Final Results

RNS Number : 3047X

Starcrest Education The Belt & Road

29 April 2019

 

For immediate release

29 April 2019

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 2018.

Highlights

·   Incorporated and registered as a private company on 23 May 2018

·   Cash balance of £4,020,320 as at 31 December 2018

·   Operating loss of £189,698 for the period ended 31 December 2018

Post-period Highlights

·   Raised equity of approximately £4.1 million (net proceeds of approximately £3.6 million) via a Subscription

·   Successful admission to trading on the London Stock Exchange's Main Market on 31 January 2019

·   First Board meeting held in Guizhou, China in March 2019

John McLean OBE, Non-Executive Chairman, commented: 

"We are delighted to announce Starcrest's audited final results since the Company's successful admission to the London Stock Exchange's Main Market on 31 January 2019.

"The Company was incorporated in May 2018 as the Directors noted a significant opportunity arising from the One Belt, One Road ("OBOR") initiative, a foreign policy and economic strategy of the Chinese Government.  Starcrest is fully aware of the enormous potential and fast changing nature of the international education industry and the opportunities arising from the OBOR initiative.  Our strategy is therefore to undertake the acquisition of one or more European based schools that implement the International Baccalaureate program and participate in the management of the acquired businesses, adopting an operational strategy with the aim of generating value for its shareholders.

"We hope that the successful listing of the Company's shares on the London Stock Exchange's main market should now provide Starcrest with access to the UK equity markets and position the Company in Britain, where education is well-recognised as the gold standard in China.

"Through its vast network of contacts and experience across the education sector and in capital markets, the Board believes it is well placed to add value to the acquisitions it hopes to make, and subsequently to the Company's shareholders.  This process of searching for potential acquisition targets has now been commenced and we look forward to updating the market of our progress in due course."

- Ends -

Enquires:

Starcrest Education John McLean OBE, Non-Executive Chairman	[phone]
Allenby Capital Limited (Financial Adviser and Broker) John Depasquale	[phone]
Yellow Jersey PR (Financial PR) Sarah Hollins Henry Wilkinson	[phone] [phone]

Notes to editors:

Starcrest Education The Belt & Road Limited ("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 period ended 31 December 2018, since Starcrest Education The Belt & Road Limited ("Starcrest") became a newly formed entity on 23 May 2018.  The Company's objective is to provide top quality education services and products to countries in Europe through seeking acquisition opportunities in the international education sector arising from the "One Belt, One Road" ("OBOR") initiative, a foreign policy and economic strategy of the Chinese Government.

The Board will utilise its extensive experience in the education industry, particularly in the higher education sector in Europe, the network of contacts it has established internationally, as well as relevant corporate acquisition and capital market expertise, to best position Starcrest to benefit from this Chinese investment initiative.

Post the period end, on 31 January 2019, Starcrest successfully commenced trading on the London Stock Exchange's Main Market, raising approximately £4 million.  The Company's listing will enhance our profile and provide access to the UK equity markets to support future growth.   The proceeds of the fund raising are to be used in the first instance for the initial acquisition of relevant businesses. 

In recognition of our newly listed status, Starcrest is in the process of joining the Quoted Companies Alliance (QCA), the independent membership organisation that champions the interests of small to mid-size quoted companies.

Results

Further to the fund raise, as of 31 December 2018, the Group had cash balances of £4,020,320.  Loss before tax for the period ended 31 December 2018 was £189,698.   

Strategy and Market

Starcrest's overall strategic objective is to provide innovative solutions that add value to students, employers and the wider society in OBOR countries primarily.

The Company's acquisition targets will initially be schools based in Europe implementing the International Baccalaureate (IB) programme that offer the potential for long-term growth.  As China is currently seeing an increase in the number of students that are unsuccessful in their applications to higher education establishments, the Starcrest Board has noted a significant opportunity to provide these students with access to improved education and best in-class services that they require to pursue better-paying jobs in China.  This human capital problem has been recently noted in a series of documents published by the Chinese government in February 2019, which outline the country's policy priorities for modernising China's education sector for the coming years. 

Our intention is therefore to be considered as a responsible and sustainable investor into each of the local markets in which we hope to operate, and as a guiding force for the improvement of the livelihoods of the individual students who receive education as a result of our efforts.  In doing so, we will remain focused on the provision of high quality education services to each of the Company's acquired businesses. 

Summary and Outlook

We believe that Starcrest is well placed to capitalise on the enormous potential and fast-changing nature of the international education industry and the opportunities arising from the OBOR initiative.  

The Board's vast experience in the education sector, corporate acquisitions and in capital markets will provide the Company with exposure to potential appropriate targets.  The first meeting of the Starcrest Board since the Company's listing was held in March 2019 in Guizhou, China in order to formally commence the acquisition process.  We believe that, with a currently uncertain investment climate in Europe, a notable opportunity has presented itself to develop business in the East where there is the likelihood of further significant growth.

