17 Sep 2018 07:00
17 September 2018
TAU CAPITAL PLC
(the "Company" or "Tau")
Final Results
Tau Capital plc and its subsidiaries ("Tau" or the "Group"), today announces its financial results for the year to 31 December 2017.
A copy of the Company's annual report and accounts for the year to 31 December 2017 (the "Annual Report and Accounts") will be available from the Company's website, www.taucapitalplc.com, shortly.
Trading in the Company's ordinary shares will remain suspended on AIM pending the posting of the Annual Report and Accounts to shareholders. A further announcement regarding the posting of the Annual Report and Accounts will be made in due course.
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 |
+44 203 328 5656
|
| Peterhouse Corporate Finance Limited (Joint-Broker) Lucy Williams / Heena Karani |
+44 207 469 0933 |
Chairman's Statement
During the year the Board has continued to try and achieve a sale of its remaining investment, Stopharm LLC ("Stopharm"). Stopharm is a Kazakh company engaged in wholesale pharmaceutical distribution.
Whilst no offers for the Stopharm investment were received by 31 December 2017, on 25 August 2018 Tau SPV 1 Cooperatief W.A. ("TAU SPV") entered into a conditional Share Purchase Agreement ("SPA") to sell its 40.35% holding in Stopharm for a gross consideration of Kazakhstan Tenge 443.85 million (equivalent to approximately US$ 1.33 million).
The sale is subject to bank approval, approval of the Company's shareholders, waiver of pre-emption rights by the participants in Stopharm, and regulatory approvals in Kazakhstan. The SPA includes a Long Stop date of 24 October being 60 days from the date of signing. The Company will also be convening an extraordinary general meeting in due course to obtain shareholder approval for the sale and to approve an amendment to the investing policy of the Company.
The adjusted carrying value of Stopharm in these accounts is US$ 1.1 million, being the gross consideration contained in the SPA executed on 25 August 2018 net of estimated selling expenses and foreign exchange movements, further details of which can be found in note 4. This represents an impairment of approximately US$ 4.9 million to the previous carrying value of Stopharm of US$ 6 million, as contained in the Company's interim results for the six months ended 30 June 2017 as reported on 29 September 2017.
The asset has effectively been up for sale since 2012 and other than an offer announced on 29 September 2014 which never progressed, and an expression of interest announced on 30 June 2016, there have been no other offers.
After a promising year in 2016, Stopharm has not performed as well in 2017 and this has contributed to the Board's decision mentioned earlier. The key statistics of Stopharm are shown below.
Stopharm LLP
Financial Results for the year ended 31 December 2017
Stopharm's reporting currency is the Kazakhstan Tenge. During 2017, Stopharm earned revenues equivalent to US$114 million (2016: US$128 million) which was an 11% decrease on the prior year. US$101 million cost of sales (2016: US$112 million) resulted in a reduced gross profit margin of 11% (2016: 12%). Earnings before interest, tax, depreciation and amortization not including foreign exchange gains and losses ("EBITDA") declined from US$4.4 million to US$2.3 million representing a 32% decrease for the year.
| 31 Dec 2017 Audited US$000's | 31 Dec 2016Audited US$000's | VarianceUS$000's | Variance% |
Revenue | 114,123 | 127,561 | (13,438) | (10.3%) |
EBITDA | 2,294 | 4,425 | (1,431) | (32.3%) |
Interest on loans | (2,682) | (2,740) | 58 | (2.1%) |
Corporate Tax expense | (95) | (462) | (367) | (79.5%) |
Net Profit | 138 | 1,105 | (968) | (87.5%) |
Working capital
Notwithstanding the Company's careful control of operating costs, the cash reserves of Tau Capital Plc (the "Company") continue to reduce. At the financial year end the Company and its subsidiaries had cash reserves of US$0.8 million with annual expenditure continuing to run at approximately US$0.49 million.
Other
The Directors' Report has further details of the status of the Company once the sale of the Stopharm holding has been successfully completed.
I would like to thank all Shareholders for their support and patience these last few years.
