CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2020

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2020

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 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 2020

The International Accounting Standards Board (Board) has issued an amendment to IFRS 16 Leases to make it easier for lessees to account for COVID-19-related rent concessions such as rent holidays and temporary rent reductions.

The Group's lease had a term of 6 months and therefore the Group have elected not to recognise an asset or liability as per the short-term lease exemption of IFRS 16. The lease payments have been recognised in profit or loss on a straight-line basis over the lease term.

(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 for periods beginning subsequent to 1 January 2020. The Directors do not believe these standards and interpretations will have a material impact on the financial statements once adopted.

4.            BASIS OF PREPARATION

The consolidated financial information has been prepared in accordance with International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies to the European Union ("IFRS") 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 2020 and its subsidiary companies (See Note 15).

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. 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.

These financial statements have been prepared on a going concern basis. The Directors consider that, having reviewed current cash flow forecasts, including specific consideration of the potential risks associated with COVID-19, they have a reasonable expectation the Group has reasonable 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.

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

Results at 31 December 2020 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. 

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

Where the Group enters into leases that are longer than 12 months, the Group recognises right-of-use assets measured at an amount equal to the lease liability. 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.

There are no significant accounting estimates or judgements that affect reported amounts of assets, liabilities, income and expenses in this period.

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 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.

b) Foreign currency risk

During the period, the board decided to convert 80% of the U.S. Dollars in Singapore's OCBC Bank to British pounds and transfer them to HSBC bank account in the UK. Financial risks of variations in foreign currency exchange rates have been significantly reduced as a result.

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:

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

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

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:

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:

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:

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.

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.

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 Group 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 Group's business over the next reporting period.

10.          OPERATING LOSS

Administrative expenses incurred in the year principally include amounts incurred in connection with the Proposed Transaction, being legal and professional fees, together with directors and staff costs as shown in note 11.

11.          STAFF COSTS AND KEY MANAGEMENT EMOLUMENTS

12.          AUDITORS' REMUNERATION

13.          TAXATION

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

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.

The loss per share for the period has been calculated using the weighted average number of shares in issue during the year.

15.          SUBSIDIARIES

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

16.          CASH AND CASH EQUIVALENTS

17.          TRADE AND OTHER PAYABLES

All payables are financial liabilities measured at amortised cost.

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

18.          SHARE CAPITAL

19.          SHARE PREMIUM

The transaction costs of £111,177 incurred in the year ended 31 December 2019 and £291,222 incurred in the year ended 31 December 2018 have been deducted from equity.

The opening and closing balance of Share premium of £3,454,364 has been recognised.

20.          RESERVES

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

21.          RELATED PARTY TRANSACTIONS

As at 31 December 2020, an amount of £209,455 (31 December 2019: £203,788) 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.

22.          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 Peng Luo, who is also a director of the Company.