Half-yearly report

Africa Opportunity Fund Limited (AOF.L)


Announcement of Unaudited Interim Results for the 6 month period to 30 June 2010

Africa Opportunity Fund Limited ("AOF" or the "Company"), the closed-ended
investment company which aims to achieve capital growth and income through
investments in value, arbitrage, and special opportunities derived from the
continent of Africa announces its unaudited results for the 6 month period to
30 June 2010.



Highlights:

 1.

  *       AOF's net asset value per share of US$0.72 decreased 1.4% from the 31
    December 2009 net asset value per share of US$0.74; including dividends.


  *       As at 30 June 2009, AOF's investment allocation was 57% listed
    equities, 40% Debt and 3% cash.


  *       Dividends in the amount of $0.0018 per share were paid on 12 April
    2010 and 12 July 2010. The third quarter dividend is scheduled for payment
    on 11 October 2010.


  *       AOF's net asset value per share as at 31 August 2010 was US$0.80.



Investment Manager's Statement


Market Conditions: After an upbeat start to the year, the second quarter of
2010 proved more difficult, in line broadly with markets.  The NAV was $0.72 per
share as of 30 June, a fall of 1.4% from 31 December 2009, including dividends.
A difficult Q2 followed a rise of 10% in Q1, including dividends, from the 31
December 2009 NAV.  As a reference in USD terms, during the half year the S&P
500 fell 6.7%, South Africa fell 7.5%, Egypt fell 5.8%, Kenya rose 20.9%, and
Nigeria rose 23.5%.


Portfolio Highlights: Away from the markets, AOF was delighted to see South
Africa host one of the best organized and patronized World Cup football/soccer
tournaments in recent memory. Befitting South Africa's hosting of the World Cup,
AOF invested in Naspers, South Africa's leading television and media company
during the period. Naspers' Multi-Choice pay-TV service maintains a dominant
presence in South Africa and other African countries. An important attribute of
our investment in Naspers is that it is constructed in somewhat synthetic form
to concentrate AOF's investment in Naspers' Africa operations. Naspers owns 34%
of the listed China online media company Tencent, which has been a phenomenal
success. In fact, we estimate that Naspers' stake in Tencent accounts for at
least 80% of the market capitalization of Naspers. By selling short Tencent in
proportion to Naspers ownership, AOF has created an investment in the premier
Africa pay TV franchise at a valuation of 9X cash flow and 11X earnings.
Emerging market peers are trading at 14X cash flow and 19X earnings.


During the period, AOF sold its Goldfields investment, realizing an attractive
return. We purchased shares during mid-2008 at an average price of $10.26, and
sold them early in 2010, at an average price of $13.40, for a 30% return. AOF
also sold its holding in oil warrants issued by the Central Bank of Nigeria at
the beginning of Q2. The warrants combine the attributes of an oil-based option
and a sovereign debt instrument. AOF purchased its warrants during 2008 and
2009 at an average price of $141 per warrant. AOF received approximately $28 in
cash coupons and our average selling price was $163, producing a total return of
35%.


AOF benefited from its short position in Maurel et Prom, an oil and gas producer
with significant assets in Africa. The shares declined from more than €12 per
share to below €9, and we covered our position at a significant gain. However,
the portfolio was not protected from specific investment disappointments or
market gyrations. Marine Subsea announced that one of its vessels required an
additional $60 million investment to fulfill its work program with Sonangol and
again finds itself in a liquidity squeeze within months of completing a
comprehensive debt restructuring. The bonds fell from the 50s back into the
30s. The market value of the €5% Old Mutual bonds declined by 32%, precipitated
in part by the recent sovereign and private bank debt problems of Euroland.


In addition, various African currencies in which AOF's investments are
denominated, in tandem with the Euro, weakened against the US dollar during the
second quarter. For example, during Q2 the CFA Franc fell 10%, since it is
pegged to the Euro, the Zambian Kwacha declined 10% too, and the Rand declined
4%.


Portfolio Appraisal Value: As of 30(th) June, the Manager's appraisal of the
intrinsic economic value of the portfolio was $0.98 per share which was
consistent with the Manager's appraisal as of 31 March.  The market price of
$0.67, at 30 June, represented a 30% 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 particular
security will reach its Appraisal Value.


