AJG Atlantis Japan Growth Fund Ld

ATLANTIS JAPAN GROWTH FUND LIMITED
(“AJGF” or the “Company”)
(a closed-ended investment company incorporated in Guernsey with registration number 30709)

Annual Results for the year ended 30 April 2015

28 August 2015

The financial information set out below does not constitute the Company's statutory accounts for the year ended 30 April 2015. All figures are based on the audited financial statements for the year ended 30 April 2015.

The financial information for the year ended 30 April 2015 noted below is derived from the financial statements delivered to the UK Listing Authority.

The annual report and audited financial statements for the year ended 30 April 2015 will shortly be posted to shareholders and will also be available on the company website:  www.atlantisjapangrowthfund.com

Introduction

INVESTMENT OBJECTIVE

Atlantis Japan Growth Fund Limited (the “Company”) aims to achieve long term capital growth through investment wholly or mainly in listed Japanese equities.

INVESTMENT POLICY

The Company may invest up to 100 per cent of its gross assets in companies quoted on any Japanese stock exchange including, without limitation, the Tokyo Stock Exchange categorised as First Section, Second Section, JASDAQ, Mothers and Tokyo PRO, or the regional stock exchanges of Fukuoka, Nagoya, Sapporo and Osaka Securities Exchange.

The Company may also invest up to 20 per cent of its Net Asset Value (the “NAV”) at the time of investment in companies listed or traded on other stock exchanges but which are either controlled and managed from Japan or which have a material exposure to the Japanese economy.

The Company may also invest up to 10 per cent of its NAV at the time of investment in securities which are neither listed nor traded on any stock exchange or over-the-counter market.

In general, investment will be through investments in equity shares in, or debt issued by, investee companies.  However, the Company may also invest up to 20 per cent of its NAV at the time of investment in equity warrants and convertible debt.

The Company will not invest in more than 10 per cent of any class of securities of an investee company. The Company will not invest in derivative instruments save for the purpose of efficient portfolio management.

The Company may borrow, with a view to enhancing capital returns, up to a maximum of an amount not exceeding 20 per cent of NAV at the time of borrowing.

Investment Policy for the Redemption Pool

In advance of each redemption point the Company notionally allocates assets and liabilities into a separate pool (the "redemption pool ").for the purpose of funding valid redemption requests for that redemption point. With regard to the redemption pool, the Company aims to liquidate the necessary assets to meet qualifying redemption requests in a timely manner, and to minimise the impact that such redemptions will have to existing shareholders and the Company as a whole.

The management and impact of the risk associated with the investment policies are described in detail in the Notes to the Financial Statements (Note 18).

INVESTMENT MANAGER AND INVESTMENT ADVISER

AFMG Limited was the Investment Manager of the Company up until 1st August 2014 on which date it was replaced in that role by Tiburon Partners LLP which had previously been the Investment Adviser.

Atlantis Investment Research Corporation (“AIRC”) was the Sub Investment Adviser until 1st August 2014, on which date it was appointed as the Investment Adviser to the Company.

AIRC, established in Tokyo, will, through Edwin Merner and his colleagues, advise the Investment Manager on the day-to-day conduct of the Company’s investment business, the role it has played since the launch of the Company in May 1996.

Chairman’s Statement

For the year ended 30th April 2015

During the course of the year there have been a number of developments, described more fully below, which I believe have been very beneficial for the Company and placed it on a much sounder footing for the future. First and foremost, the performance has remained strong in both absolute and relative terms and this has clearly been helpful to allow progress to be made in other areas. 

Following the introduction of the Subscription Right in October 2014, the Company now has the potential to increase its asset base each year for the next five years and thereby reduce the expense ratio and increase liquidity. For most of 2015, the subscription price has been at a discount to the prevailing ordinary share price and Net Asset Value per ordinary share. However, the market turmoil since mid-August, as a result of fears of a Chinese economic slowdown, has had a detrimental effect on Asian stock markets. 

The changes made to the Redemption Facility in December 2014, increasing the exit charge have served to reduce the number of redemption requests to an all-time low and have also allowed shares tendered for redemption to be successfully placed in the market for the first time. At the redemption point in March 2015, only a net 1.59% of issued shares were redeemed and not re-sold. Significantly, these changes have been achieved without a material increase in the level of the discount.

Cantor Fitzgerald Europe (“Cantor Fitzgerald”) was appointed in January 2015 as the Company’s new broker. Its experienced investment trust team has provided very useful assistance to the Board and, in particular, has helped the Company to pursue an efficient and prudent buy-back programme as a key part of the discount control strategy. Also in January 2015 the Board appointed Aravis Partners as the Company’s new marketing agent to assist with investor relations and in raising the Company’s profile more generally within the investment community. In March 2015 the Board appointed Edison, a leading independent investment research company, to produce periodic research reports aimed at increasing investors’ awareness and understanding of the Company.

PERFORMANCE

Over the year the Company gained 40.0% in Net Asset Value (‘NAV’) denominated in Japanese yen (“JPY”), which, after translation into US dollars (“USD”), produced a 20.7% increase. This compares to the benchmark TOPIX’s 20.3% rise on a total return basis measured in USD. The three year and five year records of outperformance remain very strong.

Since Company Inception

Net Asset Value Total Return (USD)	1 Year	3 Years	5 Years	10 Years	Since Inception
Atlantis Japan Growth Fund	+20.7%	+56.2%	+75.3%	+10.1%	+133.1%
Benchmark Return (USD)
Topix TR	+20.3%	+41.8%	+42.5%	+49.0%	+10.0%

   

Net Asset Value Total Return (GBP)	1 Year	3 Years	Since Inception†
Atlantis Japan Growth Fund	+31.3%	+64.5%	+129.6%
Benchmark Return (GBP)
Topix TR	+30.9%	+49.4%	+8.3%

† Inception date of the GBP return is 16th December 2010.

Year to 30th April	At Inception	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015
Total Net Assets (USDm)	198	610	467	324	185	270	211#	130#	100#	84#	94#
NAV per Share (USD)*	0.99*	2.98*	2.28*	1.58*	0.90*	1.31*	1.35	1.48	1.95	1.92	2.31

Source: Tiburon Partners and Bloomberg. As of 30th April 2015.

# Total Net Assets after redemptions during year see “Redemption Facility”.

* The Company was subject to a 10:1 stock split in December 2010. These figures have been restated showing the split for comparative purposes. The original figures prior to the split were as follows;

Year to 30th April	At Inception	2005	2006	2007	2008	2009	2010
NAV per Share (USD)	9.92	21.01	29.87	22.84	15.85	9.04	13.19

SUBSCRIPTION RIGHT

As shareholders should be aware, the Board has for some time been keen to increase the size of the Company in order to improve the liquidity of the Company’s ordinary shares and to reduce the total expense ratio. Together with the Company’s advisers, the Board explored a number of different routes and structures for increasing the Company’s asset base. In my capacity as Chairman, I also met a number of the Company’s larger shareholders to seek their views.

Following these deliberations, on 1st October 2014, the Board announced details of proposals to introduce an annual Subscription Right to enable shareholders to subscribe for one new ordinary share for every five ordinary shares held on 1st October in each year at a price equal to the undiluted NAV per Share on 2nd October one year prior. The introduction of the annual Subscription Right was duly approved by shareholders at an EGM held on 22nd October 2014.

In the Circular sent to shareholders on 1st October 2014, I summarised the principal benefits and impact of the proposals in the following terms:

• shareholders would gain an embedded Subscription Right that would allow them to subscribe for new ordinary shares in the future at a predetermined price;

• If the NAV per Share increased following the date by reference to which the Subscription Price was calculated, the Subscription Right would allow shareholders to subscribe for new ordinary shares on the Subscription Date at a discount to the prevailing NAV per Share;

• If the Subscription Rights were to be fully exercised for each of the next five years, and absent any other changes to the Company’s capital structure, the number of ordinary shares in issue would more than double. This potential increase in the Company’s ordinary share capital should have a significant impact on the liquidity of the ordinary shares in the market;

• An increase in the Company’s issued ordinary share capital and total assets through the exercise of Subscription Rights should reduce the Company’s expense ratio as the fixed operating costs of running the Company would be spread over a greater asset base;

• As a result of the intrinsic option value of the Subscription Right, the value of an ordinary share should increase. If this increase in the intrinsic value of an ordinary share were to be reflected in the share price then it should help to narrow the discount to NAV per Share at which the ordinary shares currently trade;

• Any exercise of the Subscription Rights of the Company should increase the market capitalisation and total assets of the Company. As these grew, the Company might widen its appeal to new investors thus increasing demand for the Company’s ordinary shares which could have a positive effect on the Company’s share price and the discount to NAV per Share at which the ordinary shares currently trade;

• The Subscription Right would give shareholders a choice: they would have the ability to maintain their pro rata percentage shareholding in the Company but would not be obliged to do so;

• To protect the interests of shareholders who were unable or failed to exercise their Subscription Rights and subject to the Board’s overall discretion that exercise of the Subscription Rights would be in the best interests of the Company, following a Subscription Date the Board would appoint a trustee. The trustee, provided that in such trustee’s opinion, on the basis of considerations including the then market demand for the ordinary shares, the net proceeds of sale after deduction of all costs and expenses incurred by, and any fee payable to, such trustee would exceed the costs of exercising the Subscription Rights, would exercise all or part of the Subscription Rights which had not been exercised on the terms on which the same could have been exercised on the relevant Subscription Date and sell in the market the ordinary shares resulting from such exercise;

• The Subscription Price would be reset every year, meaning that if a Subscription Right was ‘out of the money’ for the purposes of a Subscription Date, the ordinary shares would nevertheless offer a future opportunity to subscribe for new ordinary shares at the rebased Subscription Price set on the following Business Day (the undiluted NAV per Share) for the Subscription Date in the following year; and

• If shareholders elected to redeem their ordinary shares through the Redemption Facility then they would lose the Subscription Rights associated with the ordinary shares which are redeemed by the Company. Accordingly, the level of Redemption Requests received by the Company under the Redemption Facility might reduce as a result supporting the Board’s desire to increase the size of the Company.

For most of 2015, the subscription price has been at a discount to the prevailing ordinary share price and Net Asset Value per ordinary share. However, the market turmoil since mid-August, as a result of fears of a Chinese economic slowdown, has had a detrimental effect on Asian stock markets. As at 25th August 2015, the market price is 123.25p per ordinary share and the Net Asset Value is 132.90p per ordinary share. The Board cannot recommend to shareholders whether or not to exercise their Subscription Rights but would encourage shareholders to monitor the ordinary share price during September and seek independent professional advice if necessary.

It is also very important to note that if shareholders elect to redeem their ordinary shares through the Redemption Facility then they would lose the Subscription Rights associated with the ordinary shares which are redeemed by the Company. This may mean giving up any intrinsic value.

CHANGES TO THE REDEMPTION FACILITY

Following the adoption of the Subscription Right and in the light of shareholder feedback during that process, the Board reviewed the operation of the Company's share Redemption Facility. The conclusion was reached that the share Redemption Facility had potentially disadvantaged some shareholders and was no longer operating in the best interests of shareholders as a whole, a particular concern being the increasing impact on the Company's total expense ratio. Accordingly, the Board resolved to amend the Redemption Facility, with effect from 31st March 2015 in the following manner:

• The Exit Charge payable on redemptions of up to 5% of a shareholder's entitlement under the Redemption Facility (the "Basic Entitlement") would be increased to 4% from 2%; and

• Shareholders would continue to be entitled to request the redemption of shares in excess of their Basic Entitlement to the extent that other shareholders redeemed less than their Basic Entitlement or did not seek to redeem their shares at the relevant redemption point (an "Excess Request"). However, the Exit Charge on Excess Requests would be the rolling 90 day average discount calculated in accordance with the Company's existing discount control mechanism, subject to an Exit Charge cap of 10%.

All other terms of the Redemption Facility were to remain unaltered.

At the redemption point on 31st March 2015, 2,055,466 shares representing 5.00% of issued shares were initially accepted for redemption. Of these, 1,402,046 shares representing 3.41% of issued shares were placed back into the market by the Company’s broker under the matched trade mechanism. Accordingly, only a net 1.59% of issued shares were redeemed by the Company in March 2015. It is significant that the most recent revisions to the terms of the Redemption Facility (as described above) have helped to enable such a placing of shares under the matched trade mechanism for the first time since the Redemption Facility was introduced in December 2010. The Board views this as strong evidence that the Redemption Facility is now finally working in the manner originally envisaged.

It is also significant and encouraging that the changes to the Redemption Facility have been achieved without a material increase in the level of the discount.

SHARE PRICE DISCOUNT

The discount or premium for the Company represents the share price relative to its Net Asset Value. The discount for the Company averaged 8.8% during the period under review compared with a 10.4% peer group average discount over the past twelve months. The discount was 6.1% on 30th April 2015.

DISCOUNT CONTROL MECHANISM

The Directors operate a hard discount control mechanism whereby the Company is obliged to hold a continuation vote should the shares have traded, on average, at a discount of more than 10% to the Net Asset Value per share during any rolling 90 day period, in normal market conditions. If the obligation to hold a continuation vote is triggered, the vote will be held no later than the next practicable annual general meeting of the Company.

SHARE BUY-BACKS

In order to assist in managing the discount at which the Company’s shares trade and to enhance the NAV per share of remaining shareholders, the Company exercised its authority to buy back shares on 5 occasions during the year at an average discount of 9.42%. The shares bought back, representing 6.68% of current issued shares, are held in treasury. Since the year end the Company has not bought back any further shares.

APPOINTMENT OF CORPORATE BROKER

The Board was pleased to announce the appointment of Cantor Fitzgerald as the Company's sole corporate broker with effect from 1st January 2015. Cantor Fitzgerald brings experience as a broker both in the areas of Japan and investment trusts. Edmond de Rothschild continues to be retained as the Company's sole financial adviser.

CHANGE OF AUDITOR

Following an audit tender process which was conducted as part of the ongoing corporate governance responsibilities, at which three firms, including the incumbent auditors were invited to tender for the audit, the Company appointed PricewaterhouseCoopers CI LLP ("PwC CI LLP ") as the new auditors and tax advisers. PwC CI LLP have undertaken the audit of the 30th April 2015 annual accounts and will be put forward for re-election at the 2015 AGM.

CHANGE OF FUNCTIONAL CURRENCY

The Board have resolved to change the functional currency of the Company from USD to pounds sterling (“GBP”) for these financial statements (refer to Note 3 for more details). The Board have elected not to change the presentation currency of the Financial Statements which continue to be presented in USD.

MARKETING ARRANGEMENTS

As stated above, the Board is keen to build on the recent adoption of the embedded Subscription Right in an effort to increase the overall size of the Company. To that effect, AIRC, the Company's Investment Adviser, has with effect from 1st January 2015 entered into an agreement with Aravis Partners LLP, a specialist fund marketing firm, with the aim of increasing the Company's market profile. The Company has also commissioned Edison to produce periodic specialist investment company research reports aimed at increasing investors’ awareness and understanding of the Company.

OUTLOOK

The recent economic data from Japan suggests the economy has absorbed the shock delivered by the April 2014 imposition of a higher consumption tax and has returned to the growth track. Economists are forecasting economic expansion continuing through the fiscal year ending in March 2016 thus providing the backdrop for sustained corporate earnings growth. Edwin Merner, who heads the Company’s investment advisory team, observes that Japanese equities offer superior value in terms of Price-Earnings Ratio, Price to Book Ratio, and yield compared to other developed economies’ equity markets.

