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APQ Global Limited (APQ)

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Thursday 15 April, 2021

APQ Global Limited

Final results for the year to 31 December 2020

RNS Number : 5149V
APQ Global Limited
15 April 2021
 

APQ Global Limited

("APQ", "APQ Global" or the "Company") 

Final results for the year to 31 December 2020

APQ Global today announces its audited financial results for the year ended 31 December 2020. 

FINANCIAL HIGHLIGHTS

For the year ended 31 December 2020

 

Book Value at 31 December 2020 was $31.24m, a decrease from $72.92m since the start of the year. The term "book value" herein includes the assets of APQ Global Limited and its subsidiaries[1] net of any liabilities, presented in US dollars.

 

Book Value per share in the year decreased from 93.19 cents to 39.88 cents.

 

Earnings loss per share for the year was $0.51642 (2019 - earnings gain per share $0.02951).

 

Dividends paid, a Key Performance Indicator[2] (KPI) of the business, totalled 1.5 pence/2 cents (2019 - 6 pence/7.6 cents) per share and were declared and paid during the year as follows:

 

· 1.50 pence (1.97 cent) per share   Ex Dividend 30 January 2020  Paid 2 March 2020*

 

*Dividend relates to the quarter ended 31 December 2019.

 

No further dividends were declared during the year.

 

In the year covered by these financial statements, the share price of the Company has consistently traded at a discount to the actual Book Value of the Company. 

 

Since 1 January 2020, 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

Share 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

APQ Global Limited

Ordinary shares

26,578

7th August 2020

APQ Global Limited

Ordinary shares

26,578

14th October 2020

 

The Ordinary Shares disclosed in the above table were also admitted to trading on AIM. There have been further AIM equity issuances since 31 December 2020, 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

 

 

 

Carey Group - TISE sponsor
Claire Torode

01481 737 279

 

Investor Relations

[email protected]

 

 

 

 

Notes to Editors

 

APQ Global (ticker: APQ LN) is an investment company incorporated in Guernsey. The Company focuses its investment activities globally (in Asia, Latin America, Eastern Europe, the Middle East, Africa and the Channel Islands, particularly).

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 as well as earning revenue from income generating operating activities in capital 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.

*Where we refer to revenue from income generating operating activities this relates to the revenue of our investee companies.

  

For more information, please visit apqglobal.com

 

 

 

 

 

 

 

 

 

CHAIRMAN'S STATEMENT  

For the year ended 31 December 2020

 

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[3]. Specifically, our goals are to deliver a dividend yield of 6% per annum (based on capital subscribed)[4] and in addition to generate returns to grow the Company by a further 5-10% per annum[5]. The Company focuses its investment activities globally (in Asia, Latin America, Eastern Europe, the Middle East, Africa, as well as the Channel Islands).

Book Value per share in the year decreased from 93.19 cents to 39.88 cents. After adjusting for the Dividends above, the Total Return for the year was -56.3%[6].

Strategic Investment Portfolio

During November 2020, the Company's investee, APQ Cayman Limited, sold its investment in City of London Investment Group ('CLIG'). It held 1,680,495 ordinary shares in CLIG, and the sales took place between 18 and 24 November. The net proceeds from the sales of the CLIG shares were approximately £7.2 million (c.$9.6 million) (see 2020 in review for further details).

Direct Investment Portfolio

In the first quarter of 2020, the Company completed the 100% acquisitions of Parish Group Ltd., Guernsey and Delphos International, Washington DC, USA. The investments were made via the holding company, APQ Corporate Services Limited, Guernsey, which is 100% owned by APQ Global Limited. Further details on the acquisition terms can be found in the notes below.

Founded in 2010 with a focus on financial services innovation, Parish Group has been dedicated to delivering value-driven, efficient corporate and private client services to clients around the world. Parish are renowned for tailored corporate structures including setup, management and ongoing administration of companies in Guernsey and other jurisdictions and have over £800m of assets under administration.

Established in 1987 in Washington DC, Delphos operates a global network of financial solution advisors with additional offices in New York, Los Angeles, Miami, London, Montreal, Hong Kong, Beijing, Guatemala City, and Abuja. Languages spoken include English, Spanish, French, Portuguese, German, Dutch, Flemish. Hindi, Russian, Arabic, Bahasa, Greek, and Chinese. For almost 35 years, Delphos has provided market leading advisory services and secured impactful capital for corporates, fund managers, developers, SMEs, sovereigns, and entrepreneurs.

The Board continues to seek selective opportunities to add to its Direct Portfolio, further to the Company's strategy of diversifying its portfolio of global corporate service providers. 

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 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. By June 2020, this activity had ceased entirely. This activity was a one-off activity and was immaterial in the context of the firm's operations.

 

CHAIRMAN'S STATEMENT (continued)

For the year ended 31 December 2020


Gearing

In January 2020, in relation to the acquisition of Parish Group Limited (PGL), the Company issued 268,000 Convertible Preference Shares (Prefs) with a nominal value of $10. The Prefs were issued with a discretionary cumulative dividend of 6%, a fixed conversion ratio and are nonredeemable[7].

The Company's leverage is now 120%[8] (2019: 47%). The Board has confidence in the long-term prospects for the emerging markets sector and believes that the gearing should enable the Company to generate increased total returns over the longer term. However, the gearing could potentially expose the Company to more sizeable downswings when markets are falling.

Dividends

During the first quarter of 2020, facing unprecedented uncertainty caused by COVID-19 and the significant drawdown in the Book Value, the Board took the decision to temporarily suspend the regular 1.5p quarterly dividend of the Company. As of 31 December 2020, the dividend remains on hold until further notice. The Company paid 1.5p (2.0 cents) during the year related to the fourth quarter of 2019.

Total Return

Book Value per share in the year decreased from 93.19 cents to 39.88 cents. After adjusting for the Dividends above, the Total Return for the year was -56.3%4. Further details on the breakdown of the Total Return are shown below in the 2020 in Review.

Board Change

There were no changes to the composition of the Board during 2020.

Conclusion

2020 was undoubtedly a challenging year and we considered the impact of the first half in our Interim Statements and below in the 2020 in Review section below; however, I am pleased to report that the Company has emerged from that period resolute, with growth in its Liquid Markets Portfolio, while maintaining a measured risk exposure, and continuing to build its Direct Investment Portfolio.

The Investment performance and outlook for Emerging Markets are discussed in more detail in the CEO's statement.

 

 

Wayne Bulpitt

Chairman, APQ Global Limited

 

 

 

 

 

 

CEO'S STATEMENT  

For the year ended 31 December 2020

 

Going into the year, I could never have imagined the profound impact COVID-19 would have on our world and on global markets.  The virus rapidly became a global health emergency, devastating our way of life and forcing us to stay at home.

The world's economies responded, with real GDP across the OECD area plummeting an estimated -9.8% throughout Q2 2020[9].  Governments around the world responded enforcing lockdowns. The situation was dire.

By 23 March 2020, global equity markets had recognised the systemic impact of COVID-19 in-tandem. The S&P 500, MSCI Emerging Markets and MSCI World Indices plunged -33.8%, -31.2% and -34.0% respectively from 19 February 2020 levels (1-month prior) on a Total Return basis[10]. The CBOE Volatility Index (VIX)[11] climbed to the highest level since the Global Financial Crisis, to 61.6%, across the same period. Emerging Market currencies such as the Russian Rouble, Brazilian Real and the South African Rand depreciated significantly against the US Dollar (-25%, -19%, -18% respectively).

And yet there was light at the end of tunnel, workforces around the world transformed their homes into offices and into schools.  The people responded, fighting the virus on the front line and, through the aid of corporations, created vaccines to combat the virus in record time.

The Company suffered a significant drawdown across the first half of the year, with the Book Value for 2020 decreasing -56.3% (for a breakdown of the Total Return on the year, please see the 2020 in Review section). After a tumultuous beginning to the year, the Company partially recovered throughout the last quarter of the year, returning 51.6%, increasing its Book Value by $10.6m across the quarter, on the right path to rebuild its balance sheet. In addition to this, following the Company's recent acquisitions, I believe our Direct Investment Portfolio is now very well positioned to benefit from several growing trends across Emerging Markets globally, particularly with reference to impact and socially responsible investing. 

There is still much work to be done, however it is the unfathomable human capacity to resolve that gives me confidence that we can do it. 

Bart Turtelboom

 

CEO, APQ Global Limited

 

 

 

 

 

 

 

2020 IN REVIEW

 

 The Company returned 51.6% to its shareholders in the fourth quarter of 2020, measured in USD, resulting in a performance for calendar 2020 of -56.3%. The Book Value Per Share was $0.40 (equivalent to £0.29) at year end[12].

During the year, exposure to equity markets lost -38.8%, whilst local currency bond exposure returned -0.7% and FX exposure contributed -13.3%. Exposure to credit fell by -3.5%.

Asset Class

Quarter-to-31 December 20

Year-to-31 December 20

Credit

0.0%

-3.5%

Equity

46.9%

-38.8%

FX

5.5%

-13.3%

Rates

-0.9%

-0.7%

TOTAL*

51.6%

-56.3%

 

*Note: the contribution for each asset class also includes the relative contribution of other adjustments impacting total return for the period under review. The overall return to shareholder for the year reflects the movements in book value plus dividends paid.

