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Starcrest Education The Belt & Road Limited LSE:OBOR London Ordinary Share KYG843791099 ORD 1P (DI)
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Starcrest Education The Belt & Road Final Results

09/04/2020 3:14pm

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Starcrest Education The Belt & Road

09 April 2020

9 April 2020

Starcrest Education The Belt & Road Limited

("Starcrest" or the "Company" or the "Group")

Final Results

Starcrest Education The Belt & Road Limited (LSE: OBOR), the international developer and operator of education services in Europe, is pleased to announce its audited final results for the period ended 31 December 2019.

Highlights

   --    Cash balance of GBP2,787,046 as at 31 December 2019 
   --    Loss before tax of GBP1,216,746 for the period ended 31 December 2019 

-- In September 2019, the Company signed a non-legally binding heads of terms to acquire sixty per cent. of the issued share capital of The London School of Science and Technology Limited (the "Proposed Transaction")

   --    Annual General Meeting held in May 2019 
   --    First Board meeting held in Guizhou, China in March 2019 

-- Raised equity of approximately GBP4.1 million (net proceeds of approximately GBP3.6 million) via a Subscription and successful admission to trading on the London Stock Exchange's Main Market on 31 January 2019.

John McLean OBE, Non-Executive Chairman, commented:

"I am delighted to announce Starcrest's final results for the period ended 31 December 2019 .

"Starcest has made significant steps since its listing in January 2019; most notably, in September 2019, we announced our first acquisition target, The London School of Science and Technology Limited, which is in line with the Group's strategy. If successful, we believe that, given its vast network of contacts and experience across the education sector and in capital markets, the Group is well placed to add value to the acquired business and subsequently to the Company's shareholders. We look forward to updating the market in due course.

"The Board believes that there remains significant potential for long-term growth within the international education sector, particularly for institutions in Europe offering the International Baccalaureate programme. As such, we intend to continue searching for other acquisition targets that meet the Board's criteria.

"Throughout the period, we have continued to sponsor the UK-China Charity Initiative, launched by The Lord Mayor's Appeal and China Chamber of Commerce in the UK to raise funds for the LMA's charities in the UK and CCCUK poverty alleviation projects in China. In February 2020, we also supported the "China-UK United We Stand" event, hosted by the CCCUK and the City of London, for the mutual collaboration and support against the COVID-19 outbreak.

"2020 is set to be a transitional year for the Group, and we look forward to updating shareholders on our progress."

- Ends -

Enquiries:

 
  Starcrest Education The Belt & Road Limited 
   John McLean OBE, Non-Executive Chairman           +44 (0) 7768 031454 
 
    Allenby Capital Limited (Financial Adviser 
    and Broker)                                      +44 (0) 20 3328 
    John Depasquale / Nicholas Chambers              5657 
 
    Yellow Jersey PR (Financial PR) 
    Sarah Hollins                                    +44 (0) 7764 947137 
    Henry Wilkinson                                  +44 (0) 7951 402336 
 

Notes to editors:

Starcrest is an international developer and operator of education services in Europe. The newly formed entity has been established to seek acquisition opportunities in the international education sector.

The Company intends to capture opportunities arising from the 'One Belt, One Road' ("OBOR") initiative, a foreign policy and economic strategy of the Chinese Government. The term derives from the Silk Road, the ancient trade route, and encompasses the overland 'Silk Road Economic Belt' and the '21st-Century Maritime Silk Road,' concepts introduced by Chinese President Mr Xi Jinping in 2013. These are the two major axes along which China proposes to economically link Europe to China through countries across Eurasia and the Indian Ocean. The OBOR initiative also links to Africa and Oceania.

Starcrest listed on the Main Market of the London Stock Exchange on 31 January 2019 under the ticker symbol (LSE: OBOR). Further information can be found on the Company's website at https://www.starcresteducation.com

Chairman's Statement

Introduction

I am pleased to report the final results for the year ended 31 December 2019; the full year results since Starcrest Education The Belt & Road Limited (the Company) was successfully admitted to trading on the London Stock Exchange's Main Market on 31 January 2019. The Company, together with its subsidiaries form the Group or "Starcrest".

