Final Results

RNS Number : 7990R

Atlantis Japan Growth Fund Ld

27 August 2010

 

Atlantis Japan Growth Fund Limited (the "Company")

(a closed-ended investment company incorporated with limited liability under the laws of Guernsey with registered number 30709)

Statement of Annual Results

27 August 2010

This annual results announcement has been approved by the Board. It is not the Company's statutory accounts, but has been prepared on the same basis as those accounts. The statutory accounts for the year ended 30 April 2010 will be approved and audited and sent to shareholders during September 2010. It is expected that the audit report will be unqualified and will not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report.

The full annual report and audited accounts together with the notice of AGM for the year is expected to be mailed to shareholders in September 2010.

INVESTMENT OBJECTIVE

The Company aims to achieve long term capital growth through investment wholly or mainly in listed Japanese equities.

INVESTMENT POLICY

The Company may invest up to 100 per cent of its gross assets in companies quoted on any Japanese stock exchange including, without limitation, the Tokyo Stock Exchange, Jasdaq, Tokyo AIM, or the regional stock exchanges of Fukuoka, Nagoya, Osaka and Sapporo or the Japanese over-the-counter market.

The Company may also invest up to 20 per cent of its NAV at the time of investment in companies listed or traded on other stock exchanges but which are either controlled and managed from Japan or which have a material exposure to the Japanese economy.

The Company may also invest up to 10 per cent of its NAV at the time of investment in securities which are neither listed or traded on any stock exchange or over -the-counter market.

In general, investment will be through investments in equity shares in, or debt issued by, investee companies.  However, the Company may also invest up to 20 per cent of its NAV at the time of investment in equity warrants and convertible debt.

The Company will not invest in more than 10 per cent of any class of securities of an investee company.  The Company will not invest in derivative instruments save for the purpose of efficient portfolio management.

Under UK taxation rules for investment trusts, the maximum amount which may be invested in any one company is 15 per cent of the Company's investments.  However, such concentration is unlikely to occur and in practice it would be unusual for more than 10 per cent to be invested in one company.

The Company may not invest more than 10 per cent in aggregate, of the value of its total assets in other listed closed-ended investment funds except in the case of investment in closed-ended investment funds which themselves have published investment policies to invest no more than 15 per cent of their total assets in other listed  closed-ended investment funds, in which case the limit is 15 per cent.

The Company may borrow, with a view to enhancing capital returns, up to a maximum of an amount not exceeding 20 per cent of NAV at the time of borrowing.

The management and impact of the risk associated with the investment policy are described in detail in the notes to the Financial Statements (Note 15).

MANAGER AND INVESTMENT ADVISER

Atlantis Fund Management (Guernsey) Limited has been appointed as Manager of the Company.

Atlantis Investment Management Limited has been appointed by the Investment Manager as its Investment Adviser. Atlantis Investment Research Corporation, established in Tokyo, will, through Edwin Merner and his colleagues in that office, advise the Investment Adviser on the day-to-day conduct of the Company's investment business.

Manager's Report

For the year ended 30th April 2010

PERFORMANCE

During the year ended 30th April 2010 both the Company and the Tokyo Market bounced back and performance was further aided by a stronger yen. As of 30th April 2010, the Net Asset Value of the Company stood at $13.19 per share, a gain of 46.2% from 30th April 2009 (please refer to note 16). This compares with a gain of 22.4% for the TOPIX and 29.4% for the Tokyo Second Market (all figures in US dollars).

Due to unsettled financial markets, the Company was unable to borrow at reasonable rates and several loans were therefore not rolled over. As a result, borrowings fell to Y3 billion ($31.7 million) from Y4.5 billion ($45.8 million) at the end of the previous fiscal year. As of the end of April 2010 the Company is about 11.1% geared on a net basis, with cash standing at $2 million.

The yen ended the period at 94.465 to the US dollar compared to 98.150 a year ago, a gain of 3.8%. The Company has no foreign exchange hedges and none are planned at this time. At present the Company has no exposure to convertible bonds, warrants, or any kind of derivatives.

MARKET COMMENT

Since bottoming in the spring of 2009, the Tokyo Market has been moving higher but has seen occasional bouts of profit taking. The market performance has reflected the improving economy which has been marked by stronger GDP growth from the latter part of the fiscal year, rising industrial production, expanding exports, falling unemployment from last summer's high, low interest rates, easy money and a drop in bankruptcies from the highs of 2009. Investors are now beginning to anticipate positive GDP growth and expanding corporate earnings.

Daily trading volumes have risen from the depressed levels of last year and investor sentiment has taken a turn for the better. Overseas investors have been net buyers in most months and local individuals have also been on the buy side in some weeks and months. On most days, many stocks have been hitting new yearly highs with only a limited number of new yearly lows; another sign that investor sentiment is improving.We could be at the beginning of a long-term up-trend.

There are, as always, some possible risks. At present these include a slowdown in the world economy, a worsening financial crisis in Europe, a weaker than expected recovery in the US, disappointing growth in Asia (including China and South East Asia), an overly strong yen, and weakness in major stock markets including New York and London.

We think that most of the above negatives are unlikely and we remain optimistic on the outlook for the world economy, the Japanese economy, and the Tokyo Stock Market.

THE COMPANY

As we have stressed in previous annual reports, our basic investment strategy remains unchanged. We will continue to focus on value and growth and invest in companies that we think can grow earnings for at least the next several years.

Many of the companies we mentioned in our report last year were those that we expected to benefit from the projected recovery in exports and rising industrial production. We continue to hold many of these names but are also looking ahead and have been adding more domestic-related companies; those that will benefit from the anticipated recovery in consumer spending, private capital investments and housing.

We still have exposure to companies such as Makita Electric, Shin-Etsu Chemical, Nippon Electric Glass, and Stanley Electric but have been adding domestic-related stocks to the portfolio including Pacific Golf, Nihon M&A Centre, Area Link, Suzuken, Ain Pharm and some smaller local banks. We have also boosted our holdings in local trucking companies such as Hamakyorex and Trancom, expected beneficiaries of the improving economy.

The portfolio continues to be concentrated in manufacturers, exporters and related companies including specialised trading houses, auto and electronic parts makers, semiconductor manufacturing equipment companies and several other areas. Besides some of the companies mentioned above, we also have exposure to such well known companies as Keyence, Nitto Denko, Ushio, and Asahi Glass.

