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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Jap.Acc.Pf | LSE:JAP | London | Ordinary Share | GB0033788018 | PTG SHS 0.01P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 102.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMJAP
RNS Number : 7216O
Japanese Accelerated Perf Fund Ltd
11 March 2009
JAPANESE ACCELERATED PERFORMANCE FUND LIMITED
PRELIMINARY ANNOUNCEMENT OF ANNUAL RESULTS
The directors announce the statement of results for the year ended 31 December
2008 as follows:-
ABOUT THE COMPANY
Japanese Accelerated Performance Fund Limited is a Guernsey incorporated,
closed-ended investment company. With the exception of two Management Shares
issued for administrative reasons, the Company's issued share capital comprises
30,000,000 Participating Shares ("Shares") whose performance is designed to
depend upon the performance of the Nikkei 225 Index. The Company has an
unlimited life but the Shares will be redeemed on or around 22 December 2009
(the "Redemption Date").
Investment Objective and Policy
The investment objective of the Company is to provide shareholders, on the
Redemption Date, with five times the capital return of the Nikkei 225 Index, up
to a maximum amount (the "Final Capital Entitlement") of 200p per Share,
comprising a capital growth amount of up to a maximum of 100p per Share and a
capital amount of 100p per Share. The Final Capital Entitlement per Share is
designed to be determined by the performance of the Nikkei 225 Index over the
calculation period from 17 December 2003 to 17 December 2009.
The Shares are Sterling denominated and their value will not be affected by
changes in the Yen / Sterling exchange rate.
In accordance with the Company's investment policy, the net proceeds derived
from the issue of Shares have been invested in a portfolio of debt securities
and over-the-counter derivative instruments at prices based on the closing level
of the Nikkei 225 Index on 17 December 2003 of 10,092.64. Therefore, if the
Nikkei 225 Index rises 20% from its starting level of 10,092.64 on 17 December
2003, which equates to a level of 12,111.17 in December 2009, the Shares are
designed to return a capital growth of 100%.
There is full capital protection if the Nikkei 225 Index has fallen at the end
of the calculation period (December 2009) unless the Nikkei 225 Index has closed
more than 50% down during the calculation period at 5046.32 or lower. In this
case, if the Nikkei 225 Index is still below 10,092.64 at the end of the
calculation period, the net asset value of the Company will fall by an
equivalent percentage. If the level of the Nikkei 225 Index has returned above
its starting level of 10,092.64 at the close of business on 17 December 2009,
then the Company will still provide five times the return of the Nikkei 225
Index to a maximum of 100% of capital introduced.
The Company has invested substantially all of its net assets in medium term loan
notes ("Debt Securities") issued by financial institutions, selected by the
Manager, that, at the date of issue of the relevant Debt Security, had a rating
of at least A- or A3, as determined by Standard & Poor's and/or Moody's Investor
Services Inc. respectively and was either (a) a credit institution as defined in
Article 1 of the Council Directive of 20 March 2000 relating to the taking up
and pursuit of the business of credit institutions (No 2000/12/EC), other than
an institution referred to in Article 2(3) of that Directive, if authorised by
the competent authority of an EU Member State in relation to the credit
institution concerned; (b) a bank authorised in a Member State of the European
Economic Area; or (c) a bank authorised by a signatory state (other than an EU
Member State or a Member State of the European Economic Area) to the Basle
Capital Convergence Agreement of July 1988 (Switzerland, Canada, Japan and the
US).
To avoid over-dependency on any single issuer, the Company has acquired seven
Debt Securities. It is not anticipated that this portfolio of Debt Securities
will be varied prior to the maturity date of the Debt Securities other than in
exceptional circumstances.
Your attention is drawn to the Schedule of Investments, which shows the assets
held by the Company, and note 12 (b) to the financial statements, which refers
to the credit risk of the issuers of these assets as at the end of the reporting
period and as at the date of this announcement.
In the event of a default by an issuer of a Debt Security purchased by the
Company, the Company would rank as an unsecured creditor in respect of sums due
from the issuer of such Debt Security. In such event, the Company may (in
respect of that Debt Security) receive a lesser amount (if any) and at a
different time than the proceeds anticipated at the maturity of the relevant
Debt Security. Any losses would be borne by the Company and returns to
Shareholders would be significantly adversely affected.
The Company has also sold a put option to BNP Paribas with an effective date of
17 December 2009, the proceeds of which sale were used to finance the
acquisition of the Debt Securities. The performance of the put option is linked
to the performance of the Nikkei 225 Index (the "Index"). At an Index value of
10,092.64 or above at the close of business on 17 December 2009, or if the Index
has never closed below 5,046.32 during the calculation period from 17 December
2003 to 17 December 2009, the put option will be worth GBPNil at maturity. If
the Index has closed below 5,046.32 over the calculation period and the Index is
still below 10,092.64 on 17 December 2009, the put option will be worth a
percentage of the notional value, being GBP30,000,000, equivalent to the
percentage fall in the level of the Nikkei 225 Index over the calculation
period, such payment payable to BNP Paribas by the Company.
The Company has not invested and will not invest in other listed investment
companies (included listed investment trusts).
The Company may borrow up to ten percent of its net asset value for temporary
purposes. It is not, however, the current intention of the Directors to engage
in any borrowing. Without prejudice to the powers of the Company to invest in
transferable securities, the Company may not lend to, nor act as guarantor on
behalf of, third parties.
CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
At launch the net proceeds derived from the issue of Shares of the Company were
invested in a portfolio of debt securities and options at a price based on the
level of the Nikkei 225 Index at the close of business on 17 December 2003,
namely 10,092.64. On 31 December 2008, the Nikkei 225 Index closed at 8,859.56,
a fall of 12.2% since launch and 42.1% over the reporting period. Over the same
periods, the total market value of the Company's shares fell by 10.0% and 45.2%
respectively.
As the Company's investment portfolio is based upon the Nikkei 225 Index, it is
possible to show the potential capital entitlements available to shareholders
based on the level of the Nikkei 225 Index on 17 December 2009, being the last
date of the calculation period. These figures are for illustrative purposes only
and do not represent forecasts or take into account any unforeseen
circumstances.
As at 17 December 2009:
+----------------------+----------------------+---------------------+
| Final Nikkei 225 | Net Asset Value if |Net Asset Value if |
| Index | | |
+----------------------+----------------------+---------------------+
| Level | Nikkei 225 Index | Nikkei 225 Index |
| | never | has |
+----------------------+----------------------+---------------------+
| | closes below | closed below |
| | 5,046.32** | |
+----------------------+----------------------+---------------------+
| | | 5,046.32** |
+----------------------+----------------------+---------------------+
| 7,000 | 100 | 69 |
+----------------------+----------------------+---------------------+
| 7,500 | 100 | 74 |
+----------------------+----------------------+---------------------+
| 8,000 | 100 | 79 |
+----------------------+----------------------+---------------------+
| 8,500 | 100 | 84 |
+----------------------+----------------------+---------------------+
| 8,859.56* | 100 | 87 |
+----------------------+----------------------+---------------------+
| 9,000 | 100 | 89 |
+----------------------+----------------------+---------------------+
| 9,500 | 100 | 94 |
+----------------------+----------------------+---------------------+
| 10,000 | 100 | 99 |
+----------------------+----------------------+---------------------+
| 10,500 | 120 | 120 |
+----------------------+----------------------+---------------------+
| 11,000 | 145 | 145 |
+----------------------+----------------------+---------------------+
| 11,500 | 170 | 170 |
+----------------------+----------------------+---------------------+
| 12,000 | 194 | 194 |
+----------------------+----------------------+---------------------+
| 12,500 | 200 | 200 |
+----------------------+----------------------+---------------------+
| 13,000 and over | 200 | 200 |
+----------------------+----------------------+---------------------+
* Nikkei 225 Index level at the end of the reporting year
** On any day from
17 December 2003 to 17 December 2009
Since the financial year end the Nikkei 225 Index has fallen further as the pace
of the global economic decline appeared to quicken. Consensus forecasts are
currently predicting the global recession will not end until at least late 2009
threatening more pain for Japan's export dependent economy. Whilst further falls
in the Index are quite possible, any signs of economic recovery could prompt a
considerable rally, at least over the short term.
