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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Atlantis Japan Growth Fund Ld | LSE:AJG | London | Ordinary Share | GG00B61ND550 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 172.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMAJG
ATLANTIS JAPAN GROWTH FUND LIMITED
("AJGF" or the "Company")
(a closed-ended investment company incorporated in Guernsey with registration
number 30709)
LEI 5493004IW0LDG0OPGL69
Annual Results for the financial year ended 30 April 2019
12 July 2019
(Classified Regulated Information, under DTR 6 Annex 1 section 1.1)
The financial information set out below does not constitute the Company's
statutory accounts for the financial year ended 30 April 2019. All figures are
based on the audited financial statements for the financial year ended 30 April
2019.
The financial information for the financial year ended 30 April 2019 noted
below is derived from the financial statements delivered to the UK Listing
Authority.
The annual report and audited financial statements for the financial year ended
30 April 2019 will shortly be posted to shareholders and will also be available
on the company website: www.atlantisjapangrowthfundlimited.com
Introduction
INVESTMENT OBJECTIVE
Atlantis Japan Growth Fund Limited (the "Company") aims to achieve long term
capital growth through investment wholly or mainly in listed Japanese equities.
INVESTMENT POLICY
The Company may invest up to 100 per cent of its gross assets in companies
quoted on any Japanese stock exchange including, without limitation, the Tokyo
Stock Exchange categorised as First Section, Second Section, JASDAQ, Mothers
and Tokyo PRO, or the regional stock exchanges of Fukuoka, Nagoya, Sapporo and
Osaka Securities Exchange.
The Company may also invest up to 20 per cent of its Net Asset Value (the
"NAV") at the time of investment in companies listed or traded on other stock
exchanges but which are either controlled and managed from Japan or which have
a material exposure to the Japanese economy.
The Company may also invest up to 10 per cent of its NAV at the time of
investment in securities which are neither listed nor traded on any stock
exchange or over-the-counter market.
In general, investment will be through investments in equity shares in, or debt
issued by, investee companies. However, the Company may also invest up to 20
per cent of its NAV at the time of investment in equity warrants and
convertible debt.
The Company will not invest in more than 10 per cent of any class of securities
of an investee company. The Company will not invest in derivative instruments
save for the purpose of efficient portfolio management.
The Company may not invest more than 10 per cent in aggregate, of the value of
its total assets in other listed closed-ended investment funds except in the
case of investment in closed-ended investment funds which themselves have
published investment policies to invest no more than 15 per cent of their total
assets in other listed closed-ended investment funds, in which case the limit
is 15 per cent.
The Company may borrow, with a view to enhancing capital returns, up to a
maximum of an amount not exceeding 20 per cent of NAV at the time of borrowing.
Investment Policy for the Redemption Pool
At each redemption point the Company may (a) notionally allocate assets and
liabilities into a separate pool (the "redemption pool") for the purpose of
funding valid redemption requests for that redemption point or (b) fund the
valid redemption requests from available cash. With regard to the redemption
pool, the Company aims to liquidate the necessary assets to meet qualifying
redemption requests in a timely manner, and to minimise the impact that such
redemptions will have to existing shareholders and the Company as a whole.
The management and impact of the risks associated with the investment policies
are described in detail in the Notes to the Financial Statements (See Note 16).
INVESTMENT MANAGER AND INVESTMENT ADVISER
Quaero Capital LLP has been appointed as Investment Manager of the Company
since 1 August 2014.
Atlantis Investment Research Corporation ("AIRC") has been appointed as the
Investment Adviser to the Company since 1 August 2014.
AIRC, established in Tokyo, will, through Taeko Setaishi as lead adviser and
her colleagues, advise the Investment Manager on the day-to-day conduct of the
Company's investment business, the role it has played since the launch of the
Company in May 1996.
Chairman's Statement
For the financial year ended 30 April 2019
In contrast to the prior financial year, the year ended 30 April 2019 proved to
be a more challenging environment for the Company as well as for most major
developed equity markets. Despite these more turbulent times, I am proud to
report that over the course of the year, the Company's NAV per share fell only
marginally, by 0.1%, compared to a decrease of 2.9% for the TOPIX Total Return
index in GBP.
At the time of writing, we have just passed the third anniversary of Taeko
Setaishi's appointment as lead adviser in May 2016. Over the three years to 30
April 2019, the Company's NAV per share has significantly outpaced the TOPIX
benchmark - by 22.0%, giving shareholders a total return of 64.0% in GBP terms.
It should be noted that this outperformance is after deduction of all costs and
also takes into account a dilution impact of approximately 11.0% resulting from
the new shares which were issued in October 2016 and October 2017. It is also
worth highlighting that the Company's three year NAV per share performance
record places the Fund within the top three amongst the combined AIC Japan
universe of ten investment trusts. This strong performance reinforces my view
that the Company has longer-term viability and that it is well positioned to
warrant the closer attention of a broader investor base.
In this context, I would like to draw your attention to the forthcoming
Continuation Vote to be held at the AGM on 12 September 2019 at which the Board
will be recommending that the Company should continue in existence in order to
carry on pursuing the investment mandate which has brought long-term
outperformance for shareholders.
At the Extraordinary General Meeting held in April 2016, the Board, with the
support of shareholders, laid out a plan to grow the Company's assets under
management ("AUM"), primarily through improved performance and the Subscription
Right programme. Over the three year period, AUM rose from GBP59.5m at 30 April
2016 to GBP107.3m as at 30 April 2019. Although a significant achievement, the
Board, after much deliberation, will be putting forward proposals to
shareholders to amend the structure of the Company in order to further enhance
the sustainability and future success of the Company for the benefit of
shareholders.
I have already noted above the good performance that our Investment Advisor has
produced since Taeko Setaishi took prime responsibility as portfolio manager.
The Japanese stock market and economy remain among the largest in the world and
the Board is convinced that the Company's investment mandate remains as
relevant today as it was when the Company first launched. As well as
performance, in considering the Company's future following the Continuation
Vote, the Board has also considered all aspects of the Company's structure.
It is evident to the Board that while the Redemption Mechanism has provided
shareholders with a valuable alternative to secondary market liquidity, the
mechanism is relatively complex, and it is not always easy for all shareholders
to participate. In particular retail investors owning the shares through retail
platforms may face administrative challenges when choosing to participate in
the Redemption Mechanism.
The Board believes that the time is right to replace this mechanism. There is
now much greater consensus in the investment companies sector that the use of
dividend payments utilising distributable capital reserves is an effective and
low cost way to provide investors with additional liquidity. The Board also
believes it is a fairer way to distribute capital to all shareholders.
The Board is also very mindful of the investment strategy and the impact that
frequent and relatively large redemptions can have on a portfolio that is
predominantly composed of small and mid-sized companies. A smaller and more
frequent dividend payment will, we believe, interfere much less in how the
portfolio is constructed.
Finally, the Board notes that income investors, who form a growing and
important component of the overall investor universe, are increasingly
comfortable with dividends that are in part funded from capital reserves as one
part of a portfolio of income producing investments. There are limited options
to receive meaningful levels of income and simultaneously gain exposure to the
exciting growth potential of Japanese equities; so, in introducing a dividend
policy the Board believes it will broaden the appeal of the Company to a new
range of investors.
With this in mind the Board proposes to replace the Redemption Mechanism with a
regular quarterly dividend payment set with reference to 1% of net asset value,
to be calculated on the basis of the daily average NAV over the final month of
each financial year. Dividends will be paid in March, June, September and
December.
This will require a change to the Company's Articles of Association, which
shareholders will be asked to vote upon at the AGM.
The new dividend policy will be subject to shareholder approval at each AGM, in
line with market practice. It is our current intention that, subject to the
passing of these resolutions that the first dividend paid under this new policy
will be paid in December 2019. The average net asset value for the final month
of the financial year just passed was 237 pence per share and therefore the
dividends for December, March and June will be 2.37 pence per share. Based on
the closing share price on 11 July 2019 this equates to an annualised dividend
yield of 4.3%.
Accordingly, September's redemption will be the last opportunity that
shareholders will have to redeem shares using the existing Redemption
Mechanism.
The Board has also reviewed the current 90 day rolling discount mechanism.
Currently the Company is obligated to propose a Continuation Vote to
shareholders should the discount on any given 90 day rolling period average
greater than ten per cent. It has concluded that while this mechanism has
assisted in limiting the average discount, it has also had the effect of acting
as a natural brake on the discount narrowing more substantially. Since the
Company introduced this mechanism in 2013, market practice among investment
companies has moved to a more flexible approach to discount control that also
takes into account factors such as liquidity and prevailing market conditions,
and the Board believes that taking such an approach is in the interests of all
shareholders. The Board wishes to emphasise to shareholders that it remains
committed to managing the discount using share buy backs, but feels that this
commitment is better served by taking a less formulaic approach. The Board
emphasises that it believes that it is in the long term interests of
shareholders that the Company grows its share capital, and this can only be
achieved if the share price trades consistently at or above net asset value.
The Board will be renewing its existing powers to buy back shares at the AGM.
Alongside these changes, the Board also proposes that in addition to the
forthcoming Continuation Vote, there will be a similar opportunity at every
fourth AGM to vote on the continuation of the Company, beginning in at the AGM
in 2023.
Finally, and again in line with market best practice, the Board has agreed with
the Investment Manager a change to the Investment Management Fees. A tiered fee
structure has been agreed, with a fee of 1% per cent on the first GBP125m of net
assets, 0.85% on net assets between GBP125m and GBP175m and 0.70% on net assets
above GBP175m.
Overall your Board believes this package of measures is in line with today's
market best practice, better aligns the interests of all shareholders and makes
your Company a more attractive proposition to a wider potential audience.
PERFORMANCE
Over the financial year the Company's NAV per share fell by 0.1%. This compares
to the benchmark TOPIX's 2.9% decrease on a total return basis measured in GBP.
Since Company inception
Net Asset Value Total 1 Year 3 Years 5 Years Since
Return (GBP) Inception
Atlantis Japan Growth -0.1% 63.5% 112.5% 271.7%
Fund
Topix TR -2.9% 39.9% 84.8% 53.0%
Financial year At 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
to 30 April
Inception
Total Net Assets 130 176 127# 80# 65# 50# 61# 60# 77# 119# 107#
(GBPm)
NAV per Share 0.65 0.86 0.81 0.91 1.26 1.14 1.50 1.48 1.75 2.42 2.42
(GBP)
Source: Quaero Capital and Bloomberg. As of 30 April 2019.
# Total Net Assets after redemptions during year, see below "Redemption
Facility".
DISCOUNT CONTROL MECHANISM
The Board currently operates a hard discount control mechanism whereby the
Company is obliged to hold a continuation vote should the shares have traded,
on average, at a discount of more than 10% to the NAV per share during any
rolling 90 day period in normal market conditions. If the obligation to hold a
continuation vote is triggered, the vote will be held no later than the next
practicable annual general meeting of the Company.
SHARE BUY-BACKS
In order to assist in managing the discount at which the Company's shares trade
and to enhance the NAV per share of remaining shareholders, the Company has
authority to buy back shares. During the financial year ended 30 April 2019,
the Company exercised its authority to buy back shares on three separate
occasions in respect of a total of 500,000 Ordinary shares at a weighted
average discount of 8.7% based on diluted NAVs. Since the financial year end,
the Company has not exercised its authority to buy back any further shares. The
shares bought back during the financial year, representing 1.1% of current
issued shares, are held in treasury.
REDEMPTION FACILITY
At the redemption point on 28 September 2018, 2,874,315 shares representing
5.9% of issued shares, were validly lodged for redemption. Under the terms of
the redemption facility, total redemptions at each redemption point are limited
to 5% of the issued share capital (excluding treasury shares) at that time.
Accordingly, redemption requests were scaled back so that only 5.0% of the
Company's shares (2,434,356 shares) were accepted for redemption and redeemed
at this redemption point.
At the redemption point on 29 March 2019, 3,811,426 shares representing 8.27%
of issued shares, were validly lodged for redemption. Redemption requests were
scaled back so that only 5.0% of the Company's shares (2,303,888 shares) were
accepted for redemption.
As part of the operation of the redemption facility on 29 March 2019, a matched
trade mechanism was utilised to match any and all redemptions received with
533,400 shares being matched from redemptions in excess of shareholders' basic
entitlements.
GEARING
Gearing is defined as the ratio of a company's long-term debt less cash held
compared to its equity capital, expressed as a percentage. The effect of
gearing is that, in rising markets, the Company tends to benefit from any
growth of the Company's investment portfolio above the cost of payment of the
prior ranking entitlements of any lenders and other creditors. Conversely, in
falling markets the Company suffers more if the Company's investment portfolio
underperforms the cost of those prior entitlements.
In order to improve the potential for capital returns to shareholders the
Company currently has access to a flexible loan facility with The Royal Bank of
Scotland International Limited for amounts up to ¥1.5 billion. As at the end of
April 2019 the Company's net gearing level (being the amount of drawn down bank
debt less the cash held on the balance sheet) was 3.8% (2018: 2.4%).
The Directors consider it a priority that the Company's level of gearing should
be maintained at appropriate levels with sufficient flexibility to enable the
Company to adapt at short notice to changes in market conditions. The Board
reviews the Company's level of gearing on a regular basis. The current maximum
that has been set is 20% of the Company's total assets. The Investment Adviser
will be encouraged to use the gearing facility and the Company's cash reserves
in order to enhance returns for shareholders.
PRIIPS KEY INFORMATION DOCUMENTS
We are required by EU regulations introduced at the beginning of 2018 to
provide investors with a Key Information Document ("KID") which includes
performance projections which are the product of prescribed calculations based
on the Company's past performance. Whilst the content and format of the KID
cannot be amended under the applicable EU regulations, the Board, sharing
industry-wide concerns, does not believe that these projections are an
appropriate or helpful way to assess the Company's future prospects.
Accordingly, the Board urges shareholders also to consider the more complete
information set out in the Company's interim and full annual report and
financial statements, together with the monthly factsheets and daily net asset
value announcements, when considering an investment in the Company's shares.
These documents, together with a link to third party research coverage of the
Company are published at www.atlantisjapangrowthfund.com.
ONGOING CHARGES
The Board continues to look very closely at the level of ongoing charges
incurred by the Company and for the financial year ended 30 April 2019 the
ongoing charges were 1.6% (30 April 2018: 1.6%). The Board will remain vigilant
in seeking opportunities for further reductions
OUTLOOK
While Japan's economic annual growth is likely to be subdued, beneath this
placid outlook there are profound economic and social structural changes
fostering compelling investment opportunities.
We expect the Bank of Japan ("BoJ") to maintain its current loose monetary
policies with the 2.0% inflation target still a long way off, although the
deflationary risks seem to all but have disappeared given the ever increasing
labour shortages and improving private sector capex.
In previous statements, I have highlighted the implications for the Company of
the greater focus in Japan on the Corporate Governance Code and we continue to
see a steady improvement in total shareholder returns by way of more efficient
use of capital, share buybacks and higher dividends.
As at the end of April 2019 the TOPIX was trading on a forward price earnings
multiple of 13x and a price to book ratio of 1.30x.
These valuations are towards the lower end of historical ranges and compare
favourably to other developed equity markets. Taeko Setaishi, the Company's
investment adviser, expects the growth outlook for mid to smaller sized
companies to continue to exceed that for larger companies lending support to
the Company's portfolio positioning.
In conclusion, I believe there is a compelling case for investment in Japanese
equities over the medium to longer term. Furthermore, the Company's adviser is
very well placed to pursue long-term capital gains through bottom-up stock
picking to select undervalued companies with a strong competitive advantage and
longer term growth potential.
Noel Lamb 12 July 2019
Investment Adviser's Report
For the financial year ended 30 April 2019
Performance
The Company's NAV per share, calculated in GBP and on a total return basis,
ended the financial year at 242.15p, representing a 0.1% loss during the course
of the year. The Company's share price at the financial year end was 218.50p, a
decrease of 0.2% over the same period and representing a 9.8% discount to NAV.
Over the financial year, the TOPIX total return index recorded a 2.9% capital
loss calculated in GBP.
At the conclusion of the financial year under review, the Company's borrowings
stood at ¥1 billion with cash of ¥297 million. The Company's net gearing was
3.8% which compared to a gearing of 2.4% at the end of the previous year. JPY
was ¥144.24 against GBP at 30 April 2019, a gain of 4.2% from the previous
financial year's closing rate of ¥150.27.
The Company's portfolio at 30 April 2019 contained 62 companies, one more than
at the same time a year ago. The companies which made a particularly strong
contribution to the portfolio's performance during the financial year included
semiconductor production equipment maker Lasertec, corporate benefits
administrator Benefit One, material handling/logistics systems equipment
assembler Daifuku, and medical equipment assembler Asahi Intecc.
Excluding cash, the portfolio was entirely invested in the equities of publicly
listed Japanese companies and listed J-REITs. The Company had no foreign
exchange hedges and no exposure to convertible bonds or any other type of
structured financial product.
Market comment & Economic Outlook
The financial year ended 30 April 2019 was challenging for Japanese equity
investors. Investor sentiment was negatively affected by geopolitical tensions
in Asia, trade disputes and a sluggish Chinese economy. The Tokyo Stock
Exchange short sell ratio hovered in the 45%-50% range for prolonged periods of
time, a data point suggesting a lack of enthusiasm for Japan equities. The
October-December quarter was particularly punishing as indices for large and
smaller capitalised stocks declined by 15%-25% in local currency terms.
Reassured by better economic data from China, and reported progress in trade
negotiations, the Tokyo Stock Price Index ("TOPIX") rebounded in the final
quarter of the Company's financial year. Despite this, during the financial
year on a total return basis, TOPIX dropped by 6.8% in JPY (-2.9% in GBP
terms).