Strategy: We remain focused on investing in companies with minimal debt that
sell goods and services in short supply in Africa. A considerable part of our
search for those companies is directed both in the consumer and financial
sectors and in the African markets that failed to participate in the 2009 rally
in emerging markets. Broadly, this means that AOF is gradually reducing its
portfolio of fixed income and commodity related securities and pursuing
investments intended to provide long term growth.


Africa Opportunity Partners

AFRICA OPPORTUNITY FUND LIMITED

CONSOLIDATED INCOME STATEMENT

FOR THE PERIOD 1 JANUARY THROUGH 30 JUNE 2010 AND 2009



+----------------------------+----+---------------------++---------------------+
|                            |    |                     ||         For the Half|
|                            |    |                     ||                     |
|                            |Note|    For the Half Year||   Year Ended 30 June|
|                            |    |   Ended 30 June 2010||                 2009|
+----------------------------+----+---------------------++---------------------+
|                            |    |                  USD||                  USD|
+----------------------------+----+---------------------++---------------------+
+----------------------------+----+---------------------++---------------------+
|Revenue                     |    |                     ||                     |
+----------------------------+----+---------------------++---------------------+
|Dividend income             |    |              873,941||              983,027|
+----------------------------+----+---------------------++---------------------+
|Other income                |    |              850,669||              833,957|
+----------------------------+----+---------------------++---------------------+
|Interest income             |    |              472,994||              811,715|
+----------------------------+----+---------------------++---------------------+
|Provision for option        |    |              140,707||                    -|
|liabilities                 |    |                     ||                     |
+----------------------------+----+---------------------++---------------------+
|Realised exchange gains     |    |               52,989||                    -|
+----------------------------+----+---------------------++---------------------+
|Profit on financial assets  |    |                     ||                     |
|at fair value through profit|    |                    -||            1,678,648|
|or loss                     |    |                     ||                     |
+----------------------------+----+---------------------++---------------------+
|Liquidation fee income      |    |                    -||            1,505,413|
+----------------------------+----+---------------------++---------------------+
|                            |    |            2,391,300||            5,812,760|
+----------------------------+----+---------------------++---------------------+
+----------------------------+----+---------------------++---------------------+
|Expenses                    | 10 |                     ||                     |
+----------------------------+----+---------------------++---------------------+
|Losses on financial assets  |    |                     ||                     |
|at fair value through profit|    |            2,185,635||                    -|
|or loss                     |    |                     ||                     |
+----------------------------+----+---------------------++---------------------+
|Management fee              |    |              330,079||              178,437|
+----------------------------+----+---------------------++---------------------+
|Custodian, secretarial and  |    |              173,683||               88,415|
|administration fees         |    |                     ||                     |
+----------------------------+----+---------------------++---------------------+
|Brokerage fees and          |    |               94,389||                6,194|
|commissions                 |    |                     ||                     |
+----------------------------+----+---------------------++---------------------+
|Other operating expenses    |    |               66,537||                8,669|
+----------------------------+----+---------------------++---------------------+
|Directors' fees             |    |               40,000||               22,144|
+----------------------------+----+---------------------++---------------------+
|Interest charges            |    |               31,943||               12,227|
+----------------------------+----+---------------------++---------------------+
|Audit fees                  |    |               14,435||                7,566|
+----------------------------+----+---------------------++---------------------+
|Provision for option        |    |                    -||              698,014|
|obligations                 |    |                     ||                     |
+----------------------------+----+---------------------++---------------------+
|Realised exchange loss      |    |                    -||               63,901|
+----------------------------+----+---------------------++---------------------+
+----------------------------+----+---------------------++---------------------+
|                            |    |            2,936,701||            1,085,567|
+----------------------------+----+---------------------++---------------------+
+----------------------------+----+---------------------++---------------------+
|Gain for the period         |    |            (545,401)||            4,727,193|
+----------------------------+----+---------------------++---------------------+
+----------------------------+----+---------------------++---------------------+
|Attributable to:            |    |                     ||                     |
+----------------------------+----+---------------------++---------------------+
|Equity holders of the       |    |            (544,921)||            4,649,609|
|Company                     |    |                     ||                     |
+----------------------------+----+---------------------++---------------------+
|Non-controlling interest    |    |                (480)||               77,584|
+----------------------------+----+---------------------++---------------------+
+----------------------------+----+---------------------++---------------------+
+----------------------------+----+---------------------++---------------------+
|                            |    |            (545,401)||            4,727,193|
+----------------------------+----+---------------------++---------------------+
+----------------------------+----+---------------------++---------------------+
|Basic gain per share for    |    |                     ||                     |
|gain attributable to the    |    |                     ||                     |
|equity holders of the       | 9  |             (0.0128)||               0.1091|
|Company during the period   |    |                     ||                     |
+----------------------------+----+---------------------++---------------------+
+----------------------------+----+---------------------++---------------------+



