TIDMPEJR
RNS Number : 1249L
Prospect Epicure J-REIT Val Fd PLC
30 April 2010
30 April 2010
Prospect Epicure J-REIT Value Fund plc
Final results for the year ended 31 December 2009
Prospect Epicure J-REIT Value Fund plc ("PEJR" or "the Company"), the AIM listed
company established to invest in undervalued Japanese physical real estate
through J-REIT's, announces final results for the year ended 31 December 2009.
Following the approval of shareholders at an extraordinary general meeting on 23
July 2009, the Company is a realisation company and its investment objective is
to realise assets on behalf of the Company in a manner designed to preserve as
much value as possible for shareholders.
Key highlights
· NAV per share as at 31 December 2009 of 6.78p
· Two capital distributions equating to 6 pence per share made in October
2009 and March 2010
· Unaudited NAV per share at 31 March 2010 of 3.69 pence following the
second capital distribution
· Final investments sold for cash on 26 April 2010
· Directors' intend to shortly convene a general meeting of the Company at
which a special resolution will be put to shareholders for:
o the voluntary winding up of the Company and the appointment of a liquidator;
and
o the cancellation of admission to trading on AIM of the Company's ordinary
shares
· Prior to any such cancellation, it is the Directors' intention to make a
further capital distribution to shareholders, once all cash has been converted
to GBP and all remaining cost estimates finalised.
David von Simson, chairman of PEJR, commented:
"The Board are pleased to have made the two capital distributions and also have
the intention to make a third capital distribution.
We are also pleased to announce that given that all of the remaining investments
have now been sold and converted into cash, we intend to shortly convene a
general meeting to approve the voluntary winding up of the company and also the
cancellation of admission to trading on AIM of the Company's ordinary shares. A
further announcement on these matters will be made shortly."
For further information
+-------------------------------+-------------------------------+
| Prospect Epicure J-REIT Value | +41 (0) (22) 908 1190 |
| Fund plc | |
+-------------------------------+-------------------------------+
| Leonard O'Brien | |
+-------------------------------+-------------------------------+
| | |
+-------------------------------+-------------------------------+
| Panmure Gordon | +44 (0) 20 7459 3600 |
+-------------------------------+-------------------------------+
| Richard Gray | |
+-------------------------------+-------------------------------+
| Andrew Potts | |
+-------------------------------+-------------------------------+
Chairman's Statement
We are pleased to present the Annual Report and Accounts for the year ended 31
December 2009.
Following the extraordinary general meeting in July 2009, the Company became a
realisation Company and the Manager and Investment Adviser have been taking
action to realise the Company's investment portfolio in a manner designed to
preserve as much value as possible for shareholders. On 26 April 2010 the final
investments were sold for cash.
The financial statements of the Company are now prepared on a non going concern
basis, with assets stated at realisable amounts and provisions for the estimated
liquidation costs.
The Company publishes its net asset value on a monthly basis which includes an
estimate of liquidation costs and a provision for fees and expenses expected to
be incurred in realising the assets. As at 31 March 2010 the net assets were
GBP4,830,114 with 131 million shares in issue giving a NAV per share of 3.69
pence. Included in this were portfolio holdings of GBP3,814,704 and cash (net of
provisions but including dividends receivable) of GBP1,015,410 with no
borrowings.
As a result of realisations to date the Company made one distribution of 3p per
share in October 2009 and a second distribution of 3p per share was made on 12
March 2010 to shareholders of account as at 12 February 2010.
As all of the Company's investments have now been sold and converted into cash,
it is the Directors' intention to shortly convene a general meeting of the
Company at which a special resolution will be put to shareholders for the
voluntary winding up of the Company and the appointment of a liquidator. In
addition, the Company also intends to put to shareholders a resolution seeking
the cancellation of admission to trading on AIM of the Company's ordinary shares
in accordance with the AIM Rules for Companies. Prior to any such cancellation,
it is the Directors' intention to make a further capital distribution to
shareholders, once all cash has been converted to GBP and all remaining cost
estimates finalised. A further announcement with details of the general meeting
and the capital distribution will be made in due course.
David von Simson
Chairman
30 April 2010
Report of the Manager and Investment Adviser
Prospect Epicure J-REIT Value Fund plc (the "Company") was established to
capitalise on attractive investment opportunities in the Japanese real estate
investment trust (J-REIT) market. Following the approval of shareholders at an
extraordinary general meeting on 23 July 2009, the Company is now a realisation
company and its investment objective is to realise assets on behalf of the
Company in a manner designed to preserve as much value as possible for
shareholders.
Investment Overview
The Investment Adviser has been realising the portfolio since shareholder
approval was granted in July 2009 with a view to preserving as much value as
possible for shareholders. On 26 April 2010, the final investments were sold for
cash. By employing a medium-term timeframe for liquidation, the Company was able
to secure exit prices at near recent highs for its holdings. The Investment
Adviser believes the steady selling of shares into the market near recent highs
prevented negative share price reaction, and enabled the maximum preservation of
shareholder equity.
The Company was invested in a portfolio of smaller capitalised J-REITs. Although
trading in the shares of these smaller capitalised J-REITs tends to be much less
than in the larger capitalised J-REITs, the Investment Adviser's investment
stance focused on NAV discounts and high dividend yields. The holdings that
comprised the portfolio were chosen because the Investment Adviser considered
them to be among the most undervalued, highest yielding stocks within their
universe.
As at 31 December 2009, the Company's investment portfolio consisted of the
following J-REITs:
+--------+-------------+--------+-----------+
| | | | 31 |
| | | | December |
| | | | 2009 |
+--------+-------------+--------+-----------+
| Code | Security | Number | valuation |
| | name | | GBP'000 |
+--------+-------------+--------+-----------+
| | | | |
+--------+-------------+--------+-----------+
| 8984 | Blife | 116 | 323 |
| | Investment | | |
| | Corporation | | |
+--------+-------------+--------+-----------+
| 8966 | Crescendo | 1,018 | 815 |
| | Investment | | |
| | REIT | | |
+--------+-------------+--------+-----------+
| 8970 | Japan | 2,792 | 2,030 |
| | Single | | |
| | Residence | | |
| | REIT | | |
+--------+-------------+--------+-----------+
| 8974 | LaSalle | 207 | 167 |
| | Japan | | |
| | REIT | | |
+--------+-------------+--------+-----------+
| 8985 | Nippon | 519 | 479 |
| | Hotel | | |
| | Fund | | |
| | Investment | | |
| | Corporation | | |
+--------+-------------+--------+-----------+
| 8969 | Prospect | 1,731 | 896 |
| | REIT | | |
| | Corporation | | |
+--------+-------------+--------+-----------+
| 8963 | Invincible | 2,688 | 1,674 |
| | Investment | | |
| | Corporation | | |
+--------+-------------+--------+-----------+
| | | | 6,384 |
+--------+-------------+--------+-----------+
In the interest of preserving as much shareholder value as possible, the sale of
the remaining holdings in the portfolio was executed over the course of several
months at target prices representing recent highs.
+--------+-------------+---------+
| Code | Security | Average |
| | name | Sale |
| | | Price |
| | | (yen) |
+--------+-------------+---------+
| | | |
+--------+-------------+---------+
| 8963 | Invincible | 16,608 |
| | Investment | |
| | Corporation | |
+--------+-------------+---------+
| 8969 | Prospect | 87,756 |
| | REIT | |
| | Corporation | |
+--------+-------------+---------+
| 8970 | Japan | 93,347 |
| | Single | |
| | Residence | |
| | REIT | |
+--------+-------------+---------+
Key Events
Setting the Stage for 2009
On 9 October 2008, New City Residence Investment Corporation announced the
initiation of Civil Rehabilitation proceedings due to its inability to refinance
its debts in a timely fashion or to secure new financing for the pre-committed
acquisition of a property. This was an unprecedented even in the J-REIT
industry, and shook investor confidence in the sector as a whole. In the wake of
the NCR bankruptcy, investor focus shifted from underlying asset values and cash
flows to imminent refinancing and exposure to pre-commitment risks.
While lending costs rose for most of 2009, it is important to note that there
were no instances of lenders refusing refinancing.
2009: Consolidation Frenzy & The Return of Equity Finance
2009 saw the J-REIT market begin its climb out of the doldrums caused by the
global credit crises, amid a slew of sponsor changes, consolidation
announcements and a firm commitment on the part of the government to provide a
safety net in the form of a "lender of last resort" fund. The above events
worked to remove the spectre of the 2008 bankruptcy of New City Residence, and
the cloud it cast over the ability of J-REITs to secure financing.
Sponsor Changes
The J-REIT market had five sponsorship changes during 2009, and one announced as
of February end 2010. The market response was positive to the changes, due
mainly to easier refinancing activities available to J-REITs with strong
domestic sponsors.
