TIDMPJF
RNS Number : 7974R
Prospect Japan Fund Ld
27 August 2010
THE PROSPECT JAPAN FUND LIMITED
INTERIM RESULTS ANNOUNCEMENT
The financial information set out in this announcement does not constitute the
Company's statutory financial statements for the period ended 30 June 2010. All
figures are based on the 30 June 2010 unaudited financial statements, approved
by the Board of Directors on 27 August 2010.
The Company's statutory financial statements will shortly be available for
inspection at the UK Listing Authority's Document Viewing Facility, which is
located at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
CHAIRMAN'S REPORT
for the period from 1 January, 2010 to 30 June, 2010
The year began against a backdrop of continued uncertainty globally following
the economic downturn. Ongoing concerns over the global financial system,
particularly in the West, were offset by relative strength in the Emerging
Markets and China. Japan experienced relatively positive economic progress with
activity continuing to pick up over the period, but with the Yen strengthening
and reaching the highest point for some years.
Stock market valuations continue to be attractive and offer good value with many
companies performing relatively well and offering interesting yields. The
portfolio still has a strong real estate content, although this was reduced over
the period. Signs of a lot more interest in property companies in Japan are
encouraging, in fact, in value terms, during the last six months transactions
were double those in the preceding twelve month period.
The Net Asset Value ("NAV") per share of The Prospect Japan Fund Limited (the
"Company") rose from US$0.76 per share at the beginning of the period to US$0.81
per share at 30 June 2010, an increase of 6.58% for the period. The Topix Small
Index rose by 3.71% over the same period.
Uncertainties remain within the global environment, but the valuations remain
attractive in Japan and we believe that your Investment Advisor will continue to
add value and seek opportunities to further enhance the portfolio returns.
John Hawkins
Chairman
27 August, 2010
INTERIM MANAGEMENT REPORT
for the period from 1 January, 2010 to 30 June, 2010
Market Performance (%), US$ NAV
YTD 2010
1 Year 3 Year
5 Year
30.06.10
PROSPECT JAPAN FUND 6.58%15.71%
(65.09)%(53.18)%
Topix Small 3.71%
1.90% (19.52)% (3.13)%
Prospect Japan Fund inception date was 20 December, 1994. Topix Small is
capitalization-weighted index designed to measure the stocks not included in the
Topix 500 Index that are listed on the First Section of the Tokyo Stock
Exchange. As of August 2003, the benchmark of the Prospect Japan Fund changed
from TSE2 to Topix Small since its characteristics with respect to average
market capitalization more closely resemble the investment strategy pursued by
the portfolio. Above performance of the Fund is net of fees and expenses and
includes reinvestment of dividends and capital gains. Source: Prospect Asset
Management, Inc. Topix Small Index performance includes the reinvestment of
dividends. Source: Bloomberg.
Review:
The Company's performance was up 6.58% for the first half of the year, while the
Topix Small Index increased by 3.71%. The best performing sectors were J-REITs,
real estate and corporate bonds held in diversified financials. Sectors showing
weakness were advertising and internet.
The Japanese Yen continues to appreciate closing at 88.66 Yen per US Dollar at
the end of June. The Yen appreciated 3.9% from January to June 2010. There was
evidence of the Yen's weakness after the most recent election of Prime Minister
Naoto Kan. Political instability continues as Kan's Democratic Party of Japan
lost their majority in upper house elections in July. The Democratic Party of
Japan promised stimulus measures, without answering fears of how to pay for the
massive overhaul. This year, the government expects to borrow about as much as
it raises from taxes, but continued uncertainty is limiting risk appetite.
On April 30th, the Bank of Japan signalled that it accepts that more monetary
support will be required to continue the economic recovery saying it 'was
necessary for the Bank to make new efforts to contribute to strengthening the
foundations for economic growth.' The Bank raised its GDP growth forecast for
the current fiscal year from 1.3% to 1.8%.
We are focused on stock picking and are encouraged by the most recent corporate
forecasts, particularly for the Fund's holdings with sales growth of 4.0% and
recurring profit growth of 64.8% (simple average of top ten equity holdings in
funds) versus full year company forecasts which calls for sales growth of 5.8%
and recurring profit growth of 27.4%. (2,421 companies)
Oenon Holdings (2533) is a producer of rice wine, liquor and seasoning. The
alcohol beverage industry is seeing a decline in total sales by volume due to
lifestyle and changes in demographics. Oenon Holdings makes a niche market
providing private label sales of rice wine to large retail conglomerates - an
area that the big four brewers do not focus on. Oenon is slowly taking market
share from the four large domestic breweries. Oenon will have to provide
mark-to-market accounting on real estate holdings in December 2010. The
company's market capitalization is 12.3 billion Yen, while the unrealized gain
on their Ginza headquarters building alone is 10.9 billion Yen trading on an
Enterprise Value/Earnings before Interest, Tax, Depreciation and Amortisation
(EV/EBITDA) valuation of 4.9 (fiscal year December 2011).
The convertible bond in Fintech Global Euro Yen CB was purchased for 75% of face
value with a yield to maturity of 17% (February 2012). Given the current net
worth of Fintech the advisor believes that Fintech should be able to repay the
convertible debt in full.
Yasuragi (8919) is the largest buyer and seller of second-hand detached houses
in Japan. The bulk of properties are purchased at auction, refurbished and sold
via sales branches nationwide. Yasuragi sold 3,051 homes in fiscal year January
2010 compared to 2,862 in the prior year. Their sales goal for fiscal year
January 2011 calls for no growth in units sold and a decline in the average
sales price. Input prices are also declining, making it possible for Yasuragi
to achieve gross profit margins of 25%. The inventory turnover ratio has
improved to three times per year, up from 1.2 times in January 2007 and is on a
Price Earnings Ratio (PER) of 14.8 for fiscal year January 2011.
