TIDMAGOL
RNS Number : 7218K
Ashmore Global Opportunities Ltd
20 April 2015
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE
UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF
SUCH JURISDICTION
Ashmore Global Opportunities Limited ("AGOL", or the
"Company")
a Guernsey incorporated and registered limited liability
closed-ended investment company with a Premium Listing of its US
Dollar and Sterling share classes on the Official List.
Annual Results
For the year ended 31 December 2014
The financial information set out in this announcement do not
constitute the Company's statutory accounts for the year ended 31
December 2014. All figures are based on the audited financial
statements for the year ended 31 December 2014.
The financial information for the year ended 31 December 2014 is
derived from the financial statements delivered to the UK Listing
Authority. The Auditors reported on those accounts, their report
was unqualified and did not contain a statement under Section
263(2) and 263(3) of The Companies (Guernsey) Law, 2008.
The announcement is prepared on the same basis as will be set
out in the annual accounts.
The Annual Report will shortly be posted to shareholders and
will also be available on the company website: www.agol.com
Financial Highlights
31 December 31 December
2014 2013
Total Net Assets US$170,431,338 US$278,192,239
Net Asset Value per Share
US$ shares US$5.28 US$6.26
GBP shares GBP5.21 GBP6.19
Closing-Trade Share Price
US$ shares US$4.05 US$4.72
GBP shares GBP3.93 GBP4.40
Discount to Net Asset Value
US$ shares (23.30)% (24.60)%
GBP shares (24.57)% (28.92)%
Chairman's Statement
In the 2012 Annual Report, my predecessor wrote that the Board
expected approximately half of the 31 December 2012 NAV to become
available for distribution by 31 December 2014. I am pleased to
report that this target has been met. Including the compulsory
redemption of US$40.5 million paid in January 2015, the Company has
now distributed 50% of the December 2012 NAV or 72% of the December
2012 market capitalisation. Furthermore, more than 50% of that NAV
has been realised as the January distribution did not include
proceeds from the announced sale of Pacnet, which are expected to
be received in Q2 2015 and distributed shortly thereafter. Other
realisations are being actively pursued, with a number of these in
advanced stages. The Board expects that approximately half of the
Company's remaining NAV as at 31 December 2014 after January's
distribution of US$40.5 million will be realised during 2015,
subject to market conditions being conducive to such
realisations.
AGOL's Net Asset Values ("NAVs") per share have fallen from
US$6.26 and GBP6.19 at the end of 2013 to US$5.28 and GBP5.21 at
the end of 2014. Key detractors from performance were Jasper,
Pacnet and Skenzo, while positive contributions came from
GEMS/UtilEco, MCX and Indostar. Further details on these and AGOL's
other investments are provided in the Investment Manager's
Report.
The US$ and GBP share prices stood at US$4.05 and GBP3.93 as at
31 December 2014, decreases of 14.2% and 10.7% respectively against
31 December 2013 levels. As at 31 December 2014, the NAV of the
Company was US$170.43 million and the market capitalisation was
US$129.19 million, reflecting an average discount of 23.6% between
the NAVs per share and the share prices. This discount narrowed
slightly during the year as further proceeds were returned to
investors at a nil discount to NAV.
Quarterly Distributions
% of 31 December
Quarter End Date Distributions % of 31 December 2012 2012
(US$) NAV Market Capitalisation
------------------------------- -------------- ------------------------ ----------------------
31 March 2013 92,500,000 19% 28%
30 June 2013 13,000,000 3% 4%
30 September 2013 26,000,000 5% 8%
31 December 2013 36,900,000 8% 11%
31 March 2014 - - -
30 June 2014 7,250,000 2% 2%
30 September 2014 21,500,000 5% 7%
31 December 2014 40,500,000 8% 12%
------------------------- -------------------- ------------------------ ----------------------
Total 237,650,000 50% 72%
Given that the Company is in the process of a managed wind-down,
the Board is carefully controlling operating costs. To this end, in
the latter part of 2014 the Board considered the costs and benefits
of continuing to have the shares of the Company listed on the
London Stock Exchange. Following consultation with both
shareholders and advisors, the Board came to the conclusion that
the listing remains beneficial to shareholders as a whole. As the
Company realises its investments and distributes the proceeds, the
Company's NAV will diminish. As this occurs the Board will continue
to monitor the costs and benefits of listing.
As mentioned in last year's report, Graeme Dell retired from the
Board with effect from 16 January 2014, and Steve Hicks was
appointed to the Board with effect from the same date.
I would like to thank everyone involved with AGOL for their hard
work.
Richard Hotchkis
16 April 2015
Investment Manager's Report
Performance
As at 31 December 2014, the Net Asset Values ("NAVs") per share
of the US dollar and Sterling classes stood at US$5.28 and GBP5.21
respectively, representing returns of -15.65% and -15.83% over the
twelve months to
31 December 2014.
Portfolio
Despite 2014 being a very challenging year for some of its
underlying investee companies, Ashmore Global Opportunities Limited
("AGOL") has paid distributions of US$69.25m relating to portfolio
realisations during the year. GEMS/Utilico, the Saudi Arabian waste
management business, was sold in the third quarter of 2014 to
Jadwa, at a premium of approximately 30% compared to its last
valuation. Another smaller exit was that of Skenzo/Media.net, an
internet technology company which was realised in October. In
December, Ashmore managed Funds realised their positions in EMTEK,
the Jakarta Stock Exchange listed media company, roughly in line
with the prevailing mark.
Aside from the realisations mentioned above, performance was
also impacted by write downs and by positive mark-to-market price
movements.
One of the largest detractors from performance over the year was
Odebrecht Agroindustrial, the Brazilian ethanol producer.
Odebrecht's trading over the last couple of years has been hampered
by a combination of poor harvests and politically motivated price
controls. This resulted in rising levels of debt which eventually
exceeded the company's enterprise value. Odebrecht's equity was
marked down to zero by the independent valuation agent in May
2014.
Jasper Investments, the Singapore exchange listed oil field
services business, saw a significant fall in its share price in
August. Having struggled to secure new contracts for its Explorer
vessel, Jasper was also unable to sell its hospitality vessel,
Cosmopolitan. As a result, Jasper breached covenants and the
Yiulian Shipyard was able to exercise its right to force a sale of
Cosmopolitan. Jasper will continue to work with Yiulian in order to
realise maximum value for Cosmopolitan but the equity value of
Jasper has been written down to zero.
As part of the restructuring of Pacnet in 2012, it was refocused
around its data centres and data mining business. This focus
continued in 2014 with a further expansion of the company's data
centres, however, revenue growth was slower than expected and the
business fell behind budget, leading the third party valuation
agent to reduce the enterprise value over the course of the year.
In late December, Telstra, the Australian telecoms company,
announced that it would buy Pacnet in a deal which is expected to
complete in the second quarter of 2015.
AEI made progress with its two remaining Greenfield projects
which are located in Peru (Fenix) and Guatemala (Jaguar). Fenix was
fully commissioned in April 2014 but as mentioned in the interim
report, subsequent damage to one of the turbines led to a delay in
achieving full capacity. With the turbine repairs now complete, the
power station is fully operational and is generating cash flows
through the transmission of power to the state grid. Jaguar's
construction activities are proceeding well and the plant is
expected to be operational in the second quarter of 2015.
One of the strongest performers over the year was MCX, the
multi-commodity exchange of India, which benefited from the stellar
performance delivered by publically listed Indian equities
following the election victory of Narendra Modi's Bharatiya Janata
Party in April 2014. Another significant event during the year was
the complete exit from MCX of Financial Technologies India ("FTI"),
one of the company's original sponsors. In December 2013 the
Forward Markets Commission (the regulator) had ordered FTI to
divest its holding following an alleged fraud at FTI. The ruling
and a subsequent challenge by FTI created uncertainty for MCX which
was resolved following FTI's exit. Operationally, a rise in the
commodities transaction tax increased the cost of trading
three-fold, which led to a fall in sales and revenue.
Notwithstanding this, MCX put in place plans to increase its
product offerings and expand geographically.
In the first half of the year, the shareholder dispute at
Alphaland was settled with an agreement to split the assets of the
company between the Ashmore Funds and the local Filipino
shareholder group. In October 2014, the first closing of the
transaction occurred with Ashmore Funds taking title to three
assets: the Ayala Avenue Tower, a 50% interest in the Bay City JV
and a 60% interest in the Boracay Gateway JV. Following the
closing, the investment manager focused on securing an active sale
or leasing plan for the tower asset, that being the most liquid
part of the portfolio. Prior to the end of the year, an agreement
was reached on the sale of the tower and the transaction closed in
early February 2015. The proceeds were used to fund certain
obligations of the asset split transaction and to pay down bank
debt.
Indostar, the Indian non-bank finance company, saw a mark-up of
its valuation in December as revenue growth and profitability
performed in line with expectations. Subsequent to the year end,
the Ashmore Funds' interest in the company was sold at a price in
excess of its most recent mark.
Al Noor, the UAE hospitals business, continued to perform well;
revenues increased, additional physicians have been hired and new
centres were commissioned in Bateen and Baniva.
Outlook
The Investment Manager is focused on realising the Company's
remaining assets in an orderly fashion and returning funds to
shareholders. As described in the commentary above, the new
financial year has already witnessed some early success.
Details on the Top 10 Underlying Holdings (on a look through
basis)
The table below shows the top 10 underlying investments. Changes
to the table since the interim report have resulted from a decrease
in the value of Jasper, and from the realisations of EMTEK and
GEMS/Utileco. These changes have resulted in the inclusion of Asian
Genco, Microvast and ISM. There have also been some changes in
size/ranking by NAV.
Investment Name Holding Country Business Description
AEI 14.82% Cayman Islands Owns, operates and develops interests
in multiple power generation assets
in Latin America.
Bedfordbury 12.78% Philippines Real estate development company focusing
on underdeveloped sites.
Pacnet 7.37% Singapore Asia's leading independent telecoms
infrastructure and service provider.
Al Noor Medical 7.12% UAE Provider of integrated healthcare services.
Indostar 5.66% India Non-bank finance company (NBFC) focusing
on wholesale lending in India.
MCX 4.88% India India's leading commodity exchange
with over 80% market share.
Largo Resources 2.67% Brazil Brazilian provider of mining services.
Asian Genco 1.93% Singapore/India Infrastructure development company
with investments in power generation
assets.
Microvast 1.81% China Manufacturer of advanced battery solutions.
ISM 1.49% Philippines Telecommunications, multimedia and
information technology business.
---------------- ------- ---------------- -------------------------------------------
Good performance from MCX and Indostar saw India top the country
allocations with the Philippines also remaining a core allocation.
By industry, the largest weighting reverted to Real Estate, as per
the prior year end. The tables below show the top ten country and
industry allocations at the end of December 2014:
Country (% of NAV) Industry (% of NAV)
India 16.17% Real Estate 18.27%
Electric Integration and
Cayman Islands 14.82% Generation 16.75%
Philippines 14.27% Diversified Financial Services 12.25%
China 7.60% Telecommunications 7.37%
United Arab Emirates 7.52% Healthcare Services 7.12%
Singapore 7.38% Mining 2.67%
Russia 2.87% Oil and Gas Services 1.93%
Electrical Components and
Brazil 2.67% Equipment 1.81%
Nigeria 1.27% Retail 1.49%
Qatar 0.11% Miscellaneous Manufacturing 1.27%
AEI
Company: AEI
Industry: Power Generation
Country: Regional Latin America
Website: www.aeienergy.com
Company Status: Private
Deal Type: Private Equity
Investment Risk: Equity
Operational update
n Two operating assets (Cuiaba and San Felippe) and two
greenfield projects (Fenix and Jaguar) remain. The focus is on
selling all remaining operating assets as soon as possible and
completing the greenfield projects prior to their sale
n Greenfields:
n Fenix achieved full commercial operation on January 15 and is
now generating full cash flows through the transmission of power to
the state grid. The focus now is on refinancing with a subsequent
disposal in the next nine months.
n Jaguar's construction activities are proceeding at full speed
with a target commercial operation date in Q2 2015. Arbitration
proceedings with the previous EPC contractor are ongoing.
n HQ headcount is being continuously reduced in line with the
downsizing of the business.
Key risks
n Jaguar project completion on budget and on time
n CMNC arbitration
n Retention of key people to support the wind down
2015 operational strategy/priorities
n On time and on budget commissioning of Fenix
n Disposal planning for all assets
n HQ cost reduction
Exit strategy
n Sale of individual assets
Bedfordbury
Company: Bedfordbury Development Corporation
Industry: Real Estate Development
Country: Philippines
Website: www.alphaland.com.ph
Company Status: Public
Deal Type: Private Equity
Investment Risk: Equity
Exit strategy and timing
n In October 2014, the first closing of the transaction occurred
which saw Bedfordbury Development Corporation (BDC), a Philippines
company in which the Ashmore Funds are indirect shareholders, take
title to three former Alphaland assets: the Ayala Avenue Tower, a
50% interest in the Bay City JV and a 60% interest in the Boracay
Gateway JV.
n Following the closing, Ashmore staff focused on negotiating an
active sale and/or leasing plan for the tower which is the most
liquid part of the portfolio.
n Subsequently, BDC agreed the sale of the tower which closed in
early February 2015. The transaction proceeds have been applied to
meet certain obligations of the asset split transaction above, and
to pay down senior debt.
Pacnet
Company: Pacnet
Industry: Telecommunications
Country: Hong Kong and Singapore
Website: www.pacnet.com
Company Status: Private
Deal Type: Private Equity
Investment Risk: Equity
Operational update
n The exit from low margin products and cost reduction
initiatives has resulted in a year-on-year 32% increase in EBITDA
and a 763 bps improvement in the EBITDA margin.
n The year saw capex investment in the sub-sea network with over
70% of the network now transmitting data on 100g coherent
technology.
n Pacnet is pioneering Network as a Service (NaaS), the ability
to provision managed network services using software defined
networking technology, through the launch of Pacnet Enabled
Networks (PEN) which allow customers to "cloudify" their network
requirements.
n New tier 3 data centres (DCs) were opened in Singapore and
Chongqing bringing the total racks in Pacnet's core DCs to 6000.
Pacnet now has 7 owned DCs.
2015 operational/strategic initiatives
n Launch further versions of PEN for IP-VPN and wavelength
managed network products. This will allow products generating over
70% of revenues to be provisioned using the PEN platform.
n Close large indefeasible right of use (IRU) deals for a total
contract value of c. US$60m with two leading internet players.
n Open new data centre in Tianjin with the capacity for up to
2,000 racks.
Key risks
n Various completion items, particularly regulatory approvals
(for example, from Infocomm Development Authority of Singapore)
Exit strategy
n An agreement has been signed to sell 100% of the Company to
Telstra, subject to receiving regulatory approval. It is estimated
that gross proceeds will be in the region of US$330-350m for the
entire equity, depending on adjustments to be made at closing, with
10% of this subject to a hold back clause.
Al Noor Medical Company
Company: Al Noor Medical Company
Industry: Healthcare
Country: United Arab Emirates
Website: www.alnoorhospital.com
Company Status: Private
Deal Type: Private Equity
Investment Risk: Equity
Operational update
n Q3 2014 sales were US$101m vs US$84m in Q3 2013, 20% growth
year on year.
n Cash on hand was US$105m as at 30 September 2014.
n Inpatient volumes are flat.
n In 2014 medical centres were commissioned in Bateen and
Baniya, as well as an ICAD, for industrial workers.
n A further 49 physicians have been recruited since December
2013, bringing the total to 519.
n An interim dividend of 3.7p per share was paid in October.
2015 operational strategy/priorities
n Upgrade of Khalifa Street through the leasing and fitting-out
of additional space
n Progress with the construction underway in Al Ain (due
2016)
n Continued growth in UAE/Oman
Key risks
n Significant private shareholdings may be a drag on the market
for Al Noor's equity.
Exit strategy
n The Al Noor shares underlying our investments are now
unlocked, but remain subject to the customary closed-period
restrictions and to the phased unwinding of our investment vehicle
over the coming 6 months.
