REG - APQ Global Limited - Final results for the year to 31 December 2019
APQ Global Limited
("APQ", "APQ Global" or the "Company")
Final results for the year to 31 December 2019
APQ Global today announces its audited financial results for the year ended 31 December 2019.
FINANCIAL HIGHLIGHTS
For the year ended 31 December 2019
Book Value at 31 December 2019 was $72.9m, a decrease from $76.4m 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, presented in US dollars.
Book Value per share in the year decreased from 97.84 cents to 93.19 cents.
Earnings gain per share for the year was $0.02951 (2018 - earnings loss per share $0.25889).
Dividends paid, a KPI of the business which are further discussed in the Business Model & Strategy section, in GBP totalled 6 pence/7.6 cents (2018 - 6 pence/8.2 cents) per share and were declared and paid during the year as follows:
· 1.50 pence (1.93 cent) per share Ex Dividend 31 January 2019 Paid 1 March 2019*
· 1.50 pence (1.94 cent) per share Ex Dividend 2 May 2019 Paid 31 May 2019
· 1.50 pence (1.87 cent) per share Ex Dividend 25 July 2019 Paid 23 August 2019
· 1.50 pence (1.94 cent) per share Ex Dividend 31 October 2019 Paid 29 November 2019
*Dividend relates to the quarter ended 31 December 2018
After the year end, a further dividend of 1.5 pence (1.97 cents) per share was declared on 23 January 2020 in relation to the quarter ended 31 December 2019.
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.
Since 31 December 2019, the following securities have been admitted to the Official list of the International Stock Exchange:
Entity
Type of instrument
No. of instruments
Date admitted
APQ Global Limited
Warrants
1,000,000
30th January 2020
APQ Capital Services Ltd
Convertible preference shares
268,000
30th January 2020
APQ Global Limited
Ordinary shares
26,578
5th February 2020
APQ Global Limited
Ordinary shares
26,578
8th June 2020
There have been further AIM market trades since 31 December 2019, 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
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 / Justin McKeegan
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.
CHAIRMAN'S STATEMENT
For the year ended 31 December 2019
The aim of the Board is to steadily grow the Company's earnings seeking to deliver attractive returns and capital growth through a combination of building growing businesses globally as well as earning revenue from income generating operating activities Specifically, our goals are to deliver a dividend yield of 6% per annum (based on capital subscribed) and in addition to generate returns to grow the Company by a further 5-10% per annum. The Company focuses its investment activities globally (in Asia, Latin America, Eastern Europe, the Middle East and Africa, particularly).
Book Value per share in the year decreased from 97.84 cents to 93.19 cents, net of 7.6 cents distributed in Dividends. This decrease is primarily due to the issue of dividends offset by increased operating profits. This represents a fall of 4.7%. After adjusting for the 7.6 cents of Dividends paid during the year, the Total Return for the year was 3.5%.
Strategic Investment Portfolio
The Company has maintained its investment in City of London Investment Group ('CLIG') representing 11.7% of its overall book value. The Company believes that the prudent management and an attractive dividend yield bode well for the CLIG stock price. The Company took profits on its stake in Anglo Pacific Group during the first quarter of the year. The investment generated a total return to the Company of 44.4%, in USD, across the holding period.
Direct Investment Portfolio
In the first quarter of 2019, the Company completed the 100% acquisition of Frontier Consultancy Ltd. and rebranded it as New Markets Media & Intelligence (NMMI). The investment was made via a newly created holding company, APQ Knowledge Ltd. Guernsey, which is 100% owned by APQ Global Ltd. The investment constitutes approximately 0.50% of APQ's Book Value and incorporated earn out acquisition terms with significant scope for business expansion. The business has multiple tiers of service offerings at escalating pricing and term contracts to a varied client base. The business includes an existing conference and event planning business with large scope for expansion both by specific subject matter and geographic region.
The business operations and development are led by the former Emerging Markets Editor-at-Large for Bloomberg, Gavin Serkin, who has deep relationships with journalists across the most sophisticated financial media. This enables NMMI to run a lean business with global reach and distribution that creates the narrative to secure maximum media coverage and engineer brand building for their clients.
NMMI's network includes a full complement of writers, broadcasters, marketers, event organisers and investment professionals, covering every skill set in marketing, PR and investor relations. The rich editorial content New Markets Media & Intelligence generates and empowers unique digital marketing capabilities that accurately deliver thought leadership.
Additionally, in the first quarter of 2019, APQ Corporate Services Ltd. (a wholly owned entity of APQ Global Limited) completed the 100% acquisition of Palladium Trust Services Ltd, U.K. Palladium Trust Services provides advice and execution services relating to the establishment and administration of corporate, trust, and fund vehicles. It leverages its London base through a global network of boutique corporate fiduciaries to provide operational capabilities in over 25 jurisdictions.
Palladium specialises in structuring solutions for trusts and funds and setting up limited partnerships and companies. Palladium has delivered a variety of customised structures to suit client needs that have included Sharia compliant funds, real estate / intellectual property companies, family limited partnerships with devolved financial and insulated controlling interests, bespoke structuring solutions for Latin American families, and special purpose investment vehicles structuring to cater to specific client needs.
In May 2019, APQ Global commenced investing by trading in telecommunications minutes, generating revenue of $1,026,160, with a net loss of $227,604 The intention of undertaking this activity was to ultimately provide investors with capital return or investment income in combination with its other telecommunication investments, BARTR Holdings Limited and its subsidiary undertakings. Trading was performed by a third-party service provider, and the contracts were initially held by APQ Global, to reduce counterparty risk. Management's intention was to novate these contracts into APQ Connect at a subsequent point in time. Post year end this activity has reduced and will cease entirely in 2020. This activity was a one-off activity and was immaterial in the context of the firm's operations.
Gearing
In 2018, the Company raised £10,207,300 ($14,492,418) before expenses from the issue of 1,982 units of £5,000 ($7,099) nominal Convertible Unsecured Loan Stock (CULS), taking its total issuance to 6,000 units. There was no further issuance of CULS during 2019, and the Company's leverage is now 47%. The CULS were issued with a coupon of 3.5% per annum, a conversion premium of 10% and a maturity of 7 years. The Board has confidence in the long-term prospects for the emerging markets sector and believes that the additional gearing should enable the Company to generate increased total returns over the longer term. The Directors believe that this provides long-term structural gearing at a fixed cost that is competitive with other forms of gearing that were available, and which has the potential to be converted into the permanent capital base of the Company. However, the additional gearing could potentially expose the Company to more sizeable downswings when the market is falling.
Dividends
Despite challenging conditions in Emerging Markets in the year, I am pleased to report that the Company met its target of paying four quarterly dividends of 1.5p, making a total of 6p (7.6 cents) for the year. The portfolio contains a diverse range of asset classes, many of which deliver attractive income levels. The income performance is regularly reviewed by the board to ensure it continues to meet our investment and return targets. Upon review, the Board has decided, on 6 April 2020 to temporarily suspend the dividend paid to Ordinary Shareholders until further notice. The decision was made after significant turmoil in global markets following the COVID-19 pandemic. Whilst navigating an uncertain economic impact brought about by the pandemic, the Company will preserve cash to ensure it continues to be fully solvent and to facilitate a smooth recovery. Further details of the impact of COVID-19 on the Company can be found in the Directors Report.
Total Return
Book Value per share in the year decreased from 97.84 cents to 93.19 cents, a fall of 4.7%. After adjusting for the Dividends above, the Total Return for the year was 3.5%.
Board Change
On 1 January 2019, following full board approval, Wesley Davis replaced Richard Bray as Finance Director to the Company. Mr Davis brings over 25 years of experience in emerging & frontier markets, both in investment banking and operating company roles. He has also previously served in a consulting capacity on the International Advisory Council of the Company, with a focus on private equity and illiquid credit origination. No external company was used to make the hire. There were no other changes to the board during 2019.
Conclusion
The Investment performance and outlook for Emerging Markets are discussed in more detail in the CEO's statement.
Whilst we have been reviewing the activities for the twelve months to 31 December 2019, I cannot close without acknowledging the tumultuous events of early 2020 and the impact of the COVID-19 pandemic on our activities. Further details are discussed in the Post Balance Sheet Event section.
Just prior to "lockdown" we completed the acquisitions of Parish Group, a corporate services provider in Guernsey, and Delphos International, an international financial advisory business based in Washington, USA. These acquisitions further diversified our portfolio ahead of the significant market volatility and impact on our liquid investments that followed. Further details of which are covered in our Interim Statements, published concurrently.
Additionally, in June 2020, the Company appointed Parish Group, a wholly owned subsidiary of the Company, to replace its Company Secretary and Corporate Services provider Active Services (Guernsey) Limited. The decision was taken to increase efficiency and cut costs.
Wayne Bulpitt
Chairman, APQ Global Limited
CEO'S STATEMENT
For the year ended 31 December 2019
When the novelist L.P. Hartley wrote of the past as a "foreign country," he was casting back over half a century to a childhood era of innocence. Today, we might think the same looking back a mere half-year to the halcyon days of 2019.
The Fed had just reverted from its hawkish path to resume a steady lull of ever-easier money. As the dollar sold off, equities and emerging markets rallied, lubricated by central bank liquidity from the ECB to BoJ. The crescendo of trade tensions - Brexit, Nafta, US-China - was dismissed as political noise, a theory borne out by eventual acceptance by Xi of American farm exports. By 2019's close we were toasting near record highs across developed and emerging equity markets at those wonderfully sociable festive gatherings of yesteryear. Oh, for the days when lockdowns applied only to rioting prisoners, "track and trace" to parcels, and furloughs to servicemen and missionaries. Life was glorious - wasn't it?
In a word: No.
