Annual Financial Report

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019

STATEMENT OF CASH FLOWS

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Africa Opportunity Fund Limited

30 April 2020

Africa Opportunity Fund Limited (AOF LN)

Announcement of Annual Results for the Year ended 31 December 2019

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 2019. The Company's full annual report and financial statements will shortly be sent to shareholders and will be available to view and download from the Company's website at: www.africaopportunityfund.com.

The following text and financial information does not constitute the Company's annual report but has been extracted from the annual report and financial statements for the year ended 31 December 2019.

For further information please contact:

Africa Opportunity Fund Limited
Francis Daniels	Tel: +2711 684 1528

Liberum (Corporate Broker)
Gillian Martin
Owen Matthews	Tel: +44 20 3100 2223

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 2019 was $47.7 million and its market capitalisation was $42.3 million.

CHAIRPERSON'S STATEMENT

2019 Review

The shareholders of Africa Opportunity Fund (the "Fund" or "AOF") held an extraordinary general meeting in June 2019 to decide on the future of the Fund. They voted to realise the assets of the Fund over a three-year period ending on 30 June 2022 and for those realised assets to be returned to shareholders, whether by intermittent compulsory redemptions or other forms of shareholder distributions. Additionally, the shareholders voted to amend the investment strategy such that the Investment Manager will realise investments during this period and not make new investments. The first mandatory redemption of the Fund's shares was completed in March 2020.

2019 was a difficult year for the Fund as its net asset value declined 5% while its share price declined by 4%. To provide some basis for comparison, South Africa rose 15%, Nigeria fell 11%, Kenya rose 26%, and Egypt rose 12%. In non-African emerging markets, China rose 37%, Brazil rose 27%, Russia rose 54% and India rose 14%. In developed markets, Japan fell 8%, the US fell 5%, Europe fell 14%, and the UK fell 14%.

In general, recovery picked up in Africa as prices of major commodities like crude oil, gold, and copper rose in 2019. In contrast, prices of imports such as white maize and yellow maize (crucial imports for African consumers) fell, 11% and 10%, respectively. South Africa and Nigeria, the two largest economies of sub-Saharan Africa, were notable exceptions as their economic activity remained tepid in 2019. Furthermore, financial conditions tightened in countries like Ghana, Zambia, and Zimbabwe where the Fund has large investments. In the case of Ghana, the program of cleaning up weak financial institutions drew to a close, as the licenses of several asset management firms were revoked. To fund this program, as well as the regular budget deficit, the Ghana government has borrowed large amounts of money, thereby raising Ghana's debt/GDP level above 60%. As a result, Ghana continues to endure high real risk-free interest rates. Zambia's sovereign debt travails became more visible. Sadly, it appears inevitable that it will have to restructure its national debts. Zimbabwe resurrected its own currency - the Zimbabwe Dollar. It swiftly soared into hyperinflationary orbit to inflict more hardship on its long-suffering residents. The Fund's investments in those countries recorded significant unrealized losses.

AOF's 2019 strategy was one of deliberate realisation to maximize the value of the assets returned to shareholders. In some cases, that objective inclined the Fund towards corporate transactions to create value for the Fund. In several other cases, the Fund exited through the secondary markets.

2020 Outlook

AOF's 2020 will be dominated by the Covid-19 pandemic. The outlook for Africa is grim. According to the Institute of International Finance, foreign investors have withdrawn the largest ever amount from emerging markets - $83 billion in March alone since the start of Covid-19. Many African countries have grossly insufficient numbers of hospitals, hospital beds, intensive care units, and ventilators. Many African cities house their teeming poor in crowded and filthy slums. The overwhelming majority of Africa's urban populace ekes out a daily living settled in cash, without the protection of unemployment insurance. It is tough to enforce appropriate social distancing rules and to impose several weeks of national lockdowns.

In addition, African governments are suffering the cardiac arrest of tax revenues while enduring an exploding need for mainly imported healthcare supplies to combat Covid-19. 2020 will be a year of hardship as well as a year in which Africa will need substantial financial assistance. The policy measures adopted by different African countries to protect their citizens against this pandemic will accentuate the differences between well-governed African countries and other African countries. There will be powerful lessons of leadership and governance emerging from this pandemic.

On the positive side, Africa's strengths of a youthful, urbanizing and rapidly growing population, increasing in educational attainment, will survive this pandemic while democracy will continue to spread.

Our Shareholders should rest assured that the lengthy realisation strategy of the Fund will stand it in good stead to avoid involuntary or indiscriminate liquidation of the Fund's holdings and that the Fund will strive to manage its realisation strategy without suffering permanent impairment of its capital.

Concluding Thoughts

In closing, I would like to thank Mr. Christopher Agar, Mr. Peter Mombaur, and Dr. Vikram Mansharamani for several years of sterling service on the board of directors of the Fund. They resigned from the board to fulfill the Fund's undertaking to its shareholders to reduce the size of its board. I wish also to extend my thanks to our shareholders for their support and look forward to continuing to work with you in the years to come.

Dr. Myma Belo-Osagie

Chairperson

April 2020

MANAGER'S REPORT

2019 Review

2019 marked the twelfth full year of operation of Africa Opportunity Fund (the "Fund" or "AOF"). Its ordinary shares had an annual return of -4%. Its return on NAV was also -5%. At year-end, AOF held $10.5 million in cash, $37.2 million in equity securities, and $1.2 million in debt securities and call options equal to $0.6M. The Fund's underlying end-of-year holdings were in Botswana, Cote d'Ivoire, Egypt, Ghana, Kenya, Nigeria, Senegal, South Africa, Tanzania, Zambia, and Zimbabwe.

The Fund's shareholders decided in June 2019 to commence an orderly realization of the Fund over a three-year period ending in June 2022. Realization proceeds are to be returned to shareholders via intermittent mandatory redemptions of the Fund's shares. The Fund liquidated nine investments in their entirety in 2019, of which, Continental Reinsurance, Dangote Cement, and Stanbic Bank Uganda were the most significant in size. The Fund made those disposals via the secondary markets as well as in corporate transactions. It also reduced its holdings in nine other issuers, with our Anglogold Ashanti holdings experiencing the largest liquidation.

The Fund's precious metals producers (Zimplats, Anglogold, and Goldfields) turned in a good year for shareholders. Their share prices rose, respectively, 84%, 78%, and 87% throughout 2019, as the prices of palladium and gold rose, respectively, 54% and 18% in 2019. Anglogold's operations turned in a solid performance as it accomplished its first ever fatality-free year. It announced in December the disposal of its Sadiola mine in Mali, jointly owned with Iamgold and the Government of Mali, for a consideration of $52.5 million for its 41% stake in the mine. This sale values Sadiola's reserves at a price per ounce of $36. Since the year-end, Anglogold announced the sale of its South African assets for approximately $300 million in cash to Harmony Gold of South Africa at a price per reserve ounce of $36. Best of all, Anglogold Ashanti announced the pouring of first gold at Obuasi mine in December, thus relaunching the Obuasi mine after a 5-year hiatus. Obuasi's redevelopment as a mechanized modern mine was completed on schedule and on budget. Obuasi replaces the existing South African operations of Anglogold Ashanti at a lower cost per ounce. Over the initial 10-year life of Obuasi, annual gold production will average 400,000 ounces per annum at an all-in sustaining cost of $800 per ounce, generating an annual operating cost savings of $130 million when compared to the South African operations. Finally, cash flow from operating activities crossed the $1 billion level enabling Anglogold to lift its cash balance to $443 million and to lower its Adjusted Net Debt/EBITDA ratio below 1x. Those trends will stand Anglogold in good stead during this period of reduced production levels caused by the coronavirus disruptions. The Fund will continue to reduce its positions in the precious metals sectors.

