Rural Broadband Sltn - Final Results
06/06/2022 07:00
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RNS Number : 6695N Rural Broadband Solutions PLC 06 June 2022
6 June 2022
Rural Broadband Solutions Plc (the "Company" or "RBBS")
Final results
Rural Broadband Solutions Plc (AQSE: RBBS), a leading provider of broadband
services to rural areas of the UK, today announces its Final Results for the
year ended 31 December 2021.
Financial Highlights:
· Cash balances up to £1.34m at 31 December 2021, bolstered by the
fund raise which took place a few weeks before the year end.
· Fixed assets were up by £0.23m to £0.83m as a result of the
acquisition of Cadence Networks Limited and additional capital spend.
· Revenue of £0.9m which is 16.4% up on £0.76m SWS revenue for the
whole of 2020. The audited accounts include revenue for SWS only from the date
of acquisition.
Operational Highlights:
- Acquisition of Internet Service Provider, Cadence Networks Limited,
whose infrastructure within three London based data centres is expected to
give RBBS a significant foundation upon which it can build its own national
data network, so that it is able to manage the quality of service and capacity
to its own customers without using third party wholesale providers
Post period highlights:
- Monthly fee-paying clients at 14th May 2022 totalled 2,851 (up from
2,348 as at the 31st of December 2020).
- Approval of further Gigabit Broadband Voucher Scheme projects to
provide gigabit-capable fibre broadband services to rural areas of Shropshire,
including villages and rural towns.
Outlook:
- Complete the first phase of our fibre build within Shropshire.
- Targeting a Summer conclusion to our infrastructure fundraising
package with Investec Bank plc.
- Use the planning and research obtained through our relationship with
Analysis Mason to expand our services and take advantage of the growing rural
broadband market.
Chris New, Chief Strategist & Technical Officer, commented:
""We look forward to closing our infrastructure funding, and to continuing our
wider growth strategy. We are incredibly well placed with the strength of our
team and Board, with Project Gigabit on the horizon and with our technology
and accreditation relationships to capitalise on all of our additional growth
opportunities."
The Directors of Rural Broadband Solutions Plc accept responsibility for this
announcement.
For further information please contact:
Keith Harris
Executive Chairman
Rural Broadband Solutions Plc
www.ruralbroadbandsolutions.com
info@ruralbroadbandsolutions.com
AQSE Stock Exchange Corporate Adviser
Alfred Henry Corporate Finance Limited
Jon Isaacs
jisaacs@alfredhenry.com
www.alfredhenry.com
Tel: +44 (0) 203 772 0021
AQSE Stock Exchange Corporate Broker
Hybridan LLP
Claire Louise Noyce
claire.noyce@hybridan.com
www.hybridan.com
+44 20 3764 2341
Chairman's Statement
2021 was a year that saw a continuation of trends in how we work and where we
live, with connectivity in even the remotest areas becoming an increasingly
essential utility. However, there still remains a huge unmet need here. Just
last month the All-Party Parliamentary Group (APPG) on the Rural Powerhouse
warned that "Rural Britain is not a museum" and is being "held back" by, among
many other things, "slow" broadband connectivity. Your Company is amongst
those at the forefront of providing the information highways that can level up
the great divide. 2021 has been a pivotal year for the Company. Our initial
dark fibre ring, and backhaul capability provided by the December 2021
acquisition of Cadence Networks give RBBS a significant foundation upon which
it can build its own national data network, and efficiently provide cutting
edge connectivity to a wider range of rural towns and villages. As well as
investing in capabilities, partnerships and infrastructure, we have also put a
team in place that has the experience and expertise to execute as we move to
the next phase of our growth strategy, which we anticipate will see a step
change in customer numbers.
In December 2021, we concluded the acquisition of Cadence Networks Limited and
completed an additional fund raising of £1.67m. These actions have helped
RBBS with its strategic objective of becoming a major presence in the
provision of broadband services to rural areas in the UK. Moreover, the
acquisition has allowed RBBS to create its own national network from which
building its own Fibre network will be facilitated. The money raised not only
paid for the cash element of the consideration of the acquisition, but
provided the Company with the funds to commence the first phase of its fibre
builds.
Key Numbers
We are delighted to present our full year financial results for the year
ending 31 December 2021.
The results include a full 12 months of operational results, with revenues of
£0.9m resulting in an operating loss of £1.2m which includes a full year of
PLC expenses of £0.42m as well as acquisition and specialist consultancy
costs of £0.16m and share based payment expenses of £0.26m. Share options
have been awarded to all members of staff and are subject to specific
performance criteria.
Cash balances were up by £0.55m to £1.34m benefitting from the £1.67m
raised in the December fund raise. Fixed assets were up by £0.23m to £0.83m
as a result of the acquisition and additional capital spend. It is also worth
noting that, SWS's revenue for the whole of 2020 was £0.76m, 2021 revenue
represents a growth of 16.4% on the previous year on a like for like basis.
