Annual report & accounts 2013/14 ACAP...31st MARCH, 2014 PARTNERS preserving capital yielding superior returns Contents Page(s) Corporate information 1 Report of the Trustees 2 –

Managed by:

PARTNERSpreserving capital yielding superior returns

ACAP

FUND

Annual report & accounts

2013/14

Horwath Dafinone, Chartered Accountants, Ceddi Towers, 16 Wharf Road, Apapa, P. O. Box 2151, Marina, Lagos

Managed by

ACAP CANARYGROWTH FUND

FINANCIAL STATEMENTS

for the year ended

st31 MARCH, 2014

PARTNERSpreserving capital yielding superior returns

Contents Page(s)

Corporate information 1

Report of the Trustees 2 – 5

Report of the Fund Managers 6 - 11

Report of the independent auditors 2-13

Statement of financial position 14

Statement of comprehensive income 15

Statement of changes in equity 16

Statement of cash flows 17

Notes to the financial statements

1 Reporting fund 18

2 Summary of Significant accounting policies 18

2.1 Basis of preparation 18-19

2.2 Revenue 20

2.3 Accrued expenses 20

2.4 Taxation 20

2.5 Financial asset and liabilities 20-23

2.6 Impairment of financial assets 23-25

2.7 Cash and cash equivalent 25

2.8 Investment properties 26

2.9 Provisions 26

2.10 Equity 26

2.11 Intangible assets 27

2.12 Impairment of non financial assets 27-28

3 Use of estimates and judgement 28-31

ACAP CANARYGROWTH FUNDMANAGED BY ALTERNATIVE CAPITAL PARTNERS LIMITED I

4 Financial risk management 32

4.1 Introduction and overview 32

4.2 Classification of financial asset and liabilities 32-33

4.3 Market risk 33

4.4 Liquidity risk 33-34

4.5 Gross nominal (undiscounted) maturities of financial

assets and liabilities 35-36

4.6 Credit risk 37

5 Property linked investment 38

6 Cash and cash equivalents 38

7 Financial assets held to maturity 38

8 Financial assets at fair value through profit or loss 39

9 Trade and other receivables 39

10 Intangible asset 40

11 Trade and other payables 40

12 Equity 41

13 Interest income 41

14 Rental income 41

15 Trading gain/(loss) 42

16 Gains on investment property 42

17 Fair value gain on financial instrument 42

18 Other income 42

19 Management fees 42

20 Administrative expenses 42

21 Taxation 43

22 Related parties and other key contracts 43-44

ACAP CANARYGROWTH FUNDMANAGED BY ALTERNATIVE CAPITAL PARTNERS LIMITED ii

1

Corporate Information

Country of Incorporation and domicile Nigeria

Nature of business and principal activities The principal activity of the fund is the pooling of funds from the investing public for investment in approved investment portfolios.

Trustees to the Fund UBA Trustees Limited

Fund Manager Alternative Capital Partners Limited

Custodian to the Fund United Bank for Africa Plc [Global Investor Services]

Registrar First Registrars Nigeria Limited

Directors of Fund Manager Mr. Remi Babalola (Chairman/Chief Strategist) Mr. Bode AgunbiadeMr. Ariyo OkunsanyaMr. Tope Ashaju

Mr. Yomi Olawore

Registered office of the Fund Manager 176 Corporation Drive Dolphin Estate

IkoyiLagos

Bankers Access Bank PlcFidelity Bank PlcUnited Bank for Africa Plc

Auditors to the Fund Horwath Dafinone

Chartered Accountants

ACAP CANARYGROWTH FUNDMANAGED BY ALTERNATIVE CAPITAL PARTNERS LIMITED

2

Report of the Trustees

The Trustees are pleased to present their annual report on the affairs of the ACAP Canary Growth Fund st

(“The Fund”), for the year ended 31 March, 2014.

Legal form and principal activity: The ACAP Canary Growth Fund (“The Fund”) is registered with the Securities and Exchange Commission under the Collective Investment Scheme in accordance with the provisions of the Investments and Securities Act 2007 to enable investors make regular contribution in small denominations of an amount certain in Naira or benefit in kind for the purpose of pooling their contributions to invest in the Fund. The Fund opened for

thsubscription on the 13 of November, 2006 and commenced

thinvestment activities on 25 March, 2007. The Fund's name was

thchanged to ACAP CanaryGrowth Fund on the 28 October, 2011 from Oceanic Vintage Fund following the transfer of the Fund Management role from Oceanic Bank Plc. to Alternative Capital Partners Limited.

The ACAP CanaryGrowth Fund (“The Fund”) is listed by Memorandum on the floor of the Nigerian Stock Exchange and in line with international best practice, the assets of the Fund are totally segregated from the assets of the manager.

Operating Results: The following is a summary of the Fund's operating results:

2014 2013N N

Gross income 135,458,049 430,475,147

(Loss)/profit before tax (4,987,298) 280,151,210 Taxation (3,724,537) (1,422,414)

Operating (loss)/income for the year (8,711,835) 278,728,796

Dividend The fund manager did not recommend the payment of dividend to the unit holders (2013: N 78,199,660) for the year.


Performance of the Fund: The performance of the Fund as a function of its net asset value is as follows:

2014 2013 N N

Net asset value 1,317,147,251 1,355,123,668

Net asset value/unit 0.66 0.69

There were a total of 2,005,464,284 units in existence at the end of year. A total of 47,647,735 units were redeemed from the Fund during the year.

Report of the Trustees (continued)

Administration of theScheme Value of the Fund marginally decreased from net asset of N1.355 billion as

st stat 31 March 2013 to 1.317 billion as at 31 March 2014 while Total Operating Income decreased significantly from a positive position of N278.7million to a negative position of N8.712million as at the same periods respectively. The Administration of the Fund is guided by the provisions of the Investment and Securities Act (2007) and the Trust Deed which the Fund Manager has made concerted efforts to comply with. However, highlighted below is an observed lapse and steps taken by the Fund Manager to rectify accordingly.

Asset Allocation The Trustees are of the opinion that the Fund was administered in line with the provisions of the Trust Deed and the Investment and Securities

stAct, there was no breach of the Asset Allocation as at the end of 31 March, 2014.

Responsibilities of the The Investments and Securities Act requires the Fund Manager to keepthe Fund Manager proper books of account and prepare annual financial statements which

give a true and fair view of the state of affairs of the unit trust scheme during the year covered by the financial statements.

