NOT FOR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED
STATES, CANADA,
AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
Ashmore Global Opportunities
Limited (“AGOL”, or the “Company”)
a Guernsey incorporated and
registered limited liability closed-ended investment company with a
Premium
Listing of its US Dollar and Sterling share classes on the Official
List.
LEI 549300D6OJOCNPBJ0R33
Annual Results
For the year ended
31 December 2019
(Classified
Regulated Information, under DTR 6 Annex 1 section 1.1)
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the year ended
31 December 2019. All figures are
based on the audited financial statements for the year ended
31 December 2019.
The financial information for the year ended 31 December 2019 is derived from the financial
statements delivered to the UK Listing Authority. The Auditors
reported on those accounts, their report was unqualified and did
not contain a statement under Section 263(2) and 263(3) of The
Companies (Guernsey) Law,
2008.
The announcement is prepared on the same basis as will be set
out in the annual accounts.
The Annual Report and Audited Financial Statements will be
available on the Company website: www.agol.com
Financial Highlights
|
|
31
December 2019 |
|
31
December 2018 |
|
|
|
|
|
Total Net Assets |
|
US$14,170,771 |
|
US$30,518,440 |
|
|
|
|
|
Net Asset Value per
Share |
|
|
|
|
US$ shares |
|
US$2.89 |
|
US$5.05 |
£ shares |
|
£2.63 |
|
£4.73 |
|
|
|
|
|
Closing-Trade Share
Price* |
|
|
|
|
US$ shares |
|
US$2.54 |
|
US$4.15 |
£ shares |
|
£1.52 |
|
£3.58 |
|
|
|
|
|
Discount to Net Asset
Value* |
|
|
|
|
US$ shares |
|
(12.11)% |
|
(17.82)% |
£ shares |
|
(42.21)% |
|
(24.31)% |
* For further information, please
refer to Supplementary Information (Unaudited) – Alternative
Performance Measures (“APMs”).
Chairman’s Statement
As at 31 December 2019, the Net
Asset Value (“NAV”) of Ashmore Global Opportunities Limited (the
“Company” or “AGOL”) was US$14.2m
compared to US$30.5m as at
31 December 2018. The Company
realised investments in 2019, which allowed it to make
distributions to Shareholders of US$4.7m. The NAVs per share were US$2.89 and £2.63 as at 31
December 2019, down from US$5.05 and £4.73 respectively at the end of
2018. The share prices stood at US$2.54 and £1.52 as at 31
December 2019. On 31 March
2020 all remaining £ shares outstanding were converted to $
shares. Due to the closure of the £ share class, there will not be
any conversions going forward.
The main detractor from performance was the mark-down by the
independent valuation agent in the value of Microvast in May and
November. Further details on this and the other underlying
exposures of the Company are given in the Investment Manager’s
Report.
The US$4.7m distributions to
Shareholders during the year were primarily the proceeds of the
realisation of the investment in Kulon, and dividends from AEI. The
Investment Manager is working towards the sale of the remaining
assets, with a focus on the largest exposure of the Company, AEI,
as well as the other remaining holdings. Further details on these
are given in the Investment Manager’s Report. There may be one or
two small sales in 2020 but it is unlikely that AEI will be sold
until the 1st quarter of 2021 at the earliest.
Below is an overview of the distributions made since
February 2013 when Shareholders voted
to wind up the Company in an orderly fashion.
Quarterly
Distributions |
|
|
|
|
|
|
|
|
|
Quarter
End Date |
Distributions |
|
% of 31
December 2012 |
% of 31
December 2012 |
|
(US$) |
|
NAV |
Market
Capitalisation |
31 March 2013 |
92,500,000 |
|
19% |
28% |
30 June 2013 |
13,000,000 |
|
3% |
4% |
30 September 2013 |
26,000,000 |
|
5% |
8% |
31 December 2013 |
36,900,000 |
|
8% |
11% |
30 June 2014 |
7,250,000 |
|
2% |
2% |
30 September 2014 |
21,500,000 |
|
5% |
7% |
31 December 2014 |
40,500,000 |
|
8% |
12% |
31 March 2015 |
19,500,000 |
|
4% |
6% |
30 June 2015 |
27,250,000 |
|
6% |
8% |
31 December 2015 |
16,200,000 |
|
3% |
5% |
31 March 2016 |
2,500,000 |
|
0% |
1% |
30 September 2017 |
3,000,000 |
|
1% |
1% |
30 June 2018 |
25,500,000 |
|
5% |
8% |
31 December 2018 |
1,500,000
* |
0% |
0% |
30 June 2019 |
4,725,000 |
|
1% |
1% |
|
|
|
|
|
Total |
337,825,000 |
|
70% |
102% |
|
|
|
|
|
|
* was declared in January 2019 and
distributed to Shareholders in Q2 2019.
The Board has taken the decision to close the hedging programme
and convert all the £ shares into $ shares. Whilst the hedging was
designed to eliminate exchange rate risk between the two share
classes, it could generate cash losses to the fund if £ fell
against the $. To protect itself against that, AGOL always retained
a cash reserve. Now that there are very few assets left, there
seemed little point in maintaining the hedging programme, and that
the cash reserve could be used to cover other expenses or returned
to shareholders.
With all the uncertainties surrounding COVID-19 and the economic
outlook, the Board feels that it is prudent to reduce costs as much
as possible. As a result, the Board is reviewing the listing of
AGOL as significant costs savings could be made if AGOL were to be
delisted.
I would like to thank everyone involved with AGOL for their hard
work.
Richard
Hotchkis
24 April 2020
Investment Manager’s Report
Performance
As at 31 December 2019, the NAV of
the Company was US$14.2m, compared to
US$30.5m at the end of December 2018. During 2019, US$6.2m was distributed to Shareholders of which
US$1.5m related to realisations
completed in 2018 and the balance from realisations achieved and
dividends received in 2019. Consequently, the performance to
Shareholders was -38.03%. As at 31 December
2019, the NAVs per share of the US$ and £ classes stood at
US$2.89 and £2.63 respectively.
Portfolio Review
AEI, which remaining asset is a coal-fired power plant in
Guatemala, continues to operate
satisfactorily. Various efforts to dispose of the asset have not
yet been successful. The final appeal by the original Chinese
contractor was heard in November 2019
and in March 2020 we received a
ruling in our favour on all points. That has cleared the path for a
realisation of the asset in the medium term, subject to market
conditions.
The operating performance by Microvast worsened in 2019. First,
the macro/industry situation in China continues to deteriorate in the EV
battery sector with the further decrease of government subsidies.
Second, anticipating the above, Microvast embarked some years ago
on a strategy of foreign expansion. While this has brought
successes in places such as the UK, Germany and the
Netherlands, among others, this expansion has not been rapid
enough to offset lower profitability in China, added to which anticipated orders from
large European car and truck manufacturers have not yet
materialised. These two issues combined leave the company's balance
sheet significantly weakened, and new funding will be required. The
independent valuation agent took the view that unless new orders
materialise quickly, such new funding may be hard to obtain, and
that in turn may make the current enterprise unviable as a going
concern. In two stages in May and November, the independent
valuation agent wrote down the equity valuation to zero.
Microvast’s management continues to focus on raising additional
capital and winning further orders in Europe and China.
There was a full realisation of the Company’s investment in
Kulon in Russia, the proceeds of
which were distributed to Shareholders in Q2 2019.
Further details on the smaller holdings in the Company are given
later in this Investment Manager’s report.
Outlook
As described above, the focus remains on realising AGOL's
remaining investments in an orderly manner, and we expect to start
to make progress on this later this year. Nevertheless,
realisations are very much influenced by the attraction and
circumstances of each individual asset.
Since the year end we have seen the development of the
coronavirus covid-19 outbreak initially in China and now reaching most continents. At
present, it is not possible to assess the detailed impact of the
emerging risk, on the investments in the Company but there is
growing concern about the impact on the world economy. There has
been a significant change in the financial markets in the last few
weeks. The Board and the Investment Manager continue to watch the
efforts of governments to contain the spread of the virus and
monitor the economic impact, if any, on the investments in the
Company.
The Investment Manager, Custodian, Administrator and Secretary
are monitoring developments relating to coronavirus covid-19 and
are coordinating their operational response based on existing
business continuity plans and on guidance from global health
organisations, relevant governments, and general pandemic response
best practices.
Details on the Top 4 Underlying
Holdings (on a look through basis)
The table below shows the top 4 underlying investments as at
31 December 2019 excluding the cash
balance (cash was (0.39)% as at 31 December
2019).
Investment Name |
% of NAV |
Country |
Business Description |
|
|
|
|
|
|
|
|
AEI |
80.62% |
|
Guatemala |
Power
generation in Latin America |
|
ZIM Laboratories
Ltd |
8.51% |
|
India |
Pharmaceutical research and manufacturing |
|
GZ Industries Ltd |
6.17% |
|
Nigeria |
Aluminium
can manufacturing |
|
Numero Uno |
6.06% |
|
India |
Branded
apparel manufacturers and retailers |
|
|
|
|
|
|
|
|
|
The tables below show the country and industry allocations of
underlying investments over 1% at the end of December 2019:
Country |
% of
NAV |
|
Industry |
% of
NAV |
Guatemala |
80.62% |
|
Electrical |
80.62% |
India |
13.59% |
|
Pharmaceuticals |
8.51% |
Nigeria |
6.17% |
|
Miscellaneous
manufacturing |
6.17% |
|
|
|
Retail |
5.08% |
These tables form an integral part of the financial
statements.
Details on a Selection of the
Underlying Holdings
Microvast
Industry: Technology/clean-tech
Country: China
Website: www.microvast.com
Company Status: Private
Investment Risk: Equity
Operational update
• Microvast continues to supply
batteries for pure e-bus and plug-in hybrid electric vehicles
(PHEV) to almost all major Chinese original bus manufacturers
(OEMs), with these being deployed in over 30 cities in China. Follow-on orders continue to be
received for the European bus market, where increasingly stringent
emission rules support the market.
• Microvast’s gross margins have fallen
due to lower prices under the new China e-bus subsidy policy. 2019 revenues were
down YoY.
• The balance sheet is stretched with
net debt exceeding current Enterprise Value, leading the
independent valuation agent to mark down the equity value to zero
during 2019.
2020 operational
strategy/priorities
• Securing new long term contracts for
commercial vehicle and auto customers.
• Securing new financing and extending
existing financing facilities both for existing operations and for
capex and R&D.
• Hire and retain high quality
staff.
Key risks
• Not securing large long-term
contracts, making financing difficult to obtain.
• Overcapacity in both Chinese and
global battery companies.
• Warranty claims arising from defective
cells or modules.
• Unfavourable changes to the Chinese
government’s New Energy Vehicle policy.
Exit strategy
• Block sale pre- or post-IPO.
AEI
Industry: Power generation
Country: Guatemala
Company Status: Private
Investment Risk: Equity
Operational update
• The only operating entity remaining in
AEI is Jaguar, in Guatemala.
• The final appeal by the original
Chinese conractor was heard in November
2019 and in March 2020 we
received a ruling in our favour on all points. That has cleared the
path for a realisation of the asset in the medium term, subject to
market conditions.
Key risks
• Final exit process.
Exit strategy
• Trade sale of the asset.
• Wind up of AEI post the Jaguar
exit.
ZIM Laboratories
Industry: Pharmaceuticals
Country: India
Website: zimlab.in
Company Status: Public
Investment Risk: Equity
Operational update and priorities
• The company results are satisfactory
albeit below ambitious targets.
• The focus is new delivery solutions
for generic products as well as direct marketing in India and marketing partnerships in the rest
of the world.
• Add manufacturing flexibility to deal
with high value added, lower volume orders.
Exit strategy and timing
• The share price performed poorly in
2019 on very low trading volumes. A block sale at a fair valuation
is being sought.
Numero Uno
Industry: Retail
Country: India
Website: www.numerounojeanswear.com
Company Status: Private
Investment Risk: Equity
Operational update and priorities
• Recent results have been on budget and
the company remains profitable. Alternative distribution channels
are being pursued.
• Management is focussed on efficiency
in operations.
Key risks
• Cash payments remain important to the
company and any new tightening of liquidity conditions could impact
revenues.
Exit strategy and timing
• Discussions with the promotor of the
company about possible avenues of realising our investment.
GZI
Industry: Aluminium can manufacturing
Country: Nigeria
Website: www.gzican.com
Company Status: Private
Investment Risk: Equity
Operational update
• In Nigeria, a stable macro environment helped the
business continue its strong performance in H1 2019, however in H2
2019 the business was affected by unseasonable weather and land
border closings falling 10% short of its budget.
• In South
Africa, GZI launched its two-line, 1.2bn capacity plant on
schedule and budget. 70% of capacity has been contracted and
production is ramping up and reached peak production by
February 2020.
• Going forward we expect pricing
pressure in Nigeria but that
should be offset by larger volumes and growth in South Africa driving value in 2020.
2020 operational
strategy/priorities
• Sell land in Kenya.
• Leverage larger presence for global
contracts with beverage contracts up for renewal.
• Manage foreign exchange
exposures/requirements.
Key risks
• Slowdown in the African beverages
markets.
• Clients opting for cheaper competitors
or alternatives.
• Access to US$ / local currency
depreciation.
• Recruitment / talent sourcing.
Exit strategy and timing
• 2020 exit through IPO or strategic
sale.
Ashmore Investment Advisors
Limited
Investment Manager
24 April 2020
Board Members
As at 31 December 2019, the Board
consisted of four non-executive Directors. The Directors are
responsible for the determination of the Company’s investment
policy and have overall responsibility for its activities. As
required by the Association of Investment Companies Code on
Corporate Governance (the “AIC Code”), the majority of the Board of
Directors are independent of the Investment Manager. In preparing
this annual report, the independence of each Director has been
considered.
Richard Hotchkis,
Independent Chairman, (UK resident) appointed 18 April 2011
Richard Hotchkis has over 40
years of investment experience. Until 2006, he was an investment
manager at the Co-operative Insurance Society, where he started his
career in 1976. He has a breadth of investment experience in both
UK and overseas equities, including in emerging markets, and in
particular, investment companies and other closed-ended funds,
offshore funds, hedge funds and private equity funds.
Steve Hicks, Non-Independent
Director (connected to the Investment Manager), (UK resident)
appointed
16 January 2014
Steve Hicks, who is a qualified
UK lawyer, has held a number of legal and compliance roles over a
period of more than 25 years. From June
2010 until January 2014, he
was the Ashmore Group Head of Compliance. Prior thereto he was
Director, Group Compliance at the London listed private equity company 3i Group
plc.
Nigel de la Rue, Independent
Director, (Guernsey resident)
appointed 16 October 2007
Nigel de la Rue graduated in 1978
from Pembroke College,
Cambridge with a degree in Social
and Political Sciences. He is qualified as an Associate of the
Chartered Institute of Bankers, as a Member of the Society of Trust
and Estate Practitioners (“STEP”) and as a Member of the Institute
of Directors. He was employed for 23 years by Baring Asset
Management’s Financial Services Division, where he was responsible
for the group’s Fiduciary Division and sat on the Executive
Committee. He left Baring in December
2005, one year after that Division was acquired by Northern
Trust. He has served on the Guernsey Committees of the Chartered
Institute of Bankers and STEP, and on the Guernsey Association of
Trustees, and currently holds a number of directorships in the
financial services sector.
Christopher Legge, Independent
Director, (Guernsey resident)
appointed 27 August 2010
Christopher Legge has over 25
years’ experience in financial services. He qualified as
a Chartered Accountant in London in 1980 and spent the majority of
his career based in Guernsey with
Ernst & Young, including being the Senior Partner of
Ernst & Young in the Channel Islands. Christopher
retired from Ernst & Young in 2003 and currently holds a
number of directorships in the financial sector. He was appointed
to the Board of Sherborne Investors (Guernsey) C Limited on 25 May 2017. He was also appointed as a
non-executive director of NB Distressed Debt Investment Fund
Limited with effect from 12 April
2018.
Disclosure of Directorships in Public
Companies Listed on Recognised Stock Exchanges
The following summarises the Directors’ directorships in other
public companies:
Company Name
Exchange
Richard
Hotchkis
Nil
Steve Hicks
Nil
Nigel de la Rue
Nil
Christopher
Legge
NB Distressed Debt Investment Fund
Limited
London
Sherborne Investors (Guernsey) B Limited
London
Sherborne Investors (Guernsey) C Limited
London
Third Point Offshore Investors
Limited
London
TwentyFour Select Monthly Income Fund
Limited
London
Strategic Report
The Directors submit their Strategic Report together with the
Company’s audited financial statements for the year ended
31 December 2019.
The Strategic Report provides a review of the business for the
financial year and describes how risks are managed. In addition,
the report outlines the financial performance of the Company during
the financial year and the position at the end of the year, and
discusses the main factors that could affect the future
performance, and financial position of the Company.
Business Model and Strategy
Investment
Strategy
Prior to the Extraordinary General Meeting (“EGM”) of
shareholders on 13 March 2013, the
Company’s investment objective was to deploy capital in a
diversified portfolio of global emerging market strategies and
actively manage these with a view to maximising total returns. This
was implemented by investing across various investment themes
(Alternatives including Special Situations and Real Estate,
External Debt, Local Currency, Equities, Corporate Debt and
Multi-Strategy), with a principal focus on Special Situations.
On 12 December 2012, the Board
announced, following its review and in conjunction with its
independent financial and legal advisers, options to address the
structural issue of the discount to NAV at which the shares were
trading, which included proposals to shareholders: to amend the
investment strategy to make no new Special Situations investments
(with any new investments to be shorter term in nature); to realise
the Company’s assets for cash over the next few years; and to
return cash realised from the investment portfolio to shareholders
(the “Managed Wind-Down”). Shareholders approved these proposals at
an EGM held on 13 March 2013. The
Board believes that the revised investment strategy is the best way
of realising the value of the Company.
Going Concern
The Board of Directors called an EGM, which was held on
13 March 2013, to approve proposals
for a managed wind-down of the Company`s portfolio. All proposals
were duly passed at the EGM and accordingly the Board:
1. changed the investment objective of the Company to the
realisation of the Company’s assets in an orderly manner in order
to return cash to shareholders;
2. amended the Articles of Incorporation to facilitate a
regular, quarterly return of cash to shareholders;
3. amended the Articles of Incorporation in relation to the
removal of the continuation vote;
4. amended the Articles of Incorporation to reduce the minimum
number of Directors from five to one; and
5. amended the terms of the Investment Management Agreement
(“IMA”) between the Company and Ashmore Investment Advisors Limited
(the “Investment Manager”).