Philip Lambert
Chairman
14 September 2018
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 2017.
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. The Company's ordinary shares were admitted to AIM on 3 May 2007.
On 25 July 2012, following the approval by shareholders, 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.
On 25 August 2018, a Company subsidiary executed a conditional agreement for the sale of its remaining investment (see note 4 and note 15).
Other than the conditional disposal of its remaining investment, subsequent to the financial year end 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 investment they held at the financial reporting date are disclosed in note 4.
Results and dividends
The Company's results for the financial year ended 31 December 2017 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 2017 (31 December 2016: US$ Nil), leaving a loss of US$5,336,713 (31 December 2016: US$601,460 loss) to be transferred from reserves.
Subsequent Events
On 25 August 2018, the Company's subsidiary Tau SPV 1 Cooperatief W.A. ("TAU SPV") entered into a Share Purchase Agreement ("SPA") to sell its 40.35% holding in of Stopharm LLP ("Stopharm") for a gross consideration of Kazakhstan Tenge 443.85 million (approximately US$ 1.33 million), see note 15.
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. While a SPA for the sale of Stopharm has been executed, the Conditions Precedent need to be completed before Financial Close occurs. No final decision has been made by the Board in relation to the winding down of the Company, therefore the Company is still considered a going concern by the Board.
Following the completion of the sale of Stopharm, the Company will no longer be classified as an investing company and will be classified as an AIM Rule 15 cash shell and as such will be required to make an acquisition or acquisitions which constitutes a reverse takeover under AIM Rule 14 (including seeking re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from completion of the Disposal or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least £6 million) failing which, the Company's ordinary shares would then be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM would be cancelled six months from the date of suspension should the reason for the suspension not have been rectified.
The sale of the Stopharm holding is conditional, inter alia, on approval of the Company's shareholders. If the relevant shareholder resolution is not passed at the forthcoming Extraordinary General Meeting of the Company, the Board will seek the cancellation of the admission of the Company's ordinary shares to trading on AIM followed by an orderly liquidation of the Company and the return all available cash to shareholders.
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 2017 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
14 September 2018
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
Opinion |
| |
In our opinion the financial statements: · give a true and fair view of the state of the company's affairs as at 31 December 2017 and of its loss for the year then ended; · have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and · have been prepared in accordance with the requirements of Isle of Man Companies Act 2006.
We have audited the financial statements of Tau Capital plc (the 'Company') which comprise: · the statement of comprehensive income; · the statement of financial position; · the statement of changes in equity; · the cash flow statement; and · the related notes 1 to 15.
The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union. |
| |
Basis for opinion | ||
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report.
We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. | ||
Material uncertainty relating to going concern | ||
We draw attention to note 3 (n) in the financial statements, which indicates that the Company's indirect subsidiary has yet to sell its investment in Stopharm. The Directors have accepted a recent market offer of $1.3 million on the 25 August 2018 from a potential buyer, subject to certain conditons being met. 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.
The following procedures were performed to assess the Company's going concern; § We obtained Tau Capital PLC's cash flow projection up until September 2019, and obtained the basis of the estimated outflows. We obtained bank statements to support the cash position used in preparing the cash flow forecasts. § We tested the clerical accuracy/assessment of the sophistication of the model used to prepare the forecasts. We obtained documents supporting projected expenses and determine that they are reasonable in line with current year actual incurred expenses. § We performed an assessment of the historical accuracy of forecasts prepared by management including amount of headroom in the forecasts (cash). § We made inquiry into specific projected expenses with material variance.
As stated in note 3(n), these events or conditions, along with the other matters as set forth in note 3(n) to the financial statements, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter. | ||
Summary of our audit approach | ||
Key audit matters The key audit matters that we identified in the current year were: · Valuation of investment in subsidiaries · Going Concern (see material uncertainty relating to going concern section) | ||
Materiality The materiality that we used in the current year was $54,000 which was determined on the basis of 3% of Equity. | ||
Scoping The entity consists of a subsidiary and indirect subsidiary which holds a level 3 investment. We have identified the group and performed risk assessment to identify areas of risk. Procedures were tailored to address these risks. | ||
Significant changes in our approach None noted | ||
Key audit matters |
| |
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the material uncertainty relating to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.
