Ashmore Global Opportunities Limited Interim Report and Unaudited Condensed Interim Financial Statements For the six months ended 30 June 2013
Ashmore Global Opportunities Limited
Table of Contents
1 Financial Highlights 2 Chairman’s Statement 4
Investment Manager’s Report
18 Unaudited Schedule of Investments 19 Board Members 20 Directors’ Responsibility Statement 21 Independent Review Report to Ashmore Global Opportunities Limited 22 Unaudited Condensed Statement of Financial Position 23 Unaudited Condensed Statement of Comprehensive Income 24 Unaudited Condensed Statement of Changes in Equity 25 Unaudited Condensed Statement of Cash Flows 26 Notes to the Unaudited Condensed Interim Financial Statements 37 Corporate Information
Ashmore Global Opportunities Limited
Financial Highlights
30 June 2013 31 December 2012
Total Net Assets
US$359,198,373 US$480,034,269
Net Asset Value per Share
US$ Shares
US$7.66 US$7.92
£ Shares
£7.53 £7.77
Closing-Trade Share Price
US$ Shares
£ Shares
Discount to Net Asset Value
US$5.33
US$5.25
£5.15 £5.43
US$ Shares
(30.42)% (33.71)%
£ Shares
(31.61)% (30.12)%
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Ashmore Global Opportunities Limited
Chairman’s Statement
The Chairman submits this statement and the
interim report of Ashmore Global Opportunities Limited (the “Company”) for the six months ended 30 June 2013. As at 30 June 2013 the Net Asset Values (“NAVs”) of the US Dollar and Sterling classes stood at US$7.66 and £7.53 respectively, decreases of 3.28% and 3.09% respectively over the period. The US Dollar and Sterling share prices stood at US$5.33 and £5.15 respectively as at 30 June 2013, an increase of 1.52% and a decrease of 5.16% respectively against 31 December 2012 levels.
MANAGED WIND DOWN OF THE COMPANY At an EGM held on 13 March 2013, resolutions were passed which: (i) changed the investment objective and ceased the current investment restrictions of the Company in order to realise the Company’s assets in an orderly manner and return cash to Shareholders; (ii) amended the Articles of Incorporation of the Company in order to facilitate regular, quarterly returns of cash to Shareholders; (iii) amended the Articles of Incorporation of the Company removing the necessity for a continuation vote by Shareholders; (iv) amended the Articles of Incorporation of the Company reducing the minimum number of Directors from five to one; and (v) amended the terms of the Investment Management Agreement (“IMA”) between the Company and Ashmore Investment Management Limited (“Investment Manager”).
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Following the EGM, the changes to the Articles of Incorporation and to the IMA have been effected to reflect the above resolutions.
DISTRIBUTION TO SHAREHOLDERS Since the EGM held on 13 March 2013, the Company has made its first capital distribution of US$92.5 million (gross of buyback fees and distribution costs) following the end of the first quarter of 2013 and its second distribution of US$13.0 million (gross of buyback fees and distribution costs) following the end of the second quarter of 2013. This compares to the 31 December 2012 NAV of US$480.0 million and a market capitalisation at the same date of US$328.6 million. These distributions from 31 December 2012 to date represented approximately 22% of NAV or 32% of market capitalisation.
MARKET DISCOUNT TO NET ASSET VALUE As at 30 June 2013, the NAV of the Company was US$359.2 million and the market capitalisation was US$247.8 million reflecting an average discount of 31% between the NAVs per share and the share prices. While the Board recognises that the discount of the share price to the NAV per share remains around December levels (in percentage terms), it is encouraged by the recent exits and associated distributions. Moreover, recent exits have been made at or above the latest valuation levels and the Board believes that there is the potential for growth in the NAV as further exits are made by the Investment Manager. Shareholders should also recognise that during the year to date about one fifth of their shareholdings have been paid out at a nil discount to NAV.
Ashmore Global Opportunities Limited
Chairman’s Statement continued
INVESTMENT PORTFOLIO AND DIVESTMENTS On a look through basis, the allocation to Special Situations as a percentage of the Company’s total net assets was 77.51% at 30 June 2013, compared to 65.63% at 31 December 2012. As mentioned in the 2012 annual report, the December 2012 figure was relatively low due to the significant distributions received from the Ashmore Global Special Situations Funds right at the end of the year. The 30 June 2013 figures include the cash earmarked for the second quarterly distribution which was paid to Shareholders on 2 August 2013. The Company is retaining cash to cover potential drawdowns by one of its fund holdings and for the purpose of paying regular expenses. During the period, the Company received distributions of US$74.5 million from its investments. The majority of these came from the Ashmore Asian Recovery Fund and the Ashmore Asian Special Opportunities Fund, with AEI distributing twice and various smaller distributions received from other investments. During the period AGOL also sold its positions in various daily dealing Ashmore SICAV Funds. Looking through the fund investments to the top underlying holdings, since the 2012 annual report, the most significant events have occurred in Odebrecht Agroindustrial (previously ETH Bioenergia) and Al Noor Medical. During the period, a number of divestments were made from the underlying Special Situations Funds including Sweta in India and Bangkok Land in Thailand. These developments are described in more detail in the Investment Manager’s report together with information on the top ten holdings on a look through basis.
Principal Risks and Uncertainties The Board considers that the main risks and uncertainties faced by the Company fall into these categories of: (i) General markets risks; (ii) Emerging Market risks; and (iii) Other portfolio specific risks. A detailed explanation of these risks and uncertainties can be found in the Company’s most recent Annual Report for the year ended 31 December 2012 (the “Annual Report”). The principal risks and uncertainties facing the Company remain unchanged from those disclosed in the Annual Report.
Related party transactions Full details of the investment management arrangements were provided in the Annual Report. There have been no significant changes to the related party transactions described in the Annual Report which could have a material effect on the financial position or performance of the Company.
OUTLOOK A number of the underlying portfolio companies including AEI and TAAS are expected to reach important milestones in the second half of 2013, the details of which are discussed in the Investment Manager’s report. The Investment Manager remains focused on a speedy and orderly realisation of the Company’s investments, in line with the Board’s desire to return cash to Shareholders both as quickly as possible and at full valuations.
