Company Registration No. 2522419
SHINKIN INTERNATIONAL LTDReport and Financial Statements
31 December 20054
SHINKIN INTERNATIONAL LTD
REPORT AND FINANCIAL STATEMENTS 2005
CONTENTSPage
Officers and professional advisers
Directors' report
Statement of directors' responsibilities3
Independent auditors’ report4
Profit and loss account
Balance sheet
Notes to the accounts
SHINKIN INTERNATIONAL LTD
REPORT AND FINANCIAL STATEMENTS 2005
OFFICERS AND PROFESSIONAL ADVISERS
directors
Mr Toshikazu Nishida
Mr Hiroshi Sudo
Mr Hiroki Shin
secretary
Clifford Chance Secretary Limited
10 Upper Bank Street
London
E14 5JJ
registered office
4th Floor
River Plate House
7-11 Finsbury Circus
London
EC2M 7YA
2nd Floor
55 Moorgate
London
EC2R 6EX
bankers
Barclays Bank PLC
54 Lombard Street
London EC3P 3AH
Bank of Tokyo-Mitsubishi UFJ
12-15 Finsbury Circus
London
EC2M 7BT
solicitors
Clifford Chance
200 Aldersgate St
London
EC1A 4JJ
McFaddens
City Tower
40 Basinghall Street
London
EC2V 5DE
auditors
Deloitte & Touche LLPLondon
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SHINKIN INTERNATIONAL LTD
DIRECTORS' REPORT
The directors submit their annual report and the audited financial statements for the year ended 31 December 20054.
PRINCIPAL ACTIVITIES
The company’s main activity is trading in Eurobonds. It is the directors’ intention that the company will continue this activity during the forthcoming year.
The company is regulated by The Financial Services Authority.
Business review
The results for the year, set out on page 6, show a profit after taxation for the year of £1,498,715291,648 (20043 - £291,648765,151). The directors regard the results for the year as satisfactory.
dividends and transfer to reserves
The directors do not recommend the payment of a dividend for the year (2004: nil). The balance of £1,498,715 (2004 - £291,648) has been transferred to reserves.[RK (O)1]
Directors
The directors who served during the year were:
Mr Masuo Kajita (Chairman)
Mr Kiyoshi Ikeda
Mr Hiroshi Sudo
Mr Masuo Kajita (Resigned 13 February 2005)
Mr Hiroki Shin (Appointed 29 March 2005)
Mr Kiyoshi Ikeda (Resigned 1 April 2005)
Mr Toshikazu Nishida (Appointed 15 April 2005)
None of the directors had any beneficial or non-beneficial interests in the share capital of the company during the year.
AUDITORS
Deloitte & Touche LLP have expressed their willingness to continue in office as auditors and a resolution to reappoint them will be proposed at the Annual General Meeting.
By order of the Board.
Hiroshi Sudo
Director
27 March 2006
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SHINKIN INTERNATIONAL LTD
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the financial statements. The directors have chosen to prepare the accounts for the company in accordance with United Kingdom Generally Accepted Accounting Practice.
Company law requires the directors to prepare such financial statements for each financial year which give a true and fair view in accordance with United Kingdom Generally Accepted Accounting Practice of the state of affairs of the company and of the profit or loss of the company for that period and comply with UK GAAP and the Companies Act 1985. In preparing those 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;
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
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 Act 1985. 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.
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INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SHINKIN INTERNATIONAL LTD
We have audited the financial statements of Shinkin International Ltd for the year ended 31 December 2005 which comprise the profit and loss account, the balance sheet and the related notes 1 to 16. These financial statements have been prepared in accordance with the United Kingdom Financial Reporting Standard for Smaller Entities, and the accounting policies set out therein.
This report is made solely to the company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As described in the statement of directors' responsibilities, the company's directors are responsible for the preparation of the financial statements in accordance with applicable United Kingdom law and the Financial Reporting Standard for Smaller Entities (United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities).