Revenue continues to grow from our existing network. As at 14th May 2022,
monthly fee-paying clients totaled 2,851 (up from 2,348 as at the 31st of
December 2020). This provides a solid base of recurring revenue. Customer
churn remains extremely low reflecting our superior offer in rural areas.
This installed base of clients gives a current annual run rate of over £0.95m
of subscription revenues. This growth does not include the additional revenue
that will be generated as a result of the Project Gigabit Opportunity
(villages) and the Fibre to the Premise (FTTP) solution for small towns - work
for both commenced just prior to the year-end in 2021.
Growth of the Business
In the Chairman's Statement in last year's Annual Report and Accounts, I
stated that "we will be pushing forward to deliver the implementation of our
growth strategy." Throughout 2021, this is what we have been doing and the
Company's ambition continues to reflect the much larger market opportunity
that now prevails.
During that time, we have continued to prepare the foundations for business
growth by enlarging the management team and the premises required to operate a
bigger operating entity. We have also been deploying the proceeds from our
recently raised equity capital, not only to continue to grow our core customer
base, which is described in more detail below, but also to plan a much more
aggressive expansion into the rural broadband market. To this end, we hired
Analysys Mason, a well-known specialist consultancy in the field of digital
infrastructure planning, to analyse, review and report on the strategy on
which we are embarking.
The attraction of acquiring Cadence was influenced by the opportunity to
collaborate with its founders, particularly Adam Gent who is now Chief
Technical Officer for the Group. Adam has an enviable track record in the
field of business-to-business core fibre network solutions and has already
considerably bolstered the quality and resilience of the existing Fixed
Wireless Access (FWA) network. In December we announced that this would allow
Chris New to move towards a CEO role in 2022. This transition is now complete
as of midway through Q1 2022. This is a non-Board role.
The acquisition of Cadence has also considerably increased our data transfer
capacity and at a much cheaper price than previous leased lines and will allow
RBBS to sell services on a business-to-business basis. From that base, we
continue to concentrate on growing the size and scope of our business in
Shropshire for the benefit of our shareholders and the satisfaction of our
customers and on taking our trading model into other rural areas of the UK.
Capital Availability and Outlook
We are encouraged and excited by the planned expansion of our services and by
the potential for the Company borne from the existing and growing size of the
rural broadband market and the significant planning and research that we have
done in conjunction with Analysis Mason. We are also encouraged by the ever
increasing demand within the UK for nationwide fast and reliable broadband.
Our dynamic business sector has become a critical element in returning the
economy to growth. We are focused on delivering first rate services to our
growing customer base, thereby maximising our return on investment to all our
stakeholders and have commenced the first phase of our fibre build within
Shropshire.
In our December 2021 statement, we announced that we have appointed Investec
Bank plc as infrastructure funding advisor because the Investec team has
specialist expertise in the digital infrastructure sector and can facilitate
access to various potential sources of funding. Investec continues to progress
an infrastructure fundraising process to finance both ultrafast and gigabit
capable broadband build out from both existing and new markets. We now expect
to conclude this process during the Summer.
The ability to have got this far inevitably relies upon high quality human
resources and in this respect I would like to record my sincere thanks to our
management team led by Chris New which has faced a fast evolving environment
with skill, hard work and dedication. As a result, I look forward with
confidence to our achieving the progress we are seeking throughout this year
and beyond.