The Company continues to realise its portfolio in an orderly
manner which is taking longer than originally envisaged. The Board
has reviewed the Company’s annual operating costs with a view to
reducing costs where possible and currently estimate such costs to
be in the region of US$280,000. The
Company currently has sufficient cash to meet those expenses for at
least two years.
The Directors have examined significant areas of possible going
concern risk and are satisfied that no material exposures exist.
The Directors consider that the Company has adequate resources to
continue in operational existence for the foreseeable future and
believe it is appropriate to adopt the going concern basis in
preparing the financial statements, despite the managed wind-down
of the Company over the next few years.
Long Term
Viability Statement
In accordance with the AIC Code the Directors have assessed the
future prospects of the Company over the next two years. The
Directors believe this to be a reasonable timeframe in which to
realise the remaining portfolio of investments. As stated in the
Going Concern section above the Company currently has sufficient
cash resources to meet its operating expenses for that period. The
principal risk affecting the Company is market price risk, although
the Covid-19 pandemic may also affect the timing of disposals, as
it seeks to realise its remaining portfolio. Once the majority of
the investments have been sold the Board will propose that the
Company enters into voluntary liquidation. The Directors consider
that the Company has sufficient cash and liquid resources to
complete its wind down and liquidation in an orderly manner
including paying all associated costs.
Business Environment
Internal
Controls
The Board is ultimately responsible for the Company’s system of
internal control and for reviewing its effectiveness. The Board
confirms that there is an ongoing process for identifying,
evaluating and managing the significant risks faced by the Company.
This process has been in place for the year under review and up to
the date of approval of this annual report and accords with the
Turnbull guidance. The Code requires Directors to conduct, at least
annually, a review of the Company’s system of internal control,
covering all controls, including: financial, operational,
compliance and risk management.
The risk matrix is subject to an annual review by the Board. The
Board has reviewed the effectiveness of the systems of internal
control. In particular, it has reviewed and updated the process for
identifying and evaluating the significant risks affecting the
Company and the policies by which these risks are managed. The
internal control systems are designed to meet the Company’s
particular needs and the risks to which it is exposed. Accordingly,
the internal control systems are designed to manage rather than
eliminate the risk of failure to achieve business objectives and by
their nature can only provide reasonable and not absolute assurance
against misstatement and loss.
Risks and
Uncertainties
The principal risks and uncertainties faced by the Company
include market risk (comprising currency risk, interest rate risk
and other price risk), credit risk, concentration risk, liquidity
risk, operational risk and capital management. These could have a
material adverse effect separately or in combination on the
Company’s earnings and financial condition. Further information on
these risks and uncertainties and how they are mitigated is set out
in note 14 to the financial statements.
The other risks and uncertainties which have been identified and
the steps which are taken by the Board to mitigate them are as
follows:
- Cyber risks: the Board is reliant on
its key service providers in that regard who have confirmed to the
Board that they have detailed cyber risk mitigation programmes and
report any relevant issues to the Board on a timely basis.
Similarly the Company must comply with the provisions of the Law
and Listing Rules and the Board relies on its service providers and
in particular the Company Secretary in that regard. The key service
providers are contracted to provide investment, company
secretarial, administration and accounting services and report to
the Board on a quarterly basis.
- Emerging risks: in order to recognise
any new risks that may impact the Company and to ensure that
appropriate controls are in place to manage those risks, the Audit
Committee undertakes regular reviews of the Company’s risk matrix.
This review took place on three occasions during the year during
Audit Committee Meetings.
Since the year end we have seen the development of the
coronavirus covid-19 outbreak initially in China and now reaching most continents. At
present, it is not possible to assess the detailed impact of the
emerging risk, on the investments in the Company but there is
growing concern about the impact on the world economy. There has
been a significant change in the financial markets in the last few
weeks. The Board and the Investment Manager continue to watch the
efforts of governments to contain the spread of the virus and
monitor the economic impact, if any, on the investments in the
Company.
The Directors do not believe that any adjustments to the
financial statements as at 31 December
2019 are required as a result of this subsequent event.
The Investment Manager, Custodian, Administrator and Secretary
are monitoring developments relating to coronavirus covid-19 and
are coordinating their operational response based on existing
business continuity plans and on guidance from global health
organisations, relevant governments, and general pandemic response
best practices.
Board
Diversity
The Board considers that its members have a balance of skills
and experience which are relevant to the Company. The Board has no
plans to refresh the Board at the current time due the Company
being in managed wind-down. If it becomes necessary to appoint new
Directors and review the Board composition, the Board will
consider, amongst other factors, diversity, balance of skills,
knowledge, gender, ethnicity and experience. The Board does not
consider it appropriate to establish targets or quotas in this
regard.
Social, Community
and Human Rights
The Company does not have any specific policies on social,
community or human rights issues as it is an investment company
which does not have any physical assets, property, employees or
operations on its own. Please refer to the Chairman’s Statement and
Investment Manager’s Report for more details on the Company’s
investments.
Position and Performance
Key Performance Indicators
(“KPIs”)
Net Asset
Value
The NAV of the Company has decreased from US$30.5m as at 31 December
2018 to US$14.2m as at
31 December 2019.
Net Asset Value
per Share
The NAVs per share of the US$ and £ classes stood at
US$2.89 and £2.63 respectively as at
31 December 2019, compared to US5.05
and £4.73 respectively as at 31 December
2018.
Closing-Trade
Share Price
The closing-trade share price of the US$ and £ classes stood at
US$2.54 and £1.52 respectively as at
31 December 2019, compared to
US$4.15 and £3.58 respectively as at
31 December 2018.
Discount to Net
Asset Value
The discount to the NAV of the US$ and £ classes was (12.11)%
and (42.21)% respectively as at 31 December
2019, compared to (17.82)% and (24.31)% respectively as at
31 December 2018.
Ongoing
Charges
The Company’s ongoing charges ratio has increased from 0.75% as
at 31 December 2018 to 1.34% as at
31 December 2019. The increase in the
ongoing charges percentage between 2018 and 2019 is due to the drop
in the average NAV for 2019 compared to 2018 while the expenses
remained relatively similar year-on-year.
Earnings per
Share
The Earnings per Share of the US$ and £ classes were
US$(1.90) and US$(2.19) respectively for the year
ended
31 December 2019, compared to
US$ (0.68) and US$(1.33) respectively for the year ended
31 December 2018.
Dividends
During 2019, US$6.2m was
distributed to Shareholders of which US$1.5m related to realisations completed in 2018
and the balance from realisations achieved and dividends received
in 2019.
Performance
The performance to Shareholders was -38.03% for the year ended
31 December 2019, compared to -10.40%
for the year ended 31 December
2018.
Key Service Providers
The Company does not have any employees and as such the Board
delegates responsibility for its day to day operations to a number
of key service providers. The activities of each service provider
are closely monitored by the Board and they are required to report
to the Board at the quarterly Board meetings or more frequently if
required.
In addition, a formal review of the performance of each service
provider is carried out once a year by the Management Engagement
Committee.
Investment
Manager
Ashmore Investment Advisors Limited is the Investment Manager.
In exchange for its services a fee is payable as detailed in note
11 to the financial statements.
Brokers
J.P. Morgan Cazenove is the Broker.
Administrator and Secretary
Northern Trust International Fund Administration Services
(Guernsey) Limited is the
Administrator and Secretary. Further details on fee structure are
included in note 11 to the financial statements.
Custodian
Northern Trust (Guernsey) Limited
is the Custodian. Further details on fee structure are included in
note 11 to the financial statements.
UK Registrar and Transfer Agent
Computershare Investor Services PLC is the UK Registrar and
Transfer Agent.
Advocates
Carey Olsen (Guernsey) LLP are the Advocates to the
Company.
UK Solicitor
Slaughter and May are the Solicitor to the Company.
Signed on behalf of the Board of Directors on 24 April 2020
Richard Hotchkis
Christopher Legge
Chairman
Chairman of the
Audit Committee
Directors’ Report
The Directors submit their Report together with the Company’s
audited financial statements for the year ended 31 December
2019, which have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (the “IASB”) and are in
agreement with the accounting records, which have been properly
kept in compliance with section 238 of the Companies (Guernsey) Law, 2008.
The Company
The Company was incorporated with limited liability in
Guernsey, Channel Islands as an authorised closed-ended
investment company on 21 June 2007.
The Company was launched on 7 December
2007 and the Company’s shares were admitted to the Official
Listing of the London Stock Exchange on 12
December 2007, pursuant to Chapter 14 of the Listing Rules.
Following changes to the Listing Rules on 6
April 2010, the listing became a Standard Listing. On
27 April 2011, the UK Listing
Authority confirmed the transfer of the Company from a Standard
Listing to a Premium Listing under Chapter 15 of the Listing
Rules.
Results and Dividends
The results for the year are discussed in more detail in the
Chairman’s Statement and the Investment Manager’s Report. The
Company is returning cash to investors via regular compulsory
partial redemptions and is therefore not paying dividends.
Compulsory Partial Redemptions
Following the approval by the Company’s shareholders of the
wind-down proposal as described in the circular published on
20 February 2013, during the year
ended 31 December 2019, management
announced returns of capital to shareholders by way of compulsory
partial redemption of shares, with the following redemption
date:
- 7 March 2019, US$1.5m using the 31
January 2019 NAV; and
- 6 June 2019, US$4.7m using the 30 April
2019 NAV.
Between the end of the reporting year and the date when the
financial statements were authorised for issue, there were no
returns of capital to shareholders by way of compulsory partial
redemptions of shares.
The amounts applied to the partial redemptions of shares
comprised monies from dividends received and from the realisation
of the Company’s investments up to 31
December 2019 pursuant to the wind-down of the Company.
Share Capital
The number of shares in issue at the year end is disclosed in
note 8 to the financial statements.
The Board
The Board of Directors has overall responsibility for
safeguarding the Company’s assets, for the determination of the
investment policy of the Company, for reviewing the performance of
the service providers and for the Company’s activities. The
Directors, all of whom are non-executive, are listed in the Board
Members section.
The Board has adopted a policy on tenure that is considered
appropriate for an investment company. In accordance with the AIC
Code all current Directors offer themselves for re-election at the
2020 AGM of the Company. Mr de la Rue and Mr Legge have both served
as Directors for more than nine years. The Board does not believe
that length of service, by itself, leads to a closer relationship
with the Investment Manager or necessarily affects a Director’s
independence. The Board believes that it is not in the best
interests of shareholders to refresh the Board at the current time
when the Company is in managed wind-down.
The Board holds Board meetings at least four times a year. At
Board meetings, the Directors review the management of the
Company’s assets and all other significant matters so as to ensure
that the Directors maintain overall control and supervision of the
Company’s affairs. The Board is responsible for the appointment and
monitoring of all service providers to the Company, following
updates and recommendations from the Management Engagement
Committee. Between these formal meetings there is regular contact
with the Investment Manager. The Directors are kept fully informed
of investment and financial controls and other matters that are
relevant to the business of the Company and should be brought to
the attention of the Directors. The Directors also have access to
the Secretary and, where necessary in the furtherance of their
duties, to independent professional advice at the expense of the
Company.
The table below sets out the number of Board, Audit and
Management Engagement Committee meetings during the year ended
31 December 2019:
|
Board
meetings attended |
Audit
Committee meetings
attended |
Management Engagement Committee meeting attended |
Richard
Hotchkis |
6 |
3 |
1 |
Steve
Hicks |
4 |
3 |
- |
Nigel de la
Rue |
7 |
3 |
1 |
Christopher
Legge |
7 |
3 |
1 |
|
|
|
|
|
|
|
|
No. of meetings
during the year |
7 |
3 |
1 |
In addition to the meetings above, four other committee meetings
were held during the year. Any Directors who are not members of
Board Committees are invited to attend meetings of such committees
as necessary.
Directors’ Interests
As at 31 December 2019, three
Directors, Nigel de la Rue,
Christopher Legge and Richard Hotchkis, had beneficial interests in
the Company representing 373, 232 and 139 £ shares
respectively.
The Company has adopted a code of Directors’ dealings in shares,
which is based on the Model Code for directors’ dealings contained
in the LSE’s Listing Rules.
Directors’ Indemnity
Directors’ and officers’ liability insurance cover is in place
in favour of the Directors. The Directors entered into indemnity
agreements with the Company which provide for, subject to the
provisions of the Companies (Guernsey) Law, 2008, an indemnity for
Directors in respect of costs which they may incur relating to the
defence of proceedings brought against them arising out of their
positions as Directors, in which they are acquitted or judgement is
given in their favour by the Court. The agreement does not provide
for any indemnification for liability which attaches to the
Directors in connection with any negligence, unfavourable
judgements, or breach of duty or trust in relation to the
Company.
Corporate Governance
To comply with the UK Listing Regime, the Company must comply
with the requirements of the UK Corporate Governance Code. The
Company is also required to comply with the Code of Corporate
Governance issued by the Guernsey Financial Services
Commission.
The Company is a member of the Association of Investment
Companies (“AIC”) and, by complying with the AIC Code, it is deemed
to comply with both the UK Corporate Governance Code and Guernsey
Code of Corporate Governance.
The Guernsey Financial Services Commission’s Code of Corporate
Governance (the “GFSC Code”) provides a framework that applies to
all entities licensed by the Guernsey Financial Services Commission
or which are registered or authorised as a collective investment
scheme in Guernsey. Companies
reporting against the UK Corporate Governance Code or the AIC Code
are deemed to comply with the GFSC Code.
The UK Corporate Government Code was revised in July 2018 and the updated AIC Code was issued in
February 2019, applicable to
financial years beginning on or after 1
January 2019. The Company reports against the revised UK
Corporate Government Code and updated AIC Code in this annual
report.
By complying with the AIC Code and the UK Corporate Governance,
the Board is confident that information provided to shareholders is
of a high standard. To ensure ongoing compliance with the
principles and recommendations of the AIC Code, the Board receives
and reviews a report from the Secretary, at each quarterly meeting,
identifying whether the Company is in compliance and recommending
any changes that are necessary.
The Company has complied with the recommendations of the AIC
Code and the relevant provisions of the UK Corporate Governance
Code, except as set out below.
The UK Corporate Governance Code includes provisions relating
to:
• the role of the chief executive;
• executive Directors’ remuneration;
• the need for an internal audit function;
• whistle-blowing policies;
• nomination committees;
• remuneration committees;
• Auditor’s tenure and re-appointment.
For the reasons explained in the UK Corporate Governance Code,
the Board considers that these provisions are not relevant to the
position of the Company as an investment company. The Company has
therefore not reported further in respect of these provisions. The
Directors are non-executive and the Company does not have
employees, hence no whistle-blowing policy is required. The
Directors have satisfied themselves that the Company’s key service
providers have appropriate whistle-blowing policies and procedures
and seek regular confirmation from the service providers that
nothing has arisen under those policies and procedures which should
be brought to the attention of the Board. Details of compliance
with the AIC Code are noted in the succeeding pages. The Company
has not followed the provisions in relation to auditor’s tenure and
re-appointment due to the fact that the Company is in managed
wind-down. There have been no instances of non-compliance, other
than those noted above.
Details and biographies for all the Directors can be found in
the Board Members section of this annual report, and on the
Company’s website (www.agol.com). In considering the independence
of the Chairman, the Board has taken note of the provisions of the
Code relating to independence and has determined that Richard Hotchkis is an Independent Director. As
the Chairman is an Independent Director, no appointment of a Senior
Independent Director has been made.
The Board has a breadth of experience relevant to the Company
and the Directors believe that any changes to the Board’s
composition can be managed without undue disruption.
The Board, Audit Committee and Management Engagement Committee
undertake an evaluation of their own performance and that of the
individual Directors on an annual basis. In order to review their
effectiveness, the Board, Audit Committee and Management Engagement
Committee carry out a process of formal self-appraisal in order to
consider how they function as a whole and also to review the
individual performance of their members. This process is conducted
by the respective Chairman reviewing the Directors’ performance,
contribution and commitment to the Company. Given that the Company
is in a managed wind-down, the Board considers that it would not be
justified in incurring the expense of an independent evaluation of
the Board’s performance.
With the appointment to the Board of any new Director,
consideration will be given as to whether an induction process is
appropriate. The Chairman regularly reviews and agrees with each
Director their training and development needs.
Ongoing Charges
Ongoing charges for the year ended 31
December 2019 have been prepared in accordance with the
AIC’s recommended methodology and amounted to 1.34% of the average
NAV (31 December 2018: 0.75%). The
increase in the ongoing charges percentage between 2018 and 2019 is
due to the drop in the average NAV for 2019 compared to 2018 while
the expenses remained relatively similar year-on-year.
For further information, please refer to Supplementary
Information (Unaudited) – Alternative Performance Measures
(“APMs”).
Audit Committee
An Audit Committee has been established and holds meetings at
least twice a year for the purpose, amongst others, of considering
the appointment, independence, effectiveness and remuneration of
the auditor and to review and recommend the statutory annual report
and interim report to the Board of Directors. Full details of its
functions and activities are set out in the Report of the Audit
Committee.
Nomination Committee
The Board as a whole fulfils the function of a nomination
committee. The Board considers that, given the size of the Board
and that the Company has no executives, it would not be appropriate
to establish a separate nomination committee as anticipated by the
AIC Code. Neither external search consultancy nor open advertising
have been used when appointing the Chairman or the non-executive
Directors because of the specialist nature of the appointments and
the knowledge amongst existing Directors and the Investment
Manager.
Conversion Committee
The Company has established a Conversion Committee, which
consists of Nigel de la Rue,
Christopher Legge and Richard Hotchkis. The Conversion Committee holds
meetings in order to determine the terms of monthly/quarterly share
conversions, based on shareholders’ requests received by the
Company. The date on which conversion of the shares takes place
(the “Conversion Date”) is determined by the Conversion Committee,
being not more than 20 business days after the relevant Conversion
Calculation Date.
The Directors approved share conversions during the year, the
details of which can be found in note 8 to the financial
statements. Conversions approved by the Directors subsequent to the
year end are detailed in note 20 to the financial statements.
Disclosure Committee
The Company has established a Disclosure Committee with formally
delegated duties and functions. The Disclosure Committee meets when
required to consider any potential disclosures to be made by the
Company through a Regulatory Information Service provider, in
compliance with the Company’s obligations under the Disclosure and
Transparency Rules. The Disclosure Committee is comprised of
Richard Hotchkis, Christopher Legge and Chairman, Nigel de la Rue. The principal duty of the
Disclosure Committee is to consider and approve announcements and
disclosures to be made on behalf of the Company in accordance with
the Company’s ongoing compliance with applicable law.