Sponsorship Changes
+--------+--------+-------------+-------------+------------+
| Date | Code | Name | Type | New |
| | | | | Sponsor |
+--------+--------+-------------+-------------+------------+
|Jun-09 | 8976 | DA | Office | Daiwa |
| | | Office | |Securities |
| | | Investment | | |
+--------+--------+-------------+-------------+------------+
|Sep-09 | - | New |Residential | Daiwa |
| | | City | | House |
| | | Residence | | |
+--------+--------+-------------+-------------+------------+
|Oct-09 | 3227 | MID | Office | Kansai |
| | | REIT | | Electric |
+--------+--------+-------------+-------------+------------+
|Oct-09 | 8966 | Crescendo |Diversified | Heiwa |
| | | Investment | | Real |
| | | | | Estate |
+--------+--------+-------------+-------------+------------+
|Dec-09 | 8962 | Nippon |Residential | Itochu |
| | |Residential | | |
| | | Investment | | |
+--------+--------+-------------+-------------+------------+
|Feb-10 | 8973 | Joint |Diversified | Sekisui |
| | | REIT | | House |
+--------+--------+-------------+-------------+------------+
Mergers
+--------+--------+-------------+-------------+
| Date | Code | Name | Merger |
| | | | w/ |
+--------+--------+-------------+-------------+
|Feb-10 | 8963 | Invincible | LCP |
| | | Investment | Investment |
| | | Corp | |
+--------+--------+-------------+-------------+
|Mar-10 | 3269 | Advance | Nippon |
| | | Residence |Residential |
| | | Investment | Investment |
+--------+--------+-------------+-------------+
|Mar-10 | 8953 | Japan | LaSalle |
| | | Retail | Japan |
| | | Fund | |
+--------+--------+-------------+-------------+
|Apr-10 | 8984 | Blife | New |
| | | Investment | City |
| | |Corporation | Residence |
+--------+--------+-------------+-------------+
|Jul-10 | 8986 | Japan | Prospect |
| | | Rental | REIT |
| | | Housing | |
| | | Inv | |
+--------+--------+-------------+-------------+
Government Support Measures
The government continued looking for ways to reduce refinancing stress on the
JREIT market, establishing a Public-Private Real Estate Stabilisation Fund to
aid in refinancing, particularly of corporate bonds. The fund opened on 5
September 2009. In March 2010, Prospect REIT (8969) became the first J-REIT to
use the facility, borrowing Y10 billion.
Further details on the Public-Private J-REIT support fund:
Requirements:
- LTV no more than 65% after receipt of loan
- No mid-long term financing risks
- No portfolio properties with legal violations
- Management company received no administrative penalties in the past
- Must have posted a positive NOI in the latest fiscal period
- Assets must have exceeded liabilities in the latest fiscal period
- Must not have breached loan covenants
Terms:
- Initial - 3mo TIBOR +150 400bps depending on LTV, AUM and P/NAV
- Additional spread of 0 150bps from the 2nd year of loan depending on P/NAV
- Maturity no longer than 3 years (March 2015)
2009 Public Offerings
+--------+--------+----------------+--------+
| Date | Code | Name | Size |
| | | | (mn |
| | | | yen) |
+--------+--------+----------------+--------+
|Oct-09 | 3226 | Nippon |21,430 |
| | |Accommodations | |
| | | Fund | |
+--------+--------+----------------+--------+
|Oct-09 | 8972 | Kenedix | 9,851 |
| | | Realty | |
| | | Investment | |
+--------+--------+----------------+--------+
|Nov-09 | 8952 | Japan |31,900 |
| | | Real | |
| | | Estate | |
| | | Investment | |
+--------+--------+----------------+--------+
|Nov-09 | 3240 | Nomura |11,500 |
| | | Residential | |
| | | REIT | |
+--------+--------+----------------+--------+
Going forward
The period of heightened investor concern regarding refinancing risk seems to
have passed, as many of the most at risk J-REITs have secured new sponsors, and
corporate bond refinancings were uneventful. AUM and dividend growth are in the
spotlight, as J-REITs are again able to turn to equity markets to fund
expansion. The string of late 2009 public offerings has continued into early
2010, with three J-REITs announcing issuances totalling Y36.2 bn thus far into
the new year. Bond markets have also started to thaw, as four J-REITs have
announced placement of Y40 bn worth of new corporate bonds. Short term risks
include an increase in property vacancies leading to resumption of the large
appraisal value declines seen in early 2009, and a cessation of real estate
transactions as J-REITs await a new bottom.
Leonard O'Brien
Curtis Freeze
Epicure Managers Japan Limited
Prospect Asset Management, Inc.
Manager
Investment Adviser
30 April 2010
30 April 2010
Investing Policy
Investment Objective
Following the approval of shareholders at an extraordinary general meeting on 23
July 2009, the Company is now a realisation company and its investment objective
is to realise assets on behalf of the Company in a manner designed to preserve
as much value as possible for shareholders.
Assets or Companies in which the Company can invest
Given that the Company is now a realisation company, the Company's policy is not
to make any new investments, but rather to realise assets on behalf of the
Company.
Whether investments will be active or passive investments
Whilst Epicure Managers Japan Limited (the "Manager") and Prospect Asset
Management, Inc. (the "Investment Adviser") have a mandate to realise assets on
behalf of the Company, the Investment Adviser will continue to maintain an
active approach to its investments in a manner designed to preserve as much
value as possible for shareholders.
Holding period for investments
Whilst the Manager and Investment Adviser have a mandate to realise assets on
behalf of the Company, given the daily traded volumes of certain of the
Company's investments, it is expected that certain of the positions may
potentially take a number of months to realise, assuming that there is no
significant change in market conditions or that the Investment Adviser is able
to realise some or all of the positions with a small number of parties. The
Investment Adviser will seek to realise the Group's investments through sales in
the market. In addition, the Board, in conjunction with its advisers, may
explore the possibility of selling all or part of the Group's portfolio to
institutional buyers as an alternative means of realising value for
Shareholders.
Spread of investments and maximum exposure limits
Given that the Company is now a realisation company and the Company's policy is
not to make any new investments, the Company does not have a policy in relation
to the spread of its investments or maximum exposure limits per investment.
Policy in relation to gearing
Given that the Company is now a realisation company with the Manager and
Investment Adviser having a mandate to realise assets on behalf of the Company,
the Company does not have a policy in relation to gearing, however following the
repayment of all outstanding indebtedness in 2008, it is not the Director's
intention to again borrow funds.
Policy in relation to cross-holdings
Whilst the Company does not have a formal policy on cross-holdings, given that
the Company is now a realisation company with a policy to not make any new
investments, the Company does not currently have any investments in other listed
or unlisted closed-ended investment funds.
Investing Restrictions
Given that the Company is now a realisation company, and the Group policy is not
to make any new investments but rather to realise assets on behalf of the
Company, the Company does not have a policy on investing restrictions.
Returns and Distribution Policy
Following the approval of shareholders at an extraordinary general meeting on 23
July 2009, the Company is now a realisation company and its investment objective
is to realise assets on behalf of the Company in a manner designed to preserve
as much value as possible for shareholders.
Certain of the Company's constitutional arrangements were amended so as to
permit a return of capital arising on the disposal of investments to
shareholders in as orderly manner as possible. It is expected that capital will
be returned to shareholders over time through ad hoc returns of capital and buy
backs of ordinary shares through the market.
The decision to pay any such returns of capital will be at the sole discretion
of the board of the Company. Pursuant to the Isle of Man Companies Act 2006, the
Board may only authorise a return of capital if the Directors are satisfied, on
reasonable grounds, that the Company will, immediately after such return,
satisfy the Solvency Test.
The decision to make any repurchases of Ordinary Shares will be at the sole
discretion of the Board and will be subject to the Directors being satisfied, on
reasonable grounds, that the Company will, immediately after the repurchase,
satisfy the Solvency Test.
The "Solvency Test" is referred to in section 49 of the Isle of Man Companies
Act 2006, which the Company satisfies if it is able to pay its debts as they
become due in the normal course of the Company's business and the value of its
assets exceeds the value of its liabilities.
The rate at which returns of capital are paid under the Company's capital return
scheme and ordinary shares are repurchased under the buy back programme (as set
out in the Company's circular to shareholders dated 18 June 2009) will depend
on, in particular, the rate at which the Group's investments are realised. The
market in Japanese real estate investment trusts ("J-REIT's") is relatively
illiquid. The Company itself is a holder of relatively less liquid J-REIT
investments. The illiquidity in the market and in the Company's portfolio means
that the timing of the realisation process and, therefore, distributions to
shareholders, is uncertain. The Investment Adviser will seek to realise
investments as efficiently as possible whilst at the same time seeking to
maximise value for shareholders on exit.
Life of the Company
Once substantially all of the Group's investments have been realised, the
Directors intend to convene an extraordinary general meeting of the Company at
which a special resolution will be put for the voluntary winding up of the
Company and the appointment of a liquidator.
If this special resolution is passed the winding up of the Company will take
effect immediately. The liquidator will be appointed to oversee that the
Company's remaining assets available for distribution on a winding up are
distributed to Shareholders. The appointed liquidators will set aside sufficient
assets in a liquidation fund to meet the Company's liabilities. The liquidators
would also provide in the liquidation fund for a retention, which they consider
sufficient to meet any contingent and unknown liabilities of the Company.
The Company has a number of Singaporean subsidiaries. The liquidation process is
complex and uncertain and could take in excess of 12 months. As stated above,
risks and uncertainties would apply during the liquidation process and the
timing and size of any distributions to Shareholders are uncertain and will
depend on the ongoing costs payable during the liquidation and settlement of any
unknown or contingent liabilities. The Board has commenced the liquidation
process for the majority of the Singaporean subsidiaries.
