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RNS

Annual Financial Report

Released 07:00 30-May-2018

RNS Number : 5840P
Aberdeen Japan Investment Trust PLC
30 May 2018
 

ABERDEEN JAPAN INVESTMENT TRUST PLC

 

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 MARCH 2018

 

 

STRATEGIC REPORT 

 

Net asset value total return{A} 2018

 +12.6%


+7.5%

2017

+20.5%


+23.5%





Index total return 2018

+8.2%


14.6%

2017

+33.0%


10.5%




{B} Discount ranged between 8.7% and 14.6% during the year ended 31 March 2018





Ongoing charges ratio{A} 2018

1.18%


5.20p

2017

1.24%


2017

6.00p

{A}        Alternative Performance Measure (see pages 13, 55, 63 and 64 of the published 2018 Annual Report).

 

 

1.         CHAIRMAN'S STATEMENT

 

Highlights

Since the change in the mandate, your Company has delivered a strong NAV total return of 88.3%, outperforming the benchmark by 16.6%.

 

Overview

For most of the year, the Japanese stock market rose steadily amid a synchronised global economic recovery that lifted markets across the world, notably without any major market gyrations. The Japanese Topix benchmark climbed to its highest in two decades, underpinned by a stable and expanding domestic economy that has had its longest growth run in almost 30 years. Sentiment was buoyed by Prime Minister Shinzo Abe's victory at the snap elections, which gave him a continued mandate to pursue his expansionary policies and economic reform.

 

In early 2018 worries emerged over the US Federal Reserve's pace of interest-rate normalisation in the wake of rising wages , a possible trade war between the US and China, and a possible technology-sector sell-off following Facebook's massive data leak. Japanese stocks, along with other global markets, succumbed to a significant sell-off in February from which they have not so far fully recovered. Nevertheless, the Japanese stockmarket has performed  strongly over the last five years and since the inception of your Company's Japan-only investment mandate in October 2013 has delivered an impressive total return, in sterling, of almost 72%.

 

Over the year to 31 March 2018, your Company's net asset value returned a respectable 12.6% compared to the benchmark return of 8.2% in sterling terms. This outperformance was due to a gain of 3.5% from the currency hedge as sterling strengthened. When excluding the hedge contribution the total return was 0.1% short of the benchmark which is in line with the market, but significantly short of the strong gains in the peer group. This outcome partly reflects our Manager's highly selective style which applies a bottom-up, stock-picking approach, with an emphasis on long term performance. The market, as a whole, has been buoyed by optimistic buying, boosting quality and non-quality stocks alike.  Notwithstanding this, since the change in the mandate in late 2013 to Japan-only, your Company's performance including the currency hedge has been encouraging, delivering a total return of 88.3% and outperforming the benchmark by 16.6%.

 

The Ordinary share price's total return for the year was 7.5% as the discount to NAV per Ordinary share widened from 10.5% as at 31 March 2017, to 14.6% at the year end.

 

A detailed analysis of your Company's performance can be found in the Manager's Review below.

 

Hedging

The Board has reviewed the continued suitability of the currency hedge policy which was introduced almost 5 years ago as part of the new investment mandate approved by shareholders in October 2013. The hedge, in isolation, has continued to do its job of smoothing currency gains and losses in sterling terms. An initial two years of gains was followed by two years of losses which included weakened sterling after the Brexit referendum, followed by a recovery during the last year. Since inception to the end of April 2018 the hedge's currency gains and losses have been roughly neutral but the cost of operating the hedge over the period has been about £1.0m. After careful consideration with the Manager, the Board has concluded that the net benefit to shareholders of operating the hedge has not been significant enough to support its continuing operation. It therefore proposes to discontinue the policy of hedging the Company's net Yen exposure into Sterling subject to approval by shareholders of the relevant amendment of the investment policy.  Accordingly, an ordinary resolution to approve the change to the investment policy will be proposed at the AGM. The proposed changes to the investment policy are set out in full on page 62 of the published 2018 annual report.

 

Gearing

The Company continued to make use of its ability to gear during the financial year.  The loan facility with ING was renegotiated in January 2018 and replaced with a Yen 1.3 billion two year fixed term and a Yen 1.0 billion one year floating rate facility.  The Board continues to monitor the level of gearing and considers a gearing level of around 10% to be appropriate, although as highlighted previously, with market fluctuations, this may range between 5% and 15%.  Gearing as at 31 March 2018 was 10.5% .

 

Dividend

Dividend income from Japanese companies fell in sterling terms as the pound strengthened during the year. The Company's revenue return per Ordinary share for the financial year was therefore slightly lower at 6.59p (2017 - 7.25p).    

 

The Board aims to pay a dividend not less than the amount required to maintain investment trust status. Based on this policy the Board is recommending a final dividend of 5.2p per Ordinary share in respect of the year ended 31 March 2018 (2017 - 6.0p).  If approved, the dividend will be paid on 13 July 2018 to shareholders on the register as at the close of business on 15 June 2018. The ex-dividend date is 14 June 2018.

 

Discounts and Share Buybacks

During the period, discount volatility continued to feature within the investment trust sector, including the Company's peer group.  The Board monitors closely the discount level of the Company's shares in relation to the NAV and has in place a mechanism to buy back shares at certain levels. 

 

During the financial year, 349,320 shares were bought back into treasury at a cost of £2.1 million.  Since the period end, a further 55,000 shares have been bought back into treasury at a cost of £325,000.  Overall, the discount averaged 9.4% over the last 90 days of the Company's financial year and there is no requirement under the articles for the Company to put forward a continuation vote to shareholders.  The discount at the end of March 2018 was 14.6% compared to 10.5% at the previous year end and an average of 11.4% for the year. 

 

Manager

The Board has continued to monitor closely the impact on the Manager of the merged parent company Standard Life Aberdeen plc, to ensure that satisfactory arrangements are in place for the effective management and successful performance of the Company's investments. The investment processes supporting the parent's two equity capabilities were combined shortly after the end of March 2018. This has not produced significant change in the organisation or the investment team in the Company's Investment Manager, Aberdeen Investment Management Kabushiki Kaisha, and the Board is satisfied that the established investment policies and principles will continue unchanged in respect of the Company's portfolio.

 

Management Agreement

The Board is pleased to report that it has negotiated a reduction in the management fee with the Manager. With effect from 1 April 2018, the fee will be calculated at 0.75% of net assets compared to the previous rate of 0.95% of net assets up to £50m and 0.75% of assets above £50m. This is part of the Board's focus on the ongoing costs of the Company which have reduced from 1.47% in 2013 to 1.18% in 2018. As a result of the reduced management fee, the Ongoing Charges Ratio in 2019 will be about 1.07%. However, the European PRIIPs regulations requires ongoing costs to include interest and other transaction costs in the Key Information Document from 2018 onwards. On this basis, the forecast for 2019 of about 1.26% is a reduction from 1.37% as at 1 Jan 2018 and compares well with our peer group.

 

 Environmental, Social & Corporate Governance ('ESG')

The Company is a 'tier 1' signatory of the UK Stewardship Code which aims to enhance the quality of engagement by investors with investee companies in order to improve their socially responsible performance and the long term investment return to shareholders. The Board works closely with the Investment Manager to ensure the appropriate active engagement with the companies in which the Company invests.  During the year the Manager has substantially increased the integration of engagement of ESG issues in the investment process, reporting the results regularly to the Board, and has disinvested from two companies as a result of unacceptable governance.

 

Outlook

After a strong 2017 and the calm that global markets have featured for some time, markets corrected and volatility returned in early 2018. It is likely that more normal volatility can be expected for the rest of the year ahead as global synchronisation of economies and markets weakens.

 

In Japan, the Yen's strength remains a perennial concern for the export sector, while Prime Minister Abe's support has weakened in recent months which may dent his ability to push through less-palatable policies. One positive outcome of the recent market correction is that it brought company fundamentals back into focus, instead of the relatively indiscriminate buying experienced in 2017 when investment flows into Japan were particularly strong. The companies in the portfolio have considerable financial resources which should provide a buffer if the macro-economy worsens faster than expected. These companies know that potentially game-changing events like the trade issues between China and the US also present opportunities. Given their flexibility and nimbleness, these holdings should be able to take advantage of shifting market dynamics through product innovation and basic research and development.

 

The Manager's consistent engagement with our investee companies over the long term has helped contain key risks, while improving the returns to the Company and its shareholders, through the unlocking of value of these mainly cash-rich, debt-free and conservatively-run businesses. Although the pace of corporate governance reform has been slow, progress has been positive and the changing mind-set is likely to remain long after Prime Minister Abe. While the overall picture may appear rather uncertain in the short to medium term, your Company is well positioned to meet these challenges.