On 9 March 2009, the Index closed at 7086.03, down 20.0% from the end of
December 2008 in local currency terms and down 24.2% in Sterling terms. The
substantial fall in the Index has, as may be expected, resulted in some weakness
in the Company's shares, in part due to concerns the full capital protection
could be lost if the Index closes below 5046.32 (a fall of 28.8% from current
levels) on any day during the calculation period. Since the financial year end,
the shares have, however, outperformed the underlying Index, falling by 15.6% to
76 pence on 9 March 2009. Moreover, if the Nikkei 225 Index were to close at its
current level on the Company's end date of 17 December 2009, not having closed
below 5046.32 on any business day during the calculation period, the final
capital entitlement would be 100 pence.
Charles Tracy
Chairman
11 March 2009
MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
A description of important events which have occurred during the financial year,
their impact on the performance of the Company as shown in the financial
statements and a description of the principal risks and uncertainties facing the
Company is given in the Chairman's Statement, Manager's Report and the notes to
the financial statements and is incorporated here by reference.
There were no material related party transactions which took place in the
financial year.
Going Concern
The performance of the investments held by the Company over the reporting period
and the outlook for the future are described in the Chairman's Statement and the
Manager's Report. The Company's financial position, its cash flows and liquidity
position are set out in the financial statements and the Company's financial
risk management objectives and policies, details of its financial instruments
and its exposures to market price risk, credit risk, liquidity risk, portfolio
construction risk, interest rate risk and currency risk are set out in note 12
to the financial statements.
As disclosed in the section headed "Investment Objective and Policy" above, the
Company has sold a Put option to BNP Paribas (the "Put Option Counterparty"). As
the Company's contingent liability under the Put option sold to the Put Option
Counterparty will not crystallise until the Put option's scheduled maturity date
of 17 December 2009, and as such contingent liability would be based on the
level of the Nikkei 225 Index on that date, the directors do not consider that
such contingent liability would result now in the insolvency of the Company. In
addition, unless the Nikkei 225 Index closes below 5,046.32 during the
calculation period from 17 December 2003 to 17 December 2009, the put option
will expire worthless.
As disclosed in note 12(c) to the financial statements, upon the issue of Shares
in December 2003 the Company created a cash reserve (the "Expense Provision") in
the amount of 3.75% of the amount raised by the issue of such shares (the
"Initial Gross Proceeds"), such amount being estimated in the opinion of the
directors upon the advice of the Manager to be sufficient to meet the operating
expenses reasonably expected to be incurred over the life of the Company.
After making enquiries, the directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to consider that the Company is a
going concern.
As the Company's portfolio of debt securities and the sold Put option mature in
December 2009, being less than twelve months from the date of this report,
International Financial Reporting Standards require that the financial
statements be prepared on a break-up basis. This does not imply that the Company
is insolvent, nor does it imply that returns to shareholders on the Redemption
Date will be impaired.
Responsibility Statement
The Board of directors jointly and severally confirm that, to the best of their
knowledge:
* the financial statements, prepared in accordance with International Financial
Reporting Standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
* This Management Report includes or incorporates by reference a fair review of
the development and performance of the business and the position of the Company,
together with a description of the principal risks and uncertainties that it
faces.
John Le Prevost Christopher Jones
Director Director
11 March 2009
MANAGER'S REPORT FOR THE YEAR ENDED 31 DECEMBER 2008
Market Review
The Nikkei 225 Index fell 42.1% over the year as the credit crunch that started
in the summer of 2007 turned into a global financial crisis, causing many
financial institutions to collapse or have to be rescued by governments and
sparking what could be a prolonged global economic down-turn.
The start of the period saw global equity markets falling amidst fears over
banks' sub-prime exposures and recessionary worries. The Nikkei 225 Index,
despite its constituents being relatively unexposed to the worst of the
sub-prime debt, fell by over 2,700 points in January 2008 as Japan, being a net
exporter of goods, was expected to suffer particularly from a global slowdown.
The Index recovered some of its losses in February as fears of a collapse eased
and market participants judged the sell-off to be overdone. In March, however,
the Index plummeted as the near collapse and bail-out of US investment bank Bear
Stearns led to fresh lows with the Index down over 3,500 points since the start
of the period. From these lows, the Index rallied by up to 23% over the next 3
months as the rescue of Bear Stearns was looked upon as a turning point in the
credit crisis, the US Federal Reserve having signalled it would ensure any large
financial institutions under duress would be rescued. Over the summer months the
Index gave back most of these gains, however, falling steadily on persistent
concerns over the size of the expected impending recession.
The collapse of US investment bank Lehman Brothers in September was the catalyst
for a steep fall in global equity markets, including the Nikkei 225 Index. The
collapse followed US government bail-outs of insurance company AIG and mortgage
providers Freddie Mac and Fannie Mae. These bail-outs wiped out virtually all
shareholders' equity prompting large falls in the prices of financial
institutions, particularly those suspected of having a weak balance sheet and
which might need rescuing.
This led to further downward pressure on share prices, threatening many
seemingly sound financial companies. As the systemic risks became clear,
governments around the world stepped in with a variety of comprehensive plans
designed to shore up the financial system. Whilst these plans were successful in
reducing the systemic risk, share prices continued to fall as the deleveraging
now taking place led to expectations of a severe global recession. The Nikkei
225 Index ended the year at 8,859.56.
Market Outlook
Despite the conservative nature of Japan's banks keeping their sub-prime
exposure to low levels and protecting them from the worst of the effects of the
credit crunch, the Japanese economy and its stock markets have been severely
damaged by the global financial crisis. This is largely due to the dependence on
exports of many of Japan's largest companies, which have suffered a reduction in
demand as foreign consumers cut back on many products made by Japanese
companies. To make matters even worse, the profitability of goods sold overseas
has been reduced with the strengthening of the Japanese Yen.
With little sign of an end to the credit crunch and a global recession underway,
the outlook for the Japanese economy looks gloomy, a view shared by its
companies which have scaled back production, causing industrial output to fall
by a record 20.6% for the year to December 2008. With Japanese interest rates
already at virtually zero, policy makers have no scope to make the kind of large
scale rate cuts seen elsewhere in the world and will have to find alternative
measures to boost demand whilst they wait for the export market to improve.
