TIDMSWC
RNS Number : 1479Y
Summerway Capital PLC
11 May 2021
11 May 2021
Summerway Capital Plc
("Summerway" or the "Company")
Interim Report for the six months ended 28 February 2021
London, 11 May 2021 - Summerway Capital Plc announces its
unaudited condensed interim results for the six months ended 28
February 2021.
Over the period, Summerway incurred a loss after taxation of
GBP217.6k (2020: GBP86.7k), reflecting operating expenses of
GBP106.5k (2020: GBP97.9k), share based payment expense of GBP20.4k
(2020: Nil), one-off costs relating to the placing of shares and
change in investment strategy of GBP92.2k (2020: Nil) and finance
income of GBP1.5k (2020: GBP11.2k). As at 28 February 2021,
Summerway held GBP6.957 million cash (31 August 2020 GBP5.488
million).
Vin Murria OBE, Summerway's Chairman, commented:
" The Group continues to pursue its recently approved investment
strategy and has an active pipeline of investment and acquisition
opportunities, which are currently under assessment. As a Board, we
remain encouraged about the opportunity for securing the Group's
inaugural transaction, and we look forward to updating Shareholders
on progress in due course ."
The Interim Report is also available on the Company's website at
www.summerwaycapital.co.uk
Enquiries:
Summerway Capital Plc
+44 (0) 20 7440
Tony Morris 7520
N+1 Singer (Nominated Adviser and Broker)
+44 (0) 20 7496
Sandy Fraser, Amanda Gray 3000
LEI Code: 213800YXCATORT475807
CHAIRMAN'S STATEMENT
I am pleased to present to shareholders the Interim Condensed
Consolidated Financial Statements of Summerway Capital Plc (the
"Company") for the six months ended 28 February 2021.
Strategy
The Company's investment strategy remains focused on investment
and acquisition opportunities across the software,
Software-as-a-Service and digital technologies and services
sectors. The Board believe there are a number of opportunities to
invest in, or acquire businesses that can be organically or
acquisitively grown to become leading providers of enterprise
software, solutions and services.
Results and Developments in the Period
The Group's loss after taxation for the six months to 28
February 2021 was GBP217,588 (2020: GBP86,730), reflecting
operating expenses of GBP106,560 (2020: GBP97,904), share based
payment expense of GBP20,408 (2020: Nil), one-off costs relating to
the placing of shares and change in investment strategy of
GBP92,159 (2020: Nil) and finance income of GBP1,539 (2020:
GBP11,174).
On the 15 January 2021, the Company's Shareholders approved its
new investment strategy and the Company also completed a placing,
which raised proceeds of GBP1,675,000. As at 28 February 2021,
Summerway held GBP6,957,201 cash (31 August 2020 GBP5,547,414).
In conjunction with the change in strategy, a number of
directorate changes occurred, including the appointment of Vin
Murria OBE as Chairman of the Company, and Paul Gibson and Tony
Morris as Non-Executive Directors, as well as the resignations of
Alexander Anton and Mark Farmiloe.
Outlook
The Group continues to pursue its recently approved investment
strategy and has an active pipeline of investment and acquisition
opportunities, which are currently under assessment. As a Board, we
remain encouraged about the opportunity for securing the Group's
inaugural transaction, and we look forward to updating Shareholders
on progress in due course.
Vin Murria OBE
Chairman
SUMMERWAY CAPITAL PLC
Consolidated Statement of Comprehensive Income
For the six months ended 28 February 2021
Six months Six months Year
ended ended ended
28 February 29 February 31 August
2021 2020 2020
Note
---------------------------------- ----- ----------- ----------- ----------
GBP GBP GBP
Administrative expenses 4 (219,127) (97,904) (186,552)
----------- ----------- ----------
Operating loss (219,127) (97,904) (186,552)
Finance income 1,539 11,174 12,041
----------- ----------- ----------
Finance income 1,539 11,174 12,401
Loss before income tax (217,588) (86,730) (174,511)
----------- ----------- ----------
Income tax - - -
----------- ----------- ----------
Net loss for the period (217,588) (86,730) (174,511)
Total other comprehensive income - - -
----------- ----------- ----------
Total comprehensive loss (217,588) (86,730) (174,511)
----------- ----------- ----------
Attributable to:
Owners of the Company (217,588) (86,730) (174,511)
Loss per ordinary share
Basic and diluted loss per share
attributable to ordinary equity
holders of the Company 5 (3.30)p (1.41)p (2.85)p
The Company's activities derive from continuing operations.
