TIDMPJF
RNS Number : 8217C
Prospect Japan Fund Ld
22 April 2013
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 2012. All figures are based on the Audited Financial
Statements for the year ended 31 December 2012, approved by the
Board of Directors on 16 April 2013.
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, 2012
The Fund has shown a return of 20.24 per cent for the year ended
31 December 2012, strongly outperforming the Topix Small Index of
8.76 per cent and its peers. Your Manager's strategy and skills and
beliefs in both stock picking and sectors have yielded very
satisfactory results. The Japanese economy continued the
improvement witnessed at the end of the preceding year, with
corporate earnings sustaining the recovery post the earthquake
aided by the weakening of the Yen, which has boosted exports.
Japanese corporations have continued to build their cash
reserves for acquisition of both foreign and also domestic
companies and also for buy out opportunities which have become a
more frequent feature.
Perhaps the most significant event of the year was the win by
The Liberal Democratic Party on the 16th December of The Diet Lower
House and the appointment of Shinzo Abe as Prime Minister.
Significantly the coalition won a supermajority in the Lower House,
with power to override the Upper House. The LDP are committed to
reflation and growth with policies which include a depreciation of
the Yen and a 2 per cent inflation target to be adopted and
implemented by The Bank of Japan, under a new governor. The changes
are generating additional investment opportunities and in the
process attracting international investors and, to a lesser but
significant extent, domestic investors.
The Fund's share price discount to the Net Asset Value at the
end of the year was 14.85 per cent which was 3.13 percentage points
lower compared with the end of the previous year.
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.
The next Annual General Meeting of the Company is scheduled to
be held on 21 June 2013.
John Hawkins
Chairman
19 April 2013
INVESTMENT ADVISOR'S REPORT
for the year ended 31 December, 2012
Market Performance (%), US$ NAV
1 Year 3 Year 5 Year
Prospect Japan Fund 20.24 32.89 (43.58)
Topix Small 8.76 27.62 13.25
Prospect Japan Fund inception date is 20 December 1994. Topix
Small is a 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.
Source: Prospect Asset Management, Inc. Index Performance
Source: Bloomberg.
Summary
The Prospect Japan Fund Limited (the "Company") returned 20.24%
in 2012 well ahead of the Topix Small Index's 8.76% gain.
The seminal event of 2012 took place in the waning weeks of
December, as the landslide election of the Liberal Democratic Party
("LDP") after three years in the wilderness fuelled reflation
expectations, drove the Yen to a 28-month low, and lifted equities
higher. Former Prime Minister Shinzo Abe returned to power on a
platform to launch a full-scale war on Japan's entrenched
deflation, weakening the currency and seeking to achieve 3% nominal
GDP growth via short-term stimulus spending on public works and
economic growth centered legislation.
The 16 December election gained the LDP and its coalition
partner New Komeito 68% of the lower house seats, establishing a
super majority capable of pushing through much of the new
administration's ambitious goals. The coalition came out swinging,
calling for an approximately Yen10 trillion supplementary budget
centered on public works. Key to Abe's vision is closer ties
between the government and the Bank of Japan ("BoJ"), pressuring
the BoJ to further expand its efforts on the monetary stimulus by
publicly pushing for unlimited monetary easing and the adoption of
a 2% inflation target, as opposed to the current 1% "goal"
announced in February 2012. Abe has gone so far as to consider
revising the law governing the BoJ if it does not meet
expectations. The development of policies for economic growth will
now rest with a new economic revitalization council.
The election was preceded by months of political gridlock during
which time the only major political achievement was passage of a
sales tax increase bill proposed by then Prime Minister Yoshihiko
Noda, calling for a doubling of the 5% tax by 2015. The measure was
seen as a vital first step towards dealing with Japan's government
debt burden. The law calls for the tax to increase from 5% up to 8%
in 2014, then to 10% in 2015, though there is a clause allowing for
a suspension of implementation based on economic conditions. This
followed a downgrading of Japan's sovereign credit rating to 'A+'
by Fitch Ratings in May, maintaining a negative outlook stating
that Japan continues to struggle with reining in its dire fiscal
balance. According to Fitch, 'the downgrades and negative outlook
reflect growing risks for Japan's sovereign credit profile as a
result of a high and rising public debt ratio.' Implementation of
the tax hike under the new administration is unclear.
