responsibilities of the Committee • reviewed the service levels provided by the Company’s Custodian services provider documents a reconciliation of approaches where more The Committee’s responsibilities are set out in formal terms of reference and Depositary; than one approach has been employed. The Investment Manager reviews which are available on the Company’s website and are reviewed at least • considered the emerging and principal risks facing the Company and the valuation approaches taken considering the nature of the investment annually. The Committee’s primary responsibilities are set as follows: the mitigating controls in place; being valued. The Investment Manager considers the appropriateness • to monitor the integrity of the financial statements of the Company, • carried out a detailed review of the external Auditor’s performance of the data inputs and assumptions used in the valuation analysis. The including its Annual and Half-Yearly reports and any other formal during the 2024 audit; following information was reviewed to make certain assumptions: announcements of the Company relating to its financial performance, • agreed the audit plan and fees with the Auditor in respect of the Annual • Historical financial information was reviewed to inform the assumptions and to review and report to the Board on significant financial reporting Report for the year ended 31 December 2025, including the principal on financial metrics such as revenues and leverage ratios. issues and judgements which those statements contain, having regard areas of focus; • Business plans and management presentations were reviewed to to matters communicated to it by the Auditor; • reviewed the Company’s Half-Yearly Report and financial statements, inform the assessment of trends in growth and profitability. • to review the Half-Yearly and Annual Reports; discussed the appropriateness of the accounting policies adopted and General economic and industry trends and the impact they may have • to review the Company’s internal financial controls and the internal recommended these to the Board for approval; are discussed and considered prior to recommending acceptance of the control and risk management systems of the Company and its third- • assessed whether it was appropriate to prepare the Company’s valuation. Any illiquid investments will be valued by the Directors based on party service providers; financial statements on a going concern basis and made recommendations from the Investment Manager. • to make recommendations to the Board in relation to the appointment recommendations to the Board. This review included challenging the Maintaining Internal Controls of the external Auditor and their remuneration; assumptions on viability of the Company and reviewing stress tests The Committee has carefully considered the internal control systems, focused on its ability to continue to meet its liabilities; • to review the scope, results, cost effectiveness, independence and by monitoring and reviewing the Risk Matrix and using that to inform the objectivity of the external Auditor; • considered the appropriate level of dividend to be paid by the material controls required to mitigate those risks identified. As the Company for recommendation to the Board; and • to develop and implement policy on the engagement of the external Company relies heavily on third-party suppliers, the Committee monitors Auditor to supply non-audit services and consider relevant guidance • examined in detail the methodology and assumptions applied in valuing the services and control levels of all of its suppliers on an ongoing basis, as regarding the provision of non-audit services by the external audit firm; the assets of the Company. explained below. and Following the year end, the Committee has received and discussed Going Concern and Long-term Viability of the Company • to review circulars issued in respect of major non-routine and with the Auditor their report on the results of the audit and reviewed this The Committee considered the Company’s financial requirements for the corporate transactions. Annual Report and Financial Statements, discussed the appropriateness next 12 months and concluded that it has sufficient resources to meet its of the accounting policies adopted and recommended these to the Board commitments. Consequently, the financial statements have been prepared for approval. on a going concern basis. The Committee also considered the longer- Signifcant Matters and Decisions term viability statement within the Annual Report for the year ended 31 The Committee considered the following key issues in relation to the December 2025, covering a five-year period, and the underlying factors and Company’s financial statements during the year. A more detailed assumptions which contributed to the Committee deciding that this was explanation of the consideration of the matters set out below, and the steps an appropriate length of time to consider the Company’s long-term viability. taken to manage them, is set out in the principal risks and uncertainties on The Company’s viability statement can be found on page 31. pages 34 and 35. 50 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Governance / Report from the Audit Committee continued Internal Controls The Audit Partner is due to rotate every five years. This is the fifth year the are reported to the Board. The Committee carefully considers the internal control systems by current Audit Partner is in place. The Auditor has confirmed that a new Independence and Objectivity of the Auditor continually monitoring the services and controls of its third-party partner will be introduced following completion of the FY25 audit. The Committee has considered the independence and objectivity service providers. The Audit Committee specifically considered and discussed with the Auditor of the Auditor. £34,000 non-audit fees were paid to BDO LLP during the The Committee reviewed the risk matrix at both of its meetings held during the impact of the Exit Opportunity, the combination with FJV and preparation year to 31 December 2025 (2024: £nil). The fees paid were in respect of the year under review, updating it where appropriate. The results of this for reporting under provision 34 of the AIC Code. Key audit matters raised reporting accountant services provided in relation to the combination with ongoing process, as well as the principal risks identified and controls put by the Auditor are detailed in their report on pages 51 and 52, as well as the FJV. The Committee is satisfied that the Auditor has fulfilled its obligations to in place to manage or mitigate these risks, are detailed on pages 34 and materiality threshold. the Company and its Shareholders and remains independent and objective. 