Annual Report and 31 January 2026 Financial Statements ## Baillie Gifford ## Shin Nippon PLC Investor disclosure document The UK Alternative Investment Fund Managers Regulations require certain information to be madeavailable to investors prior to their making aninvestment in the Company. The Company’s Investor Disclosure Document is available for viewingat shinnippon.co.uk. Notes None of the views expressed in this document If you reside in the United Kingdom and you are should be construed as advice to buy or sell a in any doubt as to the action you should take, you particular investment. should consult your stockbroker, bank manager, solicitor, accountant or other independent financial Investment trusts are UK public listed companies adviser authorised under the Financial Services and and as such comply with the requirements of the Markets Act 2000 immediately. If you are outside the Financial Conduct Authority (‘FCA’). They are not United Kingdom you should consult an appropriately authorised or regulated by the FCA. authorised financial adviser. Baillie Gifford Shin Nippon PLC currently conducts If you have sold or otherwise transferred all of your its affairs, and intends to continue to conduct its ordinary shares in Baillie Gifford Shin Nippon PLC, affairs, so that the Company’s ordinary shares can please forward this document, together with qualify to be considered as a mainstream investment accompanying documents, but not your personalised product and can be recommended by Independent Form of Proxy, as soon as possible to the purchaser Financial Advisers (IFAs) to ordinary retail investors or transferee, or to the stockbroker, bank or other in accordance with the rules of the FCA in relation agent through whom the sale or transfer was or tonon-mainstream investment products. isbeing effected for delivery to the purchaser This document is important and requires your ortransferee. immediate attention. Baillie Gifford Shin Nippon PLC Introduction ## Contents Financial highlights 02 An introduction to Baillie Gifford Shin Nippon PLC 04 Strategic report Chair’s statement 07 Managers’ report 10 Baillie Gifford’s stewardship principles 16 Proxy voting 18 Environmental, social and governance engagement 19 One year summary 24 Five year summary 26 Ten year record 28 Review of investments 30 Portfolio executive summary 37 Baillie Gifford – valuing private companies 40 Portfolio by growth profile 42 List of investments 43 Business review 46 Governance report Directors and management 58 Directors’ report 63 Corporate governance report 68 Audit Committee report 75 Directors’ remuneration report 78 Statement of Directors’ responsibilities 82 Financial report Independent Auditor’s report 85 Income statement 92 Balance sheet 93 Statement of changes in equity 94 Cash flow statement 95 Notes to the Financial Statements 96 Shareholder information Notice of Annual General Meeting 113 Further shareholder information 118 Communicating with shareholders 121 Third party data provider disclaimer 123 Sustainable Finance Disclosure Regulation 124 Glossary of terms and Alternative Performance Measures 125 Company information 129 01 Introduction ## Financial highlights Year to 31 January 2026 Total returns * † Share price NAV Comparative # index ## 14.4% 5.4% 21.5% NAV, share price and comparative index Discount * (figures rebased to 100 at 31 January 2025) (plotted as at month end dates) 120 15% 110 10% 100 5% 90 | 80 | | | 0% | | | | --- | --- | --- | --- | --- | --- | | | J | F MAMJ JASONDJ | | J | F MAMJ JASONDJ | | | 2025 | | | 2025 | | † ● Share price ● NAV ● Comparative ● Discount index # 130 20% † Net asset value per share (‘NAV’) with borrowings at fair value. At 31 January 2026 the NAV with borrowings at fair value was the same as the NAV with borrowings at book value. For a definition of terms see Glossary of terms and alternative performance measures on pages 125 to 128. * Alternative Performance Measure – see Glossary of terms on pages 125 to 128. 2026 2026 # The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms). Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123. Past performance is not a guide to future performance. 02 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC 03 Introduction ## An introduction to ## Baillie Gifford ## Shin Nippon PLC Japan is the world’s fourth largest economy, home ## Investing in new to unique technologies and an emerging class of digital disruptors. Our patient long-term approach ## opportunitiesin Japan. allows us to benefit from those at the vanguard of innovation and entrepreneurialism. There are plenty ## Shin Nippon’s objective of examples to be found in areas such as robotics and automation, or in the manufacturing of complex ## isto pursue long term electronic components, where Japan retains its technical edge. Less obvious, are the emerging class ## capitalgrowth through of entrepreneurs that are helping the country tackle ## investment principally in its digital transition. Japan is also home to some of the world’s best-known brands, many of which are ## smallJapanese companies primed to benefit from the premiumisation trend within Asia, from rising wealth across the region. ## which are believed to have These are just some of the opportunities emerging ## above average prospects for selective bottom-up stock pickers within Japan. ## for growth. Time is our greatest asset Adopting a long-term approach allows us to frame investment opportunities differently to the rest of themarket. We consider the unique attractions of individual companies, and we do so over five-year time periods and beyond. This long-term focus enables us to forgo the short-term fluctuations ofmarkets, cycles and share prices – to unearth exploitable and under appreciated opportunities that will ultimately deliver long-term outperformance. 04 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Flexible approach to growth investing Growth can come in various guises, from companies (compounding) approach, or via a more vertical of all shapes and sizes. As such our portfolio is (exponential) axis. built,from the bottom-up, with a diversified mix of By focusing on businesses with attractive structural companies from across many sectors and industries. growth opportunities, with strong and sustainable The commonality is that each investment must competitive positions, high-quality earnings and present a plausible pathway to doubling in value over aligned management we will optimise our exposure a five-year period. Of course, there are various ways to Japan’s best of breed growth opportunities. to climb a mountain – be that through a gradual Our structure Public company Permanent capital Accessibility • Just like other public • The closed-ended structure • Listed on the London Stock companies, Shin Nippon provides a pool of permanent Exchange, Shin Nippon can borrow money to make capital. Unlike open-ended provides intra-day liquid additional investments. funds, the portfolio remains access, and our shares are Thisfinancial gearing can intact and is not impacted openly tradeable for investors amplify investment returns. byshareholder demand. from around the world. • Our shareholders have rights, • We have the freedom to invest • There are no performance and we seek their approval, for the long term and hold fees or minimum investment via votes, if we want to make assets that can be harder restrictions. significant changes. tobuy and sell – such as • Shareholders could benefit private companies. • The board of directors looks from simplified tax reporting after the interests of our • Our extended time horizons when compared with other shareholders. They meet arematched by our structures that hold private several times a year and companies. This alignment companies. are responsible for various underpins the prospect of things, such as overseeing enduring relationships. performance. 05 ## Strategic ## report This strategic report, which includes pages 6 to 56 and incorporates the Chair’s statement has been prepared in accordance with the Companies Act 2006. Baillie Gifford Shin Nippon PLC ## Chair’s ## statement Performance Despite achieving positive absolute returns, I am sorry to report that over the twelve months to 31 January 2026, the Company’s poor relative performance has continued. Net asset value total return was 5.4% * and the share price total return was 14.4%. The MSCI Japan Small Cap Index (total Jamie Skinner return in sterling terms) increased by 21.5%. Chair Investing for capital growth from Japanese smaller Appointed 2018 companies has continued to be challenging. The Chair in 2023 portfolio’s focus on high-growth, domestically- oriented small caps has been out of favour as value stocks, large exporters and AI-related mega-caps have dominated returns in Japan. Rising interest rates, a weak yen and significant valuation de- rating across small-cap growth stocks in Japan have further weighed on performance, despite many holdings continuing to grow earnings strongly. Mistakes have certainly been made. Following challenge from the Board, and open constructive dialogue with the Managers, lessons have been learnt. Past portfolio construction underestimated correlations between certain growth holdings, exacerbating the impact of market-wide de-rating and a shrinking opportunity set at the point of initial investment. As covered in my interim statement, the investment process has been refined to reflect these insights, along with accessing a broadened opportunity set at point of initial investment, improved position sizing and a sharper focus on resilience as well as growth. While the recent period has further tested patience, the Board continues to believe the portfolio is invested in one of the most overlooked areas of global equity markets, with valuations at near decade lows and long-term growth opportunities intact. * After deducting borrowings at fair value. For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123. Past performance is not a guide to future performance. 07 Strategic report Portfolio managers capital; introduce a performance triggered tender offer for up to 100% of the Company’s issued share In May 2025, Brian Lum was promoted from deputy capital, which will be undertaken if the Company’s portfolio manager to lead portfolio manager, net asset value total return does not equal or exceed replacing Praveen Kumar. Jared Anderson was the total return on the MSCI Japan Small Cap Index also appointed deputy portfolio manager. While (in sterling terms) over the five year period from remaining committed to their long-term investment 31December 2025 to 31 December 2030; and put a approach, Brian and Jared have made a number of one-off continuation vote to shareholders in 2028. changes to the portfolio since their appointment. | These changes reflect their views of the best | The 15% tender offer has taken place and was | | --- | --- | | Japanese small cap growth companies and take | oversubscribed, with 49.8% of the Company’s | | advantage of the changes to the Company’s | issued share capital tendered. On 20 March 2026, | | investment policy announced in 2025, which | payments were made, in lieu of the tendered | | broadened the investable universe to reflect the | shares, through CREST and cheques despatched to | | opportunity set. Since then, there have been | certifiedshareholders. | five positions initiated in companies with market capitalisation in excess of ¥150 billion (the upper Ongoing Charges and Management Fee restriction prior to the changes to the investment The Company’s ongoing charges ratio for the year policy) and twelve complete exits, including was 0.81% compared to 0.80% last year. Moneytree, which was an unquoted holding. In | addition, there have been significant changes | It has been agreed with the Managers that the | | --- | --- | | to the size of a number of existing holdings with | annual management fee paid, with effect from | | position sizing forming an important element of the | 1February 2026, will be 0.65% on the first £250m | | portfolioreview. | of the Company’s net assets and 0.55% on the | remainder. It had previously been 0.75% on the first Further details on the transactions, current portfolio £50m of net assets, 0.65% on the next £200m of positioning and prospects for the portfolio are net assets and 0.55% on the remainder. contained within the portfolio managers’ report. Buybacks and Discount 15% Tender, Continuation Vote in 2028 and Following shareholder approval at last year’s Annual 100% Performance Triggered Tender General Meeting (‘AGM’), in August 2025 the During the final quarter of 2025, the Board Scottish Court of Session approved the Company’s undertook a consultation exercise with shareholders application to cancel its share premium account representing in excess of 43% of the Company’s and the creation of an equivalent Distributable issued share capital. While those shareholders Capital Reserve of £260.3 million. This provides a shared the Board’s frustration with the continued significant pool of reserves which can be used to poor performance, many recognised the unique fund distributions, including dividends, and returns opportunity offered by the Company, being the of capital, such as tender offers and share buybacks. only investment trust offering dedicated exposure to small cap growth companies in Japan, and As at 31 January 2026, the Company’s share price were supportive of the mandate continuing to be stood at a 7. 5% discount to the NAV per share pursued. They, and the Board, also believed that compared to 14.6% as at 31 January 2025. Over the incumbent portfolio managers should be given the financial year, the Company has bought back an appropriate amount of time to demonstrate the approximately 34.2 million shares, which are held efficacy of the changes made to the portfolio. in treasury, equivalent to approximately 12.2% of the Company’s issued share capital. Since then Consequently, and looking to balance the views of and excluding the shares bought back as part of different shareholders, the Board sought and, on the the recent 15% unconditional tender, a further 18 February 2026, obtained shareholder approval 2.8million shares have been purchased. The Board to: undertake a tender offer for up to 15% of the will continue to authorise the use of buy backs if the Company’s issued share capital in Q1 2026; remove discount to NAV is substantial in absolute terms or in the 2027 performance triggered conditional tender relation to its peers. offer for up to 15% of the Company’s issued share 08 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## Borrowings The Company has a ¥16.1bn secured revolving credit facility with Bank of America, which matures in November 2027. At present, ¥14.84bn is drawn, compared to ¥16.1bn a year ago, with net gearing standing at 14.9% as at 31 January 2026 compared to 16.1% a year earlier. ## Dividend Revenue return per share was 0.77p compared to 0.67p the prior year. The Board is recommending a final dividend of 0.69p per share (0.60p – 2025), being broadly the minimum required to maintain investment trust status. The proposed final dividend will be put before shareholders as part of the Company's AGM business in May. I should add that, as the Company's focus is on capital growth, shareholders should not rely on their investment in the Company to provide any income. ## Annual General Meeting This year's AGM will take place on Thursday 21 May 2026 at the ICAEW, Chartered Accountants' Hall, 1 Moorgate Place, London EC2R 6EA commencing at 11.30am. The AGM is an important opportunity for engagement, giving shareholders the chance to meet and ask questions of the Directors and the portfolio managers, and vice versa. I very much hope to see as many of you there as possible. ## Outlook During the year, the Board undertook its triennial trip to Japan. The trip allows the Directors to assess the portfolio managers in action first hand, along with the quality of current and potential investments. It also provides an insight to the mood on the ground of management teams, providing a useful perspective. Utilising a twin-track approach, the Directors met with a total of 35 companies in aggregate over the course of five days. Based in part on the learnings from this trip, despite a prolonged period of weak sentiment and challenging market conditions, it appears that the outlook for long-term capital growth from investments in Japanese smaller companies remains attractive. Growth investing and domestically oriented small caps have been out of favour, particularly amid a weaker yen, rising interest rates and a strong market preference for value stocks. However, the Board and Managers believe this backdrop remains a compelling opportunity for patient investors. Japan is confronting structural pressures that are driving meaningful change. Labour shortages, demographic challenges and entrenched inefficiencies are forcing companies to rethink how they operate. Smaller, more entrepreneurial businesses are often best placed to respond, using digitalisation, automation and new technologies to improve productivity and scale their businesses. Artificial intelligence, in particular, is emerging as a powerful enabler across a wide range of sectors, helping companies remove bottlenecks and expand growth potential. The Japanese small-cap universe remains broad and underexplored, offering access to specialist businesses operating in niche markets, often protected by local regulation, culture or technical expertise. Many portfolio companies are delivering growth well ahead of the broader market, yet valuations remain depressed following an extended period of de-rating. Despite the troubled times we live in and the current market volatility, the Board remains confident that disciplined, long-term investment in high-quality Japanese smaller companies offers the potential for attractive capital growth over time. Jamie Skinner 30 March 2026 09 Strategic report ## Managers’ report In May 2025, Jared Anderson and I became the respective new deputy and lead portfolio managers for Baillie Gifford Shin Nippon. Given the portfolio’s poor performance in recent times, we are under no illusion regarding the challenge that awaits us, and we acknowledge that shareholders’ patience has been severely tested. Brian Lum We have subsequently reviewed the portfolio Investment Manager comprehensively, implemented modifications to the Appointed 2025 portfolio construction process, and made numerous changes to the portfolio. What remains unchanged though, is our fundamental commitment to invest in a portfolio of high growth smaller companies in Japan with a genuinely long-term mindset, and we are optimistic in our prospects given the underlying operating performance of the portfolio companies and the attractive valuations on offer. Jared Anderson Annual review Deputy Manager While it gives us some comfort to see Shin Nippon Appointed 2025 deliver its first positive annual NAV (and share price) returns for 5 years, we are nevertheless acutely aware of the scale of our underperformance relative to the MSCI Japan Small Cap (‘MXJPSC’) index in the past 12months, a period during which the portfolio continued to face heavy stylistic headwinds. The increasing interest rate in Japan meant growth stocks’ intrinsic valuations suffered as future profits are discounted more heavily. In addition, the ongoing push for corporate governance reform, where companies are heavily encouraged to place more emphasis on shareholder returns, has given the strongest share price boost to Japan’s most poorly run listed companies. Faced with pressure from the regulators and activist investors, many such companies have responded by unwinding cross shareholdings and announcing record buybacks and dividends. Aportfolio built around high growth, typically better-managed businesses did not benefit to the samedegree. 10 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC The result is that value stocks overwhelmingly outperformed growth stocks in the past year – to give an illustration of this dynamic, MSCI Japan Value outperformed MSCI Japan Growth by 15 percentage points in the calendar year 2025 – and Shin Nippon is positioned much further along the growth spectrum than Japan’s growth indices. The other headwind is the weak yen, which, despite some strengthening during the summer of 2025, subsequently returned to near historic lows relative to the dollar as the market reacted to the election of Sanae Takaichi as Japan’s prime minister in October. Our portfolio is skewed towards domestic growth companies, which typically suffer as a weak yen stimulates cost inflation and hurts domestic consumption. On a more anecdotal note, the level of interest towards individual Japanese small caps from institutional investors remains low. As someone who has met Japanese companies regularly at our Edinburgh office for a decade, it is striking to me that most visiting Japanese small companies have struggled to secure any other investor meetings in the past year – this was not the case in the past. Related to this, executives (including those for our holdings) are often genuinely puzzled (rather than apologetic) by their company’s weak share price. To patient investors like us, these reactions are illuminating. Indeed, we derive confidence by observing the strong fundamentals of our portfolio companies. Delivered and expected growth for Shin Nippon’s portfolio companies continue to be far superior to that of the comparative index, both in terms of revenues and profits. For example, market estimates suggest that the portfolio will grow sales and earnings by 12.9% and 18.6% respectively on a one-year forward basis. The equivalent figures for the comparative index are 3.5% and 11.8%. Longer term projections show a similar dynamic. In the meantime, the portfolio continues to trade at a valuation discount in terms of EV/EBIT multiple (Enterprise Value/Earnings Before Interest and Tax); 11.1x for the portfolio vs 12.5x for the comparative index. ## Process Improvements While we remain true to our growth and long-term orientation, we also recognise that mistakes have been made in recent years. For example, with the benefit of hindsight, the portfolio was invested in too many stocks that were driven by a narrow set of growth drivers (such as digitalisation), and the subsequent correlated derating (deserved or not) hurt. The weighting of a stock in the portfolio should be commensurate with its potential upside, the absolute downside risk and its correlation with the rest of the portfolio. With these in mind, we have implemented a position sizing framework which divides our portfolio companies into four types of growth profiles (Emerging Prospects, Rapid Scalers, Cyclical Gainers, and Proven Winners); and three tiers of conviction levels, as shown by the table below. ## Relative conviction (RADAR) ### Growth profiles | | Emerging Prospects Earnings Time | Rapid Scaler Earnings Time | Cyclical Gainers Earnings Time | Proven Winner Earnings Time | | --- | --- | --- | --- | --- | | **Strong** | 0.6 – 1.5% | 2.5 – 5% | 2.5 – 5% | 3+% | | **Solid** | 0.4 – 0.6% | 1 – 2.5% | 1 – 2.5% | 2 – 3% | | **Base** | <0.4% | 0.5 – 1% | 0.5 – 1% | <1 – 2% | 11 Strategic report The four growth profiles give a sense of a company’s big data company, a ‘Rapid Scaler’), Kasumigaseki level of maturity and absolute risk profile. Emerging Capital (a real estate company with an unusual Prospects are companies with unproven business asset light business model, also a ‘Rapid Scaler’), models, and sometimes in the loss-making or even DMG Mori (a leading high precision machine tools pre-revenue phase. These are high risk, high impact company, a ‘Cyclical Gainer’), and Money Forward investments that should be small positions. The (acloud-based software company that automates next category along the maturity spectrum is Rapid back office workflow such as accounting, another Scalers – these typically founder-led companies are ‘Rapid Scaler’) are all such examples. We have at the most exciting stage of scaling into what are still long admired some of these names and believe immature markets, and this category can be thought these are all exciting investment cases individually. of as the engine room of the portfolio. Then we have At a portfolio level, historically we have displayed Cyclical Gainers, established companies which enjoy a significant bias towards the small end of the structural growth tailwinds, but nevertheless operate comparative index. While we expect this stylistic in viciously cyclical industries (such as semiconductors tilt to remain given our growth style, these latest or capital equipment) where a degree of caution on additions have incrementally narrowed our position sizing is warranted. Finally, we have Proven difference to the benchmark. Winners, which are above-average growth companies More importantly, they represent a diverse range with proven business models, strong market positions, of growth profiles, driven by different themes. For and decent or improving financials. These are the example, the investment case for Seiko Group larger positions. Jared and I monitor the portfolio on hinges on structural premiumisation of its product a regular basis using this framework as a guideline mix, which is shifting gradually from affordable – corporate developments, further investment battery watches to luxury Grand Seiko timepieces research, or share price movements may prompt which retail for over £5,000. Kasumigaseki Capital us to re-evaluate a stock’s growth classification, – the real estate development company – focuses our conviction levels, and therefore the optimal on specific niches such as cold chain storage portfolioweighting. and group stay hotels in Japan and beyond, This process helps us 1) sharpen our research and opportunities with esoteric dynamics which the engagement efforts (each growth profile demands a innovative management team has identified. DMG different focus), 2) improve buy & sell discipline, and Mori – a result of a historic merger between a 3) also enables us to systematically recognise the Japanese company and a German company – is not growth milestones of our companies (e.g. is this Rapid only a play on factory automation but also offers a Scaler now a Proven Winner?). As growth investors, degree of exposure to the growing aerospace and we will never lose sight of the possibility of unearthing defence sector in Europe and Japan. the next megacaps – having a framework that Concurrent with implementing the position sizing recognises this is a part of this. framework articulated above, we have also made Additionally, we have been working more closely the decision to exit several positions that do with our internal risk team and adopted various risk not make the cut in terms of conviction levels. tools to monitor portfolio correlations and risk factors Some were successful investments where we better. Our primary focus daily remains centred around felt significant future upside was unlikely – these picking the best growth stocks. However, we believe include long-term holding MonotaRO (the B2B these additional considerations will lead to better e-commerce company) and MatsukiyoCocokara aggregate performance outcomes in the long-term. (thepharmacy chain). Others were investment cases that have not developed as we had hoped, such Portfolio updates as Kumiai (the agricultural chemicals company), Avex (theentertainment agency), Cellsource There are several broad directions to highlight. (aregenerative medicine company) and Demae- Firstly, we have taken advantage of our new ability Can (the food delivery platform). Another is oRo to invest in companies with market capitalisation (aSoftware-as-a-Service company) which correlated of above ¥150b. New buys Seiko Group (the watch highly with other similar holdings in the portfolio, company, a ‘Proven Winner’), JMDC (a healthcare For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 12 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC but one we felt may be less resilient to potential Performance AI disruptions in the long-term. Two holdings, For the year ended 31 January 2026, Shin Nippon’s TechnoPro (IT consultancy) and Moneytree (unlisted NAV total return increased by 5.4% compared to fintech), were acquired by third parties during the an increase of 21.5% in the comparative index year, resulting in the Fund exiting these positions. (all figures total return and in sterling terms, NAV The number of stocks in the portfolio has reduced with borrowings at fair value). Over three and to 63 as at the end of the Company’s financial five years, the Company’s NAV (total return) has | year, approaching the 50-60 holding range which | declined by 14.9% and 36.1% compared to an | | --- | --- | | we see as the optimal on an ongoing basis in | increase of 40.7% and 42.4% respectively for the | | terms of research depth and more meaningful | comparativeindex. | corporate engagement. There are currently three For the year, Tsugami was our top contributor. private companies held, accounting for 1.8% of Tsugami (a Cyclical Gainer) is a precision machine- the portfolio. Our experience of investing in private tool maker founded in 1937, best known for products companies has in aggregate been poor and it is likely such as automatic lathes and precision grinding that the main area of our focus for the foreseeable machines. It entered the Chinese market in the future will be on listed companies. 1990s and today derives most of its sales through its Beyond new buys and complete exits, we have listed Chinese subsidiary Precision Tsugami. While adjusted existing positions to align with the automotive is the key industry for Tsugami, itis framework discussed above. Most of the changes also exposed to emerging fields such as humanoid are down to individual bottom-up factors, but one robotics and AI infrastructure, which helped drive noteworthy theme is of course the rise of Artificial strong profit growth in the past year. In recent years, Intelligence (AI). Japanese Small Caps may not it has started to invest aggressively in India, which it be the first place to look for AI winners, but this sees as the next key growth market for the company, is precisely the opportunity. Over the past year, potentially following Precision Tsugami’s trajectory in wehave added to the likes of JEOL and Kohoku the long run. Kogyo. These are just two examples amongst a Raksul – the procurement and marketing platform group of ‘Hidden AI Champions’ in the portfolio – targeting small businesses in Japan – was also lowprofile companies with strong market positions a significant positive contributor to portfolio that either supply into the AI supply chain or address performance. We have invested in Raksul since its AI-induced bottlenecks. For example, while JEOL is IPO in 2018, and it has since achieved sales CAGR better known for selling microscopes to universities, of over 27% (and profits ahead of that). Shares it is also the global leader in Multi-Beam Mask jumped in December following the announcement Writers – an essential piece of equipment used that the management and Goldman Sachs proposed in the production of the world’s most advanced to take the company private at ¥1710, a 37% semiconductor chips. Kohoku Kogyo is the dominant premium relative to the pre-announcement share producer of ‘optical isolators’ – a mission critical price. We believe the tender offer price of ¥1710 component deployed in subsea communication severely undervalues the company. We have voiced cables that are also used by datacentres – which our opposition both with the Board of Directors, as is the company’s second most important product well as publicly. The tender offer price has since in revenue terms but serves as its key profit driver. been increased to ¥1900 and is set to go through at These are not well-known companies for global time of writing in March 2026. This case highlights investors seeking to gain exposure to the AI theme, 1) the tremendous value that can found in the small and we believe they are underappreciated by cap growth space, and 2) the premature ‘acquisition themarket. risk’ for some of the best growth companies in The portfolio segmented by growth profiles can theuniverse. be found on page 42 of the Annual Report. The company’s net gearing decreased marginally to15%. For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 13 Strategic report Inforich was our biggest detractor to performance. opportunities to scale into. For me, this is a far Inforich (an ‘Emerging Prospect’), a start-up best more enticing long-term investment prospect than known for its network of over 80k mobile battery aiming for a one-off capital efficiency uplift that has rental stations globally, delivered sales growth driven the returns of value stocks in recent times, and operational profit growth of 35% and 24% especially after a period of dramatic performance respectively in 2025, and is in an early phase of differential between growth and value. overseas expansion. These are highly respectable Secondly, we acknowledge that growth companies numbers, even if they fall short of the company’s in Japan have not historically scaled as rapidly as own ambitions a year ago. Unfortunately, the mix of other innovative companies in the US or even Europe. below-plan growth and its small market capitalisation Onetypical bottleneck is human resources. It is hard (which deterred most institutional investors) has led to hire enough top talent when employment for life to a sharp decline in its share price. As of March is the norm and when the population is shrinking. 2026, a tender offer is in progress that will see Bain Thischallenge may be falling away, as we are seeing Capital take Inforich private at ¥4,560 per share, shifts in attitudes towards employment amongst the more than double the company’s share price before younger generation. Then there is AI. AI may be seen the tender offer announcement. as a job-killer in some markets; in Japan, AIadoption Given the broader market environment, it is no is necessary and can potentially be a catalyst for surprise that the second biggest performance the elusive much needed jump in productivity. Japan detractor was another high growth company. may not be an AI superpower like the US or China, Appier, founded in 2012 by a team of AI scientists, but it could be one of the biggest AI beneficiaries. delivers Software-as-a-Service that helps its Encouragingly, the Japanese government business clients find and keep customers – think recognisesthis. of Appier’s AI tools as the brains to their clients’ Having stated earlier how higher interest rates marketing department if you will. The effectiveness are hurting growth companies’ valuations, there of Appier’s offering enabled it to consistently is a silver lining here. That capital now carries a deliver strong growth along with positive and rising cost should benefit those that can deploy it most profitability. In 2025, it delivered strong sales effectively – i.e. high-quality growth companies. growth of 28% (32% on a FX neutral basis) and Atone end of the spectrum, weak companies operating income growth of 50%. Despite these sustained historically by zero-cost debt may struggle encouraging results, the shares have declined and eventually exit, freeing up societal resources. due to concerns about its growth investments and Atthe other end, those that provide the best general weak sentiment toward software companies products and services will be able to exercise pricing based on AI disruption. While we acknowledge power more easily in an environment where inflation the dynamism and unpredictability of the AI has finally taken hold after decades of deflation. landscape, we believe Appier’s prospects are still underestimated by the market. Similarly, ongoing corporate reforms benefit the whole market, as painful as that has been for us in relative terms. A more competitive and dynamic Concluding remarks market should increase the chances of world class As the new lead portfolio manager for Shin Nippon, growth companies emerging again from Japan – this which has now gone through a prolonged period of is exciting for growth investors in the long run. severe underperformance, it is natural to reflect on the validity of my and Jared’s investment approach I am hugely energised by the opportunity set in this market and why we remain hugely excited by as a growth investor, and excited by what our growth investing in the Japan Small Cap universe, portfolio can achieve in the coming years. We have despite our performance difficulties. companies that are addressing large growing market opportunities, often with strong competitive edge Firstly, Japan is a market that faces huge structural (as demonstrated by superior financials), and led by issues: ageing demographics; a shrinking workforce; aligned and ambitious management. Nearly 80% and, persistently low labour productivity. These of the companies have founder/founding family are well-documented challenges, but for growth involvement. Many of these are deeply overlooked in investors and innovative companies (including an era of factor investing, and the pipeline of ideas is many portfolio holdings), they represent enormous equally rich and compelling. For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 14 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC In the short term, we are mindful of the crisis in the Middle East. Japan’s economy is particularly vulnerable given its reliance on energy imports, and a prolonged conflict raises the prospect of stagflation in Japan. Despite the troubling headlines, we believe that our portfolio is relatively resilient given our bias towards fast moving domestically orientated companies. We will monitor the situation closely and adjust the portfolio accordingly. We would like to thank our shareholders for their continued support and patience. Jared and I will do our utmost to deliver the returns that Shin Nippon shareholders deserve in the coming years. Brian Lum For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 15 Strategic report ## Baillie Gifford’s ## stewardship principles Baillie Gifford’s overarching ethos is that we are Long-term value creation ‘Actual’ investors. That means we seek to invest We believe that companies that are run for the for the long term. Our role as an engaged owner long term are more likely to be better investments is core to our mission to be effective stewards over our clients’ time horizons. We encourage our for our clients. As an active manager, we invest in holdings to be ambitious, focusing on long-term companies at different stages of their evolution value creation and capital deployment for growth. across many industries and geographies, and focus We know events will not always run according to on their unique circumstances and opportunities. plan. In these instances we expect management Ourapproach favours a small number of simple to act deliberately and to provide appropriate principles rather than overly prescriptive policies. transparency. We think helping management to This helps shape our interactions with holdings resist short-term demands from shareholders often andensures our investment teams have the protects returns. We regard it as our responsibility to freedomand retain the responsibility to act in encourage holdings away from destructive financial clients’best interests. engineering towards activities that create genuine value over the long run. Our value will often be in supporting management when others don’t. Alignment in vision and practice Alignment is at the heart of our stewardship approach. We seek the fair and equitable treatment of all shareholders alongside the interests of management. While assessing alignment with management often comes down to intangible factors and an understanding built over time, we look for clear evidence of alignment in everything from capital allocation decisions in moments of stress to the details of executive remuneration plans and committed share ownership. We expect companies to deepen alignment with us, rather than weaken it, where the opportunity presents itself. 16 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Governance fit for purpose Corporate governance is a combination of structures and behaviours; a careful balance between systems, processes and people. Good governance is the essential foundation for long-term company success. We firmly believe that there is no single governance model that delivers the best long-term outcomes. We therefore strive to push back against one-dimensional global governance principles in favour of a deep understanding of each company we invest in. We look, very simply, for structures, people and processes which we think can maximise the likelihood of long-term success. We expect to trust the boards and management teams of the companies we select, but demand accountability ifthat trust is broken. Sustainable business practices A company’s ability to grow and generate value for our clients relies on a network of interdependencies between the company and the economy, society and environment in which it operates. We expect holdings to consider how their actions impact and rely on these relationships. We believe long-term success depends on maintaining a social licence to operate and look for holdings to work within the spirit and not just the letter of the laws and regulations that govern them. Material factors should be addressed at the board level as appropriate. 