Japan recorded its first annual trade deficit in 31 years for
2011, mainly due to soaring imports of oil and liquid natural gas
following the 11 March 2011 earthquake/tsunami. Reliance on foreign
oil will remain high, but should show a moderate decrease as more
nuclear reactors go online. On 1 July, Japan ended a two-month
period without nuclear power after Kansai Electric Power restarted
the Oi Nuclear Power Plant in western Japan. The decision to
restart the reactor came from Prime Minister Noda due to concerns
of energy shortages despite a swell of protestors.
Japan posted a record current account deficit in January 2012
amid flagging exports and soaring energy imports. The shortfall in
the current account stood at Yen437.3 billion in January before
seasonal adjustment, the data showed. That was the first deficit
since January 2009, when Japan registered its previous record
shortfall of Yen132.7 billion at the height of the global financial
crisis.
Japan has entered a technical recession after maintaining an
annualized 3.5% GDP decline for Q3, its 3rd recession since the
global financial crisis. Sluggish exports and dampened domestic
demand have dragged on the economy. Industrial production declined
year-on-year for the 6th consecutive month in November, falling
5.8% and cementing the case for enhanced stimulus efforts supported
by the incoming Abe administration.
Attempted economic stimulus fell primarily to the BoJ, where
attempts to weaken the Yen included an announced inflation goal of
1% on 14 February, 2012. The BoJ also announced that it would
review raising its 1% inflation "goal" to a more concrete 2%
inflation "target", as demanded by the new Prime Minister Abe, at
its January 2013 policy board meeting.
In December, the BoJ expanded its asset purchase program for the
third time in 2012, this time by Yen10 trillion, increasing
allocations for Japanese Government Bonds and short-dated T-Bills
by Yen5 trillion each. The program has now been expanded to Yen66
trillion, including an increase in the J-REIT allotment to Yen130
billion from Yen120 billion. More aggressive BoJ action can be
expected with the appointment of a new governor from April 2013,
and there is also the possibility of additional fiscal stimulus
when the 2013 budget is drafted.
A bright spot has been a recovery in the Tokyo office market,
with Miki Shoji reporting that the average office vacancy in
Tokyo's Central Business District has fallen 25 bps through the
November end to 8.76% as a glut of new supply has been
absorbed.
At the year's end, the Yen was trading at Yen86.6 to the US
dollar, overshooting Bloomberg's top rated analysts' estimates of
82 by June 2013. On 14 December the quarterly Tankan survey of
large manufacturers showed an average forecast of 78.3 through
March 2013.
FUND PERFORMANCE 2012
OUTPERFORMANCE
The biggest contributor to 2012 performance was Yasuragi (8919).
Yasuragi, a real estate brokerage firm that focuses on refurbishing
and selling of second-hand single-family homes was acquired by
private equity firm Advantage Partners. Advantage Partners offered
Yen627 a share, a 61% premium to the last traded price on 26
January. Advantage Partners took the company private.
Welcia Holdings (3141) a drug store chain, performed strongly
through the first half of 2012, announcing solid first half results
on 13 April with sales growth of 9.7% year-on-year and operating
profit growth of 18.3% accompanied by same-store-sales of +4.2%,
outpaced estimates. Welcia completed the move to the First Section
of the Tokyo Stock Exchange in April.
Shaklee Global Group (8205), a seller of nutrition and personal
care products, was quiet for most of the year, before rallying to a
5-year high on a very positive November results announcement. The
company experienced double digit growth in revenues and profits
during the first half of its fiscal year, exceeding estimates on
expansion in Asian markets.
UNDERPERFORMANCE
Invincible Investment Corporation (8963), a J-REIT with a
diversified portfolio, saw its unit price trend downward for much
of the year despite improved operational performance under new
sponsor, Fortress. The J-REIT continues to struggle under the
burden of the sector's highest borrowing costs, and so has missed
the benefits of lower rates permitting dividend expansion.
Tomoe Corporation (1921) constructs steel structures and school
facilities, long-span projects, bridges, electric pylons and
gymnasiums. The company fell as weak H1 performance from higher
than expected input costs on steel projects and large impairment
losses on investment securities resulted a downward revision of
full-year forecasts.
J-REIT MARKET 2012
The TSEREIT index gained 26.00% during 2012, outperforming the
Nikkei 225's +12.22% year-on-year performance.
J-REITs gained strongly on the back of improved fundamentals,
decreasing cost of debt financing and strong public policy support.
