Global Connectivity - Half-year Report
10/09/2024 07:00
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RNS Number : 4706D Global Connectivity PLC 10 September 2024
10 September 2024
Global Connectivity Plc (the "Company" or "GCON")
Interim Results for the six months ended 30 June 2024
Global Connectivity Plc (AQSE: GCON), through its investment in Rural
Broadband Solutions Holdings Limited ("RBSHL") and thereby an indirect
investor in Voneus Limited ("Voneus"), a leading provider of Broadband
Services to rural areas of the UK, today announces its unaudited half year
results for the six months ended 30 June 2024.
Overview
- It is still less than 12 months since GCON became an indirect investor
in Voneus as a result of the merger between Voneus and RBSHL backed by two
major international infrastructure investors, the mission of which was to meet
the needs of hard-to-reach, rural and market town communities in the UK for
fast, reliable broadband connectivity.
- In September 2023, when the merger took effect, it was announced that
Voneus had available up to £250 million of new shareholder capital and debt
funding. In the short period between then and 30 June 2024, a substantial
amount of that capital has been regularly and vigorously deployed to grow the
business in respect of all essential KPIs including number of homes passed,
those fit for service and, importantly, customer sales.
- We expected that, as a result, this significant capital investment
would lead to an increase in the rate of growth of the business and also to
the shareholding in Voneus of RBSHL which at 30 June 2024 reached 39.7%. The
net asset value of GCON enjoyed a consequent increase in GCON's derived
ownership and asset value compared to 31 December 2023.
Financial Highlights
- Net assets increased by £9.4 million from £7.8 million at 31 December
2023 to £17.2 million at 30 June 2024.
- As at 30 June 2024 the net asset value per share is 4.75p (31 December
2023: 2.16p)
- The Company has estimated the fair value of its investment in RBSHL, an
unquoted company, and recognised an increase in that fair value.
- As at 30 June 2024, GCON had current cash of £318 thousand with
additional funding due by 31 December 2024.
- Running costs of GCON have for a quoted company been kept at a minimal
level.
Operational Highlights
- The management of Voneus has expanded and is an integrated and cohesive
unit with consequent benefits for recent and future operating performance.
Outlook
- The increase in pace of investment into Voneus has meant that business
progress has exceeded our expectations, with homes passed, including work in
progress, exceeding 100,000.
- The £75 million investment threshold after which GCON stands to be
diluted, was exceeded in August 2024.
- Any incurred dilution should be compared and measured against the rise in
value of Voneus, the future outlook for its business and the shareholding
percentage owned by RBSHL in Voneus.
- Our cash resources enable us to maintain our carried investment position
in Voneus and to consider the short- and medium-term merits of investing to
mitigate dilution.
- We continue our search for compelling investment opportunities in
alternative relevant services sectors.
The Directors of Global Connectivity Plc accept responsibility for the
contents of this announcement.
This announcement contains information which, prior to its disclosure, was
inside information as stipulated under Regulation 11 of the Market Abuse
(Amendment) (EU Exit) Regulations 2019/310 (as amended).
- ENDS -
For more information, contact:
Keith Harris
Executive Chairman
Global Connectivity plc
Email: info@globalconnectivityplc.com
https://www.globalconnectivityplc.com/
(https://www.globalconnectivityplc.com/)
Claire Louise Noyce
AQSE Stock Exchange Corporate Advisor and Corporate Broker
Hybridan LLP
Tel: +44 20 3764 2341
Email: claire.noyce@hybridan.com (mailto:claire.noyce@hybridan.com)
www.hybridan.com (http://www.hybridan.com)
Chairman's Statement
Since the merger, in September 2023, which created Voneus in its current form,
we have based the value of GCON's (derived) shareholding in the company on
sensible and conservative principles. In the process, we took into
consideration the equity value of Voneus which reflected the latest round of
equity capital funding, the increasing stake owned by RBSHL in Voneus and
GCON's actual percentage ownership of RBSHL.
The interim and audited final year valuations, as at 30 June 2023 and 31
December 2023 respectively, reflected this methodology. As noted, since the
September 2023 merger, there has been significant investment by the main
shareholders to a level where the original total financial targets envisaged
at the time of the merger are close to being reached. This financial backing
has occurred in parallel with the strengthening of the experienced management
team of Voneus and as a result the business has grown in all material
respects.
Our valuation methodology produces a fair value of our investment in Voneus of
£15.9 million as at 30 June 2024. In August 2024, a further capital injection
by shareholders into Voneus took place. After careful consideration we elected
at this time not to invest to maintain our 15% ownership of RBSHL, but even
allowing for the resulting dilution to 11.8% we show a valuation of £13.6
million.
Based on progress to date, should further equity funding be made at a higher
valuation and should the Company elect not to participate then, whilst our
percentage ownership RBSHL would decrease, the effects of the dilution should
be mitigated.