During the year, the Company's largest exposure was to equities. It maintained a very healthy cash position of 43.7% of the liquid market portfolio assets. During the last quarter of the year, exposure to equity markets made 46.9%, whilst local currency bond exposure returned -0.9% and FX exposure contributed 5.5%. There was no exposure to credit during the quarter.

Following a challenging period in Q1 driven by extreme market volatility owing to the initial onset of the COVID-19 pandemic, the Company continued to focus on rebuilding its Book Value, which increased by $10.6m, from $20.6m to $31.2m, during the last quarter of the year. The Board of the Company reviewed its quarterly dividend, which remains on hold whilst the Company endeavors to rebuild its Book Value.

 

Liquid Markets Portfolio

The Year-to-Date performance attribution of the equity portfolio is shown below by sector. The largest contributor to the negative performance of the equity portfolio on the year was exposure to the Technology sector (-33.1%). Whilst exposure to the Consumer Cyclical sector contributed positively (+21.6%).

Year-to-31 Dec 20 Equity Portfolio Attribution

Sector

% Contribution

Technology

-33.1%

Energy

-31.2%

Consumer Discretionary

-18.9%

Health Care

-15.7%

Communications

-9.4%

Consumer Staples

-6.2%

Industrials

-3.7%

Real Estate

-2.6%

Utilities

-1.6%

Financials

-1.5%

Materials

-1.4%

Information Technology

-0.5%

Cash

+4.3%

Consumer, Cyclical

+21.6%

 

The Quarter-to-Date performance attribution of the equity portfolio is shown below by sector. The largest contributor to the performance of the equity portfolio on the quarter was Consumer Cyclicals (+31.1%).

 

Quarter-to-31 Dec 20 Equity Portfolio Attribution

Sector

% Contribution

Consumer, Cyclical

31.1%

Financial

28.3%

Industrials

14.5%

Energy

10.8%

Communications

7.6%

Utilities

2.5%

Technology

1.6%

Consumer Discretionary

1.3%

Materials

1.3%

Consumer Staples

0.6%

Health Care

0.3%

Real Estate

0.1%

 

The Company believes the global economic recovery following the COVID-19 pandemic will be supportive for global equity markets. As such, the Company's largest exposure by sector at the end of the year was Consumer Cyclicals (25.7%).  The second and third largest sector exposures were in the Financial and Energy sectors, 20.5% and 10.8% respectively.

 

Equity Exposure by Sector

Sector

%

Consumer, Cyclical

25.7%

Financial

20.5%

Energy

10.8%

Communications

7.5%

Industrial

7.0%

Materials

5.7%

Consumer Staples

5.4%

Consumer Discretionary

4.5%

Utilities

3.8%

Industrials

3.2%

Health Care

2.8%

Technology

2.6%

Real Estate

0.5%

 

At the end of 2020, the Company's largest exposure was to global equities, which accounted for 97% of the total liquid portfolio exposure (excluding cash). It maintained a healthy cash position of 43.7% of the liquid assets. The Company significantly decreased its EM currency and credit exposure, holding no trading positions at the end of the year. The Company held one small position in Argentina forming its EM rates exposure (approximately 2%).

 

At the end of the year, the liquid market portfolio's 1-day Value at Risk (VaR) was -3.7% [13]. The Standalone VaR by Asset class was largely concentrated to Equity (3.5%).  By Region, the largest risk was concentrated in Europe (2.4%) and Latin America (1.1%).

 

 

Standalone VaR by Asset Class[14]

 

Asset Class

Standalone VaR

Credit

0.0%

Equity

3.5%

FX

0.4%

Rates

0.0%

 

                                                                               Standalone VaR by Region14

Region

Standalone VaR

Europe

2.4%

North America

0.5%

Latin America

1.1%

Emerging Markets Other

0.3%

 

 

Strategic Investment Portfolio[15]

The Company's investee, APQ Cayman Limited, took profits on its entire investment in City of London Investment Group ('CLIG') during the last quarter of the year, freeing up $9.6m of cash to increase liquidity. It intends to partially redeploy the proceeds in the near future.

Direct Investment Portfolio[16]

As of the year end, the Company held majority investment stakes in four private businesses, following its acquisitions of Delphos International, based in Washington DC and Parish Group Limited, based in Guernsey, earlier in the year. The Fair Value of the Direct Investment Portfolio was down -0.7% year on year. Parish Group Limited and BARTR were the biggest negative contributors to the performance, whilst Delphos International and New Markets Media and Intelligence pared back some of the fall.

From a financial and operational perspective, these holdings were resilient over the year, notwithstanding difficult circumstances brought about by the COVID-19 pandemic. Of particular note, Delphos International begun hiring additional staff to facilitate an increase in its business development. Parish Group Limited has also begun to make additional hires across the Group.  New Markets Media and Intelligence (NMMI) has progressed nicely year on year, with revenue growth of 51% over the year.

The Company has an active pipeline of investment opportunities in the corporate services and financial sectors, with a global focus, and will update shareholders on these discussions at the appropriate time.

Post Balance Sheet Events (PBSE)

On 20 January 2021, APQ Global Limited, through its wholly owned Subsidiary, APQ Corporate Services Limited, entered into an agreement to purchase 70% of the FMA- Frontier Markets Advisors Inc ("FMA Inc"), a company incorporated and domiciled in Canada. The total cash consideration of this purchase agreement was $260,000. FMA is a consulting firm that provides investment and risk management services to investors in the emerging and frontier markets. FMA's expertise includes impact investing and development financing. FMA is a member of CAFIID - Canada Forum for Impact Investment and Development.

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2020

 

 

 

2020

 

2019

 

Note

$

 

$

 

 

 

 

 

Revenue

5

11,405,149

 

12,688,702

 

 

 

 

 

Net loss on financial assets at fair value through profit and loss

15

(48,194,038)

 

(3,016,884)

 

 

 

 

 

Administrative expenses

6

(2,438,278)

 

(5,441,673)

 

 

 

 

 

Other income

9

739,512

 

-

 

 

 

 

 

Operating (loss) / profit for the year before tax

 

(38,487,655)

 

4,230,145

 

 

 

 

 

Interest receivable

10

7,119

 

352,182

 

 

 

 

 

Interest payable

11

(2,525,532)

 

(2,274,831)

 

 

 

 

 

Net gain on financial liabilities at fair value through profit and loss

19

570,507

 

-

 

 

 

 

 

(Loss) / profit on ordinary activities before taxation

 

(40,435,561)

 

2,307,496

 

 

 

 

 

Tax on (loss) / profit on ordinary activities

 

-

 

-

 

 

 

 

 

Total (loss) / profit for the year

 

(40,435,561)

 

2,307,496

 

 

 

 

 

Other comprehensive (loss) / income

 

-

 

-

 

 

 

 

 

Total comprehensive (loss) / income for the year

 

(40,435,561)

 

2,307,496

 

 

 

 

 

Basic earnings per share

12

(0.51642)

 

0.02951

 

 

 

 

 

Diluted earnings per share

12

(0.51642)

 

0.02938

 

 

 

 

 

           

The notes below form an integral part of the Financial Statements.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION    Company No. 62008

As at 31 December 2020

 

 

 

2020

 

2019

 

Note

$

 

$

 

 

 

 

 

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

14

13,500

 

17,670

Right of use assets

23

160,376

 

84,802

Investments

15

67,764,691

 

105,414,240

Total non-current assets

 

67,938,567

 

105,516,712

 

 

 

 

 

Current assets

 

 

 

 

Trade and other receivables

16

1,105,234

 

871,691

Cash and cash equivalents

 

509,928

 

1,505,234

Total current assets

 

1,615,162

 

2,376,925

 

 

 

 

 

Total assets

 

69,553,729

 

107,893,637

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

17

(652,644)

 

(912,783)

Total current liabilities

 

(652,644)

 

(912,783)

 

 

 

 

Long term liabilities

 

 

 

3.5% Convertible Unsecured Loan Stock

(36,226,778)

 

(34,064,993)

6% Convertible preference shares

(1,347,099)

 

-

Lease liabilities

(83,781)

 

-

Total long term liabilities

(37,657,658)

 

(34,064,993)

 

 

 

 

 

Net assets

 

31,243,427

 

72,915,861

 

 

 

 

 

Equity

 

 

 

 

Share capital

20

99,869,252

 

99,733,054

Equity component of 3.5% Convertible Unsecured Loan Stock

18

  6,919,355

 

  6,919,355

Equity component of 6% Convertible preference shares

19

100,813

 

-

Other capital reserves

21

259,460

 

300,798

Share warrants reserve

22

107,702

 

-

Retained earnings

 

(71,085,642)

 

(29,109,833)

Exchange reserve

2.15

(4,927,513)

 

(4,927,513)

 

 

 

 

Total equity

31,243,427

 

72,915,861

 

 

 

 

Net asset value per ordinary share

39.88c

 

93.19c

 

The Financial Statements below were approved by the Board of Directors of APQ Global Limited and signed on 

14 April 2021 on its behalf by:

 

 

 

 

Bart Turtelboom   Wesley Davis 

Chief Executive Officer  Director 

The notes below form an integral part of the Financial Statements

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

As at 31 December 2020

 

 

 

 

 

