TIDMTAU
RNS Number : 6312J
Tau Capital PLC
30 June 2017
30 June 2017
TAU CAPITAL PLC
(the "Company" or "Tau")
Final Results
Tau Capital plc and its subsidiaries ("Tau" or the "Group"),
today announces its results for the year to 31 December 2016.
A copy of the annual report and accounts will be posted to
shareholders today and will be available from the Company's
website, www.taucapitalplc.com, shortly.
For further information, please contact:
FIM Capital Limited
Philip Scales +44 (0) 1624 681250
Allenby Capital Limited (Nominated Adviser and Joint-Broker)
John Depasquale / Alex Brearley / Richard Short +44 203 328 5656
Peterhouse Corporate Finance Limited (Joint-Broker)
Lucy Williams / Heena Karani +44 207 469 0933
Chairman's Statement
The main objective of Tau is to effect the sale of the Company's
one remaining investment, its stake in Stopharm LLP ("Stopharm").
Stopharm is continuing to make steady progress and the recent
strengthening of the Kazakhstan Tenge has enhanced its financial
performance.
A brief extract from Stopharm's 2016 audited financial
statements is detailed below. The Board believes that the holding
can be sold and consequently consider that it is prudent to
continue to carry the value of the investment at US$6 million.
During the year the Board has been in dialogue with the majority
stakeholder(s) in Stopharm and it is hoped that by aligning all
parties' interests, a more satisfactory sale can be achieved in the
longer term.
Expenses of the Company continue to be monitored closely and,
where possible, cost savings are made. The Company and its
subsidiaries have cash reserves amounting to US$1.3M at the year
end, which, with a projected operational cash flow for the current
financial year amounting to US$400K, provide the Company with
adequate working capital. On that basis, the Board consider the
Company to be a Going Concern.
The relationship with Capital Gate Holdings LLP, which had been
trying to achieve a sale of Stopharm, has been terminated.
Stopharm LLP
Financial results for the year ended 31 December 2016
During the year ended 31 December 2016 Stopharm earned revenues
of US$127M (2015: US$109M) which was a 16 per cent increase on the
prior year, whilst increased cost of sales resulted in a reduced
gross profit margin of 12 per cent (2015: 22 per cent). Earnings
before interest, tax, depreciation and amortization ("EBITDA") have
grown US$1.4M to US$4.4M representing a 47 per cent increase for
the year.
31 Dec 2016 Audited US$000's 31 Dec 2015
Audited US$000's Variance Variance
US$000's %
Revenue 127,561 109,730 17,921 16.3%
EBITDA 4,425 3,010 1,415 47.1%
Interest on loans (2,650) (2,277) (373) (16.4%)
Corporate tax expense (462) (249) (213) (85.5%)
Net profit 1,108 227 881 388.1%
It is the view of the Board that it is in the best interests of
shareholders to allow Stopharm to continue to develop their
business further which will hopefully improve its value and create
the opportunity for our stake in Stopharm to be realised. The Board
is of the opinion that the interests of shareholders are best
served by continuing to actively pursue the sale of the Company's
interest in Stopharm either directly or through other
intermediaries. The Board also believes that, although achieving
the best possible value from a sale will inevitably take longer to
achieve under the current market circumstances, there is no
alternative which serves the interests of shareholders better.
There remains uncertainty both as to the timing and the proceeds
from a sale. The Board will continue to make every effort to
dispose of this investment as soon as reasonably possible.
Thank you again for your continuing support.
Philip Lambert
Chairman
29 June 2017
Directors' Report
The Directors have pleasure in presenting the annual report and
audited financial statements of Tau Capital Plc (the "Company") for
the year ended 31 December 2016.
Principal activity and incorporation
The Company was incorporated in the Isle of Man on 3 April 2007
for the purpose of investing in public and private businesses that
are established in, operating in or have exposure to Kazakhstan and
neighbouring countries. It was admitted to the Alternative
Investment Market of the London Stock Exchange on 3 May 2007.
On 25 July 2012, the Company restated its investing policy and
committed to realising assets and distributing net proceeds as soon
as practicable to shareholders, subject to retaining sufficient
cash to meet current and future liabilities.
The Company disposed of all public equity investments during
2014, and is actively pursuing the disposal of other investments
via its direct and indirect subsidiaries.
Other than the transactions mentioned above, there were no
changes to the nature of the Company's business, its direct and
indirect subsidiaries or in the classes of business in which the
Company has an interest. Details of the Company's direct and
indirect subsidiaries and the private equity investments which they
hold at the balance sheet date are disclosed in note 4.
Results and dividends
The Company's results for the financial year ended 31 December
2016 are set out in the Statement of Comprehensive Income.
A review of the Company's activities is set out in the
Chairman's Statement.
The Directors do not recommend the payment of a final dividend
for the year ended 31 December 2016 (31 December 2015: US$ Nil),
leaving a loss of US$601,385, representing approximately a 173 per
cent decrease compared to the same period in 2015 (31 December
2015: US$1,643,406 loss) to be transferred from reserves (31
December 2015: transfer from reserves).
Going concern
The Company's business activities, together with the factors
likely to affect its future development, performance and positions
are set out in the Chairman's Report. Note 3 and note 10 to the
financial statements include the Company's objectives and policies,
its financial risk management objectives, details of its financial
instruments and hedging activities and its exposures to market
risk, credit risk and liquidity risk.
The Directors have considered forecast administration expenses
and liquid financial resources available to the Company post year
end, and after making enquires, have a reasonable expectation that
the Company has adequate financial resources to meet liabilities as
they fall due and to continue in operational existence for the
foreseeable future.
The Directors have considered the resolutions passed at the 2012
AGM in relation to an orderly disposal of investments, and after
consideration are of the opinion that, notwithstanding the time
scales pertaining to the disposal of investments which require
disposal of the private investments by the Company's direct and
indirect subsidiaries within 24 months, the fact that these
disposals have not yet been completed by the Company's direct and
indirect subsidiaries and the fact that no final decision has been
made by the Board in relation to the winding down of the Company,
the Company is still a going concern.
Following the completion of the disposal of private investments
by the Company's direct and indirect subsidiaries, and subsequent
return of the majority of cash reserves to shareholders, the
Directors believe that there may be value in the Company as a
quoted cash shell company and are seeking a disposal of the cash
shell as a going concern as an alternative to a liquidation to
maximise value for shareholders. The Board expects a positive
outcome from future discussions and on that basis considers the
Company to be a going concern. However, if the outcome of future
discussions is not successful the Board may need to consider an
orderly wind down of the Company.
The above conditions therefore indicate the existence of a
material uncertainty which may cast significant doubt about the
Company's ability to continue as a going concern and therefore the
Company may be unable to realise assets and/or discharge
liabilities in the normal course of business. These financial
statements do not include any adjustment that would result if the
Company were unable to continue as a going concern.
Accordingly, the Directors continue to adopt the going concern
basis in preparing the financial statements.
Directors
The Directors of the Company during the year and to the date of
this report were as follows:
Appointed
Philip Scales 3 April 2007
Philip Lambert 11 April 2007
Terence Mahony 24 July 2012
Directors' interests in the shares of the Company are detailed
in note 7.
