TIDMGSDO TIDMTTM TIDMTTM
RNS Number : 0909L
Goldman Sachs Dynamic Opportunities
30 August 2012
Goldman Sachs Dynamic Opportunities Limited (the "Company")
Half Yearly Financial Report
The Company has today, in accordance with DTR 6.3.5, released
its Report and Condensed Unaudited Financial Statements for the six
months ended 30 June 2012 (the "Report"). The Report is available
from the Company's website
http://www.goldmansachs.com/client_services/asset_management/closed_ended_investment_companies/resident.html
and will shortly be submitted to the National Storage Mechanism and
will also shortly be available for inspection at
www.hemscott.com/nsm.do.
Financial Highlights
U.S. Dollar Shares
Sterling Shares (GBP) (US$)(1)
At period end At period end
30 June 2012 30 June 2012
Total Net Assets 63,069,571 887,092
Net Asset Value per Share 1.0483 1.9921
Bid-Market Share Price 0.9350 -
Discount to Net Asset Value (10.81%) -
U.S. Dollar Shares
Sterling Shares (GBP) (US$)(1)
At year end At year end
31 December 2011 31 December 2011
Total Net Assets 127,338,670 1,750,542
Net Asset Value per Share 1.0582 1.9655
Bid-Market Share Price 0.9450 -
Discount to Net Asset Value (10.70%) -
(1) The US$ share class was delisted from the London Stock
Exchange ("LSE") during the year ended 31 December 2011.
Chairman's Statement
I am pleased to present shareholders with this interim report of
Goldman Sachs Dynamic Opportunities Limited ("GSDO" or the
"Company") for the half year ended 30 June 2012.
As detailed in the Investment Manager's Report, the Company's
investments had a mixed performance during the first half of the
year and overall the Company's net asset value per share fell by
0.94% during the period (measured in Sterling terms, net of fees).
Following the commencement of the winding down referred to below,
in the first half of the year the Investment Manager has been
focusing on liquidating the Main Portfolio in an orderly manner.
This has resulted in a relative increase in the Company's overall
allocation to Event Driven due to the different liquidity profiles
of investments in the four sectors in which the Company is
invested.
On 13 December 2011 shareholders resolved to change the
Company's investment objective and policy and commence a managed
winding down and an orderly realisation of the Company's existing
investments in the Main Portfolio.
The liquid investments in the 2010 and 2011 Redemption
Portfolios have already been realised in a timely manner with the
cash proceeds having been distributed to redeeming shareholders in
satisfaction of redemption requests. As at 31 December 2011
approximately 91% (by NAV) of the 2011 Redemption Portfolio
investments and 92% (by NAV) of the 2010 Redemption Portfolio
investments had been realised and the cash returned to redeeming
shareholders.
Investments in the Main Portfolio have continued to be realised
as planned and cash reserves accumulated. Approximately 50% of the
investments of the Main Portfolio had been realised by the
beginning of June, with the proceeds being distributed to GBP and
US$ Shareholders on 8 June 2012(1) . As communicated previously,
once investments have been realised such that the Board believes
that the Company no longer meets the requirements for the continued
listing of the GBP share class, shareholders will be asked to
approve the appointment of a liquidator and the Company will be
wound up.
The Company has meanwhile ceased membership of the Association
of Investment Companies (AIC) on 30 April 2012 and therefore no
longer follows the AIC Code but continues to apply the UK Corporate
Governance Code. A review of material related party transactions is
included in the notes to the condensed unaudited financial
statements.
Christopher Sherwell
Chairman
29 August 2012
(1) Amounts payable to holders of GBP Shares were converted into
sterling using the GBP: US$ spot exchange on 1 June 2012.
Investment Manager's Report (2,3)
The net asset value of the Main Portfolio fell by 0.94% in the
first half of 2012 (measured in Sterling terms, net of fees). The
following provides an overview of performance of the Main Portfolio
investments by hedge fund sector (in U.S. Dollar terms, performance
is shown net of underlying Advisor fees only).
Event Driven Allocation: 79%
The value of the Company's investments in the Event Driven
sector rose by 2.51% over the first half of the year.
The Company's Event Driven Advisors generated positive returns
over the first quarter of 2012. January was the strongest month in
the quarter as Advisors benefited from "risk-on" sentiment, with
long positions in both equities and credit contributing to
performance. While most Advisors generated positive performance,
Advisors typically did not capture the full upside performance of
broad markets due to more conservative positioning at the end of
2011 after the heightened volatility of the second half of 2011.
Positive performance was maintained in February as equity exposure
generally contributed gains, particularly in certain special
situations equity positions where prices rebounded sharply from
depressed levels in late 2011. Similarly, credit markets
experienced spread compression and positive returns across both the
high yield and loan space, which may have been further supported by
positive sentiment arising from the successful sale of certain
Maiden Lane II assets in late January and early February. Across
both credit and multi-strategy Advisors, hedges and short exposure
offset positive returns as prices of risk assets generally rose
during the month. Continuing from January and February, special
situations equity positions also contributed positive performance
in March as markets were typically supportive of these
idiosyncratic event positions. In addition, positive developments
in merger arbitrage positions and a general tightening trend across
arbitrage spreads resulted in positive performance for some
Advisors. Credit performance broadly was more muted; due partly to
rising rates as well as widening credit spreads in some instances.
Across both credit and multi-strategy Advisors, hedges and short
exposure generally detracted and somewhat offset positive
returns.
The Company's Event Driven Advisors generated negative returns
over the second quarter of 2012. In April, Event Driven Advisors
collectively realised positive performance. Corporate credit
exposure generally contributed positive returns, particularly in
financial liquidation positions, while structured credit generally
retraced some gains from the previous months. Performance for
special situations equity and merger arbitrage positions was mixed
and attribution from hedges was somewhat flat. Performance turned
negative in May as concerns around the macro environment returned
to the forefront. Equity exposure was broadly a source of negative
performance, with losses from special situations equity, although
there were a few positive idiosyncratic drivers from merger
arbitrage investments. Corporate credit markets were relatively
resilient through early May, but sold off sharply into month-end as
risk sentiment deteriorated on an increase in negative economic
news. Structured credit also detracted from performance. Negative
performance also continued into June. Equity exposure was a source
of mixed returns as equity special situations generally contributed
positively during the second half of the month alongside a slight
improvement in risk sentiment, although core merger arbitrage
positions experienced mixed performance. Despite a weak start in
June, leveraged credit markets performed well during the month with
high-yield bonds and loans each posting strong positive returns.
Similarly, structured credit valuations rebounded as the overall
market sentiment for risk assets improved and as capital continued
to flow into the structured credit opportunity. Performance of
hedges and macro-oriented positions was mixed during June, but
largely detracted from performance.
(2) Allocations as of 30 June 2012. The allocations should not
be deemed representative of the allocations in the future. In
particular as the Company has now commenced a managed winding down,
as investments are realised, allocations will change. All the
allocations were calculated using the portfolio's valuations at
month-end. The returns presented above are net of underlying
Advisor management and incentive fees, but do not reflect the
management and incentive fees paid to the Investment Manager.
Returns as of 30 June 2012. Returns less than 12 months are
cumulative, not annualised. This information discusses general
market activity, industry or sector trends, or other broad-based
economic, market or political conditions. It also refers to
specific securities in the context of their past performance or as
the basis for previously made discretionary investment decisions.
It should not be construed as research or investment advice, or a
recommendation to buy or sell investments in the Company or any
other investments mentioned in this report or to follow any
investment strategy. Please see additional disclosures. Past
performance is not indicative of future results, which may
vary.
(3) The economic and market forecasts presented herein have been
generated by GSAM for informational purposes as of the date of this
report. They are based on proprietary models and there can be no
assurance that the forecasts will be achieved. Please see
additional disclosures at the end of this report. This information
discusses general market activity, industry or sector trends, or
other broad-based economic, market or political conditions. It also
refers to specific securities which pertains to past performance or
is the basis for previously made discretionary investment
decisions. It should not be construed as research or investment
advice, or a recommendation to buy or sell investments in the
Company or any other investments the Company mentioned in this
report or to follow any investment strategy. Please see additional
disclosures. Past performance is not indicative of future results,
which may vary.
Equity Long/Short Allocation: 8%
The value of the Company's investments in the Equity Long/Short
sector rose by 5.38% over the first half of the year.
