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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 |
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TIDMPEJR
RNS Number : 6076Z
Prospect Epicure J-REIT Val Fd PLC
24 September 2009
24 September 2009
Prospect Epicure J-REIT Value Fund plc
Interim report for the period ended 30 June 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 interim results for the period ended 30 June 2009.
Key highlights
* Proposals to facilitate a return of capital to shareholders approved at an
extraordinary general meeting on 23 July 2009
* Company is now a realisation fund and portfolio is being realised in an orderly
manner to preserve value for shareholders
* NAV per share as at 30 June 2009 of 11.63p (31 December 2008: 9.41p) up 24% as a
result of the increase in investment values
* Profit before tax of GBP5.26m compared to loss before tax of GBP11.95m for the
period from 1 January 2008 to 30 June 2008
* First capital distribution of 3p per share to be paid on 15 October 2009
J-REIT sector highlights
* Tight credit conditions continue, with interest rate increases for J-REITs
without the support of large, brand name domestic sponsors
* Establishment of Government Private-Public support fund on 5 September to aid
J-REIT financing
David von Simson, chairman of PEJR, commented:
"Following the approval of shareholders at the extraordinary general meeting on
23 July 2009, we have instructed the Manager and the Investment Adviser to draw
up proposals to realise the Company's investment portfolio in a manner designed
to preserve as much value as possible for shareholders.
The Board are pleased to announce a first capital distribution of 3p per share.
In conjunction with the process of realising the investment portfolio, the
Company is working with its advisers to ensure that the subsidiaries are
liquidated in an effective manner.
We are also pleased that the recent share price gains of our J-REIT investments
have been higher than the overall J-REIT market, and look forward to being able
to provide an update on realisations in due course."
For further information
+---------------------------------------+---------------------------------------+
| Prospect Epicure J-REIT Value Fund plc - +41 (0) (22) 908 1190 |
| Leonard O'Brien |
| |
+-------------------------------------------------------------------------------+
| Panmure Gordon - +44 (0) 20 7459 3600 | |
| | |
| Richard Gray | |
| Andrew Potts | |
+---------------------------------------+---------------------------------------+
Chairman's Statement
We are pleased to present the Interim Report for the period ended 30 June 2009.
The net asset value per share as at 30 June 2009 was 11.63p and the Company
reported a profit before tax of GBP5.3m largely as a result of revaluation gains
in the portfolio.
Shortly after the period end, the Directors called an Extraordinary General
Meeting at which all the special resolutions proposed to facilitate a return of
capital to shareholders, comprising a change of investment policy so that the
Company will become a realisation company, the re-registration of the Company
under the Isle of Man Companies Act 2006, the adoption of a new memorandum and
articles of association and the adoption of a capital return scheme, were duly
passed.
As a result the Board has instructed the Manager and the Investment Adviser to
draw up proposals to realise the Company's investment portfolio 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, as explained in the circular
to shareholders dated 18 June 2009, the timing of the realisation process and
therefore distributions to shareholders under the capital return scheme is
uncertain.
Also as explained in the circular to shareholders dated 18 June 2009, the
Company is now publishing 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 August 2009 the net assets were
GBP13,210,068 with 131 million shares in issue giving a NAV per share of 10.08p.
Included in this were portfolio holdings of GBP9,452,002 and cash (net of
provisions) of GBP3,785,066, with no borrowings.
In conjunction with the process of realising the Company's portfolio, the
Company is working with its advisers to ensure that the subsidiaries are
liquidated in an effective manner.
Capital Return
The Directors are pleased to announce that a first capital distribution of 3p
per share has been declared and will be payable on 15 October 2009 to ordinary
shareholders on the register of shareholders at the close of business on 2
October 2009.
David Von Simson
Chairman
24 September 2009
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 Company is now a realisation company, with the intention to wind down
holdings via arranged block sales and open market trades.