Valuation of investments in subsidiaries |
| |
Key audit matter description The entity holds one investment through an indirect subsidiary. The investment is not listed and classified as a level 3 investment. Since 2012 management have actively sought to dispose of the investment, with the price being determined by an internal valuation model.
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 investment owned by those subsidiaries. Following an agreement to sell the last remaining investment post year-end, as detailed in Note 4, management have valued the investment at $1,100,000 based on the agreed sales price post year end, net of costs.
The investment accounts for 93% of the total assets of the Company.
In making their determination to use the post year-end sales price as being equivalent to fair value, management have had to exercise judgement as to whether the sales price agreed in August 2018 was equivalent to fair value as at 31 December 2017 and there is hence a risk that this judgement is not appropriate and hence that the valuation as at 31 December 2017 does not accurately represent fair value.
|
| |
How the scope of our audit responded to the key audit matter An assessment of the design and implementation of the controls over the valuation of the investment was performed. An understanding of the valuation methodology, underlying data, estimates and assumptions was obtained and further corroborated through supporting evidence.
We have reviewed the sales agreement dated 25 August 2018 and challenged the assumption of using the sales price as the basis for the fair value at 31 December 2017. We assessed the costs associated with the sale and the foreign exchange rate used to convert the sales price to USD.
We considered the adequacy of the disclosure made in note 4 to the financial statements concerning the valuation of the investment in subsidiaries, particularly as regards to the valuation uncertainty. |
| |
Key observations The fair value of this investment disclosed in the financial statements for the indirect subsidiary as at 31 December 2017 appears to be reasonable and in line with the International Private Equity & Venture Capitalist Association valuation guidelines. |
| |
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.
|
| ||||
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
We agreed with the Directors that we would report to them all audit differences in excess of $54,000 (2016: $214,800), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Directors on disclosure matters that we identified when assessing the overall presentation of the financial statements. |
|
| |||
An overview of the scope of our audit | |
The audit was scoped by obtaining an understanding of the entity and its environment, including internal controls and assessing the risks of material misstatement.
As the entity is an investment entity we conducted the audit through direct communication with the service provider. Assessment of the service provider was performed including design and implementation of internal controls over the financial reporting process.
Other information | |
The Directors are responsible for the other information. The other information comprises the information included in the annual report including the titles of the other information, other than the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in respect of these matters. |
|
Responsibilities of Directors | |
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, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. | |
Auditor's responsibilities for the audit of the financial statements | |
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report. | |
Use of our report
This report is made solely to the Company's members, as a body, in accordance with Section 80C of the 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. |
Report on other legal and regulatory requirements
Matters on which we are required to report by exception |
Adequacy of explanations received and accounting records Under the Companies Act 2006 we are required to report to you if, in our opinion: · we have not received all the information and explanations we require for our audit; or · adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or · the financial statements are not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. |
Directors' remuneration Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors' remuneration have not been made. We have nothing to report in respect of this matter.
|
Deloitte LLP
Isle of Man
Statement of Comprehensive Income
|
|
| Year ended |
| Year ended |
|
|
| 31 Dec 2017 |
| 31 Dec 2016 |
| Note |
| US$ |
| US$ |
Investment income |
|
|
|
|
|
Interest income |
|
| 7 |
| 12 |
Net loss on financial assets and liabilities |
|
|
|
|
|
at fair value through profit or loss | 4 |
| (4,966,852) |
| (76,303) |
Total operating loss |
|
| (4,966,845) |
| (76,291) |
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Operating expenses | 8 |
| (369,868) |
| (525,169) |
|
|
|
|
|
|
Total comprehensive loss for the year |
|
|
|
|
|
attributable to the shareholders |
|
| (5,336,713) |
| (601,460) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share | 14 |
| ($0.11) |
| ($0.01) |
All results derive from continuing operations.
