TIDMAOF
RNS Number : 4887J
Africa Opportunity Fund Limited
12 September 2016
12 September 2016
Africa Opportunity Fund Limited
("AOF" or the "Company")
Half Yearly Report for the Six Months ended 30 June 2016
The Board of Africa Opportunity Fund Limited is pleased to
announce its unaudited results for the 6 month period to 30 June
2016. The full half yearly report for the period ended 30 June 2016
will be sent to shareholders and will be available shortly on the
Company's website: www.africaopportunityfund.com.
Highlights:
-- AOF's ordinary share net asset value per share of US$0.898 as
at 30 June 2016 increased by 2.7% from the 31 December 2015 net
asset value per share of US$0.875. AOF's C share net asset value
per share of US$0.819 decreased by 0.2% from the 31 December 2015
net asset value per share of US$0.821.
-- As at 30 June 2016, AOF's investment allocation for its
Ordinary Shares was 75% equities, 25% debt and 0% cash. AOF's
investment allocation for its C Shares was 59% equities, 39% debt
and 2% cash.
-- AOF's Ordinary Shares net asset value per share as at 31 July 2016 was US$0.886.
-- AOF's C Share net asset value per share as at 31 July 2016 was US$0.803.
Manager's Report
Market Conditions
The Africa Opportunity Fund ("AOF" or "the Fund") ordinary share
NAV rose 2.8% in H1. In the same period, the share price rose 7%
from $0.647 to $0.692. As a reference, in US dollar terms, in H1
the S&P rose 4%, Brazil rose 48%, Russia rose 25%, India rose
3%, and China fell 17%. In Africa, South Africa rose 10%, Egypt
fell 11%, Kenya fell 1%, and Nigeria fell 23%. Three Africa-focused
exchange traded funds - the Lyxor ETF Pan Africa (PAF FP) listed on
the Euronext Paris, Market Vectors Africa Index (AFK US) listed on
the NYSE, and the DBX MSCI Africa Top 50 (XMAF LN) listed on the
LSE - rose, respectively, 33%, 12%, and 6%.
Ordinary Share Portfolio Highlights
The Fund had a respectable performance. Its bonds and the
securities of commodity producers rallied, offset by losses on the
short side. Specifically, the bond portfolio contributed 4.1%; the
equity securities of commodity producers also contributed 4.1%,
while the shorts lost 2.9%. The Fund's performance occurred against
a darkening landscape of macro risks. For the first time since
2004, the International Monetary Fund's latest Sub-Saharan Africa
2016 and 2017 regional GDP forecasts of 1.6% and 3.3% are lower
than its corresponding global GDP forecast of 3.1% and 3.4%.
Nigeria is experiencing outright recession, with its GDP forecast
to contract by 1.8%, while South Africa's Reserve Bank forecasts 0%
GDP growth for this year.
The secular headwinds include a declining Chinese GDP growth
rate, low commodity prices, and a negative impact from Brexit on
the important African export markets in Europe and the United
Kingdom. Cyclical headwinds, lasting 12 to 18 months, range from
the constricting effects of looming elections in Ghana, Zambia, and
Kenya on domestic investment decisions, to large hidden state
borrowing by mendicant governments like that of Mozambique, and
religious and ethnic banditry in Nigeria. Fortunately, the growing
gloom about Africa is expanding the pockets of deeply undervalued
securities available from investors to investigate and purchase.
The H1 2016 results of several companies across Africa confirm the
unfolding slowdown - operating profits are declining in US Dollar
terms, year-on-year. Significantly, the strongest companies are
responding in a variety of ways: for example, deepening their
supply roots in Africa, as manifest in Dangote Cement's switch from
the use of high cost and imported low-pour fuel oil to coal
imported from South Africa to reliance on Nigerian coal as an
alternative to natural gas. AOF seeks to benefit from these wind
patterns by investing in: African oligopolies located in stressed
economies; companies with large assets ignored by the market; high
yielding hard currency denominated African corporate debt; and some
hard currency earners. We'll also continue to look for ways to
short over-indebted African consumers. During H1, the Fund added
equity and debt securities to its gold portfolio, acquired debt
securities of some Nigerian banks, and covered some of its short
positions.
Ghana's large share of the ordinary shares' portfolio calls for
explanation. AOF purchased almost $2 million face value of Tullow
bonds in April, at a price of 74, precipitating the jump in AOF's
exposure to Ghana. The running yield and yield to maturity of those
bonds were 8.4% and 12.5%. With a debt/total assets ratio of 44%, a
debt/equity ratio of 170%, and large development commitments,
Tullow's balance sheet is debt laden. But, measured against
Tullow's 320 million crude oil barrels in reserve, the Fund was
paying $16/barrel of low-cost oil and little for resources in
Equatorial Guinea, Gabon, Kenya, and Uganda. Significantly, the
fund was not increasing its Cedi exposure. To date, those bonds
have generated 10% in returns. Tullow will increase its Ghana
revenues in Q3 as the Tweneboa, Enyenra, and Ntomme offshore fields
enter production. AOF's Cedi-denominated investments in Enterprise
Group and Standard Chartered Bank had a weak H1. Standard Chartered
Bank's ordinary shares lost 11% while Enterprise's shares declined
by 0.2%, both in US Dollars. Furthermore, the Cedi remains
vulnerable to a sharp depreciation, as the Ghana government exceeds
its expenditure targets in this year of elections. However, the H1
results of both Enterprise and Standard Chartered were decent.
Enterprise's H1 2016 profits attributable to shareholders rose by
53% when compared to 2015. A warning is warranted insofar as
Enterprise's life business has slowed down its growth rate. In the
case of Standard Chartered Bank, credit impairment charges
declined, year-on-year, in each of the first two quarters of 2016
leading to a 98% rise in H1 2016 profits to $38.6 million.
Iamgold's 6.75% 2020 bonds are typical of the hard currency
fixed income securities in the AOF portfolio. They generated a 47%
return, in the H1. 7.96 million ounces of proved and probable
reserves and annual production around 800,000 ounces from 4
operating mines in Burkina Faso, Mali, Surinam, and Canada place
Iamgold squarely in the class of mid-tier gold producers. All-in
sustaining costs of $1,100 make Iamgold our highest cost gold
mining producer. But, it has the most sober balance sheet among our
gold producers. Its opening 2016 debt/total assets ratio of 21% was
much lower than Goldfield's 34% ratio and the 38% ratio of
Anglogold Ashanti. $30 million of additional equity was issued in
H1 2016, enhancing the cushion below our bonds. Debt/EBITDA, as of
June 30, 2016, was a respectable 2.7x. Iamgold's $650 million bond
issue ranks behind an undrawn secured $250 million bank facility.
Therefore, we are second in line for repayment in the event of a
default. In owning its bonds at the end of H1, AOF was paying $110
per reserve ounce, an attractive price for a gold security with a
running yield of 7.5%. The ordinary shares had 7% of their net
asset value in gold mining equities, 8% in gold mining debt, 1% in
oil and gas equities, and 8% in oil and gas debt.
Copperbelt Energy is a company with large assets ignored by the
market, for eminently understandable reasons. Its investment in
Abuja Electricity Distribution Company is proving to be a
gargantuan millstone of losses. After the end of the quarter, a
Nigerian Federal high court issued an order revoking a 45% tariff
increase granted to distribution companies by Nigeria's electricity
regulator. Still, electricity consumed without payment ceases to be
produced. Nigerian consumers will either become payers or lose
their woefully minimal quantities of grid-supplied electricity.
Copperbelt Energy's US Dollar denominated share price rose 20% in
H1. Despite its Nigerian woes and Nigeria-induced losses, it
declared a dividend in respect of 2015. It trades on a historical
dividend yield of 13%. That dividend represented a 40% payout ratio
of its profitable and cash generating US Dollar denominated Zambian
operations. Crucially, those Zambian operations do not guarantee
the Nigerian debts of the consolidated Copperbelt group. A 10%+
dividend yield, if sustainable, is a sign of undervaluation because
it turns an equity security into a convertible debt synonym. In the
case of Copperbelt, the markets have discounted completely its
Nigerian businesses. Understandable as the market's contempt for
Nigeria is, in light of the low collection rates in Nigeria, it
ignores Copperbelt's rapidly growing and highly profitable business
segment of electric power trading within the South African Power
Pool. That segment grew more than 100% in 2015 to constitute 33% of
Copperbelt's $68 million in Zambian operating profits, and should
grow rapidly again in 2016. Copperbelt just completed the
construction of the 220kV double circuit transmission line between
Zambia and the Democratic Republic of Congo, increasing the
capacity of Zambia-Congo interconnection from 260 MW to 500 MW,
which will enhance its trading capacity. Copperbelt expects to sell
about 15% less power to its Zambian customers in 2016 and expects
also to incur losses in Nigeria. Nevertheless, we anticipate that
its Zambian profits and dividend levels will match its 2015
levels.
AOF also covered some of its short positions. We closed our
Massmart short position and reduced our Shoprite short position -
the two largest sources of losses in our short book. The ordinary
shares lost 2.9 cents per share from its short book in H1.
C Share Portfolio Highlights
The C share's portfolio has exposure to 33 issuers, of which 14
are new issuers to the Fund. Its largest losses came from
Continental Reinsurance, Mashonaland Holdings, and its short book.