Close Investments Limited
11 March 2009
STATEMENT OF OPERATIONS
for the year ended 31 December 2008
+--------------------------------------+---------+--------------+--------------+
| | | 1 Jan 2008 | 1 Jan 2007 |
+--------------------------------------+---------+--------------+--------------+
| | Notes | to 31 Dec | to 31 Dec |
| | | 2008 | 2007 |
+--------------------------------------+---------+--------------+--------------+
| | | GBP | GBP |
+--------------------------------------+---------+--------------+--------------+
| | | | |
+--------------------------------------+---------+--------------+--------------+
| Net movement in unrealised | | | |
| (depreciation) / | | | |
+--------------------------------------+---------+--------------+--------------+
| appreciation on investments | 5 | (13,470,729) | 1,499,260 |
+--------------------------------------+---------+--------------+--------------+
| | | | |
+--------------------------------------+---------+--------------+--------------+
| Unrealised appreciation on value of | | (2,453,198) | (120,000) |
| put option | | | |
+--------------------------------------+---------+--------------+--------------+
| | | | |
+--------------------------------------+---------+--------------+--------------+
| Operating expenses | 2 | (285,116) | (269,881) |
+--------------------------------------+---------+--------------+--------------+
| | | | |
+--------------------------------------+---------+--------------+--------------+
| Net (loss) / gain for the year | | | |
| attributable to | | | |
+--------------------------------------+---------+--------------+--------------+
| shareholders | | (16,209,043) | 1,109,379 |
+--------------------------------------+---------+--------------+--------------+
| | | | |
+--------------------------------------+---------+--------------+--------------+
| | | | |
+--------------------------------------+---------+--------------+--------------+
| | | Pence | Pence |
+--------------------------------------+---------+--------------+--------------+
| (Loss) / earnings per Share for the | | | |
| year | | | |
+--------------------------------------+---------+--------------+--------------+
| - Basic and Diluted | 4 | (54.03) | 3.70 |
+--------------------------------------+---------+--------------+--------------+
| | | | |
+--------------------------------------+---------+--------------+--------------+
| Earnings per Management Share for | | | |
| the year | | | |
+--------------------------------------+---------+--------------+--------------+
| - Basic and Diluted | | 0.00 | 0.00 |
+--------------------------------------+---------+--------------+--------------+
In arriving at the results for the financial year, all amounts above relate to
continuing operations.
There are no recognised gains or losses for the year other than those disclosed
above.
Reconciliation of (loss) / earnings per Share for investment purposes to (loss)
/ earnings per Share per the financial statements:
+------------------------------------------------+---------------+--------------+
| | Pence | Pence |
+------------------------------------------------+---------------+--------------+
| (Loss) / earnings per Share for investment | (53.08) | 4.60 |
| purposes | | |
+------------------------------------------------+---------------+--------------+
| Adjustment for amortisation of debt issue | (0.38) | (0.37) |
| costs | | |
+------------------------------------------------+---------------+--------------+
| Adjustment to include expenses on an accruals | (0.57) | (0.53) |
| basis | | |
+------------------------------------------------+---------------+--------------+
| (Loss) / earnings per share per the financial | (54.03) | 3.70 |
| statements | | |
+------------------------------------------------+---------------+--------------+
In accordance with International Financial Reporting Standards, expenses should
be attributed to the period to which they relate.
The earnings per Share for investment purposes represents the earnings per Share
attributable to shareholders in accordance with the Prospectus, which recognises
all expenses of the Company up to and including the date that the Final Capital
Entitlement becomes payable.
NET ASSET STATEMENT
as at 31 December 2008
+--------------------------------------+----------+-------------+--------------+
| | | 31 Dec 2008 | 31 Dec 2007 |
+--------------------------------------+----------+-------------+--------------+
| | Notes | GBP | GBP |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| FIXED ASSETS | | | |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| Unquoted financial assets designated | | | |
| as at fair | | | |
+--------------------------------------+----------+-------------+--------------+
| value through profit or loss | 5 | - | 49,207,780 |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| CURRENT ASSETS | | | |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| Unquoted financial assets designated | | | |
| as at fair | | | |
+--------------------------------------+----------+-------------+--------------+
| value through profit or loss | 5 | 35,737,051 | - |
+--------------------------------------+----------+-------------+--------------+
| Receivables | 6 | 119,129 | 226,281 |
+--------------------------------------+----------+-------------+--------------+
| Cash at bank | | 338,296 | 520,400 |
+--------------------------------------+----------+-------------+--------------+
| | | 36,194,476 | 746,681 |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| CURRENT LIABILITIES | | | |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| Payables - due within one year | 7 | 20,201 | 24,341 |
+--------------------------------------+----------+-------------+--------------+
| Financial liabilities - due within | 7 | 2,633,198 | - |
| one year | | | |
+--------------------------------------+----------+-------------+--------------+
| | | 2,653,399 | 24,341 |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| NET CURRENT ASSETS | | 33,541,077 | 722,340 |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| TOTAL ASSETS LESS CURRENT | | 33,541,077 | 49,930,120 |
| LIABILITIES | | | |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| Non-current liabilities excluding | | | |
| net assets | | | |
+--------------------------------------+----------+-------------+--------------+
| attributable to shareholders | 8 | - | 180,000 |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| NET ASSETS ATTRIBUTABLE TO | | | |
+--------------------------------------+----------+-------------+--------------+
| SHAREHOLDERS | | 33,541,077 | 49,750,120 |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| SHARES IN ISSUE | | 30,000,000 | 30,000,000 |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| | | Pence | Pence |
+--------------------------------------+----------+-------------+--------------+
| NAV PER SHARE | | 111.80 | 165.83 |
+--------------------------------------+----------+-------------+--------------+
| | | | |
+--------------------------------------+----------+-------------+--------------+
| NAV PER MANAGEMENT SHARE | | 100.00 | 100.00 |
+--------------------------------------+----------+-------------+--------------+
Reconciliation of NAV per Share for investment purposes to NAV per Share per the
financial statements:
+-----------------------------------------------------+------------+------------+
| | 31 Dec | 31 Dec |
| | 2008 | 2007 |
+-----------------------------------------------------+------------+------------+
| | Pence | Pence |
+-----------------------------------------------------+------------+------------+
| NAV per Share for investment purposes | 110.34 | 163.42 |
+-----------------------------------------------------+------------+------------+
| Adjustment for debt issue costs | 0.36 | 0.73 |
+-----------------------------------------------------+------------+------------+
| Adjustment to include expenses on an accruals basis | 1.10 | 1.68 |
+-----------------------------------------------------+------------+------------+
| NAV per Share per the financial statements | 111.80 | 165.83 |
+-----------------------------------------------------+------------+------------+
In accordance with International Financial Reporting Standards, expenses should
be attributed to the period to which they relate.
The NAV per Share for investment purposes represents the NAV per Share
attributable to shareholders in accordance with the Prospectus, which recognises
all expenses of the Company up to and including the date that the Final Capital
Entitlement becomes payable.