The market has seen a full-scale recovery in demand for secondary
issues, along with 4 successful J-REIT Initial Public Offering's
("IPO's"), the first since 2007.
J-REITs raised approximately Yen211 billion through 11 new
equity issues during the year, along with 4 IPOs for about Yen264
billion, supporting the almost Yen1 trillion in property
acquisitions announced during the year. Yen89.0 billion in new
corporate bonds were issued during the year, with an average 0.910%
interest rate and 5.1 year maturity.
As of year-end, the BoJ has purchased Yen111.1 billion in J-REIT
units under its asset purchase program (85.5% of total allotment).
The BoJ refrained from any unit purchases during the last two
months of the year.
The Financial Services Agency working group concluded its 13th
and final meeting with a final report on suggested revisions to the
Investment Trust Act. The changes will be drafted and voted on by
the incoming Diet, with expected implementation in 2013. Changes to
regulations effecting J-REITs are as follows:
1) Lifting certain bans on overseas acquisition of real estate.
2) Diversification of fund procurement channels, including
rights offerings, unit buy backs, and reduction of capital without
compensation. The issue of convertible bond issuance was discussed,
but shelved for the time being.
3) Establishing rules to strengthen corporate governance,
specifically in regards to transactions with related entities and
allowing existing unit holders to petition against the issuance of
new shares.
OUTLOOK FOR THE COMPANY 2013
Revenues of Japanese companies are expected to grow 2.7% and
profits to grow 7% in the year to March 2013. For the year to March
2014, sales are forecast to grow 3.3% and profits to grow 22.7%.
This recovery is fully discounted in the recent market rally.
Therefore, gains for the company are expected from stock picking
those companies most likely to see a change of control at a
significant premium. The market saw 10 management buyouts, 21 take
over bids and buying full ownership of listed subsidiaries, and 29
mergers between listed companies in 2012, for a total of 60 change
of control transactions. An even greater number of deals is
expected this year due to real estate reflation. About 75 similar
transactions out of 3700 listed companies in Japan would not be
surprising in 2013.
RECENT DEVELOPMENTS
The Bank of Japan, under new governor Kuroda, has terminated the
Asset Purchase Program in favor of "Quantitative and Qualitative"
monetary easing, aimed at lowering long-term interest rates and
supporting asset prices in pursuit of reaching its 2% inflation
target within the next two years. The bank will now target up to an
annual Yen60-70 trillion expansion of the monetary base, achieved
by 1) annual purchases of Yen50 billion of Japanese Government
Bonds ("JGB") with maturities up to 40 years, 2) annual purchases
of ETF and J-REIT units of Yen1 trillion and Yen30 billion
respectively. JGB purchasing operations have been consolidated
under the new program, and the bank has suspended the "banknote
principle" under which the BoJ was prohibited from buying more
banknotes than in circulation.
The BoJ action benefits J-REITs through the direct purchases
providing floor, lowering long-term interest rates, and by widening
the yield-spread as JGB yields decline. Higher unit prices also
provide more opportunity for J-REITs to issue new equity and grow
through AUM expansion.
The announcement reassured markets of the bank's seriousness in
ending persistent deflation, and the yen resumed its weakening
trend, nearing JPY/USD 100, from 92.87 the day before the
announcement.
PRINCIPAL RISKS AND UNCERTAINTIES
Continuing sovereign debt concerns in Japan, Europe and the USA
could cause 2013 to be turbulent. The Yen could also continue to
fluctuate wildly, increasing uncertainty over corporate profits in
Japan. Merger and MBO financing could dry up if banks were to
suffer losses on Japan Government Bond holdings. 2013 is expected
to be a very eventful year, with increasing volatility.
Prospect Asset Management, Inc.