Jonathan Agnew 28 August 2013
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Ashmore Global Opportunities Limited
Investment Manager’s Report
PERFORMANCE As at 30 June 2013, the NAVs for the US Dollar and Sterling share classes stood at $7.66 and £7.53 respectively, representing performances of -3.28% and -3.09% respectively for the six month period. This compares to a return of -9.57% for the MSCI Emerging markets Index over the same period (net, dividends reinvested). The chart below shows the performance of AGOL’s NAV and share price since inception (US$). Price and NAV performance against peer indices (rebased), since inception AGOL Share Price
AGOL NAV
LPX PE
MSCI EM
120
100
80
60
40
20
Data sourced from Northern Trust and Bloomberg
4
13 20 n Ju
20 ec D
Ju
n
20
12
12
11 20 D ec
11 20 Ju n
10 20 D ec
Ju
n
20
10
09 20 D ec
Ju n
20
09
08 20 D ec
08 20 n Ju
D ec
20
07
0
Ashmore Global Opportunities Limited
Investment Manager’s Report continued
Portfolio Following the EGM in March 2013, the Board of AGOL announced that investors had voted in favour of a managed wind down of the Company. This led to the sale of all non-special situations investments with the proceeds being distributed back to investors. The outcome of this vote also means that the Company will make no new investments. On a look through basis, the allocation to Special Situations was 77.51% as at 30 June 2013. The tables below show the Top 10 underlying portfolio companies, as well as a split of the portfolio by country and industry. Since December 2012, there have been a number of changes in size and ranking by NAV. Investment Name
Holding
Country
Business Description
Elang Mahkota Teknologi 13.33% Indonesia (EMTEK)
Listed Indonesian telecoms, information technology & multimedia company
Odebrecht Agroindustrial 12.31% Brazil
Renewable energy company producing ethanol & electricity from sugar cane
AEI 7.03% Cayman
Owns and operates essential energy infrastructure businesses in emerging markets
Alphaland 6.75% Philippines
Real estate development company focussing on underdeveloped sites
Pacnet 5.62% Singapore
Asia’s leading independent telecommunications infrastructure and services provider
Gems/Utileco 4.42% Saudi Arabia
Saudi Arabian integrated industrial services and waste management platform
MCX 4.41% India
Nationwide, electronic, commodity futures exchange trading in over 40 commodities
Jasper Investments 4.39% Singapore
Listed company investing in Asian growth enterprises, but primarily oil field services
Al-Noor Medical 4.11% UAE
A UAE based integrated healthcare service provider comprising three hospitals, six clinics, ten pharmacies and one warehouse
Taas
A Russian oil and gas exploration company
3.40%
Russia
Strong performance by EMTEK over the period has resulted in Indonesia replacing Singapore in the top three country allocations with Brazil and India remaining as core allocations in the top two places. EMTEK has also influenced the industry table, with Media now the largest industry allocation. Country
(% of NAV)
Industry
(% of NAV)
Brazil
14.55%
Media
13.33%
India
13.72%
Energy-Alternate Sources
12.31% 10.07%
Indonesia
13.35%
Real Estate
Singapore
12.31%
Diversified Financial Services
8.36%
Philippines
7.74%
Electric
8.22%
Cayman Islands
7.03%
Telecommunications
7.44%
Russia
5.61%
Oil & Gas Services
6.58%
Saudi Arabia
4.45%
Oil & Gas
5.03%
United Arab Emirates
4.25%
Environmental Control
4.42%
China
4.15%
Healthcare-Services
4.11%
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Investment Manager’s Report continued
PORTFOLIO COMPANY PERFORMANCE Operating performance amongst the investee companies developed positively over the period. The valuation of TAAS saw a number of movements, some negative and some positive. The start of production was delayed due to a change in contractor for the processing facilities, and estimated operating expenditure is now higher than previously estimated, although capital expenditure remains in line with expectations. Net debt has grown slightly but the debt to equity ratio remains comfortably below 100%. Two tax changes had a positive impact on the company’s valuation: A reduction in the corporate tax rate for oil producing fields in the Yakutia region and an extension of the exemption from mineral extraction tax. On balance, the independent valuation agent marked down the valuation of the TAAS equity by 14%. TAAS is expected to go into production in Q3 2013, which will change the company’s status from “under construction” to “in production”. MCX, the Indian commodity exchange saw its share price fall significantly over the period, the key reason being proposed regulatory changes which would have a negative impact on the futures market. MCX continues to dominate Indian futures with an 87% market share and remains one of the largest commodities futures exchanges globally, with over 40 different commodities traded. As previously reported, ECI has embarked on a major restructuring programme over the last 12 months. We believe that the task is broadly complete, with a newly strengthened management team in place who are working to improve the profitability of the business. During the period, Odebrecht Agroindustrial (previously ETH Bioenergia), the Brazilian integrated ethanol producer, reported a 45% increase in
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ethanol production on the back of a much better harvest as weather conditions returned to normal. Nevertheless, historic delays to sugar cane production as a result of poor weather continued to have a knock on effect on the company’s cash flows. While both EBITDA and enterprise value increased as a result of the recent growth in production, rising debt levels offset any benefit to the equity and consequently the independent valuation agent marked down the equity valuation by 26%. EMTEK was the outstanding performer for the period. The integration of IDKM and SCTV continues to progress well; plans are underway to roll out a Pay TV station in Jakarta and management continue to develop new opportunities including the development of content and production studios. The listed share price of EMTEK increased substantially over the period. AEI continues to perform well and was marked up by the third party valuation agent. Further non-core assets sales during the period resulted in dividend payments to its shareholders. One of the Greenfield assets is scheduled to go into production in Q3 2013, with the other scheduled for Q4 2014. There were two realisations in the six month period. The first occurred in February 2013 when AGOL exited Bangkok Land, the listed Thai real estate developer. This followed the exit of IMPACT, Bangkok Land’s key operating asset which was sold to the Bangkok Land holding company in December. The second exit during the period, which was completed in April 2013, was the sale of Sweta Estates, an Indian real estate developer. Al Noor Hospital was listed on the London Stock Exchange in June at a value of over US$1 billion, marginally above the latest valuation. AGOL retains its underlying exposure through various special situations fund investments.
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OPERATING AND VALUATION METRICS Portfolio split by Sales growth
Portfolio split by Debt to EBITDA ratio % NAV
No. of deals
70.0%
% NAV 35.0%
59.5%
60.0%
30.0%
50.0%
25.0%
40.0%
20.0%
30.0%
15.0%
20.0% 10.0% 0.0%
24.8%
10.0% 0.1% 1 10%
0.0%
7 4
% NAV
30.0%
No. of deals
27.1%
25.0%
23.6%
20.0%
25.0%
17.7%
15.0%
20.0%
10.0%
10.8% 6.8%
0.0%
5.0%
5.0%
5
–
3
13
10%
0.0%
0.0%
0.0% –
15
3
5
0 to 5x
5.1x to 10x
10.1x to 15x
>15x
EV/EBITDA multiple
Profit growth
Portfolio split by Gearing ratio
Portfolio split by Valuation basis % NAV
30.0%
No. of deals
% NAV
30.0%
26.6% 25.0%
22.1%
20.0%
25.8%
25.0%
No. of deals 25.3%
20.0%
18.2%
16.3%
15.0%
15.4%
15.0% 10.0%
7.8%
5.0%
5.9%
5.0%
2.8% 7
8
0
0 to 0.5
5
1
1
0.6 to 1 1.1 to 1.5 1.6 to 2 Gearing (D:E)
9 >2
0.0%
3
0.0% –
18
0.6% 1
0.0% –
6
3
Tra DC ns F ac tio nm Ind ult us ipl es try Co mp ara ble s Hi sto ric co st Ex ter na lB rok er Lis ted Pr ice D Co CF/I mp ndu ara str ble y s
10.0%
0.0%
1 3.1 to 4
Portfolio split by EV/EBITDA multiple % NAV
40.0%
10.0%
5.9%
Debt to EBITDA ratio
Portfolio split by Profit growth
15.0%
6.9% 1.0% 1
Sales growth
45.0%
No. of deals
31.4%
Valuation basis
The above analysis of the last twelve months’ operating performance and valuation metrics of AGOL’s underlying Special Situations holdings as at 30 June 2013 has been done on a best effort basis. The totals may not add up to 100% due to holdings in other investment themes, or Special Situations themed investments for which the selected measures are inappropriate (for example distressed debt or project development). AGOL and Ashmore Investment Management Limited accept no liability for these figures. 7
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DETAILS ON TOP 10 UNDERLYING HOLDINGS Elang Mahkota Teknologi EMTEK Company: Emtek
Business Description
Website: www.emtek.co.id
r E mtek is a holding company with interests in Free-to-Air TV, communications networks and related retail and IT services. However, the vast majority of Emtek’s value comes from its interest in SCTV, Indonesia’s No2 FTA channel
Company Status: Private
r S CTV has acquired an 84.7% interest in Indosiar, its main FTA competitor. This will give the combined platform a 25% market share in Indonesia
Initial Investment: October 2003
Investment Rationale – Why Did Ashmore Invest?
Industry: Television Country: Indonesia
Deal Type: Private Equity Investment Risk: Equity Investing Ashmore SS Funds: ARF GSSF 3 GSSF 4 Note: Latest available data as at 30-Jun-13
r E mtek/SCTV provided a clear exposure to rising Indonesian incomes and expenditure r A shmore believes that the FTA media business in Indonesia will consolidate over time, for which Emtek would provide the best platform
Value Creation – What Has Ashmore Done? r IDKM, in which EMTEK acquired an 85% interest, has been merged with SCTV – the integrated entity is held by EMTEK and is effective from May 2013 r C ombined audience share for the last year was 25% – consistent across Prime Time and Non-Prime – and market position held steady for the year r C ost of Broadcast and OPEX continued to decline year-on-year. A major driver of this remains EMTEK’s in-house production strategy r Accelerated roll out of Pay TV
Current Initiatives r IDKM integration and performance improvement r Production platform development r Increased utilisation of studio capacity with broader content development r T he Indonesian market has excess capacity and it is inefficient. Applying SCTV’s benchmarks to other operators should result in material savings and increased revenues
Potential Exit Routes r W e believe that a successful integration with IDKM will provide a more attractive platform going forward and will increase the number of exit routes available
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DETAILS ON TOP 10 UNDERLYING HOLDINGS continued Odebrecht Agroindustrial (formerly ETH Bioenergia) Company: Odebrecht Agroindustrial (formerly ETH Bioenergia) Industry: Ethanol and Power Country: Brazil Website: www.eth.com Company Status: Private Initial Investment: March 2007
Business Description r O debrecht Agroindustrial is a fully integrated renewable fuels company, which we anticipate may become one of Brazil’s largest ethanol production platforms, involving the planning, development and harvesting of sugarcane and the large scale industrial production and distribution of ethanol fuel r O debrecht Agroindustrial currently operates 9 large-scale ethanol plants (7 of which are greenfield state of the art facilities) r A t full capacity (which is expected to occur in 2017/18) Odebrecht Agroindustrial will crush over 40 million tons of sugarcane and produce 3 billion litres of ethanol
Deal Type: Private Equity Investment Risk: Equity
Investment Rationale – Why Did Ashmore Invest?