 

 

 

 

 

 

 

Notes

Share capital

 

CULS equity component

Convertible preference shares equity component

 

 

Share warrants

 

Other capital reserves

Retained earnings

Exchange reserve

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As 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 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

21

-

-

-

-

186,391

-

-

186,391

 

Share based payments

settled in cash

21

-

-

 

  -

 

-

(13,471)

-

-

(13,471)

 

Issue of share awards

20

136,198

-

-

-

(136,198)

-

-

-

 

Dividends

13

-

-

-

-

-

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

As at 31 December 2020

 

 

Notes

Share capital

 

CULS equity component

Convertible preference shares equity component

 

 

Share warrants

 

Other capital reserves

Retained earnings

Exchange reserve

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 1 January 2020

 

99,733,054

 

6,919,355

 

-

 

-

 

300,798

(29,109,833)

(4,927,513)

72,915,861

 

 

 

 

 

 

 

 

 

 

Comprehensive income

for the year

 

 

 

 

 

 

 

 

 

Loss for the year

 

-

-

-

-

-

(40,435,561)

-

(40,435,561)

 

 

 

 

 

 

 

 

 

 

Equity after total comprehensive

income for the year

 

99,733,054

 

6,919,355

 

 

-

 

 

-

 

300,798

(69,545,394)

(4,927,513)

32,480,300

 

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

Issue of share warrants

22

-

-

-

107,702

-

-

-

107,702

Adjustment to preference share terms

19

-

-

100,813

-

-

-

-

100,813

Share based payments

21

-

-

-

-

108,333

-

-

108,333

Share based payments

settled in cash

21

-

-

 

-

 

-

(13,473)

-

-

(13,473)

Issue of share awards

20

136,198

-

-

-

(136,198)

-

-

-

Dividends

13

-

-

-

-

-

(1,540,248)

-

(1,540,248)

 

 

 

 

 

 

 

 

 

 

As at 31 December 2020

 

99,869,252

6,919,355

100,813

107,702

259,460

(71,085,642)

(4,927,513)

31,243,427

 

 

The notes below form an integral part of the Financial Statements.

 

CONSOLIDATED STATEMENT OF CASH FLOW

For the year ended 31 December 2020

 

 

 

 

 

 

 

2020

 

2019

Cash flow from operating activities

Note

$

 

$

 

 

 

 

 

Cash generated from operations

 

 

 

 

(Loss) / profit for the financial year

 

(40,435,561)

 

2,307,496

Adjustments for non-cash income and expenses

 

 

 

 

Equity settled share-based payments

21

108,333

 

186,391

Depreciation on property, plant and equipment

14

14,298

 

13,541

Depreciation on right of use assets

23

84,802

 

84,803

Net loss on financial assets at fair value through profit and loss

15

48,194,038

 

3,016,884

Net gain on financial liabilities at fair value through profit and loss

19

(570,507)

 

-

Net gain on amendment to 6% convertible preference share terms

19

(661,581)

 

-

Net gain on deferred compensation no longer payable

9

(77,931)

 

-

Exchange rate fluctuations

 

(343,618)

 

1,331,787

Changes in operating assets and liabilities

 

 

 

 

Decrease / (increase) in trade and other receivables

16

463,758

 

(498,538)

Increase in trade and other payables

17

78,089

 

24,030

Increase in receivables from group undertakings

16

(697,301)

 

(281,489)

Increase in payables from group undertakings

17

31,282

 

1,960

Cash generated from operations

 

6,188,101

 

6,186,865

 

 

 

 

 

Interest received

10

(7,119)

 

(352,182)

Interest paid

11

2,525,532

 

2,274,831

 

 

 

 

 

Net cash inflow from operating activities

 

8,706,514

 

8,109,514

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

Payments to acquire investments

 

(8,045,778)

 

(338,066)

Payments to acquire property, plant and equipment

14

(10,128)

 

(5,490)

Interest received

10

7,119

 

352,182

Loan to APQ Cayman Limited

 

-

 

349,504

 

 

 

 

 

Net cash inflow / (outflow) from investing activities

 

(8,048,787)

 

358,130

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

Equity dividends paid

13

(1,540,248)

 

(6,007,719)

Preference share dividends paid

11

(147,936)

 

-

Interest on CULS

18

(1,319,273)

 

(1,347,911)

Cash settled share-based payments

21

(13,473)

 

(13,471)

Principal paid on lease liabilities

23

(68,432)

 

(110,379)

 

 

 

 

 

Net cash outflow from financing activities

 

(3,089,362)

 

(7,479,480)

 

 

 

 

 

Net (decrease) / increase in cash and cash equivalents

 

(2,431,635)

 

988,164

 

 

 

 

 

Cash and cash equivalents at beginning of year

 

1,505,234

 

511,871

 

 

 

 

 

Exchanged rate fluctuations on cash and cash equivalents

 

1,436,329

 

5,199

 

 

 

 

 

Cash and cash equivalents at end of year

 

509,928

 

1,505,234

 

CONSOLIDATED STATEMENT OF CASH FLOW

For the year ended 31 December 2020 (continued)

 

 

 

2020

 

2019

 

 

$

 

$

Reconciliation of cash flows to debt

 

 

 

 

Brought forward

 

34,132,003

 

31,834,626

Cash flows used in servicing interest payments of CULS

 

(1,319,273)

 

(1,347,911)

Cash flows used in principal payments of lease liabilities

 

(68,432)

 

(110,379)

Non cash flows - recognition of lease liability

 

160,376

 

143,850

Non cash flows - net impact of recognition of convertible preference shares

 

1,347,099

 

-

Non cash flows - amortisation of discount on CULS issue

 

2,375,068

 

2,264,716

Non cash flows - amortisation of discount on lease liabilities

 

2,528

 

10,115

Exchange differences

 

1,104,884

 

1,336,986

Closing balance

 

37,734,253

 

34,132,003

 

 

 

 

 

Net debt comprises the following:

 

 

 

 

Convertible Unsecured Loan Stock 2024

 

36,226,778

 

34,064,993

6% convertible preference shares

 

1,347,099

 

-

Lease liabilities

 

160,376

 

67,010

 

 

37,734,253

 

34,132,003

 

 

The notes below form an integral part of the Financial Statements.

 

 

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2020

 

1. Corporate information

 

The financial statements of APQ Global Limited (the "Group") for the year ended 31 December 2020 were authorised for issue in accordance with a resolution of the Board of Directors on 13 April 2021. 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[17].

 

The Company and its subsidiaries[18] 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

 

Following the measures taken in the first quarter of the year, 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. See below for the Stress Testing applied in coming to this conclusion.

 

Stress Testing

 

After assessing the Company as a Going Concern in normal (poor) economic conditions across a one year horizon, the Company would maintain a sufficient expense coverage ratio 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 would retain USD 37.4 (+26.5) million in cash as of March 1, 2022.

 

Under normal market assumptions, the Company assumes that it meets all its financial obligations as well as its operating expenses. It earns a nominal income/growth yield on its Liquid Market Portfolio based on prevailing market risk premiums. The Company forecasts to receive dividend income from its Direct Investment Portfolio in line with those paid throughout 2020 ($348k). Under poor economic conditions, the earnings assumptions are halved, and zero dividends are received from the Company's Direct Investment Portfolio, whilst the financial obligations and expenses are held constant. There are zero Fair Value Profit or Losses assumed on the Direct Investment Portfolio throughout the period under review.

 

 

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2020

 

2. Significant accounting policies (continued)

 

2.2 Going concern (continued)

 

Long Term Viability Statement

 

There is currently no strict regime of Corporate Governance to which the Company must adhere to, however there are guidelines set out for AIM companies. The Company complies with the UK code on Corporate Governance, issued July 2018 for periods beginning on or after 1 January 2019 to the extent outlined in the Corporate Governance section below. In accordance with provision 31 of the UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months minimum required by the 'Going Concern' provision. Three years is deemed to be an appropriate time period for management to implement its medium-term strategic objectives set out in the Business Model and Strategy section 10 of the financial statements. 

 

Further to the above - Going Concern, the Company extends its above analysis to a three-year cash flow forecast (to January 2024) using newly targeted budgets and concluded that:

 

Assuming normal (poor) economic conditions[19], the Company would preserve an expense coverage ratio of 124 (88), net of its financial obligations of 214 (102), retaining $64.5 (+$30.8) million in cash on its balance sheet as of Jan 1, 2024. Providing considerable headroom to absorb poor conditions.

 

Dividend Suspension

 

The suspension of the dividend paid to ordinary shareholders will increase the cash available to the Company by approximately $6m per annum based on last year's distributions. The Board reviews the dividend policy quarterly. The dividend remains on hold until further notice.

 

2.3 Functional and presentational currency

 

The Group's presentational and functional currency is US Dollars.

 

2.4 Standards issued

 

Standards, amendments and interpretations effective on or after 1 January 2020

 

The following standards, interpretations and amendments did not have a significant impact on the financial position or performance of the Group:

 

Amendments to References to the Conceptual Framework in IFRS Standards (effective for financial years beginning on or after 1 January 2020)

 

Amendments to the definition of a business in IFRS 3 Business Combinations (effective for financial years beginning on or after 1 January 2020)

 

Amendments to the definition of material in IAS I Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (effective for financial years beginning on or after 1 January 2020)

 

Amendments to interest rate benchmark reform in IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures (effective for financial years beginning on or after 1 January 2020)

 

Amendments to IFRS 16, COVID-19-Related Rent Concessions (effective for financial years beginning on or after 30 June 2020)

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

2. Significant accounting policies (continued)

 

2.4 Standards issued (continued)

 

Early adoption of standards

 

The Group did not adopt new or amended standards in the year that are yet to become effective.