Keith Harris
Chairman
1 June 2022
Consolidated income statement
for the year ended 31 December 2021
Year ended Year ended
31 December 2021 31 December 2020
£'000 £'000
Turnover 887 128
Cost of sales (333) (30)
Gross profit 554 98
Other administration fees and expenses (1,783) (769)
Other operating income 26 23
Amortisation of intangible assets - (23)
Operating loss (1,203) (671)
Finance income - 5
Finance expenses (8) (23)
Foreign exchange loss - (31)
Net finance expense (8) (49)
Loss before income tax (1,211) (720)
Income tax expense 97 (8)
Loss for the year (1,114) (728)
Attributable to:
- Owners of the Parent (1,114) (728)
(1,114) (728)
Basic and diluted loss per share (pence) attributable to the owners of the (0.36) (0.35)
Parent during the year
Consolidated Balance sheet
at 31 December 2021
As at As at
31 December 2021 31 December 2020
£'000 £'000
Assets
Non-current assets
Intangible assets 1,626 1.372
Right-of-use assets 17 30
Fixed assets 831 605
Subscriptions due 950 950
Total non-current assets 3,424 2,957
Current assets
Stock 223 187
Deferred tax 20 -
Trade and other receivables 177 146
Cash at bank 1,340 789
Total current assets 1,760 1,122
Total assets 5,184 4,079
Equity
Capital and reserves attributable to owners of the Parent:
Issued share capital 3,619 3,041
Warrant reserve 77 77
Share option reserve 257 -
Retained earnings 532 409
Total equity 4,485 3,527
Liabilities
Current liabilities
Bank loan 37 12
Lease liability 26 28
Trade and other payables 472 212
Total current liabilities 535 252
Non-current liabilities
Bank loan 119 153
Lease liability 45 69
Deferred tax - 78
Total non-current liabilities 164 300
Total liabilities 699 552
Total equity and liabilities 5,184 4,079
Consolidated statement of cashflows
for the year ended 31 December 2021
Year ended Year ended
31 December 2021 31 December 2020
£'000 £'000
Cash flows from operating activities
Loss for the year before tax (1,211) (720)
Adjustments for:
Finance income - (5)
Finance expenses 8 23
Gain on sale of tangible fixed assets (3) -
Depreciation and impairment of tangible fixed assets 245 30
Amortisation of intangible assets - 23
Share based payments relating to share options 257 -
Foreign exchange loss - 31
Operating loss before changes in working capital (704) (618)
(Increase)/decrease in trade and other receivables (18) 360
Increase in stock (36) -
Increase/(decrease) in trade and other payables 240 (265)
Cash used in operations (518) (523)
Interest received - 5
Interest paid (8) -
Net cash used in operating activities (526) (518)
Cash flows from investing activities
Purchase of intangible fixed assets (43) -
Purchase of tangible fixed assets (359) (108)
Sale of tangible fixed assets 8 -
Net cash on acquisition of subsidiary (77) (946)
Net cash used in from investing activities (471) (1,054)
Cash flows from financing activities
Issue of shares 1,675 2,291
Principal paid on lease liabilities (118) (23)
Interest paid on lease liabilities - (1)
Repayment of loans (9) -
Net cash generated from financing activities 1,548 2,267
Net increase in cash and cash equivalents 551 695
Cash and cash equivalents at beginning of the year 789 94
Foreign exchange losses on cash and cash equivalents - -
Cash and cash equivalents at end of the year 1,340 789
Notes to Preliminary Results for the Period Ended 31 December 2021
1 General information
The financial information set out above does not constitute statutory accounts
for the purpose of the Isle of Man Companies Act 2006. The financial
information has been extracted from the statutory accounts of Rural Broadband
Solutions Plc and is presented using the same accounting policies, which have
not yet been filed with the Registrar of companies, but on which the auditors
gave an unqualified report on 1 June 2022.
The preliminary announcement of the results for the year ended 31 December
2021 was approved by the board of directors on 1 June 2022.
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. Rural Broadband Solutions Plc and its subsidiaries'
(the "Group") 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 (formerly known as Mainstream Fund 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 (note 27) 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 re-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 (note 27). 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.
The financial statements were authorised for issue by the directors on 1 June
2022.
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 European Union. 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.
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.
Adoption of new and revised International Financial Reporting Standards
(IFRSs)
A number of new standards, amendments to standards and interpretation are
effective for annual periods beginning after 1 January 2021 and have not been
applied in preparing these consolidated financial statements. None of these
are expected to have a significant effect on the consolidated financial
statements of the Group. The relevant standards are as follows.
Adoption of new and revised International Financial Reporting Standards
(IFRSs)
Application date of
standard (Periods commencing on or after)
Reference Title Summary
IAS1 Presentation of Financial Statements Amendments regarding the classification of liabilities. 1 January 2023
2.2 Significant accounting estimates and judgements
The Group 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 Group 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 Group makes
judgements as to whether there is observable data indicating a measurable
decrease in the estimated future cash flows from a financial asset.
2.3 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ("the functional currency"). The consolidated financial
statements are presented in Pound Sterling, which is the Company's functional
and the Group's 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.
(c) Group companies
The results and financial position of all the Group entities that have a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are
translated at average exchange rates; and
(iii) all resulting exchange differences are recognised as a
separate component of equity.
On consolidation, exchange differences arising from the translation of the net
investment in foreign operations are taken to other comprehensive income. When
a foreign operation is disposed of, exchange differences that were recorded in
equity are recognised in the income statement as part of the gain or loss on
sale. On the partial disposal of a subsidiary that includes a foreign
operation, the proportionate share of the cumulative amount of exchange
differences recognised in other comprehensive income is re-attributed to the
non-controlling interests. In any other partial disposal of a foreign
operation, the proportionate share of the cumulative exchange differences
recognised in other comprehensive income is reclassified to profit and loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
2.4 Revenue and expense recognition
Revenue from the provision of broadband services is recognised by reference to
the month it is provided. Revenue is shown net of value added tax.
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.