35 of this report. The Committee received a report on internal control and Audit Fees and Non-audit Services Provided by the Auditor Appointment of the Auditor compliance from the Investment Manager and the Company’s other key In accordance with the Company’s non-audit services policy, the Audit Following consideration of the performance of the Auditor, the services service providers, and no significant matters of concern were identified. Committee reviews the scope and nature of all proposed non-audit services provided during the year and a review of its independence and objectivity, The Company does not have an internal audit function. During the year, before engagement, to ensure that auditor independence and objectivity the Committee has recommended to the Board the reappointment of BDO the Committee reviewed whether an internal audit function would be of are safeguarded. The policy includes a list of non-audit services which LLP as Auditor to the Company. value and concluded that this would provide minimal additional comfort at may be provided by the Auditor provided there is no apparent threat to considerable extra cost to the Company. While the Committee believes independence, as well as a list of services which are prohibited. Non-audit that the existing systems of monitoring and reporting by third parties remain services are capped at 70.0% of the average of the statutory audit fees for appropriate and adequate, it will continue, on an annual basis, to actively the preceding three years. consider possible areas within the Company’s controls environment that may Margaret Stephens Information on the fees paid to the Auditor is set out in note 3 to the financial need a detailed review. Chair of the Audit Committee statements on page 64. Provision 34 readiness activities 12 March 2026 Effectiveness of the External Audit A recurring item for the Committee has been the Company’s readiness The Audit Committee monitors and reviews the independence and activities relating to changes brought by Provision 34 of the AIC Code. effectiveness of the external audit carried out by the Auditor, including a To that end, during the reporting period, the Committee received regular detailed review of the audit plan and the audit results report, and makes updates on steps being taken in the market to prepare for Provision 34 recommendations to the Board on the re-appointment, remuneration and as a result requested an update to its service provider questionnaires, and terms of engagement of the Auditor. This review takes into account specifically addressing the effectiveness of the internal controls of third the experience and tenure of the audit partner and team, the nature and parties. In the post reporting period following collation of the results were level of services provided, and confirmation that the Auditor has complied presented to the Board and any matters of concern identified will be with independence standards. During the year to 31 December 2025, the monitored during 2026. Committee carried out a detailed review of the quality and effectiveness of External Auditor the 2024 audit. BDO LLP has been the Auditor to the Company since launch in 2018. No The review was based on feedback requested from the Investment tender for the audit of the Company has been undertaken. In accordance Manager, the Administrator and the Company Secretary and discussions with the Competitions and Markets Authority Order, a competitive audit with the Auditor. No issues were identified with regards to the effectiveness tender must be carried out at least every ten years. The Company is of the external audit. The Board felt that the Auditor had demonstrated therefore required to carry out a tender no later than in respect of the appropriate professional scepticism by showing curiosity and challenge financial year ending 31 December 2029. The Committee reviews the by, among other things, actively questioning management explanations continuing appointment of the Auditor on an annual basis and gives regular throughout the course of the annual report process, including requesting consideration to the Auditor’s fees and independence, along with matters corroborating evidence rather than relying solely on representations provided raised during each audit. to the Auditor. Any concerns with effectiveness of the external audit process AVI Japan Opportunity Trust plc / Annual Report 2025 SR G G FS SI 51 ### Governance / Independent Auditor’s Report ### to the Members of AVI Japan Opportunities Trust plc Report on the audit of the fnancial statements • Evaluating the appropriateness of the Directors’ method of assessing the An overview of the scope of our audit Opinion going concern in light of economic and market conditions by reviewing Our audit was scoped by obtaining an understanding of the Company In our opinion the financial statements: the information used by the Directors in completing their assessment; and its environment, the applicable financial reporting framework and the • Assessing the appropriateness of the Directors’ assumptions and Company’s system of internal control. We identified and assessed the risks • give a true and fair view of the state of the Company’s affairs as at judgements made in their base case and stress tested forecasts of material misstatement of the Company financial statements. We then 31 December 2025 and of its profit and cash flows for the year including consideration of the available cash resources relative to applied professional judgement to focus our audit procedures on the areas then ended; forecast expenditure and commitments; that posed the greatest risks to the financial statements. We continually • have been properly prepared in accordance with UK adopted assessed risks throughout our audit, revising the risks where necessary, international accounting standards; and • Challenging the Directors’ assumptions and judgements made in their with the aim of reducing the risk of material misstatement to an acceptable forecasts by performing an independent analysis of the liquidity of the • have been prepared in accordance with the requirements of the level, in order to provide a basis for our opinion. portfolio; and Companies Act 2006. • We reviewed the Directors’ assessment of the potential impact of the Key audit matters We have audited the financial statements of AVI Japan Opportunity Trust ‘exit opportunity’ as well as the related disclosures presented. Key audit matters are those matters that, in our professional judgement, plc (the ‘Company’) for the year ended 31 December 2025 which comprise were of most significance in our audit of the financial statements of the the Statement of Comprehensive Income, Statement of Changes in Based on the work we have performed, we have not identified any material current period and include the most significant assessed risks of material Equity, Balance Sheet, Cash Flow Statement and Notes to the Financial uncertainties relating to events or conditions that, individually or collectively, misstatement (whether or not due to fraud) that we identified, including Statements, including a summary of material accounting policy information. may cast significant doubt on the Company’s ability to continue as a going those which had the greatest effect on: the overall audit strategy, the The financial reporting framework that has been applied in the preparation concern for a period of at least twelve months from when the financial allocation of resources in the audit, and directing the efforts of the of the financial statements is applicable law and UK adopted international statements are authorised for issue. However, because not all future events engagement team. These matters were addressed in the context of our accounting standards. or conditions can be predicted, this statement is not a guarantee as to the audit of the financial statements as a whole, and in forming our opinion Company’s ability to continue as a going concern. Basis for opinion thereon, and we do not provide a separate opinion on these matters. We conducted our audit in accordance with International Standards on In relation to the Company’s reporting on how it has applied the UK Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under Corporate Governance Code, we have nothing material to add or draw those standards are further described in the Auditor’s responsibilities for the attention to in relation to the Directors’ statement in the financial statements audit of the financial statements section of our report. We believe that the about whether the Directors considered it appropriate to adopt the going audit evidence we have obtained is sufficient and appropriate to provide a concern basis of accounting in preparing the financial