 

Standards issued but not yet effective

 

IFRS 17  Insurance Contracts  Effective 1 January 2023

 

Amendments to standards issued but not yet effective

 

IAS 1  Presentation of Financial Statements  Effective 1 January 2023

 

IFRS 3     Business Combinations                                      Effective 1 January 2022   

IFRS 4  Insurance Contracts  Effective 1 January 2021

 

IFRS 7  Financial Instruments: Disclosures  Effective 1 January 2021

 

IAS 8  Accounting policies: Changes in Accounting

  Estimates and Errors     Effective 1 January 2023

 

IFRS 9  Financial Instruments 

Benchmark reform issues  Effective 1 January 2021 

Derecognition of financial liabilities                               Effective 1 January 2022

 

IAS 16  Property, Plant and Equipment  Effective 1 January 2022

 

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 and APQ Capital Services Limited 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.

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

2. Significant accounting policies (continued)

 

2.6 Financial instruments (continued)

 

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 and APQ Knowledge 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 liabilities held at FVTPL

 

APQ Capital Services Limited, a subsidiary of the Company, issued 6% convertible preference shares ("CPS") which were a compound instrument containing a financial liability held at amortised cost and a financial liability held at fair value through profit and loss.

 

The fair value of the derivative component held at fair value through profit and loss, containing a variable conversion rate, is derived from the difference between the value of the consideration determined for the total instrument and the fair value assigned to the liability held at amortised cost.

 

Subsequent measurement at fair value was based on the value of the conversion option. The liability was derecognised on 30 June 2020 as the terms of the instrument were changed to remove the variable conversion rate. Please see 2.8 for more details on this transaction.

 

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 16 and Note 25 in these financial statements.

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

2. Significant accounting policies (continued)

 

2.6 Financial instruments (continued)

 

Financial liabilities held at amortised cost

 

The Group recognises trade creditors, other creditors, accruals liability component of convertible preference shares, 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 17, Note 18, Note 19, Note 23 and Note 25 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; and

· Adjustments required to existing market data to make it more comparable to the asset being valued.

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

2. Significant accounting policies (continued)

 

2.7 Fair value measurement (continued)

 

The use of these guidelines additionally requires management to make significant estimates in relation to the inputs utilised in preparing these valuations. These include but are not limited to:

· Future cash flow expectations deriving from these assets; and

· Appropriate discount factors to be used in determining the discounted future cash flows.

Where an assets fair value cannot be determined the Company measures these assets at a valuation of $nil.

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 6% Convertible preference shares

 

APQ Capital Services Limited, a subsidiary of the Company, issued 6% convertible preference shares ("CPS"). The CPS contain a perpetual 6% dividend rate and a conversion option for ordinary shares of APQ Global Limited. On initial issue the CPS were recognised as a liability comprising a liability held at amortised cost and a derivative conversion option held at fair value through profit and loss.

 

At the date of issue, the fair value of the liability component held at amortised cost was estimated by assuming that an equivalent non-convertible obligation of the Company would have a coupon rate of 7.9%. The fair value of the derivative component, containing a variable conversion rate, is derived from the difference between the value of the consideration determined for the acquisition of Parish Group Limited and the fair value assigned to the liability held at amortised cost.

 

The terms of the CPS were amended on the 30 June 2020, to amend the conversion option to a fixed ratio of CPS to ordinary shares. Subsequent to this amendment to the CPS are regarded as a compound instrument, comprising of a liability component and an equity component.  Due to the significant change in the terms of the CPS the initial instrument was derecognised and then recognised at the new fair value. The gain of $661,581 on the derecognition of the liability is recognised within other income in the statement of comprehensive income.

 

On amendment, 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 11.9%. The fair value of the equity component was determined based on the present value of the average gain on conversion based on a range of simulated share prices. 

 

The dividends on the convertible preference shares are taken to the statement of comprehensive income as finance costs.

 

2.9 Share warrants

 

Share warrants issued are measured at fair value at the date of issue using the Black-Scholes pricing model, which incorporates certain input assumptions including the warrant price, risk-free interest rate, expected warrant life and expected share price volatility. The fair value is included as a component of equity and is transferred from the share warrant equity reserve to share capital on exercise. If the warrants expire then the fair value is transferred from the share warrant equity reserve to retained earnings.

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

2. Significant accounting policies (continued)

 

2.10 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'.

 

2.11 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. 

 

2.12 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.

 

2.13 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.

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

2. Significant accounting policies (continued)

 

2.13 Share-based payments (continued)

 

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.

 

2.14 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 and accounted for as a deduction from retained earnings.

2.15 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.

2.16 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.

 

2.17 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.

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

2. Significant accounting policies (continued)

 

2.18 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

Furniture and fixtures  over 4 years

Leasehold improvements  over 2 years

 

Residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each year end.

 

2.19 Impairment of receivables from group undertakings

 

Impairment provisions for receivables from group undertakings are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, no impairment is recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

 

2.20 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.

 

2.21 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.

 

2.22 Telecommunication minutes income

 

Telecommunications minutes income represents income received with respect to the resale of minutes purchased by the Company. The Company had a few customers each governed by separate contracts. The performance obligations under 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. The transaction price is valued per minute and is allocated to each minute sold.  This source of revenue has now ceased.

 

2.23 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).

 

2.24 Fee expense

 

Fees are recognised on an accrual basis. Refer to Note 6 for details of fees and expenses paid in the period.

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

2. Significant accounting policies (continued)

 

2.25 Taxes

 

The Company is taxable in Guernsey at the company standard rate of 0% (2019 - 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.

 

2.26 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:

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

3. Significant accounting judgements, estimates and assumptions (continued)

 

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.

 

In May 2019 APQ Global commenced trading in telecommunications minutes. In the year, this generated revenue of $712,946 (2019 - $1,026,160), with a net loss of $17,646 (2019 - $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. 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. This activity ceased entirely in June 2020.

 

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.

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

3. Significant accounting judgements, estimates and assumptions (continued)

 

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 15 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. Management were unable to determine a reliable methodology for valuing BARTR Holdings Limited and has therefore recognised the value of its investments as $nil.

 

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.

 

Fair value of 6% convertible preference shares

 

Fair value has been determined through a range of inputs and modelling the results of the change in these inputs. Inputs are determined based on past performance, comparable instruments and management's determination of the suspected future time horizons for the conversion of the instruments. These forecasted values are by their nature estimates and therefore there is uncertainty with relation to the valuation of these instruments. Further details in relation to the valuation of these instruments can be found in note 19.

 

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.

 

 

 

2020

 

2019

 Group

 

$

 

$

 

 

 

 

 

Cayman

 

53,586,488

 

102,885,960

United Kingdom

 

551,655

 

425,085

Guernsey

 

11,736,157

 

4,438,129

Europe

 

3,679,429

 

-

 

 

 

 

 

 

 

69,553,729

 

107,749,174

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

 

5. Analysis of revenue

 

 

2020

 

2019

 

 

 

$

 

$

 

 

 

 

 

Dividends received from APQ Cayman Limited

 

9,355,112

 

11,663,216

Dividends received from APQ Corporate Services Limited

 

1,255,533

 

-

Dividends received from APQ Knowledge Limited

 

81,558

 

-

Rental income

 

-

 

(674)

Telecommunications minutes income

 

712,946

 

1,026,160

 

 

 

 

 

 

 

11,405,149

 

12,688,702

 

6. Analysis of administrative expenses

 

 

2020

 

2019

 

Notes

$

 

$

 

 

 

 

 

Personnel expenses

8

598,103

 

495,435

Depreciation of property, plant and equipment

14

14,298

 

13,541

Depreciation of right of use assets

23

84,802

 

84,803

Audit fees

 

165,948

 

96,167

Auditors' remuneration - other accounting services

 

60,770

 

7,992

Nominated advisor fees

 

63,473

 

63,217

Expenses incurred in relation to investment in BARTR Holdings Limited

 

3,543

 

179,227

Costs of purchasing telecommunications minutes

 

730,592

 

1,253,764

Administration fees and expenses

 

194,387

 

182,892

Director's remuneration

7

169,348

 

227,716

Other expenses

 

252,731

 

423,495

Professional fees

 

1,384,504

 

810,138

Share based payment expenses

22

108,333

 

186,391

Insurance

 

11,380

 

11,265

Bad debt expenses

 

216,543

 

155,111

Recharge of expenses to APQ Cayman Limited

 

(433,665)

 

(341,595)

Net exchange (gains)/losses

 

(1,186,812)

 

1,592,114

 

 

 

 

 

 

 

2,438,278

 

5,441,673

           

 

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

For the year ended 31 December 2020

   

 

7. Directors' remuneration

 

 

 

2020

 

2019

 

 

 

$

 

$

 

 

 

 

 

Directors' remuneration

 

166,292

 

222,643

Share based payment expenses

 

86,666

 

149,113

Social security costs on directors' remuneration

 

3,056

 

5,073

 

 

 

 

 

 

 

256,014

 

376,829

 

 

 

 

 

The highest paid director was Bart Turtelboom (2019 - Bart Turtelboom)

 

132,971

 

225,974

 

 

 

 

 

Average number of directors in the year

 

4

 

4

 

 

 

 

 

 

8. Personnel expenses

 

 

 

2020

 

2019

 

 

 

$

 

$

 

 

 

 

 

Short term benefits - wage and salaries

 

256,037

 

221,652

Short term benefits - social security costs

 

25,571

 

21,341

Short term benefits - other benefits

 

307,029

 

244,591

Short term benefits - Share based payment expenses

 

21,667

 

37,278

Post-employment benefits

 

9,466

 

7,851

 

 

 

 

 

 

 

619,770

 

532,713

 

 

 

 

 

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 directors' remuneration detailed in note 7, is as follows:

 

 

 

 

 

Short term benefits - other benefits

 

300,062

 

238,350

Short term benefits - Share based payment expenses

 

21,667

 

37,278

 

 

321,729

 

275,628

 

 

 

 

 

Other benefits include drawings paid to the members of APQ Partners LLP and staff benefits such as healthcare.