In our opinion, the Fund Manager has in preparing the financial statements;

- selected suitable accounting policies and applied them consistently;

- made judgments and estimates that were reasonable and prudent;

N

3ACAP CANARYGROWTH FUNDMANAGED BY ALTERNATIVE CAPITAL PARTNERS LIMITED

- ensured that the applicable Financial Reporting Standards were followed, and in the case of any material departures, that it was fully disclosed and explained within the financial statements; and

- prepared the financial statements on a going concern basis, since it was appropriate to assume that the Fund shall continue to exist.

The Fund Manager is responsible for keeping proper accounting records, which disclose with reasonable accuracy, at any point in time, the financial position of the Fund, and enables the Fund Manager to ensure that the financial statements comply with the Trustee Investments Act, CAP T22 LFN 2004, the Investments and Securities Act, 2007, the provisions of the Trust Deed and any supplemental thereto, together with the rules and regulations set out by the regulatory bodies established pursuant to the legislation referred to within this paragraph (''Applicable Regulations'').

The Fund Manager is also responsible for maintaining adequate financial resources to meet its commitments and to manage the risks to which the Fund is exposed.

Responsibilities of the The responsibilities of the Trustee as provided by Securities and Trustee Exchange Commission Rules and Regulations made pursuant to the

Investments and Securities Act, are as stated below:

- Monitoring of the activities of the Fund Manager and the Custodian on behalf of and in the interest of the Unit Holders.

- Ensuring that Custodian takes into custody all of the scheme's assets and holds it in trust for the holders in accordance with the Trust Deed and the Custodial Agreement

- Monitoring of the Register of Unit Holders or contributors;

- Ascertaining the Fund Manager's compliance with the Applicable Regulations;

- Ascertaining that the monthly and other periodic returns/reports relating to the Fund are sent by the Fund Manager to the Commission.



- Taking all steps and executing all documents which are necessary to secure acquisitions or disposal properly made by the Fund Manager in accordance with the Trust Deed and Custodial Agreement;

- Exercising any right of voting conferred on it as the registered holder of any investment and / or forward to the Fund Manager within a reasonable time all notices of meetings, reports, circulars, proxy solicitations and any other documents of a like nature for necessary action;

- Ensuring that fees and expenses of the fund is within the prescribed limits; and

- Acting at all times in the interest and for the benefit of unit holders of the scheme.

Charitable donations The Fund did not make any charitable donations during the year.

Auditors In accordance with section 169(1) of the ISA, 2007 Messrs Horwath Dafinone, Chartered Accountants, have indicated willingness to continue in office as Auditors of the Fund.

By Order of the TrusteesTokunbo AjayiFRC/2014/NBA/00000008349

Lagos, Nigeriath

6 November, 2014

6

Report of the Fund Managers

GLOBAL OVERVIEWGlobal growth has strengthened as expected in recent times and this is largely driven by advanced economies, supported by easier financial market conditions and gradually improving consumer and business confidence. While emerging economies have benefitted from the stronger external demand, domestic demand has remained weaker than expected in many of them, reflecting in part, tighter financial conditions. While global growth is projected to continue to improve, the recovery is uneven and fragile and significant downside risks remain just as adverse geo-political developments in both Ukraine and Venezuela have exacerbated a negative market tone in selected developing countries. The Global economy grew by 2.40% in Q4 2013.

In line with our outlook, equities rebounded strongly in February 2014 after shrugging off a number of negative factors. During the month for example, economic performance data from China remained weak on average while January 2014 manufacturing data in the U.S dipped, together with a downward revision of the country's Q4 2013 GDP growth estimate.

The Ukraine-Russia unrest was one of the notable headwinds that confronted global markets during the year. Notwithstanding, stocks remained resilient, driven by strong fundamentals, less emerging market worries, improved economic performance of the euro area and better-than-expected corporate performances.

DOMESTIC OPERATING ENVIRONMENT

Nigeria's real output growth in the last decade has averaged over 6 per cent. In the second and third quarters of 2013, real output grew by 6.2 and 6.9 per cent respectively.

The on-going reforms in the various sectors of the Nigerian economy gradually yielded positive results. This manifested in the country being classified among the fastest growing economies in the world and a middle income country. In addition to the robust growth largely driven by the non-oil sector, the stance of monetary policy has helped to significantly rein in inflationary pressures which moderated to 7.8 per cent year on year. The moderation in consumer price inflation reflected a trend which began in the first quarter of 2013. The anticipated bumper agricultural output this year is expected to lead to further decline in inflation and contribute to a sustained macroeconomic stability. However, the threat of a spending blow-out in the run-up to the 2015 general elections poses potential risks to inflation.

In addition, the conducive investment climate brought about by predictable macroeconomic environment and the rebased GDP estimate to about $500bn has continued to ensure sustained inflow of foreign capital into the economy. The Nigerian Foreign Reserve depleted by about 1.30% ($568million) in 2013 and further dipped in January 2014 by about 1.45% ($622million) Month on


Month to close at about $42billion. Following the bearish trend, the Nigerian Currency in the parallel market (that is N / $ rate) depreciated by 2.73% in 2013 and further dipped in January 2014 by 1.37% to close at N162.50.

While Federal Government's overall spending in 2013 has not been considerably higher than in 2012, oil revenues have continued to decline in spite of the relative stability in oil price and output when compared with preceding years. External Reserves have remained in excess of $45billion because of a massive inflow in portfolio funds. The implication of this is that financial markets are susceptible to external shocks.

Actual Federal Government retained revenue for January to October 2013 stood at N3,188 billion, representing a shortfall of 21.0 percent compared with proportionate budget for 2013. However, the total expenditure of the Federal Government Jan-Oct 2013 stood at N3,770 billion, which was 19.7 percent below the proportionate budget for the same period, but exceeded the cumulative outlay during the same period of 2012 by 2.2 per cent. Given the budgeted expenditure of N5, 792 billion and retained revenue of N 4,905 billion, the fiscal deficit for the year is projected at N887.07 billion or 1.9 percent of GDP. Between January to October 2013, the fiscal operations of the Federal Government resulted in a deficit of N 582.11 or 1.5 percent of GDP and financed mainly through domestic borrowing. The major concern of the CBN is its impact on macroeconomic variables. The Bank therefore continued to pursue tight monetary policies in order to contain inflationary pressure. These include the introduction of cash reserve requirement (CRR) initially at 50 percent on public sector deposits but currently 75 percent with the deposit money banks (DMBs) to stem liquidity surge.