The importance of reliable and fast broadband to homes and businesses in rural
areas is now well recognised. The new government has acknowledged this as
recently evidenced by the Department for Science, Innovation & Technology
in an announcement in August 2024 in pledging to invest £800 million to bring
gigabit-capable broadband to an initial 96,000 homes, with a further intention
to cover a further 215,000 homes in coming months. Voneus is ideally
positioned to take full advantage of the government's shared objective of
closing the digital divide. Its performance data point to a fast rollout
within its existing footprint, increasing installations with negligible churn.
I look forward with optimism to being a part of that successful growth.
Keith Harris
Chairman
9 September 2024
Income Statement
(Unaudited) (Unaudited) (Audited)
Period from 1 January 2024 to 30 June 2024 Period from 1 January 2023 to 30 June 2023 Year ended 31 December 2023
Note £'000 £'000 £'000
Net gain on financial assets at fair value through profit or loss 6 9,507 3,171 3,171
Other administration fees and expenses 3 (150) (139) (248)
Operating profit 9,357 3,032 2,923
Finance income 2 1 3
Net finance income 2 1 3
Profit before income tax 9,359 3,033 2,926
Income tax expense 4 - - -
Profit for the period 9,359 3,033 2,926
Basic and diluted profit per share (pence) 5 2.59 0.84 0.81
Statement of Comprehensive Income
(Unaudited) (Unaudited) (Audited)
Period from 1 January 2024 to 30 June 2024 Period from 1 January 2023 to 30 June 2023 Year ended 31 December 2023
Note £'000 £'000 £'000
Profit for the period 9,359 3,033 2,926
Other comprehensive expense - - -
Total comprehensive income for the period 9,359 3,033 2,926
Balance Sheet
(Unaudited) (Unaudited) (Audited)
As at 30 June 2024 As at 30 June 2023 As at 31 December 2023
Note £'000 £'000 £'000
Assets
Non-current assets
Amounts due from related parties 7 - 275 -
Other financial assets 6 15,882 6,375 6,375
Subscriptions due - 950 -
Total non-current assets 15,882 7,600 6,375
Current assets
Amounts due from related parties 7 33 308 33
Subscriptions due 950 - 950
Trade and other receivables 8 25 24 27
Cash at bank 318 33 461
Total current assets 1,326 365 1,471
Total assets 17,208 7,965 7,846
Equity
Capital and reserves attributable to owners of the Parent:
Issued share capital 3,619 3,619 3,619
Warrant reserve 77 77 77
Share option reserve 309 288 299
Retained earnings 13,177 3,925 3,818
Total equity 17,182 7,909 7,813
Liabilities
Current liabilities
Trade and other payables 9 26 56 33
Total current liabilities 26 56 33
Total liabilities 26 56 33
Total equity and liabilities 17,208 7,965 7,846
The financial statements were approved and authorised for issue by the Board
of Directors on 9 September 2024 and signed on its behalf by:
Keith
Harris
Selwyn Lewis
Director
Director
Statement of Changes in Equity
Share capital Warrant reserve Share Option Retained earnings/ (deficit) Total
Reserve
£'000 £'000 £'000 £'000 £'000
Unaudited
Balance at 1 January 2023 3,619 77 278 892 4,866
Comprehensive income
Profit for the period - - - 3,033 3,033
Total comprehensive income for the period - - - 3,033 3,033
Transactions with owners
Share based payments relating to share options - - 10 - 10
Total transactions with owners - - 10 - 10
Balance at 30 June 2023 3,619 77 288 3,925 7,909
Audited
Balance at 1 January 2023 3,619 77 278 892 4,866
Comprehensive income
Profit for the year - - - 2,926 2,926
Total comprehensive income for the year - - - 2,926 2,926
Transactions with owners
Share based payments relating to share options - - 21 - 21
Total transactions with owners - - 21 - 21
Balance at 31 December 2023 3,619 77 299 3,818 7,813
Unaudited
Balance at 1 January 2024 3,619 77 299 3,818 7,813
Comprehensive expense
Profit for the period - - - 9,359 9,359
Total comprehensive income for the period - - - 9,359 9,359
Transactions with owners
Share based payments relating to share options - - 10 - 10
Total transactions with owners - - 10 - 10
Balance at 30 June 2024 3,619 77 309 13,177 17,182
Cash Flow Statement
(Unaudited) (Unaudited) (Audited)
Period from 1 January 2024 to 30 June 2024 Period from 1 January 2023 to 30 June 2023 Year ended 31 December 2023
Note £'000 £'000 £'000
Cash flows from operating activities
Profit for the period before tax 9,359 3,033 2,926
Adjustments for:
Net gain on financial assets at fair value through profit or loss (9,507) (3,171) (3,171)
Finance income (2) (1) (3)
Share based payments relating to share options 10 10 21
Operating loss before changes in working capital (140) (129) (227)
Decrease in trade and other receivables 2 65 62
Decrease in trade and other payables (7) (103) (126)
Cash used in operations (145) (167) (291)
Interest received 2 1 3
Net cash used in operating activities (143) (166) (288)
Cash flows from investing activities
Repayment from subsidiary - 175 725
Net cash generated from investing activities - 175 725
Net increase/(decrease) in cash and cash equivalents (143) 9 437
Cash and cash equivalents at beginning of the period 461 24 24
Cash and cash equivalents at end of the period 318 33 461
Notes to the Financial Statements
1 General Information
These interim financial statements do not include all of the information
required for full annual financial statements and should be read in
conjunction with the financial statements of the Company as at and for the
year ended 31 December 2023 which have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the UK.