Management Engagement Committee
The function of the Management Engagement Committee, comprised
of three independent Directors (Christopher
Legge, Richard Hotchkis and
Nigel de la Rue), is to ensure that
the Company’s Investment Management Agreement is competitive and
reasonable for the shareholders, along with the Company’s
agreements with all other third-party service providers (other than
the external auditor). The Committee also reviews the performance
of the Investment Manager and the other third-party service
providers on a periodic basis.
The Company has entered into an agreement with the Investment
Manager, Ashmore Investment Advisors Limited. This sets out the
Investment Manager’s key responsibilities, which include proposing
an investment strategy to the Board and, within certain authority
limits, selecting investments for acquisition and disposal and
arranging appropriate lending facilities. The Investment Manager is
also responsible for all issues pertaining to asset management. The
Management Engagement Committee reviews the performance, fees and
terms of the Investment Management Agreement on an annual
basis.
Despite the performance of the Company since incorporation, at
its October 2018 and October 2019 meetings it was the view of the
Management Engagement Committee that it is in the best interests of
the shareholders to continue with the current appointment of the
Investment Manager. At the date of this report, the Board continues
to expect that Ashmore Investment Advisors Limited will remain the
Investment Manager for the remaining life of the Company.
As all the Directors are non-executive, the Board has resolved
that it is not appropriate to form a Remuneration Committee and
remuneration is reviewed and discussed by the Board as a whole
(with each Director abstaining when approving any changes to their
own fee), with independent advice from the Administrator and the
Broker. Details on Directors’ remuneration can be found in the
Directors’ Remuneration Report of this annual report.
The terms of reference of all the existing committees are made
available by the Company to shareholders upon request.
Alternative Investment Fund Managers
Directive
The Alternative Investment Fund Managers Directive (“AIFMD”)
establishes an EU-wide harmonised framework for monitoring and
supervising risks relating to collective investment undertakings
that are not subject to the Undertaking for Collective Investment
in Transferable Securities (“UCITS”) regime. AGOL meets the
definition of an Alternative Investment Fund (“AIF”) under this
legislation and is subject to the AIFMD framework.
Ashmore Investment Advisors Limited (“AIAL”) was authorised as
an Alternative Investment Fund Manager (“AIFM”) by the Financial
Conduct Authority (“FCA”) on 18 July
2014. Effective 18 July 2014,
the Board appointed AIAL as the Company’s AIFM and AIAL assumed the
role of Investment Manager to the Company from Ashmore Investment
Management Limited (“AIML”), pursuant to a Novation of the
5 November 2007 Investment Management
Agreement. Prior to 18 July 2014,
AIML served as Investment Manager to the Company. The investment
advisory services provided to the Company were novated to AIAL to
comply with the new AIFMD legislation.
AIAL and AIML are both wholly-owned subsidiaries of Ashmore
Investments (UK) Limited, which is a wholly-owned subsidiary of the
Ashmore Group plc (“Ashmore Group”). The novation of the Investment
Management Agreement with the Company did not result in any change
in: (i) the manner in which investment management services are
provided (including the manner in which the Company is managed or
operated) as contemplated by the Investment Management Agreement;
(ii) the personnel who are responsible for providing or supervising
the provision of investment management services (including those
responsible for the management, portfolio management and operation
of the Company); or (iii) the personnel ultimately responsible for
overseeing such provision of services.
Foreign Account Tax Compliance Act
The Foreign Account Tax Compliance Act (“FATCA”) is aimed at
determining the ownership of US assets in foreign accounts and
improving US tax compliance with respect to those assets. The
legislation is wide-encompassing and affects all non-US funds,
albeit some more than others. On 13 December
2013, the States of Guernsey entered into an Inter-Governmental
Agreement (“IGA”) with the US Treasury in order to facilitate the
requirements of FATCA through local legislation. The IGA and the
associated guidance notes set out the requirements and obligations
of the Company under the rules. For the purposes of this agreement,
the Company registered with the US Internal Revenue Services
(“IRS”) as a Guernsey reporting
Foreign Financial Institution (“FFI”), received a Global
Intermediary Identification Number (28C9PC.99999.SL.831), and can
be found on the IRS FFI list.
UK Guernsey Intergovernmental
Agreement
The Organisation for Economic Co-operation and Development
(“OECD”) introduced the Common Reporting Standard (“CRS”) which
acts as the single global standard governing the automatic exchange
of financial account information between tax authorities of tax
jurisdictions that have signed up to the standard. The CRS has been
adopted by Guernsey and came into
effect on 1 January 2016. It replaced
the intergovernmental agreement between the UK and Guernsey to improve international tax
compliance that had previously applied in respect of 2014 and 2015.
The first report for CRS was made to the Director of Income Tax by
30 June 2017.
The Board takes the necessary actions to ensure that the Company
is compliant with Guernsey
regulations and guidance in this regard.
Criminal Finances Act
In respect of the Criminal Finances Act 2017 which has
introduced a new corporate criminal offence (“CCO”) of ‘failing to
take reasonable steps to prevent the facilitation of tax evasion’,
the Board confirms that they are committed to zero tolerance
towards the criminal facilitation of tax evasion.
Relations with Shareholders
The Investment Manager maintains a regular dialogue with
institutional shareholders, the feedback from which is reported to
the Board. In addition, Board members are available to respond to
shareholders’ questions at the Annual General Meeting.
There were no significant votes (being greater than 20%) cast
against the resolutions proposed at the 2019 AGM.
The Company announces its NAV on a monthly basis to the London
Stock Exchange. Shareholders who wish to communicate with the Board
should contact the Administrator in the first instance, whose
contact details can be found on the Company’s website.
As at 31 December 2019, the
following entities had significant shareholdings in the
Company:
Significant
Shareholder |
US$
shares
held |
£
shares
held |
%
holding in
Company |
The Bank of New York
Nominees Limited |
1,590,800 |
7,107 |
32.66% |
Goldman Sachs
Securities Nominees Limited |
696,701 |
37,626 |
15.15% |
Chase Nominees
Limited |
2 |
615,693 |
15.11% |
Nortrust Nominees
Limited |
416,331 |
3,937 |
8.60% |
Nordea Bank Danmark
A/S |
250,284 |
- |
5.11% |
Lynchwood Nominees
Limited |
54,412 |
151,080 |
4.82% |
Aurora Nominees
Limited |
174,590 |
6,362 |
3.72% |
Vidacos Nominees
Limited |
178,586 |
1,014 |
3.67% |
HSBC Global Custody
Nominees UK Limited |
104,392 |
24,970 |
2.74% |
Signed on behalf of the Board of Directors on 24 April 2020
Richard Hotchkis
Christopher Legge
Chairman
Chairman of
the Audit Committee
Report of the Audit Committee
On the following pages, we present the Audit Committee (the
“Committee”) Report for 2019, setting out the Committee’s structure
and composition, principal duties and key activities during the
year. As in previous years, the Committee has reviewed the
Company’s financial reporting, the independence and effectiveness
of the independent auditor and the internal control and risk
management systems of the Company’s service providers.
Structure and Composition
The Committee consists of Nigel de la
Rue, Richard Hotchkis and
Chairman Christopher Legge.
Appointment to the Committee is for a period of up to three years,
which may be extended for two further three-year periods provided
that the majority of the Committee remains independent of the
Investment Manager. Despite Nigel de la Rue’s tenure being extended
on three occasions, it was deemed appropriate to extend his
membership in the Committee due to the Company being in wind-down.
Nigel de la Rue, Christopher Legge and Richard Hotchkis are currently serving their
fifth, fourth and third, three-year terms respectively.
Nigel de la Rue served more than
nine years and was re-elected as a Director of the Company at the
Annual General Meeting held on 23 August
2019. Nigel de la Rue and
Christopher Legge also both served
as directors for more than nine years but remain on the Board for
the reasons stated as in the Directors’ Report.
An induction programme is provided for new Committee members and
ongoing training is available for all members as required.
The Board consider Mr Hotchkis to be independent and in view of
the small size of the Board consider him to a valuable member of
the Audit Committee.
The Committee conducts formal meetings at least twice a year.
The first table of the Directors’ Report sets out the number of
Committee meetings held during the year ended 31 December 2019 and the number of such meetings
attended by each Committee member. The independent auditor is
invited to attend meetings at which the annual reports are
presented to the Committee as well as the annual audit planning
meeting.
Principal Duties
The role of the Committee includes:
· to monitor the integrity of the financial
statements of the Company and any formal announcements relating to
the Company’s financial performance, reviewing significant
financial reporting judgements contained therein;
· to review the Company’s internal financial
controls and, unless expressly addressed by the Board itself, to
review the Company’s internal control and risk management
systems;
· to make recommendations to the Board, and for them
to be subsequently put to shareholders for their approval at the
Annual General Meeting, in relation to the appointment,
re-appointment or removal of the external auditor and to approve
the remuneration and terms of engagement of the external
auditor;
· to review and monitor the external auditor’s
independence and objectivity and the effectiveness of the audit
process, taking into consideration relevant UK professional and
regulatory requirements;
· to develop and implement policy on the engagement
of the external auditor to supply non-audit services, taking into
account relevant ethical guidance regarding the provision of
non-audit services by the external audit firm; and to report to the
Board, identifying any matters in respect of which it considers
that action or improvement is needed, making recommendations as to
the steps to be taken; and
· to report to the Board on how it has discharged
its responsibilities.
The complete details of the Committee’s formal duties and
responsibilities are set out in the Committee’s terms of reference,
which can be obtained from the Administrator.
Independent Auditor (Independence and
Effectiveness)
KPMG Channel Islands Limited (“KPMG”) have expressed their
willingness to continue in office as auditor and a resolution
proposing their re-appointment will be submitted at the Annual
General Meeting. According to the AIC Code, the Committee is
responsible for conducting a tender process and for making
recommendations to the Board about the appointment, re-appointment
and removal of the external auditor. However, this is not
appropriate due to the Company being in wind-down. The audit
engagement director rotates every five years.
The independence and objectivity of the independent auditor is
reviewed by the Committee, which also reviews the terms under which
the independent auditor is appointed to perform non-audit services.
The Committee has also established pre-approval policies and
procedures for the engagement of KPMG to provide audit, assurance
and tax services.
The audit and non-audit fees proposed by the auditor each year
are reviewed by the Committee taking into account the Company’s
structure, operations and other requirements during the year, and
the Committee makes recommendations to the Board.
Committee Evaluations during the
Year
The following sections discuss the assessments made by the
Committee during the year.
Effectiveness of the Audit
The Committee had formal meetings with KPMG during the course of
the year: 1) before the start of the audit to discuss formal
planning, to discuss any potential significant issues and to agree
the scope of the audit, and 2) after the audit work was concluded
to discuss any significant issues encountered.
The Board reviewed the effectiveness and independence of KPMG by
using a number of qualitative measures, including but not limited
to:
· the audit plan presented before the start of
the audit;
· the post audit report and presentation,
including deviations from the original plan;
· any changes to audit personnel;
· the auditor’s own internal procedures to
identify threats to independence;
· feedback from both the Investment Manager
and the Administrator.
Further to the above, on the conclusion of the 2019 audit, the
Committee performed a specific evaluation of the performance of the
independent auditor. This covered qualitative areas such as the
quality of the audit team, business understanding, audit approach
and management.
There were no significant adverse findings from this
evaluation.
Significant Financial Statement
Issues
The Committee’s review of the interim and annual financial
statements focused on the following areas:
The financial statements have been prepared on the going concern
basis, despite the managed wind-down of the Company which was
approved by the shareholders during the EGM of 13 March 2013. The Directors discussed the
rationale for this accounting basis and they noted that they had
examined significant areas of going concern risk, and were
satisfied that no material exposures existed.
The valuation of the Company’s investment portfolio, given it
represents the majority of the total assets of the Company requires
the use of significant judgement for unlisted investments. The
Directors are satisfied with the Investment Manager’s Pricing
Methodology and Valuation Committee (“PMVC”)’s controls, and the
appropriateness of the valuation techniques, inputs and assumptions
used in relation to valuation of unlisted investments. The
foregoing matters were discussed during the planning and testing
stages of the audit and there were no significant disagreements
noted between management and the independent auditor.
The Committee is satisfied that the significant assumptions used
for determining the value of assets and liabilities have been
appropriately scrutinised and challenged and are sufficiently
robust. The Committee further concludes that the financial
statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Company’s performance, business model and strategy.
The Independent Auditor reported to the Committee that no
material unadjusted misstatements were found in the course of its
work. Furthermore, both the Investment Manager and the
Administrator confirmed to the Committee that they were not aware
of any material unadjusted misstatements, including matters
relating to presentation. The Committee confirms that it is
satisfied that the Independent Auditor has fulfilled its
responsibilities with regard to diligence and professional
scepticism.
Audit Fees and Safeguards for
Non-Audit Services
Where non-audit services are to be provided to the Company by
its auditor, full consideration of the financial and other
implications for the independence of the auditor arising from any
such engagement are considered prior to proceeding.
The table below summarises the remuneration of KPMG and of other
KPMG affiliates for audit and non-audit services provided to the
Company for the years ended 31 December
2019 and 31 December 2018:
|
|
Year
ended |
Year
ended |
|
|
31
December 2019 |
31
December 2018 |
|
|
US$ |
US$ |
Audit and audit
related services |
|
|
|
- Annual
audit |
|
55,352 |
48,664 |
|
|
|
|
Internal Control
The Committee has reviewed the need for an internal audit
function. Based on reviews of control reports, the Committee has
concluded that the systems and procedures employed by the
Administrator and the Investment Manager, including their internal
audit functions, provide sufficient assurance that a sound system
of internal control which safeguards the Company’s assets is
maintained. An internal audit function specific to the Company is
therefore considered unnecessary.
Conclusions and Recommendations
The Committee is satisfied that the external auditor remains
independent and confirms that the Committee also met with the
external auditor without the Investment Manager or Administrator
(Northern Trust International Fund Administration Services
(Guernsey) Limited) being present,
so as to provide a forum for the external auditor to raise any
matters of concern in confidence.
Consequent to the review process on the effectiveness of the
independent audit and the review of the audit and non-audit
services that the Independent Auditor delivers, the Committee has
recommended that KPMG be reappointed for the coming financial
year.
For any questions on the activities of the Committee not
addressed in the foregoing, a member of the Committee remains
available to attend each Annual General Meeting to respond to such
questions.
Christopher Legge
Chairman of the Audit Committee
24 April 2020
Statement of Directors’ Responsibility
in respect of the Annual Report and Audited Financial
Statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law they have
elected to prepare the financial statements in accordance with
International Financial Reporting Standards as issued by the IASB
and applicable law.
The financial statements are required by law to give a true and
fair view of the state of affairs of the Company and of the profit
or loss of the Company for that period. In preparing these
financial statements, the Directors are required to:
· select suitable accounting policies and then apply
them consistently;
· make judgements and estimates that are reasonable
and prudent;
· state whether applicable accounting standards have
been followed, subject to any material departures disclosed and
explained in the financial statements;
· assess the Company’s ability to continue as going
concern, disclosing, as applicable, matters related to going
concern; and
· use the going concern basis of accounting unless
they either intend to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Companies (Guernsey) Law, 2008. They are responsible for
such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the Company and to prevent and detect
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website and for the preparation and dissemination of
financial statements. Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions. The Directors have carried out a robust
assessment of the principal risks facing the Company, including
those that would threaten its business model, future performance,
solvency or liquidity.
Disclosure of Information to the
Auditor
The Directors who held office at the date of approval of the
financial statements confirm that, so far as they are each
aware:
· there is no relevant audit information of which
the Company’s auditor is unaware; and
· each Director has taken all the steps that they
ought to have taken as a Director to make themselves aware of any
relevant audit information and to establish that the Company’s
auditor is aware of that information.
Statement under the Disclosure
Guidance and Transparency Rules 4.1.12
We confirm that to the best of our knowledge and belief:
· the financial statements, prepared in accordance
with International Financial Reporting Standards as issued by the
IASB, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company;
· the Annual Report and financial statements, taken
as a whole, are fair, balanced and understandable and provide the
information necessary for the shareholders to assess the Company’s
performance, business model and strategy; and
· the Chairman’s Statement, the Investment Manager’s
Report and the Directors’ Report include a fair review of the
development and performance of the business and the position of the
Company. A description of the principal risks and uncertainties
that the Company faces is provided in note 14 of the financial
statements.
Signed on behalf of the Board of Directors on 24 April 2020
Richard Hotchkis
Christopher Legge
Chairman
Chairman of the Audit
Committee
Directors’ Remuneration Report
Introduction
An ordinary resolution for the approval of the annual
remuneration report will be put to shareholders at the Annual
General Meeting.
Remuneration Policy
As all the Directors are non-executive, the Board has resolved
that it is not appropriate to form a Remuneration Committee and
remuneration is reviewed and discussed by the Board as a whole.
Directors’ remuneration is considered on a periodic basis.
The Company’s policy is that the fees payable to the Directors
should reflect the time spent by the Directors on the Company’s
affairs in addition to the responsibilities borne by the Directors,
and should be sufficient to attract, retain and motivate Directors
of the quality required to run the Company successfully. The
Chairman of the Board is paid a higher fee in recognition of his
additional responsibilities, as is the Chairman of the Audit
Committee. The policy is to review fee rates periodically, although
such a review will not necessarily result in any changes to the
rates, and account is taken of fees paid to the Directors of
comparable companies.
There are no long-term incentive schemes provided by the Company
and no performance fees are paid to Directors.
In accordance with Article 18.3 of the Company’s Articles of
Incorporation, at each Annual General Meeting one-third of the
Directors retire from office via rotation and are put forward for
re-election based on continued satisfactory performance. Any
Director who serves nine years on the Board will thereafter be put
forward for re-election on an annual basis. Directors’ appointments
can also be terminated in accordance with the Articles. Should
shareholders vote against a Director standing for re-election, the
Director affected will not be entitled to any compensation. There
are no set notice periods and a Director may resign by giving
notice in writing to the Board at any time.
As Steve Hicks is connected to
the Investment Manager and is therefore deemed not to be an
Independent Director, he shall be put forward for re-election on an
annual basis.
Directors’ Fees
Directors are remunerated in the form of fees, payable monthly
in arrears, to the Directors personally. No other remuneration or
compensation was paid or payable by the Company during the year to
any of the Directors apart from the reimbursement of allowable
expenses.
