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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Prospect EP. | LSE:PEJR | London | Ordinary Share | IM00B1FW6C18 | 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% | 0.455 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMPEJR RNS Number : 1249L Prospect Epicure J-REIT Val Fd PLC 30 April 2010 30 April 2010 Prospect Epicure J-REIT Value Fund plc Final results for the year ended 31 December 2009 Prospect Epicure J-REIT Value Fund plc ("PEJR" or "the Company"), the AIM listed company established to invest in undervalued Japanese physical real estate through J-REIT's, announces final results for the year ended 31 December 2009. Following the approval of shareholders at an extraordinary general meeting on 23 July 2009, the Company is a realisation company and its investment objective is to realise assets on behalf of the Company in a manner designed to preserve as much value as possible for shareholders. Key highlights · NAV per share as at 31 December 2009 of 6.78p · Two capital distributions equating to 6 pence per share made in October 2009 and March 2010 · Unaudited NAV per share at 31 March 2010 of 3.69 pence following the second capital distribution · Final investments sold for cash on 26 April 2010 · Directors' intend to shortly convene a general meeting of the Company at which a special resolution will be put to shareholders for: o the voluntary winding up of the Company and the appointment of a liquidator; and o the cancellation of admission to trading on AIM of the Company's ordinary shares · Prior to any such cancellation, it is the Directors' intention to make a further capital distribution to shareholders, once all cash has been converted to GBP and all remaining cost estimates finalised. David von Simson, chairman of PEJR, commented: "The Board are pleased to have made the two capital distributions and also have the intention to make a third capital distribution. We are also pleased to announce that given that all of the remaining investments have now been sold and converted into cash, we intend to shortly convene a general meeting to approve the voluntary winding up of the company and also the cancellation of admission to trading on AIM of the Company's ordinary shares. A further announcement on these matters will be made shortly." For further information +-------------------------------+-------------------------------+ | Prospect Epicure J-REIT Value | +41 (0) (22) 908 1190 | | Fund plc | | +-------------------------------+-------------------------------+ | Leonard O'Brien | | +-------------------------------+-------------------------------+ | | | +-------------------------------+-------------------------------+ | Panmure Gordon | +44 (0) 20 7459 3600 | +-------------------------------+-------------------------------+ | Richard Gray | | +-------------------------------+-------------------------------+ | Andrew Potts | | +-------------------------------+-------------------------------+ Chairman's Statement We are pleased to present the Annual Report and Accounts for the year ended 31 December 2009. Following the extraordinary general meeting in July 2009, the Company became a realisation Company and the Manager and Investment Adviser have been taking action to realise the Company's investment portfolio in a manner designed to preserve as much value as possible for shareholders. On 26 April 2010 the final investments were sold for cash. The financial statements of the Company are now prepared on a non going concern basis, with assets stated at realisable amounts and provisions for the estimated liquidation costs. The Company publishes its net asset value on a monthly basis which includes an estimate of liquidation costs and a provision for fees and expenses expected to be incurred in realising the assets. As at 31 March 2010 the net assets were GBP4,830,114 with 131 million shares in issue giving a NAV per share of 3.69 pence. Included in this were portfolio holdings of GBP3,814,704 and cash (net of provisions but including dividends receivable) of GBP1,015,410 with no borrowings. As a result of realisations to date the Company made one distribution of 3p per share in October 2009 and a second distribution of 3p per share was made on 12 March 2010 to shareholders of account as at 12 February 2010. As all of the Company's investments have now been sold and converted into cash, it is the Directors' intention to shortly convene a general meeting of the Company at which a special resolution will be put to shareholders for the voluntary winding up of the Company and the appointment of a liquidator. In addition, the Company also intends to put to shareholders a resolution seeking the cancellation of admission to trading on AIM of the Company's ordinary shares in accordance with the AIM Rules for Companies. Prior to any such cancellation, it is the Directors' intention to make a further capital distribution to shareholders, once all cash has been converted to GBP and all remaining cost estimates finalised. A further announcement with details of the general meeting and the capital distribution will be made in due course. David von Simson Chairman 30 April 2010 Report of the Manager and Investment Adviser Prospect Epicure J-REIT Value Fund plc (the "Company") was established to capitalise on attractive investment opportunities in the Japanese real estate investment trust (J-REIT) market. Following the approval of shareholders at an extraordinary general meeting on 23 July 2009, the Company is now a realisation company and its investment objective is to realise assets on behalf of the Company in a manner designed to preserve as much value as possible for shareholders. Investment Overview The Investment Adviser has been realising the portfolio since shareholder approval was granted in July 2009 with a view to preserving as much value as possible for shareholders. On 26 April 2010, the final investments were sold for cash. By employing a medium-term timeframe for liquidation, the Company was able to secure exit prices at near recent highs for its holdings. The Investment Adviser believes the steady selling of shares into the market near recent highs prevented negative share price reaction, and enabled the maximum preservation of shareholder equity. The Company was invested in a portfolio of smaller capitalised J-REITs. Although trading in the shares of these smaller capitalised J-REITs tends to be much less than in the larger capitalised J-REITs, the Investment Adviser's investment stance focused on NAV discounts and high dividend yields. The holdings that comprised the portfolio were chosen because the Investment Adviser considered them to be among the most undervalued, highest yielding stocks within their universe. As at 31 December 2009, the Company's investment portfolio consisted of the following J-REITs: +--------+-------------+--------+-----------+ | | | | 31 | | | | | December | | | | | 2009 | +--------+-------------+--------+-----------+ | Code | Security | Number | valuation | | | name | | GBP'000 | +--------+-------------+--------+-----------+ | | | | | +--------+-------------+--------+-----------+ | 8984 | Blife | 116 | 323 | | | Investment | | | | | Corporation | | | +--------+-------------+--------+-----------+ | 8966 | Crescendo | 1,018 | 815 | | | Investment | | | | | REIT | | | +--------+-------------+--------+-----------+ | 8970 | Japan | 2,792 | 2,030 | | | Single | | | | | Residence | | | | | REIT | | | +--------+-------------+--------+-----------+ | 8974 | LaSalle | 207 | 167 | | | Japan | | | | | REIT | | | +--------+-------------+--------+-----------+ | 8985 | Nippon | 519 | 479 | | | Hotel | | | | | Fund | | | | | Investment | | | | | Corporation | | | +--------+-------------+--------+-----------+ | 8969 | Prospect | 1,731 | 896 | | | REIT | | | | | Corporation | | | +--------+-------------+--------+-----------+ | 8963 | Invincible | 2,688 | 1,674 | | | Investment | | | | | Corporation | | | +--------+-------------+--------+-----------+ | | | | 6,384 | +--------+-------------+--------+-----------+ In the interest of preserving as much shareholder value as possible, the sale of the remaining holdings in the portfolio was executed over the course of several months at target prices representing recent highs. +--------+-------------+---------+ | Code | Security | Average | | | name | Sale | | | | Price | | | | (yen) | +--------+-------------+---------+ | | | | +--------+-------------+---------+ | 8963 | Invincible | 16,608 | | | Investment | | | | Corporation | | +--------+-------------+---------+ | 8969 | Prospect | 87,756 | | | REIT | | | | Corporation | | +--------+-------------+---------+ | 8970 | Japan | 93,347 | | | Single | | | | Residence | | | | REIT | | +--------+-------------+---------+ Key Events Setting the Stage for 2009 On 9 October 2008, New City Residence Investment Corporation announced the initiation of Civil Rehabilitation proceedings due to its inability to refinance its debts in a timely fashion or to secure new financing for the pre-committed acquisition of a property. This was an unprecedented even in the J-REIT industry, and shook investor confidence in the sector as a whole. In the wake of the NCR bankruptcy, investor focus shifted from underlying asset values and cash flows to imminent refinancing and exposure to pre-commitment risks. While lending costs rose for most of 2009, it is important to note that there were no instances of lenders refusing refinancing. 