17 Strategic report ## Baillie Gifford – ## proxy voting We believe that ‘active ownership’ of our clients’ Company meeting record holdings is as important as selecting the right investments in the first instance. These guidelines are aligned with our stewardship principles and describe our approach to proxy voting and company engagement, the key levers of active ownership, often described as ‘stewardship’. While these guidelines are intended to provide an insight into how we approach voting on our clients’ behalf, it is important to note that we assess every company individually. In voting, we will always evaluate proposals on a case-by-case basis, based on what we believe to be in the best long-term interests of our clients, rather than rigidly applying apolicy. Number of meetings voted 68 A broad cross section of our investment staff are withmanagement involved in our ongoing work on stewardship. In the Number of meetings with at least one 5 same way that our investment approach is based against, withhold or abstain around empowered and independent teams, our Meetings not voted* 4 voting and engagement is led by the individual * In the period, meetings not voted reflect investment teams. In keeping with our decentralised instances where the holding had been sold and autonomous culture, our investment teams will, prior to the vote date. on occasion, elect to vote differently on the same Voting distribution general meeting resolutions. Where this happens, we report accordingly in the proxy voting disclosure on our website. We also have clear processes in place to identify, prevent and manage potential proxy voting related conflicts of interest to ensure that in all cases the firm acts in the clients’ best interest. Baillie Gifford’s firm-wide conflict of interest disclosure is available on our website. Prior to taking any voting action, we usually address specific ESG concerns by engaging directly with the company, using voting as an escalation mechanism ifwe have not seen sufficient progress. Voting activity and the reasons for any resolutions voted against in the period are disclosed on the Company website and can be viewed at shinnippon.co.uk. Votes for 94.3% Votes against 0.3% Votes abstained 0.5% No vote 4.9% 18 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## Environmental, social and ## governance engagement By engaging with companies, we seek to build constructive relationships with them, to better inform our investment activities and, where necessary, effect change within our holdings, ultimately with the goal ofachieving better returns for our shareholders. The issues we consider in our assessment of ESG factors arevaried but may include governance arrangements, human rights, labour rights, diversity and inclusion, climate change, nature and biodiversity, respect for legal and regulatory guidelines and consideration ofstakeholder perspectives. Engagement Topics 30 25 20 15 10 5 0 Climate Pre-AGM Proxy voting and leadership Remuneration Board diversity Business conduct Corporate culture Shareholder rights Board effectiveness Board independence Governance of strategy Engagement Themes 80 60 40 20 0 Number of engagements 100 The examples on the following pages demonstrate our approach to proxy voting and stewardship through constructive, ongoing engagement. % 19 ● Environmental ● Social ● Governance EnvironmentalSocialGovernance Strategic report GMO Payment Gateway – Engagement case Toyo Tanso: Advancing governance and study: encouraging long-term strategic sustainability through board reform and focus and governance clarity. emissions reduction. % of total assets* 0.7% % of total assets* 1.8% Objective: To discuss the company’s long-term strategic Objective: To assess progress on board reform and trajectory and 2030 operating profit ambitions with the governance effectiveness, encourage greater international founder and CEO, Issei Ainoura, explore the implications expertise at board level given the company’s global revenue of leadership tenure for culture and succession planning, exposure, and evaluate the credibility and ambition of its and encourage a greater emphasis on long-term value emissions-reduction and broader sustainability initiatives, creation over annual profit targets. alongside capital allocation discipline. Discussions: Ainoura-san described GMOPG as a strongly Discussion: Toyo Tanso is a global leader in the production of sales-led organisation. He noted the monthly meetings, speciality graphite materials, supplying high-performance where he reviews progress against target customers and components used in semiconductors, electric vehicles, and reiterated GMOPG’s highly ambitious financial goals, industrial applications. including a strong emphasis on achieving 25 per cent We met with Toyo Tanso’s Chairman and CEO to discuss the annual operating profit growth alongside a long-term company’s sustainability initiatives, capital allocation operating profit target for 2030. strategy, and broader business developments. The We reiterated our preference for directing the market’s conversation primarily focused on board composition and attention to the company’s long-term direction and progress toward reducing emissions. progress against its 2030 objectives, rather than focusing The leadership team outlined steps taken to enhance the on slight year-on-year variations in operating profit growth. independence and expertise of the board, including a We highlighted how an excessive focus on short-term reduction in board size from eight members to four over the performance can distort internal behaviour, even as we past four years. This change aims to foster greater recognise the range of stakeholders he needs to manage accountability and more effective governance. Given Toyo and the impressive ambition that this goal represents. Tanso’s significant ex-Japan revenue exposure, we also We asked whether achieving the ¥100 billion operating explored the need for greater international business profit target in 2030 might be a natural point for him to expertise within the board. Management was receptive to transition to a chair role. He framed the 2030 target as this idea and expressed an intention to strengthen global merely a way marker and expressed a desire to continue perspectives as the board evolves. “like Buffett,” signalling both personal ambition and a On environmental progress, Toyo Tanso highlighted its efforts clear intention to remain chief executive officer (CEO). to lower emissions through the adoption of more Wediscussed our view that long tenure is not inherently energy-efficient technologies and a shift toward renewable problematic, provided there is a precise mechanism for the energy sources. The company has set a target to reduce CEO to understand when the time is right for change. emissions intensity by 30% by 2030. However, they Outcome: Following our meeting, management refined acknowledged ongoing challenges in hard-to-abate areas its profit-growth messaging and shared that this was such as carbon baking furnaces. partly informed by our feedback. Itshifted from an annual The discussion also covered human rights initiatives. Toyo profit growth-rate objective to a profit point target for the Tanso has completed a due diligence exercise starting with 2031 financial year, intended to more clearly articulate its parent company and plans to extend this work across its the growth drivers, visibility, and strategic initiatives group operations and supply chain. The company’s approach underpinning this ambition. is to build domestic competence first before expanding We view this evolution as well aligned with our long-term oversight into higher-risk international tiers. investment horizon. The meeting and follow-up Finally, we revisited our voting decision from the previous communication reinforced our view that management is year regarding dividend policy. We had abstained on the aligned with our investment horizon through its approach, proposed payout of around 30%, which fell short of our culture, and governance. 40% expectation given the company’s strong cash position. The company acknowledged this feedback and confirmed that it is currently reviewing its payout framework as part of a broader capital allocation strategy. Outcome: The meeting underscored Toyo Tanso’s openness to external perspectives and its willingness to adapt. The company is continuing to refine its governance structure, strike a balance between reinvestment and shareholder returns, and make progress on sustainability, although some operational challenges remain in achieving its environmentaltargets. 20 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Nakanishi – Addressing governance gaps through stronger tax oversight. % of total assets* 1.6% Purpose: To understand the root causes of the overseas tax underpayment, assess the adequacy of remedial actions taken to strengthen internal controls and international tax oversight, and ensure governance frameworks are robust enough to prevent recurrence and maintain shareholderconfidence. Discussion: Nakanishi is a leading manufacturer of high-precision dental and industrial rotary instruments. During a meeting with the CFO of Nakanishi, we sought to understand the circumstances surrounding Nakanishi’s recent tax underpayment issue and evaluate the company’s response and corrective measures. Before our meeting, we became aware that Nakanishi had been required to pay an additional ¥1.2 billion in taxes and penalties following an underpayment identified across its overseas entities. During our conversation, Suzuki-san acknowledged the issue and offered an apology, explaining that the root cause lay in a lack of specialised international tax expertise within the company. At the time, Nakanishi relied on a domestic Japanese third-party accounting firm, which had incorrectly handled certain overseas tax filings. Recognising this gap, the company has since taken steps to strengthen its internal financial governance. These include hiring an in-house international tax advisor and appointing PwC as its new external tax consultant to improve compliance and oversight going forward. Outcome: Nakanishi has already settled the ¥1.2billion payment and appears to have addressed the shortcomings in its tax management structure. From the discussion, itwas clear that this was a case of administrative oversight rather than deliberate misconduct. The company’s response demonstrates a commitment to improving governance and restoring confidence in its financialcontrols. 21 Strategic report Proxy voting – ‘active ownership’ in action JEOL Kohoku Kogyo % of total assets* 3.3% % of total assets* 2.6% Meeting 2025 Annual General Meeting Meeting 2025 Annual General Meeting Vote Abstain Vote Against Reason: We abstained on the dividend because we believe Reason: We continued to oppose the low dividend payment the company could return more capital to shareholders, given because we believe the company’s capital strategy is not in its strong cash position. Ahead of the AGM, we reached out shareholders’ interests. Ahead of the AGM, we reached out to the company to understand its stance on shareholder to the company to understand its stance on shareholder returns. They informed us that their policy is to maintain a returns. They explained that they implemented a share payout ratio of 30 per cent. In previous years, we opposed the buyback programme, which we believe will increase the company’s dividend. However, this year, we decided to company’s total return ratio for the next fiscal year. While abstain to acknowledge the absolute increase in the dividend we welcomed this news, we decided to continue to oppose and recognising the cyclical weakness the company has the dividend due to shareholder returns in the current fiscal faced in recent quarters due to challenges in their industry. year being below our expectations. This was consistent with our previous voting approach. We hope to feel able to support the dividend proposal at the 2026 AGM. Shinnihon % of total assets* 1.2% Meeting 2025 Annual General Meeting Vote Abstain Reason: We abstained on the resolution to approve the granting of a retirement bonus to an inside director because details such as the amount and the recipient were not disclosed. Ahead of the AGM, we contacted the company to request additional information, however, thecompany did not respond. Generally, in Japan, retirement bonuses are calculated based on tenure and not the recipient’s contribution to shareholder value. As we generally think remuneration should be reflective of an individual and the company’s performance, due to an absence of information we could not make an informed judgement and decided to abstain. * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 22 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC 23 Strategic report # One year summary **The following information illustrates how Shin Nippon has performed over the year to 31 January 2026.** | | 31 January 2026 | 31 January 2025 | % change | | --- | --- | --- | --- | | Shareholders' funds | £358.8m | £389.7m | | | Gearing^{†} | 15% | 16% | | | Net asset value per ordinary share^{‡} | 146.3p | 139.4p | 4.9 | | Share price | 135.4p | 119.0p | 13.8 | | Comparative index^{#} | | | 21.5 | | Yen/sterling exchange rate | 211.68 | 192.41 | (9.1) | | Discount^{†} | 7.5% | 14.6% | | | Revenue earnings per ordinary share | 0.77p | 0.67p | 14.9 | | Dividend proposed per ordinary share in respect of the financial year | 0.69p | 0.60p | 15.0 | | Ongoing charges^{†} | 0.81% | 0.80% | | | Active share^{†} | 97% | 97% | | | Year to 31 January | 2026 | 2025 | | --- | --- | --- | | **Total return (%)^{†}** | | | | Net asset value | 5.4 | (5.1) | | Share price | 14.4 | (5.0) | | Comparative index^{#} | 21.5 | 8.9 | $^{†}$ Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 125 to 128. $^{‡}$ Net asset value per share ('NAV') with borrowings at fair value. At 31 January 2026 the NAV with borrowings at fair value was the same as the NAV with borrowings at book value. For a definition of terms see Glossary of terms and alternative performance measures on pages 125 to 128. $^{#}$ The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms). Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123. Past performance is not a guide to future performance. 24 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC | Year to 31 January | 2026 | 2026 | 2025 | 2025 | | --- | --- | --- | --- | --- | | Year's high and low | High | Low | High | Low | | Net asset value per ordinary share (after deducting borrowings at fair value)^{†} | 152.8p | 108.3p | 150.4p | 112.7p | | Share price | 138.4p | 95.5p | 126.8p | 105.0p | | Discount (after deducting borrowings at fair value)^{†} | 6.7% | 16.9% | 6.5% | 18.6% | | Year to 31 January | 2026 | 2025 | | --- | --- | --- | | **Net return per ordinary share** | | | | Revenue return | 0.77p | 0.67p | | Capital return | 4.22p | (10.97p) | | **Total return** | **4.99p** | **(10.30p)** | † Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 125 to 128. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123. Past performance is not a guide to future performance. 25 Strategic report # Five year summary The following charts indicate how an investment in Shin Nippon has performed relative to its comparative index, peer group and its net asset value over the five year period to 31 January 2026. The Board reviews performance principally over rolling five year periods. Annual change in net asset value and share price total return† ![img-0.jpeg](img-0.jpeg) Annual change in net asset value and share price total return† relative to the comparative index* ![img-1.jpeg](img-1.jpeg) * The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms). † See Glossary of terms and Alternative Performance Measures on pages 125 to 128. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123. Past performance is not a guide to future performance. 26 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC | | † | | † | # | | --- | --- | --- | --- | --- | | Five year total return performance | | Five year peer group total return | performance | | | (figures rebased to 100 at 31 January 2021) | | (figures rebased to 100 at 31 January 2021) | | | | 160 | | 220 | | | 200 140 180 120 160 140 100 120 80 100 80 60 60 | 40 | | | | | | | | | | 40 | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | 20262021 2022 2023 20252024 | | | | | | | 20262021 2022 2023 20252024 | | | | | | | Cumulative to 31 January | | | | | | | | | Cumulative to 31 January | | | | | | ● Share price | | ● | NAV total return | | | ● | Comparative | | | ● Shin Nippon | ● | AVI Japan | | ● | Nippon Active Value | | | | total return | † | | (after deducting | | | | index | * | | | | Opportunity Trust | | | | | | | | | | borrowings at fair value) | | † | | | | | NAV total return (after deducting borrowings at fair value) in sterling terms | | | | | | | † . | Premium/(discount) to net asset value Turnover (plotted on a quarterly basis) 5 20% 0 -5 15% -10 10% -15 | | -20 | | | 5% | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 20262021 2022 2023 20252024 | | | | 20262021 2022 2023 20252024 | | | | Years to 31 January | | | | Years to 31 January | | | ● Shin Nippon premium/(discount) | | † | | ● Turnover | † | | | 25% 10 * The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms). # AIC peer group comprises: AVI Japan Opportunity Trust and Nippon Active Value Fund. † See Glossary of terms and Alternative Performance Measures on pages 125 to 128. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123. Past performance is not a guide to future performance. 27 Strategic report ## Ten year ## record Capital | | Total | | | Shareholders’ | | NAV per | | | | Premium/ | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | At | assets * | Bank loans | | | funds | share(fair) * | | Share price | | (discount) * | | | 31 January | £’000 | | £’000 | | £’000 | | p | | p | | % | 2016 182,817 19,427 163,390 86.2 89.6 3.9 2017 257,448 23,576 233,872 115.5 119.6 3.5 2018 449,289 47,877 401,412 168.7 184.4 9.3 2019 486,101 51,946 434,155 158.5 171.2 8.0 2020 535,801 52,085 483,716 172.8 170.4 (1.4) 2021 761,251 63,199 698,052 231.5 244.0 5.3 2022 643,754 91,102 552,652 175.8 174.4 (0.8) 2023 633,466 88,013 545,453 173.7 158.8 (8.6) 2024 544,267 86,475 457,792 147.8 126.2 (14.6) 2025 473,366 83,676 389,690 139.4 119.0 (14.6) 2026 428,928 70,105 358,823 146.3 135.4 ( 7. 5) Revenue Gearing ratios | | | | Available | | | | Revenue | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Gross | for ordinary | | | | (loss)/earnings | | | Ongoing | | | | Gross | | | Year to | revenue | shareholders | | | per ordinary share | | | | charges * | | Gearing * | | gearing * | | | 31 January | £’000 | | | £’000 | | | | p | | % | | % | | % | 2016 1,798 (290) (0.16) 1.02 9 12 2017 2,912 101 0.05 0.96 8 10 2018 3,496 (227) (0.11) 0.89 11 12 2019 5,092 106 0.04 0.77 11 12 2020 6,006 790 0.28 0.73 10 11 2021 5,587 (141) (0.05) 0.71 8 9 2022 7,436 896 0.29 0.66 11 16 2023 9,617 3,490 1.11 0.74 15 16 2024 8,870 2,944 0.94 0.72 18 19 2025 7,389 1,989 0.67 0.80 16 21 2026 7,052 1,981 0.77 0.81 15 20 * See Glossary of terms and Alternative Performance Measures on pages 125 to 128. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123. Past performance is not a guide to future performance. 28 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC # **Cumulative performance (taking 2016 as 100)** | At 31 January | NAV per share ^{†} | Share price | Comparative index ^{#} | | --- | --- | --- | --- | | 2016 | 100 | 100 | 100 | | 2017 | 134 | 133 | 135 | | 2018 | 196 | 206 | 158 | | 2019 | 184 | 191 | 145 | | 2020 | 200 | 190 | 159 | | 2021 | 269 | 272 | 168 | | 2022 | 204 | 195 | 161 | | 2023 | 202 | 177 | 170 | | 2024 | 171 | 141 | 181 | | 2025 | 162 | 134 | 197 | | **2026** | **170** | **153** | **239** | # **Compound annual returns (%)** | 5 year | (8.8) | (10.9) | 7.3 | | --- | --- | --- | --- | | 10 year | 5.4 | 4.3 | 9.1 | † Net asset value total return has been calculated after deducting borrowings at fair value. See Glossary of terms and Alternative Performance Measures on pages 125 to 128. # The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms). Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123. All per share figures have been restated for the five for one share split on 21 May 2018. # **Ten year total return performance\*** ![img-2.jpeg](img-2.jpeg) \* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer on page 123. Past performance is not a guide to future performance. 29 Strategic report ## Review of ## investments Top ten holdings A review of the Company’s ten largest investments together witha list of the new acquisitions in the year. | Tsugami | Raksul | | --- | --- | | Founded in 1937, Tsugami is a specialist | Raksul is an online platform providing cloud- | | in high precision machine tools (such as | based printing and advertising services | | automatic lathes and grinding machines), | for SMEs. The printing industry in Japan | | which are used to make complex | is very sizeable albeit mature, and is quite | | components with microns-level accuracy. | traditional. It is also very inefficient in that | | Ithas a long history, enjoys strong positions | a small number of printing companies get | | in its niches, and benefits from megatrends | a large chunk of customer orders leaving | | such as automation and miniaturisation of | smaller and mid-sized players with very low | | electronic components. Having established | capacity utilisation. Online penetration also | | itself in China, where it continues to grow | remains very low compared to other developed | | strongly; it has recently established a | markets. Through its online platform, Raksul | | presence in India where there are exciting | is attempting to modernise this industry by | | growth prospects. We classify Tsugami to | using its platform to efficiently allocate orders | | be a ‘Cyclical Gainer’ in accordance with the | thereby improving utilisation rates across | | growth profiles set out on page 42. | the sector. Through its advertising business, | Raksul sells SAAS software that provides low- cost and measurable advertising for SMEs. The company is growing its sales very rapidly and has built sufficient scale to improve its profitability as well. Management are young and dynamic, with most having both an overseas and a consulting background. Raksul is considered to be a ‘Rapid Scaler’. | | | Valuation £17,774,000 | | | | Valuation £17,333,000 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | % of total assets* 4.1% | | | | % of total assets* 4.0% | | | | | | Valuation at | £10,224,000 | | | Valuation at | £11,479,000 | | | | | 31 January 2025 | | | | 31 January 2025 | | | | | | % of total assets | | | 2.2% | % of total assets | | 2.4% | | | | at 31 January 2025 | | | | at 31 January 2025 | | | | | | Net purchases/(sales) | | £118,000 | | Net purchases/(sales) | £692,000 | | | | | in year to 31 January 2026 | | | | in year to 31 January 2026 | | | | | | Held since 2019 | | | | Held since 2018 | | | | * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. | | | | | | | | | | 30 | Annual Report and Financial Statements 2026 | | | | | | | | Baillie Gifford Shin Nippon PLC JEOL GA Technologies Yonex GA Technologies provides online B2B Yonex is the leading badminton racket brand JEOL is a specialist manufacturer of (`business-to-business’) services for the in the world. Badminton is growing as a high-powered microscopes and other real estate sector. It has developed a suite participation sport across Asia and many scientific analysis equipment. In addition, of artificial intelligence based software of the top players use Yonex equipment. through its partnership with IMS (an applications that allows clients to manage The company is now leveraging its strong Austrian company), JEOL participates in numerous tasks like remote viewing, brand to expand into the global tennis manufacturing multi-beam mask writers rental property management, end-to-end market where it has already demonstrated for the semiconductor industry, which has processing of mortgages and automated impressive market share gains, especially proved to be a highly successful business. generation of building floor plans, to in the US which is the world’s largest tennis Over the past few years, JEOL has name a few. It is run by its ambitious and market. In addition, management have increased its margins in both microscope young founder who owns a large stake, moved to a direct sales model which should and mask-writing businesses, driven by thereby ensuring strong alignment with support higher margins in the long run. We new product launches and strong demand. minority shareholders. GA Technologies is see Yonex as a ‘Proven Winner’. The company should be able to grow classified as a ‘Rapid Scaler’. revenues strongly, and defend its margins through the cycle, thanks to its ongoing technological developments and product innovation. We consider JEOL to be a ‘Cyclical Gainer’. | Valuation £14,042,000 | | | Valuation £12,198,000 | | | | Valuation £11,812,000 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | % of total assets* 3.3% | | | % of total assets* 2.8% | | | | % of total assets* 2.8% | | | | Valuation at | £12,617,000 | | Valuation at | £12,372,000 | | | Valuation at | £11,906,000 | | | 31 January 2025 | | | 31 January 2025 | | | | 31 January 2025 | | | | % of total assets | | 2.7% | % of total assets | | | 2.6% | % of total assets | | 2.5% | | at 31 January 2025 | | | at 31 January 2025 | | | | at 31 January 2025 | | | | Net purchases/(sales) | £1,567,000 | | Net purchases/(sales) | | £530,000 | | Net purchases/(sales) | (£1,946,000) | | | in year to 31 January 2026 | | | in year to 31 January 2026 | | | | in year to 31 January 2026 | | | | Held since 2013 | | | Held since 2020 | | | | Held since 2015 | | | * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 31 Strategic report | Kohoku Kogyo | SWCC | Katitas | | --- | --- | --- | | Kohoku Kogyo manufactures electronic | SWCC Showa is an electric wire/cable | Katitas is a specialist real-estate developer | | components. Its two main products are | manufacturer. Its traditional business | that buys and renovates old, abandoned | | capacitor lead terminals and optical | relates to the manufacture and supply of | homes before selling them on to mainly first- | | components for subsea data cables. | low and high voltage cables for private | time buyers. The problem of empty houses | | Bothof these product niches are low cost | and public electric power utilities. It is in | in Japan is reaching acute levels, resulting in | | but mission critical, and the company | the process of moving away from its low | a hollowing out of entire communities. There | | enjoys powerful leading positions globally | growth and low margin legacy business, | are an estimated 8million old or abandoned | | with 50%+ market share. The company’s | of supplying cables, to becoming a | houses across Japan, most of them vacant. | | track record, vertical integration, and | component supplier. It has developed | A lot of these are ancestral homes which | | cumulation of manufacturing knowhow | a set of unique, lightweight and high | families, despite living elsewhere, are | | set it apart from competitors. We believe it | margin connector components, branded | reluctant to sell. For authorities looking to | | has excellent long term growth prospects | as SICONEX, that are driving strong profit | regenerate local economies, the only option | | as it benefits from structural drivers such | growth. The market continues to rate the | is to demolish these properties and build new | | as electrification and AI. Kohoku Kogyo is | company as an undifferentiated supplier | establishments, often for business purposes. | | considered to be a ‘Cyclical Gainer’. | of commoditised products, ignoring the | The families are generally reluctant to give | | | radical changes occurring within the | up these properties for sentimental reasons. | | | business, and as such the shares remain | Katitas offers an alternate and attractive | | | very lowly rated. SWCC is classed as a | option for these families by offering to | | | ‘Proven Winner’. | acquire these houses and the associated | land for a reasonable price, renovate these to a high standard before selling them. Inthe process, Katitas also ends up playing a part in rejuvenating local communities. Because these houses are scattered all across Japan, sourcing potential properties is quite difficult. Over the years, Katitas has developed a strong network of local contacts across Japan that ensures a steady supply of properties they could buy. The company generates very attractive margins despite selling these properties at a meaningful discount to new builds. Finally, second-hand home ownership in Japan is exceptionally low compared to other developed markets although this is changing and should provide a long-term tailwind for Katitas. This is classified as a ‘Proven Winner’. | Valuation £11,332,000 | | | Valuation £10,652,000 | | | Valuation £10,521,000 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | % of total assets* 2.6% | | | % of total assets* 2.5% | | | % of total assets* 2.4% | | | | Valuation at | £7,917,000 | | Valuation at | £12,625,000 | | Valuation at | £14,465,000 | | | 31 January 2025 | | | 31 January 2025 | | | 31 January 2025 | | | | % of total assets | | 1.7% | % of total assets | | 2.7% | % of total assets | | 3.1% | | at 31 January 2025 | | | at 31 January 2025 | | | at 31 January 2025 | | | | Net purchases/(sales) | £2,617,000 | | Net purchases/(sales) | (£1,450,000) | | Net purchases/(sales) | (£6,447,000) | | | in year to 31 January 2026 | | | in year to 31 January 2026 | | | in year to 31 January 2026 | | | | Held since 2022 | | | Held since 2022 | | | Held since 2017 | | | * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 32 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Gift Harmonic Drive Systems Gift holdings is one of Japan’s largest Harmonic Drive is a leading mechatronic ramen restaurants. It has a unique model company. It is best known for its precision whereby it operates its own stores but also motion control products such as harmonic supplies raw materials to a network of reducers, as used in industrial robots franchisees with a very simple charging and semiconductor manufacturing. Its structure. This significantly lowers the long history and consistent R&D helped barrier for franchisees to join Gift Holdings’ cement an excellent position in this ecosystem thereby enabling the company exciting market. Aside from continued to expand rapidly at very low cost and high developments in established robotics margin. The company is run by its young applications, Harmonic Drive also offers and dynamic founder who trained as a exposure to the ‘Physical AI’ theme – for ramen chef for several years before starting example, we believe Harmonic Drive is the company without any external money. well placed to benefit from the growth of Ramen is a staple food item in Japan and it humanoid robots. Harmonic Drive is viewed is one of the few categories that has grown as a ‘Rapid Scaler’. over the past decade despite demographic headwinds. We see Gift as a ‘Rapid Scaler’. | Valuation £10,434,000 | | | | Valuation £10,177,000 | | | | --- | --- | --- | --- | --- | --- | --- | | % of total assets* 2.4% | | | | % of total assets* 2.4% | | | | Valuation at | £10,334,000 | | | Valuation at | £11,033,000 | | | 31 January 2025 | | | | 31 January 2025 | | | | % of total assets | | | 2.2% | % of total assets | | 2.3% | | at 31 January 2025 | | | | at 31 January 2025 | | | | Net purchases/(sales) | | £52,000 | | Net purchases/(sales) | £2,816,000 | | | in year to 31 January 2026 | | | | in year to 31 January 2026 | | | | Held since 2024 | | | | Held since 2012 | | | * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 33 Strategic report New buys ©2020 Mariia Korneeva_Shutterstock Cover DMG Mori JMDC Cover runs Hololive production, one of DMG Mori is a leading machine-tool maker JMDC is a Japanese healthcare data the world’s leading agencies for Vtubers formed from the combination of Japan’s platform. It aggregates insurance claims (or ‘virtual Youtubers’) – these are content DMG Seiki and Germany’s Gildemeister, data, personal health records through its creators who broadcast and interact with selling high-precision CNC machines and Pep Up app, and hospital-derived datasets, fans online as animated characters, often integrated automated production lines. then sells anonymised data packages using motion capture technologies. Cover Factory automation is a key structural and analytics to pharma companies, recruits and trains talent, provides content driver. DMG is well positioned through insurers, and hospitals; it also runs a production and distribution support, and its deep technical capabilities, a global smaller telemedicine workflow that lets makes money from events, merchandising support network, and an integrated product radiologists read scans remotely. As and licensing IP. As a pioneer in this approach which leads to long term customer healthcare becomes more digital and emerging field, Cover has a strong track relationships. The company’s cost structure more AI-enabled, access to high-quality, record in growth and innovation and suggests significant scope for profits to longitudinal data becomes scarce and continues to be led by its founder Tanigo grow as utilisation of DMG Mori’s capacity strategically valuable. The company Motoaki. The opportunity is particularly improves; and the growing Aerospace & benefits from classic data-network effects, exciting if Vtubing becomes mainstream Defence sector in Europe and Japan may and the sensitivity of medical data makes globally. Weconsider this a ‘Rapid Scaler.’ serve as a powerful catalyst for this to it hard for new entrants to compete. materialise. This is a ‘Cyclical Gainer.’ After years of building its datasets, the management’s emphasis is increasingly shifting toward monetisation, and we believe JMDC has very strong long-term prospects. We categorise JMDC as a ‘Rapid Scaler.’ Valuation £2,334,000 Valuation £5,525,000 Valuation £3,129,000 % of total assets* 0.5% % of total assets* 1.3% % of total assets* 0.7% * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 34 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC | Kasumigaseki Capital | Mani | Money Forward | | --- | --- | --- | | Kasumigaseki Capital is a real estate | Mani is a niche medical device | Money Forward is a leading provider of | | developer that focuses on niches such as | manufacturer that supplies precision tools | cloud-based software for Japan’s small | | automated refrigerated warehouses, group | to surgeons and dentists: ophthalmic | and mid-sized businesses, covering back- | | stay hotels and premium nursing homes | knives for cataract surgery, specialist | office workflows such as accounting, | | in Japan and beyond. The company has | suture needles, and dental restorative | expense management, and payroll. | | shown a knack for spotting interesting | materials. While the market may seem | Alongside this, Money Forward also runs | | opportunities and developing properties | unglamorous, this is an attractive business | the personal finance app Money Forward | | with innovative features. Furthermore, | as quality and reliability really matters; | ME. As Money Forward software forms | | Kasumigaseki employs an unusual asset | and Mani enjoys excellent reputation in | the system of record for its business | | light business model where its own capital | these niches. The underlying market is | clients, few clients switch away once it is | | is only deployed for the planning stage of a | supported by Asia’s ageing population, as | embedded. This provides a predictable | | project, leading to high asset turnover and | well as the company’s proactive expansion | income stream, as well as a platform to | | impressive returns. As a result, Kasumigaseki | into the US. We see the company’s recent | connect clients to other services (such | | Capital has achieved >100% annual profit | management changes as an indicator of | as fintech). Money Forward is led by its | | growth in recent years, and the ambitious | ambition and expects to see Mani scale | ambitious founder, and we are particularly | | management continues to aim to recycle | profitably into their chosen segments | excited by its long-term prospects as | | capital aggressively to pursue further | internationally. We classed Mani as a | Japan’s smaller businesses digitalise from | | expansion in the coming years by targeting | ‘Proven Winner.’ | a low base, and the company explores the | | ~50% net profit growth in the next few | | immense potential of AI within its product | | years. Kasumigaseki Capital is categorised | | offering. Money Forward is a ‘Rapid Scaler.’ | as a ‘Rapid Scaler.’ Valuation £5,212,000 Valuation £9,001,000 Valuation £3,638,000 % of total assets* 1.2% % of total assets* 2.1% % of total assets* 0.8% * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 35 Strategic report | Seiko | Shinnihon | | --- | --- | | Seiko has been making watches for over | Shinnihon Corp is a mid-sized, family- | | 100 years. Aside from having a globally | owned construction company and real | | recognised brand backed by heritage and | estate development company, focusing on | | technical innovation, Seiko stands out in | projects around the Tokyo metropolitan area. | | the Swiss dominated industry through its | The company’s construction business has | | vertical integration and unrivalled breadth | achieved decent growth and profitability in | | of credible offering across price tiers. | recent years through solid execution, and it | | While the global watch market is shrinking | has benefited from the tight labour supply | | in volume terms, it continues to grow in | as demand for dependable subcontractors | | value terms as watches shift from utility | such as Shinnihon rose. On the real estate | | to personal expression and luxury. Seiko, | side, Shinnihon’s long-term orientated | | still led by the founding family, is set to | management is ready to deploy its | | benefit from the premiumisation trend, | balance sheet to build its land bank should | | and we believe has a long growth runway | opportunities emerge and has also signalled | | as it increasingly establishes itself at the | for a stronger focus on shareholder returns. | | high end of the market through the Grand | Shinnihon is a ‘Cyclical Gainer.’ | Seiko and Credor brands. We see Seiko as a ‘Proven Winner.’ Valuation £1,113,000 Valuation £5,144,000 % of total assets* 0.3% % of total assets* 1.2% * For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 36 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## Portfolio executive ## summary Performance 1 year 3 years 5 years 10 years % % % % Share price 14.4 (13.7) (43.8) 53.0 NAV 5.4 (14.9) (36.1) 71.6 Comparative index* 21.5 40.7 42.4 138.8 All figures are stated on a total return basis † for the period to 31 January 2026. * Comparative index: MSCI Japan Small Cap Index (total return and in sterling terms). † Alternative Performance Measure – see Glossary of terms and Alternative Performance Measures on pages 125 to 128. Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 123. Key contributors and detractors to performance – year to 31 January 2026 | | | Absolute | | | | Absolute | | | --- | --- | --- | --- | --- | --- | --- | --- | | | performance | | | | performance | | | | Contributors | | | % * | Detractors | | | % * | | Tsugami 80.2 | | | | Inforich (62.2) | | | | | Raksul 36.2 | | | | Appier Group (41.7) | | | | | Yonex 42.3 | | | | Harmonic Drive Systems (30.8) | | | | | Horiba 73.6 | | | | Peptidream (33.8) | | | | | Anicom 49.0 | | | | GENDA (58.4) | | | | * Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 February 2025 to 31 January 2026. For the definition of total return see Glossary of terms and Alternative Performance Measures on pages 125 to 128. Table ordered by contribution to performance. Source: Revolution. New buys Complete sales Cover Avex Group DMG Mori Cellsource JMDC Demae-Can Kasumigaseki Capital Inter Action Mani Iriso Electronics Money Forward Jade Group Seiko Kumiai Chemical Shinnihon MatsukiyoCocokara Moneytree MonotaRO oRo Shima Seiki SIIX Technopro Torex Semiconductor 37 Strategic report ## Distribution of total assets\* and size splits ### Industry 2026 ![img-3.jpeg](img-3.jpeg) | Industry | 2026 % | 2025 % | | --- | --- | --- | | 1 Industrials | 28.3 | 27.1 | | 2 Information technology | 17.9 | 19.2 | | 3 Consumer discretionary | 15.1 | 15.5 | | 4 Communication services | 9.4 | 9.6 | | 5 Financials | 8.7 | 9.1 | | 6 Healthcare | 7.2 | 5.4 | | 7 Consumer staples | 3.7 | 5.5 | | 8 Real estate | 3.7 | 3.0 | | 9 Materials | 2.0 | 1.3 | | 10 Net liquid assets | 4.0 | 4.3 | ### Listings 2026 ![img-4.jpeg](img-4.jpeg) | Listings | 2026 % | 2025 % | | --- | --- | --- | | 1 Tokyo Prime | 67.7 | 66.2 | | 2 Tokyo Growth | 14.3 | 16.1 | | 3 Tokyo Standard | 12.2 | 11.4 | | 4 Private company | 1.8 | 2.0 | | 5 Net liquid assets | 4.0 | 4.3 | ### Size splits (market capitalisation of investments) As at 31 January 2026 ![img-5.jpeg](img-5.jpeg) Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 123. \* For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 125 to 128. 38 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Portfolio weightings * Relative to comparative index Industrials Communication Services Information Technology Financials Consumer Discretionary Utilities Consumer Staples Materials Energy Health Care Real Estate (10) (5) 0510 Difference (% points underweight/overweight) Holding period >10 years 5–10 years 2–5 years <2 years 0102030 40 % of portfolio * Source: Baillie Gifford/Revolution and relevant underlying index providers. See disclaimer on page 123 and Glossary of terms and Alternative Performance Measures on pages 125 to 128. 39 Strategic report ## Baillie Gifford – ## valuing private ## companies We hold our private company investments at an Beyond the regular cycle, the valuations group also estimation of ‘fair value’, i.e. the price that would be monitors the portfolio for certain `trigger events’. paid in an open-market transaction. Valuations are These may include changes in fundamentals, a adjusted both during regular valuation cycles and on takeover approach, an intention to carry out an an ad hoc basis in response to ‘trigger events’. Our Initial Public Offering (`IPO’), company news which valuation process ensures that private companies is identified by the valuation team or by the portfolio are valued in both a fair and timely manner. managers, or meaningful changes to the valuation of comparable public companies. Any ad hoc change The valuation process is overseen by a valuations to the fair valuation of any holding is implemented group at Baillie Gifford, which takes advice from an swiftly and reflected in the next published net asset independent third party (S&P Global). The valuations value (‘NAV’). There is no delay. group is independent from the investment team, as well as Baillie Gifford’s Private Companies Specialist The valuations team also monitors relevant team, with all voting members being from different marketindices on a weekly basis and updates operational areas of the firm, and the investment valuations in a manner consistent with our external managers only receive final valuation notifications valuer’s (S&P Global) most recent valuation report once they have been applied. where appropriate. We revalue the private holdings on a three- The valuation movements in the year have been month rolling cycle, with one-third of the holdings summarised below, pricing in the continued reassessed each month. During stable market challenging market backdrop, coupled with some conditions, and assuming all else is equal, each positive performance within the private portfolio. investment would be valued four times in a Average twelve-month period. Regarding the Trust’s private Average movement portfolio, the prices are also reviewed twice per movement in price of year by the respective boards and are subject in company share class valuation held to the scrutiny of external auditors in the annual auditprocess. Shin Nippon* 4 7. 