**Summary**
Baillie Gifford Shin Nippon PLC (BGS) released its annual financial report for the year ending January 31, 2026, highlighting a 5.4% increase in net asset value (NAV) per share and a 14.4% rise in share price, underperforming the comparative MSCI Japan Small Cap Index, which grew by 21.5%. Over five years, the companys NAV and share price declined by 36.1% and 43.8%, respectively, while the index increased by 42.4%. The company attributed its performance to challenges in investing in Japanese smaller companies, particularly high-growth, domestically-oriented small caps, exacerbated by rising interest rates, a weak yen, and valuation de-rating. Despite these headwinds, the board remains optimistic about the long-term growth potential of Japanese smaller companies, citing undervalued markets and strong fundamentals.
Key developments include the promotion of Brian Lum to lead portfolio manager and Jared Anderson to deputy portfolio manager, with a portfolio turnover of 21.2%. The companys share price ended the period at a 7.5% discount to NAV, and a final dividend of 0.69p per share was recommended. Shareholders approved changes to the tender offer and introduced a continuation vote in 2028 and a 100% performance-triggered tender. The annual management fee was adjusted to 0.65% on the first £250m of net assets and 0.55% on the remainder.
The companys total assets stood at £428.9 million, with a focus on achieving long-term capital growth through investments in Japanese smaller companies. The report also detailed the companys stewardship principles, environmental, social, and governance (ESG) engagement, and proxy voting activities, emphasizing long-term value creation, alignment, governance, and sustainable business practices.
| Financial Metric | 2025 | 2026 | Year-on-Year Change |
|---|---|---|---|
| Net Asset Value (NAV) per Share | 139.4p | 146.3p | +4.95% |
| Share Price | 119.0p | 135.4p | +13.78% |
| Discount to NAV | -14.6% | -7.5% | Improvement by 7.1% |
| Revenue Return per Share | 0.67p | 0.77p | +14.93% |
| Final Dividend per Share | 0.60p | 0.69p | +15.00% |
| Total Assets | £453.21 million | £428.92 million | -5.36% |
| Bank Loans | ¥16.1 billion | ¥14.84 billion | -7.83% |
| Net Gearing | 16.1% | 14.9% | Reduction by 1.2% |
| Ongoing Charges Ratio | 0.80% | 0.81% | +1.25% |