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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Jap. Leisure H. | LSE:JPLH | London | Ordinary Share | GG00B28QMS50 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 23.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
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TIDMJPLH
RNS Number : 3288L
Japan Leisure Hotels Ltd
05 May 2010
5 MAY 2010
JAPAN LEISURE HOTELS LIMITED
("Japan Leisure Hotels", "JPLH" or "the Company")
Final Results for the year ended 31 December 2009
Japan Leisure Hotels (AIM: JPLH) announces its final results for the year ended
31 December 2009. JPLH's current portfolio comprises 6 hotels with 242 rooms.
This announcement does not constitute the Company's full Annual Report. It
consists of extracts from the Company's Annual Report for the year ended 31
December 2009: the Chairman's Statement, Asset Manager's Report, Financial
Statements and Abridged Notes.
SUMMARY
· Continued steady trading during a severe recession; daily occupancy rates
of the portfolio remain in excess of 240%
· Recommendation of interim dividend of 1p per share in respect of 2009, in
line with previously stated intention
· EBITDA margin before asset management fees increased to 38.2% in 2009 from
34.5% in 2008 *
· Cash from operations in 2009 increased to JPJPY243 million (GBP1.7
million) (2008: JPJPY213 million (GBP1.1 million))
· Cash position of approximately JPJPY413 million (GBP2.8 million) with no debt,
compared to JPJPY263 million at the end of 2008
· Adjusted NAV of JPJPY108.41 (74p ) per share as at 31 December 2009
· Refurbishment and rebranding of Yokkaichi expected to be complete by the
end of May 2010, on time and within budget
· Numerous attractive acquisition opportunities continue to be available
Alan Clifton, JPLH's Chairman, commented:
"I am pleased to report that Japan Leisure Hotels performed well in 2009 despite
the deepest global recession in living memory. This has enabled us to deliver on
our promise of recommending a cash dividend in respect of 2009. Trading to date
in 2010 continues to be very challenging, but JPLH's performance during the last
two years provides comfort that it can perform well even in a difficult
environment. The Directors are therefore cautiously optimistic with regard to
prospects for the current year."
Stephen Mansfield, Asset Manager, commented:
"There is a growing awareness of the opportunity in the Japanese leisure hotel
industry. The challenge is to grow the business so that operational
efficiencies will generate further improvements in margins. Our progress to
date provides us with every confidence that we can move to the next stage of our
development."
A full copy of the 2009 Annual Report is available in PDF format on the
Company's website, www.japanleisurehotels.com. The Annual Report is expected to
be posted to shareholders by the end of May 2010.
* Excludes Yokkaichi hotel
Enquiries:
+------------------------------+-------------------------------------+
| Asset Manager | +81 3 4550 1808 |
+------------------------------+-------------------------------------+
| Steve Mansfield | |
+------------------------------+-------------------------------------+
| | |
+------------------------------+-------------------------------------+
| Shore Capital (NOMAD to | 020 7408 4090 |
| JPLH) | |
+------------------------------+-------------------------------------+
| Dru Danford | |
+------------------------------+-------------------------------------+
| Stephane Auton | |
+------------------------------+-------------------------------------+
| | |
+------------------------------+-------------------------------------+
| Pelham Bell Pottinger | 020 7337 1509 or 07802 442486 |
+------------------------------+-------------------------------------+
| Archie Berens | |
+------------------------------+-------------------------------------+
JAPAN LEISURE HOTELS LIMITED
("Japan Leisure Hotels", "JPLH" or "the Company")
Final Results for the year ended 31 December 2009
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that in 2009, Japan Leisure Hotels ('JLH') performed well
in the face of the deepest global recession in living memory, the impact of
which was particularly severe in Japan. To have withstood these headwinds and
not only managed to maintain the revenues of the business in a deflationary
environment but also to have increased the free cash flow from the business is
testament not only to the leisure hotel industry's relative insulation from
recessionary forces but also our management team's abilities. If we look at the
performance in real terms, taking account of deflation in 2009 of 3%, revenues
have effectively increased by 4% compared to 2008.
As we have previously observed, it is the lack of privacy in Japan that is the
key driver that underpins the leisure hotel industry. Nevertheless, commercial
skill and high standards are required to operate successfully and we are
fortunate to have a team who exhibit these qualities in abundance.
Financial Performance
Last year, our portfolio of leisure hotels continued to enjoy high levels of
occupancy, albeit not quite as high as historically. Revenue for the portfolio
for the full year grew marginally to JPJPY 1.20 billion (GBP8.2 million),
compared to JPJPY1.18 billion (GBP6.1 million) in 2008. REVPAR1, however,
declined from JPJPY14,215 (using annualised figures for Yokkaichi) to
JPJPY13,568.
Careful management of the operations, and a significant reduction in energy
costs from 2008, resulted in increased operating profit before exceptional items
of JPJPY33.3 million compared to JPJPY9.6 million in 2008. Similarly, cash from
operations in 2009 was JPJPY243 million (GBP1.7 million), compared to JPJPY213
million (GBP1.1 million) in 2008, resulting in a cash position as at 31 December
2009 of JPJPY413 million (GBP2.8 million) (2008: JPJPY263 million). Our company
is free of debt and continues to generate strong cash flows.
JLH's portfolio of 6 leisure hotels was valued by Colliers International (Hong
Kong) Ltd at 31 December 2009 at approximately JPJPY4,632 million. When this is
combined with other net assets, including cash, the Adjusted Net Asset Value as
at 31 December 2009 was JPJPY4,780 million (GBP32.5 million) or JPJPY108.41
(74p) per share.
The Directors concluded that a change in the application of its accounting
policy was necessary to ensure that tax liabilities are recognised in the same
period as income for accounting purposes. As a result of this change in policy,
the 2008 figures have been restated in two important areas: the amount of
negative goodwill was reduced to reflect the tax that would ultimately be
incurred if that benefit were actually realised; and the tax expense was
increased.
1 REVPAR: revenue per available room per day
Dividend
It is gratifying to announce that, as a result of the Group's cash resources
having been built up to a sufficient level, an interim dividend will be
recommended in respect of 2009. This is in line with our previously stated
intention. An interim dividend of 1p per share will be paid on 20 August 2010
to shareholders on the register as at 7 July 2010 and the record date will be 9
July 2010.
The Board hopes again to be in a position to recommend a dividend payment at
this point next year, subject to a continued resilient business performance by
our hotels.
Management and Administration
During the year, Mark Huntley resigned from the Board as a non-executive
director. We thank Mark for his contribution and the role he played in the
listing of the company on AIM.
Since the year end, we have appointed Praxis Property Fund Services Limited as
the Company's Administrator in place of Heritage International Fund Managers
Limited.
Current Trading and Outlook
Trading to date in 2010 continues to be very challenging and revenue levels are
falling short of 2009. However, there is hope that with the improvements in the
Japanese economy, greater confidence will filter through to consumers in general
and they will become more willing to spend during the remainder of the year.
