TIDMVOC
RNS Number : 0608T
Vision Opportunity China Fund Ltd
29 May 2009
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE IN OR INTO THE UNITED STATES,
CANADA, AUSTRALIA, REPUBLIC OF SOUTH AFRICA OR JAPAN
VISION OPPORTUNITY CHINA FUND LIMITED
UNAUDITED INTERIM REPORT AND CONSOLIDATED ACCOUNTS
FOR THE PERIOD ENDED 31 MARCH 2009
Chairman's Statement
Period ended 31 March 2009
The Company is pleased to report results for the period from 1 October 2008 to
31 March 2009. The published Net Asset Value ("NAV") per Ordinary Share of the
Company at 31 March 2009 is US$0.9513, a 22% decrease from the NAV per Ordinary
Share at 30 September 2008, and 0.7% increase since inception at 28 November
2007. At 31 March 2009 the Company's published NAV was US$69,959,918.
This period has been one of tremendous turbulence for both the world financial
markets and economies globally. The macroeconomic conditions in the Greater
China region are not immune to the downturn, but continue to show great
resilience. The Company has focused on selecting investments with long-term
growth potential in the Greater China region, and has taken advantage of market
conditions to negotiate favourable terms. During this period, we have completed
four investments at an aggregate cost of approximately US$27 million. The
transactions include two direct investments into public companies and two
negotiated purchases from existing shareholders.
In addition during this period, the Company successfully completed a tender
offer to provide Shareholders with greater liquidity. In December 2008, the
Company purchased 33,810,426 Ordinary Shares at US$0.8831 per share, (being the
NAV per Ordinary Shares at 31 October 2008). Following the purchase of Ordinary
Shares by the Company pursuant to the Tender Offer, 26,456,029 Ordinary Shares
were cancelled and 7,354,397 Ordinary Shares are now held in treasury.
As of 31 March 2009, the Company had invested approximately US$73.4 million
across 14 companies. We have realised approximately US$18.6 million of proceeds
from assets purchased for approximately US$15.4 million, representing a return
of approximately 20% (1).
The Board is pleased with the progress the Company has made to date. Going
forward, we shall continue to focus on working with our portfolio companies and
endeavouring to generate returns for our Shareholders.
Christopher Fish
Chairman
Date: 29 May 2009
Enquiries to:
Vision Opportunity China Fund Limited
David Benway, Director / Adam Benowitz, Portfolio Manager
www.vocfund.com Tel: + 1 (212) 849 5368
Fairfax I.S. PLC
James King / Gillian McCarthy Tel: +44 (0) 20 7598 5368
Bankside Consultants Limited
Simon Rothschild / Oliver Winters Tel: +44 (0) 20 7367 8888
(1) Excluding "shell" company purchases as investment vehicles and a short-term
loan to Vision Opportunity Master Fund. If including the shell companies and the
loan, VOC deployed approximately US$81 million in 16 companies and realised
approximately US$26 million in sale proceeds.
Investment Manager's Report
Period ended 31 March 2009
Over the period under review, we have made good progress in investing the
Company's assets as well as starting to harvest returns for selective
investments. As noted in the Chairman's Statement, as of 31 March 2009 we had
deployed approximately US$73.4 million across 14 companies (2);. Our five
largest investments account for 68% of the total capital invested (Shengkai
Innovations, QKL Stores, China Bio Energy, China Information Security and Lihua
International). Since inception of the Company, we have realised approximately
US$18.6 million of sale proceeds with a realised gain of approximately US$3.2
million.
VOC's published NAV at 31 March 2009 was approximately US$70 million or
US$0.9513 per Ordinary Share (see Note 13 to the accounts).
On the capital market front, VOC's share price was US$0.78 as of 31 March 2009,
a decrease of 25.7% since our inception on 28 November 2007. During the same
period, the Dow Jones Industrial Average, the S&P 500 and Russell 2000 Small-Cap
Index each decreased by 42.7%, 45.7% and 45.1% respectively. The Halter USX
China Index, the Hang Seng China Enterprise Index and the Shanghai Stock
Exchange Composite Index decreased by 57.1%, 50.7% and 50.6% respectively.
Led by strong government investment, a number of key economic indicators suggest
that the Chinese economic recovery is underway. The Chinese government
maintained its 8% GDP growth target for 2009. In support of the growth target,
the government launched a US$586 billion stimulus package accompanied by credit
expansion. China's new lending surged more than six fold from a year earlier to
a record US$277 billion in March 2009. During the first quarter of 2009, China's
GDP grew 6.1% year-on- year, and in April 2009 industrial output, retail sales,
and urban fixed asset investment grew 7%, 15% and 34% respectively year-on-year.
The Purchasing Managers Index ("PMI"), a gauge of nationwide manufacturing
activity, exceeded 50 in April 2009 for the first time since August 2008,
suggesting that the manufacturing economy is generally expanding. Exports and
imports both decreased over 20% year on year in April 2009. Consumption,
especially in rural areas, continued to improve as a result of government
subsidies on home appliance purchases.
VOC's portfolio companies are not immune to macro-economic conditions in China
and the wider world. However, we have selected our key investments such that
they are focused on the domestic Chinese market and are leaders in fast-growing
market segments. As a result, our key portfolio positions continue to generate
both top line and bottom line growth, while maintaining healthy balance sheet
positions. While current equity market conditions require a longer time horizon
to develop liquidity in small-cap Chinese companies, we have seen initial signs
of increasing interest in some of our positions.
We believe we have built a strong portfolio for VOC with good value and sound
growth potential. As we shift our focus from capital deployment to portfolio
management and exit, we remain committed to maximising returns to our
shareholders.
