TIDMJPLH
RNS Number : 3511Z
Japan Leisure Hotels Ltd
21 September 2009
21 SEPTEMBER 2009
JAPAN LEISURE HOTELS LIMITED
("Japan Leisure Hotels", "JPLH" or "the Company")
Interim Report for the six months ended 30 June 2009
Japan Leisure Hotels (AIM: JPLH) announces its interim report for the six months
ended 30 June 2009. JPLH's current portfolio comprises 6 hotels with 242 rooms.
Japan's geography, culture and demographics place a premium on privacy, which
results in adult couples of all ages continuing to visit leisure hotels, even in
these challenging economic times.
SUMMARY
* Continued high levels of occupancy* in excess of 240%
* EBITDA margin before asset management fees for H1 2009 increased to 39.7% from
33.2% in H1 2008 *
* The Company continues to generate profits before taxation
* Net cash generated from operations in H1 2009 of JPJPY118.6 million (GBP0.86
million)
* Company remains in a strong financial position with a cash balance of
approximately JPJPY327 million (GBP2.1 million) as of 30 June 2009
* Adjusted NAV of 76p (JPJPY120) per share as at 30 June 2009
* Many acquisition opportunities available on attractive terms
*Excludes non Bonita branded hotel in Yokkaichi, acquired in August 2008
Alan Clifton, JPLH's Chairman, commented:
"The first six months of 2009 saw our portfolio continue to perform well despite
a challenging economic environment. This outcome supports the Board's continued
belief that the leisure hotel industry in Japan is well protected from
recessionary forces. Increased media attention on the Japanese leisure hotel
industry and our position within it has undoubtedly raised the Company's profile
and has led to increased levels of interest from a variety of sources. We
continue to explore a range of options to secure appropriate funding to buy
further hotels and remain confident of executing our long term growth strategy."
Stephen Mansfield, Asset Manager, commented:
"These results underscore the value that can be released through strong
management of leisure hotels in Japan. By building a recognised brand and
delivering a consistently strong performance, we are demonstrating to investors
that, if we had increased financial resources, we could amass and successfully
operate a business many time the size of the existing Bonita portfolio."
A full copy of the 2009 Half Year Report is available in PDF format on the
Company's website, www.japanleisurehotels.com.
Enquiries:
+------------------------------------+------------------------------------------+
| Asset Manager | +81 3 4550 1808 |
+------------------------------------+------------------------------------------+
| Steve Mansfield | |
+------------------------------------+------------------------------------------+
| | |
+------------------------------------+------------------------------------------+
| Shore Capital (NOMAD to JPLH) | 020 7408 4090 |
+------------------------------------+------------------------------------------+
| Dru Danford | |
+------------------------------------+------------------------------------------+
| Stephane Auton | |
+------------------------------------+------------------------------------------+
| | |
+------------------------------------+------------------------------------------+
| Pelham Public Relations | 020 7337 1509 or 07802 442486 |
+------------------------------------+------------------------------------------+
| Archie Berens | |
+------------------------------------+------------------------------------------+
JAPAN LEISURE HOTELS LIMITED
HALF YEAR REPORT FOR 6 MONTHS ENDED 30 JUNE 2009
CHAIRMAN'S STATEMENT
Introduction
The first six months of 2009 saw Japan Leisure Hotels ("JPLH") portfolio
continue to perform well despite a challenging economic environment. This
performance supports the Board's continued belief that the leisure hotel
industry in Japan is well protected from recessionary forces. The country's
geography, culture and demographics place a premium on privacy, which results in
adult couples of all ages continuing to visit leisure hotels, no matter what the
economic climate. As recent media coverage has demonstrated, the leisure hotel
industry in Japan, which generates sales of more than GBP30 billion per year, is
an accepted and mainstream part of Japanese life.
Financial Performance
JPLH's portfolio of hotels continued to enjoy high levels of occupancy with the
Bonita branded hotels1 maintaining strong occupancy rates of more than 240%.
Continued efficiency measures implemented by New Perspective combined with lower
energy and food costs has improved the EBITDA margin2 before asset management
fees for the Bonita portfolio in the first 6 months ended 30 June 2009 to 39.5%
compared to 33.2% in the corresponding period in 2008.
Total sales for the 6 months ended 30 June 2009 was JPJPY 590.7 million (GBP4.1
million)3, compared with JPJPY563.6 million in the corresponding period in 2008.
Excluding the hotel at Yokkaichi, which was not included in the figures for the
first half of 2008 having only been acquired in August 2008, total sales for the
Bonita portfolio were JPJPY 543.6 million. Thus, on a like for like basis, sales
at the Bonita hotels fell by 3.8% - a creditable performance, given that overall
Japanese economic activity shrank by an average of 7.6%4 during the period.
Cash arising from operations in the 6 months ended 30 June 2009 was JPJPY 118.6
million (GBP0.86 million), resulting in a cash position of JPJPY 327.0 million
(GBP2.1 million)5 as at 30 June 2009, with no material debt. This shows that the
portfolio continues to generate strong cash flows and supports the Board's
continued confidence that JPLH will be in a position to pay a dividend in
respect of the year ending 31 December 2009.
The Company's Adjusted Net Asset Value ("NAV") as at 30 June 2009 was 76p per
share, compared with 91p as at 31 December 20085. The difference is entirely due
to the movement of the exchange rate during the period - in Japanese yen the
Adjusted NAV increased slightly from JPJPY118.65 at 31 December 2008 to
JPJPY120.10.
+---+-------------------------------------------------------------------------------------+
| 1 | The Bonita portfolio refers to the five hotels that are operating under the |
| | Bonita brand located at Sendai, Yamagata, Isawa, Komaki and Matsusaka. |
+---+-------------------------------------------------------------------------------------+
| 2 | EBITDA comprises earnings before interest, tax, depreciation and amortisation and |
| | excludes the operating expenses of the Guernsey companies. EBITDA margin is |
| | EBITDA expressed as a percentage of revenue. |
+---+-------------------------------------------------------------------------------------+
| 3 | Average exchange rate of 142.68 yen per pound Sterling during the six months ended |
| | 30 June 2009. |
+---+-------------------------------------------------------------------------------------+
| 4 | Source: Trading Economics. |
+---+-------------------------------------------------------------------------------------+
| 5 | Exchange rate of 158 yen per pound Sterling at 30 June 2009, compared with 131 yen |
| | per pound Sterling at 31 December 2008. |
+---+-------------------------------------------------------------------------------------+
There is a large tax charge of JPJPY30 million which has adversely affected the
results as shown on the income statement. This has arisen as a consequence of a
difference between income calculated for Japanese tax purposes and that reported
under IFRS and the payment of Japanese withholding tax on distributions of
profit paid to the Company from the SPEs in respect of both last year and the
current financial period. Note 5 provides further details.
We view EBITDA as the best gauge to measure the performance of the portfolio.
Despite challenging trading conditions, EBITDA has increased and the portfolio
generated more cash in comparison to the corresponding period of 2008. This
amply illustrates the robustness of the leisure hotel industry compared to other
business sectors and the strength of the management team on the ground.
In contrast, there remain many leisure hotels whose owners are either
experiencing financial difficulties or in these testing times regard their
hotels as non-core, presenting an opportunity for JPLH to invest in them on very
attractive terms. Our challenge is to find a way of exploiting this unique
investment opportunity. Increased media attention on the Japanese leisure hotel
industry and JPLH's position within it has undoubtedly raised the Company's
profile and has led to increased levels of interest from a variety of sources.
