TIDMPJF
RNS Number : 5748B
Prospect Japan Fund Ld
18 April 2012
THE PROSPECT JAPAN FUND LIMITED
ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the year ended 31
December 2011. All figures are based on the audited financial
statements for the year ended 31 December 2011, approved by the
Board of Directors on 16 April 2012.
The announcement is prepared on the same basis as will be set
out in the annual report and financial statements.
CHAIRMAN'S REPORT
for the year ended 31 December, 2011
The year ended 31 December 2011 has again shown signs of
improvement for the Japanese economy with corporate earnings
continuing the recovery post the earthquake and the tsunami despite
the strength of the Yen. More recently the Yen has weakened
considerably against other international currencies which will
assist economic policy and exports.
During the course of 2011 there has been some corporate action
activity seen in the Japanese market and Japanese corporations
continue to build their cash holdings for acquisition or management
buy out opportunities,
The Government and the Bank of Japan have added further stimulus
measures to assist the economy to provide total liquidity of Yen65
trillion. On 14 February 2012 the Bank of Japan increased their
Asset Purchasing Programme by a further Yen10 trillion taking the
total to Yen30 trillion. In addition, the Government have
implemented a loan programme amounting to Yen35 trillion. These
increased facilities will be utilised to purchase further Japanese
Government Bonds and should encourage the Banks to lend which will
greatly assist the economy and the property sector.
Other positive indications for the economy include an increase
in land prices which, coupled with a pick up in construction, bode
well for a better year ahead. The effects of the Government's
reconstruction stimulus packages following the earthquake on 11
March 2011 have not had much impact in rebuilding programmes as yet
but should be beneficially reflected during the course of this
year.
The Net Asset Value ("NAV") as at December 2011 showed a decline
of 5.62 percent during 2011 against a 2.14 percent decline of the
Topix Small Cap Index for the same period.
The share price discount to Net Asset Value at the year end was
17.98 percent, which was 2.08 percentage points greater than that
at the end of 2010.
The Investment Advisor reports in considerable detail on the
portfolio in its report within these Financial Statements. The
Board remains fully supportive of the strategy pursued by the
Investment Advisor.
At the Annual General Meeting of the Company held on 22 August
2011, a special resolution to wind up the Company was proposed in
accordance with the Articles of Association. The special resolution
to wind up the Company did not receive sufficient votes to be
passed and so the Company continues as recommended to shareholders
by the Board of Directors. The Articles require the Company to
propose a special resolution to wind up the Company at every third
Annual General Meeting, therefore, the next such resolution will be
tabled for consideration at the Annual General Meeting in 2014.
Rupert Evans is subject to annual re-election due to his
position as a Director of the Manager in accordance with Section
B.7.1 of the UK Corporate Governance Code and is also subject to
retirement by rotation in accordance with Article 26.2 of the
Company's Articles of Incorporation and, being eligible, has
offered himself for re-election. All of the other Directors are
independent, providing an appropriate balance to the composition of
the Board.
The next Annual General Meeting of the Company is scheduled to
be held on 24 August 2012.
John Hawkins
Chairman
16 April 2012
INVESTMENT ADVISOR'S REPORT
for the year ended 31 December, 2011
Market Performance (%), US$ NAV
1 Year 3 Year 5 Year
Prospect Japan Fund (5.62) 51.79 (60.65)
Topix Small (2.14) 20.07 (6.85)
Prospect Japan Fund inception date is 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. The above performance of the Fund is net
of fees and expenses and includes reinvestment of dividends and
capital gains.
Fund Performance Source: Prospect Asset Management, Inc. Index
Performance Source: Bloomberg.
Summary
The Prospect Japan Fund Limited (the "Company") returned -5.62%
in 2011, behind the Topix Small Index' -2.14% loss.
The year started on an upbeat note following strong performance
in 2010, however the 11 March Tohoku-Pacific Earthquake/Tsunami
quickly silenced all optimism. The world watched, stunned by the
force of nature that killed thousands, and feared the unknown as
the battle to control the Fukushima nuclear plant unfolded on
television. Despite the massive loss of life, the Japanese showed
their resilience by quickly restoring supply chains and pitching in
to reduce electricity consumption.
The earthquake/tsunami direct impact on the Fund was limited in
that there was no major damage or loss of life at the companies
which comprise its holdings. The problems included both supply
chain disruptions and delays in production. Only two companies
incurred losses that accounted for slightly more than 2% of total
sales.
The Bank of Japan announced on 14 February 2012 that it had
increased its asset purchase program by Yen10 trillion to provide a
total amount of Yen30 trillion, aiming to reduce risk premiums and
increase investor confidence through the acquisition of exchange
traded funds, J-REITs, Japanese Government Bonds and Corporate
Bonds. As of the end of 2011 roughly half of these funds have been
used to purchase assets.
Several 'supplementary' budgets were enacted as a way to fund
the cleanup and reconstruction of Tohoku. Supplementary budgets of
Yen4 trillion (May), Yen2 trillion (June), Yen12 trillion
(November) were passed by parliament. A fourth supplementary budget
of Yen2.5 trillion was approved by parliament on 3 February 2012.
The rebuilding costs are expected to reach Yen23 trillion over ten
years, double the cost of the Great Hanshin Earthquake of 1995.
Japanese corporations continue to complain that profitability is
declining with the strength of the Japanese Yen. The Ministry of
Finance announced the sale of Yen692.5 billion in March, after the
Yen reached a post-war high. In October, the Bank of Japan
conducted further unilateral intervention in the currency market,
causing the Yen to weaken by 4.9% versus the US dollar. Post
intervention, the Yen ended at Yen79.5 per US dollar. Some may look
at the move as an inappropriate use of funds (Yen9 trillion), since
the currency drifted back to stronger territory. The Bank of Japan
inflation target announcement on 14 February was big news,
triggering a sell-off of Japanese Yen. The Yen had a huge monthly
move of 5.7% in February ending at Yen81.01 to the US dollar, and
subsequently moving to Yen82.63 to the US dollar at the end of
March. The Bank of Japan inflation target announcement on 14
February 2012 was big news, triggering a sell-off of Japanese Yen.
The Yen had a huge monthly move of 5.7% in February ending at
Yen81.01 to the US dollar, and subsequently moving to Yen82.63 to
the US dollar at the end of March. Subsequent to this weakening of
the Yen it is expected that the Yen will stabilize at around these
levels.
Standard & Poor's had earlier cut Japan's credit rating to
AA minus from AA on 27 January 2011, commenting on political
instability and the lack of consistent strategy in dealing with
Japan's debt problem as key reasons for the downgrade. Japan is not
alone in the downgrade, with France, Austria, Italy, Spain, Cyprus,
Portugal, Malta, Slovakia and Slovenia also being additions to the
downgrade list.
Political instability continued as Prime Minister Kan's
departure after 15 months in office made way for fellow Democratic
Party of Japan member Noda. Noda was appointed Prime Minister on 2
September 2011. The new administration will focus on
post-earthquake reconstruction, new energy policy and tax
reform.
Tax reform centres on an increase in the consumption tax to 8%
in April 2014 from the current 5% level, and a subsequent increase
to 10% by 2015. Corporate tax rates are planned to be lowered from
the current 40.7% to 38.0% initially and eventually down to 35.6%
by March 2016.
FUND PERFORMANCE
OUTPERFORMANCE
Azel Corporation provided the largest gains for the Fund. The
Fund held a convertible bond position in Azel Corporation, a
bankrupt condominium developer. The bankruptcy court decided on a
final valuation for Azel, allowing the valuation to be marked
upwards.
Tomoe Corporation (1921) constructs steel structures and school
facilities, long-span projects, bridges, electric pylons and
gymnasiums. Tomoe was cited in the 'Kabushiki Shimbun' - a
financial newspaper - as an earthquake/tsunami reconstruction
beneficiary. Tomoe announced a revision to second quarter sales and
profits on 8 November. Sales were revised down due to a project
being pushed back from the second to third quarter. Profits were
revised up due to cost reductions and an additional order coming
through while net income revised downward on stock valuation
losses.
Fintech Global (8789), a financial services company, bought back
a convertible bond that was used as short term bridge financing.
The implied return on the investment for the Fund was an annualized
17%.