JLH's performance during the last two years provides comfort that it can perform
well even in a difficult environment. The Directors are therefore cautiously
optimistic with regard to prospects for the current year. In the longer term,
the Board is steadfast in its intention to pursue its goal of delivering
sustained cash returns to investors through pursuit of its declared corporate
objectives.
We remain convinced that the opportunity still exists to become a major
consolidator in the leisure hotel market in Japan. We believe that having
successfully demonstrated our ability to grow earnings and cash, and pay a
dividend, we are an even more attractive proposition to potential investors.
Not all owners and operators of leisure hotels have managed their way through
the recession as astutely as our Asset Manager, resulting in plenty of
distressed assets becoming available on attractive terms. We continue to
investigate ways of raising the necessary finance to take advantage of these
opportunities to grow our portfolio. Our intention would be to renovate and
rebrand them, as we have successfully achieved with our first acquisition. This
would provide worthwhile economies of scale, enhance the value of our brand and
increase our ability to generate cash, thus offering the prospect of improved
levels of dividend payments.
Annual Meeting
We look forward to discussing our current strategy and recent performance with
shareholders at the Annual General Meeting, to be announced in due course. This
will be held at the registered office of the Company, Praxis Property Fund
Services Limited, Sarnia House, St. Peter Port, Guernsey, Channel Islands.
Chairman
Alan Clifton
JAPAN LEISURE HOTELS LIMITED
("Japan Leisure Hotels", "JPLH" or "the Company")
Final Results for the year ended 31 December 2009
ASSET MANAGER'S REPORT
The Japanese economy
2009 was a very challenging period for Japan. The economy posted a 5% decline in
GDP during the year, the worst recession since the Second World War, but
recovered in the final quarter with growth of 1.1%, which translates to a 4.6%
annualised increase. Deflation returned with a vengeance; prices were on average
3% lower in January 2010 compared to January 2009. There was also an historic
change of leadership in the government with the Liberal Democratic Party being
removed after 54 years of almost unbroken rule and being replaced by the
Democratic Party of Japan government under the leadership of Yukio Hatoyama.
Clearly, like many other countries in the world, Japan has many economic issues
to address: growing deflation, a cut back in the public investment introduced
last year now looms and national debt is twice the country's GDP. On the other
hand, fears of a double dip recession are now receding, as the global economic
problems subside and export demand returns.
The new government appears determined to tackle the problems of deflation; the
Bank of Japan injected JPJPY10 trillion of virtually interest free liquidity
into the banking system in November with the objective of reducing the strength
of the yen and helping to boost export earnings, although the currency has so
far shown little sign of responding. Nevertheless, Japan's new finance minister
has stated that he wants the Bank of Japan to be more accountable and has
started to apply pressure for a formal inflation target to be set.
Japan's foreign policy appears to be shifting as well with moves being made to
establish stronger economic ties with the rest of Asia, especially China. It
remains to be seen how this will play out but it is indicative of a fresh
approach.
Although consumer spending remains low the leisure hotel sector has shown great
resilience, as in previous recessionary periods. In a country where 80% of
people live in densely populated cities and where multi-generational households
are the norm, spending quality time with a partner continues to be seen as a
necessity as opposed to a discretionary luxury. Moreover, the fact that the
Consumer Confidence Index rose for the third successive month in March will only
improve consumer spending.
The leisure hotel industry
The Japanese leisure hotel industry consists of approximately 25,000 hotels with
an average of 24 rooms per hotel. The industry's turnover is estimated at more
than JPY4 trillion (UKGBP30 billion) per year, with approximately 500 million
visits made each year, translating into over two million Japanese visiting one
of Japan's leisure hotels each day.
In an industry with such a fundamentally robust demand and significant size, it
would be natural to expect it to be well consolidated - but this is not the case
with the leisure hotel industry in Japan. The fragmentation of the industry
persists and, in the current environment, may even be increasing. No single
operator controls more than 100 hotels and 90% of owners own five or fewer
hotels.
The strategy of consolidating the industry is even more compelling now than it
was when Japan Leisure Hotels listed in 2008. There is now an even greater
number of leisure hotels available for sale in Japan which can be refurbished
and re-branded and, through this consolidation, value can be realised. We
believe that these current conditions in the leisure hotel industry are
unprecedented and provide us a unique opportunity to gain a significant market
share in this industry - provided we have the resources at hand.
There is a real opportunity for operators of size and those with the management
infrastructure to maintain their hotels at high standards to benefit from the
maturing of the industry and its expected consolidation.
Financial Results
Presented below are statements of the EBITDA2 relating to the hotel operations,
based on audited figures, for the year ended 31 December 2009.
+-------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | Bonita Portfolio | Yokkaichi | Total |
+-------------------+-----------------------+-----------------------+-----------------------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
+-------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 |
+-------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Revenue | 1,099,188 | 1,153,491 | 99,305 | 34,066 | 1,198,493 | 1,187,557 |
+-------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Variable | (570,012) | (608,013) | (60,522) | (30,125) | (630,534) | (638,138) |
| operating | | | | | | |
| expenses | | | | | | |
+-------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Fixed operating | (205,820) | (228,065) | (29,538) | (23,380) | (235,358) | (251,445) |
| expenses | | | | | | |
+-------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| EBITDA | 323,356 | 317,413 | 9,245 | (19,439) | 332,601 | 297,974 |
+-------------------+-----------+-----------+-----------+-----------+-----------+-----------+
The overall performance of the hotels has been pleasingly resilient in the face
of the prevailing economic conditions and considering that no significant
investment has been made into any of the hotels for the last three years.
Overall guest numbers were up slightly on 2008 to 190,897 (2008: 189,928), and
this is reflected in the revenue figures up to JPJPY1,198,493,000 from
JPJPY1,187,557,000. It should be noted that the main reason for the increase is
the fact that the hotel in Yokkaichi purchased in August 2008 was open for
business for all of 2009, and it made a positive contribution to EBITDA. For the
Bonita portfolio3, the number of guests declined by 5.9% and sales by 4.7%,
reflecting the significant problems in the broader economy combined with an
expected softening in performance at some of the hotels versus the competition
as some of our properties head towards their scheduled capital improvements.
We took the strategic decision to operate the business for the best returns
possible. This has required Bonita Hotels to maintain its focus on quality and
experience and sacrifice higher occupancy, in some locations, to some of our
competitors where they have engaged in severe price competition.
