REG - APQ Global Limited - Interim results for period ending 30 June 2019
APQ Global Limited
("APQ Global" or the "Company")
Interim results for the period from 1 January 2019 to 30 June 2019
FINANCIAL HIGHLIGHTS
For the six months ended 30 June 2019
Book Value at 30 June 2019 was $72.5m, a decrease of $3.9m from $76.4m at the start of the period. The term "book value" herein includes the assets of APQ Global Limited and its subsidiaries net of any liabilities. The results include the net assets of the Company and its subsidiaries, presented in US dollars.
Book Value per share in the period decreased by 5.17 cents from 97.84 to 92.67 cents.
Loss per share for the period was 13.48 cents (for the six months ended 30 June 2018 - loss per share was 19.13 cents).
Dividends paid in GBP totalled 3.00 pence (3.93 cent) per share and were declared and paid during the period as follows:
· 1.50 pence (1.97 cent) per share Ex Dividend 31 January 2019 Paid 1 March 2019
· 1.50 pence (1.96 cent) per share Ex Dividend 2 May 2019 Paid 31 May 2019
After the period end, a further dividend of 1.50 pence (1.95 cents) per share was declared on 18 July 2019 in relation to the quarter ended 30 June 2019.
In the period covered by these financial statements, the share price of the Company has consistently traded at a discount over the prevailing Book Value of the Company.
There have been further AIM market trades since 30 June 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 Turtelboom020 3478 9708
N+1 Singer - Nominated Adviser and Broker
James Maxwell / Justin McKeegan020 7496 3000
Carey Group - TISE sponsor
Claire Torode01481 737 279
Investor Relations
IR@apqglobal.com
Notes to Editors
APQ Global Limited
APQ Global (ticker: APQ LN) is a global emerging markets income company with interests across Asia, Latin America, Eastern Europe, the Middle East and Africa. The Company's objective is to steadily grow earnings to deliver attractive returns and capital growth to shareholders. This objective is achieved through a combination of revenue generating operating activities and investing in growing businesses across emerging markets. APQ Global run a well-diversified and liquid portfolio, take strategic stakes in selected businesses and plan to take operational control of companies through the acquisition of minority and majority stakes in companies with a focus on emerging markets.
For more information, please visit apqglobal.com.
International Advisory Council (IAC)
Established in February 2017, the IAC assists in locating the best investment opportunities across the globe. The panel of advisors, chaired by Tania Rotherwick, contribute insights from their own areas of geographical and sector expertise to support APQ Global's business strategy.
SIX MONTHS ENDED 30 JUNE 2019 REVIEW
INTRODUCTION
The Company ended the 6 months ended 30 June 2019 with fairly defensive positioning. Accounting for GBP/USD exchange rate movements and the dividend paid, the Company returned -1.3% to its shareholders for the 6 months ended 30 June 2019, measured in USD. The Company paid dividends of 3.93 cents (3.00p) during the period and its book value was 92.67 cents per share at 30 June 2019.
During the period the Company slightly increased its exposure to risk assets across the board, particularly equities and emerging market ("EM") currencies while maintaining a very healthy cash position. During the period under review, exposure to credit markets made 6.5%, whilst equity investments returned 4.6%. EM Currency exposure contributed 1.0%. Local currency bond exposure returned 0.4%.The Company is well on track to meet its target annual dividend yield of 6.0% and the dividend is well covered by economic income in the portfolio. Net of funding costs, 61% of total income is stemming from the FX portfolio, 21% from the credit portfolio and the remaining 18% from the Equity and Strategic portfolios.
As at 30 June 2019, the Company's exposure to credit and government bonds was 29.9% of book value. Local currency bond exposure was 13.3% of book value. EM equities accounted for 28.2% of book value and EM Currency exposure 76.2% of Book Value.
LIQUID MARKETS PORTFOLIO
During the period, the Company selectively added to its EM equity exposure, adding some single name exposure across Brazil, Russia and Mexico. The Company kept its position in City of London Investment Group. Additionally, we elected to add to our exposure to the MSCI Emerging Markets Index, taking advantage of growing momentum.The Company believes that the medium-term global economic growth outlook will be supportive for emerging markets equities. However, we remain conscious of the multitude of risks around the world: the US-China trade war shows little signs of abating, the monetary policy outlook in the US and Europe increasingly points to a significant slowdown in the world economy going into next year and President Trump continues to throw the book at the post-war economic order.
