Final Results

4 March 2011

JAPAN RESIDENTIAL INVESTMENT COMPANY LIMITED ("THE COMPANY")

Consolidated Financial Statements for the Year Ended 30 November 2010

Japan Residential Investment Company Limited (AIM: JRIC) is a closed-ended Guernsey registered company established to make and hold investments in residential property in Japan. The Company presents its audited consolidated annual financial results for the year ended 30 November 2010.

Highlights

·; Reinforced balance sheet with £34.1 million net capital raising in June 20101.

·; Reduced gearing substantially, including net debt to asset ratio2 lowered to 47% at year end, from 60% one year prior.

·; Portfolio value decline slowed to 1.9% in the second half of 2010 on a like-for-like basis, compared with 5.0% decline in the first half.

·; Loss for the year narrowed to £11.7 million, down from £22.7 million one year prior on reduced valuation losses on investment properties.

·; Improved occupancy levels to 95% as at 30 November 2010, up from 91% one year prior.

·; Underlying profit3 increased to £5.2 million over the year, from £4.8 million one year prior.

·; Cumulative interim distributions of 2.5p per share in respect of the 12 months ended 30 November 2010.

Notes:

1 The Fund raised £34.1 million net of expenses through the issue of 87.5 million shares at a price of 40p per share on 22 June 2010.

2 Net debt to asset ratio: Total debt less cash and restricted reserves as a proportion of investment property.

3 Underlying profit: Profit excluding losses from fair value adjustments, foreign exchange and other capital items. 2010 underlying profit (see Note 8) is stated after writing off £645,000 in capitalised financing costs incurred due to early refinancing. The Fund uses 'underlying business performance' in its internal financial reporting and provides this analysis as additional information.

Enquiries:

Chairman's Statement

What a difference a year makes! The Fund, having weathered a financial maelstrom, is now in good shape. The successful capital raising in June netted £34.1 million, greatly strengthening the balance sheet. In 2010 the Fund sold two non-core properties for ¥528 million (£3.9 million) excluding taxes and sales costs, further improving its cash position. Of the total debt outstanding at the end of the 2009 fiscal year, the Investment Adviser eliminated more than a third through a combination of refinancing, voluntary pay down, and scheduled amortisation. The result is a conservatively geared portfolio, with lower interest expense and a satisfactory buffer against lender LTV and debt service coverage covenants.

The severe economic downturn in 2008/9 had a delayed but severe impact on portfolio occupancy and revenue. The Investment Adviser responded by redoubling leasing efforts and persistent value engineering of the Fund cost structure. Occupancy stabilised in Q4 2010 and by January 2011 the Fund had registered four consecutive months with occupancy above 95%.

The decline in property values that began in autumn 2007 appears to be nearing an end. The rate of decline in portfolio value slowed significantly to 1.9% in the second half of 2010 on a like-for-like basis, down from 5.0% in the first half, suggesting stabilisation is not far off and the possibility of a reflationary cycle around the corner. The combination of lower debt servicing costs, stabilising property values, and improved revenue bodes well for the strength and sustainability of Fund distributions going forward.

Results

The Fund generated a loss for the year of £11.7 million in 2010, down from £22.7 million in 2009 due to the slowing rate of decline in value of investment properties. Underlying profit - profit excluding losses from fair value adjustments, foreign exchange and other capital items - was £5.2 million or 3.8p per share. Calculation of underlying profit is net of a £645,000 write-off of capitalised finance costs incurred with the early refinancing of debt, which is considered non-recurring. The unrealised valuation loss on investment properties was £16.8 million (7.1% of market value at 30 November 2009) excluding foreign exchange translation effects.

Net Asset Value ("NAV") as at 30 November 2010 was £122.2 million (65.2p per share), an increase of £29.2 million since 30 November 2009. The increase is the result of £34.1 million in net proceeds from issuing shares and an £8.7 million foreign exchange gain which were offset partially by a loss of £11.7 million and distributions paid in the amount of £1.9 million.

Borrowings

Through a combination of refinancing, voluntary partial pay down and scheduled amortisation, outstanding debt was reduced by £45.9 million during the year to £128.3 million as at 30 November 2010. Cash at bank and Restricted lender reserves totalled £17.1 million at period end, resulting in net debt of £111.2 million. Investment property totalled £236.7 million, bringing the net debt to assets ratio to 47%, down from 60% one year prior.