2009: Consolidation Frenzy & The Return of Equity Finance 2009 saw the J-REIT market begin its climb out of the doldrums caused by the global credit crises, amid a slew of sponsor changes, consolidation announcements and a firm commitment on the part of the government to provide a safety net in the form of a "lender of last resort" fund. The above events worked to remove the spectre of the 2008 bankruptcy of New City Residence, and the cloud it cast over the ability of J-REITs to secure financing. Sponsor Changes The J-REIT market had five sponsorship changes during 2009, and one announced as of February end 2010. The market response was positive to the changes, due mainly to easier refinancing activities available to J-REITs with strong domestic sponsors. Sponsorship Changes +--------+--------+-------------+-------------+------------+ | Date | Code | Name | Type | New | | | | | | Sponsor | +--------+--------+-------------+-------------+------------+ |Jun-09 | 8976 | DA | Office | Daiwa | | | | Office | |Securities | | | | Investment | | | +--------+--------+-------------+-------------+------------+ |Sep-09 | - | New |Residential | Daiwa | | | | City | | House | | | | Residence | | | +--------+--------+-------------+-------------+------------+ |Oct-09 | 3227 | MID | Office | Kansai | | | | REIT | | Electric | +--------+--------+-------------+-------------+------------+ |Oct-09 | 8966 | Crescendo |Diversified | Heiwa | | | | Investment | | Real | | | | | | Estate | +--------+--------+-------------+-------------+------------+ |Dec-09 | 8962 | Nippon |Residential | Itochu | | | |Residential | | | | | | Investment | | | +--------+--------+-------------+-------------+------------+ |Feb-10 | 8973 | Joint |Diversified | Sekisui | | | | REIT | | House | +--------+--------+-------------+-------------+------------+ Mergers +--------+--------+-------------+-------------+ | Date | Code | Name | Merger | | | | | w/ | +--------+--------+-------------+-------------+ |Feb-10 | 8963 | Invincible | LCP | | | | Investment | Investment | | | | Corp | | +--------+--------+-------------+-------------+ |Mar-10 | 3269 | Advance | Nippon | | | | Residence |Residential | | | | Investment | Investment | +--------+--------+-------------+-------------+ |Mar-10 | 8953 | Japan | LaSalle | | | | Retail | Japan | | | | Fund | | +--------+--------+-------------+-------------+ |Apr-10 | 8984 | Blife | New | | | | Investment | City | | | |Corporation | Residence | +--------+--------+-------------+-------------+ |Jul-10 | 8986 | Japan | Prospect | | | | Rental | REIT | | | | Housing | | | | | Inv | | +--------+--------+-------------+-------------+ Government Support Measures The government continued looking for ways to reduce refinancing stress on the JREIT market, establishing a Public-Private Real Estate Stabilisation Fund to aid in refinancing, particularly of corporate bonds. The fund opened on 5 September 2009. In March 2010, Prospect REIT (8969) became the first J-REIT to use the facility, borrowing Y10 billion. Further details on the Public-Private J-REIT support fund: Requirements: - LTV no more than 65% after receipt of loan - No mid-long term financing risks - No portfolio properties with legal violations - Management company received no administrative penalties in the past - Must have posted a positive NOI in the latest fiscal period - Assets must have exceeded liabilities in the latest fiscal period - Must not have breached loan covenants Terms: - Initial - 3mo TIBOR +150 400bps depending on LTV, AUM and P/NAV - Additional spread of 0 150bps from the 2nd year of loan depending on P/NAV - Maturity no longer than 3 years (March 2015) 2009 Public Offerings +--------+--------+----------------+--------+ | Date | Code | Name | Size | | | | | (mn | | | | | yen) | +--------+--------+----------------+--------+ |Oct-09 | 3226 | Nippon |21,430 | | | |Accommodations | | | | | Fund | | +--------+--------+----------------+--------+ |Oct-09 | 8972 | Kenedix | 9,851 | | | | Realty | | | | | Investment | | +--------+--------+----------------+--------+ |Nov-09 | 8952 | Japan |31,900 | | | | Real | | | | | Estate | | | | | Investment | | +--------+--------+----------------+--------+ |Nov-09 | 3240 | Nomura |11,500 | | | | Residential | | | | | REIT | | +--------+--------+----------------+--------+ Going forward The period of heightened investor concern regarding refinancing risk seems to have passed, as many of the most at risk J-REITs have secured new sponsors, and corporate bond refinancings were uneventful. AUM and dividend growth are in the spotlight, as J-REITs are again able to turn to equity markets to fund expansion. The string of late 2009 public offerings has continued into early 2010, with three J-REITs announcing issuances totalling Y36.2 bn thus far into the new year. Bond markets have also started to thaw, as four J-REITs have announced placement of Y40 bn worth of new corporate bonds. Short term risks include an increase in property vacancies leading to resumption of the large appraisal value declines seen in early 2009, and a cessation of real estate transactions as J-REITs await a new bottom. Leonard O'Brien Curtis Freeze Epicure Managers Japan Limited Prospect Asset Management, Inc. Manager Investment Adviser 30 April 2010 30 April 2010 Investing Policy Investment Objective Following the approval of shareholders at an extraordinary general meeting on 23 July 2009, the Company is now a realisation company and its investment objective is to realise assets on behalf of the Company in a manner designed to preserve as much value as possible for shareholders. Assets or Companies in which the Company can invest Given that the Company is now a realisation company, the Company's policy is not to make any new investments, but rather to realise assets on behalf of the Company. Whether investments will be active or passive investments Whilst Epicure Managers Japan Limited (the "Manager") and Prospect Asset Management, Inc. (the "Investment Adviser") have a mandate to realise assets on behalf of the Company, the Investment Adviser will continue to maintain an active approach to its investments in a manner designed to preserve as much value as possible for shareholders. Holding period for investments Whilst the Manager and Investment Adviser have a mandate to realise assets on behalf of the Company, given the daily traded volumes of certain of the Company's investments, it is expected that certain of the positions may potentially take a number of months to realise, assuming that there is no significant change in market conditions or that the Investment Adviser is able to realise some or all of the positions with a small number of parties. The Investment Adviser will seek to realise the Group's investments through sales in the market. In addition, the Board, in conjunction with its advisers, may explore the possibility of selling all or part of the Group's portfolio to institutional buyers as an alternative means of realising value for Shareholders. Spread of investments and maximum exposure limits Given that the Company is now a realisation company and the Company's policy is not to make any new investments, the Company does not have a policy in relation to the spread of its investments or maximum exposure limits per investment. Policy in relation to gearing Given that the Company is now a realisation company with the Manager and Investment Adviser having a mandate to realise assets on behalf of the Company, the Company does not have a policy in relation to gearing, however following the repayment of all outstanding indebtedness in 2008, it is not the Director's intention to again borrow funds. Policy in relation to cross-holdings Whilst the Company does not have a formal policy on cross-holdings, given that the Company is now a realisation company with a policy to not make any new investments, the Company does not currently have any investments in other listed or unlisted closed-ended investment funds. Investing Restrictions Given that the Company is now a realisation company, and the Group policy is not to make any new investments but rather to realise assets on behalf of the Company, the Company does not have a policy on investing restrictions. Returns and Distribution Policy Following the approval of shareholders at an extraordinary general meeting on 23 July 2009, the Company is now a realisation company and its investment objective is to realise assets on behalf of the Company in a manner designed to preserve as much value as possible for shareholders. Certain of the Company's constitutional arrangements were amended so as to permit a return of capital arising on the disposal of investments to shareholders in as orderly manner as possible. It is expected that capital will be returned to shareholders over time through ad hoc returns of capital and buy backs of ordinary shares through the market. The decision to pay any such returns of capital will be at the sole discretion of the board of the Company. Pursuant to the Isle of Man Companies Act 2006, the Board may only authorise a return of capital if the Directors are satisfied, on reasonable grounds, that the Company will, immediately after such return, satisfy the Solvency Test. The decision to make any repurchases of Ordinary Shares will be at the sole discretion of the Board and will be subject to the Directors being satisfied, on reasonable grounds, that the Company will, immediately after the repurchase, satisfy the Solvency Test. The "Solvency Test" is referred to in section 49 of the Isle of Man Companies Act 2006, which the Company satisfies if it is able to pay its debts as they become due in the normal course of the Company's business and the value of its assets exceeds the value of its liabilities. The rate at which returns of capital are paid under the Company's capital return scheme and ordinary shares are repurchased under the buy back programme (as set out in the Company's circular to shareholders dated 18 June 2009) will depend on, in particular, the rate at which the Group's investments are realised. The market in Japanese real estate investment trusts ("J-REIT's") is relatively illiquid. The Company itself is a holder of relatively less liquid J-REIT investments. The illiquidity in the market and in the Company's portfolio means that the timing of the realisation process and, therefore, distributions to shareholders, is uncertain. The Investment Adviser will seek to realise investments as efficiently as possible whilst at the same time seeking to maximise value for shareholders on exit. Life of the Company Once substantially all of the Group's investments have been realised, the Directors intend to convene an extraordinary general meeting of the Company at which a special resolution will be put for the voluntary winding up of the Company and the appointment of a liquidator. If this special resolution is passed the winding up of the Company will take effect immediately. The liquidator will be appointed to oversee that the Company's remaining assets available for distribution on a winding up are distributed to Shareholders. The appointed liquidators will set aside sufficient assets in a liquidation fund to meet the Company's liabilities. The liquidators would also provide in the liquidation fund for a retention, which they consider sufficient to meet any contingent and unknown liabilities of the Company. The Company has a number of Singaporean subsidiaries. The liquidation process is complex and uncertain and could take in excess of 12 months. As stated above, risks and uncertainties would apply during the liquidation process and the timing and size of any distributions to Shareholders are uncertain and will depend on the ongoing costs payable during the liquidation and settlement of any unknown or contingent liabilities. The Board has commenced the liquidation process for the majority of the Singaporean subsidiaries. Consolidated Income Statement +------------------+--------+----------+-----------+ | | | | | | | Note | For | For | | | | the | the | | | | year | year | | | | ended | ended | | | | 31 | 31 | | | | December | December | | | | 2009 | 2008 | +------------------+--------+----------+-----------+ | | | GBP'000 | GBP'000 | +------------------+--------+----------+-----------+ | | | | | +------------------+--------+----------+-----------+ | Income | | | | | | | | | +------------------+--------+----------+-----------+ | | | 9 | 318 | | Interest | | | | | income | | | | +------------------+--------+----------+-----------+ | | | 1,132 | 5,949 | | Dividend | | | | | income | | | | +------------------+--------+----------+-----------+ | Realised | | (22,443) | (88,840) | | loss on | | | | | disposal | | | | | of | | | | | financial | | | | | assets | | | | +------------------+--------+----------+-----------+ | Revaluation | | 24,750 | (28,967) | | gains/(losses) | | | | | on financial | | | | | assets | | | | +------------------+--------+----------+-----------+ | Total | | 3,448 | (111,540) | | net | | | | | investment | | | | | income/(expense) | | | | +------------------+--------+----------+-----------+ | | | | | +------------------+--------+----------+-----------+ | Expenses | | | | +------------------+--------+----------+-----------+ | | 8.2 | (99) | (1,012) | | Manager's | | | | | fees | | | | +------------------+--------+----------+-----------+ | | 8.4 | (169) | (351) | | Administration | | | | | fees | | | | +------------------+--------+----------+-----------+ | | | (71) | (68) | | Audit | | | | | and | | | | | professional | | | | | fees | | | | +------------------+--------+----------+-----------+ | | 6 | (35) | (870) | | Interest | | | | | expense | | | | +------------------+--------+----------+-----------+ | | 8 | (451) | (389) | | Other | | | | | expenses | | | | +------------------+--------+----------+-----------+ | | 11 | (753) | - | | Provisions | | | | +------------------+--------+----------+-----------+ | Total | | (1,578) | (2,690) | | operating | | | | | expenses | | | | +------------------+--------+----------+-----------+ | | | | | +------------------+--------+----------+-----------+ | Profit/(loss) | | 1,870 | (114,230) | | before tax | | | | +------------------+--------+----------+-----------+ | | | | | +------------------+--------+----------+-----------+ | Income | 14 | (79) | (416) | | tax | | | | | expense | | | | +------------------+--------+----------+-----------+ | Profit/(loss) | | 1,791 | (114,646) | | for the year | | | | +------------------+--------+----------+-----------+ | | | | | +------------------+--------+----------+-----------+ | Basic | 12 | 1.37 | (95.20) | | and | | | | | fully | | | | | diluted | | | | | earnings/(loss) | | | | | per share | | | | | (pence) | | | | +------------------+--------+----------+-----------+ Consolidated Statement of Comprehensive Income +------------------------------+------+---------------+----------------+ | |Note | For the year | For the year | | | | ended | ended | | | | 31 December | 31 December | | | | 2009 | 2008 | +------------------------------+------+---------------+----------------+ | | | GBP'000 | GBP'000 | +------------------------------+------+---------------+----------------+ | Profit/(Loss) for the year | | 1,791 | (114,646) | +------------------------------+------+---------------+----------------+ | | | | | +------------------------------+------+---------------+----------------+ | Other comprehensive | | | | | income/(expense) | | | | +------------------------------+------+---------------+----------------+ | Net change in fair value | | - | 28,967 | | gains on available-for-sale | | | | | financial assets (net of | | | | | tax) | | | | +------------------------------+------+---------------+----------------+ | Foreign exchange translation | | (1,303) | 15,332 | | differences | | | | +------------------------------+------+---------------+----------------+ | Other comprehensive | | (1,303) | 44,299 | | (expense)/income for the | | | | | year (net of tax) | | | | +------------------------------+------+---------------+----------------+ | | | | | +------------------------------+------+---------------+----------------+ | Total comprehensive | | 488 | (70,347) | | income/(expense) for the | | | | | year | | | | +------------------------------+------+---------------+----------------+ Consolidated Balance Sheet +--------------------+--------+----------+----------+ | | Note | At 31 | At 31 | | | | December | December | | | | 2009 | 2008 | +--------------------+--------+----------+----------+ | | | GBP'000 | GBP'000 | +--------------------+--------+----------+----------+ | | | | | +--------------------+--------+----------+----------+ | Non-current | | | | | assets | | | | +--------------------+--------+----------+----------+ | Available-for-sale | 5 | - | 10,554 | | financial assets | | | | +--------------------+--------+----------+----------+ | Total | | - | 10,554 | | non-current | | | | | assets | | | | +--------------------+--------+----------+----------+ | | | | | +--------------------+--------+----------+----------+ | Current | | | | | assets | | | | +--------------------+--------+----------+----------+ | Financial | 5 | 6,384 | - | | assets | | | | | held for | | | | | sale | | | | +--------------------+--------+----------+----------+ | Other | | 146 | 608 | | receivables | | | | | and | | | | | prepayments | | | | +--------------------+--------+----------+----------+ | Cash | 9 | 3,241 | 1,635 | | at | | | | | bank | | | | +--------------------+--------+----------+----------+ | Total | | 9,771 | 2,243 | | current | | | | | assets | | | | +--------------------+--------+----------+----------+ | Total | | 9,771 | 12,797 | | assets | | | | +--------------------+--------+----------+----------+ | | | | | +--------------------+--------+----------+----------+ | Issued | 10 | 1,310 | 1,310 | | share | | | | | capital | | | | +--------------------+--------+----------+----------+ | Share | | 8,616 | 12,546 | | premium | | | | +--------------------+--------+----------+----------+ | Retained | | (13,580) | (15,371) | | earnings | | | | +--------------------+--------+----------+----------+ | Foreign | | 12,541 | 13,844 | | currency | | | | | translation | | | | | reserve | | | | +--------------------+--------+----------+----------+ | Total | | 8,887 | 12,329 | | equity | | | | +--------------------+--------+----------+----------+ | | | | | +--------------------+--------+----------+----------+ | Other | | 157 | 468 | | creditors | | | | | and | | | | | accrued | | | | | expenses | | | | +--------------------+--------+----------+----------+ | Provisions | 11 | 727 | - | +--------------------+--------+----------+----------+ | Total | | 884 | 468 | | current | | | | | liabilities | | | | +--------------------+--------+----------+----------+ | Total | | 884 | 468 | | liabilities | | | | +--------------------+--------+----------+----------+ | Total | | 9,771 | 12,797 | | equity | | | | | & | | | | | liabilities | | | | +--------------------+--------+----------+----------+ Company Balance Sheet +--------------------+--------+----------+----------+ | | Note | At 31 | At 31 | | | | December | December | | | | 2009 | 2008 | +--------------------+--------+----------+----------+ | | | GBP'000 | GBP'000 | +--------------------+--------+----------+----------+ | | | | | +--------------------+--------+----------+----------+ | Non-current | | | | | assets | | | | +--------------------+--------+----------+----------+ | Available-for-sale | 5 | - | 6,399 | | financial assets | | | | +--------------------+--------+----------+----------+ | Investment | 2 | - | 3,009 | | in | | | | | subsidiaries | | | | +--------------------+--------+----------+----------+ | Total | | - | 9,408 | | non-current | | | | | assets | | | | +--------------------+--------+----------+----------+ | | | | | +--------------------+--------+----------+----------+ | Current | | | | | assets | | | | +--------------------+--------+----------+----------+ | Investment | 2 | 1,217 | - | | in | | | | | subsidiaries | | | | +--------------------+--------+----------+----------+ | Financial | 5 | 5,488 | - | | assets | | | | | held for | | | | | sale | | | | +--------------------+--------+----------+----------+ | Other | | 145 | 503 | | receivables | | | | | and | | | | | prepayments | | | | +--------------------+--------+----------+----------+ | Inter-company | | 524 | 1,232 | | balances | | | | +--------------------+--------+----------+----------+ | Cash | 9 | 2,380 | 1,319 | | at | | | | | bank | | | | +--------------------+--------+----------+----------+ | Total | | 9,754 | 3,054 | | current | | | | | assets | | | | +--------------------+--------+----------+----------+ | Total | | 9,754 | 12,462 | | assets | | | | +--------------------+--------+----------+----------+ | | | | | +--------------------+--------+----------+----------+ | Issued | 10 | 1,310 | 1,310 | | share | | | | | capital | | | | +--------------------+--------+----------+----------+ | Share | | 8,616 | 12,546 | | premium | | | | +--------------------+--------+----------+----------+ | Retained | | (12,571) | (13,898) | | earnings | | | | +--------------------+--------+----------+----------+ | Foreign | | 11,532 | 11,453 | | currency | | | | | translation | | | | | reserve | | | | +--------------------+--------+----------+----------+ | Revaluation | | - | 918 | | reserve | | | | +--------------------+--------+----------+----------+ | Total | | 8,887 | 12,329 | | equity | | | | +--------------------+--------+----------+----------+ | | | | | +--------------------+--------+----------+----------+ | Other | | 150 | 133 | | creditors | | | | | and | | | | | accrued | | | | | expenses | | | | +--------------------+--------+----------+----------+ | Provisions | 11 | 717 | - | +--------------------+--------+----------+----------+ | Total | | 867 | 133 | | current | | | | | liabilities | | | | +--------------------+--------+----------+----------+ | Total | | 867 | 133 | | liabilities | | | | +--------------------+--------+----------+----------+ | Total | | 9,754 | 12,462 | | equity | | | | | & | | | | | liabilities | | | | +--------------------+--------+----------+----------+ The profit earned by the Company for the year ended 31 December 2009 was GBP1,325,794 (2008: GBP43,909) which includes a gain on write back of intercompany balances of GBP2,014,406 and a gain of GBP917,930 due to recycling the revaluation reserve through the income statement. Consolidated Statement of Changes in Equity +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | | Share | Share | Foreign | Retained | Revaluation | Total | | | Capital | Premium | Currency | Earnings | Reserve | | | | | | Translation | | | | | | | | Reserve | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Balance | 1,010 | - | (1,488) | 102,810 | (28,967) | 73,365 | | at 1 | | | | | | | | January | | | | | | | | 2008 | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Total | | | | | | | | comprehensive | | | | | | | | income | | | | | | | | /(expense) | | | | | | | | for the year | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Retained | - | - | - | (114,646) | - | (114,646) | | loss for | | | | | | | | the year | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Other | | | | | | | | comprehensive | | | | | | | | income/(expense) | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Net | - | - | - | - | 28,967 | 28,967 | | change | | | | | | | | in | | | | | | | | fair | | | | | | | | value | | | | | | | | of | | | | | | | | available-for-sale | | | | | | | | financial assets | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Foreign | - | - | 15,332 | - | - | 15,332 | | exchange | | | | | | | | translation | | | | | | | | differences | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Total | - | - | 15,332 | (114,646) | 28,967 | (70,347) | | comprehensive | | | | | | | | income/(expense) | | | | | | | | for