Continental and Mashonaland Holdings constituted 7% and 5% of the
NAV of the C shares. The C shares had 9% of its net asset value in
gold mining equities, 6% in gold mining debt, 2% in oil and gas
equities, and 9% in oil and gas debt. Although gold companies like
Anglogold and Iamgold contributed positively to the C share
portfolio, those gains were overwhelmed by the losses incurred in
some of the large holdings of the C shares.
H1 witnessed the end of the curatorship of African Bank, in
early April, and the successful restructuring of its debt. African
Bank collapsed in August 2014 because its provisions were
insufficient for the level of losses it was incurring and it lost
access to the wholesale money markets. African Bank's loan
portfolio was divided into two segments: a relatively conservative
loan book, supported by a new banking license, with a value of 21
billion Rands, and 24 billion of cash, and 10 billion of equity;
and a risky loan book in run-off mode, without a banking license to
grant new loans. The C shares acquired its Swiss Franc denominated
African Bank bonds at an average price of 57 between August 2014
and November 2015. Bondholders approved in February an exchange of
new securities for the old African Bank bonds. The new package
comprised a cash payment equal to 10 percent of the face value of
the old bonds, new bonds with a face value equal to 84 percent of
the old bonds, a stub claim in the risky loan-book with an initial
value around 6 cents, and 90% of accrued, but unpaid interest on
the old bonds. The new bonds matured two years later than the old
bonds. The consolidated books of African Bank remain the largest
unsecured consumer finance book in South Africa. Collections on
those books have turned out better than forecast. Nevertheless, our
somber view of the financial state of South Africa's consumer
inclined us to reduce our exposure to that sector. We sold some of
our bonds at a price of 92, then tendered the balance to African
Bank at 94 in July. Our total return was 21% in H1 and 47% since
August 2014. During the quarter, we sold the OCP 6.875% 04/25/2044
bonds at a price of 103 and the equity securities of Maroc
Telecom.
The struggle to get African retail consumers to accept that
reliable grid-supplied electricity requires cost-effective
electricity tariffs paid by them to electricity distributors like
Kenya Power and Abuja Electricity Distribution Company is
unrelenting and continues unabated. It is certainly proving to be a
tough fight. Kenya's energy permanent secretary rejected in early
May Kenya Power's request to Kenya's electricity regulatory
authority for a tariff increase, although his authority to issue
such decisions was questionable. Kenya Power's share price fell 5%
in May alone, and 10% in Q2. To compound woes, it is paying larger
capacity charges as new renewable energy generation and other
independent power producers increase power output at a time when it
is suffering disappointment in electricity sales to Kenyan
industrial customers. The last disappointment is that Kenya Power
appears to have satisfied the conditions precedent for borrowing
from the World Bank - an event supposed to occur last year to
reduce its financing costs - only at the end of June. The 70%
discount to book value at which Kenya Power traded at the end of H1
implied that the markets believed that Kenyan grid-supplied
electricity would be permanently unprofitable. That is overwrought
pessimism. Kenya Power's end-of-quarter vital valuation statistics
were a P/E ratio of 2.6x and a P/B of 0.3x. Its enterprise value of
$1.1 billion was 42% of total assets generating 10.42% in cash from
operations as of December 2015. That return was almost identical to
Umeme of Uganda's 10.43%. Yet, Umeme's $471 million enterprise
value represents 90% of its total assets. Contrast both valuations
with those of National Grid in the UK and ITC Holdings in the US: a
7.8% cash from operations return in the case of National Grid and
7.6% in the case of ITC Holdings supported enterprise value/total
assets ratios of 110% and 150%, respectively, in the case of
National Grid and ITC Holdings. Undoubtedly, imperceptible interest
rates in a QE world inapplicable to sub-Saharan Africa, hold aloft
the British and American benchmarks. Yet, a doubling of Kenya
Power's market capitalization would raise its enterprise
value/total assets ratio from 42% to a mere 49%. Kenya Power is
cheap!
H1 brought the Fund losses in the short book of the C shares,
constituting 17% of the C share NAV. Those losses accounted for 3.5
cents per C share, as, at 17% of the C share NAV, that short book
accounts for a larger proportion of the C share portfolio than the
ordinary shares' short book (14% of NAV).
Portfolio Appraisal Value
As of June 30, the Manager's appraisal of the intrinsic economic
value of the Ordinary Share portfolio was $1.14 per share. The
market price of $0.693 at quarter end represents a 39% discount.
The Manager's appraisal of the intrinsic economic value of the C
Share portfolio was $1.07 per share. The market price of $0.65 at
quarter end represents a 39% discount. Note the Appraisal Values
are intended to provide a measure of the Manager's long-term view
of the attractiveness of AOF's portfolio. It is a subjective
estimate, and does not tell when that value will be realized, nor
does it guarantee that any security will reach its Appraisal
Value.
Shoprite arbitration
The Shoprite arbitration commenced in August. It is expected to
continue in September and October 2016. We hope the arbitrator will
deliver his decision by the end of the year.
Strategy
The long-term investment appeal of Africa remains intact. We
remain focused on investing in companies that sell goods and
services in short supply. We also invest in commodity related
companies, on a selective basis, when we can implicitly purchase
the underlying resources at a material discount to spot market
values. AOF's ordinary share portfolio possesses undervalued
companies. Its top 7 equity holdings offer a weighted average
dividend yield of 4.7%, a rolling P/E ratio of 26.2x (falling to
9.4x if Copperbelt Zambia's profits substitute Copperbelt's
losses), a return on assets of 10%, and a return on equity of 18%.
Excluding Copperbelt, which recorded a 2015 loss exceeding its
market capitalization, AOF's ordinary share portfolio's top 7
equity holdings had a weighted average dividend yield of 3.5%, a
P/E ratio of 11x, a return on assets of 12%, and a return on equity
of 23%. The corresponding statistics for the top 7 equity holdings
in AOF's C share portfolio are a dividend yield of 5%, a P/E ratio
of 31.4x (falling to 7.9x if Copperbelt Zambia's profits substitute
Copperbelt's losses), a return on assets of 4%, and a return on
equity of 10%. If Copperbelt were excluded, then the top 7 equity
holdings of the C shares had a weighted average dividend yield of
3%, a P/E ratio of 11x, a return on assets of 12%, and a return on
equity of 23%. As African markets adjust to the down draft of weak
commodity prices and volatility, we are finding excellent long and
short opportunities. As always, caution is necessary. It is a
privilege to have investible funds. We intend to exercise that
privilege with prudent confidence.
On Behalf of the Investment Manager, Africa Opportunity Partners
Ltd
Responsibility Statements:
The Board of Directors confirms that, to the best of their
knowledge:
a. The financial statements, prepared in accordance with
Disclosure and Transparency Rules ("DTR") 4.2.4R and International
Financial Reporting Standard 34: Interim Financial Reporting, as
adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company.
b. The Interim Investment Manager Report, and Condensed Notes to
the Financial Statements include:
i. a fair review of the information required by DTR 4.2.7R
(indication of important events that have occurred during the first
six months and their impact on the financial statements, and a
description of principal risks and uncertainties for the remaining
six months of the year); and
ii. a fair review of the information required by DTR 4.2.8R
(confirmation that no related party transactions have taken place
in the first six months of the year that have materially affected
the financial position or performance of the Company during that
period).
