Annual Financial Report

RNS Number : 9221W

Africa Opportunity Fund Limited

29 April 2016

Africa Opportunity Fund Limited (AOF.L and AOFC.L)

Announcement of Annual Results for the Year ended 31 December 2015

The Board of Africa Opportunity Fund Limited ("AOF", the "Company" or the "Fund") is pleased to announce its audited results for the year ended 31 December 2015.

Highlights

· AOF's ordinary share net asset value per share of US$ 0.874 as at 31 December 2015 decreased by 11% from the 31 December 2014 net asset value per share of US$1.011, including dividends.

· AOF's C share net asset value per share of US$0.821 as at 31 December 2015 decreased 9% from the 31 December 2014 net asset value per share of US$0.912.

· As at 31 December 2014, AOF's investment allocation for its Ordinary shares was 77% equities, 13% debt and 10% cash and for its C shares was 63% equities, 24% debt and 13% cash.

The Company

Africa Opportunity Fund Limited ("AOF" or the "Company") is a Cayman Islands incorporated closed-end investment company traded on the Specialist Fund Segment ("SFS") of the London Stock Exchange ("LSE"). AOF's net asset value on 31 December 2015 was US$61.3 million and its market capitalisation was US$48.1 million.

Chairperson's Statement

2015 Review

2015 was a challenging year for the Africa Opportunity Fund (the "Fund" or "AOF"), a volatile year for world markets, and a dispiriting year for emerging markets. It proved to be even more challenging than I had warned last year.

Africa's terms of trade continued to deteriorate as more commodity prices fell in response to waning Chinese demand, a steady supply of unwanted commodities, and rising inventories. Copper, for example, joined oil and iron-ore in falling to unexpectedly low levels. Several African currencies collapsed in dramatic fashion in tandem with collapsing export proceeds. Their collapse, excruciating as it feels to Africans as consumers and AOF, as an Africa investor, is part of the medicine that can turn Africa into a globally competitive continent. It is a truism that the tumbling export revenues suffered by oil exporters like Nigeria and Angola were the counterpoise to the lower oil import bills of other net oil importing African countries such as Senegal, Tanzania, Uganda, and Kenya. The gross domestic product growth rates of the African non-oil, metals, and minerals exporters were higher in 2015 than their oil, metals, and minerals exporting brethren. Nevertheless, regardless of current economic performance, all African countries face the daunting task of deepening their productive capacities. It is too easy to forget the large potential profitability awaiting entrepreneurs and companies creating businesses which close the gaps between the productivity standards of the archetypal African country and current global productivity norms. Consider that 40% of America's workforce was employed in agriculture as far back as 1900 and 65% of Africa's workers toiled on the land as recently as 2009¹. Most Americans, then, had no access to phones; a majority of Africans, today, own cellphones. It is easy to overlook the huge scope for growth of building materials industries when sub-Saharan Africa's 960 million people consumed 100 million tonnes of cement in 2015 versus 71 million tonnes produced in Turkey. By 2030, sub-Saharan Africa's population is forecast by the United Nations to be 1.4 billion. If Sub-Saharan Africa's cement production in 2030 equaled India's 2015 cement production of 274 million tonnes, its cement market would have grown at an annual compounded rate of 7% to reach a per capita annual cement consumption of 196 kilograms, lower than India's current 2015 per capita production of 211 kilogram and 40% of today's global average per capita consumption. Undoubtedly, lots of capital must be raised to finance the numerous infrastructure and housing projects needed to build decent urban settings for the countless Africans migrating from its rural areas to its cities. Yet, it is this beguiling juxtaposition of the 21^st century and the 19^th century that creates numerous investment prospects in Africa and makes Africa an attractive destination for the long-term investor to earn good returns on invested capital.

A major conundrum for many African governments is finding the resources to maintain, if not accelerate, the pace of national development in these painful times. Consequently, many countries are destined for stints in the recuperation ward of the International Monetary Fund within the next few years. Some ways of solving this conundrum impose disproportionate cost on investors; other ways seek to allocate the costs evenly across all interest groups. The sober reality is that public resources will have to be complemented by private investment. African capital will have to attract foreign capital to accomplish the goal of rapid development.

AOF's strategy in 2015 combined fresh investments in suppliers to Africa's infrastructure drive such as cement companies and electric utilities, with the short selling of securities of companies leveraged to the waning fortunes of the heavily indebted among Africa's consumers, principally in South Africa. There was a modest increase in the size of the Fund's bond portfolio, as a risk-adjusted means of increasing the Fund's exposure to the beaten-down hard currency earning Africa commodity exporters. These investments tended to be made in the regions expected to serve as relative havens - francophone Africa, countries like Morocco, which have de facto Euro pegs, and oil-importing countries like Egypt and Kenya.

The net asset value of the Fund's A shares, including dividends, declined by 11% while the net asset value of the Fund's C shares declined by 9%. AOF's share prices fell far more than net asset value, leading to a widening of the discount between its share price and its net asset value. The total return for the A shares was -22%, and for the C shares was -28%. The respective discounts to net asset value were 26% and 14%, respectively.

To provide some basis for comparison, South Africa fell 21%, Nigeria fell 21%, Kenya fell 18%, and Egypt fell 31%. In non-African emerging markets, China rose 3%, Brazil fell 42%, Russia was flat, and India fell 8%. In developed markets, Japan rose 10%, the US rose 1%, and the UK fell 5%². For AOF's shareholders, 2015 marked a second consecutive year of losses. Those losses must be taken in the context of AOF's long-term orientation. In that context AOF's thesis and strategy of seeking to purchase the strong growth prospects of various African industries without paying too much for them at the time of investment means the Fund remains an excellent investment vehicle for the long term investor.

2016 Outlook

2016 is a year of uncertainties for African investors. It is positive that more African countries are accepting the inevitability of unpleasant austere adjustments. Although it would be foolhardy to claim that African currencies have reached their bottom, especially when the International Monetary Fund has publicly described the Nigerian Naira as overvalued³, it seems that a lot of the currency corrections have occurred. The concomitant sharp sell-offs in equities and debt securities created more than a few attractive entry points into companies with respectable growth prospects. The dark cloud hanging over African capital markets is the possibility of macro-economic or currency crisis in China causing a general flight from both emerging and frontier markets. AOF sees excellent long-term investment opportunities in this environment.

There are three elections in 2016 of interest to AOF: those of Uganda, Zambia, and Ghana. As an investor, AOF is agnostic about the sovereign selections of voters in each of those countries. We are more interested in the effect of those elections on the economic policies of those countries and whether their currencies are likely to suffer even more depreciation than they have experienced in the last two years. Uganda's February election had little effect on the Ugandan shilling. We hope that the two remaining elections pass without serious incident and with displays of fiscal sobriety by the incumbent governments. It also seems that more African courts are handing down decisions to strengthen institutions charged with rooting out governmental abuses such as the Public Protector's Office in South Africa. Governments in countries like Tanzania and Kenya have begun to suspend officials suspected of corruption. Those actions demonstrate the deepening roots of the Rule of Law in Africa, an undoubted blessing for all investors and residents of Africa. Therefore, as always, we remain optimistic about AOF's prospects.

Concluding Comments

Early in 2016 the Board selected Liberum Capital Ltd as AOF's new corporate broker. The discount to NAV at which AOF's shares trade is wide, and the Manager intends to pursue renewed marketing efforts with Liberum's assistance. The Board will also consider other steps such as share repurchases if the discount persists.

The Shoprite litigation continues to drag on, but the Manager is working diligently to bring its efforts to fruition. Remain hopeful that arbitration proceedings will be concluded this year.

In closing, we extend our thanks to our shareholders for their support and partnership and look forward to continuing to work with you in the years to come.

Dr. Myma Belo-Osagie

Chairperson

April 2016

¹Berkshire Hathaway 2015 Annual Report, p. 21 and Fact Sheet: The World Bank and Agriculture in Africa. http://go.worldbank.org/GUJ8RVMRLO

²Reference indices are calculated in US Dollars using: Nigeria NSE Allshare Index, South Africa FTSE/JSE Africa Allshare Index, Nairobi NSE Allshare Index, Egypt Hermes Index, Russia MICEX Index, Brazil IBOV Index, the Shanghai Shenzen 300 CSI Index, the India SENSEX Index, the S&P 500, the FTSE 100, and the Nikkei 225.

³Ibid, p. 16, footnote 5.

Manager's Report

2015 marked the eighth full year of operation of Africa Opportunity Fund ("the Fund" or "AOF"). It marked also a full trading year for the "C shares", until they are merged with the original issue of the Fund's shares (hereinafter referred to as "A shares"). The A shares had a return of -11%, including dividends while the C shares had a return of -9%. At year-end, AOF held $50.1 million in equity securities, $10.7 million in debt securities, $6.8 million in cash; and derivative and short sale liabilities equal to $6.4 million. In class terms, the A shares held $32.0 million in equity securities; $4.9 million in debt securities; $3.8 million in cash; and derivative and short sale liabilities equal to $3.6 million. The C shares held $18.1 million in equity securities; $5.8 million in debt securities; $3.0 million in cash; and derivative and short sale liabilities equal to $2.9 million. The Fund's underlying end-of-year holdings were in Botswana, Cote d'Ivoire, Egypt, Ghana, Kenya, Morocco, Nigeria, Senegal, South Africa, Tanzania, Uganda, Zambia, and Zimbabwe. Our lodestar for measuring the Fund's portfolio is our estimate of its appraisal value per share. That subjective estimate measures the Manager's view of the long-term attractiveness of the portfolio, which we publish quarterly in our newsletters. It was $0.98 per share at the end of 2015. The appraisal value for the C shares was $1.03 per share for 2015.

Although AOF's two share classes suffered large losses in 2015, the Fund's performance surpassed several Africa indices. Collapsing African currencies, partially induced by collapsing commodity prices, and a dash of Zimbabwean deflation continued to cast a dominating pall over our results. African markets have had a tough time over the last five years. Set forth below, in tabular form, is data to provide some perspective on the trends of the last five years.

Comparative Returns
Index/security	1 Year	3 Year	5 Year
AOF NAV	-11%	-6%	-1%
Lyxor Africa ETF	-31%	-46%	-56%
DBX MSCI Africa Top 50	-25%	-25%	n/a
Market Vectors Africa	-30%	-39%	-41%
Brazil Bovespa	-42%	-63%	-74%
Russia Micex	0%	-44%	-47%
India Sensex	-8%	16%	-7%
China CSI 300	3%	51%	33%
US S&P 500	1%	52%	80%

AOF's 2015 performance notwithstanding, we remain optimistic because the underlying operating cash flow in the Fund's major holdings continues to grow at a decent pace in US Dollars. Many of AOF's companies are continental leaders in their industries, whether measured by profitability or balance sheet quality or market position. Sooner or later, AOF hopes to enjoy the market's acknowledgement of these underlying financial attributes. Current stagnant economic conditions notwithstanding, we are steadfast in believing that Africa's own secular prospects remain undimmed, positive, and powerful.

The 2015 performances of different African capital markets were molded by identical factors from 2014: worsening terms of trade of most African exporters caused by a decelerating Chinese economy, the eventual rise in US interest rates, and displays of fiscal profligacy by some African governments. This triple cocktail of macro causes undermined the living standards of African consumers, reduced the profitability of the African corporate sector, and lowered the external value of most African currencies. It was brutal. In order of depreciation against the US Dollar: the Zambian Kwacha fell by 42%; the Rand by 25%; the Tanzanian shilling by 19%; the Ugandan shilling by 18%; the Ghanaian Cedi by 15%; the Botswana Pula by 15%; the CFA Franc by 12%; the Kenyan shilling by 11%; the Moroccan Dirham by 9%; the Egyptian Pound by 9%; the Guinean Franc by 9%; and the Nigerian Naira by 8%,^[1]. Unfortunately, Africa's commodity exporters could face a few more grim years in a period of rising US interest rates. The Bank for International Settlements' latest early warning indicators for stress in domestic banking systems suggest that China is at high risk of suffering a banking crisis within the next three years². Were such a crisis to occur, several African countries, as exporters to China, are bound to suffer more macro-economic turbulence. Furthermore, sharing the loss of purchasing power and foreign exchange among voters in any one country in the first 18 months after those losses seems to be more a political than an economic exercise in burden sharing, resulting in varying levels of diminished profitability for the corporate sectors of different African countries. Nigeria, for example, has opted to freeze the exchange rate of the Naira, causing an emerging parallel market rate for that currency and labyrinthine petrol queues. Zimbabwe, by contrast, is in the embrace of an actual deflationary spiral as the US Dollar remains its primary form of legal tender.

How should AOF sail on these stormy seas and dark clouds?

Our answer starts with an acknowledgment of the trends in which we repose a high degree of confidence. The first trend is that freely tradeable currencies like the US Dollar will become more valuable to Africans simply because it is hard to see how African companies can increase sufficiently the volume of their commodity exports to offset the price falls of those exports. The second trend is that Africans will have to maintain, if not expand, their investment and capital expenditure levels to build physical and human capital infrastructure required by a competitive and industrializing Africa. Many more power plants, railways, ports and container terminals are needed in Africa right now; the productivity of African agriculture is in urgent need of explosive growth to both reduce the cost of staple crops like maize and rice and Africa's food imports; raising sub-Saharan Africa's tertiary enrollment ratio (the percentage of students eligible to enter a tertiary institution like a university, community college, or technical school) from its current 8% to India's 24% is possible only if 24 Harvard sized campuses are built every year for the next decade. The third trend is that the African consumer will save more out of her modest income to finance a larger share of investment in Africa, whether through incentives to buy long-term financial savings products or the coercion of higher prices for goods and services. The fourth trend is financial capital generated in Africa will continue to command a high price because the demands for its uses continue to handsomely outstrip its supply. A fifth trend is that there will be many more Africans, especially young ones, living in urban Africa with longer life spans than their parents. These trends imply continued weakening of African currencies against freely tradeable currencies; expanding basic materials industries like those of cement production; a bigger electricity generation and distribution industry; grudgingly granted tax concessions to encourage exploration and production of African natural resources; a slow-down in the consumptive expenditures of African households; and a larger long-term financial services industry. Short selling of securities and currency hedging, where affordable, will have to be essential parts of AOF's investment strategy to profit from some of those trends. An illustration of the protection from currency hedging can be found in the Euro short position AOF has maintained since the middle of 2011 to preserve the US Dollar value of its CFA Franc-denominated positions, especially Sonatel. As the Euro declined from $1.21 at the end of 2014 to $1.09 at the end of 2015, AOF's Euro hedge contributed 2 cents in unrealized gains to the A share's net asset value. However, the lion's share of AOF profits is likely to come from investing for the long haul in companies, with attractive modestly leveraged returns on equity, in industries which must grow in tandem with these trends. As a rough approximation, AOF will tend to hold debt securities, denominated in freely tradeable currencies, issued by companies developing Africa's natural resources, and the equity securities of national and continental corporate leaders in attractive industries.