Investing Ashmore SS Funds: AGOL ARF GSSF 3 GSSF 4 GSSF 5
r O debrecht’s competitive advantage based on its cost-advantaged raw material supply, integrated production and strong execution
Note: Latest available data as at 30-Jun-13
r A favourable ethanol demand and production environment in Brazil, with an experienced labour force, a large amount of inexpensive, fertile and arable land, an ideal climate, and proven technology
r T he Company is one of the few global-scale, technologically advanced producers with a significant ethanol and cogeneration capacity and a strong balance sheet
Value Creation – What Has Ashmore Done? r T he Brazilian president announced changes to improve sector economics from May 2013 with an increase of ethanol in the gasoline mix from 20% to 25% and a tax cut from 5.6% to 1% (PIS/Cofins) r A 50% increase in the number of tons of cane crushed as new mills came online r A reduction in employee turnover from 34% to 16% r E xtended grace periods on the debt payments with BNDES in light of the industry-wide production shortfalls
Current Initiatives r Agri process improvement and a cost cutting programme r Export growth, especially to the US r Improvements to the product mix towards higher margin anhydrous ethanol and sugar r S egregation of the energy assets into a new company (Odebrecht Energia Renovaveis – OER) that will reduce debt and generate positive capital returns to Odebrecht Agroindustrial (OA). Ashmore will have the same equity share in OER as it currently has in OA
Potential Exit Routes r Target IPO of OA and OER r Secondary placement
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DETAILS ON TOP 10 UNDERLYING HOLDINGS continued AEI Company: AEI Industry: Power Generation Country: Regional Latin America Website: www.aeienergy.com
Business Description r H eadquartered in Houston, Texas, AEI owns and operates interests in multiple power generation assets primarily in Central and South America r B usinesses include operating plants in Central America and the development of three greenfield projects in South America
Investment Rationale – Why Did Ashmore Invest? Company Status: Private Initial Investment: May 2006 Deal Type: Private Equity Investment Risk: Equity Investing Ashmore SS Funds: AGOL GSSF 2 GSSF 3 GSSF 4 GSSF 5 Dividends (per share): US$12 (May 2011) US$0.83 (December 2012) US$0.97 (February 2013) Note: Latest available data as at 30-Jun-13
r A EI was formed by Ashmore to create a diversified portfolio of Emerging Markets energy assets r A EI is reorganising around its core power generation assets with a focus on cash generation from its producing assets and completion of the Greenfield projects
Value Creation – What Has Ashmore Done? r F urther downsizing of the HQ function to reflect the new focus of the business and the divestment of non-core businesses r C ontinued oversight of the Greenfield projects with Fenix commissioning now scheduled for Q4 2013 (due to some minor equipment related delays) and Jaguar continuing to target commissioning in Q4 2014. Al Arrayan, the wind project in Chile, is also proceeding as planned r H igher than expected realisations from the sale of non-core assets, which have been distributed to investors
Current Initiatives r Exit of the remaining operational assets r Ongoing HQ cost monitoring/improvements r Greenfield financing support
Potential Exit Routes r The private sale of assets either individually or as a group
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DETAILS ON TOP 10 UNDERLYING HOLDINGS continued Alphaland Company: Alphaland Industry: Real Estate Development Country: The Philippines Website: www.alphaland.com.ph
Business Description r A lphaland is a developer of Class A office and retail space and high and mid-tier residential real estate in Metro Manila. In addition, the Company is a development partner in two high-end resorts and second home developments on holiday islands near to Manila r T he Company’s assets are a Metro Manila land bank, a tenanted mixed-use office building, under construction sites in Makati Manila and two residential developments in the island belt around Manila
Company Status: Public Initial Investment: June 2007 Deal Type: Private Equity Investing Ashmore SS Funds: ARF GSSF 3 GSSF 4 GSSF 5 Note: Latest available data as at 30-Jun-13
Investment Rationale – Why Did Ashmore Invest? r T he macro driver for Ashmore’s initial investment was the relative lack of Class A office buildings in Metro Manila compared to the potential demand:
– S upply was insufficient for the needs of the outsourcing, offshoring and services industries
– C ontinued strong remittance payments were seeking quality, new build, affordable city housing. This has not been a traditional market for Metro Manila developers
r In addition, our partners in Alphaland were able to provide i) an experienced local management team able to source land and build, and ii) favourable acquisition prices from distressed sellers
Value Creation – What Has Ashmore Done? r A lphaland Tower, the flagship office building on Ayala Avenue, was completed and opened in June
Current Initiatives r N ow that the development projects have progressed, Ashmore staff are focused on exiting the investment, with an M&A transaction the most likely outcome
Potential Exit Routes r A n equity markets transaction done on the back of a more developed, cash producing portfolio of assets or an M&A sale to local developers
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DETAILS ON TOP 10 UNDERLYING HOLDINGS continued Pacnet Company: Pacnet Industry: Telecommunications Country: Hong Kong and Singapore Website: www.pacnet.com Company Status: Private Initial Investment: October 2007 Deal Type: Private Equity Investment Risk: Equity Investing Ashmore SS Funds: ARF GSSF2 GSSF3 GSSF4 Note: Latest available data as at 30-Jun-13
Business Description r P acnet was formed in 2008 with the merger of three leading Asian IP telecommunication companies, creating Asia’s longest and highest capacity privately-owned submarine cable network r Total network construction costs were US$4.1 billion r Its mission is to become Asia’s leading next generation data service provider for all enterprises in the Asia Pacific region
Investment Rationale – Why Did Ashmore Invest? r Network acquisitions were done at a fraction of construction costs r V alue drivers included exponential Asian broadband usage growth and pricing recovery from massive over-capacity r P lan to become the largest owner of sub-sea capacity in Asia to command pricing power and lead consolidation while building a complex telecom services company
Value Creation – What Has Ashmore Done? r E BITDA – following a cost cutting initiative, the EBITDA margin has improved from 16% to 21% and the monthly run rate EBITDA is now approximately US$8.5 million r C hina – the Company has entered into an agreement with the Tianjin Government to operate a tier III data centre (DC), giving Pacnet its 2nd mainland DC r D ata Centres – the company is attracting leading financial and internet tech companies into its HK and Australia data centres, and Singapore will be ready for service in December 2013
Current Initiatives r Identifying further cost savings, the launch of a more comprehensive suite of managed services for both the data centres and Network as a Service, and opening further data centre sites in China
Potential Exit Routes r P acnet’s core network and its improved Managed Services offering make it an attractive target for telecommunications firms looking either to expand into Asia Pacific or to become regional players with a diversified product offering for Enterprise customers
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DETAILS ON TOP 10 UNDERLYING HOLDINGS continued GEMS/Utileco Company: GEMS/Utileco Industry: Waste Management Country: Saudi Arabia Website: www.gems-ksa.com www.utileco.com Company Status: Private Initial Investment: May 2008 Deal Type: Private Equity Investment Risk: Equity Investing Ashmore SS Funds: GSSF 4 GSSF 5 Note: Latest available data as at 30-Jun-13
Business Description r G EMS/Utileco is an integrated industrial services and waste managment platform. The main business activities are the collection, handling and disposal of petroleum and chemical wastes r T he company is also involved in wastewater treatment, bio remediation, resource recovery and environmental cleanups, as well as the recovery and resale of oils such as waste lube oil r G EMS runs 14 waste oil collection and treatment sites across the Kingdom of Saudi Arabia
Investment Rationale – Why Did Ashmore Invest? r T he rationale partnerships, management management region
is to leverage GEMS’s existing infrastructure, facilities, licenses and contracts, combined with Utileco’s IP and team, to create the leading integrated regional waste company in both the Kingdom of Saudi Arabia and the
r A shmore funds invested in GEMS/Utileco in Q4 2008 and Q1 2009, with several subsequent investments to fund capacity increases and the consolidation of shareholdings over the past two years r F urther value generation is available through continued capacity expansion and investment in Integrated Waste Management plants and waste lube oil re-refineries. This will increase not only collection capacity, but also the quantity of resources recovered including waste and base oils which can be resold in the local market as well as regionally