Company Secretary
The Secretary of the Company during the year ended 31 December
2016 and to the date of this report was Philip Scales.
Auditors
Deloitte LLP, being eligible, has indicated its willingness to
continue in office.
Approved on behalf of the Board of Directors
_________________ ___________________
Philip Scales Philip Lambert
29 June 2017
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and financial statements in accordance with applicable Isle of Man
law and regulations.
Isle of Man company law requires the Directors to prepare
financial statements for each financial year. Under that law the
Directors have elected to prepare the financial statements in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union. Under company law, the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period.
In preparing these financial statements, International Accounting
Standard 1 requires that Directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Company's financial position and financial
performance; and
-- make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Isle of Man Companies Act
2006. They are also responsible for the system of internal control,
for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the Isle of Man governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Independent Auditor's Report to the Members of Tau Capital
Plc
We have audited the financial statements of Tau Capital Plc
("the Company") for the year ended 31 December 2016, which comprise
the Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Changes in Equity, the Statement of Cash
Flows and the related notes 1 to 16. The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRS) as
adopted by the European Union.
This report is made solely to the Company's members, as a body,
in accordance with Section 80(c) of the Isle of Man Companies Act
2006. Our audit work has been undertaken so that we might state to
the Company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Statement of Directors'
Responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
(APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the Directors; and the
overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited
financial statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 December 2016 and of its loss for the year ended;
and
-- have been properly prepared in accordance with IFRSs as
adopted by the European Union.
-- have been properly prepared in accordance with the Isle of Man Companies Act 2006
Emphasis of Matter - valuation of investment in subsidiaries
In forming our opinion on the financial statements, which is not
modified, in this regard, we have considered the adequacy of the
disclosure made in note 4 to the financial statements concerning
the valuation of the investment in subsidiaries. The Directors of
the Company have estimated the total fair value of the direct and
indirect subsidiaries based on their net assets, which are affected
by the valuation of the underlying private investments owned by
those subsidiaries. As of 31 December 2016, the private investment
held by the indirect subsidiary has been valued at US$6,000,000 in
accordance with the valuation techniques detailed in note 4. In the
absence of readily available market values, the value has been
estimated by the Directors based on their knowledge of the
investment and the market conditions. Due to the inherent
uncertainty of the valuation, the estimated values may differ
materially from the value that would have been realised had a
disposal of the private investment been made between a willing
buyer and seller as at 31 December 2016, which in turn would have
an impact on the valuation of the Company's investment in
subsidiaries. It is not possible to quantify such
uncertainties.
Emphasis of Matter - Going Concern
Also in forming our opinion on the financial statements, which
is not modified, in this regard, we have considered the adequacy of
the disclosure made in note 3(p) to the financial statements
concerning the Company's ability to continue as a going
concern.
The Company's indirect subsidiary has yet to sell its investment
in Stopharm. As detailed in note 3, the Board of Directors of the
Company's indirect subsidiary are currently in discussions with
other parties about this sale and expect a positive outcome from
those discussions. The Directors of the Company are also discussing
future trading opportunities for the Company, including continuing
as a quoted shell company. Should such discussions not be
successful and a formal offer not be secured, an orderly wind down
of the Company may be necessary.
These conditions, as more fully explained in note 3, indicate
the existence of a material uncertainty which may cast significant
doubt about the Company's ability to continue as a going concern.
The financial statements do not include the adjustments that would
result if the Company was unable to continue as a going
concern.
Deloitte LLP
Douglas
Isle of Man
29 June 2017
Statement of Comprehensive Income
Year ended Year ended
31 Dec 31 Dec
2016 2015
Note US$ US$
Investment income
Interest income 12 17
Net loss on financial assets
and liabilities
at fair value through profit
or loss 4 (76,303) (1,044,966)
----------- ------------
Total operating loss (76,291) (1,044,949)
----------- ------------
Expenses
Operating expenses 8 (525,169) (598,457)
----------- ------------
Total comprehensive loss
for the year
----------- ------------
attributable to the shareholders (601,460) (1,643,406)
----------- ------------
Basic and diluted loss per
share 15 ($0.01) ($0.03)
All results derive from continuing operations.
In both the current and prior years, there was no other
comprehensive income other than that dealt with above.
Statement of Financial Position
As at As at
31 Dec 2016 31 Dec 2015
Note US$ US$
Assets
Current assets
Investment in subsidiaries 4 7,533,445 7,609,748
Loans to subsidiaries 64,658 108,699
Debtors and prepayments 15,030 49,469
Cash 91,347 97,481
------------ ------------
Total assets 7,704,480 7,865,397
------------ ------------
Liabilities
Current liabilities
Creditors and accruals (108,875) (103,857)
Loan from subsidiaries (435,525) -
------------ ------------
Total liabilities (544,400) (103,857)
------------ ------------
Total current and net assets 7,160,080 7,761,540
============ ============
Shareholders' equity
Share capital 5 976,209 976,209
Distributable reserves 6,183,871 6,785,331
------------ ------------
Total shareholders' equity 7,160,080 7,761,540
============ ============
Net Asset Value per share $0.15 $0.18
Approved by the Board of Directors and signed on its behalf
by:
_________________ ___________________
Philip Scales Philip Lambert
29 June 2017
Statement of Changes in Equity for the year ended 31 December
2016
Share Distributable
capital reserves Total
US$ US$ US$
Balance at 31 December 2015 976,209 6,785,331 7,761,540
Total comprehensive loss for the
year - (601,460) (601,460)
Balance at 31 December 2016 976,209 6,183,871 7,160,080
======== ============== ==========
Statement of Changes in Equity for the year ended 31 December
2015
Share Distributable
capital reserves Total
US$ US$ US$
Balance at 31 December 2014 976,209 8,428,737 9,404,946
Total comprehensive loss for the
year - (1,643,406) (1,643,406)
---------- -------------- ------------
Balance at 31 December 2015 976,209 6,785,331 7,761,540
==========
Statement of Cash Flows
Year ended Year ended
31 Dec 2016 31 Dec 2015
US$ US$
Cash flows from operating activities
Loss for the year (601,460) (1,643,406)
Adjustments to reconcile loss for
the year to net cash provided by
operating activities
Decrease in debtors and prepayments 34,439 1,345
Decrease in investment in subsidiaries 76,303 1,044,966
Increase/(decrease) in creditors
and accruals 5,018 (21,794)
Decrease in loans to subsidiaries 44,041 -
Increase in loans from subsidiaries 435,525 886
------------ ------------
Net cash used in operating activities (6,134) (618,003)
------------ ------------
Net decrease in cash and cash equivalents (6,134) (618,003)
Cash and cash equivalents
at the beginning of year 97,481 715,484
Cash and cash equivalents
------------ ------------
at the end of year 91,347 97,481
============ ============
Notes to the Financial Statements
for the year ended 31 December 2016
1. General
Tau Capital plc (the "Company") is a closed-ended investment
fund incorporated which was domiciled in the Isle of Man on 3 April
2007. The Company was incorporated under the Isle of Man Companies
Acts 1931-2004. Following approval at the AGM held on 24 July 2012,
the Company was re-registered under the Isle of Man Companies Act
2006 with number 008604V. The Company was originally established to
allow investors the opportunity to realise returns through
investing through the direct and indirect subsidiaries in both
public and private businesses that are established in, operating in
or have exposure to Kazakhstan. Although Kazakhstan focused, the
Company also sought investment opportunities in the Kyrgyz
Republic, Uzbekistan, Turkmenistan, Tajikistan, Mongolia and Russia
(the "Investment Countries"). The Company is listed on AIM, a
market of that name operated by London Stock Exchange. The Company
has no employees.