The Company's Equity Long/Short Advisors generated positive
performance in each month of the first quarter of 2012 with strong
returns particularly in January and February. In January,
performance benefited from an aggressive broad sector rotation
effect that caused the weakest sectors of 2011 to rally
significantly and outperform the markets during January, including
financials, materials, industrials, consumer discretionary and
technology. Advisors with long exposure to these sectors as well as
small capitalisation investments generally outperformed peers and
kept pace with the market rally. Advisors with greater short
exposure to those sectors that rallied and greater long exposure to
more defensive sectors generally underperformed in January. Many of
the same trends continued into February. Cyclical sectors, such as
technology, financials, consumer discretionary and energy, which
lagged equity markets in 2011, continued to lead the rally in
February. Advisors with long exposure to these sectors as well as
higher net exposure to emerging market equities generally
outperformed peers and kept pace with the market rally. Advisors
with greater short exposure to those sectors that rallied and
greater long exposure to more defensive sectors generally continued
to underperform. While there was more dispersion in March,
performance remained positive overall. Top performing strategies
benefited from long exposure to the information technology,
consumer discretionary, consumer staples, and financials sectors.
Underperforming Advisors realised losses from long exposure to the
emerging markets, the energy and materials sectors, and
idiosyncratic company-specific events. Short exposure broadly
detracted across sectors.
Following realisations of investments within the Main Portfolio,
the Company's remaining Equity Long/Short Advisor began the second
quarter with positive performance as gains from positions in the
media and healthcare sectors offset losses from positions in the
technology and financial sectors. Performance turned negative in
May, when primarily positions in the healthcare, consumer and
energy sectors detracted and losses were not fully offset by gains
from positions in the technology and industrials sectors. Negative
performance continued into June with key detractors in the
materials and consumer sectors; negative performance was partially
offset from gains in the healthcare sector.
Tactical Trading Allocation: 5%
The value of the Company's investments in the Tactical Trading
sector fell by 0.99% over the first half of the year.
The Company's Tactical Trading Advisors generated positive
performance over the first quarter of 2012. In January, macro
Advisors generated the largest gains in fixed income trading
through long positioning. Performance in commodities was also
positive due to long positioning, although exposure was limited.
Performance in currencies was mixed, with divided U.S. Dollar
positioning. In February, macro Advisors generated gains in
aggregate across all major asset classes. Gains in fixed income
primarily came from yield curve steepeners in the U.S. and long
corporate credit positioning. In currencies, a short U.S. Dollar
bias versus commodity-related and emerging market currencies led to
gains. Risk in equities and commodities was more limited, but long
positioning in global equities, gold and energy commodities
resulted in gains. Performance in March was mixed as Advisors
traded tactically in response to mixed economic data, but remained
positive overall. Fixed income trading was a modest contributor,
with gains driven by yield curve steepeners. In currencies, long
positions in cyclical currencies detracted from performance. Risk
in commodities and equities remained low, with long positions in
certain commodities resulting in modest losses for some
Advisors.
The Company's remaining Tactical Trading Advisor generated
negative performance over the second quarter of 2012. The Advisor
had a negative start to the quarter with trading in developed
market cross currency positions and developed markets rates driving
losses. Performance turned positive in May when gains in developed
market cross currency positions and short positions in European
equities more than offset negative performance from U.S. interest
rate trading and small losses from commodities positions.
Performance turned negative again in June when losses were driven
by fixed income and equities. Performance in currencies was also
negative whereas risk in commodities was relatively low and
performance was largely flat.
Relative Value Allocation: 8%
The value of the Company's investments in the Relative Value
sector rose by 0.74% over the first half of the year.
The Company's Relative Value Advisor generated positive
performance in the first quarter as gains in January and February
were not offset by losses in March. In January and February, gains
on the Advisor's long portfolio more than offset losses on short
positions. Geographically, the Middle East was the region with the
largest positive performance while returns in Asia and Latin
America were more mixed. In March, losses on the long portfolio
more than offset gains from short positions. Performance was
negative across regions with Asia, Latin America and also the
Middle East detracting.
The Company's Relative Value Advisor generated negative returns
in the second quarter as the Advisor suffered losses in June after
flat performance in April and May. In the first two months of the
quarter, losses on long positions largely offset gains on short
positions. Geographically, performance was mixed with positions in
the Middle East, Latin America and Western Europe contributing
positively in April while positions in the Middle East and North
America detracted in May. Performance turned negative in June as
positions in all regions detracted, driven primarily by losses from
long positions whereas some short hedging positions contributed
positively.
Outlook for remainder of 2012
The Investment Manager currently has a positive outlook for
equity strategies broadly. Trading oriented Advisors may be able to
exploit continued elevated levels of volatility and Advisors
focused on more long-term themes who are willing to withstand short
term market volatilities can benefit from attractive entry
opportunities. Company fundamentals are weakening into the second
quarter earnings season, which may provide long and short
opportunities for Advisors. However, fundamentals continue to be
overshadowed by macroeconomic uncertainty. The recent spike in
correlations and resurgence of European fiscal issues has caused
Advisors to reduce net and gross exposures into the summer. Should
these issues wane, Advisors will have dry powder to allocate to
equities.
The outlook for credit-focused strategy is neutral going into
the second half of 2012. Trading oriented and balanced long/short
strategies may be able to exploit volatility and spread tightening.
However, low dealer inventories could indicate reduced liquidity
and result in higher volatility. The outlook for select directional
strategies, including structured credit, off-the-run mid-market
corporate credit and European bank restructuring has also recently
improved. However, capital market liquidity and companies' ability
to refinance, if disrupted, pose a risk to credit strategies but
would create distressed opportunities.
The Investment Manager currently has a positive outlook on
discretionary macro strategies. High levels of government
interventions typically create dislocations that macro Advisors can
exploit. Further longer-term opportunities can be provided by
continuing high dispersion of growth across economies. Additional
trading opportunities can be created by renewed concerns about the
stability of the Euro. However, as especially June has shown, these
markets can be difficult to navigate in the short term.
The Company's principal risks and uncertainties are set out in
Note 9 - Financial risk management and have not changed materially
since the date of the Audited Annual Report for the year ended 31
December 2011.
Main Portfolio composition at 30 June 2012
See actual Report.
Monthly performance by sector: July 2011 - June 2012, U.S.
Dollar
See actual Report.
NAV performance summary, net of fees: August 2006 - June 2012
(6)
Annualised
Aug
- Net Return
Jan Feb Mar Apr May Jun Jan-Jun Dec Since
2012 2012 2012 2012 2012 2012 2012 2011 2010 2009 2008 2007 2006 Inception
Sterling -1.25% -0.14% 0.21% -1.67% 4.79% -2.71% -0.94% -5.74% 12.85% 4.93% -17.30% 13.17% 3.11% 1.10%
U.S.
Dollar 1.63% 1.11% 0.23% -0.07% -0.68% -0.85% 1.35% -5.80% 5.73% 17.86% -20.74% 13.34% 3.44% 1.71%
Euro* - - - - - - - -7.23% 13.04% 14.21% -28.71% 11.57% 2.45% -0.49%
* Euro share class returns provided through to June 2011 when
share class discontinued.
Share Price Premium/Discount to Net Asset Value: August 2006 -
June 2012, Sterling
See actual Report.
(6) Returns as of 30 June 2012. Returns less than 12 months are
cumulative, not annualised. Returns are net of underlying Advisor
fees and incentive and management fees paid to the Investment
Manager. From inception to 25 November 2008 the Company's GBP and
EUR Share classes were subject to currency hedging against the U.S.
Dollar. Such currency hedging arrangements were suspended from 25
November 2008 and, in the case of the GBP Share class only, were
reinstated on 30 March 2010. Currency hedging arrangements for the
EUR Share class have not been reinstated on 30 March 2010.
Following the passing of the Winding Down Resolution, the currency
hedging programme was terminated on 17 January 2012.
Past performance is not indicative of future results which may
vary. As the Company is in the process of a managed wind down, its
current investment policy is significantly different to its
historic investment policy.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss for the
consolidated Main and Redemption Portfolios as at 30 June 2012 are
set out below:
Market % of Company's
Name of investment Strategy value (US$) net assets(7)
Eton Park Overseas Fund, Ltd. (8) Event Driven 25,958,961 23.25%
Silver Point Capital Offshore Fund, Ltd.