Value Creation – What Has Ashmore Done? r Increased capacity and optimisation of the Rabigh, Joffah and Dammam sites r T he development of expanded capabilities in the industrial services sector, including larger shut down contracts at client sites r E ntrance into the tank cleaning business through signing the company’s first major tank cleaning project r G EMS was selected by an international jury to win the National Energy Globe Award of Saudi Arabia for the Dammam site, thus consolidating a strong regional reputation for best-in-class technology
Current Initiatives r T he construction of additional storage, handling and processing capacity at the Al Joffah, Rabigh, Yanbu and Dammam sites to increase capacity and meet demand r T he recruitment of engineers and technicians to bolster capacity across the company, address growing demand and to expand the industrial services capability r T he leveraging of client relationships in the waste management and industrial services business segments to expand into the oil trading business. Significant volumes have already been contracted
Potential Exit Routes r T arget a trade sale to local Saudi industrials, regional funds, or international waste management businesses looking for exposure to the sector/region, or a sale to existing shareholders 13
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DETAILS ON TOP 10 UNDERLYING HOLDINGS continued Multi Commodity Exchange of India Limited (MCX) Company: MCX Industry: Banking and Finance Country: India Website: www.mcxindia.com Company Status: Private Initial Investment: March 2010 Deal Type: Private Equity Investment Risk: Equity Investing Ashmore SS Funds: AADCIF AGOL GSSF4 GSSF5 Note: Latest available data as at 30-Jun-13
Business Description r MCX is India’s leading commodity exchange with an 87% market share r G lobally, MCX is the third largest commodities futures exchange in terms of volume. In terms of future contracts traded, it ranks first in silver and gold, second in natural gas, and third in crude oil r It has 40 commodities trading across segments including bullion, base metals, energy and agricultural commodities
Investment Rationale – Why Did Ashmore Invest? r MCX is India’s leading commodity exchange with a first mover advantage r M CX looked to benefit from the rapid growth in the commodity trading business on the back of India’s economic growth r S tructural changes in the business and better infrastructure provided opportunities to enhance value. India’s proportion of commodity derivatives to physical contracts is at 3x compared to 30-40x for global benchmarks r A shmore acquired the stake at a discount to the entry price as part of the seller’s strategy to divest non-core assets
Value Creation – What Has Ashmore Done? r M CX was the first futures exchange to offer futures trading in steel and crude oil, amongst others, and a futures for physicals facility
Current Initiatives r Enhance the product portfolio by adding new commodities r Launch commodity options on approval of the FCRA bill by the Government r E xpand geographically and improve penetration though international strategic tie-ups, investor awareness drives and by signing up new brokers
Valuation r T he current market capitalisation is US$672 million, down from a peak of US$1.36 billion in November 2012 on account of; increased liquidity (the public float increased from 20% to 80% on the expiry of the lock-in period in March 2013); the introduction of a Commodity Transaction Tax (CTT) from July 2013; and continuing uncertainty with regard to passing the Forward Contracts (Regulations) Act (FCRA) by the Government
Potential Exit Routes r In March 2012 , MCX became the first Indian bourse to be listed on the Indian stock exchanges. r Stake sales in the secondary market
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DETAILS ON TOP 10 UNDERLYING HOLDINGS continued Jasper Investments Company: Jasper Investments Industry: Oilfield Services Country: Singapore Website: www.jasperinvestments.com Company Status: Public Initial Investment: September 2005 Deal Type: Private Equity Investment Risk: Equity Investing Ashmore SS Funds: ARF GSSF2 GSSF3 GSSF4 Note: Latest available data as at 30-Jun-13
Business Description r J asper Investments Limited (“Jasper”) is a holding company listed on the SGX since 1993 which principally invests in the offshore oil and gas drilling and services sector r J asper’s principal subsidiary, Jasper Offshore, owns and operates oil rigs for deep sea drilling which are contracted out to oil and gas exploration and production companies
Investment Rationale – Why Did Ashmore Invest? r A shmore acquired its majority interest in Jasper as a Singapore listed holding vehicle r A shmore first had the opportunity to acquire Neptune, the oilfield services genesis of Jasper, when the previous management and promotion team got into financial difficulties r A conversion programme was expected to be a cheaper and more efficient way to fund increasing E&P capex spending
Value Creation – What Has Ashmore Done? r B oth Keppel jack-ups were sold to a Mexican acquirer for US$216 million each versus a contract value of US$172 million each r T he Explorer is now on its second drilling contract. The contract is for two holes with CNOOC in West Africa and drilling of the first hole is ongoing r A new CEO with considerable operational, technical and marketing experience in the drilling industry is in place with further mid-level hires following this change r T he conversion of Cosmopolitan into an accommodation vessel continues on track with the vessel commissioning in Q4 2013
Current Initiatives r M anagement is focussed on the successful operation of the CNOOC drilling mandate. In addition, management is working on a number of drilling opportunities post-contract r Enhancement of the governance of the business r T he Cosmopolitan sale process is ongoing with a number of interested parties
Potential Exit Routes r M &A of either the Company with assets under contract, or the individual assets depending on the relative value
15
Ashmore Global Opportunities Limited
Investment Manager’s Report continued
DETAILS ON TOP 10 UNDERLYING HOLDINGS continued Al Noor Medical Company Company: Al Noor Medical Company Industry: Healthcare Country: United Arab Emirates Website: www.alnoorhospital.com Company Status: Private Initial Investment: October 2010 Deal Type: Private Equity Investment Risk: Equity Investing Ashmore SS Funds: GSSF 4 GSSF 5 Note: Latest available data as at 30-Jun-13
Business Description r A l Noor Medical Company, established in 1985 in Abu Dhabi, is an integrated healthcare service provider comprising three hospitals, six clinics, ten pharmacies and one warehouse r T hrough its operating assets the Company provides primary, secondary and intermediate tertiary care services r T he Company (as of year-end 2012) operates total bed capacity of approximately 300 and employs approximately 3,200 administrative and clinical staff including 350 doctors
Investment Rationale – Why Did Ashmore Invest? r A shmore invested in Al Noor in Q3 2010 as one of the existing investors was in need of liquidity and seeking to partially monetize their investment r T he demographics of the UAE, coupled with extended life expectancies and increased cases of “lifestyle” diseases r T his investment is in an undersupplied sector which has displayed consistent high growth of a non-cyclical nature. The company had been a market leader for 25 years, and had a strong financial and operational track record supported by a strong management team
Value Creation – What Has Ashmore Done? r T here was an extensive review of back office admin and support functions which created US$6 million of annualised savings r T wo new primary care clinics were opened in Abu Dhabi and one in Muscat r A leveraged recapitalisation of AED 500 million was completed r Cumulative dividends of US$13.6 million have been received to date
Recent Initiatives r Al Noor listed on the LSE on 21 June 2013 r F ollowing the listing Ashmore Funds received US$23.8 million from the Al Noor holding structure, being the proceeds of shares sold in the IPO. The Funds retain an indirect interest of some 4.8% (down from 8.9%)
16
Ashmore Global Opportunities Limited
Investment Manager’s Report continued
DETAILS ON TOP 10 UNDERLYING HOLDINGS continued TAAS Company: TAAS Industry: Oil exploration/production Country: Russia Company Status: Private Initial Investment: November 2007 Deal Type: Private Equity Investment Risk: Equity
Business Description r T AAS holds the licence for development and commercial exploitation of the Srednebotuobinskoe oil-gas-condensate field located in Eastern Siberia in the Republic of Sakha (Yakutia), Russia r T he field is one of the five largest discovered in Eastern Siberia with 2P oil reserves of 991 MM bbl as per an independent report produced by DeGoyler and MacNaughton (31 March 2012) r It is located close (168 km) to the East Siberia Pacific Ocean (ESPO) pipeline, the main oil export route from Russia to the Far East which is connected to an oil terminal in Kozmino Bay on the Pacific shore
