TIDMREDC
RNS Number : 7882J
Red Capital PLC
29 April 2022
29 April 2022
Red Capital Plc
("Red Capital" or the "Company")
Full Year Results for the period ended 31 December 2021
Red Capital Plc (LSE: REDC) has today published its Annual
Report and Financial Statements for the period ended 31 December
2021 (the "Annual Report").
In accordance with Listing Rule 9.6.1 copies of the Annual
Report have been submitted to the UK Listing Authority and will
shortly be available to view on the Company's website at
https://www.redcapitalplc.com/ and will be shortly available for
inspection from the National Storage Mechanism at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanis m .
LEI: 213800O4A398G6GL7270
Enquiries
Tessera - Strategic Adviser
Tony Morris +44 (0) 7742 189145
Chairman's Statement
For the 9 month period ended 31 December 2021
CHAIRMAN'S STATEMENT
I am pleased to present the financial results for Red Capital
Plc ("Red", the "Company") and its subsidiary (together the
"Group") for the period ended 31 December 2021, which covers nine
months of trading since the Company's incorporation on 31 March
2021.
Since establishing the Company on the Standard List of the Main
Market of the London Stock Exchange in 2021, as a team we have
remained focused on executing our strategy and continue to assess
investment and acquisition opportunities where we believe there to
be sustainable growth potential both organically, and through
acquisition. These will typically be fundamentally sound assets,
where tangible opportunities exist to drive strategic, operational
and performance improvements.
Despite some prevailing general macroeconomic uncertainty, we
remain extremely positive regarding prospects within our chosen
areas of focus across business services and technology sectors.
With Red, we have an ideal platform from which we can execute our
buy-and-build strategy and we look forward to updating shareholders
in due course as our investment and acquisition plans develop
during the new financial year.
I would like to take this opportunity to thank our shareholders
for both their support at IPO and while we diligently continue to
source and evaluate a number of exciting propositions, that if
secured, we believe have the potential to deliver value for our
shareholders.
David Williams
Chairman
28 April 2022
Report of the Directors
For the 9 month period ended 31 December 2021
REPORT OF THE DIRECTORS
The Directors of the Company present their report for the period
ended 31 December 2021.
PRINCIPAL ACTIVITY AND BUSINESS REVIEW
For the financial period ended 31 December 2021, the Company's
principal activity was a holding company, which has actively
pursued its strategy through the sourcing and assessment of
acquisition and investment opportunities in the business services
and technology sectors.
On 19 November 2021, the Company successfully listed its
ordinary shares onto the Main Market of the London Stock
Exchange.
RESULTS
During the period, Red recorded a loss of GBP220,843 and the
loss per share was 11.5p, reflecting moderate monthly operating
expenses of the Company as well as transaction expenses occurred
during its IPO, which completed in November 2021. The Company had
cash reserves at the end of the period of GBP829,065.
DIVIDS
At this point in the Company's development, it does not
anticipate declaring any dividends in the foreseeable future. As
such, the Directors do not recommend the payment of a dividend for
the period.
FUTURE DEVELOPMENTS
The Directors expect to continue to execute the Company's
strategy in sourcing and assessing acquisition and investment
opportunities across its stated sectors of focus.
KEY PERFORMANCE INDICATORS
The Board continues to focus on maximising shareholder value by
sourcing, assessing and where in the interest of shareholders to do
so, investing in and acquiring businesses within the business
services and technology sectors.
Follow completion of the Company's inaugural transaction, the
Board will be in a position to identify and develop its key
performance indicators for on-going monitoring and management.
GOING CONCERN
The Directors, having made due and careful enquiry, are of the
opinion that the Company has adequate working capital to execute
its operations and has the ability to access additional financing,
if required, over the next 12 months. The Company's unaudited cash
balance as at 22 April 2022 was GBP808,688, and excluding the
consummation of any investment or acquisition which will likely
require specific funding, has adequate resources available to fund
its on-going forecast operating expenses for at least twelve months
following approval of the financial statements. The Directors,
therefore, have made an informed judgement at the time of approving
the financial statements, that there is a reasonable expectation
that the Company has adequate resources to continue in operational
existence for the foreseeable future. As a result, the Directors
have adopted the going concern basis of accounting in preparing the
annual financial statements (see Note 2).
RISK MANAGEMENT
In order to execute the Group's strategy, the Company and its
subsidiaries will be exposed to both financial and non-financial
risks. The Board has overall responsibility for the Group's risk
management and it is the Board's role to consider whether those
risks identified by management are acceptable within the Group's
strategy and risk appetite. The Board therefore periodically
reviews the principal risks and considers how effective and
appropriate the controls that management has in place to mitigate
the risk exposure are and will make recommendations to management
accordingly.
As the Company had not completed its first investment or
acquisition in the period, it has limited financial statements
and/or historical financial data, and limited trading history. As
such, the Company during the period was subject to the risks and
uncertainties associated with an early-stage acquisition company,
including the risk that the Company will not achieve its investment
objectives and that the value of an investment could decline and
may result in the partial or complete loss of capital invested. The
past performance of investee companies or assets managed by the
Directors will not necessarily be a guide to future business,
results of operations, financial condition or prospects of the
Company.