Shibusawa Warehouse (9304) is a warehouse company with large landholdings in
central Tokyo. Shibusawa generates a majority of profits from the real estate
rental division of office properties. Management is encouraged that the gains
made in the second half of fiscal year March 2010 are continuing this year,
noting that sales and profits were above target in March, April and May due to a
pickup in exports - specifically automobile related parts to China. The only
growth factored in will come from full year contributions from redevelopment
projects (warehouse - Kobe Port Island warehouse facility; office - Kakigara-cho
office building). Unrealized gains on the real estate portfolio were disclosed
at 38.5 billion Yen (market value of 59.8 billion Yen minus book value 21.3
billion Yen). Three different appraisal companies performed the analysis. The
market capitalization of Shibusawa Warehouse is 23 billion Yen. Shibusawa is
trading on an EV/EBITDA multiple of 12.5 (fiscal year May 2011).
Growell Holdings (3141) is a drug store chain located in the greater Tokyo area,
expanding nationwide via organic growth, mergers and acquisitions. New store
openings will fall short of projections for fiscal year August 2010, however a
rebound in fourth quarter same store sales will help achieve profit targets.
Sales will be 2 billion Yen below target, profits on target. The summer heat is
helping Growell attract customers; sales of cold medication, sun block and
cosmetics are doing well. Same store sales for the fourth quarter are trending
in the +6% range, higher than full year company forecasts of +1.6%. The stage
is being set for a recovery in the drug store sector; high summer heat usually
calls for a high level of pollen the next year signaling bad news for hay fever
sufferers and good for drug stores. The stock is trading on a PER of 7.8 for
fiscal year August 2011, the lowest of the top ten drug store chains (median PER
of 10.5). A Price to Growth ratio of 0.6 makes this a compelling stock that
remains sparsely covered by the sales side.
Tri-stage (2178) provides marketing and consulting services for direct market
advertising. The company is the dominant player in the industry with positive
monthly sales (May +8.9%, June +7.9%, July +13.2%). The company is debt free
and trades on a forecast PER of 6.3 for fiscal year February 2011.
J-REIT Highlights:
The first half of 2010 was positive for the J-REIT sector (+2.0%, vs Nikkei 225
-11.0%). J-REIT consolidation began in earnest, with four mergers completed,
three new merger announcements and two sponsor changes in the sector.
Refinancing concerns that weighed down the market for most of the previous 18
months have abated with many J-REITs returning to the equity and bond markets.
Ten new equity issuances and eleven bond issuances contributed to J-REIT ability
to complete 394 billion Yen in property acquisitions during the first half of
the year.
Ongoing Consolidation
Consolidation was the theme of the first half of 2010, being host to the first
completed J-REIT merger, with TGR Investment and LCP Investment relisting as
Invincible Investment on 1 February. This was followed by three additional
completed mergers: Japan Retail Fund (8953) absorbing LaSalle REIT, Advance
Residence (3269) absorbing Nippon Residential, B-Life Investment (8984)
absorbing the failed New City Residence.
Three additional JREIT mergers, with residential REITs Japan Rental Housing
(8986) and Prospect REIT (8969) announcing its intention to merge on 1 July,
2010 with JRH being the surviving entity. United Urban Investment (8960)
announced intention to merge with Nippon Commercial Investment (3229) on 1
December, 2010. Finally, Crescendo Investment (8966) announced it will merge
with Japan Single-Residence (8970) on 1 October, 2010.
In addition, there were two sponsor changes during the half. Joint REIT (8973)
announced that major developer Sekisui House (1928) as its new sponsor in
February, after an extended selection process. The J-REIT subsequently changed
its name to Sekisui House SI Investment. Premier Investment (8956) announced in
April that NTT Urban Development would take full sponsorship.
Equity Financing
Ten J-REITs announced equity issuances during the quarter, raising 143.1 billion
Yen in fresh capital. The proceeds were to be used for new property acquisitions
and debt repayments.
Debt Markets Thawing
As credit concerns receded the J-REIT sector saw the rousing return of corporate
bond issuances. Eleven J-REITs announced the issuance of 90.5 billion Yen in new
corporate bonds during the half. These were the first public issuances since
March 2008. The proceeds from these issuances were used for the paying down
short-term debt and asset acquisition.
J-REIT property transactions
J-REIT property transactions heated up during the half as management shifted
gears towards AUM growth. There were acquisitions totalling 394 billion
Yen during the half, not including property acquired through J-REIT mergers.
Summary
We expect continued uncertainty in the overall market environment. However,
through careful stock selection focused on deeply undervalued growth, cash flow
and dividend yield, the current environment is ideal for continued
outperformance through stock picking.
Prospect Asset management, Inc
27 August, 2010
PORTFOLIO OF INVESTMENTS
as at 30 June, 2010
+--------------+----------+---------------------+-----+-------------+----+------------+
| Number | | | | Fair | | Percentage |
| of | | | | Value | | of |
+--------------+----------+---------------------+-----+-------------+----+------------+
| Securities | | Investments | | in | | Net |
| | | | | U.S. | | Asset |
| | | | | Dollars | | Value |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Listed investments | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Advertising | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 186,500 | | Tri-stage Inc | | 4,167,351 | | 5.12 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 4,167,351 | | 5.12 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Beverages | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 3,937,000 | | Oenon Holdings Inc | | 7,949,050 | | 9.77 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 7,949,050 | | 9.77 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Health Care | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 1,410 | | Message Co | | 3,048,863 | | 3.75 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 3,048,863 | | 3.75 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Internet | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 2,213 | | Next Co Ltd | | 1,627,518 | | 2.00 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 1,627,518 | | 2.00 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Investment | | | | |
| | | companies | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 5,896,000 | | Gro-Bels Co Ltd+ | | 1,729,130 | | 2.12 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 1,729,130 | | 2.12 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Real Estate | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 1,952 | | Logicom Inc | | 961,083 | | 1.18 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 3,935 | | Urbanet Corp | | 1,145,147 | | 1.41 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 1,610,700 | | Yasuragi Co++ | | 6,358,863 | | 7.81 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 8,465,093 | | 10.40 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | REITs | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 1,328 | | FC Residential | | 3,729,874 | | 4.58 |
| | | Investment REIT | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 5,562 | | Japan | | 7,290,107 | | 8.96 |
| | | Single-Residence | | | | |
| | | REIT Inc | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 7,898,895 | | Prospect Epicure | | 54,687 | | 0.07 |
| | | J-REIT Value Fund* | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 7,502 | | Prospect REIT | | 7,116,555 | | 8.74 |
| | | Investment | | | | |
| | | Corporation** | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 18,191,223 | | 22.35 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Retail | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 59,300 | | Askul Corp | | 1,005,334 | | 1.24 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 240,600 | | Growell Holdings | | 4,847,009 | | 5.95 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 329,000 | | Sekichu Co Ltd | | 1,476,984 | | 1.81 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 479,000 | | Shaklee Global | | 3,133,721 | | 3.85 |