Indostar
Company: Indostar Capital Finance
Industry: Banking and Financial Services
Country: India
Website: www.indostarcapital.com
Company Status: Private
Deal Type: Private Equity
Investment Risk: Equity
Operational update
n The management team is focussed on improving business
performance amidst a challenging lending environment. Year-to-date
profitability is in line with the budget.
n Indostar completed an on-budget borrowing programme, where
leverage (D/E) increased from 1.66x in FY14 to 1.84x in December
2014.
n The weighted cost of borrowing has been reduced by 150 bps to
11.81% since March 2014.
n Indostar is currently well placed from both an asset portfolio
and a liquidity position.
2015 operational strategy/priorities
n Continue to build the loan book with an increased focus on
origination and higher fee income to increase the return on
equity
n Increase leverage while also reducing borrowing costs by
diversifying sources and improving the company's debt rating
n Diversify income streams through the launch of an SME
Financing and Asset Management businesses
Key risks
n Sale and Purchase Agreement (SPA) execution
Exit strategy
n Strategic stake sale
Multi Commodity Exchange of India Limited (MCX)
Company: Multi Commodity Exchange of India
Industry: Banking and Finance
Country: India
Website: www.mcxindia.com
Company Status: Public
Deal Type: Private Equity
Investment Risk: Equity
Operational update
n MCX has an 81% market share of the commodities market.
n Average daily turnover/revenues decreased to US$ 3bn in FY15
(FY14: US$ 4.5bn) after the implementation of the Commodities
Transaction Tax (CTT) in FY14 which increased the cost of trading
three-fold.
n EBITDA margins were hit due to the fall in revenues and slower
cuts to overheads.
n The promoters have exited their stake in MCX to comply with
the order of the Forward Markets Commission (FMC) (the Regulator).
Kotak Mahindra Bank is now the largest shareholder with a 15%
stake.
n MCX renegotiated its technology services contract, which
reduced costs and improved the profitability of the company.
2015 operational strategy/priorities
n Enhance the product portfolio by adding new commodities
n Expand geographically and improve penetration though
international strategic tie ups, investor awareness drives and by
signing up new brokers
n Appointment of a professional CEO
Key risks
n Continued regulatory oversight by the FMC
n Uncertainty with regard to the enactment timing of the Forward
Contracts Regulations Act, which will bring in a new set of
investors and allow MCX to start offering "options" as a
product
Exit strategy
n Sale in the public market
Largo Resources
Company: Largo Resources
Industry: Metals and Mining
Country: Brazil
Website: www.largoresources.com
Company Status: Public
Deal Type: Private Equity
Investment Risk: Equity
Operational/corporate update
n Production proper commenced in August 2014, and as at January
2015 was running at 55-75% of nameplate capacity. The ramp-up is
expected to take another 6-9 months.
n Vanadium pricing is currently at a five year low, trading at
around US$5 per pound, which is more than 15% below its pricing a
year ago. Largo's cash cost in the ramp-up stage is somewhat
misleading, but is currently below US$5 and should decline as the
production ramp-up is achieved.
2015 operational strategy/priorities
n Ramp up production to the design capacity of 9,600 tonnes of
V2O5 concentrate by Q3 2015
Key risks
n Vanadium pricing remains low in the commodity cycle.
n Price shocks and commissioning delays could cause funding gaps
and/or negatively impact investor sentiment.
n Largo is in dispute with Global Tungsten & Powders (GTP)
concerning a contract which Largo entered into for the supply of
tungsten, from Currais Novos (CN). An arbitration award of US$8m
was recently made against Largo, and it is reviewing its response.
CN remains shut due to production problems including a lack of
water.
Exit strategy
n Re-listing on the main TSX exchange or a strategic sale
Asian Genco
Company: Asian Genco Private Limited
Industry: Energy and Utilities
Country: Singapore / India
Website: www.asiangenco.com
Company Status: Private
Deal Type: Private Equity
Investment Risk: Equity
Operational update
n The hydro project is 92% physically constructed.
n There is uncertainty around the balance of equity funding as
investors are unwilling to fund given uncertainty over completion
timelines and expected further cost over-runs.
n Construction activity at the site has stalled due to a lack of
funding.
n The Government of Sikkim, a 26% partner in the hydro project,
is looking to increase its stake to 51% and convert this from a
private to a public project. This will be achieved through a
combination of primary equity against the balance of equity
required, and a secondary stake purchased from the existing
investors. There is further support through the monitoring of the
project by the Central Government.
2015 operational strategy/priorities
n To complete the hydro project with limited further time and
cost over-runs. Government of Sikkim to arrange for equity funds
relating to the shortfall created by existing co-investors not
being able/willing to bring in their share of the equity capital
call
n Target completion date December 2015 (first turbine by
September 2015)
n Focus on project execution, including augmenting/replacing
existing management and contractors
n Sell the stake in the thermal project to a strategic
investor
Key risks
n Further time and cost over-runs on the hydro project
n Loss of the controlling stake in the hydro project, dilution
of existing rights and uncertainty of timely exit
Exit strategy
n M&A of the company, sale of its individual assets or the
sale of a strategic stake
Microvast
Company: Microvast
Industry: Technology/Clean-tech
Country: China
Website: www.microvast.com
Company Status: Private
Deal Type: Private Equity
Investment Risk: Equity
Operational update
n Microvast continues to supply batteries to Chongqing with over
1,000 buses now in operation.
n There has been a steady flow of orders and Microvast has now
signed contracts to supply 800 pure E bus packs to Wright Bus Co.
in London and VDL in Belgium.
n Production capacity is a constraining factor and additional
funding is required for capital investment. The company is in
discussions with shareholders and other parties to organise this
funding.
n The business is also in advanced discussions for sales
contracts with a number of other Chinese local governments
including Beijing, Fujian, Jinan and Suzhou.
2015 operational strategy/priorities
n Delivering high quality packs to all customers considering
pressures on production capacity
n Expanding production capacity
n Review financing needs for a scaled-up business
n Liquidity event planning
Key risks
n Production failures/quality issues
n Working capital constraints
Exit strategy
n Block sale pre- or post-IPO
n "Put" shares back to the company
ISM
Company: ISM
Industry: Telecom/Banking
Country: Philippines
Website:
http://edge.pse.com.ph/companyInformation/form.do?cmpy_id=36
Company Status: Public
Deal Type: Private Equity
Investment Risk: Equity
ISM Holdco.
n ISM sold its 21% stake of The Philippine Bank of
Communications ('PBCom') for PHP 33 per share (approximately PHP
2.1bn/US$46m).
n Besides the proceeds from the sale of PBCom shares, ISM holds
a 32.5% equity stake in Acentic (an integrator of hospitality
technologies; that is, a provider of hotel-based interactive
multimedia) and has a claim for contingent consideration on the
sale of Eastern Telecom.
Exit strategy
n Following completion of the PBCom transaction above, Ashmore
Funds have tendered to participate in the current ISM share
buy-back scheme which would see the repurchase of up to 1.2bn
shares at PHP 1.52 per share.
Ashmore Investment Advisors Limited
Investment Manager
16 April 2015
Board Members
As at 31 December 2014, the Board consisted of four
non-executive Directors. The Directors are responsible for the
determination of the investment policy of Ashmore Global
Opportunities Limited (the "Company" or "AGOL") and have overall
responsibility for the Company's activities. As required by the AIC
Code on Corporate Governance (the "Code"), the majority of the
Board of Directors are independent of the Investment Manager. In
preparing this annual report, the independence of each Director has
been considered.
Richard Hotchkis, Independent Chairman, (Guernsey resident)
appointed 18 April 2011
Richard Hotchkis has 38 years of investment experience. Until
2006, he was an investment manager at the Co-operative Insurance
Society, where he started his career in 1976. He has a breadth of
investment experience in both UK and overseas equities, including
in emerging markets, and in particular, investment companies and
other closed-ended funds, offshore funds, hedge funds and private
equity funds. Richard is currently a director of a number of funds,
including Alternative Investment Strategies Limited and Advance
Frontier Markets Fund Limited.
Steve Hicks, Non-Independent Director (connected to the
Investment Manager), (UK resident) appointed
16 January 2014
Steve Hicks, who is a qualified UK lawyer, has held a number of
legal and compliance roles over a period of more than 25 years.
From June 2010 until January 2014 he was the Ashmore Group Head of
Compliance. Prior thereto he was Director, Group Compliance at the
London listed private equity company 3i Group plc.
Nigel de la Rue, Independent Director,(Guernsey resident)
appointed 16 October 2007
Nigel de la Rue graduated in 1978 from Pembroke College,
Cambridge with a degree in Social and Political Sciences. He is
qualified as an Associate of the Chartered Institute of Bankers, as
a Member of the Society of Trust and Estate Practitioners (STEP)
and as a Member of the Institute of Directors. He was employed for
23 years by Baring Asset Management's Financial Services Division,
where he was responsible for the group's Fiduciary Division and sat
on the Executive Committee. He left Baring in December 2005, one
year after that Division was acquired by Northern Trust. He has
served on the Guernsey Committees of the Chartered Institute of
Bankers and STEP, and on the Guernsey Association of Trustees, and
currently holds a number of directorships in the financial services
sector.
Christopher Legge, Independent Director,(Guernsey resident)
appointed 27 August 2010
Christopher Legge has over 25 years' experience in financial
services. He qualified as a Chartered Accountant in London in 1980
and spent the majority of his career based in Guernsey with Ernst
& Young, including being the Senior Partner of Ernst &
Young in the Channel Islands. Christopher retired from Ernst &
Young in 2003 and currently holds a number of directorships in the
financial sector, including at BH Macro Limited where he is Senior
Independent Director and chairs the Audit Committee.
Graeme Dell, Non-Independent Director(employee of the Investment
Manager), (UK resident) appointed 5 March 2008 and resigned 16
January 2014
Disclosure of Directorships in Public Companies Listed on
Recognised Stock Exchanges
The following summarises the Directors' directorships in other
public companies:
Company Name Exchange
Richard Hotchkis
Advance Frontier Markets Fund Limited AIM and CISE
Steve Hicks Nil
Nigel de la Rue Nil
Christopher Legge
Baring Vostok Investments PCC Limited CISE
BH Macro Limited London, Bermuda and Dubai
John Laing Environmental Assets Group Limited London
Schroder Global Real Estate Securities Limited (since 1 January 2015) London
Sherborne Investors (Guernsey) B Limited London
Third Point Offshore Investors Limited London
TwentyFour Select Monthly Income Fund Limited London
Directors' Report
The Directors submit their Report together with the Company's
Statement of Financial Position, Statement of Comprehensive Income,
Statement of Changes in Equity, Statement of Cash Flows, and
related notes for the year ended 31 December 2014, which have been
prepared properly, in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the IASB and are in
agreement with the accounting records, which have been properly
kept in compliance with section 238 of the Companies (Guernsey)
Law, 2008.
The Company
The Company was incorporated with limited liability in Guernsey,
Channel Islands as an authorised closed-ended investment company on
21 June 2007. The Company was launched on 7 December 2007 and the
Company's shares were admitted to the Official Listing of the
London Stock Exchange on 12 December 2007, pursuant to Chapter 14
of the Listing Rules. Following changes to the Listing Rules on 6
April 2010, the listing became a Standard Listing. On 27 April
2011, the UK Listing Authority confirmed the transfer of the
Company from a Standard Listing to a Premium Listing under Chapter
15 of the Listing Rules. The Company's US$ shares and GBP shares
are included in the FTSE All-Share Index.
Investment Strategy
Prior to the Extraordinary General Meeting ("EGM") of
shareholders on 13 March 2013, the Company's investment objective
was to deploy capital in a diversified portfolio of global emerging
market strategies and actively manage these with a view to
maximising total returns. This was implemented by investing across
various investment themes (Alternatives including Special
Situations and Real Estate, External Debt, Local Currency,
Equities, Corporate Debt and Multi-Strategy), with a principal
focus on Special Situations.
The Company employed a dynamic allocation of the Company's
assets across Ashmore's investment themes with a principal focus on
Special Situations, seeking to create value for shareholders and
target total return through active portfolio management. The
Investment Manager employed a predominantly top-down and
value-driven investment approach coupled with a bottom-up selection
of investments in those Ashmore funds ("Funds") where corporate and
Special Situations assets were more significant. Through investing
in the Funds, the Company sought to build a globally diverse
portfolio of investments and to benefit from the Investment
Manager's experience in investing globally in emerging markets
countries (including in distressed and Special Situations assets)
and in the resolution or restructuring of such investments.
On 12 December 2012, the Board announced, following its review
and in conjunction with its independent financial and legal
advisers, options to address the structural issue of the discount
to net asset value at which the shares were trading, which included
proposals to shareholders: to amend the investment strategy to make
no new Special Situations investments (with any new investments to
be shorter term in nature); to realise the Company's assets for
cash over the next few years; and over time to return all cash
realised from the investment portfolio to shareholders (the
"Managed Wind-Down"). Shareholders approved these proposals at an
EGM held on 13 March 2013. The Board believes the revised
investment strategy is the best way of realising the value of the
Company.
Going Concern
The Board of Directors called an EGM, which was held on 13 March
2013, to approve proposals for a managed wind-down of the Company`s
portfolio. All proposals were duly passed at the EGM and
accordingly the Board:
1. changed the investment objective of the Company to the
realisation of the Company's assets in an orderly manner in order
to return cash to shareholders;
2. amended the Articles of Incorporation to facilitate a
regular, quarterly return of cash to shareholders;
3. amended the Articles of Incorporation in relation to the removal of the continuation vote;
4. amended the Articles of Incorporation to reduce the minimum
number of Directors from five to one; and
5. amended the terms of the Investment Management Agreement
("IMA") between the Company and Ashmore Investment Advisors Limited
("Investment Manager") (Ashmore Investment Management Limited until
July 2014).
The Directors have examined significant areas of possible
financial going concern risk and are satisfied that no material
exposures exist. The Directors therefore consider that the Company
has adequate resources to continue in operational existence for the
foreseeable future and after due consideration believe it is
appropriate to adopt the going concern basis in preparing the
financial statements, despite the managed wind-down of the Company
over the next few years.
Results and Dividends
The results for the year are set out in the Statement of
Comprehensive Income of this annual report.
Compulsory Partial Redemptions
Following the approval by the Company's shareholders of the
wind-down proposal as described in the circular published on 20
February 2013, during the year ended 31 December 2014, the Company
announced returns of capital to shareholders by way of compulsory
partial redemptions of shares, with the following redemption
dates:
-- 31 January 2014, using the 31 December 2013 Net Asset Value;
-- 8 August 2014, using the 30 June 2014 Net Asset Value; and
-- 31 October 2014, using the 30 September 2014 Net Asset Value.
Between the end of the reporting year and the date when the
financial statements were authorised for issue, the Company
announced returns of capital to shareholders by way of compulsory
partial redemptions of shares, with the following redemption
dates:
-- 30 January 2015, using the 31 December 2014 Net Asset Value.
The amounts applied to the partial redemptions of shares
comprised monies from the realisation of the Company's investments
up to and including the reference NAV calculation dates pursuant to
the wind-down of the Company.
Share Capital
The number of shares in issue at the year end is disclosed in
note 8 to the financial statements.
The Board
The Board of Directors has overall responsibility for
safeguarding the Company's assets, for the determination of the
investment policy of the Company, for reviewing the performance of
the service providers and for the Company's activities. The
Directors, all of whom are non-executive, are listed in the Board
Members section.
In accordance with Article 18.3 of the Company's Articles of
Incorporation, at each Annual General Meeting one-third of the
Directors shall retire from office via rotation and be put forward
for re-election based on continued satisfactory performance. Any
Director who serves nine years on the Board, will thereafter be put
forward for re-election on an annual basis.
The Board holds Board meetings at least four times a year. At
Board meetings, the Directors review the management of the
Company's assets and all other significant matters so as to ensure
that the Directors maintain overall control and supervision of the
Company's affairs. The Board is responsible for the appointment and
monitoring of all service providers to the Company, following
updates and recommendations from the Management Engagement
Committee. Between these formal meetings there is regular contact
with the Investment Manager. The Directors are kept fully informed
of investment and financial controls and other matters that are
relevant to the business of the Company and should be brought to
the attention of the Directors. The Directors also have access to
the Secretary and, where necessary in the furtherance of their
duties, to independent professional advice at the expense of the
Company.