Africa's electric utility industry was described in last year's report as "another sector guaranteed to enjoy years of profitable growth". Copperbelt Energy PLC ("Copperbelt") was presented as an example of the profit waiting to be garnered in that sector. Those sentiments turned out to be prematurely optimistic. Rather, it served as a sober warning of the risks in an industry in transition from public ownership of assets to one of private enterprise subject to regulatory approval of its tariffs. There is a dearth of electricity in Africa. To quote Bill Gates, "the amount of electricity per person in Africa today, when you factor out South Africa, is lower than it was 30 years ago. That's kind of a stunning thing." ³ One would think that Africa is drowning in electricity from the problems encountered by Copperbelt Energy in collecting money from its customers or the modest growth in electricity demand experienced by Kenya Power. Copperbelt generates revenue from the transmission of electricity to copper mines in Zambia and the Katanga province of the Democratic Republic of Congo, the distribution of electricity in Abuja, the Federal capital of Nigeria, the generation of electricity by the Shiroro hydroelectric dam in Nigeria, and a joint venture interest in the supply of broadband services throughout Zambia. It is developing a 40MW hydroelectric dam in Kabompo Gorge, northwestern Zambia, and a 128 MW heavy fuel oil power plant in Freetown, Sierra Leone. Copperbelt reported a gigantic group loss in 2015 of $220.3 million (1.9 billion Zambian kwacha), despite its Zambian transmission profits both rising 18% from $33.6 million in 2014 to $39.5 million on revenue of $291 million, and generating free cash flow of $22.5 million in 2015. Copperbelt lost $260 million on revenue of $326 million generated in Abuja, as a result of writing off $90 million of bad debts caused by aggregate technical, commercial, and collection losses of 52% of sold electricity. Ironically, $40 million (8 billion Naira) of those bad debts are owed by the military, several ministries, departments, and agencies of Nigeria's own Federal government. To date, the Zambian market's skepticism about Copperbelt's Nigeria foray has been completely vindicated. Yet, the current Copperbelt market capitalization of $104 million⁴ and enterprise value of $340 million is too low. As an entity able to maintain its Zambian profits in US Dollars, despite the 42% depreciation of the Kwacha, Copperbelt can be compared with other Dollar earning utility companies. Its earnings before interest, tax, depreciation, and amortization ("EBITDA") in Zambia has climbed from $47.4 million in 2013 to $79.9 million in 2015. Capitalizing the three year average of that EBITDA ($63 million) by a multiple of 7x (half of the EV/EBITDA multiples applicable to utilities) suggests its enterprise value should be around $440 million. Copperbelt's group book value is $237 million; thus it trades at a 56% discount to that book value. Undoubtedly, Copperbelt's Nigerian woes account for its depressed valuation. Yet, it is only a question of time before Nigerians pay for their electricity consumption; otherwise, they will not have the predictable electricity supply which is required to industrialize. It is understandable that the markets are distressed by Copperbelt's debt burden attributable to its Nigerian collection challenges. Still, it is worth noting that Copperbelt's Nigerian businesses are held as investments, not assets of Copperbelt PLC in Zambia. Copperbelt itself does not guarantee any of the Abuja-related debts. At worst, Copperbelt would have to write-off its investment in Nigeria, leading, paradoxically, to an increased book value of $381 million ⁵. Furthermore, Copperbelt's Zambian operations are demonstrating resilience in the face of drought, collapse in copper prices, and a train of its customers putting various mines on care and maintenance. How? By expanding into new lines of revenue like power trading. Even as its transmission and wheeling revenues weakened in 2015, and are expected to continue to weaken in 2016, Copperbelt's power trading revenues more than doubled to approximately 8% of its Zambian revenues. A proven Zambian US Dollar earner lost half its US Dollar valuation in the very year when the superiority of its US Dollar earning capacity was demonstrated for all to see. In time, the virtues of Copperbelt will command respect and recognition.

The Economist had occasion to observe in its March 26, 2016 issue that the US economy was suffering from proliferating oligopolies accompanied, ineluctably, by higher industrial profitability⁶. Railways and airlines are two examples. Sidestepping the debate whether oligopolies help or hinder economic development, there should be no doubt that a vibrant cement industry is oligopolistic, profitable, and necessary for rapid economic growth in several African countries. Controlling 62% market share of Nigeria's cement industry, Dangote Cement is the leader of a national oligopoly. Its strategy is to reinvest its high level of Nigerian profits in building new capacity across sub-Saharan Africa to become the lowest cost producer in most African markets. The $148/ton price of Dangote's cement sold in Nigeria, supporting a 61% EBITDA margin, is much higher than the $89/ton price it commands in eastern and southern Africa where it battles not only incumbent players, but also cement imports from countries like Pakistan. Nigeria's cement industry, including old multinational companies like Lafarge, is protected by laws designed to encourage cement production in Nigeria. Dangote Cement has used those protective barriers to construct the largest cement plant in Africa, reliant on Nigeria's own natural gas. 2015 annual production capacity of 44 million tons, itself a vastly higher capacity than the 8 million ton capacity of Dangote upon its listing in 2010, is supposed to soar by 77% to 77 million tons by 2019. By so doing, Dangote Cement seeks to become the largest cement company in Africa, present in 16 countries. Dangote's expansion strategy is by no means risk-free. Alluring demand growth characteristics for an urbanizing Africa in dire need of infrastructure and buildings notwithstanding, there are important national cement markets mired in excess capacity today. Nigeria is one example; South Africa is a second. Dangote's capacity utilization in Nigeria was only 45%. To date, AOF's investment in Dangote has produced a 3% loss through 2015.

Dangote Cement is the largest company listed on the Nigeria Stock Exchange, even though it has one shareholder - Dangote Industries - owning 90% of its share capital. Its founder and Chairman - Alhaji Aliko Dangote - has evolved from a trader into Africa's wealthiest industrial magnate. Dangote Cement's current market capitalization is $14.6 billion and its enterprise value is $15.7 billion. Current vital valuation metrics are a P/E ratio of 16 x, a Price/Tangible book ratio of 4.4x, an Enterprise Value/EBITDA of 12x, and a dividend yield of 5%. Dangote Cement's 2015 profits were $936 million, cash flow from operations was $1.4 billion, and free cash flow was $600 million. Its EBITDA margin was 53% and its net margin was 37%. Dangote Cement's latest return on average equity was 29% and return on average assets was 19%. Admittedly, those returns are lower than the comparable 2010 ratios of 57% and 30%. All Nigerian valuations discount, to some degree, an expectation that the Naira will suffer a substantial devaluation within the next 12 months. Dangote's spectacularly high Nigerian margins must fall in time. Still, the scale of its expansion, coupled with the huge latent demand for building materials in Africa to develop Africa's cities and industrial capacity suggest that Dangote's profits should continue to climb at a decent pace, even as its profitability and capital returns decline towards global norms. AOF is not paying much for the strong secular positive prospects of Dangote Cement.

We have held steadfastly to the proposition that the financial services sector of sub-Saharan Africa, outside South Africa, Botswana, and Namibia, is underdeveloped and set for years of high annual growth. There are two caveats to that proposition. First, an industry for which cyclical interest rates is a major cost must, necessarily, also be cyclical. Second, insofar as a country's financial sector's assets constitute a major part of the liabilities of that country's non-financial sectors, the aggregate balance sheet of that country's financial sector must expand and contract, accordion like, as the liabilities of those non-financial sectors improve and deteriorate in creditworthiness. Put another way, it is tough for a country's financial sector to thrive in the midst of a national crisis. 2015 illustrated this proposition in Ghana in the case of Standard Chartered Bank. Standard Chartered Bank's non-performing loans rose to 41% of its entire loan book. It was a wonder that it still managed to eke out a profit. Its decision to provide more credit to the private sector of Ghana boomeranged as cash flow evaporated in the midst of a foreign exchange crisis. AOF suffered a loss of 31% on its Standard Chartered Bank holdings in 2015.

2015 demonstrated also the resilience of Enterprise Group, providing AOF a total return of 17% on our investment. We note a passage from Berkshire Hathaway's recent annual report which summarizes a key attribute for Enterprise as well: "When Berkshire's book value is calculated, the full amount of our float is deducted as a liability, just as if we had to pay it out tomorrow and could not replenish it. But to think of float as strictly a liability is incorrect. It should instead be viewed as a revolving fund. Daily, we pay old claims and related expenses… and that reduces float. Just as surely, we each day write new business that will soon generate its own claims, adding to float. If our revolving float is both costless and long-enduring...the true liability of this float is dramatically less than the accounting liability⁷. In the case of Enterprise, the Ghanaian cedi has depreciated by 50% against the US Dollar between the end of 2012 and the end of 2015, yet in that period, the value of Enterprise's book value attributable to its shareholders has risen from $45 million to $54 million. The corresponding "float" (investable funds due to other parties like policyholders and reinsurers) rose from $55 million to $69 million as net written premia also rose 11% from $60 million to $67 million. Enterprise's 2015 net premiums earned was 254 million Cedis ($67 million) versus 203.9 million Cedis ($67 million) in 2014. Reported cash flow from operations rose from $5 million in 2014 to $14 million to 2015. After adding back Enterprise's 2015 investments and recognizing the profits belonging to Enterprise's shareholders disclosed in its most recent embedded value statement, but yet to be recognized in its financial statements, we estimate that Enterprise's gross operating cash flow before investments attributable to shareholders rose from $16 million in 2014 to $23 million in 2015. Enterprise may appear to be circumambulating at a crawl like a developed market tortoise of an insurance group with these modest increases over a three year period. On the contrary, those very modest increases hint of considerable growth potential when the Cedi ends its current collapsing phase. This is the period in which Enterprise has been confirmed officially as the largest life company in Ghana, as measured by gross premia written, to overtake the State Life Company, and the second largest property and casualty insurance company. But, there remains a lot more business to be written. Consider that, according to Swiss Re's June 2014 Sigma report on the global insurance industry, Ghana's per capita life insurance premium of $7.2 is 53% of Kenya's $13.6 life premium per capita while its property and casualty insurance premium is less than 1/3^rd that of Kenya and the potential high growth prospects of the Ghanaian insurance industry are patently clear. An investment in Enterprise is a stake in a high growth industry.

AOF continued to hold a portfolio of commodity producers through another year of price declines. 2015 price declines for some commodities were smaller than those of 2014. For example, gold declined by 10%, palm oil by 15%, rubber by 23%, and crude oil by 35%. In contrast, commodities which experienced sharper 2015 price declines than 2014 included platinum, which fell 26%; copper, which fell 24%; and manganese, by 22%. Between December 31, 2012 and the end of 2015, the iron ore price dropped by a cumulative 70%, crude oil by 66%, rubber by 61%, platinum by 42%, copper by 41%, gold by 37%, palm oil by 27%, and polished diamond prices by 12%. Once again, the truth of the old saying that the cure for high prices is high prices and the price for low prices is low prices has been verified. In light of our ignorance about when excess supplies of various commodities will disappear, and our belief that AOF should have some exposure to Africa's sources of hard currency earnings, we tried to concentrate AOF's commodity investments in low cost commodity producers or explorers. Owning the equity or debt of those companies may have a high opportunity cost in the short run; however, we seek companies that have an ability to generate respectable operating cash flows even in these dire times. Eventually, commodity prices will pick up, giving decent returns to investors willing to invest during the commodity bust period. Kosmos Energy is a good example. It is the oil and gas explorer and producer which turned Ghana into an oil exporting state by discovering the billion barrel Jubilee oil field in 2007. Kosmos was hedging a significant share of its production when oil prices were in triple digits. It explored for Ghanaian oil when Ghana was long dismissed as an oil district. The business model of Kosmos has four interlocking and unorthodox parts: (a) explore for natural hydrocarbons in countries which combine geological indicators of those hydrocarbons, a long history of failure to find commercial discoveries, and a decent potential to discover huge hydrocarbon fields; (b) negotiate extremely favorable tax regimes in its target countries to reward Kosmos if exploration is successful, with future explorers having to accept less favorable tax regimes after Kosmos has lowered the geological risks of those target countries; (c) design a plan to commence commercial production of discovered hydrocarbons in a much shorter period than industry norms; and (d) maintain a sober balance sheet, founded on low-cost oil and hedges to ensure cash flow even in depressed industry conditions. The upshot? Remarkably low finding costs per barrel, a 100%+ reserve replacement ratio; and operating costs for the Jubilee field in the $10-$15 per barrel range. One illustration: since inception, Kosmos has spent $851 million on exploration outside Ghana. Inevitably, it has suffered dry holes. Nevertheless, in 2015 Kosmos announced 15 trillion cubic feet natural gas discoveries in Mauritania and Senegal (equivalent to 2.6 billion barrels of oil) alone give it a finding cost per barrel (outside Ghana) of $0.33 per barrel. Exxon Mobil reports finding costs around $4 per barrel, to provide some perspective. Today, the markets seem to view its recent finds as value destructive liabilities, presumably because of low natural gas prices and high development costs for natural gas fields. Indeed, the owners of common stock of Kosmos Energy suffered a 38% loss in 2015. AOF owns also securities of Tullow Oil. Consequently, its oil and gas holdings span both West African and East African hydrocarbon fields.

