Half Year Report

RNS Number : 0986O

Africa Opportunity Fund Limited

30 September 2019

 

Africa Opportunity Fund Limited

("AOF" or the "Company")

Half Yearly Report for the Six Months ended 30 June 2019

The Board of Directors of Africa Opportunity Fund Limited is pleased to announce its unaudited results for the 6 month period to 30 June 2019. The full half yearly report for the period ended 30 June 2019 will be sent to shareholders and will be available soon on the Company's website: www.africaopportunityfund.com.

Highlights:

·      AOF's ordinary share net asset value per share of US$0.689 as at 30 June 2019 increased by 2% from the 31 December 2018 net asset value per share of US$0.675.

·      As at 30 June 2019, AOF's investment allocation for its Ordinary Shares was 79% equities, 5% debt and 16% unencumbered cash. 

·      AOF's Ordinary Shares net asset value per share as at 20 September 2019 was US$0.632.

·      AOF's Ordinary Shares did not pay an annual dividend for 2018.

·      AOF's shareholders adopted resolutions at an extraordinary general meeting held on June 27, 2019 for AOF to cease to make new investments for the next three years and to return funds to shareholders in an orderly manner during that three year period.

Manager's Commentary
 

Market Conditions

AOF's ordinary share NAV rose 2% in H1. As a reference, during this period in USD the S&P rose 19%, Brazil rose 16%, Russia rose 33%, India rose 10%, and China rose 21%. In Africa, South Africa rose 14%, Egypt rose 18%, Kenya rose 8%, and Nigeria fell 1%.  Three Africa-focused exchange traded funds - the Lyxor ETF (PAF FP), the DBX MSCI Africa Top 50 (XMAF LN), and Van Eck Africa Index (AFK US), rose, respectively, 12%, 9%, and 12%.

Ordinary Shares Portfolio Highlights

The Fund turned in an underwhelming half year. On the positive front, its natural resources portfolio delivered strong returns of 5.5 cents per share, as the gold price rose 8%, and crude oil prices rose by more than 20%. Crucially, our top natural resource investments - Anglogold in gold mining and Kosmos Energy in oil and gas - have taken deliberate corporate action to lower the average production costs of their reserves. 

The Fund's Anglogold investment (common stock and options) delivered gains of 2.6 cents per share in H1. Anglogold's total return of 40% can be attributed to the 2019 gold price rally, its asset disposal program, and its stringent financial targets to guarantee ongoing discipline in its future capital allocation decisions.  It wishes to sell its mining interests in South Africa, Mali, and Argentina.  Selling annual South African 400,000+ ounces with an all-in sustaining cost of $1144 per ounce while building a new mechanized mine in Ghana's Obuasi, with annual production of 400,000 ounces at a comparable cost of $800 should improve Anglogold's cost competitiveness, allow it to retire debt, and remove any South African mining discount hanging over Anglogold's valuation.  One measure of the significant improvements Anglogold has effected in its mine portfolio is the 64% increase in its all-in sustaining cost margin (average gold price minus all-in sustaining cost per ounce) from 14% in 2013, at an average gold price of $1412 per ounce to 23% in H1 2019 at a lower average gold price of $1306. Complementing this encouraging margin trend is Anglogold's new leverage target of 1X Net Debt/Adjusted EBITDA ratio (versus its old target of 1.5X).  These two measures should enhance Anglogold Ashanti's investment appeal.

The Fund's Kosmos Energy investment increased AOF's NAV by 0.9 cents per share in in H1, as its share price rose 54% and it declared a maiden dividend. Daily crude oil production reached a record level of 71,100 barrels of crude oil, up 65% from Q2 2018's daily 43,000 barrels of oil, despite operational problems at one of its Ghana oil fields.  Contributions from the Gulf of Mexico more than offset Kosmos' Ghanaian problems, enabling Kosmos to produce $136 million in free cash flow in Q2 alone and putting it on track to generate close to $200 million of free cash flow in 2019. It drilled successful wells in the Gulf of Mexico and Mauritania, resulting in larger resources of both crude oil and natural gas. Kosmos is lowering its lifting costs per barrel by discovering new reserves near existing drilling infrastructure in the Gulf of Mexico and Equatorial Guinea.  The latest new discoveries in the Gulf of Mexico enjoy lifting costs below $8 per barrel. Five more exploration wells will be drilled in H2. Kosmos has announced that it would sell down its stake in the Mauritania/Senegal natural gas fields by the end of 2019. It reported considerable interest in those assets, with the sale proceeds thereof being applied to reduce Komsos' net debt of $1.98 billion. Best of all, though, is that the overhang of Kosmos' founding private equity investors selling down their stakes over several years came to an end. Warburg Pincus and Blackstone left the share register by the end of Q2.