Even before COVID-19 destroyed the global economy, the International Monetary Fund was flashing warning of the slowest pace of growth for the developing world since the global financial crisis - albeit at salivating levels in a current context of +3.7% for 2019. While China accounted for much of the slowdown, the rest of the BRICs were sickly too. Brazil was limping at around 1% growth for a third year, hobbled by decades of bloated government spending. An isolated Russia was similarly lack luster at 1.2%. India's heavy-handed demonetization and imposition of a new universal Goods and Services Tax on SMEs crimped growth to a six-year low as unemployment hit a 45-year high. Other emerging markets teetered too: Mexico had just ushered in its first left-wing president in over three decades, Turkey was in recession, and South Korea was in its slowest growth phase since central bank records began.
Amidst this, we successfully reached our income target, returning a 6% dividend yield to our investors (based on the issuance price). Additionally, we completed the acquisition of two promising businesses, Palladium Trust Services and New Markets Media, to add to our direct trading portfolio. I am confident that these investments will aid us in continuing to meet our income objectives, as well as our capital returns targets in the years to come.
The year ahead will be difficult. Having to repair the Company after a damaging COVID-19 period was not something I predicted we would have to do whilst setting targets at the beginning of a New Year. Although, I believe it can be done. Further details on the impact of COVID-19 and the Board measures to mitigate it can be found in the Post Balance Sheet Event section.
Bart Turtelboom
CEO, APQ Global Limited
2019 IN REVIEW
Accounting for GBP/USD exchange rate movements and the dividend paid, the Company returned 3.8% to its shareholders year-to-date.
In the last quarter of the year, the Company slightly increased its exposure to risk assets across the board, particularly equities and EM currencies. While maintaining a very healthy cash position (95.0% of Book Value).
Asset Class
Year-to-Date
Credit
-7.7%
Equity
9.2%
FX
4.3%
Rates
-2.2%
TOTAL*
3.5%
During the year, the Company's credit exposure generated -7.7%, whilst equity investments returned 9.2% and local currency bond exposure returned -2.2%. Emerging Markets ("EM") Currency exposure made 4.3%.
*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.
The bulk of the Company's overall exposure was in EM Currencies (72.1% of book value), followed by EM Equity exposure (32.6% of book value). EM Local Currency Bond exposure accounted for 14.0% of book value, whilst EM Hard Currency Credit and Government Bond exposure accounted for 2.7%. The Company maintained a large cash holding of 96.0% of Book Value.
Portfolio Breakdown
Asset Class
% of Book Value
EM Credit and Government Bonds
2.7%
EM Local Currency Bonds
14.0%
EM Currency Exposure
72.1%
EM Equities
32.6%
Cash
96.0%
TOTAL
217.4%*
*Note: Greater than 100% of Book Value is indicative of Leverage used in the portfolio
Liquid Markets Portfolio
During the year, the Company held its strategic position in City of London Investment Group and took profit on its Anglo Pacific position, making a total return of 44.4% across the holding period. The Company added substantial exposure to the MSCI Emerging Markets equity index towards the end of the year, capturing some of the momentum. The Company also held some small direct exposure to some Emerging Market single stocks across Russia, Chile and South Africa (ranging from 0.6%-0.8%).
EM Equity Exposure
Security Name
% of Book Value
MSCI Emerging Markets Index
17.9%
City of London Investment Group PLC
11.7%
MMC Norilsk Nickel PJSC
0.8%
Gazprom PJSC
0.7%
Antofagasta PLC
0.7%
Anglo American PLC
0.6%
iShares China Large-Cap ETF
0.1%
During the year, the Company was focused on the following global economic factors when making its allocation decisions. Chinese growth appears to be bottoming, the trade war between the US and China appears to be de-escalating for now and G7 growth rates are stabilizing. Geo-political risks remain significant with strife in Libya, ongoing tensions between Iran and the US and political uncertainty in Russia all increasing the possibility of negatively affecting market sentiment.
From a sector perspective, the Company's EM exposure was largely in Financials (49.2%). The next largest sector exposures were in the technology and Consumer Discretionary sectors, 8.6% and 7.8% respectively.
Equity Exposure by Sector
Sector
% of Book Value
Financials
49.2%
Information Technology
8.6%
Consumer Discretionary
7.8%
Basic Materials
6.4%
Energy
6.3%
Communication Services
6.1%
Materials
4.0%
Consumer Staples
3.5%
Industrials
2.9%
Real Estate
1.6%
Health Care
1.5%
Utilities
1.4%
Cash
0.3%
Country Index
0.3%
The Company's emerging markets credit book, very small by historical standards, has its largest position in the Republic of Argentina, accounting for 1.7% of book value.
Credit Exposure (% of Book Value)
Security Name
Exposure (% of Book Value)
ARGTES 16 10/17/23
1.7%
TPEIR 9 3/4 06/26/29
0.8%
ETEGA 8 1/4 07/18/29
0.2%
Geographically, the credit portfolio continues to reflect its much-reduced size with positions in Argentina (62.8%) and Greece (37.2%). From a sector perspective, the credit exposure is concentrated in government and financial entities.
Credit Exposure by Country
Country
% of Book Value
Argentina
62.8%
Greece
37.2%
Credit Exposure by Sector
Sector
% of Book Value
Government
62.8%
Financial
37.2%
During the last quarter in the year, the Company significantly increased its EM currency exposure. The largest long positions were held in the Colombian Peso (16.4% of Book value), Indian Rupee (12.0%) and the Brazilian Real (4.1%). The largest short positions were held in South African Rand (-7.8%) and Russian Rouble (-5.6%).
The portfolio stress tests indicate that the Company would lose -4.13% of book value for a 10% sell-off in the S&P equity index, -0.08% in value if credit spreads were to widen 10% and +0.09% in value if interest rates in the US were to increase by 1%.
Stress Test Scenarios
Scenario
Change in % of Book Value
Equity Stress Test (S&P -10%)
-4.13%
Credit Stress Test (Credit Spreads up 10%)
-0.08%
Interest Rates Stress Test (Yields up 1%)
0.09%
Strategic Investment Portfolio
The Company has maintained its investment in City of London Investment Group ('CLIG') representing 11.7% 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.
Post Balance Sheet Events (PBSE)
On 29 January 2020, the Company entered into an agreement to purchase 100% of the Parish Group Limited ("Parish"), a company incorporated and domiciled in Guernsey. Parish Group Limited is a fiduciary and corporate services provider. In consideration to the sellers for the acquisition:
· The Company paid a net amount of approximately $4,095,630 cash consideration to the Sellers;
· APQ Capital Services Limited, a wholly owned subsidiary of the Company, issued 268,000 Convertible Preference Shares (convertible into ordinary shares in APQ Global) to the sellers (the "Convertible Preference Shares") at price of $10 per share; and
· The Company issued 1.0 million warrants in APQ Global ("Warrants"), with an exercise price equal to the most recently announced book value per share of 70.94 pence, to the sellers.
The Convertible Preference Shares are convertible into a variable number of shares linked to the relative assets attributable to the convertible preference shares. On 30 June 2020, the conversion ratio on the Convertible Preference Shares issued by APQ Capital Services was amended to a fixed conversion ratio of 11.25 ordinary shares per convertible preference share. The investment in Parish was made through APQ Corporate Services Limited and is held for the purpose of investment income and capital appreciation. It will therefore be measured at fair value through profit and loss as part of the valuation of APQ Corporate Services Limited.
Additionally, in June 2020, the Company appointed Parish Group, a wholly owned subsidiary of the Company, to replace its Company Secretary and Corporate Services provider Active Services (Guernsey) Limited. The decision was taken to increase efficiency and cut costs.
On 3 March 2020, the Company entered into an agreement to purchase 100% of Delphos International, Ltd ("Delphos"), a US based financial advisory firm with a global client base. In consideration to the shareholders of Delphos for the acquisition, the Company paid an upfront amount of $1.5 million in cash (the "Upfront Payment"). The Company is also required to make an additional payment to clear the working capital of Delphos prior to the acquisition, this amounted to $112,265 In addition to the Upfront Payment, the Company shall potentially make up to three earn-out payments to the Sellers ("Earn-Out Payments"), depending on the levels of EBTDA generated by Delphos for the years ended 30 June 2020 and 30 June 2021, with each payment capped at $0.75 million and a further Earn-Out Payment capped at $0.5 million for the year ended 30 June 2022. In the event that the minimum contingencies applied to the Earn-Out payments are not met, the Company is not required to make any further payments in respect of that Earn-Out period. The investment in Delphos was made through APQ Corporate Services Limited and is held for the purpose of investment income and capital appreciation. It will therefore be measured at fair value through profit and loss as part of the valuation of APQ Corporate Services Limited.
2020 began with the outbreak of a new strain of the coronavirus (COVID-19), with confirmed cases in the majority of countries across the world. The spread of the virus has been far reaching and has caused severe disruption to financial markets globally, negatively affecting performance. The market volatility that followed the pandemic had a direct impact on the liquid market portfolio, with the largest losses stemming from the equity portfolio, particularly in the energy and financial sectors, and FX portfolio, in Russian Ruble and Mexican Peso, ultimately causing a large draw down in the Book Value of the Company. The portfolio was quickly de-risked, shown by the large percentage of cash held in the portfolio at March 31st, 2020 (80%). However, the market had dropped substantially by that time.
The Company has met all its payment obligations to various counterparties and is in full compliance with all debt covenants. Furthermore, the Board has decided, on 6 April 2020, to implement the following further cash preservation measures, which are intended to facilitate a smooth recovery:
• Suspension of dividends paid to ordinary shareholders until further notice;
• The management bonus scheme to be cut from 20% of profits to 10%;
• Significant cost reduction across all the Company; and
• Move to quarterly reporting of key metrics in the Company's income statement and balance sheet, an increase from semi-annually, starting for the reporting period Q2 2020.
Further details of the Boards action to mitigate the risks brought about by COVID-19 can be found in the going concern section.