Although we hold some of the bigger, well known Japanese companies, we are also investing in many medium sized and smaller companies that are not well known but look highly undervalued and have outstanding long term growth prospects. Roughly 60% of the portfolio is invested in such names.

Our investment style is very much based on stock picking and we only buy companies we like. As a result we have little or no exposure to some sectors including smoke stack industries. We also generally avoid commodity related names including those in utilities, shipping, construction, oil, airlines, fishing, mining, and heavy industry as we find it difficult to make long term earnings projections.

We will continue to seek out undervalued companies that we think are cheap in terms of PER, PBR, cash flow and, most importantly, long term earnings growth prospects. Despite the recovery following the dark days of early 2009, the market continues to look cheap and we are finding many attractive, undervalued stocks. The Manager and the advisory team based in Tokyo continue to visit as many companies as possible and at this time are finding many attractive candidates; companies that look cheap and can grow earnings for at least the next several years. As well as following our current holdings, we will continue to place stress on finding undervalued growth stocks, just as we have done in the past.

Atlantis Fund Management (Guernsey) Limited

Directors' Report and Statement of Directors Responsibility

PRINCIPAL ACTIVITY

The Atlantis Japan Growth Fund ("the Company") is a Guernsey authorised closed ended investment company listed on the London Stock Exchange.  Trading in the Company's ordinary shares commenced on 10th 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 year. In preparing these Financial Statements, the Directors are required to:

-              select suitable accounting policies and then apply them consistently;

-              make judgements and estimates that are reasonable and prudent;

-              state whether applicable accounting standards have been followed subject to any material departures disclosed and explained in the Financial Statements; and

-              prepare the Financial Statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

We confirm, to the best of our knowledge, that:

-              this Annual Report and Financial Statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and loss of the Company; and

-              this Annual Report and Financial Statements includes information detailed in the Directors' Report, the Investment Manager's Report and Notes to the Financial Statements, which provides a fair review of the information required by:

a)     DTR 4.1.8 of the Disclosure and Transparency Rules ("DTR") being a fair review of the Company business and a description of the principal risks and uncertainties facing the Company; and

b)    DTR 4.1.11 of the DTR being an indication of important events that have occurred since the beginning of the financial year and likely future development of the Company.

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.  They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the Directors' Report and other information included in the Annual Report is prepared in accordance with company law applicable in Guernsey. They are also responsible for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Services Authority.

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

·      They have 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.

Schedule of Investments

			Fair				Percentage
		Number of	Value				of NAV
		Shares	$'000				%
Advertising
Tri-Stage		53,000	1,370				0.51
Auto Parts & Equipment
F-Tech		100,000	1,755				0.65
H-One Co		52,500	550				0.20
Imasen Electric Industrial		104,800	1,730				0.64
Muro Corporation		262,600	1,362				0.51
Stanley Electric		235,100	4,798				1.79
Yokowo		110,000	746				0.28
			10,941				4.07
Banks
Mie Bank		625,000	1,654				0.62
Nishi-Nippon City Bank		325,000	926				0.34
Suruga Bank		430,000	4,201				1.57
Yamaguchi Financial Group		100,000	997				0.37
			7,778				2.90
Building Materials
Asahi Glass		460,000	5,444				2.03
Daiken		300,000	813				0.30
Endo Lighting		158,200	774				0.29
			7,031				2.62
Chemicals
Atect		192,200	1,111				0.41
Chugoku Marine Paints		500,000	3,732				1.39
Marktec		19,100	186				0.07
Nippon Carbon		379,000	1,368				0.51
Nitto Denko		90,000	3,506				1.31
Sakai Chemical Industry		925,000	4,181				1.56
Shikoku Chemicals		200,000	1,122				0.42
Shin-Etsu Chemical		120,000	6,898				2.57
T&K Toka		96,600	1,453				0.54
Toyo Drilube		20,600	276				0.10
Tri Chemical Laboratories		195,000	789				0.29
			24,622				9.17
Commercial Services
Ajis		149,690	2,612				0.97
Gakujo		68,800	237				0.09
Mainichi Comnet		340,200	1,131				0.42
Nihon M&A Center		950	3,429				1.28
Novarese		4,000	3,176				1.18
SBI VeriTrans		1,273	853				0.32
			1,438				4.26
Computers
Roland DG		50,000	821				0.31
Cosmetics/Personal Care
Cota		109,500	826				0.31
Unicharm		25,000	2,414				0.90
			3,240				1.21
Distribution/Wholesale
Toyota Tsusho		675,800	10,137				3.77
Diversified Financial Services
Japan Securities Finance		335,300	2,389				0.89
Kyokuto Securities		200,000	1,700				0.63
Mitsubishi UFJ Lease & Finance		100,370	3,873				1.44
Nomura Holdings		884,000	6,101				2.27
Osaka Securities Exchange		1,104	5,651				2.10
			19,714				7.33
Electrical Computers & Equipment
Casio Computer		35,000	274				0.10
Funai Electric		47,000	1,846				0.69
Ushio		270,000	4,450				1.66
			6,570				2.45
Electronics
Chiyoda Integre		100,000	1,761				0.66
Idec		157,900	1,511				0.56
Keyence		30,600	7,263				2.70
Kokusai		384,900	2,538				0.94
Kuroda Electric		320,000	4,837				1.80
Macnica		68,900	1,582				0.59
Marubun		186,600	1,373				0.51
Micronics Japan		31,600	507				0.19
Nihon Dempa Kogyo		90,700	1,974				0.73
Nippon Electric Glass		505,000	7,682				2.86
Omron		247,700	5,740				2.14
Showa Shinku		150,000	1,093				0.41
Sumida		483,400	6,545				2.44
Sunx		597,900	2,911				1.08
Suzuki		160,000	1,321				0.49
Tabuchi Electric		150,000	284				0.11
Tokyo Electron Device		1,078	1,689				0.63
			50,611				18.84
Food
Frente		65,000	1,500				0.56
Warabeya Nichiyo		89,200	1,061				0.39
			2,561				0.95
Hand/Machine Tools
Asahi Diamond Industrial		200,000	2,073				0.77
A-One Seimitsu		231	866				0.32
Disco		48,000	3,394				1.26
Makita		491,200	15,147				5.64
			21,480				7.99
Healthcare-Products
Ain Pharmaciez		266,900	8,222				3.06
Daiken Medical		219,300	2,087				0.78
Falco SD Holdings		118,700	1,189				0.44
Mani		136,800	4,851				1.81
Message		250	531				0.20
			16,880				6.29
Home Builders
Hinokiya Juutaku		575	431				0.16
Home Furnishings
Foster Electric		160,100	4,535				1.69
Internet
Bit-isle		3,301	3,418				1.27
Monotaro		312,900	5,667				2.11
Morningstar Japan		1,293	536				0.20
			9,621				3.58
Leisure Time
Pacific Golf Group International Holdings		1,984	1,401				0.52
Tosho		85,000	442				0.16
			1,843				0.68
Machinery-Diversified
Fanuc		10,000	1,179				0.44
Metal Fabricate/Hardware
JFE Shoji Holdings		500,000	2,583				0.96
Miscellaneous Manufacturing
Mirai Industry		80,300	750				0.28
Nippon Valqua Industries		385,000	888				0.33
Shoei /Taito-ku		102,000	1,058				0.39
			2,696				1.00
Office/Business Equipment
Canon		15,000	690				0.26
Japan Drilling		30,400	1,567				0.58
			2,257				0.84
Packaging & Containers
Fuji Seal International		234,700	4,842				1.80
Pharmaceuticals
Fuji Pharma		50,000	946				0.35
Medical Ikkou		638	1,493				0.56
Suzuken		91,600	3,471				1.29
Toho Holdings		244,700	3,891				1.45
			9,801				3.65
Real Estate
Arealink		43,527	2,327				0.87
Hulic		350,000	2,508				0.93
Star Mica		288	367				0.14
			5,202				1.94
REITS
Japan Logistics Fund		300	2,363				0.88
Retail
Diamond Dining		150	865				0.32
G-7 Holdings		79,800	516				0.19
Handsman		333,200	2,981				1.11
Hiday Hidaka		314,500	3,649				1.36
Nihon Chouzai		180,000	5,339				1.99
			13,350				4.97
Semiconductors
FOI		328,000	2,944				1.10
Lasertec		120,800	1,857				0.69
Mimasu Semiconductor Industry		100,000	1,479				0.55
			6,280				2.34
Transportation
AIT	102,800			1,030				0.38
Art	250,100			3,971				1.48
Hamakyorex	455,600			12,009				4.47
Higashi Twenty One	290,100			1,090				0.41
Kintetsu World Express	246,900			5,870				2.19
Sakai Moving Service	271,700			5,617				2.09
Trancom	302,000			4,844				1.80
Yusen Air & Sea Service	43,300			654				0.24
				35,085				13.06
Total equities				297,262				110.66
Total Investments				297,262				110.66
Net Liabilities				(28,637)				(10.66)
Total Net Assets				268,625				100.00