2 % 39.1% * Data reflecting period 1 February 2025 – 31 January 2026 to align with the Company’s reporting period end. 40 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## Private companies summary ### Historical snapshot Since our first investment in private companies in 2017, Shin Nippon has deployed £20.14 million of capital in this area. ### Portfolio activity – year to 31 January 2026 No new capital was deployed in private companies during the year. No private companies listed during the year, however Moneytree was taken-over and is no longer held. ### Private exposure* (31 January 2026) ![img-6.jpeg](img-6.jpeg) * Stated as a percentage of total assets as at 31 January 2026. † Spiber was written down to nil following confirmation that the existing entity would be liquidated, with all residual value used to repay creditors, leaving no recoverable value for shareholders. ### Company level valuation movements – year to 31 January 2026 ![img-7.jpeg](img-7.jpeg) Source: Baillie Gifford. This graph shows the change in valuation at company level for the year to 31 January 2026 in local currency. 41 Strategic report ## Portfolio by ## growth profile as at 31 January 2026 The portfolio is structured by growth profile (as described in the Manager’s Report on pages 11 and 12) and conviction level, which together guide position sizing. Emerging Prospects Rapid Scaler Cyclical Gainers Proven Winner Earnings Earnings Earnings Earnings Time Time Time Time Gojo & Company Inc Ord 1.2% Tsugami 4.1% | | SpiderPlus 0.7% | Raksul 4.0% | | | | --- | --- | --- | --- | --- | | Strong | | | JEOL 3.3% | – | | | INFORICH 0.7% | GA Technologies 2.8% | | | Kohoku Kogyo 2.6% JEPLAN 0.6% Gift 2.4% Harmonic Drive Systems 2.4% eGuarantee 1.9% Nifco 2.2% Appier Group 1.8% KH Neochem 2.0% Bengo4.com 1.8% Horiba 2.0% Yonex 2.8% Infomart 1.5% Megachips 1.9% SWCC 2.5% Global Security Experts 1.4% | | | | Toyo Tanso 1.8% | Katitas 2.4% | | --- | --- | --- | --- | --- | | Solid | – | Litalico 1.3% | | | | | | | Optex 1.8% | Lifenet Insurance 2.2% | Peptidream 1.3% Nikkiso 1.5% Vector 2.1% Kasumigaseki Capital 1.2% DMG Mori 1.3% Mani 2.1% Soracom 1.2% Shinnihon 1.2% GMO Financial Gate 1.1% OSG 1.1% Cybozu 1.0% Kamakura Shinsho 1.0% Istyle 1.0% Seria 1.9% Cosmos Pharmaceuticals 1.9% Kitz 1.7% Weathernews 0.8% Sho-Bond 1.6% Oisix 0.8% Nakanishi 1.6% Money Forward 0.8% | | Crowdworks 0.3% | | Nittoku 0.9% | Anicom 1.6% | | --- | --- | --- | --- | --- | | Base | | GMO Payment Gateway 0.7% | | | | | Spiber 0.0% | | Nippon Ceramic 0.6% | Asahi Intecc 1.5% | JMDC 0.7% Anest Iwata 1.1% Genda 0.6% I-Ne 1.0% COVER 0.5% Noritsu Koki 1.0% Shoei 0.9% Seiko 0.3% Total assets* 3.5% 34.0% 28.3% 30.2% * Net liquid assets represents 4% of total assets Conviction levels Conviction levels are determined by portfolio weight within each growth profile, reflecting our assessment of upside potential, downside risk and the strength of the investment case: Strong – holdings at the upper end of the position size ranges. Solid – holdings with mid-range position sizes. Base – holdings with smaller position sizes. Conviction levels, and therefore position sizes, are reviewed on an ongoing basis and may change as share price and fundamentals evolve. 42 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## List of ## investments as at 31 January 2026 | | | 2026 | % of | | | Absolute | † | 2025 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Value | total | | performance | | | Value | | Name | Business | £’000 | assets | # | | | % | £’000 | Tsugami Manufacturer of automated machine tools 17,774 4.1 80.2 10,224 Raksul Internet based services 17,333 4.0 36.2 11,479 JEOL Manufacturer of scientific equipment 14,042 3.3 (0.5) 12,617 GA Technologies Interactive media and services 12,198 2.8 (7.0) 12,372 Yonex Sporting goods 11,812 2.8 42.3 11,906 Kohoku Kogyo Manufacturer of undersea cable lead terminals 11,332 2.6 8.0 7,917 SWCC Electric wire and cable manufacturer 10,652 2.5 41.2 12,625 Katitas Real estate services 10,521 2.4 30.3 14,465 Gift Food industry operator and distributor 10,434 2.4 1.7 10,334 Harmonic Drive Systems Robotic components 10,177 2.4 (30.8) 11,033 Lifenet Insurance Online life insurance 9,605 2.2 (6.5) 14,347 Nifco Value-added plastic car parts 9,241 2.2 19.3 12,886 Mani* Manufactures medical goods and equipment 9,001 2.1 20.9 – Vector PR Company 8,851 2.1 30.6 8,367 Horiba Manufacturer of measuring instruments 8,669 2.0 73.6 6,889 KH Neochem Chemical manufacturer 8,639 2.0 14.0 3,011 Megachips Electronic components 8,191 1.9 35.6 13,318 Cosmos Pharmaceuticals Drugstore chain 8,137 1.9 (12.6) 8,755 Seria Discount retailer 8,125 1.9 28.5 6,136 eGuarantee Guarantees trade receivables 7,993 1.9 (7.4) 4,683 Top 20 212,727 49.5 Toyo Tanso Electronics company 7,883 1.8 26.9 6,165 Appier Group Software as a service company providing 7,826 1.8 (41.7) 11,679 AIplatforms Optex Infrared detection devices 7,677 1.8 35.2 6,622 Bengo4.com Online legal consultation 7,615 1.8 (5.3) 7,226 Kitz Industrial valve manufacturer 7,230 1.7 60.8 5,044 Anicom Pet insurance provider 6,987 1.6 49.0 7,395 Nakanishi Dental equipment 6,783 1.6 (21.6) 9,947 Sho-Bond Infrastructure reconstruction 6,712 1.6 3.8 7,560 * Figures relate to part period returns where the investment has been purchased in the period. # See Glossary of terms and Alternative Performance Measures on pages 125 to 128. † Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 February 2025 to 31 January 2026. 43 Strategic report | | | 2026 | % of | | | Absolute | † | 2025 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Value | total | | performance | | | Value | | Name | Business | £’000 | assets | # | | | % | £’000 | Asahi Intecc Specialist medical equipment 6,548 1.5 (10.1) 4,501 Nikkiso Industrial pumps and medical equipment 6,426 1.5 62.6 4,716 Infomart Internet platform for restaurant supplies 6,352 1.5 2 7. 3 10,886 Global Security Experts Cyber Security Company 5,989 1.4 14.5 5,273 Litalico Provides employment support and learning support 5,693 1.3 (1.7) 4,211 services for people with disabilities DMG Mori* Machine tool manufacturer 5,525 1.3 (21.9) – Peptidream Drug discovery and development platform 5,490 1.3 (33.8) 9,907 Kasumigaseki Capital* Real estate developer and management services 5,212 1.2 (24.1) – Shinnihon* Construction company and real estate developer 5,144 1.2 18.8 – Soracom Networking software provider 5,128 1.2 (16.8) 2,185 Gojo & Company Inc Ord Diversified financial services 5,112 1.2 (15.5) 6,050 Anest Iwata Manufactures compressors and painting machines 4,650 1.1 15.2 11,060 GMO Financial Gate Face-to-face payment terminals and 4,612 1.1 (28.3) 7,140 processingservices OSG Manufactures machine tool equipment 4,504 1.1 43.2 4,148 Cybozu Develops and markets internet and intranet 4,497 1.0 (20.5) 9,389 application software for business I-Ne Hair care range 4,303 1.0 (42.1) 6,991 Noritsu Koki Holding company with interests in biotech and 4,158 1.0 25.7 10,360 agricultural products Istyle Beauty product review website 4,136 1.0 (21.5) 6,598 Kamakura Shinsho Information processing company 4,104 1.0 6.4 4,829 Nittoku Coil winding machine manufacturer 3,871 0.9 3.0 7,119 Shoei Manufactures motor cycle helmets 3,774 0.9 (23.2) 7,463 Money Forward* Accounting and back office software company 3,638 0.8 (17.8) – Weathernews Weather information services 3,323 0.8 6.6 3,057 Oisix Organic food website 3,313 0.8 (12.4) 5,987 GMO Payment Gateway Online payment processing 3,174 0.7 (0.1) 3,351 INFORICH Software Company 3,167 0.7 (62.2) 9,831 JMDC* Medical statistics data services 3,129 0.7 (21.6) – SpiderPlus Construction project management platform 2,872 0.7 (31.0) 4,263 Genda Operates as a holding company for 2,699 0.6 (58.4) 659 entertainmentbusinesses Nippon Ceramic Electronic component manufacturer 2,490 0.6 46.0 1,181 JEPLAN Chemical PET recycling 2,459 0.6 194.9 834 COVER* An entertainment agency that manages content 2,334 0.5 (42.3) – creators known as Vtubers (‘virtual Youtubers’) Crowdworks Crowd sourcing services 1,225 0.3 (44.6) 3,597 Seiko* Vertically integrated manufacturer of watches, and 1,113 0.3 6.3 – various electronic devices Spiber Textiles – – (100.0) 1,030 Private company (unlisted) investment. * Figures relate to part period returns where the investment has been purchased in the period. # See Glossary of terms and Alternative Performance Measures on pages 125 to 128. † Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 February 2025 to 31 January 2026. 44 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC | 2026 | % of | | | Absolute | † | 2025 | | --- | --- | --- | --- | --- | --- | --- | | Value | total | | performance | | | Value | | £’000 | assets | # | | | % | £’000 | Total investments 411,604 96.0 Net liquid assets # 17,324 4.0 Total assets # 428,928 100.0 Bank loans (70,105) (16.3) Shareholders’ funds 358,823 83.7 Source: Baillie Gifford/Revolution and relevant underlying index data providers. See disclaimer on page 123. # See Glossary of terms and Alternative Performance Measures on pages 125 to 128. † Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 February 2025 to 31 January 2026. Private company Net liquid Total Listed equities investments assets † assets † % % % % 31 January 2026 94.2 1.8 4.0 100.0 31 January 2025 93.8 1.9 4.3 100.0 † See Glossary of terms and Alternative Performance Measures on pages 125 to 128. 45 Strategic report ## Business review Business model Change to Investment Policy Anon-material change to the Investment Policy was Business and status approved by the Board on 2 April 2025. Previously Baillie Gifford Shin Nippon PLC (‘the Company’) the policy restricted investee companies to those is a public company limited by shares and is with a market capitalisation or turnover of less than incorporated in Scotland. The Company is an ¥150bn at time of initial purchase. This limit had investment company within the meaning of section been restricting new purchases to companies that 833 of the Companies Act 2006 and carries on are now in approximately the bottom 20% of the business as an investment trust. Investment trusts MSCI Japan Small Cap Index in terms of market are UK public listed companies and their shares are cap. The Board has replaced the fixed limit with traded on the London Stock Exchange. They invest a relative restriction based on the composition of in a portfolio of assets in order to spread risk. The the MSCI Japan Small Cap Index at any given time. Company has a fixed share capital although, subject TheInvestment Policy is set out below. to shareholder approval sought annually, it may purchase its own shares or issue shares. The price Objective and policy ofshares is determined, like other quoted shares, Baillie Gifford Shin Nippon’s objective is to pursue bysupply and demand. long term capital growth through investment The Company has been approved as an investment principally in small Japanese companies which are trust by HM Revenue & Customs subject to the believed to have above average prospects for growth. Company continuing to meet the eligibility conditions. The Company will invest primarily in companies that, The Directors are of the opinion that the Company at the time of initial investment, are constituents has continued to conduct its affairs so as to enable of the MSCI Japan Small Cap Index (the “Index”). itto comply with the ongoing requirements of However, the Company would typically expect section 1158 of the Corporation Tax Act 2010 and to invest in ‘small’ companies that have market the Investment Trust (Approved Company) Tax capitalisations at or below the average market Regulations 2011. capitalisation of the companies within the Index at the time of initial investment. The Company is an Alternative Investment Fund (‘AIF’) for the purposes of the UK Alternative Investment The portfolio is constructed through the identification Fund Managers Regulations. of individual companies which offer long term growth potential, typically over a five year horizon. The portfolio is actively managed and does not seek to track the comparative index, hence a degree of volatility against the index is inevitable. Past performance is not a guide to future performance. 46 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC In constructing the equity portfolio a spread of risk Borrowings is achieved by diversifying the portfolio through Borrowings are typically invested in securities when investment in 40 to 80 companies. Although sector it is considered that investment grounds merit the concentration and the thematic characteristics of Company taking a geared position to securities. the portfolio are carefully monitored, there are no Gearing levels, and the extent of equity gearing, maximum limits to deviation from comparative index are discussed by the Board and Managers at every stock or sector weights. Board meeting. The Managers are tasked with ensuring that gearing is managed efficiently and Exposure to any single company is limited to 5% of within the parameters set by the Board and any loan the Company’s total assets, measured at the time of covenants. investment. Exposure to a single company that, as a result of performance, exceeds 5% of the Company’s Facility Facility total assets is subject to particular scrutiny but may amount type Lender Maturing Drawings be maintained at a level in excess of 5% where the ¥16,100 Secured Bank of 7 November Y14,840 Managers are convinced of the ongoing merits of the million revolving America, N.A. 2027 million investment case. credit drawn The Company may invest in UK and Overseas During the year, the existing Y2bn and Y7bn domiciled collective investment schemes, including revolving credit facilities with ING were cancelled UK listed investment trusts, that invest principally in and incorporated into the cheaper secured revolving Japanese securities. On acquisition, no more than credit facility with Bank of America (extended to 15% of the Company’s total assets will be invested in Y16.1bn). such companies or funds. The main covenants relating to the loans are The portfolio is expected to consist of predominantly that borrowings should not exceed 35% of the quoted equity holdings, however unlisted investments Company’s adjusted net asset value. During the may also be held. Unlisted investments shall not year, Bank of America removed the loan covenant exceed 10% of the total assets of the Company in that required the Company’s net asset value to be aggregate, measured at the time of investment. at least £225 million. There were no breaches in the From time to time, fixed interest instruments, loan covenants during the year. or non-equity investments, may be held on an opportunistic basis. The Company may use derivatives which will be principally, but not exclusively, for the purpose of efficient portfolio management (i.e. for the purpose of reducing, transferring or eliminating investment risk in its investments, including protection against currencyrisks). The Company recognises the long-term advantages of gearing. Although the Company may have maximum equity gearing of 50% of shareholders’ funds, the Board would seek to have a maximum equity gearing level of 30% of shareholders’ funds atthe time of drawdown. 47 Strategic report ## Key performance indicators The Board uses key performance indicators (KPIs) to measure the progress and performance of the Company over time when discharging its duties as set out on page 64. These KPIs are established industry measures and an explanation of how they are calculated can be found in the Glossary of terms and Alternative Performance Measures ('APM') on pages 125 to 128. The performance measures below are to 31 January 2026. ### Share price and net asset value total returns (APM) The total return is the return to shareholders after reinvesting any net dividend on the date that the share price goes ex-dividend. ![img-8.jpeg](img-8.jpeg) ### Share price discount/premium (APM) As stock markets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. If the share price is higher than the NAV per share, this situation is called a premium. ![img-9.jpeg](img-9.jpeg) ### Ongoing charges (APM) Ongoing charges are the total recurring expenses (excluding the Company's cost of dealing in investments and borrowing costs) incurred by the Company as a percentage of the daily average net asset value. ![img-10.jpeg](img-10.jpeg) The Board also has regard to the total return of the Company's principal comparative index (MSCI Japan Small Cap Index (total return and in sterling terms)) and considers the performance of comparable companies. Across these measures, the Board looks for relative outperformance over the long term, while remaining mindful that the nature of the investment policy and the growth characteristics of the portfolio investments may entail periods of underperformance over the short and medium term. The Board received shareholder approval in February 2026 to bring forward the 15% tender offer planned for 2027 to Q1 2026, introduce a 100% performance related tender in 2030 and hold a continuation vote in 2028. The 15% tender offer was oversubscribed and completed on 19 March 2026. Discussion on the current year's performance is included in the Chair's statement on pages 7 to 9. The one, five and ten year records of the KPIs are shown on pages 24 to 29. 48 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Principal and emerging risks As explained on pages 72 and 73, there is an ongoing process for identifying, evaluating and managing the risks faced by the Company. The Directors have carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, regulatory compliance, solvency or liquidity. In light of the forthcoming requirements of Provision 29 of the revised UK Corporate Governance Code (and Provision 34 of the AIC Code), the Board has undertaken a review of the Company’s risk framework during the year. This review has focused on identifying the Company’s material risks, being those risks which could have the most significant impact on the Company’s ability to achieve its investment objective and continue in operation. As a result, the Board has rationalised and consolidated its risk disclosures into a smaller number of clearly defined material risks. This consolidation reflects the interrelated nature of a number of previously disclosed risks, particularly where macroeconomic and geopolitical factors act as amplifiers of underlying investment risks, rather than representing standalone risks. The Board considers that the following represent the Company’s material risks. These will form the basis for the Board’s future assessment of the effectiveness of the Company’s material controls. Financial risk Rating and What is the risk? How is it managed? change Current assessment of risk Risk level: High The Company’s assets consist mainly of The Board considers at each meeting various This risk remains high given listed securities (98% of the investment portfolio metrics including individual stock continued market volatility, portfolio) and its principal financial risks performance and weightings, the top and ongoing macroeconomic and are therefore market related. These include bottom contributors to performance and geopolitical uncertainty and the market risk (comprising currency risk, relative sector weightings against the sensitivity of smaller companies interest rate risk and other price risk), comparative index. The portfolio managers to these conditions. liquidity risk and credit risk. provide rationale for stock selection decisions and portfolio positioning. The Company’s investment strategy, | including its focus on smaller companies, | The Board undertook a comprehensive review | | --- | --- | | may result in increased volatility and | of the Company’s investment strategy in | | periods of underperformance relative | November 2024, following which a number of | | to the comparative index. Smaller | changes were implemented, including the | | companies are typically more sensitive | appointment of a new lead portfolio manager | | to market sentiment and macroeconomic | and deputy portfolio manager and refinements | | shocks. Macroeconomic and geopolitical | to portfolio construction. The Board continues | | developments, including heightened global | to monitor the effectiveness of these changes | | instability, as well as climate-related factors | closely. | such as the physical impacts of climate The Board has also taken steps to address change and the transition to a lower-carbon shareholder concerns and performance- economy, may exacerbate these risks. related outcomes, including the introduction | The Company also has exposure to private | of a tender offer in 2026, a continuation vote | | --- | --- | | company investments, which may be more | in 2028 and a performance-triggered tender | | difficult to value and realise. During the | offer in 2030. | year, Moneytree was taken over and Spiber The Board considers the impact of currency was written down to zero, reducing the movements, particularly in relation to yen/ Company’s ongoing exposure to private sterling exchange rates, and the interaction company investments. between portfolio assets and yen- denominated borrowings. Private company investment risk is mitigated through limits on exposure, frequent independent valuation processes and detailed Board review. The Company’s investment policy limits exposure to private companies to 10% of total assets at the time of investment. Moderate RiskHigh Risk Low Risk Decreasing RiskIncreasing Risk Stable Risk 49 Strategic report Discount risk Rating and What is the risk? How is it managed? change Current assessment of risk Risk level: Moderate The discount at which the Company’s To manage this risk, the Board monitors This risk is considered to be shares trade relative to its net asset value the level of discount/premium at which reducing. The Company’s can change. A widening discount may the shares trade, movements in the share discount decreased from undermine investor confidence and result register and investor sentiment towards the 14.6% to 7.5% over the year in shareholders receiving less than the Company and the wider investment trust to 31 January 2026, reflecting underlying net asset value when selling sector. improved market conditions their shares. The Board has authority to buy back and the positive impact of share There is also an increased risk of activist shares where considered to be in the best buybacks and other measures shareholder activity within the investment interests of shareholders. Over the year to implemented by the Board. trust sector, which may seek to influence 31 January 2026, the Company bought back While the risk of discount strategy, capital allocation or corporate approximately 34.2 million shares (2025 – volatility remains, the actions structure. Such activity may increase 30.3 million), which are held in treasury. taken during the year have share price volatility, create uncertainty The Board has also implemented measures strengthened the Company’s for shareholders and divert the Board’s to provide shareholder liquidity and address position in managing this risk. time and focus away from the oversight discount-related concerns, including the of the Company’s long-term investment 15% tender offer completed in March 2026. strategy and performance. The Board continues to engage actively with shareholders and to consider appropriate measures to address any sustained discount. Regulatory risk Rating and What is the risk? How is it managed? change Current assessment of risk Risk level: Low Failure to comply with applicable legal and Baillie Gifford’s Business Risk, Internal This risk is considered to regulatory requirements such as the tax Audit and Compliance departments provide be unchanged. All control rules for investment trust companies, the regular reports to the Audit Committee on procedures continue to operate FCA Listing Rules and the Companies Act monitoring programmes and regulatory effectively. could lead to suspension of the compliance. Company’s Stock Exchange listing, Shareholder documents and announcements, financial penalties or loss of investment including the Annual and Interim Reports, trust status. are subject to robust internal review processes to ensure compliance with relevant regulations. Procedures are also in place to ensure adherence to the Market Abuse Regulation and Disclosure Guidance and TransparencyRules. Where appropriate, representations are made in respect of regulatory developments to ensure that the interests of investment trusts are recognised. Moderate RiskHigh Risk Low Risk Decreasing RiskIncreasing Risk Stable Risk 50 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Third party service provider risk Rating and What is the risk? How is it managed? change Current assessment of risk Risk level: Low The Company relies on third party service The Board has delegated the design, This risk is considered to be providers, including the Managers, implementation and operation of internal unchanged and all control depositary, custodian and registrar, for the controls to the Managers and Secretaries but procedures are operating provision of key operational, retains overall responsibility for oversight. effectively. administrative and safeguarding functions. Baillie Gifford & Co conducts an annual Failure of these providers’ systems or review of its system of internal controls, controls could lead to an inability to documented in an ISAE 3402 report which provide accurate reporting and is independently reviewed by its auditor. This monitoring, or result in loss or report is reviewed by Baillie Gifford’s Business misappropriation of assets. Risk Department, with a summary of key Custody of the Company’s assets may be findings reported to the Audit Committee. compromised through control failures at The Audit Committee also has access to the the depositary, custodian or registrar. full report and the opportunity to review and challenge its contents. The custodian, depositary and registrar provide regular reports on their control environments, including the safekeeping of assets and maintenance of shareholder records, and independently audited internal controls reports. These are reviewed by Baillie Gifford’s Business Risk Department and reported to the Audit Committee, with any issues investigated. The Company’s assets are subject to independent reconciliation and verification procedures, including confirmation of holdings with the custodian and investee companies, and are also subject to annual external audit. The Board considers the resilience and performance of all key service providers on an ongoing basis and believes that alternative providers could be engaged if required. Cyber securityrisk Rating and What is the risk? How is it managed? change Current assessment of risk Risk level: Moderate A cyber attack on the systems of Baillie The Audit Committee receives regular This risk is considered to be Gifford or the Company’s third party reporting from Baillie Gifford’s Business increasing due to the evolving service providers could compromise the Risk Department on the effectiveness of threat landscape, heightened confidentiality, integrity or availability of information security controls and the broader geopolitical tensions and the data and systems, potentially resulting in cyber security framework. increasing sophistication of operational disruption, financial loss or Cyber security due diligence is performed on cyber threats. reputational damage. key third party service providers, including The evolving nature of cyber threats, assessment of their information security including increased sophistication of controls, crisis management procedures and attacks and the emergence of new business continuity arrangements. technologies such as artificial intelligence, Baillie Gifford maintains comprehensive may increase the likelihood and potential business continuity and disaster recovery impact of cyber incidents. In addition, plans which are designed to ensure the the continued use of hybrid working continued operation of systems and arrangements may increase exposure to processes in the event of a disruption or cyber risks. cyber incident. Moderate RiskHigh Risk Low Risk Decreasing RiskIncreasing Risk Stable Risk 51 Strategic report Leverage risk Rating and What is the risk? How is it managed? change Current assessment of risk The Company may borrow money for All borrowings require prior approval of the Risk level: Moderate investment purposes. If the value of Board and gearing levels are discussed at This risk is considered to investments falls, any borrowings will each Board meeting. Compliance with loan bestable. magnify the impact of these losses. There covenants is monitored regularly. is also a risk that borrowing facilities Details of the Company’s borrowing facilities may not be renewed or that covenant are set out in note 11 to the Financial requirements may not be met, requiring Statements. The Company’s revolving credit the Company to sell investments to facility with Bank of America matures in repayborrowings. November 2027 and provides flexibility in managing gearing levels. The majority of the Company’s investments are in quoted securities which are readily realisable and could be sold to repay borrowings if required. Gearing levels reduced during the year from 16% to 15%, reflecting a reduction in borrowings and active management of the balance sheet. Further information on leverage is provided on page 120 and in the Glossary of terms and Alternative Performance Measures on pages125 to 128. Emerging risk The Board also considers emerging risks, being those that may not have an immediate impact but could arise over the longer term. The Board considers that the key emerging risks arise from the interconnectedness of global economies and the related exposure of the investment portfolio to external and emerging threats such as the societal and financial implications of escalating geopolitical tensions, cyber security risks including developing AI capabilities, and potential future public health threats. The Board monitors these risks on an ongoing basis and considers their potential impact within the context of the material risks outlinedabove. Moderate RiskHigh Risk Low Risk Decreasing RiskIncreasing Risk Stable Risk 52 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Viability statement Gearing levels and compliance with loan covenants are reviewed by the Board on a regular basis. Notwithstanding the continuation vote to be held at the Company’s Annual General Meeting in 2028 and Specific leverage and liquidity stress testing was the potential for a performance-triggered tender offer conducted during the year. Stress tests are applied for up to 100% of the Company’s issued share capital to the portfolio to identify the commitment leverage to be implemented, subject to shareholder approval, of the Company in two scenarios: (i) gross assets around the time of the Company’s Annual General reduce by 25%; and (ii) gross assets reduce by Meeting in 2030, the Directors have, in accordance 50%. Stress tests are also performed to determine with provision 31 of the UK Corporate Governance the impact on revenue earnings per share as a result Code, assessed the prospects of the Company over of an increase and decrease in projected portfolio a period of five years. The Directors continue to income of 25%. These stress tests are designed to believe this period to be appropriate as it reflects the assess the resilience of the Company’s balance sheet, Company’s longer term investment strategy and to be liquidity and income under adverse market conditions. a period during which, in the absence of any adverse Consideration is also given to the risk of further market change to the regulatory environment and to the tax deterioration and no matters of concern were noted. treatment afforded to UK investment trusts, they do The Directors have also considered the oversubscribed not expect there to be any significant change to the 15% tender offer that completed on 19 March, the current principal risks facing the Company nor to the potential impact of the continuation vote in 2028 and effectiveness of the controls employed to mitigate the performance-triggered tender offer referred to those risks. In making this assessment, the Directors above. Given the liquidity of the Company’s portfolio have taken into account the potential impact of the and the absence of any structural impediments to the continuation vote and the performance-triggered realisation of investments, the Directors believe that tender offer. Should the continuation vote not be the Company would be able to meet its liabilities as passed, the Directors would be required to bring they fall due in the event that either mechanism were forward proposals for the future of the Company for to result in a realisation of part or all of the portfolio. shareholder approval. Similarly, the tender offer would only be implemented if the relevant performance In addition, all of the key operations required by conditions are met and would be subject to shareholder the Company are outsourced to third party service approval. In either case, the Company’s investment providers and it is reasonably considered that portfolio is comprised predominantly of quoted alternative providers could be engaged at relatively securities which are readily realisable and the Directors short notice. believe that the Company would be able to meet Based on the Company’s processes for monitoring its liabilities as they fall due in such circumstances. revenue projections, share price premium/discount, The Directors therefore continue to believe that the the Managers’ compliance with the investment prospects for Japanese small companies remain objective, asset allocation, the portfolio risk profile, positive over the long term and that the Company leverage, counterparty exposure, liquidity risk and remains viable over the assessment period. financial controls, the Directors have concluded that In considering the viability of the Company, the there is a reasonable expectation that the Company Directors have conducted a robust assessment of each will be able to continue in operation and meet its of the principal and emerging risks and uncertainties liabilities as they fall due over the next five years. detailed on pages 49 to 52 and in particular the impact Going Concern is reported on in the Corporate of market risk where a significant fall in Japanese Governance report on page 73. small equities markets would adversely impact the value of the investment portfolio. The Directors have Promoting the success of the Company also considered the Company’s leverage and liquidity (section 172 statement) in the context of the secured bank loan with Bank of America which expires on 7 November 2027 (see Under section 172 of the Companies Act 2006, the note 11 on page 103). Although the Directors do not directors of a company must act in the way they envisage difficulty with refinancing the bank loan, consider, in good faith, would be most likely to the majority of the investments are quoted securities promote the success of the company for the benefit of which are readily realisable and could be sold to repay its members as a whole, and in doing so have regard borrowings if required. Similarly, investments can (amongst other matters and to the extent applicable) be realised to meet expenses to the extent that they to: a) the likely consequences of any decision in exceed portfolioincome. the long term, b) the interests of the company’s employees, c) the need to foster the company’s 53 Strategic report business relationships with suppliers, customers and others, d) the impact of the company’s operations on the community and the environment, e) the desirability of the company maintaining a reputation for high standards of business conduct, and f) the need to act fairly as between members of the company. In this context and having regard to Baillie Gifford Shin Nippon being an externally-managed investment company with no employees, the Board considers that the Company’s key stakeholders are its existing and potential new shareholders, its externally-appointed Managers (Baillie Gifford) and other professional service providers (corporate broker, registrar, auditor and depositary), lenders, portfolio companies, wider society and the environment. The Board considers that the interests of the Company’s key stakeholders are aligned, in terms of wishing to see the Company deliver sustainable long-term growth, in line with the Company’s stated objective and strategy, and meet the highest standards of legal, regulatory, and commercial conduct, with the differences between stakeholders being merely a matter of emphasis on those elements. The Board’s methods for assessing the Company’s progress in the context of its stakeholders’ interests are set out on the following pages. Stakeholder Why we engage How we engage and what we do Shareholders Shareholders are, collectively, the Company’s The Board places great importance on communication owners: providing them with a return for their with shareholders. The Annual General Meeting provides investment in accordance with the Company’s an opportunity for the Board and Managers to present to investment policy and objective is the reason shareholders on the Company’s performance, future plans for its existence. and prospects. It also allows shareholders the opportunity to meet with the Board and Managers and raise questions and concerns. The Chair is available to meet with shareholders as appropriate. The Managers meet regularly with shareholders and their representatives, reporting their views back to the Board. Directors also attend certain shareholder presentations, in order to gauge shareholder sentiment first hand. Shareholders may also communicate with members of the Board at any time by writing to them at the Company’s registered office or to the Company’s broker. These communication opportunities help inform the Board when considering how best to promote the success of the Company for the benefit of all shareholders over the long term. Baillie Gifford – The Company’s Board has delegated the The Board seeks to engage with its Managers, and other Managers and management of the Company’s portfolio, service providers, in a collaborative and collegiate manner, Secretaries and the administration of the Company’s encouraging open and constructive discussion and debate, operations including fulfilment of regulatory while also ensuring that appropriate and regular challenge and taxation reporting requirements, to is brought and evaluation conducted. This approach aims to BaillieGifford. Baillie Gifford is therefore enhance service levels and strengthen relationships with the responsible for the substantial activities of Company’s providers, with a view to ensuring the interests of the Company and has the most immediate the Company’s shareholders are best served by keeping cost influence on its conduct towards the other levels proportionate and competitive, and by maintaining the stakeholders, subject to the oversight and highest standards of business conduct. strategic direction provided by the Board. Portfolio companies As all of the Company’s operations are The Board is cognisant of the need to consider the impact of conducted by third party professional the Company’s investment strategy and policy on wider society providers, it is the companies held in its and the environment. The Board considers that its oversight investment portfolio which have the primary of environmental, social and governance (‘ESG’) matters is real-world impact in terms of social and an important part of its responsibility to all stakeholders. The environmental change, both positively and Board’s review of the Managers includes an assessment of negatively, as well as generating, through their their ESG approach and its application in making investment | commercial success, the investment growth | decisions. The Board regularly reviews Governance | | --- | --- | | sought by the Company’s shareholders. | Engagement reports, which document the Managers’ | | The investee companies have an interest in | interactions with investee companies on ESG matters (see | | understanding their shareholders’ investment | pages 18 to 22). | rationale in order to assure themselves that long-term business strategies will besupported. 