TIDMREDC
RNS Number : 6754X
Red Capital PLC
27 April 2023
27 April 2023
Red Capital Plc
("Red Capital" or the "Company")
Full Year Results for the period ended 31 December 2022
Red Capital Plc (LSE: REDC) has today published its Annual
Report and Financial Statements for the period ended 31 December
2022 (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 Investment Management
Limited
Tony Morris +44 (0) 7742 189145
Chairman's Statement
I am pleased to present the financial results for Red Capital
Plc ("Red" or the "Company") and its subsidiary (together the
"Group") for the year ended 31 December 2022.
Since establishing the Company 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 continuing general macroeconomic and geopolitical
uncertainty, we remain extremely positive regarding prospects
within our chosen areas of focus across business services and
technology sectors, and we look forward to updating shareholders in
due course as our investment and acquisition plans develop during
the new financial year.
I would also like to take this opportunity to thank our
shareholders for both their support and patience 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
26 April 2023
Report of the Directors
The Directors of the Company present their report for the year
ended 31 December 2022.
PRINCIPAL ACTIVITY AND BUSINESS REVIEW
For the financial year ended 31 December 2022, the Group and
Company's principal activities were that of a holding group and
company respectively. The Group and Company have actively pursued
their strategy through the sourcing and assessment of acquisition
and investment opportunities in the business services and
technology sectors.
RESULTS
During the year, Red recorded a loss of GBP207,660 (2021: loss
of GBP220,843) and the loss per share was 2.08p (2021: loss per
share of 11.49p), reflecting moderate monthly operating expenses of
the Group. The Group and Company had cash reserves at the end of
the year of GBP611,888 (2021: 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 year.
FUTURE DEVELOPMENTS
The Directors expect to continue to execute the Group'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 Group and Company have adequate working capital to
execute their operations over the next 12 months. The Group and
Company's unaudited cash balance as at 21 April 2023 was
GBP542,301, and excluding the consummation of any investment or
acquisition which will likely require specific funding, have
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 Group
and Company have 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 year 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
through detailed forecasting and planning for amount and timing of
payments and receipts of interest income, to ensure cash resources
are available when required.
Given the relatively small size and operation of the Group in
the year, 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 year 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 year ended 31 December
2022 did not materially change from those set out in 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
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
year.
CHARITABLE DONATIONS
The Company has made no charitable donations during the
year.
POST BALANCE SHEET EVENTS
There have been no significant post balance sheet events. See
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 2022, there were 10,000,000 ordinary shares of 1p par
value each in issue.
SIGNIFICANT SHAREHOLDERS
As at 21 April 2023, 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 546,000 5.5%
Vidacos Nominees Limited 400,000 4.0%
Hargreaves Lansdown (Nominees) Limited 322,096 3.2%
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 21 April 2023, the Directors in aggregate held 5,500,000
ordinary shares, which represents 55 per cent. of the Company's
issued share capital.
COMPANY DIRECTORS
The Directors during the year and summaries of their experience
are set out below.
David Williams Non-Executive Chairman
David has significant 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 Waste Recycling Group Plc, 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
Simon is a highly experienced software and technology
entrepreneur, and is currently Group Chief Executive O cer of
Vistra, a global leader in fund administration and corporate
services. Prior to this he was Chief Executive O cer 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 o ce during the year and their beneficial
interest in the share capital of the Company at 31 December 2022
were as follows:
31 December
2022
--------------- -----------
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. There are no other benefits paid to
Directors outside of their service fees, save for ordinary course
reimbursable expenses properly incurred in the performing of their
duties as Directors. The Company does not operate a pension
scheme.
31 December
Benefits 2022
Salary in kind Total
Director GBP GBP GBP
David Williams 30,000 - 30,000
Simon Webster 20,000 - 20,000
--------------- ------ -------- -----------
50,000 - 50,000
--------------- ------ -------- -----------
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 2021, 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.
Subco
Participant 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.