statements. basis for our opinion. Our responsibilities and the responsibilities of the Directors with respect to Independence going concern are described in the relevant sections of this report. We remain independent of the Company in accordance with the ethical Overview 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 Key audit 2025 2024 entities, and we have fulfilled our other ethical responsibilities in accordance matters Valuation and ownership with these requirements. The non-audit services prohibited by the FRC’s N N of investments Ethical Standard were not provided to the Company and we remain independent of the Company in conducting our audit. Materiality Company fnancial statements as a whole £4.25m (2024:£2.12m) based on 1% (2024: 1%) of Conclusions relating to going concern net assets 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: 52 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Governance / Independent Auditor’s Report continued ### to the Members of AVI Japan Opportunities Trust plc 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 We considered the valuation and ownership of investments to be We responded to this matter by testing the valuation and ownership of the whole portfolio of listed and unlisted investments. ownership of the most important audit area as investments represent the most In relation to the listed investments, we performed the following procedures: quoted & unquoted significant balance in the Financial Statements and underpin the • Confirmed the year-end bid price was used by agreeing to independently obtained, externally quoted prices; investments principal activity of the Company. • Assessed if there were contra indicators, such as liquidity considerations, to suggest bid price is not the most appropriate (Note 1 & 8) The investment portfolio at the year-end comprised of equity indication of fair value by considering the realisation period for individual holdings; investments. • Recalculated the valuation by multiplying the number of shares held per the statement obtained from the custodian by the There is a risk that the prices used for the listed investments held by share price; and the Company are not reflective of fair value. We do not consider the • Obtained direct confirmation of the number of shares held per equity investment from the custodian regarding all investments use of bid price as a proxy for fair value of listed investments to be held at the balance sheet date. subject to significant estimation uncertainty. In relation to a sample of unlisted investments, we performed the following procedures: Significant judgment may be required in determining the valuation • Considered the appropriateness of the valuation methodology applied by the AIFM under the International Private Equity and methodology for unlisted investments, and their valuations are subject Venture Capital Valuation (IPEV’) Guidelines and applicable accounting standards; to estimation uncertainty. • Reviewed the valuations prepared by the management expert and challenged and corroborated the inputs to the valuation There is also a risk of error in the recording of investment holdings with reference to management information on investee companies, market data and our own understanding of the investee such that those records do not appropriately reflect the property of the companies and assessed the impact of the estimation uncertainty concerning these assumptions; and Company. • Agreed the holdings to independent confirmation received from the underlying investee companies, to confirm ownership. For these reasons and the materiality to the Financial Statements as a Where appropriate, we performed stress and reverse stress tests to determine materiality of possible movements in selected inputs. whole, the valuation and ownership of listed and unlisted investments are considered to be a key area of our overall audit strategy and Key observations: allocation of our resources and hence a Key Audit Matter. 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. Our application of materiality Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: We apply the concept of materiality both in planning and performing our Company fnancial statements 2025 2024 audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could Materiality £4,250,000 £2,120,000 influence the economic decisions of reasonable users that are taken on the Basis for determining materiality 1% of Net assets basis of the financial statements. Rationale for the benchmark applied As an investment trust, the net asset value is the key measure of performance for users In order to reduce to an appropriately low level the probability that any of the financial statements. misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Performance materiality £3,187,500 £1,590,000 Importantly, misstatements below these levels will not necessarily be Basis for determining performance materiality 75% of materiality evaluated as immaterial as we also take account of the nature of identified Rationale for the percentage applied for The level of performance materiality applied was set after having considered a number of factors including misstatements, and the particular circumstances of their occurrence, when performance materiality the expected total value of known and likely misstatements and the level of transactions in the year. evaluating their effect on the financial statements as a whole. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G G FS SI 53 Reporting threshold Going concern • The Directors’ statement with regards to Strategic report In our opinion, based on the work undertaken in the We agreed with the Audit Committee that we would report to them all and longer- the appropriateness of adopting the going and Directors’ course of the audit: individual audit differences in excess of £212,500 (2024:£106,000). We also term viability concern basis of accounting and any material report • the information given in the Strategic report and agreed to report differences below this threshold that, in our view, warranted uncertainties identified set out on page 49; and the Directors’ report for the financial year for reporting on qualitative grounds. • The Directors’ explanation as to their which the financial statements are prepared is Other information assessment of the Company’s prospects, the consistent with the financial statements; and The Directors are responsible for the other information. The other information period this assessment covers and why the • the Strategic report and the Directors’ report have comprises the information included in the Annual Report other than the period is appropriate set out on page 50. been prepared in accordance with applicable financial statements and our auditor’s report thereon. Our opinion on the • The Directors’ statement on whether they have legal requirements. financial statements does not cover the other information and, except to a reasonable expectation that the Company will In the light of the knowledge and understanding of the extent otherwise explicitly stated in our report, we do not express any be able to continue in operation and meet its the Company and its environment obtained in the form of assurance conclusion thereon. Our responsibility is to read the liabilities set out on page 50. course of the audit, we have not identified material other information and, in doing so, consider whether the other information misstatements in the Strategic report or the Directors’ is materially inconsistent with the financial statements or our knowledge Other Code • Directors’ statement on fair, balanced and report. obtained in the course of the audit, or otherwise appears to be materially provisions understandable set out on page 48; misstated. If