For the period 1 October 2010 to 31 March 2011
Unaudited Unaudited
1 October 2010 1 October 2009
to to
Notes 31 March 2011 31 March 2010
------------------------------------- ----- --------------- ---------------
US$ US$
Cash flows from operating activities:
Bank interest received 1 13
Dividends received 64,787 8,793
Operating expenses paid (2,759,092) (29,238,957)
Amounts paid on purchases of
investments (5,192,853) (2,738,224)
Sales proceeds received from
disposal of investments 12,952,840 40,675,471
---------------
Net cash from in operating
activities 5,065,683 8,707,096
--------------- ---------------
Cash flows used in financing
activities:
Amounts received on issue of
C Ordinary Shares in GPCo 16,024 -
Amounts paid re buyback of
Ordinary Shares (1,440,000) -
Net cash used in financing
activities (1,423,976) -
--------------- ---------------
Net increase in cash and cash
equivalents during the period 3,641,707 8,707,096
Cash and cash equivalents,
start of period 6,162,090 23,088,711
Effect of exchange rate changes
during the period (4,129) (5,787)
--------------- ---------------
Cash and cash equivalents,
end of period 7 9,799,668 31,790,020
--------------- ---------------
Cash and cash equivalents comprise
the following amounts:
Bank deposits 9,799,671 31,798,337
Bank overdrafts (3) (8,317)
--------- ----------
9,799,668 31,790,020
--------- ----------
The accompanying notes on pages 10-20 form an integral part of
these financial statements.
Notes to the Consolidated Financial Statements
For the period 1 October 2010 to 31 March 2011
1. The Company:
The Company is a Guernsey registered, closed-ended investment
company. The Company commenced business on 28 November 2007 when
the Ordinary Shares were admitted to trading on AIM. The registered
office of the Company is 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.
The Company's investment policy during the reporting period is
disclosed on pages 6 & 7.
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 principal 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 amount
invested in the Limited Partnership to enable the Group to make
investments.
The Company, the GPCo and the Limited Partnership together form
an integrated fund structure and consequently the Company has
consolidated its interests in GPCo and the Limited Partnership. The
Investment Manager's holding in the GPCo is the interest in B
Redeemable Preference Shares.
The C Ordinary Share of the GPCo issued to the Investment
Manager entitles the Investment Manager to GBP10,000 (or
equivalent) on liquidation or winding up of the Company and to no
other rights.
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 European Union and
are in compliance with the Companies (Guernsey) Law, 2008.
(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
2010.
3. Related Parties & Material Contracts:
The Company is responsible for the continuing fees of GPCo, the
Administrator, the Custodian, the Prime Broker, the NOMAD &
Broker and the Registrar in accordance with the Limited
Partnership, Administration, Custodian, the Prime Broker, NOMAD
& 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 was a Director
of the Company during the period 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. Dr Cohen resigned as a
Director of the Company on 1 October 2010.
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.
The 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.
As at 31 March 2011 the management fee prepaid was US$16,053 (30
September 2010 & 31 March 2010: US$Nil).
The Investment Manager is also entitled to a performance
allocation, through its interest in GPCo, in respect of a
performance period 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 exceeds the Hurdle
NAV at the end of such period. The Hurdle NAV 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 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, the High Watermark.
The performance allocation is an amount equal to 20% 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.
Each subsequent performance period is a period of one financial
year commencing on 1 October.
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