Enterprise Group's 35% USD share price fall exceeded the 22% decline of the Ghana Stock Exchange Composite Index. Its end of year closing share price of $0.29 constituted a 5-year low. But, Enterprise's profitability rose in 2019 as it restored its dividend. It is very encouraging that, despite Enterprise's actual revenue and investment income results turning out much lower than forecast in its March 2018 rights offering circular, its group profits have exceeded those forecasts in both 2018 and 2019. Claims, operating expenses, and commission expenses have been less than forecast, with operating expense growth in 2019 lagging materially Ghanaian inflation. The most significant development, though, was that Enterprise's cost of float (a balance sheet liability in accounting terms) was at least 450 basis points lower than forecast in the rights issue. Its cost of float (money owed to policyholders) is 23% of the 5 year borrowing costs of the Ghana government itself and less than 55% of Ghana's inflation rate. As a result, its float earns a minimum real (inflation adjusted) spread of 6%, more than offsetting the disadvantage of a smaller float than forecast in the rights circular. Enterprise's actual increase in net cash and cash equivalents, in Dollars, was 30% higher than forecast, despite the steeper than forecast depreciation of the Cedi against the Dollar. Its 2019 14% return on average equity, in Dollars, and its operating cash flow return on average equity, in Dollars, of 16% suggest that it is recovering from the doldrums of the last few years. Enterprise continues to have the largest market share of Ghana's life, property and casualty, and private pension industries. But its real estate portfolio and funeral business continue to suffer losses. Ghana's commercial property market continues its multiyear correction, as vacancy rates climb and new expensive buildings are completed. It must also be said that the life and property and casualty industries have been stagnant in Dollar terms for the last few years because of the low real disposable income growth of Ghanaians. Some affiliates of established Ghanaian insurance companies have also been sucked into Ghana's banking crisis, contributing to the under-pricing of insurance products and a general feeling of scarce investible funds among Ghanaians. However, the proposed increases in the capital requirements for insurance companies should improve the competitive dynamics of these industries. Enterprise's P/B valuation of 0.5x, P/E ratio of 3.9x, and P/Operating Cash Flow of 1.4x is absurdly cheap. It implies that the entire proceeds of the rights offering have disappeared and ignores completely Enterprise's 2018 value of its in-force life business attributable to shareholders of $40 million (which equates to P/Embedded value ratio of 0.24x). Absurd valuations tend to get mugged by commercial reality in time, whether through the capital markets or mergers and acquisitions.

The next significant source of loss to discuss is Copperbelt. Its total return performance also lagged that of the Lusaka Stock Exchange in 2019. It ended the year with a dividend yield of 18% based on a 50% dividend payout ratio. Based, however, on the impaired Konkola Copper Mine receivable from Copperbelt's H1 results, our estimated forward dividend yield is an eminently respectable 9%. Copperbelt's price collapse is one outcome of the unfolding battle between Zambia's copper mining industry and the state-owned utility ("ZESCO") over electricity tariff levels sustainable for both ZESCO and the mining industry. Zambia's mining industry is concentrated in the Copperbelt Province and the Northern Province. Most ofCopperbelt's assets and customers are in the Copperbelt province and its network is needed by ZESCO to transmit power to electricity customers in the Copperbelt Province. Since 2018, ZESCO has refused to agree on a new electricity bulk supply agreement to replace the one expiring in March 2020. Indeed, in early 2020, Copperbelt announced that it had been informed by both ZESCO and the Government of Zambia that the expiring bulk supply agreement would not be renewed. The bulk supply agreement did expire at the end of March and the parties have failed to agree on a new agreement. For now, electricity continues to be delivered to Copperbelt's customers. In theory, a failure to execute new agreements would result in a suspension of electricity to Zambia's mining industry. One simple fact, though, is that Copperbelt's transmission lines are essential to the survival of both Zambia's copper industry and ZESCO's own financial health. A second one is that poorly maintained transmission lines do not benefit anyone in a modern economy. The third fact is that ZESCO is burdened by losses and, finally, some large Zambian copper mines are struggling to remain profitable under current electricity tariffs, let alone higher prices. For example, Konkola Copper Mine, one of the largest mines, is loss making. In fact, Zambian miners have identified electricity price tariffs hikes as the biggest risk of 2020. We remain steadfast in our belief that an electricity industry cannot afford to have a loss-making transmission network, and we expect Copperbelt to remain profitable.

The Fund's Zimbabwean property holdings, in aggregate, lost more than 40% of their value because of the resurgence of hyperinflation in Zimbabwe. The 94% depreciation of Zimbabwe's resurrected Zimbabwe Dollar since inception, plus other indicia of its economic chaos, was also a major contributor to Fastjet's 80% drop in share price. Zimbabwean macro-economic turmoil notwithstanding, the Fastjet losses constitute an unforced error. Our property holdings (First Mutual Properties and Mashonaland Holdings) remain substantially unencumbered commercial buildings and land. They are guaranteed to survive the currency crisis. Replacing their portfolios is unlikely to become cheaper with the passage of time. No doubt that Zimbabwean commercial property does not generate a lot of cash these days. Nevertheless, our Zimbabwean property holdings are worth a great deal more than their current market capitalization. The one Zimbabwean exporter in the Fund's portfolio - Zimplats - had a markedly different fortune than our Zimbabwean investments. As a producer of platinum group metals, with a higher concentration of palladium than typical in South African mines, its profitability rose with the palladium price. The Fund sold steadily 1/3^rd of its Zimplats holdings, but was left with a higher market value of its holding at the end of 2019 than its initial 2019 market value.

The Fund's financial liabilities - primarily short positions and hedges - generated losses of $0.45 million in 2019. Over its life, the Fund has generated from its financial liabilities a cumulative gain of $4.5 million and a cumulative gain of $2.1 million since 2014.

The Covid-19 pandemic is likely to inflict reduced revenues and profits on the Fund's holdings. Whether in the import/export trade, tourism, electricity consumption, lending, insurance, commercial property management, oil and gas, or plantations, the Fund will feel the impact of destroyed demand in its investments as countries try to reduce economic activity to suppress Covid-19. We shall strive to preserve the value of the Fund in this fog of fear and uncertainty. The multiplying recessions across the globe have created a turbulent environment in which to realize the Fund's holdings. Although the realization pace may slow, we continue to believe that the Fund's holdings are undervalued. Our mission is to monetize that undervaluation through our realization strategy.

Francis Daniels

Africa Opportunity Partners

April 2020

AFRICA OPPORTUNITY FUND LIMITED

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2019

	Notes	2019	2018

		USD	USD
Income
Net gains on investment in subsidiaries at fair value
through profit or loss	6(a)	-	-
		-	-
Expenses
Net losses on investment in subsidiaries at fair value
through profit or loss	6(a)	1,115,691	17,398,818
Management fee		1,002,326	1,184,038
Custodian fees, brokerage fees and commissions		-	39,237
Other operating expenses		37,219	30,222
Directors' fees		148,750	188,761
Audit and professional fees		199,628	168,715
		2,503,614	19,009,791

Total comprehensive loss for the year attributable to equity holders		(2,503,614)	(19,009,791)

Earnings per share attributable to equity holders		(0.033)	(0.254)

AFRICA OPPORTUNITY FUND LIMITED

	Notes	2019	2018

		USD	USD
ASSETS
Cash and cash equivalents	8	103,067	4,376
Other receivables	7	78,091	4,949
Investment in subsidiaries at fair value through profit or loss	6(a)	47,888,007	50,385,898
Total assets		48,069,165	50,395,223

EQUITY AND LIABILITIES

LIABILITIES
Trade and other payables	10	334,497	156,941
Total liabilities		334,497	156,941

Net assets attributable to shareholders		47,734,668	50,238,282


Ordinary share capital		748,496	748,496
Share premium		37,921,452	37,921,452
Retained earnings		9,064,720	11,568,334
Total equity	9(b)	47,734,668	50,238,282

