REG - Africa OpportunityFd - Half-year Report
30/09/2025 09:00
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RNS Number : 3981B Africa Opportunity Fund Limited 30 September 2025
30 September
2025
Africa Opportunity Fund Limited
("AOF" or the "Company", or the "Fund")
Half Yearly Report for the Six Months ended 30 June 2025
The Board of Directors of Africa Opportunity Fund Limited is pleased to
announce its unaudited results for the 6-month period to 30 June 2025. The
full half yearly report for the period ended 30 June 2025 will be sent to
shareholders and will be available on the Company's website: www.
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Highlights:
· AOF's Ordinary share net asset value per share of US$1.215 as at
30 June 2025, was up 1% when compared against the 31 December 2024 net asset
value per share of US$1.201.
· As at 30 June 2025, AOF's investment allocation for its Ordinary
Shares was all equities.
· AOF's Ordinary Shares net asset value per share on 31 August 2025
was US$1.197.
Manager's Commentary:
Market Conditions
AOF's NAV and share price were, essentially, flat in H1 2025. As a
reference, during this period in USD the S&P rose 6%, Brazil rose 31%,
India rose 10%, and China rose 3%. In Africa, South Africa rose 24%, Egypt
rose 10%, Kenya rose 30%, and Nigeria rose 20%. Three Africa-focused
exchange traded funds ("etfs") - the Van Eck Africa Index (AFK US), Lyxor Pan
Africa ETF (LGQM GY), and the DBX MSCI Africa Top 50 (XMAF LN), respectively,
rose 29%, 27% and 30%. The Africa etfs concentrated their allocations on
African commodity producers listed on non-African exchanges and large
companies listed on the South African, Egyptian, and Moroccan stock markets.
Sub-Saharan African countries like Nigeria, Kenya, and Senegal have de minimis
representation in most Africa etfs. Simply put, share liquidity was
paramount for those
etfs. By contrast, the Fund's holdings are focused on Sub-Saharan Africa
companies, with much less weight accorded to liquidity.
Ordinary Shares Portfolio Highlights
AOF's portfolio benefited from stable to appreciating African currencies in
H1, offset by a substantial devaluation of AOF's internally-generated estimate
of the Zimbabwean currency (the "ZiG"). The Kenyan shilling was flat while
Ghana's Cedi appreciated by 40%. Gold and cocoa export receipts in H1,
year-on-year, rose by, 80% and 184%, respectively, lifted the Cedi's value and
improved materially Ghana's terms of trade. As Ghana's inflation rate fell 42%
from 23.5% in January 2025 to 13.7% in June 2025, its central bank's real
monetary policy rate soared from 3.5% in January to 14.3% in June, one of the
world's highest rates. It was lowered by 300 basis points to a still
remarkable 11.3% real monetary policy rate at the end of July. It is
anticipated that Ghana's real monetary policy rate will be lowered
substantially in H2 2025 as the Cedi continues to benefit from exogenous
windfalls. Ghana's balance of trade surplus, as a % of its GDP at the end of
June, rose to 6.4%, the highest H1 ratio since 2019.
The Ghana Stock Exchange Composite Index enjoyed, respectively, a H1 total
return of 31% in Cedis and 84% in Dollars. Enterprise Group's share price,
in H1, was up 44% in Cedis and 104% in Dollars. As of June 30, Enterprise
commanded a market capitalisation of $47 million versus 2024 attributable
shareholders' equity of $78 million and traded on a historical P/E ratio of
2.8x, with a return on equity of 22%. Its H1 2025 Cedi-denominated profits
attributable to shareholders, though, were down 38% as against H1 2024 profits
because, among other factors, the Cedi's appreciation inflicted substantial
translation losses on the Cedi values of Enterprise's Dollar deposits and its
property portfolio. Those diminished profits were more than offset by
Enterprise's H1 2024 "float" (premiums received now to pay future claims) of
1.33 billion Cedis rising by 57% to a H1 2025 float of 2 billion Cedis ($87
million vs. $200 million in H1 2025). Furthermore, Enterprise's June 30,
2025 attributable shareholders equity rose to $120 million. It continues to
trade at a low valuation for a debt-free leading insurance group in Ghana.
Enterprise continues to control the pension administrator, property and
casualty and life assurance companies that have the largest market shares in
Ghana. They are also well-capitalised: unencumbered equity capital in 2024
equal to 22% of total assets for Enterprise Life, 38% for Enterprise
Insurance, and 75% for Enterprise Trustees. As inflation and interest rates
fall in Ghana, Enterprise PLC should be able to improve its profitability,
increase its dividend, and be rewarded with a much higher valuation.
Enterprises' shareholders, at its current valuation, pay very little for the
benefits of a recovering Ghana.
The Fund invested 5.7% of its February net asset value in shares of
AngloPlatinum (now "Valterra") and Anglogold Ashanti ("Anglogold"). 60% of
that investment was allocated to Valterra in two tranches and 40% to
Anglogold. The H1 total returns generated by Valterra and Anglogold for the
Fund were, respectively, 14% and 48%. Valterra is a vertically integrated
platinum group metals ("PGM") producer, with the largest PGM resource base
globally, producing all its output from South Africa and Zimbabwe. Its
market capitalization at the time of initial investment was $8.9 billion and
its enterprise value was $7.9 billion. By the end of June, Valterra's market
capitalisation and enterprise value had risen, respectively, to $11.8 billion
and $12.0 billion. Its 150 million 4E PGM 1 million-ounce mineral reserves
have an 80-year life. The PGM industry has suffered from volatile current
demand as well as anticipated collapse of future demand for the internal
combustion engine ("ICE") powered vehicles. The Fund's initial Valterra
investment occurred when the 3E PGM 2 price (around $1270) was lower than the
costs of almost 50% of all PGM production, let alone at a level that permitted
the PGM producers to earn their historical return on capital employed.
Valterra, fortunately, was one of the profitable PGM producers even at those
inadequate price levels subjecting this industry to weak cash margins. There
has been some reconsideration of the forecast diminution in the future size of
the global ICE powered vehicle fleet in the wake of slowing sales of electric
vehicles ("EV") and repealed tax incentives granted to encourage the purchase
of EVs, which, with the ongoing PGM supply deficit, has spurred a recovery of
PGM prices. Most of Valterra's production comes from low-cost, long-life
open-pit and shallow underground deposits that have been perennial profit
generators during the current industry downturn. Valterra's profits and
market captialisation should benefit from the rising tide in PGM prices.