Consolidated Statement of Financial Position
As at 28 February 2021
As at As at As at
28 February 29 February 31 August
2021 2020 2020
Note
---------------------------------- ---- ----------- ----------- ---------
GBP GBP GBP
Assets
Current assets
Cash and cash equivalents 6,957,201 5,547,414 5,487,991
Other receivables 7 32,490 24,112 9,779
----------- ----------- ---------
Total current assets 6,989,691 5,571,526 5,497,770
----------- ----------- ---------
Total assets 6,989,691 5,571,526 5,497,770
----------- ----------- ---------
Current liabilities
Trade and other payables 9 35,516 15,690 29,715
----------- ----------- ---------
35,516 15,690 29,715
----------- ----------- ---------
Non-current liabilities
Incentive shares 10 20,300 12,000 12,000
----------- ----------- ---------
20.300 12,000 12,000
----------- ----------- ---------
Total liabilities 55,816 27,690 41,715
----------- ----------- ---------
Net Assets 6,933,875 5,543,836 5,456,055
----------- ----------- ---------
Capital and reserves attributable
to equity holders of the parent
Share capital 8 80,334 61,300 61,300
Share premium reserve 7,367,052 5,711,086 5,711,086
Capital redemption reserve 49,500 49,500 49,500
Accumulated losses (563,011) (278,050) (365,831)
----------- ----------- ---------
Total Equity 6,933,875 5,543,836 5,456,055
----------- ----------- ---------
Consolidated Statement of Changes in Equity
For the six months ended 28 February 2021
Notes Share Share Capital Accumulated Total
capital Premium Redemption losses equity
reserve reserve
--------- ---------- ------------ ------------ ----------
GBP GBP GBP GBP GBP
Balance as at
31 August 2019 61,300 5,711,086 49,500 (191,320) 5,630,566
Loss for the
period - - - (86,730) (86,730)
--------- ---------- ------------ ------------ ----------
Balance as at
29 February 2020 61,300 5,711,086 49,500 (278,050) 5,543,836
--------- ---------- ------------ ------------ ----------
Loss for the
period - - - (87,781) (87,781)
--------- ---------- ------------ ------------ ----------
Balance as at
31 August 2020 61,300 5,711,086 49,500 (365,831) 5,456,055
--------- ---------- ------------ ------------ ----------
Issue of shares 19,034 1,655,966 - - 1,675,000
Warrants - share
based payment
expense - - - 20,408 20,408
Loss for the
period - - - (217,588) (217,588)
--------- ---------- ------------ ------------ ----------
Balance as at
8 February 2021 80,334 7,367,052 49,500 (563,011) 6,933,875
--------- ---------- ------------ ------------ ----------
Consolidated Statement of Cash Flows
For the six months ended 28 February 2021
Six months Six months Year
ended ended ended
28 February 29 February 31 August
2021 2020 2020
Note
------------------------------------------ ------- ---------------- ---------------- ----------
GBP GBP GBP
Cash flows from operating activities
Operating loss (219,127) (97,904) (186,552)
Adjustment for share based payment
expense 20,408 - -
Adjustments to reconcile loss before
income tax to operating cash flows:
(Increase)/decrease in other receivables 7 (22,711) (8,442) 5,891
Increase/(decrease) in trade and
other payables 9,10 14,101 (5,251) 8,774
Bank interest received 1,539 11,174 12,041
---------------- ---------------- ----------
Net cash used in operating activities (205,790) (100,423) (159,846)
---------------- ---------------- ----------
Cash flows from financing activities
Proceeds from issue of share capital 8 1,675,000 - -
Net cash generated from financing
activities 1,675,000 - -
---------------- ---------------- ----------
Net increase/(decrease) in cash and
cash equivalents 1,469,210 (100,423) (159,846)
Cash and cash equivalents at beginning
of the period 5,487,991 5,647,837 -
---------------- ---------------- ----------
Cash and cash equivalents at the
end of the period 6,957,201 5,547,414 5,487,991
---------------- ---------------- ----------
Notes to the Financial Statements
For the six months ended 28 February 2021
1. GENERAL INFORMATION
Summerway Capital plc is an investing company (for the purposes
of the AIM Rules for Companies) and is incorporated in England and
Wales and domiciled in the United Kingdom (company number:
11545912). It is a public limited company and the address of the
registered office is 32-33 Cowcross Street London EC1M 6DF. The
Company is the parent company of Summerway Subco Limited (company
number: 11565845).