the year | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Transactions | | | | | | | | with owners | | | | | | | | recorded | | | | | | | | directly in | | | | | | | | equity | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Contributions | | | | | | | | by and | | | | | | | | distributions | | | | | | | | to owners | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Proceeds | 300 | 12,993 | - | - | - | 13,293 | | from | | | | | | | | shares | | | | | | | | issued | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Share | - | (447) | - | - | - | (447) | | issue | | | | | | | | expenses | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Dividends | - | - | - | (3,535) | - | (3,535) | | paid | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Total | 300 | 12,546 | - | (3,535) | - | 9,311 | | contributions | | | | | | | | by and | | | | | | | | distributions | | | | | | | | to owners | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Balance | 1,310 | 12,546 | 13,844 | (15,371) | - | 12,329 | | at 31 | | | | | | | | December | | | | | | | | 2008 | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Balance | 1,310 | 12,546 | 13,844 | (15,371) | - | 12,329 | | at 1 | | | | | | | | January | | | | | | | | 2009 | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Total | | | | | | | | comprehensive | | | | | | | | income/(expense) | | | | | | | | for the year | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Profit | - | - | - | 1,791 | - | 1,791 | | for | | | | | | | | the | | | | | | | | year | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Other | | | | | | | | comprehensive | | | | | | | | income/(expense) | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Foreign | - | - | (1,303) | - | - | (1,303) | | exchange | | | | | | | | translation | | | | | | | | differences | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Total | - | - | (1,303) | 1,791 | - | 488 | | comprehensive | | | | | | | | income/(expense) | | | | | | | | for the year | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Transactions | | | | | | | | with owners | | | | | | | | recorded | | | | | | | | directly in | | | | | | | | equity | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Contributions | | | | | | | | by and | | | | | | | | distributions | | | | | | | | to owners | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Distributions | - | (3,930) | - | - | - | (3,930) | | paid | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Total | - | (3,930) | - | - | - | (3,930) | | contributions | | | | | | | | by and | | | | | | | | distributions | | | | | | | | to owners | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ | Balance | 1,310 | 8,616 | 12,541 | (13,580) | - | 8,887 | | at 31 | | | | | | | | December | | | | | | | | 2009 | | | | | | | +--------------------+---------+---------+-------------+-----------+-------------+-----------+ Consolidated Cash Flow Statement +------------------------------+------+---------------+----------------+ | |Note | For the year | For the year | | | | ended 31 | ended | | | | December 2009 | 31 December | | | | | 2008 | +------------------------------+------+---------------+----------------+ | | | GBP'000 | GBP'000 | +------------------------------+------+---------------+----------------+ | | | | | +------------------------------+------+---------------+----------------+ | Cash flows from operating | | | | | activities | | | | +------------------------------+------+---------------+----------------+ | Group profit/(loss) after | | 1,791 | (114,646) | | tax | | | | +------------------------------+------+---------------+----------------+ | Adjustments for: | | | | +------------------------------+------+---------------+----------------+ | Net investment | | (3,448) | 111,540 | | (income)/expense | | | | +------------------------------+------+---------------+----------------+ | Income tax | | 79 | 416 | +------------------------------+------+---------------+----------------+ | Operating loss before | | (1,578) | (2,690) | | changes in working capital | | | | +------------------------------+------+---------------+----------------+ | | | | | +------------------------------+------+---------------+----------------+ | Decrease/(Increase) in trade | | 31 | (25) | | and other receivables | | | | +------------------------------+------+---------------+----------------+ | Increase/(Decrease) in trade | | 358 | (271) | | and other payables | | | | +------------------------------+------+---------------+----------------+ | Cash used in operations | | (1,189) | (2,986) | +------------------------------+------+---------------+----------------+ | | | | | +------------------------------+------+---------------+----------------+ | Dividends received | | 1,421 | 7,759 | +------------------------------+------+---------------+----------------+ | Interest received | | 9 | 319 | +------------------------------+------+---------------+----------------+ | Net cash generated from | | 241 | 5,092 | | operating activities | | | | +------------------------------+------+---------------+----------------+ | | | | | +------------------------------+------+---------------+----------------+ | Investing activities | | | | +------------------------------+------+---------------+----------------+ | Purchase of financial assets | | (970) | (11,238) | | | | | | +------------------------------+------+---------------+----------------+ | Proceeds from sale of | | 6,487 | 57,336 | | financial assets | | | | +------------------------------+------+---------------+----------------+ | Net cash generated from | | 5,517 | 46,098 | | investing activities | | | | +------------------------------+------+---------------+----------------+ | | | | | +------------------------------+------+---------------+----------------+ | Financing activities | | | | +------------------------------+------+---------------+----------------+ | Proceeds from the issue of | | - | 13,293 | | shares | | | | +------------------------------+------+---------------+----------------+ | Share issue costs | | - | (447) | +------------------------------+------+---------------+----------------+ | Repayment of bank borrowings | | - | (65,215) | +------------------------------+------+---------------+----------------+ | Distributions/dividends paid | | (3,930) | (3,535) | +------------------------------+------+---------------+----------------+ | Net cash used in financing | | (3,930) | (55,904) | | activities | | | | +------------------------------+------+---------------+----------------+ | | | | | +------------------------------+------+---------------+----------------+ | Net increase/(decrease) in | | 1,828 | (4,714) | | cash and cash equivalents | | | | +------------------------------+------+---------------+----------------+ | Effects of exchange rate | | (222) | 1,516 | | changes on cash and cash | | | | | equivalents | | | | +------------------------------+------+---------------+----------------+ | Cash and cash equivalents at | | 1,635 | 4,833 | | beginning of year | | | | +------------------------------+------+---------------+----------------+ | Cash and cash equivalents at | 9 | 3,241 | 1,635 | | end of year | | | | +------------------------------+------+---------------+----------------+ Notes to the Consolidated Financial Statements 1 The Company Prospect Epicure J-REIT Value Fund plc (the "Company") was incorporated and registered in the Isle of Man under the Isle of Man Companies Act 1931-2004 on 3 November 2006 as a public company with registered number 118230C. On 14 August 2009 the Company was re-registered as a company under the Isle of Man Companies Act 2006 with registered number 004213V. From 24 July 2009, the Company has been operating as a realisation company and the net asset value includes an estimate of liquidation costs and a provision for fees and expenses expected to be incurred in realising the assets. The Company's agents and the Manager perform all significant functions. Accordingly, the Company itself has no employees. 2 The Subsidiaries For efficient portfolio management purposes, the Company established the following subsidiary companies: +---------------+---------------+------------+ | | Country | Percentage | | | of | of | +---------------+---------------+------------+ | | incorporation | Shares | | | | held | +---------------+---------------+------------+ | | | | +---------------+---------------+------------+ | Aquatic | Singapore | 100% | | Holding | | | | Company | | | | Pte Ltd | | | | * | | | +---------------+---------------+------------+ | Adriatic | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Agean | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Amakusa | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Aral | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Baffin | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Barents | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Bothnia | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Harima | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Huron | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Indian | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Ladoga | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Mediterranean | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ | Scotia | Singapore | 100% | | Investments | | | | Pte Ltd | | | +---------------+---------------+------------+ | Taranto | Singapore | 100% | | Investments | | | | Pte Ltd * | | | +---------------+---------------+------------+ * in the process of being liquidated as at 31 December 2009 Investment in subsidiaries in the Company's financial statements is stated at fair value, being the respective net asset value of the subsidiary companies (which includes the underlying investments at market value). 3. Significant Accounting Policies The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The annual report of the Company for the year ended 31 December 2009 comprises the Company and its subsidiaries (together referred to as the "Group"). 3.1 Basis of presentation These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The financial statements have been prepared on a non-going concern basis, with assets stated at realisable amounts and provisions for the estimated liquidation costs. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise its judgement in the process of applying the Company's accounting policies. The provision for estimated liquidation costs is a critical accounting estimate. For further information see note 11. 3.2 Financial assets The Group originally designated its investments in J-REITs as available-for-sale financial assets. They were included in non-current assets. Due to the Company now operating as a realisation company, financial assets are designated as held for sale within current assets. The Group invests in J-REITs which are stated at fair value, which is based on quoted market prices. The quoted market price used for financial assets held by the Group is the current bid price ruling at the period end. Fair value movements were recognised in equity, with gains and losses recycled to profit or loss on disposal. Fair value movements are now recognised in the income statement. Purchases and sales of investments are recognised on trade date - the date on which the Group commits to purchase or sell the asset. Investments are initially recorded at fair value. 