Money Supply & Interest Rates

CBN maintained a tight monetary stance throughout the year 2013. The Apex Bank retained rates throughout the year and tightened liquidity further by raising CRR on both public and private sector deposits to 75% and 15% respectively earlier this year. The Naira was caught in a bearish stranglehold in February, 2014 as the market (especially foreign investors) reassessed the return structure of various instruments given changing global, regulatory and political risks. The Naira lost 1.51% against the US Dollar to close the month at N164.95/US$. The local currency depreciated further against the Pound and Euro, losing 3.32% and 3.80% to N 276.26/£ and N 227.72/€ respectively. The central theme around the Naira in the medium-term is the sustainability of the official peg (155/US$ ± 3%) given foreign developments and the trend decline seen in the foreign reserves despite elevated crude oil prices.

Equities Market

As expected, the Nigerian equity market started the year 2013 on a positive note in continuation of the previous year's rally when it gained 35.45% YTD. The NSE Index grew by 47.19% during the year. In


8

spite of this recovery, the market responded to the heightened political risk due to the national elections when it opened the year 2014 in a negative of 0.24% and 7.25% in the just ended first quarter 2014. Although the transparency, compliance and accountability brought about by the reform of the stock exchange helped to stabilize the market and prevented a significant southward movement of the index, the cautious action of investors coupled with their buy and hold strategy to ride out the election period led to the current market performance. The release of impressive financial results and other corporate actions by some of the quoted companies especially banks also helped to restore some confidence to the market. However, the financial performance was not enough to reverse the bearish trend in the market as it sustained a dip of 5.24% as at May 20, 2014 even as the elections draw near.

The political reforms, Nigeria being seen as a frontier market, currency stability and monetary policies made by the immediate past CBN governor contributed to the confidence in the Nigerian Capital Market in the preceding year. These and other factors drove market capitalization of the listed equities to close on a high note.

Money Market & Fixed Income Market

The performance of the financial sector was as a result of the continuous implementation of the financial sector reforms that have strengthened the sectors' financial intermediation process engendered by improved interventions in relevant and critical sectors of the economy, stronger regulation and supervision through better disclosures by financial institutions, improved corporate governance, and capital market development. Other measures include improved cost structure of banks, enhanced financial inclusion, and improved financial infrastructures. There have also been numerous programmes and projects to improve the payments system. The banks in Nigeria are safer and the CBN in


collaboration with other stakeholders, continues to implement sound financial sector policies to ensure that the recent gains are sustained and even improved upon.

The T-Bill market received a boost in January, 2014 following the liquidity surge in the system which was triggered by the redemption of N 1trillion worth of AMCON bonds on the 31st of December 2013, the inflow of about N 290billion from FAAC, and a maturity of a significant amount of OMO bills. Therefore rates in January, 2014 for short term notes did an average of 9.00% and long term notes an average of 11.00%.

The bond market followed the trend in the T-Bill market as, the market benefited from the high level of liquidity in the system but came under pressure later in the month as offshore investors withdrew capital from the domestic market in preference for the dollar.

PERFORMANCE OF THE FUND

There is a strong performance by the Fund since its inception and has always been borne out of the Fund Managers' investment strategies, focus and careful approach to sector allocation and security selection. However, the Fund grew organically and below is highlights of the performance:

31-Mar-13 31-Mar-14N N

Profit/ (Loss) After tax 278,728,796 (8,711,835)Net Asset Value 1,355,123,688 1,317,147,251Net Asset Value/Unit 0.69 0.66

The Fund's operating result for financial year 2014 was below expectation as a result of the huge provision on the Real Estate portfolio of the Fund. The sum of N 101,323,750 million was provided for the impairment of trade and other receivables in the portfolio owing to the on-going dispute on the Balogun Shopping Mall in which the Fund under the management of the former Fund Manager, Oceanic Bank Plc, had invested through the developer to the real estate development. The Developer is currently engaging Lagos State Government (LASG) in discussion with a view to resolving all issues surrounding the transaction.


10

The asset class is shown in the table below:

OUTLOOK

The developed market stocks are likely to gradually overcome the U.S Fed-induced pressure, particularly on persistently strong U.S economic data and the Euro government's commitment to a progressive recovery. Stable corporate earnings would also boost market recovery.


On the other hand, the emerging market stocks are expected to nose dive as the recovery in advanced economies and the scale-back of U.S Quantitative Easing (QE) would continue to influence capital flight away from local assets causing a great deal of volatility. The recent spree of interest rate hikes may temper the wave of outflow albeit temporarily.

The large economies of the world are all devaluing their currencies. This will not be consequence-free as gold and silver will be direct beneficiaries starting with rising prices. Since the Fed has declared QE, it is logical to conclude that this expansion of the monetary base will continue. If it grows at the same pace through January to the end of the year 2014, there is a high likelihood that price of gold will maintain an upward trend.

The Nigerian Equities Market is expected to rally on last year's performance for H1 but may become bearish in H2 due to some underlying factors such as the Fed QE tapering, suspension of the CBN Governor and a possible change in Monetary Policy Rate (MPR), excess liquidity as a result of the upcoming February, 2015 elections which will obviously increase core inflation. The rally may come to a halt as contagion emanating from worries about the investment cases for emerging markets and the implementation of 75% CRR on public sector fund and a possible 100% CRR proposition on public sector funds slows down foreign inflows. Therefore, the fixed Income and money market are expected to remain relatively flat for H1 but may become bullish favouring specifically the short term investor by H2 as investors would seek to preserve their capital and OMO sales are expected to push yields higher.

The Nigerian foreign reserve decline is largely as a result of inadequate revenue stemming from vandalisation of oil pipelines, oil bunkering and untimely or non-remission of oil proceeds from NNPC as well as CBN intervention at the inter-bank currency market to stabilize the Naira. The downside to the continuous depletion may be that CBN may no longer be able to support the Naira which will in turn lead to depreciation of the country's currency. A fall in foreign investor confidence level at this point will be inevitable and the country's economic profile may no longer look attractive.

CONCLUSION

Serious concerns about the troubled world economy have generally dampened demand. Therefore troubled global economy must be monitored vigilantly because of the reality of the risk of a global deceleration in demand. It is possible that fears associated with the global economy may affect domestic decisions on medium to long term investments. Also, the serious security concerns, heightened political instability and perceived concern in the controversial suspension of the CBN governor may see the Nigerian financial market taking a serious hit as these factors may scare foreign investors away. Not to forget, as the US Fed continues its quantitative easing, the Nigeria market would also experience FDI outflow which if not properly managed can impact negatively on the economy as a whole.


REPORT OF THE INDEPENDENT AUDITORS TO THE UNIT HOLDERS OF ACAP CANARYGROWTH FUND

We have audited the financial statements of ACAP CanaryGrowth Fund which comprise, the statement st

of financial position as at 31 March, 2014, the statement of comprehensive income for the year ended st

31 March, 2014, the statement of changes in equity, the statement of cash flows for the year then ended, and other explanatory notes. These financial statements are set out on pages 14 to 36 and have been prepared using the summary of significant accounting policies set out on page18 to 31.

