TIDMAPQ
RNS Number : 1130Q
APQ Global Limited
04 June 2018
4 June 2018
APQ Global Limited
("APQ", "APQ Global" or the "Company")
Final results for the year to 31 December 2017
APQ Global, the emerging markets growth company, today announces
its audited financial results for the year ended 31 December
2017.
FINANCIAL HIGHLIGHTS
Book Value at 31 December 2017 was $100.0m, an increase from
$95.6m since the start of the year. The term "book value" herein
includes the assets of APQ Global Limited and its subsidiaries net
of any liabilities. The results include the net assets of the
Company and its subsidiaries, presented in US dollars.
Book Value per share in the year rose from 122.52 to 128.11
cents.
Earnings per share for the year was $0.06995 (2016 -
$0.00999)
Dividends paid in GBP totalled 5 pence (6.54 cent) per share and
were declared and paid during the year as follows:
Paid 24 February 2017
* 0.5 pence (0.63 cent) per share Ex Dividend 26
January 2017
Paid 24 May 2017
* 1.5 pence (1.94 cent) per share Ex Dividend 27 April
2017
Paid 18 August 2017
* 1.5 pence (1.98 cent) per share Ex dividend 27 July
2017
Paid 27 November 2017
* 1.5 pence (1.99 cent) per share Ex dividend 26
October 2017
After the year end, a further dividend of 1.5 pence (2.08 cent)
per share was declared on 19 January 2018 in relation to the
quarter ended 31 December 2017.
In the year covered by these financial statements, the share
price of the Company has consistently traded at a premium over the
actual Book Value of the Company.
There have been further AIM market trades since 31 December
2017, details of these can be found on the London Stock Exchange
website by following the link below. Monthly book values and
quarterly reports are also made available as they fall due.
http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GG00BZ6VP173GGGBXASQ1.
html
As of 1 January 2017, the Group changed its presentational and
functional currency from Pounds Sterling to US Dollars.
On 4 September 2017, the Company raised GBP20,090,000
($26,953,749) million before expenses from the issue of 4,018 units
of GBP5,000 ($6,708) nominal convertible unsecured loan stock with
a coupon of 3.5% per annum, a conversion premium of 10% and a
maturity of 7 years. These are listed and admitted to trading on
the International Securities Market of the London Stock Exchange.
In addition, post year end on 22 January 2018, the Company raised a
further GBP10,207,300 ($14,492,418) before expenses from the issue
of a further 1,982 units of GBP5,000 ($7,099) nominal convertible
unsecured loan stock with a coupon of 3.5% per annum, a conversion
premium of 10% and a maturity of 7 years.
For further enquiries, please contact:
APQ Global Limited
Bart Turtelboom - Chief Executive
Officer 020 3478 9708
N+1 Singer - Nominated Adviser and
Broker
James Maxwell / Lauren Kettle 020 7496 3000
Carey Group - TISE sponsor
Claire Torode 01481 737 279
Buchanan Communication - Financial
PR
Charles Ryland / Henry Wilson 020 7466 5000
Notes to Editors
APQ Global Limited
APQ Global (ticker: APQ LN) is a global emerging markets income
company with interests across Asia, Latin America, Eastern Europe,
the Middle East and Africa. The Company's objective is to steadily
grow earnings to deliver attractive returns and capital growth to
shareholders. This objective is achieved through a combination of
revenue generating operating activities and investing in growing
businesses across emerging markets. APQ Global run a
well-diversified and liquid portfolio, take strategic stakes in
selected businesses and plan to take operational control of
companies through the acquisition of minority and majority stakes
in companies with a focus on emerging markets.
For more information, please visit apqglobal.com.
International Advisory Council (IAC)
Established in February 2017, the IAC assists in locating the
best investment opportunities across the globe. The panel of
advisors, chaired by Tania Rotherwick, contribute insights from
their own areas of geographical and sector expertise to support APQ
Global's business strategy.
CHAIRMAN'S STATEMENT
2017 was the first full year of trading for APQ Global,
following our successful IPO in August 2016. We are delighted to be
able to look back and say we delivered on our income and capital
gains goals in the first full year, paying four dividends and
putting ourselves on target for a 6 percent dividend yield in 2017.
We would like to thank our Board of Directors and management team,
who worked hard to make this happen.
In 2017, we achieved an increase in our book value of 4.6
percent and a total return of 9.9 percent.
Over the past year we have also achieved other important
milestones in our company's growth. In September, we successfully
issued a seven-year convertible bond with a coupon of 3.5%
(denominated in Pound Sterling). We are grateful to our new bond
holders and look forward to working with them in the years ahead.
We have also significantly expanded our International Advisory
Council and have gained very valuable expertise in specific
geographies and sectors. We welcome all our new members and look
forward to working with all of you in 2018.
We have deployed the bulk of our portfolio in liquid instruments
in emerging market ("EM") equities, bonds and currencies. While we
are eager to expand our activities in more strategic and direct
investment opportunities, we have found the expected returns to
fall far short of our corporate return objectives. We continue to
look out for rewarding opportunities and are confident that we will
close some interesting opportunities during the course of the year
ahead.
2017 was a year of high correlation across asset classes. G7
equities, G7 government bonds, high yield credit, high-grade
credit, emerging markets equities and bonds all posted positive
returns. This makes us cautious. At the start of 2016, we saw
significant value in emerging markets, particularly in the
resources sector, and benefitted handsomely as emerging markets
rebounded. In 2017, extraneous factors-mainly the election of
President Trump and the continuing environment of extraordinarily
low interest rates-appear to have been the main drivers of returns.
However, as we enter 2018, both are vulnerable to reversals with
the US mid-term elections and further Federal Reserve hikes hanging
over the market.
LOOKING AHEAD TO 2018: MANY REASONS TO STAY POSITIVE
Despite this cautious stance on the state of G7 markets, we
believe that 2018 will continue to be supportive of emerging
markets. Potential GDP growth in emerging markets continues to
outpace its G7 peers by a wide margin. Commodity prices will likely
support laggard economies such as Brazil, Russia and South Africa.
Monetary policy remains attuned to domestic inflation dynamics.
Finally, geo-political risks appear to be abating. The conflict
between North Korea and the United States appears to be headed to a
Cold War equilibrium. Ukraine remains stuck in a similar state. The
conflict in Syria appears to be in its end-game with further
escalation unlikely. In the G7, Brexit remains a wild card but
appears unlikely to have any unfortunate global consequences.
The election cycle in emerging markets will be a dominant factor
in 2018 and drive diversification across markets. While President
Putin won in Russia it appears, the elections in Brazil and Mexico
are likely to throw us some curve balls. In South Africa, Ramaphosa
has secured his place as the head of the ANC, but with only three
out of six seats on the National Executive Committee on his side,
he faces a long and challenging battle in the run up to the 2019
elections. In Brazil, we will not know until the summer how the
cards stack up between ex-President Lula, various centre-right
candidates and a Trump-style firebrand. The country has recovered
from a nasty recession and political scandal and the outcome of the
upcoming Presidential election will be crucial to establish the
future path of fiscal policy and macroeconomic stability.
Given the positive growth outlook for emerging markets (expected
to grow around 5%), we believe keeping our allocation to EM credit
in place will deliver positive returns, despite relatively tight
spreads (both CEMBI and EMBI stand at around 285bp). EM corporates
have started to de-lever in 2017, which combined with a positive
economic outlook globally should keep both spreads and default
rates well contained. One risk to this outlook is an overly
aggressive tightening of monetary conditions by the Federal
Reserve. While impacting the default rates less, this tightening
should nonetheless lead to wider credit spreads.
We also continue to believe that emerging markets will offer
enough idiosyncratic opportunities that can play out independently
from global developments or wider financial market conditions. A
recent example of this has been the continued strong performance of
Argentina as regional elections have given President Macri
additional political capital to implement reforms.