UNDERPERFORMANCE
Invincible Investment Corporation (8963), a J-REIT with a
diversified portfolio, had a tough year as they struggled with
severe interest rate hikes and large losses on properties sold to
repay debt. Fortress announced (July) that they would take over
sponsorship of Invincible, coinciding with a third party allotment
to pay down debt and extend debt duration. The market initially
reacted positively to the news, but lack of clarity about future
earnings and dividends had by the year-end brought the stock price
down by almost 35% since the third party allotment was made.
Tri-Stage (2178) provides direct marketing services for clients
primarily via television shopping. Tri-Stage sales were affected in
March, when television viewers spent little time on shopping,
instead focusing on news related to the Tohoku earthquake and
subsequent tsunami. Television commercial cancellations
post-earthquake impacted sales by Yen840 million and gross profits
by Yen250 million. Tri-Stage announced a downward revision to sales
and profits on 28 December due to lower than expected sales.
Specifically, there have been no hit products in the last two
years. Profits were revised downward due to higher costs for
advertising time.
Next (2120), a real estate information services company, revised
their pricing structure in late 2010 in which real estate agents
pay to place real estate listings on the Next website and mobile
phone applications. Next expected some volatility as agents
acclimatised to a new system, however sales were far below
expectations resulting in a downward revision to sales and
profits.
J-REIT MARKET 2011
The TSEREIT index declined 26.2% during 2011, underperforming
the Nikkei 225's -17.3% year-on-year performance.
The Tohoku-Pacific Earthquake on 11 March, and the subsequent
tsunami and nuclear disaster, had little direct impact on J-REIT
portfolios. Properties in the affected areas constitute less than
2% of J-REIT assets, and J-REITs reported only minor damage to
properties.
Despite the poor year-on-year price performance, the J-REIT
space saw the continuation of solid recovery on several fronts as
bank lending rates and maturity improved, secondary issuances and
property acquisitions grew and Bank of Japan purchases of J-REIT
shares helped to set a floor under the market.
J-REITs raised Yen234.4 billion in new equity issuance during
the year, up 52.6% year-on-year, helping to support Yen720 billion
in new property acquisitions. Yen78.5 billion in new corporate
bonds were issued during the year, with an average 1.101% interest
rate and 4.5 year maturity.
The Bank of Japan purchased Yen64.3 billion in J-REIT shares
during the year. The total amount spent since the start of the
program is now Yen66.5 billion, or 60.5% of its total Yen110
billion allotment.
Conditions for J-REITs with new sponsors and/or mergers have
also improved dramatically, with names such as Invincible
Investment (8963) in a position to benefit from improved lending
terms thanks to the recent addition of Fortress as a sponsor. The
merger between Ichigo Real Estate (8983) and FC Residential
Investment (8975) is also expected to lead to improved lender
relationships.
It is to be expected that sub-AA rated J-REITs, having not
benefited from Bank of Japan unit purchases, stand the most to gain
from a re-rating of the sector as benefits from improved financing
and acquisitions continue. Japan Hotel & Resort (8981) and
Nippon Hotel Fund (8985) announced their intention to merge in
April 2012, marking a continuation of consolidation in the
market.
Another positive sign of possible regulatory reform, a tax
system revision allowing J-REITs to retain gains on asset sales,
was included in 2012 tax systems revision requests submitted by the
Financial Services Agency and Ministry of Land, Infrastructure,
Transport and Tourism. The revision would allow these gains to be
excluded from the requirement to distribute more than 90% of
profits.
OUTLOOK FOR THE COMPANY
Corporate profits in Japan are expected to fall as a result of
the March 11 natural disaster. Toyo Keizai estimates that in fiscal
year March 2012 sales will increase by 2.2% year-on-year and
recurring profits will decline by 11.7% for Topix (ex-financials).
There is room for optimism; Toyo Keizai is forecasting sales to
grow by 3.9% and recurring profits to jump 18.5% in fiscal year
March 2013. Although profits will be weak this fiscal year, looking
forward we see strong earnings ahead in this stock-pickers
market.
Cheap valuations and excess cash on the balance sheets of
corporate Japan have prompted companies to buy back shares.
According to data as of 31 March 2011, Topix companies
(ex-financials) have amassed a cash pile of Yen76.6 trillion (USD
90 billion), the highest level since 2000, up 5.6% year-on-year.
Corporate Japan is taking advantage of low valuations as seen by a
pick-up in management buyouts at significant premiums to the last
traded price. Topix' price to book ratio is currently 0.88 times,
close to a historic low.
It is anticipated that Government spending on the rebuilding
after the Earthquake and Tsunami will provide most of the boost to
Japan's GDP, which Nomura forecasts to grow 4.1% this year.
PRINCIPAL RISK AND UNCERTAINTIES
The advisor is optimistic about the market in 2012 pointing to
the strong profit growth forecast by the Toyo Keizai. However the
advisor is cognizant of the pessimism of markets in general and the
negative impact that the European sovereign debt crisis is having
on the global market. The financial uncertainty in Europe is not
likely to diminish soon, with the recent downgrade of France and
Italy's sovereign debt added to the list of Standard & Poor's
downgrades.
The Bank of Japan amended their Asset Purchase Program for the
third time on 14 February, 2012, raising the level for the year to
Yen20 trillion. The perceived risk is that this 'backstop' per se
may not be sufficient as a price keeping mechanism.
Corporate governance in Japan was highlighted by the Olympus
scandal. The Olympus situation is an isolated event, but raises
serious questions about the corporate governance breaches. On 28
March, Japanese prosecutors filed additional charges against
Olympus and four individuals for alleged involvement in an
accounting scandal. The total number arrested is now at 8 people
and includes the former Chairman, Tsuyoshi Kikukawa.
Prospect Asset Management, Inc.
6 April, 2012
DIRECTORS' REPORT
The Directors present their Annual Report and the Audited
Financial Statements of Prospect Japan Fund Limited (the "Company")
for the year ended 31 December, 2011.
The Company's Business
The Company was registered under the laws of Guernsey on 18
November, 1994 as a Limited Company with a premium listing on the
London Stock Exchange. It is a closed-ended investment company
established 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.
Results and Dividend
The results for the year are set out in the Statement of
Comprehensive Income. The Directors do not recommend the payment of
a dividend for the year.
In the year to 31 December, 2011 Net Asset Value per Ordinary
Share decreased by 5.62%.
Performance
The Board considers that Prospect Asset Management (Channel
Islands) Limited, the manager to the Company, is managing the
Company's investments in a manner that is most likely to achieve
the objective of long term capital appreciation for its
shareholders.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Financial
Statements in accordance with applicable Guernsey Law and Generally
Accepted Accounting Principles. Guernsey Company Law requires the
Directors to prepare Financial Statements for each financial year
which give a true and fair view of the state of the affairs of the
Company and of the total return of the Company for that year and in
accordance with the applicable laws. In preparing those Financial
Statements the Directors are required to:
- select suitable accounting policies and then apply them
consistently;
- make judgements and estimates that are reasonable;
- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the Financial Statements; and
- prepare the Financial Statements on a going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the Financial Statements have been properly prepared in accordance
with The Companies (Guernsey) Law, 2008. They are also responsible
for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud, error
and non-compliance with law or regulations.
The Directors confirm that they have complied with the above
requirements in preparing the Financial Statements.
The Directors confirm that to the best of their knowledge
(a) The Annual Financial Statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union and give a true and fair view of
the financial position and profit or loss of the Company as at and
for the year ended 31 December, 2011.
(b) The Annual Financial Report includes information detailed in
the Chairman's Report, Investment Advisor's and Directors' Reports
and Notes to the Annual Financial Statements which provides a fair
review of the information required by:
(i) DTR 4.1.8 of the Disclosure and Transparency Rules, being a
fair review of the Company business and a description of the
principal risks and uncertainties facing the Company; and
(ii) DTR 4.1.11 of the Disclosure and Transparency Rules, being
an indication of important events that have occurred since the end
of the financial year and the likely future development of the
Company.
Directors' Statement
So far as each of the Directors is aware, there is no relevant
audit information of which the Company's auditor is unaware, and
each Director has taken all the steps he ought to have taken as a
Director to make himself aware of any relevant audit information
and to establish that the Company's auditor is aware of that
information.
Total Expense Ratio
The Total Expense Ratio ("TER") is the ratio of the Company's
operating costs (excluding transaction charges and exchange losses
on income transactions) to the average net assets of the
Company.
The Company's TER for the year ended 31 December 2011 was 2.43
per cent (2010: 2.44 per cent).