The fees payable by the Company in respect of each of the
Directors who served during the years ended 31 December 2019 and 2018, were as follows:
|
Year
ended
31 December 2019 |
Year
ended
31 December 2018 |
|
£ |
£ |
Richard Hotchkis |
21,240 |
28,350 |
Steve Hicks* |
- |
- |
Christopher Legge |
21,240 |
28,350 |
Nigel de la Rue |
20,040 |
26,730 |
Total |
62,520 |
83,430 |
* Non-independent Director
The Directors’ fees were reduced by 25% with effect from
1 January 2019.
Signed on behalf of the Board of Directors on 24 April 2020
Richard Hotchkis
Christopher Legge
Chairman
Chairman of the Audit Committee
Our opinion is
unmodified
We have audited the financial statements of Ashmore Global
Opportunities Limited (the “Company”), which comprise the statement
of financial position as at 31 December
2019, the statements of comprehensive income, changes in
equity and cash flows for the year then ended, and notes,
comprising significant accounting policies and other explanatory
information including a schedule of investments.
In our opinion, the accompanying financial statements:
· give a true and fair view of the financial
position of the Company as at 31 December
2019, and of the Company’s financial performance and the
Company’s cash flows for the year then ended;
· are prepared in accordance with
International Financial Reporting Standards (IFRS); and
· comply with the Companies (Guernsey) Law, 2008.
Basis for
Opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities are described below. We have fulfilled our ethical
responsibilities under, and are independent of the Company in
accordance with, UK ethical requirements including FRC Ethical
Standards as applied to listed entities. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion.
Key Audit Matters:
our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In arriving at our
audit opinion above, the key audit matters were as follows
(unchanged from 2018):
The risk |
Our response |
Valuation of financial assets at fair value through profit or
loss
US$ 14.6m; (2018: US$ 31.2m)
Refer to the Report of the Audit Committee, note 2d accounting
policy and note 7 disclosures |
Basis:
The Company invests in an unlisted private equity investment and a
portfolio of unquoted investment funds (together the “investment
portfolio”).
The investment portfolio represents the most significant balance on
the statement of financial position and is the principal driver of
the Company’s net asset value (“NAV”) (2019: 103.0%; 2018:
102.2%).
The Company’s investment in an unlisted private equity investment
is valued with the assistance of the Company’s third party
valuation agent based on a valuation model following the
International Private Equity and Venture Capital Valuation
Guidelines (December 2018)
The Company’s investments in unquoted investment funds are valued
on the basis of the latest NAV provided by the respective
administrators of those unquoted investment funds.
Risk:
The valuation of the Company’s investment portfolio is considered a
significant area of our audit, given that it represents the
majority of the net assets of the Company and in view of the
significance of estimates involved. In addition, judgements are
involved in the determination of fair value of the unlisted private
equity investment.
|
Our audit procedures included:
Internal Control:
We evaluated the design and implementation of the Investment
Manager’s Pricing Methodology and Valuation Committee (“PMVC”)’s
control in relation to the valuation of the unlisted private equity
investment.
Challenging managements’ assumptions and inputs including use of
our KPMG Specialist:
For the investment into the unlisted private equity investment
(51.3% of NAV (US$ 7.3m)), we used our own valuation specialist to
evaluate the methodology applied by the PMVC and challenge the key
assumptions used in preparing the valuation by reference to
observable independent market data, information and industry
expectations. We corroborated material investee company inputs used
in the valuation model to supporting documentation. We also
evaluated the Company’s third party valuation agent in the context
of their ability to appropriately challenge and review the fair
value of the investment valuation, by assessing their objectivity,
capabilities and competence.
For unlisted investments in other funds (10.0% of NAV (US$ 1.4m))
we obtained net asset value per share confirmations directly from
the underlying funds’ administrators. We inspected the latest
audited financial statements of these underlying funds in order to
assess the appropriateness of the accounting framework utilised,
any modifications to the audit opinion and other disclosures which
may be relevant to the valuation of the Company’s investments.
For investments in other Ashmore special situation investment
funds, which are also audited by KPMG Channel Islands Limited (all
with coterminous year ends), (41.7% of NAV (US$ 5.9m)) we undertook
discussions on key audit findings with the audit teams of those
funds and examined their coterminous audited financial statements
to assess the appropriateness of the accounting framework utilized,
any modifications to the audit opinion and other disclosures which
may be relevant to the valuation of the Company’s investments.
Assessing disclosures:
We have also assessed the Company’s disclosures (see note 2d) in
relation to the use of estimates and judgements regarding fair
value of investments and the Company’s valuation policies adopted
and fair value disclosures in note 7 for compliance with IFRS. |
Ability to continue as a going concern entity
Refer to note 2b accounting policies |
Basis:
At an Extraordinary General Meeting in March 2013, the shareholders
approved proposals for a managed wind-down of the Company’s
investment portfolio, changing the investment objective of the
Company to the realisation of the Company’s assets in an orderly
manner in order to return cash to shareholders.
Risk:
There is a risk that the directors may not be able to achieve the
wind-down in an orderly manner and if this was the case then it
would impact their ability to continue as a going concern. |
Our audit procedures included:
Holding discussions with the Board of Directors and the Investment
Manager to understand the proposed investment portfolio realisation
programme and to assess the implications of the managed wind-down
on the financial statements. We also challenged the Board of
Directors’ and Investment Manager’s assessment of the Company’s
ability to continue as a going concern against our own audit
knowledge and expectations about the Company. |
Assessing disclosures:
We also considered the Company’s going concern disclosure in note
2b of the financial statements for compliance with IFRS. |
Our application of
materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at
US$ 283,000, determined with
reference to a benchmark of net assets of $
14.2m, of which it represents approximately 2.0% (2018:
3.0%).
We reported to the Audit Committee any corrected or uncorrected
identified misstatements exceeding US$
14,000, in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level
specified above, which has informed our identification of
significant risks of material misstatement and the associated audit
procedures performed in those areas as detailed above.
We have nothing to
report on going concern
We identified going concern as a key audit matter on this
report. Based on the work described in our response to that key
audit matter above, we are required to report to you if we have
anything material to add or draw attention to in relation to the
directors’ statement in note 2b to
the financial statements on the use of the going concern basis of
accounting with no material uncertainties that may cast significant
doubt over the Company’s use of that basis for a period of at least
twelve months from the date of approval of the financial
statements. We have nothing to report in this respect.
Other
information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report but does not include the financial statements and our
auditor's report thereon. Our opinion on the financial statements
does not cover the other information and we do not express an audit
opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Disclosures of
principal risks and longer-term viability
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw attention
to in relation to:
- the directors’ confirmation within the long term viability
statement that they have carried out a robust assessment of the
principal risks facing the Company, including those that would
threaten its business model, future performance, solvency or
liquidity;
- the disclosures describing these risks and explaining how they
are being managed or mitigated;
- the directors’ explanation in the long term viability statement
as to how they have assessed the prospects of the Company, over
what period they have done so and why they consider that period to
be appropriate, and their statement as to whether they have a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Corporate
governance disclosures
We are required to report to you if:
- we have identified material inconsistencies between the
knowledge we acquired during our financial statements audit and the
directors’ statement that they consider that the annual report and
financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company’s position and performance,
business model and strategy; or
· the section of the annual report describing
the work of the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee.
We are required to report to you if the Corporate Governance
Statement does not properly disclose a departure from the
provisions of the UK Corporate Governance Code specified by the
Listing Rules for our review.
We have nothing to report to you in these respects.
We have nothing to
report on other matters on which we are required to report by
exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey)
Law, 2008 requires us to report to you if, in our opinion:
- the Company has not kept proper accounting records; or
- the financial statements are not in agreement with the
accounting records; or
- we have not received all the information and explanations,
which to the best of our knowledge and belief are necessary for the
purpose of our audit.
Respective
responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on 24, the
directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing the
Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The purpose of
this report and restrictions on its use by persons other than the
Company’s members as a body
This report is made solely to the Company’s members, as a body,
in accordance with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than
the Company and the Company’s members, as a body, for our audit
work, for this report, or for the opinions we have formed.
Steven Stormonth
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors, Guernsey
24 April 2020
Statement of Financial Position
As at 31 December 2019
|
|
31
December 2019 |
|
31
December 2018 |
|
Note |
US$ |
|
US$ |
Assets |
|
|
|
|
Cash and cash
equivalents |
|
691,726 |
|
413,401 |
Other financial
assets |
6 |
- |
|
5,366 |
Financial assets at
fair value through profit or loss (“FVTPL”) |
4 |
14,713,255 |
|
31,179,252 |
Total
assets |
|
15,404,981 |
|
31,598,019 |
|
|
|
|
|
Equity |
|
|
|
|
Capital and
reserves attributable to equity holders
of the Company |
|
|
|
|
Special reserve |
8 |
375,709,891 |
|
381,934,791 |
Retained earnings |
|
(361,539,120) |
|
(351,416,351) |
Total
equity |
|
14,170,771 |
|
30,518,440 |
|
|
|
|
|
Liabilities |
|
|
|
|
Current
liabilities |
|
|
|
|
Financial liabilities
at FVTPL |
4 |
12,409 |
|
70,234 |
Other financial
liabilities |
6 |
1,221,801 |
|
1,009,345 |
Total
liabilities |
|
1,234,210 |
|
1,079,579 |
Total equity and
liabilities |
|
15,404,981 |
|
31,598,019 |
|
|
|
|
|
Net asset
values |
|
|
|
|
Net assets per US$
share |
9 |
US$2.89 |
|
US$5.05 |
Net assets per £
share |
9 |
£2.63 |
|
£4.73 |
The financial statements were approved by the Board of Directors
on 24 April 2020, and were signed on
its behalf by:
Richard Hotchkis
Christopher Legge
Chairman
Chairman of the Audit Committee
Statement of Comprehensive Income
For the year ended 31 December
2019
|
|
Year
ended
31 December 2019 |
|
Year
ended
31 December 2018 |
|
Note |
US$ |
|
US$ |
|
|
|
|
|
Interest income
calculated using the effective interest method |
10 |
18,073 |
|
55,724 |
Net foreign currency
gain |
|
45,098 |
|
46,734 |
Net loss from
financial instruments at FVTPL |
5 |
(9,637,810) |
|
(6,094,473) |
Total net
loss |
|
(9,574,639) |
|
(5,992,015) |
|
|
|
|
|
Expenses |
|
|
|
|
Incentive fees |
11a |
(237,746) |
|
(30,175) |
Directors’
remuneration |
11b |
(81,670) |
|
(113,016) |
Investment management
fees |
11a |
(69,273) |
|
(60,397) |
Fund administration
fees |
11c |
(4,658) |
|
(9,683) |
Custody fees |
11d |
(749) |
|
(5,606) |
Other operating
expenses |
12 |
(154,034) |
|
(137,937) |
Total operating
expenses |
|
(548,130) |
|
(356,814) |
|
|
|
|
|
Loss for the
year |
|
(10,122,769) |
|
(6,348,829) |
|
|
|
|
|
Total loss and
comprehensive income
for the year |
|
(10,122,769) |
|
(6,348,829) |
|
|
|
|
|
Earnings per
share |
|
|
|
|
Basic and diluted
loss per US$ share |
13 |
US$(1.90) |
|
US$(0.68) |
Basic and diluted
loss per £ share |
13 |
US$(2.19) |
|
US$(1.33) |
All items derive from continuing activities.
Statement of Changes in Equity
For the year ended 31 December
2019
|
|
|
Special |
|
Retained |
|
|
|
|
|
reserve |
|
earnings |
|
Total |
|
Note |
|
US$ |
|
US$ |
|
US$ |
|
|
|
|
|
|
|
|
Total equity as at
1 January 2019 |
|
|
381,934,791 |
|
(351,416,351) |
|
30,518,440 |
Total loss and
comprehensive income for the year |
|
|
- |
|
(10,122,769) |
|
(10,122,769) |
Capital
distribution |
8 |
|
(6,224,900) |
|
- |
|
(6,224,900) |
Total equity as at
31 December 2019 |
|
|
375,709,891 |
|
(361,539,120) |
|
14,170,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity as at
1 January 2018 |
|
|
407,583,513 |
|
(345,067,522) |
|
62,515,991 |
Total loss and
comprehensive income for the year |
|
|
- |
|
(6,348,829) |
|
(6,348,829) |
Capital
distribution |
8 |
|
(25,648,722) |
|
- |
|
(25,648,722) |
Total equity as at
31 December 2018 |
|
|
381,934,791 |
|
(351,416,351) |
|
30,518,440 |
Statement of Cash Flows
For the year ended 31 December
2019
|
|
Year
ended
31 December 2019 |
|
Year
ended
31 December 2018 |
|
|
Note |
US$ |
|
US$ |
|
Cash flows from
operating activities |
|
|
|
|
|
Net bank interest
received |
|
18,073 |
|
55,724 |
|
Dividends
received |
|
1,083,815 |
|
21,243,875 |
|
Net operating expenses
paid |
|
(330,308) |
|
(435,184) |
|
Net cash from
operating activities |
|
771,580 |
|
20,864,415 |
|
|
|
|
|
|
|
Cash flows from
investment activities |
|
|
|
|
|
Sales of
investments |
|
13,303,096 |
|
6,890,914 |
|
Purchases of
investments |
|
(7,499,906) |
* |
(2,000,000) |
* |
Net cash
flows on derivative instruments and foreign exchange |
(71,545) |
|
(366,942) |
|
Net cash from
investment activities |
|
5,731,645 |
|
4,523,972 |
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
Capital
distributions |
8 |
(6,224,900) |
|
(25,648,722) |
|
Net cash used in
financing activities |
|
(6,224,900) |
|
(25,648,722) |
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents |
|
278,325 |
|
(260,335) |
|
|
|
|
|
|
|
Reconciliation of net cash flows to movement in cash and cash
equivalents |
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at the beginning of the year |
413,401 |
|
673,736 |
|
Net
increase/(decrease) in cash and cash equivalents |
|
278,325 |
|
(260,335) |
|
Cash and cash
equivalents at the end of the year |
|
691,726 |
|
413,401 |
|
* |
This amount represents a purchase of shares in the
Ashmore SICAV 2 Global Liquidity US$ Money Market Fund, which is
solely related to the cash management of US$ on account. This is
not the purchase of a new investment. |
|
|
Notes to the Financial Statements - Schedule of
Investments
As at 31 December 2019
Description of
investments |
Fair
value
US$ |
|
%
of
net assets |
|
|
|
|
AEI Inc - Equity |
7,271,092 |
|
51.31 |
Ashmore Global Special
Situations Fund 4 LP |
2,803,057 |
|
19.78 |
Ashmore Global Special
Situations Fund 5 LP |
1,601,550 |
|
11.30 |
AA Development Capital
India Fund 1, LLC |
1,420,471 |
|
10.02 |
Ashmore Global Special
Situations Fund 3 LP |
718,268 |
|
5.07 |
Ashmore Global Special
Situations Fund 2 Limited |
472,037 |
|
3.33 |
VTBC Ashmore Real
Estate Partners 1 LP |
311,358 |
|
2.20 |
|
|
|
|
Total investments
at fair value |
14,597,833 |
|
103.01 |
|
|
|
|
Net other current
liabilities |
(427,062) |
|
(3.01) |
|
|
|
|
Total net
assets |
14,170,771 |
|
100.00 |
Notes to the Financial Statements
1. General Information
Ashmore Global Opportunities Limited (the “Company” or “AGOL”)
is an authorised closed ended investment company incorporated in
Guernsey on 21 June 2007 with an indefinite life and a
listing on the London Stock Exchange. As an existing closed ended
Company, AGOL is deemed to have been granted an authorisation in
accordance with section 8 of the Protection of Investors (Bailiwick
of Guernsey) Law, 1987, as
amended, and rule 7.02(2) of the Authorised Closed Ended Investment
Schemes Rules 2008 on the same date as the Company obtained consent
under the Control of Borrowing (Bailiwick of Guernsey) Ordinances 1959 to 1989. AGOL’s
investment objective is the realisation of the Company’s assets in
an orderly manner in order to return cash to shareholders.
The Company was launched on 7 December
2007 and the Company’s shares were admitted to the Official
Listing of the London Stock Exchange on 12
December 2007, pursuant to Chapter 14 of the Listing Rules.
Following changes to the Listing Rules on 6
April 2010, the listing became a Standard Listing. On
27 April 2011, the UK Listing
Authority confirmed the transfer of the Company from a Standard
Listing to a Premium Listing under Chapter 15 of the Listing
Rules.
On 20 February 2013, the Board of
Directors proposed a managed wind-down of the Company following
consultation with the Investment Manager and the main shareholders.
The proposal was accepted during the Extraordinary General Meeting
(“EGM”) of shareholders on 13 March
2013.
The Directors have assessed the impact of the Alternative
Investment Fund Managers Directive (“AIFMD”) on the financial
statements of the Company and have concluded that the Company is
exempt from following Chapter V, Section 1, Articles 103 – 111 of
the European Commission’s Level 2 Delegated Regulation on the basis
of the operations of the Company: it being (i) a Non-EEA AIF, and
(ii) not being marketed in the European Union, as defined by the
Directive.
Investment Strategy
Prior to the Extraordinary General Meeting (“EGM”) of
shareholders on 13 March 2013, the
Company’s investment objective was to deploy capital in a
diversified portfolio of global emerging market strategies and
actively manage these with a view to maximising total returns. This
was implemented by investing across various investment themes
(Alternatives including Special Situations and Real Estate,
External Debt, Local Currency, Equities, Corporate Debt and
Multi-Strategy), with a principal focus on Special Situations.
The Company is domiciled in Guernsey, Channel
Islands. Most of the Company’s income is from investment
entities incorporated in Guernsey.
Significant Shareholders
The Company has a diversified shareholder population. As at
31 December 2019 and 31 December 2018, The Bank of New York Nominees
Limited, Goldman Sachs Securities Nominees Limited and Chase
Nominees Limited held more than 10% of the Company’s NAV.
Significant shareholders are listed in the Directors’ Report.
2. Summary of Significant
Accounting Policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied for the years presented, unless otherwise
stated.
a) Statement of Compliance
These audited financial statements, which give a true and fair
view, are prepared in accordance with: International Financial
Reporting Standards (“IFRS”); and the Listing Rules of the UK
Listing Authority. They comply with the Companies (Guernsey) Law, 2008 (the “Law”).
b) Basis of Preparation
These audited financial statements have been prepared under the
historical cost convention, except for financial assets and
financial liabilities at fair value through profit and loss
(“FVTPL”).
These audited financial statements have been prepared on the
going concern basis, despite the managed wind-down of the Company
approved by the shareholders on 13 March
2013. The factors surrounding this are detailed in the
Strategic Report. The Board has concluded that the managed
wind-down of the Company has no significant impact on the valuation
of the Company’s investments or its ability to meet liabilities as
they fall due for the foreseeable future, including for at least 12
months from the date of this report.