The Fund has achieved the debt levels targeted under therecapitalisation. Following January paydowns, the portfolio LTV was reduced to 53% on the asset level based on year end valuations. The majority of debt has now been refinanced with extended maturities beyond the initial Fund life, with the exception of ¥7.0 billion (£53.4 million) in bonds maturing in May 2012. Following a reduction in the LTV on these bonds to 61% and in light of the quality of the underlying assets and improvements in the credit market, the Investment Adviser considers this debt to be at a sustainable level.

Distributions

The Directors are pleased to announce a further interim distribution of 1.5p per share to be paid on 8 April 2011 to shareholders on the register on 11 March 2011, bringing the amount paid and payable in respect of the 12 months ending 30 November 2010 to 2.5p per share, an amount which represents 89% of underlying profit. In accordance with the Fund objective of achieving both steady income and capital growth the Board intends to maintain a sustainable and prudent distribution policy.

Outlook

The Fund today is on a solid footing with reduced gearing, improved portfolio operating performance and the prospect of recovery in Japan's property market. Substantial delevering made possible by the recapitalisation and selective sale of non-core assets has brought debt to a sustainable level. The combination of lower debt servicing charges, following delevering, and improvements in portfolio occupancy levels, which began at the end of 2010, are expected to enhance 2011 revenues substantially. With a reinforced balance sheet, stabilising property markets, and improved operating performance, the Fund is well positioned for sustained distributions at prudent levels and to benefit from the anticipated reflation of real estate values in Japan.

The Board warmly commends the performance and hard work of the Manager and the Investment Adviser over this very positive year in the life of the Fund.

Raymond Apsey

Chairman

3 March 2011

Report of the Manager and the Investment Adviser

Overview

The Fund's objective is to generate steady income and capital growth through the acquisition and management of quality Japanese residential properties. The focus over the past 12 months has been on strengthening the balance sheet in response to reduced availability of credit and asset value declines. Following the selective sale of non-core assets and the successfulrecapitalisationin June 2010, the Investment Adviser was able to delever the portfolio aggressively. All outstanding loans have now been refinanced with maturities extending beyond the initial Fund life (as denoted by the continuation vote scheduled for September 2013). The voluntary partial pay down of bonds maturing in May 2012, which was negotiated by the Investment Adviser, allows the Fund to continue to benefit from this low cost debt while delevering to a sustainable level.

2010 was a year in which we also focused on mitigating the impact of the economic downturn on the operational side of the business. The Investment Adviser worked intensively with third party property managers to re-think leasing strategy, expand marketing activities, and communicate the competitive strength of our units throughout the market on a property-by-property basis. As a result of these efforts, the Fund has seen a significant uplift in portfolio occupancy with limited rent price declines. At the same time, we have continued to value engineer the operating cost side of the business and successfully negotiated reductions in property management, building management, unit restoration, and various professional fees.

The Fund has reached its stride, and 2011 is a year in which the rewards for recent efforts should become fully evident. We expect forthcoming results to demonstrate the cash generating capability of the JRIC portfolio while operating at 95% occupancy under a lower cost structure. Furthermore, we anticipate that the substantially reduced gearing, stabilisation of portfolio value, and re-establishment of distributions should increase the Fund's appeal to a wider range of investors.

Market

Following a substantial contraction in 2009, Japan's economy is recovering, aided by government stimulus measures and improved international trade. After growing at an estimated 4.3% in 2010, the economy is forecast to increase at a more modest 1.3% in 2011 as Japan continues to benefit from exports to growing Asian economies (including China). Consumer spending, which accounts for 60% of Japan's gross domestic product, has improved for six straight quarters. The deflationary trend continued through 2010 with consumer prices falling 0.9%. Consumer prices are expected to fall a further 0.2% in 2011, however, pressures from high corporate profits and an improving labour market are expected to reverse this trend by 2012.

Economic uncertainty has resulted in a general flight to quality assets. In this environment, investors are attracted to Japan's large, liquid and mature property market and the broad stability of the world's third largest economy that underpins Yen-denominated assets. At the same time, the aftermath of the financial crisis continues as a steady flow of forced sale properties - the result of non-recourse debt maturities and pressure on borrowers to improve balance sheets - continues to weigh heavily on the market. Nevertheless, increased investor demand combined with greater availability of credit and low interest rates are supporting property values.