As announced upon admission to trading, Starcrest's strategic objective has been to provide innovative solutions that add value to students, employees and the wider society in One Belt One Road (OBOR) countries.

As per the Group's strategy, we have been proactively seeking relevant acquisition opportunities that fit with the Group's search criteria and that offer attractive growth potential. As a result, on 18 September 2019, Starcrest was pleased to announce the signing of the non-legally binding Heads of Terms to acquire sixty per cent. of the issued share capital of London School of Science and Technology Limited (LSST). We believe that LSST provides a valuable opportunity for Starcrest and its shareholders.

The Company is unable to provide further information at this stage about the terms of the Proposed Transaction. We are in the process of our Due Diligence, as soon as we are able to provide an update, we will do so.

As announced in the Company's interim results, released in September 2019, we can confirm that, during the period, Starcrest successfully became a member of the Quoted Companies Alliance (QCA), the independent membership organisation that champions the interests of small to mid-size quoted companies.

Prior to and since the Company's admission, Starcrest has continued in its support of UK-China relations. Throughout the period, we continued to sponsor the UK-China Charity Initiative, launched by The Lord Mayor's Appeal and China Chamber of Commerce in the UK to raise funds for the LMA's charities in the UK and CCCUK poverty alleviation projects in China. Post period, in February 2020, we also supported the "China-UK United We Stand" event, hosted by the CCCUK and the City of London, for the mutual collaboration and support against the COVID-19 outbreak.

Results and Trading

As of 31 December 2019, the Group had cash balances of GBP2,787,046. Loss before tax for the period ended 31 December 2019 was GBP1,216,746.

The majority of the losses reported in this period, representing approximately GBP0.8m are attributed to professional fees and associated costs relating to the listing on 31 January 2019 and funds invested in legal and financial due diligence relating to the Proposed Transaction.

Since the year-end, the Group can confirm that trading has remained in line with the Board's expectations.

Working Capital

Since the year-end, the Group has opened a bank account in the UK and has transferred a significant proportion of the funds held in its Singapore bank account to the UK bank. As at 31 March 2020, funds held at our banks was GBP2,588,046.

The Board has reviewed its cash flows for the next 12 months on a stand-alone basis, having taken into account current overheads and projected costs associated with the due diligence on the Proposed Transaction. The Board is satisfied that the Group has sufficient funds for the next 12 months.

Strategy and COVID-19

The Group continues to seek acquisition targets across Europe, which will add value and support this strategy. The Directors look forward to updating the market with our overall progress.

In light of developments regarding COVID-19, which the World Health Organisation (WHO) announced as a pandemic, the wellbeing of our staff remains our ultimate priority. Following Government advice, in order to ensure the health and safety of all employees, all of the Company's personnel are now working from home as the Company's range of corporate activities, notably progressing the Proposed Transaction, continues. This will remain the case until we are confident that all employees can safely return to working as we were prior to the COVID-19 outbreak.

As a direct result of the virus, we have already seen a monumental shift in the education sector towards online, remote learning. The Board believes this trend will continue even after the virus has been properly dealt with, and believes that its strategy and search criteria for acquisition targets is in-line with this growing trend.

Summary and Outlook

The Board remains of the belief that Starcrest is well placed and has adopted the right strategy to capitalise on the enormous potential of the Chinese education sector and the opportunities arising from China's OBOR initiative.

Starcrest still intends to hold our Annual General Meeting in May 2020, however, we will consider alternative methods of hosting the event to remain in accordance with Government advice regarding social distancing. We will update shareholders as developments materialise.

The Board will continue to prioritise the safeguarding of all employees during this difficult time, and we look forward to updating existing and prospective investors with our progress regarding the Proposed Transaction and other corporate news in due course.