The outlook for emerging market currencies and local markets has
generally continued to brighten over the course of 2017, and growth
figures for the year should come in around 4.5%. Next year's growth
forecast is just shy of 5%. This should also lead to a small
widening of the positive difference of emerging market versus
developed market growth, which should also add support to EM
currencies. Against that there will be elections in several key
emerging markets - Mexico and Brazil being the major ones. Polls
and news flow around these events could lead to heightened
volatility. Another key risk to our constructive outlook would be
an overly aggressive tightening by the Federal Reserve, which would
put pressure on currencies as well as local yield curves. The US
aside, another factor supporting the case for emerging market
growth should be the still very accommodative policies enacted by
central banks in Japan and Europe. While these global influences
can distort emerging market asset prices away from their
fundamental value temporarily, paying close attention to
fundamentals will eventually pay off for longer-term investors.
The outlook for 2018 for emerging market equities looks very
strong, with multiple levers of growth all pointing in the same
direction. For the first time since the global financial crisis we
are experiencing synchronised growth across all the major developed
and emerging economies and we believe this will continue in 2018.
We expect developed market GDP growth to be between 1.8% and 2.0%
in 2018 and emerging markets to post growth of between 4.8% and
5.0%.
Sincerely,
Wayne Bulpitt
Chairman, APQ Global Limited
2017 IN REVIEW
During 2017, the Company returned 9.9% for its shareholders.
During 2017, the Company paid four dividends for a total of 5p per
share (6.53 $ cents) and its US Dollar book value rose 5.59 $ cents
to $1.281 per share. During the quarter, the Company gradually
increased its exposure, mainly in currencies and credit. At the end
2017, the Company's funds remained fully deployed, except for cash
retained for collateral and working capital purposes.
During 2017, management estimates indicate that the Company's
credit exposure generated 6.59%, equity investments returned 6.73%
and rates contributed 2.92%. Emerging markets ("EM") Currency
exposure lost 6.34%.
Return Contribution for Each Asset Class (in
$)
2017
=======================
Credit 6.59%
=======================
Equity 6.73%
=======================
FX -6.34%
=======================
Rates 2.92%
=======================
TOTAL* 9.90%
=======================
*Note: the contribution for each asset class also includes the
relative contribution of other adjustments impacting total return
for the year. The overall return to shareholder for the year
reflects the movements in book value plus dividends paid.
According to management estimates, the Company is comfortably on
track to meet its target ongoing annual dividend yield of 6% and
the dividend is well covered by income generated by the portfolio.
Breaking down our dividend funding, management estimates indicate
that 1.7% comes from the Company's equity positions and 3.5% is
derived from credit positions. Currency exposure contributes 1.7%
with the remaining 2.1% coming from APQ Global's strategic and
government bond portfolios.
At the end of 2017, the bulk of the Company's overall exposure
was in EM credit and government bonds (66.5% of book value),
followed by EM equity exposure (26.8%). EM local currency bond
exposure accounted for 25.1% of book value.
Portfolio Breakdown
% of Book Value
=================
EM Credit and Government
Bonds 66.5%
=================
EM Local Currency Bonds 25.1%
=================
EM Equities 26.8%
=================
Unemcumbered Cash Holding 20.9%
=================
TOTAL* 139.3%
=================
*Note: this excludes -39.3% of other net liabilities that form
part of the book value.
Liquid Markets Portfolio
At the end of 2017, the Company's top 10 holdings in the EM
equity portfolio were:
EM Equity Exposure
Security Name % of Book Value
=================
City of London Investment Group
PLC 4.2%
=================
Anglo Pacific Group PLC 1.2%
=================
African Rainbow Minerals Ltd 0.8%
=================
Exxaro Resources Ltd 0.8%
=================
OCI Co Ltd 0.7%
=================
Hyundai Marine & Fire Insurance
Co Ltd 0.7%
=================
Tekfen Holding AS 0.7%
=================
United Tractors Tbk PT 0.7%
=================
OTP Bank PLC 0.7%
=================
Petronas Chemicals Group Bhd 0.7%
=================
The largest EM equity positions are now in China and South
Korea, followed by Russia and South Africa, due to the Company's
bullish view on commodities. The Company believes that the global
economic growth outlook will continue to be supportive of commodity
markets and that EM equities offer compelling value. From a sector
perspective, the bulk of the Company's EM exposure is in energy,
industrials and financials, taking into account the sector
composition of index exposure in the EM country indices and global
EM.
The Company's EM credit book is well diversified for stable
income growth and the largest position is Serbian sovereign risk,
accounting for 3.1% of book value.
EM Credit Exposure
Security Name % of Book Value
=================
SERBIA 5 7/8 12/03/18 3.1%
=================
TURKEY 6 3/4 04/03/18 3.0%
=================
AFREXI 3 7/8 06/04/18 3.0%
=================
ITAU 2.85 05/26/18 3.0%
=================
LUKOIL 3.416 04/24/18 3.0%
=================
PEMEX 4 7/8 01/18/24 2.1%
=================
KZOKZ 9 1/8 07/02/18 1.5%
=================
VIP 4.95 06/16/24 1.5%
=================
CAIXBR 4 1/2 10/03/18 1.5%
=================
GMKNRM 4 3/8 04/30/18 1.3%
=================
Geographically, the credit portfolio is also well diversified
with the largest positions concentrated in Brazil (14.5%), Russia
(13.5%) and Turkey (12.9%).
From a sector perspective, the credit exposure is concentrated
in government entities, banks and corporations in the energy
sector.
During the last quarter of 2017, the Company significantly
paired its direct currency exposure. The largest long positions
were held in the Brazilian Real (12%) and the South African Rand
(2.5%).
The Company's cautious stance is reflected in its low
sensitivity to overall market movements. The stress tests indicate
that the Company would marginally lose 0.43% of book value for a
10% sell-off in the S&P equity index, drop 0.96% in value if
credit spreads were to widen 10% and lose 2.90% in value if
interest rates in the US were to increase by 1%.
Stress Test Scenarios (as of 31 December 2017)
Scenario Change in % of Book
Value
=====================
Equity Stress Test (S&P -10%) -0.43%
=====================
Credit Stress Test (Credit Spreads
up 10%) -0.96%
=====================
Interest Rates Stress Test (Yields
up 1%) -2.90%
=====================
Strategic Investment Portfolio
During the last quarter of 2017, the Company made a $10m
investment in the Oppenheimer Emerging Markets Local Debt UCITS
Fund. Through this investment, the Company gains access to a
diverse pool of local markets debt instruments in a very cost
effective manner.
In addition, the Company has maintained its investment in City
of London Investment Group ('CLIG') representing 4.2% of its
overall book value. APQ Global believes that the positive outlook
for the EM equity asset class, the prudent management and an
attractive dividend yield bode well for the CLIG stock price.
During 2017, the Company generated a 24.2% return on this
investment.
The Company also holds 3.1% and 4.1% of book value respectively
in two publicly listed EM debt funds (EMD US and EDD US). Both
funds trade at appealing discounts and have high annual dividend
yields in the range of 7.5%. The Company made a 13.8% and 16.2%
return respectively on these investments.
The Company also holds a small stake in Anglo Pacific Group of
1.2% of book value, a London Main Market listed mining royalty
company, through participation in a rights issue earlier in the
year to fund a new royalty agreement with a Canadian mining
company. This investment generated a 26.5% return.
Direct Investment Portfolio
The Company is currently evaluating various business
opportunities with a focus on EM which are undergoing a process of
due diligence and takes a cautious approach to such investments.
The Company will update shareholders in due course on its progress
with these potential investment opportunities.