3.3 Foreign currency translation Japanese Yen is the currency of the primary economic environment in which the entity operates ("The functional currency"). This is also the functional currency of the subsidiaries. Pounds Sterling is the currency in which the financial statements are presented ("The presentational currency"). Monetary assets and liabilities denominated in foreign currencies as at the date of these financial statements are translated to Japanese Yen at exchange rates prevailing on that date. Expenses are translated into Japanese Yen based on exchange rates on the date of the transaction. All resulting exchange differences are recognised in the income statement. The accounts are presented in Pounds Sterling by translating the assets and liabilities at the exchange rate prevailing on the balance sheet date. Items of revenue and expense are translated at exchange rates on the date of the relevant transactions. Components of equity are translated at the date of the relevant transaction and not retranslated. All resulting exchange differences are recognised in equity. 3.4Interest income and dividend income Interest income is recognised on a time-proportionate basis using the effective interest rate method. Dividend income is recognised when the right to receive payment is established. 3.5 Basis of consolidation Subsidiaries Subsidiaries are those enterprises controlled by the Company. Control exists where the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. 3.6 Investment in subsidiaries Investment in subsidiaries is stated at fair value, with fair value adjustments recognised in equity. 3.7Segment reporting The chief operating decision-maker has been identified as the Manager. The Manager reviews the group's internal reporting in order to assess performance and allocate resources. It has been determined that there is only one operating segment based on these reports. The key information reviewed in order to assess the performance of the segment is the dividends received, investment value and gearing levels. All of this information is included in the primary statements on pages 11 to 16. 3.8 Adoption of new and revised International Financial Reporting Standards (IFRSs) Standards affecting amounts reported in the current period (and/or prior periods) The following revised Standards have been adopted in the current period and have affected only the presentation and disclosure of the amounts reported in these financial statements. +-------------------------------------------------------+-------------+ | Standard | Effective | | | date | | | (accounting | | | periods | | | commencing | | | after) | +-------------------------------------------------------+-------------+ | | | +-------------------------------------------------------+-------------+ | IAS 1 (as revised in 2007) Presentation of financial | 1 January | | statements | 2009 | +-------------------------------------------------------+-------------+ | IFRS 7 Financial instruments: disclosures (Amendment: | 1 January | | Improving disclosures about financial instruments | 2009 | +-------------------------------------------------------+-------------+ IAS 1 Presentation of financial statements A revised version of IAS 1 was issued in September 2007. The revised standard prohibits the presentation of items of income and expenses (that is, 'non-owner changes in equity') in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity in a statement of comprehensive income. As a result, the Group presents all owner changes in equity in the consolidated statement of changes in equity; all non-owner changes in equity are presented in the consolidated statement of comprehensive income. The adoption of this revised standard impacts only presentation aspects; therefore, it has no impact on profit or earnings per share. IFRS 7 Financial instruments The IASB published amendments to IFRS 7 in March 2009. The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and liquidity risk. The adoption of the amendment does not have any impact on profit or earnings per share. Standards adopted with no effect on financial statements The following revised Standards and Interpretations have also been adopted in these financial statements. Their adoption has not had any significant impact on the amounts reported in these financial statements but may affect the accounting for future transactions or arrangements. +-------------------------------------------------------+-------------+ | Standard | Effective | | | date | | | (accounting | | | periods | | | commencing | | | after) | +-------------------------------------------------------+-------------+ | | | +-------------------------------------------------------+-------------+ | IFRS 8 Operating segments | 1 January | | | 2009 | +-------------------------------------------------------+-------------+ IFRS 8 Operating segments IFRS 8 replaces IAS 14, 'Segment reporting', and is effective for annual periods beginning on or after 1 January 2009. The new standard requires a 'management approach', under which segment information is presented on a similar basis to that used for internal reporting purposes. Management considers the Group to comprise a single operating segment, and as such, is not affected by the amendment. Standards and interpretations becoming effective in 2009 but not relevant to the Group +-------------------------------------------------------+-------------+ | Standard | Effective | | | date | | | (accounting | | | periods | | | commencing | | | after) | +-------------------------------------------------------+-------------+ | | | +-------------------------------------------------------+-------------+ | IFRS 2 Share-based payment - vesting conditions and | 1 January | | cancellations | 2009 | +-------------------------------------------------------+-------------+ | IAS 20 Accounting for government grants and | 1 January | | disclosure of government assistance | 2009 | +-------------------------------------------------------+-------------+ | IAS 23 Borrowing costs | 1 January | | | 2009 | +-------------------------------------------------------+-------------+ | IAS 28 Investments in associates | 1 January | | | 2009 | +-------------------------------------------------------+-------------+ | IAS 31 Interests in joint ventures (Revised May | 1 January | | 2008) | 2009 | +-------------------------------------------------------+-------------+ | IAS 32 Financial instruments: Presentation - | 1 January | | amendments relating to puttable instruments and | 2009 | | obligations arising on liquidation | | +-------------------------------------------------------+-------------+ | IAS 38 Intangible assets | 1 January | | | 2009 | +-------------------------------------------------------+-------------+ | IAS 39 Financial instruments: Recognition and | 1 January | | measurement (revised May 2008) | 2009 | +-------------------------------------------------------+-------------+ | IAS 39 Financial instruments: Recognition and | 1 July | | measurement - amendments for embedded derivatives | 2009 | | when reclassifying financial instruments | | +-------------------------------------------------------+-------------+ | IAS 40 Investment property | 1 January | | | 2009 | +-------------------------------------------------------+-------------+ | | | | IFRIC Interpretation | | +-------------------------------------------------------+-------------+ | | | +-------------------------------------------------------+-------------+ | IFRIC 13 Customer loyalty programmes | 1 July | | | 2008 | +-------------------------------------------------------+-------------+ | IFRIC 15 Agreement for construction of real estate | 1 January | | | 2009 | +-------------------------------------------------------+-------------+ | IFRIC 16 Hedges of a net investment in a foreign | 1 October | | operation | 2008 | +-------------------------------------------------------+-------------+ Standards and interpretations in issue not yet adopted A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2009, and have not been applied in preparing these consolidated financial statements: +-------------------------------------------------------+-------------+ | New/revised International Accounting Standards / | Effective | | International Financial Reporting Standards | date | | (IAS/IFRS) | (accounting | | | periods | | | commencing | | | after) | +-------------------------------------------------------+-------------+ | | | +-------------------------------------------------------+-------------+ | IAS 1 Presentation of financial statements (Revised | 1 January | | 2009) | 2010 | +-------------------------------------------------------+-------------+ | IAS 7 Statement of cash flows (Revised 2009) | 1 January | | | 2010 | +-------------------------------------------------------+-------------+ | IAS 17 Leases (Revised 2009) | 1 January | | | 2010 | +-------------------------------------------------------+-------------+ | IAS 24 Related party disclosures - revised | 1 January | | definition of related parties | 2011 | +-------------------------------------------------------+-------------+ | IAS 27 Consolidated and separate financial statements | 1 July | | - amendment relating to cost of an investment on | 2009 | | first-time adoption (Revised 2008) | | +-------------------------------------------------------+-------------+ | IAS 28 Investments in associates - consequential | 1 July | | amendments resulting from amendments to IFRS 3 (2008) | 2009 | +-------------------------------------------------------+-------------+ | IAS 31 Interests in joint ventures - consequential | 1 July | | amendments resulting from amendments to IFRS 3 (2008) | 2009 | +-------------------------------------------------------+-------------+ | IAS 32 Financial instruments: Presentation - | 1 | | amendments relating to classification of rights | February | | issues | 2010 | +-------------------------------------------------------+-------------+ | IAS 36 Impairment of assets (Revised 2009) | 1 January | | | 2010 | +-------------------------------------------------------+-------------+ | IAS 38 Intangible assets | 1 July | | | 2009 | +-------------------------------------------------------+-------------+ | IAS 39 Financial instruments: Recognition and | 30 June | | measurement - amendments for embedded derivatives | 2009 | | when reclassifying financial instruments | | +-------------------------------------------------------+-------------+ | IAS 39 Financial instruments: Recognition and | 1 July | | measurement - amendments for eligible hedged items | 2009 | +-------------------------------------------------------+-------------+ | IAS 39 Financial instruments: Recognition and | 1 January | | measurement (Revised 2009) | 2010 | +-------------------------------------------------------+-------------+ | IFRS 1 First-time