AJG.L Regulatory News (AJG)

ATLANTIS JAPAN GROWTH FUND LD - Annual Results for the year ended 30 April 2016

PR Newswire

London, August 2

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 30th April 20162nd August 2016

The financial information set out below does not constitute the Company's statutory accounts for the year ended 30th April 2016. All figures are based on the audited financial statements for the year ended 30th April 2016.

The financial information for the year ended 30th April 2016 noted below is derived from the financial statements delivered to the UK Listing Authority.

The annual report and audited financial statements for the year ended 30th April 2016 will shortly be posted to shareholders and will also be available on the company website: www.atlantisjapangrowthfund.com

Introduction

INVESTMENT OBJECTIVEAtlantis Japan Growth Fund Limited (the “Company”) aims to achieve long term capital growth through investment wholly or mainly in listed Japanese equities.

INVESTMENT POLICYThe 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 nor 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

At each redemption point the Company may (a) notionally allocate assets and liabilities into a separate pool (the "redemption pool") for the purpose of funding valid redemption requests for that redemption point or (b) fund the valid redemption requests from available cash. 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 (See Note 16).

INVESTMENT MANAGER AND INVESTMENT ADVISERTiburon Partners LLP has been appointed as Investment Manager of the Company.

Atlantis Investment Research Corporation (“AIRC”) has been appointed as the Investment Adviser to the Company.

AIRC, established in Tokyo, will, through Taeko Setaishi and her 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 StatementFor the year ended 30th April 2016

The year ended 30th April 2016 was a challenging one for the Company on a number of fronts. Market conditions in Japan were difficult over the period with the TOPIX down 4.6% and the Company’s NAV per share falling by 6.4%. The Company’s maintenance of net gearing for most of the year and the focus on growth both had a negative effect on relative performance. The Company’s five year performance figures remain well ahead of benchmark at +59.9% versus TOPIX of +33.3% in USD terms.

During March 2016 the Company also received a requisition from its then largest shareholder requiring an extraordinary general meeting to be convened to consider a resolution instructing the Board to put forward proposals for the restructuring and/or liquidation of the Company. I am pleased to say that the resolution was defeated at the EGM held on 3rd May 2016 by a majority of 56.27% of the votes cast on a poll.

In spite of the recent challenges that the Company has faced, I believe that we commence the new financial year in a much better position to take the Company forward on a sound footing. The requisition in fact served as a catalyst for the Board to bring forward plans in relation to succession within the fund advisory team and, with effect from 1st May 2016, Taeko Setaishi who had been deputy fund adviser since 1996, was appointed as the Company’s lead fund adviser. Ms Setaishi is a highly rated, top decile ranked manager with an impressive track record. She has since 2003 been the lead fund adviser to Atlantis Japan Opportunities Fund (“AJOF”), an open-ended fund that targets undervalued growth companies with a small to mid-cap bias.

With Ms Setaishi as lead fund adviser, the Company will continue to pursue its existing investment objective and policy but its portfolio will be managed using the same investment style and process as AJOF - characterised by a thematic approach with a smaller number of holdings. I believe that Ms Setaishi is a great asset to the Company and look forward to her conviction-led, bottom-up stock selection process delivering returns for all shareholders.

The Board is confident that our strategy for improving performance, narrowing the share price discount and growing the Company will be successful. Shareholders will also now be given the opportunity to hold a continuation vote at the AGM in 2019.

PerformanceOver the year the Company’s NAV per share denominated in JPY declined by 15.7%, which, after translation into USD, produced a 6.4% decrease. This compares to the benchmark TOPIX’s 4.6% fall on a total return basis measured in USD. Over five years however, the Company has outperformed TOPIX by more than 26%.

Since Company Inception

† Inception date of the GBP return is 16th December 2010.

Source: Tiburon Partners and Bloomberg. As of 30th April 2016.# Total Net Assets after redemptions during year.* 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;

CHANGE OF LEAD ADVISERTaeko Setaishi was appointed as lead fund adviser with effect from 1st May 2016. As a highly rated manager with a very strong track record, the Board believes that she is a great asset to the Company and we look forward to her conviction-led, bottom-up stock selection process delivering returns for all shareholders.

I would like to thank Ed Merner for his contribution as lead adviser since the launch of the Company in 1996. Over that period the Company has produced a NAV per share return in USD of 118% and beaten TOPIX by 113%. Ed has achieved a status over the last twenty years rarely rivalled by his peers. He has passed the baton on, but will remain part of the investment advisory team and will continue to work closely with Ms Setaishi. I join with all our investors, particularly those invested since inception, in wishing him well.

REQUISITIONOn 17th March 2016, the Company received a requisition from its then largest shareholder requiring an extraordinary general meeting to be convened to consider a resolution instructing the Board to put forward proposals for the restructuring and/or liquidation of the Company.

An EGM was duly held on 3rd May 2016 and the resolution was defeated by a majority of 56.27% of the votes cast on a poll. The vote against the resolution comprised the majority of our largest shareholders as well as a significant number of smaller shareholders, including private individuals, who have clearly shown that they want to remain invested in the Company under the management of Taeko Setaishi. Speaking to our investors, the message has come through loudly that they wish to be invested in Japan, in a closed-end structure with a stable pool of capital and with the team at AIRC.

The Board has asked all shareholders to respect the outcome of the meeting and allow us to continue to implement our strategy for improving the Company's performance, further narrowing the share price discount and growing the Company over the next three years.

MARKETING ARRANGEMENTSAs announced in April this year, AIRC (the Company’s Tokyo-based investment adviser) and Tiburon (the Company’s London-based investment manager) have committed to a closer day-to-day working relationship with the objective of achieving more proactive and effective communication with shareholders and marketing of the Company to potential new investors. As part of this initiative, with effect from 1st June 2016, Tiburon has formally replaced Aravis Partners LLP in relation to the marketing of the Company.

APPOINTMENT OF FINANCIAL ADVISERThe Board was pleased to appoint Cantor Fitzgerald as the Company’s sole financial adviser with effect from 4th May 2016. Cantor Fitzgerald has also been acting as the Company’s corporate broker since January 2015 and brings experience both in the areas of Japan and investment trusts.

CONTINUATION VOTEA continuation vote (i.e. an ordinary resolution to continue the Company) will be proposed at the Company’s annual general meeting in 2019, following the expiry of the annual 1:5 embedded subscription right mechanism. This mechanism was introduced in 2014 to allow the Company to increase its market capitalisation and total assets, as well as decrease its expense ratio over a five year period. The decision to have a continuation vote at the 2019 AGM reflects the Board’s confidence that the measures that it is implementing will be successful in improving investment performance, narrowing the share price discount and providing a platform for the growth of the Company.

SUBSCRIPTION RIGHTOn 1st October 2014, the Board announced details of proposals to introduce an annual Subscription Right to enable shareholders to subscribe for one new ordinary share for every five ordinary shares held on 1st October in each year at a price equal to the undiluted NAV per share on 2nd October one year prior. The introduction of the annual Subscription Right was duly approved by shareholders at an EGM held on 22nd October 2014.

The Subscription Right was introduced in 2014 to allow the Company to increase its market capitalisation and total assets, as well as decrease its expense ratio.

For the first part of the financial year the Subscription Rights were ‘in the money’ i.e. the share price was above the Subscription Price. It was only following the market turmoil in China in the summer of 2015 that the share price fell below the Subscription Price. In respect of the 1st October 2015 Subscription Date, applications were received from shareholders for 296,903 new ordinary shares. Accordingly, 296,903 new ordinary shares were issued for an aggregate consideration of £379,353.07 at an exercise price of 127.77p per ordinary share.

The mechanism put in place by the Board allowed for a 5 year programme of Subscription Rights, it was not expected that they would be in the money every year. When the current Subscription Rights expire, the exercise price (sometimes called ‘strike price’) of the new Subscription Rights is reset at the then prevailing share NAV (so if the NAV is down then the new strike price will be set at a new lower level).

It should be noted that as at 14th July 2016 (the latest practicable date) the closing price per ordinary share was 156p whilst the NAV per share on 2nd October 2015 was 143.76p. This means that based on the share price at 14th July 2016, the subscription rights were ‘in the money’ by 8.5%.

It is also important to note that if shareholders elect to redeem their ordinary shares through the Redemption Facility then they would lose the Subscription Rights associated with the ordinary shares which are redeemed by the Company. This would mean giving up any intrinsic value.

SHARE PRICE DISCOUNTThe discount or premium for the Company represents the share price relative to its Net Asset Value. The discount for the Company averaged 8.7% during the period under review compared with an average of 11.7% for the AIC Japanese smaller companies sub-sector - the Company’s peer group. The Company’s discount was 6.8% on 30th April 2016 and 4.76% on 14th July 2016.

DISCOUNT CONTROL MECHANISMThe 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-BACKSIn order to assist in managing the discount at which the Company’s shares trade and to enhance the NAV per share of remaining shareholders, the Company has authority to buy back shares although this authority was not exercised during the financial year ended 30th April 2016. Since the financial year end, the Company has exercised its authority to buy back 200,000 shares on 13th May 2016 at a discount to NAV of 11.36%. The shares bought back, representing 0.50% of current issued shares, are held in treasury.

THE REDEMPTION FACILTYAt the Redemption Point on 30th September 2015, 746,591 shares representing 1.85% of issued shares were validly lodged for redemption. Of these, 176,679 shares representing 0.44% of issued shares were placed back into the market by the Company’s broker under the matched trade mechanism. Accordingly, only a net 1.41% of issued shares were redeemed by the Company in September 2015.