The activity of the Company is the investment, acquisition and
development of companies operating within the software,
Software-as-a-Service ("SaaS") and digital technologies and
services sectors. The Directors believe there are numerous
opportunities to invest in or acquire businesses that can be
organically or acquisitively grown to become leading providers of
enterprise software, solutions and services. Under its strategy,
the Company will identify target companies within the software,
SaaS and digital technologies and services sectors, where the Board
believe there are tangible opportunities across the UK and EU to
drive strategic, operational and performance improvement, either as
standalone entities or as a part of an enlarged group.
2. BASIS OF PREPARATION
These Interim Condensed Consolidated Financial Statements and
accompanying notes have neither been audited nor reviewed by the
auditor, do not constitute statutory accounts within the meaning of
Section 434 of the Companies Act 2006 and do not include all the
information and disclosures required in annual statutory financial
statements. They should be read in conjunction with the Group's
Annual Report and Accounts for the year ended 31 August 2020 which
are available on the Group's website. Those statutory accounts were
approved by the Board of Directors on 1 February 2021 and have been
filed with Companies House. The report of the auditors on those
accounts was unqualified.
These Interim Condensed Consolidated Financial Statements were
approved by the Board of Directors on 10 May 2021.
3. ACCOUNTING POLICIES
The accounting policies applied by the Group in these interim
condensed consolidated financial statements are the same as those
applied by the Group in the audited consolidated financial
statements for the year ended 31 August 2020 and which will form
the basis of the 2021 Annual Report.
There have been no new accounting standards or changes to
existing accounting standards applied for the first time since 1
September 2020 which have a material effect on these interim
results. The Group does not currently expect any material impact of
any other standards issued by the IASB, but not yet effective.
4. ADMINISTRATION EXPENSES
Period Period Year ended
ended 28 ended 29 31 August
February February 2020
2021 2020
--------- --------- -------------
GBP GBP GBP
Group expenses by nature
One-off costs related
to the issue of shares
and change in investing
strategy 92,159 - -
Staff related costs 31,017 27,000 54,780
Office costs - 19,498 21,890
NOMAD, registrar and
Stock Exchange costs 27,149 22,309 46,391
Audit, accountancy and
professional costs 36,596 21,659 50,997
Share based payment
expense 20,408 - -
Other expenses 11,798 7,438 12,494
--------- --------- -------------
219,127 97,904 186,552
--------- --------- -------------
5. LOSS PER SHARE
Basic loss per ordinary share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period.
Period Period ended Year ended
ended 28 29 February 31 August
February 2020 2020
2021
---------------- -------------- --------------
Loss attributable to the owners
of the Company GBP (217,588) GBP (86,730) GBP (174,511)
Weighted average number of
ordinary shares in issue 6,592,707 6,130,000 6,130,000
Basic and diluted loss per (3.30)
share p (1.41) p (2.85) p
6. INVESTMENTS
Principal subsidiary undertakings of the Group
The Company directly owns the ordinary share capital of its
subsidiary undertakings as set out below:
The issued share capital of the subsidiary comprises 1 A
ordinary share of GBP0.01 and 1,450,000 B ordinary shares of
GBP0.01.