On the 1st May 2020, the Company agreed to settle the outstanding payments due on its acquisition of Palladium Trust Services Limited under the Share Purchase Agreement of £148,333 for £80,000. A one-off gain to the Statement of Comprehensive Income of the Company of £63,036 ($77,931) was recognised as part of the settlement. The impact of this settlement of on the fair value of the investment is nil as the value of this investment is determined in relation to the entity's forecast cash flows and external comparisons.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
2019
2018
Note
$
$
Revenue
5
12,688,702
1,601,748
Net loss on financial assets at fair value through profit and loss
14
(3,016,884)
(18,535,478)
Administrative expenses
6
(5,441,673)
(2,361,870)
Operating profit / (loss) for the year before tax
4,230,145
(19,295,600)
Interest receivable
9
352,182
1,367,151
Interest payable
10
(2,274,831)
(2,280,049)
Profit / (loss) on ordinary activities before taxation
2,307,496
(20,208,498)
Tax on profit / (loss) on ordinary activities
-
-
Total profit / (loss) for the year
2,307,496
(20,208,498)
Other comprehensive income / (loss)
-
-
Total comprehensive income / (loss) for the year
2,307,496
(20,208,498)
Basic earnings per share
11
0.02951
(0.25889)
Diluted earnings per share
11
0.02938
(0.25889)
The notes section below form an integral part of the Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Company No. 62008
As at 31 December 2019
2019
2018
Note
$
$
Assets
Non-current assets
Property, plant and equipment
13
17,670
25,721
Right of use assets
20
84,802
-
Investments
14
105,414,240
74,154,302
Total non-current assets
105,516,712
74,180,023
Current assets
Trade and other receivables
15
871,691
33,839,280
Cash and cash equivalents
1,505,234
511,871
Total current assets
2,376,925
34,351,151
Total assets
107,893,637
108,531,174
Current liabilities
Trade and other payables
16
(912,783)
(253,384)
Total current liabilities
(912,783)
(253,384)
Long term liabilities
3.5% Convertible Unsecured Loan Stock
17
(34,064,993)
(31,834,626)
Total long-term liabilities
(34,064,993)
(31,834,626)
Net assets
72,915,861
76,443,164
Equity
Share capital
18
99,733,054
99,596,856
Equity component of 3.5% Convertible Unsecured Loan Stock
17
6,919,355
6,919,355
Other capital reserves
19
300,798
264,076
Retained earnings
(29,109,833)
(25,409,610)
Exchange reserve
2.13
(4,927,513)
(4,927,513)
Total equity
72,915,861
76,443,164
Net asset value per ordinary share
93.19c
97.84c
The Financial Statements below were approved by the Board of Directors of APQ Global Limited and signed on 14 September 2020 on its behalf by:
___________________ ___________________
Bart Turtelboom Wesley Davis
Chief Executive Officer Director
The notes section below form an integral part of the Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 December 2019
Share capital
CULS equity component
Other capital reserves
Retained earnings
Exchange reserve
Total
As at 1 January 2018
99,494,707
4,285,225
-
1,141,163
(4,927,513)
99,993,582
Comprehensive income
for the year
Loss for the year
-
-
-
(20,208,498)
-
(20,208,498)
Equity after total comprehensive
income for the year
99,494,707
4,285,225
-
(19,067,335)
(4,927,513)
79,785,084
Contributions by and distributions to owners
CULS equity component
-
2,634,130
-
-
-
2,634,130
Share based payments
-
-
376,328
-
-
376,328
Share based payments
settled in cash
-
-
(10,103)
-
-
(10,103)
Issue of share awards
102,149
-
(102,149)
-
-
-
Dividends
-
-
-
(6,342,275)
-
(6,342,275)
As at 31 December 2018
99,596,856
6,919,355
264,076
(25,409,610)
(4,927,513)
76,443,164
Comprehensive income
for the year
Profit for the year
-
-
-
2,307,496
-
2,307,496
Equity after total comprehensive
income for the year
99,596,856
6,919,355
264,076
(23,102,114)
(4,927,513)
78,750,660
Contributions by and distributions to owners
Share based payments
-
-
186,391
-
-
186,391
Share based payments
settled in cash
-
-
(13,471)
-
-
(13,471)
Issue of share awards
136,198
-
(136,198)
-
-
-
Dividends
-
-
-
(6,007,719)
-
(6,007,719)
As at 31 December 2019
99,733,054
6,919,355
300,798
(29,109,833)
(4,927,513)
72,915,861
The notes section below form an integral part of the Financial Statements.
CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended 31 December 2019
Restated*
2019
2018
Cash flow from operating activities
Note
$
$
Cash generated from operations
Profit / (loss) for the financial year
2,307,496
(20,208,498)
Adjustments for non-cash income and expenses
Equity settled share-based payments
19
186,391
376,328
Depreciation on property plant and equipment
13
13,541
12,137
Depreciation on right of use assets
20
84,803
-
Net loss on financial assets at fair value through profit and loss
14
3,016,884
18,535,478
Exchange rate fluctuations
1,331,787
(2,225,016)
Changes in operating assets and liabilities
(Increase) / decrease in trade and other receivables
15
(498,538)
7,245
Increase / (decrease) in trade and other payables
16
24,030
(161,524)
Increase in receivables from group undertakings
15
(281,489)
-
Increase in payables from group undertakings
16
1,960
-
Cash generated from / (used in) operations
6,186,865
(3,663,850)
Interest received
9
(352,182)
(1,367,151)
Interest paid
10
2,274,831
2,280,049
Net cash inflow / (outflow) from operating activities
8,109,514
(2,750,952)
Cash flow from investing activities
Payments to acquire investments
14
(338,066)
(766,680)
Payments to acquire property, plant and equipment
13
(5,490)
(19,812)
Interest received
9
352,182
1,367,151
Loan to APQ Cayman Limited
15
349,504
(7,249,304)
Net cash inflow / (outflow) from investing activities
358,130
(6,668,645)
Cash flow from financing activities
Equity component of CULS
17
-
2,634,130
Issue of CULS
17
-
11,279,186
Equity dividends paid
12
(6,007,719)
(6,342,275)
Interest on CULS
17
(1,347,911)
(1,362,452)
Cash settled share-based payments
19
(13,471)
(10,103)
Principal paid on lease liabilities
20
(110,379)
-
Net cash (outflow) / inflow from financing activities
(7,479,480)
6,198,486
Net increase / (decrease) in cash and cash equivalents
988,164
(3,221,111)
Cash and cash equivalents at beginning of year
511,871
4,005,434
Exchanged rate fluctuations on cash and cash equivalents
5,199
(272,452)
Cash and cash equivalents at end of year
1,505,234
511,871
2019
2018
$
$
Reconciliation of cash flows to debt
Brought forward
31,834,626
22,135,311
Cash flows from issue of CULS
-
11,313,247
Cash flows used in servicing interest payments of CULS
(1,347,911)
(1,362,452)
Cash flows used in principal payments of lease liabilities
(110,379)
-
Non cash flows - recognition of lease liability
143,850
-
Non cash flows - amortisation of discount on CULS issue
2,264,716
2,245,988
Non cash flows - amortisation of discount on lease liabilities
10,115
-
Exchange differences
1,336,986
(2,497,468)
Closing balance
34,132,003
31,834,626
Net debt comprises the following:
Convertible Unsecured Loan Stock 2024
34,064,993
31,834,626
Lease liabilities
67,010
-
34,132,003
31,834,626
*The 2018 cash flow has been restated due to an error in the classification of exchange rate differences on CULS, which had been treated as a movement in cash and cash equivalents rather than as a non-cash adjustment to cash generated from operating activities. Cash used in operations and the net decrease in cash and cash equivalents have both increased by $2,225,016. Exchange rate fluctuations on cash and cash and cash equivalents have increased by the same amount compared to that previously shown in the financial statements published for the year ended 31 December 2018. There has been no change to the Group's overall cash position for the year ended 31 December 2018.
The notes section below form an integral part of the Financial
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
1. Corporate information
The financial statements of APQ Global Limited (the "Group") for the year ended 31 December 2019 were authorised for issue in accordance with a resolution of the Board of Directors on 14 September 2020. 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 PO Box 142, The Beehive, Rohais, St Peter Port, Guernsey, GY1 3HT.
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 purpose. 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 (FVTPL) that have been measured at fair value. The financial statements have been prepared on a going concern basis.
The principal accounting policies are set out below.
2.2 Going concern
The Directors believe that it is appropriate to adopt the going concern basis in preparing the Financial Statements since the ultimate assets of the Company mainly consist of securities which are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for at least 12 months from the date of this report. The Company will be able to meet all its liabilities as they fall due.
During the first quarter of 2020, the Company experienced difficult trading conditions in its liquid portfolio due to large market movements in emerging markets currencies, bonds and equities.
During this time, the Company took decisive action to mitigate further risk to the balance sheet, de-risking its portfolio of liquid market securities, with the portfolio as of 31st March 2020 comprising:
• $40.6 million of unencumbered cash;
• $4.3 million of cash equities;
• $1.3 million of cash bonds; and
• $1.3 million of tangible book value in its private direct investments.
At the close of business on 30 June 2020, the Company's estimate of its unaudited book value per Ordinary Share was 31.70 US Dollar cents.
The Company has met all its payment obligations to various counterparties and is not in breach of any debt covenants.
Furthermore, with the ongoing uncertainty faced by emerging markets due to COVID-19, the Board has decided to implement the following further cash preservation measures, which are intended to facilitate a smooth recovery:
• Suspension of dividends paid to ordinary shareholders until further notice;
• The management bonus scheme to be cut from 20% of profits to 10%;
• Significant cost reduction across all of the Company; and
• Move to quarterly reporting of key metrics in the Company's income statement and balance sheet, an increase from semi-annually, starting for the reporting period Q2 2020.
Stress Testing
Following the above measures taken, the Company would maintain an expense coverage ratio between 71-81 (Jun20-Sep21), assuming zero income from its assets and net of paying all its operating expenses and net of its financial payment obligations to the CULS and Preference Shareholders. The Company would not breach any debt covenants and retain USD 17.5 million in cash and liquid assets at end of month September 2021.
Cost Reduction
In total the Company is aiming to cut the operating costs across all of its subsidiaries by December 2020 by 44%. This will be achieved through a combination of staff reduction (or salary cuts) and switches to lower cost service providers.