In view of the requisition received on 17th March 2016 to convene an extraordinary general meeting of the Company (as referred to above) the Board considered that it would be inappropriate to proceed to offer the redemption facility on the Redemption Point on 31st March 2016 and announced that the redemption facility would be suspended on that occasion.

BOARD CHANGESAs previously announced, Andrew Martin Smith will be retiring as a Director with effect from 31st July 2016. Mr Martin Smith has made a terrific contribution to the Company since 2002 both in his capacity as a Director and Chairman of the Audit Committee. He has been fiercely independent and a champion of shareholder rights. The Board has engaged a specialist non-executive search consultant focussing on the investment trust sector with a view to finding an appropriate successor. Philip Ehrmann succeeded Mr Martin Smith as Chairman of the Audit Committee with effect from 1st September 2015. Eric Boyle has notified the Board of his intention to retire as a Director of the Company with effect from the completion of the AGM on 14th October 2016.

ONGOING CHARGESThe Board has been looking very closely at the level of ongoing charges incurred by the Company and I am pleased that for the year ended 30th April 2016 it proved possible to reduce the ongoing charges to 1.91% compared to 2.07% in the prior year. The Board will remain vigilant in seeking opportunities for further reductions.

RESTATEMENTOn account of the change of functional currency of the Company detailed in last year’s Annual Report and Financial Statements, the prior year comparatives have been restated (refer to Note 3 for more details).

OUTLOOKRecent data from Japan indicate an uneven economic performance but there is no doubting the authorities’ determination to suppress deflationary expectations and restore the economy to a moderate growth-path. The Bank of Japan has embarked upon a negative interest rate regime to revive bank lending and a stimulative fiscal package is likely to be passed by the Diet in the autumn of 2016. Economists are projecting modest growth in the 0.5%-1.0% range for the fiscal year ending March 2017. Despite the handicap of operating in a stronger JPY environment, analysts expect Japanese corporate earnings growth to be sustained in the current fiscal year.

As I noted in my Chairman’s statement last year, spurred by the new Corporate Governance Code, reform has begun to sweep through Japanese corporate management to the direct benefit of shareholders. I was pleased to learn that Japanese companies have paid out over 50% of their aggregate net income for the fiscal year ending March 2016 through increased dividends and share buybacks. Taeko Setaishi and Ed Merner, the Company’s advisory team, have also observed a noticeable acceleration in merger and acquisition activity by corporates.

In the immediate aftermath of the UK referendum on continuing membership of the EU, global financial markets including in Japan suffered some degree of shock but have since largely recovered their initial losses.

Noel Lamb

29th July 2016

Investment Adviser’s ReportFor the year ended 30th April 2016

PerformanceThe year ended 30th April 2016 was a challenging one for the Company as the Japanese economy struggled to maintain forward momentum despite aggressive monetary measures introduced by the Bank of Japan. Corporate earnings for the fiscal year ended March 2016 were judged by the market as disappointing and corporate guidance to March 2017 assumes a stronger JPY and is, consequently, cautious. Equity prices were battered, particularly by an extensive January-March quarter overseas investor sell-off, which net purchases by local institutions failed to offset.

The Company’s NAV per share fell 6.4% over the year versus a decline of 4.6% for the TOPIX which includes all TSE1 stocks (all figures are calculated in USD and on a total return basis). The Company’s performance relative to TOPIX was negatively affected by the maintenance of net gearing during most of the year and the concentration on growth which had temporarily fallen out of favour with the market. The Company will continue to focus on growth, which at times can have a negative effect on performance, but has proven to be a successful investment approach over the longer term.

At the end of the period under review, borrowings stood at ¥600 million and cash stood at some ¥576 million resulting in the Company effectively having little net gearing. The portfolio contained 64 companies compared to 80 a year ago. JPY ended April 2016 at ¥107.13 against USD, a gain of 11% from the closing rate of ¥118.90 at the end of April 2015.

The Company has no foreign exchange hedges and no exposure to bonds, convertible bonds, warrants or derivatives of any kind. Excluding cash, the Company continues to be invested entirely in listed Japanese securities.

Market comment & Economic OutlookPrime Minister Abe has little to show for his efforts to kick-start the economy which continues to struggle against deflationary headwinds despite the Bank of Japan’s proactive monetary stance. However, there are some emerging green shoots with unemployment at its lowest level in years, exports showing signs of improving and capital investments heading higher. Consumer spending, supplemented by ‘in-bound’ tourist demand, remains essentially flat. However the tight labour conditions are contributing to moderate wage gains which could contribute to improving consumer confidence and subsequently household spending. The Bank of Japan’s introduction of negative interest rates is showing signs of having a positive effect on the housing market.

Japan’s economic problems, in part, have been due to a sluggish world economy, especially in China and Southeast Asia. However there are signs that the worst is over and that we will see stronger world growth over the coming few years. Economic expansion in Asia will eventually provide a demand boost for Japan. Companies across a broad spectrum are investing in offshore production and sales and service facilities. Japanese companies continue to be world-leaders in a wide range of areas including medical equipment, automobiles and automobile parts, measuring equipment, semiconductor manufacturing equipment, new materials such as carbon fibre and software, including game software.

A stable to weaker JPY/USD rate would have a positive impact on the trend of exports, the profitability of exports and the continuation of the inbound flow of visitors from overseas.

INVESTMENT ADVISER’S StrategyThe Investment Adviser is a growth adviser. In its search for growth, the Investment Adviser has been encouraged by finding many robust growing companies which it thinks can sustain their earnings momentum for a number of years. These companies include Ichigo, Nihon M&A Center Inc, DA Consortium, Yonex, and Anicom. The Investment Adviser has also widened its investment search to include companies that have been struggling but now appear to be entering a period of sustained growth. Examples of the latter include Panasonic, Teijin and JACCS. 

The Investment Adviser pays little attention to sector weightings and recommends holding a diversified portfolio of growth companies and cyclical growth companies. The focus is primarily on medium and smaller sized companies and there is a very limited exposure to micro caps. Portfolio liquidity is maintained by selected holdings in large capitalised companies including Mitsubishi Electric, Nidec and Panasonic. 

The advisory team consists of four analysts/fund managers who spend the majority of their time visiting companies or preparing for management visits. The team meets formally on a weekly basis to review the previous week’s visits but exchanges information and suggestions daily. Taeko Setaishi, the lead adviser to the Company, is responsible for final stock recommendations but relies on input from the other team members.

The Investment Adviser’s strategy is primarily a bottom-up approach influenced by the bigger picture and developing trends in a wide range of industries. Information flow originates from many sources but the Investment Adviser’s decision-making process places the most stress on its primary company research. The approach is to buy early and at low prices. The Investment Adviser is not afraid to accumulate companies that sell-side brokers have rated as sells or in many cases are just not bothering to cover anymore.

In summary, the Investment Adviser plans to keep up a busy schedule of company visits and remains on the lookout for attractive, inexpensive growth investment opportunities that should be able to expand earnings over the medium term and consequentially contribute to the Company’s long term capital appreciation.

Atlantis Investment Research CorporationJuly 2016

Alternative Investment Fund Manager’s ReportFor the year ended 30th April 2016

Tiburon Partners LLP, which is registered in England as a limited liability partnership, was authorised on 22nd July 2014 by the Financial Conduct Authority of the UK as the Company’s Alternative Investment Fund Manager (the “AIFM”) for the purposes of the Alternative Investment Funds Managers Directive (“AIFMD” or the “Directive’”).

As the Company’s AIFM, Tiburon Partners LLP is required to make available an annual report for each financial year of the Company containing the following:

i. A balance sheet or a statement of assets and liabilities (see Statement of Financial Position below).

ii. An income and expenditure account for the financial year (see Statement of Comprehensive Income below).

iii. A report on the activities of the financial year (see Chairman’s Statement above, Investment Adviser’s Report above, Details of Ten Largest Investments below, Schedule of Investments below and Directors’ Report and Statement of Directors’ Responsibilities below).

iv. Details of material changes to the information set out under Article 23 of the Directive. To satisfy this requirement, the AIFM publishes an Investor Disclosure Document available at www.atlantisjapangrowthfund.com.

v. In accordance with the Directive, information in relation to the Company’s leverage and the remuneration of the AIFM, is required to be made available to investors. In accordance with the Directive, the AIFM remuneration policy is available from Tiburon Partners LLP on request and the numerical remuneration disclosures in respect of the AIFM’s first relevant reporting period (year ended 31st March 2016) will be made available in due course.

The remuneration disclosures referred to in paragraph (v) above are a regulatory requirement and follow ESMA and FCA guidance. The Executive Committee of the AIFM is responsible for formulating and implementing the remuneration policy, the purpose of which is to promote effective risk management. All executive partners, as well as other members of the firm who are deemed to be risk takers, or who otherwise occupy control functions are included within the scope of the policy.

Tiburon Partners LLPJuly 2016

Details of Ten Largest Investments

The ten largest investments comprise a fair value of $25,068,297 (2015: $26,601,745) representing 28.8% of Net Asset Value (2015: 28.4%) with details as below:

Ichigo (739,500 shares)Ichigo is involved in a wide range of real estate related businesses including ownership and management of office buildings, mostly in the greater Tokyo area, directing several local REITS and operating solar power generating stations. It has been growing steadily and plans to keep expanding in coming years. The Investment Adviser is expecting above average earnings growth from the company.