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

 

9. Other income

 

 

2020

 

2019

 

 

 

$

 

$

 

 

 

 

 

Other income from early settlement of deferred compensation

 

77,931

 

-

Other income from amendment to 6% convertible preference share terms

 

661,581

 

-

 

 

 

 

 

 

 

739,512

 

-

 

10. Interest receivable

 

 

2020

 

2019

 

 

$

 

$

 

 

 

 

 

Loan interest receivable from APQ Cayman Limited

 

-

 

350,046

Loan interest receivable from Palladium Trust Services Limited

 

6,488

 

1,067

Loan interest receivable from New Markets Media & Intelligence Ltd

 

631

 

1,069

 

 

 

 

 

 

 

7,119

 

352,182

 

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. In addition, the Company charged interest of $nil (2019 - $350,046) to APQ Cayman Limited for the year ended 31 December 2020.

 

11. Interest payable

 

 

 

2020

 

2019

 

 

$

 

$

 

 

 

 

 

Interest on 3.5% Convertible Unsecured Loan Stock 2024 

 

2,375,068

 

2,264,716

Interest on lease liabilities

 

2,528

 

10,115

Dividend paid on 6% convertible preference shares

 

147,936

 

-

 

 

 

 

 

 

 

2,525,532

 

2,274,831

 

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

12. 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.

 

 

2020

 

2019

 

 

$

 

$

 

 

 

 

 

Total comprehensive (loss) / income for the year

 

(40,435,561)

 

2,307,496


Weighted average number of shares in issue

 

78,299,359

 

78,196,993

 

 

 

 

 

Earnings per share

 

(0.51642)

 

0.02951

 

 

 

 

 

Diluted earnings per share

 

(0.51642)

 

0.02938

 

The Group had share awards vested but not yet issued, which are not dilutive in 2020, as the impact of dilution would be to decrease the loss per share. In 2019 these awards were dilutive. 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 233,657 (2019 - 350,485).

 

The Group has 6,000 (2019 - 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 (2019 - 6,000) exercise price on these conversion options currently exceeds the traded share price of APQ Global. These are not currently dilutive (2019 - not dilutive).

 

Potentially dilutive instruments issued during the year

 

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. These share warrants are not currently dilutive.

 

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. These convertible preference shares are not currently dilutive.

 

13. Dividends

 

  Dividends were declared in the year ended 31 December 2020 and 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

0.019

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

First dividend

30 January 2020

2 March 2020

1,174,014

1,540,248

0.015

0.020

Total 2020

 

 

1,174,014

1,540,248

0.015

0.020

 

The stated dividend policy of the Company is to target an annualised dividend yield of 6% based on the Placing Issue Price. Due to the impact of Covid-19 the Company has ceased all dividends until further notice.

 

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.

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

14. Property, plant and equipment

 

 

Office

 equipment

 

Furniture and fixtures

 

Leasehold

improvements

 

 

Total

 

$

 

$

 

$

 

$

Cost

 

 

 

 

 

 

 

At 1 January 2020

63,511

 

19,352

 

34,588

 

117,451

Additions during the year

9,613

 

515

 

-

 

10,128

At 31 December 2020

73,124

 

19,867

 

34,588

 

127,579

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

At 1 January 2020

49,474

 

15,719

 

34,588

 

99,781

Charge for the year

12,523

 

1,775

 

-

 

14,298

At 31 December 2020

61,997

 

17,494

 

34,588

 

114,079

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

At 31 December 2020

11,127

 

2,373

 

-

 

13,500

 

 

 

 

 

 

 

 

At 31 December 2019

14,037

 

3,633

 

-

 

17,670

 

15. Investments

 

 

APQ

Cayman Limited

 

APQ Corporate Services Limited

 

 

APQ Knowledge Limited

 

 

BARTR Holdings Limited

 

 

 

Listed Investments

 

 

 

 

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

 

 

-

 

 

67,764,691

 

 

 

 

 

 

 

 

 

 

 

 

Additions 

-

 

8,495,598

 

-

 

-

 

2,048,891

 

10,544,489

Fair value movement

(49,299,472)

 

(179,735)

 

445,374

 

(790,743)

 

 

1,630,538

 

 

(48,194,038)

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2020

53,586,488

 

9,168,732

 

1,330,042

 

-

 

 

3,679,429

 

 

67,764,691

 

The Company meets the definition of an investment entity, it is therefore required to measure its investments, including its subsidiary undertakings at fair value.  Subsidiary undertakings whose primary purpose is to support the investment activities of the Company are consolidated on a line for line basis. Subsidiary undertakings which act as an investment holding company are valued based on the underlying trading investment companies they hold. These investments are held solely for capital appreciation and investment income and measured at fair value through profit and loss("FVTPL")

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

15. Investments (continued)

 

Investments in subsidiaries

 

The following tables outlines the subsidiary undertakings of the Company:

 

Name

 

Country of incorporation

 

Registered Office

 

Immediate Parent Company

 

Holding %

 

Acquisition/ Incorporation Date

 

Activity

 

Recognition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APQ Capital Services Limited

 

Guernsey

 

PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT

 

APQ Global Limited

 

100

 

31 July 2019

 

Investment support

 

Consolidated

APQ Cayman Limited

 

Cayman Islands

 

 

Mourant Ozannes Corporate Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, PO Box 1348, Grand Cayman KY1-1108

 

APQ Global Limited

 

100

 

10 August 2016

 

Investment entity

 

FVTPL

APQ Corporate Services Limited

 

Guernsey

 

PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT

 

APQ Global Limited

 

100

 

10 January 2019

 

 

Investment holding company

 

FVTPL

APQ Knowledge Limited

 

Guernsey

 

PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT

 

APQ Global Limited

 

100

 

1 March 2019

 

 

Investment holding company

 

FVTPL

APQ Partners LLP

 

England and Wales

 

22a St. James's Square, London, SW1Y 4JH

 

APQ Global Limited

 

100

 

10 August 2016

 

Investment support

 

Consolidated

New Markets Media & Intelligence Ltd

 

England and Wales

 

22a St. James's Square, London, SW1Y 4JH

 

APQ Knowledge Limited

 

100

 

26 February 20191

 

 

Trading investment company

 

FVTPL

Palladium Finance Group Limited

 

Seychelles

 

Global Gateway 8, Rue de la Perle, Providence, Seychelles

 

APQ Corporate Services Limited

 

100

 

22 February 20192

 

Trading investment company

 

FVTPL

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

15. Investments (continued)

 

Palladium Trust Company (NZ) Limited

 

New Zealand

 

Level 8, AIG

Building, 41 Shortland Street, Auckland, New Zealand 1010

 

APQ Corporate Services Limited

 

100

 

22 February 20192

 

Trading investment company

 

FVTPL

Palladium Trust Services Ltd

 

England and Wales

 

22a St. James's Square, London, SW1Y 4JH

 

APQ Corporate Services Limited

 

100

 

22 February 20192

 

 

Trading investment company

 

FVTPL

 

1 The total consideration of the purchase agreement to acquire New Markets Media & Intelligence Ltd was deferred over a 3 year period. As at 31 December 2020, $187,304 (£137,023) (2019: $355,859 (£279,423)) is still due with respect to this purchase agreement and is included within deferred consideration in Note 17.

 

2 The total consideration of the purchase agreement to acquire Palladium was deferred over a 3 and a half year period. During the year, the Company negotiated early settlement of the deferred consideration due under the agreement. A gain of $77,931 has been recognised within other income in Note 9 with respect to this settlement. As at 31 December 2020, $nil (£nil) (2019: $210,540 (£158,929)) is still due with respect to this purchase agreement and is included within deferred consideration in Note 17.