(8) Event Driven 14,780,239 13.24%
Spinnaker Global Opportunity Fund Ltd. Event Driven 9,711,302 8.70%
Perry Partners International, Inc. Event Driven 9,573,722 8.58%
Anchorage Capital Partners Offshore, Ltd. Event Driven 8,036,903 7.20%
Equity Long
TPG-Axon Partners (Offshore), Ltd. (8) /Short 7,081,535 6.34%
Moon Capital Global Equity Offshore Fund
Ltd. Relative Value 6,557,040 5.87%
Moore Global Investments, Ltd. Tactical Trading 4,753,497 4.26%
Harbinger Capital Partners Special Situations
Offshore Fund, L.P. (8) Event Driven 2,461,745 2.20%
Spinnaker Capital Pacnet Holdings Inc.
(8) Event Driven 856,781 0.77%
Amaranth International Limited (8) Relative Value 440,686 0.39%
GLG Tisbury Fund Limited (8) Event Driven 123,391 0.11%
Total 90,335,802 80.91%
============= ===============
Kent A. Clark
Chief Investment Officer
Goldman Sachs Hedge Fund Strategies LLC
August 2012
(7) Inclusive of assets attributable to redeeming Shareholders.
The investments represent 90.50% excluding assets attributable to
redeeming Shareholders.
(8) On 1 October 2010, pursuant to the 2010 redemption
proposals, a portion of these investments was segregated to form
the 2010 Redemption Portfolio. On 1 October 2011, pursuant to the
2011 redemption proposals, a portion of these investments was
segregated to form the 2011 Redemption Portfolio.
The 2011 and 2010 Redemption Portfolios are managed with a view
to realisation and their proceeds constitute the outstanding
redemption monies for the purposes of the 2011 and 2010 redemption
proposals. See Note 10 - Redemptions payable for further
information. The Main Portfolio is now also being managed with a
view to realisation.
Board Members
The Directors of the Company are as follows:
Christopher Sherwell, (Chairman), aged 64 is a non-executive
Director of a number of investment-related companies. He was
Managing Director of Schroders (CI) Limited from April 2000 until
January 2004 and served as a Director of various Schroder group
companies and investment funds. He remained a non-executive
Director of Schroders (CI) Limited before stepping down on 31
December 2008. His other directorships include chairmanship of
Consulta (Channel Islands) Limited, a specialist investment
management company. Before joining Schroders in 1993 he worked as a
Far East regional strategist with Smith New Court Securities in
London and then Hong Kong. He was previously a journalist, working
for the Financial Times. He is a resident of Guernsey. Mr Sherwell
was appointed as a non-executive Director of the Company on 3 July
2006.
Talmai Morgan, aged 59, qualified as a Barrister in 1976. He
moved to Guernsey in 1988 where he worked for Barings and then for
the Bank of Bermuda as Managing Director of Bermuda Trust
(Guernsey) Limited. From January 1999 to June 2004, he was Director
of Fiduciary Services and Enforcement at the Guernsey Financial
Services Commission (Guernsey's financial regulatory agency) where
he was responsible for the design and subsequent implementation of
Guernsey's law relating to the regulation of fiduciaries,
administration businesses and company directors. He was also
particularly involved in Working Groups of the Financial Action
Task Force and the Offshore Group of Banking Supervisors. Mr Morgan
holds an MA in Economics and Law from Cambridge University. He is a
Director of a number of listed investment funds and is a resident
of Guernsey. Mr Morgan was appointed as a non-executive Director of
the Company on 3 July 2006. On 17 February 2010 Mr Morgan was
appointed as Senior Independent Director.
Charles Baillie, aged 45, is head of the Global Portfolio
Solutions (GPS) Group. The GPS Group provides multi-asset class
products and solutions for institutional and individual investors,
focusing on customised asset allocation, tactical implementation,
risk management and portfolio construction. He is a member of the
GPS Investment Committee and serves on the firm's Global Recruiting
Council. Previously, Charles was co-head of the Alternative
Investments & Manager Selection (AIMS) Group, which is
comprised of the Private Equity Group, Hedge Fund Strategies and
long-only Global Manager Strategies businesses. Prior to joining
Goldman Sachs Asset Management, Charles worked in the Mergers and
Acquisitions Group within the Investment Banking Division in
London. He also served as secretary to the Goldman Sachs Operating
Committee, a group of senior partners that established firmwide
operating policy. Charles joined Goldman Sachs as an analyst in the
Investment Banking Division in 1991, and was named managing
director in 2002 and partner in 2008. Charles earned a BAH from
Queen's University, Canada, an MA from the University of Oxford,
and an MBA from the Harvard Graduate School of Business
Administration, where he graduated as a Baker Scholar. Mr Baillie
was appointed as a non-executive Director of the Company on 28
August 2008.
Christopher Legge, aged 57, is a Guernsey resident and worked
for Ernst & Young in Guernsey from 1983 to 2002. Having joined
the firm as an audit manager in 1983, he was appointed a partner in
1986 and managing partner in 1998. From 1990 to 1998, he was head
of Audit and Accountancy, and was responsible for the audits of a
number of insurance, banking, investment fund and financial
services clients. He also had the responsibility for the firm's
training, quality control and compliance functions. He was
appointed managing partner of Ernst & Young for the Channel
Islands region in 2000. Since his retirement from Ernst & Young
in 2003, Mr Legge has held a number of non-executive directorships
in the financial services sector including B H Macro Limited, Third
Point Offshore Investors Limited and Ashmore Global Opportunities
Limited. He is an FCA and holds a BA (Hons) in Economics from the
University of Manchester. Mr Legge was appointed as a non-executive
Director of the Company on 29 September 2008.
Responsibility Statement (1)
The Directors of Goldman Sachs Dynamic Opportunities Limited
confirm:
a) the condensed set of interim unaudited financial statements
have been prepared in accordance with IAS 34 'Interim Financial
Reporting' as adopted by the European Union;
b) the Chairman's Statement and Investment Manager's Report
(together the interim Management Report) includes a fair review of
the information required by the Disclosure and Transparency Rules
4.2.7 and 4.2.8 of the United Kingdom Financial Services Authority,
namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
unaudited financial statements and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
By order of the Board
Christopher Sherwell Christopher Legge
Director Director
29 August 2012
(1) The condensed unaudited financial statements are published
on the www.goldmansachs.com website, which is maintained by the
Company's Investment Manager. The maintenance and integrity of the
website is, so far as relates to the Company, the responsibility of
the Investment Manager. The work carried out by the auditors does
not involve consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that may have
occurred to the financial statements since they were initially
presented on the website.
Unaudited Statement of Assets and Liabilities
As at As at
Note 30 June 2012 31 December 2011
(Audited)
US$ US$
ASSETS
Financial assets at fair value through
profit or loss 5,7 90,335,802 171,831,672
Cash and cash equivalents 19,290,006 13,805,927
Securities sold receivable 2,634,624 33,773,161
Other receivables 10,885 17,266
Total assets 112,271,317 219,428,026
============= =================
LIABILITIES
Financial liabilities at fair value
through profit or loss 5,7 - 6,172,520
Redemptions payable 10 11,831,542 12,567,786
Management fee 8(a) 205,564 444,129
Legal fees 147,558 182,851
Custodian fee 8(d) 22,366 30,357
Administration fee 8(c) 23,605 17,781
Directors' remuneration and expenses 8(b) 34,249 -
Provision for wind down costs 46,758 46,758
Other expenses 147,497 314,505
------------- -----------------
Total liabilities, excluding net assets
attributable to
holders of repayable shares 12,459,139 19,776,687
============= =================
Net assets attributable to holders
of repayable shares 99,812,178 199,651,339
============= =================
Net assets per GBP share 11 GBP1.0483 GBP1.0582
Net assets per US$ share 11 US$1.9921 US$1.9655
The financial statements were authorised for issue by the Board
of Directors on 29 August 2012 and are signed on its behalf
Christopher Sherwell Christopher Legge
Director Director
Unaudited Statement of Comprehensive Income
For the six months For the six months
ended ended
Note 30 June 2012 30 June 2011
US$ US$
Income
Interest income 6,903 2,909
Net changes in financial assets
and financial
liabilities at fair value through
profit or loss 6 2,051,339 11,034,130
Other income 135,260 -
-------------- --------------------
Total income 2,193,502 11,037,039
============== ====================
Expenses
Management fee 8(a) 745,006 2,498,102
Legal fees 157,000 240,000
Listing sponsor fees 34,515 122,810
Administration fee 8(c) 74,537 84,933
Custodian fee 8(d) 49,064 84,933
Directors' remuneration and expenses 8(b) 69,616 70,376
Audit fee 50,212 43,431
Interest expense 8(e) 72,548 240,200
Other expenses 97,373 142,917
-------------- --------------------
Total operating expenses 1,349,871 3,527,702
============== ====================
Change in net assets from operations 843,631 7,509,337
============== ====================
Other comprehensive income:
Currency translation differences 746,804 (791,593)
-------------- --------------------
Total comprehensive income 1,590,435 6,717,744
============== ====================
Return per GBP share 16 GBP0.0078 GBP0.0084
Return per US$ share (1) 16 US$0.0465 US$0.0160
Return /(loss) per EUR share
(2) 16 - (EUR0.1082)
(1) The US$ share class was delisted from the LSE during the
year ended 31 December 2011.
