Annual Financial Report

RNS Announcement

Baillie Gifford Shin Nippon PLC (BGS)

Legal Entity Identifier: X5XCIPCJQCSUF8H1FU83

Results for the year to 31 January 2026

The following is the results announcement for the year to 31 January 2026 which was approved by the Board on 30 March 2026.

Over the year to 31 January 2026, the Company's net asset value per share† increased by 5.4% and the share price by 14.4%, compared to a 21.5% increase for the comparative index*.

Over five years, the Company's comparative index* was up 42.4% while the net asset value per share† was down by 36.1% and the share price was down 43.8%.

¾ Investing for capital growth from Japanese smaller companies has continued to be challenging. High-growth, domestically oriented small caps, the focus of the portfolio, continue to be out of favour. Rising interest rates, a weak yen and significant valuation de-rating across small-cap growth stocks in Japan have further weighed on performance, despite many holdings continuing to grow top and bottom-line earnings strongly.

¾ While the recent period has further tested patience, the Board continues to believe the portfolio is invested in one of the most overlooked areas of global equity markets, with valuations at near decade lows and long-term growth opportunities intact; disciplined, long-term investment in high-quality Japanese smaller companies offers the potential for attractive capital growth over time.

¾ During the period, Brian Lum was promoted from deputy to being the Company's lead portfolio manager and Jared Anderson was appointed as deputy portfolio manager. Portfolio turnover for the financial year was 21.2%, with fifteen positions exited and eight new positions initiated. There are currently three private companies in the portfolio accounting for 1.8% of total assets.

¾ The Company's share price ended the period at a 7.5% discount to the NAV per share compared to a discount of 14.6% as at 31 January 2025. 34.2 million shares were bought back in the reporting period and are currently held in treasury.

¾ Revenue return per share was 0.77p (2025: 0.67p). The Board is recommending a final dividend of 0.69p per share (2025: 0.60p), being broadly the minimum required to maintain investment trust status.

¾ Since period end, shareholders have approved the replacement of the 15% one-off three-year performance-triggered tender (measured to 31 January 2027) with an immediate 15% tender, along with the introduction of a continuation vote in 2028 and a 100% performance-triggered tender measured over the five years to 31 December 2030.

¾ The annual management fee paid, with effect from 1 February 2026, will be 0.65% on the first £250m of the Company's net assets and 0.55% on the remainder.

† After deducting borrowings at fair value. For a definition of terms see Glossary of terms and Alternative Performance Measures at the end of this announcement.

* The Company's comparative index is the MSCI Japan Small Cap Index (total return and in sterling terms). See disclaimer at the end of this announcement.

Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer at the end of this announcement.

Shin Nippon aims to achieve long term capital growth through investment principally in small Japanese companies which are believed to have above average prospects for growth. At 31 January 2026 the Company had total assets of £428.9 million (before deduction of bank loans of £70.1 million).

The Company is managed by Baillie Gifford, an Edinburgh based fund management group with approximately £183 billion under management and advice as at 26 March 2026.

Past performance is not a guide to future performance. The value of an investment and any income from it is not guaranteed and may go down as well as up and investors may not get back the amount invested. The Company has borrowed money to make further investments. This is commonly referred to as gearing. The risk is that, when this money is repaid by the Company, the value of these investments may not be enough to cover the borrowing and interest costs, and the Company makes a loss. If the Company's investments fall in value, gearing will increase the amount of this loss. The more highly geared the Company, the greater this effect will be.

Investment in investment trusts should be regarded as long term. You can find up to date performance information about Shin Nippon at shinnippon.co.uk.

31 March 2026

For further information please contact:

Anzelm Cydzik, Baillie Gifford & Co

Tel: 0131 275 2000

Jonathan Atkins, Director, Four Communications

Tel: 0203 920 0555 or 07872 495396

Chair's statement

Performance

Despite achieving positive absolute returns, I am sorry to report that over the twelve months to 31 January 2026, the Company's poor relative performance has continued. Net asset value total return was 5.4%* and the share price total return was 14.4%. The MSCI Japan Small Cap Index (total return in sterling terms) increased by 21.5%.

Investing for capital growth from Japanese smaller companies has continued to be challenging. The portfolio's focus on high-growth, domestically-oriented small caps has been out of favour as value stocks, large exporters and AI-related mega-caps have dominated returns in Japan. Rising interest rates, a weak yen and significant valuation de-rating across small-cap growth stocks in Japan have further weighed on performance, despite many holdings continuing to grow earnings strongly.

Mistakes have certainly been made. Following challenge from the Board, and open constructive dialogue with the Managers, lessons have been learnt. Past portfolio construction underestimated correlations between certain growth holdings, exacerbating the impact of market-wide de-rating and a shrinking opportunity set at the point of initial investment. As covered in my interim statement, the investment process has been refined to reflect these insights, along with accessing a broadened opportunity set at point of initial investment, improved position sizing and a sharper focus on resilience as well as growth.

While the recent period has further tested patience, the Board continues to believe the portfolio is invested in one of the most overlooked areas of global equity markets, with valuations at near decade lows and long-term growth opportunities intact.

Portfolio managers

In May 2025, Brian Lum was promoted from deputy portfolio manager to lead portfolio manager, replacing Praveen Kumar. Jared Anderson was also appointed deputy portfolio manager. While remaining committed to their long-term investment approach, Brian and Jared have made a number of changes to the portfolio since their appointment. These changes reflect their views of the best Japanese small cap growth companies and take advantage of the changes to the Company's investment policy announced in 2025, which broadened the investable universe to reflect the opportunity set. Since then, there have been five positions initiated in companies with market capitalisation in excess of ¥150 billion (the upper restriction prior to the changes to the investment policy) and eleven complete exits, including Moneytree, which was an unquoted holding. In addition, there have been significant changes to the size of a number of existing holdings with position sizing forming an important element of the portfolio review.

Further details on the transactions, current portfolio positioning and prospects for the portfolio are contained within the portfolio managers' report.

15% Tender, Continuation Vote in 2028 and 100% Performance Triggered Tender

During the final quarter of 2025, the Board undertook a consultation exercise with shareholders representing in excess of 43% of the Company's issued share capital. While those shareholders shared the Board's frustration with the continued poor performance, many recognised the unique opportunity offered by the Company, being the only investment trust offering dedicated exposure to small cap growth companies in Japan, and were supportive of the mandate continuing to be pursued. They, and the Board, also believed that the incumbent portfolio managers should be given an appropriate amount of time to demonstrate the efficacy of the changes made to the portfolio.

Consequently, and looking to balance the views of different shareholders, the Board sought and, on the 18 February 2026, obtained shareholder approval to: undertake a tender offer for up to 15% of the Company's issued share capital in Q1 2026; remove the 2027 performance triggered conditional tender offer for up to 15% of the Company's issued share capital; introduce a performance triggered tender offer for up to 100% of the Company's issued share capital, which will be undertaken if the Company's net asset value total return does not equal or exceed the total return on the MSCI Japan Small Cap Index (in sterling terms) over the five year period from 31 December 2025 to 31 December 2030; and put a one-off continuation vote to shareholders in 2028.

The 15% tender offer has taken place and was oversubscribed, with 49.8% of the Company's issued share capital tendered. On 20 March 2026, payments were made, in lieu of the tendered shares, through CREST and cheques despatched to certified shareholders.

Ongoing Charges and Management Fee

The Company's ongoing charges ratio for the year was 0.81% compared to 0.80% last year.

It has been agreed with the Managers that the annual management fee paid, with effect from 1 February 2026, will be 0.65% on the first £250m of the Company's net assets and 0.55% on the remainder. It had previously been 0.75% on the first £50m of net assets, 0.65% on the next £200m of net assets and 0.55% on the remainder.

