TIDMPJF
RNS Number : 4672L
Prospect Japan Fund Ld
28 April 2015
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 2014. All figures are based on the Audited Financial
Statements for the year ended 31 December 2014, approved by the
Board of Directors on 27 April 2015.
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, 2014
Whilst over the previous three year period the Company's return
was 36.90% compared with 31.71% for the MSCI Japan Small Cap Index,
the last year's performance based on valuations produced in
accordance with International Financial Reporting Standards
("IFRS") was +9.21% compared with MSCI Japan Small Cap Index
performance of (0.12%) ((10.85%) based on published NAV).
The Investment Advisor writes in considerable detail about
performance and strategy particularly in light of the changes in
investment policy approved by shareholders earlier in the year.
The significant event has been the change of investment policy
permitting, inter alia, the investment of up to 25 per cent of the
Company's portfolio into a single stock, which was approved by the
shareholders at the EGM held on 5 March 2014. This change was made
to facilitate the opportunity to realise value for shareholders
through the initiation of a corporate transaction or other
corporate action. One of the investments during the year to take
advantage of the change of investment policy was the purchase of
Yen3 billion (US$25.3 million) Convertible Bond in Prospect Co, a
real estate developer in Japan, formerly known as Gro-bels. The
Convertible Bond has a coupon of 4% and is convertible into shares
of Prospect Co at a price of Yen60 per share. The proceeds provided
Prospect Co. with a significant pool of funds to extend its
corporate activity through taking positions in Japanese listed
companies, some of which may be companies held directly by the
Company. Prospect Co is the ultimate parent of the manager of the
Company (PAM(CI)L) and therefore the investment constituted a
related party transaction.
In the Investment Advisor's monthly review for December 2014
published on the Company's website (www.prospectjapan.com), they
note that the largest individual holding of the Company (the Yen3
billion convertible bond noted above) has been valued at cost vis
$25 million. For the purposes of the Financial Statements, these
bonds have to be valued in accordance with IFRS. The effect of this
IFRS adjustment is to increase the value of the holding by $26
million to $51 million. This was a major factor which turned the
comprehensive income for the year from what would have been a loss
(as indicated by the published NAV) into a gain for the year of
$10.48million. For further details of the differences between
published NAV and IFRS adjusted NAV please see note 16. At the end
of December, 2014 Prospect Co shares traded at Yen83, a 38.3%
premium to par value of Yen60. Since the year end, 1,800,000,000
have been converted to 30,000,000 shares of which 27,404,000 have
been sold at an average rate of Yen81.
In light of the Company's investment in the corporate bond
issued by Godo Kaisha Taiheiyo Jisho becoming non performing during
the year, the Company is pleased to have sold the investment after
the year end to Prospect Co. for an amount equal to the face value
of the bond plus all accrued interest to 31 December 2014. In light
of Prospect Co.'s real estate business, Prospect Co. is much better
placed to manage this investment than the Company.
As widely expected the ruling LDP coalition won a convincing
victory in the Lower House election and Prime Minister Abe lost no
time in announcing new tax reforms, including additional cuts in
corporation tax. From April 2015 corporation tax will be cut from
34.6% to 32.1%, followed by a further reduction to 31.3% in April
2016.
A draft of the Japanese Corporate Governance Code, which is due
to be implemented in June 2015, was also announced. The code
follows a number of other shareholder-friendly measures in 2014,
including the Stewardship Code and the Ito Review, and is designed
to stimulate corporate entrepreneurship and increase corporate
value.
Japanese companies remain financially strong and as at the end
of September aggregate cash levels reached Yen233trn. In addition
to cash flow being used for increased shareholder returns, total
M&A activity also rose in 2014 and in the second half of the
year there was a noticeable increase in the number of domestic
deals.
So far Abenomics has had a degree of success such as weakening
the yen, higher stock prices and better performance by businesses.
It is quite possible that Abe will use the public support gained in
the election in December 2014 as a driving force for implementing
reforms especially for the third arrow of "growth strategies" where
so far there has been slower progress. There is a clearly a need
for structural reform so that the benefits of Abenomics spread
outside from the main urban areas and to small and mid-sized
companies.
Risks and uncertainties remain but the Directors have reviewed
the outlook for your Company and believe the opportunities remain
exciting in Japan and continue to have every confidence in the
strategy and ability of your manager.
John Hawkins
Chairman
27 April, 2015
INVESTMENT ADVISOR'S REPORT
for the year ended 31 December, 2014
Market Performance (%), US$ NAV
1 Year 3 Year 5 Year
Prospect Japan Fund 9.21/(10.85)* 65.66 84.20
MSCI Japan Small Cap Index (0.12) 31.71 52.47
The Prospect Japan Fund Limited inception date is 20 December
1994. 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.) Although the Company is not
managed to a benchmark, it measures its performance against the
MSCI Japan Small Cap Index (Total Return) for comparison purposes
only. The MSCI Developed Markets Small Cap Indices offer an
exhaustive representation of this size segment by targeting
companies that are in the Investable Market Index but not in the
Standard Index in a particular developed market. The indices
include Value and Growth style indices and industry indices based
on the Global Industry Classification Standard (GICS(R)). (Source:
Bloomberg)
*Refers to performance based on published NAV
Summary
The Prospect Japan Fund Limited (the "Company") NAV performance
based on valuations produced in accordance with International
Financial Reporting Standards ("IFRS") increased 9.21% in 2014,
outperforming the MSCI Japan Small Cap Index which declined 0.12%.
NAV performance based on the published NAV showed a decrease of
10.85%. The broader Japan market performed poorly in 2014, weighed
down by domestic issues such as a higher import bill, disappointing
export numbers and the consumption tax hike. These were compounded
by external shocks from emerging market volatility and the Russian
incursion into Crimea.
The effects of April's consumption tax increase proved longer
lasting than anticipated, driving the Japanese economy into
technical recession as consumer spending remained depressed during
Q2 and Q3.
US economic growth (+4.6% in Q2, the fastest growth in 3 years)
and strong employment numbers fuelled speculation of US Fed
interest rates hike timing, resulting in a strengthening dollar H2
2014. The dollar rose to Yen119.8 by year end, helping the TOPIX
index end the year near annual highs, up 25.3% from 2014 lows in
April.
Perhaps the largest story of the year was the surprise expansion
of the Bank of Japan ("BoJ") monetary easing program in October
2014, and simultaneous release of the Government Pension Investment
Fund ("GPIF") new investment weightings.
Despite the support from the BoJ, GDP contraction and ongoing
sluggish consumer spending prompted Prime Minister Shinzo Abe to
delay the upcoming additional 2 basis point increase in consumption
tax by 18 months and call for snap elections to renew his mandate
to govern. The ruling coalition easily retained its super majority
following the December snap elections, returning the focus to
economic growth policies. These include expected reforms to the
Japanese corporate tax code and labour regulations in 2015. The
administration has also announced new stimulus spending totalling
Yen3.5 trillion with focus on revitalization of regional economies,
including Yen1.7 trillion in additional post-disaster
reconstruction.
Company holdings, with strong weightings towards Real Estate
(31.8%), Retail (8.2%) and Financial Services (8.1%), are direct
beneficiaries of the continued support for fiscal and monetary
stimulus by the Abe administration and BoJ. Support for asset
inflation and domestic consumption can be seen through additional
stimulus government spending, delay of the next consumption tax
increase and the additional easing enacted by the BoJ. Real Estate
prices are supported by an expectation of stable near to mid-term
low government bond yields via BoJ purchases.
Strong recovery in the Tokyo office market continues, due to low
new office supply. Miki Shoji reporting that the average office
vacancy in Tokyo's Central Business District has fallen 187 bps
through the year end to 5.47%. This marks its lowest reading since
January 2009.
While the Company did not have direct exposure to J-REITs at
year end, they serve as a bellwether for the overall Japanese real
estate market, and BoJ commitment to asset reflation via direct
purchase of investment units. In 2014, the BoJ purchased a total of
Yen 37.2 billion in J-REIT units, bringing total purchases to date
to Yen178.2 billion of Yen180 billion target for direct purchases
by 2014 end. The annual purchase allocation for 2015 stands at
Yen90 billion.
The TSEREIT index rallied to a seven year high at year end,
supported by a decline in JGB yields to as low as 0.31%.
UNDERPERFORMANCE
Underperformance was led by Shaklee Global Group (8205), a
seller of nutrition and personal care products, with a high
percentage of overseas sales which fell sharply during November,
following weaker than expected H1 results and a downward revision
to full year forecasts. Shaklee was also the subject of social
media speculation on potential regulatory investigations into its
Chinese operations, though these concerns remain unsubstantiated.
Accordingly, shares in the company surrendered most of the gains
made earlier in the year.