Consolidated Statement of Comprehensive Income for the year
ended 31 December 2017
Period ended
31 December
Note Year ended 2016
31 December Restated
2017 in USD
$ $
Turnover 5 10,161,594 -
Net (loss) / gain on financial assets at
fair value through profit and loss 12 (2,722,395) 1,288,867
Administrative expenses 6 (1,786,643) (509,009)
Operating profit for the year/period before
tax 5,652,556 779,858
Interest received 7 306,529 -
Interest paid 8 (499,403) -
Profit on ordinary activities before taxation 5,459,682 779,858
Tax on profit on ordinary activities - -
Profit for the financial year/period 5,459,682 779,858
Other comprehensive income
Exchange difference due to change in presentational
currency 2.10 - (4,927,513)
Foreign currency translation difference
- foreign operations 2.10 5,737 -
Total comprehensive income for the year/period 5,465,419 (4,147,655)
============== ==============
Basic and diluted earnings per share 9 0.06995 0.00999
Consolidated Statement of Financial Position as at 31 December
2017
2016
Restated
2017 in USD
Note $ $
Assets
Non-current assets
Property, plant and equipment 11 18,046 -
Investments 12 91,923,100 94,645,495
-------------- -------------
Total non-current assets 91,941,146 94,645,495
Current assets
Trade and other receivables 13 26,597,221 -
Cash and cash equivalents 4,005,434 1,128,771
-------------- -------------
Total current assets 30,602,655 1,128,771
Total assets 122,543,801 95,774,266
============== =============
Current liabilities
Trade and other payables 14 (414,908) (144,137)
-------------- -------------
Total current liabilities (414,908) (144,137)
Long term liabilities
3.5% Convertible Unsecured Loan Stock 15 (22,135,311) -
-------------- -------------
Total long term liabilities (22,135,311) -
Net assets 99,993,582 95,630,129
============== =============
Equity
Share capital 17 99,494,707 99,777,784
Equity component of 3.5% Convertible Unsecured
Loan Stock 15 4,285,225 -
Retained earnings 1,141,163 779,858
Exchange reserve 2.10 (4,927,513) (4,927,513)
Total equity 99,993,582 95,630,129
============== =============
Net asset value per ordinary share 128.11c 122.52c
============== =============
Consolidated Statement of Changes in Equity as at 31 December
2017
CULS equity Retained Exchange
Share capital component earnings reserve Total
$ $ $ $ $
Balance at 10 May 2016 - - - - -
Issue of shares 101,355,979 - - - 101,355,979
Transaction costs of
raising equity (1,578,195) - (1,578,195)
Profit for the period - - 779,858 - 779,858
Exchange reserve - - - (4,927,513) (4,927,513)
At 31 December 2016
(Restated in USD) 99,777,784 - 779,858 (4,927,513) 95,630,129
=============== ============= ============= ============== =============
Transaction costs of
raising equity (283,077) - - - (283,077)
CULS equity component - 4,285,225 - - 4,285,225
Profit for the year - - 5,459,682 - 5,459,682
Foreign currency translation
difference - foreign
operations - - 5,737 - 5,737
Dividends - - (5,104,114) - (5,104,114)
As at 31 December 2017 99,494,707 4,285,225 1,141,163 (4,927,513) 99,993,582
=============== ============= ============= ============== =============
Consolidated Statement of Cash Flow for the year ended 31
December 2017
Period ended
31 December
Year ended 2016
31 December Restated
2017 in USD
Note $ $
Cash flow from operating activities
Profit for the financial year/period 5,459,682 779,858
Adjustments for non-cash income and expenses
Interest received 7 (306,529) -
Interest paid 8 499,403 -
Depreciation 11 7,350 -
Net loss/(gain) on financial assets at fair
value through profit and loss 12 2,722,395 (1,288,867)
Changes in operating assets and liabilities
Increase in trade and other receivables 13 (124,664) -
Increase in trade and other payables 14 270,771 144,137
Net cash inflow/(outflow) from operating
activities 8,528,408 (364,872)
Cash flow from investing activities
Payments to acquire investments * - (76,040,176)
Payments to acquire property, plant and
equipment 11 (24,902) -
Loan to APQ Cayman Limited 13 (26,472,557)
Net cash outflow from investing activities (26,497,459) (76,040,176)
Cash flow from financing activities
Proceeds from issue of shares * - 79,112,014
Transaction costs of raising equity 16 (283,077) (1,578,195)
Equity component of CULS 15 4,285,225 -
Issue of CULS 15 22,135,311
Equity dividends paid 10 (5,104,114) -
Interest received 7 306,529 -
Interest on CULS 8 (499,403) -
Net cash inflow from financing activities 20,840,471 77,533,819
Net increase in cash and cash equivalents 2,871,420 1,128,771
Cash and cash equivalents at beginning of 1,128,771 -
year/period
Effect of exchange rate fluctuations on 5,243 -
conversion of foreign operation
Cash and cash equivalents at end of year/period 4,005,434 1,128,771
============== ==============
* In addition to the cash subscription of $76,040,176
(GBP58,500,000) for the acquisition of APQ Cayman Limited, the
Company also issued shares in the amount $22,243,964
(GBP17,130,244) for a consideration of investment in APQ Cayman
Limited for the period ended 31 December 2016.
Notes to the Financial Statements for the year ended 31 December
2017
1. Corporate information
The financial statements of APQ Global Limited (the "Group") for
the year ended 31 December 2017 were authorised for issue in
accordance with a resolution of the Board of Directors on May 2018.
The Company is incorporated as a limited company in Guernsey. The
Company was incorporated on 10 May 2016 for an unlimited duration
in accordance with the Companies (Guernsey) Law, 2008. The
Company's registered office is at 1st Floor, Tudor House, Le
Bordage, St Peter Port, Guernsey, GY1 1DB.
The objective of the Company is to steadily grow its earnings to
seek to deliver attractive returns and capital growth through a
combination of building growing businesses in emerging markets as
well as earning revenue from income generating operating
activities.
The Company and its subsidiaries have no investment restrictions
and no maximum exposure limits will apply to any investments made
by the Group, unless otherwise determined and set by the Board from
time to time. No material change will be made to the Company's or
subsidiaries objective or investing policy without the approval of
Shareholders by ordinary resolution.
The Group's investment activities are managed by the Board.
The shares are quoted on The International Stock Exchange for
informational purposes but cannot be traded on this exchange. The
ordinary shares are admitted to trading on AIM.
2. Significant accounting policies
2.1 Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union and applicable
law. The financial statements have been prepared on a
historical-cost basis, except for financial assets and financial
liabilities held at fair value through profit or loss (FVPL) that
have been measured at fair value.
The principle accounting policies are set out below.
2.2 Functional and presentational currency
As of 1 January 2017, the Company changed its presentational and
functional currency from Pounds Sterling to US Dollars.
The Group's main activities and returns for the year ended 31
December 2017 are US Dollars from its subsidiary APQ Cayman
Limited. In addition, the Company ceased hedging the FX exposure on
their investment in APQ Cayman Limited during the year. As a
result, the Board carried out a review of the underlying
performance of the Company and concluded that the functional
currency should be changed from Pounds Sterling to US Dollars.
During the year, the Company also changed the currency in which
it presents its financial statements from Pounds Sterling to US
Dollars, to bring the presentational currency in line with its
functional currency. A change in presentational currency is a
change in accounting policy which is accounted for retrospectively.
The financial information for the period ended 31 December 2016
previously reported in Pounds Sterling has been restated in US
Dollars using differing exchange rates. The prior period statement
of comprehensive income was converted using an average rate for the
period. Equity shares were converted using the historical date
which was the date of issue of the shares. The assets and
liabilities were converted at the closing exchange date at 31
December 2016. Therefore, an exchange reserve of $4,927,513 is
included in the comparative period to reflect the fact that the
presentational currency differs from the functional currency in
that period.
2.3. Standards issued but not yet effective
New and amended standards and interpretations
There were no new standards or interpretations effective for the
first time for periods beginning on or after 1 January 2017 that
had a significant effect on the Group's financial statements.
Furthermore, none of the amendments to standards that are effective
from the that date had a significant effect on the financial
statements.