Anglogold owns 11 mines on three continents - Africa, Australia, and South
America - plus some exploration assets in North America. Its market
capitalisation, at the time of investment, was $15.9 billion and its
enterprise value was $18.4 billion. By the end of June, Anglogold's market
capitalisation and enterprise value had risen, respectively, to $23.0 billion
and $25.2 billion. Anglogold's 31 million gold ounce mineral reserves have an
11-year life. It has benefited handsomely from the combination of record gold
prices, rising production, subdued cost increases, and accretive
acquisitions. Its trailing 12-month net profits for the period ended June 30
soared 83% from $1.0 billion in 2024 net profits to $1.8 billion on a 12%
increase of sold gold from 2.6 million ounces in 2024 to 2.9 million ounces
between June 2024 and June 2025. Consequently, it retired $1 billion of debt
in 12 months from operating cash inflows to lower its net debt to $92 million
by June 30, and should be a net cash company by the end of this year. It is
noteworthy that Anglogold has also steadily expanded the size of its gold
resources in the new "Beatty" gold district in southern Nevada, thus gaining
exposure to the second most attractive mining jurisdiction out of eighty-two
surveyed in the 2024 Fraser Institute's 2024 Survey of Mining Companies.
Although the high gold price and the strong rally in Anglogold's share price
preceding our investment decision were sources of anxiety, its improving
operational and cost profile, the growing interest of central banks in
purchasing gold for the non-Dollar monetary assets share of their foreign
exchange reserves, its rising dividend yield and relative undervaluation when
compared against other large gold producers provide some support to
Anglogold's current valuation.
Zimbabwe's currency enjoyed a placid H1 with very little devaluation or
depreciation in the official or unofficial forex markets. However, the
inflation differentials between the United States and Zimbabwe were larger
than implied by the stable ZiG and an unusual shortage of the ZiG.
Consequently, AOF's internal estimate of the ZiG's external value depreciated
by 38% in H1. The share price of Mashonaland Holdings ("Mash") fell 25% in
ZiG while that of First Mutual Properties ("FMP") appreciated 14% for a
combined decline in value of -14% in ZiG, -47% in Dollars, and a $0.31/share
decline in AOF's nav per share. At the end of H1, Mash's carrying value by AOF
implied a market capitalisation of $37 million versus $93 million
capitalisation, at the official ZiG rate, and $84 million of shareholders'
equity at the end of 2024. These large differences in valuation hint at the
quantum of value to be monetised in AOF's Zimbabwe property portfolio.
The Nairobi Stock Exchange Allshare Index enjoyed a H1 total return, in both
Kenyan shillings and Dollars, of 30%. Kenya Power's shares enjoyed an
excellent H1 performance, with a total return of 143%, as it paid its first
interim dividend in nine years in April. Its market capitalization rose from
$72 million at 2024 year-end to $173 million while enterprise value climbed
from $760 million to $860 million. Kenya Power's revenues, EBITDA, and profit
before tax have exceeded the formal targets set forth in both its current
2023-2028 strategic plan and in a July 2023 International Monetary Fund report
on Kenya. Yet, Kenya Power remains heavily leveraged, thus creating a setting
in which its shares can re-rate materially if its regulators continue to allow
it to charge cost-reflective tariffs while earning a return that covers both
debt service and dividends to shareholders. Its customers have surpassed the
10 million mark and it reached a record peak electricity demand of 2362
megawatts. Reserve margin, on the other hand, collapsed from the prudent
international norm of 15% to less than 4%, with the inevitable attendant
increase in blackouts. It reported, for its June-December 2024 period, a 5%
increase in purchased electricity units, an 8% rise in revenues to $833
million (vs. 762 million in H1 2023/4), a 24% climb in operating profit to
$121 million (vs. $98 million in H1 2023/24), and a 21x jump to $77 million of
net profit (vs. net profit of $3.6 million in H1 2023/4). A negative note
was that free cashflow (before debt amortisation) declined sharply by 59% to
$20 million (vs. $45 million in H1 2023/4). Kenya Power remains vulnerable
to a steep depreciation of the Kenyan shilling that would raise the Kenyan
shilling value of its Dollar and Euro denominated loans and power purchase
agreements. It also remains behind schedule in reducing that vulnerability
through a transfer of those loans to its sister company - Kenya Transmission
Company("Ketraco") - in consideration for the sale of its transmission lines
to Ketraco. Despite its many challenges, we remain cautiously optimistic that
Kenya Power can continue on its current path of recovery.
Annual general meeting of the Fund's shareholders
The Fund held an annual general meeting in June 2025 at which all resolutions
were passed.
Strategy
The investing objective of the Fund is to earn superior returns by investing
in businesses that it believes can flourish in
Africa and, in doing so, aiding capital formation and the mobilisation of
savings with the intention of growing wealth and
productivity in Africa's economies.
On Behalf of the Investment Manager, Africa Opportunity Partners LLC.
Responsibility Statements:
The Board of Directors confirm that, to the best of its 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
29 September 2025
AFRICA OPPORTUNITY FUND LIMITED
UNAUDITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 JANUARY 2025 TO 30 JUNE 2025
For the period For the period
ended 30 June ended 30 June
Notes 2025 2024
USD USD
Income
Net gains on investment in subsidiaries at fair value
through profit or loss 6(a) 445,202 -
445,202 -
Expenses
Net losses on investment in subsidiaries at fair value
through profit or loss 6(a) - 356,762
Management fees 173,562 4,167
Other operating expenses 24,930 57,370
Directors' fees 35,000 35,000
Audit and professional fees 54,900 67,200
288,392 520,499
Income/(Loss) for the period attributable to equity holders* 156,810 (520,499)
* There is no other comprehensive income for the period.
AFRICA OPPORTUNITY FUND LIMITED
UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE
2025
Notes 30 June 30 June 2024
2025
USD USD
ASSETS
Cash and cash equivalents 8 9,595 55,804
Prepayments 7 9,986 1,341
Investment in subsidiaries at fair value through profit or loss* 6(a) 13,982,104 9,641,965
Amounts due from related party 3,132 -
14,004,817 9,699,110
Total assets
EQUITY AND LIABILITIES
LIABILITIES
Trade and other payables 10 68,825 131,562
Amounts due to related party - 210,000
68,825 341,562
Total liabilities
Net assets attributable to shareholders 13,935,992 9,357,548
Ordinary share capital 114,689 114,689
Share premium 5,810,553 5,810,553
Retained earnings 8,010,750 3,432,306
13,935,992 9,357,548
Total equity
Net assets value per share:
- Ordinary shares 1.215 0.816
*The investment in subsidiaries at fair value through profit or loss include
the investment in the Master Fund -
Africa Opportunity Fund L.P.