Per Order of the Board
9 September 2016
AFRICA OPPORTUNITY FUND LIMITED
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 JANUARY 2016 TO 30 JUNE 2016
For the For the
period period
ended 30 ended 30
June June
Notes 2016 2015
USD USD
Revenue
Interest revenue 700,660 214,297
Dividend revenue 1,122,328 1,012,058
Net gains on financial assets
at fair value through profit
or loss 5(a) 2,004,362 (4,300,605)
Other income 9,945 12,948
--------------------- ---------------------
3,837,295 (3,061,302)
--------------------- ---------------------
Expenses
Net losses on financial liabilities
at fair value through profit
or loss 5(b) 1,021,981 841,636
Management fee 554,850 585,458
Brokerage fees and commission 75,816 68,556
Net foreign exchange loss 722,294 -
Custodian, secretarial and
administration fees 95,924 179,264
Interest expense 58,114 145,363
Dividend expense on securities
sold not yet purchased 94,404 85,382
Other expenses 120,690 87,333
Directors' fees 93,113 87,500
Audit fees 65,000 54,934
--------------------- ---------------------
2,902,186 2,135,426
--------------------- ---------------------
Profit/(loss) before tax 935,109 (5,196,728)
Less withholding tax (5,330) (39,557)
--------------------- ---------------------
Increase/(decrease) in net
assets attributable to shareholder
from operations/Total Comprehensive
Income for the period 929,779 (5,236,285)
===================== =====================
Attributable to:
Shareholders/Equity holders
of the parent 922,333 (5,210,469)
Non-controlling interest 7,446 (25,816)
--------------------- ---------------------
929,779 (5,236,285)
--------------------- ---------------------
AFRICA OPPORTUNITY FUND LIMITED
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
30 June 30 June
Notes 2016 2015
----------- -----------
USD USD
ASSETS
Cash and cash equivalents - 7,506,157
Trade and other receivables 6 1,062,011 1,396,871
Financial assets at fair value
through profit or loss 5(a) 67,462,000 63,977,956
----------- -----------
Total assets 68,524,011 72,880,984
----------- -----------
EQUITY AND LIABILITIES
LIABILITIES
Amount due to broker 8 1,021,836 -
Trade and other payables 9 797,856 303,848
Financial liabilities at fair
value through profit or loss 5(b) 4,212,731 7,738,011
----------- -----------
Total liabilities (excluding net
assets attributable to shareholders) 6,032,423 8,041,859
----------- -----------
NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS 62,491,588 64,839,125
----------- -----------
Equity attributable to equity
holders of parent
Non-controlling interest 313,842 314,414
----------- -----------
Total equity 313,842 314,414
----------- -----------
Net assets attributable to shareholders 62,177,746 64,524,711
----------- -----------
Total equity attributable to equity
holders of parent and total
net assets attributable to shareholders 7 62,491,588 64,839,125
=========== ===========
Net assets attributable to:
- Ordinary shares 7 38,264,672 39,338,023
- Class C shares 7 23,913,074 25,186,688
----------- -----------
Net assets attributable to shareholders 62,177,746 64,524,711
----------- -----------
Net assets value per share:
- Ordinary shares 0.898 0.923
- Class C shares 0.819 0.863
AFRICA OPPORTUNITY FUND LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM 1 JANUARY 2016 TO 30 JUNE 2016
Net assets
Number Class attributable
of Ordinary C to
units Shares Shares shareholders
----------- ------------ ------------ -------------
USD USD USD
At 1 January 2016 71,830,327 37,287,967 23,967,446 61,255,413
OPERATIONS:
Increase/(decrease)
in net assets
attributable to
shareholders
from operations
for the period - 976,705 (54,372) 922,333
----------- ------------ ------------ -------------
At 30 June 2016 71,830,327 38,264,672 23,913,074 62,177,746
=========== ============ ============ =============
Net assets
Number Class attributable
of Ordinary C to
units Shares Shares shareholders
----------- ------------ ------------ -------------
USD USD USD
At 1 January 2015 71,830,327 43,099,112 26,636,068 69,735,180
OPERATIONS:
Decrease in net
assets
attributable to
shareholders
from operations
for the period - (3,761,090) (1,449,379) (5,210,469)
----------- ------------ ------------ -------------
At 30 June 2015 71,830,327 39,338,022 25,186,689 64,524,711
=========== ============ ============ =============
AFRICA OPPORTUNITY FUND LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM 1 JANUARY 2016 TO 30 JUNE 2016
For the For the
Period Period
Ended 30 Ended 30
June June
Notes 2016 2015
------------ -------------
USD USD
Operating activities
Increase/(decrease) in net
assets attributable to shareholders
from
operations/Total Comprehensive
Income for the period 929,779 (5,236,285)
Adjustment for non-cash items:
Unrealised (gain)/loss on financial
assets at fair value through
profit or loss 5(a) (2,178,361) 2,707,418
Realised loss on sale of financial
assets at fair value
through profit or loss 5(a) 173,999 1,593,187
Unrealised loss on financial
liabilities held for trading 5(b) 3,233,022 96,153
Realised (gain)/loss on financial
liabilities held for trading 5(b) (2,211,041) 745,483
Effect of exchange rate on
cash and cash equivalents (722,294) -
------------ -------------
Cash used in operating activities (774,896) (94,044)
------------ -------------
Net changes in operating assets
and liabilities
Purchase of financial assets
at fair value through profit
or loss (8,927,175) (11,868,641)
Proceeds on disposal of financial
assets at fair value through
profit or loss 4,289,065 7,412,769
Net purchases of financial
liabilities at fair value through
profit or loss (3,255,852) (4,604,719)
Increase in trade and other
receivables (281,038) (360,069)
Increase in trade and other
payables 354,640 172,381
------------ -------------
Net cash used from operating
activities (7,820,360) (9,248,279)
------------ -------------
Net decrease in cash and cash
equivalents (8,595,256) (9,342,323)
------------ -------------
Effect of exchange rate on
cash and cash equivalents 722,294 -
Cash and cash equivalents at
1 January 6,851,126 16,848,480
------------ -------------
Cash and cash equivalents at
30 June (1,021,836) 7,506,157
============ =============
AFRICA OPPORTUNITY FUND LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2016 TO 30 JUNE 2016
1. GENERAL INFORMATION
Africa Opportunity Fund Limited (the "Company") was admitted to
trading on the London Stock Exchange's (the "LSE") AIM Market in
July 2007 and moved to the Specialist Fund Segment "SFS" of the
LSE's Main Market in April 2014.
Africa Opportunity Fund Limited is a closed-ended fund
incorporated with limited liability and registered in Cayman
Islands under the Companies Law on 21 June 2007, with registered
number MC-188243.
The Company aims to achieve capital growth and income through
investment in value, arbitrage, and special situations investments
in the continent of Africa. The Company may therefore invest in
securities issued by companies domiciled outside Africa which
conduct significant business activities within Africa. The Company
has the ability to invest in a wide range of asset classes
including real estate interests, equity, quasi-equity or debt
instruments and debt issued by African sovereign states and
government entities.
The Company's investment activities are managed by Africa
Opportunity Partners Limited, a limited liability company
incorporated in the Cayman Islands and acting as the investment
manager pursuant to an Amended and Restated Investment Management
Agreement dated 12 February 2014.
To ensure that investments to be made by the Company and the
returns generated on the realisation of investments are both
effected in the most tax efficient manner, the Company has
established Africa Opportunity Fund L.P. as an exempted limited
partnership in the Cayman Islands. All investments made by the
Company are made through the limited partnership. The limited
partners of the limited partnership are the Company and AOF CarryCo
Limited. The general partner of the limited partnership is Africa
Opportunity Fund (GP) Limited.
The consolidated financial statements for the Company for the
half-year ended 30 June 2016 were authorised for issue in
accordance with a resolution of the Board of Directors on 9
September 2016.
Presentation currency
The consolidated financial statements are presented in United
States dollars ("USD").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied from the prior year to the
current year for items which are considered material in relation to
the consolidated financial statements.
Statement of compliance
The financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Basis of preparation
The consolidated financial statements have been prepared under
the historical cost convention except for financial assets and
financial liabilities at fair value through profit or loss that
have been measured at fair value.
The preparation of consolidated financial statements in
conformity with IFRS requires the use of certain critical
accounting estimates. It also requires the Board of Directors to
exercise its judgement in the process of applying the Company's and
its subsidiaries' (referred to as the "Group") accounting policies.
The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in Note 4.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Group as at 30 June 2016.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control and
continued to be consolidated until the date that such control
ceases.
The financial statements of the subsidiaries are prepared for
the same reporting period as the parent company, using consistent
accounting policies.
All intra-group balances, income and expenses and unrealised
gains and losses resulting from intra-group transactions are
eliminated in full.
Non-controlling interests represent the portion of profit or
loss and net assets not held by the Group and are presented
separately in the statement of comprehensive income and within
equity in the Statement of Changes in Equity from parent
shareholders' equity.
Foreign currency translation
(a) Functional and presentation currency
The Group's consolidated financial statements are presented in
USD which is the Group's functional currency. That is the currency
of the primary economic environment in which the Group operates.
Each entity in the Group determines its own functional currency and
items included in the financial statements of each entity are
measured using that functional currency. The functional currency of
the entities within the Group is USD. The Group chose USD as the
presentation currency.
(b) Transactions and balances
Transactions in foreign currencies are initially recorded at the
functional currency rate prevailing at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies
are retranslated at the functional currency spot rate of the
exchange ruling at the reporting date. All differences are taken to
profit or loss. Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the
exchange rates as at the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value
is determined.
Financial instruments
(i) Classification
The Group classifies its financial assets and liabilities in
accordance with IAS 39 into the following categories:
Financial assets and liabilities at fair value through profit or
loss
The category of the financial assets and liabilities at fair
value through the profit or loss is subdivided into:
Financial assets and liabilities held for trading
Financial assets are classified as held for trading if they are
acquired for the purpose of selling and repurchasing in the near
term. This category includes equity securities, investments in
managed funds and debts instruments. These assets are acquired
principally for the purpose of generating a profit from short term
fluctuation in price. All derivatives and liabilities from the
short sales of financial instruments are classified as held for
trading.
Financial instruments designated as at fair value through profit
or loss upon initial recognition
These include equity securities and debt instruments that are
not held for trading. These financial assets are designated on the
basis that they are part of a group of financial assets which are
managed and have their performance evaluated on a fair value basis,
in accordance with risk management and investment strategies of the
Group, as set out in the Group's offering document. The financial
information about the financial assets is provided internally on
that basis to the Investment Manager and to the Board of
Directors.
Derivatives - Options
Derivatives are classified as held for trading (and hence
measured at fair value through profit or loss), unless they are
designated as effective hedging instruments (however the Group does
not apply any hedge accounting). The Group's derivatives relate to
option contracts.
Options are contractual agreements that convey the right, but
not the obligation, for the purchaser either to buy or sell a
specific amount of a financial instrument at a fixed price, either
at a fixed future date or at any time within a specified
period.
The Group purchases and sells put and call options through
regulated exchanges and OTC markets. Options purchased by the Group
provide the Group with the opportunity to purchase (call options)
or sell (put options) the underlying asset at an agreed-upon value
either on or before the expiration of the option. The Group is
exposed to credit risk on purchased options only to the extent of
their carrying amount, which is their fair value.
Options written by the Group provide the purchaser the
opportunity to purchase from or sell to the Company the underlying
asset at an agreed-upon value either on or before the expiration of
the option.
Options are generally settled on a net basis.
Contracts for difference
Contracts for difference are derivatives that obligate either
the buyer or the seller to pay to the other the difference between
the asset's current price and its price at the time of the
contract's usage. Unrealized gains or losses are recorded at the
end of each time period that passes without the CFDs being used.