In order to mitigate against these risks, the Directors will
continue to undertake thorough due diligence on investment
opportunities and acquisition targets, to a level considered
reasonable and appropriate by the Company on a case-by-case basis,
including the potential commissioning of third-party specialist
reports as appropriate. Following completion of any investment or
acquisition, it is intended that any investments or assets will be
managed by the Directors and assisted by the Company's professional
advisers.
Financial Risk Management
The Directors consider the Group to be exposed to the following
financial risks:
a. Price risk: the price paid for securities is subject to
market movement that will have an impact on the operations of the
Group;
b. Cash flow interest rate risk: the Group has significant cash
balances which exposed it to movement in the market interest rates;
and
c. Liquidity risk: the Group manages its cash requirements to
balance cash availability and the generation of interest
income.
Given the relatively small size and operation of the Group in
the period, the Directors have not delegated the responsibility of
risk monitoring to a sub-committee of the Board, but closely
monitor the risks on a periodic basis. The Directors consider their
exposure in the financial period to have been low. Refer to Note 14
for assessment of the risks arising from financial instruments.
Non-financial Risk Management
The non-financial risk factors for the period ended 31 December
2021 did not materially change from those set out in the Red's
Prospectus dated 16 November 2021.
GREENHOUSE GAS EMISSIONS, ENERGY CONSUMPTION AND ENERGY
EFFICIENCY
As the Company has not completed its first acquisition and has
on only two Directors, limited travel and no premises, the
Directors do not consider any disclosure under the Task Force on
Climate-related Financial Disclosures is required at this juncture,
however the Company will continue to review this position as it
executes its investment and acquisition strategy.
POLITICAL CONTRIBUTIONS
The Company has made no political contributions during the
period.
CHARITABLE DONATIONS
The Company has made no charitable donations during the
period.
POST BALANCE SHEET EVENTS
Details of post balance sheet events are disclosed in Note
20.
SHARE CAPITAL
Details of the Company's share capital is set out in Note 15.
The Company's share capital consists of one class of ordinary
share, which does not carry rights to fixed income. As at 31
December 2021, there were 10,000,000 ordinary shares of 1p par
value each in issue.
SIGNIFICANT SHAREHOLDERS
As at 22 April 2022, the Company had been advised of the
following notifiable interests (whether directly or indirectly
held) in voting rights.
Name Shareholding Percentage
-------------------------------- ------------ ----------
David Williams 3,500,000 35.0%
Simon Webster 2,000,000 20.0%
The Bank of New York (Nominees)
Limited 576,000 5.8%
Stephen Ball 300,000 3.0%
Mark Best 300,000 3.0%
David Jenkins 300,000 3.0%
Guy Le Sueur 300,000 3.0%
Robin Southwell OBE 300,000 3.0%
Giles Willits 300,000 3.0%
As at 22 April 2022, the Directors in aggregate held 5,500,000
ordinary shares, which represents 55.0 per cent. of the Company's
issued share capital.
COMPANY DIRECTORS
The Directors during the period and summaries of their
experience are set out below.
David Williams Non-executive Chairman (aged 68)
David has over 36 years' experience in investment markets,
serving as Chairman in executive and non-executive capacities for a
number of public and private companies. He has overseen the
development of these companies, raising in excess of GBP1 billion
of capital to support both organic and acquisitive growth
initiatives.
David was the original founder of Marwyn Capital LLP, the
award-winning investment management company. David was also
formerly Chairman of Entertainment One Ltd. (LSE: ETO), Zetar plc,
and Oxford BioDynamics Plc (AIM: OBD), and non-executive director
of Breedon Group plc (AIM: BREE). He currently serves as
Non-executive Chairman of the AIM-quoted cyber security business,
Shearwater Group plc (AIM: SWG) and Main Market listed Acceler8
Ventures Plc (LSE: AC8) and is a non-executive director of Bay
Capital Plc (LSE: BAY).
Simon Webster Non-Executive Director (age 52)
Simon is a highly experienced software and technology
entrepreneur, and most recently was Chief Executive Officer of CPA
Global, a global leader in intellectual property software and
tech-enabled services. Simon led CPA Global over a 20-year period,
growing it from an initial GBP50 million business into $6.0 billion
of enterprise value before its merger with NYSE listed Clarivate
Plc (NYSE: CCC) in October 2020.
His early career was spent in the UK financial services sector
leading business change, delivering technology transformations and
supporting M&A transactions.
Simon has been investing in and working with founders of growth
businesses as Founder and CEO of SHUFL Capital since 2010. He is
also a Fellow of the Chartered Institute of Management
Accountants.
The Directors who held office during the period and their
beneficial interest in the share capital of the Company at 31
December 2021 were as follows:
31 December
2021
David Williams 3,500,000
Simon Webster 2,000,000
------------
5,500,000
------------
DIRECTORS REMUNERATION
The Chairman and Non-Executive Director are each entitled to
fees of GBP30,000 and GBP20,000 per annum for their respective
roles within the Company, as per their service agreements entered
into on 15 November 2021. All Director fees have been accrued in
the period. There are no other benefits paid to Directors outside
of their service fees, save for ordinary course reimbursable
expenses properly incurred in the performing their duties as
Directors. The Company does not operate a pension scheme.