The preparation of financial statements in conformity with IFRS
requires judgements, estimates and assumptions that affect the
application of policies and the reported amounts of assets,
liabilities, income and expenses.
These estimates and their associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making judgements about the carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and their underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision
affects only that period, or in the period of revision and future
periods if the revision affects both current and future
periods.
The key estimates and judgements made by management in the
application of IFRS that have a significant effect on the financial
statements relate to the valuation of unquoted financial
instruments as described in notes 2d and 7b.
c) Foreign Currency
i) Functional and presentational
currency
These audited financial statements have been prepared in US
dollars (“US$”), which is the Company’s functional and
presentational currency, rounded to the nearest US$. The Board of
Directors considers the US$ to be the currency that most faithfully
represents the economic effect on the Company of the underlying
transactions, events and conditions. The US$ is the currency in
which the Company measures its performance and reports its
results.
ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary assets and liabilities are
translated into the functional currency using the exchange rate
prevailing at the Statement of Financial Position date (the
“reporting date”).
Foreign exchange gains and losses arising from translation are
included in net foreign currency gain in the Statement of
Comprehensive Income.
Foreign exchange gains and losses relating to the financial
assets and liabilities carried at FVTPL are presented in the
Statement of Comprehensive Income within “Net loss from financial
instruments at FVTPL”.
d) Financial Assets and Financial Liabilities
i) Recognition and
initial measurement
The Company recognises financial assets and financial
liabilities at FVTPL on the trade date, which is the date on which
the Company becomes a party to the contractual provisions of the
instrument. Other financial assets and financial liabilities are
recognised on the date on which they are originated.
Financial assets and financial liabilities at FVTPL are
initially measured at fair value, with transaction costs recognised
as expenses in the Statement of Comprehensive Income. Financial
assets or financial liabilities not at FVTPL are initially measured
at fair value and include transaction costs that are directly
attributable to their acquisition or issue.
ii) Classification of
financial assets
On initial recognition, the Company classifies financial assets
as measured at amortised cost or FVTPL.
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
· it is held within a business model whose
objective is to hold assets to collect contractual cash flows;
and
· its contractual terms give rise on specified
dates to cash flows that are solely payments of principal and
interest (“SPPI”).
On initial recognition of an equity investment that is not held
for trading, the Company may irrevocably elect to present
subsequent changes in the investment’s fair value in other
comprehensive income. This election is made on an
investment-by-investment basis. All other financial assets of the
Company, not classified as measured at amortised cost or fair value
through other comprehensive income, are measured at FVTPL.
- Business model assessment
In making an assessment of the objective of the business model
in which a financial asset is held, the Company considers all of
the relevant information about how the business is managed,
including:
· the documented investment strategy and the
execution of this strategy in practice. This includes whether the
investment strategy focuses on earning contractual interest income,
maintaining a particular interest rate profile, matching the
duration of the financial assets to the duration of any related
liabilities or expected cash outflows or realising cash flows
through the sale of the assets;
· how the performance of the portfolio is
evaluated and reported to the Company's management;
· the risks that affect the performance of the
business model (and the financial assets held within that business
model) and how those risks are managed;
· how the investment manager is compensated:
e.g. whether compensation is based on the fair value of the assets
managed or the contractual cash flows collected; and
· the frequency, volume and timing of sales of
financial assets in prior periods, the reasons for such sales and
expectations about future sales activity.
Transfers of financial assets to third parties in transactions
that do not qualify for derecognition are not considered sales for
this purpose, consistent with the Company's continuing recognition
of the assets.
The Company has determined that it has two business models.
· Held-to-collect business model: this
includes cash and cash equivalents, balances due from brokers and
other assets. These financial assets are held to collect
contractual cash flows.
· Other business model: this includes equity
investments, investments in quoted and unquoted Funds and forward
foreign currency contracts. These financial assets are managed and
their performance is evaluated, on a fair value basis.
- Assessment of whether contractual
cash flows are SPPI
For the purposes of this assessment, 'principal' is defined as
the fair value of the financial asset on initial recognition.
'Interest' is defined as consideration for the time value of money
and for the credit risk associated with the principal amount
outstanding during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and administrative
costs) as well as a profit margin.
In assessing whether the contractual cash flows are SPPI, the
Company considers the contractual terms of the instrument. This
includes assessing whether the financial asset contains a
contractual term that could change the timing or amount of
contractual cash flows such that it would not meet this condition.
In making this assessment, the Company considers:
· contingent events that would change the
amount or timing of cash flows;
· leverage features;
· prepayment and extension features;
· terms that limit the Company's claim to cash
flows from specified assets (e.g. non-recourse features); and
· features that modify consideration of the
time value of money (e.g. periodical reset of interest rates).
- Reclassifications
Financial assets are not reclassified subsequent to their
initial recognition unless the Company were to change its business
model for managing financial assets, in which case all affected
financial assets would be reclassified on the first day of the
first reporting period following the change in the business
model.
ii) Subsequent
measurement of financial assets
Subsequent to initial recognition, all financial assets at FVTPL
are measured at fair value. 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.
Gains and losses arising from changes in the fair value of
financial assets at FVTPL are presented in the Statement of
Comprehensive Income within “Net loss from financial instruments at
FVTPL” in the period in which they arise and can be unrealised or
realised.
Unrealised gains and losses comprise changes to the fair value
of financial instruments for the year and the reversal of prior
period unrealised gains and losses for financial instruments which
were realised in the reporting period.
Realised gains and losses on the disposal of financial
instruments classified as at FVTPL are calculated using the average
cost method.
- Valuation of investments in Funds
Investments in quoted open-ended Funds are valued by reference
to the most recent prices quoted on a recognised investment
exchange. Investments in unquoted Funds are valued on the basis of
the latest NAV provided by the administrator of the unquoted Fund
in question, as at the close of business on the relevant valuation
day.
- Valuation of direct investments
Direct investments may be effected via holding vehicles. The
valuations of such positions are based on the valuation of the
underlying investments. Where possible the fair values of direct
debt or equity investments are based on their quoted market prices
at the reporting date, without any deduction for estimated future
selling costs. If a quoted market price is not available on a
recognised stock exchange or from a broker/dealer for non-exchange
traded financial instruments, the fair value is estimated using
valuation techniques, as described in note 7.
- Valuation of forward foreign currency contracts
Open forward foreign currency contracts at the reporting date
are valued at forward currency rates prevailing on that date. The
change in the fair value of open forward foreign currency contracts
is calculated as the difference between the contract rate and the
forward currency rate as at the reporting date.
The Company does not apply hedge accounting.
- Financial assets at amortised cost
These assets are subsequently measured at amortised cost using
the effective interest method. Interest income is recognised in
“Interest income calculated using the effective interest method”,
foreign exchange gains and losses are recognised in “Net foreign
currency gain” and impairment (if any) is recognised in “Impairment
losses on financial instruments” in the Statement of Comprehensive
Income. Any gain or loss on derecognition is also recognised in
profit or loss.
Cash and cash equivalents, balances due from brokers and other
financial assets are included in this category.
iii) Financial liabilities -
Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised
cost or FVTPL.
A financial liability is classified as at FVTPL if it is
classified as held-for-trading, if it is a derivative or if it is
designated as such on initial recognition. Financial liabilities at
FVTPL are measured at fair value and net gains and losses,
including any interest expense, are recognised in profit or
loss.
Other financial liabilities are subsequently measured at
amortised cost using the effective interest method. Interest
expense and foreign exchange gains and losses are recognised in
profit or loss. Any gain or loss on derecognition is also
recognised in profit or loss.
Financial liabilities at FVTPL:
· Held-for-trading: derivative financial
instruments.
Financial liabilities at amortised cost:
· This includes accounts payable and accrued
expenses.
v) Impairment of
financial assets
The Company recognises loss allowances for expected credit loss
(“ECL”) on financial assets measured at amortised cost.
The Company measures loss allowances at an amount equal to
lifetime ECLs, except for the following, which are measured at
12-month ECLs:
· financial assets that are determined to have
low credit risk at the reporting date; and
· other financial assets for which credit risk
(i.e. the risk of default occurring over the expected life of the
asset) has not increased significantly since initial
recognition.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating ECLs, the Company considers reasonable and supportable
information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information
and analysis, based on the Company’s historical experience and
informed credit assessment and including forward-looking
information.
The Company assumes that the credit risk on a financial asset
has increased significantly if it is more than 30 days past
due.
The Company considers a financial asset to be in default
when:
· the borrower is unlikely to pay its credit
obligations to the Company in full, without recourse by the Company
to actions such as realising security (if any is held); or
· the financial asset is more than 90 days
past due.
Lifetime ECLs are the ECLs that result from all possible default
events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default
events that are possible within the 12 months after the reporting
date (or a shorter period if the expected life of the instrument is
less than 12 months).
The maximum period considered when estimating ECLs is the
maximum contractual period over which the Company is exposed to
credit risk.
- Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the
entity in accordance with the contract and the cash flows that the
Company expects to receive).
ECLs are discounted at the effective interest rate of the
financial asset.
- Credit-impaired financial
assets
At each reporting date, the Company assesses whether financial
assets carried at amortised cost are credit-impaired. A financial
asset is 'credit-impaired' when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred. As at 31
December 2019 and 2018, the Company’s financial assets
measured at amortised cost were not impaired.
Evidence that a financial asset is credit-impaired includes the
following observable data:
· significant financial difficulty of the
borrower or issuer;
· a breach of contract such as a default or
being more than 90 days past due; or
· it is probable that the borrower will enter
bankruptcy or other financial reorganisation.
- Presentation of allowance for ECLs
in the Statement of Financial Position
Loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets.
- Write-off
The gross carrying amount of a financial asset is written off
when the Company has no reasonable expectations of recovering a
financial asset in its entirety or a portion thereof.
v) Derecognition
Financial assets are derecognised when the contractual rights to
receive cash flows from the assets have expired or the Company has
transferred substantially all the risks and rewards of ownership.
Financial liabilities are derecognised when their contractual
obligations are discharged, cancelled or expired.
vi) Offsetting
Financial assets and liabilities are offset and the net amount
presented in the Statement of Financial Position when, and only
when, the Company has a legal right to offset the recognised
amounts and it intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
The Company has adopted the amendments to IAS 32 on offsetting.
These amendments clarify the offsetting criteria in IAS 32 by
explaining when an entity currently has a legally enforceable right
to set-off and when gross settlement is considered to be equivalent
to net settlement.
The Company does not hold any financial assets or financial
liabilities that are subject to master netting agreements or
similar agreements and, as such, has not presented any financial
assets or liabilities net on the Statement of Financial Position.
There were no financial assets or financial liabilities that are
offset in the Statement of Financial Position.
Income and expenses are presented on a net basis only when
permitted under IFRS.
e) Amounts due from and due to Brokers
Amounts due from and due to brokers represent receivables for
securities sold and payables for securities purchased that have
been contracted for but not yet settled or delivered on the
reporting date respectively. The accounting policy for the
recognition of amounts due from and due to brokers is discussed in
note 2d.
f) Cash and Cash Equivalents
Cash and cash equivalents may comprise current deposits with
banks, bank overdrafts and other short-term highly liquid
investments that: are readily convertible to known amounts of cash;
are subject to insignificant changes in value; and are held for the
purpose of meeting short-term cash commitments rather than for
investment or other purposes. Cash, deposits with banks and bank
overdrafts are stated at their principal amount.
g) Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
included in equity as a deduction from issue proceeds, net of
tax.
h) Interest Income
Interest income is recognised in the Statement of Comprehensive
Income as it accrues, on a time-proportionate basis using the
effective interest rate method. It includes interest income from
cash and cash equivalents and from debt securities at FVTPL.
i) Dividend Income
Income distributions from quoted Funds are recognised in the
Statement of Comprehensive Income within “Net loss from financial
instruments at FVTPL” when declared. Dividend income from unquoted
Funds and private equity investments is recognised when the right
to receive payment is established.
j) Earnings per Share
The Company presents basic and diluted earnings per share
(“EPS”) data for each class of its ordinary shares. The basic EPS
of each share class is calculated by dividing the profit or loss
attributable to the ordinary shareholders of each share class by
the weighted average number of ordinary shares outstanding for the
respective share class during the period. Where dilutive
instruments are in issue, diluted EPS is determined by adjusting
the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding for the
effects of the dilutive instruments.
k) Expenses
All expenses are recognised in the Statement of Comprehensive
Income on an accruals basis.
l) Segmental Reporting
Although the Company has two classes of shares and invests in
various investment themes, it is organised and operates as one
business and one geographical segment, as the principal focus is on
emerging market strategies, mainly achieved via investments in
funds domiciled in Europe but
investing globally. 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. Additionally, the
Company’s performance is evaluated on an overall basis. The
Company’s management receives financial information prepared under
IFRS and, as a result, the disclosure of separate segmental
information is not required.
m) Consolidation
The Company is not required to consolidate any of the
investments listed in the Schedule of Investments or the underlying
investments of the Funds held, as it does not control them and
given that the Company is an investment entity under IFRS 10 –
Investment Entities. All investments including those
effected via holding vehicles are valued at FVTPL.
Disclosure of Interests in Other
Entities
As a result of the application of IFRS 12 – Disclosure of
Interests in Other Entities, the Company has made disclosures
about its involvement with unconsolidated structured entities in
note 16.
The Company has concluded that unlisted Funds in which it
invests, but which it does not consolidate, meet the definition of
structured entities for the following reasons:
· the voting rights attached to the Funds are
not considered to be dominant rights as the holder is unable to
control the Funds. The rights relate only to influence over
administrative tasks;
· each Fund’s activities are restricted by its
prospectus; and
· the Funds have narrow and well-defined
objectives to provide investment opportunities to investors.
n) Related Parties
IAS 24 – Related Party Disclosures defines a related
party as a person or entity that is related to the entity that is
preparing its financial statements (the “reporting entity”). A
person or a close member of that person’s family is related to a
reporting entity if that person has control, joint control, or
significant influence over the entity or is a member of its key
management personnel. An entity is related to a reporting entity
if, among other circumstances, it is a parent, subsidiary, fellow
subsidiary, associate, or joint venture of the reporting entity, or
it is controlled, jointly controlled, or significantly influenced
or managed by a person who is a related party. For further
information, please refer to Supplementary Information (Unaudited)
– Remuneration Disclosure.
o) New Standards, Amendments and Interpretations
The Company has initially applied IFRIC 23 – Uncertainty over
Income Tax Treatments from 1 January
2019. A number of other new standards are also effective
from 1 January 2019 but they do not
have a material effect on the Company’s financial statements.
The Company has consistently applied the accounting policies as
set out below to all periods presented in these financial
statements.
IFRIC 23 – Uncertainty over Income
Tax Treatments
On 7 June 2017, the IASB issued
IFRIC Interpretation 23 – Uncertainty over Income Tax
Treatments (the “Interpretation”). The Interpretation clarifies
application of recognition and measurement requirements in IAS 12
– Income Taxes when there is uncertainty over income
tax treatments. The Interpretation is effective for annual
reporting periods beginning on or after 1
January 2019. Please refer to note 3 for further
details.
p) New Standards and Interpretations not yet
Adopted
A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning after
1 January 2019 and early adoption is
permitted; however, the Company has not early adopted the new or
amended standards in preparing these financial statements.
The following amended standards and interpretations are not
expected to have a significant impact on the Company’s financial
statements:
- Amendments to References to Conceptual
Framework in IFRS Standards;
- Definition of a Business (Amendments
to IFRS 3);
- Definition of Material (Amendments to
IAS 1 and IAS 8);
- IFRS 17 – Insurance
Contracts;
- Interest Rate Benchmark Reform
(Amendments to IFRS 9, IAS 39 and IFRS 7).
q) Contingent Assets
Contingent assets are not recognised in the financial
statements, but are disclosed in the notes to the financial
statements where an inflow of economic benefits is probable but not
virtually certain. Please see note 19 for details about contingent
assets as at 31 December 2019.
3. Taxation
The Director of Income Tax in Guernsey has confirmed that, for the year
ended 31 December 2019, the Company
is exempt from Guernsey Income Tax under the Income Tax (Exempt
bodies) (Guernsey) Ordinance 1989,
and that any surplus income of the Company may be distributed
without the deduction of Guernsey Income Tax. Pursuant to the
exemption granted under the above-mentioned ordinance, the Company
is subject to an annual fee of £1,200 (2018: £1,200) equivalent to
US$1,531 (2018: US$1,600), payable to the States of Guernsey
Income Tax.
The Company is exposed to other taxes in its countries of
investment. During the years ended 31
December 2019 and 31 December
2018, no dividend income or interest income received by the
Company was subject to withholding tax imposed in the countries of
investment.
4. Financial Assets and Liabilities at
FVTPL
|
|
|
|
|
|
31
December 2019 |
31
December 2018 |
|
|
|
|
|
|
US$ |
US$ |
Equity
investments |
|
14,597,833 |
31,179,252 |
Derivative
financial assets |
|
115,422 |
- |
Total
financial assets at FVTPL |
|
14,713,255 |
31,179,252 |
During the years ended 31 December
2019 and 2018, the Company invested in the Ashmore SICAV 2
Global Liquidity US$ Money Market Fund, formerly known as the
Ashmore SICAV 2 Global liquidity US$ Fund. During the year ended
31 December 2019, the Company sold
Ashmore Asian Recovery Fund, Ashmore Asian Special Opportunities
Fund Limited and Ashmore SICAV 2 Global Liquidity US$ Money Market
Fund. There were no other significant changes to the Company’s
direct equity investments other than valuation movements.
