Global Connectivity - Interim Results
28/09/2023 07:00
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RNS Number : 9045N Global Connectivity PLC 28 September 2023
Global Connectivity Plc (the "Company" or "GCON")
Interim Results
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 unaudited half year results for the six
months ended 30 June 2023.
Overview
- Since completion of its transaction with Tiger Infrastructure
Partners LP ("Tiger"), Global Connectivity 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 continues to own a 15% stake.
- Following the merger with Voneus Broadband and the acquisition of
Broadway Partners, GCON's involvement in the broadband market has now been
consolidated and it is expected that the Company's asset value will be further
enhanced.
Financial Highlights
- Net assets were up by £3.0m compared to 31 December 2022 mainly as
a result of a net gain on financial assets at fair value through profit or
loss of £3.2m.
- The Company has estimated the fair value of its investment in RBSHL,
an unquoted equity instrument, and recognised an increase in fair value based
on the information provided by the investee company.
- As at 30 June 2023, the current cash was circa £33k. However, the
standard running costs have reduced significantly (by 36% on the same period
of the previous year) and the directors expect £0.55m to be received from SWS
in repayment of the intercompany loan over the next 18 months.
Operational Highlights
- Macquarie Capital, the Israel Infrastructure Fund and Tiger
Infrastructure Partners have merged SWS Broadband and Cadence Networks with
Voneus Broadband, and simultaneously acquired Broadway Partners.
- The combined group will be funded with up to £250 million in new
capital from the three shareholders and bank lenders to advance the company's
and the UK government's shared objective of closing the digital divide.
- The combined company has a target to serve over 350,000 premises
across the UK.
Outlook
- GCON's involvement in the broadband fibre market is now anchored.
- It can therefore be expected that the process of seeking suitable
investments to further the growth of GCON will accelerate.
-ENDS
For further information please contact:
Keith Harris
Executive Chairman
Global Connectivity Plc
Email: info@globalconnectivityplc.com
https://www.globalconnectivityplc.com/
Claire Louise Noyce
AQSE Stock Exchange Corporate Adviser & 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)
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
SIGNIFICANT DEVELOPMENT
In my Chairman's Statement in our Final Accounts for the year ended 31
December 2022, published on 27 June 2023, I reflected on the anticipated
benefits to GCON of our financial and strategic relationship with Tiger
Infrastructure Partners Fund III LP ("Tiger"). These arise from the
transaction we entered into which led to the formation of Rural Broadband
Solutions Holdings Limited ("RBSHL"), the company now owned 85% by Tiger and
15% by GCON.
I am pleased to report that, within a year of signing the agreement with
Tiger, RBSHL has been part of a significant transaction with Tiger, both for
the development of the whole UK rural broadband market and for GCON. Earlier
this week, on 25 September 2023, GCON announced that Macquarie Capital, the
Israel Infrastructure Fund and Tiger (through RBSHL) have merged their fibre
broadband interests, and simultaneously acquired Broadway Partners.
The combined group will operate under the name Voneus Broadband, under which
Macquarie Capital has been operating since investing in this business sector,
in 2019. The combined group will be funded with up to £250 million from its
three major shareholders and bank lenders to accelerate its progress and the
UK government's shared objective of closing the digital divide. These
consolidation and financial developments place Voneus in a game-changing
position to service the needs of hard-to-reach communities with broadband
connectivity. The company has a target to serve over 350,000 premises across
the UK.
This transaction creates a business of substantial scale that can benefit from
numerous synergies including improved cost economies, a larger future build
pipeline and diversified contractor relationships. The component parts which
now make up Voneus operate in adjacent geographical areas.
The capital contribution to the new group will be funded disproportionately so
that RBSHL will increase its stake in Voneus Broadband from the current 32%.
There are no capital demands on GCON, and it has protection from dilution, in
respect of its ownership of the combined company, until Tiger's capital
contribution exceeds £75 million.