Consolidated Income Statement
+------------------+--------+----------+-----------+
| | | | |
| | Note | For | For |
| | | the | the |
| | | year | year |
| | | ended | ended |
| | | 31 | 31 |
| | | December | December |
| | | 2009 | 2008 |
+------------------+--------+----------+-----------+
| | | GBP'000 | GBP'000 |
+------------------+--------+----------+-----------+
| | | | |
+------------------+--------+----------+-----------+
| Income | | | |
| | | | |
+------------------+--------+----------+-----------+
| | | 9 | 318 |
| Interest | | | |
| income | | | |
+------------------+--------+----------+-----------+
| | | 1,132 | 5,949 |
| Dividend | | | |
| income | | | |
+------------------+--------+----------+-----------+
| Realised | | (22,443) | (88,840) |
| loss on | | | |
| disposal | | | |
| of | | | |
| financial | | | |
| assets | | | |
+------------------+--------+----------+-----------+
| Revaluation | | 24,750 | (28,967) |
| gains/(losses) | | | |
| on financial | | | |
| assets | | | |
+------------------+--------+----------+-----------+
| Total | | 3,448 | (111,540) |
| net | | | |
| investment | | | |
| income/(expense) | | | |
+------------------+--------+----------+-----------+
| | | | |
+------------------+--------+----------+-----------+
| Expenses | | | |
+------------------+--------+----------+-----------+
| | 8.2 | (99) | (1,012) |
| Manager's | | | |
| fees | | | |
+------------------+--------+----------+-----------+
| | 8.4 | (169) | (351) |
| Administration | | | |
| fees | | | |
+------------------+--------+----------+-----------+
| | | (71) | (68) |
| Audit | | | |
| and | | | |
| professional | | | |
| fees | | | |
+------------------+--------+----------+-----------+
| | 6 | (35) | (870) |
| Interest | | | |
| expense | | | |
+------------------+--------+----------+-----------+
| | 8 | (451) | (389) |
| Other | | | |
| expenses | | | |
+------------------+--------+----------+-----------+
| | 11 | (753) | - |
| Provisions | | | |
+------------------+--------+----------+-----------+
| Total | | (1,578) | (2,690) |
| operating | | | |
| expenses | | | |
+------------------+--------+----------+-----------+
| | | | |
+------------------+--------+----------+-----------+
| Profit/(loss) | | 1,870 | (114,230) |
| before tax | | | |
+------------------+--------+----------+-----------+
| | | | |
+------------------+--------+----------+-----------+
| Income | 14 | (79) | (416) |
| tax | | | |
| expense | | | |
+------------------+--------+----------+-----------+
| Profit/(loss) | | 1,791 | (114,646) |
| for the year | | | |
+------------------+--------+----------+-----------+
| | | | |
+------------------+--------+----------+-----------+
| Basic | 12 | 1.37 | (95.20) |
| and | | | |
| fully | | | |
| diluted | | | |
| earnings/(loss) | | | |
| per share | | | |
| (pence) | | | |
+------------------+--------+----------+-----------+
Consolidated Statement of Comprehensive Income
+------------------------------+------+---------------+----------------+
| |Note | For the year | For the year |
| | | ended | ended |
| | | 31 December | 31 December |
| | | 2009 | 2008 |
+------------------------------+------+---------------+----------------+
| | | GBP'000 | GBP'000 |
+------------------------------+------+---------------+----------------+
| Profit/(Loss) for the year | | 1,791 | (114,646) |
+------------------------------+------+---------------+----------------+
| | | | |
+------------------------------+------+---------------+----------------+
| Other comprehensive | | | |
| income/(expense) | | | |
+------------------------------+------+---------------+----------------+
| Net change in fair value | | - | 28,967 |
| gains on available-for-sale | | | |
| financial assets (net of | | | |
| tax) | | | |
+------------------------------+------+---------------+----------------+
| Foreign exchange translation | | (1,303) | 15,332 |
| differences | | | |
+------------------------------+------+---------------+----------------+
| Other comprehensive | | (1,303) | 44,299 |
| (expense)/income for the | | | |
| year (net of tax) | | | |
+------------------------------+------+---------------+----------------+
| | | | |
+------------------------------+------+---------------+----------------+
| Total comprehensive | | 488 | (70,347) |
| income/(expense) for the | | | |
| year | | | |
+------------------------------+------+---------------+----------------+
Consolidated Balance Sheet
+--------------------+--------+----------+----------+
| | Note | At 31 | At 31 |
| | | December | December |
| | | 2009 | 2008 |
+--------------------+--------+----------+----------+
| | | GBP'000 | GBP'000 |
+--------------------+--------+----------+----------+
| | | | |
+--------------------+--------+----------+----------+
| Non-current | | | |
| assets | | | |
+--------------------+--------+----------+----------+
| Available-for-sale | 5 | - | 10,554 |
| financial assets | | | |
+--------------------+--------+----------+----------+
| Total | | - | 10,554 |
| non-current | | | |
| assets | | | |
+--------------------+--------+----------+----------+
| | | | |
+--------------------+--------+----------+----------+
| Current | | | |
| assets | | | |
+--------------------+--------+----------+----------+
| Financial | 5 | 6,384 | - |
| assets | | | |
| held for | | | |
| sale | | | |
+--------------------+--------+----------+----------+
| Other | | 146 | 608 |
| receivables | | | |
| and | | | |
| prepayments | | | |
+--------------------+--------+----------+----------+
| Cash | 9 | 3,241 | 1,635 |
| at | | | |
| bank | | | |
+--------------------+--------+----------+----------+
| Total | | 9,771 | 2,243 |
| current | | | |
| assets | | | |
+--------------------+--------+----------+----------+
| Total | | 9,771 | 12,797 |
| assets | | | |
+--------------------+--------+----------+----------+
| | | | |
+--------------------+--------+----------+----------+
| Issued | 10 | 1,310 | 1,310 |
| share | | | |
| capital | | | |
+--------------------+--------+----------+----------+
| Share | | 8,616 | 12,546 |
| premium | | | |
+--------------------+--------+----------+----------+
| Retained | | (13,580) | (15,371) |
| earnings | | | |
+--------------------+--------+----------+----------+
| Foreign | | 12,541 | 13,844 |
| currency | | | |
| translation | | | |
| reserve | | | |
+--------------------+--------+----------+----------+
| Total | | 8,887 | 12,329 |
| equity | | | |
+--------------------+--------+----------+----------+
| | | | |
+--------------------+--------+----------+----------+
| Other | | 157 | 468 |
| creditors | | | |
| and | | | |
| accrued | | | |
| expenses | | | |
+--------------------+--------+----------+----------+
| Provisions | 11 | 727 | - |
+--------------------+--------+----------+----------+
| Total | | 884 | 468 |
| current | | | |
| liabilities | | | |
+--------------------+--------+----------+----------+
| Total | | 884 | 468 |
| liabilities | | | |
+--------------------+--------+----------+----------+
| Total | | 9,771 | 12,797 |
| equity | | | |
| & | | | |
| liabilities | | | |
+--------------------+--------+----------+----------+
Company Balance Sheet
+--------------------+--------+----------+----------+
| | Note | At 31 | At 31 |
| | | December | December |
| | | 2009 | 2008 |
+--------------------+--------+----------+----------+
| | | GBP'000 | GBP'000 |
+--------------------+--------+----------+----------+
| | | | |
+--------------------+--------+----------+----------+
| Non-current | | | |
| assets | | | |
+--------------------+--------+----------+----------+
| Available-for-sale | 5 | - | 6,399 |
| financial assets | | | |
+--------------------+--------+----------+----------+
| Investment | 2 | - | 3,009 |
| in | | | |
| subsidiaries | | | |
+--------------------+--------+----------+----------+
| Total | | - | 9,408 |
| non-current | | | |
| assets | | | |
+--------------------+--------+----------+----------+
| | | | |
+--------------------+--------+----------+----------+
| Current | | | |
| assets | | | |
+--------------------+--------+----------+----------+
| Investment | 2 | 1,217 | - |
| in | | | |
| subsidiaries | | | |
+--------------------+--------+----------+----------+
| Financial | 5 | 5,488 | - |
| assets | | | |
| held for | | | |
| sale | | | |
+--------------------+--------+----------+----------+
| Other | | 145 | 503 |
| receivables | | | |
| and | | | |
| prepayments | | | |
+--------------------+--------+----------+----------+
| Inter-company | | 524 | 1,232 |
| balances | | | |
+--------------------+--------+----------+----------+
| Cash | 9 | 2,380 | 1,319 |
| at | | | |
| bank | | | |
+--------------------+--------+----------+----------+
| Total | | 9,754 | 3,054 |
| current | | | |
| assets | | | |
+--------------------+--------+----------+----------+
| Total | | 9,754 | 12,462 |
| assets | | | |
+--------------------+--------+----------+----------+
| | | | |
+--------------------+--------+----------+----------+
| Issued | 10 | 1,310 | 1,310 |
| share | | | |
| capital | | | |
+--------------------+--------+----------+----------+
| Share | | 8,616 | 12,546 |
| premium | | | |
+--------------------+--------+----------+----------+
| Retained | | (12,571) | (13,898) |
| earnings | | | |
+--------------------+--------+----------+----------+
| Foreign | | 11,532 | 11,453 |
| currency | | | |
| translation | | | |
| reserve | | | |
+--------------------+--------+----------+----------+
| Revaluation | | - | 918 |
| reserve | | | |
+--------------------+--------+----------+----------+
| Total | | 8,887 | 12,329 |
| equity | | | |
+--------------------+--------+----------+----------+
| | | | |
+--------------------+--------+----------+----------+
| Other | | 150 | 133 |
| creditors | | | |
| and | | | |
| accrued | | | |
| expenses | | | |
+--------------------+--------+----------+----------+
| Provisions | 11 | 717 | - |
+--------------------+--------+----------+----------+
| Total | | 867 | 133 |
| current | | | |
| liabilities | | | |
+--------------------+--------+----------+----------+
| Total | | 867 | 133 |
| liabilities | | | |
+--------------------+--------+----------+----------+
| Total | | 9,754 | 12,462 |
| equity | | | |
| & | | | |
| liabilities | | | |
+--------------------+--------+----------+----------+
The profit earned by the Company for the year ended 31 December 2009 was
GBP1,325,794 (2008: GBP43,909) which includes a gain on write back of
intercompany balances of GBP2,014,406 and a gain of GBP917,930 due to recycling
the revaluation reserve through the income statement.