I am encouraged by the changes in the stance of Japanese corporate management towards the issues of governance, transparency, and cash distribution. Spurred by a new Corporate Code that was implemented in June 2015, Japanese companies of all market capitalisations and across all industries have been adopting shareholder friendly policies. These include appointments of outside directors, establishing financial goals and returning excess cash to shareholders amongst other measures. I am confident these actions will collectively lead to a positive reassessment of Japanese equities by domestic and international investors alike over the medium to longer term.

The recent decision of the Chinese authorities to allow a devaluation of the Renminbi gave rise to extreme volatility in emerging market currencies and equity markets which then spread to Japan and other developed markets. As at the date of this report it is still too early to assess the longer term implications of these developments.

Noel Lamb

26th August 2015

Investment Adviser’s Report

For the year ended 30th April 2015

PERFORMANCE

The Japanese stock market has been benefiting from the improving economy and from hopes that we have now entered a period of sustained growth. Some of the positives include the Bank of Japan’s continuing quantitative easing, historically low interest rates and a slow but steady recovery in investor confidence. There has also been net buying in some months by pension funds (including government controlled pension funds), trust banks, investment trusts and corporations and of course overseas investors who account for over 60% of daily trading. Corporate earnings have been rising and the outlook for the current fiscal year ending March 2016 indicates double-digit earnings growth. Many investors are projecting continuing positive GDP growth this fiscal year continuing into following fiscal year ending 2017.

For the year ended 30th April 2015 the Topix advanced 20.3% and the Company’s NAV per share climbed 20.7% (all figures in USD and on a total return basis).

Total borrowings remain unchanged at ¥1.25 billion ($10.51 million) and cash stood at ¥163.46 million ($1.37 million) which means the Company’s net gearing is around 9.8%. The JPY ended April at ¥118.90 against the USD, a loss of around 13.8% from the previous year’s closing of ¥102.5. The Company has no foreign exchange hedges and no exposure to bonds, convertible bonds, warrants or derivatives of any kind. Excluding cash, the Company continues to be invested entirely in listed Japanese securities.

The portfolio now includes 80 stocks compared to 82 one year ago. In terms of contribution to overall performance for the year, the Company’s five best performing stocks were TDK, Nihon M&A Center Inc, Tokio Marine, Seibu Holdings, and Disco.

MARKET COMMENT & ECONOMIC OUTLOOK

The Investment Adviser believes that the market will continue to be influenced by earnings and expected earnings growth over the coming 12-18 months. Low interest rates, quantitative easing, expanding exports, rising private capital investment, wage hikes, sideways to lower unemployment, and improving consumer spending should all help to push up GDP growth. Prime Minister Abe and the ruling Democratic Party are making concerted efforts to carry out economic reforms which in turn should help improve the business climate.

There are of course risks to the above scenario including a stronger JPY. Other risks include weaker than expected world economic growth, especially in the US, Europe, China, and South East Asia, runaway commodity prices, or some type of geo-political event. 

The recent decision of the Chinese authorities to allow a devaluation of the Renminbi gave rise to extreme volatility in emerging market currencies and equity markets which then spread to Japan and other developed markets. Nevertheless the Investment Adviser thinks the market outlook remains favourable in the medium to long-term.

INVESTMENT ADVISER’S STRATEGY

The Investment Adviser’s strategy remains unchanged and is very much a bottom-up approach; but even so attention is paid to the big picture including economic trends, expected GDP growth, the perceived trend of corporate earnings, interest rates, money supply and the monetary base, the JPY, the world economy and commodity prices.

More than 75% of the Investment Adviser’s time is directly focused on finding, buying, and holding companies that are reasonably priced to cheap and that can also grow earnings for the next several years or longer. Based on the Investment Adviser’s formula, the best value and sales and earnings growth is now being found in selected medium sized companies and smaller companies. Due to liquidity risks the Company has only limited exposure to micro-caps or illiquid stocks.

The economy is improving, valuations seem reasonable to highly attractive in terms of projected Price-Earnings Ratio, Price to Book Ratio, dividend yield, Price/Earnings to Growth, Return on Equity and Return on Investment which indicates that there are still many undervalued, attractive stocks from which to choose.

In the last year the Investment Adviser has moved away from export related stocks, which in many cases now seem fully priced, to domestic stocks, especially companies that should benefit from the economic recovery and include companies in areas such as retail, consumer, service, software, real estate, finance, and selected technology. But as stated above, emphasis will continue to be placed on stock picking, not sector allocation.

The Investment Adviser plans to keep up a busy schedule of company visits ranging from small to big companies in all kinds of businesses. The team visits or contacts over 1,000 companies per year, which provide a long list of possible buy candidates, and always remains on the outlook for new investment ideas. As in the past the Investment Adviser will continue to place emphasis on long term capital appreciation. The approach is not one of trading or momentum investing and the Investment Adviser will continue to find, buy, and hold stocks that look cheap and that can grow earnings over the medium to longer term.

Atlantis Investment Research Corporation

August 2015

Alternative Investment Fund Manager’s Report

For the year ended 30th April 2015

Tiburon Partners LLP, which is registered in England as a limited liability partnership, was authorised on 22nd July 2014 by the Financial Conduct Authority of the UK as the Company’s Alternative Investment Fund Manager (‘AIFM’) for the purposes of the Alternative Investment Funds Managers Directive ‘(AIFMD’ or the ‘Directive’).

As the Company’s AIFM, Tiburon Partners LLP is required to make available an annual report for each financial year of the Company containing the following:

i.              A balance-sheet or a statement of assets and liabilities (see Statement of Financial Position below).

ii.             An income and expenditure account for the financial year (see Statement of Comprehensive Income below).

iii.            A report on the activities of the financial year (see Chairman’s Statement, Investment Adviser’s Report, Details of Ten Largest Investments below, Schedule of Investments and Directors’ Report and Statement of Directors’ Responsibilities).

iv.            Details of material changes to the information set out under Article 23 of the Directive. For these purposes, there are no material changes to be noted to the information set out in the Prospectus dated 1st October 2014 issued by the Company.

v.             Certain disclosures relating to remuneration paid by the AIFM to its staff. In accordance, however, with confirmation issued by the European Securities and Markets Authority (‘ESMA’) that the AIFMD remuneration rules do not apply to an AIFM until completion of its first full performance following authorisation, the Company is not disclosing quantitative data on AIFM remuneration information in the current report. The required remuneration disclosures will be made in the AIFM Report made after the first full performance period of the AIFM has been completed.

The remuneration disclosures referred to in paragraph (v) above are a regulatory requirement and follow ESMA and FCA guidance. The Executive Committee of the AIFM is responsible for formulating and implementing the remuneration policy, the purpose of which is to promote effective risk management. All executive partners, as well as other members of the firm who are deemed to be risk takers, or who otherwise hold FCA control functions are included within the scope of the policy.

Tiburon Partners LLP

August 2015

Details of Ten Largest Investments

The ten largest investments comprise a fair value of $26,601,745 (2014: $26,930,619) representing 28.4% of Net Asset Value (2014: 32.0%) with details as below:

Tokio Marine Holdings (94,500 shares, cost $3,014,982)

Tokio is one of Japan’s leading insurance companies and has now entered the life insurance business. It has expanded overseas business with overseas sales expected to exceed 50% of total sales in the near term. An expected decrease in the combined loss ratio and expanding new premiums written should result in steadily rising sales and earnings in coming years.

Fair value of $3,893,594 representing 4.2% of the Net Asset Value (2014: 0.0%)

TDK (39,000 shares, cost $1,669,759)

TDK is now focussing on producing parts and products used in communication equipment, industrial equipment and disc drives which marks a change from its previous emphasis on consumer related products. Sales are rising, profit margins are improving and the Investment Adviser is looking for good recovery/growth in coming years.

Fair value of $2,836,056 representing 3.0% of the Net Asset Value (2014: 2.9%)

Sakai Moving Service (85,000 shares, cost $2,078,400)

Sakai is a leading Japanese household moving company with a nationwide network of moving centres and has been steadily gaining market share in recent years. The company has been cutting costs with the aim of improving profit margins. Sakai is well run but sales and earnings are sensitive to the state of the economy. 

Fair value of $2,751,147 representing 2.9% of the Net Asset Value (2014: 2.8%)

Kito Corp (265,700 shares, cost $2,534,827)

Kito makes a wide range of chain load handling machinery used in lifting. The company has been increasing its world market share and Asia has been a very high growth market in recent years. The world economy is now showing signs of recovering and corporations are streamlining their operations, helping to increase demand, sales and earnings over the coming few years. The weaker JPY is another positive for Kito. 

Fair value of $2,606,733 representing 2.8% of the Net Asset Value (2014: 3.3%)

Hito Communications (158,200 shares, cost $1,456,879)

Hito is an outsourcing company specializing in providing well trained staff for stores selling electronics goods, mostly electronic discount stores. The company is also now supplying staff to several clothing chains. The economy is recovering and some of Hito’s customers should do well as consumer spending climbs which in turn will help lift the company’s sales and earnings.

Fair value of $2,597,424 representing 2.8% of the Net Asset Value (2014: 3.9%)

Ai Holdings (137,100 shares, cost $1,959,684)

Ai has several businesses including security surveillance equipment for installation in a variety of domestic applications. The company offers a very competitive service and has been rapidly gaining market share. Ai is also involved in cutting machines for hobby use and issuing cards for hospital patient and credit use. The company has been very successful in taking over poorly run companies and then expanding their businesses. Continued high growth is expected in coming years.

Fair value of $2,526,458 representing 2.7% of the Net Asset Value (2014: 2.8%)

Lintec (98,400 shares, cost $2,029,752)

Lintec produces a wide range of products including specialty paper, casting paper, adhesive paper and films for labels, labeling materials, films for car windows, films used in building windows, LCD films, interior decorative sheets, and many more. A growing economy, expanding exports, and steady raw materials should help lift earnings over the next few years. The company is well run, has a strong balance sheet, and profit margins should increase in coming years.

Fair value of $2,437,863 representing 2.6% of the Net Asset Value (2014: 0.0%)

Seibu Holdings (80,000 shares, cost $1,555,096)

Seibu is one of Tokyo’s leading private railways but also owns many hotels and a number of restaurants and resorts including ski resorts. After going through a difficult period several years ago, the company has relisted and is once again growing its sales and earnings.

Fair value of $2,337,109 representing 2.5% of the Net Asset Value (2014: 0.0%)

Tokai Tokyo Financial (298,800 shares, cost $2,200,252)

Tokai is a regional broker with its head office in Nagoya but also has offices in other major Japanese cities and overseas. The company is conservatively run and is involved in investment banking, private banking, institutional sales, and other related businesses. The company tends to do well when Japanese stocks are rising and trading volume is at a high level.

Fair value of $2,326,086 representing 2.5% of the Net Asset Value (2014: 2.0%)

Kokusai (145,000 shares, cost $2,149,859)

Kokusai produces and sells tyre balancing systems and has indirectly been benefiting from the steadily growing demand for tyres which in turn is sensitive to higher car sales in the US, China, India, and other major economies, especially in Asia. The business is somewhat cyclical but the Investment Adviser is forecasting above average sales and earnings growth for the next few years.

Fair value of $2,289,274 representing 2.4% of the Net Asset Value (2014: 0.0%)

Schedule of Investments

		Fair Value
Holdings	Investments held at fair value through profit or loss	$'000	% of NAV
	Advertising: 0.60% (2014: 1.01%)
121,400	Hakuten	563	0.6
	Apparel: 0.00% (2014: 0.22%)	-	-
	Auto Manufacturers: 0.00% (2014: 2.72%)	-	-
	Auto Parts & Equipment: 2.32% (2014: 2.27%)
71,100	Mitsuba	1,521	1.63
8,000	Muro	85	0.09
64,000	Seiren	564	0.6
	Banks: 3.20% (2014: 3.34%)
39,400	Sumitomo Mitsui Financial Group	1,736	1.86
281,000	Sumitomo Mitsui Trust	1,253	1.34
	Building Materials: 0.69% (2014: 1.95%)
44,300	Japan Pile	253	0.27
52,700	Toyo Shutter	394	0.42
	Chemicals: 10.08% (2014: 4.35%)
44,400	Atect	295	0.32
285,000	Kinugawa Rubber Industrial	1,323	1.41
98,400	Lintec	2,438	2.61
88,600	MEC	615	0.66
255,900	Mitsubishi Chemical	1,608	1.72
73,800	MORESCO	1,337	1.43
138,600	Yushiro Chemical Industry	1,807	1.93
	Commercial Services: 10.64% (2014: 19.99%)
78,700	Aeon Delight	2,101	2.25
34,400	Altech	652	0.7
10,900	Bengo4.com	227	0.24
177,500	Gakujo	1,989	2.13
158,200	Hito Communications	2,597	2.78
46,500	Kanamoto	1,370	1.47
20,400	Nihon M&A Center Inc	716	0.77
25,000	PRAP Japan	280	0.3
	Computers: 3.03% (2014: 5.02%)
39,000	TDK	2,836	3.03
	Distribution/Wholesale: 4.05% (2014: 8.39%)
137,100	Ai Holdings	2,526	2.7
150,000	Morito	1,267	1.35
	Diversified Financial Services: 8.76% (2014: 6.59%)
30,000	Fuyo General Lease	1,237	1.32
41,300	IBJ Leasing	934	1
339,500	Ichigo	945	1.01
51,900	Imamura Securities	776	0.83
108,600	Kyokuto Securities	1,648	1.76
298,800	Tokai Tokyo Financial	2,326	2.49
34,700	UCS	322	0.35
	Electrical Components and Equipment: 0.00% (2014: 0.43%)	-	-
	Electronics: 6.31% (2014: 4.98%)
145,000	Kokusai	2,289	2.45
80,700	Kyowa Electronics Instruments	332	0.36
135,000	Macnica Fuji Electronics	1,669	1.78
73,800	Marubun	483	0.52
103,800	Suzuki	1,121	1.2
	Engineering & Construction: 2.35% (2014: 1.41%)
268,000	Giken Kogyo	509	0.54
212,400	Raito Kogyo	1,693	1.81
	Food: 0.23% (2014: 0.00%)
15,000	Halows	219	0.23
	Gas: 0.62% (2014: 0.00%)
88,700	Shizuoka Gas	582	0.62
	Hand/Machine Tools: 1.28% (2014: 2.20%)
13,000	Disco	1,198	1.28
	Healthcare-Products: 0.72% (2014: 0.00%)
58,100	Shofu	671	0.72
	Home Builders: 0.00% (2014: 0.36%)	-	-
	Home Furnishings: 1.08% (2014: 0.21%)
328,800	JVC Kenwood	1,012	1.08
	Insurance: 6.46% (2014: 0.00%)
147,600	T&D	2,152	2.3
94,500	Tokio Marine Holdings	3,894	4.16
	Internet: 1.41% (2014: 3.49%)	-	-
140,300	Matsui Securities	1,322	1.41
	Leisure Time: 1.41% (2014: 0.00%)
306,000	Tokyo Dome	1,317	1.41
	Lodging: 1.31% (2014: 0.00%)
499,000	Royal Hotel	1,229	1.31
	Machinery-Construction & Mining: 1.25% (2014: 1.78%)
89,000	Mitsubishi Electric	1,170	1.25
	Machinery-Diversified: 5.47% (2014: 7.40%)
137,800	Aida Engineering	1,585	1.71
196,800	CKD	1,822	1.95
138,300	Nittoku Engineering	1,695	1.81
	Media: 0.97% (2014: 0.88%)
103,300	Nippon BS Broadcasting	909	0.97
	Metal Fabricate/Hardware: 2.48% (2014: 2.32%)
110,700	Okada Aiyon	1,013	1.08
394,000	Ryobi	1,305	1.4
	Miscellaneous Manufacturing: 5.53% (2014: 4.21%)
265,700	Kito Corp	2,607	2.79
140,000	Tigers Polymer	957	1.02
270,900	Towa	1,606	1.72
	Office Furnishing: 0.00% (2014: 4.28%)	-	-
	Pharmaceuticals: 0.07% (2014: 0.88%)
1,600	Medical Ikkou	67	0.07
	Real Estate: 9.29% (2014: 4.77%)
122,000	Japan Property Management Center	1,692	1.81
260,800	Keihanshin Building	1,559	1.67
26,600	Pressance	860	0.92
80,000	Seibu Holdings	2,337	2.5
155,000	Sun Frontier Fudousan	1,499	1.6
46,500	Toubu Jyuhanco	740	0.79
	Retail: 9.60% (2014: 3.67%)
42,000	Amiyaki Tei	1,681	1.8
22,400	Arcland Service	960	1.03
126,600	Hard Off Corp	1,268	1.36
54,000	HUB	843	0.9
85,000	Kirindo	799	0.85
178,600	Misawa	1,224	1.31
198,800	Nextage	1,526	1.63
15,000	St Marc	508	0.54
141,000	Watt Mann	172	0.18
	Semiconductors: 0.00% (2014: 4.69%)	-	-
	Software: 0.00% (2014: 1.13%)	-	-
	Storage/Warehousing: 1.48% (2014: 0.00%)
390,000	Mitsui-Soko	1,380	1.48
	Telecommunications: 1.28% (2014: 0.00%)
40,800	WirelessGate	1,201	1.28
	Textiles: 0.00% (2014: 2.29%)	-	-
	Transportation: 4.94% (2014: 5.07%)
85,000	Sakai Moving Service	2,751	2.94
294,000	Senko	1,874	2
	Total Japan (2014: 112.30%)	101,843	108.91
	Total Equities (2014: 112.30%)	101,843	108.91
	Total Investments	101,843	108.91
	Cash (2014: 0.83%	1,374	1.47
	Other Net Liabilities (2014: (13.13%))	-9,708	-10.38
	Net Assets Attributable to Holders of Redeemable
	Participating Shares at fair value	93,509	100