Adam Benowitz
Managing Member
Vision Capital Advisors, LLC
29 May 2009
(2) Excluding "shell" company purchases as investment vehicles and a short-term
loan to Vision Opportunity Master Fund. If including the shell companies and the
loan, VOC deployed approximately US$81 million in 16 companies and realised
approximately US$26 million in sale proceeds
Consolidated Balance Sheet
As at 31 March 2009
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | Notes | Unaudited | | Audited | | Unaudited |
| | | 31 March | | 30 September | | 31 March |
| | | 2009 | | 2008 | | 2008 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | US$ | | US$ | | US$ |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Non-current assets: | 6 | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Investment designated | | | | | | |
| as: | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Fair value through | | 55,733,746 | | 56,794,508 | | 26,910,150 |
| profit or loss | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Held for trading | | 7,670,479 | | 15,336,809 | | 1,361,750 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Total investments | | 63,404,225 | | 72,131,317 | | 28,271,900 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Current assets: | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Cash and cash | 7 | 6,125,920 | | 56,850,049 | | 67,760,996 |
| equivalents | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Other receivables | 8 | 122,911 | | 57,243 | | 105,319 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | 6,248,831 | | 56,907,292 | | 67,866,315 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Total Assets | | 69,653,056 | | 129,038,609 | | 96,138,215 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Current liabilities: | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Other payables | 9 | 4,961,848 | | 7,011,465 | | 241,844 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Due to Prime Broker | | - | | - | | 99,422 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | 4,961,848 | | 7,011,465 | | 341,266 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Non-current liabilities: | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| B Redeemable | 11 | 100,000 | | 100,000 | | 100,000 |
| Participating Shares of | | | | | | |
| GPCo | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Total Liabilities | | 5,061,848 | | 7,111,465 | | 441,266 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Total net assets | | 64,591,208 | | 121,927,144 | | 95,969,949 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Represented by | | | | | | |
| Shareholders' Equity: | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Revenue reserves | 10 | 21,778 | | 27,499,727 | | 1,278,212 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Share capital | 11 | 71,064,098 | | 94,427,417 | | 94,418,737 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Treasury shares | 11 | (6,494,668) | | - | | - |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Total net assets | | 64,591,208 | | 121,927,144 | | 95,969,949 |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
| Net Asset Value per | 12 | 0.9759 | | 1.2193 | | 0.9570 |
| Ordinary Share | | | | | | |
+--------------------------+--------+--------------+-+--------------+-+--------------+
Consolidated Income Statement
For the period 1 October 2008 to 31 March 2009
+-----------------------------------+--------+---------------+--+----------------+
| | Notes | Unaudited | | Uaudited |
| | | 1 October | | 7 November |
| | | 2008 | | 2007 |
| | | to | | to |
| | | 31 March 2009 | | 31 March2008 |
+-----------------------------------+--------+---------------+--+----------------+
| | | | | US$ |
+-----------------------------------+--------+---------------+--+----------------+
| Income | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| Bank interest | | 6,915 | | 964,586 |
+-----------------------------------+--------+---------------+--+----------------+
| Dividend income | | 88,621 | | - |
+-----------------------------------+--------+---------------+--+----------------+
| Movement in net unrealised | 6 | (26,268,831) | | 1,418,887 |
| (loss)/gain on investments at | | | | |
| fair value through profit or loss | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| Net realised (loss)/gain on | 6 | (828,829) | | - |
| investments at fair value through | | | | |
| profit or loss | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| Net foreign exchange (loss)/gains | | (8,818) | | 71 |
+-----------------------------------+--------+---------------+--+----------------+
| Net investment income | | (27,010,942) | | 2,383,544 |
+-----------------------------------+--------+---------------+--+----------------+
| | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| Expenses | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| Investment Manager's fees | 3 | 952,130 | | 650,723 |
+-----------------------------------+--------+---------------+--+----------------+
| Movement in value of GPCo | 3 | (1,386,947) | | - |
| invested PPU's | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| Income allocation on B Redeemable | | (26,643) | | 1,202 |
| Preference Shares of GPCo | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| Administrator's fees | 3 | 60,336 | | 57,151 |
+-----------------------------------+--------+---------------+--+----------------+
| Directors' fees and expenses | 4 | 85,000 | | 70,121 |
+-----------------------------------+--------+---------------+--+----------------+
| Auditor's remuneration | | 37,005 | | 27,987 |
+-----------------------------------+--------+---------------+--+----------------+
| Custodian's fees | 3 | 15,228 | | 47,480 |
+-----------------------------------+--------+---------------+--+----------------+
| Registrar's fees | 3 | 7,518 | | 3,363 |
+-----------------------------------+--------+---------------+--+----------------+
| NOMAD & Broker's fees | 3 | 36,934 | | 39,533 |
+-----------------------------------+--------+---------------+--+----------------+
| Prime Broker's commissions | 3 | 209,002 | | 35,823 |
+-----------------------------------+--------+---------------+--+----------------+
| D&O insurance | | 51,490 | | 44,412 |
+-----------------------------------+--------+---------------+--+----------------+
| Annual listing fees | | 6,127 | | 3,052 |
+-----------------------------------+--------+---------------+--+----------------+
| Legal and professional fees | | 151,490 | | 63,666 |
+-----------------------------------+--------+---------------+--+----------------+
| Expenses re Tender Offer | | 142,000 | | - |
+-----------------------------------+--------+---------------+--+----------------+
| Expenses re investments | | 55,288 | | - |
+-----------------------------------+--------+---------------+--+----------------+
| Marketing fees | | 41,375 | | 22,862 |
+-----------------------------------+--------+---------------+--+----------------+
| Other expenses | | 29,673 | | 37,957 |
+-----------------------------------+--------+---------------+--+----------------+
| | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| Total expenses | | 467,007 | | 1,105,332 |
+-----------------------------------+--------+---------------+--+----------------+
| | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| Return for the period | 10 | (27,477,949) | | 1,278,212 |
| attributable to Ordinary | | | | |
| Shareholders | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| | | | | |
+-----------------------------------+--------+---------------+--+----------------+
| (Loss)/earnings per Ordinary | 5 | (0.3533) | | 0.0128 |
| Share (basic and diluted) | | | | |
+-----------------------------------+--------+---------------+--+----------------+
The results from the current and prior periods are derived from continuing
operations.