No. of
ordinary
shares
to which
Exercise the
Participant Date of grant price 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. At present,
the Board reviews investment and acquisition opportunities on an as
required basis, and meets regularly with its Strategic Advisor to
discuss possible inorganic growth opportunities, as well as monitor
deal flow and investment and acquisitions in progress, and review
the Company's strategy to ensure that it remains aligned to the
delivery of shareholder value. Those investment and acquisition
opportunities that are assessed by the Board (with support from its
Strategic Advisor) are considered in light of the investment and
acquisition criteria as detailed in the Company's Prospectus. In
addition, as part of the investment and acquisition screening
process, the Company will augment Board and Strategic Advisor
capability on a case by case basis as required with industry and
operating partner input, where deep domain expertise can be
accessed. 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 position, and will address key differences
to the QCA Code. Specifically, it is anticipated this will
include:
i. the augmentation of the Board with suitably qualified
additional executive and non-executive directors including
independents;
ii. the implementation of audit, remuneration and nomination
committees with appropriate terms of reference;
iii. a formalised annual evaluation and review process covering
the Board and Committees, including succession planning;
iv. the publication of KPIs;
v. the development of a corporate and social responsibility policy; and
vi. an enhanced risk management and governance framework
tailored to the operating assets and strategic direction of the
enlarged entity.
ROLE OF THE BOARD
The Board is responsible for the management of the business of
the Group, setting the strategic direction of the Group and
establishing the policies of the Group. It is the Directors'
responsibility to oversee the financial position of the Group and
monitor the business and affairs of the Group, 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 Group and Company
at all times. The Board also addresses issues relating to internal
control and the Group's approach to risk management and has
formally adopted an anti-corruption and bribery policy.
The Group 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 Group's strategy.
The Group 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 Group'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 Group'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 the 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 O cial 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 year 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 Group's
cash and financial resources through Board level approvals. At such
time that the Group completes an acquisition, the Directors
anticipate that the Group's financial position and prospects
procedures regime will be updated and expanded as necessary to
cater for the nature of the Group's business following completion
of its inaugural investment or acquisition.
BOARD EVALUATION
In the year, 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 Group has completed its first acquisition.
EXTERNAL ADVISERS
The Board accessed the following external advisers during the
year and post the year 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 INDEPENT AUDITOR
So far as the Directors are aware, there is no relevant audit
information of which the Group and Company's independent 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 Group and
Company's independent 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 Group and 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 Group and 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 Group and Company's position and
performance, business model and strategy.
INDEPENT AUDITOR
The independent auditor, MHA MacIntyre Hudson, will be proposed
for re-appointment at the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD
David Williams
Chairman
26 April 2023
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 year. 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 Group
and Company and of the profit or loss of the Group for that
year.
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 su cient to show and explain the Group and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and 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 Group and 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
independent auditors does not involve the consideration of these
matters and, accordingly, the independent 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 year ended 31 December 2022
9 month
Year ended period ended
31 December 31 December
2022 2021
Note GBP GBP
-------------------------------------------- ---- ----------- ------------
Administrative expenses (207,914) (220,843)
-------------------------------------------- ---- ----------- ------------
Operating loss 6 (207,914) (220,843)
Interest receivable 254 -
-------------------------------------------- ---- ----------- ------------
Loss on ordinary activities before taxation (207,660) (220,843)
Taxation charge 7 - -
-------------------------------------------- ---- ----------- ------------
Loss and total comprehensive loss for the
year/period (207,660) (220,843)
-------------------------------------------- ---- ----------- ------------
Loss per share (pence)
Basic and diluted 8 (2.08p) (11.49p)
-------------------------------------------- ---- ----------- ------------
All activities in both the current and the prior period relate
to continuing operations.
The notes below form part of these consolidated financial
statements.