AFRICA OPPORTUNITY FUND LIMITED

CONSOLIDATED BALANCE SHEET

FOR THE PERIOD 1 JANUARY THROUGH 30 JUNE 2010 AND 2009



+---------------------------------+-----+------------------++------------------+
|                                 |Notes|As at 30 June 2010||As at 30 June 2009|
+---------------------------------+-----+------------------++------------------+
|                                 |     |               USD||               USD|
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|ASSETS                           |     |                  ||                  |
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|Financial assets at fair value   |4(a) |        33,103,358||        25,621,061|
|through profit or loss           |     |                  ||                  |
+---------------------------------+-----+------------------++------------------+
|Trade and other receivables      |  5  |           873,049||         1,098,068|
+---------------------------------+-----+------------------++------------------+
|Cash and cash equivalents        |     |           385,361||         3,116,285|
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|Total assets                     |     |        34,361,768||        29,835,414|
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|EQUITY AND LIABILITIES           |     |                  ||                  |
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|Equity attributable to equity    |     |                  ||                  |
|holders of the parent            |     |                  ||                  |
+---------------------------------+-----+------------------++------------------+
|Share capital                    |  6  |           426,303||           426,303|
+---------------------------------+-----+------------------++------------------+
|Share premium                    |     |        39,166,287||        39,541,433|
+---------------------------------+-----+------------------++------------------+
|Retained losses                  |     |       (8,911,887)||      (13,738,621)|
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|Shareholders' interests          |     |        30,680,703||        26,229,115|
+---------------------------------+-----+------------------++------------------+
|Non-controlling interest         |     |           198,539||           495,189|
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|Total equity                     |     |        30,879,242||        26,724,304|
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|Liabilities                      |     |                  ||                  |
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|Financial liabilities at fair    |4(b) |         3,140,053||         2,061,800|
|value through profit or loss     |     |                  ||                  |
+---------------------------------+-----+------------------++------------------+
|Trade and other payables         |  7  |           342,473||         1,049,310|
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|Total liabilities                |     |         3,482,526||         3,111,110|
+---------------------------------+-----+------------------++------------------+
+---------------------------------+-----+------------------++------------------+
|Total equity and liabilities     |     |        34,361,768||        29,835,414|
+---------------------------------+-----+------------------++------------------+