| | | Group Inc | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 1,719 | | Toridoll Corp | | 3,082,973 | | 3.79 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 13,546,021 | | 16.64 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Storage/warehousing | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 1,794,000 | | Shibusawa Warehouse | | 6,070,723 | | 7.46 |
| | | Co | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 6,070,723 | | 7.46 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Total listed | | 64,794,972 | | 79.61 |
| | | investments | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Unlisted | | | | |
| | | investments | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Convertible bonds | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 940,000,000 | | Azel Corp 4% | | 106,029 | | 0.13 |
| | | 01/12/2012 | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 900,000,000 | | FinTech Global 0% | | 7,613,784 | | 9.35 |
| | | 02/08/2012 | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 7,719,813 | | 9.48 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Corporate bond | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| 196,000,000 | | Takefuji Corp 10% | | 1,746,546 | | 2.15 |
| | | 14/04/2011 | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | 1,746,546 | | 2.15 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Total unlisted | | 9,466,359 | | 11.63 |
| | | investments | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Total investments | | 74,261,331 | | 91.24 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | Net current assets | | 7,126,018 | | 8.76 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | NET ASSETS | | 81,387,349 | | 100.00 |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
| | | | | | | |
+--------------+----------+---------------------+-----+-------------+----+------------+
+ Mr. Curtis Freeze, Director of Prospect Asset Management (Channel Islands)
Limited, the Manager of The Prospect Japan Fund Limited is Chairman of Gro-Bels
Co Ltd.
++Mr. Curtis Freeze, Director of Prospect Asset Management (Channel Islands)
Limited, the Manager of The Prospect Japan Fund Limited is a Director of
Yasuragi Co.
* Prospect Epicure JREIT Value Fund is classed as a related party as the fund
shares the same Investment Advisor as the Company.
** Prospect REIT Investment Corporation is classed as a related party as the
fund and the Company's Investment Advisors are wholly owned subsidiaries of
Prospect Company Limited, the parent company.
RESPONSIBILITY STATEMENT
for the period from 1 January, 2010 to 30 June, 2010
We confirm that to the best of our knowledge:
(a) the Interim Condensed set of Financial Statements have been
prepared in accordance with IAS 34 - Interim Financial Reporting;
(b) the Chairman's Report, Interim Management Report and Notes to the
Condensed Financial Statements include:
· a fair review of the information required by DTR 4.2.7R (indication of
important events during the first six months and description of principal risks
and uncertainties for the remaining six months of the year); and
· a fair review of the information required by DTR 4.2.8R (disclosure of
related parties' transactions and changes therein).
By order of the Board,
John Hawkins
Richard Battey
27 August, 2010
INDEPENDENT INTERIM REVIEW REPORT TO THE PROSPECT JAPAN FUND LIMITED
Introduction
We have been engaged by the Company to review the Condensed set of Financial
Statements in the half-yearly Financial Report for the six months ended 30 June,
2010 which comprises the Statement of Comprehensive Income, the Statement of
Changes in Equity, the Statement of Financial Position, the Statement of Cash
Flows and the related notes. We have read the other information contained in the
half-yearly Financial Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the Condensed
set of Financial Statements.
This report is made solely to the Company in accordance with guidance contained
in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed
by the Independent Auditor of the Entity" issued by the Auditing Practices
Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our work, for this report,
or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly Financial Report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the half-yearly
Financial Report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, the Annual Financial Statements of the Company are
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. The Condensed set of Financial Statements
included in this half-yearly 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 half-yearly Financial Report based on our
review.
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 half-yearly Financial
Report for the six months ended 30 June, 2010 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
Ernst & Young LLP
27 August, 2010
STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
for the period from 1 January, 2010 to 30 June, 2010
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | Revenue | | Capital | | Total | | Revenue | | Capital | | Total |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | 01.01.2010 | | 01.01.2010 | | 01.01.2010 | | 01.01.2009 | | 01.01.2009 | | 01.01.2009 |
| | | to | | to | | to | | to | | to | | to |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | 30.06.2010 | | 30.06.2010 | | 30.06.2010 | | 30.06.2009 | | 30.06.2009 | | 30.06.2009 |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| Notes | In | | In | | In | | In | | In | | In |
| | U.S. | | U.S. | | U.S. | | U.S. | | U.S. | | U.S. |
| | Dollars | | Dollars | | Dollars | | Dollars | | Dollars | | Dollars |
+----------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Investment income | 957,708 | | - | | 957,708 | | 1,078,460 | | - | | 1,078,460 |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Interest income | 1,071,421 | | - | | 1,071,421 | | - | | - | | - |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Foreign exchange | 567,145 | | 93,830 | | 660,975 | | 23,909 | | (22,975) | | 934 |
| | movements | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Gain on financial | | | | | | | | | | | |
| | assets | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | at fair value | - | | 3,658,195 | | 3,658,195 | | - | | 13,503,613 | | 13,503,613 |
| | through profit or | | | | | | | | | | | |
| | loss | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Total income | 2,596,274 | | 3,752,025 | | 6,348,299 | | 1,102,369 | | 13,480,638 | | 14,583,007 |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
|4 | Management fee | (580,819) | | - | | (580,819) | | (396,227) | | - | | (396,227) |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
|5 | Other expenses | (297,585) | | - | | (297,585) | | (264,695) | | - | | (264,695) |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Transaction costs | - | | (173,361) | | (173,361) | | - | | (25,794) | | (25,794) |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Total expenses | (878,404) | | (173,361) | | (1,051,765) | | (660,922) | | (25,794) | | (686,716) |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Gain for the | 1,717,870 | | 3,578,664 | | 5,296,534 | | 441,447 | | 13,454,844 | | 13,896,291 |
| | period before tax | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
|3 | Withholding tax | (67,043) | | - | | (67,043) | | (74,543) | | - | | (74,543) |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Gain for the | 1,650,827 | | 3,578,664 | | 5,229,491 | | 366,904 | | 13,454,844 | | 13,821,748 |
| | period after tax | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Total | | | | | | | | | | | |
| | comprehensive | | | | | | | | | | | |
| | income | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | for the period | 1,650,827 | | 3,578,664 | | 5,229,491 | | 366,904 | | 13,454,844 | | 13,821,748 |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
|2 | Gain per Ordinary | | | | | | | | | | | |
| | Share - | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | Basic & Diluted | | | | | 0.052 | | | | | | 0.137 |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | |
+--+-------------------+------------+----------+------------+----------+-------------+----------+------------+----------+-------------+----------+-------------+
The 'Total' column of this statement represents the Company's Statement of
Comprehensive Income, prepared in accordance with IFRS. The supplementary
'Revenue' and 'Capital' columns are both prepared under guidance published by
the Association of Investment Companies.