The residential property market in major Japanese cities isstabilising. Residential land values in the six large cities fell 0.9% in the six months ending September 2009 versus a 2.1% decline during the prior six month period. Yields on residential investment property have been trending downward since peaking in late 2009.

Currently, quality residential properties trade at net yields of 5% to 6% in Tokyo and 6% to 7% in Osaka/Nagoya. New supply has been constrained by an exit of mid-tier developers due to bankruptcy or difficulty obtaining development financing. Limited supply and strong demand, due to the improving economy and low interest rate environment, are combining to support prices on new condominiums where in 2010 prices per square metre increased 3.4% in Tokyo and 3.6% in Osaka.

Residential rents in 2010 declined 1.5% in Tokyo, 1.0% in Osaka, and 1.1% in Nagoya (versus office rent declines of 11.4%, 7.2%, and 6.5% respectively). Residential investment property is back in favour due to stable occupancy and rent levels relative to the commercial sector. The moderate negative trend in residential rents is expected to reverse itself by 2012 due to the improving economy, limited new supply, and positive net migration as well as increased household formation in the major cities.

Result

Gross rental income grew 3.5% to £18.1 million in the fiscal year. Yen appreciation offset underlying declines in rent revenue which were mainly the result of property dispositions. Property operating expenses increased 16.5% to £4.6 million in 2010 as foreign exchange gains, higher charges from unit restoration and taxes were only partially offset by negotiated reductions in property management fees. Property operating expenses also reflect the cost of leasing up additional units as occupancy rose from 91% to 95% in 2010. With a more stable occupancy rate and lower tenant turnover, we anticipate a reduction in this expense item in 2011.

Unrealised valuation loss on investment properties was 7.1% of market value as at 30 November 2009 excluding foreign exchange translation effects, down from 10.2% over the same period one year prior. Portfolio values appear to be bottoming out having registered a 1.9% decline in the second half on a like-for-like basis, versus a 5.0% decline in the first half of 2010. Property values fell 6.8% in 2010 on a like-for-like basis. In Yen terms, Fund properties had fallen 20% from purchase price as at 30 November 2010.

Administrative and other expenses fell 23.4% to £2.1 million in 2010 from £2.8 million in the prior year. The Fund realised substantial reductions in legal and tax advisory fees as well as appraisal costs following the shift from quarterly to semi-annual property valuations.

Net financing costs increased 6.4% to £4.9 million as the reduction in debt outstanding and falling interest rates were offset by the stronger Yen.

Borrowings

Total debt outstanding of £128.3 million less Cash at bank and Restricted lender reserves of £17.1 million resulted in net debt of £111.2 million and a net debt to assets ratio of 47% as at 30 November 2010. Based on the principal amount of total debt outstanding at year end, 77% was hedged as follows: 11% was fixed rate; 25% floating rate with swap into fixed rate; and 41% floating rate with a cap. 23% of total debt was at floating rate.

Post year end, a combination of scheduled amortisation and voluntary partial pay down of debt held by Mizuho Corporate Bank in the amount of ¥503 million (£3.8 million) was made on 31 January 2011, resulting in a reduction of total debt outstanding to ¥16.6 billion (£126.6 million).

The weighted average debt maturity as at 31 January 2011 was 2.4 years and the weighted average interest cost was 1.9%. There are no refinancing events in 2011 and the next debt maturity is ¥7.0 billion (£53.4 million), which comes due in May 2012. Assets financed by this debt are of high quality with a large allocation to the Tokyo market and manageable LTV of 61%. Based on these factors as well as improvements in the credit markets and discussions with lenders, the Investment Adviser is confident in its ability to secure replacement financing for this portfolio in 2012.

Fund LTV is currently 53% at the asset level based on property values as at 30 November 2010. Given the greater availability of non-recourse debt,stabilisingproperty markets and strong cash flow of the underlying portfolio, the Investment Adviser considers the current gearing to be prudent and sustainable.

Portfolio

The portfolio of 51 income generating residential properties was valued at ¥31.1 billion (£236.7 million) as at year end. This follows the sale of two properties for ¥528 million (£3.9 million) excluding taxes and sales costs in 2010. On a like-for-like basis, property values fell 6.8% YoY and 20% from purchase price as at 30 November 2010. The rate of decline is slowing with portfolio value falling 1.9% during the six months ended 30 November 2010. The unleveraged net yield of the portfolio (appraised net operating income over value) ended at 6.0% as at 30 November 2010.