Consolidated Statement of Changes in Equity
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| | Share | Share | Foreign | Retained | Revaluation | Total |
| | Capital | Premium | Currency | Earnings | Reserve | |
| | | | Translation | | | |
| | | | Reserve | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Balance | 1,010 | - | (1,488) | 102,810 | (28,967) | 73,365 |
| at 1 | | | | | | |
| January | | | | | | |
| 2008 | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Total | | | | | | |
| comprehensive | | | | | | |
| income | | | | | | |
| /(expense) | | | | | | |
| for the year | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Retained | - | - | - | (114,646) | - | (114,646) |
| loss for | | | | | | |
| the year | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Other | | | | | | |
| comprehensive | | | | | | |
| income/(expense) | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Net | - | - | - | - | 28,967 | 28,967 |
| change | | | | | | |
| in | | | | | | |
| fair | | | | | | |
| value | | | | | | |
| of | | | | | | |
| available-for-sale | | | | | | |
| financial assets | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Foreign | - | - | 15,332 | - | - | 15,332 |
| exchange | | | | | | |
| translation | | | | | | |
| differences | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Total | - | - | 15,332 | (114,646) | 28,967 | (70,347) |
| comprehensive | | | | | | |
| income/(expense) | | | | | | |
| for the year | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Transactions | | | | | | |
| with owners | | | | | | |
| recorded | | | | | | |
| directly in | | | | | | |
| equity | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Contributions | | | | | | |
| by and | | | | | | |
| distributions | | | | | | |
| to owners | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Proceeds | 300 | 12,993 | - | - | - | 13,293 |
| from | | | | | | |
| shares | | | | | | |
| issued | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Share | - | (447) | - | - | - | (447) |
| issue | | | | | | |
| expenses | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Dividends | - | - | - | (3,535) | - | (3,535) |
| paid | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Total | 300 | 12,546 | - | (3,535) | - | 9,311 |
| contributions | | | | | | |
| by and | | | | | | |
| distributions | | | | | | |
| to owners | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Balance | 1,310 | 12,546 | 13,844 | (15,371) | - | 12,329 |
| at 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Balance | 1,310 | 12,546 | 13,844 | (15,371) | - | 12,329 |
| at 1 | | | | | | |
| January | | | | | | |
| 2009 | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Total | | | | | | |
| comprehensive | | | | | | |
| income/(expense) | | | | | | |
| for the year | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Profit | - | - | - | 1,791 | - | 1,791 |
| for | | | | | | |
| the | | | | | | |
| year | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Other | | | | | | |
| comprehensive | | | | | | |
| income/(expense) | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Foreign | - | - | (1,303) | - | - | (1,303) |
| exchange | | | | | | |
| translation | | | | | | |
| differences | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Total | - | - | (1,303) | 1,791 | - | 488 |
| comprehensive | | | | | | |
| income/(expense) | | | | | | |
| for the year | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Transactions | | | | | | |
| with owners | | | | | | |
| recorded | | | | | | |
| directly in | | | | | | |
| equity | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Contributions | | | | | | |
| by and | | | | | | |
| distributions | | | | | | |
| to owners | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Distributions | - | (3,930) | - | - | - | (3,930) |
| paid | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Total | - | (3,930) | - | - | - | (3,930) |
| contributions | | | | | | |
| by and | | | | | | |
| distributions | | | | | | |
| to owners | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
| Balance | 1,310 | 8,616 | 12,541 | (13,580) | - | 8,887 |
| at 31 | | | | | | |
| December | | | | | | |
| 2009 | | | | | | |
+--------------------+---------+---------+-------------+-----------+-------------+-----------+
Consolidated Cash Flow Statement
+------------------------------+------+---------------+----------------+
| |Note | For the year | For the year |
| | | ended 31 | ended |
| | | December 2009 | 31 December |
| | | | 2008 |
+------------------------------+------+---------------+----------------+
| | | GBP'000 | GBP'000 |
+------------------------------+------+---------------+----------------+
| | | | |
+------------------------------+------+---------------+----------------+
| Cash flows from operating | | | |
| activities | | | |
+------------------------------+------+---------------+----------------+
| Group profit/(loss) after | | 1,791 | (114,646) |
| tax | | | |
+------------------------------+------+---------------+----------------+
| Adjustments for: | | | |
+------------------------------+------+---------------+----------------+
| Net investment | | (3,448) | 111,540 |
| (income)/expense | | | |
+------------------------------+------+---------------+----------------+
| Income tax | | 79 | 416 |
+------------------------------+------+---------------+----------------+
| Operating loss before | | (1,578) | (2,690) |
| changes in working capital | | | |
+------------------------------+------+---------------+----------------+
| | | | |
+------------------------------+------+---------------+----------------+
| Decrease/(Increase) in trade | | 31 | (25) |
| and other receivables | | | |
+------------------------------+------+---------------+----------------+
| Increase/(Decrease) in trade | | 358 | (271) |
| and other payables | | | |
+------------------------------+------+---------------+----------------+
| Cash used in operations | | (1,189) | (2,986) |
+------------------------------+------+---------------+----------------+
| | | | |
+------------------------------+------+---------------+----------------+
| Dividends received | | 1,421 | 7,759 |
+------------------------------+------+---------------+----------------+
| Interest received | | 9 | 319 |
+------------------------------+------+---------------+----------------+
| Net cash generated from | | 241 | 5,092 |
| operating activities | | | |
+------------------------------+------+---------------+----------------+
| | | | |
+------------------------------+------+---------------+----------------+
| Investing activities | | | |
+------------------------------+------+---------------+----------------+
| Purchase of financial assets | | (970) | (11,238) |
| | | | |
+------------------------------+------+---------------+----------------+
| Proceeds from sale of | | 6,487 | 57,336 |
| financial assets | | | |
+------------------------------+------+---------------+----------------+
| Net cash generated from | | 5,517 | 46,098 |
| investing activities | | | |
+------------------------------+------+---------------+----------------+
| | | | |
+------------------------------+------+---------------+----------------+
| Financing activities | | | |
+------------------------------+------+---------------+----------------+
| Proceeds from the issue of | | - | 13,293 |
| shares | | | |
+------------------------------+------+---------------+----------------+
| Share issue costs | | - | (447) |
+------------------------------+------+---------------+----------------+
| Repayment of bank borrowings | | - | (65,215) |
+------------------------------+------+---------------+----------------+
| Distributions/dividends paid | | (3,930) | (3,535) |
+------------------------------+------+---------------+----------------+
| Net cash used in financing | | (3,930) | (55,904) |
| activities | | | |
+------------------------------+------+---------------+----------------+
| | | | |
+------------------------------+------+---------------+----------------+
| Net increase/(decrease) in | | 1,828 | (4,714) |
| cash and cash equivalents | | | |
+------------------------------+------+---------------+----------------+
| Effects of exchange rate | | (222) | 1,516 |
| changes on cash and cash | | | |
| equivalents | | | |
+------------------------------+------+---------------+----------------+
| Cash and cash equivalents at | | 1,635 | 4,833 |
| beginning of year | | | |
+------------------------------+------+---------------+----------------+
| Cash and cash equivalents at | 9 | 3,241 | 1,635 |
| end of year | | | |
+------------------------------+------+---------------+----------------+
Notes to the Consolidated Financial Statements
1 The Company
Prospect Epicure J-REIT Value Fund plc (the "Company") was incorporated and
registered in the Isle of Man under the Isle of Man Companies Act 1931-2004 on 3
November 2006 as a public company with registered number 118230C.
On 14 August 2009 the Company was re-registered as a company under the Isle of
Man Companies Act 2006 with registered number 004213V.
From 24 July 2009, the Company has been operating as a realisation company and
the net asset value includes an estimate of liquidation costs and a provision
for fees and expenses expected to be incurred in realising the assets.
The Company's agents and the Manager perform all significant functions.
Accordingly, the Company itself has no employees.
2 The Subsidiaries
For efficient portfolio management purposes, the Company established the
following subsidiary companies:
+---------------+---------------+------------+
| | Country | Percentage |
| | of | of |
+---------------+---------------+------------+
| | incorporation | Shares |
| | | held |
+---------------+---------------+------------+
| | | |
+---------------+---------------+------------+
| Aquatic | Singapore | 100% |
| Holding | | |
| Company | | |
| Pte Ltd | | |
| * | | |
+---------------+---------------+------------+
| Adriatic | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Agean | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Amakusa | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Aral | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Baffin | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Barents | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Bothnia | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Harima | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Huron | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Indian | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Ladoga | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Mediterranean | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
| Scotia | Singapore | 100% |
| Investments | | |
| Pte Ltd | | |
+---------------+---------------+------------+
| Taranto | Singapore | 100% |
| Investments | | |
| Pte Ltd * | | |
+---------------+---------------+------------+
* in the process of being liquidated as at 31 December 2009
Investment in subsidiaries in the Company's financial statements is stated at
fair value, being the respective net asset value of the subsidiary companies
(which includes the underlying investments at market value).
3. Significant Accounting Policies
The principal accounting policies adopted in the preparation of the consolidated
financial statements are set out below.
The annual report of the Company for the year ended 31 December 2009 comprises
the Company and its subsidiaries (together referred to as the "Group").
3.1 Basis of presentation
These financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS"). The financial statements have been
prepared on a non-going concern basis, with assets stated at realisable amounts
and provisions for the estimated liquidation costs.
The preparation of financial statements in conformity with IFRS requires the use
of certain critical accounting estimates. It also requires the Board of
Directors to exercise its judgement in the process of applying the Company's
accounting policies. The provision for estimated liquidation costs is a critical
accounting estimate. For further information see note 11.
3.2 Financial assets
The Group originally designated its investments in J-REITs as available-for-sale
financial assets. They were included in non-current assets. Due to the Company
now operating as a realisation company, financial assets are designated as held
for sale within current assets.
The Group invests in J-REITs which are stated at fair value, which is based on
quoted market prices. The quoted market price used for financial assets held by
the Group is the current bid price ruling at the period end. Fair value
movements were recognised in equity, with gains and losses recycled to profit or
loss on disposal. Fair value movements are now recognised in the income
statement.