 

Board

I have had the privilege of serving as Chairman of the Board of the Company since 2008 and in accordance with the Board's succession plan will step down as Chairman after the AGM in July.  I shall leave the Board during the course of the year once a replacement Director is recruited.  My successor as Chairman will be Karen Brade who has been a Director since 2012 and has a wealth of experience both in international finance and investment trusts which will serve the Company well. The Company has evolved significantly over the past 10 years and I am confident that under Karen's leadership it will continue its successful development in the future.     

     

Neil Gaskell

Chairman

 

29 May 2018

 

 

2.         MANAGER'S REVIEW

Overview

Japanese equities posted solid gains in the year under review despite several bouts of volatility, as investors were heartened by the synchronised global upturn. At the sectoral level, most industrials stocks reported better-than-expected earnings, thanks to the rising demand for factory automation, while consumer names benefited from the robust inbound tourist traffic. However, developments in the US were less straightforward. While the sweeping tax cuts could prove favourable, concerns over the Federal Reserve's steeper rate hike and rising risks of a global trade war unnerved markets and increased the prospects of a stronger yen.

 

At home, the economic upswing stretched to its longest since 1989, resulting in a modest uptick in wage growth. The Bank of Japan's governor Haruhiko Kuroda was re-appointed for another five-year term, marking the continuation of his accommodative policy. However, the inflation target of 2% remained elusive in spite of rising energy prices. On the political front, Prime Minister Shinzo Abe's popularity suffered another blow after fresh revelations came to light about the possible involvement of the Prime Minister's Office in a discounted sale of public land.

 

Portfolio review

The Company's net asset value per share rose by 12.6%, compared to the benchmark's index total return of 8.2%. The equity holdings returned 8.1%, excluding the sterling hedge effect of 3.5%.

 

Nabtesco and Keyence continued to steal the limelight in the portfolio. With their technological expertise, they have solidified their market-leading positions and posted earnings that beat expectations, driven by the sustained rise in demand for factory automation. Nabtesco's reduction gears are a key component in industrial robots, while Keyence develops sensors, image-processing systems and other related devices for remote-control equipment. We like both companies for their cash-generative businesses, backed by healthy balance sheets.

 

Another pillar of the portfolio's returns was the healthcare sector. Notably, we were encouraged by Asahi Intecc and Sysmex, which consistently delivered excellent results. Asahi Intecc is a maker of guidewires and other catheter treatment products. Building on its past performance, this year's profits improved significantly, from new product launches and in-house distribution and marketing functions in Japan and Europe. Markets in China and EMEA have also registered double-digit growth. Recently, the company has switched to direct sales in the US, where its flagship products were previously sold by a distributor. We believe that this development, together the extensive application of Asahi Intecc's guidewires to peripheral vascular and cardiovascular areas, will allow the company to sustain its earnings momentum.

 

For Sysmex, its hematology products are considered the best in class because of their precision and processing speed. This has allowed the company to steadily expanded its market share in this segment. Overall, Sysmex is an integrated manufacturer of medical devices and accessories used to perform tests on blood, urine and other tissues. With an ingrained R&D culture, it has various projects in the pipeline, promising attractive long-term growth opportunities. The company is poised to benefit from China's increased spending in healthcare, enabling more hospitals to invest in high-quality equipment.

 

The rising wealth of China's burgeoning middle class and their desire for premium products also bode well for the portfolio's consumer names, including Shiseido and Pigeon. We initiated Shiseido in the first half of the review period. The cosmetics maker has successfully implemented cost-savings measures, put in place an incentive-based pay structure and improved its earnings through a focused marketing strategy that emphasises prestige product lines. Meanwhile, China has become Pigeon's largest overseas business, accounting for a third of its total sales. Its fourth-quarter results met expectations, driven by robust performance in the mainland's baby-care segment, where Pigeon's baby bottles are perceived to be of better quality than their local rivals.

 

On the other hand, undermining the portfolio's returns was Suruga Bank, which was being probed by the Financial Services Agency for allegedly making loans based on falsified data provided by real estate companies that make borrowers seem creditworthy. We are reviewing the degree to which the lender was involved in this incident, whether its staff were party to the scheme or victims of the deception.  The position in Suraga was significantly reduced post the year end.

 

Another company that hampered the portfolio's performance was Japan Tobacco, which remained under pressure, as competing novel nicotine products continued to take market share from its domestic cigarette sales. In response, the company launched its own vapouriser PLOOMTECH, but the national rollout was delayed due to hiccups in production. A heated version of the smokeless tobacco product could be launched early next year in a bid to win back lost market share. Meanwhile, its overseas expansion stayed on track. Most recently, it acquired Russia's fourth-largest cigarette maker Donskoy Tabak, whose budget brand should complement its current higher-value offering.

 

Staying true to our bottom-up approach, we take seriously our engagement with the companies in which we invest. On that front, we supported Nippon Paint's shareholders' vote for an improved board structure, with more independent directors, as proposed by substantial shareholder Wuthelam Holdings. The board refreshment came in the wake of Nippon's botched attempt to expand into more mature markets, a strategy that we had disagreed with, given better opportunities elsewhere in emerging Asia. Meanwhile, we were heartened by Japan Exchange Group's decision to sell its stake in Singapore Exchange over the next three years. We have consistently urged Japanese corporates, including the local bourse, to unwind their cross shareholdings in other listed companies, in line with Japan's Corporate Governance Code.

 

In other key portfolio activity, we initiated Komatsu, the world's second-largest construction and mining equipment maker next to Caterpillar. Its global reach allows it to build a loyal client base, an after-sales service which uses remote monitoring systems to prevent any erosion of its market share and superior products that are able to meet stricter emissions standards. We believe that Komatsu's progressive management has set clear targets for financial and shareholder returns. More growth opportunities will unfold, as the heavy-equipment replacement cycle is still in its early stages, after a protracted four-year decline.

We also introduced Yamaha Corp. While we were sceptical of corporate restructuring in the past, our view has evolved, and we were encouraged by Yamaha's efforts to streamline its businesses to become leaner. The company has narrowed its focus to just musical instruments, where it has a solid global market share, and audio equipment, given its competitive edge in sound-synthesis technology. We expect Yamaha to be in a good position to benefit from healthy market growth in developed and emerging markets, even as it continues to restructure its production facilities. Additionally, the company has been gradually unwinding its cross shareholdings and returning the proceeds to shareholders.

 

Outlook

We expect to see more volatility, as macroeconomic conditions normalise and global growth moderates. The developing trade war between the US and its trading partners, as well as rising geopolitical tensions in the region and elsewhere could put more upward pressure on the yen, a safe-haven asset, further dampening the prospects of Japan's export sector. 

 

That said, the investment case for Japan remains compelling, as companies are backed by a healthy domestic economy and improving corporate fundamentals. Monetary policy will stay accommodative as the Bank of Japan strives to attain its inflation target. The still-tight labour market and rising material costs could squeeze margins, but they could also prompt companies to be leaner and focus on their most profitable businesses, a positive trend we have seen across many of the portfolio's holdings. Despite conservative earnings forecasts to reflect the challenges ahead, their balance sheets and cash flows are robust, and dividend payouts have been sustainable. We have also seen encouraging signs in corporate governance reform, as companies slowly increase the levels of independence and diversity of their boards. We remain committed to our investment approach, which entails rigorous interaction and engagement with companies. This allows us to identify those with solid long-term prospects and progressive management that will shield them against market volatility and safeguard the interests of all shareholders.

 

Aberdeen Investment Management Kabushiki Kaisha

Investment Manager

 

29 May 2018

 

 

3.         OVERVIEW OF STRATEGY

Business Model

This report provides shareholders with details of the Company's business model and strategy as well as the principal risks and challenges it faces.

 

The Company is an investment trust which seeks to deliver a competitive return to its shareholders through the investment of its funds in accordance with the investment policy as approved by shareholders. 

 

The Board appoints and oversees an investment manager, decides the appropriate financial policies to manage the assets and liabilities of the Company, ensures compliance with legal and regulatory requirements and reports objectively to shareholders on performance.

 

The Directors do not envisage any change in this model in the foreseeable future.

 

Investment Objective

To achieve long-term capital growth principally through investment in listed Japanese companies which are believed by the Investment Manager to have above average prospects for growth.  

 

The Board's strategy is represented by its investment policy, financial policies, and risk management policies.

 

Investment Policy

The Company primarily invests in the shares of companies which are listed in Japan.  The portfolio is constructed through the identification of individual companies of any market capitalisation size and in any business sector, which offer long-term growth potential. 

 

The portfolio is selected from the 3,500 listed stocks in Japan and is actively managed to contain between 30 and 70 stocks which, in the Manager's opinion, represent the best basis for producing higher returns than those of the market as a whole in the long term. There will therefore inevitably be periods in which the Company's portfolio both outperforms and also underperforms the market as represented by the Company's benchmark.