The table below sets out the number of Board, Audit and
Management Engagement Committee meetings during the year ended 31
December 2014:
Management Engagement
Board meetings Audit Committee meetings Committee meeting
attended attended attended
Richard Hotchkis 5 3 1
Steve Hicks 4 N/A N/A
Nigel de la Rue 4 3 1
Christopher Legge 5 3 1
Graeme Dell 1 N/A N/A
No. of meetings during
the year 5 3 1
In addition to the meetings above, six other committee meetings
were held during the year. Any Directors who are not members of
Board Committees are invited to attend meetings of such committees
as necessary.
Directors' Interests
As at 31 December 2014, three Directors, Nigel de la Rue,
Christopher Legge and Richard Hotchkis, had beneficial interests in
2,177, 1,360 and 818 GBP shares respectively.
The Company has adopted a code of Directors' dealings in shares,
which is based on the Model Code for Directors' dealings contained
in the LSE's Listing Rules.
Directors' Indemnity
Directors' and officers' liability insurance cover is in place
in favour of the Directors. The Directors entered into indemnity
agreements with the Company which provide for, subject to the
provisions of the Companies (Guernsey) Law, 2008, an indemnity for
Directors in respect of costs which they may incur relating to the
defence of proceedings brought against them arising out of their
positions as Directors, in which they are acquitted or judgement is
given in their favour by the Court. The agreement does not provide
for any indemnification for liability which attaches to the
Directors in connection with any negligence, unfavourable
judgements, or breach of duty or trust in relation to the
Company.
Corporate Governance
To comply with the UK Listing Regime, the Company must comply
with the requirements of the UK Corporate Governance Code. The
Company is also required to comply with the Code of Corporate
Governance issued by the Guernsey Financial Services
Commission.
The Company is a member of the Association of Investment
Companies (the "AIC") and, by complying with the AIC Code of
Corporate Governance ("AIC Code"), it is deemed to comply with both
the UK Corporate Governance Code and Guernsey Code of Corporate
Governance.
The Guernsey Financial Services Commission's Code of Corporate
Governance (the "GFSC Code") provides a framework that applies to
all entities licensed by the Guernsey Financial Services Commission
or which are registered or authorised as a collective investment
scheme in Guernsey. Companies reporting against the UK Corporate
Governance Code or the AIC Code are deemed to comply with the GFSC
Code.
The Board of the Company has considered the principles and
recommendations of the AIC Code by reference to the AIC Corporate
Governance Guide for Investment Companies ("AIC Guide"). The AIC
Code, as explained by the AIC Guide, addresses all the principles
set out in the UK Corporate Governance Code, as well as setting out
additional principles and recommendations on issues that are of
specific relevance to the Company.
The Board considers that reporting against the principles and
recommendations of the AIC Code, by reference to the AIC Guide
(which incorporates the UK Corporate Governance Code), will provide
better information to shareholders. To ensure ongoing compliance
with these principles, the Board receives and reviews a report from
the Secretary, at each quarterly meeting, identifying whether the
Company is in compliance and recommending any changes that are
necessary.
The Company has complied with the recommendations of the AIC
Code and the relevant provisions of the UK Corporate Governance
Code, except as set out below:
The UK Corporate Governance Code includes provisions relating
to:
-- the role of the chief executive;
-- executive Directors' remuneration;
-- the need for an internal audit function;
-- whistle-blowing policies;
-- nomination committees;
-- remuneration committees.
For the reasons set out in the AIC Guide, and as explained in
the UK Corporate Governance Code, the Board considers that these
provisions are not relevant to the position of the Company as an
investment company. The Company has therefore not reported further
in respect of these provisions. The Directors are non-executive and
the Company does not have employees, hence no whistle-blowing
policy is required. The Directors have satisfied themselves that
the Company's key service providers have appropriate
whistle-blowing policies and procedures and seek regular
confirmation from the service providers that nothing has arisen
under those policies and procedures which should be brought to the
attention of the Board. Details of compliance are noted in the
succeeding pages. There have been no instances of non-compliance,
other than those noted above.
The AIC have released an updated Guide and Code in February
2015, which is effective for accounting periods commencing 1
January 2015. The Company will therefore report against the updated
AIC Code and Guide in subsequent Annual Reports.
Details and biographies for all the Directors can be found in
the Board Members section of this annual report, and on the
Company's website (www.agol.com). In considering the independence
of the Chairman, the Board has taken note of the provisions of the
Code relating to independence and has determined that Richard
Hotchkis is an Independent Director. As the Chairman is an
Independent Director, no appointment of a Senior Independent
Director has been made.
The Board has a breadth of experience relevant to the Company
and the Directors believe that any changes to the Board's
composition can be managed without undue disruption.
The Board, Audit Committee and Management Engagement Committee
undertake an evaluation of their own performance and that of the
individual Directors on an annual basis. In order to review their
effectiveness, the Board, Audit Committee and Management Engagement
Committee carry out a process of formal self-appraisal in order to
consider how they function as a whole and also to review the
individual performance of their members. This process is conducted
by the respective Chairman reviewing the Directors' performance,
contribution and commitment to the Company. Given that the Company
is in a managed wind-down, the Board considers that it would not be
justified in incurring the expense of an independent evaluation of
the Board's performance.
With the appointment to the Board of any new Director,
consideration will be given as to whether an induction process is
appropriate.
Ongoing Charges
Ongoing charges for the year ended 31 December 2014 have been
prepared in accordance with the AIC's recommended methodology and
amounted to 0.54% of the NAV (31 December 2013: 0.96%).
Audit Committee
An Audit Committee has been established and holds meetings at
least twice a year for the purpose, amongst others, of considering
the appointment, independence, effectiveness and remuneration of
the auditor and to review and recommend the statutory annual report
and interim report to the Board of Directors. Full details of its
functions and activities are set out in the Report of the Audit
Committee.
Nomination Committee
The Board as a whole fulfils the function of a nomination
committee. The Board considers that, given the size of the Board
and that the Company has no executives, it would not be appropriate
to establish a separate nomination committee as anticipated by the
AIC Code. Neither external search consultancy nor open advertising
have been used when appointing a Chairman or a non-executive
Director because of the specialist nature of the appointments and
the knowledge amongst existing Directors and Ashmore Investment
Advisors Limited (Ashmore Investment Management Limited until July
2014).
Conversion Committee
The Company has established a Conversion Committee, which
consists of Nigel de la Rue, Christopher Legge and Richard
Hotchkis. The Conversion Committee holds meetings in order to
determine the terms of monthly/quarterly share conversions, based
on shareholders' requests received by the Company. The date on
which conversion of the shares takes place (the "Conversion Date")
is determined by the Conversion Committee, being not more than 20
business days after the relevant Conversion Calculation Date.
The Directors approved a number of conversions during the year,
the details of which can be found in note 8 in the notes to the
financial statements. Conversions approved by the Directors
subsequent to the year end are detailed in note 19 in the Notes to
the Financial Statements.
Disclosure Committee
The Company has established a Disclosure Committee with formally
delegated duties and functions. The Disclosure Committee meets when
required to consider any potential disclosures to be made by the
Company through a Regulatory Information Service provider, in
compliance with the Company's obligations under the Disclosure and
Transparency Rules. The Disclosure Committee is comprised of
Richard Hotchkis, Christopher Legge and Chairman, Nigel de la Rue.
The principal duty of the Disclosure Committee is to consider and
approve announcements and disclosures to be made on behalf of the
Company in accordance with the Company's ongoing compliance with
applicable law.
Management Engagement Committee
The function of the Management Engagement Committee, comprised
of three independent Directors (Christopher Legge, Richard Hotchkis
and Nigel de la Rue), is to ensure that the Company's Investment
Management Agreement is competitive and reasonable for the
shareholders, along with the Company's agreements with all other
third-party service providers (other than the external auditor).
The Committee also reviews the performance of the Investment
Manager and the other third-party service providers on a periodic
basis.
The Company has entered into an agreement with the Investment
Manager, Ashmore Investment Advisors Limited (Ashmore Investment
Management Limited until July 2014). This sets out the Investment
Manager's key responsibilities, which include proposing an
investment strategy to the Board and, within certain authority
limits, selecting investments for acquisition and disposal and
arranging appropriate lending facilities. The Investment Manager is
also responsible for all issues pertaining to asset management. The
Management Engagement Committee reviews the performance, fees and
terms of the Investment Management Agreement on an annual
basis.
Despite the performance of the Company since incorporation, at
its October 2012 and January 2013 meetings it was the view of the
Management Engagement Committee that it is in the best interests of
the shareholders to continue with the current appointment of the
Investment Manager. At the date of this report, the Board continues
to expect that Ashmore will remain the Investment Manager for the
remaining life of the Company.
Remuneration Committee
As all the Directors are non-executive, the Board has resolved
that it is not appropriate to form a Remuneration Committee and
remuneration is reviewed and discussed by the Board as a whole
(with each Director abstaining when approving any changes to their
own fee), with independent advice from the Administrator and the
Broker. Details on Directors' remuneration can be found in the
Directors' Remuneration Report.
The terms of reference of all the existing committees are made
available by the Company to shareholders upon request.
Internal Controls
The Board is ultimately responsible for the Company's system of
internal control and for reviewing its effectiveness. The Board
confirms that there is an ongoing process for identifying,
evaluating and managing the significant risks faced by the Company.
This process has been in place for the year under review and up to
the date of approval of this annual report and accords with the
Turnbull guidance. The Code requires Directors to conduct, at least
annually, a review of the Company's system of internal control,
covering all controls, including: financial, operational,
compliance and risk management.
The risk matrix is subject to an annual review by the Board. The
Board has reviewed the effectiveness of the systems of internal
control. In particular, it has reviewed and updated the process for
identifying and evaluating the significant risks affecting the
Company and the policies by which these risks are managed. The
internal control systems are designed to meet the Company's
particular needs and the risks to which it is exposed. Accordingly,
the internal control systems are designed to manage rather than
eliminate the risk of failure to achieve business objectives and by
their nature can only provide reasonable and not absolute assurance
against misstatement and loss.
Alternative Investment Fund Managers Directive
The Alternative Investment Fund Managers Directive ("AIFMD")
establishes an EU-wide harmonised framework for monitoring and
supervising risks relating to collective investment undertakings
that are not subject to the UCITS regime. AGOL meets the definition
of an Alternative Investment Fund ("AIF") under this legislation
and is subject to the AIFMD framework.
Ashmore Investment Advisors Limited ("AIAL") was authorized as
an Alternative Investment Fund Manager ("AIFM") by the Financial
Conduct Authority ("FCA") on 18 July 2014. Effective 18 July 2014,
the Board appointed AIAL as the Company's AIFM and AIAL assumed the
role of Investment Manager to the Company from Ashmore Investment
Management Limited ("AIML"), pursuant to a Novation of the 5
November 2007 Investment Management Agreement. Prior to 18 July
2014, AIML served as Investment Manager to the Company. The
investment advisory services provided to the Company were novated
to AIAL to comply with the new AIFMD legislation.
AIAL and AIML are both wholly-owned subsidiaries of Ashmore
Investments (UK) Limited, which is a wholly-owned subsidiary of the
Ashmore Group plc ("Ashmore Group"). The novation of the Investment
Management Agreement with the Company did not result in any change
in: (i) the manner in which investment management services are
provided (including the manner in which the Company is managed or
operated) as contemplated by the Investment Management Agreement;
(ii) the personnel who are responsible for providing or supervising
the provision of investment management services (including those
responsible for the management, portfolio management and operation
of the Company); or (iii) the personnel ultimately responsible for
overseeing such provision of services.
Foreign Account Tax Compliance Act
The Foreign Account Tax Compliance Act ("FATCA") is aimed at
determining the ownership of US assets in foreign accounts and
improving US tax compliance with respect to those assets. The
legislation is wide-encompassing and affects all non-US Funds,
albeit some more than others. However, on 13 December 2013 the
States of Guernsey entered into an Inter-Governmental Agreement
("IGA") with the US Treasury in order to facilitate the
requirements of FATCA through local legislation. The IGA and the
associated guidance notes set out the requirements and obligations
of the Company under the rules, and the Board is monitoring
implementation with the assistance of its legal advisers and
accountants.
UK Guernsey Intergovernmental Agreement
The States of Guernsey has also entered into an IGA with the UK,
signed on 22 October 2013, under which a disclosure obligation will
arise on the Company in respect of all shareholders who have a UK
connection. The IGA and the associated guidance notes set out the
requirements and obligations of the Company under the rules, and
the Board is monitoring implementation with the assistance of its
legal advisers and accountants.
Relations with Shareholders
The Investment Manager maintains a regular dialogue with
institutional shareholders, the feedback from which is reported to
the Board. In addition, Board members are available to respond to
shareholders' questions at the Annual General Meeting.
The Company announces its Net Asset Value on a monthly basis to
the London Stock Exchange. A monthly report on investment
performance is published on the Company's website (www.agol.com).
Shareholders who wish to communicate with the Board should contact
the Administrator in the first instance, whose contact details can
be found on the Company's website.
Significant Shareholders
As at 31 December 2014, the following entities had significant
shareholdings in the Company:
US$ shares GBP shares % holding in
Significant Shareholder held held Company
Chase Nominees Limited 34,016 5,406,456 25.87%
Goldman Sachs Securities (Nominees)
Limited 4,045,952 165,636 13.32%
State Street Nominees Limited 1,664,140 1,519,724 12.39%
Nortrust Nominees Limited 2,485,991 265,515 8.96%
The Bank Of New York (Nominees)
Limited - 1,834,827 8.74%
Nordea Bank Danmark A/S 1,494,483 - 4.63%
Lynchwood Nominees Limited 697,596 400,168 4.07%
UBS Private Banking Nominees Limited - 826,980 3.94%
Rock (Nominees) Limited 291,114 503,330 3.30%
Signed on behalf of the Board of Directors on 16 April 2015
Richard Hotchkis Christopher Legge
Chairman Chairman of the Audit Committee
Report of the Audit Committee
On the following pages, we present the Audit Committee (the
"Committee") Report for 2014, setting out the Committee's structure
and composition, principal duties and key activities during the
year. As in previous years, the Committee has reviewed the
Company's financial reporting, the independence and effectiveness
of the independent auditor and the internal control and risk
management systems of service providers.
Structure and Composition
The Audit Committee consists of Nigel de la Rue, Richard
Hotchkis and Chairman Christopher Legge. Appointment to the Audit
Committee is for a period of up to three years, which may be
extended for two further three-year periods provided that the
majority of the Audit Committee remains independent of the
Investment Manager. Nigel de la Rue, Christopher Legge and Richard
Hotchkis are currently serving their third, second and first,
three-year terms respectively. An induction programme is provided
for new Audit Committee members and ongoing training is available
for all members as required.
The Audit Committee conducts formal meetings at least twice a
year. The first table of the Director's Report sets out the number
of Audit Committee meetings held during the year ended 31 December
2014 and the number of such meetings attended by each Committee
member. The independent auditor is invited to attend meetings at
which the annual and interim reports are presented to the Committee
as well as the annual audit planning meeting.
Principal Duties
The role of the Committee includes:
-- to monitor the integrity of the financial statements of the
Company and any formal announcements relating to the Company's
financial performance, reviewing significant financial reporting
judgements contained therein;
-- to review the Company's internal financial controls and,
unless expressly addressed by the Board itself, to review the
Company's internal control and risk management systems;
-- to make recommendations to the Board, and for them to be
subsequently put to shareholders for their approval at the Annual
General Meeting, in relation to the appointment, re-appointment or
removal of the external auditor and to approve the remuneration and
terms of engagement of the external auditor;
-- to review and monitor the external auditor's independence and
objectivity and the effectiveness of the audit process, taking into
consideration relevant UK professional and regulatory
requirements;
-- to develop and implement policy on the engagement of the
external auditor to supply non-audit services, taking into account
relevant ethical guidance regarding the provision of non-audit
services by the external audit firm; and to report to the Board,
identifying any matters in respect of which it considers that
action or improvement is needed, making recommendations as to the
steps to be taken; and
-- to report to the Board on how it has discharged its responsibilities.
The complete details of the Committee's formal duties and
responsibilities are set out in the Committee's terms of reference,
which can be obtained from the Company's administrator.
Independent Auditor (independence and effectiveness)
KPMG Channel Islands Limited have expressed their willingness to
continue in office as auditor and a resolution proposing their
re-appointment will be submitted at the Annual General Meeting.
The independence and objectivity of the independent auditor is
reviewed by the Audit Committee, which also reviews the terms under
which the independent auditor is appointed to perform non-audit
services. The Audit Committee has also established pre-approval
policies and procedures for the engagement of KPMG to provide
audit, assurance and tax services.