19 April, 2013
DISCLOSURE OF DIRECTORSHIPS IN PUBLIC COMPANIES LISTED ON
RECOGNISED STOCK EXCHANGES
for the year ended 31 December, 2012
The following summarises the Directors' directorships in other
public companies
Directorships Stock Exchange
Company Name
Richard Battey
AcenciA Debt Strategies Limited London
Northwood Capital Enhanced European Fund Limited Irish
Juridica Investments Limited London
Princess Private Equity Holding Limited London
Better Capital PCC Limited London
NB Global Floating Rate Income Fund Limited London
Rupert Evans
El Oro Limited Channel Islands
Oryx International Growth Fund Limited London
The Red Fort Partnership Limited Channel Islands
FF&P Alternative Strategy PCC Limited Channel Islands
FF&P Enhanced Opportunities Limited Channel Islands
FF&P Global Property Fund PCC Limited Channel Islands
FF&P Ventures Fund PCC Limited Channel Islands
Master Capital Fund Limited Irish
John Hawkins
Advance Developing Markets Fund Limited London
Low Carbon Accelerator Limited London
M W Japan Fund Limited Irish
P D Star Fund Limited Irish
SR Global Fund Inc. Irish
The Greater China Fund, Inc. New York
Real Estate Credit Investments PCC Limited London
Christopher Sherwell
Baker Steel Resources Trust Limited London
Goldman Sachs Dynamic Opportunities Limited
(in voluntary liquidation) London
F&C UK Real Estate Investments Limited
(Formerly IRP Property Investments Limited) London and Channel Islands
NB Private Equity Partners Limited Euronext, Amsterdam and SFM
London
NB Distressed Debt Investment Fund Limited London and Channel Islands
Raven Russia Limited London
Rufford & Ralston PCC Limited Channel Islands
Alternative Liquidity Solutions Limited
(formerly Saltus European Debt Strategies Limited) London
Schroder Oriental Income Fund Limited London
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, 2012.
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, 2012 Net Asset Value per Ordinary
Share increased by 20.24%.
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. The Directors are required 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, 2012.
(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.
Ongoing Charges
During the year, the Association of Investment Companies ("AIC")
recommended that Ongoing Charges disclosure should replace the
Total Expense Ratio which has traditionally been calculated by
investment companies. Ongoing charges for the year ended 31
December, 2012 and 31 December, 2011 have been prepared in
accordance with the AIC's recommended methodology and replaced the
previously used Total Expense Ratios. The Ongoing charges for the
year ended 31 December, 2012 was 2.21 per cent (31.12.11: 2.20 per
cent). No performance fees were charged during the year.
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 2012. 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.
The new Guernsey Financial Services Commission ("GFSC") Code of
Corporate Governance (the "GFSC Code") 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.
Attendance at the Board, Audit Committee and Management
Engagement Committee meetings during the year was as follows;
Board Meetings Management Engagement Ad hoc Committee Audit Committee
Committee Meetings Meetings Meetings
Held Attended Held Attended Held Attended Held Attended
Rupert Evans 4 3 NA NA - - NA NA
John Hawkins 4 4 2 2 - - 2 2
Christopher
Sherwell 4 4 2 2 - - 2 2
Richard Battey 4 4 2 2 - - 2 2
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.
Board Performance
The company conducted a review of the effectiveness of the Board
during the year. The review concluded that the members of the Board
had the right mix of skills and functioned effectively as a
Board.
Supply 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, 2012, the Directors were
entitled to receive an annual fee of GBP20,000, the Chairman of the
Audit Committee GBP22,500 and the Chairman of the Board
GBP25,000.
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 12 November, 2012 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, Investment Manager and the third party
service providers to the Company. The Committee is satisfied with
their performance.
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, 2012 Chris Sherwell had beneficial interests of
9,940 (2011: 9,940) Ordinary Shares respectively of the Company. No
other Directors holding office at 31 December, 2012, 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, 2012 the following interests in the share
capital of the Company exceeded 3% of the issued share capital:
Number of Percentage of issued
shares share capital
CG Asset Management 14,997,936.00 15.72%
Clearstream, Luxembourg 7,192,629.00 7.54%
Lazard Asset Management 16,440,066.00 17.23%
Permal Asset Management 21,694,907.00 22.74%
Ruffer 4,020,185.00 4.21%
South Yorkshire Pension
Authority 4,140,000.00 4.34%
SVM Asset Management 6,070,000.00 6.36%
1607 Capital Partners 15,316,200.00 16.06%
Share buybacks
As approved at the AGM on 24 August, 2012, the Company may
purchase, subject to various terms as set out in the Articles, a
maximum of 14,577,865 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.
