Annual Results for the year ended 30 April 2014

Reports and Financial Statements ATLANTIS JAPAN GROWTH FUND LIMITED ("AJGF" or the "Company") (a closed-ended investment company incorporated in Guernsey with registration number 30709) Annual Results for the year ended 30 April 2014 1 August 2014 The financial information set out below does not constitute the Company's statutory accounts for the year ended 30 April 2014. All figures are based on the audited financial statements for the year ended 30 April 2014. The financial information for the year ended 30 April 2014 noted below is derived from the financial statements delivered to the UK Listing Authority. The Auditors reported on those accounts, their report was unqualified and did not contain a statement under Section 263(2) and 263(3) of The Companies (Guernsey) Law, 2008. The annual report and audited financial statements for the year ended 30 April 2014will shortly be posted to shareholders and will also be available on the company website: www.atlantisjapangrowthfund.com Introduction 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 categorised as First Section, Second Section, JASDAQ, Mothers and Tokyo PRO, or the regional stock exchanges of Fukuoka, Nagoya, Sapporo and Osaka Securities Exchange. The Company may also invest up to 20 per cent 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 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. 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. Investment Policy for the Redemption Pool With regard to the redemption pool, the Company aims to liquidate the necessary assets to meet qualifying redemption requests in a timely manner, and to minimise the impact that such redemptions will have to existing shareholders and the Company as a whole. The management and impact of the risk associated with the investment policies are described in detail in the Notes to the Financial Statements (Note 15). INVESTMENT MANAGER AND INVESTMENT ADVISER AFMG Limited was the Investment Manager of the Company up until 1stAugust 2014on which date it was replaced in that role by Tiburon Partners LLP which had previously been the Investment Adviser. Atlantis Investment Research Corporation, established in Tokyo, will, through Edwin Merner and his colleagues, advise 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. Chairman's Statement For the year ended 30th April 2014 PERFORMANCE Over the year the Company gained 2.9% in the Net Asset Value("NAV") denominated inyen, which translated into a 1.8% fall in US dollar terms. This compares to the TOPIX's 2.9% decline measured in US dollars. The Company's favourable performance against TOPIX can be attributed to stock selection and its over-weighting in smaller and medium sized companies whose respective indices out-performed TOPIX over the course of the year. The three year record of outperformance remains excellent. Atlantis Japan Growth Fund Performance Since Company Inception Net Asset Value Total Return (USD) Since Inception 1 Year 3 Year 5 Year 10 Year Atlantis Japan Growth Fund +93.1% -1.8% +41.5% +111.9% -2.5% Benchmark Return (USD) Topix TR -8.6% -2.9% +16.1% +47.1% +25.6% Net Asset Value Total Return (GBP) Since Inception† 1 Year 3 Year Atlantis Japan Growth Fund +74.9% -9.5% +40.4% Benchmark Return (GBP) Topix TR -17.3% -10.5% +15.1% † Inception date of the GBP return is 16th December 2010. Year to 30th April At Inception 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total Net Assets (USDm) 198 429 610 467 324 185 270 211# 130# 100# 84# NAV per Share (USD)* 0.99* 2.10* 2.98* 2.28* 1.58* 0.90* 1.31* 1.35 1.48 1.95 1.92 Source: Tiburon Partners and Bloomberg. As of 30th April 2014. # Total Net Assets after redemptions during year see "Redemption Facility". * The Company was subject to a 10:1 stock split in December 2010. These figures have been restated showing the split for comparative purposes. The original figures prior to the split were as follows; Year to 30th April At Inception 2005 2006 2007 2008 2009 2010 NAV per Share (USD) 9.92 21.01 29.87 22.84 15.85 9.04 13.19 SHARE PRICE DISCOUNT The discount or premium for the Company represents the share price relative to its Net Asset Value. The discount for the Companyaveraged 6.4% during the period under review compared with a 7.0% peer group average discount over the past twelve months. The discount was 7.0% on 30th April 2014. DISCOUNT CONTROL MECHANISM The Directors operate a hard discount control mechanism whereby the Company is obliged to hold a continuation vote should the shares have traded, on average, at a discount of more than 10% to the Net Asset Value per share during any rolling 90 day period, in normal market conditions. If the obligation to hold a continuation vote is triggered, the vote will be held no later than the next practicable annual general meeting of the Company. 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 exercised its authority to buy back shares on 3 occasions during the year at an average discount of 6.3%. The shares bought back, representing 4.8% of current issued shares, are held in treasury. Since the year end the Company has not bought back any further shares. REGULATORY I am pleased to report that the Company has entered into the arrangements necessary to ensure compliance with the AIFM Directive. This provides a more robust management structure and allows Mr. Merner and the team at AIRC to continue to advise on the Company's day to day investment activities. Following a review of the Company's management arrangements, the Board approved the appointment of Tiburon Partners LLP ("Tiburon"), who had been acting as the Company's investment adviser, as the Company's alternative investment fund manager on the terms of and subject to the conditions of a new investment management agreement between the Company and Tiburon. The Company's existing investment management agreement between the Company and AFMG Limited ("AFMG") has been terminated with AFMG no longer retaining a role in the management of the Company's assets. Atlantis Investment Research Corporation has been re-appointed by the Company and Tiburon to act as investment adviser on the terms of and subject to the conditions of a new investment advisory agreement. Save for the removal of AFMG from the Company's portfolio management structure, the contractual terms to which the Company, Tiburon and AIRC are subject have not changed in substance and, in particular, the management fee which the Company pays remains unchanged. 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, Tiburon and the Depositary. Due to legislative and regulatory changes introduced by virtue of the AIFM Directive, the Company has also amended and re-stated its administration agreement with Northern Trust International Fund Administration Services (Guernsey) Limited. OUTLOOK I am greatly encouraged by the recent economic data indicating that the Bank of Japan`s massive quantitative easing program, coupled with fiscal stimulus, are having the intended effect of rooting out deflationary expectations in Japan. Anxiety that the April consumption tax increase will knock Japan back into a recession appears to have been misplaced. Consensus forecasts project economic expansion will resume from the second quarter of the financial year endingMarch 2015. Japanese equities offer compelling value in terms of PER, PBR and yield relative to other major markets. I would be remiss not to note risks including Japan`s geopolitical conflicts with its neighbours, precarious public sector finances and flagging enthusiasm for structural change. Ed Merner, who heads the Company's investment advisory team, believes that earnings growth in Japan will be sustained over the medium term, and this in turn will underpin the equity market. The Directors believe the Company is well positioned to take advantage of further improvements and structural change in the economy over the year ahead. The emphasis on growth has served the Company well historically and there seems to be little reason to initiate a strategic change. MR. TIM GUINNESS Tim Guinness retired as Chairman and from the board at the end of April. My predecessor brought a wealth of knowledge to our deliberations and has an amazing eye for detail. Always passionate in defence of shareholder interests, and highly respected by his colleagues, Tim will be much missed and leaves with our thanks and very best wishes. Noel Lamb 1stAugust 2014 Investment Manager's Report For the year ended 30th April 2014 PERFORMANCE For the year ended 30th April 2014 the Company's NAV declined 1.8% in US dollar terms on a total return basis; this was a superior performance to the TOPIX (TR) which finished 2.9% lower year-on-year. Over the course of the year, the Japanese yen's weakness vis-à-vis the US dollar was responsible for the dollar denominated decline but in Japanese yen terms the Company's NAV rose by 2.9%. Over the last three years the Company's NAV has gained 41.5% compared to TOPIX's (TR) 16.1% increase. There were two offsetting market influences on the Company's performance during the year. The Company entered the year with an unusually high exposure, in historical terms, to larger capitalized stocks. For reference, a year ago multinational companies such as Sumitomo Mitsui Financial Group, Toyota, Mitsui Fudosan, Daikin and Sekisui House were prominent in the Company's top ten holdings. However, as their valuations were pushed higher by the wave of overseas buying that materialized through the first three quarters, the Manager rebalanced the portfolio towards smaller and medium capitalized stocks. As can be seen below, none of these companies, except for Sumitomo Mitsui Financial Group, remain in the top ten holdings due to either liquidation or portfolio rebalancing. These larger capitalized stocks were replaced by smaller undervalued growth companies such as job information specialist Gakujo and logistics equipment assembler Kito. The Company consequently benefited from the outperformance logged by smaller stocks over the course of the year. On the other hand, the Company's concentration on growth was not rewarded by the market. Quantitative attribution analysis suggested the market was oriented toward value rather than growth thus dampening the Company's performance. The Company ended the fiscal year with JPY 1.25bn ($12.2 million) in borrowings. Cash stood at JPY 113.9 million which meant the Company on a net basis was 13% leveraged. The yen gradually depreciated against the US dollar over the course of the fiscal year and ended at JPY 102.5. The Company has no foreign exchange hedges; a weaker yen has a negative impact on the US dollar value of the Company. ECONOMIC OUTLOOK Fueled by fiscal stimulus and massive quantitative easing, Japan's real GDP growth accelerated to 2.3% in the financial year ending March 2014 with consumption, housing, and public sector capital formation particularly robust. However, it should be noted that growth in the final January-March quarter was heavily affected by consumers' anticipatory purchases prior to the 1st April consumption tax increase from 5% to 8%. The reaction to the tax hike will likely depress private sector consumption and housing investment in the first half of the financial year ending March 2015 and consequently decelerate the economy's real growth rate to a 1.0%-1.3% range in the financial year ending March 2015. Consensus estimates place the nominal growth rate at 3.0%-3.3%. If this does transpire then the Bank of Japan (BOJ) is on track to accomplish its major policy objective of rooting out entrenched domestic deflationary expectations. Pronouncements from the BOJ suggest continued commitment to doubling Japan's monetary base over the medium term. Recent data indicates monthly year-on-year money supply growth continues in the 40%-50% range. The private sector is deleveraged and modest loan growth has emerged. Japan's economy should not lack for liquidity. There are serious, but not insurmountable, challenges for the economy. Geopolitical relations in northeast Asia are tense but to date have not had a negative impact on regional economic activity. Despite the consumption tax hike, the government's finances remain stretched. A progressively aging population has tipped into actual population decline which to date has been offset by rising productivity. The government believes structural reforms will improve the workforce participation rate but conservative social norms