BlueOrchard Asset Management (Luxembourg) S.A. · Expert-comptable (autorisation gouvernementale...

BlueOrchard Asset Management(Luxembourg) S.A.Société anonyme

R.C.S. Luxembourg B 170.191

44, rue de StrasbourgL-2560 Luxembourg

Audited annual accounts as at 30 June 2016

BlueOrchard Asset Management (Luxembourg) S.A.Société anonyme


Table of contents

- Audit report

Pages

1 - 2

- Balance sheet as at 30 June 2016 3 - 8

- Profit and Loss account for the year ended 30 June 2016 9 - 11

- Notes to the annual accounts 12- 18

...............................................................................................................................................................................................................PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P 1443, L-1014 LuxembourgT: +352 49 48 48-1, F : +352 494848 2900, www.pwc.lu

Cabinet de révisions agréé. Expert-comptable (autorisation gouvernementale n°10028256)R.C.S. Luxembourg B 65 477 – TVA LU25482518

Audit report

To the Shareholders ofBlueOrchard Asset Management (Luxembourg) S.A.

We have audited the accompanying annual accounts of BlueOrchard Asset Management(Luxembourg) S.A., which comprise the balance sheet as at 30 June 2016, the profit and loss account forthe year then ended and a summary of significant accounting policies and other explanatoryinformation.

Board of Directors’ responsibility for the annual accounts

The Board of Directors is responsible for the preparation and fair presentation of these annual accountsin accordance with Luxembourg legal and regulatory requirements relating to the preparation of theannual accounts, and for such internal control as the Board of Directors determines is necessary toenable the preparation of annual accounts that are free from material misstatement, whether due tofraud or error.

Responsibility of the “Réviseur d’entreprises agréé”

Our responsibility is to express an opinion on these annual accounts based on our audit. We conductedour audit in accordance with International Standards on Auditing as adopted for Luxembourg by the“Commission de Surveillance du Secteur Financier”. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whether the annualaccounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe annual accounts. The procedures selected depend on the judgment of the “Réviseur d’entreprisesagréé”, including the assessment of the risks of material misstatement of the annual accounts, whetherdue to fraud or error. In making those risk assessments, the “Réviseur d’entreprises agréé” considersinternal control relevant to the entity’s preparation and fair presentation of the annual accounts in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of accountingestimates made by the Board of Directors, as well as evaluating the overall presentation of the annualaccounts.

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

..IL pwc

Opinion

In our opinion, the annual accounts give a true and fair view of the financial position of BlueOrchard Asset Management (Luxembourg) S.A. as of 30 June 2016, and of the results of its operations for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the annual accounts.

Luxembourg, 28 November 2016

Price aterhouseCoopers, Societe cooperative

Repr ented by

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Notes to the annual accounts as at 30 June 2016_____________________________________________________________________________________________________________________________

NOTE 1 GENERAL INFORMATION

BlueOrchard Asset Management (Luxembourg) S.A. (the “Company”) was incorporatedunder the law of 10 August 1915 concerning commercial companies, as amended (the“1915 Law”), the Chapter 16 of the Luxembourg law of 17 December 2010 on Undertakingsfor Collective Investment, as amended (the “2010 Law”), and the law of 12 July 2013relating to AIFMs (the “2013 Law”) on 26 June 2012 under the legal form of a public limitedcompany (“société anonyme”) for an unlimited duration.

The Company is registered with the Luxembourg Trade and Companies Register undersection B number 170.191.

On 15 April 2016, the Management resolved to transfer the registered office of theCompany from 136, route d’Arlon, L-1150 Luxembourg to 44, rue de Strasbourg, L-2560Luxembourg.

The exclusive purpose of the Company is:

(i) to act as an Alternative Investment Fund Manager ("AIFM") of Alternative InvestmentFunds ("AIFs") in accordance with 2013 Law;

(ii) to carry out any activities connected with the management (including investment adviceactivities), administration and marketing of AIFs. The Company may carry out part of theseactivities (apart from administration and marketing activities) for AIFs or other AIFMs asdelegate;

(iii) to carry out any activities deemed useful for the accomplishment of its object,remaining however within the limitation set forth by the 1915 Law, article 125-2 of the2010 Law and the 2013 Law.