Investment Rationale – Why Did Ashmore Invest? Investing Ashmore SS Funds: GSSF3 GSSF4 Note: Latest available data as at 30-Jun-13
r T he investment offered an opportunity to gain access to a large, high quality oil field in the developing Eastern Siberia region r V alue creation will be delivered through development of the field, connection to the Far East markets via the ESPO and anticipated strategic interest in the acquisition of Russian oil reserves well positioned to target markets in the Far East, including Chinese crude oil markets r G overnment attempts to attract investment in the region included certain tax breaks that were awarded to TAAS, significantly improving the economics of the deal
Value Creation – What Has Ashmore Done? r The focus has been on construction of the field infrastructure r A n update to reserves was produced by DeGoyler and MacNaughton, confirming 2P of 991 MMbbl of oil, 10m MMbbl of condensate and gas reserves of 2110 MM
Recent Initiatives r Strategic/trade sale after first oil production
Ashmore Investment Management Limited Investment Manager 28 August 2013
17
Ashmore Global Opportunities Limited
Unaudited Schedule of Investments as at 30 June 2013
Ashmore Global Special Situations Fund 4 LP
Valuation in US$
% of NAV
137,971,404 38.41
Ashmore Asian Recovery Fund
57,631,691 16.04
Ashmore Global Special Situations Fund 5 LP
37,804,378 10.53
Renovavel Investments BV New PIK/PPN
23,969,808 6.67
Ashmore Global Special Situations Fund 3 LP
16,448,801 4.58
AA Development Capital India Fund LP
15,436,144 4.30
AEI Inc – Equity
15,312,598 4.26
Aginyx Ordinary Shares
8,956,832 2.49
Everbright Ashmore China Real Estate Fund LP
8,326,814 2.32
VTBC Ashmore Real Estate Partners 1 LP
4,795,317 1.34
Ashmore Asian Special Opportunities Fund Limited
4,241,094 1.18
Ashmore Private Equity Turkey Fund LP
2,910,821 0.81
Ashmore Global Special Situations Fund 2 Limited
1,240,429 0.35
Total investments at fair value Net other current assets Total net assets (total equity)
335,046,131
93.28
24,152,242 6.72 359,198,373
100.00
Valuation in US$
% of NAV
Special Situations*
278,423,335 77.51
Cash and equivalents
41,545,720 11.57 9,046,246
2.52
Real Estate
12,396,707
3.45
Local Currency
(6,365,877)
(1.77)
Corporate Debt
335,046,131 93.28
*As defined in the registration document of the Company (the “Prospectus”).
18
Ashmore Global Opportunities Limited
Board Members
As at 30 June 2013 the Board consisted of five nonexecutive directors. The Directors are responsible for the determination of the investment policy of Ashmore Global Opportunities Limited (the “Company” or “AGOL”) and have overall responsibility for the Company’s activities. As required by The AIC Code on Corporate Governance (the “Code”), the majority of the Board of Directors are independent of the Investment Manager. In preparing this SemiAnnual Report the independence of each Director has been considered. Jonathan Agnew, Independent Chairman (UK resident) appointed 16 October 2007 Jonathan Agnew is Chairman of AGOL, having been appointed to the Board in 2007. He is also Chairman of The Cayenne Trust plc and Senior Independent Director of Rightmove plc. Mr Agnew was formerly a managing director of Morgan Stanley and subsequently Chief Executive of Kleinwort Benson Group and has been Chairman of Limit plc, Gerrard Group plc, Henderson Geared Income & Growth Trust plc, Beazley plc, LMS Capital plc and Nationwide Building Society. Graeme Dell, Non-Independent Director (Employee of the Investment Manager), (UK resident) appointed 5 March 2008 Graeme Dell joined Ashmore Group plc and was appointed to the Board as Group Finance Director in December 2007. Prior to joining Ashmore, Graeme was Group Finance Director at Evolution Group Plc from 2001 to 2007, where he had group-wide responsibility for finance, operations, technology, compliance, risk and HR which included playing a significant role in the foundation and development of Evolution’s Chinese securities business. Graeme previously worked for Deutsche Bank and Goldman Sachs in a range of business management, finance and operations roles both in Europe and in Asia Pacific. Graeme qualified as a Chartered Accountant with Coopers & Lybrand and is a graduate of Hertford College, Oxford University.
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 including BH Macro Limited where he is Senior Independent Director and Chairman of the Audit Committee and Third Point Offshore Investors Limited, where he is also Chairman of the Audit Committee. Richard Hotchkis, Independent Director (Guernsey resident) appointed 18 April 2011 Richard Hotchkis has 37 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. Richard is currently a director of a number of funds including FRM Credit Alpha Limited, Alternative Investment Strategies Limited and Advance Frontier Markets Fund Limited. 19
Ashmore Global Opportunities Limited
Directors’ Responsibility Statement
We confirm that to the best of our knowledge: • the condensed set of financial statements in the half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting; and • the half-yearly financial report includes a fair view of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year ending 31 December 2013; and
20
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so. Signed on behalf of the Board of Directors on 28 August 2013
Jonathan Agnew Chairman of the Board of Directors
Christopher Legge Chairman of the Audit Committee
Ashmore Global Opportunities Limited
Independent Review Report to Ashmore Global Opportunities Limited
INTRODUCTION
Our responsibility
We have been engaged by Ashmore Global Opportunities Limited (the “Company”) to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013, which comprise the Unaudited Condensed Statement of Financial Position, the Unaudited Condensed Statement of Comprehensive Income, the Unaudited Condensed Statement of Changes in Equity, the Unaudited Condensed Statement of Cash Flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules (“the DTR”) of the UK’s Financial Conduct Authority (“the UK FCA”). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 for our review work, for this report, or for the conclusions we have reached.
Directors’ responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the halfyearly financial report in accordance with the DTR of the UK FCA. The annual financial statements are prepared in accordance with IFRSs. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting.
Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the halfyearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with IAS 34 and the DTR of the UK FCA.
KPMG Channel Islands Limited Chartered Accountants
21
Ashmore Global Opportunities Limited
Unaudited Condensed Statement of Financial Position As at 30 June 2013
30 June 2013 31 December 2012 Notes US$ US$
Assets Cash and cash equivalents
26,471,534 28,141,250
4a
– 3,773
Other financial assets Financial assets at fair value through profit or loss
3
Total assets
336,992,059 458,867,159 363,463,593
487,012,182
Equity Capital and reserves attributable to equity holders of the Company Special reserve
616,326,181 705,125,322
Retained earnings
(257,127,808) (225,091,053)
Total equity
359,198,373
480,034,269
Liabilities Current liabilities 4b
Other financial liabilities Financial liabilities at fair value through profit or loss Total liabilities
3
1,293,176 6,658,436 2,972,044 319,477
4,265,220 6,977,913
Total equity and liabilities
363,463,593 487,012,182
Net asset values Net assets per $ share
7
US$7.66 US$7.92
Net assets per £ share
7
£7.53 £7.77
The unaudited condensed interim financial statements on pages 22 to 36 were approved by the Board of Directors on 28 August 2013, and were signed on its behalf by:
Jonathan Agnew
Christopher Legge
Chairman of the Board of Directors
Chairman of the Audit Committee
The notes on pages 26 to 36 form an integral part of these financial statements.
22
Ashmore Global Opportunities Limited
Unaudited Condensed Statement of Comprehensive Income For the six months ended 30 June 2013
Six months ended Six months ended 30 June 2013 30 June 2012 Notes US$ US$
4,489 398
Interest income Dividend income
462,236 1,496,649
Net foreign currency gain
(1,327,204) 134,192
Other net changes in fair value on financial assets and liabilities at fair value through profit or loss Total net loss
3
(28,508,285) (25,481,215)
(29,368,764) (23,849,976)
Expenses Net investment management fee
(4,950,999) (1,360,203)
Incentive fee
3,304,814 2,164,679
Directors’ remuneration
(125,260) (122,478)
Fund administration fee
(40,272) (101,348)
Custodian fees
(24,604) (51,548) (831,670) (406,351)
Other operating expenses Total operating expenses
(2,667,991) 122,751
Operating loss for the year
(32,036,755)
(23,727,225)
– –
Other comprehensive income
Total comprehensive loss for the year (32,036,755) (23,727,225) Earnings per share Basic and diluted loss per US$ share
8
Basic and diluted earnings per € share*
8
Basic and diluted loss per £ share
8
US$(0.24) US$(0.40) –
US$0.50*
US$(1.23) US$(0.68)
*For the period ended 23 April 2012 as the Euro share class was cancelled on that date. All items derive from continuing activities.