regarding immigration and women in the workforce will be slow to change. That said, industrial production is recovering, and a tighter labor market is putting upward pressure on wages. In summary deflationary pressures have eased with aggregate demand currently exceeding supply. The prerequisites are in place for the Japanese economy to expand at a sustained 1.0%-2.0% annual real rate over the medium term. MARKET COMMENT Over the past few years demand for Japanese equities has broadly originated from two sources - overseas investors and individuals. Overseas investors hold approximately 30% of outstanding Japanese shares and account for about 60% of equity market turnover. Overseas investors were active equity buyers in the first three quarters of the financial year ending March 2014 but were then net sellers in January-March. Thus far into the new fiscal year they have been marginal net purchasers. In the new fiscal year two new developments have emerged that potentially could tighten equity demand. Prime Minister Abe has long criticized the USD 1.3tr Government Pension Investment Fund (GPIF) for its ultra-conservative asset allocation favouring government bonds. In the spring the Prime Minister successfully reshuffled the GPIF board of governors to include progressive individuals who have argued for a more diversified asset allocation, including equities. Expectations are high that the GPIF will be raising its allocation to domestic equities over the medium term. In addition, business corporations, flush with cash and under pressure to improve shareholder returns, have announced an encouraging number of share buyback proposals. In the year-to-date, Japanese companies have announced share buybacks in excess of JPY 200bn each month. The Manager believes the valuations of Japanese equities are attractive. Forward global PERs, including Japan, have generally converged around the 15x level. From this perspective, the Company, with a 13x PER for the financial year ending March 2015, is priced at a discount to the market. On the basis of other valuation measurements, PBR and yield for example, Japan, at 1.3x and 1.6% respectively, represents compelling comparative value particularly in the context of the consensus 10%+ corporate earnings growth forecast for the financial year ending March 2015. For reference the Company's portfolio currently yields 2.5% and has a historic 2.0x PBR. MANAGER'S STRATEGY The Manager will remain fully invested in the Japanese equity market. Furthermore he intends to maintain the portfolio's leverage at approximately 10-13% in order to participate in the available growth opportunities, particularly in the smaller and mid-capitalized company universe. The Manager does not anticipate investing in bonds, convertible bonds, or any other structured derivative product. The Manager continues to employ a stock selection process driven by bottom-up fundamentals. The main criteria for stock selection is a company's medium to long term growth potential with the investment decision determined by a blend of benchmarks including but not limited to PER, PBR, dividend yield, and sustained free cash flow. The Company's investment process will continue to be based on rigorous proprietary research. Given the bottom-up nature of the stock selection process the Company portfolio's sector weightings are the result of aggregate individual stock selection rather than a top-down sector allocation. The Manager believes the structural reforms being proposed by Prime Minister Abe will create investment opportunities in sectors targeted for reform. From an over-arching perspective the Japanese investment environment will be more hospitable if the government acts on the reform proposal to lower the corporate tax rate from 35% to less than 30%. Meaningful progress on critical reforms to Japan's agricultural, medical services, and energy sectors combined with liberalized employment and business formation regulations should create a hospitable investment environment, particularly in the small and medium capitalized segment. With labor demand tightening and the relaxation labor regulations in the offing the Manager has invested in a number of staffing companies including Parsona, Trust Tech and Outsourcing. This is a fragmented business and wide diversification allows growth to be captured with relatively lower risk. Nihon M&A is representative of the Company's investment philosophy and continues to be a core holding. Japan's mounting number of elderly small business owners, without heirs or with heirs uninterested in taking over the business, are seeking to divest. Nihon M&A sustains an attractive growth rate as it arranges an increasing number of small business transfers. The Company's in-house research has uncovered several undervalued social network companies with striking growth potential. Vector is a high growth web based PR company with an expanding client list and a record of notable PR campaign successes. In the Manager's view, the authorities' fiscal, monetary, and structural reform proposals have created the environment for Japan's economy to resume growth. The Company is well positioned in the equity market to benefit from an earnings driven recovery. The Manager will continue to seek for portfolio inclusion structural growth companies, a strategy that has historically delivered good performance. AFMG Limited July 2014 Details of Ten Largest Investments The ten largest investments comprise a fair value of $26,930,619 (2013: $34,621,618) representing 32.0% of Net Asset Value (2013: 34.7%) with details as below: Hito Communications (193,900 shares, cost $1,785,644) Hito is an outsourcing company specializing in providing well trained staff for stores selling electronics goods, mostly electronic discount stores. The Company is also now supplying staff to several clothing chains asthe economy is recovering and Hito's customers should do well as consumer spending climbs which in turn will help lift the Company's sales and earnings. Fair value of $3,217,637 representing 3.9% of the Net Asset Value (2013: 2.4%) Inaba Denki Sangyo (103,800 shares, cost $2,682,915) Inaba is a specialized independent trading house specializing in construction tools, materials, and housing equipment and acts both as an agent and also has a direct sales network. In a cyclical business, the Investment Manager projects good sales growth and expanding profit margins for the next few years. Fair value of $3,169,543 representing 3.8% of the Net Asset Value (2013: 0.0%) Sumitomo Mitsui Financial Group (71,300 shares, cost $2,248,959) Sumitomo Mitsui is one of Japan's leading city banks and after suffering from the after effects of the bubble period for the subsequent 20 years is now growing again and is focusing on retail banking including home mortgages, expansion into Asia, domestic corporate loans, and the brokerage business. The Investment Manager looks for above average earnings growth in the medium to longer term. Fair value of $2,805,257 representing 3.3% of the Net Asset Value (2013: 4.1%) Nihon M&A CenterInc(120,000 shares, cost $1,010,751) The Company puts together buyers and sellers of small businesses, often smaller family run operations. Nihon works closely with accounting companies and local banks who help to introduce buyers and sellers to Nihon. The Investment Manager looks for steadily expanding sales and earnings as the Company opens new offices and hires and trains new consultants. Fair value of $2,794,400 representing 3.3% of the Net Asset Value (2013: 3.0%) Kito Corp (152,000 shares, cost $2,900,216) The Company makes a wide range of chain load handling machinery used in lifting. Asia has been a very high growth market in recent years. The world economy is now showing signs of recovering and corporations are streamlining their operations which should help increase demand, sales, and earnings over the coming few years. The weaker yen is another plus and the Investment Manager looks for steady sales and earnings in coming years. Fair value of $2,774,421 representing 3.3% of the Net Asset Value (2013: 0.0%) Toyota Tsusho (104,500 shares, cost $1,108,942) Toyota Tsusho, 21.5% owned by Toyota Motors, is a medium/large scale trader involved in selling steel, autos and auto parts, chemicals, non-ferrous metals, and even agricultural products. Overseas sales account for almost 60% of total turnover and the Company is now expanding its African operations. Fair value of $2,741,335representing 3.3% of the Net Asset Value (2013: 5.0%) TDK (57,000 shares, cost $2,440,416) TDK is now placing stress on producing parts and products used in communication equipment, industrial equipment, disc drives, etc. The Company had been heavily weighted in consumer related products in former years.Sales are rising, profit margins are improving and the Investment Manager looks for good recovery/growth in coming years. Fair value of $2,424,467 representing 2.9% of the Net Asset Value (2013: 1.6%) Sakai Moving Service (69,900 shares, cost $1,595,831) Sakai is a leading Japanese household moving company and has a nationwide network of moving centers and has been steadily gaining market share in recent years. The Company has been cutting costs and profit margins have been improving. Sakai is well run but sales and earnings are sensitive to the state of the economy. Fair value of $2,352,617 representing 2.8% of the Net Asset Value (2013: 1.3%) Ai Holdings (146,600 shares, cost $2,095,476) Ai has several businesses including security surveillance equipment installed in apartments including lobbies, hallways, elevators, parking garages, etc. The Company offers a very competitive service and has been rapidly gaining market share. The Company is also involved in cutting machines for hobby use, issuing cards for hospital patient use, credit use, etc. The Company has been very successful in taking over poorly run companies and then growing their businesses. The Investment Manager looks for continued high growth in coming years. Fair value of $2,328,323 representing 2.8% of the Net Asset Value (2013: 0.4%) Itoki (310,000 shares, cost $2,037,542) Itoki is one of Japan's leading office furniture companies and should benefit from the current office building boom in Tokyo and other major Japanese cities which is expected to continue for the next few years or longer. Fair value of $2,322,618 representing 2.8% of the Net Asset Value (2013: 0.0%) Schedule of Investments Fair Value Holdings Financial assets at fair value through profit or loss USD 000s % of NAV Advertising: 1.01% (2013: 0.00%) 74,900 Trenders 604 0.72 20,000 Vector 245 0.29 Apparel: 0.22% (2013: 0.00%) 9,500 Asics 184 0.22 Auto Manufacturers: 2.72% (2013: 4.01%) 42,500 Toyota Motor 2,287 2.72 Auto Parts & Equipment: 2.27% (2013: 2.37%) 65,000 Marujun 303 0.36 76,000 Mitsuba 1,117 1.33 61,800 Muro 490 0.58 Banks: 3.34% (2013: 6.27%) 71,300 Sumitomo Mitsui Financial Group 2,805 3.34 Building Materials: 1.95% (2013: 3.80%) 28,500 Daikin Industries 1,641 1.95 Chemicals: 4.35% (2013: 2.10%) 333,000 Kinugawa Rubber Industrial 1,387 1.65 137,800 MORESCO 2,269 2.70 Commercial Services: 19.99% (2013: 10.13%) 95,000 Aeon Delight 2,087 2.48 140,400 Daiohs 1,149 1.37 174,900 Gakujo 1,235 1.47 193,900 Hito Communications 3,218 3.83 14,300 Kanamoto 448 0.53 120,000 Nihon M&A CenterInc 2,794 3.32 76,000 Outsourcing 945 1.12 213,000 Pasco 817 0.97 104,500 Pasona 532 0.63 31,300 Success 533 0.63 589,100 Tanseisha 2,218 2.64 42,800 Trust Tech 644 0.77 15,000 WDB 195 0.23 Computers: 5.02% (2013: 2.26%) 13,600 BrainPad 205 0.24 47,500 Roland DG 1,599 1.90 57,000 TDK 2,425 2.88 Cosmetics/Personal Care: 0.00% (2013: 1.31%) - - Distribution/Wholesale: 8.39% (2013: 5.33%) 146,600 Ai Holdings 2,328 2.77 87,800 Fuji Electronics 1,044 1.24 102,500 Morito 940 1.12 104,500 Toyota Tsusho 2,741 3.26 Diversified Financial Services: 6.59% (2013: 7.44%) 40,000 Fuyo General Lease 1,372 1.63 17,200 Hitachi Capital 422 0.50 116,200 Kyokuto Securities 1,814 2.16 50,000 Nomura Holdings 287 0.34 245,900 Tokai Tokyo Financial 1,646 1.96 Electrical Components & Equipment: 0.43% (2013: 0.00%) 55,000 Onamba 364 0.43 Electronics: 4.98% (2013: 8.26%) 47,500 Dai-ichi Seiko 603 0.72 103,800 Inaba Denki Sangyo 3,170 3.77 86,000 Kyowa Electronics Instruments 409 0.49 Engineering & Construction: 1.41% (2013: 0.21%) 375,000 Giken Kogyo 1,182 1.41 Hand/Machine Tools: 2.20% (2013: 0.31%) 22,800 Disco 1,381 1.64 98,700 Takamatsu Machinery 467 0.56 Home Builders: 0.36% (2013: 