The audit and non-audit fees proposed by the auditor each year
are reviewed by the Committee taking into account the Company's
structure, operations and other requirements during the year, and
the Committee makes recommendations to the Board.
Committee Evaluations during the Year
The following sections discuss the assessments made by the
Committee during the year.
Effectiveness of the Audit
The Committee had formal meetings with KPMG during the course of
the year: 1) before the start of the audit to discuss formal
planning, discuss any potential significant issues and agree the
scope of the audit, and 2) after the audit work was concluded to
discuss any significant issues encountered.
The Board reviewed the effectiveness and independence of KPMG by
using a number of qualitative measures, including but not limited
to:
-- the audit plan presented before the start of the audit;
-- the post audit report and presentation, including deviations from the original plan;
-- any changes to audit personnel;
-- the auditor's own internal procedures to identify threats to independence;
-- feedback from both the Manager and the Administrator.
Further to the above, on the conclusion of the 2014 audit, the
Committee performed a specific evaluation of the performance of the
independent auditor. This covered qualitative areas such as the
quality of the audit team, business understanding, audit approach
and management.
There were no significant adverse findings from this
evaluation.
Significant Financial Statement Issues
The Committee's review of the interim and annual financial
statements focused on the following areas:
The financial statements have been prepared on the going concern
basis, despite the managed wind-down of the Company which was
approved by the shareholders during the EGM of 13 March 2013. The
Directors discussed the rationale for this accounting basis and
they noted that they had examined significant areas of possible
financial going concern risk, and were satisfied that no material
exposures existed.
The valuation of the Company's investment portfolio, given it
represents the majority of the total assets of the Company requires
the use of significant judgement for unlisted investments. The
Directors are satisfied with the Investment Manager's Pricing
Methodology and Valuation Committee ("PMVC")'s controls, and the
appropriateness of the valuation techniques, inputs and assumptions
used in relation to valuation of unlisted investments. The
foregoing matters were discussed during the planning and testing
stages of the audit and there were no significant disagreements
noted between management and the independent auditor.
The Committee is satisfied that the significant assumptions used
for determining the value of assets and liabilities have been
appropriately scrutinised and challenged and are sufficiently
robust. The Committee further concludes that the financial
statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Company's performance, business model and strategy.
The Independent Auditor reported to the Committee that no
material unadjusted misstatements were found in the course of its
work. Furthermore, both the Investment Manager and the
Administrator confirmed to the Committee that they were not aware
of any material unadjusted misstatements, including matters
relating to presentation. The Committee confirms that it is
satisfied that the Independent Auditor has fulfilled its
responsibilities with regard to diligence and professional
scepticism.
Audit Fees and Safeguards for Non-Audit Services
Where non-audit services are to be provided to the Company by
its auditor, full consideration of the financial and other
implications for the independence of the auditor arising from any
such engagement are considered prior to proceeding.
The table below summarises the remuneration of KPMG Channel
Islands Limited and of other KPMG affiliates for audit and
non-audit services for the years ended 31 December 2014 and 31
December 2013:
Year ended Year ended
31 December 2014 31 December 2013
US$ US$
Audit and audit related
services
- Annual audit 71,011 98,425
- Interim review 32,480 43,701
Internal Control
The Audit Committee has reviewed the need for an internal audit
function. Based on reviews of control reports, the Audit Committee
has concluded that the systems and procedures employed by the
Administrator and the Investment Manager, including their internal
audit functions, provide sufficient assurance that a sound system
of internal control which safeguards the Company's assets is
maintained. An internal audit function specific to the Company is
therefore considered unnecessary.
Conclusions and Recommendations
The Audit Committee is satisfied that the external auditor
remains independent and confirms that the Audit Committee also met
with the external auditor without the Investment Manager or
Administrator (Northern Trust International Fund Administration
Services (Guernsey) Limited) being present, so as to provide a
forum for the external auditor to raise any matters of concern in
confidence.
Consequent to the review process on the effectiveness of the
independent audit and the review of the audit and non-audit
services that the Independent Auditor delivers, the Committee has
recommended that KPMG be reappointed for the coming financial
year.
For any questions on the activities of the Committee not
addressed in the foregoing, a member of the Audit Committee remains
available to attend each Annual General Meeting to respond to such
questions.
Christopher Legge
Chairman of the Audit Committee
16 April 2015
Statement of Directors' Responsibility in respect of the Annual
Report and Audited Financial Statements
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law they have
elected to prepare the financial statements in accordance with
International Financial Reporting Standards and applicable law.
The financial statements are required by law to give a true and
fair view of the state of affairs of the Company and of the profit
or loss of the Company for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Companies (Guernsey) Law,
2008. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and
to prevent and detect fraud and other irregularities.
Disclosure of Information to the Auditor
The Directors who held office at the date of approval of the
financial statements confirm that, so far as they are each
aware:
-- there is no relevant audit information of which the Company's auditor is unaware; and
-- each Director has taken all the steps that they ought to have
taken as a Director to make themselves aware of any relevant audit
information and to establish that the Company's auditor is aware of
that information.
Responsibility Statement in respect of the Annual Report and
Audited Financial Statements
The Directors confirm that to the best of their knowledge and
belief the annual report and audited financial statements, taken as
a whole, are fair, balanced and understandable and provide the
information necessary for the shareholders to assess the Company's
performance, business model and strategy.
Statement under the Disclosure and Transparency Rules 4.1.12
We confirm that to the best of our knowledge and belief:
-- the financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company;
-- the financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary
for the shareholders to assess the Company's performance, business
model and strategy; and
-- the Chairman's Statement, the Investment Manager's Report and
the Directors' Report include a fair review of the development and
performance of the business and the position of the Company,
together with a description of the principal risks and
uncertainties that the Company faces.
Signed on behalf of the Board of Directors on 16 April 2015
Richard Hotchkis Christopher Legge
Chairman Chairman of the Audit Committee
Directors' Remuneration Report
Introduction
An ordinary resolution for the approval of the annual
remuneration report will be put to shareholders at the Annual
General Meeting.
Remuneration Policy
As all the Directors are non-executive, the Board has resolved
that it is not appropriate to form a Remuneration Committee and
remuneration is reviewed and discussed by the Board as a whole.
Directors' remuneration is considered on a periodic basis.
The Company's policy is that the fees payable to the Directors
should reflect the time spent by the Directors on the Company's
affairs in addition to the responsibilities borne by the Directors,
and should be sufficient to attract, retain and motivate Directors
of the quality required to run the Company successfully. The
Chairman of the Board is paid a higher fee in recognition of his
additional responsibilities, as is the Chairman of the Audit
Committee. The policy is to review fee rates periodically, although
such a review will not necessarily result in any changes to the
rates, and account is taken of fees paid to the Directors of
comparable companies.
There are no long-term incentive schemes provided by the Company
and no performance fees are paid to Directors.
In accordance with Article 18.3 of the Company's Articles of
Incorporation, at each Annual General Meeting one-third of the
Directors retire from office via rotation and are put forward for
re-election based on continued satisfactory performance. Any
Director who serves nine years on the Board will thereafter be put
forward for re-election on an annual basis. Directors' appointments
can also be terminated in accordance with the Articles. Should
shareholders vote against a Director standing for re-election, the
Director affected will not be entitled to any compensation. There
are no set notice periods and a Director may resign by giving
notice in writing to the Board at any time.
As Steve Hicks is connected to the Investment Manager and is
therefore deemed not to be an Independent Director, he shall be put
forward for re-election on an annual basis.
As a result of the Company being placed into a managed
wind-down, it was considered appropriate for there to be a
reduction in Directors' fees.
Directors' Fees
Directors are remunerated in the form of fees, payable monthly
in arrears, to the Directors personally. No other remuneration or
compensation was paid or payable by the Company during the year to
any of the Directors apart from the reimbursement of allowable
expenses.
Effective 1 January 2013, Mr Dell agreed to waive his Director's
fee. Upon his appointment on 16 January 2014, Mr Hicks also agreed
to waive his entitlement to a Director's fee.
Prior to 31 March 2013, Directors' remuneration was as follows:
the Chairman: GBP75,000 per annum, the Chairman of the Audit
Committee: GBP35,000 per annum and the Directors: GBP33,000 per
annum.
Effective 31 March 2013, the Independent Directors agreed to
reduce their fees as follows: the Chairman by 20% and the other
Directors by 10%.
Richard Hotchkis agreed that his fee as Chairman would be
GBP31,500 per annum, effective from 1 November 2013.
The fees payable by the Company in respect of each of the
Directors who served during the years ended
31 December 2014 and 2013, were as follows:
Year ended Year ended
31 December 2014 31 December 2013
GBP GBP
Richard Hotchkis* 31,500 30,825
Steve Hicks** - -
Christopher Legge 31,500 32,375
Nigel de la Rue 29,700 30,525
Jonathan Agnew*** - 53,750
Graeme Dell**** - -
Total 92,700 147,475
------------------- ------------------ ------------------
* Appointed as Chairman on 17 October 2013
** Appointed as Non-Independent Director on 16 January 2014
*** Retired as Chairman on 17 October 2013
**** Retired as Non-Independent Director on 16 January 2014
Signed on behalf of the Board of Directors on 16 April 2015
Richard Hotchkis Christopher Legge
Chairman Chairman of the Audit Committee
Independent Auditor's Report to the Members of Ashmore Global
Opportunities Limited
Opinions and conclusions arising from our audit
Opinion on financial statements
We have audited the financial statements (the "financial
statements") of Ashmore Global Opportunities Limited (the
"Company") for the year ended 31 December 2014 which comprise the
statement of financial position, the statement of comprehensive
income, the statement of changes in equity, the statement of cash
flows and the related notes. The financial reporting framework that
has been applied in their preparation is applicable law and
International Financial Reporting Standards. In our opinion, the
financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 December 2014 and of its total comprehensive
income for the year ended 31 December 2014;
-- have been properly prepared in accordance with International
Financial Reporting Standards ; and
-- comply with the Companies (Guernsey) Law, 2008.
Our assessment of risks of material misstatement
The risks of material misstatement detailed in this section of
this report are those risks that we have deemed, in our
professional judgment, to have had the greatest effect on: the
overall audit strategy; the allocation of resources in our audit;
and directing the efforts of the engagement team. Our audit
procedures relating to these risks were designed in the context of
our audit of the financial statements as a whole. Our opinion on
the financial statements is not modified with respect to any of
these risks, and we do not express an opinion on these individual
risks.
In arriving at our audit opinion above on the financial
statements, the risks of material misstatements that had the
greatest effect on our audit were as follows:
Valuation of investments (US$134.4 million)
-- The risk - The incorrect valuation of investments. As
described in the Report from the Audit Committee, the valuation of
the Company's listed and unlisted investments is a significant area
of our audit as those investments represent the majority (78.8%) of
the Company's net assets. Of that balance, 96.5% (US$ 129.7 m) are
unlisted or in an inactive market and are subject to estimation
risk.
-- Our response -Our audit procedures with respect to the
valuation of investments included, but were not limited to:
We tested the design and implementation of the Investment
Manager's Pricing Methodology and Valuation Committee ("PMVC")'s
controls in relation to the valuation of unlisted direct
investments; we evaluated the work performed by management's
valuation expert, and we assessed the appropriateness of the
valuation techniques, inputs and assumptions used.
For unlisted direct investments into underlying investees (8.9%
of net assets (US$ 15.1 m)), we used our own valuations specialist,
to evaluate the methodologies applied by considering the nature of
the investments and accepted industry practices as well as
challenging key assumptions applied by the Investment Manager and
its PMVC by reference to independent market data and information
and industry expectations.
For unlisted investments in other funds (23.1% of net assets
(US$ 39.4 m)) we obtained net asset value per share confirmations
directly from the underlying funds' administrators and inspected
the latest audited financial statements of these underlying funds
in order to evaluate the nature of the investments held by the
underlying funds, the financial reporting standards applied in the
preparation of the underlying funds' financial statements and any
modifications to audit reports and other disclosures which may be
relevant to the valuation of the Company's investments.
For investments in other Ashmore Special Situations investment
funds, which are also audited by KPMG Channel Islands Limited (44%
of net assets (US$ 75.1 m)) we undertook discussions on key audit
findings with the audit teams of those funds and examined their
coterminous audited financial statements.
Our audit procedures with respect to the Company's listed
investments included, but were not limited to, verifying the fair
value used in the financial statements to a third-party pricing
service provider.
We have also considered the Company's disclosures (see Note 2d)
in relation to the use of estimates and judgments regarding fair
value of investments and the Company's valuation policies adopted
and fair value disclosures in Note 7 for compliance with
International Financial Reporting Standards.
Going concern
-- The risk - At an Extraordinary General Meeting in March 2013,
the shareholders approved proposals for a managed wind-down of the
Company's investment portfolio changing the investment objective of
the company to the realization of the Company's assets in an
orderly manner in order to return cash to shareholders. Refer to
the Report of the Audit Committee and Note 2b accounting
policies.
-- Our response -Our audit procedures with respect to going
concern included, but were not limited to, holding discussions with
the Board of Directors and the Investment Manager, Ashmore
Investment Management Limited, to understand the proposed
investment portfolio realisation programme and to assess the
implications of the managed wind-down on the financial statements.
We also challenged management's assessment of the Company's ability
to continue as a going concern against our other audit
findings.
We also considered the Company's going concern disclosure in
Note 2b of the financial statements for compliance with
International Financial Reporting Standards and other appropriate
technical guidance.
Our application of materiality and an overview of the scope of
our audit
Materiality is a term used to describe the acceptable level of
precision in financial statements. Auditing standards describe a
misstatement or an omission as "material" if it could reasonably be
expected to influence the economic decisions of users taken on the
basis of the financial statements. The auditor has to apply
judgment in identifying whether a misstatement or omission is
material and to do so the auditor identifies a monetary amount as
"materiality for the financial statements as a whole".
Materiality for the financial statements as a whole was set at
US$3.4 million. This has been calculated using a benchmark of the
Company's net asset value (of which it represents approximately 2%)
which we believe is the most appropriate benchmark as net asset
value is considered to be one of the principal considerations for
members of the Company in assessing the financial performance of
the Company.
We agreed with the audit committee to report to it all corrected
and uncorrected misstatements we identified through our audit with
a value in excess of US$170,000, in addition to other audit
misstatements below that threshold that we believe warranted
reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level
specified above, which has informed our identification of
significant risks of material misstatement and the associated audit
procedures performed in those areas as detailed above.
Whilst the audit process is designed to provide reasonable
assurance of identifying material misstatements or omissions it is
not guaranteed to do so. Rather we plan the audit to determine the
extent of testing needed to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements does not exceed materiality for the financial
statements as a whole. This testing requires us to conduct
significant depth of work on a broad range of assets, liabilities,
income and expense as well as devoting significant time of the most
experienced members of the audit team, in particular the
Responsible Individual, to subjective areas of the accounting and
reporting process.
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the Board of Directors;
and the overall presentation of the financial statements. In
addition, we read all the financial and non-financial information
in the Annual Report to identify material inconsistencies with the
audited financial statements and to identify any information that
is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Matters on which we are required to report by exception
Under International Standards on Auditing [ISAs] (UK and
Ireland) we are required to report to you if, based on the
knowledge we acquired during our audit, we have identified other
information in the Annual Report that contains a material
inconsistency with either that knowledge or the financial
statements, a material misstatement of fact, or that is otherwise
misleading.
In particular, we are required to report to you if:
-- we have identified material inconsistencies between the
knowledge we acquired during our audit and the directors' statement
that they consider that the Annual Report and financial statements
taken as a whole is fair, balanced and understandable and provides
the information necessary for members to assess the Company's
performance, business model and strategy; or
-- the Report of the Audit Committee does not appropriately
address matters communicated by us to the audit committee.
Under the Companies (Guernsey) Law, 2008, we are required to
report to you if, in our opinion:
-- the Company has not kept proper accounting records; or
-- the financial statements are not in agreement with the accounting records; or
-- we have not received all the information and explanations,
which to the best of our knowledge and belief are necessary for the
purpose of our audit.
Under the Listing Rules we are required to review the part of
the Corporate Governance Statement relating to the Company's
compliance with the ten provisions of the UK Corporate Governance
Code specified for our review.