Dividend Suspension
The suspension of the dividend paid to ordinary shareholders will increase the cash available to the Company by approximately $6mm per annum based on last year's distributions.
2.3 Functional and presentational currency
The Group's presentational and functional currency is US Dollars.
2.4 Standards issued
New and amended standards and interpretations
The only new standard impacting the Group that has been adopted in the annual financial statements for the year ended 31 December 2019, and which have given rise to changes in the Group's accounting policies is IFRS 16 "Leases".
On 1 January 2019, the Group adopted all of the requirements of IFRS 16 - Leases. IFRS 16 Leases was issued in January 2016 and provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.
To determine the split between principal and interest in the lease the Company is required to estimate the interest it would have to pay in order to finance payments under the new lease. The interest rate used by the Company is based on the incremental borrowing rate, which was calculated by using the Company's most recent issue of convertible loan stock. The impact of the estimated interest rate is currently considered to be immaterial to the financial statements, but the Directors will review this approach as appropriate.
The Group has taken advantage of the transition exemptions available on the implementation of IFRS 16 and have adopted the modified retrospective approach. This means that the Group has not needed to restate the comparatives stated in these financial statements for the year ended 31 December 2018. The effect of the adoption of IFRS 16 has resulted in the increase of assets by $170k and liabilities by $170k as at 1 January 2019. The impact has been to accelerate the expense recognised within the Statement of Comprehensive Income as opposed to its treatment under IAS17.
Standards issued but not yet effective
IFRS 17 "Insurance contracts" was issued and will not become effective until accounting periods beginning 1 January 2023. IFRS 17 applies to all types of insurance contacts and covers recognition, measurement, presentation and disclosure. This standard is not applicable to the Group.
An amendment to IAS 8 "Accounting policies, changes in accounting estimates and errors" will become effective for accounting periods beginning on or after 1 January 2020. The introduction amendments to IAS 8 are not expected to have a material impact on the reported results and financial position of the Group. These amendments have not been adopted early by the Group.
Other accounting standards have been published and will be mandatory for the Group's accounting periods beginning on or after 1 January 2020 or later periods. The impact of these standards is not expected to be material to the reported results and financial position of the Group. The Group has not adopted any of these standards early.
2.5 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 subsidiaries APQ Cayman Limited, APQ Corporate Services Limited and APQ Knowledge Limited are therefore measured at fair value through profit or loss (FVTPL), in accordance with IFRS 13 "Fair Value Measurement" and IFRS 9 "Financial Instruments".
Notwithstanding this, IFRS 10 requires subsidiaries that provide services that relate to the investment entity's investment activities to be consolidated. The subsidiaries APQ Partners LLP and APQ Capital Services Limited assist 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, APQ Partners LLP and APQ Capital Services Limited, whilst APQ Cayman Limited, APQ Corporate Services Limited and APQ Knowledge Limited are 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.
2.6 Financial instruments
The Group classifies its financial assets and financial liabilities at initial recognition into the following categories, in accordance with IFRS 9 Financial Instruments.
Financial assets at FVTPL
The investments in APQ Cayman Limited, APQ Corporate Services Limited and APQ Knowledge Limited are 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 investments in APQ Cayman Limited, APQ Corporate Services Limited and APQ Knowledge Limited and has designated the investments as fair value through profit or loss in the financial statements. The investments in APQ Cayman Limited, APQ Corporate Services Limited, APQ Knowledge Limited and APQ Connect Limited are 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.
The investment in BARTR Holdings Limited is designated as fair value through profit or loss 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.
Financial assets held at amortised cost
The Group recognises trade debtors, accrued income and other debtors as financial assets classified as amortised cost. These assets are held in order to collect the contractual cash flows and the contractual cash flows are solely payments of principal and interests. These are classified, at initial recognition, as receivables at fair value plus transaction costs and are subsequently measured at amortised cost. The Group has adopted the simplified approach to the credit loss model. Under the simplified credit loss model approach a provision is recognised based on the expectation of default rates over the full lifetime of the financial assets without the need to identify significant increases on credit risk on these assets.
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.
Further detail of the Group's financial assets held at amortised cost are disclosed in Note 15 and Note 21 in these financial statements.
Financial liabilities held at amortised cost
The Group recognises trade creditors, other creditors, accruals and the liability component of convertible loan stock as other financial liabilities. Other financial liabilities are classified, at initial recognition, as payables at fair value net of transaction costs and are subsequently measured at amortised cost using the effective interest method. Further details are disclosed in Note 16, Note 17, Note 20 and Note 21 in these financial statements.
The Group derecognises a financial liability when the obligation under the liability is discharged, cancelled or expired.
2.7 Fair value measurement
The Company measures its investments in APQ Cayman Limited, APQ Corporate Services Limited, APQ Knowledge Limited and BARTR Holdings Limited at fair value at each reporting date.
For APQ Cayman Limited this 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, including APQ Corporate Services Limited, APQ Knowledge Limited and BARTR Holdings Limited, the fair value is determined by using valuation techniques deemed to be appropriate in the circumstances. These have been determined in accordance with the International Private Equity and Venture Capital Valuation (IPEV) Guidelines. These guidelines require the valuer to make judgements with regards to the most appropriate valuation method to be used and the results and inputs used to determine these valuations. Valuation methods that may be used include:
· The income approach - valuation through discounted cash flow forecast of future cash flows or earnings, using appropriate discount rates.
· The market approach - valuation by comparing the asset being valued to comparable assets for which price information is readily available. This price information can be in the form of transactions that have occurred or market information on companies operating in a similar industry.
· The cost approach - valuation based on the cost of reproducing or replacing the asset being valued.
The use of these guidelines requires management to make judgements in relation to the inputs utilised in preparing these valuations. These include but are not limited to:
· Determination of appropriate comparable assets and benchmarks;
· Future cash flow expectations deriving from these assets;
· Appropriate discount factors to be used in determining the discounted future cash flows; and
· Adjustments required to existing market data to make it more comparable to the asset being valued.
For the year ended 31 December 2018, the investment in BARTR Holdings Limited was measured at cost as this approximated the fair value of the investment, as there had been no significant change in its fundamentals from the acquisition date by the Group of 19 November 2019. This investment is now held at FVTPL in accordance with the IPEV guidelines.
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.
2.8 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 FVTPL 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'.
2.9 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.
2.10 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.
2.11 Share-based payments
On 19 April 2017, and amended on 17 July 2018, 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 settled 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 other capital reserves, 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. The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At the end of each period, the Group revises its estimates on the number of awards it expects to vest based on service conditions.
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.
The Group retains the right to settle the share award in cash. The transaction is accounted for as an equity settled payment and vested over the life of the award. At the point the Group elects to settle the share award in cash, or an expectation that the award will be settled in cash, the value of the portion to be settled in cash is reclassified from the share-based payment reserve to liabilities. Any difference between the value recorded in the share-based payment reserve and the value of the cash to be paid is recognised as an expense in the statement of comprehensive income.
Per the management share plan the vesting period for any awards issued can be up to 5 years and subject to certain conditions. The first awards were issued in the year with respect to the performance period ended 31 December 2017.
2.12 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.
2.13 Exchange reserve
During the year ended 31 December 2017, 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 was previously reported in Pounds Sterling and was restated in US Dollars using differing exchange rates. The retained earnings were converted using an average rate for the period they related to. 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 Statement of Financial Position to reflect the fact this change in presentational currency from the functional currency to 31 December 2016.
2.14 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 becomes irrevocable, which is following its payment. A final dividend is recognised as a liability in the period when it becomes irrevocable, which is once it has been approved at the annual general meeting of shareholders.
2.15 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.
2.16 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 on a straight-line basis over its expected useful life to estimated residual values, as follows:
Office equipment over 3 years (2018 - over 3 years)
Furniture and fixtures over 4 years (2018 - over 4 years)
Leasehold improvements over 2 years (2018 - over 2 years)
Residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each year end.
2.17 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.
2.18 Dividend income
Dividend income is recognised on the date when the Company's right to receive the payment is established. This is ordinarily at the ex-dividend date.
2.19 Telecommunication minutes income
Telecommunications minutes income represents income received with respect to the resale of minutes purchased by the Company. The performance obligations in the contracts with these customers is the supply of these minutes. Minutes are supplied at the point of customer utilisation and therefore income is recognised in the period the customer has utilised the minutes.
2.20 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 FVTPL are changes in the fair value of financial assets and liabilities held for trading or designated upon initial recognition as at FVTPL 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 FVTPL 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).
2.21 Fee expense
Fees are recognised on an accrual basis. Refer to Note 6 for details of fees and expenses paid in the period.
2.22 Taxes
The Company is taxable in Guernsey at the company standard rate of 0% (2018 - 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.
2.23 Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
· Leases of low value assets; and
· Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the group's incremental borrowing rate on commencement of the lease is used. Variable lease payments are expensed in the period to which they relate.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
· lease payments made at or before commencement of the lease;
· initial direct costs incurred; and
· the amount of any provision recognised where the group is contractually required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made.
Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset.
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
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 also holds several private investments either directly or through its other subsidiaries for the purpose of investment income and capital appreciation.
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 an exit strategy for all of its underlying investments.
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. The Board therefore recognises its investment in APQ Cayman Limited, APQ Corporate Services Limited, APQ Knowledge Limited and BARTR Holdings Ltd at fair value through profit or loss. The Board has also concluded that since APQ Partners LLP and APQ Capital Services Limited provide services related to the Company's investment activities, these subsidiaries should be consolidated.
As disclosed in the Chairman's Statement, in May 2019 APQ global commenced trading in telecommunications minutes, generating revenue of $1,026,160, with a net loss of $227,604. The intention of undertaking this activity was to ultimately provide investors with capital return or investment income in combination with its other telecommunication investments, BARTR Holdings Limited and its subsidiaries. Trading was performed by a third-party service provider, and the contracts were initially held by APQ Global, to reduce counterparty risk. Management's intention was to novate these contracts into APQ Connect at a subsequent point in time. Post year end this activity has reduced and will cease entirely in 2020. As this activity was a one-off activity and was immaterial in the context of the firm's operations, the Directors are satisfied that the Investment entity status is maintained, and the financial statements continue to be prepared in accordance with the investment entity provisions of IFRS 10.