AFRICA OPPORTUNITY FUND LIMITED
UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD FROM 1 JANUARY 2025 TO 30 JUNE 2025
Share Share Retained
Capital Premium Earnings Total
USD USD USD USD
At 1 January 2025 114,689 5,810,553 7,853,940 13,779,182
OPERATIONS:
Total comprehensive income for the period - - 156,810 156,810
114,689 5,810,553 8,010,750 13,935,992
At 30 June 2025
AFRICA OPPORTUNITY FUND LIMITED
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM 1 JANUARY 2025 TO 30 JUNE
2025
For the period ended For the period ended
30 June 2025 30 June 2024
USD USD
Operating activities
Income/(Loss) for the period 156,810 (520,499)
Adjustment for non-cash items:
Net (gains)/losses on investment in subsidiaries at
fair value through profit or loss (445,202) 356,762
Cash used in operating activities (288,392) (163,737)
Net changes in operating assets and liabilities
Reduction in investments in subsidiaries at fair value
through profit or loss 150,000 -
Increase in due from other related party (3,132) -
Increase in due to other related party - 210,000
(Increase)/Decrease in other receivables (479) 9,697
Decrease in trade and other payables (53,758) (29,123)
Net cash generated from operating activities 92,631 190,574
Net (decrease)/increase in cash and cash equivalents (195,761) 26,837
Cash and cash equivalents at 1 January 205,356 28,967
Cash and cash equivalents at 30 June 9,595 55,804
AFRICA OPPORTUNITY FUND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2025 TO 30 JUNE
2025
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 is exempted from
registering with CIMA under the Private Funds Act of the Cayman Islands given
that it is listed on the Specialist Funds Segment of the London Stock Exchange
which is approved by CIMA.
The Company had a limited life, and was not deemed a going concern for the
2024 period through 14 July 2024. Shareholders ratified the adoption of the
New Investment Policy at a 15 July 2024 EGM, as the Directors and shareholders
considered it to be in the best interests of the Company and its shareholders
to terminate the liquidation strategy previously adopted effective 1 July
2019. The shareholders also ratified the removal of the continuation vote
policy at the EGM. This ratification, and the transition from a liquidation
strategy to a continuing investment policy, dictated that the Company be
deemed to have an indefinite life and be considered a going concern. See
Note 4 for additional details regarding the going concern status.
The Company's investment activities are managed by Africa Opportunity Partners
LLC, a limited liability company incorporated in the Delaware, United States
and acting as the investment manager pursuant to an Amended and Restated
Investment Management Agreement dated 21 June 2024.
The Company aims to earn superior returns by investing in businesses that it
believes can flourish in Africa and, in doing so, aiding capital formation and
the mobilisation of savings with the intention of growing wealth and
productivity in Africa's economies. 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.
To ensure that investments to be made by the Company and the returns generated
on the realisation of investments are both effected in the most tax efficient
manner, the Company has established Africa Opportunity Fund L.P. ("the Master
Fund") as an exempted limited partnership in the Cayman Islands. All
investments made by the Company are made through the limited partnership. The
limited partners of the limited partnership are the Company and AOF CarryCo
Limited. The general partner of the limited partnership is Africa Opportunity
Fund (GP) Limited. Africa Opportunity Fund Limited includes 100% of Africa
Opportunity Fund (GP) Limited.
The financial statements for the Company for the half year ended 30 June 2025
were authorised for issue in accordance with a resolution of the Board of
Directors on 29 September 2025.
Presentation currency
The financial statements are presented in United States dollars ("USD"). All
figures are presented to the nearest dollar.
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES
The material accounting policies applied in the preparation of these financial
statements are set out below. These policies have been consistently applied
from the prior year to the current year for items which are considered
material in relation to the financial statements.
Statement of compliance
The financial statements are prepared in accordance with IFRS Accounting
Standards as issued by the International Accounting Standards Board (IASB).
Basis of preparation
The Company satisfied the criteria of an investment entity under IFRS 10:
Consolidated Financial Statements. As such, its interest in the subsidiaries
has been classified as financial assets at fair value through profit or loss,
and measured at fair value. This consolidation exemption has been applied and
more details of this assessment are provided in Note 4 "critical accounting
judgements, estimates and assumptions." The financial statements are prepared
in accordance with International Financial Reporting Standards ("IFRS") as
issued by the International Accounting Standards Board (IASB). The financial
statements have been prepared under the historical cost convention except for
financial assets and financial liabilities measured at fair value through
profit or loss.
Although these estimates are based on management's knowledge of current events
and actions, actual results ultimately may differ from those estimates. 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 judgment 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 material to the
financial statements are disclosed in Note 4.
The Company presents its statement of financial position in order of
liquidity.
The Company's financial statements include disclosure notes on the Master
Fund, Africa Opportunity Fund L.P. given that the net asset value of the
Master Fund is a significant component of the Investment in Subsidiaries of
the Company. These additional disclosures are made in order to provide the
users of the financial statements with an overview of the Master Fund
performance.
Please refer to Note 1 and Note 4 for additional details regarding the going
concern status of the Company.
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 the Company operates. The Company determines its own functional currency
and items included in the financial statements of each entity are measured
using that functional currency. The functional currency of the Company is USD.
The Company chooses USD as the presentation currency.
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded at the functional
currency rate prevailing at the date of transaction. Monetary assets and
liabilities denominated in foreign currencies are retranslated at the
functional currency spot rate of the exchange ruling at the reporting date.
All differences are taken to profit or loss. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated
using the exchange rates as at the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value is determined.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
Classification
The Company classifies its financial assets and liabilities into the following
categories:
(i) Financial assets and liabilities at fair value through profit or loss
For the Company, financial assets classified at fair value through profit or
loss upon initial recognition include investment in subsidiaries.
Investment in subsidiaries
In accordance with the exception under IFRS 10 Consolidated Financial
Statements, the Company does not consolidate subsidiaries in the financial
statements. Investments in subsidiaries are accounted for as financial
instruments at fair value through profit or loss in accordance with IRFS 9 -
Financial Instruments.
Management concluded that the Company meets the definition of an investment
entity as it invests solely for returns from capital appreciations, investment
income or both, and measures and evaluates the performance of its investments
on a fair value basis. Accordingly, consolidated financial statements have not
been prepared.
(ii) Financial assets at amortised cost
The Company measures financial assets at amortised cost if both of the
following conditions are met:
· The financial asset is held within a business model with the objective to
hold financial assets in order to collect contractual cash flows.
· The contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the
effective interest (EIR) method and are subject to impairment. Gains and
losses are recognised in profit or loss when the asset is derecognised,
modified or impaired. The Company's financial assets at amortised cost are
comprised of 'cash and cash equivalents' in the statement of financial
position.
(iii) Other financial liabilities
This category includes all financial liabilities, other than those classified
as fair value through profit or loss. The Company includes in this category
amounts relating to Trade and other payables.
(a) Initial 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
marketplace are recognised directly on the trade date, i.e., the date that the
Master Fund commits to purchase or sell the asset.
(b) 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.
(c) 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 investment in
subsidiaries at fair value through profit or loss'.
Financial assets at amortised costs are subsequently measured using the
effective interest method and are subject to impairment. Gains and losses are
recognised in profit or loss when the asset is derecognised, modified or
impaired.
Financial liabilities, other than those classified as at fair value through
profit or loss, are measured at amortised cost using the effective interest
method. Gains and losses are recognised in profit or loss when the liabilities
are derecognised, as well as through the amortisation process.