John McLean OBE

Non-Executive Chairman

8 April 2020

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEARED 31 DECEMBER 2019

 
                                       Note         Year Ended    Period Ended 
                                                   31 December     31 December 
                                                          2019        2018 
                                                           GBP         GBP 
  Administrative expenses                          (1,214,374)       (189,698) 
                                             -----------------  -------------- 
  Operating loss                        10         (1,214,374)       (189,698) 
 
  Finance expense                                      (2,372)               - 
                                                 (1,2 16 , 746 
  Loss before taxation                                       )       (189,698) 
  Taxation                              13                   -               - 
                                             -----------------  -------------- 
                                                 (1,2 16 , 746 
  Loss for the year/period                                   )       (189,698) 
  Other comprehensive loss 
  Exchange loss arising 
  on translation to presentation                     (113,428)               - 
  currency 
                                             -----------------  -------------- 
 
  Total comprehensive loss                       (1,3 30 , 174 
   for the period                                            )       (189,698) 
                                             -----------------  -------------- 
 
 
  Loss per share - basic 
   and diluted (pence per 
   share)                               14               ( 6 )           (319) 
                                             -----------------  -------------- 
 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 
                                                     As at                As at 
                                                  31 December           31 December 
                                                      2019                 2018 
                                         Note              GBP             GBP 
-------------------------------------  ------  ---------------  ---  -------------- 
 
  Assets 
  Non-current assets 
  Right-of-use assets                     15            70,197                    - 
  Total non-current assets                              70,197                    - 
 
  Current assets 
  Cash and cash equivalents               17         2,787,046            4,020,320 
  Trade and other receivables                           14,600                    - 
                                               ---------------       -------------- 
  Total current assets                               2,801,646            4,020,320 
                                               ---------------       -------------- 
  Total assets                                       2,871,843            4,020,320 
                                               ===============       ============== 
 
  Equity and liabilities 
   Capital and reserves attributable 
   to owners of the company 
  Share capital                           19           215,600                8,000 
  Share premium                           20         3,454,364                    - 
  Other reserve                           21                 -            3,773,141 
  Retained earnings                                (1,406,444)            (189,698) 
  Foreign exchange reserves                          (113,428)                    - 
                                               ---------------       -------------- 
  Total equity                                       2,150,092            3,591,443 
 
  Liabilities 
   Current liabilities 
   Trade and other payables                18          658,822              428,877 
  Lease liability                         15            62,929                    - 
                                               ---------------       -------------- 
  Total current liabilities                            721,751              428,877 
 
  Total equity and liabilities                       2,871,843            4,020,320 
                                               ===============       ============== 
 
 
 

These financial statements were approved by the Board of Directors for issue on 8 April 2020 and signed on behalf by:

John McLean OBE

Non-Executive Chairman

   CONSOLIDATED   STATEMENT OF CHANGES IN EQUITY 

FOR THE YEARED 31 DECEMBER 2019

 
                                                                                     Foreign exchange 
                                Share        Share        Other         Retained         reserves            Total 
                               capital      premium      Reserve        earnings                            equity 
                     Note       GBP          GBP           GBP            GBP              GBP               GBP 
----------------   ------  -----------  -----------  -------------  -------------  ------------------  ------------- 
 
  Balance at 01 
   January 
   2019                          8,000            -      3,773,141      (189,698)                        - 3,591,443 
 
    Shares issued      19      207,600            -      (207,600)              -      -                           - 
 
  Transferred 
   from 
   other reserves 
   to 
   share premium       20            -    3,565,541    (3,565,541)              -                   -              - 
 
  Transactions 
   costs 
   deducted from 
   equity              20            -    (111,177)              -              -                   -      (111,177) 
  Loss for the                       -            -              -    (1,216,746)                  *    (1,216,746) 
  year 
 
  Other 
   comprehensive 
   loss for the 
   year                              -            -              -              -      ( 113,428)         ( 113,428) 
                           -----------  -----------  -------------  -------------  ------------------  ------------- 
  Balance at 31 
   December 
   2019                        215,600    3,454,364              -    (1,406,444)                (113,428) 2,150,092 
                           -----------  -----------  -------------  -------------  --------------------------------- 
 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEARED 31 DECEMBER 2018

 
 
                                              Share       Other Reserve      Retained       Total 
                                             capital                         earnings      equity 
                                   Note       GBP             GBP             GBP           GBP 
------------------------------   ------  -----------  -----------------  ------------  ----------- 
 