All items in the above statement derive from continuing operations.
STATEMENT OF CHANGES IN EQUITY (Unaudited)
for the period from 1 January, 2010 to 30 June, 2010
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | Capital | | | | | | Capital | | Capital | | Capital | | |
| | | | | | | | | | | | | | | Reserve/ | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | Share | | Redemption | | Redemption | | Revenue | | Reserve/ | | Reserve/ | | Exchange | | |
| | | Capital | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | Account | | Reserve | | Reserve | | Reserve | | Realised | | Unrealised | | Differences | | Total |
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | In | | In | | In | | In | | In | | In | | In |
| | | In | | U.S. | | U.S. | | U.S. | | U.S. | | U.S. | | U.S. | | U.S. |
| | | U.S. | | Dollars | | Dollars | | Dollars | | Dollars | | Dollars | | Dollars | | Dollars |
| | | Dollars | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| Balances at | 100,030 | | 315,479 | | 92,299,301 | | (11,213,972) | | 42,638,373 | | (50,287,542) | | 2,306,189 | | 76,157,858 |
| 1 January, | | | | | | | | | | | | | | | |
| 2010 | | | | | | | | | | | | | | | |
+-------------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| Total | | | | | | | | | | | | | | |
| comprehensive | | | | | | | | | | | | | | |
| income/(expense) | | | | | | | | | | | | | | |
+------------------------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| for the | | | | | | | | | | | | | | | |
| period | | | | | | | | | | | | | | | |
+-------------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| Gain/(loss) | - | | - | | - | | 1,650,827 | | (6,971,326) | | 10,456,160 | | 93,830 | | 5,229,491 |
| for the | | | | | | | | | | | | | | | |
| period | | | | | | | | | | | | | | | |
| after tax | | | | | | | | | | | | | | | |
+-------------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| Balances at | 100,030 | | 315,479 | | 92,299,301 | | (9,563,145) | | 35,667,047 | | (39,831,382) | | 2,400,019 | | 81,387,349 |
| 30 June, | | | | | | | | | | | | | | | |
| 2010 | | | | | | | | | | | | | | | |
+-------------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| for the period | | | | | | | | | | | | | | |
| from 1 January, | | | | | | | | | | | | | | |
| 2009 to 30 June, | | | | | | | | | | | | | | |
| 2009 | | | | | | | | | | | | | | |
+------------------------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | Capital | | | | | | Capital | | Capital | | Capital | | |
| | | | | | | | | | | | | | | Reserve/ | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | Share | | Redemption | | Redemption | | Revenue | | Reserve/ | | Reserve/ | | Exchange | | |
| | | Capital | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | Account | | Reserve | | Reserve | | Reserve | | Realised | | Unrealised | | Differences | | Total |
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | In | | In | | In | | In | | In | | In | | In |
| | | In | | U.S. | | U.S. | | U.S. | | U.S. | | U.S. | | U.S. | | U.S. |
| | | U.S. | | Dollars | | Dollars | | Dollars | | Dollars | | Dollars | | Dollars | | Dollars |
| | | Dollars | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| Balances at | 100,615 | | 314,894 | | 92,616,639 | | (12,138,471) | | 61,155,877 | | (86,645,000) | | 1,075,388 | | 56,479,942 |
| 1 January, | | | | | | | | | | | | | | | |
| 2009 | | | | | | | | | | | | | | | |
+-------------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| Total | | | | | | | | | | | | | | |
| comprehensive | | | | | | | | | | | | | | |
| income/(expense) | | | | | | | | | | | | | | |
+------------------------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| for the | | | | | | | | | | | | | | | |
| period | | | | | | | | | | | | | | | |
+-------------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| Gain/(loss) | - | | - | | - | | 366,904 | | (13,948,591) | | 27,426,410 | | (22,975) | | 13,821,748 |
| for the | | | | | | | | | | | | | | | |
| period | | | | | | | | | | | | | | | |
| after tax | | | | | | | | | | | | | | | |
+-------------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| Balances at | 100,615 | | 314,894 | | 92,616,639 | | (11,771,567) | | 47,207,286 | | (59,218,590) | | 1,052,413 | | 70,301,690 |
| 30 June, | | | | | | | | | | | | | | | |
| 2009 | | | | | | | | | | | | | | | |
+-------------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
| | | | | | | | | | | | | | | | | |
+----+--------+----------+----------+------------+----------+-------------+----------+--------------+----------+--------------+----------+--------------+----------+-------------+----------+-------------+
STATEMENT OF FINANCIAL POSITION
as at 30 June, 2010
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | 30.06.2010 | | 31.12.2009 | | 30.06.2009 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
|Notes | | | In | | In | | In |
| | | | U.S. | | U.S. | | U.S. |
| | | | Dollars | | Dollars | | Dollars |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | (Unaudited) | | (Audited) | | (Unaudited) |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Non-current assets | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| 6 | Financial assets at fair | | 74,261,331 | | 61,297,442 | | 62,107,898 |
| | value through profit or | | | | | | |
| | loss | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Current assets | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Due from brokers | | - | | 1,446,389 | | 2,438,184 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Dividends and interest | | 272,746 | | 623,431 | | 496,826 |
| | receivable | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Other receivables | | 40,231 | | 39,931 | | 56,221 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Cash and cash equivalents | | 7,348,538 | | 13,259,156 | | 5,480,459 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Total current assets | | 7,661,515 | | 15,368,907 | | 8,471,690 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Current liabilities | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Due to brokers | | 313,348 | | 286,985 | | - |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Other creditors | | 222,149 | | 221,506 | | 277,898 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Net current assets | | 7,126,018 | | 14,860,416 | | 8,193,792 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Net assets | | 81,387,349 | | 76,157,858 | | 70,301,690 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Equity | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| 7 | Share capital account | | 100,030 | | 100,030 | | 100,615 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| 7 | Redemption reserve | | 92,299,301 | | 92,299,301 | | 92,616,639 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| 7 | Capital redemption reserve | | 315,479 | | 315,479 | | 314,894 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Other reserves | | (11,327,461) | | (16,556,952) | | (22,730,458) |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Total equity | | 81,387,349 | | 76,157,858 | | 70,301,690 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | Ordinary Shares in issue | | 100,030,520 | | 100,030,520 | | 100,615,520 |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | |
+-------+-----------------------------+----------+--------------+----------+--------------+----------+--------------+
The Financial Statements were approved by the Board of Directors on 27 August,
2010 and signed on its behalf by:
John Hawkins
Richard Battey
STATEMENT OF CASH FLOWS (Unaudited)
for the period from 1 January, 2010 to 30 June, 2010
+----+---------------------------------+----------+--------------+--+-------------+
| | | | 01.01.2010 | | 01.01.2009 |
| | | | to | | to |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | 30.06.2010 | | 30.06.2009 |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | In U.S. | | In U.S. |
| | | | Dollars | | Dollars |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Cash flows from operating | | | | |
| | activities | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Net cash inflow from operating | | 544,888 | | 1,304,096 |
| | activities | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Cash flows from investing | | | | |
| | activities | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Purchase of investments | | (48,119,490) | | (6,546,439) |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Sale of investments | | 41,083,824 | | 10,474,428 |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Net cash (outflow)/inflow from | | (7,035,666) | | 3,927,989 |
| | investing activities | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Net cash (outflow)/ inflow | | (6,490,778) | | 5,232,085 |
| | before financing activities | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Reconciliation of net cash flow | | | | |
| | to | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | movement in net funds | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Net cash (outflow)/inflow | | (6,490,778) | | 5,232,085 |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Effects of foreign exchange | | 580,160 | | 80,299 |
| | rate changes | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Cash and cash equivalents at | | 13,259,156 | | 168,075 |
| | beginning of period | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | Cash and cash equivalents at | | 7,348,538 | | 5,480,459 |
| | end of period | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
| | | | | | |
+----+---------------------------------+----------+--------------+--+-------------+
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Note 1 Principal Accounting Policies
Basis of Accounting
The Interim Condensed Financial Statements for the six months ended 30 June,
2010 have been prepared in accordance with IAS 34 "Interim Financial Reporting"
as adopted by the European Union, the Listing Rules of the London Stock Exchange
("LSE") and applicable legal and regulatory requirements of the Companies
(Guernsey) Law, 2008. The accounting policies, presentation and methods of
computation followed in this Interim Condensed set of Financial Statements are
consistent with those of the latest Annual Audited Financial Statements for the
year ended 31 December, 2009 except for the revised accounting treatment for
revenue recognition relating to Interest on debt securities. Interest on debt
securities is recognised on an accruals basis, using the effective interest rate
on the investment. The effective interest rate basis amortises any discount or
premium on the purchase of an investment over its remaining life. The amortised
amounts are charged to the Statement of Comprehensive Income.
The Interim Condensed Financial Statements do not include all the information
and disclosures required in the Annual Financial Statements and should be read
in conjunction with the Company's Annual Report and Audited Financial Statements
for the year ended 31 December, 2009.
The preparation of the Interim Condensed Financial Statements requires
management to make estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities at the date of the Interim Condensed
Financial Statements. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from those
estimates.
Presentation of information
The Interim Condensed Financial Statements have been prepared on a going concern
basis under the historical cost convention adjusted to take account of the
revaluation of the Company's investments at fair value.
In order to better reflect the activities of an investment company and in
accordance with the guidance issued by the Association of Investment Companies,
supplementary information which analyses the Statement of Comprehensive Income
between items of a capital and revenue nature has been presented
within the Statement of Comprehensive Income.
Note 2 Gain/(loss) per Ordinary Share - Basic & Diluted and Net Asset Value
per Ordinary Share - Basic & Diluted
The gain per Ordinary Share - Basic and Diluted has been calculated based on the
weighted average number of Ordinary Shares of 100,030,520 and a net gain of
US$5,229,491 (31 December, 2009: on 100,517,026 Ordinary Shares and a net gain
of US$ 19,995,254; 30 June, 2009: on 100,615,520 Ordinary Shares and a net gain
of US$13,821,748).
There were no dilutive elements to shares issued or repurchased during the
period.
The Net Asset Value per Ordinary Share - Basic and Diluted has been calculated
based on the number of shares in existence at the period end date 100,030,520
(31 December, 2009: 100,030,520; 30 June, 2009: 100,615,520) and shareholders'
funds attributable to equity interests of US$81,387,349 (31 December, 2009:
US$76,157,858; 30 June, 2009: US$70,301,690). The Company announces its Net
Asset Value per Share to the London Stock Exchange ("LSE") at each weekly and
month end valuation point.
Below is the Net Asset Value per Ordinary Share announced to the LSE and as
presented in these Interim Condensed Financial Statements.