The effective interest method is a method of calculating the amortised cost of
a financial asset or a financial liability and of allocating the interest
income or interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash payments or
receipts through the expected life of the financial instrument. 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
The Company derecognises a financial liability when the obligation under the
liability is discharged, cancelled or expires.
Impairment of financial assets
The Company recognises an allowance for expected credit
losses (ECLs) for all financial assets measured at amortised cost. When
measuring ECL, the Company uses reasonable and supportable forward-looking
information, which is based on assumptions for the future movement of
different economic drivers and how these drivers will affect each other. Loss
given default is an estimate of the loss arising on default. It is based on
the difference between the contractual cash flows due and those that the
entity would expect to receive, taking into account cash flows from credit
enhancements. The Company considers a financial asset in default when
contractual payments are 90 days past due.
However, in certain cases, the Company may also
consider a financial asset to be in default when internal or external
information indicates that the Company is unlikely to receive the outstanding
contractual amounts in full before taking into account any credit enhancements
held by the Company. A financial asset is written off when there is no
reasonable expectation of recovering the contractual cash flows.
At the reporting date, there was no receivable from
related party. As a result, no ECL has been recognised.
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.
Determination of fair value
The Company, at the feeder level, measures its investments in subsidiaries at
net asset value (NAV) at each reporting date. Please refer to Note 6 for
additional details.
For investments at master fund level, 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 at the master level that are not traded in
an active market, the fair value is determined by using appropriate valuation
techniques. Valuation techniques include: using recent arm's length market
transactions; reference to the current market value of another instrument that
is substantially the same; discounted cash flow analysis and option pricing
models making as much use of available and supportable market data as
possible. An analysis of fair values of financial instruments and further
details as to how they are measured is provided in Note 6.
The Company uses the following hierarchy for determining and disclosing the
fair value of the financial instruments by valuation technique:
· Level 1: quoted (unadjusted) market prices in
active markets for identical assets and liabilities.
· Level 2: valuation techniques for which the lowest
level input that is significant to the fair value measurement is directly or
indirectly observable.
· Level 3: valuation techniques for which the lowest
level input that is significant to the fair value measurement is unobservable.
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 held for
trading or 'at fair value through profit or loss' and excludes expenses.
Unrealised gains and losses comprise changes in the fair value of financial
instruments for the year and from reversal of prior year's unrealised gains
and losses for financial instruments which were realised in the reporting
period.
Classification of financial instruments, liabilities and equity.
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 satisfy the above conditions and thus meet the requirements to be
classified as equity. Movement in fair value is shown in the Statement of
Profit or Loss and Other Comprehensive Income as an 'income/(loss) for the
period attributable to equity holders'.
Dividend income
Dividend revenue is recognised when the Company's 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 2025. The
Company has not early adopted any other standard, interpretation or amendment
that has been issued but is not yet effective.
The accounting policies adopted are consistent with those of the previous
financial year except for the following new policies and amendments to IFRS as
from 1 January 2025:
Effective for
accounting period
Amendments to IAS 21: Lack of Exchangeability
1
January 2025
Although this new standard and amendment applied for the first time in 2025,
it did not have a material impact on the financial statements of the Company.
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
Amendments to IFRS 9 and IFRS 7: Classification and Measurement of Financial
Instruments 1 January 2026
Amendments to IFRS 9 and IFRS 7: Disclosures - Contracts Referencing
Nature-dependent Electricity 1 January 2026
Amendments to IFRS 18: Presentation and Disclosure in Financial
Statements
1 January 2027
Amendments to IFRS 19: Subsidiaries without Public Accountability:
Disclosures
1 January 2027
The Company does not expect that the adoption of these standards will have any
material impact on the financial statements. No other standards and
interpretations that have been issued but not yet effective, that are not
included above, are expected to have any material impact on the financial
statements.
4. CRITICAL 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 had a limited life, and was not deemed a going concern, for the
2024 period through 14 July 2024. At the Extraordinary General Meeting ("EGM")
of the Company held on 15 July 2024, the shareholders voted in favor of a New
Investment Policy which ended the liquidation strategy and the process of
periodic shareholder continuation votes. The shareholders also ratified the
removal of the continuation vote policy at the EGM. This ratification, and
the transition from a liquidation strategy to a continuing investment policy,
dictated that the Company be deemed to have an indefinite life and be
considered a going concern.
Below is a brief synopsis of the investment strategy as approved with the
adoption of the New Investment Policy and consistent with the Company's
Circular dated 24 June 2024:
The Investment Manager, relying on the extensive experience of the management
team, selects a limited number of investment opportunities. In selecting those
investment opportunities, the Investment Manager will adhere to an analytical
process, elements of which include: classifying cach investment opportunity in
the appropriate categories of an asset-based equity opportunity, an
earnings-based equity opportunity, distressed debt, corporate debt, African
sovereign debt, arbitrage, or special situations.
The Company will screen potential investee companies according to its value
investing principles. It will seek to invest in investee companies valued at
substantial discounts to their intrinsic value. In terms of industries, the
Company's search will include companies with a record of profitable exports
from Africa, catalysts for productivity growth in Africa, companies
participating in the growth of long-term real savings, companies managing the
growth, and operations, of African infrastructure and networks, and companies
able to lower profitably the real prices of goods and services consumed by
African consumers.
The assessment of equity investment opportunities involves:
· in the case of an asset-based equity opportunity, determining
whether the equity securities of the company or entity under consideration
commands a valuation which is materially lower than the Investment Manager's
estimate of that company's or entity's intrinsic value. The determination of a
company's or entity's intrinsic value is based on a variety of standards such
as comparing the book value of the assets of the company or entity against the
price the Investment Manager believes would be paid for a similar asset in a
private transaction, or the valuations of listed peers of that company or
entity;
· in the case of an earnings-based equity opportunity, determining
whether the equity securities of the company or entity under consideration
possesses both a high real return on assets and an earnings yield higher than
the local currency denominated government debt of the country in which the
assets of that company are located;
· comparing the valuation of the company or entity in question
against valuations of its listed and private peers (where possible) in
different parts of Africa, non-African emerging markets and developed markets;
· understanding the industry in which the company or entity under
consideration operates, the prospects of that industry and the prospects of
competitors of the company or entity in question. This aspect will frequently
require discussions with industry participants;
· comparing cach security issued by the relevant company or entity
against its other classes of issued securities to determine which security
offers the best risk-reward ratio to the Group; and
· estimating the product of the probability of loss and the quantum
of loss of an investment opportunity to set off against the product of the
probability of gain and the quantum of gain of that investment to determine
the risk-adjusted potential return on that investment opportunity. As a
general proposition, the higher the anticipated probability of loss of an
investment, the smaller the likely investment.