(2) The EUR share class was delisted from the LSE and closed
during the year ended 31 December 2011.
Unaudited Statement of Changes in Net Assets Attributable to
Holders of Repayable Shares
Net Assets
Attributable
to
For the six months ended 30 June 2012 Holders of
Repayable
Shares
US$
Net assets at beginning of period 199,651,339
Total comprehensive income for the period 1,590,435
Managed wind down redemption of shares - Main
portfolio (101,429,596)
Net assets at end of period 99,812,178
=============
Net Assets
Attributable
to
For the six months ended 30 June
2011 Holders of
Repayable
Shares
US$
Net assets at beginning of period 316,518,104
Total comprehensive income for
the period 6,717,744
Redemption of shares - 2011 redemption
proposals (91,215,002)
Net assets at end of period 232,020,846
============
Unaudited Statement of Cash Flows
For the six months
For the six months ended ended
30 June 2012 30 June 2011
US$ US$
Cash flows from operating activities
Net income/(loss) from operations 843,631 7,509,337
Adjustments to reconcile net increase/(decrease)
in net assets
to net cash from operating activities:
Net changes in fair value through profit
or loss (4,754,129) (4,619,825)
Purchase of financial assets at fair
value through
profit or loss - (37,500,000)
Proceeds from sales of financial assets
at fair value through
profit or loss 82,748,922 29,040,642
Net unrealised gain on forward currency
contracts (2,671,443) (283,566)
Decrease in subscriptions in investees,
made in advance - 20,000,000
(Increase)/decrease in operating assets 6,381 (48,281)
Decrease in securities sold receivable 31,138,537 201,359
Increase/(decrease) in operating liabilities (408,784) 174,729
Net cash from operating activities 106,903,115 14,474,395
-------------- --------------------
Cash flows from financing activities
Redemption of shares (101,429,596) -
Effect of change in fair value of redemptions
payable (736,244) 404,943
-------------- --------------------
Net cash inflow/(outflow) from financing
activities (102,165,840) 404,943
-------------- --------------------
Net increase/(decrease) in cash and cash
equivalents 4,737,275 14,879,338
============== ====================
Cash and cash equivalents at beginning
of period 13,805,927 24,362,803
Effect of exchange rate on translation 746,804 (791,593)
Cash and cash equivalents at end of period 19,290,006 38,450,548
============== ====================
Notes to the Condensed Unaudited Financial Statements
for the six months ended 30 June 2012
1. Organisation
Goldman Sachs Dynamic Opportunities Limited (the "Company") was
incorporated with limited liability in Guernsey, Channel Islands as
a closed-ended investment company on 3 July 2006. The Company's GBP
shares, EUR shares and US$ shares were listed on the London Stock
Exchange on 27 July 2006. The listing of the EUR shares and US$
shares was cancelled on 1 August 2011.
Winding Down Resolution
On 13 December 2011, at the Company's Extraordinary General
Meeting, it was proposed and subsequently resolved that, the
investment objective and the investment policy of the Company be
amended so that the Company will be managed with a view to
realising its investments comprised in the Main Portfolio in an
orderly and timely manner (such realisations to be effected in such
manner as the Investment Manager (in its absolute discretion) may
determine) and returning the proceeds of such realisations to
Shareholders (in accordance with their rights to distributions on a
winding up as set out in the Company's Articles of Association) at
such times and from time to time and in such manner as the
Directors may (in their absolute discretion) determine (the
"Winding Down Resolution"). See Note 12 - Share capital for more
information.
2. Significant accounting policies
Basis of preparation
The condensed set of unaudited financial statements included in
this half-yearly financial report have been prepared in accordance
with the Disclosure and Transparency Rules of the Financial
Services Authority and International Accounting Standards 34
'Interim Financial Reporting', as adopted by the European
Union.
The condensed interim unaudited financial statements do not
include all of the information required for the annual financial
statements, and should be read in conjunction with the annual
financial statements for the Company as at and for the year ended
31 December 2011. The financial statements of the Company as at and
for the year ended 31 December 2011 were prepared in accordance
with International Financial Reporting Standards ("IFRS") as
adopted by the European Union.
The accounting policies applied are consistent with those of the
annual financial statements for the year ended 31 December 2011, as
described in those financial statements.
Going Concern
As a result of the passing of the Winding Down Resolution, the
Directors consider that it is no longer appropriate to adopt the
going concern basis in preparing the financial statements.
Consequently, these financial statements have been prepared in
accordance with International Financial Reporting Standards on a
non-going concern basis. Accordingly, adjustments have been made to
the financial statements to reduce assets to their realisable
values, to provide for liabilities arising from the decision, and
to reclassify all assets and liabilities as current. A provision
for legal costs associated with the winding down of the Company was
accrued for at the time of the passing of the Winding Down
Resolution, and the amount payable is included in the Unaudited
Statement of Assets and Liabilities.
New Standards and amendments
The following standards that are relevant to the Company's
operations have been published and are mandatory for accounting
periods beginning on 1 January 2013 and have not been early
adopted:
-- IFRS 13, 'Fair value measurement', issued in May 2011. The
standard explains how to measure fair value for financial reporting
and introduces significantly enhanced disclosure about fair values.
It does not address or change the requirements on when fair values
should be used. IFRS 13 has been issued to provide a single source
of guidance for all fair value measurements and to clarify the
definition of fair value. The standard is not applicable until 1
January 2013 and the Directors have decided not to early adopt the
standard. At time of adoption it is not expected to have a
significant impact on the financial statements.
3. Operating segments
The Company is engaged in a single segment of business,
investing in hedge funds. Information on realised gains and losses
derived from sales of investments are disclosed in Note 6 - Net
changes in financial assets and financial liabilities at fair value
through profit or loss.
The Company is domiciled in Guernsey. All of the Company's
income from investments is from underlying investment vehicles
("Investees") that are incorporated in countries other than
Guernsey. The Company has no assets classified as non-current
assets.
The Company has a diversified portfolio of investments, however
as a result of the managed wind down the portfolio may become
concentrated.
The Company also has a diversified shareholder population. As at
30 June 2012, two investors in the GBP share class and one investor
in the US$ share class own more than 10% of the issued capital of
the respective share classes of the Company.
4. Taxation
The Company is domiciled in Guernsey. The Company is exempt from
paying income tax. The Company is registered for taxation purposes
in Guernsey where it pays an annual exempt status fee which is
currently GBP600 under The Income Tax (Exempt Bodies) (Guernsey)
Ordinances 1989.
5. Financial assets and financial liabilities at fair value through profit or loss
31 December
30 June 2012 2011
Financial assets at fair value through profit
or loss US$ US$
Investees
Main portfolio(1) 82,508,111 158,997,910
2010 Redemption portfolio(2) 3,300,630 3,950,755
2011 Redemption portfolio(3) 4,527,061 5,381,930
------------- ------------
90,335,802 168,330,595
Derivatives
Unrealised gain on forward currency contracts - 3,501,077
------------- ------------
Total 90,335,802 171,831,672
------------- ------------
(1) The Main Portfolio is being managed with a view to
realisation as a result of the Winding Down Resolution.
(2) On 1 October 2010 the 2010 Redemption Portfolio was
established to meet redemptions of Shares pursuant to the 2010
Redemption proposals.
(3) On 1 October 2011 the 2011 Redemption Portfolio was
established to meet redemptions of Shares pursuant to the 2011
Redemption proposals.
The 2010 and 2011 Redemption Portfolios are managed with a view
to realisation and the proceeds constitute the redemption monies
for the purposes of the 2010 and 2011 redemption proposals
respectively. See Note 10 - Redemptions payable for further
information.