Board of Directors

NOEL LAMB (Chairman , aged 58, appointed to the Board on 1st February 2011 and appointed as Chairman on 1st May 2014), British, graduated from Exeter College, Oxford University and is a barrister-at-law. He joined Lazard Brothers & Co Limited in 1987 and from 1992 to 1997 he was the managing director of Lazard Japan Asset Management where he was the fund manager for their Japanese equities. In 1997, he moved to the Russell Investment Group where he established the investment management capability of Russell in London. In 2002, he was promoted to Chief Investment Officer in North America where he managed assets of $150bn.

ANDREW MARTIN SMITH MCSI (aged 63, appointed to the Board on 26th September 2002), British, graduated from Exeter College, Oxford University with an MA in Politics and Economics. He began his career with Allied Hambro Unit Trust Company and worked in the corporate finance and capital markets divisions of Hambros Bank Limited becoming a director in 1986. He was chief executive of Hambros’ fund management activities from 1993 to 1997 prior to the merger with Guinness Flight. He works as an adviser and consultant at Guinness Asset Management and is a Director of Guinness Asset Management Funds in Dublin. He is Chairman of Parmenion Capital Management LLP and a non-executive Director of Church House Investments and M & G High Income and TR European Growth Investment Trusts.

ERIC BOYLE FCSI (aged 61, appointed to the Board on 17th October 2000), British, is a partner of Smith & Williamson Investment Management LLP. He has over 30 years’ experience in stockbroking and investment banking with NCL Investments – now part of Smith & Williamson. He became a member of the London Stock Exchange in 1982 and has specialised in Japan and emerging markets since 1989 in particular, by way of country and regional closed or open-ended funds. With the experience gained in studying a variety of companies in this capacity, he has held directorships in a number of companies and funds. During his career, he has raised new money for several groups launching new products investing in both emerging and developed markets.

PHILIP EHRMANN FCSI (aged 56, appointed to the Board on 25th October 2013), British, graduated from the London School of Economics with a BSc in Economics. He started his investment career in 1981 specialising in the North American market before heading up Emerging Markets for Invesco Asset Management. In 1995 he joined Gartmore Investment Management to undertake a similar role, before becoming Head of Pacific & Emerging Markets. Whilst at Gartmore he managed the Gartmore Asia Pacific Trust Plc, a pan-Asian Investment Trust. In 2006 he moved to Jupiter Asset Management where he was Co-Head of Asia. At the beginning of 2015 he joined Manulife Asset Management as a Senior Managing Director, responsible for overseeing Global Emerging Markets equity portfolios.

TAKESHI MURAKAMI (aged 71, appointed to the Board on 29th November 2007), Japanese, graduated from Doshisha University in Kyoto with a BA in Economics. He has 38 years’ experience in both stock broking and investment management. He started his career at Sanyo Securities, Osaka in 1966 where he was primarily engaged in international business promotion at its New York office between 1972-1978 and at its London office for two years between 1982-1984. He then joined Schroder Securities in London in 1984, before moving to its Tokyo office in 1986. He served as Schroder's Tokyo Branch Manager for ten years until he moved to Schroder Investment Management Japan in 1996 as Director, where he promoted the Japanese pension fund management business. Having retired from Schroder’s at the age of 60 in 2003, Takeshi resumed his career at Instinet Japan as Chairman in 2004 for a year.

Directors’ Report and Statement of Directors’ Responsibilities

The Directors are pleased to present their nineteenth Report and the Audited Financial Statements of the Company for the year ended 30th April 2015.

PRINCIPAL ACTIVITY

The Company is a Guernsey authorised closed ended investment company with UK investment trust status listed on the London Stock Exchange. The Company has a premium listing on the London Stock Exchange. Trading in the Company’s ordinary shares commenced on 10th May 1996.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for preparing Financial Statements for each financial year which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that year. In preparing these Financial Statements, the Directors are required to:

–      select suitable accounting policies and then apply them consistently;

–      make judgements and estimates that are reasonable and prudent;

–      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.

We confirm, to the best of our knowledge, that:

-      this Annual Report and Financial Statements, prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

–      this Annual Report and Financial Statements includes information detailed in the Directors' Report, the Investment Adviser’s Report and Notes to the Financial Statements, which provides a fair review of the information required by:

a)     DTR 4.1.8 of the Disclosure and Transparency Rules (“DTR”) being a fair review of the Company business and a description of the principal risks and uncertainties facing the Company; and

b)    DTR 4.1.11 of the DTR being an indication of important events that have occurred since the beginning of the financial year, the likely future development of the Company, the Company’s use of financial instruments and where material, the Company’s financial risk management objectives and policies and its exposure to price risk, credit risk, liquidity risk and cash flow risk.

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 shareholders to assess the Company’s performance, business model and strategy.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the Financial Statements comply with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the Directors’ Report and other information included in the Annual Report is prepared in accordance with company law applicable in Guernsey. They are also responsible for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.

The Directors who held office at the date of the approval of the Financial Statements confirm that, so far as they are aware:

–      There is no relevant audit information of which the Company’s auditor is unaware; and

–      They have taken all the steps they ought to have taken as Directors to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

The Directors confirm that these Financial Statements comply with these requirements.

BUSINESS REVIEW AND TAX STATUS    

The Investment Trust Company regime was amended for accounting periods commencing on or after 1st January 2012, whereby a formal application for initial entry into the regime is required, supported by appropriate annual tax filings to maintain ongoing investment trust status. This differs from the previous regime whereby investment trust status was granted annually on a retrospective basis after the company tax return was submitted to HM Revenue and Customs.

A successful application for the Company to enter into the investment trust regime has been made and accepted, subject to the Company continuing to meet eligibility conditions. In the opinion of the Directors, the Company has conducted its affairs so as to enable it to maintain investment trust status, subject to completion of the relevant audit work.

REDEMPTION FACILITY

The purpose of the facility is to provide a measure of liquidity for those shareholders who may wish to redeem.  The Redemption Facility will operate at six-monthly intervals on 31st March and 30th September (or if such date is not a business day, the previous business day).

The Directors shall be entitled at their absolute discretion to determine the procedures for the redemption of the ordinary shares (subject to the facilities and requirements of CREST and the Companies Law). Without prejudice to the Directors discretion, it is intended that the procedure described below shall apply.

Redemptions may take place on any redemption point. Upon redemption all new ordinary shares so redeemed shall be cancelled. 

The total redemptions at each redemption point are limited to 5% of the issued share capital at the time. At each redemption point, each shareholder is entitled to request the redemption of 5% of their holding of shares held at the immediately preceding redemption point and held continuously at all times since that date, rounded down to the nearest whole number (the “Basic Entitlement’’). Until 31st March 2015 the redemption value was based upon the realisation value of the portfolio, less an exit charge set at 2% on redemptions of up to a shareholder's Basic Entitlement. Following a Board resolution to amend the Redemption Facility, with effect from the same date, the exit charge payable on redemptions of up to a shareholder's Basic Entitlement will be be increased to 4%.

Shareholders are entitled to request the redemption of shares in excess of their Basic Entitlement to the extent that other shareholders redeem less than their Basic Entitlement or do not seek to redeem their shares at the relevant redemption point (an "Excess Request"). Following the amendment to the Redemption Facility, with effect from 31st March 2015, the exit charge on Excess Requests will be the rolling 90 day average discount calculated in accordance with the Company's existing discount control mechanism, subject to an exit charge cap of 10%. Any such excess redemption requests will be satisfied pro rata in proportion to the amount in excess of the Basic Entitlement (rounded down to the nearest whole number of shares). For the avoidance of doubt, the lending of shares will be regarded as a disposal of beneficial interest.

The right of shareholders to request the redemption of their ordinary shares on any redemption point shall be exercised by the shareholder delivering to the receiving agent (or to such other person as the Directors may designate for this purpose) a duly completed redemption request. Redemption request forms are available upon request from the Administrator. Redemption requests shall not be valid (unless the Company otherwise agrees) unless they are received by the receiving agent not earlier than 20 days nor later than 10 days before the relevant redemption point.

SHARE BUY-BACKS

The Company has been granted the authority to make market purchases of up to a maximum of 14.99% of the aggregate number of ordinary shares in issue at a price not exceeding the higher of (i) 5% above the average of the mid-market values of the ordinary shares for the 5 business days before the purchase is made or, (ii) the higher of the price of the last independent trade and the highest current investment bid for the ordinary shares.

In deciding whether to make any such purchases the Directors will have regard to what they believe to be in the best interests of shareholders as a whole, to the applicable legal requirements and any other requirements in its Articles. The making and timing of any buybacks will be at the absolute discretion of the Board and not at the option of the shareholders, and is expressly subject to the Company having sufficient surplus cash resources available (excluding borrowed moneys). The Listing Rules prohibit the Company from conducting any share buybacks during close periods immediately preceding the publication of annual and interim results.

RESULTS

The results for the year are set out in the Statement of Comprehensive Income. 

DIVIDEND

As a UK investment trust the Company is subject to the provisions of the Corporation Tax Act 2010, the provisions of section 1158 of which (‘s.1158’) include a retention test which states that the Company should not retain in respect of any accounting period an amount which is greater than 15% of its income. This has been modified for accounting periods beginning on or after 28th June 2013 such that a negative balance on a company's revenue reserve is taken into account when calculating the amount of income. This is not relevant however for the year ended 30th April 2015.

There were no distributions made during the year and the Company met the retention test for the year ended 30th April 2015.

CAPITAL VALUES

At 30th April 2015 the value of net assets available to shareholders was $93,509,272 (2014 - $84,086,197) (net of redemption liability) and the Net Asset Value per share was $2.31/£1.50 (2014 - $1.92/£1.14).

PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements of the Company have been prepared in accordance with IFRS, which comprise standards and interpretations approved by the European Union, and International Accounting Standards, and Standing Interpretations Committee interpretations approved by the IASC that remain in effect.

SIGNIFICANT SHAREHOLDINGS

In accordance with the Company's Articles of Association the Directors have the ability to request nominee shareholders to disclose the beneficial shareholders they represent. Based on the information received the following shareholders have a holding in the Company in excess of 3%.

Shareholder			%		Ordinary Shares
LIM Advisors			15.78		6,485,974
South Yorkshire Pension Authority			14.80		6,085,500
1607 Capital Partners			8.34		3,430,418
Ecclesiastical Investment Management			5.59		2,296,807
Smith & Williamson Investment Management			4.55		1,870,807
Reliance Mutual Insurance Society			4.29		1,762,278

SECRETARY

The Secretary is Northern Trust International Fund Administration Services (Guernsey) Limited.

AUDITORS

Following an audit tender process which was conducted as part of the ongoing corporate governance responsibilities, at which three firms, including the incumbent auditors were invited to tender for the audit, the Company appointed PwC CI LLP as the new auditors and tax advisers.

PwC CI LLP have indicated their willingness to continue in office.

Resolutions re-appointing them and authorising the Directors to fix their remuneration will be proposed at the Annual General Meeting.

PRINCIPAL RISKS AND UNCERTANTIES

As an investment trust, the Company invests in securities for the long term. The financial investments held as assets by the Company comprise equity shares (see the Schedule of Investments for a breakdown). As such, the holding of securities, investing activities and financing associated with the implementation of the investment policy involves certain inherent risks. Events may occur that could result in either a reduction in the Company’s net assets or a reduction of revenue profits available for distribution.

Set out below are the principal risks inherent in the Company’s activities along with the actions taken to manage them. The Board reviews and agrees policies for managing these risks and these policies have remained substantially unchanged since 30th April 2006.

Performance

The Board regularly monitors the Company’s investment performance against a number of indices and the peer group.

Discount

A disproportionate widening of the discount relative to the Company’s peers could result in loss of value for shareholders. The Board reviews the discount level regularly. The introduction of the Redemption Facility has improved the liquidity in the Company’s shares and helps to narrow the discount to the NAV at which the shares trade.

The Company operates a shareholder approved discount control mechanism whereby the Company will hold a continuation vote if the shares have traded, on average, at a discount of more than 10% to the Net Asset Value per share during any rolling 90 day period, in normal market conditions. If the obligation to hold a continuation vote is triggered, the vote will be held no later than the next practicable annual general meeting of the Company. As of the date of this report, the continuation vote has not been triggered.

Regulatory

The Company operates in a complex regulatory environment and faces a number of regulatory risks. Breaches of regulations, such as Section 1158 of the Corporation Tax Act 2010, The Companies (Guernsey) Law, 2008 and the UKLA Listing Rules, could lead to a number of detrimental outcomes and reputational damage. Section 1158 qualification criteria are continually monitored. The Board relies on the services of the Administrator, Northern Trust International Fund Administration Services (Guernsey) Limited and its professional advisers to ensure compliance with The Companies (Guernsey) Law, 2008 and the UKLA Listing Rules.