Fair value of $3,320,105 representing 3.8% of the Net Asset Value (2015: 1.0%)

MCUBS MidCity Investment (830 shares)MCUBS is a real estate investment trust controlled by Mitsubishi Corporation and UBS which has focused mostly on office properties in Osaka. Now under new leadership, management is emphasising geographic diversification, particularly in Tokyo. With the outlook for low interest rates, rising office building prices, and high occupancy levels, the Investment Adviser expects steady sales and profits growth in coming years.

Fair value of $2,819,993 representing 3.2% of the Net Asset Value (2015: 0.0%)

Financial Products (210,000 shares)FPG targets its sales of Japanese operating leases to small businesses and high net worth individuals seeking to defer tax liabilities. The prospect of lower corporate tax rates over the medium term drives interest in this type of financial product. Working from their Japanese operating lease client list FPG has begun to cross-sell other financial products such as insurance, asset management services and real estate.

Fair value of $2,616,792 representing 3.0% of the Net Asset Value (2015: 0.0%)

Yumeshin (405,000 shares)Yumeshin provides management personnel to construction companies who are hired for specific projects lasting from several months to several years. Given the national shortage of qualified engineers and managers, the company’s services are in high demand. The Investment Adviser expects steady growth up to the 2020 summer Olympics. The company has a positive cash flow and one of the highest dividend yields amongst Japanese listed companies.

Fair value of $2,381,575 representing 2.7% of the Net Asset Value (2015: 0.0%)

DA Consortium (305,000 shares)DAC, partly owned by Hakuhodo (Japan’s second largest advertising company), is a media buyer for internet advertising and holds a strong position in MSN. The company should benefit from the strong growth of internet advertising, a recovering Asian economy and a portfolio of fast growing domestic and overseas subsidiaries.

Fair value of $2,345,825 representing 2.7% of the Net Asset Value (2015: 0.0%)

Anicom (95,000 shares)Anicom commands an overwhelming share of the Japanese pet health insurance market. The market continues to expand as the number of insured pets age and more pet owners sign up for insurance. With an increase in scale, Anicom has lowered its loss and expense ratios which has translated into rising profits. In order to handle the mounting premium income, Anicom has established an in-house asset management company which to date has delivered a creditable performance. New products in the pipeline, such as pet hospitals, should contribute to growth.

Fair value of $2,336,538 representing 2.7% of the Net Asset Value (2015: 0.0%)

Nidec (30,500 shares)Nidec, the world’s leader in HDD motors, produces a wide range of precision electric motors and is strengthening its mid to large sized motor product line. The company has shifted most production offshore. Nidec has a highly active M&A track record. The Investment Adviser thinks the company can continue to maintain a superior level of earnings growth under the current management.

Fair value of $2,330,168 representing 2.7% of the Net Asset Value (2015: 0.0%)

Daicel (180,000 shares)Daicel produces a wide range of organic chemicals including cellulose acetate, cigarette tow and engineering plastics. Daicel, through its pyrotechnic segment, has become a global leader in airbag inflators, which are now in strong demand due to some extent to defective parts produced by one of the company’s major competitors. The Investment Adviser thinks this will have a significant and positive impact on Daicel`s sales and earnings over the next several years.

Fair value of $2,326,971 representing 2.7% of the Net Asset Value (2015: 0.0%)

Cyberdyne (105,000 shares)Cyberdyne is a highly innovative venture company which developed and now assembles and distributes special medical equipment known as HAL (hybrid assist limbs). HAL have found application in assisting stroke victims regain limb mobility. HAL have been accepted for rehabilitation use in Germany and applications are pending in other countries. 

Fair value of $2,306,109 representing 2.7% of the Net Asset Value (2015: 0.0%)

Trusco Nakayama (56,000 shares)Trusco is a specialised trading house which distributes machine parts, cutting tools and other industrial consumables. Recently it has diversified into handling construction supplies. The company stocks an extensive inventory and can make rapid deliveries upon receipt of an order. With an expansion of Trusco’s customer base and product offerings, the Investment Adviser is looking for steady sales and earnings growth over the next few years.

Fair value of $2,284,221 representing 2.6% of the Net Asset Value (2015: 0.0%)

Schedule of InvestmentsAs at 30th April 2016

Board of Directors

NOEL LAMB (Chairman, aged 59, appointed to the Board on 1st February 2011 and appointed as Chairman on 1st May 2014), British, graduated from Exeter College, Oxford University and is a barrister-at-law. He joined Lazard Brothers & Co Limited in 1987 and from 1992 to 1997 he was the managing director of Lazard Japan Asset Management where he was the fund manager for their Japanese equities. In 1997, he moved to the Russell Investment Group where he established the investment management capability of Russell in London. In 2002, he was promoted to Chief Investment Officer in North America where he managed assets of $150bn until his departure in 2008.

ANDREW MARTIN SMITH MCSI (aged 64, appointed to the Board on 26th September 2002 and will retire from the Board on 31st July 2016), British, graduated from Exeter College, 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. He works as an adviser and consultant at Guinness Asset Management and is a Director of Guinness Asset Management Funds in Dublin. He is a non-executive Director of Church House Investments and M&G High Income and TR European Growth Investment Trusts.

ERIC BOYLE FCSI (aged 62, appointed to the Board on 17th October 2000 and intends to retire from the Board on 14th October 2016), 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 57, 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 in 1981 specialising in the North American market before heading up Emerging Markets for Invesco Asset Management. In 1995 he joined Gartmore Investment Management to undertake a similar role, before becoming Head of Pacific & Emerging Markets. Whilst at Gartmore he managed the Gartmore Asia Pacific Trust Plc, a pan-Asian Investment Trust. In 2006 he moved to Jupiter Asset Management where he was Co-Head of Asia. At the beginning of 2015 he joined Manulife Asset Management as a Senior Managing Director, responsible for overseeing Global Emerging Markets equity portfolios.

TAKESHI MURAKAMI (aged 72, appointed to the Board on 29th November 2007), Japanese, graduated from Doshisha University in Kyoto with a BA in Economics. He has 38 years’ 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 then joined Schroder Securities in London in 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.

Directors’ Report and Statement of Directors’ Responsibilities

The Directors are pleased to present their twentieth Report and the Audited Financial Statements of the Company for the year ended 30th April 2016.

PRINCIPAL ACTIVITYThe Company is a Guernsey registered authorised closed ended investment company with UK investment trust status 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’ RESPONSIBILITIESThe Directors are responsible for preparing Financial Statements for each financial year which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that year. In preparing these Financial Statements, the Directors are required to:

– select suitable accounting policies and then apply them consistently;

– make judgements and estimates that are reasonable and prudent;

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

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

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

– this Annual Report and Financial Statements, prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”) and applicable Guernsey law, give a true and fair view of the assets, liabilities, financial position and assess the Company’s position and performance, business model and strategy of the Company; and

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

a) DTR 4.1.8 of the 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 Annual Report and 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.

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 Conduct Authority.

The Directors who held office at the date of the approval of the Financial Statements confirm that, so far as they are aware:

– There is no relevant audit information of which the Company’s auditor is unaware; and

– Each Director has taken all the steps they ought to have taken as Directors to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

The Directors confirm that these Financial Statements comply with these requirements.

BUSINESS REVIEW AND TAX STATUSThe Company has been formally accepted into the Investment Trust Company regime, subject to the Company continuing to submit appropriate annual tax filings to HM Revenue and Customs. In the opinion of the Directors, the Company has conducted its affairs so as to enable it to maintain ongoing investment trust status, subject to completion of the relevant audit work.

REDEMPTION FACILITYThe purpose of the facility is to provide a measure of liquidity for those shareholders who may wish to redeem. The Redemption Facility 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 Directors shall be entitled at their absolute discretion to determine the procedures for the redemption of the ordinary shares (subject to the facilities and requirements of CREST and the Companies Law). Without prejudice to the Directors discretion, it is intended that the procedure described below shall apply.

Redemptions may take place on any redemption point. Upon redemption all ordinary shares redeemed shall be cancelled. 

The 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’’). Until 31st March 2015 the redemption value was based upon the realisation value of the portfolio, less an exit charge set at 2% on redemptions of up to a shareholder's Basic Entitlement. Following a Board resolution to amend the Redemption Facility, with effect from the same date, the exit charge payable on redemptions of up to a shareholder's Basic Entitlement was increased to 4%.

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 (an "Excess Request"). Following the amendment to the Redemption Facility, with effect from 31st March 2015, the exit charge on Excess Requests is the rolling 90 day average discount calculated in accordance with the Company's existing discount control mechanism, subject to an exit charge cap of 10%. 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.

SHARE BUY-BACKSThe Company has been granted the authority to make market purchases of up to a maximum of 14.99% of the aggregate number of ordinary shares in issue at a price not exceeding the higher of (i) 5% above the average of the mid-market values of the ordinary shares for the 5 business days before the purchase is made or, (ii) the higher of the price of the last independent trade and the highest current investment bid for the ordinary shares.

In deciding whether to make any such purchases the Directors will have regard to what they believe to be in the best interests of shareholders as a whole, to the applicable legal requirements and any other requirements in its Articles. The making and timing of any buybacks will be at the absolute discretion of the Board and not at the option of the shareholders, and is expressly subject to the Company having sufficient surplus cash resources available (excluding borrowed moneys). The Listing Rules prohibit the Company from conducting any share buybacks during close periods immediately preceding the publication of annual and interim results.