On the operating level, moderate declines in rents were more than offset by significant improvement in portfolio occupancy. The Fund ended the year with a portfolio occupancy rate of 95.1%, up from 91.0% one year prior. The average occupancy rate increased to 92.4% for the year, versus 92.1% in the prior year. Tenant cancellations, which spiked to 35% in 2009 in response to the weak economy, were reduced to a more manageable 29% in 2010 following intensified leasing and tenant retention efforts. As of January 2011, the Fund has realised four consecutive months with occupancy above 95%. Further improvement in operating performance is anticipated in 2011 as a result of cost reductions and enhanced revenues.

Regional Allocation: Assets are well diversified in and around the major population centres of Japan. Regional allocation remained almost unchanged following the sale of two assets in Osaka. 86% of all properties by value are located in the top three markets: Tokyo 45%, Osaka 27% and Nagoya 14%. The remaining 14% of properties are located in or within commuting distance to a "key city" with a population over 1 million or in a prefectural capital city.

Asset Diversification: The Fund is well diversified with the 10 largest assets comprising less than half of the total portfolio value. The largest single asset represents 10.8% of portfolio value. Portfolio diversification and liquidity is reflected in the small average property size of ¥609 million (£4.6 million).

Asset Quality: All properties are held as fee simple ownership. All buildings have a reinforced concrete structure. On account of a variety of characteristics including quality of design, amenities and surrounding environment, they are expected to remain competitive in the marketplace for the foreseeable future. The majority of units, 94%, are Single and Compact Type, targeting the young, single demographic.

Tenant Risk: The portfolio offers broad tenant diversification with the largest tenant occupying a mere 1.2% of the Fund's total leasable space. Due to overall tenant quality and third party guarantees on the majority of leases, instances of non-collection of rent have been limited to less than 0.1% of gross rental income.

Affordability: Units are concentrated in mid-level rent markets offering broad tenant affordability and appeal. 89% of the rents were priced below ¥150,000 (£1,144) per month. Average monthly rent on residential units was ¥92,000 (£701) as at 30 November 2010.

Building Age: The average age of the portfolio was 5.1 years at the year end. However, a full 91% of properties by value are less than 5 years old and 25% are less than 3 years old. The modernity of the portfolio is expected to result in lower repair and maintenance costs, higher probability of renewal and greater competitiveness.

Access: All properties are located within walking distance (most within 10 minutes) of a train or subway station.

Outlook

Amidst global economic uncertainty, Japan's industrial competitiveness and the relative strength of its financial sector has helped to impart Japanese Yen-denominated investments with a degree of "safe haven" status. Demand for quality rental housing in urban areas remains strong as the supporting trends of net migration and increases in household formation continue. On the basis of strong fundamentals, we are optimistic about the prospect for a sustained recovery in residential property values in Japan.

With a portfolio of 51 properties and 2,200 units spread predominantly among the three largest metropolitan markets in Japan, the Fund has achieved a high level of diversification in terms of location, assets and tenants. The strategy of investing in quality urban assets capable of sustaining high occupancy rates has resulted in stable cash flows. The 2010 capital raising has enabled substantial delevering of the Fund which will help to ensure the sustainability of distributions.

KK Halifax Management Limited KK Halifax Asset Management

Manager Investment Adviser

JAPAN RESIDENTIAL INVESTMENT COMPANY LIMITED 

Consolidated Statement of Comprehensive Income

For the year ended 30 November 2010

All items in the above statement are derived from continuing operations.

The loss is attributable to shareholders of the Company. There are no minority interests.

The accompanying notes form an integral part of these financial statements.

JAPAN RESIDENTIAL INVESTMENT COMPANY LIMITED 

Consolidated Statement of Financial Position

As at 30 November 2010

JAPAN RESIDENTIAL INVESTMENT COMPANY LIMITED 

Consolidated Statement of Changes in Equity

For the year ended 30 November 2010

JAPAN RESIDENTIAL INVESTMENT COMPANY LIMITED 

Consolidated Statement of Cash Flows

For the year ended 30 November 2010

JAPAN RESIDENTIAL INVESTMENT COMPANY LIMITED 

Notes to the Consolidated Financial Statements

For the year ended 30 November 2010

1. General Information

The Fund, which comprises the Company and its subsidiaries and special purpose entities as defined in note 2, has been established to make and hold investments in residential property in Japan.

The Company is incorporated and domiciled in Guernsey. The Company has its primary listing on the AIM market of the London Stock Exchange.

