TIDMAJG
ATLANTIS JAPAN GROWTH FUND LIMITED
("AJGF" or the "Company")
(a closed-ended investment company incorporated in Guernsey with registration
number 30709)
LEI 5493004IW0LDG0OPGL69
Annual Results for the financial year ended 30 April 2022
5 July 2021
(Classified Regulated Information, under DTR 6 Annex 1 section 1.1)
The financial information set out below does not constitute the Company's
statutory accounts for the financial year ended 30 April 2022. All figures are
based on the audited financial statements for the financial year ended 30 April
2022.
The financial information for the financial year ended 30 April 2022 noted
below is derived from the financial statements delivered to the UK Listing
Authority.
The annual report and audited financial statements for the financial year ended
30 April 2022 will shortly be posted to shareholders and will also be available
on the company website: www.atlantisjapangrowthfundlimited.com
INTRODUCTION
INVESTMENT OBJECTIVE
Atlantis Japan Growth Fund Limited (the "Company") aims to achieve long term
capital growth through investment wholly or mainly in listed Japanese equities.
INVESTMENT POLICY
The Company may invest up to 100% of its gross assets in companies quoted on
any Japanese stock exchange including, without limitation, the Tokyo Stock
Exchange Prime, Standard and Growth sections, or the regional stock exchanges
of Fukuoka, Nagoya and Sapporo. The Company's benchmark index is the TOPIX
Total Return index "benchmark total return index" and the Company will not be
restricted to investing in constituent companies of the benchmark.
The Company may also invest up to 20% of its Net Asset Value (the "NAV") at the
time of investment in companies listed or traded on other stock exchanges but
which are either controlled and managed from Japan or which have a material
exposure to the Japanese economy.
The Company may also invest up to 10% of its NAV at the time of investment in
securities which are neither listed nor traded on any stock exchange or
over-the-counter market.
In general, investments will be made in equity shares of investee companies, or
in debt issued by investee companies. However, the Company may also invest up
to 20% of its NAV at the time of investment in equity warrants and convertible
debt.
The Company will not invest in more than 10% of any class of securities of an
investee company. The Company will not invest in derivative instruments save
for the purpose of efficient portfolio management.
The Company may not invest more than 10% in aggregate of the value of its total
assets in other listed closed-ended investment funds except in the case of
investment in closed-ended investment funds which themselves have published
investment policies to invest no more than 15% of their total assets in other
listed closed-ended investment funds, in which case the limit is 15%.
The Company may borrow, with a view to enhancing capital returns, up to a
maximum of an amount not exceeding 20% of NAV at the time of borrowing.
No material change will be made to the investment policy without the approval
of shareholders by ordinary resolution.
The management and impact of the risks associated with the investment policies
are described in detail in the Notes to the Financial Statements (see Note 15).
INVESTMENT MANAGER AND INVESTMENT ADVISER
Quaero Capital LLP has been the appointed Investment Manager of the Company
since 1 August 2014.
Atlantis Investment Research Corporation ("AIRC") has been the appointed
Investment Adviser to the Company since 1 August 2014.
AIRC, established in Tokyo, through Taeko Setaishi as lead adviser, and her
colleagues, advises the Investment Manager on the day-to-day conduct of the
Company's investment business, the role it has played since the launch of the
Company in May 1996.
DIVID POLICY
There are regular quarterly dividend payments of 1% of the Company's NAV (based
on the average daily NAV in the final month of the financial year). The
dividends will be paid out of capital reserves and will be paid in March, June,
September and December (please see Dividend Policy below for further details).
Chairman's Statement
For the financial year ended 30 April 2022
After enjoying several years of handsome returns, the past year has been one of
the most challenging for global equity markets since the 2008 global financial
crisis, seeing the nascent hopes for recovery overwhelmed by Russia's invasion
of Ukraine and rising energy prices. Our thoughts are very much with those
affected directly by such geopolitical turmoil. Japan has not been immune to
such spasms and, having taken steps back from the stringent Covid restrictions,
is now faced with the twin challenges of rising inflationary pressures and
slower global growth. In such an environment, the Company finished its
financial year on 30 April 2022 with its shares 26.9% lower than a year
earlier, underperforming the Company's benchmark, the Topix Total Return (TR)
Index (which saw a 5% decline in sterling terms). This very much reflected the
growth style of the Company, with a continued focus on investing in those
companies that will deliver sustainable earnings growth over the long-term.
Despite such a challenging market for growth investors, the Company's 32.4%
performance over 5 years compares favourably with the Topix (TR) sterling
return of 22.6%. The Company paid out four regular quarterly dividends of 1% of
the Company's net asset value ("NAV"), calculated on the average daily NAV of
April 2021. Further, at the end of the financial year, the Company's discount
was 12.2% against 9.2% a year earlier.
MARKET AND PERFORMANCE
The Japanese market, like many of the developed markets, saw a persistent
rotation between growth and cyclical companies over the past 12 months. This
came as investors sought to account for the geopolitical tensions, rising
inflation and the subsequent impact on the interest rate cycle that helped
drive a re-rating of growth companies. The Company's performance in the first
half of the financial year was steady, driven by the chosen thematic exposure
to global leaders in the renewable energy, electronic component and biotech
spaces. In the second half of the year, performance was disproportionately
affected by a continued shift out of growth stocks into value shares, one of
the factors driving outperformance of those cyclicals geared to the modest
global economic recovery.
DIVID POLICY
The quarterly dividend is set at 1% of the average daily NAV per share in the
final month of the preceding financial year and is paid out of capital
resources at the end of each calendar quarter. The Board continues to believe
that the new dividend policy is the fairer way to distribute capital to all
shareholders, compared to the previously employed redemption mechanism. The
September 2021, December 2021, March 2022 and June 2022 dividend payments were
paid to registered shareholders at the rate of 2.88p per share, based on the
average daily NAV per share in the final month of the Company's financial year
ended 30 April 2021. The average NAV per share for the month of April 2022 was
215p and so the new quarterly dividend rate will be at 2.15p for the four
dividends payable at the end of September 2022, December 2022, March 2023 and
June 2023.
Environmental, Social and Governance (ESG) Investment
Investing responsibly is at the centre of the Company's investment philosophy
and process. In 2015 the Company's investment manager, Quaero Capital, became a
signatory to the UNPRI to demonstrate commitment to responsible investment.
Quaero Capital has since joined the Institutional Investor Group for Climate
Change (IIGCC) and the Carbon Disclosure Project (CDP), as it looks to
understand and adopt best practice to address climate change. As long-term
investors it is fundamentally important that we understand the environmental,
social and governance risks and opportunities affecting the companies in which
we invest. Strong relationships built over many years in the market enable us
to use our position as long-term investors to encourage transparency and flag
areas of high ESG risk.
BOARD COMPOSITION
As the Board reported last year, I will be stepping down in 2023 as Chairman of
the Company and am working with my successor, Michael Moule, to ensure a smooth
transition and a focus on refreshing board membership. Michael has been a
director since February 2018 and we look forward to his continued stewardship
focus as he takes up the new role with effect from next year's AGM.
All Directors are subject to annual re-election at the AGM, which will be held
at The Cavalry & Guards Club on 8 September 2022.
DISCOUNT MANAGEMENT AND SHARE BUY BACKS
In order to assist in managing the discount at which the Company's shares trade
and to enhance the NAV per share of remaining shareholders, the Company has
authority to buy back shares. The Board renewed its existing powers to buy back
shares at the 2020 AGM. The Board reviews the discount level on a regular basis
and will opportunistically buy back stock if the discount is perceived to be
too wide.
The discount widened over the period from 9.2% to 12.2%. As part of its
discount management policy, during the financial year ended 30 April 2022, the
Company exercised its authority to buy back 378,000 shares for holding in
Treasury, which represented 0.81% of the issued share capital.
At the 2019 AGM, the Board announced that a Continuation Vote will be called
every fourth year. Hence, the next Continuation Vote will be held at the 2023
AGM.
GEARING
Gearing is defined as the ratio of a company's long-term debt, less cash held,
compared to its equity capital, expressed as a percentage. The effect of
gearing is that, in rising markets, the Company tends to benefit from any
growth of the Company's investment portfolio above the cost of payment of the
prior ranking entitlements of any lenders and other creditors. Conversely, in
falling markets the Company suffers more if the Company's investment portfolio
underperforms the cost of those prior entitlements.
In order to improve the potential for capital returns to shareholders, the
Company currently has access to an overdraft facility with the Company's
Depositary, Northern Trust (Guernsey) Limited, for up to ¥1.5 billion. As at 30
April 2022 the Company's net gearing level (being the amount of drawn-down bank
debt less the cash held on the balance sheet) was 5.0% compared to 0.4% at the
end of the prior reporting period.
The Directors consider it a priority that the Company's level of gearing should
be maintained at appropriate levels with sufficient flexibility to enable the
Company to adapt at short notice to changes in market conditions. The Board
reviews the Company's level of gearing on a regular basis. The current maximum
that has been set is 20% of the Company's net assets. The Investment Adviser is
encouraged to use the gearing facility and the Company's cash reserves in order
to enhance returns for shareholders.
ONGOING CHARGES AND INVESTMENT MANAGEMENT FEE
The Board continues to look very closely at the level of ongoing charges
incurred by the Company and for the financial year ended 30 April 2022 the
ongoing charges were 1.65% (30 April 2021: 1.58%). The Board will remain
vigilant in seeking opportunities for reductions. Details of the ongoing
charges are shown in Note 19 to the Financial Statements.
A tiered structure for investment management fees was put in place with effect
from 5 July 2019, with a fee of 1% on the first £125m of net assets, 0.85% on
net assets between £125m and £175m and 0.70% on net assets above £175m.
OUTLOOK
Uncertainty over the outcome and timing of the war in Ukraine will continue to
weigh on sentiment in global markets, particularly as to how the impact on
inflation and economic growth of disrupted global supply chains will play out
for corporate earnings. Japan's economic outlook has remained more resilient
than many of the developed economies and it is encouraging to see positive
growth forecasts being released by corporates for the next Fiscal Year. Ongoing
corporate governance reforms are also creating more value for minority
shareholders. These factors support the valuation argument for Japan with
relatively attractive PER, PBR and yield comparables particularly as our
Investment Adviser ekes out those overlooked growth opportunities. Key focuses
of attention will be on how the upcoming July Upper House elections will impact
stimulus policies and the pressure on the Bank of Japan to respond to
inflationary pressures, currently reflected in widening interest rate
differentials and a twenty year low for the yen versus US dollar. Yen weakness
has been a challenge for some Japanese companies but is also helping to boost
corporate earnings for others. It is not just the exporters who have
benefited, since cost inflation has helped many companies to increase product
prices in a way that they were unable to do before.
The Company retains, as a key pillar to its investment style, a focus on a
long-term growth trajectory. Your Directors and I believe that this places it
in a strong position to benefit from exposure to growth-orientated businesses,
companies with sustainable competitive advantages and that have strong free
cash flow. This will help drive long-term performance of the Company. The
Investment Adviser's focus on growth factors has served the Company and its
shareholders well over the 26 year life of the Company, and the Board remains
confident that this approach will reward shareholders as we maintain a focus on
generating returns over the long-term.
Noel Lamb 5 July 2022
Investment Adviser's Report
For the financial year ended 30 April 2022
Performance
The Company's Net Asset Value (NAV) per share, calculated in sterling, ended
the financial year at 210.73p, down 21.3% YoY on a total return basis, versus
the Topix Total Return Index decline of 5.0%. The Company's discount to NAV
ended the period at -12.2%, widening from -9.2%.
At the end of the period, the Company's net gearing was 5.0%, which was an
increase from the previous year's level of 0.4%. The Japanese yen also
continued to weaken over the year, from ¥151.48 to ¥164.11, incurring an 8.3%
loss in value versus sterling.
As at the end of April 2022, the Company's portfolio held 66 stocks, which is
the same number as at the previous year. Sectors that contributed positively
included Other Financing Business, Marine Transportation and Wholesale Trade.
There were strong contributions from software testing specialist SHIFT (3697
JP), semiconductor manufacturing gas purveyor Japan Material Co (6055 JP) and
niche pre-owned auto insurance and warranty provider Premium Group Co (7199
JP). Sectors that underperformed included Services, Information & Communication
and Machinery. Stocks that underperformed included the investor relations
consultant IR Japan Holding (6035 JP), precision small motor specialist Nidec
(6594 JP), and mergers and acquisitions specialist Nihon M&A Center (2127 JP).
Three factors weighed on the Company's performance. The first was the
persistent sell-off in growth and technology stocks. The second was the
technical impact of the restructuring of the Tokyo Stock Exchange section
categories, effective from April 2022. This intensified the sell-off in
Japanese small caps which had already been hit by a global sell-off. The third
was the lead up to and invasion of Ukraine in February, which exacerbated
volatility and the shift from growth to value compounded by the acceleration of
inflation and global monetary tightening.
The portfolio remains entirely invested in the equities of listed Japanese
companies and J-REITS. The Company has no exposure to foreign exchange hedges,
nor does it take positions in convertible bonds or other types of structured
financial products.
Market comment
At the beginning of the financial year, the Japanese market had been adjusting
to the persistence of the pandemic: new variants; supply chain disruptions;
component shortages; rising input costs; inflationary pressures; and US and EU
monetary policy diverging from the Bank of Japan's ("BoJ") easy stance. There
was a brief rally early in the financial year in anticipation of further policy
initiatives from the new government under Prime Minister Fumio Kishida. His
administration then lost momentum from the new year which contributed to some
of the market gyration between growth and value styles from month to month..
Inflationary pressures increased globally, including in Japan on the producer
price level as well as on supermarket shelves (though core inflation data
excluding fresh food and energy remained well below the BoJ's 2% target).
Encouragingly, corporate earnings trends were fairly steady as companies reined
in spending, started passing on rising input costs by increasing prices,
restructured where needed and focused on driving profitable areas of their
businesses.
Whatever hopes there were of getting inflation under control and seeing a
return to normalcy by easing supply chain bottlenecks, were quickly upended by
the invasion of Ukraine and the zero-Covid lockdowns in China. Monetary policy
between Japan and the US diverged further and the yen weakened dramatically
after the Fed raised its benchmark interest rate in March, while the BoJ
confirmed its near-zero rate policy. The persistence of the Ukraine crisis has
led commodity prices to soar. Despite such uncertainties, we did see foreign
investor activity shift to modest net buying of Japanese equities in April -
the last month of the Company's financial year - though volumes were lower than
in previous years. As at the end of the Company's financial year, the Topix
(Prime) Index is on a forward PER of 14.07x and PBR of 1.16x, which are
attractive valuations on a historical basis and relative to other markets.
Economic Outlook
Following Russia's invasion of Ukraine, Oil rose to over $100/bl and the
Japanese yen briefly surpassed JPY130/USD and JPY165/GBP. The weaker Japanese
yen benefits exporters and the repatriation of profits into yen, but severely
impacts costs for importers of oil, commodities and various components. That
said, restrictions are being eased for inbound travel and the economy is
opening back up from this summer. Corporate balance sheets remain strong and
while companies are understandably guiding conservatively due to geopolitical
uncertainties, for many manufacturing sectors order backlogs remain high which
provides a measure of visibility and confidence. Inventories along the supply
chain are also trending at a low level, and employment is robust in Japan as
well as in key destination markets for Japanese companies such as in the US.
Although supply chain disruptions could still negatively impact upcoming data
points such as industrial production, GDP and consumer spending, the most
recently published manufacturing PMI series for May was 53.3, down from 53.5 in
April. This is still comfortably above 50, indicating on the whole that the
benefits of the weaker yen are offsetting the negative impact on raw materials
costs. Key factors going forward include the reopening of the economy,
resumption of travel in and out of Japan, and efforts to reduce supply chain
bottlenecks.
Investment Adviser's Strategy
Given continued geopolitical uncertainty, it is difficult to predict how the
inflation picture will change in the coming months. However, there is some
expectation of reaching a near-term peak, as supply chains improve and normal
economic activity returns. The Investment Adviser is taking a measured approach
focusing on both companies with limited exposure to overseas markets as well as
those benefiting from structural change and growth areas such as in technology,
manufacturing and workflow efficiency, work-style reform, healthcare,
infrastructure and unique new business models. The Investment Adviser notes
that companies have started to raise prices, particularly from the start of the
new Japanese fiscal year in April. This is helping to offset rising materials
and input costs, which is a positive sign for maintaining profit margins and
the ability to weather inflationary pressures. Initial impressions of
favourable retail sales, customer footfall traffic, domestic travel,
hospitality and dining during the recent Japanese Golden Week holiday at the
end of April and beginning of May bode well for the economic outlook. The
government's extraordinary economic package and its commitment to supporting
the growth of new technologies should also help stabilize the economy and
market during these difficult times. The Investment Adviser has not changed its
basic approach of frequently meeting with company managements to test their
progress and continues to employ a bottom-up approach in its fundamental
analysis.
Atlantis Investment Research Corporation
5 July 2022
Alternative Investment Fund Manager's Report
For the financial year ended 30 April 2022
Quaero Capital LLP, which is registered in England as a limited liability
partnership, was authorised on 22 July 2014 by the Financial Conduct Authority
of the UK as the Company's Alternative Investment Fund Manager (the "AIFM") for
the purposes of the Alternative Investment Fund Managers Directive ("AIFMD" or
the "Directive").