INVESTMENT POLICYThe Company’s investment objective and policy are set out above.

RESULTSThe results for the year are set out in the Statement of Comprehensive Income. 

DIVIDENDAs a UK investment trust the Company is subject to the provisions of the Corporation Tax Act 2010, the provisions of section 1158 of which (‘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 2016.

There were no distributions made during the year and the Company met the retention test for the year ended 30th April 2016.

CAPITAL VALUESAt 30th April 2016 the value of net assets available to shareholders was $86,957,813 (2015: $93,509,272) and the Net Asset Value per share was $2.16/£1.48 (2015: $2.31/£1.50).

PREPARATION OF FINANCIAL STATEMENTSThe 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 SHAREHOLDINGSIn accordance with the Company's Articles of Association the Directors have the ability to request nominee shareholders to disclose the beneficial shareholders they represent. Based on the information received the following shareholders had a holding in the Company in excess of 3% as at 30th April 2016.

SECRETARYThe Secretary is Northern Trust International Fund Administration Services (Guernsey) Limited.

INDEPENDENT AUDITORSThe Company has appointed PricewaterhouseCoopers CI LLP (“PwC CI LLP”) as its independent auditors and tax advisers.

PwC CI LLP 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 UNCERTANTIESAs an investment trust, the Company invests in securities for the long term. The financial investments held as assets by the Company comprise equity shares (see the Schedule of Investments 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 conducts robust reviews of these risks and agrees policies for their management. These policies have remained substantially unchanged since 30th April 2006.

PerformanceThe Board regularly monitors the Company’s investment performance against a number of indices and the AIC Japanese smaller companies sub-sector peer group.

DiscountA 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.

The Company operates a shareholder approved 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 date of this report, the continuation vote has not been triggered.

RegulatoryThe Company operates in a complex regulatory environment and faces a number of regulatory risks. Breaches of regulations, such as Section 1158 of the Corporation Tax Act 2010, The Companies (Guernsey) Law, 2008 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 The Companies (Guernsey) Law, 2008, the UKLA Listing Rules, Prospectus Rules, Disclosure Transparency Rules and the rules of the London Stock Exchange.

OperationalLike 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 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.

FinancialThe financial risks faced by the Company, including the impact of changes in Japanese equity market prices on the value of the Company’s investments, are disclosed in Note 16 to the Financial Statements. The financial risks disclosed in Note 16 are detailed for compliance with IFRS and in certain cases are not principal risks of the Company.

CORPORATE GOVERNANCE AND SHAREHOLDER RELATIONSDetails of the Company’s compliance with corporate governance best practice, including information on relations with shareholders, are set out in the Corporate Governance Statement and this statement forms part of the Directors’ Report.

VIABILITY STATEMENTIn accordance with provision C.2.2 of the UK Corporate Governance Code, published by the Financial Reporting Council in September 2014, the Directors have assessed the prospects of the Company over the period from the date of this document to the Annual General Meeting in 2019. The Directors believe this period to be appropriate as they have committed to put forward a proposal for the continuation of the Company at that meeting and therefore do not make any assumption that such resolution will be passed by shareholders.

The Directors, in their assessment of the viability of the Company, have considered each of the Company’s principal risks as referred to above, in particular the impact of a significant fall in the Japanese equity market on the value of the Company’s investment portfolio. The Directors have also considered the Company’s income and expenditure projections and the fact that the Company’s investments comprise readily realisable securities which can be sold to meet funding requirements if necessary.

Based on the Company’s processes for monitoring operating costs, share price discount, the Investment Manager’s compliance with the investment objective, asset allocation, the portfolio risk profile, gearing, counterparty exposure, liquidity risk and financial controls, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period from the date of this document to the Annual General Meeting in 2019.

GOING CONCERNAs outlined in the Viability Statement above, the Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. Whilst the Company may be obliged to hold a continuation vote in accordance with its discount control mechanism, the Directors do not believe this should automatically trigger the adoption of a non-going concern basis in line with AIC Statement of Recommended Practice which states that it is more appropriate to prepare financial statements on a going concern basis unless a continuation vote has already been triggered and shareholders have voted against continuation. Therefore, the Directors believe the use of the going concern basis is 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 to meet its ongoing obligations.

ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVEThe 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") as the Company's Alternative Investment Fund Manager on the terms of and subject to the conditions of the Investment Management Agreement between the Company and Tiburon.

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.

FOREIGN ACCOUNT TAX COMPLIANCE ACTFor purposes of the US Foreign Account Tax Compliance Act, the Company registered with the US Internal Revenue Service (“IRS”) as a Guernsey reporting Foreign Financial Institution (“FFI”), received a Global Intermediary Identification Number, and can be found on the IRS FFI list under the link http://apps.irs.gov/app/fatcaFfiList/flu.jsf.

The Company is subject to Guernsey regulations and guidance based on reciprocal information sharing inter-governmental agreements which Guernsey has entered into with the United Kingdom and the United States of America. The Board will take the necessary actions to ensure that the Company is compliant with Guernsey regulations and guidance in this regard.

29th July 2016

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 members at the forthcoming Annual General Meeting.

REMUNERATION COMMITTEEThe Board as a whole fulfils the function of a Remuneration Committee. The Company’s financial adviser, corporate broker and company secretary, will be asked to provide advice when the Directors consider the level of Directors’ fees.

POLICY ON DIRECTORS’ FEESThe Board’s policy is that the remuneration of non-executive Directors should reflect the experience of the Board as a whole and be fair and comparable to that of other investment trusts that are similar in size, have a similar capital structure and have a similar investment objective.

The fees for the non-executive Directors are determined within the limits of £200,000 set out in the Company’s Articles of Incorporation. The Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits.

DIRECTORS’ SERVICE CONTRACTSIt is the Board’s policy that none of the Directors have a service contract. Directors are appointed initially until the following Annual General Meeting when, under the Company’s Articles of Incorporation it is required that they be re-elected by shareholders. Thereafter two Directors shall retire by rotation, or if only one Director is subject to retire by rotation he shall retire. The retiring Directors will then be eligible for reappointment having been considered for reappointment by the Chairman and other Directors.

DIRECTORS’ EMOLUMENTS FOR THE YEARDirectors’ emoluments are paid in sterling. The Directors who served in the year received the following emoluments in the form of fees:

DIRECTORS’ INTERESTS

The Directors listed above served throughout the year under review.

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 2016 and 30th April 2015 are as follows:

As at the date of this report, Andrew Martin Smith held 37,250 ordinary shares of the Company. The above interests of all other Directors were unchanged as 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.

The following summarises the Directors’ directorships in other public companies:

DISCLOSURE OF DIRECTORSHIPS IN PUBLIC COMPANIES LISTED ON RECOGNISED STOCK EXCHANGES

A. Martin Smith

None of the other Directors held directorships in other public companies during the year under review.

APPROVALA resolution for the approval of the Directors’ Remuneration Report for the year ended 30th April 2016 will be proposed at the Annual General Meeting.

By order of the Board

Noel Lamb Philip Ehrmann

Chairman Director 

29th July 2016

Corporate Governance

INTRODUCTIONThe 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 February 2015 edition of the AIC Code of Corporate Governance (the “AIC Code”) by reference to the AIC Corporate Governance Guide for Investment Companies (the “AIC Guide”). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code 2014 (the “UK Code”), as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.

On 18th February 2015, the Financial Reporting Council provided the AIC with an updated endorsement letter to cover the February 2015 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 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 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 Code throughout the accounting year, except as set out below.

– the role of the chief executive

– executive directors’ remuneration

– the need for an internal audit function

– the need to appoint a senior independent director

– the need to appoint a nomination committee or management engagement committee

– the whistle blowing policy 

For the reasons set out in the AIC Guide, and as explained in the UK 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 have employees, hence no whistle-blowing policy is required. However, the Directors note that the Company’s service providers have whistle blowing policies in place.

THE BOARDDisclosures under Principle 5 of the AIC CodeThe Board comprises five independent non-executive Directors including the Chairman, Noel Lamb. Due to the size of the Company, the nature of its activities and the fact that all of the Directors are independent, the Board does not consider it necessary to appoint a senior independent director.

The Board has not appointed a remuneration committee but comprising wholly independent Directors, the whole Board considers these matters regularly. The Board considers agenda items formally laid out in the Notice and Agenda, which are formally circulated to the Board in advance of the meeting as part of the Board papers.

The primary focus at Board meetings is a review of investment performance and associated matters such as the discount, redemptions, gearing, asset allocation, marketing and investor relations, peer group information and industry issues. There were 7 Board meetings (2014-2015: 6) and 3 Audit Committee meeting (2014-2015: 1) held during the year 1st May 2015 to 30th April 2016. The table below shows the number of formal meetings attended by each Director during the year.

In addition to the above meetings 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 Incorporation it is required that they be re-elected by shareholders. Thereafter two Directors shall retire by rotation, or if only one Director is subject to retire by rotation he shall retire. The retiring Directors will then be eligible for reappointment having been considered for reappointment by the Chairman and other Directors.

The Board 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 Board may also use independent external agencies as and when the requirement to recruit an additional Board member becomes necessary.