Statement of Comprehensive Income

For the Year Ended 30th April 2010

		2010				2009
		Revenue	Capital	Total		Revenue	Capital	Total
Notes		$'000	$'000	$'000		$'000	$'000	$'000
	Income
3	Gains/(losses) on investments held at fair value	-	89,113	89,113		-	(134,742)	(134,742)
	Exchange loss	-	(2,072)	(2,072)		-	(4,383)	(4,383)
	Dividend income	5,391	-	5,391		7,610	-	7,610
		5,391	87,041	92,432		7,610	(139,125)	(131,515)
	Expenses
4	Investment management fee	3,673	-	3,673		3,632	-	3,632
5	Custodian fees	222	-	222		287	-	287
7	Administration fees	244	-	244		231	-	231
18	Reorganisation expenses	256		256		-	-	-
	Registrar and transfer agent fees	23	-	23		7	-	7
8	Directors' fees and expenses	132	-	132		143	-	143
	Transaction costs	-	604	604		-	537	537
	Insurance fees	27	-	27		21	-	21
	Audit fee	29	-	29		46	-	46
	Printing and advertising fees	50	-	50		42	-	42
	Legal and professional fees	70	-	70		75	-	75
	Listing fees	8	-	8		51	-	51
	Miscellaneous expenses	27	-	27		15	-	15
		4,761	604	5,365		4,550	537	5,087
	Finance cost
	Interest expense and bank charges	709	-	709		962	-	962
	Profit/(Loss) before tax	(79)	86,437	86,358		2,098	(139,662)	(137,564)
9	Taxation	(377)	-	(377)		(532)	-	(532)
	Profit/(Loss) and total
	comprehensive income for the year	(456)	86,437	85,981		1,566	(139,662)	(138,096)
10	Earnings/(Deficit) per ordinary share	$(0.022)	$4.229	$4.207		$0.077	$(6.835)	$(6.758)

All of the Company's income and expenses are included in the profit/loss for the year and therefore the profit for the year is also the Company's comprehensive income for the year, as defined by IAS 1(revised).  In arriving at the result for the year, all amounts above relate to continuing activities.

The total column in this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with IFRS.  The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies.

Statement of Changes in Equity

For the Year Ended 30th April 2010

		Ordinary							Capital				Capital			Capital Reserve/
		share			Share		Revenue		Reserve/				Reserve/			Exchange
		Capital			Premium		Reserve		Realised				Unrealised			Differences					Total
		$'000			$'000		$'000		$'000				$'000			$'000					$'000
Balances at 1st May 2009		204			192,650		(19,092)		202,155				(182,204)			(10,047)					183,666
Movements during the year
Realised loss on investments sold		-			-		18,377		(18,377)				-			-					-
Movement on unrealised gain on revaluation of investments		-			-		(107,490)		-				107,490			-					-
Loss on foreign exchange		-			-		2,072		-				-			(2,072)					-
Distribution (Note 19)							(1,022)														(1,022)
Total comprehensive income		-			-		85,981		-				-			-					85,981
Balances at 30th April 2010		204			192,650		(21,174)		183,778				(74,714)			(12,119)					268,625
		Ordinary							Capital				Capital				Capital Reserve/
		Share		Share			Revenue		Reserve/				Reserve/				Exchange
		Capital		Premium			Reserve		Realised				Unrealised				Differences				Total
		$'000		$'000			$'000		$'000				$'000				$'000				$'000
Balances at 1st May 2008		204		192,650			(20,658)		305,885				(150,655)				(5,664)				321,762
Movements during the year
Realised loss on investments sold		-		-			103,730		(103,730)				-				-				-
Movement on unrealised loss on revaluation of investments		-		-			31,549		-				(31,549)				-				-
Loss on foreign exchange		-		-			4,383		-				-				(4,383)				-
Total comprehensive loss		-		-			(138,096)		-				-				-				(138,096)
Balances at 30th April 2009		204		192,650			(19,092)		202,155				(182,204)				(10,047)				183,666