 

The Board does not impose any restrictions on these shorter term performance variations from the benchmark, nor any limits on the concentration of stock or sector weightings within the portfolio, except that no individual shareholding shall exceed 10% of the Company's portfolio at the time of purchase, although market movements may subsequently increase this percentage.

 

The full text of the Company's investment policy is provided on page 62 of the published 2018 Annual Report.

 

Investment Approach

The Investment Manager's investment philosophy is that markets are not always efficient. The Investment Manager's approach is therefore that superior investment returns are attainable by investing in companies with good fundamentals and above average growth prospects that in the Investment Manager's opinion drive share prices over the long-term.  The Investment Manager follows a bottom-up investment process based on a disciplined evaluation of companies through active engagement, at least twice a year, with management on performance including environmental, social and governance issues by its fund managers who are based in Japan. The Manager estimates a company's worth in two stages, quality, defined by reference to management, business focus, the balance sheet and corporate governance, and then price  calculated by reference to key financial ratios, the market, the peer group and business prospects.  The selection of the portfolio of shares is the major source of the good performance of the portfolio and no stock is bought without the fund managers having first met management.

 

Stock selection is key in constructing a diversified portfolio of companies with macroeconomic, political factors and benchmark weightings being secondary.  

 

Given the long-term fundamental investment philosophy, the Manager expects to hold most companies in which the Company invests for extended periods of time and this accounts for the relatively low level of activity within the portfolio.

 

Financial Policies

The Board's main financial policies cover the management of shareholder capital, risk management of the Company's asset and liabilities, including currency risk, the use of gearing and the reporting to shareholders of the Company's performance and financial position.

 

Management of Shareholder Capital

The Board's policy for the management of shareholder capital is primarily to ensure its long term growth. This growth will reflect both the Manager's investment performance and from time to time the issue of shares when sufficient demand exists to do this without diluting the value of existing shareholder capital.  The Board aims normally to pay a dividend each year and not less than the minimum required to maintain investment trust status.  The Board will authorise the buyback of shares in order to avoid excessive variability in the discount and if, despite this, the average discount exceeds 10% during the 90 day period preceding its financial year end, the Board will offer shareholders the opportunity to wind up the Company at the next AGM.

 

Risk Management

The policy for risk management is primarily focused on the investment risk in the portfolio using the Manager's risk management systems and risk parameters, overseen by the Board.

 

Derivatives

The Company may use derivatives from time to time for the purpose of mitigating risk in its investments, including protection against currency movements. The performance of the Company is subject to fluctuations in the Yen/£ exchange rate. The Company's exposure to Yen fluctuations is partially offset by the natural hedge provided by any borrowing in Yen as well as by investments in Japanese companies which have significant sources of income from exports of goods or from non-Japanese operations. 

 

The Board has currently determined that approximately 50% of the Company's Yen net assets should be hedged against fluctuations in the Yen/£ exchange rate through the use of rolling forward contracts. The Board monitors the hedging policy and its effects on the Company's performance on a regular basis and, following consultation with the Manager, has concluded that the net benefit of the Company's Sterling hedge is not sufficient to continue its operation and has therefore proposed to discontinue it, subject to shareholder approval at the AGM.  

 

The wider corporate risks, including those arising from the increasingly regulated and competitive market place, are managed directly by the Board.  The principal risks are more fully described under the paragraph 'Principal Risks and Uncertainties'.

 

Use of Gearing

Gearing is the amount of borrowing used to increase the Company's portfolio of investments in order to enhance returns when and to the extent it is considered appropriate to do so or to finance share buybacks when necessary. The level of borrowing is subject to a maximum of 25% of net assets but will normally be set at a stable and lower level than the maximum. The Board has currently established a gearing level of around 10% of net assets although, with stock market fluctuations, this may range between 5 and15%.

 

Principal Risks and Uncertainties

The Company's risks are regularly monitored at Audit Committee meetings and the Board believes that the Company is resilient to most short term operational risks which are effectively mitigated by the internal controls of the Manager and Depositary.  Identification and mitigation  of other longer term and strategic risks which might threaten its business model, future performance or solvency are robustly assessed by the Audit Committee and managed by the Board. The principal risks and uncertainties faced by the Company are described in the table below, together with the mitigating actions.

 

Description

Mitigating Action

Investment strategy risk

The Company and its investment objective may become unattractive to investors. The value of Japanese equities may be affected by factors not associated with the UK, including the general health of the Japanese economy and political events in and around Japan, which can affect investor demand.

 

The Board monitors longer term trends in investor demand and, if appropriate, can propose changes to the investment objective to the shareholders.

Investment risk

Investment risk arises from the Company's exposure to variations of share prices within its portfolio in response to individual company and to wider Japanese or international factors. Investment in a focussed portfolio of shares can lead to greater short term changes in the portfolio's value than in a larger portfolio of stocks and these variations will be amplified by the use of gearing.

 

The Board regularly monitors the investment performance of the portfolio and the performance of the Manager in operating the investment policy against the long term objectives of the Company and, where appropriate, has in place mitigation measures such as the currency hedging policy.

 

 

Reputation

The attractiveness of the Company to investors is based on the good reputation of the Manager as well as of investment trusts generally. Were investments trusts to fall out of favour as a route for investors or Aberdeen's reputation as Manager of the Company to weaken, it is likely that investor demand would decline.

 

The Board monitors shareholder sentiment regularly and would be able to take remedial action were its reputation to be threatened.

 

Regulatory compliance risk

The Company operates under a set of UK, European and international laws and regulations.

 

The Board is active in ensuring that it fully complies with all applicable laws and regulation and is assisted by the Manager and other advisers in doing this. The Board believes that, while the consequences of non-compliance can be severe, the control arrangements it has put in place reduce the likelihood of this happening.

Performance risk

Inappropriate investment decisions or the effect of the hedge, which reduces currency gains when yen strengthens, may result in the Company's underperformance against the benchmark index and Peer Group and a widening of the Company's discount.

 

The Board regularly reviews performance data and attribution analysis and other relevant factors and, were an underperformance likely to be sustained, would be able to take remedial measures.

The Board considers that, over the longer term, the gains and losses of the hedge should be balanced and in the shorter term the additional stability of the Company's  performance provided by the hedge is of value to the shareholders.  The Board is also able to change the amount which is hedged should it consider this to be appropriate.

Share price and discount risk

The principal risks described above each can affect the movement of the Company's share price and in some cases have the potential to increase the discount in the market value of the Company compared with the NAV.

 

The Board actively monitors the discount and believes that the combined effect of good investment performance, the risk mitigation arrangements described above and its ability to authorise buyback of shares when necessary, will both reduce discount and limit its variability.   

 

Key Performance Indicators (KPIs)

The key performance indicators (KPIs) which the Board uses to monitor the Company's performance are established industry measures, and are as follows:

 

KPI

Achievement of KPI

-     NAV (total return) relative to the Company's benchmark index

No

-     Share price (total return) vs Peer Group

No

-     Discount or premium of the share price to NAV vs Peer Group on an annual average.

No

-     Ongoing Charges Ratio

Yes

 

An analysis of the KPIs is provided below.  Performance is compared against the Company's benchmark index and its Peer Group.  In view of the Manager's style of investing, there can be, in the short-term, considerable divergence from both comparators.  The Board uses a three year rolling performance for the following KPIs:- total NAV return against the benchmark index and share price total return compared with the Peer Group. The KPI for the discount comparison to its Peer Group is over one year.  The Company's Ongoing Charges Ratio is compared with the Peer Group, taking into account its size, to ensure that total running costs remain competitive.

 

Over the three year period to 31 March 2018, the Company's NAV and share price return underperformed its KPI.  This was largely attributable to the loss on the Currency Hedge caused by the sharp depreciation of sterling following the Brexit Referendum.  Excluding the impact of the Hedge, the Company's NAV return over three years was approximately 36.2% compared to the benchmark's return of 41.4%.  The discount KPI also underperformed.  The Trust's OCR reduced over the year to 31 March 2018 to 1.18% and is competitive within its Peer Group relative to its size of total assets. 

 

Promoting the Company

The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the value and rating of the Company's shares. The Board believes an effective element of achieving this is through participation in the promotional programme run by the Aberdeen Group on behalf of a number of investment trusts under its management.

 

The purpose of the programme is both to enable the Company to communicate the long-term attractions of the Company effectively with existing shareholders and to gain new shareholders with the aim of improving liquidity and enhancing the value and rating of the Company's shares. The Company also supports the Aberdeen Group's investor relations programme of regional roadshows, promotional and public relations campaigns. 

 

In addition, the Company's website contains a daily update on the latest portfolio performance and a monthly summary of investment performance together with information about the Japanese market, details of the principal risks of investing in the Company  and any other significant developments within the Company.   