adoption of International Financial | 1 July | | Reporting Standards (Revised 2008) | 2009 | +-------------------------------------------------------+-------------+ | IFRS 1 First-time adoption of International Financial | 1 January | | Reporting Standards - additional exemptions for | 2010 | | first-time adopters | | +-------------------------------------------------------+-------------+ | IFRS 2 Share-based payment - amendments relating to | 1 January | | group cash-settled share-based payment transactions | 2010 | +-------------------------------------------------------+-------------+ | IFRS 3 Business combinations - comprehensive revision | 1 July | | on applying the acquisition method | 2009 | +-------------------------------------------------------+-------------+ | IFRS 5 Non-current assets held for sale and | 1 July | | discontinued operations (revised 2008) | 2009 | +-------------------------------------------------------+-------------+ | IFRS 5 Non-current assets held for sale and | 1 January | | discontinued operations (revised 2009) | 2010 | +-------------------------------------------------------+-------------+ | IFRS 7 Disclosures for first-time adopters (amendment | 1 July | | to IFRS 1) | 2010 | +-------------------------------------------------------+-------------+ | IFRS 8 Operating segments (revised 2009) | 1 January | | | 2010 | +-------------------------------------------------------+-------------+ | IFRS 9 Financial instruments | 1 January | | | 2013 | +-------------------------------------------------------+-------------+ | | | +-------------------------------------------------------+-------------+ | | | +-------------------------------------------------------+-------------+ | IFRIC Interpretation | | +-------------------------------------------------------+-------------+ | | | +-------------------------------------------------------+-------------+ | IFRIC 9 Reassessment of embedded derivatives | 1 July | | | 2009 | +-------------------------------------------------------+-------------+ | IFRIC 17 Distributions of non-cash assets to owners | 1 July | | | 2009 | +-------------------------------------------------------+-------------+ | IFRIC 18 Transfers of assets from customers | 1 July | | | 2009 | +-------------------------------------------------------+-------------+ | IFRIC 19 Extinguishing financial liabilities with | 1 July | | equity instruments | 2010 | +-------------------------------------------------------+-------------+ | | | +-------------------------------------------------------+-------------+ 4 Net Asset Value per Share The net asset value per share as at 31 December 2009 is 6.78p per share based on 131,000,000 ordinary shares in issue as at that date (31 December 2008: 9.41p per share). 5 Financial assets +-------------+--------+----------+ | Group | | 31 | | | | December | | | | 2009 | +-------------+--------+----------+ | Security | Number | GBP'000 | | name | | | +-------------+--------+----------+ | | | | +-------------+--------+----------+ | Blife | 116 | 323 | | Investment | | | | Corporation | | | +-------------+--------+----------+ | Crescendo | 1,018 | 815 | | Investment | | | | Corporation | | | +-------------+--------+----------+ | Japan | 2,792 | 2,030 | | Single | | | | Residence | | | | REIT | | | +-------------+--------+----------+ | LaSalle | 207 | 167 | | Japan | | | | REIT | | | | Inc | | | +-------------+--------+----------+ | Nippon | 519 | 479 | | Hotel | | | | Fund | | | | Investment | | | | Corporation | | | +-------------+--------+----------+ | Prospect | 1,731 | 896 | | Residential | | | | Investment | | | | Corporation | | | +-------------+--------+----------+ | TGR | 2,688 | 1,674 | | Investment | | | | Inc* | | | +-------------+--------+----------+ | | | 6,384 | +-------------+--------+----------+ * This investment was renamed Invincible Investment Corporation on 1 February 2010. At 31 December 2009 the cost of the held-for-sale financial assets was GBP28,217,356. This includes an adjustment for the unrealised loss of GBP24,145,875 on the portfolio of holdings which were purchased by the Company from its subsidiaries last year and the consolidation of the assets into one subsidiary for realisation purposes. Company +-------------+--------+----------+ | | | 31 | | | | December | | | | 2009 | +-------------+--------+----------+ | Security | Number | GBP'000 | | name | | | +-------------+--------+----------+ | | | | +-------------+--------+----------+ | Blife | 116 | 323 | | Investment | | | | Corporation | | | +-------------+--------+----------+ | Crescendo | 1,018 | 815 | | Investment | | | | Corporation | | | +-------------+--------+----------+ | Japan | 2,792 | 2,030 | | Single | | | | Residence | | | | REIT | | | +-------------+--------+----------+ | LaSalle | 207 | 167 | | Japan | | | | REIT | | | | Inc | | | +-------------+--------+----------+ | Nippon | 519 | 479 | | Hotel | | | | Fund | | | | Investment | | | | Corporation | | | +-------------+--------+----------+ | TGR | 2,688 | 1,674 | | Investment | | | | Inc | | | +-------------+--------+----------+ | | | 5,488 | +-------------+--------+----------+ At 31 December 2009 the cost of the held-for-sale financial assets was GBP3,502,260 (31 December 2008: GBP5,481,406). 6 Interest-bearing loans and borrowings The subsidiaries each had a facility with Citigroup to allow them to borrow Japanese Yen up to the value of the J-REITs held by them. The effective interest rate on this facility was base rate plus 0.25%. The bank borrowings were repayable on demand. The loan facility was cancelled on 1 December 2008. For more information about the Group's exposure to interest rate and currency risk see note 15. 7 Related Party Transactions Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the other party in making financial or operational decisions. The Manager, Epicure Managers Japan Limited, is a related party by virtue of its ability to make operational decisions for the Company and through common directors. The director of the Manager is Silex Management Limited, of which L O'Brien is a director. Silex Management Limited does not have any beneficial interest in Epicure Managers Japan Limited. Silex Management Limited provides fiduciary services to the Singaporean subsidiaries of the Company. The Investment Adviser, Prospect Asset Management Inc, is a related party by virtue of its ability to make operational decisions for the Company. The Investment Adviser is entitled to receive 50% of the management fee and 75% of the performance fee receivable by the Manager (see note 8.2). Richard Bolton is managing director and a shareholder of Galileo Fund Services Limited (the Administrator). David von Simson holds 100,000 Ordinary shares in the Company. Save as disclosed above, none of the Directors had any interest during the year in any material contract for the provision of services which was significant to the business of the Company. Responsibility and administration fees paid to Silex Management Limited during the year ended 31 December 2009 amounted to GBP1,266 (31 December 2008: GBP83,050). 8 Charges and Fees 8.1 Nominated Adviser As nominated adviser to the Company for the purposes of the AIM Rules, the Nominated Adviser is entitled to receive an annual fee of GBP60,000 payable twice yearly in advance. Advisory fees paid to the Nominated Adviser for the year ended 31 December 2009 amounted to GBP111,927 (31 December 2008: GBP70,698). 8.2 Manager's fees In accordance with the terms of the placing, the Manager was paid a project fee of 3% of the gross proceeds of the initial Placing and 2.5% of the secondary Placing and was responsible for paying the Placing Agent and the Distribution Adviser for their services. Fees paid for the year ended 31 December 2008 amounted to GBP332,325 and have been charged to equity as a share issue expense. Annual fees The Manager is entitled to an annual management fee of 1% of the Gross Asset Value of the Company payable quarterly in arrears. Annual management fees for the year ended 31 December 2009 amounted to GBP98,620 (31 December 2008: GBP1,011,638). Performance fees The Manager is entitled to a performance fee in certain circumstances. This fee is payable in reference to the increase in Adjusted NAV per Ordinary Share (using the NAV per Ordinary Share on Admission as the initial reference point) over the course of a performance period. The first performance period began on Admission and ended on 31 December 2007; each subsequent performance period is a period of one financial year. The Manager will become entitled to a performance fee in respect of a performance period only if two tests are met. First a performance test must be met. The performance test is calculated as to the amount by which the Adjusted NAV per Ordinary Share at the end of the relevant period exceeds an amount equal to the Placing Price, increased at a rate of 8 per cent. per annum up to the end of the relevant performance period. The second test to be met (a high watermark test) is that the Adjusted NAV per Ordinary Share at the end of the relevant period is higher than the highest previously recorded Adjusted NAV per Ordinary Share at the end of a performance period in relation to which a performance fee was last earned (or if no performance fee has been earned since Admission, must be higher than the Placing Price). If the performance test is met, and the high watermark exceeded, the performance fee will be an amount equal to 20 per cent. of the increase in the Adjusted NAV per Ordinary Share multiplied by the time weighted average of the Ordinary Shares in issue, in each case since the performance period in respect of which a performance fee was last earned (or since Admission if no performance fee has yet been earned). Performance fees accrued but not payable during the year ended 31 December 2009 amounted to GBPnil (31 December 2008: GBPnil). 8.3 Custodian fees The Custodian is entitled to receive a fixed monthly fee of GBP1,300. Custodian fees for the year ended 31 December 2009 amounted to GBP25,456 (31 December 2008: GBP16,772). 8.4 Administrator and Registrar fees The Administrator is entitled to receive a fee of 15 basis points per annum of the net asset value of the Company between GBP0 and GBP50 million, 10 basis points of the net asset value of the Company between GBP50 and GBP100 million and 7.5 basis points of the net asset value of the Company in excess of GBP100 million, subject to a minimum monthly fee of GBP7,500, payable quarterly in arrears. The Administrator shall assist in the preparation of the financial statements of the Company for which it shall receive a fee of GBP1,500 per set. The Administrator shall provide general secretarial services to the Company for which it shall receive a minimum annual fee of GBP4,000. The Administrator may utilise the services of a CREST accredited registrar for the purposes of settling share transactions through CREST. The cost of this service will be borne by the Company. It is anticipated that the cost will be in the region of GBP6,000 per annum subject to the number of CREST settled transactions undertaken. Administration fees paid for the year ended 31 December 2009 amounted to GBP151,637 (31 December 2008: GBP149,577), secretarial fees were GBP4,698 (31 December 2008: GBP4,558), financial statement preparation fees were GBP3,214 (31 December 2008: GBP3,025) and Crest fees were GBP5,047 (31 December 2008: GBP4,537). There are also fees payable to Asiaciti Management Pte Ltd and Silex Management Limited of GBP106,300 and GBP1,266 respectively (31 December 2008: GBP57,448 and GBP83,050 respectively). 