Net assets value per share:
- Ordinary shares	9(b)	0.638	0.671

AFRICA OPPORTUNITY FUND LIMITED

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2019

	Share	Share	Retained
	Capital	Premium	Earnings	Total

	USD	USD	USD	USD

At 1 January 2018	748,496	37,921,452	30,578,125	69,248,073

OPERATIONS:
Total comprehensive loss for the year	-	-	(19,009,791)	(19,009,791)

At 31 December 2018	748,496	37,921,452	11,568,334	50,238,282


	Share	Share	Retained
	Capital	Premium	Earnings	Total

	USD	USD	USD	USD

At 1 January 2019	748,496	37,921,452	11,568,334	50,238,282

OPERATIONS:
Total comprehensive loss for the year	-	-	(2,503,614)	(2,503,614)

At 31 December 2019	748,496	37,921,452	9,064,720	47,734,668

AFRICA OPPORTUNITY FUND LIMITED

FOR THE YEAR ENDED 31 DECEMBER 2019

		2019	2018

		USD	USD
Operating activities
Total comprehensive loss for the year		(2,503,614)	(19,009,791)

Adjustment for non-cash items:

Unrealised loss on investment in subsidiaries at
fair value through profit or loss	6(a)	1,115,691	17,398,818

Cash used in operating activities		(1,387,923)	(1,610,973)

Net changes in operating assets and liabilities
Distribution received	6(a)	1,382,200	1,522,262
Increase in other receivables		(73,142)	(4,949)
Increase in trade and other payables		177,556	6,269

Net cash generated from operating activities		1,486,614	1,523,582

Net increase/(decrease) in cash and cash equivalents		98,691	(87,391)

Cash and cash equivalents at start of the year		4,376	91,767

Cash and cash equivalents at end of year		103,067	4,376

NOTES TO THE FINANCIAL STATEMENTS

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. ("the Master Fund") 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. Africa Opportunity Fund Limited includes 100% of Africa Opportunity Fund (GP) Limited.

The financial statements for the Company for the year ended 31 December 2019 were authorised for issue in accordance with a resolution of the Board of Directors on 30 April 2020.

Presentation currency

The financial statements are presented in United States dollars ("USD"). All figures are presented to the nearest dollar.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Statement of compliance

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

Basis of preparation

In the prior and current year, the Company satisfied the criteria of an investment entity under IFRS 10: Consolidated Financial Statements. As such, the Company no longer consolidates the entities it controls. Instead, its interest in the subsidiaries has been classified as fair value through profit or loss, and measured at fair value. This consolidation exemption has been applied prospectively and more details of this assessment are provided in Note 4 "significant accounting judgements, estimates and assumptions." The financial statements are prepared in accordance with International Financial Reporting Standards (''IFRS'') as issued by the International Accounting Standards Board (IASB). The financial statements have been prepared under the historical cost convention except for financial assets and financial liabilities measured at fair value through profit or loss. The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Although these estimates are based on management's knowledge of current events and actions, actual results ultimately may differ from those estimates. In addition to the following: All assets have been assessed for impairment regardless of whether any indicators for impairment were identified; and all possible liabilities that might arise from the winding up of the Company have been accrued for 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 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.

The Company presents its statement of financial position in order of liquidity. An analysis regarding recovery within 12 months (current) and more than 12 months after the reporting date (non-current) is presented in Note 14.

Foreign currency translation

(i) Functional and presentation currency

The Company's financial statements are presented in USD which is the functional currency, being the currency of the primary economic environment in which both the Company operates. The Company 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 Company is USD. The Company chooses 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

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(a) Classification

The Company classifies its financial assets and liabilities in accordance with IFRS 9 into the following categories:

(i) 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 at the Africa Opportunity Fund LP (the "Master Fund") level.

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

These include equity securities and debt instruments that are not held for trading at the Master Fund level. These financial assets are classified at FVTPL 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 Company, as set out in each of their offering documents. The financial information about the financial assets is provided internally on that basis to the Investment Manager and to the Board of Directors. For the Company, financial assets classified at fair value through profit or loss upon initial recognition include investment in subsidiaries.

Investment in subsidiaries

In accordance with the exception under IFRS 10 Consolidated Financial Statements, the Company does not consolidate subsidiaries in the financial statements. Investments in subsidiaries are accounted for as financial instruments at fair value through profit or loss.

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 Company does not apply any hedge accounting). The Master Fund'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 Master Fund purchases and sells put and call options through regulated exchanges and OTC markets. Options purchased by the Master Fund provide the Master Fund 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 Master Fund 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 Master Fund provide the purchaser the opportunity to purchase from or sell to the Master Fund 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.

Derivatives relating to options and contracts for difference are recorded at the level of the Master Fund. The financial statements of the Company does not reflect the derivatives as they form part of the net asset value (NAV.) of the Master Fund which is fair valued.

(ii) Financial assets at amortised cost

The Company measures financial assets at amortised cost if both of the following conditions are met:

· The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows

· The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Company's financial assets at amortised cost comprise 'trade and other receivables' and 'cash and cash equivalents' in the statement of financial position.

(iii) Other financial liabilities

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

(a) Recognition

The Company 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 Master Fund commits to purchase or sell the asset.

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.

Financial assets at amortised cost 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.

(b) Subsequent measurement

The Company measures financial instruments which are classified 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 and dividend earned 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'. Distributions received on investments at FVTPL is recorded in "Net gain or loss on financial assets at fair value through profit or loss".

Financial assets at amortised costs are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

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 Company 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.

(e) 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 Company 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 Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Company 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 Company's continuing involvement in the asset.

(e) Derecognition (Continued)

The Company derecognises a financial liability when the obligation under the liability is discharged, cancelled or expired. 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 Company measures it investments in subsidiaries at fair value through profit or loss, and the Master Fund measures its investments in financial instruments, such as equities, debentures and other interest-bearing investments and derivatives, 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 Company. 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 6.

The Company 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 Company recognises an allowance for expected credit losses (ECLs) for all financial assets measured at amortised cost. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised either on a 12-month or lifetime basis. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. At the reporting date, the majority of the Company's debt instruments were held at fair value through profit or loss with the exception of trade and other receivables and cash and cash equivalents which are de minimis. As a result, no ECL has been recognised as any amount would have been insignificant.

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 expenses. At the Master Fund Level, the fair value gains and losses exclude interest and dividend income.

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 at the Master Fund level. Refer to the accounting policy for financial liabilities, other than those classified 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 financial assets at amortised cost for recognition and measurement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In 2017, the Ordinary Shares and Class C Shares were merged into one single class of share and classified as equity.

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 of the Master fund for all interest-bearing financial instruments using the effective interest method.

Dividend revenue and expense

Dividend revenue is recognised when the Master fund'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 of the Master fund. Distribution Income at Company level is disclosed under Net losses/gains on investment in subsidiaries at fair value through 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 Company applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2019. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

Although these new standards and amendments applied for the first time in 2019, they did not have a material impact on the financial statements of the Company.

The accounting policies adopted are consistent with those of the previous financial year except for the following new and amendments to IFRS as from 1 January 2019:

Effective for accounting

period beginning on or

after

Standards and Amendments:

IAS 12 - Income Taxes - Income tax consequences of payments on financial 1 January 2019

instruments classified as equity

IAS 23 - Borrowing Costs - Borrowing costs eligible for capitalisation 1 January 2019

Amendments to IFRS 9 Prepayment features with negative compensation 1 January 2019

Amendments to IAS 28: Long-term interests in associates and joint ventures 1 January 2019

Amendments to IAS 19: Plan amendment, curtailment or settlement 1 January 2019

IFRS 16 Leases 1 January 2019

IFRS 11 - Joint Arrangements - Previously held interest in joint arrangements 1 January 2019

IFRS 3 Business Combinations - Previously held interests in a joint operation 1 January 2019

IFRIC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019

3.1 ACCOUNTING STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE

The following standards, amendments to existing standards and interpretations were in issue but not yet effective. The Company would adopt these standards, if applicable, when they become effective. No early adoption of these standards and interpretations is intended by the Board of directors.