The Investment Adviser expects corporate earnings in the coming financial year
to be, at best, flat year-on-year with particular weakness in the initial six
months. Sluggish sales growth could negatively impact operating rates. Other
profit headwinds include higher input labour costs owing to a) the tight labour
market and b) personnel reforms intended to equalise compensation between
full-time and part-time employees.
Japan reported a surprising 2.1% annualised growth spurt for January-March
2019. However this performance masked underlying weaknesses since the economy's
principal components (consumption, private sector capex, and exports) declined.
Owing to fiscal stimulus and anticipatory spending related to the forthcoming
sales tax increase, Japan should remain on a growth path in the first two
quarters of fiscal year March 2020, and then decline in the subsequent quarter.
Real GDP growth in fiscal year March 2020 could be below its potential and in
the 0.3% to 0.5% range.
Inflation is set to remain well below the Bank of Japan's 2% target for the
foreseeable future. Consequently, monetary policy will remain exceptionally
loose with a rate hike not likely to be considered for another 12 months.
In summary, the Investment Adviser expects the Japanese economy over the medium
term to generate annualised growth of approximately +0.5% to +1.0% supported by
contributions from private sector capital expenditure, external demand and
household consumption. The risks associated with this scenario include a
lengthy, comprehensive trade war between China and the United States (combined,
both account for 40% of Japan's exports), tariffs and/or other hostile measures
taken by the United States specifically against the Japanese automobile sector,
a sudden JPY appreciation against the USD and increases in commodity prices.
INVESTMENT ADVISER'S Strategy
The Investment Adviser employs a bottom-up stock picking investment style,
which is based on the assumption that anticipated corporate profits growth is a
key determinant of equity valuations over the long term. Consequently, the
investment advisory team at AIRC seeks out companies with strong competitive
advantages, positive cash flows, and secular growth potential.
While AIRC's proprietary research is a team effort, investment decisions are
the sole responsibility of the lead investment adviser. The AIRC investment
process, may, but will not necessarily, result in a portfolio bias tilted
toward medium and smaller capitalised companies.
There are no top-down pre-determined sector weightings as such; sector exposure
is created by the accumulation of individual positions held in the TOPIX
sector. The portfolio is constructed to gain exposure to themes expected to
drive Japan's economic growth over the long term. While Japan's economic annual
growth will likely oscillate around a +0.5% - +1.0% trend line, beneath this
placid outlook there are profound economic and social structural changes
fostering compelling investment opportunities. In particular:
1. Japan's irreversible demographic trend will intensify demand for
geriatric healthcare, products and services. Other societies will have to find
solutions to rising healthcare demands and arguably Japan will lead in
developing new hard and software solutions. The Company's exposure to geriatric
healthcare is focused on care suppliers (Solasto), equipment makers (Asahi
Intecc), and cutting edge drug discovery firms (PeptiDream).
2. Japan's tight labour market has prompted companies to re-evaluate their
personnel practices. Every effort is being made to retain personnel through
improved conditions and offering full employee status. Outsourcing core and
non-core operations has become standard practice as well. The Company has
exposure to these trends through positions in Benefit One, Creek & River,
Recruit, Outsourcing, and Fullcast.
3. Japan is the largest supplier of robots, material handling systems, and
other capital goods to Asia. The Company's investments in this sector include
Daifuku and Mitsubishi Electric.
4. The Investment Adviser believes semiconductors are a secular growth
product with sustained long term demand from the automobile sector, content
digitalisation and the Internet of Things. Japanese companies have carved out
high market shares in critical semiconductor production equipment production
line tools. Investments include Lasertec, Tokyo Electron, Disco and Japan
Material.
5. The structural changes occurring in the Japanese economy have created a
hospitable environment for new business ventures. As a growth oriented
investment vehicle the Company constantly seeks new businesses for investment.
New business model investments include Bengo4.com, House Do, Bplats, S-pool and
TKP.
The investment advisory team at AIRC consists of four analysts / advisers who
are engaged daily in contacting companies or preparing for management visits.
The team meets formally on a weekly basis to review the previous week's visits
but it also exchanges information on a daily basis. AIRC has a collegiate
approach to research but believes a sole individual should be responsible for
portfolio advisory decisions. The lead investment adviser to the Company, Taeko
Setaishi, is responsible for the final stock recommendations but relies on
input from the other team members.
In conclusion, the Investment Adviser believes the Japanese equity markets are
host to many attractive growth investment opportunities that have the potential
to contribute to the Company's long term capital appreciation.
Atlantis Investment Research Corporation
12 July 2019
Alternative Investment Fund Manager's Report
For the financial year ended 30 April 2019
Quaero Capital LLP, which is registered in England as a limited liability
partnership, was authorised on 22 July 2014 by the Financial Conduct Authority
of the UK as the Company's Alternative Investment Fund Manager (the "AIFM") for
the purposes of the Alternative Investment Fund Managers Directive ("AIFMD" or
the "Directive").
As the Company's AIFM, Quaero Capital LLP is required to make available an
annual report for each financial year of the Company containing the following:
i. A balance-sheet or a statement of assets and liabilities (see Statement
of Financial Position below).
ii. An income and expenditure account for the financial year (see Statement
of Comprehensive Income below).
iii. A report on the activities of the financial year (see Chairman's
Statement below, Investment Adviser's Report below, Details of Ten Largest
Investments below, Schedule of Investments below and Directors' Report and
Statement of Directors' Responsibilities below).
iv. Details of material changes to the information set out under Article 23
of the Directive. To satisfy this requirement, Quaero Capital LLP publishes an
Investor Disclosure Document available at http://www.quaerocapital.uk.
v. Certain disclosures in relation to the remuneration of Quaero Capital
LLP. To meet these requirements, details of Quaero Capital LLP's remuneration
policy and remuneration disclosures in respect of Quaero Capital LLP's
reporting period for the financial year ended 31 March 2019 are available at
http://www.quaerocapital.uk/downloads/regulatory-disclosures.
vi. Details of the leverage employed by the Company. Using the methodologies
prescribed under the Directive, the leverage of the Company is disclosed in the
following table:
Commitment leverage as at Gross leverage as at
30 April 2019 30 April 2019
Leverage ratio 103.8% 103.8%
Quaero Capital LLP
12 July 2019
Details of Ten Largest Investments
The ten largest investments comprise a fair value of GBP30,688,249 (30 April
2018: GBP33,937,809) representing 28.6% of Net Asset Value (30 April 2018: 28.6%)
with details as below:
Nidec (33,000 shares)
Nidec is the world's leading small precision electric motor maker with
particular application in hard disk drives. Through a highly active and
successful global M&A strategy Nidec has also become a major supplier of mid
and large sized motors. The company has a proven management team focused on
creating shareholder value.
Fair value of GBP3,611,330 representing 3.4% of the Net Asset Value (30 April
2018: 3.6%).
Japan Elevator Service Holdings (227,000 shares)
Japan Elevator Service is the leading independent elevator maintenance service
provider which has exploited its technical strength (remote low-cost
inspections) and marketing capabilities to build share and expand geographic
reach to the Kansai region. The company benefits from elevator manufacturers
withdrawing from the maintenance service market and is directing cash flow to
acquisitions.
Fair value of GBP3,545,648 representing 3.3% of the Net Asset Value (30 April
2018: 0.0%).
Asahi Intecc Co Ltd. (80,000 shares)
Asahi Intecc manufactures ultra-fine stainless steel wire and has evolved into
a major assembler of angiographic catheters and PTCA guidewires. All
manufacturing operations are conducted off-shore in Thailand and Vietnam. Asahi
Intecc has moved to diversify its operations by taking over Toyoflex.
Fair value of GBP3,111,440 representing 2.9% of the Net Asset Value (30 April
2018: 2.2%).
PeptiDream (74,000 shares)
PeptiDream is a biopharmaceutical company that employs its proprietary PDPS
(Peptide Discovery Platform System) to discover and develop next generation
pharmaceutical products. The company, in partnership with other global drug
companies, is currently involved in 92 multi-venture projects plus in-house
programs targeting influenza. Global partners include AstraZeneca, Novartis,
and Merck. Revenues, rising at a steady pace, are generated through license
sales and contract fees.
Fair value of GBP3,073,032 representing 2.9% of the Net Asset Value (30 April
2018: 2.2%).
TKP (83,000 shares)
TKP manages and operates rental meeting rooms for corporate clients as well as
other large facilities with meeting rooms and banquet halls. TKP keeps costs
low by acquiring large facilities on a long term basis and leases them out on a
short term, e.g., hourly, basis. The company also provides food, beverages, and
other services for meetings. TKP plans to build hotels in Japan's major cities
and has been actively expanding overseas in New York, Singapore, and Hong Kong.
Fair value of GBP2,934,654 representing 2.7% of the Net Asset Value (30 April
2018: 2.6%).
Japan Material (255,000 shares)
Japan Material provides management services for special gases, ultra-pure
water, and chemicals by dispatching engineers to semiconductor and LCD
production facilities. The company also sells these consumable supplies as
well as piping equipment. Clients include most major Japanese semiconductor/LCD
manufacturers. Japan Material's Taiwan subsidiary provides similar services and
supplies to major Taiwanese manufacturers.
Fair value of GBP2,915,207 representing 2.7% of the Net Asset Value (30 April
2018: 2.4%).
Creek & River (340,000 shares)
Creek & River specialises in providing temporary staff referrals to content
providers, mainly to TV stations, game, web, and advertising firms. Creek &
River has widened its staffing rolls to medical professionals, accountants, and
fashion. The company has launched an intellectual property management
service.
Fair value of GBP2,889,868 representing 2.7% of the Net Asset Value (30 April
2018: 2.3%).
Benefit One (180,000 shares)
Benefit One creates and administers employee benefit programs for a wide range
of corporate and government agency clients. Member organisations prefer to
outsource benefit administration for a fixed fee owing to cost and convenience.
Benefits include discounted access to leisure facilities and health care
check-ups which have proved to be popular. Benefit One has established
operations in China, United States, Germany, and Thailand.
Fair value of GBP2,883,906 representing 2.7% of the Net Asset Value (30 April
2018: 2.0%).
Keyence Corporation (6,000 shares)
Keyence is the leading maker of detection and measuring control equipment,
particularly FA sensors. Uniquely, Keyence employs a direct sales business
model which fosters close relationships with customers who are in the
semiconductor, LCD, foodstuffs, and pharmaceutical sectors. Keyence is a
fabless company with all production outsourced to affiliates. Its senior
management is highly regarded for its disciplined financial targets.
Fair value of GBP2,875,170 representing 2.7% of the Net Asset Value (30 April
2018: 2.2%).
Hikari Tsishin (20,000 shares)
Hikari Tsushin is a sales organisation with 2,000 shops targeting individuals
and SMEs. Hikari has diversified from distributing business equipment and
mobile phones to a variety of other products and services including water
coolers, electric power, mobile wi-fi routers, and insurance.
Fair value of GBP2,847,994 representing 2.6% of the Net Asset Value (30 April
2018: 2.1%).
Schedule of Investments
As at 30 April 2019
Fair Value
Holdings Financial assets at fair value through profit GBP'000 % of NAV
or loss
Advertising: 0.52% (30 April 2018: 1.33%)
110,000 Tow 553 0.52
Auto Parts & Equipment: 0.00% (30 April 2018: - -
0.78%)
Chemicals: 4.48% (30 April 2018: 5.21%)
73,000 KH Neochem 1,632 1.52
150,900 Mitsubishi Chemical 826 0.77
58,000 Tri Chemical Laboratories 2,348 2.19
Commercial Services: 27.83% (30 April 2018:
21.76%)
135,000 Aoyama Zaisan Networks 1,485 1.38
180,000 Benefit One 2,884 2.69
340,000 Creek & River 2,890 2.69
160,000 Fullcast Holdings 2,701 2.52
107,500 Funai Soken 2,141 2.00
64,000 Hirayama 1,298 1.21
47,000 Kanamoto 858 0.80
230,000 Link And Motivation 1,346 1.25
130,000 Nihon M&A Center 2,839 2.65
140,000 Outsourcing 1,410 1.31
57,000 Phil 1,517 1.41
75,000 Recruit Holdings 1,731 1.61
530,000 Riso Kyoiku 1,562 1.46
130,000 S-Pool 2,267 2.11
83,000 TKP 2,935 2.74
Computers: 0.00% (30 April 2018: 2.08%) - -
Distribution/Wholesale: 1.90% (30 April 2018:
1.69%)
105,000 Trusco Nakayama 2,042 1.90
Diversified Financial Services: 1.40% (30
April 2018: 1.94%)
80,000 Japan Investment Adviser 1,498 1.40
Electronics: 9.49% (30 April 2018: 9.17%)
120,000 Chino 1,085 1.01
167,000 Idec 2,611 2.43
6,000 Keyence Corporation 2,875 2.68
33,000 Nidec 3,611 3.37
Engineering & Construction: 0.00% (30 April - -
2018: 0.89%)
Hand/Machine Tools: 1.11% (30 April 2018:
3.22%)
9,000 Disco 1,192 1.11
Healthcare-Products: 2.90% (30 April 2018:
3.15%)
80,000 Asahi Intecc 3,111 2.90
Healthcare-Services: 6.45% (30 April 2018:
3.79%)
110,000 Advantage Risk Management 701 0.65
115,000 Elan 1,345 1.25
74,000 PeptiDream 3,073 2.87
235,000 Solasto 1,805 1.68
Home Furnishings: 0.00% (30 April 2018: - -
1.38%)
Internet: 4.78% (30 April 2018: 0.00%)
55,000 Bengo4.com 1,645 1.53
44,000 Bplats 1,232 1.15
120,000 Sharingtechnology 996 0.93
60,000 Uzabase 1,256 1.17
Leisure Time: 1.05% (30 April 2018: 1.80%)
57,000 Tosho 1,128 1.05
Lodging: 2.04% (30 April 2018: 0.93%)
55,500 Kyoritsu Maintenance 2,193 2.04
Machinery-Construction & Mining: 0.92% (30
April 2018: 2.27%)
90,000 Mitsubishi Electric 987 0.92
Machinery-Diversified: 10.57% (30 April 2018:
11.36%)
57,000 Daifuku 2,679 2.50
227,000 Japan Elevator Service Holdings 3,546 3.30
120,000 Nittoku Engineering 2,313 2.16
40,000 Optorun 809 0.75
400,000 Yamashin-Filter 1,994 1.86
Metal Fabricate/Hardware: 1.27% (30 April
2018: 1.22%)
150,000 Okada Aiyon 1,358 1.27
Real Estate: 1.07% (30 April 2018: 5.38%)
120,000 House Do 1,153 1.07
REITS: 3.11% (30 April 2018: 2.72%)
1,780 Industrial & Infrastructure Fund Investment 1,562 1.46
Reits
2,500 MCUBS MidCity Investment 1,768 1.65
Retail: 2.23% (30 April 2018: 1.24%)
21,000 Convano 116 0.11
100,000 Komeda 1,414 1.32
14,000 Monogatari 864 0.80
Semiconductors: 7.39% (30 April 2018: 6.73%)
255,000 Japan Material 2,915 2.72
77,000 Lasertec 2,685 2.50
19,000 Tokyo Electron 2,324 2.17
Software: 4.09% (30 April 2018: 4.80%)
48,000 Cresco 1,125 1.05
59,000 CRI Middleware 1,411 1.32
58,700 Money Forward 1,850 1.72
Telecommunications: 5.29% (30 April 2018:
3.51%)
20,000 Hikari Tsushin 2,848 2.65
80,000 Vision Inc/Tokyo Japan 2,829 2.64
Transportation: 3.92% (30 April 2018: 4.01%)
75,000 Fuji Kyuko 2,186 2.04
18,000 Hamakyorex 512 0.48
90,000 Naigai Trans Line 830 0.77
15,000 Sakai Moving Service 680 0.63
Total Japan: (30 April 2018: 102.36%) 111,380 103.81
Total listed equities: (30 April 2018: 111,380 103.81
102.36%)
Total investments held at fair value through 111,380 103.81
profit or loss
Cash and cash equivalents (30 April 2018: 2,125 1.98
2.83%)
Other net liabilities (30 April 2018: (6,214) (5.79)
(5.19%))
Net assets attributable to equity 107,291 100.00
shareholders
Board of Directors
NOEL LAMB (Chairman, appointed to the Board on 1 February 2011 and appointed as
Chairman on 1 May 2014), British, graduated from Exeter College, Oxford
University and is a barrister-at-law. He joined Lazard Brothers & Co Limited in
1987 and from 1992 to 1997 he was the managing director of Lazard Japan Asset
Management where he was the fund manager for their Japanese equities. In 1997,
he moved to the Russell Investment Group where he established the investment
management capability of Russell in London. In 2002, he was promoted to Chief
Investment Officer in North America where he managed assets of $150bn until his
departure in 2008.
PHILIP EHRMANN FCSI (appointed to the Board on 25 October 2013), British,
graduated from the London School of Economics with a BSc in Economics. He
started his investment career in 1981 specialising in the North American market
before heading up Emerging Markets for Invesco Asset Management. In 1995 he
joined Gartmore Investment Management to undertake a similar role, before
becoming Head of Pacific & Emerging Markets. Whilst at Gartmore he managed the
Gartmore Asia Pacific Trust Plc, a pan-Asian Investment Trust. In 2006 he moved
to Jupiter Asset Management where he was Co-Head of Asia. At the beginning of
2015 he joined Manulife Asset Management as a Senior Managing Director,
responsible for overseeing Global Emerging Markets equity portfolios.