Separately, over the past several months, the board of GCON has been actively
investigating appropriate investment opportunities in a variety of technically
based businesses that enhance connectivity either between consumers or
companies that provide services to consumers where enhanced connectivity is
essential. We have declined to pursue two of these opportunities due to these
(on more detailed examination) not fulfilling all the criteria that the
Company has with respect to suitability, fit and growth potential and are
advancing discussions in respect of a further two. Now that GCON's involvement
in the broadband fibre market is anchored, it can be expected that the process
of seeking suitable investments to further the growth of GCON will accelerate.
Keith Harris
Chairman
27 September 2023
Income Statement
(Unaudited) (Unaudited) (Audited)
Period from 1 January 2023 to 30 June 2023 Period from 1 January 2022 to 30 June 2022 Year ended 31 December 2022
Note £'000 £'000 £'000
Turnover - - -
Cost of sales - - -
Gross profit - - -
Net gain on financial assets at fair value through profit or loss 6 3,171 - -
Other administration fees and expenses 3 (139) (347) (338)
Management services recharges - 51 82
Operating profit/(loss) 3,032 (296) (256)
Finance income 1 - -
Reversal)/(increase) of impairment of intercompany loan - (356) 616
Net finance income/(expense) 1 (356) 616
Profit/(loss) before income tax 3,033 (652) 360
Income tax expense 4 - - -
Profit/(loss) for the period 3,033 (652) 360
Basic and diluted profit/(loss) per share (pence) 5 0.84 (0.18) 0.10
Statement of Comprehensive Income
(Unaudited) (Unaudited) (Audited)
Period from 1 January 2023 to 30 June 2023 Period from 1 January 2022 to 30 June 2022 Year ended 31 December 2022
Note £'000 £'000 £'000
Profit/(loss) for the period 3,033 (652) 360
Other comprehensive expense - - -
Total comprehensive income/(expense) for the period 3,033 (652) 360
Balance Sheet
(Unaudited) (Unaudited) (Audited)
As at 30 June 2023 As at 30 June 2022 As at 31 December 2022
Note £'000 £'000 £'000
Assets
Non-current assets
Investment in subsidiaries - 1,966 -
Amounts due from related parties 7 275 - 275
Other financial assets 6 6,375 - 3,204
Subscriptions due 950 950 950
Total non-current assets 7,600 2,916 4,429
Current assets
Amounts due from related parties 7 308 881 483
Trade and other receivables 8 24 29 89
Cash at bank 33 140 24
Total current assets 365 1,050 596
Total assets 7,965 3,966 5,025
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 288 301 278
Retained earnings 3,925 (120) 892
Total equity 7,909 3,877 4,866
Liabilities
Current liabilities
Trade and other payables 9 56 89 159
Total current liabilities 56 89 159
Total liabilities 56 89 159
Total equity and liabilities 7,965 3,966 5,025
The financial statements were approved and authorised for issue by the Board
of Directors on 27 September 2023 and signed on its behalf by:
Keith
Harris
Selwyn Lewis
Director
Director
Statement of Changes in Equity
Share capital Share premium Warrant reserve Share Retained earnings/ (deficit) Total
Option
Reserve
£'000 £'000 £'000 £'000 £'000 £'000
Unaudited
Balance at 1 January 2022 3,619 - 77 257 532 4,485
Comprehensive expense
Loss for the period - - - - (652) (652)
Total comprehensive expense for the period - - - - (652) (652)
Transactions with owners
Share based payments relating to share options - - - 44 - 44
Total transactions with owners - - - 44 - 44
Balance at 30 June 2022 3,619 - 77 301 (120) 3,877
Audited
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
Unaudited
Balance at 1 January 2023 3,619 - 77 278 892 4,866
Comprehensive expense
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
Cash Flow Statement
(Unaudited) (Unaudited) (Audited)
Period from 1 January 2023 to 30 June 2023 Period from 1 January 2022 to 30 June 2022 Year ended 31 December 2022
Note £'000 £'000 £'000
Cash flows from operating activities
Profit/(loss) for the period before tax 3,033 (652) 360
Adjustments for:
Net gain on financial assets at fair value through profit or loss (3,171) - -
Finance income (1) - -
Increase/(reversal) of impairment of amounts due from related parties - 356 (616)
Share based payments relating to share options 10 20 21
Operating loss before changes in working capital (129) (276) (235)