+--+---------------------------------------------------------------------+
| 2| EBITDA comprises earnings before interest, tax, depreciation and |
| | amortisation and excludes the operating expenses of the Guernsey |
| | companies. Revenue shown here differs from "revenue" shown in the |
| | Consolidated Statement of Comprehensive Income because it includes |
| | other income that is attributable to the operation of the hotels |
| | that is included in "other income" in the Consolidated Statement of |
| | Comprehensive Income. |
+--+---------------------------------------------------------------------+
| 3| The Bonita portfolio refers to the five hotels that are operating |
| | under the Bonita brand located at Sendai, Yamagata, Isawa, Komaki |
| | and Matsusaka |
+--+---------------------------------------------------------------------+
Notwithstanding this, operating expenses decreased, due largely to a fall in
energy costs, but also to reductions in energy use, a shift to self laundry at
more of the hotels in the last year and more efficient staff scheduling. This
has resulted in an increased EBITDA in terms both of gross amount - by 1.9% -
and EBITDA margin4 - from 27.95% to 29.42% from the previous year5 - and an
increase in cash from operating the hotels, before tax6 JPJPY306.4 million in
2008 to JPJPY343.2 million.
The following key performance indicators illustrate the performance of the
Bonita portfolio:
+-----------+-------------+-------------+-------------+---------+--------+
| | 2005 | 2006 | 2007 | 2008 | 2009 |
+-----------+-------------+-------------+-------------+---------+--------+
| REVPAR |JPJPY10,506 |JPJPY15,350 |JPJPY16,572 | JPJPY | JPJPY |
| | | | | 16,206 |15,443 |
+-----------+-------------+-------------+-------------+---------+--------+
| Occupancy | 160% | 239% | 254% | 257% | 242% |
| rate | | | | | |
+-----------+-------------+-------------+-------------+---------+--------+
| EBITDA | (43.5)% | 25.5% | 28.7% | 27.5% |29.42% |
| Margin | | | | | |
+-----------+-------------+-------------+-------------+---------+--------+
Operating commentary
At the end of the period Bonita Services assumed the operations at Matsusaka,
Komaki and Yokkaichi hotels from the previous operator; this change will improve
the delivery of services to our guests and drive more consistency across the
portfolio.
As stated above, the renovation of Yokkaichi is almost completed and it is
scheduled to reopen as the sixth Bonita branded hotel towards the end of May. As
part of the renovation process we have developed our own management software and
integrated this with both the entertainment system to improve the guest
experience and the air-conditioning and lighting system to improve energy
efficiency; we expect this action to provide significant benefits in the future.
Despite the continuing tough conditions for consumers they continue to respond
positively to our flexible and attractive prices, we continue to win new guests
and our loyalty programme is the key means of retaining existing guests. Our
loyalty schemes and mobile and online marketing initiatives remain effective.
Mobile marketing has been especially successful, with a 43% increase in the
number of visits to the Bonita hotels website via mobile phone. We have also
seen a slight increase in the overall number of members of our loyalty scheme.
There are continuing efforts to upgrade the guest services across the Bonita
chain as a whole. One of the most significant improvements of 2009 was the
implementation of a group wide food and beverage offering which included the
implementation of a centralised procurement system. These initiatives have shown
a good return so far. The introduction of a new menu has had a particularly
strong impact, with revenue per item served up between 60% and 130%, depending
upon the location of the hotel. We expect further improvements and a positive
impact in 2010.
As noted earlier, a number of the properties are now reaching the point where
some significant expenditure will be required to maintain the competitiveness of
the property. For example, our Komaki property opened almost exactly five years
ago. Our plan is to provide an update to each property at the five year point.
+--+---------------------------------------------------------------------+
| 4| EBITDA margin is EBITDA expressed as a percentage of revenue |
+--+---------------------------------------------------------------------+
| 5| Under the terms of the asset management agreements, fees paid to |
| | the asset manager with respect to the Bonita portfolio increased by |
| | 19% in 2009. Excluding asset manager fees, EBITDA margin on the |
| | Bonita portfolio increased from 34.51% to 38.19% |
+--+---------------------------------------------------------------------+
| 6| Calculated by adding tax paid as shown in the consolidated |
| | statement of cash flows and the Guernsey total profit as shown in |
| | Note 7 to the accounts to net cash from operating activities as |
| | shown in the Consolidated Statement of Cash Flows |
+--+---------------------------------------------------------------------+
However, for Komaki and other properties, we have chosen to delay action. There
are a number of new processes we have instigated for the renovation at Yokkaichi
which we will seek to utilise during future renovations at other properties. We
would expect work to start in Komaki towards the end of this year or early in
2011.
The current opportunity
The combination of Japan Leisure Hotels and New Perspective is unique in this
industry. Both are exclusively focussed on this industry alone and are committed
to a transparent operating ethos; this sets us apart both from the many
operators for whom leisure hotels are a small adjunct to a main business, and
from the more specialised private chains in the industry. There are
considerable economies of scale to be gained from operating a hotel group of
size. Combined with the creation of an established and visible brand in an
industry that lacks any brand recognition, these would provide significant
competitive advantages.
The current financial crisis continues to provide a plethora of opportunities to
acquire assets from financially distressed businesses; these businesses are on
the whole sound but are currently facing refinancing issues in the current
environment. Consolidation and the resulting economies of scale would allow a
larger group to provide significantly better value to its guests and thus
increase competitive pressures on the smaller operators which would ultimately
allow the larger operators significantly greater pricing power.
Opportunities to acquire suitable assets to add to our portfolio continue to be
available and, if anything, these opportunities are increasing. Although
corporate bankruptcies have fallen from their peaks of last year, the number of
owners of leisure hotels who are seeking to divest these assets has risen as
lenders continue to refuse to extend loans due to their desire to strengthen
their balance sheets. It remains a buyer's market.
Outlook
We have demonstrated that we can grow guest numbers, maintain revenues, manage
costs and improve the profitability of, and free cash flow from, the properties
in the face of considerable headwinds from the economy as a whole. Yokkaichi is
on track to further establish the Bonita brand and differentiate it from the
rest of the market and once again proves our ability to successfully renovate
and rebrand a hotel on time and within budget. This confirms our ability to
execute the strategy we have sought to pursue.
Economic conditions in Japan appear to be improving slowly and there is a
growing awareness of the leisure hotel industry's size and resilience. We are
increasingly hopeful that this, together with our performance to date, will
persuade a greater number of investors to invest in JLH and allow us to release
the value that is available in the market. There is evidence of an increased
level of interest from a variety of sources of investment in the sector, which
gives us encouragement as we consider ways of raising new finance.
We are confident and see the current trials and tribulations in the industry as
a significant opportunity for any investor. Our vision is to develop our
business into an established, mainstream part of Japanese life. This will be
achieved by delivering consistently high standards of service to our guests
through strong management and training for our staff. Our intention is to make
the guest experience one that all our guests will seek to recapture time and
again. We will continue to challenge the norm and seek new and innovative
offerings for our guests and seek to challenge our suppliers to deliver the best
value for money. This will result in a business which is not only transparent
for investors but will provide exceptional returns.
Our challenge is to create the scale that is required to build the business into
a leading player in the Japanese leisure hotel industry. Our progress to date
provides us with every confidence that we can move to the next stage of our
development.