As the Company's AIFM, Quaero Capital LLP is required to make available an
annual report for each financial year of the Company containing the following:
i. A balance sheet or a statement of assets and liabilities (see Statement
of Financial Position below).
ii. An income and expenditure account for the financial year (see Statement
of Comprehensive Income below).
iii. A report on the activities of the financial year including an overview
of the investment activities and financial performance over the year (see
Chairman's Statement above, Investment Adviser's Report above, Details of Ten
Largest Investments below, Schedule of Investments below and Directors' Report
and Statement of Directors' Responsibilities below).
iv. Details of material changes to the information set out under Article 23
of the Directive. To satisfy this requirement, Quaero Capital LLP publishes an
Investor Disclosure Document available at www.atlantisjapangrowthfund.com.
v. Certain disclosures in relation to the remuneration of Quaero Capital
LLP. To meet these requirements, details of Quaero Capital LLP's
remuneration policy and remuneration disclosures in respect of Quaero
Capital LLP's reporting period for the financial year ended 31 March
2022 are available at www.atlantisjapangrowthfund.com/literature.
vi. Details of the leverage employed by the Company. Using the methodologies
prescribed under the Directive, the leverage of the Company is disclosed in the
following table:
Commitment leverage as at Gross leverage as at
30 April 2022 30 April 2022
Leverage ratio 1.05:1 1.05:1
Quaero Capital LLP
5 July 2022
Nidec (54,000 shares)
Nidec is the world`s leading manufacturer of electric motors from miniature to
large sizes, and of brushless motors which reduce noise and vibration. In the
past, the more expensive brushless motors were used mainly for higher-end
products such as PCs, but a shift in focus across all industries and product
categories has increased Nidec's total addressable market significantly. In
addition to being used in various household appliances, Nidec motors are used
in numerous industrial and machinery applications which require higher levels
of precision and efficiency. They are also expanding into supplying motors for
EVs. The company has grown both organically and with an aggressive M&A strategy
under the leadership of founder and Chairman Shigenobu Nagamori who recently
returned to his role as CEO to guide the company through the current difficult
conditions resulting from the pandemic and war in Ukraine. He replaces Jun
Seki, the former
Nissan executive, who continues to head the automotive segment. This has been
performing well and is a critical part of Nidec's long-term growth strategy to
expand in electronic vehicle drive components such as e-Axles. Nidec has a
proven track record for innovation and execution as a premier low-cost mass
producer, and offers high growth potential.
Fair value of £2,823,582 representing 3.2% of Net Asset Value (30 April 2021:
4.7%)
Tokyo Electron (7,500 shares)
Tokyo Electron is a leading global assembler of semiconductor production
equipment (SPE) with high market share in front-end processes such as coater/
developers (100% market share for extreme ultraviolet lithography (EUV)),
etching including for 3D NAND memory, deposition and cleaning systems. In the
recent past semiconductors were used mainly to store and process data, while
humans created and analyzed the data. With highspeed and real-time requirements
of new technologies such as AI and Big Data, semiconductors are now being used
to create, detect, analyze and act on data without human intervention. Over
the next 5 years, global data volume is expected to increase fourfold with
approximately three-quarters created and used by semiconductors. Global
semiconductor revenues are expected to grow 2-3 times over the next 5 years.
Tokyo Electron's high market share in SPE processes for EUV and 3D NAND
stacking that is essential for rising data workloads, as well as having
launched two new production facilities in 2020, put it in a strong position to
grow faster than the market. In FY21 ending March 2022, Tokyo Electron achieved
record net profit, after tax, of JPY437bn.
Fair value of £2,547,988 representing 2.9% of Net Asset Value (30 April 2021:
5.2%)
S-Pool (310,000 shares)
S-Pool is a niche staffing company for call centres, mobile phone stores, other
retail stores and e-commerce. It is known for placing personnel with special
needs and disabilities. The company also runs farms on which it employs people
with disabilities, and coordinates with local governments and businesses
interested in hiring special needs people. The company is involved in training,
staff education, making referrals, and is developing a recruitment agency as a
new service. It also dispatches personnel for nursing care, long-term care and
childcare facilities. The company also runs logistics outsourcing services for
warehouses, and employment process support services. It is expanding into new
areas such as Environment Management Support Services and a wide range of
Administrative and Business Process Organization services. The company is
enjoying double digit sales and profit growth. Due to the nature of its
business the firm is known as an ESG and sustainable growth play and organizes
its business model around solving various social and corporate issues.
Fair value of £2,484,854 representing 2.9% of Net Asset Value (30 April 2021:
1.5%)
Industrial & Infrastructure Fund Investment Reits (2,000 shares)
Industrial Infrastructure is a real estate investment trust that invests in
logistics facilities and infrastructure properties, such as aircraft
maintenance hangers at Haneda Airport. The REIT was established in 2017 and was
sponsored by Mitsubishi Corp and UBS Realty (name changed to KJR Management in
April 2022), known for strength in ESG and responsible investment. It was the
first Japanese REIT to be a signatory of the Montreal Carbon Pledge and UN
Environment Programme Finance Initiative and has received various ESG awards.
The REIT can acquire properties and favourable financing through its sponsor
network. It also has a lower cost of equity which gives it an edge over peers.
Its current forward dividend yield is 3.38% and has an annualized dividend
growth target of 4%. As a result of its low funding cost advantage and ability
to secure quality investments, it consistently trades at a premium to NAV per
share (currently around 1.43x as of 31 May). Logistics and infrastructure are a
long-term structural growth area in Japan and the Industrial & Infrastructure
REIT offers a stable way to participate in this growth.
Fair value of £2,286,514 representing 2.6% of Net Asset Value (30 April 2021:
2.3%)
Disco (11,000 shares)
Disco is a semiconductor production equipment maker and holds the top global
share in slicing and dicing, grinding and polishing equipment for
semiconductors, electronic components and silicon wafers. The stock also offers
some defensive qualities as it also has non-integrated circuit (IC) customers
that provides some counter-cyclical protection, and it has a large consumables
and maintenance business that generates steady recurring revenues. Disco has
benefited from the extension of the current semiconductor cycle and the
continued excess demand conditions in maintenance, parts and consumables. Due
to the acute semiconductor shortages as a result of the pandemic, and more
recently the war in Ukraine, the Japanese government is supporting the
onshoring of semiconductor production and strengthening of the industry and
supply chains in Japan as a strategic initiative. The same phenomenon is
occurring in other countries which is benefiting Disco. The company is also a
weak yen beneficiary and has a large orderbook giving it visibility on steady
sales growth for the next few years regardless of where we are in the cycle.
Fair value of £2,162,207 representing 2.5% of Net Asset Value (30 April 2021:
2.2%)
Wacom (370,000 shares)
Wacom is the leader in graphic tablets and has a 60% global market share. The
company dominates the professional design and drafting industry, and is
expanding into new applications in the education and industrial markets. The
company supplies digital pen (stylus) technology solutions to customers such as
Samsung (which is a 5% owner), Lenovo, Dell, Google and Microsoft. The company
has long since been recognized as a leader in this area, but with CEO Nobutaka
Ide taking the helm in 2018 with a background in marketing, it has been
repositioning itself as a partner and solutions provider to global technology
firms for digital pens rather than just as a component supplier. There have
been efforts by some of the bigger players such as Apple to establish their own
stylus as the industry de facto standard. This has not materialized, as other
large players resisted letting their competitor be the standard-setter. The
company expects double digit growth over the next several years.
Fair value of £2,143,347 representing 2.4% of Net Asset Value (30 April 2021:
0.7%)
Sony (30,000 shares)
Sony is Japan's leading consumer electronics and media company and also a
leading producer of semiconductor complementary metal oxide semiconductor
(CMOS) sensors which are essential for cameras. It is the only global player
that has a strong presence in hardware, games, movies, TV, and semiconductors,
and it has demonstrated superior management and execution capability in its
recovery over the last decade. It competes with big global tech giants like
Samsung, Microsoft, Apple, and Disney and yet is trading at less than 5% of the
valuation (USD 112.6bil) of some of these companies (e.g., Apple at USD
2.4tril). Sony has both the content and the delivery mechanisms and devices to
distribute, and a proven track record. It has opportunities in streaming across
all genres (film, music, games), autonomous drive and EVs, sensors, AR/VR,
healthcare, and many other areas. While there are concerns of slowing consumer
demand if global economic conditions worsen during a period of inflation, these
remain structural long-term growth areas, and Sony is at a much lower overall
valuation than global peers. Sony is on a forward PER of 16.5x and is
projecting profit growth of 7-10% for the next 2-3 years.
Fair value of £2,061,169 representing 2.3% of Net Asset Value (30 April 2021:
2.0%)
Schedule of Investments
As at 30 April 2022
Fair value
Holdings Financial assets at fair value through profit or £ '000 % of NAV
loss
Banks: 1.92% (30 April 2021: 0.00%)
Keiyo Bank
220,000 671 0.77
Sumitomo Mitsui Financial
42,000 1,007 1.15
Chemicals: 3.58% (30 April 2021:
4.51%)
Shin-Etsu Chemical
16,000 1,762 2.02
Tri Chemical Laboratories
90,000 1,361 1.56
Construction: 1.46% (30 April 2021: 0.68%)
Besterra
180,000 1,271 1.46
Electric Appliances: 20.10% (30 April 2021: 21.93%)
Chino
140,000 1,379 1.58
Keyence Corporation
6,000 1,942 2.22
Kohoku Kogyo
25,000 1,110 1.27
Lasertec
12,000 1,302 1.49
Nidec
54,000 2,824 3.24
Optex
70,000 738 0.85
Oxide
45,000 1,496 1.71
Sony
30,000 2,061 2.36
Tokyo Electron
7,500 2,548 2.92
Wacom
370,000 2,143 2.46
Electric Power & Gas: 0.00% (30 April 2021: 4.10%)
Information & Communication: 18.32% (30 April 2021: 14.45%)
GMO Financial Gate
7,000 559 0.64
GMO Internet
90,000 1,447 1.66
Hikari Tsushin
18,000 1,681 1.93
Internet Initiative
55,000 Japan 1,384 1.59
Plus Alpha
95,000 Consulting 1,360 1.56
PR TIMES
130,000 1,713 1.96
SB Technology
110,000 1,517 1.74
Shift
24,000 3,646 4.18
Simplex
60,000 631 0.72
ULS
40,000 975 1.12
VisasQ
55,000 1,061 1.22
Machinery: 8.69% (30 April 2021:
11.60%)
Daifuku
40,000 1,972 2.26
Disco
11,000 2,162 2.48
Giken
65,000 1,419 1.63
Okada Aiyon
170,000 1,610 1.84
Yamashin-Filter
200,000 424 0.48
Marine Transportation: 1.99% (30 April 2021: 0.00%)
Nippon Yusen
30,000 1,738 1.99
Metal Products: 0.93% (30 April 2021: 0.56%)
SUMCO
70,000 813 0.93
Nonferrous Metals: 2.24% (30 April 2021: 0.00%)
Nippon Denkai
50,000 1,098 1.26
SWCC Showa
80,000 856 0.98
Other Financing Business: 3.26% (30 April 2021:
1.50%)
Premium
120,000 2,847 3.26
Other Products: 1.84% (30 April 2021: 1.88%)
Furuya Metal
15,000 863 0.99
Snow Peak
50,000 740 0.85
Pharmaceutical: 2.86% (30 April 2021: 7.49%)
CellSource
75,000 1,773 2.03
Mizuho Medy
60,000 727 0.83
Precision Instruments: 4.49% (30 April 2021: 3.73%)
Asahi Intecc
130,000 2,022 2.32
Hirayama
110,000 866 0.99
Topcon
100,000 1,029 1.18
Real Estate: 8.53% (30 April 2021: 5.58%)
&Do Holdings
220,000 1,218 1.40
Aoyama Zaisan Networks
70,000 523 0.60
Industrial & Infrastructure Fund Investment Reits
2,000 2,287 2.62
Japan Logistics Fund Reits
620 1,207 1.38
Katitas
50,000 932 1.07
Renewable Japan Energy Infrastructure Fund
2,000 1,271 1.46
Rubber Products: 0.00% (30 April 2021: 0.51%)
Securities & Commodity Futures: 0.00% (30 April 2021: 0.24%)
Services: 20.49% (30 April 2021: 21.62%)
Amvis Holdings
42,000 1,319 1.51
Bell System24 Holdings
220,000 2,018 2.31
Bengo4.com
40,000 829 0.95
Creek & River
80,000 1,032 1.18
Daiseki
20,000 575 0.66
Funai Soken
50,000 667 0.76
Japan Elevator Service Holdings
90,000 945 1.08
Japan Material
250,000 3,024 3.46
Services: 20.49% (30 April 2021: 21.62%)
Kanamoto
110,000 1,309 1.50
M3
29,000 746 0.85
Nihon M&A Center
90,000 889 1.02
Recruit Holdings
45,000 1,328 1.52
S-Pool
310,000 2,485 2.85
Writeup
45,000 738 0.84
Transportation Equipment: 1.67% (30 April 2021: 0.00%)
Denso
30,000 1,462 1.67
Wholesale Trade: 2.49% (30 April 2021: 0.00%)
Bike O
160,000 1,112 1.27
Mitsui
55,000 1,061 1.22
Total Japan (30 April 2021: 100.38%)
91,525 104.86
Total listed equities (30 April 2021: 100.38%)
91,525 104.86
Total investments held at fair value through
profit or loss 91,525 104.86
Cash and Cash Equivalents (30 April 2021: (0.56%))
(4,533) (5.19)
Other net assets (30 April 2021: 0.18%)
287 0.33
Net assets attributable to equity shareholders
87,279 100.00
Board of Directors
For the financial year ended 30 April 2022
NOEL LAMB (Chairman, appointed to the Board on 1 February 2011 and appointed as
Chairman on 1 May 2014), British, graduated from Exeter College, Oxford
University and a barrister-at-law. He joined Lazard Brothers & Co Limited in
1987 and from 1992 to 1997 he was the managing director of Lazard Japan Asset
Management where he was the fund manager for their Japanese equities. In 1997,
he moved to the Russell Investment Group where he established the investment
management capability of Russell in London. In 2002, he was promoted to Chief
Investment Officer in North America where he managed assets of $150bn until his
departure in 2008. In 2020, he was appointed as a director of Guinness Asset
Management Funds and in January 2022 as chairman of Rockwood Strategic plc.
PHILIP EHRMANN FCSI (appointed to the Board on 25 October 2013), British,
graduated from the London School of Economics with a BSc in Economics. He
started his investment career in 1981 specialising in the North American market
before heading up Emerging Markets for Invesco Asset Management. In 1995 he
joined Gartmore Investment Management to undertake a similar role, before
becoming Head of Pacific & Emerging Markets. Whilst at Gartmore he managed the
Gartmore Asia Pacific Trust plc, a pan-Asian Investment Trust. In 2006 he moved
to Jupiter Asset Management where he was Co-Head of Asia. At the beginning of
2015 he joined Manulife Asset Management as a Senior Managing Director,
responsible for overseeing Global Emerging Markets equity portfolios.
RICHARD PAVRY (appointed to the Board on 1 August 2016), British, is the Chief
Executive Officer at Devon Equity Management Limited. Richard graduated in
Natural Sciences from Cambridge University before converting to law. He began
his career as a solicitor with Simmons & Simmons, moving to Jupiter Asset
Management in 2000 where he served as head of investment trusts. He moved to
Devon Equity Management Limited in November 2019. Richard has previously served
as a non-executive director of Jupiter Second Split Trust plc and is Chairman
of Devon Equity Funds SICAV.
MICHAEL MOULE (appointed to the Board on 5 February 2018), British, has a close
connection to investment trusts and global investment having managed The City
of London Investment Trust plc, The Bankers Investment Trust plc and The Law
Debenture Corporation plc during an extensive City career with Touche Remnant
and Henderson Global Investors. He was until May 2022 a member of the
Investment Committee of The Open University, and was previously Chairman of
Polar Capital Technology Trust plc.
YUKI SOGA (appointed to the Board on 1 July 2021), Japanese, currently residing
in London. Schooled in the UK and a graduate of Somerville College, Oxford, she
has spent most of her career to date working in Tokyo. Yuki commenced her
career with lawyers Clifford Chance and Herbert Smith and then researched
quoted Japanese equities for Arcus and Macquarie. She subsequently became a
partner at Indus Capital Tokyo. Since June 2020 Yuki has been running her own
research and consulting business.
Strategic Report
For the financial year ended 30 April 2022
The Strategic Report provides shareholders with enhanced transparency and
oversight capabilities when assessing how directors have performed their duties
to promote the continued success of the company for shareholders' collective
benefit. This is achieved by providing context to the financial statements,
analysis of past performance and insights into the decisions taken to maintain
future performance.
The Directors submit their Strategic Report, Directors' Report and Statement of
Directors' Responsibilities, together with the Company's Statement of
Comprehensive Income, Statement of Changes in Equity, Statement of Financial
Position, Statements of Cash Flows and the related Notes for the financial year
ended 30 April 2022, together the "Audited Financial Statements". These Audited
Financial Statements give a true and fair view and have been properly prepared,
in accordance with International Financial Reporting Standards as adopted by
the European Union ("IFRS").
THE COMPANY
Atlantis Japan Growth Fund Limited (the "Company") was incorporated in Guernsey
on 13 March 1996. The Company commenced activities on 10 May 1996. The Company
is an authorised closed-ended investment scheme registered and domiciled in
P.O. Box 255, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3QL,
Channel Islands. The Company's equity shares are traded on the London Stock
Exchange.
As an investment trust, the Company is classified as an Alternative Investment
Fund whose Alternative Investment Fund Manager (AIFM), Quaero Capital LLP, is
required to be authorised and regulated by the Financial Conduct Authority. The
Company is itself subject to the UKLA Listing Rules, Prospectus Rules,
Disclosure Guidance and Transparency Rules ("DTR") and the rules of the London
Stock Exchange.
INVESTMENT OBJECTIVE AND POLICY
The Company's investment objective and policy are set out above.