We have nothing to report in respect of the above
responsibilities.
Scope of report and responsibilities
The purpose of this report and restrictions on its use by
persons other than the Company's members as a body
This report is made solely to the Company's members, as a body,
in accordance with section 262 of the Companies (Guernsey) Law,
2008 and, in respect of any further matters on which we have agreed
to report, on terms we have agreed with the Company. Our audit work
has been undertaken so that we might state to the Company's members
those matters we are required to state to them in an auditor's
report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than
the Company and the Company's members, as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit, and express an
opinion on, the financial statements in accordance with applicable
law and ISAs (UK and Ireland). Those standards require us to comply
with the UK Ethical Standards for Auditors.
Neale D Jehan
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Glategny Esplanade, Glategny Court, St Peter Port, Guernsey
17 April 2015
Schedule of Investments
As at 31 December 2014
Fair value % of
Description of investment US$ net assets
Ashmore Global Special Situations Fund 4 LP 46,574,674 27.33
Ashmore Global Special Situations Fund 5 LP 24,551,794 14.41
Ashmore Asian Recovery Fund 16,118,434 9.46
AEI Inc - Equity 15,125,986 8.88
AA Development Capital India Fund 1, LLC 6,558,761 3.85
Everbright Ashmore China Real Estate Fund LP 5,646,645 3.31
VTBC Ashmore Real Estate Partners 1 LP 4,793,939 2.81
Aginyx Ordinary Shares 4,779,524 2.80
Ashmore SICAV 2 Global Liquidity US$ Fund 4,000,000 2.35
Ashmore Global Special Situations Fund 3 LP 2,993,539 1.76
Ashmore Asian Special Opportunities Fund Limited 2,341,044 1.37
Ashmore Global Special Situations Fund 2 Limited 942,616 0.55
Ashmore Private Equity Turkey Fund 1 LP 20,840 0.01
Renovavel Investments BV New PIK/PPN - 0.00
Total investments at fair value 134,447,796 78.89
---------------------- ------------
Net other current assets 35,983,542 21.11
Total net assets 170,431,338 100.00
---------------------- ------------
Statement of Financial Position
As at 31 December 2014
31 December 31 December
2014 2013
Note US$ US$
---------------------------------------- ----- ---------------------------- ------------------------------
Assets
Cash and cash equivalents 14,383,849 41,013,703
Other financial assets 6 24,730,545 9,895
Financial assets at fair value through
profit or loss 4 134,464,226 241,385,286
Total assets 173,578,620 282,408,884
---------------------------------------- ----- ---------------------------- ------------------------------
Equity
Capital and reserves attributable
to equity holders
of the Company
Special reserve 8 515,783,066 579,014,573
Retained earnings (345,351,728) (300,822,334)
Total equity 170,431,338 278,192,239
---------------------------------------- ----- ---------------------------- ------------------------------
Liabilities
Current liabilities
Other financial liabilities 6 2,608,411 3,693,957
Financial liabilities at fair value
through profit or loss 4 538,871 522,688
Total liabilities 3,147,282 4,216,645
---------------------------------------- ----- ---------------------------- ------------------------------
Total equity and liabilities 173,578,620 282,408,884
---------------------------------------- ----- ---------------------------- ------------------------------
Net asset values
Net assets per US$ share 9 US$5.28 US$6.26
---------------------------------------- ----- ---------------------------- ------------------------------
Net assets per GBP share 9 GBP5.21 GBP6.19
---------------------------------------- ----- ---------------------------- ------------------------------
The financial statements were approved by the Board of Directors
on 16 April 2015, and were signed on its behalf by:
Richard Hotchkis Christopher Legge
Chairman Chairman of the Audit Committee
The accompanying notes form an integral part of these financial
statements.
Statement of Comprehensive Income
For the year ended 31 December 2014
Year ended Year ended
31 December 31 December
2014 2013
Note US$ US$
-------------------------------------- ----- -------------------------------- --------------------------------
Interest income 10 - 4,489
Dividend income 10 50,761,382 40,483,106
Net foreign currency (loss) (239,591) (1,748,890)
Other net changes in the fair value
of financial assets and liabilities
at fair value through profit or
loss 5 (92,086,427) (106,813,766)
Total net (loss) (41,564,636) (68,075,061)
-------------------------------------- ----- -------------------------------- --------------------------------
Expenses
Net investment management fees 11a (2,652,687) (7,337,095)
Incentive fees 11a 191,193 1,542,435
Directors' remuneration 11b (145,670) (256,906)
Fund administration fees 11c (42,040) (72,462)
Custody fees 11d (18,965) (34,306)
Interest charges (1,084) -
Other operating expenses 12 (295,505) (1,497,886)
Total operating expenses (2,964,758) (7,656,220)
-------------------------------------- ----- -------------------------------- --------------------------------
Operating (loss) for the year (44,529,394) (75,731,281)
-------------------------------------- ----- -------------------------------- --------------------------------
Other comprehensive income - -
Total comprehensive (loss) for the
year (44,529,394) (75,731,281)
-------------------------------------- ----- -------------------------------- --------------------------------
Earnings per share
Basic and diluted (loss) per US$ 13 US$(1.00) US$(1.48)
share
-------------------------------------- ----- -------------------------------- --------------------------------
Basic and diluted (loss) per GBP 13 US$(2.08) US$(2.36)
share
-------------------------------------- ----- -------------------------------- --------------------------------
All items derive from continuing activities.
The accompanying notes form an integral part of these financial
statements.
Statement of Changes in Equity
For the year ended 31 December 2014
Special Retained
reserve earnings Total
Note US$ US$ US$
-------------------------------- ----- ------------------------ ------------------------ ------------------
Total equity as at 1 January
2014 579,014,573 (300,822,334) 278,192,239
Total comprehensive loss
for the year - (44,529,394) (44,529,394)
Capital distribution 8 (63,231,507) - (63,231,507)
Total equity as at 31 December
2014 515,783,066 (345,351,728) 170,431,338
------------------------ ------------------------ ------------------
Total equity as at 1 January
2013 705,125,322 (225,091,053) 480,034,269
Total comprehensive loss
for the year - (75,731,281) (75,731,281)
Capital distribution (126,110,749) - (126,110,749)
Total equity as at 31 December
2013 579,014,573 (300,822,334) 278,192,239
------------------------ ------------------------ ------------------
The accompanying notes form an integral part of these financial
statements.
Statement of Cash Flows
For the year ended 31 December 2014
Year ended Year ended
31 December 31 December
2014 2013
US$ US$
-------------------------------------------- -------------------------------- -----------------------------
Cash flows from operating activities
Net bank interest received - 4,489
Dividends received 33,585,788 40,483,106
Operating expenses paid (4,050,575) (10,626,821)
Net cash inflow from operating activities 29,535,213 29,860,774
-------------------------------------------- -------------------------------- -----------------------------
Cash flows from investing activities
Sale of investments and return on capital 13,810,673 212,914,814
Purchase of investments (4,000,000) (101,661,281)
Net cash flows on derivative instruments
and foreign exchange (2,744,233) (2,131,105)
Net cash inflow from investing activities 7,066,440 109,122,428
-------------------------------------------- -------------------------------- -----------------------------
Cash flows from financing activities
Capital distributions (63,231,507) (126,110,749)
Net cash used in financing activities (63,231,507) (126,110,749)
-------------------------------------------- -------------------------------- -----------------------------
Net (decrease)/increase in cash and cash
equivalents (26,629,854) 12,872,453
============================================ ================================ =============================
Reconciliation of net cash flows to movement in cash
and bank balances
Cash and cash equivalents at the beginning
of the year 41,013,703 28,141,250
(Decrease)/increase in cash and bank
balances (26,629,854) 12,872,453
--------------------------------------------
Cash and cash equivalents at the end
of the year 14,383,849 41,013,703
-------------------------------------------- -------------------------------- -----------------------------
The accompanying notes form an integral part of these financial
statements.
Notes to the Financial Statements
1. General Information
Ashmore Global Opportunities Limited (the "Company", "AGOL") is
an authorised closed ended investment company incorporated in
Guernsey on 21 June 2007 with an indefinite life and a listing on
the London Stock Exchange. As an existing closed ended Company,
AGOL is deemed to have been granted an authorisation in accordance
with section 8 of the Protection of Investors (Bailiwick of
Guernsey) Law 1987, as amended, and rule 7.02(2) of the Authorised
Closed Ended Investment Schemes Rules 2008 on the same date as the
Company obtained consent under the Control of Borrowing (Bailiwick
of Guernsey) Ordinance 1959 to 1989. AGOL's investment objective
was to deploy capital in a diversified portfolio of global emerging
market strategies and actively manage these with a view to
maximising total returns. This was implemented by investing across
various investment themes, including external debt, local currency,
Special Situations (incorporating distressed debt and private
equity), corporate high yield and equities with a principal focus
on special situations.
The Company was launched on 7 December 2007 and the Company's
shares were admitted to the Official Listing of the London Stock
Exchange on 12 December 2007, pursuant to Chapter 14 of the Listing
Rules. Following changes to the Listing Rules on 6 April 2010, the
listing became a Standard Listing. On 27 April 2011, the UK Listing
Authority confirmed the transfer of the Company from a Standard
Listing to a Premium Listing under Chapter 15 of the Listing
Rules.
On 20 February 2013, the Board of Directors proposed a managed
wind-down of the Company following consultation with the Investment
Manager and the main shareholders. The proposal was accepted during
the Extraordinary General Meeting of shareholders on 13 March
2013.
Investment Strategy
The Board of Directors is charged with setting the Company's
investment strategy in accordance with the Articles of
Incorporation. They have delegated the day-to-day implementation of
this strategy to the Investment Manager but retain responsibility
to ensure that adequate resources of the Company are directed in
accordance with their decisions. The investment decisions of the
Investment Manager are reviewed on a regular basis to ensure
compliance with the policies and legal responsibilities of the
Board. The Investment Manager has been given full authority to act
on behalf of the Company, including the authority to purchase and
sell securities and other investments on behalf of the Company and
to carry out other actions as appropriate to give effect thereto.
Whilst the Investment Manager may make investment decisions on a
day-to-day basis regarding the allocation of funds to different
investments, any changes to the investment strategy or major
allocation decisions have to be approved by the Board, although
they may be proposed by the Investment Manager. The Board therefore
retains full responsibility for major allocation decisions made on
an ongoing basis. The Investment Manager will always act in
accordance with the terms of the Investment Management Agreement,
which cannot be changed without the approval of the Board of
Directors.
Following the EGM held on 13 March 2013, the investment
restrictions ceased to apply for the Company in order to facilitate
the realisation of its assets in an orderly manner to return cash
to shareholders.
The Company is domiciled in Guernsey, Channel Islands. Most of
the Company's income is from investment entities incorporated in
Guernsey.
Significant Shareholders
The Company has a diversified shareholder population. As at 31
December 2014 and 2013, Chase Nominees Limited, Goldman Sachs
Securities (Nominees) Limited and State Street Nominees Limited
held more than 10% of the Company's Net Asset Value. Significant
shareholders are listed in the Directors' Report.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied for the years presented, unless otherwise
stated.
a) Statement of Compliance
The financial statements, which give a true and fair view, are
prepared in accordance with: International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board; interpretations issued by the International
Financial Reporting Standards Committee; and the Listing Rules of
the UK Listing Authority. They comply with the Companies (Guernsey)
Law, 2008 (the "Law").
b) Basis of Preparation
The financial statements have been prepared under the historical
cost convention, as modified by the revaluation of financial assets
and financial liabilities at fair value through profit or loss.
The financial statements have been prepared on the going concern
basis, despite the managed wind-down of the Company which was
approved by the shareholders during the Extraordinary General
Meeting of 13 March 2013. The factors surrounding this are detailed
in the Directors' Report. The Board has concluded that the managed
wind-down of the Company has no significant impact on the valuation
of the Company's investments or its ability to meet liabilities as
they fall due for the foreseeable future, including for at least 12
months from the date of this report.
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and the reported amounts of
assets, liabilities, income and expenses.
These estimates and their associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making judgements about the carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and their underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision
affects only that period, or in the period of revision and future
periods if the revision affects both current and future
periods.
The key judgements made by management in the application of IFRS
that have a significant effect on the financial statements and the
key estimates with a significant risk of material adjustment relate
to unquoted financial instruments as described in note 2d.
c) Foreign Currency Transactions
i) Functional and presentation currency
The financial statements have been prepared in US dollars (US$),
which is the Company's functional and presentation currency,
rounded to the nearest US dollar. The Board of Directors considers
the US dollar to be the currency that most faithfully represents
the economic effect of the underlying transactions, events and
conditions. The US dollar is the currency in which the Company
measures its performance and reports its results. This
determination also considers the competitive environment in which
the Company is compared to other European investment products.
ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary assets and liabilities are
translated into the functional currency using the exchange rate
prevailing at the Statement of Financial Position date.
Foreign exchange gains and losses arising from translation are
included in the Statement of Comprehensive Income.
Foreign exchange gains and losses relating to the financial
assets and liabilities carried at fair value through profit or loss
are presented in the Statement of Comprehensive Income within
"Other net changes in the fair value of financial assets and
financial liabilities at fair value through profit or loss".
d) Financial Assets and Financial Liabilities
i) Classification
The Company has classified financial assets and financial
liabilities into the following categories:
- Financial assets and financial liabilities at fair value through profit or loss:
Financial assets and liabilities held for trading:
Financial assets or financial liabilities classified as held for
trading are those acquired or incurred principally for the purpose
of selling or repurchasing in the short term. Derivatives,
including forward foreign currency contracts, are categorised as
financial assets or financial liabilities held for trading.
Financial assets and liabilities designated at fair value
through profit or loss at inception:
Financial assets and financial liabilities designated at fair
value through profit or loss at inception are financial instruments
that are not classified as held for trading but are managed, and
whose performance is evaluated on a fair value basis in accordance
with the Company's documented investment strategy. These financial
instruments include direct debt or equity investments and
investments in quoted and unquoted Funds.
- Financial assets and financial liabilities at amortised cost:
Loans and receivables
This includes cash and cash equivalents, balances due from
brokers, and other receivables.
Other financial liabilities
This includes balances due to brokers and other payables.
ii) Initial recognition
Regular purchases and sales of financial assets and liabilities
are initially recognised on the trade date - the date on which the
Company becomes a party to the contractual provisions of the
instrument. Other financial assets and liabilities are recognised
on the date they are originated.
Financial assets and financial liabilities at fair value through
profit or loss are initially recognised at fair value, with
transaction costs recognised in the Statement of Comprehensive
Income. Financial assets or financial liabilities not at fair value
through profit or loss are initially recognised at fair value and
include transaction costs that are directly attributable to their
acquisition or issue.
iii) Subsequent measurement
- Fair value measurement
Subsequent to initial recognition, all financial assets and
financial liabilities at fair value through profit or loss are
measured at fair value. 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.
Gains and losses arising from changes in the fair value of the
financial assets or financial liabilities at fair value through
profit or loss category are presented in the Statement of
Comprehensive Income within "Other net changes in the fair value of
financial assets and liabilities at fair value through profit or
loss" in the period in which they arise and can be unrealised or
realised.
Unrealised gains and losses comprise changes to the fair value
of financial instruments for the period and the reversal of prior
period unrealised gains and losses for financial instruments which
were realised in the reporting period.
Realised gains and losses on the disposal of financial
instruments classified as at fair value through profit or loss are
calculated using the average cost method.
- Valuation of investments in Funds
Investments in quoted open ended Funds are valued by reference
to the most recent prices quoted on a recognised investment
exchange. Investments in unquoted Funds are valued on the basis of
the latest Net Asset Value provided by the administrator of the
unquoted Fund in question, as at the close of business on the
relevant valuation day.
- Valuation of direct investments
Direct investments may be effected via holding vehicles. The
valuations of such positions are based on the valuation of
underlying investments. The fair values of direct investments in
debt or equity securities are based on their quoted market prices
at the Statement of Financial Position date, without any deduction
for estimated future selling costs. If a quoted market price is not
available on a recognised stock exchange or from a broker/dealer
for non-exchange traded financial instruments, the fair value is
estimated using valuation techniques, as described in note 7.