Fund Manager and Trustees' responsibilities for the financial statements

The Fund Manager is responsible for the preparation and fair presentation of the financial statements in accordance with the International Financial Reporting Standards as adopted by the Financial Reporting Council of Nigeria and the requirements of the Investment and Securities Act, 2007, whilst the Trustee is responsible for ascertaining compliance with the provision of the Trust Deed and other relevant laws. The responsibility of the Fund Manager includes the designing, implementing and maintaining internal controls that are relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error as well as selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and Nigerian Standards on Auditing issued by the Institute of Chartered Accountants of Nigeria. The standards require that we comply with ethical requirements and plan and perform the audit so as to obtain reasonable assurance as to whether the financial statements are free from material misstatement.


Basis of our opinion

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.We obtained all the information and explanations that were required for the purpose of our audit.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion.

Report on legal and regulatory requirements

In accordance with the section 169 (1) of the Investment and Security Acts, 2007 we confirm that the financial statements are in agreement with the accounting records, which have been properly kept.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the funds at st

31 March, 2014 and of its financial performance and its cash flows for the year ended on that date, and have been properly prepared in accordance with the International Financial Reporting Standards as adopted by the Financial Reporting Council of Nigeria and comply with the provisions of the Trustee Investment Act, CAP T22 LFN 2004, the Investments and Securities Act, 2007 and the provision set out in the Trust Deed of the Fund.

Lagos, Nigeriath

6 November, 2014


14

stStatement of financial position as at 31 March, 2014st st 31 March 31 March

2014 2013 N N

NotesAssets

Non-current assets

Property linked investment 5 61,899,403 86,749,265

Current assets

Cash and cash equivalents 6 204,962,746 385,170,939Financial assets held to maturity 7 473,323,290 177,068,902Financial asset at fair value through profit or loss 8 579,796,764 697,945,391Trade and other receivables 9 125,618,116 228,332,358Intangible assets 10 2,259,224 3,064,542

Total assets 1,447,859,543 1,578,331,397

Liabilities

Current liabilities

Trade and other payables 11 130,712,292 223,207,729

Total liabilities 130,712,292 223,207,729

Equity

Members capital account 12.1 1,853,401,753 1,804,466,675Retained earnings 12.2 (536,254,502) (449,343,007) Total equity 1,317,147,251 1,355,123,668

Total equity and liabilities 1,447,859,543 1,578,331,397 Trustee Fund Manager

Tokunbo Ajayi Quareeb KukuFRC/2014/NBA/00000008349 FRC/2014/ICAN/00000008068

th6 November, 2014

The notes on pages 18 to36 forms & an integral part of these financial statements.


Statement of comprehensive income for the year st

ended 31 March, 2014

st st 31 March 31 March Notes 2014 2013

N N

Interest income 13 51,718,307 45,745,126Rental income 14 28,454,317 27,186,494Dividend income 32,790,376 13,871,976Trading profit/(loss) 15 1,777,681 (25,239,755)Gains on investment property 16 - 1,603,750Net gains on financial instruments at fair value through profit or loss 17 19,705,326 362,238,068Other income 18 1,012,042 5,069,488

Total income 135,458,049 430,475,147

Management expenses 19 24,175,428 123,685,220Administrative expenses 20 14,946,169 19,132,094Doubtful recoverable 101,323,750 7,506,623

Total operating expenses (140,445,347) (150,323,937) (Loss)/profit before taxation (4,987,298) 280,151,210Taxation 21 (3,724,537) (1,422,414)

Operating (loss)/income for the year (8,711,835) 278,728,796

Other comprehensive income - -

Total comprehensive (loss)/income for the year (8,711,835) 278,728,796

The notes on pages 18 to 36 form & an integral part of these financial statements.


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2014

Members Retained Total

Capital account earnings equity

N N N

stBalance at 1 April, 2013 1,804,466,675 (449,343,007) 1,355,123,668

Loss for the year - (8,711,835) (8,711,835)

Dividend paid - (78,199,660) (78,199,660)

Contributions during the year 48,935,078 - 48,935,078

stBalance at 31 March, 2014 1,853,401,753 (536,254,502) 1,317,147,251

2013

Members Retained

Capital account earnings Total

N N Nst

Balance at 1 April, 2012 1,567,432,492 (724,781,505) 842,650,987

Profit for the year - 278,728,796 278,728,796

Premium granted upon redemption - (3,290,298) (3,290,298)

Contributions during the year 237,034,183 - 237,034,183

stBalance at 31 March, 2013 1,804,466,675 (449,343,007) 1,355,123,668

The notes on pages 18 to 36 form & an integral part of these financial statements.

Statement of changes in equity for the year st

ended 31 March, 2014


17

stStatement of cash flows for the year ended 31 March 2014st st 31 March, 31 March,

2014 2013N N

Cash flows from operating activities

(Loss)/Profit before tax (4,987,298) 280,151,210Profit/(loss) on sale of securities 1,777,681 25,239,755Profit sale of investment property - (1,603,750)Acquired from business combination - (3,290,298)Amortization of software 805,318 1,671,569Fair value adjustments-Equity investment (19,705,326) (362,238,068)

(22,109,625) (60,069,582)Changes in operating asset and liability Net decrease/(increase) in trade and other receivables 102,714,242 (160,312,956)Net (decrease)/increase in trade and other payables (92,495,437) 174,998,892

Cash flow from operations (11,890,819) (45,383,646)Taxation paid (3,724,537) (1,422,414)

Net cash outflow from operations (15,615,356) (46,806,060)

Cash flow from investing activitiesPurchase of equity securities (175,182,279) (66,345,539)Proceeds from sale of equity securities 311,258,551 72,665,902Proceeds from sale of investment property - 5,000,000Net purchase of fixed income investment (170,608,633) (43,716,989)Purchase of property linked investment (125,645,756) (40,000,000)Property linked investment 24,849,862 7,550,735Purchase of software - -Net disposal of investment property - 101,323,750

Net cash (outflow)/inflow from investing activities (135,328,255) 36,477,859

Cash flow from financing activities

Fund received into members capital account 96,582,813 266,074,781Members capital redeemed (47,647,735) (29,040,598)Distribution to unit holders (78,199,660) -

Net cash (outflow)/inflow used in financing activities (29,264,582) 237,034,183

Net cash (outflow)/inflow for the year (180,208,193) 226,706,019Cash and cash equivalents at beginning of year 385,170,939 158,464,920

Cash and cash equivalents at end of year 204,962,746 385,170,939

The notes on pages 18 to 36 form an integral part of these financial statements.