The Company's investments are held by direct and indirect
subsidiaries. Tau (Cayman) L.P., a direct subsidiary, holds one
private investment as at the year end date (31 December 2015: one).
Tau SPV 1 Cooperatief W.A., an indirect subsidiary, holds one
private investment (31 December 2015: one) as at the year end
date.
The Company is currently implementing the investing policies
agreed at the 2012 AGM and has not made any new investments during
the period under review.
2. Adoption of new and revised Standards
New standards adopted for the period
The Company has adopted the following standards:
-- IFRS 10 Consolidated financial statements
-- IFRS 11 Joint arrangements
-- IFRS 12 Disclosure of interesting in other entities
-- IAS 1 (amendments) Disclosure initiative
-- IAS 27 Consolidated and separate financial statements
-- IAS 28 Investments in Associates and Joint Ventures
-- Annual improvements to IFRS: 2012 -2014 cycles
Standards not yet applied
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet effective
(and in some cases had not yet been adopted by the EU):
-- IAS 12 (amendments) Income Taxes (TBC)
-- Annual improvements to IFRS: 2014-2016 cycle (TBC)
-- IFRS 15 Revenue from contracts with customers (1 January 2018)
-- IFRS 9 Financial Instruments (1January 2018)
-- IFRIC Interpretation 21 Levies (TBC)
The Directors do not expect that the adoption of the Standards
and Interpretations listed above will have a material impact on the
financial statements of the Company in future periods. Beyond the
information above, it is not practicable to provide a reasonable
estimate of the effect of these standards until a detailed review
has been completed.
3. Accounting Policies
The significant accounting policies and estimation techniques
adopted by the Company for the year ended 31 December 2016 are
consistent with those adopted by the Company for the annual
financial statements for the year ended 31 December 2015, other
than as described below in relation to "Adoption of Investment
Entities".
Adoption of Investment Entities
Investment Entities: Amendments to IFRS 10, IFRS 12 and IAS 27
issued in October 2012, introduced an exception to the principle
that all subsidiaries shall be consolidated. Entities are required
to apply the amendments for annual periods beginning on or after 1
January 2014. Accordingly, the Company has adopted Investment
Entities: Amendments to IFRS 10, IFRS 12 and IAS 27 in the prior
period and has adopted the amended standards in the financial
statements for the year ended 31 December 2016.
In adopting Investment Entities: Amendments to IFRS 10, IFRS 12
and IAS 27, the Company has also adopted the following standards
which are applicable for annual periods beginning on 1 January
2014:
i. IFRS 10 Consolidated Financial Statements
ii. IFRS 11 Joint arrangements
iii. IFRS 12 Disclosure of Interests in Other Entities
iv. IAS 27 Separate Financial Statements (as amended in
2011)
v. IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)
The result of the application of these standards is that the
Company meets the definition of an investment entity as defined by
IFRS 10. The Company is now required, throughout the current period
and all comparative periods presented, to apply the exception to
consolidate its subsidiaries in accordance with IFRS 10 and IAS 27
(as amended) and to present separate financial statements as its
only financial statements.
In accordance with IFRS 10 as amended by Investment Entities:
Amendments to IFRS 10, IFRS 12 and IAS 27, the Company shall not
consolidate its subsidiaries or apply IFRS 3, Business
Combinations, when it obtains control of another entity. Instead
the Company will measure its investment in its subsidiaries at fair
value through profit or loss in accordance with IAS 39, Financial
Instruments: Recognition and Measurement.
IFRS 10 and IFRS 12 require certain disclosures regarding the
status as an investment entity and regarding the Company's interest
in its subsidiaries. These disclosures have been made in note
4.
On adoption of the revised standards and assessment that the
Company is an investment entity, the total fair value of the
subsidiaries that ceased to be consolidated was US$7,533,445 (2015:
US$7,609,748) (see note 4 for further detail). No gain or loss was
recognized by the Company on adoption of Investment Entities:
Amendments to IFRS 10, IFRS 12 and IAS 27.
The adoption of IFRS 11 and IAS 28 (as amended) has not had a
material impact on the financial statements of the Company.
a) Basis of Preparation
The financial statements are presented in US dollars. The
functional currency is also the US dollar.
The Statement of Financial Position presents assets and
liabilities in decreasing order of liquidity and does not
distinguish between current and non-current items. All of the
Company's assets and liabilities are held for the purpose of being
traded or are expected to be realised within one year with the
exception of the Company's investment in direct and indirect
subsidiaries which own the private investments. All references to
net assets throughout this document refer to net assets
attributable to holders of ordinary shares unless otherwise
stated.
b) Statement of compliance
The annual financial statements of Tau Capital plc are prepared
in accordance with International Financial Reporting Standards
("IFRS"), as adopted by the European Union and applicable legal and
regulatory requirements of Isle of Man law and the AIM Rules of the
London Stock Exchange.
c) Segment reporting
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Company that are
regularly reviewed by the Board of Directors in order to allocate
resources to the segment and assess its performance.
The investment strategy of the Company, through its direct and
indirect subsidiaries is focused on entities that operate in or
have an exposure to Kazakhstan and the Investment Countries, which
represent one geographical segment. Accordingly, the Directors are
of the opinion that the Company is engaged in a single segment of
business, being investment business, in one geographical area,
being Kazakhstan and the Investment Countries.
d) Taxation
Current tax is provided at amounts expected to be paid (or
recovered) using the tax rates and laws that have been enacted, or
substantially enacted at balance sheet date.
e) Financial instruments
i) Classification
The Company designates its assets and liabilities into the
category below in accordance with IAS 39 "Financial instruments:
Recognition and Measurement".
Financial assets and liabilities at fair value through profit or
loss
The category of financial assets and liabilities at fair value
through profit or loss is further sub-divided into:
Financial assets and liabilities held for trading. These include
equities, debt instruments, OTC options, futures and liabilities
from short sales of financial instruments. These instruments are
acquired or incurred principally for the purpose of generating a
profit from a short-term fluctuation in price. Derivatives are
categorised as held for trading, as the Company does not designate
any derivatives as hedges for hedge accounting purposes as
described under IAS 39.