The Company is 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
resulting portfolio holdings were chosen because the Investment Adviser
considered them to be among the most undervalued, highest yielding stocks within
their universe. 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. Based on the current market
conditions, the Investment Adviser believes that the expected time to full
realisation of the investment portfolio is 6 to 12 months. Potential risks to
the valuation of the Company's holdings during the realization period include 1)
deterioration of credit availability to the real estate sector, 2) renewed
concern regarding credit worthiness of small cap J-REITs, 3) limited success of
government support measures, 4) accelerated decline in Japanese real estate
prices, and 5) delays in sector consolidation.
As at 30 June 2009, the Company's investment portfolio consisted of the
following J-REITs:
+-------------+--------+-----------+
| | | 30 |
| | | June |
| | | 2009 |
+-------------+--------+-----------+
| Security | | valuation |
| name | | GBP'000 |
+-------------+--------+-----------+
| Blife | | 446 |
| Investment | | |
| Corporation | | |
+-------------+--------+-----------+
| Crescendo | | 3,008 |
| Investment | | |
| Corporation | | |
+-------------+--------+-----------+
| FC | | 1,167 |
| Residential | | |
| Investment | | |
| Corporation | | |
+-------------+--------+-----------+
| Japan | | 2,440 |
| Single | | |
| Residence | | |
| REIT | | |
+-------------+--------+-----------+
| LaSalle | | 187 |
| Japan | | |
| REIT | | |
| Inc | | |
+-------------+--------+-----------+
| Nippon | | 567 |
| Hotel | | |
| Fund | | |
| Investment | | |
| Corporation | | |
+-------------+--------+-----------+
| Prospect | | 1,895 |
| Residential | | |
| Investment | | |
| Corporation | | |
+-------------+--------+-----------+
| TGR | | 2,163 |
| Investment | | |
| Inc | | |
+-------------+--------+-----------+
| | | 11,873 |
+-------------+--------+-----------+
The Investment Adviser continued to actively manage the investment portfolio to
ensure that as much value is preserved for shareholders.
Recent J-REIT Sector News
Blife Investment
Sponsor company Daiwa House Industries has garnered support from creditors of
failed J-REIT New City Residence for a proposed take over and merger between NCR
and Blife Investment. The creditors rejected the receivership plan presented by
Lone Star at a creditors meeting on 15 July, in favour of the Daiwa House
proposal. The court ruled that the rival offer could not be considered during
the proceedings and has scheduled a second creditors meeting for 9 September, at
which time the Lone Star bid will be voted on again. Should creditors again
reject Lone Star, a new process could be initiated in which other offers could
be considered.
Government Support Measures
The government continued looking for ways to reduce refinancing stress on the
J-REIT market, establishing a Public-Private fund to aid in refinancing,
particularly of corporate bonds. The fund opened on 5 September 2009. As of yet,
no J-REIT has needed to use its facilities for refinancing.
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)
Recent Developments
Credit conditions continue to be tight, with interest rate increases for J-REITs
without the support of large, brand name domestic sponsors. The Investment
Adviser believes that upward pressure on lending rates is likely to continue.
Focus is also shifting towards the next round of J-REIT corporate bond
maturities, scheduled to begin in Q3 2009. Several J-REITs have already
announced the intention to fund bond redemptions through bank loans, and one
(8986 Japan Rental Housing) has obtained the necessary funds through a Third
Party Offering. The establishment of the government support fund should provide
a lender of last resort for J-REITs unable to obtain refinance bonds through
bank loans, eliminating the risk of another bankruptcy in the sector.
Portfolio Overview
The following is an overview of recent news regarding the Company's larger
holdings
8966 Crescendo Investment
Crescendo Investment (CIC) is a diversified J-REIT with 93.5 billion yen in
assets under management, 77.4% within the 23 main wards of Tokyo. The company
reported lower period-on-period performance for the period ending 31 May 2009
due to the lack of revenue from property dispositions and a decrease in rental
income due to lower occupancy, which ended the period at 92.4%. The largest
concern for CIC is Y20 billion in corporate bonds that mature at end October
2009. The company has raised funds via property disposition, and sold two office
properties after the end of the period for a total price of Y8.2 billion. CIC
estimates it currently has roughly Y12 billion in cash on hand for the bond
repayment and is seeking help from creditors and sponsor to secure Y8 billion in
new bank debt to provide the balance. The ability to arrange this new debt is
the largest risk going forward. Management stated that use of the upcoming
public-private fund for refinancing the bond is being considered.