Tomoe Corp (1921), a steel frame construction company that
derives 82% of its operating profit from real estate leasing,
underperformed along with the real estate index, following strong
outperformance during 2013. The company maintains Yen14.7 billion
in unrealized gains on rental real estate assets (vs a market cap
of Yen18.5 billion), with an adjusted price to book ratio of 0.55x.
While share performance during the year disappointed, Tomoe Corp
announced strong H1 results, along with a large upward revision to
full year 2015 guidance. H1 profits rose sharply thanks to
contribution of a Yen2.5 billion government bridge construction
order with an exceptional 20% profit margin.
OUTPERFORMANCE
The largest contributor to 2014 performance was Daiwa Motor
Transportation (9082), a taxi and limousine service provider. The
company rallied strongly towards year-end following its November
announcement of H1 results. Daiwa Motor reported net income 28.7%
above company guidance, aided by a resurgence in its real estate
business. The steep drop in oil prices into year-end also likely
played a part in turning sentiment.
The Company's largest position, Prospect Co. Ltd (3528), rallied
into December, following a Yen3 billion convertible bond issuance
to the Company and the announced tender offer bid ("TOB") for
control of Yutaka Shoji (8747), a commodity futures trader (1.4% of
the Company). Outperformance of Prospect was not reflected in
Company's published NAV performance at end December, Prospect
shares traded at Yen83, a 38.3% premium to par value of Yen60. This
fact has been reported in the annual accounts.
The Tokyo District Court advised the results of the case
involving the Toho (9602) TOB of Toho Real Estate in March 2015,
with the court ordering the price raised 13.6% to Yen835. While an
improvement, the price is still significantly discounted to book
value of Toho Real Estate when adjusted for unrealised gains on its
real estate holdings. The Company is currently appealing the
ruling.
OUTLOOK FOR THE COMPANY 2015
The outlook for 2015 remains positive, as BoJ easing, a weaker
Yen, and potential for a second year of wage increases provide
tailwinds for the economy. We see high probability for
outperformance of asset rich companies due to demand from J-REITs
for sources of additional property acquisitions. J-REITs acquired
over Yen1.5 trillion in property during 2014. We expect demand for
attractive property, as well as sites for redevelopment to be
healthy going forward. Accordingly, gains for the company are
expected from stock picking among companies with undervalued real
estate portfolios.
The Company believes that activism plays a key role in unlocking
value from Japanese companies. To help in these activist endeavors,
in November 2014 the fund bought 100% of a $25.3 million
convertible bond from the Investment Advisor's parent, Prospect
Co., Ltd. The activism has helped the Prospect Co., Ltd. share
price which, as of the beginning of April this year, has allowed
the Company to convert half of the bond and sell the shares for a
35% gain.
Prospect Asset Management, Inc.
27 April 2015
DISCLOSURE OF DIRECTORSHIPS IN PUBLIC COMPANIES LISTED ON
RECOGNISED STOCK EXCHANGES
for the year ended 31 December, 2014
The following summarises the Directors' directorships in other
public companies
Directorships Stock Exchange
Company Name
Richard Battey
AcenciA Debt Strategies Limited London
Juridica Investments Limited London
Princess Private Equity Holding Limited London
Better Capital PCC Limited London
NB Global Floating Rate Income Fund Limited London
Pershing Square Holdings Limited Euronext
Rupert Evans
El Oro Limited Channel Islands
Oryx International Growth Fund Limited London
The Red Fort Partnership 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
Low Carbon Accelerator Limited London
M W Japan Fund Limited Irish
Aberdeen Greater China Fund, Inc. New York
Advance Developing Markets Fund London
DIRECTORS' REPORT
The Directors present their Annual Report and the Audited
Financial Statements of The Prospect Japan Fund Limited (the
"Company") for the year ended 31 December, 2014.
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 close-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. The Company
is a FATCA compliant organisation with FATCA entity classification
FFI and GIIN L0Q9R3.99999.SL.831.
Results and Dividend
The results for the year are set out in the Statement of
Comprehensive Income.
Whilst over the last three year period the Company's return was
36.90% compared with 31.71% for the MSCI Japan Small Cap Index, the
last year's performance based on valuations produced in accordance
with International Financial Reporting Standards ("IFRS") was
+9.21% compared with MSCI Japan Small Cap Index performance of
(0.12%) ((10.85%) based on published NAV).
In the Investment Advisor's monthly review for December 2014
published on the Company's website (www.prospectjapan.com), they
note that the largest individual holding of the Company (the Yen3
billion convertible bond noted above) has been valued at cost vis
$25 million. For the purposes of the Financial Statements, these
bonds have to be valued in accordance with IFRS. The effect of this
IFRS adjustment is to increase the value of the holding by $26
million to $51 million. This was a major factor which turned the
comprehensive income for the year from what would have been a loss
(as indicated by the published NAV) into a gain for the year of
$10.48million. At the end of December, 2014 Prospect Co shares
traded at Yen83, a 38.3% premium to par value of Yen60. For further
details of the differences between published NAV and IFRS adjusted
NAV please see note 16.
The Directors do not recommend the payment of a dividend for the
year.
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.
Principal Risks and Uncertainties
The Company's assets consist mainly of listed and quoted
securities and its principal risks are therefore market related or
currency related. A more detailed explanation of these risks and
the way they are managed is contained in note 13 to the accounts.
Other risks faced by the Company include the following:
(i) Investment objective and strategy
The Company's strategy may not be successful in achieving its
investment objective.
(ii) Investment risk
To achieve the objective of delivering long-term performance,
the Company invests in Japanese growth as well as cyclical
companies with strong management teams that possess a clear vision
and focus on profitability and shareholders' interests. The
investment process is driven by proprietary fundamental research
identifying companies with below average valuations and above
average earnings growth and return on equity.
The Company also invests in companies that have undervalued
assets where it identifies a realistic catalyst for positive
change. This represents an enhancement of the overall investment
process reflecting what the Manager believes are exciting new
opportunities in the Japanese equity market. The Manager believes
that these types of companies compliment the Company's overall
stock picking expertise, enabling the Company to identify the best
opportunities for long term capital appreciation in Japan caused by
ongoing consolidation.
Risk management is an integral part of the investment management
process. Core to the process is that risks taken are not incidental
but are fully understood and accounted for. In-depth proprietary
fundamental research provides the Manager with a deep understanding
of each stock in the Company's portfolio and the associated risks.
The Board considers the risks facing the Company on an on-going
basis. All Board meetings are also attended by the Manager, either
in person or by telephone, where reports on portfolio performance
and strategy are provided.
Portfolio performance will be dependent on the performance of
Japanese equities and such stocks will be influenced by the general
health of the country. The largest risk for Japan continues to be a
slowdown in the global economy, particularly in major trading
partners. Japan remains sensitive to economic and geopolitical
uncertainty abroad, as seen during disruptive developments in
Russia and elsewhere in 2014. Within Japan, there continues to be
uncertainty with regard to sustainable inflation expectations
leading to a positive feedback cycle of increased consumption and
wage growth. The Bank of Japan is currently acquiring the majority
of newly issued government debt in pursuit of reaching its 2%
inflation target and questions remain as to the need, timing and
method of further stimulus measures.
(iii) Foreign exchange risk
The movement of exchange rates may have an unfavourable or
favourable impact on returns as the majority of the Company's
assets are denominated in Yen, rather than US Dollar, the reporting
currency of the Company.
(iv) Ordinary shares
The market value of the shares in the Company may not reflect
the underlying Net Asset Value and may trade at a discount to it.
The Board actively monitors the discount of the Company and, where
appropriate, may implement share buybacks to help reduce the
discount and/or discount volatility.
(v) Borrowing
The Investment Policy restricts the Company from entering into
borrowings in excess of 20 per cent. of net assets at the time the
borrowings are drawn down. Whilst such borrowings may enhance the
return on the shares where the underlying Company performance is
positive, the opposite is also true and any borrowing will enhance
the negative performance of the Company.
(vi) Third party service providers
The Company has no employees and the Board comprises three
non-executive directors. The Company is reliant on the Manager, the
Investment Advisor and the Secretary, Registrar and Administrator
to perform its executive function. The most significant of these
third party service providers is the Manager to whom the management
of the Company's investments has been delegated. Failure by any of
these third party service providers to perform the services in
accordance with the terms of the relevant service contracts
represents a risk to the operations of the Company and the
performance of the Company. Termination of the Investment
Management Contract by the Manager or loss of key staff by the
Manager could materially affect the ability of the Company to
operate and detract from the performance of the Company until a
suitable replacement could be found.