The Company's investment activities are managed by Quaero Capital LLP
("Investment Manager") with the administration delegated to Northern Trust
International Fund Administration Services (Guernsey) Limited.
KEY PERFORMANCE INDICATORS ("KPIs")
At each Board meeting, the Board considers a number of performance measures to
assess the Company's success in achieving its objectives. Below are the main
KPIs which have been identified by the Board for determining the progress of
the Company:
· Change in Net Asset Value ("NAV");
· Discount to the NAV;
· Share price; and
· Ongoing charges.
RESULTS AND DIVIDS
The results for the financial year are set out in the Statement of
Comprehensive Income below.
As a UK investment trust the Company is subject to the provisions of the
Corporation Tax Act 2010. Section 1158 includes a retention test which states
that the Company should not retain in respect of any accounting period an
amount which is greater than 15% of its income. This has been modified for
accounting periods beginning on or after 28 June 2013 such that a negative
balance on a company's revenue reserve is taken into account when calculating
the amount of distributable income. This is not relevant for the financial year
ended 30 April 2022 (30 April 2021: not relevant).
Distributions of £4,511,513 were made during the financial year (30 April 2021:
£3,711,357) and the Company met the retention test for the financial year ended
30 April 2022.
For more information please also refer to Packaged Retail and Insurance-based
Investment Products ("PRIIPs") regulations below.
CAPITAL VALUES
At 30 April 2022, the value of net assets attributable to shareholders was £
87,278,759 (30 April 2021: £116,501,330) and the NAV per share was £2.11 (30
April 2021: £2.79).
BUSINESS REVIEW AND TAX STATUS
The Company has been formally accepted into the investment trust company
regime, subject to the Company continuing to submit appropriate annual tax
filings to HM Revenue and Customs. In the opinion of the Directors, the Company
has conducted its affairs so as to enable it to maintain ongoing investment
trust status, subject to completion of the relevant tax work.
DIVID POLICY
There is a regular dividend paid to all shareholders on a quarterly basis set
at 1% of net asset value at the close of the preceding financial year. The June
2021 dividend was made at the rate of 2.17p per share, being 1% of the average
daily NAV per share in the final month of our financial year ended the 30 April
2020. The quarterly dividend will be paid out of capital resources at the end
of each calendar quarter. The September 2021, December 2021 and March 2022
dividend payments were made at the rate of 2.88p per share, being the average
daily NAV per share in the final month of our financial year ended 30 April
2021. As a result of the Company's performance over the year to April 2022, the
average NAV per share for the month of April 2022 was 215p and so the new
quarterly dividend rate will be at 2.15p for the four dividends payable at the
end of September 2022, December 2022, March 2023 and June 2023.
SHARE BUY-BACKS
The Company has been granted the authority to make market purchases of up to a
maximum of 14.99% of the aggregate number of ordinary shares in issue at a
price not exceeding the higher of (i) 5% above the average of the mid-market
values of the ordinary shares for the five business days before the purchase is
made, or (ii) the higher of the price of the last independent trade and the
highest current investment bid for the ordinary shares.
In deciding whether to make any such purchases the Directors will have regard
to what they believe to be in the best interests of shareholders as a whole, to
the applicable legal requirements and any other requirements in the Articles.
The making and timing of any buy-backs will be at the absolute discretion of
the Board and not at the option of the shareholders, and is expressly subject
to the Company having sufficient surplus cash resources available (excluding
borrowed moneys).
The Board believes that the effective use of treasury shares can assist the
Company in improving liquidity in the Company's ordinary shares, managing any
imbalance between supply and demand and minimising the volatility of the
discount at which the ordinary shares trade to their NAV for the benefit of
shareholders. It is believed that this facility gives the Company the ability
to sell ordinary shares held in treasury quickly and cost effectively, and
provides the Company with additional flexibility in the management of the
capital base. During the financial year ended 30 April 2022, 378,000 shares
were purchased into treasury (30 April 2021: None). The number of shares held
in treasury at 30 April 2022 is 5,065,186 (30 April 2021: 4,687,186), the
percentage of treasury shares in total is 10.9% (30 April 2021: 10.1%).
The Board shall have regard to current market practice for the re-issuance of
treasury shares by investment trusts and the recommendations of the Investment
Manager and the Financial Adviser. The Board's current policy is that any
ordinary shares held in treasury will not be resold by the Company at a
discount to the Investment Manager and the Financial Adviser's estimate of the
prevailing NAV per ordinary share as at the date of issue. The Board will make
an announcement of any change in its policy for the re-issuance of ordinary
shares from treasury via a Regulatory Information Service approved by the
Financial Conduct Authority ("FCA").
VIABILITY STATEMENT
In accordance with the AIC Code, the Board has assessed the prospects of the
Company over the next three years from the date of this document. The Company's
investment objective is to achieve long-term capital growth and the Board
regards the Company as a long-term investment.
The Board has considered the Company's business model including its investment
objective and investment policy as well as the principal risks and
uncertainties that may affect the Company as detailed below. The Board, in its
assessment of the viability of the Company, has considered each of the
Company's principal risks as referred to below, in particular the impact of a
significant fall in the Japanese equity market on the value of the Company's
investment portfolio. The Board has noted that the Company holds a highly
liquid portfolio invested predominantly in listed equities and no significant
increase to ongoing charges or operational expenses is anticipated. Details of
the ongoing charges are shown in Note 19 to the Financial Statements.
After making reasonable inquiries and assessing all data relating to the
Company's liquidity, particularly its holding of significant liquid level 1
assets, the Directors believe that the Company has adequate resources to
continue in operational existence until the next continuation vote and do not
consider there to be any threat from COVID-19 or other issues.
The Directors also review the level of the discount or premium between the
middle market price of the Company's ordinary shares and their NAV on a regular
basis. The Directors have powers granted to them at the last annual general
meeting to purchase ordinary shares and either cancel or hold them in treasury
as a method of controlling the discount to NAV and enhancing shareholder value.
The Board has therefore concluded, based on the Company's processes for
monitoring operating costs, share price discount, the Investment Manager's
compliance with the investment objective, asset allocation, the portfolio risk
profile, gearing, counterparty exposure, liquidity risk and financial controls,
that there is a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the next
three years.
GOING CONCERN
As outlined in the Viability Statement above, the Directors believe that the
Company has adequate resources to continue in operational existence for the
next twelve months from the date of approval of the Financial Statements.
Whilst the Company is obliged to hold a continuation vote every four years, the
Directors do not believe this should automatically trigger the adoption of a
basis other than going concern basis in line with the Association of Investment
Companies ("AIC") Statement of Recommended Practice ("SORP") which states that
it is more appropriate to prepare financial statements on a going concern basis
unless a continuation vote has already been triggered and shareholders have
voted against continuation. The Directors have also considered the results of
the most resent continuation vote held at the 2021 annual general, meeting
whereby the resolution was passed for the Company to continue in existence from
the date of authorisation of the financial statements. As noted above in the
Company's Viability Statement, there are no material uncertainties relating to
events or conditions that may cast significant doubt as to the ability of the
Company to continue to meet its ongoing obligations.
After making enquiries and given the nature of the Company and its investment,
and having carried out an assessment of the impact of COVID-19 on
the Company, the Directors are satisfied that it is appropriate to continue to
adopt the going concern basis in preparing these Financial Statements. The
Company's Investment Shares are liquid and can be converted to cash to meet
liabilities as they fall due. The Board considers this to be sufficient for
normal requirements. After due consideration, the Directors consider that the
Company is able to continue for the foreseeable future from the date of
authorisation of the financial statements.
PRINCIPAL RISKS AND UNCERTANTIES
As an investment trust, the Company invests in securities for the long term.
The financial investments held as assets by the Company comprise equity shares
(see the Schedule of Investments above for a breakdown). As such, the holding
of securities, investing activities and financing associated with the
implementation of the investment policy involve certain inherent risks. Events
may occur that could result in either a reduction in the Company's net assets
or a reduction of revenue profits available for distribution.
Principal risks should include, but are not necessarily limited to, those that
could result in events or circumstances that might threaten the company's
business model, future performance, solvency, liquidity and reputation. In
deciding which risks are principal risks companies should consider the
potential impact and probability of the related events or circumstances, and
the timescale over which they may occur.
The Board has carried out a robust assessment of the principal and emerging
risks facing the Company and prepares and reviews regularly a risk matrix which
documents the significant risks. These risks have remained substantially
unchanged since the prior year with minor adjustment to accommodate unforeseen
global events such as COVID-19 and the war in Ukraine.
The risk matrix document considers the following information:
· Identifying and reporting changes in the risk environment;
· Identifying and reporting changes in the operational controls;
· Identifying and reporting on the effectiveness of controls and remediation
of errors arising; and
· Reviewing the risks faced by the Company and the controls in place to
address those risks.
Performance
Inappropriate investment policies and processes may result in under-performance
against the prescribed benchmark index and the Company's peer group. The Board
manages these risks by ensuring a diversification of investments and regularly
reviewing the portfolio asset allocation and investment process. The Board also
regularly monitors the Company's investment performance against a number of
indices and the AIC Japanese smaller companies' sub-sector peer group. In
addition, certain investment restrictions have been set and these are monitored
as appropriate.
Discount
A disproportionate widening of the discount relative to the Company's peers
could result in loss of value for shareholders. The Board reviews the discount
level regularly.
Up until September 2019, the Company operated a shareholder-approved discount
control mechanism whereby the Company held a continuation vote if the shares
traded, on average, at a discount of more than 10% to the NAV per share during
any rolling 90 day period in normal market conditions. If the obligation to
hold a continuation vote was triggered, the vote was held no later than the
next practicable annual general meeting of the Company.
Regulatory
The Company operates in a complex regulatory environment and faces a number of
regulatory risks. Breaches of regulations, such as Section 1158 of the
Corporation Tax Act 2010, the Companies (Guernsey) Law, 2008, the UKLA Listing
Rules and the Disclosure and Transparency Rules ("DTR"), could lead to a number
of detrimental outcomes and reputational damage. The Company conforms with the
Alternative Investment Fund Managers Directive ("AIFMD"). The Board relies on
the services of the Administrator, Northern Trust International Fund
Administration Services (Guernsey) Limited, and its professional advisers to
ensure compliance with the Companies (Guernsey) Law, 2008, the Protection of
Investors (Bailiwick of Guernsey) Law, 2020 ("POI Law"), the Authorised
Closed-Ended Investment Scheme Rules and Guidance, 2021 ("Authorised
Closed-ended Rules"), the UKLA Listing Rules and Prospectus Rules, the DTR and
the rules of the London Stock Exchange.
Operational
Like most other investment trust companies, the Company has no employees. The
Company therefore relies upon the services provided by third parties and is
dependent on the control systems of the Investment Manager, Investment Adviser,
Company's Administrator and Depositary. The security, for example, of the
Company's assets, dealing procedures, accounting records and maintenance of
regulatory and legal requirements depends on the effective operation of these
systems. These are regularly tested, monitored and are reviewed by the
Directors at the quarterly board meetings.
Financial
The financial risks faced by the Company, including the impact of changes in
Japanese equity market prices on the value of the Company's investments, are
disclosed in Note 15 to the Financial Statements. The financial risks disclosed
in Note 15 are detailed for compliance with IFRS.
Global Events
COVID-19 continues to affect the global economy and this may negatively impact
the Company's performance. In responding to the risks of COVID-19, the
Directors have established business continuity plans and have inquired and are
satisfied that service providers have a process in place to continue to provide
required services to the Company and maintain compliance with laws and
regulations in the face of the challenges encountered.
The current geopolitical tension caused by the Russian invasion of Ukraine is
creating uncertainty in the markets and directly impacting energy costs.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") POLICIES
Although the Company does not have specific ESG or sustainability objectives.
the Board is convinced that integrating ESG risks into the Company's financial
analysis will support making better decisions for its shareholders. As a
long-term investor it is fundamentally important that the Company understands
the environmental, social and governance risks and opportunities affecting its
investments. Strong relationships built over many years in the market enable
the Company to use its position to encourage transparency and flag areas of
high ESG risk.
The Investment Manager, in consultation with the Investment Adviser, operates
an exclusion policy which incorporates exclusion lists to screen investments
across all applicable investment strategies. These exclusion lists include any
companies involved in the production or distribution of indiscriminate and
controversial weapons, in line with international convention. Additionally,
companies whose conduct is in systematic and severe breach of UN Global Compact
principles are also excluded from investment consideration. So too are
companies that have a significant part of their business exposed to coal mining
and coal powered energy without any public plans for significant reduction.
The Investment Manager and the Investment Adviser support all the Principles of
the Japan Stewardship Code for responsible institutional investors and seek to
fulfil their stewardship responsibilities under the Code. Whilst using both
external and internal analysis, the Investment Manager, in consultation with
the Investment Adviser, seeks to vote on all investee companies' matters in
line with its responsible investment philosophy with the aim of contributing
positively and promoting the sustainable growth and long-term success of
investee companies and stakeholders.
The Investment Manager is a signatory/member of the following:
· UN PRI (United Nations Principles for Responsible Investment) to
demonstrate commitment to responsible investment. The PRI acts in the long-term
interests of its signatories, of the financial markets and economies in which
they operate and ultimately of the environment and society.
· IIGCC (Institutional Investors Group on Climate Change), which looks to
influence corporations to address long term risks associated with climate
change.
· CDP (Carbon Disclosure Project), which looks to influence companies to
disclose their carbon footprint and address risks associated with climate
change. The project also provides a wealth of environmental data reported by
companies.
· TCFD (Task Force for Climate-related Financial Disclosure). The
Investment Manager has signed the statement of support for the Financial
Stability Board's Task Force on Climate-related Financial Disclosures. As such
as it will make annual disclosures in line with the recommendation in its
annual Sustainability Report, outlining its strategy and its targets.
FUTURE PROSPECTS
Please see the Chairman's Statement above and the Investment Advisors Report
above for more information on the future prospects of the Company.
SECTION 172 STATEMENT
Section 172 of the Companies Act 2006 ("UK Companies Act") applies directly to
UK domiciled companies. Nonetheless, the intention of the AIC Code is that the
matters set out in section 172 are reported on by all London listed investment
companies, irrespective of domicile, provided that this does not conflict with
local company law.
Section 172 states that: A director of a company must act in the way he or she
considers, in good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole, and in doing so have regard
(amongst other matters) to the following six items:
(a) the likely In managing the Company, the aim of the Board,
consequences of any Investment Manager and Investment Adviser is always
decision in the long term, to ensure the long-term sustainable success of the
Company and, therefore, the likely long-term
consequences of any decision are a key consideration.
In managing the Company during the year under review,
the Board acted in the way which it considered, in
good faith, would be most likely to promote the
Company's long-term sustainable success and to
achieve its wider objectives for the benefit of
Shareholders as a whole, having had regard to the
Company's wider stakeholders and the other matters
set out in section 172 of the UK Companies Act.
(b) the interests of the The Company does not have any employees.
company's employees,
(c) the need to foster the The Board's approach is described under "Shareholders
company's business Relations" below.
relationships with
suppliers, customers and
others,
(d) the impact of the The Board's approach is described under
company's operations on "Environmental, Social and Corporate Governance
the community and the Policies" above.
environment,
(e) the desirability of The Board's approach is described under
the company maintaining a "Environmental, Social and Corporate Governance
reputation for high Policies" above.
standards of business
conduct, and
(f) the need to act fairly The Board's approach is described under "Shareholders
as between members of the Relations" below.
company.
Noel Lamb Philip Ehrmann
Chairman Director
5 July 2022
Directors' Report and Statement of Directors' Responsibilities
For the financial year ended 30 April 2022
The Directors are pleased to present their twenty sixth Annual Report and
Audited Financial Statements of the Company for the financial year ended 30
April 2022.
PRINCIPAL ACTIVITY
The Company is a Guernsey registered authorised closed-ended investment company
with UK investment trust status traded on the London Stock Exchange. The
Company has a premium listing in the Official List. Trading in the Company's
ordinary shares commenced on 10 May 1996.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing Financial Statements for each
financial year which give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that financial year. In
preparing these Financial Statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed subject
to any material departures disclosed and explained in the Financial Statements;
- prepare the Financial Statements on a going concern basis unless it is
inappropriate to presume that the Company will continue in business.
We confirm, to the best of our knowledge, that:
- this Annual Report and Audited Financial Statements, prepared in
accordance with IFRS and applicable Guernsey law, give a true and fair view of
the assets, liabilities, financial position and assesses the Company's
position, performance, business model and strategy of the Company; and
- this Annual Report and Audited Financial Statements include information
detailed in the Directors' Report, the Investment Adviser's Report and Notes to
the Financial Statements, which provides a fair review of the information
required by:
a) DTR 4.1.8 of the DTR, being a fair review of the Company's business and a
description of the principal risks and uncertainties facing the Company;
b) DTR 4.1.11 of the DTR, being an indication of important events that have
occurred since the beginning of the financial year, the likely future
development of the Company, the Company's use of financial instruments and,
where material, the Company's financial risk management objectives and policies
and its exposure to price risk, credit risk, liquidity risk and cash flow risk.
In the opinion of the Directors, the Annual Report and Audited Financial
Statements, taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Company's position,
performance, business model and strategy.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the Financial Statements comply with
the Companies (Guernsey) Law, 2008 (the "Companies Law") and the POI. They are
also responsible for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for ensuring that the Directors' Report and other
information included in the Annual Report is prepared in accordance with
company law applicable in Guernsey. They are also responsible for ensuring that
the Annual Report includes information required by the UKLA Listing Rules and
the DTR.