Having served on the Board for more than nine years Mr Andrew Martin Smith and Mr Eric Boyle are subject to annual re-election in accordance with the UK Code. Mr Martin Smith will be retiring as a Director with effect from 31st July 2016 and Mr Boyle has notified the Board of his intention to retire as a Director with effect from the completion of the AGM on 14th October 2016. In addition Mr Noel Lamb will retire by rotation in accordance with the Articles of Incorporation and offers himself for re-election. The Board embraces the principles of the UK Code but, with regard to its provisions concerning director tenure, is of the opinion that that an individual’s independence cannot be arbitrarily determined on the basis of a set period of time. The Company’s investment objective is to achieve long term capital growth and it benefits from having long serving Directors with a detailed knowledge of the Company’s operations to effectively oversee its management on behalf of shareholders. The Company therefore does not impose fixed term limits on Directors’ tenure as this would result in a loss of experience and knowledge without any assurance of increased independence. The Board, collectively and individually, firmly believes in the continued independence of its members. The Board confirms that the performance of all Directors has been subject to formal evaluation and that they continue to be effective in their role. The Board firmly recommends to shareholders that all Directors, with the exception of the retiring 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 Chubb Insurance Company of Europe in respect of the Directors liability. For the year 1st May 2015 to 30th April 2016 the charge was $7,684.

INTERNAL CONTROLSThe Board has delegated the responsibility for the management of the Company’s investment portfolio, the provision of depositary services and the administration, registrar and corporate secretarial functions including the independent calculation of the Company’s Net Asset Value and the production of the Annual Report and Financial Statements. The Annual Report and Financial Statements are also 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 Service Organisation Controls (SOC 1) report on this service provider.

The extent and quality of the systems of internal control and compliance adopted by the Investment Manager and the Investment Adviser are also reviewed on a regular basis, and the primary focus at each Board meeting is a review of investment performance and associated matters such as gearing, asset 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.

COMMITTEESThe Board has established an Audit Committee which is described below.

The Board has not appointed a Management Engagement Committee or Nomination Committee but has chosen to assess and review the performance of the Board and contractual arrangements with the Investment Manager 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 7 to the Financial Statements.

Audit CommitteeThe Audit Committee operates within defined terms of reference. The Audit Committee’s responsibilities include, but are not limited to:

– 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 Ehrmann as Chairman, Mr Martin Smith, Mr Boyle and Mr Lamb.

In accordance with the AIC Code, the Board has determined that Mr Ehrmann has recent and relevant financial experience. All other members of the Audit Committee are deemed to have the necessary ability and experience to understand the Financial Statements.

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 Audited financial statements.

The Audit Committee meets at least twice a year and may meet more frequently if the Audit Committee deems necessary or if required by the Company’s 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 Manager, the Administrator and the Depositary.

The Company Secretary is the Secretary of the Audit Committee and attends all Meetings of the Audit Committee.

The Audit Committee is satisfied that auditor objectivity and independence is not impaired by the performance by PwC CI LLP of non-audit 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.

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 RELATIONSThe 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 Adviser. Following the Annual General Meeting each year the Investment Adviser gives a presentation to the shareholders.

The Company reports to shareholders twice a year and a proxy voting card is sent to shareholders with the Annual Report and 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 MANAGERThe 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 Investment Manager on the terms agreed is in the interests of the Company’s shareholders as a whole.

By order of the Board

29th July 2016

Audit Committee Report

On the following pages, we present the Audit Committee's Report, setting out the responsibilities of the Audit Committee and its key activities for the year ended 30th April 2016.

The Audit Committee has continued its detailed scrutiny of the appropriateness of the Company’s system of risk management and internal controls, the robustness and integrity of the Company’s financial reporting, along with the external audit process. The Committee has devoted time to ensuring that controls and processes have been properly established, documented and implemented.

During the course of the year, the information that the Audit Committee has received has been timely and clear and has enabled the Audit Committee to discharge its duties effectively.

The Audit Committee supports the aims of the UK Code and the best practice recommendations of other corporate governance organisations such as the Association of Investment Companies (“AIC”), and believes that reporting against the revised AIC Code allows the Audit Committee to further strengthen its role as a key independent oversight Committee.

Role and ResponsibilitiesThe primary function of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities. This includes reviewing the financial reports and other financial information before publication.

In addition, the Audit Committee reviews the systems of internal controls on a continuing basis that the Investment Manager and the Board have established with respect to finance, accounting, risk management, compliance, fraud and audit. The Committee also reviews the accounting and financial reporting processes, along with reviewing the roles, independence and effectiveness of the external auditor.

The ultimate responsibility for reviewing and approving the Annual Report and 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 ControlThe 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 UK Code.

The Audit Committee continues to be responsible for reviewing the adequacy and effectiveness of the Company’s on-going risk management systems and processes. Its system of internal controls, along with its design and operating effectiveness, is subject to review by the Audit Committee through reports received from the Investment Manager, Investment Adviser and Depositary, along with those from the Administrator and external auditor.

The Audit Committee has reviewed the need for an internal audit function and has decided that the systems and procedures employed by the Investment Manager, Investment Adviser, Administrator and Depositary provide sufficient assurance that a sound system of risk management and internal control, which safeguards shareholders’ investments and the Company’s assets, is maintained. An internal audit function is therefore considered unnecessary. 

Fraud, Bribery and CorruptionThe Audit Committee has relied on the overarching requirement placed on all service providers under the relevant agreements to comply with applicable law. The Audit Committee reviews the service provider policies and receives a confirmation from all service providers that there have been no instances of fraud or bribery.

Financial Reporting and Significant Financial IssuesThe Audit Committee assesses whether suitable accounting policies have been adopted. The Audit Committee reviews accounting papers prepared by the Investment Manager and Administrator which provide details on the main financial reporting judgements.

The Audit Committee also reviews reports by the external auditors which highlight any issues with respect to the work undertaken on the audit.

The significant issues considered during the year by the Audit Committee in relation to the Financial Statements and how they were addressed are detailed below:

(i) Valuation of Investments:

The Company’s investments had a fair value of $86,526,298 as at 30th April 2016 and represent a substantial portion of the assets of the Company. As such this is the largest factor in relation to the consideration of the Financial Statements. These investments are valued in accordance with the Accounting Policies set out in Note 2 (f) to the Financial Statements. The Audit Committee considered the valuation of the investments held by the Company as at 30th April 2016 to be correct from information provided by the Investment Manager, Investment Adviser, Depositary and Administrator on their processes for the valuation of these investments.

 (ii) Income Recognition:

The Audit Committee considered the income from investments recorded in the Financial Statements for the year ended 30th April 2016. Income from investments is recognised in accordance with the Significant Accounting Policies set out in Note 2 (d). The Audit Committee reviewed information obtained from the Investment Manager and was satisfied that income, having arisen solely from dividends declared by listed equities, was correctly stated in the Financial Statements.

 (iii) Change to Functional Currency

During the year ended 30th April 2015, the Company changed its functional currency from USD to GBP. A number of key indicators such as the Company's primary investor base and its price quotation on the London Stock Exchange had led the Directors to conclude that the functional currency should change from USD to GBP. The presentation currency remained unchanged as USD.

To provide an accurate translation of transactions involving currencies other than the Company’s functional currency, which, in accordance with the Significant Accounting Policies set out in Note 2 (l) are recorded at the exchange rates prevailing on the dates of the transactions, an analysis on a transaction by transaction basis is required. As noted in the prior year Financial Statements, it was impractical, at the time, to state all numbers in the Financial Statements for the year ended 30th April 2015 on a GBP functional currency basis, and therefore certain numbers were stated using a USD functional currency basis.

Having conducted the above analysis during the year ended 30th April 2016, the prior year comparatives have been restated to correct prior period errors over the certain amounts which were still being reflected on a USD functional currency basis. The differences for these currency translation adjustments and their impact on prior period Financial Statements are detailed in Note 3. There has been no impact on the Net Asset Value of the Company.

 (iv) Review of the Financial Statements

At the request of the Audit Committee, the Administrator confirmed that it was not aware of any material misstatements, including matters relating to Financial Statement presentation. At the Audit Committee meeting to review the Annual Report and Audited Financial Statements, the Audit Committee received and reviewed a report on the audit from the external auditors. On the basis of its review of this report, the Audit Committee is satisfied that the external auditor has fulfilled its responsibilities with diligence and professional scepticism. The Audit Committee advised the Board that this Annual Report and 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. 

The Audit Committee is satisfied that appropriate disclosures have been included in the Financial Statements.

External AuditorsThe Audit Committee has responsibility for making a recommendation on the appointment, reappointment and removal of the external auditors. PwC CI LLP have been external auditors to the Company since their appointment on 13th January 2015.

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 and Financial Statements.

As a general rule, the Company does not utilise external auditors for internal audit purposes, secondments or valuation advice. Services which do not compromise auditor independence, such as tax compliance, tax structuring, private letter rulings, accounting advice, quarterly reviews and disclosure advice are normally permitted but will be pre-approved by the Audit Committee.

The following table summarises the remuneration paid for audit and non-audit services during the year ended 30th April 2016 and the year ended 30th April 2015.

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 29th July 2016 and signed on behalf by:

Philip Ehrmann

Chairman, Audit Committee

Depositary StatementFor the year ended 30th April 2016

Report of the Depositary to the Shareholders

Northern Trust (Guernsey) Limited has been appointed as Depositary to Atlantis Japan Growth Fund Limited (the “Company”) in accordance with the requirements of Article 36 and Articles 21(7), (8) and (9) of the Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the “AIFM Directive”).