The financial statements were approved by the Board of directors on 11 March
2009 and are signed on its behalf by:
John Le Prevost Christopher Jones
Director Director
STATEMENT OF CASH FLOWS
for the year ended 31 December 2008
+----------------------------------------------+--------------+--------------+
| | 1 Jan 2008 | 1 Jan 2007 |
+----------------------------------------------+--------------+--------------+
| | to 31 Dec | to 31 Dec |
| | 2008 | 2007 |
+----------------------------------------------+--------------+--------------+
| | GBP | GBP |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| Operating activities | | |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| Net (loss) / gain for the year attributable | (16,209,043) | 1,109,379 |
| to shareholders | | |
+----------------------------------------------+--------------+--------------+
| Add: Unrealised depreciation / | | |
| (appreciation) on | | |
+----------------------------------------------+--------------+--------------+
| Investments | 13,470,729 | (1,499,260) |
+----------------------------------------------+--------------+--------------+
| Add: Unrealised appreciation on value of Put | 2,453,198 | 120,000 |
| option | | |
+----------------------------------------------+--------------+--------------+
| Add: Amortisation of debt issue costs | 112,705 | 112,397 |
+----------------------------------------------+--------------+--------------+
| Less: Interest received | (21,375) | (32,282) |
+----------------------------------------------+--------------+--------------+
| Less: (Decrease) / Increase in accrued | (4,140) | 9,414 |
| expenses | | |
+----------------------------------------------+--------------+--------------+
| Less: Increase in prepayments and accrued | | |
| income | | |
+----------------------------------------------+--------------+--------------+
| excluding debt issue costs | (5,553) | (3,671) |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| Net cash outflow from operating activities | (203,479) | (184,023) |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| Investing activities | | |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| Interest received | 21,375 | 32,282 |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| Net cash inflow from investing activities | 21,375 | 32,282 |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| Cash and cash equivalents at beginning of | 520,400 | 672,141 |
| year | | |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| Decrease in cash and cash equivalents | (182,104) | (151,741) |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| Cash and cash equivalents at end of year | 338,296 | 520,400 |
+----------------------------------------------+--------------+--------------+
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS
for the year ended 31 December 2008
+----------------------------------------------+--------------+---------------+
| | 31 Dec | 31 Dec 2007 |
| | 2008 | |
+----------------------------------------------+--------------+---------------+
| | GBP | GBP |
+----------------------------------------------+--------------+---------------+
| | | |
+----------------------------------------------+--------------+---------------+
| Opening balance | 49,750,120 | 48,640,741 |
+----------------------------------------------+--------------+---------------+
| | | |
+----------------------------------------------+--------------+---------------+
| Net (loss) / gain for the year attributable | (16,209,043) | 1,109,379 |
| to Shareholders | | |
+----------------------------------------------+--------------+---------------+
| | | |
+----------------------------------------------+--------------+---------------+
| Closing balance | 33,541,077 | 49,750,120 |
+----------------------------------------------+--------------+---------------+
NOTES TO THE FINANCIAL STATEMENTS
as at 31 December 2008
1. ACCOUNTING POLICIES
(a) Basis of Preparation
The financial statements have been prepared in conformity with International
Financial Reporting Standards which comprise standards and interpretations
approved by the International Accounting Standards Board and International
Financial Reporting Interpretations Committee and applicable Guernsey law. The
financial statements have been prepared on a historical cost basis except for
the measurement at fair value of financial instruments. As the Company's
Participating Shares are due for redemption within twelve months, on or around
22 December 2009, the financial statements have been prepared on a break up
basis. The directors do not anticipate costs of liquidation to be material. Such
costs will be borne out of the Expense Provision described on note 7 to the
financial statements.
Up to the date of approval of these financial statements, certain new standards,
interpretations and amendments to existing standards have been published but are
not yet effective for the current reporting period and which the Company has not
early adopted, as follows:
+---------------------------------------------------------------------------+-----------------------+
| | Effective for |
+---------------------------------------------------------------------------+-----------------------+
| | periods |
+---------------------------------------------------------------------------+-----------------------+
| New standards | commencing |
+---------------------------------------------------------------------------+-----------------------+
| IFRS 1 First time Adoption of International Reporting Standards (revised) | 1 January 2009 |
+---------------------------------------------------------------------------+-----------------------+
| IFRS 3 Business Combinations (revised) | 1 July 2009 |
+---------------------------------------------------------------------------+-----------------------+
| IFRS 8 Operating segments | 1 January 2009 |
+---------------------------------------------------------------------------+-----------------------+
| IAS 1 Presentation of Financial Statements (revised) | 1 January 2009 |
+---------------------------------------------------------------------------+-----------------------+
| IAS 23 Borrowing Costs (revised) | 1 January 2009 |
+---------------------------------------------------------------------------+-----------------------+
| | |
+---------------------------------------------------------------------------+-----------------------+
| Amendments to standards | |
+---------------------------------------------------------------------------+-----------------------+
| IFRS 1 and IAS 27 Cost of an Investment in a Subsidiary, Jointly | |
+---------------------------------------------------------------------------+-----------------------+
| Controlled Entity or Associate | 1 January 2009 |
+---------------------------------------------------------------------------+-----------------------+
| IFRS 2 Amendments to IFRS 2 - Vesting Conditions and | |
+---------------------------------------------------------------------------+-----------------------+
| Cancellations | 1 January 2009 |
+---------------------------------------------------------------------------+-----------------------+
| IAS 27 Consolidated and Separate Financial Statements | |
+---------------------------------------------------------------------------+-----------------------+
| (Amendment) | 1 July 2009 |
+---------------------------------------------------------------------------+-----------------------+
| IAS 32 and IAS 1 Puttable Financial Instruments and Obligations | |
+---------------------------------------------------------------------------+-----------------------+
| Arising on Liquidation | 1 January 2009 |
+---------------------------------------------------------------------------+-----------------------+
| IAS 39 Eligible Hedged Items | 1 January 2009 |
+---------------------------------------------------------------------------+-----------------------+
| IAS 39 and IFRS 27IAS 39 Financial Instruments: Recognition and | |
+---------------------------------------------------------------------------+-----------------------+
| Measurement and IFRS 7 Financial Instruments: Disclosures - | |
+---------------------------------------------------------------------------+-----------------------+
| Reclassification of Financial Assets (Amendments) | |
+---------------------------------------------------------------------------+-----------------------+
| Reclassification of Financial Assets: Effective Date and Transition | 1 July 2008 |
+---------------------------------------------------------------------------+-----------------------+
| | |
+---------------------------------------------------------------------------+-----------------------+
| New interpretations | |
+---------------------------------------------------------------------------+-----------------------+
| IFRIC 13 Customer Loyalty Programmes | 1 July 2008 |
+---------------------------------------------------------------------------+-----------------------+
| IFRIC 15 Agreements for the Construction of Real Estate | 1 January 2009 |
+---------------------------------------------------------------------------+-----------------------+
| IFRIC 16 Hedges of a Net Investment in a Foreign Operation | 1 October 2008 |
+---------------------------------------------------------------------------+-----------------------+
| IFRIC 17 Distribution of Non-cash Assets to Owners | 1 July 2009 |
+---------------------------------------------------------------------------+-----------------------+
The above Standards and Interpretations are not expected to have an impact on
the Company's financial statements except for the presentation of additional
disclosures and changes to the presentation of components of the financial
statements.
(b) Taxation
The Company has been granted exemption under the Income Tax (Exempt Bodies)
(Guernsey) Ordinance, 1989 from Guernsey Income Tax, and is charged an annual
fee of GBP600.
(c) Expenses
All expenses are accounted for on an accruals basis.
(d) Debt Issue Costs
The debt issue costs incurred amounted to GBP675,000. Because the Company's
participating Shares are redeemable on or around 22 December 2009, they are
required to be classified as debt instruments under IAS 32. Consequently, issue
costs are amortised over the life of the instrument.
(e) Interest Income
Interest income is accounted for on an accruals basis.
(f) Cash and Cash Equivalents
Cash in bank and short term deposits which are held to maturity are carried at
cost. Cash and cash equivalents are defined as call deposits, short term
deposits and highly liquid investments readily convertible to known amounts of
cash and subject to insignificant risk of changes in value. For the purposes of
the Statement of Cash Flows, cash and cash equivalents consist of cash and
deposits at bank.
(g) Investments
All investments have been designated as financial assets at "fair value through
profit and loss". Investments are initially recognised on the date of purchase
at cost, being the fair value of the consideration given, excluding transaction
costs associated with the investment. After initial recognition, investments are
measured at fair value, with unrealised gains and losses on investments and
impairment of investments recognised in the Statement of Operations. Fair value
is the amount for which the financial instruments could be exchanged, or a
liability settled, between knowledgeable willing parties in an arm's length
transaction. Fair value also reflects the credit quality of the issuers of the
financial instruments.