Consolidated Statement of Changes in Equity
For the period 1 October 2008 to 31 March 2009
+--------------------------+-------+--------------+--------------+-------------+--------------+
| | | Unaudited |
| | | 1 October 2008 to 31 March 2009 |
+--------------------------+-------+----------------------------------------------------------+
| |Notes | Revenue | Share | Treasury | Total |
| | | Reserve | Capital | Shares | |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| | | US$ | US$ | US$ | US$ |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| Balance brought forward | | 27,499,727 | 94,427,417 | - | 121,927,144 |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| | | | | | |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| Tender offer | 11 | - | (23,363,319) | - | (23,363,319) |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| | | | | | |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| Repurchase of Ordinary | 11 | - | - | (6,494,668) | (6,494,668) |
| Shares | | | | | |
| - held as Treasury | | | | | |
| Shares | | | | | |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| | | | | | |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| Deficit for the period | 10 | (27,477,949) | - | - | (27,477,949) |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| | | | | | |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| Balance carried forward | | 21,778 | 71,064,098 | (6,494,668) | 64,591,208 |
+--------------------------+-------+--------------+--------------+-------------+--------------+
| | | | | | |
+--------------------------+-------+--------------+--------------+-------------+--------------+
For the period 7 November 2007 to 31 March 2008
+--------------------------+-------+-------------+-------------+------------+--------------+
| | | Unaudited |
| | | 7 November 2007 to 31 March 2008 |
+--------------------------+-------+-------------------------------------------------------+
| |Notes | Revenue | Share | Treasury | Total |
| | | Reserve | Capital | Shares | |
+--------------------------+-------+-------------+-------------+------------+--------------+
| | | US$ | US$ | US$ | US$ |
+--------------------------+-------+-------------+-------------+------------+--------------+
| Balance brought forward | | - | - | - | - |
+--------------------------+-------+-------------+-------------+------------+--------------+
| | | | | | |
+--------------------------+-------+-------------+-------------+------------+--------------+
| Issue of Ordinary Shares | 11 | - | 100,000,000 | - | 100,000,000 |
+--------------------------+-------+-------------+-------------+------------+--------------+
| | | | | | |
+--------------------------+-------+-------------+-------------+------------+--------------+
| Issue costs on issuance | 11 | - | (5,572,583) | - | (5,572,583) |
| of Ordinary Shares | | | | | |
+--------------------------+-------+-------------+-------------+------------+--------------+
| | | | | | |
+--------------------------+-------+-------------+-------------+------------+--------------+
| Return for the period | 10 | 1,278,212 | - | - | 1,278,212 |
+--------------------------+-------+-------------+-------------+------------+--------------+
| | | | | | |
+--------------------------+-------+-------------+-------------+------------+--------------+
| Balance carried forward | | 1,278,212 | 94,427,417 | - | 95,705,629 |
+--------------------------+-------+-------------+-------------+------------+--------------+
| | | | | | |
+--------------------------+-------+-------------+-------------+------------+--------------+
Consolidated Statement of Cash Flows
For the period 1 October 2008 to 31 March 2009
+-----------------------------------+--------+----------------+--+------------------+
| | Notes | Unaudited | | Unaudited |
| | | 1 October 2008 | | 7 November 2007 |
| | | to | | to |
| | | 31 March 2009 | | 31 March 2008 |
+-----------------------------------+--------+----------------+--+------------------+
| | | US$ | | US$ |
+-----------------------------------+--------+----------------+--+------------------+
| | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Cash flows from / (used in) | | | | |
| operating activities | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Bank interest received | | 15,975 | | 957,234 |
+-----------------------------------+--------+----------------+--+------------------+
| Dividends received | | 88,621 | | - |
+-----------------------------------+--------+----------------+--+------------------+
| Operating expenses paid | | (2,577,369) | | (970,135) |
+-----------------------------------+--------+----------------+--+------------------+
| Amounts paid on purchases of | | (27,011,430) | | (26,753,591) |
| investments | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Sales proceeds received from | | 8,626,879 | | - |
| disposal of investments | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Net cash used in operating | | (20,857,324) | | (26,766,492) |
| activities | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Cash flows from / (used in) | | | | |
| financing activities | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Amounts received on Ordinary | | - | | 100,000,000 |
| Shares issued | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Issue costs paid on issuance of | | - | | (5,572,583) |
| Ordinary Shares | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Amounts received on B Redeemable | | - | | 100,000 |
| Preference Shares issued by GPCo | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Amounts paid re Tender Offer | | (23,363,319) | | - |
+-----------------------------------+--------+----------------+--+------------------+
| Amounts paid on repurchase of | | (6,494,668) | | - |
| Ordinary Shares - held as | | | | |
| Treasury Shares | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Net cash from financing | | (29,857,987) | | 94,527,417 |
| activities | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Net (decrease)/increase in cash | | (50,715,311) | | 67,760,925 |
| and cash equivalents during the | | | | |
| period | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Cash and cash equivalents, start | | 56,850,049 | | - |
| of period | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Effect of exchange rate changes | | (8,818) | | 71 |
| during the period | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Cash and cash equivalents, end of | 7 | 6,125,920 | | 67,760,996 |
| period | | | | |
+-----------------------------------+--------+----------------+--+------------------+
+-----------------------------------+--------+----------------+--+------------------+
| Cash and cash equivalents | | | | |
| comprise the following balance | | | | |
| sheet amounts: | | | | |
+-----------------------------------+--------+----------------+--+------------------+
| Bank deposits | | 6,125,920 | | 67,760,996 |
+-----------------------------------+--------+----------------+--+------------------+
| | | 6,125,920 | | 67,760,996 |
+-----------------------------------+--------+----------------+--+------------------+
Notes to the Consolidated Financial Statements
For the period 1 October 2008 to 31 March 2009
1. The Company:
Vision Opportunity China Fund Limited is a Guernsey registered, closed-ended
investment company. The Company commenced business on 28 November 2007 when the
Ordinary Shares of the Company were admitted to trading on AIM. The registered
office of the Company is Suites 13 and 15, Sarnia House, Le Truchot, St Peter
Port, Guernsey, GY1 4NA.
The Company is a Guernsey Registered Closed-ended Investment Scheme and is
subject to the Registered Collective Investment Scheme Rules 2008.
There have recently been a number of changes to the regulatory regime for
Guernsey funds. A number of provisions which were contained in the Control of
Borrowing (Bailiwick of Guernsey) Ordinance, 1959 to 2003 ('COBO') (which
governed closed ended funds) have been consolidated into the Protection of
Investors (Bailiwick of Guernsey) Law, 1987 as amended (the 'POI Law') (which
governed open-ended funds and licencees) so that the POI Law now governs both
open-ended and closed-ended funds (as well as licensees).
Closed-ended funds are now Category 1 controlled investments under the POI Law.
The changes have also codified in the POI Law a number of standard conditions
and ongoing notification requirements imposed on the licensees of funds which
were listed on the fund's COBO consent, but were not explicitly set out in COBO.
It is intended that the changes will simplify Guernsey's investment fund regime
by categorising all funds (whether open-ended or closed-ended) as either
registered schemes or authorised schemes. The Company has elected to become a
registered scheme.
The Company's investment policy is to invest in companies whose operations at
the time of the Group's initial investment are principally in Greater China.
The underlying investments of the Group are held by the Limited Partnership
which was registered as a limited partnership in Guernsey under the Limited
Partnership (Guernsey) Law, 1995. The Company is the limited partner of the
Limited Partnership and the Company's subsidiary, GPCo, is the general partner
of the Limited Partnership.
GPCo was incorporated in Guernsey and is licensed under The Protection of
Investors (Bailiwick of Guernsey) Law 1987, as amended. GPCo's principle
activity is to manage the Limited Partnership which it does by employing the
services of Vision Capital Advisors under the Investment Management Agreement.
GPCo is responsible for the continuing fees of the Investment Manager.
The Company owns all of the issued A Ordinary Share capital of GPCo. The A
Ordinary Shares give the Company the sole control rights over GPCo.
Vision Capital Advisors owns all of the issued B Redeemable Preference Share
capital of GPCo. The B Redeemable Preference Shares give the Investment Manager
the sole economic rights to the performance allocation to which GPCo is entitled
under the terms of the Limited Partnership and the return on the US$100,000
capital invested by Vision Capital Advisors for the B Redeemable Preference
Shares.
Through its interest as a limited partner in the Limited Partnership, the
Company is entitled to a return on the US$94,427,417, (plus accrued interest),
it invested in the Limited Partnership to enable the Group to make investments.
On 2 December 2008, the Company's Shareholders approved the Tender Offer
pursuant to which the Company, through Fairfax I.S. PLC, acquired 33,810,426
Ordinary Shares from Shareholders for an aggregate price (including costs) of
US$30 million. Following the Tender Offer, 26,456,029 Ordinary Shares were
cancelled and the issued Ordinary Share capital of the Company became 73,543,971
Ordinary Shares, of which 7,354,397 are held in treasury.