As at 31 December 2019, derivative
financial assets comprised forward foreign currency contracts as
follows:
Currency
Bought |
Amount
Bought |
|
Currency
Sold |
Amount
Sold |
|
Maturity
Date |
Unrealised
Gain |
£ |
3,876,657 |
|
US$ |
5,024,360 |
|
31/01/2020 |
115,422 |
Derivative financial assets |
|
|
115,422 |
As at 31 December 2018, there were
no derivative financial assets.
|
|
|
|
|
|
31
December 2019 |
31
December 2018 |
|
|
|
|
|
|
US$ |
US$ |
Derivative
financial liabilities |
|
(12,409) |
(70,234) |
Total
financial liabilities at FVTPL |
|
(12,409) |
(70,234) |
As at 31 December 2019, derivative
financial liabilities comprised forward foreign currency contracts
as follows:
Currency
Bought |
Amount
Bought |
|
Currency
Sold |
Amount
Sold |
|
Maturity
Date |
Unrealised
Loss |
US$ |
1,144,714 |
|
£ |
872,755 |
|
31/01/2020 |
(12,409) |
Derivative financial liabilities |
|
|
(12,409) |
As at 31 December 2018, derivative
financial liabilities comprised forward foreign currency contracts
as follows:
Currency
Bought |
Amount
Bought |
|
Currency
Sold |
Amount
Sold |
|
Maturity
Date |
Unrealised
Loss |
£ |
8,082,702 |
|
US$ |
10,378,641 |
|
31/01/2019 |
(70,234) |
Derivative financial liabilities |
|
|
(70,234) |
5. Net Loss from Financial Instruments
at FVTPL
|
|
|
|
|
|
31
December 2019 |
31
December 2018 |
|
|
|
|
|
|
US$ |
US$ |
Derivative
financial instruments |
|
56,604 |
(1,005,309) |
Total
derivative financial instruments |
|
56,604 |
(1,005,309) |
Financial
assets mandatorily measured at FVTPL: |
|
|
|
|
- Equity
investments |
|
(9,694,414) |
(5,089,164) |
Total
financial assets mandatorily measured at FVTPL |
|
(9,694,414) |
(5,089,164) |
Net
loss from financial instruments at FVTPL |
|
(9,637,810) |
(6,094,473) |
|
|
|
|
|
|
|
|
Net loss
from financial instruments at FVTPL: |
|
|
|
- Dividend
income |
|
1,100,458 |
21,243,891 |
- Realised
gains on investments |
|
12,145 |
2,412,475 |
- Realised
losses on investments |
|
(910,967) |
(12,720,885) |
- Realised
gains on forward foreign currency contracts |
|
1,099,524 |
1,919,582 |
- Realised
losses on forward foreign currency contracts |
|
(1,216,167) |
(2,333,258) |
- Change
in unrealised gains on investments |
|
2,995,306 |
11,113,449 |
- Change
in unrealised losses on investments |
|
(12,891,356) |
(27,138,094) |
- Change
in unrealised gains on forward foreign currency contracts |
|
185,656 |
- |
- Change
in unrealised losses on forward foreign currency contracts |
|
(12,409) |
(591,633) |
Net
loss from financial instruments at FVTPL |
|
(9,637,810) |
(6,094,473) |
6. Other Financial Assets
and Liabilities
a) Other financial assets:
Other financial assets relate to accounts receivable and prepaid
expenses, and comprise the following:
|
|
|
|
|
|
31
December 2019 |
31
December 2018 |
|
|
|
|
|
|
US$ |
US$ |
Prepaid
expenses |
|
- |
5,366 |
|
|
|
|
|
|
- |
5,366 |
b) Other financial liabilities:
Other financial liabilities relate to accounts payable and
accrued expenses, and comprise the following:
|
|
|
|
|
|
31
December 2019 |
31
December 2018 |
|
|
|
|
|
|
US$ |
US$ |
Incentive
fees payable |
|
(1,145,642) |
(907,896) |
Investment
management fees payable |
|
(6,059) |
(5,069) |
Other
accruals |
|
(70,100) |
(96,380) |
|
|
|
|
|
|
(1,221,801) |
(1,009,345) |
7. Financial
Instruments
a) Carrying amounts versus fair values
As at 31 December 2019, the
carrying values of financial assets and liabilities presented in
the Statement of Financial Position approximate their fair
values.
The table below sets out the classifications of the carrying
amounts of the Company’s financial assets and financial liabilities
into categories of financial instruments as at 31 December 2019.
|
Mandatorily at FVTPL |
Financial assets at amortised cost |
Financial liabilities at amortised cost |
Total |
Cash and cash
equivalents |
- |
691,726 |
- |
691,726 |
Non-pledged financial
assets at FVTPL |
14,713,255 |
- |
- |
14,713,255 |
Total |
14,713,255 |
691,726 |
- |
15,404,981 |
|
|
|
|
|
Financial liabilities
at FVTPL |
(12,409) |
- |
- |
(12,409) |
Other payables |
- |
- |
(1,221,801) |
(1,221,801) |
Total |
(12,409) |
- |
(1,221,801) |
(1,234,210) |
The table below sets out the classifications of the carrying
amounts of the Company’s financial assets and financial liabilities
into categories of financial instruments as at 31 December 2018.
|
Mandatorily at FVTPL |
Financial assets at amortised cost |
Financial liabilities at amortised cost |
Total |
Cash and cash
equivalents |
- |
413,401 |
- |
413,401 |
Non-pledged financial
assets at FVTPL |
31,179,252 |
- |
- |
31,179,252 |
Other receivables |
- |
5,366 |
- |
5,366 |
Total |
31,179,252 |
418,767 |
- |
31,598,019 |
|
|
|
|
|
Financial liabilities
at FVTPL |
(70,234) |
- |
- |
(70,234) |
Other payables |
- |
- |
(1,009,345) |
(1,009,345) |
Total |
(70,234) |
- |
(1,009,345) |
(1,079,579) |
b) Financial instruments carried at fair value - fair value
hierarchy
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability (i.e. the exit price)
in an orderly transaction between market participants at the
measurement date.
For certain of the Company’s financial instruments including
cash and cash equivalents, prepaid/accrued expenses and other
debtors and creditors, their carrying amounts approximate fair
value due to the immediate or short-term nature of these financial
instruments. The Company’s investments and financial derivative
instruments are carried at market value, which approximates fair
value.
The Company classifies financial instruments within a fair value
hierarchy that prioritises the inputs to valuation techniques used
to measure fair value. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements). The three levels of the
fair value hierarchy are as follows:
Level 1 inputs are unadjusted quoted prices in active
markets for identical assets or liabilities that the reporting
entity has the ability to access at the measurement date.
Level 2 inputs are observable inputs other than quoted
prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly, including:
- quoted prices for similar assets or liabilities in active
markets;
- quoted prices for identical or similar assets or liabilities
in markets that are not active;
- inputs other than quoted prices that are observable for the
asset or liability;
- inputs that are derived principally from or corroborated by an
observable market.
Level 3 inputs are unobservable inputs for the asset or
liability.
Inputs are used in applying various valuation techniques and
broadly refer to the assumptions that market participants use to
make valuation decisions, including assumptions about risk. Inputs
may include price information, volatility statistics, specific and
broad credit data, liquidity statistics, and other factors. A
financial instrument’s level within the fair value hierarchy is
based on the lowest level of any input that is significant to the
fair value measurement. However, the determination of what
constitutes “observable” requires significant judgement. The
Company considers observable data to be that market data which is
readily available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources
that are actively involved in the relevant market.
The categorisation of a financial instrument within the
hierarchy is based upon the pricing transparency of the instrument
and does not necessarily correspond to the Company’s perceived risk
of that instrument.
Investments: Investments whose values are based on quoted
market prices in active markets, and are therefore classified
within Level 1, may include active listed equities, certain U.S.
government and sovereign obligations, and certain money market
securities. The Company does not generally adjust the quoted price
for such instruments, even in situations where it holds a large
position and a sale could reasonably impact the quoted price.
Investments that trade in markets that are not considered to be
active, but are valued based on quoted market prices, dealer
quotations or alternative pricing sources supported by observable
inputs are classified within Level 2. These may include government
and sovereign obligations, government agency securities, corporate
bonds, and municipal and provincial obligations.
Investments classified within Level 3 have significant
unobservable inputs, as they trade infrequently or not at all.
Level 3 instruments may include private equity investments, certain
loan agreements, less-liquid corporate debt securities (including
distressed debt instruments) and collateralised debt obligations.
Also included in this category are government and sovereign
obligations, government agency securities and corporate bonds for
which independent broker prices are used and information relating
to the inputs of the price models is not observable.
When observable prices are not available; e.g. if an asset does
not trade regularly, the Company may rely on information provided
by any person, firm or entity including any professional person
whom the Directors consider to be suitably qualified to provide
information in respect of the valuation of investments and who is
approved by the Custodian (an “Approved Person”). Approved Persons
may include certain brokers and the Pricing Methodology and
Valuation Committee (“PMVC”) of the Investment Manager.
The PMVC may, upon request, provide assistance to the
Administrator in determining a methodology for valuing assets where
the Administrator cannot determine a price or methodology from
another source. It is the Administrator’s responsibility to
determine whether to use any such assistance provided by the PMVC.
These assets, which are classified within Level 3, may include all
asset types but are frequently ‘Special Situations’ type
investments, typically incorporating distressed, illiquid or
private investments.
For these hard-to-value investments, the methodology and models
used to determine fair value are created in accordance with the
International Private Equity and Venture Capital Valuation (“IPEV”)
guidelines. Smaller investments may be valued directly by the PMVC
but material investments are valued by experienced personnel at an
independent third-party valuation specialist. Such valuations are
subject to review, amendment if necessary, then approval by the
PMVC. The valuations are ultimately approved by the Directors and
reviewed by the auditors as they make up part of the NAV in the
financial statements.
Valuation techniques used include the market approach, the
income approach or the cost approach depending on the availability
of reliable information. The market approach generally consists of
using; comparable transactions, earnings before interest, tax,
depreciation and amortisation (“EBITDA”) multiples; or enterprise
value (“EV”) multiples (based on comparable public company
information). The use of the income approach generally consists of
the net present value of estimated future cash flows, adjusted as
deemed appropriate for liquidity, credit, market and/or other risk
factors.
Inputs used in estimating the value of investments may include
the original transaction price, recent transactions in the same or
similar instruments, completed or pending third-party transactions
in the underlying investment or comparable issuers, subsequent
rounds of financing, recapitalisations and other transactions
across the capital structure, offerings in the equity or debt
capital markets and bids received from potential buyers.
For the determination of the NAV, Level 3 investments may be
adjusted to reflect illiquidity and/or non-transferability.
However, any such adjustments are typically reversed in the
financial statements where it is required by the accounting
standards.
The Company believes that its estimates of fair value are
appropriate, however estimates and assumptions concerning the
future, by definition, seldom equal the actual results and the
estimated value may not be realised in a current sale or immediate
settlement of the asset or liability. The use of different
methodologies, assumptions or inputs would lead to different
measurements of fair value and given the number of different
factors affecting the estimate, specific sensitivity analysis
cannot be reliably quantified.
Financial Derivative Instruments: Financial derivative
instruments can be exchange-traded or privately negotiated
over-the-counter (“OTC”). Exchange-traded derivatives, such as
futures contracts and exchange-traded option contracts, are
typically classified within Level 1 or Level 2 of the fair value
hierarchy depending on whether or not they are deemed to be
actively traded.
OTC derivatives, including forwards, credit default swaps,
interest rate swaps and currency swaps, are valued by the Company
using observable inputs, such as quotations received from the
counterparty, dealers or brokers, whenever these are available and
considered reliable. In instances where models are used, the value
of an OTC derivative depends upon the contractual terms of, and
specific risks inherent in, the instrument as well as the
availability and reliability of observable inputs. Such inputs
include market prices for reference securities, yield curves,
credit curves, measures of volatility, prepayment rates and
correlations of such inputs. Certain OTC derivatives, such as
generic forwards, swaps and options, have inputs which can
generally be corroborated by market data and are therefore
classified within Level 2.
Those OTC derivatives that have less liquidity or for which
inputs are unobservable are classified within Level 3. While the
valuations of these less liquid OTC derivatives may utilise some
Level 1 and/or Level 2 inputs, they also include other unobservable
inputs which are considered significant to the fair value
determination. At each measurement date, the Company updates the
Level 1 and Level 2 inputs to reflect observable inputs, though the
resulting gains and losses are reflected within Level 3 due to the
significance of the unobservable inputs.
The Company recognises transfers between Levels 1, 2 and 3 based
on the date of the event or change in circumstances that caused the
transfer. This policy on the timing of recognising transfers is the
same for transfers into a level as for transfers out of a level.
There were no transfers between the three levels during the years
ended 31 December 2019 and
31 December 2018.
The following table analyses within the fair value hierarchy the
Company’s financial assets and liabilities at FVTPL (by class)
measured at fair value as at 31 December
2019:
|
Level
1 |
Level
2 |
Level
3 |
Total |
Non-pledged
financial assets at FVTPL |
|
|
|
|
Equity
investments |
- |
- |
14,597,833 |
14,597,833 |
Derivative financial
assets |
- |
115,422 |
- |
115,422 |
Total |
- |
115,422 |
14,597,833 |
14,713,255 |
|
|
|
|
|
Financial
liabilities at FVTPL |
|
|
|
|
Derivative financial
liabilities |
- |
(12,409) |
- |
(12,409) |
Total |
- |
(12,409) |
- |
(12,409) |
The following table analyses within the fair value hierarchy the
Company’s financial assets and liabilities at FVTPL (by class)
measured at fair value as at 31 December
2018:
|
Level
1 |
Level
2 |
Level
3 |
Total |
Non-pledged
financial assets at FVTPL |
|
|
|
|
Equity
investments |
2,000,954 |
- |
29,178,298 |
31,179,252 |
Total |
2,000,954 |
- |
29,178,298 |
31,179,252 |
|
|
|
|
|
Financial
liabilities at FVTPL |
|
|
|
|
Derivative financial
liabilities |
- |
(70,234) |
- |
(70,234) |
Total |
- |
(70,234) |
- |
(70,234) |
Level 1 assets include the Ashmore SICAV 2 Global
Liquidity US$ Money Market Fund.
Level 2 assets and liabilities include forward foreign
currency contracts that are calculated internally using observable
market data.
Level 3 assets include all unquoted Funds, limited
partnerships and unquoted investments. Investments in unquoted
Funds and limited partnerships are valued on the basis of the
latest NAV, which represents the fair value, as provided by the
administrator of the unquoted Fund at the close of business on the
relevant valuation day. Unquoted Funds have been classified as
Level 3 assets after consideration of their underlying investments,
lock-up periods and liquidity.
The following tables present the movement in Level 3 instruments
for the years ended 31 December 2019
and 31 December 2018:
|
|
Equity investments |
Opening balance as at
1 January 2019 |
|
|
|
29,178,298 |
Sales and returns of
capital |
|
|
|
(3,785,593) |
Gains and
losses recognised in profit and loss * |
|
|
(10,794,872) |
Closing balance as
at 31 December 2019 |
|
|
|
14,597,833 |
|
|
Equity investments |
Opening balance as at
1 January 2018 |
|
|
|
62,402,266 |
Sales and returns of
capital |
|
|
|
(6,890,914) |
Gains and
losses recognised in profit and loss * |
|
|
(26,333,054) |
Closing balance as
at 31 December 2018 |
|
|
|
29,178,298 |
* The change in unrealised losses for the year ended
31 December 2019 recognised in profit
or loss and relating to Level 3 instruments held as at 31 December 2019 amounted to US$10,042,824 (31 December
2018: change in net unrealised losses of U$21,913,937).
Total gains and losses included in the Statement of
Comprehensive Income are presented in “Net loss from financial
instruments at FVTPL”.
The following table shows the valuation techniques and the key
unobservable inputs used in the determination of fair value for the
Level 3 investments as at 31 December
2019:
Balance as at
31 December 2019
US$ |
|
Valuation technique |
Significant unobservable inputs |
Range
of estimates for unobservable inputs |
Sensitivity to
changes in significant unobservable inputs |
Equity in a
private company |
7,271,092 |
|
Discounted Cash Flows |
Liquidity discount at adjusted equity level |
-
** |
The
estimated fair value would increase if:
- the liquidity discount were lower
- the EV/EBITDA multiples were higher |
|
Market
approach using comparable traded multiples |
Listed
company EV/EBITDA multiple |
-
** |
Investments in unlisted
Funds |
7,326,741 |
|
Unadjusted NAV |
Inputs
to NAV* |
US$0.01
to US$7.95 |
The estimated fair
value would increase if the NAV was higher |
* The Company has assessed whether there are any discounts in
relation to lock-in periods that are impacting liquidity. There
were no discounts in relation to lock-in periods as at 31 December 2019.
** Information has not been included as these are commercially
sensitive.
The following table shows the valuation techniques and the key
unobservable inputs used in the determination of fair value for the
Level 3 investments as at 31 December
2018:
Balance as at
31 December 2018
US$ |
|
Valuation technique |
Significant unobservable inputs |
Range
of estimates for unobservable inputs |
Sensitivity to
changes in significant unobservable inputs |
Equity in a
private company |
6,082,361 |
|
Discounted Cash Flows |
Liquidity discount at adjusted equity level |
-
** |
The
estimated fair value would increase if:
- the liquidity discount were lower
- the EV/EBITDA multiples were higher |
|
Market
approach using comparable traded multiples |
Listed
company EV/EBITDA multiple |
-
** |
Investments in unlisted
Funds |
23,095,937 |
|
Unadjusted NAV |
Inputs
to NAV* |
US$0.02
to US$44.89 |
The estimated fair
value would increase if the NAV was higher |
* The Company has assessed whether there are any discounts in
relation to lock-in periods that are impacting liquidity. There
were no discounts in relation to lock-in periods as at 31 December 2018.
** Information has not been included as these are commercially
sensitive.
Unobservable inputs are developed as follows:
· EBITDA and revenue multiples represent
amounts that market participants would use when pricing an
investment. These multiples are selected from comparable publicly
listed companies based on geographic location, industry size,
target markets and other factors that are considered to be
reasonable. The traded multiples for the comparable companies are
determined by dividing its respective enterprise value by its
EBITDA or revenue.
· The Company used a combination of market
multiples and discounted cash flows methodologies to derive the
fair value.
The Company believes that its estimates of fair value are
appropriate; however the use of different methodologies or
assumptions could lead to different measurements of fair value. For
fair value investments in Level 3, changing one or more of the
assumptions used to alternative assumptions could result in an
increase or decrease in net assets attributable to investors. Due
to the numerous different factors affecting the assets, the impact
cannot be reliably quantified. It is reasonably possible, on the
basis of existing knowledge, that outcomes within the next
financial year that are different from the assumptions used could
require a material adjustment to the carrying amounts of affected
assets.
7. Capital and
Reserves
The Company’s capital is represented by two classes of ordinary
shares, namely the US$ share class and the £ share class. The
holders of ordinary shares are entitled to dividends as declared
from time to time and have no redemption rights.
The total comprehensive gain or loss during the year is
allocated proportionately to each share class except for the
results of hedging the US$ exposure of the assets attributable to
the Pound Sterling-denominated £ share class, which are allocated
solely to this share class.
The Company is authorised to issue an unlimited number of US$
and £ shares at no par value.