Statement of Financial Position

As at 30th April 2010

		30th April 2010		30th April 2009
Notes		$'000		$'000
	Non Current Assets
2(f) 11	Financial assets at fair value
	through profit or loss	297,262		212,124
	Current Assets
	Due from brokers	102		4,289
2(d)	Dividends and other receivables	2,305		2,660
2(g)	Cash and cash equivalents	2,043		17,056
		4,450		24,005
	Current Liabilities
	Due to brokers	(608)		(6,106)
	Payables and accrued expenses	(721)		(509)
2(h) 12	Loans payable	(21,172)		(15,283)
		(22,501)		(21,898)
	Net Current (Liabilities)/Assets	(18,051)		2,107
	Non Current Liabilities
2(h) 12	Loans payable	(10,586)		(30,565)
15	Net Assets	268,625		183,666
14	Equity
	Ordinary share capital	204		204
	Share premium	192,650		192,650
	Revenue reserve	(21,174)		(19,092)
2(l)	Capital reserve	96,945		9,904
17	Net Assets Attributable to Equity Shareholders	268,625		183,666
	Net Asset Value per Ordinary Share*	$13.14		$8.99

*Based on the Net Asset Value at the year end divided by the number of shares in issue:

20,435,627 (30th April 2009 - 20,435,627)

Statement of Cash Flows

For the Year Ended 30th April 2010

			30th April 2010		30th April 2009
Notes			$'000		$'000
	Reconciliation of gain/(loss) for period to net cash flow
	from operating activities
	Net gain/(loss) before taxation		86,358		(137,564)
3	(Loss)/gain on investments held at fair value		(89,113)		134,742
	Exchange loss		2,072		4,383
	Interest expense		709		962
	Decrease in debtors and accrued income		355		1,316
	Increase/(decrease) in creditors		212		(226)
9	Taxation		(377)		(532)
			216		3,081
	Cash flows from operating activities		216		3,081
	Investing Activities
	Purchase of investments		(160,366)		(156,233)
	Sale of investments		162,428		195,640
	Net cash inflow from investing activities
			2,062		39,407
	Net cash inflow before financing		2,278		42,488
	Cash flows from financing activities
	Interest paid		(716)		(1,084)
19	Distribution		(1,022)		-
	Net loans repaid		(16,482)		(26,170)
	Net cash outflow from financing activities		(18,220)		(27,254)
	Net (decrease)/increase in cash and cash equivalents		(15,942)		15,234
	Exchange movements		929		(3,726)
	Movement in cash and cash equivalents in the year		(15,013)		11,508
	Cash and cash equivalents at beginning of year		17,056		5,548
	Cash and cash equivalents at end of year		2,043		17,056

Notes to the Financial Statements

For the Year Ended 30th April 2010

1.         GENERAL

             Atlantis Japan Growth Fund Limited (the "Company") was incorporated in Guernsey on
13th March 1996. The Company commenced activities on 10th May 1996.

2.         ACCOUNTING POLICIES

a) Statement of Compliance

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS"), which comprise standards and interpretations approved by the European Union and International Accounting Standards, and Standing Interpretations Committee interpretations approved by the IASC that remain in effect.

Basis of accounting

The annual Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities held at fair value through profit and loss, and in accordance with International Financial Reporting Standards (IFRS), AIC SORP and the 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 expense. 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.

Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year with the exception of the following:

IAS 1 (revised 2007) Presentation of Financial Statements

Amendments to IAS 1 introduces the statement of comprehensive income which presents all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense, either in one single statement, or two linked statements. The Company chose to present one single statement of comprehensive income.

In order to better reflect the activities of an investment company and in accordance with the guidance issued by the Association of Investment Companies (AIC), supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. 

Amendments to IFRS 7 Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments

The amendments to IFRS 7 were issued in March 2009 and become effective for annual periods beginning on or after 1st January 2009, with early adoption permitted. The Company has adopted these amendments with effect from 1st April 2009.

The amendment to IFRS 7 requires fair value measurements to be disclosed by the source of inputs using a three-level hierarchy:

-   Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

-   Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2).

-   Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

In addition, the amendments revise the specified minimum liquidity risk disclosures including: the contractual maturity of non derivative and derivative financial liabilities and a description of how this is managed.

IFRS 8 Operating segments

IFRS 8 became effective from 1st January 2009. IFRS 8 replaces IAS 14, 'Segment reporting', and aligns segment reporting with the requirements of the US standard SFAS 131, 'Disclosures about segments of an enterprise and related information'. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The segment information is therefore reported in a manner that is more consistent with the internal reporting provided to the chief operating decision-maker.

Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board that makes strategic decisions (refer to note 6 for further information).

Standards, interpretations and amendments to published statements not yet effective

At the date of authorisation of these financial statements, the following standards and interpretations, which have not been applied in these Financial Statements, were in issue but not yet effective:

-   IAS 7 (amendment) Statement of Cash Flows - 1st January 2010. Amendments to this standard might result in presentation changes to the Statement of Cash Flows.

-   IFRS 9 Financial Instruments - 1st January 2013. Adoption of this standard is not expected to result in additional disclosures within the Company's Financial Statements.