  Issue of shares on 
   incorporation on 
   23 May 2018                      19         7,519                  -             -        7,519 
 
  Repurchase and cancellation 
   of the issued ordinary 
   share capital                    19      ( 7,519)                  -             -     ( 7,519) 
 
  Proceeds from shares 
   issued                           19         8,000                  -             -        8,000 
  Consideration for 
   shares to be issued              21             -          4,064,363             -    4,064,363 
 
  Transaction costs 
   deducted from equity             20             -          (291,222)             -    (291,222) 
  Total comprehensive 
   loss for the financial 
   period                                          -                  -     (189,698)    (189,698) 
                                         -----------  -----------------  ------------  ----------- 
  Balance at 31 December 
   2018                                        8,000          3,773,141     (189,698)    3,591,443 
                                         -----------  -----------------  ------------  ----------- 
 
 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEARED 31 DECEMBER 2019

 
                                               Year Ended                 Period Ended 
                                               31 December                 31 December 
                                                  2019                        2018 
                                                  GBP                         GBP 
------------------------------------------  --------------  ----  ----  -------------- 
 
  Cash flows from operating activities 
  Loss for the year/period                     (1,216,746)                   (189,698) 
   Depreciation                                     88,531                           - 
  Finance cost                                       2,372                           - 
  Increase in payables                             281,377                     185,757 
                                            --------------              -------------- 
  Net cash used in operating activities          (844,466)                     (3,941) 
                                            --------------              -------------- 
  Cash flows from financing activities 
   Proceeds from issue of ordinary 
    shares                                               -                       8,000 
   Proceeds from ordinary shares to 
    be issued                                            -                   4,064,363 
   Expenses paid on share issue                  (174,837)                    (48,102) 
  Principal paid on lease liabilities             (98,171)                           - 
   Interest paid on lease liabilities              (2,372)                           - 
                                            --------------              -------------- 
  Net cash (used)/generated from 
   financing activities                          (275,380)                   4,024,261 
                                            --------------              -------------- 
 
  Net (decrease)/increase in cash              (1,119,846)                   4,020,320 
   and cash equivalents 
   Cash and cash equivalents at beginning 
   of the financial period                       4,020,320                           - 
  Exchange losses on cash and cash               (113,428)                           - 
   equivalents 
                                            --------------              -------------- 
  Cash and cash equivalents at end 
   of financial period                           2,787,046                   4,020,320 
                                            ==============              ============== 
 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   1.            GENERAL INFORMATION 

Starcrest Education The Belt & Road Limited ("the Company") was incorporated and registered in the Cayman Islands as a private company limited by shares on 23 May 2018 under the Companies Law (as revised) of The Cayman Islands, with the name Starcrest Education The Belt & Road Limited, and registered number 337619.

The Company's registered office is located at Cricket Square, Hutchins Drive PO Box 2681, Grand Cayman KY1-1111, Cayman Islands.

These financial statements are presented for the 12 month period from 1 January 2019 to 31 December 2019 so are not directly comparable to the comparative period of 7 months from 23 May 2018 to 31 December 2018.

   2.            PRINCIPAL ACTIVITIES 

The principal activity of the Group is to seek education related acquisition opportunities in Europe.

   3.            RECENT ACCOUNTING PRONOUNCEMENTS 
   (a)       New interpretations and revised standards effective for the year ended 31 December 2019 

The Group has applied the same accounting policies and methods of computation as used in its 2018 accounts, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2019, and have been adopted in the 2019 annual financial statements. New standards impacting the Group that have been adopted in the annual financial statements for the year ended 31 December 2019, and which have given rise to changes in the Group's accounting policies are:

i. IFRS 16 Leases

Effective 1 January 2019, IFRS 16 has replaced IAS 17 Leases and IFRIC 4 Determining whether an Arrangement Contains a Lease.

IFRS 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. On 1 January 2019 the Group had no leases (2018: none) so there was no impact on transition to IFRS 16. See Note 5.6 for lease accounting policies.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate.