Corporate Governance
Application of the AIC Code
The Board of Prospect Japan Fund Limited has considered the
principles and recommendations of the AIC's Code of Corporate
Governance (the "AIC Code") by reference to the AIC Corporate
Governance Guide for Investment Companies (the "AIC Guide"). The
AIC Code as explained by the AIC Guide, addresses all the
principles set out in Section 1 of the The UK Corporate Governance
Code ("The Code"), as well as setting out additional principles and
recommendations on issues which are of specific relevance to
investment companies. The Board considers that reporting against
the principles and recommendations of the AIC Code, and by
reference to the AIC Guide (which incorporates The Code), will
provide better information to shareholders.
The Board is accountable to the Company's shareholders for good
governance and this statement describes how the principles
identified in the AIC Code have been applied to the Company. Save
for the exception noted below, the Company has complied with the
provisions set out in the AIC Code and the relevant provisions of
The Code throughout the year ended 31 December 2011. The Code
includes provisions relating to; the role of the chief executive,
executive director's remuneration and, the need for an internal
audit function. For the reasons set out in the AIC Guide, and in
the preamble to the AIC Code, the Board considers these provisions
are not relevant to the position of the Company, being an
externally managed investment company with no employees. The
Company has therefore not reported further in respect of these
provisions.
On 30 September 2011 the Guernsey Financial Services Commission
("GFSC") issued a new Code of Corporate Governance (the "GFSC
Code") which came into effect on 1 January 2012. The GFSC Code
replaces the existing GFSC guidance, "Guidance on Corporate
Governance in the Finance Sector". The GFSC Code provides a
framework that applies to all entities licensed by the GFSC or
which are registered or authorised as a collective investment
scheme. The Company complies with the AIC Code and as such also
complies with the GFSC Code.
The Board
The Board comprises four non-executive directors. All members of
the Board other than Rupert Evans are independent of the Manager.
None of the Directors have a contract of service with the
Company.
The Chairman of the Board is John Hawkins. In considering the
independence of the Chairman, the Board has taken note of the
provisions of The Code relating to independence and has determined
that Mr Hawkins is an Independent Director. As the Chairman is an
Independent Director, no appointment of a senior Independent
Director has been made. The Company has no employees and therefore
there is no requirement for a chief executive.
The Board meets on at least four occasions each year, at which
time the Directors review the investment management of the
Company's assets and all other significant matters so as to ensure
that the Directors maintain overall control and supervision of the
Company's affairs. The Board is responsible for the appointment and
monitoring of all service providers to the Company.
The Board conducted a formal review of its effectiveness during
the year. The review concluded that the Board has a good mix of
skills and experience and functions effectively as a Board.
Attendance at the Board and Audit Committee meetings during the
year was as follows;
Ad hoc Committee Audit Committee
Board Meetings Meetings Meetings
Held Attended Held Attended Held Attended
Rupert Evans 4 4 - - NA NA
John Hawkins 4 4 - - 2 2
Christopher
Sherwell 4 4 - - 2 2
Richard Battey 4 4 - - 2 2
David FitzWilliam-Lay 3 3 - - 2 2
David FitzWilliam-Lay retired on 22 August 2011.
Re-election
In accordance with the Company's Articles of Association, all
newly appointed Directors stand for election by the shareholders at
the next Annual General Meeting ("AGM") following their
appointment. The Directors retire by rotation and offer themselves
for re-election every three years. Directors who have served on the
Board for more than nine years are subject to annual re-election.
Mr Rupert Evans is considered a non-independent Director due to
being a Director of the Manager. Non-independent Directors are
subject to annual re-election.
Supply and Agenda of Information
The quarterly board meetings are the principal source of regular
information for the Board enabling it to determine policy and to
monitor performance and compliance. The Manager attends each Board
meeting either in person or by telephone thus enabling the Board to
fully discuss and review the Company's operation and performance.
Each Director has direct access to the Company Secretary, and may,
at the expense of the Company, seek independent professional advice
on any matter that concerns them in the furtherance of their
duties.
Nomination Committee
The Board as a whole fulfils the function of a Nomination
Committee. Whilst the independent Directors take the lead in the
appointment of new Directors, any proposal for a new Director will
be discussed and approved by all of the Board.
Directors' Remuneration
The level of Directors' fees is determined by the whole Board on
an annual basis and therefore a separate Remuneration Committee has
not been appointed. When considering the level of Directors'
remuneration the Board considers the industry standard and the
level of work that is undertaken.
During the year ended 31 December, 2011, the Directors were
entitled to receive an annual fee of GBP15,000, the Chairman of the
Audit Committee GBP17,500 and the Chairman of the Board GBP20,000.
At the Board Meeting held on 8 February 2012, the Board approved an
increase in their Directors fees of GBP5,000 each with effect from
1January 2012.
Therefore, the Director's fees are now GBP20,000 basic Directors
fee; GBP22,500 for the Chairman of the Audit Committee; GBP25,000
for the Chairman of the Board.
Going Concern
The Directors believe that it is appropriate to continue to
adopt the going concern basis in preparing the Financial Statements
because the assets of the Company consist mainly of securities that
are readily realisable and, whilst the liquidity of these needs to
be managed, the Company has adequate financial resources to meet
its liabilities as they fall due.
Audit Committee
An audit committee has been appointed comprising the independent
Directors. The Audit Committee operates within clearly defined
terms of reference which have been approved by the Board and
provides a forum through which the Company's external Auditors
report to the Board. The Board is satisfied that the Audit
Committee contains members with sufficient recent and relevant
financial reporting experience.
The Audit Committee has considered the requirement for an annual
internal audit of the Company. On the basis that the Company is an
investment company with no employees, the Audit Committee believes
that an internal audit function is not necessary for the
Company.
Management and Engagement Committee
At a Board Meeting held on 18 April, 2007 it was resolved that a
Management and Engagement Committee be appointed comprising the
independent Directors. The Management and Engagement Committee
operates within clearly defined terms of reference which have been
approved by the Board.
The purpose of this committee is to review the performance of
the Investment Advisor and the third party service providers to the
Company.
Dialogue with Shareholders
The Investment Advisor maintains a regular dialogue with
institutional shareholders, feedback from which is reported to the
Board. In addition, Board members and representatives of the
Manager are available to answer shareholders' questions at the
Annual General Meeting. The Company Secretary is available to
answer general shareholders' queries at any time during the
year.
Internal Control
The Board is responsible for establishing and maintaining the
Company's system of internal control and for maintaining and
reviewing its effectiveness. The system of internal controls is
designed to manage rather than to eliminate the risk of failure to
achieve business objectives and as such can only provide
reasonable, but not absolute assurance against material
misstatement or loss.
The Board considers on an ongoing basis the process for
identifying, evaluating and managing any significant risks faced by
the Company. The process includes reviewing reports from the
Company Secretary on risk control and compliance, in conjunction
with the Manager's regular reports which cover investment
performance.
The Board has contractually delegated to external parties
various functions as listed below. The duties of investment
management, accounting and custody are segregated. Each of the
contracts entered into with the parties was entered into after full
and proper consideration by the Board of the quality and cost of
services offered, including the control systems in operation as far
as they relate to the affairs of the Company.
The key terms of the Investment Management Agreement and
specifically the fee charged by the Manager are set out in Note 4
to the Financial Statements.
* Management is provided by Prospect Asset Management (Channel
Islands) Limited, a company licensed and regulated by the Guernsey
Financial Services Commission.
* Investment Advisory Services are provided by Prospect Asset
Management Inc., a company registered with the SEC.
* Administration, Registrar and Company Secretarial duties are
performed by Northern Trust International Fund Administration
Services (Guernsey) Limited, a company licensed and regulated by
the Guernsey Financial Services Commission.
* CREST agency functions are performed by Computershare (CI)
Limited, a company licensed and regulated by the Jersey Financial
Services Commission.
* Custody of assets is undertaken by Northern Trust (Guernsey)
Limited, a company licensed and regulated by the Guernsey Financial
Services Commission.
Directors' and Other Interests
At 31 December, 2011 Chris Sherwell had beneficial interests of
9,940 (2010: 9,940) Ordinary Shares respectively of the Company. No
other Directors holding office at 31 December, 2011, 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 year and the date of this report.
Rupert Evans is a Director of the Manager and a former partner
in the firm of the Guernsey legal advisors, Mourant Ozannes. John
Hawkins, Chris Sherwell and Richard Battey are Directors of a range
of funds.