Buybacks and Discount

Following shareholder approval at last year's Annual General Meeting ('AGM'), in August 2025 the Scottish Court of Session approved the Company's application to cancel its share premium account and the creation of an equivalent Distributable Capital Reserve of £260.3 million. This provides a significant pool of reserves which can be used to fund distributions, including dividends, and returns of capital, such as tender offers and share buybacks.

As at 31 January 2026, the Company's share price stood at a 7.5% discount to the NAV per share compared to 14.6% as at 31 January 2025. Over the financial year, the Company has bought back approximately 34.2 million shares, which are held in treasury, equivalent to approximately 12.2% of the Company's issued share capital. Since then and excluding the shares bought back as part of the recent 15% unconditional tender, a further 2.8 million shares have been purchased. The Board will continue to authorise the use of buy backs if the discount to NAV is substantial in absolute terms or in relation to its peers.

Borrowings

The Company has a ¥16.1bn secured revolving credit facility with Bank of America, which matures in November 2027. At present, ¥14.84bn is drawn, compared to ¥16.1bn a year ago, with net gearing standing at 14.9% as at 31 January 2026 compared to 16.1% a year earlier.

Dividend

Revenue return per share was 0.77p compared to 0.67p the prior year. The Board is recommending a final dividend of 0.69p per share (0.60p - 2025), being broadly the minimum required to maintain investment trust status. The proposed final dividend will be put before shareholders as part of the Company's AGM business in May. I should add that, as the Company's focus is on capital growth, shareholders should not rely on their investment in the Company to provide any income.

Annual General Meeting

This year's AGM will take place on Thursday 21 May 2026 at the ICAEW, Chartered Accountants' Hall, 1 Moorgate Place, London EC2R 6EA commencing at 11.30am. The AGM is an important opportunity for engagement, giving shareholders the chance to meet and ask questions of the Directors and the portfolio managers, and vice versa. I very much hope to see as many of you there as possible.

Outlook

During the year, the Board undertook its triennial trip to Japan. The trip allows the Directors to assess the portfolio managers in action first hand, along with the quality of current and potential investments. It also provides an insight to the mood on the ground of management teams, providing a useful perspective. Utilising a twin-track approach, the Directors met with a total of 35 companies in aggregate over the course of five days.

Based in part on the learnings from this trip, despite a prolonged period of weak sentiment and challenging market conditions, it appears that the outlook for long-term capital growth from investments in Japanese smaller companies remains attractive. Growth investing and domestically oriented small caps have been out of favour, particularly amid a weaker yen, rising interest rates and a strong market preference for value stocks. However, the Board and Managers believe this backdrop remains a compelling opportunity for patient investors.

Japan is confronting structural pressures that are driving meaningful change. Labour shortages, demographic challenges and entrenched inefficiencies are forcing companies to rethink how they operate. Smaller, more entrepreneurial businesses are often best placed to respond, using digitalisation, automation and new technologies to improve productivity and scale their businesses. Artificial intelligence, in particular, is emerging as a powerful enabler across a wide range of sectors, helping companies remove bottlenecks and expand growth potential.

The Japanese small-cap universe remains broad and underexplored, offering access to specialist businesses operating in niche markets, often protected by local regulation, culture or technical expertise. Many portfolio companies are delivering growth well ahead of the broader market, yet valuations remain depressed following an extended period of de-rating.

Despite the troubled times we live in and the current market volatility, the Board remains confident that disciplined, long-term investment in high-quality Japanese smaller companies offers the potential for attractive capital growth over time.

Jamie Skinner30 March 2026

* After deducting borrowings at fair value. For a definition of terms see Glossary of terms and Alternative Performance Measures at the end of this announcement.

Source: LSEG/Baillie Gifford and relevant underlying index providers. See disclaimer at the end of this announcement.

Past performance is not a guide to future performance.

Managers' report

In May 2025, Jared Anderson and I became the respective new deputy and lead portfolio managers for Baillie Gifford Shin Nippon. Given the portfolio's poor performance in recent times, we are under no illusion regarding the challenge that awaits us, and we acknowledge that shareholders' patience has been severely tested.

We have subsequently reviewed the portfolio comprehensively, implemented modifications to the portfolio construction process, and made numerous changes to the portfolio. What remains unchanged though, is our fundamental commitment to invest in a portfolio of high growth smaller companies in Japan with a genuinely long-term mindset, and we are optimistic in our prospects given the underlying operating performance of the portfolio companies and the attractive valuations on offer.

Annual review

While it gives us some comfort to see Shin Nippon deliver its first positive annual NAV (and share price) returns for 5 years, we are nevertheless acutely aware of the scale of our underperformance relative to the MSCI Japan Small Cap ('MXJPSC') index in the past 12 months, a period during which the portfolio continued to face heavy stylistic headwinds.

The increasing interest rate in Japan meant growth stocks' intrinsic valuations suffered as future profits are discounted more heavily. In addition, the ongoing push for corporate governance reform, where companies are heavily encouraged to place more emphasis on shareholder returns, has given the strongest share price boost to Japan's most poorly run listed companies. Faced with pressure from the regulators and activist investors, many such companies have responded by unwinding cross shareholdings and announcing record buybacks and dividends. A portfolio built around high growth, typically better-managed businesses did not benefit to the same degree.

The result is that value stocks overwhelmingly outperformed growth stocks in the past year - to give an illustration of this dynamic, MSCI Japan Value outperformed MSCI Japan Growth by 15 percentage points in the calendar year 2025 - and Shin Nippon is positioned much further along the growth spectrum than Japan's growth indices.

The other headwind is the weak yen, which, despite some strengthening during the summer of 2025, subsequently returned to near historic lows relative to the dollar as the market reacted to the election of Sanae Takaichi as Japan's prime minister in October. Our portfolio is skewed towards domestic growth companies, which typically suffer as a weak yen stimulates cost inflation and hurts domestic consumption.

On a more anecdotal note, the level of interest towards individual Japanese small caps from institutional investors remains low. As someone who has met Japanese companies regularly at our Edinburgh office for a decade, it is striking to me that most visiting Japanese small companies have struggled to secure any other investor meetings in the past year - this was not the case in the past. Related to this, executives (including those for our holdings) are often genuinely puzzled (rather than apologetic) by their company's weak share price. To patient investors like us, these reactions are illuminating. Indeed, we derive confidence by observing the strong fundamentals of our portfolio companies. Delivered and expected growth for Shin Nippon's portfolio companies continue to be far superior to that of the comparative index, both in terms of revenues and profits. For example, market estimates suggest that the portfolio will grow sales and earnings by 12.9% and 18.6% respectively on a one-year forward basis. The equivalent figures for the comparative index are 3.5% and 11.8%. Longer term projections show a similar dynamic. In the meantime, the portfolio continues to trade at a valuation discount in terms of EV/EBIT multiple (Enterprise Value/Earnings Before Interest and Tax); 11.1x for the portfolio vs 12.5x for the comparative index.

Process Improvements

While we remain true to our growth and long-term orientation, we also recognise that mistakes have been made in recent years. For example, with the benefit of hindsight, the portfolio was invested in too many stocks that were driven by a narrow set of growth drivers (such as digitalisation), and the subsequent correlated derating (deserved or not) hurt. The weighting of a stock in the portfolio should be commensurate with its potential upside, the absolute downside risk and its correlation with the rest of the portfolio.

With these in mind, we have implemented a position sizing framework which divides our portfolio companies into four types of growth profiles (Emerging Prospects, Rapid Scalers, Cyclical Gainers, and Proven Winners); and three tiers of conviction levels, as shown by the table below.