Purchases and sales of investments are recognised on trade date - the date on
which the Group commits to purchase or sell the asset. Investments are initially
recorded at fair value.
3.3 Foreign currency translation
Japanese Yen is the currency of the primary economic environment in which the
entity operates ("The functional currency"). This is also the functional
currency of the subsidiaries.
Pounds Sterling is the currency in which the financial statements are presented
("The presentational currency").
Monetary assets and liabilities denominated in foreign currencies as at the date
of these financial statements are translated to Japanese Yen at exchange rates
prevailing on that date. Expenses are translated into Japanese Yen based on
exchange rates on the date of the transaction. All resulting exchange
differences are recognised in the income statement.
The accounts are presented in Pounds Sterling by translating the assets and
liabilities at the exchange rate prevailing on the balance sheet date. Items of
revenue and expense are translated at exchange rates on the date of the relevant
transactions. Components of equity are translated at the date of the relevant
transaction and not retranslated. All resulting exchange differences are
recognised in equity.
3.4Interest income and dividend income
Interest income is recognised on a
time-proportionate basis using the effective interest rate method.
Dividend income is recognised when the right to receive payment is
established.
3.5 Basis of consolidation
Subsidiaries
Subsidiaries are those enterprises controlled by the Company. Control exists
where the Company has the power, directly or indirectly, to govern the financial
and operating policies of an enterprise so as to obtain benefits from its
activities. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control effectively
commences until the date that control effectively ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains arising from
intra-group transactions, are eliminated in preparing the consolidated financial
statements.
3.6 Investment in subsidiaries
Investment in subsidiaries is stated at fair value, with fair value adjustments
recognised in equity.
3.7Segment reporting
The chief operating decision-maker has been identified as the Manager. The
Manager reviews the group's internal reporting in order to assess performance
and allocate resources. It has been determined that there is only one operating
segment based on these reports. The key information reviewed in order to assess
the performance of the segment is the dividends received, investment value and
gearing levels. All of this information is included in the primary statements on
pages 11 to 16.
3.8 Adoption of new and revised International Financial Reporting
Standards (IFRSs)
Standards affecting amounts reported in the current period (and/or prior
periods)
The following revised Standards have been adopted in the current period and have
affected only the presentation and disclosure of the amounts reported in these
financial statements.
+-------------------------------------------------------+-------------+
| Standard | Effective |
| | date |
| | (accounting |
| | periods |
| | commencing |
| | after) |
+-------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------+-------------+
| IAS 1 (as revised in 2007) Presentation of financial | 1 January |
| statements | 2009 |
+-------------------------------------------------------+-------------+
| IFRS 7 Financial instruments: disclosures (Amendment: | 1 January |
| Improving disclosures about financial instruments | 2009 |
+-------------------------------------------------------+-------------+
IAS 1 Presentation of financial statements
A revised version of IAS 1 was issued in September 2007. The revised standard
prohibits the presentation of items of income and expenses (that is, 'non-owner
changes in equity') in the statement of changes in equity, requiring 'non-owner
changes in equity' to be presented separately from owner changes in equity in a
statement of comprehensive income. As a result, the Group presents all owner
changes in equity in the consolidated statement of changes in equity; all
non-owner changes in equity are presented in the consolidated statement of
comprehensive income. The adoption of this revised standard impacts only
presentation aspects; therefore, it has no impact on profit or earnings per
share.
IFRS 7 Financial instruments
The IASB published amendments to IFRS 7 in March 2009. The amendments to IFRS 7
expand the disclosures required in respect of fair value measurements and
liquidity risk. The adoption of the amendment does not have any impact on profit
or earnings per share.
Standards adopted with no effect on financial statements
The following revised Standards and Interpretations have also been adopted in
these financial statements. Their adoption has not had any significant impact on
the amounts reported in these financial statements but may affect the accounting
for future transactions or arrangements.
+-------------------------------------------------------+-------------+
| Standard | Effective |
| | date |
| | (accounting |
| | periods |
| | commencing |
| | after) |
+-------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------+-------------+
| IFRS 8 Operating segments | 1 January |
| | 2009 |
+-------------------------------------------------------+-------------+
IFRS 8 Operating segments
IFRS 8 replaces IAS 14, 'Segment reporting', and is effective for annual periods
beginning on or after 1 January 2009. The new standard requires a 'management
approach', under which segment information is presented on a similar basis to
that used for internal reporting purposes. Management considers the Group to
comprise a single operating segment, and as such, is not affected by the
amendment.
Standards and interpretations becoming effective in 2009 but not relevant to the
Group
+-------------------------------------------------------+-------------+
| Standard | Effective |
| | date |
| | (accounting |
| | periods |
| | commencing |
| | after) |
+-------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------+-------------+
| IFRS 2 Share-based payment - vesting conditions and | 1 January |
| cancellations | 2009 |
+-------------------------------------------------------+-------------+
| IAS 20 Accounting for government grants and | 1 January |
| disclosure of government assistance | 2009 |
+-------------------------------------------------------+-------------+
| IAS 23 Borrowing costs | 1 January |
| | 2009 |
+-------------------------------------------------------+-------------+
| IAS 28 Investments in associates | 1 January |
| | 2009 |
+-------------------------------------------------------+-------------+
| IAS 31 Interests in joint ventures (Revised May | 1 January |
| 2008) | 2009 |
+-------------------------------------------------------+-------------+
| IAS 32 Financial instruments: Presentation - | 1 January |
| amendments relating to puttable instruments and | 2009 |
| obligations arising on liquidation | |
+-------------------------------------------------------+-------------+
| IAS 38 Intangible assets | 1 January |
| | 2009 |
+-------------------------------------------------------+-------------+
| IAS 39 Financial instruments: Recognition and | 1 January |
| measurement (revised May 2008) | 2009 |
+-------------------------------------------------------+-------------+
| IAS 39 Financial instruments: Recognition and | 1 July |
| measurement - amendments for embedded derivatives | 2009 |
| when reclassifying financial instruments | |
+-------------------------------------------------------+-------------+
| IAS 40 Investment property | 1 January |
| | 2009 |
+-------------------------------------------------------+-------------+
| | |
| IFRIC Interpretation | |
+-------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------+-------------+
| IFRIC 13 Customer loyalty programmes | 1 July |
| | 2008 |
+-------------------------------------------------------+-------------+
| IFRIC 15 Agreement for construction of real estate | 1 January |
| | 2009 |
+-------------------------------------------------------+-------------+
| IFRIC 16 Hedges of a net investment in a foreign | 1 October |
| operation | 2008 |
+-------------------------------------------------------+-------------+
Standards and interpretations in issue not yet adopted
A number of new standards, amendments to standards and interpretations are not
yet effective for the year ended 31 December 2009, and have not been applied in
preparing these consolidated financial statements:
+-------------------------------------------------------+-------------+
| New/revised International Accounting Standards / | Effective |
| International Financial Reporting Standards | date |
| (IAS/IFRS) | (accounting |
| | periods |
| | commencing |
| | after) |
+-------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------+-------------+
| IAS 1 Presentation of financial statements (Revised | 1 January |
| 2009) | 2010 |
+-------------------------------------------------------+-------------+
| IAS 7 Statement of cash flows (Revised 2009) | 1 January |
| | 2010 |
+-------------------------------------------------------+-------------+
| IAS 17 Leases (Revised 2009) | 1 January |
| | 2010 |
+-------------------------------------------------------+-------------+
| IAS 24 Related party disclosures - revised | 1 January |
| definition of related parties | 2011 |
+-------------------------------------------------------+-------------+
| IAS 27 Consolidated and separate financial statements | 1 July |
| - amendment relating to cost of an investment on | 2009 |
| first-time adoption (Revised 2008) | |
+-------------------------------------------------------+-------------+
| IAS 28 Investments in associates - consequential | 1 July |
| amendments resulting from amendments to IFRS 3 (2008) | 2009 |
+-------------------------------------------------------+-------------+
| IAS 31 Interests in joint ventures - consequential | 1 July |
| amendments resulting from amendments to IFRS 3 (2008) | 2009 |
+-------------------------------------------------------+-------------+
| IAS 32 Financial instruments: Presentation - | 1 |
| amendments relating to classification of rights | February |
| issues | 2010 |
+-------------------------------------------------------+-------------+
| IAS 36 Impairment of assets (Revised 2009) | 1 January |
| | 2010 |
+-------------------------------------------------------+-------------+
| IAS 38 Intangible assets | 1 July |
| | 2009 |
+-------------------------------------------------------+-------------+
| IAS 39 Financial instruments: Recognition and | 30 June |
| measurement - amendments for embedded derivatives | 2009 |
| when reclassifying financial instruments | |
+-------------------------------------------------------+-------------+
| IAS 39 Financial instruments: Recognition and | 1 July |
| measurement - amendments for eligible hedged items | 2009 |
+-------------------------------------------------------+-------------+
| IAS 39 Financial instruments: Recognition and | 1 January |
| measurement (Revised 2009) | 2010 |
+-------------------------------------------------------+-------------+
| IFRS 1 First-time adoption of International Financial | 1 July |
| Reporting Standards (Revised 2008) | 2009 |
+-------------------------------------------------------+-------------+
| IFRS 1 First-time adoption of International Financial | 1 January |
| Reporting Standards - additional exemptions for | 2010 |
| first-time adopters | |
+-------------------------------------------------------+-------------+
| IFRS 2 Share-based payment - amendments relating to | 1 January |
| group cash-settled share-based payment transactions | 2010 |
+-------------------------------------------------------+-------------+
| IFRS 3 Business combinations - comprehensive revision | 1 July |
| on applying the acquisition method | 2009 |
+-------------------------------------------------------+-------------+
| IFRS 5 Non-current assets held for sale and | 1 July |
| discontinued operations (revised 2008) | 2009 |
+-------------------------------------------------------+-------------+
| IFRS 5 Non-current assets held for sale and | 1 January |
| discontinued operations (revised 2009) | 2010 |
+-------------------------------------------------------+-------------+
| IFRS 7 Disclosures for first-time adopters (amendment | 1 July |
| to IFRS 1) | 2010 |
+-------------------------------------------------------+-------------+
| IFRS 8 Operating segments (revised 2009) | 1 January |
| | 2010 |
+-------------------------------------------------------+-------------+
| IFRS 9 Financial instruments | 1 January |
| | 2013 |
+-------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------+-------------+
| IFRIC Interpretation | |
+-------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------+-------------+
| IFRIC 9 Reassessment of embedded derivatives | 1 July |
| | 2009 |
+-------------------------------------------------------+-------------+
| IFRIC 17 Distributions of non-cash assets to owners | 1 July |
| | 2009 |
+-------------------------------------------------------+-------------+
| IFRIC 18 Transfers of assets from customers | 1 July |
| | 2009 |
+-------------------------------------------------------+-------------+
| IFRIC 19 Extinguishing financial liabilities with | 1 July |
| equity instruments | 2010 |
+-------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------+-------------+
4 Net Asset Value per Share
The net asset value per share as at 31 December 2009 is 6.78p per share based on
131,000,000 ordinary shares in issue as at that date (31 December 2008: 9.41p
per share).