In both the current and prior years, there was no other comprehensive income other than that dealt with above.
The accompanying notes form an integral part of these financial statements.
Statement of Financial Position
|
|
|
|
|
|
|
|
| As at |
| As at |
|
|
| 31 Dec 2017 |
| 31 Dec 2016 |
| Note |
| US$ |
| US$ |
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Investment in subsidiaries | 4 |
| 2,566,593 |
| 7,533,445 |
Loans to subsidiaries | 6 |
| 111,574 |
| 64,658 |
Debtors and prepayments |
|
| 15,143 |
| 15,030 |
Cash |
|
| 69,784 |
| 91,347 |
Total assets |
|
| 2,763,094 |
| 7,704,480 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Creditors and accruals |
|
| (90,133) |
| (108,875) |
Loan from subsidiaries | 6 |
| (849,594) |
| (435,525) |
Total liabilities |
|
| (939,727) |
| (544,400) |
|
|
|
|
|
|
Total current and net assets |
|
| 1,823,367 |
| 7,160,080 |
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
Share capital | 5 |
| 976,209 |
| 976,209 |
Distributable reserves |
|
| 847,158 |
| 6,183,871 |
Total shareholders' equity |
|
| 1,823,367 |
| 7,160,080 |
|
|
|
|
|
|
Net Asset Value per share |
|
| $0.04 |
| $0.15 |
Approved by the Board of Directors and signed on its behalf by:
_________________ ___________________
Philip Scales Philip Lambert
14 September 2018
The accompanying notes form an integral part of these financial statements.
Statement of Changes in Equity for the year ended 31 December 2017
|
|
|
|
| Share | Distributable |
|
| capital | reserves | Total |
| US$ | US$ | US$ |
Balance at 31 December 2016 | 976,209 | 6,183,871 | 7,160,080 |
|
|
|
|
Total comprehensive loss for the year | - | (5,336,713) | (5,336,713) |
Balance at 31 December 2017 | 976,209 | 847,158 | 1,823,367 |
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 |
| |||
|
|
|
|
| |||
The accompanying notes form an integral part of these financial statements.
Statement of Cash Flows
|
|
|
|
|
|
| Year ended |
| Year ended |
|
| 31 Dec 2017 |
| 31 Dec 2016 |
|
| US$ |
| US$ |
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
Loss for the year |
| (5,336,713) |
| (601,460) |
|
|
|
|
|
Adjustments to reconcile loss for the year to net cash provided by operating activities |
|
|
|
|
(Increase)/decrease in debtors and prepayments |
| (113) |
| 34,439 |
Decrease in investment in subsidiaries |
| 4,966,852 |
| 76,303 |
(Decrease)/increase in creditors and accruals |
| (18,743) |
| 5,018 |
Decrease in loans to subsidiaries |
| 64,659 |
| 44,041 |
Increase in loans from subsidiaries |
| 302,495 |
| 435,525 |
Net cash used in operating activities |
| (21,563) |
| (6,134) |
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
| (21,563) |
| (6,134) |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
at the beginning of year |
| 91,347 |
| 97,481 |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
at the end of year |
| 69,784 |
| 91,347 |
|
|
|
|
|
The accompanying notes form an integral part of these financial statements.
Notes to the Financial Statements
for the year ended 31 December 2017
1. General
Tau Capital plc (the "Company") is a closed-ended investment fund incorporated and 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's ordinary shares are admitted to trading 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., is the intermediate parent of Tau SPV 1 Cooperatief WA ("Tau SPV 1"), which holds one private investment (31 December 2016: one) as at the year end date.
The Company disposed of all public equity investments during 2014.
On 25 August 2018 it executed a conditional agreement for the sale of its remaining investment (see note 4 and note 15).
2. Adoption of new and revised Standards
New standards adopted for the year
The Company has adopted the following standards:
· Annual improvements to IFRSs 2014 - 2016 cycle
· Disclosure initiative (amendments to IAS 7)
Standards not yet applied
At the date of authorisation of these financial statements, the following Standards and Interpretations which were relevant to the Company but 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):
· IFRS 9 Financial Instruments
IFRS 9 Financial Instruments
The standard replaces IAS 39 Financial Instruments: Recognition and Measurement. It includes revised guidance on classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39.