Consolidated Statement of Financial Position
As at 31 December 2022
31 December 31 December 31 December 31 December
2022 2022 2021 2021
Note GBP GBP GBP GBP
---------------------------- ---- ----------- ----------- ----------- -----------
Current assets
Cash and cash equivalents 11 611,888 829,065
Trade and other receivables 12 9,947 2,583
---------------------------- ---- ----------- ----------- ----------- -----------
Total current assets 621,835 831,648
---------------------------- ---- ----------- ----------- ----------- -----------
Total assets 621,835 831,648
---------------------------- ---- ----------- ----------- ----------- -----------
Current liabilities
Trade and other payables 13 53,561 57,281
---------------------------- ---- ----------- ----------- ----------- -----------
Total current liabilities 53,561 57,281
---------------------------- ---- ----------- ----------- ----------- -----------
Total liabilities 53,561 57,281
---------------------------- ---- ----------- ----------- ----------- -----------
Total net assets 568,274 774,367
---------------------------- ---- ----------- ----------- ----------- -----------
Equity
Issued share capital 15 100,000 100,000
Share premium 16 894,998 894,998
Capital redemption reserve 16 2 2
Share-based payment reserve 18 1,777 210
Retained deficit 16 (428,503) (220,843)
---------------------------- ---- ----------- ----------- ----------- -----------
Total equity 568,274 774,367
---------------------------- ---- ----------- ----------- ----------- -----------
The consolidated financial statements were approved and
authorised for issue by the Board on 26 April 2023 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 year ended 31 December 2022
Share-
Capital based
Share Share redemption payment Retained
capital premium reserve reserve deficit Total
Note 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
-------------------------- ---- ------- ------- ---------- ------- --------- ---------
Loss for the year - - - - (207,660) (207,660)
Transactions with owners
in
their capacity as owners:
Share-based payment 18 - - - 1,567 - 1,567
-------------------------- ---- ------- ------- ---------- ------- --------- ---------
At 31 December 2022 100,000 894,998 2 1,777 (428,503) 568,274
-------------------------- ---- ------- ------- ---------- ------- --------- ---------
The notes below form part of these consolidated financial
statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
9 month
Year ended period ended
31 December 31 December
2022 2021
GBP GBP
---------------------------------------------------------- ----------- ------------
Operating activities
Loss before taxation (207,660) (220,843)
Adjustments for:
Share-based payment charge 1,567 210
---------------------------------------------------------- ----------- ------------
Operating cash flows before changes in working
capital (206,093) (220,633)
Increase in trade and other receivables (7,364) (2,583)
(Decrease)/increase in trade and other payables (3,720) 57,281
---------------------------------------------------------- ----------- ------------
Net cash outflows from operating activities (217,177) (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 (decrease)/ increase in cash and cash equivalents (217,177) 829,065
Cash and cash equivalents at beginning of the year/period 829,065 -
---------------------------------------------------------- ----------- ------------
Cash and cash equivalents at end of the year/period 611,888 829,065
---------------------------------------------------------- ----------- ------------
The notes below form part of these consolidated financial
statements.
Notes forming part of the Consolidated Financial Statements
For the year ended 31 December 2022
1 General information
The Company was incorporated in the prior period on 31 March
2021 as Red Capital Limited, a private limited company under the
laws of Jersey with registered number 134737. On 11 November 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 o ce 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 accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in
theses consolidated financial statements.
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.
The consolidated financial statements are prepared on the
historical cost basis.
The comparative figures presented cover the nine-month 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 Group has adequate working capital to execute its
operations over the next 12 months. The Group's unaudited cash
balance as at 21 April 2023 was GBP542,301, 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 Group 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 year comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to items recognised in other
comprehensive income or directly in equity, in which case it is
recognised in other comprehensive income or equity
respectively.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates and laws
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 and laws
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 from
inception, held for meeting short term commitments.