31 December
30 June 2012 2011
Financial liabilities at fair value through
profit or loss US$ US$
Derivatives
Unrealised loss on forward currency contracts - 6,172,520
--------------- ------------
Total - 6,172,520
--------------- ------------
6. Net changes in financial assets and financial liabilities at fair value through profit or loss
The net realised and change in unrealised investment gain/(loss)
from trading in financial assets and financial liabilities shown in
the Unaudited Statement of Comprehensive Income can be analysed as
follows:
For the For the
six months
six months ended ended
30 June 2012 30 June 2011
US$ US$
Net realised gain/(loss) on Investees 3,082,153 (5,707,208)
Net realised gain/(loss) on forward currency
contracts (5,374,233) 6,130,739
------------- -------------
Net realised investment gain/(loss) (2,292,080) 423,531
------------- -------------
Net change in unrealised gain/(loss) on Investees 1,671,976 10,327,033
Net change in unrealised gain/(loss) on forward
currency contracts 2,671,443 283,566
------------- -------------
Net change in unrealised investment gain/(loss) 4,343,419 10,610,599
------------- -------------
Net changes in financial assets and financial
liabilities at fair value through profit or
loss 2,051,339 11,034,130
============= =============
Cumulative net realised investment gain/(loss) (68,571,395) (71,334,332)
============= =============
Cumulative net change in unrealised investment
gain/(loss) 12,938,826 38,828,585
============= =============
7. Forward currency contracts
Following the passing of the Winding Down Resolution, the
currency hedging programme was terminated on 17 January 2012. The
Company had the following open forward currency contracts at 31
December 2011:
As at 31 December 2011
Fair value/
Currency Bought Currency Sold Maturity Date Unrealised gain/(loss)
GBP132,968,980 $209,146,908 24/01/2012 (US$2,533,910)
GBP4,293,930 $6,893,474 24/01/2012 (US$221,380)
$216,040,382 GBP136,955,455 24/01/2012 US$3,233,025
GBP136,994,535 $216,040,382 22/02/2012 (US$3,232,797)
$11,874,368 GBP7,592,040 22/02/2012 US$80,878
$204,166,014 GBP131,550,267 22/02/2012 (US$184,433)
GBP131,590,541 $204,166,014 22/03/2012 US$187,174
------------------------
(US$2,671,443)
========================
As a result of the termination of the currency hedging
programme, as at 30 June 2012 the Company did not hold any cash
collateral on forward currency contracts (31 December 2011:
US$5,543,564, which is included in cash and cash equivalents in the
Unaudited Statement of Assets and Liabilities).
8. Significant agreements and related parties
a) Investment Manager
The Investment Manager is remunerated at a rate of 0.75% per
annum of the Total Assets attributable to each class of ordinary
shares as at each month end including the Total Assets of each
Redemption Portfolio for the provision of investment management
services. Prior to the Winding Down Resolution being passed on 13
December 2011, the Investment Manager was remunerated at a rate of
1.5% per annum of the Total Assets attributable to the Main
Portfolio out of which it paid the trail commission payable to
qualifying investors. With effect from 13 December 2011 trail
commission is no longer payable. Additionally, the Investment
Manager was entitled to a performance fee equivalent to 10% of the
amount by which the year-end Net Assets attributable to each class
of ordinary shares at the end of one financial period (having made
adjustments for any issues or repurchases of ordinary shares and
for any contingent or accrued but unpaid liabilities) is greater
than the value of Net Assets attributable to that class of ordinary
shares at the end of the previous financial period. Performance
fees ceased to be paid on the Main Portfolio with effect from 13
December 2011 and were not payable on the Redemption Portfolios.
Management fees charged during the six months ended 30 June 2012
and 30 June 2011 are included in the Unaudited Statement of
Comprehensive Income. The Management fee payable for the periods
ended 30 June 2012 and 31 December 2011 are included in the
Unaudited Statement of Assets and Liabilities.
b) Directors' remuneration and expenses
Mr Christopher Sherwell, Mr Talmai Morgan and Mr Christopher
Legge are independent Directors and have no executive function with
the Investment Manager or its affiliated companies. The Company
pays each independent Director an annual fee for their services as
a Director of the Company. Mr Charles Baillie is affiliated with
the Investment Manager and has waived his right to a fee of
GBP25,000 per annum. Directors' remuneration and expenses charged
during the six months ended 30 June 2012 and 30 June 2011 are
included in the Unaudited Statement of Comprehensive Income. The
Directors' remuneration and expenses payable for the periods ended
30 June 2012 and 31 December 2011 are included in the Unaudited
Statement of Assets and Liabilities.
c) Administrator
Effective 1 January 2012 the annual remuneration rate for
administration fees is 0.06% of the Total Assets attributable to
each class of shares of the Main Portfolio (subject to a minimum
annual fee of US$100,000 for the Main Portfolio and US$15,000 per
each Redemption Portfolio).
Prior to 1 January 2012 the annual remuneration rate for
administration fees was 0.05% (maximum fee allowable was 0.06%) of
the Total Assets of each class of shares of the Company, payable
monthly in arrears (subject to a minimum fee of US$100,000 per
annum).
Administration fees charged during the six months ended 30 June
2012 and 30 June 2011 are included in the Unaudited Statement of
Comprehensive Income. The Administration fee payable for the
periods ended 30 June 2012 and 31 December 2011 are included in the
Unaudited Statement of Assets and Liabilities.
d) Custodian
The annual remuneration rate for custodian fees is 0.05%
(maximum fee allowable is 0.06%) of the Total Assets of each class
of shares of the Company thereafter, payable quarterly in arrears
and subject to a minimum fee of US$20,000 per annum.
Custodian fees charged during the six months ended 30 June 2012
and 30 June 2011 are included in the Unaudited Statement of
Comprehensive Income. The Custodian fee payable for the periods
ended 30 June 2012 and 31 December 2011 are included in the
Unaudited Statement of Assets and Liabilities.
e) Credit facility
The Company previously entered into a credit facility with the
Royal Bank of Canada, Grand Cayman for up to a maximum of US$45
million. The facility was renewable annually and carried interest
on amounts drawn down at LIBOR plus 1.50%. In addition, an annual
commitment fee of 1.00% was payable on the maximum amount which was
drawn. Following the Winding Down Resolution, the facility matured
and was terminated on 27 February 2012.
9. Financial risk management
The Company's activities expose it to a variety of financial
risks: market risk (including currency risk, interest rate risk and
price risk), credit risk, liquidity risk and investment in
Investees risk. Following the Winding Down Resolution, the Company
is exposed to additional specific risk factors related to the
Winding Down of the Company which are referenced in the Risk
Factors section of the Winding Down Resolution. Certain of these
risks include but are not limited to valuation risk, concentration
risk, and uncertainty as to when shares will be redeemed.
The condensed interim unaudited financial statements do not
include all financial risk management information and disclosures
required in the annual financial statements, and should be read in
conjunction with the Company's annual financial statements as at 31
December 2011.
Liquidity risk
Liquidity risk is the risk that the Company will encounter
difficulty in meeting obligations associated with financial
liabilities. The Company's investments in the Investees can be
redeemed on a limited basis. As a result, the Company may not be
able to liquidate quickly some of its investments in these
instruments in order to respond to specific events such as
deterioration in the creditworthiness of any particular Investee.
The Company, being closed-ended, was able to invest its portfolio
with less regard to the issues arising from the limited liquidity
of the Investees than would be the case for open-ended funds of
hedge funds.
The Advisors of the Investees may, at their discretion, transfer
a portion of the Company's investment into share classes where
liquidity terms are directed by the Advisor in accordance with the
respective Investee's offering memorandum, commonly referred to as
side pocket share classes. These side pocket share classes may have
restricted liquidity and prohibit the Company from fully
liquidating its investments without delay. The Company's Investment
Manager attempts to determine the Investees strategy on side
pockets prior to making an allocation to the Investee through its
due diligence process. However, no assurance can be given on
whether or not the Investee will implement side pockets during the
investment period. The Advisors of the Investees may also, at their
discretion, suspend redemptions or implement other restrictions on
liquidity which could impact the Company. As at 30 June 2012,
US$18,897,364 or 17% (31 December 2011: US$22,223,871 or 10%) of
Net Assets, inclusive of assets attributable to redeeming
Shareholders, were considered illiquid by the Company due to
restrictions implemented by certain Advisors of the Investees.
These illiquids will limit the Company's flexibility to realise the
assets and distribute proceeds to Shareholders.
Certain of the Company's Investees may have liquidity exposure
related to the Advisors' estimates of the recovery value of claims
against Lehman Brothers Holdings, Inc. and for certain of its
subsidiaries and affiliates ("Lehman"), including cash claims
involving amounts owed to the Investees by Lehman and/or
proprietary claims involving recovery of Investees' assets held by
Lehman at the time of its insolvency. These estimates are based on
information received from the majority, but not all of, the
Advisors, and the Company has no way of independently verifying or
otherwise confirming the accuracy of the information provided. As a
result, there can be no guarantee that such estimates are accurate.