Subsidiary Proportion Proportion
of A ordinary of B ordinary
Nature of Country shares held shares
business of incorporation by Company held by
Company
Summerway Subco Incentive England
Limited vehicle and Wales 100% 0%
The address of the registered office of Summerway Subco Limited
(the "Subsidiary") is 32-33 Cowcross Street London EC1M 6DF . The
subsidiary was incorporated on 12 September 2018 and prepares its
own financial statements for the period ended 30 September each
year.
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 do not have voting rights. No dividends
shall be declared in relation to any of the B ordinary shares
without the consent of the Parent company.
The B ordinary shares have been issued to certain participants
of the Company's Subsidiary Incentive Scheme. A summary of the
Company's Subsidiary Incentive Scheme can be found on pages 6 and 7
of the Company's Circular issued to Shareholders on 23 December
2020 and in Note 12.
7. OTHER RECEIVABLES
All receivables are current. There is no material difference
between the book value and the fair value of receivables.
As at As at As at
28 February 29 February 31 August
2021 2020 2020
------------ ------------ -----------
GBP GBP GBP
Amounts falling due
within one year
Prepayments 5,880 18,550 9,180
Other receivables 26,610 5,562 599
------------ ------------ -----------
32,490 24,112 9,779
------------ ------------ -----------
8. CALLED UP SHARE CAPITAL
As at As at As at
28 February 29 February 31 August
2021 2020 2020
------------- --------------- -------------
GBP GBP GBP
Issued
8,033,409 (2020: 6,130,000)
ordinary shares of 1p each 80,334 61,300 61,300
------------- --------------- -------------
On 15 January 2021 1,903,409 ordinary of GBP0.01 each were
issued pursuant to a placing at a price of 0.88 per share and were
admitted to trading on AIM.
9. TRADE AND OTHER PAYABLES
There is no material difference between the book value and the
fair value of the trade and other payables.
As at As at As at
28 February 29 February 31 August
2021 2020 2020
------------ ------------- ----------
GBP GBP GBP
Trade payables 14,436 180 315
Accruals 17,868 14,791 28,800
Other tax and social security
payables 3,212 719 600
35,516 15,690 29,715
------------ ------------- ----------
10. NON-CURRENT LIABILITIES
As at As at As at
28 February 29 February 31 August
2021 2020 2020
------------ ------------ -----------
GBP GBP GBP
Incentive shares 20,300 12,000 12,000
20,300 12,000 12,000
------------ ------------ -----------
The incentive shares liability is estimated at fair value
through profit and loss using level 3 fair value measurement
techniques.
Fair values are categorised into different levels in a fair
value hierarchy based on the degree to which the inputs to the
measurement are observable and the significance of the inputs to
the fair value measurement in its entirety:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
On 15 January 2021, the Company amended its Subsidiary Incentive
to cater for the change in investment strategy approved by
Shareholders and previously announced board changes. Details
pertaining to the amendments to the Subsidiary Incentive Scheme are
outlined on pages 6 and 7 of the Circular issued to Shareholders on
23 December 2020.
The B shares issued to date by the subsidiary under the amended
Share Incentive Scheme were deemed to have an implied aggregate
subscription price of GBP20,300, based on the nominal value per B
share plus a premium. The initial subscription price of the B
shares under the amended Share Incentive Scheme remains the best
estimate of the fair value of the liability associated with the
incentive shares as none of the criteria for potential value
creation have yet been met. The fair value of the liability is
assessed at each reporting date with any changes accounted for as a
fair value gain or loss and recognised directly in the statement of
comprehensive income.
11. SHARE-BASED PAYMENTS
On 15 January 2021, the Company granted Vin Murria a warrant
providing for a right to subscribe for an additional 3,246,062 new
Ordinary Shares at 88 pence per share. The warrant instrument is
exercisable at any time from grant date up to and including the
eighteen-month anniversary of grant date. As at 28 February 2021,
all of the 3,246,062 warrants remain outstanding, and the
share-based payments expense for the period to 28 February 2021 was
GBP20,408.