Ordinary Shares
The following table presents a summary of changes in the number
of shares issued and fully paid during the year ended 31 December 2019:
|
|
US$
shares |
|
£
shares |
Shares
outstanding as at 1 January 2019 |
4,449,792 |
|
1,334,501 |
Share conversions |
|
16,410 |
|
(14,866) |
Compulsory
partial redemptions |
(849,134) |
|
(254,584) |
Shares
outstanding as at 31 December 2019 |
3,617,068 |
|
1,065,051 |
The following table presents a summary of changes in the number
of shares issued and fully paid during the year ended 31 December 2018:
|
|
US$
shares |
|
£
shares |
Shares
outstanding as at 1 January 2018 |
7,357,618 |
|
2,258,946 |
Share conversions |
|
34,474 |
|
(26,859) |
Compulsory
partial redemptions |
(2,942,300) |
|
(897,586) |
Shares
outstanding as at 31 December 2018 |
4,449,792 |
|
1,334,501 |
Share Conversion
A shareholder has the right, as the Directors may determine for
this purpose at each “Conversion Calculation Date”, to elect to
convert some or all of the shares of any class they hold into a
different class of shares by giving at least five business days’
notice to the Company before the relevant Conversion Calculation
Date. Prior to the 2011 AGM, shareholders were able to convert
their shares on a quarterly basis at the NAV Calculation Dates in
March, June, September and December. As per the amended Articles of
Incorporation dated 18 April 2011,
shareholders were able to convert their shares on a monthly
basis.
On 30 August 2013, the Directors
of the Company announced that share conversion opportunities would
be offered at the end of February, May, August and November. Share
conversion opportunities for all other month ends were no longer
offered and this decision was taken due to the timings and
processes surrounding the anticipated returns of capital as part of
the orderly wind-down of the Company.
The following share conversions took place during the year ended
31 December 2019:
Transfers from |
Transfers to |
Number
of shares
to switch out |
|
Number
of shares
to switch in |
£ shares |
US$ shares |
14,866 |
|
16,410 |
The following share conversions took place during the year ended
31 December 2018:
Transfers from |
Transfers to |
Number
of shares
to switch out |
|
Number
of shares
to switch in |
£ shares |
US$ shares |
52,928 |
|
66,684 |
US$ shares |
£ shares |
32,210 |
|
26,069 |
Compulsory Partial Redemptions
Following the approval by the Company’s shareholders of the
wind-down proposal as described in the circular published on
20 February 2013, during the year
ended 31 December 2019, management
announced partial returns of capital to shareholders by way of
compulsory partial redemption of shares with the following
redemption dates:
- 7 March 2019, US$1.5m using the 31
January 2019 NAV; and
- 6 June 2019, US$4.7m using the 30 April
2019 NAV.
During the year ended 31 December
2018, management announced partial returns of capital to
shareholders by way of compulsory partial redemptions of shares
with the following redemption date:
- 21 June 2018, US$25.5m using the 31 May
2018 NAV.
The amounts applied to the partial redemptions of
shares comprised monies from dividends received and from
the realisation of the Company’s investments up to and
including the reference NAV calculation dates pursuant to the
wind-down of the Company.
During the year ended 31 December
2019, the following shares were redeemed by way of
compulsory partial redemptions of shares (consideration in US$ has
been determined using the exchange rates at the redemption
date):
|
|
Number
of ordinary shares redeemed |
|
Consideration in US$ |
US$ shares |
|
849,134 |
|
4,552,860 |
£ shares |
|
254,584 |
|
1,672,040 |
|
|
|
|
6,224,900 |
During the year ended 31 December
2018, the following shares were redeemed by way of
compulsory partial redemptions of shares (consideration in US$ has
been determined using the exchange rates at the redemption
date):
|
|
Number
of ordinary shares redeemed |
|
Consideration in US$ |
|
US$ shares |
|
2,942,300 |
|
18,497,624 |
|
£ shares |
|
897,586 |
|
7,151,098 |
|
|
|
|
|
25,648,722 |
* |
* The capital distribution differs by US$148,722 to the amount declared, because during
the distribution process, shareholders of the £ share class were
overpaid by US$148,589 (the
US$133 difference is FX). The Company
had to compulsory redeem shares from the £ shareholders to the
value of the amount by which they were overpaid, and these proceeds
were then distributed as cash to the US$ shareholders who were
underpaid.
Voting Rights
The voting rights each share is entitled to in a poll at any
general meeting of the Company (applying the Weighted Voting
Calculation as described in the Prospectus published by the Company
on 6 November 2007) are as
follows:
US$ shares: |
1.0000 |
£ shares: |
2.0288 |
The above figures may be used by shareholders as the denominator
for calculations to determine if they are required to notify their
interest in, or a change to their interest in the Company under the
FCA’s Disclosure Guidance and Transparency Rules.
Special Reserve
On 5 November 2007, the Company
passed a special resolution that, subject to the admission of the
Company’s shares to the London Stock Exchange becoming
unconditional and with the approval of the Royal Court, the amount
standing to the credit of the share premium account of the Company
following completion of the offering be cancelled and the amount of
the share premium account so cancelled be credited as a
distributable reserve to be established in the books of account of
the Company. This reserve is able to be applied in any manner in
which the Company’s profits available for distribution (as
determined in accordance with the Laws) are able to be applied,
including in the purchase of the Company’s own shares and in the
payment of dividends.
Distribution Policy
Subject to the Laws and the Listing Rules, the Company may by
ordinary resolution from time to time declare dividends. No
dividend shall exceed the amount recommended by the Board.
No dividends were declared during the years ended 31 December 2019 and 2018.
Following the EGM on 13 March
2013, shareholders approved proposals to distribute surplus
cash held by the Company on a quarterly basis by way of pro rata
compulsory partial redemptions of shares.
8. Net Asset Value
The NAV of each US$ and £ Share is determined by dividing the
total net assets of the Company attributable to the US$ and £ Share
classes by the number of US$ and £ shares in issue respectively at
the year end as follows:
As at 31 December
2019 |
Net
assets
attributable to each
share class in US$ |
Shares in issue |
Net
assets
per share
in US$ |
Net
assets
per share
in local currency |
US$ shares |
10,466,558 |
3,617,068 |
2.89 |
2.89 |
£ shares |
3,704,213 |
1,065,051 |
3.48 |
2.63 |
|
14,170,771 |
|
|
|
As at 31 December
2018 |
Net
assets
attributable to each
share class in US$ |
Shares in issue |
Net
assets
per share
in US$ |
Net
assets
per share
in local currency |
US$ shares |
22,475,297 |
4,449,792 |
5.05 |
5.05 |
£ shares |
8,043,143 |
1,334,501 |
6.03 |
4.73 |
|
30,518,440 |
|
|
|
The allocation of the Company’s NAV between share classes is
further described in the Company’s Prospectus.
9. Interest Income
Calculated using the Effective Interest Method
|
|
|
Year
ended
31 December 2019 |
|
Year
ended
31 December 2018 |
|
|
|
US$ |
|
US$ |
Interest
income calculated using the effective interest method on financial
assets carried at amortised cost: |
|
|
|
|
- Cash and cash
equivalents |
|
|
18,073 |
|
55,724 |
|
|
|
18,073 |
|
55,724 |
10. Significant Agreements
a) Investment Manager
Effective 18 July 2014, the Board
appointed Ashmore Investment Advisors Limited (“AIAL”) as the
Company’s Alternative Investment Fund Manager (“AIFM”) and AIAL
assumed the role of Investment Manager to the Company pursuant to a
Novation of the 5 November 2007
Investment Management Agreement.
The Investment Manager is remunerated at a monthly rate of one
twelfth of 1% of the NAV excluding investments made in Funds
(calculated before deduction of the investment management fee for
that month and before the deduction of any accrued incentive fee).
In relation to investments made in the Funds, the Investment
Manager is entitled only to management fees at the rate charged by
it to the Funds.
The net investment management fees during the year were as
follows:
|
|
|
Year
ended
31 December 2019 |
|
Year
ended
31 December 2018 |
|
|
|
US$ |
|
US$ |
Investment management
fees |
|
|
(69,273) |
|
(60,397) |
|
|
|
(69,273) |
|
(60,397) |
The Investment Manager is entitled to incentive fees based on
the performance of investments other than investments in Funds, if
those investments achieve a return in excess of 6% per annum
compounded annually. Provided that the 6% return hurdle is cleared,
the residual return is allocated to the Investment Manager until it
has received the incentive fee which is calculated as 20% of the
aggregate of (i) the amount received by the Company in excess of
the cost of investment and (ii) the returns achieved on investments
above 6% per annum compounded annually. Incentive fees are payable
only upon the realisation of investments. During the year ended
31 December 2019, no incentive fees
were paid and US$237,746 were charged
(31 December 2018: US$130,477 paid and US$30,175 charged).
b) Directors’ Remuneration
With effect from 1 January 2019,
the Directors’ remuneration was reduced by 25%.
During the years ended 31 December
2019 and 31 December 2018,
Directors’ remuneration was as follows:
|
|
Year
ended
31 December 2019 |
Year
ended
31 December 2018 |
Chairman: |
|
£21,240
per annum |
£28,350
per annum |
Chairman of the Audit
Committee: |
|
£21,240
per annum |
£28,350
per annum |
Independent Directors: |
£20,040
per annum |
£26,730
per annum |
Non-Independent Director: |
waived |
waived |
c) Administrator
The Administrator, Northern Trust International Fund
Administration Services (Guernsey)
Limited, performs administrative duties for which it is remunerated
at an annual rate of 0.02% of the Company’s Total Net Assets.
d) Custodian
Northern Trust (Guernsey)
Limited (the “Custodian”) is remunerated at an annual rate of 0.01%
of the Company’s Total Net Assets.
12. Other Operating Expenses
|
|
|
Year
ended
31 December 2019 |
|
Year
ended
31 December 2018 |
|
|
|
US$ |
|
US$ |
Audit fees |
|
|
(55,352) |
|
(48,664) |
Professional fees |
|
|
(42,272) |
|
(2,011) |
Legal fees |
|
|
11,997 |
* |
(9,263) |
Miscellaneous
fees |
|
|
(68,407) |
|
(77,999) |
|
|
|
(154,034) |
|
(137,937) |
* The credits to legal fees for the year ended 31 December 2019 represents the reversal of
accruals as a result of a reduction in expenses as the Company
continues to wind down.
13. Earnings per Share (“EPS”)
The calculation of the earnings per US$ and £ share is based on
the profit/(loss) for the year attributable to US$ and £
shareholders and the respective weighted average number of shares
in issue for each share class during the year.
The loss attributable to each share class for the year ended
31 December 2019 was as follows:
|
|
|
US$
share |
|
£
share |
Issued shares at the
beginning of the year |
|
|
4,449,792 |
|
1,334,501 |
Effect on
the weighted average number of shares: |
|
|
|
|
- Conversion of
shares |
|
|
4,103 |
|
(3,717) |
- Compulsory partial
redemption of shares |
|
|
(486,906) |
|
(145,976) |
Weighted average
number of shares |
|
|
3,966,989 |
|
1,184,808 |
Loss
for the year attributable to each class of shareholders
(US$) |
|
(7,524,408) |
|
(2,598,361) |
EPS (US$) |
|
|
(1.90) |
|
(2.19) |
There were no dilutive instruments in issue during the year
ended 31 December 2019.
The profit attributable to each share class for the year ended
31 December 2018 was as follows:
|
|
|
US$
share |
|
£
share |
Issued shares at the
beginning of the year |
|
|
7,357,618 |
|
2,258,946 |
Effect on
the weighted average number of shares: |
|
|
|
|
- Conversion of
shares |
|
|
20,646 |
|
(16,197) |
- Compulsory partial
redemption of shares |
|
|
(1,500,573) |
|
(457,769) |
Weighted average
number of shares |
|
|
5,877,691 |
|
1,784,980 |
Loss
for the year attributable to each class of shareholders
(US$) |
|
(3,976,174) |
|
(2,372,655) |
EPS (US$) |
|
|
(0.68) |
|
(1.33) |
There were no dilutive instruments in issue during the year
ended 31 December 2018.
14. Financial Risk Management
The Company’s activities expose it to a variety of financial and
operational risks which include: market risk (including currency
risk, interest rate risk and price risk), credit risk and liquidity
risk.
The Company is also exposed to certain risk factors peculiar to
investing in Emerging Markets. These require the consideration of
matters not usually associated with investing in the securities of
issuers in the developed capital markets of North America, Japan or Western
Europe. The economic and political conditions in Emerging
Markets differ from those in developed markets, and offer less
social, political and economic stability. The value of investments
in Emerging Markets may be affected by changes in exchange
regulations, tax laws, withholding taxes or economic and monetary
policies. The absence, in many cases until relatively recently, of
any move towards capital markets structures or to a free market
economy means investing in Emerging Markets may be considered more
risky than investing in developed markets.
The Company puts policies and processes in place to measure and
manage the various types of risk to which it is exposed; these are
explained below.
Market Risk
All of the Company’s investments are recognised at fair value,
and changes in market conditions directly affect net investment
income.
i) Currency Risk
The Company’s principal exposure to currency risk arises from
underlying investments denominated in currencies other than US$ and
from the exposure of its underlying portfolio companies to local
currencies in their countries of operation. The value of such
investments may be affected favourably or unfavourably by
fluctuations in exchange rates, notwithstanding any efforts made to
hedge such exposures.
The Investment Manager may hedge currency exposures by reference
to the most recent NAV of the Company’s underlying investments via
the use of forward foreign currency contracts or similar
instruments.
As at the reporting date, the Company is not exposed to any
significant direct currency risk arising on its financial assets
and liabilities, as all direct investments of the Company are
denominated in US$, and a sensitivity analysis of currency risk is
not meaningful at this time. However, the Company has put in place
hedging mechanisms to hedge the currency risk arising on the £
share class.
Shares in the Company are denominated in US$ and £. The base
currency is the US$, and therefore non-US$ subscription monies for
shares are typically converted into US$ for operational purposes.
The costs and any benefit of hedging the foreign currency exposure
of the assets attributable to shares denominated in Pound Sterling
against the US$ is allocated solely to the £ share class. This may
result in variations in the NAVs of the two classes of shares as
expressed in US$.
As at 31 December 2019, the net
foreign currency exposure on the £ share class was as follows:
|
|
|
US$ |
|
% of net
assets |
Currency exposure of £
share class |
|
|
3,704,213 |
|
26.14 |
Nominal value of
currency hedges |
|
|
(3,879,646) |
|
(27.38) |
Net foreign currency
exposure |
|
|
175,433) |
|
(1.24) |
As at 31 December 2018, the net
foreign currency exposure on the £ share class was as follows:
|
|
|
US$ |
|
% of net
assets |
Currency exposure of £
share class |
|
|
8,043,143 |
|
26.36 |
Nominal value of
currency hedges |
|
|
(10,378,641) |
|
(34.01) |
Net foreign currency
exposure |
|
|
(2,335,498) |
|
(7.65) |
ii) Interest Rate Risk
The majority of the Company’s financial assets and liabilities
are non-interest bearing (31 December
2019: 95.39%, 31 December
2018: 98.65%). As at 31 December
2019, interest-bearing financial assets comprised cash and
cash equivalents of US$691,726
(31 December 2018: US$413,401). The Company’s investment portfolio
is composed entirely of non-interest bearing assets as at
31 December 2019 (31 December 2018: 100%). As a result, the Company
is subject to limited direct exposure to interest rate risk through
fluctuations in the prevailing levels of market interest rates and
a sensitivity analysis of interest rate risk is not meaningful at
this time.
iii) Other Price
Risk
Other price risk is the risk that the value of financial
instruments will fluctuate as a result of changes in market prices
(other than those arising from interest rate risk or currency
risk), whether caused by factors specific to an individual
investment, its issuer or any other relevant factors.
The Company’s strategy for the management of price risk is to
seek to maximise the exit prices that it obtains for its direct and
indirect investments.
The table below summarises the sensitivity of the Company’s net
assets attributable to equity holders to investment price movements
as at the reporting date. The analysis is based on the assumption
that the prices of the investments increase by 5% (2018: 5%), with
all other variables held constant.
|
|
|
31
December 2019 |
|
31
December 2018 |
|
|
|
US$ |
|
US$ |
Equity
investments |
|
|
729,892 |
|
1,558,963 |
|
|
|
729,892 |
|
1,558,963 |
A 5% decrease in prices of the investments would result in an
equal but opposite effect on the net assets attributable to equity
holders, on the basis that all other variables remain constant. The
price risk sensitivity analysis provided is a relative estimate of
risk rather than a precise and accurate number.
Credit Risk
The Company is exposed to credit risk, which is the risk that a
counterparty to a financial instrument will fail to discharge an
obligation or commitment that it has entered into with the
Company.
The Company’s financial instruments include non-exchange traded
financial instruments. Credit risk for non-exchange traded
financial instruments is generally higher because the counterparty
for the instrument is not backed by an exchange clearing house.
The Company’s financial instruments include direct and indirect
holdings of securities and other obligations of companies that are
experiencing significant financial or business distress, including
companies involved in bankruptcy or other reorganisation and
liquidation proceedings. Although such holdings may result in
significant returns, they involve a substantial degree of risk. The
level of analytical sophistication, both financial and legal,
necessary for successful investment in companies experiencing
significant business and financial distress is unusually high.
There is no assurance that the Investment Manager will correctly
evaluate the nature and magnitude of the various factors that could
affect the prospects for a successful reorganisation or similar
action. The completion of debt and/or equity exchange offers,
restructurings, reorganisations, mergers, takeover offers and other
transactions can be prevented or delayed, or the terms changed, by
a variety of factors. If a proposed transaction appears likely not
to be completed or in fact is not completed or is delayed, the
market price of the investments held by the Company may decline
sharply and result in losses which could have a material adverse
effect on the performance of the Company and returns to
shareholders.
The administrative costs in connection with a bankruptcy or
restructuring proceeding are frequently high and will be paid out
of the debtor’s assets prior to any return to creditors (other than
out of assets or proceeds thereof, which may be subject to valid
and enforceable liens and other security interests) and equity
holders. In addition, certain claims that have priority by law over
the claims of other creditors (for example, claims for taxes) may
reduce any entitlement of the Company. In any reorganisation or
liquidation proceeding relating to a company or sovereign issuance
in which the Company invests, the Company may lose its entire
investment or may be required to accept cash or securities with a
value less than its original investment. Under such circumstances,
the returns generated from such investments may not compensate
investors adequately for the risks assumed, which could have a
material adverse effect on the performance of the Company and
returns to shareholders.