Substantial Shareholdings
At 31 December, 2011 the following interests in the share
capital of the Company exceeded 3% of the issued share capital:
Percentage
Number of issued
of shares share capital
Capital Value
Fund 4,803,436 4.89%
Clearstream, Luxembourg
clients 5,728,449 5.83%
Deutsche Bank
Intl 6,000,000 6.11%
Japan Omnibus 8,738,335 8.90%
Permal Investment Holdings 15,431,572 15.71%
SVM Global Fund 5,950,000 6.06%
Share buybacks
At the Extraordinary General Meeting of the Company held on 7
August, 2002, it was resolved to amend the Articles of Association
to permit the Company to make market purchases of its own Ordinary
Shares, up to 1,652,445 (14.99% of the issued share capital at that
date). Following the share split on 9 June, 2004, the maximum
number of share buybacks permitted became 16,524,453.
As approved at the AGM on 22 August, 2011, the Company may
purchase, subject to various terms as set out in the Articles, a
maximum of 5,724,519 Ordinary Shares. During the year, the Company
purchased shares as detailed in Note 9 of the Financial Statements.
Post year end transactions are detailed in Note 15 of the Financial
Statements.
Auditors
The Auditors, Ernst & Young LLP have indicated their
willingness to continue in office and offer themselves for
re-appointment at the forthcoming AGM.
Richard Battey Chris Sherwell
Director Director
16 April 2012
INVESTMENT POLICY
for the year ended 31 December, 2011
The Company will invest mainly in shares, but may also invest in
equity related instruments such as convertible bonds or warrants
issued by smaller Japanese companies and debt instruments.
The Company may invest not more than 10% of the Net Asset Value
of the Company in unlisted securities which are not recognised for
trading on or quoted on any of the Japanese Stock Markets. It is
the intention of the Directors that such investments should only be
made where either a listing or an alternative form of realising the
investment can be expected within a reasonable period of time.
Within these parameters, the assets of the Company may be used to
provide "venture" or "start-up" capital (but no investment will
carry unlimited liability). The balance of the assets of the
Company not invested in securities will normally be invested in
short-term debt securities and money market instruments or placed
on deposit.
The assets of the Company will be denominated principally in
Japanese Yen. It is not the present intention of the Directors to
hedge the currency exposure of the Company, but the Directors
reserve the right to do so in the future if they consider this to
be desirable.
It is intended that the principal investment objective and
policies of the Company as set out above will remain in force until
determined by the Directors and any material change in the policies
will only be made with shareholder approval.
While overall control of investment policy will be retained by
the Directors, day-to-day investment management is the
responsibility of the Manager. The Manager will have the benefit of
advice from the Investment Advisor.
PORTFOLIO OF INVESTMENTS
as at 31 December, 2011
Number Percentage
of Fair Value of
in U.S. Net Asset
Securities Investments Dollars Value
Listed investments
Advertising
689,700 Tri-Stage Inc 7,846,487 9.55
7,846,487 9.55
Apparel
255,200 Katakura Inds 2,327,921 2.83
2,327,921 2.83
Beverages
4,040,000 Oenon Holdings Inc 9,317,271 11.33
9,317,271 11.33
Engineering and Construction
2,473,800 Tomoe Corp 8,796,867 10.70
8,796,867 10.70
Internet
472,700 Next Co Ltd 1,717,470 2.09
1,717,470 2.09
Investment Companies
6,574,000 Gro-Bels Co Ltd(+) 3,133,905 3.81
3,133,905 3.81
Machinery
285,900 Zuiko 4,788,636 5.83
4,788,636 5.83
Real Estate
86,400 Cosmos Initia Co Ltd 151,393 0.18
19,800 Iida Home Max Co Ltd 146,430 0.18
1,913 Logicom Inc 554,564 0.67
3,706 Urbanet Corp 1,103,945 1.34
1,680,400 Yasuragi Co(++) 7,447,756 9.06
9,404,088 11.43
REITs
Invincible Investment
88,433 Corp 7,189,490 8.75
Ichigo Real Estate Investment
15,637 Corp 6,003,770 7.30
Prospect Epicure J-REIT
7,898,895 Value Fund* - -
13,193,260 16.05
Retail
297,730 Growell Holdings 7,050,541 8.59
290,000 Sekichu Co Ltd 1,457,193 1.77
Shaklee Global Group
716,000 Inc 3,782,258 4.60
12,289,992 14.96
Storage/warehousing
3,013,000 Shibusawa Warehouse Co 8,229,801 10.01
8,229,801 10.01
Total listed investments 81,045,698 98.59
-------------- -----------
Unlisted investments
Corporate bond
315,700,000 Takefuji Corp 10% 14/4/2011 134,228 0.16
134,228 0.16
Total unlisted investments 134,228 0.16
Total investments 81,179,926 98.75
Net current assets 1,024,864 1.25
NET ASSETS 82,204,790 100.00
(+) Mr. Curtis Freeze, Director of Prospect Asset Management
(Channel Islands) Limited, the Manager of The Prospect Japan Fund
Limited is President 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. (Resigned from Board, March
2012).
* Prospect Epicure JREIT Value Fund is classed as a related
party as the fund shares the same Investment Advisor as the
Company.
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PROSPECT JAPAN FUND LIMITED
We have audited the Financial Statements of Prospect Japan Fund
Limited for the year ended 31 December 2011 which comprise the
Statement of Comprehensive Income, Statement of Financial Position,
Statement of Changes in Equity, Statement of Cash Flows and the
related notes 1 to 15. The financial reporting framework that has
been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
This report is made solely to the company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state to
the company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors'
Responsibilities, the directors are responsible for the preparation
of the Financial Statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the Financial Statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Scope of the audit of the Financial Statements
An audit involves obtaining evidence about the amounts and
disclosures in the Financial Statements sufficient to give
reasonable assurance that the Financial Statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the Financial Statements. In addition, we
read all the financial and non-financial information in the Annual
Report to identify material inconsistencies with the audited
Financial Statements. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Opinion on Financial Statements
In our opinion the Financial Statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2011 and of its loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- proper accounting records have not been kept; or
-- the Financial Statements are not in agreement with the accounting records; or
-- we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review the part of
the Corporate Governance Statement relating to the Company's
compliance with the nine provisions of the UK Corporate Governance
Code specified for our review.
Michael Bane
for and on behalf of Ernst & Young LLP
Guernsey, Channel Islands
16 April, 2012
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December, 2011
Revenue Capital Total Revenue Capital Total
01.01.2011 01.01.2011 01.01.2011 01.01.2010 01.01.2010 01.01.2010
to to to to to to
31.12.2011 31.12.2011 31.12.2011 31.12.2010 31.12.2010 31.12.2010
In U.S. In U.S. In U.S. In U.S. In U.S. In U.S.
Notes Dollars Dollars Dollars Dollars Dollars Dollars
Investment income 2,182,612 - 2,182,612 1,923,527 - 1,923,527
Interest income - - - 61,455 - 61,455
Foreign exchange
movements (332,777) 577,539 244,762 198,882 633,896 832,778
(Loss)/gain on financial
assets
at fair value through
profit or loss - (5,618,627) (5,618,627) - 12,467,619 12,467,619
Total income 1,849,835 (5,041,088) (3,191,253) 2,183,864 13,101,515 15,285,379
4 Management fee (1,318,200) - (1,318,200) (1,215,047) - (1,215,047)
5 Other expenses (673,260) - (673,260) (627,617) - (627,617)
Transaction costs - (261,557) (261,557) - (327,367) (327,367)
Total expenses (1,991,460) (261,557) (2,253,017) (1,842,664) (327,367) (2,170,031)
(Loss)/gain for the
year before
tax (141,625) (5,302,645) (5,444,270) 341,200 12,774,148 13,115,348
3 Withholding tax (152,783) - (152,783) (135,254) - (135,254)
(Loss)/gain for the
year after tax (294,408) (5,302,645) (5,597,053) 205,946 12,774,148 12,980,094
Total comprehensive
(deficit)/
income for the year (294,408) (5,302,645) (5,597,053) 205,946 12,774,148 12,980,094
(Loss)/gain per Ordinary
2 Share -
Basic & Diluted (0.057) 0.130
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 FINANCIAL POSITION
as at 31 December, 2011
31.12.2011 31.12.2010
In U.S. In U.S.