The interim financial statements for the six months ended 30 June 2024 are
unaudited and have not been reviewed by the Company's auditors MAH, Chartered
Accountants. The comparative interim figures for the six months ended 30 June
2023 are also unaudited.
2 Basis of preparation
The accounting policies applied by the Company in the preparation of these
condensed interim financial statements are the same as those applied by the
Company in its financial statements for the year ended 31 December 2023.
3 Other administration fees and expenses
Period ended Period ended Year ended
30 June 2024 (Unaudited) 30 June 2023 (Unaudited) 31 December 2023 (Audited)
Audit fees 8 10 15
Directors' remuneration and fees 60 46 62
Directors' insurance cover 7 8 16
Professional fees 17 15 34
Share based payment expense 10 10 21
Other expenses 48 50 100
Administration fees and expenses 150 139 248
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 £10,000 (2023: £6,000).
Executive Directors' fees
The Chairman is entitled to an annual fee of £100,000 (2023: £80,000).
All directors' remuneration and fees
Total fees and basic remuneration (including VAT where applicable) paid to the
Directors for the period ended 30 June 2024 amounted to £60,448 (30 June
2023: £46,066) and was split as below. Directors' insurance cover amounted to
£7,489 (30 June 2023: £7,959).
All directors' remuneration and fees
Period ended Period ended Year ended
30 June 2024 (Unaudited) 30 June 2023 (Unaudited) 31 December 2023 (Audited)
Selwyn Lewis 5 3 6
Michael Langoulant 5 3 6
Keith Harris 50 40 80
Outstanding fees for former director waived - - (31)
Expenses reimbursed - - 1
60 46 62
4 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 (2023: 0%) to which the Company is
subject.
5 Basic and diluted profit/(loss) per share
(a) Basic
Basic profit/(loss) per share is calculated by dividing the profit/(loss)
attributable to equity holders of the Company by the weighted average number
of shares in issue during the period.
Period ended Period ended Year ended
30 June 2024 (Unaudited) 30 June 2023 (Unaudited) 31 December 2023 (Audited)
Profit attributable to equity holders of the Company (£'000) 9,359 3,033 2,927
Weighted average number of shares in issue (thousands) 361,926 361,926 361,926
Basic profit per share (pence per share) 2.59 0.84 0.81
(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 categories of dilutive
potential ordinary shares: warrants and share options.
Although the Company is reporting a profit from continuing operations for the
period 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.
6 Other financial assets
Instruments measured at fair value through profit and loss 30 June 2024 (Unaudited) 30 June 2023 (Unaudited) 31 December 2023 (Audited)
Start of the period 6,375 3,204 3,204
Net gain on financial assets at fair value through profit or loss 9,507 3,171 3,171
End of the period 15,882 6,375 6,375
Categorised as
Level 3 - unquoted investments 15,882 6,375 6,375
Total financial assets 15,882 6,375 6,375
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 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.
The Company has estimated the fair value of its investment in Rural Broadband
Solutions Holdings Limited, an unquoted equity instrument, and recognised an
increase in fair value based on the information provided by the investee
company.
7 Amounts due from related parties
This balance is unsecured and interest free. £32,760 (31 December 2023:
£32,760) relates to management services recharges which are repayable on
demand.
8 Trade and other receivables
30 June 2024 (Unaudited) 30 June 2023 (Unaudited) 31 December 2023 (Audited)
Prepayments 13 13 19
VAT receivable 12 11 8
Trade and other receivables 25 24 27
The fair value of trade and other receivables approximates their carrying
value.
9 Trade and other payables
30 June 2024 (Unaudited) 30 June 2023 (Unaudited) 31 December 2023 (Audited)
Other payables 26 56 33
Trade and other payables 26 56 33
The fair value of trade and other payables approximates their carrying value.
10 Post Balance Sheet Events
In August 2024, a further capital injection by shareholders into Voneus took
place. After careful consideration the Company elected at this time not to
invest to maintain its 15% ownership of RBSHL, the resulting dilution to 11.8%
has reduced the fair value of the investment from £15.9 million to £13.6
million.
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