From a sector perspective, the bulk of the Company's emerging market exposure is in Financials, followed by Materials and Energy, after taking into account the sector composition of the MSCI EM & Brazilian Index exposure.
The Company's emerging markets credit book is well diversified for stable income growth and the largest position is in Pemex, accounting for 2.8% of book value. Geographically, the credit portfolio is also well diversified with the largest positions concentrated in China (23.2%), Sri-Lanka (14.0%) and Mexico (9.2%).
From a sector perspective, the credit exposure is concentrated in government entities, financials and corporations in the energy sector.
The portfolio stress tests indicate that the Company would lose -3.56% of book value for a 10% sell-off in the S&P equity index, -0.02% in value if credit spreads were to widen 10% and -0.75% in value if interest rates in the US were to increase by 1%.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
We confirm that to the best of our knowledge:
• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and gives a true and fair view of the assets, liabilities, financial position and profit of the group as required by DTR 4.2.4R;
• the half yearly report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period.
For and on behalf of the Board
WayneBulpitt
Chairman, APQ Global Limited30 September 2019
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
For the six months ended 30 June 2019
Note
For the six months ended
30 June 2019
For the six months ended
30 June 2018
$
$
Turnover
4
6,265,886
4,885
Net loss on financial assets at fair value through profit and loss
11
(4,532,368)
(13,492,036)
Administrative expenses
5
(2,002,185)
(991,473)
Operating loss for the period before tax
(268,667)
(14,478,624)
Interest receivable
6
350,046
693,170
Interest payable
7
(1,135,266)
(1,148,292)
Loss on ordinary activities before taxation
(1,053,887)
(14,933,746)
Tax on loss on ordinary activities
-
-
Loss on ordinary activities after taxation for the financial period
(1,053,887)
(14,933,746)
Basic and diluted earnings per share
8
(0.01348)
(0.19132)
The notes on pages 13 to 24 form an integral part of the Financial Statements.
There is no other comprehensive income.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)----
As at 30 June 2019
30 June
2019
31 December 2018
Note
$
$
Assets
Non-current assets
Property, plant and equipment
10
21,971
25,721
Leased assets
17
123,713
-
Investments
11
103,898,757
74,154,302
Total non-current assets
104,044,441
74,180,023
Current assets
Trade and other receivables
12
1,012,124
33,839,280
Cash and cash equivalents
570,132
511,871
Total current assets
1,582,256
34,351,151
Total assets
105,626,697
108,531,174
Current liabilities
Trade and other payables
13
(868,425)
(253,384)
Total current liabilities
(868,425)
(253,384)
Long term liabilities
Long term lease liabilities
17
(41,064)
-
3.5% Convertible Unsecured Loan Stock
14
(32,257,873)
(31,834,626)
Total long-term liabilities
(32,298,937)
(31,834,626)
Net assets
72,459,335
76,443,164
Equity
Share capital
15
99,664,954
99,596,856
Equity component of 3.5% Convertible Unsecured Loan Stock
14
6,919,355
6,919,355
Other capital reserves
295,088
264,076
Retained earnings
(29,492,549)
(25,409,610)
Exchange reserve
(4,927,513)
(4,927,513)
Total equity
72,459,335
76,443,164
Net asset value per ordinary share
92.67c
97.84c
The Financial Statements were approved by the Board of Directors of APQ Global Limited and signed on September 2019 on its behalf by:
___________________ ___________________
Bart Turtelboom Wesley Davis
Chief Executive Officer Director
Date: September 2019
The notes on pages 13 to 24 form an integral part of the Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six months ended 30 June 2019
Share capital
$
CULS equity component
$
Other
capital reserves
$
Retained earnings
$
Exchange reserve
$
Total
$
At 1 January 2018
99,494,707
4,285,225
-
1,141,163
(4,927,513)
99,993,582
Comprehensive income
for the period
Loss for the period
-
-
-
(14,933,746)
-
(14,933,746)
Total comprehensive
income for the period
99,494,707
4,285,225
-
(13,792,583)
(4,927,513)
85,059,836
Contributions by and distributions to owners
CULS equity component
-
2,634,130
-
-
-
2,634,130
Dividends
-
-
-
(3,291,184)
-
(3,291,184)
As at 30 June 2018
99,494,707
6,919,355
-
(17,083,767)
(4,927,513)
84,402,782
At 1 January 2019
99,596,856
6,919,355
264,076
(25,409,610)
(4,927,513)
76,443,164
Comprehensive income