(h) Financial assets and liabilities
The Group's financial assets and liabilities comprise cash and
cash equivalents and accruals. Financial assets are stated at
amortised cost less provision for expected credit losses. Financial
liabilities are stated at 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
The following amendments to standards were issued and adopted in
the year, with no material impact on the financial statements (all
effective for annual periods beginning on or after 1 January
2022):
-- Reference to the Conceptual Framework - Amendments to IFRS 3
-- Onerous Contracts - Cost of Fulfilling a Contract - Amendments to IAS 37
-- Annual Improvements to IFRS Standards 2018-2020
There were no other new accounting standards issued that have
been adopted in the year.
(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 are detailed below. The Directors do not expect the adoption
of these amendments to standards to have a material impact on the
financial statements.
Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12)
-- The amendments narrow the scope of the initial recognition
exemption to exclude transactions that give rise to equal and
offsetting temporal differences e.g. leases and decommissioning
liabilities.
-- For such transactions, the associated deferred tax assets and
liabilities will need to be recognised from the beginning of the
earliest comparative period presented, with any cumulative effect
recognised as an adjustment to retained earnings or other
components of equity at that date.
-- For all other transactions, the amendments apply to
transactions that occur after the beginning of the earliest period
presented.
-- The amendments are effective for financial years beginning on
or after 1 January 2023 and are endorsed by the UK Endorsement
Board ("UKEB").
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2)
-- The amendments to IAS 1 require companies to disclose their
material accounting policy information rather than their
significant accounting policies. The amendments to IFRS Practice
Statement 2 provide guidance on how to apply the concept of
materiality to accounting policy disclosures.
-- The amendments are effective for financial years beginning on
or after 1 January 2023 and are endorsed by the UKEB.
Definition of Accounting Estimates (Amendments to IAS 8)
-- The amendments clarify how companies should distinguish
changes in accounting policies from changes in accounting
estimates. That distinction is important because changes in
accounting estimates are applied prospectively only to future
transactions and other future events, but changes in accounting
policies are generally also applied retrospectively to past
transactions and other past events.
-- The amendments are effective for financial years beginning on
or after 1 January 2023 and are endorsed by the UKEB.
Non-Current Liabilities with Covenants (Amendments to IAS 1)
-- The amendments to IAS 1 specify that covenants to be complied
with after the reporting date do not affect the classification of
debt as current or non-current at the reporting date.
-- The amendments require a company to disclose more information
regarding loan covenants in the notes to the financial statements
and require identification of which loans are affected by
covenants.
-- The amendments are effective for financial years beginning on
or after 1 January 2024 and are not yet endorsed by the UKEB.
Classification of Liabilities as Current or Non-current
(Amendments to IAS 1)
-- The amendments, as issued in 2020, aim to clarify the
requirements on determining whether a liability is current or
non-current, and apply for annual reporting periods beginning on or
after 1 January 2023.
-- The International Accounting Standards Board ("IASB") has
subsequently proposed further amendments to IAS 1 and the deferral
of the effective date of the 2020 amendments to no earlier than 1
January 2024. The amendments are not yet endorsed by the UKEB.
IFRS 17 Insurance Contracts
-- IFRS 17 replaces IFRS 4 and sets out substantial requirements
for the accounting of insurance contracts along with detailed
disclosure.
-- The Group and Company are not insurers and have not
previously entered into contracts that fall within the scope of
IFRS 4 to be treated as insurance contracts. Therefore, this
standard is not deemed to be relevant to the Group at this time and
is not expected to have a significant impact on the Group's
consolidated financial statements.
-- The new standard is effective for financial years beginning
on or after 1 January 2023 has been endorsed by the UKEB.
Lease liability in a sale and leaseback transaction (Amendments
to IFRS 16)
-- The amendments to IFRS 16 change the basis of calculation of
a gain or loss arising on a sale and leaseback transaction to
better reflect in terms of economic substance, the lessee's
retained ownership interest.
-- The Group and Company do not currently hold any sale and
leaseback arrangements. Therefore, these amendments are not deemed
to be relevant to the Group at this time and are not expected to
have a significant impact on the Group's consolidated financial
statements.
-- The amendments are effective for financial years beginning on
or after 1 January 2023 and are not yet endorsed by the UKEB.