+-------+--------+-----------+--------+--+--------+----------+------------+-+------------+-+------------+
| | | | | | | | 30.06.2010 | | 31.12.2009 | | 30.06.2009 |
| | | | | | | | | | | | |
+-------+--------+-----------+--------+--+--------+----------+------------+-+------------+-+------------+
| | | | | | | | In | | In U.S. | In |
| | | | | | | | U.S. | | Dollars | U.S. |
| | | | | | | | Dollars | | | Dollars |
+-------+--------+-----------+--------+--+--------+----------+------------+-+--------------+------------+
| Net Asset Value per Ordinary Share - | | | 0.81 | | 0.76 | | 0.70 |
| Basic and Diluted | | | | | | | |
+----------------------------------------+--------+----------+------------+-+------------+-+------------+
| | | | | | | | | | | | |
+-------+--------+-----------+--------+--+--------+----------+------------+-+------------+-+------------+
| | | | | | | | | | | | |
+-------+--------+-----------+--------+--+--------+----------+------------+-+------------+-+------------+
Note 3 Taxation
The Company is exempt from taxation in Guernsey under the terms of The Income
Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. Its liability is an annual fee
of GBP600.
The amount disclosed as withholding tax in the Statement of Comprehensive Income
relates solely to withholding tax suffered at source, on income in the investing
country, Japan.
Note 4 Management Fees
The management fee is payable to the Manager, Prospect Asset Management (Channel
Islands) Limited, monthly in arrears at a rate of 1.5% per annum of the Net
Asset Value, which is calculated as of the last business day of each month.
Total management fees for the period amounted to US$580,819 (30 June, 2009:
US$396,227) of which US$110,557 (30 June, 2009: US$92,618) is due and payable at
the period end. The Management Agreement dated 1 December, 1994 remains in force
until determined by the Company or by the Manager giving the other party not
less than three months' notice in writing, subject to additional provisions
included in the agreement regarding a breach by either party.
Note 5 Other Expenses
+-------+--------+-----------+--------+--+--------+----------+--------+-+------------+-+------------+
| | | | | | | | | | 01.01.2009 | | 01.01.2009 |
| | | | | | | | | | to | | to |
+-------+--------+-----------+--------+--+--------+----------+--------+-+------------+-+------------+
| | | | | | | | | | 30.06.2010 | | 30.06.2009 |
| | | | | | | | | | | | |
+-------+--------+-----------+--------+--+--------+----------+--------+-+------------+-+------------+
| | | | | | | | | | In | | In |
| | | | | | | | | | U.S. | | U.S. |
| | | | | | | | | | Dollars | | Dollars |
+-------+--------+-----------+--------+--+--------+----------+--------+-+------------+-+------------+
| Administration and secretarial | | | | | | 96,803 | | 66,038 |
| fees* | | | | | | | | |
+-------------------------------------+--+--------+----------+--------+-+------------+-+------------+
| Custodian's fees and | | | | | | | 27,513 | | 18,343 |
| charges** | | | | | | | | | |
+----------------------------+--------+--+--------+----------+--------+-+------------+-+------------+
| General expenses | | | | | | | 93,062 | | 121,520 |
+----------------------------+--------+--+--------+----------+--------+-+------------+-+------------+
| Directors' remuneration | | | | | | | 60,413 | | 42,778 |
+----------------------------+--------+--+--------+----------+--------+-+------------+-+------------+
| Auditors' fees | | | | | | | | 19,794 | | 16,016 |
+----------------+-----------+--------+--+--------+----------+--------+-+------------+-+------------+
| | | | | | | | | | | | |
+-------+--------+-----------+--------+--+--------+----------+--------+-+------------+-+------------+
| | | | | | | | | | | | |
+-------+--------+-----------+--------+--+--------+----------+--------+-+------------+-+------------+
| | | | | | | | | | 297,585 | | 264,695 |
+-------+--------+-----------+--------+--+--------+----------+--------+-+------------+-+------------+
| | | | | | | | | | | | |
+-------+--------+-----------+--------+--+--------+----------+--------+-+------------+-+------------+
| | | | | | | | | | | | |
+-------+--------+-----------+--------+--+--------+----------+--------+-+------------+-+------------+
*The administration and secretarial fees are payable to Northern Trust
International Fund Administration Services (Guernsey) Limited, monthly in
arrears and is 0.25% of the Net Asset Value of the Company, which is calculated
as of the last business day of each month. Total administration and secretarial
fees for the period amounted to US$96,803 (30 June, 2009: US$66,038) of which
US$18,426 (30 June, 2009: US$15,436) is due and payable at the period end.
**The custodian's fees and charges are payable to Northern Trust (Guernsey)
Limited monthly in arrears and are 0.08% of the value of the Portfolio of the
Company, and are calculated as of the last business day of each month. Total
custodian's fees and charges for the period amounted to US$27,446 (30 June,
2009: US$18,343) of which US$5,371 (30 June, 2009: US$4,517) is due and payable
at the period end.