We have enquired into the conduct of Tiburon Partners LLP (the “AIFM”) for the year ended 30th April 2016, in our capacity as Depositary to the Company.

This report including the review provided below has been prepared for and solely for the shareholders in the Company. We do not, in giving this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown.

Our obligations as Depositary are stipulated in the relevant provisions of the AIFM Directive and the relevant sections of Commission Delegated Regulation (EU) No 231/2013 (collectively the “AIFMD legislation”).

Amongst these obligations is the requirement to enquire into the conduct of the AIFM and the Company and their delegates in each annual accounting period.

Our report shall state whether, in our view, the Company has been managed in that period in accordance with the AIFMD legislation. It is the overall responsibility of the AIFM to comply with these provisions. If the AIFM or their delegates have not so complied, we, as the Depositary, will state why this is the case and outline the steps which we have taken to rectify the situation.

Basis of Depositary Review

The Depositary conducts such reviews as it, in its reasonable discretion, considers necessary in order to comply with its obligations and to ensure that, in all material respects, the Company has been managed (i) in accordance with the limitations imposed on its investment and borrowing powers by the provisions of its constitutional documentation and the appropriate regulations and (ii) otherwise in accordance with the constitutional documentation and the appropriate regulations. Such reviews vary based on the type of Company, the assets in which a Company invests and the processes used, or experts required, in order to value such assets.

Review

In our view, the Company has been managed during the year, in all material respects:

(i) in accordance with the limitations imposed on the investment and borrowing powers of the Company by the constitutional document; and by the AIFMD legislation; and

(ii) otherwise in accordance with the provisions of the constitutional document and the AIFMD legislation.

For and on behalf of

Northern Trust (Guernsey) Limited

29th July 2016

Independent Auditors’ Report to the Members ofAtlantis Japan Growth Fund LimitedFor the year ended 30th April 2016

Report on the Financial Statements

We have audited the accompanying financial statements of Atlantis Japan Growth Fund (the “Company”) which comprise the statement of financial Position as of 30th April 2016 and the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory information.

Directors’ Responsibility for the Financial StatementsThe directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and with the requirements of Guernsey law. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Company as of 30th April 2016, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and have been properly prepared in accordance with the requirements of The Companies (Guernsey) Law, 2008.

Report on other Legal and Regulatory RequirementsWe read the other information contained in the Annual Report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.

In our opinion the information given in the directors’ report is consistent with the financial statements.

This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Section 262 of The Companies (Guernsey) Law, 2008 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters which we are required to review under the Listing Rules:

– the directors’ statement in relation to going concern. As noted in the directors’ statement, the directors have concluded that it is appropriate to adopt the going concern basis in preparing the financial statements. The going concern basis presumes that the Company has adequate resources to remain in operation, and that the directors intend it to do so, for at least one year from the date the financial statements were signed. As part of our audit we have concluded that the directors’ use of the going concern basis is appropriate. However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Company’s ability to continue as a going concern;

– the directors’ statement that they have carried out a robust assessment of the principal risks facing the Company and the directors’ statement in relation to the longer-term viability of the Company. Our review was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statements; checking that the statements are in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statements are consistent with the knowledge acquired by us in the course of performing our audit;

– the part of the Corporate Governance Statement relating to the Company’s compliance with the ten further provisions of the UK Corporate Governance Code specified for our review; and

– certain elements of the report to shareholders by the board on directors’ remuneration.

Evelyn BradyFor and on behalf of PricewaterhouseCoopers CI LLPChartered Accountants and Recognised AuditorGuernsey, Channel Islands29th July 2016

a) The maintenance and integrity of the Atlantis Japan Growth Fund Limited’s website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

b) Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement of Comprehensive IncomeFor the year ended 30th April 2016

*Where applicable, the comparative Statement of Comprehensive Income has been restated and does not correspond to the Financial Statements for the year ended 30th April 2015 (refer to Note 3 for more details).

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.

The notes form an integral part of these financial statements.

Statement of Changes in EquityFor the year ended 30th April 2016

The notes form an integral part of these financial statements.

Statement of Changes in EquityFor the year ended 30th April 2015*

*Where applicable, the comparative Statement of Changes in Equity has been restated and does not correspond to the Financial Statements for the year ended 30th April 2015 (refer to Note 3 for more details).

The notes form an integral part of these financial statements.

Statement of Financial Position

As at 30th April 2016

*Where applicable, the comparative Statement of Financial Position has been restated and does not correspond to the Financial Statements for the year ended 30th April 2015 (refer to Note 3 for more details).

**Based on the Net Asset Value at the year end divided by the number of shares in issue: 40,182,900 (30th April 2015: 40,455,909) (See Note 17).

Approved by the Board of Directors on 29th July 2016 and signed on its behalf by:

Noel Lamb Philip Ehrmann

Chairman Director 

The notes form an integral part of these financial statements.

Statement of Cash Flows

For the year ended 30th April 2016

*Where applicable, the comparative Statement of Cash Flows has been restated and does not correspond to the Financial Statements for the year ended 30th April 2015 (refer to Note 3 for more details).

The notes form an integral part of these financial statements

Notes to the Financial Statements

For the year ended 30th April 2016

1. GENERAL INFORMATION

Atlantis Japan Growth Fund Limited (the “Company”) was incorporated in Guernsey on 13th March 1996. The Company commenced activities on 10th May 1996. The Company is an authorised closed-ended investment scheme registered in Guernsey. The Company’s equity shares are listed on the London Stock Exchange.

As an investment trust, the Company is not regulated as a collective investment scheme by the Financial Conduct Authority. However, it is subject to the UKLA Listing Rules, Prospectus Rules, Disclosure Transparency Rules and the rules of the London Stock Exchange.

The Company’s investment objective is to achieve long term capital growth through investment wholly or mainly in listed Japanese equities.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of preparation

The Financial Statements of the Company have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”). The Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of investments held at fair value through profit or loss (“investments”), and in accordance with IFRS, and The Association of Investment Companies (“AIC”) Statement of Recommended Practice (“SORP”) for Investment Trust Companies and Venture Capital Trusts to the extent it is not in conflict with IFRS and the Principal Documents.

The preparation of the Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. As at the year ended 30th April 2016, the Company, being solely invested in listed equities, did not hold any investment requiring the use of estimates to determine their value. 

The significant accounting policies adopted, with the exception of the changes set out in Note 2 (l), are consistent with those of the previous financial year and are set out below:

Standards and amendments to existing standards effective 1st May 2015

There are no standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1st May 2015 which have had a material impact on the Company.

New standards, amendments and interpretations effective after 30th April 2016 not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 30th April 2016, and have not been applied in preparing these Financial Statements. Those that the Directors consider relevant to the Company are detailed below.

Amendments to IAS 1 issued in December 2014 clarify that information should not be obscured by aggregating or by providing immaterial information, materiality considerations apply to the all parts of the financial statements, and even when a standard requires a specific disclosure, materiality considerations do apply. The amendments are effective for annual periods beginning 1st January 2016. The Directors do not expect that the adoption of the Amendments to IAS 1 will have a material impact on the Financial Statements of the Company in future periods.

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, subject to EU endorsement. Further chapters dealing with impairment methodology and hedge accounting are still being developed. The Directors 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 on the Company’s Financial Statements.

b) Going concern

The Financial Statements have been prepared on a going concern basis in line with the Directors’ belief that it is appropriate to presume that the Company will continue in business.

c) Presentation of the Statement of Comprehensive Income

In order to better reflect the activities of an investment trust company, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income.

d) Income recognition

Dividend income arising on the Company’s investments is accounted for gross of withholding tax on an ex-dividend basis or when the right to receive payment is established.

e) Expenses

All expenses are recognised in the Statement of Comprehensive Income on an accruals basis.

f) Investments held at fair value through profit or loss

The Company’s business is investing in securities with a view to profiting from their total return in the form of income and capital growth. This portfolio of investments 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.

Investments are initially recognised at the settlement date of purchase. 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 are measured at ‘fair value’, which is their last traded price based on published price quotations.

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

Investments are derecognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership.

g) Due from and due to brokers

Amounts due from and to brokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the Statement of Financial Position date respectively. These amounts are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.

h) Other receivables

Other receivables are amounts due in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

i) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents, as defined above, net of outstanding bank overdrafts.

j) Other payables and accrued expenses

Other payables and accrued expenses are obligations to pay for services that have been acquired in the ordinary course of business. Other payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

k) Loans payable

All loans are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest bearing loans and borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account discount or premium on settlement. Any costs of arranging any interest-bearing loans are capitalised and amortised over the life of the loan.

The Company’s loans are denominated in JPY. Gains and losses on foreign exchange on loans are included in the Statement of Comprehensive Income as capital.

l) Foreign currencies

The Company’s investments are predominately denominated in JPY. The Company’s obligation to shareholders is denominated in GBP and when appropriate, the Company may hedge the exchange rate risk from JPY to GBP. Therefore, the Company’s functional currency is GBP. As set out in more detail in Note 3, the Company’s functional currency was previously USD. The Directors have elected to continue to present the Financial Statements in USD for the purposes of consistency, as the presentation currency of the Company has been USD since incorporation.

At each Statement of Financial Position date, assets and liabilities, which are denominated in foreign currencies, are translated into the functional currency at the closing rates of exchange. Transactions involving currencies other than the functional currency are recorded at the exchange rates prevailing on the dates of the transactions. Resulting exchange differences are recognised in profit or loss in the Statement of Comprehensive Income.