8970 Japan Single-Residence
Japan Single Residence (JSR) is a residential J-REIT with 56.6 billion yen in
assets under management, 60.8% within the 23 main wards of Tokyo. JSR saw a
decrease in occupancy rates to 90.8% during the last period ending 31 July 2009.
Management lays the blame squarely on the deteriorating property management
("PM") quality of main sponsor Apamanshop HD as ongoing restructuring resulted
in the departure of quality personnel. JSR has responded by looking for
new PM companies for the hardest hit properties. JSR has put in considerable
effort to improve the attractiveness of its holdings by upgrading buildings with
new locks, security systems etc, and believes that occupancy problems are
resulting from the PM's inability to convey these qualities to tenants. JSR is
currently in mid-stage negotiations with a potential new sponsor that management
hopes to complete by the end of October. SMBC, Apamanshop's main lender, has
already signaled it's approval of the new sponsor and DaVinci and Lehman
Brothers have also agreed to sell their share (20%, 30% respectively) in JSR's
management company. With new sponsorship, management hopes to be able to more
easily enter into meaningful talks of M&A, which they feel will be necessary for
long-term growth.
8963 TGR Investment
Tokyo Growth REIT (TGR) is a diversified J-REIT with 43.0 billion yen in assets
under management, 74.1% within the 23 main wards of Tokyo. Results for the
period ending 30 June 2009 were down sharply period-on-period due chiefly to the
effects of a Y324 mn capital gain last period (44.1% of Period 12 net income),
and the booking of the loss on sale this period. Occupancy rates on the
remaining 61 properties declined by 1.0 ppt to 94.4% from last period, though
the number, based on leasable space, is skewed by the vacancies of 1F shops at
some residential properties. TGR is focused firmly on maintaining occupancy
levels at this point, as dispositions in the current environment will likely
result in losses.
Key Recent Events
7 April - Lone Star announced as new sponsor for New City Residential (NCR)
9 April - Japan's ruling Liberal Democratic Party (LDP) approves Y15.4 trillion
stimulus package
29 May - Joint REIT sponsor, Joint Corp. files for bankruptcy protection
18 June - Daiwa Securities announced as new sponsor for DA Office
15 July - NCR creditors reject Lone Star offer. Show support for rival Daiwa
House proposal
5 September- Public-Private J-REIT Support Fund initiation
15 September - NCR creditors reject renewed Lone Star offer.
18 September - Daiwa House announces basic agreement to become new NCR sponsor
Going Forward
The Investment Adviser believes that the continued success of J-REIT debt
refinancing and the beginnings of consolidation activities combined with active
government support of the sector has reduced credit risk perception and helped
sustain the year to date outperformance of the Company's holdings. Small cap,
high yielding J-REITs have outperformed their peers as the risk of bankruptcy
recedes. Liquidity in some holdings remains relatively low, and the Investment
Adviser believes that arranged placements combined with gradual selling into the
market over the next six to twelve months is the best way to realise the
portfolio while preserving as much value as possible for shareholders.
Leonard O'Brien Curtis Freeze
Epicure Managers Japan Limited Prospect Asset Management, Inc.