RICHARD PAVRY (appointed to the Board on 1 August 2016), British, is the head
of investment trusts at Jupiter Asset Management Limited. Richard graduated in
Natural Sciences from Cambridge University before converting to law. He began
his career as a solicitor with Simmons & Simmons, moving to the corporate
finance team at UBS in 1999 and then to Jupiter Asset Management in 2000.
Richard has previously served as a non-executive director of Jupiter Second
Split Trust PLC.
MICHAEL MOULE (appointed to the Board on 5 February 2018), British, has a close
connection to investment trusts and global investment having managed The City
of London Investment Trust plc, The Bankers Investment Trust PLC and The Law
Debenture Corporation p.l.c. during an extensive City career with Touche
Remnant and Henderson Global Investors. He is currently a director of The
European Investment Trust plc and a member of the investment committees of the
British Heart Foundation and The Open University. He was previously Chairman
of Polar Capital Technology Trust plc.
Directors' Report and Statement of Directors' Responsibilities
The Directors are pleased to present their twenty third Annual Report and
Audited Financial Statements of the Company for the financial year ended 30
April 2019.
PRINCIPAL ACTIVITY
The Company is a Guernsey registered authorised closed-ended investment company
with UK investment trust status traded on the London Stock Exchange. The
Company has a premium listing in the Official List. Trading in the Company's
ordinary shares commenced on 10 May 1996.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing Financial Statements for each
financial year which give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that financial year. In
preparing these Financial Statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed subject
to any material departures disclosed and explained in the Financial Statements;
and
- prepare the Financial Statements on a going concern basis unless it is
inappropriate to presume that the Company will continue in business.
We confirm, to the best of our knowledge, that:
- this Annual Report and Audited Financial Statements, prepared in
accordance with International Financial Reporting Standards as adopted by the
European Union ("IFRS") and applicable Guernsey law, gives a true and fair view
of the assets, liabilities, financial position and assesses the Company's
position and performance, business model and strategy of the Company; and
- this Annual Report and Audited Financial Statements include information
detailed in the Directors' Report, the Investment Adviser's Report and Notes to
the Financial Statements, which provides a fair review of the information
required by:
a) DTR 4.1.8 of the Disclosure Guidance and Transparency Rules ("DTR"),
being a fair review of the Company's business and a description of the
principal risks and uncertainties facing the Company; and
b) DTR 4.1.11 of the DTR, being an indication of important events that have
occurred since the beginning of the financial year, the likely future
development of the Company, the Company's use of financial instruments and,
where material, the Company's financial risk management objectives and policies
and its exposure to price risk, credit risk, liquidity risk and cash flow risk.
In the opinion of the Board, the Annual Report and Audited Financial
Statements, taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Company's performance,
business model and strategy.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the Financial Statements comply with
The Companies (Guernsey) Law, 2008 (the "Companies Law") and the Protection of
Investors (Bailiwick of Guernsey) Law, 1987 ("POI Law"). They are also
responsible for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for ensuring that the Directors' Report and other
information included in the Annual Report is prepared in accordance with
company law applicable in Guernsey. They are also responsible for ensuring that
the Annual Report includes information required by the Listing Rules of the
Financial Conduct Authority and the DTR.
The Directors who held office at the date of the approval of the Financial
Statements confirm that, so far as they are aware:
- There is no relevant audit information of which the Company's auditor is
unaware; and
- Each Director has taken all the steps they ought to have taken as
Directors to make themselves aware of any relevant audit information and to
establish that the Company's auditor is aware of that information.
The Directors confirm that these Financial Statements comply with these
requirements.
In respect of the UK Criminal Finances Act 2017, which has introduced a new
corporate criminal offence of "failing to take reasonable steps to prevent the
facilitation of tax evasion", the Board confirms that it is committed to zero
tolerance towards the criminal facilitation of tax evasion.
BUSINESS REVIEW AND TAX STATUS
The Company has been formally accepted into the investment trust company
regime, subject to the Company continuing to submit appropriate annual tax
filings to HM Revenue and Customs. In the opinion of the Directors, the Company
has conducted its affairs so as to enable it to maintain ongoing investment
trust status, subject to completion of the relevant audit work.
REDEMPTION FACILITY
The purpose of the facility is to provide a measure of liquidity for those
shareholders who may wish to redeem. The redemption facility will at the
Directors' discretion operate at six-monthly intervals on 31 March and 30
September (or if such date is not a business day, the previous business day).
The Directors shall be entitled at their absolute discretion to determine the
procedures for the redemption of the ordinary shares (subject to the facilities
and requirements of CREST and the Companies Law). Without prejudice to the
Directors discretion, it is intended that the procedure described below shall
apply.
Redemptions may take place on any redemption point. Upon redemption, all
ordinary shares redeemed shall be cancelled.
The total redemptions at each redemption point are limited to 5% of the issued
share capital at the time. At each redemption point, each shareholder is
entitled to request the redemption of 5% of their holding of shares held at the
immediately preceding redemption point and held continuously at all times since
that date, rounded down to the nearest whole number (the "basic entitlement").
Until 31 March 2015, the redemption value was based upon the realisation value
of the portfolio, less an exit charge set at 2% on redemptions of up to a
shareholder's basic entitlement. Following a Board resolution to amend the
redemption facility, with effect from the same date, the exit charge payable on
redemptions of up to a shareholder's basic entitlement was increased to 4% of
the total redemption costs.
Shareholders are entitled to request the redemption of shares in excess of
their basic entitlement to the extent that other shareholders redeem less than
their basic entitlement or do not seek to redeem their shares at the relevant
redemption point (an "excess request"). Following the amendment to the
redemption facility, with effect from 31 March 2015, the exit charge on excess
requests is the rolling 90-day average discount calculated in accordance with
the Company's existing discount control mechanism, subject to an exit charge
cap of 10%. Any such excess redemption requests will be satisfied pro rata in
proportion to the amount in excess of the basic entitlement (rounded down to
the nearest whole number of shares).
The right of shareholders to request the redemption of their ordinary shares on
any redemption point shall be exercised by the shareholder delivering to the
receiving agent (or to such other person as the Directors may designate for
this purpose) a duly completed redemption request. Redemption request forms are
available upon request from the Administrator. Redemption requests shall not be
valid (unless the Company otherwise agrees) unless they are received by the
receiving agent not earlier than 20 days nor later than 10 days before the
relevant redemption point. The Company may, prior to a redemption point, in its
sole discretion, invite investors to purchase, at the investment price,
ordinary shares which are the subject of redemption requests.
SHARE BUY-BACKS
The Company has been granted the authority to make market purchases of up to a
maximum of 14.99% of the aggregate number of ordinary shares in issue at a
price not exceeding the higher of (i) 5% above the average of the mid-market
values of the ordinary shares for the five business days before the purchase is
made or (ii) the higher of the price of the last independent trade and the
highest current investment bid for the ordinary shares.
In deciding whether to make any such purchases the Directors will have regard
to what they believe to be in the best interests of shareholders as a whole, to
the applicable legal requirements and any other requirements in the Articles.
The making and timing of any buy-backs will be at the absolute discretion of
the Board and not at the option of the shareholders, and is expressly subject
to the Company having sufficient surplus cash resources available (excluding
borrowed moneys).
The Board believes that the effective use of treasury shares can assist the
Company in improving liquidity in the Company's ordinary shares, managing any
imbalance between supply and demand and minimising the volatility of the
discount at which the ordinary shares trade to their NAV for the benefit of
shareholders. It is believed that this facility gives the Company the ability
to sell ordinary shares held in treasury quickly and cost effectively, and
provides the Company with additional flexibility in the management of the
capital base. During the financial year ended 30 April 2019, there were 500,000
shares purchased into treasury (30 April 2018: None). The number of shares held
in treasury at 30 April 2019 is 4,374,186 (30 April 2018: 3,874,186), the
percentage of treasury shares in total is 9.9% (2018: 7.9%).
The Board shall have regard to current market practice for the reissue of
treasury shares by investment trusts and the recommendations of the Investment
Adviser. The Board's current policy is that any ordinary shares held in
treasury will not be resold by the Company at a discount to the Investment
Adviser's estimate of the prevailing NAV per ordinary share as at the date of
issue. The Board will make an announcement of any change in its policy for the
re-issuance of ordinary shares from treasury via a Regulatory Information
Service approved by the Financial Conduct Authority ("FCA").
INVESTMENT POLICY
The Company's investment objective and policy are set out below.
RESULTS
The results for the financial year are set out in the Statement of
Comprehensive Income below.
DIVID
As a UK investment trust the Company is subject to the provisions of the
Corporation Tax Act 2010. Section 1158 ("s.1158") includes a retention test
which states that the Company should not retain in respect of any accounting
period an amount which is greater than 15% of its income. This has been
modified for accounting periods beginning on or after 28 June 2013 such that a
negative balance on a company's revenue reserve is taken into account when
calculating the amount of distributable income. This is not relevant for the
financial year ended 30 April 2019.
There were no distributions made during the financial year (30 April 2018: GBP
Nil) and the Company met the retention test for the financial year ended 30
April 2019.
CAPITAL VALUES
At 30 April 2019 the value of net assets attributable to shareholders was GBP
107,290,867 (30 April 2018: GBP118,738,232) and the NAV per share was GBP2.42 (30
April 2018: GBP2.42).
PREPARATION OF FINANCIAL STATEMENTS
The Financial Statements of the Company have been prepared in accordance with
IFRS, which comprise standards and interpretations approved by the European
Union, and International Accounting Standards, and Standing Interpretations
Committee interpretations approved by the Inter-Agency Standing Committee
("IASC") that remain in effect.
SIGNIFICANT SHAREHOLDINGS
In accordance with the Company's Articles of Association the Directors have the
ability to request nominee shareholders to disclose the beneficial shareholders
they represent. Based on the information received the following shareholders
had a holding in the Company in excess of 3% as at 30 April 2019.
Shareholder % Ordinary
Shares
1607 Capital 21.6 9,569,249
Partners
Wells Fargo & 21.5 9,526,948
Company
Lazard 6.2 2,747,220
Hargreaves Lansdown plc 4.4 1,958,153
Interactive Investor Trading 3.4 1,491,384
Miton Group plc 3.2 1,432,289
SECRETARY
The Secretary is Northern Trust International Fund Administration Services
(Guernsey) Limited.
INDEPENT AUDITOR
The Company has appointed PricewaterhouseCoopers CI LLP ("PwC") as its
independent auditor.
PwC have indicated their willingness to continue in office.
Resolutions re-appointing them and authorising the Directors to fix their
remuneration will be proposed at the annual general meeting.
PRINCIPAL RISKS AND UNCERTANTIES
As an investment trust, the Company invests in securities for the long term.
The financial investments held as assets by the Company comprise equity shares
(see the Schedule of Investments below for a breakdown). As such, the holding
of securities, investing activities and financing associated with the
implementation of the investment policy involve certain inherent risks. Events
may occur that could result in either a reduction in the Company's net assets
or a reduction of revenue profits available for distribution.
Set out below are the principal risks inherent in the Company's activities
along with the actions taken to manage them. The Board conducts robust reviews
of these risks and agrees policies for their management. These policies have
remained substantially unchanged since 30 April 2006.
Performance
Inappropriate investment policies and processes may result in under-performance
against the prescribed benchmark index and the Company's peer group. The Board
manages these risks by ensuring a diversification of investments and regularly
reviewing the portfolio asset allocation and investment process. The Board also
regularly monitors the Company's investment performance against a number of
indices and the AIC Japanese smaller companies' sub-sector peer group. In
addition, certain investment restrictions have been set and these are monitored
as appropriate.
Discount
A disproportionate widening of the discount relative to the Company's peers
could result in loss of value for shareholders. The Board reviews the discount
level regularly. The introduction of the redemption facility has improved the
liquidity in the Company's shares and helps to narrow the discount to the NAV
at which the shares trade.
The Company operates a shareholder-approved discount control mechanism whereby
the Company will hold a continuation vote if the shares have traded, on
average, at a discount of more than 10% to the NAV per share during any rolling
90 day period in normal market conditions. If the obligation to hold a
continuation vote is triggered, the vote will be held no later than the next
practicable annual general meeting of the Company.
Regulatory
The Company operates in a complex regulatory environment and faces a number of
regulatory risks. Breaches of regulations, such as Section 1158 of the
Corporation Tax Act 2010, The Companies (Guernsey) Law, 2008, the UKLA Listing
Rules and the DTR, could lead to a number of detrimental outcomes and
reputational damage. The Company conforms with the Alternative Investment Fund
Managers Directive ("AIFMD"). The Board relies on the services of the
Administrator, Northern Trust International Fund Administration Services
(Guernsey) Limited, and its professional advisers to ensure compliance with The
Companies (Guernsey) Law, 2008, the POI Law, the UKLA Listing Rules and
Prospectus Rules, the DTR and the rules of the London Stock Exchange.
Operational
Like most other investment trust companies, the Company has no employees. The
Company therefore relies upon the services provided by third parties and is
dependent on the control systems of the Investment Manager, Investment Adviser
and the Company's Administrator. The security, for example, of the Company's
assets, dealing procedures, accounting records and maintenance of regulatory
and legal requirements depends on the effective operation of these systems.
These are regularly tested and monitored.
Financial
The financial risks faced by the Company, including the impact of changes in
Japanese equity market prices on the value of the Company's investments, are
disclosed in Note 16 to the Financial Statements. The financial risks disclosed
in Note 16 are detailed for compliance with IFRS.
CORPORATE GOVERNANCE AND SHAREHOLDER RELATIONS
Details of the Company's compliance with corporate governance best practice,
including information on relations with shareholders, are set out in the
Corporate Governance Statement below and this statement forms part of the
Directors' Report.
VIABILITY STATEMENT
In accordance with provision C.2.2 of the UK Corporate Governance Code as
issued by the Financial Reporting Council ('FRC') in April 2016, the Board has
assessed the prospects of the Company over the next three years including the
period from the date of this document to the annual general meeting in 2019.
The Company's investment objective is to achieve long-term capital growth and
the Board regards the Company as a long-term investment.
The Board has considered the Company's business model including its investment
objective and investment policy as well as the principal risks and
uncertainties that may affect the Company as detailed below. The Board, in its
assessment of the viability of the Company, has considered each of the
Company's principal risks as referred to above, in particular the impact of a
significant fall in the Japanese equity market on the value of the Company's
investment portfolio. The Board has noted that the Company holds a highly
liquid portfolio invested predominantly in listed equities and no significant
increase to ongoing charges or operational expenses is anticipated.
The Directors also review the level of the discount or premium between the
middle market price of the Company's ordinary shares and their NAV on a regular
basis. The Directors have powers granted to them at the last annual general
meeting to purchase ordinary shares and either cancel or hold them in treasury
as a method of controlling the discount to NAV and enhancing shareholder value.
The Board has therefore concluded, based on the Company's processes for
monitoring operating costs, share price discount, the Investment Manager's
compliance with the investment objective, asset allocation, the portfolio risk
profile, gearing, counterparty exposure, liquidity risk and financial controls,
that there is a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the next
three years. As part of its assessment, the Board has noted that shareholders
will be required to vote on the continuation of the Company at the 2019 annual
general meeting.
GOING CONCERN
As outlined in the Viability Statement above, the Directors believe that the
Company has adequate resources to continue in operational existence for the
next 12 months. Whilst the Company is obliged to hold a continuation vote at
the 2019 annual general meeting in accordance with its discount control
mechanism, the Directors do not believe this should automatically trigger the
adoption of a basis other than going concern basis in line with the Association
of Investment Companies ("AIC") Statement of Recommended Practice ("SORP")
which states that it is more appropriate to prepare financial statements on a
going concern basis unless a continuation vote has already been triggered and
shareholders have voted against continuation. The Directors have also taken
account its expectations of the results of the forthcoming continuation vote.
While the outcome of the vote is not yet known and therefore creates some
uncertainty as to the going concern basis, the Directors are recommending that
shareholders vote in favour of the continuation resolution and have no reason
to assume that shareholders will not support the continuation of the Company
and have prepared the viability statement under this assumption. Save as noted
above in the Company's Viability Statement, there are no material uncertainties
relating to events or conditions that may cast significant doubt as to the
ability of the Company to continue to meet its ongoing obligations.
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE
The Company has entered into the arrangements necessary to ensure compliance
with the AIFM Directive. Following a review of the Company's management
arrangements, the Board approved the appointment of Quaero Capital LLP
("Quaero") as the Company's Alternative Investment Fund Manager on the terms of
and subject to the conditions of the Investment Management Agreement between
the Company and Quaero.
The Board has also appointed Northern Trust (Guernsey) Limited (the
"Depositary") to act as the Company's depositary (as required by the AIFM
Directive) on the terms and subject to the conditions of a Depositary Agreement
between the Company, Quaero and the Depositary.
International Tax Reporting
For the purposes of the US Foreign Account Tax Compliance Act, the Company
registered with the US Internal Revenue Services ("IRS") as a Guernsey
reporting Foreign Financial Institution ("FFI"), received a Global Intermediary
Identification Number PYT2PS.99999.SL.831, and can be found on the IRS FFI
list.
The Common Reporting Standard ("CRS") is a global standard for the automatic
exchange of financial account information developed by the Organisation for
Economic Co-operation and Development ("OECD"), which has been adopted by
Guernsey and which came into effect on 1 January 2016. The Board has taken the
necessary action to ensure that the Company is compliant with Guernsey
regulations and guidance in this regard.
Noel Lamb Philip Ehrmann
Chairman Director
12 July 2019
Directors' Remuneration Report
The Board has approved this report, in accordance with the rules covering good
communication to shareholders. An ordinary resolution for the approval of this
report will be put to the members at the forthcoming annual general meeting.