At each Statement of Financial Position date, assets and liabilities are translated into the presentation currency at the closing rate of exchange. Income and expenses for each Statement of Comprehensive Income are translated into the presentation currency at the exchange rate prevailing on the dates of the transactions. Resulting exchange differences are recognised in other comprehensive income in the Statement of Comprehensive Income.

m) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. In addition, the Company incurs withholding taxes imposed by certain countries on dividend and interest income. Such income is recognised gross of the taxes and the corresponding withholding tax is recognised as a tax expense. 

The tax currently payable is based on the taxable profit for the 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.

n) 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 of gains/(losses) on investments and gains/(losses) relating to foreign exchange.

o) Treasury shares

Where the Company purchases its own share capital (whether into treasury or cancellation), the consideration paid, which includes any directly attributable costs (net of income taxes) is recognised as a deduction from equity shareholders’ funds through the revenue reserve, which is a distributable reserve.

When such shares are subsequently sold or reissued, and consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is recognised as an increase in equity and proceeds from the reissue of treasury shares are transferred to/from the revenue reserve.

Shares held in treasury are not taken into account in determining earnings per share detailed in Note 12 and NAV per share detailed in Note 17.

p) Offsetting of financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

3. CHANGE IN ACCOUNTING POLICY AND FUNCTIONAL CURRENCY

During the year ended 30th April 2015, the Directors, having assessed changes in the Company’s operations since inception, determined that the functional currency should have changed from USD to GBP on 16th December 2010.

To provide an accurate translation of transactions involving currencies other than the Company’s functional currency, which, in accordance with the Significant Accounting Policies set out in Note 2 (l) are recorded at the exchange rates prevailing on the dates of the transactions, an analysis on a transaction by transaction basis is required. As noted in the prior year Financial Statements, it was impractical, at the time, to state all numbers in the Financial Statements for the year ended 30th April 2015 on a GBP functional currency basis, and therefore certain numbers were stated using a USD functional currency basis.

Having conducted the above analysis during the year ended 30th April 2016, the prior year comparatives have been restated to correct prior period errors over the certain amounts which were still being reflected on a USD functional currency basis. There has been no impact on the Net Asset Value of the Company.

As a result of these adjustments, $21,619,443 has been reclassified from the capital reserve to accumulated other comprehensive income in the Statement of Changes in Equity and Statement of Financial Position for the period from 16th December 2010 to 30th April 2014. The impact of these adjustments on each line item of the Statement of Changes in Equity and Statement of Financial Position affected are shown below.

Statement of Changes in Equity

30th April 2014 (Restated)

Statement of Financial Position

The impact of these adjustments on each line item of the Statement of Comprehensive Income and Statement of Financial Position affected for the year ended 30th April 2015 are shown below.

Statement of Comprehensive Income

Statement of Financial Position

4. 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.

The fair value of the financial instruments held by the Company and the equivalent percentages of the total value of the Company are reported in the Schedule of Investments.

5. NET GAINS ON INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

*Where applicable, certain comparative number have been restated and do not correspond to the Financial Statements for the year ended 30th April 2015 (refer to Note 3 for more details).

6.RELATED PARTY DISCLOSURES

The Investment Manager, Depositary, Administrator and Directors are considered related parties to the Company under IAS 24 as they have the ability to control, or exercise significant influence over, the Company in making financial or operational decisions. (See Notes 7 to 10 for details of transactions with these related parties during the year ended 30th April 2016.

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 2016 and 30th April 2015 are as follows:

As at the date of this report, Andrew Martin Smith held 37,250 ordinary shares of the Company. The above interests of all other Directors were unchanged as at the date of this report.

As at 30th April 2016, a family member of the President of the Investment Adviser held 946,000 (2015: 946,000) ordinary shares of the Company.

7. INVESTMENT MANAGEMENT FEE

Under the terms of the Investment Management Agreement, the Investment Manager, Tiburon Partners LLP, will continue in office until a resignation is tendered or the contract is terminated. In both circumstances, a resignation or termination must be given with a notice period which must not be less than three months, and be in accordance with the Investment Management Agreement. Fees payable to the Investment Adviser are met by the Investment Manager.

The Company pays to the Investment Manager a fee accrued daily and paid monthly in arrears at the annual rate of 1 per cent of the weekly Net Asset Value of the Company.

Redemption Pool Investment Management Fees

The Investment Manager shall also be entitled to receive a fee from the Company of 1 per cent per annum of the daily Net Asset Value of any redemption pool together with transaction charges.

For the year ended 30th April 2016, total investment management fees were $882,293 (2015: $891,959) of which $68,926 (2015: $76,444) is due and payable as at that date.

8. DEPOSITARY FEES

Under the terms of the Depositary Agreement, fees are payable to the Depositary, Northern Trust (Guernsey) Limited, monthly in arrears, on the Gross Asset Value of the Company as at the last business day of the month at an annual rate of:

The Depositary is also entitled to a global custody 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.

Redemption Pool Depositary Fees

The Depositary shall also be entitled to receive a fee from the Company of the Gross Asset Value of any redemption pool, together with transaction charges, at an annual rate of:

For the year ended 30th April 2016, total depositary fees were $133,604 (2015: $118,375) of which $29,365 (2015: $21,784) is due and payable as at that date.

9. ADMINISTRATION FEES

Under the terms of the Administration Agreement, the Company pays to the Administrator, Northern Trust International Fund Administration Services (Guernsey) Limited, a fee accrued weekly and paid monthly in arrears at the annual rate of:

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 of £7,500 will be payable.

An additional fee will be payable on the fair value of the assets of that redemption pool of:

For the year ended 30th April 2016, total administration fees were $141,331 (2015: $143,019) of which $45,744 (2015: $12,595) is due and payable as at that date.

10. 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 2016, total directors’ fees and expenses were $225,466 (2015: $345,234) of which $58,413 (2015: $107,827) is due and payable as at that date.

11. TAXATION

The Company is exempt from taxation in Guernsey under the provisions of The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and has paid an annual exemption fee of £1,200 (2015: £1,200), however the Company is subject to UK tax being a UK tax resident to comply with the Section 1158 of the Corporation Tax Act 2010.

The main rate of corporation tax in the UK was 20% for 2015. 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%.

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.

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

Factors that may affect future tax charges

As at 30th April 2016, the Company has excess management expenses of $29,782,672 that are available to offset future taxable revenue. Whilst this represents management’s best estimate based on the carried forward balance in the previous year of $29,040,940, the estimated value could differ from actual amounts. However, the potential impact is not expected to be significant.

A deferred tax asset has not been recognised in respect of these amounts as they will be recoverable only to the extent that there is sufficient future taxable revenue.

12. BASIC AND DILUTED (DEFICIT)/EARNINGS PER ORDINARY SHARE

The basic and diluted (deficit)/earnings per ordinary share figure is based on the (loss)/profit for the year of $(829,307) (2015*: $23,875,784) and on 40,295,404 being the weighted average number of shares in issue during the year ended 30th April 2016 (2015: 42,233,514).

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

*Where applicable, certain comparative number have been restated and do not correspond to the Financial Statements for the year ended 30th April 2015 (refer to Note 3 for more details).

13. LOANS PAYABLE

The credit facility is provided by Royal Bank of Scotland International Limited (“RBS”). As at 30th April 2016, the Company had drawn down ¥600,000,000 ($5,600,411) (2015: ¥1,250,000,000/ $10,508,583) of the ¥1,500,000,000 borrowable under the terms of the facility agreement

Under the terms of the facility agreement, the Company is required to comply with the following financial covenants:

- the Company’s portfolio must contain at least 60 investments, of which at least 50 must be in investments quoted on the Tokyo Stock Exchange or any other equivalent exchange approved by RBS, at all times;

- the amount of the credit facility drawn down must not exceed 25% of the value of the Company’s portfolio at any time; and

- the Company’s NAV must not fall below $58,000,000 at any time.

The Company complied with all of the above the financial covenants during the years ended 30th April 2016 and 30th April 2015.

 (Losses)/gains on foreign exchange on the Company’s loan amounted to $(1,776,187) during the year ended 30th April 2016 (2015*: $724,260).

*Where applicable, certain comparative number have been restated and do not correspond to the Financial Statements for the year ended 30th April 2015 (refer to Note 3 for more details).

14. FORWARD CURRENCY CONTRACTS

There were no forward currency contracts held during the year ended 30th April 2016 (2015: None).

15. SHARE CAPITAL AND SHARE PREMIUM

Authorised

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 of such amount as the Directors may resolve to pay out of the net assets attributable to the relevant C share class and from income received and accrued attributable to the relevant C share class for the period up to the conversion date payable on a date falling before, on or after the conversion date as the Directors may determine. There are no C shares currently in issue.

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

Voting rights

On a show of hands, every Member who is present shall have one vote; and on a poll, a Member present in person or by proxy shall be entitled to one vote per ordinary share held.

Entitlement to dividends

The Company may declare dividends in respect of the ordinary shares. Treasury shares do not confer an entitlement to any dividends declared.

Rights in a winding-up

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

Issued Ordinary Shares

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.

16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

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

- securities held in accordance with the investment objective and policies

- cash and cash equivalents and short-term receivables and payables arising directly from operations

- loans used to finance investment activity

- derivative instruments for the purposes of efficient portfolio management only.