Manager Investment Adviser
24 September 2009 24 September 2009
Consolidated Income Statement (unaudited)
+----------------------+--------+----------+-------------+
| | Note | For | For |
| | | the | the |
| | | period | period from |
| | | from 1 | 1 January |
| | | January | 2008 to 30 |
| | | 2009 to | June 2008 |
| | | 30 June | |
| | | 2009 | |
+----------------------+--------+----------+-------------+
| | | GBP'000 | GBP'000 |
+----------------------+--------+----------+-------------+
| | | | |
+----------------------+--------+----------+-------------+
| Income | | | |
+----------------------+--------+----------+-------------+
| | | 7 | 148 |
| Interest | | | |
| income | | | |
+----------------------+--------+----------+-------------+
| | | 830 | 4,292 |
| Dividend | | | |
| income | | | |
+----------------------+--------+----------+-------------+
| Realised | | (18,399) | (14,913) |
| loss on | | | |
| disposal | | | |
| of | | | |
| financial | | | |
| assets | | | |
+----------------------+--------+----------+-------------+
| Revaluation | | 23,439 | - |
| gains on | | | |
| financial | | | |
| assets | | | |
+----------------------+--------+----------+-------------+
| Total | | 5,877 | (10,473) |
| net | | | |
| investment | | | |
| income/(expense) | | | |
+----------------------+--------+----------+-------------+
| | | | |
+----------------------+--------+----------+-------------+
| Expenses | | | |
+----------------------+--------+----------+-------------+
| | 6.2 | 47 | 656 |
| Manager's | | | |
| fees | | | |
+----------------------+--------+----------+-------------+
| | 6.4 | 61 | 156 |
| Administration | | | |
| fees | | | |
+----------------------+--------+----------+-------------+
| | | 30 | 43 |
| Audit | | | |
| and | | | |
| professional | | | |
| fees | | | |
+----------------------+--------+----------+-------------+
| | | 37 | 426 |
| Interest | | | |
| expense | | | |
+----------------------+--------+----------+-------------+
| | 6 | 195 | 192 |
| Other | | | |
| expenses | | | |
+----------------------+--------+----------+-------------+
| | 11 | 243 | - |
| Provisions | | | |
+----------------------+--------+----------+-------------+
| Total | | 613 | 1,473 |
| operating | | | |
| expenses | | | |
+----------------------+--------+----------+-------------+
| | | | |
+----------------------+--------+----------+-------------+
| Profit/(Loss) before | | 5,264 | (11,946) |
| tax | | | |
+----------------------+--------+----------+-------------+
| | | | |
+----------------------+--------+----------+-------------+
| Income | 10 | (58) | (300) |
| tax | | | |
| expense | | | |
+----------------------+--------+----------+-------------+
| Profit/(Loss) for | | 5,206 | (12,246) |
| the period | | | |
+----------------------+--------+----------+-------------+
| | | | |
+----------------------+--------+----------+-------------+
| Basic | 8 | 3.97 | (11.62) |
| and | | | |
| fully | | | |
| diluted | | | |
| earnings/(loss) | | | |
| per share | | | |
| (pence) | | | |
+----------------------+--------+----------+-------------+
Statement of Comprehensive Income (unaudited)
+------------------------------------+------+-------------------+--------------------+
| |Note | For the period 1 | For the period 1 |
| | | January 2009 to | January 2008 to 30 |
| | | 30 June 2009 | June 2008 |
+------------------------------------+------+-------------------+--------------------+
| | | GBP'000 | GBP'000 |
+------------------------------------+------+-------------------+--------------------+
| Profit/(loss) for the period | | 5,206 | (12,246) |
+------------------------------------+------+-------------------+--------------------+
| | | | |
+------------------------------------+------+-------------------+--------------------+
| Other comprehensive | | | |
| income/(expense) | | | |
+------------------------------------+------+-------------------+--------------------+
| Net change in fair value gains on | | - | (28,429) |
| available-for-sale financial | | | |
| assets (net of tax) | | | |
+------------------------------------+------+-------------------+--------------------+
| Foreign exchange translation | | (2,303) | 5,029 |
| differences | | | |
+------------------------------------+------+-------------------+--------------------+
| Other comprehensive expense for | | (2,303) | (23,400) |
| the period (net of tax) | | | |
+------------------------------------+------+-------------------+--------------------+
| | | | |
+------------------------------------+------+-------------------+--------------------+
| Total comprehensive | | 2,903 | (35,646) |
| income/(expense) for the period | | | |
+------------------------------------+------+-------------------+--------------------+
Consolidated Balance Sheet
+--------------------+--------+-------------+-----------+
| | Note | (Unaudited) | (Audited) |
| | | At 30 June | At 31 |
| | | 2009 | December |
| | | | 2008 |
+--------------------+--------+-------------+-----------+
| | | GBP'000 | GBP'000 |
+--------------------+--------+-------------+-----------+
| | | | |
+--------------------+--------+-------------+-----------+
| Non-current | | | |
| assets | | | |
+--------------------+--------+-------------+-----------+
| Available-for-sale | 4 | - | 10,554 |
| financial assets | | | |