The Company, the GPCo and the Limited Partnership together form an integrated
fund structure. The Investment Manager's holding in the GPCo is the only
minority interest in the GPCo.
2. Principal Accounting Policies:
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the Group's financial
statements:
(a) Basis of Preparation:
The condensed interim financial statements have been prepared in accordance with
International Accounting Standard ("IAS") 34 "Interim Financial Reporting", as
adopted by the EU, which comprise standards and interpretations approved by the
International Accounting Standards Board ("IASB"), and International Accounting
Standards and Standing Interpretations Committee interpretations approved by the
International Accounting Standards Committee ("IASC") that remain in effect.
(b) Significant Accounting Policies:
The same accounting policies, presentation and methods of computation are
followed in the condensed interim financial statements as those followed in the
preparation of the Group's annual audited financial statements for the year
ended 30 September 2008.
(c) Segmental Reporting:
The Directors are of the opinion that the Group is engaged in a single segment
of business, being investment business.
(d) Treasury Shares:
Where the Company purchases its own Ordinary Shares, the consideration paid,
including any directly attributable incremental costs is deducted from equity
attributable to the Company's equity holders until the shares are cancelled,
reissued or disposed of. Where such Ordinary Shares are subsequently sold or
reissued, any consideration received, net of any directly attributable
incremental transaction costs, is included in equity attributable to the
Company's equity holders.
3. Related Parties & Material Contracts:
The Company is responsible for the continuing fees of GPCo, the Administrator,
the Custodian, the NOMAD & Broker, the Prime Broker and the Registrar in
accordance with the Limited Partnership, Administration, Custodian, Nominated
Adviser and Broker, Prime Broker and Registrar agreements, respectively.
The Investment Manager is a related party of the Group as a result of a number
of connections. Dr Randolph Cohen is a Director of the Company and is co founder
and senior Managing Director of the Investment Manager. Mr David Benway is a
Director of the Company and is also Director of Research and Investments for the
Investment Manager.
Limited Partnership Agreement
Pursuant to the provisions of the Limited Partnership Agreement dated 22
November 2007, GPCo's compensation consists of all expenses incurred in relation
to the constitution, administration and business of the Limited Partnership,
without limitation or exception.
GPCo is responsible for the continuing fees of the Investment Manager in
accordance with the Investment Management Agreement.
Investment Management Agreement
Pursuant to the Investment Management Agreement, GPCo pays a management fee to
the Investment Manager of 0.5% of the final month-end NAV of the previous
quarter, paid quarterly in advance. For the first quarter following Admission,
the management fee was 0.5% of the net proceeds pro-rated on a time basis.
As at 31 March 2009 the management fee creditor was US$Nil (30 September 2008
and 31 March 2008: US$Nil).
The Investment Manager is also entitled to a performance allocation, through its
interest in GPCo, in respect of a performance period only if two conditions are
met, namely (i) the performance hurdle test is met; and (ii) the High Watermark
is exceeded.
The performance hurdle test will be met in a performance period if the Adjusted
Closing NAV per Ordinary Share (as defined in the Investment Management
Agreement) exceeds the Hurdle NAV per Ordinary Share at the end of such period.
The Hurdle NAV per Ordinary Share is the greater of (a) the Opening NAV per
Ordinary Share and (b) the High Watermark, increased over the relevant
performance period by a rate equal to 10 per cent. per annum.
The High Watermark will be exceeded if the Adjusted Closing NAV per Ordinary
Share at the end of the relevant performance period is higher than the High
Watermark.
The performance allocation is based on "NAV Increase per Ordinary Share" which
is the amount by which the Adjusted Closing NAV per Ordinary Share exceeds
either (i) the Opening NAV per Ordinary Share; or (ii) in the case where the
High Watermark exceeds the Hurdle NAV per Ordinary Share, the High Watermark.
The performance allocation is an amount equal to 20 per cent. of the NAV
Increase per Ordinary Share multiplied by the time weighted average of the total
number of Ordinary Shares in issue for the relevant period. Vision Capital
Advisors will not be entitled to any such part of the performance allocation to
which it would otherwise be entitled if allocating such part of the performance
allocation would have caused the performance hurdle test or High Watermark test
to not be met.
The first performance period began on Admission and ended on 30 September 2008.
Each subsequent performance period is a period of one financial year.
The Investment Manager has agreed to treat a portion of its performance
allocation as invested each year. The portion of the performance allocation
which is represented by realised gains, less expenses, from investments will be
distributable in cash by the Limited Partnership to GPCo in arrears at the end
of each performance period (the "Cash Performance Allocation"). Any amount of
the performance allocation which is not represented by realised gains (or which
the Investment Manager via GPCo otherwise elects not to receive in cash as part
of the Cash Performance Allocation) will be treated as invested by GPCo at the
end of each performance period in Performance Partnership Units ("PPUs) in the
Limited Partnership. PPUs will accrue a preferred share of the profits and
losses of the Limited Partnership on the basis of fluctuations in the Market
Price (as defined in the Investment Management Agreement) of Ordinary Shares
from the date of their allocation to GPCo until the date PPUs are redeemed, such
that GPCo's return on its PPUs will track the return of an investor in Ordinary
Shares over the same period (ignoring dealing costs).
GPCo is entitled to receive a priority distribution from the Limited Partnership
equivalent to the Cash Performance Allocation and the return on the PPUs. GPCo's
entitlement to the Cash Performance Allocation and the return on the PPUs will
be payable to the Investment Manager as the owner of 100 per cent. of the B
Shares in GPCo.
At the end of each performance period, the Administrator will calculate the
proposed performance allocation and the split between the Cash Performance
Allocation payable and the amount which will be automatically treated as
invested PPUs (to be reviewed and agreed by the Board) and, if cash is
available, GPCo will pay a dividend on the non-voting B Shares or permit certain
of them to be redeemed to pay the Cash Performance Allocation to the Investment
Manager. If cash is not available, or Vision Capital Advisors elects, the Cash
Performance Allocation may be satisfied by the issue of further PPUs to Vision
Capital Advisors.
As at 31 March 3009 the Cash Performance Allocation creditor was US$Nil (30
September 2008: US$570,629) and the value of the Performance Allocation treated
as invested PPUs was US$4,917,356 (30 September 2008: US$6,304,303 and 31 March
2008: US$Nil).
Administration Agreement
Praxis Fund Services Limited has been appointed as Administrator to the Group
under the Administration Agreement dated 16 November 2007. The Administrator
provides day-to-day administration and secretarial services to the Group.
The Administration Agreement may be terminated by either party on not less than
180 days' written notice, or earlier upon certain breaches of the Administration
Agreement or the insolvency or receivership of either party or if the
Administrator ceases to be qualified to act as such.