2.3. Standards issued but not yet effective (continued)
At the date of authorisation of these financial statements, IFRS
9 "Financial instruments" was issued to replace IAS 39, but will
not become effective until accounting periods beginning on or after
1 January 2018 and has not been applied in these financial
statements. The Group's financial assets predominantly comprise
equity investments held at fair value and the introduction of IFRS
9 is not expected to have a material impact on the reported results
and financial position of the Group.
Also, at the date of authorisation of these financial statement,
IFRS 15 "Revenue from contracts with customers" was issued but will
not become effective until accounting periods beginning on or after
1 January 2018 and IFRS 16 "Leases" was issued but will not become
effective until accounting periods beginning on or after 1 January
2019. The Group has limited exposure to revenue from contracts with
customers and the Group's lease commitments are disclosed in note
17. The introduction of IFRS 15 and IFRS 16 is not expected to have
a material impact on the reported results and financial position of
the Group.
Other accounting standards have been published and will be
mandatory for the Group's accounting periods beginning on or after
1 January 2018 or later periods. The impact of these standards is
not expected to be material to the reported results and financial
position of the Group.
2.4 Basis of consolidation
The Directors have concluded that APQ Global Limited has all the
elements of control as prescribed by IFRS 10 "Consolidated
Financial Statements" in relation to its subsidiaries and that the
Company satisfies the criteria to be regarded as an investment
entity. For a detailed analysis of the assessment of the criteria
please refer to note 3; Significant accounting judgements,
estimates and assumptions. Based on this, the subsidiary APQ Cayman
Limited is therefore measured at fair value through profit or loss
(FVTPL), in accordance with IFRS 13 "Fair Value Measurement" and
IAS 39 "Financial Instruments; Recognition and Measurement".
Notwithstanding this, IFRS 10 requires subsidiaries that provide
services that relate to the investment entity's investment
activities to be consolidated. The subsidiary APQ Partners LLP
assists the Board with implementation of its business strategy,
provides research on business opportunities in emerging markets and
provides support for cash management and risk management purposes.
Accordingly, the consolidated financial statements of the Group
include the results of the Company and APQ Partners LLP, whilst APQ
Cayman Limited is measured at FVTPL. The results of APQ Partners
LLP are consolidated from the date control commences. Intra-group
balances and transactions and any unrealised income and expenses
arising from intra-group transactions are eliminated in preparing
these consolidated financial statements.
2.5 Financial instruments
The Group classifies its financial assets and financial
liabilities at initial recognition into the following categories,
in accordance with IAS 39 Financial Instruments: Recognition and
Measurement.
The Group recognises trade debtors, prepayments and accrued
income and other debtors as financial assets. Further detail is
disclosed in Note 13 in these financial statements. The Group
recognises trade creditors, other creditors and accruals as
financial liabilities. Further detail is disclosed in Note 13 in
these financial statements.
Financial assets and liabilities at FVPL.
The investment in APQ Cayman Limited is designated at fair value
through profit or loss upon initial recognition on the basis that
they are part of a group of financial assets that are managed and
have their performance evaluated on a fair value basis, in
accordance with risk management and investment strategies of the
Company, as set out in the Company's offering document.
In accordance with the exception under IFRS 10 Consolidated
Financial Statement for an investment entity, the Company does not
consolidate its investment in APQ Cayman Limited and has designated
the investment as fair value through profit or loss in the
financial statements.
The investment in APQ Cayman Limited is subsequently measured at
fair value with movements in fair value recognised as net
gain/(loss) on financial assets at fair value through profit and
loss in the consolidated statement of comprehensive income.
All other financial assets and financial liabilities are
classified, at initial recognition, as receivables or payables at
fair value and are subsequently measured at amortised cost.
A financial asset (or, where applicable, a part of a financial
asset or a part of a group of similar financial assets) is
derecognised where the rights to receive cash flows from the asset
have expired, or the Group has transferred its rights to receive
cash flows from the asset, or has assumed an obligation to pay the
received cash flows in full without material delay to a third party
under a pass-through arrangement and either:
(a) the Group has transferred substantially all of the risks and
rewards of the asset; or
(b) the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset.
When the Company has transferred its right to receive cash flows
from an asset (or has entered into a pass-through arrangement), and
has neither transferred nor retained substantially all of the risks
and rewards of the asset nor transferred control of the asset, the
asset is recognised to the extent of the Group's continuing
involvement in the asset. In that case, the Group also recognises
an associated liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights and
obligations that the Group has retained.
The Group derecognises a financial liability when the obligation
under the liability is discharged, cancelled or expired.
2.6 Fair value measurement
The Company measures its investment in APQ Cayman Limited at
fair value at each reporting date, which is considered to be the
carrying value of the net assets of APQ Cayman Limited. APQ Cayman
Limited measures its underlying investments at fair value.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either in the
principal market for the asset or liability or, in the absence of a
principal market, in the most advantageous market for the asset or
liability. The principal or the most advantageous market must be
accessible to the Company. The fair value of an asset or a
liability is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming that market participants act in their economic best
interest.
The fair value for financial instruments traded in active
markets at the reporting date is based on their quoted price (bid
price for long positions and ask price for short positions),
without any deduction for transaction costs.
For all other financial instruments not traded in an active
market, the fair value is determined by using valuation techniques
deemed to be appropriate in the circumstances. Valuation techniques
include the market approach (i.e., using recent arm's length market
transactions adjusted as necessary and reference to the current
market value of another instrument that is substantially the same)
and the income approach (i.e., discounted cash flow analysis and
option pricing models making as much use of available and
supportable market data as possible).
For assets and liabilities that are measured at fair value on a
recurring basis, the Company identifies transfers between levels in
the hierarchy by re-assessing the categorisation (based on the
lowest level input that is significant to the fair value
measurement as a whole), and deems transfers to have occurred at
the beginning of each reporting period.
2.7 Foreign currency translations
Transactions during the year, including purchases and sales of
securities, income and expenses, are translated at the rate of
exchange prevailing on the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies are retranslated at the functional currency rate of
exchange ruling at the reporting date.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates as at
the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined.
Foreign currency transaction gains and losses on financial
instruments classified as at FVPL are included in profit or loss in
the statement of comprehensive income as part of the 'net (loss) or
gain on financial assets at fair value through profit or loss'.
On consolidation, the income and expense items of APQ Partners
LLP are translated into US Dollar at the average exchange rate for
the period. All assets and liabilities of APQ Partners LLP are
translated at exchange rates prevailing on the statement of
financial position date. Exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in
equity.
2.8 Share capital
In the event of the liquidation of the Company the Ordinary
Shares entitle the holder to a pro rata share of the Company's net
assets. Shares are issued net of transaction costs, which are
defined as incremental costs directly attributable to the equity
transaction that otherwise would have been avoided.
2.9 Retained earnings
Retained earnings consists of profit or losses for the financial
year as disclosed in the Statement of Comprehensive Income less
foreign currency translation differences. Dividends declared by the
Board of Directors are paid are accounted for as a deduction from
retained earnings.
2.10 Exchange reserve
During the year, the Company changed the functional and
presentational currency in which it presents its financial
statements from Pounds Sterling to US Dollars. A change in
presentational currency is a change in accounting policy which is
accounted for retrospectively. The financial information for the
period ended 31 December 2016 previously reported in Pounds
Sterling has been restated in US Dollars using differing exchange
rates. The prior period statement of comprehensive income was
converted using an average rate for the period. Equity shares were
converted using the historical date which was the date of issue of
the shares. The assets and liabilities were converted at the
closing exchange date at 31 December 2016. Therefore, an exchange
reserve is included in the comparative period to reflect the fact
that the presentational currency differs from the functional
currency in that period.
2.11 Distributions to shareholders
Dividends are at the discretion of the Company. A dividend to
the Company's shareholders is accounted for as a deduction from
retained earnings. An interim dividend is recognised as a liability
in the period in which it is irrevocably declared by the Board of
Directors. A final dividend is recognised as a liability in the
period in which it is approved by the annual general meeting of
shareholders.