for the period
Loss for the period
-
-
-
(1,053,887)
-
(1,053,887)
Total comprehensive
income for the period
99,596,856
6,919,355
264,076
(26,463,497)
(4,927,513)
75,389,277
Contributions by and distributions to owners
Share based payments
-
-
105,846
-
-
105,846
Share based payments
settled in cash
-
-
(6,736)
-
-
(6,736)
Issue of share awards
68,098
-
(68,098)
-
-
-
Dividends
-
-
-
(3,029,052)
-
(3,029,052)
As at 30 June 2019
99,664,954
6,919,355
295,088
(29,492,549)
(4,927,513)
72,459,335
The notes on pages 13 to 24 form an integral part of the Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (UNAUDITED)
For the six months ended 30 June 2019
For the six months ended
30 June 2019
For the six months ended
30 June 2018
Note
$
$
Cash flow from operating activities
Cash generated from operations
Loss for the financial period
(1,053,887)
(14,933,746)
Adjustments for non-cash income and expenses
Equity settled share-based payments
16
105,846
-
Depreciation
10
6,885
5,713
Net loss on financial assets at fair value through profit and loss
11
4,532,368
13,492,036
Changes in operating assets and liabilities
Increase in trade and other receivables
12
(894,705)
(21,016)
Increase/(decrease) in trade and other payables
13
532,392
(230,259)
Cash generated/(used in) from operations
3,228,899
(1,687,272)
Interest receivable
6
(350,046)
(693,170)
Interest payable
7
1,135,266
1,148,292
Net cash inflow/(outflow) from operating activities
4,014,119
(1,232,150)
Cash flow from investing activities
Payments to acquire investments
11
(904,466)
-
Payments to acquire property, plant and equipment
10
(3,135)
(19,019)
Interest received
6
350,046
693,170
Loan to APQ Cayman Limited
12
349,504
(9,177,615)
Net cash outflow from investing activities
(208,051)
(8,503,464)
Cash flow from financing activities
Equity component of CULS
14
-
2,634,130
Issue of CULS
14
-
9,936,752
Equity dividends paid
9
(3,029,052)
(3,291,184)
Interest on CULS
14
(681,109)
(684,506)
Cash settled share-based payments
16
(6,736)
-
Net cash (outflow)/inflow from financing activities
(3,716,897)
8,595,192
Net decrease in cash and cash equivalents
89,171
(1,140,422)
Cash and cash equivalents at beginning of period
511,871
4,005,434
Exchange rate fluctuation on CULS
14
(30,910)
-
Cash and cash equivalents at end of period
570,132
2,865,012
Non-current loans and borrowings
Brought forward
31,834,626
22,135,311
Cash flows
(681,109)
10,628,741
Non cash flows
1,104,356
(228,203)
Closing balance
32,257,873
32,535,849
The notes on pages 13 to 24 form an integral part of the Financial Statements.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
1. Corporate information
The interim consolidated financial statements of APQ Global Limited (the "Group") for the six months ended 30 June 2019 were authorised for issue in accordance with a resolution of the Board of Directors on 30 September 2019. The Company is incorporated as a limited company in Guernsey. The Company was incorporated on 10 May 2016 for an unlimited duration in accordance with the Companies (Guernsey) Law, 2008. The Company's registered office is at 1st Floor, Tudor House, Le Bordage, St Peter Port, Guernsey, GY1 1DB.
The objective of the Company is to steadily grow its earnings to seek to deliver attractive returns and capital growth through a combination of building growing businesses in emerging markets as well as earning revenue from income generating operating activities.
The Company and its subsidiaries have no investment restrictions and no maximum exposure limits will apply to any investments made by the Group, unless otherwise determined and set by the Board from time to time. No material change will be made to the Company's or subsidiaries objective or investing policy without the approval of Shareholders by ordinary resolution.
The Group's investment activities are managed by the Board.
The shares are quoted on The International Stock Exchange for informational purposes. The ordinary shares are admitted to trading on AIM.
2. Significant accounting policies
2.1 Basis of preparation
These interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2018 Annual Report.
Taking account of the financial resources available to the Company, the directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook. After making enquiries the directors have a reasonable expectation that the Company has adequate resources for the foreseeable future, a period of not less than twelve months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.