AFRICA OPPORTUNITY FUND LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD 1 JANUARY THROUGH 30 JUNE 2010


                  ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

+---------------+---------+-+------------++------------++------------++---------------++------------+
|               |         | |            ||            ||            ||               ||            |
+---------------+---------+-+------------++------------++------------++---------------++------------+
|               | Issued  | |   Share    ||  Retained  ||            ||Non-controlling||   Total    |
+---------------+---------+-+------------++------------++------------++---------------++------------+
|               | capital | |  premium   ||   Losses   ||   Total    ||   interest    ||   Equity   |
+---------------+---------+-+------------++------------++------------++---------------++------------+
|               |   USD   | |    USD     ||    USD     ||    USD     ||      USD      ||USD         |
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
|At 1 January   |1,155,100| | 107,741,068||(49,824,259)||  59,071,909||        417,605||  59,489,514|
|2009           |         | |            ||            ||            ||               ||            |
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
|Attributable to|         | |            ||            ||            ||               ||            |
|tender offer   |(728,797)| |(67,977,957)||  31,436,028||(37,270,726)||              -||(37,270,726)|
|pool           |         | |            ||            ||            ||               ||            |
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
|Comprehensive  |         | |            ||            ||            ||               ||            |
|income for the |        -| |           -||  10,021,265||  10,021,265||        179,347||  10,200,612|
|year           |         | |            ||            ||            ||               ||            |
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
|Non-controlling|         | |            ||            ||            ||               ||            |
|interest buy   |        -| |           -||           -||           -||      (397,933)||   (397,933)|
|back           |         | |            ||            ||            ||               ||            |
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
|Dividend       |        -| |   (443,355)||           -||   (443,355)||              -||   (443,355)|
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
|At 1 January   |  426,303| |  39,319,756|| (8,366,966)||  31,379,093||        199,019||  31,578,112|
|2010           |         | |            ||            ||            ||               ||            |
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
|Comprehensive  |         | |            ||            ||            ||               ||            |
|income for the |        -| |           -||   (544,921)||   (544,921)||          (480)||   (545,401)|
|period         |         | |            ||            ||            ||               ||            |
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
|Dividend       |        -| |   (153,469)||           -||   (153,469)||              -||   (153,469)|
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
+---------------+---------+-+------------++------------++------------++---------------++------------+
|At 30 June 2010|  426,303| |  39,166,287|| (8,911,887)||  30,680,703||        198,539||  30,879,242|
+---------------+---------+-+------------++------------++------------++---------------++------------+









The notes on pages 8 to 15 form an integral part of these financial statements.



AFRICA OPPORTUNITY FUND LIMITED

CONSOLIDATED CASH FLOW STATEMENT

FOR THE PERIOD 1 JANUARY THROUGH 30 JUNE 2010 AND 2009


+----------------------------+-----+---------------------++--------------------+
|                            |Notes| For the Period Ended||For the Period Ended|
|                            |     |         30 June 2010||        30 June 2009|
+----------------------------+-----+---------------------++--------------------+
|                            |     |                  USD||                 USD|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Cash flows from operating   |     |                     ||                    |
|activities                  |     |                     ||                    |
+----------------------------+-----+---------------------++--------------------+
|(Losses)/gains for the      |     |                     ||                    |
|period                      |     |            (545,401)||           4,727,193|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Adjustment for:             |     |                     ||                    |
+----------------------------+-----+---------------------++--------------------+
|Interest income             |     |            (472,994)||           (811,715)|
+----------------------------+-----+---------------------++--------------------+
|Loss/(gain) on financial    |     |                     ||                    |
|assets at fair value through|     |                     ||                    |
|profit or loss              |     |            2,185,635||         (1,678,648)|
+----------------------------+-----+---------------------++--------------------+
|Dividend income             |     |            (873,941)||           (983,027)|
+----------------------------+-----+---------------------++--------------------+
|Gain on Options             |     |            (837,204)||                   -|
+----------------------------+-----+---------------------++--------------------+
|Provision for option        |     |                     ||                    |
|liabilities                 |     |            (140,707)||                   -|
+----------------------------+-----+---------------------++--------------------+
|Tender offer pool adjustment|     |             (68,886)||         (3,485,296)|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Operating gain/(loss) before|     |                     ||                    |
|working capital changes     |     |            (753,498)||         (2,231,493)|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Decrease/(increase) in other|     |                     ||                    |
|receivables and prepayments |     |            (263,393)||             196,179|
+----------------------------+-----+---------------------++--------------------+
|Increase in other payables  |     |                     ||                    |
|and accrued expenses        |     |              887,280||             130,717|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Net cash (used in) /        |     |                     ||                    |
|generated from operating    |     |                     ||                    |
|activities                  |     |            (129,611)||         (1,904,597)|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Interest received           |     |              669,276||             811,715|
+----------------------------+-----+---------------------++--------------------+
|Purchase of financial assets|     |                     ||                    |
|at fair value through profit|4(a) |                     ||                    |
|or loss                     |     |         (12,835,141)||         (7,935,602)|
+----------------------------+-----+---------------------++--------------------+
|Disposal of financial assets|     |                     ||                    |
|at fair value through profit|4(a) |                     ||                    |
|or loss                     |     |            8,339,109||           8,712,005|
+----------------------------+-----+---------------------++--------------------+
|Dividend received           |     |              855,953||             983,027|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Net cash (used in) /        |     |                     ||                    |
|generated from investing    |     |                     ||                    |
|activities                  |     |          (2,970,803)||           2,571,145|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Cash flows from financing   |     |                     ||                    |
|activities                  |     |                     ||                    |
+----------------------------+-----+---------------------++--------------------+
|Dividend paid               |     |            (187,573)||           (221,678)|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Net cash flow (used in) /   |     |                     ||                    |
|generated from financing    |     |                     ||                    |
|activities                  |     |            (187,573)||           (221,678)|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Net (decrease) / increase in|     |                     ||                    |
|cash and cash equivalents   |     |          (3,287,987)||             444,870|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Cash and cash equivalent at |     |                     ||                    |
|the start of the period     |     |            3,673,348||           2,671,415|
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
+----------------------------+-----+---------------------++--------------------+
|Cash and cash equivalent at |     |                     ||                    |
|the end of the period       |     |              385,361||           3,116,285|
+----------------------------+-----+---------------------++--------------------+