- Valuation of forward foreign currency contracts
Open forward foreign currency contracts at the Statement of
Financial Position date are valued at forward currency rates
prevailing on that date. The change in the fair value of open
forward foreign currency contracts is calculated as the difference
between the contract rate and the forward currency rate as at the
Statement of Financial Position date.
The Company does not apply hedge accounting.
iv) Impairment of financial assets classified as loans and
receivables
At each reporting date, the Company assesses whether there is
objective evidence that financial assets classified as loans and
receivables are impaired. As at 31 December 2014 and 2013, the
Company's loans and receivables were not impaired.
Objective evidence of impairment may include: significant
financial difficulty of the borrower or issuer, default or
delinquency by a borrower or issuer, restructuring of a loan or
advance by the Company on terms that the Company would not
otherwise consider, indications that a borrower or issuer will
enter bankruptcy or other observable data relating to a group of
assets such as adverse changes in the payment status of borrowers
or issuers in the group or economic conditions that correlate with
defaults in the group.
Impairment losses on loans and receivables are measured as the
difference between the carrying amount of the financial asset and
the present value of the estimated future cash flows from the asset
discounted at its original effective interest rate. Impairment
losses are recognised in the Statement of Comprehensive Income and
reflected in the Statement of Financial Position in an allowance
account against loans and receivables. Interest on impaired assets
continues to be recognised through the unwinding of the discount.
The Company writes off loans and receivables when they are
determined to be uncollectible.
When a subsequent event causes the amount of impairment loss to
decrease, the decrease in impairment is reversed through profit or
loss.
v) Derecognition
Financial assets are derecognised when the contractual rights to
receive cash flows from the investments have expired or the Company
has transferred substantially all the risks and rewards of
ownership. Financial liabilities are derecognised when their
contractual obligations are discharged, cancelled or expire.
vi) Offsetting
Financial assets and liabilities are offset and the net amount
presented in the Statement of Financial Position when, and only
when, the Company has a legal right to offset the recognised
amounts and it intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
The Company has adopted the amendments to IAS 32 on offsetting.
These amendments clarify the offsetting criteria in IAS 32 by
explaining when an entity currently has a legally enforceable right
to set-off and when gross settlement is considered to be equivalent
to net settlement.
The Company does not hold any financial assets or financial
liabilities that are subject to master netting agreements or
similar agreements and, as such, has not presented any financial
assets or liabilities net on the Statement of Financial Position.
There were no financial assets or financial liabilities that are
offset in the Statement of Financial Position.
Income and expenses are presented on a net basis only when
permitted under IFRS.
e) Amounts due from and due to Brokers
Amounts due from and due to brokers represent receivables for
securities sold and payables for securities purchased that have
been contracted for but not yet settled or delivered on the
Statement of Financial Position date respectively. The accounting
policy for the recognition of amounts due from and due to brokers
is discussed in note 2d.
f) Cash and Cash Equivalents
Cash and cash equivalents may comprise current deposits with
banks, bank overdrafts and other short-term highly liquid
investments that: are readily convertible to known amounts of cash;
are subject to insignificant changes in value; and are held for the
purpose of meeting short-term cash commitments rather than for
investment or other purposes. Cash, deposits with banks and bank
overdrafts are stated at their principal amount.
g) Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
included in equity as a deduction from issue proceeds, net of
tax.
h) Interest Income and Dividend Income
Interest income is recognised in the Statement of Comprehensive
Income as it accrues, on a time-proportionate basis using the
effective interest rate method. It includes interest income from
cash and cash equivalents and from debt securities at fair value
though profit or loss.
Income distributions from quoted Funds are recognised in the
Statement of Comprehensive Income as dividend income when declared.
Dividend income from unquoted Funds and private equity investments
is recognised when the right to receive payment is established.
i) Earnings per Share
The Company presents basic and diluted earnings per share
("EPS") data for each class of its ordinary shares. The basic EPS
of each share class is calculated by dividing the profit or loss
attributable to the ordinary shareholders of each share class by
the weighted average number of ordinary shares outstanding for the
respective share class during the period. Where dilutive
instruments are in issue, diluted EPS is determined by adjusting
the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding for the
effects of the dilutive instruments.
j) Expenses
All expenses are recognised in the Statement of Comprehensive
Income on an accruals basis.
k) Segmental Reporting
Although the Company has two classes of shares and invests in
various investment themes, it is organised and operates as one
business and one geographical segment as the principal focus is on
emerging market strategies, mainly achieved via investments in
Funds domiciled in Europe but investing globally. Accordingly, all
significant operating decisions are based upon analysis of the
Company as one segment. The financial results from this segment are
equivalent to the financial statements of the Company as a whole.
Additionally, the Company's performance is evaluated on an overall
basis. The Company's management receives financial information
prepared under IFRS and, as a result, the disclosure of separate
segmental information is not required.
l) Consolidation
The Company is not required to consolidate any of the
investments listed in the Schedule of Investments or the underlying
investments of the Funds held, as it does not control them and
given the fact that the Company is an investment entity under IFRS
10 - Investment Entities. All investments including those effected
via holding vehicles are valued at fair value through profit or
loss.
i) Disclosure of Interests in Other Entities
As a result of the application of IFRS 12, Disclosure of
Interests in Other Entities, the Company has made disclosures about
its involvement with unconsolidated structured entities in note
16.
The Company has concluded that un-listed funds in which it
invests, but which it does not consolidate, meet the definition of
structured entities for the following reasons:
-- the voting rights attached to the funds are not considered to
be dominant rights as the holder is unable to control the funds.
The rights relate only to influence over administrative tasks;
-- each fund's activities are restricted by its prospectus; and
-- the funds have narrow and well-defined objectives to provide
investment opportunities to investors.
ii) Investment Entities
The Company has adopted the accounting standards on Investment
Entities (amendments to IFRS 10, IFRS 12, and IAS 27) and
management has concluded that the Company meets the definition of
an investment entity. All investments of the Company in underlying
funds are measured at fair value through profit and loss.
m) New Standards and Interpretations not yet Adopted
A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning after 1
January 2014, and have not been applied in preparing these
financial statements. The only new standard relevant to the Company
is IFRS 9 Financial Instruments, which is discussed below. The
Company does not plan to adopt IFRS 9 early.
i) IFRS 9 Financial Instruments
IFRS 9, published in July 2014, will replace the existing
guidance in IAS 39. It includes revised guidance on the
classification and measurement of financial instruments, including
a new expected credit loss model for calculating impairment on
financial assets, and new general hedge accounting requirements. It
also carries forward the guidance on recognition and derecognition
of financial instruments from IAS 39.
IFRS 9 is effective for annual reporting periods beginning on or
after 1 January 2018, with early adoption permitted. Based on an
initial assessment by management, this standard is not expected to
have a material impact on the Company.
ii) Amendments to IAS 24
Annual Improvements to IFRSs 2010-2012 Cycle - Amendments to IAS
24, issued in December 2013, extends the definition of a related
party to include a management entity that provides key management
personnel services to the reporting entity. The amendments specify
that if key management personnel services are provided by a
management entity, then the reporting entity is required to
separately disclose the amounts incurred for the provision of key
management personnel services that are provided by that management
entity. However, the reporting entity is not required to look
through to the management entity and disclose compensation paid by
the management entity to its employees and directors.
An entity applies the amendments for annual periods beginning on
or after 1 July 2014. Earlier application is permitted. As the
Company is already disclosing this information, the amendment will
not have an impact on the Company.
3. Taxation
The Director of Income Tax in Guernsey has confirmed that, for
the year ended 31 December 2014, the Company is exempt from
Guernsey Income Tax under the Income Tax (Exempt bodies) (Guernsey)
Ordinance 1989, and that any surplus income of the Company may be
distributed without the deduction of Guernsey Income Tax. Pursuant
to the exemption granted under the above-mentioned ordinance, the
Company is subject to an annual fee, currently GBP600, payable to
States of Guernsey Income Tax. The Company is exposed to other
taxes in its countries of investment.
4. Financial Assets and Liabilities at Fair Value through Profit or Loss
31 December 31 December
2014 2013
US$ US$
Financial assets held for trading:
- Derivative financial assets 16,430 4,072,451
---------------------------------------------------
Total financial assets held for trading 16,430 4,072,451
--------------------------------------------------- ------------ ------------
Designated at fair value through profit or
loss at inception:
- Equity investments 134,447,796 234,666,774
- Debt investments - 2,646,061
---------------------------------------------------
Total designated at fair value through profit
or loss at inception 134,447,796 237,312,835
--------------------------------------------------- ------------ ------------
Total financial assets at fair value through
profit or loss 134,464,226 241,385,286
--------------------------------------------------- ------------ ------------
During the year ended 31 December 2014, the Company invested in
the Ashmore SICAV 2 Global Liquidity US$ Fund. There were no other
significant changes to the Company's direct equity and debt
investments other than the valuation movements.
As at 31 December 2014, derivative financial assets comprised
forward foreign currency contracts as follows:
Currency Amount Currency Amount Maturity Unrealised
Bought Bought Sold Sold Date Gain
---------- ---------- --------- ---------- ----------- -----------
US$ 3,198,215 GBP 2,041,330 17/02/2015 16,430
Derivative financial assets 16,430
--------------------------------------------- ----------- -----------
As at 31 December 2013, derivative financial assets comprised
forward foreign currency contracts as follows:
Currency Amount Currency Amount Maturity Unrealised
Bought Bought Sold Sold Date Gain
---------- ------------ --------- ------------ ----------- -----------
BRL 31,607,567 US$ 13,210,000 04/02/2014 76,223
GBP 120,308,128 US$ 196,194,284 17/01/2014 3,047,441
US$ 15,988,451 BRL 35,778,956 04/02/2014 948,787
Derivative financial assets 4,072,451
------------------------------------------------- ----------- -----------
31 December 31 December
2014 2013
US$ US$
Financial liabilities held for trading:
- Derivative financial liabilities (538,871) (522,688)
--------------------------------------------------
Total financial liabilities held for trading (538,871) (522,688)
-------------------------------------------------- ------------ -------------------------
As at 31 December 2014, derivative financial liabilities
comprised forward foreign currency contracts as follows:
Currency Amount Currency Amount Maturity Unrealised
Bought Bought Sold Sold Date Loss
---------- ----------- --------- ------------ ----------- -------------------------
GBP 67,358,975 US$ 105,530,125 17/02/2015 (538,871)
Derivative financial liabilities (538,871)
------------------------------------------------ ----------- -------------------------
As at 31 December 2013, derivative financial liabilities
comprised forward foreign currency contracts as follows:
Currency Amount Currency Amount Maturity Unrealised
Bought Bought Sold Sold Date Loss
---------- ----------- --------- ----------- ----------- -------------------------
US$ 5,010,012 EUR 3,693,588 21/01/2014 (79,524)
US$ 23,404,608 GBP 14,400,000 17/01/2014 (443,164)
Derivative financial liabilities (522,688)
----------------------------------------------- ----------- -------------------------
5. Net Gain/Loss from Financial Assets and Liabilities at Fair Value through Profit or Loss
31 December 31 December
2014 2013
US$ US$
Other net changes in fair value through profit
or loss:
- Realised (20,853,104) (16,964,482)
- Change in unrealised (71,233,323) (89,849,284)
----------------------------------------------------
Total (losses) (92,086,427) (106,813,766)
---------------------------------------------------- ------------- ----------------------
Other net changes in fair value on assets
held for trading - derivatives (6,576,846) (155,505)
Other net changes in fair value on assets
designated at fair value through profit or
loss (85,509,581) (106,658,261)
----------------------------------------------------
Total net (losses) (92,086,427) (106,813,766)
---------------------------------------------------- ------------- ----------------------
6. Other Financial Assets and Liabilities
a) Other financial assets:
Other financial assets comprised the following:
31 December 31 December
2014 2013
US$ US$
Dividends receivable 17,175,594 -
Due from brokers 7,544,785 -
Prepaid Directors' insurance 10,166 9,895
24,730,545 9,895
------------ ----------------------------
The amounts due from brokers relate to the sale of investments
for which the settlement date was subsequent to the Statement of
Financial Position date.
b) Other financial liabilities:
Other financial liabilities relate to accounts payable and
accrued expenses, and comprised the following:
31 December 31 December
2014 2013
US$ US$
Management fee payable (net) 117,712 258,918
Incentive fee payable 1,726,717 2,600,241
Other accruals 763,982 834,798
2,608,411 3,693,957
------------ ------------
The net management fee payable includes a rebate of US$102,437
(31 December 2013: US$665,598) due from the Investment Manager in
accordance with the Investment Management Agreement as described in
note 11a.
7. Financial Instruments
a) Carrying amounts versus fair values
As at 31 December 2014, the carrying values of financial assets
and liabilities presented in the Statement of Financial Position
approximate their fair values.
b) Financial instruments carried at fair value - fair value
hierarchy
The Company classifies fair value measurements using a fair
value hierarchy that reflects the significance of the inputs used
in making the measurements. The fair value hierarchy has the
following levels:
-- Level 1: Quoted prices (unadjusted) in an active market for identical instruments.
-- Level 2: Valuation techniques based on observable inputs,
either directly (i.e. as prices) or indirectly (i.e. derived from
prices). This category includes instruments valued using: quoted
prices in active markets for similar instruments; quoted prices for
identical or similar instruments in markets that are considered
less than active; or other valuation techniques for which all
significant inputs are directly or indirectly observable from
market data.
-- Level 3: Valuation techniques using significant unobservable
inputs. This category includes all instruments for which the
valuation technique includes inputs not based on observable market
data and the unobservable inputs have a significant effect on the
instrument's valuation. This category includes instruments that are
valued based on quoted prices for similar instruments for which
significant unobservable adjustments or assumptions are required to
reflect differences between the instruments.
The level in the fair value hierarchy 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. For this purpose, the
significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses
observable inputs that require significant adjustment based on
unobservable inputs, that measurement is a level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors
specific to the asset or liability.
The Company considers observable market data to be that market
data which is readily available, regularly distributed or updated,
reliable and verifiable, not proprietary, and provided by
independent sources that are actively involved in the relevant
market.
The Company recognises transfers between levels 1, 2 and 3 based
on the date of the event or change in circumstances that caused the
transfer. This policy on the timing of recognising transfers is the
same for transfers into a level as for transfers out of a
level.
The following table analyses within the fair value hierarchy the
Company's financial assets and liabilities at fair value through
profit and loss (by class) measured at fair value at 31 December
2014:
Level 1 Level 2 Level 3 Total balance
Financial assets at fair value
through profit and loss
Financial assets held for
trading:
- Derivative financial assets - 16,430 - 16,430
Financial assets designated
at fair value through profit
or loss at inception:
- Equity investments 8,779,524 - 125,668,272 134,447,796
Total 8,779,524 16,430 125,668,272 134,464,226
-------------------------------- ---------- -------- ------------ --------------
Level 1 Level 2 Level 3 Total balance
Financial liabilities at fair
value
through profit and loss
Financial liabilities held
for trading:
- Derivative financial liabilities - 538,871 - 538,871
Total - 538,871 - 538,871
------------------------------------ --------- -------- -------- --------------
The following table analyses within the fair value hierarchy the
Company's financial assets and liabilities at fair value through
profit and loss (by class) measured at fair value at 31 December
2013:
Level 1 Level 2 Level 3 Total balance
Financial assets at fair value
through profit and loss
Financial assets held for
trading:
- Derivative financial assets - 4,072,451 - 4,072,451
Financial assets designated
at fair value through profit
or loss at inception:
- Equity investments 5,371,650 - 229,295,124 234,666,774
- Debt investments - - 2,646,061 2,646,061
Total 5,371,650 4,072,451 231,941,185 241,385,286
------------------------------------ ---------- ---------- ------------ --------------
Financial liabilities at fair
value
through profit and loss
Financial liabilities held
for trading:
- Derivative financial liabilities - 522,688 - 522,688
Total - 522,688 - 522,688
------------------------------------ ---------- ---------- ------------ --------------
Level 1assets include listed Aginyx Ordinary Shares (MCX) and
the Ashmore SICAV 2 Global Liquidity US$ Fund.
Level 2assets include forward foreign currency contracts that
are calculated internally using observable market data.
Level 2liabilities include forward foreign currency contracts
that are calculated internally using observable market data.