The single biggest factor on the negative front is an underlying macro-economic pattern in several African countries. Governments in countries like Ghana, South Africa, Zambia, and Zimbabwe have incurred large amounts of debt in recent years to pay for heavier salary and interest-servicing obligations, and climbing contingent liabilities. Each government faces doubts about its resolve and ability to reduce sharply its recurrent expenditure ratios.  Consequently, in those countries with shallow savings pools, high domestic real interest rates (20% in the case of Zambia, for example, and 10% in the case of Ghana) exert immense downward pressure on local stock exchanges, regardless of whether listed companies report growing profits. Its specific victim was a 14% decline in the Dollar market capitalization of Enterprise Group in H1.  That loss accounted for approximately 34% of the Fund's losses or 1.4 cents per share. Insofar as the Ghana Stock Exchange Composite Index lost 14% in Dollars in H1 and the price movements of insurance stocks tend to be correlated with general stock market performance, Enterprise's return appears to be typical.  Yet, one source of solace was that Enterprise's H1 2019 earnings per share increased by 140%, its operating cash flow rose at an annualized 24% rate, and its cost of float was 4%.  Enterprise's profitability strengthened even as its valuation fell to a 26% discount to book value and a 40% discount to embedded value.  Yet, in contrast to developed countries, Ghana's population is growing and it has high real risk-free interest rates - both desirable attributes for the profitability of an insurance sector.  But, it is those high real interest rates that suppress Enterprise's valuation because future cash flows are discounted with those higher rates.  Is Enterprise's June 30 market capitalization of $65.3 million warranted?  That capitalization placed it on a P/E ratio of 10.6x, a P/B ratio of 0.74x, and a dividend yield of 2.14%. 

Copperbelt's shares lost 25% in Q2 and 8% overall in H1 or 0.5 cents per ordinary share. As a supplier to copper mines, Copperbelt's share price in Dollars tends to move in sympathy with the copper price. Furthermore, the 34% rise in 10 year Zambian interest rates to 22.5% during this period more than neutralized the appeal of Copperbelt's 15%+ dividend yield. Zambia and Zimbabwe are in the throes of a severe drought. The usable storage level of their largest single source of electricity - the Kariba dam dropped from being 85% full at the end of July 2018 to 24% full on July 31, 2019. Copperbelt was granted permission by the Zambian government in early June to import electricity from South Africa to satisfy the unmet power needs of its mining customers. We expect that, as occurred in 2016, Copperbelt's power imports will insulate its revenues and profitability from the harmful effects of the latest drought.  A more troubling development, though, is a request to Zambia's Energy Regulatory Board by ZESCO, the bulk electricity supplier to Copperbelt and its customers, in Q1 2019 to raise electricity tariffs (other than tariffs for mining and exports) by a weighted average rate of 113%. That request signifies that the renegotiation of Copperbelt's bulk supply agreement in 2020 will be difficult since Copperbelt's customers oppose an increase in their tariffs. As a transmission company, Copperbelt's economic function is to move electricity between electricity sellers and electricity buyers. One favourable development is that Copperbelt has been shortlisted for the award of solar energy projects under Zambia's GETFIT program. Despite these darkening clouds of uncertainty, we think that commercial logic should prevail.

Our Zimbabwean property investments suffered a 30% loss equal to 0.7 cents per share from the Zimbabwe government's reintroduction of the Zimbabwe Dollar in February 2019 and making it the principal medium of exchange in June 2019. Hyperinflation has reemerged in Zimbabwe and economic activity has collapsed, as the supply of foreign exchange contracted sharply, and the new Zimbabwe Dollar has depreciated by 70% since inception. Despite the current poor economic conditions, Mashonaland Holdings, for example, continued to generate modest levels of free cash flow, remains completely ungeared, and experienced rising occupancy levels. Zimbabwe's outlook is grim because its economy is forecast to contract this year in a hyperinflationary environment. The US Dollar value of our Zimbabwean holdings is likely to weaken as Zimbabwe's GDP shrinks in H2.