The notes on pages 26 to 36 form an integral part of these financial statements.
23
Ashmore Global Opportunities Limited
Unaudited Condensed Statement of Changes in Equity For the six months ended 30 June 2013
Special Retained reserve earnings Total Note US$ US$ US$
As at 1 January 2013
705,125,322
(225,091,053)
480,034,269
Total comprehensive loss for the period
–
(32,036,755)
(32,036,755)
Capital distribution
6 (88,799,141)
As at 30 June 2013
616,326,181
– (88,799,141)
(257,127,808)
359,198,373
As at 1 January 2012
709,686,456
(196,866,875)
512,819,581
Total comprehensive loss for the period
–
(23,727,225)
(23,727,225)
Repurchase of own shares As at 30 June 2013
(200,270) 709,486,186
– (220,594,100)
(200,270) 488,892,086
The notes on pages 26 to 36 form an integral part of these financial statements.
24
Ashmore Global Opportunities Limited
Unaudited Condensed Statement of Cash Flows For the six months ended 30 June 2013
Six months ended Six months ended 30 June 2013 30 June 2012 Notes US$ US$
Cash flows from operating activities (32,036,755) (23,727,225)
Operating loss for the period
Adjustments for: (4,489) (398)
– Interest income
(462,236) (1,496,649)
– Dividend income Total
(32,503,480) (25,224,272)
(5,361,487) (2,112,198)
Net decrease in other receivables and payables Net decrease in financial assets at fair value through
120,178,498 20,978,406
profit and loss, excluding derivatives (see note below) Net decrease in derivative financial instruments
Cash generated from/(used in) operations
4,349,169 939,279 86,662,700 (5,418,785)
4,489 398
Interest received
462,236 1,365,201
Dividend received Net cash from/(used in) operating activities
87,129,425 (4,053,186)
Cash flows from financing activities (88,799,141) –
Capital distribution
6
Repurchase of own shares
6
Net cash used in financing activities
– (200,270) (88,799,141)
(200,270)
Net decrease in cash and cash equivalents
(1,669,716) (4,253,456)
Cash and cash equivalents at beginning of the period
28,141,250 5,142,245
Cash and cash equivalents at the end of the period
26,471,534
888,789
Note: Cash flows from the purchase of financial assets during the period amounted to US$101,112,589 (30 June 2012: US$35,442,760) and proceeds from the sale of financial assets and returns of capital during the period amounted to US$211,048,913 (30 June 2012: US$28,579,831).
The notes on pages 26 to 36 form an integral part of these financial statements.
25
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements
1. basis of preparation a) Statement of compliance These unaudited condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting on a going concern basis, despite the managed wind-down of the Company which was approved by the Shareholders during the Extraordinary Meeting of 13 March 2013. The Directors have examined significant areas of possible financial going concern risk and are satisfied that no material exposures exist. The Directors therefore consider that the Company has adequate resources to continue in operational existence for the foreseeable future and after due consideration 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.
These unaudited interim financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the audited financial statements of the Company for the year ended 31 December 2012. Selected explanatory notes are included to explain events and transactions that are significant to have an understanding of the changes in financial position and performance of the Company since the last annual financial statements.
These unaudited condensed interim financial statements were authorised for issue by the Board of Directors on 28 August 2013.
b) Judgements and estimates Preparing the condensed interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities income and expenses. Actual results may differ from these estimates.
In preparing these unaudited condensed interim financial statements, significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the audited financial statements of the Company for the year ended 31 December 2012.
2. Summary of significant accounting policies
The unaudited condensed interim financial statements were prepared on the going concern basis, despite the managed wind-down of the Company which was approved by the Shareholders during the Extraordinary Meeting of 13 March 2013. The Board has concluded that currently the managed winddown of the company has no significant impact on the valuation of company’s investments.
Except as described below, the accounting policies applied in these unaudited condensed interim financial statements are the same as those applied in the Company’s financial statements as at and for the year ended 31 December 2012. The following changes in accounting policies are also expected to be reflected in the Company’s financial statements as at and for the year ending 31 December 2013.
Changes in accounting policies The Company has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2013.
•
IFRS 10 Consolidated Financial Statements (2011)
•
IFRS 13 Fair Value Measurement
•
Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)
•
Annual Improvements to IFRS 2009-2011 Cycle
26
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements continued
2. Summary of significant accounting policies continued
IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other IFRSs. In particular, it unifies the definition of fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date. It also replaces and expands the disclosure requirements about fair value measurements in other IFRSs, including IFRS 7 Financial Instruments: Disclosures. Some of these disclosures are specifically required in interim financial statements for financial instruments; accordingly, the Company has included additional disclosures in this regard (see Note 5). In accordance with the transitional provisions of IFRS 13, the Company has applied the new fair value measurement guidance prospectively, and has not provided any comparative information for new disclosures. Notwithstanding the above, the change had no significant impact on the measurements of the Company’s assets and liabilities.
The adoption of the other new standards has no impact on the recognised assets, liabilities and comprehensive income of the Company.
3. Financial assets and liabilities at fair value through profit or loss 30 June 2013 31 December 2012 US$ US$
Financial assets held for trading: – Derivative financial assets
1,945,928
3,642,530
Total financial assets held for trading
1,945,928
3,642,530
Designated at fair value through profit or loss at inception: – Equity investments
311,076,323
423,845,150
– Debt investments
23,969,808
31,379,479
Total designated at fair value through profit or loss at inception 335,046,131
455,224,629
Total financial assets at fair value through profit or loss
458,867,159
336,992,059
During the period ended 30 June 2013, the Company disposed of its investments in Ashmore SICAV EM Equity Select Fund, Ashmore SICAV Emerging Markets Total Return Fund and Ashmore Greater China Equity Fund, no acquisitions of investments were made. There were no other significant changes to the Company’s direct equity holdings and debt investments other than the valuation movements.
As at 30 June 2013, derivative financial assets were comprised of forward foreign currency contracts as follows:
Currency Bought
GBP
US$
Amount Bought
1,700,000 18,333,177
Currency Sold
US$ BRL
Amount Sold
Maturity Date
2,576,571 19/07/2013 37,126,516 02/08/2013
Unrealised gain (US$)
1,521 1,634,343
US$
3,821,685
EUR
2,923,588 22/07/2013
21,157
US$
61,031,324
GBP
40,053,700 19/07/2013
288,907
Derivative financial assets
1,945,928
27
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements continued
3. Financial assets and liabilities at fair value through profit or loss continued
As at 31 December 2012, derivative financial assets were comprised of forward foreign currency contracts as follows:
Currency Bought
GBP
Amount Bought
188,497,429
Currency Sold
US$
Amount Sold
Maturity Date
302,763,460 18/01/2013
US$
10,316,757
BRL
21,188,556 04/02/2013
US$
4,943,125
GBP
3,039,170 18/01/2013
Derivative financial assets
Unrealised gain (US$)
3,626,326 13,044 3,160 3,642,530
30 June 2013 31 December 2012 US$ US$
Financial liabilities held for trading: – Derivative financial liabilities
(2,972,044) (319,477)
Total financial liabilities held for trading
(2,972,044) (319,477)
Total financial liabilities at fair value through profit or loss
(2,972,044) (319,477)
As at 30 June 2013, derivative financial liabilities comprised forward foreign currency contracts as follows:
Currency Bought
GBP
Amount Bought
187,454,690
Currency Sold
US$
Maturity Date
287,251,673 19/07/2013
As at 31 December 2012, derivative financial assets were comprised of forward foreign currency contracts as follows: Currency Bought
Amount Bought
US$ 7,600,000 US$ 3,814,025 US$ 5,670,371 Derivative financial liabilities
Currency Sold
BRL EUR GBP
Amount Sold
(2,972,044)
Derivative financial liabilities
Unrealised loss (US$)
Amount Sold
Maturity Date
15,937,960 04/02/2013 2,923,588 14/01/2013 3,567,429 18/01/2013
(2,972,044)
Unrealised loss (US$)
(150,418) (40,816) (128,243) (319,477)
30 June 2013 30 June 2012 US$ US$
Other net changes in fair value through profit or loss: – Realised (31,472,587) 775,379 – Change in unrealised 2,964,302 (26,256,594) Total losses (28,508,285) (25,481,215) Other net changes in fair value on assets held for trading (18,266,112) 2,228,672 Other net changes in fair value on assets designated at fair value through profit or loss (10,242,173) (27,709,887) Total net losses
28
(28,508,285) (25,481,215)
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements continued
4. other financial assets and liabilites
a) Other financial assets relate to prepaid expenses and were comprised of the following:
30 June 2013 31 December 2012 US$ US$
Due from brokers – Prepaid regulatory fees
– 3,773 – 3,773
b) Other financial liabilities Other financial liabilities relate to accounts payable and accrued expenses, and comprise the following:
30 June 2013 31 December 2012 US$ US$
Management fee payable (net) 138,648 446,531 Incentive fee payable 837,862 5,886,923 Other accruals 316,666 324,982 1,293,176 6,658,436 Net management fee payable includes a rebate of US$461,644 (31 December 2012: US$1,173,727) due from the Investment Manager in accordance with the Investment Management Agreement.
