AJIT.L Regulatory News (AJIT)

17 November 2022

abrdn Japan Investment Trust PLC (the "Company")

Legal Entity Identifier (LEI): 5493007LN4380BLNLM64

HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

INVESTMENT OBJECTIVE

The Company's objective is to achieve long-term capital growth principally through investment in listed Japanese companies which are believed by the Investment Manager to have above average prospects for growth.

Performance Highlights

Performance (total return)

A Total return represents capital return plus dividends reinvested.

B Share price total return and NAV total return are considered to be Alternative Performance Measures. Further details can be found below.

C Index represents the Tokyo Stock Price Index, commonly known as TOPIX, a market capitalisation weighted index of all companies listed on the First Section of the Tokyo Stock Exchange, in sterling terms.

Financial Calendar, Dividends and Highlights

Financial Calendar

Financial Highlights

Chairman's Statement

Performance

Rising inflation and muted growth expectations meant that the six month period to 30 September 2022 was something of an uphill struggle for Japanese equities. The TOPIX index ended down 5.5% and, with rising interest rates and weaker investment sentiment globally, the quality companies favoured by your Manager underperformed. The Company's net asset value (NAV) total return was -7.5 % during the period, while the share price closed at 535.0p.

Inflation in Japan is still relatively low compared with the global picture and unlike other major central banks, the Bank of Japan's ("BoJ") policy objective over the past decade has been to inject some modest inflation into the system to stimulate economic growth. However, despite inflationary expectations reaching their highest level since 2008 (3% year-on-year), the BoJ has refrained from intervening and Governor Kuroda has taken the view that inflation is primarily imported through energy costs and, due to weak underlying demand, is in danger of falling back to lower levels in the next fiscal year. This looser monetary policy has led to an increasingly weak currency. During the period the Yen fell to its lowest level against the US dollar in more than 30 years causing prices of imported goods and energy to rise even further. At this point the BoJ stepped in, buying Yen to support the currency, the first time this has happened since the Asian financial crisis in 1998. However, while the Yen was very weak against the US dollar, rising briefly above ¥150, it should be noted that it was relatively stable against sterling, which has suffered from its own well documented domestic headwinds over the period.

Even in this complex operating environment for Japanese companies, results over the last six months have shown that better-run companies are presenting more optimistic outlooks, protecting their profitability, and reacting well to the challenges presented to them. Rising input costs have proved challenging but businesses with pricing power have been able to maintain their margins despite sharply rising prices. It is also notable that share buybacks increased significantly over the period, rising to US$32 billion, the highest levels in 16 years. With dividend payments also increasing, this suggests that companies that have excess capital are actively returning that to shareholders.

Markets over the period essentially focused on the macro and overlooked the micro. Businesses that were positively leveraged to rising inflation or commodity prices have seen their share prices rise. Sectors that were beneficial for the Company included consumer staples and financial sectors. On the other hand, companies that were hurt by rising input prices have been more at risk. Sectors within the portfolio that were weaker over the six months included materials and consumer discretionary.

In such a macro-driven market, and with signs of slowing growth and potential weakening demand, your Manager has taken a very cautious approach to the portfolio, seeking to ensure that the companies in which they invest are resilient to the macro backdrop, while reducing exposure to those with a weaker outlook, such as technology companies. More details regarding the performance and positioning at a company level can be found in the Manager's review that follows.

Environmental, Social & Corporate Governance ("ESG")

ESG continues to be an important consideration in your Manager's investment process and the Board is encouraged by some notable movements relating to corporate governance in Japan. Over the period, Japan's Ministry of Economy, Trade and Industry released the fifth iteration of the Ito Report, first published in 2014, which encourages investors' engagement with corporates to drive improvement in shareholder returns. The pace of corporate reform after the first report, alongside the publishing of Japan's Corporate Governance Code, disappointed investors, but tangible evidence of changing mindsets amongst Japanese corporations has been witnessed in recent years.

The most recent iteration suggests a focus on sustainability, encouraging continued corporate reforms and further engagement between investors and corporates. While the report is not legally binding, it does encourage Japanese companies to improve and highlights that value can be unlocked through investor engagement, which your Manager undertakes regularly.