Standards, interpretations and amendments to published statements effective but not relevant

At the date of authorisation of these Financial Statements, the following standards and interpretations, which have not been applied in these Financial Statements, were in issue but are not relevant for the Company's financial statements:

-   IAS 19 (amendment) Employee Benefits

-   IAS 20 (amendment) Government Grants and Disclosure of Government Assistance

-   IAS 23 (amendment), 'Borrowing costs';

-   IAS 29 (amendment) Financial Reporting in Hyperinflationary Economies

-   IAS 39 and IFRIC 9 (amendments), 'Embedded derivatives' (effective for all periods ending on or after 30 June 2009);

-   IFRS 1 (amendment), 'First-time adoption of IFRS', and IAS 27, 'Consolidated and separate financial statements';

-   IFRS 2 (amendment), 'Share-based payment';

-   IFRIC 15, 'Agreements for construction of real estates'

Standards, interpretations and amendments to published statements not yet effective and not relevant

The following interpretations are mandatory for the Company's accounting periods beginning on or after 1 July 2009 or later periods but are not relevant for the Company's financial statements:

-   IAS 27 (revised), 'Consolidated and separate financial statements' (effective from 1 July 2009);

-   IAS 28, 'Consequential Amendments Arising From Amendments to IFRS 3' (effective from 1 July 2009)

-   IAS 31, 'Consequential Amendments Arising From Amendments to IFRS 3' (effective from 1 July 2009)

-   IAS 39 (amendment), 'Financial instruments: Recognition and measurement' (effective from 1 July 2009);

-   IFRS 1 (amendments), 'Additional exemptions for first-time adopters' (effective from 1 January 2010);

-   IFRS 2 (amendments), 'Group cash-settled share-based payment transactions' (effective from 1 January 2010);

-   IFRS 3 (revised), 'Business combinations' (effective from 1 July 2009);

-   IFRS 5 (amendment), 'Non-current Assets Held for Sale and Discontinued Operations' (effective 1 July 2009);

-   IFRIC 17, 'Distributions of non-cash assets to owners' (effective from 1 July 2009); and

-   IFRIC 18, 'Transfers of assets from customers' (effective from 1 July 2009).

2.         ACCOUNTING POLICIES (continued)

'Improvements to IFRS' were issued in May 2008 and April 2009 respectively and contain numerous amendments to IFRS, which the IASB consider non-urgent but necessary. 'Improvements to IFRS' comprise amendments that result in accounting changes for presentation, recognition or measurement purposes as well as terminology or editorial amendments related to a variety of individual standards. Most of the amendments are effective for annual periods beginning on or after 1 January 2009 and 1 January 2010 respectively, with earlier application permitted. No material changes to accounting policies are expected as a result of these amendments.

             c) Presentation of 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

             Dividends arising on the Company's investments are accounted for on an ex-dividend basis. Investment income is accounted for gross of withholding tax.

             e) Expenses

             All expenses are recognised on an accruals basis and have been charged against revenue, with the exception of transaction costs, which have been charged against capital.

             f) Investments

             The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Company's Board of Directors and other key management personnel.

             Accordingly, upon initial recognition the investments are designated by the Company as 'at fair value through profit or loss'. 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). Subsequently, the investments listed overseas are valued at 'fair value', which is bid price (where a bid price is available) or otherwise at fair value based on published price quotations.

             Gains and losses on non-current asset investments are included in the Statement of Comprehensive Income as capital.

             g) 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 Flow, cash and cash equivalents consist of cash and cash equivalents, as defined above, net of outstanding bank overdrafts.

             h) 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.

             i) Foreign Currencies

             The Company's investments are predominately denominated in Japanese yen. The Company's obligation to shareholders is denominated in US dollars and when appropriate, the Company may hedge the exchange rate risk from yen to US dollars. Therefore, the functional currency is US dollars, which is also the presentational currency of the Company. Transactions involving currencies other than US dollars, are recorded at the exchange rate ruling on the transaction date. At each Statement of Financial Position date, monetary items and non-monetary assets and liabilities that are fair valued, which are denominated in foreign currencies, are retranslated at the closing rates of exchange.

             Exchange differences arising from retranslating at the Statement of Financial Position date:

             -  investments and other financial instruments measured at fair value through profit or loss; and

             -  other monetary items;

             and arising on settlement of monetary items, are included in the Statement of Comprehensive Income and allocated as capital if they are of a capital nature, or as revenue if they are of a revenue nature.

Foreign Currency Transactions

Foreign currency assets and liabilities, including investments at valuation, are translated into U.S. Dollars at the rate of exchange ruling at the Statement of Financial Position date.  Investment transactions and income and expenditure items are translated at the rate of exchange ruling at the date of the transactions.  Gains and losses on foreign exchange are included in the Statement of Comprehensive Income.

             j) Taxation

             The tax expense represents the sum of the tax currently payable and deferred tax.

             The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that were applicable at the Statement of Financial Position date.

             In line with the recommendations of the AIC SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Statement of Comprehensive Income is the "marginal basis". Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Statement of Comprehensive Income, then no tax relief is transferred to the capital return column.

             Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. A deferred tax liability is recognised in full for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Investment trusts which have approval as such under section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains.

             The carrying amount of deferred tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

             Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

             k) Financial Liabilities

Financial liabilities are recognised when the Company becomes a party to the contractual agreements of the instrument.  Trade and other payables are initially recognised at their nominal value and subsequently measured at amortized cost less settlement payments.  Financial liabilities are derecognised from the Statement of Financial Position only when the obligations are extinguished either through discharge, cancellation or expiration.

             l) Capital and Reserves

The capital reserve distinguishes between gains/(losses) on sale or disposals and valuation gains/(losses) on investments.  The capital reserve consists of realised gains/(losses) on investments, movement in valuation gains/(losses) on investments and gains/(losses) relating to foreign exchange.

3.         GAINS/(LOSSES) ON INVESTMENTS HELD AT FAIR VALUE

		2010		2009
		$'000		$'000
Proceeds from sales of investments		158,241		196,120
Original cost of investments sold		(176,618)		(299,850)
Losses realised on investments sold during the year		(18,377)		(103,730)
Net unrealised gain/(depreciation) for the year		107,490		(31,012)
Gains/(losses) on investments held at fair value		89,113		(134,742)

4.         INVESTMENT MANAGEMENT FEE

             The Company pays to the Investment Manager a fee accrued weekly and paid monthly in arrears at the annual rate of 1.5 per cent of the weekly Net Asset Value of the Company. For the year ended 30th April 2010, total investment management fees were $3,672,564 (2009 - $3,631,865) of which $327,591 (2009 - $202,725) is due and payable as at that date.

             Under the terms of the Investment Management Agreement dated 18th March 1996, the Investment Manager, Atlantis Fund Managers (Guernsey) Limited, 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 twelve months, and be in accordance with the Investment Management Agreement. Fees payable to the Investment Adviser are met by the Investment Manager.