John Hawkins Richard Battey
19 April 2013
INVESTMENT POLICY
for the year ended 31 December, 2012
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, 2012
Percentage
Number of Fair Value of
Securities Investments in U.S. Dollars Net Asset Value
Listed investments
Advertising
739,100 Tri-stage Inc 9,855,809 10.29
9,855,809 10.29
Automobile
38,000 Nikki Co Ltd 110,598 0.12
110,598 0.12
Beverages
1,926,000 Oenon Holdings Inc 4,421,939 4.62
4,421,939 4.62
Diversified Financial
Services
309,700 Ace Koeki Co Ltd 840,327 0.88
840,327 0.88
Engineering and Construction
Toyo Engineering works
870,000 Ltd 1,886,480 1.97
3,128,600 Tomoe Corp 10,448,015 10.91
12,334,495 12.88
Internet
409,600 OPT Inc 3,182,189 3.32
3,182,189 3.32
Media
Seven Seas Holdings
2,938,000 Co Ltd 511,016 0.53
511,016 0.53
Pharmaceuticals
Katakura Industries
1,048,400 Co Ltd 9,299,930 9.71
9,299,930 9.71
Real Estate
6,539,000 Gro-Bels Co Ltd + 3,487,872 3.64
435 Sunwood Corp 228,748 0.24
3,716,620 3.88
REITs
Invincible Investment
105,226 Corp 7,516,143 7.85
Prospect Epicure J-REIT
7,898,895 Value Fund*# - -
7,516,143 7.85
Retail
266,000 Sekichu Co Ltd 1,360,227 1.42
Shaklee Global Group
842,000 Inc 7,703,363 8.04
9,063,590 9.46
Transportation
Shibusawa Warehouse
3,096,000 Co Ltd 9,621,150 10.04
9,621,150 10.04
Total listed investments 70,473,806 73.55
----------- -------
Unlisted investments
Corporate bond
Godo Kaisha Taiheiyo
5,150,000 Jisho 5,150,000 5.38
150,000,000 Kidoh Construction 1,739,332 1.82
315,700,000 Takefuji Corp 178,084 0.19
7,067,416 7.39
Total unlisted investments 7,067,416 7.39
Total investments 77,541,222 80.94
Net current assets 18,258,324 19.06
NET ASSETS 95,799,546 100.00
+ 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.
* Prospect Epicure JREIT Value Fund is classed as a related
party as the fund shares the same Investment Advisor as the
Company
# Currently in liquidation.
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF THE PROSPECT JAPAN FUND LIMITED
We have audited the Financial Statements of The Prospect Japan
Fund Limited the (the "Company") for the year ended 31 December
2012 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 2012 and of its gain 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:
Under the Companies (Guernsey) Law, 2008 we are required 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.
Christopher James Matthews, FCA
for and on behalf of Ernst & Young LLP
Guernsey, Channel Islands
19 April, 2013
The Financial Statements are published on websites maintained by
the Investment Manager.
The maintenance and integrity of these websites are the
responsibility of the Investment Manager; the work carried out by
the Auditors does not involve consideration of these matters and,
accordingly, the Auditors accept no responsibility for any changes
that may have occurred to the Financial Statements since they were
initially presented on the website.
Legislation in Guernsey governing the preparation and
dissemination of Financial Statements may differ from legislation
in other jurisdictions.
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December, 2012
Revenue Capital Total Revenue Capital Total
01.01.2012 01.01.2012 01.01.2012 01.01.2011 01.01.2011 01.01.2011
to to to to to to
31.12.2012 31.12.2012 31.12.2012 31.12.2011 31.12.2011 31.12.2011
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 1,658,400 - 1,658,400 2,182,612 - 2,182,612
Interest income 439,355 - 439,355 - - -
Foreign exchange
movements (896,118) 536,762 (359,356) (332,777) 577,539 244,762
Gain/(loss) on financial
assets
at fair value through
profit or loss - 16,749,969 16,749,969 - (5,618,627) (5,618,627)
Total income 1,201,637 17,286,731 18,488,368 1,849,835 (5,041,088) (3,191,253)
4 Management fee (1,410,894) - (1,410,894) (1,318,200) - (1,318,200)
5 Other expenses (664,351) - (664,351) (673,260) - (673,260)
Transaction costs - (320,563) (320,563) - (261,557) (261,557)
Total expenses (2,075,245) (320,563) (2,395,808) (1,991,460) (261,557) (2,253,017)
Gain/(loss) for the
period before tax (873,608) 16,966,168 16,092,560 (141,625) (5,302,645) (5,444,270)
3 Withholding tax (116,088) - (116,088) (152,783) - (152,783)
Gain/(loss) for the
period after tax (989,696) 16,966,168 15,976,472 (294,408) (5,302,645) (5,597,053)
Total comprehensive
income/
(deficit) for the
period (989,696) 16,966,168 15,976,472 (294,408) (5,302,645) (5,597,053)
Gain per Ordinary
2 Share -
Basic & Diluted (0.010) 0.175 0.165 (0.003) (0.053) 0.028
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, 2012
31.12.2012 31.12.2011
In U.S. In U.S.