AFRICA OPPORTUNITY FUND LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD 1 JANUARY THROUGH 30 JUNE 2010



1. GENERAL INFORMATION


Africa Opportunity Fund Limited (the "Company") was launched with an Alternative
Market Listing "AIM" in July 2007.


The  Company  is  a  closed-ended  fund  incorporated with limited liability and
registered  in Cayman Islands  under the Companies  Law on 21 June 2007 and with
registered  number MC-188243. The Company is  domiciled at PO Box 309 GT, Ugland
House, South Church Street, George Town, Grand Cayman, Cayman Islands.


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 therefore  may invest  in securities  issued by companies domiciled
outside  Africa which conduct significant business activities within Africa. The
Company  will  have  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 Investment Management Agreement
dated 18 July 2007.


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
will  be  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.



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


The  principal accounting policies applied in the preparation of these unaudited
interim  financial  statements  are  set  out  below.  These  policies have been
consistently  applied in  dealing with  items which  are considered  material in
relation to the consolidated financial statements.



Statement of compliance


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


Basis of preparation


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


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 Group'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 3.


Basis of consolidation


The  consolidated financial statements comprise  the financial statements of the
Company and its subsidiaries (referred to as the "Group") as at 30 June 2010.


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


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


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


Non Controlling interests represent the portion of profit or loss and net assets
not  held by the Group and are  presented separately in the Income Statement and
within  equity in the Statement of Changes  in Equity and the Balance Sheet from
parent shareholders' equity.


Foreign currency translation


(a) Functional and presentation currency


The  Group's consolidated financial statements are presented in USD which is the
Group's  functional  currency.  That  is  the  currency  of the primary economic
environment  in  which  the  Company  operates.  The  functional currency of the
entities  within  the  Group  is  USD.  The  Group chose USD as the presentation
currency.


(b) Transactions and balances


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


Financial Instruments


(i) Classification


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



Financial assets and liabilities at fair value through profit or loss


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


Financial   assets  and  liabilities  held  for  trading:  All  derivatives  and
liabilities  from  short  sales  of  financial  instruments  are  classified  as
held-for-trading.


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


Loans and receivables


Loans  and  receivables  are  non-derivative  financial  assets  with  fixed  or
determinable payments that are not quoted in an active market


Other financial liabilities


This category includes all financial liabilities, other than those classified as
at  fair  value  through  profit  or  loss.  The Group includes in this category
amounts relating to other short-term payables.


 i.      Recognition


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


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


 ii.      Derecognition


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


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

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

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


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


The Group derecognises a financial liability when the obligation under the
liability is discharged, cancelled or expires.


 iii.      Initial measurement


Financial assets and financial 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 as at fair
value through profit or loss. Embedded derivatives separated from the host are
carried at fair value with changes in fair value recognised in profit or loss.


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


 iv.      Subsequent measurement


After initial measurement, the Group measures financial instruments which are
classified as at fair value through profit or loss at fair value. Subsequent
changes in the fair value of those financial instruments are recorded in 'Net
gain or loss on financial assets and liabilities at fair value through profit or
loss'. Interest earned and dividend revenue elements of such instruments are
recorded separately in 'Interest revenue' and 'Dividend revenue', respectively.