Salary Benefits 31 December
in kind 2021 Total
Director GBP GBP GBP
------- --------- ------------
David Williams 3,534 - 3,534
Simon Webster 2,356 - 2,356
------- --------- ------------
5,890 - 5,890
------- --------- ------------
In addition to the Directors' fee entitlements outlined above,
the Directors are also participants in the Subco Incentive Scheme
and holders of warrants as detailed below.
SUBCO INCENTIVE SCHEME
The Directors believe that the success of the Company will
depend to a high degree on the future performance of key employees
and advisers in executing and supporting the Company's growth
strategy. The Company has therefore established equity-based
incentive arrangements which are, and will continue to be, an
important means of retaining, attracting and motivating key
employees, consultants and advisers, and also for aligning the
interests of the Directors with those of shareholders.
On 12 November 2021, the Group created a new Subco Incentive
Scheme within its wholly owned subsidiary Red Capital Subco
Limited. Under the terms of the Subco Incentive Scheme, scheme
participants are only rewarded if a predetermined level of
shareholder value is created over a three to five year period or
upon a change of control of the Company or Subco (whichever occurs
first), calculated on a formula basis by reference to the growth in
market capitalisation of the Company, following adjustments for the
issue of any new ordinary shares and taking into account dividends
and capital returns ("Shareholder Value"), realised by the exercise
by the beneficiaries of a put option in respect of their shares in
Subco and satisfied either in cash or by the issue of new ordinary
shares at the election of the Company.
Under these arrangements in place, participants are entitled up
to 15 per cent. of the Shareholder Value created, subject to such
Shareholder Value having increased by at least 12.5 per cent. per
annum compounded over a period of between three and five years from
Admission, or following a change of control of the Company or
Subco.
In order to implement the Subco Incentive Scheme, the Company as
sole shareholder of Subco, approved the creation of a new share
class in Subco (the "B Shares"). At the same time the Subco's
existing ordinary shares were redesignated A Shares. The B Shares
do not have voting or dividend rights.
On 12 November, David Williams, Chairman of the Company, Simon
Webster, a Non-Executive Director of the Company, and Kathleen Long
and Anthony Morris, Directors of Tessera Investment Management
Limited, became the first participants in the Subco Incentive
Scheme ("Founder Participants"), and as such, the proportion of
Shareholder Value attaching to the Subco Incentive Scheme is 11 per
cent. of a total cap of 15 per cent.
The Founder Participants and their respective holdings are
outlined below.
Participant Subco B shares
held
David Williams 50,000
Simon Webster 40,000
Kathleen Long 10,000
Anthony Morris 10,000
---------------
110,000
---------------
WARRANTS
On 15 November 2021, the Company constituted 10,000,000 warrants
on the terms of an instrument under which the Company issued
6,000,000 warrants to certain existing shareholders of the Company
including the Directors, and a further 4,000,000 warrants on
admission of the Company to the Main Market of the London Stock
Exchange.
The warrants are exercisable at any time from the date of
completion of the inaugural transaction (an investment or
acquisition) made by the Company where the consideration for such
transaction is at least GBP10 million at a price of GBP0.10 per
ordinary share. These warrants can be exercised through application
to the Company. The warrants will not be listed on the London Stock
Exchange or any other publicly traded market.
The Directors' respective warrant holdings are detailed
below.
Participant Date of grant Exercise No. of ordinary
price shares to which
the grant relates
15 November
David Williams 2021 GBP0.10 3,500,000
15 November
Simon Webster 2021 GBP0.10 2,000,000
-------------------
5,500,000
-------------------
CORPORATE GOVERNANCE
As a Jersey company and a company with a Standard Listing, the
Company is not required to comply with the provisions of the UK
Corporate Governance Code 2018. Furthermore, there is no applicable
regime of corporate governance to which the directors of a Jersey
company must adhere over and above the general fiduciary duties and
duties of care, skill and diligence imposed on such directors under
Jersey law. Notwithstanding this, the Directors are committed to
maintaining high standards of corporate governance and will be
responsible for carrying out the Company's objectives and
implementing its business strategy.
All investment, acquisition, divestment and other strategic
decisions are considered and determined by the Board. The Board
provides leadership within a framework of prudent and effective
controls. The Board has established the corporate governance values
of the Company and has overall responsibility for setting the
Company's strategic aims, defining the business plan and strategy
and managing the financial and operational resources of the
Company.
In this regard, the Board, so far as is practicable given the
Company's size and stage of its development, has voluntarily
adopted the QCA Code as its chosen corporate governance framework.
There are certain provisions of the QCA Code which the Company will
not adhere to currently, and their adoption will be delayed until
such time as the Directors believe it is appropriate to do so. It
is anticipated that this will occur concurrently with the Company's
first material investment or acquisition.
Following such an acquisition, the Company will seek to develop
its corporate governance stance, and will address key differences
to the QCA Code including the implementation of audit, remuneration
and nomination committees with appropriate terms of reference, the
publication of KPIs, and the development of a corporate and social
responsibility policy.