IFRS 9 will be effective for accounting periods beginning on or after 1 January 2018. The Company does not plan to adopt this standard early.
Based on an initial assessment, this standard is not expected to have a material impact on the Company. This is because the financial instruments currently measured at fair value through profit or loss ("FVTPL") will continue to be measured at FVTPL under IFRS 9 and those currently measured at amortised cost will continue to be measured at amortised cost under IFRS 9.
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.
3. Accounting Policies
The significant accounting policies and estimation techniques adopted by the Company for the year ended 31 December 2017 are consistent with those adopted by the Company for the annual financial statements for the year ended 31 December 2016.
a) Basis of Preparation
The financial statements are presented in US dollars. The functional currency is also the US dollar.
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 the Company 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 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.
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 at amortised cost. These include loans to subsidiaries, debtors and prepayments and cash. Debtors and prepayments are classified as current assets if receipt is due within one year or less. If not, they are presented as non-current assets.
Financial liabilities at amortised cost. These include loans from subsidiaries and creditors and accruals. These are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Financial assets designated at fair value through profit or loss. These are financial instruments, including investment in subsidiaries and their performance is evaluated on a fair value basis in accordance with the Company's documented investment strategy.
ii) Recognition
All financial assets and liabilities are recognised on the trade date, which is the date that the Company commits to purchase the asset.
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 amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus the principal repayment, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment. Current assets and liabilities are valued at their nominal values due to their short-term duration.
If a quoted market price is not available, 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 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.
f) 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.
g) Expenses
All expenses 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 that the results of the Company subsidiaries and private equity investment are presented in US dollars.
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) Share capital
The Company's founder shares are classified as equity in accordance with the Company's Articles of Association.
Ordinary shares are classified as equity. Incremental costs attributable to the issue of new Shares are shown in equity as a deduction from the proceeds.
l) 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.
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.
m) 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 Directors have considered the resolutions passed at the 2012 AGM in relation to an orderly disposal of investments.
Subsequent to the financial year end a conditional Sale and Purchase Agreement ("SPA") for the sale of Stopharm LLP ("Stopharm") has been executed, the Conditions Precedent need to be completed before the Financial Close of the sale occurs. Following Financial Close, the Company's direct and indirect subsidiaries may be disposed of.
Following the completion of the sale of Stopharm, the Company will no longer be classified as an investing company and will be classified as an AIM Rule 15 cash shell and as such will be required to make an acquisition or acquisitions which constitutes a reverse takeover under AIM Rule 14 (including seeking re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from completion of the Disposal or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least £6 million) failing which, the Company's ordinary shares would then be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM would be cancelled six months from the date of suspension should the reason for the suspension not have been rectified.
The sale of the Stopharm holding is conditional, inter alia, on approval of the Company's shareholders. If the relevant shareholder resolution is not passed at the forthcoming Extraordinary General Meeting of the Company, the Board will seek the cancellation of the admission of the Company's ordinary shares to trading on AIM followed by an orderly liquidation of the Company and the return all available cash to shareholders.
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
The Company holds the following investments in subsidiaries:
Name | Country of incorporation | Principal investment activity | Ownership interest |
Tau (Cayman) L.P. | Cayman Islands | Investment holding | 100% |
Tau Cayman Ltd | Cayman Islands | Administration | 100% |
The subsidiary company Tau (Cayman) L.P. in turn holds the following investment in subsidiary:
Name | Country of incorporation | Principal investment activity | Ownership interest |
Tau SPV 1 | The Netherlands | Investment holding | 99% |
The fair values of the subsidiaries of the Company at 31 December 2017 and 31 December 2016 were as follows:
| 31 December 2017 | 31 December 2016 |
| US$ | US$ |
Tau (Cayman) L.P. (including its subsidiary TAU SPV 1) | 2,566,593 | 7,533,445 |
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
All financial instruments recorded at fair value for the current and prior financial year were measured using non-market observable inputs (level 3).