Effective for accounting

period beginning on or

after

New or revised standards and interpretation:

IFRS 3 Business Combination Definition of a Business- Amendments to IFRS 3 1 January 2020

IFRS 17 Insurance Contracts 1 January 2023

IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in 1 January 2020

Accounting Estimates and Errors - Definition of Material

Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7 1 January 2020

Conceptual Framework for Financial Reporting 1 January 2020

The above standards and interpretations issued but not effective are not expected to have material impact on the Company.

4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company'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 Company'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 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 continue in existence.

In June 2019, the Directors convened an Annual General Meeting (AGM) and an Extraordinary General Meeting (EGM) where the following was passed:

·Ordinary resolution that the requirement of the Company to propose the realisation opportunity (opportunity provided to Shareholders to realise all or part of their shareholding in the Company pro rata share of the Company's investment portfolio) be and is hereby waived.

· Ordinary resolution that the continuation of the existence of the Company be and is hereby approved.

· The text set out under "New Investing Policy" in paragraph 2 of Part III of the Company's circular to Shareholders dated 5 June 2019 (the "Circular") be and is hereby adopted as the new investment policy of the Company;

· The terms of the Amended and Restated Investment Management Agreement (as defined in the Circular) be and are hereby approved;

· The memorandum and the articles of association in the form initialled by the Chair of the meeting be adopted as the memorandum and articles of association of the Company in substitution for and to the exclusion of the existing memorandum and articles of association; and

· Any variation to the rights attaching to the Ordinary Shares in the Company pursuant to the adoption of the new memorandum and articles of association, and in particular the right for the Company to redeem the Ordinary Shares (including any redemptions made of 15 per cent. or more of the Company's issued share capital), be and is hereby approved. There has been no variation of rights to the ordinary shares during the financial year.

Below is a brief synopsis of the "New Investing Policy" as per the Company's Circular dated 5 June 2019:

For a period of up to three years following the Extraordinary General Meeting (the "Return Period"), the Company will make no new investments (save that it may invest in, or advance additional funds to, existing investments within the Company's portfolio to maximise value and assist in their eventual realisation). The Company will adopt the New Investment Policy whereby the Company's existing portfolio of investments will be divested in a controlled, orderly and timely manner to facilitate a staged return of capital. It should be appreciated that there is no time horizon in terms of the implementation of the New Investment Policy. Although the Company's portfolio is comprised of largely liquid equity holdings, the Company has some illiquid investments and it may take the Investment Manager some time to realise these. Shareholders will be provided with an opportunity to reassess the investment policy and distribution policy at the end of the Return Period. To that end, a further ordinary resolution for the Company's continuation will be proposed at an extraordinary general meeting to be convened at the end of the Return Period (the "Second Continuation Vote"). Subsequent to the disposal of the investments, the Company will be liquidated, which indicates that it will no longer be a going concern. IAS 1 - Presentation of Financial Statements and IAS 10 - Events after the reporting period require that the financial statements should not be prepared on a going concern basis if management determines that it intends to liquidate the entity. The directors have considered an alternative basis of preparation but believe that International Financial Reporting Standards ("IFRS") as a basis for preparation best reflects the financial position and performance of the Company. Other than financial assets at fair value through profit or loss, the carrying value of the remaining assets, which were determined in accordance with the accounting policies, have been reviewed for any possible impairment, and consideration has been given to whether any additional provision is necessary as a result of the Directors' intention to wind up the Company. It is expected that all assets will realise at least at the amounts at which they are presented in the statement of financial position and that there will be no material additional liabilities. It should be noted that due to events after finalisation of the AFS, the final amounts to be received could vary from the amount shown in the statement of financial position due to circumstances which arise subsequent to preparation of the financial statement and these variations could be material.

Determination of functional currency

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

Assessment for an investment entity

An investment entity is an entity that:

(a) Obtains funds from one or more investors for the purpose of providing those investor(s) with investment management services;

(b) Commits to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and

An investment entity must demonstrate that fair value is the primary measurement attribute used. The fair value information must be used internally by key management personnel and must be provided to the entity's investors. In order to meet this requirement, an investment entity would:

· Elect to account for investment property using the fair value model in IAS 40 Investment Property

· Elect the exemption from applying the equity method in IAS 28 for investments in associates and joint ventures, and

· Measure financial assets at fair value in accordance with IFRS 9.

In addition, an investment entity should consider whether it has the following typical characteristics:

· It has more than one investment, to diversify the risk portfolio and maximise returns;

· It has multiple investors, who pool their funds to maximise investment opportunities;

· It has investors that are not related parties of the entity; and

· It has ownership interests in the form of equity or similar interests.

As from the year ended December 2016, the Board concluded that the Company meets the definition of an investment entity as all investments have been measured on a fair value basis. IFRS 10 allows the application of this change to be made prospectively in the period in which the definition is met. IFRS 10 Consolidated Financial Statements provides 'investment entities' an exemption from the consolidation of particular subsidiaries and instead require that an investment entity measures the investment in each eligible subsidiary at fair value through profit or loss in accordance with IFRS 9 Financial Instruments.

Assumptions and Estimates

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 Company 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 Company. Such changes are reflected in the assumptions when they occur. 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.

Fair value of financial instruments

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 6.

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 6. 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 Company performs sensitivity analysis or stress testing techniques.

Valuation of investments listed on the Zimbabwe Stock Exchange

The fair value of the investments listed on the Zimbabwe Stock Exchange amounted to USD 824,461. The Fund has applied discounts to its investments listed on the Zimbabwe Stock Exchange since November 30, 2018. In applying those discounts, it has taken note of rising economic uncertainties, and signs of sovereign stress, in Zimbabwe, especially since October 2018, manifest, for example, in lengthening queues for the foreign exchange remittances, and a heightened volatility in share prices. It selected a transparent discount factor to the market values of its listed Zimbabwean holdings, otherwise known as the Old Mutual Implied Rate. That rate is the ratio of 1 ordinary share of Old Mutual listed on the Zimbabwe Stock Exchange to the US Dollar price of 1 ordinary share of Old Mutual listed on the London Stock Exchange on the same day. To provide an illustrative example, the Old Mutual share price on the Zimbabwe Stock Exchange on December 31, 2019 was 36.55 ZWL, the corresponding Old Mutual share price in Dollars on the London Stock Exchange was $1.39925, and the quoted share price of First Mutual Properties was 0.17 ZWL. The share price of First Mutual Properties recorded in the financial statements of the Fund was $0.0065 =0.17 ZWL*($1.39925/36.55 ZWL). This ratio was selected because it represented a legal, market-determined, exchange rate available to persons seeking to move funds in and out of Zimbabwe via the movement of Old Mutual shares between share registers in Zimbabwe and the United Kingdom or South Africa.

5. AGREEMENTS

Investment Management Agreement

Management and Performance fees

For the period 1 January 2019 to 30 June 2019, the 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 Company subject to the overall supervision of the Company's board as specified in the 2014 prospectus of the Company, was in effect. Under the Amended and Restated Investment Management Agreement, the Investment Manager received, 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.

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 was subject to a "high watermark" requirement. Subsequent to the merger of the ordinary shares and the C shares, the high watermark is calculated as the aggregate of the Net Asset Value of the pre-merger ordinary share high watermark plus the proceeds of the C class share placing before expenses. 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.