2.2 Basis of accounting
APQ Global Limited has applied the same accounting policies and methods of computation in its interim consolidated financial statements as in its 2018 annual financial statements, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2019 and will be adopted in the 2019 annual financial statements. The only new standard impacting the Group that will be 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 implicit interest rate utilised in calculating 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 will mean that the Group has not needed to restate the comparatives stated in these financial statements for the year ended 31 December 2018 in the 2019 interim consolidated financial statements. The effect of the adoption of IFRS 16 has resulted in the increase of both assets and liabilities by $124k and accelerated the expense recognised within the Statement of Comprehensive Income.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
2. Significant accounting policies (continued)
2.3 Functional and presentational currency
As of 1 January 2017, the Company changed its presentational and functional currency from Pounds Sterling to US Dollars.
During the year ended 31 December 2017, the Company also changed the currency in which it presents its financial statements from Pounds Sterling to US Dollars, to bring the presentational currency in line with its functional currency. A change in presentational currency is a change in accounting policy which is accounted for retrospectively.
2.4 Fair value measurement
The Company measures its investment in APQ Cayman Limited at fair value at each reporting date, which is considered to be the carrying value of the net assets of APQ Cayman Limited. APQ Cayman Limited measures its underlying investments at fair value.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The fair value for financial instruments traded in active markets at the reporting date is based on their quoted price (bid price for long positions and ask price for short positions), without any deduction for transaction costs. For all other financial instruments not traded in an active market, the fair value is determined by using valuation techniques deemed to be appropriate in the circumstances. Valuation techniques include the market approach (i.e., using recent arm's length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same) and the income approach (i.e., discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible).
For assets and liabilities that are measured at fair value on a recurring basis, the Company identifies transfers between levels in the hierarchy by re-assessing the categorisation (based on the lowest level input that is significant to the fair value measurement as a whole), and deems transfers to have occurred at the beginning of each reporting period.
3. Segment Information
For management purposes, the Group is organised into one main operating segment, which invests in equities and credit, government and local currency bonds. All of the Group's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole.
The following table analyses the Group's assets by geographical location. The basis for attributing the assets are the place of listing for the securities or for non-listed securities, country of domicile.
30 June
2019
31 December
2018
Group
$
$
Cayman
102,227,611
107,109,483
United Kingdom
461,313
417,338
Guernsey
2,937,773
1,004,353
105,626,697
108,531,174
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
4. Analysis of turnover
For the six months ended
30 June 2019
For the six months ended
30 June 2018
$
$
Dividends received from APQ Cayman Limited
5,963,216
-
Rental income
(674)
4,885
Other income from BARTR business operations
303,344
-
6,265,886
4,885
5. Analysis of administrative expenses
For the six months ended
30 June 2019
For the six months ended
30 June 2018
$
$
Personnel expenses
239,620
170,383
Finance lease expenses
45,168
-
Operating lease expenses
-
49,743
Depreciation expenses
6,885
5,713
Audit fees
48,350
42,463
Audit related services
8,273
6,931
Nominated advisor fees
32,424
48,755
Expenses incurred in relation to investment in BARTR Holdings Limited
599,097
-
Administration fees and expenses
94,035
35,068
Director's fees for Bart Turtelboom
38,927
62,158
Director's fees for Wayne Bulpitt
26,130
20,575
Director's fees for Richard Bray
-
20,575
Director's fees for Philip Soulsby
11,334
12,001
Director's fees for Wesley Davis
36,000
-
Other expenses
191,058
133,232
Professional fees
389,720
286,272
Share based payment expenses
105,846
-
Insurance
5,500
5,824
Recharge of expenses to APQ Cayman Limited
(171,751)
-
Net exchange losses
295,569
91,780
2,002,185
991,473
6. Interest receivable
For the six months ended
30 June 2019
For the six months ended
30 June 2018
$
$
Loan interest receivable from APQ Cayman Limited (note 12)
350,046
693,132
Bank interest received
-
38
350,046
693,170
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
7. Interest payable
For the six months ended
30 June 2019
For the six months ended
30 June 2018
$
$
Interest on 3.5% Convertible Unsecured Loan Stock 2024
1,135,266
1,148,292
8. 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 period.
