TIDMGCON
RNS Number : 0989E
Global Connectivity PLC
28 June 2023
Global Connectivity Plc (the "Company" or "GCON")
Final results year ended 31 December 2022
Global Connectivity Plc (AQSE: GCON), a leading provider of
broadband services to rural areas of the UK through its investment
in Rural Broadband Holdings Solutions Limited, today announces its
Final Results for the year ended 31 December 2022.
Overview
- Since completion of its transaction with Tiger Infrastructure
Partners LP ("Tiger"), Global Connectivity Plc (formerly known as
Rural Broadband Solutions Plc) has been in a period of transition
as its subsidiaries are now owned by Rural Broadband Solutions
Holdings Ltd (RBSHL) in which the Company owns a 15% stake.
- Both former subsidiaries are benefiting from the investment
and the strategic expertise provided by Tiger and the directors
consider that the holding in RBSHL is the anchor to growing the
Company's asset value.
Financial Highlights
- Net assets were up by GBP0.4m to GBP5.03m as a result of the
reversal of the impairment of the intercompany loan with Secure Web
Services Limited ("SWS") and a significant reduction in running
costs.
- As at 16(th) June 2023, the current cash was circa GBP75k,
although running costs have reduced significantly and the directors
expect GBP0.55m to be received from SWS in repayment of the
intercompany loan over the next 18 months.
Operational Highlights
- The transaction with Tiger completed on 25th October 2022, in
which Tiger agreed to invest up to GBP75m into RBSHL This
investment places RBSHL, the new holding company of SWS and Cadence
Networks Ltd ("Cadence"), in a position to fund growth organically
and by acquisition with no further equity dilution for GCON until
the GBP75m ceiling has been reached.
- Tiger has committed an initial investment of GBP16m during its
first year of majority ownership. Please refer to:
https://www.globalconnectivityplc.com/Documents/Blog/rns-infrastructure-funding-complete.pdf
on our website where announcements are held:
https://www.globalconnectivityplc.com/announcements
Outlook
- The directors remain focused on finding other opportunities to
invest in, where technology can assist communication in a
commercial way.
-S
For further information please contact:
Keith Harris
Executive Chairman
Global Connectivity Plc
www.globalconnectivityplc.com
Claire Louise Noyce
AQSE Stock Exchange Corporate Adviser & Corporate Broker
Hybridan LLP
claire.noyce@hybridan.com
www.hybridan.com
Tel: +44 20 3764 2341
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the "
UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
Chairman's Statement
TIGER INFRASTRUCTURE FUNDING
As a result of unrequited demand for broadband services
throughout rural areas of the UK, by acquiring Secure Web Services
Limited ("SWS"), we created a public company, Rural Broadband
Solutions Plc ("RBBS"), to provide high speed broadband services to
those areas. The investment we raised across two fundraises in
September 2020 and then December 2021 from the public market
totalled GBP4.17 million. That capital was deployed to strengthen
our management team in order to expand our operational network and
enable the planned first phase of fibre build, and to make the
strategic acquisition of Cadence Networks Ltd ("Cadence").
Whilst implementing this growth strategy, it became apparent
that rural broadband services were likely to develop more quickly
and to a larger extent than was anticipated when we embarked on
this enterprise. In short, it had become clear that there was an
ever increasing demand nationwide for fast and reliable broadband.
It was equally apparent that the strategy on which we had embarked
would require a further considerable deployment of capital. Our
vision was clear, but the opportunity was immediate with Project
Gigabit on the horizon.
The huge opportunity, bold vision and capital required to
develop the plan, underpinned our belief that we should seek a
partner with an infrastructure fund and proven expertise, strong
capital backing and a shared belief in our vision. As a
consequence, this resulted in us entering into discussions with
Tiger Infrastructure Partners LP ("Tiger"). Tiger is an innovative
private equity firm focused on providing transformational growth
capital to middle market infrastructure companies.
The transaction with Tiger completed on 25th October 2022, in
which Tiger agreed to invest up to GBP75 million into a new jointly
owned company, Rural Broadband Solutions Holdings Limited
("RBSHL"). Tiger's investment places RBSHL, the new holding company
of SWS and Cadence, in a position to fund growth organically by
fulfilling our target to provide full fibre initially in the
communities of Shropshire and Wales and neighbouring districts, and
potentially by way of acquisitions, at an increased pace.
Global Connectivity (GCON)'s 15% equity ownership in RBSHL is
not subject to dilution unless and until Tiger reaches its GBP75
million capital contribution to RBSHL. This will enable GCON to
operate as an investment vehicle with the capacity to seek
opportunities in non-competing business sectors. We are already
actively engaged in investigating such appropriate investments. The
senior management team of RBSHL will continue dedicating their time
to the delivery of RBSHL's business plan, and will not be involved
in diligencing or managing new investment for GCON.
