TIDMTAU
RNS Number : 8903A
Tau Capital PLC
17 September 2018
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 +44 (0) 1624 681250
Philip Scales
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 2016 Variance Variance
Audited US$000's US$000's %
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 GBP6 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:
Materiality $54,000 (2016: $214,800)
Basis for determining materiality 3% of Equity
Rationale for the benchmark applied The entity current holds
one investment which they are attempting to dispose. The
net asset value of the entity was therefore considered the
key performance indicator.
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 31 Dec
2017 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 GBP6 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:
Principal investment
Name Country of incorporation 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:
Principal investment
Name Country of incorporation 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 Fair value Fair Valuation Significant unobservable Relationship
assets as at 31 value techniques input of unobservable
December hierarchy and key inputs to
2017 inputs fair value
Investment 100% of Level Estimated Tau SPV 1 also holds The higher
in subsidiaries investments 3 recovery an investment in an unlisted the valuation
in direct value private company valued of investments
and indirect at US$1,100,000 as at in unlisted
subsidiaries: 31 December 2017. The private
US$2,566,593 private company valuation companies,
(2016: is based on actual transaction the higher
US$7,533,445) terms, including binding the fair
agreements with third value.
parties for the purchase
of private equity less
an estimate of the related
costs.
--------------- ----------- ------------ -------------------------------- -----------------
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 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 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 GBP48,000 during 2017 (31 December 2016: GBP GBP42,000).
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
GBP35,000 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 GBP25,000 (31
December 2016: GBP36,000).
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 Financial Cash & cash Other assets
assets liabilities equivalents & liabilities Total
US$ US$ US$ US$ 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 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)
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:
Financial Cash & cash Other assets Effect on
assets equivalents & liabilities profit &
% change US$ US$ US$ 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:
Financial Cash & cash Other assets Effect on
assets equivalents & liabilities 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.
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$6,000,000) which
represents 60.3% (31 December 2016: 83.8%) of the Company's net
assets. These investments are considered to be illiquid, as there
is no active market for the purchase and sale of these
investments.
The table below analyses the Company's financial liabilities as
at 31 December 2017 and 31 December 2016 into relevant maturity
groupings based on the remaining period at the date of the
Statement of Financial Position to the contractual maturity date.
The amounts in the table are the contractual undiscounted cash
flows. Balances due within 12 months equal their carrying balances
as the impact of discounting is not significant.
Less than 1
As at 31 December 2017: month 1-6 months
US$ US$
Accounts payable and other expenses (90,132) -
Loan from subsidiaries (849,594) -
(939,726) -
------------ -----------
As at 31 December 2016:
Less than 1
month 1-6 Months
US$ 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GGUCPBUPRGRC
(END) Dow Jones Newswires
September 17, 2018 02:00 ET (06:00 GMT)
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