Changes made in the AOF portfolio during H1 included selling down our equity holdings in Anglogold Ashanti, Goldfields, Dangote Cement, Naspers, Stanbic Bank Uganda, Standard Chartered Bank Ghana, and Letshego. The ordinary share portfolio had 14% of its net asset value in gold mining equities, 3% in oil and gas equities, and no exposure to gold mining or oil and gas debt.

Portfolio Appraisal Value

As of June 30, the Manager's appraisal of the intrinsic economic value of the Ordinary Share portfolio was $0.977 per share. The market price of $0.585 on June 28 represented a 40% discount. Note the Appraisal Value is intended to provide a measure of the Manager's long-term view of the attractiveness of AOF's portfolio. It is a subjective estimate, and does not tell when that value will be realized, nor does it guarantee that any security will reach its Appraisal Value.

Strategy

The Fund has begun the process of realizing its holdings, but we believe the long-term investment appeal of Africa remains intact.

On Behalf of the Investment Manager, Africa Opportunity Partners Ltd

Responsibility Statements:

The Board of Directors confirm that, to the best of their knowledge:

a.   The financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company.

b.         The Interim Investment Manager Report, and Condensed Notes to the Financial Statements include:

i.   a fair review of the information required by DTR 4.2.7R (indication of important events that have occurred during the first six months and their impact on the financial statements, and a description of principal risks and uncertainties for the remaining six months of the year); and

ii.   a fair review of the information required by DTR 4.2.8R (confirmation that no related party transactions have taken place in the first six months of the year that have materially affected the financial position or performance of the Company during that period).

Per Order of the Board

 30 September, 2019

 

AFRICA OPPORTUNITY FUND LIMITED

UNAUDITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE PERIOD FROM 1 JANUARY 2019 TO 30 JUNE 2019           

				For the period		For the period
				ended 30 June		ended 30 June
		Notes		2019		2018
				USD		USD
Income
Net gains on investment in subsidiaries at fair value through profit or loss		5(a)		2,085,851		-
				2,085,851		-
Expenses
Net losses on investment in subsidiaries at fair value through profit or loss		5(a)		-		2,678,023
Management fee				505,744		612,082
Other operating expenses				105,959		39,419
Directors' fees				87,500		87,500
Audit fees				46,180		70,653
				745,383		3,487,677
Total comprehensive income/(loss) for the period (decrease)/increase in net assets attributable to shareholders from operations				1,340,468		(3,487,677)

AFRICA OPPORTUNITY FUND LIMITED

UNAUDITED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2019                                                           

		Notes		30 June 2019			30 June 2018
				USD			USD
ASSETS
Cash and cash equivalents		7		115,532			43,029
Trade and other receivables		6		20,823			-
Investment in subsidiaries		5(a)		51,521,749			65,849,721
Total assets				51,658,104			65,892,750
EQUITY AND LIABILITIES
LIABILITIES
Trade and other payables		9		79,354			132,354
Total liabilities				79,354			132,354
Net assets attributable to shareholders				51,578,750			65,760,396
Ordinary share capital				748,496			748,496
Share premium				37,921,452			37,921,452
Retained earnings				12,908,802			27,090,448
Total equity				51,578,750			65,760,396
Net assets value per share:
- Ordinary shares				0.689			0.879

AFRICA OPPORTUNITY FUND LIMITED

UNAUDITED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM 1 JANUARY 2019 TO 30 JUNE 2019           

				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 income for the period				-		-		1,340,468		1,340,468
At 30 June 2019				748,496		37,921,452		12,908,802		51,578,750

AFRICA OPPORTUNITY FUND LIMITED

UNAUDITED STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM 1 JANUARY 2019 TO 30 JUNE 2019                                   

				For the period ended		For the period ended
				30 June 2019		30 June 2018
				USD		USD
Operating activities
Total comprehensive income/(loss) for the period				1,340,468		(3,487,677)
Adjustment for non-cash items:
Unrealised (gain)/loss on investments in subsidiaries at fair value through profit or loss				(2,085,851)		2,678,023
Cash used in operating activities				(745,383)		(809,654)
Net changes in operating assets and liabilities
Proceeds from investment in subsidiaries at fair value through profit or loss				950,000		779,234
Increase in trade and other receivables				(15,874)		-
Decrease in trade and other payables				(77,587)		(18,318)
Net cash generated from operating activities				856,539		760,916
Net increase/(decrease) in cash and cash equivalents				111,156		(48,738)
Cash and cash equivalents at 1 January				4,376		91,767
Cash and cash equivalents at 30 June				115,532		43,029

AFRICA OPPORTUNITY FUND LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD FROM 1 JANUARY 2019 TO 30 JUNE 2019                                                           

1.         GENERAL INFORMATION

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

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

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

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

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

The financial statements for the Company for the half year ended 30 June 2019 were authorised for issue in accordance with a resolution of the Board of Directors on 30 September 2019.