It is frequently difficult to obtain accurate information as to
the condition of distressed entities. Such investments may be
adversely affected by laws relating to, among other things,
fraudulent transfers and other voidable transfers or payments,
lender liability and the bankruptcy court’s power to disallow,
reduce, subordinate or disenfranchise particular claims. The market
prices of such securities are subject to abrupt and erratic market
movements and above-average price volatility, and the spread
between the bid and offer prices of such securities may be greater
than those prevailing in other securities markets.
Securities issued by distressed companies may have a limited
trading market, resulting in limited liquidity. As a result, the
Company may have difficulties in valuing or liquidating positions,
which could have a material adverse effect on the performance of
the Company and returns to shareholders.
As at the reporting date, the maximum exposure to direct credit
risk before any credit enhancements is the carrying amount of the
financial assets, as set out below. This excludes credit risk
relating to underlying debt instruments held by the Funds.
|
|
|
31
December 2019 |
|
31
December 2018 |
|
|
|
US$ |
|
US$ |
Cash and cash
equivalents* |
|
|
691,726 |
|
413,401 |
Forward currency
contracts* |
|
|
115,422 |
|
- |
|
|
|
807,148 |
|
413,401 |
* Held with Northern Trust (Guernsey) Limited.
None of these assets are impaired nor past due but not
impaired.
The Investment Manager monitors the credit ratings of the
Company’s counterparties, maintains an approved counterparty list
and periodically reviews all counterparty limits.
The credit risk arising on transactions with brokers relates to
transactions awaiting settlement. The risk relating to unsettled
transactions is considered small due to the short settlement period
involved.
Substantially all of the assets of the Company are held with the
Custodian; Northern Trust (Guernsey) Limited, which is an indirect
wholly-owned subsidiary of the Northern Trust Corporation.
Bankruptcy or insolvency of the Custodian may cause the Company’s
rights with respect to cash and securities held by the Custodian to
be delayed or limited. This risk is managed by monitoring the
credit quality and financial positions of the Custodian. The credit
rating assigned by S&P to the Northern Trust Corporation as at
the year-end date was A+ (2018: A+). Depending on the requirements
of the jurisdictions in which the investments of the Company are
issued, the Custodian may use the services of one or more
sub-custodians.
Concentration
Risk
Due to the managed wind-down, the Company is in the process of
reducing the number and diversification of assets held and as such
is considered to have exposure to concentration risk. The
concentration of underlying assets is set out in the “Details on
Top 4 Underlying Holdings”. Country and industry concentrations are
also set out in the “Details on Top 5 Underlying Holdings”.
Liquidity Risk
Liquidity risk is the risk that the Company may not be able to
generate sufficient cash resources to settle its obligations in
full as they fall due or can only do so on terms that are
materially disadvantageous.
The Company is not exposed to any significant liquidity risk
arising from redemptions because shareholders do not have the right
to redeem.
Most of the investments of the Company are traded only on over
the counter markets and there may not be an organised public market
for such securities. The effect of this is to increase the
difficulty of valuing the investments and certain investments may
generally be illiquid. There may be no established secondary market
for certain of the investments made by the Company. Reduced
secondary market liquidity may adversely affect the market price of
the investments and the Company’s ability to dispose of particular
investments. Due to the lack of adequate secondary market liquidity
for certain securities, it may be more difficult to obtain accurate
security valuations for the purposes of valuing the Company.
Valuations may only be available from a limited number of sources
and may not represent firm bids for actual sales. In addition, the
current or future regulatory regime may adversely affect
liquidity.
All residual maturities of the financial liabilities of the
Company in US$ as at 31 December 2019
and
31 December 2018 are less than three months, except for
incentive fees payable to the Investment Manager on realisation of
investments.
Liquidity risk is primarily related to outstanding commitments
and recallable distributions from investments in limited
partnerships. The outstanding investment commitments of the Company
are disclosed in note 18.
Operational
Risk
Operational risk is the risk of direct or indirect loss arising
from a wide variety of causes associated with the Company’s
processes and infrastructure, or from external factors other than
market, credit, or liquidity issues, such as those arising from
legal or regulatory requirements and generally accepted standards
of corporate behaviour. Operational risks arise from all of the
Company’s operations.
Capital
Management
The Company is not subject to externally imposed capital
requirements. The shares issued by the Company provide an investor
with the right to require redemption for cash at a value
proportionate to the investor’s share in the Company’s net assets
at redemption date and are classified as equity. See note 8 for a
description of the terms of the shares issued by the Company. The
Company’s objective is to realise the assets in orderly manner to
return cash to shareholders. The Articles of Incorporation of the
Company were amended to facilitate regular returns of cash to
shareholders.
14. Ultimate Controlling Party
In the opinion of the Directors on the basis of shareholdings
advised to them, the Company has no ultimate controlling party.
15. Involvement with Unconsolidated
Structured Entities
The table below describes the types of structured entities that
the Company does not consolidate but in which it holds an
interest.
Type of structured
entity |
Nature and
purpose |
|
Interest held by the
Company |
Investment Funds |
To manage assets on
behalf of third party investors. These vehicles are financed
through the issue of units to investors. |
|
Investments in units
issued by the Funds |
The table below sets out interests held by the Company in
unconsolidated structured entities as at 31
December 2019.
Investment in unlisted
investment Funds |
Number
of
investee Funds |
|
Total net
assets |
|
Carrying
amount included in “Financial assets at FVTPL” |
|
% of net
assets of underlying Funds |
Special Situations
Private Equity Funds |
5 |
|
63,963,243 |
|
7,015,383 |
|
10.97 |
Real Estate Funds |
1 |
|
2,557,626 |
|
311,358 |
|
12.17 |
The table below sets out interests held by the Company in
unconsolidated structured entities as at 31
December 2018.
Investment in unlisted
investment Funds |
Number
of
investee Funds |
|
Total net
assets |
|
Carrying
amount included in “Financial assets at FVTPL” |
|
% of net
assets of underlying Funds |
Special Situations
Private Equity Funds |
7 |
|
109,261,120 |
|
19,855,680 |
|
18.17 |
Real Estate Funds |
1 |
|
31,019,749 |
|
3,240,257 |
|
10.45 |
The maximum exposure to loss is the carrying amount of the
financial assets held.
During the year, the Company did not provide financial support
to these unconsolidated structured entities and has no intention of
providing financial or any other support, except for the
outstanding commitments as disclosed in note 18 to the financial
statements.
16. Related Party Transactions
Parties are considered to be related if one party has the
ability to control the other party or to exercise significant
influence over the other party in making financial or operational
decisions.
The Directors are responsible for the determination of the
investment policy of the Company and have overall responsibility
for the Company’s activities. The Company’s investment portfolio is
managed by AIAL.
The Company and the Investment Manager entered into an
Investment Management Agreement under which the Investment Manager
has been given responsibility for the day-to-day discretionary
management of the Company’s assets (including uninvested cash) in
accordance with the Company’s investment objectives and policies,
subject to the overall supervision of the Directors and in
accordance with the investment restrictions in the Investment
Management Agreement and the Articles of Incorporation.
During the year ended 31 December
2019, the Company engaged in the following related party
transactions:
|
|
Expense |
|
Payable |
Related
Party |
Nature |
US$ |
|
US$ |
AIAL |
Investment management
fees |
(69,273) |
|
(6,059) |
AIAL |
Incentive fees |
(237,746) |
(1,145,642) |
Board of
Directors |
Directors’
remuneration |
(81,670) |
|
- |
|
|
|
|
|
|
|
|
Investment Activity |
Related
Party |
Nature |
|
|
US$ |
Related Funds |
Sales |
|
3,785,593 |
Related Funds |
Dividends |
|
1,083,815 |
Ashmore SICAV 2 Global
Liquidity US$ Money Market Fund |
Purchases |
(7,499,906) |
Ashmore SICAV 2 Global
Liquidity US$ Money Market Fund |
Sales |
|
9,517,503 |
Ashmore SICAV 2 Global
Liquidity US$ Money Market Fund |
Dividends |
|
|
16,643 |
During the year ended 31 December
2018, the Company engaged in the following related party
transactions:
|
|
Expense |
|
Payable |
Related
Party |
Nature |
US$ |
|
US$ |
AIAL |
Investment management
fees |
(60,397) |
|
(5,069) |
AIAL |
Incentive fees |
(30,175) |
|
(907,896) |
Board of
Directors |
Directors’
remuneration |
(113,016) |
|
- |
|
|
|
|
|
|
|
Investment
Activity |
|
|
|
|
US$ |
Related Funds |
Sales |
|
6,890,914 |
Related Funds |
Dividends |
|
20,316,058 |
Ashmore SICAV 2 Global
Liquidity US$ Fund |
Purchases |
|
(2,000,000) |
Ashmore SICAV 2 Global
Liquidity US$ Fund |
Dividends |
|
|
16 |
Related Funds are other Funds managed by Ashmore Investment
Advisors Limited or its associates.
Purchases and sales of the Ashmore SICAV 2 Global Liquidity US$
Money Market Fund (“Global Liquidity Fund”) were solely related to
the cash management of US$ on account. Funds are swept into the
S&P AAAm rated Global Liquidity Fund and returned as and when
required for asset purchases or distributions. The Global Liquidity
Fund is managed under the dual objectives of the preservation of
capital and the provision of daily liquidity, investing exclusively
in very highly rated short-term liquid money market securities.
The Directors had the following beneficial interests in the
Company:
|
31
December 2019 |
31
December 2018 |
|
£
ordinary shares |
£
ordinary shares |
Nigel de la Rue |
373 |
462 |
Christopher Legge |
232 |
288 |
Richard Hotchkis |
139 |
173 |
17. Commitments
During the year ended 31 December
2011, the Company increased its commitment to VTBC Ashmore
Real Estate Partners 1 LP to a total of €11.4 million. As at
31 December 2019, the outstanding
commitment was €243,474
(31 December 2018: €243,474).
During the year ended 31 December
2011, the Company entered into a subscription agreement with
AA Development Capital India Fund LP for an initial commitment of
US$4,327,064, which was subsequently
increased to US$23,851,027. AA
Development Capital India Fund LP was dissolved by its General
Partner on
28 June 2013 with all outstanding
commitments transferred to AA Development Capital India Fund 1 LLC.
As at 31 December 2019, the
outstanding commitment was US$5,959,809 (31 December
2018: US$5,959,809).
18. Contingent Assets
The Company has submitted a claim in connection with the
settlement of a securities class action lawsuit preliminarily
approved by the US District Court for the Southern District of
New York captioned In Re Foreign
Exchange Benchmark Rates Antitrust Litigation. The inflow of
economic benefits from the settlement fund is deemed to be
probable, but not virtually certain. As the value of the settlement
fund cannot be determined in advance, it is not possible to
estimate the settlement amount of the Company.
19. Subsequent Events
Share Conversions
The following share conversions occurred subsequent to
31 December 2019:
Transfers from |
Transfers to |
Number
of shares
to switch out |
|
Number
of shares
to switch in |
£ shares |
US$ shares |
1,065,656 |
|
1,230,563 |
US$ shares |
£ shares |
709 |
|
605 |
As a result, the total number of £ shares outstanding as at
31 March 2020 was nil. Due to the
closure of the £ share class, there will not be any conversions
going forward.
Emerging Risks
Since the year end we have seen the development of the
coronavirus covid-19 outbreak initially in China and now reaching most continents. At
present, it is not possible to assess the detailed impact of the
emerging risk, on the investments in the Company but there is
growing concern about the impact on the world economy. There has
been a significant change in the financial markets in the last few
weeks. The Board and the Investment Manager continue to watch the
efforts of governments to contain the spread of the virus and
monitor the economic impact, if any, on the investments in the
Company.
The Directors do not believe that any adjustments to the
financial statements as at 31 December
2019 are required as a result of this subsequent event.
There were no other significant events subsequent to the
year-end date that require adjustment to, or disclosure in, the
financial statements.
Supplementary Information
(Unaudited)
Remuneration Disclosure
Ashmore Investment Advisors Limited (“AIAL”) is a full-scope UK
Alternative Investment Fund Manager (“AIFM”) that manages many
alternative investment funds (“AIFs”). These AIFs implement a
number of investment strategies including; equity, fixed income and
alternatives; and invest in many different regions and industry
sectors. AIAL manages both open-ended and closed-ended AIFs,
several of its AIFs are leveraged and some are listed on regulated
markets. Its AuM was approximately US$7.6
billion at 30 June 2019.
AIAL’s parent company (“Ashmore”) is listed on a regulated market,
counts ten offices worldwide and has a number of subsidiaries both
in the UK and abroad. Taking into account guidance from the UK
Financial Conduct Authority (“FCA”), AIAL has complied with the
full AIFM Remuneration Code.
AIAL does not have any direct employees, and as such the amount
of remuneration paid to staff by AIAL is zero. All AIAL AIFM
Remuneration Code Staff are employed and paid by Ashmore. Ashmore’s remuneration principles
have remained unchanged since it was listed, and are designed to
align all employees with the long-term success of the business.
These include significant levels of deferral, a clear link between
performance and levels of remuneration and strong alignment of
executive directors and employees with shareholders and clients
through significant employee share ownership. The culture is
therefore a collaborative one, with clients’ interests and the
creation of shareholder value, including for employee shareholders,
the overarching factors for success.
Executive directors, members of the investment team, and indeed
all other employees, participate in a single capped incentive pool
and are paid under a similar structure, with an annual cash bonus
and share award, meaning that all employees are long-term
shareholders in the business.
The policy includes:
- a capped basic salary to contain the
fixed cost base;
- a cap on the total variable
compensation including any awards made under Ashmore’s share plan,
available for all employees at 25% of profits, which to date has
not been fully utilised; and
- a deferral for five years of a
substantial portion of variable compensation into Ashmore shares (or equivalent), which, in the
case of executive directors in lieu of a separate LTIP, is also
partly subject to additional performance conditions measured over
five years.
AIAL’s board of directors reviews the general principles of the
remuneration policy and is responsible for its implementation with
regard to AIAL’s AIFM Remuneration Code Staff. Ashmore’s
Remuneration Committee periodically reviews the ongoing
appropriateness and relevance of the remuneration policy, including
in connection with the provision of services to AIAL. Ashmore employs the services of; McLagan to
provide advice on remuneration benchmarking; Deloitte to provide
advice on tax compliance, share plan design and administration; and
the Remuneration Committee’s advisors are Aon. The Remuneration
Committee’s terms of reference can be found here:
http://www.ashmoregroup.com/investor-relations/corporate-governance.
Performance assessment for AIAL’s AIFM Remuneration Code Staff
for their work relating to AIAL is based on a combination of
quantitative and qualitative criteria related to the performance of
AIAL, the performance of relevant AIF(s) or business units and the
performance of the individual. Qualitative criteria include
adherence to Ashmore Group plc’s risk and compliance policies. This
performance assessment is adjusted for relevant current and future
risks related to the AIFs managed by AIAL.
The compensation of control function staff is based on function
specific objectives and is independent from the performance of AIAL
and/or the AIFs managed by AIAL. The remuneration of the senior
officers in AIAL’s control functions is directly overseen by the
Remuneration Committee.
Variable remuneration awarded to AIAL’s Remuneration Code Staff
in respect of AIFMD work is subject to performance adjustment which
allows Ashmore to reduce the
deferred amount, including to nil, in light of the ongoing
financial situation and/or performance of Ashmore, AIAL, the AIFs that AIAL manages and
the individual concerned.
The total contribution of AIAL’s AIFM Remuneration Code Staff to
the business of Ashmore is
apportioned between work carried out for AIAL and work carried out
for the other businesses and subsidiaries of Ashmore. Their remuneration is similarly
apportioned between AIAL and the other businesses and subsidiaries
where required.
The remuneration attributable to AIAL for its AIFMD identified
staff for the financial year ended 30 June
2019 was as follows:
|
Number of
beneficiaries |
Variable
remuneration |
Fixed
remuneration |
Total
remuneration |
Ashmore Global
Opportunities Limited |
14 |
£1,976 |
£255 |
£2,231 |
Total AIAL |
21 |
£2,348,230 |
£202,102 |
£2,550,332 |
All of the remuneration above was attributable to senior
management who have a material impact on the funds risk profile.
The Company’s allocation of the AIAL remuneration has been made on
the basis of NAV.
Alternative Performance Measures
(“APMs”)
An APM is a financial measure of historical or future
performance, financial position, or cash flows, other than a
financial measure defined and specified in the applicable financial
reporting framework.
Closing-Trade Share Price
A share price is the amount it would cost to buy one share in
the Company. The closing-trade share price of a share of a share
class is derived from the trading price on the London Stock
Exchange.
The closing-trade share prices are disclosed in the Financial
Highlights and in the Strategic Report.
Premium/Discount to Net Asset
Value
The premium/discount to NAV is calculated for each share class
by using the following formula:
Where:
· ‘A’ is the closing market price as at
31 December 2019 of a share of the
share class as derived from the trading price on the London Stock
Exchange; and
· ‘B’ is the final NAV per share of the share
class as at 31 December 2019.
If the share price of a share is lower than the NAV per share,
the shares are said to be trading at a discount.
The discount to NAV is disclosed in the Financial Highlights and
in the Strategic Report.
Ongoing Charges
The ongoing charges represent the Company’s management fees and
all other operating expenses, excluding incentive fees and
transaction costs, expressed as a percentage of the average monthly
NAV during the year. The ongoing charges are disclosed in the
Strategic Report and in the Directors’ Report.
Corporate Information
Directors
Richard Hotchkis
Nigel de la Rue
Christopher Legge
Steve Hicks |
Custodian
Northern Trust (Guernsey) Limited
PO Box 71
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3DA
Channel Islands |
Registered Office
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Channel Islands |
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 1WR
Channel Islands |
Administrator and Secretary
Northern Trust International Fund
Administration Services (Guernsey) Limited
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Channel Islands |
Advocates to the Company
Carey Olsen (Guernsey) LLP
Carey House
Les Banques
St Peter Port
Guernsey
GY1 4BZ
Channel Islands |
Alternative Investment Fund Manager
Ashmore Investment Advisors Limited
61 Aldwych
London
WC2B 4AE
United Kingdom |
UK
Solicitor to the Company
Slaughter and May
One Bunhill Row
London
EC1Y 8YY
United Kingdom |
Brokers
J.P. Morgan Cazenove
20 Moorgate
London
EC2R 6DA
United Kingdom
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London
EC4V 3BJ
United Kingdom |
UK
Registrar and Transfer Agent
Computershare Investor Services PLC
The Pavilions
Bridgewater Road
Bristol
BS13 8AE
United Kingdom
Website
Performance and portfolio information for shareholders can be found
at:
www.agol.com |