Once the CFDs are used, the difference between the opening position
and the closing position is recorded as either revenue or a loss
depending on whether the business was the buyer or the seller.
Loans and receivables
Loans and receivables are non-derivatives financial assets with
fixed or determinable payments that are not quoted in an active
market. The Group's loans and receivables comprise 'trade and other
receivables' and 'cash and cash equivalents' in the statement of
financial position.
Other financial liabilities
This category includes all financial liabilities, other than
those classified as fair value through profit or loss. The Group
includes in this category amounts relating to trade and other
payables and dividend payable.
(ii) Recognition
The Group recognises a financial asset or a financial liability
when, and only when, it becomes a party to the contractual
provisions of the instrument.
Purchases or sales of financial assets that require delivery of
assets within the time frame generally established by regulation or
convention in the market place are recognised directly on the trade
date, i.e., the date that the Group commits to purchase or sell the
asset.
(iii) Initial measurement
Financial assets and liabilities at fair value through profit or
loss are recorded in the statement of financial position at fair
value. All transaction costs for such instruments are recognised
directly in profit or loss.
Derivatives embedded in other financial instruments are treated
as separate derivatives and recorded at fair value if their
economic characteristics and risks are not closely related to those
of the host contract, and the host contract is not itself
classified as held for trading or designated at fair value though
profit or loss. Embedded derivatives separated from the host are
carried at fair value.
Loans and receivables and financial liabilities (other than
those classified as held for trading) are measured initially at
their fair value plus any directly attributable incremental costs
of acquisition or issue.
(iv) Subsequent measurement
After initial measurement, the Group measures financial
instruments which are classified as at fair value through profit or
loss at fair value. Subsequent changes in the fair value of those
financial instruments are recorded in 'Net gain or loss on
financial assets and liabilities at fair value through profit or
loss'. Interest earned and dividend revenue elements of such
instruments are recorded separately in 'Interest revenue' and
'Dividend revenue', respectively. Dividend expenses related to
short positions are recognised in 'Dividends on securities sold not
yet purchased'.
Loans and receivables are carried at amortised cost using the
effective interest method less any allowance for impairment. Gains
and losses are recognised in profit or loss when the loans and
receivables are derecognised or impaired, as well as through the
amortisation process.
Financial liabilities, other than those classified as at fair
value through profit or loss, are measured at amortised cost using
the effective interest method. Gains and losses are recognised in
profit or loss when the liabilities are derecognised, as well as
through the amortisation process.
The effective interest method is a method of calculating the
amortised cost of a financial asset or a financial liability and of
allocating the interest income or interest expense over the
relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash payments or receipts
through the expected life of the financial instrument or, when
appropriate, a shorter period to the net carrying amount of the
financial asset or financial liability. When calculating the
effective interest rate, the Group estimates cash flows considering
all contractual terms of the financial instruments, but does not
consider future credit losses. The calculation includes all fees
paid or received between parties to the contract that are an
integral part of the effective interest rate, transaction costs and
all other premiums or discounts.
(v) Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
derecognised where:
-- The rights to receive cash flows from the asset have expired; or
-- The Group has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a
'pass-through' arrangement; and
Either (a) the Group has transferred substantially all the risks
and rewards of the asset, or (b) the Group has neither transferred
nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows
from an asset (or has entered into a pass-through arrangement), and
has neither transferred nor retained substantially all the risks
and rewards of the asset nor transferred control of the asset, the
asset is recognised to the extent of the Group's continuing
involvement in the asset.
The Group derecognises a financial liability when the obligation
under the liability is discharged, cancelled or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or
loss.
Determination of fair value
The Group measures its investments in financial instruments at
fair value at each reporting date.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measured is based on the presumption that the transaction to sell
the asset or transfer the liability takes place either in the
principal market for the asset or liability or, in the absence of a
principal market, in the most advantageous market for the asset or
liability. The principal or the most advantageous market must be
accessible to the Group.
The fair value for financial instruments traded in active
markets at the reporting date is based on their quoted price or
binding dealer price quotations, without any deduction for
transaction costs.
Where the Group has assets and liabilities with offsetting
market risks, it uses mid-market prices as a basis for establishing
fair values for the offsetting risk positions and applies the bid
or ask price to the net open position as appropriate.
For all other financial instruments not traded in an active
market, the fair value is determined by using appropriate valuation
techniques. Valuation techniques include: using recent arm's length
market transactions; reference to the current market value of
another instrument that is substantially the same; discounted cash
flow analysis and option pricing models making as much use of
available and supportable market data as possible. An analysis of
fair values of financial instruments and further details as to how
they are measured is provided in Note 5.
The Group uses the following hierarchy for determining and
disclosing the fair value of the financial instruments by valuation
technique:
-- Level 1: quoted (unadjusted) market prices in active markets
for identical assets and liabilities.
-- Level 2: Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable.
-- Level 3: Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.
Impairment of financial assets
The Group assesses at each reporting date whether a financial
asset or group of financial assets classified as loans and
receivables is impaired. A financial asset or a group of financial
assets is deemed to be impaired if, and only if, there is an
objective evidence of impairment as a result of one or more events
that have occurred after the initial recognition of the asset (an
incurred 'loss event') and that loss event has an impact on the
estimated future cash flows of the financial asset or the group of
financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtor,
or a group of debtors, is experiencing significant financial
difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other
financial reorganisation and, where observable data indicate that
there is a measurable decrease in the estimated future cash flows,
such as changes in arrears or economic conditions that correlate
with defaults. If there is objective evidence that an impairment
loss has been incurred, the amount of the loss is measured as the
difference between the asset's carrying amount and the present
value of estimated future cash flows (excluding future expected
credit losses that have not yet been incurred) discounted using the
asset's original effective interest rate. The carrying amount of
the asset is reduced through the use of an allowance account and
the amount of the loss is recognised in profit or loss as 'Credit
loss expense'.
Impaired debts, together with the associated allowance, are
written off when there is no realistic prospect of future recovery
and all collateral has been realised or has been transferred to the
Group.
Interest revenue on impaired financial assets is recognised
using the rate of interest used to discount the future cash flows
for the purpose of measuring the impairment loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the
net amount reported in the statement of financial position if, and
only if, there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on a net
basis, or to realise the asset and settle the liability
simultaneously.
Net gain or loss on financial assets and liabilities at fair
value through profit or loss
This item includes changes in the fair value of financial assets
and liabilities held for trading or designated upon initial
recognition as 'at fair value through profit or loss' and excludes
interest and dividend income and expenses.
Unrealised gains and losses comprise changes in the fair value
of financial instruments for the period and from reversal of prior
period's unrealised gains and losses for financial instruments
which were realised in the reporting period.
Realised gains and losses on disposals of financial instruments
classified as 'at fair value through profit or loss' are calculated
using the Average Cost (AVCO) method. They represent the difference
between an instrument's initial carrying amount and disposal
amount, or cash payments or receipts made on derivative contracts
(excluding payments or receipts on collateral margin accounts for
such instruments).
Due to and due from brokers
Amounts due to brokers are payables for securities purchased (in
a regular way transaction) that have been contracted for but not
yet delivered on the reporting date. Refer to the accounting policy
for 'financial liabilities, other than those classified as at fair
value through profit or loss' for recognition and measurement.
Amounts due from brokers include margin accounts and receivables
for securities sold (in a regular way transaction) that have been
contracted for but not yet delivered on the reporting date. Refer
to accounting policy for 'loans and receivables' for recognition
and measurement.
Shares that impose on the Company, an obligation to deliver to
shareholders a pro-rata share of the net asset of the Company on
liquidation classified as financial liabilities
The shares are classified as equity if those shares have all the
following features:
(a) It entitles the holder to a pro rata share of the Company's
net assets in the event of the Company's liquidation.
The Company's net assets are those assets that remain after
deducting all other claims on its assets. A pro rata share is
determined by:
(i) dividing the net assets of the Company on liquidation into units of equal amount; and
(ii) multiplying that amount by the number of the shares held by the shareholder.
(b) The shares are in the class of instruments that is
subordinate to all other classes of instruments. To be in such a
class the instrument:
(i) has no priority over other claims to the assets of the Company on liquidation, and
(ii) does not need to be converted into another instrument
before it is in the class of instruments that is subordinate to all
other classes of instruments.
(c) All shares in the class of instruments that is subordinate
to all other classes of instruments must have an identical
contractual obligation for the issuing Company to deliver a pro
rata share of its net assets on liquidation.
In addition to the above, the Company must have no other
financial instrument or contract that has:
(a) total cash flows based substantially on the profit or loss,
the change in the recognised net assets or the change in the fair
value of the recognised and unrecognised net assets of the Company
(excluding any effects of such instrument or contract) and
(b) the effect of substantially restricting or fixing the residual return to the shareholders.
The shares that meet the requirements to be classified as a
financial liability have been designated as at fair value through
profit or loss on initial recognition.
The movement in fair value is shown in the statement of
comprehensive income as an 'Increase or decrease in net assets
attributable to shareholders'.
Distributions to shareholders whose shares are classified as
financial liabilities
Distributions to shareholders are recognised in the statement of
comprehensive income as finance costs.
Interest revenue and expense
Interest revenue and expense are recognised in profit or loss
for all interest-bearing financial instruments using the effective
interest method.