Notes Dollars Dollars
Non-current assets
Financial assets at fair value through
6 profit or loss 81,179,926 87,202,122
Current assets
7 Receivables 1,058,870 896,627
------------ ------------
Cash and cash equivalents 486,833 1,587,728
Total current assets 1,545,703 2,484,355
------------ ------------
Current liabilities
8 Payables 520,839 820,752
Net current assets 1,024,864 1,663,603
Total assets less current liabilities 82,204,790 88,865,725
Equity
9 Share capital account 98,198 99,634
9 Redemption reserve 90,963,192 92,027,074
9 Capital redemption reserve 317,311 315,875
Other reserves (9,173,911) (3,576,858)
Total equity 82,204,790 88,865,725
Ordinary Shares in issue 98,198,602 99,634,852
2 Net Asset Value per Ordinary Share 0.84 0.89
The Financial Statements were approved by the Board of Directors
on 16 April, 2012 and signed on its behalf by:
Richard Battey Chris Sherwell
Director Director
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December, 2011
Capital
Share Capital Capital Capital Reserve/
Capital Redemption Redemption Revenue Reserve/ Reserve/ Exchange
Account Reserve Reserve Reserve Realised Unrealised Differences Total
In U.S. In U.S. In U.S. In U.S. In U.S. In U.S. In U.S. In U.S.
Dollars Dollars Dollars Dollars Dollars Dollars Dollars Dollars
Balances at
1 January,
2011 99,634 315,875 92,027,074 (11,008,026) 27,619,116 (23,128,033) 2,940,085 88,865,725
Total comprehensive
income
for the year
(Loss)/Gain
for the year
after tax - - - (294,408) (5,146,917) (733,267) 577,539 (5,597,053)
Capital
activities
Repurchase
of shares (1,436) 1,436 (1,063,882) - - - - (1,063,882)
Balances at
31 December,
2011 98,198 317,311 90,963,192 (11,302,434) 22,472,199 (23,861,300) 3,517,624 82,204,790
========= =========== ============ ============= ============= ============= ============ ============
Capital
Capital Capital Capital Reserve/
Share Redemption Redemption Revenue Reserve/ Reserve/ Exchange
capital Reserve Reserve Reserve Realised Unrealised Differences Total
In U.S. In U.S. In U.S. In U.S. In U.S. In U.S. In U.S. In U.S.
Dollars Dollars Dollars Dollars Dollars Dollars Dollars Dollars
Balances at
1 January,
2010 100,030 315,479 92,299,301 (11,213,972) 42,638,373 (50,287,542) 2,306,189 76,157,858
-
Total comprehensive
income
for the year
Gain/(loss)
for the year
after tax - - - 205,946 (15,019,257) 27,159,509 633,896 12,980,094
Capital
activities
Repurchase
of shares (396) 396 (272,227) - - - - (272,227)
Balances at
31 December,
2010 99,634 315,875 92,027,074 (11,008,026) 27,619,116 (23,128,033) 2,940,085 88,865,725
========= =========== ============ ============= ============= ============= ============ ============
STATEMENT OF CASH FLOWS
for the year ended 31 December, 2011
01.01.2011 01.01.2010
to to
31.12.2011 31.12.2010
In U.S. In U.S.
Notes Dollars Dollars
Cash flows from operating activities
Net cash inflow from operating
10 activities 228,029 362,585
Cash flows from investing activities
Purchase of financial assets at
fair value through profit or loss (77,118,552) (96,537,860)
Sale of financial assets at fair
value through profit or loss 76,894,388 84,292,524
Net cash outflow from financing
activities (224,164) (12,245,336)
Net cash inflow/(outflow) before
financing 3,865 (11,882,751)
Cash flows from financing activities
9 Repurchase of shares (1,063,882) (272,227)
Net cash outflow from financing
activities (1,063,882) (272,227)
Decrease in cash and cash equivalents (1,060,017) (12,154,978)
Reconciliation of net cash flow
to
movement in net funds
Net cash outflow (1,060,017) (12,154,978)
Effects of foreign exchange rate
changes (40,878) 483,550
Cash and cash equivalents at
the beginning of the year 1,587,728 13,259,156
Cash and cash equivalents at
the end of the year 486,833 1,587,728
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December, 2011
Note 1 Principal Accounting Policies
The following accounting policies have been applied consistently
in dealing with items which are considered to be material in
relation to the Company's Financial Statements:
Basis of preparation
The Financial Statements are prepared in accordance with
International Financial Reporting Standards ("IFRS") adopted for
use in the European Union, which comprise standards and
interpretations approved by the International Accounting Standards
Board (IASB) and are in compliance with The Companies (Guernsey)
Law, 2008. The Financial Statements have been prepared on a going
concern basis under the historical cost convention, as modified by
the revaluation of financial assets at fair value through profit or
loss.
Going concern
The Directors believe that it is appropriate to continue to
adopt the going concern basis in preparing the Financial Statements
because the assets of the Company consist mainly of securities that
are readily realisable and, whilst the liquidity of these needs to
be managed, the Company has adequate financial resources to meet
its liabilities as they fall due.
In accordance with the Company's Articles, the Board is required
every three years to include in the business to be considered by
shareholders at the Annual General Meeting a Special Resolution
that the Company should be wound up. This resolution requires 75%
of votes in favour for it to be passed. The next such resolution
will be tabled at the Eighteenth Annual General Meeting to be held
in 2014.
Presentation of information
Where presentational guidance set out in the Statement of
Recommended Practice ("SORP") for Investment Companies issued by
the Association of Investment Companies ("AIC") in January 2009 is
consistent with the requirements of IFRS, the Directors have sought
to prepare the Financial Statements on a basis compliant with the
SORP. Supplementary information which analyses the Statement of
Comprehensive Income between items of a revenue and capital nature
has been presented within the Statement of Comprehensive
Income.
Standards, amendments and interpretations effective during the
year
The following interpretations were applicable for the year but
had no impact on the financial position or performance of the
Company.
IAS 1 (Amendments), Presentation of Financial Statements;
lAS 24 (Amendments), Related Party Disclosures;
IFRS 1 (Amendments), Additional exemptions for first-time
adopters;
IFRS 1 (Revised and restructured), First-time Adoption of
International Financial Reporting Standards;
IFRS 7 (Amendments), Financial Instruments : Disclosures;
IFRS 9 Financial Instruments Classification and Measurement;
and
IFRIC 14 (Amendments), Prepayments of a minimum funding
requirement.
Standards, amendments and interpretations issued but not yet
effective
The following interpretations are mandatory for accounting
periods beginning on or after 1st January, 2012.
-- IAS 12 Income Taxes - Limited scope amendment - (effective 1 January,2012);
-- IAS 19 (Amendments), Employee Benefits- (effective 1 January, 2013);
-- IAS 27 (Amendments), Consolidated and Separate Financial
Statements - (effective 1 January, 2013);
-- IAS 28 (Amendments), Investments in Associates - (effective 1 January, 2013);
-- IAS 32 Financial Instruments: Presentation - Application
guidance on the offsetting of financial assets and financials
liabilities - (effective 1 January, 2014);
-- IFRS 7 (Amendments), Financial Instruments : Disclosures -
(effective 1 January, 2013 and 1 January, 2015);
-- IFRS 9 Financial Instruments: Classification and Measurement
- (effective 1 January, 2015);
IFRS 9 will change the way the Company classifies and measures
certain of its financial assets. The Company is currently in the
process of evaluating the potential effect of this standard. The
standard is not expected to have a significant impact on the
Financial Statements since the majority of the Company's financial
assets are designated at fair value through profit and loss.
-- IFRS 10 Consolidated Financial Statements - (effective 1 January, 2013);
-- IFRS 11 Joint Arrangements - (effective 1 January, 2013);
-- IFRS 12 Disclosure of Interests in Other Entities - (effective 1 January, 2013);
-- IFRS 13 Fair Value Measurement - (effective 1 January, 2013);
IFRS 13 aims to improve consistency and reduce complexity by
providing a precise definition of fair value and a single source of
fair value measurement and disclosure requirements. The Company is
yet to assess the full impact of IFRS 13 and does not intend to
early-adopt the standard.
There are no other standards, amendments or interpretations that
are not yet effective that would be expected to have a material
impact on the Company.
The Board anticipate that the adoption of these standards and
interpretations in a future period will not have a material impact
on the financial statements of the Company.