we identify such material inconsistencies or apparent material • Board’s confirmation that it has carried out a Directors’ In our opinion, the part of the Directors’ Remuneration misstatements, we are required to determine whether this gives rise to a robust assessment of the emerging and principal remuneration Report to be audited has been properly prepared in | material misstatement in the financial statements themselves. If, based | risks set out on pages 34 and 35; | | accordance with the Companies Act 2006. | | --- | --- | --- | --- | | on the work we have performed, we conclude that there is a material | • The section of the annual report that describes | Matters on | We have nothing to report in respect of the following | | misstatement of this other information, we are required to report that fact. | the review of effectiveness of risk management | which we | matters in relation to which the Companies Act 2006 | | We have nothing to report in this regard. | and internal control systems set out on | are required | requires us to report to you if, in our opinion: | | | page 50; and | to report by | | | Corporate governance statement | | | • adequate accounting records have not been | | | • The section describing the work of the Audit and | exception | | | The UK Listing Rules sourcebook requires us to review the Directors’ | | | kept, or returns adequate for our audit have not | | | Risk Committee set out on page 49. | | been received from branches not visited by us; or | statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Parent Company’s • the financial statements and the part of the Other Companies Act 2006 reporting compliance with the provisions of the UK Corporate Governance Code Directors’ remuneration report to be audited are Based on the responsibilities described below and our work performed specified for our review. not in agreement with the accounting records during the course of the audit, we are required by the Companies Act 2006 and returns; or Based on the work undertaken as part of our audit, we have concluded and ISAs (UK) to report on certain opinions and matters as described below. that each of the following elements of the Corporate Governance Statement • certain disclosures of Directors’ remuneration is materially consistent with the financial statements or our knowledge specified by law are not made; or obtained during the audit. • we have not received all the information and explanations we require for our audit. 54 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Governance / Independent Auditor’s Report continued ### to the Members of AVI Japan Opportunities Trust plc Responsibilities of Directors Non-compliance with laws and regulations Fraud Based on: We assessed the susceptibility of the financial statement to material As explained more fully in the Directors’ responsibilities statement, the misstatement including fraud. Directors are responsible for the preparation of the financial statements and • Our understanding of the Company and the industry in which it for being satisfied that they give a true and fair view, and for such internal operates; Our risk assessment procedures included: control as the Directors determine is necessary to enable the preparation of • Discussion with the Investment Manager and those charged with • Enquiry with the Investment Manager, the Administrator and those financial statements that are free from material misstatement, whether due to governance; and charged with governance regarding any known or suspected instances fraud or error. • Obtaining and understanding of the Company’s policies and procedures of fraud; In preparing the financial statements, the Directors are responsible for regarding compliance with laws and regulations; • Obtaining an understanding of the Company’s policies and procedures assessing the Company’s ability to continue as a going concern, disclosing, relating to: we considered the significant laws and regulations to be Companies Act as applicable, matters related to going concern and using the going concern 2006, DTR rules, the principles of the AIC Code of Corporate Governance, – Detecting and responding to the risks of fraud; and basis of accounting unless the Directors either intend to liquidate the Company industry practice represented by the AIC SORP, the applicable accounting – Internal controls established to mitigate risks related to fraud. or to cease operations, or have no realistic alternative but to do so. framework, and the Company’s qualification as an Investment Trust • Review of minutes of meeting of those charged with governance for any Auditor’s responsibilities for the audit of the fnancial statements under UK tax legislation, as any non-compliance of this would lead to the known or suspected instances of fraud; and Our objectives are to obtain reasonable assurance about whether the Company losing various deductions and exemptions from corporation tax. • Discussion amongst the engagement team as to how and where fraud financial statements as a whole are free from material misstatement, Our procedures in respect of the above included: might occur in the financial statements. whether due to fraud or error, and to issue an auditor’s report that includes • Agreement of the financial statement disclosures to underlying our opinion. Reasonable assurance is a high level of assurance but is not a Based on our risk assessment, we considered the areas most susceptible to supporting documentation; guarantee that an audit conducted in accordance with ISAs (UK) will always fraud to be management override of controls. • Enquiries of management and those charged with governance relating detect a material misstatement when it exists. Misstatements can arise from Our procedures in respect of the above included: to the existence of any non-compliance with laws and regulations; fraud or error and are considered material if, individually or in the aggregate, • In addressing the risk of management override of controls, we they could reasonably be expected to influence the economic decisions of • Reviewing minutes of meeting of those charged with governance performed the following: users taken on the basis of these financial statements. throughout the period for instances of non-compliance with laws and regulations; and – Performed a review of estimates and judgements made in the However, the primary responsibility for the prevention and detection of • Reviewing the calculation in relation to Investment Trust compliance to unlisted investment valuations and considered whether the valuation fraud rests with both those charged with governance of the Company and check that the Company was meeting its requirements to retain their methodology applied is appropriate; management. Investment Trust Status. – Performed a review of estimates and judgements applied by the Extent to which the audit was capable of detecting irregularities, Investment Manager in the Financial Statements to assess their including fraud appropriateness and the existence of any systematic bias; Irregularities, including fraud, are instances of non-compliance with laws – Considered the opportunity and incentive to manipulate accounting and regulations. We design procedures in line with our responsibilities, entries and target tested relevant adjustments made in the period end outlined above, to detect material misstatements in respect of irregularities, financial reporting process; including fraud. The extent to which our procedures are capable of detecting – Reviewed for significant transactions outside the normal course of irregularities, including fraud is detailed below: business; and – Performed a review of unadjusted differences, if any, for indications of bias or deliberate misstatement. AIF Japan Opportunity Trust plc / Annual Report 2020 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 2005. 