For the six months ended
30 June 2019
For the six months ended
30 June 2018
$
$
Total comprehensive income for the period
(1,053,887)
(14,933,746)
Average number of shares in issue
78,170,417
78,055,000
Earnings per share
(0.01348)
(0.19132)
For the current period the effect of share awards vested but not yet issued is not dilutive as the effect of this dilution would be to decrease the loss per share. For the prior period there was no dilution per ordinary share.
9. Dividends
Dividends were declared in the period ended 30 June 2019 as follows:
Ex-dividend date
Payment date
Dividend (£)
Dividend ($)
Dividend per share (£)
Dividend per share ($)
First dividend
31 January 2019
1 March 2019
1,172,420
1,511,601
0.015
0.020
Second dividend
2 May 2019
31 May 2019
1,172,818
1,517,451
0.015
0.020
2,345,238
3,029,052
0.030
0.040
The stated dividend policy of the Company is to target an annualised dividend yield of 6% based on the Placing Issue Price. The past two dividend payments of £0.015 are on target with the stated policy. In addition, the Company declared a further dividend of 1.5 pence (1.95 cent) per share on 18 July 2019 in respect of the quarter ended 30 June 2019.
There is no guarantee that any dividends will be paid in respect of any financial period. The ability to pay dividends is dependent on a number of factors including the level of income returns from the Group's investments. 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.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
10. 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 period
3,135
-
-
3,135
At 30 June 2019
61,156
19,352
34,588
115,096
Accumulated depreciation
At 1 January 2019
37,676
13,976
34,588
86,240
Charge for the period
6,013
872
-
6,885
At 30 June 2019
43,689
14,848
34,588
93,125
Net book value
At 30 June 2019
17,467
4,504
-
21,971
At 31 December 2018
20,345
5,376
-
25,721
11. Investments
APQ
Cayman Limited
APQ Corporate Services Limited
BARTR Holdings Limited
Total
$
$
$
$
At 1 January 2019
73,387,622
-
766,680
74,154,302
Additions
33,372,357
904,466
-
34,276,823
Fair value movement
(4,532,368)
-
-
(4,532,368)
102,227,611
904,466
766,680
103,898,757
APQ Cayman Limited was acquired during the year ended 31 December 2016. APQ Global Limited wholly owns APQ Cayman Limited whose registered office of the Company is at the offices of Mourant Ozannes Corporate Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, PO Box 1348, Grand Cayman KY1-1108, Cayman Islands. The Company meets the definition of an investment entity. Therefore, it does not consolidate APQ Cayman Limited and recognises it as an investment at fair value through profit or loss.
APQ Global Limited is the managing partner of APQ Partners LLP whose registered office is at 22-23 Old Burlington Street, London, W1S 2JJ. This subsidiary is consolidated into the group financial statements.
On the 19 November 2018, the Company invested $766,680 in 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. This capital interest represents a 40% shareholding and equivalent voting rights. BARTR Holdings Limited wholly owns two subsidiaries, BARTR Connect Limited, whose registered office is Tobias House St. Marks Court, Thornaby, Stockton-On-Tees, 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.
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. In addition, 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.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
11. Investments (continued)
On 21 December 2018, the Group entered into an agreement to purchase 100% of the following 5 entities; Palladium Trust Services, 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). All 5 of the entities are 100% owned by APQ Corporate Services Limited.
On 26 February 2019, the Group entered into an agreement to purchase 100% of Frontier Consultancy Limited, a Company incorporated in England and Wales. The total consideration of the purchase agreement was $613,947 (£463,742). The entity is 100% owned by APQ Knowledge 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.
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. There have been no significant changes to the circumstances of BARTR Holdings Limited and its subsidiaries, or to wider market conditions. Its carrying value at acquisition therefore approximates its fair value.
The investment in APQ Corporate Services Limited was completed on 10 January 2019. There have been no significant changes to the circumstances of APQ Corporate Services Limited and its subsidiaries, or to wider market conditions. Its carrying value at acquisition therefore approximates its fair value.
Unlisted managed funds
The Company classifies its investments into the three levels of the fair value hierarchy based on:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and
Level 3: 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 and APQ Corporate Services Limited as level 3 because its net asset value is deemed to be an unobservable input. The most significant unobservable input used in the fair value of the investment in APQ Cayman is the NAV. The movement in the investments in the year are shown above. The movement of investments classified under level 3 is the same as the table above.