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


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


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


Determination of fair value


Fair value is the amount for which an asset could be exchanged, or a liability
settled, between knowledgeable, willing parties in an arm's length transaction.


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


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.


Impairment of financial assets


The  Group assesses at each reporting date whether a financial asset or group of
financial  assets classified as  loans and receivables  is impaired. If there is
objective  evidence that an impairment loss has been incurred, the amount of the
loss  is measured as the difference between  the asset's carrying amount and the
present  value of estimated future cash  flows (excluding future expected credit
losses  that have not  yet been incurred)  discounted using the asset's original
effective interest rate. The carrying amount of the asset is reduced through the
use  of an allowance account and the amount  of the loss is recognised in profit
or loss as 'Credit loss expense'.


Impaired debts together with the associated allowance are written off when there
is no realistic prospect of future recovery and all collateral has been realised
or  has been transferred to the Group. If, in a subsequent period, the amount of
the  estimated  impairment  loss  increases  or  decreases  because  of an event
occurring  after  the  impairment  was  recognised,  the  previously  recognised
impairment loss is increased or reduced by adjusting the allowance account. If a
previous  write-off is later recovered, the  recovery is credited to the 'Credit
loss expense'.


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


Interest revenue and expense


Interest revenue and expense are recognised in the Statement of Comprehensive
Income for all interest-bearing financial instruments using the effective
interest method.


Dividend revenue and expense


Dividend revenue is recognised when the Group's right to receive the payment is
established. Dividend revenue is presented gross of any non-recoverable
withholding taxes, which are disclosed separately in the Statement of
comprehensive Income.


Other payables


Other  payables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.


Provision


A  provision is  recognised when  and only  when there  is a  present obligation
(legal  or constructive) as a result of a past event, and it is probable that an
outflow  embodying economic benefits will be  required to settle that obligation
and  a reliable estimate can be made of the amount of the obligation. Provisions
are reviewed at each balance sheet date and adjusted to reflect the current best
estimate.


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.


Related parties


For  the purposes  of these  financial statements,  parties are considered to be
related  to  the  Group  if  they  have  the ability, directly or indirectly, to
control  the Group  or exercise  significant influence  over the Group in making
financial  and operating decisions, or vice versa, or where the Group is subject
to  common  control  or  common  significant  influence.  Related parties may be
individuals or other entities.


Dividend distribution


Dividend  distributions  are  at  the  discretion  of  the  Company.  A dividend
distribution  to the Company's shareholders is accounted for as a deduction from
retained  earnings.  A  proposed  dividend  is  recognised as a liability in the
period in which it is approved by the annual general meeting of shareholders.



3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS


The  preparation  of  the  financial  statements  requires  management  to  make
judgements,  estimates  and  assumptions  that  affect  the  reported amounts of
revenues,  expenses,  assets  and  liabilities  at  the reporting date. However,
uncertainty  about these assumptions and estimate  could result in outcomes that
require  a material adjustment to the carrying  amount of the asset or liability
affected in future periods.


Critical accounting judgements in applying the Group's accounting policies


In the process of applying the Group's accounting policies, which are described
in Note 2, the directors have made the following judgements that have the most
effect on the amounts recognised in the financial statements:


(i) Determination of functional currency


The  determination of  the functional  currency of  the Group  is critical since
recording of transactions and exchange differences arising thereon are dependent
on  the functional currency selected.  The primary objective of  the Group is to
generate  returns in USD, its capital  raising currency. The Group's performance
is  evaluated  in  USD,  the  directors  have  considered those factors and have
determined that the functional currency of the Group is USD.


(ii) Fair value of other financial instruments


When  the fair value  of financial assets  and financial liabilities recorded in
the  Balance Sheet  cannot be  derived from  active markets, they are determined
using  a variety  of valuation  techniques that  include the use of mathematical
models,  discounted cash flow models and market comparables. The inputs to these
models  are taken from observable markets where  possible, but where this is not
feasible,  a degree  of judgment  is required  in establishing  fair values. The
judgments  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.


(iii) Impairment of financial assets


The Group follows the guidance of IAS 39 to determine when held-to-maturity
financial assets and receivables are impaired.