Our review of 2015 would be incomplete without an update about the Shoprite litigation. The arbitration of AOF's dispute with Shoprite remains pending. There is much we would like to say on the topic, but because of the litigation it is difficult to do so. As a quick recap, AOF sued Shoprite in the Western Cape High Court of South Africa for its failure to pay dividends due to AOF since August 2011. It sued in its capacity as a beneficial owner of the Shoprite shares bought through the Lusaka Stock Exchange because Standard Chartered Bank, custodian of those shares, refused to sue Shoprite in its capacity as the registered owners of those Shoprite shares. Shoprite has, amongst other things, challenged AOF's standing as beneficial owner, to institute legal proceedings against it, acknowledging the right of Standard Chartered, but not AOF. The matter was referred to arbitration which was scheduled for April. Only a pre-arbitration trial could be heard and the matter has been postponed to August by agreement between the parties. We continue to remain confident that AOF's actions against Shoprite will have a favorable outcome and title to all of the Fund's shares will be confirmed.

We end with a statement of our investing philosophy. The key elements of the investment strategy for the Fund are:

Material discounts to intrinsic value: The Fund invests primarily where and when an investment can be made at a material discount to the Manager's estimate intrinsic value.

Company preference: The Fund prefers companies which demonstrate both high real returns on assets and an earnings yield higher than the yield to maturity of local currency denominated government debt.

Industry focus rather than country focus: The Fund seeks to invest in industries it finds attractive with little regard to national borders.

National resource discounts: The Fund seeks natural resource companies whose market valuations reflect a discount to the spot and future world market prices for those natural resources.

"Turnaround" countries: The African continent is home to a large number of reforming or "turnaround" countries. "Turnaround" countries combine secular political reform with the opening of industries to private sector participation.

Balkanized investment landscape: The Fund seeks to invest in companies with low valuations in relation to peers across the continent and uses an arbitrage approach to provide attractive investment returns.

Point of entry: The Fund seeks the most favorable risk adjusted point of entry into a capital structure, whether through financing a new company or acquiring the debt or listed equity of an established company.

Africa offers several attractive investment opportunities, exemplified by the Fund's own portfolio of undervalued companies. As of the end of March 2016, AOF's combined top 10 holdings juxtaposed high operational returns with reasonable valuation ratios, signifying strong earning power. Those holdings had a weighted average dividend yield of 4%, a P/E ratio of 16X, a return on assets of 7%, and a return on equity of 13%. We remain interested in industries which have products in short supply in Africa that rely more on domestic African demand than global growth. We are hunting in those terrains for compelling equity investments. We are unhappy about the losses suffered by our shareholders in 2015, but shall continue to build a portfolio that delivers both capital growth and income into the future.

Francis Daniels

Africa Opportunity Partners

April 2016

Directors' Responsibility Statements (required under DTR 4.1.12)

The Directors, being the persons responsible within the Group, hereby confirm to the best of their knowledge:

· 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 and the undertakings included in the consolidation taken as a whole; and

· the Chairman's Statement and Investment Manager Report, and Condensed Notes to the Financial Statements include a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

Per Order of the Board

29 April 2016

[1] Bloomberg

2 Bank for International Settlements Quarterly Review, March 2016, pps. 28 and 29

3 Quartz Africa article of February 22, 2016, by Kevin J. Delaney

4 Market capitalization on 3/31/2016 on Bloomberg

5 Copperbelt Energy PLC's 2015 Annual Report, page 49.

6 "Revenues in fragmented industries-those in which the biggest four firms together control less than a third of the market-dropped from 72% of the total in 1997 to 58% in 2012. Concentrated industries, in which the top four firms control between a third and two-thirds, have seen their share of revenues rise from 14% to 33%. And just under a tenth of the activity takes place in industries in which the top four firms control two-thirds or more of sales." The Economist, March 26, 2016-Briefing: Business in America

7 Berkshire Hathaway 2015 Annual Report, pps 10-11.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2015

	Notes	2015		2014

		USD		USD
Income
Interest revenue	6	652,135		1,047,599
Dividend revenue		1,657,433		2,388,453
Other income		30,068		333,657
Net foreign exchange gain		514,316		1,059,102

		2,853,952		4,828,811

Expenses
Net losses on financial assets and liabilities at fair value through profit or loss	7 (c)	7,853,063	12,092,559
Placing agent fee	22	-		937,987
Management fee	5	1,149,597		1,196,481
Brokerage fees and commissions		298,413		681,880
Custodian, secretarial and administration fees		356,686		343,193
Dividend expense on securities sold not yet purchased		167,103		178,917
Marketing fees		-		25,137
Other operating expenses		276,742		452,009
Directors' fees		181,250		144,422
Audit fees		94,863		40,265

		10,377,717		16,092,850

Operating loss
		(7,523,765)		(11,264,039)
Finance costs
Distribution to shareholders	18	(912,289)		-


Loss before tax		(8,436,054)		(11,264,039)

Less withholding tax		(77,544)		(238,339)


Decrease in net assets attributable to shareholders from operations/ Total Comprehensive Loss for the year		(8,513,598)		(11,502,378)

Attributable to:
Shareholders/Equity holders of the parent	(8,479,767)	(11,436,911)
Non-controlling interest	(33,831)	(65,467)

	(8,513,598)	(11,502,378)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2015

		Notes	2015	2014

			USD	USD
	ASSETS
	Cash and cash equivalents	9	6,851,126	16,848,480
	Trade and other receivables	8	780,973	1,036,802
	Financial assets at fair value through profit or loss	7(a)	60,819,532	63,822,689

	Total assets		68,451,631	81,707,971

	EQUITY AND LIABILITIES

	LIABILITIES
	Trade and other payables	11	443,216	131,467
	Financial liabilities at fair value through profit or loss	7(b)	6,446,603	11,501,094

	Total Liabilities (excluding net assets attributable to shareholders)		6,889,819	11,632,561
NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS			61,561,812	70,075,410
	EQUITY
	Equity attributable to equity holders of parent		-	-
	Non-controlling interest	12	306,399	340,230

	Total equity		306,399	340,230

	Net assets attributable to shareholders	10	61,255,413	69,735,180

	Total equity attributable to equity holders of parent and total net assets attributable to shareholders		61,561,812	70,075,410

Net assets attributable to:
- Ordinary shares	10	37,287,967	43,099,112
- Class C shares	10	23,967,446	26,636,068

Net assets attributable to shareholders		61,255,413	69,735,180

Net assets value per share:
- Ordinary shares	10	0.875	1.011
- Class C shares	10	0.821	0.912

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2015

ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

		Share	Share	Retained		Non-controlling	Total
		capital	premium	earnings	Total	interest	equity
	Notes	USD	USD	USD	USD	USD	USD

At 31 December 2014		426,303	37,921,452	13,701,196	52,048,951	405,697	52,454,648

Profit for the period		-	-	282,153	282,153	1,711	283,864

Dividend	18	-	(76,859)	-	(76,859)	-	(76,859)

At 17 April 2014		426,303	37,844,593	13,983,349	52,254,245	407,408	52,661,653

Transfer to consolidated statement of changes in net assets (note 10)

(426,303)

(37,844,593)

(13,983,349)

(52,254,245)

Loss for the period	-			-		-	-	(67,178)			(67,178)

At 31 December 2014		-	-		-		-		340,230	340,230

At 1 January 2015

340,230

Loss for the period	-			-	-	-		(33,831)			(33,831)
At 31 December 2015		-	-		-		-		306,399	306,399

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

FOR THE YEAR ENDED 31 DECEMBER 2015

	Number of units	Ordinary Share	Class C shares	Net assets attributable to shareholders

	USD	USD	USD	USD

At 17 April 2014 - transfer from equity (refer to note 10)	42,630,327	52,254,245	-	52,254,245

CAPITAL TRANSACTIONS:
Issue of C shares	29,200,000	-	29,200,000	29,200,000

OPERATIONS:
Decrease in net assets attributable to shareholders from operations for the period	-	(9,155,133)	(2,563,932)	(11,719,065)


At 31 December 2014	71,830,327	43,099,112	26,636,068	69,735,180

At 1 January 2015	71,830,327	43,099,112	26,636,068	69,735,180


OPERATIONS:
Decrease in net assets attributable to shareholders from operations	-	(5,811,145)	(2,668,622)	(8,479,767)


At 31 December 2015	71,830,327	37,287,967	23,967,446	61,255,413

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2015

	Notes	2015	2014

		USD	USD
Operating activities
Decrease in net assets attributable to shareholders from operations/ Total Comprehensive Loss for the year		(8,513,598)	(11,502,378)

Adjustment for items separately disclosed:
Dividend expense Adjustments for non-cash items		912,289	-
Unrealised loss on financial assets at fair value through profit or loss	7(a)	7,433,641	10,339,284
Realised loss on sale of financial assets at fair value through profit or loss	7(a)	2,651,638	2,132,906
Unrealised loss on financial liabilities held for trading	7(b)	(2,905,223)	135,784
Realised gain on financial liabilities held for trading	7(b)	673,007	(515,415)
Effect of exchange rate on cash and cash equivalents		(514,316)	(1,059,102)

Cash generated from/(used in) operating activities		(262,562)	(468,921)

Net changes in operating assets and liabilities
Purchase of financial assets at fair value through profit or loss		(16,586,148)	(32,760,408)
Proceeds on disposal of financial assets at fair value through profit or loss		9,504,026	11,939,459
Derecognition of financial liabilities held for trading		(7,888,534)	-
Purchase of financial liabilities held for trading		5,066,259	6,916,862
Decrease in trade and other receivables		255,829	77,198
Increase/(Decrease) in trade and other payables		311,749	(2,365,766)

Net cash used in operating activities		(9,336,819)	(16,192,655)

Financing activities
Proceeds from issue of redeemable shares		-	29,200,000
Dividend paid	18	(912,289)	(162,150)

Net cash flow generated/(used in) financing activities		(912,289)	29,037,850

Net (decrease)/increase in cash and cash equivalents		(10,511,670)	12,376,274

Effect of exchange rate on cash and cash equivalents		514,316	1,059,102

Cash and cash equivalents at the start of the year		16,848,480	3,413,104

Cash and cash equivalents at the end of the year	9	6,851,126	16,848,480

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

1. GENERAL INFORMATION

Africa Opportunity Fund Limited (the "Company") was launched with an Alternative Market Listing "AIM" in July 2007 and moved to the Specialist Funds Segment "SFS" in April 2014.

Africa Opportunity Fund Limited is a closed-ended fund incorporated with limited liability and registered in Cayman Islands under the Companies Law on 21 June 2007, with registered number MC-188243.

The Company aims to achieve capital growth and income through investment in value, arbitrage, and special situations investments in the continent of Africa. The Company may therefore invest in securities issued by companies domiciled outside Africa which conduct significant business activities within Africa. The Company has the ability to invest in a wide range of asset classes including real estate interests, equity, quasi-equity or debt instruments and debt issued by African sovereign states and government entities.

The Company's investment activities are managed by Africa Opportunity Partners Limited, a limited liability company incorporated in the Cayman Islands and acting as the investment manager pursuant to an Amended and Restated Investment Management Agreement dated 12 February 2014.

To ensure that investments to be made by the Company and the returns generated on the realisation of investments are both effected in the most tax efficient manner, the Company has established Africa Opportunity Fund L.P. as an exempted limited partnership in the Cayman Islands. All investments made by the Company are made through the limited partnership. The limited partners of the limited partnership are the Company and AOF CarryCo Limited. The general partner of the limited partnership is Africa Opportunity Fund (GP) Limited.

The consolidated financial statements for the Company for the year ended 31 December 2015 were authorised for issue in accordance with a resolution of the Board of Directors on 29 April 2016.

Presentation currency

The consolidated financial statements are presented in United States dollars ("USD").

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied from the prior year to the current year for items which are considered material in relation to the consolidated financial statements.

Statement of compliance

The consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Basis of preparation

The consolidated financial statements have been prepared under the historical cost convention except for financial assets and financial liabilities at fair value through profit or loss that have been measured at fair value.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise its judgement in the process of applying the Company's and its subsidiaries' (referred to as the "Group") accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group as at 31 December 2015.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control and continues to be consolidated until the date that such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

All intra-group balances, income and expenses and gains and losses resulting from intra-group transactions are eliminated in full.

Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented separately in the statement of comprehensive income and within equity in the statement of changes in equity from parent shareholders' equity.

Foreign currency translation

(i) Functional and presentation currency

The consolidated financial statements are presented in USD which is the Company's functional currency, being the currency of the primary economic environment in which the Group operates. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The functional currency of the entities within the Group is USD. The Group chose USD as the presentation currency.

(ii) Transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of the exchange ruling at the reporting date. All differences are taken to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

Financial instruments

(i) Classification

The Group classifies its financial assets and liabilities in accordance with IAS 39 into the following categories:

Financial assets and liabilities at fair value through profit or loss

The category of the financial assets and liabilities at fair value through the profit or loss is subdivided into:

Financial assets and liabilities held for trading

Financial assets are classified as held for trading if they are acquired for the purpose of selling and repurchasing in the near term. This category includes equity securities, investments in managed funds and debts instruments. These assets are acquired principally for the purpose of generating a profit from short term fluctuation in price. All derivatives and liabilities from the short sales of financial instruments are classified as held for trading.

Financial assets designated at fair value through profit or loss upon initial recognition

These include equity securities and debt instruments that are not held for trading. These financial assets are designated on the basis that they are part of a group of financial assets which are managed and have their performance evaluated on a fair value basis, in accordance with risk management and investment strategies of the Group, as set out in the Group's offering document. The financial information about the financial assets is provided internally on that basis to the Investment Manager and to the Board of Directors.

(i) Classification (Continued)

Derivatives - Options

Derivatives are classified as held for trading (and hence measured at fair value through profit or loss), unless they are designated as effective hedging instruments (however the Group does not apply any hedge accounting). The Group's derivatives relate to option contracts.

Options are contractual agreements that convey the right, but not the obligation, for the purchaser either to buy or sell a specific amount of a financial instrument at a fixed price, either at a fixed future date or at any time within a specified period.

The Group purchases and sells put and call options through regulated exchanges and OTC markets. Options purchased by the Group provide the Group with the opportunity to purchase (call options) or sell (put options) the underlying asset at an agreed-upon value either on or before the expiration of the option. The Group is exposed to credit risk on purchased options only to the extent of their carrying amount, which is their fair value.