The Board has segregated the duties of investment management,
accounting and custody. Each of the contracts with third party
service providers has been entered into after full and proper
consideration of the quality and cost of the services provided and
the control systems in place. The Board reviews the performance of
the Investment Advisor and the Manager on a regular basis.
Statement of Directors' Responsibilities and Declarations
The Directors are responsible for preparing the Financial
Statements in accordance with applicable Guernsey Law and
International Financial Reporting Standards as adopted by the EU.
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. The Directors
are responsible for ensuring that the Annual Report includes
information required by the Rules of the UK Listing Authority. The
Directors are also responsible for ensuring that the Company
complies with the provisions of the Listing Rules and the
Disclosure Rules and Transparency Rules of the UK Listing
Authority. With regard to corporate governance the Company is
required to disclose how it has applied the principles and complied
with the provisions of the Corporate Governance code applicable to
the Company. 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 and performance 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 and
International Financial Reporting Standards as adopted by the EU
("IFRS"). 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 IFRS as adopted by the European Union and give a
true and fair view of the financial position and performance of the
Company as at and for the year ended 31 December, 2014.
(b) The Chairman's Report, Investment Advisor's and Directors'
Reports include a fair review of the development and performance of
the Company business and the position of the Company together with
a description of the principal risks and uncertainties facing 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. In the opinion of the Board, the Annual Report and
Financial Statements taken as a whole, are fair, balanced and
understandable and provide the information necessary to assess the
Company's performance, business model and strategy.
Ongoing Charges
Ongoing charges are the recurring expenses incurred by the fund
excluding one-off expenses. Ongoing charges for the years ended 31
December, 2014 and 31 December, 2013 have been prepared in
accordance with the AIC's recommended methodology. The ongoing
charges for the year ended 31 December, 2014 was 2.28 per cent (31
December, 2013: 2.24 per cent). No performance fees were charged
during the year.
Corporate Governance
The AIC Corporate Governance Guide for Investment Companies
("AIC Guide") came into effect from 1 February 2013. The AIC guide
brings together the recommendations of the UK Corporate Governance
Code ("UK Code") and the AIC Code of Corporate Governance ("AIC
Code") into a single document.
The Board of The Prospect Japan Fund Limited has considered the
principles and recommendations of the AIC Code by reference to the
AIC Guide. The AIC Code addresses all the principles set out in
Section 1 of the 2012 UK 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 more relevant 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, 2014. The Code
includes provisions relating to; the role of the chief executive,
executive directors' 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 that 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 Company complies with the AIC Code and as such also complies
with the Guernsey Financial Services Commission ("GFSC") Code of
Corporate Governance (the "GFSC Code"). 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 Board
The Board comprises three non-executive directors. All members
of the Board other than Rupert Evans are independent of the
Manager. None of the Directors has a contract of service with the
Company.
The Chairman of the Board is John Hawkins. Biographies for Mr
Hawkins and all other Directors can be found in the Board members'
section. In considering the independence of the Chairman, the Board
has taken note of the provisions of the AIC 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 formal 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 4 NA NA 3 2 NA NA
John Hawkins 4 4 - - 3 3 3 3
Richard Battey 4 4 - - 3 1 3 3
Christopher
Sherwell 4 2 - - 3 2 3 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. At the AGM on 27 August, 2014,
Rupert Evans, John Hawkins, Richard Battey and Christopher Sherwell
retired as Directors, and being eligible, Rupert Evans, John
Hawkins and Richard Battey offered themselves for re-election.
Rupert Evans, John Hawkins and Richard Battey were re-elected as
Directors of the Company.
Board Performance
The Company conducted a review of the effectiveness of the Board
during the year by way of self-evaluation questionnaires. 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 the entire Board. Christopher Sherwell
retired at the Annual General Meeting. A succession plan has been
discussed and is in place. A number of suitable candidates are
being reviewed. The Board has not engaged an external search
consultancy, nor is it advertising openly.
The Board has also given careful consideration to the
recommendations of the Davies Report on "Women on Boards". As
recommended in the Davies Report, the Board has reviewed its
composition and believes that the current appointments provide an
appropriate range of skills, experience and diversity. The Board
will take into account the recommendations of the Davies Report as
part of its succession planning over future years.
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, 2014 and 31 December, 2013,
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
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. The last such resolution was
tabled at the eighteenth Annual General Meeting held in 2014. The
Shareholders voted against the resolution, and in favour of the
continuation of the Company. Based on this vote and the fact that
the assets of the Company consist mainly of securities that are
readily realisable, whilst the Directors acknowledge that the
liquidity of these assets needs to be managed, the Directors
believe that the Company has adequate financial resources to meet
its liabilities as they fall due and that it is appropriate for the
Financial Statements to be prepared on a going concern basis.
Factors regarding the going concern basis are also discussed in
note 1 of the Financial Statements.
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.
The table above sets out the number of Audit Committee Meetings
held during the year ended 31 December, 2014 and the number of such
meetings attended by each Committee member.
The Audit Committee Report detailing responsibilities and
activities is presented in the Audit Committee report.
Management and Engagement Committee
The Management and Engagement Committee comprise the Independent
Directors. The Management and Engagement Committee operate 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. As the Board has evaluated their
performance during the course of their regular meetings and found
it satisfactory, the Management Engagement Committee did not need
to meet during the year.
Dialogue with Shareholders
The Investment Advisor and the Corporate Broker maintain 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 deal with general shareholders' queries
at any time during the year.
Internal Control
The Board is responsible for establishing and maintaining the
Company's systems of internal control and for maintaining and
reviewing its effectiveness. The systems of internal controls are
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 relevant third party 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 Guernsey 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
No Directors holding office at 31 December, 2014, or their
associates, had any beneficial interest in the Company's Shares
(2013: Christopher Sherwell had beneficial interest in 9,940
shares). There has been no change in this position 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 and Richard Battey are Directors of a range of funds.
Substantial Shareholdings
As at the date of this report, the Company has been notified of
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
Lazard Asset Management 20,525,944 22.20%
1607 Capital Partners 17,493,887 19.19%
CG Asset Management 15,105,436 16.30%
Weiss Asset Management 6,979,265 7.55%
Wells Capital Management 4,684,888 5.07%
Permal Asset Management 4,482,907 4.85%
Share buybacks
As approved at the AGM on 27 August, 2014, the Company may
purchase, subject to various terms as set out in the Articles, a
maximum of 14,013,191 Ordinary Shares under the Company's discount
control mechanism. During the year, the Company purchased shares as
detailed in Note 9 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
27 April 2015
AUDIT COMMITTEE REPORT
Below, we present the Audit Committee (the "Committee") Report
for 2014, setting out the Committee's structure and composition,
principal duties and key activities during the year. As in previous
years, the Committee has reviewed the Company's financial
reporting, the independence and effectiveness of the independent
auditor and the internal control and risk management systems of
service providers.
Role and responsibilities
The function of the Audit Committee (the "Committee") is to
ensure that the Company maintains the highest standards of
integrity of its financial reporting and internal control.
The responsibilities of the Committee are:
-- To review and make recommendations on the appointment of the
Company's Auditors, the scope of the audit, the audit fee, and any
questions of the resignation or dismissal of the Auditors;
-- To discuss with the Auditors the nature and scope of the
audit and to keep under review such scope and its
cost-effectiveness;
-- To receive and review a Report from the Company's Auditors
and to discuss any matters arising from the audit and
recommendations made by them;
-- To review the Company's half-year and Annual Report and
Financial Statements and any other financial information published
by the Company, in each case before issue or publication, prior to
submission to the Board, having particular regard to:-
-- the accounting policies and whether they continue to be appropriate for the business;
-- any changes in accounting policies or practices and whether
they are appropriate for the business;
-- any important areas where judgement must be exercised e.g. valuation of unquoted investments;
-- any significant adjustments arising from the audit;
-- the going concern assumption;
-- other legal, UK Listing Authority or recognised investment exchange requirements;
-- To advise the Board on whether the Annual Report and
Financial Statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for
shareholders to assess the Company's performance, business model
and strategy.
-- To ensure that the internal control systems of the service
providers are adequate. To receive reports from the Company's
service providers covering internal control systems and procedures
supported either by SSAE 16, ISAE 3402 or AAF Reports. In light of
the above, to review the Company's statement on internal controls
prior to endorsement by the Board;
-- To monitor the Company's procedures for ensuring compliance
with statutory, regulatory and other financial reporting
requirements i.e. the Guernsey Financial Services Commission and
the London Stock Exchange (which includes the UK Listing
Authority);
-- To review significant transactions outside the Company's
normal business (e.g. Company share buy backs); and
-- To consider any other topics referred to it by the Board.
Membership
The members of the Committee are Richard Battey (Chairman) and
John Hawkins. Full biographical details of each member can be found
in the Board members' section. All members attended the formal
Audit Committee meetings held during the year. In addition a number
of ad hoc meetings were held with the Auditors to discuss financial
reporting matters.