The Directors who held office at the date of the approval of the Financial
Statements confirm that, so far as they are aware:
- There is no relevant audit information of which the Company's auditor is
unaware; and
- Each Director has taken all the steps they ought to have taken as
Directors to make themselves aware of any relevant audit information and to
establish that the Company's auditor is aware of that information.
The Directors confirm that these Financial Statements comply with these
requirements.
In respect of the UK Criminal Finances Act 2017, which has introduced a new
corporate criminal offence of "failing to take reasonable steps to prevent the
facilitation of tax evasion", the Board confirms that it is committed to zero
tolerance towards the criminal facilitation of tax evasion.
PREPARATION OF FINANCIAL STATEMENTS
The Financial Statements of the Company have been prepared in accordance with
IFRS.
SIGNIFICANT SHAREHOLDINGS
In accordance with the Company's Articles of Association the Directors have the
ability to request nominee shareholders to disclose the beneficial shareholders
they represent. Based on the information received the following shareholders
had a holding in the Company in excess of 3% as at 30 April 2022.
Shareholder % Ordinary
Shares
1607 Capital Partners 23.35 9,731,003
Allspring Global Investments 15.38 6,410,130
Lazard Asset 6.21 2,588,903
Management
Hargreaves Lansdown Asset Management 5.24 2,186,032
Premier Miton 4.21 1,755,000
Investors
Canaccord Genuity Wealth Management 4.12 1,715,561
Interactive Investor 3.38 1,409,917
The Company has not received any notifications of changes to the above
mentioned holdings from 30 April 2022 to date of approval of the financial
statements.
SECRETARY
The Secretary is Northern Trust International Fund Administration Services
(Guernsey) Limited.
INDEPENT AUDITOR
Grant Thornton Limited were re-appointed as the independent auditor at the
Annual General Meeting, and Grant Thornton Limited have indicated their
willingness to be re-appointed in office.
Resolutions to re-appointing the Independent Auditor and authorising the
Directors to fix their remuneration will be proposed at the Annual General
Meeting.
CORPORATE GOVERNANCE AND SHAREHOLDER RELATIONS
Details of the Company's compliance with corporate governance best practice,
including information on relations with shareholders, are set out in the
Corporate Governance Statement below and this statement forms part of the
Directors' Report.
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE
The Company has entered into the arrangements necessary to ensure compliance
with the AIFM Directive. Following a review of the Company's management
arrangements, the Board approved the appointment of Quaero Capital LLP
("Quaero") as the Company's Alternative Investment Fund Manager on the terms of
and subject to the conditions of the Investment Management Agreement between
the Company and Quaero.
The Board has also appointed Northern Trust (Guernsey) Limited (the
"Depositary") to act as the Company's depositary (as required by the AIFM
Directive) on the terms and subject to the conditions of a Depositary Agreement
between the Company, Quaero and the Depositary.
International Tax Reporting
For the purposes of the US Foreign Account Tax Compliance Act, the Company
registered with the US Internal Revenue Services ("IRS") as a Guernsey
reporting Foreign Financial Institution ("FFI"), received a Global Intermediary
Identification Number PYT2PS.99999.SL.831, and can be found on the IRS FFI
list.
The Common Reporting Standard ("CRS") is a global standard for the automatic
exchange of financial account information developed by the Organisation for
Economic Co-operation and Development ("OECD"), which has been adopted by
Guernsey and which came into effect on 1 January 2016. The Board has taken the
necessary action to ensure that the Company is compliant with Guernsey
regulations and guidance in this regard.
Noel Lamb Philip Ehrmann
Chairman Director
5 July 2022
Directors' Remuneration Report
For the financial year ended 30 April 2022
The Board has approved this report, in accordance with the rules covering good
communication to shareholders, as opposed to the requirements and format of a
typical listed company Directors' Remuneration Report. An ordinary resolution
for the approval of this report will be put to the members at the forthcoming
annual general meeting.
REMUNERATION COMMITTEE
The Board as a whole fulfils the function of a Remuneration Committee. The
Company's Financial Adviser, Corporate Broker and Company Secretary will be
asked to provide advice when the Directors consider the level of Directors'
fees.
POLICY ON DIRECTORS' FEES
The Board's policy is that the remuneration of non-executive Directors should
reflect the experience of the Board as a whole and be fair and comparable to
that of other investment trusts that are similar in size, have a similar
capital structure and have a similar investment objective.
The fees for the non-executive Directors are determined within the limits of £
200,000 set out in the Company's Articles of Incorporation. The Directors are
not eligible for bonuses, pension benefits, share options, long-term incentive
schemes or other benefits.
DIRECTORS' SERVICE CONTRACTS
It is the Board's policy that none of the Directors have a service contract.
Directors are appointed initially until the following annual general meeting
when, under the Company's Articles of Incorporation, it is required that they
be re-elected by shareholders. Thereafter, two Directors shall retire by
rotation, or if only one Director is subject to retire by rotation they shall
retire. The retiring Directors will then be eligible for reappointment having
been considered for reappointment by the Chairman and other Directors.
Notwithstanding the foregoing provisions of the Company's Articles of
Incorporation, the Board is recommending that all Directors be subject to
re-election as laid out in AIC Code at the forthcoming annual general meeting.
DIRECTORS' EMOLUMENTS FOR THE FINANCIAL YEAR
The Directors who served in the financial year are entitled to the following
emoluments in the form of fees:
Year ended Year ended
30 April 2022 30 April 2021
Regular fees £ £
Noel Lamb
34,000 33,000
Richard Pavry
26,000 26,000
Philip Ehrmann
29,000 28,500
Michael Moule
26,000 26,000
Yuki Soga (appointed 1 July
2021) 21,667 -
113,500
136,667
DIRECTORS' INTERESTS
The Directors listed above are all members of the Board at the financial year
end 30 April 2022.
Certain Directors had a beneficial interest in the Company by way of their
investment in the ordinary shares of the Company.
The details of these interests as at 30 April 2022 and 30 April 2021 are as
follows:
Ordinary Shares Ordinary Shares
30 April 2022 30 April 2021
Noel Lamb
30,000 23,250
Richard Pavry
40,000 40,000
Philip Ehrmann
50,000 50,000
Michael Moule
50,000 40,000
As at the date of this report, there were no changes to the Directors'
interests.
There were no relevant contracts in force during or at the end of the financial
year in which any Director had an interest. There are no service contracts in
issue in respect of the Company's Directors.
No Directors had a non-beneficial interest in the Company during the financial
year under review.
DISCLOSURE OF DIRECTORSHIPS IN PUBLIC COMPANIES LISTED ON RECOGNISED STOCK
EXCHANGES
The following summarises the Directors' directorships in other public
companies:
Noel Lamb
Company Name Stock Exchange
Rockwood Strategic plc London
None of the other Directors held directorships in other public companies during
the financial year under review.
APPROVAL
A resolution for the approval of the Directors' Remuneration Report for the
financial year ended 30 April 2022 will be proposed at the annual general
meeting.
By order of the Board
Noel Lamb Philip Ehrmann
Chairman Director
5 July 2022
Corporate Governance
For the financial year ended 30 April 2022
INTRODUCTION
The following Corporate Governance statement forms part of the Directors'
Report above (DTR 7.2.1). The Board of the Company has considered the
principles and provisions of the February 2019 edition of the AIC Code of
Corporate Governance (the "AIC Code"). The AIC Code addresses all the
principles set out in the UK Corporate Governance Code 2018 (the "UK Code"), as
well as setting out additional principles and provisions on issues that are of
specific relevance to the Company.
The Company is subject to the Guernsey Financial Services Commission ("GFSC")
Code of Corporate Governance (the "GFSC Code") and reports against the AIC Code
which is deemed to comply with the GFSC Code.
The Company has complied with the provisions of the AIC Code and the relevant
provisions of the UK Code throughout the financial year, except as set out
below:
- the role of the chief executive
- executive directors' remuneration
- the need for an internal audit function
- the need to appoint a senior independent director
- the need to appoint a nomination committee or management engagement
committee
- the whistle blowing policy
The Board considers these provisions are not relevant to the position of the
Company, being an externally managed investment company. The Company has
therefore not reported further in respect of these provisions. The Directors
are non-executive and the Company does not have employees, hence no
whistle-blowing policy is required. However, the Directors note that the
Company's service providers have whistle blowing policies in place.
The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an
explanation of how the AIC Code adapts the Principles and Provisions set out in
the UK Code to make them relevant for investment companies.
THE BOARD
Disclosures under the AIC Code
The Board comprises five independent non-executive Directors including the
Chairman, Noel Lamb. Due to the size of the Company, the nature of its
activities and the fact that all of the Directors are independent, the Board
does not consider it necessary to appoint a senior independent Director.
The Board has not appointed a remuneration committee but, comprising wholly
independent Directors, the whole Board considers these matters regularly. The
Board considers agenda items formally laid out in the Notice and Agenda, which
are formally circulated to the Board in advance of the meeting as part of the
Board papers.
The primary focus at board meetings is a review of investment performance and
associated matters such as the discount, redemptions, gearing, asset
allocation, marketing and investor relations, peer group information and
industry issues. There were five board meetings (1 May 2020-30 April 2021:
four), three Audit Committee meetings (1 May 2020-30 April 2021: two) and six
other committee meetings (1 May 2020-30 April 2021: six) held during the
financial year 1 May 2021 to 30 April 2022. The table below shows the number of
formal meetings attended by each Director during the financial year:
Director Board Meetings Audit Committee Board Committee
Attended Meetings Attended Meetings Attended
Noel Lamb 5/5 3/3 6/6
Philip Ehrmann 5/5 3/3 1/6
Richard Pavry 5/5 3/3 1/6
Michael Moule 5/5 3/3 4/6
Yuki Soga (appointed 1 July 4/5 3/3 -/6
2021)
Directors are appointed initially until the following annual general meeting
when, under the Company's Articles of Incorporation, it is required that they
be re-elected by shareholders. Thereafter, two Directors shall retire by
rotation, or if only one Director is subject to retire by rotation he shall
retire. The retiring Directors will then be eligible for reappointment having
been considered for reappointment by the Chairman and other Directors. The
Board is recommending that all Directors be subject to re-election as laid out
in AIC Code at the forthcoming AGM.
The Board evaluates its performance and considers the tenure of each Director
including the Chairman on an annual basis, and considers that the mix of
skills, experience, ages and length of service to be appropriate to the
requirements of the Company. The Directors can also provide feedback to the
Chairman at the regular quarterly board meetings, audit committee and other
committee meetings.
When considering succession planning, the Board bears in mind the balance of
skills, knowledge, sector experience and diversity existing on the Board. The
Board has noted amendments to the AIC code to strengthen the principle on
boardroom diversity following the Davies Report. The Board considers diversity
as part of the annual performance evaluation and it is felt that there is a
range of backgrounds and each Director brings different qualities to the Board
and its discussions. It is not felt appropriate for the Company to have set
targets in relation to diversity; candidates will be assessed in relation to
the relevant needs of the Company at the time of appointment. A good knowledge
of investment management generally, Japanese investment management specifically
and investment trust industry matters and sophisticated investor concerns
relevant to the Company will nevertheless remain the key criteria by which new
Board candidates will be assessed. The Board will recommend when the
recruitment of additional non-executive Directors is required. Once a decision
is made to recruit additional Directors to the Board each Director is invited
to submit nominations and these are considered in accordance with the Board's
agreed procedures. The Board may also use independent external agencies as and
when the requirement to recruit an additional Board member becomes necessary.
The Board embraces the principles of the AIC Code but, with regard to its
provisions concerning Director tenure, is of the opinion that an individual's
independence cannot be arbitrarily determined on the basis of a set period of
time. The Company's investment objective is to achieve long term capital growth
and it benefits from having long serving Directors with a detailed knowledge of
the Company's operations to effectively oversee its management on behalf of
shareholders. The Company therefore does not impose fixed term limits on
Directors' tenure as this would result in a loss of experience and knowledge
without any assurance of increased independence. The Board, collectively and
individually, firmly believes in the continued independence of its members. The
Board confirms that the performance of all Directors has been subject to formal
evaluation and that they continue to be effective in their role. The Board
firmly recommends to shareholders that all Directors should be re-elected.
There is an agreed procedure for Directors to take independent professional
advice if necessary, and at the Company's expense. This is in addition to the
access which every Director has to the advice of the Company Secretary. The
Company has taken out insurance through Bartlett Group Limited in respect of
the Directors' liability. For the financial year ended 30 April 2022 the charge
was £6,383 (30 April 2021: £5,205).
INTERNAL CONTROLS
The Board has delegated the responsibility for the management of the Company's
investment portfolio, the provision of depositary services and the
administration, registrar and corporate secretarial functions including the
independent calculation of the Company's NAV and the production of the Annual
Report and Audited Financial Statements. The Annual Report and Audited
Financial Statements are also independently reviewed by the Audit Committee.
Whilst the Board delegates responsibility, it retains responsibility for the
functions it delegates and is responsible for the risk management and systems
of internal control. Formal contractual agreements have been put in place
between the Company and providers of these services.
The Board directly on an ongoing basis and via its Audit Committee has
implemented a system to identify and manage the risks inherent in such
contractual arrangements by assessing and evaluating the performance of the
service providers, including financial, operational and compliance controls and
risk management systems.
On an ongoing basis compliance reports are provided at each Board meeting from
the Administrator, Northern Trust International Fund Administration Services
(Guernsey) Limited, and the Audit Committee reviews the Service Organisation
Controls (SOC 1) report on this service provider.
The extent and quality of the systems of internal control and compliance
adopted by the Investment Manager and the Investment Adviser are also reviewed
on a regular basis, and the primary focus at each Board meeting is a review of
investment performance and associated matters such as gearing, asset
allocation, marketing and investment relations, peer group information and
industry issues. The Board also closely monitors the level of discount and has
the ability to buy back shares in the market.
The Board believes that it has implemented an effective system for the
assessment of risk, but the Company has no staff, has no internal audit
function and can only give reasonable but not absolute assurance that there has
been no material financial misstatement or loss.
COMMITTEES
The Board has established an Audit Committee which is described below.
The Board has not appointed a Management Engagement Committee or Nomination
Committee but has chosen to assess and review the performance of the Board and
contractual arrangements with the Investment Manager, Investment Adviser and
service providers to the Company on an annual basis by the entire Board who are
independent non-executive Directors. Details of the Investment Management
Agreement are shown in Note 6 to the Financial Statements.
Audit Committee
The Audit Committee operates within defined terms of reference. The Audit
Committee's responsibilities include, but are not limited to (see below for
more details):
- review of draft annual and interim report and financial statements;
- review of independence, objectivity, qualifications and experience of the
auditor; and
- review of audit fees.
The Audit Committee is appointed by the Board and comprises Mr Ehrmann as
Chairman, Mr Pavry, Mr Lamb, Mr Moule and Ms Soga.
In accordance with the AIC Code, the Board has determined that Mr Ehrmann has
recent and relevant financial experience. All other members of the Audit
Committee are deemed to have the necessary ability and experience to understand
the Financial Statements. For more information on the Audit Committee,
including their relevant sector experience, please see above.
The Chairman is also a member of the Audit Committee and in accordance with the
AIC Code, the Board has deemed this appropriate as all of the other members of
the Audit Committee are independent non-executive Directors and the Chairman
may not be the Chairman of the Audit Committee.
The function of the Audit Committee is to ensure that the Company maintains the
highest standards of integrity, financial reporting and internal control.
The Audit Committee meets with the Company's external auditor annually to
review the Audited Financial Statements.
The Audit Committee meets at least twice a year and may meet more frequently if
the Audit Committee deems necessary or if required by the Company's auditor.
The Company's auditor is advised of the timing of the Audit Committee Meetings.
The Audit Committee has access to the Compliance officers of the Investment
Manager, the Administrator and the Depositary.
The Company Secretary is the Secretary of the Audit Committee and attends all
meetings of the Audit Committee.
The Audit Committee is authorised by the Board to investigate any activity
within its terms of reference. It is authorised to obtain outside legal or
other independent professional advice and to secure the attendance of outsiders
with relevant experience and expertise if it considers this necessary.
SHAREHOLDER RELATIONS
The Board monitors the trading activity and shareholder profile on a regular
basis and maintains contact with the Company's stockbroker to ascertain the
views of shareholders. Shareholders where possible are contacted directly on a
regular basis, and shareholders are invited to attend the Company's annual
general meeting in person and ask questions of the Board and Investment
Adviser. Following the annual general meeting each year the Investment Adviser
gives a presentation to the shareholders.
The Company reports to shareholders twice a year and a proxy voting card is
sent to shareholders with the Annual Report and Audited Financial Statements.
The Registrar monitors the voting of the shareholders and proxy voting is taken
into consideration when votes are cast at the annual general meeting.
Shareholders may contact the Directors via the Company Secretary. In addition,
estimated NAVs are published on a daily basis and monthly factsheets are
published on the Investment Manager's website at
www.atlantisjapangrowthfund.com.
EVALUATION OF PERFORMANCE OF INVESTMENT MANAGER AND INVESTMENT ADVISER
The investment performance is reviewed at each regular Board meeting at which
representatives of the Investment Manager and Investment Adviser are required
to provide answers to any questions raised by the Board. The Board has
instigated an annual formal review of the Investment Manager and Investment
Adviser which includes consideration of:
- performance compared with benchmark and peer group;
- investment resources dedicated to the Company;
- investment management fee arrangements and notice period compared with
peer group; and
- marketing effort and resources provided to the Company.
In the opinion of the Directors the continuing appointment of the Investment
Manager and Investment Adviser on the terms agreed is in the interests of the
Company's shareholders as a whole.
By order of the Board
Noel Lamb Philip Ehrmann
Chairman Director
5 July 2022
Audit Committee Report
For the financial year ended 30 April 2022
On the following pages, we present the Audit Committee's Report, setting out
the responsibilities of the Audit Committee and its key activities for the
financial year ended 30 April 2022.