Our responsibility is to audit the financial statements in accordance with relevant United Kingdom legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view in accordance with the relevant financial reporting framework, and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors' report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions with the company is not disclosed.
We read the directors’ report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
- the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities, of the state of the company's affairs as at 31 December 2005 and of its profit for the year then ended; and
- the financial statements have been properly prepared in accordance with the provisions of the Companies Act 1985 applicable to small companies.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London
27 March 2006
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SHINKIN INTERNATIONAL LTD
PROFIT AND LOSS ACCOUNT
Year ended 31 December 2005
Note / 2005 / 2004£
Net trading loss / 1 / (1,165,724) / (483,193)
Other operating income / 2 / 3,828,525 / 1,227,118
Administrative expenses / (2,551,645) / (2,361,139)
Operating profit/(loss) / 111,156 / (1,617,214)
Interest receivable / 2,058,218 / 2,022,688
Interest payable / 4 / (4,111) / (270)
Profit on ordinary activities before taxation / 5 / 2,165,263 / 405,204
Tax on profit on ordinary activities / 7 / (666,548) / (113,556)
Retained profit for the year / 14 / 1,498,715 / 291,648
Retained profit brought forward / 8,543,059 / 8,251,411
Retained profit carried forward / 10,041,774 / 8,543,059
The company has no recognised gains or losses other than the profit for the current and preceding years, therefore a statement of total recognised gains and losses has not been presented. All the above activities relate to continuing operations.
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SHINKIN INTERNATIONAL LTD
BALANCE SHEET
31 December 2005
Note / £ / 2005£ / £ / 2004
£
FIXED ASSETS
Tangible assets / 8 / 259,130 / 154,882
Investments / 9 / 27,208,136 / 22,430,308
27,467,266 / 22,585,190
CURRENT ASSETS
Debtors / 10 / 6,274,111 / 23,107,928
Cash at bank and in hand / 12,126,782 / 15,248,817
18,400,893 / 38,356,745
CREDITORS: amounts falling due
within one year / 12 / (5,826,385)[RK (O)2] / (22,398,876)
NET CURRENT ASSETS / 12,574,508 / 15,957,869
TOTAL ASSETS LESS CURRENT
LIABILITIES / 40,041,774 / 38,543,059
Capital and reserves
Called up share capital / 13 / 30,000,000 / 30,000,000
Profit and loss account / 10,041,774 / 8,543,059
EQUITY SHAREHOLDERS’ FUNDS / 14 / 40,041,774 / 38,543,059
These financial statements were approved by the Board of directors on 27 March 2006 and were signed on its behalf by:
Mr Hiroshi Sudo
Director
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SHINKIN INTERNATIONAL LTD
1. PRINCIPAL ACCOUNTING POLICIES
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the company’s financial statements.
Basis of preparation
The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom law and accounting standards.
Operating income
Operating income is derived from the company’s core business activity. The customer base is primarily located in Japan.
Arrangement fees
Arrangement fees receivable for participation in the issue of securities are recorded when the company receives notification of its allotments in respect of purchase commitments. Other fees and commissions are accounted for when receivable.
Net trading loss
The net trading loss comprises the aggregate profits less losses of trading in the bond market. The directors are of the opinion that turnover and cost of sales do not have meaningful equivalents in a securities business. Therefore these amounts are not included in the profit and loss account.
Foreign currency translation
Transactions in foreign currencies are translated into sterling at the month-end rates of exchange ruling during the year.
Amounts receivable or payable which are denominated in foreign currencies are translated into sterling at rates ruling at the balance sheet date. The resulting exchange differences arising are included in the profit and loss account.
Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation and provision for impairment in value.
Depreciation has been provided at the following rates:
Leasehold improvements / 20% per annum reducing balanceOffice equipment / 20% per annum straight line
Office furniture / 10% per annum straight line
Computer hardware / 25% per annum reducing balance
Computer software / 20% per annum straight line
Taxation
The tax currently payable is based on taxable profit for the year and is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included within the financial statements.