There is significant uncertainty with respect to the ultimate
outcome of the Lehman insolvency proceedings, and therefore the
amounts ultimately recovered from Lehman could be materially
different than such estimates. Based on the information received,
the gross indirect exposure to Lehman did not materially affect the
Company's net assets attributable to holders of repayable
shares.
The following table summarises the liquidity provisions related
to the Company's investments in Investees at 30 June 2012:
Redemption Remaining Holding
Investees Period Period
Eton Park Overseas Fund, Ltd. (1) Annually None
Silver Point Capital Offshore Fund, Ltd. (1) Annually None
Spinnaker Global Opportunity Fund Ltd. (2) Quarterly None
Perry Partners International, Inc. Quarterly None
Anchorage Capital Partners Offshore, Ltd. Annually None
TPG-Axon Partners (Offshore), Ltd. (1) Quarterly None
Moon Capital Global Equity Offshore Fund Ltd. Quarterly None
(2)
Moore Global Investments, Ltd. (2) Quarterly None
Harbinger Capital Partners Special Situations N/A N/A
Offshore Fund, L.P. (1)
Spinnaker Capital Pacnet Holdings Inc. (1) N/A N/A
Amaranth International Limited (1) N/A N/A
GLG Tisbury Fund Limited (1) N/A N/A
(1) This Investee has notified the Company of certain
restrictions on liquidity, which may include side pocket
investments, suspended redemptions or other implemented
restrictions on liquidity.
(2) Limited on a percentage basis as to how much can be redeemed
each quarter.
Other aspects of the Company's financial risk management
objectives and policies are consistent with those described in the
annual report for the year ended 31 December 2011.
10. Redemptions payable
Total redemptions payable as at 30 June 2012 are made up of the
2011 and 2010 Redemption Portfolios as follows:
31 December
30 June 2012 2011
US$ US$
2011 redemptions payable 6,656,878 7,073,773
2010 redemptions payable 5,174,664 5,494,013
------------- ------------
11,831,542 12,567,786
------------- ------------
These redemption payable amounts will change in line with the
value of investments attributable to the 2010 and 2011 Redemption
Portfolios.
2011 redemptions payable
Redemptions payable in relation to the 2011 redemption proposals
consists of the amounts payable to holders of the cancelled US$
shares and EUR shares based on the acceptances of the redemption
proposals as announced on 16 June 2011. On 18 November 2011 the
2011 Redeeming Shareholders were paid US$78,317,218, approximately
91% of the total amount that was then due. The 2011 redemptions
payable amounts outstanding at 30 June 2012 are set out in the
below table:
GBP shares US$ shares EUR shares Total
Number of shares cancelled - 40,649,280 3,055,335 43,704,615
Number of shares redeemed - (36,990,830) (2,780,348) (39,771,178)
Number of shares remaining - 3,658,450 274,987 3,933,437
As at 30 June 2012
Remaining 2011 Redemption
Portfolio value (based
on NAV as at 30 June
2012) - US$6,204,853 EUR356,177
------------ ------------- ------------ -------------
US$ payable equivalent - US$6,204,853 US$452,025 US$6,656,878
------------ ------------- ------------ -------------
As at 31 December 2011
Remaining 2011 Redemption
Portfolio value (based
on NAV as at 31 December
2011) - US$6,593,420 EUR370,015
------------ ------------- ------------ -------------
US$ payable equivalent - US$6,593,420 US$480,353 US$7,073,773
------------ ------------- ------------ -------------
As at 21 June 2011 the Redeemed shares have been cancelled and
all Redeeming Shareholders have ceased to be Shareholders in the
Company and instead are unsecured creditors in respect of the
redemption monies outstanding from time to time.
2010 redemptions payable
Redemptions payable in relation to the 2010 redemption proposals
consist of the amounts payable to holders of the cancelled US$
shares and EUR shares based on the acceptances of the redemption
proposals as announced on 24 June 2010. On 18 November 2010 the
2010 Redeeming Shareholders were paid US$54,941,641, approximately
82% of the total amount that was then due. A further payment of
US$6,855,429 was made on 18 November 2011 which represented
approximately 10% of the outstanding balance following the first
redemption payment, such that cumulative payments now made equal
approximately 92% of the NAV of these Redeemed Shares at 30
September 2010. The 2010 redemptions payable amounts at 30 June
2012 are set out in the below table:
GBP shares US$ shares EUR shares Total
Number of shares cancelled - 29,090,245 4,130,495 33,220,740
Number of shares redeemed
in 2010 - (23,853,993) (3,387,000) (27,240,993)
Number of shares redeemed
in 2011 - (2,827,569) (401,480) (3,229,049)
Number of shares remaining - 2,408,683 342,015 2,750,698
As at 30 June 2012
Remaining 2010 Redemption
portfolio value (based
on NAV as at 30 June
2012) - US$4,548,754 EUR493,192
------------ ---------------- ------------ ----------------
US$ payable equivalent - US$4,548,754 US$625,910 US$5,174,664
------------ ---------------- ------------ ----------------
As at 31 December 2011
Remaining 2010 Redemption
portfolio value (based
on NAV as at 31 December
2011) - US$4,829,448 EUR511,912
--- -------------- ----------- -------------
US$ payable equivalent - US$4,829,448 US$664,565 US$5,494,013
--- -------------- ----------- -------------
It is expected that the balance of redemption monies in respect
of shares redeemed under the 2010 and 2011 redemption proposals
will be paid once sufficient assets have been realised in the 2010
and 2011 Redemption Portfolios to make such payment(s).
All assets, liabilities, income and expenses attributable to the
2010 and 2011 Redemption Portfolios are included in the financial
statements of the Company as a whole.
11. Net asset value
30 June 31 December
GBP shares 2012 2011
Net assets (GBP) 63,069,571 127,338,670
Number of shares in issue 60,166,489 120,332,912
----------- ------------
NAV (GBP) per GBP share 1.0483 1.0582
=========== ============
US$ shares(1)
Net assets (US$) 887,092 1,750,542
Number of shares in issue 445,315 890,628
----------- ------------
NAV (US$) per US$ share 1.9921 1.9655
=========== ============
(1) The US$ share class was delisted from the LSE during the
year ended 31 December 2011.
12. Share capital
2011 Continuation resolutions and redemptions
Over the 12 month period and similar to the prior year, the
Company's GBP shares, the EUR shares and the US$ shares traded, on
average, at discounts to their respective Net Asset Values in
excess of the discount management provisions, as described in the
Articles of Association, and accordingly, the Directors announced
on 13 January 2011 that the Company was required to propose 2011
continuation resolutions in respect to each share class.
At the Class Meetings held on 14 April 2011, Shareholders passed
a continuation resolution for the GBP shares, however, continuation
resolutions for the EUR shares and the US$ shares failed to pass.
As announced on 16 June 2011, the Board received acceptances for
redemption proposals for 40,649,280 US$ shares and 3,055,335 EUR
shares.
The shares were cancelled in June 2011 and as a result all
holders of the redeemed shares ceased to be Shareholders in the
Company and were classified as unsecured creditors on the Unaudited
Statement of Assets and Liabilities. See Note 10 - Redemptions
payable.
On 11 July 2011, the Board announced that it had determined to
exercise powers of redemption in respect of the then remaining
issued EUR Shares and US$ Shares as permitted by the Company's
articles of association but subject to such Shareholders first
being offered the opportunity to convert their EUR Shares and/or
US$ Shares into GBP Shares. 207,493 EUR Shares and 5,176 US$ Shares
in aggregate were converted into GBP Shares by reference to the 30
June 2011 NAV Calculation Date.
On 29 July 2011, 3,889,485 EUR shares and 2,207,586 US$ shares
were redeemed. This represented all of the remaining EUR and US$
Shareholders at that date and as a result of the redemptions, the
listings of the remaining EUR and US$ shares was cancelled on 1
August 2011.
On 18 August 2011, 1,047,106 GBP Shares were converted into
905,326 US$ Shares by reference to the 30 June 2011 conversion
calculation date. All such US$ Shares are unlisted.
On 23 August 2011 EUR5,511,667 and US$4,617,950 were paid out to
the redeeming Shareholders which represented 100% of the redemption
proceeds from the compulsory redemption of the EUR Shareholders and
US$ Shareholders.
Winding Down Resolution
On 22 September 2011, the Board announced that it was consulting
with Shareholders as to the future direction of the Company.