Pursuant to the provisions of the Administration Agreement, Praxis Fund Services
Limited is entitled to receive the following administration fees from the Group:
* Accounting and NAV calculation - a fee based upon 0.10% of NAV subject to a
minimum of GBP4,500 per month;
* Company Secretarial & US Shareholder Reporting - time based fee; and
* GPCo - time based fee subject to a minimum of GBP10,000 per annum.
As at 31 March 2009 the administration fee creditor was US$9,968 (30 September
2008: US$15,744 and 31 March 2008: US$14,401).
Registrar Agreement
Pursuant to the provisions of the Registrar Agreement, Capita Registrars
(Guernsey) Limited is entitled to an annual maintenance fee of GBP2 per
shareholder account, subject to an annual minimum of GBP5,000 per annum,
together with a per deal fee per shareholder transaction.
As at 31 March 2009 the registrar fee creditor was US$1,772 (30 September 2008:
US$2,353 creditor and 31 March 2008: US$517 prepaid).
Custodian Agreement
Jefferies & Company Inc. has been appointed as Custodian to the Group and in
that capacity has custody of many of the Group's investments. In accordance with
US securities laws, the assets of Jefferies' customers are required to be
segregated from Jefferies' proprietary assets.
As at 31 March 2009 the custodian fee creditor was US$883 (30 September 2008:
US$8,094 and 31 March 2008: US$12,518).
Nominated Adviser & Broker Agreement
Pursuant to the provisions of Nominated Adviser and Broker Agreement, Fairfax is
paid a retainer of GBP50,000 per annum in respect of its ongoing services as the
Company's Nominated Adviser and Broker commencing on Admission. The Nominated
Adviser and Broker Agreement is terminable by either party on 3 months' notice
and in certain other circumstances.
As at 31 March 2009 the fees paid in advance to Fairfax were US$18,344 (30
September 2008: US$Nil and 31 March 2008: US$39,484).
Prime Broker Agreement
Jefferies & Company Inc. has been appointed as Prime Broker to the Limited
Partnership. The Limited Partnership pays the Prime Broker commissions and other
transaction fees (for the execution of purchases and sales of securities). These
fees are payable at the Prime Broker's prevailing rates.
As at 31 March 2009 the Limited Partnership had amounts due to the Prime Broker
of US$Nil (30 September 2008 US$Nil and 31 March 2008: US$99,422).
Loan to Master Fund
The Group's main co-investment relationship is with Vision Opportunity Master
Fund Limited ("Master Fund"), which is also managed by Vision Capital Advisors.
On 23 May 2008 Vision Opportunity China LP made a secured loan in the sum of
US$6,500,000 to the Master Fund at an interest rate of 3 month LIBOR plus 4%,
payable at maturity. The loan was secured by the 4,362,416 common shares
underlying a J-Warrant issued by Sunway Global Inc, which served as collateral.
This transaction was carried out on arm's length terms and the loan was repaid
in full, together with accrued interest, on 8 August 2008. There were no loans
outstanding at the period end.
Directors' Interests
The interests in Ordinary Shares of the Directors and their families, who held
office during the period, as at 31 March 2009 are set out below:
+-------------------------+---------------+--+------------------+--+--------------+
| |31 March 2009 | | 30 | | 31 March |
| | | | September 2008 | | 2008 |
+-------------------------+---------------+--+------------------+--+--------------+
| | No. of | | No. of Ordinary | | No. of |
| | Ordinary | | Shares | | Ordinary |
| | Shares | | | | Shares |
+-------------------------+---------------+--+------------------+--+--------------+
| Christopher | - | | - | | - |
| Fish | | | | | |
| (Chairman) | | | | | |
+-------------------------+---------------+--+------------------+--+--------------+
| Dr Randolph | 7,800,000 | | 7,500,000 | | 7,500,000 |
| Cohen* | | | | | |
+-------------------------+---------------+--+------------------+--+--------------+
| David Benway | - | | - | | - |
+-------------------------+---------------+--+------------------+--+--------------+
| Ruiping Wang | - | | - | | - |
+-------------------------+---------------+--+------------------+--+--------------+
| Dr Christopher | - | | - | | - |
| Polk | | | | | |
+-------------------------+---------------+--+------------------+--+--------------+
*Dr Cohen is interested in 7,800,000 (30 September 2008 and 31 March 2008:
7,500,000) Ordinary Shares in the Company due to his 33.3 per cent. interest in
the economic rights in Vision Capital Advisors' Ordinary Shares in the Company.
There were no other changes in the interests of the Directors prior to the date
of this report.
Dr Cohen has an indirect interest through Vision Capital Advisors' holdings of
Class B shares in the GPCo.
Other than Dr Cohen, no Director and no connected person of any Director has an
interest in Ordinary Shares of the Company which, is known to, (or could with
reasonable diligence be ascertained by) the Directors, whether held directly or
through a third party,.
Lock-In Agreements
In accordance with lock-in agreements dated 16 November 2007, the Directors,
Vision Capital Advisors and current/former employees of Vision Capital Advisors,
(being Jonathan Shane and David Skirloff) have pursuant to Rule 7 of the AIM
Rules for Companies agreed, not to dispose of any Ordinary Shares within a
period of 12 months from Admission, except in certain restricted circumstances
permitted by the AIM Rules for Companies. As at 31 March 2009, this lock-in
provision had expired and therefore applied to nil (30 September 2008: 7,800,000
and 31 March 2008: 7,750,000) Ordinary Shares.
Additionally, as at 31 March 2009 Vision Capital Advisors and employees of
Vision Capital Advisors, Jonathan Shane and Carl Kleidman, had purchased a
collective 535,000 (30 September 2008: 285,000 and 31 March 2008: 250,000)
Ordinary Shares that carry certain restrictions.
4. Directors' Fees and Expenses:
Each of the Directors has entered into an agreement with the Company providing
for them to act as a non-executive Directors of the Company. Their annual fees,
excluding all reasonable expenses incurred in the course of their duties which
will be reimbursed by the Company, are as follows:
+--------------------------+---------------+--+------------------+--+---------------+
| |31 March 2009 | | 30 | |31 March 2008 |
| | | | September 2008 | | |
+--------------------------+---------------+--+------------------+--+---------------+
| | Annual Fee | | Annual Fee | | Annual Fee |
+--------------------------+---------------+--+------------------+--+---------------+
| | US$ | | US$ | | US$ |
+--------------------------+---------------+--+------------------+--+---------------+
| Christopher | 70,000 | | 70,000 | | 70,000 |
| Fish (Chairman) | | | | | |
+--------------------------+---------------+--+------------------+--+---------------+
| Dr Randolph | - | | - | | - |
| Cohen | | | | | |
+--------------------------+---------------+--+------------------+--+---------------+
| David Benway | - | | - | | - |
+--------------------------+---------------+--+------------------+--+---------------+
| Ruiping Wang | 50,000 | | 50,000 | | 50,000 |
+--------------------------+---------------+--+------------------+--+---------------+
| Dr Christopher | 50,000 | | 50,000 | | 50,000 |
| Polk | | | | | |
+--------------------------+---------------+--+------------------+--+---------------+
Dr Cohen and Mr Benway are not entitled to any to Directors' fees for the
period. As at 31 March 2009, the Directors' fees creditor was US$Nil (30
September 2008: US$Nil and 31 March 2008 US$58,284).