We note that some Altnets are experiencing funding issues amid
difficult conditions of rising costs, aggressive competition, and
the need to sign up consumers to meet targets. We are grateful for
Tiger in bringing its ideas, support and energy to our plans and
not just the financing package.
Keith Harris
Chairman
27 June 2023
Income Statement
Year ended 31 December 2022 Year ended
31 December 2021
Note GBP'000 GBP'000
--------------------------------------------------------- ----- ---------------------------- ------------------
Turnover - -
Cost of sales - -
Gross profit - -
Other administration fees and expenses 4 (338) (704)
Management services recharges 18 82 134
Operating loss (256) (570)
--------------------------------------------------------- ----- ---------------------------- ------------------
Reversal)/(increase) of impairment of intercompany loan 616 (544)
--------------------------------------------------------- ----- ---------------------------- ------------------
Net finance expense 616 (544)
--------------------------------------------------------- ----- ---------------------------- ------------------
Profit/(loss) before income tax 360 (1,114)
Income tax expense 5 - -
--------------------------------------------------------- ----- ---------------------------- ------------------
Profit/(loss) for the year 360 (1,114)
--------------------------------------------------------- ----- ---------------------------- ------------------
Basic and diluted profit/(loss) per share (pence) 6 0.10 (0.36)
--------------------------------------------------------- ----- ---------------------------- ------------------
Statement of Comprehensive Income
Year ended 31 December 2022 Year ended
31 December 2021
Note GBP'000 GBP'000
--------------------------------------------------- ------ ---------------------------- ------------------
Profit/(loss) for the year 360 (1,114)
Other comprehensive expense - -
Total comprehensive income/(expense) for the year 360 (1,114)
----------------------------------------------------------- ---------------------------- ------------------
Balance Sheet
As at 31 December 2022 As at 31 December 2021
Note GBP'000 GBP'000
----------------------------------------------------------- ------- ----------------------- -----------------------
Assets
Non-current assets
Investment in subsidiaries 18, 19 - 1,942
Amounts due from related parties 9, 18 275 -
Other financial assets 8 3,204 -
Subscriptions due 7 950 950
----------------------------------------------------------- ------- ----------------------- -----------------------
Total non-current assets 4,429 2,892
----------------------------------------------------------- ------- ----------------------- -----------------------
Current assets
Amounts due from related parties 9, 18 483 643
Trade and other receivables 10 89 63
Cash at bank 11 24 1,025
----------------------------------------------------------- ------- ----------------------- -----------------------
Total current assets 596 1,731
----------------------------------------------------------- ------- ----------------------- -----------------------
Total assets 5,025 4,623
----------------------------------------------------------- ------- ----------------------- -----------------------
Equity
Capital and reserves attributable to owners of the Parent:
Issued share capital 12 3,619 3,619
Warrant reserve 13 77 77
Share option reserve 13 278 257
Retained earnings 14 892 532
----------------------------------------------------------- ------- ----------------------- -----------------------
Total equity 4,866 4,485
----------------------------------------------------------- ------- ----------------------- -----------------------
Liabilities
Current liabilities
Trade and other payables 16 159 138
Total current liabilities 159 138
----------------------------------------------------------- ------- ----------------------- -----------------------
Total liabilities 159 138
----------------------------------------------------------- ------- ----------------------- -----------------------
Total equity and liabilities 5,025 4,623
----------------------------------------------------------- ------- ----------------------- -----------------------
The financial statements were approved and authorised for issue
by the Board of Directors on 27 June 2023 and signed on its behalf
by:
Keith Harris Selwyn Lewis
Director Director
Statement of Changes in Equity
Share capital Share Warrant Share option reserve Retained earnings/ Total
premium reserve (deficit)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Balance at 1 January
2021 3,041 - 77 - 409 3,527
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Comprehensive expense
Loss for the year - - - - (1,114) (1,114)
Total comprehensive
expense for the year - - - - (1,114) (1,114)
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Transactions with
owners
Issue of shares 578 1,237 - - - 1,815
Share based payments
relating to share
options - - - 257 - 257
Transfer to retained
earnings - (1,237) - - 1,237 -
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Total transactions
with owners 578 - - 257 1,237 2,072
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Balance at 31 December
2021 3,619 - 77 257 532 4,485
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Balance at 1 January
2022 3,619 - 77 257 532 4,485
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Comprehensive income
Profit for the year - - - - 360 360
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Total comprehensive
income for the year - - - - 360 360
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Transactions with