Effective 1 July 2019, the Company and the Investment Manager have, upon the approval of the Reorganisation Resolution at the EGM in June 2019, entered into the Amended and Restated Investment Management Agreement which amends the fees payable to the Investment Manager as follows:

T he management fee shall be reduced to 1 per cent of the Net Asset Value per annum for the first two years of the Return Period (the period of up to three years following the EGM held in June 2019) and then further reduced to 0 per cent in the last year of the Return Period.

The Investment Manager's entitlement to future performance fees (through CarryCo) will be cancelled and CarryCo's limited partnership interest in the Limited Partnership will be transferred to the Company for nominal value in the last year of the Return Period, that being 2022.

Realisation fees

The Investment Manager shall be entitled to the following realisation fees during the Return Period from the net proceeds of all portfolio realisations (including any cash returned by way of a Compulsory Redemption):

On distributions of cash to Shareholders where the applicable payment date is on or prior to 30 June 2020: 2 per cent of the net amounts realised.

On distributions of cash to Shareholders where the applicable payment date is 1 July 2020 or later: 1 per cent of the net amounts realised.

The revisions to the arrangements with the Investment Manager, constitute a related party transaction under the Company's related party policy, and in accordance with that policy, the Company was required to obtain: (i) the approval of a majority of the Directors who are independent of the Investment Manager; and (ii) a fairness opinion or third-party valuation in respect of such related party transaction from an appropriately qualified independent adviser.

The management fee for the financial year under review amounts to USD 1,002,326 (2018: USD 1,184,038) of which USD 246,321 (2018: USD nil) relates to accrued realisation fees and the performance fees for the financial year under review was nil (2018: nil).

Administrative Agreement

SS&C Technologies is the Administrator for the Company. Administrative fees are expensed at the Master Fund level

and have been included in the NAV of the subsidiary.

Custodian Agreement

A Custodian Agreement has been entered into by the Master Fund and Standard Chartered Bank (Mauritius) Ltd, whereby Standard Chartered Bank (Mauritius) Ltd would provide custodian services to the Master Fund 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 are expensed at the Master Fund level and have been included in the NAV of the subsidiary.

Prime Brokerage Agreement

Under the Prime Brokerage Agreement, the Master Fund appointed Credit Suisse Securities (USA) LLC as its prime broker for the purpose of carrying out the Master Fund's instructions with respect to the purchase, sale and settlement of securities. Custodian fees are expensed at the Master Fund level and have been included in the NAV of the subsidiary.

Brokerage Agreement

Under the Broker Agreement revised during 2016, the Master Fund appointed Liberum, a company incorporated in England to act as Broker to the Company. The broker fee is payable in advance at six-month intervals. The broker fees

are expensed at the Master Fund level and have been included in the NAV of the subsidiary.

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

6(a). Investment in subsidiaries at fair value

The Company has established Africa Opportunity Fund L.P., an exempted limited partnership in the Cayman Islands to ensure that the investments made and returns generated on the realisation of the investments made and returns generated on the realisation of the investments are both effected in the most tax efficient manner. All investments made by the Company are made through the limited partner which acts as the master fund. At 31 December 2019, the limited partners of the limited partnership are the Company (99.45%) and AOF CarryCo Limited (0.55%). The general partner of the limited partnership is Africa Opportunity Fund (GP) Limited. Africa Opportunity Fund Limited holds 100% of Africa Opportunity Fund (GP) Limited.

	2019	2018
	USD	USD

Investment in Africa Opportunity Fund L.P.	47,885,834	50,383,677
Investment in Africa Opportunity Fund (GP) Limited	2,173	2,221

Total investment in subsidiaries at fair value through profit or loss	47,888,007	50,385,898

Fair value at 01 January	50,385,898	69,306,978
Distribution income*	(1,382,200)	(1,522,262)
Net loss on investment in subsidiaries at fair value through profit or loss	(1,115,691)	(17,398,818)

Fair value at 31 December	47,888,007	50,385,898

*"Distribution income" relates to the distribution of cash to the Company from Africa Opportunity Fund L.P. in order to enable the Company to pay expenses.

6(b). Fair value hierarchy

The Company 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.

Note: The assets and liabilities of the Master Fund have been presented but do not represent the assets and liabilities of the Company as the Master Fund has not been consolidated.

Investment in subsidiaries at fair value through profit or loss:

	31 December
	2019	Level 1	Level 2	Level 3
COMPANY	USD	USD	USD	USD

Investment in subsidiaries at fair value through profit or loss	47,888,007	-	47,888,007	-

MASTER FUND

Financial assets at fair value through profit or loss

Equities	37,212,024	34,850,831	2,361,193	-
Debt securities	1,160,484	1,160,484	-	-

	38,372,508	36,011,315	2,361,193	-
Financial liabilities at fair value through profit or loss

Written call options	632,250	632,250	-	-

	632,250	632,250	-	-

	31 December
	2018	Level 1	Level 2	Level 3
COMPANY	USD	USD	USD	USD

Investment in subsidiaries at fair value through profit or loss	50,385,898	-	50,385,898	-

MASTER FUND

Financial assets at fair value through profit or loss

Equities	46,877,826	42,900,686	3,975,890	1,250
Debt securities	2,282,673	2,107,673	-	175,000
Written put options	117,825	117,825	-	-

	49,278,324	45,126,184	3,975,890	176,250
Financial liabilities at fair value through profit or loss

Written put options	797,188	797,188	-	-

	797,188	797,188	-	-

The valuation technique of the investment in subsidiaries at Company level is as follow:

The Company's investment manager considers the valuation techniques and inputs used in valuing these funds as part of its due diligence, to ensure they are reasonable and appropriate and therefore the NAV of these funds may be used as an input into measuring their fair value. In measuring this fair value, the NAV of the funds is adjusted, as necessary, to reflect restrictions on redemptions, future commitments, and other specific factors of the fund and fund manager. In measuring fair value, consideration is also paid to any transactions in the shares of the fund. Given that there have been no such adjustments made to the NAV of the underlying subsidiaries and given the simple structure of the subsidiaries investing over 95% in quoted funds, the Company classifies these investment in subsidiaries as Level 2.

The valuation techniques of the investments at master fund level are as follows:

Equity and debt securities

These pertain to equity and debt instruments which are quoted for which there is a market price. As a result, they are classified within level 1 of the hierarchy

Contract for difference (CFD)

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

Written put options

These are traded on an active market and have a quoted market price. They have therefore been classified in level 1 of the hierarchy.

Unlisted debt and equity investments

African Leadership University ("ALU") is a network of tertiary institutions, currently with operations in both Mauritius and Rwanda. The Investment Manager continues to value ALU on the basis of the post-money valuation of ALU's Series B financing round as of May 2018. The valuation has been determined using observable prices based from the last round of obtaining external financing through the issue of ALU's series B preference shares. This valuation, in addition to analysis of the Investment Manager, continues to be the best estimate of ALU fair value, as confirmed by the terms of its 2018 financing round accepted in the capital markets. A review of this position as at 31 December 2019 concluded this investment remains fairly valued at its existing level.