ROLE OF THE BOARD
The Board is responsible for the management of the business of
the Company, setting the strategic direction of the Company and
establishing the policies of the Company. It is the Directors'
responsibility to oversee the financial position of the Company and
monitor the business and affairs of the Company, on behalf of the
shareholders, to whom they are accountable. The primary duty of the
Directors is to act in the best interests of the Company at all
times. The Board also addresses issues relating to internal control
and the Company's approach to risk management and has formally
adopted an anti-corruption and bribery policy.
The Company does not have a separate investing committee and
therefore the Board as a whole will be responsible for sourcing
acquisitions and ensuring that opportunities are in conformity with
the Company's strategy.
The Company holds four formal Board meetings a year, with
unscheduled meetings as matters arise which require the attention
of the Board. Formal Board meetings are timed to link to key events
in the Company's corporate calendar. Outside the scheduled and
unscheduled meetings of the Board, the Directors maintain frequent
contact with each other to keep them fully briefed on the Company's
operations.
INTERNAL CONTROLS
The Board acknowledges its responsibility for establishing and
monitoring the Group's systems of internal control. Although no
system of internal control can provide absolute assurance against
material misstatement or loss, the Group's systems are designed to
provide the Directors with reasonable assurance that problems can
be identified on a timely basis and dealt with appropriately.
The Group maintains an appropriate process for financial
reporting. The annual budget is reviewed and approved by then Board
before being formally adopted.
Other key procedures that have been established and which are
designed to provide effective control are as follows:
Management structure - The Board meets regularly on a formal and
informal basis to discuss all issues affecting the Group.
Investment appraisal - The Group has a robust framework for
investment appraisal and approval is required by the Board, where
appropriate.
Share dealing and inside information - the Company has adopted a
share dealing code regulating trading and confidentiality of inside
information for the Directors and other persons discharging
managerial responsibilities (and their persons closely associated)
which contains provisions appropriate for a company whose shares
are admitted to trading on the Official List (particularly relating
to dealing during closed periods which will be in line with the
Market Abuse Regulation). The Company takes all reasonable steps to
ensure compliance by the Directors and any relevant employees with
the terms of that share dealing code.
The Board reviews the effectiveness of the systems of internal
control and considers the major business risks and the control
environment. No significant deficiencies have come to light during
the period and no weaknesses in internal financial control have
resulted in any material losses, or contingencies which would
require disclosure, as recommended by the guidance for Directors on
reporting on internal financial control.
The Directors are focused on careful management of the Company's
cash and financial resources through Board level approvals. At such
time that the Company completes an acquisition, the Directors
anticipate that the Company's financial position and prospects
procedures regime will be updated and expanded as necessary to
cater for the nature of the Company's business following completion
of its inaugural investment or acquisition.
BOARD EVALUATION
In the period, the Board evaluation process was limited to an
ongoing informal evaluation of the performance of the Board by each
Director. This will be replaced by a formal, annual evaluation
process once the Company has completed its first acquisition.
EXTERNAL ADVISERS
The Board accessed the following external advisers during the
period and post the period end:
Mayer Brown International LLP and Ogier (Jersey) LLP - legal
Tessera Investment Management Limited - capital markets and
M&A
JTC Plc - company secretarial, governance and regulatory
filings
CONFLICTS OF INTEREST
A Director has a duty to avoid a situation in which he or she
has, or can have, a direct or indirect interest that conflicts, or
possibly may conflict, with the interests of the Company. The Board
has satisfied itself that there are no conflicts of interest where
the Directors have appointments on the Boards of, or relationships
with, companies outside the Company. Furthermore, the Board
requires Directors to declare all appointments and other situations
which could result in a possible conflict of interest, and
therefore believes it has a robust framework to deal with any
conflict of interest should it arise.
RELATIONS WITH SHAREHOLDERS
The Chairman is the Group's principal spokesperson with
investors, fund managers, the press and other interested parties.
As well as the Annual General Meeting with shareholders, the other
Directors may give formal presentations at investor road shows
following the announcement of interim and full year results.
Notice of this year's Annual General Meeting will shortly be
sent to shareholders.
DISCLOSURE OF INFORMATION TO THE AUDITOR
So far as the Directors are aware, there is no relevant audit
information of which the Company's auditor is unaware, and each
Director has taken all the steps that he ought to have taken as a
Director in order to make himself aware of any relevant audit
information and to establish that the Company's auditor is aware of
that information.
The Directors confirm to the best of their knowledge that:
-- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as whole;
-- the Chairman's Statement and Report of the Directors includes
a fair review of the development and performance of the business
and the position of the Company and the undertakings included in
the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face; and
-- the annual report and accounts, taken as a whole, are fair,
balanced and understandable and provide the information necessary
for shareholders to assess the Company's position and performance,
business model and strategy.
AUDITOR
The auditor, MHA MacIntyre Hudson, will be proposed for
re-appointment at the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD
David Williams
Chairman
28 April 2022
Statement of Directors Responsibilities
For the 9 month period ended 31 December 2021
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors'
report and the financial statements in accordance with applicable
law and regulations.