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 OC306127). 56 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Financial Statements / Statement of Comprehensive Income ### For the year ended 31 December 2025 For the year ended 31 December 2025 For the year ended 31 December 2024 | | Revenue | | Capital | | Revenue | | Capital | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | return | return | Total | | return | return | Total | | Notes | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’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. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 57 ### Financial Statements / Statement of Changes in Equity ### For the year ended 31 December 2025 | Ordinary | | | Capital | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | redemption | | | Share | Special | Capital | Revenue | | | | | capital | | reserve | premium | | reserve* | reserve* | reserve** | | Total | | | £’000 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | £’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. 58 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Financial Statements / Balance Sheet ### For the year ended 31 December 2025 | | | | As at | | As at | | | | As at | | As at | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 31 December | | 31 December | | | | 31 December | | 31 December | | | | | | 2025 | | 2024 | | | | 2025 | | 2024 | | | Notes | | £’000 | | £’000 | | Notes | | £’000 | | £’000 | | Non-current assets | | | | | | Equity attributable to equity Shareholders | | | | | | | Investments held at fair value through profit or loss 8 432,911 220,865 | | | | | | Ordinary Share capital 13 2,479 1,372 | | | | | | Capital redemption reserve 36 36 432,911 220,865 Share premium 246,040 64,255 Special reserve 64,572 70,653 Current assets Capital reserve 110,046 73,223 Receivables 9 902 1,256 Revenue reserve 2,118 2,442 Cash and cash equivalents 28,236 5,403 Total equity 425,291 211,981 29,138 6,659 Net asset value per Ordinary Share –basic and diluted (pence) 14 174.71 155.44 Total assets 462,049 227,524 Current liabilities Number of shares in issue excluding treasury 13 243,423,107 136,373,227 Revolving credit facility 11 (31,304) – Other payables 10 (5,454) (664) 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: (36,758) (664) Total assets less current liabilities 425,291 226,860 Non-current liabilities Norman Crighton The accompanying notes are an integral part of these financial statements. Revolving credit facility 11, 12 – (14,879) Registered in England & Wales No. 11487703 Net assets 425,291 211,981 AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 59 ### Financial Statements / Statement of Cash Flows ### For the year ended 31 December 2025 | | 31 December | | 31 December | | | 31 December | | 31 December | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2025 | | 2024 | | | 2025 | | 2024 | | Notes | | £’000 | | £’000 | Notes | | £’000 | | £’000 | Reconciliation of proft before taxation to net cash inflow Reconciliation of net cash flow movement from operating activities Cash and cash equivalents at beginning of year 5,403 13,430 Profit before taxation 41,853 38,613 Exchange losses on currency balances (1,692) (1,147) Gains on investments held at fair value through profit or loss (38,314) (36,663) Exchange rate movements 4 – Increase in other receivables (197) (434) Increase/(decrease) in cash and cash equivalents 24,521 (6,880) Exchange gains on revolving credit facility (2,948) (1,422) Exchange losses on currency balances 1,692 1,147 Cash and cash equivalents at end of year 28,236 5,403 Interest paid 466 283 Increase in other payables 250 25 Dividends received 6,416 4,388 Taxation paid (736) (488) Interest paid 466 303 Interest received 7 – Net cash inflow from operating activities 2,066 1,061 Investing activities The accompanying notes are an integral part of these financial statements. 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) AIR Japan Opportunity Trust plc / Annual Report 2025 ## Financial Statements / Notes to the Financial Statements For the year ended 31 December 2025 ### 1. General Information and Accounting Policies AIR 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 SDPF. #### 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 2020. 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 it, in its reasonable opinion, if 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. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 61 1 Critical Accounting Judgements and Key Sources of Estimation Uncertainty All investments for which fair value is measured or disclosed in the financial statements are categorised within the The preparation of financial statements in conformity with UK-adopted international accounting standards requires fair value hierarchy in note 15. management to make judgements, estimates and assumptions that affect the application of policies and the We considered it appropriate to present the below sensitivities performed on AVI Japan Opportunity Trust plc’s reported amounts in the Balance Sheet, the Statement of Comprehensive Income and the disclosure of contingent unquoted investments that are valued using a market approach based on revenue multiples. The analysis assets at the date of the financial statements. The estimates and associated assumptions are based on historical considered the impact of changes in the key unobservable input, namely the enterprise value to revenue multiples experience and various other factors that are believed to be reasonable under the circumstances, the results of (TEV/LTM revenue and, where applicable, TEV/FY+1 revenue) applied in the valuation. A sensitivity of ±10% was which form the basis of making judgements about carrying value of assets and liabilities that are not readily apparent applied to the selected multiples to assess the potential range of outcomes. The analysis indicates that a 10% from other sources. Actual results may differ from these estimates. decrease or increase in the applied multiples would result in a corresponding decrease or increase in the estimated The areas requiring judgement and estimation in the preparation of the financial statements relate to the determination of fair value per share of the underlying investments, with movements broadly proportional to the change in the the carrying value of unquoted investments at fair value through profit or loss. The policy for unquoted investments is set multiples used. This reflects the reliance of the valuations on comparable market multiples and demonstrates that out in the Investments section below. Further areas are recognising and classifying unusual or special dividends received as the fair values are moderately sensitive to changes in the selected revenue multiples. The calculation of the analysis either capital or revenue in nature; the recognition of expenses between capital and revenue; and the level of deferred tax. was aided by an independent valuation service provider. 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. 