Another area of encouraging news was the higher number of companies increasing the ratio of independent or external directors on their boards. Although the ratio is still lower than in other developed markets, it is now just over 40%, a stark difference to that of a decade ago when the ratio was less than 10%.

You can read more about your Manager's ESG engagement and activity in the Manager's Review.

Dividend

A final dividend of 9.0p per Ordinary share in respect of the year ended 31 March 2022 was paid to shareholders on 22 July 2022, making a total dividend for the year of 15.0p (2021 - 15.0p). The revenue return per Ordinary share over the six month period to 30 September 2022 fell to 3.19p (2021 - 3.42p) and therefore the Board has declared an interim dividend of 5.0p for the year ending 31 March 2023 (2022 - 6.0p) which will be paid to shareholders on 29 December 2022. The record date is 2 December 2022 with an ex-dividend date of 1 December 2022.

Gearing

The Board believes that the potential to gear the portfolio at the right time is one of the great advantages of the closed ended company structure, with the sensible use of modest financial gearing seeking to enhance returns to shareholders.

The Board considers a gearing level of around 10% to be appropriate although, with stock market fluctuations, this may range between 5-15%. Net gearing as at 30 September 2022 was 12.1% (31 March 2022 - 11.4%).

The Company currently has a Yen 1.3 billion fixed term facility, which expires in January 2023, and a Yen 1.0 billion floating rate facility, expiring in December 2024, both with ING Bank. The Company's gearing options are being considered carefully by the Board sufficiently in advance of the maturity of the current fixed term loan facility in January 2023.

Discount and Share Buybacks

The Board regularly monitors the discount level of the Company's shares in relation to the NAV. There is a process in place to buy back shares at appropriate levels when to do so will add value for shareholders. However, during the six-month period to 30 September 2022, the Company did not undertake any share buybacks. At the time of writing the Company's discount to NAV (including income) is 13.0%. The Board and the Manager will continue to monitor the Company's discount carefully and take appropriate action when it believes it is in the best interests of shareholders to do so.

The Company's External Auditor

The Board has been monitoring the general trend of rising audit fees across the industry and has recently completed a successful audit tender. KPMG LLP ("KPMG") were initially appointed as auditor in respect of the financial year ended 31 March 2016 for a period of ten years. Following a discussion with KPMG about future fee increases, in the best interests of shareholders the Board took the decision to undertake an early audit tender in which KPMG did not participate. KPMG therefore resigned as the Company's external audit firm on 15 November 2022. The tender process was competitive and successful with Johnston Carmichael being appointed to undertake the Company's audit for the year ending 31 March 2023. The appointment of Johnston Carmichael as auditor will be recommended by the Board to shareholders at the earliest opportunity which will be the Company's Annual General Meeting to be held in July 2023. On behalf of the Company, the Board would like to thank KPMG LLP for their professional support and diligent service throughout their appointment.

Outlook

The Board continues to be optimistic for Japan's equity market for the longer term. No country is wholly immune to geo-political tensions, and Japan itself suffered an uncharacteristic and shocking act of political violence in July with the assassination of former Prime Minister Abe, apparently by an individual with a grievance. But Japan's politics and economic policy framework remain stable.

This time last year, I highlighted that factors such as rising inflation rates could affect Japanese companies and this has unfortunately proved to be the case. However, we continue to believe that the Manager's Tokyo-based team and its bottom-up investment process which provides a portfolio of well-run businesses, with healthy balance sheets, and ample free cash flow, means that the Company is well positioned to cope with the current challenges being presented. Your locally based manager has a strong focus on companies that are able to thrive, regardless of external pressures faced, having built dominant positions in their own fields, often with global footprints.

Despite signs of slowing growth in Japan and weaker discretionary consumer spending, the long-term structural growth opportunities remain intact for the companies favoured by your Manager. These include secular growth trends arising from the rise of the digital economy, the growing move toward energy efficiency, technological advances in healthcare, and Asia's burgeoning middle class. Combined with ESG factors, which are becoming ever more important, your Manager's ESG focus, at the core of its investment process, should ensure shareholders own a portfolio that is sustainable over the long term with every opportunity for growth.