4 (a). FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS


+-------------------------++------------------------++-------------------------+
|                         ||   1 January through 30 ||1 January through 30 June|
|                         ||               June 2010||                     2009|
+-------------------------++------------------------++-------------------------+
|                         ||                     USD||                      USD|
+-------------------------++------------------------++-------------------------+
|Designated at fair value ||                        ||                         |
|through profit or loss:  ||                        ||                         |
+-------------------------++------------------------++-------------------------+
|At start of year         ||              30,792,961||               57,140,459|
+-------------------------++------------------------++-------------------------+
+-------------------------++------------------------++-------------------------+
|Additions                ||              12,835,141||                9,394,427|
+-------------------------++------------------------++-------------------------+
|Disposals                ||             (8,339,109)||              (8,712,006)|
+-------------------------++------------------------++-------------------------+
|Net gain on financial    ||                        ||                         |
|assets at fair value     ||             (2,185,635)||                1,583,606|
|through profit or loss   ||                        ||                         |
+-------------------------++------------------------++-------------------------+
|Allocation of assets to  ||                        ||                         |
|liquidation pool as of   ||                       -||             (33,785,425)|
|calculation date         ||                        ||                         |
+-------------------------++------------------------++-------------------------+
+-------------------------++------------------------++-------------------------+
|At 30 June               ||              33,103,358||               25,621,061|
+-------------------------++------------------------++-------------------------+
+-------------------------++------------------------++-------------------------+
+-------------------------++------------------------++-------------------------+
|Analysis of portfolio:   ||                        ||                         |
+-------------------------++------------------------++-------------------------+
|- Listed equity          ||              20,642,757||               15,263,880|
|securities               ||                        ||                         |
+-------------------------++------------------------++-------------------------+
|- Unlisted equity        ||                  46,469||                        -|
|securities               ||                        ||                         |
+-------------------------++------------------------++-------------------------+
|- Listed debt securities ||              11,153,567||               10,072,240|
+-------------------------++------------------------++-------------------------+
|- Unlisted debt          ||               1,260,565||                  284,941|
|securities               ||                        ||                         |
+-------------------------++------------------------++-------------------------+
+-------------------------++------------------------++-------------------------+
|                         ||              33,103,358||               25,621,061|
+-------------------------++------------------------++-------------------------+



4 (b). FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS


+------------------------++-------------------------++-------------------------+
|                        ||1 January through 30 June||1 January through 30 June|
|                        ||                     2010||                     2009|
+------------------------++-------------------------++-------------------------+
|                        ||                      USD||                      USD|
+------------------------++-------------------------++-------------------------+
+------------------------++-------------------------++-------------------------+
|Written put option      ||                  148,875||                        -|
+------------------------++-------------------------++-------------------------+
|Written call option and ||                2,991,178||                2,061,800|
|short position          ||                         ||                         |
+------------------------++-------------------------++-------------------------+
|                        ||                3,140,053||                2,061,800|
+------------------------++-------------------------++-------------------------+



5. TRADE AND OTHER RECEIVABLES


+------------------------------++--------------++--------------+
|                              || 30 June 2010 || 30 June 2009 |
+------------------------------++--------------++--------------+
|                              ||          USD ||          USD |
+------------------------------++--------------++--------------+
+------------------------------++--------------++--------------+
| Interest receivable on bonds ||      501,572 ||      648,759 |
+------------------------------++--------------++--------------+
| Dividend receivable          ||       17,988 ||      177,634 |
+------------------------------++--------------++--------------+
| Other receivables            ||      353,489 ||      271,675 |
+------------------------------++--------------++--------------+
|                              ||      873,049 ||    1,098,068 |
+------------------------------++--------------++--------------+


The receivable are neither past due nor impaired. Interest receivable on bonds
are due within six months.