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Notes to the financial statements for the year ended st31 March, 2014

1. Reporting Fund

ACAP CanaryGrowth Fund ("The Fund") is a Fund domiciled in Nigeria. The Fund Manager's registered office is 176, Corporation Drive, Dolphin, Ikoyi, Lagos. The Fund is an open-ended mutual Fund primarily involved in investing in a highly diversified portfolio of equity securities issued by companies listed on the Nigerian stock exchange, fixed income securities, real estates etc with the objective of providing unit holders with above average returns over the medium to long term.

The administration of the Fund is delegated to Alternative Capital Partners Limited.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation a. Statement of compliance

stThe financial statements of the Fund for the year ended 31 March 2014 has been prepared in accordance with International Financial Reporting Standards (IFRS).

The financial statements were authorised for issue by the Investment Committee of ACAP thCanaryGrowth Fund on , 17 June, 2014.

b. Basis of measurementThe financial statements have been prepared on the historical cost basis except for financial instrument at fair value through profit or loss and investment properties which are measured at fair value.

c. Functional and presentation currency These financial statements are presented in Nigeria Naira, which is the Fund's functional

currency.

d. Use of estimates and judgmentsThe preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported


19

amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgement about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

Information about significant areas of estimation, uncertainties and critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the financial statement are described in Notes 3.

e. New and amended standards and interpretations

The accounting policies adopted are consistent with those of the previous financial year.

f. Standards and interpretations issued but not yet effective.

Standard content Effective yearIFRS 9 Financial instruments 1 January, 2015

IFRS 9: Financial instruments - Classification and measurement

IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2015.

2.2 Revenue

a. InterestInterest income and expenses are recognized in profit or loss using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash to the carrying amount of the financial asset or liability. When calculating the effective interest rate, the Fund estimates future cash flows considering all contractual terms of the financial instruments but not future credit losses.

The calculation of the effective interest rate includes contractual fees and points paid or received, transaction costs and discounts or premiums that are integral part of the effective interest rate.


Interest income and expense presented in the financial statements include:

(i) Interest on financial assets and liabilities measured at amortised cost calculated on an effective interest rate basis.

(ii) Interest on financial assets measured at fair value through profit or loss calculated on an effective interest rate basis.

b. Dividend incomeDividend income is recognized when the right to receive income is established.

2.3 Accrued expensesAccrued expenses are recognised initially at fair value and subsequently stated at amortised cost using the effective interest method.

2.4 Taxation

Withholding taxThe Fund is exempted from paying income tax under the current system of taxation in Nigeria. Certain dividend and interest income received by the Fund are subject to withholding tax imposed in the country of origin. The withholding tax borne by the Fund is treated as the final tax and recognised in the statement of profit or loss account.

2 Summary of significant accounting policies (continued)

2.5 Financial assets and liabilities

(i) Recognition Financial assets and liabilities (including assets and liabilities designated at fair value through profit or loss) are initially recognized on the trade date which is the date that the Fund becomes a party to the contractual provisions of the instrument. Other financial assets and liabilities are recognised on the date they are originated.

All financial instruments are measured initially at their fair value plus transaction costs, except in the case of financial assets and financial liabilities recorded at fair value through profit or loss. Subsequent recognition of financial assets and liabilities is at amortised cost or fair value.

When the transaction price differs from the fair value of other observable current market, transactions in the same instrument or based on a valuation technique whose variables include only data observable from markets, the Fund immediately recognises


21

the difference between the transaction price and the fair value (a 'Day 1' profit or loss) in ' Net gains/(losses) on financial instruments classified as held for trading'. In cases where fair value is determined using data which is not observable, the difference between the transaction price and model value is only recognized in the income statement when the inputs become observable, or when the instrument is derecognized.

(ii) Classification The classification of financial instruments depends on the purpose and management's intention for which the financial instruments were acquired and their characteristics.

The Fund classifies financial assets and liabilities into the following categories:

- Financial assets at fair value through profit or loss- Held to maturity- Loans and receivables- Available for sale- Other financial liabilities at amortised cost

(iii) De-recognitionThe Fund de-recognises a financial asset when the contractual rights to the cash flows from the financial assets expire, or when it transfers the rights to receive the contractual cash flows on the financial assets in a transaction in which substantially all of the risks and rewards of ownership of the financial assets are transferred. Any interest in transferred financial assets that is created or retained by the Fund is recognized as a separate asset or liability.

The Fund derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.

The Fund enters into transactions whereby it transfers assets recognized on its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets or portion of them. If all or substantially all risks and rewards are retained, then the transferred assets are not derecognised. Transfers of assets with retention of all or substantially all risks and rewards include securities lending and repurchase transactions.

(iii) De-recognition (continued)

In transactions in which the Fund neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset and it retains control over the asset, the Fund continues to recognise the asset to the extent of its continuing involvement, determined by extent to which it is exposed to changes in the value of the transferred


22

asset. The rights and obligations retained in the transfer are recognised separately as assets and liabilities as appropriate. In transfers where control over the asset is retained, the Fund continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset.

(iv) OffsettingFinancial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted under IFRSs, or for gains and losses arising from a group of similar transactions such as in the Fund's trading activities.

(v) Amortised cost measurementThe amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.

(vi) Fair value measurementFair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction on the measurement date.

For financial instruments traded in active markets, the determination of fair values of financial assets and financial liabilities is based on quoted market price or dealer price quotations.

A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. If the above criteria are not met, the market is regarded as being inactive. Indications that a market is inactive are when there is a wide bid-offer or significant increase in the bid- offer spread or there are few recent transactions.

For all other financial instruments, fair value is determined using valuation techniques. In


23

these techniques, fair values are estimated from observable data in respect of similar financial instruments, using models to estimate the present value of expected future cash flows or other valuation techniques, using inputs (for example, NIBOR,LIBOR yield curve, FX rates, volatilities and counterparty spreads) existing at the dates of the statement of financial position.

In cases where the fair value of the unlisted equity instruments cannot be determined reliably, the instruments are carried at cost less impairment.

The best evidence of fair value of a financial instrument at initial recognition is the transaction price, i.e, the fair value of the consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data observable from markets. When transaction price provides the best evidence of fair value at initial recognition, the financial instrument is initially measured from a valuation model and subsequently recognised in profit or loss on an appropriate basis over the life of the instrument but not later than when the valuation is supported wholly by observable market data or instrument is closed out.

2.6 Impairment of financial assets

(a) Assets carried at amortised costThe Fund assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For receivables, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future


24

credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the income statement.