3.56%) 25,000 Sekisui House 299 0.36 Home Furnishings: 0.21% (2013: 2.16%) 14,300 Foster Electric 173 0.21 Insurance: 0.00% (2013: 3.09%) - - Internet: 3.49% (2013: 6.99%) 60,800 F@N Communications 1,016 1.21 95,000 kabu.com Securities 420 0.50 150,100 Matsui Securities 1,375 1.64 17,100 Quest 120 0.14 Machinery-Construction & Mining: 1.78% (2013: 1.56%) 68,000 Modec 1,499 1.78 Machinery-Diversified: 7.40% (2013: 4.22%) 188,000 Aida Engineering 1,786 2.12 Machinery-Diversified: 7.40% (2013: 4.22%) (continued) 240,000 CKD 2,177 2.59 75,000 Nissei ASB Machine 1,190 1.42 315,900 Pegasus Sewing Machine Manufacturing 1,066 1.27 Media: 0.88% (2013: 0.82%) 127,100 Asahi Broadcasting 742 0.88 Metal Fabricate/Hardware: 2.32% (2013: 0.58%) 43,500 Okaya 556 0.66 410,000 Ryobi 1,208 1.44 54,700 SANNO 189 0.22 Miscellaneous Manufacturing: 4.21% (2013: 1.13%) 152,000 Kito Corp 2,774 3.30 73,000 Kuriyama 762 0.91 Office Furnishings: 4.28% (2013: 0.00%) 310,000 Itoki 2,323 2.76 59,800 Komatsu Wall Industry 1,279 1.52 Packaging & Containers: 0.00% (2013: 0.59%) - - Pharmaceuticals: 0.88% (2013: 2.81%) 38,100 Fuji Pharma 741 0.88 Real Estate: 4.77% (2013: 10.34%) 750,500 Arealink 908 1.08 146,100 Fuji 854 1.02 45,100 Keihanshin Building 228 0.27 81,100 NAC 1,192 1.42 160,700 Nisshin Fudosan 561 0.67 44,600 Wadakohsan 264 0.31 REITS: 0.00% (2013: 3.59%) - - Retail: 3.67% (2013: 8.09%) 44,900 AmiyakiTei 1,255 1.49 60,000 Himaraya 637 0.76 19,300 HUB 756 0.90 13,200 International Conglomerate of Distribution for Automobile 209 0.25 17,800 Misawa 230 0.27 Semiconductors: 4.69% (2013: 0.74%) 149,600 Samco 1,811 2.15 352,300 UT 2,138 2.54 Software: 1.13% (2013: 0.00%) 51,900 Pro-Ship 954 1.13 Telecommunications: 0.00% (2013: 1.76%) - - Textiles: 2.29% (2013: 1.39%) 435,000 Suminoe Textile 1,311 1.56 95,000 Toray Industries 618 0.73 Transportation: 5.07% (2013: 5.97%) 190,600 AIT 1,417 1.68 69,900 Sakai Moving Service 2,353 2.80 109,000 Senko 497 0.59 Total Japan (2013: 113.19%) 94,434 112.30 Total Equities (2013: 113.19%) 94,434 112.30 Total Investments 94,434 112.30 Cash (2013: 0.64%) 695 0.83 Other Net Liabilities (2013: (13.83%)) (11,043) (13.13) Net Assets Attributable to Holders of Redeemable Participating Shares at fair value 84,086 100.00 Board of Directors NOEL LAMB (aged 57, appointed to the Board on 1st February 2011 and appointed as Chairman on 30thApril 2014),British, a graduate of Exeter College, Oxford and is a barrister-at-law. He joined Lazard Brothers & Co Limited in 1987 and from 1992 to1997 he was the managing director of Lazard Japan Asset Management where he was the fund manager for their Japanese equities. In 1997, Noel moved to the Russell Investment Group where he established the investment management capability of Russell in London. In 2002, Noel was promoted to Chief Investment Officer in North America where he managed assets of USD 150bn. ANDREW MARTIN SMITHMCSI (aged 62, appointed to the Board on 26th September 2002), British, graduated from Oxford University with an MA in Politics and Economics. He began his career with Allied Hambro Unit Trust Company and worked in the corporate finance and capital markets divisions of Hambros Bank Limited becoming a director in 1986. He was chief executive of Hambros' fund management activities from 1993 to 1997 prior to the merger with Guinness Flight. He works as an adviser and consultant at Guinness Asset Management and is a Director of Guinness Asset Management Funds in Dublin. He is Chairman of Parmenion Capital Management LLP and a non- executive Director of Church House Investments and M & G High Income and TR European Growth Investment Trusts. ERIC BOYLE FCSI (aged 60, appointed to the Board on 17th October 2000), British, is a partner of Smith & Williamson Investment Management LLP. He has over 30 years' experience in stockbroking and investment banking with NCL Investments - now part of Smith & Williamson. He became a member of the London Stock Exchange in 1982 and has specialised in Japan and emerging markets since 1989 in particular, by way of country and regional closed or open-ended funds. With the experience gained in studying a variety of companies in this capacity, he has held directorships in a number of companies and funds. During his career, he has raised new money for several groups launching new products investing in both emerging and developed markets. PHILIP EHRMANN FCSI(aged 55, appointed to the Board on 25th October 2013), British, graduated from the London School of Economics with a BSc in Economics. He started his investment career at Rowe & Pitman Inc. (now part of UBS) in 1981 specialising in the North American market as a stock broker. In 1984 he moved into asset management joining Montagu Investment Management, initially to oversee US equities, before heading up Emerging Markets for what had become Invesco Asset Management. In 1995 he joined Gartmore Investment Management to undertake a similar role, before becoming Head of Pacific & Emerging Markets in 2000. 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 is a Fund Management Director and joint head of the Asian team. TAKESHI MURAKAMI (aged 70, appointed to the Board on 29thNovember 2007), Japanese, graduated from Doshisha University in Kyoto with BA in Economics. He has 38 years' of experience in both stock broking and investment management. He started his career at Sanyo Securities, Osaka in 1966 where he was primarily engaged in international business promotion at its New York office between 1972-1978 and at its London office for two years between 1982-1984. He thenjoined Schroder Securities in Londonin 1984, before moving to its Tokyo office in 1986. He served as Schroder's Tokyo Branch Manager for ten years until he moved to Schroder Investment Management Japan in 1996 as Director, where he promoted the Japanese pension fund management business. Having retired from Schroder's at the age of 60 in 2003, Takeshi resumed his career at Instinet Japan as Chairman in 2004 for a year. TIMOTHY GUINNESS (Chairman, aged 66, appointed to the Board on 26th September 2002 and retired as Chairman and from the Board on 30th April 2014), British, graduated from Cambridge University with an MA in Engineering followed by an MBA from the Sloan School M.I.T. He began his investment banking career in Baring Brothers in 1970. He moved to Guinness Mahon in 1977, becoming Senior Investment Director in 1982. He was co-founder of Guinness Flight Global Asset Management in 1987. After its acquisition by Investec Asset Management in 1998, he served as Joint Chairman of Investec Asset Management until 31st March 2003.He is the Chairman and Chief Investment Officer of two investment management companies - Guinness Asset Management and Guinness Atkinson Asset Management since 2003. These companies specialise in investment in equities in three areas - energy; Asia ex Japan; and innovation. He also has a number of non-executive directorships. These include the chairmanship of Brompton Bicycle Company Ltd. Directors' Report and Statement of Directors' Responsibilities The Directors are pleased to present their eighteenth Report and the Audited Financial Statements of the Company for the year ended 30th April 2014. PRINCIPAL ACTIVITY Atlantis Japan Growth Fund Limited ("the Company") is a Guernsey authorised closed ended investment company listed on the London Stock Exchange. The Company has a premium listing 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: - thisAnnual Report and Financial Statements, prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Company; and - thisAnnual 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, 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 Board, the Financial Statements taken as a whole, are fair, balanced andunderstandable and provide the information necessary to shareholdersto assess the Company's 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. 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 ConductAuthority. 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. BUSINESS REVIEW AND TAX STATUS The Investment Trust Company regime was amended for accounting periods commencing on or after 1st January 2012, whereby a formal application for initial entry into the regime is required, supported by appropriate annual tax filings to maintain ongoing investment trust status. This differs from the previous regime whereby investment trust status was granted annually on a retrospective basis after the company tax return was submitted to HM Revenue and Customs. HMRC approval has been granted for all periods up to and including 30th April 2012. Due to the late filing of the formal application with HMRC to enter the investment trust regime, which was subsequently not accepted, the Company did not have investment trust status for the year ended 30th April 2013.No corporation tax was payable as a consequence of this and a successful application for the Company to enter into the investment trust regime from 1st May 2013 has been made and accepted, subject to the Company continuing to meet eligibility conditions. In the opinion of the Directors, the Company has conducted its affairs so as to enable it to maintain investment trust status, subject to completion of the relevant audit work. REDEMPTION FACILITY The purpose of the facility is to provide a measure of liquidity for those shareholders who may wish to redeem. Until 12th March 2013 this was on a four-monthly basis. Following an Extraordinary General Meeting on the same date shareholders approved an amendment to the operation of the Redemption Facility whereby it will operate at six-monthly intervals on 31st March and 30th September (or if such date is not a business day, the previous business day). The first redemption point was30th April 2013. Please refer to Note 17 to the financial statements for more details. The Directors shall be entitled at their absolute discretion to determine the procedures for the redemption of the new ordinary shares (subject to the facilities and requirements of CREST and the Companies Law). Without prejudice to the Directors discretion, it isintended that the procedure described below shall apply. Redemptions may take place on any redemption point. Upon redemption all new ordinary shares so redeemed shall be cancelled. Until 12thMarch 2013 shareholders could request the redemption of all or any of their new ordinary shares on any redemption point, provided that they held the relevant new ordinary shares at the immediately preceding redemption point and continue to be beneficially interested in those shares at all times since that date until the redemption point. Following the Extraordinary General Meeting on the same date total redemptions at each redemption point are limited to 5% of the issued share capital at the time. At each redemption point, each shareholder is entitled to request the redemption of 5% of their holding of shares held at the immediately preceding redemption point and held continuously at all times since that date,rounded down to the nearest whole number (the "Basic Entitlement''). Shareholders are entitled to request the redemption of shares in excess of their Basic Entitlement to the extent that other shareholders redeem less than their Basic Entitlement or do not seek to redeem their shares at the relevant redemption point. Any such excess redemption requests will be satisfied pro rata in proportion to the amount in excess of the Basic Entitlement (rounded down to the nearest whole number of shares).For the avoidance of doubt, the lending of shares will be regarded as a disposal of beneficial interest. The right of shareholders to request the redemption of their ordinary shares on any redemption point shall be exercised by the shareholder delivering to the receiving agent (or to such other person as the Directors may designate for this purpose) a duly completed redemption request. Redemption request forms are available upon request from the Administrator. Redemption requests shall not be valid (unless the Company otherwise agrees) unless they are received by the receiving agent not earlier than 20 days nor later than 10 days before the relevant redemption point. RESULTS The results for the year are set out in the Statement of Comprehensive Income. DIVIDEND The provisions of section 1158 of the Corporation Tax Act 2010 (`s.1158') include 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 28th June 2013 such that a negative balance on a company's revenue reserve is taken into account when calculating the amount of income. This is not relevant however for the year ended 30th April 2014. There were no distributions made during the year and the Company met the retention test for the year ended 30th April 2014. CAPITAL VALUES At 30th April 2014 the value of net assets available to shareholders was $84,086,197 (2013-$94,917,916) (net of redemption liability) and the Net Asset Value per share was $1.92 (2013 - $1.95). PREPARATION OF FINANCIAL STATEMENTS The financial statements of the Company have been prepared in accordance with 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. 