The Audit Committee has continued its detailed scrutiny of the appropriateness
of the Company's system of risk management and internal controls, the
robustness and integrity of the Company's financial reporting, along with the
external audit process. The Committee has devoted time to ensuring that
controls and processes have been properly established, documented and
implemented.
During the course of the financial year, the information that the Audit
Committee has received has been timely and clear and has enabled the Audit
Committee to discharge its duties effectively.
The Audit Committee supports the aims of the UK Code, the AIC code and the best
practice recommendations of other corporate governance organisations and the
Association of Investment Companies ("AIC"), and believes that reporting
against the revised AIC Code allows the Audit Committee to further strengthen
its role as a key independent oversight Committee.
ROLE AND RESPONSIBILITIES
The primary function of the Audit Committee is to assist the Board in
fulfilling its oversight responsibilities. This includes reviewing the
financial reports and other financial information before publication.
In addition, the Audit Committee reviews the systems of internal controls on a
continuing basis that the Investment Manager and the Board have established
with respect to finance, accounting, risk management, compliance, fraud and
audit. The Committee also reviews the accounting and financial reporting
processes, along with reviewing the roles, independence and effectiveness of
the external auditor.
The ultimate responsibility for reviewing and approving the Annual Report and
Audited Financial Statements remains with the Board.
The Audit Committee's full terms of reference can be obtained by contacting the
Company's Administrator.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board, as a whole, including the Audit Committee members, considers the
nature and extent of the Company's risk management framework and the risk
profile that is acceptable in order to achieve the Company's strategic
objectives. As a result, it is considered that the Board has fulfilled its
obligations under the AIC Code.
The Audit Committee continues to be responsible for reviewing the adequacy and
effectiveness of the Company's on-going risk management systems and processes.
Its system of internal controls, along with its design and operating
effectiveness, is subject to review by the Audit Committee through reports
received from the Investment Manager, Investment Adviser and Depositary, along
with those from the Administrator and external auditor.
The Audit Committee has reviewed the need for an internal audit function and
has decided that the systems and procedures employed by the Investment Manager,
Investment Adviser, Administrator and Depositary provide sufficient assurance
that a sound system of risk management and internal control, which safeguards
shareholders' investments and the Company's assets, is maintained. An internal
audit function is therefore considered unnecessary.
FRAUD, BRIBERY AND CORRUPTION
The Audit Committee has relied on the overarching requirement placed on all
service providers under the relevant agreements to comply with applicable law.
The Audit Committee reviews the service provider policies and receives a
confirmation from all service providers that there have been no instances of
fraud or bribery.
FINANCIAL REPORTING AND SIGNIFICANT FINANCIAL ISSUES
The Audit Committee assesses whether suitable accounting policies have been
adopted. The Audit Committee reviews accounting papers prepared by the
Investment Manager and Administrator which provide details on the main
financial reporting judgements.
The Audit Committee also reviews reports by the external auditor which
highlight any issues with respect to the work undertaken on the audit.
The significant issues considered during the financial year by the Audit
Committee in relation to the Financial Statements and how they were addressed
is detailed below:
(i) Valuation of Investments:
The Company's investments had a fair value of £91,525,470 as at 30 April 2022
and represent a substantial portion of the assets of the Company. As such this
is the largest factor in relation to the consideration of the Financial
Statements. These investments are valued in accordance with the Significant
Accounting Policies set out in Note 2 (f) to the Financial Statements. The
Audit Committee considered the valuation of the investments held by the Company
as at 30 April 2022 to be correct from information provided by the Investment
Manager, Investment Adviser, Depositary and Administrator on their processes
for the valuation of these investments.
(ii) Income Recognition:
The Audit Committee considered the income from investments recorded in the
Financial Statements for the financial year ended 30 April 2022. Income from
investments is recognised in accordance with the Significant Accounting
Policies set out in Note 2 (d). The Audit Committee reviewed information
obtained from the Investment Manager and was satisfied that income (excluding
net realised and unrealised gains/losses on investments), having arisen solely
from dividends declared by listed equities, was correctly stated in the
Financial Statements.
(iii) Review of the Financial Statements:
At the request of the Audit Committee, the Administrator confirmed that it was
not aware of any material misstatements, including matters relating to
Financial Statements presentation. At the Audit Committee meeting to review the
Annual Report and Audited Financial Statements, the Audit Committee received
and reviewed the audit findings report from the external auditor. On the basis
of its review of this report, the Audit Committee is satisfied that the
external auditor has fulfilled its responsibilities with diligence and
professional scepticism. The Audit Committee advised the Board that these
Annual Report and Audited Financial Statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's position, performance, business model and
strategy. The Audit Committee will consider and make recommendations to the
Board in relation to the appointment and re-appointment of the Company's
external auditor. The Audit Committee will discuss with the external auditor
concerning such issues as compliance with accounting standards and any
proposals which the external auditor has made regarding internal auditing
procedures.
(iv) COVID-19
COVID-19 continues to adversely affected the global economy and this may
negatively impact the Company's performance.
The Audit Committee is satisfied that appropriate disclosures have been
included in the Financial Statements.
EXTERNAL AUDITOR
The Audit Committee has responsibility for making a recommendation on the
appointment, reappointment and removal of the external auditor.
During the financial year the Audit Committee received and reviewed the audit
plan, audit findings report and audit report from the external Auditor. To
assess the effectiveness of the external audit process, the auditor was asked
to articulate the steps that they have taken to ensure objectivity and
independence, including where the auditor provides non-audit services. The
Audit Committee also reviewed the work done during the financial year by the
external auditor as part of the audit process and from time to time compares
their effectiveness as well as their costs with the benefit of the experience
they have had in other investment management houses and relevant contexts.
These steps enable the Audit Committee to monitor the auditor's performance,
behaviour and effectiveness during the exercise of their duties, which informs
the decision to recommend reappointment on an annual basis. The Audit Committee
under its terms of reference reviews the appointment and re-appointment of the
external auditor typically at its December meeting in advance of the reviewing
the audit approach for the Annual Report and Audited Financial Statements.
The Committee ensures that auditor objectivity and independence are safeguarded
by requiring pre-approval by the Committee for all non-audit services provided
to the Company, which takes into consideration:
- confirmation from the auditor that they have adequate arrangements in
place to safeguard their objectivity and independence in carrying out such
work, within the meaning of the regulatory and professional requirements to
which they are subject;
- the fees to be incurred, relative to the audit fees;
- the nature of the non-audit services; and
- whether the auditor's skills and experience make it the most suitable
supplier of such services and whether they are in a position to provide them.
The following table summarises the remuneration paid for services of Grant
Thornton Limited during the financial year ended 30 April 2022 and 30 April
2021.
For the financial year ended 30
April 2022
£
Annual audit 36,750
For the financial year ended 30
April 2021
£
Annual audit 35,000
For any questions on the activities of the Audit Committee not addressed in the
foregoing, a member of the Audit Committee will attend each annual general
meeting to respond to such questions.
The Audit Committee Report was approved on 5 July 2022 and signed on behalf of
the Audit Committee by:
Philip Ehrmann
Chairman, Audit Committee
Depositary Statement
For the financial year ended 30 April 2022
REPORT OF THE DEPOSITARY TO THE SHAREHOLDERS
Northern Trust (Guernsey) Limited has been appointed as Depositary to Atlantis
Japan Growth Fund Limited (the "Company") in accordance with the requirements
of Article 36 and Articles 21(7), (8) and (9) of the Directive 2011/61/EU of
the European Parliament and of the Council of 8 June 2011 on Alternative
Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and
Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the "AIFM Directive").
We have enquired into the conduct of Quaero Capital LLP (the "AIFM") for the
financial year ended 30 April 2022, in our capacity as Depositary to the
Company.
This report, including the review provided below, has been prepared solely for
the shareholders of the Company. We do not, in giving this report, accept or
assume responsibility for any other purpose or to any other person to whom this
report is shown.
Our obligations as Depositary are stipulated in the relevant provisions of the
AIFM Directive and the relevant sections of Commission Delegated Regulation
(EU) No 231/2013 (collectively the "AIFMD legislation").
Amongst these obligations is the requirement to enquire into the conduct of the
AIFM and the Company and their delegates in each annual accounting period.
Our report shall state whether, in our view, the Company has been managed in
that period in accordance with the AIFMD legislation. It is the overall
responsibility of the AIFM to comply with these provisions. If the AIFM or
their delegates have not so complied, we, as the Depositary, will state why
this is the case and outline the steps which we have taken to rectify the
situation.
BASIS OF DEPOSITARY REVIEW
The Depositary conducts such reviews as it, in its reasonable discretion,
considers necessary in order to comply with its obligations and to ensure that,
in all material respects, the Company has been managed (i) in accordance with
the limitations imposed on its investment and borrowing powers by the
provisions of its constitutional documentation and the appropriate regulations
and (ii) otherwise in accordance with the constitutional documentation and the
appropriate regulations. Such reviews vary based on the type of company, the
assets in which a company invests and the processes used, or experts required,
in order to value such assets.
REVIEW
In our view, the Company has been managed during the year, in all material
respects:
(i) in accordance with the limitations imposed on the investment and borrowing
powers of the Company by the constitutional document and by the AIFMD
legislation; and
(ii) otherwise in accordance with the provisions of the constitutional document
and the AIFMD legislation.
For and on behalf of
Northern Trust (Guernsey) Limited
5 July 2022
Independent Auditor's Report to the Members of Atlantis Japan Growth Fund
Limited
For the financial year ended 30 April 2022
Opinion
We have audited the financial statements of Atlantis Japan Growth Fund Limited
(the 'Company') for the year ended 30 April 2022, which comprise the Statement
of Comprehensive Income, the Statement of Changes in Equity, the Statement of
Financial Position, the Statement of Cash Flows and notes to the financial
statements, including a summary of significant accounting policies. The
financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards as adopted by
the European Union (IFRSs).
In our opinion, the financial statements:
· give a true and fair view of the state of the Company's affairs as at 30
April 2022 and of its loss for the year then ended;
· are in accordance with IFRSs; and
· comply with the Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the 'Auditor's responsibilities for the audit of the
financial statements' section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to our audit of
the financial statements in Guernsey, including the FRC's Ethical Standard as
applied to listed public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the directors' use
of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company's ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify the auditor's
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
Our evaluation of the directors' assessment of the Company's ability to
continue to adopt the going concern basis of accounting included:
· We assessed the determination made by the Board of Directors that the
Company is a going concern and hence the appropriateness of the financial
statements to be prepared on going concern basis;
· Evaluation of the Company's liquidity, solvency and ability to meet its
ongoing liabilities as they fall due, in what we believed would be the
Company's worst-case scenario;
· We obtained management's assessment of going concern and corroborated
management's key assertion that investments held could easily be converted to
cash (if required), by review of the frequency of investment trading activity
during the year and shortly after the year end;
· We challenged the appropriateness of management's key assertions by
challenging the assumptions used including their expectation on the impact of
the continuing challenge of Covid-19 and the impact of the Russian/Ukraine
crisis on the markets; and
· We assessed the disclosures in the financial statements relating to going
concern to ensure they were fair, balanced and understandable and in compliance
with IAS 1 'Presentation of Financial Statements'.
In our evaluation of the directors' conclusions, we considered the inherent
risks associated with the Company's business model including effects arising
from macro-economic uncertainties such as Covid-19, we assessed and challenged
the reasonableness of estimates made by the directors and the related
disclosures and analysed how those risks might affect the Company's financial
resources or ability to continue operations over the going concern period.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Company's ability to continue
as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors' use
of the going concern basis of accounting in the preparation of the financial
statements is appropriate.
In relation to the Company's reporting on how they have applied the UK
Corporate Governance Code, we have nothing material to add or draw attention to
in relation to the directors' statement in the financial statements about
whether the directors considered it appropriate to adopt the going concern
basis of accounting.
The responsibilities of the directors with respect to going concern are
described in the 'Responsibilities of directors for the financial statements'
section of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those
that had the greatest effect on:
Ø the overall audit strategy;
Ø the allocation of resources in the audit; and
Ø directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
In the graph below, we have presented the key audit matters, significant risks
and other risks relevant to the audit.
Key Audit Matter How our scope addressed the matter
Existence and valuation of the portfolio In responding to the key audit matter, we
of investments performed the following audit procedures:
The portfolio of investments is fully o We obtained an understanding of the
comprised of quoted investments which are internal control environment and inspected
held by an external Custodian and valued the Administrator's 'System and
using publicly available quoted market Organization Controls (SOC 1) Report' and
prices, in accordance with IFRS 9 associated Independent Service Auditor
Financial Instruments and IFRS 13 Fair Report to identify if controls applicable
Value Measurement. to the audit of the existence and valuation
Whilst the valuation of these investments of investment balances had been included
is not considered complex, nor does it within the SOC 1 report, tested by the
involve significant judgements and Independent Service Auditor and that they
estimates to be made by management, the were concluded as operating effectively
market value of investments is material during the year;
to the Company, as they represent 105% of o We agreed all the shares/units held
the net asset value as at 30 April 2022 within the investment portfolio to third
and represent a balance considerably party confirmation obtained from the
larger than any other reported balance Custodian;
within the Company's financial o We compared the value per share/unit
statements. of each investment held within the
investment portfolio to prices stated on
publicly available pricing sources.
o We selected a sample of investment
sales and purchases which occurred during
the year and agreed the transactions
selected to supporting contracts and cash
payments/receipts; and
Due to the financial significance of the o Where applicable, we assessed the foreign
investments held at the year-end, an exchange rate applied to convert the value
error or misstatement regarding the of all investments to GBP and concluded on
recognition/ inclusion of a single whether the foreign exchange rate applied
investment could lead to a material was reasonable in comparison to publicly
misstatement within the financial available rates.
statements. As the risk of potential
financial statement impact was considered
high, the existence and valuation of the
portfolio of investments was considered
to be the most significant assessed risk
of material misstatement.
Relevant disclosures in the Annual Report Our results
and Audited Financial Statements Based on our work, we did not find any
o Audit committee report material misstatement relating to the
o Financial Statements: note 2(f), valuation and existence of investments.
Investments held at fair value through
profit and loss; note 15, Financial risk
management objectives and policies and
note 16, Investments held at fair value
through profit or loss.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit,
and in evaluating the effect of identified misstatements on the audit and of
uncorrected misstatements, if any, on the financial statements and in forming
the opinion in the auditor's report.
Materiality was determined as follows:
Materiality measure
Materiality for We define materiality as the magnitude of misstatement in the
financial financial statements that, individually or in the aggregate,
statements as a could reasonably be expected to influence the economic decisions
whole of the users of these financial statements. We use materiality
in determining the nature, timing and extent of our audit work.
Materiality £873,000, which is 1% of the Company's net asset value as at 30
threshold April 2022.
Significant In determining materiality, we made the following significant
judgements made judgements:
by auditor in Ø A key performance indicator/metric for users of the financial
determining statements is net asset value of the Company, specifically the
materiality change in net asset value per share. It is indicated in the
Strategic Report that the Board considers the change in Net
Asset Value as a measure in assessing the Company's success in
achieving its objectives.
Ø Significant income and consequently profit/loss for the year
is dependent upon the transactions within, and the valuation of,
the investment portfolio.
Ø Net asset value is the generally accepted measure used for
similar companies within the industry.
Materiality for the current year is lower than the level that we
determined for the year ended 30 April 2021 to reflect the
decrease in net asset value as at 30 April 2022 compared to the
net asset value as at 30 April 2021.
Performance We set performance materiality at an amount less than
materiality used materiality for the financial statements as a whole to reduce to
to drive the an appropriately low level the probability that the aggregate of
extent of our uncorrected and undetected misstatements exceeds materiality for
testing the financial statements as a whole.
Performance £611,000, which is 70% of financial statement materiality.
materiality
threshold
Significant In determining performance materiality, we made the following
judgements made significant judgements:
by the auditor Ø No misstatements or control deficiencies were identified in
in determining the prior year audit and our assessment of the control
the performance environment in the current year, concluded there were strong
materiality controls around the relevant business processes and financial
reporting activities.
Specific We determine specific materiality for one or more particular
materiality classes of transactions, account balances or disclosures for
which misstatements of lesser amounts than materiality for the
financial statements as a whole could reasonably be expected to
influence the economic decisions of users taken on the basis of
the financial statements.
Our assessment did not highlight any particular classes of
transactions, account balances or disclosures where a lower
level of specifically materiality was required.
Communication of We determine a threshold for reporting unadjusted differences to
misstatements to the audit committee.
the audit
committee
Threshold for Misstatements below £43,600 and misstatements that, in our view,
communication warrant reporting on qualitative grounds.
The graph below illustrates how performance materiality interacts with our
overall materiality and the tolerance for potential uncorrected misstatements.
An overview of the scope of our audit
The day-to-day management of the Company's investment portfolio, the custody of
its investments and the maintenance of the Company's accounting records is
outsourced to third-party service providers. Accordingly, our audit work is
focussed on obtaining an understanding of, and evaluating, internal controls
at the Company and the third-party service providers (which included obtaining
the SOC 1 Report of the Administrator), and inspecting records and documents
held by these third-party service providers. The Company engages an investment
manager, Quaero Capital LLP, to manage the investment portfolio. We had
interaction with the investment manager which included correspondence on
Company performance, in completing aspects of our audit work.