54 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Stakeholder Why we engage How we engage and what we do Broker The Company’s broker provides an interface The Company’s broker regularly attends Board meetings, and between the Company’s Board and its provides reports to those meetings, in order to keep the Board institutional shareholders. apprised of shareholder and wider market sentiment regarding the Company. They also arrange forums for shareholders to meet the Chair, or other Directors, outwith the normal general meeting cycle. Registrar The Company’s registrar provides an The Company Secretaries liaise with the registrar to ensure the interfacewith those shareholders who frequency and accuracy of communications to shareholders holdthe Company’s shares directly. is appropriate, and monitor shareholder correspondence to ensure that the level of service provided by the registrar is acceptable. The Manager’s risk function reviews the registrars’ internal controls report and reports on the outcome of this review to the Audit Committee. | Auditor The Company’s Auditor has a responsibility to | | The Company’s Auditor meets with the Audit Chair and | | --- | --- | --- | | | provide an opinion on whether the Company’s | the Board, in the absence of the Managers where deemed | | | financial statements as a whole are free | necessary, and the Managers undertake to provide all | | | from material misstatement, as set out in the | information requested by the Auditor in connection with the | | | Auditor’s report to the Members on pages 85 | Company’s annual audit promptly and to ensure that it is | | | to 91. | complete and accurate in all respects. | | Depositary | The depositary is responsible for the | The depositary provides the Audit Committee with a report on | | andcustodian | safekeeping of the Company’s financial | its monitoring activities. The Board and Managers seek to | | | instruments, as set out in more detail on | engage with the depositary and custodian in a collaborative and | | | page64. | collegiate manner, encouraging open and constructive | discussion and debate, while also ensuring that appropriate and regular challenge is brought and evaluation conducted. This approach aims to enhance service levels and strengthen relationships with the Company’s providers, with a view to ensuring the interests of the Company’s shareholders are best served by keeping cost levels proportionate and competitive, and by maintaining the highest standards of business conduct. Lenders Lenders such as holders of debt instruments The Company’s legal advisers review all legal agreements in (debentures, bonds and private placement loan connection with the Company’s debt arrangements and advise notes) and banks providing fixed or revolving the Board on the appropriateness of the terms and covenants credit facilities provide the Company’s gearing therein. The Managers and Secretaries ensure that the | | as described on page 47 and have an interest | frequency and accuracy of reporting on, for example, covenant | | --- | --- | --- | | | inthe Company’s ongoing financial health | certification, is appropriate and that correspondence from the | | | andviability. | lenders receives a prompt response. | | AIC/industry peers The Association of Investment Companies | | The Company is a member of the AIC, and the Directors and/ | | | (‘AIC’) and the Company’s investment | orthe Managers and Secretaries (as appropriate) participate | | | trust industry peers have an interest in | in technical reviews, requests for feedback on proposed | | | the Company’s conduct and performance, | legislation or regulatory developments, corporate governance | | | asadverse market sentiment towards | discussions and/or training. | oneinvestment trust can affect attitudes towards the wider industry. Investment platforms Investment platforms provide an interface The Managers liaise with the various investment platforms on withshareholders who invest in the strategies for improving communications with the Company’s Companyindirectly. shareholders who hold their shares via these platforms. An annual timetable of key dates is published on the Company’s website, for the ease of reference of such shareholders. Wider society and the No entity, corporate or otherwise, can exist The Board and Managers’ interactions with the various environment without having an influence on the society stakeholders as noted above form the principal forms of inwhich it operates or utilising the planet’s direct engagement with wider society and in respect of the resources. Through its third-party relationships, environment (commercial, financial, and in terms of planetary as noted above, the Company seeks to be health and resources). apositive influence and, in circumstances where that is not possible, to mitigate its negative impacts insofar as is possible. 55 Strategic report The Board recognises the importance of keeping the interests of the Company and its stakeholders, in aggregate, firmly front of mind in its key decision making. The Company Secretaries are available at all times to the Board to ensure that suitable consideration is given to the range of factors to which the Directors should have regard. In addition to ensuring that the Company's stated investment objective was being pursued, key decisions and actions during the year which required the Directors to have regard to applicable section 172 factors included: | Key decision | Action | | --- | --- | | Change to Investment Policy | A change to the Investment Policy was approved by the Board on 2 April 2025 to broaden the market cap of small companies permitted for investment with the aim of enhancing future returns to shareholders. | | Share Buybacks | The buying back of 34.2 million of the Company's own shares into treasury at a discount to net asset value, for subsequent reissue, in order to ensure the Company's shareholders found liquidity for their shares when natural market demand was insufficient, and on terms that enhance net asset value for remaining shareholders. | | Increase to Distributable Reserves | At the Annual General Meeting on 20 May 2025 shareholders approved the reduction of the share premium account and creation of an equivalent distributable reserve. This has provided a significant pool of reserves which can be used in future to fund distributions including dividends, and any returns of capital, including tender offers and share buybacks. | | Tender Offer and other proposals | Committing to undertake a tender offer for up to 15 per cent of the issued share capital in 2026 (replacing the performance triggered tender offer that had been planned for 2027). Proposing a one-off continuation vote to be held at the annual general meeting of the Company to be held in 2028 and the proposal to introduce a 2030 performance related tender offer for up to 100 per cent of the issued share capital. | | Reduction in Management Fee | Agreeing a reduction in the management fee with Baillie Gifford & Co Limited such that the fee is 0.65% on the first £250 million of net assets and 0.55% thereafter per annum, with effect from 1 February 2026 (see page 99). | | Shareholder Meetings | Engaging with 43% of shareholders during the year to understand their priorities and concerns, with the feedback received informing several of the major decisions outlined in this statement. Maintaining open, regular and constructive dialogue with shareholders, which the Board considers central to its stewardship responsibilities. | | Borrowings | Arranging a three year ¥16,100 million secured revolving credit facility with Bank of America, N.A. to refinance the ING Bank N.V. facilities expiring in March 2026 and November 2026 for the purpose of investing in exciting Japanese small cap opportunities, which the Board believes will enhance long term returns for shareholders while delivering finance cost savings over the period. | | Dividend | The recommendation of a final dividend of 0.69p per share, being broadly the minimum required to maintain the Company's investment trust status. | ## Employees, human rights and community issues The Board recognises the requirement to provide information about employees, human rights and community issues. The Company has no employees. All its Directors are non-executive and all its functions are outsourced. There are therefore, no disclosures to be made in respect of employees, human rights and community issues. Further information on the Company's approach to environmental, social and governance ('ESG') matters are provided below. ### Board representation At 31 January 2026 the Board comprises five Directors, three male and two female. The Company has no employees. The Board's policy and disclosures on diversity are set out on pages 70 and 71. ### Environmental, social and governance policy Details of the Company's policy on socially responsible investment can be found under 'Corporate governance and stewardship' on page 74 and the Managers' approach to stewardship and examples of portfolio company engagement are set out on pages 18 to 22. The Company considers that it does not fall within the scope of the Modern Slavery Act 2015 and it is not, therefore, obliged to make a slavery and human trafficking statement. In any event, the Company considers its supply chains to be of low risk as its suppliers are typically professional advisers. A statement by the Managers under the Act has been published on the Managers' website at bailliegifford.com. ### Future developments of the Company The outlook for the Company for the next year is set out in the Chair's statement on pages 7 to 9 and in the Managers' report on pages 10 to 15. The Strategic report which includes pages 6 to 56 was approved by the Board on 30 March 2026. Jamie Skinner Chair 56 Annual Report and Financial Statements 2026 ## Governance ## report This governance report, which includes pages 57 to 83 outlines the Board’s approach to the governance of your Company. We believe that good governance builds better outcomes and we are committed to high standards of corporate governance and transparency. Governance report # Directors and management ## Directors ![img-11.jpeg](img-11.jpeg) **Jamie Skinner** Chair Appointed 2018 Chair in 2023 Jamie Skinner was appointed a Director in 2018 and became Chair of the Audit Committee shortly thereafter. He was appointed Chair in May 2023. Jamie is a chartered accountant and a fellow of the Chartered Institute for Securities and Investment. He joined Cazenove & Co in 1989 as a corporate finance executive working principally on investment companies and also other sector IPO activity, and in 1995 he was appointed Managing Director of the Johannesburg office. In 1999 he joined Martin Currie Investment Management Limited as a director and in 2014 was appointed Head of Client Services. He served as President and CEO of The China Fund, Inc. until 2012, President and CEO of The Taiwan Fund, Inc. until 2014 and President of the Martin Currie Business Trust until 2015. He also served on the boards of Martin Currie, Inc. and the Martin Currie Japan Absolute Return Fund up to his retirement from Martin Currie on 31 July 2018. He was a non-executive director of Ediston Property Investment Company plc from 2018 until it went into voluntary liquidation on 6 January 2024. ### Other commitments Jamie is Chairman of the Asian Opportunities Absolute Return Fund Limited and Audit Chair of the Ashoka India Equity Trust plc. He is also Chairman of the R&A Foundation and is the investment trustee of the Wilson Christie Foundation. ### Contribution to the Board Jamie brings long experience of investment trusts from a corporate finance perspective and as head of a client service team responsible for the management of several funds. He has also been a member of investment boards for many years, serving in various capacities, including audit, remuneration, nomination and marketing. 58 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Professor Sethu Vijayakumar was appointed Director in 2018 and is the Senior Independent Director. He is the Professor of Robotics at the University of Edinburgh and the (Founding) Director of the Edinburgh Centre for Robotics. He holds additional responsibility as the Programme Director for Artificial Intelligence at The Alan Turing Institute, London, where he helps shape the UK National roadmap in Robotics and Autonomous Systems. He is a world-renowned roboticist, Professor Sethu pioneering the data driven control of several iconic robotic platforms Vijayakumar including a recent collaboration with the NASA Johnson Space Centre Director on the Valkyrie humanoid robot being prepared for unmanned robotic Appointed 2018 pre-deployment missions to Mars. He is a Fellow of the Royal Society ofEdinburgh, a judge on BBC Robot Wars and winner of the 2015 TamDalyell Prize for Excellence in engaging the public with science. Sethu has strong ties with Japan having spent seven years in Tokyo during his PhD and postdoctoral training, still closely collaborates with several R&D firms and multinationals on translational research projects and is a fluent Japanese speaker. Other commitments Sethu holds the Chair of Robotics at the University of Edinburgh and is the Programme Director for AI and Robotics at the Alan Turing Institute, the UK’s National Institute for AI and Data Science. Contribution to the Board Sethu brings his substantial experience of working close to the latest advances in technology as well as the startup ecosystem – especially in the context of Japanese industries, SMEs, large scale governmental initiatives and academia. His advisory and reviewer roles of large-scale European R&D funding instruments such as Horizon 2020, DFG and ERC as well as the Japanese JST Moonshot projects gives him excellent visibility of current trends in cutting edge solutions to global challenges. 59 Governance report ![img-12.jpeg](img-12.jpeg) **Kevin Troup** Director Appointed 2020 Kevin Troup was appointed to the Board in 2020. He became the Chair of the Audit Committee in May 2023. Kevin qualified as a Chartered Accountant in London in 1993 with Coopers & Lybrand. He was then an Investment Manager managing Japanese small and mid caps with Scottish Life from 1995. In 2000 he joined Martin Currie Investment Management managing Japanese Smaller Companies and gained further Japanese investment experience with Standard Life Investments from 2010 until retiring in 2018. #### **Other commitments** Kevin is a director at Baring Fund Managers Limited as well as a director of Kintail Trustees Limited, the corporate trustee of The Robertson Trust charity where he is Chair of the Investment Committee. #### **Contribution to the Board** Kevin brings audit, risk, compliance and smaller company investment experience from across the financial services spectrum, including investment trusts, open-ended funds and pension schemes. Kevin was previously Audit Chair at European Assets Trust plc which was a European small companies' investment trust. ![img-13.jpeg](img-13.jpeg) **Abigail Rotheroe** Director Appointed 2022 Abigail Rotheroe was appointed to the Board in 2022 and is Chair of the Nomination Committee. Abigail is a CFA® charterholder whose investment career began at Schroder Capital Management in 1987 as an analyst on the Japanese desk. She worked in Hong Kong for Schroders and then HSBC, managing specialist Asia/Pacific equity portfolios for Japanese clients. On her return to London in 1994, she joined Threadneedle Investments with responsibility for the Threadneedle Asia Growth Fund, Threadneedle Asia and Pacific inc. Japan Growth Fund and the TIML India Fund. Since 2013 Abigail has been involved in social and impact investing and in her most recent role was Investment Director of Snowball Impact Management which she left in August 2022. #### **Other commitments** Abigail is a non-executive director of Templeton Emerging Markets Investment Trust plc, Hydrogen Capital Growth plc and Greencoat UK Wind PLC. She is an Investment Committee member/co-optee of Joseph Rowntree Charitable Trust, The Robertson Trust and a member of WHEB's Investment Advisory Committee. #### **Contribution to the Board** Abigail brings Japanese equity experience alongside her background as a retail asset manager, analyst and most recently an investment company investor. She also brings knowledge of sustainable and responsible investment. 60 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Claire Finn was appointed to the Board in 2021. Claire began her career in Japan in 1995 before moving back to the UK in 1999. She worked for Tokyo Mitsubishi Bank in London from 1999 to 2001. In2001 she joined Henderson Global Investors undertaking roles in client service and product development. In 2005 Claire joined Merrill Lynch | Claire Finn | Investment Managers (MLIM) as Vice President of | | --- | --- | | Director | Product Development. MLIM was subsequently | | Appointed 2021 | bought by BlackRock and Claire moved into the | distribution team, rising to the position of Managing Director of Defined Contributions, Unit Linked and Platforms. Claire left BlackRock in 2018 and transitioned to a portfolio career in 2019. Other Commitments Claire is currently the Chair of UBS Asset Management Life Limited and a director of Artemis Fund Managers Limited and Sparrows Capital Limited. She is also a Director of The Law Debenture Corporation plc, where she is Chair of the Remuneration Committee. Contribution to the Board Claire brings investment management experience including distribution to retail and institutional investors, product development and corporate governance. She has also lived and worked in Japanand speaks Japanese fluently. The Directors listed on the prior pages were in office during the year to 31 January 2026 and remained in office as at 30 March 2026. All Directors are members of the Nomination and Audit Committees with the exception of Mr Skinner who stepped down from the Audit Committee on being appointed Chair of the Board in May 2023. 61 Governance report ![img-14.jpeg](img-14.jpeg) **Brian Lum** Investment Manager Appointed 2025 Brian joined Baillie Gifford in 2006. He is head of the Smaller Companies team and Lead Investment Manager on the International Smaller Companies strategy. He is also a member of the International Growth Portfolio Construction Group. He is a CFA Charterholder and graduated with an MSci and BA (Hons) in Physics from the University of Cambridge in 2006. ![img-15.jpeg](img-15.jpeg) **Jared Anderson** Deputy Manager Appointed 2025 Jared joined Baillie Gifford in 2016. He is co-manager of Japan All Cap Strategy and Japanese Smaller Companies Strategy. Prior to joining Baillie Gifford, Jared spent two years as an Assistant Economist at the Scottish government. Jared graduated with an MA (Hons) in Economics from the University of Edinburgh in 2012. ## Managers and secretaries The Company has appointed Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, as its Alternative Investment Fund Manager and Company Secretaries. Baillie Gifford & Co is an investment management firm formed in 1927 out of the legal firm Baillie & Gifford, WS, which had been involved in investment management since 1908. Baillie Gifford is one of the largest investment trust managers in the UK and currently manages twelve investment trusts. Baillie Gifford also manages unit trusts and Open Ended Investment Companies, together with investment portfolios on behalf of pension funds, charities and other institutional clients, both in the UK and overseas. Funds under the management or advice of Baillie Gifford totalled around £183 billion at 26 March 2026. Based in Edinburgh, it is one of the leading privately owned investment management firms in the UK, with 59 partners and a staff of around 1,620. Baillie Gifford & Co Limited and Baillie Gifford & Co are both authorised and regulated by the Financial Conduct Authority. 62 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## Directors’ ## report The Directors present their report Corporate governance together with the audited Financial The Corporate governance report is set out on Statements of the Company for pages68 to 74 and forms part of this Report. the year to 31 January 2026. Managers and Company Secretaries Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed as the Company’s Alternative Investment Fund Manager (‘AIFM’) and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited. The Investment Management Agreement sets out the matters over which the Managers have authority in accordance with the policies and directions of, and subject to restrictions imposed by, the Board. The Management Agreement is terminable on not less than six months’ notice. Compensation fees would only be payable in respect of the notice period if termination were to occur sooner. The annual management fee is 0.75% on the first £50m of net assets, 0.65% on the next £200m of net assets and 0.55% on the remainder. The fees are calculated and paid on a quarterly basis. With effect from 1February 2026, the annual management fee is 0.65% on the first £250 million of net assets and 0.55% on the remaining net assets, calculated and payable quarterly. The Board as a whole fulfils the function of the Management Engagement Committee. 63 Governance report The Board reviews investment performance and Directors monitors the arrangements for the provision of Information about the Directors, including their investment management and secretarial services relevant experience and contribution to the Board, to the Company on a continuous basis. A formal can be found on pages 58 to 61. evaluation of the Managers by the Board is In accordance with the principles of the UK conducted annually. The Board’s annual evaluation Corporate Governance Code, all Directors will retire considers, amongst others, the following topics as at the Annual General Meeting and offer themselves recommended by the AIC Guide ‘Evaluation of the for re-election. Manager’: Following formal performance evaluation the Board • Quality of Team; considers that the performance of the Directors • Investment Management; continues to be effective and each remains • Commitment of Manager; committed to the Company. Their contribution to the Board is greatly valued and the Board recommends • Managing the Company; their re-election to shareholders. • Promotion; Director indemnification and insurance • Shareholders; and The Company has entered into qualifying third • Management Agreement. party deeds of indemnity in favour of each of the Following the most recent evaluation and Directors. The deeds cover any liabilities that may comprehensive review of strategy in December arise to a third party, other than the Company, for 2025, the Board is in agreement that the continuing negligence, default or breach of trust or duty. The appointment of Baillie Gifford & Co Limited as Directors are not indemnified in respect of liabilities AIFMand the delegation of investment management to the Company, any regulatory or criminal fines, services to Baillie Gifford & Co on the terms any costs incurred in connection with criminal agreed,is in the interest of shareholders as a whole. proceedings in which the Director is convicted or This is due to: the strength and experience of the civil proceedings brought by the Company in which investment management team; the Managers’ judgement is given against him or her. In addition, commitment to the investment trust sector as a the indemnity does not apply to any liability to the whole and to the Japanese markets in particular; extent that it is recovered from another person. and the Board’s continuing belief in the potential for Theindemnities were in force during the year to good long-term investment performance in relation 31January 2026 and up to the date of approval of to the amended investment policy and strategy. this report. The Board also recognises the high quality of the The Company maintains Directors’ and Officers’ Managers’ secretarial, administrative and corporate Liability Insurance. governance functions. Conflicts of interest The Board considers that maintaining a low ongoing charges ratio is in the best interest of shareholders. Each Director submits a list of potential conflicts of The Board continues to give careful consideration to interest and time commitments to the Nomination the basis of the management fee. Committee on an ongoing basis. The Committee considers these carefully, taking into account the circumstances surrounding them and makes a Depositary recommendation to the Board on whether or not In accordance with the AIFM Regulations, the AIFM the potential conflicts should be authorised. Board must appoint a depositary to the Company. The authorisation is for a period of one year. Having Bank of New York Mellon (International) Limited has considered the lists of potential conflicts and time been appointed as the Company’s depositary. commitments there were no situations which gave The depositary’s responsibilities include cash rise to a direct or indirect interest of a Director which monitoring, safe keeping of the Company’s financial conflicted with the interests of the Company. instruments, verifying ownership and maintaining a record of other assets and monitoring the Company’s compliance with investment limits and leverage requirements. The custody function is also undertaken by The Bank of New York Mellon (International) Limited (‘the custodian’). 64 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## Dividend Shin Nippon invests with the aim of maximising capital growth rather than income. Retained earnings are reinvested in the portfolio. The Board recommends a final dividend of 0.69p per ordinary share. If approved, the recommended final dividend will be paid on 26 May 2026 to shareholders on the register at the close of business on 17 April 2026. The ex-dividend date is 16 April 2026. The Company's dividend payment policy in respect of ordinary shares is to pay a single final dividend that will be broadly the minimum distribution to maintain investment trust status. ## Share capital ### Capital structure The Company's capital structure (excluding treasury shares) consists of 245,320,073 ordinary shares of 2 pence each at 31 January 2026 (2025 – 279,491,301 ordinary shares of 2 pence each). At 31 January 2026, 68,932,412 shares were held in treasury (2025 – 34,761,184). There are no restrictions concerning the holding or transfer of the Company's ordinary shares and there are no special rights attached to any of the shares. Treasury shares do not receive distributions and are not entitled to exercise the voting rights attached to them. Subsequent to the year end and up to 26 March 2026, the Company has continued to buy back shares under its existing authority and has also completed the tender offer for 15% of the Company's issued share capital, details of which are set out in the Chair's statement. Shares purchased pursuant to the tender offer have been held in treasury. As at 26 March 2026, the Company had 205,700,895 ordinary shares of 2 pence each in issue (excluding shares held in treasury) and 108,551,590 shares held in treasury. ### Capital entitlement On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to ordinary shareholders in proportion to their shareholdings. ### Voting Each ordinary shareholder present in person or by proxy is entitled to one vote on a show of hands and, on a poll, to one vote for every share held. Information on the deadlines for proxy appointments can be found on page 116. ## Major interests in the Company's shares The Company has not received any notification of major interests of 3.0% or more (for directly held interests) in the voting rights of the Company as at 31 January 2026. The Company has received notification of the following interests of 5.0% or more (for indirectly held interests) in the voting rights of the Company as at 31 January 2026. | Name | No. of ordinary 2p shares notified as at 31 January 2026 | % of issue | | --- | --- | --- | | 1607 Capital Partners LLC | 28,311,247 | 11.5 | | City of London Investment Management Company Limited | 29,805,918 | 12.1 | | Lazard | 13,602,797 | 5.5 | Subsequent to the year end on 12 February 2026 the Company received notification that 1607 Capital Partners LLC held 24,491,752 shares being 10.0% of the shares in issue. On 20 March 2026 the Company received notification that City of London Investment Management Company Limited held 23,608,128 being 11.4% of the shares in issue. There have been no further notifications of major interests in the Company's shares notified up to 26 March 2026. ## Analysis of shareholders at 31 January | | 2026 Number of shares held | 2026 % | 2025 Number of shares held | 2025 % | | --- | --- | --- | --- | --- | | Institutions | 99,955,164 | 40.7 | 100,406,183 | 35.9 | | Intermediaries | 137,439,791 | 56.0 | 172,838,053 | 61.8 | | Individuals* | 2,120,761 | 0.9 | 2,724,936 | 1.0 | | Marketmakers | 5,804,357 | 2.4 | 3,522,129 | 1.3 | | | **245,320,073** | **100.0** | **279,491,301** | **100.0** | \* Includes all holdings under 5,000 shares. ## Annual General Meeting ### Share issuance authority At the last Annual General Meeting, the Directors were granted authority to issue shares up to an aggregate nominal amount of £1,802,428.40 and to issue shares or sell shares held in treasury for cash on a non pre-emptive basis for cash up to an aggregate nominal amount of £540,782.60 representing 10% of the issued share capital of the Company as at 31 March 2025. Such authorities will expire at the conclusion of the Annual General Meeting to be held on 21 May 2026. 65 Governance report Resolution 12 in the Notice of Annual General Meeting seeks a general authority for the Directors to issue ordinary shares up to an aggregate nominal amount of £1,371,202.16. This amount represents 33.33% of the nominal value of the issued share capital excluding treasury shares at 26 March 2026 and meets institutional guidelines. No issue of ordinary shares will be made pursuant to the authorisation in Resolution 12 which would effectively alter the control of the Company without the prior approval of shareholders in general meeting. Resolution 13, which is proposed as a special resolution, seeks authority for the Directors to issue shares or sell shares held in treasury on a non pre-emptive basis for cash (i.e. without first offering such shares to existing shareholders pro-rata to their existing holdings) up to an aggregate nominal amount of £411,401.80 (representing 10% of the issued ordinary share capital of the Company excluding treasury shares as at 26 March 2026). The authorities sought in Resolutions 12 and 13 will continue until the conclusion of the Annual General Meeting to be held in 2027 or on the expiry of 15 months from the passing of the resolutions, if earlier. Such authorities will only be used to issue shares or sell shares from treasury at a premium to net asset value and only when the Directors believe that it would be in the best interests of the Company to do so. The Directors believe that the ability to buy-back shares at a discount and re-sell them or issue new shares at a premium are useful tools in smoothing supply and demand. During the year to 31 January 2026 the Company issued no shares. Between 1 February and 26 March 2026 the Company issued no further shares. 108,551,590 shares were held in treasury as at 26 March 2026. #### **Market purchases of own shares by the Company** At the last Annual General Meeting, the Company was granted authority to purchase up to 40,531,656 ordinary shares (equivalent to 14.99% of its issued share capital). This authority expires at the forthcoming Annual General Meeting. The Directors are seeking shareholders' approval at the Annual General Meeting to renew the authority to make market purchases of ordinary shares up to an amount representing approximately 14.99% of the Company's ordinary shares in issue at the date of passing of the Resolution, such authority to expire at the Annual General Meeting of the Company to be held in 2027. 34,171,228 shares were bought back during the year under review. Between 1 February and 26 March 2026, excluding the shares bought back as part of the recent 15% unconditional tender, the Company bought back 2,821,169 shares. The principal reasons for share buy backs are: i. to enhance net asset value for continuing shareholders by purchasing shares at a discount to the prevailing net asset value; and ii. to address any imbalance between the supply of and demand for the Company's shares that results in a discount of the quoted market price to the published net asset value per share. The Company may hold bought back shares 'in treasury' and then: a. sell such shares (or any of them) for cash (or its equivalent under the Companies Act 2006); or b. cancel such shares (or any of them). All buy backs will initially be held in treasury. Shares will only be sold from treasury at a premium to the net asset value per ordinary share. The Company shall not be entitled to exercise the voting rights attaching to treasury shares or be entitled to any dividend distributions. In accordance with the Listing Rules of the UK Listing Authority, the maximum price (excluding expenses) that may be paid on the exercise of the authority must not exceed the higher of: i. 5% above the average closing price on the London Stock Exchange of an ordinary share over the 5 business days immediately preceding the date of purchase; and ii. the higher of the last independent trade and the highest current independent bid on the London Stock Exchange. The minimum price (exclusive of expenses) that may be paid will be the nominal value of an ordinary share. Purchases of shares will be made within guidelines established, from time to time, by the Board. The Company does not have any warrants or options in issue. Your attention is drawn to Resolution 13 in the Notice of Annual General Meeting. 66 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC This authority, if conferred, will only be exercised In addition, as disclosed in the Dividend section if to do so would result in an increase in net on page 65, the Board has recommended a final asset value per ordinary share for the remaining dividend of 0.69p per ordinary share in respect of shareholders and if it is considered in the best the year ended 31 January 2026, payable on 26 May interests of shareholders generally. 2026 to shareholders on the register at the close of business on 17 April 2026. Financial instruments As the approval and completion of the tender offer The Company’s financial instruments comprise and the declaration of the dividend occurred after the itsinvestment portfolio, cash balances, bank year end, these represent non-adjusting events under borrowings and debtors and creditors that arise IAS 10 (or FRS 102 Section 32). Accordingly, the directly from its operations such as sales and Financial Statements for the year ended 31January purchases awaiting settlement and accrued income. 2026 do not reflect the impact of theseevents. The financial risk management objectives and policies arising from its financial instruments and Greenhouse gas emissions and Streamlined theexposure of the Company to risk are disclosed Energy and Carbon Report (‘SECR’) innote 18 to the Financial Statements. All of the Company’s activities are outsourced to third parties. The Company therefore has no | Articles of Association | greenhouse gas emissions to report from its | | --- | --- | | The Company’s Articles of Association may only be | operations, nor does it have responsibility for | | amended by special resolution at a general meeting | any other emissions producing sources under | | of shareholders. | the Companies Act 2006 (Strategic Report and | Directors’ Reports) Regulations 2013. For the reasons set out above, the Company considers Disclosure of information to Auditor itselfto be a low energy user and therefore is not The Directors confirm that so far as each of required to disclose energy and carbon information the Directors is aware there is no relevant audit under the SECR regulations. information of which the Company’s Auditor is unaware and the Directors have taken all the steps Bribery Act that they might reasonably be expected to have The Company has a zero tolerance policy towards taken as Directors in order to make themselves aware bribery and is committed to carrying out business of any relevant audit information and to establish that fairly, honestly and openly. The Managers also adopt the Company’s Auditor is aware of that information. a zero tolerance approach and have policies and procedures in place to prevent bribery. Independent Auditor Johnston Carmichael LLP is willing to continue Criminal Finances Act 2017 in office and in accordance with section 489 The Company has a commitment to zero tolerance and section 491(1) of the Companies Act 2006, towards the criminal facilitation of tax evasion. resolutions concerning its reappointment and remuneration will be submitted to the Annual Recommendation General Meeting. The Directors consider each resolution being proposed at the Annual General Meeting to be in the Post balance sheet events best interests of the Company and its shareholders Following shareholder approval on 18 February as a whole and they unanimously recommend that 2026, the Company undertook a tender offer for all shareholders vote in favour of them, as they up to 15% of its issued share capital (excluding intend to do where possible in respect of their shares held in treasury), details of which are set out own beneficial holdings of shares which amount in the circular dated 23 January 2026. Under the in aggregate to 194,189 shares, representing terms of the tender offer, eligible shareholders were approximately 0.08% of the issued share capital entitled to tender shares at a price equal to the Net ofthe Company at 31 January 2026. Asset Value per share as at the calculation date, less the costs of the tender and a 2% discount. The | tender offer was oversubscribed and, accordingly, | On behalf of the Board | | --- | --- | | 36,798,009 ordinary shares were purchased on | Jamie Skinner | | 19 March 2026. Shares purchased pursuant to the | Chair | | tender have been held in treasury. | 30 March 2026 | 67 Governance report ## Corporate ## governance report The Board is committed to Compliance achieving and demonstrating The Board confirms that the Company has complied high standards of corporate throughout the year under review with the relevant governance. This statement provisions of the Code and the recommendations of outlines how the principles of the the AIC Code. The Code includes provisions relating 2018 UK Corporate Governance to the role of the chief executive, executive directors’ Code, (the ‘Code’) which can remuneration and the need for an internal audit be found at frc.org.uk, and the function. Given that the Company is an externally- principles of the Association of managed investment trust, the Board considers Investment Companies (‘AIC’) these provisions are not relevant to the Company Code of Corporate Governance (the need for an internal audit function specific to issued in 2024 were applied the Company has been addressed on page 76). throughout the financial year. The The FRC has confirmed that AIC member companies AIC Code provides a framework who report against the AIC Code will be meeting of best practice for investment their obligations in relation to the UK Code (the AIC companies and can be found at Code can be found at theaic.co.uk). theaic.co.uk. The Board The Board comprises five Directors, all of whom arenon-executive. The Board appoints the Managersand Secretaries and approves the termsof the investment management agreement. It has a number of matters reserved for its approval including strategy, investment policy, currency hedging, gearing, share buy back and issuance policy, treasury matters, dividend and corporate governance policy. A separate meeting devoted to strategy is held each year. The Board also reviews the financial statements, investment transactions, revenue budgets and investment performance. Fulland timely information is provided to the Board to enable the Board to function effectively and to allowDirectors to discharge their responsibilities. The Chair, Mr J Skinner, is responsible for organising the business of the Board, ensuring its effectiveness and settingits agenda. Mr KJ Troup replaced MrJSkinner as the Audit Committee Chair in 2023. The executive responsibility for investment management has been delegated tothe Company’s Alternative Investment Fund Manager (‘AIFM’), Baillie Gifford & Co Limited, and in the context of a Board comprising entirely non-executive directors there is no chief executive officer. Professor S Vijayakumar is the Senior Independent Director. 68 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Board of Directors Comprises independent non-executive directors* Chair: Jamie Skinner Senior Independent Director: Professor Sethu Vijayakumar Audit Nomination Committee Committee Chair: Kevin Troup Chair: Abigail Rotheroe Purpose: The primary purpose of the Purpose: The main purpose of the Company’s Audit Committee is to provide Nomination Committee is to oversee Board oversight of the financial reporting process, recruitment and succession planning as the audit process, the Company’s system well as Board appraisals including of internal controls and compliance with identifying training needs. laws and regulations. Third-party service providers appointed by the Board Alternative Investment Fund Managers and Company Secretaries: Baillie Gifford & Co Limited (wholly owned subsidiary of Baillie Gifford & Co) Dealing activity and transaction reporting: Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited The Bank of Computershare Winterflood Johnston New York Mellon Investor Services Securities Ltd Carmichael LLP (International) Limited PLC Company broker Auditor Depositary Registrar * The independent non-executive directors are made up of Claire Finn, Abigail Rotheroe, Jamie Skinner, Kevin Troup and Professor Sethu Vijayakumar. Furtherdetails on their experience and contribution to the Board can be found on pages 58 to 61. 