Provided the investment opportunity falls within the investment policy of the
Group, the Investment Manager will have, on behalf of the Group, the
discretion to make and dispose of investments. However, in the event that an
investment will constitute more than 20% of Net Asset Value at the time of
investment the prior approval of the Board will be required. Before any
investment is undertaken by the Group, all appropriate due diligence will be
undertaken, and this will include checking the United States's sanctions list.
Special consideration will also be given to money laundering and terrorist
financing risks and any and all politically exposed persons who may be a part
of, or have close links with, any target company.
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.
The Board considers that the Company continues to meet the definition of an
investment entity as it invests solely for returns from capital appreciations,
investment income or both, and measures and evaluates the performance of its
investments in subsidiaries on a fair value basis. In addition, the Company
has more than one investors and major investors are not related parties of the
Company. Accordingly, consolidated financial statements have not been
prepared. IFRS 10 Consolidated Financial Statements provides "investment
entities' an exemption from the consolidation of particular subsidiaries and
instead require that an investment entity measures the investment in each
eligible subsidiary at fair value through profit or loss in accordance with
IFRS 9 Financial Instruments.
Assumptions and Estimates
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are discussed below. The Company based its
assumptions and estimates on parameters available when the financial
statements were prepared. However, existing circumstances and assumptions
about future developments may change due to market changes or circumstances
arising beyond the control of the Company. Such changes are reflected in the
assumptions when they occur. When the fair value of financial assets and
financial liabilities recorded in the statement of financial position cannot
be derived from active markets, their fair value is determined using a variety
of valuation techniques that include the use of mathematical models.
Fair value of financial instruments
The Company's investment manager considers the valuation techniques and inputs
used in valuing the subsidiaries 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.
IFRS 13 requires disclosures relating to fair value measurements using a
three-level fair value hierarchy. The level within which the fair value
measurement is categorised in its entirety is determined on the basis of the
lowest level input that is significant to the fair value measurement in its
entirety as provided in Note 6. Assessing the significance of a particular
input requires judgement, considering factors specific to the asset or
liability. To assess the significance of a particular input to the entire
measurement, the Company performs sensitivity analysis or stress testing
techniques.
5a. AGREEMENTS
Investment Management Agreement
Effective 15 July 2024, the Company and the Investment Manager have, upon the
approval of the Reorganisation Resolution at the EGM in July 2024, entered
into the Amended and Restated Investment Management Agreement which amends the
fees payable to the Investment Manager as follows:
Management fees
A fixed management fee equal to USD$350,000 per annum. The management fee
charged during 2024 was for the period beginning 15 July 2024. No fee was
charged for the period prior to the ratification of the amended agreement.
The Investment Manager's entitlement to future performance fees (through
CarryCo) has been cancelled.
Realisation fees
Effective 15 July 2024, with the adoption of the New Investment Policy at the
July 2024 EGM, the realisation fee was terminated.
The revisions to the arrangements with the Investment Manager, constitute a
related party transaction under the Company's related party policy, and in
accordance with that policy, the Company was required to obtain: (i) the
approval of a majority of the Directors who are independent of the Investment
Manager; and (ii) a fairness opinion or third-party valuation in respect of
such related party transaction from an appropriately qualified independent
adviser.
The realisation fee for the financial period under review amounts to USD Nil
(2024: USD 4,167) of which USD Nil (2024: USD 4,167) relates to accrued
realisation fees; management and performance fees for the financial period
under review were USD 173,562 (2024: nil).
Administrative Agreement
NAVFund Services is the Administrator for the Company, effective as at 1
January 2025. Administrative fees are expensed at the Master Fund level and
have been included in the NAV of the subsidiary.
Custodian Agreement
A Custodian Agreement has been entered into by the Master Fund and Standard
Chartered Bank (Mauritius) Ltd ("SCB"), whereby SCB would provide custodian
services to the Master Fund and would be entitled to a custody fee of between
18 and 25 basis points per annum of the value of the assets held by the
custodian and a tariff of between 10 and 45 basis points per annum of the
value of assets held by the custodian. The custodian fees are expensed at the
Master Fund level and have been included in the NAV of the subsidiary.
Following the exit of SCB from the Zimbabwe market in 2024, Custodial
Agreements were entered into by the Master Fund and FBC Bank Limited ("FBC"),
whereby FBC would provide custodian services and hold direct custody of
Zimbabwe securities and would be entitled to a custody fee of 10 basis points
per annum on the market value of the assets held by the custodian. The
custodian fees are expensed at the Master Fund level and have been included in
the NAV of the subsidiary.
5b. SUMMARY OF MATERIAL ACCOUNTING POLICIES AT THE MASTER FUND
LEVEL
Africa Opportunity Fund LP (the "Master Fund") is incorporated in the Cayman
Islands and is not subject to regulatory review. Management has voluntarily
disclosed all the policies and notes to the accounts of the Master Fund to
provide shareholders of the Company with a better insight.
The primary accounting policies are similar as in Note 2. Those policies which
only relate to the Master Fund's financial statements are set out below. These
policies have been consistently applied from the prior year to the current
year for items which are considered material in relation to the financial
statements.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
(a) Classification
The Master Fund classifies its financial assets and liabilities in accordance
with IFRS 9 into the following categories:
(i) Financial assets and liabilities at fair value through profit or loss
The category of the financial assets and liabilities at fair value through the
profit or loss is subdivided into:
Financial assets and liabilities held for trading
Financial assets are classified as held for trading if they are acquired for
the purpose of selling and repurchasing in the near term. This category
includes equity securities. These assets are acquired principally for the
purpose of generating a profit from short term fluctuation in price.
Financial assets at fair value through profit or loss upon initial recognition
These include equity securities that are not held for trading. 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.
Derivatives - Options
Derivatives are classified as held for trading (and hence measured at fair
value through profit or loss), unless they are designated as effective hedging
instruments (however the Company does not apply any hedge accounting). The
Master Fund's derivatives relate to option contracts.
Options are contractual agreements that convey the right, but not the
obligation, for the purchaser either to buy or sell a specific amount of a
financial instrument at a fixed price, either at a fixed future date or at any
time within a specified period.
The Master Fund purchases and sells put and call options through regulated
exchanges and OTC markets. Options purchased by the Master Fund provide the
Master Fund with the opportunity to purchase (call options) or sell (put
options) the underlying asset at an agreed-upon value either on or before the
expiration of the option. The Master Fund is exposed to credit risk on
purchased options only to the extent of their carrying amount, which is their
fair value.
Options written by the Master Fund provide the purchaser the opportunity to
purchase from or sell to the Master Fund the underlying asset at an
agreed-upon value either on or before the expiration of the option.
Options are generally settled on a net basis.
Derivatives relating to options are recorded at the level of the Master
Fund. The financial statements of the Company do not reflect the derivatives
as they form part of the net asset value (NAV) of the Master Fund which is
fair valued.
(ii) Financial assets at amortised cost
The Master Fund measures financial assets at amortised cost if both of the
following conditions are met:
· The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual cash flows.