Valuations of the investments are based on valuations provided to the Company by
Future Value Consultants Limited, a third party. These valuations are intended
to be an indication of the fair value of the Company's investments, including an
issuers' credit risk, designed to reflect the best estimation of the price at
which they could be sold, even though there is no guarantee that a willing buyer
might be found if the Company chose to sell the relevant investment.
The indicative fair values of the investments are based on an approximation of
the market level of the investments. As at the balance sheet date, an
independent review of the valuations of the investments provided by Future Value
Consultants Limited is performed by the Manager. As the investments are not
traded in an active market, the indicative fair value is determined by using
valuation techniques. Future Value Consultants Limited and the Manager use a
variety of methods and make assumptions that are based on market conditions
existing at the balance sheet date.
Valuation techniques used may include the use of comparable recent arm's length
transactions (where available), discounted cash flow analysis, option pricing
models and other valuation techniques commonly used by market participants. The
techniques used by the Manager are periodically reviewed by experienced
personnel at the Manager.
Models use observable data, to the extent practicable. However, areas such as
credit risk (both own and counterparty), volatilities and correlations require
Future Value Consultants Limited and the Manager to make estimates. Changes in
assumptions about these factors could affect the reported fair value of
financial instruments.
In previous accounting periods, the valuation data was provided by BNP Paribas.
Being cognisant of current market conditions, the Company believes that the
valuations provided by Future Value Consultants Limited comply with the
definition of fair value as defined by International Financial Reporting
Standards and are more appropriate.
The investments will be derecognised on their maturity date, being 21 December
2009. Accordingly, the investments have been reclassified as current assets as
at 31 December 2008. Gains and losses on the sale or maturity of investments
will be taken to the Statement of Operations.
(h) Put Option
The Put option was initially recognised at the fair value of the consideration
received on the date of sale, and included within payables falling due after
more than one year. After initial recognition, the Put option is measured at
fair value with unrealised gains and losses being recognised in the Statement of
Operations. The Put option will be derecognised at maturity on 17 December 2009.
Accordingly, the Put option has been reclassified as a current liability due
within one year as at 31 December 2008.
(i) Trade Date Accounting
All "regular way" purchases and sales of financial assets are recognised on the
"trade date", i.e. the date that the Company commits to purchase or sell the
asset. Regular way purchases or sales are purchases or sales of financial assets
that require delivery of the asset within the timeframe generally established by
regulation or convention in the market place.
(j) Segmental Reporting
The directors are of the opinion that the Company is engaged in a single segment
of business, being investment business.
2 OPERATING EXPENSES
+------+-------------------------------------------+--------------+--------------+
| | | 1 Jan 2008 | 1 Jan 2007 |
+------+-------------------------------------------+--------------+--------------+
| | | to 31 Dec | to 31 Dec |
| | | 2008 | 2007 |
+------+-------------------------------------------+--------------+--------------+
| | | GBP | GBP |
+------+-------------------------------------------+--------------+--------------+
| | | | |
+------+-------------------------------------------+--------------+--------------+
| | Amortisation of debt issue costs | 112,705 | 112,397 |
+------+-------------------------------------------+--------------+--------------+
| | Investment management fees (1) | 105,000 | 105,000 |
+------+-------------------------------------------+--------------+--------------+
| | Administration fees | 20,000 | 20,000 |
+------+-------------------------------------------+--------------+--------------+
| | Directors' remuneration | 15,000 | 15,000 |
+------+-------------------------------------------+--------------+--------------+
| | Registration fees | 8,318 | 9,230 |
+------+-------------------------------------------+--------------+--------------+
| | Directors' and Officers' Insurance | 9,000 | 9,580 |
+------+-------------------------------------------+--------------+--------------+
| | Audit fees | 15,050 | 7,038 |
+------+-------------------------------------------+--------------+--------------+
| | Other operating expenses | 21,418 | 23,918 |
+------+-------------------------------------------+--------------+--------------+
| | | 306,491 | 302,163 |
+------+-------------------------------------------+--------------+--------------+
| | | | |
+------+-------------------------------------------+--------------+--------------+
| | Less: Interest earned on expense | | |
| | provision bank | | |
+------+-------------------------------------------+--------------+--------------+
| | account | (21,375) | (32,282) |
+------+-------------------------------------------+--------------+--------------+
| | | 285,116 | 269,881 |
+------+-------------------------------------------+--------------+--------------+
(1) The Manager is entitled to receive a fee from the Company at an annual rate
of 0.35% of the Initial Gross Proceeds.
3 DIRECTORS' REMUNERATION
The Prospectus provides that each director will be paid a fee of GBP5,000 per
annum by the Company. The remuneration will remain fixed over the life of the
Company. John R Le Prevost, a director of the Company, is also a director of
Anson Fund Managers Limited, the Company's Secretary and of Anson Registrars
Limited the Company's Registrar, Transfer Agent and Paying Agent.
4 LOSS PER SHARE
The loss per Share is based on the net loss attributable to shareholders for the
year of GBP16,209,043 (2007: profit GBP1,109,379) and on 30,000,000 (2007:
30,000,000) Shares, being the weighted average number of Shares in issue during
the year. The earnings per Management Share is based on the net gain for the
year of GBPNil (2007: GBPNil) and on 2 (2007: 2) Management Shares, being the
weighted averaged number of Management Shares in issue during the year.
5 INVESTMENTS
+---------------------------------------------+---------------+------------+
| UNQUOTED FINANCIAL ASSETS DESIGNATED AS | 31 Dec | 31 Dec |
| | 2008 | 2007 |
+---------------------------------------------+---------------+------------+
| FAIR VALUE THROUGH PROFIT AND LOSS | GBP | GBP |
+---------------------------------------------+---------------+------------+
| | | |
+---------------------------------------------+---------------+------------+
| Portfolio cost | 30,192,200 | 30,192,200 |
+---------------------------------------------+---------------+------------+
| | | |
+---------------------------------------------+---------------+------------+
| Unrealised appreciation on valuation | 19,015,580 | 17,516,320 |
| brought forward | | |
+---------------------------------------------+---------------+------------+
| | | |
+---------------------------------------------+---------------+------------+
| Unrealised (depreciation) / appreciation on | | |
| valuation for | | |
+---------------------------------------------+---------------+------------+
| the year | (13, 470,729) | 1,499,260 |
+---------------------------------------------+---------------+------------+
| | | |
+---------------------------------------------+---------------+------------+
| Unrealised appreciation on valuation | 5,544,851 | 19,015,580 |
| carried forward | | |
+---------------------------------------------+---------------+------------+
| | | |
+---------------------------------------------+---------------+------------+
| Valuation | 35,737,051 | 49,207,780 |
+---------------------------------------------+---------------+------------+
Valuations of investments are based on valuations provided by Future Value
Consultants Limited which are subject to a review by the Manager. The provided
valuations are derived from proprietary models based upon well-recognised
financial principles and reasonable estimates about relevant future market
conditions.
To comply with the definition of fair value as defined by International
Financial Reporting Standards, Future Value Consultants Limited was engaged to
provide valuations of the investments, taking account of the current
counterparty credit risk of the issuers of the Debt Securities held by the
Company.
The future performance of the financial assets will be based on the closing
level of the Nikkei 225 Index (the "Index") on 17 December 2009. If on that
date, the Index closes above 10,092.64 the instruments are designed to give a
return of five times the performance of the index up to a maximum capital growth
of 100% of the capital and subject to minimum returns as described in the
Investment Objective and Policy on pages 2 and 3.