owners
Share based payments
relating to share
options - - - 21 - 21
Total transactions
with owners - - - 21 - 21
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Balance at 31 December
2022 3,619 - 77 278 892 4,866
----------------------- -------------- --------- --------- --------------------- ---------------------- --------
Cash Flow Statement
Year ended 31 December 2022 Year ended
31 December 2021
Note GBP'000 GBP'000
------------------------------------------------------------- ----- ---------------------------- ------------------
Cash flows from operating activities
Profit/(loss) for the year before tax 360 (1,114)
Adjustments for:
(Reversal)/increase of impairment of amounts due from
related parties (616) 544
Share based payments relating to share options 21 123
Foreign exchange loss 3 - -
Operating loss before changes in working capital (235) (447)
(Increase)/decrease in trade and other receivables (26) 34
Increase in trade and other payables 21 58
------------------------------------------------------------- ----- ---------------------------- ------------------
Cash used in operations (240) (355)
Interest received - -
Net cash used in operating activities (240) (355)
------------------------------------------------------------- ----- ---------------------------- ------------------
Cash flows from investing activities
Investment in subsidiary - (80)
Loan to subsidiary (521) (975)
Reorganisation costs (240) -
Net cash used in from investing activities (761) (1,055)
------------------------------------------------------------- ----- ---------------------------- ------------------
Cash flows from financing activities
Issue of shares - 1,675
Net cash generated from financing activities - 1,675
------------------------------------------------------------- ----- ---------------------------- ------------------
Net (decrease)/increase in cash and cash equivalents (1,001) 265
Cash and cash equivalents at beginning of the year 1,025 760
Foreign exchange losses on cash and cash equivalents - -
------------------------------------------------------------- ----- ---------------------------- ------------------
Cash and cash equivalents at end of the year 11 24 1,025
------------------------------------------------------------- ----- ---------------------------- ------------------
Notes to the Financial Statements
1 General information
Global Connectivity Plc (formerly known as Rural Broadband
Solutions Plc) (the "Company") was incorporated and registered in
the Isle of Man under the Isle of Man Companies Acts 1931 to 2004
on 27 June 2006 as a public limited company with registered number
117001C. On 7 January 2011 with the approval of Shareholders in
general meeting, the Company was re-registered as a company under
the Isle of Man Companies Act 2006 with registered number 006491v.
The Company's investment strategy is to identify investment
opportunities and acquisitions in the developing market for rural
broadband in the UK. The Company seeks to provide Shareholders with
an attractive total return achieved primarily through capital
appreciation.
The Company's administration is delegated to Apex Corporate
Services (IOM) Limited (the "Administrator"). The registered office
of the Company is Exchange House, 54-62 Athol Street, Douglas, Isle
of Man, IM1 1JD.
Pursuant to a prospectus dated 20 October 2006 there was an
authorisation to place up to 50 million shares. Following the close
of the placing on 26 October 2006, 30 million shares were issued at
a price of 100p per share.
The shares of the Company were admitted to trading on the AIM
Market of the London Stock Exchange ("AIM") on 26 October 2006 when
dealings also commenced. On the same date the shares of the Company
were admitted to the Official List of The International Stock
Exchange (the "TISE").
As a result of a further fundraising in May 2007, 32,292,810
shares were issued at a price of 106p per share, which were
admitted to trading on AIM on 22 May 2007.
On 4 June 2018 the listing of the Company's shares on AIM and on
TISE was cancelled.
Pursuant to an Admission Document dated 2 December 2019 there
was a placing of 29,000,000 shares on 2 December 2019. On the same
date the shares of the Company were admitted to trading on the
Aquis Stock Exchange (formerly the NEX Exchange Growth Market).
Pursuant to an Admission Document dated 23 September 2020 there
was a placing of 100,000,000 shares and 100,000,000 warrants for
the fundraising, consideration shares of 16,000,000 in relation to
the acquisition of Secure Web Services Limited and 800,000 shares
and 1,622,400 warrants issued in consideration for services on 21
October 2020. On the same date the shares of the Company were
admitted to trading on the Aquis Stock Exchange.
A further Placing and Subscription took place in December 2021
in order to fund the acquisition of Cadence Networks Limited and
drive organic growth before infrastructure funding. There was a
placing of 55,833,333 shares and consideration shares of 2,000,000
in relation to the acquisition of Cadence Networks Limited. These
shares were issued and admitted to trading on the Aquis Stock
Exchange on 21 December 2021.
The Company's agents perform all functions, other than those
carried out by the Board.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all years presented unless otherwise
stated.
2.1 Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the UK. The financial statements have been prepared on the going
concern basis, as the Board of Directors has a reasonable
expectation that the Company has the resources to continue in
business for the foreseeable future.