8.5 Other operating expenses The costs associated with maintaining the Company's subsidiaries, to include the costs of incorporation and third party service providers are chargeable to each subsidiary. 9 Cash and Cash Equivalents +-------------+----------+----------+ | Group | 31 | 31 | | | December | December | | | 2009 | 2008 | +-------------+----------+----------+ | | GBP'000 | GBP'000 | +-------------+----------+----------+ | | | | +-------------+----------+----------+ | Bank | 3,241 | 1,635 | | balances | | | +-------------+----------+----------+ | Cash | 3,241 | 1,635 | | and | | | | cash | | | | equivalents | | | +-------------+----------+----------+ +-------------+----------+----------+ | Company | 31 | 31 | | | December | December | | | 2009 | 2008 | +-------------+----------+----------+ | | GBP'000 | GBP'000 | +-------------+----------+----------+ | | | | +-------------+----------+----------+ | Bank | 2,380 | 1,319 | | balances | | | +-------------+----------+----------+ | Cash | 2,380 | 1,319 | | and | | | | cash | | | | equivalents | | | +-------------+----------+----------+ 10 Share Capital Share capital +----------+-------------+---------+ | Ordinary | Number | GBP'000 | | Shares | | | | of 1p | | | | each | | | +----------+-------------+---------+ | | | | +----------+-------------+---------+ | In | 131,000,000 | 1,310 | | issue | | | | at the | | | | start | | | | of the | | | | year | | | +----------+-------------+---------+ | Issued | - | - | | during | | | | the | | | | year | | | +----------+-------------+---------+ | In | 131,000,000 | 1,310 | | issue | | | | at 31 | | | | December | | | | 2009 | | | +----------+-------------+---------+ +----------+-------------+---------+ | Ordinary | Number | GBP'000 | | Shares | | | | of 1p | | | | each | | | +----------+-------------+---------+ | | | | +----------+-------------+---------+ | In | 101,000,000 | 1,010 | | issue | | | | at the | | | | start | | | | of the | | | | year | | | +----------+-------------+---------+ | Issued | 30,000,000 | 300 | | during | | | | the | | | | year | | | +----------+-------------+---------+ | In | 131,000,000 | 1,310 | | issue | | | | at 31 | | | | December | | | | 2008 | | | +----------+-------------+---------+ The authorised share capital of the Company is GBP20 million divided into 2 billion Ordinary Shares of GBP0.01 each. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regards to the Company's assets. Dividends amounting to GBP3.93 million were declared and paid during the year. Warrants 20.2 million warrants were issued pursuant to the initial Placing (one warrant for every five ordinary shares). The warrants entitled the holder to subscribe for one Ordinary Share of 1p each in the Company in cash in the period from the date of Admission up to 1 March 2010, at the price of 110p per Share payable in full on subscription. Capital Management Further to the statement made by the Company on 24 July 2009, the Company is now operating as a realisation company and the net asset value includes an estimate of liquidation costs and a provision for fees and expenses expected to be incurred in realising the assets. The investment portfolio is being realised in a manner designed to preserve as much value as possible for Shareholders. In view of the illiquidity of certain of the Company's holdings the timing of the realisation process and therefore distributions to shareholders under the capital return scheme is uncertain. The Company is working with its advisers to ensure that the subsidiaries are liquidated in an effective manner. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 11 Provisions The Company is now operating as a realisation company. The calculation of the published net asset value from 23 July 2009 onwards includes an estimate of liquidation costs and a provision for fees and expenses expected to be incurred in realising the assets. As at 31 December 2009 these provisions amounted to GBP726,916. (This consists of provisions of $195,000 and GBP604,475.) 12 Earnings/(loss) per Share Basic and Fully Diluted Basic and fully diluted earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the year. +-----------------+----------+-----------+ | | 31 | 31 | | | December | December | | | 2009 | 2008 | +-----------------+----------+-----------+ | | | | +-----------------+----------+-----------+ | | | | +-----------------+----------+-----------+ | Gain/(loss) | 1,791 | (114,646) | | attributable | | | | to equity | | | | holders of | | | | the Group | | | | (GBP'000) | | | +-----------------+----------+-----------+ | Weighted | 131,000 | 120,426 | | average | | | | number | | | | of | | | | ordinary | | | | shares | | | | in issue | | | | (thousands) | | | +-----------------+----------+-----------+ | Basic | 1.37 | (95.20) | | earnings/(loss) | | | | per share | | | | (pence per | | | | share) | | | +-----------------+----------+-----------+ There is no difference between the basic and fully diluted earnings/(loss) per share for the year. 13 Directors' Remuneration The maximum amount of remuneration payable to the Directors permitted under the Articles of Association is GBP200,000 per annum. The Directors are each entitled to receive reimbursement of any expenses incurred in relation to their appointment. Total fees and expenses paid to the Directors for the year ended 31 December 2009 amounted to fees of GBP122,870 and insurance expenses of GBP24,366 (31 December 2008: GBP142,380 and GBP22,890 respectively). 14 Taxation Isle of Man taxation The Company is resident for taxation purposes in the Isle of Man by virtue of being incorporated in the Isle of Man and is technically subject to taxation on its income but the rate of tax is zero. Japanese taxation It is the intention of the directors that the affairs of the Company and its subsidiaries will be conducted so that they are not considered to be resident in Japan nor have a taxable presence in Japan. Distributions paid by listed J-REITs to the subsidiaries are subject to 7 per cent. withholding tax. Withholding tax for the year ended 31 December 2009 amounted to GBP79,250 (year ended 31 December 2008: GBP416,423) and has been included in income tax expense in the income statement. Capital gains on disposal of listed J-REIT holdings are not taxable in Japan where the total holding is not more than 5 per cent. of the J-REITs capital. Where the holding is greater than 5 per cent., but the subsidiary has not held a 25 per cent. or greater interest, then protection under the Japan:Singapore tax treaty may exempt the gain on disposal of a listed J-REIT from Japanese tax. For gains on disposals where the subsidiary has held 25 per cent. or greater interest, or otherwise where treaty protection is not available, the subsidiary will be liable to Japanese tax on the gain (the current rate applying is 30 per cent.). No provision has been made for capital gains tax on any realised gains made. Singapore taxation It is the intention of the Directors that the affairs of the subsidiaries will be conducted in Singapore so that they are considered to be resident in Singapore. Dividends received by the subsidiaries from the J-REIT investments should be exempt from tax in Singapore due to the benefit of double tax relief. Provided that any profits derived by the subsidiaries from the disposal of J-REITs are considered to be capital gains, and not trading income, the profits will not be subject to tax in Singapore. No provision has been made for Singapore tax. 15 Financial instruments The Group's activities expose it to a variety of financial risks: market price risk, foreign exchange risk, credit risk, liquidity risk and cash flow interest rate risk. Market price risk The Group's strategy on the management of investment risk is driven by the Group's investment objective. The main objective of the Group is to preserve as much value as possible for Shareholders during the realisation process of the Company's investment portfolio. The Manager and the Investment Advisor review the position on a day to day basis and the Directors review the position at the Board meetings. The Group's securities are susceptible to market price risk arising from uncertainties about future prices of these instruments caused by market factors specific to the instrument or its issuer or factors affecting all instruments traded in the market. The market in J-REITs is relatively illiquid. Therefore, market price movements tend to be exaggerated. At 31 December 2009, if the market value of the J-REIT portfolio had increased/decreased by 10% with all other variables held constant, this would have increased/decreased net assets attributable to shareholders by approximately GBP638,390 (31 December 2008: 20% GBP2,110,806). Foreign exchange risk The Group's operations are conducted in jurisdictions which generate revenue, expenses, assets and liabilities in currencies other than Japanese Yen. As a result, the Group is subject to the effects of exchange rate fluctuations with respect to these currencies. The currency giving rise to this risk is primarily Pounds Sterling. The Group may invest in financial instruments and enter into transactions denominated in currencies other than its functional currency of Japanese Yen. Consequently, the Group is exposed to risks that the exchange rate of its currency relative to other foreign currencies may change in a manner that has an adverse effect on the value of that portion of the Group's assets or liabilities denominated in currencies other than sterling. The Group's policy is not to enter into any currency hedging transactions. At the reporting date the Group had the following exposure: +------------+-----------+-----------+ | Currency | 31 | 31 | | | December | December | | | 2009 | 2008 | +------------+-----------+-----------+ | | % | % | +------------+-----------+-----------+ | | | | +------------+-----------+-----------+ | Pound | 18.16 | 3.57 | | Sterling | | | +------------+-----------+-----------+ | Japanese | 82.14 | 95.18 | | Yen | | | +------------+-----------+-----------+ | US Dollars | (1.41) | 0.02 | +------------+-----------+-----------+ | Singapore | 1.11 | 1.23 | | Dollars | | | +------------+-----------+-----------+ The following table sets out the Group's total exposure to foreign currency risk and the net exposure to foreign currencies of the monetary assets and liabilities: +-----------+----------+-------------+----------+ | | Monetary | Monetary | Net | | | Assets | Liabilities | Exposure | | | GBP'000 | GBP'000 | GBP'000 | +-----------+----------+-------------+----------+ | 31 | | | | | December | | | | | 2009 | | | | +-----------+----------+-------------+----------+ | | | | | +-----------+----------+-------------+----------+ | Pound | 2,299 | (685) | 1,614 | | Sterling | | | | +-----------+----------+-------------+----------+ | Japanese | 7,315 | (15) | 7,300 | | Yen | | | | +-----------+----------+-------------+----------+ | US | - | (126) | (126) | | Dollars | | | | +-----------+----------+-------------+----------+ | Singapore | 157 | (58) | 99 | | Dollars | | | | +-----------+----------+-------------+----------+ | | 9,771 | (884) | 8,887 | +-----------+----------+-------------+----------+ +-----------+----------+-------------+----------+ | | Monetary | Monetary | Net | | | Assets | Liabilities | Exposure | | | GBP'000 | GBP'000 | GBP'000 | +-----------+----------+-------------+----------+ | 31 | | | | | December | | | | | 2008 | | | | +-----------+----------+-------------+----------+ | | | | | +-----------+----------+-------------+----------+ | Pound | 824 | (384) | 440 | | Sterling | | | | +-----------+----------+-------------+----------+ | Japanese | 11,775 | (40) | 11,735 | | Yen | | | | +-----------+----------+-------------+----------+ | US | 2 | - | 2 | | Dollars | | | | +-----------+----------+-------------+----------+ | Singapore | 196 | (44) | 152 | | Dollars | | | | +-----------+----------+-------------+----------+ | | 12,797 | (468) | 12,329 | +-----------+----------+-------------+----------+ At 31 December 2009 and 2008, had the Pound Sterling strengthened by 5% in relation to all currencies, with all other variables held constant, net assets attributable to equity holders of the Company and the change in net assets attributable to equity holders per the income statement would have decreased by the amounts shown below. +------------+-----------+-----------+ | | 31 | 31 | | | December | December | | | 2009 | 2008 | +------------+-----------+-----------+ | | GBP'000 | GBP'000 | +------------+-----------+-----------+ | | | | +------------+-----------+-----------+ | Japanese | (348) | (559) | | Yen | | | +------------+-----------+-----------+ | US Dollars | 6 | - | +------------+-----------+-----------+ | Singapore | (5) | (7) | | Dollars | | | +------------+-----------+-----------+ | Effect on | (347) | (566) | | net assets | | | +------------+-----------+-----------+ Credit risk Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Group. The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. This relates also to financial assets carried at amortised cost, as they have a short term maturity. At the reporting date, the Group's financial assets exposed to credit risk amounted to the following: +--------------------+----------+----------+ | | 31 | 31 | | | December | December | | | 2009 | 2008 | +--------------------+----------+----------+ | | GBP'000 | GBP'000 | +--------------------+----------+----------+ | Available-for-sale | - | 10,554 | | financial assets | | | +--------------------+----------+----------+ | Financial | 6,384 | - | | assets | | | | held for | | | | sale | | | +--------------------+----------+----------+ | Cash | 3,241 | 1,635 | | at | | | | bank | | | +--------------------+----------+----------+ | Other | 146 | 608 | | receivables | | | +--------------------+----------+----------+ | | 9,771 | 12,797 | +--------------------+----------+----------+ The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. The Directors do not expect any counterparty to fail to meet its obligations. Liquidity risk The Group manages its liquidity risk by maintaining sufficient cash, the availability of funding through an adequate amount of credit facilities and the ability to close out market positions. The Group's liquidity position is monitored by the Manager and the Board of Directors. Residual undiscounted contractual maturities of financial liabilities: +----------------------+---------+---------+---------+---------+---------+----------+ | 31 December 2009 | Less | 1-3 | 3 | 1-5 | Over | No | | | than | months | months | years | 5 | stated | | | 1 | | to 1 | | years | maturity | | | month | | year | | | | +----------------------+---------+---------+---------+---------+---------+----------+ | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | +----------------------+---------+---------+---------+---------+---------+----------+ | Financial | | | | | | | | liabilities | | | | | | | +----------------------+---------+---------+---------+---------+---------+----------+ | Other creditors and | 157 | - | - | - | - | - | | accrued expenses | | | | | | | +----------------------+---------+---------+---------+---------+---------+----------+ | Provisions | 154 | 82 | 254 | 237 | - | - | +----------------------+---------+---------+---------+---------+---------+----------+ | | 311 | 82 | 254 | 237 | - | - | +----------------------+---------+---------+---------+---------+---------+----------+ +----------------------+---------+---------+---------+---------+---------+----------+ | | Less | 1-3 | 3 | 1-5 | Over | No | | 31 December 2008 | than | months | months | years | 5 | stated | | | 1 | | to 1 | | years | maturity | | | month | | year | | | | +----------------------+---------+---------+---------+---------+---------+----------+ | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | +----------------------+---------+---------+---------+---------+---------+----------+ | Financial | | | | | | | | liabilities | | | | | | | +----------------------+---------+---------+---------+---------+---------+----------+ | Other creditors and | 468 | - | - | - | - | - | | accrued expenses | | | | | | | +----------------------+---------+---------+---------+---------+---------+----------+ | | 468 | - | - | - | - | - | +----------------------+---------+---------+---------+---------+---------+----------+ Interest rate risk The majority of the Group's financial assets are non-interest-bearing. Cash held by the Group is invested at short-term market interest rates. Bank borrowings are subject to interest rates linked to Japan's base rate. As a result, the Group is not subject to fair value interest rate risk due to fluctuations in the prevailing levels of market interest rates. However it is subject to cash flow risk arising from changes in market interest rates. The table below summarises the Group's exposure to interest rate risks. It includes the Groups' financial assets and liabilities at the earlier of contractual re-pricing or maturity date, measured by the carrying values of assets and liabilities: +-------------+---------+---------+---------+---------+---------+--------------+---------+ | 31 | Less | 1-3 | 3 | 1-5 | Over 5 | Non-interest | Total | | December | than | months | months | years | years | bearing | | | 2009 | 1month | | to 1 | | | | | | | | | year | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | Financial | | | | | | | | | Assets | | | | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | Financial | - | - | - | - | - | 6,384 | 6,384 | | assets | | | | | | | | | held for | | | | | | | | | sale | | | | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | Other | - | - | - | - | - | 146 | 146 | | receivables | | | | | | | | | and | | | | | | | | | prepayments | | | | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | Cash | 3,241 | - | - | - | - | - | 3,241 | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | Total | 3,241 | - | - | - | - | 6,530 | 9,771 | | financial | | | | | | | | | assets | | | | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | | | | | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | Financial | | | | | | | | | Liabilities | | | | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | Other | - | - | - | - | - | 157 | 157 | | creditors | | | | | | | | | and | | | | | | | | | accrued | | | | | | | | | expenses | | | | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | Provisions | - | - | - | - | - | 727 | 727 | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | Total | | | | | | 884 | 884 | | financial | | | | | | | | | liabilities | | | | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | | | | | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ | Total | 3,241 | - | - | - | - | | | | interest | | | | | | | | | rate | | | | | | | | | sensitivity | | | | | | | | | gap | | | | | | | | +-------------+---------+---------+---------+---------+---------+--------------+---------+ +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | 31 | Less | 1-3 | 3 | 1-5 | Over 5 | Non-interest | Total | | December | than | months | months | years | years | bearing | | | 2008 | 1month | | to 1 | | | | | | | | | year | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | Financial | | | | | | | | | Assets | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | Available-for-sale | - | - | - | - | - | 10,554 | 10,554 | | financial assets | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | Other | - | - | - | - | - | 608 | 608 | | receivables | | | | | | | | | and | | | | | | | | | prepayments | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | Cash | 1,635 | - | - | - | - | - | 1,635 | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | Total | 1,635 | - | - | - | - | 11,162 | 12,797 | | financial | | | | | | | | | assets | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | Financial | | | | | | | | | Liabilities | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | Interest | | | | | | | | | bearing | | | | | | | | | loans | | | | | | | | | and | | | | | | | | | borrowings | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | Other | - | - | - | - | - | (468) | (468) | | creditors | | | | | | | | | and | | | | | | | | | accrued | | | | | | | | | expenses | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | Total | - | - | - | - | - | (468) | (468) | | financial | | | | | | | | | liabilities | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ | Total | 1,635 | - | - | - | - | | | | interest | | | | | | | | | rate | | | | | | | | | sensitivity | | | | | | | | | gap | | | | | | | | +--------------------+---------+---------+---------+---------+---------+--------------+---------+ At 31 December 2009, should the interest rates have increased/decreased by 60% with all other variables remaining constant, the increase/decrease in net assets attributable to shareholders for the year would amount to approximately GBP6,834 (31 December 2008: GBP10,820). 16 Post Balance Sheet Events On 4 February 2010 the Company announced a capital distribution of 3p per share payable on 12 March 2010 to ordinary shareholders on the register of shareholders at the close of business on 12 February 2010. The 20.2 million warrants issued pursuant to the initial Placing (one warrant for every five ordinary shares) expired on 1 March 2010. On 26 April 2010, the final investments were sold for cash. The 31 December 2009 investment portfolio realised sales proceeds of Y908 million in 2010; Y30 million lower than the yen value as at 31 December 2009. This represents a decrease in value of approximately GBP22,000. This information is provided by RNS The company news service from the London Stock Exchange END FR SDSSUSFSSEDL
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