Valuation data provided by Future Value Consultants Limited to the Company is
provided for informational purposes only and does not represent an offer to buy
or sell the Debt Securities by Future Value Consultants Limited or any other
party. The valuations provided are an indication of market levels and do not
imply that they can be sold at that valuation price. They are based on
assumptions and data Future Value Consultants Limited considers in its judgement
reasonable, but an alternative valuer might arrive at different valuations for
the same investments.
6 RECEIVABLES
+------------------------------------------------------------+----------------+----------------+
| | 31 Dec 2008 | 31 Dec 2007 |
+------------------------------------------------------------+----------------+----------------+
| | GBP | GBP |
+------------------------------------------------------------+----------------+----------------+
| | | |
+------------------------------------------------------------+----------------+----------------+
| Accrued income | 107 | 1,225 |
+------------------------------------------------------------+----------------+----------------+
| Prepaid debt issue costs | 108,086 | 220,792 |
+------------------------------------------------------------+----------------+----------------+
| Prepayments | 10,936 | 4,264 |
+------------------------------------------------------------+----------------+----------------+
| | 119,129 | 226,281 |
| | | |
+------------------------------------------------------------+----------------+----------------+
7 PAYABLES (amounts falling due within one year)
+----------------------------------------------------+------------+------------+
| | 31 Dec | 31 Dec |
| | 2008 | 2007 |
+----------------------------------------------------+------------+------------+
| | GBP | GBP |
+----------------------------------------------------+------------+------------+
| | | |
+----------------------------------------------------+------------+------------+
| Accrued administration fees | 1,694 | 1,699 |
+----------------------------------------------------+------------+------------+
| Accrued registration fees | 467 | 762 |
+----------------------------------------------------+------------+------------+
| Accrued investment management fees | - | 8,630 |
+----------------------------------------------------+------------+------------+
| Accrued audit fees | 12,500 | 7,000 |
+----------------------------------------------------+------------+------------+
| Other accrued expenses | 5,540 | 6,250 |
+----------------------------------------------------+------------+------------+
| Expense Provision | 366,590 | 191,720 |
+----------------------------------------------------+------------+------------+
| Less: Prepaid Expense Provision | (366,590) | (191,720) |
+----------------------------------------------------+------------+------------+
| | | |
+----------------------------------------------------+------------+------------+
| | 20,201 | 24,341 |
+----------------------------------------------------+------------+------------+
+----------------------------------------------------+------------+------------+
| FINANCIAL LIABILITIES | 31 Dec | 31 Dec |
| | 2008 | 2007 |
+----------------------------------------------------+------------+------------+
| | GBP | GBP |
+----------------------------------------------------+------------+------------+
| | | |
+----------------------------------------------------+------------+------------+
| Fair value of the Put option | 2,633,198 | - |
+----------------------------------------------------+------------+------------+
| | | |
+----------------------------------------------------+------------+------------+
| | 2,633,198 | - |
+----------------------------------------------------+------------+------------+
The prepaid Expense Provision represents monies set aside to meet the on-going,
annual and redemption expenses of the Company, as set out in the Prospectus.
If, at the Redemption Date, there is any surplus remaining from the Expense
Provision (together with accrued interest thereon), this surplus will revert to
the Manager. In the event of redemption or repurchase of all the Shares, or upon
a winding-up of the Company, in each case prior to the Redemption Date, any
balance of the Expense Provision (together with accrued interest thereon) other
than the investment management fee will also revert to the Manager.
The performance of the Put option is linked to the performance of the Nikkei 225
Index. At an Index value of 10,092.64 or above at the close of business on 17
December 2009, or if the Index has never closed below 5,046.32 during the
calculation period from 17 December 2003 to 17 December 2009, the Put option
will be worth GBPNil at maturity. If the Index has closed below 5,046.32 over
the calculation period and the Index is still below 10,092.64 at 17 December
2009, the Put option will be worth a percentage of the notional value, being
GBP30,000,000, equivalent to the percentage fall in the level of the Nikkei 225
Index over the calculation period.
The Put option is not exercisable until the maturity date of 17 December 2009.
The fair value of the Put option is based on the valuation provided by Future
Value Consultants Limited. There is no active market regarding the Put option.
BNP Paribas, in its capacity as the Put option counterparty, has security over
the financial assets held by the Company for payment of any monies owed upon
maturity or termination of the Put option contract.
The original proceeds from the sale of the Put option were GBP2,565,000.
8 PAYABLES (amounts falling due after one year)
+---------------------------------------------+------------+------------+
| | 31 Dec | 31 Dec |
| | 2008 | 2007 |
+---------------------------------------------+------------+------------+
| | GBP | GBP |
+---------------------------------------------+------------+------------+
| | | |
+---------------------------------------------+------------+------------+
| Expense provision | - | 349,880 |
+---------------------------------------------+------------+------------+
| Less: Prepaid expense provision (see note | - | (349,880) |
| 7) | | |
+---------------------------------------------+------------+------------+
| | | |
+---------------------------------------------+------------+------------+
| | - | - |
+---------------------------------------------+------------+------------+
+---------------------------------------------+------------+------------+
| FINANCIAL LIABILITIES | 31 Dec | 31 Dec |
| | 2008 | 2007 |
+---------------------------------------------+------------+------------+
| | GBP | GBP |
+---------------------------------------------+------------+------------+
| | | |
+---------------------------------------------+------------+------------+
| Fair value of the Put option (see note 7) | - | 180,000 |
+---------------------------------------------+------------+------------+
| | | |
+---------------------------------------------+------------+------------+
| | - | 180,000 |
+---------------------------------------------+------------+------------+
9 SHARE CAPITAL
+---------------------------------------------+-------------+------------+
| Authorised | SHARES | GBP |
+---------------------------------------------+-------------+------------+
| | | |
+---------------------------------------------+-------------+------------+
| Unclassified shares of 0.01p each | 200,000,000 | 20,000 |
+---------------------------------------------+-------------+------------+
| Management shares of GBP1.00 each | 100 | 100 |
+---------------------------------------------+-------------+------------+
| | | |
+---------------------------------------------+-------------+------------+
| | | 20,100 |
+---------------------------------------------+-------------+------------+
+---------------------------------------------------------+------------+
| Issued | SHARES |
+---------------------------------------------------------+------------+
| | |
+---------------------------------------------------------+------------+
| Participating shares ("Shares") - fully paid | 30,000,000 |
+---------------------------------------------------------+------------+
| Management shares - fully paid | 2 |
+---------------------------------------------------------+------------+
| | |
+---------------------------------------------------------+------------+
| Number of shares in issue at 31 December 2007 and 31 | 30,000,002 |
| December 2008 | |
+---------------------------------------------------------+------------+
| | |
+---------------------------------------------------------+------------+
| | GBP |
+---------------------------------------------------------+------------+
| | |
+---------------------------------------------------------+------------+
| Issued capital as at 31 December 2007 and 31 December | 3,002 |
| 2008 | |
+---------------------------------------------------------+------------+
Participating Shares are redeemable on or around 22 December 2009. The Company
is closed-ended and therefore shareholders have no right to request the Company
to repurchase their Shares or to redeem them prior to the Redemption Date. If
the Company is wound up prior to the Redemption Date, shareholders will be
entitled to the net asset value of the Shares on the winding up date. No
dividends will be paid on the Shares.
Management shares are not redeemable, do not carry any right to dividends and in
a winding up rank only for a return of the amount of paid up capital after
return of capital on Shares and nominal shares. Given the immateriality of the
Management shares to the net assets of the Company, they have been included in
the net assets attributable to holders of Shares.