Options written by the Group provide the purchaser the opportunity to purchase from or sell to the Company the underlying asset at an agreed-upon value either on or before the expiration of the option.

Options are generally settled on a net basis.

Contracts for difference

Contracts for difference are derivatives that obligate either the buyer or the seller to pay to the other the difference between the asset's current price and its price at the time of the contract's usage. Unrealized gains or losses are recorded at the end of each time period that passes without the CFDs being used. Once the CFDs are used, the difference between the opening position and the closing position is recorded as either revenue or a loss depending on whether the business was the buyer or the seller.

Loans and receivables

Loans and receivables are non-derivatives financial assets with fixed or determinable payments that are not quoted in an active market. The Group's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the statement of financial position.

Other financial liabilities

This category includes all financial liabilities, other than those classified as fair value through profit or loss. The Group includes in this category amounts relating to trade and other payables and dividend payable.

(ii) Recognition

The Group recognises a financial asset or a financial liability when, and only when, it becomes a party to the contractual provisions of the instrument.

Purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place are recognised directly on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

(iii) Initial measurement

Financial assets and liabilities at fair value through profit or loss are recorded in the statement of financial position at fair value. All transaction costs for such instruments are recognised directly in profit or loss.

Derivatives embedded in other financial instruments are treated as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contract, and the host contract is not itself classified as held for trading or designated at fair value though profit or loss. Embedded derivatives separated from the host are carried at fair value.

Loans and receivables and financial liabilities (other than those classified as held for trading) are measured initially at their fair value plus any directly attributable incremental costs of acquisition or issue.

(iv) Subsequent measurement

After initial measurement, the Group measures financial instruments which are classified as at fair value through profit or loss at fair value. Subsequent changes in the fair value of those financial instruments are recorded in 'Net gain or loss on financial assets and liabilities at fair value through profit or loss'. Interest earned and dividend revenue elements of such instruments are recorded separately in 'Interest revenue' and 'Dividend revenue', respectively. Dividend expenses related to short positions are recognised in 'Dividends on securities sold not yet purchased'.

Loans and receivables are carried at amortised cost using the effective interest method less any allowance for impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Financial liabilities, other than those classified as at fair value through profit or loss, are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, as well as through the amortisation process.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instruments, but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

(v) Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where:

· The rights to receive cash flows from the asset have expired; or

· The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and

Either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset (or has entered into a pass-through arrangement), and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group's continuing involvement in the asset.

The Group derecognises a financial liability when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss.

Determination of fair value

The Group measures its investments in financial instruments at fair value at each reporting date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measured is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to the Group.

The fair value for financial instruments traded in active markets at the reporting date is based on their quoted price without any deduction for transaction costs.

For all other financial instruments not traded in an active market, the fair value is determined by using appropriate valuation techniques. Valuation techniques include: using recent arm's length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible. An analysis of fair values of financial instruments and further details as to how they are measured is provided in Note 7.

The Group uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation technique:

· Level 1: quoted (unadjusted) market prices in active markets for identical assets and liabilities.

· Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

· Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Impairment of financial assets

The Group assesses at each reporting date whether a financial asset or group of financial assets classified as loans and receivables is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is an objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an incurred 'loss event') and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtor, or a group of debtors, is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and, where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred) discounted using the asset's original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss as 'Credit loss expense'.

Impaired debts, together with the associated allowance, are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group.

Interest revenue on impaired financial assets is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Net gain or loss on financial assets and liabilities at fair value through profit or loss

This item includes changes in the fair value of financial assets and liabilities held for trading or designated upon initial recognition as 'at fair value through profit or loss' and excludes interest and dividend income and expenses.

Unrealised gains and losses comprise changes in the fair value of financial instruments for the year and from reversal of prior year's unrealised gains and losses for financial instruments which were realised in the reporting period.

Realised gains and losses on disposals of financial instruments classified as 'at fair value through profit or loss' are calculated using the Average Cost (AVCO) method. They represent the difference between an instrument's initial carrying amount and disposal amount, or cash payments or receipts made on derivative contracts (excluding payments or receipts on collateral margin accounts for such instruments).

Due to and due from brokers

Amounts due to brokers are payables for securities purchased (in a regular way transaction) that have been contracted for but not yet delivered on the reporting date. Refer to the accounting policy for financial liabilities, other than those classified as at fair value through profit or loss for recognition and measurement.

Amounts due from brokers include margin accounts and receivables for securities sold (in a regular way transaction) that have been contracted for but not yet delivered on the reporting date. Refer to accounting policy for loans and receivables for recognition and measurement.

Shares that impose on the Company, an obligation to deliver to shareholders a pro-rata share of the net asset of the Company on liquidation classified as financial liabilities

The shares are classified as equity if those shares have all the following features:

(a) It entitles the holder to a pro rata share of the Company's net assets in the event of the Company's liquidation.

The Company's net assets are those assets that remain after deducting all other claims on its assets. A pro rata share is determined by:

(i) dividing the net assets of the Company on liquidation into units of equal amount; and

(ii) multiplying that amount by the number of the shares held by the shareholder.

(b) The shares are in the class of instruments that is subordinate to all other classes of instruments. To be in such a class the instrument:

(i) has no priority over other claims to the assets of the Company on liquidation, and

(ii) does not need to be converted into another instrument before it is in the class of instruments that is subordinate to all other classes of instruments.

(c) All shares in the class of instruments that is subordinate to all other classes of instruments must have an identical contractual obligation for the issuing Company to deliver a pro rata share of its net assets on liquidation.

Shares that impose on the Company, an obligation to deliver to shareholders a pro-rata share of the net asset of the Company on liquidation classified as financial liabilities (Continued)

In addition to the above, the Company must have no other financial instrument or contract that has:

(a) total cash flows based substantially on the profit or loss, the change in the recognised net assets or the change in the fair value of the recognised and unrecognised net assets of the Company (excluding any effects of such instrument or contract) and

(b) the effect of substantially restricting or fixing the residual return to the shareholders.

The shares that meet the requirements to be classified as a financial liability have been designated as at fair value through profit or loss on initial recognition.

The movement in fair value is shown in the statement of comprehensive income as an 'Increase or decrease in net assets attributable to shareholders'.

Distributions to shareholders whose shares are classified as financial liabilities.

Distributions to shareholders are recognised in the statement of comprehensive income as finance costs.

Interest revenue and expense

Interest revenue and expense are recognised in profit or loss for all interest-bearing financial instruments using the effective interest method.

Dividend revenue and expense

Dividend revenue is recognised when the Group's right to receive the payment is established. Dividend revenue is presented gross of any non-recoverable withholding taxes, which are disclosed separately in profit or loss. Dividend expense relating to equity securities sold short is recognised when the shareholders' right to receive the payment is established.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

3. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The accounting policies adopted are consistent with those of the previous financial year except for the following new and amended IFRS and IFRIC interpretations adopted in the year commencing 1 January 2015:

Amendments	Effective for accounting period beginning on or after

Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)	1 July 2014
Annual Improvements 2010-2012 Cycle	1 July 2014
Annual Improvements 2011-2013 Cycle	1 July 2014

Where the adoption of the standard or interpretation or improvement is deemed to have an impact on the financial statements or performance of the Group, its impact is described below:

Amendments to IAS 19 Defined Benefit Plans: Employee Contributions - effective 1 July 2014

IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment is effective for annual periods beginning on or after 1 July 2014.

This amendment had no impact on the financial position of the Fund's financial statements.

Annual Improvements 2010-2012 Cycle and Annual Improvements 2011-2013 Cycle

	Effective for accounting period beginning on or after
Annual Improvements 2010-2012 Cycle
IFRS 2 Share-based Payment	1 July 2014
IFRS 3 Business Combinations	1 July 2014
IFRS 8 Operating Segments	1 July 2014
IAS 16 Property, Plant and Equipment	1 July 2014
IAS 24 Related Party Disclosures	1 July 2014
Annual Improvements 2011-2013 Cycle
IFRS 3 Business Combinations	1 July 2014
IFRS 13 Fair Value Measurement	1 July 2014
IAS 40 Investment Property	1 July 2014

Where the adoption of the standard or interpretation or improvement is deemed to have an impact on the financial statements or performance of the Fund, its impact is described below:

IFRS 3 Business Combinations

The amendment is applied prospectively and clarifies that all contingent consideration arrangements classified as liabilities (or assets) arising from a business combination should be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IAS 39.

This amendment did not have any impact on the Fund.

IFRS 8 Operating Segments

The amendments are applied retrospectively and clarify that:

· An entity must disclose the judgements made by management in applying the aggregation criteria in paragraph 12 of IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are 'similar'; and

· The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities.

This amendment did not impact the Fund's accounting policy as the Fund is organised in one main operating segment which invests in equity securities and relative derivatives.

IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets

The amendment is applied retrospectively and clarifies in IAS 16 and IAS 38 that the asset may be revalued by reference to observable data by either adjusting the gross carrying amount of the asset to market value or by determining the market value of the carrying value and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value. In addition, the accumulated depreciation or amortisation is the difference between the gross and carrying amounts of the asset.

This amendment did not have any impact the Fund during the current period as the Fund does not have such type of assets.

IAS 24 Related Party Disclosures

The amendment is applied retrospectively and clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services.

Additional disclosures have been made in the financial statements of the Fund to cater for these amendments. (Refer to note 14)

Annual Improvements 2011-2013 Cycle

These improvements are effective from 1 July 2014 and the Fund has applied these amendments for the first time in these interim condensed consolidated financial statements. They include:

IFRS 3 Business Combinations

The amendment is applied prospectively and clarifies for the scope exceptions within IFRS 3 that:

· Joint arrangements, not just joint ventures, are outside the scope of IFRS 3; and

· This scope exception applies only to the accounting in the financial statements of the joint arrangement itself.

The Fund has not entered into a joint arrangement, and thus this amendment is not relevant for the Fund.

IFRS 13 Fair Value Measurement

The amendment is applied prospectively and clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IAS 39. The Fund does not apply the portfolio exception in IFRS 13.

IAS 40 Investment Property

The description of ancillary services in IAS 40 differentiates between investment property and owner-occupied property (i.e., property, plant and equipment). The amendment is applied prospectively and clarifies that IFRS 3, and not the description of ancillary services in IAS 40, is used to determine if the transaction is the purchase of an asset or a business combination. This amendment does not have any impact as the Fund does not hold any investment property.

3.1 STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Fund's financial statements are disclosed below. They are mandatory for accounting periods beginning on the specified dates, but the Fund has not early adopted them:

	Effective for accounting period beginning on or after

IFRS 9 Financial Instruments	1 January 2018
Sale or contribution of assets between an investor and its associate or joint venture (Amendments to IFRS 10 and IAS 28)	1 January 2016
Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28)	1 January 2016
IFRS 14 Regulatory Deferral Accounts	1 January 2016
IFRS 15 Revenue from Contracts with Customers	1 January 2018
IFRS 16 Leases	1 January 2019
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)	1 January 2016
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)	1 January 2016
Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)	1 January 2016
Amendments to IAS 27: Equity Method in Separate Financial Statement	1 January 2016
Annual improvements 2012 - 2014 Cycle	1 January 2016
Disclosure initiative - Amendments to IAS 1	1 January 2016

IFRS 9 Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

IFRS 9 Financial Instruments - Classification and measurement of financial assets, Accounting for financial liabilities and derecognition - 1 January 2018

Classification and measurement of financial liabilities

For financial liabilities designated as FVTPL using the FVO, the amount of change in the fair value of such financial liabilities that is attributable to changes in credit risk must be presented in OCI. The remainder of the change in fair value is presented in profit or loss, unless presentation of the fair value change in respect of the liability's credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. All other IAS 39 Financial Instruments: Recognition and Measurement classification and measurement requirements for financial liabilities have been carried forward into IFRS 9, including the embedded derivative separation rules and the criteria for using the FVO.

Impairment

The impairment requirements are based on an expected credit loss (ECL) model that replaces the IAS 39 incurred loss model. The ECL model applies to: debt instruments accounted for at amortised cost or at FVOCI; most loan commitments; financial guarantee contracts; contract assets under IFRS 15; and lease receivables under IAS 17 Leases. Entities are generally required to recognise either 12-months' or lifetime ECL, depending on whether there has been a significant increase in credit risk since initial recognition (or when the commitment or guarantee was entered into). For some trade receivables, the simplified approach may be applied whereby the lifetime expected credit losses are always recognised.

Hedge accounting

Hedge effectiveness testing is prospective, without the 80% to 125% bright line test in IAS 39, and, depending on the hedge complexity, can be qualitative. A risk component of a financial or non-financial instrument may be designated as the hedged item if the risk component is separately identifiable and reliably measureable. The time value of an option, any forward element of a forward contract and any foreign currency basis spread, can be excluded from the designation as the hedging instrument and accounted for as costs of hedging. More designations of groups of items as the hedged item are possible, including layer designations and some net positions.

The application of IFRS 9 may change the measurement and presentation of many financial instruments, depending on their contractual cash flows and business model under which they are held. The impairment requirements will generally result in earlier recognition of credit losses. The new hedging model may lead to more economic hedging strategies meeting the requirements for hedge accounting.

The Directors are assessing the impact of this new standard.

Sale or contribution of assets between an investor and its associate or joint venture (Amendments to IFRS 10 and IAS 28) - effective 1 January 2016

This amendment to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011) was made to clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture, as follows:

· it requires full recognition in the investor's financial statements of gains and losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations); and

· it requires the partial recognition of gains and losses where the assets do not constitute a business, i.e. a gain or loss is recognised only to the extent of the unrelated investors' interests in that associate or joint venture.

These requirements apply regardless of the legal form of the transaction, e.g. whether the sale or contribution of assets occurs by an investor transferring shares in a subsidiary that holds the assets (resulting in loss of control of the subsidiary), or by the direct sale of the assets themselves.

The amendment will not have an impact on the Fund as it does not have any associate or joint venture.

Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) - effective 1 January 2016

This amendment to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 28 Investments in Associates and Joint Ventures (2011) was made to address issues that have arisen in the context of applying the consolidation exception for investment entities by clarifying the following points:

· The exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary of an investment entity, even if the investment entity measures all of its subsidiaries at fair value.

· A subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity.

· When applying the equity method to an associate or a joint venture, a non-investment entity investor in an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries.

· An investment entity measuring all of its subsidiaries at fair value provides the disclosures relating to investment entities required by IFRS 12.

The amendment will not have an impact on the Fund as it is not considered as an Investment entity.

IFRS 14 Regulatory Deferral Accounts - effective 1 January 2016

IFRS 14 permits an entity which is a first-time adopter of International Financial Reporting Standards to continue to account, with some limited changes, for 'regulatory deferral account balances' in accordance with its previous GAAP, both on initial adoption of IFRS and in subsequent financial statements.

This new standard will not have an impact, as the Fund is not a first time adopter of IFRS.

IFRS 15 Revenue from Contracts with Customers - effective 1 January 2018

IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.

The five steps in the model are as follows:

· Identify the contract with the customer;

· Identify the performance obligations in the contract;

· Determine the transaction price;

· Allocate the transaction price to the performance obligations in the contracts; and

· Recognise revenue when (or as) the entity satisfies a performance obligation.

Guidance is provided on topics such as the point in which revenue is recognised, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced.

This new standard will not have an impact on the Fund as the sources of income of the fund, being dividends and interest, are scoped out of IFRS 15.

IFRS 16 Leases - effective 1 January 2019

The IASB has redrafted this new leasing standard that would require lessees to recognise assets and liabilities for most leases. Lessees applying IFRS would have a single recognition and measurement model for all leases (with certain exemptions). Lessors applying IFRS would classify leases using the principle in IAS 17; in essence, lessor accounting would not change.

This standard will not have an impact on the Fund as it does not have any leases.

Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) - effective 1 January 2016

Amends IFRS 11 Joint Arrangements to require an acquirer of an interest in a joint operation in which the activity constitutes a business (as defined in IFRS 3 Business Combinations) to:

• Apply all of the business combinations accounting principles in IFRS 3 and other IFRSs, except for those principles that conflict with the guidance in IFRS 11; and

• Disclose the information required by IFRS 3 and other IFRSs for business combinations.

The amendments apply both to the initial acquisition of an interest in joint operation, and the acquisition of an additional interest in a joint operation (in the latter case, previously held interests are not remeasured).

The amendment will not have an impact since the Fund does not have any interests in joint operations.

Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) - effective 1 January 2016

Amends IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets to:

· Clarify that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate for property, plant and equipment;

· Introduce a rebuttable presumption that an amortisation method that is based on the revenue generated by an activity that includes the use of an intangible asset is inappropriate, which can only be overcome in limited circumstances where the intangible asset is expressed as a measure of revenue, or when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated; and

· Add guidance that expected future reductions in the selling price of an item that was produced using an asset could indicat`e the expectation of technological or commercial obsolescence of the asset, which, in turn, might reflect a reduction of the future economic benefits embodied in the asset.

The amendment will not have an impact since the Fund does not hold any property, plant and equipment.

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) - effective 1 January 2016

Amends IAS 16 Property, Plant and Equipment and IAS 41 Agriculture to:

· Include 'bearer plants' within the scope of IAS 16 rather than IAS 41, allowing such assets to be accounted for a property, plant and equipment and measured after initial recognition on a cost or revaluation basis in accordance with IAS 16;

· Introduce a definition of 'bearer plants' as a living plant that is used in the production or supply of agricultural produce, is expected to bear produce for more than one period and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales; and

· Clarify that produce growing on bearer plants remains within the scope of IAS 41.

The amendment will not have an impact as the Fund does not hold any property, plant and equipment.

Amendments to IAS 27: Equity Method in Separate Financial Statements - 1 January 2016

The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. Entities already applying IFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively.

For first-time adopters of IFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to IFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted.

This amendment will not have an impact on the Fund as it does not hold investment in subsidiaries.

Annual Improvements 2012 - 2014 Cycle - 1 July 2016

The following amendments were made to these standards:

· IFRS 5 - Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued

· IFRS 7 - Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and clarification on offsetting disclosures in condensed interim financial statements

· IAS 9 - Clarify that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid

· IAS 34 - Clarify the meaning of 'elsewhere in the interim report' and require a cross-reference

The Fund is still evaluating the effect of these new or revised standards and interpretations on the presentation of its financial statements.

No early adoption is intended by the Board of directors.

4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts recognised in the financial statements and disclosure of contingent liabilities. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Judgements

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

Going concern

The Group's management has made an assessment of the Group's ability to continue as a going concern and is satisfied that the Group has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis.

Determination of functional currency

The determination of the functional currency of the Group is critical since recording of transactions and exchange differences arising thereon are dependent on the functional currency selected. As described in Note 2, the directors have considered those factors therein and have determined that the functional currency of the Group is the United States Dollar.

Assessment for not being an investment entity

The Company does not meet the definition of an investment entity as it does not measure and evaluate the performance of substantially all of its investments on a fair value basis; for example, Company's investment in Triton Resources Inc. has been recorded at cost at year end as their fair value cannot be measured reliably (refer to notes 7).

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. The Group based its assumptions and estimates on parameters available when the financial statements were prepared. However, existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Fair value of financial instruments

When the fair value of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active markets, their fair value is determined using a variety of valuation techniques that include the use of mathematical models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, estimation is required in establishing fair values. The estimates include considerations of liquidity and model inputs such as credit risk (both own and counterparty's), correlation and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments in the statement of financial position and the level where the instruments are disclosed in the fair value hierarchy. The models are calibrated regularly and tested for validity using prices from any observable current market transactions in the same instrument (without modification or repackaging) or based on any available observable market data. An analysis of fair values of financial instruments and further details as to how they are measured is provided in Note 7.

Fair value of financial instruments (Continued)

IFRS 13 requires disclosures relating to fair value measurements using a three-level fair value hierarchy. The level within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety as provided in Note 7.

Assessing the significance of a particular input requires judgement, considering factors specific to the asset or liability. To assess the significance of a particular input to the entire measurement, the Group performs sensitivity analysis or stress testing techniques.

Investment in Shoprite Holdings (SHP ZL)

The Company (through its subsidiary Africa Opportunity Fund L.P) has a significant position of 6.4%% of NAV (2014: 9.6%%) in Shoprite Holdings (SHP ZL) ("Shoprite") on the Zambian Register. The value of the investment as at 31 December 2015 amounted to USD 3,889,649 (2014: USD 6,685,334) and the original cost of the investment was USD 3,639,685 (2014: USD 3,639,685. Shoprite has conveyed its intention to seek to reverse certain trades made on the Lusaka Stock Exchange. To date, the filing to the courts made by Shoprite against the Company (through the custodian as nominee on behalf of the fund) has been dismissed as an abuse of Process of Court on account of multiplicity of action with costs awarded to the defendants. The multiplicity of action refers to an existing case in a separate jurisdiction that has been filed by Shoprite against its agent and transfer agent Messrs Lewis Nathan Advocates. Shoprite appealed the decision. A consent court order was issued in October 2014 consolidating all the actions. Shoprite issued a consolidated writ of summons in March 2015 seeking to reverse trades for 438,743 Shoprite shares out of AOF's holding of 679,145 Shoprite shares. The Company and Shoprite have an arbitration hearing scheduled for August 2015. Management has fair valued the investment in Shoprite at the price prevailing on the Lusaka stock exchange. Additionally, Shoprite has been placing dividend payments into escrow rather than distributing these amounts to shareholders. These dividends are reflected as a receivable amounting to USD 478,676 (2014: USD 568,676) in the Group's assets.

Management has assessed these facts and consulted with their legal advisors, who consider such action by Shoprite to be devoid of merit. Therefore, management believe that the correct judgement is to continue to account for the investment at fair value and accrue for the dividends on this investment. This investment has been classified as level 2 as the Shoprite shares traded on the Lusaka market is illiquid.

5. AGREEMENTS

Investment Management Agreement

Following the Admission of Ordinary Shares and C Shares to the Specialist Fund Market (now Specialist Fund Segment) of the London Stock Exchange on 17 April 2014, the Company entered into an Amended and Restated Investment Management Agreement with Africa Opportunity Partners (the "Investment Manager"), an investment management company incorporated in the Cayman Islands, to manage the operations of the Group subject to the overall supervision of the Group's board as specified in the SFS Admission document of the Company.

Under the Amended and Restated Investment Management Agreement, the Investment Manager will receive, conditional upon completion of the Placing, a management fee equal to the aggregate of: (i) two per cent of the Net Asset Value per annum up to US$50 million; and (ii) one per cent of the Net Asset Value per annum in excess of US$50 million, payable in US$ quarterly in advance. If the Placing does not complete, the Investment Manager will continue to receive a management fee equal to 2 per cent of the Net Asset Value per annum, payable in US$ quarterly in advance.

In addition, the principals (directors) of the Investment Manager are beneficially interested in CarryCo, which under the terms of the Amended and Restated Limited Partnership Agreement, is entitled to share an aggregate annual carried interest (the "Performance Allocation") from the Limited Partnership equivalent to 20 per cent of the excess of the Net Asset Value (as at 31 December in each year) over the sum of (i) the annual management fee for that year end (ii) a non-compounding annual hurdle amount equal to the Net Asset Value as at 31 December in the previous year, as increased by 5 per cent. The Performance Allocation is subject to a "high watermark" requirement. The Performance Allocation accrues monthly and is calculated as at 31 December in each year and is allocated following the publication of the NAV for such date.

The management fee for the financial year under review amounts to USD 1,149,597 (2014: USD 1,196,481) and the performance fees for the financial year under review was nil (2014: USD nil).

Administrative Agreement

International Proximity has been re-appointed, from 01 January 2015 to 31 August 2015, to provide various administrative services to the Company and received an aggregate fee of USD 61,778 (2014: USD 69,311) payable by the Company for administrative and certain secretarial services for the Group. On 01 September 2015, SS&C Technologies was appointed as the new administrator and received an aggregate fee of USD 23,425 (2014: nil). This is classified under "Custodian, secretarial and administration fees'' in the consolidated statement of comprehensive income.

Custodian Agreement

A Custodian Agreement has been entered into by the Company and Standard Chartered Bank (Mauritius) Ltd, whereby Standard Chartered Bank (Mauritius) Ltd would provide custodian services to the Company and would be entitled to a custody fee of between 18 and 25 basis points per annum of the value of the assets held by the custodian and a tariff of between 10 and 45 basis points per annum of the value of assets held by the custodian. The custodian fees for the financial year under review amounts to USD 141,025 (2014: USD 124,474) and is classified under "Custodian, secretarial and administration fees'' in the consolidated statement of comprehensive income.

Prime Brokerage Agreement

Under the Prime Brokerage Agreement, the Company appointed Credit Suisse Securities (USA) LLC as its prime broker for the purpose of carrying out the Company's instructions with respect to the purchase, sale and settlement of securities. The fees charged for the financial year under review amounts to USD 223,720 (2014: 472,557) and is classified under "Brokerage fees and commissions'' in the consolidated statement of comprehensive income.

Broker Agreement

Under the Broker Agreement, during 2015, the Company appointed LCF Edmond Rothschild Securities Limited ("LCFR"), a company incorporated in England and Wales to act as Broker to the Group.

Under the Broker Agreement, the Company paid to LCFR a fee of USD 29,547 (2014: USD 34,343) for the financial year under review. The broker fee is payable in advance at six month intervals and was classified under "Brokerage fees and commissions'' in the consolidated statement of comprehensive income.

6. INTEREST REVENUE

	2015	2014

	USD	USD

Interest on deposits	41,499	-
Interest on bonds	610,636	1,047,599

Total interest revenue	652,135	1,047,599

7. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

7(a) Financial assets at fair value through profit or loss

	2015	2014

	USD	USD
Held for trading financial assets:
At 1 January	63,822,689	55,473,931
Additions	16,586,148	32,760,408
Disposals	(12,155,664)	(14,072,366)
Net losses on financial assets at fair value through profit or loss	(7,433,641)	(10,339,284)

At 31 December (at fair value)	60,819,532	63,822,689

Analysed as follows:

- Listed equity securities	48,963,914	50,685,167
- Listed debt securities	9,002,913	11,887,510
- Unlisted equity securities	1,001,250	1,000,012
- Unlisted debt securities	1,696,823	250,000
- Contract for difference	154,632	-

	60,819,532	63,822,689

Net changes on fair value of financial assets at fair value through profit or loss

	2015	2014

	USD	USD

Realised	(2,651,638)	(2,132,906)
Unrealised	(7,433,641)	(10,339,284)

Total losses	(10,085,279)	(12,472,190)

7(b) Financial liabilities at fair value through profit or loss

	2015	2014

	USD	USD
Held for trading financial liabilities
Contract for difference	134,396	-
Written put options	-	132,883
Listed equity securities sold short	6,312,207	11,368,211

Financial liabilities at fair value through profit or loss	6,446,603	11,501,094


	2015	2014

	USD	USD
Net changes on fair value of financial liabilities at fair value through profit or loss

Realised	(673,007)	515,415
Unrealised	2,905,223	(135,784)

Total gains	2,232,216	379,631

7(c) Net gains/ (losses) on financial assets and liabilities at fair value through profit or loss

	2015	2014

	USD	USD

Net losses on fair value of financial assets at fair value through profit or loss	(10,085,279)	(12,472,190)
Net gains on fair value of financial liabilities at fair value through profit or loss	2,232,216	379,631

Net losses	(7,853,063)	(12,092,559)

7(d) Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation technique:

Level 1: quoted (unadjusted) market prices in active markets for identical assets and liabilities.

Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Recurring fair value measurement of assets and liabilities - 2015

31 December 2015

Level 1

Level 2

Level 3

USD

Financial assets at fair value through profit or loss:

Equities	48,963,914	45,074,265	3,889,649	-
Debt securities	10,449,736	-	10,449,736	-

Contract for Difference	154,632	-	154,632	-
	59,568,282	45,074,265	14,494,017	-

Financial liabilities at fair value through profit or loss
Shortsellings	6,312,207	6,312,207	-	-

Contract for Difference	134,396	-	134,396	-
	6,446,603	6,312,207	134,396	-

7(d) Fair value hierarchy (Continued)

Recurring fair value measurement of assets and liabilities - 2014

31 December 2014	Level 1	Level 2	Level 3

USD	USD	USD	USD

Financial assets at fair value through profit or loss:

Equities	51,685,179	43,999,833	7,685,346	-
Debt securities	12,137,510	-	12,137,510	-

	63,822,689	43,999,833	19,822,856	-
Financial liabilities at fair value through profit or loss	11,501,094	11,368,211	132,883	-

	2015	2014

	Number	USD

Investment in Triton (at cost)	1,251,250	-

Valuation techniques

Debt securities

The investment manager calculates an average price from various quotes received from brokers, who makes use of observable data in order to determine the fair value, as it represents the most appropriate estimate of fair value of the debt securities.

Contract for difference (CFD)

The prices for CFD are calculated based on average prices from various quotes received from brokers.

Unlisted debt and equity investments

The Company invests in private debt and equity companies which are not quoted in an active market. Transactions in such investments do not occur on a regular basis. The Company used a market based valuation technique for these positions.

The Company's investment manager determines comparable public companies based on industry, size, leverage and strategy to determine fair value where possible. For investments with limited comparable companies, the investment manager determines the fair value via a determination of the enterprise value of the investment. 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. In the prior year, the investment manager deemed AOF's equity investment in Triton Resources Inc. ("Triton") to be unique in that intangible assets (logging and harvesting rights) created a significant portion of the investment's enterprise value.

In 2014, Triton Resources Inc. underwent a reorganisation that resulted in the Company owning one million Triton Class A preferred shares valued at USD1.00 each and a promissory note in the amount of US$250,000. In 2014 a significant portion of the balance sheet related to Goodwill as a result of the acquisition/reorganisation event. Management has used a market based valuation techniques based on recent price transaction to fair value its investment in Triton. Hence the investment has been classified as level 2.

In late 2015 and early 2016 Triton has been in negotiations on separate Letters of Intent, subject to ongoing due diligence and other binding agreements, to sell its Ghana and its French Guyana and Surinam assets. The Investment Manager, based on its own sensitivity analysis, and in part due to these third party contemporaneous recognitions of Triton's balance sheet and off-balance sheet assets believe that its Triton investment cannot be measured reliably. The range of fair values measurements is significant and the probabilities of the various estimates cannot be assessed; hence due to the "hard to value" nature of the off-balance sheet assets, and the difficulty in valuing the investment by observable measures, the investment in Triton was kept at cost.

	2015	2014

Financial assets at fair value through profit or loss	USD	USD

At 1 January	-	950,000
Total gain/ (losses) in profit or loss	-	(950,000)
Net transfers into level 3	-	-

At 31 December	-	-

Total gains and losses included in profit or loss for assets held at the end of the reporting period

(950,000)

In the current year, there has been no transfer made from level 2 to level 3.

Fair value would not vary significantly if changing one or more of the inputs.

8. TRADE AND OTHER RECEIVABLES

	2015	2014

	USD	USD

Interest receivable on bonds	239,201	391,986
Dividend receivable (Note 4)	478,676	568,676
Other receivable	63,096	76,140

	780,973	1,036,802

Interest receivable on bonds is due within six months.

9. CASH AND CASH EQUIVALENTS

	2015	2014

	USD	USD

Account with Custodian	486,634	182,164
Other cash accounts	-	383,337
Call deposit accounts	2,450	5,139
Other bank accounts	6,362,042	16,277,840

	6,851,126	16,848,480

Other bank accounts are non-interest bearing.

10(a). ORDINARY SHARE CAPITAL

	2015	2015	2014	2014

	Number	USD	Number	USD
Authorised share capital
Ordinary shares with a par value of USD 0.01	1,000,000,000	10,000,000	1,000,000,000	10,000,000

Share capital
At 1 January	-	-	42,630,327	426,303
Reclassification	-	-	(42,630,327)	(426,303)

At 31 December	-	-	-	-

The directors have the general authority to repurchase the ordinary shares in issue subject to the Company having funds lawfully available for the purpose. However, if the market price of the ordinary shares falls below the Net Asset Value, the directors will consult with the Investment Manager as to whether it is appropriate to instigate a repurchase of the ordinary shares.

10(b). NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

	Ordinary	Class C
	Shares	Shares		Total

	USD	USD		USD
Reclassification from equity at 17 April 2014	52,254,245		-		52,254,245

Changes during the year:
Issue of shares	-		29,200,000		29,200,000
Redemption of shares	-		-		-
Loss for the period	(9,155,133)		(2,563,932)		(11,719,065)


At 31 December 2014	43,099,112		26,636,068		69,735,180

10(b). NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS (CONTINUED)

Ordinary	Class C
Shares	Shares	Total

USD	USD	USD

At 1 January 2015	43,099,112	26,636,068	69,735,180

Changes during the year:
Loss for the period	(5,811,145)	(2,668,622)	(8,479,767)


At 31 December 2015	37,287,967	23,967,446	61,255,413

Net assets value per share in 2015	0.875	0.821	-

Net assets value per share in 2014

1.011

0.912

C shares

In the prior year, AOF closed a Placing of 29.2 million C shares of US$0.10 each at a placing price of US$1.00 per C share, raising a total of $29.2 million before the expenses of the Issue. The placing was closed on 11 April 2014 with the shares commencing trading on 17 April 2014.

AOF's Ordinary Shares and the C Shares from the April placing were admitted to trading on the LSE's Specialist Fund Segment ("SFS") effective 17 April 2014.

C Shares are a transient class of shares: the assets representing the net proceeds of any issue of C Shares will be maintained, managed and accounted for as a separate pool of capital of the Company until those C Shares convert into Ordinary Shares (which will occur once 85 per cent of all of the assets representing the Net Placing Proceeds have been invested in accordance with the Company's existing investment policy (or, if earlier, six months after the date of issue of the C Shares)). Under the Articles the Directors have discretion to make such adjustments to the timing of Conversion as they consider reasonable having regard to the interests of all Shareholders. In this regard, although Conversion was anticipated to occur no later than six months after Admission, the Directors considered it is in the best interests of all Shareholders (being at that time Ordinary Shareholders and C Shareholders) to extend the Conversion Date beyond the six month period as the Shoprite case was still unresolved as at year end. On such conversion, each holder of C Shares will receive such number of Ordinary Shares as equals the number of C Shares held by them multiplied by the Net Asset Value per C Share and divided by the Net Asset Value per Ordinary Share (subject to a discount of 5 per cent.), in each case as at a date shortly prior to Conversion. As at reporting date, the dispute with Shoprite is still unresolved and the Conversion has not yet been made.

The Company does not have a fixed life but, as stated in the Company's admission document published in 2007, the Directors consider it desirable that Shareholders should have the opportunity to review the future of the Company at appropriate intervals. Accordingly, Shareholders passed an ordinary resolution at an extraordinary general meeting of the Company on 28 February 2014 that the Company continues in existence.

In 2019, the Directors will convene another general meeting where an ordinary resolution will be proposed that the Company will continue in existence. If the resolution is not passed, the Directors will be required to formulate proposals to be put to Shareholders to reorganise, reconstruct or wind up the Company. If the resolution is passed, the Company will continue its operations and a similar resolution will be put to Shareholders every five years thereafter.

At the same time as the continuation vote in 2019, the Company will provide Shareholders with, without first requiring a Shareholder vote to implement this policy, an opportunity to realise all or part of their shareholding in the Company for a net realised pro rata share of the Company's investment portfolio.

The directors have the discretion to defer the conversion indefinitely. Hence, there could be two classes of shares (the Ordinary and the C Class shares) that could be realised in a forced liquidation by the shareholders, and then the requirements of IAS 32.16C and 16D would need to be applied to both classes. Due to the fact that there are two separate pools of assets and liabilities attributable to the C Class and Ordinary shareholders respectively, the requirements of IAS 32.16C(a) would not be met. Therefore both the classes have been classified as financial liabilities as from April 2014 upon issuance of the Class C shares.

11. TRADE AND OTHER PAYABLES

	2015	2014

	USD	USD

Management Fee Payable	277,868	-
Directors Fees Payable	64,387	43,750
Other Payables	100,961	87,717

	443,216	131,467

Other payables and accrued expenses are non-interest bearing and have an average term of six months.

12. NON-CONTROLLING INTEREST

Material partly-owned subsidiary

Financial information of subsidiary that has material non-controlling interests is provided below:

Proportion of equity interest held by non-controlling interests:

Name	Country of incorporation and operation	2015	2014

Africa Opportunity Fund L.P.	Cayman Islands	0.9%	0.9%


Accumulated balances of material non-controlling interest:		USD	USD

Africa Opportunity Fund L.P.		306,399	340,230

Profit and other comprehensive income allocated to material non-controlling interest:

Africa Opportunity Fund L.P.		(33,831)	(65,467)

The summarised financial information of the subsidiary is provided below. This information is based on amounts before inter-company eliminations.

12. NON-CONTROLLING INTEREST

Summarised statement of profit or loss for 2015:

Africa Opportunity Fund L.P.

					USD

Income					1,924,001
Expenses					(5,565,806)
Loss before tax					(3,641,805)
Less withholding tax					(24,254)

Loss after tax					(3,666,059)
Other comprehensive loss					-

Total comprehensiveloss for the year					(3,666,059)
Attributable to non-controlling interests					(33,831)

Summarised statement of profit or loss for 2014:

Africa Opportunity Fund L.P.

						USD

Income						4,211,115
Expenses						(11,655,152)
Loss before tax						(7,444,037)
Less withholding tax						(209,243)

Loss after tax						(7,653,279)
Other comprehensive loss						-

Total comprehensive lossfor the year						(7,653,279)
Attributable to non-controlling interests						(65,467)

Summarised statement of financial position as at 31 December 2015:					Africa Opportunity Fund L.P.

					USD

Cash at bank					2,672,641
Trade and other receivables					679,374
Financial assets at fair value through profit or loss					33,437,689
Financial liabilities at fair value through profit or loss					(3,586,989)

Total equity					32,202,715
Attributable to:
Equity holders of parent					32,896,316
Non-controlling interest					306,399

Summarised statement of financial position as at 31 December 2014:					Africa Opportunity Fund L.P.

					USD

Cash at bank					5,078,795
Trade and other receivables					845,713
Financial assets at fair value through profit or loss					47,402,194
Trade and other payables					(12,270)
Financial liabilities at fair value through profit or loss					(10,516,965)

Total equity					42,797,467
Attributable to:
Equity holders of parent					42,457,609
Non-controlling interest					340,230

13. EARNING PER SHARE

The ordinary and C shares are classified as financial liabilities and therefore the disclosure of the earning per share on the face of the consolidated statement of comprehensive is not required in terms of IAS 33. However, the Company has voluntarily disclosed the earnings per share as per below.

The earnings per share is calculated by dividing the decrease in net assets attributable to shareholders by the weighted average number of ordinary and C shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares.

The Company's diluted earnings per share are the same as basic earnings per share, since the Company has not issued any instrument with dilutive potential.

		Ordinary shares		C shares
		2015	2014	2015	2014

Decrease in net assets attributable to shareholders	USD	(5,811,145)	(8,872,979)	(2,668,622)	(2,563,932))


Number of shares in issue		42,630,327	42,630,327	29,200,000	20,640,000

Change in net assets attributable to shareholders per share	USD	(0.136)	(0.208)	(0.091)	(0.124)

14. RELATED PARTY DISCLOSURES

The Directors consider Africa Opportunity Fund Limited (the "Company") as the ultimate holding company of Africa Opportunity Fund (GP) Limited and Africa Opportunity Fund L.P.

The financial statements include the financial statements of Africa Opportunity Fund Limited and its subsidiaries as follows:

	Country of	% equity interest	% equity interest
Name	incorporation	2015	2014

Africa Opportunity Fund (GP) Limited	Cayman Islands	100	100

Africa Opportunity Fund L.P.	Cayman Islands	99.09	99.09

During the year ended 31 December 2015, the Company transacted with related entities. The nature, volume and type of transactions with the entities are as follows:

	Type of	Nature of	Volume	Balance at
Name of related parties	relationship	transaction	USD	31 Dec 2015

				USD
Africa Opportunity Partners Limited	Investment Manager	Management fee expense	1,149,597	277,868

International Proximity

Administrator

Administration fees

61,778

SS&C Technologies

Administrator

Administration fees

23,435

During the year ended 31 December 2014, the Company transacted with related entities. The nature, volume and type of transactions with the entities are as follows:

				Balance at
	Type of	Nature of	Volume	31 Dec 2014
Name of related parties	relationship	transaction	USD	USD

Africa Opportunity Partners Limited	Investment Manager	Management fee expense	1,196,481	-
Africa Opportunity Partners Limited	Investment Manager	Performance fee expense	-	36,532
International Proximity	Administrator	Administration fees	69,311	-

The Investment Manager is considered to be key management personnel as it plans, directs and controls the operations of the fund.

Key Management Personnel (Directors' fee)

In the current year, except for Robert Knapp who has waived his fees, each director has been paid a fee of USD 35,000 per annum plus reimbursement for out-of pocket expenses.

In the prior year, except for Robert Knapp who has waived his fees, each director was paid a fee of USD 20,000 per annum plus reimbursement for out-of pocket expenses through the placing on 17 April and a fee of USD 35,000 per annum plus reimbursement for out-of pocket expenses thereafter.

Robert Knapp, who is a director of the Company, also forms part of the executive team of the Investment Manager. Details of the agreement with the Investment Manager are disclosed in Note 5. He has a beneficiary interest in AOF CarryCo Limited. The latter is entitled to carry interest computed in accordance with the rules set out in the Admission Document (refer to note 5 - 'Investment management agreement' for further detail of the performance fee paid to the director).

Details of investments in the Company by the Directors are set out below:

	No of shares held	Direct interest held %

2015	9,979,460	13.89

2014	9,113,000	12.69

The increase in director shares in 2015 is a result of Robert Knapp and Vikram Mansharamani purchasing additional shares during the year.