Financial assets and liabilities designated at fair value
through profit or loss at inception. These are financial
instruments, including investment in subsidiaries, that are not
classified as held for trading but are managed, and their
performance is evaluated on a fair value basis in accordance with
the Company's documented investment strategy.
ii) Recognition
All regular way purchases and sales of financial instruments are
recognised on the trade date, which is the date that the Company
commits to purchase the asset. Regular way purchases or sales are
purchases or sales of financial instruments that require delivery
of assets within the period generally established by regulation or
convention in the market place. Realised gains and losses on
disposals of financial instruments are calculated using the
first-in-first-out ("FIFO") method.
iii) Initial measurement
Financial instruments categorised at fair value through profit
or loss, are recognised initially at fair value, with transaction
costs for such instruments being recognised directly in the
Statement of Comprehensive Income.
iv) Subsequent measurement
After initial measurement, the Company measures financial
instruments which are classified as at fair value through profit or
loss at their fair values. Fair value is the amount for which an
asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm's length transaction. The
fair value of financial instruments is based on their quoted market
prices on a recognised exchange or sourced from a reputable
broker/counterparty in the case of non-exchange traded instruments
at the date of the Statement of Financial Position without any
deduction for estimated future selling costs. Financial assets are
priced at their current bid prices, while financial liabilities are
priced at their current offer prices.
If a quoted market price is not available on a recognised stock
exchange or from a reputable broker/counterparty, the fair value of
the financial instruments may be estimated by the Directors using
valuation techniques, including use of recent arm's length market
transactions, reference to the current fair value of another
instrument that is substantially the same, discounted cash flow
techniques, option pricing models or any other valuation technique
that provides a reliable estimate of prices obtained in actual
market transactions.
v) De-recognition
The Company de-recognises a financial asset when the contractual
rights to the cash flows from the financial asset expire or it
transfers the financial asset and the transfer qualifies for
de-recognition in accordance with IAS 39. The Company derecognises
a financial liability when the obligation specified in the contract
is discharged, cancelled or expires.
e) Interest income and expense
Interest income and interest expense are recognised on an
accruals basis, using the effective interest method, in line with
contractual terms. Interest is accrued on a daily basis. The
effective interest method is a method of calculating the amortised
cost of a debt instrument and of allocating interest income over
the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash flows through the expected
life of a debt instrument, to the net carrying amount on initial
recognition.
f) Dividend income and expense
Dividend income and expense are recognised in the Statement of
Comprehensive Income on the dates on which the relevant securities
are listed as "ex-dividend" or where they are declared and ratified
by the relevant subsidiary shareholders. Dividend income is shown
gross of any non-recoverable withholding taxes, which are disclosed
separately in the Statement of Comprehensive Income, and net of any
tax credits.
g) Expenses
All expenses, including performance fees and management fees,
are recognised in the Statement of Comprehensive Income on an
accruals basis.
h) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount
reported in the Statement of Financial Position when there is a
legally enforceable right to offset the recognised amounts and
there is an intention to settle on a net basis, or realise the
asset and settle the liability simultaneously.
i) Foreign currency translation
i) Functional and presentation currency
Items included in the Company's financial statements are
measured and presented using the currency of the primary economic
environment in which it operates (the "functional currency"). This
is the US dollar, which reflects the Company's primary activity of
investing in US dollar subsidiaries which ultimately invest in US
dollar securities and derivatives.
ii) Foreign currency transactions
Monetary assets and liabilities and financial instruments
categorised as at fair value through profit or loss, denominated in
currencies other than the US dollar are translated into US dollars
at the closing rates of exchange at the date of the Statement of
Financial Position. Transactions during the year are translated at
the rate of exchange prevailing on the date of the transaction.
Foreign currency transaction gains and losses are included in
realised and unrealised gains and losses on financial assets and
liabilities designated at fair value through profit or loss.
j) Cash and cash equivalents
Cash and cash equivalents comprise of cash balances with a
maturity date of up to three months from the date of acquisition.
They are short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to
insignificant changes in value and are held for the purpose of
meeting short-term cash commitments rather than for investment or
other purposes.
k) Amounts due from brokers
Amounts due from and to brokers represent receivables for
securities sold and payables for securities purchased that have
been contracted for but not yet settled or delivered on the date of
the Statement of Financial Position.
l) Share capital
The Company's founder shares are classified as equity in
accordance with the Company's Articles of Association.
m) Share-based payments
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. The cost of equity-settled
transactions is recognised, together with a corresponding increase
in equity, from the date that they are issued. The equity-settled
transactions were fully vested on the date of their issue.
For cash-settled share-based payments, a liability equal to the
portion of the goods or services received is recognised at the fair
value of the liability determined at each date of the Statement of
Financial Position with any changes in fair value recognised in
profit or loss for the year.
n) Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the Company's accounting
policies
In assessing whether it meets the definition of an investment
entity, the Company must consider whether it has the typical
characteristics of an investment entity. The Company has been
deemed to meet the definition of an investment entity per IFRS 10
Consolidated Financial Statements as the following conditions
exist:
-- The Company obtains funds from one or more investors for the
purpose of providing those investors with investment management
services;
-- The Company commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income or both;
-- The Company measures and evaluates the performance of all of
its investments on a fair value basis; and
-- The Company's investors are not a related party of the entity.
o) Critical accounting judgements and key sources of estimation uncertainty (continued)
Key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates and
assumptions. It also requires the Board of Directors to exercise
its judgement in the process of applying the Company's accounting
policies. Key estimates, assumptions and judgements that have
significant risk of causing material adjustment to the carrying
amount of assets and liabilities within the next financial year are
outlined below:
Fair value of investment in subsidiaries
Where the fair value of financial assets and financial
liabilities in the Company's subsidiaries recorded net as an
investment in subsidiaries in the Statement of Financial Position,
cannot be derived from active markets, they are determined using a
variety of valuation techniques. Where applicable, investments in
private investments held by the subsidiaries (direct and indirect)
are valued according to the International Private Equity and
Venture Capital Valuation Guidelines December 2012. Valuation
techniques may include the use of mathematical models. The input to
these models is taken from observable markets where possible, but
where this is not feasible, a degree of judgement is required in
establishing fair values. It is reasonably possible that outcomes
within the next financial year that are different from the
assumptions adopted by the Board of Directors of the Company's
direct and indirect subsidiaries and the Company could require a
material adjustment to the carrying amount of the private
investments. Further details concerning the uncertainties
surrounding the valuation of private investments can be found in
note 4.
o) Going concern
The Company's business activities, together with the factors
likely to affect its future development, performance and positions
are set out in the Chairman's Statement.
The Company has adequate financial resources. The Directors have
considered the forecast administration expenses and liquid
financial resources available to it and these forecasts indicate
that the Company has sufficient cash resources to meet its ongoing
operating expenses into the foreseeable future. The Company, and
its direct and indirect subsidiaries, have cash reserves amounting
to US$1.3M at the year end, and the projected operational cash
outflows for the coming financial year amount to US$400K, which
provides the Company with a minimum of 3 years working capital.
The Directors have considered the resolutions passed at the 2012
AGM in relation to an orderly disposal of investments, and after
consideration are of the opinion that, notwithstanding the time
scales pertaining to the disposal of investments which require
disposal of the private investments by the Company's direct and
indirect subsidiaries within 24 months, the fact that these
disposals have not yet been completed by the Company's direct and
indirect subsidiaries and the fact that no final decision has been
made by the Board in relation to the winding down of the Company,
the Company is still a going concern.