Operational

Like most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager, Investment Adviser and the Company’s Administrator. The security, for example, of the Company’s assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements depends on the effective operation of these systems. These are regularly tested and monitored.

Financial

The financial risks faced by the Company are disclosed in Note 18 to the Financial Statements.

CORPORATE GOVERNANCE AND SHAREHOLDER RELATIONS

Details of the Company’s compliance with corporate governance best practice, including information on relations with shareholders, are set out in the Corporate Governance Statement and this statement forms part of the Directors’ Report.

GOING CONCERN

The Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. Whilst the Company’s current liabilities exceed its current assets the Directors do not believe this represents a liquidity risk as the Company has invested in listed and readily realisable investments. Whilst the Company may be obliged to hold a continuation vote in accordance with its discount control mechanism, the Directors do not believe this should automatically trigger the adoption of a non-going concern basis in line with AIC Statement of Recommended Practice which states that it is more appropriate to prepare financial statements on a going concern basis unless a continuation vote has already been triggered and shareholders have voted against continuation. Therefore, the Directors believe the use of the going concern basis is appropriate as there are no material uncertainties relating to events or conditions that may cast significant doubt about the ability of the Company to continue to meet its ongoing obligations.

ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE

The Company has entered into the arrangements necessary to ensure compliance with the AIFM Directive. Following a review of the Company's management arrangements, the Board approved the appointment of Tiburon Partners LLP ("Tiburon"), effective 1st August 2014, who had been acting as the Company's Investment Adviser, as the Company's Alternative Investment Fund Manager on the terms of and subject to the conditions of a new Investment Management Agreement between the Company and Tiburon. The Company's previous Investment Management Agreement between the Company and AFMG Limited ("AFMG”) has been terminated, effective 1st August 2014, with AFMG no longer retaining a role in the management of the Company's assets. Atlantis Investment Research Corporation ("AIRC”) has been re-appointed, effective 1st August 2014, by the Company and Tiburon to act as Investment Adviser on the terms of and subject to the conditions of a new Investment Advisory Agreement. Save for the removal of AFMG from the Company's portfolio management structure, the contractual terms to which the Company, Tiburon and AIRC are subject have not changed in substance and, in particular, the management fee which the Company pays remains unchanged. (Refer to Note 7 for details of the new Investment Management Agreement)

The Board has also appointed Northern Trust (Guernsey) Limited (the "Depositary") to act as the Company's depositary (as required by the AIFM Directive), effective 1st August 2014, on the terms and subject to the conditions of a Depositary Agreement between the Company, Tiburon and the Depositary. (Refer to Note 8 for details of the Depositary Agreement). Due to legislative and regulatory changes introduced by virtue of the AIFM Directive, the Company has also amended and re-stated its administration agreement with Northern Trust International Fund Administration Services (Guernsey) Limited.

FOREIGN ACCOUNT TAX COMPLIANCE ACT

For purposes of the US Foreign Account Tax Compliance Act, the Company registered with the US Internal Revenue Service (“IRS”) as a Guernsey reporting Foreign Financial Institution (“FFI”), received a Global Intermediary Identification Number, and can be found on the IRS FFI list under the link http://apps.irs.gov/app/fatcaFfiList/flu.jsf.

The Company is subject to Guernsey regulations and guidance based on reciprocal information sharing inter-governmental agreements which Guernsey has entered into with the United Kingdom and the United States of America. The Board will take the necessary actions to ensure that the Company is compliant with Guernsey regulations and guidance in this regard.

Noel Lamb                           Andrew Martin Smith           

Chairman                               Director 

26th August 2015

Directors’ Remuneration Report

The Board has approved this report, in accordance with the rules covering good communication to shareholders. An ordinary resolution for the approval of this report will be put to the members at the forthcoming Annual General Meeting.

REMUNERATION COMMITTEE

The Board as a whole fulfils the function of a Remuneration Committee. The Company’s financial adviser, corporate broker and company secretary, will be asked to provide advice when the Directors consider the level of Directors’ fees.

POLICY ON DIRECTORS’ FEES

The Board’s policy is that the remuneration of non-executive Directors should reflect the experience of the Board as a whole and be fair and comparable to that of other investment trusts that are similar in size, have a similar capital structure and have a similar investment objective.

The fees for the non-executive Directors are determined within the limits of £200,000 set out in the Company’s Articles of Incorporation. The Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits.

DIRECTORS’ SERVICE CONTRACTS

It is the Board’s policy that none of the Directors have a service contract. Directors are appointed initially until the following Annual General Meeting when, under the Company’s Articles of Incorporation it is required that they be re-elected by shareholders. Thereafter two directors shall retire by rotation, or if only one director is subject to retire by rotation he shall retire. The retiring directors will then be eligible for reappointment having been considered for reappointment by the Chairman and other directors.

COMPANY’S PERFORMANCE

For the purpose of this report the Board is required to select an index against which the Company’s performance can be measured. Although performance is not measured against a single benchmark the Topix TR (USD) and the Tokyo Second Market (USD) have been selected for this purpose. The graphs below show the company price and total return over five years and from inception (assuming all dividends are reinvested) to ordinary shareholders against the Topix TR (USD) and the Tokyo Second Market TR (USD) on a total return basis until 30th April 2015.

DIRECTORS’ EMOLUMENTS FOR THE YEAR

Directors’ emoluments are paid in sterling. The Directors who served in the year received the following emoluments in the form of fees:

					Year ended	Year ended
					30th April 2015	30th April 2014
Regular fees					£	£
*Timothy Guinness					-	30,000
**Noel Lamb					30,000	25,000
Eric Boyle					25,000	25,000
Andrew Martin Smith					27,500	27,500
Takeshi Murakami					25,000	25,000
***Philip Ehrmann					25,000	6,250
					132,500	138,750

*Timothy Guinness retired on 30th April 2014. 

**Noel Lamb’s annual fees increased to £30,000 following his appointment as Chairman on 1st May 2014. 

***Philip Ehrmann’s annual fees increased to £25,000 as he was appointed as a Director on 25th October 2013 and therefore only received a quarter of his annual fee entitlement during the year ended 30th April 2014.

The following one-off additional payments were approved and paid during the year ended 30th April 2015 for the extra work engaged in by the Board in relation to arranging the change of Investment Manager and the preparation and review of documentation relating to introduction of the annual Subscription Right.

					Year ended
					30th April 2015
Additional fees					£
Noel Lamb					12,000
Eric Boyle					10,000
Andrew Martin Smith					10,000
Philip Ehrmann					8,000
					40,000

DIRECTORS’ INTERESTS

The Directors served throughout the year under review.

Certain Directors had a beneficial interest in the Company by way of their investment in the ordinary shares of the Company.

The details of these interests as at 30th April 2015 and 30th April 2014 are as follows:

				Ordinary Shares		Ordinary Shares
				2015		2014
*Timothy Guinness				-		100,000
Andrew Martin Smith				25,000		25,000
Noel Lamb				10,000		10,000

*Timothy Guinness retired on 30th April 2014

The above interests were unchanged at the date of this report.

There were no relevant contracts in force during or at the end of the year in which any Director had an interest. There are no service contracts in issue in respect of the Company’s Directors.

No Directors had a non-beneficial interest in the Company during the year under review.

DISCLOSURE OF DIRECTORSHIPS IN PUBLIC COMPANIES LISTED ON RECOGNISED STOCK EXCHANGES

The following summarises the Directors’ directorships in other public companies:

Company Name						Stock Exchange
A. Martin Smith
TR European Growth Plc						London
M & G High Income Investment Trust Plc						London

None of the other Directors held directorships in other public companies:

APPROVAL

A resolution for the approval of the Directors’ Remuneration Report for the year ended 30th April 2015 will be proposed at the Annual General Meeting.

By order of the Board

Noel Lamb                           Andrew Martin Smith           

Chairman                               Director 

26th August 2015

Corporate Governance

INTRODUCTION

The following Corporate Governance statement forms part of the Directors’ Report (DTR 7.2.1). The Board of the Company has considered the principles and recommendations of the AIC Code of Corporate Governance (“AIC Code”) by reference to the AIC Corporate Governance Guide for investment Companies (“AIC Guide”). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code 2012, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.

On 22nd January 2013, the Financial Reporting Council provided the AIC with an updated endorsement letter to cover the fifth edition of the AIC Code. The endorsement confirms that by following the AIC Code investment company boards should fully meet their obligations in relation to the UK Corporate Governance Code and paragraph LR 9.8.6 of the Listing Rules.

The Company follows 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. Companies reporting against the UK Corporate Governance Code or the AIC Code are deemed to comply with the GFSC Code.

The Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK
Corporate Governance Code, except as set out below.

• the role of the chief executive
• executive directors’ remuneration
• the need for an internal audit function
• the whistle blowing policy
   

For the reasons set out in the AIC Guide, and as explained in the UK Corporate Governance Code, the Board considers these provisions are not relevant to the position of the Company, being an externally managed investment company. The Company has therefore not reported further in respect of these provisions. The Directors are non-executive and the Company does not have employees, hence no whistle-blowing policy is required.

THE BOARD

Disclosures under Principle 5 of the AIC Code

The Board comprises five independent non-executive directors including the Chairman, Noel Lamb, who was appointed on 31st May 2014. Due to the size of the Company, the nature of its activities and the fact that all of the directors are independent, the Board does not consider it necessary to appoint a senior independent director.

The Board has not appointed a remuneration committee but comprising wholly independent directors, the whole Board considers these matters regularly. The Board considers agenda items formally laid out in the Notice and Agenda, which are formally circulated to the Board in advance of the meeting as part of the Board papers.

The primary focus at Board Meetings is a review of investment performance and associated matters such as the discount, redemptions, gearing, asset allocation, marketing and investor relations, peer group information and industry issues. There were 6 board meetings (2013-2014: 4) and 1 audit committee meeting (2013-2014: 2) held during the accounting year 1st May 2014 to 30th April 2015. The table below shows the number of formal meetings attended by each director during the accounting year.

Director                                     Board Meetings Attended                      Audit Committee Meetings Attended

Eric Boyle                                                              5                                                                              1

Andrew Martin Smith                                               6                                                                              1

Takeshi  Murakami                                                 5                                                                              n/a

Noel Lamb                                                             6                                                                              1

Philip Ehrmann                                                       6                                                                              1

In addition to the meetings held above there were also 6 other committee meetings held during the year in relation to the introduction of the annual Subscription Right, the amendment of the Redemption Facility and other operational matters.

Directors are appointed initially until the following Annual General Meeting when, under the Company’s Articles of Incorporation it is required that they be re-elected by shareholders. Thereafter two directors shall retire by rotation, or if only one director is subject to retire by rotation he shall retire. The retiring directors will then be eligible for reappointment having been considered for reappointment by the Chairman and other directors.

The Board evaluates its performance and considers the tenure of each director on an annual basis, and considers that the mix of skills, experience, ages and length of service to be appropriate to the requirements of the Company.

When considering succession planning, the Board bears in mind the balance of skills, knowledge, and experience and diversity existing on the Board. The Board has noted amendments to the UK Code to strengthen the principle on boardroom diversity following the Davies Report. The Board considers diversity as part of the annual performance evaluation and it is felt that there is a range of backgrounds and each director brings different qualities to the Board and its discussions. It is not felt appropriate for the Company to have set targets in relation to diversity; candidates will be assessed in relation to the relevant needs of the Company at the time of appointment. A good knowledge of investment management generally, Japan investment management specifically and investment trust industry matters and sophisticated investor concerns relevant to this company will nevertheless remain the key criteria by which new Board candidates will be sought. The Board will recommend when the recruitment of additional non-executive directors is required. Once a decision is made to recruit additional directors to the Board each director is invited to submit nominations and these are considered in accordance with the Board’s agreed procedures. The Board may also use external agencies as and when the requirement to recruit an additional Board member becomes necessary.

Having served on the Board for more than nine years Mr Eric Boyle and Mr Andrew Martin Smith are subject to annual re-election in accordance with the UK Corporate Governance Code and both directors will offer themselves for re-election. The Board considers that Messrs Boyle’s and Martin Smith’s length of service and breadth of experience enhances the effective management of the Company. In addition Mr Noel Lamb will retire by rotation in accordance with the Articles of Incorporation and offers himself for re-election. The Board confirms the performance of all directors has been subject to formal evaluation and that they continue to be effective in their role. The Board firmly recommends to shareholders that all directors should be re-elected.

There is an agreed procedure for directors to take independent professional advice if necessary, and at the Company’s expense. This is in addition to the access which every director has to the advice of the Company Secretary.

The Company has taken out insurance with Chubb Insurance Company of Europe in respect of the directors liability. For the year 1st May 2014 to 30th April 2015 the charge was £17,485.

INTERNAL CONTROLS

The Board has delegated the responsibility for the management of the Company’s investment portfolio, the provision of custody services and the administration, registrar and corporate secretarial functions including the independent calculation of the Company’s Net Asset Value and the production of the Annual Report and Financial Statements which are independently audited. Whilst the Board delegates responsibility, it retains responsibility for the functions it delegates out and is responsible for the risk management and systems of internal control. Formal contractual agreements have been put in place between the Company and providers of these services.

The Board directly on an ongoing basis and via its Audit Committee has implemented a system to identify and manage the risks inherent in such contractual arrangements by assessing and evaluating the performance of the service providers including financial, operational and compliance controls and risk management systems. On an ongoing basis compliance reports are provided at each Board Meeting from the Administrator, Northern Trust International Fund Administration Services (Guernsey) Limited and the Audit Committee reviews the SOC 1 report on this service provider.

The extent and quality of the systems of internal control and compliance adopted by the Investment Manager and the Investment Adviser are also reviewed on a regular basis, and the primary focus at each Board Meeting is a review of investment performance and associated matters such as gearing, asset allocations, marketing and investment relations, peer group information and industry issues. The Board also closely monitors the level of discount and has the ability to buy back shares in the market.

The Board believes that it has implemented an effective system for the assessment of risk, but the Company has no staff, has no internal audit function and can only give reasonable but not absolute assurance that there has been no material financial misstatement or loss.

COMMITTEES

The Board has established an Audit Committee which is described below.

The Board has not appointed a Management Engagement Committee or Nomination Committee but has chosen to assess and review the performance of the Board and contractual arrangements with the Investment Manager and Investment Adviser on an annual basis by the entire Board who are independent non-executive directors.  Details of the Investment Management Agreement are shown in Note 7 to the Financial Statements.

Audit Committee

The Audit Committee operates within defined terms of reference. The Audit Committee’s responsibilities include, but are not limited to:

• Review of draft annual and interim report and financial statements.
• Review of independence, objectivity, qualifications and experience of the Auditors.
• Review of audit fees.

The Audit Committee is appointed by the Board and comprises Mr Martin Smith as Chairman, Mr Ehrmann, Mr Boyle and Mr Lamb.

In accordance with the AIC Code, the Board has determined that Mr Martin Smith has recent and relevant financial experience. All other members of the Audit Committee are deemed to have the necessary ability and experience to understand the Financial Statements.

The function of the Audit Committee is to ensure that the Company maintains the highest standards of integrity, financial reporting and internal control.