Notes Dollars Dollars
Non-current assets
Financial assets at fair value through
6 profit or loss 77,541,222 81,179,926
Current assets
7 Receivables 1,737,922 1,058,870
Cash and cash equivalents 16,945,485 486,833
Total current assets 18,683,407 1,545,703
----------- ------------
Current liabilities
8 Payables 425,083 520,839
Net current assets 18,258,324 1,024,864
Net assets 95,799,546 82,204,790
Equity
9 Share capital account 95,278 98,198
9 Redemption reserve 88,581,476 90,963,192
9 Capital redemption reserve 320,231 317,311
Other reserves 6,802,561 (9,173,911)
Total equity 95,799,546 82,204,790
Ordinary Shares in issue 95,278,602 98,198,602
2 Net Asset Value per Ordinary Share 1.01 0.84
The Financial Statements were approved by the Board of Directors
on 19 April, 2013 and signed on its behalf by:
John Hawkins Richard Battey
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December, 2012
Capital
Capital Capital Capital Reserve/
Share
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,
2012 98,198 317,311 90,963,192 (11,302,434) 22,472,199 (23,861,300) 3,517,624 82,204,790
Total comprehensive
income/(expense)
for the
period
(Loss)/gain
for the
period after
tax - - - (989,696) 4,430,933 11,998,473 536,762 15,976,472
Capital
activities
Repurchase
of shares (2,920) 2,920 (2,381,716) - - - - (2,381,716)
Balances
at 31
December,
2012 95,278 320,231 88,581,476 (12,292,130) 26,903,132 (11,862,827) 4,054,386 95,799,546
========= =========== ============ ============= ============ ============= ============ ============
Capital
Capital Capital Capital Reserve/
Share
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/(expense)
for the
period
(Loss)/gain
for the
period 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,
2012 98,198 317,311 90,963,192 (11,302,434) 22,472,199 (23,861,300) 3,517,624 82,204,790
========= =========== ============ ============= ============ ============= ============ ============
STATEMENT OFCASH FLOWS
for the year ended 31 December, 2012
01.01.2012 01.01.2011
to to
31.12.2012 31.12.2011
In U.S. In U.S.
Notes Dollars Dollars
Cash flows from operating activities
Net cash inflow from operating
10 activities 418,906 228,029
Cash flows from investing activities
Purchase of investments (76,663,344) (77,118,552)
Sale of investments 96,022,694 76,894,388
Net cash inflow/(outflow) from
investing activities 19,359,350 (224,164)
Net cash inflow before financing
activities 19,778,256 3,865
Cash flows from financing activities
Repurchase of shares (2,381,716) (1,063,882)
Net cash outflow from financing
activities (2,381,716) (1,063,882)
Increase/(decrease) in cash and
cash equivalents 17,396,540 (1,060,017)
Reconciliation of net cash flow
to
movement in net funds
Net cash inflow/(outflow) 17,396,540 (1,060,017)
Effects of foreign exchange rate
changes (937,888) (40,878)
Cash and cash equivalents at beginning
of period 486,833 1,587,728
Cash and cash equivalents at end
of period 16,945,485 486,833
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December, 2012
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 first time
this year but had no impact on the financial position or
performance of the Company.
-- IAS 12 Income Taxes - Limited scope amendment - (effective 1 January, 2012);
Standards, amendments and interpretations issued but not yet
effective
The following interpretations are mandatory for accounting
periods beginning on or after 1st January, 2013.
-- IFRS 1 (Amendments) - Borrowing Costs - (effective 1 January, 2013)
-- IAS 1 Presentation of items of Other Comprehensive Income (effective 1 July, 2012)
-- 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.
The European Union has not yet endorsed the amendments to IFRS
10 "Consolidated Financial Statements" and IFRS 9 "Financial
Instruments: Classification and Measurement" for investment
entities. The application of IFRS 10 "Consolidated Financial
Statements" is due to be endorsed on 1 January, 2014.
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 May 2012 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,
2012.
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 designated 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 it 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 shares are denominated in United States Dollar and
accordingly the Board have determined that the Company's functional
and presentation currency is United States Dollar, despite the fact
that the investments are in Japanese Yen.