On 14 October 2011, the Board announced that it would recommend
to Shareholders that the Company should commence a managed winding
down of the Main Portfolio. On 18 November 2011, the Board
announced recommended proposals for a change to the Company's
investment policy to permit a Winding Down (the "Winding Down
Proposals") and put forward a resolution to that effect. On 13
December 2011 Shareholders passed the resolution.
The Winding Down Proposals were designed to provide for a
managed winding down of the Company with an orderly realisation of
the Company's existing investments comprised in the Main Portfolio
and subsequently (and subject to Shareholder approval) the
appointment of a Liquidator and the winding up of the Company. As
at 30 June 2012, a Liquidator has not yet been appointed.
In November 2011, 14,698 US$ shares were converted into 17,517
GBP shares by reference to the 30 September 2011 conversion
calculation date. On the basis of Conversion Notices received by
the Company, the Company's issued share capital at 18 November 2011
consisted of 120,332,912 GBP shares and 890,628 US$ shares.
On 30 May 2012 the Board announced, further to the approval by
the Company's shareholders of the managed winding down proposals,
that the Company had resolved to make a first distribution from the
Main portfolio by way of a compulsory redemption of shares of
60,166,423 GBP shares and 445,313 US$ shares.
On 8 June 2012, GBP65,134,217 and US$901,447 were paid out to
the Main portfolio shareholders as a first distribution payment
related to the managed wind down which represented approximately
50% of the Company's respective aggregate NAVs as at 31 March
2012.
The issued share capital activities for the period from 1
January 2011 to 30 June 2012 are summarised in the following
table:
GBP shares US$ shares EUR shares
------------- ------------- ------------
January 2011 issued share capital 127,440,517 37,111,163 7,465,197
March 2011 share conversions (6,316,681) 5,750,879 (312,884)
------------- ------------- ------------
121,123,836 42,862,042 7,152,313
2011 Redemption proposal acceptances - (40,649,280) (3,055,335)
30 June 2011 issued share capital 121,123,836 2,212,762 4,096,978
Conversion opportunity 238,665 (5,176) (207,493)
------------- ------------- ------------
29 July 2011 issued share capital pre
redemption of shares 121,362,501 2,207,586 3,889,485
Redemption of EUR shares and US$ shares - (2,207,586) (3,889,485)
------------- ------------- ------------
29 July 2011 issued share capital 121,362,501 - -
1 August 2011 delisting of shares - Delisted Delisted
August 2011 share conversions (1,047,106) 905,326 -
September 2011 share conversions 17,517 (14,698) -
------------- ------------- ------------
31 December 2011 issued share capital 120,332,912 890,628 -
Managed wind down redemption of GBP shares
and US$ shares (60,166,423) (445,313) -
------------- ------------- ------------
30 June 2012 issued share capital 60,166,489 445,315(1) -(2)
------------- ------------- ------------
(1) The US$ shares comprise a delisted share class and no longer
trades on the LSE.
(2) The EUR share class has been delisted from the LSE and
closed.
As of 31 March, 30 June, 30 September and 31 December of each
year a shareholder may elect to convert some or all of his Ordinary
Shares of one currency class into Ordinary Shares of another
currency class. The Board has decided that the conversion mechanism
should remain in place going forward, even during the Managed
Winding Down. No conversion requests were received as at 31
December 2011, 31 March 2012 or 30 June 2012.
2010 Continuation resolutions and redemptions
A meeting to consider the 2010 continuation resolutions was held
on 23 April 2010. Shareholders passed a continuation resolution for
the GBP shares, however, continuation resolutions for the EUR
shares and the US$ shares failed to pass. As announced on 24 June
2010, the Board received acceptances for redemption proposals for
29,090,245 US$ shares and 4,130,495 EUR shares. Those shares were
cancelled in July 2010 and as a result, all holders of those
redeemed shares ceased to be Shareholders in the Company and were
classified as unsecured creditors on the Unaudited Statement of
Assets and Liabilities. See Note 10 - Redemptions payable.
13. Treasury Shares
The Company has not repurchased any of its own shares and has
not sold any shares held in treasury back to the market during the
six months ended 30 June 2012 (30 June 2011: Nil). The Company did
not hold any shares in treasury as at 30 June 2012 (31 December
2011: Nil). The Company's issued capital (excluding redeemed
shares) at 30 June 2012 consisted of 60,166,489 GBP shares (31
December 2011: 120,332,912 GBP shares) and 445,315 US$ shares (31
December 2011: 890,628 US$ shares).
14. Seasonality
The Company's operations are not affected by seasonality or
cyclicality and as such they have no impact on the condensed
unaudited financial statements.
15. Controlling Party
In the opinion of the Directors on the basis of shareholdings
advised to them, the Company has no immediate or ultimate
controlling party.
16. Return Per Share
Basic return per share is calculated by dividing the returns
attributable to holders of repayable shares of the Company by the
weighted average number of shares in issue during the period
excluding shares purchased by the Company and held as treasury
shares and redeemed shares.
There were no potentially dilutive shares in issue at 30 June
2012.
17. Exchange Rates
The exchange rates (against US$) at 30 June 2012 and 31 December
2011 were as follows:
30 June 2012 31 December 2011
British Pound Sterling GBP 0.64 0.64
Euro EUR 0.79 0.77
18. Subsequent Events
Subsequent to period end there were no significant events which
require further disclosure.
Corporate Information
Directors Custodian
Christopher Sherwell (Chairman) Royal Bank of Canada (Channel Islands)
Talmai Morgan (Senior Independent Limited
Director) PO Box 48, Canada Court
Christopher Legge Upland Road
Charles Baillie St Peter Port
Guernsey
All the above are non-executive Directors GY1 3BQ
having the following correspondence Channel Islands
address:
Independent Auditors
RBC Offshore Fund Managers Limited PricewaterhouseCoopers CI LLP
PO Box 246, Canada Court Royal Bank Place
Upland Road 1 Glategny Esplanade
St Peter Port St Peter Port
Guernsey Guernsey
GY1 3QE GY1 4ND
Channel Islands Channel Islands
Administrator Registrar
RBC Offshore Fund Managers Limited Capita IRG (CI) Limited
PO Box 246, Canada Court 2nd Floor
Upland Road No 1 Le Truchot
St Peter Port St Peter Port
Guernsey Guernsey
GY1 3QE GY1 4AE
Channel Islands Channel Islands
Secretary and Registered Office Advocates to the Company
RBC Offshore Fund Managers Limited Ogier
PO Box 246, Canada Court Ogier House
Upland Road St Julians Avenue
St Peter Port St Peter Port
Guernsey Guernsey
GY1 3QE GY1 1WA
Channel Islands Channel Islands
Investment Manager Broker
Goldman Sachs Hedge Fund Strategies Jefferies Hoare Govett Limited
LLC Vinters Place
200 West Street 68 Upper Thames Street
New York, New York London
10282 EC4V 3BJ
United States
RBS Hoare Govett Limited was acquired
UK Solicitors to the Company by Jefferies International Limited
Bingham McCutchen (London) LLP on 1 March 2012.
41 Lothbury
London
EC2R 7HF
United Kingdom
Glossary of Hedge Fund Strategies
Event Driven
Event driven strategies seek to identify security price changes resulting
from corporate events such as restructurings, mergers, takeovers, spin-offs
and other special situations. Corporate events arbitrageurs generally
choose their investments based on their perceptions of the likelihood
that the event or transaction will occur, the amount of time that the
process will take and the perceived ratio of return to risk. Strategies
that may be used in the event driven sector include risk arbitrage/special
situations and credit opportunities/distressed securities, each of which
is described in greater detail below. However, other strategies may
be employed as well.
Risk Arbitrage/Special Situations
Risk arbitrageurs seek to capture the price spread between current market
prices and the value of securities upon successful completion of a takeover
or merger transaction. The availability of spreads reflects the unwillingness
of other market participants to take on transaction-based risk, i.e.
the risk that the transaction will not be completed and the price of
the company being acquired will fall. Risk arbitrageurs evaluate this
risk and seek to create portfolios that reduce specific event risk.
Special situations such as spin-offs and corporate reorganisations and
restructurings offer additional opportunities for Advisors. Often these
strategies are employed alongside risk arbitrage or distressed investing.
An Advisor's ability to evaluate the effect of the impact and timing
of the event and to take on the associated event risk is the source
of the returns. Advisors differ in the degree to which they hedge the
equity market risk of their portfolios.