Note 6 Financial Assets at Fair Value through Profit and Loss
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | 01.01.2010 | | 01.01.2009 | | 01.01.2009 |
| | | | | | | | to | | to | | to |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | 30.06.2010 | | 31.12.2009 | | 30.06.2009 |
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | In | | In | | In |
| | | | | | | | U.S. | | U.S. | | U.S. |
| | | | | | | | Dollars | | Dollars | | Dollars |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| Opening book cost | | | | | 111,584,984 | | 141,771,667 | | 141,771,667 |
+------------------------------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| Purchases at cost | | | | | 48,409,388 | | 55,180,765 | | 6,390,230 |
+------------------------------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| Proceeds on sale | | | | | (39,637,435) | | (67,245,561) | | (12,912,612) |
+------------------------------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| Realised loss on sale | | | | | (6,264,224) | | (18,121,887) | | (13,922,797) |
+------------------------------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| Closing book cost | | | | | 114,092,713 | | 111,584,984 | | 121,326,488 |
+------------------------------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| Unrealised loss | | | | | (39,831,382) | | (50,287,542) | | (59,218,590) |
+------------------------------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| Fair | | | | | | | 74,261,331 | | 61,297,442 | | 62,107,898 |
| value | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------------+----------+--------------+----------+--------------+
Note 7 Share Capital, Redemption Reserve & Capital Redemption Reserve
+--------------+----------+---------------+----------+--+-+----------+--+----------+--+-------------+--+------------+
| | | | | | | | | | | | Capital |
+--------------+----------+---------------+----------+----+----------+--+----------+--+-------------+--+------------+
| | | | | | | | | | Redemption | | Redemption |
| | | | | | | | | | | | |
+--------------+----------+---------------+----------+----+----------+--+----------+--+-------------+--+------------+
| Ordinary Shares | | | | | Share | | Reserve | | Reserve |
| | | | | | Capital | | | | |
+-----------------------------------------+----------+--+------------+--+----------+--+-------------+--+------------+
| Number of shares | | | | | In | | In U.S. | | In U.S. |
| | | | | | U.S. | | Dollars | | Dollars |
| | | | | | Dollars | | | | |
+-----------------------------------------+----------+--+------------+--+----------+--+-------------+--+------------+
| 100,030,520 | | Balance at 1 January, 2010 | | | 100,030 | | 92,299,301 | | 315,479 |
+--------------+----------+-------------------------------+----------+--+----------+--+-------------+--+------------+
| | | Shares repurchased and | | | | | | | |
+--------------+----------+-------------------------------+----------+--+----------+--+-------------+--+------------+
| - | | cancelled during the period | | | - | | - | | - |
+--------------+----------+-------------------------------+----------+--+----------+--+-------------+--+------------+
| | | | | | | | | | | | |
+--------------+----------+---------------+----------+----+----------+--+----------+--+-------------+--+------------+
| | | | | | | | | | | | |
+--------------+----------+---------------+----------+----+----------+--+----------+--+-------------+--+------------+
| 100,030,520 | | Balance at 30 June, 2010 | | | 100,030 | | 92,299,301 | | 315,479 |
+--------------+----------+-------------------------------+----------+--+----------+--+-------------+--+------------+
| | | | | | | | | | | | |
+--------------+----------+---------------+----------+----+----------+--+----------+--+-------------+--+------------+
| | | | | | | | | | | | |
+--------------+----------+---------------+----------+----+----------+--+----------+--+-------------+--+------------+
| | | | | | | | | | | | | |
+--------------+----------+---------------+----------+--+-+----------+--+----------+--+-------------+--+------------+
The Redemption Reserve account is a distributable reserve account which can be
used for among other things the payment of dividends, if any.
The Capital Redemption Reserve is used to cancel the nominal shares of the
Company when they are redeemed or there is a share buy back.
Ordinary Shares carry the right to vote at general meetings of the Company and
to receive dividends and, in a winding-up will participate in any surplus assets
remaining after settlement of any outstanding liabilities of the Company.
As approved at the AGM on 8 June, 2009, the Company may purchase a maximum of
6,976,950 Ordinary Shares, equivalent to 6.33% of the Issued share capital of
the Company as at the date of the AGM. During the period there were no shares
purchased or cancelled.
Note 8 Reconciliation of Deficit on Ordinary Activities to Net Cash Inflow
from Operating Activities
+-------+----------+-----------+----------+--+----------+----------+--------+-+------------+-+------------+
| | | | | | | | | | 30.06.2010 | | 30.06.2009 |
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------+-+------------+-+------------+
| | | | | | | | | | In | | In |
| | | | | | | | | | U.S. | | U.S. |
| | | | | | | | | | Dollars | | Dollars |
+-------+----------+-----------+----------+--+----------+----------+--------+-+------------+-+------------+
| Return on ordinary activities for the | | | | | 1,477,466 | | 341,110 |
| period | | | | | | | |
+--------------------------------------------+----------+----------+--------+-+------------+-+------------+
| Amortisation on convertible and corporate bonds | | (797,276) | | - |
+---------------------------------------------------------------------------+-+------------+-+------------+
| Decrease in dividends receivable and other receivables | | 350,385 | | 1,112,891 |
+---------------------------------------------------------------------------+-+------------+-+------------+
| Increase/(decrease) in other creditors | | | | | | 643 | | (46,631) |
+-----------------------------------------+--+----------+----------+--------+-+------------+-+------------+
| Foreign exchange loss | | | | | | | (486,330) | | (103,274) |
+------------------------------+----------+--+----------+----------+--------+-+------------+-+------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------+-+------------+-+------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------+-+------------+-+------------+
| Net cash inflow from operating activities | | | | | 544,888 | | 1,304,096 |
+--------------------------------------------+----------+----------+--------+-+------------+-+------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------+-+------------+-+------------+
| | | | | | | | | | | | |
+-------+----------+-----------+----------+--+----------+----------+--------+-+------------+-+------------+
Note 9 Related Party Transactions
Parties are considered to be related if one party has the ability to control the
other party or exercise significant influence over the other party in making
financial or operational decisions.
The Directors are responsible for the determination of the investment policy of
the Company and have overall responsibility for the Company's activities. The
Company's investment portfolio is managed by PAM(CI) Ltd whose parent company is
Prospect Company Limited.
Mr Rupert Evans is a Director of the Manager.
Directors' fees are disclosed in Note 5. The basic fee payable to each Director
is GBP15,000 per annum, the Chairman of the Audit Committee GBP17,500 per annum
and the Chairman of the Board GBP20,000 per annum. Mr. Chris Sherwell was the
Chairman of the Audit Committee until he was replaced by Mr. Richard Battey on
10 February, 2010.
At 30 June, 2010 David FitzWilliam-Lay and Chris Sherwell held beneficial
interests of 30,742 and 9,940 Ordinary Shares respectively in the Company. No
other Directors holding office at 30 June, 2010, or their associates, had any
beneficial interest in the Company's shares. There have been no changes in these
interests between the end of the period and up to the date of this report.
Prospect Epicure J-REIT Value Fund is classed as a related party as the fund
shares the same Investment Advisor as the Company. The value of the Company's
investment in Prospect Epicure J-REIT Value Fund as at 30 June, 2010 was
US$54,687. Refer to the Portfolio Statement for further details. The Company did
not receive any income during the period (2009: Nil) from Prospect Epicure
J-REIT Value Fund.
Prospect REIT Investment Corporation is classed as a related party as the fund
and the Company's Investment Advisors are wholly owned subsidiaries of Prospect
Company Limited, the parent company. The value of the Company's investment in
Prospect REIT Investment Corporation as at 30 June, 2010 was US$7,116,555. Refer
to the Portfolio Statement for further details. The Company received US$152,307
(30 June, 2009: US$357,937) by way of dividends during the period from Prospect
REIT Investment Corporation.