Notes to the Financial Statements (continued)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
The financial statements have been prepared under the historic
cost convention, as described in the accounting policies set out
below. These accounting policies are consistent with those in the
previous year.
New International Financial Reporting Standards (IFRSs) and
interpretations effective in the current period
Application date of
Reference Narrative standard (Periods commencing
on or after)
====================================== ====================================== ======================================
Amendment to IFRS 16 Covid-19 Related Rent Concessions 1 April 2021
beyond 30 June 2021
Amendments to IAS 16, Property, Plant and Equipment - 1 January 2022
Proceeds before
Intended Use
Annual Improvements to IFRS Standards Annual Improvements to IFRS Standards 1 January 2022
2018-2020 (May 2020), 2018-2020 (May 2020),
Amendments to IFRS 3, (May 2020) Reference to the Conceptual Framework 1 January 2022
Amendments to IAS 37 (May 2020), Onerous Contracts - Cost of Fulfilling 1 January 2022
a Contract
====================================== ====================================== ======================================
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and
interpretation are effective for annual periods beginning after 1
January 2022 and have not been applied in preparing these financial
statements. None of these are expected to have a significant effect
on the financial statements of the Company. The relevant standards
are as follows.
Application date of
Reference Narrative standard (Periods commencing
on or after)
====================================== ====================================== ======================================
IFRS 17 Insurance Contracts 1 January 2023
IAS 1 (amendments) Classification of Liabilities as 1 January 2023
Current or Non-Current and disclosure
of accounting policies
IAS 8 (amendments) Changes in Accounting Estimates and 1 January 2023
Errors
IAS 12 (amendments) Income Taxes 1 January 2023
IAS 1 (amendments) and IFRS practice Disclosure of Accounting policies 1 January 2023
statement 2
IFRS 16 (amendments) Lease liability in a sale and 1 January 2024
leaseback
Amendments to IFRS 4 Extension of the Temporary Exemption 1 January 2023
from Applying IFRS 9
Amendments to IAS 8 Definition of accounting estimates 1 January 2023
Amendments to IFRS 17 Initial Application of IFRS 17 and 1 January 2024
IFRS 9 - Comparative Information
Amendments to IAS 1 Non- current Liabilities with 1 January 2024
Covenants
-------------------------------------- -------------------------------------- --------------------------------------
Notes to the Financial Statements (continued)
2 Summary of significant accounting policies (continued)
2.2 Significant accounting estimates and judgements
The Company makes certain estimates and assumptions regarding
the future. Estimates and judgements are continually evaluated
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
(a) Trade receivables and Loans and receivables
The Company assesses its trade receivables and loans and
receivables for impairment at the end of each reporting period. In
determining whether an impairment loss should be recorded in profit
or loss, the Company makes judgements as to whether there is
observable data indicating a measurable decrease in the estimated
future cash flows from a financial asset.
(b) Fair value of financial assets - Level 3
The Company reviews the fair value of its unquoted equity
instrument at each Statement of Financial Position date. This
requires management to make an estimate of the value of the
unquoted security in the absence of an active market. At year end,
management's best judgement is based on the information provided to
them by the investee company. Where all of the information
available is positive but there is insufficient information to
demonstrate that the fair value is anything other than cost as a
result of a lack of other inputs or evidence to suggest an uplift
of the value, no fair value increase is recognised to be
prudent.
2.3 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements are measured using
the currency of the primary economic environment in which the
entity operates ("the functional currency"). The financial
statements are presented in Pound Sterling, which is the Company's
functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the company
income statement.
2.4 Revenue and expense recognition
The company provides management services and revenue comprises
of certain costs incurred during the period which are then
recharged. The pricing of these services (which drives the revenue
recognition) depends on the service level required by the client,
and on the commercial imperatives and pricing sensitivities of the
client. The contractual performance obligations will typically be
embedded in an agreement with the client. Where that agreement is
detailed, the revenue recognition will follow the allocation of
fees and revenues against the completion of the agreed performance
milestones in the accounting period. Where the agreement is not
specific, the revenue recognition will be in proportion to the
completion of performance milestones in the relevant accounting
period against the internal costings prepared in advance for each
project.
Interest income is recognised in the financial statements on a
time-proportionate basis using the effective interest method.
The effective interest method is a method of calculating the
amortised cost of a financial asset or financial liability and of
allocating the interest income or interest expense over the
period.
Expenses are accounted for on an accruals basis.
Notes to the Financial Statements (continued)
2 Summary of significant accounting policies (continued)
2.5 Financial assets and financial liabilities
Financial instruments
IFRS 9 requires an entity to address the classification,
measurement and recognition of financial assets and
liabilities.
a) Classification
The Company classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at fair value (either
through OCI or through profit or loss); and
-- those to be measured at amortised cost.