62 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Financial Statements / Notes to the Financial Statements continued ### For the year ended 31 December 2025 1 ### 1. General Information and Accounting Policies continued Foreign currency Transactions denominated in currencies other than Pounds Sterling are recorded at the rates of exchange prevailing Investments continued on the date of transaction. Items which are denominated in foreign currencies are translated at the rates prevailing Impact on on the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the Total fair value Total fair value Value of Holding transaction is included as exchange gain or loss in the capital reserve or revenue reserve depending on whether the (mid-point) (mid-point) for +/- within AJOT for +/- gain or loss is capital or revenue in nature. - Based on | | | | | | | 10% move of key | | 10% move of key | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Q4’2025 | | | Key | | | | | Cash and Cash Equivalents | | | | | | | | unobservable input | | unobservable input | | | | | Valuation | | Report | unobservable | | | | | | Cash comprises cash in hand and balances held in interest bearing accounts revalued for exchange | | Company | approach | | £’000 | | inputs Sensitivity | | £’000 | | £’000 | rate movements. | For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents Market TEV / LTM* as defined above. 1 Asoview Approach 5,589.3 revenue multiple 10% 4,889.3 6,056.0 -700.0 466.7 Revolving Credit Facility Market TEV / LTM* The revolving credit facility is shown at amortised cost and revalued for exchange rate movements. Any gain or loss 2 Yoriso Approach 543.3 revenue multiple 10% 490.9 592.9 -52.4 49.6 arising from changes in exchange rates is included in the capital reserve and shown in the capital column of the TEV / LTM* Statement of Comprehensive Income. revenue multiple Income Market TEV / FY+1** Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable 3 Go Inc. Approach 3,211.7 revenue multiple 10% 2,480.7 3,914.6 -731.0 702.9 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. TEV / LTM* Irrecoverable withholding taxes are disclosed within taxation in the Statement of Comprehensive Income. revenue multiple Special dividends are taken to the revenue or capital account depending on their nature. In deciding whether a | | | Market | | TEV / FY+1** | | | --- | --- | --- | --- | --- | --- | | | 4 | | | | dividend should be regarded as a capital or revenue receipt, the Board reviews all relevant information as to the | | iYell | | Approach 1,736.2 | revenue multiple 10% 1,276.9 2,292.5 -459.3 556.3 | | | reasons for the sources of the dividend on a case-by-case basis. TEV / LTM* When the Company has elected to receive scrip dividends in the form of additional shares, rather than cash, the revenue multiple amount of the cash dividend forgone is recognised as income. Any excess in the value of the cash dividend is Market TEV / FY+1** recognised in the capital column. All other income is accounted for on a time-apportioned accruals basis and is 5 Studyplus Approach 1,987.4 revenue multiple 10% 1,572.7 2,557.8 -414.8 570.3 recognised in the Statement of Comprehensive Income. *TEV/LTM: Total enterprise value / Actual revenue for the last twelve months. Expenses and Finance Costs **TEV/FY+1:Totalenterprisevalue/Forecastedrevenueforthenextfiscalyear. Expenses incurred directly in relation to arranging debt finance are amortised over the term of the finance. All 1 Asoviewfairmarketvaluationisbasedonacalibratedmarketapproach.Thesensitivityanalysisappliesavariationof+/-10%tothechangeinthe expenses and finance costs are accounted for on an accruals basis. On the basis of the Board’s expected long- averageofcomparablecompanymultiplesbetweenthelatestfinancingroundandthevaluationdate. term split of total returns the Company charges 90% of its management fee and finance costs to capital. 2 Yorisofairvalueassessmentisbasedonmarketapproach.Thesensitivityanalysisappliesavariationof+/-10%totheselectedTEV/LTMRevenuemultiple. 3 GoIncfairvalueassessmentisbasedonamarketcalibrationapproach.Thesensitivityanalysisappliesavariationof+/-10%toi)themovementof Taxation comparablecompanymultiplesbetweenthelatestfinancingroundandthevaluationdate,ii)thecompany-specificadjustmentfactorthatreflects The charge for taxation is based on the net revenue for the year and takes into account taxation deferred or thecompany’sfinancialandoperationalperformancesincethelatestfinancinground,andiii)forecastedrevenueforthenextfiscalyear. accelerated because of temporary differences between the treatment of certain items for accounting and 4 iYellfairvalueassessmentisbasedonamarketcalibrationapproach.Thesensitivityanalysisappliesavariationof+/-10%toi)themovementof comparablecompanymultiplesbetweenthelatestfinancingroundandthevaluationdate,ii)thecompany-specificadjustmentfactorthatreflects taxation purposes. thecompany’sfinancialandoperationalperformancesincethelatestfinancinground,andiii)forecastedrevenueforthenextfiscalyear. The tax charge consists of overseas tax not recoverable. 5 Studyplusfairvalueassessmentisbasedonamarketcalibrationapproach.Thesensitivityanalysisappliesavariationof+/-10%toi)themovementof comparablecompanymultiplesbetweenthelatestfinancingroundandthevaluationdate,ii)thecompany-specificadjustmentfactorthatreflectsthe company’sfinancialandoperationalperformancesincethelatestfinancinground,andiii)forecastedrevenueforthenextfiscalyear. Ari Japan Opportunity Trust plc / Annual Report 2020 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 SOFR 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. * The share premium account cancellation was completed following the registration of the court order on 4 June 2019. # 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 re-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 Sava 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. AIR Japan Opportunity Trust plc / Annual Report 2025 # Financial Statements / Notes to the Financial Statements continued For the year ended 31 December 2025 # 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. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 65 54 ### 4. Finance Costs Year ended 31 December 2025 Year ended 31 December 2024 | Revenue | | Capital | | Revenue | | Capital | | | --- | --- | --- | --- | --- | --- | --- | --- | | | return | return | Total | | return | return | Total | | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’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 | | Capital | | Revenue | | Capital | | | --- | --- | --- | --- | --- | --- | --- | --- | | | return | return | Total | | return | return | Total | | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’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. 66 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Financial Statements / Notes to the Financial Statements continued ### For the year ended 31 December 2025 5 ### 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 | | Capital | | Revenue | | Capital | | | --- | --- | --- | --- | --- | --- | --- | --- | | | return | return | Total | | return | return | Total | | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’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 * 2024figuresupdatedforconsistency. 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. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 67 6 ### 6. Dividends | 31 December | | 31 December | | | --- | --- | --- | --- | | | 2025 | | 2024 | | | £’000 | | £’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 | | 31 December | | | --- | --- | --- | --- | | | 2025 | | 2024 | | | £’000 | | £’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. 