Improvements to IFRSs
In June 2011 the IASB issued improvements to IFRS, an omnibus of
amendments to its IFRS standards. The amendments have not been
adopted as they become effective for annual periods on or after 1
January, 2013. The Company expects no impact from the adoption of
the amendments on its financial position or performance.
Significant accounting judgements, estimates and assumptions
The preparation of the Financial Statements in conformity with
IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and the
reported amounts of assets and liabilities, income and expense. 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.
The financial information in these Financial Statements has been
prepared on the basis of standards applicable as at 31 December,
2011.
Financial instruments
Financial assets and financial liabilities are recognised in the
Company's Statement of Financial Position when the Company becomes
a party to the contractual provisions of the instrument. Financial
assets and liabilities, other than those shown at fair value
through profit or loss, are measured at amortised cost using the
effective interest rate method.
Financial assets at fair value through profit or loss
("investments")
All "regular way" purchases and sales of investments are
recognised on the trade date, that is the date on which the Company
commits to purchase or sell the investment). "Regular way"
purchases or sales are purchases or sales of financial assets that
require delivery of assets within the time frame generally
established by regulation or convention in the market place.
All of the Company's investments are recorded at fair value
through profit or loss at the time of acquisition. Investments are
initially recognised at fair value, normally being the cost
incurred in their acquisition. Any transaction costs are expensed
in the Statement of Comprehensive Income. After initial
recognition, investments are measured at fair value. Gains and
losses arising from changes in fair value are presented in the
Statement of Comprehensive Income in the period in which they
arise.
Investments are recognised at fair value through profit or loss
at inception because they are managed and their performance
evaluated on a fair value basis and information thereon is
evaluated by the management of the Company on a fair value
basis.
Other financial instruments
For other financial instruments, including other receivables,
other payables and unrealised gains or losses on open forward
foreign currency contracts, the carrying amounts as shown in the
Statement of Financial Position approximate to fair values due to
the short term nature of these financial instruments.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the
net amount reported in the Statement of Financial Position, if and
only if, there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on a net
basis, or to realise assets and settle the liabilities
simultaneously.
Fair value
The Company's investments consist of equity and equity-related
investments in smaller companies in Japan and unlisted convertible
and corporate bonds.
Listed investments held at the statement of financial position
date are valued at bid prices quoted on the principal stock
exchange on which the investments are traded. Gains and losses
arising from changes in fair value are presented in the Statement
of Comprehensive Income in the period in which they arise.
Unlisted investments are valued at the Directors' estimate of
their fair value in accordance with the requirements of IAS 39
'Financial Instruments: Recognition and Measurement'. The Directors
estimates are based on available price data or comparisons with the
valuations of comparable convertible and corporate bonds.
Derecognition of financial instruments
A financial asset is derecognised when the Company has
transferred substantially all the risks and rewards of the asset,
or has neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of the
asset.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled.
Income
Income arising on the investments is recognised when the right
to receive them has been met and is recorded gross of withholding
tax. Bank interest is accounted for on an accruals basis.
Expenses
Expenses are accounted for on an accruals basis. Expenses
incurred on the acquisition of investments at fair value through
profit or loss are charged to the Statement of Comprehensive Income
in capital. All other expenses are charged to the Statement of
Comprehensive Income in revenue.
Cash and Cash equivalents
Cash and cash equivalents are defined as cash in hand, demand
deposits and highly liquid investments readily convertible to known
amounts of cash and subject to insignificant risk of change in
value. Cash and cash equivalents at the year end constituted demand
deposits.
Capital Reserves
Gains and losses recorded on the realisation of investments and
realised exchange differences of a capital nature are transferred
to the realised capital reserve. Unrealised gains and losses
recorded on the revaluation of investments held at a period end and
unrealised exchange differences of a capital nature are transferred
to the unrealised capital reserve.
Foreign Currencies
(i) Functional and presentation currency
The Company's functional and presentational currency is United
States Dollar.
(ii) Foreign currency transactions
Monetary assets and liabilities and investments at fair value
through profit or loss are translated into United States Dollars at
the rate of exchange ruling at the Statement of Financial Position
date. Investment transactions and income and expenditure items are
translated at the rate of exchange ruling at the date of the
transactions. Gains and losses on foreign exchange are included in
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 99,056,113 and a net loss of US$5,597,053 (2010: on 99,851,377
Ordinary Shares and a net gain of US$12,980,094).
There were no dilutive elements to shares issued or repurchased
during the year.
The Net Asset Value per Ordinary Share - Basic and Diluted has
been calculated based on the number of shares in existence at the
year end date 98,198,602 (2010: 99,634,852) and shareholders' funds
attributable to equity interests of US$82,204,790 (2010:
US$88,865,725).
Note 3 Taxation
The Company has been granted Exempt Status under the terms of
The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 to income
tax in Guernsey. 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 ("PAM(CI)Ltd") , 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 year amounted to US$1,318,200 (2010:
US$1,215,047) of which US$102,458 (2010: US$109,725) is due and
payable at the year 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
01.01.2011 01.01.2010
to to
31.12.2011 31.12.2010
In U.S. In U.S.
Dollars Dollars
Administration and secretarial
fees* 219,700 202,508
Custodian's fees and
charges** 122,043 103,813
General expenses 174,778 156,524
Directors' remuneration 119,922 127,698
Auditors' fees*** 36,817 37,074
673,260 627,617
*The administration and secretarial fees are payable to Northern
Trust International Fund Administration Services (Guernsey) Limited
monthly in arrears at a rate of 0.25% of the Net Asset Value of the
Company as at the last business day of the month. Total
administration and secretarial fees for the year amounted to
US$219,700 (2010: US$202,508) of which US$17,076 (2010: US$$18,288)
is due and payable at the year end.
** The custodian's fees and charges are payable to Northern
Trust (Guernsey) Limited monthly in arrears at a rate of 0.08% of
the value of the portfolio of the Company as at the last business
day of the month. Total custodian's fees and charges for the year
amounted to US$122,043 (2010: US$103,813) of which US$5,380 (2010:
US$5,734) is due and payable at the year end.
***There were no non-audit fees payable to the Company's
auditors at the year end.
Note 6 Financial Assets at Fair Value through Profit and Loss
31.12.2011 31.12.2010
In U.S. In U.S.
Dollars Dollars
Opening book cost 110,330,155 111,584,984
Purchases at cost 76,703,583 96,651,544
Sale proceeds (77,107,152) (83,052,915)
Realised
loss (4,885,360) (14,853,458)
Closing book cost 105,041,226 110,330,155
Unrealised loss (23,861,300) (23,128,033)
Fair value as at 31
December 81,179,926 87,202,122
Note 7 Receivables
31.12.2011 31.12.2010
In U.S. In U.S.
Dollars Dollars
Amounts due from brokers 278,868 206,780
Dividends receivable 780,002 689,847
1,058,870 896,627
Note 8 Payables
31.12.2011 31.12.2010
In U.S. In U.S.
Dollars Dollars
Amounts due to brokers 272,380 566,468
Other creditors 248,459 254,284
520,839 820,752
Note 9 Share Capital, Redemption Reserve & Capital Redemption Reserve
Capital
Redemption Redemption
Share
Ordinary Shares Capital Reserve Reserve
In U.S. In U.S. In U.S.
Number of shares Dollars Dollars Dollars
Balance at 1 January,
99,634,852 2011 99,634 92,027,074 315,875
Shares repurchased
and
cancelled during
(1,436,250) the year (1,436) (1,063,882) 1,436
Balance at 31 December,
98,198,602 2011 98,198 90,963,192 317,311
The Redemption Reserve account is a distributable reserve
account which can 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 22 August, 2011, the Company may
purchase a maximum of 5,724,519 Ordinary Shares, equivalent to
5.80% of the Issued share capital of the Company as at the date of
the AGM. During the year, shares were purchased and cancelled as
follows:-
Price Percentage
per Share of
In U.S.
Date Shares Dollars share capital
21 March, 2011 100,000 0.690 0.10%
21 March, 2011 100,000 0.630 0.10%
13 May, 2011 50,000 0.752 0.05%
18 May, 2011 193,000 0.770 0.20%
20 May, 2011 100,000 0.770 0.10%
24 June, 2011 30,000 0.780 0.03%
29 June, 2011 295,000 0.810 0.30%
1 July, 2011 68,250 0.810 0.07%
13 December, 2011 100,000 0.690 0.10%
23 December, 2011 400,000 0.700 0.41%
1,436,250 1.46%
Note 10 Reconciliation of Deficit on Ordinary Activities to Net
Cash Inflow from Operating Activities
31.12.2011 31.12.2010
In U.S. In U.S.