Significant issues related to the financial statements
The Committee's review of the interim and annual financial
statements focused on the following areas:
-- Going concern. As detailed in the Chairman's Report a
Resolution to wind up the Company was required to be put to the
Shareholders at the 2014 AGM. The Shareholders voted against
winding up the Company. The Committee consider that the Company has
the ability to meet its obligations as they fall due over a period
greater than a year and accordingly have recommended to the Board
that it remains appropriate for these financial statements to be
prepared on a going concern basis.
-- The Committee has concentrated on the investment issues of
value, existence and title in respect of the Company's portfolio
holdings. Over 55% by value of the investments are quoted
investments and are held in a designated account at the Custodian.
The remaining 45% of investments are unlisted and dealt with in
more detail below.
Key activities and significant risks
The investment manager has built a concentrated portfolio of
small and medium sized enterprises and the Committee appreciates
that there are significant risks inherent in that investment policy
compared with a wider spread in larger quoted companies. There is
also a material exposure to property at the year-end given a 7%
direct exposure to property companies (2013: 19%).
The Company holds three unlisted investments. Following advice
from the Investment Manager and per requirements under IFRS, the
Committee considers the valuation of each of these investments in
detail. For further details on the Investment policies and the
valuation of unlisted investments, please see note 13 of the
Financial Statements.
The Manager and Administrator confirmed to the Committee that
they were not aware of any material misstatements including matters
relating to presentation. The Committee advised the Board that this
Annual Report and Financial Statements, taken as a whole, is fair,
balanced and understandable.
Following a review of the presentations and reports from the
Administrator and after consulting where necessary with the
external Auditor, the Committee is satisfied that the Financial
Statements appropriately address the critical judgements and key
estimates (both in respect to the amounts reported and the
disclosures). The Committee is also satisfied that the significant
assumptions used for determining the value of assets have been
appropriately scrutinised, challenged and are sufficiently robust.
Further details on the significant assumptions used for determining
the value of assets can be found in note 13 of the Financial
Statements.
Risk Management
After consultation with the Manager and external Auditor, the
Committee considers the key risk of misstatement in the Company's
financial statements to be the override of controls by its service
providers, the Manager and Administrator.
The Committee reviews and examines externally prepared
assessments of the control environment in place at the Manager and
the Administrator, with the Manager and Administrator providing a
SOC1 report covering internal control systems and procedures
supported either by SSAE 16, ISAE 3402 or AAF Reports, on an annual
basis and a bi-annual basis respectively. No significant failings
or weaknesses were identified in these reports by the Committee.
There were no changes in risk management or internal control
systems during the year.
The 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.
External Audit
Ernst & Young LLP were appointed as external Auditor to the
Company on 28 June 2001. The Company does not have a policy on
putting the audit services contract out to tender. There are no
contractual obligations which would act to restrict the Committee's
choice of external Auditor. The Committee reviews the engagement
letter that was issued by the external Auditor at the start of each
audit, ensuring that it reflects any changes in circumstances since
the previous year. The Committee also considers if the Auditor's
work plan, including levels of materiality and resources to execute
the plan are consistent with the scope of the audit engagement.
The Committee has performed a review of the audit process, the
effectiveness and performance of the audit team, and the quality
and cost-effectiveness of the audit, and confirms that it is
satisfied that the external Auditor has fulfilled its
responsibilities with diligence and professional scepticism and
that the scope of the audit is appropriate. The Committee has come
to that conclusion after having met with the Auditors both formally
and informally through the year to discuss changes in audit and
corporate governance reporting, valuation issues, significant risks
related to the financial statements and the audit process. The
Committee has also received feedback from the Administrator.
Following this review of the independence and effectiveness of the
Company's external Auditors, the Committee has recommended to the
Board that Ernst & Young LLP be reappointed as Auditors, which
the Board will submit for approval to the Company's Members.
Fraud, Bribery and Corruption
The Audit Committee continues to monitor the fraud, bribery and
corruption policies of the Company. The Board receives a
confirmation from all service providers that there have been no
instances of fraud or bribery.
Richard Battey
Chairman, Audit Committee
27 April, 2015
INVESTMENT POLICY
for the year ended 31 December, 2014
The Company announced the approval of an amendment to the
Company's Investment Objective, Policy and Restrictions at the
Extraordinary General Meeting on 5 March, 2014 which increased the
amount that the Company may invest or lend 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)
from up to 10 per cent. of its assets to up to 25 per cent. of its
assets at the time the investment is made.
Following this change, and for the period under review, the
investment policy was as follows;
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 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;
(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 25 per cent of
its assets at the time the investment is made 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) invest more than 10 per cent of its assets at the time the
investment is made in closed-end investment funds which are listed
on the Official List maintained by the Financial Conduct Authority
(except to the extent that those investment funds have state
investment policies to invest no more than 15 per cent of their
total assets in other investment funds which are listed on the
Official List) and the Company will not invest more than 15 per
cent of its assets at the time the investment is made in such
funds; or
(vii) the Company may not invest more than 5% of its assets at
the time the investment is made 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; or
(ix) the Company may not enter into borrowings in excess of 20
per cent. of net assets at the time the borrowings are drawn
down.
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, 2014
Percentage
Number of Fair Value of
Net Asset
Securities Investments in U.S. Dollars Value
Listed investments
Advertising
985,800 Tri-stage Inc 12,621,540 9.75
12,621,540 9.75
Banks
8,369,000 The Daito Bank 9,874,720 7.63
9,874,720 7.63
Diversified Financial
Services
Akatsuki Financial Group
337,060 Inc 1,881,331 1.45
438,000 Yutaka Shoji Co Ltd 1,469,774 1.14
3,351,105 2.59
Engineering and Construction
2,090,600 Tomoe Corp 7,907,541 6.11
7,907,541 6.11
Machinery
Showa Aircraft Industry
577,600 Co Ltd 5,490,825 4.24
5,490,825 4.24
Real Estate
Katakura Industries Co
743,400 Ltd 7,857,022 6.07
7,857,022 6.07
Retail
467,000 Shaklee Global Group Inc 8,683,464 6.71
8,683,464 6.71
REITs
Prospect Epicure J-REIT
7,898,895 Value Fund*# - -
- -
Storage/warehousing
Maruhachi Warehouse Co
1,509,000 Ltd 4,545,941 3.51
446,695 Yasuda Logistics Corp 3,981,006 3.08
---------------- -----------
8,526,947 6.59
Transportation
Daiwa Motor Transportation
914,000 Co Ltd 3,671,297 2.84
3,000 Hokkaido Chuo Bus Co Ltd 9,063 0.01
3,680,360 2.85
Total listed investments 67,993,524 52.54
================ ===========
Unlisted investments
Corporate bonds
5,150,000 Godo Kaisha Taiheiyo Jisho 4,681,865 3.62
Prospect Co Ltd 2nd Series
Unsecured Convertible Bond
3,000,000,000 + 51,198,143 39.56
315,700,000 Takefuji Corp 128,518 0.10
56,008,526 43.28
Total unlisted investments 56,008,526 43.28
Total investments 124,002,050 95.82
Net current assets 5,421,387 4.18
NET ASSETS 129,423,437 100.00
* Prospect Epicure J-REIT Value Fund is classed as a related
party as the fund shares the same Investment Advisor as the
Company
# Currently in liquidation.
+ Mr. Curtis Freeze, Director of Prospect Asset Management
(Channel Islands) Limited ("PAM(CI)"), the Manager of The Prospect
Japan Fund Limited is President of Prospect Co Ltd which owns the
majority share capital of PAM(CI) and Prospect Asset Management Inc
("PAMI"), the Investment Advisor of The Prospect Japan Fund
Limited.
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF THE PROSPECT JAPAN FUND LIMITED
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of The Prospect Japan
Fund Limited's ("the Company") affairs as at 31 December 2014 and
of its profit for the year then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards as adopted by the European Union
("IFRS"); and
-- have been prepared in accordance with the requirements of the
Companies (Guernsey) Law, 2008.
What we have audited
We have audited the financial statements of The Prospect Japan
Fund Limited for the year ended 31 December 2014 which comprise the
Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Changes in Equity, the Statement of Cash
Flows and related notes 1 to 17. The financial reporting framework
that has been applied in their preparation is applicable law and
IFRS.
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 set out, 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 and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Our assessment of risks of material misstatement
We identified the following risk that we believed would have the
greatest effect on the overall audit strategy, the allocation of
resources and directing the efforts of the engagement team:
-- valuation of the Company's unquoted investments whose
valuations are subjective and require the use of estimation and
judgement
Our application of materiality
We determined planning materiality for the Company to be US$1.29
million (2013: US$1.1 million), which is 1% of Net Asset Value.