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 have a holding in the Company in excess of 3%. Shareholder % OrdinaryShares LIMAdvisors 17.76 7,796,717 SouthYorkshirePensionAuthority 13.58 5,960,500 1607CapitalPartners 10.72 4,705,988 EcclesiasticalInvestment Management 5.36 2,352,910 RelianceMutual 4.01 1,762,278 SIXSIS 3.58 1,571,830 SECRETARY The Secretary is Northern Trust International Fund Administration Services (Guernsey) Limited. AUDITORS Grant Thornton Limited have indicated their willingness to continue in office. Resolutions re-appointing them and authorising the Directors to fix their remuneration will be proposed at the Annual General Meeting. PRINCIPAL RISKS AND UNCERTANTIES As an investment trust, the Company invests in securities for the long term (excluding the redemption facility). The financial investments held as assets by the Company comprise of equity shares (see the Schedule of Investments for a breakdown). As such, the holding of securities, investing activities and financing associated with the implementation of the investment policy involves 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. Set out below are the principal risks inherent in the Company's activities along with the actions taken to manage them. The Board reviews and agrees policies for managing these risks and these policies have remained substantially unchanged since 30th April 2006. Performance The Board regularly monitors the Company's investment performance against a number of indices and the peer group. 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. The introduction of the redemption facility has improved the liquidity in the Company's shares and helps to narrow the discount to the NAV at which the shares trade. At an Extraordinary General Meeting dated 12th March 2013 the shareholders approved the introduction of a discount control mechanism whereby the Company will hold a continuation vote if the shares have traded, on average, at a discount of more than 10% to the Net Asset Value per share during any rolling 90 day period, in normal market conditions. If the obligation to hold a continuation vote is triggered, the vote will be held no later than the next practicable annual general meeting of the Company. As of the year ended 30th April 2014, the continuation vote has not been triggered. 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, Guernsey Company Law 2008 and the UKLA Listing Rules, could lead to a number of detrimental outcomes and reputational damage. Section 1158 qualification criteria are continually monitored. 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 Guernsey Company Law 2008 and the UKLA Listing Rules. 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, Tokyo Sub Adviser and the Company's Administrator. 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 and monitored. Financial The financial risks faced by the Company are disclosed in Note 15 to the Financial Statements. Changes to the Board Philip Ehrmann was appointed as a Director on 25th October 2013. Timothy Guinness retired as Chairman and as a Directoron 30th April 2014.Noel Lamb succeeded him as Chairman with effect from30th April. 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. GOING CONCERN The Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company has introduced a redemption facility and as a result the Company has reduced in size over the last 3 years. Because the Company is invested in listed and readily realisable assets these outflows have had no material effect on the Company's ability to meet its ongoing obligations therefore the Directors believe the use of the going concern basis is still appropriate as there are no material uncertainties relating to events or conditions that may cast significant doubt about the ability of the Company to continue as a going concern. Inter-Governmental Agreements The States of Guernsey signed an intergovernmental agreement with the UK ("UK-Guernsey IGA") on22nd October 2013, under which mandatory disclosure requirements will be required in respect ofshareholders who have a UK connection. The UK-Guernsey IGA has been ratified by Guernsey'sStates of Deliberation and the relevant legislation introduced. The impacts of the UK-Guernsey IGAon the Company and the Company's reporting responsibilities pursuant to the UK-Guernsey IGA arenot currently in final form. The Board is monitoring implementation of the UK-Guernsey IGA withthe assistance of its legal advisers. 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 Tiburon Partners LLP ("Tiburon"), who had been acting as the Company's investment adviser, as the Company's alternative investment fund manager on the terms of and subject to the conditions of a new investment management agreement between the Company and Tiburon. (Please refer to Note 22 for details of the new investment management agreement). The Company's existing investment management agreement between the Company and AFMG Limited ("AFMG") has been terminated with AFMG no longer retaining a role in the management of the Company's assets. Atlantis Investment Research Corporation has been re-appointed by the Company and Tiburon to act as investment adviser on the terms of and subject to the conditions of a new investment advisory agreement. Save for the removal of AFMG from the Company's portfolio management structure, the contractual terms to which the Company, Tiburon and AIRC are subject have not changed in substance and, in particular, the management fee which the Company pays remains unchanged. (Please refer to Note 22 for details of the new investment manager's agreement) 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, Tiburon and the Depositary. (Please refer to Note 22 for details of the depositary agreement). Due to legislative and regulatory changes introduced by virtue of the AIFM Directive, the Company has also amended and re-stated its administration agreement with Northern Trust International Fund Administration Services (Guernsey) Limited. ForeignAccountTax Compliance Act The US Foreign Account Tax Compliance Act ("FATCA") was introduced by the United States in 2010, but became effective for the fund following the States of Guernsey entering into a Model 1 intergovernmental agreement ("IGA") with the US Treasury in December 2013. The legislation is concerned with improving tax information sharing to help identify those US individuals that chose to avoid paying their fair share of tax by holding assets overseas. The Board has taken advice as regards registering as a Participating Foreign Financial Institution ("PFFI") and the steps necessary to record its account holders to meet the FATCA reporting requirements. The first period of reporting will be from 2015 in respect to periods after 1 July 2014. Noel Lamb Andrew Martin Smith Chairman Director 1stAugust2014 Directors' Remuneration Report The Board has approved this report, in accordance with the rules covering good communication to shareholders. An ordinary resolution for the approval of this report will be put to the membersat 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 thelevel of Directors' fees. POLICY ON DIRECTORS' FEES The Board's policy is that the remuneration of non-executive Directors should reflect the experience ofthe Board as a whole and be fair and comparable to that of other investment trusts that are similar insize, 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 inthe Company's Articles of Inception. 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 Association 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. COMPANY'S PERFORMANCE For the purpose of this report the Board is required to select an index against which the Company's performance can be measured. Although performance is not measured against a single benchmark the Topix TR (USD) and the Tokyo Second Market (USD) have been selected for this purpose. DIRECTORS' EMOLUMENTS FOR THE YEAR Directors' emoluments are paid in sterling. The Directors who served in the year received the following emoluments in the form of fees: Year ended Year ended 30-Apr-14 30-Apr-13 Regular fees £ £ Timothy Guinness 30,000 30,000 Noel Lamb 25,000 25,000 Eric Boyle 25,000 25,000 Andrew Martin Smith 27,500 27,500 Takeshi Murakami 25,000 25,000 Philip Ehrmann 6,250 - 138,750 132,500 Noel Lamb's annual fees will increase to £30,000 following his appointment as Chairman on 30th April 2014. DIRECTORS' INTERESTS The Directors served throughout the year under review, with the exception ofPhilip Ehrmann who was appointed on 25th October 2013. 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 30th April 2014and 30th April 2013 are as follows: Ordinary Shares Ordinary Shares 2014 2013 *T. Guinness 100,000 100,000 A. Martin Smith 25,000 25,000 N. Lamb 10,000 10,000 *Timothy Guinness retired on 30th April 2014 The above interests were unchanged at the date of this report. There were no relevant contracts in force during or at the end of the 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 year under review. DISCLOSURE OF DIRECTORSHIPS IN PUBLIC COMPANIES LISTED ONRECOGNISED STOCK EXCHANGES The following summarises the Directors' directorships in other public companies: None of the other Directors held directorships in other public companies: APPROVAL A resolution for the approval of the Directors' Remuneration Report for the year ended 30th April 2014 will be proposed at the Annual General Meeting. By order of the Board Noel Lamb Andrew Martin Smith Chairman Director 1stAugust2014 Corporate Governance INTRODUCTION The following Corporate Governance statement forms part of the Directors' Report (DTR 7.2.1). The Board of the Company has considered the principles and recommendations of the AIC Code of Corporate Governance ("AICCode") by reference to the AIC Corporate Governance Guide for investment Companies ("AIC Guide"). The AIC Code, asexplained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code2012, as well as setting outadditional principles and recommendations on issues that are of specific relevance to the Company. On 22nd January 2013, the Financial Reporting Council provided the AIC with an updated endorsement letter to cover the fifth edition of the AIC Code. The endorsement confirms that by following the AIC Code investment company boards should fully meet their obligations in relation to the UK Corporate Governance Code and paragraph LR 9.8.6 of the Listing Rules. The Company follows the Guernsey Financial Services Commission ("GFSC") Code of Corporate Governance (the "GFSC Code"). The GFSC Code provides a framework that applies to all entities licensed by the GFSC or which are registered or authorised as a collective investment scheme. Companies reporting against the UK Corporate Governance Code or the AIC Code are deemed to comply with the GFSC Code. The Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK Corporate Governance Code, except as set out below. Ø the role of the chief executive Ø executive directors' remuneration Ø the need for an internal audit function Ø the whistle blowing policy For the reasons set out in the AIC Guide, and as explained in the UK Corporate Governance Code, 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 haveemployees, hence no whistle-blowing policy is required. THE BOARD Disclosures under Principle 5 of the AIC Code Following the retirement of Timothy Guinness the Board is comprised of five independent non-executive directors including the Chairman, Noel Lamb, who was appointed on 30th April 2014. 