The four growth profiles give a sense of a company's level of maturity and absolute risk profile. Emerging Prospects are companies with unproven business models, and sometimes in the loss-making or even pre-revenue phase. These are high risk, high impact investments that should be small positions. The next category along the maturity spectrum is Rapid Scalers - these typically founder-led companies are at the most exciting stage of scaling into what are still immature markets, and this category can be thought of as the engine room of the portfolio. Then we have Cyclical Gainers, established companies which enjoy structural growth tailwinds, but nevertheless operate in viciously cyclical industries (such as semiconductors or capital equipment) where a degree of caution on position sizing is warranted. Finally, we have Proven Winners, which are above-average growth companies with proven business models, strong market positions, and decent or improving financials. These are the larger positions. Jared and I monitor the portfolio on a regular basis using this framework as a guideline - corporate developments, further investment research, or share price movements may prompt us to re‑evaluate a stock's growth classification, our conviction levels, and therefore the optimal portfolio weighting.

This process helps us 1) sharpen our research and engagement efforts (each growth profile demands a different focus), 2) improve buy & sell discipline, and 3) also enables us to systematically recognise the growth milestones of our companies (e.g. is this Rapid Scaler now a Proven Winner?). As growth investors, we will never lose sight of the possibility of unearthing the next megacaps - having a framework that recognises this is a part of this.

Additionally, we have been working more closely with our internal risk team and adopted various risk tools to monitor portfolio correlations and risk factors better. Our primary focus daily remains centred around picking the best growth stocks. However, we believe these additional considerations will lead to better aggregate performance outcomes in the long-term.

Portfolio updates

There are several broad directions to highlight. Firstly, we have taken advantage of our new ability to invest in companies with market capitalisation of above ¥150b. New buys Seiko Group (the watch company, a 'Proven Winner'), JMDC (a healthcare big data company, a 'Rapid Scaler'), Kasumigaseki Capital (a real estate company with an unusual asset light business model, also a 'Rapid Scaler'), DMG Mori (a leading high precision machine tools company, a 'Cyclical Gainer'), and Money Forward (a cloud-based software company that automates back office workflow such as accounting, another 'Rapid Scaler') are all such examples. We have long admired some of these names and believe these are all exciting investment cases individually. At a portfolio level, historically we have displayed a significant bias towards the small end of the comparative index. While we expect this stylistic tilt to remain given our growth style, these latest additions have incrementally narrowed our difference to the benchmark.

More importantly, they represent a diverse range of growth profiles, driven by different themes. For example, the investment case for Seiko Group hinges on structural premiumisation of its product mix, which is shifting gradually from affordable battery watches to luxury Grand Seiko timepieces which retail for over £5,000. Kasumigaseki Capital - the real estate development company - focuses on specific niches such as cold chain storage and group stay hotels in Japan and beyond, opportunities with esoteric dynamics which the innovative management team has identified. DMG Mori - a result of a historic merger between a Japanese company and a German company - is not only a play on factory automation but also offers a degree of exposure to the growing aerospace and defence sector in Europe and Japan.

Concurrent with implementing the position sizing framework articulated above, we have also made the decision to exit several positions that do not make the cut in terms of conviction levels. Some were successful investments where we felt significant future upside was unlikely - these include long‑term holding MonotaRO (the B2B e-commerce company) and MatsukiyoCocokara (the pharmacy chain). Others were investment cases that have not developed as we had hoped, such as Kumiai (the agricultural chemicals company), Avex (the entertainment agency), Cellsource (a regenerative medicine company) and Demae-Can (the food delivery platform). Another is oRo (a Software-as-a-Service company) which correlated highly with other similar holdings in the portfolio, but one we felt may be less resilient to potential AI disruptions in the long-term. Two holdings, TechnoPro (IT consultancy) and Moneytree (unlisted fintech), were acquired by third parties during the year, resulting in the Fund exiting these positions.

The number of stocks in the portfolio has reduced to 63 as at the end of the Company's financial year, approaching the 50-60 holding range which we see as the optimal on an ongoing basis in terms of research depth and more meaningful corporate engagement. There are currently three private companies held, accounting for 1.8% of the portfolio. Our experience of investing in private companies has in aggregate been poor and it is likely that the main area of our focus for the foreseeable future will be on listed companies.

Beyond new buys and complete exits, we have adjusted existing positions to align with the framework discussed above. Most of the changes are down to individual bottom-up factors, but one noteworthy theme is of course the rise of Artificial Intelligence (AI). Japanese Small Caps may not be the first place to look for AI winners, but this is precisely the opportunity. Over the past year, we have added to the likes of JEOL and Kohoku Kogyo. These are just two examples amongst a group of 'Hidden AI Champions' in the portfolio - low profile companies with strong market positions that either supply into the AI supply chain or address AI-induced bottlenecks. For example, while JEOL is better known for selling microscopes to universities, it is also the global leader in Multi-Beam Mask Writers - an essential piece of equipment used in the production of the world's most advanced semiconductor chips. Kohoku Kogyo is the dominant producer of 'optical isolators' - a mission critical component deployed in subsea communication cables that are also used by datacentres - which is the company's second most important product in revenue terms but serves as its key profit driver. These are not well-known companies for global investors seeking to gain exposure to the AI theme, and we believe they are underappreciated by the market.

The portfolio segmented by growth profiles can be found on page 42 of the Annual Report and Financial Statements. The company's net gearing decreased marginally to 15%.

Performance

For the year ended 31 January 2026, Shin Nippon's NAV total return increased by 5.4% compared to an increase of 21.5% in the comparative index (all figures total return and in sterling terms, NAV with borrowings at fair value). Over three and five years, the Company's NAV (total return) has declined by 14.9% and 36.1% compared to an increase of 40.7% and 42.4% respectively for the comparative index.

For the year, Tsugami was our top contributor. Tsugami (a Cyclical Gainer) is a precision machine-tool maker founded in 1937, best known for products such as automatic lathes and precision grinding machines. It entered the Chinese market in the 1990s and today derives most of its sales through its listed Chinese subsidiary Precision Tsugami. While automotive is the key industry for Tsugami, it is also exposed to emerging fields such as humanoid robotics and AI infrastructure, which helped drive strong profit growth in the past year. In recent years, it has started to invest aggressively in India, which it sees as the next key growth market for the company, potentially following Precision Tsugami's trajectory in the long run.

Raksul - the procurement and marketing platform targeting small businesses in Japan - was also a significant positive contributor to portfolio performance. We have invested in Raksul since its IPO in 2018, and it has since achieved sales CAGR of over 27% (and profits ahead of that). Shares jumped in December following the announcement that the management and Goldman Sachs proposed to take the company private at ¥1710, a 37% premium relative to the pre-announcement share price. We believe the tender offer price of ¥1710 severely undervalues the company. We have voiced our opposition both with the Board of Directors, as well as publicly. The tender offer price has since been increased to ¥1900 and is set to go through at time of writing in March 2026. This case highlights 1) the tremendous value that can found in the small cap growth space, and 2) the premature 'acquisition risk' for some of the best growth companies in the universe.

Inforich was our biggest detractor to performance. Inforich (an `Emerging Prospect'), a start-up best known for its network of over 80k mobile battery rental stations globally, delivered sales growth and operational profit growth of 35% and 24% respectively in 2025, and is in an early phase of overseas expansion. These are highly respectable numbers, even if they fall short of the company's own ambitions a year ago. Unfortunately, the mix of below-plan growth and its small market capitalisation (which deterred most institutional investors) has led to a sharp decline in its share price. As of March 2026, a tender offer is in progress that will see Bain Capital take Inforich private at ¥4560 per share, more than double the company's share price before the tender offer announcement.

Given the broader market environment, it is no surprise that the second biggest performance detractor was another high growth company. Appier, founded in 2012 by a team of AI scientists, delivers Software-as-a-Service that helps its business clients find and keep customers - think of Appier's AI tools as the brains to their clients' marketing department if you will. The effectiveness of Appier's offering enabled it to consistently deliver strong growth along with positive and rising profitability. In 2025, it delivered strong sales growth of 28% (32% on a FX neutral basis) and operating income growth of 50%. Despite these encouraging results, the shares have declined due to concerns about its growth investments and general weak sentiment toward software companies based on AI disruption. While we acknowledge the dynamism and unpredictability of the AI landscape, we believe Appier's prospects are still underestimated by the market.