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 judgments that
have been made in arriving at the amounts recognised in the
consolidated financial statements with the exception of the
valuation of share-based payments. Please see Note 18 for further
details.
4 Employees
Staff costs, including Directors, consist of:
9 month
Year ended period ended
31 December 31 December
2022 2021
GBP GBP
------------------- ----------- ------------
Wages and salaries 50,000 5,890
------------------- ----------- ------------
50,000 5,890
------------------- ----------- ------------
9 month
Year ended period ended
31 December 31 December
2022 2021
Number Number
------------------------------------------------------ ----------- ------------
The average number of employees, including Directors,
during the year was: 2 2
------------------------------------------------------ ----------- ------------
5 Directors' remuneration
The Company Directors are considered the only key management
personnel and their remuneration was as follows:
9 month
Year ended period ended
31 December 31 December
2022 2021
GBP GBP
---------------------- ----------- ------------
Directors' emoluments 50,000 5,890
---------------------- ----------- ------------
50,000 5,890
---------------------- ----------- ------------
6 Operating profit / (loss)
9 month
Year ended period ended
31 December 31 December
2022 2021
GBP GBP
-------------------------------------------------- ----------- ------------
This has been arrived at after charging:
Professional services 117,927 60,491
Listing expenses - 106,473
Fees payable to the Company's independent auditor
for the audit of the parent
and consolidated accounts 22,000 20,000
-------------------------------------------------- ----------- ------------
7 Taxation
9 month
Year ended period ended
31 December 31 December
2022 2021
GBP GBP
-------------------------------------------------- ----------- ------------
Jersey corporation tax
Corporation tax on loss for the year - -
-------------------------------------------------- ----------- ------------
Total taxation on loss on ordinary activities - -
-------------------------------------------------- ----------- ------------
9 month
Year ended period ended
31 December 31 December
2022 2021
GBP GBP
-------------------------------------------------- ----------- ------------
Loss before tax (207,660) (220,843)
-------------------------------------------------- ----------- ------------
Tax for financial service companies at 10% (2021:
10%) (20,766) (22,084)
Effect of:
Tax losses on which a deferred tax asset has not
been recognised 20,766 22,084
-------------------------------------------------- ----------- ------------
Total taxation on loss on ordinary activities - -
-------------------------------------------------- ----------- ------------
Deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which the
deductible temporary differences and carry forward tax
losses/credits can be utilised. Accordingly, the Group has not
recognised deferred tax assets in respect of deductible temporary
differences and carry forward tax losses as at 31 December 2022 and
31 December 2021 respectively, as it is not probable at year end
that relevant taxable profits will be available in future based on
the current activities of the Group as a holding group. There are
no expiry dates on these tax losses as at the yearend. The
unrecognised deferred tax asset is summarised below:
Tax losses and unrecognised deferred tax asset carried
forward
2022 2021
GBP GBP
------------------------------------------------------ ------- -------
Cumulative temporary differences and carry forward
tax losses 428,503 220,843
Unrecognised deferred tax asset on above at 10%
(based on the
enacted tax rate at the date of signing the financial
statements) 42,850 22,084
------------------------------------------------------ ------- -------
8 Earnings per share
Earnings per share is calculated by dividing the loss after tax
for the year by the weighted average number of shares in issue for
the year, these figures being as follows:
9 month
Year ended period ended
31 December 31 December
2022 2021
GBP GBP
----------------------------------------------- ----------- ------------
Loss used in basic and diluted EPS, being loss
after tax (207,660) (220,843)
Adjustments:
Share-based payment charge 1,567 210
Adjusted earnings used in adjusted EPS (206,093) (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.