5 Financial assets
+-------------+--------+----------+
| Group | | 31 |
| | | December |
| | | 2009 |
+-------------+--------+----------+
| Security | Number | GBP'000 |
| name | | |
+-------------+--------+----------+
| | | |
+-------------+--------+----------+
| Blife | 116 | 323 |
| Investment | | |
| Corporation | | |
+-------------+--------+----------+
| Crescendo | 1,018 | 815 |
| Investment | | |
| Corporation | | |
+-------------+--------+----------+
| Japan | 2,792 | 2,030 |
| Single | | |
| Residence | | |
| REIT | | |
+-------------+--------+----------+
| LaSalle | 207 | 167 |
| Japan | | |
| REIT | | |
| Inc | | |
+-------------+--------+----------+
| Nippon | 519 | 479 |
| Hotel | | |
| Fund | | |
| Investment | | |
| Corporation | | |
+-------------+--------+----------+
| Prospect | 1,731 | 896 |
| Residential | | |
| Investment | | |
| Corporation | | |
+-------------+--------+----------+
| TGR | 2,688 | 1,674 |
| Investment | | |
| Inc* | | |
+-------------+--------+----------+
| | | 6,384 |
+-------------+--------+----------+
* This investment was renamed Invincible Investment Corporation on 1 February
2010.
At 31 December 2009 the cost of the held-for-sale financial assets was
GBP28,217,356. This includes an adjustment for the unrealised loss of
GBP24,145,875 on the portfolio of holdings which were purchased by the Company
from its subsidiaries last year and the consolidation of the assets into one
subsidiary for realisation purposes.
Company
+-------------+--------+----------+
| | | 31 |
| | | December |
| | | 2009 |
+-------------+--------+----------+
| Security | Number | GBP'000 |
| name | | |
+-------------+--------+----------+
| | | |
+-------------+--------+----------+
| Blife | 116 | 323 |
| Investment | | |
| Corporation | | |
+-------------+--------+----------+
| Crescendo | 1,018 | 815 |
| Investment | | |
| Corporation | | |
+-------------+--------+----------+
| Japan | 2,792 | 2,030 |
| Single | | |
| Residence | | |
| REIT | | |
+-------------+--------+----------+
| LaSalle | 207 | 167 |
| Japan | | |
| REIT | | |
| Inc | | |
+-------------+--------+----------+
| Nippon | 519 | 479 |
| Hotel | | |
| Fund | | |
| Investment | | |
| Corporation | | |
+-------------+--------+----------+
| TGR | 2,688 | 1,674 |
| Investment | | |
| Inc | | |
+-------------+--------+----------+
| | | 5,488 |
+-------------+--------+----------+
At 31 December 2009 the cost of the held-for-sale financial assets was
GBP3,502,260 (31 December 2008: GBP5,481,406).
6 Interest-bearing loans and borrowings
The subsidiaries each had a facility with Citigroup to allow them to borrow
Japanese Yen up to the value of the J-REITs held by them. The effective interest
rate on this facility was base rate plus 0.25%. The bank borrowings were
repayable on demand. The loan facility was cancelled on 1 December 2008. For
more information about the Group's exposure to interest rate and currency risk
see note 15.
7 Related Party Transactions
Parties are considered to be related if one party has the ability to control the
other party or to exercise significant influence over the other party in making
financial or operational decisions.
The Manager, Epicure Managers Japan Limited, is a related party by virtue of its
ability to make operational decisions for the Company and through common
directors. The director of the Manager is Silex Management Limited, of which L
O'Brien is a director. Silex Management Limited does not have any beneficial
interest in Epicure Managers Japan Limited. Silex Management Limited provides
fiduciary services to the Singaporean subsidiaries of the Company.
The Investment Adviser, Prospect Asset Management Inc, is a related party by
virtue of its ability to make operational decisions for the Company. The
Investment Adviser is entitled to receive 50% of the management fee and 75% of
the performance fee receivable by the Manager (see note 8.2).
Richard Bolton is managing director and a shareholder of Galileo Fund Services
Limited (the Administrator).
David von Simson holds 100,000 Ordinary shares in the Company.
Save as disclosed above, none of the Directors had any interest during the year
in any material contract for the provision of services which was significant to
the business of the Company.
Responsibility and administration fees paid to Silex Management Limited during
the year ended 31 December 2009 amounted to GBP1,266 (31 December 2008:
GBP83,050).
8 Charges and Fees
8.1 Nominated Adviser
As nominated adviser to the Company for the purposes of the AIM Rules, the
Nominated Adviser is entitled to receive an annual fee of GBP60,000 payable
twice yearly in advance.
Advisory fees paid to the Nominated Adviser for the year ended 31 December 2009
amounted to GBP111,927 (31 December 2008: GBP70,698).
8.2 Manager's fees
In accordance with the terms of the placing, the Manager was paid a project fee
of 3% of the gross proceeds of the initial Placing and 2.5% of the secondary
Placing and was responsible for paying the Placing Agent and the Distribution
Adviser for their services. Fees paid for the year ended 31 December 2008
amounted to GBP332,325 and have been charged to equity as a share issue expense.
Annual fees
The Manager is entitled to an annual management fee of 1% of the Gross Asset
Value of the Company payable quarterly in arrears. Annual management fees for
the year ended 31 December 2009 amounted to GBP98,620 (31 December 2008:
GBP1,011,638).
Performance fees
The Manager is entitled to a performance fee in certain circumstances. This fee
is payable in reference to the increase in Adjusted NAV per Ordinary Share
(using the NAV per Ordinary Share on Admission as the initial reference point)
over the course of a performance period. The first performance period began on
Admission and ended on 31 December 2007; each subsequent performance period is a
period of one financial year. The Manager will become entitled to a performance
fee in respect of a performance period only if two tests are met.
First a performance test must be met. The performance test is calculated as to
the amount by which the Adjusted NAV per Ordinary Share at the end of the
relevant period exceeds an amount equal to the Placing Price, increased at a
rate of 8 per cent. per annum up to the end of the relevant performance period.
The second test to be met (a high watermark test) is that the Adjusted NAV per
Ordinary Share at the end of the relevant period is higher than the highest
previously recorded Adjusted NAV per Ordinary Share at the end of a performance
period in relation to which a performance fee was last earned (or if no
performance fee has been earned since Admission, must be higher than the Placing
Price).
If the performance test is met, and the high watermark exceeded, the performance
fee will be an amount equal to 20 per cent. of the increase in the Adjusted NAV
per Ordinary Share multiplied by the time weighted average of the Ordinary
Shares in issue, in each case since the performance period in respect of which a
performance fee was last earned (or since Admission if no performance fee has
yet been earned).
Performance fees accrued but not payable during the year ended 31 December 2009
amounted to GBPnil (31 December 2008: GBPnil).
8.3 Custodian fees
The Custodian is entitled to receive a fixed monthly fee of GBP1,300.
Custodian fees for the year ended 31 December 2009 amounted to GBP25,456 (31
December 2008: GBP16,772).
8.4 Administrator and Registrar fees
The Administrator is entitled to receive a fee of 15 basis points per annum of
the net asset value of the Company between GBP0 and GBP50 million, 10 basis
points of the net asset value of the Company between GBP50 and GBP100 million
and 7.5 basis points of the net asset value of the Company in excess of GBP100
million, subject to a minimum monthly fee of GBP7,500, payable quarterly in
arrears.
The Administrator shall assist in the preparation of the financial statements of
the Company for which it shall receive a fee of GBP1,500 per set.
The Administrator shall provide general secretarial services to the Company for
which it shall receive a minimum annual fee of GBP4,000.
The Administrator may utilise the services of a CREST accredited registrar for
the purposes of settling share transactions through CREST. The cost of this
service will be borne by the Company. It is anticipated that the cost will be
in the region of GBP6,000 per annum subject to the number of CREST settled
transactions undertaken.
Administration fees paid for the year ended 31 December 2009 amounted to
GBP151,637 (31 December 2008: GBP149,577), secretarial fees were GBP4,698 (31
December 2008: GBP4,558), financial statement preparation fees were GBP3,214 (31
December 2008: GBP3,025) and Crest fees were GBP5,047 (31 December 2008:
GBP4,537).