These financial statements were approved for issue by the Board of Directors on 3 March 2011.

2. Basis of Preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'), which comprise standards and interpretations approved by the International Accounting Standards Board ('IASB'), and International Accounting Standards and Standards Interpretations Committee, interpretations approved by the International Accounting Standards Committee ('IASC') that remain in effect, to the extent that they have been adopted by the European Union and The Companies (Guernsey) Law, 2008.

The financial statements have been prepared in Sterling, which is the presentation currency of the Fund, and under the historical cost convention, except for investment property and certain financial instruments which are carried at fair value.

3. Significant agreements

The Fund has entered into the following significant agreements:

(a) The Company has entered into an agreement with KK Halifax Management Limited ('KKHML') whereby KKHML provides management services for a fee of £50,000 per annum.

(b) The Japan-domiciled firms in which the Company is the ultimate beneficiary have entered into agreements with KK Halifax Asset Management ('KKHAM') whereby KKHAM provides investment advisory services for a management fee of 0.5% of Gross Assets under management calculated and paid quarterly, which is subject to a minimum fee of ¥200 million (£1,459,000) per annum with effect from 1 June 2010. KKHAM is also entitled to a performance fee equivalent to 20% of the performance of the investments in excess of 10% per annum, which will be calculated on the basis of the average annual return on a three year rolling basis. No performance fee was paid during the year (2009: Nil).

(c) The Company has entered into an agreement with Praxis Property Fund Services Limited ('PPFSL') whereby PPFSL provides administration and company secretarial services for a fee equal to 0.10% of the net asset value of the Fund, calculated and paid quarterly, subject to a minimum fee of £50,000 per annum.

(d) The Company has entered into an agreement with Smith & Williamson Corporate Finance Limited ('SWCFL') whereby SWCFL acts as the Nominated Adviser for an annual fee of £30,000.

(e) The Company has entered into an agreement with Fairfax I.S. Limited ('FISL') whereby FISL acts as financial adviser and nominated broker to the Company for an annual fee of £40,000. Prior to 1 January 2010 this fee was £50,000 per annum.

(f) The Japan-domiciled firms in which the Company is the ultimate beneficiary have entered into agreements with Colliers International ('CI') whereby CI provides accounting and administrative services for a fixed fee of ¥34.6 million (£253,000), with an additional variable fee based on the number of properties held.

4. Related party transactions

Transactions between the Company and its subsidiaries which are related parties have been eliminated on consolidation and are not disclosed in this note.

Directors' fees have been disclosed in the Directors' Report. There were no outstanding fees payable to Directors at the year end. There are no key personnel other than the Directors, Investment Adviser and Manager.

The Fund pays fees to KKHML for its management services. The total charge to the Statement of Comprehensive Income during the year was £50,000 (2009: £50,000), of which £12,500 (2009: £12,500) was outstanding at the end of the year. Paul Hammerstad, a director of the Company, is also a director of KKHML.

The Japan-domiciled firms in which the Company is the ultimate beneficiary pay fees to KKHAM for its investment advisory services. The total charge to the Statement of Comprehensive Income during the year was £1,329,000 (2009: £1,285,000) of which £Nil (2009: £Nil) was outstanding at the year end. Paul Hammerstad, a director of the Company, is also a director of KKHAM. A contribution to office rent of £6,000 was paid to KKHAM by the Japan-domiciled firms in which the Company is the ultimate beneficiary.

The Japan-domiciled firms in which the Company is the ultimate beneficiary pay fees to CI for its accounting and administrative services. The total charge to the Statement of Comprehensive Income during the year was £433,000 (2009: £438,000) of which £Nil (2009: £Nil) was outstanding at the year end. Paul Hammerstad, a director of the Company, is also a director of CI.

5. Underlying profit

6. Gross rental income

The Fund leases out its investment property under operating leases. All operating leases are for original terms of two years or more. Service and management charges include common area maintenance fee income, non-refundable deposits received and other income.

The future aggregate minimum rentals receivable under operating leases as at the year end date are as follows:

7. Property operating expenses

All property operating expenses relate to investment properties that generated rental income.

Included in Property taxes and duties is an amount of £61,000 which relates to consumption tax expenses for intercompany property transactions and £108,000 which relates to under-accrued property tax for the 2009 financial year.