69 Governance report The Directors believe that the Board has a balance Directors’ attendance at meetings of skills and experience that enable it to provide Audit Nomination effective strategic leadership and proper governance Board Committee Committee of the Company. Information about the Directors, Number of meetings 5 4 1 including their relevant experience, can be found onpages 58 to 61. J Skinner* 5 – 1 CEC Finn † 4 4 1 The Directors recognise the importance of Board AE Rotheroe 5 4 1 succession planning. The composition of the Board and the succession plan are reviewed annually KJ Troup 5 4 1 toensure there is an appropriate balance of skills, S Vijayakumar 5 4 1 experience, length of service and diversity. * J Skinner is not a member of the Audit Committee but was in attendance. There is an agreed procedure for Directors to seek † Ms Finn was unable to attend a Board meeting due to a personal bereavement. independent professional advice if necessary at the The table above shows the attendance record for Company’s expense. thecore Board and Committee meetings held during the year. The Annual General Meeting was attended Appointments by all the Directors serving at that date, other than The terms and conditions of Directors’ appointments Ms CEC Finn, who was unable to attend due to a are set out in formal letters of appointment which are personal bereavement. available for inspection on request. Under the provisions of the Company’s Articles of Nomination Committee Association, a Director appointed during the year is The Nomination Committee consists of the required to seek election by shareholders at the next wholeBoard due to the small size of the Board. Annual General Meeting. MsAE Rotheroe is the Chair. The Committee meets at least annually andat such other times Independence of Directors as may be required. The Committee has written terms of reference that include reviewing the In accordance with the principles of the UK Board, identifying and nominating new candidates Corporate Governance Code, all Directors will offer for appointment to the Board, Board appraisal, themselves for re-election annually. succession planning and training. The Committee All the Directors are considered by the Board to also considers whether Directors should be beindependent of the Company and the Managers recommended for re-election byshareholders. and free of any business or other relationship The Committee is also responsible for considering thatcould interfere with the exercise of their Directors’ potential conflicts of interest and for independent judgement. making recommendations to the Board on whether or not the potential conflicts should be authorised. The Board is not controlled by long serving Directors. The Committee’s terms of reference are available Policy on tenure of the Chair onrequest from the Company and on the Company’s The Board recognises the importance of an website: shinnippon.co.uk. independent and effective chair. In the absence of exceptional circumstances, the Chair will retire Board diversity at the Annual General Meeting following the ninth anniversary of their appointment in accordance Diversity policy withthe UK Code of Corporate Governance. Appointments to the Board are made on merit and based on objective criteria, including the Meetings promotion of diversity of gender, social and ethnic backgrounds, and cognitive and personal strengths. There is an annual cycle of Board meetings which The priority in succession planning and appointing is designed to address, in a systematic way, overall new Directors is to identify candidates with the best strategy, review of investment policy, investment range of skills and experience to complement those performance, marketing, revenue budgets, dividend of the existing Directors, with a view to ensuring that policy and communication with shareholders. The the Board remains well placed to help the Company Board considers that it meets sufficiently regularly achieve its investment and governance objectives. todischarge its duties effectively. 70 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC The following disclosures are provided in respect of Performance evaluation the FCA Listing Rules targets that: i) 40% of a board During the year, the Board again utilised Boardforms, should be women; ii) at least one senior role should be an independent firm which assists companies with held by a woman; and iii) at least one board member the design and execution of board evaluations, should be from a non-white ethnic background, as to facilitate the performance evaluation of the defined by the Office of National Statistics (‘ONS’) Chair, each Director, the Board as a whole and its criteria. As an externally managed investment Committees. Each Director, including the Chair, was company with no chief executive officer (CEO) or invited to consider and respond to the evaluation chief financial officer (CFO), the roles which qualify questionnaires. The performance of each Director as senior under FCA guidance are Chair and Senior was appraised by Ms A Rotheroe, chair of the Independent Director (SID). The Board also considers Nomination Committee, while the appraisal of the Audit Committee Chair and Nomination Committee Chair was led by Mr S. Vijayakumar, the Company’s Chair to represent senior roles within this context. Senior Independent Director. The appraisals and evaluations considered, amongst other criteria, At 31 January 2026, which shall be used as the the balance of skills and experience on the Board, reference date for the disclosures in accordance training and development requirements, the with the Listing Rules 9.8.6R(9), the Board met contributions of individual Directors, and the overall the target on percentage of women and on ethnic effectiveness of the Board and its Committees. background but not the target of a woman in a seniorrole as classified by the FCA. The Board does Following this process it was concluded that there was consider the chair of the Nomination Committee a diverse range of skills within the Board and that the to be a senior role and this position was held by performance of each Director, the Chair, the Board a woman, Ms A Rotheroe. The Board considers and its Committees continues to be effective and each that its small size is the principal reason why the Director remains committed to theCompany. other Listing Rule targets were not met. The Board A review of the Chair’s and other Directors’ supports, and is ambitious to meet, all the Listing commitments was carried out on 3 December 2025 Rule diversity targets and will continue to review its and the Nomination Committee is satisfied that they size and composition both as part of its refreshment are capable of devoting sufficient time to the Company. cycle and more widely. There have beenno changes to Board membership since 31January 2026 and data has been collected on a self-reporting basis. Induction and training New Directors are provided with an induction Number of Percentage Senior programme which is tailored to the particular Board members of the Board roles circumstances of the appointee. Regular briefings are | Men 3 60% 2* | | provided on changes in regulatory requirements that | | --- | --- | --- | | Women 2 40% 0 | † | could affect the Company and Directors. Directors | | Prefer not to say – – – | | receive other relevant training as necessary. | * The Board also considers Audit Committee Chair to be a senior role. Therole of Audit Committee Chair is currently held by a man. Remuneration † The Board also considers Nomination Committee Chair to be a senior role. As all the Directors are non-executive, there is The role of Nomination Committee Chair is currently held by a woman. no requirement for a separate Remuneration Number of Percentage Senior Committee. Directors’ fees are considered by Board members of the Board roles the Board as a whole within the limits approved White British or 4 80% 1* by shareholders. The Company’s policy on OtherWhite (including remuneration is set out in the Directors’ minority white groups) Remuneration report on pages 78 to 81. Asian/Asian British 1 20% 1 Prefer not to say – – – Management Engagement Committee * The Board also considers Audit Committee Chair and Nomination The Directors have considered that a separate Committee Chair to be senior roles. The ethnic background of Management Engagement Committee is not required theAuditCommittee Chair is white. The ethnic background of the given the small size of the Board. Nomination Committee Chair is white. Board composition Audit Committee The Committee reviewed the composition of the The report of the Audit Committee is set out on Board during the year in consideration of succession pages 75 to 77. planning and developing a diverse pipeline. 71 Governance report Internal controls and risk management whether further action is required to manage theserisks. The Directors acknowledge their responsibility forthe Company’s risk management and internal The Directors confirm that they have reviewed the control systems and for reviewing their effectiveness of the Company’s risk management effectiveness. The systems are designed to manage and internal controls systems, which accord with rather than eliminate the risk of failure to achieve the FRC ‘Guidance on Risk Management, Internal business objectives and can only provide reasonable Control and Related Financial and Business but not absolute assurance against material Reporting’, and they have procedures in place misstatement orloss. toreview their effectiveness on a regular basis. Nosignificant weaknesses were identified in the The Board confirms that there is an ongoing yearunder review and up to the date of this Report. process for identifying, evaluating and managing the significant risks faced by the Company in The Board confirms that these procedures have accordance with the FRC guidance ‘Guidance on been in place throughout the Company’s financial Risk Management, Internal Control and Related year and continue to be in place up to the date Financial and Business Reporting’. ofapproval of this Report. The practical measures in relation to the design, During the year the Audit Committee considered implementation and maintenance of control policies the changes required by the new AIC Corporate and procedures to safeguard the Company’s Governance Code, published in 2024. Within the assets and to manage its affairs properly, including new Code, Provision 34, effective for accounting the maintenance of effective operational and periods starting on or after 1 January 2026, requires compliance controls have been delegated to the boards to monitor and, at least annually, review the Managers and Secretaries. effectiveness of the company’s risk management and internal control framework. The monitoring and The Board oversees the functions delegated to review should cover all material controls including the Managers and Secretaries and the controls financial, operational, reporting and compliance. managed by the AIFM in accordance with the UK Boards are required to report on that review in Alternative Investment Fund Managers Regulations their annual report providing; a description of (as detailed below). Baillie Gifford & Co’s Internal how the board has monitored and reviewed the Audit and Compliance Departments and the effectiveness of the framework, a declaration of the AIFM’s permanent risk function provide the Audit material controls as at the balance sheet date, and Committee with regular reports on their monitoring description of any material controls not operating programmes. The reporting procedures for these effectively as at the balance sheet date and action departments are defined and formalised within taken to improve them. a service level agreement. Baillie Gifford & Co conducts an annual review of its system of internal In preparation for reporting against Provision 34, controls which is documented within an internal the Audit Committee carried out a review of the controls report that complies with ISAE 3402. Company’s risk matrix and principal risks and This report is independently reviewed by Baillie have agreed a timeline with the Managers and Gifford & Co’s Auditor and a copy is provided to the Secretaries to develop an appropriate process Audit Committee. The report is reviewed by Baillie for the identification of material controls, how Gifford’s Business Risk Department, which reports assurance will be obtained and the evidence to a summary of key findings to the Audit Committee support the Board’s attestation in this regard in the and highlights any areas of concern. The Audit 2026 Annual Report and Financial Statements. As Committee also has access to the full report and the noted above, effective risk management and internal opportunity to review its contents and challenge the control systems were in place during the year under Managers as appropriate. review and Provision 34 is expected to result in changes to disclosures in the Annual Report and A report identifying the material risks faced by the Financial Statements rather than an overhaul of risk Company and the key controls employed to manage management and internalcontrols. these risks is reviewed by the Audit Committee. To comply with the UK Alternative Investment These procedures ensure that consideration is given Fund Managers Regulations, The Bank of New regularly to the nature and extent of risks facing the York Mellon (International) Limited acted as the Company and that they are being actively monitored. Company’s Depositary and Baillie Gifford & Co Where changes in risk have been identified during Limited as its AIFM. the year they also provide a mechanism to assess 72 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC The depositary’s responsibilities include cash Going concern monitoring, safe keeping of the Company’s In accordance with the Financial Reporting financial instruments, verifying ownership and Council’sguidance on going concern and liquidity risk, maintaining a record of other assets and monitoring the Directors have undertaken a rigorous reviewof the the Company’s compliance with investment limits Company’s ability to continue as a going concern. and leverage requirements. The depositary is The Company’s principal and emerging risks liable for the loss of financial instruments held include market risk, liquidity risk and credit risk. in custody. Thedepositarywill ensure that any An explanation of these risks and how they are delegate segregates the assets of the Company. managed is contained in note 18 to the Financial TheCompany’s depositary also acts as the Company’s Statements. The Board has, in particular, considered custodian. The custodian prepares reports on its key the impact of heightened market volatility, owing controls and safeguards which are independently to macroeconomic and geopolitical concerns. The reviewed by its Auditor. These reports are reviewed Board has reviewed the results of specific leverage by Baillie Gifford’s Business Risk Department and a and liquidity stress testing, but does not believe summary of the key points is reported to the Audit the Company’s going concern status is affected. Committee, with any concerns investigated. The Audit Stress tests are applied to the portfolio to identify Committee also has access to these reports and may the commitment leverage of the Company in two review them directly as part of its oversight of the scenarios: (i) gross assets reduce by 25%; and Company’s control environment. (ii)gross assets reduce by 50%. Stress tests are The Company’s registrar, Computershare Investor also performed to determine the impact on revenue Services PLC, provides reports on its internal control earnings per share as a result of an increase and framework which are subject to independent review. decrease in projected portfolio income of 25%. These reports are reviewed by Baillie Gifford’s Additionally, the Board has considered the 15% tender Business Risk Department and a summary of the key offer which was oversubscribed and completed on findings is reported to the Audit Committee, with any 19 March 2026. The impact of the 15% tender offer matters of concern investigated. The Audit Committee has been reflected in the Company’s forecasts and also has access to these reports and the opportunity stress testing and was taken into account as part of to review them directly and to raise any queries with the Board’s going concern assessment, and the Board the Managers or the registrar as appropriate. does not consider that the Company’s going concern The depositary provides the Audit Committee with status isaffected. half-yearly reports on its monitoring activities. The Company’s assets, which are primarily investments The AIFM has established a permanent risk in quoted securities (Level 1) and are readily realisable, management function to ensure that effective risk exceed its liabilities significantly and could be sold to management policies and procedures are in place repay borrowings if required. Allborrowings require and to monitor compliance with risk limits. The AIFM the prior approval of the Board. Gearing levels and has a risk management policy which covers the risks compliance with loan covenants are reviewed by the associated with the management of the portfolio, Board on a regular basis. As at 31 January 2026, the and the adequacy and effectiveness of this policy Company had a net current liability of £52.8 million is reviewed and approved at least annually. This primarily as a result of a revolving credit facility which review includes the risk management processes and is repayable on a three monthly basis although the systems and limits for each risk area. facility itself does not mature until 2027. Following The risk limits, which are set by the AIFM and the refinancing of the remaining ING loans with Bank approved by the Board, take into account the of America on 28 February 2025, the Company’s objectives, strategy and risk profile of the portfolio. loan facilities do not mature until November 2027 as These limits, including leverage (see page 120), disclosed in note 11 on page 103. The Company has are monitored and the sensitivity of the portfolio to continued to comply with the investment trust status key risks is undertaken periodically as appropriate requirements of section 1158 of the Corporation to ascertain the impact of changes in key variables Tax Act 2010 and the Investment Trust (Approved in the portfolio. Exceptions from limits monitoring Company) Regulations 2011. and stress testing undertaken by Baillie Gifford’s Business Risk Department are escalated to the AIFM and reported to the Board along with remedial measures being taken. 73 Governance report Accordingly, the Financial Statements have been and enabling the Managers to consider how ESG prepared on the going concern basis as it is the factors could impact long term investment returns. Directors’ opinion, having assessed the principal The Managers’ stewardship principles and examples and emerging risks and other matters set out in the of portfolio company engagement are set out on Viability Statement on page 53, that the Company pages18 to 22 and the statement of compliance will continue in operational existence for a period of with the UK Stewardship Code can be found on the at least twelve months from the date of approval of Managers’ website at bailliegifford.com. The Managers’ these Financial Statements. policy has been reviewed and endorsed by the Board. Baillie Gifford & Co has considered the Sustainable Relations with shareholders Finance Disclosure Regulation (‘SFDR’) and further The Board places great importance on communication details can be found on page 124. with shareholders. The Company’s Investment Climate change Manager meets regularly with shareholders and theirrepresentatives and reports to the Board. The Board recognises that climate change poses a TheCompany broker and the Managers’ sales team serious threat to our environment, our society and also have regular contact with current and potential to economies and companies around the globe. shareholders. The Chair and Directors are available to Addressing the underlying causes is likely to result meet with shareholders as appropriate and did so in in companies that are high emitters of carbon facing the year ended 31 January 2026. Shareholders greater societal and regulatory scrutiny and higher wishing to communicate with any members of costs to account for the true environmental impact theBoard may do so by writing to them at the of their activities. The Managers’ pursuit of long term Company’s registered office, emailing the Managers growth opportunities typically involves investment at enquiries@bailliegifford.com or through the in entrepreneurial, disruptive and technology-driven Company’s broker, Winterflood Securities Ltd (see businesses. These companies are often capital-light contact details in Company information on page 129). with a low carbon footprint. The Managers’ report Details of engagement with shareholders are included provides some examples of new investments that on page 56. address ESG themes, including climate change. The Company’s Annual General Meeting provides The Manager has engaged an external provider to a forum for communication with all shareholders. map the carbon footprint of the portfolio, using the The level of proxies lodged for each resolution information to prioritise engagement and understand is announced at the meeting and is published what higher emitting companies are doing to at shinnippon.co.uk subsequent to the meeting. manage climate risk better. This analysis estimates Thenotice period for the Annual General Meeting that the carbon intensity of the Shin Nippon portfolio isat least twenty working days. is 73% lower than the comparative index (MSCI Japan Small Cap Index). Carbon intensity measures Shareholders and potential investors may obtain up-to- the carbon efficiency of the portfolio per unit of dateinformation on the Company at shinnippon.co.uk. output and assesses the portfolio’s exposure to carbon-intensive companies. Corporate governance and stewardship The Company has given discretionary voting powers Baillie Gifford’s Task Force on Climate-Related to Baillie Gifford & Co. The Managers vote against Financial Disclosures (‘TCFD’) Climate Report resolutions they consider may damage shareholders’ isavailable on the Managers’ website at rights or economic interests and report their actions bailliegifford.com. A Shin Nippon-specific TCFD to the Board. climate report is also available on the Company’s page of the Managers’ website at shinnippon.co.uk. The Company believes that it is in the shareholders’ interests to consider environmental, social and The Managers are members of the Asian Corporate governance (‘ESG’) factors when selecting and Governance Association and International Corporate retaining investments and have asked the Managers Governance Network. to take these issues into account. The Managers do not exclude companies from their investment universe On behalf of the Board purely on the grounds of ESG factors but adopt a Jamie Skinner positive engagement approach whereby matters are Chair discussed with management with the aim of improving 30 March 2026 the relevant policies and management systems 74 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## Audit ## Committee report The Audit Committee consists of The Committee’s authority and duties are clearly all Directors with the exception of defined within its written terms of reference the Chair, Mr Skinner who attends which are available on request from the Company by invitation. The members of Secretaries and at shinnippon.co.uk. The terms of theCommittee consider that reference are reviewed annually. theyhave the requisite financial The Committee’s effectiveness is reviewed on an skills and experience to fulfil the annual basis as part of the Board’s performance responsibilities of the Committee. evaluation process. Mr Troup and Ms Rotheroe have Mr K Troup, Chair of the Committee, recent and relevant financial experience. is a Chartered Accountant. At least once a year the Committee meets with the external Auditor without any representative of the Managers being present. Main activities of the Committee The Committee met four times during the year, with two of the meetings focused on the review of the Company’s private company valuations. Johnston Carmichael LLP attended three of the meetings. Baillie Gifford & Co’s Internal Audit and Compliance Departments and the AIFM’s permanent risk function provided reports on their monitoring programmes for the two meetings focused on governance matters and the approval of the financial statements. The matters considered, monitored and reviewed by the Committee during the course of the year included the following: • the results announcement and the Annual and Interim Reports; • the Company’s accounting policies and practices and the implementation of the Managers’ valuation policy for investments in private (unlisted) companies; • the regulatory changes impacting the Company; • the fairness, balance and understandability of the Annual Report and Financial Statements and whether it provided the information necessary for shareholders to assess the Company’s performance, business model and strategy; 75 Governance report • the effectiveness of the Company’s internal The Managers agreed the prices of all the quoted control and risk management systems; investments at 31 January 2026 to external price sources and the holdings were agreed to • re-appointment, remuneration and engagement confirmations from the Company’s Custodian. letter of the external Auditor; • whether the audit services contract should be put Private company (unlisted) investments out to tender; The Committee reviewed the Managers’ valuation approach for investments in private (unlisted) • the policy on the engagement of the external companies (as described on page 40) and Auditor to supply non-audit services; approved the valuations of the private company • the independence and objectivity of the external (unlisted) investments following a detailed review Auditor and the effectiveness of the external audit of the valuation of each investment and relevant process; challenge where appropriate. The Managers agreed • the need for the Company to have its own internal the holdings in certificated form to confirmations audit function; from the Company’s custodian and holdings of uncertificated private company (unlisted) • internal controls reports received from the investments were agreed to confirmations from Managers, Custodian and Registrar; therelevant investee companies. • written assurance from the Company’s key The Managers confirmed to the Committee that they third party service providers regarding whether were not aware of any material misstatements in the they have been aware of any fraud or had any context of the Financial Statements as a whole and suspicions of fraud over the Company’s financial that the Financial Statements are in accordance with year; and applicable law and accounting standards. • the arrangements in place within Baillie Gifford &Co whereby their staff may, in confidence, raise Internal controls and risk management concerns about possible improprieties in matters The Committee reviewed the effectiveness of of financial reporting or other matters. theCompany’s risk management and internal controls systems as described on pages 72 and 73. Internal audit No significant weaknesses were identified in the The Committee continues to believe that the year under review. compliance and internal controls systems and the internal audit function in place within the Managers External Auditor provide sufficient assurance that a sound system To fulfil its responsibility regarding the independence of internal control, which safeguards shareholders’ of the external Auditor, the Committee reviewed: investment and the Company’s assets, is maintained. An internal audit function, specific to the Company • the audit plan f or the current year; is therefore considered unnecessary. • a repor t from the Auditor describing their arrangements to manage Auditor independence Financial reporting and received confirmation of their independence; The Committee considers that the most significant and issues likely to affect the Financial Statements are • the proposed audit f ee and extent of non-audit the existence and valuation of quoted investments, services provided by the external Auditor. For the as they represent 94.2% of total assets. year to 31 January 2026 the proposed audit fee was £43,000 and there were no non-audit fees Quoted investments forthe year to 31 January 2026 (2025 – nil). The majority of the investments are in quoted securities and market prices are readily available from independent external pricing sources. The Committee reviewed Baillie Gifford’s Report on Internal Controls which details the controls in place regarding the recording and pricing of investments. 76 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC To assess the effectiveness of the external Auditor, Having carried out the review described above, the Committee reviewed and considered: theCommittee is satisfied that the Auditor remains independent and effective for the purposes of this • the Auditor’s fulfilment of the agreed audit plan; year’s audit. and There are no contractual obligations restricting the • feedback from the Secretaries on the performance Committee’s choice of external Auditor. of the audit team. To fulfil its responsibility for oversight of the external Audit tender audit process the Committee considered and Following the audit tender process conducted during reviewed: the year to 31 January 2023, the Board unanimously • the Auditor’s engagement letter; decided to appoint Johnston Carmichael LLP as Auditor with effect from the audit of the Financial • the Auditor’s proposed audit plan; Statements for the year to 31 January 2024. • the audit fee; and In recognition of underlying audit rotation • a report from the Auditor on the conclusion of requirements, the Committee intends to undertake theaudit. afurther tender process during the year to 31January 2033. The audit partner responsible for the audit will be rotated at least every five years in accordance with professional and regulatory standards in order to Accountability and audit protect independence and objectivity and to provide The respective responsibilities of the Directors fresh challenge to the business. Mr Sutherland, and the Auditor in connection with the Financial thecurrent audit partner has held this role since Statements are set out on pages 82 to 91. May2023 and will continue as audit partner until theconclusion of the 2028 audit. On behalf of the Board Johnston Carmichael LLP have confirmed that they Kevin Troup believe they are independent within the meaning Audit Committee Chair ofregulatory and professional requirements and 30 March 2026 thatthe objectivity of the audit partner and staff isnot impaired. 77 Governance report # Directors’ remuneration report **This report has been prepared in accordance with the requirements of the Companies Act 2006.** ## **Statement by the Chair** The Directors’ Remuneration Policy is subject to shareholder approval every three years or sooner if an alteration to the policy is proposed. The Remuneration Policy which is set out below was approved at the Annual General Meeting in May 2023. No changes are proposed to the policy and an ordinary resolution for the approval of the Remuneration Policy will be put to the members at the forthcoming Annual General Meeting on 21 May 2026. The Board reviewed the level of fees during the year and it was agreed that from 1 February 2026 the Directors’ fees would increase to £31,000 from £30,000 and the additional fee for the Chair of the Audit Committee would increase to £6,000 from £5,000. The fee for the Chair would be increased to £44,500 from £43,000, and the additional fee for the Chair of the Nomination Committee would remain at £1,000. The Directors’ fees were last increased on 1 February 2025. ## **Directors’ remuneration policy** The Board is composed wholly of non-executive Directors, none of whom has a service contract with the Company. There is no separate remuneration committee and the Board as a whole considers changes to Directors’ fees from time to time. Baillie Gifford & Co Limited, the Company Secretaries, provide comparative information when the Board considers the level of Directors’ fees. 78 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC The Board’s policy is that the remuneration of The fees payable to the Directors in the subsequent Directors should be set at a reasonable level that is financial periods will be determined following an commensurate with the duties and responsibilities annual review of the Directors’ fees. of the role and consistent with the requirement Expected to attract and retain Directors of the appropriate fees for the quality and experience. The Board believes that | | year ending | | | Fees as at | | | --- | --- | --- | --- | --- | --- | | the fees paid to the Directors should reflect the | 31 Jan 2027 | | 31 Jan 2026 | | | | | | £ | | | £ | experience of the Board as a whole, be fair and should take account of the level of fees paid by Chair’s fee 44,500 43,000 comparable investment trusts. Any views expressed Non-executive Director fee 31,000 30,000 by shareholders on the fees being paid to Directors Additional fee for Chair of the 6,000 5,000 will be taken into consideration by the Board when Audit Committee reviewing the Board’s policy on remuneration. Additional fee for Chair of the 1,000 1,000 Nomination Committee Non-executive Directors are not eligible for any other remuneration or benefits apart from the Total aggregate annual fees that 250,000 250,000 can be paid to the Directors in reimbursement of allowable expenses. There are any year under the Directors’ noperformance conditions relating to Directors’ Remuneration Policy, as set feesand there are no long term incentive schemes out in the Company’s Articles or pension schemes. No compensation is payable of Association (see ‘Limit on onloss of office. Directors’ Remuneration’ above) Limit on Directors’ remuneration Annual report on remuneration The fees for the non-executive Directors are payable An ordinary resolution for the approval of this report monthly in arrears and are determined within the will be put to the members at the forthcoming limit set out in the Company’s Articles of Association Annual General Meeting. which is currently £250,000 in aggregate. Any The law requires the Company’s Auditor to audit change to this limit requires shareholder approval. certain of the disclosures provided in this report. The basic and additional fees payable to Directors in Where disclosures have been audited, they are respect of the year ended 31 January 2026 and the indicated as such. The Auditor’s opinion is included expected fees payable in respect of the year ending in Johnston Carmichael LLP’s report on page 85. 31 January 2027 are set out in the following table. Directors’ remuneration for the year (audited) The Directors who served during the year received the following remuneration in the form of fees and taxable benefits. This represents the entire remuneration paid to the Directors. | | | | 2026 | | | | | | | 2025 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2026 | | Taxable | | 2026 | | 2025 | | Taxable | | | 2025 | | | | Fees | | benefits * | | Total | | Fees | | benefits * | | | Total | | | Name | | £ | | £ | | £ | | £ | | | £ | | £ | CEC Finn 30,000 2,332 32,332 29,000 1,714 30,714 AE Rotheroe 31,000 3,547 34,547 30,000 2,047 32,047 J Skinner (Chair) 43,000 1,908 44,908 42,000 1,903 43,903 KJ Troup 35,000 1,149 36,149 34,000 927 34,927 S Vijayakumar 30,000 2,024 32,024 29,000 435 29,435 169,000 10,960 179,960 164,000 7,026 171,026 * Comprises travel and subsistence expenses incurred by Directors in the course of travel to attend Board and Committee meetings held at the Company’s registered office in Edinburgh. These amounts have been grossed up for income tax. 79 Governance report Annual change in Directors’ fees (role-based) The table below contains the annual percentage change in remuneration over the four financial years prior to the current year in respect of the various director roles. | | | Year to | | Year to | | Year to | | | Year to | | | Year to | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 January | | 31 January | | 31 January | | | 31 January | | | 31 January | | | | Fee rates: | | 2026 | | 2025 | | 2024 | | | 2023 | | | 2022 | | | Chairman £43,000 | | | | £42,000 | | £42,000 | | £42,000 | | | | £37,500 | | | | | +2.4% | | 0.0% | | 0.0% | | | +12.0% | | | 0.0% | | | Chair of the Audit Committee £35,000 | | | | £34,000 | | £32,000 | | £32,000 | | | | £28,500 | | | | | +2.9% | | +6.3% | | 0.0% | | | +12.3% | | | 0.0% | | | Directors £30,000 | | | | £29,000 | | £28,000 | | £28,000 | | | | £25,000 | | | | | +3.4% | | +3.6% | | 0.0% | | | +12.0% | | | 0.0% | | | Additional fee for Chair of the Nomination | | £1,000 | | £1,000 | | £1,000 | | | | – | | | – | | Committee | | 0.0% | | 0.0% | | | n/a | | | – | | | – | Notes: 1. The table shows the annual change in Directors’ fees by role over the five financial years to 31 January 2026. 2. Percentage changes are calculated based on the fee applicable for each role in the relevant financial year compared to the prior year. 3. The figures shown exclude any taxable benefits and therefore reflect base Directors’ fees only. 4. The additional fee for the Chair of the Nomination Committee is shown separately and is payable in addition to the standard Directors’ fee. Directors’ interests (audited) Relative importance of spend on pay The table below shows the actual expenditure during | | Ordinary 2p | | Ordinary 2p | | | | --- | --- | --- | --- | --- | --- | | | shares held | | shares held | | the year in relation to Directors’ remuneration and | | Nature | | at 31 Jan | | at 31 Jan | | distributions to shareholders. | Name | of interest | 2026 | 2025 | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | CEC Finn Beneficial 10,000 10,000 | | | | 2026 | 2025 | Change | | | | | | | £’000 | £’000 | | % | AE Rotheroe Beneficial 20,189 20,189 Directors’ remuneration 180 171 5.3 J Skinner Beneficial 50,000 50,000 Share buy-backs 42,137 35,219 19.6 KJ Troup Beneficial 100,000 59,000 S Vijayakumar Beneficial 14,000 14,000 Directors’ service details The Directors are not required to hold shares in the Date of Due date for Company. The Directors at the year end, and their Name appointment re-election interests in the Company, were as shown above. S Vijayakumar 1 September 2018 AGM in 2026 There have been no other changes in the Directors’ interests up to 26 March 2026. J Skinner 7 December 2018 AGM in 2026 KJ Troup 1 March 2020 AGM in 2026 Statement of voting at Annual General Meeting CEC Finn 1 November 2021 AGM in 2026 At the last Annual General Meeting, of the proxy votes AE Rotheroe 1 March 2022 AGM in 2026 received in respect of the Directors’ remuneration report, 99.0% were in favour, 0.8% were against and votes withheld were 0.2%. At the last Annual General Meeting at which the Directors’ Remuneration Policy was considered (May 2023), 99.2% were in favour, 0.6% were against and votes withheld were 0.2%. 80 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC | Company performance | Approval | | --- | --- | | The following graph compares the total return | The Directors’ remuneration report on pages78 | | (assuming all dividends are reinvested) to ordinary | to 81 was approved by the Board of Directors | | shareholders compared to the total shareholder | andsigned on its behalf on 30 March2026. | return on a notional investment made up of shares in the component parts of the Company’s comparative index. This index was chosen for comparison Jamie Skinner purposes as it is the index against which the Chair Company has measured its performance over the period covered by the graph. The share price total return is also compared to the FTSE All-Share Index. This index is a widely used measure of performance for UK listed companies. Performance graph (figures have been rebased to 100 at 31 January 2016) 300 200 100 0 20262016 2018 2021 2023 20252017 20202019 2022 2024 Cumulative to 31 January ● Baillie Gifford Shin Nippon’s ● Comparative ● FTSE All-share share price * index † index * Source: LSEG and underlying data providers. See disclaimer on page 123. * Total return (assuming net dividends are reinvested). See Glossary of terms and Alternative Performance Measures on pages 125 to 128. † The comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms). See disclaimer on page 123. Past performance is not a guide to future performance. 81 Governance report ## Statement of Directors’ ## responsibilities in respect of the Annual Report and the Financial Statements The Directors are responsible for preparing The Directors are responsible for keeping adequate the Annual Report and Financial Statements in accounting records that are sufficient to show and accordance with applicable law and regulations. explain the Company’s transactions and disclose with reasonable accuracy at any time the financial Company law requires the Directors to prepare position of the Company and enable them to ensure Financial Statements for each financial year. Under that its Financial Statements comply with the that law they are required to prepare the Financial Companies Act 2006. They are responsible for such Statements in accordance with United Kingdom internal control as they determine is necessary to accounting standards, including FRS 102 ‘The enable the preparation of Financial Statements that Financial Reporting Standard applicable in the UK are free from material misstatement, whether due and Republic of Ireland’. to fraud or error, and have general responsibility for Under company law the Directors must not approve taking such steps as are reasonably open to them to the Financial Statements unless they are satisfied safeguard the assets of the Company and to prevent that they give a true and fair view of the state of and detect fraud and other irregularities. affairs of the Company and of its profit or loss for Under applicable law and regulations, the Directors that period. In preparing these Financial Statements, are also responsible for preparing a Strategic report, the Directors are required to: Directors’ report, Directors’ Remuneration report • select suitable accounting policies and then apply andCorporate Governance Statement that complies them consistently; with that law and those regulations. • make judgements and estimates that are The Directors are responsible for ensuring the reasonable and prudent; Annual Report and the Financial Statements aremade available on a website. The Directors • state whether applicable United Kingdom havedelegated operational responsibility to the accounting standards have been followed, subject Managers for the maintenance and integrity of to any material departures disclosed and explained the corporate and financial information included in the Financial Statements; on the Company’s website. Legislation in the • assess the Company’s ability to continue as a United Kingdom governing the preparation and going concern, disclosing, as applicable, matters dissemination of Financial Statements may differ related to going concern; and from legislation in other jurisdictions. • use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. 