Level 3 assets include all unquoted funds, limited partnerships
and unquoted investments. Investments in unquoted funds and limited
partnerships are valued on the basis of the latest Net Asset Value,
which represents the fair value, provided by the administrator of
the unquoted fund, as at the close of business on the relevant
valuation day. Unquoted funds are classified as level 3 assets
after consideration of their underlying investments, lock-up
periods and liquidity.
The following tables present the movement in level 3 instruments
for the years ended 31 December 2014 and December 2013 by class of
financial instrument:
Equity securities Debt securities Total
--------------------------------------- ------------------- ----------------------- -----------------
Opening balance as at 1 January
2014 229,295,124 2,646,061 231,941,185
Sales and return of capital (16,584,258) - (16,584,258)
Gains and losses recognised in profit
and loss * (87,042,594) (2,646,061) (89,688,655)
----------------------------------------
Closing balance as at 31 December
2014 125,668,272 - 125,668,272
---------------------------------------- ------------------ ----------------------- -----------------
Equity securities Debt securities Total
--------------------------------------- -------------------- ---------------- ----------------
Opening balance as at 1 January
2013 266,380,538 31,379,479 297,760,017
Purchases 548,690 - 548,690
Sales and return of capital (82,546,152) - (82,546,152)
Transfer into level 3 110,194,018 - 110,194,018
Gains and losses recognised in profit
and loss * (65,281,970) (28,733,418) (94,015,388)
----------------------------------------
Closing balance as at 31 December
2013 229,295,124 2,646,061 231,941,185
---------------------------------------- ------------------- ---------------- ----------------
* Gains and losses recognised in profit and loss include
unrealised results on existing assets as at
31 December 2014 of US$(366,282,237) (31 December 2013:
US$(293,659,787)).
Total gains and losses included in the Statement of
Comprehensive Income are presented in "Other net changes in the
fair value of financial assets and financial liabilities at fair
value through profit and loss".
As at 31 December 2014, the carrying values of other financial
assets and liabilities approximated their fair values.
Valuation methodology of level 3 assets held by the Company and
indirectly by the Company through its investments in the underlying
Ashmore Funds
The Pricing Methodology and Valuation Committee (PMVC), which
has been authorised as an Approved Person to provide valuations to
the Administrator, operates and meets to consider the methods for
pricing hard-to-value investments where a reliable pricing source
is not available, if an asset does not trade regularly, or in the
case of a significant event (such as a major event and market
volatility outside of local market hours). These assets, which are
classified within level 3, may include all asset types but are
frequently 'Special Situations' style investments, typically
incorporating distressed, illiquid or private equity assets.
For these hard-to-value investments, the methodology and models
used to determine fair value were created in accordance with the
International Private Equity and Venture Capital Valuation (IPEV)
guidelines by experienced personnel at an independent third-party
valuation specialist. The valuation is then subject to review,
amendment if necessary, then approval, firstly by the PMVC, and
then by the Board of Directors of the Company.
Valuation techniques used by the third-party valuation
specialists include the market approach, the income approach or the
cost approach for which sufficient and reliable data is available.
Within level 3, the use of the market approach generally consists
of using comparable market transactions, while the use of the
income approach generally consists of the net present value of
estimated future cash flows, adjusted as deemed appropriate for
liquidity, credit, market and/or other risk factors.
The main inputs used by the third-party valuation specialist in
estimating the value of level 3 investments include the original
transaction price, recent transactions in the same or similar
instruments, completed or pending third-party transactions in the
underlying investment or comparable issuers, subsequent rounds of
financing, recapitalisations and other transactions across the
capital structure, offerings in the equity or debt capital markets,
and changes in financial ratios or cash flows. Level 3 investments
may also be adjusted to reflect illiquidity and/or
non-transferability.
The following tables show the valuation techniques and the key
unobservable inputs used in the determination of fair value of
level 3 direct investments:
Balance as at 31 Valuation methodology Unobservable inputs Range
December 2014
US$
-------------------- -------------- ---------------------- -------------------------- ------
Equity in private 15,125,986 Comparable and - Forecast annual revenue N/A
companies growth rate
Discounted Cashflows - Forecast EBITDA margin
- Risk adjusted discount
rate
- Market multiples
-------------------- -------------- ---------------------- -------------------------- ------
Debt in private - Comparables - -
companies
-------------------- -------------- ---------------------- -------------------------- ------
Investments in 110,542,286 Net Asset Value Inputs to Net Asset N/A
unlisted Funds Value
Balance as at 31 Valuation methodology Unobservable inputs Range
December 2013
US$
-------------------- -------------- ---------------------- -------------------------- ------
Equity in private 16,471,209 Comparable and - Forecast annual revenue N/A
companies growth rate
Discounted Cashflows - Forecast EBITDA margin
- Risk adjusted discount
rate
- Market multiples
-------------------- -------------- ---------------------- -------------------------- ------
Debt in private 2,646,061 Comparables - Market multiples N/A
companies
- Discounts
-------------------- -------------- ---------------------- -------------------------- ------
Investments in 212,823,915 Net Asset Value Inputs to Net Asset N/A
unlisted Funds Value
The Company believes that its estimates of fair value are
appropriate, however the use of different methodologies or
assumptions could lead to different measurements of fair value. For
fair value investments in level 3, changing one or more of the
assumptions used to alternative assumptions could result in an
increase or decrease in net assets attributable to investors. Due
to the numerous different factors affecting the assets, the impact
cannot be reliably quantified. It is reasonably possible, on the
basis of existing knowledge, that outcomes within the next
financial year that are different from the assumptions used could
require a material adjustment to the carrying amounts of affected
assets.
8. Capital and Reserves
The Company's capital is represented by two classes of ordinary
shares, namely the US$ share classand GBP share class. The holders
of ordinary shares are entitled to dividends as declared from time
to time and have no redemption rights.
The total comprehensive gain or loss during the year is
allocated proportionately to each share class except for the
results of hedging the US dollar exposure of the assets
attributable to the Pound Sterling-denominated GBPshare class,
which are allocated solely to this share class.
The Company is authorised to issue an unlimited number of US$
and GBP shares at no par value.
Ordinary Shares
The following table presents the summary of changes in the
number of shares issued and fully paid during the year ended 31
December 2014:
US$ shares GBP shares
Shares outstanding as at 31
December 2013 15,462,002 17,690,012
Share conversions 1,475,994 (888,808)
Compulsory redemptions (3,989,355) (4,229,154)
Shares outstanding as at 31
December 2014 12,948,641 12,572,050
------------------------------------ -------------------------------------
Share Conversion
A shareholder has the right, as the Directors may determine for
this purpose at each "Conversion Calculation Date", to elect to
convert some or all of the shares of any class they hold into a
different class or classes of shares by giving at least five
business days' notice to the Company before the relevant Conversion
Calculation Date. Prior to the 2011 AGM, shareholders were able to
convert their shares on a quarterly basis at the NAV Calculation
Dates in March, June, September and December. As per the amended
Articles of Incorporation dated 18 April 2011, shareholders were
able to convert their shares on a monthly basis.
On 30 August 2013, the Directors of the Company announced that
share conversion opportunities were offered for the months ending
February, May, August and November. Share conversion opportunities
for all other month ends were no longer offered and this decision
was taken due to the timings and processes surrounding the
anticipated returns of capital as part of the orderly wind-down of
the Company.
The following share conversions took place during the year ended
31 December 2014:
Transfers from Transfers to Number of shares Number of shares
to switch out to switch in
---------------- -------------- ----------------- -----------------
GBP shares US$ shares 937,797 1,551,842
US$ shares GBP shares 75,848 48,989
Compulsory Redemptions
Following the approval by the Company's shareholders of the
wind-down proposal as described in the circular published on 20
February 2013, during the year ended 31 December 2014, the Company
announced partial returns of capital to shareholders by way of
compulsory partial redemptions of shares with the following
redemption dates:
-- 31 January 2014, using the 31 December 2013 Net Asset Value;
-- 8 August 2014, using the 30 June 2014 Net Asset Value; and
-- 31 October 2014, using the 30 September 2014 Net Asset Value.
The amounts applied to the partial redemptions of shares
comprised monies from the realisation of the Company's investments
up to and including the reference NAV calculation dates pursuant to
the wind-down of the Company. During the year, the following shares
were redeemed by way of compulsory partial redemptions of
shares.
Number of ordinary Consideration in
shares redeemed US$
------------ ------------------- -----------------
US$ shares 3,989,355 23,216,527
GBP shares 4,229,154 40,014,980
63,231,507
-----------------
Voting rights
The voting rights each share is entitled to in a poll at any
general meeting of the Company (applying the Weighted Voting
Calculation as described in the Prospectus published by the Company
on 6 November 2007) is as follows:
US$ shares: 1.0000
GBP shares: 2.0288
The above figures may be used by shareholders as the denominator
for calculations to determine if they are required to notify their
interest in, or a change to their interest in the Company under the
FCA's Disclosure and Transparency Rules.
Special Reserve
On 5 November 2007, the Company passed a special resolution
that, subject to the admission of the Company's shares to the
London Stock Exchange becoming unconditional and with the approval
of the Royal Court, the amount standing to the credit of the share
premium account of the Company following completion of the offering
be cancelled and the amount of the share premium account so
cancelled be credited as a distributable reserve to be established
in the books of account of the Company. This reserve is able to be
applied in any manner in which the Company's profits available for
distribution (as determined in accordance with the Laws) are able
to be applied, including in the purchase of the Company's own
shares and in the payment of dividends.
Distribution Policy
Subject to the Laws and the Listing Rules, the Company may by
ordinary resolution from time to time declare dividends. No
dividend shall exceed the amount recommended by the Board. The
Board may declare and pay interim dividends if, in the opinion of
the Board, they are justified by the profits of the Company.
No dividends were declared during the year ended 31 December
2014 or the year ended 31 December 2013.
Following the EGM on 13 March 2013, shareholders approved
proposals to distribute surplus cash held by the Company on a
quarterly basis by way of pro rata compulsory redemptions of
shares.
9. Net Asset Value
The Net Asset Value of each US$ and GBP Share is determined by
dividing the total net assets of the Company attributed to the US$
and GBP Share classes by the number of US$ and GBP shares in issue
respectively at the year end as follows:
As at 31 December Net assets Shares in issue Net assets Net assets
2014 attributable per share per share
to each in US$ in local currency
share class
in US$
-------------- ---------------- ----------- -------------------
US$ shares 68,325,380 12,948,641 5.28 5.28
GBP shares 102,105,958 12,572,050 8.12 5.21
170,431,338
------------------- -------------- ---------------- ----------- -------------------
As at 31 December Net assets Shares in issue Net assets Net assets
2013 attributable per share per share
to each in US$ in local currency
share class
in US$
-------------- ---------------- ----------- -------------------
US$ shares 96,788,419 15,462,002 6.26 6.26
GBP shares 181,403,820 17,690,012 10.25 6.19
278,192,239
------------------- -------------- ---------------- ----------- -------------------
10. Dividend and Interest Income
Year ended Year ended
31 December 31 December
2014 2013
Interest income US$ US$
Cash and cash equivalents - 4,489
Total interest income - 4,489
--------------------------------- ------------- -------------
Equity investments designated
at fair value through profit
or loss 50,761,382 40,483,106
Total dividend income 50,761,382 40,483,106
--------------------------------- ------------- -------------
11. Significant Agreements
a) Investment Manager
Ashmore Investment Advisors Limited ("AIAL") was authorized as
an Alternative Investment Fund Manager ("AIFM") by the Financial
Conduct Authority ("FCA") on 18 July 2014. Effective 18 July 2014,
the Board appointed AIAL as the Company's AIFM and AIAL assumed the
role of Investment Manager to the Company from Ashmore Investment
Management Limited ("AIML"), pursuant to a Novation of the 5
November 2007 Investment Management Agreement. Prior to 18 July
2014, AIML served as Investment Manager to the Company. The
investment advisory services provided to the Company were novated
to AIAL as part of regulatory change and ongoing regulatory
compliance in the United Kingdom. The IMA has been amended; to
reflect these changes; to comply with regulatory obligations; and
to provide an appropriate balance between the Board's independence
from the new AIFM, its control over the Company and the Company's
investment policies.
Until 12 December 2014 the Investment Manager was remunerated at
a monthly rate of one twelfth of 2% of the Net Asset Value
(calculated before the deduction of investment management fees for
that month and before the deduction of any accrued incentive fee),
payable monthly in arrears. There was an arrangement to offset the
investment management fees payable by the Company against
management fees charged at the Sub-Fund level to avoid
double-charging management fees, so that the effective monthly
investment management fee payable at Company level equated to one
twelfth of 2% of the Net Asset Value. From 13 December 2014, the
monthly rate reduced to one twelfth of 1% of the Net Asset Value
excluding investments made in Funds (calculated before deduction of
the investment management fee for that month and before the
deduction of any accrued incentive fee). In relation to investments
made in the Funds, the Investment Manager is entitled only to
management fees at the rate charged by it to the Funds.
The Investment Manager may terminate the Investment Management
Agreement at any time by giving the Company not less than six
months' written notice.
The Investment Management Agreement, which is governed by
English law, had a fixed term of three years, which commenced on
Admission. Following this initial term, the agreement continues
unless: (i) it is terminated by the Company, giving the Investment
Manager not less than two years' written notice, provided that any
such notice may only be given following the expiry of the fixed
initial term of three years; or (ii) it is terminated by the
Company, giving the Investment Manager sixty calendar days' written
notice to expire no earlier than the fixed three-year initial term
of the agreement, provided that the Company provides the Investment
Manager with certain compensation.
Under the terms of the Investment Management Agreement, the
Investment Manager was entitled to 4% of the reduction in Net Asset
Value resulting from any repurchase of shares pursuant to the
Company's buy-back policy, or any distribution made in relation to
shares, or any return of capital made in relation to the shares,
provided that such reduction occurred with reference date on or
before 30 June 2014. The investment management fee expense amounts
in these financial statements include all such fees.
The net investment management fees during the year were as
follows:
Year ended Year ended
31 December 31 December
2014 2013
US$ US$
Investment management fee expense (4,231,908) (7,315,304)
Investment management fee rebate 3,345,221 5,352,797
Buyback fees (1,766,000) (5,374,588)
(2,652,687) (7,337,095)
------------- ----------------------
The Investment Manager is entitled to incentive fees based on
the performance of investments other than investments in Funds, if
those investments achieve a return over the period in excess of 6%
per annum. Provided that the 6% return hurdle is cleared, the
incentive fee is calculated as 20% of the aggregate of (i) the
amount received by the Company in excess of the cost of investment
and (ii) the returns achieved on investments above 6% per annum.
Incentive fees are payable only upon the realisation of
investments. During the year, incentive fees of US$682,331 were
paid and US$(191,193) were credited (31 December 2013: US$1,324,234
paid and US$(1,542,435) credited respectively).
b) Directors' Remuneration
During the year ended 31 December 2014, Directors' remuneration
was as follows:
Chairman: GBP31,500 per annum
Chairman of the Audit Committee: GBP31,500 per annum
Independent Directors: GBP29,700 per annum
Non-Independent Directors: waived
During the year ended 31 December 2013, Directors' remuneration
was as follows: until 31 March 2013: Chairman: GBP75,000 per annum,
Chairman of the Audit Committee: GBP35,000 per annum and
Independent Directors: GBP33,000 per annum. With effect from 1
April 2013, the remuneration was reduced by 20 per cent for the
Chairman and by 10 per cent for the Chairman of the Audit Committee
and Independent Directors, which equates to GBP60,000, GBP31,500
and GBP29,700 respectively. With effect from 1 November 2013, the
remuneration was reduced to GBP31,500 per annum for the Chairman.
The Non-Independent Director's remuneration was waived from 1
January 2013.
c) Administrator
The Administrator, Northern Trust International Fund
Administration Services (Guernsey) Limited, performs administrative
duties for which it was remunerated at an annual rate of 0.02% of
the Company's Total Net Assets.
d) Custodian
Northern Trust (Guernsey) Limited (the "Custodian") was
remunerated at an annual rate of 0.01% of the Company's Total Net
Assets.
12. Other Operating Expenses
Year ended Year ended
31 December 31 December
2014 2013
US$ US$
Promotional fees (92,904) 121,886
Audit fees 103,491 142,126
Professional fees (22,341) 826,683
Legal fees 15,878 -
Miscellaneous fees 291,381 407,191
295,505 1,497,886
------------- -------------
Promotional fees are fees reimbursed to the Investment Manager
for promotional and administrational costs they incurred in
relation to the Company.
