The Investment Manager has agreed to treat a portion of its
performance allocation as invested each year. The portion of the
performance allocation which is represented by realised gains, less
expenses, from investments will be distributable in cash by the
Limited Partnership to GPCo in arrears at the end of each
performance period (the "Cash Performance Allocation"). Any amount
of the performance allocation which is not represented by realised
gains (or which the Investment Manager via GPCo otherwise elects
not to receive in cash as part of the Cash Performance Allocation)
will be treated as invested by GPCo at the end of each performance
period in Performance Partnership Units ("PPUs") in the Limited
Partnership. PPUs will accrue a preferred share of the profits and
losses of the Limited Partnership on the basis of fluctuations in
the market price of Ordinary Shares from the date of their
allocation to GPCo until the date PPUs are redeemed, such that
GPCo's return on its PPUs will track the return of an investor in
Ordinary Shares over the same period (ignoring dealing costs).
GPCo is entitled to receive a priority distribution from the
Limited Partnership equivalent to the Cash Performance Allocation
and the return on the PPUs. GPCo's entitlement to the Cash
Performance Allocation and the return on the PPUs will be payable
to the Investment Manager as the owner of 100% of the B Redeemable
Preference Shares in GPCo.
At the end of each performance period, the Administrator will
calculate the proposed performance allocation and the split between
the Cash Performance Allocation payable and the amount which will
be automatically treated as invested in PPUs (to be reviewed and
agreed by the Board) and, if cash is available, GPCo will pay a
dividend on the non-voting B Redeemable Preference Shares or permit
certain of them to be redeemed to pay the Cash Performance
Allocation to the Investment Manager. If cash is not available or,
if Vision Capital Advisors elects, the Cash Performance Allocation
may be satisfied by the issue of further PPUs to Vision Capital
Advisors. For the financial year ending 30 September 2011, the
performance allocation pre dividend High Watermark is US$2.1567 per
Ordinary Share (30 September 2010: US$2.0947).
As at 31 March 2011 the accrued uncrystalised Cash Performance
Allocation creditor was US$Nil (30 September 2010: US$Nil & 31
March 2010: US$2,955,422) and the amount which would be
automatically treated as invested PPUs, upon crystalisation, is
US$Nil (30 September 2010: US$Nil & 31 March 2010:
US$7,913,938).
Administration Agreement
Praxis Fund Services Limited has been appointed as Administrator
to the Group under an administration agreement dated 16 November
2007 (the "Administration Agreement"). The Administrator provides
day-to-day administration and secretarial services to the
Group.
The Administration Agreement may be terminated by either party
on not less than 180 days' written notice, or earlier upon certain
breaches of the Administration Agreement or the insolvency or
receivership of either party or if the Administrator ceases to be
qualified to act as such.
Pursuant to the provisions of the Administration Agreement, the
Administrator is entitled to receive the following administration
fees from the Group:
-- Accounting and NAV calculation - a fee based upon 0.10% of
NAV subject to a minimum of GBP4,500 per month;
-- Company Secretarial & US Shareholder Reporting- time
based fee; and
-- GPCo - time based fee subject to a minimum of GBP10,000 per
annum.
As at 31 March 2011 the administration fee creditor was
US$19,582 (30 September 2010: US$24,490 & 31 March 2010:
US$24,517).
Registrar Agreement
Pursuant to the provisions of the registrar agreement between
the Registrar and the Group, dated 16 November 2007, the Registrar
is entitled to an annual maintenance fee of GBP2 per Shareholder
account, subject to an annual minimum of GBP5,000 per annum,
together with a per deal fee per Shareholder transaction. In
addition, the Registrar is also entitled to an investor relations
fee of GBP2,720 per annum and a compliance fee of GBP750 per
annum.
As at 31 March 2011 the registrar fee creditor was US$3,857 (30
September 2010: US$3,860 & 31 March 2010: US$4,000).
Custodian & Prime Broker Agreement
Jefferies & Company Inc. has been appointed as custodian to
the Group and in that capacity currently has custody of all of the
Group's investments. In accordance with US securities laws, the
assets of the Custodian's customers are required to be segregated
from the Custodian's proprietary assets.