(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 97,028,307 and a net gain of US$15,976,472 (2011: 99,056,113
Ordinary Shares and a net loss of US$5,597,053).
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 of 95,278,602 (2011: 98,198,602) and shareholders'
funds attributable to equity interests of US$95,799,546 (2011:
US$82,204,790).
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$1,410,894 (2011:
US$1,318,200) of which US$110,087 (2011: US$102,458) 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
01.01.2012 01.01.2011
to to
31.12.2012 31.12.2011
In U.S.
Dollars In U.S. Dollars
Administration and secretarial
fees* 235,149 219,700
Custodian's fees and
charges** 116,173 122,043
General expenses 121,668 147,134
Directors' remuneration 141,236 119,922
Non-audit fees 19,516 27,644
Auditors' fees 30,609 36,817
664,351 673,260
*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$235,149 (2011: US$219,700) of which US$18,348 (2011: US$$17,076)
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$116,173 (2011: US$122,043) of which US$13,969 (2011:
US$5,380) is due and payable at the year end.
Note 6 Financial Assets at Fair Value through Profit or Loss
01.01.2012 01.01.2011
to to
31.12.2012 31.12.2011
In U.S. Dollars In U.S. Dollars
Opening book cost 105,041,226 110,330,155
Purchases at cost 76,435,294 76,703,583
Proceeds on sale (96,823,967) (77,107,152)
Realised gain/(loss)
on sale 4,751,496 (4,885,360)
Closing book cost 89,404,049 105,041,226
Unrealised loss (11,862,827) (23,861,300)
Fair value 77,541,222 81,179,926
Note 7 Receivables
31.12.2012 31.12.2011
In U.S.
In U.S. Dollars Dollars
Amounts due from brokers 884,904 278,868
Interest receivable 399,513 -
Dividends receivable 453,505 780,002
-----------
1,737,922 1,058,870
Note 8 Payables
31.12.2012 31.12.2011
In U.S.
In U.S. Dollars Dollars
Amounts due to
brokers 169,656 272,380
Other creditors 255,427 248,459
425,083 520,839
Note 9 Share Capital, Redemption Reserve & Capital Redemption Reserve
Authorised Share
Capital 31.12.2012 31.12.2011
In U.S. In U.S.
Number of shares Dollars Dollars
Ordinary Shares
150,000,000 of US$0.001 each 150,000 150,000
"C" Ordinary Shares
60,000,000 of US$0.01 each 600,000 600,000
As approved at the AGM on 24 August, 2012, the Company may
purchase a maximum of 14,577,865 Ordinary Shares, equivalent to
14.99% 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:-
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,
98,198,602 2012 98,198 90,963,192 317,311
Shares repurchased
and
cancelled during
(2,920,000) the period (2,920) (2,381,716) 2,920
Balance at 31 December,
95,278,602 2012 95,278 88,581,476 320,231
The Redemption Reserve account is a distributable reserve
account which can be used for among other things, the payment of
dividends, if any. The Directors do not recommend the payment of a
dividend for the year.
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.
Note 10 Reconciliation of Deficit on Ordinary Activities to Net
Cash Inflow from Operating Activities
31.12.2012 31.12.2011
In U.S. Dollars In U.S. Dollars
Revenue loss on ordinary activities
for the period (989,696) (294,408)
Decrease in dividends receivable
and other receivables (73,016) (90,155)
Increase/(decrease) in
other creditors 6,968 (5,825)
Foreign exchange gain 1,474,650 618,417
Net cash inflow from operating
activities 418,906 228,029
Note 11 Analysis of Financial Assets and Liabilities by
Measurement Basis
Investments Net current
at fair
value assets Total
In U.S. In U.S. In U.S.
Dollars Dollars Dollars
As at 31 December,
2012
Financial assets
Investments at fair value
through profit or loss 77,541,222 - 77,541,222
Cash and cash
equivalents - 16,945,485 16,945,485
Receivables - 1,737,922 1,737,922
77,541,222 18,683,407 96,224,629
============ ============ ===========
Financial liabilities
Payables - 425,083 425,083
- 425,083 425,083
============ ============ ===========
Investments Net current
at fair
value assets 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
============ ============ ===========
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 2012 was GBP20,000, the Chairman of the Audit
Committee GBP22,500 and the Chairman of the Board GBP25,000 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 (2011: 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.