5. (Loss)/earnings per Ordinary Share:
Earnings per Ordinary Share of US$(0.3533) (period ended 31 March 2008:
US$0.0128) is based on the (deficit)/return for the period of US$(27,477,949)
(period ended 31 March 2008: US$1,278,212) and on a weighted average of
77,771,046 (period ended 31 March 2008: 100,000,000) Ordinary Shares in issue.
6. Investments:
+------------------------------------+--------------+--+------------------+--+---------------+
| Loans: | 1 October | | 7 November 2007 | | 7 November |
| | 2008 | | to | | 2007 |
| | to | | 30 September | | to |
| | 31 March | | 2008 | |31 March 2008 |
| | 2009 | | | | |
+------------------------------------+--------------+--+------------------+--+---------------+
| | US$ | | US$ | | US$ |
+------------------------------------+--------------+--+------------------+--+---------------+
| | | | | | |
+------------------------------------+--------------+--+------------------+--+---------------+
| Opening | - | | - | | - |
| fair | | | | | |
| value | | | | | |
+------------------------------------+--------------+--+------------------+--+---------------+
| Purchases | - | | 6,500,000 | | - |
+------------------------------------+--------------+--+------------------+--+---------------+
| Sales | - | | (6,500,000) | | - |
| - | | | | | |
| proceeds | | | | | |
+------------------------------------+--------------+--+------------------+--+---------------+
| Closing | - | | - | | - |
| fair | | | | | |
| value | | | | | |
+------------------------------------+--------------+--+------------------+--+---------------+
| | | | | | |
+------------------------------------+--------------+--+------------------+--+---------------+
| Closing | - | | - | | - |
| book | | | | | |
| cost | | | | | |
+------------------------------------+--------------+--+------------------+--+---------------+
| Closing | - | | - | | - |
| net | | | | | |
| unrealised | | | | | |
| gain | | | | | |
+------------------------------------+--------------+--+------------------+--+---------------+
| Closing | - | | - | | - |
| fair | | | | | |
| value | | | | | |
+------------------------------------+--------------+--+------------------+--+---------------+
+------------------------------------------+--------------+--+------------------+--+---------------+
| Fair | 1 October | | 7 November 2007 | | 7 November |
| Value | 2008 | | to | | 2007 |
| Through | to | | 30 September | | to |
| Profit | 31 March | | 2008 | | 31 March 2008 |
| or Loss | 2009 | | | | |
| Investments: | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| | US$ | | US$ | | US$ |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Listed | 19,666,055 | | 22,285,280 | | 22,391,508 |
| equity | | | | | |
| securities | | | | | |
| (freely | | | | | |
| tradeable) | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Listed | 29,067,691 | | 34,509,228 | | 4,518,642 |
| equity | | | | | |
| securities | | | | | |
| (restricted) | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Unlisted | 7,000,000 | | - | | - |
+------------------------------------------+--------------+--+------------------+--+---------------+
| | 55,733,746 | | 56,794,508 | | 26,910,150 |
+------------------------------------------+--------------+--+------------------+--+---------------+
| | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Opening | 56,794,508 | | - | | - |
| fair | | | | | |
| value | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Purchases | 27,011,430 | | 47,202,307 | | 26,845,835 |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Sales | (8,640,862) | | (10,717,771) | | - |
| - | | | | | |
| proceeds | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Sales | (828,829) | | 4,078,090 | | - |
| - | | | | | |
| realised | | | | | |
| gains on | | | | | |
| disposals | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Movement | (18,602,501) | | 16,231,883 | | 64,315 |
| in net | | | | | |
| unrealised | | | | | |
| gains | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Closing | 55,733,746 | | 56,794,508 | | 26,910,150 |
| fair | | | | | |
| value | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Closing | 58,104,364 | | 40,562,625 | | 26,845,835 |
| book | | | | | |
| cost | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Closing | (2,370,618) | | 16,231,883 | | 64,315 |
| net | | | | | |
| unrealised | | | | | |
| gain | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
| Closing | 55,733,746 | | 56,794,508 | | 26,910,150 |
| fair | | | | | |
| value | | | | | |
+------------------------------------------+--------------+--+------------------+--+---------------+
+-----------------------------------+--------------+--+------------------+--+----------------+
| Held | 1 October | | 7 November 2007 | | 7 November |
| for | 2008 | | to | | 2007 |
| Trading | to | | 30 September | | to |
| Investments: | 31 March | | 2008 | | 31 March 2008 |
| | 2009 | | | | |
+-----------------------------------+--------------+--+------------------+--+----------------+
| | US$ | | US$ | | US$ |
+-----------------------------------+--------------+--+------------------+--+----------------+
| Unlisted | 7,670,479 | | 15,336,809 | | 1,361,750 |
| investments | | | | | |
| - warrants | | | | | |
+-----------------------------------+--------------+--+------------------+--+----------------+
| | | | | | |
+-----------------------------------+--------------+--+------------------+--+----------------+
| Opening | 15,336,809 | | - | | - |
| fair | | | | | |
| value | | | | | |
+-----------------------------------+--------------+--+------------------+--+----------------+
| Purchases | - | | 7,178 | | 7,718 |
+-----------------------------------+--------------+--+------------------+--+----------------+
| Movement | (7,666,330) | | 15,329,631 | | 1,354,572 |
| in net | | | | | |
| unrealised | | | | | |
| gains | | | | | |
+-----------------------------------+--------------+--+------------------+--+----------------+
| Closing | 7,670,479 | | 15,336,809 | | 1,361,750 |
| fair | | | | | |
| value | | | | | |
+-----------------------------------+--------------+--+------------------+--+----------------+
| | | | | | |
+-----------------------------------+--------------+--+------------------+--+----------------+
| Closing | 7,178 | | 7,178 | | 7,178 |
| book | | | | | |
| cost | | | | | |
+-----------------------------------+--------------+--+------------------+--+----------------+
| Closing | 7,663,301 | | 15,329,631 | | 1,354,572 |
| net | | | | | |
| unrealised | | | | | |
| gain | | | | | |
+-----------------------------------+--------------+--+------------------+--+----------------+
| Closing fair value | 7,670,479 | | 15,336,809 | | 1,361,750 |