We undertook substantive testing on significant transactions, balances and
disclosures, the extent of which was based on various factors such as our
overall assessment of the control environment, the effectiveness of controls
over individual systems and the management of specific risks. The majority of
our substantive testing focused on the audit of the investment portfolio and
associated disclosures as at the reporting date and the movement in investment
holdings during the year. There were no changes in approach from the previous
period.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the Annual Report and Audited Financial
Statements, other than the financial statements and our auditor's report
thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is
to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement of the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to
which the Companies (Guernsey) Law, 2008 requires us to report to you if, in
our opinion:
· proper accounting records have not been kept by the Company; or
· the Company's financial statements are not in agreement with the
accounting records; or
· we have not obtained all the information and explanations, which to the
best of our knowledge and belief, are necessary for the purposes of our audit.
Corporate governance statement
The Listing Rules require us to review the directors' statement in relation to
going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Company's compliance with the provisions of the UK
Corporate Governance Code specified for our review. The Company has also
reported compliance against the GFSC Finance Sector Code of Corporate
Governance and the AIC Code of Corporate Governance (the "Code") which has been
endorsed by the UK Financial Reporting Council as being consistent with the UK
Corporate Governance Code to meet the Company's obligations, as an investment
company, under the Listing Rules of the FCA. Based on the work undertaken as
part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
· the directors' statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of
accounting in preparing the financial statements and the directors'
identification of any material uncertainties to the Company's ability to
continue to do so over a period of at least twelve months from the date of
approval of the financial statements;
· the directors' explanation in the Annual Report and Audited Financial
Statements as to how they have assessed the prospects of the Company, over what
period they have done so and why they consider that period to be appropriate,
and their statement as to whether they have a reasonable expectation that the
Company will be able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions;
· the directors' statement that they consider the annual report and
financial statements taken as a whole is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Company's
performance, business model and strategy;
· the directors' confirmation in the annual report that they have carried
out a robust assessment of the principal and emerging risks facing the Company
(including the impact of Covid-19) and the disclosures in the annual report
that describe the principal risks, procedures to identify emerging risks and an
explanation of how they are being managed or mitigated (including the impact of
Covid-19);
· the section of the annual report that describes the review of the
effectiveness of Company's risk management and internal control systems,
covering all material controls, including financial, operational and compliance
controls; and
· the section of the annual report describing the work of the audit
committee, including significant issues that the audit committee considered
relating to the financial statements and how these issues were addressed.
Responsibilities of directors for the financial statements
As explained more fully in the statement of directors' responsibilities, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities, including
fraud. Owing to the inherent limitations of an audit, there is an unavoidable
risk that material misstatements in the financial statements may not be
detected, even though the audit is properly planned and performed in accordance
with the ISAs (UK).
The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
· We obtained an understanding of the legal and regulatory frameworks
applicable to the Company and the investment industry in which it operates,
becoming familiar with applicable laws and regulations. We determined that the
following laws and regulations were most significant:
o IFRSs;
o The Companies (Guernsey) Law, 2008;
o The Protection of Investors (Bailiwick of Guernsey) Law, 2020;
o The UK Corporate Governance Code;
o The Association of Investment Companies (AIC) Code of Corporate Governance
and GFSC Finance Sector Code of Corporate Governance.
o FCA Listing Rules;
o FCA Disclosure Guidance and Transparency Rules;
o The Authorised Closed-Ended Investment Scheme Rules and Guidance 2021;
o The Alternative Investment Fund Managers Directive; and
o Applicable tax legislation in Guernsey and the United Kingdom.
· We obtained an understanding of how the Company is complying with those
legal and regulatory frameworks by making inquiries of management and those
responsible for legal and compliance procedures. We corroborated our inquiries
through our review of board minutes and reports prepared for Board meetings and
Audit Committee meetings.
· In assessing the potential risks of material misstatement we:
o Obtained an understanding of the Company's operations, including the nature
of its revenue sources and investment operations and of its objectives and
strategies to understand the classes of transactions, account balances,
expected financial statement disclosures and business risks that may result in
risks of material misstatement;
o Obtained an understanding of the applicable statutory provisions;
o Reviewed the policies and procedures implemented by the Company to review
and monitor compliance with its regulatory requirements; and
o Reviewed compliance reports prepared by the Administrator/Secretary and
presented to the Board throughout the year.
· We assessed the susceptibility of the Company's financial statements to
material misstatement, including how fraud might occur. We also considered
investor focus and management remuneration which may create an incentive for
management to manipulate profit. We considered the possibility of fraud through
management override and, based on our understanding, we designed and
incorporated the following audit procedures into our audit strategy to identify
instances of fraud and non-compliance with relevant laws and regulations:
o Identifying and assessing relevant controls management has in place to
prevent and detect fraud;
o Identifying and testing journal entries, in particular any journal entries
posted with unusual account combinations; and
o Assessing the extent of compliance with the relevant laws and regulations as
part of our procedures on the related financial statement item.
· These audit procedures were designed to provide reasonable assurance that
the financial statements were free from fraud or error. The risk of not
detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error and detecting irregularities that result
from fraud is inherently more difficult than detecting those that result from
error, as fraud may involve collusion, deliberate concealment, forgery or
intentional misrepresentations. Also, the further removed non-compliance with
laws and regulations is from events and transactions reflected in the financial
statements, the less likely we would become aware of it.
· It was assessed and concluded that the engagement team collectively have
the appropriate competence and capabilities to recognise non-compliance with
laws and regulations.
· Relevant laws and regulations and potential fraud risks were communicated
to all engagement team members. We remained alert to any indications of fraud
or non-compliance with laws and regulations throughout the audit.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the
Members on 9 September 2021 to audit the financial statements for the year
ended 30 April 2022 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and
reappointments of the firm is 3 years, covering the periods ended 30 April 2020
to 30 April 2022.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the Company and we remain independent of the Company in conducting
our audit.
Our audit opinion is consistent with the additional report to the audit
committee.
Use of our report
This report is made solely to the Company's members, as a body, in accordance
with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been
undertaken so that we might state to the Company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Cyril Swale
For and on behalf of Grant Thornton Limited
Chartered Accountants
St Peter Port
Guernsey
Date: 5 July 2022
Statement of Comprehensive Income
For the financial year ended 30 April 2022
30 April 2022 30 April 2021
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Income
4 Net (losses)/gains on - (23,473) (23,473) - 23,423 23,423
investments held at fair
value through profit or loss
Net gains/(losses) on foreign - 46 46 - (261) (261)
exchange
Dividend income 1,589 - 1,589 1,203 - 1,203
1,589 (23,427) (21,838) 1,203 23,162 24,365
Expenses
6 Investment management fees (1,107) - (1,107) (1,187) - (1,187)
7 Depositary fees (95) - (95) (101) - (101)
8 Administration fees (140) - (140) (150) - (150)
Registrar and transfer agent - - - (13) - (13)
fees
9 Directors' fees and expenses (144) - (144) (124) - (124)
Insurance fees (6) - (6) (5) - (5)
Audit fees (43) - (43) (38) - (38)
Printing and advertising fees (12) - (12) (6) - (6)
Legal and professional fees (92) - (92) (79) - (79)
Listing fees - - - (19) - (19)
10 Research costs (101) - (101) (97) - (97)
Miscellaneous expenses (89) - (89) (54) - (54)
(1,829) - (1,829) (1,873) - (1,873)
Finance cost
Interest expense and bank (21) - (21) (9) - (9)
charges
(Loss)/profit before taxation (261) (23,427) (23,688) (679) 23,162 22,483
11 Taxation (243) - (243) (184) - (184)
(Loss)/profit for the
financial year (504) (23,427) (23,931) (863) 23,162 22,299
Total comprehensive (loss)/ (504) (23,427) (23,931) (863) 23,162 22,299
income for the financial year
12 (Deficit)/earnings per £ £ £(0.574) £ £0.554 £0.533
ordinary share (0.012) (0.562) (0.021)
In arriving at the result for the financial year, all amounts above relate to
continuing activities. During the financial year no other comprehensive income
was required to be accounted for.
The total column in this statement represents the Company's Statement of
Comprehensive Income, prepared in accordance with IFRS. The supplementary
revenue and capital columns are both prepared under guidance published by the
Association of Investment Companies.
The notes below form an integral part of these financial statements.
Statement of Changes in Equity
For the financial year ended 30 April 2022
Accumulated
Capital Capital Capital other
Ordinary Share Revenue reserve/ reserve/ reserve/ comprehensive
Share
capital premium reserve realised unrealised exchange income Total
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balances at 1 May 2021 - - (25,337) 89,356 60,776 (14,437) 6,143 116,501
Movements during the financial
year
14 Shares bought into treasury - - - (779) - - - (779)
4 Net unrealised loss on - - - 30,434 (30,434) - - -
investments held at fair value
through profit or loss
Net gain on foreign exchange - - - (46) - 46 - -
18 Distributions to shareholders - - - (4,512) - - - (4,512)
Total comprehensive loss - - (504) (23,427) - - - (23,931)
Balances at 30 April 2022 - - (25,841) 91,026 30,342 (14,391) 6,143 87,279
The notes below form an integral part of these financial statements.
Accumulated
Capital Capital Capital other
Ordinary Share Revenue reserve/ reserve/ reserve/ comprehensive
Share
capital premium reserve realised unrealised exchange income Total
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balances at 1 May 2020 - - (24,474) 75,176 55,244 (14,176) 6,143 97,913
Movements during the financial
year
4 Net unrealised gain on - - - (5,532) 5,532 - - -
investments held at fair value
through profit or loss
Net loss on foreign exchange - - - 261 - (261) - -
18 Distributions to shareholders - - - (3,711) - - - (3,711)
Total comprehensive income - - (863) 23,162 - - - 22,299
Balances at 30 April 2021 - - (25,337) 89,356 60,776 (14,437) 6,143 116,501
The notes below form an integral part of these financial statements.
Statement of Financial Position
As at 30 April 2022
30 April 2022 30 April
2021
Notes £'000 £'000
Non-current assets
15,16 Investments held at fair value through profit 91,525 116,946
or loss
Current assets
Cash and cash equivalents 72 12
Due from brokers - 322
Dividends receivable 622 398
Prepaid expenses and other receivables 5 25
699 757
Current liabilities
Bank overdraft (4,605) (667)
Due to brokers (107) (291)
Payables and accrued expenses (233) (244)
(4,945) (1,202)
Net current liabilities (4,246) (445)
Non-current liabilities - -
17 Net assets
87,279 116,501
Equity
Ordinary share capital - -
Share premium - -
Revenue reserve (25,841) (29,048)
Capital reserve 106,977 139,406
Accumulated other comprehensive income 6,143 6,143
Net assets attributable to equity shareholders 87,279 116,501
17 Net asset value per ordinary share* £2.11 £2.79
Approved by the Board and authorised for issue on 5 July 2022 and signed on its
behalf by:
Noel Lamb Philip Ehrmann
Chairman Director
The notes below form an integral part of these financial statements.
Statement of Cash Flows
For the financial year ended 30 April 2022
30 April 30 April
2022 2021
£'000 £'000
Notes
Cash flows from operating activities
Profit before taxation (23,688) 22,483
Adjustments to reconcile profit before taxation
to net cash flows from operating activities
4 Net realised gains on investments held at fair (6,961) (17,891)
value through profit or loss
4 Net unrealised losess/(gains) on investments 30,434 (5,532)
held at fair value through profit or loss
Net exchange gains on cash and cash equivalents - 9
Interest expense and bank charges 21 9
Increase in due from brokers 322 (32)
(Increase)/decrease in dividends receivable (224) 14
Decrease/(increase) in prepaid expenses and 20 (8)
other receivables
Decrease in due to brokers (184) (257)
(Decrease)/increase in payables and accrued (11) 5
expenses
11 Taxation paid (243) (184)
(514) (1,384)
16 Purchase of investments (55,642) (52,294)
16 Sale of investments 57,590 53,568
1,948 1,274
Net cash inflow/(outflow) from operating 1,434 (110)
activities
Cash flows from financing activities
Interest paid (21) (9)
18 Distributions paid to shareholders (4,512) (3,711)
18 Redemptions (779) -
Net cash outflow from financing activities (5,312) (3,720)
Net decrease in cash and cash equivalents (3,878) (3,830)
Net exchange losses on cash and cash equivalents - (9)
Cash and cash equivalents at beginning of (655) 3,184
financial year
Cash and cash equivalents at end of financial (4,533) (655)
year
The notes below form an integral part of these financial statements.
Notes to the Financial Statements
For the financial year ended 30 April 2022
1. GENERAL INFORMATION
Atlantis Japan Growth Fund Limited (the "Company") was incorporated in Guernsey
on 13 March 1996. The Company commenced activities on 10 May 1996. The Company
is an authorised closed-ended investment scheme registered and domiciled in
P.O. Box 255, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3QL,
Channel Islands. The Company's equity shares are traded on the London Stock
Exchange.
As an investment trust, the Company is not regulated as a collective investment
scheme by the Financial Conduct Authority. However, it is subject to the UKLA
Listing Rules, Prospectus Rules, Disclosure Guidance and Transparency Rules and
the rules of the London Stock Exchange.
The Company's investment objective is to achieve long term capital growth
through investing wholly or mainly in listed Japanese equities.
The Company's investment activities are managed by Quaero Capital LLP
("Investment Manager") with the administration delegated to Northern Trust
International Fund Administration Services (Guernsey) Limited.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial
statements are set out below. These policies have been consistently applied to
all the financial years presented, unless otherwise stated.
a) Basis of preparation
The Financial Statements of the Company have been prepared in accordance with
IFRS. The Financial Statements have been prepared under the historical cost
convention, as modified by the revaluation of investments held at fair value
through profit or loss, and in accordance with the Association of Investment
Companies ("AIC") Statement of Recommended Practice ("SORP") for Investment
Trust Companies and Venture Capital Trusts to the extent it is not in conflict
with IFRS and the Company's Principal Documents.
The preparation of the Financial Statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and the reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from those
estimates. As at the financial year ended 30 April 2022, the Company, being
solely invested in listed equities, did not hold any investment requiring the
use of significant estimation to determine their value. There were no other
significant estimates for the financial year ended 30 April 2022.
The significant accounting policies adopted are consistent with those of the
previous financial year.
New standards not yet adopted
There were no new standards or interpretations effective for the first time for
periods beginning on or after 1 May 2021 that had a significant effect on the
Company's Financial Statements. Furthermore, none of the amendments to
standards that are effective from that date had a significant effect on these
Financial Statements.
Other accounting standards and interpretations have been published and will be
mandatory for the Company's accounting periods beginning on or after 1 May 2022
or later periods. On review of the future standards and interpretations, the
impact of these standards is not expected to be material to the reported
results and financial position of the Company.
Critical judgements
The Board consider GBP the currency that most faithfully represents the
economic effect of the underlying transactions, events and conditions. GBP is
the currency in which the Company measures its performance. This determination
also considers the competitive environment in which the Company is compared to
other European investment products. The presentation currency for these
financial statements is GBP.
b) Going concern
The Financial Statements have been prepared on a going concern basis in line
with the Directors' belief that the Company will continue in business for the
foreseeable future from the date of authorisation of the financial statements
(refer above for more details).
After making reasonable inquiries and assessing all data relating to the
Company's liquidity, particularly its holding of significant liquid level 1
assets, the Directors believe that the Company has adequate resources to
continue in operational existence for the foreseeable future and do not
consider there to be any threat, from COVID-19 or other issues, to the going
concern status of the Company. For these reasons, the Directors have adopted
the going concern basis in preparing the Financial Statements.
c) Presentation of the Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company,
supplementary information which analyses the Statement of Comprehensive Income
between items of a revenue and capital nature has been presented alongside the
Statement of Comprehensive Income.
d) Income recognition
Dividend income arising on the Company's investments is accounted for gross of
withholding tax on an ex-dividend basis or when the right to receive payment is
established.
e) Expenses
All expenses are recognised in the Statement of Comprehensive Income on an
accruals basis.
f) Investments held at fair value through profit or loss
(i) Classification and Measurement
The Company classifies its investments based on both the Company's business
model for managing those financial assets and the contractual cash flow
characteristics of those financial assets. The portfolio of the financial
assets is managed and performance is evaluated on a fair value basis. The
Company is primarily focussed on fair value information and uses that
information to assess the assets' performance and to make decisions.
The Company classifies its entire investment portfolio as financial assets or
liabilities as fair value through profit or loss. This includes forward
currency contracts of which none were held at the financial year end (30 April
2021: Nil). All financial assets are mandatorily measured as at fair value
through profit or loss with no assets being designated.
The Company's policy requires the Investment Manager and the Directors to
evaluate the information about these financial assets and liabilities on a fair
value basis together with other related financial information.
(ii) Recognition and Measurement
Investments are initially recognised at the trade date of purchase. They are
included initially at fair value, which is taken to be their cost (excluding
expenses incidental to the acquisition which are written off in the Statement
of Comprehensive Income, and allocated to the capital column of the Statement
of Comprehensive Income at the time of acquisition).
Investments are de-recognised when the rights to receive cash flows from the
investments have expired or the Company has transferred substantially all risks
and rewards of ownership.
Gains and losses on investments are included in the Statement of Comprehensive
Income as capital.
(iii) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value of financial assets and liabilities traded
in active markets (such as transferable securities and financial derivative
instruments traded publicly) are based on quoted market prices at the close of
trading on the reporting date.
If a quoted market price is not available on a recognised stock exchange or
from a broker/dealer for non-exchange traded financial instruments, the fair
value of the instrument is estimated using valuation techniques, including the
use of recent arm's length market transactions, reference to the current fair
value of another instrument that is substantially the same, discounted cash
flow techniques, option pricing models or any other valuation technique that
provides a reliable estimate of prices obtained in actual market transactions.