   (b)       Standards and interpretations in issue but not yet effective 

There are a number of standards and interpretations which have been issued by the International Accounting Standards Board that are effective in future accounting periods that the Group has decided not to adopt early. The most significant of these are as follows, which are all effective for the period beginning 1 January 2020:

-- IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)

   --      IFRS 3 Business Combinations (Amendment - Definition of Material) 
   --      Revised Conceptual Framework for Financial Reporting 

The Directors do not believe these standards and interpretations will have a material impact on the financial statements once adopted.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   4.            BASIS OF PREPARATION 

The consolidated financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and prepared under the historic cost convention.

The consolidated financial statements include the audited financial statements for the Company for the year ended 31 December 2019 and its subsidiary companies (See Note 16 ).

The Group's functional currency is USD. The Company listed its shares on the Main market of the London Stock Exchange on 31 January 2019 (See Note 19). The directors have decided to present the financial information in Pounds Sterling (GBP), which is the Company's presentation currency, as the Company is listed in the UK.

These financial statements have been prepared on a going concern basis. The Directors consider that, having reviewed current cash flow forecasts on a stand-alone basis (i.e. excluding the Proposed Transaction), having taken into account current overheads and projected costs associated with the due diligence on the Proposed Transaction and including specific consideration of the potential risks associated with COVID-19, they have a reasonable expectation the Group has adequate resources to continue its operations for the foreseeable future.

   5.            SIGNIFICANT ACCOUNTING POLICIES 
   5.1         Foreign currency translation 

Transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Results at 31 December 2019 are translated into the presentation currency. Assets and liabilities are translated at the closing rate while income and expenses are translated at exchange rates at the dates of the transactions. Differences arising are recognised in Other Comprehensive Income in the period in which they arise.

   5.2         Financial instruments 

A financial asset or a financial liability is recognised only when the Group becomes a party to the contractual provisions of the instrument.

Financial instruments are initially recognised at the transaction price as this represents fair value, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest.

Financial assets

Financial assets are initially recognised at fair value, less transaction costs. Subsequent to initial recognition, they are recorded at amortised cost.

Financial liabilities

Financial liabilities are initially recognised at fair value less transaction costs. Subsequent to initial recognition, they are recorded at amortised cost.

   5.3         Share Capital 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares or options in relation to ordinary shares are shown in equity as a deduction, net of taxation, from the proceeds.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   5.            SIGNIFICANT ACCOUNTING POLICIES (Continued) 
   5.4         Cash and cash equivalents 

Cash and cash equivalents include cash in hand, deposits held on call with banks and other short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

   5.5         Earnings per share 

Basic earnings per share is computed using the weighted average number of shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of shares during the period plus the dilutive effect of dilutive potential ordinary shares outstanding during the year.

   5.6        Leases 

During the year the Group has recognised a right-of-use asset measured at an amount equal to the lease liability, in relation to leased office space. The lease liability is measured at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rate at date of lease commencement. Lease modifications are accounted for at the effective date of the lease modification.

   6.            ACCOUNTING ESTIMATES AND JUDGEMENTS 

Preparation of financial information in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

The Directors have applied judgement in determining the appropriate split of professional costs incurred in connection with the listing between profit or loss and equity. The Directors have made this assessment based on the proportion of shares in issue before and after the listing.

The Directors have applied judgement in determining the incremental borrowing rate, which is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The rate is used to measure lease liabilities by discounting the present value of future lease payments (See Note 15).

   7.            FINANCIAL RISK MANAGEMENT 

The Group has exposure to liquidity risk, foreign currency risk and capital risks from its use of financial instruments. Credit, interest rate and market risks are not considered to be material to the Group. The Group is not subject to any external imposed capital requirements.

The Group's financial instruments consist mainly of cash and accounts payable.

a) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

The Group's financial liabilities comprise amounts due to the parent company, lease liabilities and accruals. The Group's financial assets comprise cash and cash equivalents.

The Group has sufficient cash to meet their liabilities as they fall due.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   7.            FINANCIAL RISK MANAGEMENT (Continued) 
   b)   Foreign currency risk (Continued) 

The Group's operations expose it primarily to the financial risks of variations in foreign currency exchange rates. The Group undertakes transactions denominated in currencies which are different to its presentation currency. Consequently, the Group's financial performance is affected by exchange rate fluctuations.