Karen BradeChairman16 November 2022

Other Matters

Principal Risks and Uncertainties

The Board has in place a robust process to identify, assess and monitor the principal risks and uncertainties facing the Company and to identify and evaluate newly emerging risks. The Company's risks are regularly assessed by the Audit Committee and managed by the Board through the adoption of a risk matrix which identifies the key risks for the Company, including emerging risks, and covers strategy, investment management, operations, shareholders, regulatory and financial obligations and third party service providers. The Board believes that the Company is well prepared to mitigate short term operational risks through the internal controls of the Manager and Depositary. Analysis and mitigation of other longer term and more strategic risks are managed by the Board.

The principal risks and uncertainties facing the Company have been identified as follows:

- Market, economic and political risk

- Investment strategy risk

- Investment management risk

- Operational risk

- Regulatory risk

- Share price and discount risk

- Leverage risk

- Pandemic risk

- ESG risks

Further details of these risks are provided on pages 16 to 17 of the 2022 Annual Report and Accounts which is available on the Company's website: abrdnjapan.co.uk. 

The Board monitors these principal risks closely and has a process to identify and assess emerging risks, such as climate change and geopolitical developments.

The increasing political and economic uncertainty that has been affecting markets, particularly in reaction to higher interest rates and the volatility associated with Russia's invasion of Ukraine received notable focus in the reporting period, as did the ongoing impact of the Covid-19 pandemic, particularly on supply chains.

The Board is aware of the elevated threat posed by climate change and continues to monitor, through the Investment Manager, the potential risk that the companies in the portfolio may fail to adapt to changes in policy and regulation.

In all other respects, the Company's principal risks and uncertainties have not changed materially since the publication of the 2022 Annual Report and Accounts, nor are they expected to change in the second half of the financial year ending 31 March 2023. 

Related Party Transactions

Any related party transactions during the period are disclosed in the Notes to the Financial Statements. There have been no related party transactions that have had a material effect on the financial position of the Company during the period.

Going Concern

In accordance with the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, the Directors have undertaken a rigorous review and consider that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. 

The Company's assets consist of equity shares in companies listed on the Tokyo Stock Exchange and in most circumstances are realisable within a short timescale. 

The Company has a fixed term loan facility of JPY 1.3 billion which expires in January 2023 and a revolving loan facility of JPY 1.0 billion expiring in December 2023. The Board has set limits for borrowing and regularly reviews the Company's gearing levels and its compliance with bank covenants. Initial discussions with banks have commenced with a view to renewing the fixed term loan facility. 

The Board has a reasonable expectation that the Company has adequate financial resources to continue its operational existence for the foreseeable future and the ability to meet all its liabilities and ongoing expenses from its assets. Given that the Company's portfolio comprises "Level One" assets (listed on a recognisable exchange and realisable within a short timescale), and the Company's relatively low level of gearing, the Directors believe that adopting a going concern basis of accounting remains appropriate.

Accordingly, the Board continues to adopt the going concern basis in preparing the financial statements. 

Directors' Responsibility Statement

The Directors are responsible for preparing the Half Yearly Financial Report in accordance with applicable laws and regulations. The Directors confirm that to the best oftheir knowledge:

- the condensed set of Financial Statements has been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting);

- the Half Yearly Financial Report includes a fair review of the information required by rule 4.2.7R of the Disclosure Guidance and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year); and

- the financial statements include a fair review of the information required by 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so).

The Half Yearly Financial Report for the six months ended 30 September 2022 comprises the Half Yearly Board Report, which consists of the Chairman's Statement, Investment Manager's Review and Other Matters (including the Directors' Responsibility Statement), and the condensed set of financial statements which has not been reviewed or audited by the Company's Auditor.

Karen Brade,Chairman16 November 2022

Investment Manager's Review

Overview

Japanese equities, represented by the Topix Index, fell over the six-month period to 30 September 2022, in what was a volatile period for equities globally. Investors worldwide have been concerned about rising inflation and the economic fallout from the actions of central banks in trying to manage the impact of this. Much of the pressure has been international, with particular concerns that interest rate increases initiated by the US Federal Reserve, against a backdrop of record high inflation and labour shortages, could lead to a US recession.