REMUNERATION COMMITTEE
The Board as a whole fulfils the function of a Remuneration Committee. The
Company's financial adviser, corporate broker and company secretary will be
asked to provide advice when the Directors consider the level of Directors'
fees.
POLICY ON DIRECTORS' FEES
The Board's policy is that the remuneration of non-executive Directors should
reflect the experience of the Board as a whole and be fair and comparable to
that of other investment trusts that are similar in size, have a similar
capital structure and have a similar investment objective.
The fees for the non-executive Directors are determined within the limits of GBP
200,000 set out in the Company's Articles of Incorporation. The Directors are
not eligible for bonuses, pension benefits, share options, long-term incentive
schemes or other benefits.
DIRECTORS' SERVICE CONTRACTS
It is the Board's policy that none of the Directors have a service contract.
Directors are appointed initially until the following annual general meeting
when, under the Company's Articles of Incorporation, it is required that they
be re-elected by shareholders. Thereafter, two Directors shall retire by
rotation, or if only one Director is subject to retire by rotation he shall
retire. The retiring Directors will then be eligible for reappointment having
been considered for reappointment by the Chairman and other Directors.
Notwithstanding the foregoing provisions of the Company's Articles of
Incorporation, the Board is recommending that all Directors be subject to
re-election at the forthcoming annual general meeting.
DIRECTORS' EMOLUMENTS FOR THE FINANCIAL YEAR
The Directors who served in the financial year are entitled to the following
emoluments in the form of fees:
Year ended Year ended
30 April 2019 30 April 2018
Regular fees GBP GBP
Noel Lamb 32,500 30,000
Richard Pavry 25,833 25,000
Philip Ehrmann 28,334 27,500
Michael Moule 25,833 6,250
112,500 88,750
The fees for the non-executive Directors were last reviewed five years ago and
have been unchanged since 2013. It was decided that fees be increased by GBP1,000
per annum for non-executive Directors and GBP3,000 per annum for the Chairman
with effect from 6 July 2018.
DIRECTORS' INTERESTS
The Directors listed below are all members of the Board at the financial year
end 30 April 2019.
Certain Directors had a beneficial interest in the Company by way of their
investment in the ordinary shares of the Company.
The details of these interests as at 30 April 2019 and 30 April 2018 are as
follows:
Ordinary Shares Ordinary Shares
30 April 2019 30 April 2018
Noel Lamb 14,400 14,400
Richard Pavry 40,000 40,000
Philip Ehrmann 28,800 28,800
Michael Moule 20,000 16,000
As at the date of this report, the above interests of the Directors were
unchanged.
There were no relevant contracts in force during or at the end of the financial
year in which any Director had an interest. There are no service contracts in
issue in respect of the Company's Directors.
No Directors had a non-beneficial interest in the Company during the financial
year under review.
DISCLOSURE OF DIRECTORSHIPS IN PUBLIC COMPANIES LISTED ON RECOGNISED STOCK
EXCHANGES
The following summarises the Directors' directorships in other public
companies:
Michael Moule
Company Name Stock Exchange
The European Investment Trust London
plc
None of the other Directors held directorships in other public companies during
the financial year under review.
APPROVAL
A resolution for the approval of the Directors' Remuneration Report for the
financial year ended 30 April 2019 will be proposed at the annual general
meeting.
By order of the Board
Noel Lamb Philip Ehrmann
Chairman Director
12 July 2019
Corporate Governance
INTRODUCTION
The following Corporate Governance statement forms part of the Directors'
Report below (DTR 7.2.1). The Board of the Company has considered the
principles and recommendations of the July 2016 edition of the AIC Code of
Corporate Governance (the "AIC Code") by reference to the AIC Corporate
Governance Guide for Investment Companies (the "AIC Guide"). The AIC Code, as
explained by the AIC Guide, addresses all the principles set out in the UK
Corporate Governance Code 2016 (the "UK Code"), as well as setting out
additional principles and recommendations on issues that are of specific
relevance to the Company. A revised edition of the AIC Code (2019 AIC Code) was
published in February 2019 and a revised edition of the UK Code (2018 UK Code)
was published in July 2018. Both codes are effective for annual periods
beginning on or after 1 January 2019 and will be adopted by the Company in the
financial year ended 30 April 2020 Annual Report and Audited Financial
Statements.
The Company is subject to the Guernsey Financial Services Commission ("GFSC")
Code of Corporate Governance (the "GFSC Code") and reports against the AIC Code
which is deemed to comply with the GFSC Code.
The Company has complied with the recommendations of the AIC Code and the
relevant provisions of the UK Code throughout the financial year, except as set
out below:
- the role of the chief executive
- executive directors' remuneration
- the need for an internal audit function
- the need to appoint a senior independent director
- the need to appoint a nomination committee or management engagement
committee
- the whistle blowing policy
For the reasons set out in the AIC Guide, and as explained in the UK Code, the
Board considers these provisions are not relevant to the position of the
Company, being an externally managed investment company. The Company has
therefore not reported further in respect of these provisions. The Directors
are non-executive and the Company does not have employees, hence no
whistle-blowing policy is required. However, the Directors note that the
Company's service providers have whistle blowing policies in place.
THE BOARD
Disclosures under Principle 5 of the AIC Code
The Board comprises four independent non-executive Directors including the
Chairman, Noel Lamb. Due to the size of the Company, the nature of its
activities and the fact that all of the Directors are independent, the Board
does not consider it necessary to appoint a senior independent director.
The Board has not appointed a remuneration committee but, comprising wholly
independent Directors, the whole Board considers these matters regularly. The
Board considers agenda items formally laid out in the Notice and Agenda, which
are formally circulated to the Board in advance of the meeting as part of the
Board papers.
The primary focus at board meetings is a review of investment performance and
associated matters such as the discount, redemptions, gearing, asset
allocation, marketing and investor relations, peer group information and
industry issues. There were four board meetings (1 May 2017-30 April 2018:
five) and three Audit Committee meetings (1 May 2017-30 April 2018: three) held
during the financial year 1 May 2018 to 30 April 2019. The table below shows
the number of formal meetings attended by each Director during the financial
year:
Director Board Meetings Attended Audit Committee Meetings Attended
Noel Lamb 4 3
Philip Ehrmann 4 3
Richard Pavry 4 3
Michael Moule 4 3
In addition to the above meetings, there were also five other committee
meetings (1 May 2017-30 April 2018: five) held during the financial year in
relation to the operation of the redemption facility and other operational
matters.
Directors are appointed initially until the following annual general meeting
when, under the Company's Articles of Incorporation, it is required that they
be re-elected by shareholders. Thereafter, two Directors shall retire by
rotation, or if only one Director is subject to retire by rotation he shall
retire. The retiring Directors will then be eligible for reappointment having
been considered for reappointment by the Chairman and other Directors. The
Board is recommending that all Directors be subject to re-election at the
forthcoming AGM.
The Board evaluates its performance and considers the tenure of each Director
on an annual basis, and considers that the mix of skills, experience, ages and
length of service to be appropriate to the requirements of the Company.
When considering succession planning, the Board bears in mind the balance of
skills, knowledge, and experience and diversity existing on the Board. The
Board has noted amendments to the UK Code to strengthen the principle on
boardroom diversity following the Davies Report. The Board considers diversity
as part of the annual performance evaluation and it is felt that there is a
range of backgrounds and each Director brings different qualities to the Board
and its discussions. It is not felt appropriate for the Company to have set
targets in relation to diversity; candidates will be assessed in relation to
the relevant needs of the Company at the time of appointment. A good knowledge
of investment management generally, Japanese investment management specifically
and investment trust industry matters and sophisticated investor concerns
relevant to the Company will nevertheless remain the key criteria by which new
Board candidates will be assessed. The Board will recommend when the
recruitment of additional non-executive Directors is required. Once a decision
is made to recruit additional Directors to the Board each Director is invited
to submit nominations and these are considered in accordance with the Board's
agreed procedures. The Board may also use independent external agencies as and
when the requirement to recruit an additional Board member becomes necessary.
The Board embraces the principles of the UK Code but, with regard to its
provisions concerning director tenure, is of the opinion that an individual's
independence cannot be arbitrarily determined on the basis of a set period of
time. The Company's investment objective is to achieve long term capital growth
and it benefits from having long serving Directors with a detailed knowledge of
the Company's operations to effectively oversee its management on behalf of
shareholders. The Company therefore does not impose fixed term limits on
Directors' tenure as this would result in a loss of experience and knowledge
without any assurance of increased independence. The Board, collectively and
individually, firmly believes in the continued independence of its members. The
Board confirms that the performance of all Directors has been subject to formal
evaluation and that they continue to be effective in their role. The Board
firmly recommends to shareholders that all Directors should be re-elected.
There is an agreed procedure for Directors to take independent professional
advice if necessary, and at the Company's expense. This is in addition to the
access which every Director has to the advice of the Company Secretary. The
Company has taken out insurance jointly with QBE and Travelers in respect of
the Directors' liability. For the financial year ended 30 April 2019 the charge
was GBP4,875.
INTERNAL CONTROLS
The Board has delegated the responsibility for the management of the Company's
investment portfolio, the provision of depositary services and the
administration, registrar and corporate secretarial functions including the
independent calculation of the Company's NAV and the production of the Annual
Report and Audited Financial Statements. The Annual Report and Audited
Financial Statements are also independently audited. Whilst the Board delegates
responsibility, it retains responsibility for the functions it delegates and is
responsible for the risk management and systems of internal control. Formal
contractual agreements have been put in place between the Company and providers
of these services.
The Board directly on an ongoing basis and via its Audit Committee has
implemented a system to identify and manage the risks inherent in such
contractual arrangements by assessing and evaluating the performance of the
service providers, including financial, operational and compliance controls and
risk management systems.
On an ongoing basis compliance reports are provided at each Board meeting from
the Administrator, Northern Trust International Fund Administration Services
(Guernsey) Limited, and the Audit Committee reviews the Service Organisation
Controls (SOC 1) report on this service provider.
The extent and quality of the systems of internal control and compliance
adopted by the Investment Manager and the Investment Adviser are also reviewed
on a regular basis, and the primary focus at each Board meeting is a review of
investment performance and associated matters such as gearing, asset
allocations, marketing and investment relations, peer group information and
industry issues. The Board also closely monitors the level of discount and has
the ability to buy back shares in the market.
The Board believes that it has implemented an effective system for the
assessment of risk, but the Company has no staff, has no internal audit
function and can only give reasonable but not absolute assurance that there has
been no material financial misstatement or loss.
COMMITTEES
The Board has established an Audit Committee which is described below.
The Board has not appointed a Management Engagement Committee or Nomination
Committee but has chosen to assess and review the performance of the Board and
contractual arrangements with the Investment Manager, Investment Adviser and
service providers to the Company on an annual basis by the entire Board who are
independent non-executive Directors. Details of the Investment Management
Agreement are shown in Note 7 to the Financial Statements.
Audit Committee
The Audit Committee operates within defined terms of reference. The Audit
Committee's responsibilities include, but are not limited to (see below for
more details):
- review of draft annual and interim report and financial statements;
- review of independence, objectivity, qualifications and experience of the
auditor;
- review of audit fees.
The Audit Committee is appointed by the Board and comprises Mr Ehrmann as
Chairman, Mr Pavry, Mr Lamb and Mr Moule.
In accordance with the AIC Code, the Board has determined that Mr Ehrmann has
recent and relevant financial experience. All other members of the Audit
Committee are deemed to have the necessary ability and experience to understand
the Financial Statements.
The function of the Audit Committee is to ensure that the Company maintains the
highest standards of integrity, financial reporting and internal control.
The Audit Committee meets with the Company's external auditor annually to
review the Audited Financial Statements.
The Audit Committee meets at least twice a year and may meet more frequently if
the Audit Committee deems necessary or if required by the Company's auditor.
The Company's auditor is advised of the timing of the Audit Committee Meetings.
The Audit Committee has access to the Compliance officers of the Investment
Manager, the Administrator and the Depositary.
The Company Secretary is the Secretary of the Audit Committee and attends all
meetings of the Audit Committee.
The Audit Committee is satisfied that auditor objectivity and independence is
not impaired by the performance by PwC CI LLP of non-audit services, which
cover UK tax compliance services. The Audit Committee considers that the
appointment of a third party unfamiliar with the Company to carry out non-audit
services of UK tax compliance would not benefit shareholders since they would
incur unnecessary additional expense.
The Audit Committee is authorised by the Board to investigate any activity
within its terms of reference. It is authorised to obtain outside legal or
other independent professional advice and to secure the attendance of outsiders
with relevant experience and expertise if it considers this necessary.
SHAREHOLDER RELATIONS
The Board monitors the trading activity and shareholder profile on a regular
basis and maintains contact with the Company's stockbroker to ascertain the
views of shareholders. Shareholders where possible are contacted directly on a
regular basis, and shareholders are invited to attend the Company's annual
general meeting in person and ask questions of the Board and Investment
Adviser. Following the annual general meeting each year the Investment Adviser
gives a presentation to the shareholders.
The Company reports to shareholders twice a year and a proxy voting card is
sent to shareholders with the Annual Report and Audited Financial Statements.
The Registrar monitors the voting of the shareholders and proxy voting is taken
into consideration when votes are cast at the annual general meeting.
Shareholders may contact the Directors via the Company Secretary. In addition,
estimated NAVs are published on a daily basis and monthly factsheets are
published on the Investment Manager's website at http://www.quaerocapital.uk/
funds/atlantis-japan-growth-fund-limited.
EVALUATION OF PERFORMANCE OF INVESTMENT MANAGER AND INVESTMENT ADVISER
The investment performance is reviewed at each regular Board meeting at which
representatives of the Investment Manager and Investment Adviser are required
to provide answers to any questions raised by the Board. The Board has
instigated an annual formal review of the Investment Manager and Investment
Adviser which includes consideration of:
- performance compared with benchmark and peer group;
- investment resources dedicated to the Company;
- investment management fee arrangements and notice period compared with
peer group; and
- marketing effort and resources provided to the Company.
In the opinion of the Directors the continuing appointment of the Investment
Manager and Investment Adviser on the terms agreed is in the interests of the
Company's shareholders as a whole.
By order of the Board
Noel Lamb Philip Ehrmann
Chairman Director
12 July 2019
Audit Committee Report
We present the Audit Committee's Report, setting out the responsibilities of
the Audit Committee and its key activities for the financial year ended 30
April 2019.
The Audit Committee has continued its detailed scrutiny of the appropriateness
of the Company's system of risk management and internal controls, the
robustness and integrity of the Company's financial reporting, along with the
external audit process. The Committee has devoted time to ensuring that
controls and processes have been properly established, documented and
implemented.
During the course of the financial year, the information that the Audit
Committee has received has been timely and clear and has enabled the Audit
Committee to discharge its duties effectively.
The Audit Committee supports the aims of the UK Code and the best practice
recommendations of other corporate governance organisations and the Association
of Investment Companies ("AIC"), and believes that reporting against the
revised AIC Code allows the Audit Committee to further strengthen its role as a
key independent oversight Committee.
Role and Responsibilities
The primary function of the Audit Committee is to assist the Board in
fulfilling its oversight responsibilities. This includes reviewing the
financial reports and other financial information before publication.
In addition, the Audit Committee reviews the systems of internal controls on a
continuing basis that the Investment Manager and the Board have established
with respect to finance, accounting, risk management, compliance, fraud and
audit. The Committee also reviews the accounting and financial reporting
processes, along with reviewing the roles, independence and effectiveness of
the external auditor.
The ultimate responsibility for reviewing and approving the Annual Report and
Audited Financial Statements remains with the Board.
The Audit Committee's full terms of reference can be obtained by contacting the
Company's Administrator.
Risk Management and Internal Control
The Board, as a whole, including the Audit Committee members, considers the
nature and extent of the Company's risk management framework and the risk
profile that is acceptable in order to achieve the Company's strategic
objectives. As a result, it is considered that the Board has fulfilled its
obligations under the UK Code.
The Audit Committee continues to be responsible for reviewing the adequacy and
effectiveness of the Company's on-going risk management systems and processes.
Its system of internal controls, along with its design and operating
effectiveness, is subject to review by the Audit Committee through reports
received from the Investment Manager, Investment Adviser and Depositary, along
with those from the Administrator and external auditor.
The Audit Committee has reviewed the need for an internal audit function and
has decided that the systems and procedures employed by the Investment Manager,
Investment Adviser, Administrator and Depositary provide sufficient assurance
that a sound system of risk management and internal control, which safeguards
shareholders' investments and the Company's assets, is maintained. An internal
audit function is therefore considered unnecessary.
Fraud, Bribery and Corruption
The Audit Committee has relied on the overarching requirement placed on all
service providers under the relevant agreements to comply with applicable law.
The Audit Committee reviews the service provider policies and receives a
confirmation from all service providers that there have been no instances of
fraud or bribery.
Financial Reporting and Significant Financial Issues
The Audit Committee assesses whether suitable accounting policies have been
adopted. The Audit Committee reviews accounting papers prepared by the
Investment Manager and Administrator which provide details on the main
financial reporting judgements.
The Audit Committee also reviews reports by the external auditors which
highlight any issues with respect to the work undertaken on the audit.
The significant issues considered during the financial year by the Audit
Committee in relation to the Financial Statements and how they were addressed
is detailed below:
(i) Valuation of Investments:
The Company's investments had a fair value of GBP111,379,895 as at 30 April 2019
and represent a substantial portion of the assets of the Company. As such this
is the largest factor in relation to the consideration of the Financial
Statements. These investments are valued in accordance with the Significant
Accounting Policies set out in Note 2,(f) to the Financial Statements. The
Audit Committee considered the valuation of the investments held by the Company
as at 30 April 2019 to be correct from information provided by the Investment
Manager, Investment Adviser, Depositary and Administrator on their processes
for the valuation of these investments.