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 being comprised of 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 gearing, asset allocation, marketing and investor relations, peer group information and industry issues. There were 4board meetings (2012-2013:5) and 2 audit committee meetings( 2012-2013:2) held during the accounting year 1st May 2013 to 30th April 2014. The table below shows the number of formal meetings attended by each director during the accounting year. Director Board Meetings Attended Audit Committee Meetings Attended Timothy Guinness 4 2 Eric Boyle 4 2 Andrew Martin Smith 4 2 Takeshi Murakami 4 n/a Noel Lamb 4 2 Philip Ehrmann 2 1 In addition to the meetings held above there were also 4 other committee meetings held during the year in relation to the operation of the redemption facility and other operational matters. Directors are appointed initially until the following Annual General Meeting when, under the Company's Articles of Association 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 evaluates its performance and considers the tenure of each director 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. When considering succession planning, the Board bears in mind the balance of skills, knowledge, and experience and diversity existing on the Board. The Board has noted amendments to the UK 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, Japan investment management specifically and investment trust industry matters and sophisticated investor concerns relevant to this company will nevertheless remain the key criteria by which new Board candidates will be sought. 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 Boardmay also use external agencies as and when the requirement to recruit an additional Board member becomes necessary. Trust Associates, an independent advisor in the governance and management of investment companies, was appointed to identify potential candidates to join the Board of Directors.Following a shortlisting and interview process, Mr Phillip Ehrmann was identified as the preferred candidate.After due consideration by the Board, it wasresolved to appoint Mr Phillip Ehrmann to the role. Having served on the board for more than ten years Mr Eric Boyle and Mr Andrew Martin Smith are subject to annual re-election in accordance with theUK Corporate Governance Code and both directors will offer themselves for re-election. The board considers that Messrs Boyle's and Martin Smith's length of service and breadth of experience enhances the effective management of the company. In addition Mr Noel Lamb will retire by rotation in accordance with the Articles of Incorporation and offers themselves for re-election. The board confirms 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 with Gallagher Heath in respect of the directors liability. For the year1stMay 2013 to 30thApril2014 the charge was £19,425. INTERNAL CONTROLS The Board has delegated the responsibility for the management of the Company's investment portfolio, the provision of custody services and the administration, registrar and corporate secretarial functions including the independent calculation of the Company's Net Asset Value and the production of the Annual Report and Financial Statements which are independently audited. Whilst the Board delegates responsibility, it retains responsibility for the functions it delegates out 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 SOC 1 report on this service provider. The extent and quality of the systems of internal control and compliance adopted by the Investment Manager, Investment Adviser and AIRC, the Investment Sub-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 allocations, 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 theBoard and contractual arrangements with the Investment Manager and investment adviser on an annual basis by the entire Board who are independent non-executive directors. Details of the Investment Management agreement are shown in Note 5 to the Financial Statements. Audit Committee The Audit Committeeoperates within defined terms of reference. The Audit Committee's responsibilities include: - Review of draft annual and interim report and financial statements. - Review of independence, objectivity, qualifications and experience of the Auditors. - Review of audit fees. The Audit Committee is appointed by the Board and comprises Mr Martin Smith as Chairman, Mr Guinness (retired 30th April 2014),Mr Ehrmann (appointed 25th October 2013), Mr Boyle and Mr Lamb. In accordance with the AIC Code, the Board has determined that Mr Martin Smith 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. 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 auditors annually to review the Auditedfinancial 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 Auditors. The Company's Auditors are advised of the timing of the Audit Committee Meetings. The Audit Committee has access to the Compliance officers of the Investment Adviser, the Administrator and the Custodian. The Company Secretary is the Secretary of the Audit Committee and attends all Meetings of the Audit Committee. The Audit Committee is satisfied that auditor objectivity and independence is not impaired by the performance byGrant Thornton UK LLP of non-audit tax services, which cover UK tax compliance services. The Audit Committee considers that the appointment of a third party unfamiliar with the Company to carry out non-audit services of UK tax compliance would not benefit shareholders since they would incur unnecessary additional expense. Grant Thornton UK LLP is UK-based and provides non-audit tax advice to the Company.The auditors are Grant Thornton Limited, based in Guernsey. 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 of Directors and Investment Manager. Following the Annual General Meeting each year the Investment Manager 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 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. EVALUATION OF PERFORMANCE OF INVESTMENT MANAGER The investment performance is reviewed at each regular Board meeting at which representatives of the Investment Manager are required to provide answers to any questions raised by the Board. The Board has instigated an annual formal review of the Investment Manager 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 InvestmentManager on the terms agreed is in the interests of the Company's shareholders as a whole. By order of the Board Noel Lamb Andrew Martin Smith Chairman Director 1stAugust2014 Audit Committee Report We present the Audit Committee's Report for 2014, setting out the responsibilities of the Audit Committee and its key activities in the year from 1st May 2013 to 30th April 2014. The Audit Committee has scrutinised 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 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 is very supportive of the latest UK Corporate Governance Code recommendations. We support the aims of the Code and the best practice recommendations of other corporate governance organisations such as the Association of Investment Companies ("AIC"), and believe that the revised 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 and other 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 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, 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 and AIRC, 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 continues to monitor the fraud, bribery and corruption policies of the Company 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 andwhether the Investment Manager has made appropriate estimates and judgements. The Audit Committee reviews accounting papers prepared by the Investment Manager and Administratorwhich provide details on the main financial reporting judgements. The Audit Committee also reviews reports by the external auditors which highlight any issues withrespect to the work undertaken on the audit. The significant issues considered during the year by the Audit Committee in relation to theFinancial Statements and how they were addressed are detailed below: (i) Valuation of Investments: The Company's investments had a fair value of $94,433,693 as at 30thApril 2014 and represent asubstantial portion of net assets of the Company. As such this is the largest factor in relation to theaccuracy of the Financial Statements. These investments are valued in accordance with theAccounting Policies set out in Note 2 to the Financial Statements. The Audit Committee consideredthe valuation of the investments held by the Company as at 30th April 2014 to be reasonable fromdiscussions with the Investment Manager, Custodian and Administrator on their processes for thevaluation of these investments. (ii) Income Recognition: The Audit Committee considered the calculation of income from investments recorded in theFinancial Statements as at 30th April 2014. The Audit Committee reviewed theInvestment Manager's process for calculating income from investments andfound it to be reasonable based on the explanations provided and information obtained from theInvestment Manager. The Audit Committee was therefore satisfied that income was correctly statedin the Financial Statements. At the request of the Audit Committee, the Administrator confirmed that it was not aware of anymaterial misstatements including matters relating to Financial Statement presentation. At theAudit Committee meeting to review the Annual Report and Audited Financial Statements, the AuditCommittee received and reviewed a report on the audit from the external auditors. On the basis ofits review of this report, the Audit Committee is satisfied that the external auditor has fulfilled itsresponsibilities with diligence and professional scepticism. The Audit Committee advised the Boardthat these Annual Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary to shareholders to assess the Company's performance, business model, and strategy. Following a review of the presentations and reports from the Investment Manager andAdministrator and consulting where necessary with the external auditor, the Audit Committee issatisfied that the Financial Statements appropriately address the critical judgements and keyestimates (both in respect to the amounts reported and the disclosures). The Audit Committee isalso satisfied that the significant assumptions used for determining the value of assets andliabilities have been appropriately scrutinised, challenged and are sufficiently robust. The Audit Committee is satisfied that the judgements made by the Investment Manager andAdministrator are reasonable, and that appropriate disclosures have been included in the accounts. External Auditors The Audit Committee has responsibility for making a recommendation on the appointment, reappointment and removal of the external auditors,Grant Thornton Limited ("GT"). GT have been external auditors to the Company since inception, during which period the role has not been put out to tender. During the year the Audit Committee received and reviewed audit plans and reports from the external auditors. To assess the effectiveness of the external audit process, the auditors were 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 year by the external auditors both as part of the audit process and on non-audit matters 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 auditors' 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. As a general rule, the Company does not utilise external auditors for internal audit purposes,secondments or valuation advice. Services which are in the nature of audit, such as taxcompliance, tax structuring, private letter rulings, accounting advice, quarterly reviews anddisclosure advice are normally permitted but will be pre-approved by the Audit Committee. The following table summarises the remuneration paid to Grant Thornton foraudit and non-audit services during the year ended 30thApril 2014. For the year ended 30th April 2014 $ Grant Thornton Limited Annual audit 36,074 Tax consulting and compliance services 4,977 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 1stAugust2014and signed on behalf by: Andrew Martin Smith Chairman, Audit Committee Independent Auditor's Report to the Membersof Atlantis Japan Growth Fund Limited For the year ended 30th April 2014 We have audited the financial statements of Atlantis Japan Growth Fund Limited ("the Company") for the year ended 30th April 2014 which comprise the Statement of Comprehensive Income, the Statement of Changes in Equity, the Statement of Financial Position, the Statement of Cash Flows, and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. 