Global Connectivity - Global Connectivity - Final Results
28/06/2023 07:00
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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 £0.4m to £5.03m 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 £75k, although
running costs have reduced significantly and the directors expect £0.55m 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 £75m 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 £75m ceiling has been reached.
- Tiger has committed an initial investment of £16m during its first
year of majority ownership. Please refer to:
https://www.globalconnectivityplc.com/Documents/Blog/rns-infrastructure-funding-complete.pdf
(https://www.globalconnectivityplc.com/Documents/Blog/rns-infrastructure-funding-complete.pdf)
on our website where announcements are held:
https://www.globalconnectivityplc.com/announcements
(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.
-ENDS
For further information please contact:
Keith Harris
Executive Chairman
Global Connectivity Plc
www.globalconnectivityplc.com (http://www.globalconnectivityplc.com)
Claire Louise Noyce
AQSE Stock Exchange Corporate Adviser & Corporate Broker
Hybridan LLP
claire.noyce@hybridan.com (mailto:claire.noyce@hybridan.com)
www.hybridan.com (http://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 £4.17 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 £75 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 £75 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 £'000 £'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 £'000 £'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 £'000 £'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/ (deficit) Total
premium reserve
£'000 £'000 £'000 £'000 £'000 £'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 £'000 £'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
standard (Periods commencing on or after)
Reference Narrative
Amendment to IFRS 16 Covid-19 Related Rent Concessions beyond 30 June 2021 1 April 2021
Amendments to IAS 16, Property, Plant and Equipment - Proceeds before 1 January 2022
Intended Use
Annual Improvements to IFRS Standards 2018-2020 (May 2020), Annual Improvements to IFRS Standards 2018-2020 (May 2020), 1 January 2022
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 a Contract 1 January 2022
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
standard (Periods commencing on or after)
Reference Narrative
IFRS 17 Insurance Contracts 1 January 2023
IAS 1 (amendments) Classification of Liabilities as Current or Non-Current and disclosure of 1 January 2023
accounting policies
IAS 8 (amendments) Changes in Accounting Estimates and Errors 1 January 2023
IAS 12 (amendments) Income Taxes 1 January 2023
IAS 1 (amendments) and IFRS practice statement 2 Disclosure of Accounting policies 1 January 2023
IFRS 16 (amendments) Lease liability in a sale and leaseback 1 January 2024
Amendments to IFRS 4 Extension of the Temporary Exemption from Applying IFRS 9 1 January 2023
Amendments to IAS 8 Definition of accounting estimates 1 January 2023
Amendments to IFRS 17 Initial Application of IFRS 17 and IFRS 9 - Comparative Information 1 January 2024
Amendments to IAS 1 Non- current Liabilities with Covenants 1 January 2024
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
£'000 £'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 year 1-5 years Over 5 years No stated maturity
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Trade and other payables 159 - - - - -
159 - - - - -
31 December 2021 Less than 1 month 1-3 months 3 months to 1 year 1-5 years Over 5 years No stated maturity
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Trade and other payables 138 - - - - -
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 £nil lower (2021: 100 basis
points, £nil 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 Year ended
December 2022
31 December 2021
£'000
£'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
£200,000 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 £6,000. Mr Stone was
entitled to receive an annual fee of £15,000.
Executive Directors' fees
The Chairman is entitled to an annual fee of £90,000 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 £112,213 (31
December 2021: £107,137) and was split as below. Directors' insurance cover
amounted to £20,883 (31 December 2021: £19,183).
Year ended Year ended
31 December 2022 31 December 2021
£'000 £'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 (£'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 £'000 £'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 £825,000 to be repaid over three years
at a rate of £275,000 per annum (note 18).
9 Amounts due from related parties
This balance is unsecured and interest free. £725,000 relates to a loan, see
note 18. £32,760 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
£'000 £'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
£'000 £'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 £'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 £'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
Outstanding (000s) Weighted average exercise price (£) Outstanding (000s) Weighted average exercise price (£)
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 (£000s) 77 77
Share price (£) 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:
( )
Units Weighted average exercise 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 £0.01.
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 Year ended
31
December 2022 31 December 2021
£'000 £'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 (£'000) 4,866 4,485
Shares in issue (in thousands) 361,926 361,926
NAV per share (£) 0.01 0.01
16 Trade and other payables
31 December 2022 31 December 2021
£'000 £'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 £82,000 (2021:
£134,450) and related to management services performed over time. At the
balance sheet date there was a balance of £32,760 (2021: £12,200) owed to
the Company.
During the year, £521k was provided to Secure Web Services Limited, by way of
an intercompany loan (2021: £975K). At the balance sheet date there was a
loan outstanding of £725,000 (2021: £1,246,670). This loan is unsecured and
interest free. £175,000 is due immediately with £275,000 due 31 December
2023 and the remaining £275,000 due 31 December 2024.
19 Investment in subsidiaries
31 December 2022 31 December 2021
Cost £'000 £'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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