Presentation currency

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

2.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied from the prior period to the current period 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 period, 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 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.

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 equity.

(a)      Classification

The Company classifies its financial assets and liabilities in accordance with IAS 39 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 designated 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.

Under IAS 39, the investment in subsidiaries were designated at FVTPL.

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 Company the underlying asset at an agreed-upon value either on or before the expiration of the option.

Options are generally settled on a net basis.

Contracts for difference

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

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.

(i)  Financial assets at amortised cost

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

·   The financial assets 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.

Previously under IAS 39, the Company classified these financial assets as loans and receivables.

(ii)  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.

(b)      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.          

(c)      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.

(d)      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 earned elements of such instruments are recorded separately in 'Interest revenue'. Dividend expenses related to short positions are recognised in 'Dividends on securities sold not yet purchased'. Dividend income/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 derecognise, modified or impaired. Under IAS 39, loans and receivables were carried at amortised cost using the effective interest method less any allowance for impairment. Gains and losses were recognised in profit or loss when the loans and receivables were derecognised 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.

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

Determination of fair value

The 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 5.

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

As from the financial year 2018, the Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. 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 in two stages. 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. Previously under IAS 39, the Company assessed for impairment when there was an objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of an asset (an "incurred" loss event) and that loss has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

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

Offsetting financial instruments

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

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

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

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

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

Due to and due from brokers

Amounts due to brokers are payables for securities purchased (in a regular way transaction) that have been contracted for but not yet delivered on the reporting date 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 loans and receivables for recognition and measurement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Distributions to shareholders whose shares are classified as financial liabilities.

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

Interest revenue and expense

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

Dividend revenue and expense

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

Cash and cash equivalents

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

3.         CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The 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.

The nature and the effect of these changes for accounting standards and interpretations relevant to the Company's operations are disclosed below. Although these new standards and amendments applied for the first time in 2018, 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:

Amendments to IFRS 10 and IAS 28: Sale or Contribution of assets between an investor and     Effective date deferred

its associate or joint venture                                                                                                                                     indefinitely

Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)                                              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

Annual improvements 2015-2017 cycle 1 January 2019

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

IFRS 16 Leases                                                                                                                                                    1 January 2019

IFRIC Interpretation 23 Uncertainty over Income Tax Treatments                                                                     1 January 2019

Where the adoption of the standards or amendments or improvements is deemed to have an impact on the financial statements or performance of the Company, their impact is described below.

IFRS 15- Revenue from Contracts with Customers

The adoption of IFRS 15 did not have a significant impact on the Company. At the Master Fund's level, income comprises mainly interest revenue and dividend income which are scoped out of IFRS 15.

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 Combinations                                                                                                                             1 January 2020

IFRS 17 Insurance Contracts                                                                                                                                 1 January 2022

Amendments:

The following table set out the impact of the adoption of IFRS 9 on the statement of financial position, retained earnings including the effects of Expected Credit Loss, if any.

3.2.     TRANSITION DISCLOSURES

In USD	IAS 39 Measurement		Remeasurement (ECL)	IFRS 9 measurement
Financial assets	Category	Amount		Amount	Category
Listed equity and debt securities (at Master Fund Level)	FVTPL	39,899,084	-	39,899,084	FVTPL
Unlisted equity and debt securities (at Master Fund Level)	FVTPL	3,472,417	-	3,472,417	FVTPL
Cash and cash equivalent (at Company level)	Amortised cost	115,532	-	115,532	Amortised cost

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 and an Extraordinary General Meeting where the following was passed:

·      Ordinary resolution that the requirement of the Company to propose the realisation opportunity 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.

In summary, shareholders voted to give AOF three years during which the Investment Manager will realize the portfolio in an orderly manner and distribute the proceeds to the shareholders.

A brief synopsis of the "New Investing Policy" is below: (Please review the Company's Circular dated 5 June 2019 for a detailed and comprehensive description of the Policy):

For a period of up to three years following the EGM (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").