The financial instruments held by the Company principally comprise equities listed on the stock markets in Japan including, without limitation, the Tokyo Stock Exchange categorised as First Section, Second Section, JASDAQ, Mothers and Tokyo PRO, or the regional stock exchanges of Fukuoka, Nagoya, Sapporo and Osaka Securities Exchange.

The specific risks arising from the Company's exposure to these instruments, and the Investment Manager/Investment Adviser's policies for managing these risks, which have been applied throughout the year, are summarised below.

Capital management

The Company’s objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Company may not borrow or otherwise use leverage exceeding 20% of its net assets for investment purposes, to settle facilities for specific investments such as bridge financing. In connection with the facility agreement, the Company has entered into an English law multicurrency revolving credit facility with RBS over its depositary accounts held with Northern Trust (Guernsey) Limited (See Note 13).

The Company does not have any externally imposed capital requirements apart from the fact that it should not retain more than 15% of income, in order to comply with section 1158 of Corporation Tax Act 2010. The Company has complied with this requirement.

The Company is a closed-ended investment company. The Company’s capital is represented by ordinary shares of no par and each share carries one vote. They are entitled to dividends when declared. 

No shares were repurchased in to treasury during the year ended 30th April 2016 (2015: 799,075). (See Notes 18 and 19 respectively for details of shares issued via the Subscription Right and the Redemption Facility.)

Market price risk

The Company's investment portfolio - particularly its equity investments - is exposed to market price fluctuations which are monitored by the Investment Manager/Investment Adviser in pursuance of the investment objective and policies.

At 30th April 2016, the Company’s market price risk is affected by three main components: changes in market prices, currency exchange rates and interest rate risk. Currency exchange rate movements and interest rate movements, which are dealt with under the relevant headings below, primarily affect the fair values of the Company’s exposures to equity securities, related derivatives and other instruments. Changes in market prices primarily affect the fair value of the Company’s exposures to equity securities, related derivatives and other instruments.

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

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

- more substantial government intervention in the economy, including restrictions on investing in companies or in industries deemed sensitive to relevant national interests. 

Market price sensitivity analysis

If the price of each of the equity securities to which the Company had exposure at 30th April 2016 had increased or decreased by 5% with all other variables held constant, this would have increased or decreased profit and net assets attributable to equity shareholders of the Company by: 

Foreign currency risk

The Company principally invests in securities denominated in currencies other than GBP, the functional currency of the Company. Therefore, the Statement of Financial Position will be affected by movements in the exchange rates of such currencies against the GBP. The Investment Manager/Investment Adviser has the power to manage exposure to currency movements by using forward currency contracts. No such instruments were held 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 GBP is set out in Note 2(l) to the Financial Statements.

As at 30th April 2016, the Company has a USD cash exposure in USD terms of $15,018 (2015: $63,595)

The Company's net JPY exposure in USD terms is as follows:

Foreign currency sensitivity analysis

If the exchange rate at 30th April 2016, between the functional currency and all other currencies had increased or decreased by a 5% currency movement 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 equity shareholders of the Company by: 

No benchmark is used in the calculation of the above information. The only foreign currency the Company has a significant exposure to is JPY, hence the above foreign currency sensitivity analysis has not been disclosed on a currency by currency basis.

Interest rate risk

Substantially all the Company’s assets and liabilities are non-interest bearing except for the one outstanding loan payable detailed in Note 13, and any excess cash and cash equivalents are invested at short-term market interest rates.

As at 30th April 2016, 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 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. As at 30th April 2016, the interest accrued on the loan was $4,600 (2015: $8,854).

The following assets and liabilities disclosures exclude prepayments and taxation receivables and payables:

The cash flow interest rate risk comprises those assets and liabilities with a floating interest rate, for example cash deposits at local market rates. Cash and cash equivalents earn interest at the prevailing market interest rate. Although this portion of the 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 assets and liabilities with a fixed interest rate, for example loans payable and loan interest payable.

Fair Value

All assets and liabilities are carried at fair value with the exception of cash and cash equivalents, which are carried at amortised cost, and loans payable, which are carried at amortised cost using the effective interest rate method.

Short term receivables and payables

Receivables and payables do not carry interest and are short term in nature. They are stated at amortised cost, as reduced by appropriate allowances for irrecoverable amounts in the case of receivables.

Liquidity risk

Liquidity risk is the risk that the Company will encounter in realising assets or otherwise raising funds to meet financial commitments.

As at 30th April 2016, the Company had drawn down a loan facility (amended 8th April 2016) of ¥600,000,000/$5,600,411 (2015: ¥1,250,000,000/$10,508,583). In connection with the facility agreement, the Company has entered into a English law multicurrency revolving credit facility with RBS over its depositary 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.

The loan must be repaid on the last day of its interest period.

The Company invests primarily in listed securities which are liquid in nature.

The Company’s liquidity risk is managed by the Investment Manager who monitors the cash positions on a regular basis.

The maturity analysis of the Company’s financial liabilities (excluding tax balances) is as follows:

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 Depositary. 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 Depositary, Northern Trust (Guernsey) Limited. These assets are held distinct and separately from the proprietary assets of the Depositary. Securities are clearly recorded to ensure they are held on behalf of the Company. Bankruptcy or insolvency of the Depositary and or one of its agents or affiliates may cause the Company’s rights with respect to the securities held by the Depositary to be delayed or limited.

NTC is a wholly owned subsidiary of Northern Trust Corporation. As at 30th April 2016 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 Depositary the Company uses. Northern Trust acts as its own sub-depositary in the U.S., the U.K., Ireland and Canada. In all other markets Northern Trust appoints a local sub-depositary. Northern Trust continually reviews its sub-depositary network to ensure clients have access to the most efficient, creditworthy and cost-effective provider in each market.

The securities held by the Company are legally held with the Depositary, which holds the securities in segregated accounts, and subject to any security given by the Company to secure its overdraft facilities, the Company’s securities should be returned to the Company in the event of the insolvency of the Depositary or its appointed agents, although it may take time for the Company to prove its entitlement to the securities and for them to be released by the liquidator of the insolvent institution. The Company will however only rank as an unsecured creditor in relation to any cash deposited or derivative positions with the Depositary, their related companies and their appointed agents, and is therefore subject to the credit risk of the relevant institution in this respect.

The assets exposed to credit risk at year end amounted to $5,412,924 (2015: $1,374,211).

Fair value hierarchy

The fair value of investments traded in active markets (such as publicly traded derivatives and trading securities) are based on quoted market prices at the close of trading on the Statement of Financial Position date. The quoted market price used for investments held by the Company is the last traded price; the appropriate quoted market price for financial liabilities is the current asking price.

A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

The fair value of investments that are not traded in an active market is determined by using valuation techniques.

For instruments for which there is no active market, the Company may use internally developed models, which are usually based on valuation methods and techniques generally recognised as standard within the industry. Valuation models may be used primarily to value unlisted equity, debt securities and other debt instruments for which markets were or have been inactive during the financial year. Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions.

The following table sets out fair value measurements using the IFRS 13 fair value hierarchies:

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.

17. NET ASSET VALUE HISTORY

18. SUBSCRIPTION RIGHT

Shareholders have the opportunity to subscribe for one new ordinary share for every five ordinary shares held on 1st October in each year. The following subscriptions were made during the year:

During the year ended 30th April 2016, a total of $574,416 was paid by subscribing shareholders (2015: $Nil).

19. REDEMPTION FACILITY

Ordinarily, shareholders have the opportunity to make redemptions of part or all of their shareholding on a six-monthly basis with the Board’s discretion in declining any redemption requests. As set out in more detail in the Chairman’s Statement, the offer of the redemption facility at the Redemption Point on 31st March 2016 was suspended. The following redemptions were made during the year:

During the year ended 30th April 2016, a total of $1,163,129 was paid to redeeming shareholders (2015: $5,787,882).

20. 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 2016 (2015: $Nil).

21. ONGOING CHARGES

The ongoing charges using the AIC recommended methodology was 1.91% for the year ended 30th April 2016 (2015: 2.07%). Of the $2,015,946 of expenses in the Statement of Comprehensive Income, $325,510 is considered by the Directors to be non-recurring and is excluded from the calculation of the ongoing charges.

22. EXCHANGE RATES

The following exchange rates were used to translate assets and liabilities into the reporting currency (USD) at 30th April 2016, 30th April 2015 and 30th April 2014:

The following average exchange rates were used to translate transactions into the reporting currency (USD) during the years ended 30th April 2016 and 30th April 2015:

23. CHANGES IN THE PORTFOLIO

A list, specifying for each investment the total purchases and sales which took place during the year ended 30th April 2016 may be obtained, upon request, at the registered office of the Company.

24. EVENTS AFTER THE REPORTING PERIOD

On 4th May 2016, Edmond de Rothschild Securities (UK) Limited resigned as Financial Adviser and the Company appointed Cantor Fitzgerald Europe as its Financial Adviser.

On 1st June 2016, Aravis Partners LLP resigned as Marketing Agent and the Company appointed Tiburon Partners LLP as its Marketing Agent.

On 8th July 2016, the credit facility drawn down at 30th April 2016 (See Note 13) was rolled-over until 7th October 2016.

There were no other significant events subsequent to the year ended 30th April 2016 which require adjustment to or additional disclosure in the Financial Statements.

25. ULTIMATE CONTROLLING PARTY

There is no one entity with ultimate control over the Company.