This provided a basis for determining the nature, timing and extent
of risk assessment procedures, identifying and assessing the risk
of material misstatement and determining the nature, timing and
extent of further audit procedures. We used equity as a basis for
determining planning materiality because the Company's primary
performance measures for internal and external reporting are based
on net asset value.
On the basis of our risk assessments, together with our
assessment of the Company's overall control environment, our
judgement was that overall performance materiality (i.e. our
tolerance for misstatement in an individual account or balance) for
the Company should be 75% of materiality, namely US$968k (2013:
US$0.8 million). Our objective in adopting this approach was to
ensure that total uncorrected and undetected audit differences in
the financial statements did not exceed our materiality level.
We agreed with the Audit Committee that we would report to them
all audit differences in excess of US$65k (2013: US$ 0.06 million),
as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluated any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations.
An overview of the scope of our audit
We adopted a risk-based approach in determining our audit
strategy. This approach focuses audit effort towards higher risk
areas, such as management judgments and estimates.
Our response to the risk of incorrect valuation of the Company's
unquoted investments was as follows:
-- We confirmed our understanding of the Company's processes,
methodologies and policies for valuing unquoted investments;
-- We determined and challenged the appropriateness of the
valuation techniques applied to unquoted investments, and obtained
evidence to corroborate the inputs into the valuation model;
-- We agreed valuation inputs that did not require specialist
knowledge to supporting documentation and we tested the
arithmetical accuracy of the Company's calculations;
-- We engaged our own derivatives valuation experts, in relation
to the valuation of the Prospect Co Ltd unsecured convertible bond,
to:
a) assist us to determine whether the methodology used to value
the investment was appropriate; and
b) corroborate and challenge management's judgements and
valuation inputs utilised in the valuation calculation.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to report to
you if, in our opinion, information in the Annual Report is:
-- materially inconsistent with the information in the audited financial statements; or
-- apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Company; or
-- is otherwise misleading
In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge acquired
during the audit and the directors' statement that they consider
the Annual Report is fair, balanced and understandable and whether
the Annual Report appropriately discloses those matters that we
communicated to the Audit Committee which we consider should have
been disclosed.
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
27 April, 2015
The maintenance and integrity of the Company's website is the
sole responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditor accepts 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, 2014
Revenue Capital Total Revenue Capital Total
01.01.2014 01.01.2014 01.01.2014 01.01.2013 01.01.2013 01.01.2013
to to to to to to
31.12.2014 31.12.2014 31.12.2014 31.12.2013 31.12.2013 31.12.2013
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 1,104,378 - 1,104,378 1,398,250 - 1,398,250
Interest income 23,738 - 23,738 55,176 - 55,176
Foreign exchange
movements 1,275,048 (4,364,984) (3,089,936) (579,475) (4,298,624) (4,878,099)
Gain on financial
assets
at fair value
through profit
or loss - 16,037,689 16,037,689 - 33,388,135 33,388,135
Total income 2,403,164 11,672,705 14,075,869 873,951 29,089,511 29,963,462
Management
4 fee (1,827,971) - (1,827,971) (1,706,635) - (1,706,635)
5 Other expenses (1,147,024) - (1,147,024) (840,538) - (840,538)
Transaction
costs - (397,717) (397,717) - (1,078,749) (1,078,749)
Total expenses (2,974,995) (397,717) (3,372,712) (2,547,173) (1,078,749) (3,625,922)
Gain/(loss)
for the year
before tax (571,831) 11,274,988 10,703,157 (1,673,222) 28,010,762 26,337,540
Withholding
3 tax (227,663) - (227,663) (140,744) - (140,744)
(Loss)/gain
for the year
after tax (799,494) 11,274,988 10,475,494 (1,813,966) 28,010,762 26,196,796
(Loss)/ gain
for the year (799,494) 11,274,988 10,475,494 (1,813,966) 28,010,762 26,196,796
(Loss)/gain
per Ordinary
2 Share -
Basic & Diluted
(in Cents) (0.85) 12.06 11.20 (1.90) 29.50 27.60
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. There was no comprehensive income other than the
(loss)/gain for the year.
All items in the above statement derive from continuing
operations.
The notes form an integral part of the Financial Statements.
STATEMENT OF FINANCIAL POSITION
as at 31 December, 2014
31.12.2014 31.12.2013
In U.S. In U.S.
Notes Dollars Dollars
Non-current assets
Financial assets at fair value through
6 profit or loss 124,002,050 99,187,758
Current assets
7 Receivables 749,055 3,162,181
Cash and cash equivalents 5,404,636 21,309,724
Total current assets 6,153,691 24,471,905
------------ ------------
Current liabilities
8 Payables 732,304 2,047,594
Net current assets 5,421,387 22,424,311
Net assets 129,423,437 121,612,069
Equity
9 Share capital account 92,452 94,878
9 Redemption reserve 85,533,077 88,197,203
9 Capital redemption reserve 323,057 320,631
Other reserves 43,474,851 32,999,357
Total equity 129,423,437 121,612,069
Ordinary Shares in issue 92,452,602 94,878,602
Net Asset Value per Ordinary Share
2 (in cents) 139.99 128.18
The Financial Statements were approved by the Board of Directors
on 27 April, 2015 and signed on its behalf by:
John Hawkins Richard Battey
The notes form an integral part of the Financial Statements.
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December, 2014
Capital
Capital Capital Capital Reserve/
Share
Capital Redemption Redemption Revenue Reserve/ Reserve/ Exchange
Account Reserve Reserve Reserve Realised Unrealised Differences Total
In
In U.S. In U.S. In U.S. In U.S. U.S. In U.S. In U.S. In U.S.
Dollars Dollars Dollars Dollars Dollars Dollars Dollars Dollars
Balances
at 1
January,
2014 94,878 320,631 88,197,203 (14,106,096) 49,738,831 (2,389,140) (244,238) 121,612,069
Total comprehensive
income/(expense)
for the period
(Loss)/gain
for the
period
after tax - - - (799,494) 4,134,299 11,505,673 (4,364,984) 10,475,494
Capital
activities
Repurchase
of shares (2,426) 2,426 (2,664,126) - - - - (2,664,126)
Balances
at 31
December,
2014 92,452 323,057 85,533,077 (14,905,590) 53,873,130 9,116,533 (4,609,222) 129,423,437
========= =========== ============ ============= =========== ============= ============ ============
Capital
Capital Capital Capital Reserve/
Share
Capital Redemption Redemption Revenue Reserve/ Reserve/ Exchange
Account Reserve Reserve Reserve Realised Unrealised Differences Total
In
In U.S. In U.S. In U.S. In U.S. U.S. In U.S. In U.S. In U.S.
Dollars Dollars Dollars Dollars Dollars Dollars Dollars Dollars
Balances
at 1
January,
2013 95,278 320,231 88,581,476 (12,292,130) 26,903,132 (11,862,827) 4,054,386 95,799,546
Total comprehensive
income/(expense)
for the period
(Loss)/gain
for the
period
after tax - - (1,813,966) 22,835,699 9,473,687 (4,298,624) 26,196,796
Capital
activities
Repurchase
of shares (400) 400 (384,273) - - - - (384,273)
Balances
at 31
December,
2013 94,878 320,631 88,197,203 (14,106,096) 49,738,831 (2,389,140) (244,238) 121,612,069
========= =========== ============ ============= =========== ============= ============ ============
The notes form an integral part of the Financial Statements.
STATEMENT OFCASH FLOWS
for the year ended 31 December, 2014
01.01.2014 01.01.2013
to to
31.12.2014 31.12.2013
In U.S. In U.S.
Notes Dollars Dollars
Cash flows from operating activities
Net cash inflow/(outflow) from
10 operating activities 2,269,678 (4,079,421)
Cash flows from investing activities
Purchase of investments (105,284,182) (240,847,025)
Sale of investments 94,138,526 253,973,582
Net cash (outflow)/inflow from
investing activities (11,145,656) 13,126,557
Net cash (outflow)/inflow before
financing activities (8,875,978) 9,047,136
Cash flows from financing activities
9 Repurchase of shares (2,664,126) (384,273)
Net cash outflow from financing
activities (2,664,126) (384,273)
(Decrease)/increase in cash and
cash equivalents (11,540,104) 8,662,863
Reconciliation of net cash flow
to
movement in net funds
Net cash (outflow)/inflow (11,540,104) 8,662,863
Effects of foreign exchange rate
changes (4,364,984) (4,298,624)
Cash and cash equivalents at
beginning of the year 21,309,724 16,945,485
Cash and cash equivalents at
end of the year 5,404,636 21,309,724
Foreign exchange translation amounts arising in 2013 have been
presented in the comparative column on the face of the statement of
cash flows, and not as a reconciling item in Note 10, to align with
the current period presentation, with no net impact on the net cash
(outflow)/inflow.