· The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the
effective interest (EIR) method and are subject to impairment. Gains and
losses are recognised in profit or loss when the asset is derecognised,
modified or impaired. The Master Fund's financial assets at amortised cost
comprise 'trade and other receivables' and 'cash and cash equivalents' in the
statement of financial position.
(iii) Other financial liabilities
This category includes all financial liabilities, other than those classified
as fair value through profit or loss. The Master Fund includes in this
category amounts relating to trade and other payables and dividend payable.
(a) Recognition
The Master Fund 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 directly on the trade date, i.e., the date that the
Master Fund commits to purchase or sell the asset.
(b) 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.
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.
(c) Subsequent measurement
The Master Fund 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 derecognised, modified or
impaired.
Financial liabilities, other than those classified as at fair value through
profit or loss, are measured at amortised cost using the effective interest
method. Gains and losses are recognised in profit or loss when the liabilities
are derecognised, as well as through the amortisation process.
The effective interest method is a method of calculating the amortised cost of
a financial asset or a financial liability and of allocating the interest
income or interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash payments or
receipts through the expected life of the financial instrument or, when
appropriate, a shorter period to the net carrying amount of the financial
asset or financial liability. When calculating the effective interest rate,
the Master Fund 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.
(d) 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 Master Fund has transferred substantially all the risks and
rewards of the asset, or (b) the Master Fund has neither transferred nor
retained substantially all the risks and rewards of the asset, but has
transferred control of the asset. When the Master Fund 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 Master Fund's continuing involvement in the
asset.
The Master Fund derecognises a financial liability when the obligation under
the liability is discharged, cancelled or expires.
Determination of fair value
The Master Fund measures its investments in financial instruments, such as
equities, 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 Master
Fund. The fair value for financial instruments traded in active markets at
the reporting date is based on their quoted price without any deduction for
transaction costs.
For all other financial instruments not traded in an active market, the fair
value is determined by using appropriate valuation techniques. Valuation
techniques include: using recent arm's length market transactions; reference
to the current market value of another instrument that is substantially the
same; discounted cash flow analysis and option pricing models making as much
use of available and supportable market data as possible. An analysis of fair
values of financial instruments and further details as to how they are
measured is provided in Note 6.
The Master Fund uses the following hierarchy for determining and disclosing
the fair value of the financial instruments by valuation technique:
· Level 1: quoted (unadjusted) market prices in
active markets for identical assets and liabilities.
· Level 2: valuation techniques for which the lowest
level input that is significant to the fair value measurement is directly or
indirectly observable.
· Level 3: valuation techniques for which the lowest
level input that is significant to the fair value measurement is unobservable.
Impairment of financial assets
The Master Fund recognises an allowance for expected
credit losses (ECLs) for all financial assets measured at amortised cost. ECLs
are based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Master Fund
expects to receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from the sale
of collateral held or other credit enhancements that are integral to the
contractual terms.
ECLs are recognised either on a 12-month or lifetime basis. For credit
exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result
from default events that are possible within the next 12-months (a 12-month
ECL). For those credit exposures for which there has been a significant
increase in credit risk since initial recognition, a loss allowance is
required for credit losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).
The Master Fund considers a financial asset in default when contractual
payments are 90 days past due. However, in certain cases, the Master fund may
also consider a financial asset to be in default when internal or external
information indicates that the Master fund is unlikely to receive the
outstanding contractual amounts in full before taking into account any credit
enhancements held by the Master fund. A financial asset is written off when
there is no reasonable expectation of recovering the contractual cash flows.
For trade receivables, the Master Fund applies a simplified approach in
calculating ECLs. Therefore, the Master Fund 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 assessment of the Master Fund's
debt instruments which include trade and other receivables and cash and cash
equivalents were considered as de minimis. As a result, no ECL has been
recognised as any amount would have been insignificant.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount
reported in the statement of financial position if, and only if, there is a
currently legally enforceable right to offset the recognised amounts and there
is an intention to settle on a net basis, or to realise the asset and settle
the liability simultaneously.
Net gain or loss on financial assets and liabilities at fair value through
profit or loss
This item includes changes in the fair value of financial assets and
liabilities held for trading or designated upon initial recognition as 'at
fair value through profit or loss' and excludes interest and expenses. At
the Master Fund Level, the fair value gains and losses exclude interest and
dividend income.
Unrealised gains and losses comprise changes in the fair value of financial
instruments for the year and from reversal of prior year's unrealised gains
and losses for financial instruments which were realised in the reporting
period.
Realised gains and losses on disposals of financial instruments classified as
'at fair value through profit or loss' are calculated using the Average Cost
(AVCO) method. They represent the difference between an instrument's initial
carrying amount and disposal amount, or cash payments or receipts made on
derivative contracts (excluding payments or receipts on collateral margin
accounts for such instruments).
Due to and due from brokers
Amounts due to brokers are payables for securities purchased (in a regular way
transaction) that have been contracted for but not yet delivered on the
reporting date at the Master Fund level. Refer to the accounting policy for
financial liabilities, other than those classified at fair value through
profit or loss for recognition and measurement.
Amounts due from brokers include margin accounts and receivables for
securities sold (in a regular way transaction) that have been contracted for
but not yet delivered on the reporting date. Refer to accounting policy for
financial assets at amortised cost for recognition and measurement.
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
Dividend revenue is recognised when the Master Fund's right to receive the
payment is established. Dividend revenue is presented gross of any
non-recoverable withholding taxes, which are disclosed separately in profit or
loss of the Master Fund.
6. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH
PROFIT OR LOSS
6(a). Investment in subsidiaries at fair value
The Company has established Africa Opportunity Fund L.P., an exempted limited
partnership in the Cayman Islands to ensure that the investments made and
returns generated on the realisation of the investments made and returns
generated on the realisation of the investments are both effected in the most
tax efficient manner. All investments made by the Company are made through the
limited partner which acts as the master fund. The limited partners of the
limited partnership are the Company (95.7%) and AOF CarryCo Limited (4.3%).
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.
2025
USD
Investment in Africa Opportunity Fund L.P. 13,977,234
Investment in Africa Opportunity Fund (GP) Limited 4,870
Total investment in subsidiaries at fair value 13,982,104
Fair value at 01 January 13,686,902
Reduction in investment in subsidiaries* (150,000)
Net gain on investment in subsidiaries at fair value 445,202
Fair value at 30 June 2025 13,982,104
*The reduction in investment in subsidiaries relates
to capital withdrawn from the Master Fund by the Company
6(b). Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the
fair value of the financial instruments by valuation technique:
Level 1: quoted (unadjusted) market prices in active markets for identical
assets and liabilities.
Level 2: valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly
observable.
Level 3: valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable.
Note: The assets and liabilities of the Master Fund have been presented but do
not represent the assets and liabilities of the Company as the Master Fund has
not been consolidated.