Concluding remarks

As the new lead portfolio manager for Shin Nippon, which has now gone through a prolonged period of severe underperformance, it is natural to reflect on the validity of my and Jared's investment approach in this market and why we remain hugely excited by growth investing in the Japan Small Cap universe, despite our performance difficulties.

Firstly, Japan is a market that faces huge structural issues: ageing demographics; a shrinking workforce; and, persistently low labour productivity. These are well-documented challenges, but for growth investors and innovative companies (including many portfolio holdings), they represent enormous opportunities to scale into. For me, this is a far more enticing long-term investment prospect than aiming for a one-off capital efficiency uplift that has driven the returns of value stocks in recent times, especially after a period of dramatic performance differential between growth and value.

Secondly, we acknowledge that growth companies in Japan have not historically scaled as rapidly as other innovative companies in the US or even Europe. One typical bottleneck is human resources. It is hard to hire enough top talent when employment for life is the norm and when the population is shrinking. This challenge may be falling away, as we are seeing shifts in attitudes towards employment amongst the younger generation. Then there is AI. AI may be seen as a job-killer in some markets; in Japan, AI adoption is necessary and can potentially be a catalyst for the elusive much needed jump in productivity. Japan may not be an AI superpower like the US or China, but it could be one of the biggest AI beneficiaries. Encouragingly, the Japanese government recognises this.

Having stated earlier how higher interest rates are hurting growth companies' valuations, there is a silver lining here. That capital now carries a cost should benefit those that can deploy it most effectively - i.e. high-quality growth companies. At one end of the spectrum, weak companies sustained historically by zero-cost debt may struggle and eventually exit, freeing up societal resources. At the other end, those that provide the best products and services will be able to exercise pricing power more easily in an environment where inflation has finally taken hold after decades of deflation.

Similarly, ongoing corporate reforms benefit the whole market, as painful as that has been for us in relative terms. A more competitive and dynamic market should increase the chances of world class growth companies emerging again from Japan - this is exciting for growth investors in the long run.

I am hugely energised by the opportunity set as a growth investor, and excited by what our portfolio can achieve in the coming years. We have companies that are addressing large growing market opportunities, often with strong competitive edge (as demonstrated by superior financials), and led by aligned and ambitious management. Nearly 80% of the companies have founder/founding family involvement. Many of these are deeply overlooked in an era of factor investing, and the pipeline of ideas is equally rich and compelling.

In the short term, we are mindful of the crisis in the Middle East. Japan's economy is particularly vulnerable given its reliance on energy imports, and a prolonged conflict raises the prospect of stagflation in Japan. Despite the troubling headlines, we believe that our portfolio is relatively resilient given our bias towards fast moving domestically orientated companies. We will monitor the situation closely and adjust the portfolio accordingly.

We would like to thank our shareholders for their continued support and patience. Jared and I will do our utmost to deliver the returns that Shin Nippon shareholders deserve in the coming years.

Brian Lum

For a definition of terms see Glossary of terms and Alternative Performance Measures at the end of this announcement.

Baillie Gifford - valuing private companies

We hold our private company investments at an estimation of 'fair value', i.e. the price that would be paid in an open-market transaction. Valuations are adjusted both during regular valuation cycles and on an ad hoc basis in response to 'trigger events'. Our valuation process ensures that private companies are valued in both a fair and timely manner.

The valuation process is overseen by a valuations group at Baillie Gifford, which takes advice from an independent third party (S&P Global). The valuations group is independent from the investment team, as well as Baillie Gifford's Private Companies Specialist team, with all voting members being from different operational areas of the firm, and the investment managers only receive final valuation notifications once they have been applied.

We revalue the private holdings on a three-month rolling cycle, with one-third of the holdings reassessed each month. During stable market conditions, and assuming all else is equal, each investment would be valued four times in a twelve‑month period. Regarding the Trust's private portfolio, the prices are also reviewed twice per year by the respective boards and are subject to the scrutiny of external auditors in the annual audit process.

Beyond the regular cycle, the valuations group also monitors the portfolio for certain `trigger events'. These may include changes in fundamentals, a takeover approach, an intention to carry out an Initial Public Offering (`IPO'), company news which is identified by the valuation team or by the portfolio managers, or meaningful changes to the valuation of comparable public companies. Any ad hoc change to the fair valuation of any holding is implemented swiftly and reflected in the next published net asset value ('NAV'). There is no delay.

The valuations team also monitors relevant market indices on a weekly basis and updates valuations in a manner consistent with our external valuer's (S&P Global) most recent valuation report where appropriate.

The valuation movements in the year have been summarised below, pricing in the continued challenging market backdrop, coupled with some positive performance within the private portfolio.

* Data reflecting period 1 February 2025 - 31 January 2026 to align with the Company's reporting period end.

Review of investments

A review of the Company's ten largest investments together with a list of the new acquisitions in the year.

Top ten holdings

Tsugami

Founded in 1937, Tsugami is a specialist in high precision machine tools (such as automatic lathes and grinding machines), which are used to make complex components with microns-level accuracy. It has a long history, enjoys strong positions in its niches, and benefits from megatrends such as automation and miniaturisation of electronic components. Having established itself in China, where it continues to grow strongly; it has recently established a presence in India where there are exciting growth prospects. We classify Tsugami to be a 'Cyclical Gainer' in accordance with the growth profiles set out on page 42 of the Annual Report and Financial Statements.

Raksul

Raksul is an online platform providing cloud-based printing and advertising services for SMEs. The printing industry in Japan is very sizeable albeit mature, and is quite traditional. It is also very inefficient in that a small number of printing companies get a large chunk of customer orders leaving smaller and mid-sized players with very low capacity utilisation. Online penetration also remains very low compared to other developed markets. Through its online platform, Raksul is attempting to modernise this industry by using its platform to efficiently allocate orders thereby improving utilisation rates across the sector. Through its advertising business, Raksul sells SAAS software that provides low-cost and measurable advertising for SMEs. The company is growing its sales very rapidly and has built sufficient scale to improve its profitability as well. Management are young and dynamic, with most having both an overseas and a consulting background. Raksul is considered to be a 'Rapid Scaler'.

JEOL

JEOL is a specialist manufacturer of high-powered microscopes and other scientific analysis equipment. In addition, through its partnership with IMS (an Austrian company), JEOL participates in manufacturing multi-beam mask writers for the semiconductor industry, which has proved to be a highly successful business. Over the past few years, JEOL has increased its margins in both microscope and mask-writing businesses, driven by new product launches and strong demand. The company should be able to grow revenues strongly, and defend its margins through the cycle, thanks to its ongoing technological developments and product innovation. We consider JEOL to be a 'Cyclical Gainer'.

GA Technologies

GA Technologies provides online B2B (`business-to-business') services for the real estate sector. It has developed a suite of artificial intelligence based software applications that allows clients to manage numerous tasks like remote viewing, rental property management, end-to-end processing of mortgages and automated generation of building floor plans, to name a few. It is run by its ambitious and young founder who owns a large stake, thereby ensuring strong alignment with minority shareholders. GA Technologies is classified as a 'Rapid Scaler'.

Yonex

Yonex is the leading badminton racket brand in the world. Badminton is growing as a participation sport across Asia and many of the top players use Yonex equipment. The company is now leveraging its strong brand to expand into the global tennis market where it has already demonstrated impressive market share gains, especially in the US which is the world's largest tennis market. In addition, management have moved to a direct sales model which should support higher margins in the long run. We see Yonex as a 'Proven Winner'.

Kohoku Kogyo

Kohoku Kogyo manufactures electronic components. Its two main products are capacitor lead terminals and optical components for subsea data cables. Both of these product niches are low cost but mission critical, and the company enjoys powerful leading positions globally with 50%+ market share. The company's track record, vertical integration, and cumulation of manufacturing knowhow set it apart from competitors. We believe it has excellent long term growth prospects as it benefits from structural drivers such as electrification and AI. Kohoku Kogyo is considered to be a 'Cyclical Gainer'.