Valuation of investments
There are a range of methods for determining the fair value of the unquoted investments held by the Group. Determination of the most appropriate method for valuing these is a key judgement of the Board, and the use of different methods will result in variations in the fair value determined for each investment. The Board determines the most appropriate method based of the life stage of the investment and available comparisons to existing companies operating in the same investments. The Board utilises qualified third parties to assist in deciding the most appropriate valuation technique.
Fair value of share awards
The Directors consider the fair value of the share awards issued in the year to be the equivalent of the fixed cash settlement of the transaction were the Board to choose to settle in cash rather than shares. In the event there was no fixed amount for the cash settlement the Directors would value the awards using the Black Scholes model. Further details with respect to the share awards can be found in note 19.
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 of investments
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 14 for further discussion regarding the fair value of investments.
The Directors measure the investments in APQ Corporate Services Limited, APQ Knowledge Limited and BARTR Holdings Limited in accordance with the IPEV guidelines. As these investments are unlisted, their fair value is determined through a range of inputs using external comparisons and management generated forecasts. Forecasts are by their nature estimated expectations and this leads to uncertainty with respect to the valuation of these investments.
The forecast future cash flows are a key estimate in the determination of these valuations and are subject to uncertainty. These forecasts are determined at the Statement of Financial Position date and do not reflect changes in these forecasts from events after the reporting periods. The impact of the COVID-19 pandemic that occurred in 2020 may have an impact on the future cash flows of these investments however these are not reflected in the valuations determined as at 31 December 2019.
Fair value of share awards
To determine the expense to be recognised in the statement of comprehensive income over the vesting period the Directors must calculate the expected likelihood of the service conditions being met for the awards to vest, and only recognise the portion where this is likely to be met. This expectation is remeasured at each reporting date.
4. 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.
2019
2018
Group
$
$
Cayman
102,885,960
107,109,483
United Kingdom
425,085
417,338
Guernsey
4,438,129
1,004,353
107,749,174
108,531,174
5. Analysis of revenue
2019
2018
$
$
Dividends received from APQ Cayman Limited
11,663,216
1,592,173
Rental income
(674)
9,575
Telecommunications minutes income
1,026,160
-
12,688,702
1,601,748
6. Analysis of administrative expenses
2019
2018
$
$
Personnel expenses
495,435
336,153
Operating lease expenses
-
95,601
Depreciation of tangible fixed assets expenses
13,541
12,137
Depreciation of right of use assets
84,803
-
Audit fees
96,167
95,121
Audit related services - review of interim financial statements
7,992
6,846
Nominated advisor fees
63,217
84,025
Expenses incurred in relation to investment in BARTR Holdings Limited
179,227
70,000
Costs of purchasing telecommunications minutes
1,253,764
-
Administration fees and expenses
182,892
64,033
Director's remuneration
227,716
210,978
Other expenses
423,495
286,245
Professional fees
810,138
679,365
Share based payment expenses
186,391
376,328
Insurance
11,265
(352)
Bad debt expenses
155,111
-
Recharge of expenses to APQ Cayman Limited
(341,595)
(169,483)
Net exchange losses
1,592,114
214,873
5,441,673
2,361,870
7. Director's remuneration
2019
2018
$
$
Director's remuneration
222,643
204,320
Share based payment expenses
149,113
301,062
Social security costs on director's remuneration
5,073
6,658
376,829
512,040
The highest paid director was Bart Turtelboom (2018 - Bart Turtelboom)
225,974
401,934
Average number of directors in the year
4
4
8. Personnel expenses
2019
2018
$
$
Short term benefits - wage and salaries
221,652
71,900
Short term benefits - social security costs
21,341
4,208
Short term benefits - other benefits
244,591
258,468
Short term benefits - Share based payment expenses
37,278
75,266
Post-employment benefits
7,851
1,577
532,713
411,419
Personnel expenses include expenses per note 6 and the portion of share based payments relating to individuals who are not directors of the Company.
Key management personnel expenses, excluding director's remuneration detailed in note 7, is as follows:
Short term benefits - other benefits
238,350
253,600
Short term benefits - Share based payment expenses
37,278
75,266
275,628
328,866
9. Interest receivable
2019
2018
$
$
Loan interest receivable from APQ Cayman Limited
350,046
1,367,008
Loan interest receivable from Palladium Trust Services Limited
1,067
-
Loan interest receivable from New Markets Media & Intelligence Ltd
1,069
-
Bank interest receivable
-
143
352,182
1,367,151
During 2018, the Company provided a loan of $7,249,304 to APQ Cayman Limited from the proceeds of the CULS issue. The loan was repayable on demand. During 2019, the balance of $33,372,357 was converted into an investment. The balance of $33,721,861 at 31 December 2018 was included within trade and other receivables.
In addition, the Company charged interest of $350,046 (2018 - $1,367,008) to APQ Cayman Limited for the year ended 31 December 2019. 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.
10. Interest payable
2019
2018
$
$
Interest on 3.5% Convertible Unsecured Loan Stock 2024
2,264,716
2,280,049
Discount on unwinding of lease liability
10,115
-
2,274,831
2,280,049
11. 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.
2019
2018
$
$
Total comprehensive income / (loss) for the year
2,307,496
(20,208,498)
Weighted average number of shares in issue
78,196,993
78,057,840
Earnings per share
0.02951
(0.25889)
Diluted earnings per share
0.02938
(0.25889)
The Group had share awards vested but not yet issued, which are dilutive in 2019. The impact of these share awards would have no impact on the total comprehensive income/loss for the year. They would increase the weighted average number of shares by 350,485 (2018 - 467,313). These share awards were not dilutive in 2018 as the impact of the dilution would be to decrease the loss per share.
The Group has 6,000 (2018 - 6,000) units of Convertible Loan Stock which are potentially dilutive if converted into ordinary shares. This would increase the weighted average number of shares by 6,000 (2018 - 6,000) exercise price on these conversion options currently exceeds the traded share price of APQ Global These are not currently dilutive (2018 - not dilutive).
Potentially dilutive instruments issued after the reporting date
On the 29 January 2020, APQ Global issued 1,000,000 share warrants with an exercise price of 70.94p. The possible impact of this dilution would be to increase the weighted average number of shares by 1,000,000.
On the 29 January 2020, APQ Global issued 268,000 convertible preference shares which were convertible into a variable number of shares linked to the relative assets attributable to the convertible preference shares. On 30 June 2020, the terms of the Convertible preference shares were changed so that they are now convertible into 11.25 ordinary shares per convertible preference share. The possible impact of this dilution would be to increase the weighted average number of shares by 3,015,000.
12. Dividends
Dividends were declared in the year ended 31 December 2018 and 2019 as follows:
Ex-dividend date
Payment date
Dividend (£)
Dividend ($)
Dividend per share (£)
Dividend per share ($)
First dividend
1 February 2018
2 March 2018
1,170,825
1,625,920
0.015
0.021
Second dividend
26 April 2018
25 May 2018
1,170,825
1,665,264
0.015
0.021
Third dividend
26 July 2018
24 August 2018
1,170,825
1,522,307
0.015
0.020
Fourth dividend
1 November 2018
30 November 2018
1,172,021
1,528,784
0.015
0.020
Total 2018
4,684,496
6,342,275
0.060
0.082
First dividend
31 January 2019
1 March 2019
1,172,420
1,511,601
0.015
0.019
Second dividend
2 May 2019
31 May 2019
1,172,818
1,517,451
0.015
0.019
Third dividend
25 July 2019
23 August 2019
1,173,217
1,464,644
0.015
0.019
Fourth dividend
31 October 2019
29 November 2019
1,173,616
1,514,023
0.015
0.019
Total 2019
4,692,071
6,007,719
0.060
0.076
The stated dividend policy of the Company is to target an annualised dividend yield of 6% based on the Placing Issue Price. In addition, the Company declared a further dividend of 1.5 pence (1.97 cents) per share on 23 January 2020 in respect of the quarter ended 31 December 2019.
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
13. Property, plant and equipment
Office
equipment
Furniture and fixtures
Leasehold
improvements
Total
$
$
$
$
Cost
At 1 January 2019
58,021
19,352
34,588
111,961
Additions during the year
5,490
-
-
5,490
At 31 December 2019
63,511
19,352
34,588
117,451
Accumulated depreciation
At 1 January 2019
37,676
13,976
34,588
86,240
Charge for the year
11,798
1,743
-
13,541
At 31 December 2019
49,474
15,719
34,588
99,781
Net book value
At 31 December 2019
14,037
3,633
-
17,670
At 31 December 2018
20,345
5,376
-
25,721
14. Investments
APQ
Cayman Limited
APQ Corporate Services Limited
APQ Knowledge Limited
BARTR Holdings Limited
Total
$
$
$
$
$
At 1 January 2019
73,387,622
-
-
766,680
74,154,302
Additions
33,372,357
290,518
613,947
-
34,276,822
Fair value movement
(3,874,019)
562,351
270,721
24,063
(3,016,884)
At 31 December 2019
102,885,960
852,869
884,668
790,743
105,414,240
APQ Global Limited wholly owns APQ Cayman Limited whose registered office 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, APQ Cayman Limited is not consolidated and is recognised 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. APQ Partners LLP supports the investment activities of APQ Global Limited and therefore does not meet the requirements of being an investment entity. This subsidiary is consolidated into the group financial statements. Refer to Note 2.5 for further detail.