2.12 Cash and cash equivalents
Cash and cash equivalents in the statement of financial position
comprise cash on hand and short-term deposits in banks that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, with original
maturities of three months or less.
Short-term investments that are not held for the purpose of
meeting short-term cash commitments and restricted margin accounts
are not considered as 'cash and cash equivalents'.
For the purpose of the statement of cash flows, cash and cash
equivalents consist of cash and cash equivalents as defined above,
net of outstanding bank overdrafts when applicable.
2.13 Property, plant and equipment
Property, plant and equipment is recorded at historical cost
less accumulated depreciation and impairment losses.
Depreciation is provided on all property, plant and equipment at
rates calculated to write off the cost or valuation of each asset
evenly over its expected useful life to estimated residual values,
as follows:
Office equipment over 3 years
Furniture and fixtures over 4 years
Leasehold improvements over 2 years
Residual values, useful lives and depreciation method are
reviewed, and adjusted if appropriate, at each year end.
2.14 3.5% Convertible Unsecured Loan Stock 2024
3.5% Convertible Unsecured Loan Stock 2024 ("CULS") issued by
the Company is regarded as a compound instrument, comprising of a
liability component and an equity component. At the date of issue,
the fair value of the liability component was estimated by assuming
that an equivalent non-convertible obligation of the Company would
have a coupon rate of 6.5%. The fair value of the equity component,
representing the option to convert liability into equity, is
derived from the difference between the issue proceeds of the CULS
and the fair value assigned to the liability. The liability
component is subsequently measured at amortised cost using the
effective interest rate.
Direct expenses associated with the CULS issue are allocated to
the liability and equity components in proportion to the split of
the proceeds of the issue. Expenses allocated to the liability
component are amortised over the life of the instrument.
The interest expense on the CULS is calculated according to the
effective interest rate method by applying the assumed rate of 6.5%
at initial recognition to the liability component of the
instrument. The difference between this amount and the actual
interest paid is added to the carrying amount of the CULS.
2.15 Interest revenue and expenses
Interest revenue and expenses are recognised in the statement of
comprehensive income for all interest-bearing financial instruments
using the effective interest method.
2.16 Dividend income
Dividend income is recognised on the date when the Company's
right to receive the payment is established.
2.17 Net gain or loss on financial assets and liabilities at
fair value through profit or loss
Net gains or losses on financial assets and liabilities at FVPL
are changes in the fair value of financial assets and liabilities
held for trading or designated upon initial recognition as at FVPL
and exclude interest and dividend income and expenses.
Unrealised gains and losses comprise changes in the fair value
of financial instruments for the period and from reversal of the
prior period's unrealised gains and losses for financial
instruments which were realised in the reporting period. Realised
gains and losses on disposals of financial instruments classified
as at FVPL are calculated using the first-in, first-out (FIFO)
method. They represent the difference between an instrument's
initial carrying amount and disposal amount, or cash payments or
receipts made on derivative contracts (excluding payments or
receipts on collateral margin accounts for such instruments).
2.18 Fee expense
Fees are recognised on an accrual basis. Refer to Note 6 for
details of fees and expenses paid in the period.
2.19 Taxes
The Company is taxable in Guernsey at the company standard rate
of 0%.
However, in some jurisdictions, investment income is subject to
withholding tax deducted at the source of the income. Withholding
tax is a generic term used for the amount of withholding tax
deducted at the source of the income and is not significant for the
Company. The Company presents the withholding tax separately from
the gross investment income in the statement of comprehensive
income. For the purpose of the statement of cash flows, cash
inflows from investments are presented gross of withholding taxes,
when applicable.
2.20 Leases
Leases are accounted for in accordance with IAS 17 and IFRIC 4.
The leases entered into by the Group are operating leases. The
total payments made under operating leases are charged to other
administrative expenses in the statement of comprehensive income on
a straight-line basis over the period of the lease. When an
operating lease is terminated before the lease period has expired,
any payment required to be made to the lessor by way of penalty is
recognised as an expense in the period in which termination takes
place.
2.21 Shared-based payments
During the year, the Company formalised a management share plan.
The plan allows for certain members of the management to benefit
from 20% of any increase in the year end book value per share for a
given year (a performance period). Awards can be issued as an
allocation of a specified number of shares or as an option (a right
to acquired shares under the plan for nil consideration). Since any
awards granted are to be settles by the issuance of equity they are
deemed to be equity settled share-based payments accounted for in
accordance with IFRS 2.
Equity-settled share-based payments are measured at fair value
at the date of grant. The fair value determined at the grant date
of the equity-settled share-based payments is expensed over the
vesting period, together with a corresponding increase in equity,
based upon the Group's estimate of the shares that will eventually
vest, which involves making assumptions about any performance and
service conditions over the vesting period. The vesting period is
determined by the period of time the relevant participant must
remain in the Group's employment before the rights to the shares
transfer unconditionally to them. Where a service period commences
in anticipation of awards to be granted the expense of shares
granted should be recognised by the Group over the vesting period
from the date of commencement of service.
Where the terms of an equity-settled transaction are modified,
as a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any increase in
the value of the transaction as a result of the modification, as
measured at the date of modification.
Where an equity-settled transaction is cancelled, it is treated
as if it had vested on the date of the cancellation, and any
expense not yet recognised for the transaction is recognised
immediately. However, if a new transaction is substituted for the
cancelled transaction and designated as a replacement transaction
on the date that it is granted, the cancelled and new transactions
are treated as if they were a modification of the original
transaction, as described in the previous paragraph.
Per the management share plan the vesting period for any awards
issued can be up to 5 years and subject to certain conditions. No
awards have been granted as of the year end date and no amount in
respect of any awards that may be issued in respect of the December
2017 performance period have been recognised in these financial
statements.
3. Significant accounting judgements, estimates and
assumptions
The preparation of the Group's financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts recognised in the financial statements
and disclosure of contingent liabilities. However, uncertainty
about these assumptions and estimates could result in outcomes that
could require a material adjustment to the carrying amount of the
asset or liability affected in future periods.
Judgements
In the process of applying the Group's accounting policies,
management has made the following judgements, which have the most
significant effect on the amounts recognised in the financial
statements:
Assessment as investment entity
The Company owns 100% of the shares of APQ Cayman Limited.
Entities that meet the definition of an investment entity within
IFRS 10 are required to measure their subsidiaries at fair value
through profit or loss rather than consolidate them, except to the
extent that the subsidiary provides services that relate to the
investment entity's investment activities. The criteria which
define an investment entity are, as follows:
-- An entity that obtains funds from one or more investors for
the purpose of providing those investors with investment management
services;
-- An entity that commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income, or both; and
-- An entity that measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Company's listing document details its objective of
providing investment management services to investors which
includes investing in equities, fixed income securities, private
equity and property investments for the purpose of returns in the
form of investment income and capital appreciation. This is via its
subsidiary APQ Cayman Limited.
The Company reports to its investors via quarterly investor
information, and to its management, via internal management
reports, on a fair value basis. All investments are reported at
fair value to the extent allowed by IFRS in the Company's annual
reports. The Company has a clearly documented exit strategy for all
of its underlying investments (i.e. those investments held by APQ
Cayman Limited).
The Board has concluded that the Company meets additional
characteristics of an investment entity, in that it has more than
one investment; the Companies ownership interests are predominantly
in the form of equities and similar securities; it has more than
one investor and its investors are not related parties.
The Board has therefore concluded that the Company meets the
definition of an investment entity. These conclusions will be
reassessed on an annual basis, if any of these criteria or
characteristics change and therefore recognises its investment in
APQ Cayman Limited at fair value through profit or loss. The Board
has also concluded that since APQ Partners LLP provides services
related to the Company's investment activities, this subsidiary
should be consolidated.