10 SHARE PREMIUM
+---------------------------------------------------------+------------+
| | GBP |
+---------------------------------------------------------+------------+
| | |
+---------------------------------------------------------+------------+
| Share premium as at 31 December 2007 and 31 December | 29,997,000 |
| 2008 | |
+---------------------------------------------------------+------------+
11 FINANCIAL INSTRUMENTS
The Company's main financial instruments comprise:
(a) Cash and cash equivalents that arise directly from the Company's operations;
(b) Debt Securities whose performance is based on the performance of the Nikkei
225 Index. Details of these are shown in the schedule of investments on pages;
and
(c) The Company has also sold a Put option, whose performance is based on the
Nikkei 225 Index. Details of the Put option contract are shown in Note 7.
12 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The main risks arising from the Company's financial instruments are market price
risk, credit risk, liquidity risk and interest rate risk. The Board regularly
reviews and agrees policies for managing each of these risks and these are
summarised below:
(a) Market Price Risk
Market price risk arises mainly from uncertainty about future prices of
financial instruments held. It represents the potential loss the Company might
suffer through holding market positions in the face of price movements. The
Manager actively monitors market prices and reports to the Board as to the
appropriateness of the prices used for valuation purposes. A list of investments
held by the Company is shown in the Schedule of Investments.
Details of the Company's investment objective and policy are given above.
Price sensitivity
The following details the Company's sensitivity to a 10% increase or decrease in
the final market prices of its constituent financial assets and liabilities.
The final redemption value of the Shares is determined by reference to the level
of the Nikkei 225 Index over the calculation period (the "Calculation Period")
from 17 December 2003 (the "Start Date") to 17 December 2009 (the "End Date").
If at the End Date the Index stands below 10,092,64 (the "Start Value"), but has
not closed below 5,046.32 during the Calculation Period, the redemption
entitlement will be equal to 100.00 pence per share.
On 31 December 2008 the Index stood at 8,859.56, a fall of 12.22% since the
Start Date.
During the period from the Start Date to 31 December 2008 the Index had not
closed below 5,046.32. As the Index would need to decline by more than 43.04%
from its level as at 31 December 2008 for the redemption entitlement to be less
than 100.00 pence per Share and further as the Index would need to rise by more
than 13.93% as at the End Date for the redemption entitlement due to be more
than 100.00 pence per Share, as at 31 December 2008 the Company had no material
sensitivity to either a 10% increase or decrease in the level of the Index, all
being subject to counterparty default.
(b) Credit Risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Company. At the
date of this report all issuers carried an investment grade credit rating. The
Board monitors credit risk and will consider further action if the credit rating
of an issuer falls below A- or A3 as ranked by Standard & Poor's Ratings
Services and Moody's Investor Services Inc. respectively. Credit risks are
mitigated in the Company because the Medium Term Notes have been purchased from
several different issuers.
The following table details the aggregate investment grade of the Debt
Securities in the portfolio, as rated by Moody's Investor Services Inc:
+-------------------------------------------+------------------+----------------+----------------+
| Rating | 11 March 2009 | 31 Dec 2008 | 31 Dec 2007 |
+-------------------------------------------+------------------+----------------+----------------+
| | | | |
+-------------------------------------------+------------------+----------------+----------------+
| Aaa | 0.00% | 0.00% | 14.37% |
+-------------------------------------------+------------------+----------------+----------------+
| Aa | 27.94% | 42.24% | 27.51% |
+-------------------------------------------+------------------+----------------+----------------+
| A | 72.06% | 57.76% | 58.12% |
+-------------------------------------------+------------------+----------------+----------------+
The credit risk on cash transactions and transactions involving derivative
financial instruments is mitigated by transacting with counterparties that are
regulated entities subject to prudential supervision, or with high
credit-ratings assigned by international credit-rating agencies.
(c) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in
realising assets or otherwise raising funds to meet financial commitments. The
Company's main financial commitments are its ongoing operating expenses and any
cash settlement due to BNP Paribas (the "Put Option Counterparty") on the
maturity of the Put option sold to the Put Option Counterparty, scheduled to
occur on 17 December 2009.
Upon the issue of the Shares in December 2003 the Company created a cash reserve
(the "Expense Provision") in the amount of 3.75% of the amount raised by the
issue of the Shares (the "Initial Gross Proceeds"), such amount being estimated
in the opinion of the directors upon the advice of the Manager to be sufficient
to meet the operating expenses reasonably expected to be incurred over the life
of the Shares.
If at any time during the life of the Company the Expense Provision is exhausted
then, subject to the relevant excess expenses having been agreed by the Manager,
the Manager will make good such shortfall from its own resources, subject to a
maximum in each of the first five annual financial periods of 0.25 per cent. of
the Initial Gross Proceeds and in the last financial period preceding the
Redemption Date, of a maximum amount of GBP100,000. Should these expenses exceed
this cap the return to Shareholders will be adversely impacted. The directors do
not anticipate that the expenses will exceed the Expense Provision.
The Debt Securities purchased by the Company mature on 21 December 2009 (the
"Maturity Date") and are due to be redeemed at their notional face value plus
five times the performance increase between 17 December 2003 and 17 December
2009 in the Nikkei 225 Index, capped at an amount equal to 100% of the notional
face value, so that the aggregate maturity proceeds are expected to be between
GBP30,000,000 if the Nikkei 225 Index closes on 17 December 2009 at or below its
starting value on 17 December 2003 of 10,092.64 and a maximum of GBP60,000,000
if the Nikkei 225 Index closes at or above 12,111.17 on 17 December 2009, all
subject to counterparty default.
Provided that none of the issuers of the Debt Securities defaults on its
obligation to pay the maturity proceeds on the Maturity Date, the minimum
maturity proceeds of GBP30,000,000 due are intended to satisfy the maximum
payment due to be made by the Company to the Put Option Counterparty on the
maturity of the Put Option of GBP30,000.000.
The directors and the Manager monitor the credit ratings of all issuers of the
Debt Securities. In the event of any downgrading in the long-term credit rating
of any issuer below A- or A3, as determined by Standard & Poor's and/or Moody's
Investor Services Inc respectively, the Company may in its absolute discretion
seek to sell the relevant Debt Securities to third party purchasers and to
reinvest the proceeds in the purchase of Debt Securities of another issuer such
that the new Debt Securities will replicate as closely as possible the terms and
conditions of the original Debt Securities. If the purchase of such Debt
Securities is not possible, the Directors may reinvest such proceeds as they see
fit in investments which, in the opinion of the Directors, as nearly as is
practicable, replicate the investment characteristics of the Debt Securities
sold and so that the proceeds are invested, as nearly as is practicable, in
accordance with the Company's stated investment objective. As at the accounting
reference date and the date of this report, all issuers of the Debt Securities
carried an investment grade credit rating.
(d) Portfolio Construction Risk
Portfolio construction risk arises when the intended balance or resultant effect
of movements in value of assets and liabilities is disturbed because of some
unintended external event.
In the case of the Company's investment portfolio there is an intended balance
between the aggregate nominal value of the Debt Securities held and the nominal
value of the Put option and, if one or more of the Debt Security issuers
defaults, in part or in total, there will not be a corresponding reduction in
the value of the Put option. Thus, if such an issuer default does occur and
there is an index barrier breach which causes the Company's contingent liability
under the Put option to take effect, the default will cause an acceleration in
the reduction of the final redemption value of a Share such that it will fall to
zero well before the Index reaches nil. At the date of this report all issuers
carried an investment grade credit rating and the Company has no reason to
expect that any of the issuers of the Debt Securities held by the Company will
default on their obligations upon the maturity of those Debt Securities.