Following the completion of the disposal of private investments
by the Company's direct and indirect subsidiaries, and subsequent
return of the majority of cash reserves to shareholders, the
Directors believe that there may be value in the Company as a
quoted cash shell company and are seeking a disposal of the cash
shell as a going concern as an alternative to a liquidation to
maximise value for shareholders. The Board expects a positive
outcome from future discussions and on that basis considers the
Company to be a going concern. However, if the outcome of future
discussions is not successful the Board may need to consider an
orderly wind down of the Company.
The above conditions therefore indicate the existence of a
material uncertainty which may cast significant doubt about the
Company's ability to continue as a going concern and therefore the
Company may be unable to realise assets and/or discharge
liabilities in the normal course of business. These financial
statements do not include any adjustment that would result if the
Company were unable to continue as a going concern.
Accordingly, the Directors continue to adopt the going concern
basis in preparing the financial statements.
4. Investment in Subsidiaries
Direct Subsidiaries
The Company holds the following investments in subsidiaries:
Country Principal investment Proportion of
Name of incorporation activity ownership interest
---------------------- -----------------------
Tau (Cayman) L.P. Cayman Islands Investment holding 100%
Tau Cayman Ltd Cayman Islands Administration 100%
------------------- ---------------------- ------------------------- -----------------------
Indirect Subsidiaries
The subsidiary company Tau (Cayman) L.P. in turn holds the
following investment in subsidiary:
Country Principal investment Proportion of
Name of incorporation activity ownership interest
----------------------- -------------------------
Tau SPV 1 Cooperatief
W.A. The Netherlands Investment holding 99%
----------------------- ---------------------- ------------------------- -----------------------
The fair values of the subsidiaries of the Company at 31
December 2016 and 31 December 2015 were as follows:
31 December 31 December
2016 2015
US$ US$
Tau (Cayman) L.P. (including
its subsidiary TAU SPV 1
Cooperatief W.A.) 7,533,445 7,609,748
Tau Cayman Limited - -
The Company classifies its investment in subsidiaries in
accordance with IAS 39 - Financial Instruments: Recognition and
Measurement and values its investment in subsidiaries in accordance
with IFRS 13 - Fair Value Measurements ("IFRS 13"). IFRS 13 defines
fair value and establishes a framework for measuring fair
value.
Financial instruments included in each category are as
follows:
Level 1 - Quoted market price
Level 2 - Market observable inputs
Level 3 - Non-market observable inputs
The following tables show an analysis of financial instruments
recorded at fair value, between those whose fair value is based on
quoted market prices (level 1); those involving valuation
techniques where all the model inputs are observable in the market
(level 2); and those where the valuation technique involves the use
of non-market observable inputs (level 3).
As at 31 December 2016, the breakdown was as follows:
Level Level Level 3 Total
1 2
US$ US$ US$ US$
Financial Assets
- Designated at fair value
through profit or loss - - 7,533,445 7,533,445
-------- -------- ------------- -------------
- - 7,533,445 7,533,445
-------- ---------------------------------------- ------------- -------------
As at 31 December 2015, the breakdown was as follows:
Level Level Level 3 Total
1 2
US$ US$ US$ US$
Financial Assets
- Designated at fair value
through profit or loss - - 7,609,748 7,609,748
------- -------- ------------- -------------
- - 7,609,748 7,609,748
------- ---------------------------------------- ------------- -------------
The following is a reconciliation of the movement in financial
assets for which non-market observable inputs (level 3) were used
to determine fair value as at 31 December 2016 and 31 December
2015:
31 December 31 December
2016 2015
US$ US$
Opening balance at beginning
of year 7,609,748 8,654,714
Net unrealised loss on investments (76,303) (1,044,966)
--------------- ---------------
Closing balance at end of
year 7,533,445 7,609,748
--------------- ---------------
Net unrealised loss on investments is recognised as investment
income in the Statement of Comprehensive Income. There were no
transfers out of level 3 during the year (2015: none).
Fair value of the Company's level 3 financial assets that are
measured at fair value on a recurring basis
All of the Company's financial assets are measured at fair value
at the end of each reporting period. The following table gives
information about how the fair values of these financial assets are
determined (in particular, the valuation techniques and inputs
used).
Financial Fair value Fair Valuation Significant unobservable Relationship
assets as at 31 value techniques input of unobservable
December hierarchy and key inputs to
2016 inputs fair value
--------------- ----------------- ----------- --------------- -------------------------- -----------------
Investment 100% investment Level Net realisable Tau (Cayman) L.P. The higher
in Subsidiary in Tau (Cayman) 3 assets holds the valuation
L.P.: approach an investment in of investments
US$7,533,445 a in unlisted
(2015: subsidiary TAU private
US$7,609,748) SPV 1 companies,
Cooperatief W.A. the higher
("Tau the fair
SPV 1") which is value.
an
indirect subsidiary
of the
Company. Tau SPV
1
also holds an investment
in an unlisted
private
company valued
at
US$6,000,000 as
at 31 December
2016. The net
assets are predominantly
based on the valuation
of
an underlying private
company investment,
which is based
on
unobservable inputs
as
detailed below.
--------------- ----------------- ----------- --------------- -------------------------- -----------------
If the value of unlisted private company investments held by Tau
SPV 1 Cooperatief W.A., the subsidiary of Tau (Cayman) L.P. and
indirect subsidiary of the Company, were 10 per cent higher/lower
while all the other variables were held constant, the carrying
amount of the investment held would increase/decrease by US$600,000
(2015: US$600,000).
Tau Cayman Limited has no assets or liabilities and a fair value
of US$ Nil (2015: US$ Nil). A sensitivity to changes in assumptions
has therefore not been prepared in respect of the investment in Tau
Cayman Limited.
Tau (Cayman) L.P.
As noted above, the fair value of Tau (Cayman) L.P. is based on
the net assets of Tau (Cayman) L.P. As at 31 December 2016 and 31
December 2015, the assets and liabilities of Tau (Cayman) L.P. were
as follows:
31 Dec 2016 31 Dec 2015
US$ US$
Cash 1,193,597 1,757,255
Debtors and prepayments 3,200 -
Loan to group 435,524 -
Investment in subsidiary - Tau
SPV 1 5,982,908 5,960,477
Total assets 7,615,229 7,717,732
Loan from group (81,784) (107,984)
Total liabilities (81,784) (107,984)
Total net assets 7,533,445 7,609,748
------------ ------------
The total net asset of Tau (Cayman) L.P. include a loan to the
Company at $435,524 (2015: $nil) for the payment of operating
expenses of the company. The loan has no fixed payment terms and is
payable on demand (note 6). It is the expectation of the Company
that the loan will only be repaid by the company on disposal of the
investment in Stopharm LLP held by Tau SPV1 Cooperatief W.A. when
cash guaranteed by the sale will enable the Company to settle all
outstanding loans before distribution to shareholders take
place.