	2019	2018

	USD	USD
Investment in Triton	-	176,250

Financial assets at fair value through profit or loss	2019	2018

	USD	USD
Investment in Triton:
At 1 January	176,250	851,250
Disposals	(100,000)	-
Total loss in profit or loss	(76,250)	(675,000)

At 31 December	-	176,250

Total loss included in the profit or loss of Africa Opportunity Fund L.P.
for asset held at the end of the reporting period	(76,250)	(675,000)

	2019	2018

	USD	USD

Investment in ALU	2,361,193	2,361,193

Financial assets at fair value through profit or loss	2019	USD

	USD	USD
Investment in ALU:
At 1 January	2,361,193	1,686,553
Total loss in profit or loss	-	674,640

At 31 December	2,361,193	2,361,193

Total gain included in the profit or loss of Africa Opportunity Fund L.P.
for asset held at the end of the reporting period	-	674,640

Investment in Shoprite Holdings (SHP ZL)

On 22 August 2017, as a condition precedent to the merger of the C shares and the ordinary shares, the 637,528 ordinary shares of Shoprite Holdings (SHP ZL "Shoprite") affected by the terms of the Shoprite arbitral award, plus estimates of associated legal costs, were excluded from the assets of Africa Opportunity Fund, and securities called Contingent Value Rights ("CVR"s) were issued to the ordinary shareholders of record. As such, the outcome of the Shoprite arbitration is separate and independent of the net asset value of the ordinary shares of Africa Opportunity Fund. Consequently, the current ordinary shareholders were not considered to be affected by the outcome of the Shoprite arbitration and any appeals. The contingent value rights holders will be responsible for the losses or benefits associated with the Shoprite arbitration appeal which occurred in 2019. The full terms and conditions attaching to the CVRs are contained in the instrument by which they are constituted that can be inspected at the Fund's website.

In January 2019 the Fund was informed of the appeal award by the arbitration panel. Africa Opportunity Fund was deemed to not have right to the disputed shares and the panel identified an additional 41,617 shares, and corresponding dividends that were deemed not properly titled to AOF. This adjustment was made in prior year financial statements.

6(c). Statement of Comprehensive Income of the Master Fund for the year ended 31 December 2019

The net loss on investment in subsidiaries at fair value through profit or loss amounting to USD 1,115,691 (2018: net loss USD 17,398,818) is due to the loss arising at the Master Fund level and can be analysed as follows:

	2019	2018

	USD	USD
Income
Interest revenue	511,309	463,318
Dividend revenue	2,208,919	2,479,546
Other income	91,573	25,006
Net foreign exchange gain	-	484,892
	2,811,801	3,452,762
Expenses
Net losses on financial assets and liabilities at fair value
through profit or loss	2,762,813	20,142,153
Net foreign exchange loss	179,653	-
Custodian fees, Brokerage fees and commission	471,637	389,415
Dividend expense on securities sold not yet purchased	-	98,281
Other operating expenses	147,308	11,777
Audit and professional fees	23,263	101,970
	3,584,647	20,743,596

Operating loss before tax	(772,846)	(17,290,834)

Less withholding tax	(281,256)	(205,488)

Total Comprehensive loss for the year	(1,054,102)	(17,496,322)

Attributable to:
AOF Limited (direct interests)	(1,048,219)	(17,398,054)
AOF Limited ( indirect interests through AOF (GP) Ltd)	(46)	(764)
	(1,048,265)	(17,398,818)
AOF CarryCo Limited (minority interests)	(5,837)	(97,504)
	(1,054,102)	(17,496,322)

(i) Net (losses)/gains on financial assets and liabilities at fair value through profit or loss held by Africa Opportunity Fund L.P.

	2019	2018
	USD	USD
Net losses on fair value of financial assets at fair value through profit or loss	(3,421,780)	(19,926,489)
Net gains/(losses) on fair value of financial liabilities at fair value through profit or loss	658,967	(215,664)
Net losses	(2,762,813)	(20,142,153)

(ii) Financial asset and liabilities at fair value through profit or loss held by Africa Opportunity Fund L.P.

	2019	2018
	USD	USD
Held for trading assets:
At 1 January	49,278,324	69,163,219
Additions	3,547,544	8,439,260
Disposal	(11,031,579)	(8,397,666)
Net losses on financial assets at fair value through profit or loss	(3,421,780)	(19,926,489)
At 31 December (at fair value)	38,372,509	49,278,324
Analysed as follows:
- Listed equity securities	34,850,831	44,633,208
- Listed debt securities	1,160,485	2,107,673
- Unlisted equity securities	2,361,193	2,362,443
- Unlisted debt securities	-	175,000
	38,372,509	49,278,324

Other receivables, cash at bank and other payables are not included above.

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

	2019	2018
	USD	USD

Realised	(4,350,287)	604,993
Unrealised	928,507	(20,531,482)
Total losses	(3,421,780)	(19,926,489)

(iv) Financial liabilities at fair value through profit or loss held by Africa Opportunity Fund L.P.

	2019	2018

	USD	USD
Held for trading financial liabilities
Written call options	632,250	-
Written put options	-	797,188
Financial liabilities at fair value through profit or loss	632,250	797,188

(v) Net changes on fair value of financial liabilities at fair value through profit or loss

	2019	2018
	USD	USD

Realised	585,447	241,003
Unrealised	73,520	(456,667)
	658,967	(215,664)

7. OTHER RECEIVABLES

The carrying amount of other receivables approximates their fair value.

8. CASH AND CASH EQUIVALENTS

2019

2018

USD

Other bank accounts

103,067

4,376

9(a). ORDINARY SHARE CAPITAL

Company

	2019	2019	2018	2018
	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

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.

9(b). NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

		Ordinary
		Shares
		USD
At 1 January 2018		69,248,073
Changes during the period:
Total comprehensive loss for the year		(19,009,791)

At 31 December 2018		50,238,282
Net asset value per share at 31 December 2018		0.671

		Ordinary
		Shares
		USD
At 1 January 2019		50,238,282
Changes during the period:
Total comprehensive loss for the year		(2,503,614)

At 31 December 2019		47,734,668
Net asset value per share at 31 December 2019		0.638

Ordinary and C share Merger, Issuance of Contingent Value Rights

In 2014, 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.

Due to the fact that there were 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 were classified as financial liabilities as from April 17, 2014 upon issuance of a Class C shares.

The Fund merged the C share class and the ordinary shares as contemplated in the April 2014 issuance of the C share class, and with the consent of the Board of Directors, on 23 August 2017. The C Class shares were converted into ordinary shares. Based on a conversion ratio of 1.1034, 29,200,000 C Shares were delisted and cancelled and 32,219,279 Ordinary Shares were admitted to trading on the Specialist Fund Segment of the London Stock Exchange. Subsequent to the merger, the total number of ordinary shares is 74,849,606.

The Shoprite arbitral award was issued in 2016. The arbitral award resulted in AOF not being considered the legal owner of the specified Shoprite Holdings; therefore, the Shoprite investment was written off. To effectuate this merger, Contingent Value Rights certificates for any residual rights with respect to Shoprite shares listed on the Lusaka Stock Exchange were issued to the ordinary shareholders of record on 21 August 2017.

Subsequent to the merger, one class of ordinary shares exists for all investors and all financial and return information presented reflects the existing ordinary share class. Upon conversion of the C Class shares into Ordinary shares, the remaining shares in AOF are classified as equity. Information regarding the merger was distributed and released to the market prior to, and upon execution of, the merger. This information and information relative to the CVRs can be found on the Fund's website.

10. TRADE AND OTHER PAYABLES

	2019	2018

	USD	USD

Due to Africa Opportunity Fund L.P.	-	41,768
Directors Fees Payable	17,500	43,750
Other Payables	316,997	71,423
	334,497	156,941

Other payables and accrued expenses are non-interest bearing and have an average term of three months. The carrying amount of trade and other payables approximates their fair value.

11. EARNING PER SHARE

The earnings per share (EPS) is calculated by dividing the decrease in net assets attributable to shareholders by number of ordinary shares. The EPS for 2019 and 2018 represent both the basic and diluted EPS.

		2019	2018

		Ordinary shares	Ordinary shares

Total Comprehensive loss	USD	(2,503,614)	(19,009,791)

Number of shares in issue		74,849,606	74,849,606

Change in net assets attributable to shareholders per share	USD	(0.033)	(0.254)

12. 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.