 

Investments in subsidiaries - additions in 2020

 

Delphos International, Ltd3

 

United States

 

2121 K St, N 2121 K St, NW, Suite 1020, Washington, DC 20037

 

APQ Corporate Services Limited

 

100

 

3 March 2020

 

Trading investment company

 

FVTPL

Parish Corporate Services Limited4

 

Guernsey

 

PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT

 

APQ Corporate Services Limited

 

100

 

29 January 2020

 

 

Trading investment company

 

FVTPL

Parish Group Limited4

 

Guernsey

 

PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT

 

APQ Corporate Services Limited

 

100

 

29 January 2020

 

 

Trading investment company

 

FVTPL

Parish Nominees Limited4

 

Guernsey

 

PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT

 

APQ Corporate Services Limited

 

100

 

29 January 2020

 

 

Trading investment company

 

FVTPL

Parish Trustees Limited4

 

Guernsey

 

PO Box 142, The Beehive, Rohais, St Peter Port, GY1 3HT

 

APQ Corporate Services Limited

 

100

 

29 January 2020

 

 

Trading investment company

 

FVTPL

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

15. Investments (continued)

 

The Company invested $8,495,598 in APQ Corporate Services Limited in the year. This was to facilitate the investments it has made in Delphos and Parish.

 

3 In consideration to the shareholders of Delphos, a capital raising and transaction advisory business, APQ Corporate Services Limited, a wholly owned subsidiary of the Company, paid an upfront amount of $1.5 million in cash. APQ Corporate Services Limited, was also required to make an additional payment to clear the working capital of Delphos prior to the acquisition, this amounted to $112,265. The Company invested $1,612,266 to facilitate this investment.

 

4 Parish Group Limited is a fiduciary and corporate services provider. In consideration to the sellers for the acquisition the Company, via its wholly owned subsidiary, APQ Corporate Services, paid a net amount of $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 at price of $10 per share. The Company additionally issued 1.0 million warrants in APQ Global with an exercise price equal of 70.94 pence, to the Sellers. Total consideration is valued at $6,883,332 which the Company invested in APQ Corporate Services Limited to facilitate this investment.

 

Investments in subsidiaries - additions after the reporting period

 

FMA - Frontier Markets Advisors Inc5

 

Canada

 

202-230 Ch. du Golf, Montreal, QC H3E 2A8, Canada

 

APQ Corporate Services Limited

 

70

 

20 January 2021

 

Trading investment company

 

FVTPL

 

5 On 20 January 2021, APQ Corporate Services Limited, a wholly owned subsidiary of the Company, entered into an agreement to purchase 70% of the FMA- Frontier Markets Advisors Inc a company incorporated and domiciled in Canada which provide investment and financing services. The total cash consideration of this purchase agreement was $260,000.

 

 

 

 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

15. Investments (continued)

 

Investments in subsidiaries - disposals during the year

 

On 4 December 2020, the Company, via its wholly owned Subsidiary, APQ Corporate Services Limited, sold its investment in GEO Strategic Partners Limited, a company registered in the Isle of Man. GEO Strategic Partners Limited was not consolidated and was recognised as an investment at fair value through profit or loss as part of the valuation of APQ Corporate Services Limited.

 

On 1 December 2020, Palladium Trust Company (BVI) Limited, a wholly owned subsidiary of the APQ Corporate Services Limited, incorporated in the British Virgin Islands was dissolved.

 

On 18 December 2020, APQ Connect Limited, a subsidiary of the Company, incorporated in Guernsey was dissolved. The Company wrote off an amount of £216,543 which was due from APQ Connect Limited.

 

Other investments

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. On 19 May 2020, the capital interest was converted from ordinary shares to preference shares which have no voting rights, but preferential dividends and preferential rights on assets on wind up of BARTR Holdings Limited. BARTR Holdings Limited is held as an investment at fair value through profit or loss.

 

The Company has made direct investments in equities that are freely traded on international stock exchanges. These investments are highly liquid and measured at fair value through profit and loss.

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 ("NAV"). NAV is determined based on the observable market values of its portfolio of assets and liabilities.

 

Fair value of the investment in APQ Corporate, has been determined by determining the valuation of its underlying investments. The underlying investments have been valued through the income approach, incorporating comparison with external sources and the expected cash flows of the investment. The income approach was determined to be the most appropriate as the underlying investments are revenue generating businesses.

 

The investment in APQ Knowledge Limited was completed on 1 March 2019. Fair value has been determined by determining the valuation of its underlying investments. The underlying investments have been valued through the income approach, incorporating comparison with external sources and the expected cash flows of the investment. The income approach was determined to be the most appropriate as the underlying investments are revenue generating businesses.

 

The fair value of BARTR Holdings Limited of nil. This is due to BARTR Holdings Limited being a pre-revenue technology start-up company for which future revenue is highly uncertain, and without comparable companies to benchmark the valuation against. The income approach and market approach therefore do not produce a reliable valuation and management has therefore determined the valuation to be $nil.

 

Listed investments are measured at fair value using the current market bid price for the underlying equity as quoted on the applicable stock exchange the security is traded on.

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

15. Investments (continued)

 

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 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, as they are private investments. 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 these companies hold, used in deriving a valuation using discounted cash flows. Valuation is determined for these holding companies by the value of the underlying investments held. The Company has valued its investment in BARTR Holdings Limited as $nil. The unobservable inputs of future cash flows could not be reliably determined due to the pre-revenue nature of the business and therefore the most reliable fair value to be determined was $nil. The movement in the investments in the year are shown above. Sensitivity to these inputs are discussed in Note 25.

 

The Company has classified its investments in APQ Cayman Limited as level 3. Valuation is determined based on the NAV. The majority of underlying assets and liabilities of APQ Cayman Limited are held at fair value based on observable markets.

 

The listed investments are designated as Level 1 instruments in the fair value hierarchy as fair value can be determined by the quoted market price for these assets. The movement of investments classified by level is as per the below.

 

The movement of investments classified by level is as per the below.

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

At 1 January 2020

 

-

 

-

 

105,414,240

 

105,414,240

Additions

 

2,048,891

 

-

 

8,495,598

 

10,544,489

Fair value movement

 

1,630,538

 

 

 

(49,824,576)

 

(48,194,038)

 

 

 

 

 

 

 

 

 

 

 

3,679,429

 

-

 

64,085,262

 

67,764,691

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

16. Trade and other receivables

 

 

 

 

 

2020

 

2019

 

 

 

 

 

 

$

 

$

 

 

 

 

 

 

 

 

 

 

Trade debtors

 

 

 

 

62,448

 

68,581

Amounts due from group undertakings

 

 

 

 

978,790

 

281,489

Prepayments and accrued income

 

 

 

 

39,437

 

466,914

Other debtors

 

 

 

 

24,559

 

54,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,105,234

 

871,691

 

 

 

 

 

 

 

 

 

 

                               

 

No expected credit losses adjustments are included in the above balances, as the majority of the balances relate to group undertaking over which the Company has significant oversight, to determine recoverability. Bad debts of $216,543 have been recognised within the year (2019: $155,111).

 

17. Trade and other payables

 

 

 

 

 

2020

 

2019

 

 

 

 

 

 

$

 

$

 

 

 

 

 

 

 

 

 

 

Trade creditors

 

 

 

 

100,808

 

75,260

Amounts due to group undertakings

 

 

 

 

33,242

 

1,960

Other creditors 

 

 

 

 

22,749

 

61,409

Accruals

 

 

 

 

231,946

 

140,745

Lease liabilities

 

 

 

 

76,595

 

67,010

Deferred consideration

 

 

 

 

187,304

 

566,399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

652,644

 

912,783

 

                               

 

18. 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

-

 

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

 

 

 

 

 

 

Amortisation of discount on issue and issue expenses

-

 

2,375,068

 

-

Interest paid during the year

-

 

(1,319,273)

 

-

Exchange differences

-

 

1,105,990

 

-

 

 

 

 

 

 

As at 31 December 2020

41,446,167

 

36,226,778

 

6,919,355

 

 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

18. 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 percent. premium to the unaudited Book Value per Ordinary Share on 31 July 2017. Following conversion of 80 percent. 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 percent. 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.

 

19. 6% convertible preference shares

 

 

Nominal number

 of preference shares

 

 

Liability

held at amortised cost

 

 

Liability

held at fair value through profit and loss

 

 

Equity

component

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

As at 1 January 2020

-

 

-

 

-

 

-

Preference shares issued during the acquisition of Parish

268,000

 

2,026,016

 

653,984

 

-

Fair value movement on derivative component

-

 

-

 

(570,507)

 

-

Derecognition on amendment to conversion terms

-

 

(2,026,016)

 

(83,477)

 

-

Recognition following the amendment to conversion terms

-

 

1,347,099

 

-

 

100,813

 

 

 

 

 

 

 

 

As at 31 December 2020

268,000

 

1,347,099

 

-

 

100,813

 

On the 29 January 2020, APQ Capital Services Limited, a subsidiary of APQ Global, issued 268,000 convertible preference shares at a value of $10 per share, which were convertible into a variable number of shares linked to the relative assets attributable to the convertible preference shares. These convertible preference shares were admitted to trading on The International Stock Exchange on 30 January 2020.