15. TAXATION

Under the current laws of Cayman Islands, there is no income, estate, transfer sales or other Cayman Islands taxes payable by the Company. As a result, no provision for income taxes has been made in the financial statements.

Dividend revenue is presented gross of any non-recoverable withholding taxes, which are disclosed separately in the statement of comprehensive income. Withholding taxes are not separately disclosed in statement of cash flows as they are deducted at the source of the income.

A reconciliation between tax expense and the product of accounting profit multiplied by the applicable tax rate is as follows:

	2015		2014

	USD		USD

Decrease in net assets attributable to shareholder from operations	(8,436,054)	(11,264,039)

Income tax expense calculated at 0%	-	-


Withholding tax suffered outside Mauritius	77,544	238,339

Income tax expense recognized in profit or loss	77,544	238,339

16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Introduction

The Group's objective in managing risk is the creation and protection of shareholder value. Risk is inherent in the Group's activities. It is managed through a process of ongoing identification, measurement and monitoring, subject to risks limits and other controls. The process of risk management is critical to the Group's continuing profitability. The Group is exposed to market risk (which includes currency risk, interest rate risk and price risk), credit risk and liquidity risk arising from the financial instruments it holds.

Risk management structure

The Group's Investment Manager is responsible for identifying and controlling risks. The Board of Directors supervises the Investment Manager and is ultimately responsible for the overall risk management approach of the Group.

Fair value

The carrying amount of financial assets and liabilities at fair value through profit or loss are restated to fair value at the reporting date. The carrying amount of trade and other receivables, cash and cash equivalents other payables and accrued expenses approximates their fair value due to their short term nature.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices and includes interest rate risk, foreign currency risk and equity price risk.

Short selling involves borrowing securities and selling them to a broker-dealer. The Group has an obligation to replace the borrowed securities at a later date. Short selling allows the Group to profit from a decline in market price to the extent that such decline exceeds the transaction costs and the costs of borrowing the securities, while the gain is limited to the price at which the Fund sold the security short.

Possible losses from short sales may be unlimited as the Group has an obligation to repurchase the security in the market at prevailing prices at the date of acquisition.

With written options, the Group bears the market risk of an unfavourable change in the price of the security underlying the option. Exercise of an option written by the Group could result in the Group selling or buying a security at a price significantly different from its fair value.

A contract for difference creates, as its name suggests, a contract between two parties speculating on the movement of an asset price. The term 'CFD' which stands for 'contract for difference' consists of an agreement (contract) to exchange the difference in value of a particular currency, commodity share or index between the time at which a contract is opened and the time at which it is closed. The contract payout will amount to the difference in the price of the asset between the time the contract is opened and the time it is closed. If the asset rises in price, the buyer receives cash from the seller, and vice versa. The Group bears the risk of an unfavourable change on the fair value of the CFD. The risk arises mainly from changes in the equity and foreign exchange rates of the underlying security.

The Group's financial assets are susceptible to market risk arising from uncertainties about future prices of the instruments. Since all securities investments present a risk of loss of capital, the Investment Manager moderates this risk through a careful selection of securities and other financial instruments. The Group's overall market positions are monitored on a daily basis by the Investment Manager.

The directors have based themselves on past and current performance of the investments and future economic conditions in determining the best estimate of the effect of a reasonable change in equity prices, currency rate and interest rate.

Equity Price Risk

Equity price risk is the risk that the fair value of equities decreases as a result of changes in the levels of the equity indices and the values of individual stocks. The trading equity risk arises from the Group's investment portfolio.

The equity price risk exposure arises from the Group's investments in equity securities, from equity securities sold short and from equity-linked derivatives (the written options). The Group manages this risk by investing in a variety of stock exchanges and by generally limiting exposure to a single industry sector to 15% of NAV.

Management's best estimate of the effect on the profit or loss for a year due to a reasonably possible change in equity indices, with all other variables held constant is indicated in the table below. There is no effect on 'other comprehensive income' as the Group has no assets classified as 'available-for-sale' or designated hedging instruments. In practice, the actual trading results may differ from the sensitivity analysis below and the difference could be material. An equivalent decrease in each of the indices shown below would have resulted in an equivalent, but opposite impact.

	Change in equity price	Effect on net assets attributable to shareholders	Effect on net assets attributable to shareholders
EQUITY	Change in equity price	2015	2014

		USD	USD

Financial assets at fair value through profit or loss	10%	6.081,953	6,382,269
	-10%	(6,081,953)	(6,382,269)

Financial liabilities at fair value through profit or loss	10%	644,660	(1,150,109)
	-10%	(644,660)	1,150,109

Equity Price Risk - 2015

Stock	Change in equity price	Effect on profit for the year

	2015	USD

Anglogold Ashanti Ltd	30%	478,340
	-30%	(478,340)


Continental Reinsurance Plc	30%	1,029,657
	-30%	(1,029,657)

Copperbelt Energy Corporation Plc	30%	590,239
	-30%	(590,239)

Dangote Cement Plc	30%	377,852
	-30%	(377,852)

Diamondcorp Plc	30%	152,831
	-30%	(152,831)

Equity Price Risk - 2015

Stock

Change in equity price

Effect on profit for the year


Enterprise Group Ltd	30%	2,862,440
	-30%	(2,862,440)

Gold Fields Ltd	30%	41,550
	-30%	(41,550)

IAMGOLD Corporation	30%	44,261
	-30%	(44,261)

Kenya Power & Lighting Ltd	30%	576,070
	-30%	(576,070)

Kosmos Energy Limited	30%	291,505
	-30%	(291,505)

Letshego BG	30%	756,741
	-30%	(756,741)

Lydec	30%	128,776
	-30%	(128,776)

Maroc Telecom Ltd	30%	295,445
	-30%	(295,445)

Mashonaland Holdings Ltd	30%	736,951
	-30%	(736,951)

Massmart Holdings	30%	(378,792)
	-30%	378,792

Stock	Change in equity price	Effect on profit for the year

	2015	USD
MISR Duty Free Shops	30%	240,942
	-30%	(240,942)

Old Mutual PLC	30%	12,531
	-30%	(12,531)

Pallinghurst Resources Ltd	30%	235,609
	-30%	(235,609)

Pearl Properties	30%	395,624
	-30%	(395,624)

Pick N Pay Stores Ltd	30%	(276,162)
	-30%	276,162

PSG Group Ltd	30%	(227,885)
	-30%	227,885

PZ Cussons	30%	(119,642)
	-30%	119,642

Rockcastle Global Real Estate Company Ltd	30%	(70,604)
	-30%	70,604

Seed Co. Ltd	30%	101,458
	-30%	(101,458)

Shoprite Plc	30%	216,667
	-30%	(216,667)

Societe des Caoutchoucs de Grand-Bereby (SOGB)	30%	322,238
	-30%	(322,238)

Sonatel	30%	2,061,381
	-30%	(2,061,381)

Stanbic Bank Uganda	30%	548,622
	-30%	(548,622)

Stock	Change in equity price		Effect on profit for the year

	2015		USD

Standard Chartered Bank	30%	607,650
	-30%	(607,650)

Standard Chartered Bank - Preference share	30%	1,644
	-30%	(1,644)

Tanzanian Breweries	30%	487,127
	-30%	(487,127)

Unilever Plc	30%	114,861
	-30%	(114,861)

Triton Resources Inc.	30%	375,375
	-30%	(375,375)

Zimplats Holdings Ltd	30%	110,558
	-30%	(110,558)

Equity Price Risk - 2014

Stock	Change in equity price	Effect on profit for the year

	2014	USD

Anglogold Ashanti Ltd	30%		216,581
	-30%		(216,581)

Continental Reinsurance Plc	30%	1,012,209
	-30%	(1,012,209)

Copperbelt Energy Corporation Plc	30%	436,467
	-30%	(436,467)

Enterprise Group Ltd	30%	2,027,861
	-30%	(2,027,861)

Ecobank Transnational Inc.	30%	19,582
	-30%	(19,582)

Stock	Change in equity price	Effect on profit for the year

	2014	USD

IAMGOLD Corporation		30%		18,954
		-30%		(18,954)

Kosmos Energy Limited	30%		470,332
	-30%		(470,332)

Letshego BG	30%		818,311
	-30%		(818,311)

Mashonaland Holdings Ltd	30%		606,777
	-30%		(606,777)

Maroc Telecom Ltd	30%		336,896
	-30%		(336,896)

MISR Duty Free Shops	30%			186,459
	-30%			(186,459)

Mineral Deposits Ltd	30%			140,460
	-30%			(140,460)

Naspers Ltd	30%		1,436,593
	-30%		(1,436,593)

Pearl Properties	30%		320,767
	-30%		(320,767)

Pallinghurst Resources Ltd	30%		386,878
	-30%		(386,878)

Seed Co. Ltd	30%		120,710
	-30%		(120,710)

Shoprite Plc	30%		2,005,600
	-30%		(2,005,600)

Stock	Change in equity price	Effect on profit for the year

	2014	USD


Societe des Caoutchoucs de Grand-Bereby (SOGB)	30%	196,523
	-30%	(196,523)

Sonatel	30%	2,145,027
	-30%	(2,145,027)

Stanbic Bank Uganda	30%	653,080
	-30%	(653,080)

Standard Chartered Bank	30%	725,927
	-30%	(725,927)

Standard Chartered Bank - Preference share	30%	1,589
	-30%	(1,589)

Tanzanian Breweries	30%	575,170
	-30%	(575,170)

Unilever Plc	30%	194,013
	-30%	(194,013)

Triton Resources Inc.	30%	300,003
	-30%	(300,003)

Zimplats Holdings Ltd	30%	152,784
	-30%	(152,784)

Currency risk

The Group's investments are denominated in various currencies as shown in the currency profile below. Consequently, the Group is exposed to the risk that the exchange rate of the United States Dollar (USD) relative to these various currencies may change in a manner which has a material effect on the reported values of its assets denominated in those currencies. To manage its risks, the Company may enter into currency arrangements to hedge currency risk if such arrangements are desirable and practicable.

The following table shows the offsetting of financial assets:

As at 31 December 2015

				Related amounts not set off in the statement of financial position
	Gross amounts of recognised financial assets	Gross amounts of recognised financial liabilities set off in the statement of financial position	Net amount of financial assets presented in the statement of financial position	Financial instruments	Cash collateral	Net amount

	USD	USD	USD	USD	USD	USD

Cash and cash equivalents	34,542,607	(27,691,482)	6,851,125	-	-	6,851,125

Total	34,542,607	(27,691,482)	6,851,125	-	-	6,851,125

As at 31 December 2014

				Related amounts not set off in the statement of financial position
	Gross amounts of recognised financial assets	Gross amounts of recognised financial liabilities set off in the statement of financial position	Net amount of financial assets presented in the statement of financial position	Financial instruments	Cash collateral	Net amount

	USD	USD	USD	USD	USD	USD

Cash and cash equivalents	29,040,909	(12,192,429)	16,848,480	-	-	16,848,480

Total	29,040,909	(12,192,429)	16,848,480	-	-	16,848,480

Cash and cash equivalents are offset as the Company has current bank balances and bank overdraft with the same counterparty which the Company has the current legally enforceable right to set off the recognised amounts and the intention to settle on a net basis or realise the asset and settle the liability simultaneously.

The currency profile of the Group's financial assets and liabilities is summarised as follows:

	2015	2015	2014	2014
	Financial	Financial	Financial	Financial
	assets	liabilities	assets	Liabilities

	USD	USD	USD	USD

Australian Dollar	223,631	-	(187,566)	-
Botswana Pula	2,522,469	-	2,727,702	-
Canadian Dollar	-	-	36	-
Swiss Franc	(1,648,149)	-	567,389	-
CFA Franc	8,328,710	-	8,451,876	-
Euro	(7,444,619)	-	(8,002,686)	-
Egyptian Pound	803,141	-	621,529	-
Ghanaian Cedi	11,600,631	-	9,925,239	-
Great Britain Pound	124,487	398,697	1,117,214	19,397
Hong Kong Dollar	11	-	3,673,802	3,916,878
Kenyan Shilling	1,920,232	-	-	-
Moroccan Dirhams	427,936	-	-	-
Nigerian Naira	4,691,694	-	3,374,031	-
Norwegian Kroner	(191,530)	-	(127,338)	-
South African Rand	1,963,026	6,047,906	6,203,195	4,275,154
Swedish Kroner	2,342,980	-	58	-
Tanzanian Shilling	1,623,756	-	1,949,549	-
Uganda Shilling	1,828,741	-	2,176,934	-
United States Dollar	33,414,273	443,216	40,528,108	3,421,132
Zambian Kwacha	5,857,113	-	8,708,899	-

	68,388,534	6,889,819	81,707,971	11,632,561

Prepayments have been excluded as these are not financial assets.

The sensitivity analysis shows how the value of a financial instrument will fluctuate due to changes in foreign exchange rates against the US Dollar, the functional currency of the Group.

The following table details the Group's sensitivity to a possible change in the USD against other currencies. The percentage applied as sensitivity represents management's assessment of a reasonably possible change in foreign currency denominated monetary items by adjusting the translation at the year-end for the change in currency rates. A positive number below indicates an increase in profit where the USD weakens against the other currencies. In practice, actual results may differ from estimates and the difference can be material.