The Company's operations will focus upon the management and growth of the portfolio across Europe with the ultimate intention of generating significant value for Starcrest's shareholders.  The Directors look forward to updating our existing and prospective investors with our progress in due course.

John McLean OBE

Non-Executive Chairman

STATEMENT OF COMPREHENSIVE INCOME

For the period from incorporation on 23 May 2018 to 31 December 2018

	Note		Period Ended 31 December 2018 £
Administrative expenses			(189,698)
Operating loss	10		(189,698)
Finance income			-
Loss before taxation			(189,698)
Taxation	12		-
Total comprehensive loss attributable to equity holders of the Company for the period			(189,698)
Loss per share - basic and diluted (pence per share)	13		(319)

STATEMENT OF FINANCIAL POSITION

					As at 31 December 2018
	Note				£
Assets
Current assets
Cash and cash equivalents	14				4,020,320
Total current assets					4,020,320
Total assets					4,020,320
Equity and liabilities Capital and reserves attributable to owners of the company
Share capital	16				8,000
Other reserve	17				3,773,141
Retained earnings					(189,698)
Total equity					3,591,443
Liabilities Current liabilities Trade and other payables	15				428,877
Total current liabilities					428,877
Total equity and liabilities					4,020,320

STATEMENT OF CHANGES IN EQUITY

 For the period from incorporation on 23 May 2018 to 31 December 2018

			Share capital		Other Reserve		Retained earnings		Total equity
		Note	£		£		£		£
Issue of shares on incorporation on 23 May 2018		16	7,519		-		-		7,519
Repurchase and cancellation of the issued ordinary share capital		16	(7,519)		-		-		(7,519)
Proceeds from shares issued Consideration for shares to be issued Transaction costs deducted from equity		16 17 17	8,000 - -		- 4,064,363 (291,222)		- - -		8,000 4,064,363 (291,222)
Total comprehensive loss for the financial period			-		-		(189,698)		(189,698)
Balance as at 31 December 2018			8,000		3,773,141		(189,698)		3,591,443

STATEMENT OF CASH FLOWS

For the period from incorporation on 23 May 2018 to 31 December 2018

					Period Ended 31 December 2018
					£
Cash flows from operating activities
Operating loss Increase in payables					(189,698)  185,757
Net cash used in operating activities					(3,941)
Cash flows from financing activities Proceeds from issue of ordinary shares Proceeds from ordinary shares to be issued Expenses paid on share issue					8,000 4,064,363 (48,102)
Net cash generated from financing activities					4,024,261
Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the financial period					4,020,320 -
Cash and cash equivalents at end of financial period					4,020,320

NOTES TO THE FINANCIAL INFORMATION

For the period from incorporation on 23 May 2018 to 31 December 2018

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.

2.             PRINCIPAL ACTIVITIES

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

3.             RECENT ACCOUNTING PRONOUNCEMENTS 

Standards and interpretations in issue but not yet effective

     IFRS 16 'Leases' is effective for annual periods beginning on or after 1 January 2019 with earlier application permitted, as long as IFRS 15 is also applied.

The Company has no leases as at the period end and therefore the impact on adopting this standard on the financial statements will be minimal.

4.             BASIS OF PREPARATION

The 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 Company's functional currency is USD. The Company listed it's shares on the Main market of the London Stock Exchange on 31 January 2019 (See Note 20). The directors have decided to present the financial information in Pounds Sterling (£), which is the Company's presentation currency, as the Company is listed in the UK.

No comparative figures have been presented as the financial information covers the period from incorporation of the Company on 23 May 2018 to 31 December 2018.

5.             SIGNIFICANT ACCOUNTING POLICIES

5.1         Foreign currency translation

Transactions in currencies other than the Company'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 carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise.

5.             SIGNIFICANT ACCOUNTING POLICIES (Continued)

5.2         Financial instruments

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

Financial instruments are initially recognised at the transaction price, 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 for a similar instrument.

Financial assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value.

Financial assets are subsequently classified into the following specified categories: Financial assets measured at fair value through profit and loss (FVTPL), Financial assets measured at amortised cost and Financial assets measured at fair value through other comprehensive income (FVOCI).

Financial liabilities

Financial liabilities are initially recognised at fair value. 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. 

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.

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 whether the proceeds received prior to the period and relating to the listing of the Company's shares are appropriately classified as equity. The Directors' view is that the admission of the Company's shares to the London Stock Exchange was within the Company's control as at 31 December 2018, and accordingly, the proceeds received have been classified as equity.