Estimates and assumptions
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below. The Group based its assumptions and estimates
on parameters available when the financial statements were
prepared. However, existing circumstances and assumptions about
future developments may change due to market changes or
circumstances arising beyond the control of the Group. Such changes
are reflected in the assumptions when they occur.
Fair value
The Directors consider that the fair value of the investment in
APQ Cayman Limited should be based on the NAV of APQ Cayman
Limited, please refer to note 2.6 and note 12 for further
discussion regarding the fair value of investments.
4. Segment Information
For management purposes, the Group is organised into one main
operating segment, which invests in equities and credit, government
and local currency bonds. All of the Group's activities are
interrelated, and each activity is dependent on the others.
Accordingly, all significant operating decisions are based upon
analysis of the Group as one segment. The financial results from
this segment are equivalent to the financial statements of the
Group as a whole.
The following table analyses the Group's assets by geographical
location. The basis for attributing the assets are the place of
listing for the securities or for non-listed securities, country of
domicile.
2017 2016
Group $ $
Cayman 118,395,657 94,645,495
United Kingdom 457,254 -
Guernsey 3,690,890 1,128,771
122,543,801 95,774,266
============= ============
5. Analysis of turnover
Year ended Period ended
31 December 31 December
2017 2016
$ $
Dividends received from APQ Cayman Limited 10,150,252 -
Rental income 11,342 -
10,161,594 -
============== ==============
6. Analysis of administrative expenses
Year ended Period ended
31 December 31 December
2017 2016
$ $
Recharge of expenses from APQ Partners
LLP - 271,345
Personnel expenses 380,526 -
Operating lease expenses 91,113 -
Depreciation expenses 7,350 -
Audit fees 78,098 72,974
Non-audit fees from auditor - 5,560
Nominated advisor fees 98,761 53,018
Administration fees and expenses 116,544 31,582
Director's fees for Bart Turtelboom 118,666 -
Director's fees for Wayne Bulpitt 39,049 19,091
Director's fees for Richard Bray 39,049 19,091
Director's fees for Philip Soulsby 22,842 13,818
Other expenses 427,012 11,412
Professional fees 410,587 6,000
Insurance 12,798 5,118
Net exchange gains (55,752) -
1,786,643 509,009
============== ==============
7. Interest received
Year ended Period ended
31 December 31 December
2017 2016
$ $
Loan interest received from APQ Cayman
Limited 306,499 -
Bank interest received 30 -
306,529 -
============== ==============
During the year, the Company provided a loan of $26,472,557 to
APQ Cayman Limited from the proceeds of the CULS issue. The loan is
repayable on demand and the entire balance is outstanding at 31
December 2017 and is included within trade and other receivables.
In addition, the Company charged interest of $306,499 to APQ Cayman
Limited for the year ended 31 December 2017. This was fully
received during the year and no balance was outstanding at year
end. Interest is accrued on the outstanding balance of the loan at
such rate as is required to enable the Company to meet its
obligations to holders of its convertible unsecured loan stock 2024
in relation to the payment of interest thereon.
8. Interest paid
Year ended Period ended
31 December 31 December
2017 2016
$ $
Interest on 3.5% Convertible Unsecured
Loan Stock 2024 499,403 -
============== ==============
9. Earnings Per Share
The basic and diluted earnings per shares are calculated by
dividing the profit or loss by the average number of ordinary
shares outstanding during the year/period.
Year ended Period ended
31 December 31 December
2017 2016
$ $
Total comprehensive income for the year/period 5,459,682 779,858
Average number of shares in issue 78,055,000 78,055,000
Earnings per share 0.06995 0.00999
============== ==============
For the current year and the prior period there was no dilution
per ordinary share.
10. Dividends
There were no dividends paid in the period ended 31 December
2016. Dividends were declared in the year ended 31 December as
follows:
Dividend
per share Dividend
Ex-dividend Payment date Dividend Dividend (GBP) per share
date (GBP) ($) ($)
26 January 24 February
First dividend 2017 2017 390,275 491,005 0.005 0.006
--------------- ----------------- ----------- ------------ ------------ ------------
27 April
Second dividend 2017 24 May 2017 1,170,825 1,514,755 0.015 0.019
--------------- ----------------- ----------- ------------ ------------ ------------
18 August
Third dividend 27 July 2017 2017 1,170,825 1,543,557 0.015 0.020
--------------- ----------------- ----------- ------------ ------------ ------------
26 October 27 November
Fourth dividend 2017 2017 1,170,825 1,554,797 0.015 0.020
--------------- ----------------- ----------- ------------ ------------ ------------
3,902,750 5,104,114 0.050 0.065
---------------------------------------------------- ----------- ------------ ------------ ------------
The stated dividend policy of the Company is to target an
annualised dividend yield of 6% based on the Placing Issue Price.
The past three dividend payments of GBP0.015 are on target with the
stated policy. In addition, the Company declared a further dividend
of 1.5 pence (2.08 cent) per share on 19 January 2018 in respect of
the quarter ended 31 December 2017.
There is no guarantee that any dividends will be paid in respect
of any financial year. The ability to pay dividends is dependent on
a number of factors including the level of income returns from the
Company's businesses. There can be no guarantee that the Group will
achieve the target rates of return referred to in this document or
that it will not sustain any capital losses through its
activities.
11 Property, plant and equipment
Office Furniture Leasehold
equipment and fixtures improvements Total
$ $ $ $
Cost
At 1 January 2017 - - - -
Acquired during the
year* 90,308 11,449 34,588 136,345
Additions during the
year 14,979 2,038 - 17,017
Disposals (64,473) - - (64,473)
Exchange differences 2,228 1,032 - 3,260
------------ --------------- --------------- ----------
At 31 December 2017 43,042 14,519 34,588 92,149
============ =============== =============== ==========
Accumulated depreciation
At 1 January 2017 - - - -
Acquired during the
year* 82,512 11,360 34,588 128,460
Charge for the year 6,913 437 - 7,350
Disposals (64,473) - - (64,473)
Exchange differences 1,826 940 - 2,766
------------ --------------- --------------- ----------
At 31December 2017 26,778 12,737 34,588 74,103
============ =============== =============== ==========
Net book value
At 31 December 2017 16,264 1,782 - 18,046
============ =============== =============== ==========
At 31 December 2016 - - -
============ =============== =============== ==========
*Acquired as part of acquisition of APQ Partners LLP
12. Investments
APQ Cayman
Limited
$
At 1 January 2017 94,645,495
Additions -
Fair value movement (2,722,395)
91,923,100
=============
APQ Cayman Limited was acquired during the prior year. APQ
Global Limited wholly owns APQ Cayman Limited whose registered
office of the Company is at the offices of Mourant Ozannes
Corporate Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay,
PO Box 1348, Grand Cayman KY1-1108, Cayman Islands. The Company
meets the definition of an investment entity. Therefore, it does
not consolidate APQ Cayman Limited and recognises it as an
investment at fair value through profit or loss.
APQ Global Limited is the managing partner of APQ Partners LLP
whose registered office is at 22-23 Old Burlington Street, London,
W1S 2JJ. This subsidiary is consolidated into the group financial
statements. Refer to 2.4 for further detail.
Valuation techniques
APQ Cayman Limited has a portfolio of tradable assets and
liabilities which it values at fair value using the same policies
as the Company. The Company is able to redeem its holding of APQ
Cayman Limited at its net asset value. Fair value of the investment
in APQ Cayman Limited is therefore measured at its Net Asset
Value.
Unlisted managed funds
The Company classifies its investments into the three levels of
the fair value hierarchy based on:
Level 1: Quoted prices in active markets for identical assets or
liabilities;
Level 2: Those involving inputs other than quoted prices
included in Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices);
and
Level3: Those with inputs for the asset or liability that are
not based on observable market data (unobservable inputs).