On the 19 November 2018, APQ Global Limited acquired a capital interest represents a 40% shareholding and equivalent voting rights BARTR Holdings Limited, a company incorporated in England and Wales, whose registered office is Tobias House St. Marks Court, Thornaby, Stockton-On-Tees, United Kingdom, TS17 6QW. BARTR Holdings Limited wholly owns two subsidiaries, BARTR Connect Limited, whose registered office is Tobias House St. Marks Court, Thornaby, Stockton-On-Tees, United Kingdom, TS17 6QW, and BARTR Technologies Limited, whose registered office is 156 Great Charles Street Queensway, Birmingham, England, B3 3HN, the Company therefore has an indirect 40% interest in these subsidiaries. BARTR Holdings Limited meets the definition of an investment entity. Therefore, BARTR Holdings Limited is not consolidated and is recognised as an investment at fair value through profit or loss.
On 10 January 2019, the Company incorporated a wholly owned subsidiary APQ Corporate Services Limited, for the purpose of acting as a holding company for new investments. The registered address of APQ Corporate Services Limited is PO Box 142, The Beehive, Rohais, St Peter Port, Guernsey, GY1 3HT. APQ Corporate Services Limited meets the definition of an investment entity. Therefore, APQ Corporate Services Limited is not consolidated and is recognised as an investment at fair value through profit or loss.
On 21 December 2018, the Group entered into an agreement to purchase 100% of the following 5 entities; Palladium Trust Services Limited, a Company incorporated in England and Wales, Palladium Trust Company (NZ) Limited, a company incorporated and domiciled in New Zealand, Palladium Corporate Service (Singapore) Pte Limited, a company incorporated and domiciled in Singapore, Palladium Finance Group Limited (Seychelles), a company incorporated and domiciled in the Seychelles and Palladium Trust Company (BVI) Limited, a company incorporated and domiciled in the British Virgin Islands. The completion of this purchase was finalised on 22 February 2019. The total consideration of the purchase agreement was $290,518 (£222,500). As at 31 December 2019, $210,540 (£158,929) is still due with respect to this purchase agreement and is included within deferred consideration in Note 16. All 5 of the entities are 100% owned by APQ Corporate Services Limited. The intention is to hold these investments for the purpose of obtaining investment income and capital appreciation. As their parent company, APQ Corporate Services Limited meets the definition of an investment entity, these entities are not consolidated and are recognised as an investment at fair value through profit or loss as part of the valuation of APQ Corporate Services Limited.
On 1 March 2019, the Company incorporated a wholly owned subsidiary APQ Knowledge Limited also for the purpose of acting as a holding company for new investments. The registered address of APQ Knowledge Limited is PO Box 142, The Beehive, Rohais, St Peter Port, Guernsey, GY1 3HT. APQ Knowledge Limited meets the definition of an investment entity. Therefore, APQ Knowledge Limited is not consolidated and is recognised as an investment at fair value through profit or loss.
On 26 February 2019, the Group entered into an agreement to purchase 100% of Frontier Consultancy Limited, a Company incorporated in England and Wales. Frontier Consultancy Limited changed its name to New Markets Media & Intelligence Ltd on 13 March 2019. The total consideration of the purchase agreement was $613,947(£463,742). As at 31 December 2019, $355,859 (£279,423) is still due with respect to this purchase agreement and is included within deferred consideration in Note 16. The entity is 100% owned by APQ Knowledge Limited. The intention is to hold this investment for the purpose of obtaining investment income and capital appreciation. As its parent company, APQ Knowledge Limited meets the definition of an investment entity, New Markets Media & Intelligence Ltd is not consolidated and is recognised as an investment at fair value through profit or loss as part of the valuation of APQ Corporate Services Limited.
On 12 April 2019, APQ Corporate Services Limited incorporated a wholly owned subsidiary, GEO Strategic Partners Limited, a Company incorporated in the Isle of Man. The intention is to hold this investment for the purpose of obtaining investment income and capital appreciation. As its parent company, APQ Corporate Services Limited meets the definition of an investment entity, GEO Strategic Partners Limited is not consolidated and is recognised as an investment at fair value through profit or loss as part of the valuation of APQ Corporate Services Limited.
On 31 July 2019, APQ Global Limited incorporated a wholly owned subsidiary, APQ Connect Limited, a Company incorporated in Guernsey. The registered address of APQ Connect Limited is PO Box 142, The Beehive, Rohais, St Peter Port, Guernsey, GY1 3HT.
On 31 July 2019, APQ Global Limited incorporated a wholly owned subsidiary, APQ Capital Services Limited, a Company incorporated in Guernsey. The registered address of APQ Capital Services Limited is PO Box 142, The Beehive, Rohais, St Peter Port, Guernsey, GY1 3HT. APQ Capital Services supports the investment activities of APQ Global Limited and therefore does not meet the requirements of being an investment entity. This subsidiary is consolidated into the group financial statements. Refer to Note 2.5 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.
The investment in BARTR Holdings Limited was completed on 19 November 2018. Fair value has been determined in relation to the most recent round of fund raising by BARTR Holdings Limited. This is due to BARTR Holdings Limited being a pre-revenue technology start-up company for which other valuation techniques are not appropriate.
The investment in APQ Corporate Services Limited was completed on 10 January 2019. Fair value has been determined through the income approach, incorporating comparison with external sources and the expected cash flows of the investment.
The investment in APQ Knowledge Limited was completed on 1 March 2019. Fair value has been determined through the income approach, incorporating comparison with external sources and the expected cash flows of the investment.
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 investments in APQ Cayman Limited, BARTR Holdings Limited, APQ Corporate Services Limited and APQ Knowledge Limited as level 3 as the inputs utilised in valuing the investments are deemed to be unobservable. The most significant unobservable input used in the fair value of the investment in APQ Cayman is the NAV. The most significant unobservable input used in the fair value of the investments in BARTR Holdings Limited is the most recent funding raised by BARTR Holdings Limited. The most significant unobservable input used in the fair value of the investments in APQ Corporate Services Limited and APQ Knowledge Limited are the future expected cash flows of the investments, used in deriving a valuation using discounted cash flows. 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.
15. Trade and other receivables
2019
2018
$
$
Trade debtors
68,581
21,808
Loan to APQ Cayman Limited
-
33,721,861
Amounts due from group undertakings
281,489
-
Prepayments and accrued income
466,914
59,044
Other debtors
54,707
36,567
871,691
33,839,280
During the year, the Company provided a loan of $nil (2018 - $7,249,304) to APQ Cayman Limited from the proceeds of the CULS issue. The loan is repayable on demand and the balance as at 31 December 2019 is $nil (2018 - $33,721,861). During the year, the Company converted the $33,372,357 loan with APQ Cayman Limited, from the proceeds of the CULS issue to an investment. In addition, the Company charged interest of $350,046 (2018 - $1,367,008) to APQ Cayman Limited for the year ended 31 December 2019. 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.
No expected credit losses adjustments are included in the above balances. All bad debts have been recognised within the year and other balances that have not been received subsequent to year end relate to group undertakings or the rental lease security deposit.
16. Trade and other payables
2019
2018
$
$
Trade creditors
75,260
115,046
Amounts due to group undertakings
1,960
-
Other creditors
61,409
37,315
Accruals
140,745
101,023
Lease liabilities
67,010
-
Deferred consideration
566,399
-
912,783
253,384
17. 3.5% Convertible Unsecured Loan Stock 2024
Nominal number
of CULS
Liability
component
Equity
component
$
$
$
As at 1 January 2018
26,953,749
22,135,311
4,285,225
Issue of 3.5% Convertible Unsecured Loan Stock 2024
14,492,418
11,755,346
2,737,072
Expenses of issue
-
(442,099)
(102,942)
Amortisation of discount on issue and issue expenses
-
2,245,988
-
Interest paid during the year
-
(1,362,452)
-
Exchange differences
-
(2,497,468)
-
As at 31 December 2018
41,446,167
31,834,626
6,919,355
Amortisation of discount on issue and issue expenses
-
2,264,716
-
Interest paid during the year
-
(1,347,911)
-
Exchange differences
-
1,313,562
-
As at 31 December 2019
41,446,167
34,064,993
6,919,355
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 £20,090,000 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.
On 22 January 2018, the Company raised a further £10,207,300 ($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 £5,000 ($7,099) nominal each, at an issue price of £5,150 ($7,312) per unit.
18. Share Capital
The authorised and issued share capital of the Company is 78,241,047 ordinary shares of no par value listed on The International Stock Exchange and admitted to trading on AIM. All shares are fully paid up.
Quantitative information about the Company's capital is provided in the statement of changes in equity and in the tables below.
Holders of ordinary 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. They also hold rights to receive notice, attend, speak and vote at general meetings 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
£
$
As at 1 January 2018
78,055,000
76,621,621
99,494,707
Shares issued from share awards during the year
79,735
75,512
102,149
At 31 December 2018
78,134,735
76,697,133
99,596 856
Shares issued from share awards during the year
106,312
100,682
136,198
At 31 December 2019
78,241,047
76,797,815
99,733,054
During the year ended 31 December 2019, 106,312 (2018 - 79,735) shares were issued as part of the share award scheme as detailed in note 19.
19. Share awards
On 19 April 2017 (and amended 17 July 2018), the Company established a share award scheme for the employees of the Company. The scheme grants the Board the authority to allot share awards or share options with service conditions attached. Share awards or options can only be awarded for performance periods whereby the book value per share (excluding dividend transactions) exceeds the book value per share for all previous performance period ends. The maximum amount of share awards or options is determined by reference to 20% of the increased performance of the current book value per share against all previous performance periods. The Board retains the right to settle these awards in either shares or cash. As the Company does not have a present obligation to settle in cash the awards are all recognised as equity settled share awards.
The first share awards were granted in 2018 with respect to the performance period ended 31 December 2017.
Grant date
Type of award
No. of instruments
Fair value of instrument granted
Vesting conditions
Final vesting date
cents
1 January 2018
Shares
584,141
128.11
Awards vest quarterly over 5 years provided the employee is still in service of the Group.
31 December 2022
Fair value for the award dated 1 January 2018 is calculated by reference to the fixed value of cash per share that the Board is at discretion to pay rather than settle the award in shares.