7.             FINANCIAL RISK MANAGEMENT

The Company has exposure to the 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 Company. The Company is not subject to any external imposed capital requirements.

The Company's financial instruments consist mainly of accounts receivable and payable.

a) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities. The Company'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 Company's reputation.

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

b) Foreign currency risk

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

The carrying amounts of the balances and transactions denominated in a currency other than the Company's presentation currency at the reporting date were as follows:

2018			United States Dollar		RMB
Cash at bank			4,020,320		-
Amounts due to the parent company			(33,988)		(170,637)
Total			3,986,332		(170,637)

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

	2018 Profit or loss	Equity
United States Dollar	(363,062)	(363,062)
RMB	15,512	15,512

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

	2018
	Profit or loss	Equity
United States Dollar	443,743	443,743
RMB	(18,960)	(18,960)

7.             FINANCIAL RISK MANAGEMENT (Continued)

c)  Credit risk

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

The Company'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 Company actively manages the capital available to fund the Company, comprising equity and reserves. The Company'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.

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 performance and determine the allocation of resources. The Board of Directors are of the opinion that under IFRS 8 the Company has only one operating segment. The Board of Directors assess the performance of the operating segment using financial information which is measured and presented in a manner consistent with that in the Financial Statements. Segmental reporting will be reviewed and considered in light of the development of the Company's business over the next reporting period.

10.          OPERATING LOSS

	The operating loss is stated after charging:
			Period ended 31 December 2018
			£
	Foreign exchange losses			272

11.          AUDITORS' REMUNERATION

	The following remuneration was received by the Company's auditors:
			Period ended 31 December 2018
			£
	Remuneration for the audit of the Company's financial statements			17,500
	Corporate finance services			50,000

12.          TAXATION

The Company is incorporated in the Cayman Islands, and its activities are subject to taxation at a rate of 0%.

13.          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.

			Period ended 31 December 2018
Loss attributable to ordinary shareholders (£)			(189,698)
Weighted average number of shares			59,375
Loss per share (expressed as pence per share)			(319)

The loss per share for the period has been calculated using the weighted average number of shares during the period. The Company issued new Ordinary shares in January 2019 (See note 20) and the new issues will significantly increase the weighted average number of shares and subsequently reduce loss per share.

14.          CASH AND CASH EQUIVALENTS

		31 December 2018
		£
Cash at bank		4,020,320
Cash at bank earns interest at floating rates based on daily bank deposit rates.

15.          OTHER PAYABLES

			31 December 2018
			£
Amounts due to the parent company Accruals			249,451 179,426
			428,877

All payables are financial liabilities measured at amortised cost.

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

16.          SHARE CAPITAL

	Number of shares	Nominal value      £
Authorised
Ordinary shares of £0.01 each	1,000,000,000	10,000,000
Issued and fully paid
Issue of ordinary shares of £0.01 each	800,000	8,000

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 US$10,000 of US$1 each. Separately, the Company's authorised share capital became 1,000,000,000 ordinary shares of £0.01 each. On the same date the Company issued 800,000 ordinary shares at nominal value.

17.          OTHER RESERVE

The Other Reserve comprises £4,064,363 in cash consideration received during the period for the new Ordinary shares to be issued in January 2019 (See Note 20).

Transaction costs of £291,222 that are incremental and directly attributable to the issue of these shares have been deducted from the Other Reserve.

18.          RELATED PARTY TRANSACTIONS

On 23 May 2018, the Company issued 10,000 ordinary shares at par value of US$1 each to Mr Xingcheng Zhu, who is also a Company director. On 18 December, the Company repurchased and cancelled these 10,000 ordinary shares and issued 800,000 ordinary shares of £0.01 each to Starcrest Education Management Company Ltd, a company registered in China and controlled by Mr Zhu, (See Note 16).

As at 31 December 2018, an amount of £249,451 was owed to Starcrest Education Management Company Ltd, the parent company. This amount mainly arose from business expenses paid on behalf of the Company by the parent company.

During the year a Director advanced $50,000 to the Company on behalf of Starcrest Education Management Company Ltd, as consideration for shares to be issued. This was repaid subsequent to the period end.

Key management has not been remunerated in the period hence no key management personnel compensation information is disclosed.

19.          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.

20.          SUBSEQUENT EVENTS

On 31 January 2019, a total of 20,760,000 ordinary shares of nominal value £0.01 each were issued by way of placing at a price of £0.20 per share on the London Stock Exchange. Total cash consideration of $5,190,000 was received by the Company. The financial effect of this transaction is an increase to share capital of £162,575 and the recognition of share premium of £3,610,566.

Cash consideration of £4,064,363 was received in advance from the shareholders during the period and has been recognised as Other Reserve as at 31 December 2018 (See Note 17).

 

END

 

 

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