The Group's management has made an assessment of the Group's
ability to continue as a going concern and is satisfied that the
Company has the resources to continue in business for the
foreseeable future. Furthermore, management is not aware of any
material uncertainties that may cast significant doubt upon the
Group's ability to continue as a going concern. Therefore, the
financial statements continue to be prepared on the going concern
basis.
Determination of functional currency
The determination of the functional currency of the Group is
critical since recording of transactions and exchange differences
arising thereon are dependent on the functional currency selected.
As described in Note 2, the directors have considered those factors
therein and have determined that the functional currency of the
Company is the United States Dollar.
Estimates and assumptions
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below. The Group based its assumptions and estimates
on parameters available when the financial statements were
prepared. However, existing circumstances and assumptions about
future developments may change due to market changes or
circumstances arising beyond the control of the Group. Such changes
are reflected in the assumptions when they occur.
Fair value of financial instruments
When the fair value of financial assets and financial
liabilities recorded in the statement of financial position cannot
be derived from active markets, their fair value is determined
using a variety of valuation techniques that include the use of
mathematical models. The inputs to these models are taken from
observable markets where possible, but where this is not feasible,
estimation is required in establishing fair values. The estimates
include considerations of liquidity and model inputs such as credit
risk (both own and counterparty's), correlation and volatility.
Changes in assumptions about these factors could affect the
reported fair value of financial instruments in the statement of
financial position and the level where the instruments are
disclosed in the fair value hierarchy. The models are calibrated
regularly and tested for validity using prices from any observable
current market transactions in the same instrument (without
modification or repackaging) or based on any available observable
market data. IFRS 7 requires disclosures relating to fair value
measurements using a three-level fair value hierarchy. The level
within which the fair value measurement is categorised in its
entirety is determined on the basis of the lowest level input that
is significant to the fair value measurement in its entirety.
Assessing the significance of a particular input requires
judgement, considering factors specific to the asset or liability.
To assess the significance of a particular input to the entire
measurement, the Group performs sensitivity analysis or stress
testing techniques.
Investment in Shoprite Holdings (SHP ZL)
The Group (through its subsidiary Africa Opportunity Fund L.P.)
has 9.0 per cent of its net assets (14.4 per cent of the net assets
of the Ordinary shares) in Shoprite Holdings (SHPZL) ("Shoprite")
on the Zambian Register. The value of the investment as at 30 June
2014 amounted to USD 6,786,064 (2013: USD 7,800,572) and the
original cost of the investment was USD 3,639,685 (2013: USD
3,639,685). Shoprite has conveyed its intention to seek to reverse
certain trades made on the Lusaka Stock Exchange which includes
543,743 or 80.06 per cent of the shares held by Africa Opportunity
Fund L.P. To date, the filing to the courts made by Shoprite
against the Company (through the custodian as nominee on behalf of
the fund) has been dismissed as an abuse of Process of Court on
account of multiplicity of action with costs awarded to the
defendants. The multiplicity of action refers to an existing case
in a separate jurisdiction that has been filed by Shoprite against
its agent and transfer agent Messrs Lewis Nathan Advocates.
Shoprite has to date not appealed the decision, and no further
filing has been made. Management has fair valued the investment in
Shoprite at the price prevailing on the Lusaka Stock Exchange.
Additionally, Shoprite has been placing dividend payments into
escrow rather than distributing these amounts to shareholders.
These dividends are reflected as a receivable amounting to USD
428,473 (2013: USD 334,163) in the Group's assets.
Management has assessed these facts and consulted with their
legal advisors, who consider such action by Shoprite to be devoid
of merit. Therefore, management believes that the correct judgement
is to continue to account for the investment at fair value and
accrue for the dividends on this investment.
The C shares have no direct holdings in Shoprite shares as at 30
June 2014.
5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
5 (a) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 2014 30 June 2013
------------- -------------
USD USD
Designated at fair value through profit
or loss:
At start of year 55,473,931 42,159,300
Additions 16,679,578 16,106,663
Disposals (1,415,107) (14,619,208)
Net (losses)/ gains on financial assets
at fair value through profit or loss (5,068,917) 7,391,461
65,669,485 51,038,216
============ =============
Analysis of portfolio:
- Listed equity securities 46,818,244 41,280,635
- Unlisted equity securities - 606,249
- Listed debt securities 17,901,241 8,486,332
- Unlisted debt securities 950,000 665,000
-----------
65,669,485 51,038,216
=========== ===========
Net gains/(losses) on fair value of financial assets at fair
value through profit or loss
30 June 2014 30 June 2013
------------- -------------
USD USD
Realised (500,903) 6,808,459
Unrealised (4,568,014) 583,002
-------------
Net gains/(losses) (5,068,917) 7,391,461
============= =============
5 (b) FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR
LOSS
30 June 2014 30 June 2013
------------- -------------
USD USD
Written put option 66,713 1,126,915
Listed securities sold short 11,617,976 4,352,506
-------------
11,684,689 5,479,421
============= =============
30 June 2014 30 June 2013
------------- -------------
USD USD
Realised 284,315 357,457
Unrealised (212,923) (111,221)
-------------
Net gains/ (losses) 71,392 246.236
============= =============
5 (c) Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of the financial instruments by valuation
technique:
Level 1: quoted (unadjusted) market prices in active markets for
identical assets and liabilities.
Level 2: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
Level 3: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable.
Recurring fair value measurement of assets and liabilities -
2014
30 June Level 1 Level 2 Level 3
2014
-------- -------- -------- --------
USD USD USD USD
Financial assets at fair value through profit or loss:
Equities 46,818,244 40,032,180 6,786,064 -
Debt securities 18,851,241 - 17,901,241 950,000
------------- ------------- ----------- --------
65,669,485 40,032,180 24,687,305 950,000
============= ============= =========== ========
Financial liabilities
at fair value through
profit or loss 11,684,689 11,684,689 - -
============= ============= =========== ========
Recurring fair value measurement of assets and liabilities -
2013
30 June Level 1 Level 2 Level 3
2013
---------- ---------- ---------- ----------
USD USD USD USD
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