2.5 Financial assets and financial liabilities (continued)
The classification depends on the Company's business model for
managing the financial assets and the contractual terms of the cash
flows.
For assets measured at fair value, gains and losses will be
recorded either in profit or loss or in OCI. For investments in
equity instruments that are not held for trading, this will depend
on whether the Company has made an irrevocable election at the time
of initial recognition to account for the equity investment at fair
value through other comprehensive income (FVOCI).
The Company classifies financial assets as amortised costs only
if both of the following criteria are met:
-- the asset is held within a business model whose objective is
to collect contractual cash flows; and
-- the contractual terms give rise to cash flows that are solely
payment of principal and interest.
b) Recognition
Purchases and sales of financial assets are recognised on trade
date (that is, the date on which the Company commits to purchase or
sell the asset). Financial assets are de-recognised when the rights
to receive cash flows from the financial assets have expired or
have been transferred and the Company has transferred substantially
all the risks and rewards of ownership.
c) Measurement
At initial recognition, the Company measures a financial asset
at its fair value plus, in the case of a financial asset not at
fair value through profit or loss (FVPL), transaction costs that
are directly attributable to the acquisition of the financial
asset.
Transaction costs of financial assets carried at FVPL are
expensed in profit or loss.
To determine the fair value of the investment, the Directors
have reviewed all information received form the investee company.
Where all of the information available is all positive but there is
insufficient information to demonstrate that the fair value is
anything other than cost as a result of a lack of other inputs or
evidence to suggest an uplift or impairment of the value, no fair
value movement is recognised.
Assets carried at amounts based on fair value are defined as
follows:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
Debt instruments
Amortised cost: Assets that are held for collection of
contractual cash flows, where those cash flows represent solely
payments of principal and interest, are measured at amortised cost.
Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly in profit or loss
and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as a
separate line item in the statement of profit or loss.
Notes to the Financial Statements (continued)
2 Summary of significant accounting policies (continued)
d) Impairment
The Company assesses, on a forward-looking basis, the expected
credit losses associated with any debt instruments carried at
amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. For
trade receivables, the Company applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
2.6 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
2.7 Warrants and share options
The Company estimates the fair value of the future liability
relating to issued warrants and share options using:
-- residual method, where a warrant was issued and included as a
part of a package placement of "1 share + 1 warrant"
-- the Black-Scholes pricing model taking into account the terms
and conditions upon which the warrants and share options were
issued, if the warrant or share option was granted on its own.
Warrants relating to equity finance are recorded as a reduction
of share premium based on the fair value of the warrants. The
charge for the share options is recorded under administrative
expenses in the income statement.
2.8 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, demand
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value. The carrying amount of
these assets approximates their fair value.
3 Risk management in respect of financial instruments
The Company's activities expose it to a variety of financial
risks: market risk (including foreign currency risk and interest
rate risk), credit risk and liquidity risk. The financial risks
relate to the following financial instruments: investments, loans
and receivables and other liabilities as detailed in note 2.5.
Foreign currency risk
Foreign currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates. The Company's operations are not conducted in jurisdictions
which generate revenue, expenses, assets and liabilities in
currencies other than Pound Sterling ("the functional currency of
the Company"). As a result, there was no exposure to foreign
currency risk as at 31 December 2021 or 31 December 2022.
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.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date. This
relates also to financial assets carried at amortised cost.
Notes to the Financial Statements (continued)
3 Risk management in respect of financial instruments (continued)
Credit risk (continued)
At the reporting date, the Company's financial assets exposed to
credit risk amounted to the following:
31 December 2022 31 December 2021
GBP'000 GBP'000
---------------------------------- ------------------ -----------------
Other financial assets 3,204 -
Subscriptions due 950 950
Amounts due from related parties 758 643
Trade and other receivables 89 63
Cash at bank 24 1,025
5,025 2,681
---------------------------------- ------------------ -----------------
The Company manages its credit risk by monitoring the
creditworthiness of counterparties regularly. Cash transactions and
balances are limited to high-credit-quality financial
institutions.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to
meet its obligations as they fall due. The Company currently
manages its liquidity risk by maintaining sufficient cash and with
the personal support of the Chairman for shortfalls as a result of
the timing of loan repayments. The Company's liquidity position is
monitored by the Board of Directors.
The residual undiscounted contractual maturities of financial
liabilities are as follows:
31 December 2022 Less than 1 month 1-3 months 3 months to 1 1-5 years Over 5 years No stated
year maturity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Financial
liabilities
Trade and other 159 - - - - -
payables
159 - - - - -
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
31 December 2021 Less than 1 month 1-3 months 3 months to 1 1-5 years Over 5 years No stated
year maturity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Financial
liabilities
Trade and other 138 - - - - -
payables
138 - - - - -
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest rates.