In terms of monetary tightening, Japan has generally bucked the trend. The Bank of Japan ("BoJ") held interest rates throughout the period, reiterating its intention to keep rates low until inflation is 'sustainably above' its target range of greater than 2%. Meanwhile, domestic core consumer inflation hit 3.0% in September, an eight-year high, marking the sixth month in a row that it has been above the central bank's target. However, BoJ Governor Haruhiko Kuroda suggests that Japan's inflation is mostly imported, and that the rate is expected to fall below the target range by next year. The BoJ's strategy sits in contrast with other developed economies, in a month where the major developed-market central banks all raised policy rates aggressively. The yen continued its slide against the US dollar, rising briefly above ¥150 - a 32-year low - in October and again prompting Japan's Ministry of Finance to support the currency.

For the most part, corporate results published throughout the period have shown resilience against a difficult economic backdrop. Inflation, rising materials costs and supply-chain issues are still a feature for many companies. However, better quality companies, such as those held in the Company's portfolio, have been able to present a more optimistic outlook than investors expected by maintaining margins through more aggressive price increases thanks to their pricing power. Corporate earnings for the quarter ended 30 June 2022 suggest that the economic slowdown remained shallow, even as companies remain cautious on the outlook. Component shortages were still widespread and rising input costs were a headwind. The BoJ's Tankan survey of business conditions, published just after the end of the period, showed that manufacturing sentiment had deteriorated, although the non-manufacturing index came out ahead of forecasts. Flash purchasing managers index data showed an overall expansion in manufacturing during the period under review, until it contracted in September.

Portfolio review

The Company's NAV decreased by 7.5% in sterling total return terms over the period, while the benchmark Topix index fell 5.5%. Our stock choices underperformed the broader market over the period, due to concerns that rising inflation, and subsequently, higher interest rates would lower the profitability and longer-term growth outlook for our holdings. While these concerns are certainly headwinds for many businesses, the good management teams, strong market positions and resilient balance sheets of the Company's holdings should allow them to navigate these difficult economic conditions. We continue to believe that our investment approach will outperform over a market cycle, especially in periods where company fundamentals are being rewarded. We recognise that our bottom-up approach may lead to periods of underperformance; however, our goal remains to deliver outperformance over the medium to long-term through adherence to our core investment principles.

While inflation has impacted Japan less than many other developed economies, many businesses are feeling the impact along their supply chains. However, this has presented an opportunity for companies which are able to pass on price rises to their customers. One such is Asahi Group, the brewer, which implemented its first price hike in 14 years. Medical-equipment maker Olympus and seasonings producer Ajinomoto have also been able to pass on higher input costs thanks to their pricing power. Despite the increasingly challenging economic outlook, many companies have indicated that their business outlooks are quite stable, and many have increased their levels of share buybacks, helping to underpin share prices. Overall, companies in the TOPIX index have increased buybacks by 45% over the year to date, compared with last year.

The biggest detractor from the Company's performance was ValueCommerce. The stock declined on investor concerns that the growth of the mainstay EC Solutions business is slowing. Shin-Etsu Chemical has also struggled this year, with investors fearing a slowing economy and peaking demand for polyvinyl chloride used in housing. Similarly, healthcare and semiconductor equipment maker JEOL, fell as investors have grown concerned over falling demand for its scientific instruments for semiconductor applications.

In contrast, Tokio Marine was one of the best performers, as the stock rose after the announcement of multiple share buybacks over the period. Civil engineering firm Sho-Bond also rose on investor expectations that government spending on the maintenance of Japan's ageing infrastructure would remain high. The Company also benefitted from its holding in real estate developer, Tokyu Fudosan, which rose on the back of consecutive good results and investor expectations that the company will continue to make progress on divesting its lower quality assets.

Trading activity for the portfolio during the period has involved buying stocks which offer good potential for upside in the current economic environment, such as the convenience shop chain Seven & i. Your Manager believes that the market underestimates the potential for meaningful restructuring of its domestic businesses and, also, expects the overseas convenience store business to drive long-term growth. In the large cap space, Olympus and Nomura Research Institute ("NRI") were added. Olympus is the leader in gastrointestinal endoscopes with more than 70% global market share. The company has maintained its market share through product improvements and extensive infrastructure investment in its service centres and training centres, building user loyalty and discouraging switches to competitor products. The company has implemented restructuring measures to focus on the core medical technology business and to improve overall profitability. NRI is Japan's leading system integrator. Your Manager believes that investment in technology by Japanese large corporates will remain firm, regardless of the economic outlook, and NRI has a track record of providing added value solutions. NRI's vertically integrated business model also gives it a meaningful advantage, as the company's consulting arm can funnel potential mandates to its system integration business. In addition, the company provides high-margin shared online services for financial institutions, generating stable earnings.