Fair value hierarchy of the Company
30 June
2025 Level 1 Level 2 Level 3
COMPANY USD USD USD
Investment in subsidiaries 13,982,104 - 13,982,104 -
30 June
2024 Level 1 Level 2 Level 3
COMPANY USD USD USD
Investment in subsidiaries 9,641,965 - 9,641,965 -
Fair value hierarchy of the Master Fund.
The Company has investment in Africa Opportunity Fund L.P., the Master Fund,
amounting to USD 13,982,104. The underlying investments of the Master Fund
amounts to USD 14,555,227. Details on the financial assets and liabilities of
the Master Fund and fair value hierarchy are as follows:
30 June
2025 Level 1 Level 2 Level 3
USD USD USD
MASTER FUND
Financial assets at fair value
through profit or loss
Equities 14,555,227 12,429,427 2,125,800 -
14,555,227 12,429,427 2,125,800 -
30 June
2024 Level 1 Level 2 Level 3
USD USD USD
MASTER FUND
Financial assets at fair value
through profit or loss
Equities 8,438,239 6,312,357 2,125,882 -
8,438,239 6,312,357 2,125,882 -
6(c). 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 approximately 75% in quoted
funds, the Company classifies this investment in subsidiaries as Level 2.
6(d). The valuation technique of the investments at Master Fund level
are as follows:
Equity investments
These pertain to equity investments which are quoted and for which there is a
market price. As a result, they are classified within level 1 of the hierarchy
except for the valuation of instruments listed on Zimbabwe Stock Exchange
which have been classified as level 2 given that their quoted share price had
been discounted. As at 30 June 2025 they are classified as level 1 given
that no discount was applied. A description of the methodology for both
years is as follows:
Valuation of investments listed on the Zimbabwe Stock Exchange
The total carrying value of the investments held by the Master Fund amounted
to USD 14,555,227 as at 30 June 2025 (Note 6(b)), of which USD 4,060,321
represents investments listed on the Zimbabwe Stock Exchange. Based on quoted
prices on the Zimbabwe Stock Exchange, these investments would have been
valued at USD 10,077,202. However, owing to the ongoing market instability,
hyperinflationary economy and difficulty repatriating ZiG currency to USD, a
discount has been applied to the market price to arrive at the fair value of
USD 4,060,321.
In April 2024, the Governor of the Reserve Bank of Zimbabwe introduced the
Zimbabwe Gold Notes and Coins ("ZiG") as the new currency of Zimbabwe. The
intent of the recalibrated monetary policy is to address the state of price
and exchange rate instability in the economy. The structured currency
introduced is anchored by a composite basket of foreign currency and precious
metals (primarily gold) held as reserves by the Reserve Bank. The starting
exchange rate was determined by prevailing closing interbank exchange rate as
at 5 April and London PM Fix price of gold as at 4 April 2024. The intervening
exchange rate is determined by inflation differential between ZiG and USD
inflation rates and movement in price basket precious minerals held as
reserves.
Though the Company valued the Zimbabwe investments at the prevailing ZiG rate
as at 30 June 2024, by August 2024 it was apparent that the Company would need
to begin discounting the ZiG, as it had previously done with the ZWL, due to
the perceived inability to repatriate funds at, or close to, the official
rate. In fact, many investor attempts to repatriate funds were addressed by
the govt. through the issuance of T-Bills.
Similar to our ZWL discount, the Company adjusted the official exchange rate
by utilising the inflation differential with the US Dollar. The Company
continued to adjust its model to reflect a 20% surrender requirement on the
basis that the reported CPI captured only 80% of actual inflation, as it had
done with the ZWL discount. This discount factor changes every month. The
consequence of applying this discount factor is that Zimbabwe Dollar prices of
the Company's investments listed on the Zimbabwe Stock Exchange in ZiG
converted into US Dollars, as at 30 June 2025 at a discount rate of 59.7%
(there was no discount on the ZiG currency as at 30 June 2024).
The value of the Zimbabwe investments recorded in the books of the Company,
after applying the methodologies as described above, was USD 4,060,321 (2024:
USD 3,237,149).
Written put options
These are traded on an active market and have a quoted market price. They have
therefore been classified in level 1 of the hierarchy. As of 30 June 2025, the
Company had no options outstanding.
Unquoted debt and equity investments
Sand Technology Holdings ("Sand Tech") (formerly known as African Leadership
University) is a global solutions company with expertise in enterprise and
industrial artificial intelligence. The Investment Manager valued Sand Tech on
the basis of an observable arms-length transaction between existing
shareholders selling a portion of their shares and an unaffiliated third
party. The transactions were agreed via an omnibus share purchase agreement
dated 28 September 2022 with dates of the agreements evidencing the first,
second, third, and fourth tranches, respectively, 30 September 2022, 5
December 2022, 6 March 2023 and 5 June 2023 (the fourth tranche was converted
to partial purchases in June and September 2023, the overall number of shares
remaining consistent), and thus were utilised as the basis of the valuation as
at 30 June 2025. At 30 June 2025, the investment in Sand Tech has been
classified under level 2 because the value of the investment utilises the
recent transaction. The valuation of Sand Tech as at 30 June 2025 was USD
2,125,800 (30 June 2024: USD 2,125,800).
6(e). Statement of profit or loss and other comprehensive Income of the
Master Fund for the period from 1 January to 30 June 2025
The net gain on investments in subsidiaries at fair value through profit or
loss for the period from 1 January 2025 to 30 June 2025 amounted to USD
445,202, while net losses on investments in subsidiaries at fair value through
profit or loss for the period from 1 January 2024 to 30 June 2024 amounted to
USD 356,762 arising at the Master Fund and can be analysed as follows:
For the period
ended 30 June
2025
USD
Income
Dividend revenue 298,944
Interest revenue 290
Net gains on financial assets and liabilities at fair value
through profit or loss 256,442
555,676
Expenses
Custodian fees, brokerage fees, commission and administration 50,226
Professional fees 3,132
Other operating expenses 1,127
54,485
Operating profit before tax 501,191
Less withholding tax (32,319)
Total Comprehensive income for the period 468,872
Attributable to:
AOF Limited (direct interests) 445,017
AOF Limited (indirect interests through AOF (GP) Ltd) 185
445,202
AOF CarryCo Limited (NCI) 23,670
468,872
The financial assets and liabilities of the Master Fund are analysed as
follows:
(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
2025 2024
USD USD
Net gains/(losses) on fair value of financial assets at fair value 256,442 (289,473)
through profit or loss
Net gains/(losses) 256,442 (289,473)
(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
2025 2024
USD USD
Held for trading assets:
At 1 January 13,031,893 8,727,712
Disposal 1,266,892 -
Net gains/(losses) on financial assets at fair value 256,442 (289,473)
through profit or loss
At 30 June (at fair value) 14,555,227 8,438,239
Analysed as follows:
- Listed equity securities 12,429,427 6,312,439
- Unlisted equity securities 2,125,800 2,125,800
14,555,227 8,438,239
(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
2025 2024
USD USD
Realised - -
Unrealised 256,442 (289,473)
Total gains/(losses) 256,442 (289,473)
7. RECEIVABLES
30 June 2025 30 June 2024
USD USD
Prepayments 9,986 1,341
9,986 1,341
8. CASH AND CASH EQUIVALENTS
30 June 2025 30 June 2024
USD USD
Cash at bank 9,595 55,804
9(a). ORDINARY SHARE CAPITAL
30 June 2025 30 June 2025 30 June 2024 30 June 2024
Number USD Number USD
Authorised share capital
Ordinary shares with a par value of
USD 0.01 1,000,000,000 10,000,000 1,000,000,000 10,000,000
Issued share capital
Ordinary shares with a par value of
USD 0.01 11,468,907 114,689 11,468,907 114,689
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.