The fair value of financial derivative instruments, that are not
exchange-traded, is estimated at the amount that the Company would receive or
pay to terminate the contract at the reporting date, taking into account
current market conditions (volatility, appropriate yield curve) and the current
creditworthiness of the counterparties. Realised gains and losses on investment
disposals are calculated using the weighted average cost method.
g) Due from and due to brokers
Amounts due from and to brokers represent receivables for securities sold and
payables for securities purchased that have been contracted for but not yet
settled or delivered on the Statement of Financial Position date respectively.
These amounts are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.
At each reporting date, the Company shall measure the loss allowance on the
amounts due from broker at an amount equal to the lifetime expected credit
losses if the credit risk has increased significantly since initial
recognition. If, at the reporting date, the credit risk has not increased
significantly since initial recognition, the Company shall measure the loss
allowance at an amount equal to 12 month expected credit losses. Significant
financial difficulties of the broker, probability that the broker will enter
bankruptcy or financial reorganisation, and default in payments are all
considered indicators that a loss allowance may be required. If the credit risk
increases to the point that it is considered to be credit impaired interest
income will be calculated based on the gross carrying amount adjusted for the
loss allowance. A significant increase in credit risk is defined by management
as any contractual payment which is more than 30 days past due. Any contractual
payment is more than 90 days past due is considered credit impaired.
The effective interest method is a method of calculating the amortised cost of
a financial asset or financial liability and of allocating the interest income
or interest expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments or receipts
throughout the expected life of the financial instrument or, when appropriate,
a shorter period to the net carrying amount of the financial asset or financial
liability. When calculating the effective interest rate, the Company estimates
cash flows considering all contractual terms of the financial instrument but
does not consider future credit losses. The calculation includes all fees and
points paid or received between parties to the contract that are an integral
part of the effective interest rate, transaction costs and all other premiums
or discounts.
h) Other receivables
Other receivables are amounts due in the ordinary course of business. If
collection is expected in one year or less, they are classified as current
assets. If not, they are presented as non-current assets. Other receivables are
recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method.
i) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents
consist of cash and cash equivalents, as defined above, net of outstanding bank
overdrafts.
IAS 7 requires disclosures that:
. Enable users of the financial statements to evaluate changes in
liabilities arising from financing activities; and
. Provide a reconciliation of the opening and closing balances of
liabilities arising from financing activities in the statement of financial
position is suggested although not mandatory.
These requirements have been met as part of the Statement of Changes in Equity
for share capital transactions attributable to holders of ordinary shares and
Note 13 (Loans Payable).
j) Other payables and accrued expenses
Other payables and accrued expenses are obligations to pay for services that
have been acquired in the ordinary course of business. Other payables are
classified as current liabilities if payment is due within one year or less. If
not, they are presented as non-current liabilities. Other payables are
recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method.
k) Loans payable
All loans are initially recognised at cost, being the fair value of the
consideration received, less issue costs where applicable. After initial
recognition, all interest bearing loans and borrowings are subsequently
measured at amortised cost. Amortised cost is calculated by taking into account
discount or premium on settlement. Any costs of arranging any interest-bearing
loans are capitalised and amortised over the life of the loan.
The Company's loans are denominated in JPY. Gains and losses on foreign
exchange on loans are included in the Statement of Comprehensive Income as
capital.
l) Foreign currencies
The Company's investments are predominately denominated in JPY. The Company's
obligation to shareholders is denominated in GBP and, when appropriate, the
Company may hedge the exchange rate risk from JPY to GBP. Therefore, the
Company's functional currency is GBP. The Company's presentation currency is
GBP.
At each Statement of Financial Position date, assets and liabilities, which are
denominated in foreign currencies, are translated into the functional currency
at the closing rates of exchange. Transactions involving currencies other than
the functional currency are recorded at the exchange rates prevailing on the
dates of the transactions. Resulting exchange differences are recognised in
profit or loss in the Statement of Comprehensive Income.
Foreign exchange gains and losses relating to cash and cash equivalents are
presented in the Statement of Comprehensive Income within "Net gains/(losses)
on foreign exchange".
m) Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. In addition, the Company incurs withholding taxes imposed by certain
countries on dividend and interest income. Such income is recognised gross of
the taxes and the corresponding withholding tax is recognised as a tax expense.
The tax currently payable is based on the taxable profit for the financial
year. Any taxable profit differs from the net profit, if any, as reported in
the Statement of Comprehensive Income because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible.
The Company's liability for current tax is calculated using tax rates that were
applicable at the Statement of Financial Position date.
In line with the provisions of the AIC SORP, the allocation method used to
calculate tax relief on expenses presented against capital returns in the
supplementary information in the Statement of Comprehensive Income is the
"marginal basis".
Under this basis, if taxable income is capable of being offset entirely by
expenses presented in the revenue return column of the Statement of
Comprehensive Income, then no tax relief is transferred to the capital return
column.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the Financial
Statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. A
deferred tax liability is recognised in full for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Investment trusts which have approval as
such under Section 1158 of the Corporation Tax Act 2010 are not liable for
taxation on capital gains.
The carrying amount of deferred tax assets is reviewed at each Statement of
Financial Position date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.
Deferred tax is calculated at the tax rates that are enacted or substantively
enacted in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the Statement of Comprehensive Income,
except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
n) Capital reserve
The capital reserve distinguishes between gains/(losses) on sales or disposals
and valuation gains/(losses) on investments. The capital reserve consists of
realised gains/(losses) on investments, movement in valuation of gains/(losses)
on investments and gains/(losses) relating to foreign exchange. This is a
distributable reserve which may be utilised for the repurchase of share capital
and for distributions to shareholders by way of Dividend.
o) Share premium
Share Premium Account represents the excess of the issue price over the par
value on shares issued.
p) Revenue reserve
Revenue reserve is a distributable reserve and is the undistributed income of
the Company.
q) Accumulated other comprehensive income
Historical exchange differences on the translation of assets, liabilities,
income and expenses from functional to presentation currency are recognised in
accumulated other comprehensive income.
r) Treasury shares
Where the Company purchases its own share capital (whether into treasury or
cancellation), the consideration paid, which includes any directly attributable
costs (net of income taxes), is recognised as a deduction from equity
shareholders' funds through the capital reserve, which is a distributable
reserve.
When such shares are subsequently sold or reissued, the consideration received,
net of any directly attributable incremental transaction costs and the related
income tax effects, is recognised as an increase in equity and proceeds from
the reissue of treasury shares are transferred to/from the capital reserve.
Shares held in treasury are not taken into account in determining earnings per
share detailed in Statement of Comprehensive Income and NAV per share detailed
in Note 17.
s) Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported in the
Statement of Financial Position when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the Company or the counterparty.
t) Ordinary shares
The Company's ordinary shares were redeemable in the capital of the Company at
no par value and are classified as equity in accordance with the Company's
Articles of Incorporation.
u) Subscriber shares
The Company's subscriber shares are classified as equity in accordance with the
Company's Articles of Incorporation. These shares do not participate in the
profits of the Company. For more information please see Note 14.
v) Dividend distribution
Dividend distribution to the Company's shareholders is recognised as a
liability in the Company's financial statements and disclosed in the Statement
of Changes in Equity in the period in which the dividends are approved by the
Board.
3. OPERATING SEGMENTS
The Board makes the strategic resource allocations on behalf of the Company and
is responsible for the Company's entire portfolio. The Board is of the opinion
that the Company is engaged in a single geographic and economic segment
business. The asset allocation decisions are based on a single, integrated
investment strategy, and the Company's performance is evaluated on an overall
basis.
The internal reporting provided to the Directors for the Company's assets,
liabilities and performance is prepared on a consistent basis with the
measurement and recognition principles of IFRS.
The fair value of the financial instruments held by the Company and the
equivalent percentages of the total value of the Company are reported in the
Schedule of Investments above.
4. NET GAINS ON INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
30 April 2022 30 April 2021
£'000 £'000
Realised gains on investments held at fair value
through profit or loss 19,240 19,817
Realised losses on investments held at fair value (12,279) (1,926)
through profit or loss
Net realised gains on investments held at fair value 6,961 17,891
through profit or loss
Unrealised gains on investments held at fair value 9,256 18,850
through profit or loss
Unrealised losses on investments held at fair value (39,690) (13,318)
through profit or loss
Net unrealised (losses)/gains on investments held at (30,434) 5,532
fair value through profit or loss
Net (losses)/gains on investments held at fair value
through profit or loss (23,473) 23,423
5. RELATED PARTY DISCLOSURE
The Investment Manager, Investment Adviser, Depositary, Administrator and
Directors are considered related parties to the Company under IAS 24 as they
have the ability to control, or exercise significant influence over, the
Company in making financial or operational decisions. See Notes 6 to 9 for
details of transactions with these related parties during the financial year
ended 30 April 2022.
The Company has a credit facility with the Depositary, Northern Trust Guernsey
(limited). Please see Note 13 for details.
Certain Directors had a beneficial interest in the Company by way of their
investment in the ordinary shares of the Company.
The details of these interests as at 30 April 2022 and 30 April 2021 are as
follows:
Ordinary Shares Ordinary Shares
30 April 2022 30 April 2021
Noel Lamb
30,000 23,250
Richard Pavry
40,000 40,000
Philip Ehrmann
50,000 50,000
Michael Moule
50,000 40,000
The above interests of the Directors were unchanged as at the date of this
report. Remuneration paid to the Directors during the year is detailed in note
9.
As at 30 April 2022, a family member of the President of the Investment Adviser
held 900,800 (30 April 2021: 900,800) ordinary shares of the Company.
6. INVESTMENT MANAGEMENT AND INVESTMENT ADVISER FEES
Under the terms of the Investment Management Agreement, the Investment Manager,
Quaero Capital LLP, will continue in office until a resignation is tendered or
the contract is terminated. In both circumstances, a resignation or termination
must be given with a notice period which must not be less than three months,
and be in accordance with the Investment Management Agreement.
The Company pays to the Investment Manager a fee accrued daily and paid monthly
in arrears at the annual rate of 1% of the daily NAV of the Company on the
first £125m of net assets, 0.85% on net assets between £125m and £175m and
0.70% on net assets above £175m with effect from 5 July 2019.
The Investment Adviser Fees are 75% of the total Investment Management Fees and
are paid by the Investment Manager.
For the financial year ended 30 April 2022, total investment management fees
were £1,106,750 (30 April 2021: £1,186,901), of which £71,043 (30 April 2021: £
100,170) is due and payable as at that date. Of the total investment management
fees, £276,688 (30 April 2021: £296,725) was due to the Investment Manager,
with £53,282 (30 April 2021: £25,043) payable as at 30 April 2022.
For the financial year ended 30 April 2022, total investment adviser fees were
£830,062 (30 April 2021: £890,176), with £17,761 (30 April 2021: £75,127)
payable as at 30 April 2022.
7. DEPOSITARY FEES
Under the terms of the Depositary Agreement, fees are payable to the
Depositary, Northern Trust (Guernsey) Limited, monthly in arrears, on the Gross
Asset Value (Net Asset Value before investment management fees) of the Company
as at the last business day of the month at an annual rate of:
Gross Asset Value
Annual Rate
Up to
$50,000,000
0.035%
$50,000,001 to
$100,000,000
0.025%
Thereafter
0.015%
The Depositary is also entitled to a global custody fee of 0.03% per annum of
the NAV of the Company, subject to a minimum fee of $20,000, and transaction
fees as per the Depositary Agreement.
For the financial year ended 30 April 2022, total depositary fees were £94,579
(30 April 2021: £101,476), of which £18,034 (30 April 2021: £23,251) was due
and payable as at that date.
8. ADMINISTRATION FEES
Under the terms of the Administration Agreement, the Company pays to the
Administrator, Northern Trust International Fund Administration Services
(Guernsey) Limited, a fee accrued weekly and paid monthly in arrears at the
annual rate of:
NAV
Annual Rate
Up to
$50,000,000
0.18%
$50,000,001 to
$100,000,000
0.135%
$100,000,001 to
$200,000,000
0.0675%
Thereafter
0.02%
For the financial year ended 30 April 2022, total administration fees were £
140,342 (30 April 2021: £149,549), of which £21,552 (30 April 2021: £12,406)
was due and payable as at that date.
9. DIRECTORS' FEES AND EXPENSES
Each of the Directors is entitled to receive a fee from the Company, being £
36,000 per annum for the Chairman, £30,00 per annum for the Chairman of the
Audit Committee and £26,000 per annum for each of the other Directors. In
addition, the Company reimburses all reasonably incurred out-of-pocket expenses
of the Directors.
For the financial year ended 30 April 2022, total directors' fees and expenses
were £148,146 (30 April 2021: £124,484), of which £8,910 (30 April 2021: £
7,589) was due and payable as at that date.
10. RESEARCH COSTS
In line with the introduction of revised rules in respect of the use of dealing
commission as part of the implementation of the Directive 2014/65/EU on Markets
in Financial Instruments and amending Directive 2004/39/EC ("MiFID II"),
effective from 3 January 2018, the Investment Manager no longer pays for its
investment research via dealing commission.
The Investment Manager has established a research budget whereby the Company
will pay for research services independently of trade execution. All
transactions are placed and executed on the basis that best execution is
achieved. Research costs incurred from 1 May 2021 to 30 April 2022 amounted to
£100,611 (30 April 2021: £96,740).
11. TAXATION
The Company is exempt from taxation in Guernsey under the provisions of The
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and has paid an annual
exemption fee of £1,200 (30 April 2021: £1,200), however the Company is subject
to UK tax being a UK tax resident to comply with the Section 1158 of the
Corporation Tax Act 2010. The main rate of corporation tax in the UK was 19%
effective from 1 April 2017 and effective 1 April 2023 the rate will increase
to 25%.
30 April 30 April
2022 2021
£'000 £'000
Irrecoverable overseas tax 243 184
Tax charge in respect of the current year 243 184
Current taxation
The current taxation charge for the financial year is different from the
standard rate of corporation tax in the UK. The differences are explained in
the following table:
30 April 30 April
2022 2021
£'000 £'000
(Loss)/profit before tax (23,688) 22,483
Capital gain/(loss) for the financial year 23,427 (23,162)
Revenue loss for the financial year (261) (679)
30 April 30 April
2022 2021
£'000 £'000
Theoretical tax at UK corporation tax rate of 19% (30 (50) (129)
April 2021 -19%)
Effects of:
Excess management expenses 96 164
Notional relief for overseas tax suffered (46) (35)
Overseas tax written off 243 184
Actual current tax charge 243 184
The Company is an investment trust and therefore is not taxable on capital
gains.
Factors that may affect future tax charges
As at 30 April 2022, the Company has excess management expenses of £11,170,418
that are available to offset future taxable revenue. Whilst this represents
management's best estimate based on the carried forward balance in the previous
financial year of £39,614,339 the estimated value could differ from actual
amounts. However, the potential impact is not expected to be significant.
A deferred tax asset has not been recognised in respect of these amounts as
they will be recoverable only to the extent that there is sufficient future
taxable revenue.
12. EARNINGS/(DEFICIT) PER ORDINARY SHARE
The earnings/(deficit) per ordinary share figure is based on the loss for the
financial year of £23,930,408 (30 April 2021: profit of £22,298,614) divided by
the weighted average number of shares (excluding shares held in treasury) in
issue during the financial year ended 30 April 2022, being 41,416,570 (30 April
2021: 41,794,570).
30 April 30 April
2022 2021
£'000 £'000
Net revenue loss (504) (863)
Net capital (loss)/profit (23,427) 23,162
Net total (loss)/profit (23,931) 22,299
Weighted average number of ordinary shares
in issue during the financial year 41,716,040 41,794,570
£ £
Revenue loss per ordinary share (0.012) (0.021)
Capital (loss)/profit per ordinary share (0.562) 0.554
Total (loss)/profit per ordinary share (0.574) 0.533
The revenue loss per ordinary share and capital loss per ordinary share figure
is based on the net revenue loss for the financial year of £503,939 (30 April
2021: loss of £861,793), the net capital loss of £23,426,469 (30 April 2021:
profit of £23,160,407) respectively and 41,416,570 being the weighted average
number of shares in issue (excluding shares held in treasury) during the
financial year ended 30 April 2022 (30 April 2021: 41,794,570).
As at 30 April 2022, basic and diluted earnings/deficit per share are the same
as no dilutive instruments are in issue.
13. LOANS PAYABLE
As at 30 April 2022, the Company had drawn down ¥752,724,992 (£4,609,310) on
the credit facility (30 April 2021: not drawn down). ¥1,500,000,000 (£
9,911,569) is borrowable under the terms of the facility agreement. Under the
terms of the facility agreement with NTGL, the Company is required to comply
with the following financial covenant:
Borrowings on the accounts in the name of the borrower may not exceed at any
time the lesser of (a) 20% of the value of unencumbered, listed and daily
priced assets held in custody by the Depositary for the borrower or (b) 100% of
any borrowing limit set out in the constitutional documents of such borrower.
The Company complied with all of the above financial covenants during the
financial years ended 30 April 2022 and 30 April 2021.
14. SHARE CAPITAL AND SHARE PREMIUM
Authorised
The Company is authorised to issue an unlimited number of ordinary shares of no
par value. The Company has issued two subscriber shares for the purposes of
incorporation of the Company. The subscriber shares do not participate in the
profits of the Company.
The Company may also issue C shares being a convertible share in the capital of
the Company of no par value. C shares shall not have the right to attend or
vote at any general meeting of the Company. The holders of C shares of the
relevant class shall be entitled, in that capacity, to receive a special
dividend of such amount as the Directors may resolve to pay out of the net
assets attributable to the relevant C share class and from income received and
accrued attributable to the relevant C share class for the period up to the
conversion date payable on a date falling before, on or after the conversion
date as the Directors may determine. There are no C shares currently in issue.