There are also fees payable to Asiaciti Management Pte Ltd and Silex Management
Limited of GBP106,300 and GBP1,266 respectively (31 December 2008: GBP57,448 and
GBP83,050 respectively).
8.5 Other operating expenses
The costs associated with maintaining the Company's subsidiaries, to include the
costs of incorporation and third party service providers are chargeable to each
subsidiary.
9 Cash and Cash Equivalents
+-------------+----------+----------+
| Group | 31 | 31 |
| | December | December |
| | 2009 | 2008 |
+-------------+----------+----------+
| | GBP'000 | GBP'000 |
+-------------+----------+----------+
| | | |
+-------------+----------+----------+
| Bank | 3,241 | 1,635 |
| balances | | |
+-------------+----------+----------+
| Cash | 3,241 | 1,635 |
| and | | |
| cash | | |
| equivalents | | |
+-------------+----------+----------+
+-------------+----------+----------+
| Company | 31 | 31 |
| | December | December |
| | 2009 | 2008 |
+-------------+----------+----------+
| | GBP'000 | GBP'000 |
+-------------+----------+----------+
| | | |
+-------------+----------+----------+
| Bank | 2,380 | 1,319 |
| balances | | |
+-------------+----------+----------+
| Cash | 2,380 | 1,319 |
| and | | |
| cash | | |
| equivalents | | |
+-------------+----------+----------+
10 Share Capital
Share capital
+----------+-------------+---------+
| Ordinary | Number | GBP'000 |
| Shares | | |
| of 1p | | |
| each | | |
+----------+-------------+---------+
| | | |
+----------+-------------+---------+
| In | 131,000,000 | 1,310 |
| issue | | |
| at the | | |
| start | | |
| of the | | |
| year | | |
+----------+-------------+---------+
| Issued | - | - |
| during | | |
| the | | |
| year | | |
+----------+-------------+---------+
| In | 131,000,000 | 1,310 |
| issue | | |
| at 31 | | |
| December | | |
| 2009 | | |
+----------+-------------+---------+
+----------+-------------+---------+
| Ordinary | Number | GBP'000 |
| Shares | | |
| of 1p | | |
| each | | |
+----------+-------------+---------+
| | | |
+----------+-------------+---------+
| In | 101,000,000 | 1,010 |
| issue | | |
| at the | | |
| start | | |
| of the | | |
| year | | |
+----------+-------------+---------+
| Issued | 30,000,000 | 300 |
| during | | |
| the | | |
| year | | |
+----------+-------------+---------+
| In | 131,000,000 | 1,310 |
| issue | | |
| at 31 | | |
| December | | |
| 2008 | | |
+----------+-------------+---------+
The authorised share capital of the Company is GBP20 million divided into 2
billion Ordinary Shares of GBP0.01 each.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All shares rank equally with regards to the Company's assets. Dividends
amounting to GBP3.93 million were declared and paid during the year.
Warrants
20.2 million warrants were issued pursuant to the initial Placing (one warrant
for every five ordinary shares). The warrants entitled the holder to subscribe
for one Ordinary Share of 1p each in the Company in cash in the period from the
date of Admission up to 1 March 2010, at the price of 110p per Share payable in
full on subscription.
Capital Management
Further to the statement made by the Company on 24 July 2009, the Company is now
operating as a realisation company and the net asset value includes an estimate
of liquidation costs and a provision for fees and expenses expected to be
incurred in realising the assets.
The investment portfolio is being realised in a manner designed to preserve as
much value as possible for Shareholders. In view of the illiquidity of certain
of the Company's holdings the timing of the realisation process and therefore
distributions to shareholders under the capital return scheme is uncertain. The
Company is working with its advisers to ensure that the subsidiaries are
liquidated in an effective manner.
Neither the Company nor any of its subsidiaries are subject to externally
imposed capital requirements.
11 Provisions
The Company is now operating as a realisation company. The calculation of the
published net asset value from 23 July 2009 onwards includes an estimate of
liquidation costs and a provision for fees and expenses expected to be incurred
in realising the assets. As at 31 December 2009 these provisions amounted to
GBP726,916. (This consists of provisions of $195,000 and GBP604,475.)
12 Earnings/(loss) per Share
Basic and Fully Diluted
Basic and fully diluted earnings/(loss) per share is calculated by dividing the
profit/(loss) attributable to equity holders of the Group by the weighted
average number of ordinary shares in issue during the year.
+-----------------+----------+-----------+
| | 31 | 31 |
| | December | December |
| | 2009 | 2008 |
+-----------------+----------+-----------+
| | | |
+-----------------+----------+-----------+
| | | |
+-----------------+----------+-----------+
| Gain/(loss) | 1,791 | (114,646) |
| attributable | | |
| to equity | | |
| holders of | | |
| the Group | | |
| (GBP'000) | | |
+-----------------+----------+-----------+
| Weighted | 131,000 | 120,426 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| in issue | | |
| (thousands) | | |
+-----------------+----------+-----------+
| Basic | 1.37 | (95.20) |
| earnings/(loss) | | |
| per share | | |
| (pence per | | |
| share) | | |
+-----------------+----------+-----------+
There is no difference between the basic and fully diluted earnings/(loss) per
share for the year.
13 Directors' Remuneration
The maximum amount of remuneration payable to the Directors permitted under the
Articles of Association is GBP200,000 per annum. The Directors are each entitled
to receive reimbursement of any expenses incurred in relation to their
appointment. Total fees and expenses paid to the Directors for the year ended 31
December 2009 amounted to fees of GBP122,870 and insurance expenses of GBP24,366
(31 December 2008: GBP142,380 and GBP22,890 respectively).
14 Taxation
Isle of Man taxation
The Company is resident for taxation purposes in the Isle of Man by virtue of
being incorporated in the Isle of Man and is technically subject to taxation on
its income but the rate of tax is zero.
Japanese taxation
It is the intention of the directors that the affairs of the Company and its
subsidiaries will be conducted so that they are not considered to be resident in
Japan nor have a taxable presence in Japan.
Distributions paid by listed J-REITs to the subsidiaries are subject to 7 per
cent. withholding tax. Withholding tax for the year ended 31 December 2009
amounted to GBP79,250 (year ended 31 December 2008: GBP416,423) and has been
included in income tax expense in the income statement.
Capital gains on disposal of listed J-REIT holdings are not taxable in Japan
where the total holding is not more than 5 per cent. of the J-REITs capital.
Where the holding is greater than 5 per cent., but the subsidiary has not held a
25 per cent. or greater interest, then protection under the Japan:Singapore tax
treaty may exempt the gain on disposal of a listed J-REIT from Japanese tax. For
gains on disposals where the subsidiary has held 25 per cent. or greater
interest, or otherwise where treaty protection is not available, the subsidiary
will be liable to Japanese tax on the gain (the current rate applying is 30 per
cent.). No provision has been made for capital gains tax on any realised gains
made.
Singapore taxation
It is the intention of the Directors that the affairs of the subsidiaries will
be conducted in Singapore so that they are considered to be resident in
Singapore.
Dividends received by the subsidiaries from the J-REIT investments should be
exempt from tax in Singapore due to the benefit of double tax relief. Provided
that any profits derived by the subsidiaries from the disposal of J-REITs are
considered to be capital gains, and not trading income, the profits will not be
subject to tax in Singapore. No provision has been made for Singapore tax.
15 Financial instruments
The Group's activities expose it to a variety of financial risks: market price
risk, foreign exchange risk, credit risk, liquidity risk and cash flow interest
rate risk.
Market price risk
The Group's strategy on the management of investment risk is driven by the
Group's investment objective. The main objective of the Group is to preserve as
much value as possible for Shareholders during the realisation process of the
Company's investment portfolio. The Manager and the Investment Advisor review
the position on a day to day basis and the Directors review the position at the
Board meetings.
The Group's securities are susceptible to market price risk arising from
uncertainties about future prices of these instruments caused by market factors
specific to the instrument or its issuer or factors affecting all instruments
traded in the market. The market in J-REITs is relatively illiquid. Therefore,
market price movements tend to be exaggerated.
At 31 December 2009, if the market value of the J-REIT portfolio had
increased/decreased by 10% with all other variables held constant, this would
have increased/decreased net assets attributable to shareholders by
approximately GBP638,390 (31 December 2008: 20% GBP2,110,806).
Foreign exchange risk
The Group's operations are conducted in jurisdictions which generate revenue,
expenses, assets and liabilities in currencies other than Japanese Yen. As a
result, the Group is subject to the effects of exchange rate fluctuations with
respect to these currencies. The currency giving rise to this risk is primarily
Pounds Sterling.
The Group may invest in financial instruments and enter into transactions
denominated in currencies other than its functional currency of Japanese Yen.
Consequently, the Group is exposed to risks that the exchange rate of its
currency relative to other foreign currencies may change in a manner that has an
adverse effect on the value of that portion of the Group's assets or liabilities
denominated in currencies other than sterling.
The Group's policy is not to enter into any currency hedging transactions.