		% equity	% equity
	Country of	interest	interest
Name	incorporation	2019	2018

Africa Opportunity Fund (GP) Limited	Cayman Islands	100	100

Africa Opportunity Fund L.P.	Cayman Islands	99.45	99.45

During the year ended 31 December 2019, 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 2019

				USD

Africa Opportunity Partners Limited	Investment Manager	Management fee expense	1,002,326	246,321
Africa Opportunity Fund LP	Subsidiary	Receivable	-	70,180
SS&C Technologies	Administrator	Administration fees	105,855	-


	Type of	Nature of	Volume	Balance at
Name of related parties	relationship	transaction	USD	31 Dec 2018

				USD
Africa Opportunity Partners Limited	Investment Manager	Management fee expense	1,184,038	-
Africa Opportunity Fund LP	Subsidiary	Payable	-	41,768
SS&C Technologies	Administrator	Administration fees	114,919	-

Key Management Personnel (Directors' fee)

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 during both 2019 and 2018.

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).

During 2019, three directors with holdings in the Company left the Board. The changes in shares and direct interest held is solely attributable to this event.

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

	No of shares held	Direct interest held %

2019	12,183,358	16.28

2018	14,284,315	19.08

13. 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:

	2019	2018

	USD	USD

Total comprehensive loss	(2,503,614)	(19,009,791)
Income tax expense calculated at 0%	-	-
Withholding tax suffered outside Mauritius	-	-
Income tax expense recognized in profit or loss	-	-

* Withholding taxes are borne at the master fund level and amounted to USD 281,256 (2018: USD 205,488). These have been included in the NAV of the subsidiary.

14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Introduction

The Company's objective in managing risk is the creation and protection of shareholder value. Risk is inherent in the Company'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 Company's continuing profitability. The Company 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 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 Company.

Fair value

The carrying amount of financial assets and liabilities at fair value through profit or loss are measured at fair value at the reporting date. The carrying amount of trade and other receivables, cash and cash equivalents trade and other payables 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 Master Fund has an obligation to replace the borrowed securities at a later date. Short selling allows the Master Fund 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 Master Fund has an obligation to repurchase the security in the market at prevailing prices at the date of acquisition.

With written options, the Master Fund bears the market risk of an unfavourable change in the price of the security underlying the option. Exercise of an option written by the Master Fund could result in the Master Fund 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 Master Fund 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 Master Fund'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 Master Fund'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 Master Fund's investment portfolio.

The equity price risk exposure arises from the Master Fund's investments in equity securities, from equity securities sold short and from equity-linked derivatives (the written options). The Master Fund 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 Company has no assets classified as 'financial assets at fair value through other comprehensive income' 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.

Equity
		Effect on
Company	Change in	Equity
	NAV price	2019

		USD

Investment in subsidiaries at fair value through profit or loss	10%	4,788,801
	-10%	(4,788,801)

		Effect on net
		assets
		attributable to
Master Fund	Change in	shareholders
	NAV price	2019

		USD

Financial assets at fair value through profit or loss	10%	3,837,251
	-10%	(3,837,251)

Financial liabilities at fair value through profit or loss	10%	(63,225)
	-10%	63,225

Equity
		Effect on
Company	Change in	Equity
	NAV price	2018

		USD

Investment in subsidiaries at fair value through profit or loss	10%	5,038,590
	-10%	(5,038,590)

		Effect on net
		assets
		attributable to
Master Fund	Change in	shareholders
	NAV price	2018

		USD

Financial assets at fair value through profit or loss	10%	4,927,832
	-10%	(4,927,832)

Financial liabilities at fair value through profit or loss	10%	(79,719)
	-10%	79,719

Currency risk

The Master Fund's investments are denominated in various currencies as shown in the currency profile below. Consequently, the Company 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 Master Fund 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 2019

Company

Gross amounts

of recognised

Net amount of

Gross

financial

financial assets

amounts of

liabilities set off

presented in

recognised

in the statement

the statement

financial

of financial

Financial

Cash

assets

position

instruments

collateral

Net amount

USD

Cash and cash equivalents

103,067

Total

103,067

As at 31 December 2018

Company

Gross amounts

of recognised

Net amount of

Gross

financial

financial assets

amounts of

liabilities set off

presented in

recognised

in the statement

the statement

financial

of financial

Financial

Cash

assets

position

instruments

collateral

Net amount

USD

Cash and cash equivalents

4,376

Total

4,376

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 Company's financial assets and liabilities is summarised as follows:

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Prepayments are typically excluded as these are not financial assets; prepayments as at 31 December 2019 and 2018 amounted to USD 7,911 and US 4,949, respectively.

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 Company.

Currency risk at master fund level

The following table details the master fund'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 at the Master Fund level. 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. The effect of a change in USD against other currencies at the master fund level as per the table below will have the same impact at the company level and will form part of the NAV of the subsidiary.

Currency Risk - Year 2019
		Effect on net assets attributable to
	Currency	shareholders in (USD)
Master Fund
Change:		30%	-30%
	Botswana Pula	(246,091)	246,091
	Ghana Cedi	(1,965,547)	1,965,547
	Kenyan Shilling	(200,264)	200,264
	Nigerian Naira	(1,101,834)	1,101,834
	South African Rand	(396,164)	396,164
	Tanzanian Shilling	(335,406)	335,406
	Uganda Shilling	(46,612)	46,612
	Zambian Kwacha	(1,165,784)	1,165,784

Change:		10%	-10%
	CFA Franc	(550,235)	550,235
	Egyptian Pound	(168,527)	168,527

Change:		5%	-5%
	Australian Dollar	(44,594)	44,594
	Great British Pound	(9,708)	9,708

Currency Risk - Year 2018
		Effect on net assets attributable to
	Currency	shareholders in (USD)
Master Fund
Change:		30%	-30%
	Botswana Pula	(560,094)	560,094
	Ghana Cedi	(3,033,754)	3,033,754
	Kenyan Shilling	(288,836)	288,836
	Nigerian Naira	(231,756)	231,756
	Tanzanian Shilling	(393,918)	393,918
	Uganda Shilling	(636,163)	636,163
	South African Rand	(1,263,302)	1,263,302
	Zambian Kwacha	(1,589,462)	1,589,462

Change:		10%	-10%
	CFA Franc	(588,982)	588,982
	Egyptian Pound	(218,071)	218,071

Change:		5%	-5%
	Australian Dollar	(31,554)	31,554
	Great British Pound	(65,593)	65,593

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

The Company takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. The Company'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 Company'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:

		2019	2019	2018	2018
		Company	Master Fund	Company	Master Fund
		Carrying	Carrying	Carrying	Carrying
		amount	amount	amount	amount

	Notes	USD	USD	USD	USD

Financial assets at fair value
through profit or loss	6(c)(ii)	-	38,372,509	-	49,278,324

Other receivables, excluding
prepayments	7	70,180	486,335	-	258,814

Cash and cash equivalents	8	103,067	10,479,259	4,376	2,611,947

The cash and cash equivalent assets of the Company 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 A- 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 Company are unrated. The issuers of the unrated debt instruments owned by the Company 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 2019 the Master Fund 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:

	Master Fund	Master Fund
	2019	2018

	USD	USD
Bond & Notes
Ghana	-	175,000
South Africa	1,160,484	2,107,673

Total	1,160,484	2,282,673


	Master Fund	Master Fund
	2019	2018

	USD	USD
Equity Securities
Ghana	8,015,936	11,411,113
South Africa	5,758,288	8,202,715
Senegal	4,357,495	4,749,214
Nigeria	4,100,179	1,333,287
Other	4,034,293	3,429,866
Zambia	3,458,549	4,737,440
Zimbabwe	1,895,919	3,547,331
Egypt	1,685,274	2,180,706
Cote D'Ivoire	1,144,851	1,140,610
Tanzania	1,118,020	1,313,059
Botswana	820,302	1,866,979
Kenya	667,546	962,788
Uganda	155,373	2,120,543