The notes form an integral part of the Financial Statements.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December, 2014
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 by 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 assets
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 Annual General Meeting to be held in
2017.
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 amendments were applicable for the first time this
year but had no impact on the financial position or performance of
the Company.
- IFRS 10 (Amendments) - Consolidated Financial Statements
(effective 1 January, 2014)
- IFRS 12 (Amendments) - Disclosure of Interests in Other
Entities (effective 1 January, 2014)
- IAS 27 (Amendments) - Separate Financial Statements (effective
1 January, 2014)
- IAS 28 (Amendments) - Investments in Associates and Joint
Ventures (effective 1 January, 2014)
Interpretations which are relevant to the Financial Statements
are discussed below. The remaining interpretations are not
considered to be applicable to the Financial Statements.
Standards, amendments and interpretations issued but not yet
effective
- IFRS 9 Financial Instruments - (effective 1 January, 2018)
(not yet EU endorsed)
- IFRS 10 (Amendments) - Consolidated Financial Statements
(effective 1 January, 2016)
- IFRS 12 (Amendments) - Disclosure of Interests in Other
Entities (effective 1 January, 2016)
- IFRS 13 (Amendments) - Fair Value Measurement (effective 1
July, 2014)
- IFRS 14 - Regulatory Deferral Accounts (effective 1 January,
2016)
- IFRS 15 - Revenue from Contracts with Customers (effective 1
January, 2017) (not yet EU endorsed)
- IAS 1 (Amendments) - Presentation of Financial Statements
(effective 1 January, 2016)
- IAS 27 (Amendments) - Separate Financial Statements (effective
1 January, 2016)
- IAS 28 (Amendments) - Investments in Associates and Joint
Ventures (effective 1 January, 2016)
Investment Entities, Applying the Consolidation Exception
Narrow-scope amendments to IFRS 10, IFRS 12 and IAS 28 introduce
clarifications to the requirements when accounting for investment
entities. The amendments also provide relief in particular
circumstances, which will reduce the costs of applying the
Standards.
IFRS 9, Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9
Financial Instruments which reflects all phases of the financial
instruments project and replaces IAS 39 Financial Instruments:
Recognition and Measurement and all previous versions of IFRS 9.
The standard introduces new requirements for classification and
measurement, impairment, and hedge accounting. IFRS 9 is effective
for annual periods beginning on or after 1 January 2018, with early
application permitted. Retrospective application is required, but
comparative information is not compulsory. Early application of
previous versions of IFRS 9 (2009, 2010 and 2013) is permitted if
the date of initial application is before 1 February 2015. The
adoption of IFRS 9 will have an effect on the classification and
measurement of the Company's financial assets, but no impact on the
classification and measurement of the Company's financial
liabilities.
IFRS 13, Fair Value Measurement
The amendment is applied prospectively and clarifies that the
portfolio exception in IFRS 13 can be applied not only to financial
assets and financial liabilities, but also to other contracts
within the scope of IFRS 9 (or IAS 39, as applicable).
IFRS 14, Regulatory Deferral Accounts
An optional standard that allows an entity, whose activities are
subject to rate-regulation, to continue applying most of its
existing accounting policies for regulatory deferral account
balances upon its first-time adoption of IFRS. Entities that adopt
IFRS 14 must present the regulatory deferral accounts as separate
line items on the statement of financial position and present
movements in these account balances as separate line items in the
statement of profit or loss and other comprehensive income. The
standard requires disclosures on the nature of, and risks
associated with, the entity's rate-regulation and the effects of
that rate-regulation on its financial statements. IFRS 14 is
effective for annual periods beginning on or after 1 January 2016.
Since the Company is an existing IFRS preparer, this standard would
not apply.
IFRS 15, Revenue from Contracts with Customers
This standard was issued in May 2014 and establishes a new
five-step model that will apply to revenue arising from contracts
with customers. Under IFRS 15 revenue is recognised at an amount
that reflects the consideration to which an entity expects to be
entitled in exchange for transferring goods or services to a
customer. The principles in IFRS 15 provide a more structured
approach to measuring and recognising revenue. The new revenue
standard is applicable to all entities and will supersede all
current revenue recognition requirements under IFRS. Either a full
or modified retrospective application is required for annual
periods beginning on or after 1 January, 2017 with early adoption
permitted. The Company is currently assessing the impact of IFRS
15.
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.
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 and
disclosure of contingent assets. 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.
Fair value of securities not quoted in an active market
In the process of applying the Company's accounting policies,
management has made the following judgements, which have the most
significant effect on the amounts recognised in the financial
statements:
The Company carries its investments at fair value, with changes
in value being recognised in the Statement of Comprehensive Income.
In cases of unlisted investments where prices of investments are
not quoted in an active market, estimates are based on available
traded prices, comparisons with the valuations of comparable
instruments or by using valuation techniques, such as the Black
Scholes model. The carrying amounts of the instruments approximate
fair value.
The Investment Manager exercises judgement on the valuation of
unlisted investments. As the level 3 investments are unlisted
corporate bonds, valuation techniques are based on the value of
comparable convertible bonds for which market prices are available
and adjusted for interest rate yield, credit risk and other
factors. Further details on the valuation techniques applied to
level 3 investments can be found in note 13 of the Financial
Statements.
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 and
other payables, 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.
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 IFRS 13
'Fair Value Measurement'. The Directors' estimates are based on
available price data, comparisons with the valuations of comparable
convertible and corporate bonds or by using appropriate valuation
techniques, such as the Black Scholes model.
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 Dollars
and accordingly the Board have determined that the Company's
functional and presentation currency is United States Dollars,
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 and Diluted and
Net Asset Value per Ordinary Share - Basic and Diluted
The (loss)/gain per Ordinary Share - Basic and Diluted has been
calculated based on the weighted average number of Ordinary Shares
of 93,521,466 and a net gain of US$10,475,494 (2013: 95,073,601
Ordinary Shares and a net gain of US$26,196,796).
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 92,452,602 (2013: 94,878,602) and shareholders'
funds attributable to equity interests of US$129,423,437 (2013:
US$121,612,069).
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 (GBP1,200
with effect from 1 January 2015).
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) ("PAM(CI)"), 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$1,827,971 (2013: US$1,706,635) of which
US$140,024 (2013: US$156,315) 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
01.01.2014 01.01.2013
to to
31.12.2014 31.12.2013
In U.S. In U.S.
Dollars Dollars
Administration and secretarial
fees* 304,662 284,439
Custodian's fees and
charges** 125,556 149,240
General expenses 523,776 204,246
Directors' remuneration 138,280 133,595
Auditors'
fees 38,000 43,074
Non-audit
fees 16,750 25,944
1,147,024 840,538
*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$304,662 (2013: US$284,439) of which US$23,337 (2013: US$26,053)
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$125,556 (2013: US$149,240) of which US$10,006 (2013:
US$23,235) is due and payable at the year end.
Note 6 Financial Assets at Fair Value through Profit or Loss
01.01.2014 01.01.2013
to to
31.12.2014 31.12.2013
In U.S.
Dollars In U.S. Dollars
Opening book cost 101,576,898 89,404,049
Purchases
at cost 103,729,025 241,863,287
Proceeds
on sale (94,952,422) (253,604,885)
Realised gain on sale 4,532,016 23,914,447
Closing book cost 114,885,517 101,576,898
Unrealised gain/(loss) 9,116,533 (2,389,140)
Fair value 124,002,050 99,187,758
Note 7 Receivables
31.12.2014 31.12.2013
In U.S. In U.S.
Dollars Dollars
Amounts due from brokers 605,775 -
Dividends receivable 143,280 319,454
Other receivables* - 2,842,727
749,055 3,162,181
*Other receivables were amounts due from the custodian caused by
duplicate trades.
Note 8 Payables
31.12.2014 31.12.2013
In U.S. In U.S.