 

Investors should be aware that, with effect from 1 January 2018, the PRIIPS Regulation requires the Manager to prepare a key information document ("KID") in respect of the Company. This KID must be made available to retail investors prior to them making any investment decision and a link to it is available from the Company's website. The information and the procedures for calculating the risks, costs and potential returns contained in the KID are prescribed by the law. Investors should note that the figures in the KID may not reflect the expected returns for the Company and anticipated performance returns cannot be guaranteed.

 

Board Diversity

The Board recognises the importance of having a diverse group of Directors with the right mix of competencies to allow the Board to fulfil its obligations. At 31 March 2018 there were three male Directors and one female Director, all of whom bring different experience and skills and contribute distinctively to the Board's performance. The Board's statement on diversity is set out on page 27 of the published 2018 Annual Report.

 

Employee, Environmental, Social & Human Rights Issues

The Company has no employees as it has delegated operational management to the Manager. There are therefore no disclosures to be made in respect of employees.  The Company's socially responsible investment policy is outlined on page 27 of the published 2018 Annual Report.

 

Modern Slavery Act

Due to the nature of the Company's business, being a company that does not offer goods and services to customers, the Board considers that it is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. In any event, the Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

 

Viability Statement

The Company's business model is designed to deliver long term capital growth to its shareholders through investment in large and liquid stocks in the global equity markets. Its plans are therefore based on having no fixed or limited life provided the global equity markets continue to operate normally.

 

The Board has assessed its prospects over a three year period in accordance with the 2016 UK Corporate Governance Code.  In making this assessment, the Board has considered the principal risks and related mitigating actions for the Company as set out above on pages 10 to 11 of the published 2018 Annual Report and matters such as significant economic or stock market volatility, a substantial reduction in the liquidity of the portfolio, or changes in investor sentiment which could have an impact on  the Company's prospects  in the future.

 

The Board considers that, given that it is invested in readily realisable listed securities, and has a relatively low level of fixed expenses and of debt, it will be able to meet the Company's liabilities when they fall due for the foreseeable future but that a three year period reflects appropriately the inherent and increasing uncertainties involved in any longer period.

 

Accordingly, taking into account the Company's current position and its prospects, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of this Report.

 

The Strategic Report was approved by the Board of Directors and signed on its behalf for Aberdeen Japan Investment Trust PLC by:

 

Neil Gaskell

Chairman

 

29 May 2018

 

 

4.         RESULTS

 

 

Financial Highlights

 


31 March 2018

31 March 2017

% change

Total assets

£111,863,000

£104,369,000

+7.2

Total equity shareholders' funds (net assets)

£100,472,000

£92,168,000

+9.0

Market capitalisation

£85,775,000

£82,533,000

+3.9

Share price (mid market)

582.50p

547.50p

+6.4

Net asset value per share

682.31p

611.41p

+11.6

Discount to net asset value

14.6%

10.5%


Net gearing{A}

10.5%

12.1%






Operating costs




Ongoing charges ratio{B}

1.18%

1.24%






Earnings




Total return per share

75.83p

102.69p


Revenue return per share

6.59p

7.25p


Proposed final dividend per share

5.20p

6.00p


Revenue reserves (prior to payment of proposed final dividend)

£2,604,000

£2,520,000


Definitions are disclosed on page 63 and 64 of the published 2018 Annual Report.




{A} Calculated in accordance with AIC guidance "Gearing Disclosures post RDR". 



{B} Considered to be an Alternative Performance Measure. Ongoing charges ratio calculated in accordance with guidance issued by the AIC as the total of the investment management fee and administrative expenses divided by the average cum income net asset value throughout the year.

 

 

KEY PERFORMANCE INDICATORS









Return since


1 year

3 year

5 year

8 October 2013


return

return

return

(change of mandate)

Net asset value{A}

+12.6%

+27.3%

+72.7%

+88.3%

Index

+8.2%

+41.4%

+67.7%

+71.7%

Share price{A}

+7.5%

+16.8%

+59.5%

+76.4%

Peer Group share price

+17.9%

+50.8%

+132.5%

+104.7%

Average discount - Company

-11.3%

-10.0%

-9.3%

-9.4%

Average discount - Peer Group

-3.3%

-4.8%

-5.5%

-5.4%

Source: Standard Life Aberdeen, Lipper & Morningstar.




{A} Considered to be an Alternative Performance Measure. Total return represents capital return plus dividends reinvested. For one year return calculation see note 20.

Dividend calculations are based on reinvestment at the ex-dividend date. NAV returns are based on cum-income NAV with debt at fair value.

Based on share price and NAV per Morningstar (ie as available in the market, not including unreleased R&A NAVs).

Peer Group is the Japan sector of Morningstar.

Index represents the MSCI AC Asia Pacific (including Japan) Index (in Sterling terms) up to 7 October 2013 and the TOPIX (in Sterling terms) from 8 October 2013.

 

 

DIVIDENDS

 


Rate

Ex-dividend date

Record date

Payment date

Proposed final dividend 2018

5.20p

14 June 2018

15 June 2018

13 July 2018

Final dividend 2017

6.00p

15 June 2017

16 June 2017

14 July 2017

 

 

INVESTMENT PORTFOLIO

 

Top Ten Investments

As at 31 March 2018

 



Valuation

Total

Valuation



2018

assets

2017

Company

Sector

£'000

%

£'000

Shin-Etsu Chemical Company





Despite the challenging environment, the Japanese maker of specialised chemicals remains a leader in its industry, due to its technological edge and a greater focus on profits than most Japanese rivals.

Chemicals

5,825

5.2

5,952

Keyence Corporation





The leading maker of sensors has a cash generative business and is backed by a strong balance sheet and technological expertise.

Electronic & Electrical Equipment

5,306

4.7

5,182

Fanuc Corporation





A leading manufacturer of factory automation systems, equipment and robots that has an excellent track record of being able to maintain margins with robust cash flow and a strong net cash position.

Industrial Engineering

4,515

4.0

4,176

Sysmex Corporation





The medical-equipment maker has a leading position in niche markets, particularly its dominance in the field of haematology. It also has a solid balance sheet and resilient business.

Health Care Equipment & Services

4,127

3.7

3,434

Amada Holdings Company





A manufacturer of sheet metal fabrication machines. The company has a leading position especially among Japanese small to mid-size enterprises thanks to its core technology and effective sales strategy leveraging its internal financing operations.

Industrial Engineering

3,980

3.6

            4,196

Shiseido Company





One of Japan's biggest cosmetics groups with a strong portfolio that is increasingly weighted to lucrative prestige brands, supported by good management and decent governance.

Chemicals

3,877

3.5

                   -

Pigeon Corporation





Among Japan's leading baby and childcare product manufacturers, the company also operates in child and elder-care services. It generates more than a third of its revenues in overseas markets, with the biggest exposure in China.

Personal Goods

3,861

3.4

3,134

Yahoo Japan Corporation





It operates the country's biggest domestic portal and is well placed in the growing online advertising market, given its strong branding and dominant market position.

Software & Computer Services

3,661

3.3

3,251

Seven & I Holdings Company





A Japanese retail conglomerate with interests in  a wide range of domestic businesses including convenience stores, discount stores, supermarkets, department stores and food services, which gives its earnings a defensive edge.

General Retailers

3,637

3.3

4,413

Makita Corporation





The medical-equipment maker has a leading position in niche markets, particularly its dominance in the field of haematology. It also has a solid balance sheet and resilient business.

Household Goods & Home Construction

3,496

3.1

2,320

Top ten investments


42,285

37.8


 

 

INVESTMENT PORTFOLIO - OTHER INVESTMENTS

 

As at 31 March 2018

 



Valuation

Total

Valuation



2018

assets

2017

Company

Sector

£'000

%

£'000

Nabtesco Corporation

Industrial Engineering

3,490

3.1

4,404

KDDI Corporation

Mobile Telecommunications

3,183

2.9

4,131

Daikin Industries

Industrial Engineering

3,145

2.8

2,969

Japan Exchange Group Inc.

Financial Services

2,906

2.6

1,775

Denso Corporation

Automobiles & Parts

2,884

2.6

1,405

Japan Tobacco Inc.

Tobacco

2,814

2.5

5,140

Nippon Paint Holdings Company

Chemicals

2,763

2.5

2,591

Chugai Pharmaceutical Company

Pharmaceuticals & Biotechnology

2,699

2.4

2,837

Stanley Electric Company

Automobiles & Parts

2,683

2.4

-

Ashai Intecc Company

Health Care Equipment & Services

2,621

2.3

1,295

Top twenty investments


71,473

63.9


Daito Trust Construction Company

Real Estate Investment & Services

2,401

2.2

2,634

Honda Motor Company

Automobiles & Parts

2,191

2.0

2,625

Renesas Electronics Corporation

Technology Hardware & Equipment

2,056

1.8

-

San-A Company

Food & Drug Retailers

2,051

1.8

2,083

Aeon Financial Service Company

Financial Services

2,047

1.8

1,791

Nitori Holdings

General Retailers

1,890

1.7

-

Suruga Bank

Banks

1,888

1.7

2,556

AIN Holdings Inc.