The Company has classified its investment in APQ Cayman Limited
as level 3 because its net asset value is deemed to be an
unobservable input. The most significant unobservable input used in
the fair value of the investment in APQ Cayman is the NAV. The
movement in the investments in the year are shown above.
The movement of investments classified under level 3 is the same
as the table above.
Sensitivity
The most significant unobservable input used in the fair value
is the NAV of APQ Cayman Limited. A reasonable change of 5% in the
NAV will have an impact of $4,596,155 (2016 - $4,732,275) on the
fair value of the investment.
Further sensitivity to underlying market movements has been
noted in the 2017 review.
13. Trade and other receivables
2017 2016
$ $
Trade debtors 8,667 -
Loan to APQ Cayman
Limited 26,472,557 -
Prepayments and accrued
income 74,730 -
Other debtors 41,267 -
26,597,221 -
============ ======
During the year, the Company provided a loan of $26,472,557 to
APQ Cayman Limited from the proceeds of the CULS issue. The loan is
repayable on demand and the entire balance is outstanding at 31
December 2017 and is included within trade and other receivables.
In addition, the Company charged interest of $306,499 to APQ Cayman
Limited for the year ended 31 December 2017. This was fully
received during the year and no balance was outstanding at year
end. Interest is accrued on the outstanding balance of the loan at
such rate as is required to enable the Company to meet its
obligations to holders of its convertible unsecured loan stock 2024
in relation to the payment of interest thereon.
14. Trade and other payables
2017 2016
$ $
Trade creditors 102,944 -
Other creditors 157,421 -
Due to APQ Partners
LLP - 56,656
Accruals 154,543 87,481
414,908 144,137
========= =========
15. 3.5% Convertible Unsecured Loan Stock 2024
Nominal number Liability Equity
of CULS component component
$ $ $
As at 1 January 2017 - - -
Issue of 3.5% Convertible Unsecured
Loan Stock 2024 26,953,749 22,518,898 4,434,851
Expenses of issue - (759,757) (149,626)
Amortisation of discount on issue 499,403
and issue expenses - -
Interest paid during the year - (306,499) -
Exchange differences - 183,266 -
26,953,749 22,135,311 4,285,225
================ ============ ============
At an Extraordinary General Meeting held on 4 September 2017,
Resolutions were passed approving the issue of 4,018 3.5 per cent.
convertible unsecured loan stock 2024 ("CULS") to raise
GBP20,090,000 before expenses. The CULS were admitted to trading on
the International Securities Market, the London Stock Exchange's
market for fixed income securities and dealings commenced at 8.00
a.m. on 5 September 2017.
Following Admission there were 4,018 CULS in issue. Holders of
the CULS are entitled to convert their CULS into Ordinary Shares on
a quarterly basis throughout the life of the CULS, commencing 31
December 2017, and all outstanding CULS will be repayable at par
(plus any accrued interest) on 30 September 2024. The initial
conversion price is 105.358 pence, being a 10 per cent. premium to
the unaudited Book Value per Ordinary Share on 31 July 2017.
Following conversion of 80 per cent. or more of the nominal amount
of the CULS originally issued, the Company will be entitled to
require remaining CULS Holders to convert their outstanding CULS
into Ordinary Shares after they have been given an opportunity to
have their CULS redeemed.
16. Share Capital
The issued share capital of the Company is 78,055,000 ordinary
shares of no par value listed on the Channel Islands Securities
Exchange and AIM.
information about the Company's capital is provided in the
statement of changes in equity and in the tables below.
The shares are entitled to dividends when declared and to
payment of a proportionate share of the Companies net asset value
on any approved redemption date or upon winding up of the
Company.
The Company's objectives for managing capital are:
-- To invest the capital in investments meeting the description,
risk exposure and expected return indicated in its listing
documents.
-- To maintain sufficient liquidity to meet the expenses of the
Company, pay dividends and to meet redemption requests as they
arise.
-- To maintain sufficient size to make the operation of the Company cost-efficient.
-- The Board has authority to purchase up to 14.99 per cent. of
the issued Ordinary Share capital of the Company. The Board intends
to seek a renewal of this authority at each annual general meeting
of the Company. No buy backs occurred during the period under
review.
Ordinary
shares
No GBP $
As at 1 January 2017 78,055,000 76,839,621 99,777,784
Transaction costs of raising equity - (218,000) (283,077)
At 31 December 2017 78,055,000 76,621,621 99,494,707
============ ============ ============
16. Business combinations
On 3 February 2017, the Company 100% acquired APQ Partners LLP.
The following table summarises the consideration paid, the fair
value of the assets acquired, liabilities at the acquisition
date.
APQ Partners
LLP
$
Cash -
--------------
Total consideration transferred -
==============
Recognised amounts of identifiable assets acquired,
and liabilities assumed
Cash and cash equivalents 39,862
Tangible fixed assets 7,885
Trade and other receivables 134,259
Trade and other payables (182,006)
-
==============
17. Commitments
Operating lease commitments
At 31 December 2017, the Group had future minimum lease payments
under non-cancellable operating leases in relation to rental of the
Group's premises, which fall due as follows:
2017 2016
$ $
Within 1 year 94,693 -
Within 2 to 5 years 188,607 -
283,300 -
========= ======
18. Financial risk and management objectives and policies
The Group's objective in managing risk is the creation and
protection of shareholder value. Risk is inherent in the Group's
activities, but it is managed through a process of ongoing
identification, measurement and monitoring, subject to risk limits
and other controls. The process of risk management is critical to
the Group's continuing profitability. The Group is exposed to
market risk (which includes interest rate risk, currency risk and
price risk), liquidity risk, credit risk and investment holding
period risk arising from the financial instruments it holds.
Interest rate risk
Whilst the bank accounts of APQ Global Limited are not interest
bearing there is no exposure to interest rate risk. In addition,
the CULS are at a fixed interest rate so there is no exposure to
interest rate risk.
Currency risk
The Group's functional and reporting currency is denominated in
US Dollars. The Group's Ordinary Shares are denominated in
Sterling. Through its activities in emerging markets the Group will
have underlying exposure to a range of emerging market currencies.
Accordingly, the Group's earnings may be affected favourably or
unfavourably by fluctuations in currency rates. The impact of an
overall increase/decrease in the NAV of APQ Cayman Limited is
disclosed on page 41 of the report and accounts. The Board may
engage in the future in currency hedging in seeking to mitigate
foreign exchange risk although there can be no guarantees or
assurances that the Group will successfully hedge against such
risks.
18. Financial risk and management objectives and policies
(continued)
The Group hold assets and liabilities in Pounds Sterling at year
end. The following table detail the Group's assets and liabilities
and the currency exposure to Pounds Sterling to the Group:
2017 2016
$ $
Cash and cash equivalents 4,005,286 1,128,872
Trade debtors 8,667 -
Loan to APQ Cayman Limited 26,472,557 -
Accrued income 812 -
Other debtors 41,206 -
Trade creditors (102,944)
Other creditors (157,421) -
Due to APQ Partners LLP - (56,656)
Accruals (154,543) (87,481)
CULS (22,135,311) -
7,978,309 984,735
============== ===========
A reasonable change of 5% in the Group's Pounds Sterling net
assets will have an impact of $398,915 (2016 - $49,237) on the
value of the net assets.
Liquidity risk
Liquidity risk is the risk that the Group and the Company may
not be able to meet a demand for cash or fund an obligation when
due. The Board continuously monitor forecast and actual cash flows
from operating, financing and investing activities to consider
payment of dividends, repayment of the Group's outstanding debt or
further investing activities.
The Group may employ borrowings in connection with its business
activities. Prospective investors should be aware that in the event
that the Group's income falls for whatever reason, the use of
borrowings will increase the impact of such a fall on the net
revenue of the Group. The Group will pay interest on any borrowing
it incurs. As such, the Group is exposed to interest rate risk due
to fluctuations in the prevailing market rates. Interest rate
movements may affect the level of income receivable by the Group
and the interest payable on the Group's variable rate
borrowings.