8. Administrative and other expenses

Auditors' remuneration relates entirely to the provision of audit services. In addition the previous auditors, Ernst & Young, earned the following fees during the year:

9. Taxation charge

The Company is exempt from Guernsey taxation on income derived outside of Guernsey and bank interest earned inside Guernsey under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989, as amended. A fixed annual fee of £600 is payable to the States of Guernsey in respect of this exemption. No charge to Guernsey taxation will arise on capital gains.

The Fund's SPEs are subject to foreign tax on income arising from distributions and interest payments originating from Japan. Deferred taxes have been provided on the undistributed profits of the Japanese entities and interest receivable by the subsidiaries at the expected tax rate on the future payments by the Japanese entities.

The fair value adjustments of the investment properties result in a temporary difference between the carrying value of the properties and their tax basis. Deferred taxes on these differences are based on the expected tax rate on the future distributions made on disposal of the investment property.

The Fund is liable to Japanese tax arising on activities of its Japanese operations. Withholding taxes arise on income distributions from the TKs to the TK Investor, J-RIC International Limited. The Fund is liable to Dutch tax arising on the activities of its Dutch operations.

The charge for the year can be reconciled to the loss per the Statement of Comprehensive Income as follows:

The applicable country rate above is a blended rate of those applicable in different jurisdictions, weighted by the profits and losses arising therein. No deferred tax assets have been recognised in respect of losses due to the unpredictability of future taxable profits.

10. Loss per share - basic and diluted

The Fund does not have any dilutive potential shares.

11. Investment property

Property duties are paid once the acquisition of the property has been processed by the Japanese tax office, often this might not be in the same accounting year as the acquisition.

The total cost of the investment property held at the year end date was £294.4 million (¥38.6 billion) (2009: £291.5 million (¥41.7 billion)).

Investment property consists of residential properties that are leased to third parties under operating leases. The fair value of the Fund's investment property at 30 November 2010 has been calculated on the basis of valuations carried out at that date by the following independent professionally qualified valuers with relevant recent experience:

The valuation basis has been fair market value as defined by Japanese Real Estate Appraisal Standards calculated using the income capitalisation approach. This approach consists of both the direct capitalisation method which applies a market capitalisation rate to net operating income ('NOI') and the discounted cash flow method which applies a discount rate to both NOI and a forecast terminal property value. NOI is calculated with reference to in place lease contracts as well as monthly reports of actual property income and expenses.

The Fund has pledged approximately £229.1 million (2009: £218.9 million) of its investment property as security for bonds and loans payable (see note 20). Income generated by the pledged investment properties is distributable subject to the Fund meeting its interest obligations on the bonds and loans payable. The bonds and loans payable also include covenants that require maintenance of maximum loan to value ('LTV') ratios ranging between 73% and 80% and minimum stressed debt service coverage ratio tests of between 1.2x and 1.6x.

Any changes in market conditions will directly affect the profit or loss reported through the Statement of Comprehensive Income. A 5% increase in the value of the direct properties as at 30 November 2010 would have increased total comprehensive income for the year by £11.8 million (2009: £11.8 million). A decrease of 5% would have had an equal but opposite effect. It is expected that increases or decreases would be primarily the result of changes in capitalisation rates, the primary variables in the fair value calculations.

12. Security deposits held

13. Interest rate derivatives

The Fund utilises derivative financial instruments, in the form of interest rate cap contracts and interest rate swap contracts, to hedge its exposure to interest rate risk.

The interest rate cap contracts hedge the interest payments on the bonds issued to ORIX Corporation against movements in Japanese Yen LIBOR rates. These contracts expire on 21 May 2012 and ensure that the Fund's interest cost from bonds issued to ORIX Corporation does not exceed 4%.

An interest rate swap contract was taken out on 29 March 2010 in order to hedge floating rate interest payments on ¥4,327 million (£33.0 million) of the loan payable to Mizuho Corporate Bank. Under the terms of the contract the Fund pays interest quarterly at a fixed rate of 1.599% up to 31 December 2010 and 2.349% with effect from 1 January 2011. The contract matures on 30 December 2013.

14. Trade and other receivables

All amounts are receivable within 90 days.

15. Restricted lender reserves

The restricted lender reserves, which belong to the Fund, comprise bank deposits that are held as reserves in lender restricted accounts against future expenses including interest, taxes and insurance. The restricted lender reserves are governed by lender agreements that stipulate the terms under which the Fund may withdraw funds subject to lender approval.