82 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Responsibility Statement of the Directors in respect of the Annual Financial Report We confirm that to the best of our knowledge: • the Financial Statements which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and net return of the Company; • the Strategic report/Directors’ report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company and business faces; and • the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, businessmodel and strategy. On behalf of the Board Jamie Skinner Chair 30 March 2026 Notes The following notes relate to financial statements published on a website and are not included in the printed version of the Annual Report and Financial Statements: • The maintenance and integrity of the Baillie Gifford & Co website is the responsibility of Baillie Gifford & Co; the work carried out by the auditors does not involve consideration of these matters and accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. • Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 83 ## Financial ## report The Financial Statements for the year to 31 January 2026 are set out on pages 84 to 111 and have been prepared in accordance with FRS102 ‘The Financial Reporting Standard applicable in the UK andRepublic of Ireland’. Baillie Gifford Shin Nippon PLC ## Independent ## Auditor’s report To the members of Baillie Gifford Shin Nippon PLC Opinion Our approach to the audit We have audited the financial statements of Baillie We planned our audit by first obtaining an Gifford Shin Nippon PLC (“the Company”), for the understanding of the Company and its environment, year ended 31 January 2026, which comprise the including its key activities delegated by the Board to Income statement, the Balance sheet, the Statement relevant approved third-party service providers and of changes in equity, the Cash flow statement, the controls over provision of those services. and Notes to the financial statements, including We conducted our audit using information significant accounting policies. The financial maintained and provided by Baillie Gifford & reporting framework that has been applied in their Co Limited (the “Investment Manager”, and the preparation is applicable law and United Kingdom “Company Secretaries”), the Bank of New York Accounting Standards, including Financial Reporting Mellon (International) Limited (the “Custodian” Standard 102 The Financial Reporting Standard and the “Depositary”) and Computershare Investor applicable in the UK and Republic of Ireland (United Services PLC (the “Registrar”) to whom the Company Kingdom Generally Accepted Accounting Practice). has delegated the provision of services. In our opinion the financial statements: We tailored the scope of our audit to reflect our risk • Give a true and fair view of the state of the assessment, taking into account such factors as Company’s affairs as at 31 January 2026 and of its the types of investments within the Company, the net return for the year then ended; involvement of Baillie Gifford & Co, the accounting processes and controls, and the industry in which • Have been properly prepared in accordance with the Company operates. United Kingdom Generally Accepted Accounting Practice; and The scope of our audit was influenced by our application of materiality. We set certain quantitative • Have been prepared in accordance with the thresholds for materiality. These together with requirements of the Companies Act 2006. qualitative considerations, helped us to determine the scope of our audit and the nature, timing and Basis for opinion extent of our audit procedures on the individual We conducted our audit in accordance with financial statement line items and disclosures and International Standards on Auditing (UK) (ISAs in the evaluation of the effect of misstatements, (UK)) and applicable law. Our responsibilities both individually and in aggregate on the financial under those standards are further described in statements as a whole. the Auditor responsibilities for the audit of the financial statements section of our report. We are Key audit matters independent of the Company in accordance with the Key audit matters are those matters that, in our ethical requirements that are relevant to our audit professional judgement, were of most significance in of the financial statements in the UK, including the our audit of the financial statements of the current FRC’s Ethical Standard, as applied to listed public period and include the most significant assessed interest entities, and we have fulfilled our other risks of material misstatement (whether or not due ethical responsibilities in accordance with these to fraud) that we identified. These matters included requirements. We believe that the audit evidence those which had the greatest effect on: the overall we have obtained is sufficient and appropriate to audit strategy; the allocation of resources in the audit; provide a basis for our opinion. and directing the efforts of the engagement team. 85 Financial report These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters. We summarise below the key audit matters in arriving at our audit opinion above, together with how our audit addressed these matters and the results of our audit work in relation to these matters. Key audit matter How our audit addressed the key audit matter and our conclusions Valuation of quoted investments We assessed controls reports provided by Baillie Gifford & Co to evaluate the (as per page 76 (Audit Committee report), page 96 design and implementation of key controls. (Principal accounting policies) and Note 9). We compared market prices and exchange rates applied to all quoted At 31 January 2026 the valuation of the quoted investments held at 31 January 2026 to an independent third-party source investments portfolio was £404.0m. and recalculated the investment valuations. As this is the largest component of the Company’s We obtained average trading volumes from an independent third-party source Balance sheet and a key driver of the Company’s for all quoted investments held at year end and assessed their liquidity. net assets and total return, the valuation of quoted From our completion of these procedures, we identified no material investments has been designated as a key audit matter, misstatements in relation to the valuation of quoted investments. being one of the most significant assessed risks of material misstatement due to error. There is a further risk that investments held at fair value may not be actively traded and the quoted prices may not be reflective of their fair value. Valuation and ownership of unlisted investments We performed a walkthrough of the unlisted investment valuation and (as per page 76 (Audit Committee report), page 96 ownership process to evaluate the design and implementation of key controls. (Principal accounting policies) and Note 9). We obtained evidence of Valuation Committee and Board oversight and At 31 January 2026 the valuation of the unlisted approval of the unlisted investment valuations. investments was £7.6m. We evaluated the competence, capabilities and objectivity of S&P Global in The Company determines the fair value of unlisted their role as the Managers’ expert. investments in accordance with the revised We tested 100% of the unlisted investments and as part of our procedures International Private Equity and Venture Capital (IPEV) have assessed the Directors’ estimate of the fair value of the unlisted valuation guidelines. Management is required to investments with reference to IPEV guidelines. estimate the valuation of unlisted investments, which For 100% of unlisted investments held, we: requires them to select an appropriate valuation method • Obtained an understanding of the sector for each investee company for the and appropriate inputs. There is significant estimation period being audited, making enquiries of the Managers; required, therefore this has been designated as a key audit matter, being one of the most significant assessed • Gained an understanding of the original investment rationale and valuation risks due to fraud or error. basis, along with any milestones set; Additionally, there is a risk that the Company does not • Obtained an update on the investment, paying particular attention to have proper legal title to the investments recorded as progress against pre-set milestones and/or indications that a reduction in held at year end. valuation may be appropriate; • Assessed the appropriateness of the valuation basis used, paying particular attention to any changes from the prior year valuation basis; • Agreed data used in the valuation models to independent sources and assessed how management get comfortable with the accuracy and reliability of investee company information; • Reperformed the enterprise value calculations and waterfalls to ensure mathematical accuracy; and • Where appropriate, developed an auditor’s point estimate or range. We performed back-testing over investment disposals to assess for potential management bias in the valuation process. We tested the Moneytree K.K. disposal and agreed it to the sales and purchase agreement. We agreed 100% of unlisted investments held at year end via direct email confirmation from the investee companies. We assessed whether the accounting for the investments and the disclosures in relation to valuation estimates within the financial statements were in accordance with accounting policies, the AIC SORP and FRS102 requirements. From our completion of these procedures, we identified no material misstatements in relation to the valuation and ownership of the unlisted investments. 86 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Key audit matter How our audit addressed the key audit matter and our conclusions Revenue recognition, including allocation of special We assessed controls reports provided by Baillie Gifford & Co to evaluate the dividends as revenue or capital returns design and implementation of key controls. (as per page 97 (Principal accounting policies) and We assessed whether income was recognised and disclosed in accordance Note2). with the financial reporting framework, including the AIC SORP and the Investment income recognised up to 31 January 2026 Company’s accounting policies. amounted to £7.1m, consisting primarily of dividend income We recalculated 100% of dividends due to the Company from quoted from quoted investments. investments based on investment holdings throughout the year and announcements made by investee companies. Revenue-based performance metrics are often one of the key performance indicators for stakeholders. The We agreed a sample of dividends received to bank statements. investment income received by the Company during the We compared exchange rates applied to all overseas dividends received from year directly impacts these metrics and the minimum the investee companies during the year to an independent third-party source. dividend required to be paid by the Company. We assessed the completeness of the special dividend population with There is a risk that revenue is incomplete, did not occur reference to third-party market data and assessed management’s judgement or is inaccurate through failure to recognise income for allocating special dividends as revenue or capital returns with reference to entitlements or failure to appropriately account for their the underlying commercial circumstances of dividend payments. treatment. It has therefore been designated a key audit From our completion of these procedures, we identified no material matter, being one of the most significant assessed risks of misstatements in relation to revenue recognition, including allocation of material misstatement due to error. special dividends as revenue or capital returns. Additionally, there is a fraud risk of incorrect allocation of special dividends as revenue or capital returns, as judgement is required in determining their allocation within the Income Statement. Our application of materiality We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature and extent of our work and in evaluating the results of that work. | Materiality measure Value | | Materiality measure Value | | | --- | --- | --- | --- | | Materiality for the financial statements as a whole | £3.59m | Specific materiality | £0.18m | | We have set materiality as 1% of net assets as we | (2025: | Recognising that there are transactions and | (2025: | | believe that net assets is the primary performance | £3.90m) | balancesof a lesser amount which could influence | £0.19m) | | measure used by investors and is the key driver of | | the understanding of users of the financial statements | | | shareholder value. We determined the measurement | | we calculate a lower level of materiality for testing | | | percentage to be commensurate with the risk and | | such areas. | | complexity of the audit and the Company’s listed Specifically, given the importance of the distinction status. between revenue and capital for the Company, we also applied a separate testing threshold for the revenue column of the Income statement, set at our Performance materiality £2.69m Audit Committee reporting threshold. Performance materiality represents amounts set by (2025: We have set a specific materiality in respect of related the auditor at less than materiality for the financial £2.92m) party transactions and Directors’ remuneration. statements as a whole, to reduce to an appropriately We used our judgement in setting these thresholds low level the probability that the aggregate of and considered our past experience of the audit, the uncorrected and undetected misstatements exceeds history of misstatements and industry benchmarks for materiality for the financial statements as a whole. specific materiality. In setting this we consider the Company’s overall control environment, our past experience of the audit that indicates a lower risk of material misstatements. Audit Committee reporting threshold £0.18m Based on our judgement of these factors, we have We agreed with the Audit Committee that we would (2025: set performance materiality at 75% of our overall report to them all differences in excess of 5% of overall £0.19m) financial statement materiality. materiality in addition to other identified misstatements that warranted reporting on qualitative grounds, in our view. For example, an immaterial misstatement as a result of fraud. During the course of the audit, we reassessed initial materiality and found no reason to alter the basis of calculation used at year-end. 87 Financial report Conclusions relating to going concern financial statements does not cover the other information and, except to the extent otherwise In auditing the financial statements, we have explicitly stated in our report, we do not express concluded that the Directors’ use of the going any form of assurance conclusion thereon. Our concern basis of accounting in the preparation responsibility is to read the other information of the financial statements is appropriate. Our and, in doing so, consider whether the other evaluation of the Directors’ assessment of the information is materially inconsistent with the Company’s ability to continue to adopt the going financial statements or our knowledge obtained in concern basis of accounting included: the course of the audit, or otherwise appears to be • Evaluating management’s method of assessing materially misstated. If we identify such material going concern, including consideration of the inconsistencies or apparent material misstatements, Tender Offer held in February 2026, bank loans, we are required to determine whether this gives and market conditions and macro-economic rise to a material misstatement in the financial uncertainties; statements themselves. If, based on the work we have performed, we conclude that there is a material • Assessing and challenging the forecast cashflows misstatement of this other information, we are and associated sensitivity modelling, including required to report that fact. assessing the loan covenants used by the Directors in support of their going concern We have nothing to report in this regard. assessment; • Obtaining and recalculating management’s Opinions on other matters prescribed by the assessment of the Company’s ongoing Companies Act 2006 maintenance of investment trust status; and In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in • Assessing the adequacy of the Company’s going accordance with the Companies Act 2006. concern disclosures included in the Annual Report. In our opinion, based on the work undertaken in the course of the audit: Based on the work we have performed, we have not identified any material uncertainties relating to • The information given in the Strategic Report events or conditions that, individually or collectively, and the Directors’ Report for the financial year may cast significant doubt on the Company’s for which the financial statements are prepared is ability to continue as a going concern for a period consistent with the financial statements; and of at least twelve months from when the financial • The Strategic Report and the Directors’ Report statements are authorised for issue. have been prepared in accordance with applicable In relation to the Company’s reporting on how it has legal requirements. applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in Matters on which we are required to report relation to the Directors’ statement in the financial by exception statements about whether the Directors considered In the light of the knowledge and understanding of it appropriate to adopt the going concern basis the Company and its environment obtained in the ofaccounting. course of the audit, we have not identified material Our responsibilities and the responsibilities of misstatements in the Strategic Report or the the Directors with respect to going concern are Directors’ Report. described in the relevant sections of this report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 Other information requires us to report to you if, in our opinion: The other information comprises the information • Adequate accounting records have not been kept included in the Annual Report and Financial by the Company, or returns adequate for our audit Statements other than the Financial Statements have not been received from branches not visited and our auditor’s report thereon. The Directors are by us; or responsible for the other information contained within the Annual Report. Our opinion on the 88 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC • The financial statements and the part of the Responsibilities of Directors Directors’ Remuneration Report to be audited are As explained more fully in the Directors’ not in agreement with the accounting records and Responsibilities Statement set out on pages 82 returns; or and 83, the Directors are responsible for the • Certain disclosures of Directors’ remuneration preparation of the financial statements and for being specified by law are not made; or satisfied that they give a true and fair view, and for such internal control as the Directors determine is • We have not received all the information and necessary to enable the preparation of financial explanations we require for our audit; or statements that are free from material misstatement, • A corporate governance statement has not been whether due to fraud or error. In preparing the prepared by the Company. financial statements, the Directors are responsible for assessing the Company’s ability to continue as Corporate governance statement a going concern, disclosing, as applicable, matters related to going concern and using the going concern We have reviewed the Directors’ statement in basis of accounting unless the Directors either intend relation to going concern, longer-term viability and to liquidate the Company or to cease operations, or that part of the Corporate Governance Statement have no realistic alternative but to do so. relating to the entity’s compliance with the provisions of the UK Corporate Governance Code specified for our review by the Listing Rules. Auditor’s responsibilities for the audit of the financial statements Based on the work undertaken as part of our audit, Our objectives are to obtain reasonable assurance we have concluded that each of the following about whether the financial statements as a whole elements of the Corporate Governance Statement is are free from material misstatement, whether due materially consistent with the financial statements or to fraud or error, and to issue an auditor’s report our knowledge obtained during the audit: that includes our opinion. Reasonable assurance is • The Directors’ statement with regards to the a high level of assurance but is not a guarantee that appropriateness of adopting the going concern an audit conducted in accordance with ISAs (UK) basis of accounting and any material uncertainties will always detect a material misstatement when it identified set out on page 73; exists. Misstatements can arise from fraud or error and are considered material if, individually or in the • The Directors’ explanation as to its assessment aggregate, they could reasonably be expected to of the Company’s prospects, the period this influence the economic decisions of users taken on assessment covers and why the period is the basis of these financial statements. appropriate set out on page 53; A further description of our responsibilities for • The Directors’ statement on fair, balanced and the audit of the financial statements is located understandable set out on page 83; on the Financial Reporting Council’s website at: • The Directors’ statement on whether it has a http://www.frc.org.uk/auditorsresponsibilities. This reasonable expectation that the Company will description forms part of our auditor’s report. be able to continue in operation and meets its liabilities set out on page 53; Extent to which the audit was considered capable of detecting irregularities, including fraud • The Board’s confirmation that it has carried out a robust assessment of the emerging and principal Irregularities, including fraud, are instances of risks set out on page 49 to 55; non-compliance with laws and regulations. We design procedures in line with our responsibilities, • The section of the Annual Report that outlined above, to detect material misstatements in describes the review of the effectiveness of risk respect of irregularities, including fraud. The extent management and internal control systems set out to which our procedures are capable of detecting on pages 72 and 73; and irregularities, including fraud is detailed below. • The section describing the work of the Audit Committee set out on pages 75 to 77. 89 Financial report We assessed whether the engagement team incentive for fraudulent activity. We considered the collectively had the appropriate competence and overall control environment and how management capabilities to identify or recognise non-compliance and those charged with governance oversee the with laws and regulations by considering their implementation and operation of controls. In areas experience, past performance and support available. of the financial statements where the risks were considered to be higher, we performed procedures All engagement team members were briefed to address each identified risk. We identified a on relevant identified laws and regulations and heightened fraud risk in relation to: potential fraud risks at the planning stage of the audit. Engagement team members were reminded • Management override of controls; to remain alert to any indications of fraud or non- • Valuation of unlisted investments; and compliance with laws and regulations throughout the audit. • Allocation of special dividends. We obtained an understanding of the legal and Audit procedures performed in response to the regulatory frameworks that are applicable to the heightened fraud risks relating to valuation of unlisted Company and the sector in which it operates, investments and allocation of special dividends are focusing on those provisions that had a direct effect set out in the section on key audit matters above, and on the determination of material amounts and audit procedures performed in response to the risk of disclosures in the financial statements. The most management override of controls are included below. relevant frameworks we identified include: In addition to the above, the following procedures • Companies Act 2006; were performed to provide reasonable assurance that the financial statements were free of material fraud • Financial Conduct Authority (FCA) listing and orerror: Disclosure Guidance and Transparency Rules (DTR); • Reviewing minutes of meetings of those charged with governance for reference to: breaches • The principles of the UK Corporate Governance of laws and regulation or for any indication of Code applied by the 2024 AIC Corporate any potential litigation and claims; and events Governance Code (the “AIC Code”); or conditions that could indicate an incentive • Industry practice represented by the Statement of or pressure to commit fraud or provide an Recommended Practice: Financial Statements of opportunity to commit fraud; Investment Trust Companies and Venture Capital • Reviewing the level of and reasoning behind the Trusts (“the SORP”) issued in July 2022; Company’s procurement of legal and professional • The Company’s qualification as an investment services; trusts under section 1158 of the Corporation Tax • Performing audit procedures over the risk of Act 2010; and management override of controls, including • UK Generally Accepted Accounting Practice. testing of journal entries and other adjustments for appropriateness, performing unpredictability We gained an understanding of how the Company testing, recalculating the investment management is complying with these laws and regulations by fee, evaluating the business rationale of making enquiries of management and those charged significant transactions outside the normal course with governance. We corroborated these enquiries of business and assessing judgements made by through our review of relevant correspondence with management in their calculation of accounting regulatory bodies and board meeting minutes. estimates for potential management bias; We assessed the susceptibility of the financial • Completion of appropriate checklists and use statements to material misstatement, including how of our experience to assess the Company’s fraud might occur, by meeting with management compliance with the Companies Act 2006 and the and those charged with governance to understand Listing Rules; and where it was considered there was susceptibility to fraud. This evaluation also considered how • Agreement of the financial statement disclosures management and those charged with governance to supporting documentation. were remunerated and whether this provided an 90 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Our audit procedures were designed to respond to Use of our report the risk of material misstatements in the financial This report is made solely to the Company’s statements, recognising that the risk of not detecting members, as a body, in accordance with Chapter a material misstatement due to fraud is higher than 3 of Part 16 of the Companies Act 2006. Our audit the risk of not detecting one resulting from error, as work has been undertaken so that we might state fraud may involve intentional concealment, forgery, to the Company’s members those matters we are collusion, omission or misrepresentation. There are required to state to them in an auditor’s report and inherent limitations in the audit procedures performed for no other purpose. To the fullest extent permitted and the further removed non-compliance with laws by law, we do not accept or assume responsibility to and regulations is from the events and transactions anyone other than the Company and the Company’s reflected in the financial statements, the less likely we members as a body, for our audit work, for this would become aware of it. report, or for the opinions we have formed. Other matters which we are required toaddress Richard Sutherland (Senior Statutory Auditor) For and on behalf of Johnston Carmichael LLP Following the recommendation of the Audit Statutory Auditor Committee, we were appointed by the Board on Edinburgh 17 May 2023 to audit the financial statements for United Kingdom the year ended 31 January 2024 and subsequent 30 March 2026 financial years. The period of our total uninterrupted engagement is three years, covering the years ended 31 January 2024 to 31 January 2026. The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain independent of the Company in conducting our audit. Our audit opinion is consistent with the additional report to the Audit Committee. 91 Financial report ## Income ## statement For the year ended 31 January | | | 2026 | 2026 | 2026 | | 2025 | 2025 | 2025 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | | Capital | Total | Revenue | | Capital | Total | | Notes | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’000 | Gains/(losses) on investments 9 – 5,584 5,584 – (34,865) (34,865) Currency gains 13 – 5,321 5,321 – 2,415 2,415 Income 2 7,052 – 7,052 7,389 – 7,389 Investment management fee 3 (2,270) – (2,270) (2,482) – (2,482) Other administrative expenses 4 (889) – (889) (714) – (714) Net return before finance costs 3,893 10,905 14,798 4,193 (32,450) (28,257) and taxation Finance costs of borrowings 5 (1,208) – (1,208) (1,465) – (1,465) Net return before taxation 2,685 10,905 13,590 2,728 (32,450) (29,722) Tax on ordinary activities 6 (704) – (704) (739) – (739) Net return after taxation 1,981 10,905 12,886 1,989 (32,450) (30,461) Net return per ordinary share 7 0.77p 4.22p 4.99p 0.67p (10.97p) (10.30p) Note: Dividends per share payable 8 0.69p 0.60p and paid in respect of the year The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in this statement derive from continuing operations. A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement. The accompanying notes on pages 96 to 111 are an integral part of the Financial Statements. 92 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC # Balance sheet ## As at 31 January | | Notes | 2026 £'000 | 2026 £'000 | 2025 £'000 | 2025 £'000 | | --- | --- | --- | --- | --- | --- | | **Fixed assets** | | | | | | | Investments held at fair value through profit or loss | 9 | | 411,604 | | 453,211 | | **Current assets** | | | | | | | Debtors | 10 | 2,427 | | 1,989 | | | Cash at bank | 18 | 16,689 | | 20,797 | | | | | 19,116 | | 22,786 | | | **Creditors** | | | | | | | Amounts falling due within one year | 11 | (71,897) | | (86,307) | | | **Net current liabilities** | | | (52,781) | | (63,521) | | **Net assets** | | | **358,823** | | **389,690** | | **Capital and reserves** | | | | | | | Share capital | 12 | | 6,285 | | 6,285 | | Share premium account | 13 | | - | | 260,270 | | Distributable capital reserve | 13 | | 260,270 | | - | | Capital redemption reserve | 13 | | 21,521 | | 21,521 | | Capital reserve | 13 | | 68,213 | | 99,445 | | Revenue reserve | 13 | | 2,534 | | 2,169 | | **Shareholders' funds** | | | **358,823** | | **389,690** | | **Net asset value per ordinary share*** | 14 | | **146.3p** | | **139.4p** | The Financial Statements of Baillie Gifford Shin Nippon PLC (Company Registration Number SC093345) on pages 92 to 111 were approved and authorised for issue by the Board and were signed on its behalf on 30 March 2026. Jamie Skinner Chair \* See Glossary of terms and Alternative Performance Measures on pages 125 to 128. The accompanying notes on pages 96 to 111 are an integral part of the Financial Statements. 93 Financial report ## Statement of ## changes in equity For the year ended 31 January 2026 | | | | Share | Distributable | | | Capital | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | | capital | redemption | | Capital | Revenue | | Shareholders’ | | | | capital | account | | | reserve | | reserve | reserve | reserve | | | funds | | Notes | £’000 | | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | Shareholders’ funds at 1 February 2025 6,285 260,270 – 21,521 99,445 2,169 389,690 Ordinary shares bought back into treasury 12 – – – – (42,137) – (42,137) Cancellation of share premium account – (260,270) 260,270 – – – – Net return on ordinary activities after 7 – – – – 10,905 1,981 12,886 taxation Dividend paid in the year 8 – – – – – (1,616) (1,616) Shareholders’ funds at 31 January 2026 6,285 – 260,270 21,521 68,213 2,534 358,823 For the year ended 31 January 2025 | | | | Share | | Capital | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | redemption | | Capital | Revenue | | Shareholders’ | | | | capital | account | | | reserve | reserve | reserve | | | funds | | Notes | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | Shareholders’ funds at 1 February 2024 6,285 260,270 21,521 167,114 2,602 457,792 Ordinary shares bought back into treasury 12 – – – (35,219) – (35,219) Net return on ordinary activities after 7 – – – (32,450) 1,989 (30,461) taxation Dividend paid in the period 8 – – – – (2,422) (2,422) Shareholders’ funds at 31 January 2025 6,285 260,270 21,521 99,445 2,169 389,690 The accompanying notes on pages 96 to 111 are an integral part of the Financial Statements. 94 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC # Cash flow statement ## For the year ended 31 January | | Notes | 2026 £'000 | 2026 £'000 | 2025 £'000 | 2025 £'000 | | --- | --- | --- | --- | --- | --- | | **Cash flows from operating activities** | | | | | | | Net return/(loss) on ordinary activities before taxation | | 13,590 | | (29,722) | | | Net (gains)/losses on investments | | (5,584) | | 34,865 | | | Currency gains | | (5,321) | | (2,415) | | | Finance costs of borrowings | | 1,208 | | 1,465 | | | Overseas withholding tax | | (709) | | (805) | | | Decrease in debtors, accrued income and prepaid expenses | | 55 | | 638 | | | Increase/(decrease) in creditors | | 149 | | (402) | | | **Cash inflow from operations** | | | 3,388 | | 3,624 | | Interest paid | | | (1,384) | | (1,460) | | **Net cash inflow from operating activities** | | | **2,004** | | **2,164** | | **Cash flows from investing activities** | | | | | | | Acquisitions of investments | | (96,423) | | (112,102) | | | Disposals of investments | | 142,314 | | 165,814 | | | **Net cash inflow from investing activities** | | | **45,891** | | **53,712** | | Ordinary shares bought back into treasury and stamp duty thereon | 12 | (42,137) | | (35,219) | | | Bank loans repaid | | (456,693) | | (35,907) | | | Bank loans drawn down | | 449,990 | | 35,907 | | | **Net cash (outflow) from financing activities** | | | **(48,840)** | | **(35,219)** | | **Dividends paid** | 8 | | **(1,616)** | | **(2,422)** | | **(Decrease)/increase in cash and cash equivalents** | | | **(2,561)** | | **18,235** | | Exchange movements | | | (1,547) | | (403) | | Cash and cash equivalents at 1 February | 18 | | 20,797 | | 2,965 | | **Cash and cash equivalents at 31 January*** | 18 | | **16,689** | | **20,797** | \* Cash and cash equivalents represent cash at bank and deposits repayable on demand. The accompanying notes on pages 96 to 111 are an integral part of the Financial Statements. 95 Financial report # Notes to the Financial Statements ## 01 Principal accounting policies The Financial Statements for the year to 31 January 2026 have been prepared in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' on the basis of the accounting policies set out below which are unchanged from the prior year and have been applied consistently. ### a. Basis of accounting All of the Company's operations are of a continuing nature and the Financial Statements are prepared on a going concern basis under the historical cost convention, modified to include the revaluation of fixed asset investments at fair value through profit or loss, and on the assumption that approval as an investment trust under section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 will be retained. The Board has, in particular, considered the impact of heightened market volatility and reviewed the results of specific leverage and liquidity stress testing, but does not believe the Company's going concern status is affected. The Company's assets, which are primarily investments in quoted securities and are readily realisable (Level 1) exceed its liabilities significantly and could be sold to repay borrowings if required. All borrowings require the prior approval of the Board. Gearing levels and compliance with loan covenants are reviewed by the Board on a regular basis. As at 31 January 2026, the Company had a net current liability of £52.8 million primarily as a result of the revolving credit facility which is repayable on a three monthly basis although does not mature until 2027. The Company has continued to comply with the investment trust status requirements of section 1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved Company) Regulations 2011. Accordingly, the Financial Statements have been prepared on the going concern basis as it is the Directors' opinion, having assessed the principal and emerging risks and other matters, as set out in the Viability Statement on page 53, that the Company will continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements. The Financial Statements have been prepared in accordance with the Companies Act 2006, applicable United Kingdom Accounting Standards and with the AIC's Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in November 2014 and updated in July 2022 with consequential amendments. In order to reflect better the activities of the Company and in accordance with guidance issued by the AIC, supplementary information which analyses the profit and loss account between items of a revenue and capital nature has been presented in the Income statement. The Company has only one material segment being that of an investment trust company, investing principally in small Japanese companies. Financial assets and financial liabilities are recognised in the Company's Balance sheet when it becomes a party to the contractual provisions of the instrument. The Directors consider the Company's functional currency to be sterling as the Company's shareholders are predominantly based in the UK, and the Company and its investment manager, who are subject to the UK's regulatory environment are also UK based. ### b. Investments #### Purchases and sales Purchases and sales of investments are accounted for on a trade date basis. All investments are designated as valued at fair value through profit or loss upon initial recognition and are measured at subsequent reporting dates at fair value. #### Listed investments The fair value of listed security investments is bid value or, in the case of holdings on certain recognised overseas exchanges, at last traded prices. #### Private company investments Private company investments are valued at fair value by the Directors following a detailed review and appropriate challenge of the valuations proposed by the Managers. The Managers' private company investment policy applies techniques consistent with the International Private Equity and Venture Capital Valuation Guidelines 2025 ('IPEV'). The techniques applied are predominantly market-based approaches. The market-based approaches available under IPEV are set out below and are followed by an explanation of how they are applied to the Company's private company portfolio: - Industry valuation benchmarks; and The nature of the private company portfolio currently will influence the valuation technique applied. The valuation approach recognises that, as stated in the IPEV Guidelines, the price of a recent investment, 96 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC if resulting from an orderly transaction, generally ii. Interest from fixed interest securities is recognised on represents fair value as at the transaction date and an effective yield basis. may be an appropriate starting point for estimating fair iii. Overseas dividends include withholding tax deducted value at subsequent measurement dates. However, atsource. consideration is given to the facts and circumstances as at the subsequent measurement date, including iv. Interest receivable on bank deposits are recognised on changes in the market or performance of the investee an accruals basis. company. Milestone analysis is used where appropriate v. If scrip is taken in lieu of dividends in cash, the net to incorporate the operational progress of the investee amount of the equivalent cash dividend is credited to company into the valuation. Additionally, the background the revenue account. Any excess in the value of the to the transaction must be considered. As a result, shares received over the amount of the cash dividend various multiples-based techniques are employed to foregone is recognised as capital. assess the valuations particularly in those companies with established revenues. Discounted cashflows are used e. Expenses where appropriate. An absence of relevant industry peers All expenses are accounted for on an accruals basis may preclude the application of the Industry Valuation and are charged to the revenue account except where Benchmarks technique and an absence of observable they relate directly to the acquisition or disposal of an prices may preclude the Available Market Prices approach. investment, in which case they are added to the cost All valuations are cross-checked for reasonableness by of the investment or deducted from the sale proceeds. employing relevant alternativetechniques. Expenses directly relating to the issuance of shares are The private company investments are valued according deducted from the proceeds of such issuance. to a three monthly cycle of measurement dates. The fair f. Finance costs value of the private company investments will be reviewed Long term borrowings are carried in the Balance sheet before the next scheduled three monthly measurement at amortised cost, representing the cumulative amount date on the following occasions: of net proceeds after issue, plus accrued finance costs. • at the year end and half year end of the Company; and The finance costs of such borrowings are allocated to the revenue account at a constant rate on the carrying • where there is an indication of a change in fair value as amount. defined in the IPEV guidelines (commonly referred to as ‘trigger’ events). Gains and losses on the repurchase or early settlement ofdebt are wholly charged to capital. Gains and losses Gains and losses on investments are recognised in the g. Taxation Income statement as capital items. Gain and losses Current tax is provided at the amounts expected to be arising from foreign exchange differences are recognised paid or recovered. Deferred taxation is provided on an in the Income statement and classified as a revenue or undiscounted basis on all timing differences which have capital item as appropriate. originated but not reversed by the Balance sheet date, calculated at the tax rates expected to apply when the c. Cash and cash equivalents timing differences reverse, based on what has been Cash and cash equivalents include cash in hand and enacted or substantially enacted, relevant to the benefit deposits repayable on demand. Deposits are repayable or liability. Deferred tax assets are recognised only to on demand if they can be withdrawn at any time without the extent that it is more likely than not that there will be notice and without penalty or if they have a maturity or taxable profits from which underlying timing differences period of notice of not more than one working day. can be deducted. d. Income h. Dividends payable i. Income from equity investments is brought into account Dividends are not recognised in the Financial Statements on the date on which the investments are quoted ex- unless there is an obligation to pay at the Balance dividend or, where no ex-dividend date is quoted, when sheetdate. the Company’s right to receive payment is established. 