JAPAN LEISURE HOTELS LIMITED
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2009
+------------+-----+-----+---------+----+--+-------------------------+--+-------------------------+
| | | 2009 | | 2008 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | Restated |
+----------------------------------+-------+-------------------------+--+-------------------------+
| |Notes | JPJPY'000 | | JPJPY'000 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Revenue | 6 | 1,197,181 | | 1,183,950 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Total Revenue | | 1,197,181 | | 1,183,950 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Raw materials and consumables | | (123,011) | | (124,648) |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Personnel costs | | (279,838) | | (276,242) |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Depreciation and amortisation | | (230,401) | | (217,141) |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Other expenses | 7 | (530,651) | | (556,306) |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | (1,163,901) | | (1,174,337) |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Operating profit before | | 33,280 | | 9,613 |
| exceptional item | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Negative goodwill | | | | 586,946 |
| | | - | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Profit on operations | | 33,280 | | 596,559 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Net loss on sale of tangible | | (228) | | (3,068) |
| assets | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Other income | | 11,271 | | |
| | | | | - |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Net foreign exchange losses | | (1,102) | | (36,410) |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Finance income | | 259 | | 11,487 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Finance costs | | (14) | | |
| | | | | - |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Cost of warrants | | | | (2,364) |
| | | - | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Net finance costs | | (857) | | (27,287) |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Profit before taxation | | 43,466 | | 566,204 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Taxation charge | 8 | (23,142) | | (21,520) |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Profit for the year | | 20,324 | | 544,684 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Total comprehensive income for | | 20,324 | | 544,684 |
| the year | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Profit attributable to: | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Owners of the Company | | 17,805 | | 542,442 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Non-controlling interest | | 2,519 | | 2,242 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Total profit for the year | | 20,324 | | 544,684 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Total comprehensive income | | | | |
| attributable to: | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Owners of the Company | | 17,805 | | 542,442 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Non-controlling interest | | 2,519 | | 2,242 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Total comprehensive income for | | 20,324 | | 544,684 |
| the year | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Basic earnings per share (Yen) | 9 | 0.40 | | 12.83 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Diluted earnings per share (Yen) | 9 | 0.32 | | 9.91 |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Adjusted earnings/(loss) per | 9 | 0.40 | | (1.05) |
| share - basic (Yen) | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| Adjusted earnings/(loss) per | 9 | 0.32 | | (0.81) |
| share - diluted (Yen) | | | | |
+----------------------------------+-------+-------------------------+--+-------------------------+
| | | | | | | | | |
+------------+-----+-----+---------+----+--+-------------------------+--+-------------------------+
| All items in the above statement are derived from continuing operations. |
+-------------------------------------------------------------------------------------------------+
| | | | | | | | | |
+------------+-----+-----+---------+----+--+-------------------------+--+-------------------------+
JAPAN LEISURE HOTELS LIMITED
Consolidated Statement of Financial Position
At 31 December 2009
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | 2009 | | 2008 | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | Restated | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| | | | |Notes | JPJPY'000 | | JPJPY'000 | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Assets | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Non-current assets | | | | | | | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| Property, plant and equipment | | | 4,899,264 | | 5,055,240 | |
+------------------------------------------------------+--+-------+------------------------+----------+------------------------+----------+
| Intangible assets | | | | 32,883 | | 3,872 | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| Rental deposits | | | | 3,220 | | 3,420 | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | 4,935,367 | | 5,062,532 | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Current assets | | | | | | | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| Inventories | | | | | 21,971 | | 18,354 | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Trade and other receivables | | | 17,874 | | 62,805 | |
+------------------------------------------------------+--+-------+------------------------+----------+------------------------+----------+
| Cash and cash equivalents | | | 413,424 | | 263,369 | |
+------------------------------------------------------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | 453,269 | | 344,528 | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Total assets | | | | 5,388,636 | | 5,407,060 | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Liabilities | | | | | | | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| Current liabilities | | | | | | | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| Trade and other payables | | | 135,578 | | 165,069 | |
+------------------------------------------------------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Non-current liabilities | | | | | | | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| Deferred tax liabilities | | | 8 | 203,749 | | 214,304 | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| Other long-term payables | | | 1,298 | | | |
| | | | | | - | |
+------------------------------------------------------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | 205,047 | | 214,304 | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Total liabilities | | | | 340,625 | | 379,373 | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Total net assets | | | | 5,048,011 | | 5,027,687 | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Equity | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Share capital | | | | 97,121 | | 97,121 | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| Distributable reserve | | | | 4,365,514 | | 4,365,514 | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| Retained earnings | | | | 555,220 | | 537,415 | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| Equity attributable to shareholders of the Company | | | 5,017,855 | | 5,000,050 | |
+------------------------------------------------------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Non-controlling interest | | | 30,156 | | 27,637 | |
+------------------------------------------------------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Total equity | | | | 5,048,011 | | 5,027,687 | |
+-------------------------------------------+----------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
| Net asset value per share | | 10 | JPY | | JPY | |
| | | | 114.47 | | 114.01 | |
+------------------------------------------------------+--+-------+------------------------+----------+------------------------+----------+
| | | | | | | | | |
+--------------------------------+----------+----------+--+-------+------------------------+----------+------------------------+----------+
JAPAN LEISURE HOTELS LIMITED
Consolidated Statement of Changes in Equity
For the year ended 31 December 2009
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| For the year ended 31 | | | | | | |
| December 2009 | | | | | | |
+-------------------------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | Share | Share | Distributable | Retained | Total | Non-controlling | Total |
| | capital | premium | reserve | earnings | shareholders' | interest | |
| | | | | | equity | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| At 1 January | 97,121 | | 4,365,514 | 537,415 | 5,000,050 | 27,637 | 5,027,687 |
| 2009 | | - | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| Total | | | | | | | |
| comprehensive | | | | | | | |
| income for | | | | | | | |
| the period | | | | | | | |
+ +-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | 17,805 | 17,805 | 2,519 | 20,324 |
| | - | - | - | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| At 31 | 97,121 | | 4,365,514 | 555,220 | 5,017,855 | 30,156 | 5,048,011 |
| December | | - | | | | | |
| 2009 | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| For the year ended 31 December | | | | | |
| 2008 restated | | | | | |
+------------------------------------------------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | Share | Share | Distributable | Retained | Total | Non-controlling | Total |
| | capital | premium | reserve | earnings | shareholders' | interest | |