Dollars Dollars
Amounts due to brokers 382,899 1,748,459
Other creditors 349,405 299,135
732,304 2,047,594
Note 9 Share Capital, Redemption Reserve & Capital Redemption Reserve
Authorised
Share Capital 31.12.2014 31.12.2013
Number of In U.S. In U.S.
shares Dollars Dollars
Ordinary Shares of US$0.001
150,000,000 each 150,000 150,000
"C" Ordinary Shares of
60,000,000 US$0.01 each 600,000 600,000
As approved at the AGM on 27 August, 2014, the Company may
purchase a maximum of 14,013,191 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
Ordinary Share
Shares Capital Reserve Reserve
Number of In U.S. In U.S. In U.S.
shares Dollars Dollars Dollars
Balance at 1 January,
94,878,602 2014 94,878 88,197,203 320,631
Shares repurchased
and
cancelled during
(2,426,000) the year (2,426) (2,664,126) 2,426
Balance at 31 December,
92,452,602 2014 92,452 85,533,077 323,057
Capital
Redemption Redemption
Ordinary Share
Shares Capital Reserve Reserve
Number of In U.S. In U.S. In U.S.
shares Dollars Dollars Dollars
Balance at 1 January,
95,278,602 2013 95,278 88,581,476 320,231
Shares repurchased
and
cancelled during
(400,000) the year (400) (384,273) 400
Balance at 31 December,
94,878,602 2013 94,878 88,197,203 320,631
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 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.
"C" Ordinary Shares do not carry the right to attend or to vote
at general meetings of the Company or to receive dividends and, in
a winding up will participate in any "C" Ordinary Share surplus
assets remaining after the settlement of any outstanding
liabilities of the Company. There were no "C" Ordinary Shares in
issue during the year (2013: Nil)
Note 10 Reconciliation of Deficit on Ordinary Activities to Net
Cash Outflow from Operating Activities
31.12.2014 31.12.2013
In U.S. In U.S.
Dollars Dollars
Revenue loss on ordinary activities
for the year (799,494) (1,813,966)
Decrease/(increase) in dividends receivable
and other receivables 3,018,902 (2,309,163)
Increase in other creditors 50,270 43,708
Net cash inflow/(outflow) from operating
activities 2,269,678 (4,079,421)
Foreign exchange translation amounts arising in 2013 have been
presented in the comparative column on the face of the statement of
cash flows, and not as a reconciling item in the above note, to
align with the current period presentation, with no net impact on
the net cash (outflow)/inflow.
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,
2014
Financial assets
Investments at fair value through
profit or loss 124,002,050 - 124,002,050
Cash and cash equivalents - 5,404,636 5,404,636
Receivables - 749,055 749,055
124,002,050 6,153,691 130,155,741
============ ============ ============
Financial liabilities
Payables - 732,304 732,304
- 732,304 732,304
============ ============ ============
Investments Net current
at fair
value assets Total
In U.S. In U.S. In U.S.
Dollars Dollars Dollars
As at 31 December,
2013
Financial assets
Investments at fair value through
profit or loss 99,187,758 - 99,187,758
Cash and cash equivalents - 21,309,724 21,309,724
Receivables - 3,162,181 3,162,181
99,187,758 24,471,905 123,659,663
============ ============ ============
Financial liabilities
Payables - 2,047,594 2,047,594
- 2,047,594 2,047,594
============ ============ ============
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) (the "Manager") whose parent company is Prospect
Co., Ltd (Kabushiki Kaisha Prospect ("KKP"), a Japanese Company).
During the year, the Company purchased a convertible bond issued by
Prospect Co., Ltd. As Prospect Co., Ltd is the ultimate parent of
the Manager and therefore a related party, the Company was required
to seek Shareholder approval at and EGM held on 20, November 2014.
The resolution to purchase the investment was duly passed. See the
Chairman's report for further details of the transaction.
Mr Rupert Evans is a Director of the Manager.
Directors' fees are disclosed in Note 5. The basic fee payable
to Directors in 2014 and 2013 is GBP20,000, the Chairman of the
Audit Committee GBP22,500 and the Chairman of the Board GBP25,000
per annum.
No Directors holding office at 31 December, 2014, or their
associates, had any beneficial interest in the Company's shares.
There have been no changes in these interests between the end of
the period and up to the date of this report.
Mr. Curtis Freeze is a Director of PAM(CI), the Manager of The
Prospect Japan Fund Limited, and is the President of Prospect Co
Ltd., the owner of PAMI, the Investment Advisor to The Prospect
Japan Fund Limited and PAM(CI), the Manager of The Prospect Japan
Fund Limited.
Prospect Epicure J-REIT 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 (2013: Nil) during the year from
Prospect Epicure J-REIT 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 MSCI
Japan Small Cap Index would have on the percentage of funds
invested. The MSCI Developed Markets Small Cap Indices offer an
exhaustive representation of the size segment by targeting
companies that are in the Investable Market Index but not in the
Standard Index in a particular developed market. The indices
include Value and Growth style indices and industry indices based
on the Global Industry Classification Standard. The MSCI Japan
Small Cap 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, 2014 a 1% positive/negative movement in the
index would produce a positive/negative movement in the net assets
of the Company of US$493,103 (2013:$354,100) 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.
Foreign Currency Risk
The Company principally invests in securities denominated in
Japanese Yen rather than United States Dollars, 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 balance sheet date in either the current or
prior year.
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:
31.12.2014 31.12.2013
In US
In US Dollars Dollars
Investments
Japanese Yen (Yen14,258,762,107; 2013:Yen10,428,237,572) 119,320,185 99,187,758
119,320,185 99,187,758
Other (Liabilities)/Assets
US Dollars (199,947) (185,346)
Sterling (GBP80,232, 2013:GBP49,548) (124,683) (81,886)
Japanese Yen (Yen686,649,031; 2013:Yen2,408,698,490) 5,746,017 22,691,543
5,421,387 22,424,311
The below details the Company's sensitivity to a 10% (31
December 2013: 10%) change in Japanese Yen exchange rates against
the US Dollar.
31.12.2014 31.12.2013
In US In US
Dollars Dollars
Impact on Statement of Comprehensive
Income and Equity in response to a
- 10% increase in the US Dollar
against other currencies (11,382,120) (11,093,472)
============= =============
- 10% decrease in the US Dollar
against other currencies 13,908,709 13,555,679
============= =============
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 equivalents as the Company predominantly
keeps its surplus cash in Japanese Yen on which it does not earn
interest.
If the risk-free rate of return increased/decreased by 1%, the
impact on the net asset value and the profit and loss for the year
would be a decrease/increase of US$614,132 (2013: US$364,228).
Interest rate sensitivity analysis
As the intrinsic value of the corporate bonds could potentially
be 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
Financial assets at fair value through profit or loss are
carried at fair value. The valuation techniques for valuing
unlisted corporate bonds are described below. Other assets and
liabilities are carried at amortised cost which approximates fair
value.
IFRS 13 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.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
(i) in the principal market for the asset or liability, or
(ii) in the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market must be accessible
by the Company.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
The Company uses valuation techniques that are appropriate in
the circumstances and for which sufficient data is available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All financial instruments for which fair value is recognised or
disclosed are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1 - Quoted market prices (unadjusted) in an active market
for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable
Level 3 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable
For financial instruments that are recognised at fair value on a
recurring basis, the Company determines whether transfers have
occurred between levels in the hierarchy by re-assessing
categorisation, based on the lowest level input that is significant
to the fair value measurement as a whole, at the end of each
reporting period.
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 2014.
Level 1 Level 2 Level 3 Total
In US
In US Dollars In US Dollars In US Dollars Dollars
Financial assets
at fair value
through profit
or loss:
-Equity Securities 67,993,524 - - 67,993,524
-Debt Securities
Corporate bonds - - 56,008,526 56,008,526
Total as at 31 December,
2014 67,993,524 - 56,008,526 124,002,050
============== ============== ============== ============
The following table presents the movement in level 3 instruments
for the year ended 31 December, 2014 by class of Financial
Instrument.
Debt
Securities Total
In US Dollars In US Dollars
Opening balance 15,113,042 15,113,042
Purchases 25,456,088 25,456,088
Sales (9,166,872) (9,166,872)
Realised losses
during the year (494,679) (494,679)
Unrealised gains during the
year 25,100,947 25,100,947
Closing balance 56,008,526 56,008,526
============== ==============
Net unrealised gain for the year included
in the Statement of Comprehensive Income 25,100,947 25,100,947
============== ==============
There were no transfers between levels for the year ended 31
December, 2014.
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, 2013 as required by
IFRS 7.
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 84,074,716 - - 84,074,716
-Debt Securities
Corporate bonds - - 15,113,042 15,113,042
Total assets as
at 31 December,
2013 84,074,716 - 15,113,042 99,187,758
============== ============== ============== ==============
The following table presents the movement in level 3 instruments
for the year ended 31 December, 2013 by class of Financial
Instrument.
Debt
Securities Total
In US
In US Dollars Dollars
Opening balance 7,067,416 7,067,416
Purchases 20,324,858 20,324,858
Sales (11,245,782) (11,245,782)
Realised losses
during the year (1,297,697) (1,297,697)
Unrealised gains during the
year 264,247 264,247
Closing balance 15,113,042 15,113,042
============== =============
Net unrealised loss for the
year included in the Statement
of Comprehensive Income for
level 3 Investments held
at 31 December, 2013 264,245 264,245
============== =============
There were no transfers between levels for the year ended 31
December, 2013.