Deferred tax assets and liabilities are not discounted.
Fixed asset investments
Fixed asset investments are stated at original cost less any provision for impairment identified by the directors.
1.PRINCIPAL ACCOUNTING POLICIES (continued)
Operating leases
Operating lease rentals are charged to the profit and loss account on a straight-line basis over the lease term.
Related party transactions
Under FRS 8, the company is exempt from the requirement to disclose related party transactions with other group entities, on the grounds that more than 90% of the voting rights are controlled within the group, and consolidated financial statements, in which the company is included, are publicly available. There were no other related party transactions requiring disclosure.
Cash flow statement
The directors have taken advantage of the exemptions conferred by FRS1 (revised 1996) not to prepare a cash flow statement on the grounds that the company’s parent (whose accounts are publicly available) has prepared a consolidated cash flow statement.
2.Other operating income
2005£ / 2004
£
Arrangement fees / 3,790,780 / 1,223,168
Rent receivable / 10,378 / 10,242
Other miscellaneous income
(includes foreign exchange gains and losses) / 27,367 / (6,292)
3,828,525 / 1,227,118
3.Staff numbers and costs
The average number of persons employed by the company throughout the year, including directors, was as follows:
Number of employees2005 / 2004
Dealing / 7 / 7
Settlement / 2 / 2
Administration / 4 / 4
13 / 13
The aggregate payroll costs of employees (including executive directors) were as follows:
2005£ / 2004
£
Wages and salaries / 890,383 / 925,572
Social security costs / 33,792 / 37,859
924,175 / 963,431
4.Interest payable
2005£ / 2004
£
On bank overdrafts / 4,111 / 270
5.Profit on ordinary activities before taxation
The profit on ordinary activities before taxation is stated after charging the following:
2005£ / 2004
£
Foreign exchange (gain)/loss / (16,044) / 1,838
Depreciation / 35,187 / 25,192
Auditors’ remuneration
-audit / 28,000 / 26,250
-other / 33,270 / 29,707
Operating lease rentals- land and building / 590,525 / 590,651[RK (O)3]
6.Directors’ remuneration
The emoluments of directors from all sources in respect of their services to the company are as follows:
2005£ / 2004
£
Salaries paid to directors / 276,877 / 324,045
Pension contributions paid to directors / - / -
The emoluments of the highest paid director were £152,163 (2004 - £183,418).
7.Tax on profit on ordinary activities
2005£ / 2004
£
Current tax
UK corporation tax charge at 30% (2004 - 30%) / 638,093 / 120,007
Adjustment in respect of prior years / 14,530 / (12,366)
652,623 / 107,641
Deferred tax
Reversal of timing differences / 13,925 / 5,915
666,548 / 113,556
Factors affecting the current tax charge
The tax assessed for the period is lower than that resulting from
applying the standard rate of corporation tax in the UK: 30%
(2004 – 30%)
The differences are explained below:
Profit on ordinary activities before tax / 2,165,263 / 405,204
Tax at 30% thereon / 649,579 / 121,561
Effects of:
Expenses not deductible for tax purposes / 2,439 / 4,361
Capital allowances in excess of depreciation / (13,925) / (5,915)
Prior-period adjustments / 14,530 / (12,366)
652,623 / 107,641
8.Tangible fixed assets
Officefurniture
£ / Computer hardware and software
£ / Leasehold
improve-ments
£ / Office equipment
£ / Total
£
Cost
At 1 January 2005 / 123,234 / 380,059 / 575,711 / 349,579 / 1,428,583
Additions / - / 136,767 / - / 2,667 / 139,434
At 31 December 2005 / 123,234 / 516,826 / 575,711 / 352,246 / 1,568,017
Depreciation
At 1 January 2005 / 122,471 / 375,920 / 510,564 / 264,744 / 1,273,699
Charge for year / 200 / 3,884 / 13,030 / 18,074 / 35,188
At 31 December 2005 / 122,671 / 379,804 / 523,594 / 282,818 / 1,308,887
Net book value
At 31 December 2005 / 563 / 137,022 / 52,117 / 69,428 / 259,130
At 31 December 2004 / 763 / 4,138 / 65,147 / 84,834 / 154,882
9.Fixed asset investments
2005£ / 2004
£
Golf club debenture / 7,000 / 7,000
Bond investments – unlisted / 27,201,136 / 22,423,308
27,208,136 / 22,430,308
The investment in the golf club debenture is in The Oxfordshire Golf Club.