SWCC

SWCC Showa is an electric wire/cable manufacturer. Its traditional business relates to the manufacture and supply of low and high voltage cables for private and public electric power utilities. It is in the process of moving away from its low growth and low margin legacy business, of supplying cables, to becoming a component supplier. It has developed a set of unique, lightweight and high margin connector components, branded as SICONEX, that are driving strong profit growth. The market continues to rate the company as an undifferentiated supplier of commoditised products, ignoring the radical changes occurring within the business, and as such the shares remain very lowly rated. SWCC is classed as a 'Proven Winner'.

Katitas

Katitas is a specialist real-estate developer that buys and renovates old, abandoned homes before selling them on to mainly first-time buyers. The problem of empty houses in Japan is reaching acute levels, resulting in a hollowing out of entire communities. There are an estimated 8 million old or abandoned houses across Japan, most of them vacant. A lot of these are ancestral homes which families, despite living elsewhere, are reluctant to sell. For authorities looking to regenerate local economies, the only option is to demolish these properties and build new establishments, often for business purposes. The families are generally reluctant to give up these properties for sentimental reasons. Katitas offers an alternate and attractive option for these families by offering to acquire these houses and the associated land for a reasonable price, renovate these to a high standard before selling them. In the process, Katitas also ends up playing a part in rejuvenating local communities. Because these houses are scattered all across Japan, sourcing potential properties is quite difficult. Over the years, Katitas has developed a strong network of local contacts across Japan that ensures a steady supply of properties they could buy. The company generates very attractive margins despite selling these properties at a meaningful discount to new builds. Finally, second-hand home ownership in Japan is exceptionally low compared to other developed markets although this is changing and should provide a long-term tailwind for Katitas. This is classified as a 'Proven Winner'.

Gift

Gift holdings is one of Japan's largest ramen restaurants. It has a unique model whereby it operates its own stores but also supplies raw materials to a network of franchisees with a very simple charging structure. This significantly lowers the barrier for franchisees to join Gift Holdings' ecosystem thereby enabling the company to expand rapidly at very low cost and high margin. The company is run by its young and dynamic founder who trained as a ramen chef for several years before starting the company without any external money. Ramen is a staple food item in Japan and it is one of the few categories that has grown over the past decade despite demographic headwinds. We see Gift as a 'Rapid Scaler'.

Harmonic Drive Systems

Harmonic Drive is a leading mechatronic company. It is best known for its precision motion control products such as harmonic reducers, as used in industrial robots and semiconductor manufacturing. Its long history and consistent R&D helped cement an excellent position in this exciting market. Aside from continued developments in established robotics applications, Harmonic Drive also offers exposure to the 'Physical AI' theme - for example, we believe Harmonic Drive is well placed to benefit from the growth of humanoid robots. Harmonic Drive is viewed as a 'Rapid Scaler'.

New buys

Cover

Cover runs Hololive production, one of the world's leading agencies for Vtubers (or 'virtual Youtubers') - these are content creators who broadcast and interact with fans online as animated characters, often using motion capture technologies. Cover recruits and trains talent, provides content production and distribution support, and makes money from events, merchandising and licensing IP. As a pioneer in this emerging field, Cover has a strong track record in growth and innovation and continues to be led by its founder Tanigo Motoaki. The opportunity is particularly exciting if Vtubing becomes mainstream globally. We consider this a 'Rapid Scaler.'

DMG Mori

DMG Mori is a leading machine-tool maker formed from the combination of Japan's DMG Seiki and Germany's Gildemeister, selling high-precision CNC machines and integrated automated production lines. Factory automation is a key structural driver. DMG is well positioned through its deep technical capabilities, a global support network, and an integrated product approach which leads to long term customer relationships. The company's cost structure suggests significant scope for profits to grow as utilisation of DMG Mori's capacity improves; and the growing Aerospace & Defence sector in Europe and Japan may serve as a powerful catalyst for this to materialise. This is a 'Cyclical Gainer.'

JMDC

JMDC is a Japanese healthcare data platform. It aggregates insurance claims data, personal health records through its Pep Up app, and hospital-derived datasets, then sells anonymised data packages and analytics to pharma companies, insurers, and hospitals; it also runs a smaller telemedicine workflow that lets radiologists read scans remotely. As healthcare becomes more digital and more AI-enabled, access to high-quality, longitudinal data becomes scarce and strategically valuable. The company benefits from classic data-network effects, and the sensitivity of medical data makes it hard for new entrants to compete. After years of building its datasets, the management's emphasis is increasingly shifting toward monetisation, and we believe JMDC has very strong long-term prospects. We categorise JMDC as a 'Rapid Scaler.'

Kasumigaseki Capital

Kasumigaseki Capital is a real estate developer that focuses on niches such as automated refrigerated warehouses, group stay hotels and premium nursing homes in Japan and beyond. The company has shown a knack for spotting interesting opportunities and developing properties with innovative features. Furthermore, Kasumigaseki employs an unusual asset light business model where its own capital is only deployed for the planning stage of a project, leading to high asset turnover and impressive returns. As a result, Kasumigaseki Capital has achieved >100% annual profit growth in recent years, and the ambitious management continues to aim to recycle capital aggressively to pursue further expansion in the coming years by targeting ~50% net profit growth in the next few years. Kasumigaseki Capital is categorised as a 'Rapid Scaler.'

Mani

Mani is a niche medical device manufacturer that supplies precision tools to surgeons and dentists: ophthalmic knives for cataract surgery, specialist suture needles, and dental restorative materials. While the market may seem unglamorous, this is an attractive business as quality and reliability really matters; and Mani enjoys excellent reputation in these niches. The underlying market is supported by Asia's ageing population, as well as the company's proactive expansion into the US. We see the company's recent management changes as an indicator of ambition and expects to see Mani scale profitably into their chosen segments internationally. We classed Mani as a 'Proven Winner.'

Money Forward

Money Forward is a leading provider of cloud-based software for Japan's small and mid-sized businesses, covering back-office workflows such as accounting, expense management, and payroll. Alongside this, Money Forward also runs the personal finance app Money Forward ME. As Money Forward software forms the system of record for its business clients, few clients switch away once it is embedded. This provides a predictable income stream, as well as a platform to connect clients to other services (such as fintech). Money Forward is led by its ambitious founder, and we are particularly excited by its long-term prospects as Japan's smaller businesses digitalise from a low base, and the company explores the immense potential of AI within its product offering. Money Forward is a 'Rapid Scaler.'

Seiko

Seiko has been making watches for over 100 years. Aside from having a globally recognised brand backed by heritage and technical innovation, Seiko stands out in the Swiss dominated industry through its vertical integration and unrivalled breadth of credible offering across price tiers. While the global watch market is shrinking in volume terms, it continues to grow in value terms as watches shift from utility to personal expression and luxury. Seiko, still led by the founding family, is set to benefit from the premiumisation trend, and we believe has a long growth runway as it increasingly establishes itself at the high end of the market through the Grand Seiko and Credor brands. We see Seiko as a 'Proven Winner.'

Shinnihon

Shinnihon Corp is a mid-sized, family-owned construction company and real estate development company, focusing on projects around the Tokyo metropolitan area. The company's construction business has achieved decent growth and profitability in recent years through solid execution, and it has benefited from the tight labour supply as demand for dependable subcontractors such as Shinnihon rose. On the real estate side, Shinnihon's long-term orientated management is ready to deploy its balance sheet to build its land bank should opportunities emerge and has also signalled for a stronger focus on shareholder returns. Shinnihon is a 'Cyclical Gainer.'

* For a definition of terms see Glossary of terms and Alternative Performance Measures at the end of this announcement.