Total	37,212,025	46,995,651

Shortsellings
Other	(426,750)	-
South Africa	(205,500)	-
Ghana	-	(797,188)
	(632,250)	(797,188)

Total	37,740,259	48,481,136

Analysed by industry of underlying assets:

	Master Fund	Master Fund
	2019	2018

	USD	USD
Bond & Notes
Consumer Finance	956,459	901,086
Consumer Product & Services	204,025	221,882
Telecommunications	-	984,705
Plantations	-	175,000

	1,160,484	2,282,673

	Master Fund	Master Fund
	2019	2018

	USD	USD
Equity Securities and Shortsellings
Financial Services	10,526,725	12,534,559
Mining Industry	7,487,688	6,642,371
Utilities	4,553,494	6,260,996
Telecommunications	4,357,495	6,137,760
Other	4,046,468	4,544,395
Oil Exploration & Production	1,464,113	500,161
Plantations	1,144,851	1,036,973
Beverages	1,118,020	1,313,059
Real Estate	824,461	1,612,200
Consumer Finance	820,302	2,066,158
Transport	179,572	1,301,556
Media	56,586	1,370,868
Consumer Products & Services	-	104,887
Materials	-	772,520

	36,579,775	46,198,463

Total	37,740,259	48,481,136

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company'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 Company's reputation.

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

Year 2019			Due	Due	Due
		Due	Between 3	Between 1	greater
	Due on	within 3	and 12	and 5	than 5
	demand	Months	Months	years	years	Total

	USD	USD	USD	USD	USD	USD
Financial liabilities
Other payables	-	334,497	-	-	-	334,497

Total liabilities	-	334,497	-	-	-	334,497

Year 2018			Due	Due	Due
		Due	Between 3	Between 1	greater
	Due on	within 3	and 12	and 5	than 5
	demand	Months	Months	years	years	Total

	USD	USD	USD	USD	USD	USD
Financial liabilities
Other payables	-	156,941	-	-	-	156,941

Total liabilities	-	156,941	-	-	-	156,941

Capital management

Total capital is considered to be the total equity as shown in the 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 Company cost effective.

The primary objective of the Company'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.

15. ANALYSIS OF NAV OF MASTER FUND ATTRIBUTABLE TO ORDINARY SHARES

	31.12.2019	31.12.2018

	USD
ASSETS
Cash and cash equivalents	10,479,259	2,611,947
Trade and other receivables	486,335	217,046
Receivable from AOF Ltd	-	41,768
Financial assets at fair value through profit or loss	38,372,509	49,278,324
Total assets	49,338,103	52,149,085

EQUITY AND LIABILITIES
Liabilities
Trade and other payables	470,431	682,554
Payable to AOF Ltd	70,180	-
Financial liabilities at fair value through profit or loss	632,250	797,188
Total liabilities	1,172,861	1,479,742

Net assets attributable to shareholders	48,165,242	50,669,343

16. SEGMENT INFORMATION

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

For geographical segmentation, please refer to Note 14.

17. PERSONNEL

The Company did not employ any personnel during the year (2018: the same).

18. COMMITMENTS AND CONTINGENCIES

There are no commitments or contingencies at the reporting date.

19. EVENTS AFTER REPORTING DATE

MANDATORY REDEMPTION

The Directors, at their sole discretion, can effect a compulsory redemption of the Ordinary Shares on an ongoing basis and will therefore undertake a staged return of capital to shareholders. On 10 March 2020, the Board of Directors of Africa Opportunity Fund Limited approved the mandatory redemption of 30,278,230 Ordinary shares. On 16 March 2020, the mandatory redemption was completed and AOF redeemed the 30,278,230 Ordinary Shares, on a pro rata basis, at the prevailing NAV per Ordinary Share of $0.611 as at 29 February 2020. Such shares were cancelled automatically following their redemption. Fractions of shares produced by the applicable redemption ratios have not been redeemed and so the number of shares redeemed in respect of each shareholder has been rounded down to the nearest whole number of shares. Payments of redemption proceeds were effected either through Euroclear or Clearstream (in the case of shares held in uncertificated form) or by cheque (in the case of shares held in certificated form) on or around 25 March 2020. Any share certificates for the balance of holdings of shares were despatched to shareholders on or around 25 March 2020. Following the Mandatory Redemption, the Company has 44,571,376 Ordinary Shares in issue. As of 16 March 2020, Robert Knapp and Myma Belo-Osagie, Directors of the Company, owned 12,083,358 and 100,000 Ordinary Shares, respectively. As a result of the Mandatory Redemption described above, Robert Knapp and Myma Belo-Osagie now hold 7,195,387 and 59,548 Ordinary Shares, respectively. The redemption was funded through proceeds received from realizing the assets of the Company. As at 31 Dec 2019, the Company had disposed some of its portfolio of investments thereby generating proceeds of around USD 11M and as at 31 March 2020, the Company disposed 26% of its portfolio generating proceeds of USD 9.8M. The proceeds received have been used partly for redemption of shares to the Shareholders amounting to USD 18.5M and the rest has been kept to finance the fund's operational expenses.

COVID-19 PANDEMIC

The Board of Directors and Investment Manager continue to assess the impact of the recent outbreak of a novel and highly contagious form of coronavirus ("Covid-19"), which the World Health Organization has officially declared a pandemic. Covid-19, has resulted in numerous deaths across the globe, adversely impacted global commercial activity, interrupted normal business and social activities and contributed to significant volatility in certain equity and debt markets. The global impact of the outbreak is rapidly evolving, and many countries have reacted by instituting quarantines, prohibitions on travel, restrictions on imports and exports, and the closure of offices, businesses, schools, retail stores and other public venues. Businesses, including the Investment Manager and key vendors of the Company are also implementing similar precautionary measures. Such measures, as well as the general uncertainty surrounding the dangers and impact of Covid-19, are creating significant disruption in supply chains and economic activity and are having a particularly adverse impact on transportation, hospitality, tourism, entertainment and other industries. The impact of Covid-19 has led to significant volatility and declines in the global public equity markets and it is uncertain how long this volatility will continue. As Covid-19 continues to spread, the impacts, including a potential global, regional or other economic recession, are increasingly uncertain and difficult to assess. Public health emergencies, including outbreaks of Covid-19 or other existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on the Company, including the fair value of its investments. As at 31 March 2020, 60% of the Investment portfolio was disposed. Proceeds from disposal of these shares amounted to USD 9.18 million. The proceeds of USD 9.18 million as well as existing cash resources as at 31 December 2019 have been used for the redemption of shares on 16 March 2020. The fair value of the remaining 74% portfolio has witnessed a fall of around 32% as at 29 April 2020. The current investment strategy and distribution policy, while mitigating some operational risks due to the enhanced levels of cash and cash equivalents as a consequence of the realisation efforts, does pose other challenges as the Investment Manager continues to attempt to maximise value while realising investments during this volatile environment. The Company and the Master fund will continue to meet their working capital requirements and other obligations through utilisation of existing cash resources.

The Directors consider the emergence of the Covid-19 pandemic to be a non-adjusting post balance sheet event and hence any future impact is likely to be in connection with the assessment of the fair value of investments at future valuation dates. The Fund's portfolio of investments may see a range of impacts due to Covid-19, the specifics of which will depend on a variety of factors, including geographic location, industry sector, the effectiveness of governmental actions and country specific infection rates, amongst others. The Board and the Investment Manager are actively working towards assessing and minimizing risks to the Fund's portfolio, however, given the degree of uncertainty around the potential future course of Covid-19, it is not possible to accurately quantify the future impact on the portfolio at this time.

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

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".

MANAGER

Africa Opportunity Partners Limited.

Africa Opportunity Fund Limited (AOF)

Friday, 15th November 2024

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