2.5 Basis of consolidation
Subsidiaries
Where the company has control over an investee, it is classified as a
subsidiary. The company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the practical
ability to direct the relevant activities of the investee without holding the
majority of the voting rights. In determining whether de-facto control exists,
the company considers all relevant facts and circumstances including the size
of the company's voting rights relative to both the size and dispersion of
other parties who hold voting rights, substantive potential voting rights held
by the company and by other parties, other contractual arrangements and
historic patterns in voting attendance.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group and continue to be included until control is lost or
ceases.
Goodwill is initially measured as the excess of the aggregate of the
consideration transferred and the fair value of non-controlling interest over
the net identifiable assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
Transactions and non-controlling interests
The Group treats transactions with non-controlling interests that do not
result in a loss of control as transactions with equity owners of the Group.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains/losses arising
from intra-group transactions, are eliminated in preparing the consolidated
financial statements.
2.6 Operating segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker is the person or group that allocates resources to and assesses
the performance of the operating segments of an entity. The Group has
determined that its chief operating decision-maker is the Board of the
Company.
The Board reviews the Group's internal reporting in order to assess
performance and allocate resources. Based on this internal reporting to the
Board, it has been determined that there is only one operating segment, the
provision of broadband services in the UK.
2.7 Leases
At inception of the contract, the company assesses whether a contract is, or
contains, a lease. It recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the
lessee. The right-of-use assets and the lease liabilities are presented as
separate line items in the statement of financial position.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the
company uses its incremental borrowing rate. It is subsequently measured by
increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to
reflect the lease payments made.
The right-of-use assets comprise the initial measurement of the corresponding
lease liability, plus lease payments made on or before the commencement day,
less any lease incentives received and plus any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment
losses.
2.8 Tangible fixed assets
Tangible fixed assets are measured at cost, net of depreciation and any
impairment losses.
Depreciation is recognised so as to write off the cost of the assets less
their residual values over their useful lives on the following bases:
Plant & Machinery Written off over 1, 3, 4, 6 or 10 years
Motor vehicles 25% straight line
Fixtures & fittings 25% straight line
Computer equipment 25% straight line
Leasehold buildings Over the period of the lease payments and over
10 years
The gain or loss arising on disposal of an asset is determined as the
difference between the sale proceeds and the carrying value of the asset and
is credited or charged to profit or loss.
2.9 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 Group 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.
The classification depends on the Group'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 Group 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 Group 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 Group 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 Group has
transferred substantially all the risks and rewards of ownership.
c) Measurement
At initial recognition, the Group 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.
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.
d) Impairment
The Group 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 Group applies the simplified
approach permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
2.10 Government grant
A government grant is recognised only when there is reasonable assurance that
(a) the entity will comply with any conditions attached to the grant and (b)
the grant will be received. The grant is recognised as income over the period
necessary to match them with the related costs, for which they are intended to
compensate, on a systematic basis.
2.11 Taxation
Current and deferred tax is charged or credited in profit or loss, except when
it relates to items charged or credited directly to equity, in which case the
related tax is also dealt with in equity. Current tax is calculated on the
basis of the tax laws enacted or substantively enacted at the reporting date
in the countries where the Company and its subsidiaries operate.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are generally recognised for all
deductible temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible temporary
differences can be utilised, except for differences arising on investments in
subsidiaries where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not reverse in the
foreseeable future.
Recognition of the deferred tax assets is restricted to those instances where
it is probable that a taxable profit will be available against which the
difference can be utilised.
Deferred tax is calculated based on rates enacted or substantively enacted at
the reporting date and expected to apply when the related deferred tax asset
is realised, or liability settled.
2.12 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.
2.13 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 consolidated income
statement.
2.14 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an
expense, unless those costs are required to be recognised as part of the cost
of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in
which the employee's services are received.
Termination benefits are recognised immediately as an expense when the company
is demonstrably committed to terminate the employment of an employee or to
provide termination benefits.
2.15 Retirement benefits
For defined contribution schemes the amount charged to profit or loss is the
contributions payable in the year. Differences between contributions payable
in the year and contributions actually paid are shown as either accruals or
prepayments.
2.16 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. Basic and diluted loss per share
(a) Basic
Basic loss per share is calculated by dividing the loss attributable to equity
holders of the Group by the weighted average number of shares in issue during
the year.
Year ended Year ended
31 December 31 December 2020
2021
Loss attributable to equity holders of the Company (£'000) (1,114) (728)
Weighted average number of shares in issue (thousands) 305,836 205,964
Basic loss per share (pence per share) (0.36) (0.35)
(b) Diluted
Diluted 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.
As the Group is reporting a loss from continuing operations for the year, in
accordance with IAS 33, the warrants and share options are not considered
dilutive because the exercise of the warrants or share options would have an
anti-dilutive effect. The basic and diluted loss per share as presented on the
face of the Consolidated Income Statement are therefore identical.
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