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 auditors' 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. Respective responsibilities of directors and auditors As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the financial statements which give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable legal and regulatory requirements and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Auditor commentary An overview of the scope of our audit Our audit approach was based on a thorough understanding of the Company's business and is risk-based. 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, and inspecting records and documents held by the third-party service providers. 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. Our application of materiality We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any identified misstatements and in forming our opinion. For the purpose of determining whether the financial statements are free from material misstatement we define materiality as the magnitude of a misstatement or an omission from the financial statements or related disclosures that would make it probable that the judgement of a reasonable person relying on the information would have been changed or influenced by the misstatement or omission. We also determine a level of performance materiality which we use to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. We established a materiality for the financial statements taken as a whole to be US $840,000, which is 1% of the Company's Net Asset Value. Net asset value is the most appropriate benchmark for materiality consideration as this is the basis of the Company's key performance indicator. We have determined the threshold at which we communicate misstatements to the Audit Committee to be US $42,000. In addition, we communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds. Our assessment of risk Without modifying our opinion, we highlight the following matters that are, in our judgement, likely to be most important to users' understanding of our audit. Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and not to express an opinion on individual transactions, account balances or disclosures. Financial assets designated at fair value through profit or loss (FVTPL) The principal activity of the Company is to invest in portfolio of listed equities in Japan with a view to generate long term capital growth for its shareholders. Accordingly, the investment portfolio is the largest asset in the financial statements and is designated at fair value through profit or loss ("FVTPL") in accordance with IAS 30 "Financial Instruments: Recognition and Measurement". We have therefore identified the valuation of financial assets as a significant risk requiring special audit consideration. Our audit work included, but was not restricted to, obtaining a confirmation of investments held at the yearend directly from the independent custodian's statements and reconciling these to the records maintained by the Company's administrator, testing a selection of investment additions and disposals to supporting documentation, and agreeing the valuation of the quoted investments to an independent source of market prices. The Company's accounting policy and other disclosures on financial assets designated at FVTPL are included in Notes 2(f) and 11. Revenue recognition Under ISAs (UK & Ireland), there is a presumed risk that revenue may be misstated due to improper recognition of revenues. Due to the nature of this risk we are required to assess it as a significant risk requiring special audit considerations. Our audit work included, but was not restricted to, assessing whether the Company's revenue recognition policies conform to IAS 18 "Revenues" and reviewing significant contracts to determine whether interest and/or dividends have been accounted for in accordance with that policy. The Company's accounting policy in respect of revenue recognition is included in Note 2(d). Management override of internal controls Under ISAs (UK & Ireland), for all our audits we are required to consider the risk of management override of financial controls. Due to the unpredictable nature of this risk we are required to assess it as a significant risk requiring special audit consideration. Our audit work included, but was not restricted to, specific procedures relating to this risk that are required by ISA 240, The Auditors Responsibilities relating to Fraud in an Audit of the FinancialStatements. This includes tests of journal entries, the evaluation of judgments and assumptions in management's estimates and tests of significant transactions outside the normal course of business. In particular, our work on financial assets at FVTPL addressed key aspects of ISA 240. Opinion on the financial statements In our opinion the financial statements: - give a true and fair view of the state of the company's affairs as at 30th April 2014 and of its loss for the year then ended; - are in accordance with IFRSs as adopted by the European Union; and - comply with The Companies (Guernsey) Law, 2008. Matters on which we are required to report by exception We have nothing to report in respect of the following: Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is: - materially inconsistent with the information in the audited financial statements; or - apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company acquired in the course of performing our audit; or - otherwise misleading. In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that were communicated to the audit committee which we consider should have been disclosed. Under The Companies (Guernsey) Law, 2008 we are required to report to you, if in our opinion: - proper accounting records have not been kept by the Company; or - the 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. Under the Listing Rules we are required to review: - the directors' statement, in relation to going concern; and - the 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. Alexander Langley For and on behalf ofGrant Thornton Limited Chartered Accountants St Peter Port, Guernsey, Channel Islands 1stAugust 2014 Statement of Comprehensive Income For the year ended 30th April 2014 2014 2013 Revenue Capital Total Revenue Capital Total Notes $'000 $'000 $'000 $'000 $'000 $'000 Income 4 Gains on investments held at fair value - - - - 19,280 19,280 Gain on foreign exchange - 335 335 - 1,881 1,881 Dividend income 2,223 - 2,223 2,445 - 2,445 2,223 335 2,558 2,445 21,161 23,606 Expenses 4 Losses on investments held at fair value - 1,551 1,551 - - - 5 Investment management fee 944 - 944 984 - 984 6 Custodian fees 71 - 71 77 - 77 7 Administration fees 150 - 150 166 - 166 17 Redemption facility expenses 20 - 20 - - - 7 Registrar and transfer agent fees 16 - 16 39 - 39 8 Directors' fees and expenses 323 - 323 273 - 273 Insurance fees 28 - 28 33 - 33 Audit fee 56 - 56 49 - 49 Printing and advertising fees 38 - 38 39 - 39 Legal and professional fees 172 - 172 337 - 337 Listing fees 13 - 13 14 - 14 Miscellaneous expenses 27 - 27 21 - 21 1,858 1,551 3,409 2,032 - 2,032 Finance cost Interest expense and bank charges 155 - 155 258 - 258 (Loss)/profit before tax 210 (1,216) (1,006) 155 21,161 21,316 9 Taxation (267) - (267) (171) - (171) (Loss)/profit and total comprehensive (loss)/income for the year (57) (1,216) (1,273) (16) 21,161 21,145 10 (Deficit)/earnings per ordinary share $(0.001) $(0.026) $(0.027) $0.000 $0.336 $0.336 All of the Company's income and expenses are included in the profit/loss for the year and therefore the loss for the year is also the Company's comprehensive loss 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 2014 Capital Capital Capital Reserve/ Ordinary Share Share Revenue Reserve/ Reserve/ Exchange Capital Premium Reserve Realised Unrealised Differences Total Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 Balances at 1st May 2013 - - (23,951) 100,365 30,472 (11,968) 94,918 Movements during the year 17 Redemptions - (9,456) - - - - (9,456) Shares bought into treasury - - (103) - - - (103) Transfer from capital reserve - 9,456 - - - - 9,456 Transfer to share premium - - - (9,456) - - (9,456) 4 Gain on investments sold - - (18,748) 18,748 - - - Movement on loss on valuation of 4 investments - - 20,299 - (20,299) - - Gain on foreign exchange - - (335) - - 335 - Total comprehensive loss - - (1,273) - - - (1,273) Balances at 30th April 2014 - - (24,111) 109,657 10,173 (11,633) 84,086 Capital Capital Capital Reserve/ Ordinary Share Share Revenue Reserve/ Reserve/ Exchange Capital Premium Reserve Realised Unrealised Differences Total Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 Balances at 1st May 2012 - 36,739 (22,061) 108,936 20,065 (13,849) 129,830 Movements during the year 17 Redemptions - (54,183) - - - - (54,183) Shares bought into treasury - - (1,793) - - - (1,793) Proceeds from reissue of treasury shares - - 96 - - - 96 Transfer from capital reserve - 17,444 - - - - 17,444 Transfer to share premium - - - (17,444) - - (17,444) 4 Gain on investments sold - - (8,873) 8,873 - - - Movement on gain on valuation of 4 investments - - (10,407) - 10,407 - - Gain on foreign exchange - - (1,881) - - 1,881 - 18 Distribution - - (177) - - - (177) Total comprehensive income - - 21,145 - - - 21,145 Balances at 30th April 2013 - - (23,951) 100,365 30,472 (11,968) 94,918 Statement of Financial Position As at 30th April 2014 30th April 30th April 2014 2013 Notes $'000 $'000 Non Current Assets 2(f), 11 Financial assets at fair value through profit or loss 94,434 107,440 Current Assets Due from brokers 1,262 - 2(d) Dividends and other receivables 946 821 2(g) Cash and cash equivalents 695 603 2,903 1,424 Current Liabilities Due to brokers (846) - Due to shareholders - (4,880) Payables and accrued expenses (210) (235) 2(h), 12 Loans payable (12,195) (8,831) (13,251) (13,946) Net Current Liabilities (10,348) (12,522) 16 Net Assets 84,086 94,918 Equity 14 Ordinary share capital - - 14 Share premium - - Revenue reserve (24,111) (23,951) 2(l) Capital reserve 108,197 118,869 16 Net Assets Attributable to Equity Shareholders 84,086 94,918 Net Asset Value per Ordinary Share* $1.92 $1.95 *Based on the Net Asset Value at the yearend divided by the number of shares in issue:43,894,158 (30th April 2013-48,693,711) (See Note 14) Approved by the Board of Directors on 1stAugust 2014and signed on its behalf by: Noel Lamb Andrew Martin Smith Chairman Director Statement of Cash Flows For the year ended 30th April 2014 30th April 30th April 2014 2013 Notes $'000 $'000 Reconciliation of profit for the year to net cash flows from operating activities (Loss)/profit before taxation (1,006) 21,316 4 Loss/(gain) on investments held at fair value 1,551 (19,280) Gain on foreign exchange (335) (1,881) Interest expense and bank charges 155 258 (Increase)/decrease in dividends and other receivables (125) 703 Decrease in payables and accrued expenses (25) (87) 9 Taxation paid (267) (171) Net cash (outflow)/inflow from operating activities (52) 858 Investing Activities Purchase of investments (69,908) (68,954) Sale of investments 80,918 126,554 Net cash inflow from investing activities 11,010 57,600 Net cash inflow before financing 10,958 58,458 Cash flows from financing activities Interest paid (125) (281) Redemptions (14,336) (49,303) Treasury shares (103) (1,793) Net loans drawn down/(repaid) 3,948 (7,354) Net cash outflow from financing activities (10,616) (58,731) Net increase/(decrease) in cash and cash equivalents 342 (273) Exchange movements (250) (44) Movement in cash and cash equivalents in the year 92 (317) Cash and cash equivalents at beginning of year 603 920 Cash and cash equivalents at end of year 695 603 Notes to the Financial Statements For the year ended 30th April 2014 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 or loss, and in accordance with International Financial Reporting Standards ("IFRS"), andThe 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 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. The accounting policies adopted are consistent with those of the previous financial year and are set out below: Applicable new standards and interpretations not yet adopted IFRS 9 Financial Instruments IFRS 9, Financial Instruments issued in November 2009 and October 2010, is being issued in phases and introduces new requirements dealing with recognition, classification, and measurement and derecognition of financial assets and liabilities. These chapters are tentatively effective for annual periods beginning 1st January 2018. Further chapters dealing with impairment methodology and hedge