We continue to explore a range of options to secure appropriate funding to buy
further hotels and remain confident of executing our long term growth strategy.
Alan Clifton
Chairman
Japan Leisure Hotels
18 September 2009
JAPAN LEISURE HOTELS LIMITED
HALF YEAR REPORT FOR 6 MONTHS ENDED 30 JUNE 2009
ASSET MANAGER'S REPORT
The Japanese Economy
Japanese GDP declined by 14.2%1 in the first quarter of 2009, its worst
performance on record. However, analysts predict that Japan is likely to be one
of the first major economies to return to positive growth and this is supported
by the most recent economic statistics from Japan that show a 0.6%1 increase in
GDP in the second quarter of 2009. Exports and industrial production have showed
positive growth and factory output has rebounded to 8.3% in the second quarter
of 2009, compared to a fall of 22.1%1 in the first quarter. Exports also rose by
6.3%1 between April and June, the first quarterly increase since January 2008.
This recovery is largely due to the government stimulus package which has helped
many factories and small businesses through the financial crisis. The stimulus
package, which is focussed on subsidies and tax breaks, has supported industry
and encouraged consumer spending, helping the recovery of world's second-largest
economy.
It is too soon to say with any confidence whether these tentative signs of
revival will take hold and turn into a sustainable recovery. On several
occasions during the 1990s Japan's economy showed signs of recovery which
transpired to be false dawns; therefore we are cautious about predicting a swift
return to sustained economic growth. However, as noted in the Chairman's
Statement, the leisure hotel industry is proving especially resilient in times
of economic downturn; Japanese consumers remain relatively affluent and less
burdened with debt than their Western counterparts. Historical figures show that
there has always been a steady demand for leisure hotels in Japan which gives us
confidence that our business model need not be dependent on broader economic
growth for its success.
1 Source: Trading Economics
Financial Results
Presented below are unaudited statements of EBITDA for the 6 months ended 30
June 2009.
+-----------+-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+
| | Bonita Branded | | Yokkaichi | | Total |
| | Hotels | | | | |
+-----------+-----------------------+----------+-----------------------+----------+-----------------------+
| | 6 months to 30 June | | 6 months to 30 | | 6 months to 30 June |
| | | | June | | |
+-----------+-----------------------+----------+-----------------------+----------+-----------------------+
| | 2009 | 2008 | | 2009 | 2008 | | 2009 | 2008 |
+-----------+-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+
| | JPJPY'000 | JPJPY'000 | | JPJPY'000 | JPJPY'000 | | JPJPY'000 | JPJPY'000 |
+-----------+-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+
| | | | | | | | | |
+-----------+-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+
| Revenue | 540,615 | 563,641 | | 50,047 | - | | 590,662 | 563,641 |
+-----------+-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+
| | | | | | | | | |
+-----------+-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+
| Variable | (272,842) | (300,484) | | (32,281) | - | | (305,122) | (300,485) |
| operating | | | | | | | | |
| expenses | | | | | | | | |
+-----------+-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+
| Fixed | (101,707) | (109,298) | | (17,071) | - | | (118,778) | (109,298) |
| operating | | | | | | | | |
| expenses | | | | | | | | |
+-----------+-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+
| | | | | | | | | |
+-----------+-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+
| EBITDA | 166,066 | 153,859 | | 695 | - | | 166,761 | 153,858 |
+-----------+-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+
The difference between the total EBITDA above and the operating profit before
exceptional item per the Consolidated Income Statement is depreciation and
amortisation of JPJPY114.9 million, operating expenses of the Guernsey companies
of JPJPY35.7 million and other expenses of JPJPY0.2 million.
The cash flow from operations of the hotels in the six months ended 30 June 2009
was JPJPY178 million which is greater than EBITDA due to a reduction in working
capital.
The following key performance indicators further illustrate the performance of
the Bonita portfolio.
+----------------+-------------+-------------+-------------+-----------+-----------+
| | 2005 | 2006 | 2007 | 2008 | H1 2009 |
+----------------+-------------+-------------+-------------+-----------+-----------+
| REVPAR2 | JPJPY10,506 | JPJPY15,350 | JPJPY16,572 | JPJPY | JPJPY |
| | | | | 16,206 | 15,401 |
+----------------+-------------+-------------+-------------+-----------+-----------+
| Occupancy rate | 160% | 239% | 254% | 257% | 243% |
+----------------+-------------+-------------+-------------+-----------+-----------+
| EBITDA Margin3 | (41.7)% | 25.8% | 32.0% | 34.5% | 39.7% |
+----------------+-------------+-------------+-------------+-----------+-----------+
| | | | | | |
+----------------+-------------+-------------+-------------+-----------+-----------+
| 2 REVPAR: Daily Revenue per available room |
+----------------------------------------------------------------------------------+
| 3 Before asset management fees |
+----------------+-------------+-------------+-------------+-----------+-----------+
Review of Operations
As the Company's Chairman makes clear, we believe that the leisure hotel
industry is relatively well protected from recessionary forces. We must,
however, recognise that our guests are individuals whose finances, like those of
consumers all around the world, are under greater stress than ever before. This
has meant that sales and visitor numbers have not been as high as they might
have been in more benign economic conditions.
The caution of consumers has manifested itself in many different ways but to
give an example, we have seen a discernable move by guests to choose lower
priced rooms rather than our high end rooms. At our hotels in the Chubu region,
there has also been a noticeable impact from the downturn in exports, in
particular the closure of factories in the area by Toyota, the area's largest
employer. However, with Toyota resuming full operations at most of its factories
in the second quarter, we have started to see an improvement in visitor numbers
at these hotels.
We have reacted to these changes in guest behaviour by being very price
conscious and seeking to deliver the best value for money, principally by
focussing on delivering high quality services. Our objective is to ensure that
the Bonita brand is associated with both quality and value. We have launched a
number of promotional offers and have also worked hard to use web-based
marketing initiatives to attract and retain guests.
Concurrently we have continued to work on maximising our margins; measures have
included more efficient procurement of food, beverages and other consumables; a
centralised inventory management system; more laundry being done in-house; and a
tighter system of working shifts, thereby reducing staff costs. We also
benefited from reduced utility costs as a result of the lower oil price.
All of this has meant that we were able to increase EBITDA from JPY154 million
to JPY167million. EBITDA margins before asset manager fees for all six
properties were 37.2%, compared to 33.2% for the 6 months ended 30 June 2008.
Planning for the Yokkaichi renovation is moving forward on plan. Bids have been
solicited for the renovation work and we are now in the process of selecting the
favoured firm and scheduling the work. As we have noted previously, the planning
and execution of this renovation is taking considerably longer than we would
expect normally, due to our desire to review all processes, costs and expenses
for all aspects of the operation and, where efficiencies can be achieved, to
incorporate these into the design. This continues to take quite a considerable
amount of time but will stand us in good stead for the future.
The Opportunity
As we noted in the 2008 Annual Report, the leisure hotel industry is highly
fragmented and many hotel owners are experiencing severe financial distress that
has been exacerbated by the economic downturn; in particular, owners are unable
to refinance long term debt as it comes due. These are the two primary drivers
of the opportunity for JPLH to grow its portfolio of hotels and become a
dominant player in a stable and established industry which produces around GBP30
billion of revenue each year. Since JPLH's listing in early 2008, New
Perspective has consistently demonstrated its ability to manage successfully and
profitably a portfolio of hotels under a single brand, generating healthy levels
of cash. The performance of the Bonita portfolio has amply demonstrated our
ability to source, renovate and manage these assets in Japan.