The Audit Committee meets with the Company’s external auditors annually to review the Audited financial statements.

The Audit Committee meets at least twice a year and may meet more frequently if the Audit Committee deems necessary or if required by the Company’s Auditors.

The Company’s Auditors are advised of the timing of the Audit Committee Meetings. The Audit Committee has access to the Compliance officers of the Investment Adviser, the Administrator and the Custodian.

The Company Secretary is the Secretary of the Audit Committee and attends all Meetings of the Audit Committee.

The Audit Committee is satisfied that auditor objectivity and independence is not impaired by the performance by PwC CI LLP of non-audit tax services, which cover UK tax compliance services. The Audit Committee considers that the appointment of a third party unfamiliar with the Company to carry out non-audit services of UK tax compliance would not benefit shareholders since they would incur unnecessary additional expense.

The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

SHAREHOLDER RELATIONS

The Board monitors the trading activity and shareholder profile on a regular basis and maintains contact with the Company’s stockbroker to ascertain the views of shareholders. Shareholders where possible are contacted directly on a regular basis, and shareholders are invited to attend the Company’s Annual General Meeting in person and ask questions of the Board of Directors and Investment Adviser. Following the Annual General Meeting each year the Investment Adviser gives a presentation to the shareholders.

The Company reports to shareholders twice a year and a proxy voting card is sent to shareholders with the Annual Report and Financial Statements. The Registrar monitors the voting of the shareholders and proxy voting is taken into consideration when votes are cast at the Annual General Meeting. Shareholders may contact the Directors via the Company Secretary.

EVALUATION OF PERFORMANCE OF INVESTMENT MANAGER

The investment performance is reviewed at each regular Board meeting at which representatives of the Investment Manager are required to provide answers to any questions raised by the Board. The Board has instigated an annual formal review of the Investment Manager which includes consideration of:

• performance compared with benchmark and peer group;
• investment resources dedicated to the Company;
• investment management fee arrangements and notice period compared with peer group; and
• marketing effort and resources provided to the Company.

In the opinion of the Directors the continuing appointment of the Investment Manager on the terms agreed is in the interests of the Company’s shareholders as a whole.

By order of the Board

Noel Lamb                           Andrew Martin Smith           

Chairman                               Director 

26th August 2015

Audit Committee Report

We present the Audit Committee's Report, setting out the responsibilities of the Audit Committee and its key activities for the year ended 30th April 2015.

The Audit Committee has continued its detailed scrutiny of the appropriateness of the Company’s system of risk management and internal controls, the robustness and integrity of the Company’s financial reporting, along with the external audit process. The Committee has devoted time to ensuring that controls and processes have been properly established, documented and implemented.

During the course of the year, the information that the Audit Committee has received has been timely and clear and has enabled the Audit Committee to discharge its duties effectively.

The Audit Committee supports the aims of the UK Corporate Governance Code (the “Code”) and the best practice recommendations of other corporate governance organisations such as the Association of Investment Companies (“AIC”), and believes that reporting against the revised AIC Code allows the Audit Committee to further strengthen its role as a key independent oversight Committee.

Role and Responsibilities

The primary function of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities. This includes reviewing the financial reports and other financial information before publication.

In addition, the Audit Committee reviews the systems of internal controls on a continuing basis that the Investment Manager and the Board have established with respect to finance, accounting, risk management, compliance, fraud and audit. The Committee also reviews the accounting and financial reporting processes, along with reviewing the roles, independence and effectiveness of the external auditor.

The ultimate responsibility for reviewing and approving the Annual Report and other Financial Statements remains with the Board.

The Audit Committee's full terms of reference can be obtained by contacting the Company's Administrator.

Risk Management and Internal Control

The Board, as a whole, including the Audit Committee members, considers the nature and extent of the Company’s risk management framework and the risk profile that is acceptable in order to achieve the Company’s strategic objectives. As a result, it is considered that the Board has fulfilled its obligations under the Code.

The Audit Committee continues to be responsible for reviewing the adequacy and effectiveness of the Company’s on-going risk management systems and processes. Its system of internal controls, along with its design and operating effectiveness, is subject to review by the Audit Committee through reports received from the Investment Manager, Investment Adviser and Depositary, along with those from the Administrator and external auditor.

The Audit Committee has reviewed the need for an internal audit function and has decided that the systems and procedures employed by the Investment Manager, Investment Adviser, Administrator and Depositary provide sufficient assurance that a sound system of risk management and internal control, which safeguards shareholders’ investments and the Company’s assets, is maintained. An internal audit function is therefore considered unnecessary. 

Fraud, Bribery and Corruption

The Audit Committee has relied on the overarching requirement placed on all service providers under the relevant agreements to comply with applicable law. The Audit Committee reviews the service provider policies and receives a confirmation from all service providers that there have been no instances of fraud or bribery.

Financial Reporting and Significant Financial Issues

The Audit Committee assesses whether suitable accounting policies have been adopted and whether the Investment Manager has made appropriate estimates and judgements. The Audit Committee reviews accounting papers prepared by the Investment Manager and Administrator which provide details on the main financial reporting judgements.

The Audit Committee also reviews reports by the external auditors which highlight any issues with respect to the work undertaken on the audit.

The significant issues considered during the year by the Audit Committee in relation to the Financial Statements and how they were addressed are detailed below:

(i) Valuation of Investments:

The Company’s investments had a fair value of $101,842,822 as at 30th April 2015 and represent a substantial portion of assets of the Company. As such this is the largest factor in relation to the consideration of the Financial Statements. These investments are valued in accordance with the Accounting Policies set out in Note 2 (f) to the Financial Statements. The Audit Committee considered the valuation of the investments held by the Company as at 30th April 2015 to be reasonable from information provided by the Investment Manager, Investment Adviser, Depositary and Administrator on their processes for the valuation of these investments.

(ii) Income Recognition:

The Audit Committee considered the calculation of income from investments recorded in the Financial Statements as at 30th April 2015. Income from investments is calculated in accordance with the Accounting Policies set out in Note 2 (d) to the Financial Statements. The Audit Committee reviewed the Investment Manager's process for calculating income from investments and found it to be reasonable based on the explanations provided and information obtained from the Investment Manager. The Audit Committee was therefore satisfied that income was correctly stated in the Financial Statements.

Following a review of the presentations and reports from the Investment Manager and Administrator and consulting where necessary with the external auditor, the Audit Committee is satisfied that the Financial Statements appropriately address the critical judgements and key estimates (both in respect of the amounts reported and the disclosures). The Audit Committee is also satisfied that the significant assumptions used for determining the value of assets and liabilities have been appropriately scrutinised, challenged and are sufficiently robust.

(iii) Change to Functional Currency

During the year ended 30th April 2015, having consulted with the Company’s Auditors, a decision was made by the Directors to change the functional currency from USD to GBP. It was acknowledged that the Company’s share register had changed from having a base of US investors to having a base of primarily UK investors and that the Company’s price quotation on the London Stock Exchange had been changed to GBP. These two changes led to the decision to change the functional currency from USD to GBP. The presentation currency remains unchanged as USD.

In accordance with the Accounting Policies set out in Note 2 (f) to the Financial Statements, on initial recognition, investments are recognised at cost and then are subsequently revalued at fair value through profit or loss. When investments are acquired and disposed of in parts their cost is calculated using the weighted average cost method. To provide an accurate translation of realised and unrealised gains/losses on investments held at fair value in the new functional currency an analysis on a transaction by transaction, and investment by investment basis would be required. Given the lack of availability of underlying information and volume of transactions this analysis is impractical and therefore gains and losses on investments at fair value are based on a USD functional and presentational currency basis in the current year.

Although these realised and unrealised gains and losses on investments held at fair value have not been translated using GBP as the functional currency any resulting differences would have been reflected as currency translation adjustments and reclassified to the Capital reserve in the Statement of Changes In Equity. Accordingly, there would have been no impact on the Net Asset Value of the Company.

A restatement of the prior year as a result of the changes in the functional currency to GBP from USD has not been practical for the same reasons as detailed above.

 (iv) Review of the Financial Statements

At the request of the Audit Committee, the Administrator confirmed that, with the exception of the possible effects of the matter described above, it was not aware of any material misstatements, including matters relating to Financial Statement presentation. At the Audit Committee meeting to review the Annual Report and Audited Financial Statements, the Audit Committee received and reviewed a report on the audit from the external auditors. On the basis of its review of this report, the Audit Committee is satisfied that the external auditor has fulfilled its responsibilities with diligence and professional scepticism. The Audit Committee advised the Board that this Annual Report and Financial Statements, taken as a whole, with the exception of the possible effects of the matter described above, are fair, balanced and understandable and provide the information necessary to shareholders to assess the Company’s performance, business model, and strategy. 

The Audit Committee is satisfied that the judgements made by the Investment Manager and Administrator are reasonable, and that appropriate disclosures have been included in the Financial Statements.

External Auditors

The Audit Committee has responsibility for making a recommendation on the appointment, reappointment and removal of the external auditors. On 13 January 2015, the Company appointed PwC CI LLP as its new external auditors.

During the year the Audit Committee received and reviewed audit plans and reports from the external auditors. To assess the effectiveness of the external audit process, the auditors were asked to articulate the steps that they have taken to ensure objectivity and independence, including where the auditor provides non-audit services. The Audit Committee also reviewed the work done during the year by the external auditors both as part of the audit process and on non-audit matters and from time to time compares their effectiveness as well as their costs with the benefit of the experience they have had in other investment management houses and relevant contexts. These steps enable the Audit Committee to monitor the auditors’ performance, behaviour and effectiveness during the exercise of their duties, which informs the decision to recommend reappointment on an annual basis. The Audit Committee under its terms of reference reviews the appointment and re-appointment of the external auditor typically at its December meeting in advance of the reviewing the audit approach for the Annual Report and Financial Statements.

As a general rule, the Company does not utilise external auditors for internal audit purposes, secondments or valuation advice. Services which do not compromise auditor independence, such as tax compliance, tax structuring, private letter rulings, accounting advice, quarterly reviews and disclosure advice are normally permitted but will be pre-approved by the Audit Committee.

The following table summarises the remuneration paid for audit and non-audit services during the year ended 30th April 2015 and the year ended 30th April 2014.

						For the year ended 30th April 2015
						$
Annual audit						49,649
Tax consulting and compliance services						3,125
						For the year ended 30th April 2014
						$
Annual audit						36,074
Tax consulting and compliance services						4,977

For any questions on the activities of the Audit Committee not addressed in the foregoing, a member of the Audit Committee will attend each Annual General Meeting to respond to such questions.

The Audit Committee Report was approved on 26th August 2015 and signed on behalf by:

Andrew Martin Smith

Chairman, Audit Committee

Depositary Statement

For the period from 1st August 2014 to 30th April 2015

Report of the Depositary to the Shareholders

Northern Trust (Guernsey) Limited has been appointed as Depositary, effective 1st August 2014,  to Atlantis Japan Growth Fund Limited (the “Company”) in accordance with the requirements of Article 36 and Articles 21(7), (8) and (9) of the Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the “AIFM Directive”).

We have enquired into the conduct of Tiburon Partners LLP (the “AIFM”) for the period from 1st August 2014 to 30th April 2015, in our capacity as Depositary to the Company.

This report including the review provided below has been prepared for and solely for the shareholders in the Company. We do not, in giving this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown.

Our obligations as Depositary are stipulated in the relevant provisions of the AIFM Directive and the relevant sections of Commission Delegated Regulation (EU) No 231/2013 (collectively the “AIFMD legislation”).

Amongst these obligations is the requirement to enquire into the conduct of the AIFM and the Company and their delegates in each annual accounting period.

Our report shall state whether, in our view, the Company has been managed in that period in accordance with the AIFMD legislation. It is the overall responsibility of the AIFM to comply with these provisions. If the AIFM or their delegates have not so complied, we, as the Depositary, will state why this is the case and outline the steps which we have taken to rectify the situation.

Basis of Depositary Review

The Depositary conducts such reviews as it, in its reasonable discretion, considers necessary in order to comply with its obligations and to ensure that, in all material respects, the Company has been managed (i) in accordance with the limitations imposed on its investment and borrowing powers by the provisions of its constitutional documentation and the appropriate regulations and (ii) otherwise in accordance with the constitutional documentation and the appropriate regulations. Such reviews vary based on the type of Company, the assets in which a Company invests and the processes used, or experts required, in order to value such assets.

Review

In our view, the Company has been managed during the period, in all material respects:

(i) in accordance with the limitations imposed on the investment and borrowing powers of the Company by the constitutional document; and by the AIFMD legislation; and

(ii) otherwise in accordance with the provisions of the constitutional document and the AIFMD legislation.

For and on behalf of

Northern Trust (Guernsey) Limited

26th August 2015

Independent Auditor’s Report to the Members of

Atlantis Japan Growth Fund Limited

For the year ended 30th April 2015

Report on the Financial Statements

We have audited the accompanying financial statements of Atlantis Japan Growth Fund (the “Company”) which comprise the Statement of Financial Position as of 30th April 2015 and the Statement of Comprehensive Income, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and a summary of significant accounting policies and other explanatory information.

Directors’ Responsibility for the Financial Statements

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and with the requirements of Guernsey law. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Qualified Opinion

In our opinion, except for the possible effects of the matter described in the Basis for our qualified opinion paragraph below, the financial statements give a true and fair view of the financial position of the Company as of 30th April 2015, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and have been properly prepared in accordance with the requirements of The Companies (Guernsey) Law, 2008.

Basis for our qualified opinion

As detailed in note 3, during the year there has been a change in the application of functional currency from US Dollars ("USD") to pounds sterling ("GBP"). This change has not been applied to Net gains on investments held at fair value through profit or loss and the Capital reserve in the statement of financial position because the lack of underlying information and volume of transactions means that it cannot be estimated reliably. Given the fact the company has not been able to estimate this amount reliably we have not been able to obtain sufficient audit evidence for us to audit the potential impact of the functional currency change on these line items.

Report on other Legal and Regulatory Requirements

We read the other information contained in the Annual Report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. The other information is as per the table of contents.

In our opinion the information given in the Directors’ Report is consistent with the financial statements.

This report, including the opinion, has been prepared for, and only for, the Company’s members as a body in accordance with Section 262 of The Companies (Guernsey) Law, 2008 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters which we are required to review under the Listing Rules:

• the directors’ statement in relation to going concern;

• the part of the Corporate Governance Statement relating to the Company’s compliance with the ten provisions of the UK Corporate Governance Code specified for our review; and

• certain elements of the report to shareholders by the Board on Directors’ remuneration.