5. financial instruments
a) Financial risk management The Company’s financial risk management objectives and policies are consistent with those disclosed in the audited financial statements of the Company for the year ended 31 December 2012.
b) Carrying amounts versus fair values As at 30 June 2013 the carrying values of financial assets and liabilities approximate their fair values and are presented in the condensed consolidated statement of financial position.
c) Financial risk management Financial risk management objectives and policies are consistent with those disclosed in the audited financial statements as at and for the year ended 31 December 2012.
d) Financial instruments carried at fair value - fair value hierarchy The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: • Level 1: Quoted price (unadjusted) in an active market for an identical instrument. • Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted prices in active markets for similar instruments: quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques for which all significant inputs are directly or indirectly observable from market data.
• L evel 3: Valuation techniques using significant unobservable inputs. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.
29
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements continued
5. financial instruments continued
The level in the fair value hierarchy 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. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.
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 following table analyses within the fair value hierarchy the Company’s financial assets and liabilities at fair value through profit and loss (by class) measured at fair value at 30 June 2013:
Level 1 Level 2 Level 3 Total balance
Financial assets at fair value through profit and loss
Financial assets held for trading:
– Derivative financial assets
Financial assets designated at
–
1,945,928
–
1,945,928
fair value through profit or loss at inception:
– Equity investments
– Debt investments
Total
8,956,832
–
302,119,491
311,076,323
–
–
23,969,808
23,969,808
8,956,832
1,945,928
326,089,299
336,992,059
Financial liabilities at fair value through profit and loss
Financial liabilities held for trading:
– Derivative financial liabilities
–
2,972,044
–
2,972,044
Total
–
2,972,044
–
2,972,044
Level 1 assets include listed MCX, Aginyx Ordinary Shares, which were transferred from level 2 during the period, as the price is no longer subject to a discount since March 2013.
Level 2 assets include forward currency contracts that are calculated internally using observable data.
Level 2 liabilities include forward currency contracts that are calculated internally using observable 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 Net Asset Value which represents the fair value, quoted by the administrator of the unquoted fund as at the close of business on the relevant valuation day. Ashmore Asian Recovery Fund (“ARF”) shares were suspended from their official listing on the Channel Islands Stock Exchange with effect from 29 January 2013 and therefore were transferred from level 2 into level 3.
30
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements continued
5. financial instruments continued
The following tables present the movement in level 3 instruments for the period ended 30 June 2013 by class of financial instrument.
Equity securities
Opening balance 1 January 2013
Sales and return of capital
(80,680,253)
–
(80,680,253)
Transfer into level 3
110,194,018
–
110,194,018
Gains and losses recognised in profit and loss*
Closing balance 30 June 2013
*Gains and losses recognised in profit and loss include unrealised results on existing assets as at 30 June 2013 of US$(199,855,503).
Total gains and losses included in the statement of comprehensive income are presented in ‘Other net changes in fair value of financial assets and financial liabilities at fair value through profit and loss’.
As at 30 June 2013 the carrying values of other financial assets and liabilities approximate their fair values.
The Pricing Methodology and Valuation Committee (PMVC) which has been authorised as an Approved Person to provide valuations to the Administrator, operates and meets to consider the methods for pricing hard to value investments where a reliable pricing source is not available, if an asset does not trade regularly, or in the case of a significant event (such as a major event and market volatility outside of local market hours). These assets, which are classified within level 3, include all asset types but are frequently ‘Special Situations’ style investments, typically incorporating distressed, illiquid or private equity assets.
For these hard to value investments, the methodology and models used to determine fair value were created in accordance with the International Private Equity and Venture Capital Valuation (IPEV) guidelines by experienced personnel at an independent third party valuation specialist. The valuation is then subject to review, amendment if necessary, then approval, firstly by the PMVC, and then by the Board of Directors of the Company.
Valuation techniques used by the third party valuation specialists include the market approach, the income approach or the cost approach for which sufficient and reliable data is available. Within level 3, the use of the market approach generally consists of using comparable market transactions, while 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.
The main inputs used by the third party valuation specialist in estimating the value of level 3 investments 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 changes in financial ratios or cash flows. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability.
6,225,188 302,119,491
31,379,479
Total
266,380,538
Debt securities
(7,409,671) 23,969,808
297,760,017
(1,184,483) 326,089,299
31
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements continued
5. financial instruments continued The following table shows the valuation technique and the key unobservable inputs used in the determination of fair value of level 3 investments:
Valuation technique Significant unobservable inputs
Inter-relationship between significant unobservable inputs and fair value measurement
As described – Forecast annual revenue growth rate
The estimated fair value would increase if:
above
– Forecast EBITDA margin
– the annual revenue growth rate was higher;
– Risk adjusted discount rate
– the EBITDA margin was higher;
(12.7% to 18.8%)
– Market multiples
– the risk-adjusted discount rate was lower;
or – the multiples were higher 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 equity investments in Level 3, changing one or more of the assumptions used to alternative assumptions would result in an increase/(decrease) in net assets attributable to equity holders. 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 period that are different from the assumptions used could require a material adjustment to the carrying amounts of affected assets.
6. Capital and reserves
The following share conversions took place during the period ended 30 June 2013:
Transfers from Transfers to
Number of shares to switch out
Number of shares to switch in
£ shares
US$ shares
US$ shares
£ shares
9,387
14,000
992,555
647,266
The redemption was effected pro-rata to holdings of shares on the register at the close of business on the redemption record date which was 26 April 2013. As a result 19.40 per cent of the Company’s issued share capital was redeemed. Fractions of shares were not redeemed and the number of shares redeemed for each shareholder was rounded down to the nearest whole number of shares.
The cash utilised to effect the partial redemption of shares was comprised of monies from the realisation of the Company’s investments received up to and including 31 March 2013, pursuant to the winding down of the Company, less liquid assets of at least US$10 million which were retained by the Company for solvency purposes.
Following the approval by the Company’s shareholders of the wind down proposal as described in the circular published on 20 February 2013, on 18 April 2013 the Company announced a return of capital to shareholders of 149.91 pence and 152.58 US cents per £ and US$ share held respectively, by way of a compulsory partial redemption of shares, with a redemption date of 3 May 2013 using the 31 March 2013 Net Asset Value.
Number of shares redeemed
Net assets per share in US$
Value in US$
US$ Share
4,472,623
7.87
35,177,185
£ Share
4,569,851
11.73
53,621,983
32
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements continued
6. Capital and reserves continued
Following the compulsory partial redemption of shares, the Company confirmed that all treasury shares (GBP 1,063,503 treasury shares and US$ 2,385,107 treasury shares) were cancelled.
Number of Shares held in treasury as at 30 June 2013
Number of Shares held in treasury as at 31 December 2012
US$ share class
– 2,385,107*
£ share class
– 1,063,503
– 3,448,610
* The € treasury shares held at 23 April 2012 were converted into $ treasury shares using an effective rate of 1.3748 which resulted in the creation of 425,470 US$ shares.