Significant growth will not be achieved organically, based on broader economic
recovery, but instead will rely on our ability to grow the portfolio of hotels.
We have explained previously the importance of operating under a respectable,
well regarded brand and we believe our performance to date has met this
objective; this has been aided by recent media coverage that has heightened the
overall awareness of our brand and further reinforced our position as a quality
operator in this industry. By building a recognised brand and delivering
consistently strong performance, we are demonstrating to investors that, if we
had increased financial resources, we could amass and successfully operate a
business many times the size of the existing Bonita portfolio. By accumulating a
large number of hotels which are available at low prices in the current
environment, the profits available for distribution will increase materially, by
implementing strong management systems across the portfolio and by leveraging
the economies of scale that will accrue to a larger operation.
This is the opportunity which we continue to discuss with potential investors.
There is no lack of choice for someone who wishes to acquire a number of hotels
on very attractive terms but we believe we are extremely well placed to identify
the very best hotels to acquire and operate them to their full potential. The
general economic outlook remains uncertain and this is likely to remain so. That
said the current large number of hotels for sale in the market will not continue
indefinitely. We remain firmly committed to securing the necessary funding as
soon as possible to seize this opportunity.
Outlook
We have shown that a portfolio of well managed assets can generate creditable
returns even during times of deep recession. Recent economic signs have been
more encouraging, which can only improve the prospects for the existing
portfolio. We believe that our performance in these conditions should provide
plenty of comfort for anyone considering an investment to allow us to take
advantage of the consolidation opportunity outlined above. We continue to
explore a range of financing options and look forward to reporting progress.
Stephen Mansfield Robert Marshall
Director Director
New Perspective Y.K.New Perspective Y.K.
18 September 2009 18 September 2009
Independent Review Report
to the Members of Japan Leisure Hotels Limited
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the interim financial report for the six months ended 30 June 2009
which comprises the Consolidated Income Statement, the Consolidated Balance
Sheet, the Consolidated Statement of Changes In Equity, Consolidated Cash Flow
Statement and related Condensed Notes. We have read the other information
contained in the interim financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
Directors' responsibilities
The interim financial report is the responsibility of, and has been approved by,
the Directors. As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The condensed set of
financial statements included in this interim financial report has been prepared
in accordance with International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the interim financial report based on our review.
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London Stock
Exchange for companies trading on the AIM and for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to any
other person or for any other purpose and we hereby expressly disclaim any and
all such liability.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the interim financial report
for the six months ended 30 June 2009 is not prepared, in all material respects,
in accordance with the basis of preparation as set out in note 1 and in
accordance with the AIM rules issued by the London Stock Exchange.
BDO Novus Limited
Chartered Accountants
Place du Pré, Rue du Pré, St Peter Port, Guernsey
18 September 2009
JAPAN LEISURE HOTELS LIMITED
Consolidated Income Statement (Unaudited)
For the period 1 January 2009 to 30 June 2009
+-------------------------------------------+------+----------------+--+-----------------+
| | | 01.01.2009 to | | 01.01.2008 to |
| | | 30.06.2009 | | 30.06.2008 |
+-------------------------------------------+------+----------------+--+-----------------+
| | | (Unaudited) | | (Unaudited) |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | (Restated - |
| | | | | Note 3) |
+-------------------------------------------+------+----------------+--+-----------------+
| |Note | JPJPY'000 | | JPJPY'000 |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Revenue | | 590,662 | | 563,641 |
+-------------------------------------------+------+----------------+--+-----------------+
| Total revenue | | 590,662 | | 563,641 |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Raw materials and consumables | | (55,273) | | (58,644) |
+-------------------------------------------+------+----------------+--+-----------------+
| Personnel costs | | (137,200) | | (132,184) |
+-------------------------------------------+------+----------------+--+-----------------+
| Depreciation and amortisation | | (114,868) | | (105,793) |
+-------------------------------------------+------+----------------+--+-----------------+
| Other expenses | 4 | (270,081) | | (258,174) |
+-------------------------------------------+------+----------------+--+-----------------+
| Total expenses | | (577,422) | | (554,795) |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Operating profit before exceptional item | | 13,240 | | 8,846 |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Exceptional item | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Negative goodwill | 6 | - | | 801,250 |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Profit on operations | | 13,240 | | 810,096 |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Interest income | | 217 | | 8,607 |
+-------------------------------------------+------+----------------+--+-----------------+
| Net foreign currency gain/(loss) | | 681 | | (13,451) |
+-------------------------------------------+------+----------------+--+-----------------+
| Cost of warrants | | - | | (2,364) |
+-------------------------------------------+------+----------------+--+-----------------+
| | | 898 | | (7,208) |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Profit before taxation | | 14,138 | | 802,888 |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Taxation | 5 | (30,149) | | (82) |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| (Loss)/profit for the period | | (16,011) | | 802,806 |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Attributable to: | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Equity shareholders | | (17,494) | | 801,482 |
+-------------------------------------------+------+----------------+--+-----------------+
| Minority interest | | 1,483 | | 1,324 |
+-------------------------------------------+------+----------------+--+-----------------+
| | | (16,011) | | 802,806 |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| (Loss)/earnings per share - basic (Yen) | 7 | (0.40) | | 19.81 |
+-------------------------------------------+------+----------------+--+-----------------+
| (Loss)/earnings per share - diluted (Yen) | 7 | (0.31) | | 15.15 |
+-------------------------------------------+------+----------------+--+-----------------+
| Adjusted (loss)/earnings per share - | 7 | (0.40) | | 0.01 |
| basic (Yen) | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| Adjusted (loss)/earnings per share - | 7 | (0.31) | | 0.01 |
| diluted (Yen) | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
| | | | | |
+-------------------------------------------+------+----------------+--+-----------------+
All items in the above statement are derived from continuing operations.
The accompanying condensed notes form an integral part of these consolidated
financial statements.