The Company may administer its own assets on an ancillary basis.

The Company may provide services in Luxembourg or abroad and may for that purposeestablish representative offices and/or branches.

The Company's financial year starts on the first day of July and ends on the last day of Juneof each year.

Based on the criteria defined by 1915 Law, the Company is exempted from the obligation todraw up consolidated accounts and a consolidated management report.

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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The annual accounts have been prepared in accordance with Luxembourg legal andregulatory requirements under the historical cost convention.

Accounting policies and valuation rules are, besides the ones laid down by the amendedLaw of 19 December 2002, determined and applied by the Board of Directors.

The preparation of annual accounts requires the use of certain critical accountingestimates. It also requires the board of directors to exercise its judgment in the process ofapplying the accounting policies. Changes in assumptions may have a significant impact onthe annual accounts in the year in which the assumptions changed. Management believesthat the underlying assumptions are appropriate and that the annual accounts thereforepresent the financial position and results fairly.

The Company makes estimates and assumptions that affect the reported amounts of assetsand liabilities in the next financial year. Estimates and judgements are continually evaluatedand are based on historical experience and other factors, including expectations of futureevents that are believed to be reasonable under the circumstances.

2.2 Significant accounting policies

The main valuation rules applied by the Company are the following:

2.2.1 Foreign currency translation

The Company maintains its books and records in euro (EUR).

Transactions expressed in currencies other than EUR are translated into EUR at theexchange rate effective at the date of the transaction.

Cash at bank is translated at the exchange rate effective at the balance sheet date.Exchange losses and gains are recorded in the profit and loss account of the year.

Long-term assets expressed in currencies other than EUR are translated into EUR at theexchange rate effective at the date of the transaction. At the balance sheet date, theseassets remain translated at historical exchange rates.

Other assets and liabilities are translated separately respectively at the lower or at thehigher of the value converted at the historical exchange rate or the value determined onthe basis of the exchange rates effective at the balance sheet date. The unrealizedexchange losses are recorded in the profit and loss account. The realized exchange gainsand losses are recorded in the profit and loss account at the moment of their realisation.

2.2.2 Prepayments

This asset item includes expenditures incurred during the financial year but relating to asubsequent financial year.

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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2.3 Tangible fixed assets

Tangible fixed assets are valued at purchase price including the expenses incidental theretoor at production cost. Tangible fixed assets are depreciated over their estimated usefuleconomic life.

The depreciation rate and method applied is as follows:

Where the Company considers that a tangible fixed asset has suffered a durabledepreciation in value, an additional write-down is recorded to reflect this loss. These valueadjustments are not continued if the reasons for which the value adjustments were madehave ceased to apply.

2.2.4 Financial fixed assets

Securities held as fixed assets are valued at their purchase price including the expensesincidental thereto. The financial fixed assets are composed of 627 shares of BlueOrchardAmerica Latina SAC 1% subscripted on July 2014.

2.2.5 Debtors

Debtors are valued at their nominal value. They are subject to value adjustments wheretheir recovery is compromised. These value adjustments are not continued if the reasonsfor which the value adjustments were made have ceased to apply.

2.2.6 Non subordinated debts

Non-subordinated debts are recorded at their nominal value.

2.2.7 Tax debts

The estimated tax liabilities of the Company for the financial years for which the tax returnshave not yet been filed are recorded under the caption “Tax debts”. The advance paymentsare shown in the assets of the balance sheet under the “Debtors”.

2.2.8 Creditors

Creditors are recorded at their nominal value.

Tangible fixed assets Depreciation rate Depreciation method

Hardware 33% Straight-line method

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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2.9 Net turnover

The net turnover is composed of management fees in connection with the management ofUCIs.