+-----------------------------------+--------------+--+------------------+--+----------------+
+------------------------------------------+--------------+--+------------------+--+----------------+
| Total | 1 October | | 7 November 2007 | | 7 November |
| Investments: | 2008 | | to | | 2007 |
| | to | | 30 September | | to |
| | 31 March | | 2008 | | 31 March 2008 |
| | 2009 | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| | US$ | | US$ | | US$ |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Listed | 19,666,055 | | 22,285,280 | | 22,391,508 |
| equity | | | | | |
| securities | | | | | |
| (freely | | | | | |
| tradeable) | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Listed | 29,067,691 | | 34,509,228 | | 4,518,642 |
| equity | | | | | |
| securities | | | | | |
| (restricted) | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Unlisted | 7,000,000 | | - | | - |
| equity | | | | | |
| securities | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Warrants | 7,670,479 | | 15,336,809 | | 1,361,750 |
+------------------------------------------+--------------+--+------------------+--+----------------+
| | 63,404,225 | | 72,131,317 | | 28,271,900 |
+------------------------------------------+--------------+--+------------------+--+----------------+
| | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Opening | 72,131,317 | | - | | - |
| fair | | | | | |
| value | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Purchases | 27,011,430 | | 53,709,485 | | 26,853,013 |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Sales | (8,640,862) | | (17,217,771) | | - |
| - | | | | | |
| proceeds | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Sales | (828,829) | | 4,078,090 | | - |
| - | | | | | |
| realised | | | | | |
| gain on | | | | | |
| disposals | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Movement | (26,268,831) | | 31,561,514 | | 1,418,887 |
| in net | | | | | |
| unrealised | | | | | |
| gains | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Closing | 63,404,225 | | 72,131,317 | | 28,271,900 |
| fair | | | | | |
| value | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Closing | 58,111,542 | | 40,569,803 | | 26,853,013 |
| book | | | | | |
| cost | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Closing | 5,292,683 | | 31,561,514 | | 1,418,887 |
| net | | | | | |
| unrealised | | | | | |
| gain | | | | | |
+------------------------------------------+--------------+--+------------------+--+----------------+
| Closing fair value | 63,404,225 | | 72,131,317 | | 28,271,900 |
+------------------------------------------+--------------+--+------------------+--+----------------+
7. Cash and Cash Equivalents:
+----------------------------+--------------+--+------------------+--+----------------+
| | 31 March | | 30 September | | 31 March 2008 |
| | 2009 | | 2008 | | |
+----------------------------+--------------+--+------------------+--+----------------+
| | US$ | | US$ | | US$ |
+----------------------------+--------------+--+------------------+--+----------------+
| | | | | | |
+----------------------------+--------------+--+------------------+--+----------------+
| Cash | 6,125,920 | | 56,850,049 | | 67,670,996 |
| at | | | | | |
| bank | | | | | |
+----------------------------+--------------+--+------------------+--+----------------+
| | | | | | |
+----------------------------+--------------+--+------------------+--+----------------+
8. Other Receivables:
+----------------------------------+--------------+--+------------------+--+----------------+
| | 31 March | | 30 September | | 31 March 2008 |
| | 2009 | | 2008 | | |
+----------------------------------+--------------+--+------------------+--+----------------+
| | US$ | | US$ | | US$ |
+----------------------------------+--------------+--+------------------+--+----------------+
| Unsettled | 13,982 | | - | | - |
| investment | | | | | |
| sales | | | | | |
+----------------------------------+--------------+--+------------------+--+----------------+
| Bank | - | | 9,061 | | 7,352 |
| interest | | | | | |
| receivable | | | | | |
+----------------------------------+--------------+--+------------------+--+----------------+
| Prepayments | 108,929 | | 48,182 | | 97,967 |
+----------------------------------+--------------+--+------------------+--+----------------+
| | 122,911 | | 57,243 | | 105,319 |
+----------------------------------+--------------+--+------------------+--+----------------+
The Directors consider that the carrying amount of other receivables
approximates fair value.
9. Other Payables:
+--------------------------------------+--------------+--+------------------+--+----------------+
| | 31 March | | 30 September | | 31 March 2008 |
| | 2009 | | 2008 | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| | US$ | | US$ | | US$ |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Performance | 4,917,356 | | 6,874,932 | | - |
| allocation | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Income | (26,643) | | 36,358 | | 1,202 |
| allocation | | | | | |
| on B | | | | | |
| Redeemable | | | | | |
| Preference | | | | | |
| Shares | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Administrator's | 9,968 | | 15,744 | | 14,401 |
| fee | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Custodian's | - | | 8,094 | | 12,518 |
| fee | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Listing | - | | - | | 3,048 |
| fee | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| NOMAD | - | | - | | 39,484 |
| & | | | | | |
| Broker's | | | | | |
| fee | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Registrar's | 1,772 | | 2,353 | | - |
| fee | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Legal | 3,420 | | 4,743 | | 42,012 |
| & | | | | | |
| professional | | | | | |
| fees | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Audit | 26,431 | | 62,119 | | 27,952 |
| fee | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Directors' | - | | - | | 58,284 |
| fees and | | | | | |
| expenses | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Travel | - | | - | | 20,328 |
| & | | | | | |
| marketing | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Issue | - | | - | | 8,680 |
| costs | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| Sundry | 29,544 | | 7,122 | | 13,935 |
| payables | | | | | |
+--------------------------------------+--------------+--+------------------+--+----------------+
| | 4,961,848 | | 7,011,465 | | 241,844 |
+--------------------------------------+--------------+--+------------------+--+----------------+
The Directors consider that the carrying amount of other payables approximates
fair value.