13. Earnings per Share (EPS)
The calculation of the earnings per US$ and GBP share is based
on the gain/(loss) for the year attributable to US$ and GBP
shareholders and the respective weighted average number of shares
in issue for each share class during the year.
The loss attributable to each share class for the year ended 31
December 2014 was as follows:
US$ share GBP share
--------------------------------------- --------------------------- ---------------------------
(Loss) per share class (US$) (13,963,351) (30,566,043)
Weighted average number of shares 13,936,230 14,705,142
EPS per share class (US$) (1.00) (2.08)
----------------------------------------- --------------------------- ---------------------------
Issued shares at the beginning
of the year 15,462,002 17,690,012
Effect on the weighted average number
of shares:
Conversion of shares 748,662 (451,679)
Compulsory redemption of shares (2,274,434) (2,533,191)
Weighted average number of shares 13,936,230 14,705,142
----------------------------------------- --------------------------- ---------------------------
There were no dilutive instruments in issue during the year.
The loss attributable to each share class for the year ended 31
December 2013 was as follows:
US$ share GBP share
--------------------------------------- --------------------------- ---------------------------
(Loss) per share class (US$) (28,693,899) (47,037,382)
Weighted average number of shares 19,446,877 19,960,122
EPS per share class (US$) (1.48) (2.36)
----------------------------------------- --------------------------- ---------------------------
Issued shares at the beginning
of the year 23,834,219 23,052,010
Effect on the weighted average number
of shares:
Conversion of shares (810,141) 526,419
Compulsory redemption of shares (3,577,201) (3,618,307)
Weighted average number of shares 19,446,877 19,960,122
----------------------------------------- --------------------------- ---------------------------
There were no dilutive instruments in issue during the year.
14. Financial Risk Management
The Company's activities expose it to a variety of financial
risks which include: market risk (including currency risk, interest
rate risk and price risk), credit risk and liquidity risk.
The Company puts policies and processes in place to measure and
manage the various types of risk to which it is exposed; these are
explained below.
Market risk
The majority of the Company's financial instruments are
recognised at fair value, and changes in market conditions directly
affect net investment income.
i) Currency Risk
Although the majority of the Company's investments are
denominated in US$, which is its functional currency, the Company
may invest in financial instruments denominated in currencies other
than its functional currency. Consequently, the Company is exposed
to the risk that the value of its currency, relative to other
foreign currencies, may change in a manner that has an adverse
effect on the value of the portion of the Company's assets or
liabilities denominated in currencies other than US$.
The Investment Manager may hedge currency exposures by reference
to the most recent Net Asset Value of the Company's underlying
investments via the use of forward foreign currency contracts or
similar instruments.
As at the Statement of Financial Position date, the Company is
not exposed to any significant currency risk arising on its
financial assets and liabilities, as all investments of the Company
are denominated in US$. However, the Company has put in place
hedging mechanisms to hedge the currency risk arising on the GBP
share class.
Shares in the Company are denominated in US$ and GBP. The base
currency is the US dollar, and therefore non-US dollar subscription
monies for shares are typically converted into US dollars for
operational purposes. The costs and any benefit of hedging the
foreign currency exposure of the assets attributable to shares
denominated in Pound Sterling against the US dollar will be
allocated solely to the GBP share class. This may result in
variations in the Net Asset Values of the two classes of shares as
expressed in US dollars.
As at 31 December 2014, the net foreign currency exposure on the
GBP share class was as follows (in US$):
GBP share
Currency exposure of GBP share
class 102,105,958
Nominal value of currency hedges (102,331,910)
Net foreign currency exposure (225,952)
--------------
As at 31 December 2013, the net foreign currency exposure on the
GBP share class was as follows (in US$):
GBP share
Currency exposure of GBP share
class 181,403,820
Nominal value of currency hedges (172,789,676)
Net foreign currency exposure 8,614,144
--------------
As at 31 December 2014, had the US dollar strengthened by 1% in
relation to the Pound Sterling, with all other variables held
constant, net assets attributable to equity holders would have
decreased by US$5,224
(31 December 2013: increased by US$35,498).
A 1% weakening of the US dollar against the above currencies
would have resulted in an equal but opposite effect on the net
assets attributable to shareholders, on the basis that all other
variables remain constant. This currency risk sensitivity analysis
is a relative estimate of risk rather than a precise and accurate
number.
ii) Interest rate risk
The majority of the Company's financial assets and liabilities
are non-interest bearing (31 December 2014: 91.56%, 31 December
2013: 85.26%). As at 31 December 2014, interest-bearing financial
assets comprised cash and cash equivalents of US$14,383,849. The
Company's investment portfolio is composed entirely of non-interest
bearing assets as at 31 December 2014 (31 December 2014: 100%, 31
December 2013: 100%). As a result, the Company is subject to
limited exposure to interest rate risk due to fluctuations in the
prevailing levels of market interest rates and a sensitivity
analysis of interest rate risk is not meaningful at this time.
iii) Other price risk
Other price risk is the risk that the value of financial
instruments will fluctuate as a result of changes in market prices
(other than those arising from interest rate risk or currency
risk), whether caused by factors specific to an individual
investment, its issuer or any other relevant factors.
The Company's strategy for the management of price risk is
driven by the Company's investment objective. The Company invests
primarily in Funds managed by the Investment Manager ("Ashmore
Funds"), with a principal focus on Special Situations. The Company
may also invest (or co-invest alongside Ashmore Funds and/or others
when appropriate) in direct investments and, on a limited basis,
third-party Funds.
The table below summarises the sensitivity of the Company's net
assets attributable to equity holders to investment price movements
as at the Statement of Financial Position date. The analysis is
based on the assumption that the prices of the investments increase
by 5% (2013: 5%), with all other variables held constant.
A 5% decrease in prices of the investments would result in an
equal but opposite effect on the net assets attributable to equity
holders, on the basis that all other variables remain constant. The
price risk sensitivity analysis provided is a relative estimate of
risk rather than a precise and accurate number.
31 December 31 December
2014 2013
US$ US$
Equity investments 6,722,390 11,733,339
Debt investments - 132,303
6,722,390 11,865,642
------------ ------------
Credit Risk
Credit risk is the risk that the counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company. Credit risk is generally
higher when a non exchange-traded financial instrument is involved,
because the counterparty is not backed by an exchange clearing
house.
As at the Statement of Financial Position date, the maximum
exposure to credit risk before any credit enhancements is the
carrying amount of the financial assets, as set out below:
31 December 31 December
2014 2013
US$ US$
Cash and cash equivalents 14,383,849 41,013,703
Forward currency contracts 16,430 4,072,451
14,400,279 45,086,154
------------ ------------
None of these assets are impaired nor past due but not
impaired.
The credit risk arising on transactions with brokers relates to
transactions awaiting settlement. The risk relating to unsettled
transactions is considered small due to the short settlement period
involved. In addition, the Company monitors the credit rating and
the financial positions of the brokers used to further mitigate
this risk.
Substantially all of the assets of the Company, including cash,
are held by Northern Trust (Guernsey) Limited. Bankruptcy or
insolvency of the Custodian may cause the Company's rights with
respect to assets held by the Custodian to be delayed or limited.
The Company monitors this risk by monitoring the credit quality and
financial positions of the Custodian that the Company uses.
The Company is not considered to have exposure to credit risk on
its PIK/PPN debt instruments, as the underlying investment is an
equity (PIK and PPN agreements are made with an SPV which is used
to acquire the direct investment).
The Company is considered to have exposure to concentration risk
from its investment in AEI Inc - Equity which is also held in the
GSSF Funds. As at 31 December 2014, the exposure to this instrument
(held directly and indirectly) amounted to US$11,372,195 (31
December 2013: US$27,738,601). As at 31 December 2013, the Company
also had direct and indirect exposure to Renovavel Investments BV
New PIK/PPN amounting to US$4,926,434. These amounts were
classified in the caption "Financial assets at fair value through
profit and loss" in the Statement of Financial Position.
Liquidity Risk
The Company is not exposed to any significant liquidity risk
arising from redemptions at the shareholders' discretion as the
shares issued have no defined redeemable date.
In accordance with the investment objective, a significant
proportion of the Company's investments are focused on Special
Situations via investments in unlisted Funds and other financial
instruments. As a result, the Company may not be able to quickly
liquidate its investments in these instruments.
All residual maturities of the financial liabilities of the
Company in US$ as at 31 December 2014 and 2013 are less than three
months, except for incentive fees payable to the Investment Manager
on realisation of investments.
Liquidity risk is primarily related to outstanding commitments
and recallable distributions from investments in limited
partnerships. The outstanding investment commitments of the Company
are disclosed in note 18. As at 31 December 2014 and 2013, the
Company had enough cash and liquid assets to meet its obligations
on these outstanding commitments.
Capital Management
The Company is not subject to externally imposed capital
requirements. The shares issued by the Company provide an investor
with the right to require redemption for cash at a value
proportionate to the investor's share in the Company's net assets
at redemption date and are classified as equity. See note 8 for a
description of the terms of the shares issued by the Company. The
Company's objective is to realise the assets in orderly manner to
return cash to shareholders. The Articles of Incorporation of the
Company were amended to facilitate regular returns of cash to
shareholders
15. Ultimate Controlling Party
In the opinion of the Directors on the basis of shareholdings
advised to them, the Company has no ultimate controlling party.
16. Involvement with Unconsolidated Structured Entities
The table below describes the types of structured entities that
the Company does not consolidate but in which it holds an
interest.
Type of structured Nature and purpose Interest held by the Company
entity
------------------- ----------------------------- -----------------------------
Investment funds To manage assets on behalf Investments in units issued
of third party investors by the Funds
and generate fees for
the investment manager.
These vehicles are financed
through the issue of
units to investors.
The table below sets out interests held by the Company in
unconsolidated structured entities. The maximum exposure to loss is
the carrying amount of the financial assets held.
Carrying amount
included in "Financial
Number of assets at fair
Investment in unlisted investee Total net value through profit
investment funds funds assets or loss"
---------------------------- ---------- ------------ ------------------------
Special Situations Private
Equity Funds 8 524,943,085 100,101,702
Real Estate Funds 2 119,297,211 10,440,584
During the year, the Company did not provide financial support
to these unconsolidated structured entities and has no intention of
providing financial or any other support, except for the
outstanding commitments as disclosed in note 18 to the financial
statements.
17. Related Party Transactions
Parties are considered to be related if one party has the
ability to control the other party or to exercise significant
influence over the other party in making financial or operational
decisions.
The Directors are responsible for the determination of the
investment policy of the Company and have overall responsibility
for the Company's activities. The Company's investment portfolio is
managed by Ashmore Investment Advisors Limited*.
The Company and the Investment Manager entered into an
Investment Management Agreement under which the Investment Manager
has been given responsibility for the day-to-day discretionary
management of the Company's assets (including uninvested cash) in
accordance with the Company's investment objectives and policies,
subject to the overall supervision of the Directors and in
accordance with the investment restrictions in the Investment
Management Agreement and the Articles of Incorporation.
During the year ended 31 December 2014, the Company engaged in
the following related party transactions:
Income/ Receivable/
(Expense) (Payable)
Related Party Nature US$ US$
Ashmore Investment Advisors Management fees
Limited* (net) (2,652,687) (117,712)
Ashmore Investment Advisors
Limited* Incentive fees 191,193 (1,726,717)
Ashmore Investment Advisors Promotional fees
Limited* 92,904 -
Board of Directors Directors' fees (145,670) (13,000)
Investment
Activity
US$
Related funds Purchases (4,000,000)
Related funds Sales 16,584,258
Related funds Dividends 50,761,382
* Ashmore Investment Management Limited until 18 July 2014.
During the year ended 31 December 2013, the Company engaged in
the following related party transactions:
Income/ Receivable/
(Expense) (Payable)
Related Party Nature US$ US$
Ashmore Investment Management Management fees
Limited (net) (7,337,095) (258,918)
Ashmore Investment Management
Limited Incentive fees 1,542,435 (2,600,241)
Ashmore Investment Management
Limited Promotional fees (121,886) (92,904)
Board of Directors Directors' fees (256,906) (20,081)
Investment
Activity
US$
Related funds Purchases (101,661,280)
Related funds Sales 200,461,039
Related funds Dividends 40,483,106
Related funds are other Funds managed by Ashmore Investment
Management Limited.
The Directors had the following beneficial interests in the
Company:
31 December 2014 31 December 2013
GBP ordinary shares GBP ordinary shares
Nigel de la Rue 2,177 2,883
Christopher Legge 1,360 1,802
Richard Hotchkis 818 1,082
Purchases and sales of the Ashmore SICAV 2 Global Liquidity Fund
("Global Liquidity Fund") were solely related to the cash
management of US dollars on account. Funds are swept into the
S&P AAAm rated Global Liquidity Fund and returned as and when
required for asset purchases or distributions. The Global Liquidity
Fund is managed under the dual objectives of the preservation of
capital and the provision of daily liquidity, investing exclusively
in very highly rated short-term liquid money market securities.
18. Commitments
During the year ended 31 December 2010, the Company entered into
a subscription agreement with Everbright Ashmore China Real Estate
Fund LP for a total commitment of US$10 million. As at 31 December
2014, the outstanding commitment was US$529,455 (31 December 2013:
US$808,727).
During the year ended 31 December 2011, the Company increased
its commitment to VTBC Ashmore Real Estate Partners 1 LP to a total
of EUR11.4 million. As at 31 December 2014, the outstanding
commitment was EUR243,474 (31 December 2013: EUR243,474).
During the year ended 31 December 2011, the Company entered into
a subscription agreement with AA Development Capital India Fund LP
for an initial commitment of US$4,327,064, which was subsequently
increased to US$23,851,027. AA Development Capital India Fund LP
was dissolved by its General Partner on 28 June 2013 with all
outstanding commitments transferred to AA Development Capital India
Fund 1 LLC. As at 31 December 2014, the outstanding commitment was
US$6,261,340 (31 December 2013: US$6,261,340).
19. Subsequent Events
a) Share Conversion
The following conversion occurred subsequent to 31 December
2014:
Transfers Transfers Number of shares Number of shares
from to to switch out to switch in
------------ ------------ ----------------- -----------------
GBP shares US$ shares 874,782 1,336,168
b) Compulsory Redemption of Shares
The following compulsory redemption of shares occurred on 31
January 2015 with reference to the
31 December 2014 Net Asset Value:
Number of ordinary Consideration in
shares redeemed US$
------------ ------------------- -----------------
US$ shares 3,101,167 16,236,375
GBP shares 3,010,927 23,372,144
39,608,519
-----------------
Corporate Information
Directors Custodian
Richard Hotchkis Northern Trust (Guernsey) Limited
Nigel de la Rue PO Box 71
Christopher Legge Trafalgar Court
Steve Hicks Les Banques
Graeme Dell (retired 16 January St Peter Port
2014) Guernsey GY1 3DA
Channel Islands
Registered Office Auditor
PO Box 255 KPMG Channel Islands Limited
Trafalgar Court Glategny Court
Les Banques Glategny Esplanade
St Peter Port St Peter Port
Guernsey GY1 3QL Guernsey GY1 1WR
Channel Islands Channel Islands
Administrator, Secretary and Registrar Advocates to the Company
Northern Trust International Fund Carey Olsen
Administration Services (Guernsey) Carey House
Limited Les Banques
PO Box 255 St Peter Port
Trafalgar Court Guernsey GY1 4BZ
Les Banques Channel Islands
St Peter Port
Guernsey GY1 3QL
Channel Islands
Investment Manager UK Solicitors to the Company
Ashmore Investment Advisors Limited Slaughter and May
(effective 18 July 2014) One Bunhill Row
61 Aldwych London EC1Y 8YY
London WC2B 4AE United Kingdom
United Kingdom
Ashmore Investment Management Limited UK Transfer Agent
(until 18 July 2014) Computershare Investor Services
61 Aldwych PLC
London WC2B 4AE The Pavilions
United Kingdom Bridgewater Road
Bristol BS13 8AE
United Kingdom
Broker Website
J.P. Morgan Cazenove Performance and portfolio information
20 Moorgate for shareholders can be found at:
London EC2R 6DA www.agol.com
United Kingdom
Broker
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
United Kingdom
This information is provided by RNS
The company news service from the London Stock Exchange
END
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