Mr. Curtis Freeze, Director of Prospect Asset Management (Channel Islands)
Limited, the Manager of The Prospect Japan Fund Limited is Chairman of Gro-Bels
Co Ltd and a Director of Yasuragi Co.
Note 10 Segmental Reporting
The Board is responsible for the Company's entire portfolio and considers the
business to have a single operating and geographical segment. The Board's asset
allocation decisions are based on a single, integrated investment strategy, and
the Company's performance is evaluated on an overall basis.
The Company invests in a diversified portfolio of Japanese investments.
As required by IFRS 8, the total fair value of the financial instruments held by
the Company and the equivalent percentages of the total value of the Company are
reported in the Portfolio Statement.
Revenue earned is reported separately on the face of the Statement of
Comprehensive Income as investment income being dividend income received from
equities, and interest income being interest earned from convertible and
corporate bonds.
Note 11 Subsequent Events
These Financial Statements were approved for issuance by the Board on 27 August,
2010. Subsequent events have been evaluated until this date. No material events
have occurred subsequent to the period end and up to the signing date that would
have a material effect on these Financial Statements.
GENERAL INFORMATION
General
The Company is a closed-ended investment company incorporated in Guernsey in
November 1994 and was launched in December 1994 with an initial asset value of
US$70 million. There are 100,035,520 Ordinary Shares in issue as at 30 June,
2010. The Company's Ordinary Shares being listed on the London Stock Exchange.
The Ordinary Shares of the Company have not been registered under the United
States Securities Act of 1933 or the United States Investment Companies Act of
1940. Accordingly, none of the Ordinary Shares may be offered or sold directly
or indirectly in the United States or to any United States persons [as defined
in Regulation 'S' under the 1933 Act] other than in accordance with certain
exemptions. Investment in the Company is suitable only for sophisticated
investors and should be regarded as long-term. Past performance is no indication
of future results.
Investment Objective
The Company was established to invest substantially all of its assets in
securities issued by smaller Japanese companies. The objective of the Company
is to achieve long-term capital growth from an actively managed portfolio of
securities primarily of smaller Japanese companies listed or traded on Japanese
Stock Markets.
Investment Restrictions
The following investment restrictions have been adopted:
(i) the Company may not invest in securities carrying unlimited
liability; or
(ii) the Company may not deal short in securities; or
(iii) the Company may not take legal or management control in investments
in its portfolio; or
(iv) the Company may not invest in any commodities, land or interests in
land; or
(v) the Company may not invest or lend more than 10% of its assets in
securities of any one company or single issuer (other than obligations of the
Japanese Government or its agencies or of the US Government or its agencies); or
(vi) the Company may not invest more than 10% of its assets in non-corporate
investments or securities not listed or quoted on any recognised stock exchange,
for which purpose securities quoted on any of the Japanese Stock Markets will be
treated as securities quoted on a recognised stock exchange; or
(viii) the Company may not invest more than 5% of its assets in unit trusts,
shares or other forms of participation in managed open-ended investment
vehicles; or
(ix) the Company may not commit its assets in the purchase of foreign
exchange contracts, financial futures contracts, put or call options or in the
purchase of securities on margin other than in connection with or for the
purpose of hedging transactions effected on behalf of the Company.
NAV and Share Price Information
The prices of Ordinary Shares and the latest NAV are published daily in the
Financial Times. Prices (in Sterling terms) of the Ordinary Shares appear
within the section of the London Share Service entitled "Investment Companies".
The NAV (in Dollar terms) appears within the section of the Financial Times
Managed Funds Service under Prospect Asset Management (Channel Islands) Limited.
Life of the Company
From inception the Directors have believed that Shareholders should be able to
review the progress of the Company so that a decision can be taken as to whether
Shareholders should have an opportunity of realising the Company's underlying
investments. Accordingly, at the Eleventh Annual General Meeting of the Company
held on 22 May 2008, the Board included in the business to be considered by
Shareholders a Special Resolution that the Company should be wound up. As the
resolution was not passed, the Board shall include a similar resolution in the
business to be considered at every third Annual General Meeting held.
Directors
Brief biographical details of the Directors are as follows:
David FitzWilliam-Lay retired in 1993 after three and a half years as Chairman
of GT Management Plc, an international investment management company.
Previously he had been Chairman of its principal subsidiary companies (US, Japan
and Hong Kong) and Group CEO. He joined the GT Management Group in 1978. He was
a member of the Board of Governors of the National Association of Securities
Dealers, Washington DC between 1987 and 1990.
Rupert Evans is a Guernsey advocate and former partner in the firm of the
Guernsey legal advisors, Ozannes. He is now a consultant to Mourant Ozannes.
He is a non-executive director of the Manager and of a number of investment
companies. Mr Evans is resident in Guernsey.
John Hawkins is a Fellow of the Institute of Chartered Accountants in England
and Wales. He was formerly Executive Vice President and a member of the
Corporate Office of The Bank of Bermuda Limited, with whom he spent many years
in Asia. He retired from the Bank of Bermuda in 2001 after 25 years with the
Group. He is a director of a range of funds which include hedge funds and equity
funds investing in Japan and Asia.
Christopher Sherwell was Managing Director of Schroders (C.I.) Limited from 2000
to 2003, and was Investment Director with Schroders (C.I.) Limited from 1993 to
2000. Prior to joining Schroders (C.I.) Limited, Mr Sherwell was Far East
Regional Strategist with Smith New Court Securities, and from 1977 to 1990
worked as a journalist on the Financial Times, including seven years as a
foreign correspondent in the Far East and Australia from 1983 to 1990.
Richard Battey is a qualified chartered accountant. He is a non-executive
director of a number of investment companies and funds. Mr Battey joined the
Schroder Group in December 1977 and was a director of Schroders (C.I.) Limited
from April 1994 to December 2004, where he served as Finance Director and Chief
Operating Officer, and was a director of Schroder Group Guernsey companies
before retiring from his last Schroder directorship in December 2008.
Taxation Status
The Company has obtained exemption from Guernsey Income Tax under the terms of
The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. There is no capital
gains tax in Guernsey.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMGZRKNDGGZM
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