4 AIR Japan Opportunity Trust plc / Annual Report 2025 # Financial Statements / Notes to the Financial Statements continued For the year ended 31 December 2025 # 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 | AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 69 98 10 | 8. Investments Held at Fair Value Through Profit or Loss continued | | | | | 9. Receivables | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Year ended | | Year ended | | | 2025 | 2024 | | | 31 December | | 31 December | | | £’000 | £’000 | | | | 2025 | | 2024 | | | | Trade receivables, prepayments and other debtors £’000 £’000 Due from brokers 207 758 Transaction costs Other receivables and prepayments 695 498 Cost on acquisition 149 69 902 1,256 Cost on disposals 99 65 248 134 No receivables are past due or impaired. Analysis of capital gains ### 10. Current Liabilities 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 2025 2024 £’000 £’000 Net gains on investments held at fair value 38,314 36,663 Revolving credit facility 31,304 – 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 Trade payables, accruals and short-term borrowings December 2024: £104,411,000). These investments have been revalued over time and until they were sold, any Management fees 338 170 unrealised gains or losses were included in the fair value of the investments. Interest payable 147 61 The Company has 14 investments of 3% or more of the equity capital of the investee companies, which are set out Purchases for future settlement 4,765 287 in the table below. Other payables 204 146 % of investee Company company 5,454 664 Atsugi 24.2 Total current liabilities 36,758 664 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 70 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Financial Statements / Notes to the Financial Statements continued ### For the year ended 31 December 2025 131211 | 11. Revolving Credit Facility | | 13. Share Capital | | | | --- | --- | --- | --- | --- | | | Year ended 31 December 2025 Year ended 31 December 2024 | | As at 31 December 2025 | As at 31 December 2024 | | | | | Ordinary Shares of 1p each | Ordinary Shares of 1p each | ¥’000 £’000 ¥’000 £’000 | | | | Nominal | | | Nominal | | | --- | --- | --- | --- | --- | --- | --- | --- | | Opening balance 2,930,000 14,879 2,930,000 16,301 | | Number | | value | Number | | value | | Proceeds from amounts drawn 3,670,000 19,373 – – | Allotted, called up and fully paid | of shares | | £’000 | of shares | | £’000 | Exchange rate movement – (2,948) – (1,422) Balance at beginning of year 137,198,943 1,372 140,836,702 1,408 Closing balance 6,600,000 31,304 2,930,000 14,879 Issue of Ordinary Shares 110,674,880 1,107 – – Ordinary Shares bought back – Tender Offer – – (3,637,759) (36) Maximum facility available 6,600,000 31,304 2,930,000 14,879 247,873,823 2,479 137,198,943 1,372 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 Treasury shares: is the aggregate of the Margin 1.55% and the Daily Non-Cumulative Compounded Risk Free Rate (“RFR”) that Balance at beginning of year 825,716 400,000 day payable bi-annually. RFR being the Tokyo Overnight Average Rate (“TONAR”) (previously where TONAR – the Buyback of Ordinary Shares into treasury 3,625,000 425,716 reference rate was less than zero it was deemed to be zero). The current estimated aggregate interest rate is 2.03% Balance at end of year 4,450,716 825,716 (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, Total Ordinary Share capital excluding 0.375% if less than 50% is drawn down) are charged on undrawn balances payable quarterly. As at the date of treasury shares 243,423,107 136,373,227 this report, the Company has fully utilised the facility. During the year ended 31 December 2025, 110,674,880 Ordinary Shares (31 December 2024: nil) were issued for Under the terms of the facility covenants, remaining the same, the net assets shall not be less than £75 million; a net consideration of £182,892,000 (31 December 2024: £nil), including nil Ordinary Shares issued from treasury and the adjusted total net assets to borrowing ratio shall not be less than 4.5:1. (31 December 2024: nil). The facility is shown at amortised cost and revalued for exchange rate movements. Any gain or loss arising During the year, 3,625,000 Ordinary Shares (31 December 2024: 425,716) were bought back and placed in from changes in exchange rates are included in the capital reserves and shown in the capital column of the treasury for an aggregate consideration of £6,077,000 (31 December 2024: £584,000). Statement of Comprehensive Income. Interest costs are charged to capital and revenue in accordance with the Company’s accounting policies. Exit Opportunity In 2024 the Company offered an Exit Opportunity, allowing eligible Shareholders to tender all or part of their During the year ended 31 December 2024, costs of £18,000 were incurred in relation to the extension holdings. The Company received applications from eligible Shareholders to tender a total of 3,637,759 shares, of the facility. 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. ### 12. Non-Current Liabilities FJV Combination 2025 2024 On 27 November 2025, the Company announced the acquisition of approximately £184million of net assets for £’000 £’000 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. Revolving credit facility – 14,879 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 Total – 14,879 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. AVI Japan Opportunity Trust plc / Annual Report 2025 14 15 #### 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** | 72 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Financial Statements / Notes to the Financial Statements continued ### For the year ended 31 December 2025 15 ### 15. Financial Instruments and Capital Disclosures continued | | | | | 31 December | | 31 December | | | --- | --- | --- | --- | --- | --- | --- | --- | | Currency Risk continued | | | | | 2025 | | 2024 | | | | | | | £’000 | | £’000 | | | GBP | JPY | Total | | | | | | | £’000 | £’000 | £’000 | | | | | Exposure to floating interest rates Cash and cash equivalents 28,236 5,403 At 31 December 2024 JPY revolving credit facility (31,304) (14,879) Receivables 122 1,134 1,256 Cash and cash equivalents 13 5,390 5,403 JPY revolving credit facility – (14,879) (14,879) If the above level of cash and JPY revolving credit facility was maintained for a year, a 1% increase in interest rates Payables (316) (348) (664) 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 Currency exposure on net monetary items (181) (8,703) (8,884) profit/(loss) and the NAV, through a cost increase/revenue reduction, of £31,000 (31 December 2024: £95,000). Investments held at fair value through profit or loss – 220,865 220,865 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 Total net currency exposure (181) 212,162 211,981 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. A 5% increase or decrease in foreign exchange rates has been used to illustrate the potential effect on net asset Liquidity Risk value. This percentage is considered appropriate based on: Liquidity risk is mitigated by the fact that the Company has £28,236,000 (2024: £5,403,000) cash at bank, the • Historical volatility of the relevant currencies; assets are readily realisable, which can be easily sold to meet funding commitments and further short-term flexibility • The nature of the Company’s foreign currency exposures, which are diversified and not concentrated in highly is available through the use of bank borrowings. The current revolving credit facility is repayable on 2 April 2026, volatile markets; or prior to that date at the discretion of the Company. Repayment may be completed through cash repayments, • Industry practice, where a 5% sensitivity is commonly used for similar investment companies. 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. 