At the reporting date the Group had the following exposure:
+------------+-----------+-----------+
| Currency | 31 | 31 |
| | December | December |
| | 2009 | 2008 |
+------------+-----------+-----------+
| | % | % |
+------------+-----------+-----------+
| | | |
+------------+-----------+-----------+
| Pound | 18.16 | 3.57 |
| Sterling | | |
+------------+-----------+-----------+
| Japanese | 82.14 | 95.18 |
| Yen | | |
+------------+-----------+-----------+
| US Dollars | (1.41) | 0.02 |
+------------+-----------+-----------+
| Singapore | 1.11 | 1.23 |
| Dollars | | |
+------------+-----------+-----------+
The following table sets out the Group's total exposure to foreign currency risk
and the net exposure to foreign currencies of the monetary assets and
liabilities:
+-----------+----------+-------------+----------+
| | Monetary | Monetary | Net |
| | Assets | Liabilities | Exposure |
| | GBP'000 | GBP'000 | GBP'000 |
+-----------+----------+-------------+----------+
| 31 | | | |
| December | | | |
| 2009 | | | |
+-----------+----------+-------------+----------+
| | | | |
+-----------+----------+-------------+----------+
| Pound | 2,299 | (685) | 1,614 |
| Sterling | | | |
+-----------+----------+-------------+----------+
| Japanese | 7,315 | (15) | 7,300 |
| Yen | | | |
+-----------+----------+-------------+----------+
| US | - | (126) | (126) |
| Dollars | | | |
+-----------+----------+-------------+----------+
| Singapore | 157 | (58) | 99 |
| Dollars | | | |
+-----------+----------+-------------+----------+
| | 9,771 | (884) | 8,887 |
+-----------+----------+-------------+----------+
+-----------+----------+-------------+----------+
| | Monetary | Monetary | Net |
| | Assets | Liabilities | Exposure |
| | GBP'000 | GBP'000 | GBP'000 |
+-----------+----------+-------------+----------+
| 31 | | | |
| December | | | |
| 2008 | | | |
+-----------+----------+-------------+----------+
| | | | |
+-----------+----------+-------------+----------+
| Pound | 824 | (384) | 440 |
| Sterling | | | |
+-----------+----------+-------------+----------+
| Japanese | 11,775 | (40) | 11,735 |
| Yen | | | |
+-----------+----------+-------------+----------+
| US | 2 | - | 2 |
| Dollars | | | |
+-----------+----------+-------------+----------+
| Singapore | 196 | (44) | 152 |
| Dollars | | | |
+-----------+----------+-------------+----------+
| | 12,797 | (468) | 12,329 |
+-----------+----------+-------------+----------+
At 31 December 2009 and 2008, had the Pound Sterling strengthened by 5% in
relation to all currencies, with all other variables held constant, net assets
attributable to equity holders of the Company and the change in net assets
attributable to equity holders per the income statement would have decreased by
the amounts shown below.
+------------+-----------+-----------+
| | 31 | 31 |
| | December | December |
| | 2009 | 2008 |
+------------+-----------+-----------+
| | GBP'000 | GBP'000 |
+------------+-----------+-----------+
| | | |
+------------+-----------+-----------+
| Japanese | (348) | (559) |
| Yen | | |
+------------+-----------+-----------+
| US Dollars | 6 | - |
+------------+-----------+-----------+
| Singapore | (5) | (7) |
| Dollars | | |
+------------+-----------+-----------+
| Effect on | (347) | (566) |
| net assets | | |
+------------+-----------+-----------+
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail
to discharge an obligation or commitment that it has entered into with the
Group.
The carrying amounts of financial assets best represent the maximum credit risk
exposure at the balance sheet date. This relates also to financial assets
carried at amortised cost, as they have a short term maturity.
At the reporting date, the Group's financial assets exposed to credit risk
amounted to the following:
+--------------------+----------+----------+
| | 31 | 31 |
| | December | December |
| | 2009 | 2008 |
+--------------------+----------+----------+
| | GBP'000 | GBP'000 |
+--------------------+----------+----------+
| Available-for-sale | - | 10,554 |
| financial assets | | |
+--------------------+----------+----------+
| Financial | 6,384 | - |
| assets | | |
| held for | | |
| sale | | |
+--------------------+----------+----------+
| Cash | 3,241 | 1,635 |
| at | | |
| bank | | |
+--------------------+----------+----------+
| Other | 146 | 608 |
| receivables | | |
+--------------------+----------+----------+
| | 9,771 | 12,797 |
+--------------------+----------+----------+
The maximum exposure to credit risk is represented by the carrying amount of
each financial asset in the balance sheet. The Directors do not expect any
counterparty to fail to meet its obligations.
Liquidity risk
The Group manages its liquidity risk by maintaining sufficient cash, the
availability of funding through an adequate amount of credit facilities and the
ability to close out market positions.
The Group's liquidity position is monitored by the Manager and the Board of
Directors.
Residual undiscounted contractual maturities of financial liabilities:
+----------------------+---------+---------+---------+---------+---------+----------+
| 31 December 2009 | Less | 1-3 | 3 | 1-5 | Over | No |
| | than | months | months | years | 5 | stated |
| | 1 | | to 1 | | years | maturity |
| | month | | year | | | |
+----------------------+---------+---------+---------+---------+---------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------+---------+---------+---------+---------+---------+----------+
| Financial | | | | | | |
| liabilities | | | | | | |
+----------------------+---------+---------+---------+---------+---------+----------+
| Other creditors and | 157 | - | - | - | - | - |
| accrued expenses | | | | | | |
+----------------------+---------+---------+---------+---------+---------+----------+
| Provisions | 154 | 82 | 254 | 237 | - | - |
+----------------------+---------+---------+---------+---------+---------+----------+
| | 311 | 82 | 254 | 237 | - | - |
+----------------------+---------+---------+---------+---------+---------+----------+
+----------------------+---------+---------+---------+---------+---------+----------+
| | Less | 1-3 | 3 | 1-5 | Over | No |
| 31 December 2008 | than | months | months | years | 5 | stated |
| | 1 | | to 1 | | years | maturity |
| | month | | year | | | |
+----------------------+---------+---------+---------+---------+---------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------+---------+---------+---------+---------+---------+----------+
| Financial | | | | | | |
| liabilities | | | | | | |
+----------------------+---------+---------+---------+---------+---------+----------+
| Other creditors and | 468 | - | - | - | - | - |
| accrued expenses | | | | | | |
+----------------------+---------+---------+---------+---------+---------+----------+
| | 468 | - | - | - | - | - |
+----------------------+---------+---------+---------+---------+---------+----------+
Interest rate risk
The majority of the Group's financial assets are non-interest-bearing. Cash held
by the Group is invested at short-term market interest rates. Bank borrowings
are subject to interest rates linked to Japan's base rate. As a result, the
Group is not subject to fair value interest rate risk due to fluctuations in the
prevailing levels of market interest rates. However it is subject to cash flow
risk arising from changes in market interest rates.
The table below summarises the Group's exposure to interest rate risks. It
includes the Groups' financial assets and liabilities at the earlier of
contractual re-pricing or maturity date, measured by the carrying values of
assets and liabilities:
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| 31 | Less | 1-3 | 3 | 1-5 | Over 5 | Non-interest | Total |
| December | than | months | months | years | years | bearing | |
| 2009 | 1month | | to 1 | | | | |
| | | | year | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial | | | | | | | |
| Assets | | | | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial | - | - | - | - | - | 6,384 | 6,384 |
| assets | | | | | | | |
| held for | | | | | | | |
| sale | | | | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| Other | - | - | - | - | - | 146 | 146 |
| receivables | | | | | | | |
| and | | | | | | | |
| prepayments | | | | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| Cash | 3,241 | - | - | - | - | - | 3,241 |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| Total | 3,241 | - | - | - | - | 6,530 | 9,771 |
| financial | | | | | | | |
| assets | | | | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| | | | | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial | | | | | | | |
| Liabilities | | | | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| Other | - | - | - | - | - | 157 | 157 |
| creditors | | | | | | | |
| and | | | | | | | |
| accrued | | | | | | | |
| expenses | | | | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| Provisions | - | - | - | - | - | 727 | 727 |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| Total | | | | | | 884 | 884 |
| financial | | | | | | | |
| liabilities | | | | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| | | | | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
| Total | 3,241 | - | - | - | - | | |
| interest | | | | | | | |
| rate | | | | | | | |
| sensitivity | | | | | | | |
| gap | | | | | | | |
+-------------+---------+---------+---------+---------+---------+--------------+---------+
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| 31 | Less | 1-3 | 3 | 1-5 | Over 5 | Non-interest | Total |
| December | than | months | months | years | years | bearing | |
| 2008 | 1month | | to 1 | | | | |
| | | | year | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial | | | | | | | |
| Assets | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Available-for-sale | - | - | - | - | - | 10,554 | 10,554 |
| financial assets | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Other | - | - | - | - | - | 608 | 608 |
| receivables | | | | | | | |
| and | | | | | | | |
| prepayments | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Cash | 1,635 | - | - | - | - | - | 1,635 |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Total | 1,635 | - | - | - | - | 11,162 | 12,797 |
| financial | | | | | | | |
| assets | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial | | | | | | | |
| Liabilities | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Interest | | | | | | | |
| bearing | | | | | | | |
| loans | | | | | | | |
| and | | | | | | | |
| borrowings | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Other | - | - | - | - | - | (468) | (468) |
| creditors | | | | | | | |
| and | | | | | | | |
| accrued | | | | | | | |
| expenses | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Total | - | - | - | - | - | (468) | (468) |
| financial | | | | | | | |
| liabilities | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Total | 1,635 | - | - | - | - | | |
| interest | | | | | | | |
| rate | | | | | | | |
| sensitivity | | | | | | | |
| gap | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
At 31 December 2009, should the interest rates have increased/decreased by 60%
with all other variables remaining constant, the increase/decrease in net assets
attributable to shareholders for the year would amount to approximately GBP6,834
(31 December 2008: GBP10,820).
16 Post Balance Sheet Events
On 4 February 2010 the Company announced a capital distribution of 3p per share
payable on 12 March 2010 to ordinary shareholders on the register of
shareholders at the close of business on 12 February 2010.
The 20.2 million warrants issued pursuant to the initial Placing (one warrant
for every five ordinary shares) expired on 1 March 2010.
On 26 April 2010, the final investments were sold for cash. The 31 December 2009
investment portfolio realised sales proceeds of Y908 million in 2010; Y30
million lower than the yen value as at 31 December 2009. This represents a
decrease in value of approximately GBP22,000.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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