Dollars Dollars
Return on ordinary activities
for the year (294,408) 205,946
Decrease in dividends receivable and
other receivables (90,155) (26,485)
(Decrease)/Increase
in other creditors (5,825) 32,778
Foreign exchange gain 618,417 150,346
Net cash inflow from operating
activities 228,029 362,585
Note 11 Analysis of Financial Assets and Liabilities by
Measurement Basis
Investments Receivables
at fair
value and payables Total
In U.S. In U.S. In U.S.
Dollars Dollars Dollars
As at 31 December,
2011
Financial assets
Investments at fair value through
profit or loss 81,179,926 - 81,179,926
Cash and cash
equivalents - 486,833 486,833
Receivables - 1,058,870 1,058,870
81,179,926 1,545,703 82,725,629
============ ============== ===========
Financial liabilities
Payables - 520,839 520,839
- 520,839 520,839
============ ============== ===========
Investments Receivables
at fair
value and payables Total
In U.S. In U.S. In U.S.
Dollars Dollars Dollars
As at 31 December,
2010
Financial assets
Investments at fair value through
profit or loss 87,202,122 - 87,202,122
Cash and cash
equivalents - 1,587,728 1,587,728
Receivables - 896,627 896,627
87,202,122 2,484,355 89,686,477
============ ============== ===========
Financial liabilities
Payables - 820,752 820,752
- 820,752 820,752
============ ============== ===========
Note 12 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 (Kabushiki Kaisha Prospect, a Japanese Company).
Mr Rupert Evans is a Director of the Manager.
Directors' fees are disclosed in Note 5. The basic fee payable
to Directors in 2011 was GBP15,000, the Chairman of the Audit
Committee GBP17,500 and the Chairman of the Board GBP20,000 per
annum.
Prospect Epicure JREIT Value Fund is classed as a related party
as the fund shares the same Investment Advisor as the Company. The
Company did not receive income (2010: Nil) during the year from
Prospect Epicure JREIT Value Fund.
Note 13 Financial Risk Management Objectives and Policies
Financial Instruments
In accordance with its investment objectives and policies, the
Company holds financial instruments which at any one time may
comprise the following:
* securities held in accordance with the investment objectives and policies
* cash and short-term debtors and creditors arising directly from operations
* borrowing used to finance investment activity
* derivative transactions including investment in warrants and forward currency contracts
* options or futures for hedging purposes
The financial instruments held by the Company principally
comprise equities listed on the stock market in Japan. The specific
risks arising from the Company's exposure to these instruments, and
the Manager/Investment Advisor's policies for managing these risks,
which have been applied throughout the year, are summarised
below.
Capital Management
The Company is a closed-ended investment company, and thus has a
fixed capital. The Company's capital is represented by Ordinary
Shares and each share carries one vote. They are entitled to
dividends when declared.
As approved at the AGM on 22 August, 2011, the Company may
purchase a maximum of 5,724,519 Ordinary Shares, equivalent to
5.80% of the Issued share capital of the Company as at the date of
the AGM provided that;
-- The minimum price to be paid (exclusive of expenses) be US$0.01;
-- The maximum price to be paid (exclusive of expenses) be 105%
of the average mid-market valuation for five days preceding the
purchase; and
-- If the shares are trading on the London Stock Exchange at a
discount to the lower of the undiluted or diluted Net Asset
Value;
The Board also considers from time to time whether it may be
appropriate to raise new capital by a further issue of shares. The
raising of new capital would however be dependent on there being
genuine market demand.
The Company is not subject to externally imposed capital
requirements.
Market Price Risk
The Company's investment portfolio - particularly its equity
investments - is exposed to market price fluctuations, which are
monitored by the Manager/Investment Advisor in pursuance of the
investment objectives and policies.
Exceptional risks associated with investment in Japanese smaller
companies may include:
a) greater price volatility, substantially less liquidity and
significantly smaller market capitalisation, and
b) more substantial government intervention in the economy, including restrictions on investing in companies or in industries deemed sensitive to relevant national interests.
Market price sensitivity analysis
The sensitivity of the Company to market price risk can be
approximated by measuring the impact that a movement in the Topix
Small Index would have on the percentage of funds invested. Topix
Small Index is the 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. Topix
Small Index provides an indicator of the effect of market price
risk on the Company's portfolio since its characteristics with
respect to average market capitalization more closely resemble the
investment strategy pursued by the Company. However, the Company's
investments are concentrated to the real estate industry and
unlisted and corporate bonds and as such do not reflect the full
array of companies on the index. At 31 December, 2011 a 1%
positive/negative movement in the index would produce a
positive/negative movement in the net assets of the Company of
US$389,663 (2010: US$322,648) for equity related securities. This
relationship between the movement in the value of the assets of the
Company and the Index is of a linear nature. As the intrinsic value
of the corporate bonds is affected by the movements in interest
rates, an increase in the interest rate would decrease the value of
the bonds and a decrease would have an opposite effect.
Foreign Currency Risk
The Company principally invests in securities denominated in Yen
rather than United States Dollar, the functional currency of the
Company. Therefore, the Statement of Financial Position may be
affected by movements in the exchange rates of such currencies
against the US Dollar. The Manager/Investment Advisor has the power
to manage exposure to currency movements by using forward currency
contracts. The Company was not party to any such instruments at the
date of these Financial Statements.
It is not the present intention of the Directors to hedge the
currency exposure of the Company, but the Directors reserve the
right to do so in the future if they consider this to be
desirable.
The treatment of currency transactions other than in US Dollars
is set out in Note 1 to the Financial Statements under "Foreign
Currencies".
The Company's currency exposure is as follows:
31.12.2011 31.12.2010
In US In US
Dollars Dollars
Investments
Japanese Yen (Yen6,300,779,956, 2010:Yen7,105,869,103) 81,179,926 87,145,807
Sterling (GBPNil,
2010:GBP34,888) - 56,315
81,179,926 87,202,122
Other (Liabilities)/Assets
US Dollars (130,237) (137,668)
Sterling (GBP40,938,
2010:GBP42,330) (63,622) (68,327)
Japanese Yen (Yen94,591,186,
2010:Yen152,447,021) 1,218,723 1,869,598
1,024,864 1,663,603
The below details the Company's sensitivity to a 10% (31
December 2010: 10%) change in the Yen exchange rates against the US
Dollar.
31.12.2011 31.12.2010
In US Dollars In US Dollars
Impact on Statement of Comprehensive Income
and Equity in response to a
- 10% increase 7,497,147 8,093,510
======================= ===================
- 10% decrease (9,161,768) (9,891,804)
======================= ===================
Interest Rate Risk
The Company may invest in fixed and floating rate securities.
The income of the Company may be affected by changes to interest
rates relevant to particular securities or as a result of the
Manager/Investment Advisor being unable to secure similar returns
on the expiry of contracts or sale of securities.
The value of fixed interest securities may be affected by
interest rate movements in the future however, in the Directors'
opinion no material impact is expected. Interest receivable on bank
deposits or payable on bank overdraft positions will be affected by
fluctuations in interest rates, however the value of the underlying
cash positions will not be affected.
The direct effect of movements in interest rates are not
material on cash and cash equivalent as the Company predominately
keeps its surplus cash in Japanese Yen on which it does not earn
interest.
Interest rate sensitivity analysis
As the intrinsic value of the corporate bonds is affected by the
movements in interest rates, an increase in the interest rate would
decrease the value of the corporate bonds and a decrease would have
an opposite effect.
Fair Value
All assets and liabilities are carried at fair value or at
carrying value which equates to fair value.
IFRS 7 requires the Company to classify fair value measurements
using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy
has the following levels:
(i) Quoted prices (unadjusted) in active markets for identical assets or liabilities
(level 1).
(ii) Inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices)
(level 2).
(iii) Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
The following table analyses within the fair value hierarchy the
Company's financial assets and liabilities (by class) measured at
fair value for the year ended 31 December 2011.