Following the cancellation of the treasury shares, 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 registration document published by the Company on 6 November 2007 (the “Prospectus”)) is as follows:
US Dollar Shares: 1.0000
Sterling Shares:
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 and Transparency Rules.
2.0288
7. Net Asset Value
The Net Asset Value of each US$ and £ share is determined by dividing the total net assets of the Company attributed to the US$ and £ share classes by the number of US$ and £ shares in issue at the period end as follows:
Net assets attributable to each As at 30 June 2013 share class in US$ Shares in issue
Net assets per share in US$
Net assets per share in local currency
US$ Share
140,745,090 18,383,041
7.66
7.66
£ Share
218,453,283 19,120,039 11.43
7.53
As at 31 December 2012
359,198,373
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$ Share
188,793,224
23,834,219
7.92
7.92
£ Share
291,241,045
23,052,010
12.63
7.77
480,034,269 The allocation of the Company’s Net Asset Value between share classes is further described in the Company’s Prospectus.
33
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements continued
8. Earnings per share (EPS)
The calculation of the earnings per US$ and £ share is based on the gain/(loss) for the period attributable to US$ and £ Shareholders and the respective weighted average number of shares in issue for each share class during the period.
Loss attributable to each share class for the period ended 30 June 2013:
US$ Share
Loss per share class (US$)
Weighted average number of shares
£ Share
(5,077,479) (26,959,276)
21,564,108 21,879,928
EPS per share class Issued shares at the beginning of period
(0.24)
(1.23)
23,834,219 23,052,010
Effect on the weighted average number of shares:
Conversion of shares
Compulsory redemption of shares
Weighted average number of shares
(659,967) 427,366
(1,610,144) (1,599,448)
21,564,108
There were no dilutive instruments in issue during the period.
(Loss)/earnings attributable to each share class for the period ended 30 June 2012:
US$ Share
21,879,928
€ Share*
£ Share
835,947
(15,797,357)
(Loss)/gain per share class (US$)
(8,765,815)
Weighted average number of shares
21,899,222
EPS per share class (0.40) 0.50
Issued shares at the beginning of period
Effect on the weighted average number of shares:
Conversion of shares
Repurchase of own shares
Weighted average number of shares
19,896,356
2,003,316 (450) 21,899,222
1,671,712
3,370,942
(1,699,230) – 1,671,712
*For the period ended 23 April 2012 as the Euro share class was cancelled on that date.
There were no dilutive instruments in issue during the period.
23,385,922 (0.68) 23,184,008
203,402 (1,613) 23,385,797
9. Segment reporting
Although the Company has multiple share classes and invests in various investment themes, it is organised and operates as one business and one geographical segment. 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. Most of the Company’s income is from investment companies incorporated in Guernsey. Additionally, the Company’s performance is evaluated on an overall basis.
10. Ultimate controlling party
34
In the opinion of the Directors and on the basis of shareholdings advised to them, the Company has no ultimate controlling party.
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements continued
11. 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 Ashmore Investment Management Limited.
The Company and the Investment Manager entered into an Investment Management Agreement (revised 1 February 2013) 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 period ended 30 June 2013, the Company had the following related party transactions:
Income/ Receivable/ (Expense) (Payable) Related Party Nature US$ US$
Ashmore Investment Management Limited
Management fees (net)*
Ashmore Investment Management Limited
Incentive fees
Ashmore Investment Management Limited
Administration fees
Board of Directors
Directors’ fees
(4,950,999) (138,648) 3,304,814 (837,862) (74,058) (45,076) (125,260) – Investment Activity US$
(101,112,589)
Related Funds
Purchases
Related Funds
Sales
Related Funds
Dividends
During the period ended 30 June 2012, the Company engaged in the following related party transactions:
212,526,409 462,236
Income/ Receivable/ (Expense) (Payable) Related Party Nature US$ US$
Ashmore Investment Management Limited
Management fees (net)*
(1,360,203)
Ashmore Investment Management Limited
Incentive fees
Ashmore Investment Management Limited
Administration fees
(79,869)
(158,968)
Board of Directors
Directors’ fees
(122,478)
(27,000)
2,164,679
(212,017) (2,876,910)
Investment Activity US$
Related Funds
Purchases
(28,742,760)
Related Funds
Sales
Related Funds
Dividends
*Buyback fees which equal 4% of the amount by which the Net Asset Value is reduced as a result of the repurchase of shares pursuant to the Company’s buy-back policy are included in the net management fees. During the period ended 30 June 2013, Buyback fees recognised amounted to US$3,814,587 (30 June 2012: Nil).
28,579,831 1,271,076
35
Ashmore Global Opportunities Limited
Notes to the Unaudited Condensed Interim Financial Statements continued
11. Related party transactions continued
Related Funds are other Funds managed by Ashmore Investment Management Limited.
Effective 1 January 2013, Graeme Dell agreed to waive his Director’s fee.
Prior to 31 March 2013 Directors’ remuneration was as follows:
Chairman: £75,000 per annum Chairman of the Audit Committee: £35,000 per annum Directors: £33,000 per annum
Effective 31 March 2013, the Independent Directors agreed to reduce their fees as follows: the Chairman by 20% and the other Directors by 10%.
The Directors had the following beneficial interest in the Company:
30 June 2013* US$ Ordinary Shares £ Ordinary Shares
31 December 2012 US$ Ordinary Shares £ Ordinary Shares
Jonathan Agnew
12,090 – 15,000
Nigel de la Rue
– 3,224
– 4,000
Christopher Legge
– 2,015
– 2,500
Richard Hotchkis
– 1,209
– 1,500
*The reduction in beneficial interest was due to the March compulsory partial redemption of shares (note 6).
Purchases and Sales of the Ashmore SICAV 2 Global Liquidity Fund (“Global Liquidity Fund”) are 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.
–
12. Commitments
During the period ended 31 December 2010, the Company entered into a subscription agreement with Everbright Ashmore China Real Estate Fund LP for a total commitment of US$10 million. As at 30 June 2013 the outstanding commitment was US$1,357,419 (31 December 2012: US$1,357,419).
During the period 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 30 June 2013 the outstanding commitment was €7,833,696 (31 December 2012: €7,833,696).
During the period 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$23,581,027. As at 30 June 2013 the outstanding commitment was US$5,991,322 (31 December 2012: US$5,991,322).
13. Subsequent events
36
On 17 July 2013, the Company announced that it would return 26.17 pence and 26.60 US cents per GBP and US$ share respectively, on a payment date of 2 August 2013 using the 30 June 2013 Net Asset Value. As a result, 664,288 GBP shares and 638,682 US$ shares were redeemed. The gross capital distribution amounted to US$13.0 million (gross of fees, including buyback fees and distribution costs).
Ashmore Global Opportunities Limited
Corporate Information
Directors Jonathan Agnew – Chairman Graeme Dell Nigel de la Rue Christopher Legge Richard Hotchkis Registered Office Ashmore Global Opportunities Limited PO Box 255 Trafalgar Court Les Banques St Peter Port Guernsey GY1 3QL Channel Islands Administrator, Secretary and Registrar Northern Trust International Fund Administration Services (Guernsey) Limited PO Box 255 Trafalgar Court Les Banques St Peter Port Guernsey GY1 3QL Channel Islands Investment Manager Ashmore Investment Management Limited 61 Aldwych London WC2B 4AE United Kingdom Broker J.P. Morgan Cazenove 20 Moorgate London EC2R 6DA United Kingdom Broker Jefferies International Limited Vintners Place 68 Upper Thames Street London EC4V 3BJ United Kingdom
Custodian Northern Trust (Guernsey) Limited PO Box 71 Trafalgar Court Les Banques St Peter Port Guernsey GY1 3DA Channel Islands Auditor KPMG Channel Islands Limited 20 New Street St Peter Port Guernsey GY1 4AN Channel Islands Advocates to the Company Carey Olsen Carey House Les Banques St Peter Port Guernsey GY1 4BZ Channel Islands UK Solicitors to the Company Slaughter and May One Bunhill Row London EC1Y 8YY United Kingdom UK 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
37
Investment Management Limited 61 Aldwych, London WC2B 4AE. United Kingdom Authorised and regulated by the Financial Conduct Authority Designed and produced by Weber Shandwick Financial Design