10. Revenue reserve:
+------------------------------------+--------------+--+------------------+--+----------------+
| | 1 October | | 7 November 2007 | | 7 November |
| | 2008 | | to | | 2007 |
| | to | | 30 September | | to |
| | 31 March | | 2008 | | 31 March 2008 |
| | 2009 | | | | |
+------------------------------------+--------------+--+------------------+--+----------------+
| | US$ | | US$ | | US$ |
+------------------------------------+--------------+--+------------------+--+----------------+
| Opening | 27,499,727 | | - | | - |
| revenue | | | | | |
| reserve | | | | | |
+------------------------------------+--------------+--+------------------+--+----------------+
| (Deficit)/return | (27,477,949) | | 27,499,727 | | 1,278,212 |
| for the period | | | | | |
+------------------------------------+--------------+--+------------------+--+----------------+
| Closing revenue reserve | 21,778 | | 27,499,727 | | 1,278,212 |
+------------------------------------+--------------+--+------------------+--+----------------+
11. Share Capital:
+-------------------------------------------------------+---------+----------------+
| | | 31 March 2009 |
| | | & |
| | | 30 September |
| | | 2008 |
| | | & |
| | | 31 March 2008 |
+-------------------------------------------------------+---------+----------------+
| Authorised Share Capital | | US$ |
+-------------------------------------------------------+---------+----------------+
| Unlimited shares of no par value that may be | | - |
| issued as Ordinary Shares | | |
+-------------------------------------------------------+---------+----------------+
+-------------------------------+--------------+--+------------------+--+----------------+
| | 31 March | | 30 September | | 31 March 2008 |
| | 2009 | | 2008 | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| | No. | | No. | | No. |
+-------------------------------+--------------+--+------------------+--+----------------+
| Allotted, | | | | | |
| Issued | | | | | |
| and Fully | | | | | |
| Paid | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| Brought | 100,000,000 | | - | | - |
| forward | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| 100,000,000 | - | | 100,000,000 | | 100,000,000 |
| Ordinary | | | | | |
| Shares | | | | | |
| issued for | | | | | |
| US$1 each | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| Tender | (26,456,029) | | | | - |
| Offer | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| Ordinary | (7,354,397) | | - | | - |
| Shares | | | | | |
| held in | | | | | |
| treasury | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| | 66,189,574 | | 100,000,000 | | 100,000,000 |
+-------------------------------+--------------+--+------------------+--+----------------+
| Share | | | | | |
| Capital | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| Share | 94,427,417 | | - | | - |
| capital | | | | | |
| brought | | | | | |
| forward | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| Share | - | | 100,000,000 | | 100,000,000 |
| capital | | | | | |
| on | | | | | |
| issues | | | | | |
| during | | | | | |
| the | | | | | |
| period | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| Issue | - | | (5,572,583) | | (5,581,263) |
| costs on | | | | | |
| issuance | | | | | |
| of | | | | | |
| Ordinary | | | | | |
| Shares | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| Share | (23,363,319) | | - | | - |
| capital | | | | | |
| on | | | | | |
| Tender | | | | | |
| Offer | | | | | |
| during | | | | | |
| the | | | | | |
| period | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
| Share capital carried | 71,064,098 | | 94,427,417 | | 94,418,737 |
| forward | | | | | |
+-------------------------------+--------------+--+------------------+--+----------------+
On 2 December 2008, the Company's Shareholders approved the Tender Offer
pursuant to which the Company through Fairfax I.S. PLC acquired 33,810,426
Ordinary Shares from Shareholders for an aggregate price (including costs) of
US$30 million. Following the Tender Offer, 26,456,029 Ordinary Shares were
cancelled and the issued Ordinary Share capital of the Company became 73,543,971
Ordinary Shares, of which 7,354,397 are held in treasury (30 September 2008 and
31 March 2008: nil).
The repurchase of Ordinary Shares by the Company was funded from the Company's
cash resources.
+-----------------------------+--------------+--+------------------+--+--------------+
| | 31 March | | 30 September | | 31 March |
| | 2009 | | 2008 | | 2008 |
+-----------------------------+--------------+--+------------------+--+--------------+
| | US$ | | US$ | | US$ |
+-----------------------------+--------------+--+------------------+--+--------------+
| Treasury | | | | | |
| Shares | | | | | |
+-----------------------------+--------------+--+------------------+--+--------------+
| 7,354,397 | 6,494,668 | | - | | - |
| Treasury | | | | | |
| Shares | | | | | |
+-----------------------------+--------------+--+------------------+--+--------------+
The Company's authorised capital structure comprises an unlimited number of
shares of no par value.
12. Net Asset Value per Ordinary Share:
The NAV per Ordinary Share is based on the net assets attributable to holders of
Ordinary Shares of US$64,591,208 (30 September 2008: US$121,927,144 and 31 March
2008: US$95,696,949) and on the Ordinary Shares in issue less shares held in
treasury at the period end of 66,189,574 (30 September 2008 and 31 March 2008:
100,000,000).
13. Reconciliation of NAV per Financial Statements to Published NAV:
The NAV per Ordinary Share as disclosed in these financial statements is
different to the NAV per Ordinary Share as published. This difference relates to
the different treatment of the Company's own Ordinary Shares, which are held by
the Company in treasury, for valuation and financial reporting purposes. For
valuation purposes the fair value of these shares are included in the Company's
investment portfolio at bid price and the published NAV per Ordinary Share is
calculated based on the NAV of the Company (including the fair value of the
shares held in treasury) and on the total number of Ordinary Shares in issue
(including those shares held in treasury). For financial reporting purposes the
cost of the treasury shares are included as a negative equity reserve in
Company's financial statements in accordance with IFRS (see note 2(d)) and the
financial statements NAV per Ordinary Share is calculated based on the NAV of
the Company (included the cost of the shares held in treasury as negative
equity) and on the number of Ordinary Shares in issue external to the Company
(i.e. excluding those held in treasury). The table below shows a reconcilation
between the financial statements NAV per Ordinary Share compared to the
published NAV per Ordinary Share:
+---------------------------------+---------------+--+------------------+--+---------------+
| | 31 March | | 30 September | | 31 March |
| | 2009 | | 2008 | | 2008 |
+---------------------------------+---------------+--+------------------+--+---------------+
| | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
| Published NAV | US$69,959,918 | | US$121,927,144 | | US$95,696,949 |
+---------------------------------+---------------+--+------------------+--+---------------+
| | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
| No. of shares in issue | 73,543,971 | | 100,000,000 | | 100,000,000 |
+---------------------------------+---------------+--+------------------+--+---------------+
| | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
| Published | US$0.9513 | | US$1.2193 | | US$0.9570 |
| NAV per | | | | | |
| Ordinary | | | | | |
| Share | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
| | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
| Adjustment | (5,368,710) | | US$Nil | | US$Nil |
| to NAV re | | | | | |
| shares | | | | | |
| held in | | | | | |
| treasury | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
| | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
| Adjustment | (7,354,397) | | - | | - |
| to no. of | | | | | |
| shares in | | | | | |
| issue re | | | | | |
| shares | | | | | |
| held in | | | | | |
| treasury | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
| | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
| Financial Statements NAV | US$64,591,208 | | US$121,927,144 | | US$95,696,949 |
+---------------------------------+---------------+--+------------------+--+---------------+
| | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
| Financial | US$0.9759 | | US$1.2193 | | US$0.9570 |
| Statements | | | | | |
| NAV per | | | | | |
| Ordinary | | | | | |
| Share | | | | | |
+---------------------------------+---------------+--+------------------+--+---------------+
14. Dividend:
The Directors do not recommend the payment of a dividend for the period ended 31
March 2009 (period ended 31 March 2008: US$Nil).
15. Taxation:
The Income Tax Authority of Guernsey has granted the Company exemption from
Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance,
1989 and the income of the Company may be distributed or accumulated without
deduction of Guernsey income tax. Exemption under the above mentioned Ordinance
entails payment by the Company of an annual fee of GBP600. It should be noted,
however, that interest and dividend income accruing from the Company's
investments may be subject to withholding tax in the country of origin. With
effect from 1 January 2008, the standard rate of income tax for most companies
in Guernsey is zero per cent. Tax Exempt status continues to exist and the
Company has been granted this status for 2008.
The Company has not suffered any withholding tax in the period (period ended 31
March 2008: US$Nil).
16. Capital Management:
The Company has the ability to borrow up to 25% of net assets in order to meet
ongoing expenses and obligations. Any such borrowing requires Board approval.
17. Post Balance Sheet Events:
There are no significant post balance sheet events that require disclosure in
these interim financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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