5.         CUSTODIAN FEES

             The Company pays to the Custodian a fee accrued weekly at a rate of 0.03 per cent of the total weekly Net Asset Value subject to an annual minimum of US$20,000 of the assets held by the Custodian or Sub-Custodian, together with transactions charges.

             Effective 1 December 2009 the custodian fees were updated so that the annual minimum of US$20,000 no longer applied.

Charges for the year ended 30th April 2010, total custodian fees were $222,347 (2009 - $287,252) of which $20,704 (2009- $35,042) is due and payable as at that date.

6.           OPERATING SEGMENTS

IFRS 8 requires disclosure of information about the Company's operating segments and replaced the requirement to determine primary (business) and secondary (geographical) reporting segments of the Company.

The Board of Directors 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.

As required by IFRS 8, the total fair value of the financial instruments held by the Company by each major geographical segment, and the equivalent percentages of the total value of the Company, are reported in the Portfolio Statement.

Revenue earned is reported separately on the face of the statement of comprehensive income as dividend income received from Japanese equities.

7.         ADMINISTRATION FEES

             The Company pays to the Administrator a fee accrued weekly and paid monthly in arrears at the annual rate of 0.18 per cent of the weekly Net Asset Value up to $50 million and 0.135 per cent between $50 million and $100 million, 0.0675 per cent between $100 million and $200 million and 0.02 per cent above $200 million, subject to an annual minimum of $100,000. In addition, an annual minimum retainer of $1,000 is payable in respect of maintaining the principal register of shareholders.

             Effective 1 December 2009 the administration fees were updated so that the annual minimum of US$ 100,000 no longer applied

For the year ended 30th April 2010, total administration and registrar fees were $243,154 (2009 - $238,133) which $20,773 (2009 - $83,116) is due and payable as at that date.

8.         DIRECTORS' FEES AND EXPENSES

             Each of the Directors is entitled to receive a fee from the Company, being £20,000 per annum for the Chairman and £15,000 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 year ended 30th April 2010, total directors' fees and expenses were $131,734 (2009 - $143,353) of which $4,189 (2009 -$16,669) is due and payable as at that date.

9.         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 £600, 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.

		2010		2009
		$'000		$'000
Corporation tax at 28%		-		-
Irrecoverable overseas tax		377		532
Tax charge in respect of the current year		377		532

             Current Taxation

             The current taxation charge for the year is different from the standard rate of corporation tax in the UK (28%). The differences are explained below.

		2010		2009
		$'000		$'000
Profit/(loss) before tax		86,358		(137,564)
Capital (profit)/loss for the year		(86,437)		(139,662)
Taxable (loss)/profit for the year		(79)		2,098
Theoretical tax at UK corporation tax rate of 28% (2009 - 28%)		(22)		587
Effects of:
Relief for losses brought forward		128		(438)
Relief for overseas tax suffered		(106)		(149)
Overseas tax written off		377		532
Actual current tax charge		377		532

             The Company is an investment trust and therefore is not taxable on capital gains.

             Factors that may affect future tax charges

             The investment trust has excess management expenses of $22,203,354 (2009 - $23,263,089) that are available to offset future taxable revenue. 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.

10.       EARNINGS/(DEFICIT) PER ORDINARY SHARE

             The earnings per ordinary share figure is based on the net profit for the year of $85,981,128 (2009 ($138,096,046)) and on 20,435,627 ordinary shares for each year, being the weighted average number of ordinary shares in issue during the year.

             The earnings/(deficit) per ordinary share figure detailed above can be further analysed between revenue and capital, as below.

		2010		2009
		$'000		$'000
Net revenue (loss)/profit		(456)		1,566
Net capital profit/(loss)		86,437		(139,662)
Net total profit/(loss)		85,981		(138,096)
Weighted average number of ordinary shares
in issue during the year		20,435,627		20,435,627
		$		$
Revenue (loss)/profit per ordinary share		(0.022)		0.077
Capital profit/(deficit) per ordinary share		4.229		(6.835)
Total profit/(deficit) per ordinary share		4.207		(6.758)

11.       INVESTMENTS

		2010		2009
		$'000		$'000
Cost of investments brought forward		284,301		425,025
Cost of purchase of investments		154,868		159,126
Proceeds on disposal of investments		(158,241)		(196,120)
Realised loss on disposal of investments		(18,377)		(103,730)
Cost of investments carried forward		262,551		284,301
Cost of investments		262,551		284,301
Unrealised appreciation/(depreciation)		34,711		(72,177)
Fair value of investments at year end		297,262		212,124

12.       LOANS PAYABLE

Loan	Interest	Maturity	2010		2009
Amount	Rate	Date	$'000		$'000
3 year committed fixed rate
credit facility
Y1,500,000,000	1.71%	16th October 2009	-		15,283
5 year committed fixed rate
credit facility
Y2,000,000,000	1.63%	13th October 2010	21,172		-
Loan due for repayment within one year			21,172		15,283
5 year committed fixed rate
credit facility
Y2,000,000,000	1.63%	13th October 2010	-		20,377
Y1,000,000,000	2.05%	31st July 2011	10,586		10,188
Loan due for repayment greater than one year			10,586		30,565
			31,758		45,848

13.       FORWARD CURRENCY CONTRACTS

             At 30th April 2010 and 2009 the Company did not have any open forward currency contracts.

14.       SHARE CAPITAL AND SHARE PREMIUM

			2010		2009
a) Authorised			$'000		$'000
24,000,000 Ordinary Shares of $0.01 each			240		240

The rights which the ordinary shares convey upon the holders thereof are as follows:

Voting Rights

(i) on a show of hands, every Member who is present shall have one vote; and ii) 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.

Rights in a Winding-up

The holders of ordinary shares will be entitled to share in the Net Asset Value of the Company as determined by the Liquidator.

b) Issued
Ordinary Shares	Number of Shares		Share Capital		Share Premium
			$'000		$'000
In issue at 30th April 2010	20,435,627		204		192,650

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.