Valuation techniques
Listed investments
Securities valued based on quoted market prices, in an active
market for identical assets without any adjustments, are included
within Level 1 of the hierarchy and are valued at bid price.
Unlisted Investments
The Company invests in debt securities which are not quoted in
an active market. Transactions in such investments do not occur on
a regular basis. These positions are valued at the Directors'
estimate of their fair value in accordance with IFRS 13.
Level 3 valuations are monitored closely by the Investment
Manager who reports to the Board of Directors on a quarterly basis.
Valuations are based on the most appropriate method for each level
3 investment as described below.
The Company holds a bond in Taiheiyo Jisho (GK) a Japanese
partnership set up to invest in real estate ventures at a fixed
interest rate of 10%. Taiheiyo Jisho currently invests in SCD ML
II, LLC, which is developing a project on the island of Hawaii. The
project is currently behind target and SCD ML II, LLC have issued a
revised completion date. As such, there is doubt that they will be
able to pay all the interest on the bond on maturity. Due to the
increased credit risk as a result of the non- performance of the
bond, the Directors believe that this results in a reduction in the
fair value. The value of the bond has therefore been written down
by $2 million to $4.7 million in the Financial Statements. The
unobservable input used in arriving at this valuation is the
discount rate and estimated repayment date which is dependent on
the pace of progress of the project.
The Company holds a convertible bond in Prospect Co. Ltd
(formerly Gro-Bels). As stated above, the bond is valued at the
Directors' estimate of its fair value in accordance with IFRS 13
using appropriate techniques. As the bond contains an embedded
derivative, the Director's believe that the valuation produced
using the Black-Scholes model approximates fair value for
accounting purposes. The model uses both observable and
non-observable data. Observable inputs include the face value and
coupon rate of the bond, the conversion period, the shares received
for each bond converted and the maturity date. The significant
unobservable input is the volatility rate used. Using the Black
Scholes model to value the bond has resulted in a $26 million
uplift in the valuation of the bond in the financial statements
from the published NAV. A reconciliation of published to accounting
NAV can be found in note 16.
The significant unobservable inputs used in the fair value
measurement categorised within Level 3 of the fair value hierarchy
together with a quantitative sensitivity analysis as at 31
December, 2014 are as shown below:
Effect on
Significant unobservable Sensitivity fair value
Description input used In US Dollars
Godo Kaisha Taiheiyo Current period
Jisho market rate +1%/-1% (390,370)/468,135
Prospect Co Ltd 2nd
Series Unsecured Convertible
Bond Volatility +1%/-1% 107,974/(115,282)
Short term Debtors and Creditors
Trade and other receivables and creditors 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 may 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. Although market values are low in comparison to the
Company's shareholding for some securities, there is sufficient
volume to demonstrate an active market.
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. Liquidity risk is not deemed to be significant.
As at 31 December, 2014
Greater
Up to 1 week 6-12 than 12
1 week to 1 month 1-6 months months months Total
In US In US In US In US In US In US
Dollars Dollars Dollars Dollars Dollars Dollars
Financial assets
Financial assets
at fair
value through
profit or loss 27,270,006 24,387,570 16,340,361 - 56,004,113 124,002,050
Dividends receivable - - 143,279 - - 143,279
Cash and cash
equivalents 5,404,636 - - - - 5,404,636
Securities sold
receivable 605,776 - - - - 605,776
Financial liabilities
Amounts due
to brokers (382,899) - - - - (382,899)
Other creditors (29,695) (253,367) (66,343) - - (349,405)
Total 32,867,824 24,134,203 16,417,297 - 56,004,113 129,423,437
=========== ============ =========== ========= =========== ============
Greater
As at 31 December, Up to 1 week 6-12 than 12
2013 1 week to 1 month 1-6 months months months Total
In US In US In US In US In US In US
Dollars Dollars Dollars Dollars Dollars Dollars
Financial assets
Financial assets
at fair
value through
profit or loss 57,944,388 18,407,477 7,725,266 - 15,110,627 99,187,758
Dividends receivable - - 319,454 - - 319,454
Cash and cash
equivalents 21,309,724 - - - - 21,309,724
Financial liabilities
Amounts due
to brokers (1,748,459) - - - - (1,748,459)
Other creditors - (239,294) (59,841) - - (299,135)
Total 80,340,181 18,168,183 7,993,078 - 15,110,627 121,612,069
============ ============ =========== ========= =========== ============
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
investment 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 in 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 the 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 over-the-counter
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 close-ended investment company, and thus has a
fixed capital. The Company's capital is represented by Ordinary
Shares and each share carries one vote. Each share has an
entitlement to dividends if declared.
As approved at the AGM on 27 August, 2014, the Company may
purchase a maximum of 14,013,191 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) is US$0.001;
-- the maximum price to be paid (exclusive of expenses) is 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 Contingent asset
The Company declined to tender its shares for Toho Real Estate,
as the Company believed the true value to be considerably higher
than that stated in the tender offer, and entered into an
arbitration process. At the year end, the court had not yet made a
ruling. Refer to note 17 for further detail.
Note 16 Reconciliation of published valuation to Financial
Statements
31.12.2014
In US Dollars
Net assets per Financial
Statements 129,423,437
Buy back effective 30 December 2014 after
valuation point 29,695
Writeback of prior year uplift
on Toho Real Estate 791,587
Adjustment in value of financial assets at fair
value through profit and loss:
Godo Kaisha Taiheiyo
Jisho 2,061,986
Prospect Co Ltd 2nd Series Unsecured
Convertible Bond (26,000,000)
Net assets per published
valuation 106,306,705
==============
Note 17 Subsequent Events
These Financial Statements were approved for issuance by the
Board on 27 April, 2015. Subsequent events have been evaluated
until this date.
On 7 January, 2015, the Company appointed Computershare Investor
Services (Guernsey) Limited as Crest agent.
On 2 April, 2015 the Board agreed the sale of the bond in
Taiheiyo Jisho to Prospect Co., Ltd the parent company of the
Company's Manager, at the face value of the bond plus accrued
interest to 31 December, 2014 amounting to $6.7 million,
approximately $2 million in excess of the year end carrying
amount.
As mentioned in note 15 above, the Company has been involved in
court proceedings with Toho Real Estate arising from the tender
offer. In March, 2015 the Company received notice from the court
presiding over its petition that it had ruled in its favour. The
court awarded the Company an aggregate amount of Yen121,610,000
($1.03 million). Although an improvement, this is still
significantly discounted to the book value of Toho Real Estate and
as such, on 9 April, 2015 the Company filed an appeal against the
ruling.
GENERAL INFORMATION
General
The Company is a close-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 92,452,602 Ordinary
Shares in issue as at 31 December, 2014. 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.
The Company is a FATCA compliant organisation with FATCA entity
classification FFI and GIIN L0Q9R3.99999.SL.831.
Investment Objective
The Company's investment objective is to achieve long-term
capital growth from a portfolio of securities primarily of smaller
Japanese companies listed or traded on Japanese Stock Markets. The
aim will be to achieve a long-term capital return on the Company's
portfolio and dividend income will be a secondary consideration in
making investment decisions. Although the Company is not managed to
a benchmark, it measures its performance against the MSCI Japan
Small Cap Index (Total Return) for comparison purposes only.
Investment Restrictions
The following investment restrictions were approved on the 5
March, 2014:
(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 25 per cent of
its assets at the time the investment is made 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) invest more than 10 per cent of its assets at the time the
investment is made in closed-end investment funds which are listed
on the Official List maintained by the Financial Conduct Authority
(except to the extent that those investment funds have state
investment policies to invest no more than 15 per cent of their
total assets in other investment funds which are listed on the
Official List) and the Company will not invest more than 15 per
cent of its assets at the time the investment is made in such
funds; or
(vii) the Company may not invest more than 5% of its assets at
the time the investment is made 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; or
(ix) the Company may not enter into borrowings in excess of 20
per cent. of net assets at the time the borrowings are drawn
down.
NAV and Information
The prices of Ordinary Shares and the latest NAV are published
daily in the Financial Times. The price of the Ordinary Shares
appears 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 eighteenth Annual General Meeting of the
Company held on 27 August 2014, the Board included in the business
to be considered by Shareholders a special resolution that the
Company should be wound up. 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 2017.
Directors
Brief biographical details of the Directors are as follows:
Rupert Evans, age 76, 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 72, 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 67 (retired 27 August, 2014) 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 63, 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 PKODDDBKBKQB
Prospect Japan (LSE:PJF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Prospect Japan (LSE:PJF)
Historical Stock Chart
From Jul 2023 to Jul 2024