Evelyn Brady

For and on behalf of PricewaterhouseCoopers CI LLP

Chartered Accountants and Recognised Auditor

Guernsey, Channel Islands

27th August 2015

1. The maintenance and integrity of the Company’s website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
2. 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 30th April 2015

		2015				2014
		Revenue	Capital	Total		Revenue	Capital	Total
Notes		$'000	$'000	$'000		$'000	$'000	$'000
	Income
4	Net gains on investments held at fair value through profit or loss	-	15,709	15,709		-	-	-
	Net gains on foreign exchange	-	478	478		-	335	335
	Dividend income	1,987	-	1,987		2,223	-	2,223
		1,987	16,187	18,174		2,223	335	2,558
	Expenses
4	Net losses on investments held at fair value through profit or loss	-	-	-		-	1,551	1,551
5	Investment management fee	892	-	892		944	-	944
6	Depositary fees	118	-	118		71	-	71
7	Administration fees	143	-	143		150	-	150
	Redemption facility expenses	8	-	8		20	-	20
7	Registrar and transfer agent fees	7	-	7		16	-	16
8	Directors' fees and expenses	345	-	345		323	-	323
	Insurance fees	15	-	15		28	-	28
	Audit fee	43	-	43		56	-	56
	Printing and advertising fees	57	-	57		38	-	38
9	Legal and professional fees	563	-	563		172	-	172
	Listing fees	1	-	1		13	-	13
	Miscellaneous expenses	41	-	41		27	-	27
		2,233	-	2,233		1,858	1,551	3,409
	Finance cost
	Interest expense and bank charges	180	-	180		155	-	155
	(Loss)/profit before taxation	(426)	16,187	15,761		210	(1,216)	(1,006)
10	Taxation	(304)	-	(304)		(267)	-	(267)
	(Loss)/profit and total comprehensive income/(loss) for the year
		(730)	16,187	15,457		(57)	(1,216)	(1,273)
	Basic and diluted (deficit)/earnings per ordinary share
11		$(0.017)	$0.383	$0.366		$(0.001)	$(0.026)	$(0.027)

All of the Company’s income and expenses are included in the above profit/loss for the year and therefore the profit for the year is also the Company’s comprehensive profit for the year, as defined by IAS 1(revised). In arriving at the result for the year, all amounts above relate to continuing activities.

The total column in 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.

The notes form part of these financial statements

Statement of Changes In Equity

For the year ended 30th April 2015

													Capital
									Capital		Capital		Reserve/
			Ordinary Share		Share		Revenue		Reserve/		Reserve/		Exchange
			Capital		Premium		Reserve		Realised		Unrealised		Differences		Total
Notes			$'000		$'000		$'000		$'000		$'000		$'000		$'000
	Balances at 1st May 2014		-		-		(24,111)		109,657		10,173		(11,633)		84,086
	Movements during the year
18	Redemptions		-		(5,788)		-		-		-		-		(5,788)
	Shares bought into treasury		-		-		(1,537)		-		-		-		(1,537)
	Proceeds from reissue of treasury shares		-		-		383		-		-		-		383
	Transfer from capital reserve		-		5,788		-		-		-		-		5,788
	Transfer to share premium		-		-		-		(5,788)		-		-		(5,788)
4	Net realised gains on investments held at fair value through profit or loss		-		-		(10,077)		10,077		-		-		-
4	Net unrealised gains on investments held at fair value through profit or loss		-		-		(5,632)		-		5,632		-		-
	Gains on foreign exchange		-		-		(478)		-		-		478		-
	Reclassification of gains on foreign exchange on translation		-		-		-		-		-		908		908
	Total comprehensive income		-		-		15,457		-		-		-		15,457
	Balances at 30th April 2015		-		-		(25,995)		113,946		15,805		(10,247)		93,509

The notes form part of these financial statements

Statement of Changes In Equity

For the year ended 30th April 2014

									Capital		Capital		Reserve/
			Ordinary Share		Share		Revenue		Reserve/		Reserve/		Exchange
			Capital		Premium		Reserve		Realised		Unrealised		Differences		Total
Notes			$'000		$'000		$'000		$'000		$'000		$'000		$'000
	Balances at 1st May 2013		-		-		(23,951)		100,365		30,472		(11,968)		94,918
	Movements during the year
18	Redemptions		-		(9,456)		-		-		-		-		(9,456)
	Shares bought into treasury		-		-		(103)		-		-		-		(103)
	Transfer from capital reserve		-		9,456		-		-		-		-		9,456
	Transfer to share premium		-		-		-		(9,456)		-		-		(9,456)
4	Net realised gains on investments held at fair value through profit or loss		-		-		(18,748)		18,748		-		-		-
4	Net unrealised losses on investments held at fair value through profit or loss		-		-		20,299		-		(20,299)		-		-
	Gains on foreign exchange		-		-		(335)		-		-		335		-
	Total comprehensive loss		-		-		(1,273)		-		-		-		(1,273)
	Balances at 30th April 2014		-		-		(24,111)		109,657		10,173		(11,633)		84,086

The notes form part of these financial statements

Statement of Financial Position

As at 30th April 2015

		30th April 2015		30th April 2014
Notes		$'000		$'000
	Non Current Assets
12	Investments held at fair value through profit or loss	101,843		94,434
	Current Assets
	Due from brokers	2,112		1,262
	Dividends receivable	823		946
	Prepaid expenses and other receivables	73		-
	Cash and cash equivalents	1,374		695
		4,382		2,903
	Current Liabilities
	Due to brokers	(1,891)		(846)
	Payables and accrued expenses	(316)		(210)
13	Loans payable	(10,509)		(12,195)
		(12,716)		(13,251)
	Net Current Liabilities	(8,334)		(10,348)
17	Net Assets	93,509		84,086
	Equity
15	Ordinary share capital	-		-
15	Share premium	-		-
	Revenue reserve	(25,995)		(24,111)
	Capital reserve	119,504		108,197
17	Net Assets Attributable to Equity Shareholders	93,509		84,086
	Net Asset Value per Ordinary Share*	$2.31		$1.92

*Based on the Net Asset Value at the year end divided by the number of shares in issue: 40,455,909 (30th April 2014 – 43,894,158) (See Note 17)

Approved by the Board of Directors on 26th August 2015 and signed on its behalf by:

Noel Lamb             Andrew Martin Smith         

Chairman                               Directo

The notes form part of these financial statements

Statement of Cash Flows

For the year ended 30th April 2015

			30th April 2015		30th April 2014
Notes			$'000		$'000
	Reconciliation of profit/(loss) for the year to net cash flows
	from operating activities
	Profit/(loss) before taxation		15,761		(1,006)
4	Net (gains)/losses on investments held at fair value through profit or loss		(15,709)		1,551
	Net gains on foreign exchange		(478)		(335)
	Interest expense and bank charges		180		155
	Decrease/(increase) in dividends receivable		123		(126)
	(Increase)/decrease in prepaid expenses and other receivables		(73)		1
	Increase/(decrease) in payables and accrued expenses		106		(25)
10	Taxation paid		(304)		(267)
	Net cash outflow from operating activities		(394)		(52)
	Investing Activities
	Purchase of investments held at fair value through profit or loss		(81,337)		(69,908)
	Sale of  investments held at fair value through profit or loss		89,967		80,918
	Net cash inflow from investing activities		8,630		11,010
	Net cash inflow before financing		8,236		10,958
	Cash flows from financing activities
	Interest paid		(181)		(125)
	Redemptions		(5,788)		(14,336)
	Shares bought into treasury		(1,537)		(103)
	Net loans drawn down		-		3,948
	Net cash outflow from financing activities		(7,506)		(10,616)
	Net increase in cash and cash equivalents		730		342
	Exchange movements		(51)		(250)
	Movement in cash and cash equivalents in the year		679		92
	Cash and cash equivalents at beginning of year		695		603
	Cash and cash equivalents at end of year		1,374		695

The notes form part of these financial statements

Notes to the Financial Statements

For the year ended 30th April 2015

1.         GENERAL

             Atlantis Japan Growth Fund Limited (the “Company”) was incorporated in Guernsey on
13th March 1996. The Company commenced activities on 10th May 1996.

2.         ACCOUNTING POLICIES

a) Statement of Compliance

The Financial Statements of the Company have, with the exception of the matter described in the basis for the auditors qualified opinion paragraph, been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”). IFRS comprise standards and interpretations approved by the European Union and International Accounting Standards, and Standing Interpretations Committee interpretations approved by the IASC that remain in effect.

Basis of accounting

The annual Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of investments held at fair value through profit or loss (“investments”), and in accordance with IFRS, and The Association of Investment Companies (“AIC”) Statement of Recommended Practice (“SORP”) for Investment Trust Companies and Venture Capital Trusts to the extent it is not in conflict with IFRS and the Principal Documents.

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 expenses. 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. As at the year ended 30th April 2015, the Company, being solely invested in listed equities, did not hold any investment requiring the use of estimates to determine their value. 

The accounting policies adopted, with the exception of the changes set out in Note 2 (l), are consistent with those of the previous financial year and are set out below:

Applicable new standards and interpretations not yet adopted

IFRS 9 Financial Instruments

IFRS 9, Financial Instruments issued in November 2009 and October 2010, is being issued in phases and introduces new requirements dealing with recognition, classification, and measurement and derecognition of financial assets and liabilities. These chapters are tentatively effective for annual periods beginning 1st January 2018. Further chapters dealing with impairment methodology and hedge accounting are still being developed. The Company’s management have yet to assess the impact of this new standard on the Company’s Financial Statements. However, they do not expect to implement IFRS 9 until all of its chapters have been published and they can comprehensively assess the impact of all changes.

IFRS 15 Revenue from Contracts with Customers

IFRS 15, Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of Financial Statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18, Revenue and IAS 11, Construction contracts and related interpretations. The standard is effective for annual periods beginning on or after 1st January 2017 and earlier application is permitted subject to EU endorsement. The Company’s management is assessing the impact of this new standard on the Company’s Financial Statements.

Accounting standards and amendments to standards now effective

IAS 32 Amendments – Offsetting Financial Assets and Financial Liabilities

These amendments to IAS 32 clarify the meaning of “currently has a legally enforceable right to set-off”. It is applicable for annual periods beginning on or after 1st January 2014. The IAS 32 offsetting criteria require the reporting entity to intend either to settle on a net basis, or to realise the asset and settle the liability simultaneously. The amendments clarify those only gross settlement mechanisms with features that eliminate or result in insignificant credit and liquidity risk and that process receivables and payables in a single settlement process or cycle would be, in effect, equivalent to net settlement and, therefore, meet the net settlement criterion.

b) Going Concern

The Financial Statements have been prepared on a going concern basis in line with the Directors belief that it is appropriate to presume that the Company will continue in business.

c) Presentation of Statement of Comprehensive Income

In order to better reflect the activities of an investment trust company supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income.

d) Income Recognition

Dividend income arising on the Company’s investments is accounted for gross of withholding tax on an ex-dividend basis.

e) Expenses

All expenses are recognised on an accruals basis and have been charged against revenue.

f) Investments held at fair value through profit or loss

The Company’s business is investing in securities with a view to profiting from their total return in the form of income and capital growth. This portfolio of investments is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Company’s Board of Directors.

Investments are initially recognised at the settlement date of purchase. Accordingly, upon initial recognition the investments are designated by the Company as ‘at fair value through profit or loss’. They are included initially at fair value, which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the Statement of Comprehensive Income, and allocated to the capital column of the Statement of Comprehensive Income at the time of acquisition). Subsequently, the investments are valued at ‘fair value’, which is their mid-market price based on published price quotations.

Gains and losses on investments are included in the Statement of Comprehensive Income as capital in accordance with the Accounting Policies set out in Note 2 (l).

g) Due from and due to brokers

Amounts due from and to brokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the Statement of Financial Position date respectively. These amounts are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.

h) Other receivables

Other receivables are amounts due in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non current assets. Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

i) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents, as defined above, net of outstanding bank overdrafts.

j) Other payables

Other payables are obligations to pay for services that have been acquired in the ordinary course of business. Other payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non current liabilities. Other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

k) Loans payable

All loans are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest bearing loans and borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account discount or premium on settlement. Any costs of arranging any interest-bearing loans are capitalised and amortised over the life of the loan.

The Company’s loans are denominated in JPY. Gains and losses on foreign exchange on loans are included in the Statement of Comprehensive Income as capital in accordance with the Accounting Policies set out in Note 2 (l).

l) Foreign Currencies

The Company’s investments are predominately denominated in JPY. Since incorporation the Company’s obligation to shareholders was in USD and therefore the functional currency was USD. As set out in more detail in Note 3, changes to the characteristics of the Company’s obligations have occurred which have caused the Directors to reconsider the Company’s functional currency during the year ended 30th April 2015. As a result of this reconsideration the Directors resolved to change the functional currency of the Company to GBP. The Directors have elected to continue to present the Financial Statements in USD for the purposes of consistency, as the presentation currency of the Company has been USD since incorporation.

             Transactions involving currencies other than the Company’s functional currency are recorded at the exchange rate ruling on the transaction date. At each Statement of Financial Position date, monetary items and non-monetary assets and liabilities that are fair valued, which are denominated in foreign currencies, are retranslated at the closing rates of exchange.

             Exchange differences arising from retranslating at the Statement of Financial Position date are;

             – investments and other financial instruments measured at fair value through profit or loss;

             – other monetary items; and

             – exchange differences arising on settlement of monetary items;

             are included in the Statement of Comprehensive Income and allocated as capital if they are of a capital nature, or as revenue if they are of a revenue nature.

m) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. In addition, the Company incurs withholding taxes imposed by certain countries on dividend and interest income. Such income is recognised gross of the taxes and the corresponding withholding tax is recognised as a tax expense. 

The tax currently payable is based on the taxable profit for the year. Any taxable profit differs from the net profit, if any, as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that were applicable at the Statement of Financial Position date.

In line with the recommendations of the AIC SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Statement of Comprehensive Income is the “marginal basis”. Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Statement of Comprehensive Income, then no tax relief is transferred to the capital return column.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. A deferred tax liability is recognised in full for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Investment trusts which have approval as such under section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains.

The carrying amount of deferred tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

n) Capital Reserve

The capital reserve distinguishes between gains/(losses) on sale or disposals and valuation gains/(losses) on investments. The capital reserve consists of realised gains/(losses) on investments, movement in valuation gains/(losses) on investments and gains/(losses) relating to foreign exchange.

o) Treasury Shares

Where the Company purchases its own share capital (whether into treasury or cancellation), the consideration paid, which includes any directly attributable costs (net of income taxes) is recognised as a deduction from equity shareholders’ funds through the revenue reserve, which is a distributable reserve.

When such shares are subsequently sold or reissued, and consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is recognised as an increase in equity and proceeds from the reissue of treasury shares are transferred to/from the revenue reserve.

Shares held in treasury are not taken into account in determining earnings per share detailed in Note 13 and NAV per share detailed in Note 19.

3.         CHANGE IN FUNCTIONAL CURRENCY

 During the year ended 30th April 2015, the Directors assessed changes in the Company’s operations since inception which affected the determination of the Company’s functional currency. In accordance with IAS 21, key considerations included the change in currency in which funds from financing activities (i.e. issuing debt and equity instruments) are generated. The Directors consider, having conducted this analysis, that the functional currency has changed from USD to GBP. The Directors’ analysis has indicated no single date from which the change might have taken effect.

In accordance with the Accounting Policies set out in Note 2 (f), on initial recognition, investments are recognised at cost and then are subsequently revalued at fair value through profit or loss. When investments are acquired and disposed of in parts their cost is calculated using the weighted average cost method. To provide an accurate translation of realised and unrealised gains and losses on investments held at fair value in the new functional currency an analysis on a transaction by transaction, and investment by investment basis would be required. Given the lack of availability of underlying information and volume of transactions this analysis is impractical and therefore realised and unrealised gains and losses on investments at fair value are based on a USD functional and presentation currency basis in the current year.

Although these realised and unrealised gains and losses on investments held at fair value have not been translated using GBP as the functional currency any resulting differences would have been reflected as currency translation adjustments and reclassified to the Capital reserve in the Statement of Changes In Equity. Accordingly, there would have been no impact on the Net Asset Value of the Company.