15.       RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS

			2010		2009
			$'000		$'000
Income/(deficit) attributable to equity shareholders			85,981		(138,096)
Income distribution (note 19)			(1,022)		-
Shareholders' funds at beginning of year			183,666		321,762
Shareholders' funds at end of year			268,625		183,666

16.       FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

In accordance with its investment objectives and policies, the Company holds financial instruments which at any one time may comprise the following:

*    securities held in accordance with the investment objectives and policies

*    cash and short-term debtors and creditors arising directly from operations

*    borrowing used to finance investment activity

*    derivative transactions including investment in warrants and forward currency contracts

*    options or futures for hedging purposes

The financial instruments held by the Company principally comprise equities listed on the stock market in Japan.  The specific risks arising from the Company's exposure to these instruments, and the Manager/Investment Adviser's policies for managing these risks, which have been applied throughout the 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 loan facility agreement with Bank N.V. (ING), the Company entered into a Guernsey law security interest agreement in favour of ING over its custody accounts held with Northern Trust (Guernsey) Limited.

The Company does not have any externally imposed capital requirements apart from the fact that it should not retain more than 15% of the 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 and thus has fixed capital for investment.  The Company's capital is represented by ordinary shares of $0.01 and each share carries one vote.  They are entitled to dividends when declared.  At the Annual General Meeting the Board will seek shareholder approval to renew its power to purchase shares for cancellation and thus reduce capital.

At the Annual General Meeting held on 2nd October 2009, shareholders renewed the Director's authority to buyback up to 3,063,300 ordinary shares, equivalent to 14.99 of the issued share capital provided that:

·    the maximum price which may be paid for any such Shares which the Company contracts to purchase on any day shall be a sum equivalent to 105% of the average of the middle market quotation for the Shares on the Daily Official List of the London Stock Exchange on the 5 business days immediately preceding that day;

·    any purchase of Shares will be made in the market for cash at prices below the prevailing Net Asset Value per share;

·    the minimum price which may be paid for such Shares is USD0.01

No shares were repurchased during the year ended 30th April 2010 (2009: Nil).  Renewal of the buyback authority will be sought at the 2011 Annual General Meeting.  There has been no change to the capital structure of the Company during the year ended 30 April 2010.

Market Price Risk

The Company's investment portfolio - particularly its equity investments - is exposed to market price fluctuations which are monitored by the Manager/Investment Adviser in pursuance of the investment objectives and policies.   Adherence to investment guidelines and to investment and borrowing powers set out in the scheme particulars mitigates the risk of excessive exposure to any particular type of security or issuer.

At 30th April 2010, the Fund'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 Fund's exposures to equity securities, related derivatives and other instruments. Changes in market prices primarily affect the fair value of the Fund's exposures to equity securities, related derivatives and other instruments.

Exceptional risks associated with investment in Japanese smaller companies may include:

a)   greater price volatility, substantially less liquidity and significantly smaller market capitalisation, and

b)  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 Fund had exposure at 30 April 2010 had increased or decreased by 5% with all other variables held constant, this would have increased or decreased net assets attributable to holders of redeemable participating shares of the Fund by: 

		2010		2009
		+/-		+/-
Net Asset Value		$14,863,086		$10,606,206
Net Asset Value per share		$0.73		$0.52

Foreign Currency Risk

The Company principally invests in securities denominated in currencies other than United States Dollar, the functional currency of the Company. Therefore, the Statement of Financial Position may be affected by movements in the exchange rates of such currencies against the US Dollar.  The Manager/Investment Advisor has the power to manage exposure to currency movements by using forward currency contracts.  No such instruments were held at the date of these Financial Statements.

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 US Dollars is set out in Note 2(i) to the Financial Statements.

The Company's net currency exposure is as follows:

Japanese Yen
As at 30th April 2010:				$'000
Assets
Cash and cash equivalents				2,007
Investments held at fair value	297,262
Other assets				2,335
Total assets		301,604
Liabilities
Loans payable		(31,758)
Other liabilities				(608)
Total liabilities		(32,366)
Total net assets	269,238
	Japanese Yen
As at 30th April 2009:				$'000
Assets
Cash and cash equivalents		17,015
Investments held at fair value			212,124
Other assets				6,869
Total assets		236,008
Liabilities
Loans payable			(45,848)
Other liabilities	(6,106)
Total liabilities	(51,954)
Total net assets	184,054

Foreign Currency Sensitivity Analysis

If the exchange rate at 30 April, 2010 between the functional currency and all other currencies had increased or decreased by a 5% currency movement (2009: 5%) this should be a reasonably possible change for a period of one year, or less if the next financial period will be less than one year with all other variables held constant, this would have increased or reduced net assets attributable to holders of ordinary shares of the Company by: 

		2010		2009
		+/-		+/-
Net Asset Value		$13,465,556		$9,206,716
Net Asset Value per share		$0.66		$0.45

No benchmark is used in the calculation of the above information.

Interest Rate Risk

Substantially all the Company's financial assets and its liabilities are non-interest bearing except for the two outstanding loans payable detailed in note 11, and any excess cash and cash equivalents are invested at short-term market interest rates.

As at 30th April 2010, the Company has a small exposure to interest rate risk regarding the loan facility and cash and cash equivalents. 

Increases in interest rates may increase the costs of the Company's borrowings. The rate of interest on each ING drawdown loan for each interest period is the percentage rate per annum which is the aggregate of the applicable; (i) margin, (ii) LIBOR and (iii) mandatory cost.  Interest on the loan is payable monthly in arrears. For the year ended 30th April 2010 the interest accrued on the loan was $72,562 (30th April 2009: $80,160)

The following financial assets and liabilities disclosures exclude prepayments and taxation debtors and creditors:

	Cash flow		Fair value
	interest		interest		Total
	rate risk		rate risk
As at 30th April 2010:	$'000		$'000		$'000
Financial assets
Cash and bank balances	2,043		-		2,043
Financial liabilities
Loans payable	-		(31,758)		(31,758)
Net financial assets/(liabilities)	2,043		(31,758)		(29,715)

	Cash flow		Fair value
	interest		interest		Total
	rate risk		rate risk
As at 30th April 2009:	$'000		$'000		$'000
Financial assets
Cash and bank balances	17,056		-		17,056
Financial liabilities
Loans payable	-		(45,848)		(45,848)
Net financial assets/(liabilities)	17,056		(45,848)		(28,792)

The cash flow interest rate risk comprises those financial 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 Net Asset Value 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 financial assets and liabilities with a fixed interest rate, for example loans payable and loan interest payable.