The Company is exposed to interest rate risk from the cash held in
interest bearing accounts at floating rates or short-term deposits
of one month or less and on loans from third parties. The Company's
Board of Directors monitor and review the interest rate
fluctuations on a continuous basis and act accordingly.
During the year ended 31 December 2022 should interest rates
have decreased by 100 basis points, with all other variables held
constant, the shareholders' equity and profit for the period would
have been GBPnil lower (2021: 100 basis points, GBPnil lower).
Capital risk management
The Company's primary objective when managing its capital base
is to safeguard its ability to continue as a going concern. Capital
comprises share capital (see note 12) and reserves.
No changes were made in respect of the objectives, policies or
processes in respect of capital management during the years ended
31 December 2021 and 31 December 2022.
Notes to the Financial Statements (continued)
4 Other administration fees and expenses
Year ended 31 December 2022 Year ended
GBP'000 31 December 2021
GBP'000
Audit fees 15 15
Directors' remuneration and fees 112 107
Directors' insurance cover 21 19
Professional fees 133 195
Acquisition costs - 109
Reorganisation costs* (50) 50
Share based payment expense 21 123
Other expenses 86 86
---------------------------------- ---------------------------- ------------------
Administration fees and expenses 338 704
---------------------------------- ---------------------------- ------------------
* costs incurred last year were able to be recovered from Tiger
when the reorganisation completed on 25 October 2022
Included within other administration fees and expenses are the
following:
Directors' remuneration
The maximum amount of basic remuneration payable by the Company
by way of fees to the Non-executive Directors permitted under the
Articles of Association is GBP200,000 per annum. All Directors are
each entitled to receive reimbursement of any expenses incurred in
relation to their appointment. Mr Langoulant and Mr Lewis are
entitled to receive an annual fee of GBP6,000. Mr Stone was
entitled to receive an annual fee of GBP15,000.
Executive Directors' fees
The Chairman is entitled to an annual fee of GBP90,000 but
permitted a reduction when he was receiving fees from Secure Web
Services Limited whilst it was a wholly owned subsidiary.
All directors' remuneration and fees
Total fees and basic remuneration (including VAT where
applicable) paid to the Directors for the year ended 31 December
2022 amounted to GBP112,213 (31 December 2021: GBP107,137) and was
split as below. Directors' insurance cover amounted to GBP20,883
(31 December 2021: GBP19,183).
Year ended Year ended
31 December 2022 31 December 2021
GBP'000 GBP'000
--------------------- ------------------ ------------------
Selwyn Lewis 6 6
Michael Langoulant 6 6
Christopher Stone 14 8
Keith Harris 85 85
Expenses reimbursed 1 2
--------------------- ------------------ ------------------
112 107
--------------------- ------------------ ------------------
5 Taxation
The Company is resident in the Isle of Man for taxation
purposes. The Isle of Man has a 0% rate of corporate income tax
(2021: 0%) to which the Company is subject.
Notes to the Financial Statements (continued)
6 Basic and diluted profit/(loss) per share
(a) Basic
Basic profit/(loss) per share is calculated by dividing the
profit/(loss) of the Company by the weighted average number of
shares in issue during the year.
Year ended 31 December 2022 Year ended
31 December 2021
-------------------------------------------------------------------- ---------------------------- ------------------
Profit/(loss) attributable to equity holders of the Company
(GBP'000) 360 (1,114)
Weighted average number of shares in issue (thousands) 361,926 305,836
-------------------------------------------------------------------- ---------------------------- ------------------
Basic profit/(loss) per share (pence per share) 0.10 (0.36)
-------------------------------------------------------------------- ---------------------------- ------------------
(b) Diluted
Diluted profit/(loss) per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has two category of dilutive potential ordinary shares: warrants
and share options.
Although the Company is reporting a profit from continuing
operations for the year the exercise price of the warrants or
performance criteria for the share options have not been met and
therefore exercise cannot take place yet. The basic and diluted
profit per share as presented on the face of the Income Statement
are therefore identical.
7 Subscriptions due
On 10 September 2019 75 million Ordinary Shares were allotted,
37.5 million to Michael Meyer (former Chairman of the Company) and
37.5 million to Barry Hersh. The Ordinary Shares were issued at a
price of 1 pence per share. The consideration for the Ordinary
Shares is to be left outstanding on terms that it shall be paid to
the Company in full by 31 December 2024.