Baillie Gifford's stewardship principles

Baillie Gifford's overarching ethos is that we are 'Actual' investors. That means we seek to invest for the long term. Our role as an engaged owner is core to our mission to be effective stewards for our clients. As an active manager, we invest in companies at different stages of their evolution across many industries and geographies, and focus on their unique circumstances and opportunities. Our approach favours a small number of simple principles rather than overly prescriptive policies. This helps shape our interactions with holdings and ensures our investment teams have the freedom and retain the responsibility to act in clients' best interests.

Long-term value creation

We believe that companies that are run for the long term are more likely to be better investments over our clients' time horizons. We encourage our holdings to be ambitious, focusing on long-term value creation and capital deployment for growth. We know events will not always run according to plan. In these instances we expect management to act deliberately and to provide appropriate transparency. We think helping management to resist short-term demands from shareholders often protects returns. We regard it as our responsibility to encourage holdings away from destructive financial engineering towards activities that create genuine value over the long run. Our value will often be in supporting management when others don't.

Alignment in vision and practice

Alignment is at the heart of our stewardship approach. We seek the fair and equitable treatment of all shareholders alongside the interests of management. While assessing alignment with management often comes down to intangible factors and an understanding built over time, we look for clear evidence of alignment in everything from capital allocation decisions in moments of stress to the details of executive remuneration plans and committed share ownership. We expect companies to deepen alignment with us, rather than weaken it, where the opportunity presents itself.

Governance fit for purpose

Corporate governance is a combination of structures and behaviours; a careful balance between systems, processes and people. Good governance is the essential foundation for long-term company success. We firmly believe that there is no single governance model that delivers the best long-term outcomes. We therefore strive to push back against one-dimensional global governance principles in favour of a deep understanding of each company we invest in. We look, very simply, for structures, people and processes which we think can maximise the likelihood of long-term success. We expect to trust the boards and management teams of the companies we select, but demand accountability if that trust is broken.

Sustainable business practices

A company's ability to grow and generate value for our clients relies on a network of interdependencies between the company and the economy, society and environment in which it operates. We expect holdings to consider how their actions impact and rely on these relationships. We believe long-term success depends on maintaining a social licence to operate and look for holdings to work within the spirit and not just the letter of the laws and regulations that govern them. Material factors should be addressed at the board level as appropriate.

Environmental, social and governance engagement

By engaging with companies, we seek to build constructive relationships with them, to better inform our investment activities and, where necessary, effect change within our holdings, ultimately with the goal of achieving better returns for our shareholders. The issues we consider in our assessment of ESG factors are varied but may include governance arrangements, human rights, labour rights, diversity and inclusion, climate change, nature and biodiversity, respect for legal and regulatory guidelines and consideration of stakeholder perspectives.

GMO Payment Gateway - Engagement case study: encouraging long-term strategic focus and governance clarity.

Objective: To discuss the company's long-term strategic trajectory and 2030 operating profit ambitions with the founder and CEO, Issei Ainoura, explore the implications of leadership tenure for culture and succession planning, and encourage a greater emphasis on long-term value creation over annual profit targets.

Discussions: Ainoura-san described GMOPG as a strongly sales-led organisation. He noted the monthly meetings, where he reviews progress against target customers and reiterated GMOPG's highly ambitious financial goals, including a strong emphasis on achieving 25 per cent annual operating profit growth alongside a long-term operating profit target for 2030.

We reiterated our preference for directing the market's attention to the company's long-term direction and progress against its 2030 objectives, rather than focusing on slight year-on-year variations in operating profit growth. We highlighted how an excessive focus on short-term performance can distort internal behaviour, even as we recognise the range of stakeholders he needs to manage and the impressive ambition that this goal represents.

We asked whether achieving the ¥100 billion operating profit target in 2030 might be a natural point for him to transition to a chair role. He framed the 2030 target as merely a way marker and expressed a desire to continue "like Buffett," signalling both personal ambition and a clear intention to remain chief executive officer (CEO). We discussed our view that long tenure is not inherently problematic, provided there is a precise mechanism for the CEO to understand when the time is right for change.

Outcome: Following our meeting, management refined its profit-growth messaging and shared that this was partly informed by our feedback. It shifted from an annual profit growth-rate objective to a profit point target for the 2031 financial year, intended to more clearly articulate the growth drivers, visibility, and strategic initiatives underpinning this ambition.

We view this evolution as well aligned with our long‑term investment horizon. The meeting and follow-up communication reinforced our view that management is aligned with our investment horizon through its approach, culture, and governance.

Toyo Tanso: Advancing governance and sustainability through board reform and emissions reduction.

Objective: To assess progress on board reform and governance effectiveness, encourage greater international expertise at board level given the company's global revenue exposure, and evaluate the credibility and ambition of its emissions-reduction and broader sustainability initiatives, alongside capital allocation discipline.

Discussion: Toyo Tanso is a global leader in the production of speciality graphite materials, supplying high-performance components used in semiconductors, electric vehicles, and industrial applications.

We met with Toyo Tanso's Chairman and CEO to discuss the company's sustainability initiatives, capital allocation strategy, and broader business developments. The conversation primarily focused on board composition and progress toward reducing emissions.

The leadership team outlined steps taken to enhance the independence and expertise of the board, including a reduction in board size from eight members to four over the past four years. This change aims to foster greater accountability and more effective governance. Given Toyo Tanso's significant ex-Japan revenue exposure, we also explored the need for greater international business expertise within the board. Management was receptive to this idea and expressed an intention to strengthen global perspectives as the board evolves.

On environmental progress, Toyo Tanso highlighted its efforts to lower emissions through the adoption of more energy‑efficient technologies and a shift toward renewable energy sources. The company has set a target to reduce emissions intensity by 30% by 2030. However, they acknowledged ongoing challenges in hard-to-abate areas such as carbon baking furnaces.

The discussion also covered human rights initiatives. Toyo Tanso has completed a due diligence exercise starting with its parent company and plans to extend this work across its group operations and supply chain. The company's approach is to build domestic competence first before expanding oversight into higher-risk international tiers.

Finally, we revisited our voting decision from the previous year regarding dividend policy. We had abstained on the proposed payout of around 30%, which fell short of our 40% expectation given the company's strong cash position. The company acknowledged this feedback and confirmed that it is currently reviewing its payout framework as part of a broader capital allocation strategy.

Outcome: The meeting underscored Toyo Tanso's openness to external perspectives and its willingness to adapt. The company is continuing to refine its governance structure, strike a balance between reinvestment and shareholder returns, and make progress on sustainability, although some operational challenges remain in achieving its environmental targets.

Nakanishi - Addressing governance gaps through stronger tax oversight.

Purpose: To understand the root causes of the overseas tax underpayment, assess the adequacy of remedial actions taken to strengthen internal controls and international tax oversight, and ensure governance frameworks are robust enough to prevent recurrence and maintain shareholder confidence.

Discussion: Nakanishi is a leading manufacturer of high-precision dental and industrial rotary instruments.

During a meeting with the CFO of Nakanishi, we sought to understand the circumstances surrounding Nakanishi's recent tax underpayment issue and evaluate the company's response and corrective measures.

Before our meeting, we became aware that Nakanishi had been required to pay an additional ¥1.2 billion in taxes and penalties following an underpayment identified across its overseas entities. During our conversation, Suzuki-san acknowledged the issue and offered an apology, explaining that the root cause lay in a lack of specialised international tax expertise within the company.

At the time, Nakanishi relied on a domestic Japanese third-party accounting firm, which had incorrectly handled certain overseas tax filings. Recognising this gap, the company has since taken steps to strengthen its internal financial governance. These include hiring an in-house international tax advisor and appointing PwC as its new external tax consultant to improve compliance and oversight going forward.