JAPAN LEISURE HOTELS LIMITED
Consolidated Balance Sheet (Unaudited)
At 30 June 2009
+--------------------------------------------------+------+-------------+---+------------+
| | | 30.06.2009 | | 31.12.2008 |
+--------------------------------------------------+------+-------------+---+------------+
| | | (Unaudited) | | (Audited) |
+--------------------------------------------------+------+-------------+---+------------+
| |Note | JPJPY'000 | | JPJPY'000 |
+--------------------------------------------------+------+-------------+---+------------+
| ASSETS: | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| Non-current assets | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| Intangible assets | 8 | 25,633 | | 3,872 |
+--------------------------------------------------+------+-------------+---+------------+
| Property, plant and equipment | 9 | 4,975,240 | | 5,055,240 |
+--------------------------------------------------+------+-------------+---+------------+
| Rental deposits | | 3,220 | | 3,420 |
+--------------------------------------------------+------+-------------+---+------------+
| Total non-current assets | | 5,004,093 | | 5,062,532 |
+--------------------------------------------------+------+-------------+---+------------+
| | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| Current assets | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| Inventory | 10 | 22,182 | | 18,354 |
+--------------------------------------------------+------+-------------+---+------------+
| Trade and other receivables | 11 | 14,996 | | 62,805 |
+--------------------------------------------------+------+-------------+---+------------+
| Cash and cash equivalents | 12 | 326,956 | | 263,369 |
+--------------------------------------------------+------+-------------+---+------------+
| Total current assets | | 364,134 | | 344,528 |
+--------------------------------------------------+------+-------------+---+------------+
| | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| TOTAL ASSETS | | 5,368,227 | | 5,407,060 |
+--------------------------------------------------+------+-------------+---+------------+
| | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| Current liabilities - trade and other payables | 13 | (121,751) | | (145,260) |
+--------------------------------------------------+------+-------------+---+------------+
| | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| Non-current liabilities - loans payable | 14 | (687) | | - |
+--------------------------------------------------+------+-------------+---+------------+
| | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| TOTAL LIABILITIES | | (122,438) | | (145,260) |
+--------------------------------------------------+------+-------------+---+------------+
| | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| TOTAL NET ASSETS | | 5,245,789 | | 5,261,800 |
+--------------------------------------------------+------+-------------+---+------------+
| | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| Share capital | 15 | 97,121 | | 97,121 |
+--------------------------------------------------+------+-------------+---+------------+
| Distributable reserve | | 4,365,514 | | 4,365,514 |
+--------------------------------------------------+------+-------------+---+------------+
| Retained earnings | | 754,034 | | 771,528 |
+--------------------------------------------------+------+-------------+---+------------+
| EQUITY ATTRIBUTABLE TO SHAREHOLDERS | | 5,216,669 | | 5,234,163 |
+--------------------------------------------------+------+-------------+---+------------+
| Minority interest | | 29,120 | | 27,637 |
+--------------------------------------------------+------+-------------+---+------------+
| TOTAL EQUITY | | 5,245,789 | | 5,261,800 |
+--------------------------------------------------+------+-------------+---+------------+
| | | | | |
+--------------------------------------------------+------+-------------+---+------------+
| NET ASSET VALUE PER SHARE | 16 | JPJPY | | JPJPY |
| | | 118.95 | | 119.32 |
+--------------------------------------------------+------+-------------+---+------------+
| DILUTED NET ASSET VALUE PER SHARE | 16 | JPJPY | | JPJPY |
| | | 108.44 | | 106.05 |
+--------------------------------------------------+------+-------------+---+------------+
The accompanying condensed notes form an integral part of these consolidated
financial statements.
The consolidated financial statements were approved by the Board of Directors on
the 18 September 2009 and signed on its behalf by:
Alan CliftonSarah Evans
DirectorDirector
JAPAN LEISURE HOTELS LIMITED
Consolidated Statement of Changes in Equity (Unaudited)
For the period 1 January 2009 to 30 June 2009
+-----------------+----------+-----------+---------------+-----------+--------------+-----------+-----------+
| For the period from 1 January 2009 to | | | | | |
| 30 June 2009 | | | | | |
+----------------------------------------+---------------+-----------+--------------+-----------+-----------+
| | | | | | | | |
+-----------------+----------+-----------+---------------+-----------+--------------+-----------+-----------+
| | | Share | Distributable | Retained | Total | Minority | Total |
| | | Capital | Reserve | Earnings | Shareholders | Interest | Equity |
| | | | | | Equity | | |
+-----------------+----------+-----------+---------------+-----------+--------------+-----------+-----------+
| | | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 |
+-----------------+----------+-----------+---------------+-----------+--------------+-----------+-----------+
| At 1 January | | 97,121 | 4,365,514 | 771,528 | 5,234,163 | 27,637 | 5,261,800 |
| 2009 | | | | | | | |
+-----------------+----------+-----------+---------------+-----------+--------------+-----------+-----------+
| (Loss)/profit for the | - | - | (17,494) | (17,494) | 1,483 | (16,011) |
| period | | | | | | |
+----------------------------+-----------+---------------+-----------+--------------+-----------+-----------+
| | | | | | | | |
+-----------------+----------+-----------+---------------+-----------+--------------+-----------+-----------+
| At 30 June 2009 | | 97,121 | 4,365,514 | 754,034 | 5,216,669 | 29,120 | 5,245,789 |
+-----------------+----------+-----------+---------------+-----------+--------------+-----------+-----------+
| | | | | | | | |
+-----------------+----------+-----------+---------------+-----------+--------------+-----------+-----------+
| | | | | | | | |
+-----------------+----------+-----------+---------------+-----------+--------------+-----------+-----------+
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| | | | | | | | |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| | Share | Share | Distributable | Retained | Total | Minority | Total |
| | Capital | Premium | Reserve | Earnings | Shareholders | Interest | Equity |
| | | | | | Equity | | |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| At 1 January | - | - | - | (5,027) | (5,027) | - | (5,027) |
| 2008 | | | | | | | |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| Issue of | 94,757 | 4,643,102 | - | - | 4,737,859 | - | 4,737,859 |
| Ordinary Share | | | | | | | |
| capital | | | | | | | |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| Share issue | - | (277,588) | - | - | (277,588) | - | (277,588) |
| costs | | | | | | | |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| Conversion of | - | (4,365,514) | 4,365,514 | - | - | - | - |
| share premium | | | | | | | |
| account | | | | | | | |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| Profit for the | - | - | - | 801,482 | 801,482 | 1,324 | 802,806 |
| period | | | | | | | |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| Minority | - | - | - | - | - | 23,979 | 23,979 |
| interest in | | | | | | | |
| pre-acquisition | | | | | | | |
| reserves | | | | | | | |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| Warrants issued | 2,364 | - | - | - | 2,364 | - | 2,364 |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| | | | | | | | |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
| At 30 June 2008 | 97,121 | - | 4,365,514 | 796,455 | 5,250,090 | 25,303 | 5,284,393 |
+-----------------+-----------+-------------+---------------+-----------+--------------+-----------+-----------+
The accompanying condensed notes form an integral part of these consolidated
financial statements.