Positions in small cap companies Katitas and Direct Marketing Mix were also initiated in the period. Katitas is the largest domestic company selling remodelled properties. The company uses its scale to procure properties at discounts, using its expertise in procurement, remodelling and pricing to put good quality homes back to the market at affordable levels. Direct Marketing Mix provides telemarketing and consulting services to help telecom and utility companies acquire new customers in a more cost-effective manner than through their bricks-and-mortar store network. Your Manager took advantage of market volatility to initiate these stocks at attractive prices.

To fund these purchases, the portfolio's position in electronics components supplier, Murata Manufacturing, and semiconductor maker, Sanken Electric, were sold in favour of these better opportunities elsewhere. The holding in pathology laboratory operator BML, was also exited. This was a small holding which had benefitted from the rise in testing over the Covid-19 pandemic. With the impact of the pandemic waning, we saw more limited potential for upside

Environmental, social and governance ("ESG")

Human resources technology service provider Recruit Holdings continues to make strides in its governance. Since 2019, when we started engaging with the company on its board structure and other ESG issues, the company has maintained an open conversation with us about its initiatives. Most recently, the company appointed an outside director that can help in addressing legal risks for the company, an issue of growing importance as the company expands its business globally. In addition, the company continues to make efforts in reducing Scope 3 emissions to help achieve its 2030 target for carbon neutrality, after already achieving carbon neutrality in Scope 1 and 2 emissions.

We encouraged air conditioning manufacturer Daikin Industries to review the gender diversity of its board - there is one woman in a board of eleven directors - with a view that a more balanced composition is more appropriate for a company of its scale and reach. We also approached credit guarantee company Zenkoku Hosho to commend its improved disclosure on performance indicators for ESG issues, as well as taking a further step by disclosing targets for these indicators. In addition, with the company expected to announce its new medium-term plan in March, we suggested that the management team could announce a more coherent capital management policy based on a reasonable and singular capital adequacy target. Lastly, we reiterated the need for management to disclose capital budgets and timelines for growth initiatives, and also to be disciplined on capital efficiency in order to sustain its high return profile and, thus, shareholder value.

We were encouraged by news that speciality chemical and glass maker AGC will introduce a new low-carbon glass range in Europe, which is made possible by their recently upgraded furnaces. Earlier this year, the company had set a new Scope 3 target to reduce greenhouse gas emissions from activities related to assets they do not directly own. AGC's eco glass products will also help to lower energy consumption, resulting in a positive impact for the environment.

Real estate developer Tokyu Fudosan Holdings' efforts to focus more on use of its capital led to a write-down and likely sale of properties that are generating lower returns. This announcement follows its recent sale of its DIY retail chain Tokyu Hands, which was also showing low profitability. These efforts should free up resources for the company to redevelop its key properties in Shibuya, where substantial value can be unlocked.

Outlook

The impact of the economic slowdown has been increasingly visible, particularly in weakening discretionary consumption, and there are rising concerns of higher inventory levels across several industries. The BoJ again held rates at its October meeting. Food and fuel prices are the largest driver of rising prices. BoJ governor Kuroda acknowledged that Japan was making some progress, with wages likely to rise in the next year, but inflation is still likely to fall short of 2% over the longer term. The 10-year government bond yield fell after the announcement and the dovish policy continues to have an impact on exchange rates. Late in October, prime minister Kishida announced an extra economic stimulus package, valued at ¥29.1 trillion (US$199 billion). The plan is aimed at helping to support growth and lessen the impact of inflation. This will include energy subsidies for individuals and businesses, with global oil prices rising over the month. Notwithstanding, there are areas where we expect spending to remain firm, such as healthcare, the digitisation of corporates and companies that tackle the rising cost of energy.

With this backdrop, we are selectively working on opportunities, and resizing positions, to ensure that the Company's holdings are resilient in this economic environment. We remain convinced that investment in companies with strong management with experience of varied economic cycles, robust balance sheets and companies with pricing power able to pass on increasing costs will deliver healthy returns over the medium to long term.