9 month
Year ended period ended
31 December 31 December
2022 2021
Number Number
------------------------------------------------- ----------- ------------
Weighted average number of ordinary shares of 1p
each used as the
denominator in calculating basic and diluted EPS 10,000,000 1,922,729
------------------------------------------------- ----------- ------------
Earnings/(loss) per share
Basic and diluted (2.08p) (11.49p)
Adjusted - basic and diluted (2.06p) (11.47p)
------------------------------------------------- ----------- ------------
9 Adjusted earnings before interest, tax, depreciation and
amortisation (Adjusted EBITDA)
9 month
Year ended period ended
31 December 31 December
2022 2021
GBP GBP
Loss before tax (207,660) (220,843)
--------------------------- ----------- ------------
EBITDA loss (207,660) (220,843)
Share-based payment charge 1,567 210
--------------------------- ----------- ------------
Adjusted EBITDA loss (206,093) (220,663)
--------------------------- ----------- ------------
10 Subsidiaries
The Company directly owns the ordinary share capital of its
subsidiary undertakings as set out below:
Proportion Proportion
of of
A ordinary B ordinary
Nature Country of shares held shares held
Subsidiary of business incorporation by Company by Company
------------------------- -------------------- --------------- ----------- -----------
Red Capital Subco Limited Intermediate holding Jersey, Channel 100 percent 0 percent
company Islands
------------------------- -------------------- --------------- ----------- -----------
The address of the registered o ce 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.
11 Cash and cash equivalents
2022 2021
GBP GBP
-------------------------- ------- -------
Cash and cash equivalents 611,888 829,065
-------------------------- ------- -------
611,888 829,065
-------------------------- ------- -------
12 Trade and other receivables
2022 2021
GBP GBP
------------ ----- -----
Prepayments 9,947 2,583
------------ ----- -----
9,947 2,583
------------ ----- -----
13 Trade and other payables
2022 2021
GBP GBP
--------------------------------- ------ ------
Current trade and other payables
Accruals 53,561 57,281
--------------------------------- ------ ------
53,561 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
---------------------------
2022 2021
GBP GBP
-------------------------- ------------- ------------
Current financial assets
Cash and cash equivalents 611,888 829,065
-------------------------- ------------- ------------
611,888 829,065
-------------------------- ------------- ------------
Financial liabilities
measured at
amortised cost
-----------------------
2022 2021
GBP GBP
------------------------------ ----------- ----------
Current financial liabilities
Accruals 53,561 57,281
------------------------------ ----------- ----------
53,561 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 su
cient 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 More
than 1 year 2 to 5 Years than 5 years Total
GBP GBP GBP GBP
-------------------- ----------- ------------ ------------ ------
Accruals 53,561 - - 53,561
-------------------- ----------- ------------ ------------ ------
At 31 December 2022 53,561 - - 53,561
-------------------- ----------- ------------ ------------ ------
15 Share capital
Allotted, called up and fully paid
----------------------------------------
2022 2021 2022 2021
Number Number GBP GBP
---------------------------- ---------- ---------- ------- -------
Ordinary shares of 1p each: 10,000,000 10,000,000 100,000 100,000
---------------------------- ---------- ---------- ------- -------
At 31 December 2022 10,000,000 10,000,000 100,000 100,000
---------------------------- ---------- ---------- ------- -------
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.
Capital redemption reserve includes amounts in relation to
deferred shared capital.
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 2022 (2021: GBPNil).
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 percent compound per annum 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 weighted average exercise price of the outstanding B share
options is GBP0.10 which have a weighted average contractual life
of 3 years 10 months. 110,000 B share options were issued in the
nine-month period to 31 December 2021, all of which were
outstanding at the current year end. No B share options were
exercised in the current or prior period. No B share options have
expired during the current or prior period.
The Group recognised GBP1,567 (2021: GBP210) of expenditure in
the statement of total comprehensive income relating to
equity-settled share-based payments in the year.
The fair value of options granted during the year 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 prior 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 or prior period.
19 Related party transactions
Transactions with key management personnel
Key management personnel comprise the Directors and executive o
cers. 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 2022, Tessera was
owed GBP6,243 (2021: GBP6,935 plus VAT) by the Company for accrued
monthly retainer fees.
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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