Jersey Company law requires the directors to prepare financial
statements for each financial period. Under that law the directors
have elected to prepare the financial statements in accordance with
International Financial Reporting Standards as adopted by the
United Kingdom ("IFRS"). Under company law the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that
period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether the Group financial statements have been
prepared in accordance with IFRS as adopted by the United
Kingdom;
-- state whether the Company financial statements have been
prepared in accordance with FRS 101 "Reduced Disclosure Framework";
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies (Jersey) Law
1991. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The maintenance and integrity of the Group's website is the
responsibility of the Directors. The work carried out by the
auditors does not involve the consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred in the accounts since they were initially
presented on the website. Legislation in Jersey governing the
preparation and dissemination of the accounts and the other
information included in annual reports may differ from legislation
in other jurisdictions.
Consolidated statement of comprehensive income
For the 9 month period ended 31 December 2021
2021
Note GBP
Administrative expenses (220,843)
Loss before taxation 6 (220,843)
Taxation charge 7 -
----------
Loss for the period (220,843)
Total comprehensive loss for the period (220,843)
==========
Loss per share (pence)
Basic and diluted 8 (11.5p)
==========
The notes below form part of these consolidated Financial
Statements.
Consolidated statement of Financial Position
As at 31 December 2021
31 December 31 December
2021 2021
Note GBP GBP
Current assets
Cash and cash equivalents 11 829,065
Other receivables 12 2,583
Total current assets 831,648
------------
Total assets 831,648
------------
Current liabilities
Other payables 13 57,281
Total current liabilities 57,281
Total liabilities 57,281
------------
Total net assets 774,367
============
Equity
Issued share capital 15 100,000
Share premium 16 894,998
Capital redemption reserve 16 2
Share based payment reserve 18 210
Retained deficit 16 (220,843)
Total equity 774,367
============
The consolidated financial statements were approved and
authorised for issue by the Board on 28 April 2022 and were signed
on its behalf by:
David Williams
Chairman
The notes below form part of these consolidated Financial
Statements.
Consolidated statement of changes in equity
For the 9 month period ended 31 December 2021
Share Share Capital Share Retained
capital premium redemption based deficit Total
reserve payment
Notes reserve
GBP GBP GBP GBP GBP GBP
Balance at incorporation
date 2 - - - - 2
Loss for the period - - - - (220,843) (220,843)
Transactions with
owners in their capacity
as owners:
Issue of new ordinary
shares 15 99,998 899,998 2 - - 999,998
Ordinary share issue
costs - (5,000) - - - (5,000)
Share based payment 18 - - - 210 - 210
At 31 December 2021 100,000 894,998 2 210 (220,843) 774,367
See note 15 of the notes for full details of the capital
movements during the period.
The notes below form part of these consolidated Financial
Statements.
Consolidated statement of cash flows
For the 9 month period ended 31 December 2021
2021
GBP
Operating activities
Loss before taxation (220,843)
Adjustments for:
Share based payment charge 210
Operating cash flows before changes in working
capital (220,633)
Increase in other receivables (2,583)
Increase in other payables 57,281
----------
Net cash outflows from operating activities (165,935)
----------
Financing activities
Issue of ordinary shares 1,000,000
Ordinary share issue costs (5,000)
Net cash inflows from financing activities 995,000
----------
Net increase in cash and cash equivalents 829,065
Cash and cash equivalents at beginning of the period -
Cash and cash equivalents at end of the period 829,065
==========
The notes below form part of these consolidated Financial
Statements.
Notes forming part of the consolidated financial statements
For the 9 month period ended 31 December 2021
1 General information
The Company was incorporated on 31 March 2021 as Red Capital
Limited, a private limited company under the laws of Jersey with
registered number 134737. On 8 September 2021 the Company was
re-registered as an unlisted public limited company and its name
was changed to Red Capital Plc. On 19 November 2021 the Company
shares were admitted to trading onto the Main Market of the London
Stock Exchange. The Company is the parent company of Red Capital
Subco Limited (a private limited company under the laws of Jersey
with registered number 134741).
The address of its registered office is 28 Esplanade, St.
Helier, Channel Islands, JE2 3QA, Jersey. The Group has been
incorporated for the purpose of identifying suitable acquisition
opportunities in accordance with the Group's investment and
acquisition strategy with a view to creating shareholder value. The
Group will retain a flexible investment and acquisition strategy
which will, subject to appropriate levels of due diligence, enable
it to deploy capital in target companies by way of minority or
majority investments, or full acquisitions where it is in the
interests of shareholders to do so. This will include transactions
with target companies located in the UK and internationally.
2 Accounting policies
The principal policies adopted in the preparation of the
consolidated financial statements are as follows:
(a) Basis of preparation
These consolidated financial statements have been prepared in
accordance with the requirements of International Financial
Reporting Standards as adopted by the United Kingdom ("IFRS")and
the requirements of the Companies (Jersey) Law 1991.
No comparative figures have been presented as the consolidated
financial statements cover the period from incorporation on 31
March 2021 to 31 December 2021.
(b) Basis of consolidation
The consolidated financial statements present the results of the
Company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between Group
companies are therefore eliminated in full.