On 17 March 2020 20 million Ordinary Shares were allotted to
Keith Harris (Chairman of the Company). The Ordinary Shares were
issued at a price of 1 pence per share. The consideration for the
Ordinary Shares is to be left outstanding on terms that it shall be
paid to the Company in full by 31 December 2024.
8 Other financial assets
31 December 2022 31 December 2021
Carrying amount of financial assets GBP'000 GBP'000
----------------------------------------------------------- ----------------- -----------------
Instruments measured at fair value through profit and loss 3,204 -
Total financial assets 3,204 -
----------------------------------------------------------- ----------------- -----------------
Categorised as
Level 3 - unquoted investments 3,204 -
Total financial assets 3,204 -
------------------------------- ------
The infrastructure funding deal with Tiger Infrastructure
Partners Fund III LP ("Tiger") completed on 25 October 2022. As a
result the Company transferred ownership of its two previously
wholly owned subsidiaries, Secure Web Services Limited and Cadence
Networks (note 18) to a new intermediate holding company, Rural
Broadband Solutions Holdings Limited, of which the Company now owns
15%. At the same time part of intercompany loan with Secure Web
Services Limited was capitalised leaving a balance of GBP825,000 to
be repaid over three years at a rate of GBP275,000 per annum (note
18).
9 Amounts due from related parties
This balance is unsecured and interest free. GBP725,000 relates
to a loan, see note 18. GBP32,760 relates to management services
recharges which are repayable on demand.
Notes to the Financial Statements (continued)
10 Trade and other receivables
31 December 2022 31 December 2021
GBP'000 GBP'000
----------------------------- ----------------- -----------------
Prepayments 19 31
VAT receivable 70 32
Trade and other receivables 89 63
----------------------------- ----------------- -----------------
The fair value of trade and other receivables approximates their
carrying value.
11 Cash and cash equivalents
31 December 2022 31 December 2021
GBP'000 GBP'000
--------------- ----------------- -----------------
Bank balances 24 1,025
Cash at bank 24 1,025
--------------- ----------------- -----------------
12 Share capital
Ordinary Shares of 1p each As at As at
31 December 2022 Number 31 December 2022 GBP'000
---------------------------- ------------------------- --------------------------
Authorised 800,000,000 8,000
Issued and fully paid up 361,926,143 3,619
---------------------------- ------------------------- --------------------------
Ordinary Shares of 1p each As at As at
31 December 2021 Number 31 December 2021 GBP'000
---------------------------- ------------------------- --------------------------
Authorised 800,000,000 8,000
Issued and fully paid up 361,926,143 3,619
---------------------------- ------------------------- --------------------------
The holders of Ordinary Shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company.
No distributions were paid during the year (31 December 2021:
none).
13 Warrants and share options
Warrants
The number and weighted average exercise price of warrants in
issue for the year ended 31 December 2022 and 2021 is as
follows:
31 December 2022 31 December 2021
Weighted average Weighted average
Outstanding exercise price Outstanding exercise price
(000s) (GBP) (000s) (GBP)
----------------- ------------ ----------------- ------------ -----------------
Opening balance
1 January 101,622 0.04 101,622 0.04
Issued - - - -
Exercised - - - -
Closing balance
31 December 101,622 0.03* 101,622 0.04
----------------- ------------ ----------------- ------------ -----------------
* 100 million warrants were due to expire on 21 October 2022.
The Company agreed to extend the warrant exercise period by 18
months to 21 April 2024 and decreased the warrant exercise price to
3p per share.
Notes to the Financial Statements (continued)
13 Warrants and share options (continued)
Warrants (continued)
The estimate of the fair value of the Warrants is measured based
on the Black-Scholes model. The following inputs were used in the
calculation of the fair value of the warrants granted.
31 December 2022 31 December 2021
--------------------------------- ----------------- -----------------
Fair value (GBP000s) 77 77
Share price (GBP) 0.025 0.025
Expected volatility 30% 30%
Expected warrants life (years)* 1 1
Expected dividend yield 0% 0%
Risk-free interest rate 0.33% 0.33%
--------------------------------- ----------------- -----------------
* exercise period was extended
The expected volatility is based on the historical share prices
of a group of companies deemed to be comparable.
Share options
The Company has issued share options as an incentive to the
senior management of the Company (and up to the reorganisation in
October 2022 to the management of the subsidiary company Secure Web
Services Limited) . In addition, the Company has issued warrants to
senior management and advisers in payment or part payment for
services provided to the Company. All share options granted in
prior years were granted under individual agreements and are
subject to market and service vesting conditions. These options
were HMRC approved EMI options up to the date of the reorganisation
in October 2022. The vesting conditions fall into the 3 main
categories:
-- Salary sacrifice for certain individuals where no further vesting condition is required;
-- Numbers of monthly paying customers sustained over a three month period;
-- Share price hurdles based on share values of 4.5p, 7.5p and
10.5p over 3 consecutive months or a liquidity event at that price
per share at any time following the award of the options.