| | | | | | equity | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| At 1 January | | | | (5,027) | (5,027) | | (5,027) |
| 2008 | - | - | - | | | - | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| Issue of | 94,757 | 4,643,102 | | - | 4,737,859 | | 4,737,859 |
| share | | | - | | | - | |
| capital | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| Share issue | | (277,588) | | - | (277,588) | | (277,588) |
| expenses | - | | - | | | - | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| Conversion | | | | | | | |
| of share | | | | | | | |
| premium | | | | | | | |
| account | | | | | | | |
+ +-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | (4,365,514) | 4,365,514 | - | | - | - |
| | - | | | | - | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| Cost of | 2,364 | | | - | 2,364 | - | 2,364 |
| warrants | | - | - | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| Minority | | | | | | | |
| interest in | | | | | | | |
| pre-acquisition | | | | | | | |
| reserves | | | | | | | |
+ +-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | - | | 25,395 | 25,395 |
| | - | - | - | | - | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| Total | | | | | | | |
| comprehensive | | | | | | | |
| income for | | | | | | | |
| the period | | | | | | | |
+ +-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | 776,555 | 776,555 | 2,242 | 778,797 |
| | - | - | - | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| Restatement | | | | (234,113) | (234,113) | | (234,113) |
| (note 3) | - | - | - | | | - | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| At 31 | 97,121 | | 4,365,514 | 537,415 | 5,000,050 | 27,637 | 5,027,687 |
| December | | - | | | | | |
| 2008 | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
| | | | | | | | |
+-----------------+-------------------+----------------+----------------+-------------------+--------------------+--------------------+--------------------+
JAPAN LEISURE HOTELS LIMITED
Consolidated Statement of Cash Flows
For the year ended 31 December 2009
+------+--------+--------+--------+--+-------+-----+-------+--------------------------+--+------------------------+
| | | | | | | 2009 | | 2008 |
+------+--------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| | | | | | | | | Restated |
+------+--------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| | | | | |Notes | JPJPY'000 | | JPJPY'000 |
+------+--------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| Cash flows from operating | | | | | |
| activities | | | | | |
+---------------------------------+----------------+-------+--------------------------+--+------------------------+
| Profit before taxation | | | | 43,466 | | 566,204 |
+------------------------+--------+----------------+-------+--------------------------+--+------------------------+
| | | | | | | | | |
+------+--------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| Adjustments | | | | | | | |
| for: | | | | | | | |
+---------------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| | Depreciation and | | | 230,401 | | 217,141 |
| | amortisation | | | | | |
+------+--------------------------+----------------+-------+--------------------------+--+------------------------+
| | Finance income | | | | (259) | | (11,487) |
+------+-----------------+--------+----------------+-------+--------------------------+--+------------------------+
| | Finance costs | | | | 14 | | |
| | | | | | | | - |
+------+-----------------+--------+----------------+-------+--------------------------+--+------------------------+
| | Loss on disposal of | | | 228 | | 3,068 |
| | assets | | | | | |
+------+--------------------------+----------------+-------+--------------------------+--+------------------------+
| | Cost of | | | | | | 2,364 |
| | warrants | | | | - | | |
+------+-----------------+--------+----------------+-------+--------------------------+--+------------------------+
| | (Decrease)/increase in deferred income | | (960) | | 6,561 |
+------+-------------------------------------------+-------+--------------------------+--+------------------------+
| | Negative | | | | | | (586,946) |
| | goodwill | | | | - | | |
+------+-----------------+--------+----------------+-------+--------------------------+--+------------------------+
| Changes in working capital | | | 9,743 | | 4,523 |
+---------------------------------+----------------+-------+--------------------------+--+------------------------+
| Cash inflows from | | | | 282,633 | | 201,428 |
| operations | | | | | | |
+------------------------+--------+----------------+-------+--------------------------+--+------------------------+
| Interest | | | | | 259 | | 11,546 |
| received | | | | | | | |
+---------------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| Finance costs | | | | | (14) | | |
| | | | | | | | - |
+---------------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| Tax paid | | | | | (40,045) | | (189) |
+---------------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| Cost of disposal of | | | | | | (100) |
| assets | | | | - | | |
+------------------------+--------+----------------+-------+--------------------------+--+------------------------+
| Net cash from operating | | | 242,833 | | 212,685 |
| activities | | | | | |
+---------------------------------+----------------+-------+--------------------------+--+------------------------+
| | | | | | | | | |
+------+--------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| Cash flows from investing | | | | | |
| activities | | | | | |
+---------------------------------+----------------+-------+--------------------------+--+------------------------+
| Purchase of plant, property and equipment | | (68,662) | | (474,172) |
+--------------------------------------------------+-------+--------------------------+--+------------------------+
| Purchase of intangible assets | | | (30,310) | | |
| | | | | | - |
+---------------------------------+----------------+-------+--------------------------+--+------------------------+
| Increase in payables on property, plant and | | 4,696 | | |
| equipment | | | | - |
+--------------------------------------------------+-------+--------------------------+--+------------------------+
| Decrease/(increase) in deposits on rented land | | 200 | | (200) |
+--------------------------------------------------+-------+--------------------------+--+------------------------+
| Cash acquired on acquisition of SPE's | | | | | 91,730 |
| | | | - | | |
+--------------------------------------------+-----+-------+--------------------------+--+------------------------+
| Net cash used in investing activities | | | (94,076) | | (382,642) |
+--------------------------------------------+-----+-------+--------------------------+--+------------------------+
| | | | | | | | | |
+------+--------+--------+-------------------+-----+-------+--------------------------+--+------------------------+
| Cash flows from financing activities | | | | | |
+--------------------------------------------+-----+-------+--------------------------+--+------------------------+
| Share | | | | | | | 655,350 |
| proceeds | | | | | - | | |
+---------------+--------------------+-------+-----+-------+--------------------------+--+------------------------+
| Share issue costs | | | | | | (222,024) |
| | | | | - | | |
+------------------------------------+-------+-----+-------+--------------------------+--+------------------------+
| Increase in other long-term | | | | 1,298 | | |
| payables | | | | | | - |
+------------------------------------+-------+-----+-------+--------------------------+--+------------------------+
| Net cash from financing activities | | | 1,298 | | 433,326 |
+--------------------------------------------+-----+-------+--------------------------+--+------------------------+
| | | | | | | | | |
+------+--------+--------+-------------------+-----+-------+--------------------------+--+------------------------+
| Net increase in cash and cash equivalents | | 150,055 | | 263,369 |
+--------------------------------------------------+-------+--------------------------+--+------------------------+
| | | | | | | | | |
+------+--------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| Balance at the beginning of the | | | 263,369 | | |
| year | | | | | - |
+---------------------------------+----------------+-------+--------------------------+--+------------------------+
| | | | | | | | | |
+------+--------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| Balance at the end of the year | | | 413,424 | | 263,369 |
+---------------------------------+----------------+-------+--------------------------+--+------------------------+
| | | | | | | | | |
+------+--------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| | | | | | | | | |
+------+--------+--------+--------+----------------+-------+--------------------------+--+------------------------+
| | | | | | | | | | | |
+------+--------+--------+--------+--+-------+-----+-------+--------------------------+--+------------------------+
JAPAN LEISURE HOTELS LIMITED
Notes to the Condensed Consolidated Financial Statements
For the year ended 31 December 2009
1. Basis of Accounting
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2008 or 2009 but is
derived from the statutory accounts for that year.
The annual financial statements of the Group have been prepared in accordance
with IFRS, which comprise standards and interpretations issued by the
International Accounting Standards Board ("IASB") and the International
Financial Reporting Interpretations Committee ("IFRIC") approved by the
International Accounting Standards Committee ("IASC") that remain in effect, to
the extent that they have been adopted by the European Union.