Where the Group has control over a Company, it is classified as
a subsidiary. The Group controls a Company if all three of the
following elements are present: power over the Company, exposure to
variable returns from the Company, and the ability of the Group 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.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the
consolidated statement of financial position, the acquiree's
identifiable assets, liabilities and contingent liabilities are
initially recognised at their fair values at the acquisition date.
The acquisition related costs are included in the consolidated
statement of comprehensive income on an accruals basis. The results
of acquired operations are included in the consolidated statement
of comprehensive income from the date on which control is
obtained.
(c) Functional and presentational currency
The Group's functional and presentational currency for these
financial statements is the pound sterling.
(d) Going concern
The Directors, having made due and careful enquiry, are of the
opinion that the Company has adequate working capital to execute
its operations and has the ability to access additional financing,
if required, over the next 12 months. The Company's unaudited cash
balance as at 22 April 2022 is GBP808,688, and excluding the
consummation of any investment or acquisition which will likely
require specific funding, has adequate resources available to fund
the on-going forecasted operating expenses for at least twelve
months following approval of the financial statements. The
Directors, therefore, have made an informed judgement, at the time
of approving the financial statements, that there is a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. As a result, the
Directors have adopted the going concern basis of accounting in
preparing the annual financial statements.
(e) Employee benefits
Short-term benefits
Short-term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided. A liability is recognised for the amount expected to be
paid under short-term cash bonus or profit-sharing plans if the
Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
(f) Taxation
Tax on the profit or loss for the period comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the period, using tax rates enacted or
substantively enacted at the balance sheet date.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term
deposits with an original maturity of three months or less, held
for meeting short term commitments.
(h) Financial assets and liabilities
The Group's financial assets and liabilities comprise cash and
other payables.
Other payables are not interest bearing and are stated at their
amortised cost.
(i) Share-based payments
The Group operates an equity-settled share-based payment plan.
The fair value of the employee services received in exchange for
the grant of options is recognised as an expense over the vesting
period, based on the Group's estimate of awards that will
eventually vest, with a corresponding increase in equity as a
share-based payment reserve.
This plan includes market-based vesting conditions for which the
fair value at grant date reflects and are therefore not
subsequently revisited. The fair value is determined using a
binomial model.
(j) Warrants
Warrants issued as part of share issues have been determined as
equity instruments under IAS 32. Since the fair value of the shares
issued at the same time as the warrants is equal to the price paid,
these warrants, by deduction, are considered to have been issued at
fair value.
(k) Accounting standards issued
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 -
Interest Rate Benchmark Reform - Phase 2 (effective for annual
periods beginning on or after 1 January 2021) were issued and
adopted in the period, with no material impact on the financial
statements.
There were no other new accounting standards issued have been
adopted in the period.
(l) Standards in issue but not yet effective
At the date of authorisation of these financial statements there
were amendments to standards which were in issue but which were not
yet effective and which have not been applied. The principal ones
were:
-- Amendment to IFRS 16, 'Leases' - COVID-19 related rent
concessions. Extension of the practical expedient (effective for
annual period beginning on or 1 April 2021)
-- A number of narrow-scope amendments to IFRS 3, IAS 16, IAS 37
and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16
(effective for annual periods beginning on or after 1 January
2022)
-- Amendments to IAS 1, Presentation of financial statements on
classification of liabilities (effective date deferred until
accounting periods starting not earlier than 1 January 2024)
-- Narrow scope amendments to IAS 1, Practice statement 2 and
IAS 8 (effective for annual periods beginning on or after 1 January
2023.
-- Amendment to IAS 12 - deferred tax related to assets and
liabilities arising from a single transaction (effective for annual
periods beginning on or after 1 January 2023)
-- The Directors do not expect the adoption of these amendments
to standards to have a material impact on the financial
statements.
3 Accounting estimates and judgements
In preparing the consolidated financial statements, the
Directors have to make judgments on how to apply the Group's
accounting policies and make estimates about the future. The
Directors do not consider there to be any critical estimates or
judgments that have been made in arriving at the amounts recognised
in the consolidated financial statements.
4 Employees
Staff costs, including Directors, consist of: 2021
GBP
Wages and salaries 5,890
Share based payments 172
_______
6,062
_______
2021
Number
The average number of employees, including Directors, 2
during the period was: _______
5 Directors' remuneration
The Company Directors are considered the only key management
personnel and their remuneration was as follows:
2021
GBP
Directors' emoluments 5,890
Share-based payments (note 18) 172
________
6,062
________
The Chairman's fees are paid through Rise Rocks Limited, a
Company wholly owned by the Chairman.
6 loss
2021
GBP
This has been arrived at after charging:
Professional services 60,491
Listing expenses 106,473
Fees payable to the Company's auditor for the audit
of the parent and consolidated accounts 20,000
7 Taxation
2021
GBP
Jersey corporation tax
Corporation tax on loss for the period -
Total taxation on loss on ordinary activities -
9 month period
ended 31
Dec 2021
GBP
Loss before tax (220,843)
________
Tax for financial service companies at 10% (22,084)
Effect of:
Tax losses on which a deferred tax asset has not
been recognised 22,084
________
Total taxation on loss on ordinary activities -
________
8 Earnings per share
Earnings per share is calculated by dividing the loss after tax
for the period by the weighted average number of shares in issue
for the period, these figures being as follows:
2021
GBP
Loss used in basic and diluted EPS
, being loss after tax (220,843)
Adjustments:
Share based remuneration 210
Adjusted earnings used in adjusted EPS (220,633)
________
The Subco Incentive Scheme share options (note 18) have not been
included in the diluted EPS on the basis that they are
anti-dilutive, however they may become dilutive in future
periods.