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 2017 and 31 December 2016:
| 31 Dec 2017 | 31 Dec 2016 |
| US$ | US$ |
Opening balance at beginning of year | 7,533,445 | 7,609,748 |
Net loss on financial assets and liabilities at a fair value through profit or loss | (4,966,852) | (76,303) |
Closing balance at end of year | 2,566,593 | 7,533,445 |
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 (2016: 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 assets | Fair value as at 31 December 2017 | Fair value hierarchy | Valuation techniques and key inputs | Significant unobservable input | Relationship of unobservable inputs to fair value |
Investment in subsidiaries | 100% of investments in direct and indirect subsidiaries: US$2,566,593 (2016: US$7,533,445) | Level 3 | Estimated recovery value | Tau SPV 1 also holds an investment in an unlisted private company valued at US$1,100,000 as at 31 December 2017. The private company valuation is based on actual transaction terms, including binding agreements with third parties for the purchase of private equity less an estimate of the related costs. | The higher the valuation of investments in unlisted private companies, the higher the fair value. |
If the value of unlisted private company investments held by Tau SPV 1 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$110,000 (2016: US$600,000). Tau Cayman Limited has no assets or liabilities and a fair value of US$ Nil (2016: US$ Nil). A sensitivity analysis to changes in assumptions has therefore not been prepared in respect of the investment in Tau Cayman Limited.
Tau (Cayman) L.P.
The fair value of Tau (Cayman) L.P. is based on its net assets including its investment in Tau SPV 1 as follows:
|
| 31 Dec 2017 | 31 Dec 2016 |
|
| US$ | US$ |
Cash |
| 756,461 | 1,193,597 |
Debtors and prepayments |
| 5,950 | 3,200 |
Loan to group |
| 849,594 | 435,524 |
Investment in subsidiary - Tau SPV 1 |
| 1,079,772 | 5,982,908 |
Total assets |
| 2,691,777 | 7,615,229 |
|
|
|
|
Loan from group |
| (125,184) | (81,784) |
Total liabilities |
| (125,184) | (81,784) |
Total net assets |
| 2,566,593 | 7,533,445 |
The total net asset of Tau (Cayman) L.P. include a loan to the Company at US$849,594 (2016: US$435,524) for the payment of operating expenses of the Company. The loan has no fixed payment terms and is payable on demand (note 6). It is the expectation of the Company that the loan will only be repaid by the Company on the completion of the sale of the investment in Stopharm held by Tau SPV1 when cash guaranteed by the sale will enable the Company to settle all outstanding loans before distribution to shareholders take place.
Tau SPV 1- direct subsidiary of Tau (Cayman) L.P. and indirect subsidiary of the Company
The fair value of Tau SPV 1 is based on its net assets as follows:
|
| 31 Dec 2017 | 31 Dec 2016 |
|
| US$ | US$ |
Cash |
| 3,425 | - |
Financial assets at fair value through profit or loss |
| 1,100,000 | 6,000,000 |
Total assets |
| 1,103,425 | 6,000,000 |
|
|
|
|
Accounts payable and accrued expenses |
| (23,652) | (17,092) |
Total liabilities |
| (23,652) | (17,092) |
|
|
|
|
Total net assets |
| 1,079,722 | 5,982,908 |
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 2016: one) investment - Stopharm, which is detailed below.
Stopharm
Stopharm is a wholesale pharmaceuticals distributor operating in Kazakhstan of which Tau SPV1 holds 40.35 per cent of the equity.
The investment in Stopharm has been valued at 31 December 2017 at US$1,100,000 based on estimated net proceeds from the sale of the 40.35% equity interest in Stopharm held by Tau SPV 1 on 25 August 2018. The valuation of Stopharm is dependent on non-market observable inputs, which include, the change in the value of Stopharm between the financial reporting date and the date the SPA was executed and estimated sales expenses, a degree of judgement is required in estimating fair values. It is reasonably possible that the executed SPA on which the valuation is based may not materialise or 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 £3,502,000 comprising 350,199,998 ordinary shares of £0.01 each and 2 founder shares of £0.01 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 Ordinary shares in issue as at 31 December 2017 and 31 December 2016 were 48,984,680, the Founder shares in issue as at 31 December 2017 and 31 December 2016 were 2.