JAPAN LEISURE HOTELS LIMITED
Consolidated Cash Flow Statement (Unaudited)
For the period 1 January 2009 to 30 June 2009
+----------------------------------------------+------+--------------+--+----------------+
| | | 01.01.2009 | | 01.01.2008 to |
| | | to | | 30.06.2008 |
| | | 30.06.2009 | | |
+----------------------------------------------+------+--------------+--+----------------+
| | | (Unaudited) | | (Unaudited) |
+----------------------------------------------+------+--------------+--+----------------+
| | | | | (Restated - |
| | | | | Note 3) |
+----------------------------------------------+------+--------------+--+----------------+
| |Note | JPJPY'000 | | JPJPY'000 |
| | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| Cash flows from operating activities | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| (Loss)/profit for the period | | (16,011) | | 802,806 |
+----------------------------------------------+------+--------------+--+----------------+
| Adjustments for: | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| Depreciation and amortisation | | 114,868 | | 105,793 |
+----------------------------------------------+------+--------------+--+----------------+
| Interest income | | (217) | | (8,607) |
+----------------------------------------------+------+--------------+--+----------------+
| Cost of warrants | | - | | 2,364 |
+----------------------------------------------+------+--------------+--+----------------+
| Taxation | | 30,149 | | 82 |
+----------------------------------------------+------+--------------+--+----------------+
| Decrease in deferred income | | (1,026) | | - |
+----------------------------------------------+------+--------------+--+----------------+
| Negative goodwill | 6 | - | | (801,250) |
+----------------------------------------------+------+--------------+--+----------------+
| Changes in working capital | | 22,278 | | (2,259) |
+----------------------------------------------+------+--------------+--+----------------+
| Cash inflows from operations | | 150,041 | | 98,929 |
+----------------------------------------------+------+--------------+--+----------------+
| | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| Interest received | | 217 | | 8,385 |
+----------------------------------------------+------+--------------+--+----------------+
| Tax paid | | (31,677) | | (82) |
+----------------------------------------------+------+--------------+--+----------------+
| Net cash inflows from operating activities | | 118,581 | | 107,232 |
+----------------------------------------------+------+--------------+--+----------------+
| | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| Cash flows from investing activities | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| Purchase of intangible assets | | (20,899) | | - |
+----------------------------------------------+------+--------------+--+----------------+
| Purchase of freehold land | | (10,756) | | - |
+----------------------------------------------+------+--------------+--+----------------+
| Purchase of equipment, fixtures and fittings | | (23,539) | | (22,889) |
+----------------------------------------------+------+--------------+--+----------------+
| Decrease in rental deposits | | 200 | | - |
+----------------------------------------------+------+--------------+--+----------------+
| Cash acquired on acquisition of SPEs | | - | | 91,730 |
+----------------------------------------------+------+--------------+--+----------------+
| Net cash movement from investing activities | | (54,994) | | 68,841 |
+----------------------------------------------+------+--------------+--+----------------+
| | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| Cash flows from financing activities | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| Share proceeds | | - | | 655,350 |
+----------------------------------------------+------+--------------+--+----------------+
| Share issue costs | | - | | (222,024) |
+----------------------------------------------+------+--------------+--+----------------+
| Net cash generated from financing activities | | - | | 433,326 |
+----------------------------------------------+------+--------------+--+----------------+
| | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| Net increase in cash and cash equivalents | | 63,587 | | 609,399 |
+----------------------------------------------+------+--------------+--+----------------+
| | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| Cash and cash equivalents at the beginning | | 263,369 | | - |
| of period | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| | | | | |
+----------------------------------------------+------+--------------+--+----------------+
| Cash and cash equivalents at the end of | | 326,956 | | 609,399 |
| period | | | | |
+----------------------------------------------+------+--------------+--+----------------+
The accompanying condensed notes form an integral part of these consolidated
financial statements.
JAPAN LEISURE HOTELS LIMITED
Condensed Notes to the Consolidated Financial Statements (unaudited)
For the period from 1 January 2009 to 30 June 2009
General Information
Japan Leisure Hotels Limited was incorporated in Guernsey on 17 October 2007 and
commenced operations on 7 January 2008. The Company is a closed ended investment
company and registered under the provisions of the Companies (Guernsey) Law,
2008. The address of the registered office is given in the Management and
Administration section at the beginning of this report. The Company has been
established to derive cashflow and capital gains by investing in Japanese
leisure hotels.
The Company was listed and admitted to trading on AIM, the market of that name
operated by the London Stock Exchange, on 16 January 2008 (the "Placing"). On
admission 44,100,000 shares were issued at GBP0.50 per share resulting in gross
proceeds of GBP22,050,000.
Group Structure
The Group comprises the Company, its wholly-owned subsidiaries and those special
purpose entities ("SPEs") which invest in hotels in Japan. The funds raised in
the Placing have been invested through wholly-owned subsidiary companies of the
Company, which are also Guernsey registered companies: JLH 1 Limited and JLH 2
Limited (the "Subsidiaries"). These companies are responsible for investing in
properties in the Japanese leisure hotel sector.
The hotels and other assets are owned by SPEs all of which are Japanese
corporations. The Company, through its Subsidiaries, has invested in the SPEs by
entering into Tokumei Kumiai agreements ("TK Agreements"). A TK Agreement is a
contractual relationship whereby one party, the "TK Investor", agrees to
contribute capital to the other party, the "TK Operator" or SPE, to undertake an
agreed business and receives a share of the economic benefits of investment in
that business. The TK Investor's investment is referred to herein as its "TK
Interest". Further information regarding the group structure is available on the
Company's website www.japanleisurehotels.com.
1. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial
statements are set out below. These policies have been consistently applied
throughout the current period, unless otherwise stated.
Basis of accounting
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union under the historical cost convention.
The condensed interim financial statements have been prepared in accordance with
International Accounting Standard (IAS) 34 "Interim Financial Reporting". The
condensed interim financial statements do not include all the information and
disclosures required in annual financial statements, and should be read in
conjunction with the Group's annual financial statements for the year ended 31
December 2008. The presentation of the interim financial statements is
consistent with the annual financial statements.
Intangible assets
All intangible assets are held for the purpose of running the business of the
SPEs. Intangible assets comprise of software and trademarks. The estimated
useful life of software is 3 years and amortisation is charged on a straight
line basis to operating expenses. Trademarks are deemed to have an indefinite
life and therefore are not amortised but are tested annually for impairment.
Impairment of assets
Assets, other than inventories, trade and other receivables and certain
financial assets are reviewed for impairment whenever events or changes in
circumstances indicate that their carrying value may not be recoverable.
Whenever the carrying amount of an asset exceeds its recoverable amount (being
the higher of its fair value less cost to sell and its value in use), an
impairment loss is recognised in the Consolidated Income Statement.
2. NEW STANDARDS AND INTERPRETATIONS NOT APPLIED
No new IFRS, interpretations or amendments to existing standards have been
adopted early; however it is unlikely that any such standards or interpretations
or amendments issued, when adopted, will result in changes to the recognition
and measurement accounting policies.
3. RESTATEMENT OF PRIOR PERIOD FIGURES
The negative goodwill reported in the 30 June 2008 Interim Report as an
exceptional item was JPJPY156,663,000. On completion of the 31 December 2008
Annual Report this was changed to JPJPY801,250,000. Accordingly the profit for
the period ended 30 June 2008 has been increased by JPJPY644,587,000.
The reason for the restatement was a change in the method for calculating the
reserves held by the SPEs in connection with the TK Interests; these reserves
had previously been calculated with respect to the profits and losses of the
SPEs under Japanese GAAP as required under the TK Agreements; at 31 December
2008 this was changed to reflect the profits and losses of the SPEs under IFRS.
This resulted in an increase in these reserves that in turn resulted in an
increase in the amount of negative goodwill.
Additionally in the financial statements as at 31 December 2008 recognition of
the costs of warrants issued has resulted in a reduction in profit for the
period ended 30 June 2008 of JPJPY2,364,000.
At the time of the 30 June 2008 Interim Report the functional currency of the
Company was Sterling; this was changed at 31 December 2008 to JPJPY causing the
elimination of the foreign currency translation reserve and a corresponding
increase in foreign exchange loss of JPJPY8,978,000 in the Consolidated Income
Statement for the period ended 30 June 2008.