The impact of exchange rate fluctuations that are recognised through other comprehensive income are those that arise on translation from functional to presentation currency. The carrying amounts of the balances and transactions denominated in a currency other than the Group's presentation currency are as follows:

 
            2019                                              United States Dollar              RMB 
            C ash at bank                                                2,787,046                - 
            Amounts due to the parent company                                    -        (162,115) 
                                                  --------------------------------  --------------- 
            Total                                                        2,787,046        (162,115) 
                                                  ================================  =============== 
 
 
            2018                                              United States Dollar              RMB 
            C ash at bank                                                4,020,320                - 
            Amounts due to the parent company                             (26,636)        (170,637) 
                                                  --------------------------------  --------------- 
            Total                                                        3,993,684        (170,637) 
                                                  ================================  =============== 
 

A ten percent strengthening of GBP (GBP) against the following currencies at 31 December would have (decreased)/increased reported equity and other comprehensive income by the following amounts:

 
                                                                       2019 
                                                 Other comprehensive income                 Equity 
            United States Dollar                                  (253,368)              (253,368) 
            RMB                                                      14,738                 14,738 
 
                                                                       2018 
                                                 Other comprehensive income                 Equity 
            United States Dollar                                  (363,062)              (363,062) 
            RMB                                                      15,512                 15,512 
 
 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   7.          FINANCIAL RISK MANAGEMENT (Continued) 

b) Foreign currency risk (Continued)

A ten percent weakening of GBP (GBP) against the following currencies at 31 December would have (decreased)/increased reported equity and other comprehensive income by the following amounts:

 
                                                                2019 
                                               Other comprehensive income                  Equity 
            United States Dollar                                  309,672                 309,672 
            RMB                                                  (18,013)                (18,013) 
 
                                                                    2018 
                                               Other comprehensive income                Equity 
            United States Dollar                                  443,743               443,743 
            RMB                                                  (18,960)              (18,960) 
 
 

The impact of the exchange rate fluctuations that are recognised through profit or loss are those that arise on translation to functional currency. The carrying amounts of the balances and transactions denominated in a currency other than the entity's functional currency (United States Dollar) are as follows:

 
            2019                                              GBP              RMB 
            Amounts due to the parent company            (55,208)        (214,380) 
            Lease liabilities                            (83,365) 
            Accruals                                    (602,805) 
            Trade and other receivables                    19,341 
            Total                                       (722,036)        (214,380) 
                                                  ===============  =============== 
 
 
            2018                                              GBP              RMB 
            Amounts due to the parent company            (66,581)        (217,735) 
            Accruals                                    (228,953) 
            Total                                       (295,534)        (217,735) 
                                                  ===============  =============== 
 

A ten percent strengthening of USD ($) against the following currencies at 31 December would have (decreased)/increased reported equity and profit or loss by the following amounts:

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   7.          FINANCIAL RISK MANAGEMENT (Continued) 

b) Foreign currency risk (Continued)

 
                                          2019 
                                Profit or loss                Equity 
            GBP                         65,640                65,640 
            RMB                         19,489                19,489 
 
                                          2018 
                                Profit or loss                Equity 
            GBP                         26,867                26,867 
            RMB                         19,794                19,794 
 
 

A ten percent weakening of USD ($) against the following currencies at 31 December would have (decreased)/increased reported equity and profit or loss by the following amounts:

 
                                          2019 
                                Profit or loss                Equity 
            GBP                       (80,226)              (80,226) 
            RMB                       (23,820)              (23,820) 
 
                                          2018 
                                Profit or loss                Equity 
            GBP                       (32,837)              (32,837) 
            RMB                       (24,193)              (24,193) 
 
 

c) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit allowances are made for estimated losses that have been incurred by the reporting date.

The Group's cash balances were all held with Oversea-Chinese Banking Corporation Limited (OCBC). Per Standard & Poor's, the Short Term Foreign / Local Currency Deposit Rating is A-1+.