Number of awards
Weighted average of fair value of instrument
Number of awards
Weighted average of fair value of instrument
cents
cents
Outstanding at 1 January 2018
496,520
128.11
-
-
Granted
-
-
584,141
128.11
Settled in equity
(106,312)
128.11
(79,735)
128.11
Settled in cash
(10,516)
128.11
(7,886)
128.11
Outstanding at 31 December 2019
379,692
128.11
496,520
128.11
Charge for awards to be settled in Equity
Charge for awards settled in Cash
Total charge for share based awards
$
$
$
Year ended 31 December 2018
366,225
10,103
376,328
Year ended 31 December 2019
172,920
13,471
186,391
The unvested portion of the share awards currently granted is $185,625 (2018 - $372,016). Of the awards outstanding the number vested that are available for settlement amount to 29,207 (2018 - 29,207)
20. Leases
Lease commitments
The Company's subsidiary, APQ Partners LLP, leases rental space and information with regards to this lease is outlined below:
Rental lease asset
$
Leased asset recognised on adoption of IFRS 16 on 1 January 2019
169,605
Depreciation for the year
(84,803)
At 31 December 2019
84,802
Rental lease liability
$
Leased asset recognised on adoption of IFRS 16 on 1 January 2019
143,850
Unwinding of discounting on lease liability
10,115
Payments for lease
(110,379)
Exchange differences
23,424
At 31 December 2019
67,010
Further information regarding the adoption of IFRS 16 is detailed in note 26.
21. 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. Further details of the principal business risks are included in the Business Model & Strategy section. 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. The following table analyses the Group's financial assets and liabilities in accordance with IFRS 9, which are exposed to these market risks:
Financial Assets
2019
2018
Fair value through profit and loss
Amortised cost
Total
Fair value through profit and loss
Amortised cost
Total
$
$
$
$
$
$
Investments
105,414,240
-
105,414,240
74,154,302
-
74,154,302
Trade debtors
-
68,581
68,581
-
21,808
21,808
Loan to APQ Cayman Limited
-
-
-
-
33,721,861
33,721,861
Amounts due from group undertakings
-
281,489
281,489
-
-
-
Prepayments and accrued income
-
253,532
253,532
-
765
765
Other debtors
-
44,888
44,888
-
27,839
27,839
Cash and cash equivalents
-
1,505,234
1,505,234
-
511,871
511,871
Total
105,414,240
2,153,724
107,567,964
74,154,302
34,284,144
108,438,446
Financial Liabilities
2019
2018
Fair value through profit and loss
Amortised cost
Total
Fair value through profit and loss
Amortised cost
Total
$
$
$
$
$
$
Trade creditors
-
75,260
75,260
-
115,046
115,046
Amounts due to group undertakings
-
1,960
1,960
-
-
-
Other creditors
-
61,409
61,409
-
37,315
37,315
Accruals
-
140,745
140,745
-
101,023
101,023
Lease liabilities
-
67,010
67,010
-
-
-
Deferred consideration
-
566,399
566,399
CULS liability
-
34,064,993
34,064,993
-
31,834,626
31,834,626
Total
-
34,977,776
34,977,776
-
32,088,010
32,088,010
Market risk
Market price risk arises from uncertainty about the future prices and valuations of financial instruments held in accordance with the Company's investment objectives. It represents the potential loss that the Company might suffer through market price movements in respect of quoted investments and also changes in the fair value of unquoted investments that it holds. The market risk on the fair value of unquoted investments is a new risk identified in the year.
Market price risk
Equity price risk arises from equity securities held as part of the Group's portfolio of investments. The Group's investments comprise unquoted investments in its subsidiaries. APQ Cayman Limited has investments in quoted and unquoted equities and debt instruments whose value is dependent on movements in markets. The unquoted investments in the Group's other subsidiaries are subject to fluctuations in markets which may impact their profitability and the realisable value on exit from the investments.
The Board seeks to manage this risk whilst also attempting to maximise returns. The Board regularly reviews the portfolio of investments and utilises and investment advisory committee to help manage the risks of the portfolio.
The most significant unobservable input used in the fair value of APQ Cayman Limited is the NAV. A reasonable change of 10% in the NAV will have an impact of $10,288,596 (2018 - $7,338,762) on the profit of the business.
The valuation of the investments of the Group's other subsidiaries make use of multiple independent unobservable inputs and it is impractical to perform sensitivity analysis on one input utilised in the calculation of the valuations. Estimates and underlying assumptions are reviewed for reasonableness however these inputs are highly subjective.
A reasonable change of 15% in the value of the investment of APQ Corporate Services Limited will have an impact of $127,931 (2018 - $nil) on the profit of the business.
A reasonable change of 15% in the value of the investment of APQ Knowledge Limited will have an impact of $132,700 (2018 - $nil) on the profit of the business.
A reasonable change of 15% in the value of the investment of BARTR Holdings Limited will have an impact of $118,611 (2018 - $nil) on the profit of the business.
Further sensitivity to underlying market movements has been noted in the 2019 review.
Interest rate risk
The bank accounts of APQ Global Limited are not interest bearing there is limited exposure to interest rate risk. In addition, the CULS are at a fixed interest rate so there is no exposure to interest rate risk on these instruments. The Board does not feel it needs to actively manage this 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 in the notes section. 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. The Board therefore does not feel it needs to actively manage this risk at this time.
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:
2019
2018
$
$
Cash and cash equivalents
407,423
446,377
Trade debtors
68,582
21,808
Loan to APQ Cayman Limited
-
33,721,861
Accrued income
-
764
Other debtors
34,707
36,567
Amounts due from group undertakings
40,830
-
Trade creditors
(75,260)
(115,046)
Other creditors
(34,371)
(37,315)
Amounts due to group undertakings
(1,960)
-
Accruals
(140,745)
(101,023)
Lease liabilities
(67,010)
-
Deferred consideration
(566,399)
-
CULS
(34,064,993)
(31,834,626)
(34,399,196)
2,139,367
A reasonable change of 5% in the Group's Pounds Sterling net liabilities (2018 - assets) will have an impact of $1,719,960 (2018 - $106,968) on the value of the net assets. This level of change is considered to be reasonable based on observations of current conditions.
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 details the Group's expected maturity for its financial liabilities together with the contractual undiscounted cash flow amounts:
31 December 2019
Less than 1 year
1 - 5 years
5 + years
Total
$
$
$
$
Liabilities
Trade creditors
(75,260)
-
-
(75,260)
Amounts due to group undertakings
(1,960)
-
-
(1,960)
Other creditors
(61,409)
-
-
(61,409)
Accruals
(140,745)
-
-
(140,745)
Lease liabilities
(67,010)
-
-
(67,010)
Deferred consideration
(249,268)
(317,131)
-
(566,399)
CULS
-
(46,386,938)
-
(46,386,938)
(595,652)
(46,704,069)
-
(47,299,721)
31 December 2018
Less than 1 year
1 - 5 years
5 + years
Total
$
$
$
$
Liabilities
Trade creditors
(115,046)
-
-
(115,046)
Other creditors
(37,315)
-
-
(37,315)
Accruals
(101,023)
-
-
(101,023)
CULS
-
-
(45,933,169)
(45,933,169)
(253,384)
-
(45,933,169)
(46,186,553)
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 Credit Suisse, JPMorgan Chase & Co, HSBC and Barclays. As per Fitch ratings, Credit Suisse has a credit rating of A-, JPMorgan Chase & Co has a credit rating of AA-, 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.
22. 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 subsidiaries.
• 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 Board reviews and approves the investment of capital into illiquid investments and regularly reviews its dividend policy to ensure it remains in accordance with its capital aims.
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:
2019
2018
$
$
Share capital
99,733,054
99,596,856
Equity component of 3.5% Convertible Unsecured Loan Stock 2024
6,919,355
6,919,355
Other capital reserves
300,798
264,076
Retained earnings
(29,109,833)
(25,409,610)
Exchange reserve
(4,927,513)
(4,927,513)
Total shareholders' funds
72,915,861
76,443,164
23. Related party transactions
Richard Bray was a director of the Company and its 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. The Active Group are a back office support professional service firm providing registered office and administrative services to the Group.
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 was entitled to an annual salary of £120,000 as Chief Executive Officer of the Company. From 1 April 2018 this was split between the Company and APQ Cayman Limited.
APQ Global Limited - Remuneration
APQ Global Limited - Share based remuneration
APQ Cayman Limited - Remuneration
Total
$
$
$
$
2019
2018
2019
2018
2019
2018
2019
2018
Bart Turtelboom
Chief Executive Officer
76,861
100,872
149,113
301,062
76,861
58,855
302,835
460,789
Wayne Bulpitt
Non-Executive Chairman
51,384
39,932
-
-
-
-
51,384
39,932
Richard Bray
Executive Director
-
39,932
-
-
-
5,000
-
44,932
Philip Soulsby
Non-Executive Director
22,398
23,584
-
-
-
-
22,398
23,584
Wesley Davis
Executive Director
72,000
-
-
-
72,000
-
144,000
-
222,643
204,320
149,113
301,062
148,861
63,855
520,617
569,237
The directors represent key management personnel. Additional key management personnel are the partners of the LLP, details of their remuneration is disclosed in Note 8.
APQ Global Limited has incurred $89,770 (2018 - $64 033) of fees and expenses to Active Services (Guernsey) Limited as administrator of the Company. As at 31 December 2019, APQ Global Limited owed $21,677 (2018 - $11,261) to Active Services (Guernsey) Limited.
APQ Global Limited has supported APQ Cayman Limited by paying directors fees of $nil (2018 - $822) during the year to Richard Bray as he was a director of both entities. Richard Bray resigned during the year ended 31 December 2019.
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 $446,488 (2018 - $417,959) to APQ Global Limited during the year. As at 31 December 2019, APQ Global Limited were owed $142,010 (2018 - $229,391) from APQ Partners LLP. In the current and prior year amounts have been eliminated on consolidation.