(ii) Income Recognition:
The Audit Committee considered the income from investments recorded in the
Financial Statements for the financial year ended 30 April 2019. Income from
investments is recognised in accordance with the Significant Accounting
Policies set out in Note 2,(d). The Audit Committee reviewed information
obtained from the Investment Manager and was satisfied that income, having
arisen solely from dividends declared by listed equities, was correctly stated
in the Financial Statements.
(iii) Change to Presentation Currency
For the financial year ended 30 April 2019, the Company changed its
presentation currency from USD to GBP to align with the functional currency of
GBP.
(iv) Review of the Financial Statements:
At the request of the Audit Committee, the Administrator confirmed that it was
not aware of any material misstatements, including matters relating to
Financial Statements presentation. At the Audit Committee meeting to review the
Annual Report and Audited Financial Statements, the Audit Committee received
and reviewed a report on the audit from the external auditors. On the basis of
its review of this report, the Audit Committee is satisfied that the external
auditor has fulfilled its responsibilities with diligence and professional
scepticism. The Audit Committee advised the Board that these Annual Report and
Audited Financial Statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to assess
the Company's performance, business model and strategy.
(v) Going Concern:
Whilst the Company is obliged to hold a continuation vote at the 2019 annual
general meeting the Directors do not believe this should automatically trigger
the adoption of a basis other than going concern. While the outcome of the vote
is unknown and therefore creates some uncertainty on the validity of the going
concern basis, the Directors are recommending that shareholders vote in favour
of the continuation resolution and have no reason to presume that shareholders
will not support the continuation of the Company and have prepared the
viability statement under this assumption.
The Audit Committee is satisfied that appropriate disclosures have been
included in the Financial Statements.
External Auditor
The Audit Committee has responsibility for making a recommendation on the
appointment, reappointment and removal of the external auditor. PwC CI LLP has
been external auditor to the Company since their appointment on 13 January
2015.
During the financial year the Audit Committee received and reviewed audit plans
and reports from the external Auditor. To assess the effectiveness of the
external audit process, the auditors were asked to articulate the steps that
they have taken to ensure objectivity and independence, including where the
auditor provides non-audit services. The Audit Committee also reviewed the work
done during the financial year by the external auditors both as part of the
audit process and on non-audit matters and from time to time compares their
effectiveness as well as their costs with the benefit of the experience they
have had in other investment management houses and relevant contexts. These
steps enable the Audit Committee to monitor the auditor's performance,
behaviour and effectiveness during the exercise of their duties, which informs
the decision to recommend reappointment on an annual basis. The Audit Committee
under its terms of reference reviews the appointment and re-appointment of the
external auditor typically at its December meeting in advance of the reviewing
the audit approach for the Annual Report and Audited Financial Statements.
The external Auditor is required to rotate the audit partner every five years,
and the current partner has been in place for five year end audits. Therefore,
a new audit partner will be in place for the year ended 30 April 2020.
The Audit Committee has adopted a policy on the engagement of the Company's
auditor to supply non-audit services to the Company. PwC CI LLP was paid GBP7,250
for non-audit services during the financial year under review (30 April 2018: GBP
5,250).
The Committee ensures that auditor objectivity and independence are safeguarded
by requiring pre-approval by the Committee for all non-audit services provided
to the Company, which takes into consideration:
- confirmation from the auditor that they have adequate arrangements in
place to safeguard their objectivity and independence in carrying out such
work, within the meaning of the regulatory and professional requirements to
which they are subject;
- the fees to be incurred, relative to the audit fees;
- the nature of the non-audit services; and
- whether the auditor's skills and experience make it the most suitable
supplier of such services and whether they are in a position to provide them.
The Committee has reviewed the non-audit services performed by PwC CI LLP in
the financial year and has concluded that the policy has been applied and their
independence and objectivity has not been impaired as a result.
The following table summarises the remuneration paid for audit and non-audit
services during the financial year ended 30 April 2019 and the financial year
ended 30 April 2018.
For the financial year
ended 30 April 2019
GBP
Annual audit 37,950
Tax compliance and advisory 7,250
services
For the financial year
ended 30 April 2018
GBP
Annual audit 32,900
Tax compliance and advisory 5,250
services
For any questions on the activities of the Audit Committee not addressed in the
foregoing, a member of the Audit Committee will attend each annual general
meeting to respond to such questions.
The Audit Committee Report was approved on 12 July 2019 and signed on behalf of
the Audit Committee by:
Philip Ehrmann
Chairman, Audit Committee
Depositary Statement
For the financial year ended 30 April 2019
Report of the Depositary to the Shareholders
Northern Trust (Guernsey) Limited has been appointed as Depositary to Atlantis
Japan Growth Fund Limited (the "Company") in accordance with the requirements
of Article 36 and Articles 21(7), (8) and (9) of the Directive 2011/61/EU of
the European Parliament and of the Council of 8 June 2011 on Alternative
Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and
Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the "AIFM Directive").
We have enquired into the conduct of Quaero Capital LLP (the "AIFM") for the
financial year ended 30 April 2019, in our capacity as Depositary to the
Company.
This report, including the review provided below, has been prepared for and
solely for the shareholders in the Company. We do not, in giving this report,
accept or assume responsibility for any other purpose or to any other person to
whom this report is shown.
Our obligations as Depositary are stipulated in the relevant provisions of the
AIFM Directive and the relevant sections of Commission Delegated Regulation
(EU) No 231/2013 (collectively the "AIFMD legislation").
Amongst these obligations is the requirement to enquire into the conduct of the
AIFM and the Company and their delegates in each annual accounting period.
Our report shall state whether, in our view, the Company has been managed in
that period in accordance with the AIFMD legislation. It is the overall
responsibility of the AIFM to comply with these provisions. If the AIFM or
their delegates have not so complied, we, as the Depositary, will state why
this is the case and outline the steps which we have taken to rectify the
situation.
Basis of Depositary Review
The Depositary conducts such reviews as it, in its reasonable discretion,
considers necessary in order to comply with its obligations and to ensure that,
in all material respects, the Company has been managed (i) in accordance with
the limitations imposed on its investment and borrowing powers by the
provisions of its constitutional documentation and the appropriate regulations
and (ii) otherwise in accordance with the constitutional documentation and the
appropriate regulations. Such reviews vary based on the type of company, the
assets in which a company invests and the processes used, or experts required,
in order to value such assets.
Review
In our view, the Company has been managed during the year, in all material
respects:
(i) in accordance with the limitations imposed on the investment and borrowing
powers of the Company by the constitutional document and by the AIFMD
legislation; and
(ii) otherwise in accordance with the provisions of the constitutional document
and the AIFMD legislation.
For and on behalf of
Northern Trust (Guernsey) Limited
12 July 2019
Independent Auditor's Report to the Members of
Atlantis Japan Growth Fund Limited
For the financial year ended 30 April 2019
Report on the audit of the financial statements
_________________________________________________________________________________________________
Our opinion
In our opinion, the financial statements give a true and fair view of the
financial position of Atlantis Japan Growth Fund Limited (the "Company") as at
30 April 2019, and of its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards as
adopted by the European Union and have been properly prepared in accordance
with the requirements of The Companies (Guernsey) Law, 2008.
_________________________________________________________________________________________________What
we have audited
The Company's financial statements comprise:
- the statement of financial position as at 30 April 2019;
- the statement of comprehensive income for the year then ended;
- the statement of changes in equity for the year then ended;
- the statement of cash flows for the year then ended; and
- the notes to the financial statements, which include a summary of
significant accounting policies.
_________________________________________________________________________________________________Basis
for opinion
We conducted our audit in accordance with International Standards on Auditing
("ISAs"). Our responsibilities under those standards are further described in
the Auditor's responsibilities for the audit of the financial statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
_________________________________________________________________________________________________Material
uncertainty related to going concern
We draw attention to the going concern disclosures in the Directors' Report and
to the basis of preparation disclosures in note 2 to the financial statements.
These disclosures note that the Company is obliged to hold a continuation vote
at the 2019 annual general meeting. If a continuation resolution is not passed,
the directors shall put proposals to the shareholders for restructuring or
reorganisation of the Company. There is a material uncertainty as to the
outcome of this continuation resolution that may cast significant doubt on the
Company's ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
_________________________________________________________________________________________________Independence
We are independent of the Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements of the Company, as
required by the Crown Dependencies' Audit Rules and Guidance. We have fulfilled
our other ethical responsibilities in accordance with these requirements.
_________________________________________________________________________________________________Our
audit approach
Overview
Materiality
- Overall materiality was GBP1.07m which represents 1% of the
Company's net asset value.
Audit scope
- We conducted our audit work in Guernsey, which is where
the Company is incorporated and based.
- The Company engages an investment manager, Quaero Capital
LLP, to manage the investment portfolio. We had interaction
with the investment manager in completing aspects of our audit
work.
- We conducted our audit of the financial statements from
information provided by Northern Trust International Fund
Administration Services (Guernsey) Limited (the
"Administrator") to whom the Board has delegated the provision
of certain functions.
- The Company is an authorised closed-ended investment
scheme registered in Guernsey and its equity shares are listed
on the premium segment of the London Stock Exchange.
Key audit matters
- Existence and valuation of the portfolio of investments.
- Change in presentation currency.
- Material uncertainty related to going concern.
Audit scope
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the financial statements. In particular, we
considered where the directors made subjective judgements; for example, in
respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. As in all of our
audits, we also addressed the risk of management override of internal controls,
including among other matters, consideration of whether there was evidence of
bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to
enable us to provide an opinion on the financial statements as a whole, taking
into account the structure of the Company, the accounting processes and
controls, and the industry in which the Company operates.
_________________________________________________________________________________________________
Materiality
The scope of our audit was influenced by our application of materiality. An
audit is designed to obtain reasonable assurance whether the financial
statements are free from material misstatement. Misstatements may arise due to
fraud or error. They are considered material if individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative
thresholds for materiality, including the overall Company materiality for the
financial statements as a whole as set out in the table below. These, together
with qualitative considerations, helped us to determine the scope of our audit
and the nature, timing and extent of our audit procedures and to evaluate the
effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Overall Company materiality GBP1.07m (2018: $1.63m)
How we determined it 1% of net assets
Rationale for the materiality We believe that net assets is the most
benchmark appropriate benchmark because this is
the key metric of interest to
investors. It is also a generally
accepted measure used for companies in
this industry.
We agreed with the Audit Committee that we would report to them misstatements
identified during our audit above GBP54k, as well as misstatements below that
amount that, in our view, warranted reporting for qualitative reasons.
_________________________________________________________________________________________________
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the financial statements of the current
period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
In addition to the matter described in the material uncertainty related to
going concern section, we have determined the matters described below to be the
key audit matters to be communicated in our report.
Key audit matter How our audit addressed the Key audit
matter
Existence and valuation of the Our main audit procedures over these
portfolio of investments investments were as follows:
Refer to note 2 (Significant
Accounting Policies) and note 16 · We understood and evaluated the
(Financial Risk Management Objectives internal controls in place at the
and Policies). Administrator and determined that we
could place reliance on the
The portfolio of directly held Administrator's Type II assurance
investments, which constitute the controls report (the "Controls
investments held at fair value through Report") for the controls surrounding
profit or loss financial statement the recognition, measurement and
line item, comprise 100% of quoted de-recognition of investments. We also
equities, which are designated by the obtained a Controls Report bridging
reporting standards as 'Level 1' given letter from the Administrator to
that they are quoted in an active ensure that the assessment of the
market for which publically available controls environment covers the whole
pricing data is readily available. The period and that no exceptions were
investment portfolio represents 104% noted.
of the Company's net asset value. · We read the accounting policies
selected by the directors covering the
The investments are held by an recognition, classification and
independent custodian. Whilst the measurement of investments and
valuation of these investments is not assessed those policies for compliance
considered complex, nor does it with International Financial Reporting
involve significant judgements and Standards as adopted by the European
estimates to be made by management, Union.
the market value of investments is · We re-priced 100% of the
material to the Company. A material investment portfolio as at the
misstatement due to fraud or error statement of financial position date
would be material to the financial using independently obtained pricing
statements as a whole. As a result, information.
whilst we have not determined it to be · We independently obtained a
a significant audit risk, we consider custodian report from Northern Trust
the existence and valuation of (Guernsey) Limited, in its capacity as
investments to be an area of focus in independent custodian of the Company's
our audit and accordingly a key audit investments, ensuring that all
matter. investment holdings per the investment
portfolio agreed to the holdings per
the custodian report.
No misstatements were identified by
our testing which required reporting
to those charged with governance.
Change in presentation currency Our work over the change in
Refer to note 3 (Change in Accounting presentation currency included the
Policy and Presentation Currency). following:
For the financial year ended 30 April · We reviewed the presentation and
2019, the Company changed its disclosure of the change in
presentation currency from United presentation currency in the financial
States Dollars ("USD") to Pounds statements for compliance with IFRS.
Sterling ("GBP") to align with the · We obtained the underlying
functional currency of GBP. accounting records for the prior year
audited financial statements, which
were recorded in the functional
currency of GBP and included a
translation into USD for presentation
purposes.
· For each prior year financial
statement line item in the primary
statements and corresponding notes, we
re-performed the translation from USD
back to GBP and also agreed the
resulting GBP amounts to the
corresponding functional amounts in
the underlying prior year accounting
records.
· We agreed the rates of exchange
utilised to an independent source.
No misstatements were identified by
our testing which required reporting
to those charged with governance.
Other information
The directors are responsible for the other information. The other information
comprises all the information included in the Annual Report and Audited
Financial Statements but does not include the financial statements and our
auditor's report thereon.
Our opinion on the financial statements does not cover the other information
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is
to read the other information identified above and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
_________________________________________________________________________________________________
Responsibilities of the directors for the financial statements
The directors are responsible for the preparation of financial statements that
give a true and fair view in accordance with International Financial Reporting
Standards as adopted by the European Union, the requirements of Guernsey law
and for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing, as
applicable, matters relating to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
_________________________________________________________________________________________________
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
* Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
* Obtain an understanding of internal control relevant to the audit in order
to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
* Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
directors.
* Conclude on the appropriateness of the directors' use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the Company's ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may
cause the Company to cease to continue as a going concern. For example, the
terms on which the United Kingdom may withdraw from the European Union are
not clear, and it is difficult to evaluate all of the potential
implications on the Company and the wider economy
* Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves
fair presentation.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
_________________________________________________________________________________________________
Report on other legal and regulatory requirements
Under The Companies (Guernsey) Law, 2008 we are required to report to you if,
in our opinion:
- we have not received all the information and explanations we require for
our audit;
- proper accounting records have not been kept; or
- the financial statements are not in agreement with the accounting records.
We have no exceptions to report arising from this responsibility.
We have nothing to report in respect of the following matters which we have
reviewed:
- the directors' statement set out below in relation to going concern. As
noted in the directors' statement, the directors have concluded that it is
appropriate to adopt the going concern basis in preparing the financial
statements. The going concern basis presumes that the Company has adequate
resources to remain in operation, and that the directors intend it to do so,
for at least one year from the date the financial statements were signed. As
part of our audit we have concluded that the directors' use of the going
concern basis is appropriate. However, because not all future events or
conditions can be predicted, these statements are not a guarantee as to the
Company's ability to continue as a going concern;
- the directors' statement that they have carried out a robust assessment of
the principal risks facing the Company and the directors' statement in relation
to the longer-term viability of the Company. Our review was substantially less
in scope than an audit and only consisted of making inquiries and considering
the directors' process supporting their statements; checking that the
statements are in alignment with the relevant provisions of the UK Corporate
Governance Code; and considering whether the statements are consistent with the
knowledge acquired by us in the course of performing our audit; and
- the part of the Corporate Governance Statement relating to the Company's
compliance with the ten further provisions of the UK Corporate Governance Code
specified for our review.
This report, including the opinion, has been prepared for and only for the
members as a body in accordance with Section 262 of The Companies (Guernsey)
Law, 2008 and for no other purpose. We do not, in giving this opinion, accept
or assume responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
Evelyn Brady
For and on behalf of PricewaterhouseCoopers CI LLP
Chartered Accountants and Recognised Auditor
Guernsey, Channel Islands
12 July 2019
The maintenance and integrity of the Atlantis Japan Growth Fund Limited website
is the responsibility of the directors; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the website.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Statement of Comprehensive Income
For the financial year ended 30 April 2019
30 April 2019 30 April 2018 (restated*)
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income
5 Net gains on investments - 131 131 - 35,606 35,606
held at fair value through
profit or loss
Net (losses)/gains on - (272) (272) - 54 54
foreign exchange
Interest income - - - 2 - 2
Dividend income 1,391 - 1,391 1,479 - 1,479
Redemption fee paid to the 629 - 629 418 - 418
Company
2,020 (141) 1,879 1,899 35,660 37,559
Expenses
7 Investment management fees (1,103) - (1,103) (1,102) - (1,102)
8 Depositary fees (90) - (90) (89) - (89)
9 Administration fees (142) - (142) (140) - (140)
Registrar and transfer (9) - (9) (12) - (12)
agent fees
10 Directors' fees and (132) - (132) (98) - (98)
expenses
Insurance fees (5) - (5) (5) - (5)
Audit fees (45) - (45) (39) - (39)
Printing and advertising (7) - (7) (38) - (38)
fees
Legal and professional fees (81) - (81) (60) - (60)
Listing fees (29) - (29) (48) - (48)
Miscellaneous expenses (61) - (61) (51) - (51)
(1,704) - (1,704) (1,682) - (1,682)
Finance cost
Interest expense and bank (107) - (107) (113) - (113)
charges
Profit/(loss) before 209 (141) 68 104 35,660 35,764
taxation
11 Taxation (213) - (213) (226) - (226)
(Loss)/profit for the
financial year (4) (141) (145) (122) 35,660 35,538
Total comprehensive income (4) (141) (145) (122) 35,660 35,538
for the financial year
12 Basic and diluted (deficit)
/earnings per ordinary
share GBP0.000 GBP GBP(0.003) GBP(0.003) GBP0.743 GBP0.740
(0.003)
*The comparative Statement of Comprehensive Income has been restated and does
not correspond to the Financial Statements for the financial year ended 30
April 2018 (refer to Note 3 for more details).