   8.            CAPITAL MANAGEMENT 

The Group actively manages the capital available to fund the Group, comprising equity and reserves. The Group's objectives when maintaining capital is to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   9.            SEGMENT REPORTING 

IFRS 8 defines operating segments as those activities of an entity about which separate financial information is available and which are evaluated by the Board of Directors to assess perfo rm ance and determine the allocation of resources. The Board of Directors are of the opinion that under IFRS 8 the Group has only one operating segment. The Board of Directors assess the perfo rm ance of the operating

segment using financial information which is measured and presented in a m ann er consistent with that in the Financial Statements. Segmental reporting will be reviewed and considered in light of the development of the Group's business over the next reporting period.

   10.          OPERATING LOSS 
 
   The operating loss is stated after charging: 
                                    Y ear ended    Period ended 
                                    31 December     31 December 
                                           2019         2018 
                                            GBP         GBP 
   Foreign exchange losses                   -               272 
                                    ------------  -------------- 
 
 
   11.          STAFF COSTS AND KEY MANAGEMENT EMOLUMENTS 
 
                Y ear ended                  Period ended 
                 31 December                  31 December 
                    2019                         2018 
                                     GBP               GBP 
  Key management emoluments 
  Remuneration                   142,083                 - 
                               ---------  ---------------- 
 
                                     GBP            GBP 
  Executive Directors 
  Xingchen Zhu                    27,500                 - 
   Xiaojun Zhang                  27,500                 - 
 
  Non-executive Directors 
  John McLean OBE                 32,083                 - 
  Norman Cumming                  27,500                 - 
  Nicholas Petford DSc            27,500                 - 
                                 142,083                 - 
                               ---------  ---------------- 
 
 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   12.          AUDITORS' REMUNERATION 
 
   The following remuneration was received by the Company's 
    auditors: 
                                                  Year ended    Period ended 
                                                 31 December     31 December 
                                                        2019        2018 
                                                        GBP         GBP 
   Remuneration for the 
    audit of the Company's 
    financial statements                             25 ,000          17,500 
   Corporate finance services                     175,000             50,000 
 
 
   13.          TAXATION 

The Company is incorporated in the Cayman Islands, and its activities are subject to taxation at a rate of 0%. All subsidiaries have not started trading during the year.

   14.          EARNINGS PER SHARE 

The Company presents basic and diluted earnings per share information for its ordinary shares. Basic earnings per share is calculated by dividing the loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the reporting period.

There is no difference between the basic and diluted loss per share.

 
                                          Year ended    Period ended 
                                         31 December     31 December 
                                                2019            2018 
 
  Loss attributable to ordinary 
   shareholders (GBP)                    (1,216,746)       (189,698) 
 
  Weighted average number of shares       19,796,822          59,375 
 
 
  Loss per share (expressed as 
   pence per share)                              (6)           (319) 
 
 
 
 

The loss per share for the period has been calculated using the weighted average number of shares in issue during the year. The Company issued new Ordinary shares in January 2019 (See note 19 ).

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   15.          LEASES 

Leases: right-of-use assets

 
                                                      Land and Buildings 
                                                            GBP 
  At 1 January 2019                                                        - 
  Additions                                                          104,595 
   Amortisation                                                     (88,531) 
  Effect of modification 
   to lease terms                                                     54,133 
 
  At 31 December 2019                                                 70,197 
                                         ----------------------------------- 
 
 
 

Lease liabilities

 
                                                      Land and Buildings 
                                                            GBP 
  At 1 January 2019                                                        - 
  Additions                                                          104,595 
   Interest expenses                                                   2,372 
  Effect of modification 
   to lease terms                                                     54,133 
  Lease payments                                                    (98,171) 
 
  At 31 December 2019                                                 62,929 
                                         ----------------------------------- 
 
 
 

During the year the lease was extended from February 2020 to August 2020. This extension is a lease modification as it is a change in the scope of the lease by extension of contractual lease term, and is applied from the effective date of the modification, which was when the extension agreement was signed, prior to year-end.