2 General Information
Japan Leisure Hotels Limited was incorporated in Guernsey on 17 October 2007 and
commenced operations on 7 January 2008. The Company is a closed ended investment
company registered under the provisions of The Companies (Guernsey) Law, 2008.
The address of the registered office is given in the Management and
Administration section at the beginning of the Annual Report. The Company has
been established to derive cash flow and capital gains by investing in Japanese
leisure hotels.
The Company was listed and admitted to trading on AIM, the market of that name
operated by the London Stock Exchange, on 16 January 2008 (the "Placing"). On
admission 44,100,000 shares were issued at GBP0.50 per share resulting in gross
proceeds of GBP22,050,000.
3 Group Structure
The Group comprises the Company, its wholly-owned subsidiaries and those special
purpose entities ("SPEs") which invest in hotels in Japan. The funds raised in
the Placing have been invested through wholly-owned subsidiary companies of the
Company, which are also Guernsey registered companies: JLH 1 Limited and JLH 2
Limited (the "Subsidiaries").
The hotels and other assets are owned by SPEs all of which are Japanese
corporations. The Company, through its Subsidiaries, has invested in the SPEs
by entering into Tokumei Kumiai agreements ("TK Agreements"). A TK Agreement is
a contractual relationship whereby one party, the "TK Investor", agrees to
contribute capital to the other party, the "TK Operator" or SPE, to undertake an
agreed business and receives a share of the economic benefits of investment in
that business. The TK Investor's investment is referred to herein as its "TK
Interest". Further information regarding the group structure is available on
the Company's website www.japanleisurehotels.com.
4 Restatement of prior period figures
Tax expense and deferred taxation have been restated for the 2008 as
detailed below
The taxation expense included in the 31 December 2008 Annual Report was reported
as JPJPY1,711,000. On completion of this Annual Report this has been changed to
JPJPY21,520,000. Accordingly the profit for the year ended 31 December 2008 has
been decreased by JPJPY19,809,000.
The reason for the restatement is that, in the past, tax liability was only
recognised when profits that are subject to Japanese withholding tax were
distributed by the SPEs to the holding companies. The Board has reviewed this
policy and has decided that it is more prudent to recognise the tax liability
when the profit occurs.
In addition the purchase of SPEs at a discount to their net asset value that
gave rise to negative goodwill described in note 10 of the Annual Report has
been adjusted for deferred taxation. The amount of this adjustment arises from
the difference between the Japanese tax base and the carrying value of the net
assets as at acquisition date. The negative goodwill included in the 31 December
2008 Annual Report was reported as JPJPY801,250,000. On completion of this
Annual Report this has been changed to JPJPY586,946,000. Accordingly the profit
for the year ended 31 December 2008 has been decreased by JPJPY214,304,000.
The table below shows the effect of these restatements on the results of the
Company for the year ended 31 December 2008:
+----+---+-------+----+----+-+------+------------------------------+-----------------+-------------+----------+-------------------------------+
| | | | | | As per Annual | | Change | | As |
| | | | | | Report 2008 | | from | | restated |
| | | | | | | | Annual | | in this |
| | | | | | | | Report | | report |
| | | | | | | | 2008 | | |
+----+---+-------+----+-------------+ +-----------------+ +----------+ +
| | | | | | | | | | |
+----+---+-------+----+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Restated item | | JPJPY'000 | | JPJPY'000 | | JPJPY'000 |
+---------------------+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Negative goodwill | | 801,250 | | (214,304) | | 586,946 |
+---------------------+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Taxation | | (1,711) | | (19,809) | | (21,520) |
+---------------------+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| | | | | | | | | | |
+----+---+-------+----+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Profit for the | | | 778,797 | | (234,113) | | 544,684 |
| year | | | | | | | |
+----------------+----+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| | | | | | | | | | |
+----+---+-------+----+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Profit | | | | | | | |
| attributable | | | | | | | |
| to: | | | | | | | |
+----------------+----+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Equity | | | 776,555 | | (234,113) | | 542,442 |
| shareholders | | | | | | | |
+----------------+----+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| | | | | | | | | | |
+----+---+-------+----+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Deferred tax | | | | (214,304) | | (214,304) |
| | | - | | | | |
+---------------------+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Trade and payables | | (145,260) | | (19,809) | | (165,069) |
+---------------------+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| | | | | | | | | | |
+----+---+-------+----+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Net asset value | 5,261,800 | | (234,113) | | 5,027,687 |
+-----------------------------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| | | | | | | | | | |
+----+---+-------+---------+--------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Net asset value per | | JPJPY119.32 | | (JPJPY5.31) | | JPJPY114.01 |
| share (Yen) | | | | | | |
+--------------------------+--------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Net asset value per share | GBP0.91 | | (GBP0.04) | | GBP0.87 |
| (Sterling) | | | | | |
+-----------------------------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| | | | | | | | | | |
+----+---+-------+----+-------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Adjusted net asset value per | JPJPY118.65 | | (JPJPY5.31) | | JPJPY113.34 |
| share (Yen) | | | | | |
+-----------------------------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Adjusted net asset value per | GBP0.91 | | (GBP0.05) | | GBP0.86 |
| share (Sterling) | | | | | |
+-----------------------------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| | | | | | | | | | |
+----+---+-------+-----------+------+------------------------------+-----------------+-------------+----------+-------------------------------+
| | | | | | JPJPY | | JPJPY | | JPJPY |
+----+---+-------+-----------+------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Basic earnings per share | | 18.36 | | (5.53) | | 12.83 |
| (Yen) | | | | | | |
+----------------------------+------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Diluted earnings per share (Yen) | 14.19 | | (4.28) | | 9.91 |
+-----------------------------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Adjusted basic earnings per share | (0.58) | | (0.47) | | (1.05) |
| (Yen) | | | | | |
+-----------------------------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| Adjusted diluted earnings per | (0.45) | | (0.36) | | (0.81) |
| share (Yen) | | | | | |
+-----------------------------------+------------------------------+-----------------+-------------+----------+-------------------------------+
| | | | | | | | | | | | |
+----+---+-------+----+----+-+------+------------------------------+-----------------+-------------+----------+-------------------------------+
5 Operating segments
The Board of Directors is charged with setting the Company's investment strategy
in accordance with the Prospectus. The Board of Directors is the Chief Operating
Decision Maker. The Board has delegated the implementation of strategy to the
Strategy Committee. Under its agreements with the SPEs, the Asset Manager is
responsible for day to day implementation of this strategy and the management of
the assets, but the Board of Directors retains responsibility to ensure that
adequate resources of the Company are directed in accordance with their
decisions.
The investment proposals of the Asset Manager are reviewed by the Strategy
Committee from time to time to ensure compliance with the policies and legal
responsibilities of the Board of Directors. The Board retains full
responsibility as to the major funding decisions of the Company.