The following table detail the Group's expected maturity for its
financial assets (excluding equity) and liabilities together with
the contractual undiscounted cash flow amounts:
Less than 5 + years Total
31 December 2017 1 year 1 - 5 years
$ $ $ $
Assets
Cash and cash equivalents 4,005,434 - - 4,005,434
Trade debtors 8,667 - - 8,667
Loan to APQ Cayman
Limited 26,472,557 - - 26,472,557
Prepayments and accrued
income 74,730 - - 74,730
Other debtors 41,267 - - 41,267
Trade creditors (102,944) - - (102,944)
Other creditors (157,421) - - (157,421)
Accruals (154,543) - - (154,543)
CULS - - (33,528,551) (33,528,551)
30,187,747 - (33,528,551) (3,340,804)
============ ============= ============== ==============
Less than 5 + years Total
31 December 2016 1 year 1 - 5 years
$ $ $ $
Assets
Cash and cash equivalents 1,128,771 - - 1,128,771
Due to APQ Partners
LLP (56,656) - - (56,656)
Accruals (87,481) - - (87,481)
984,634 - - 984,634
=========== ============= =========== ===========
Credit risk
Credit risk is the risk that the counterparty to a financial
instrument will cause a financial loss for the Group by failing to
discharge an obligation. The Group generate its returns through its
investment in APQ Cayman Ltd and is thus exposed to the risk of
credit-related losses primarily through that investment. This is a
specific investment policy of the Group. The risk of default from
the investment is considered minimal because the Group is able to
redeem its investment in APQ Cayman Limited at any time. The
underlying assets within APQ Cayman Limited are readily tradable
and thus liquid.
The Group banks with NatWest, HSBC and Barclays. NatWest has a
credit rating of BBB+, HSBC has a credit rating of AA- and Barclays
has a credit rating of A.
The Group's maximum exposure to credit risk in relation to the
financial assets is the carrying amount as disclosed in the
statement of financial position.
The Group is also exposed to the following risks through its
investment in APQ Cayman Limited ("Cayman").
-- Cayman has investment exposure to emerging markets, which are
subject to certain risks and special considerations that are not
typically associated with more developed markets and economies.
-- Cayman invests in derivative instruments which can be highly
volatile and may be difficult to value and/or liquidate.
-- Cayman seeks exposure to emerging markets through the use of
structured products which carry additional credit risks, are
inherently difficult to value, illiquid and subject to counterparty
risk on maturity.
-- Cayman is subject to the risk of the inability of any
counterparty to perform with respect to transactions, whether due
to insolvency, bankruptcy or other causes. Where Cayman utilises
derivative instruments, it is likely to take credit risk with
regard to such counterparties and bear the risk of settlement
default.
-- Cayman is subject to custody risk in the event of the
insolvency of the custodian or any sub-custodians.
The Group intentionally exposes itself to these risks as part of
its operations. These risks are managed on an ongoing basis by
performance reviews of the underlying portfolio on a quarterly
basis by the Board of the Group.
19. Capital Management
The Group can raise new capital which may be implemented through
the issue of a convertible debt instrument or such other form of
equity or debt as may be appropriate. It also has a buy-back
authority subject to a maximum buy-back of 14.99 per cent of the
issued Ordinary Shares.
The Group's objectives for managing capital are:
-- To invest the capital into investments through its subsidiary, APQ Cayman Limited.
-- To maintain sufficient liquidity to meet the expenses of the
Group and pay dividends.
-- To maintain sufficient size to make the operation of the Group cost-effective.
The Group may utilise borrowings in connection with its business
activities. Although there is no prescribed limit in the Articles
or elsewhere on the amount of borrowings that the Group may incur,
the Directors will adopt a prudent borrowing policy and oversee the
level and term of any borrowings of the Group and will review the
position on a regular basis.
The Group's capital comprises:
2017 2016
$ $
Share capital 99,494,707 99,777,784
Equity component of 3.5% Convertible Unsecured
Loan Stock 2024 4,285,225 -
Retained earnings 1,141,163 779,858
Exchange reserve (4,927,513) (4,927,513)
Total shareholders' funds 99,993,582 95,630,129
============= =============
20. Related party transactions
Richard Bray is also a director of the wholly owned subsidiary,
APQ Cayman Limited, as well as being a director of Active
Management Services Limited which is part of the Active Group as is
Active Services (Guernsey) Limited.
Wayne Bulpitt founded the Active Group; he is also a shareholder
of the Company.
Bart Turtelboom founded APQ Partners LLP and is also a director
of APQ Cayman Limited as well as the largest shareholder of the
Company.
The Directors are remunerated from the Company in the form of
fees, payable monthly in arrears. Bart Turtelboom agreed to waive
his entitlement to director's fees however with effect from 1 April
2017, Bart Turtelboom received an annual salary of GBP120,000 as
Chief Executive Officer of the Company.
Year ended Period ended
31 December 31 December
2017 2016
$ $
Bart Turtelboom Chief Executive Officer 118,666 -
Wayne Bulpitt Non-Executive Chairman 39,049 19,091
Richard Bray Executive Director 39,049 19,091
Philip Soulsby Non-Executive Director 22,842 13,818
219,606 52,000
============== ==============
APQ Global Limited has incurred $116,544 (2016 - $31,582) of
fees and expenses to Active Services (Guernsey) Limited as
administrator of the Company. As at 31 December 2017, APQ Global
Limited owed $26,387 to Active Services (Guernsey) Limited (2016 -
$7,683).
During the year, APQ Global Limited provided a loan of
$26,472,557 to APQ Cayman Limited from the proceeds of the CULS
issue. The entire balance is outstanding at 31 December 2017 and is
included within trade and other receivables. In addition, APQ
Global Limited charged interest of $306,499 to APQ Cayman Limited
for the year ended 31 December 2017. This was fully received during
the year and no balance was outstanding at year end.
APQ Global Limited has supported APQ Cayman Limited by paying
directors fees of $5,000 (2016 - $1,250) during the year to Richard
Bray as he is a director of both entities.
As described in the Listing Document, and under the terms of the
Services Agreement, APQ Partners LLP assist the Board and the
Group's management based in Guernsey with the implementation of its
business strategy, provide research on business opportunities in
emerging markets and provide support for cash management and risk
management purposes. APQ Partners LLP are entitled to the
reimbursement of expenses properly incurred on behalf of APQ Global
Limited in connection with the provision of its services pursuant
to the agreement. APQ Partners LLP has recharged expenses of
$953,588 (2016 - $271,345) to APQ Global Limited during the year.
As at 31 December 2017, APQ Global Limited was owed $134,463 from
APQ Partners LLP (2016 - $56,656 due to APQ Partners LLP). In the
current year amounts have been eliminated on consolidation.
21. Accounting period
The Company was incorporated on 10 May 2016; therefore, the
comparatives are a short first accounting period up to 31 December
2016 represented in these financial statements. The current period
relates to the results for the year ended 31 December 2017.
22. Events after the reporting period
At an Extraordinary General Meeting held on 22 December 2017,
Resolutions were passed approving the further issue of its existing
series of 3.5 per cent. convertible unsecured loan stock 2024. On
22 January 2018, the Company raised a further GBP10,207,300
($14,492,418) before expenses through the issue of 1,982 units of
3.5 per cent. convertible unsecured loan stock 2024 in
denominations of GBP5,000 ($7,099) nominal each, at an issue price
of GBP5,150 ($7,312) per unit.
After the year end, a further dividend of 1.5 pence (2.08 cent)
per share was declared on 19 January 2018 and was paid on 27
February 2018 in relation to the quarter ended 31 December
2017.
23. Availability of the report and accounts
Copies of the Company's report and accounts for the year to 31
December 2018 will be posted to shareholders later today. Copies
will also be available to download from the Company's website at
https://www.apqglobal.com/.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UOAWRWVANRAR
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