Dividend revenue and expense
Dividend revenue is recognised when the Group's right to receive
the payment is established. Dividend revenue is presented gross of
any non-recoverable withholding taxes, which are disclosed
separately in profit or loss. Dividend expense relating to equity
securities sold short is recognised when the shareholders' right to
receive the payment is established.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank. Cash
equivalents are short term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of change in value.
3. CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
The accounting policies adopted are consistent with those of the
previous financial year which included the following new and
amended IFRS and IFRIC interpretations adopted in the year
commencing 1 January 2015:
Effective
for accounting
Amendments period beginning
on or after
Defined Benefit Plans: Employee Contributions 1 July 2014
(Amendments to IAS 19)
Annual Improvements 2010-2012 Cycle 1 July 2014
Annual Improvements 2011-2013 Cycle 1 July 2014
Where the adoption of the standard or interpretation or
improvement is deemed to have an impact on the financial statements
or performance of the Group, its impact is described below:
Amendments to IAS 19 Defined Benefit Plans: Employee
Contributions - effective 1 July 2014
IAS 19 requires an entity to consider contributions from
employees or third parties when accounting for defined benefit
plans. Where the contributions are linked to service, they should
be attributed to periods of service as a negative benefit. These
amendments clarify that, if the amount of the contributions is
independent of the number of years of service, an entity is
permitted to recognise such contributions as a reduction in the
service cost in the period in which the service is rendered,
instead of allocating the contributions to the periods of service.
This amendment is effective for annual periods beginning on or
after 1 July 2014.
This amendment had no impact on the financial position of the
Fund's financial statements.
Annual Improvements 2010-2012 Cycle and Annual Improvements
2011-2013 Cycle
Effective for accounting period
beginning on or after
Annual Improvements 2010-2012 Cycle
IFRS 2 Share-based Payment 1 July 2014
IFRS 3 Business Combinations 1 July 2014
IFRS 8 Operating Segments 1 July 2014
IAS 16 Property, Plant and Equipment 1 July 2014
IAS 24 Related Party Disclosures 1 July 2014
Annual Improvements 2011-2013 Cycle
IFRS 3 Business Combinations 1 July 2014
IFRS 13 Fair Value Measurement 1 July 2014
IAS 40 Investment Property 1 July 2014
Where the adoption of the standard or interpretation or
improvement is deemed to have an impact on the financial statements
or performance of the Fund, its impact is described below:
IFRS 3 Business Combinations
The amendment is applied prospectively and clarifies that all
contingent consideration arrangements classified as liabilities (or
assets) arising from a business combination should be subsequently
measured at fair value through profit or loss whether or not they
fall within the scope of IAS 39.
This amendment did not have any impact on the Fund.
IFRS 8 Operating Segments
The amendments are applied retrospectively and clarify that:
-- An entity must disclose the judgements made by management in
applying the aggregation criteria in paragraph 12 of IFRS 8,
including a brief description of operating segments that have been
aggregated and the economic characteristics (e.g., sales and gross
margins) used to assess whether the segments are 'similar'; and
-- The reconciliation of segment assets to total assets is only
required to be disclosed if the reconciliation is reported to the
chief operating decision maker, similar to the required disclosure
for segment liabilities.
This amendment did not impact the Fund's accounting policy as
the Fund is organised in one main operating segment which invests
in equity securities and relative derivatives.
Annual Improvements 2010-2012 Cycle and Annual Improvements
2011-2013 Cycle
IAS 16 Property, Plant and Equipment and IAS 38 Intangible
Assets
The amendment is applied retrospectively and clarifies in IAS 16
and IAS 38 that the asset may be revalued by reference to
observable data by either adjusting the gross carrying amount of
the asset to market value or by determining the market value of the
carrying value and adjusting the gross carrying amount
proportionately so that the resulting carrying amount equals the
market value. In addition, the accumulated depreciation or
amortisation is the difference between the gross and carrying
amounts of the asset.
This amendment did not have any impact the Fund during the
current period as the Fund does not have such type of assets.
IAS 24 Related Party Disclosures
The amendment is applied retrospectively and clarifies that a
management entity (an entity that provides key management personnel
services) is a related party subject to the related party
disclosures. In addition, an entity that uses a management entity
is required to disclose the expenses incurred for management
services.
Additional disclosures have been made in the financial
statements of the Fund to cater for these amendments. (Refer to
note 14)
Annual Improvements 2011-2013 Cycle
These improvements are effective from 1 July 2014 and the Fund
has applied these amendments for the first time in these interim
condensed consolidated financial statements. They include:
IFRS 3 Business Combinations
The amendment is applied prospectively and clarifies for the
scope exceptions within IFRS 3 that:
-- Joint arrangements, not just joint ventures, are outside the scope of IFRS 3; and
-- This scope exception applies only to the accounting in the
financial statements of the joint arrangement itself.
The Fund has not entered into a joint arrangement, and thus this
amendment is not relevant for the Fund.
IFRS 13 Fair Value Measurement
The amendment is applied prospectively and clarifies that the
portfolio exception in IFRS 13 can be applied not only to financial
assets and financial liabilities, but also to other contracts
within the scope of IAS 39.
Annual Improvements 2011-2013 Cycle (Continued)
IAS 40 Investment Property
The description of ancillary services in IAS 40 differentiates
between investment property and owner-occupied property (i.e.,
property, plant and equipment). The amendment is applied
prospectively and clarifies that IFRS 3, and not the description of
ancillary services in IAS 40, is used to determine if the
transaction is the purchase of an asset or a business combination.
This amendment does not have any impact as the Fund does not hold
any investment property.
3.1 STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE
The standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the Fund's
financial statements are disclosed below. They are mandatory for
accounting periods beginning on the specified dates, but the Fund
has not early adopted them:
Effective for accounting
period beginning on
or after
IFRS 9 Financial Instruments 1 January 2018
Sale or contribution of assets 1 January 2016
between an investor and its associate
or joint venture (Amendments to
IFRS 10 and IAS 28)
Investment Entities: Applying the 1 January 2016
Consolidation Exception (Amendments
to IFRS 10, IFRS 12 and IAS 28)
IFRS 14 Regulatory Deferral Accounts 1 January 2016
IFRS 15 Revenue from Contracts 1 January 2018
with Customers
IFRS 16 Leases 1 January 2019
Accounting for Acquisitions of 1 January 2016
Interests in Joint Operations (Amendments
to IFRS 11)
Clarification of Acceptable Methods 1 January 2016
of Depreciation and Amortisation
(Amendments to IAS 16 and IAS 38)
Agriculture: Bearer Plants (Amendments 1 January 2016
to IAS 16 and IAS 41)
Amendments to IAS 27: Equity Method 1 January 2016
in Separate Financial Statement
Annual improvements 2012 - 2014 1 January 2016
Cycle
Disclosure initiative - Amendments 1 January 2016
to IAS 1
IFRS 9 Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9
Financial Instruments that replaces IAS 39 Financial Instruments:
Recognition and Measurement and all previous versions of IFRS 9.
IFRS 9 brings together all three aspects of the accounting for
financial instruments project: classification and measurement,
impairment and hedge accounting. IFRS 9 is effective for annual
periods beginning on or after 1 January 2018, with early
application permitted. Except for hedge accounting, retrospective
application is required but providing comparative information is
not compulsory. For hedge accounting, the requirements are
generally applied prospectively, with some limited exceptions.
IFRS 9 Financial Instruments - Classification and measurement of
financial assets, Accounting for financial liabilities and
derecognition - 1 January 2018
Classification and measurement of financial liabilities
For financial liabilities designated as FVTPL using the FVO, the
amount of change in the fair value of such financial liabilities
that is attributable to changes in credit risk must be presented in
OCI. The remainder of the change in fair value is presented in
profit or loss, unless presentation of the fair value change in
respect of the liability's credit risk in OCI would create or
enlarge an accounting mismatch in profit or loss. All other IAS 39
Financial Instruments: Recognition and Measurement classification
and measurement requirements for financial liabilities have been
carried forward into IFRS 9, including the embedded derivative
separation rules and the criteria for using the FVO.
Impairment
The impairment requirements are based on an expected credit loss
(ECL) model that replaces the IAS 39 incurred loss model. The ECL
model applies to: debt instruments accounted for at amortised cost
or at FVOCI; most loan commitments; financial guarantee contracts;
contract assets under IFRS 15; and lease receivables under IAS 17
Leases. Entities are generally required to recognise either
12-months' or lifetime ECL, depending on whether there has been a
significant increase in credit risk since initial recognition (or
when the commitment or guarantee was entered into). For some trade
receivables, the simplified approach may be applied whereby the
lifetime expected credit losses are always recognised.
Hedge accounting
Hedge effectiveness testing is prospective, without the 80% to
125% bright line test in IAS 39, and, depending on the hedge
complexity, can be qualitative. A risk component of a financial or
non-financial instrument may be designated as the hedged item if
the risk component is separately identifiable and reliably
measureable. The time value of an option, any forward element of a
forward contract and any foreign currency basis spread, can be
excluded from the designation as the hedging instrument and
accounted for as costs of hedging. More designations of groups of
items as the hedged item are possible, including layer designations
and some net positions.
The application of IFRS 9 may change the measurement and
presentation of many financial instruments, depending on their
contractual cash flows and business model under which they are
held. The impairment requirements will generally result in earlier
recognition of credit losses. The new hedging model may lead to
more economic hedging strategies meeting the requirements for hedge
accounting.
The Directors are assessing the impact of this new standard.