(b) Assets classified as available for saleThe Fund assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the Fund uses the criteria referred to in (a) above. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in profit or loss. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the income statement.

(c) Financial assets and liabilities at fair value through profit or lossThis category comprises financial assets designated by the Fund as a fair value through profit or loss upon initial recognition.

Financial liabilities for which the fair value option is applied are recognised in the statement of financial position as 'Financial liabilities designated at fair value'. Fair value changes relating to financial liabilities designated at fair value through profit or loss are recognised in 'Net gains on financial instruments designated at fair value through profit or loss'.


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(i) Financial assets and liabilities classified as held for trading Trading assets and liabilities are those assets and liabilities that the Fund acquires or incurs principally for the purpose of selling or repurchasing in the near term, or holds as part of a portfolio that is managed together for short-term profit.

Trading assets and liabilities are initially recognised and subsequently measured at fair value in the statement of financial position with transaction costs recognised in profit or loss. All changes in fair value are recognised as part of net trading income in profit or loss.

(ii) Reclassification of financial assets and liabilities The Fund may choose to reclassify a non-derivative financial asset held for trading out of the held-for-trading category if the financial assets other than loans and receivables are permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to reoccur in the near-term. In addition, the Fund may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories if the Fund has the intention and ability to hold these financial assets for the foreseeable future until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively.

(d) Net gain from financial instruments at fair value through profit or lossNet gain from financial instruments at fair value through profit or loss includes all realised and unrealised fair value changes on quoted equity investment.

2.7 Cash and cash equivalents

Cash and cash equivalents comprise deposits with Funds, cash at hand and highly liquid financial assets with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value and are used by the Fund in the management of short-term commitments.


26

2.8 Investment propertiesInvestment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the cost of day to day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at balance sheet date. Gains or losses arising from changes in the fair values of investment properties are included in the profit or loss in the year in which they arise.

Investment properties are derecognised when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property, the deemed cost for subsequent accounting is the fair value at the date the change in use. If owner occupied property becomes an investment property, the group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

2.9 ProvisionsProvisions are liabilities of uncertain timing or amount and are recognised when the Fund has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

2.10 Equity

Members accountThe redemption of members' accounts where the value of the units is in excess of the original subscription cost is recognised by accounting for the excess as a capital distribution in the year in which the redemption occurs.


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2.11 Intangible assets

Computer software

Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the foundation are recognised as intangible assets when the following criteria are met:

- it is technically feasible to complete the software product so that it will be available for use;

- the trustees intends to complete the software product and use or sell it;- there is an ability to use or sell the software product;- it can be demonstrated how the software product will generate probable future

economic benefits;- adequate technical, financial and other resources to complete the development and

to use or sell the software product are available; and- the expenditure attributable to the software product during its development can be

reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Computer software development costs recognised as assets are amortised over their estimated useful lives.

2.12 Impairment of non financial assets

At each balance sheet date, the Fund reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Where the asset does not generate cash flows that are independent from other assets, the Fund estimates the recoverable amount of the cash generating unit (CGU) to which the asset belongs.


28

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or CGU) is estimated to be less than the carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

3. Use of estimates and judgments a. Key sources of estimation uncertainty

(i) Determining fair valueThe determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of valuation techniques as described in note 3(e)(vi). For financial instruments that trade frequently and have little price transparency, fair value is less objective and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instruments.

b. Critical accounting judgments in applying the Fund's accounting policies

(i) Valuation of financial instruments

The Fund`s accounting policy on fair value measurement is discussed in note 2.5 (vi)

The Fund measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

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.


29

Level 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 effects on the instrument`s valuation. This category includes instrument 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.

Fair values of financial assets and liabilities that are traded in an active markets are based on quoted price or dealer price quotations. For all other financial instruments, the Fund determines fair values using valuation techniques. Valuation technique include net present value and discounted cash flow models, comparison to similar instruments for which market observable price exist, binomial or trinomial option pricing models and other valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads and other premiaused in estimating discount rates, bond and equity prices, foreign currency exchange rates, equity index prices and expected price volatilities and correlations. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date that would have been determined by market participants acting at arm`s length.

The Fund uses widely recognised valuation models for determining the fair value of common and more simple financial instruments such as interest rate and currency swaps that uses only observable market data and require little management judgement and estimation. Observable prices and model inputs are usually available in the market for listed debt and equity investments, exchange traded derivatives and simple over the counter derivatives e.g interest rate swaps.

Availability of observable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets.

The Fund has an established control framework with respect to measurement of fair values. This framework includes a portfolio valuation function, which is independent of front office management and reports to the Investment Committee, who have overall responsibility for significant fair value measurements. Specific controls include: verification of observable pricing inputs and reperformance of model valuations a review and approval process for new models and changes to such models; calibration and back testing of models against observed market transactions; analysis and investigation of significant daily valuation movements; review of significant unobservable inputs and


30

valuation adjustments; and reporting of significant valuation issues to the board of directors.

(a) The table below analyses financial instruments measured at fair value at the end of the reporting period by the level in the fair value hierarchy into which the fair value measurement is categorised:

Level Level Level Level 1 2 3 Total

st 31 March, 2014 Financial assets at fair value through profit or loss Quoted investment 579,796,764 - - 579,796,764

579,796,764 - - 579,796,764

Level Level Level Level 1 2 3 Total

st31 March, 2013Financial assets atfair value throughprofit or lossQuoted investment 697,945,391 - - 697,945,391

697,945,391 - - 697,945,391


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(b) Assets and liabilities not carried at fair value but for which fair value is disclosed. The following table analyses within the fair value hierarchy, the Fund's financial assets and liabilities (by class) not measured at fair value at 31 March 2013 but for which fair value is disclosed:

Level Level Level 1 2 3 Total

Assets Financial assets held to maturity Trade and other receivables - - - -

Total - - - -

Liabilities Trade and other payables - - - -

Total - - - -

The financial assets and liabilities include in the above table are carried at amortised cost; the carrying values are a reasonable approximation of fair value.

Financial assets held at maturity include federal government bonds, treasury bills and commer-cial papers.

Trade and other receivables include the contractual amounts for settlement of trades and other obligations due to the Fund.


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4. Financial risk management

4.1 Introduction and overview

In line with best practice and regulatory requirement for Financial Institutions to establish Risk Management function in their organizations, Alternative Capital Partners Limited ("Fund Man-ager") adopted the Governance, Risk and Compliance model to drive its Enterprise Risk Man-agement [ERM] initiatives and those of the Fund it manages.

The framework aims to ensure that risks that could impede the achievement of business objec-tives are managed better and mitigated earlier, thereby improving the Fund's ability to carry out its mission and achieve its objectives. This has brought the Fund's processes in line with best practice.