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

(c)     Measures and evaluates the performance of substantially all of its investments on a fair value basis.

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 previous period, 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.

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 5.

IFRS 13 requires disclosures relating to fair value measurements using a three-level fair value hierarchy. The level within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety as provided in Note 5. Assessing the significance of a particular input requires judgement, considering factors specific to the asset or liability. To assess the significance of a particular input to the entire measurement, the Company performs sensitivity analysis or stress testing techniques.

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

5(a).     Investment in subsidiaries at fair value

		2019
		USD
Investment in Africa Opportunity Fund L.P.		51,519,434
Investment in Africa Opportunity Fund (GP) Limited		2,315
Total investment in subsidiaries at fair value		51,521,749
Fair value at 01 January		50,385,898
Net disposal of investment in subsidiaries		(950,000)
Net loss on investment in subsidiaries at fair value		2,085,851
Fair value at 30 June 2019		51,521,749

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. 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 hold 100% of the Africa Opportunity Fund (GP) Limited.

5(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.

		30 June
		2019		Level 1		Level 2		Level 3
		USD		USD		USD		USD
Investment in subsidiaries		51,521,749		-		51,521,749		-
MASTER FUND
Financial assets at fair value through profit or loss
Equities		40,965,760		38,603,317		2,361,193		1,250
Debt securities		2,405,741		2,230,741		-		175,000
		43,371,501		40,834,058		2,361,193		176,250
Financial liabilities at fair value through profit or loss
Written put options		16,875		16,875		-		-
		16,875		16,875		-		-

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 98% in quoted funds, the Company classifies these investment in subsidiaries as Level 2.

5(b).     Fair value hierarchy

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 quote market price. They have therefore been classified in level 1 of the hierarchy.

Unlisted debt and equity investments

Triton Resources Inc. concluded a binding agreement in 2016 to sell its African underwater logging harvesting assets and its Volta Lake concession in Ghana. To date, the purchaser has not completed obligatory payments and as such ownership of the harvesting assets has not changed, with Triton remaining the lessor of these assets until outstanding payments are made. Negotiations concluded in 2017 for the delivery of logs to a biomass power plant in French Guiana from 2020, subject to completion of the permitting process. Negotiations for the harvesting of underwater logs in Surinam, ongoing in 2017, were completed in early 2018. Negotiations with a lead investor who executed a letter of intent for the sale of Triton itself were suspended as the investor failed to raise the necessary funds. A new letter of Intent with a new potential buyer of Triton was executed in December 2018.

The Investment Manager, based on its own sensitivity analysis, and in conjunction with its analysis of the operational challenges and opportunities for Triton, including the delays in selling the South American concessions, adjusted the valuation of the preference shares at the end of 2018. Consistent with the prior year's treatment, the Investment Manager has determined the promissory note investments to be classified as Level 3 assets for valuation purposes.

African Leadership University ("ALU") is a network of tertiary institutions, currently with operations in both Mauritius and Rwanda. A review of this position as at 30 June 2019 concluded this investment remains fairly valued at its existing level. 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 using observables prices based from the last round of external financing. 

5(c).    Statement of Comprehensive Income of the Master Fund for the period from 1 January 2019 to 30 June 2019

The net gains on investments in subsidiaries at fair value through profit or loss for the period from 1 January 2019 to 30 June 2019 amounted to USD 2,085,851, and net losses on investments in subsidiaries at fair value through profit or loss for the period from 1 January 2018 to 30 June 2018 amounted to USD 2,678,023 is due to gains/(losses) arising at the Master Fund and can be analysed as follows:

		For the period
		ended 30 June
		2019
		USD
Income
Interest revenue		291,732
Dividend revenue		1,716,770
Other income		12,404
Net gains on financial assets and liabilities at fair value
through profit or loss		783,790
		2,804,696
Expenses
Net foreign exchange loss		216,279
Custodian fees, brokerage fees and commission		241,744
Other operating expenses		24,440
Audit fees		10,737
		493,200
Operating loss before tax		2,311,496
Less withholding tax		(213,778)
Total Comprehensive income for the period		2,097,718
Attributable to:
AOF Limited (direct interests)		2,085,758
AOF Limited ( indirect interests  through AOF (GP) Ltd)		93
		2,085,851
AOF CarryCo Limited (minority interests)		11,867
		2,097,718