Sale or contribution of assets between an investor and its
associate or joint venture (Amendments to IFRS 10 and IAS 28) -
effective 1 January 2016
This amendment to IFRS 10 Consolidated Financial Statements and
IAS 28 Investments in Associates and Joint Ventures (2011) was made
to clarify the treatment of the sale or contribution of assets from
an investor to its associate or joint venture, as follows:
-- it requires full recognition in the investor's financial
statements of gains and losses arising on the sale or contribution
of assets that constitute a business (as defined in IFRS 3 Business
Combinations); and
-- it requires the partial recognition of gains and losses where
the assets do not constitute a business, i.e. a gain or loss is
recognised only to the extent of the unrelated investors' interests
in that associate or joint venture.
These requirements apply regardless of the legal form of the
transaction, e.g. whether the sale or contribution of assets occurs
by an investor transferring shares in a subsidiary that holds the
assets (resulting in loss of control of the subsidiary), or by the
direct sale of the assets themselves.
The amendment will not have an impact on the Fund as it does not
have any associate or joint venture.
Investment Entities: Applying the Consolidation Exception
(Amendments to IFRS 10, IFRS 12 and IAS 28) - effective 1 January
2016
This amendment to IFRS 10 Consolidated Financial Statements,
IFRS 12 Disclosure of Interests in Other Entities and IAS 28
Investments in Associates and Joint Ventures (2011) was made to
address issues that have arisen in the context of applying the
consolidation exception for investment entities by clarifying the
following points:
-- The exemption from preparing consolidated financial
statements for an intermediate parent entity is available to a
parent entity that is a subsidiary of an investment entity, even if
the investment entity measures all of its subsidiaries at fair
value.
-- A subsidiary that provides services related to the parent's
investment activities should not be consolidated if the subsidiary
itself is an investment entity.
-- When applying the equity method to an associate or a joint
venture, a non-investment entity investor in an investment entity
may retain the fair value measurement applied by the associate or
joint venture to its interests in subsidiaries.
-- An investment entity measuring all of its subsidiaries at
fair value provides the disclosures relating to investment entities
required by IFRS 12.
The amendment will not have an impact on the Fund as it is not
considered as an Investment entity.
IFRS 14 Regulatory Deferral Accounts - effective 1 January
2016
IFRS 14 permits an entity which is a first-time adopter of
International Financial Reporting Standards to continue to account,
with some limited changes, for 'regulatory deferral account
balances' in accordance with its previous GAAP, both on initial
adoption of IFRS and in subsequent financial statements.
This new standard will not have an impact, as the Fund is not a
first time adopter of IFRS.
IFRS 15 Revenue from Contracts with Customers - effective 1
January 2018
IFRS 15 provides a single, principles based five-step model to
be applied to all contracts with customers.
The five steps in the model are as follows:
-- Identify the contract with the customer;
-- Identify the performance obligations in the contract;
-- Determine the transaction price;
-- Allocate the transaction price to the performance obligations in the contracts; and
-- Recognise revenue when (or as) the entity satisfies a performance obligation.
Guidance is provided on topics such as the point in which
revenue is recognised, accounting for variable consideration, costs
of fulfilling and obtaining a contract and various related matters.
New disclosures about revenue are also introduced.
This new standard will not have an impact on the Fund as the
sources of income of the fund, being dividends and interest, are
scoped out of IFRS 15.
IFRS 16 Leases - effective 1 January 2019
The IASB has redrafted this new leasing standard that would
require lessees to recognise assets and liabilities for most
leases. Lessees applying IFRS would have a single recognition and
measurement model for all leases (with certain exemptions). Lessors
applying IFRS would classify leases using the principle in IAS 17;
in essence, lessor accounting would not change.
This standard will not have an impact on the Fund as it does not
have any leases.
Accounting for Acquisitions of Interests in Joint Operations
(Amendments to IFRS 11) - effective 1 January 2016
Amends IFRS 11 Joint Arrangements to require an acquirer of an
interest in a joint operation in which the activity constitutes a
business (as defined in IFRS 3 Business Combinations) to:
-- Apply all of the business combinations accounting principles
in IFRS 3 and other IFRSs, except for those principles that
conflict with the guidance in IFRS 11; and
-- Disclose the information required by IFRS 3 and other IFRSs for business combinations.
The amendments apply both to the initial acquisition of an
interest in joint operation, and the acquisition of an additional
interest in a joint operation (in the latter case, previously held
interests are not remeasured).
The amendment will not have an impact since the Fund does not
have any interests in joint operations.
Clarification of Acceptable Methods of Depreciation and
Amortisation (Amendments to IAS 16 and IAS 38) - effective 1
January 2016
Amends IAS 16 Property, Plant and Equipment and IAS 38
Intangible Assets to:
-- Clarify that a depreciation method that is based on revenue
that is generated by an activity that includes the use of an asset
is not appropriate for property, plant and equipment;
-- Introduce a rebuttable presumption that an amortisation
method that is based on the revenue generated by an activity that
includes the use of an intangible asset is inappropriate, which can
only be overcome in limited circumstances where the intangible
asset is expressed as a measure of revenue, or when it can be
demonstrated that revenue and the consumption of the economic
benefits of the intangible asset are highly correlated; and
-- Add guidance that expected future reductions in the selling
price of an item that was produced using an asset could indicate
the expectation of technological or commercial obsolescence of the
asset, which, in turn, might reflect a reduction of the future
economic benefits embodied in the asset.
The amendment will not have an impact since the Fund does not
hold any property, plant and equipment.
Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) -
effective 1 January 2016
Amends IAS 16 Property, Plant and Equipment and IAS 41
Agriculture to:
-- Include 'bearer plants' within the scope of IAS 16 rather
than IAS 41, allowing such assets to be accounted for a property,
plant and equipment and measured after initial recognition on a
cost or revaluation basis in accordance with IAS 16;
-- Introduce a definition of 'bearer plants' as a living plant
that is used in the production or supply of agricultural produce,
is expected to bear produce for more than one period and has a
remote likelihood of being sold as agricultural produce, except for
incidental scrap sales; and
-- Clarify that produce growing on bearer plants remains within the scope of IAS 41.
The amendment will not have an impact as the Fund does not hold
any property, plant and equipment.
Amendments to IAS 27: Equity Method in Separate Financial
Statements - 1 January 2016
The amendments will allow entities to use the equity method to
account for investments in subsidiaries, joint ventures and
associates in their separate financial statements. Entities already
applying IFRS and electing to change to the equity method in its
separate financial statements will have to apply that change
retrospectively.
For first-time adopters of IFRS electing to use the equity
method in its separate financial statements, they will be required
to apply this method from the date of transition to IFRS. The
amendments are effective for annual periods beginning on or after 1
January 2016, with early adoption permitted.
This amendment will not have an impact on the Fund as it does
not hold investment in subsidiaries.
Annual Improvements 2012 - 2014 Cycle - 1 July 2016
The following amendments were made to these standards:
-- IFRS 5 - Adds specific guidance in IFRS 5 for cases in which
an entity reclassifies an asset from held for sale to held for
distribution or vice versa and cases in which held-for-distribution
accounting is discontinued
-- IFRS 7 - Additional guidance to clarify whether a servicing
contract is continuing involvement in a transferred asset, and
clarification on offsetting disclosures in condensed interim
financial statements
-- IAS 9 - Clarify that the high quality corporate bonds used in
estimating the discount rate for post-employment benefits should be
denominated in the same currency as the benefits to be paid
-- IAS 34 - Clarify the meaning of 'elsewhere in the interim
report' and require a cross-reference
The Fund is still evaluating the effect of these new or revised
standards and interpretations on the presentation of its financial
statements.
No early adoption is intended by the Board of directors.
4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Group's financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts recognised in the financial statements
and disclosure of contingent liabilities. However, uncertainty
about these assumptions and estimates could result in outcomes that
could require a material adjustment to the carrying amount of the
asset or liability affected in future periods.
Judgements
In the process of applying the Group's accounting policies,
management has made the following judgements, which have the most
significant effect on the amounts recognised in the financial
statements:
Going concern
The Group's management has made an assessment of the Group's
ability to continue as a going concern and is satisfied that the
Company has the resources to continue in business for the
foreseeable future. Furthermore, management is not aware of any
material uncertainties that may cast significant doubt upon the
Group's ability to continue as a going concern. Therefore, the
financial statements continue to be prepared on the going concern
basis.
Determination of functional currency
The determination of the functional currency of the Group is
critical since recording of transactions and exchange differences
arising thereon are dependent on the functional currency selected.
As described in Note 2, the directors have considered those factors
therein and have determined that the functional currency of the
Company is the United States Dollar.
Assessment for not being an investment entity
The Company does not meet the definition of an investment entity
as it does not measure and evaluate the performance of
substantially all of its investments on a fair value basis; for
example, Company's investment in Triton Resources Inc. has been
recorded at cost at year end as their fair value cannot be measured
reliably (refer to note 5).
Estimates and assumptions
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below. The Group based its assumptions and estimates
on parameters available when the financial statements were
prepared. However, existing circumstances and assumptions about
future developments may change due to market changes or
circumstances arising beyond the control of the Group. Such changes
are reflected in the assumptions when they occur.
Fair value of financial instruments
When the fair value of financial assets and financial
liabilities recorded in the statement of financial position cannot
be derived from active markets, their fair value is determined
using a variety of valuation techniques that include the use of
mathematical models. The inputs to these models are taken from
observable markets where possible, but where this is not feasible,
estimation is required in establishing fair values. The estimates
include considerations of liquidity and model inputs such as credit
risk (both own and counterparty's), correlation and volatility.