In arriving at the result for the financial year, all amounts above relate to
continuing activities.
The total column in this statement represents the Company's Statement of
Comprehensive Income, prepared in accordance with IFRS. The supplementary
revenue and capital columns are both prepared under guidance published by the
Association of Investment Companies.
The notes below form an integral part of these financial statements.
Statement of Changes in Equity
For the financial year ended 30 April 2019
Accumulated
Capital Capital Capital other
Ordinary Share Revenue reserve/ reserve/ reserve/ comprehensive
Share
capital premium reserve realised unrealised exchange income Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balances at 1 May 2018 - - (20,402) 83,932 63,442 (14,377) 6,143 118,738
(restated*)
Movements during the financial
year
19 Redemptions - (10,216) - - - - - (10,216)
15 Shares bought into treasury - - (1,086) - - - - (1,086)
Transfer to capital reserve - 10,216 - (10,216) - - - -
from share premium
5 Net realised gains on - - (4,677) 4,677 - - - -
investments held at fair value
through profit or loss
5 Net unrealised (losses) on - - 4,546 - (4,546) - - -
investments held at fair value
through profit or loss
Net (losses) on foreign - - 272 - - (272) - -
exchange
Total comprehensive income - - (145) - - - - (145)
Balances at 30 April 2019 - - (21,492) 78,393 58,896 (14,649) 6,143 107,291
*The comparative Statement of Changes in Equity has been restated and does not
correspond to the Financial Statements for the financial year ended 30 April
2018 (refer to Note 3 for more details).
The notes below form an integral part of these financial statements.
Accumulated
Capital Capital Capital other
Ordinary Share Revenue reserve/ reserve/ reserve/ comprehensive
Share
capital premium reserve realised unrealised exchange income Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balances at 1 May 2017 - - (20,280) 69,229 36,401 (14,431) 6,143 77,062
(restated*)
Movements during the financial
year
18 Subscriptions - 14,858 - - - - - 14,858
19 Redemptions - (8,720) - - - - - (8,720)
Transfer to capital reserve - (6,138) - 6,138 - - - -
from share premium
5 Net realised gains on - - (8,565) 8,565 - - - -
investments held at fair value
through profit or loss
5 Net unrealised gains on - - (27,041) - 27,041 - - -
investments held at fair value
through profit or loss
Net losses on foreign exchange - - (54) - - 54 - -
Total comprehensive income - - 35,538 - - - - 35,538
Balances at 30 April 2018 - - (20,402) 83,932 63,442 (14,377) 6,143 118,738
(restated*)
*The comparative Statement of Changes in Equity has been restated and does not
correspond to the Financial Statements for the financial year ended 30 April
2018 (refer to Note 3 for more details).
The notes below form an integral part of these financial statements.
Statement of Financial Position
As at 30 April 2019
30 April 30 April 2018 30 April 2017
2019 (restated*) (restated*)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
16 Investments held at fair 111,380 121,545 82,377
value through profit or loss
Current assets
Cash and cash equivalents 2,125 3,364 1,228
Due from brokers 669 662 948
Dividends receivable 398 494 493
Prepaid expenses and other 8 20 16
receivables
3,200 4,540 2,685
Current liabilities
Due to brokers (91) (442) (871)
Payables and accrued expenses (265) (250) (183)
13 Loans payable (6,933) (6,655) (6,946)
(7,289) (7,347) (8,000)
Net current liabilities (4,089) (2,807) (5,315)
Non current liabilities - - -
17 Net assets
107,291 118,738 77,062
Equity
Ordinary share capital - - -
Share premium - - -
Revenue reserve (21,492) (23,969) (23,847)
Capital reserve 122,640 136,564 94,767
Accumulated other 6,143 6,143 6,143
comprehensive income
Net assets attributable to 107,291
equity shareholders 118,738 77,062
17 Net asset value per ordinary GBP2.42 GBP2.42 GBP1.75
share**
*The comparative Statement of Financial Position has been restated and does not
correspond to the Financial Statements for the financial year ended 30 April
2018 (refer to Note 3 for more details).
**Based on the Net Asset Value at the financial year end divided by the number
of shares in issue: 44,307,284 (30 April 2018: 49,012,128) (30 April 2017:
44,035,676) (See Note 15).
Approved by the Board on 12 July 2019 and signed on its behalf by:
Noel Lamb Philip Ehrmann
Chairman Director
The notes below form an integral part of these financial statements.
Statement of Cash Flows
For the financial year ended 30 April 2019
30 April 30 April
2019 2018
(restated*)
GBP'000 GBP'000
Notes
Cash flows from operating activities
Profit before taxation 68 35,764
Adjustments to reconcile profit before
taxation to net cash flows from
operating activities
5 Net realised gains on investments held (4,677) (8,565)
at fair value through profit or loss
5 Net unrealised losses/gains on 4,546 (27,041)
investments held at fair value through
profit or loss
Net realised and unrealised losses/ 278 (291)
gains on loan
Interest expense and bank charges 107 113
(Increase)/decrease in due from (7) 286
brokers
Decrease/(increase) in dividends 96 (1)
receivable
Decrease/(increase) in prepaid 12 (4)
expenses and other receivables
Decrease in due to brokers (351) (429)
Increase in payables and accrued 15 67
expenses
11 Taxation paid (213) (226)
(126) (327)
Purchase of investments (58,231) (75,939)
Sale of investments 68,527 72,377
10,296 (3,562)
Net cash inflow/(outflow) from 10,170 (3,889)
operating activities
Cash flows from financing activities
Interest paid (107) (113)
18 Subscriptions - 14,858
19 Redemptions (10,216) (8,720)
15 Shares bought into treasury (1,086) -
Net cash (outflow)/inflow from (11,409) 6,025
financing activities
Net (decrease)/increase in cash and (1,239) 2,136
cash equivalents
Cash and cash equivalents at beginning 3,364 1,228
of financial year
Cash and cash equivalents at end of 2,125 3,364
financial year
*The comparative Statement of Cash Flows has been restated and does not
correspond to the Financial Statements for the financial year ended 30 April
2018 (refer to Note 3 for more details).
** The portfolio turnover ratio is 52.8%.
The notes below form an integral part of these financial statements.
Notes to the Financial Statements
For the financial year ended 30 April 2019
1. GENERAL INFORMATION
Atlantis Japan Growth Fund Limited (the "Company") was incorporated in
Guernsey on
13 March 1996. The Company commenced activities on 10 May 1996. The Company is
an authorised closed-ended investment scheme registered and domiciled in P.O.
Box 255, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3QL,
Channel Islands. The Company's equity shares are traded on the London Stock
Exchange.
As an investment trust, the Company is not regulated as a collective
investment scheme by the Financial Conduct Authority. However, it is subject to
the UKLA Listing Rules, Prospectus Rules, Disclosure Guidance and Transparency
Rules and the rules of the London Stock Exchange.
The Company's investment objective is to achieve long term capital growth
through investing wholly or mainly in listed Japanese equities.
The Company's investment activities are managed by Quaero Capital LLP
("Investment Manager") with the administration delegated to Northern Trust
International Fund Administration Services (Guernsey) Limited.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial
statements are set out below. These policies have been consistently applied to
all the financial years presented, unless otherwise stated.
a) Basis of preparation
The Financial Statements of the Company have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
("IFRS"). The Financial Statements have been prepared under the historical cost
convention, as modified by the revaluation of investments held at fair value
through profit or loss, and in accordance with the Association of Investment
Companies ("AIC") Statement of Recommended Practice ("SORP") for Investment
Trust Companies and Venture Capital Trusts to the extent it is not in conflict
with IFRS and the Company's Principal Documents.
The preparation of the Financial Statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and the reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from those
estimates. As at the financial year ended 30 April 2019, the Company, being
solely invested in listed equities, did not hold any investment requiring the
use of significant estimates to determine their value. There were no other
significant estimates for the financial year ended 30 April 2019.
The significant accounting policies adopted are consistent with those of the
previous financial year with the exception of the following standard amendments
effective for the current financial year.
Critical Judgements
The Board consider GBP the currency that most faithfully represents the
economic effect of the underlying transactions, events and conditions. GBP is
the currency in which the Company measures its performance, as well as the
currency in which it receives subscriptions from its investors. This
determination also considers the competitive environment in which the Company
is compared to other European investment products. The presentation currency
for these financial statements is GBP. For further information on the change in
presentation currency please see note 3.
Accounting standards in issue and effective for the first time in these
financial statements
A number of new standards, amendments to standards and interpretations are
effective for annual periods beginning after 1 January 2018, and have been
applied in preparing these Financial Statements. Those that the Directors
consider relevant to the Company are detailed in the following sections.
IFRS 9, 'Financial Instruments'
IFRS 9 "Financial Instruments: Classification and Measurement" is effective for
annual reporting periods beginning on or after 1 January 2018 and has been
adopted by the Company in these financial statements. IFRS 9 replaces the
multiple classification and measurement models in IAS 39 Financial instruments:
Recognition and measurement with a single model that has three classification
categories: amortised cost, fair value through other comprehensive income and
fair value through profit and loss.
The measurement and classification requirements have not had a significant
impact on the Financial Statements since the Company's financial assets and
liabilities are valued at fair value through profit or loss.
A financial asset is measured at amortised cost if it is held within a business
model whose objective is to hold assets in order to collect contractual cash
flows, and the asset's contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal
outstanding. All other financial assets are measured at fair value. Derivative
and equity instruments are measured at fair value through profit and loss
unless, for equity instruments not held for trading, an irrevocable option is
taken to measure at fair value through other comprehensive income (without
subsequent recycling to profit and loss).
Classification and measurement of debt assets is driven by the entity's
business model for managing the financial assets and the contractual cash flow
characteristics of the financial assets. A debt instrument is measured at
amortised cost if the objective of the business model is to hold the financial
asset for the collection of the contractual cash flows and the contractual cash
flows under the instrument solely represent payments of principal and interest
(SPPI). A debt instrument is measured at fair value through other comprehensive
income if the objective of the business model is to hold the financial asset
both to collect contractual cash flows from SPPI and to sell. All other debt
instruments must be recognised at fair value through profit or loss. An entity
may however, at initial recognition, irrevocably designate a financial asset as
measured at fair value through profit or loss if doing so eliminates or
significantly reduces a measurement or recognition inconsistency.
A financial liability is classified as at fair value through profit or loss if
it is a derivative and equity instruments are measured at fair value through
profit or loss unless, for equity instruments not held for trading, or it is
designated as such on initial recognition.
IFRS 9 also introduces a new expected credit loss ("ECL") model which involves
a three-stage approach whereby financial assets move through the three stages
as their credit quality changes. The stage dictates how an equity measures
impairment losses and applies the effective interest rate method. On initial
recognition, entities will record a day-1 loss equal to the 12 month ECL,
unless the assets are considered credit impaired. There was no material impact
on the adoption of the new impairment model.
The adoption of IFRS 9 was applied retrospectively and did not result in a
change to the classification or measurement of financial instruments.
Comparative numbers were therefore not required to be restated.
IFRS 15 'Revenue from contracts with customers'
IFRS 15 is effective for annual periods beginning on or after 1 January 2018,
with early application permitted. IFRS 15 replaces IAS 18 Revenue and IAS 11
Construction Contracts, and establishes a five step model to account for
revenue arising from contracts with customers. In addition, guidance on
interest and dividend income has been removed from IAS 18 to IFRS 9 without
significant changes to the requirements. Therefore, there is no significant
impact of adopting IFRS 15 for the Company.
Accounting standards in issue that are not yet effective and have not been
early adopted
A number of new standards, amendments to standards and interpretations are
effective for annual periods beginning on or after 1 January 2019, and have not
been early adopted in preparing these financial statements. None of these
standards have been early adopted and are not expected to have a material
effect on the financial statements of the Company.
b) Going concern
The Financial Statements have been prepared on a going concern basis in line
with the Directors' belief that it is appropriate to assume that the Company
will continue in business. Please note that a continuation vote is to be held
at the AGM on 12 September 2019 and as the outcome is not yet known, some
uncertainty exists as to the going concern basis.
c) Presentation of the Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company,
supplementary information which analyses the Statement of Comprehensive Income
between items of a revenue and capital nature has been presented alongside the
Statement of Comprehensive Income.
d) Income recognition
Dividend income arising on the Company's investments is accounted for gross
of withholding tax on an ex-dividend basis or when the right to receive payment
is established.
e) Expenses
All expenses are recognised in the Statement of Comprehensive Income on an
accruals basis.
f) Investments held at fair value through profit or loss
(i) Classification and Measurement
The Company classifies its investments based on both the Company's business
model for managing those financial assets and the contractual cash flow
characteristics of those financial assets. The portfolio of the financial
assets is managed and performance is evaluated on a fair basis. The Fund is
primarily focused on fair value information and uses that information to assess
the assets' performance and to make decisions.
The Company classifies its entire investment portfolio as financial assets or
liabilities as fair value through profit or loss. This includes forward
currency contracts of which none were held at financial year end. All financial
assets are mandatorily measured as at fair value through profit or loss with no
assets being designated.
The Company's policy requires the Investment Manager and the Directors to
evaluate the information about these financial assets and liabilities on a fair
value basis together with other related financial information.
(ii) Recognition and Measurement
Investments are initially recognised at the trade date of purchase. They are
included initially at fair value, which is taken to be their cost (excluding
expenses incidental to the acquisition which are written off in the Statement
of Comprehensive Income, and allocated to the capital column of the Statement
of Comprehensive Income at the time of acquisition).
Investments are de-recognised when the rights to receive cash flows from the
investments have expired or the Company has transferred substantially all risks
and rewards of ownership.
Gains and losses on investments are included in the Statement of Comprehensive
Income as capital.
(iii) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value of financial assets and liabilities traded
in active markets (such as transferable securities and financial derivative
instruments traded publicly) are based on quoted market prices at the close of
trading on the reporting date.
If a quoted market price is not available on a recognised stock exchange or
from a broker/dealer for non-exchange traded financial instruments, the fair
value of the instrument is estimated using valuation techniques, including use
of recent arm's length market transactions, reference to the current fair value
of another instrument that is substantially the same, discounted cash flow
techniques, option
pricing models or any other valuation technique that provides a reliable
estimate of prices obtained in actual market transactions.
The fair value of financial derivative instruments, that are not
exchange-traded, is estimated at the amount that the Company would receive or
pay to terminate the contract at the reporting date, taking into account
current market conditions (volatility, appropriate yield curve) and the current
creditworthiness of the counterparties. Realised gains and losses on investment
disposals are calculated using the weighted average cost method.
g) Due from and due to brokers
Amounts due from and to brokers represent receivables for securities sold and
payables for securities purchased that have been contracted for but not yet
settled or delivered on the Statement of Financial Position date respectively.
These amounts are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.
At each reporting date, the Company shall measure the loss allowance on the
amounts due from broker at an amount equal to the lifetime expected credit
losses if the credit risk has been increased significantly since initial
recognition. If, at the reporting date, the credit risk has not increased
significantly since initial recognition, the Company shall measure the loss
allowance at an amount equal to 12 month expected credit losses. Significant
financial difficulties of the broker, probability that the broker will enter
bankruptcy or financial reorganisation, and default in payments are all
considered indicators that a loss allowance may be required. If the credit risk
increases to the point that it is considered to be credit impaired interest
income will be calculated based on the gross carrying amount adjusted for the
loss allowance. A significant increase in credit risk is defined by management
as any contractual payment which is more than 30 days past due. Any contractual
payment is more than 90 days past due is considered credit impaired.
The effective interest method is a method of calculating the amortised cost of
a financial asset or financial liability and of allocating the interest income
or interest expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments or receipts
throughout the expected life of the financial instrument or, when appropriate,
a shorter period to the net carrying amount of the financial asset or financial
liability. When calculating the effective interest rate, the Company estimates
cash flows considering all contractual terms of the financial instrument but
does not consider future credit losses. The calculation includes all fees and
points paid or received between parties to the contract that are an integral
part of the effective interest rate, transaction costs and all other premiums
or discounts.
h) Other receivables
Other receivables are amounts due in the ordinary course of business. If
collection is expected in one year or less, they are classified as current
assets. If not, they are presented as non-current assets. Other receivables are
recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method.
i) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents
consist of cash and cash equivalents, as defined above, net of outstanding bank
overdrafts.
IAS 7 requires disclosures that:
· Enable users of the financial statements to evaluate changes in
liabilities arising from financing activities; and
· Provide a reconciliation of the opening and closing balances of
liabilities arising from financing activities in the statement of financial
position is suggested although not mandatory.
These requirements have been met as part of the Statement of Changes in Equity
for share capital transactions attributable to holders of ordinary shares and
Note 13 (Loans Payable).
j) Other payables and accrued expenses
Other payables and accrued expenses are obligations to pay for services that
have been acquired in the ordinary course of business. Other payables are
classified as current liabilities if payment is due within one year or less. If
not, they are presented as non-current liabilities. Other payables are
recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method.
k) Loans payable
All loans are initially recognised at cost, being the fair value of the
consideration received, less issue costs where applicable. After initial
recognition, all interest bearing loans and borrowings are subsequently
measured at amortised cost. Amortised cost is calculated by taking into account
discount or premium on settlement. Any costs of arranging any interest-bearing
loans are capitalised and amortised over the life of the loan.