Sensitivity
The most significant unobservable input used in the fair value is the NAV of APQ Cayman Limited. A reasonable change of 5% in the NAV will have an impact of $5,111,381 (31 December 2018 - $3,669,381) on the fair value of the investment.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
12. Trade and other receivables
30 June
2019
31 December 2018
$
$
Trade debtors
117,930
21,808
Loan to APQ Cayman Limited
-
33,721,861
Prepayments and accrued income
861,628
59,044
Other debtors
32,566
36,567
1,012,124
33,839,280
During the period, 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 (six months ended 30 June 2018 - $693,132) to APQ Cayman Limited for the period ended 30 June 2019. This was fully received during the period and no balance was outstanding at period 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.
13. Trade and other payables
30 June
2019
31 December 2018
$
$
Trade creditors
130,495
115,046
Other creditors
63,262
37,315
Loan from APQ Corporate Services Limited
98,258
-
Loan from APQ Knowledge Limited
424,348
-
Accruals
69,413
101,023
Finance lease liabilities
82,649
-
868,425
253,384
14. 3.5% Convertible Unsecured Loan Stock 2024
Nominal number
of CULS
Liability
component
Equity
component
$
$
$
As at 1 January 2019
41,446,167
31,834,626
6,919,355
Amortisation of discount on issue and issue expenses
-
1,135,266
-
Interest paid during the period
-
(681,109)
-
Exchange differences
-
(30,910)
-
As at 30 June 2019
41,446,167
32,257,873
6,919,355
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
14. 3.5% Convertible Unsecured Loan Stock 2024 (continued)
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.
15. Share Capital
The issued share capital of the Company is 78,187,891 ordinary shares of no par value listed on The International Stock Exchange and AIM.
Quantitative information about the Company's capital is provided in the statement of changes in equity and in the tables below.
The shares are entitled to dividends when declared and to payment of a proportionate share of the Companies net asset value on any approved redemption date or upon winding up of the Company.
The Company's objectives for managing capital are:
• To invest the capital in investments meeting the description, risk exposure and expected return indicated in its listing documents.
• To maintain sufficient liquidity to meet the expenses of the Company, pay dividends and to meet redemption requests as they arise.
• To maintain sufficient size to make the operation of the Company cost-efficient.
• The Board has authority to purchase up to 14.99 per cent. of the issued Ordinary Share capital of the Company. The Board intends to seek a renewal of this authority at each annual general meeting of the Company. No buy backs occurred during the period under review.
Ordinary
shares
No
£
$
As at 1 January 2019
78,134,735
76,697,133
99,596 856
Shares issued from share awards during the period
53,156
50,340
68,098
At 30 June 2019
78,187,891
76,747,473
99,664,954
During the period ended 30 June 2019, 53,156 (period ended 30 June 2018 - nil) shares were issued as part of the share award scheme as detailed in note 16.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2018
16. 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.
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 pence
Vesting conditions
Final vesting date
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
Charge for awards to be settled in Equity
Charge for awards to be settled in Cash
Total charge for share based awards
$
$
$
At 1 January 2019
366,225
10,103
376,328
Six month period ended 30 June 2019
99,110
6,736
105,846
465,335
16,839
482,174
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.
The unvested portion of the share awards currently granted is $266,170 (At 31 December 2018 - $372,016).
17. Leases
Operating lease commitments
The Company's subsidiary, APQ Partners LLP, leases office 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
164,951
Depreciation for the period
(41,238)
At 30 June 2019
123,713
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
17. Leases (continued)
Future minimum undiscounted cash flows
30 June
2019
$
Less than one year
89,089
One to five years
44,545
133,634
Lease liabilities in the Statement of Financial Position
$
Current
82,649
Non-current
41,064
123,713
Charges in Statement of Comprehensive Income
$
Depreciation of lease asset
41,239
Finance cost on lease liabilities
3,929
Finance lease expenses
45,168
18. Capital Management
The Group can raise new capital which may be implemented through the issue of a convertible debt instrument or such other form of equity or debt as may be appropriate. It also has a buy-back authority subject to a maximum buy-back of 14.99 per cent of the issued Ordinary Shares.
The Group's objectives for managing capital are:
• To invest the capital into investments through its subsidiary, APQ Cayman Limited.
• To maintain sufficient liquidity to meet the expenses of the Group and pay dividends.
• To maintain sufficient size to make the operation of the Group cost-effective.