6. Loans to and from subsidiaries
As at 31 December 2017, the Company had received from Tau (Cayman) L.P. an amount of US$849,594 (as at December 2016 the Company had been loaned to Tau (Cayman) L.P.: US$435,525) for the payment of day to day expenses. The loan is interest free, unsecured and repayable on demand.
As at 31 December 2017, the Company had loaned Tau (Cayman) L.P. an amount of US$111,574 (December 2016: US$64,658) for the payment day to day expenses of TAU SPV 1. The loan is interest free, unsecured and repayable on demand.
As at 31 December 2017, Tau (Cayman) L.P. had loaned Tau SPV 1 an amount of US$13,609 (December 2016: US$17,126) for the payment of day to day expenses. 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 Company's administrator.
As at 31 December 2017, Philip Lambert, a Director of the Company, held 101,201 ordinary shares in the Company (31 December 2016, Philip Lambert held 101,201 ordinary shares in the Company).
As at 31 December 2017, 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 2016: 12,684,221). Global Asset Tracking, a company to whom Richard Horlick provides consultancy services, received fees of GBP £48,000 during 2017 (31 December 2016: GBP £42,000).
As at 31 December 2017, Terence Mahony, a Director of the Company, held 102,424 ordinary shares (31 December 2016: 102,424).
As at 31 December 2017 and 31 December 2016, both Spencer House Capital Management LLP and Compass Asset Management Ltd held one founder share each.
8. Operating expenses
Included within operating expenses are the Directors' remuneration. Directors' remuneration for the year ended 31 December 2017 amounted to US$81,297 (31 December 2016: US$82,279) as shown below.
| 31 Dec 2017 | 31 Dec 2016 |
| US$ | US$ |
Philip Lambert | 39,365 | 39,805 |
Terence Mahony | 26,186 | 26,613 |
Philip Scales | 15,746 | 15,861 |
Total Directors' remuneration | 81,297 | 82,279 |
During the year ended 31 December 2017, none of the Directors received any additional cash or non-cash benefits (year ended 31 December 2016: nil) and no contributions were paid by the Company to a pension scheme on behalf of the Directors (year ended 31 December 2016: nil). During the year ended 31 December 2017, there were no awards of share options to Directors (year ended 31 December 2016: nil) and there were no awards to the Directors under any other long-term incentive plans (year ended 31 December 2016: nil). No share option schemes or other long-term incentive plans were in effect during the periods.
Administrator fees
The Administrator is entitled to receive a fixed fee of £35,000 per annum payable quarterly in arrears, 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 2017 amounted to US$91,539 (31 December 2016: US$91,020).
Audit fees
The auditors are entitled to an audit fee of £25,000 (31 December 2016: £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% (2016: 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 Board of Directors assess the size and type of risks the Company is exposed to.
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.
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 externally 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.
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 2017 the Company's exposure to foreign currency was as follows:
| Financial assets US$ | Financial liabilities US$ | Cash & cash equivalents US$ | Other assets & liabilities US$ |
Total US$ |
Euro | - | - | 841 | - | 841 |
Pound sterling | 15,143 | - | 66,116 | (50,700) | 30,559 |
| 15,143 | - | 66,957 | (50,700) | 31,400 |
At December 2016 the Company's exposure to foreign currency was as follows:
| Financial assets US$ | Financial liabilities US$ | Cash & cash equivalents US$ | Other assets & liabilities US$ |
Total US$ |
Euro | - | - | 733 | (6,088) | (5,355) |
Pound sterling | 15,030 | - | 81,921 | (428,736) | (331,785) |
| 15,030 | - | 82,654 | (434,824) | (337,140) |
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. 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 2017:
|
% change | Financial assets US$ | Cash & cash equivalents US$ | Other assets & liabilities US$ | Effect on profit & net assets US$ |
Euro | 10% increase | - | 84 | - | 84 |
Pound sterling | 10% increase | 1,514 | 6,612 | (5,070) | 3,056 |
|
| 1,514 | 6,696 | (5,070) | 3,140 |
As at 31 December 2016:
|
% change | Financial assets US$ | Cash & cash equivalents US$ | Other assets & liabilities US$ | Effect on profit & 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.