+--------------------+--------+-------------+-----------+
| Total | | - | 10,554 |
| non-current | | | |
| assets | | | |
+--------------------+--------+-------------+-----------+
| | | | |
+--------------------+--------+-------------+-----------+
| Current | | | |
| assets | | | |
+--------------------+--------+-------------+-----------+
| Financial | 4 | 11,873 | - |
| assets | | | |
| held for | | | |
| sale | | | |
+--------------------+--------+-------------+-----------+
| Other | | 348 | 608 |
| receivables | | | |
| and | | | |
| prepayments | | | |
+--------------------+--------+-------------+-----------+
| Cash | | 3,452 | 1,635 |
| at | | | |
| bank | | | |
+--------------------+--------+-------------+-----------+
| Total | | 15,673 | 2,243 |
| current | | | |
| assets | | | |
+--------------------+--------+-------------+-----------+
| Total | | 15,673 | 12,797 |
| assets | | | |
+--------------------+--------+-------------+-----------+
| | | | |
+--------------------+--------+-------------+-----------+
| Issued | 7 | 1,310 | 1,310 |
| share | | | |
| capital | | | |
+--------------------+--------+-------------+-----------+
| Share | | 12,546 | 12,546 |
| premium | | | |
+--------------------+--------+-------------+-----------+
| Retained | | (10,165) | (15,371) |
| earnings | | | |
+--------------------+--------+-------------+-----------+
| Foreign | | 11,541 | 13,844 |
| currency | | | |
| translation | | | |
| reserve | | | |
+--------------------+--------+-------------+-----------+
| Total | | 15,232 | 12,329 |
| equity | | | |
+--------------------+--------+-------------+-----------+
| | | | |
+--------------------+--------+-------------+-----------+
| Other | | 215 | 468 |
| creditors | | | |
| and | | | |
| accrued | | | |
| expenses | | | |
+--------------------+--------+-------------+-----------+
| Provisions | 11 | 226 | - |
+--------------------+--------+-------------+-----------+
| Total | | 441 | 468 |
| current | | | |
| liabilities | | | |
+--------------------+--------+-------------+-----------+
| Total | | 441 | 468 |
| liabilities | | | |
+--------------------+--------+-------------+-----------+
| Total | | 15,673 | 12,797 |
| equity | | | |
| & | | | |
| liabilities | | | |
+--------------------+--------+-------------+-----------+
Consolidated Statement of Changes in Equity (unaudited)
+--------------------+---------+---------+-------------+----------+-------------+----------+
| | Share | Share | Foreign | Retained | Revaluation | Total |
| | Capital | Premium | Currency | Earnings | Reserves | |
| | | | 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 for | | | | | | |
| the period | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Retained | - | - | - | (12,246) | - | (12,246) |
| loss for | | | | | | |
| the | | | | | | |
| period | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Other | | | | | | |
| comprehensive | | | | | | |
| income | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Net | | | | | (28,429) | (28,429) |
| change | | | | | | |
| in | | | | | | |
| fair | | | | | | |
| value | | | | | | |
| of | | | | | | |
| available-for-sale | | | | | | |
| financial assets | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Foreign | - | - | 5,029 | - | - | 5,029 |
| exchange | | | | | | |
| translation | | | | | | |
| differences | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Total | - | - | 5,029 | - | (28,429) | (23,400) |
| comprehensive | | | | | | |
| income for | | | | | | |
| the period | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Transactions | | | | | | |
| with owners | | | | | | |
| recorded | | | | | | |
| directly in | | | | | | |
| equity | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Contributions | | | | | | |
| by and | | | | | | |
| distributions | | | | | | |
| to owners | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Proceeds | 300 | 12,993 | - | - | - | 13,293 |
| from | | | | | | |
| shares | | | | | | |
| issued | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Share | - | (364) | - | - | - | (364) |
| issue | | | | | | |
| expenses | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Dividends | - | - | - | (3,535) | - | (3,535) |
| paid | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Total | 300 | 12,629 | - | (3,535) | - | 9,394 |
| contributions | | | | | | |
| by and | | | | | | |
| distributions | | | | | | |
| to owners | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Balance | 1,310 | 12,629 | 3,541 | 87,029 | (57,396) | 47,113 |
| at 30 | | | | | | |
| June | | | | | | |
| 2008 | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Balance | 1,310 | 12,546 | 13,844 | (15,371) | - | 12,329 |
| at 1 | | | | | | |
| January | | | | | | |
| 2009 | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Total | | | | | | |
| comprehensive | | | | | | |
| income for | | | | | | |
| the period | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Profit | - | - | - | 5,206 | - | 5,206 |
| for | | | | | | |
| the | | | | | | |
| period | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Other | | | | | | |
| comprehensive | | | | | | |
| income | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Foreign | - | - | (2,303) | - | - | (2,303) |
| exchange | | | | | | |
| translation | | | | | | |