Outcome: Nakanishi has already settled the ¥1.2 billion payment and appears to have addressed the shortcomings in its tax management structure. From the discussion, it was clear that this was a case of administrative oversight rather than deliberate misconduct. The company's response demonstrates a commitment to improving governance and restoring confidence in its financial controls.

Proxy voting - 'active ownership' in action

JEOL

Reason: We abstained on the dividend because we believe the company could return more capital to shareholders, given its strong cash position. Ahead of the AGM, we reached out to the company to understand its stance on shareholder returns. They informed us that their policy is to maintain a payout ratio of 30 per cent. In previous years, we opposed the company's dividend. However, this year, we decided to abstain to acknowledge the absolute increase in the dividend and recognising the cyclical weakness the company has faced in recent quarters due to challenges in their industry.

Shinnihon

Reason: We abstained on the resolution to approve the granting of a retirement bonus to an inside director because details such as the amount and the recipient were not disclosed. Ahead of the AGM, we contacted the company to request additional information, however, the company did not respond. Generally, in Japan, retirement bonuses are calculated based on tenure and not the recipient's contribution to shareholder value. As we generally think remuneration should be reflective of an individual and the company's performance, due to an absence of information we could not make an informed judgement and decided to abstain.

Kohoku Kogyo

Reason: We continued to oppose the low dividend payment because we believe the company's capital strategy is not in shareholders' interests. Ahead of the AGM, we reached out to the company to understand its stance on shareholder returns. They explained that they implemented a share buyback programme, which we believe will increase the company's total return ratio for the next fiscal year. While we welcomed this news, we decided to continue to oppose the dividend due to shareholder returns in the current fiscal year being below our expectations. This was consistent with our previous voting approach. We hope to feel able to support the dividend proposal at the 2026 AGM.

Baillie Gifford - proxy voting

We believe that 'active ownership' of our clients' holdings is as important as selecting the right investments in the first instance. These guidelines are aligned with our stewardship principles and describe our approach to proxy voting and company engagement, the key levers of active ownership, often described as 'stewardship'.

While these guidelines are intended to provide an insight into how we approach voting on our clients' behalf, it is important to note that we assess every company individually. In voting, we will always evaluate proposals on a case-by-case basis, based on what we believe to be in the best long-term interests of our clients, rather than rigidly applying a policy.

A broad cross section of our investment staff are involved in our ongoing work on stewardship. In the same way that our investment approach is based around empowered and independent teams, our voting and engagement is led by the individual investment teams. In keeping with our decentralised and autonomous culture, our investment teams will, on occasion, elect to vote differently on the same general meeting resolutions. Where this happens, we report accordingly in the proxy voting disclosure on our website. We also have clear processes in place to identify, prevent and manage potential proxy voting related conflicts of interest to ensure that in all cases the firm acts in the clients' best interest. Baillie Gifford's firm-wide conflict of interest disclosure is available on our website.

Prior to taking any voting action, we usually address specific ESG concerns by engaging directly with the company, using voting as an escalation mechanism if we have not seen sufficient progress. Voting activity and the reasons for any resolutions voted against in the period are disclosed on the Company website and can be viewed at shinnippon.co.uk.

List of investments as at 31 January 2026

U Private company (unlisted) investment.

* Figures relate to part period returns where the investment has been purchased in the period.

# See Glossary of terms and Alternative Performance Measures at the end of this announcement.

† Absolute performance (in sterling terms) has been calculated on a total return basis over the period 1 February 2025 to 31 January 2026.

† See Glossary of terms and Alternative Performance Measures at the end of this announcement.

Income statement

For the year ended 31 January

The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital return columns are prepared under guidance published by the Association of Investment Companies.

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

A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.

The accompanying notes below are an integral part of the Financial Statements.

Balance sheet

As at 31 January

The Financial Statements of Baillie Gifford Shin Nippon PLC (Company Registration Number SC093345) below were approved and authorised for issue by the Board and were signed on its behalf on 30 March 2026.

Jamie SkinnerChair

* See Glossary of terms and Alternative Performance Measures at the end of this announcement.

The accompanying notes below are an integral part of the Financial Statements.

Statement of changes in equity

For the year ended 31 January 2026

For the year ended 31 January 2025

The accompanying notes below are an integral part of the Financial Statements.

Cash flow statement

For the year ended 31 January

* Cash and cash equivalents represent cash at bank and deposits repayable on demand.

The accompanying notes below are an integral part of the Financial Statements.

Notes to the Financial Statements

1. Principal accounting policies

The Financial Statements for the year to 31 January 2026 have been prepared in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' on the basis of the accounting policies set out below which are unchanged from the prior year and have been applied consistently.

2. Income

3. Investment management fee - all charged to revenue

Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed as the Company's Alternative Investment Fund Manager ('AIFM') and Company Secretaries. Baillie Gifford & Co Limited has delegated portfolio management services to Baillie Gifford & Co. Dealing activity and transaction reporting have been further sub-delegated to Baillie Gifford Overseas Limited and Baillie Gifford Asia (Hong Kong) Limited.

The Investment Management Agreement sets out the matters over which the Managers have authority in accordance with the policies and directions of, and subject to restrictions imposed by, the Board. The Management Agreement is terminable on not less than six months' notice. Compensation fees would only be payable in respect of the notice period if termination were to occur sooner. The annual management fee is 0.75% on the first £50m of net assets, 0.65% on the next £200m of net assets and 0.55% on the remainder.

With effect from 1 February 2026, the annual management fee is 0.65% on the first £250m of net assets and 0.55% on the remaining net assets. The fees are calculated and paid on a quarterly basis.

4. The bank loan interest disclosed includes £0 paid (2025 - £9,000) in respect of yen deposits held at the custodian bank.

5. Ordinary dividends

We set out below the total dividends proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. There is a revenue surplus for the year to 31 January 2026 of £1,981,000 which is available for distribution by way of a dividend payment (year to 2025 - a revenue surplus of £1,989,000).

If approved, the recommended final dividend will be paid on 26 May 2026 to shareholders on the register at the close of business on 17 April 2026. The ex-dividend date is 16 April 2026.

6. Net return per ordinary share

Revenue return per ordinary share is based on the net revenue gain on ordinary activities after taxation of £1,981,000 (2025 - gain of £1,989,000) and on 258,475,084 ordinary shares (2025 - 295,693,208) being the weighted average number of ordinary shares in issue during the year.

Capital return per ordinary share is based on the net capital gain for the financial year of £10,905,000 (2025 - net capital loss of £32,450,000) and on 258,475,084 ordinary shares (2025 - 295,693,208) being the weighted average number of ordinary shares in issue during the year.

There are no dilutive or potentially dilutive shares in issue.

7. Fixed assets - investments

Investments in securities are financial assets designated at fair value through profit or loss. In accordance with Financial Reporting Standard 102, the tables provide an analysis of these investments based on the fair value hierarchy described below, which reflects the reliability and significance of the information used to measure their fair value.

Fair value hierarchy

The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit or loss account are measured is described below. Fair value measurements are categorised on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 - using unadjusted quoted prices for identical instruments in an active market;

Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and

Level 3 - using inputs that are unobservable (for which market data is unavailable).

The valuation techniques used by the Company are explained in the accounting policies below.

Unlisted securities are categorised as Level 3. None of the financial liabilities are designated at fair value through profit or loss in the Financial Statements.

8. Included in creditors is £568,000 (2025 - £611,000) in respect of the investment management fee.

The creditors above are stated at amortised cost which is a reasonable approximation to fair value.

Amortisation of the loan arrangement fees during the year was £nil (2025 - £19,000).

Borrowing facilities

At 31 January 2026

Bank of America - 3 year ¥16,100 million revolving credit facility maturing 7 November 2027. The rollover date is 12 February 2026. Drawings: ¥14,840 million.

At 31 January 2025

ING Bank N.V. - 3 year ¥2,000 million revolving credit facility maturing 3 March 2026.

ING Bank N.V. - 3 year ¥7,000 million revolving credit facility maturing 23 November 2026.