The Group may utilise borrowings in connection with its business activities. Although there is no prescribed limit in the Articles or elsewhere on the amount of borrowings that the Group may incur, the Directors will adopt a prudent borrowing policy and oversee the level and term of any borrowings of the Group and will review the position on a regular basis.
The Group's capital comprises:
30 June
2019
31 December
2018
$
$
Share capital
99,664,954
99,596,856
Equity component of 3.5% Convertible Unsecured Loan Stock 2024
6,919,355
6,919,355
Other capital reserves
295,088
264,076
Retained earnings
(29,492,549)
(25,409,610)
Exchange reserve
(4,927,513)
(4,927,513)
Total shareholders' funds
72,459,335
76,443,164
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
19. 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.
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
$
$
$
$
For the six months ended 30 June 2019
For the six months ended 30 June 2018
For the six months ended
30 June 2019
For the six months ended
30 June 2018
For the six months ended
30 June 2019
For the six months ended 30 June 2018
For the six months ended 30 June 2019
For the six months ended 30 June 2018
Bart Turtelboom
Chief Executive Officer
38,927
62,158
84,677
-
38,927
20,141
162,531
82,299
Wayne Bulpitt
Non-Executive Chairman
26,130
20,575
-
-
-
-
26,130
20,575
Richard Bray
Executive Director
-
20,575
-
-
-
2,500
-
23,075
Wesley Davis
Executive Director
36,000
-
-
-
36,000
-
72,000
-
Philip Soulsby
Non-Executive Director
11,334
12,001
-
-
-
-
11,334
12,001
112,391
115,309
84,677
-
74,927
22,641
271,995
137,950
APQ Global Limited has incurred $47,397 (six months ended 30 June 2018 - $35,068) of fees and expenses to Active Services (Guernsey) Limited as administrator of the Company. As at 30 June 2019, APQ Global Limited owed $9,242 to Active Services (Guernsey) Limited (31 December 2018 - $11,261).
During the period, 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 (six months ended 30 June 2018 - $693,132) to APQ Cayman Limited for the period ended 30 June 2019. This was fully received during the period and no balance was outstanding at period 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.
APQ Global Limited has supported APQ Cayman Limited by paying directors fees of $nil (six months ended 30 June 2018 - $833) during the period to Richard Bray as he was a director of both entities.
As described in the Listing Document, and under the terms of the Services Agreement, APQ Partners LLP assist the Board and the Group's management based in Guernsey with the implementation of its business strategy, provide research on business opportunities in emerging markets and provide support for cash management and risk management purposes. APQ Partners LLP are entitled to the reimbursement of expenses properly incurred on behalf of APQ Global Limited in connection with the provision of its services pursuant to the agreement. APQ Partners LLP has recharged expenses of $208,835 (six months ended 30 June 2018 - $311,579) to APQ Global Limited during the period. As at 30 June 2019, APQ Global Limited was owed $152,168 from APQ Partners LLP (31 December 2018 - $229,391). In both the current and prior period amounts have been eliminated on consolidation.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2019
19. Related party transactions (continued)
During the period, APQ Global Limited provided $210,000 (six months ended 30 June 2018 - $nil) to BARTR Connect Limited in the context of an investment in BARTR Holdings Limited, an entity over which the Company has significant influence. At 30 June 2019, $nil (31 December 2018 - $nil) was due to BARTR Connect Limited (See Note 11).
During the period, APQ Global Limited invested $290,518 in APQ Corporate Services Limited for its purchase of the 5 Palladium entities, which hasn't been paid in full as the purchase of the Palladium entities has a deferred payment schedule. In addition, APQ Global Limited provided funding of $144,464 to APQ Corporate Services Limited during the period. As at 30 June 2019, $98,258 (31 December 2018 - $nil) was due to APQ Corporate Services Limited (See Note 11).
During the period, APQ Global Limited invested $613,947 in APQ Knowledge Limited for its purchase of the Frontier Consultancy Limited, which hasn't been paid in full as the purchase of Frontier Consultancy Limited has a deferred payment schedule. As at 30 June 2019, $424,348 (31 December 2018 - $nil) was due to APQ Knowledge Limited (See Note 11).
20. Events after the reporting period
After the period end, a further dividend of 1.5 pence (1.95 cent) per share was declared on 18 July 2019 and was paid on 23 August 2019 in relation to the quarter ended 30 June 2019.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR LLFVIALIIVIA
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