The rights which the ordinary shares confer upon the holders thereof are as
follows:
Voting rights
On a show of hands, every member who is present shall have one vote and, on a
poll, a member present in person or by proxy shall be entitled to one vote per
ordinary share held.
Entitlement to dividends
The Company may declare dividends in respect of the ordinary shares which are
paid out of capital reserves. Treasury shares do not confer an entitlement to
any dividends declared.
Rights in a winding-up
The holders of ordinary shares will be entitled to share in the NAV of the
Company as determined by the Liquidator.
Issued Ordinary Shares
Number of Share Capital Share Premium
Shares
£'000 £'000
In issue at 30 April 2022 41,416,570 - -
In issue at 30 April 2021 41,794,570 - -
Number of Number of
Shares Shares
30 April 2022 30 April 2021
Shares of no par value
Issued shares at the start of the 41,794,570 41,794,570
financial year
Purchase of shares into treasury (378,000) -
Number of shares at the end of the financial year 41,416,570 41,794,570
Shares held in treasury
Opening balance 4,687,186 4,687,186
Shares bought into treasury during the financial year 378,000 -
Number of shares at the end of the financial year 5,065,186 4,687,186
During the financial year ended 30 April 2022, 378,000 of shares were purchased
into treasury for consideration of £778,650 (30 April 2021: £nil).
Shareholders are entitled to receive any dividends or other distributions out
of profits lawfully available for distribution and on winding up they are
entitled to the surplus assets remaining after payment of all the creditors of
the Company. The shares redeemed in the current financial year were cancelled
immediately.
15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
In accordance with its investment objective and policies, the Company holds
financial instruments which at any one time may comprise the following:
- securities held in accordance with the investment objective and
policies;
- cash and cash equivalents and short-term receivables and payables
arising directly from operations;
- loans used to finance investment activity; and
- derivative instruments for the purposes of efficient portfolio
management only.
The financial instruments held by the Company principally comprise equities
listed on the stock markets in Japan, including, without limitation, the Tokyo
Stock Exchange categorised as Prime, Standard and Growth sections, or the
regional stock exchanges of Fukuoka, Nagoya and Sapporo.
The specific risks arising from the Company's exposure to these instruments,
and the Investment Manager/Investment Adviser's policies for managing these
risks, which have been applied throughout the financial year, are summarised
below.
Capital management
The Company's objectives when managing capital are to safeguard the Company's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
The Company may not borrow or otherwise use leverage exceeding 20% of its net
assets for investment purposes, to settle facilities for specific investments,
such as bridge financing. In connection with the facility agreement, the
Company has entered into an English law, multicurrency, and revolving credit
facility with NTGL (see Note 13).
As at 30 April 2022, the Company had a commitment leverage ratio of 1.05:1 and
a gross leverage ratio of 1.05:1.
The Company does not have any externally imposed capital requirements apart
from the fact that it should not retain more than 15% of income, in order to
comply with Section 1158 of Corporation Tax Act 2010. The Company has complied
with this requirement.
The Company is a closed-ended investment company. The Company's capital is
represented by ordinary shares of no par and each share carries one vote. They
are entitled to dividends when declared.
There were 378,000 shares repurchased into treasury during the financial year
ended 30 April 2022 (30 April 2021: None).
Market risk
The Company's investment portfolio - particularly its equity investments - is
exposed to market price fluctuations which are monitored by the Investment
Manager/Investment Adviser in pursuance of the investment objective and
policies.
At 30 April 2022, the Company's market price risk is affected by three main
components: changes in market prices, currency exchange rates and interest rate
risk. Currency exchange rate movements and interest rate movements, which are
dealt with under the relevant headings below, primarily affect the fair values
of the Company's exposures to equity securities, related derivatives and other
instruments. Changes in market prices primarily affect the fair value of the
Company's exposures to equity securities, related derivatives and other
instruments.
Exceptional risks associated with investment in Japanese smaller companies may
include:
- greater price volatility, substantially less liquidity and significantly
smaller market capitalisation; and
- more substantial government intervention in the economy, including
restrictions on investing in companies or in industries deemed sensitive to
relevant national interests.
Market price sensitivity analysis
If the price of each of the equity securities to which the Company had exposure
at 30 April 2022 had increased or decreased by 5% with all other variables held
constant, this would have increased or decreased profit and net assets
attributable to equity shareholders of the Company by:
30 April 2022 30 April 2021
+/- +/-
NAV £4,576,274 £5,847,307
NAV per share £0.11 £0.14
Total comprehensive income £4,576,274 £5,847,307
Earnings per share £0.11 £0.14
Foreign currency risk
The Company principally invests in securities denominated in currencies other
than GBP, the functional currency of the Company. Therefore, the Statement of
Financial Position will be affected by movements in the exchange rates of such
currencies against the GBP. The Investment Manager/Investment Adviser has the
power to manage exposure to currency movements by using forward currency
contracts. No such instruments were held as at 30 April 2022 (30 April 2021:
None).
It is not the present intention of the Directors to hedge the currency exposure
of the Company, but the Directors reserve the right to do so in the future if
they consider this to be desirable.
The treatment of currency transactions other than in GBP is set out in Note 2
(l) to the Financial Statements.
As at 30 April 2022, the Company has a USD cash exposure in GBP terms of £4,757
(30 April 2021: £9,456).
The Company's net JPY exposure in GBP terms is set out in the following table:
As at 30 April 2022
£'000
Assets
Investments held at fair value through 91,525
profit or loss
Dividends receivable
622
Total assets 92,147
Liabilities
Bank overdraft
(4,609)
Due to brokers
(107)
Payables and accrued expenses
(4)
Total liabilities (4,720)
Total net assets 87,427
The Company's net JPY exposure in GBP terms is set out in the following table:
As at 30 April 2021
£'000
Assets
Investments held at fair value through
profit or loss 116,946
Due from brokers
322
Dividends receivable
398
Total assets
117,666
Liabilities
Bank overdraft
(677)
Due to brokers
(291)
Total liabilities (968)
Total net assets 116,698
Foreign currency sensitivity analysis
If the exchange rate at 30 April 2022, between the functional currency and all
other currencies had increased or decreased by a 5% currency movement with all
other variables held constant, this would have increased or reduced profit and
net assets attributable to equity shareholders of the Company by:
30 April 30 April
2022 2021
+/- +/-
NAV £4,371,610 £5,835,372
NAV per share £0.11 £0.14
Total comprehensive income £4,371,610 £5,835,372
Earnings per share £0.11 £0.14
No benchmark is used in the calculation of the above information. The only
foreign currency the Company has a significant exposure to is JPY, hence the
above foreign currency sensitivity analysis has not been disclosed on a
currency by currency basis.
Interest rate risk
Substantially all the Company's assets and liabilities are non-interest bearing
and any excess cash and cash equivalents are invested at short-term market
interest rates.
As at 30 April 2022, the Company has a small exposure to interest rate risk
regarding the loan facility and cash and cash equivalents.
Increases in interest rates may increase the costs of the Company's borrowings.
The rate of interest is the rate per annum equivalent to the Bank of Japan
Official base rate plus 1.25% and will be calculated on the amount for the time
being outstanding on each account based upon the number of days elapsed and a
year of 365 days. The currency base lending rate is subject to a floor of zero.
Interest on the loan is payable monthly in arrears. As at 30 April 2022, the
interest accrued on the loan was £nil (30 April 2021: £nil).
The following disclosures exclude prepayments and taxation receivables and
payables:
Less 1 month
than to
1 month 1 year Total
As at 30 April 2022 £'000 £'000 £'000
Financial assets
Cash and cash equivalents 72 - 72
Financial liabilities
Bank overdraft (4,605) - (4,605)
Net financial assets/(liabilities) (4,533) - (4,533)
Less 1 month
than to
1 month 1 year Total
As at 30 April 2021 £'000 £'000 £'000
Financial assets
Cash and cash equivalents 12 - 12
Financial liabilities
Bank overdraft (667) - (667)
Net financial assets/(liabilities) (655) - (655)
The cash flow interest rate risk comprises those assets and liabilities with a
floating interest rate, for example cash deposits at local market rates. Cash
and cash equivalents earn interest at the prevailing market interest rate.
Although this portion of the NAV is not subject to fair value risk as a result
of possible fluctuations in the prevailing market interest rates, the future
cashflows of the Company could be adversely or positively impacted by decreases
or increases in those prevailing market interest rates.
The fair value interest rate risk comprises those assets and liabilities with a
fixed interest rate, for example loans payable and loan interest payable.
Fair value
All assets and liabilities are carried at fair value with the exception of
short term receivables and payables and cash and cash equivalents, which are
carried at amortised cost.
Short term receivables and payables
Receivables and payables do not carry interest and are short term in nature.
They are stated at amortised cost, as reduced by appropriate allowances for
irrecoverable amounts in the case of receivables.
Liquidity risk
Liquidity risk is the risk that the Company will encounter in realising assets
or otherwise raising funds to meet financial commitments.
As at 30 April 2022, the Company had drawn down ¥752,724,992 (£4,609,310) on
the credit facility (30 April 2021: not drawn down). In connection with the
facility agreement, the Company has entered into an English law, multicurrency,
and revolving credit facility with NTGL.
The loan may be used for the following purposes:
- the acquisition of investments in accordance with the investment policy;
and
- its working capital requirements in the ordinary course of business.
The loan must be repaid on the earliest of the day on which written demand is
made by NTGL for repayment or the day on which an automatic repayment event
occurs (such as insolvency).
The Company invests primarily in listed securities which are liquid in nature.
The Company's liquidity risk is managed by the Investment Manager who monitors
the cash positions on a regular basis.
The maturity analysis of the Company's financial liabilities (excluding tax
balances) is set out in the following table:
Up to 1 year 1 to 5
or on demand years Total
As at 30 April 2022 £'000 £'000 £'000
Financial liabilities
Bank overdraft (4,605) - (4,605)
Other financial liabilities (340) - (340)
Total financial liabilities (4,945) - (4,945)
As at 30 April 2021
Financial liabilities
Bank overdraft (667) - (667)
Other financial liabilities (535) - (535)
Total financial liabilities (1,202) - (1,202)
Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Company.
In accordance with the investment restrictions as described in its prospectus
and investment policy, the Company may not invest more than 10% of the
Company's gross assets in securities of any one company or issuer. However,
this restriction shall not apply to securities issued or guaranteed by a
government or government agency of the Japanese or US Governments. In adhering
to these investment restrictions, the Company mitigates the risk of any
significant concentration of credit risk arising on broker and dividend
receivables.
As the Company invests primarily in publicly traded equity securities the
Company is not exposed to credit risk from these positions. However, the
Company will be exposed to a credit risk on parties with whom it trades and
will bear the risk of settlement default. The Company minimises concentrations
of credit risk by undertaking transactions with a number of regulated
counterparties on recognised and reputable exchanges. All transactions in
listed securities are settled/paid for upon delivery using approved brokers.
The risk of default is considered minimal, as delivery of securities sold is
only made once the broker has made payment. Payment is made on a purchase once
the securities have been received from the broker. The trade will fail if
either party fails to meet its obligation. The Company is exposed to credit
risk on cash and investment balances held with the Depositary. The Investment
Manager regularly reviews concentrations of credit risk.
All of the cash assets are held with the Northern Trust Company ("NTC"). Cash
deposited with NTC is deposited as banker and is held on its Statement of
Financial Position. Accordingly, in accordance with usual banking practice,
NTC's liability to the Company in respect of such cash deposits shall be that
of debtor and the Company will rank as a general creditor of NTC. The financial
assets are held with the Depositary, Northern Trust (Guernsey) Limited.
These assets are held distinct and separately from the proprietary assets of
the Depositary. Securities are clearly recorded to ensure they are held on
behalf of the Company.
Bankruptcy or insolvency of the Depositary and, or one of its agents or
affiliates may cause the Company's rights with respect to the securities held
by the Depositary to be delayed or limited.
NTC is a wholly owned subsidiary of Northern Trust Corporation. As at 30 April
2022, Northern Trust Corporation had a long term rating from Standard & Poor's
of A+ (30 April 2021: A+). Risk is managed by monitoring the credit quality and
financial positions of the Depositary the Company uses. Northern Trust acts as
its own sub-depositary in the US, the UK, Ireland and Canada. In all other
markets Northern Trust appoints a local sub-depositary. Northern Trust
continually reviews its sub-depositary network to ensure clients have access to
the most efficient, creditworthy and cost-effective provider in each market.
The securities held by the Company are legally held with the Depositary, which
holds the securities in segregated accounts, and subject to any security given
by the Company to secure its overdraft facilities, the Company's securities
should be returned to the Company in the event of the insolvency of the
Depositary or its appointed agents, although it may take time for the Company
to prove its entitlement to the securities and for them to be released by the
liquidator of the insolvent institution. The Company will however only rank as
an unsecured creditor in relation to any cash deposited or derivative positions
with the Depositary, their related companies and their appointed agents, and is
therefore subject to the credit risk of the relevant institution in this
respect.
The assets exposed to credit risk at financial year end amounted to £71,870 (30
April 2021: £333,544).
Fair value hierarchyThe fair value of investments traded in active markets (such as publicly traded
derivatives and trading securities) are based on quoted market prices at the
close of trading on the Statement of Financial Position date. The quoted market
price used for investments held by the Company is the last traded price; the
appropriate quoted market price for financial liabilities is the current asking
price.
A financial instrument is regarded as quoted in an active market if quoted
prices are readily and regularly available from an exchange, dealer, broker,
industry group, pricing service, or regulatory agency, and those prices
represent actual and regularly occurring market transactions on an arm's length
basis.
The fair value of investments that are not traded in an active market is
determined by using valuation techniques.
For instruments for which there is no active market, the Company may use
internally developed models, which are usually based on valuation methods and
techniques generally recognised as standard within the industry. Valuation
models may be used primarily to value unlisted equity, debt securities and
other debt instruments for which markets were or have been inactive during the
financial year. Some of the inputs to these models may not be market observable
and are therefore estimated based on assumptions. These instruments would be
categorised as level 2.
The following table sets out fair value measurements using the IFRS 13 fair
value hierarchies:
At 30 April 2022
Investments at fair value through Level 1 Level 2 Level 3 Total
profit or loss
£'000 £'000 £'000 £'000
Equity investments
91,525 - - 91,525
91,525 - - 91,525
At 30 April 2021
Investments at fair value through Level 1 Level 2 Level 3 Total
profit or loss
£'000 £'000 £'000 £'000
Equity investments
116,946 - - 116,946
116,946 - - 116,946
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset as follows:
· Level 1 - valued using quoted prices in active markets for identical
assets or liabilities.
· Level 2 - valued by reference to valuation techniques using observable
inputs other than quoted prices included within level 1.
· Level 3 - valued by reference to valuation techniques using inputs that
are not based on observable market data.
16. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
30 April 30 April 2021
2022
£'000 £'000
Opening book cost 77,919 61,302
Purchases at cost 55,642 52,294
Proceeds on sale (57,590) (53,568)
Realised gains 6,961 17,891
Closing book cost 82,932 77,919
Unrealised gains on investments 8,593 39,027
Fair value 91,525 116,946
17. NAV HISTORY
30 April 30 April 30 April
2022 2021 2020
NAV £ £ £
87,278,759 116,501,330 97,913,074
Number of Shares in Issue excluding 41,416,570 41,794,570 41,794,570
treasury shares
NAV per Ordinary Share £2.11 £2.79 £2.34
18. DIVIDENDS
All amounts held in the Company's revenue reserve are distributable to
shareholders by way of dividends. There are regular quarterly payments of 1% of
the company's NAV (based on the average daily NAV in the final month of the
financial year). These will be paid in March, June, September and December.
The Company declared the following dividends during the financial year ended 30
April 2022:
Date Dividend Dividend (£) Record date Ex-dividend Pay date
rate per date
share
(pence)
24 May 2021 2.17 4 June 2021 3 June 2021 30 June 2021
906,942
25 August 2021 2.88 3 September 2 September 30 September
1,203,684 2021 2021 2021
23 November 2.88 3 December 2021 2 December 2021 31 December 2021
2021 1,201,956
24 February 2.88 4 March 2022 3 March 2022 31 March 2022
2022 1,198,932
19. ONGOING CHARGES
The ongoing charges using the AIC recommended methodology were 1.65% for the
financial year ended 30 April 2022 (30 April 2021: 1.58%). Of the £1,828,253
expenses in the Statement of Comprehensive Income, excluded from the
calculation of ongoing charges, are £nil considered by the Directors to be
non-recurring (30 April 2021: £nil).
20. EXCHANGE RATES
The following exchange rates were used at the reporting date to convert the
assets and liabilities of the Company:
30 April 2022 30 April 2021 30 April 2020
GBP GBP GBP
USD $1.2555 $1.3846 $1.2614
JPY ¥162.6627 ¥151.3383 ¥134.8825
The following average exchange rates were used during the financial year to
convert the transactions of the Company:
30 April 30 April 2021 30 April 2020
2022
GBP GBP GBP
USD $1.3591 $1.3195 $1.2666
JPY ¥154.4499 ¥140.0542 ¥137.3435
21. CHANGES IN THE PORTFOLIO
A list, specifying for each investment the total purchases and sales which took
place during the financial year ended 30 April 2022, may be obtained, upon
request, at the registered office of the Company.
22. EVENTS DURING THE FINANCIAL YEAR
Yuki Soga was appointed as a Director on 1 July 2021.
There were no other significant events during the financial year which require
adjustment to or additional disclosure in the Financial Statements.
23. EVENTS AFTER THE FINANCIAL YEAR
There were no significant events subsequent to the financial year which require
adjustment to or additional disclosure in the Financial Statements.
24. ULTIMATE CONTROLLING PARTY
There is no one ultimate controlling party over the Company.
END
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