2021
Number
Weighted average number of ordinary shares of
1p each used as the denominator in calculating
basic and diluted EPS 1,922,729
________
Earnings/(loss) per share
Basic and diluted (11.5p)
Adjusted - basic and diluted after the adjustments
in the table above (11.5p)
9 Adjusted earnings before interest, tax, depreciation
and amortisation (Adjusted EBITDA)
2021
GBP
Loss before tax (220,843)
EBITDA loss (220,843)
Share based remuneration 210
Adjusted EBITDA loss (220,633)
==========
10 Subsidiaries
The Company directly owns the ordinary share capital of its
subsidiary undertakings as set out below:
Subsidiary Nature of business Country of Proportion of A Proportion of
incorporation ordinary shares held B ordinary shares
by Company held by Company
Red Capital Subco Intermediate holding Jersey, Channel 100 percent 0 percent
Limited company Islands
The address of the registered office of Red Capital Subco
Limited (the "Subco") is 28 Esplanade, St. Helier, Channel Islands,
JE2 3QA, Jersey. The Subco was incorporated on 31 March 2021.
The A ordinary shares have full voting rights, full rights to
participate in a dividend and full rights to participate in a
distribution of capital. The B ordinary shares have been issued
pursuant to the Company's Subco Incentive Scheme and hold no voting
or dividend rights or rights to distributions.
11 Cash and cash equivalents
2021
GBP
Cash and cash equivalents 829,065
________
12 Trade and other receivables
2021
GBP
Prepayments 2,583
________
13 Trade and other payables
2021
Current trade and other payables GBP
Accruals 57,281
________
14 Financial instruments
The Group's financial assets and liabilities comprise cash, and
trade and other payables. The carrying value of all financial
assets and liabilities equals fair value given their short term
nature.
Financial assets
measured at amortised
cost
2021
GBP
Current financial assets
Cash and cash equivalents 829,065
________
Financial liabilities
measured at amortised
cost
2021
GBP
Current financial liabilities
Accruals 57,281
________
Credit risk
The Group's credit risk is wholly attributable to its cash
balance. All cash balances are held at a reputable bank in Jersey.
The credit risk from its cash and cash equivalents is deemed to be
low due to the nature and size of the balances held.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
The Group's approach to liquidity risk is to ensure that
sufficient liquidity is available to meet foreseeable requirements
and to invest funds securely and profitably.
The following table details the contractual maturity of
financial liabilities based on the dates the liabilities are due to
be settled:
Financial liabilities:
Less than More than
1 year 2 to 5 Years 5 years Total
GBP GBP GBP GBP
Accruals 57,281 - - 57,281
______ ______ ______ ______
At 31 December 2021 57,281 - - 57,281
_______ _______ ______ _______
15 Share capital
Allotted, called up and fully
paid
2021 2021
Number GBP
Ordinary shares of 1p each:
At incorporation date 2 -
Issued in the period 9,999,998 100,000
_________ _________
At 31 December 10,000,000 100,000
_________ _________
On incorporation on 31 March 2021, the Company had an authorised
share capital of GBP10,000 divided into 10,000 ordinary shares of
par value of GBP1 each, of which one ordinary share was issued to
each of David Williams, Chairman of the Company and Tessera
Investment Management Limited. The two ordinary shares were each
issued for consideration of GBP1.00 per share.
On 28 October 2021, the Company sub-divided its share capital.
Pursuant to the sub-division, the two ordinary shares of GBP1.00
each in the issued share capital of the Company were split into 200
ordinary shares. Following the sub-division, 180 ordinary shares
were re-designated as deferred shares of par value GBP0.01 each.
Following the sub-division and re-designation, the issued share
capital of the Company was comprised of 20 ordinary shares and 180
deferred shares and the Company had an authorised share capital of
GBP10,000 divided into 999,800 ordinary shares of par value GBP0.01
each and 200 deferred shares of a par value GBP0.01 each. The
deferred shares were redeemed and subsequently cancelled, with a
capital redemption reserve created of equivalent value as per note
16.
On 28 October 2021, in accordance with article 5B of the
Articles, the Company redeemed for nil consideration the deferred
shares. Any amounts standing to the credit of any nominal or share
premium account relating to deferred shares that were redeemed were
credited to a capital reserve of the Company and are available for
use in accordance with the Companies Law.
On 29 October 2021, the Company increased its authorised share
capital to GBP100,000 and issued and allotted 5,999,980 ordinary
shares at a price of GBP0.10 per ordinary share to the certain
shareholders and investors, for aggregate consideration of
GBP599,998 in cash. Immediately following that issue and allotment,
the issued share capital of the Company was comprised of 6,000,000
ordinary shares.