6. SHARE CAPITAL

+----------------------------------------------+---------------++------------+
|                                              |          2010 ||       2010 |
+----------------------------------------------+---------------++------------+
|                                              |        Number ||        USD |
+----------------------------------------------+---------------++------------+
| Authorised share capital                     |               ||            |
+----------------------------------------------+---------------++------------+
| Ordinary shares with a par value of USD 0.01 | 1,000,000,000 || 10,000,000 |
+----------------------------------------------+---------------++------------+
+----------------------------------------------+---------------++------------+
+--------------------------+--------------++-----------+
|                          |         2009 ||      2009 |
+--------------------------+--------------++-----------+
|                          |       Number ||       USD |
+--------------------------+--------------++-----------+
+--------------------------+--------------++-----------+
| Share capital            |              ||           |
+--------------------------+--------------++-----------+
| Opening balance          |  115,510,000 || 1,155,100 |
+--------------------------+--------------++-----------+
+--------------------------+--------------++-----------+
| Exercise of tender offer | (72,879,673) || (728,797) |
+--------------------------+--------------++-----------+
+--------------------------+--------------++-----------+
| As at 30 June 2010       |   42,630,327 ||   426,303 |
+--------------------------+--------------++-----------+
+--------------------------+--------------++-----------+
|                          |         2010 ||      2010 |
+--------------------------+--------------++-----------+
|                          |       Number ||       USD |
+--------------------------+--------------++-----------+
+--------------------------+--------------++-----------+
| Opening balance          |   42,630,327 ||   426,303 |
+--------------------------+--------------++-----------+
+--------------------------+--------------++-----------+
+--------------------------+--------------++-----------+
| As at 30 June 2010       |   42,630,327 ||   426,303 |
+--------------------------+--------------++-----------+


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 to a discount to the
Net  Asset Value, the directors  will consult with the  Investment Manager as to
whether it is appropriate to instigate a repurchase of ordinary shares.



7. TRADE AND OTHER PAYABLES


+------------------+++--------------++--------------+
|                  ||| 30 June 2010 || 30 June 2009 |
+------------------+++--------------++--------------+
|                  |||          USD ||          USD |
+------------------+++--------------++--------------+
+------------------+++--------------++--------------+
| Accrued expenses |||      125,684 ||      277,429 |
+------------------+++--------------++--------------+
| Other payables   |||      216,789 ||      771,881 |
+------------------+++--------------++--------------+
|                  |||      342,473 ||    1,049,310 |
+------------------+++--------------++--------------+


Other payables are non-interest bearing and are due on demand.



8. GAIN PER SHARE


Basic  gain per share is calculated by  dividing the gain attributable to equity
holders  by the weighted average  number of ordinary shares  in issue during the
period  excluding  ordinary  shares  purchased  by  the Company (including those
repurchased in accordance with the Tender Offer) and held as treasury shares.


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


+----------------------------------------------+--------+----------++----------+
|                                              |        |      2010||      2009|
+----------------------------------------------+--------+----------++----------+
+----------------------------------------------+--------+----------++----------+
|(Loss)/ gain attributable to equity holders of|  USD   | (544,921)|| 4,649,609|
|the Company                                   |        |          ||          |
+----------------------------------------------+--------+----------++----------+
+----------------------------------------------+--------+----------++----------+
+----------------------------------------------+--------+----------++----------+
|Weighted average number of ordinary share in  |        |42,630,327||42,630,327|
|issue                                         |        |          ||          |
+----------------------------------------------+--------+----------++----------+
+----------------------------------------------+--------+----------++----------+
|Basic (loss)/ gain per share                  |US cents|    (1.28)||     10.91|
+----------------------------------------------+--------+----------++----------+


9. TAXATION


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



10. COMPARATIVE FIGURES


Comparative  analysis between  the first  six months  of 2010 and  the first six
months  of 2009 is  complicated by  the unique  activities related to the tender
pool  in  2009. Expenses  applicable  to  both  AOF  and to the tender pool were
allocated  pro-rata between the two pools  prior to the distribution of realised
investments   distributed   on   30 June  2009. In  2010, as  a  result  of  the
significantly decreased remaining tender pool investments, expenses for 2010 are
borne primarily by AOF.


11. TENDER OFFER POOL UPDATE


The Investment Manager continues to realise investments attributable to the
exited shareholders who tendered their shares in the 27 February 2009 tender
offer.  Pursuant to the criteria set out in IAS 39 for derecognition, these
assets and liabilities have been derecognized in the Group financials.


As at 30 June 2010, the NAV per share of the liquidating pool is estimated to be
approximately US$0.086.




[HUG#1447069]








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Source: Africa Opportunity Fund Ltd via Thomson Reuters ONE