| differences | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Total | - | - | (2,303) | 5,206 | - | 2,903 |
| comprehensive | | | | | | |
| income for | | | | | | |
| the period | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
| Balance | 1,310 | 12,546 | 11,541 | (10,165) | - | 15,232 |
| at 30 | | | | | | |
| June | | | | | | |
| 2009 | | | | | | |
+--------------------+---------+---------+-------------+----------+-------------+----------+
Consolidated Cash Flow Statement (unaudited)
+------------------------------------+------+-------------------+--------------------+
| |Note | For the period 1 | For the period 1 |
| | | January 2009 to | January 2008 to 30 |
| | | 30 June 2009 | June 2008 |
+------------------------------------+------+-------------------+--------------------+
| | | GBP'000 | GBP'000 |
+------------------------------------+------+-------------------+--------------------+
| | | | |
+------------------------------------+------+-------------------+--------------------+
| Cash flows from operating | | | |
| activities | | | |
+------------------------------------+------+-------------------+--------------------+
| Group profit/(loss) before tax | | 5,184 | (11,946) |
+------------------------------------+------+-------------------+--------------------+
| Adjustments for: | | | |
+------------------------------------+------+-------------------+--------------------+
| Investment (income)/expense | | (5,877) | 10,473 |
+------------------------------------+------+-------------------+--------------------+
| Operating loss before changes in | | (693) | (1,473) |
| working capital | | | |
+------------------------------------+------+-------------------+--------------------+
| | | | |
+------------------------------------+------+-------------------+--------------------+
| Decrease in trade and other | | 32 | 8 |
| receivables | | | |
+------------------------------------+------+-------------------+--------------------+
| Increase/(decrease) in trade and | | 42 | (153) |
| other payables | | | |
+------------------------------------+------+-------------------+--------------------+
| Cash used in operations | | (619) | (1,618) |
+------------------------------------+------+-------------------+--------------------+
| | | | |
+------------------------------------+------+-------------------+--------------------+
| Dividends received | | 931 | 3,845 |
+------------------------------------+------+-------------------+--------------------+
| Interest received | | 8 | 148 |
+------------------------------------+------+-------------------+--------------------+
| Net cash generated from operating | | 320 | 2,375 |
| activities | | | |
+------------------------------------+------+-------------------+--------------------+
| | | | |
+------------------------------------+------+-------------------+--------------------+
| Investing activities | | | |
+------------------------------------+------+-------------------+--------------------+
| Purchase of financial assets | | (996) | (8,425) |
+------------------------------------+------+-------------------+--------------------+
| Proceeds from sale of financial | | 2,878 | 24,531 |
| assets | | | |
+------------------------------------+------+-------------------+--------------------+
| Net cash generated from investing | | 1,882 | 16,106 |
| activities | | | |
+------------------------------------+------+-------------------+--------------------+
| | | | |
+------------------------------------+------+-------------------+--------------------+
| Financing activities | | | |
+------------------------------------+------+-------------------+--------------------+
| Proceeds from the issue of shares | | - | 13,293 |
+------------------------------------+------+-------------------+--------------------+
| Share issue costs | | - | (364) |
+------------------------------------+------+-------------------+--------------------+
| Repayment of bank borrowings | | - | (26,741) |
+------------------------------------+------+-------------------+--------------------+
| Dividends paid | | - | (3,535) |
+------------------------------------+------+-------------------+--------------------+
| Net cash used in financing | | - | (17,347) |
| activities | | | |
+------------------------------------+------+-------------------+--------------------+
| | | | |
+------------------------------------+------+-------------------+--------------------+
| Net increase in cash and cash | | 2,202 | 1,134 |
| equivalents | | | |
+------------------------------------+------+-------------------+--------------------+
| Effects of exchange rate changes | | (385) | (272) |
| on cash and cash equivalents | | | |
+------------------------------------+------+-------------------+--------------------+
| Cash and cash equivalents at | | 1,635 | 4,833 |
| beginning of period | | | |
+------------------------------------+------+-------------------+--------------------+
| Cash and cash equivalents at end | | 3,452 | 5,695 |
| of period | | | |
+------------------------------------+------+-------------------+--------------------+
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 de-registered as an Isle of Man 1931-2004 Act
company and re-registered as a company governed by the Isle of Man Companies Act
2006 with registered number 004213V.