Tau SPV 1 Cooperatief W.A. - direct subsidiary of Tau (Cayman)
L.P. and indirect subsidiary of the Company
The fair value of Tau SPV 1 Cooperatief W.A.("Tau SPV 1") is
based on the net assets of Tau SPV 1. As at 31 December 2016 and 31
December 2015, the assets and liabilities of Tau SPV 1 were as
follows:
31 Dec 2016 31 Dec 2015
US$ US$
Cash - 891
Financial assets at fair value
through profit or loss 6,000,000 6,000,000
Total assets 6,000,000 6,000,891
Accounts payable and accrued expenses (17,092) (21,699)
Loan to group company - (18,000)
Loan from parent - (715)
------------ ------------
Total liabilities (17,092) (40,414)
Total net assets 5,982,908 5,960,477
------------ ------------
At the year end, the investment portfolio of financial assets at
fair value through profit or loss held by the direct and indirect
subsidiaries of the Company comprised one (31 December 2015: one)
investment as follows:
As at As at
31 Dec 31 Dec
2016 2015
Investment Held by
type Note US$ US$
Stopharm LLP Private investment TAU SPV 1 (iii) 6,000,000 6,000,000
Total 6,000,000 6,000,000
---------- ----------
The directors of the direct and indirect subsidiaries and the
Company have valued private investments held by the direct and
indirect subsidiaries of the Company based on their knowledge and
using the guidance laid down in the International Private Equity
and Venture Capital Valuation Guidelines (December 2012)
("IPEVCVG"). The following table gives information about the fair
values of these financial assets and in particular, the valuation
techniques and inputs used, as at 31 December 2016.
Financial Fair value as at 31 Fair value Valuation techniques
assets December 2016 hierarchy and key inputs
Private equity 40.35 per cent equity Level 3 Multiple of earnings
investments investment in Stopharm
LLP engaged in wholesale
pharmaceutical distribution:
US$6,000,000
Stopharm LLP ("Stopharm")
Stopharm is a wholesale pharmaceuticals distributor operating in
Kazakhstan. On 1 September 2010, the Company's subsidiary Tau
(Cayman) L.P. announced the closing of a US$21.5 million investment
in Stopharm comprising a 24.00% equity stake in Stopharm acquired
for US$12.8 million and a fully secured convertible bridge loan of
US$8.7 million provided to one of the shareholders of Stopharm with
implied equity on conversion representing an additional 16.35%
stake. The conversion into equity of this loan was subject to
approval by the Anti-Monopoly Committee of the Republic of
Kazakhstan which was received on 25 November 2011. The conversion
subsequently took place on 27 December 2011.
The investment in Stopharm LLP has been valued at 31 December
2016 at $6,000,000 (31 December 2015: $6,000,000) based on an
enterprise value. This enterprise value is calculated on a multiple
range of 6 to 16 times EBITDA. Based upon corporate transactions in
Central Europe, a multiple of 12 was selected to calculate the
enterprise value as at 31 December 2015. A further liquidity
discount of 10% was then applied to give a final valuation of
$6,000,000. The value has been estimated by the Directors of the
indirect subsidiary in the absence of readily available market
values. The Directors of the Company agree with these estimates. As
at 31 December 2016, the directors have evaluated the financial
performance and Net Asset Value of Stopharm LLP and consider the
enterprise value of $6,000,000 to still be appropriate. Due to the
uncertainty arising from the lack of comparable listed companies or
recent transactions involving similar businesses on which to
determine the multiple applied against earnings used as a basis for
the valuation, the estimated values may differ materially from the
value that would have been realised had a disposal of the private
investment been made between a willing buyer and seller as at 31
December 2016, which in turn would have an impact on the valuation
of the Company's investment in subsidiaries. It is not possible to
quantify such uncertainties.
In relation to the investment held by Tau SPV 1 in Stopharm LLP,
valued at US$6,000,000 (31 December 2015: $6,000,000), where the
valuation of investment is dependent on non-market observable
inputs, in this instance an indicative offer from various parties,
a degree of judgement is required in estimating fair values. It is
reasonably possible that outcomes within the next financial year
that are different from the assumptions adopted by the Board of
Directors of Tau SPV 1 and the Company could require a material
adjustment to the carrying amount of the asset affected.
Accordingly, the valuation of the underlying private investment is
subject to significant inherent uncertainty. This in turn creates
significant uncertainty in relation to the value of the Company's
investment in subsidiaries, as Tau (Cayman) L.P. owns Tau SPV
1.
5. Share Capital
The authorised share capital of the Company is GBP3,502,000
comprising 350,199,998 ordinary shares of GBP0.01 each and 2
founder shares of GBP0.01 each. The founder shares carry identical
rights and privileges to the ordinary shares of the Company which
includes a right to receive all dividends and other distributions
declared, made or paid. The share capital of the Company has been
allocated, called up and fully paid. The shares in issue as at 31
December 2016 and 31 December 2015 were as follows:
Ordinary
Shares in Founder Shares
issue in issue
As at 31 December
2016 48,984,680 2
As at 31 December
2015 48,984,680 2
6. Loans to and from subsidiaries
As at 31 December 2016, the Company had received from Tau
(Cayman) L.P. an amount of US$435,525 (as at December 2015 the
Company had loaned to Tau (Cayman) L.P.: US$107,984) for the
payment of day to day expenses. The loan is interest free,
unsecured and repayable on demand.
As at 31 December 2016, the Company had loaned Tau SPV 1
Cooperatief W.A. an amount of US$ Nil (December 2015: US$715) for
the payment of day to day expenses. The loan is interest free,
unsecured and repayable on demand.
As at 31 December 2016, the Company had loaned Tau (Cayman) L.P.
an amount of US$64,658 (December 2015: US$ Nil) for the payment day
to day expenses of TAU SPV 1 Cooperatief W.A. The loan is interest
free, unsecured and repayable on demand.
7. Related Party Items
Philip Scales, a Director of the Company, is the deputy chairman
of FIM Capital Limited, the administrator.
Capital Gate Holdings LLP was deemed to be a related party as it
is wholly owned by Nurgul Zhaukeyeva who also owns Capital Gate
Securities Limited, which acts as our Investment Advisor and is
represented by Nurgul's husband Greg Vojack in advising the
Company.
As at 31 December 2016, Philip Lambert, a Director of the
Company, held 101,201 ordinary shares in the Company (31 December
2015, Philip Lambert held 101,201 ordinary shares in the
Company).
As at 31 December 2016, Richard Horlick, a previous Director of
the Company who was retained after his retirement on 1 January 2014
to act in a consultant capacity, held 12,684,221 ordinary shares
(31 December 2015: 12,684,221).
Global Asset Tracking, a company to whom Richard Horlick
provides consultancy services, received fees of GBP GBP42,000
during 2016 (31 December 2015: GBP GBP40,000).
As at 31 December 2016, Terence Mahony, a Director of the
Company, held 102,424 ordinary shares (31 December 2015:
102,424).
As at 31 December 2016 and 31 December 2015, both Spencer House
Capital Management LLP and Compass Asset Management Ltd held one
founder share each.
7. Related Party Items (continued)
As at 31 December 2016, the Company has received a loan from Tau
(Cayman) L.P. amounting to US$435,525 (December 2015:
US$107,984).