The table below shows the effect of these restatements on the results of the
Company for the period ended 30 June 2008:
+-------------------------------------+-------------+---+----------+--+---------+--+--+-------------+--+--+
| | As per | | Effects | | As restated |
| | Interim | | of | | in this |
| | Report 2008 | | restatement | | report |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| | JPJPY'000 | | JPJPY'000 | | JPJPY'000 |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| Restated item | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| Exceptional item - negative | 156,663 | | 644,587 | | 801,250 |
| goodwill | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| Cost of warrants | - | | (2,364) | | (2,364) |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| Elimination of currency translation | - | | (8,978) | | (8,978) |
| reserve | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| | 156,663 | | 633,245 | | 798,908 |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| Profit for the period | 169,561 | | 633,245 | | 802,806 |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| Attributable to: | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| Equity shareholders | 168,237 | | 633,245 | | 801,482 |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| | | | | | |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| Earnings per share - basic (Yen) | 4.16 | | | | 19.81 |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| Earnings per share - diluted (Yen) | 3.18 | | | | 15.15 |
+-------------------------------------+-------------+---+-------------+---------------+-------------+
| | | | |
| 4. OTHER EXPENSES | 01.01.2009 | | 01.01.2008 to |
| | to | | 30.06.2008 |
| | 30.06.2009 | | |
+---------------------------------------------------------------------+------------+--+-------------------+
| | JPJPY'000 | | JPJPY'000 |
+---------------------------------------------------------------------+------------+--+-------------------+
| | | | |
+---------------------------------------------------------------------+------------+--+-------------------+
| Hotel operating costs | 135,767 | | 138,862 |
+---------------------------------------------------------------------+------------+--+-------------------+
| Asset Manager's fees | 53,003 | | 33,457 |
+---------------------------------------------------------------------+------------+--+-------------------+
| Professional services | 21,707 | | 28,460 |
+---------------------------------------------------------------------+------------+--+-------------------+
| Auditors' remuneration | 6,818 | | 6,587 |
+---------------------------------------------------------------------+------------+--+-------------------+
| Administrator's fees | 6,976 | | 8,856 |
+---------------------------------------------------------------------+------------+--+-------------------+
| Directors' fees | 7,568 | | 8,644 |
+---------------------------------------------------------------------+------------+--+-------------------+
| Other expenses | 38,242 | | 33,308 |
+---------------------------------------------------------------------+------------+--+-------------------+
| | 270,081 | | 258,174 |
+-------------------------------------+-------------+---+----------+--+---------+--+--+-------------+--+--+
5. TAXATION
Japanese taxation
There are two components of the Japanese tax charge, withholding tax and
corporation tax:
+--+-----------------+-----------------------------------+-------------+------+--------------+
| | | | 2009 | | 2008 |
+--+-----------------+-----------------------------------+-------------+------+--------------+
| | | | JPJPY'000 | | JPJPY'000 |
+--+-----------------+-----------------------------------+-------------+------+--------------+
| | Withholding tax | | 29,998 | | - |
+--+-----------------+-----------------------------------+-------------+------+--------------+
| | Corporation tax | | 151 | | 82 |
+--+-----------------+-----------------------------------+-------------+------+--------------+
| | | | 30,149 | | 82 |
+--+-----------------+-----------------------------------+-------------+------+--------------+
Withholding tax
Withholding tax is levied at 20% on distributions of profit as calculated for
Japanese tax purposes that were made during the period from the SPEs to the
Guernsey holding companies as shown below:
+-----------------------------------------------------+-------------+-------+--------------+
| | 2009 | | 2008 |
+-----------------------------------------------------+-------------+-------+--------------+
| Withholding tax at 20% on distributions made during | JPJPY'000 | | JPJPY'000 |
| the period: | | | |
+-----------------------------------------------------+-------------+-------+--------------+
| Relating to profits of prior periods | 19,809 | | - |
+-----------------------------------------------------+-------------+-------+--------------+
| Relating to the profits of the current period | 10,189 | | - |
+-----------------------------------------------------+-------------+-------+--------------+
| | | | |
+-----------------------------------------------------+-------------+-------+--------------+
| Total withholding tax | 29,998 | | - |
+-----------------------------------------------------+-------------+-------+--------------+
Corporation tax
Corporation tax is calculated at 42% of taxable profits.
The reasons for the difference between actual corporation tax charge for the
period and the standard rate of tax in Japan applied to the profits for the
period are as follows:
+-----------------------------------------------------+-------------+-------+--------------+
| | 01.01.2009 | | 01.01.2008 |
| | to | | to |
| | 30.06.2009 | | 30.06.2008 |
+-----------------------------------------------------+-------------+-------+--------------+
| | JPJPY'000 | | JPJPY'000 |
+-----------------------------------------------------+-------------+-------+--------------+
| | (Unaudited) | | (Unaudited) |
| | | | |
+-----------------------------------------------------+-------------+-------+--------------+
| Profit before taxation | 14,138 | | 802,888 |
+-----------------------------------------------------+-------------+-------+--------------+
| | | | |
+-----------------------------------------------------+-------------+-------+--------------+
| Income not subject to tax | 20,930 | | (759,859) |
+-----------------------------------------------------+-------------+-------+--------------+
| Other items deductible for tax purposes | (95,782) | | (50,231) |
+-----------------------------------------------------+-------------+-------+--------------+
| Accelerated depreciation | 27,996 | | 8,574 |
+-----------------------------------------------------+-------------+-------+--------------+
| Delayed recognition of expenses | - | | (2,970) |
+-----------------------------------------------------+-------------+-------+--------------+
| Expenses not deductible for tax purposes | 20,223 | | 2,402 |
+-----------------------------------------------------+-------------+-------+--------------+
| Net taxable income | (12,495) | | 804 |
+-----------------------------------------------------+-------------+-------+--------------+
| | | | |
+-----------------------------------------------------+-------------+-------+--------------+
| Tax losses utilised | - | | (804) |
+-----------------------------------------------------+-------------+-------+--------------+
| Tax losses carried forward | (12,495) | | - |
+-----------------------------------------------------+-------------+-------+--------------+
| | | | |
+-----------------------------------------------------+-------------+-------+--------------+
| Actual corporation tax charge being the minimum tax | 151 | | 82 |
| charge on SPEs with nil taxable income | | | |
+-----------------------------------------------------+-------------+-------+--------------+
Guernsey taxation
The Company is exempt from taxation in Guernsey under the provisions of the
Income Tax (Exempt Bodies) (Guernsey) Ordinances, 1989 to 1992, and is charged
an annual exemption fee of GBP600 (JPJPY 77,419) included in other expenses.
The Company is a Collective Investment Scheme and has applied for and been
granted exempt status under the revised company income tax regime that came into
effect in 1 January 2008.
6. EXCEPTIONAL ITEM
Negative goodwill
Negative goodwill arises when the net assets acquired in a business acquisition
exceed the price paid by the acquiring entity. Under IFRS 3, negative goodwill
should be recognised in the Consolidated Income Statement as it arises. The
negative goodwill of JPJPY801,250,000 arising on the acquisition of the TK
Interests was credited to the Consolidated Income Statement in the year ended 31
December 2008; this reflects the difference between the net asset value in the
books of the SPEs acquired and the value of the shares issued in exchange for
the TK Interests. As per note 3 this figure has been changed from that disclosed
in the Interim Report 2008.
7. EARNINGS PER SHARE
Earnings per share is based on profits after tax attributable to equity
shareholders and the number of shares in issue during the period as shown below:
+-------------------------------------------------------------+-------------+--+-------------+
| | 01.01.2009 | | 01.01.2008 |
| | to | | to |
| | 30.06.2009 | | 30.06.2008 |
+-------------------------------------------------------------+-------------+--+-------------+
| | (Unaudited) | | (Unaudited) |
+-------------------------------------------------------------+-------------+--+-------------+
| | Number of | | Number of |
| | Shares | | Shares |
+-------------------------------------------------------------+-------------+--+-------------+
| Weighted average number of shares in issue during the | 44,100,000 | | 40,465,385 |
| period | | | |
+-------------------------------------------------------------+-------------+--+-------------+
| Dilutive potential shares from warrants | 12,420,500 | | 12,420,500 |
+-------------------------------------------------------------+-------------+--+-------------+
| | 56,520,500 | | 52,885,885 |
+-------------------------------------------------------------+-------------+--+-------------+
Warrants
For every share subscribed in the placing, the Company issued 2 warrants.