Pursuant to the IPO Placing, 4,000,000 ordinary shares were
issued and allotted at a price of GBP0.10 per ordinary shares to
certain new investors, for aggregate consideration of GBP400,000 in
cash. Warrants with the right to subscribe for further ordinary
shares in the Company were issued for every ordinary share
subscribed for.
Immediately following the issue and allotment, the Company's
issued share capital increased to 10,000,000 ordinary shares.
All shares are equally eligible to receive dividends and the
repayment of capital and represent one vote at the shareholders'
meeting of the Company.
16 Reserves
Share premium and retained earnings represent balances
conventionally attributed to those descriptions. The transaction
costs relating to the issue of shares was deducted from share
premium.
The Capital redemption reserve is made up on amounts arising
from the cancellation of the deferred shares.
The Group having no regulatory capital or similar requirements,
its primary capital management focus is on maximising earnings per
share and therefore shareholder return.
The Directors have proposed that there will be no final dividend
in respect of 2021.
17 Share Incentive Plan
On 12 November 2021, the Group created a Subco Incentive Scheme
within its wholly owned subsidiary Red Capital Subco Limited
("Subco"). Under the terms of the Subco Incentive Scheme, scheme
participants are only rewarded if a predetermined level of
shareholder value is created over a three to five year period or
upon a change of control of the Company or Subco (whichever occurs
first), calculated on a formula basis by reference to the growth in
market capitalisation of the Company, following adjustments for the
issue of any new Ordinary shares and taking into account dividends
and capital returns ("Shareholder Value"), realised by the exercise
by the beneficiaries of a put option in respect of their shares in
Subco and satisfied either in cash or by the issue of new ordinary
shares at the election of the Company.
Under these arrangements in place, participants are entitled to
up to 15 percent of the Shareholder Value created, subject to such
Shareholder Value having increased by at least 12.5 percent per
annum compounded over a period of between three and five years from
admission or following a change of control of the Company or
Subco.
18 Share based payments
The Subco Incentive Scheme detailed in Note 17 is an
equity-settled share option plan which allows employees and
advisors of the Group to sell their B shares to the Company in
exchange for a cash payment or for shares in the Company (at the
Company's election) if certain conditions are met.
These conditions include good and bad leaver provisions and that
growth in Shareholder Value of 12.5 per cent. compound per annual
is delivered over a three to five year period for the scheme to
vest. This second condition is therefore a market condition which
has been taken into account in the measurement at grant date of the
fair value of the options.
The B share options have a weighted average contractual life of
4 years 10 months. 110,000 B share options were issued in the
period, all of which were outstanding at the period end. No B share
options were exercised in the period. No B share options have
expired during the period. The weighted average exercise price of
the outstanding B share options is Nil.
The Group recognised GBP210 of expenditure in the statement of
total comprehensive income relating to equity-settled share-based
payments in the period.
The fair value of options granted during the period is
determined by applying a binominal model. The expense is
apportioned over the vesting period of the option and is based on
the number which are expected to vest and the fair value of these
options at the date of grant.
The inputs into the binomial model in respect of options granted
in the period are as follows:
Opening share price 10.0p
Expected volatility of
share price 16.67%
Expected life of options 5 years
Risk-free rate 0.92%
Target increase in share
price per annum 12.5%
Fair value of options 7.152p
Expected volatility was estimated by reference to the average
5-year volatility of the FTSE SmallCap Index.
The target increase in Shareholder Value is laid out in the
Articles of Association of the Subco and represents the compounded
target annual increase in market capitalisation (adjusted for
capital raises and dividends) that needs to be met between the
third and the fifth anniversary of the Group's admission onto Main
Market of the London Stock Exchange in order for the scheme to
vest.
The Group did not enter into any share-based payment
transactions with parties other than employees and advisors during
the current period.
19 Related party transactions
Transactions with key management personnel
Key management personnel comprise the Directors and executive
officers. The remuneration of the individual Directors is disclosed
in the Report of Directors.
Other transactions - Group
On 1 November 2021, the Company entered into an arm's length
strategic advisory agreement with Tessera Investment Management
Limited, a Company which is a shareholder in the Company, pursuant
to which Tessera has agreed to provide strategic and general
corporate advice, and acquisition and capital raising transaction
support services to the Company. Tessera was paid an initial
transaction success fee of GBP50,000 (plus VAT) on admission for
transaction management services provided to the Company in
connection with admission and capital raising activities.
From admission, Tessera continues to provide strategic advisory
services to the Company, including general corporate advice, and
acquisition and capital raising transaction support, and is
entitled to be paid a fixed monthly retainer fee of GBP5,000 (plus
VAT) per month payable in arrears. A discretionary transaction
success fee payable to Tessera may be agreed between the Company
and Tessera with such payment payable on successful completion of
an acquisition by the Company. As at 31 December 2021, Tessera was
owed GBP6,935 (plus VAT) by the Company for accrued monthly
retainer fees since IPO.
20 Post balance sheet events
There are no events subsequent to the reporting date which would
have a material impact on the financial statements.
21 Contingent liabilities
There are no contingent liabilities at the reporting date which
would have a material impact on the financial statements.
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END
FR PPUAGCUPPPGR
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