During the year, APQ Global Limited provided a loan of $nil (2018 - $7,249,304) to APQ Cayman Limited from the proceeds of the CULS issue. The balance outstanding as at 31 December 2019 is $nil (2018 - $33,721,861) and is included within trade and other receivables. During the year, the Company converted the $33,372,357 loan with APQ Cayman Limited, from the proceeds of the CULS issue to an investment. In addition, APQ Global Limited charged interest of $350,046 (2018 - $1,367,008) to APQ Cayman Limited for the year ended 31 December 2019. This was fully received during the year and no balance was outstanding at year end (2018 - no balance outstanding). Additionally, the Group recharged expenses to APQ Cayman Limited of $341,595 (2018 - $169,483) during the year.
During the year, APQ Global Limited provided $280,000 (2018 - $70,000) to BARTR Connect Limited, an entity over which the Company has significant influence, in relation to its management of telecommunication contracts. At 31 December 2019, $nil (2018 - $nil) was due to BARTR Connect Limited.
During the year, APQ Global Limited provided funding of $144,464 to APQ Corporate Services Limited during the year. As at 31 December 2019, $144,464 (2018 - $nil) was due from APQ Corporate Services Limited (See Note 15).
During the year, APQ Global Limited provided a loan to Palladium Trust Services Limited, a group undertaking, of $37,431 (2018 - $nil). In addition, the loan attracts interest at a rate of 10%. During the year, APQ Global Limited charged interest of $1,067 (2018 - $nil). As at year end, APQ Global Limited was owed $40,831 (2018 - $nil) from Palladium Trust Services Limited (See Note 15).
During the year, APQ Global Limited provided a loan to New Markets Media & Intelligence Ltd, a group undertaking, of $24,299 (2018 - $nil). In addition, the loan attracts interest at a rate of 10%. During the year, APQ Global Limited charged interest of $1,069 (2018 - $nil). During the year, New Markets Media & Intelligence Ltd also provided funding to APQ Global Limited of $28,404 (2018 - $nil). As at year end, APQ Global Limited owed $1,960 (2018 - $nil) to New Markets Media & Intelligence Ltd (See Note 16).
During the year, APQ Global Limited provided funding to APQ Connect Limited, a group undertaking, of $96,195 (2018 - $nil). As at year end, APQ Global Limited was owed $96,195 (2018 - $nil) from APQ Connect Limited (See Note 15).
24. Subsidiary undertakings
Name
Country of incorporation
Registered Office
Holding %
Activity
Recognition
APQ Capital Services Limited
Guernsey
PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT
100
Investment support
Consolidation
APQ Cayman Limited
Cayman Islands
Mourant Ozannes Corporate Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, PO Box 1348, Grand Cayman KY1-1108
100
Investment entity
Fair value
APQ Connect Limited
Guernsey
PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT
100
Investment holding company
Fair value
APQ Corporate Services Limited
Guernsey
PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT
100
Investment holding company
Fair value
APQ Knowledge Limited
Guernsey
PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT
100
Investment holding company
Fair value
APQ Partners LLP
England and Wales
22-23 Old Burlington Street, London, W1S 2JJ
100
Investment support
Consolidation
Delphos International, Ltd1
United States
2121 K St, N 2121 K St, NW, Suite 1020, Washington, DC 20037
100*
Trading investment company
Fair value
GEO Strategic Partners Limited
Isle of Man
PO Box 95, 2A Lord street, Douglas, IM99 1HP, Isle of Man
100*
Trading investment company
Fair value
New Markets Media & Intelligence Ltd
England and Wales
22-23 Old Burlington Street, London, W1S 2JJ
100*
Trading investment company
Fair value
Palladium Corporate Services (Singapore) Pty Ltd
Singapore
30 Cecil Street, #19/08 Prudential Tower, Singapore 049712
100*
Trading investment company
Fair value
Palladium Finance Group Limited
Seychelles
Global Gateway 8, Rue de la Perle, Providence, Seychelles
100*
Trading investment company
Fair value
Palladium Trust Company BVI Limited
British Virgin Islands
3076 Sir Francis Drake Highway, Road Town, Tortola VG1110
100*
Trading investment company
Fair value
Name
Country of incorporation
Registered Office
Holding %
Activity
Recognition
Palladium Trust Company (NZ) Limited
New Zealand
Level 8, AIG
Building, 41 Shortland Street, Auckland, New Zealand 1010
100*
Trading investment company
Fair value
Palladium Trust Services Ltd
England and Wales
22-23 Old Burlington Street, London, W1S 2JJ
100*
Trading investment company
Fair value
Parish Corporate Services Limited1
Guernsey
PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT
100*
Trading investment company
Fair value
Parish Group Limited1
Guernsey
PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT
100*
Trading investment company
Fair value
Parish Nominees Limited1
Guernsey
PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT
100*
Trading investment company
Fair value
Parish Trustees Limited1
Guernsey
PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT
100*
Trading investment company
Fair value
1 Acquired following the end of the reporting period
*indirect holdings through subsidiaries of APQ Global Limited
25. Events after the reporting period
On 29 January 2020, the Company entered into an agreement to purchase 100% of the Parish Group Limited ("Parish"), a company incorporated and domiciled in Guernsey. Parish Group Limited is a fiduciary and corporate services provider. In consideration to the sellers for the acquisition:
· The Company paid a net amount of approximately $4,095,630 cash consideration to the Sellers;
· APQ Capital Services Limited, a wholly owned subsidiary of the Company, issued 268,000 Convertible Preference Shares (convertible into ordinary shares in APQ Global) to the sellers (the "Convertible Preference Shares") at price of $10 per share; and
· The Company issued 1.0 million warrants in APQ Global ("Warrants"), with an exercise price equal to the most recently announced book value per share of 70.94 pence, to the sellers.
The Convertible Preference Shares are convertible into a variable number of shares linked to the relative assets attributable to the convertible preference shares. On 30 June 2020, the conversion ratio on the Convertible Preference Shares issued by APQ Capital Services was amended to a fixed conversion ratio of 11.25 ordinary shares per convertible preference share. The investment in Parish was made through APQ Corporate Services Limited and is held for the purpose of investment income and capital appreciation. It will therefore be measured at fair value through profit and loss as part of the valuation of APQ Corporate Services Limited. On 10 June 2020, APQ Global appointed Parish Group as its company secretary and changed its registered office to the offices of Parish Group.
On 3 March 2020, the Company entered into an agreement to purchase 100% of the Delphos International, Ltd ("Delphos"), a US based Corporation. In consideration to the shareholders of Delphos for the acquisition, the Company paid an upfront amount of $1.5 million in cash (the "Upfront Payment"). The Company is also required to make an additional payment to clear the working capital of Delphos prior to the acquisition, this amounted to $112,265 In addition to the Upfront Payment, the Company shall potentially make up to three earn-out payments to the Sellers ("Earn-Out Payments"), depending on the levels of EBTDA generated by Delphos for the years ended 30 June 2020 and 30 June 2021, with each payment capped at $0.75 million and a further Earn-Out Payment capped at $0.5 million for the year ended 30 June 2022. In the event that the minimum contingencies applied to the Earn-Out payments are not met, the Company is not required to make any further payments in respect of that Earn-Out period.
After the year end, a further dividend of 1.5 pence (1.97 cents) per share was declared on 23 January 2020 and was paid on 2 March 2020 in relation to the quarter ended 31 December 2019.
On 1 May 2020, The Share purchase agreement for the purchase of Palladium Trust Services Limited and the affiliated entities was amended so that the residual liability due at this date (see Note 14) was derecognised through an immediate settlement of £80k.
COVID-19
During the first quarter of 2020, the Company experienced difficult trading conditions in its liquid portfolio due to large market movements in emerging markets currencies, bonds and equities, caused by the COVID-19 pandemic. This is a non-adjusting event and therefore the valuations and balances included in these financial statements do not reflect the impact of the pandemic.
During this time, the Company took decisive action to mitigate further risk to its balance sheet, de-risking its portfolio of liquid market securities, with the portfolio as of 31st March 2020 comprising:
• $40.6 million of unencumbered cash;
• $4.3 million of cash equities;
• $1.3 million of cash bonds; and
• $1.3 million of tangible book value in its private direct investments.
At the close of business on 30 June 2020, the Company's estimate of its unaudited book value per Ordinary Share was 31.70 US Dollar cents.
The Company has met all its payment obligations to various counterparties and is not in breach of any debt covenants.
Furthermore, with the ongoing uncertainty faced by emerging markets due to COVID-19, the Board has decided to implement the following further cash preservation measures, which are intended to facilitate a smooth recovery:
• Suspension of dividends paid to ordinary shareholders until further notice;
• The management bonus scheme to be cut from 20% of profits to 10%;
• Significant cost reduction across all of the Company; and
• Move to quarterly reporting of key metrics in the Company's income statement and balance sheet, an increase from semi-annually, starting for the reporting period Q2 2020.
26. Adoption of IFRS 16
The Group adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application. The Group elected to use the transition practical expedient to not reassess whether a contract is or contains a lease at 1 January 2019. Instead, the Group applied the standard only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application.
The following table presents the impact of the adoption of IFRS 16 on the Group Statement of Financial Position as at 1 January 2019:
Adjustments
31 December 2018
IFRS 16
1 January 2019
As originally presented
$
$
$
Non-current Assets
Right of use assets
(a)
-
169,605
169,605
Current assets
Prepayments and accrued income
(b)
466,914
(25,755)
441,159
Current liabilities
Lease liability
(c)
-
79,427
79,427
Non-current liabilities
Lease liability
(c)
-
64,423
64,423
(a) Recognition of right of use asset, as measured at an amount equal to the lease liability adjusted by the prepaid lease amount.
(b) Adjustment for prepaid rents held at amortised cost.
(c) Minimum lease payments discounted using an appropriate incremental borrowing rate of 9%.
The following table shows the reconciliation between operating lease commitments as at 31 December 2018 and the initial total lease liability as at 1 January 2019
$
Operating lease commitments as at 31 December 2018
177,815
Rent payment made prior to the year ended 31 December 2018
(21,799)
Impact of discount rate
(12,166)
Lease liability at 1 January 2019
143,850
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