accounting are still being developed. The Company's management have yet to assess the impact of this new standard on the Company's Financial Statements. However, they do not expect to implement IFRS 9 until all of its chapters have been published and they can comprehensively assess the impact of all changes. IAS 32 Amendments - Offsetting Financial Assets and Financial Liabilities These amendments to IAS 32 clarify the meaning of "currently has a legally enforceable right to set-off". It is applicable for annual periods beginning on or after 1st January 2014. The IAS 32 offsetting criteria require the reporting entity to intend either to settle on a net basis, or to realise the asset and settle the liability simultaneously. The amendments clarify those only gross settlement mechanisms with features that eliminate or result in insignificant credit and liquidity risk and that process receivables and payables in a single settlement process or cycle would be, in effect, equivalent to net settlement and, therefore, meet the net settlement criterion. Accounting standards and amendments to standards now effective IFRS 7 Amendments - Financial Instruments Disclosures and Amendments related to financial assets and liabilities offsetting The additional disclosures required are designed to provide information that enables users to understand the relationship between transferred financial assets that are not derecognised in their entirety and the associated liabilities and to evaluate the nature of, and risks associated with, any continuing involvement of the reporting entity in financial assets that are derecognised in their entirety. Qualitative and quantitative disclosures have been added relating to gross and net amounts of recognised financial instruments that are (a) set off in the statement of financial position and (b) subject to enforceable master netting arrangements and similar agreements, even if not set off in the statement of financial position. There were no financial instruments offset on the Statement of Financial Position. IFRS 12 Disclosures of interests in other entities IFRS 12, `Disclosures of interests in other entities', effective for annual periods beginning on or after 1st January 2013, includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The new standard has not had any impact on the Company's financial position or performance. IFRS 13 Fair Value Measurement IFRS 13, 'Fair Value Measurement', defines fair value as 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 (i.e. an exit price). If an asset or a liability at fair value has a bid and an ask price, the standard requires valuation to be based on a price within the bid-ask spread that is most representative of fair value and allows the use of mid-market pricing as a practical market expedient for fair value measurement within a bid-ask spread. IFRS 13 includes an additional requirement to classify assets and liabilities not carried at fair value but for which fair value is disclosed into a fair value hierarchy table as presented in Note 15 to the financial statements. The following accounting standards and amendments to standards are also now effective but are not relevant to the Company: * IAS 1Amendments,'Presentation of Financial Statements' * IAS 19, 'Employee Benefits' * IFRS 10, 'Consolidated Financial Statements' * IFRS 11, 'Joint Arrangements' b) Going Concern The Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. Following the introduction of the redemption facility the Company has decreased in size in 4 years from a Net Asset Value of $269m at 30th April 2010 to $84m at 30th April 2014with $9m being redeemed during the current financial year.The Directors are actively monitoring the redemptions to ensure that there are adequate funds available for the Company to meet its ongoing obligations. Therefore the Directors believe the use of the going concern basis is still appropriate as there are no material uncertainties relating to events or conditions that may cast significant doubt about the ability of the Company to continue as a going concern. 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. 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. 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 mid-market price 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 Flows, 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 presentation 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 of; - 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. j) 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. There is no tax currently payable as the company incurred a loss during the 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 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 amortised 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 Reserve 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. OPERATING SEGMENTS 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 Schedule of Investments. Revenue earned is reported separately on the face of the Statement of Comprehensive Income as dividend income received from Japanese equities. 4. GAINSON INVESTMENTS HELD AT FAIR VALUE 2014 2013 $'000 $'000 Proceeds from sales of investments 82,180 125,808 Original cost of investments sold (63,432) (116,935) Gains on investments sold during the year 18,748 8,873 Net valuation (loss)/gain for the year (20,299) 10,407 (Loss)/gains on investments held at fair value (1,551) 19,280 5. 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 per cent of the weekly Net Asset Value of the Company. For the year ended 30th April 2014, total investment management fees were $943,593 (2013 - $983,920) of which $70,933(2013 - $85,149) is due and payable as at that date. On 29th February 2012 the Company appointed Tiburon Partners LLP as its Investment Adviser replacing Atlantis Investment Management Limited. Under the terms of the Investment Management Agreement dated 27th February 2012, the Investment Manager, AFMG 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 three months, and be in accordance with the Investment Management Agreement. Fees payable to the Investment Adviser are met by the Investment Manager. 6. 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 of the assets held by the Custodian or Sub-Custodian, together with transaction charges. Redemption Pool Fees The Custodian shall also be entitled to receive a fee from the Company of 0.03 per cent per annum of the Net Asset Value of any redemption pool together with transaction charges. (Please refer to Note 17 for details of the redemption pool facility). For the year ended 30th April 2014, total custodian fees were $70,541(2013 - $76,679) of which $8,896 (2013- $10,673) is due and payable as at that date. 7. ADMINISTRATION FEES The Company pays to the Administrator a fee accrued weekly and paid monthly in arrears at the annual rate of: Fair Value Annual Rate Up to USD50,000,000 0.18% USD50,000,001 to USD100,000,000 0.135% USD100,000,001 to USD200,000,000 0.0675% Thereafter 0.02% Redemption Pool Administration Fees At each redemption date a charge in respect of the preparatory work for the set-up and calculation of investment and redemption prices at £7,500 will be payable. (Please refer to Note 17 for details of the redemption pool facility). An additional fee will be payable on the fair value of the assets of that redemption pool of: Fair Value Annual Rate Up to USD25,000,000 0.18% USD25,000,001 to USD50,000,000 0.135% Thereafter 0.0675% For the year ended 30th April 2014, total administration and registrar fees were $166,465 (2013 - $205,373) of which $13,632 (2013 - $16,204) 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 £30,000 per annum for the Chairman, £27,500 per annum for the Chairman of the audit committee and £25,000 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 2014, total directors' fees and expenses were $322,922 (2013 - $273,259) of which $22,790(2013 -$31,737) 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. The main rate of corporation tax in the UK is 23% for 2013 which reduced to 21% on 1st April 2014. As the Company has augmented profits below the lower limit, the applicable tax charge for the year is based on the "small profits" rate of 20%. 2014 2013 $'000 $'000 Corporation tax at 20% (2013: 20%) - - Irrecoverable overseas tax 267 171 Tax charge in respect of the current year 267 171 Current Taxation The current taxation charge for the year is different from the standard rate of corporation tax in the UK. The differences are explained below. 2014 2013 $'000 $'000 (Loss)/profit before tax (1,006) 21,316 Capital loss/(profit) for the year 1,216 (21,161) Revenue profit for the year 210 155 Theoretical tax at UK corporation tax rate of 20% (2013 - 20%) 42 31 Effects of: Excess management expenses 11 3 Relief for overseas tax suffered (53) (34) Overseas tax written off 267 171 Actual current tax charge 267 171 The Company is an investment trust and therefore is not taxable on capital gains. Adjustments to 2013 and factors that may affect future tax charges An adjustment to the brought forward excess management expenses from the year ended 30th April 2013 has been made to reduce those from $34,198,048 to $25,006,106. An adjustment has also been made to the to the brought forward excess management expenses from the year ended 30th April 2013 to reflect the allocation of tax relief between revenue and capital in respect of those expenses which have been utilised. These adjustments arose from the offset of management expenses in that year to cover taxable capital gains, arising from the absence of Investment Trust Company status, as detailed in the "Business Review and Tax Status" section of the Director's report of the accounts. As at 30th April 2014, the Company has excess management expenses of $25,062,873 that are available to offset future taxable revenue. Whilst this represents management's best estimate based on the adjusted carried forward balance in the previous year of $25,006,106, 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 10. EARNINGS/(DEFICIT) PER ORDINARY SHARE The earnings per ordinary share figure is based on the net (loss)/profit for the year of ($1,272,356) (2013- $21,144,758) and on 47,042,798being the weighted average number of shares in issue at 30th April 2014 (2013: 62,939,097). The earnings/(deficit) per ordinary share figure can be further analysed between revenue and capital, as below. 2014 2013 $'000 $'000 Net revenue loss (57) (16) Net capital (loss)/profit (1,216) 21,161 Net total (loss)/profit (1,273) 21,145 Weighted average number of ordinary shares in issue during the year 47,042,798 62,939,097 $ $ Revenue (loss)/gain per ordinary share (0.001) 0.000 Capital (loss)/profit per ordinary share (0.026) 0.336 Total (loss)/profit per ordinary share (0.027) 0.336 11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 2014 2013 $'000 $'000 Cost of investments brought forward 76,968 125,175 Cost of purchase of investments 70,725 68,728 Proceeds on disposal of investments (82,180) (125,808) Gain on disposal of investments 18,748 8,873 Cost of investments carried forward 84,261 76,968 Cost of investments 84,261 76,968 Gain on valuation 10,173 30,472 Fair value of investments at year end 94,434 107,440 12. LOANS PAYABLE Loan Interest Maturity 2014 2013 Amount Rate Date $'000 $'000 5 year committed fixed rate credit facility ¥863,742,000 1.49% 10th May 2013 - 8,831 11th July ¥1,250,000,000 1.49% 2014 12,195 - Loan due for repayment within one year 12,195 8,831 The credit facility is provided by Royal Bank of Scotland International Limited. 13. FORWARD CURRENCY CONTRACTS There were no open contracts at 30th April 2014or at 30th April 2013. 14. SHARE CAPITAL AND SHARE PREMIUM The Company is authorised to issue an unlimited number of ordinary shares of no par value. 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 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 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; andii) on a poll a Member present in person or by proxy shall be entitled to one vote per ordinary shareheld. 