Credit Opportunities/Distressed Securities
Credit opportunities/distressed securities strategies invest in debt
or equity securities of firms in or near bankruptcy. Advisors differ
in terms of the level of the capital structure in which they invest,
the stage of the restructuring process at which they invest, and the
degree to which they become actively involved in negotiating the terms
of the restructuring.
Equity Long/Short
Equity long/short strategies involve making long and short equity investments,
generally based on fundamental evaluations, although it is expected
that Advisors in this investment sector will employ a wide range of
styles. For example, such Advisors may (i) focus on companies within
specific industries; (ii) focus on companies only in certain countries
or regions; (iii) focus on companies with certain ranges of market capitalisation;
or (iv) employ a more diversified approach, allocating assets to opportunities
across investing styles, industry sectors, market capitalisations and
geographic regions.
Tactical Trading
Tactical trading strategies are directional trading strategies, which
generally fall into one of two categories: managed futures strategies
and global macro strategies. Managed futures strategies involve trading
in futures and currencies globally, generally using systematic or discretionary
approaches. Global macro strategies generally utilise analysis of macroeconomic
and financial conditions to develop views on country, regional or broader
economic themes and then seek to capitalise on such views by trading
in securities, commodities, interest rates, currencies and other instruments.
Advisors use quantitative models or discretionary inputs to speculate
on the direction of individual markets or subsectors of markets. Advisors
invest assets in a diversified portfolio composed primarily of futures
contracts, forward contracts, physical commodities, options on futures
and on physical commodities, and other derivative contracts on foreign
currencies, financial instruments, stock indices, and other financial
market indices, metals, grains and agricultural products, petroleum
and petroleum products, livestock and meats, oil seeds, tropical products
and softs (such as sugar, cocoa, coffee and cotton). Advisors also engage
in the speculative trading of securities, including, but not limited
to, equity and debt securities, high yield securities, emerging market
securities and other security interests, and may do so on a cash basis
or using options or other derivative instruments. Certain Advisors may
utilise other investment media, such as swaps and other similar instruments
and transactions. Advisors generally trade futures and securities on
commodities and securities exchanges worldwide as well as in the interbank
foreign currency forward market and various other over-the-counter markets.
Relative Value
Relative value strategies seek to profit from the mispricing of financial
instruments, capturing spreads between related securities that deviate
from their fair value or historical norms. Directional and market exposure
is generally held to a minimum or completely hedged. Hence, relative
value strategies endeavour to have low correlation and beta to most
market indices.
Credit Relative Value
Credit relative value encompasses strategies that take long and short
positions in corporate bonds or their derivatives to capture misvaluations
between single issues as well as between portfolios or indices and their
underlying constituents. Strategies may also involve a capital structure
component to capture mispricing between equity and corporate debt. Strategies
are driven by both qualitative fundamental analysis and quantitative
considerations. Portfolios are constructed to ensure that the directional
exposure to credit spreads is minimal.
Convertible Arbitrage
Convertible bond arbitrage strategies consist of buying convertible
bonds and shorting an appropriate number of shares of the issuer's common
stock. The stock short sale is intended to hedge the stock price risk
arising from the equity conversion feature of the convertible bond.
Due to the bond features of convertibles, credit and interest rate risk
may also be hedged. Convertible arbitrage strategies are long volatility
strategies and profit primarily from rapid changes in stock price. A
second source of potential profit is the cash flows generated from the
bond's coupon payment and the short sale interest rebate.
Equity Market Neutral
Equity market neutral strategies try to avoid market direction influences
and seek to generate returns purely from stock selection. Advisors construct
long and short baskets of equity securities with similar characteristics
but different current valuations, with the view that the market will
gradually realise these different valuations and correct the difference.
Portfolios are designed to exhibit zero or negligible beta to all or
most markets. In many instances, Advisors also attempt to protect portfolios
from industry, market capitalisation and country exposure.
Fixed Income Relative Value
Fixed income relative value strategies seek to exploit pricing anomalies
that might exist across fixed income securities and their related derivatives.
Some fixed income strategies are based on macro considerations, and
others are primarily quantitative in nature where financial modelling
is an integral component. Mispricing in fixed income instruments to
baskets of securities is found when securities deviate from historical
relationships or fair value. These relationships can be temporarily
distorted by exogenous shock to fixed income supply and demand or by
structural changes in the fixed income market. Markets covered are predominantly
G10, developed countries, although some specialists employ similar techniques
in developing fixed income markets.
Additional information
Disclosures
The value of investments and the income derived from investments can
go down as well as up. Future returns are not guaranteed, and a loss
of principal may occur. There may be conflicts of interest relating
to the Company and its service providers, including Goldman Sachs and
its affiliates, who are engaged in businesses and have interests other
than that of managing, distributing and otherwise providing services
to the Company. These activities and interests include potential multiple
advisory, transactional and financial and other interests in securities
and instruments that may be purchased or sold by the Company, or in
other investment vehicles that may purchase or sell such securities
and instruments. These are considerations of which investors in the
Company should be aware. Additional information relating to these conflicts
is set forth in the offering materials for the Company. Goldman Sachs
Hedge Fund Strategies LLC is a U.S. registered investment adviser, is
part of Goldman Sachs Asset Management and is a wholly owned subsidiary
of The Goldman Sachs Group, Inc.
THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION
NO PERSON HAS BEEN AUTHORISED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION, WARRANTY, STATEMENT OR ASSURANCE ON BEHALF OF THE COMPANY
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION, WARRANTY,
STATEMENT OR ASSURANCE MAY NOT BE RELIED UPON.
Prospective investors should inform themselves as to any applicable
legal requirements and taxation and exchange control regulations in
the countries of their citizenship, residence or domicile which might
be relevant.
Alternative Investments by their nature, involve a substantial degree
of risk, including the risk of total loss of an investor's capital.
Fund performance can be volatile. There may be conflicts of interest
between the Alternative Investment Fund and other service providers,
including the investment manager and sponsor of the Alternative Investment.
Similarly, interests in an Alternative Investment are highly illiquid
and generally not transferable without the consent of the sponsor, and
applicable securities and tax laws will limit transfers.
Investors are also urged to take appropriate advice regarding any applicable
legal requirements and any applicable taxation and exchange control
regulations in the country of their citizenship, residence or domicile
which may be relevant to the subscription, purchase, holding, exchange,
redemption or disposal of any Alternative Investment.
Goldman Sachs Dynamic Opportunities Limited is a Guernsey company whose
GBP shares are listed on the London Stock Exchange and the rights and
obligations of the participants in Goldman Sachs Dynamic Opportunities
Limited are governed by its organisational documents, the laws of Guernsey
and the listing rules of the London Stock Exchange. References to market
or composite indices, benchmarks or other measures of relative market
performance over a specified period of time (each, an "index") are provided
for your information only. Reference to this index does not imply that
the portfolio will achieve returns, volatility or other results similar
to the index. The composition of the index may not reflect the manner
in which a portfolio is constructed in relation to expected or achieved
returns, portfolio guidelines, restrictions, sectors, correlations,
concentrations, volatility or tracking error targets, all of which are
subject to change over time.
Goldman Sachs Dynamic Opportunities Limited - Underlying Advisor Data
The data of the underlying Advisors contained herein is based on information
obtained from the given Advisor, unless otherwise indicated. Goldman
Sachs takes reasonable steps to verify - but does not guarantee - the
accuracy of this information. Historical data of Advisors is as reported
by the given Advisor or by other sources and may not be calculated in
a uniform or consistent basis with the information for other Advisors.
The data presented may be for an onshore, offshore or Master Fund vehicle
of the particular Advisor.
No part of this material may be (i) copied, photocopied or duplicated
in any form, by any means, or (ii) distributed to any person that is
not an employee, officer, director, or authorised agent of the recipient,
without GSAM's prior written consent.
Copyright (c) 2012, Goldman Sachs Dynamic Opportunities Limited.
All rights reserved.
These are not full statutory accounts. The condensed interim
unaudited financial statements do not include all of the
information required for the annual financial statements, and
should be read in conjunction with the annual financial statements
for the Company as at and for the year ended 31 December 2011. The
full audited financial statements for year ended 31 December 2011
are available for inspection at Canada Court, Upland Road, St Peter
Port, Guernsey, the registered office of the Company and the
Company's website
http://www.goldmansachs.com/client_services/asset_management/closed_ended_investment_companies/resident.html.
Enquiries:
Robin Amer
RBC Offshore Fund Managers Ltd
Tel: +44 (0)1481 744130
This information is provided by RNS
The company news service from the London Stock Exchange
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