Accordingly, 12.2 million warrants have been issued to subscribers. Each warrant
entitles the holder to subscribe for one new share at GBP0.45. The warrants will
be exercisable from 31 January 2009 until 31 January 2013.
A further 220,500 warrants have been issued to Shore Capital in part payment of
its fees in connection with the placing. The fair value of the issued warrants
to Shore Capital as payment for services is estimated to be JPJPY2.3 million
(GBP11,025) and was recognised as an expense of the Company at the time of the
placing.
Therefore there are 12,420,500 potential ordinary shares should the warrants be
exercised, which would bring the total number of ordinary shares to 56,520,500.
8. INTANGIBLE ASSETS
+-------------------------------------------------------------+-------------+--+------------+
| | 30.06.2009 | | 31.12.2008 |
+-------------------------------------------------------------+-------------+--+------------+
| | (Unaudited) | | (Audited) |
+-------------------------------------------------------------+-------------+--+------------+
| | JPJPY'000 | | JPJPY'000 |
+-------------------------------------------------------------+-------------+--+------------+
| Cost | | | |
+-------------------------------------------------------------+-------------+--+------------+
| At beginning of the period/year | 4,765 | | - |
+-------------------------------------------------------------+-------------+--+------------+
| Additions | 22,297 | | 4,765 |
+-------------------------------------------------------------+-------------+--+------------+
| At end of the period/year | 27,062 | | 4,765 |
+-------------------------------------------------------------+-------------+--+------------+
| | | | |
+-------------------------------------------------------------+-------------+--+------------+
| Amortisation | | | |
+-------------------------------------------------------------+-------------+--+------------+
| At beginning of the period/year | (893) | | - |
+-------------------------------------------------------------+-------------+--+------------+
| Provided for in the period/year | (536) | | (893) |
+-------------------------------------------------------------+-------------+--+------------+
| At 30 June 2009/31 December 2008 | (1,429) | | (893) |
+-------------------------------------------------------------+-------------+--+------------+
| | | | |
+-------------------------------------------------------------+-------------+--+------------+
| Net book value at 30 June 2009/31 December 2008 | 25,633 | | 3,872 |
+-------------------------------------------------------------+-------------+--+------------+
| | | | |
+-------------------------------------------------------------+-------------+--+------------+
9. PROPERTY, PLANT AND EQUIPMENT
+--------------------------------+--------------+--------------+--------------+--------------+
| | Freehold | Freehold | Equipment, | Total |
| | Land | Buildings | Fixtures and | |
| | | and | Fittings | |
| | | Structures | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 |
+--------------------------------+--------------+--------------+--------------+--------------+
| | | | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| Cost | | | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| At beginning of the period | 1,162,699 | 3,114,065 | 994,451 | 5,271,215 |
+--------------------------------+--------------+--------------+--------------+--------------+
| Additions | 10,756 | - | 23,576 | 34,332 |
+--------------------------------+--------------+--------------+--------------+--------------+
| | | | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| At end of the period | 1,173,455 | 3,114,065 | 1,018,027 | 5,305,547 |
+--------------------------------+--------------+--------------+--------------+--------------+
| | | | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| Depreciation | | | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| At beginning of the period | - | 105,651 | 110,324 | 215,975 |
+--------------------------------+--------------+--------------+--------------+--------------+
| Provided for in the period | - | 55,313 | 59,019 | 114,332 |
+--------------------------------+--------------+--------------+--------------+--------------+
| | | | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| At end of the period | - | 160,964 | 169,343 | 330,307 |
+--------------------------------+--------------+--------------+--------------+--------------+
| | | | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| Net book value | | | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| At 30 June 2009 (unaudited) | 1,173,455 | 2,953,101 | 848,684 | 4,975,240 |
| | | | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| | | | | |
+--------------------------------+--------------+--------------+--------------+--------------+
| At 31 December 2008 (audited) | 1,162,699 | 3,008,414 | 884,127 | 5,055,240 |
+--------------------------------+--------------+--------------+--------------+--------------+
As stated above, the Group's property, plant and equipment are stated at cost
and are depreciated on the straight line method over their estimated useful
lives.
In compliance with the AIM admission document an annual valuation has been
prepared by Colliers International (Hong Kong) Ltd, an independent valuer, in
accordance with RICS standards. Colliers International (Hong Kong) Ltd estimated
the value of the Group's property, plant and equipment at 31 December 2008 to be
JPJPY5,026 million.
10. INVENTORY
+--------------------------------------------------------------+-------------+--+------------+
| | 30.06.2009 | | 31.12.2008 |
+--------------------------------------------------------------+-------------+--+------------+
| | (Unaudited) | | (Audited) |
+--------------------------------------------------------------+-------------+--+------------+
| | JPJPY'000 | | JPJPY'000 |
+--------------------------------------------------------------+-------------+--+------------+
| | | | |
+--------------------------------------------------------------+-------------+--+------------+
| Goods held for re-sale | 22,182 | | 18,354 |
+--------------------------------------------------------------+-------------+--+------------+
11. TRADE AND OTHER RECEIVABLES
+---------------------------------------------------------+-------------+--+-------------+
| | 30.06.2009 | | 31.12.2008 |
+---------------------------------------------------------+-------------+--+-------------+
| | (Unaudited) | | (Audited) |
+---------------------------------------------------------+-------------+--+-------------+
| | JPJPY'000 | | JPJPY'000 |
+---------------------------------------------------------+-------------+--+-------------+
| | | | |
+---------------------------------------------------------+-------------+--+-------------+
| Trade receivables | 5,130 | | 6,083 |
+---------------------------------------------------------+-------------+--+-------------+
| Prepayments | 8,127 | | 41,426 |
+---------------------------------------------------------+-------------+--+-------------+
| Consumption tax refund | 1,122 | | 13,112 |
+---------------------------------------------------------+-------------+--+-------------+
| Other receivables | 617 | | 2,184 |
+---------------------------------------------------------+-------------+--+-------------+
| | 14,996 | | 62,805 |
+---------------------------------------------------------+-------------+--+-------------+
12. CASH AND CASH EQUIVALENTS
+---------------------------------------------------------+-------------+--+-------------+
| | 30.06.2009 | | 31.12.2008 |
+---------------------------------------------------------+-------------+--+-------------+
| | (Unaudited) | | (Audited) |
+---------------------------------------------------------+-------------+--+-------------+
| | JPJPY'000 | | JPJPY'000 |
+---------------------------------------------------------+-------------+--+-------------+
| | | | |
+---------------------------------------------------------+-------------+--+-------------+
| Cash held at hotels | 23,924 | | 32,963 |
+---------------------------------------------------------+-------------+--+-------------+
| Cash at banks | 303,032 | | 230,406 |
| | | | |
+---------------------------------------------------------+-------------+--+-------------+
| | 326,956 | | 263,369 |
+---------------------------------------------------------+-------------+--+-------------+
| | | | |
+---------------------------------------------------------+-------------+--+-------------+
13. TRADE AND OTHER PAYABLES
+---------------------------------------------------------+-------------+--+-------------+
| | 30.06.2009 | | 31.12.2008 |
+---------------------------------------------------------+-------------+--+-------------+
| | (Unaudited) | | (Audited) |
+---------------------------------------------------------+-------------+--+-------------+
| | JPJPY'000 | | JPJPY'000 |
+---------------------------------------------------------+-------------+--+-------------+
| | | | |
+---------------------------------------------------------+-------------+--+-------------+
| Trade payables | 51,126 | | 62,374 |
| | | | |
+---------------------------------------------------------+-------------+--+-------------+
| Accrued expenses | 31,674 | | 39,546 |
+---------------------------------------------------------+-------------+--+-------------+
| Accrued consumption tax | 8,701 | | 21,666 |
+---------------------------------------------------------+-------------+--+-------------+
| Deferred income | 13,211 | | 14,237 |
+---------------------------------------------------------+-------------+--+-------------+
| Accounts payable fixed assets | 4,644 | | 3,140 |
+---------------------------------------------------------+-------------+--+-------------+
| Current tax liabilities | 134 | | 1,662 |
+---------------------------------------------------------+-------------+--+-------------+
| Loans payable | 916 | | - |
+---------------------------------------------------------+-------------+--+-------------+
| Other payables | 11,345 | | 2,635 |
+---------------------------------------------------------+-------------+--+-------------+
| | 121,751 | | 145,260 |
+---------------------------------------------------------+-------------+--+-------------+
| | | | |
+---------------------------------------------------------+-------------+--+-------------+
14. NON-CURRENT LIABILITIES
The non-current liabilities arose due to the deferred payment for the purchase
of project management software for the renovation of Yokkaichi and maintenance
of all hotels. The total payment is JPJPY2.16 million of which JPJPY687,000 is
due within more than one year.