Kwok Chern-Yeh & Hisashi Arakawa,  abrdn Japan Limited16 November 2022

Ten Largest Investments

As at 30 September 2022

Investment Portfolio

Investment Case Studies

KDDI Corporation ("KDDI")

Background

KDDI is one of Japan's largest wireless telecom operators. It was formed in 2000 through the merger of three major carriers. The company offers mobile and fixed-line communications for homes as well as content, settlement and other value-added services. It also has a 50% stake in Jupiter Telecommunications, Japan's largest cable TV operator.

Standing out above its peers

KDDI stands out among incumbent telecoms providers in the country for its balanced growth in earnings and shareholder returns.

Earnings are driven by a user base that is relatively stable. It has a good record of enhancing its average revenue per account by bundling telecoms and non-telecoms services, while lowering its customer turnover rate.

One of the company's chief brands is au, a mobile phone operator marketed by KDDI across Japan's main islands, and by Okinawa Cellular in the Okinawa prefecture.

KDDI introduced a low-cost mobile service plan following government pressure, which was the cheapest among the country's mega carriers. While new pricing plans have resulted in a higher turnover rate, the company aims to leverage its non-telecoms ecosystem (a broad range including commerce, finance, energy, entertainment and education) to retain customer loyalty. While base pricing is cheaper, the various add-on options KDDI can offer customers, such as online storage, third-party loyalty schemes and mobile payments, creates more room for monetisation.

Strong cash flow from KDDI's robust business allows it to redistribute cash into future investment, as well as returning capital to shareholders through buybacks or dividends.

Areas of engagement

The Investment Manager has been engaging with the company to encourage more careful consideration of merger and acquisition opportunities, given the mixed track record of acquisitions made in the past, and believes that the company has become more selective in this regard. Another area of engagement has been regarding corporate governance of the company's listed subsidiary Okinawa Cellular, which markets the au brand in the Okinawa Prefecture. The Investment Manager has discussed with the company whether Okinawa Cellular should have a higher dividend pay-out ratio than KDDI, if the company is not considering share buybacks. Management has taken note of this view and the Investment Manager will continue to monitor progress on this front.

It is intended that the Investment Manager will continue its engagement on topics such as network quality, which is critical to retaining customers; regulatory risks, with the potential for the government to intervene asking carriers to lower their pricing; and data security risks arising from greater connectivity, particularly concerning devices related to the Internet of Things.

Milbon

Background

Milbon is a professional-use hair-care product company, selling shampoos, treatments and hair dyes, primarily to barbers and hairdressers through salons. It is Japan's market leader, with almost 20% market share. Over time, the company's product mix has evolved from perms, to colouring, to care products. Much of its sales are undertaken by travelling salespeople, who build direct relationships with their salons. The company also has a nascent business in cosmetics products.

Standing out above its peers

Milbon has grown to be a market leader in the professional hair care industry. Much of its success can be attributed to its team on the ground, who have strong relationships with salons. This has allowed the firm to be responsive and to develop and introduce new products as trends and fashions change.

Close contact with hair salons has resulted in healthy repeat business and lasting customer relationships. It was notable that, during the Covid-19 pandemic, Milbon was largely unaffected as its premium products continued to sell well. A move towards higher value and higher margin products should provide an attractive opportunity for future growth.

The Investment Manager is watching the company's move into overseas markets, including China and Korea. Its international presence is important longer-term, providing good potential for growth. However, this does present risks, especially with tight restrictions on imports into China. The company has taken steps to open local production facilities.

Areas of engagement

The Investment Manager has been engaging with Milbon to re-evaluate chemical substances that might be regarded as hazardous by global standards, even if they are not currently restricted by local regulations. It has also been engaging with the company to improve its disclosure on chemical safety and is encouraged to see that the company has started publishing full ingredient lists on its website. Discussions will continue with the company regarding its transparency, where the Investment Manager believes there is room for improvement at a corporate level and in product-level customer disclosures.

Condensed Statement of Comprehensive Income (unaudited)

Condensed Statement of Financial Position (unaudited)

Condensed Statement of Changes in Equity (unaudited)

Condensed Statement of Cash Flows (unaudited)

Notes to the Financial Statements (unaudited)

For the six months ended 30 September 2022

Alternative Performance Measures