The development of the ERM policy and the strengthening of the ERM Committee as well as the Compliance function and other risk management activities has heightened risk awareness, deepened the risk culture and increased knowledge sharing on risk management issues within the Fund.

4.2 Classifications of financial assets and liabilities

The table below provides a reconciliation of the line items in the Fund`s financial position to the categories of financial assets:

Note Held to maturity through receivables liabilities

profit or loss

March 31,2014Cash and cash equivalent 6 - - 204,962,746 - 204,962,746Financial asset held to maturity 7 473,323,290 - 473,323,290Financial asset at fair value through profit or loss 8 - 579,796,764 - - 579,796,764Other assets 9,10 - - 127,877,339 127,877,339

473,323,290 579,796,764 332,840,085 - 1,385,960,139Creditors and other payables 14 - - - 130,712,292 130,712,292

Fair value Loans and Other Total


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March 31,2013Cash and cash equivalent 6 - - 385,170,939 - 385,170,939Financial asset held to maturity 7 177,068,902 - - - 177,068,902Financial asset at fair value through profit or loss 8 - 697,945,391 - - 697,945,391Other assets 9,10 - - 231,396,900 - 231,396,900

177,068,902 697,945,391 616,567,839 - 1,491,582,132

Creditors and other payables 14 - - - 223,207,729 223,207,729

4.3 Market riskMarket Risk is measured as the potential gain/ loss in a position/ portfolio that is associated with a price movement of a given probability over a specified time horizon.

In view of this, management has put in place adequate systems of controls for managing the risks within our risk appetite level.

4.3.1 Strategy for measuring and managing risk:The Fund has put in place the following tools and models for measuring and managing market risk:• Value at Risk [VaR]• The Risk-Limit System• Stress Testing• Sensitivity Analysis

4.4 Liquidity RiskLiquidity Risk is the potential for loss to The Fund arising from either its inability to meet its obligations or to fund increases in assets as they fall due without incurring unacceptable cost or losses.

It is the primary responsibility of the Investment Committee to understand the liquidity risk profile of the Fund and the tools used to manage liquidity risk. The Risk Management Sub-Committee [RMC] is responsible for managing the overall liquidity of the Fund. Also, the RMC is responsible for implementing the Fund's funding policies and performing additional responsibili-ties as delegated by the Investment Committee.


34

4.4.1 Liquidity Strategy:The RMC among other functions recommends Contingency plans for managing liquidity. The strategy includes:• Desired diversification and stability of assets, contingency funding plan in case of liquidity

problem.

4.4.2 Key liquidity management strategy:• Day-to-day funding is managed by monitoring future cashflows to ensure that requirements

can be met. This includes replenishment of funds as they mature.• Maintaining an active presence in money markets to enable good liquidity risk management

process• Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection

against any unforeseen interruption to cash flow; and• Availability of robust Contingency Funding Plan to take care of emergencies.

The table below shows the undiscounted cash flows on the fund's financial assets and liabilities and on the basis of their earliest possible contractual maturity. The gross nominal inflow/outflow disclosed in the table relates to the contractual, undiscounted cash flow on the financial assets and liabilities.


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4.5 Gross nominal (undiscounted) maturities of financial assets and liabilities

Carrying Nominal 0 to 6 6 to 12 above amount cashflow months months 1 year

N N N N N At 31st March, 2014Financial assets Cash and cash equivalent 204,962,746 - - - - Financial asset held tomaturity 473,323,290 - - - - Financial asset at fairvalue 579,796,764 - - - - Other assets 127,877,339 - - - -

1,385,960,139 - - - -

Financial liabilities Creditors and other Payable 130,712,292 - - - -

130,712,292 - - - -

Gap (assets/liabilities) 1,255,247,847 - - - - Cumulative liquidity gap 1,255,247,847 - - - -


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Carrying Nominal 0 to 6 6 to 12 above amount cashflow months months 1 year

N N N N NAt 31st March, 2013Financial assets Cash and cash equivalent 385,170,939 - - - -Financial asset held tomaturity 177,068,902 - - - -Financial asset at fairvalue 697,945,391 - - - -Other assets 231,396,900 - - - -

1,491,582,132 - - - -

Financial liabilities Creditors and otherpayable 223,207,729 - - - -

223,207,729 - - - -

Gap (assets/liabilities) 1,268,374,403 - - - -

Cumulative liquidity gap 1,268,374,403 - - - -


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4.6 Credit Risk

Credit risk is part of the risk the Fund is exposed to. It is adequately managed in the Fund.

All credit decisions shall be guided by the Fund's credit risk policy. We conduct credit history of counter parties and monitor exposure limits to avoid concentration risk and default. The Fund on a regular basis assesses the credit quality of its financial instruments. The credit quality as at year end is as follows:

Financial instruments by rating category (2014)

Financial Financial asset atCash and cash asset held to Other fair value through

equivalent maturity assets profit or loss N N N N

AA/Aaa AA/Aa A/A BBB/Baa Unrated

Total

Financial instruments by rating category (2013)

Financial Financial asset atCash and cash asset held to Other fair value through

equivalent maturity assets profit or loss N N N N

AA/Aaa AA/Aa A/A BBB/Baa Unrated

Total


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2014 2013 N N

5. Property linked investment

Gross investment 61,899,403 86,749,265

This represents amount advanced by the Fund in November, 2011, under a five year lease to acquire a property located at Plot 12, Ohuosi Itoya Street, Lekki Phase 1, Lagos. The facility is secured by the legal title of the property. 6. Cash and cash equivalents

Cash at bank 21,144,974 18,000,386 Investment held till maturity 183,817,772 367,170,553

204,962,746 385,170,939

7. Financial asset held to maturity

Federal Government Bonds - 42,433,286Fixed income deposit 100,306,849 - Treasury bills 207,370,685 94,635,616 Property linked investment* 165,645,756 40,000,000

473,323,290 177,068,902

* This represents the investment in Horizon Capital Investment Limited Commercial Note backed by an on-going construction of 16 Luxury homes at Banana Island area of Ikoyi, Lagos. The fund was disbursed at an interest rate of 15% per annum and repayable on 30th September, 2014. The facility is guaranteed by the Company and a complete equivalent number of Luxury Home units.