2Significant Accounting Policies
The interim consolidated financial statements of the Company for the period
ended 30 June 2009 comprises the Company and its subsidiaries (together referred
to as the "Group"). The interim consolidated financial statements are unaudited.
2.1 Basis of presentation
These consolidated interim financial statements have been prepared in accordance
with IAS34 Interim Financial Reporting. They do not include all of the financial
information required for full annual financial statements. The financial
statements have been prepared on a realisation basis, with all non-current
balances now classified as current balances, and a provision for the estimated
liquidation costs (see note 11).
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 financial statements do not contain any critical
accounting estimates.
2.2Financial 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 fund (note 11), 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.
2.3Segment 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 6 to 10.
2.4 Dividends
Dividends are recognised as a liability in the period in which they are declared
and approved.
3 Net Asset Value per Share
The net asset value per share as at 30 June 2009 is 11.63p per share based on
131,000,000 ordinary shares in issue as at that date (31 December 2008: 9.41p
per share).
4 Available-for-sale financial assets
+-------------+--------+---------+
| | | 30 |
| | | June |
| | | 2009 |
+-------------+--------+---------+
| Security | Number | GBP'000 |
| name | | |
+-------------+--------+---------+
| Blife | 265 | 446 |
| Investment | | |
| Corporation | | |
+-------------+--------+---------+
| Crescendo | 2,578 | 3,008 |
| Investment | | |
| Corporation | | |
+-------------+--------+---------+
| FC | 879 | 1,167 |
| Residential | | |
| Investment | | |
| Corporation | | |
+-------------+--------+---------+
| Japan | 2,799 | 2,440 |
| Single | | |
| Residence | | |
| REIT | | |
+-------------+--------+---------+
| LaSalle | 207 | 187 |
| Japan | | |
| REIT | | |
| Inc | | |
+-------------+--------+---------+
| Nippon | 519 | 567 |
| Hotel | | |
| Fund | | |
| Investment | | |
| Corporation | | |
+-------------+--------+---------+
| Prospect | 2,077 | 1,895 |
| Residential | | |
| Investment | | |
| Corporation | | |
+-------------+--------+---------+
| TGR | 2,689 | 2,163 |
| Investment | | |
| Inc | | |
+-------------+--------+---------+
| | | 11,873 |
+-------------+--------+---------+
At 30 June 2009 the cost of the financial assets was GBP33,839,834. This
includes an adjustment for the unrealised loss of GBP27,879,752 on the portfolio
of holdings which were purchased by the Company from its subsidiaries.
5Related 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.
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 6.2).
Richard Bolton is managing director and a shareholder of Galileo Fund Services
Limited (the Administrator).
David von Simson holds 100,000 Ordinary shares and 20,000 warrants in the
Company.
Save as disclosed above, none of the Directors had any interest during the
period 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 period ended 30 June 2009 amounted to GBPnil (30 June 2008: GBP65,157).
6 Charges and Fees
6.1 Nominated Adviser
As nominated adviser to the Company for the purposes of the AIM Rules, the
Nominated Adviser was entitled to receive an annual fee of GBP40,000 payable
twice yearly in advance. From 1 January 2008 this fee has been amended to an
annual fee of GBP60,000 payable twice yearly in advance.