 

The conversion option into a variable number of shares was identified as a derivative option which was designated at fair value through profit and loss. This instrument was designated as a Level 3 in accordance with the fair value hierarchy as per Note 15. Fair value has been determined in conjunction with a third party valuation firm, using forecasting of the share price at the date the conversion option is exercised. The following assumptions were used in the calculation of the value of the derivative option:

 

 

 

Assumptions

 

 

 

Implicit interest rate

 

7.9%

Duration

 

7 years

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

19. 6% convertible preference shares (continued)

 

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 fair value of the convertible preference shares was remeasured at this date and the previously recognised carrying values of these convertible preference shares were derecognised. Fair value was remeasured using the following assumptions:

 

 

 

Assumptions

 

 

 

Implicit interest rate

 

11.9%

Duration

 

6.6 years

 

20. Share Capital

 

The authorised and issued share capital of the Company is 78,347,359 ordinary shares of no par value listed on The International Stock Exchange and 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 percent. 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 year

106,312

 

100,682

 

136,198

 

 

 

 

 

 

At 31 December 2019

78,241,047

 

76,797,815

 

99,733,054

 

 

 

 

 

 

Shares issued from share awards during the year

106,312

 

100,682

 

136,198

 

 

 

 

 

 

At 31 December 2020

78,347,359

 

76,898,497

 

99,869,252

 

During the year ended 31 December 2020, 106,312 (2019 - 106,312) shares were issued as part of the share award scheme as detailed in note 21.

 

 

 NOTES TO THE FINANCIAL STATEMENTS (continued)  

For the year ended 31 December 2020

 

21. 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.

 

 

 

 

2020

 

 

 

2019

 

 

 

 

 

cents

 

 

 

cents

 

 

 

 

 

 

 

 

 

Outstanding at 1 January

 

379,692

 

128.11

 

496,520

 

128.11

Settled in equity

 

(106,312)

 

128.11

 

(106,312)

 

128.11

Settled in cash

 

(10,516)

 

128.11

 

(10,516)

 

128.11

Outstanding at 31 December

 

262,864

 

128.11

 

379,692

 

128.11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

Year ended 31 December 2019

 

 

 

172,920

 

13,471

 

186,391

 

 

 

 

 

 

 

 

 

Year ended 31 December 2020

 

 

 

94,860

 

13,473

 

108,333

 

The unvested portion of the share awards currently granted is $77,291 (2019 - $185,625). Of the awards outstanding the number vested that are available for settlement amount to 29,207 (2019 - 29,207).

 

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

22. Share warrants 

 

On 29 January 2020, the Company issued 1,000,000 warrants as part of the acquisition of Parish Group Limited. The fair value of the warrants issued as part of the consideration for this investment was determined using the Black Scholes option pricing model. The assumptions used in the valuation are as follows:

 

 

Assumptions

 

 

 

Share price on issue (pence)

 

68.50

Exercise price of share warrants (pence)

 

70.94

Volatility

 

10.45%

Duration

 

6.6 years

Risk free rate

 

1.00%

Dividend yield

 

0.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29 January 2020

 

-

1,000,000

-

-

1,000,000

70.94

30 August 2026

 

 

 

 

 

 

 

 

 

 

 

-

1,000,000

-

-

1,000,000

 

 

 

The weighted average remaining life of the warrants outstanding is 5.7 years.

 

23. Leases

 

Finance lease commitments

 

The Company's subsidiary, APQ Partners LLP, leases rental space and information with regards to this lease is outlined below:

 

 

 

2020

 

2019

 Rental lease asset

 

$

 

$

 

 

 

 

 

Leased asset on 1 January 2020

 

84,802

 

169,605

Depreciation for the year

 

(84,802)

 

(84,803)

Additions

 

160,376

 

-

 

 

 

 

 

At 31 December 2020

 

160,376

 

84,802

 

 Rental lease liability

 

$

 

$

 

 

 

 

 

Leased asset on 1 January 2020

 

67,010

 

143,850

Interest on lease liability

 

2,528

 

10,115

Payments for lease

 

(68,432)

 

(110,379)

Exchange differences

 

(1,106)

 

23,424

New lease commitment

 

160,376

 

-

 

 

 

 

 

At 31 December 2020

 

160,376

 

67,010

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

24. Net asset value per ordinary share

 

The net asset value per ordinary share is calculated by dividing the net assets of the Group by the number of ordinary shares outstanding at the statement of financial position date.

 

 

2020

 

2019

 

 

$

 

$

 

 

 

 

 

Net assets at 31 December

 

31,243,427

 

72,915,861


Shares in issue at 31 December

 

78,347,359

 

78,241,047

 

 

 

 

 

Net asset value per ordinary share

 

39.88c

 

93.19c

 

25. 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 above. 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

2020

 

2019

 

Fair value through profit and loss

 

Amortised cost

 

Total

 

Fair value through profit and loss

 

Amortised cost

 

Total

 

$

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Investments

67,764,691

 

-

 

67,764,691

 

105,414,240

 

-

 

105,414,240

Trade debtors

-

 

62,448

 

62,448

 

-

 

68,581

 

68,581

Amounts due from group undertakings

-

 

978,790

 

978,790

 

-

 

281,489

 

281,489

Prepayments and accrued income

-

 

-

 

-

 

-

 

253,532

 

253,532

Other debtors

-

 

14,545

 

14,545

 

-

 

44,888

 

44,888

Cash and cash equivalents

-

 

509,928

 

509,928

 

-

 

1,505,234

 

1,505,234

 

 

 

 

 

 

 

 

 

 

 

 

Total

67,764,691

 

1,565,711

 

69,330,402

 

105,414,240

 

2,153,724

 

107,567,964

 

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

25. Financial risk and management objectives and policies (continued)

 

Financial Liabilities

2020

 

2019

 

Fair value through profit and loss

 

Amortised cost

 

Total

 

Fair value through profit and loss

 

Amortised cost

 

Total

 

$

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Trade creditors

-

 

100,808

 

100,808

 

-

 

75,260

 

75,260

Amounts due to group undertakings

-

 

33,242

 

33,242

 

-

 

1,960

 

1,960

Other creditors 

-

 

22,749

 

22,749

 

-

 

61,409

 

61,409

Accruals

-

 

231,946

 

231,946

 

-

 

140,745

 

140,745

Lease liabilities

-

 

160,376

 

160,376

 

-

 

67,010

 

67,010

Deferred consideration

-

 

187,304

 

187,304

 

-

 

566,399

 

566,399

CULS liability

-

 

36,226,778

 

36,226,778

 

-

 

34,064,993

 

34,064,993

6% convertible preference shares liability

-

 

1,347,099

 

1,347,099

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Total

-

 

38,310,302

 

38,310,302

 

-

 

34,977,776

 

34,977,776

 

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 via its subsidiaries (see note 15), listed equities and its investment in BARTR Holdings Limited. APQ Cayman Limited has investments in quoted 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 an investment advisory committee to help manage the risks of the portfolio.

 

The most significant input used in the fair value of APQ Cayman Limited is the valuations of its underlying portfolio of assets and liabilities. A reasonable change of 10% in the NAV based on these valuations will have an impact of $5,358,649 (2019 - $10,288,596) 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. Changes in any one of the variables, earnings or revenue multiples or illiquidity discounts could potentially have a significant effect on valuation.

 

A reasonable change of 15% in the value of the investment of APQ Corporate Services Limited will have an impact of $1,375,310 (2019 - $127,931) 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 $199,506 (2019 - $132,700) on the profit of the business.

 

A reasonable change in the market price of the directly held listed equities of 20% will have an impact of $735,886 (2019 - $nil) on the profit of the business.

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

25. Financial risk and management objectives and policies (continued)

 

Interest rate risk

 

The bank accounts of APQ Global Limited are not interest bearing and so 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 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:

 

 

 

2020

 

2019

 

 

$

 

$

 

 

 

 

 

Cash and cash equivalents

 

441,975

 

407,423

Trade debtors

 

62,448

 

68,582

Other debtors

 

24,559

 

34,707

Amounts due from group undertakings

 

128,790

 

40,830

Trade creditors

 

(100,808)

 

(75,260)

Other creditors 

 

(22,749)

 

(34,371)

Amounts due to group undertakings

 

(33,242)

 

(1,960)

Accruals

 

(231,946)

 

(140,745)

Lease liabilities

 

(160,376)

 

(67,010)

Deferred consideration

 

(187,304)

 

(566,399)

CULS

 

(36,226,778)

 

(34,064,993)

 

 

 

 

 

 

 

(36,305,431)

 

(34,399,196)

 

A reasonable change of 5% in the Group's Pounds Sterling net liabilities (2019 - liability) will have an impact of $1,815,272 (2019 - $1,719,960) 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:

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

25. Financial risk and management objectives and policies (continued)

 

31 December 2020

Less than 1 year

 

1 - 5 years

 

5 + years

 

Total

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Trade creditors

(100,808)

 

-

 

-

 

(100,808)

Amounts due to group undertakings

(33,242)

 

-

 

-

 

(33,242)

Other creditors 

(22,749)

 

-

 

-

 

(22,749)

Accruals

(231,946)

 

-

 

-

 

(231,946)

Lease liabilities

(76,595)

 

(83,781)

 

-

 

(160,376)

Deferred consideration

(187,304)

 

-

 

-

 

(187,304)

CULS

-

 

(46,429,300)

 

-

 

(46,429,300)

 

 

 

 

 

 

 

 

 

(652,644)

 

(46,513,081)

 

-

 

(47,165,725)

 

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)

 

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 investments (See Note 15) and is thus exposed to the risk of credit-related losses primarily through its investments. The risk of default from the investment in APQ Cayman 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 credit risk of its other subsidiary investments are managed by those entities and the credit risk on these receivables are factored into the fair value of these investments held by the Group.