Each share option converts into one ordinary share of the
Company on exercise and are accounted for as equity-settled
share-based payments. The equity instruments granted carry neither
rights to dividends nor voting rights .
Share options in issue:
Weighted average exercise
Units price
------------------------ ------------ --------------------------
Balance at 31 December
2021 29,250,000 1.0p
------------------------ ------------ --------------------------
Cancelled during
the year (2,000,000) -
------------------------ ------------ --------------------------
Balance at 31 December
2022 27,250,000 1.0p
------------------------ ------------ --------------------------
Exercisable at 31
December 2022 - -
------------------------ ------------ --------------------------
The fair value is estimated at the date of grant using the
Black-Scholes model taking into account the terms and conditions
attached to the grant.
The share options outstanding as at 31 December 2022 have a
weighted remaining contractual life of 1.5 years with an exercise
price of GBP0.01.
Notes to the Financial Statements (continued)
13 Warrants and share options (continued)
Share options (continued)
The value of share options charged to administrative expenses in
the Statement of Comprehensive Income during the year is as
follows:
Year ended 31 December 2022 Year ended
31 December 2021
GBP'000 GBP'000
--------------- ---------------------------- ------------------
Share options 21 257
--------------- ---------------------------- ------------------
Total 21 257
--------------- ---------------------------- ------------------
14 Reserves
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Retained earnings All other net gains and losses and transactions with owners (e.g. dividends) not recognised
elsewhere
Warrant reserve The warrants reserve arises on the issue of warrants. Refer note 13 for further information.
Share option reserve The share option reserve arises on the issue of share options. Refer note 13 for further
information.
15 Net asset value ("NAV") per share
31 December 2022 31 December 2021
-------------------------------------------------------------------- ----------------- -----------------
Net assets attributable to equity holders of the Company (GBP'000) 4,866 4,485
Shares in issue (in thousands) 361,926 361,926
-------------------------------------------------------------------- ----------------- -----------------
NAV per share (GBP) 0.01 0.01
-------------------------------------------------------------------- ----------------- -----------------
16 Trade and other payables
31 December 2022 31 December 2021
GBP'000 GBP'000
-------------------------- ----------------- -----------------
Directors' fees payable 46 -
Other payables 113 138
Trade and other payables 159 138
-------------------------- ----------------- -----------------
The fair value of trade and other payables approximates their
carrying value.
17 Contingent liabilities and commitments
As at 31 December 2022 the Company had no contingent liabilities
or commitments.
Notes to the Financial Statements (continued)
18 Related party transactions
Parties are considered to be related if one party has the
ability to control the other party or to exercise significant
influence over the other party in making financial or operational
decisions. Key management is made up of the Board of Directors who
are therefore considered to be related parties and the transactions
were made at arm's length. Fees in relation to the Directors are
disclosed in note 4. Shares allotted to related parties are
disclosed in note 7.
Management fees charged to the former wholly-owned subsidiary,
Secure Web Services Limited, up to the date of reorganisation
amounted to GBP82,000 (2021: GBP134,450) and related to management
services performed over time. At the balance sheet date there was a
balance of GBP32,760 (2021: GBP12,200) owed to the Company.
During the year, GBP521k was provided to Secure Web Services
Limited, by way of an intercompany loan (2021: GBP975K). At the
balance sheet date there was a loan outstanding of GBP725,000
(2021: GBP1,246,670). This loan is unsecured and interest free.
GBP175,000 is due immediately with GBP275,000 due 31 December 2023
and the remaining GBP275,000 due 31 December 2024.
19 Investment in subsidiaries
31 December 2022 31 December 2021
Cost GBP'000 GBP'000
----------------------------------------------------------------------- ----------------- -----------------
At 1 January 1,942 1,588
Additions - 220
Share based payment expense attributable to subsidiary - 134
Reclassification to other financial assets (note 8) on reorganisation (1,942) -
At 31 December - 1,942
----------------------------------------------------------------------- ----------------- -----------------
The principal subsidiary undertakings up to 25 October 2022
were:-
Country of incorporation Percentage of shares held
----------------------------- -------------------------- --------------------------
Secure Web Services Limited United Kingdom 100%
Cadence Networks Limited United Kingdom 100%
----------------------------- -------------------------- --------------------------
20 Ultimate controlling party
There is no one controlling party.
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END
NEXFLFSEREIDFIV
(END) Dow Jones Newswires
June 28, 2023 02:00 ET (06:00 GMT)
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