The Asset Manager and the Strategy Committee will always act under the terms of
the Prospectus which cannot be materially changed without the approval of the
Board of Directors. The detailed investment restrictions are available for
review in part I of the Admission Document and the Investment Strategy.
The Group's primary reporting segments are geographical with the Group operating
in two geographical areas, being Japan and Guernsey. The Group has only one
business segment, being investment in leisure hotels, therefore no additional
segmented information is given. The Group has no major single customer.
6 Revenue
+----+--+---+-+----+----------+----------+----------+-------------------------------+----------+-------------------------------+
| | | | | | | | | | | |
+----+--+---+-+----+----------+----------+----------+-------------------------------+----------+-------------------------------+
| | | | | | | 31 | | 31 |
| | | | | | | December | | December |
| | | | | | | 2009 | | 2008 |
+-----------+-+----+----------+----------+----------+-------------------------------+----------+-------------------------------+
| | | | | | | | | JPJPY'000 | | JPJPY'000 |
+----+--+---+-+----+----------+----------+----------+-------------------------------+----------+-------------------------------+
| Revenue - room | | | | 1,086,620 | | 1,074,611 |
| rental | | | | | | |
+------------------+----------+----------+----------+-------------------------------+----------+-------------------------------+
| Revenue - goods, food and | | | 110,561 | | 109,339 |
| beverage | | | | | |
+-----------------------------+----------+----------+-------------------------------+----------+-------------------------------+
| | | | | | | | | 1,197,181 | | 1,183,950 |
+----+--+---+-+----+----------+----------+----------+-------------------------------+----------+-------------------------------+
| | | | | | | | | | | |
+----+--+---+-+----+----------+----------+----------+-------------------------------+----------+-------------------------------+
7 Other expenses
+----+---+---+--+---------+----------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| | | | | | 31 December | | 31 |
| | | | | | 2009 | | December |
| | | | | | | | 2008 |
+-------------------------+----------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| | | | | | | | | JPJPY'000 | | JPJPY'000 |
+----+---+---+------------+----------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| Hotel operating | | | | | 325,561 | | 289,699 |
| expenses | | | | | | | |
+-------------------------+----------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| Operating lease expense | | | | | 5,479 | | 5,673 |
+-------------------------+----------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| Asset Manager's fees | | | | | 105,648 | | 86,925 |
+-------------------------+----------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| Professional services | | | | | 39,349 | | 55,732 |
+-------------------------+----------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| Auditors' remuneration | | | | | 13,431 | | 11,616 |
+-------------------------+----------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| Administrator's fees | | | | 13,729 | | 15,587 |
+------------------------------------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| Directors' fees | | | | 13,821 | | 16,931 |
+------------------------------------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| Other expenses | | | | 13,633 | | 74,143 |
+------------------------------------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| | | | | | | | | 530,651 | | 556,306 |
+----+---+---+--+--------------------+------------+----------+----------+--------------------------------+----------+--------------------------------+
| | | | | | | | | | | | |
+----+---+---+--+---------+----------+------------+----------+----------+--------------------------------+----------+--------------------------------+
8 Taxation
Taxation on profit on ordinary activities
Guernsey
The Company is exempt from taxation in Guernsey under the provisions of the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989, as amended, and is
charged an annual exemption fee of GBP600 (JPJPY 88,128).
Japan
The reasons for the difference between actual tax charge for the year and the
standard rate of tax in Japan applied to the results for the year are as
follows:
+------+----------+------+----------+---------------+-----------+--------------------------------+-----------+--------------------------------+
| | | | | | | 31 | | 31 |
| | | | | | | December | | December |
| | | | | | | 2009 | | 2008 |
+------+----------+------+----------+---------------+-----------+--------------------------------+-----------+--------------------------------+
| | | | | | Gross | Tax | Gross | Tax |
| | | | | | | effect | | effect |
| | | | | | | at 20% | | at 20% |
+------+----------+------+----------+---------------+-----------+--------------------------------+-----------+--------------------------------+
| | | | | | JPJPY'000 | JPJPY'000 | JPJPY'000 | JPJPY'000 |
+------+----------+------+----------+---------------+-----------+--------------------------------+-----------+--------------------------------+
| Profit before taxation | 43,466 | 8,693 | 566,204 | 113,241 |
+---------------------------------------------------+-----------+--------------------------------+-----------+--------------------------------+
| Income not subject to tax | (3,706) | (741) | (484,696) | (96,939) |
+---------------------------------------------------+-----------+--------------------------------+-----------+--------------------------------+
| Other items deductible for tax | - | | (79,455) | (15,891) |
| | | - | | |
+---------------------------------------------------+-----------+--------------------------------+-----------+--------------------------------+
| Expenses not deductible for tax | 61,222 | 12,244 | 112,592 | 22,518 |
+---------------------------------------------------+-----------+--------------------------------+-----------+--------------------------------+
| Taxable income before tax losses | 100,982 | 20,196 | 114,645 | 22,929 |
+---------------------------------------------------+-----------+--------------------------------+-----------+--------------------------------+
| Tax losses brought forward | - | | (7,890) | (1,578) |
| | | - | | |
+---------------------------------------------------+-----------+--------------------------------+-----------+--------------------------------+
| Tax losses not utilised | 9,807 | 1,961 | - | |
| | | | | - |
+---------------------------------------------------+-----------+--------------------------------+-----------+--------------------------------+
| Net taxable income | 110,789 | 22,158 | 106,755 | 21,351 |
+---------------------------------------------------+-----------+--------------------------------+-----------+--------------------------------+
| Minimum charge on SPEs with nil taxable income | | | | |
+ +-----------+--------------------------------+-----------+--------------------------------+
| | | 984 | | 169 |
+---------------------------------------------------+-----------+--------------------------------+-----------+--------------------------------+
| Tax charge | | 23,142 | | 21,520 |
+---------------------------------------------------+-----------+--------------------------------+-----------+--------------------------------+
| | | | | | | | | |
+------+----------+------+----------+---------------+-----------+--------------------------------+-----------+--------------------------------+
The following are the major deferred tax liabilities recognised by the Group and
movements thereon:
+------+--+--+-+----+----------+--------------------------------+------+-----------+
| | | | | | | | | |
+------+--+--+-+----+----------+--------------------------------+------+-----------+
| | | | | | | 31 December | | 31 |
| | | | | | | 2009 | | December |
| | | | | | | | | 2008 |
+------+--+--+-+----+----------+--------------------------------+------+-----------+
| | | | | | | JPJPY'000 | | JPJPY'000 |
+------+--+--+-+----+----------+--------------------------------+------+-----------+
| At the beginning of the year | (214,304) | | |
| | | | - |
+------------------------------+--------------------------------+------+-----------+
| Movements: | | | |
+------------------------------+--------------------------------+------+-----------+
| Revaluation of property, | | | (214,304) |
| plant and equipment | - | | |
+------------------------------+--------------------------------+------+-----------+
| Accelerated tax depreciation | 10,555 | | |
| | | | - |
+------------------------------+--------------------------------+------+-----------+
| Total movements for the year | 10,555 | | (214,304) |
+------------------------------+--------------------------------+------+-----------+
| Balance at the end of the | (203,749) | | (214,304) |
| year | | | |
+------+--+--+-+----+----------+--------------------------------+------+-----------+
9 Earnings per share
+----+--+--+-+----+----------+----------+----------+-------------+----+----------------------------+
| Number of | | | | 31 | | 31 December |
| ordinary shares | | | | December | | 2008 |
| | | | | 2009 | | |
+-----------------+----------+----------+----------+-------------+----+----------------------------+
| Number of ordinary shares for basic and diluted | | | |
| earnings per share: | | | |
+--------------------------------------------------+-------------+----+----------------------------+
| Weighted average number of shares in issue | 44,100,002 | | 42,292,623 |
| during the year | | | |
+--------------------------------------------------+-------------+----+----------------------------+
| Dilutive | | | | | 12,420,500 | | 12,420,500 |
| potential | | | | | | | |
| shares | | | | | | | |
+------------+----+----------+----------+----------+-------------+----+----------------------------+
| | | | | | | | | 56,520,502 | | 54,713,123 |
+----+--+--+-+----+----------+----------+----------+-------------+----+----------------------------+
| | | | | | | | | | | |
+----+--+--+-+----+----------+----------+----------+-------------+----+----------------------------+
Basic earnings per share
Basic earnings per share is based on the profit attributable to equity
shareholders and on the weighted average number of shares in issue during the
year.