	Change in currency	Effect on profit

Currency	2015	USD

Botswana Pula	30%	(756,741)
	30%	756,741

Ghana Cedi	30%	(3,471,734)
	-30%	3,471,734

	Change in currency	Effect on profit

Currency	2015	USD

Kenyan Shilling	30%	(576,070)
	-30%	576,070

Mauritian Rupee	30%	(128,776)
	-30%	128,776

Nigerian Naira	30%	(1,407,508)
	-30%	1,407,508

South African Rand	30%	1,418,055
	-30%	(1,418,055)

Tanzanian Shilling	30%	(487,127)
	-30%	487,127

Ugandan Shilling	30%	(548,622)
	-30%	548,622

Zambian Kwacha	30%	(1,757,134)
	-30%	1,757,134

CFA Franc	10%	(832,827)
	-10%	832,827

Egyptian Pound	10%	(80,314)
	-10%	80,314

Australian Dollar	5%	(11,196)
	-5%	11,196

Euro	5%	372,242
	-5%	(372,242)

Great British Pound	5%	8,977
	-5%	(8,977)

Hong Kong Dollar	5%	(1)
	-5%	1

Norwegian Kroner	5%	9,576
	-5%	(9,576)

Swiss Franc	5%	(34,651)
	-5%	34,651

Currency risk - Year 2014

	Change in currency	Effect on profit

Currency	2014	USD

Botswana Pula	30%	(629,470)
	30%	629,470

Ghana Cedi	30%	(2,290,440)
	-30%	(2,290,440)

Nigerian Naira	30%	(778,623)
	-30%	778,623

Norwegian Krona	30%	29,386
	-30%	(29,386)

South African Rand	30%	(444,933)
	-30%	444,933

Tanzanian Shilling	30%	(449,896)
	-30%	449,896

Ugandan Shilling	30%	(502,369)
	-30%	502,369

Zambian Kwacha	30%	(2,009,746)
	-30%	2,009,746

CFA Franc	10%	(768,352)
	-10%	768,352

Egyptian Pound	10%	(56,503)
	-10%	56,503

Australian Dollar	5%	8,932
	-5%	(8,932)

Canadian Dollar	5%	(2)
	-5%	2

Euro	5%	381,080
	-5%	(381,080)
	Change in currency		Effect on profit

Currency	2014		USD


Great Britain	5%	(52,277)
	-5%	52,277

Hong Kong Dollar	5%	(11,575)
	-5%	11,575

Swedish Krona	5%	3
	-5%	(3)

Swiss Franc	5%	(27,019)
	-5%	27,019

Interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. The fair values of the Group's debt securities fluctuate in response to changes in market interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of those instruments.

The investments in debt securities have fixed interest rate and the income and operating cash flows are not exposed to interest rate risk. The change in fair value of investments based on a change in market interest rate (a 50 basis points change) is not significant and has not been disclosed.

Credit risk

Financial assets that potentially expose the Group to credit risk consist principally of investments in debt securities, cash balances and interest receivable. The extent of the Group's exposure to credit risk in respect of these financial assets approximates their carrying values as recorded in the Group's statement of financial position.

The Group takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. The Group's main credit risk concentration is its debt securities which are classified as financial assets at fair value through profit or loss.

With respect to credit risk arising from financial assets which comprise of financial assets at fair value through profit or loss, other receivables and cash and cash equivalents, the Group's exposure to credit risk arises from the default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

		2015	2014
		Carrying amount	Carrying amount

	Notes	USD	USD

Financial assets at fair value through profit or loss	7(a)	10,699,736	12,137,510
Other receivables	8	780,973	1,036,802
Cash and cash equivalents	9	6,851,126	16,848,480

The financial assets are neither past due nor impaired at reporting date except for dividend receivable from Shoprite which is past due by more than two years. The cash and cash equivalent assets of the Group are maintained with Standard Chartered Bank (Mauritius) Ltd. Standard Chartered Bank has an A1- issuer rating from Moody's long term rating agency, a P-1 short term rating from Moody's rating agency, an AA- issuer rating from Standard and Poor's rating agency, and an A-1+ short term rating from Standard and Poor's rating agency. All other issuers of debt instruments owned by the Group are unrated. The issuers of the unrated debt instruments owned by the Group are reputable companies which do not envisage obtaining ratings, and have the ability to repay any debt or redeem any security as it falls due or when required.

Concentration risk

At 31 December 2015 the Group held investments in Africa which involves certain considerations and risks not typically associated with investments in other developed countries. Future economic and political developments in Africa could affect the operations of the investee companies.

Analysed by geographical distribution of underlying assets:

	2015	2014

Bond & Notes	USD	USD

Senegal	3,173,000	3,065,346
Equatorial Guinea	-	591,369
Burkina Faso	2,702,381	3,227,018
Mauritius	1,446,823	-
Morocco	651,552	714,450
Ghana	383,000	420,000
Nigeria	-	2,584,155
South Africa	2,342,980	1,535,172

Total	10,699,736	12,137,510

Equity Securities and Shortsellings	2015		2014
	USD		USD

Ghana	13,573,563	11,752,378
Zambia	6,642,475	9,429,818
Senegal	6,871,271	7,618,291
South Africa	(4,064,548)	5,510,579
Zimbabwe	4,481,674	4,003,459
Ivory Coast	1,457,439	1,301,785
Botswana	2,522,469	2,727,702
Nigeria	4,452,476	3,374,031
Tanzania	1,623,755	1,917,232
Egypt	803,141	621,529
Togo	-	65,275
Democratic Republic of Congo	1,412,966	-
Morocco	147,538	1,122,987
Burkina Faso	1,920,232	63,180
Uganda	1,828,741	2,176,933

Total	43,673,194	51,685,179

Analysed by industry of underlying assets:

Bond and notes	2015		2014
Analysed by industry:	USD		USD

Mining industry	5,875,381	6,292,364
Oil exploration and production	133,000	2,584,155
Consumer finance	2,342,980	1,535,172
Forestry	250,000	250,000
Consumer Products and Services	500,000	-
Telecommunications	946,823	-
Oil services industry	-	761,369
Agricultural Chemicals	651,552	714,450

Total	10,699,736	12,137,510

Equity Securities	2015	2014

Analysed by industry:	USD	USD

Financial services	12,448,644	14,800,833
Consumer products and services	666,606	7,953,572
Telecommunications	7,856,302	13,061,721
Consumer finance	6,390,167	2,727,702
Mining industry	2,738,413	3,052,191
Real estate	3,833,423	3,091,811
Plantations	1,074,467	655,076
Oil exploration and production	971,682	1,567,772
Electricity transmission and generation	4,315,632	1,454,889
Agricultural chemicals	338,192	402,367
Forestry	1,001,250	1,000,013
Materials	414,660	-
Beverages	1,623,756	1,917,232

Total	43,673,194	51,685,179

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

The Group manages liquidity risk by maintaining adequate reserves, by continuously monitoring forecast and actual cash flows. The table below illustrates the maturity profile of the Group's financial liabilities based on undiscounted payments.

Year 2015
		Due	Due Between	Due Between	Due
	Due on	within 3	3 and 12	1 and 5	greater than
	demand	Months	Months	years	5 years	Total

Financial liabilities	USD	USD	USD	USD	USD	USD

Other payables	443,216	-	-	-	-	443,216
Financial liabilities at fair value through profit or loss	-	-	6,350,144	-	96,459	6,446,603
Net assets attributable to shareholders	-	-	-	61,255,413	-	61,255,413

Total liabilities	443,216	-	6,350,144	61,255,413	96,459	68,145,232

Year 2014
		Due	Due Between	Due
	Due on	within 3	3 and 12	greater than
	demand	Months	Months	5 years	Total

Financial liabilities	USD	USD	USD	USD	USD

Other payables	131,467	-		-	131,467
Financial liabilities at fair value through profit or loss	-	132,883	11,368,211	-	11,501,094
Net assets attributable to shareholders	-	-	-	69,735,180	69,735,180

Total liabilities	131,476	132,883	11,368,211	69,735,180	81,367,741

Capital Management

Total capital is considered to be the non-controlling interests and net assets attributable to shareholders as shown in the consolidated statement of financial position.

The Company is a closed end fund and repurchase of shares in issue can be done with the consent of the Board of Directors. The Company is not subject to externally imposed capital requirements.

The objectives for managing capital are:

· To invest the capital in investment meeting the description, risk exposure and expected return indicated in the Admission document.

· To achieve consistent capital growth and income through investment in value, arbitrage and special situations opportunities derived from the African continent.

· To maintain sufficient size to make the operation of the Group cost effective.

The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

17. ANALYSIS OF SHARE OF PROFIT AND LOSSES ATTRIBUTABLE TO ORDINARY SHARE AND C SHARES

17 (a) STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015

	Ordinary shares	C shares

	USD	USD
ASSETS
Financial assets at fair value through profit or loss	36,969,056	23,850,476
Trade and other receivables	683,100	97,873
Cash and cash equivalents	3,800,295	3,050,830

Total assets	41,452,451	26,999,179

	Ordinary shares	C shares

	USD	USD

EQUITY AND LIABILITIES
Liabilities
Financial liabilities at fair value through profit or loss	3,586,989	2,859,614
Trade and other payables	271,097	172,119

Total liabilities	3,858,086	3,031,733

Equity
Non-controlling interest	306,399	-
Total equity	306,399	-

Net assets attributable to shareholders	37,287,966	23,967,446

17 (b) STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD ENDED 2015

			Ordinary shares	C shares

			USD	USD
	Revenue
	Income		1,612,136	1,241,816

			1,612,136	1,241,816
	Expenses
	Management fees		867,458	282,139
	Net losses on financial assets and liabilities at fair value through profit or loss		4,759,819	3,093,244
	Other expenses		893,292	481,765

			6,520,569	3,857,148
	Operating loss
			(4,908,433)	(2,615,332)
	Finance costs
	Distribution to shareholders		(912,289)	-

	Loss before taxation		(5,820,722)	(2,615,332)

	Taxation		(24,254)	(53,290)

	Decrease in net assets attributable to shareholders from operations		(5,844,976)	(2,668,622)
Attributable to:
Equity holders of the Company			(5,811145)		(2,668,622)
Non-controlling interest			(33,831)		-

			(5,844,976)		(2,668,622)
	Decrease in net assets attributable to shareholders per share attributable to the equity holders of the parent during the year	13	(0.136)	(0.091)

18. DIVIDEND PAYMENT

The Company expressed in the Admission Document for the Alternative Investment Market of the London Stock Exchange on which it was listed an intention, subject to having sufficient cash resources, to pay an aggregate annual dividend of an amount equal to the product of the net asset value of the Company on January 01 in each year multiplied by the three month US Dollar London Interbank Offered Rate (derived from Bloomberg) on the same date, payable in four equal quarterly installments. However, the dividend payments made in 2014 were in excess of the basis stated in the Admission Document, as the Company utilised the one year US Dollar London Interbank Offered Rate for the calculation of the dividend rate. This was the dividend policy when the Fund was listed on the AIM.

The Amended Private Placement Memorandum stated that subject to market conditions, compliance with the Companies Law and having sufficient cash resources available for the purpose, the Company intends to pay the following dividends on the Ordinary Shares at an amount equal to the total comprehensive income of the Company as that expression is used in international accounting standard (excluding net capital gains/losses in accordance with Investment Management Association Statement of Recognised Practice), such amount to be paid annually

Investors in C Shares should note that it is not currently envisaged that any dividend will be paid on the C Shares to be issued pursuant to the Placing prior to their Conversion into Ordinary Shares.

	2015	2014
Dividend - payable	USD	USD

Dividend declared and paid	912,289	76,859



Dividend per share	US cents 2.14	US cents 0.17

Opening balance - dividend payable	-	85,291
Additions	912,289	76,859
Payment	(912,289)	(162,150)

Closing balance	-	-

19. SEGMENT INFORMATION

For management purposes, the Group is organised in one main operating segment, which invests in equity securities, debt instruments and relative derivatives. All of the Group's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole.

For geographical segmentation, please refer to note 16.

20. PERSONNEL

The Group did not employ any personnel during the year (2014: the same).

21. COMMITMENTS AND CONTINGENCIES

There are no commitments or contingencies at the reporting date.

22. PLACING AND ADMISSION EXPENSES

In the prior year, the Company incurred costs associated with the April 2014 C share placing and with the admission of the ordinary shares and the C shares to the SFS of the London Stock Exchange. The total costs incurred were USD 1,246,441 of which USD 937,987 related to placing agent fees and expenses and USD 308,454 related to admission fees and expenses. The placing agent fees are shown separately on the Consolidated Statement of Comprehensive Income. The admission fees and expenses are shown within the Other operating expenses line.

23. EVENTS AFTER REPORTING DATE

Except as stated in note 4, there are no events after the reporting date which require amendments to and/ or disclosure in these financial statements.

24. FAIR VALUE OF NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

Recurring fair value measurement of financial liabilities

The below table shows the fair value hierarchy of the Net assets attributable to shareholders.

		Level 1		Level 2		Level 3
		USD		USD		USD

Ordinary shares	-	37,287,966	-
C Class shares	-	23,967,447	-

At 31 December 2015	-	61,255,413	-


Level 1	Level 2	Level 3
USD	USD	USD

Ordinary shares	-	43,099,112	-
C Class shares	-	26,636,068	-

At 31 December 2014	-	69,735,180	-

The Ordinary and C Class shares are quoted on the SFS of the London Stock Exchange ("LSE").

The shares are traded on the exchange at the quoted price as determined by the participants on the LSE. In a liquidation scenario or if investors elect to initiate their opportunity to realise all or part of the shareholding at the time of the continuation vote in 2019, the proceeds to the shareholders would be determined by the net realisation of the net asset value

Therefore, the Directors have concluded that the most appropriate estimate of fair value of both classes of shares is their net asset value per share, without adjustment, at the reporting date. This price is calculated by taking the net assets attributable to shareholders and dividing by the number of shares in issue. The Net Assets Value is published on a monthly basis. Therefore, the fair value of the Net assets attributable to shareholders has been classified as level 2 as the NAV is an input that is observable.

The Ordinary and C shares are quoted on the London Stock Exchange for informational purposes only. Moreover, as per the Private Placement Memorandum, once the Shoprite case is resolved, the basis upon which the C Shares will convert into Ordinary Shares is such that the number of Ordinary Shares to which the C Shareholders will become entitled will reflect the relative Net Asset Value per Share 0f the assets attributable to the C Shares and the Ordinary Shares (subject to a discount of 5 per cent.).

Shareholder Information

Share Price

Prices of Africa Opportunity Fund Limited are published daily in the Daily Official List of the London Stock Exchange. The shares trade under Reuters symbol "AOF.L" and Bloomberg symbol "AOF LN". C share class shares began trading 17 April 2014 and trade under Reuters symbol "AOFC.L" and Bloomberg symbol "AOFC LN".

Manager

Africa Opportunity Partners Limited.

Companies

Africa Opportunity Fund Limited (AOF)

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