Changes in assumptions about these factors could affect the
reported fair value of financial instruments in the statement of
financial position and the level where the instruments are
disclosed in the fair value hierarchy. The models are calibrated
regularly and tested for validity using prices from any observable
current market transactions in the same instrument (without
modification or repackaging) or based on any available observable
market data. An analysis of fair values of financial instruments
and further details as to how they are measured is provided in Note
5.
IFRS 13 requires disclosures relating to fair value measurements
using a three-level fair value hierarchy. The level within which
the fair value measurement is categorised in its entirety is
determined on the basis of the lowest level input that is
significant to the fair value measurement in its entirety as
provided in Note 5.
Assessing the significance of a particular input requires
judgement, considering factors specific to the asset or liability.
To assess the significance of a particular input to the entire
measurement, the Group performs sensitivity analysis or stress
testing techniques.
Investment in Shoprite Holdings (SHP ZL)
The Company (through its subsidiary Africa Opportunity Fund L.P)
has a significant position of 6.6% of NAV (30 June 2015: 8.8%) in
Shoprite Holdings (SHP ZL) ("Shoprite") on the Zambian Register.
The value of the investment as at 30 June 2016 amounted to USD
4,114,051 (30 June 2015: USD 5,696,008) and the original cost of
the investment was USD 3,639,685(2015: USD 3,639,685). Shoprite has
conveyed its intention to seek to reverse certain trades made on
the Lusaka Stock Exchange. To date, the filing to the courts made
by Shoprite against the Company (through the custodian as nominee
on behalf of the fund) has been dismissed as an abuse of Process of
Court on account of multiplicity of action with costs awarded to
the defendants. The multiplicity of action refers to an existing
case in a separate jurisdiction that has been filed by Shoprite
against its agent and transfer agent Messrs Lewis Nathan Advocates.
Shoprite appealed the decision. A consent court order was issued in
October 2014 consolidating all the actions. Shoprite issued a
consolidated writ of summons in March 2015 seeking to reverse
trades for 438,743 Shoprite shares out of AOF's holding of 679,145
Shoprite shares. Management has fair valued the investment in
Shoprite at the price prevailing on the Lusaka stock exchange.
Additionally, Shoprite has been placing dividend payments into
escrow rather than distributing these amounts to shareholders.
These dividends are reflected as a receivable amounting to USD
510,059 (2015: USD 608,819) in the Group's assets. The change in
dividends receivable from 2015 to 2016 is principally a result of
changes in the exchange rate of the South African Rand and the
United States Dollar.
Management has assessed these facts and consulted with their
legal advisors, who consider such action by Shoprite to be devoid
of merit. Therefore, management believes that the correct judgement
is to continue to account for the investment at fair value and
accrue for the dividends on this investment.
5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
5(a). FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 30 June
2016 2015
------------ ------------
USD USD
Held for trading financial
assets:
At 1 January 60,819,532 63,822,689
Additions 8,927,171 11,868,641
Disposal (4,289,065) (7,412,769)
Net gains/(losses) on financial
assets at fair value through
profit or loss 2,004,362 (4,300,605)
------------ ------------
At 30 June (at fair value) 67,462,000 63,977,956
Analysed as follows:
- Listed equity securities 48,382,357 51,923,304
- Listed debt securities 16,428,393 1,000,012
- Unlisted equity securities 1,001,250 10,804,640
- Unlisted debt securities 1,650,000 250,000
------------ ------------
67,462,000 63,977,956
============ ============
Net changes on fair value
of financial assets at fair
value through profit or
loss
30 June 30 June
2016 2015
------------ ------------
USD USD
Realised (173,999) (1,593,187)
Unrealised 2,178,361 (2,707,418)
------------ ------------
Total gains/(losses) 2,004,362 (4,300,605)
------------ ------------
5(b). FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 30 June
2016 2015
------------ ----------
USD USD
Held for trading financial liabilities:
Contracts for differences 585 -
Written call options 24,208 -
Written put options 29,250 -
Listed equity put securities sold
short 4,158,688 7,738,011
------------ ----------
Financial liabilities at fair
value through profit or loss 4,212,731 7,738,011
============ ==========
Net changes on fair value of financial
liabilities at fair value through profit
or loss
30 June 30 June
2016 2015
------------ ----------
USD USD
Realised 2,211,041 (745,483)
Unrealised (3,233,022) (96,153)
------------ ----------
Total losses (1,021,981) (841,636)
============ ==========
5 (c) Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of the financial instruments by valuation
technique:
Level 1: quoted (unadjusted) market prices in active markets for
identical assets and liabilities.
Level 2: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
Level 3: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable.
Recurring fair value measurement of assets and liabilities -
2016
30 June
Level Level Level
2016 1 2 3
------------- ----------- ------------ ---------------
USD USD USD USD
Financial assets at
fair value through
profit or loss:
Equities* 49,280,870 48,279,620 - 1,001,250
Debt securities* 18,078,393 - 18,078,393 -
Contract for Difference 102,737 - 102,737 -
------------- ----------- ------------ ---------------
67,462,000 48,279,620 18,181,130 1,001,250
============= =========== ============ ===============
Financial liabilities at fair value
through profit or loss:
Short sellings 4,212,146 4,158,688 53,458 -
Contract for Difference 585 - 585 -
------------- ----------- ------------ -------------
4,212,731 4,158,688 54,043 -
============= =========== ============ ===============
Recurring fair value measurement of assets and liabilities -
2015
30 June
Level Level Level
2015 1 2 3
USD USD USD USD
Financial assets at fair value
through profit or loss:
Equities* 52,923,316 46,227,296 6,696,020 -
Debt securities* 11,054,640 - 10,053,390 1,001,250
63,977,956 46,227,296 16,749,410 1,001,250
============ =========== =========== ==========
Financial liabilities at
fair value through profit
or loss:
Short sellings 7,738,011 7,738,011 - -
----------- ----------- ----------- -----------
7,738,011 7,738,011 - -
=========== =========== =========== ===========
* The investment in Triton in the aggregate of $1,351,250 and
$1,001,250, at 30 June 2016 and 30 June 2015, respectively, is
being carried at cost.
6. TRADE AND OTHER RECEIVABLES
30 June 2016 30 June 2015
USD USD
Interest receivable
on bonds 480,746 177,715
Dividend receivable 510,059 727,479
Other receivable 71,206 491,677
------------- -------------
1,062,011 1,396,871
============= =============
The receivables include dividends receivable from Shoprite
Holdings, see note 4. Interests receivable on bonds are due within
six months.
7. NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS
30 June 30 June 30 June 30 June
2016 2016 2015 2015
-------------- ------------ -------------- -----------
Number USD Number USD
Authorized share
capital
Ordinary shares with a
par value USD 0.01 1,000,000,000 10,000,000 1,000,000,000 10,000,000
============== ============ ============== ===========
Number Class
of Ordinary C
units Shares Shares Total
----------- -------------- ------------ --------------
USD USD USD
At 1 January 2016 71,830,327 37,287,967 23,967,446 61,255,413
Changes during
the period:
Gain for Period - 976,705 (54,372) 922,333
----------- -------------- ------------ --------------
At 30 June 2016 71,830,327 38,264,672 23,913,074 62,177,746
=========== ============== ============ ==============
Net asset value
per share
30 June 2016 0.8976 0.8189
Number Class
of Ordinary C
units Shares Shares Total
----------- -------------- ------------ --------------
USD USD USD
At 1 January 2015 71,830,327 43,099,112 26,636,068 69,735,180
Changes during
the period:
Gain for Period - (3,761,089) (1,449,380) (5,210,469)
----------- -------------- ------------ --------------
At 30 June 2015 71,830,327 39,338,023 25,186,688 64,524,711
=========== ============== ============ ==============
Net asset value
per share
30 June 2015 0.9228 0.8626
C shares
AOF closed a placing of 29.2 million C shares of US$0.10 each at
a placing price of US$1.00 per C share, raising a total of $29.2
million before the expenses of the issue. The placing was closed on
11 April 2014 with the shares commencing trading on 17 April
2014.
AOF's Ordinary Shares and the C Shares from the April placing
were admitted to trading on the LSE's Specialist Fund Segment
("SFS") effective 17 April 2014. Simultaneous with the listing on
the SFS, the Ordinary shares were cancelled from admission to
trading on the AIM.
C Shares are a transient class of shares: the assets
representing the net proceeds of any issue of C Shares will be
maintained, managed and accounted for as a separate pool of capital
of the Company until those C Shares convert into Ordinary Shares
(which will occur once 85 per cent. of all of the assets
representing the net placing proceeds (aggregate placing price less
the applicable fees and expenses of the placing) have been invested
in accordance with the Company's existing investment policy (or, if
earlier, six months after the date of issue of the C Shares)).
Under the Articles the Directors have discretion to make such
adjustments to the timing of conversion as they consider reasonable
having regard to the interests of all Shareholders. In this regard,
although conversion was anticipated to occur no later than six
months after Admission, the Directors considered it is in the best
interests of all Shareholders (being at that time Ordinary
Shareholders and C Shareholders) to extend the conversion date
beyond the six month period as the Shoprite case was still
unresolved as at year end. On such conversion, each holder of C
Shares will receive such number of Ordinary Shares as equals the
number of C Shares held by them multiplied by the Net Asset Value
per C Share and divided by the Net Asset Value per Ordinary Share
(subject to a discount of 5 per cent.), in each case as at a date
shortly prior to conversion. As at 30 June 2016, the dispute with
Shoprite is still unresolved and the conversion has not yet been
made.