2.2.10 Provisions

Provisions are intended to cover losses or debts, the nature of which is clearly defined andwhich, at the date of the balance sheet, are either likely to be incurred or certain to beincurred but uncertain as to their amount or the date on which they will arise.

NOTE 3 DEBTORS

The item “trade receivables” becoming due and payable within one year” amounting toEUR 99.394,95 (2015: EUR 51.290,95) is mainly composed of advanced tax payments.

NOTE 4 CAPITAL AND RESERVES

4.1 – Subscribed capital

The subscribed and fully paid capital of the Company amounts to EUR 125.000,00represented by 5.000 ordinary shares with a nominal value of EUR 25,00 each.

4.2 – Legal reserve

Luxembourg companies are required to allocate to a legal reserve a minimum of 5 % of theannual net income, until this reserve equals 10 % of the subscribed share capital. Thisreserve may not be distributed.

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Notes to the annual accounts as at 30 June 2016

4.3 – Movements for the year on the reserves and profit and loss items

Subscribedcapital

Legalreserve

Profit or lossbrought forward

Profit or loss forthe financial

yearTotal

EUR EUR EUR EUR EUR

Capital and reserves - opening balance 125.000,00 12.500,00 327.990,62 53.936,98 519.427,60

Allocation of 2015 results

- Results brought forward - 53.936,98 (53.936,98) -

- - 52.241,22 52.241,22Profit for the financial year

Capital and reserves – closing balance 125.000,00 12.500,00 381.927,60 52.241,22 571.668,82

NOTE 5 PROVISIONS

The provisions amounting to EUR 323.296,86 (2015: EUR 238.844,90) is composedof operating provisions (mainly retrocession fees).

NOTE 6 TRADE CREDITORS

Amounts due and payable for the account shown under “Trade creditors” are as follows:

2016(EUR)

2015(EUR)

Suppliers 146.286,79 12.436,81Other creditors - 4.000,00

Total 146.286,79 16.436,81

NOTE 7 TAX DEBTS

The item “tax debts” amounting to EUR 80.823,90 is mainly composed of income taxes foran amount of EUR 77.609,33.

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NOTE 8 OTHER EXTERNAL CHARGES

The item “other external charges” can be disclosed as follows:

The investment advisory fees amounting to EUR 2.818.221,76 equal to 1,30% of theBlueOrchard Microfinance Fund average net asset value.

NOTE 9 OTHER INTEREST AND SIMILAR FINANCIAL CHARGES

The item “Other interest and similar financial charges” amounting to EUR 32.435,91(2015: EUR 514,49) is composed of foreign currency exchange losses.

NOTE 10 NET TURNOVER

The item “Net Turnover” can be disclosed as follows:

2016(EUR)

2015(EUR)

Occupancy expenses (rent and charges) 9.825,50 8.148,00IT, telecommunication and other equipment 7.116,81 3.744,85Staff & management expenses 8.608,62 10.862,76Legal and regulatory fees 22.625,88 (15.944,77)Professional fees 151.868,73 182.821,41Investment advisory fees 2.818.221,76 2.741.016,48Retrocession fees 515.028,25 447.513,05Other miscellaneous external charges 54.807,18 47.421,41

Total 3.588.102,73 3.425.583,19

2016(EUR)

2015(EUR)

Management fees 3.953.822,11 3.496.812,74

Total3.953.822,11 3.496.812,74

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NOTE 11 OTHER INTEREST AND SIMILAR FINANCIAL INCOME

The item “Other interest and similar financial income” amounting to EUR 18.654,74(2015: 180.810,49) is composed of foreign currency exchange gains.

NOTE 12 INCOME TAX

The Company is subject to the general tax regulations of Luxembourg applicable to allcompanies.

NOTE 13 STAFF

The Company employed an average of two full time persons during the financial year.

NOTE 14 ADVANTAGES GRANTED TO BOARD MEMBERS

No advances, guarantees, loans or retirement engagements were granted to the Board ofDirectors.

_______________________________

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