A restatement of the prior year as a result of the changes in the functional currency to GBP from USD has not been practical for the same reasons as detailed above.

4.           OPERATING SEGMENTS

The Board of Directors makes the strategic resource allocations on behalf of the Company and is responsible for the Company’s entire portfolio. The Board is of the opinion that the Company is engaged in a single geographic and economic segment business. The asset allocation decisions are based on a single, integrated investment strategy, and the Company’s performance is evaluated on an overall basis.

The internal reporting provided to the Directors for the Company’s assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of IFRS.

The 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 Schedule of Investments.

5.         NET GAINS/(LOSSES) ON INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

		2015		2014
		$'000		$'000
Realised gains on investments held at fair value through profit or loss		15,975		21,531
Realised losses on investments held at fair value through profit or loss		(5,898)		(2,783)
Net realised gains on investments held at fair value through profit or loss		10,077		18,748
Unrealised gains on investments held at fair value through profit or loss		16,205		6,995
Unrealised losses on investments held at fair value through profit or loss		(10,573)		(27,294)
Net unrealised gains/(losses) on investments held at fair value through profit or loss		5,632		(20,299)
Net gains/(losses) on investments held at fair value through profit or loss		15,709		(1,551)

6.         RELATED PARTY DISCLOSURES

The Investment Manager, Depositary, Administrator and Directors are considered related parties to the Company under IAS 24 as they have the ability to control, or exercise significant influence over, the Company in making financial or operational decisions. (See notes 7 to 10 for details of transactions with these related parties during the year ended 30th April 2015 and the year ended 30th April 2014.)

Certain Directors had a beneficial interest in the Company by way of their investment in the ordinary shares of the Company.

The details of these interests as at 30th April 2015 and 30th April 2014 are as follows:   

			Ordinary Shares	Ordinary Shares
			2015	2014
*Timothy Guinness			-	100,000
Andrew Martin Smith			25,000	25,000
Noel Lamb			10,000	10,000

*Timothy Guinness retired on 30th April 2014

The above interests were unchanged at the date of this report.

As at 30th April 2015, a family member of the President of the Investment Adviser held 946,000 ordinary shares of the Company.

7.         INVESTMENT MANAGEMENT FEE

On 1st August 2014 the Company appointed Tiburon Partners LLP ("Tiburon") as its Investment Manager replacing AFMG Limited, pursuant to a new Investment Management Agreement dated 1st August 2014. Under the terms of the Investment Management Agreement, the Investment Manager, Tiburon, will continue in office until a resignation is tendered or the contract is terminated. In both circumstances, a resignation or termination must be given with a notice period which must not be less than three months, and be in accordance with the Investment Management Agreement. Fees payable to the Investment Adviser are met by the Investment Manager.

For the period 1st May 2014 to 31st July 2014, the Company paid to the Investment Manager, AFMG Limited, a fee accrued weekly and paid monthly in arrears at the annual rate of 1 per cent of the weekly Net Asset Value of the Company. From 1st August 2014, the Company pays to the Investment Manager, Tiburon, a fee accrued daily and paid monthly in arrears at the annual rate of 1 per cent of the weekly Net Asset Value of the Company.

Redemption Pool Fees

For the period 1st May 2014 to 31st July 2014, the Investment Manager, AFMG Limited, was also entitled to receive a fee from the Company of 1 per cent per annum of the weekly Net Asset Value of any redemption pool together with transaction charges. From 1st August 2014, the Investment Manager, Tiburon, shall also be entitled to receive a fee from the Company of 1 per cent per annum of the daily Net Asset Value of any redemption pool together with transaction charges.

For the year ended 30th April 2015, total investment management fees were $891,959 (2014 - $943,593) of which $76,444 (2014 - $70,933) is due and payable as at that date.

8.         DEPOSITARY FEES

On 1st August 2014, the Company appointed Northern Trust (Guernsey) Limited as Depositary (the “Depositary”), pursuant to a Depositary Agreement dated 1st August 2014. The Depositary Agreement replaced the previous custody agreement between the Company and its Custodian, Northern Trust (Guernsey) Limited (the “Custodian”).

             For the period 1st May 2014 to 31st July 2014, the Company paid to the Custodian a fee accrued weekly at a rate of 0.03 per cent of the total weekly Net Asset Value of the assets held by the Custodian, together with transaction charges. From 1st August 2014, fees are payable to the Depositary, monthly in arrears, on the Gross Asset Value of the Company as at the last business day of the month at an annual rate of:

Gross Asset Value                                                          Annual Rate

Up to $50,000,000                                                                                  0.035%

$50,000,001 to $100,000,000                                                                  0.025%                                    

Thereafter                                                                                              0.015%

The Depositary is also entitled to a global custody fee of 0.03% per annum of the Net Asset Value of the Company, subject to a minimum fee of $20,000, and transaction fees as per the Depositary Agreement.

Redemption Pool Fees

For the period 1st May 2014 to 31st July 2014 the Custodian was also entitled to receive a fee from the Company of 0.03 per cent per annum of the Net Asset Value of any redemption pool together with transaction charges. From 1st August 2014, the Depositary shall also be entitled to receive a fee from the Company of the Gross Asset Value of any redemption pool, together with transaction charges, at an annual rate of:

Gross Asset Value                                                         Annual Rate

Up to $25,000,000                                                                                  0.035%

$25,000,001 to $50,000,000                                                                    0.025%                                    

Thereafter                                                                                              0.015%

For the year ended 30th April 2015, total custodian fees and depositary fees were $118,375 (2014 - $70,541) of which $21,784 (2014 - $8,896) is due and payable as at that date.

9.         ADMINISTRATION FEES

             The Company pays to the Administrator a fee accrued weekly and paid monthly in arrears at the annual rate of:

Net Asset Value                                                              Annual Rate

Up to $50,000,000                                                                                   0.18%

$50,000,001 to $100,000,000                                                                 0.135%                                    

$100,000,001 to $200,000,000                                                              0.0675%

Thereafter                                                                                               0.02%

Redemption Pool Administration Fees

At each redemption date a charge in respect of the preparatory work for the set-up and calculation of investment and redemption prices at £7,500 will be payable.

An additional fee will be payable on the fair value of the assets of that redemption pool of:

Net Asset Value                                                               Annual Rate

Up to $25,000,000                                                                                    0.18%

$25,000,001 to $50,000,000                                                                    0.135%                                    

Thereafter                                                                                            0.0675%

For the year ended 30th April 2015, total administration and registrar fees were $150,694 (2014 - $166,465) of which $12,595 (2014 - $13,632) is due and payable as at that date.

10.       DIRECTORS’ FEES AND EXPENSES

Each of the Directors is entitled to receive a fee from the Company, being £30,000 per annum for the Chairman, £27,500 per annum for the Chairman of the audit committee and £25,000 per annum for each of the other Directors. In addition, the Company reimburses all reasonably incurred out-of-pocket expenses of the Directors. 

The following one-off additional payments were approved and paid during the year ended 30th April 2015 for the extra work engaged in by the Board in relation to arranging the change of Investment Manager and the preparation and review of documentation relating to the introduction of the annual Subscription Right.

					Year ended
					30th April 2015
Additional fees					£
Noel Lamb					12,000
Eric Boyle					10,000
Andrew Martin Smith					10,000
Philip Ehrmann					8,000
					40,000

For the year ended 30th April 2015, total directors’ fees and expenses were $345,234 (2014 - $322,922) of which $107,827 (2014 - $22,790) is due and payable as at that date.   

11.       LEGAL AND PROFESSIONAL FEES

For the year ended 30th April 2015, total legal and professional fees were $562,966 (2014 - $171,735). The increase in legal and professional fees was due to costs and expenses associated with the introduction of the annual Subscription Right, which were borne by the Company and amounted to approximately £250,000.

12.       TAXATION

The Company is exempt from taxation in Guernsey under the provisions of The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and has paid an annual exemption fee of £1,200 (2014: £600), however the Company is subject to UK tax being a UK tax resident to comply with the Section 1158 of the Corporation Tax Act 2010.

The main rate of corporation tax in the UK was 21% for 2014 which reduced to 20% on 1st April 2015. As the Company has augmented profits below the lower limit, the applicable tax charge for the year is based on the “small profits” rate of 20%.

		2015		2014
		$'000		$'000
Corporation tax at 20% (2014: 20%)		-		-
Irrecoverable overseas tax		304		267
Tax charge in respect of the current year		304		267

 Current Taxation

             The current taxation charge for the year is different from the standard rate of corporation tax in the UK. The differences are explained below.

		2015		2014
		$'000		$'000
Profit/(loss) before tax		15,761		(1,006)
Capital (profit)/loss for the year		(16,187)		1,216
Revenue (loss)/profit for the year		(426)		210
Theoretical tax at UK corporation tax rate of 20% (2014 - 20%)		(85)		42
Effects of:
Excess management expenses		146		11
Relief for overseas tax suffered		(61)		(53)
Overseas tax written off		304		267
Actual current tax charge		304		267

The Company is an investment trust and therefore is not taxable on capital gains.

Factors that may affect future tax charges

As at 30th April 2015, the Company has excess management expenses of $27,545,540 that are available to offset future taxable revenue. Whilst this represents management’s best estimate based on the carried forward balance in the previous year of $26,816,393, the estimated value could differ from actual amounts. However, the potential impact is not expected to be significant.

A deferred tax asset has not been recognised in respect of these amounts as they will be recoverable only to the extent that there is sufficient future taxable revenue.

13.       BASIC AND DILUTED EARNINGS/(DEFICIT) PER ORDINARY SHARE

The basic and diluted earnings/(deficit) per ordinary share figure is based on the profit/(loss) and total comprehensive income/(loss) for the year of $15,456,680 (2014 – ($1,272,356)) and on  42,233,514 being the weighted average number of shares in issue at 30th April 2015 (2014: 47,042,798).

The earnings/(deficit) per ordinary share figure can be further analysed between revenue and capital, as below.

		2015		2014
		$'000		$'000
Net revenue loss		(730)		(57)
Net capital profit/(loss)		16,187		(1,216)
Net total profit/(loss)		15,457		(1,273)
Weighted average number of ordinary shares
in issue during the year		42,233,514		47,042,798
		$		$
Revenue loss per ordinary share		(0.017)		(0.001)
Capital profit/(loss) per ordinary share		0.383		(0.026)
Total profit/(loss) per ordinary share		0.366		(0.027)

14.       INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

		2015		2014
		$'000		$'000
Cost of investments held at fair value through profit or loss brought forward		84,261		76,968
Cost of purchase of investments held at fair value through profit or loss		82,517		70,725
Proceeds on disposal of investments held at fair value through profit or loss		(90,817)		(82,180)
Realised gain on disposal of investments held at fair value through profit or loss		10,077		18,748
Cost of investments held at fair value through profit or loss carried forward		86,038		84,261
Cost of investments held at fair value through profit or loss		86,038		84,261
Unrealised gain on valuation held at fair value through profit or loss		15,805		10,173
Fair value of investments held at fair value through profit or loss at year end		101,843		94,434

15.       LOANS PAYABLE

Loan	Interest	Maturity	2015		2014
Amount	Rate	Date	$'000		$'000
3 year committed variable rate
credit facility
¥1,250,000,000	1.49%	11th July 2014	-		12,195
¥1,250,000,000	1.44%	10th July 2015	10,509		-
Loan due for repayment within one year			10,509		12,195

The credit facility is provided by Royal Bank of Scotland International Limited (“RBS”).  As at 30th April 2015, the Company had drawn down ¥1,250,000,000 ($10,508,583) (2014: ¥1,250,000,000/$12,194,527) of the ¥1,500,000,000 borrowable under the terms of the credit facility,

Gains on foreign exchange on the Company’s loan amounted to $769,974  during the year ended 30th April 2015 (2014: $332,713).

16.       FORWARD CURRENCY CONTRACTS

There were no forward currency contracts held during the year ended 30th April 2015 or the year ended 30th April 2014.

17.       SHARE CAPITAL AND SHARE PREMIUM

a)  Authorised

The Company is authorised to issue an unlimited number of ordinary shares of no par value.

The Company may also issue C shares being a convertible share in the capital of the Company of no par value. C shares shall not have the right to attend or vote at any general meeting of the Company. The holders of C shares of the relevant class shall be entitled, in that capacity to receive a special dividend such amount as the directors may resolve to pay out of the net assets attributable to the relevant C share class and from income received and accrued attributable to the relevant C share class for the period up to the conversion date payable on a date falling before, on or after the conversion date as the Directors may determine. There are no C shares currently in issue.

The rights which the ordinary shares confer upon the holders thereof are as follows:

Voting Rights

On a show of hands, every Member who is present shall have one vote; and on a poll, a Member present in person or by proxy shall be entitled to one vote per ordinary share held.

Entitlement to Dividends

The Company may declare dividends in respect of the ordinary shares.

Rights in a Winding-up

The holders of ordinary shares will be entitled to share in the Net Asset Value of the Company as determined by the Liquidator.

b) Issued
Ordinary Shares	Number of Shares		Share Capital		Share Premium
			$’000		$’000
In issue at 30th April 2015	40,455,909		-		-
In issue at 30th April 2014	43,894,158		-		-

   

Reconciliation of number of shares		Number of Shares	Number of Shares
		2015	2014
Shares of no par value
Issued shares at the start of the year		43,894,158	48,693,711
Re-issue of treasury shares		200,000	-
Redemption of shares		(2,839,174)	(4,743,553)
Purchase of shares into Treasury		(799,075)	(56,000)
Number of shares at the end of the year		40,455,909	43,894,158
Shares held in Treasury
Opening balance		2,102,611	2,046,611
Shares bought in to Treasury during the year		799,075	56,000
Treasury shares re-issued		(200,000)	-
Number of shares at the end of the year		2,701,686	2,102,611

Shareholders are entitled to receive any dividends or other distributions out of profits lawfully available for distribution and on winding up they are entitled to the surplus assets remaining after payment of all the creditors of the Company.

The shares redeemed in the current year were cancelled immediately.

18.       FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

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 cash equivalents and short-term receivables and payables arising directly from operations

– loans 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 markets in Japan including, without limitation, the Tokyo Stock Exchange categorised as First Section, Second Section, JASDAQ, Mothers and Tokyo PRO, or the regional stock exchanges of Fukuoka, Nagoya, Sapporo and Osaka Securities Exchange.

The specific risks arising from the Company's exposure to these instruments, and the Investment Manager/Investment Adviser's policies for managing these risks, which have been applied throughout the year, are summarised below.

Capital Management

The Company’s objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.   

The Company may not borrow or otherwise use leverage exceeding 20% of its net assets for investment purposes, to settle facilities for specific investments such as bridge financing. In connection with the facility agreement, the Company entered into an English law multicurrency revolving credit facility with RBS over its depositary accounts held with Northern Trust (Guernsey) Limited. (See Note 15)

The Company does not have any externally imposed capital requirements apart from the fact that it should not retain more than 15% of income, in order to comply with section 1158 of Corporation Tax Act 2010. The Company has complied with this requirement.

The Company is a closed-ended investment company. The Company’s capital is represented by ordinary shares of no par and each share carries one vote. They are entitled to dividends when declared. 