(e) Interest Rate Risk
Interest rate risk is the risk that fluctuations in market interest rates will
result in a reduction in deposit interest earned on cash deposits held by the
Company. The Company holds cash on fixed deposit, the return of which is subject
to fluctuations. All fixed deposits mature within three months.
The weighted average effective interest rate for cash and bank balances as at 31
December 2008 was 4.55% (2007: 5.48%).
None of the other assets or liabilities of the Company attract or incur
interest.
Interest rate sensitivity
Interest rate risk arises from the possibility that changes in interest rates
will affect future cash flows or the fair value of financial instruments. Except
for cash set aside to meet expenses, the Company's assets and liabilities are
expected to be held until the Redemption Date.
If interest rates had been 100 basis points higher and all other variables were
held constant, the Company's decrease in net assets attributable for the period
ended 31 December 2008 would have been GBP3,383 lower (2007: GBP5,204 increase
in net assets) due to an increase in the amount of interest receivable on the
bank balances.
If interest rates had been 100 basis points lower and all other variables were
held constant, the Company's decrease in net assets attributable for the period
ended 31 December 2008 would have been GBP3,383 higher (2007: GBP5,204 decrease
in net assets) due to an increase in the amount of interest receivable on the
bank balances.
The Company's sensitivity to interest rates is lower in 2008 than in 2007
because of a decrease in the value of cash balances held.
(f) Currency Risk
As both the Shares and the Debt Securities are Sterling-denominated,
Shareholders investing for Sterling returns will not be exposed to direct
currency risk. However the value of the underlying securities comprising the
Nikkei 225 may be affected by changes in the economic, political or social
environment in Japan, as well as globally, including changes in exchange rates.
(g) Capital Management
The investment objective of the Company is to provide shareholders, on the
Redemption Date, with five times the capital return of the Nikkei 225 Index, up
to a maximum amount (the "Final Capital Entitlement") of 200p per Share,
comprising a capital growth amount of up to a maximum of 100p per Share and a
capital amount of 100p per Share. The Final Capital Entitlement per Share is
designed to be determined by the performance of the Nikkei 225 Index over the
calculation period from 17 December 2003 to 17 December 2009.
The Company has an unlimited life but the Shares will be redeemed on or around
22 December 2009. Until then, the Company has a fixed capital.
(h) Collateral
Under the terms of a Credit Support Deed dated 19 December 2003 entered into
between the Company and the Put Option Counterparty, the Company as security for
the Put option has agreed to mortgage, charge and pledge with full title
guarantee, in favour of the Put option Counterparty by way of first fixed legal
mortgage all posted collateral and has assigned with full title guarantee, the
assigned rights to the Put Option Counterparty absolutely. The collateral is
held by the Custodian in a segregated account. Where there is an event of
default in respect of the Company under the Put option, the Put Option
Counterparty will be entitled to enforce its security over the collateral.
13 RELATED PARTIES
Anson Fund Managers Limited is the Company's Administrator and Secretary, Anson
Registrars Limited is the Company's Registrar, Transfer Agent and Paying Agent
and Anson Administration (UK) Limited is the UK Transfer Agent. John R Le
Prevost is a director and controller of Anson Fund Managers Limited, Anson
Registrars Limited and Anson Administration (UK) Limited. GBP28,318 (2007:
GBP29,230) of costs were incurred by the Company with these related parties in
the period, of which GBP2,161 (2007: GBP2,461) was due to these related parties
as at 31 December 2008.
SCHEDULE OF INVESTMENTS (UNAUDITED)
As at 31 December 2008
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | 31 Dec 2008 | | 31 Dec 2008 | | 31 Dec 2008 |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | NOMINAL | | VALUATION | | TOTAL NET |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| DEBT SECURITIES PORTFOLIO | HOLDINGS | | GBP | | ASSETS |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | % |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Britannia Building Society Plc | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,500,000 | | 5,227,320 | | 15.58% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Caisse Centrale du Credit Immobilier de France | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,300,000 | | 5,141,094 | | 15.33% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Caixa Geral de Depositas | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,000,000 | | 4,805,447 | | 14.33% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Egg Banking Plc | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,300,000 | | 5,122,846 | | 15.27% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Irish Permanent | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,300,000 | | 5,108,590 | | 15.23% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Royal Bank of Scotland Plc | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,300,000 | | 5,180,770 | | 15.45% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Yorkshire Building Society | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,300,000 | | 5,150,984 | | 15.36% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | 35,737,051 | | 106.55% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
The Company has also sold a Put option, details of which are shown below.
+---------------------------------------------------+---------------+---+----------------+------------------+
| | NOTIONAL | | VALUATION | |
+---------------------------------------------------+---------------+---+----------------+------------------+
| | HOLDING | | GBP | |
+---------------------------------------------------+---------------+---+----------------+------------------+
| | | | | |
+---------------------------------------------------+---------------+---+----------------+------------------+
| BNP Paribas Equity Index Option | | | | |
+---------------------------------------------------+---------------+---+----------------+------------------+
| expiring 17 December 2009 | (30,000,000) | | (2,633,198) | |
+---------------------------------------------------+---------------+---+----------------+------------------+
SCHEDULE OF INVESTMENTS (UNAUDITED)
As at 31 December 2007
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | 31 Dec 2007 | | 31 Dec 2007 | | 31 Dec 2007 |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | NOMINAL | | VALUATION | | TOTAL NET |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| DEBT SECURITIES PORTFOLIO | HOLDINGS | | GBP | | ASSETS |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | % |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Britannia Building Society Plc | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,500,000 | | 7,397,550 | | 14.87% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Caisse Centrale du Credit Immobilier de France | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,300,000 | | 7,068,770 | | 14.21% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Caixa Geral de Depositas | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,000,000 | | 6,575,600 | | 13.22% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Egg Banking Plc | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,300,000 | | 7,068,770 | | 14.21% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Irish Permanent | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,300,000 | | 6,959,550 | | 13.99% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Royal Bank of Scotland Plc | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,300,000 | | 7,068,770 | | 14.21% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| Yorkshire Building Society | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| 0% Euro Medium Term Note 21 December 2009 | 4,300,000 | | 7,068,770 | | 14.21% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | | | |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
| | | | 49,207,780 | | 98.92% |
+----------------------------------------------------+---------------+---+----------------+---+----------------+
The Company has also sold a Put option, details of which are shown below.
+---------------------------------------------------+---------------+---+----------------+------------------+
| | NOTIONAL | | VALUATION | |
+---------------------------------------------------+---------------+---+----------------+------------------+
| | HOLDING | | GBP | |
+---------------------------------------------------+---------------+---+----------------+------------------+
| | | | | |
+---------------------------------------------------+---------------+---+----------------+------------------+
| BNP Paribas Equity Index Option | | | | |
+---------------------------------------------------+---------------+---+----------------+------------------+
| expiring 17 December 2009 | (30,000,000) | | (180,000) | |
+---------------------------------------------------+---------------+---+----------------+------------------+
A pdf version of the annual financial report will shortly be posted on the
Manager's web-site www.closeinvestments.com and a further announcement will be
made once the annual financial report is available to be downloaded.
For further information contact:
Anson Fund Managers Limited
Secretary.
Tel: Guernsey 01481 722260
11 March 2009
END OF ANNOUNCEMENT
E&OE - In transmission
This information is provided by RNS
The company news service from the London Stock Exchange
END
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