Food & Drug Retailers

1,860

1.7

-

SCSK Corporation

Software & Computer Services

1,829

1.6

1,743

Kansai Paint Company

Chemicals

1,817

1.6

1,627

Top thirty investments


91,503

81.8


Mani Inc.

Health Care Equipment & Services

1,713

1.5

-

Calbee Inc.

Food Producers

1,710

1.5

2,315

Komatsu

Industrial Engineering

1,698

1.5

-

Daibiru Corporation

Real Estate Investment & Services

1,667

1.5

1,893

Shionogi & Company

Pharmaceuticals & Biotechnology

1,548

1.4

1,134

Mandom Corporation

Personal Goods

1,548

1.4

2,064

USS Company

General Retailers

1,498

1.3

1,511

Toyota Motor Corporation

Automobiles & Parts

1,371

1.2

3,252

Yamaha Corporation

Leisure Goods

1,298

1.2

-

Concordia Financial Group

Banks

1,218

1.1

1,280

Top forty investments


106,772

95.4


Resorttrust Inc.

Travel & Leisure

1,063

1.0

1,703

Start Today Company

General Retailers

1,028

0.9

-

Sanken Electric

Technology Hardware & Equipment

996

0.9

-

Pilot Corporation

Household Goods & Home Construction

555

0.5

-

Total investments


110,414

98.7


Net current assets{A}


1,449

1.3


Total assets


111,863

100.0


{A} Excludes bank loans of £11,391,000.

Unless otherwise stated, foreign stock is held and all investments are equity holdings.

In the 2017 valuation column "-" denotes stock not held at last year end.

 

 

GOING CONCERN

The Company's assets consist of equity shares in companies listed on recognised stock exchanges and in most circumstances are realisable within a short timescale. 

 

The Company does not have a fixed life. However, under the articles of association, if, in the 90 days preceding the Company's financial year-end (31 March), the Ordinary shares have been trading, on average, at a discount in excess of 10% to the underlying NAV over the same period, notice will be given of an ordinary resolution to be proposed at the following AGM to approve the continuation of the Company.  In the 90 days to 31 March 2018, the Ordinary shares traded at an average discount of 9.34% to the underlying NAV.  Accordingly, no resolution on the continuation of the Company will be put to the Company's shareholders at the Annual General Meeting.

 

After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. This takes account of the liquidity of the Company's investments, and that the earliest date that the Company may be subject to a continuation vote is at the Annual General Meeting of the Company to be held in 2019. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. 

 

Company law requires the Directors to prepare financial statements for each financial year.  Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland

 

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.  In preparing these financial statements, the Directors are required to: 

 

-           select suitable accounting policies and then apply them consistently; 

-           make judgments and estimates that are reasonable and prudent; 

-           state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and 

-           prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. 

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006.  They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. 

 

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations. 

 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.  Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 

 

Responsibility statement of the Directors in respect of the annual report

We confirm that to the best of our knowledge:

 

-           the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company taken as a whole; and

-           the Directors' report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.

 

We consider the annual report and accounts, 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.

 

For and on behalf of Aberdeen Japan Investment Trust PLC

 

Neil Gaskell

Chairman

 

29 May 2018

 

 



FINANCIAL STATEMENTS

 

STATEMENT OF COMPREHENSIVE INCOME

 



Year ended 31 March 2018

Year ended 31 March 2017



Revenue

Capital

Total

Revenue

Capital

Total


Notes

£'000

£'000

£'000

£'000

£'000

£'000

Gains on investments

10

-

6,829

6,829

-

22,557

22,557

Income

3

1,879

-

1,879

2,015

-

2,015

Exchange gains/(losses)

14

-

4,104

4,104

-

(7,205)

(7,205)

Investment management fee

4

(339)

(508)

(847)

(308)

(461)

(769)

Administrative expenses

5

(326)

(15)

(341)

(337)

(11)

(348)



_____

_____

_______

______

______

_____

Net return before finance costs and taxation


1,214

10,410

11,624

1,370

14,880

16,250









Finance costs

6

(42)

(63)

(105)

(44)

(65)

(109)



_____

_____

_______

______

______

_____

Net return before taxation


1,172

10,347

11,519

1,326

14,815

16,141









Taxation

7

(188)

-

(188)

(201)

-

(201)



_____

_____

_______

______

______

_____

Net return after taxation


984

10,347

11,331

1,125

14,815

15,940



_____

_____

_______

______

______

_____









Return per Ordinary share (pence)

9

6.59

69.24

75.83

7.25

95.44

102.69



_____

_____

_______

______

______

_____









The total column of this statement represents the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations.

The accompanying notes are an integral part of the financial statements.

 

 



STATEMENT OF FINANCIAL POSITION

 



As at

As at



31 March 2018

31 March 2017


Notes

£'000

£'000

Fixed assets




Investments designated at fair value through profit or loss

10

110,414

102,793



___________

___________

Current assets




Debtors

11

743

865

Cash at bank and in hand


881

1,007



___________

___________



1,624

1,872



___________

___________

Creditors: amounts falling due within one year




Foreign currency bank loans

12

(2,681)

(12,201)

Other creditors

12

(175)

(296)



___________

___________



(2,856)

(12,497)



___________

___________

Net current liabilities


(1,232)

(10,625)



___________

___________

Total assets less current liabilities


109,182

92,168





Creditors: amounts falling due in more than one year




Foreign currency bank loans

12

(8,710)

-



___________

___________

Net assets


100,472

92,168



___________

___________

Share capital and reserves




Called-up share capital

13

1,582

1,582

Share premium


6,656

6,656

Capital redemption reserve


2,273

2,273

Capital reserve

14

87,357

79,137

Revenue reserve


2,604

2,520



___________

___________

Equity shareholders' funds


100,472

92,168



___________

___________





Net asset value per Ordinary share (pence)

15

682.31

611.41



___________

___________

 

 



STATEMENT OF CHANGES IN EQUITY

 

For the year ended 31 March 2018












Capital






Share

Share

redemption

Capital

Revenue




capital

premium

reserve

reserve

reserve

Total


Notes

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 March 2017


1,582

6,656

2,273

79,137

2,520

92,168

Return after taxation


-

-

-

10,347

984

11,331

Dividend paid

8

-

-

-

-

(900)

(900)

Purchase of Ordinary shares to be held in treasury

13

-

-

-

(2,127)

-

(2,127)



______

______

_____

_____

_____

______

Balance at 31 March 2018


1,582

6,656

2,273

87,357

2,604

100,472



______

______

_____

_____

_____

______









For the year ended 31 March 2017












Capital






Share

Share

redemption

Capital

Revenue




capital

premium

reserve

reserve

reserve

Total



£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 March 2016


1,582

6,656

2,273

67,162

2,050

79,723

Return after taxation


-

-

-

14,815

1,125

15,940

Dividend paid

8

-

-

-

-

(655)

(655)

Purchase of Ordinary shares to be held in treasury

13

-

-

-

(2,840)

-

(2,840)



______

______

_____

_____

_____

______

Balance at 31 March 2017


1,582

6,656

2,273

79,137

2,520

92,168



______

______

_____

_____

_____

______

 

 



STATEMENT OF CASHFLOWS

 


Year ended

Year ended


31 March 2018

31 March 2017


£'000

£'000

Net return before finance costs and taxation

11,624

16,250

Adjustment for:



Gains on investments

(6,829)

(22,557)

Increase/(decrease) in other creditors

12

(3)

Expenses taken to capital reserve

15

11

Foreign exchange (gains)/losses

(690)

1,411

Overseas withholding tax

(188)

(201)

Increase in accrued dividend income

(4)

(130)

Decrease/(increase) in other debtors

8

(4)


______

______

Net cash inflow/(outflow) from operating activities

3,948

(5,223)


______

______

Investing activities



Purchases of investments

(29,919)

(14,151)

Sales of investments

28,994

23,036

Expenses allocated to capital

(15)

(11)


______

______

Net cash (outflow)/inflow from investing activities

(940)

8,874


______

______

Financing activities



Bank and loan interest paid

(105)

(109)

Equity dividend paid

(900)

(655)

Purchase of own shares to treasury

(2,127)

(2,840)


______

______

Net cash outflow from financing activities

(3,132)

(3,604)


______

______

(Decrease)/increase in cash

(124)

47


______

______




Analysis of changes in cash during the year



Opening balance

1,007

897

Effects of exchange rate fluctuations on cash held

(2)

63

(Decrease)/increase in cash as above

(124)

47


______

______

Closing balance

881

1,007


______

______

 



 

Notes to the Financial Statements


For the year ended 31 March 2018


1.