In addition to the shares redeemed during the year via the Redemption Facility (refer to Note 20 for details), 799,075 shares were repurchased in to treasury during the year ended 30th April 2015 (2014: 56,000).

Market Price Risk

The Company's investment portfolio - particularly its equity investments - is exposed to market price fluctuations which are monitored by the Investment Manager/Investment Adviser in pursuance of the investment objectives and policies.

At 30th April 2015, the Company’s market price risk is affected by three main components: changes in market prices, currency exchange rates and interest rate risk. Currency exchange rate movements and interest rate movements, which are dealt with under the relevant headings below, primarily affect the fair values of the Company’s exposures to equity securities, related derivatives and other instruments. Changes in market prices primarily affect the fair value of the Company’s exposures to equity securities, related derivatives and other instruments.

Exceptional risks associated with investment in Japanese smaller companies may include:

• greater price volatility, substantially less liquidity and significantly smaller market capitalisation, and
• 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

If the price of each of the equity securities to which the Company had exposure at 30th April 2015 had increased or decreased by 5% with all other variables held constant, this would have increased or decreased profit and net assets attributable to holders of ordinary shares of the Company by: 

		2015		2014
		+/-		+/-
Net Asset Value		5,092,141		4,721,685
Net Asset Value per share		$0.13		$0.11
Total comprehensive income		$5,092,141		$4,721,685
Earnings per share		$0.13		$0.11

Foreign Currency Risk

The Company principally invests in securities denominated in currencies other than GBP, the functional currency of the Company. Therefore, the Statement of Financial Position will be affected by movements in the exchange rates of such currencies against the GBP. The Investment Manager/Investment Adviser has the power to manage exposure to currency movements by using forward currency contracts. No such instruments were held at the date of these Financial Statements.

It is not the present intention of the Directors to hedge the currency exposure of the Company, but the Directors reserve the right to do so in the future if they consider this to be desirable. 

The treatment of currency transactions other than in GBP is set out in Note 2(l) to the Financial Statements.

The Company has a USD cash exposure in USD terms of $63,595 (2014: $91,589)

The Company's net JPY exposure in USD terms is as follows:

As at 30th April 2015:					$’000
Assets
Investments held at fair value through profit or loss					101,843
Due from brokers					2,112
Dividends receivable					823
Cash and cash equivalents					1,297
Total assets					106,075
Liabilities
Due to brokers					(1,891)
Payables and accrued expenses					(9)
Loans payable					(10,509)
Total liabilities					(12,409)
Total net assets					93,666
As at 30th April 2014:					$’000
Assets
Investments held at fair value through profit or loss					94,434
Due from brokers					1,262
Dividends receivable					946
Cash and cash equivalents					577
Total assets					97,219
Liabilities
Due to brokers					(846)
Payables and accrued expenses					(10)
Loans payable					(12,195)
Total liabilities					(13,051)
Total net assets					84,168

Foreign Currency Sensitivity Analysis

If the exchange rate at 30th April 2015, between the functional currency and all other currencies had increased or decreased by a 5% currency movement (2014: 5%) this should be a reasonably possible change for a period of one year, or less if the next financial period will be less than one year with all other variables held constant, this would have increased or reduced profit and net assets attributable to holders of ordinary shares of the Company by:  

		2015	2014
		+/-	+/-
Net Asset Value		$4,686,467	$4,212,966
Net Asset Value per share		$0.12	$0.10
Total comprehensive income		$473,501	$782,638
Earnings per share		$0.01	$0.02

No benchmark is used in the calculation of the above information. The only foreign currency the Company has a significant exposure to is JPY, hence the above foreign currency sensitivity analysis has not been disclosed on a currency by currency basis.  

Interest Rate Risk

Substantially all the Company’s assets and its liabilities are non-interest bearing except for the one outstanding loan payable detailed in Note 15, and any excess cash and cash equivalents are invested at short-term market interest rates.

As at 30th April 2015, the Company has a small exposure to interest rate risk regarding the loan facility and cash and cash equivalents. 

Increases in interest rates may increase the costs of the Company's borrowings. The rate of interest on each RBS drawdown loan for each interest period is the percentage rate per annum which is the aggregate of the applicable; (i) margin, (ii) LIBOR and (iii) mandatory cost. Interest on the loan is payable on the last day of each interest period. For the year ended 30th April 2015 the interest accrued on the loan was $8,854 (2014: $10,060).

The following assets and liabilities disclosures exclude prepayments and taxation receivables and payables:

	Less than		1 month
	1 month		- 1 year		Total
As at 30th April 2015:	$’000		$’000		$’000
Financial assets
Cash and cash equivalents	1,374		-		1,374
Financial liabilities
Loans payable	-		(10,509)		(10,509)
Net financial assets/(liabilities)	1,374		(10,509)		(9,135)
	Less than		1 month
	1 month		- 1 year		Total
As at 30th April 2014:	$’000		$’000		$’000
Financial assets
Cash and cash equivalents	695		-		695
Financial liabilities
Loans payable	-		(12,195)		(12,195)
Net financial assets/(liabilities)	695		(12,195)		(11,500)

The cash flow interest rate risk comprises those assets and liabilities with a floating interest rate, for example cash deposits at local market rates. Cash and cash equivalents earn interest at the prevailing market interest rate. Although this portion of the Net Asset Value is not subject to fair value risk as a result of possible fluctuations in the prevailing market interest rates, the future cashflows of the Company could be adversely or positively impacted by decreases or increases in those prevailing market interest rates.

The fair value interest rate risk comprises those assets and liabilities with a fixed interest rate, for example loans payable and loan interest payable.

	Weighted average  interest rate			Weighted average period for  which rate is fixed (years)
	2015	2014		2015	2014
Japanese Yen
Loans payable	1.44%	1.49%		0.19	0.20

Fair Value

All assets and liabilities are carried at fair value with the exception of cash and cash equivalents, which are carried at amortised cost, and loans payable, which are carried at amortised cost using the effective interest rate method.

Short term receivables and payables

Receivables and payables do not carry interest and are short term in nature. They are stated at amortised cost, as reduced by appropriate allowances for irrecoverable amounts in the case of receivables.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter in realising assets or otherwise raising funds to meet financial commitments.

As at 30th April 2015, the Company had drawn down a loan facility (amended 10th April 2015) of ¥1,250,000,000/$10,508,583 (2014: ¥1,250,000,000/$12,194,527). In connection with the facility agreement, the Company entered into a English law multi currency revolving credit facility with RBS over its depositary accounts held with Northern Trust (Guernsey) Limited.

The loan may be used for the following purposes:-

• the acquisition of investments in accordance with the investment policy;
• its working capital requirements in the ordinary course of business; and
• funding permitted redemptions which in each case will be repaid other than by way of rollover loan within 30 days of the relevant drawing.

and must be repaid on the last day of its interest period.

The Company invests primarily in listed securities which are liquid in nature.

The Company’s liquidity risk is managed by the Investment Manager who monitors the cash positions on a regular basis.

The maturity analysis of the Company’s financial liabilities (excluding tax balances) at 30th April 2015 is as follows:

			Up to 1 year		1 to 5		Total
			or on demand		years
As at 30th April 2015:			$’000		$’000		$’000
Financial liabilities
Loans payable			(10,547)		-		(10,547)
Other financial liabilities			(2,207)		-		(2,207)
Total financial liabilities			(12,754)		-		(12,754)
			Up to 1 year		1 to 5		Total
			or on demand		years
As at 30th April 2014:			$’000		$’000		$’000
Financial liabilities
Loans payable			(12,242)		-		(12,242)
Other financial liabilities			(1,056)		-		(1,056)
Total financial liabilities			(13,298)		-		(13,298)

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.

In accordance with the investment restrictions as described in its placing Memorandum, the Company may not invest more than 10% of the Company’s gross assets in securities of any one company or issuer. However, this restriction shall not apply to securities issued or guaranteed by a government or government agency of the Japanese or US Governments. In adhering to these investment restrictions, the Company mitigates the risk of any significant concentration of credit risk arising on broker and dividend receivables.

As the Company invests primarily in publicly traded equity securities the Company is not exposed to credit risk from these positions. However, the Company will be exposed to a credit risk on parties with whom it trades and will bear the risk of settlement default. The Company minimises concentrations of credit risk by undertaking transactions with a large number of regulated counterparties on recognised and reputable exchanges. All transactions in listed securities are settled/paid for 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 its obligation. The Company is exposed to credit risk on cash and investment balances held with the Depositary. The Investment Manager regularly reviews concentrations of credit risk.

All of the cash assets are held with the Northern Trust Company, London Branch (NTC). Cash deposited with NTC is deposited as banker and is held on its Balance Sheet. Accordingly, in accordance with usual banking practice, NTC’s liability to the Company in respect of such cash deposits shall be that of debtor and the Company will rank as a general creditor of NTC. The financial assets are held with the Depositary, Northern Trust (Guernsey) Limited. These assets are held distinct and separately from the proprietary assets of the Depositary. Securities are clearly recorded to ensure they are held on behalf of the Company. Bankruptcy or insolvency of the Depositary and or one of its agents or affiliates may cause the Company’s rights with respect to the securities held by the Depositary to be delayed or limited.  

NTC is a wholly owned subsidiary of Northern Trust Corporation. As at 30th April 2015 Northern Trust Corporation had a long term rating from Standard & Poor’s of A+. Risk is managed by monitoring the credit quality and financial positions of the Depositary the Company uses. Northern Trust acts as its own sub-depositary in the U.S., the U.K., Ireland and Canada. In all other markets Northern Trust appoints a local sub-depositary. Northern Trust continually reviews its sub-depositary network to ensure clients have access to the most efficient, creditworthy and cost-effective provider in each market.

The securities held by the Company are legally held with the Depositary, which holds the securities in segregated accounts, and subject to any security given by the Company to secure its overdraft facilities, the Company’s securities should be returned to the Company in the event of the insolvency of the Depositary or its appointed agents, although it may take time for the Company to prove its entitlement to the securities and for them to be released by the liquidator of the insolvent institution.  The Company will however only rank as an unsecured creditor in relation to any cash deposited or derivative positions with the Depositary, their related companies and their appointed agents, and is therefore subject to the credit risk of the relevant institution in this respect.

The assets exposed to credit risk at year end amounted to $1,374,211 (2014: $695,450).

Fair Value Hierarchy

The fair value of investments traded in active markets (such as publicly traded derivatives and trading securities) are based on quoted market prices at the close of trading on the Statement of Financial Position date. The quoted market price used for investments held by the Company is the current mid price; the appropriate quoted market price for financial liabilities is the current asking price.

A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

The fair value of investments that are not traded in an active market is determined by using valuation techniques.

For instruments for which there is no active market, the Company may use internally developed models, which are usually based on valuation methods and techniques generally recognised as standard within the industry. Valuation models may be used primarily to value unlisted equity, debt securities and other debt instruments for which markets were or have been inactive during the financial year. Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions.

The following table sets out fair value measurements using the IFRS 13 fair value hierarchies:

At 30th April 2015
Financial assets at fair value through profit or loss
	Level 1	Level 2	Level 3	Total
	$’000	$’000	$’000	$’000
Equity Investments	101,843	-	-	101,843
	101,843	-	-	101,843
At 30th April 2014
Financial assets at fair value through profit or loss
	Level 1	Level 2	Level 3	Total
	$’000	$’000	$’000	$’000
Equity Investments	94,434	-	-	94,434
	94,434	-	-	94,434

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 - valued using quoted prices in active markets for identical assets or liabilities.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

19.      NET ASSET VALUE HISTORY

		30th April 2015		30th April 2014		30th April 2013
Net Asset Value		$93,509,272		$84,086,197		$94,917,916
Number of Shares in Issue		40,455,909		43,894,158		48,693,711
NAV per Ordinary Share		$2.31		$1.92		$1.95

20.      REDEMPTION FACILITY

Shareholders have the opportunity to make redemptions of part or all of their shareholding on a six-monthly basis with the Board’s discretion in declining any redemption requests. The following redemptions were made during the year:-

Redemption date		Shares redeemed		$’000
		2015		2015
29/09/2014		2,185,754		(4,412)
30/03/2015		653,420		(1,376)
		2,839,174		(5,788)
Redemption date		Shares redeemed		$’000
		2014		2014
29/09/2013		2,433,335		(4,667)
30/03/2014		2,310,218		(4,789)
		4,743,553		(9,456)

As at the year ended 30th April 2015, a total of $5,787,882 was paid to redeeming shareholders. The balance of $Nil is due and payable as at that date.

21.       DIVIDENDS

All amounts held in the Company’s revenue reserve are distributable to shareholders by way of dividends.

There were no dividends declared by the Board of Directors during the year ended 30th April 2015 or the year ended 30th April 2014.

22.        ONGOING CHARGES

The ongoing charges using the AIC recommended methodology was 2.49% as at 30th April 2015 (2014 1.98%).

23.        EXCHANGE RATES

The following exchange rates were used to translate assets and liabilities into the reporting currency (USD) at 30th April 2015, 30th April 2014 and 30th April 2013:

		30th April 2015		30th April 2014		30th April 2013
		USD		USD		USD
GBP		0.6468		0.5948		0.6453
JPY		118.8950		102.5050		97.8100

24.        CHANGES IN THE PORTFOLIO

A list, specifying for each investment the total purchases and sales which took place during the year ended 30th April 2015 may be obtained, upon request, at the registered office of the Company.

25.       EVENTS DURING THE YEAR

In accordance with Directive 2011/61/EU of the European Parliament and of the Council of 8th June 2011 on Alternative Investment Fund Managers and the UK Alternative Investment Fund Managers Regulation 2013 as amended the Company is considered to be an Alternative Investment Fund (“AIF”). Effective 1st August 2014, AFMG Limited resigned as Investment Manager and the Company appointed Tiburon Partners LLP as its Investment Manager and Alternative Investment Fund Manager (“AIFM”) pursuant to a new Investment Management Agreement dated 1st August 2014.

On 1st August 2014, Atlantis Investment Research Corporation, (“AIRC”), Sub Investment Adviser to the Company until that date, was appointed as the Investment Adviser to the Company.

On 1st August 2014, the Company appointed Northern Trust (Guernsey) Limited as Depositary (the “Depositary”). The Depositary Agreement replaced the previous custody agreement between the Company and its Custodian, Northern Trust (Guernsey) Limited.

As a result of the above AIFM changes a new Administration Agreement has also been issued effective 1st August 2014.

The Company introduced an annual Subscription Right which was approved by shareholders at an EGM held on 22nd October 2014.  

On 13 January 2015, Grant Thornton Limited resigned as Auditors and the Company appointed PricewaterhouseCoopers CI LLP as its Auditors.

On 1st January 2015, Nplus 1 Singer Advisory LLP resigned as Corporate Broker and the Company appointed Cantor Fitzgerald Europe as its Corporate Broker.

On 1st January 2015, the Company appointed Aravis Partners LLP as its Marketing Agent.

With effect from 31st March 2015, the Company amended the terms of the Redemption Facility.

There were no other significant events during the year ended 30th April 2015 which require adjustment to or additional disclosure in the Financial Statements.

26.       SUBSEQUENT EVENTS

There were no significant events subsequent to the year ended 30th April 2014 which require adjustment to or additional disclosure in the Financial Statements.

27.       ULTIMATE CONTROLLING PARTY

There is no one entity with ultimate control over the Company.