Advisory fees paid to the Nominated Adviser for the period ended 30 June 2009
amounted to GBP34,302 (30 June 2008: GBP35,250).
6.2Manager'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 period ended 30 June 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 period ended 30 June 2009 amounted to GBP47,210 (30 June 2008: GBP655,837).
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 period ended 30 June 2009
amounted to GBPnil (30 June 2008: GBPnil).
6.3Custodian fees
The Custodian was entitled to receive fees calculated as 3 basis points per
annum of the gross asset value of the Company, subject to a minimum monthly fee
of GBP1,300. From 1 April 2007, this fee has been amended to a fixed monthly fee
of GBP1,300.
Custodian and sub-custodian fees for the period ended 30 June 2009 amounted to
GBP13,443 (30 June 2008: GBP8,060).
6.4 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 period ended 30 June 2009 amounted to GBP55,193
(30 June 2008: GBP70,739), secretarial fees were GBP2,453 (30 June 2008:
GBP2,175), financial statement preparation fees were GBP1,483 (30 June 2008:
GBP1,500) and Crest fees were GBP2,378 (30 June 2008: GBP2,250).
There are also fees payable to Asiaciti Management Pte Ltd and Silex Management
Limited of GBP61,880 and GBPnil respectively (30 June 2008: GBP44,965 and
GBP65,157 respectively).
6.5Other 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.
7Share Capital
Share capital
+----------+-------------+---------+
| Ordinary | Number | GBP'000 |
| Shares | | |
| of 1p | | |
| each | | |
+----------+-------------+---------+
| | | |
+----------+-------------+---------+
| In | 131,000,000 | 1,310 |
| issue | | |
| at the | | |
| start | | |
| of the | | |
| period | | |
+----------+-------------+---------+
| Issued | - | - |
| during | | |
| the | | |
| period | | |
+----------+-------------+---------+
| In | 131,000,000 | 1,310 |
| issue | | |
| at 30 | | |
| June | | |
| 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 | | |
+----------+-------------+---------+
Warrants
20.2 million warrants were issued pursuant to the initial Placing (one warrant
for every five ordinary shares). The warrants entitle 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.
8Earnings/(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 Company by the weighted
average number of ordinary shares in issue during the period.
+---------------+---------+----------+
| | 30 | 30 |
| | June | June |
| | 2009 | 2008 |
+---------------+---------+----------+
| | | |
+---------------+---------+----------+
| Profit/(Loss) | 5,206 | (12,246) |
| attributable | | |
| to equity | | |
| holders of | | |
| the Group | | |
| (GBP'000) | | |
+---------------+---------+----------+
| Weighted | 131,000 | 105,344 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| in issue | | |
| (thousands) | | |
+---------------+---------+----------+
| Basic | 3.97 | (11.62) |
| profit/(loss) | | |
| per share | | |
| (pence per | | |
| share) | | |
+---------------+---------+----------+
There is no difference between the basic and fully diluted earnings/(loss) per
share for the period.
9Directors' 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 period ended
30 June 2009 amounted to fees of GBP63,368 and insurance expenses of GBP12,082
(30 June 2008: GBP72,655 and GBP11,219 respectively).
10 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. The Company is required to pay an annual
corporate charge of GBP250 per annum.
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, although this rate is anticipated to increase to 15 per
cent. in 2009. Withholding tax for the period ended 30 June 2009 amounted to
GBP58,121 (30 June 2008 GBP300,449) 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-REIT's 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.
11 Post Balance Sheet Events
On 23 July 2009 all the special resolutions were passed at the Extraordinary
General Meeting and the Company is now operating as a realisation fund. 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. These provisions amount to $258,000 and
GBP70,458. Due to the nature of this item, these provisions have been included
in the Group's results for the six months ended 30 June 2009.
On 14 August 2009 the Company was de-registered as an Isle of Man 1931-2004 Act
company and re-registered as a company governed by the Isle of Man Companies Act
2006 with registered number 004213V.
On 23 September 2009, the Directors resolved to declare a first capital
distribution of 3p per share.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PUUACBUPBGUC
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