Principal activity


The Company is a closed-end investment company, registered in England and Wales No 3582911, with its Ordinary shares being listed on the London Stock Exchange.

 

2.

Accounting policies


(a)

Basis of accounting and going concern



The financial statements have been prepared in accordance with Financial Reporting Standard 102 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in November 2014 and updated in February 2018 with consequential amendments.  They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis. The Directors believe this is appropriate for the reasons outlined in the Directors' Report on page 23 of the published 2018 Annual Report.






The Company's financial statements are presented in Sterling, which is also the functional currency as it is the basis upon which shareholders operate and expenses are generally paid. All values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.





(b)

Valuation of investments



The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Company's Board of Directors. Accordingly, upon initial recognition the Company designates the investments 'at fair value through profit or loss'. Fair value is taken to be the investment's cost at the trade date (excluding expenses incidental to the acquisition which are written off in the Statement of Comprehensive Income, and allocated to 'capital' at the time of acquisition).






Subsequent to initial recognition, investments continue to be designated at fair value through profit or loss, which is deemed to be bid prices, where the bid price is available, or otherwise at fair value based on published price quotations.





(c)

Income  



Dividends, including taxes deducted at source, are included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are reviewed on a case-by-case basis and may be credited to capital, if circumstances dictate. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of the cash dividend is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital reserves. Interest receivable on bank balances is dealt with on an accruals basis.






Where applicable the dividend income is disclosed net of irrecoverable taxes deducted at source. UK dividend income is recorded net of tax credits.





(d)

Expenses



All expenses are accounted for on an accruals basis. Expenses are allocated to revenue in the Statement of Comprehensive Income except as follows:



expenses are allocated and borne by capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect, the investment management fee is allocated 40% to revenue and 60% to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth.





(e)

Taxation



The tax payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the  Statement of Comprehensive Income because it excludes items of income or expenditure that are taxable or deductible in other years and it further excludes items that are never taxable or deductible (see note 7 for a more detailed explanation). The Company has no liability for current tax.






Deferred taxation



Deferred taxation is provided on all timing differences, that have originated but not reversed at the Statement of Financial Position date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Statement of Financial Position date, measured on an undiscounted basis and based on tax rates expected to apply in the period that the timing differences reverse. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. Due to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.





(f)

Nature and purpose of reserves



Called-up share capital



The Ordinary share capital on the Statement of Financial Position relates to the number of shares in issue and in treasury. Only when the shares are cancelled, either from treasury or directly, is a transfer made to the capital redemption reserve.






Share premium account



The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising Ordinary shares of 10p.






Capital redemption reserve



The capital redemption reserve is used to record the amount equivalent to the nominal value of any of the Company's own shares purchased and cancelled in order to maintain the Company's capital.






Capital reserve



Gains or losses on disposal of investments and changes in fair values of investments are transferred to the capital reserve. The capital element of the management fee and relevant finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve. The costs of share buybacks to be held in treasury are also deducted from this reserve.






Revenue reserve



This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.





(g)

Foreign currencies



Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction.






Foreign currency asset and liability balances are translated to Sterling at the middle rate of exchange at the year end. Differences arising from translation are treated as capital gain or loss to capital or revenue within the Statement of Comprehensive Income depending upon the nature of the gain or loss.





(h)

Dividends payable



Final dividends are recognised in the financial statements in the period in which they are paid.





(i)

Borrowings



All secured borrowings are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable, after initial recognition, all interest bearing borrowings are subsequently measured at amortised cost.  The finance costs of such borrowings are accounted for on an accruals basis using the effective interest rate method and are charged 40% to revenue and 60% to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth. 





(j)

Derivative financial instruments



The Company uses forward foreign exchange contracts to manage currency risk arising from investment activity.






Derivatives are measured at fair value calculated by reference to forward exchange rates for contracts with similar maturity profiles.






Changes in the fair value of derivatives are recognised in the Statement of Comprehensive Income as revenue or capital depending on their nature.





(k)

Significant judgements



The Company's investments and borrowings are made in Japanese yen, however the Board considers the Company's functional currency to be Sterling. In arriving at this conclusion, the Board considered that the shares of the Company are listed on the London Stock Exchange, it is regulated in the United Kingdom, principally having its shareholder base in the United Kingdom, pays dividends and expenses in sterling and also, it seeks to ensure that the Company's Japanese Yen net exposure is appropriately Sterling-hedged through the use of rolling forward currency contracts.

 



2018

2017

3.

Income

£'000

£'000


Income from investments




Overseas dividends

1,879

2,013






Other income




Deposit interest

-

2



______

______


Total income

1,879

2,015



______

______

 



2018

2017



Revenue

Capital

Total

Revenue

Capital

Total

4.

Management fee

£'000

£'000

£'000

£'000

£'000

£'000


Management fee

339

508

847

308

461

769



______

______

______

______

______

______










For further details see note 19 Related party transactions.

 



2018

2017



Revenue

Capital

Total

Revenue

Capital

Total

5.

Administrative expenses

£'000

£'000

£'000

£'000

£'000

£'000


Promotional fees

70

-

70

60

-

60


Directors' fees

88

-

88

91

-

91


Depositary fees

16

-

16

14

-

14


Transaction costs on investment purchases

-

15

15

-

11

11


Auditor's remuneration (excluding irrecoverable VAT):








fees payable to the Company's auditor for the audit of the annual accounts

19

-

19

19

-

19


Other

133

-

133

153

-

153



______

______

______

______

______

______



326

15

341

337

11

348



______

______

______

______

______

______

 



2018

2017



Revenue

Capital

Total

Revenue

Capital

Total

6.

Finance costs

£'000

£'000

£'000

£'000

£'000

£'000


Bank loans

42

63

105

44

65

109



______

______

______

______

______

______

 



2018

2017



Revenue

Capital

Total

Revenue

Capital

Total

7.

Taxation

£'000

£'000

£'000

£'000

£'000

£'000


(a)

Analysis of charge for the year









Irrecoverable overseas taxation

188

-

188

201

-

201




______

______

______

______

______

______



Total tax charge

188

-

188

201

-

201




______

______

______

______

______

______











(b)

Factors affecting current tax charge for the year

 



The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The differences can be explained below:







2018

2017




Revenue

Capital

Total

Revenue

Capital

Total




£'000

£'000

£'000

£'000

£'000

£'000



Net return before taxation

1,172

10,347

11,519

1,326

14,815

16,141




______

______

______

______

______

______



Net return multiplied by standard rate of corporation tax in the UK of 19% (2017 - 20%)

223

1,966

2,189

265

2,963

3,228



Effects of:









Gains on investments not taxable

-

(1,272)

(1,272)

-

(4,511)

(4,511)



Currency (gains)/losses not taxable

-

(802)

(802)

-

1,441

1,441



Irrecoverable overseas withholding tax

188

-

188

201

-

201



Excess management expenses

134

108

242

138

107

245



Non-taxable overseas dividends

(357)

-

(357)

(403)

-

(403)




______

______

______

______

______

______



Total tax charge for the year

188

-

188

201

-

201




______

______

______

______

______

______











(c)

Provision for deferred taxation



At 31 March 2018 the Company had surplus management expenses and loan relationship debits with a tax value of £1,863,000 (2017 - £1,936,000) in respect of which a deferred tax asset has not been recognised. This is because the Company is not expected to generate taxable income in the future in excess of deductible expenses of that future period, and accordingly, it is unlikely that the Company will generate taxable revenue in the future and therefore will be unable to utilise the existing surplus expenses.

 

 



2018

2017

8.

Dividends

£'000

£'000


Amounts recognised as distributions to equity holders in the year:




Final dividend 2017 - 6.00p (2016 - 4.20p)

900

655



______

______






In order to comply with the requirements of Sections 1158-1159 of the Corporation Tax Act 2010 the Company is required to make a dividend distribution.




The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability. It is proposed that the final dividend will be paid on 13 July 2018 to shareholders on the register at the close of business on 15 June 2018.




The table below sets out the total dividends proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158 -1159 are considered. The revenue available for distribution by way of dividend for the year is £984,000 (2017 - £1,125,000). Presently, only the revenue reserve can be used for the distribution of dividends.







2018

2017



£'000

£'000


Proposed final dividend for 2018 - 5.20p per Ordinary share (2017 - 6.00p)

0

900



______

______

 



2018

2018

2017

2017

9.