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

						For the period		For the period
						ended 30 June		ended 30 June
						2019		2018
						USD		USD
Net gains/(losses) on fair value of financial assets at fair value through profit or loss						3,477		(5,239,777)
Net gains on fair value of financial liabilities at fair value through profit or loss						780,313		805,637
Net gains/(losses)						783,790		(4,434,140)

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

						For the period		For the period
						ended 30 June		ended 30 June
						2019		2018
						USD		USD
Held for trading assets:
At 1 January Additions						49,278,324                     -		69,163,219        2,802,453
Disposal						(5,910,300)		(1,501,243)
Net (losses)/gains on financial assets at fair value through profit or loss						3,477		(5,239,777)
At 30 June (at fair value)						43,371,501		65,224,652
Analysed as follows:  -  Listed equity securities						38,603,318		58,211,528
-  Listed debt securities						1,295,766		4,183,859
-  Unlisted equity securities						2,362,443		2,375,626
-  Unlisted debt securities						1,109,974		350,000
-  Contract for difference						-		103,639
						43,371,501		65,224,652

          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

						For the period		For the period
						ended 30 June		ended 30 June
						2019		2018
						USD		USD
Realised						(2,167,773)		331,771
Unrealised						2,171,250		(5,571,548)
Total gains/(losses)						3,477		(5,239,777)

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

						30 June 2019		30 June 2018
						USD		USD
Held for trading financial liabilities
Contract for difference						-		24,873
Written put options						16,875		1,631,525
Listed equity securities sold short						-		2,191,053
Financial liabilities at fair value through profit or loss						16,875		3,847,451

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

						For the period		For the period
						ended 30 June		ended 30 June
						2019		2018
						USD		USD
Realised						349,152		304,197
Unrealised						431,161		501,440
						780,313		805,637

6.         OTHER RECEIVABLES

			30 June 2019		30 June 2018
			USD		USD
Other receivable			20,116		-
Prepayments			707		-
			20,823		-

7.         CASH AND CASH EQUIVALENTS

			30 June 2019		30 June 2018
			USD		USD
Other bank accounts			115,532		43,029

8(a).    ORDINARY SHARE CAPITAL

	30 June 2019		30 June 2019		30 June 2018		30 June 2018
	Number		USD		Number		USD
Authorised share capital
Ordinary shares with 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.

8(b).     NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

			Ordinary
			Shares
			USD
At 1 January 2019			50,238,282
Changes during the period:
Total comprehensive loss for the period			1,340,468
At 30 June 2019			51,578,750
Net asset value per share at 30 June 2019			0.689

9.         TRADE AND OTHER PAYABLES

			30 June 2019		30 June 2018
			USD		USD
Due to Africa Opportunity Fund L.P.			-		43,029
Directors Fees Payable			43,750		43,750
Other Payables			35,604		45,575
			79,354		132,354

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

10.      EARNING PER SHARE

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

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

					Period from  1 January 2019 to 30 June 2019		Period from 1 January 2018  to 30 June 2018
					Ordinary shares		Ordinary shares
Increase in net assets attributable to shareholders		USD			1,340,468		(3,487,677)
Number of shares in issue					74,849,606		74,849,606
Change in net assets attributable to shareholders  per share		USD			0.018		(0.047)

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

11(a). STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019

ASSETS
Cash and cash equivalents			8,607,057
Trade and other receivables			435,798
Financial assets at fair value through profit or loss			43,371,501
Total assets			52,414,356
EQUITY AND LIABILITIES
Liabilities
Trade and other payables			560,304
Due to AOF Ltd			20,116
Financial liabilities at fair value through profit or loss			16,875
Total liabilities			597,295
Net assets attributable to shareholders			51,817,061

The earnings per share is calculated by dividing the decrease in net assets attributable to shareholders by number of shares outstanding.

12.       TAXATION

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

13.      SEGMENT INFORMATION

For management purposes, the 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.

14.       PERSONNEL

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

15.       COMMITMENTS AND CONTINGENCIES

There are no commitments or contingencies at the reporting date.

16.       LIFE OF THE COMPANY

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

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

·      Ordinary resolution that the requirement of the Company to propose the realisation opportunity 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.

A brief synopsis of the "New Investing Policy" is below: (Please review the Company's Circular dated 5 June 2019 for a detailed and comprehensive description of the Policy):

For a period of up to three years following the EGM (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"). This vote is anticipated to be a final liquidation vote post the distribution of all assets.

 

END

 

 

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