97 Financial report i. Foreign currencies Judgements Transactions involving foreign currencies are converted The Directors consider that the preparation of the at the rate ruling at the time of the transaction. Monetary Financial Statements involves the following key assets, liabilities and equity investments held at fair value judgements: (i) the determination of the functional in foreign currencies are translated at the closing rates of currency of the Company as sterling (see rationale in exchange at the Balance sheet date, with the exception 1(a) above); and (ii) the fair valuation of the unlisted of forward foreign exchange contracts which are valued investments. The key judgements in the fair valuation at the forward rate ruling at the Balance sheet date. process are: (i) the Managers’ determination of the Any gain or loss arising from a change in exchange rate appropriate application of the International Private Equity subsequent to the date of the transaction is included as and Venture Capital Guidelines 2025 (‘IPEV’) to each an exchange gain or loss in the Income statement and unlisted investment; and (ii) the Directors’ consideration classified as a revenue or capital item as appropriate. ofwhether each fair value is appropriate following detailed review and challenge. The judgement applied j. Share premium account inthe selection of the methodology used for determining During the year, the Company obtained court approval the fair value of each unlisted investment can have a to cancel the share premium account. The balance significant impact upon the valuation. previously recognised in the share premium account Estimates was transferred to a newly created distributable capital reserve. The key estimate in the Financial Statements is the determination of the fair value of the unlisted investments k. Distributable capital reserve by the Managers for consideration by the Directors. This Following court approval during the year, a distributable estimate is key as it significantly impacts the valuation capital reserve was created through the cancellation of the unlisted investments at the Balance sheet date. of the Company’s share premium account. The reserve The significance of this estimate has remained broadly represents the amount previously held in the share unchanged over the year with the marginal decrease in premium account and is available for distribution and to private company investments from 1.9% of total assets fund the repurchase of the Company’s own shares. to 1.8% (see note 9). The fair valuation process involves estimation using subjective inputs that are unobservable l . Capital reserve (for which market data is unavailable). The main estimates Gains and losses on disposal of investments, changes in involved in the selection of the valuation process inputs the fair value of investments held, exchange differences are: of a capital nature and the amount by which other assets and liabilities valued at fair value differ from their book i. the selection of appropriate comparable companies cost are dealt with in this reserve. Purchases of the in order to derive revenue multiples and meaningful Company’s own shares are also funded from this reserve. relationships between enterprise value, revenue and The capital reserve, to the extent it constitutes realised earnings growth. Comparable companies are chosen profits, is distributable. onthe basis of their business characteristics and growth patterns; m. Capital redemption reserve ii. the selection of a revenue metric (either historic or The nominal value of ordinary share capital repurchased forecast); and cancelled is transferred out of the called-up share capital and into the capital redemption reserve. iii. the application of an appropriate discount factor to reflect the reduced liquidity of unlisted companies n . Revenue reserve versus their quoted peers; The revenue profit or loss for the year is taken to or from this reserve. The revenue reserve when in surplus may be iv. the estimation of the probability assigned to an exit distributed by way of a dividend. being through an initial public offering (‘IPO’) or a company sale; o . Single segment reporting v. the selection of an appropriate industry benchmark The Company is engaged in a single segment of business, index to assist with the valuation validation or the being investment business, consequently no business application of valuation adjustments, particularly in the segmental analysis is provided. absence of established earnings or closely comparable p . Significant accounting estimates and judgements peers; and The preparation of the Financial Statements requires vi. the calculation of valuation adjustments derived from the use of estimates, assumptions and judgements. milestone analysis (i.e. incorporating operational These estimates, assumptions and judgements affect success against the plan/forecasts of the business the reported amounts of assets and liabilities, at the intothe valuation). reporting date. While estimates are based on best judgement using information and financial data available, Fair value estimates are cross-checked to alternative the actual outcome may differ from these estimates. The estimation methods where possible to improve the key sources of estimation and uncertainty relate to the robustness of the estimates. The risk of an over or under assumptions used in the determination of the fair value estimation of fair values is greater when methodologies ofthe unlisted investments, which are detailed in note 9 are applied using more subjective inputs. on pages 101 and 102. 98 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## 02 Income | | 2026 £'000 | 2025 £'000 | | --- | --- | --- | | **Income from investments** | | | | Listed overseas dividends | 7,052 | 7,387 | | **Other income** | | | | Deposit interest | – | 2 | | **Total income** | **7,052** | **7,389** | | **Total income comprises** | | | | Dividends from financial assets designated at fair value through profit or loss | 7,052 | 7,387 | | Interest from financial assets not at fair value through profit or loss | – | 2 | | **Total income** | **7,052** | **7,389** | ## 03 Investment management fee – all charged to revenue | | 2026 £'000 | 2025 £'000 | | --- | --- | --- | | Investment management fee | 2,270 | 2,482 | Details of the Investment Management Agreement are set out on page 63. Baillie Gifford & Co Limited's annual management fee is 0.75% on the first £50m of net assets, 0.65% on the next £200m of net assets and 0.55% on the remainder. With effect from 1 February 2026, the annual management fee is 0.65% on the first £250m of net assets and 0.55% on the remaining net assets. ## 04 Other administrative expenses | | 2026 £'000 | 2025 £'000 | | --- | --- | --- | | General administrative expenses | 423* | 294 | | Directors' fees (see Directors' remuneration report on pages 78 to 81) | 169 | 164 | | Auditor's remuneration (statutory audit of the Company's Financial Statements) | 43 | 42 | | Custody fees | 49 | 49 | | Depository fees | 41 | 45 | | Registrar fees | 67 | 23 | | Marketing expenses† | 97 | 97 | | | **889** | **714** | * General administrative expenses for the year to 31 January 2026 increased primarily due to higher professional fees associated with corporate activities undertaken during the period. † The Company is part of a marketing programme which includes all the investment trusts managed by the Managers. The marketing strategy has an ongoing objective to stimulate demand for the Company's shares. The cost of this marketing strategy is borne, in partnership, by the Company and the Managers. The Managers match the Company's marketing contribution and provide the resource to manage and run the programme. ## 05 Finance costs of borrowings | | 2026 £'000 | 2025 £'000 | | --- | --- | --- | | Interest on bank loans | 1,208 | 1,465 | The bank loan interest disclosed includes £0 paid (2025 – £9,000) in respect of yen deposits held at the custodian bank. 99 Financial report 06 Tax on ordinary activities 2026 2025 £’000 £’000 Analysis of charge in year Overseas taxation (charged to revenue) 704 739 Factors affecting tax charge for year The tax assessed for the year is lower than the average standard rate of corporation tax in the UK of 25%*. The differences are explained below: Net gain/(loss) on ordinary activities before taxation 13,590 (29,722) Net return on ordinary activities multiplied by the standard rate of corporation tax in the 3,398 (7,431) UK of 25%* (2025 – 25%) Effects of: Capital returns not taxable (2,726) 8,112 Income not taxable (1,763) (1,846) Overseas withholding tax 704 739 Taxable losses in year not utilised 1,091 1,165 Total tax charge for the year 704 739 * A tax rate of 25% reflects the UK corporation tax rate of 25% effective from 1 April 2023. As an investment trust, the Company’s capital gains are not subject to tax. At 31 January 2026 the Company had a potential deferred tax asset of £13,478,000 (2025 – £13,551,000) on tax losses which are available to be carried forward and offset against future taxable profits. A deferred tax asset has not been recognised on these losses as it is considered unlikely that the Company will generate taxable profits in the future and it is not liable to tax on its capital gains. The unrecognised deferred tax asset has been calculated using a corporation tax rate of 25% (2025 – 25%). Due to the Company’s status as an investment trust, and the intention to continue meeting the conditions required to retain approval for the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on therevaluation or disposal of investments. 07 Net return per ordinary share | | | 2026 | 2026 | 2026 | | 2025 | 2025 | 2025 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | | Capital | Total | Revenue | | Capital | Total | | Net return on ordinary activities after | | 0.77p 4.22p 4.99p 0.67p (10.97p) (10.30p) | | | | | | | taxation Revenue return per ordinary share is based on the net revenue gain on ordinary activities after taxation of £1,981,000 (2025 – gain of £1,989,000) and on 258,475,084 ordinary shares (2025 – 295,693,208) being the weighted average number of ordinary shares in issue during the year. Capital return per ordinary share is based on the net capital gain for the financial year of £10,905,000 (2025 – net capital loss of £32,450,000) and on 258,475,084 ordinary shares (2025 – 295,693,208) being the weighted average number of ordinary shares in issue during the year. There are no dilutive or potentially dilutive shares in issue. 100 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## 08 Ordinary dividends | | 2026 p | 2025 p | 2026 £'000 | 2025 £'000 | | --- | --- | --- | --- | --- | | **Amounts recognised as distributions in the year:** | | | | | | Previous year's final dividend (paid 29 May 2025) | 0.60p | 0.80p | 1,616 | 2,422 | We set out below the total dividends proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. There is a revenue surplus for the year to 31 January 2026 of £1,981,000 which is available for distribution by way of a dividend payment (year to 2025 – a revenue surplus of £1,989,000). | | 2026 p | 2025 p | 2026 £'000 | 2025 £'000 | | --- | --- | --- | --- | --- | | **Amounts paid and payable in respect of the financial year:** | | | | | | Proposed final dividend per ordinary share (payable 26 May 2026) | 0.69p | 0.60p | 1,693 | 1,677 | ## 09 Fixed assets – investments | As at 31 January 2026 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | --- | --- | --- | --- | --- | | Quoted equities | 404,032 | – | – | 404,032 | | Unlisted securities | – | – | 7,572 | 7,572 | | **Total financial asset investments** | **404,032** | **–** | **7,572** | **411,604** | | As at 31 January 2025 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | --- | --- | --- | --- | --- | | Quoted equities | 444,025 | – | – | 444,025 | | Unlisted securities | – | – | 9,186 | 9,186 | | **Total financial asset investments** | **444,025** | **–** | **9,186** | **453,211** | Investments in securities are financial assets designated at fair value through profit or loss. In accordance with Financial Reporting Standard 102, the tables provide an analysis of these investments based on the fair value hierarchy described below, which reflects the reliability and significance of the information used to measure their fair value. ### Fair value hierarchy The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit or loss account are measured is described below. Fair value measurements are categorised on the basis of the lowest level input that is significant to the fair value measurement. **Level 1** – using unadjusted quoted prices for identical instruments in an active market; **Level 2** – using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and **Level 3** – using inputs that are unobservable (for which market data is unavailable). The valuation techniques used by the Company are explained in the accounting policies on pages 96 and 97. Unlisted securities are categorised as Level 3. None of the financial liabilities are designated at fair value through profit or loss in the Financial Statements. 101 Financial report 09 Fixed assets – investments (continued) Fair value hierarchy (continued) | | Quoted | Unlisted | | 2026 | 2025 | | --- | --- | --- | --- | --- | --- | | securities | | securities | | Total | Total | | | £’000 | £’000 | † | £’000 | £’000 | Cost of investments at 1 February 2025 449,357 20,141 469,498 563,548 Investment holding losses at 1 February 2025 (5,332) (10,955) (16,287) (23,847) Value of investments at 1 February 2025 444,025 9,186 453,211 539,701 Analysis of transactions during the year: Purchases at cost 95,611 – 95,611 113,229 Sales proceeds received (140,274) (2,528) (142,802) (164,854) Realised (losses)/gains on investments (3,504) 877 (2,627) (42,425) Movement in unrealised appreciation 8,174 37 8,211 7,560 Fair value of investments held at 31 January 2026 404,032 7,572 411,604 453,211 Cost of investments held at 31 January 2026 401,190 18,490 419,680 469,498 Investment holding losses at 31 January 2026 2,842 (10,918) (8,076) (16,287) Fair value of investments held at 31 January 2026 404,032 7,572 411,604 453,211 † The unlisted security investments include holdings of ordinary shares in Gojo & Company, Spiber and JEPLAN. The company received £142,802,000 (2025 – £164,854,000) from investments sold in the year. The book cost of these investments when they were purchased was £145,430,000 (2025 – £207,279,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. Transaction costs of £48,000 (2025 – £48,000) and £113,000 (2025 – £49,000) were suffered on purchases and sales respectively. 2026 2025 £’000 £’000 Gains/(losses) on investments Losses on sales (2,627) (42,425) Changes in investment holding gain 8,211 7,560 5,584 (34,865) The loss on sales of £2,627,000 (2025 – £42,425,000) and increase in investment holding gains of £8,211,000 (2025 – £7,560,000) include amounts relating to: i) changes in local currency fair value of the investments; and, ii) movements in the yen/sterling exchange rate. 10 Debtors 2026 2025 £’000 £’000 Accrued income 1,605 1,652 Sales for subsequent settlement 684 196 Other debtors and prepayments 138 141 2,427 1,989 The debtors above are stated at amortised cost which is a reasonable approximation to fair value. 102 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## 11 Creditors – amounts falling due within one year | | 2026 £'000 | 2025 £'000 | | --- | --- | --- | | Purchases for subsequent settlement | 840 | 1,652 | | ING Bank N.V revolving loan | – | 46,775 | | Bank of America revolving loan | 70,105 | 36,901 | | Other creditors and accruals | 952 | 979 | | | **71,897** | **86,307** | Included in creditors is £568,000 (2025 – £611,000) in respect of the investment management fee. The creditors above are stated at amortised cost which is a reasonable approximation to fair value. Amortisation of the loan arrangement fees during the year was £nil (2025 – £19,000). ### Borrowing facilities #### At 31 January 2026 Bank of America – 3 year ¥16,100 million revolving credit facility maturing 7 November 2027. The rollover date is 12 February 2026. #### At 31 January 2025 ING Bank N.V. – 3 year ¥2,000 million revolving credit facility maturing 3 March 2026. ING Bank N.V. – 3 year ¥7,000 million revolving credit facility maturing 23 November 2026. Bank of America – 3 year ¥7,100 million revolving credit facility maturing 7 November 2027. The covenants during the year relating to the ING Bank N.V. and Bank of America loans were as follows: (i) Total borrowings shall not exceed 35% of the Company's net asset value; and (ii) The Company's minimum net asset value shall be £225 million. During the year, Bank of America removed covenant (ii). There were no breaches in loan covenants during the year. Security has been provided to ING Bank N.V. and Bank of America in respect of the loans by way of floating charges. The interest rate, maturity profiles and fair value of the bank loans are shown in note 18. During the year, the existing ¥2bn and ¥7bn revolving credit facilities with ING were cancelled and incorporated into the cheaper secured revolving credit facility with Bank of America (extended to ¥16.1bn). ## 12 Share capital | | 2026 Number | 2026 £'000 | 2025 Number | 2025 £'000 | | --- | --- | --- | --- | --- | | Allotted and fully paid ordinary shares of 2p each | 245,320,073 | 4,906 | 279,491,301 | 5,590 | | Treasury shares of 2p each | 68,932,412 | 1,379 | 34,761,184 | 695 | | | **314,252,485** | **6,285** | **314,252,485** | **6,285** | At 31 January 2026 the Company had remaining authority to buy back 17,628,183 shares. 34,171,228 shares were bought back during the year for total consideration of £42,137,000 (2025 – 30,266,184 shares for a total consideration of £35,219,000). Share buy-backs are funded from the capital reserve. During the year the Company issued no shares on a non pre-emptive basis (2025 – no shares). Between 1 February and 26 March 2026, excluding the shares bought back as part of the recent 15% unconditional tender, the Company did not issue any shares and bought back 2,821,169 shares. 103 Financial report 13 Capital and reserves | | | Share | Distributable | | | Capital | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Share | premium | | | capital | redemption | | Capital | Revenue | Shareholders’ | | | capital | account | | | reserve | | reserve | reserve | reserve | | funds | | £’000 | | £’000 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | At 1 February 2025 6,285 260,270 – 21,521 99,445 2,169 389,690 Cancellation of share premium account – (260,270) 260,270 – – – – Shares purchased for treasury – – – – (42,137) – (42,137) Net loss on disposal of investments – – – – (2,627) – (2,627) Changes in investment holding gains – – – – 8,211 – 8,211 Exchange differences on bank loans – – – – 6,869 – 6,869 Exchange differences on settlement – – – – (346) – (346) of investment transactions Other exchange differences – – – – (1,202) – (1,202) Net revenue return for the year – – – – – 1,981 1,981 Dividend paid in the year – – – – – (1,616) (1,616) At 31 January 2026 6,285 – 260,270 21,521 68,213 2,534 358,823 | | | Share | | Capital | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Share | premium | | redemption | | Capital | Revenue | | Shareholders’ | | | capital | account | | | reserve | reserve | reserve | | | funds | | £’000 | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | At 1 February 2024 6,285 260,270 21,521 167,114 2,602 457,792 Shares purchased for treasury – – – (35,219) – (35,219) Net loss on disposal of investments – – – (42,425) – (42,425) Changes in investment holding gains – – – 7,560 – 7,560 Exchange differences on bank loans – – – 2,818 – 2,818 Exchange differences on settlement – – – (405) – (405) of investment transactions Other exchange differences – – – 2 – 2 Net revenue return for the year – – – – 1,989 1,989 Dividend paid in the year – – – – (2,422) (2,422) At 31 January 2025 6,285 260,270 21,521 99,445 2,169 389,690 The capital reserve includes investment holding losses of £8,076,000 (2025 – losses of £16,287,000) as disclosed in note 9. The revenue reserve and the capital reserve (to the extent it constitutes realised profits) are distributable. On 7 August 2025, the Court of Session approved the cancellation of the amount standing to the credit of the Company’s share premium account and the crediting of an equivalent amount to the company’s Distributable Capital Reserve. The Court Order became effective when it was filed with Companies House on 22 August 2025. 14 Net asset value per ordinary share The net asset value attributable to the ordinary shareholders and the net asset value per ordinary share at the year end were asfollows: 2026 2025 Net asset value/shareholders’ funds* £358,823,000 £389,690,000 Number of ordinary shares in issue at year end † 245,320,073 279,491,301 Shareholders’ funds per ordinary share/net asset value per ordinary share 146.3p 139.4p (after deducting borrowings at book value)* * See Glossary of terms and Alternative Performance Measures on pages 125 to 128. † Excluding shares held in treasury. 104 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC 15 Contingent liabilities, guarantees and financial commitments There were no contingent liabilities, guarantees or financial commitments at either year end. 16 Analysis of change in net debt Other | | 31 January | | | | Exchange | | non-cash | | 31 January | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2025 | Cash flows | | movement | | changes | | | 2026 | | | | £’000 | | £’000 | | £’000 | | £’000 | | £’000 | | Cash and cash equivalents | | 20,797 (2,561) (1,547) – 16,689 | | | | | | | | | | Loans due within one year | | (83,676) 6,703 6,868 – (70,105) | | | | | | | | | (62,879) 4,142 5,321 – (53,416) 17 Related Parties and transactions with the Managers The Directors’ fees for the year are detailed in the Directors’ remuneration report on page 79. No Director has a contract of service with the Company. During the years reported no Director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006. Details of Directors’ holdings at 31 January 2026 are detailed in the Directors’ Remuneration report on page 80. Baillie Gifford & Co Limited has been appointed as the Company’s Alternative Investment Fund Manager (‘AIFM’) and Company Secretaries. Details of the terms of the Investment Management Agreement are set out on page 63 and details of the fees during the year and the balances outstanding at the year end are shown in notes 3 and 11. 18 Financial instruments and risk management As an Investment Trust, the Company invests in small Japanese company securities and makes other investments so as to achieve its investment objective of long term capital growth. The Company borrows money when the Board and Managers have sufficient conviction that the assets funded by borrowed monies will generate a return in excess of the cost of borrowing. In pursuing its investment objective, the Company is exposed to various types of risk that are associated with the financial instruments and markets in which it invests and could result in a reduction in the Company’s net assets. These risks are categorised as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and creditrisk. The Board monitors closely the Company’s exposures to these risks but does so in order to reduce the likelihood ofapermanent loss of capital rather than to minimise the short term volatility. The Company may enter into derivative transactions as explained in the objective and policy on pages 46 and 47. No such transactions were undertaken in the year under review. The risk management policies and procedures outlined in this note have not changed substantially from the previous accountingyear. Market risk The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The Board of Directors reviews and agrees policies for managing these risks and the Company’s Managers both assess the exposure to market risk when making individual investment decisions and monitor the overall level of market risk across the investment portfolio on an ongoing basis. Details of the Company’s investment portfolio are shown in note 9. i. Currency risk The Company’s assets, liabilities and income are principally denominated in yen. The Company’s functional currency and that in which it reports its results is sterling. Consequently, movements in the yen/sterling exchange rate will affect the sterling value of those items. The Managers monitor the Company’s yen exposure (and any other overseas currency exposure) and report to the Board on a regular basis. The Managers assess the risk to the Company of the ov erseas currency exposure by considering the effect on the Company’s net asset value and income of a movement in the rates of exchange to which the Company’s assets, liabilities, income and expenses are exposed. However, the country in which a company is quoted is not necessarily where it earns its profits. The movement in exchange rates on overseas earnings may have a more significant impact upon a company’s valuation than a simple translation of the currency in which the company is quoted. Yen borrowings are used periodically to limit the Company’s exposure to anticipated future changes in the yen/sterling exchange rate which might otherwise adversely affect the value of the portfolio of investments. The Company may also use forward currency contracts, although none have been used in the current or prior year. 105 Financial report 18 Financial instruments and risk management (continued) i. Currency risk (continued) Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted, is shown below. | | | | Cash and | | Bank | Other debtors | | | Net | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Investments | | deposits | | loans | and creditors | exposure | | | | At 31 January 2026 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | | Yen 411,604 16,628 (70,105) 1,373 359,500 Total exposure to currency risk 411,604 16,628 (70,105) 1,373 359,500 Sterling – 61 – (738) (677) 411,604 16,689 (70,105) 635 358,823 | | | | Cash and | | Bank | Other debtors | | | Net | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Investments | | deposits | | loans | and creditors | exposure | | | | At 31 January 2025 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | | Yen 453,211 20,752 (83,676) (55) 390,232 Total exposure to currency risk 453,211 20,752 (83,676) (55) 390,232 Sterling – 45 – (587) (542) 453,211 20,797 (83,676) (642) 389,690 Currency risk sensitivity At 31 January 2026, if sterling had strengthened by 10% against the yen, with all other variables held constant, total net assets and net return on ordinary activities after taxation would have decreased by £35,950,000 (2025 – decreased by £39,023,000). A10% weakening of sterling against the yen, with all other variables held constant, would have had a similar but opposite effect on the Financial Statement amounts. ii. Interest rate risk Interest rate movements may affect directly: • the fair value of any investments in fixed interest rate securities; • the level of income receivable on cash deposits; • the fair value of the Company’s fixed-rate borrowings; and • the interest payable on any variable rate borrowings which the Company may take out. They may also impact upon the market value of the Company’s investments as the effect of interest rate movements upon the earnings of a company may have a significant impact upon the valuation of that company’s equity. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and when entering borrowing agreements. The Board reviews on a regular basis the amount of investments in cash and the income receivable on cash deposits. The Company finances part of its activities through borrowings at approved levels. The amount of such borrowings and the approved levels are monitored and reviewed regularly by the Board. The interest rate risk profile of the Company’s financial assets and liabilities at 31 January 2026 is shown below. There was no significant change to the interest rate risk profile during the year. 106 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC 18 Financial instruments and risk management (continued) ii. Interest rate risk (continued) Financial assets | | | | 2026 | | | | | 2025 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2026 | Weighted | | | 2025 | | Weighted | | | Fair value | | average | | Fair value | | | average | | | | £’000 | interest rate | | | £’000 | interest rate | | | Cash: Yen 16,628 (0.00%) 20,752 (0.16%) Sterling 61 1.37% 45 3.60% 16,689 20,797 The cash deposits generally comprise overnight call or short term money market deposits and earn interest at floating rates based on prevailing bank base rates. Financial liabilities The interest rate risk profile of the Company’s financial liabilities at 31 January was: | | | | | | | 2026 | | | | | | | 2025 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 2026 | Weighted | | | | | | 2025 | Weighted | | | | 2026 | | Weighted | | average | | | 2025 | | Weighted | | average | | | Book value | | | average | | period until | | Book value | | | average | | period until | | | | £’000 | interest rate | | | maturity | | | £’000 | interest rate | | | maturity | | Bank loans: Yen denominated – floating rate 70,105 1.7% 645 days 83,676 1.7% 25 days Interest rate risk sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates at the balance sheet date and with the stipulated change taking place at the beginning of the financial year and held constant throughout the repor ting period in the case of instruments that have floating rates. An increase of 1% in interest rates, with all other variables being held constant, would have decreased the Company’s total net assets and total return on ordinary activities for the year ended 31 January 2026 by £691,000 (2025 – £542,000). This is mainly due to the Company’s exposure to interest rates on its floating rate bank loans and cash balances. A decrease of 1% would have had anequal but opposite effect. iii. Other price risk Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company’s net assets. The Company’s exposure to changes in market prices relates to the fixed asset investments as disclosed innote 9. The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Manager. The Board meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for the current investment positioning to ensure consistency with the Company’s objectives and investment policies. The portfolio does not seek to reproduce the index, investments are selected based upon the merit of individual companies and therefore performance may well diverge from the comparative index. Other price risk sensitivity A full list of the Company’s investments is shown on pages 43 to 45. In addition, analysis of the portfolio by investment theme is contained in the Strategic Report. 112.6% of the Company’s net assets are invested in listed equities (2025 – 113.9%). A 10% increase in listed equity valuations at 31 January 2026 would have increased total assets and total return on ordinary activities by£40,403,000 (2025 – £44,403,000). A decrease of 10% would have had an equal but opposite effect. 2.1% (2025 – 2.4%) of the Company’s net assets are invested in private company investments. The fair valuation of the private company investments is influenced by the judgements and estimates made in the fair valuation process (see 1(p) on page 98). Asensitivity analysis is provided below which recognises that the valuation methodologies employed involve subjectivity in their significant unobservable inputs and illustrates the sensitivity of the valuations to these inputs. The inputs have been flexed by +/-10%with the exception of the recent transaction price valuation approach as it does not involve significant subjectivity. Thetable also provides the range of values for the key unobservable inputs. 107 Financial report 18 Financial instruments and risk management (continued) iii. Other price risk (continued) As at 31 January 2026 Significant unobservable inputs* Fair value as | | at 31 January | Key | Other | | | | Weighted | | | | Sensitivity to changes | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2026 | unobservable | unobservable | | | | average | | Sensitivity | | in significant | | Valuation technique | £’000 | inputs | inputs | † | Range | | | range | # | % | unobservable inputs | | Benchmark | 2,459 | Selection of | a,b,c,d -31.1% | | | | | 5.3% 10% If input comparable | | | | | performance | | comparable | | | | to | | | | | benchmark performance | | | | companies | | | 60.5% | | | | | | changed by +/- 10%, the | fair value would change by +/- £245,913. Price of Recent 5,113 n/a ¶ a,b n/a n/a 10% A movement by +/- 10% Investment in the company valuations for those based on a recent transaction would change the fair value by by +/- £511,198. As at 31 January 2025 Significant unobservable inputs* Fair value as | | at 31 January | Key | | Other | | | Weighted | | | | Sensitivity to changes | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2025 | unobservable | | unobservable | | | average | | Sensitivity | | in significant | | Valuation technique | £’000 | inputs | | inputs | † | Range | | range | # | % | unobservable inputs | | Market approach using | 7,322 | EV / LTM | | a,b,c,d,e 1.8x to | | | | 2.6x 10% If EV/LTM multiples | | | | | comparable traded | | revenue | | | | 6.5x | | | | | changed by +/- 10%, | | | | multiple | ‡ | | | | | | | | the fair value would | multiples change by £648,471 and -£640,574. Illiquidity f 10% 10% 10% If the illiquidity discount is discounts changed by +/-10%, the fair value would change by £4,172 and -£4,167. | Transaction | g 21% 21% 10% If a +/- 10% adjustment is | | | --- | --- | --- | | implied | | applied to the calculated | | premium and | | premiums the fair value | | discounts | | would change by +/- | £204,995. | Benchmark | 1,864 Selection of | | | a,b,c,d -31% to | | -27% 10% If input comparable | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | performance | | comparable | | | -22% | | benchmark performance | | | | | companies, | | | | | changed by +/- 10%, the | | | | | indicies and | | | | | fair value would change | | | | | ETFs | § | | | | by +/- £186,429. | | | | | Insolvency risk | | a,b,h 75% 75% 10% If the insolvency risk | | | | | | | | discount | | | | | discount is | changed by | +/-10%, the fair value would change by +/- £559,288. † See explanation for other unobservable inputs on page 109 (sections ‘a’ to ‘h’ as relevant). # Weighted average is calculated by reference to the fair value of holdings as at the respective year-end. This therefore gives a clearer indication ofthe typical multiple or adjustment being applied across the portf olio. ¶ Whilst a recent transaction price may be the most appropriate basis for a valuation, it will be corroborated by other techniques which factor in the unobservable inputs noted in the above table. However, the transaction price itself is observable. ‡ Enterprise value (EV) divided by the last twelve months (LTM) revenue. § See explanation for the selection of comparable companies on page 109 section ‘c’. The percentage movements reflect the movement in overall company value for the basket of comparable companies relevant to each holding since the most recent transaction or since the last assessed. * Significant unobservable inputs The variable inputs applicable to each broad category of valuation basis will vary depending on the particular circumstances ofeach private company valuation. An explanation of each of the key variable inputs is provided below. The assumptions made in the production of the inputs are described in note 1(p) on page 98. 108 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC 18 Financial instruments and risk management (continued) iii. Other price risk (continued) a. Application of valuation basis Each investment is assessed independently, and the valuation basis applied will vary depending on the circumstances of each investment. When an investment is pre-revenue, the focus of the valuation will be on assessing the recent transaction and the achievement of key milestones since investment. Adjustments may also be made depending on the performance of comparable benchmarks and companies. For those investments where a trading multiples approach can be taken, the methodology will factor in revenue, earnings or net assets as appropriate for the investment, and where a suitable correlation can be identified with the comparable companies then a regression analysis will be performed. Discounted cash flows will also be considered where appropriate forecasts are available. b. Probability estimation of liquidation events The probability of a liquidation event such as a company sale, or alternatively an initial public offering (`IPO’), is a key variable input in the transaction-based and multiples-based valuation techniques. The probability of an IPO versus a company sale is typically estimated from the outset to be 50:50 if there has been no indication by the company of pursuing either of these routes. If the company has indicated an intention to IPO, the probability is increased accordingly to 75% and if an IPO has become a certainty the probability is increased to 100%. Likewise, in a scenario where a company is pursuing a trade sale the weightings will be adjusted accordingly in favour of a sale scenario, or in a situation where a company is underperforming expectations significantly and therefore deemed very unlikely to pursue an IPO. c. Selection of comparable companies The selection of comparable companies is assessed individually for each investment at the point of investment, and the relevance of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting appropriate comparable companies are the industry sector in which they operate, the geography of the company’s operations, the respective revenue and earnings growth rates and the operating margins. Typically, between 4 and 10 comparable companies will be selected for each investment, depending on how many relevant comparable companies are identified. The resultant revenue or earnings multiples or share price movements derived will vary depending on the companies selected and the industries in which they operate. d. Selection of appropriate benchmarks The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of each company are key inputs to the benchmark selection, with either one or two key indices or benchmarks being used for comparison. e. Estimated sustainable earnings The selection of sustainable revenue or earnings will depend on whether the company is sustainably profitable or not, and where it is not then revenues will be used in the valuation. The valuation approach will typically assess companies based on the last twelve months of revenue or earnings, as they are the most recent available and therefore viewed as the most reliable. Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business which will impact earnings going forward, then forward estimated revenue or earnings may be used instead. f. Application of illiquidity discount The application of an illiquidity discount will be applied either through the calibration of a valuation against the most recent transaction, or by application of a specific discount. The discount applied where a calibration is not appropriate is typically 10%, reflecting the fact that the majority of the investments held are substantial companies with some secondary marketactivity. g. Transaction implied premium and discount Where there is an implied company valuation available as a result of an external arm’s length transaction, the ongoing valuation will be calibrated to this by deriving a company valuation with reference to the average multiple from a set of comparable companies and comparing this to a transaction implied valuation, and could result in an implied premium or discount compared to comparable companies at the point of transaction. This discount or premium will be considered in future valuations, and may be reduced due to factors such as period of time since the transaction and company performance. Where a calibrated approach is not appropriate, a discount for illiquidity will be applied as noted in (f) above. h. Insolvency risk discount Insolvency risk discount is applied to investments where there is considered to be uncertainty surrounding the entity’s ability to continue as a going concern. The level of discount considers the portfolio company’s cash runway and underlying performance. 109 Financial report ## 18 Financial instruments and risk management (continued) ### iii. Other price risk (continued) #### Liquidity risk This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not significant in normal market conditions as the majority of the Company's assets are in investments that are readily realisable. The Company's investment portfolio is in Japanese small-cap equities which are typically less liquid than larger capitalisation stocks. The Managers monitor the liquidity of the portfolio on an ongoing basis and relevant guidelines are in place. The investment portfolio is sufficiently liquid to allow stocks to be realised to repay borrowings if required. The Board provides guidance to the Managers as to the maximum exposure to any one holding (see objective and policy on pages 46 and 47). The maturity profile of the Company's financial liabilities at 31 January was: | | 2026 £'000 | 2025 £'000 | | --- | --- | --- | | In less than one year: | | | | - repayment of loan | 70,105 | 83,676 | | - accumulated interest | 39 | 104 | | | **70,144** | **83,780** | The Company has the power to take out borrowings, which gives it access to additional funding when required. #### Credit risk This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. This risk is managed as follows: - The Depositary is liable for the loss of financial instruments held in custody. The Depositary will ensure that any delegate segregates the assets of the Company. The Managers monitors the Company's risk by reviewing the custodian's internal control reports and reporting their findings to the Board; - Investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Managers. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company's custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed; - The creditworthiness of the counterparty to transactions involving derivatives, structured notes and other arrangements, wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained interest, are subject to rigorous assessment by the Managers; and - At 31 January 2026 and 2025, all cash deposits were held with the custodian bank. The credit risk of the custodian is reviewed as detailed above. Cash may also be held at banks that are regularly reviewed by the Managers. If the credit rating of a bank where a cash deposit was held fell significantly, the Managers would endeavour to move the cash to an institution with a superior credit rating. 110 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC 18 Financial instruments and risk management (continued) iii. Other price risk (continued) Credit risk exposure The maximum exposure to credit risk at 31 January was: 2026 2025 £’000 £’000 Cash and deposits 16,689 20,797 Debtors 2,315 1,883 19,004 22,680 None of the Company’s financial assets are past due or impaired. Fair value of financial assets and financial liabilities The Company’s investments are stated at fair value and the Directors are of the opinion that the reported values of the Company’s other financial assets and liabilities approximate to fair value with the exception of the long term borrowings which are stated at amortised cost. The fair value of the loans is shown below. Financial assets | | | 2026 | 2026 | 2025 | 2025 | | --- | --- | --- | --- | --- | --- | | | | Book | Fair * | Book | Fair * | | | | value | value | value | value | | | | £’000 | £’000 | £’000 | £’000 | | Floating rate yen bank loans | † | 70,105 70,105 83,676 83,676 | | | | 70,105 70,105 83,676 83,676 * The fair value of each bank loan is calculated using methodologies consistent with International Private Equity and Venture Capital Valuation (‘IPEV’) guidelines. † All short-term floating rate borrowings are stated at book cost which is considered to be equal to their fair value given the facilities are revolving credit facilities. Capital management The capital of the Company is its share capital and reserves as set out in note 13 together with its borrowings (see note 11). TheCompany’s investment objective and policy is set out on pages 46 and 47. In pursuit of the Company’s objective, theBoard has a responsibility for ensuring the Company’s ability to continue as a going concern and details of the related risks andhow they are managed are set out on pages 49 to 55. The Company has the ability to buy back and issue shares (see pages 65 and 66) and changes to the share capital during the year are set out in note 12. The Company does not have any externally imposed capital requirements other than the covenants on its loans which are detailed in note 11. 19 Subsequent events On 18 February 2026, shareholders approved a tender offer for up to 15% of the Company’s issued share capital (excluding shares held in treasury), details of which are set out in the circular dated 23 January 2026. Under the terms of the tender offer, eligible shareholders were entitled to tender shares at a price equal to the Net Asset Value per share as at the calculation date, less the costs of the tender and a 2% discount. The tender offer was oversubscribed and, accordingly, 36,798,009 ordinary shares were purchased on 19 March 2026. Shares purchased pursuant to the tender have been held in treasury. In addition, the Board has recommended a final dividend of 0.69p per ordinary share in respec t of the year ended 31 January 2026, payable on 26 May 2026 to shareholders on the register at the close of business on 17 April 2026. These events are considered non-adjusting events under FRS 102 Section 32 and, as such, have not been reflected in the Financial Statements for the year ended 31 January 2026. 111 ## Shareholder ## information Baillie Gifford Shin Nippon PLC ## Notice of Annual ## General Meeting Moorgate Moorgate London Wall Circus Finsbury London Wall Basinghall Ave The Annual General Meeting of the Company will be Moorgate Copthall Ave held at the ICAEW, Chartered Accountants’ Hall, 1Moorgate Place, London, EC2R 6EA on Thursday Throgmorton Ave 21 May 2026 at 11.30am. You will find directions to the venue by scanning the QR code above. To accurately reflect the views of shareholders of the ICAEW Company, the Board intends to hold the AGM voting on a poll. The Board encourages all shareholders to submit proxy voting forms as soon as possible and, in any event, by no later than 11.30am on 19 May 2026. Should shareholders have questions for the Board orthe Managers or any queries as to how to vote orhow to attend the meeting they are welcome asalways to submit them by email to enquiries@bailliegifford.com or call 08009172112. Baillie Gifford may record your call. For details of how to vote your shares if heldviaaplatform please refer to theaic.co.uk/how-to-vote-your-shares. 113 Shareholder information Notice is hereby given that the forty first Annual General Meeting of Baillie Gifford Shin Nippon PLC will be held at ICAEW, Chartered Accountants' Hall, 1 Moorgate Place, London, EC2R 6EA, on Thursday, 21 May 2026 at 11.30am for the following purposes. All Resolutions are ordinary business. To consider and, if thought fit, to pass the following Resolutions as Ordinary Resolutions: 01. To receive and adopt the Financial Statements of the Company for the year ended 31 January 2026 with the Reports of the Directors and of the Independent Auditor thereon. 02. To approve the Directors' Remuneration Policy. 03. To approve the Directors' Annual Report on Remuneration for the year ended 31 January 2026. 04. To declare a final dividend of 0.69p per ordinary share. 05. To re-elect Ms CEC Finn as a Director of the Company. 06. To re-elect Ms AE Rotheroe as a Director of the Company. 07. To re-elect Mr J Skinner as a Director of the Company. 08. To re-elect Mr KJ Troup as a Director of the Company. 09. To re-elect Professor S Vijayakumar as a Director of the Company. 10. To re-appoint Johnston Carmichael LLP as Independent Auditor of the Company to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting at which the Financial Statements are laid before the Company. 11. To authorise the Directors to determine the remuneration of the Independent Auditor of the Company. 12. That, in substitution for any existing authority but without prejudice to the exercise of any such authority prior to the date hereof, the Directors of the Company be and they are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company ('Securities') provided that such authority shall be limited to the allotment of shares and the grant of rights in respect of shares with an aggregate nominal value of up to £1,371,202.16 (representing 33.33% of the nominal value of the issued share capital excluding treasury shares as at 26 March 2026), such authority to expire at the conclusion of the next Annual General Meeting of the Company after the passing of this Resolution or on the expiry of 15 months from the passing of this Resolution, whichever is the earlier, unless previously revoked, varied or extended by the Company in a general meeting, save that the Company may at any time prior to the expiry of this authority make an offer or enter into an agreement which would or might require Securities to be allotted or granted after the expiry of such authority and the Directors shall be entitled to allot or grant Securities in pursuance of such an offer or agreement as if such authority had not expired. To consider and, if thought fit, to pass the following Resolutions as Special Resolutions: 13. That, subject to the passing of Resolution 12 above, and in substitution for any existing power but without prejudice to the exercise of any such power prior to the date hereof, the Directors of the Company be and they are hereby generally empowered, pursuant to sections 570 and 573 of the Companies Act 2006 ('the Act') to allot equity securities (within the meaning of section 560(1) of the Act) for cash, either pursuant to the authority given by Resolution 12 above or by way of the sale of treasury shares wholly for cash as if section 561(1) of the Act did not apply to any such allotment or sale, provided that this power: a. expires at the conclusion of the next Annual General Meeting of the Company after the passing of this Resolution or on the expiry of 15 months from the passing of this Resolution, whichever is the earlier, save that the Company may, before such expiry, make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement as if the power conferred hereby had not expired; and 114 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC | b. shall be limited to the allotment of equity | | c. the maximum price (excluding expenses) | | | --- | --- | --- | --- | | | securities up to an aggregate nominal value | | which may be paid for each ordinary share | | | of £411,401.80 being approximately 10% of | | shall not be more than the higher of: | the nominal value of the issued share capital i. 5% above the average closing price on the excluding treasury shares of the Company London Stock Exchange of an ordinary share as at 26 March 2026. over the five business days immediately 14 . That, in substitution for any existing authority preceding the date of purchase; and but without prejudice to the exercise of any such ii. the higher of the last independent trade and authority prior to the date hereof, the Company the highest current independent bid on the be and is hereby generally and unconditionally London Stock Exchange; and authorised, pursuant to and in accordance with section 701 of the Companies Act 2006 d. unless previously varied, revoked or renewed (‘the Act’) to make market purchases (within by the Company in a general meeting, the the meaning of section 693(4) of the Act) of its authority hereby conferred shall expire at the ordinary shares (either for retention as treasury conclusion of the Company’s next Annual shares for future reissue, resale, transfer or General Meeting, save that the Company cancellation), provided that: may, prior to such expiry, enter into a contract to purchase ordinary shares under such a. the maximum aggregate number of ordinary authority which will or might be completed or shares hereby authorised to be purchased executed wholly or partly after the expiration is 30,834,564 being approximately 14.99% of such authority and may make a purchase of of the issued ordinary share capital of the ordinary shares pursuant to any such contract. Company as at the date of the passing of this Resolution; b. the minimum price (excluding expenses) which may be paid for each ordinary share By order of the Board is the nominal value of that share; Baillie Gifford & Co Limited Managers and Secretaries 13 April 2026 115 Shareholder information Notes described in the CREST Manual. The message, regardless of whether it constitutes the 01. As a member you are entitled to appoint a proxy appointment of a proxy or is an amendment to or proxies to exercise all or any of your rights the instruction given to a previously appointed to attend, speak and vote at the AGM. A proxy proxy must, in order to be valid, be transmitted need not be a member of the Company but so as to be received by the Company’s registrar must attend the AGM to represent you. You may (ID 3RA50) no later than 48 hours (excluding appoint more than one proxy provided each non-working days) before the time of the proxy is appointed to exercise rights attached to meeting or any adjournment. For this purpose, different shares. You can only appoint a proxy the time of receipt will be taken to be the time using the procedure set out in these notes and (as determined by the timestamp applied to the notes to the proxy form. You may not use the message by the CREST Application Host) any electronic address or telephone number from which the Company’s registrar is able to provided either in this notice or any related retrieve the message by enquiry to CREST in documents (including the Financial Statements the manner prescribed by CREST. After this time and proxy form) to communicate with the any change of instructions to proxies appointed Company for any purpose other than those through CREST should be communicated to the expressly stated. appointee through other means. 02. To be valid any proxy form or other instrument 05. CREST members and, where applicable, their appointing a proxy, together with any power CREST sponsors, or voting service providers of attorney or other authority under which it should note that Euroclear UK & Ireland Limited is signed or a certified copy thereof, must be does not make available special procedures received by post or (during normal business hours in CREST for any particular message. Normal only) by hand at the Registrars of the Company system timings and limitations will, therefore, at Computershare Investor Services PLC, The apply in relation to the input of CREST Proxy Pavilions, Bridgwater Road, Bristol, BS99 6ZY or Instructions. It is the responsibility of the CREST eproxyappointment.com no later than 48 hours member concerned to take (or, if the CREST (excluding non-working days) before the time of member is a CREST personal member, or the meeting or any adjourned meeting. sponsored member, or has appointed a voting 03. CREST members who wish to appoint a service provider(s), to procure that his/her proxyorproxies through the CREST electronic CREST sponsor or voting service provider(s) proxy appointment service may do so by take(s)) such action as shall be necessary to usingthe procedures described in the CREST ensure that a message is transmitted by means Manual and/or by logging on to the website of the CREST system by any particular time. euroclear.com/CREST. CREST personal Inthisconnection, CREST members and, where members or other CREST sponsored members, applicable, their CREST sponsors or voting and those CREST members who have appointed system providers are referred, in particular, to a voting service provider(s), should refer to their those sections of the CREST Manual concerning CREST sponsor or voting service provider(s), practical limitations of the CREST system who will be able to take the appropriate action andtimings. on their behalf. 06. The Company may treat as invalid a CREST 04. In order for a proxy appointment or instruction Proxy Instruction in the circumstances set out made using the CREST service to be valid, the in Regulation 35(5)(a) of the Uncertificated appropriate CREST message (a ‘CREST Proxy Securities Regulations 2001. Instruction’) must be properly authenticated 07. The return of a completed proxy form or other in accordance with Euroclear UK & Ireland instrument of proxy will not prevent you attending Limited’s specifications, and must contain the the AGM and voting in person if you wish. information required for such instruction, as 116 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC | 08. Pursuant to Regulation 41 of the Uncertificated | | 12. Information regarding the AGM, including | | | --- | --- | --- | --- | | | Securities Regulations 2001 and section 311 of | | information required by section 311A of the | | | the Companies Act 2006 the Company specifies | | Companies Act 2006, is available from the | | | that to be entitled to attend and vote at the | | Company’s page of the Managers’ website at | | | AGM (and for the purpose of the determination | | shinnippon.co.uk. | by the Company of the votes they may cast), 13. Members have the right to ask questions at shareholders must be registered in the Register themeeting in accordance with section 319A of Members of the Company no later than 48 ofthe Companies Act 2006. hours (excluding non-working days) prior to the commencement of the AGM or any adjourned 14. As at 26 March 2026 (being the last practicable meeting. Changes to the Register of Members date prior to the publication of this notice) the after the relevant deadline shall be disregarded Company’s issued share capital consisted of in determining the rights of any person to attend 205,700,895 ordinary shares excluding treasury and vote at the meeting. shares, carrying one vote each. Therefore, the total voting rights in the Company as at 09. Any person to whom this notice is sent who is 26March 2026 were 205,700,895 votes. a person nominated under section 146 of the | Companies Act 2006 to enjoy information rights | 15. Any person holding 3% or more of the total | | | --- | --- | --- | | (a ‘Nominated Person’) may, under an agreement | | voting rights of the Company who appoints | | between him/her and the shareholder by whom | | a person other than the Chair of the meeting | | he/she was nominated, have a right to be | | as his/her proxy will need to ensure that both | | appointed (or to have someone else appointed) | | he/she and his/her proxy complies with their | | as a proxy for the Annual General Meeting. | | respective disclosure obligations under the UK | | If a Nominated Person has no such proxy | | Disclosure Guidance and Transparency Rules. | appointment right or does not wish to exercise 16. No Director has a contract of service with it,he/she may, under any such agreement, have theCompany. a right to give instructions to the shareholder as to the exercise of voting rights. 10. The statement of the rights of shareholders in relation to the appointment of proxies in Notes 1 and 2 above does not apply to Nominated Persons. The rights described in those Notes can only be exercised by shareholders of the Company. 11. The members of the Company may require the Company to publish, on its website, (without payment) a statement (which is also passed to the Auditor) setting out any matter relating to the audit of the Company’s Financial Statements, including the Auditor’s report and the conduct of the audit. The Company will be required to do so once it has received such requests from either members representing at least 5% of the total voting rights of the Company or at least 100 members who have a relevant right to vote and hold shares in the Company on which there has been paid up an average sum per member of at least £100. Such requests must be made in writing and must state your full name and address and be sent to the Company at Calton Square, 1 Greenside Row, Edinburgh, EH1 3AN. 117 Shareholder information # Further shareholder information **Baillie Gifford Shin Nippon is an investment trust. Investment trusts offer investors the following:** - participation in a diversified portfolio of shares; - constant supervision by experienced professional managers; and - the Company is free from capital gains tax on capital profits realised within its portfolio although investors are still liable for capital gains tax on profits when selling their investment. ## How to invest The Company's shares are traded on the London Stock Exchange. They can be bought by placing an order with a stockbroker or by asking a professional adviser to do so. If you are interested in investing directly in Baillie Gifford Shin Nippon, you can do so online. There are a number of companies offering real time online dealing services – find out more by visiting the investment trust pages at bailliegifford.com. ## Sources of further information on the Company The price of shares is quoted daily in the Financial Times and can also be found on the Company's page on Baillie Gifford's website at shinnippon.co.uk. Trustnet at trustnet.com and on other financial websites. Company factsheets are also available on the Baillie Gifford website and are updated monthly. These are available from Baillie Gifford on request. ## Baillie Gifford Shin Nippon share identifiers ISIN GB00BFXYH242 Sedol BFXYH24 Ticker BGS Legal Entity Identifier X5XCIPCJQCSUF8H1FU83 The ordinary shares of the Company are listed on the London Stock Exchange and their price is shown in the Financial Times. ## Key dates The Annual Report and Financial Statements are normally issued in March or early April and the AGM is normally held during May. Any dividends, if applicable, will be paid as a single final payment shortly after the Company's AGM. ## Capital gains tax The cost for capital gains taxation purposes to shareholders who subscribed for ordinary shares (with warrants attached) is apportioned between the ordinary shares and the warrants on the following basis: | | Apportioned cost * | First day of dealing value * | | --- | --- | --- | | Cost of each ordinary share | 9.45p | 8.9p | | Cost of fraction for warrant | 0.55p | 2.7p | | | **10.00p** | | The cost for capital gains tax purposes to shareholders who subscribed for the conversion shares, subsequently converted into new ordinary shares (with warrants attached) is apportioned between the ordinary shares and the warrants as set out in the placing and offer document dated 18 May 1994. The attributable costs are: | | Apportioned cost * | First day of dealing value * | | --- | --- | --- | | Cost of each ordinary share | 32.96p | 35.6p | | Cost of fraction for warrant | 15.37p | 16.6p | * Adjusted for the five for one share split on 21 May 2018. If shareholders are in any doubt as to their personal taxation position they should consult their professional advisers. 118 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Share register enquiries How to vote your shares Computershare Investor Services PLC maintains As a shareholder you have a say on how the Company theshare register on behalf of the Company. In is run. The following link will take you through to The the event of queries regarding shares registered in Association of Investment Companies (AIC) website yourown name, please contact the Registrars on where there is information on how to vote your shares 0370 889 3223. if you hold them via one of the major platforms: theaic.co.uk/how-to-vote-your-shares. This helpline also offers an automated self-service functionality (available 24 hours a day, 7 days a Electronic proxy voting week) which allows you to: If you hold stock in your own name you can choose • hear the latest share price; to vote by returning proxies electronically at | • confirm your current share holding balance; and | | investorcentre.co.uk/eproxy. | | --- | --- | --- | | • order Change of Address and Stock Transfer | | If you have any questions about this service please | | | forms. | contact Computershare on 0370 889 3223. | By quoting the reference number on your share CREST proxy voting certificate you can check your holding on the Registrar’s website at investorcentre.co.uk. If you are a user of the CREST system (including a CREST Personal Member), you may appoint one They also offer a free, secure, share management or more proxies or give an instruction to a proxy by website service which allows you to: having an appropriate CREST message transmitted. • view your share portfolio and see the latest market For further information please refer to the CREST price of your shares; Manual. • calculate the total market price of each Where this has been received in a country where shareholding; the provision of such a service would be contrary to local laws or regulations, this should be treated as • view price histories and trading graphs; information only. • change address details; and These Financial Statements have been approved • use online dealing services. by the Directors of Baillie Gifford Shin Nippon PLC. To take advantage of this service, please log in at Baillie Gifford only provides information about its investorcentre.co.uk and enter your Shareholder products and does not provide investment advice. Reference Number and Company Code (this The staff of Baillie Gifford and Baillie Gifford Shin information can be found on your share certificate). Nippon’s Directors may hold shares in Baillie Gifford Shin Nippon and may buy or sell such shares from time to time. 119 Shareholder information Data protection Automatic Exchange of Information The Company is committed to ensuring the In order to fulfil its obligations under UK tax confidentiality and security of any personal data legislation relating to the automatic exchange provided to it. Further details on how personal data ofinformation, Baillie Gifford Shin Nippon PLC is is held and processed on behalf of the Company required to collect and report certain information can be found in the privacy policy available on the about certain shareholders. Company’s website shinnippon.co.uk. The legislation requires investment trust companies to provide personal information to HMRC on Alternative Investment Fund Managers certain investors who purchase shares in investment Regulations (‘AIFMR’) trusts. Accordingly, Baillie Gifford Shin Nippon PLC In accordance with the AIFM Regulations, must provide information annually to the local information in relation to the Company’s leverage tax authority on the tax residencies of a number and the remuneration of the Company’s AIFM, of non-UKbased certificated shareholders and Baillie Gifford & Co Limited, is required to be corporate entities. made available to investors. In accordance with Shareholders, excluding those whose shares are the Regulations, the AIFM remuneration policy held in CREST, who come on to the share register is available at bailliegifford.com or on request will be sent a certification form for the purposes of (see contact details in the ‘Company information’ collecting this information. section on page 129) and the most recent numerical remuneration disclosures in respect of the For further information, please see HMRC’s AIFM’s relevant reporting period are available at QuickGuide: Automatic Exchange of Information – bailliegifford.com. information for account holders gov.uk/government/ publications/exchange-of-information-account- holders. Leverage The Company’s maximum and actual leverage levels (see Glossary of terms and Alternative Performance Measures on pages 125 to 128) at 31 January 2026 were as follows: Gross Commitment method method Maximum limit 2.50:1 2.00:1 Actual 1.19:1 1.19:1 120 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## Communicating ## with shareholders Trust magazine Shin Nippon web page at shinnippon.co.uk Trust magazine Suggestions and questions Trust is the Baillie Gifford investment trust magazine Any suggestions on how communications with which is published twice a year. It provides an insight shareholders can be improved are welcomed, so to our investment approach by including interviews please contact the Baillie Gifford Client Relations with our fund managers, as well as containing Team and give them your suggestions. They will also investment trust news, investment features and be very happy to answer questions that you may articles about the trusts managed by Baillie Gifford, have about Baillie Gifford Shin Nippon. including Baillie Gifford Shin Nippon. Trust plays an important role in helping to explain our products so Client relations team contact details that readers can really understand them. You can contact the Baillie Gifford Client Relations You can subscribe to Trust magazine or view a digital Team by telephone, email or post: copy at bailliegifford.com/trust Telephone: +44 (0)800 917 2112 Your call may be recorded for training or monitoring Baillie Gifford Shin Nippon on the Web purposes. Up-to-date information about Baillie Gifford Shin Email: enquiries@bailliegifford.com Nippon, including a monthly commentary, recent Website: bailliegifford.com portfolio information and performance figures, can be found on the Company’s page of the Managers’ Baillie Gifford Client Relations Team website at shinnippon.co.uk. Calton Square 1 Greenside Row You can also find a brief history of Baillie Gifford Edinburgh EH1 3AN Shin Nippon, an explanation of the effects of gearing and a flexible performance reporting tool. Please note that Baillie Gifford is not permitted to give financial advice. If you would like advice, please ask an authorised intermediary. 121 Shareholder information © COVER Japan’s small-cap opportunity Japan small caps: Virtual visionaries obsession meets opportunity Citywire webinar Podcast by Brian Lum Discover why Japan’s overlooked small From AI-augmented weather forecasts to Japan’s Cover Corp is defining the space caps offer fresh growth as innovation and helping people with disabilities get hired, where anime meets reality. AI reshape the market. meet some of Japan’s most innovative growth companies. 122 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## Third party data ## provider disclaimer No third party data provider (‘Provider’) makes any MSCI Index data warranty, express or implied, as to the accuracy, Source: MSCI. The MSCI information may only be completeness or timeliness of the data contained used for your internal use, may not be reproduced herewith nor as to the results to be obtained by or redisseminated in any form and may not be recipients of the data. No Provider shall in any used as a basis for or a component of any financial way be liable to any recipient of the data for any instruments or products or indices. None of the MSCI inaccuracies, errors or omissions in the index data information is intended to constitute investment included in this document, regardless of cause, advice or a recommendation to make (or refrain from or for any damages (whether direct or indirect) making) any kind of investment decision and may resulting therefrom. not be relied on as such. Historical data and analysis No Provider has any obligation to update, modify should not be taken as an indication or guarantee or amend the data or to otherwise notify a recipient of any future performance analysis, forecast or thereof in the event that any matter stated herein prediction. changes or subsequently becomes inaccurate. The MSCI information is provided on an ‘as is’ Without limiting the foregoing, no Provider shall have basisand the user of this information assumes any liability whatsoever to you, whether in contract theentire risk of any use made of this information. (including under an indemnity), in tort (including MSCI,each of its affiliates and each other person negligence), under a warranty, under statute or involved in or related to compiling, computing or otherwise, in respect of any loss or damage suffered creating any MSCI information collectively, the byyou as a result of or in connection with any ‘MSCI Parties’ expressly disclaims all warranties opinions, recommendations, forecasts, judgements, (including, without limitation, any warranties of or any other conclusions, or any course of action originality, accuracy, completeness, timeliness, determined, by you or any third party, whether or non-infringement, merchantability and fitness for a not based on the content, information or materials particular purpose) with respect to this information. contained herein. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability or any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (msci.com). 123 Shareholder information ## Sustainable Finance Disclosure ## Regulation (‘SFDR’) The EU Sustainable Finance Disclosure Regulation apotential or actual material decline in the valueof (‘SFDR’) does not have a direct impact in the UK investment due to the occurrence of due to Brexit, however, it applies to third-country anenvironmental, social or governance event or products marketed in the EU. As Shin Nippon is condition will vary and will depend on several marketed in the EU by the AIFM, BG & Co Limited, factorsincluding but not limited to the type, extent, via the National Private Placement Regime (‘NPPR’) complexity and duration of an event or condition, the following disclosures have been provided to prevailing market conditions and existence of any comply with the high-level requirements of SFDR. mitigating factors. The AIFM has adopted Baillie Gifford & Co’s Whilst consideration is given to sustainability matters, stewardship principles and guidelines as its there are no restrictions on the investment universe policyonintegration of sustainability risks in of the Company, unless otherwise stated within in its investment decisions. investment objective & policy. Baillie Gifford & Co can invest in any companies it believes could create Baillie Gifford & Co believes that a company beneficial long-term returns for investors. However, cannot be financially sustainable in the long run if this might result in investments being made in its approach to business is fundamentally out of companies that ultimately cause a negative outcome line with changing societal expectations. It defines for the environment or society. ‘sustainability’ as a deliberately broad concept which encapsulates a company’s purpose, values, business More detail on the Manager’s approach to model, culture, and operating practices. sustainability can be found in the stewardship principles and guidelines document, available publicly Baillie Gifford & Co’s approach to investment on the Baillie Gifford website bailliegifford.com and isbased on identifying and holding high quality by scanning the QR code below. growth businesses that enjoy sustainable competitive advantages in their marketplace. Todo The underlying investments do not take into this it looks beyond current financial performance, accountthe EU criteria for environmentally undertaking proprietary research tobuild up an sustainable economic activities established under in-depth knowledge of an individual company and a the EU Taxonomy Regulation. view on its long-term prospects. Thisincludes the consideration of sustainability factors (environmental, social and/or governance matters) which it believes will positively or negatively influence the financial returns of an investment. Thelikely impact on the return of the portfolio from 124 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC # Glossary of terms and Alternative Performance Measures ('APM') An alternative performance measure is a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. The APMs noted below are commonly used measures within the investment trust industry and serve to improve comparability between investment trusts. ## Total assets This is the Company's definition of Adjusted Total Assets, being the total value of all assets held less all liabilities (other than liabilities in the form of borrowings). ## Net Asset Value Also described as shareholders' funds, Net Asset Value ('NAV') is the value of total assets less liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue. ## Net Asset Value (borrowings at book value) Borrowings are valued at adjusted net issue proceeds. The Company's yen denominated loans are valued at their sterling equivalent and adjusted for their arrangement fees. The value of the borrowings on this basis is set out in note 11 on page 103. ## Net Asset Value (borrowings at fair value) (APM) This is a widely reported measure across the investment trust industry. Borrowings are valued at an estimate of their market worth. The Company's yen denominated fixed rate loans are fair valued using methodologies consistent with International Private Equity and Venture Capital Valuation ('IPEV') guidelines. The value of the borrowings on this basis is set out in note 18 on page 111. A reconciliation from NAV (with borrowings at book value) to NAV per ordinary share (with borrowings at fair value) is provided below. | | 31 January 2026 | 31 January 2025 | | --- | --- | --- | | NAV per ordinary share (borrowings at book value) | 146.3p | 139.4p | | Shareholders' funds (borrowings at book value) | £358,823,000 | £389,690,000 | | Add: book value of borrowings | £70,105,000 | £83,676,000 | | Less: fair value of borrowings | (£70,105,000) | (£83,676,000) | | **NAV (borrowings at fair value)** | **£358,823,000** | **£389,690,000** | | **Shares in issue at year end** | **245,320,073** | **279,491,301** | | **NAV per ordinary share (borrowings at fair value)** | **146.3p** | **139.4p** | 125 Shareholder information ## Premium/discount (APM) As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the NAV per share from the share price and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium. | | 2026 NAV (book) | 2026 NAV (fair) | 2025 NAV (book) | 2025 NAV (fair) | | --- | --- | --- | --- | --- | | Closing NAV per share | 146.3p | 146.3p | 139.4p | 139.4p | | Closing share price | 135.4p | 135.4p | 119.0p | 119.0p | | **Discount** | **(7.5%)** | **(7.5%)** | **(14.6%)** | **(14.6%)** | The average discount/premium (APM) as disclosed on page 48 is calculated by taking an average of the daily discount/premium percentage using NAV (with borrowings at fair value) for the relevant periods. ## Ongoing charges (APM) The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average NAV (with borrowings at fair value). The ongoing charges have been calculated on the basis prescribed by the Association of Investment Companies. A reconciliation from the expenses detailed in the Income statement on page 92 is provided below: | | 31 January 2026 | 31 January 2025 | | --- | --- | --- | | Investment management fee | £2,270,000 | £2,482,000 | | Other administrative expenses | £889,000 | £714,000 | | Less: Non-recurring expenses* | (£240,000) | – | | **Total expenses** | **(a) £2,919,000** | **£3,196,000** | | Average daily cum-income NAV (with borrowings at fair value) | **(b) £359,484,000** | **£401,677,000** | | **Ongoing charges** | **(a) as a percentage of (b) 0.81%** | **0.80%** | \* Comprises the total costs incurred in connection with the share premium account cancellation and the 2026 Tender Offer. 126 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC Total return (APM) The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend. | | | | 2026 | | 2026 | | 2025 | | 2025 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | NAV (book) | | Share price | | NAV (book) | | Share price | | | Closing NAV per share/share price | (a) | | 146.3 135.4 139.4 119.0 | | | | | | | | Dividend adjustment factor* | (b) | | 1.0047 1.0052 1.0059 1.0076 | | | | | | | | Adjusted closing NAV | (c = a x b) | | 1 4 7. 0 136.1 140.2 119.9 | | | | | | | per share/share price | Opening NAV per share/share price | (d) | 139.4 119.0 147.8 126.2 | | --- | --- | --- | | Total return | (c ÷ d)-1 | 5.4% 14.4% (5.1%) (5.0%) | | * The dividend adjustment factor is calculated on the assumption that the dividend of 0.60p (2025 – 0.80p) paid by the Company during the year was | | | reinvested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date. Gearing (APM) At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders’ assets is called ‘gearing’. If the Company’s assets grow, the shareholders’ assets grow proportionately more because the debt remains the same. But if the value of the Company’s assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. Gearing represents borrowings at book less cash and cash equivalents expressed as a percentage of shareholders’ funds. Gross gearing is the Company’s borrowings expressed as a percentage of shareholders’ funds. 31 January 2026 31 January 2025 Gearing * Grossgearing † Gearing * Grossgearing † £’000 £’000 £’000 £’000 Borrowings (a) 70,105 70,105 83,676 83,676 Cash and cash equivalents (b) 16,689 – 20,797 – Shareholders’ funds (c) 358,823 358,823 389,690 389,690 14.9% 19.5% 16.1% 21.5% * Gearing: ((a) – (b)) ÷ (c), expressed as a percentage. † Gross gearing: (a) ÷ (c), expressed as a percentage. 127 Shareholder information Leverage For the purposes of the Alternative Investment Fund Managers (AIFM) Regulations, leverage is any method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposure and its NAV and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company’s positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other. Active share (APM) Active share, a measure of how actively a portfolio is managed, is the percentage of the quoted equity portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index. Net liquid assets Net liquid assets comprise current assets less current liabilities, excluding borrowings. Share split A share split (or stock split) is the process by which a company divides its existing shares into multiple shares. Although the number of shares outstanding increases, the total value of the shares remains the same with respect to the pre-split value. Treasury shares The Company has the authority to make market purchases of its ordinary shares for retention as treasury shares for future reissue, resale, transfer, or for cancellation. Treasury shares do not receive distributions and the Company is not entitled to exercise the voting rights attaching to them. Private (unlisted) company A private (unlisted) company means a company whose shares are not available to the general public for trading and not quoted on a stock exchange. Turnover Turnover is calculated as the minimum of purchases and sales in a month, divided by the average market value of the portfolio, summed to get rolling 12 month turnover data. 128 Annual Report and Financial Statements 2026 Baillie Gifford Shin Nippon PLC ## Company ## information Directors Company details Further information Chair: J Skinner shinnippon.co.uk Client Relations Team CEC Finn AE Rotheroe Baillie Gifford & Co Company Registration No. SC093345 KJ Troup Calton Square Professor S Vijayakumar ISIN: GB00BFXYH242 1 Greenside Row Edinburgh EH1 3AN Sedol: BFXYH24 T: +44 (0)800 917 2112 Ticker: BGS enquiries@bailliegifford.com Legal Entity Identifier: X5XCIPCJQCSUF8H1FU83 Alternative Investment FundManagers, Secretaries | and Registered Office | Registrar | Independent Auditor | | --- | --- | --- | | Baillie Gifford & Co Limited | Computershare Investor Services PLC | Johnston Carmichael LLP | | Calton Square | The Pavilions | 7–11 Melville Street | | 1 Greenside Row | Bridgwater Road | Edinburgh EH3 7PE | | Edinburgh EH1 3AN | Bristol BS99 6ZZ | | | T: +44 (0)131 275 2000 | T: +44 (0)370 889 3223 | | bailliegifford.com Depositary Corporate Broker The Bank of New York Mellon Winterflood Securities Limited (International) Limited Riverbank House 160 Queen Victoria Street 2 Swan Lane London EC4V 4LA London EC4R 3GA 129 ## shinnippon.co.uk Calton Square, 1 Greenside Row, Edinburgh EH1 3AN Telephone +44 (0)131 275 2000