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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END

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