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.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.
The Company tries to ensure that as far as possible, it will always have sufficient liquidity to meet its liabilities when due, under both normal and stress conditions, without incurring unacceptable losses or risking damage to the Company's reputation or financial integrity.
The Company's liquidity is managed on a daily basis by the Administrator.
As at 31 December 2017, 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$1,100,000 (31 December 2016: US$6,000,000) which represents 60.3% (31 December 2016: 83.8%) of the Company's net assets. These investments are considered to be illiquid, as there is no active market for the purchase and sale of these investments.
The table below analyses the Company's financial liabilities as at 31 December 2017 and 31 December 2016 into relevant maturity groupings based on the remaining period at the date of the Statement of Financial Position to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
As at 31 December 2017: | Less than 1 month | 1-6 months |
| US$ | US$ |
Accounts payable and other expenses | (90,132) | - |
Loan from subsidiaries | (849,594) | - |
| (939,726) | - |
As at 31 December 2016:
| Less than 1 month US$ | 1-6 Months US$ |
Accounts payable and other expenses | (108,875) | - |
Loan from subsidiaries | (435,525) | - |
| (544,400) | - |
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
This is the risk that the fair value of financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to the individual investment or its issuer or factors affecting the market in general. The Company is exposed to other price risk in respect of Stopharm (see note 4 for further details).
11. Exchange Rates
The following exchange rates were used to translate assets and liabilities into US dollars at 31 December 2017 and 31 December 2016:
|
| 31 Dec 2017 | 31 Dec 2016 |
Euro |
| 1.20046 | 1.1674 |
Pound sterling |
| 1.35127 | 1.2226 |
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 2017 and 31 December 2016.
13. Commitments and Contingent Liabilities
As at 31 December 2017, the Company has no commitments and contingent liabilities (31 December 2016: US$ Nil).
14. 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 Dec 2017 | 31 Dec 2016 |
|
|
|
Net loss attributable to shareholders | (US$5,336,713) | (US$601,460) |
|
|
|
Weighted average number of ordinary shares in issue | 48,984,680 | 48,984,680 |
|
|
|
Basic loss per share | ($0.11) | ($0.01) |
There is no difference between the fully diluted earnings per share and basic earnings per share.
15. Events After the Date of the Statement of Financial Position
On 25 August 2018, the Company's subsidiary TAU SPV 1 entered into a conditional SPA to sell its remaining investment, a 40.35% holding in Stopharm, to Aldar Orazbekovich Beisembayev (the "Buyer"), a citizen of the Republic of Kazakhstan, for a gross consideration of Kazakhstan Tenge 443.85 million (approximately US$ 1,330,000).
The aggregate net proceeds from the sale, after allowing for transaction and other costs, are estimated to be approximately US$ 1,100,000 and will be paid up to Tau SPV 1. The sale is subject to bank approval, approval of the Company's shareholders, waiver of pre-emption rights by the participants in Stopharm, and regulatory approvals in Kazakhstan which are expected to take up to 60 days to obtain.
The SPA contains an undertaking from the Buyer, should the Buyer transfer the holding in Stopharm within 12 months of the closing date of the SPA, to pay to TAU SPV 1 25% of any excess consideration received by the Buyer over the purchase price received by TAU SPV 1 pursuant to the SPA.
The SPA includes a Long Stop date of 24 October being 60 days from the date of signing. The Company will also be convening an extraordinary general meeting in due course to obtain shareholder approval for the sale and to approve an amendment to the investing policy of the Company.