Return per Ordinary share

p

£'000

p

£'000


Returns per share are based on the following figures:






Revenue return

6.59

984

7.25

1,125


Capital return

69.24

10,347

95.44

14,815



______

______

______

______


Total return

75.83

11,331

102.69

15,940



______

______

______

______


Weighted average number of Ordinary shares in issue


14,942,878


15,523,200




_________


_________

 



2018

2017

10.

Investments designated at fair value through profit or loss

£'000

£'000


Opening book cost

70,899

71,876


Opening investment holding gains

31,894

17,112



______

______


Opening fair value

102,793

88,988


Movements in the year:




Purchases at cost (excluding transaction costs)

29,786

14,284


Sales - proceeds (net of transaction costs)

(28,994)

(23,036)


Sales - gains on sales

7,830

7,774


(Decrease)/increase in investment holding gains

(1,001)

14,783



______

______


Closing fair value

110,414

102,793



______

______







2018

2017



£'000

£'000


Closing book cost

79,521

70,899


Closing investment holding gains

30,893

31,894



______

______



110,414

102,793



______

______







2018

2017


Gains on investments

£'000

£'000


Gains on sales

7,830

7,774


(Decrease)/increase in investment holding gains

(1,001)

14,783



______

______



6,829

22,557



______

______


As at 31 March 2018, all investments held are in listed stocks (2017 - same).







Transaction costs




During the year expenses were incurred in acquiring or disposing of investments designated as fair value through profit or loss. Expenses incurred in acquiring investments have been expensed through capital and are included within administration expenses in the Statement of Comprehensive Income, whilst expenses incurred in disposing of investments have been expensed through capital and are included within gains/(losses) on investments in the Statement of Comprehensive Income. The total costs were as follows:







2018

2017



£'000

£'000


Purchases

15

11


Sales

9

8



______

______



24

19



______

______


The above transaction costs are calculated in line with the AIC SORP.  The transaction costs in the Company's Key Information Document are calculated on a different basis and in line with the PRIIPs regulations.

 



 



2018

2017

11.

Debtors: amounts falling due within one year

£'000

£'000


Forward foreign exchange contracts

-

119


Prepayments and accrued income

742

737


Other loans and receivables

1

9



______

______



743

865



______

______






All financial assets are included at amortised cost or at fair value for forward foreign exchange contracts.

 



2018

2017

12.

Creditors

£'000

£'000


(a)

Foreign currency bank loans





Falling due within one year

2,681

12,201



Falling due after more than one year

8,710




______

______




11,391

12,201




______

______








The Company entered into a three year credit facility with ING Bank in January 2015, that matured in January 2018. In January 2018 the Company entered into a new two year credit facility with ING Bank. At the year end, JPY1,300,000,000 (2017 - JPY1,300,000,000) equivalent to £8,710,000 (2017 - £9,330,000) had been drawn down at an all-in interest rate of 0.7865% (2017 - 0.8975%) which is due to mature on 23 January 2020.





In addition, on 23 January 2018, the Company entered into a rolling one year JPY1,000,000,000 revolving credit facility with ING Bank. At the year end JPY400,000,000, equivalent to £2,681,000, had been drawn down at an all-in interest rate of 0.70%, which matured on 23 April 2018.






The terms of both loan facilities with ING Bank contain a covenant that total borrowings should not exceed 35% of the adjusted net asset value of the Company at any time and that the net asset value should not fall below £25,000,000 at any time. The Company has met these covenants throughout the period.









2018

2017


(b)

Other creditors falling due within one year

£'000

£'000



Outstanding purchase settlement

-

133



Sundry creditors

175

163




______

______




175

296




______

______

 



2018

2017

13.

Called-up share capital

Number

£'000

Number

£'000


Allotted, called-up and fully paid






Ordinary shares of 10p each

14,725,277

1,472

15,074,597

1,507


Held in treasury

1,096,295

110

746,975

75



_________

______

_________

______



15,821,572

1,582

15,821,572

1,582



_________

______

_________

______










Ordinary shares

Treasury shares

Total




Number

Number

Number


Opening balance


15,074,597

746,975

15,821,572


Ordinary shares bought back for holding in treasury


(349,320)

349,320

-




_________

_________

_________


Closing balance


14,725,277

1,096,295

15,821,572




_________

_________

_________








During the year 349,320 Ordinary shares (2017 - 517,975) were bought back and held in treasury at a cost of £2,127,000 (2017 - £2,840,000). Subsequent to the year end a further 55,000 Ordinary shares were bought back to be held in treasury at a cost of £325,000.

 



2018

2017

14.

Capital reserve

£'000

£'000


At 1 April 2017

79,137

67,162


(Losses)/gains over cost arising on movement in investment holdings

(1,001)

14,783


Gains on realisation of investments at fair value

7,830

7,774


Currency gains/(losses)

4,104

(7,205)


Administrative expenses

(15)

(11)


Management fee

(508)

(461)


Buyback of Ordinary shares for holding in treasury

(2,127)

(2,840)


Finance costs

(63)

(65)



______

______


At 31 March 2018

87,357

79,137



______

______






The capital reserve includes investment holding gains amounting to £30,893,000 (2017 - gains of £31,894,000) as disclosed in note 10.




Net currency gains arising during the year of £4,104,000 (2017 -  losses of £7,205,000) are analysed further in the table below.







2018

2017



£'000

£'000


Gains/(losses) on forward foreign exchange contracts

3,544

(5,733)


Gains/(losses) on revaluation of bank loan

810

(1,678)


(Losses)/gains on cash deposits

(250)

206



______

______



4,104

(7,205)



______

______

 

15.

Net asset value per share


The net asset value per share and the net asset values attributable to Ordinary shareholders at the year end calculated in accordance with the Articles of Association were as follows:





Net asset value per share

Net asset values attributable



2018

2017

2018

2017



p

p

£'000

£'000


Ordinary shares

682.31

611.41

100,472

92,168



______

______

______

______








The movements during the year of the assets attributable to the Ordinary shares were as follows:







2018

2017



£'000

£'000


Net assets attributable at 1 April 2017

92,168

79,723


Capital return for the year

10,347

14,815


Revenue after taxation

984

1,125


Dividend paid

(900)

(655)


Purchase of Ordinary shares to be held in treasury

(2,127)

(2,840)



______

______


Net assets attributable at 31 March 2018

100,472

92,168



______

______






The net asset value per Ordinary share is based on net assets, and on 14,725,277 (2017 - 15,074,597) Ordinary shares, being the number of Ordinary shares in issue, after deducting 1,096,295 (2017 - 746,975) shares held in treasury, at the year end.

 

16.

Financial instruments


Risk management


The Company's investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. The Company's financial instruments comprise securities and other investments, cash balances, loans, forward exchange contracts and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income.




The Company also has the ability to enter into derivative transactions, in the form of forward exchange contracts, to ensure that foreign currency exposure is appropriately hedged.




Certain risk management functions have been delegated to Aberdeen Fund Managers Limited ("AFML" or "Manager") under the terms of the management agreement (further details of which are included under note 19). The Board regularly reviews and agrees policies for managing each type of risk, are summarised below. This approach has been applied throughout the year within the Manager's risk management framework which is described on page 57 of the published 2018 Annual Report and has not changed since the previous accounting period.




The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, currency risk and price risk), (ii) liquidity risk and (iii) credit risk.




Market risk


The fair value or future cash of a financial instrument held by the Company may fluctuate because of changes in market prices. This market price risk comprises three elements - interest rate risk, price risk and currency risk. 




Interest rate risk


Interest rate movements may affect:


the level of income receivable on cash deposits; and


interest payable on the Company's variable rate borrowings.




Management of the risk


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 and borrowing decisions.




Interest rate sensitivity


Movements in interest rates would not significantly affect net assets attributable to the Company's shareholders and total profit due to there being no investments in fixed interest securities during the year and a relatively low level of bank borrowings.




Price risk


Price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of quoted investments.




Management of the risk


It is the Board's investment policy for the Company's assets to be invested in a selected portfolio of securities in quoted companies as explained on page 9 of the published 2018 Annual Report. The Manager has a dedicated investment management process, which ensures that the risk inherent in this investment policy is controlled. Underlying the process is the belief that risk is not that individual stock prices fluctuate in the short term, or that movement in the value of the portfolio deviates from the benchmark but that risk is investment in poorly managed expensive companies which the Manager does not understand. In-depth research and stock selection procedures are in place based on this risk control philosophy. The portfolio is reviewed on a periodic basis by the Manager's Investment Committee and by the Board.




Price sensitivity


If market prices at the Statement of Financial Position date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 March 2018 would have increased/(decreased) by £11,041,000 (2017 increased/(decreased) by £10,279,000) and equity reserves would have increased/(decreased) by the same amount.




Foreign currency risk


The Company primarily invests in the shares of companies which are listed in Japan but can include companies listed on other stock markets which earn significant revenue from trading in Japan or hold net assets predominantly in Japan. The Statement of Financial Position, therefore, can be significantly affected by movements in foreign exchange rates.




