Latest Annual Report

Performance

The Company delivered another year of strong performance against a volatile market backdrop. For the twelve months to 31 October 2025, the net asset value (“NAV”) total return per share was 25.2% and the share price total return was 27.9%, both ahead of the Tokyo Stock Exchange Price Index (“TOPIX”), which returned 24.1% in sterling on a total return basis. The discount of the share price to NAV narrowed to 7.7% (2024: 9.4%), further enhancing shareholder returns.

The reporting period included a sharp sell-off following “Liberation Day”; despite the subsequent tariff-related volatility, full-year performance was again ahead of the TOPIX, supported by strong stock selection, particularly among financials.

Ten years since launch

15 December 2025 marked the tenth anniversary of the Company’s launch. From inception on 15 December 2015 to 31 October 2025, the Company has comfortably outperformed the TOPIX and has been the best performer in its AIC peer group, returning 189.8% on a share price total return basis and 216.0% on an NAV per share total return basis, compared with a TOPIX return of 149.1%.

“The Company has comfortably outperformed the TOPIX and has been the best performer in its AIC peer group.”

June Aitken, Chair

Income and dividends

The Company remains committed to a progressive dividend policy. Net revenue per share for the year was 5.92p (2024: 5.32p), and total dividends declared amount to 5.90p, an increase of 8.3% on the prior year. The first interim of 1.65p was paid on 1 August 2025; a second interim of 4.25p will be paid on 2 March 2026. The Company’s dividend has risen every year since inception. Payment of the second interim dividend will mark a tenth consecutive annual increase, earning the Company a place on the AIC’s ‘Next Generation Dividend Heroes’ list.

Portfolio review

The top performing holding over the period was Fujikura, a leading manufacturer of optical fibre and connectors benefiting from data-centre and AI infrastructure investment. SBI Holdings and Nintendo were also top active contributors. Weaker performers — Shin-Etsu Chemical, Shimano and Hamamatsu Photonics — each faced a temporary slowdown in demand, but the Investment Manager retains confidence in their longer-term prospects. Corporate actions in the portfolio included a tender offer for Carta Holdings by NTT DoCoMo at a premium, and a management buyout at Technopro. Holdings in Noevir, Tokyo Metro and GMO Internet were fully exited during the period.

Governance and operations

Following a Board review in 2024, Frostrow Capital LLP was appointed as Alternative Investment Fund Manager, Administrator and Company Secretary with effect from 1 January 2025, alongside marketing and investor relations responsibilities. At the Annual General Meeting in March 2025, shareholders voted overwhelmingly in favour of the Company’s continuation as an investment trust for a further three-year period, with 99.9% of votes cast in favour.

Outlook

The Investment Manager believes the Japanese equity market has become increasingly attractive, underpinned by structural reforms aimed at improving capital efficiency and corporate governance. A revision of the Corporate Governance Code due in 2026 is expected to encourage companies to move beyond balance-sheet optimisation towards more efficient allocation of resources for strategic expansion, aligning with the perspectives of Japan’s new Prime Minister, Sanae Takaichi. The Company remains well placed to benefit from these supportive trends.

Annual Report 2025