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 do not reflect the full array of companies on the
index. At 31 December, 2012 a 1% positive/negative movement in the
index would produce a positive/negative movement in the net assets
of the Company of US$217,115 (2011: US$389,663) 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:
31.12.2012 31.12.2011
In US Dollars In US Dollars
Investments
Japanese Yen (Yen6,687,154,985, 2011:Yen6,300,779,956) 77,541,222 81,179,926
77,541,222 81,179,926
Other (Liabilities)/Assets
US Dollars 140,752 (130,237)
Sterling (GBP48,267, 2011:GBP40,938) (77,973) (63,622)
Japanese Yen (Yen1,600,966,518,
2011:Yen94,591,186) 18,195,545 1,218,723
18,258,324 1,024,864
The below details the Company's sensitivity to a 10% (31
December 2011: 10%) change in the Yen exchange rates against the US
Dollar.
31.12.2012 31.12.2011
In US Dollars In US Dollars
Impact on Statement of Comprehensive Income
and Equity in response to a
- 10% increase 8,711,139 7,497,147
================== ==============
- 10% decrease (10,645,216) (9,161,768)
================== ==============
Impact on Equity in
response to a
- 10% increase 8,711,139 7,497,147
================== ==============
- 10% decrease (10,645,216) (9,161,768)
================== ==============
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 2012.
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 70,473,806 - - 70,473,806
-Debt Securities - 7,067,416 7,067,416
Total assets as at 31
December, 2012 70,473,806 - 7,067,416 77,541,222
============== ============== ============== ==============
The following table presents the movement in level 3 instruments
for the year ended 31 December, 2012 by class of financial
instrument.
Debt
Securities Total
In US
In US Dollars Dollars
Opening balance 134,228 134,228
Purchases 8,283,617 8,283,617
Unrealised losses during the period (1,350,429) (1,350,429)
Closing balance 7,067,416 7,067,416
============== ============
Net unrealised gain for the period included
in the Statement of Comprehensive Income
for level 3 Investments held at 31 December,
2012 624,230 624,230
============== ============
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
============== ============== ============== ==============
Debt
Securities Total
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)
============== ==============
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.
There were no transfers between level 1 and level 3 during the
financial year 2012 or 2011.
On 20 December, 2012 the Company signed a Yen300,000,000
purchase agreement for an unlisted bond. The purchase was settled
on 7 January, 2013 at a cost of $3,419,796.
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.
As at 31 December Up to 1 week
2012 1 week to 1 month 1-6 months 6-12 months Total
In US In US In US In US
Dollars Dollars Dollars In US Dollars Dollars
Financial assets
Financial assets
at fair value
through profit
or loss 11,806,843 17,788,151 38,302,729 9,643,499 77,541,222
Dividends receivable - - 453,504 - 453,504
Interest receivable - - 30,976 368,538 399,514
Cash and cash equivalents 16,945,485 - - - 16,945,485
Securities sold
receivable 884,904 - - - 884,904
Financial liabilities
Amounts due to
brokers (169,656) - - - (169,656)
Other creditors - (186,182) (69,245) - (255,427)
Total 29,467,576 17,601,969 38,717,964 10,012,037 95,799,546
=========== ============ =========== ============== ===========
As at 31 December Up to 1 week
2011 1 week to 1 month 1-6 months 6-12 months Total
In US In US In US In US
Dollars In US Dollars Dollars Dollars 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
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
=========== ============== =========== ============ ===========
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,
corporate bonds 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.
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 24 August, 2012, the Company may
purchase a maximum of 14,577,865 Ordinary Shares, equivalent to
14.99% 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.
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 19 April, 2013. Subsequent events have been evaluated
until this date.
The Company has made the following share buybacks subsequent to
the year end, up to the date up to the date of these Financial
Statements:
Price per Percentage
Share of
In U.S. share
Date Shares Dollars capital
30 January,
2013 5,000 0.885 0.01%
25 February,
2013 5,000 0.840 0.01%
26 February,
2013 25,000 0.840 0.03%
27 February,
2013 10,000 0.840 0.02%
4 April, 2013 10,000 0.990 0.02%
55,000 0.09%
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 95,278,602 Ordinary
Shares in issue as at 31 December, 2012. The Company's Ordinary
Shares are 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 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 74, 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 70, 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 65, 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 61, 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 NKCDNQBKDFQD
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