As at 31 December 2016, the Company had loaned Tau (Cayman) L.P.
an amount of US$64,658 (December 2015: US$ Nil).
8. Operating expenses
Included within operating expenses are the following fees:
Directors' remuneration
Directors' remuneration for the year ended 31 December 2016
amounted to US$82,279 (31 December 2015: US$93,605). Details of the
Director's fees are shown below.
As at As at
31 Dec 2016 31 Dec 2015
US$ US$
Philip Lambert 39,805 45,292
Terence Mahony 26,613 30,195
Philip Scales 15,861 18,118
Total directors remuneration 82,279 93,605
------------ ------------
Administrator fees
The Administrator is entitled to receive a fixed fee of
GBP35,000 per annum payable quarterly in arrears. As of 1 October
2013, post resignation of the sub-administrator (BNY Mellon
Investment Services (International) Ltd) on 30 September 2013, the
Administrator is also entitled to receive an additional fixed fee
of US$35,000 per annum payable quarterly in arrears for the
provision of accounting services.
The administration fee for the year ended 31 December 2016
amounted to US$91,020 (31 December 2015: US$99,333).
Audit fees
The auditors are entitled to an audit fee of GBP 36,000 (31
December 2015: GBP 36,000).
All investment management fees are borne by the direct and
indirect subsidiaries of the Company.
9. Taxation
The company is resident for tax purposes in the Isle of Man and
its profits are subject to Isle of Man Corporate Income Tax at the
current rate of 0% (2015: 0%).
10. Financial Instruments and Associated Risks
Introduction
In accordance with the Company's accounting policy for
investment in subsidiaries (note 3e) these are designated at fair
value through profit or loss.
Risk is inherent in the Company's activities but 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 Company's continuing
existence. The Company is exposed to market risk (which includes
currency risk, interest rate risk and other price risk), credit
risk and liquidity risk arising from the financial instruments it
holds.
Risk management structure
The Board of Directors is ultimately responsible for identifying
and controlling risks and it monitors risks on an ongoing basis in
relation to the direct and indirect subsidiaries investments in the
private investments.
Risk measurement and reporting system
The Company's risks are measured using a method which reflects
both the expected loss likely to arise in normal circumstances and
unexpected losses, which are an estimate of the ultimate actual
loss based on statistical models. The model makes use of the
probabilities derived from historical experience, adjusted to
reflect the economic environment.
Monitoring and controlling risks is primarily performed based on
limits established by the Board. These limits reflect the business
strategy and market environment of the Company as well as the level
of risk that the Company is willing to accept. In addition, the
Company monitors and measures the overall risk bearing capacity in
relation to the aggregate risk exposure across all risk types and
activities.
Risk mitigation
The Company has investment guidelines that set out its overall
business strategies, its tolerance for risk and its general risk
management philosophy and have established processes to monitor and
control economic hedging transactions in a timely and accurate
manner. The Company uses derivatives and other instruments as
required for trading purposes and in connection with its risk
management activities.
Excessive risk concentration
Concentration arises when a number of counterparties are engaged
in similar business activities, or activities in the same
geographic region, or have similar economic features that would
cause their ability to meet contractual obligations to be similarly
affected by changes in economic, political or other conditions.
Concentration indicates the relative sensitivity of the Company's
performance to developments affecting a particular industry or
geographical location.
Capital risk
The Company manages its capital to ensure it is able to continue
as a going concern while maximising the return to shareholders
through the optimisation of the debt and equity balance.
The capital structure of the Company consists of loans from
subsidiaries (note 6) and equity, comprising share capital (note 5)
and distribution reserves.
The Company is not subject to any eternally imposed capital
requirements.
Market risk
Market risk is the risk that the fair value, or future cash
flows of a financial instrument, will fluctuate because of changes
in market prices and includes interest rate risk, foreign currency
risk and "other price risks", such as equity and commodity
risk.
The Company's strategy on the management of investment risk is
driven by its investment objective as outlined in note 1 to the
financial statements.
Equity price and private investment risk
Equity price risk is the risk that the fair values of equities
decrease as a result of changes in the levels of equity indices and
the value of individual stocks. The equity and private investment
price risk exposure arises from the Company direct and indirect
subsidiaries investment portfolio. The Company has previously
managed this risk by investing on different stock exchanges and in
different sectors.
Price movements are influenced by, among other things, changing
supply and demand relationships, monetary and exchange control
programs, policies of governments, political and economic events,
and policies and emotions of the marketplace.
Prior to the 2012 annual general meeting, where it was agreed
that the Company would carry out an orderly disposal of
investments, the Investment Manager considered the asset allocation
of the portfolio in order to minimise risks whilst achieving the
Company's investment objectives. Prior to 2012 the Company
maintained a diversified portfolio both in terms of the number of
positions, their geographic location and industry sector.
The following table shows the breakdown by industry sector of
investments held through the Company's direct and indirect
subsidiaries as at 31 December 2016:
Financial assets Financial liabilities
at fair value at fair value
through profit through profit
or loss or loss
US$ US$
Healthcare 6,000,000 -
6,000,000 -
----------------- ----------------------
The following table shows the breakdown by industry sector of
investments held through the Company's direct and indirect
subsidiaries as at 31 December 2015:
Financial assets Financial liabilities
at fair value at fair value
through profit through profit
or loss or loss
US$ US$
Healthcare 6,000,000 -
6,000,000 -
----------------- ----------------------
Management's best estimate of the effect on net assets and
profit due to a reasonably possible change in the value of the
private investments held in the Company's direct and indirect
subsidiaries, which would in turn impact the value of the Company's
investment in subsidiaries, of a decrease of 10%, with all other
variables held constant as at 31 December 2016 is US$600,000 (2015:
$600,000) as disclosed in note 4.
Currency risk
Currency risk is the risk that the value of a financial
instrument will fluctuate due to changes in foreign exchange rates.
The Company invests in assets denominated in currencies other than
its presentation currency, the US dollar. Consequently, the Company
is exposed to risks that the exchange rate of the US dollar,
relative to other currencies, may change in a manner which has an
adverse effect on the reported value of that portion of the
Company's assets which is denominated in currencies other than the
US dollar.
The Company's overall currency risk is monitored on a quarterly
basis by the Board of Directors during Board meetings.
At 31 December 2016 the Company's exposure to foreign currency
was as follows:
Financial Financial Cash & cash Other assets
assets liabilities equivalents & liabilities Total
US$ US$ US$ US$ US$
Euro - - 733 (6,088) (5,355)
Pound sterling 15,030 - 81,921 (428,736) (331,785)
US dollar 7,598,103 - 8,693 (109,576) 7,497,220
---------- ------------- ------------- --------------- ----------
7,613,133 - 91,347 (544,000_) 7,160,080
---------- ------------- ------------- --------------- ----------
At 31 December 2015 the Company's exposure to foreign currency
was as follows:
Financial Financial Cash & cash Other assets
assets liabilities equivalents & liabilities Total
US$ US$ US$ US$ US$
Euro - - 761 - 761
Pound sterling 49,469 - 20,170 (30,112) 39,527
US dollar 7,718,447 - 76,550 (73,745) 7,721,252
---------- ------------- ------------- --------------- ----------
7,767,916 - 97,481 (103,857) 7,761,540
---------- ------------- ------------- --------------- ----------
The following analysis discloses management's best estimate of
the effect of a reasonably possible movement in currency rates
against the US dollar, with all other variables held constant on
the Statement of Comprehensive Income (due to the fair value of
currency sensitive trading monetary assets and liabilities) and the
Statement of financial Position (due to the change in fair value of
currency swaps and forward foreign exchange contracts). A negative
amount in the table reflects a potential net reduction in total
comprehensive income or net assets, while a positive amount
reflects a net potential increase as at 31 December 2016.