Level 1 Level 2 Level 3 Total
In US Dollars In US Dollars In US Dollars In US Dollars
Assets
Financial assets
at fair value
through profit and
loss:
-Equity Securities 81,045,698 - - 81,045,698
-Debt Securities - - 134,228 134,228
Total assets as
at 31 December 2011 81,045,698 - 134,228 81,179,926
============== ============== ============== ==============
The following table presents the movement in level 3 instruments
for the year ended 31 December, 2011 by class of financial
instrument.
Equity Debt
Securities Securities Total
In US Dollars In US Dollars In US Dollars
Opening balance - 502,454 502,454
Sales - (3,340,292) (3,340,292)
Gains recognised in profit
and loss - 2,972,066 2,972,066
Closing balance - 134,228 134,228
=============== ============== ==============
Net unrealised loss for
the year included in the
Statement of Comprehensive
Income for level 3 Investments
held at 31 December 2011 - (8,519,824) (8,519,824)
=============== ============== ==============
The following table analyses within the fair value hierarchy the
Company's financial assets and liabilities (by class) measured at
fair value for the year ended 31 December 2010.
Level 1 Level 2 Level 3 Total
In US Dollars In US Dollars In US Dollars In US Dollars
Assets
Financial assets
at fair value
through profit and
loss:
-Equity Securities 78,973,398 - - 78,973,398
-Debt Securities - 7,726,270 502,454 8,228,724
Total assets as
at 31 December 2010 78,973,398 7,726,270 502,454 87,202,122
============== ============== ============== ==============
Equity Debt
Securities Securities Total
In US Dollars In US Dollars In US Dollars
Opening balance - 101,870 101,870
Transfers into
level 3 - 387,172 387,172
Gains recognised in profit
and loss - 13,412 13,412
Closing balance - 502,454 502,454
============== ============== ==============
Net unrealised loss for
the year included in the
Statement of Comprehensive
Income for level 3 Investments
held at 31 December 2010 - (1,574,076) (1,574,076)
============== ============== ==============
Level 3 investments, consisting of corporate bonds, are valued
at the Directors' estimate of their fair value in accordance with
the requirements of IAS 39 'Financial Instruments: Recognition and
Measurement'. The Directors estimates are based on available traded
prices or comparisons with the valuations of comparable convertible
bonds.
Short term Debtors and Creditors
Trade and other receivables do not carry interest and are short
term in nature. They are stated at nominal value as reduced by
appropriate allowances for irrecoverable amounts in the case of
receivables.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter in
realising assets or otherwise raising funds to meet financial
commitments.
The Company invests primarily in listed securities. The tables
below analyse liquidity of the Company's securities based on
trading volumes in the period after the statement of financial
position date and maturity of other financial assets and
liabilities.
The Investment Manager considers expected cash flows from
financial assets in assessing and managing liquidity risk, in
particular its cash resources and trade receivables. Cash flows
from trade and other receivables are all contractually due within
twelve months.
1 week
As at 31 December Up to to 1
2011 1 week month 1-6 months 6-12 months Total
In US In US
Dollars Dollars In US Dollars In US Dollars In US Dollars
Financial assets
Financial assets at
fair value
through profit
or loss 12,832,997 25,601,895 34,057,649 8,687,385 81,179,926
Dividends receivable - - 780,002 - 780,002
Interest receivable - - - - -
Cash and
cash equivalents 486,833 - - - 486,833
Securities sold
receivable 278,868 - - - 278,868
Financial liabilities
Amounts due
to brokers (272,380) - - - (272,380)
Other creditors - (169,309) (79,150) - (248,459)
Total 13,326,318 25,432,586 34,758,501 8,687,385 82,204,790
=========== =========== ============== ============== ==============
1 week
As at 31 December Up to to 1
2010 1 week month 1-6 months 6-12 months Total
In US In US In US
Dollars Dollars In US Dollars In US Dollars Dollars
Financial assets
Financial assets at
fair value
through profit
or loss 11,922,074 10,927,329 47,981,374 16,371,345 87,202,122
Dividends receivable - 83,276 606,571 - 689,847
Interest receivable - - - - -
Cash and
cash equivalents 1,587,728 - - - 1,587,728
Securities sold
receivable 206,780 - - - 206,780
Financial liabilities
Amounts due
to brokers (566,468) - - - (566,468)
Other creditors - (177,890) (76,394) - (254,284)
Total 13,150,114 10,832,715 48,511,551 16,371,345 88,865,725
=========== =========== ============== ============== ===========
Credit Risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment that it has entered into
with the Company. The Company's principal sources of credit risk
arise on amounts due from brokers for settlement of outstanding
investments transactions, dividends and interest receivable and
cash and cash equivalents.
The Company utilizes 18 executing brokers setting allocation
targets for each broker so as to not to place excessive
concentration on any one counterparty. The investment advisor
performs a quarterly review of executing brokers as part of its
"Best Execution" analysis, which is part of the advisor's
compliance program. The investment team reviews the quality of
broker research, execution and service, and sets targets for each
broker based on brokers' overall performance.
Currently all cash is placed with Northern Trust (Guernsey)
Limited ("NTGL"). NTGL is also custodian of the majority of the
Company's investments. NTGL is a wholly owned subsidiary of The
Northern Trust Corporation ("TNTC"). TNTC is publicly traded and a
constituent of the S&P 500. TNTC has a credit rating of A+.
All transactions in listed securities are settled/paid upon
delivery using approved brokers. The risk of default is considered
minimal, as delivery of securities sold is only made once the
broker has received payment. Payment is made on a purchase once the
securities have been received by the broker. The trade will fail if
either party fails to meet their obligation.
When purchasing unlisted securities including OTC bonds, the
Investment Advisor prepares an evaluation on the company issuing
these securities and monitors and reviews the Company's quality and
performance over time. These unlisted investments are issued by the
companies themselves and by their nature are either not rated or
have a higher credit rating.
It is the opinion of the Board of Directors that the carrying
amounts of these financial assets, excluding equities, represent
the maximum credit risk exposure as at the Statement of financial
position date.
Note 14 Segmental Reporting
The Board is responsible for reviewing the Company's entire
portfolio and considers the business to have a single operating
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. 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 15 Subsequent Events
These Financial Statements were approved for issuance by the
Board on 16 April, 2012. Subsequent events have been evaluated
until this date.
The Company has made the following share buybacks subsequent to
the year end and up to the date of these Financial Statements:
Price Percentage
per of
Issued
Shares Share Share
Date GBP Capital
08 February
2012 100,000 0.81 0.10%
24 February
2012 100,000 0.82 0.10%
29 February
2012 100,000 0.83 0.10%
15 March 2012 100,000 0.84 0.10%
15 March 2012 100,000 0.83 0.10%
20 March 2012 100,000 0.84 0.10%
600,000 0.60%
At the Board Meeting held on 8 February 2012, it was advised
that Mr. Curtis Freeze, Director of Prospect Asset Management
(Channel Islands) Limited and the Manager of The Prospect Japan
Fund Limited, was stepping down from the Board of Yasuragi Co.,
effective March 2012. It was also advised that he had been invited
to join the Board of Shaklee Global but his appointment has not yet
been finalised.
At the Board Meeting held on 8 February 2012, the Board approved
an increase in their Directors fees of GBP5,000 each with effect
from 1 January 2012. Therefore, the Director's fees are now
GBP20,000 basic Directors fee; GBP22,500 for the Chairman of the
Audit Committee; GBP25,000 for the Chairman of the Board.
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 98,198,602 Ordinary
Shares in issue as at 31 December, 2011. 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
(vii) 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
(viii) 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".
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 fifteenth Annual General Meeting of the Company
held on 22 August 2011, 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
will include a similar resolution in the business to be considered
at every third Annual General Meeting held. The next such
resolution will be tabled at the Annual General Meeting to be held
in 2014.
Directors
Brief biographical details of the Directors are as follows:
Rupert Evans, age 73, is a Guernsey advocate and former partner
in the firm of the Guernsey legal advisors, Mourant 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. Mr Evans was appointed to the Board on 18
November, 1994.
John Hawkins, age 69, 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. Mr Hawkins was appointed
to the Board on 4 April, 2004.
Christopher Sherwell, age 64, 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. Mr Sherwell was appointed to the Board on 27
September, 2004.
Richard Battey, age 60, 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. Mr Battey was appointed to the Board on 10 February,
2010.
Taxation Status
The Company has obtained exemption from Guernsey Income Tax
under 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
FR BKFDNCBKKKQD
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