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 Number of Ordinary Shares Shares Share Capital Share Premium $'000 $'000 In issue at 30th April 2014 43,894,158 - - In issue at 30th April 2013 48,693,711 - - Number of Number of Reconciliation of number of shares Shares Shares 2014 2013 Shares of no par value Issued shares at the start of the year 48,693,711 87,948,865 Re-issue of treasury shares - 75,000 Redemption of shares (4,743,553) (37,956,727) Purchase of shares into Treasury (56,000) (1,373,427) Number of shares at the end of the year 43,894,158 48,693,711 Shares held in Treasury Opening balance 2,046,611 748,184 Shares bought in to Treasury during the year 56,000 1,373,427 Treasury shares cancelled - (75,000) Number of shares at the end of the year 2,102,611 2,046,611 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 year were cancelled immediately. 15. 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 InvestmentManager/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 facility agreement, the Company entered into an English law multi currency revolving credit facility with RBS 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 notretain 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. 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. In addition to the shares redeemed during the year via the new redemption facility (refer to Note 17) 56,000 shares were repurchased in to treasury during the year ended 30th April 2014 (2013: 1,373,427). Market Price Risk The Company's investment portfolio - particularly its equity investments - is exposed to market price fluctuations which are monitored by the InvestmentManager/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 2014, 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 incompanies 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 30th April 2014 had increased or decreased by 5% with all other variables held constant, this would have increased or decreased profit and net assets attributable to holders of ordinary shares of the Company by: 2014 2013 +/- +/- Net Asset Value 4,721,685 5,371,983 Net Asset Value per share $0.11 0.11 Total comprehensive income $4,721,685 $5,371,983 Earnings per share $0.11 0.11 Foreign Currency Risk The Company principally invests in securities denominated in currencies other than US dollars, 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 InvestmentManager/Investment Adviser 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 has a GBP cash exposure of £16,184($27,207). The Company's net Japanese yen exposure in US dollar terms is as follows: As at 30th April 2014: $'000 Assets Cash and cash equivalents 577 Investments held at fair value 94,434 Other assets 2,208 Total assets 97,219 Liabilities Loans payable (12,194) Other liabilities (856) Total liabilities (13,050) Total net assets 84,169 As at 30th April 2013: $'000 Assets Cash and cash equivalents 144 Investments held at fair value 107,440 Other assets 820 Total assets 108,404 Liabilities Loans payable (8,831) Other liabilities (20) Total liabilities (8,851) Total net assets 99,553 Foreign Currency Sensitivity Analysis If the exchange rate at 30thApril2014, between the functional currency and all other currencies had increased or decreased by a 5% currency movement (2013: 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 profit and net assets attributable to holders of ordinary shares of the Company by: 2014 2013 +/- +/- Net Asset Value $4,209,747 $4,992,632 Net Asset Value per share $0.10 $0.10 Total comprehensive income $782,886 $1,529,281 Earnings per share $0.02 $0.03 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 one outstanding loan payable detailed in Note 12, and any excess cash and cash equivalents are invested at short-term market interest rates. As at 30thApril 2014, 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 Royal Bank of Scotland International Limited ("RBS") 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 on the last day of each interest period. For the year ended 30thApril 2014 the interest accrued on the loan was $10,060 (2013: $19,756). The following financial assets and liabilities disclosures exclude prepayments and taxation debtors and creditors: Less than 1 month 1 month - 1 year Total As at 30th April 2014: $'000 $'000 $'000 Financial assets Cash and cash equivalents 695 - 695 Financial liabilities Loans payable - (12,195) (12,195) Net financial assets/(liabilities) 695 (12,195) (11,500) Interest Rate Risk (continued) Less than 1 month Total As at 30th April 2013: $'000 $'000 Financial assets Cash and cash equivalents 603 603 Financial liabilities Loans payable (8,831) (8,831) Net financial assets/(liabilities) (8,228) (8,228) 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 equivalentsearn 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) 2014 2013 2014 2013 Japanese Yen Loans payable 1.49% 1.49% 0.20 0.03 Fair Value All financial assets and liabilities are carried at fair value with the exception of cash and cash equivalents, which are carried at amortised cost,and 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 30thApril 2014,the Company haddrawn down a loan facility (amended 11thApril 2014) of JPY1,250,000,000 ($12,194,527) (2013 - JPY 863,742,000/$8,830,815). In connection with the facility agreement, the Company entered into a English law multi currency revolving credit facility withRBS over its custody accounts held with Northern Trust (Guernsey) Limited. The loan may be used for the following purposes:- - the acquisition of investments in accordance with the investment policy; - its working capital requirements in the ordinary course of business; and - funding permitted redemptions which in each case will be repaid other than by way of rollover loan within 30 days of the relevant drawing. and must be repaid on the last day of its interest period. 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 liabilities (excluding tax balances) at 30th April 2014is as follows: Up to 1 year 1 to 5 Total or on demand years As at 30th April 2014: $'000 $'000 $'000 Financial liabilities Loans payable (12,242) - (12,242) Other financial liabilities (1,056) - (1,056) Total financial liabilities (13,298) - (13,298) Up to 1 year 1 to 5 Total or on demand years As at 30th April 2013: $'000 $'000 $'000 Financial liabilities Loans payable (8,854) - (8,854) Other financial liabilities (5,115) - (5,115) Total financial liabilities (13,969) - (13,969) 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. All of the cash assets are held with the Northern Trust Company, London Branch(NTC). Cash deposited with NTC is deposited as banker and is held on its Balance Sheet. 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 Custodian, Northern Trust (Guernsey) Limited. These assets are held distinct and separately from the proprietary assets of the Custodian. Securities are clearly recorded to ensure they are held on behalf of the Company. Bankruptcy or insolvency of the Custodian and or one of its agents or affiliates may cause the Company's rights with respect to the securities held by the Custodian tobedelayedorlimited. The Northern Trust Company, London Branch is a wholly owned subsidiary of Northern Trust Corporation. As at 30thApril 2014 Northern Trust Corporation had a long term rating from Standard & Poor's of A+. Risk is managed by monitoring the credit quality and financial positions of the Custodian the Company uses. Northern Trust acts as its own sub-custodian in the U.S., the U.K., Ireland and Canada. In all other markets Northern Trust appoints a local sub-custodian. Northern Trust continually reviews its sub-custodian 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 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 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 Custodian, 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 year end amounted to USD695,450 (2013:USD602,840). 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 Statement of Financial Position date. The quoted market price used for financial assets held by the Company is the current mid price; the appropriate quoted market price for financial liabilities is the current asking price. 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 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. The following table sets out fair value measurements using the IFRS 7 fair value hierarchies: At 30th April 2014 Financial assets at fair value through profit or loss Total Level 1 Level 2 Level 3 $'000 $'000 $'000 $'000 Equity Investments 94,434 94,434 - - 94,434 94,434 - - At 30th April 2013 Financial assets at fair value through profit or loss Total Level 1 Level 2 Level 3 $'000 $'000 $'000 $'000 Equity Investments 107,440 107,440 - - 107,440 107,440 - - 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. RECONCILIATION OF NET ASSET VALUE TO PUBLISHED NET ASSET VALUE 30th April 2014 Per Share $'000 $ Published Net Asset Value 84,086 1.92 Loss on revaluation of securities at bid prices - - 84,086 1.92 30th April 2013 Per Share $'000 $ Published Net Asset Value 95,117 1.95 Loss on revaluation of securities at bid prices (199) - 94,918 1.95 In the prior year and in accordance with IFRS the Company's investments were valued at bid prices. IFRS 13 became effective for annual periods beginning after 1st January 2013 which permits mid-market pricing. The change from bid prices tomid-market pricing did not result in a significant difference in valuation of the Company's investments. 17. REDEMPTION FACILITY Until 12th March 2013 shareholders had the opportunity to make redemptions of part or all of their shareholding on a four-monthly basis with the Board's discretion in declining any redemption requests. At the Extraordinary General Meeting on the same date the terms were amended to operate the redemption facility at six-monthly intervals. The following redemptions were made during the year:- Redemption date Shares redeemed USD'000 2014 2014 29/09/2013 2,433,335 (4,667) 30/03/2014 2,310,218 (4,789) 4,743,553 (9,456) Redemption date Shares redeemed USD'000 2013 2013 29/06/2012 16,536,591 (23,048) 31/10/2012 18,857,310 (26,255) 30/04/2013 2,562,826 (4,880) 37,956,727 (54,183) As at the year ended 30th April 2014, a total of USD 9,456,531 was paid to redeeming shareholders. The balance of USD Nil is due and payable as at that date. 18. DIVIDENDS All amounts held in the Company's revenue reserve are distributable to shareholders by way of dividends. There were no dividends declared by the board of directors during the year ended 30th April 2014. 19. ONGOING CHARGES The ongoing charges using the AIC recommended methodology was 1.98%as at 30th April 2014 (20132.16%). 20. PRIOR PERIOD ADJUSTMENT The Company was not granted investment trust status for the year ended 30th April 2013. The accounts for the year ended 30th April 2013 had previously been prepared on the assumption that investment trust status would be granted. In order to adjust for this error in the assumed basis of taxation, the figures for the year ended 30th April 2013 have been restated. These restatements had no overall impact on the profit for the year, nor on the net assets of the Company and are further explained in Note 9 to the accounts. 21. EVENTS DURING THE YEAR There were no significant events during the year ended 30th April 2014 which require adjustment to or additional disclosure in the financial statements. 22. SUBSEQUENT EVENTS On 1stAugust 2014, the Company appointed Northern Trust (Guernsey) Limited as Depositary (the"Depositary"). The Depositary Agreement will replace the existing custody agreement betweenthe Company and its Custodian, Northern Trust (Guernsey) Limited. On 1stAugust2014, AFMG Limitedresigned as Investment Manager and the Company appointed Tiburon Partners LLP as its Investment Manager (the "Manager").. From 1stAugust2014, depositary fees are payable to the depositary, monthly in arrears, at a rateof 0.035% of the Gross Asset Value of the Company up to $50 million, 0.025% on Gross Assetsbetween $50 million and $100 million and 0.015% on Gross Assets in excess of $100 million asat the last business day of the month. The Depositary is also entitled to globalcustody fee of 0.03% per annum of the Net Asset Value of the Company, subject to a minimum fee of $20,000, and transaction fees as per the Depositary Agreement. From 1stAugust 2014, management fees are accruable daily and payable monthly in arrears to the Manager, at a rate of 1%of the weekly adjusted Net Asset Value of the Company. There were no other significant events subsequent to the year ended 30th April 2014 which require adjustment to or additional disclosure inthe financial statements. 23. ULTIMATE CONTROLLING PARTY There is no one entity with ultimate control over the Company.
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