   16.          SUBSIDIARIES 

All subsidiaries which have been included in these consolidated financial statements, are as follows:

 
                               Country of incorporation        Proportion of 
                                     and principal           ownership interest 
                                   place of business           at 31 December 
             Name                                                   2019 
  Starcrest Education 
   Plc                               United Kingdom                     100% 
  Starcrest Education 
   Management (UK) Limited                United Kingdom                 100% 
 

Both companies above were incorporated in November 2019 and had not started trading in the period to 31 December 2019.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   17.          CASH AND CASH EQUIVALENTS 
 
                             Year ended             Period ended 
                             31 December             31 December 
                                2019                    2018 
                                       GBP                     GBP 
  Cash at bank                     2,787,046               4,020,320 
                      ----------------------  ---------------------- 
 
  Cash at bank earns interest at floating rates based on daily 
   bank deposit rates. 
 
   18.          TRADE AND OTHER PAYABLES 
 
                                                        Year ended      Period ended 
                                                         31 December     31 December 
                                                         2019            2018 
                                                          GBP                       GBP 
 
   Amounts due to the parent 
    company                                            203,788               249,451 
    Accruals                                           455,034               179,426 
                                             -----------------------  ----------------- 
                                                            658,822         428,877 
                                             -----------------------  ----------------- 
 

The amounts above includes GBP179,160 (2018: GBP243,120) in relation to share issue costs.

All payables are financial liabilities measured at amortised cost.

Amounts due to the parent company are unsecured, interest free and repayable on demand.

   19.          SHARE CAPITAL 
 
                                      Number of shares     Nominal 
                                                             value 
                                                              GBP 
  Authorised 
  Ordinary shares of GBP0.01 each       1,000 ,000,000    10,000,000 
 
  Issued and fully paid 
  Issue of ordinary shares of 
   GBP0.01 each                             21,560,000       215,600 
                                    ------------------  ------------ 
 

On incorporation, the Company had an authorised share capital of US$50,000 divided into 50,000 ordinary shares of a par value of US$1.00 each.

On 18 December 2018 the Company repurchased and cancelled the issued ordinary share capital of 10,000 of US$1 each. Separately, the Company's authorised share capital became 1,000,000,000 ordinary shares of GBP0.01 each. On the same date the Company issued 800,000 ordinary shares at nominal value.

On 18 December 2018 20,760,000 were subscribed to and recognised as shares to be issued in other reserves. These were subsequently issued as part of the share issue on 31 January 2019.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2019

   19.        SHARE CAPITAL (Continued) 

On 31 January 2019, a total of 20,760,000 ordinary shares of nominal value GBP0.01 each were issued by way of placing at a price of GBP0.20 per share on the London Stock Exchange.

   20.          SHARE PREMIUM 

Transaction costs of GBP111,177 for the year ended 31 December 2019 and GBP291,222 for the period from 23 May 2018 to 31 December 2018 have been deducted from equity. These costs are incremental and directly attributable to the issue of shares.

The opening balance of Other Reserves of GBP3,773,141 has been recognised as share capital and share premium after the issue of the new shares on 31 January 2019.

   21.          RESERVES 

The following describes the nature and purpose of each reserve within equity:

 
  Reserve                     Description and purpose 
 
  Share premium               Amount subscribed for share capital 
                               in excess of nominal value. 
  Other reserve               Consideration received for shares 
                               which are not yet issued . 
  Retained earnings           All other net gains and losses 
                               and transactions not recognised 
                               elsewhere. 
  Foreign exchange reserve    Gains/losses arising on retranslation 
                               of net assets from functional 
                               to presentation currency. 
 
   22.          RELATED PARTY TRANSACTIONS 

As at 31 December 2019, an amount of GBP203,788 (31 December 2018: GBP249,451) was owed to Starcrest Education Management Company Ltd. This amount mainly arose from business expenses paid on behalf of the Company by the parent company.

The remuneration of the Directors, the key management personnel of the Company, is set out in note 11.

   23.          ULTIMATE CONTROLLING PARTY 

The immediate parent company is Starcrest Education Management Company Ltd. The ultimate parent company is Shenzhen Xing Chen Investment Holdings Limited. The ultimate controlling party is Mr Xingchen Zhu, who is also a director 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 KKCBKQBKDCQK

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