Diluted earnings per share
Diluted earnings per share is based on the profit attributable to equity
shareholders and on the weighted average number of shares in issue during the
year, also taking into account the effect of the potential shares which would
arise in the event of the warrants being exercised.
Adjusted basic earnings per share - before exceptional items and after tax
Adjusted basic earnings per share - before exceptional items and after tax is
based on the profit attributable to equity shareholders before exceptional items
and after tax and on the weighted average number of shares in issue during the
year.
Adjusted diluted earnings per share - before exceptional items and after tax
Adjusted diluted earnings per share - before exceptional items and after tax is
based on the profit attributable to equity shareholders before exceptional items
and after tax and on the weighted average number of shares in issue during the
year, also taking into account the effect of the potential shares which would
arise in the event of the warrants being exercised.
+--+-----------+---+------------+--+----+----------+----------+---+-----------------------------+---+-----------------------------+
| | | | | | | | | | | | |
+--+-----------+---+------------+--+----+----------+----------+---+-----------------------------+---+-----------------------------+
|10 | Net asset value per share | | | | 31 | | 31 |
| | | | | | December | | December |
| | | | | | 2009 | | 2008 |
+--+------------------------------------+----------+----------+---+-----------------------------+---+-----------------------------+
| | | | | | | | | | JPJPY'000 | | JPJPY'000 |
+--+-----------+---+------------+--+----+----------+----------+---+-----------------------------+---+-----------------------------+
| | Net asset value per Consolidated Statement of Financial | 5,048,011 | | 5,027,687 |
| | Position | | | |
+--+--------------------------------------------------------------+-----------------------------+---+-----------------------------+
| | Difference between the value per the independent valuation | | | |
| | and the book value of plant, property and equipment as shown | | | |
| | in the Consolidated Statement of Financial Position | | | |
+--+ +-----------------------------+---+-----------------------------+
| | | (267,264) | | (29,240) |
+--+--------------------------------------------------------------+-----------------------------+---+-----------------------------+
| | Adjusted net asset value | | | | | 4,780,747 | | 4,998,447 |
+--+-------------------------------+----+----------+----------+---+-----------------------------+---+-----------------------------+
| | | | | | | | | | | | |
+--+-----------+---+------------+--+----+----------+----------+---+-----------------------------+---+-----------------------------+
| | Net asset value per share (Yen) | | | | JPJPY114.47 | | JPJPY114.01 |
+--+------------------------------------+----------+----------+---+-----------------------------+---+-----------------------------+
| | Net asset value per share (Sterling) | | | GBP0.78 | | GBP0.87 |
+--+-----------------------------------------------+----------+---+-----------------------------+---+-----------------------------+
| | | | | | | | | | | | |
+--+-----------+---+------------+--+----+----------+----------+---+-----------------------------+---+-----------------------------+
| | Adjusted net asset value per share (Yen) | | | JPJPY108.41 | | JPJPY113.34 |
+--+-----------------------------------------------+----------+---+-----------------------------+---+-----------------------------+
| | Adjusted net asset value per share (Sterling) | | | GBP0.74 | | GBP0.86 |
+--+-----------+---+------------+--+----+----------+----------+---+-----------------------------+---+-----------------------------+
Exchange rates applied for the Japanese Yen to Sterling as per 31 December 2009
146.92:1 (2008: 131.12:1)
Net asset value per share is based on total assets per the Consolidated
Statement of Financial Position at the end of the year and the number of shares
in issue at the end of the year.
Adjusted net asset value per share is based on the net asset value per
Consolidated Statement of Financial Position adjusted for the revaluation of
property and equipment, as per the Colliers International (Hong Kong) Ltd
valuation detailed in note 13, and the number of shares in issue at the end of
the year.
11 Related parties and material contracts
Mark Huntley, Director of the Company until his resignation on 2 October
2009, is also a director of Heritage International Fund Managers Limited, which
was the Company's administrator until 31 January 2010. During the year Mr.
Huntley earned JPJPY1,686,000 (2008: JPJPY2,617,000) by way of a Director's fee,
none of which was outstanding at the year end. Heritage International Fund
Managers Limited earned JPJPY13,729,000 (2008: JPJPY13,190,000 ) in
administration fees of which JPJPY3,203,000 (2008:JPJPY2,454,000 ) was
outstanding at the year end.
New Perspective, the Group's Asset Manager, earned JPJPY105,758,000
(2008: JPJPY86,925,000) by way of asset management fees and JPJPY14,812,704
(2008:JPJPY11,379,343) for accounting and other services during 2009. Of these
fees JPJPY1,579,000 (2008: JPJPY6,947,000) was outstanding at the year end.
On 9 July 2009, the New Perspective Employee Trust purchased 10,000 ordinary
shares in the Company.
12 Events after the reporting period
Subsequent to the end of the fiscal year covered by these accounts, the Group
continued development of a software system for the purpose of managing the hotel
in Yokkaichi and entered into contracts for the renovation of the same hotel. In
this connection, it entered into contracts for a total of approximately JPJPY
300 million since the year end, in addition to the contract for development of
the necessary software executed in 2009 and continued in 2010 of which
approximately JPJPY 25 million is expected to fall due in 2010.
Apart from the above, there have been no significant events subsequent to the
reporting date.
Copies of the 2009 accounts will be posted to shareholders in due course. Copies
of this announcement are available from the Company at Bond Street House, 14
Clifford Street, London W1S 4JU.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSAEDLFSSEDI
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