 

The Group's primary credit risk on its own assets are primarily related to amounts due from group undertakings. These are deemed to be low risk as the Group has significant oversight of these entities and therefore does not recognise any expected credit losses unless the group undertaking no longer has the facility to repay these amounts. The Company will then provide against these amounts in full and once confirmed they are irrecoverable these are written off.

 

Other significant assets exposed to credit risk are the Group's cash and cash equivalents. 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.

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

25. Financial risk and management objectives and policies (continued)

 

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. 

 

26. 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:

 

 

 

2020

 

2019

 

 

$

 

$

 

 

 

 

 

Share capital

 

99,869,252

 

99,733,054

Equity component of 6% Convertible preference shares

 

100,813

 

-

Equity component of 3.5% Convertible Unsecured Loan Stock 2024

 

6,919,355

 

6,919,355

Other capital reserves

 

259,460

 

300,798

Share warrants reserve

 

107,702

 

-

Retained earnings

 

(71,085,642)

 

(29,109,833)

Exchange reserve

 

(4,927,513)

 

(4,927,513)

 

 

 

 

Total shareholders' funds

31,243,427

 

72,915,861

 

 

 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

27. Related party transactions 

 

Wayne Bulpitt founded the Active Group, now renamed the Aspida Group, who acted as administrator until 10 June 2020; 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. This is split between the Company and APQ Cayman Limited.   

 

 

 

APQ Global Limited - Remuneration

 

APQ Global Limited - Share based remuneration

 

APQ Cayman Limited - Remuneration

 

APQ Capital Services Limited - Remuneration

 

 

 

Total

 

 

$

 

$

 

$

 

$

 

$

 

 

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019 

 

2020

 

2019 

 

Bart Turtelboom

Chief Executive Officer

46,305

 

76,861

 

86,666

 

149,113

 

108,724

 

76,861

 

 

-

 

-

 

 

241,695

 

302,835

 

Wayne Bulpitt 

Non-Executive Chairman

51,724

 

51,384

 

-

 

-

 

-

 

-

 

 

-

 

-

 

 

51,724

 

51,384

 

Philip Soulsby

Non-Executive Director

22,607

 

22,398

 

-

 

-

 

-

 

-

 

 

2,406

 

-

 

 

25,013

 

22,398

 

Wesley Davis

Executive Director

43,250

 

72,000

 

-

 

-

 

43,250

 

72,000

 

 

-

 

-

 

 

86,500

 

144,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

163,886

 

222,643

 

86,666

 

149,113

 

151,974

 

148,861

 

2,406

 

-

 

404,932

 

520,617

 

                                                   

 

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 $36,450 (2019 - $89,770) of fees and expenses to Aspida Services (Guernsey) Limited as administrator of the Company. As at 31 December 2020, APQ Global Limited owed $678 (2019 - $21,677) to Aspida Services (Guernsey) Limited.

 

On 10 June 2020, the Company changed its administrator from Aspida Services (Guernsey) Limited to Parish Group Limited, a wholly owned subsidiary of APQ Global Limited. APQ Global Limited has incurred $55,027 (2019 - $nil) of fees and expenses to Parish Group Limited as administrator of the Company. As at 31 December 2020 the balance owed to Parish Group Limited was $nil (2019 - $nil).

 

 

NOTES TO THE FINANCIAL STATEMENTS (continued) 

For the year ended 31 December 2020

 

27. Related party transactions (continued) 

 

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 $452,759 (2019 - $446,488) to APQ Global Limited during the year. As at 31 December 2020, APQ Global Limited were owed $119,926 (2019 - $142,010) from APQ Partners LLP. In the current and prior year amounts have been eliminated on consolidation.

 

During the year, the Group recharged expenses to APQ Cayman Limited of $460,525 (2019 - $380,025) and was recharged expenses of $26,860 (2019 - $38,430) from APQ Cayman Limited. The Company received dividends of $9,355,112 (2019 - $11,663,216)

 

During the year, APQ Global Limited provided $nil (2019 - $280,000) to BARTR Connect Limited, an entity over which the Company has significant influence, in relation to its management of telecommunication contracts. The Company additionally paid expenses on behalf of BARTR Connect Limited that it did not seek to recover from BARTR Connect Limited of $.3,543 (2019 - $117,764). At 31 December 2020, $nil (2019 - $nil) was due to BARTR Connect Limited.

 

During the year, APQ Global Limited provided funding of $850,000 (2019 - $144,464) to APQ Corporate Services Limited. As at 31 December 2020, $850,000 (2019 - $144,464) was due from APQ Corporate Services Limited (See Note 16). The Company received dividends of $1,255,533 (2019 - $nil)

 

During the year, the company received dividends of $81,558 (2019 - $nil) from APQ Knowledge Limited

 

During the year, APQ Global Limited paid $147,936 (2019 - $nil) as dividends to the holders of the convertible preference shares on behalf of APQ Capital Services Limited.

 

During the year, APQ Global Limited provided a loan to Palladium Trust Services Limited, a group undertaking, of $77,849 (2019 - $37,431). In addition, the loan attracts interest at a rate of 10%. During the year, APQ Global Limited charged interest of $6,489 (2019 - $1,067). As at year end, APQ Global Limited was owed $128,790 (2019 - $40,831) from Palladium Trust Services Limited (See Note 16).

 

During the year, APQ Global Limited provided a loan to New Markets Media & Intelligence Ltd, a group undertaking, of $nil (2019 - $24,299). In addition, the loan attracts interest at a rate of 10%. During the year, APQ Global Limited charged interest of $631 (2019 - $1,069). During the year, the loan has been fully repaid. During the year, New Markets Media & Intelligence Ltd also provided funding to APQ Global Limited of $2,405 (2019 - $28,404). As at year end, APQ Global Limited owed $33,242 (2019 - $1,960) to New Markets Media & Intelligence Ltd (See Note 17).

 

During the year, APQ Global Limited provided funding to APQ Connect Limited, a group undertaking, of $120,347 (2019 - $96,195). As at year end, APQ Global Limited was owed $nil (2019 - $96,195) from APQ Connect Limited as the company wrote of a balance of $216,542 due from APQ Connect Limited as it was dissolved (See Note 16).

 

28. Events after the reporting period 

 

On 20 January 2021, APQ Corporate Services Limited, a wholly owned subsidiary of the Company, entered into an agreement to purchase 70% of the FMA- Frontier Markets Advisors Inc ("FMA Inc"), a company incorporated and domiciled in Canada. The total cash consideration of this purchase agreement was $260,000.

 

Since 31 December 2020, 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

Ordinary shares

26,578

12th January 2021

 

 

 

 

[1] In accordance with IFRS 10, the Company, as an Investment Entity, is required to follow certain accounting rules regarding its Subsidiaries. Please refer to Note 15 for further details.

[2] See Page 10 of the Financial Statements for further details of the Company's KPI's.

[3] Where we refer to revenue from income generating operating activities this relates to the revenue of our investee companies.

[4] The Capital Subscribed on One Ordinary Share of the Company being £1.00 and thus equivalent to £0.06 in dividends per share.

[5] The dividend paid to ordinary shareholders and capital growth rate of the Company are Key Performance Indicators (KPI's).

[6] The Total Return of the Company is a KPI and an Alternative Performance Measure in accordance with International Financial Reporting Standards, The Total Return  for a given month is calculated as (Book Value Per Share (BVPS) at end of month + Dividends received during month) divided by BVPS at end of previous month. The Total Return on the YTD is then the compounded MTD Total Return for each month in the year.

[7] The Prefs are non-redeemable, except at the discretion of the Company who have the right to call back the shares after 5 years. The Prefs are convertible into the ordinary shares of the Company at a fixed ratio of 11.25.

[8] Leverage ratio = (Total CULS Debt in USD + Prefs Liability in USD) / Book Value (Total Equity) USD as of 31st December 2020

[9] https://www.oecd.org/sdd/na/gdp-growth-second-quarter-2020-oecd.htm.

[10] Using data from Bloomberg Finance LP.

[11] A measure of uncertainty around the expected returns of the S&P 500 Index

[12] Accounting for the GBP/USD exchange rate and changes in the Fair Value of the Direct Investment Portfolio. The changes in Fair Value of the Direct Investment Portfolio are allocated to Equity.

[13] 98% Confidence Interval, 700 day lookback period.

[14] Standalone VaR indicates the Value at Risk, a gauge of USD exposure, at the individual risk category level, with zero correlation applied across risk category.

[15] The Strategic Investment Portfolio is a sub-category of the Liquid Markets Portfolio. There are currently no positions held in this sub-category.

[16] The Direct Investment Portfolio comprises the Company's Private Investments (Investees) held directly by APQ Global Limited or via a wholly owned subsidiary of APQ Global Limited. See the Note 15 of the Financial Statements for further details.

[17] Where we refer to revenue from income generating operating activities this relates to the revenue of our investee companies.

[18]See Note 15

23Normal (Poor) economic conditions are as stated in the Stress Testing section above. There are no planned acquisitions or disposals in the Direct Investment Portfolio during the period.

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