As at 31 March 2011 the custodian fee creditor was US$Nil (30
September 2010: US$Nil & 31 March 2010: US$Nil).
Jefferies & Company Inc. has also been appointed as prime
broker to the Limited Partnership. The Limited Partnership pays the
Prime Broker commissions and other transaction fees (for the
execution of purchases and sales of securities). These fees are
payable at the Prime Broker's prevailing rates.
As at 31 March 2011 the Limited Partnership had amounts due to
the Prime Broker of US$8,806 (30 September 2010: US$9,812 & 31
March 2010: US$8,876).
NOMAD & Broker Agreement
Canaccord have been appointed as NOMAD & Broker to the
Company under a nominated adviser and Broker agreement dated 1
October 2009 between the Company and Canaccord (the "NOMAD &
Broker Agreement"). The NOMAD & Broker Agreement is on normal
market terms, and under those terms the Company has agreed, inter
alia, to consult and discuss with Canaccord all of its
announcements and statements and to provide Canaccord with any
information which Canaccord reasonably requires to enable it to
carry out its obligations as a NOMAD and Broker. The NOMAD &
Broker Agreement is terminable by either party on 2 months' written
notice and in certain other circumstances.
As at 31 March 2011 the fees due to Canaccord were US$1,918 (30
September 2010: US$123,110 creditor & 31 March 2010: US$125
prepaid).
Co-investments with the Master Fund
The Master Fund is a related party as a result of also being
managed by the Investment Adviser. As at 31 March 2011 the Group
held investments in the three underlying investment companies noted
below, which the Master Fund also held an interest in:
-- China Integrated Energy Inc
-- Jingwei International Limited
-- Wuhan General Group (China) Inc
The Limited Partnership, collectively with the Master Fund, does
not hold an aggregated controlling interest in any of the above
co-investments.
Directors Interests
As at 31 March 2011 the interests in Ordinary Shares held by the
Directors who held office during the year, and their families, are
set out below:
30 September
31 March 2011 2010 31 March 2010
--------------- --------------- ----------------
No. of No. of
Ordinary Ordinary No. of Ordinary
Shares Shares Shares
Christopher Fish
(Chairman) - - -
Dr Randolph Cohen
(resigned 1 October
2010)* 7,437,845 7,537,845 7,537,845
David Benway - - -
Ruiping Wang - - -
Dr Christopher Polk - - -
John Hallam - - -
(appointed 29 July
2010)
*Dr Cohen is interested in 7,437,845 or 11.39% (30 September
2010 & 31 March 2010: 7,537,845 or 11.39%) Ordinary Shares due
to his ownership of a proportion of the economic rights in Vision
Capital Advisors' Ordinary Shares and other shareholdings.
There were no changes in the interests of the Directors prior to
the date of this report.
Dr Cohen had an indirect interest through Vision Capital
Advisors' holdings of B Redeemable Preference Shares in the
GPCo.
Other than Dr Cohen no Director and no connected person of any
Director has an interest in the Ordinary Shares which, is known to,
(or could with reasonable diligence be ascertained by) the
Directors, whether held directly or through a third party.
Additionally, as at 31 March 2011 Jonathan Shane and Carl
Kleidman, employees of Vision Capital Advisors, held a collective
635,000 (30 September 2010 & 31 March 2011: 535,000) Ordinary
Shares that carry certain restrictions.
4. Directors' Fees:
Each of the Directors has entered into an agreement with the
Company providing for them to act as a non-executive Director of
the Company. Their annual fees, excluding all reasonable expenses
incurred in the course of their duties which will be reimbursed by
the Company and are included in other expense, are as follows:
30 September 31 March
31 March 2011 2010 2010
Annualised Annualised Annualised
Fee Fee Fee
-------------- ------------- -----------
US$ US$ US$
Christopher Fish (Chairman) 70,000 70,000 70,000
Dr Randolph Cohen
(resigned 1 October
2010) - - -
David Benway - - -
Ruiping Wang 50,000 50,000 50,000
Dr Christopher Polk 50,000 50,000 50,000
John Hallam*
(appointed 29 July
2010) 55,000 55,000 N/A
* as chairman of the Audit Committee Mr Hallam's fee includes a
further US$5,000 per annum.
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