The fair value of the outstanding warrants has been estimated
using the Black-Scholes option pricing model. Volatility has been
estimated at 19.75 per cent. using the arithmetical mean of both
the 1 year AIM All Share volatility index and the 3 year AIM All
Share volatility index as at 28 February 2021. Additional
assumptions used in the calculation of fair value are outlined as
follows:
28 February
2021
------------------------------ -----------
Net asset value per share at
grant date GBP0.88
Exercise price GBP0.88
Expected volatility 19.75%
Dividend yield 0%
Expected life of option 1.5 years
Risk free rate 0.003%
12. RELATED PARTY DISCLOSURES
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party, or the parties are under common
control or influence, in making financial or operational
decisions.
In conjunction with the corporate events announced on the 15
January 2021, the Company continued with, entered into, amended and
terminated a number of related party arrangements. These are set
out below.
Service agreements
Under the terms of the Chairman and Non-Executive Director
service agreements, the Chairman and the Non-Executives are each
paid a monthly fee of GBP1,500 per calendar month in arrears.
Administrative and accounting services
The Company engaged Fraser Real Estate, a company in which
Alexander Anton is an indirect shareholder to provide
administrative and accounting services throughout the period. The
Company paid Fraser Real Estate GBP2,464 during the period for the
provision of these services.
Placing agreement and issue of warrants
On 15 January 2021, the Company raised gross proceeds of
GBP1,675,000 through the issuance of 1,903,409 new ordinary shares
of the Company to Vin Murria at a placing price of 88 pence per
share. At the same time, the Company issued Vin Murria with
3,246,062 warrants which provides for a right to subscribe for an
addition 3,246,062 additional new ordinary shares of the Company at
an exercise price of 88 pence per share. The warrants may be
exercised in whole or in part during an exercise period commencing
on the date of issue of the warrants and terminating 18 months
after the date of issue. Vin Murria also purchased 500,000 existing
Ordinary Shares at 85 pence per share from a shareholder on 15
January 2021.
Subsidiary Incentive Scheme
Under the amendments to the Subsidiary Incentive Scheme, the
Founder Director's B shares were subject to a buyback by the
Company at their original subscription price of GBP0.012 per B
share for a total consideration of GBP4,000 per Founder Director
(GBP12,000 in aggregate).
Following this buyback, the articles of Summerway Subco Limited
were amended in order to implement the proposed changes to the
Subsidiary Incentive Scheme as described in Notes 6 and 10.
Alexander Anton, Benjamin Shaw, Mark Farmiloe, Tony Morris, Vin
Murria and Paul Gibson subscribed for newly issued B shares at a
revised subscription price of GBP0.014 per B share.
The current allocations of B shares in issue are set out
below.
Name B Shares held
Alexander Anton 75,000
Benjamin Shaw 75,000
Mark Farmiloe 75,000
Tony Morris 175,000
Vin Murria 1,000,000
Paul Gibson 50,000
Total 1,450,000
Corporate advisory agreements
On 15 January 2021, the Corporate Advisory Agreement entered
into between the Company and AFS Advisors LLP (an entity
wholly-owned by Alexander Anton, Benjamin Shaw and Mark Farmiloe)
was terminated at nil cost to the Company. As at 28 February 2021
no charges had been incurred under the agreement as the legal of
completion of the first acquisition did not occur.
On 15 January 2021, the Company entered into a new agreement
with Tessera Investment Management Limited ("Tessera") pursuant to
which Tessera has agreed to provide strategic and general corporate
advice, and M&A and capital raising transaction support
services to the Company (the "Tessera Corporate Advisory
Agreement"). Tessera charge GBP12,500 per month (plus VAT) payable
monthly in arrears from the date of the agreement. In order to
align the parties' collective interests and ensure the parties
share in the risk and reward of certain successful transactions, a
discretionary bonus may be awarded to Tessera by the Board in the
event of the successful completion of certain transactions. Tony
Morris, Non-Executive Director of the Company, is a director and
shareholder of Tessera.
13. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding
at 28 February 2021 that require disclosure or adjustment in these
financial statements.
14. POST BALANCE SHEET EVENTS
On 7 April 2021, Vin Murria sold 1,000,000 ordinary shares of
the Company at 165 pence per share to a leading UK based
institutional investor. Following the sale, Vin Murria continues to
hold 1,403,409 ordinary shares of the Company, representing 17.5
per cent. of its issued share capital.
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