The Company intends to pay or report dividends in order to remain an UK
Reporting Fund, however, there is no assurance that the Company will be able
to pay dividends. In compliance with the current investment strategy,
Directors have the right to return cash through compulsory redemptions, by way
of dividend or any other distribution as permitted by the Listing Rules.
9(b). SHARE CAPITAL AND SHARE PREMIUM
Share Share Ordinary
Capital Premium Shares
USD USD Number
At 1 January 2024 114,689 5,810,553 11,468,907
Changes during the period:
Redemption of ordinary shares - - -
At 30 June 2024 114,689 5,810,553 11,468,907
At 1 January 2025 114,689 5,810,553 11,468,907
Changes during the period:
Redemption of ordinary shares - - -
At 30 June 2025 114,689 5,810,553 11,468,907
9(c). NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS
Ordinary
Shares
USD
At 1 January 2025 13,779,182
Changes during the period:
Total comprehensive income for the period 156,810
At 30 June 2025 13,935,992
Net asset value per share at 30 June 2025 1.215
Mandatory Redemption
The Directors, at their sole discretion, can effect a compulsory redemption of
the Ordinary Shares on an ongoing basis and will therefore undertake a staged
return of capital to shareholders. During the half-year ended 30 June 2025,
the Directors did not initiate or approve a partial mandatory redemption of
the Company's Ordinary Shares. The Company has 11,468,907 Ordinary Shares in
issue. Robert Knapp and Myma Belo-Osagie, Directors of the Company held
6,238,860 and 15,234 Ordinary Shares, respectively.
Ordinary and C share Merger, Issuance of Contingent Value Rights
In 2014, AOF closed a Placing of 29.2 million C shares of US$0.10 each, at a
placing price of US$1.00 per C share, raising a total of $29.2 million before
the expenses of the Issue. The placing was closed on 11 April 2014 with the
shares commencing trading on 17 April 2014. AOF's Ordinary Shares and the C
Shares from the April placing were admitted to trading on the LSE's Specialist
Fund Segment ("SFS") effective 17 April 2014.
The Company merged the C share class and the ordinary shares as contemplated
in the April 2014 issuance of the C share class, and with the consent of the
Board of Directors, on 23 August 2017. The C Class shares were converted into
ordinary shares.
The Shoprite arbitral award issued in 2016. The arbitral award resulted in AOF
not being considered legal owner of the specific Shoprite Holdings, therefore,
the Shoprite investment was written off. To effectuate this merger, Contingent
Value Rights certificates for any residual rights with respect to Shoprite
shares listed on the Lusaka Stock Exchange were issued to the ordinary
shareholders of record on 21 August 2017. Information regarding the merger was
distributed and released to the market prior to, and upon execution of, the
merger. This information and information relative to the CVRs can be found on
the Company's website.
10. TRADE AND OTHER PAYABLES
30 June 2025 30 June 2024
USD USD
Due to Africa Opportunity Fund L.P. - 210,000
Directors Fees Payable 17,500 17,500
Other Payables 51,325 114,062
68,825 341,562
Other payables are non-interest bearing and have an average term of six
months. The carrying amount of trade and other payables approximates their
fair value.
11. EARNING PER SHARE
The earnings per share (EPS) is calculated by dividing the change in net
assets attributable to shareholders by the number of ordinary shares. The
EPS for the period ended 30 June 2025 and 2024 represent both the basic and
diluted EPS.
Period from 1 Period from 1
January 2025 January 2024
to 30 June 2025 to 30 June 2024
Ordinary shares Ordinary shares
Change in net assets attributable to shareholders USD 156,810 (520,499)
Number of shares in issue 11,468,907 11,468,907
Change in net assets attributable to shareholders
per share
(based on number of shares outstanding at period end) USD 0.014 (0.045)
Weighted Average number of shares in issue 11,468,907 11,468,907
Change in net assets attributable to shareholders (based on
weighted average number shares outstanding at period end) USD 0.014 (0.045)
12. ANALYSIS OF NAV OF MASTER FUND ATTRIBUTABLE TO ORDINARY SHARES
30 June 2025 30 June 2024
ASSETS
Cash and cash equivalents 241,083 1,812,190
Trade and other receivables 235,360 28,700
Receivable from AOF Ltd - 210,000
Financial assets at fair value through profit or loss 14,555,227 8,438,239
15,031,670 10,489,129
Total assets
EQUITY AND LIABILITIES
Liabilities
Trade and other payables 428,091 445,916
428,091 445,916
Total liabilities
14,603,579 10,043,213
Net assets attributable to members' account
13. TAXATION
Under the current laws of Cayman Islands, there is no income, estate, transfer
sales or other Cayman Islands taxes payable by the Company. As a result, no
provision for income taxes has been made in the financial statements.
Dividend revenue is presented gross of any non-recoverable withholding taxes,
which are disclosed separately in the statement of comprehensive income.
Withholding taxes are not separately disclosed in statement of cash flows as
they are deducted at the source of the income.
14. SEGMENT INFORMATION
For management purposes, the Çompany is organised in one main operating
segment, which invests in equity securities, principally via the Master Fund.
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.
15. PERSONNEL
The Company did not employ any personnel during the period (2024: the same).
16. COMMITMENTS AND CONTINGENCIES
There are no commitments or contingencies at the reporting date.
17. SIGNIFICANT EVENTS
Effective 1 January 2025, NAVFund Services Inc. was appointed to act as
administrator to the Company, replacing SS&C Technologies Inc.
18. EVENTS AFTER REPORTING DATE
There were no other material events after the reporting date up to the date
that these financial statements were authorised for issue that warrant
adjustments or disclosures in the financial statements for the period ended 30
June 2025.
1 4E PGM refers to the sum of platinum, palladium, rhodium, and gold
ounces. Valterra 2025 prospectus, page 271.
2 3E PGM refers to the sum of platinum, palladium, and rhodium ounces.
Valterra 2025 prospectus, page 271.
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