Financial Cash & Other assets Effect
assets cash equivalents & liabilities on profit
% change US$ US$ US$ & net assets
US$
Euro 10% increase - 73 (609) (536)
Pound sterling 10% increase 1,511 8,192 (42,874) (33,171)
1,511 8,265 (43,483) (33,707)
---------- ------------------ --------------- --------------
In practice the actual trading results may differ from this
change and the difference could be material.
The analysis below discloses management's best estimate of the
effect of a reasonably possible movement in currency rates against
the US dollar, with all other variables held constant on the
Statement of Comprehensive Income (due to the fair value of
currency sensitive trading monetary assets and liabilities) and
Statement of Financial Position (due to the change in fair value of
currency swaps and forward foreign exchange contracts). A negative
amount in the table reflects a potential net reduction in total
comprehensive income or net assets, while a positive amount
reflects a net potential increase as at 31 December 2015.
Financial Cash & Other assets Effect
assets cash equivalents & liabilities on profit
% change US$ US$ US$ & net assets
US$
Euro 10% increase - 76 - 76
Pound sterling 10% increase 4,947 2,017 (3,011) 3,953
---------- ------------------ --------------- --------------
4,497 2,093 (3,011) 4,029
---------- ------------------ --------------- --------------
In practice the actual trading results may differ from this
change and the difference could be material.
Interest rate risk
The majority of the Company's financial assets and liabilities
are non-interest bearing. As a result, the Company is not subject
to significant amounts of risk due to fluctuations in the
prevailing levels of market interest rates. Any excess cash and
cash equivalents are invested at short-term market interest
rates.
The Company's interest rate risk is monitored on a quarterly
basis by the Board of Directors during Board meetings.
Liquidity risk
Kazakhstan and the Investment Countries have less liquid and
developed securities markets than the United States of America and
Western Europe.
Given that organised securities markets in Kazakhstan and the
Investment Countries have been established relatively recently, the
procedures for settlement, clearing and registration of securities
transactions may be subject to legal uncertainties, technical
difficulties and delays. Although significant developments have
occurred in recent years, the sophisticated legal and regulatory
frameworks necessary for the efficient functioning of modern
capital markets have yet to be fully developed in Kazakhstan and
the Investment Countries. In particular, legal protections against
market manipulation and insider trading are less well developed in
Kazakhstan and the Investment Countries, and less strictly
enforced, than in the United States of America and Western European
countries, and existing laws and regulations may be applied
inconsistently with consequent irregularities in enforcement. In
addition, less information relating to the proposed target entities
and certain of the investments may be publicly available to
investors in securities issued or guaranteed by such entities than
is available to investors in entities organised in the United
States of America or Western European countries.
The Company's liquidity is managed on a daily basis by the
Administrator.
Liquidity risk (continued)
As at 31 December 2016, the Company held an investment in its
subsidiaries, which in turn held private investments and an
investment in subsidiary, which also invests in a private
investment, with an estimated total fair value of private
investments of US$6,000,000 (31 December 2015: US$6,000,000) which
represents 83.8% (31 December 2015: 77.3%) of the Company's net
assets. These investments are considered to be illiquid, as there
is no active market for the purchase and sale of these
investments.
The table below analyses the Company's financial liabilities as
at 31 December 2016 and 31 December 2015 into relevant maturity
groupings based on the remaining period at the date of the
Statement of Financial Position to the contractual maturity date.
The amounts in the table are the contractual undiscounted cash
flows. Balances due within 12 months equal their carrying balances
as the impact of discounting is not significant.
As at 31 December 2016:
Less than 1
month 1-6 months
US$ US$
Accounts payable and other expenses (108,875) -
Loan from subsidiaries (435,525) -
(544,400) -
------------ -----------
As at 31 December 2015:
Less than 1
month 1-6 Months
US$ US$
Accounts payable and other expenses (103,857) -
------------ -----------
(103,857) -
------------ -----------
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company resulting in a financial loss
to the Company. It is the Company's policy to enter into financial
instruments with a range of reputable counterparties. Therefore,
the Company does not expect to incur material credit losses on its
financial instruments.
The Company no longer holds any assets with a Prime Broker and
thus its credit risk is only in relation to holding cash and cash
equivalents.
Private investments risk
The main risks related to private investments that the Company
is exposed to through its direct and indirect subsidiaries, are
liquidity risk, credit risk and pricing risk. These risks are
correlated: since private investments are not traded in organised
markets there are no guarantees that a buyer for these investments
will materialise or repayment of loans and associated interest will
happen in line with expectations, in particular if there is an
expectation set forth in terms of investment realisation/loan
repayment. A lack of an organised market might also cause a
significant difference between the carried or expected valuation
and the actual price obtained at realisation for those investments
or the timing and method of the repayment (see note 4 for further
details).
The following exchange rates were used to translate assets and
liabilities into US dollars at 31 December 2016 and 31 December
2015:
31 Dec
31 Dec 2016 2015
Euro 1.1674 1.0856
Pound sterling 1.2226 1.4736
12. Distributions
Subject to the provisions of the Articles, the Company may by
ordinary resolution, declare that out of profits available for
distribution, in accordance with Isle of Man law, dividends be paid
to members according to their respective rights and interests in
the profits of the Company. However, no dividend shall exceed the
amount recommended by the Board. There is no fixed date on which an
entitlement to dividend arises.
No dividends were declared or paid during the year ended 31
December 2016 and 31 December 2015.
13. Soft Commissions
During the year, the Investment Managers, Investment Advisors
and connected persons have not entered into soft commission
arrangements with brokers in respect of which certain goods and
services used to support investment decision making were
received.
14. Commitments and Contingent Liabilities
As at 31 December 2016, the Company has no commitments and
contingent liabilities (31 December 2015: US$ Nil).
15. Loss per Share
Basic and diluted loss per share is calculated by dividing the
net profit or loss attributable to shareholders by the weighted
average number of ordinary shares outstanding during the year.
Year ended Year ended
31 December
31 December 2016 2015
Net loss attributable to
shareholders (US$601,460) (US$1,643,406)
Weighted average number of
ordinary shares in issue 48,984,680 48,984,680
Basic loss per share ($0.01) ($0.03)
There is no difference between the fully diluted earnings per
share and basic earnings per share.
16. Events After the Date of the Statement of Financial
Position
There has been no material adjusting and non-adjusting events
after current year end that would have a material effect on the
financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUMPQUPMGCB
(END) Dow Jones Newswires
June 30, 2017 02:00 ET (06:00 GMT)
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