The Company does not have a fixed life but, as stated in the
Company's admission document published in 2007, the Directors
consider it desirable that shareholders should have the opportunity
to review the future of the Company at appropriate intervals.
Accordingly, Shareholders passed an ordinary resolution at an
extraordinary general meeting of the Company on 28 February 2014
that the Company continues in existence.
In 2019, the Directors will convene another general meeting
where an ordinary resolution will be proposed that the Company will
continue in existence. If the resolution is not passed, the
Directors will be required to formulate proposals to be put to
Shareholders to reorganise, reconstruct or wind up the Company. If
the resolution is passed, the Company will continue its operations
and a similar resolution will be put to shareholders every five
years thereafter.
At the same time as the continuation vote in 2019, the Company
will provide shareholders with, without first requiring a
Shareholder vote to implement this policy, an opportunity to
realise all or part of their shareholding in the Company for a net
realised pro rata share of the Company's investment portfolio.
The directors have the discretion to defer the conversion
indefinitely. Hence, there could be two classes of shares (the
Ordinary and the C Class shares) that could be realised in a forced
liquidation by the shareholders, and then the requirements of IAS
32.16C and 16D would need to be applied to both classes. Due to the
fact that there are two separate pools of assets and liabilities
attributable to the C Class and Ordinary shareholders respectively,
the requirements of IAS 32.16C(a) would not be met. Therefore both
the classes have been classified as financial liabilities as from
April 17, 2014 upon issuance of the C shares.
8. AMOUNT DUE TO BROKER
30 June 2016 30 June 2015
USD USD
Amount due to broker 1,021,836 -
============= =============
The Amount due to broker represents the bank facility in place
for trades in excess of the cash available, also referred to as
margin, provided by the Prime Broker.
9. TRADE AND OTHER PAYABLES
30 June 2016 30 June 2015
USD USD
Accrued expenses 797,856 107,568
Other payables - 196,280
------------- -------------
-
797,856 303,848
============= =============
Accrued expenses as at 30 June 2016 include Management Fees
payable of USD 554,800. Other payables are non-interest bearing and
are due on demand. Other payables consisted of trades not yet
settled as at 30 June 2016 and amounted to USD Nil (2015: USD
198,280).
10. ANALYSIS OF NET ASSETS AND SHARE OF PROFIT AND LOSSES
ATTRIBUTABLE TO ORDINARY SHARE AND C SHARES
10 (a) STATEMENT OF FINANCIAL POSITION
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Ordinary
shares C Shares
USD USD
ASSETS
Financial assets at fair
value through profit or
loss 42,231,751 25,230,249
Trade and other receivables 868,377 193,634
Cash and cash equivalents - -
----------- -----------
Total assets 43,100,128 25,423,883
=========== ===========
Equity AND LIABILITIES
Liabilities
Financial liabilities
at fair value through
profit or loss 2,129,575 2,083,156
Trade and other payables 491,542 306,314
Bank facility 1,900,497 (878,661)
----------- -----------
Total liabilities 4,521,614 1,510,809
----------- -----------
Equity
Non-controlling interest 313,842 -
----------- -----------
Total equity 313,842 -
----------- -----------
Total equity and liabilities 38,264,672 23,913,074
=========== ===========
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
Ordinary
shares C Shares
USD USD
ASSETS
Financial assets at fair
value through profit or
loss 39,091,093 24,886,863
Trade and other receivables 1,126,947 269,924
Cash and cash equivalents 3,818,319 3,687,838
----------- -----------
Total assets 44,036,359 28,844,625
=========== ===========
Equity AND LIABILITIES
Liabilities
Financial liabilities
at fair value through
profit or loss 4,363,343 3,374,668
Trade and other payables 20,579 283,269
Total liabilities 4,383,922 3,657,937
----------- -----------
Equity
Non-controlling interest 314,414 -
----------- -----------
Total equity 314,414 -
----------- -----------
Total equity and liabilities 39,338,023 25,186,688
=========== ===========
10 (b) STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE PERIODED 30 JUNE 2016
Ordinary
shares C shares
USD USD
Revenue
Income 1,212,919 620,014
Net gains/(losses) on financial
assets at fair value through
profit or loss 999,053 (16,672)
---------- ---------
2,211,972 603,342
---------- ---------
Expenses
Management fees 343,007 211,843
Net foreign exchange loss 485,460 236,834
Other expenses 396,081 206,980
---------- ---------
1,224,548 655,657
---------- ---------
Loss before taxation 987,424 (52,315)
========== =========
Taxation (3,273) (2,057)
---------- ---------
Total comprehensive income for
the period 984,151 (54,372)
========== =========
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE PERIODED 30 JUNE 2015
Ordinary
shares C shares
USD USD
Revenue
Income 1,095,410 143,893
------------ ------------
1,095,410 143,893
------------ ------------
Expenses
Management fees 371,443 214,015
Net loss on financial assets
at fair value through profit
or loss 3,301,668 998,937
Net loss on financial liabilities
at fair value through profit
or loss 786,448 55,188
Other expenses 411,550 296,782
------------ ------------
4,871,109 1,564,922
------------ ------------
Loss before taxation (3,775,699) (1,421,029)
Taxation (11,206) (28,351)
------------ ------------
Total comprehensive income for
the period (3,786,905) (1,449,380)
============ ============
11. GAIN/ (LOSS) PER SHARE
Basic gain/ (loss) per share is calculated by dividing the gain/
(loss) attributable to equity holders by the weighted average
number of ordinary shares in issue during the period excluding
ordinary shares purchased by the Company (including those
repurchased in accordance with the Tender Offer) and held as
treasury shares.
The Company's diluted gain/ (loss) per share is the same as
basic gain/ (loss) per share, since the Company has not issued any
instrument with dilutive potential.
30 June 30 June
2016 2015
Increase/ (decrease) in net
assets attributable to shareholders USD 984,151 (3,786,905)
=========== ============
Ordinary Shares
Weighted average number of
ordinary share in issue 42,630,327 42,630,327
Basic gain/(loss) per share USD 0.0231 (0.0888)
=========== ============
C Shares 30 June 30 June
2016 2015
Decrease in net assets attributable
to shareholders USD (54,372) (1,449,380)
=========== ============
Weighted average number of
C share in issue 29,200,000 29,200,000
Basic (loss) per share USD (0.0019) (0.0496)
=========== ============
12. TAXATION
Under the current laws of Cayman Islands, there is no income,
estate, transfer sales or other Cayman Islands taxes payable by the
Company. As a result, no provision for income taxes has been made
in the financial statements.
13. SEGMENT INFORMATION
For management purposes, the Group is organised in one main
operating segment, which invests in equity securities, debt
instruments and relative derivatives. All of the Group's activities
are interrelated, and each activity is dependent on the others.
Accordingly, all significant operating decisions are based upon
analysis of the Group as one segment. The financial results from
this segment are equivalent to the financial statements of the
Group as a whole.
14. PERSONNEL
The Group did not employ any personnel during the half year
period ended 30 June 2016 (2015: the same).
15. FAIR VALUE OF NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS
Recurring fair value measurement of financial liabilities
The below table shows the fair value hierarchy of the Net assets
attributable to shareholders.
Level Level Level
1 2 3
------ ----------- ------
USD USD USD
Ordinary shares - 38,264,672 -
C Class shares - 29.913,074 -
------ ----------- ------
At 30 June 2016 - 62,177,746 -
====== =========== ======
Level Level Level
1 2 3
------ ----------- ------
USD USD USD
Ordinary shares - 39,338,023 -
C Class shares - 25,186,688 -
------ ----------- ------
At 30 June 2015 - 65,524,711 -
====== =========== ======
The Ordinary and C Class shares are quoted on the SFS of the
LSE. The shares are traded on the exchange at the quoted price as
determined by the participants on the LSE. In a liquidation
scenario or if investors elect to initiate their opportunity to
realise all or part of the shareholding at the time of the
continuation vote in 2019, the proceeds to the shareholders would
be determined by the net realisation of the net asset value.
Therefore, the Directors have concluded that the most
appropriate estimate of fair value of both classes of shares is
their net asset value per share, without adjustment, at the
reporting date. This price is calculated by taking the net assets
attributable to shareholders and dividing by the number of shares
in issue. The Net Assets Value is published on a monthly basis.
Therefore, the fair value of the Net assets attributable to
shareholders has been classified as level 2 as the NAV is an input
that is observable.
-Ends-
For further information please contact:
Africa Opportunity Fund Limited
Francis Daniels Tel: +2711 684 1528
Liberum (Corporate Broker)
Andrew Davis
Henry Freeman/Rob Johnson Tel: +44 20 3100 2000
Africa Opportunity Fund Limited is a closed-end investment
company incorporated in the Cayman Islands and traded on the
Specialist Fund Segment of the London Stock Exchange's Main
Market.
For more information about AOF, see
www.africaopportunityfund.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UGUBWBUPQGMB
(END) Dow Jones Newswires
September 12, 2016 02:00 ET (06:00 GMT)
Africa Opportunity (LSE:AOF)
Historical Stock Chart
From Mar 2024 to Apr 2024
Africa Opportunity (LSE:AOF)
Historical Stock Chart
From Apr 2023 to Apr 2024