Management of the risk


The Company may, from time to time, match specific overseas investment with foreign currency borrowings. The Company's borrowings, as detailed in note 12, are also in foreign currency. In addition, the Company seeks to ensure that the Company's Yen net exposure is appropriately Sterling-hedged through the use of rolling forward currency contracts. At 31 March 2018 the Company had two foreign currency contracts, details of which are disclosed on page 53 of the published 2018 Annual Report.  During the year a net gain of £3,544,000 (2017 - loss of £5,733,000) was realised from the use of such contracts.




The revenue account is subject to currency fluctuation arising on dividends paid in foreign currencies. The Company does not hedge this currency risk.




Foreign currency risk exposure by currency of denomination:





 31 March 2018

 31 March 2017




Net

Total


Net

Total



Overseas

monetary

currency

Overseas

monetary

currency



investments{A}

assets

exposure

investments{A}

assets

exposure



£'000

£'000

£'000

£'000

£'000

£'000


Japanese Yen

59,814

(9,838)

49,976

56,693

(10,708)

45,985



______

______

______

______

______

______




{A} Overseas investment is stated net of forward currency contracts with a net Sterling equivalent amount of £50,600,000 (2017 - £46,100,000)




Foreign currency sensitivity


The following table details the positive impact to a 10% decrease in Sterling against the foreign currency in which the Company has exposure (based on exposure >5% of total exposure including foreign exchange contracts). The sensitivity analysis includes foreign currency denominated monetary items and adjusts their translation at the year end for a 10% change in foreign currency rates. In the event of a 10% increase in Sterling then there would be a negative impact on the Company's returns.









2018

2018

2017

2017



Revenue

Equity{A}

Revenue

Equity{A}



£'000

£'000

£'000

£'000


Japanese Yen

188

10,058

201

9,209



______

______

______

______


{A} Represents equity exposure to relevant currencies. 




Foreign exchange contracts

 


The following Japanese Yen forward contracts were outstanding at the year end:








Unrealised gain at 31 March


Date of contract

Settlement date

Amount JPY '000

Contracted rate

2018

£'000


22 February 2018

25 May 2018

3,769,814

149.00

-


22 February 2018

25 May 2018

3,769,713

149.00

-






______






-






______








The Sterling equivalent of the above contracts is £50,600,000 based on the net amount of JPY 7,539,527,000 at the contracted rates.




Liquidity risk


This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.




Management of the risk


Liquidity risk is not considered to be significant as the Company's assets mainly comprise readily realisable securities which can be sold to meet funding requirements if necessary and flexibility is achieved through the use of loan facilities, details of which may be found in note 12.




Liquidity risk exposure


At 31 March 2018, the Company had a long term bank loans of £8,710,000 (2017 - £9,330,000) which is due to mature on 23 January 2020 with interest due on the principal every six months. The Company also had a rolling facility of £2,681,000 (2017 - £2,871,000) which matured on 23 April 2018 with interest payable at maturity.




Credit risk


This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.




Management of the risk


Investment transactions are carried out with a large number of brokers of good quality credit standing; and cash is held only with reputable banks with high quality external credit enhancements.




In addition, both stock and cash reconciliations to the Depositary's records are performed on a daily basis to ensure discrepancies are investigated on a timely basis.




None of the Company's financial assets is secured by collateral or other credit enhancements and none are past due or impaired.




Credit risk exposure


The amount of cash at bank and in hand of £881,000 (2017 - £1,007,000) and debtors of £743,000 (2017 - £865,000) in the Statement of Financial Position represent the maximum exposure to credit risk at 31 March.




Fair values of financial assets and financial liabilities


The fair value of borrowings has been calculated at £11,414,000 as at 31 March 2018 (2017 - £12,201,000) compared to an accounts value in the financial statements of £11,391,000 (2017 - £12,201,000) (note 12). The fair value of each loan is determined by aggregating the expected future cash flows for that loan discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time and currency. The carrying value of all other assets and liabilities is an approximation of fair value.

 

17.

Capital management policies and procedures


The Company's capital management objectives are:


to ensure that the Company will be able to continue as a going concern; and


to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The Board normally seeks to limit gearing to 15% of net assets.




The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the nature and planned level of gearing, which takes account of the Manager's views on the market and the extent to which revenue in excess of that which is required to be distributed should be retained.




The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period and year end positions are presented in the Statement of Financial Position.

 

18.

Fair value hierarchy


FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following classifications:




Level 1- unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date.


Level 2 - inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.


Level 3 - inputs are unobservable (ie for which market data is unavailable) for the asset or liability.




All of the Company's investments are in quoted equities actively traded on a recognised stock exchange, with their fair value being determined by reference to their quoted bid prices at the reporting date (2017 - same). The total value of the investments (2018 - £110,414,000; 2017 - £102,793,000) have therefore been deemed as Level 1. Forward foreign currency contracts as detailed in note 16 have been categorised as Level 2.

 

19.

Related party transactions


Directors' fees and interests


Fees payable during the year to the Directors and their interest in shares of the Company are disclosed within the Directors' Remuneration Report on page 32 of the published 2018 Annual Report.




Transactions with the Manager


The Company has agreements with AFML to provide management, accounting, administrative and secretarial duties. The agreement for provision of management services has been delegated to Aberdeen Investment Management Kabushiki Kaisha.




The Company has an agreement with AFML for the provision of promotional activities in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement were £70,000 (2017 - £60,000) and the accrual to AFML at the year end was £18,000 (2017 - £16,000).




The management fee is payable at a rate of 0.95% per annum of the value of the Company's net assets up to £50 million decreasing to 0.75% of the value of the Company's net assets over and above £50 million, and is payable monthly in arrears. The balance due to AFML at the year end was £71,000 (2017 - £66,000). Effective 1 April 2018, the management fee is payable at a rate of 0.75% per annum of the Company's net assets.

 

20.

Alternative performance measures


Alternative performance measures are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP.




The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies. Total return is considered to be an alternative performance measure. NAV total return involves investing the same net dividend in the NAV of the Company with debt at fair value on the date on which that dividend was earned. Share price total return involves reinvesting the net dividend in the month that the share price goes ex-dividend.




The tables below provide information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the years ended 31 March 2018 and 31 March 2017.





Dividend


Share


2018

rate

NAV

price


31 March 2017

N/A

611.41p

547.50p


15 June 2017

6.00p

642.73p

574.50p


31 March 2018

N/A

682.31p

582.50p







Total return


+12.6%

+7.5%








Dividend


Share


2017

rate

NAV

price


31 March 2016

N/A

511.29p

447.50p


9 June 2016

4.20p

533.48p

461.00p


31 March 2017

N/A

611.41p

547.50p







Total return


+20.5%

+23.5%







Ongoing charges


Ongoing charges is considered to be an alternative performance measure. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average net asset values throughout the year.







2018

2017


Investment management fees (£'000)

847

769


Administrative expenses (£'000)

341

348


Less: transaction costs on investment purchases

(15)

(11)



______

______


Ongoing charges (£'000)

1,173

1,106



______

______


Average net assets (£'000)

99,497

88,638



______

______


Ongoing charges ratio

1.18%

1.24%



______

______






At 31 March 2018 the Company's OCR was 1.18% as above compared to the Peer Group weighted average OCR of 0.84% (average net assets at 31 March 2018 - £406 million)(Source AIC).  The ongoing charges ratio provided in the Company's Key Information Document are calculated in line with the PRIIPs regulations.

 

 

21.        Additional notes for Annual Financial Report:

The final dividend, subject to shareholder approval, will be paid on 13 July 2018 to shareholders on the register at the close of business on 15 June 2018. The ex-dividend date is 14 June 2018.

 

This Annual Financial Report announcement is not the Company's statutory accounts.  The statutory accounts for the year ended 31 March 2017 have been delivered to the Registrar of Companies.  The statutory accounts for the years ended 31 March 2018 and 31 March 2017 received an audit report which was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not include a statement under section 498(2) or (3) of the Companies Act 2006.  The statutory accounts for the financial year ended 31 March 2018 have been approved by the Board and audited but will not be filed with the Registrar of Companies until after the Company's Annual General Meeting which will be held at 11.00am on 10 July 2018 at Bow Bells House, One Bread Street, London EC4M 9HH.

 

The Annual Report will be posted to shareholders in June 2018 and copies will be available from the Manager or from the Company's website (www.aberdeen-japan.co.uk*).

 

 

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements.  Investors may not get back the amount they originally invested.

 

*Neither the Company's website nor the content of any website accessible from hyperlinks on that website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.

 

For Aberdeen Japan Investment Trust PLC

Aberdeen Asset Management PLC, Secretary

 

END


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