Bank of America - 3 year ¥7,100 million revolving credit facility maturing 7 November 2027.

Drawings: ¥16,100 million. 

The covenants during the year relating to the ING Bank N.V. and Bank of America loans were as follows:

(i) Total borrowings shall not exceed 35% of the Company's net asset value; and

(ii) The Company's minimum net asset value shall be £225 million.

During the year, Bank of America removed covenant (ii). There were no breaches in loan covenants during the year.

Security has been provided to ING Bank N.V. and Bank of America in respect of the loans by way of floating charges.

The interest rate, maturity profiles and fair value of the bank loans are shown in note 18.

During the year, the existing ¥2bn and ¥7bn revolving credit facilities with ING were cancelled and incorporated into the cheaper secured revolving credit facility with Bank of America (extended to ¥16.1bn).

9. At 31 January 2026 the Company had remaining authority to buy back 17,628,183 shares. 34,171,228 shares were bought back during the year for total consideration of £42,137,000 (2025 - 30,266,184 shares for a total consideration of £35,219,000). Share buy-backs are funded from the capital reserve.

During the year the Company issued no shares on a non pre-emptive basis (2025 - no shares).

Between 1 February and 26 March 2026, excluding the shares bought back as part of the recent 15% unconditional tender, the Company did not issue any shares and bought back 2,821,169 shares.

10. Analysis of change in net debt

11. The Annual Report and Financial Statements will be available on the Company's website shinnippon.co.uk† on or around 13 April 2026.

12. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 January 2026 or 2025 but is derived from those accounts. Statutory accounts for 2025 have been delivered to the Registrar of Companies, and those for 2026 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

† Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

Glossary of terms and Alternative Performance Measures ('APM')

An alternative performance measure is a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. The APMs noted below are commonly used measures within the investment trust industry and serve to improve comparability between investment trusts.

Total assets

This is the Company's definition of Adjusted Total Assets, being the total value of all assets held less all liabilities (other than liabilities in the form of borrowings).

Net Asset Value

Also described as shareholders' funds, Net Asset Value ('NAV') is the value of total assets less liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue.

Net Asset Value (borrowings at book value)

Borrowings are valued at adjusted net issue proceeds. The Company's yen denominated loans are valued at their sterling equivalent and adjusted for their arrangement fees. The value of the borrowings on this basis is set out in note 11 on page 103 of the Annual Report and Financial Statements.

Net Asset Value (borrowings at fair value) (APM)

This is a widely reported measure across the investment trust industry. Borrowings are valued at an estimate of their market worth. The Company's yen denominated fixed rate loans are fair valued using methodologies consistent with International Private Equity and Venture Capital Valuation ('IPEV') guidelines. The value of the borrowings on this basis is set out above. A reconciliation from NAV (with borrowings at book value) to NAV per ordinary share (with borrowings at fair value) is provided below.

Premium/discount (APM)

As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the NAV per share from the share price and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium.

The average discount/premium (APM) as disclosed above is calculated by taking an average of the daily discount/premium percentage using NAV (with borrowings at fair value) for the relevant periods.

Ongoing charges (APM)

The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average NAV (with borrowings at fair value). The ongoing charges have been calculated on the basis prescribed by the Association of Investment Companies.

A reconciliation from the expenses detailed in the Income statement above is provided below:

* Comprises the total costs incurred in connection with the share premium account cancellation and the 2026 Tender Offer.

Total return (APM)

The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.

* The dividend adjustment factor is calculated on the assumption that the dividend of 0.60p (2025 - 0.80p) paid by the Company during the year was reinvested into shares of the Company at the cum income NAV per share/share price, as appropriate, at the ex-dividend date.

Gearing (APM)

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

Gearing represents borrowings at book less cash and cash equivalents expressed as a percentage of shareholders' funds.

Gross gearing is the Company's borrowings expressed as a percentage of shareholders' funds.

* Gearing: ((a) - (b)) ÷ (c), expressed as a percentage.

† Gross gearing: (a) ÷ (c), expressed as a percentage.

Leverage

For the purposes of the Alternative Investment Fund Managers (AIFM) Regulations, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its NAV and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.

Active share (APM)

Active share, a measure of how actively a portfolio is managed, is the percentage of the quoted equity portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.

Net liquid assets

Net liquid assets comprise current assets less current liabilities, excluding borrowings.

Share split

A share split (or stock split) is the process by which a company divides its existing shares into multiple shares. Although the number of shares outstanding increases, the total value of the shares remains the same with respect to the pre-split value.

Treasury shares

The Company has the authority to make market purchases of its ordinary shares for retention as treasury shares for future reissue, resale, transfer, or for cancellation. Treasury shares do not receive distributions and the Company is not entitled to exercise the voting rights attaching to them.

Private (unlisted) company

A private (unlisted) company means a company whose shares are not available to the general public for trading and not quoted on a stock exchange.

Turnover

Turnover is calculated as the minimum of purchases and sales in a month, divided by the average market value of the portfolio, summed to get rolling 12 month turnover data.

Third party data provider disclaimer

No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data. No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom.

No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.

Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgements, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

MSCI Index data

Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction.

The MSCI information is provided on an 'as is' basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information collectively, the 'MSCI Parties' expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability or any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (msci.com).

Automatic Exchange of Information

In order to fulfil its obligations under UK tax legislation relating to the automatic exchange of information, Baillie Gifford Shin Nippon PLC is required to collect and report certain information about certain shareholders.

The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. Accordingly, Baillie Gifford Shin Nippon PLC must provide information annually to the local tax authority on the tax residencies of a number of non‑UK based certificated shareholders and corporate entities.

Shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purposes of collecting this information.

For further information, please see HMRC's Quick Guide: Automatic Exchange of Information - information for account holders gov.uk/government/publications/exchange-of-information-account-holders.

Sustainable Finance Disclosure Regulation ('SFDR')

The EU Sustainable Finance Disclosure Regulation ('SFDR') does not have a direct impact in the UK due to Brexit, however, it applies to third-country products marketed in the EU. As Shin Nippon is marketed in the EU by the AIFM, BG & Co Limited, via the National Private Placement Regime ('NPPR') the following disclosures have been provided to comply with the high-level requirements of SFDR.

The AIFM has adopted Baillie Gifford & Co's stewardship principles and guidelines as its policy on integration of sustainability risks in investment decisions.

Baillie Gifford & Co believes that a company cannot be financially sustainable in the long run if its approach to business is fundamentally out of line with changing societal expectations. It defines 'sustainability' as a deliberately broad concept which encapsulates a company's purpose, values, business model, culture, and operating practices.

Baillie Gifford & Co's approach to investment is based on identifying and holding high quality growth businesses that enjoy sustainable competitive advantages in their marketplace. To do this it looks beyond current financial performance, undertaking proprietary research to build up an in-depth knowledge of an individual company and a view on its long-term prospects. This includes the consideration of sustainability factors (environmental, social and/or governance matters) which it believes will positively or negatively influence the financial returns of an investment. The likely impact on the return of the portfolio from a potential or actual material decline in the value of investment due to the occurrence of an environmental, social or governance event or condition will vary and will depend on several factors including but not limited to the type, extent, complexity and duration of an event or condition, prevailing market conditions and existence of any mitigating factors.

Whilst consideration is given to sustainability matters, there are no restrictions on the investment universe of the Company, unless otherwise stated within in its investment objective & policy. Baillie Gifford & Co can invest in any companies it believes could create beneficial long-term returns for investors. However, this might result in investments being made in companies that ultimately cause a negative outcome for the environment or society.

More detail on the Manager's approach to sustainability can be found in the stewardship principles and guidelines document, available publicly on the Baillie Gifford website bailliegifford.com and by scanning the QR code below.

The underlying investments do not take into account the EU criteria for environmentally sustainable economic activities established under the EU Taxonomy Regulation.