Decrease/(increase) in trade and other receivables 65 34 (26)
(Decrease)/increase in trade and other payables (103) (49) 21
Cash used in operations (167) (291) (240)
Interest received 1 - -
Net cash used in operating activities (166) (291) (240)
Cash flows from investing activities
Investment in subsidiary - -
Repayment from/(loan to) subsidiary 175 (594) (521)
Reorganisation costs - - (240)
Net cash generated from/(used in) investing activities 175 (594) (761)
Cash flows from financing activities
Issue of shares - - -
Net cash (used in)/generated from financing activities - - -
Net increase/(decrease) in cash and cash equivalents 9 (885) (1,001)
Cash and cash equivalents at beginning of the period 24 1,025 1,025
Cash and cash equivalents at end of the period 33 140 24
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 2022 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 2023 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
2022 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 2022.
3 Other administration fees and expenses
Period ended Period ended Year ended
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
Audit fees 10 8 15
Directors' remuneration and fees 46 59 112
Directors' insurance cover 8 11 21
Professional fees 15 75 133
Reorganisation costs* - 130 (50)
Share based payment expense 10 21 21
Other expenses 50 43 86
Administration fees and expenses 139 347 338
* 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 up to his date of resignation on
28 November 2022.
Executive Directors' fees
The Chairman is entitled to an annual fee of £80,000 (2022: £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 period ended 30 June 2023 amounted to £46,066 (30 June
2022: £58,688) and was split as below. Directors' insurance cover amounted to
£7,959 (30 June 2022: £10,562).
Notes to the Financial Statements (continued)
3 Other administration fees and expenses (continued)
All directors' remuneration and fees (continued)
Period ended Period ended Year ended
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
Selwyn Lewis 3 3 6
Michael Langoulant 3 3 6
Christopher Stone - 8 14
Keith Harris 40 45 85
Expenses reimbursed - - 1
46 59 112
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 (2022: 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 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
Profit/(loss) attributable to equity holders of the Company (£'000) 3,033 (652) 360
Weighted average number of shares in issue (thousands) 361,926 361,926 361,926
Basic profit/(loss) per share (pence per share) 0.84 (0.18) 0.10
(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.
Notes to the Financial Statements (continued)
6 Other financial assets
Instruments measured at fair value through profit and loss 30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
Start of the period 3,204 - -
Reclassification on reorganisation - - 3,204
Net gain on financial assets at fair value through profit or loss 3,171 - -
End of the period 6,375 - 3,204
Categorised as
Level 3 - unquoted investments 6,375 - 3,204
Total financial assets 6,375 - 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 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. £550,000 relates to a loan (31
December 2022: £725,000). £32,760 (31 December 2022: £32,760) relates to
management services recharges which are repayable on demand.
8 Trade and other receivables
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
Prepayments 13 18 19
VAT receivable 11 11 70
Trade and other receivables 24 29 89
The fair value of trade and other receivables approximates their carrying
value.
9 Trade and other payables
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
Directors' fees payable - - 46
Other payables 56 89 113
Trade and other payables 56 89 159
The fair value of trade and other payables approximates their carrying value.
10 Post Balance Sheet Events
As of 25 September 2023 Macquarie Capital, the Israel Infrastructure Fund and
Tiger Infrastructure Partners have merged SWS Broadband and Cadence Networks
with Voneus Broadband, and simultaneously acquired Broadway Partners. The
combined group will be funded with up to £250 million in new capital from the
three shareholders and bank lenders.
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