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: The Company is a closed-ended fund, assets do not need to be liquidated to meet redemptions, and sufficient £10,608,000). liquidity is maintained to meet obligations as they fall due. Interest Rate Risk The remaining contractual payments on the Company’s financial liabilities at 31 December 2025, based on Interest rate movements may affect: the earliest date on which payment can be required and current exchange rates at the Balance Sheet date undiscounted amounts, were as follows: • the level of income receivable on cash deposits; and • the interest payable on variable rate borrowings. In more than | The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken | | 1 year but not | | | | | --- | --- | --- | --- | --- | --- | | into account when making investment decisions. | In 1 year | | more than | | | | | or less | | | 2 years | Total | The exposure at 31 December of financial assets and financial liabilities to interest rate risk is shown by reference to £’000 £’000 £’000 floating interest rates. At 31 December 2025 Revolving credit facility 31,304 – 31,304 Payables (5,454) – (5,454) 25,850 – 25,850 AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 73 15 | 15. Financial Instruments and Capital Disclosures continued | | | | | | Financial assets at fair value through proft | Level 1 | Level 2 | Level 3 | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Liquidity Risk continued | | | | | | or loss at 31 December 2024 | £’000 | £’000 | £’000 | £’000 | | | In 1 year | In more than 1 year but not more | | | | Equity investments 220,865 – – 220,865 | | | | | | | or less | | than 2 years | | Total | | | | | | | | £’000 | | | £’000 | £’000 | | 220,865 – – 220,865 | | | | | At 31 December 2024 | | | | | | Fair value of Level 3 investments | | | | | Revolving credit facility – (14,879) (14,879) 31 December 31 December Payables (664) – (664) 2025 2024 £’000 £’000 (664) (14,879) (15,543) Opening fair value of investments – – Credit Risk Acquisition 12,954 – 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 Closing fair value of investments 12,954 – due from any one counterparty. As at 31 December 2025, cash was held with J.P. Morgan Chase Bank (A2* Moody’s credit rating). 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 The total credit exposure represents the carrying value of cash and receivable balances and totals £29,138,000 services provider to conduct independent valuation analysis of these investments. The service provider determines (31 December 2024: £6,660,000). appropriate and supportable inputs and assumptions in view of the requirement under IFRS 13. The independent Fair Values of Financial Assets valuations services provider determines and documents a reconciliation of approaches where more than one The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs approach has been employed. Their observations and results are discussed with the Manager who reviews the used in making the measurements. valuation analysis. The Manager consider the appropriateness of the valuation analysis as well as the valuation result The fair value is the amount at which the asset could be sold or the liability transferred in an orderly transaction and determined the various methods and techniques are generally recognised as standard. between market participants, at the measurement date, other than a forced or liquidation sale. There have been no transfers during the year between Levels 1, 2 and 3. 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: 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 • Level 1 – valued using quoted prices unadjusted in active markets for identical assets or liabilities. the Statement of Changes in Equity on page 58. • Level 2 – valued by reference to valuation techniques using observable inputs for the asset or liability other than The Company’s capital management objectives are: quoted prices included within Level 1. • Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market • to ensure that it will be able to continue as a going concern; data for the asset or liability. • 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 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. • 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. Financial assets at fair value through proft Level 1 Level 2 Level 3 Total The Board, with the assistance of the Investment Manager, regularly monitors and reviews the broad structure of or loss at 31 December 2025 £’000 £’000 £’000 £’000 the Company’s capital on an ongoing basis. These reviews include: Equity investments 419,957 – 12,954 432,911 • the level of gearing, which takes account of the Company’s position and the Investment Manager’s views on the market; and 419,957 – 12,954 432,911 • the extent to which revenue in excess of that which is required to be distributed should be retained. AVI Japan Opportunity Trust plc / Annual Report 2025 # Financial Statements / Notes to the Financial Statements continued For the year ended 31 December 2025 15 16 17 # 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 632 and 633 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: 1,880,000 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 26,890,713 shares, representing 11.05% of the issued Ordinary Share capital, at a price of 173.7567 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. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 75 ### Shareholder Information / AIFMD Disclosures 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. AIR Japan Opportunity Trust plc / Annual Report 2025 # Shareholder Information / Glossary (unaudited) # 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 60% 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 6%, 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 R/10ram! 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 | 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 80, 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. AM 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. 78 AVI Japan Opportunity Trust plc / Annual Report 2025 ### Shareholder Information / Investing in the Company 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. AVI Japan Opportunity Trust plc / Annual Report 2025 SR G FS SI 79 ### Shareholder Information / Company Information Directors Custodian Registered Offce Secretary Norman Crighton (Chairman) J.P. Morgan Chase Bank 19th Floor MUFG Corporate Governance Limited ### HOW TO INVEST Andrew Rose National Association 51 Lime Street Central Square (Appointed 12 February 2025) London Branch London 29 Wellington Street ### AJOT is a closed-ended investment trust with shares Margaret Stephens 25 Bank Street United Kingdom Leeds ### listed on the London Stock Exchange and part of Ekaterina (Katya) Thomson Canary Wharf EC3M 7DQ United Kingdom ### (Resigned 21 January 2025) London LS1 4DL the FTSE All-Share and FTSE Small Cap indices. Registrar and Transfer Offce | Thomas (Tom) Yoritaka | E14 5JP | | | Shares in AJOT can be bought directly on the London | | | --- | --- | --- | --- | --- | --- | | | | Equiniti Limited | Solicitors | | | | (Appointed 12 February 2025) | | | | Stock Exchange or through investment platforms. | | | | Depositary | Aspect House | Stephenson Harwood LLP | | | | Administrator | J.P. Morgan Europe Limited | Spencer Road | 1 Finsbury Circus | | | | Waystone Administration Solutions | 25 Bank Street | Lancing | London | | For more information visit: www.ajot.co.uk | | (UK) Limited | Canary Wharf | West Sussex | EC2M 7SH | | | | Broadwalk House | London | BN99 6DA | | | | | Southernhay West | E14 5JP | | | | | Registrar’s Online Platform Exeter Investment Manager and AIFM www.shareview.co.uk EX1 1TS Asset Value Investors Limited Registrar’s Shareholder Helpline Auditor 2 Cavendish Square Tel. 0371 384 2030 BDO LLP London Lines are open 8.30am to 5.30pm, 55 Baker Street W1G 0PU Monday to Friday. London W1U 7EU Registrar’s Broker Helpline Tel. 0906 559 6025 Corporate Brokers | Singer Capital Markets | Calls to this number cost £1 per | | --- | --- | | 1 Bartholomew Lane | minute from a BT landline, other | | London | providers’ costs may vary. Lines are | | EC2N 2AX | open 8.30am to 5.30pm, Monday | to Friday. 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