15. SHARE CAPITAL
All authorised and allotted shares are Ordinary Shares.
The authorised share capital of the Company is 160 million shares of GBP0.01
each.
The issued share capital of the Company is comprised as follows:
+-----------------------------------------+------------+-------------+------------+-----------+
| | 30.06.2009 | 31.12.2008 |
+-----------------------------------------+--------------------------+------------------------+
| | | (Unaudited) | | (Audited) |
+-----------------------------------------+------------+-------------+------------+-----------+
| | Number | JPJPY'000 | Number | JPJPY'000 |
+-----------------------------------------+------------+-------------+------------+-----------+
| Allotted, called up and fully paid | | | | |
+-----------------------------------------+------------+-------------+------------+-----------+
| Ordinary Shares of GBP0.01 each | 44,100,002 | 97,121 | 44,100,002 | 97,121 |
+-----------------------------------------+------------+-------------+------------+-----------+
16. NET ASSET VALUE PER SHARE
Net asset value per share is based on net asset values and the number of shares
in issue at the end of the period, which was 44,100,000. The diluted net assets
values are based on the total number shares if all the warrants were exercised
(note 7). There are 12,420,500 potential ordinary shares should the warrants be
exercised, which would bring the total number of ordinary shares to 56,520,500.
+------------------------------------------------------------+--------------+--+-------------+
| | 30.06.2009 | | 31.12.2008 |
+------------------------------------------------------------+--------------+--+-------------+
| | (Unaudited)) | | (Audited) |
+------------------------------------------------------------+--------------+--+-------------+
| | JPJPY'000 | | JPJPY'000 |
+------------------------------------------------------------+--------------+--+-------------+
| | | | |
+------------------------------------------------------------+--------------+--+-------------+
| Net asset value per Consolidated Balance Sheet | 5,245,789 | | 5,261,800 |
+------------------------------------------------------------+--------------+--+-------------+
| | | | |
+------------------------------------------------------------+--------------+--+-------------+
| Difference between the net book value and the independent | | | |
+------------------------------------------------------------+--------------+--+-------------+
| valuation carried out at 31 December 2008 of plant, | 50,760 | | (29,240) |
| property and equipment as shown in note 9. | | | |
+------------------------------------------------------------+--------------+--+-------------+
| | | | |
+------------------------------------------------------------+--------------+--+-------------+
| | | | |
+------------------------------------------------------------+--------------+--+-------------+
| | | | |
+------------------------------------------------------------+--------------+--+-------------+
| Adjusted net asset value, incorporating the valuation of | 5,296,549 | | 5,232,560 |
| plant, property and equipment | | | |
+------------------------------------------------------------+--------------+--+-------------+
| | | | |
+------------------------------------------------------------+--------------+--+-------------+
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
| | Basic NAV | | Diluted NAV |
+------------------------------------+------------------------------+----+------------------------------+
| | 30.06.2009 | | 31.12.2008 | | 30.06.2009 | | 31.12.2008 |
| | | | | | | | |
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
| | | | | | | | |
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
| Net asset value per share - Yen | JPJPY118.95 | | JPJPY119.32 | | JPJPY108.44 | | JPJPY106.05 |
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
| | | | | | | | |
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
| Net asset value per share - | GBP0.75 | | GBP0.91 | | GBP0.69 | | GBP0.81 |
| Sterling | | | | | | | |
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
| | | | | | | | |
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
| Adjusted net asset value per share | JPJPY120.10 | | JPJPY118.65 | | JPJPY109.33 | | JPJPY105.53 |
| - Yen | | | | | | | |
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
| | | | | | | | |
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
| Adjusted net asset value per share | GBP0.76 | | GBP0.91 | | GBP0.69 | | GBP0.81 |
| - Sterling | | | | | | | |
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
| | | | | | | | |
+------------------------------------+-------------+--+-------------+----+-------------+--+-------------+
17. COMMITMENTS UNDER OPERATING LEASES
Although the SPEs hold freehold title to most of the properties, there are some
parcels of land used for car parking that are rented. The total future minimum
lease payments are due as follows:
+----------------------------------------------------------+--------------+--+-------------+
| | 30.06.2009 | | 31.12.2008 |
+----------------------------------------------------------+--------------+--+-------------+
| | (Unaudited) | | (Audited) |
+----------------------------------------------------------+--------------+--+-------------+
| | JPJPY'000 | | JPJPY'000 |
+----------------------------------------------------------+--------------+--+-------------+
| | | | |
+----------------------------------------------------------+--------------+--+-------------+
| Not later than one year | 5,112 | | 6,237 |
+----------------------------------------------------------+--------------+--+-------------+
| Later than one year and not later than five years | 18,480 | | 24,949 |
+----------------------------------------------------------+--------------+--+-------------+
| Later than five years | 58,225 | | 31,186 |
+----------------------------------------------------------+--------------+--+-------------+
18. RELATED PARTIES & MATERIAL CONTRACTS
Mark Huntley, a Director of the Company, is also a director of the Company's
administrator, Heritage International Fund Managers Limited. During the period
Mr. Huntley earned JPJPY1,126,671 (2008: JPJPY1,536,909) by way of a Director's
fee, of which JPJPY591,950 (2008: JPJPY794,323) was outstanding at the period
end. Heritage International Fund Managers Limited earned JPJPY6,976,020 (2008:
JPJPY7,431,774) in administration fees in the period of which JPJPY2,959,747
(2008: JPJPY3,971,616) was outstanding at the period end.
New Perspective, the Group's Asset Manager, earned JPJPY53,112,357 by way of
asset management fees and JPJPY5,568,202 for accounting and other services
during the period. Of these fees there was JPJPY578,407 outstanding at the
period end, together with a further JPJPY2,103,524 of expenses to be reimbursed
by the Company.
During the period, the Group entered into a contract to purchase the Bonita
trademark from Bonita Services Limited for JPJPY15,000,000.
19. POST BALANCE SHEET EVENTS
There have been no significant events subsequent to the balance sheet date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GUUCCBUPBGQR
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