	Weighted average			Weighted average period for
	interest rate			which rate is fixed (years)
	2010	2009		2010	2009
Japanese Yen
Loans payable	1.77%	1.75%		1.33	0.89

Fair Value

All assets and liabilities are carried at fair value with the exception of short term borrowings which are carried at amortised cost using the effective interest rate method.

Short term Debtors and Creditors

Trade and other receivables 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 30th April 2010, the Company had drawn down a loan facility of JPY3,000,000,000 ($43,211,061). In connection with the facility agreement, the Company entered into a Guernsey law security interest agreement in favour of ING over its custody accounts held with Northern Trust (Guernsey) Limited. The loan may only be applied for investment leverage purposes only and must be repaid on the latest of (i) the day falling 364 days from the date of the draw down of the loan, and (ii) any extension date agreed between the Company and ING.

The Company invests primarily in listed securities.

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 assets and liabilities (excluding prepayments and tax balances) at 30th April 2010 is as follows:

			Up to 1 year		1 to 5		Total
			or on demand		years
As at 30th April 2010:			$'000		$'000		$'000
Financial assets
Cash and bank balances			2,043		-		2,043
Investments held at fair value			297,262		-		297,262
Other financial assets			2,407		-		2,407
Total financial assets			301,712		-		301,712
Financial liabilities
Loans payable			(21,172)		(10,586)		(31,758)
Other financial liabilities			(1,702)		(68)		(1,770)
Total financial liabilities			(22,874)		(10,654)		(33,528)
Excess/(deficit) of financial assets over gross contractual liabilities			278,838		(10,654)		268,184
			Up to 1 year		1 to 5		Total
			or on demand		years
As at 30th April 2009:			$'000		$'000		$'000
Financial assets
Cash and bank balances			17,056		-		17,056
Investments held at fair value			212,124		-		212,124
Other financial assets			6,949		-		6,949
Total financial assets			236,129		-		236,129
Financial liabilities
Loans payable			(15,943)		(30,716)		(46,659)
Other financial liabilities			(6,615)		(261)		(6,876)
Total financial liabilities			(22,558)		(30,977)		(53,535)
Excess/(deficit) of financial assets over gross contractual liabilities			213,571		(30,977)		182,594

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 placing Memorandum, 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 large 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 received payment.  Payment is made on a purchase once the securities have been received by 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 Custodian. The Investment Manager regularly reviews concentrations of credit risk.

The Custodian to the Company is Northern Trust Fiduciary Services (Ireland) Limited, an indirect wholly-owned subsidiary of Northern Trust Corporation ("TNTC"). TNTC is publicly traded and a constituent of the S&P 500. TNTC has a credit rating of AA- from Standard & Poors. Northern Trust Company ("TNTCO") is also wholly owned by TNTC. TNTCO has a credit rating of AA (2009: AA-) from Standard & Poors .

The securities held by the Company are legally held with the Custodian, 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 Custodian or its appointed agents, although it may take time to 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 Custodian, their related companies and their appointed agents, and is therefore subject to the credit risk of the relevant institution in this respect.

The net assets exposed to credit risk at year end amounted to US$1,537,466 (2009 US$15,239,084).

Fair Value Hierarchy

The fair value of financial assets and liabilities 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 year end date. The quoted market price used for financial assets held by the Company is the current bid price; the appropriate quoted market price for financial liabilities is the current asking price. When the Company holds derivatives with offsetting market risks, it uses mid-market prices as a basis for establishing fair values for the offsetting risk positions and applies this bid or asking price to the net open position, as appropriate. If a significant movement in fair value occurs subsequent to the close of trading on the year end date, valuation techniques will be applied to determine the fair value.

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 financial assets and liabilities 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 are used primarily to value unlisted equity, debt securities and other debt instruments for which markets were or have been inactive during the financial year. Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions.

The following table sets out fair value measurements using the IFRS 7 fair value hierarchies:

Financial assets at fair value through profit or loss
At 30 April 2010
	Total	Level 1	Level 2	Level 3
Atlantis Japan Growth Fund	$'000	$'000	$'000	$'000
Equity Investments	297,262	297,262	-	-
Financial assets at fair value through profit or loss
At 30 April 2009
	Total	Level 1	Level 2	Level 3
Atlantis Japan Growth Fund	$'000	$'000	$'000	$'000
Equity Investments	212,124	212,124	-	-

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.

All the listed equity instruments have been issued by publicly traded companies in Japan.  Fair values for these securities have been determined by reference to their quoted bid prices at the reporting date.

17.       RECONCILIATION OF NET ASSET VALUE TO PUBLISHED NET ASSET VALUE

					30 April 2010		Per Share
					$'000		$
Published Net Asset Value					269,530		13.19
Unrealised loss on revaluation of securities at bid prices					(905)		(0.05)
					268,625		13.14
					30 April 2009		Per Share
					$'000		$
Published Net Asset Value					184,722		9.04
Unrealised loss on revaluation of securities at bid prices					(1,056)		(0.05)
					183,666		8.99

In accordance with IFRS the Company's investments have been valued at bid price. However, in accordance with the Company's prospectus for the purposes of determining the daily net asset value per share the investments are valued at mid prices.

18.        REORGANISATION EXPENSES

The Special Resolution proposed at the Extraordinary General Meeting held on 1st April 2010 was not passed. Accordingly the proposed bonus issue of subscription shares, subdivision, reclassification and redenomination of shares, amendments to the Memorandum and adoption of new articles was not implemented, however costs associated with this proposal are reflected in the Statement of Comprehensive Income and are detailed below. 

		2009
		$'000
UK Lawyers		75
Guernsey Lawyers		31
Irish Legal Opinion		3
Sponsor's Legal Council		31
Accountants		46
UKLA		10
Registrars		23
Administrators		15
Printers and postage		22
		256

19.        DISTRIBUTION

The following distribution was declared by the Board of Directors:-

Distribution

Date

Date

Amount

Relevant

per unit

declared

Ex-date

Record Date

paid

US$

period

$0.05

17th July 2009

12th August 2009

14th August 2009

4th September 2009

1,021,781

1st May 2008 - 30th April 2009

 

END

 

 

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