The Company's loans are denominated in JPY. Gains and losses on foreign
exchange on loans are included in the Statement of Comprehensive Income as
capital.
l) Foreign currencies
The Company's investments are predominately denominated in JPY. The
Company's obligation to shareholders is denominated in GBP and, when
appropriate, the Company may hedge the exchange rate risk from JPY to GBP.
Therefore, the Company's functional currency is GBP. The Company's presentation
currency is GBP.
At each Statement of Financial Position date, assets and liabilities, which
are denominated in foreign currencies, are translated into the functional
currency at the closing rates of exchange. Transactions involving currencies
other than the functional currency are recorded at the exchange rates
prevailing on the dates of the transactions. Resulting exchange differences are
recognised in profit or loss in the Statement of Comprehensive Income.
Foreign exchange gains and losses relating to cash and cash equivalents are
presented in the Statement of Comprehensive Income within "Net gains/(losses)
on foreign exchange".
Foreign exchange gains and losses relating to the financial assets and
liabilities carried at fair value through profit or loss are presented in the
Statement of Comprehensive Income within "Net gains/(losses) on foreign
exchange".
m) Taxation
The tax expense represents the sum of the tax currently payable and
deferred tax. In addition, the Company incurs withholding taxes imposed by
certain countries on dividend and interest income. Such income is recognised
gross of the taxes and the corresponding withholding tax is recognised as a tax
expense.
The tax currently payable is based on the taxable profit for the financial
year. Any taxable profit differs from the net profit, if any, as reported in
the Statement of Comprehensive Income because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible.
The Company's liability for current tax is calculated using tax rates that were
applicable at the Statement of Financial Position date.
In line with the recommendations of the AIC SORP, the allocation method used to
calculate tax relief on expenses presented against capital returns in the
supplementary information in the Statement of Comprehensive Income is the
"marginal basis".
Under this basis, if taxable income is capable of being offset entirely by
expenses presented in the revenue return column of the Statement of
Comprehensive Income, then no tax relief is transferred to the capital return
column.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities in the
Financial Statements and the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet liability method.
A deferred tax liability is recognised in full for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Investment trusts which have approval as
such under Section 1158 of the Corporation Tax Act 2010 are not liable for
taxation on capital gains.
The carrying amount of deferred tax assets is reviewed at each Statement of
Financial Position date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the Statement of Comprehensive Income, except when it
relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
n) Capital reserve
The capital reserve distinguishes between gains/(losses) on sale or disposals
and valuation gains/(losses) on investments. The capital reserve consists of
realised gains/(losses) on investments, movement in valuation of gains/(losses)
on investments and gains/(losses) relating to foreign exchange.
o) Treasury shares
Where the Company purchases its own share capital (whether into treasury or
cancellation), the consideration paid, which includes any directly attributable
costs (net of income taxes), is recognised as a deduction from equity
shareholders' funds through the revenue reserve, which is a distributable
reserve.
When such shares are subsequently sold or reissued, the consideration received,
net of any directly attributable incremental transaction costs and the related
income tax effects, is recognised as an increase in equity and proceeds from
the reissue of treasury shares are transferred to/from the revenue reserve.
Shares held in treasury are not taken into account in determining earnings per
share detailed in Statement of Comprehensive Income and NAV per share detailed
in Note 17.
p) Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported in the
Statement of Financial Position when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the Company or the counterparty.
q) Ordinary shares
The Company's ordinary shares are redeemable in the capital of the Company at
no par value and are classified as equity in accordance with the Company's
Articles of Incorporation.
r) Subscriber shares
The Company's subscriber shares are classified as equity in accordance with the
Company's Articles of Incorporation. These shares do not participate in the
profits of the Company. For more information please see note 15.
3. CHANGE IN ACCOUNTING POLICY AND PRESENTATION CURRENCY
For the financial year ended 30 April 2019, the Directors resolved to change
the Company's presentation currency from USD to GBP in order to conform the
presentation currency with the functional currency. The Company is traded on
the London Stock Exchange in GBP and the change will bring the Company into
line with the other companies in its peer group. The Company believes this will
lead to more reliable and relevant comparison for users.
The change of presentation currency is applied retrospectively for the 2017 and
2018 comparative figures. Assets and liabilities were translated into GBP at
the relevant closing rates of exchange. Trading results in the Statement of
Comprehensive Income ("SOCI") were translated into GBP at the relevant average
rates of exchange. Share capital, share premium and other reserves were
translated at the historical rates prevailing at the dates of transactions. The
cumulative foreign currency translation reserve is set to nil. The relevant
exchange rates used are disclosed in note 22.
4. OPERATING SEGMENTS
The Board makes the strategic resource allocations on behalf of the Company and
is responsible for the Company's entire portfolio. The Board is of the opinion
that the Company is engaged in a single geographic and economic segment
business. The asset allocation decisions are based on a single, integrated
investment strategy, and the Company's performance is evaluated on an overall
basis.
The internal reporting provided to the Directors for the Company's assets,
liabilities and performance is prepared on a consistent basis with the
measurement and recognition principles of IFRS.
The fair value of the financial instruments held by the Company and the
equivalent percentages of the total value of the Company are reported in the
Schedule of Investments below.
5. NET GAINS ON INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
30 April 2019 30 April 2018
(restated*)
GBP'000 GBP'000
Realised gains on investments held at fair
value through profit or loss 10,075 11,145
Realised losses on investments held at (5,398) (2,580)
fair value through profit or loss
Net realised gains on investments held at 4,677 8,565
fair value through profit or loss
Unrealised gains on investments held at 12,844 31,568
fair value through profit or loss
Unrealised losses on investments held at (17,390) (4,527)
fair value through profit or loss
Net unrealised (losses)/gains on (4,546) 27,041
investments held at fair value through
profit or loss
Net gains on investments held at fair 131 35,606
value through profit or loss
*Please see note 3 for further details
6. RELATED PARTY DISCLOSURES
The Investment Manager, Investment Adviser, Depositary, Administrator and
Directors are considered related parties to the Company under IAS 24 as they
have the ability to control, or exercise significant influence over, the
Company in making financial or operational decisions. See Notes 7 to 10 for
details of transactions with these related parties during the financial year
ended 30 April 2019.
Certain Directors had a beneficial interest in the Company by way of their
investment in the ordinary shares of the Company.
The details of these interests as at 30 April 2019 and 30 April 2018 are as
follows:
Ordinary Shares Ordinary Shares
30 April 2019 30 April 2018
Noel Lamb 14,400 14,400
Richard Pavry 40,000
40,000
Philip Ehrmann 28,800
28,800
Michael Moule 16,000
20,000
The above interests of the Directors were unchanged as at the date of this
report.
As at 30 April 2019, a family member of the President of the Investment Adviser
held 900,800 (30 April 2018: 900,800) ordinary shares of the Company.
7. INVESTMENT MANAGEMENT AND INVESTMENT ADVISER FEES
Under the terms of the Investment Management Agreement, the Investment Manager,
Quaero Capital LLP, will continue in office until a resignation is tendered or
the contract is terminated. In both circumstances, a resignation or termination
must be given with a notice period which must not be less than three months,
and be in accordance with the Investment Management Agreement.
The Company pays to the Investment Manager a fee accrued daily and paid monthly
in arrears at the annual rate of 1% of the weekly NAV of the Company.
The Investment Adviser Fees are 75% of the total Investment Management Fees and
are paid by the Investment Manager.
Redemption pool investment management fees
The Investment Manager shall also be entitled to receive a fee from the Company
of 1% per annum of the daily NAV of any redemption pool together with
transaction charges.
For the financial year ended 30 April 2019, total investment management fees
were GBP1,102,738 (30 April 2018: GBP1,101,805), of which GBP92,390 (30 April 2018: GBP
104,797) is due and payable as at that date. Of the total investment management
fees, GBP275,684 (30 April 2018: GBP275,451) was due to the Investment Manager,
with GBP23,097 (30 April 2018: GBP26,199) payable as at 30 April 2019.
For the financial year ended 30 April 2019, total investment adviser fees were
GBP827,054 (30 April 2018: GBP826,354), with GBP69,293 (30 April 2018: GBP78,598)
payable as at 30 April 2019.
8. DEPOSITARY FEES
Under the terms of the Depositary Agreement, fees are payable to the
Depositary, Northern Trust (Guernsey) Limited, monthly in arrears, on the Gross
Asset Value (Net Asset Value before investment management fees) of the Company
as at the last business day of the month at an annual rate of:
Gross Asset Value Annual Rate
Up to $50,000,000 0.035%
$50,000,001 to $100,000,000 0.025%
Thereafter 0.015%
The Depositary is also entitled to a global custody fee of 0.03% per annum of
the NAV of the Company, subject to a minimum fee of $20,000, and transaction
fees as per the Depositary Agreement.
Redemption pool depositary fees
The Depositary shall also be entitled to receive a fee from the Company of the
Gross Asset Value of any redemption pool, together with transaction charges, at
an annual rate of:
Gross Asset Value Annual Rate
Up to $25,000,000 0.035%
$25,000,001 to $50,000,000 0.025%
Thereafter 0.015%
For the financial year ended 30 April 2019, total depositary fees were GBP89,743
(30 April 2018: GBP89,368), of which GBP11,791 (30 April 2018: GBP10,893) was due and
payable as at that date.
9. ADMINISTRATION FEES
Under the terms of the Administration Agreement, the Company pays to the
Administrator, Northern Trust International Fund Administration Services
(Guernsey) Limited, a fee accrued weekly and paid monthly in arrears at the
annual rate of:
NAV Annual Rate
Up to $50,000,000 0.18%
$50,000,001 to $100,000,000 0.135%
$100,000,001 to $200,000,000 0.0675%
Thereafter 0.02%
Redemption pool administration fees
At each redemption date a charge in respect of the preparatory work for the
set-up and calculation of investment and redemption prices of GBP7,500 will be
payable.
An additional fee will be payable on the fair value of the assets of that
redemption pool of:
NAV Annual Rate
Up to $25,000,000 0.18%
$25,000,001 to $50,000,000 0.135%
Thereafter 0.0675%
For the financial year ended 30 April 2019, total administration fees were GBP
141,937 (30 April 2018: GBP139,884), of which GBP23,605 (30 April 2018: GBP27,633)
was due and payable as at that date.
10. DIRECTORS' FEES AND EXPENSES
Each of the Directors is entitled to receive a fee from the Company, being GBP
33,000 per annum for the Chairman (GBP30,000 per annum prior to 6 July
2018), GBP28,500 per annum for the Chairman of the Audit Committee (GBP
27,500 per annum prior to 6 July 2018) and GBP26,000 per annum for each of the
other Directors (GBP25,000 per annum prior to 6 July 2018). In addition, the
Company reimburses all reasonably incurred out-of-pocket expenses of the
Directors.
For the financial year ended 30 April 2019, total directors' fees and expenses
were GBP131,510 (30 April 2018: GBP97,720), of which GBP3,162 (30 April 2018: GBP9,317)
was due and payable as at that date.
11. TAXATION
The Company is exempt from taxation in Guernsey under the provisions of The
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and has paid an annual
exemption fee of GBP1,200 (30 April 2018: GBP1,200), however the Company is subject
to UK tax being a UK tax resident to comply with the Section 1158 of the
Corporation Tax Act 2010. The main rate of corporation tax in the UK was 19%
effective from 1 April 2017.
30 April 30 April
2019 2018
(restated
*)
GBP'000 GBP'000
Irrecoverable overseas tax 213 226
Tax charge in respect of the 213 226
current year
Current taxation
The current taxation charge for the financial year is different from the
standard rate of corporation tax in the UK. The differences are explained in
the following table:
30 April 30 April 2018
2019 (restated*)
GBP'000 GBP'000
Profit before tax 68 35,764
Capital loss/(profit) for the financial 141 (35,660)
year
Revenue profit for the financial year 209 104
30 April 30 April 2018
2019 (restated*)
GBP'000 GBP'000
Theoretical tax at UK corporation tax 40 20
rate of 19% (30 April 2018 -19%)
Effects of:
Excess management expenses 1 23
Notional relief for overseas tax (41) (43)
suffered
Overseas tax written off 213 226
Actual current tax charge 213 226
*Please see note 3 for further details
The Company is an investment trust and therefore is not taxable on capital
gains.
Factors that may affect future tax charges
As at 30 April 2019, the Company has excess management expenses of GBP
24,085,708 that are available to offset future taxable revenue. Whilst this
represents management's best estimate based on the carried forward balance in
the previous financial year of GBP24,231,069 the estimated value could differ
from actual amounts. However, the potential impact is not expected to be
significant.
A deferred tax asset has not been recognised in respect of these amounts as
they will be recoverable only to the extent that there is sufficient future
taxable revenue.
12. BASIC AND DILUTED EARNINGS/(DEFICIT) PER ORDINARY SHARE
The basic and diluted earnings/(deficit) per ordinary share figure is based on
dividing the loss for the financial year of GBP144,406 (30 April 2018: profit of
GBP35,538,334) by the weighted average number of shares in issue during the
financial year ended 30 April 2019, being 47,161,422 (30 April 2018:
48,002,848).
30 April 2019 30 April 2018
(restated*)
GBP'000 GBP'000
Net revenue loss (4) (122)
Net capital (loss)/profit (141) 35,660
Net total (loss)/profit (145) 35,538
Weighted average number of ordinary
shares
in issue during the financial year 47,161,422 48,002,848
GBP GBP
Revenue loss per ordinary share - (0.003)
Capital (loss)/profit per ordinary (0.003) 0.743
share
Total (loss)/profit per ordinary share (0.003) 0.740
*Please see note 3 for further details
The revenue loss per ordinary share and capital profit per ordinary share
figure is based on the net revenue loss for the financial year of GBP3,814 (30
April 2018: loss of GBP121,847), the net capital loss of GBP140,592 (30 April 2018:
profit of GBP35,660,181) respectively and 47,161,422 being the weighted average
number of shares in issue during the financial year ended 30 April 2019 (30
April 2018: 48,002,848).
13. LOANS PAYABLE
Interest Maturity 30 April 30 April
2019 2018
(restated
*)
Loan Amount Rate Date GBP'000 GBP'000
3 year committed variable
rate
credit facility
¥ 1,000,000,000 1.12% 7 June 2019 6,933 -
¥ 1,000,000,000 1.14% 6 June 2018 - 6,655
Loan due for repayment within one year 6,933 6,655
*Please see note 3 for further details
The credit facility is provided by Royal Bank of Scotland International Limited
("RBSI"). As at 30 April 2019, the Company had drawn down ¥1,000,000,000/GBP
6,932,729 (30 April 2018: ¥1,000,000,000/GBP6,654,718) of the ¥1,500,000,000
borrowable under the terms of the facility agreement.
Under the terms of the facility agreement, the Company is required to comply
with the following financial covenants:
- the Company's portfolio must contain at least 60 investments, of which at
least 50 must be in investments quoted on the Tokyo Stock Exchange or any other
equivalent exchange approved by RBSI, at all times;
- the amount of the credit facility drawn down must not exceed 25% of the
value of the Company's portfolio at any time; and
- the Company's NAV must not fall below $58,800,000 at any time.
The Company complied with all of the above the financial covenants during the
financial years ended 30 April 2019 and 30 April 2018.
(Losses)/gains on foreign exchange on the Company's loan amounted to GBP278,240
loss during the financial year ended 30 April 2019 (30 April 2018: GBP291,335
gain).
14. FORWARD CURRENCY CONTRACTS
There were no forward currency contracts held during the financial year ended
30 April 2019 (30 April 2018: None).
15. SHARE CAPITAL AND SHARE PREMIUM
Authorised
The Company is authorised to issue an unlimited number of ordinary shares of no
par value. The Company has issued two subscriber shares for the purposes of
incorporation of the Company. The subscriber shares do not participate in the
profits of the Company.
The Company may also issue C shares being a convertible share in the capital of
the Company of no par value. C shares shall not have the right to attend or
vote at any general meeting of the Company. The holders of C shares of the
relevant class shall be entitled, in that capacity, to receive a special
dividend of such amount as the Directors may resolve to pay out of the net
assets attributable to the relevant C share class and from income received and
accrued attributable to the relevant C share class for the period up to the
conversion date payable on a date falling before, on or after the conversion
date as the Directors may determine. There are no C shares currently in issue.
The rights which the ordinary shares confer upon the holders thereof are as
follows:
Voting rights
On a show of hands, every member who is present shall have one vote and, on a
poll, a member present in person or by proxy shall be entitled to one vote per
ordinary share held.
Entitlement to dividends
The Company may declare dividends in respect of the ordinary shares. Treasury
shares do not confer an entitlement to any dividends declared.
Rights in a winding-up
The holders of ordinary shares will be entitled to share in the NAV of the
Company as determined by the Liquidator.
Issued ordinary shares
Number of Share Capital Share Premium
Shares
GBP'000 GBP'000
In issue at 30 April 44,307,284 - -
2019
In issue at 30 April 49,012,128 - -
2018
Number of Number of
Shares Shares
30 April 2019 30 April 2018
Shares of no par value
Issued shares at the start of 49,012,128 44,139,050
the financial year
Subscription of shares - 8,598,577
Redemption of shares (4,204,844) (3,725,499)
Purchase of shares into treasury (500,000) -
Number of shares at the end of the 44,307,284 49,012,128
financial year
Shares held in treasury
Opening balance 3,874,186 3,874,186
Shares bought into treasury during the 500,000 -
financial year
Number of shares at the end of the 4,374,186 3,874,186
financial year
During the financial year ended 30 April 2019, there was GBP1,085,700 purchase of
shares into treasury (30 April 2018: GBPNil).