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N N

8. Financial asset at fair valuethrough profit or loss

Quoted investment 514,973,459 652,827,412 Fair value changes 64,823,305 45,117,979

579,796,764 697,945,391 9. Trade and other receivables

Sales awaiting settlement 7,145 5,985,519 Dividend receivable 8,354,428 3,614,157 Rental income receivable 10,352,860 7,428,853 Other receivables 8,558,683 1,930,079 Deposit for investment - 9,705,000 Claims receivable-Investment property (i) - 199,668,750 Receivable deposits 98,345,000 -

125,618,116 228,332,358

(i) Claims receivable – Investment property

This represents the outstanding balance of the 21 units of shops amounting to N 101.324 million, the investment property purchased from Vizen Developers Nigeria Limited in 2007 that was impaired due to a Court of Appeal judgement dated 14th December, 2010 in favour of land owners who had taken Lagos State Urban Renewal Board to Court. The subsequent application for the extension of time to appeal against the Court of Appeal judgement by Lagos Urban Renewal Board to the Supreme Court of Nigeria was refused and dismissed in January 2012. Additionally, the sales proceeds of N 98.345 million realised from the 19 shops units previously sold were also aggregated to the Claims receivable resulting in a total Claims receivable of N 199.669 million.

The claim in respect of the 19 shops units already sold has been recognised as claims payable in note 13 of these financial statements, whilst the fair value adjustment of the unsold shops have being recognised in the statement of comprehensive income.

2014 2013


40

2014 2013 N N

10. Intangible assets

Computer software CostBalance at 1st April 5,500,000 5,500,000 Addition 3,465,000 -

Balance at 31st March 8,965,000 5,500,000

Amortisation and impairment lossesBalance at 1st April, 2,435,458 763,890 Amortisation for the period 4,270,318 1,671,568

Balance at 31st March 6,705,776 2,435,458

Balance at 31st March,2014 2,259,224 3,064,542

Balance at 31st March, 2013 3,064,542 4,736,111

11. Trade and other payables

Management fees 4,070,861 108,624,535 Redemption payable 14,696,874 3,119,968 Accrual 9,115,668 8,671,437 Due to fund managers 385,282 796,810 Trustee fee payable 162,955 330,289 WHT payable 347,062 - Audit fee payable 3,407,500 2,907,500 Registrar fee - 254,829 Custodian fee 181,090 157,361 Claims payable-Investmentproperty(note 9) 98,345,000 98,345,000

130,712,292 223,207,729


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2014 2013 N N

12. Equity

12.1 Members capital account

Balance, beginning of year 1,804,466,675 1,567,432,492 Contribution duringthe year 96,582,813 266,074,781 Redemption during the year (47,647,735) (29,040,598)

Balance as at end of year 1,853,401,753 1,804,466,675

12.2 Retained earnings

Balance, beginningof year (449,343,007) (724,781,505)(Loss)/profit for the year (8,711,835) 278,728,796Acquired from business combination - (3,290,298)Dividend paid (78,199,660) -

Balance as at end of year (536,254,502) (449,343,007)

13. Interest income

Fixed deposit income 42,321,696 33,764,436Bonds 4,200,000 5,212,055Treasury bills 5,196,611 6,768,635

51,718,307 45,745,126

14. Rental income

Rental income 14,532,105 11,795,934 Lease rental income 13,922,212 15,390,560

28,454,317 27,186,494


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2014 2013 N N

17. Fair value gain on financial instrument

This represents unrealised gain on quoted securities. 19,705,326 362,238,068

18. Other income

Other income 1,012,042 5,069,488

19. Management expenses

Management fee (note 22(a)) 20,892,039 17,048,005 Trustees' fee (note 22(b)) 697,049 554,540 Registrar's fee 1,889,291 2,288,263 Custodian fees (note 22 (c)) 697,049 496,091 Manager's incentive fee (note 22 (a)) - 103,298,321

24,175,428 123,685,220

20. Administrative expenses

Audit fees 3,174,200 2,500,000AGM expenses 3,645,848 4,592,802Other administrative expenses 8,126,121 12,039,292

14,946,169 19,132,094

15. Trading gain/(loss)

Trading gain/(loss) represents the realised gain/(loss) on quoted securities 1,777,681 (25,239,755)

16. Gains on investment property

Gains on disposal of investment property - 1,603,750


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2014 2013 N N

21. Taxation

Tax withheld on franked income 445,499 35,216 Tax on dividend income 3,279,038 1,387,198

3,724,537 1,422,414

22. Related parties and other key contracts

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

(a) Management fee

(1) The Fund is managed by Alternative Capital Partners Limited (''The Fund Manager"), an investment management Fund incorporated in Nigeria and it is responsible for the investment decisions of the Fund. The Fund manager receives a management fee at an annual rate of 1.5% of the net assets value in accordance with the provision of the first supplement trust deed as against 3.5% which was been charged by the initial Fund managers up till 31st October 2011 based on the initial trust deed. The management fee incurred during the year amounted to N 20.9 million (2013: N 17.05million). Included in other payable at 31st March 2013 is a management fee payable of N 4.07 million (2013: N 108.62million).

(2) The fund managers are also entitled to an incentive fee of 30% of the excess of 10% of the schemes net asset value in accordance with the trust deed and approval by the Security Exchange Commission. No incentive fee was charged to the profit or loss account for the year under review (2013: N 103.29million).

(b) Trustee fee

The Fund has engaged the services of UBA Trustees Limited ("the trustee") as the trustee to the Fund to provide trustee services to the Fund for a fee. The Trustee`s fee for the year ended 31st March 2013 is based on 0.05% of the Fund`s average net asset value in accordance with the provision of the trust deed. This amounted to N 0.70 million (2013: N 0.55million).


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(c) Custodian fee

The custodian fee is based on 0.05% of the fund's manager net asset value at the balance sheet date and an initial take off fee of N 300,000 in accordance with the provision of the supplemen-tary trust deed. This amounted to N 697,049 (2012: N 496,091).

(d) Directors

The directors of the fund manager who served during the year under review were:

Mr. Remi Babalola ChairmanMr. Tope Ashaju DirectorMr. Yomi Olawore DirectorMr. Bode Agunbiade Director (appointed November 4, 2013)Mr. Ariyo Okunsanya Director (appointed November 4,2013)Mr. Laide Agboola Director (resigned September 30, 2013)Mr. Obinna Onukwo Director (resigned September 30, 2013)Mr. Seni Kusamotu Director (resigned September 30, 2013)

The directors of the Fund who held indirect interest in the units of the Fund as at 31st March, 2013 are stated as follows:

March 31st 2014 March 31st 2013 Directors Units held Units held

Remi Babalola 2,511,107 2,511,107 Tope Ashaju 962,234 687,946 Alternative Capital Partners Limited 236,679,679 236,679,679


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Documents

Annual report & accounts 2013/14 ACAP...31st MARCH, 2014 PARTNERS preserving capital yielding superior returns Contents Page(s) Corporate information 1 Report of the Trustees 2 –