16. Cash and cash equivalents

17. Bonds and loans payable

The bonds and loans payable are secured by certain investment properties with a fair market value of ¥30,054 million (£229.1 million) (2009: ¥31,315 million (£218.9 million)) at the year end date.

All floating interest rates are reset every three months based on the prevailing base rate (3 months TIBOR or 3 months LIBOR) at the time.

The Fund redeemed ¥3,050 million (£22.3 million) of the bonds issued to DB Trust and Orix Corporation during the year. The maturity date of May 2012 and other terms for the outstanding ¥6,971 billion (£53.2 million) remain unchanged.

During the year the Fund repaid or refinanced its loan portfolio as follows:

·; Refinanced the loan payable to Mizuho Corporate Bank from a maturity of December 2010 to December 2013 and reduced the outstanding balance from ¥6,053 million (£42.3 million) at 30 November 2009 to ¥4,835 million (£36.9 million) at the year end, with scheduled quarterly amortisation of ¥39 million (£297,000) (next amortisation payment is scheduled in January 2011);

·; Refinanced the loan payable to Mizuho Trust and Banking Corporation from a maturity of February 2010 to January 2014 and reduced the outstanding balance from ¥3,136 million (£21.9 million) at 30 November 2009 to ¥1,827 million (£13.9 million) at the year end;

·; Refinanced the loans payable to Tokyo Star Bank Limited, which had maturities of between February 2011 and July 2011, with new debt from Mizuho Bank maturing in September 2014 and reduced the outstanding balance from ¥5,727 million (£40.0 million) at 30 November 2009 to ¥3,186 (£24.3 million) at the year end, with scheduled quarterly amortisation of ¥23 million (£175,000) (next amortisation payment is scheduled in December 2010).

18. Deferred tax assets and liabilities

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable.

The Fund did not recognise deferred income tax assets of ¥112 million (£0.9 million) (2009: ¥127 million (£0.9 million)) in respect of losses amounting to ¥268 million (£2.0 million) (2009: ¥302 million (£2.1 million)) that can be carried forward against future taxable income.

Losses amounting to ¥87 million (£0.7 million), ¥137 million (£1.0 million), ¥36 million (£0.3 million) and ¥7 million (£0.1 million) expire in 2012, 2013, 2014 and 2015 respectively (2009: ¥129 million (£0.9 million), ¥137 million (£1.0 million) and ¥36 million (£0.3 million) expire in 2012, 2013 and 2014 respectively).

19. Trade and other payables

20. Share capital

The total authorised number of ordinary shares is 250 million, each with a par value of 10p. Ordinary shares carry no right to fixed income but are entitled to dividends as declared from time to time. Each share is entitled to one vote at meetings of the Company.

On 22 June 2010 the Company issued 87,500,000 new ordinary shares at a price of 40p per share, producing net proceeds after issue costs of £34.1 million.

21. Share premium

On 12 January 2007 the Royal Court of Guernsey confirmed the reduction of the share capital of the Company by way of cancellation of the Company's share premium account, which under Guernsey company law at the time was an undistributable reserve. An amount of £85,067,000 was transferred to the special reserve, which is distributable. With effect from 1 July 2008, Guernsey company law no longer makes any distinction between distributable and non-distributable reserves, requiring instead that a company pass a solvency test in order to be able to make distributions to shareholders.

On the issue of new ordinary shares during the year, the excess of the proceeds over the nominal value of the shares issued, less the share issue costs, was credited directly to the special reserve (see note 25).

22. Special reserve

The special reserve is a distributable reserve to be used for all purposes permitted under Guernsey company law, including the buy back of shares and the payment of dividends.

23. Distributions from special reserve

24. Commitments

The Fund did not have any capital commitments at the year end date (2009: Nil).

25. Contingent liabilities

The Fund did not have any contingent liabilities at the year end date (2009: Nil).

26. Entities

The Fund consists of the Company and the following entities:

GK Foster ceased operations and was closed in February 2010.

27. Post year end events

On 31 January 2011 the Fund made a voluntary partial repayment of ¥464 million (£3.5 million) of the loan payable to Mizuho Corporate Bank. Following this repayment, amortisation of the loan is no longer required.

28. Copies of Annual Report and Consolidated Financial Statements

The Financial Statements for the year ended 30 November 2010 will be sent to shareholders in due course and will be available from the Company's registered office at Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 4NA and on its website www.jricl.com.