Bond Investments / 2005
Balance sheet
£ / 2005
Market value
£ / 2004
Balance sheet
£ / 2004
Market value
£
Investment securities
Bond Investment / 27,201,136 / 27,389,560 / 22,423,308 / 22,513,887
27,201,136 / 27,389,560 / 22,423,308 / 22,513,887
Maturities
Due within one year / 6,643,573 / 3,053,060
Due one year and over / 20,557,563 / 19,370,248
27,201,136 / 22,423,308
Movements on bond investment comprise: / 2005
£ / 2004
£
As at 1 January 2005 / 22,423,308 / 22,573,247
Acquisitions / 7,991,600 / 4,065,600
Redemption / (3,124,240) / (4,000,000)
Amortisation of discounts and premiums / (89,531) / (215,539)
At 31 December 2005 / 27,201,136 / 22,423,308
10.Debtors
2005£ / 2004
£
Amounts owed by group undertakings / 5,422,392 / 22,180,389
Deferred tax asset / - / 6,049
Prepayments and accrued income / 851,719 / 921,490
6,274,111 / 23,107,928
11.Deferred tax
2005£ / 2004
£
Opening balance / 6,049 / 11,964
Charge to profit and loss account / (13,925) / (5,915)
Closing balance / (7,876) / 6,049
12.Creditors: amounts falling due within one year
2005£ / 2004
£
Trade creditors / 5,436,081 / 22,184,080
Other creditors:
Corporation tax / 222,593 / 76,222
Social security / 10,265 / 8,413
Income tax withheld / 57,195 / 55,114
Other / - / 2,073
Deferred tax / 7,876 / -
Accruals and deferred income / 92,375 / 72,974[RK (O)4]
5,826,385 / 22,398,876
13.Called up share capital
2005£ / 2004
£
Authorised
30,000,000 Ordinary shares of £1 each / 30,000,000 / 30,000,000
Allotted, called up and fully paid
30,000,000 Ordinary shares of £1 each / 30,000,000 / 30,000,000
14.Reconciliation of movement in shareholders’ funds
2005£ / 2004
£
Shareholders’ funds at 1 January 2005 / 38,543,059 / 38,251,411
Retained profit for the year / 1,498,715 / 291,648
Shareholders’ funds at 31 December 2005 / 40,041,774 / 38,543,059
15.Leasehold and capital commitments
There were no capital commitments at the end of the financial year.
The company is committed to the following annual payments in respect of the lease of its premises.
2005£ / 2004
£
Lease expiring in more than five years / 590,525 / 590,525
16.Ultimate parent company
The Company is incorporated in Great Britain as a private limited company under the laws of England and Wales.
The immediate and ultimate parent company and controlling entity is Shinkin Central Bank, which is incorporated in Japan and is the 100% shareholder of the Company. Copies of the Shinkin Central Bank Group accounts are available from that company’s registered office at 8-1, Kyobashi 3-chome, Chuo-ku Tokyo, 104-0031 Japan.
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[RK (O)1]update for tax
1
[RK (O)2]14Q tax creditor not included.
[RK (O)3]1Does not agree to Note 16
[RK (O)4]1Does not agree to prior year lead sheet.