Shareholders are entitled to receive any dividends or other distributions out
of profits lawfully available for distribution and on winding up they are
entitled to the surplus assets remaining after payment of all the creditors of
the Company. The shares redeemed in the current financial year were cancelled
immediately.
16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
In accordance with its investment objective and policies, the Company holds
financial instruments which at any one time may comprise the following:
- securities held in accordance with the investment objective and policies;
- cash and cash equivalents and short-term receivables and payables arising
directly from operations;
- loans used to finance investment activity; and
- derivative instruments for the purposes of efficient portfolio management
only.
The financial instruments held by the Company principally comprise equities
listed on the stock markets in Japan, including, without limitation, the Tokyo
Stock Exchange categorised as First Section, Second Section, JASDAQ, Mothers
and Tokyo PRO, or the regional stock exchanges of Fukuoka, Nagoya, Sapporo and
Osaka Securities Exchange.
The specific risks arising from the Company's exposure to these instruments,
and the Investment Manager/Investment Adviser's policies for managing these
risks, which have been applied throughout the financial year, are summarised
below.
Capital management
The Company's objectives when managing capital are to safeguard the Company's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
The Company may not borrow or otherwise use leverage exceeding 20% of its net
assets for investment purposes, to settle facilities for specific investments,
such as bridge financing. In connection with the facility agreement, the
Company has entered into an English law, multicurrency, and revolving credit
facility with RBSI (see Note 13).
The Company does not have any externally imposed capital requirements apart
from the fact that it should not retain more than 15% of income, in order to
comply with Section 1158 of Corporation Tax Act 2010. The Company has complied
with this requirement.
The Company is a closed-ended investment company. The Company's capital is
represented by ordinary shares of no par and each share carries one vote. They
are entitled to dividends when declared.
500,000 shares were repurchased into treasury during the financial year ended
30 April 2019 (30 April 2018: None). See Note 19 for details of shares redeemed
via the redemption facility mechanisms. The Company discontinued the
subscription rights mechanism on 23 November 2017.
Market risk
The Company's investment portfolio - particularly its equity investments - is
exposed to market price fluctuations which are monitored by the Investment
Manager/Investment Adviser in pursuance of the investment objective and
policies.
At 30 April 2019, the Company's market price risk is affected by three main
components: changes in market prices, currency exchange rates and interest rate
risk. Currency exchange rate movements and interest rate movements, which are
dealt with under the relevant headings below, primarily affect the fair values
of the Company's exposures to equity securities, related derivatives and other
instruments. Changes in market prices primarily affect the fair value of the
Company's exposures to equity securities, related derivatives and other
instruments.
Exceptional risks associated with investment in Japanese smaller companies may
include:
- greater price volatility, substantially less liquidity and significantly
smaller market capitalisation; and
- more substantial government intervention in the economy, including
restrictions on investing in companies or in industries deemed sensitive to
relevant national interests.
Market price sensitivity analysis
If the price of each of the equity securities to which the Company had exposure
at 30 April 2019 had increased or decreased by 5% with all other variables held
constant, this would have increased or decreased profit and net assets
attributable to equity shareholders of the Company by:
30 April 2019 30 April 2018
(restated*)
+/- +/-
NAV GBP5,568,995 GBP6,077,236
NAV per share GBP0.13 GBP0.12
Total comprehensive income GBP5,568,995 GBP6,077,236
Earnings per share GBP0.13 GBP0.12
*Please see note 3 for further details
Foreign currency risk
The Company principally invests in securities denominated in currencies other
than GBP, the functional currency of the Company. Therefore, the Statement of
Financial Position will be affected by movements in the exchange rates of such
currencies against the GBP. The Investment Manager/Investment Adviser has the
power to manage exposure to currency movements by using forward currency
contracts. No such instruments were held as at 30 April 2019.
It is not the present intention of the Directors to hedge the currency exposure
of the Company, but the Directors reserve the right to do so in the future if
they consider this to be desirable.
The treatment of currency transactions other than in GBP is set out in Note 2
(l) to the Financial Statements.
As at 30 April 2019, the Company has a USD cash exposure in GBP terms of GBP8,126
(30 April 2018: GBP7,654).
The Company's net JPY exposure in GBP terms is set out in the following table:
As at 30 April 2019
GBP'000
Assets
Investments held at fair value through 111,380
profit or loss
Due from brokers
669
Dividends receivable
398
Cash and cash equivalents
2,074
Total assets 114,521
Liabilities
Due to brokers
(91)
Payables and accrued expenses
(1)
Loans payable
(6,933)
Total liabilities (7,025)
Total net assets 107,496
As at 30 April 2018 (restated
*)
GBP'000
Assets
Investments held at fair value through 121,545
profit or loss
Due from brokers
662
Dividends receivable 494
Cash and cash equivalents
2,932
Total assets 125,633
Liabilities
Due to brokers (442)
Payables and accrued expenses (12)
Loans payable (6,655)
Total liabilities (7,109)
Total net assets 118,524
*Please see note 3 for further details
Foreign currency sensitivity analysis
If the exchange rate at 30 April 2019, between the functional currency and all
other currencies had increased or decreased by a 5% currency movement with all
other variables held constant, this would have increased or reduced profit and
net assets attributable to equity shareholders of the Company by:
30 April 2019 30 April 2018
(restated*)
+/- +/-
NAV GBP5,374,646 GBP5,926,597
NAV per share GBP0.12 GBP0.12
Total comprehensive income GBP5,374,646 GBP5,926,597
Earnings per share GBP0.12 GBP0.12
*Please see note 3 for further details
No benchmark is used in the calculation of the above information. The only
foreign currency the Company has a significant exposure to is JPY, hence the
above foreign currency sensitivity analysis has not been disclosed on a
currency by currency basis.
Interest rate risk
Substantially all the Company's assets and liabilities are non-interest bearing
except for the one outstanding loan payable detailed in Note 13, and any excess
cash and cash equivalents are invested at short-term market interest rates.
As at 30 April 2019, the Company has a small exposure to interest rate risk
regarding the loan facility and cash and cash equivalents.
Increases in interest rates may increase the costs of the Company's borrowings.
The rate of interest on each RBSI drawdown loan for each interest period is the
percentage rate per annum which is the aggregate of the applicable (i) margin,
(ii) LIBOR and (iii) mandatory cost. Interest on the loan is payable on the
last day of each interest period. As at 30 April 2019, the interest accrued on
the loan was GBP11,698 (30 April 2018: GBP11,217).
The following assets and liabilities disclosures exclude prepayments and
taxation receivables and payables:
Less than 1 month to
1 month 1 year Total
As at 30 April 2019 GBP'000 GBP'000 GBP'000
Financial assets
Cash and cash equivalents 2,125 - 2,125
Financial liabilities
Loans payable - (6,933) (6,933)
Net financial assets/ 2,125 (6,933) (4,808)
(liabilities)
Less than 1 month to
1 month 1 year Total
As at 30 April 2018 GBP'000 GBP'000 GBP'000
(restated*)
Financial assets
Cash and cash equivalents 3,364 - 3,364
Financial liabilities
Loans payable - (6,655) (6,655)
Net financial assets/ 3,364 (6,655) (3,291)
(liabilities)
*Please see note 3 for further details
The cash flow interest rate risk comprises those assets and liabilities with a
floating interest rate, for example cash deposits at local market rates. Cash
and cash equivalents earn interest at the prevailing market interest rate.
Although this portion of the NAV is not subject to fair value risk as a result
of possible fluctuations in the prevailing market interest rates, the future
cashflows of the Company could be adversely or positively impacted by decreases
or increases in those prevailing market interest rates.
The fair value interest rate risk comprises those assets and liabilities with a
fixed interest rate, for example loans payable and loan interest payable.
Weighted average Weighted average period
for
interest rate which rate is fixed
(years)
2019 2018 2019 2018
JPY
Loans payable 1.14% 1.14% 0.11 0.11
Fair value
All assets and liabilities are carried at fair value with the exception of cash
and cash equivalents, which are carried at amortised cost, and loans payable,
which are carried at amortised cost using the effective interest rate method.
Short term receivables and payables
Receivables and payables do not carry interest and are short term in nature.
They are stated at amortised cost, as reduced by appropriate allowances for
irrecoverable amounts in the case of receivables.
Liquidity risk
Liquidity risk is the risk that the Company will encounter in realising assets
or otherwise raising funds to meet financial commitments.
As at 30 April 2019, the Company had drawn down a loan facility of ¥
1,000,000,000/GBP6,932,799 (30 April 2018:¥1,000,000,000/GBP6,654,718). In
connection with the facility agreement, the Company has entered into an English
law, multicurrency, and revolving credit facility with RBSI.
The loan may be used for the following purposes:
- the acquisition of investments in accordance with the investment policy;
- its working capital requirements in the ordinary course of business; and
- funding permitted redemptions which in each case will be repaid other than
by way of rollover loan within 30 days of the relevant drawing.
The loan must be repaid on the last day of its interest period.
The Company invests primarily in listed securities which are liquid in nature.
The Company's liquidity risk is managed by the Investment Manager who monitors
the cash positions on a regular basis.
The maturity analysis of the Company's financial liabilities (excluding tax
balances) is set out in the following table:
Up to 1 year 1 to 5
or on demand years Total
As at 30 April 2019 GBP'000 GBP'000 GBP'000
Financial liabilities
Loans payable (6,933) - (6,933)
Other financial liabilities (356) - (356)
Total financial liabilities (7,289) - (7,289)
Up to 1 year 1 to 5
or on demand years Total
As at 30 April 2018 GBP'000 GBP'000 GBP'000
(restated*)
Financial liabilities
Loans payable (6,655) - (6,655)
Other financial liabilities (692) - (692)
Total financial liabilities (7,347) - (7,347)
*Please see note 3 for further details
Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Company.
In accordance with the investment restrictions as described in its prospectus
and investment policy, the Company may not invest more than 10% of the
Company's gross assets in securities of any one company or issuer. However,
this restriction shall not apply to securities issued or guaranteed by a
government or government agency of the Japanese or US Governments. In adhering
to these investment restrictions, the Company mitigates the risk of any
significant concentration of credit risk arising on broker and dividend
receivables.
As the Company invests primarily in publicly traded equity securities the
Company is not exposed to credit risk from these positions. However, the
Company will be exposed to a credit risk on parties with whom it trades and
will bear the risk of settlement default. The Company minimises concentrations
of credit risk by undertaking transactions with a number of regulated
counterparties on recognised and reputable exchanges. All transactions in
listed securities are settled/paid for upon delivery using approved brokers.
The risk of default is considered minimal, as delivery of securities sold is
only made once the broker has made payment. Payment is made on a purchase once
the securities have been received from the broker. The trade will fail if
either party fails to meet its obligation. The Company is exposed to credit
risk on cash and investment balances held with the Depositary. The Investment
Manager regularly reviews concentrations of credit risk.
All of the cash assets are held with the Northern Trust Company ("NTC"). Cash
deposited with NTC is deposited as banker and is held on its Statement of
Financial Position. Accordingly, in accordance with usual banking practice,
NTC's liability to the Company in respect of such cash deposits shall be that
of debtor and the Company will rank as a general creditor of NTC. The financial
assets are held with the Depositary, Northern Trust (Guernsey) Limited.
These assets are held distinct and separately from the proprietary assets of
the Depositary. Securities are clearly recorded to ensure they are held on
behalf of the Company.
Bankruptcy or insolvency of the Depositary and, or one of its agents or
affiliates may cause the Company's rights with respect to the securities held
by the Depositary to be delayed or limited.
NTC is a wholly owned subsidiary of Northern Trust Corporation. As at 30 April
2019 Northern Trust Corporation had a long term rating from Standard & Poor's
of A+. Risk is managed by monitoring the credit quality and financial positions
of the Depositary the Company uses. Northern Trust acts as its own
sub-depositary in the US, the UK, Ireland and Canada. In all other markets
Northern Trust appoints a local sub-depositary. Northern Trust continually
reviews its sub-depositary network to ensure clients have access to the most
efficient, creditworthy and cost-effective provider in each market.
The securities held by the Company are legally held with the Depositary, which
holds the securities in segregated accounts, and subject to any security given
by the Company to secure its overdraft facilities, the Company's securities
should be returned to the Company in the event of the insolvency of the
Depositary or its appointed agents, although it may take time for the Company
to prove its entitlement to the securities and for them to be released by the
liquidator of the insolvent institution. The Company will however only rank as
an unsecured creditor in relation to any cash deposited or derivative positions
with the Depositary, their related companies and their appointed agents, and is
therefore subject to the credit risk of the relevant institution in this
respect.
The assets exposed to credit risk at financial year end amounted to GBP2,124,673
(30 April 2018: GBP3,363,694).
Fair value hierarchy
The fair value of investments traded in active markets (such as publicly traded
derivatives and trading securities) are based on quoted market prices at the
close of trading on the Statement of Financial Position date. The quoted market
price used for investments held by the Company is the last traded price; the
appropriate quoted market price for financial liabilities is the current asking
price.
A financial instrument is regarded as quoted in an active market if quoted
prices are readily and regularly available from an exchange, dealer, broker,
industry group, pricing service, or regulatory agency, and those prices
represent actual and regularly occurring market transactions on an arm's length
basis.
The fair value of investments that are not traded in an active market is
determined by using valuation techniques.
For instruments for which there is no active market, the Company may use
internally developed models, which are usually based on valuation methods and
techniques generally recognised as standard within the industry. Valuation
models may be used primarily to value unlisted equity, debt securities and
other debt instruments for which markets were or have been inactive during the
financial year. Some of the inputs to these models may not be market observable
and are therefore estimated based on assumptions.
The following table sets out fair value measurements using the IFRS 13 fair
value hierarchies:
At 30 April 2019
Investments at fair value
through profit or loss
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Equity investments 111,380 - - 111,380
111,380 - - 111,380
At 30 April 2018 (restated*)
Investments at fair value
through profit or loss
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Equity investments 121,545 - - 121,545
121,545 - - 121,545
*Please see note 3 for further details
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset as follows:
· Level 1 - valued using quoted prices in active markets for identical
assets or liabilities.
· Level 2 - valued by reference to valuation techniques using observable
inputs other than quoted prices included within level 1.
· Level 3 - valued by reference to valuation techniques using inputs that
are not based on observable market data.
17. NAV HISTORY
30 April 2019 30 April 30 April
2018 2017
(restated*) (restated*)
NAV GBP107,290,867 GBP118,738,232 GBP77,062,137
Number of Shares in 44,307,284 49,012,128 44,139,050
Issue
NAV per Ordinary GBP2.42 GBP2.42 GBP1.75
Share
*Please see note 3 for further details
18. SUBSCRIPTION RIGHTS
Shareholders had the opportunity to subscribe for one new ordinary share for
every five ordinary shares held on 1 October in each financial year, commencing
in 2015 and ending on 23 November 2017. The following subscriptions were made
for the comparative financial year 30 April 2018:
Subscription date GBP'000
Shares 30 April 2018 (restated*)
issued
30 April 2018
10 October 2017
8,598,577 14,858
8,598,577 14,858
During the financial year ended 30 April 2019 no amounts were paid by
subscribing shareholders (30 April 2018: GBP14,857,481).
*Please see note 3 for further details
19. REDEMPTION FACILITY
Ordinarily, shareholders have the opportunity to make redemptions of part or
all of their shareholding on a six-monthly basis with the Board's discretion in
declining any redemption requests. The following redemptions were made during
the financial year:
Redemption date Shares redeemed GBP'000
30 April 2019 30 April 2019
28 September 2018 2,434,356 6,087
29 March 2019 1,770,488 4,129
4,204,844 10,216
Redemption date Shares redeemed GBP'000
30 April 2018 30 April 2018
(restated*)
5 October 2017 1,145,914 2,414
3 April 2018 2,579,585 6,306
3,725,499 8,720
*Please see note 3 for further details
During the financial year ended 30 April 2019, a total of GBP10,216,306 was paid
to redeeming shareholders (30 April 2018: GBP8,719,720).
20. DIVIDS
All amounts held in the Company's revenue reserve are distributable to
shareholders by way of dividends.
There were no dividends declared by the Board during the financial year ended
30 April 2019 (30 April 2018: GBPNil).
21. ONGOING CHARGES
The ongoing charges using the AIC recommended methodology were 1.63% for the
financial year ended 30 April 2019 (30 April 2018: 1.57%). Of the GBP1,703,946
expenses in the Statement of Comprehensive Income, excluded from the
calculation of ongoing charges, are GBP4,178 considered by the Directors to be
non-recurring (30 April 2018: GBP34,037).
22. EXCHANGE RATES
The following exchange rates were used during the financial year.
30 April 2019 30 April 2018 30 April 2017
GBP GBP GBP
USD $1.3037 $1.3774 $1.2938
JPY ¥145.1940 ¥150.7167 ¥144.2145
The following average exchange rates were used during the financial year:
30 April 2019 30 April 2018 30 April 2017
GBP GBP GBP
USD $1.3044 $1.3382 $1.2934
JPY ¥145.0373 ¥147.9520 ¥140.0559
23. CHANGES IN THE PORTFOLIO
A list, specifying for each investment the total purchases and sales which took place during the financial year ended 30 April 2019, may be obtained, upon request, at the registered office of the Company. 24. EVENTS AFTER THE FINANCIAL YEAR ENDED 30 APRIL 2019 There were no significant events subsequent to the financial year ended 30 April 2019 which require adjustment to or additional disclosure in the Financial Statements. 25. ULTIMATE CONTROLLING PARTY There is no one entity with ultimate control over the Company. END
(END) Dow Jones Newswires
July 12, 2019 12:27 ET (16:27 GMT)
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