TIDMSWC
RNS Number : 6331N
Summerway Capital PLC
02 February 2021
2 February 2021
Summerway Capital Plc
("Summerway" or the "Company")
Audited results for the year ended 31 August 2020
Summerway Capital Plc announces its audited consolidated results
for the year ended 31 August 2020.
CHAIRMAN'S STATEMENT
INTRODUCTION
I am pleased to present the financial results for Summerway
Capital Plc for the year ended 31 August 2020.
Summerway was admitted to trading on AIM, a market operated by
the London Stock Exchange on 19 October 2018. Since admission,
Alexander Anton, Benjamin Shaw and Mark Farmiloe (the "Founding
Directors") have explored investment and acquisition opportunities
in line with the Group's initial investing strategy. The Founding
Directors have also had discussions with management teams and
transaction opportunities in sectors outside of the Group's
original investing policy, in particular within the broad sphere of
technology and related services.
As a result of one or more of these opportunities arising, on 15
December 2020 and post the period end, the Group announced it
intended to change its strategic direction through amending its
investing policy, and bringing in additional management with the
relevant and proven expertise to implement the revised investing
policy.
Following a meeting of the Group's Shareholders on 15 January
2021, the Group's proposed change in strategic direction was
approved, and the Group's investing policy has now been amended to
a focus on investment and acquisition opportunities across the
software, Software-as-a-Service ("SaaS") and digital technologies
and services sectors. In conjunction with the change in strategy, a
number of directorate changes occurred, including the appointment
of myself as Chairman of the Group, and Paul Gibson and Tony Morris
as Non-Executive Directors, and the resignations of Alexander Anton
and Mark Farmiloe.
As an investing company (as defined by the AIM Rules for
Companies), under the new strategy and with the enhanced Board's
expertise, respective reach and relationships, the Group will
identify target companies within the software, SaaS and digital
technologies and services sectors, where the Directors believe
there are tangible opportunities to drive strategic, operational
and performance improvement, either as standalone entities or as a
part of an enlarged group. This process will include a review of
opportunities where the Directors have existing relationships
together with a methodical review of small cap opportunities across
the UK and EU markets.
Following the completion of the recent placing as part of the
change in strategic direction announced on 15 January 2021, the
Group is well capitalised with in excess of GBP7.1 million in
unaudited cash as at 29 January 2021, and despite the ongoing
challenges of the current COVID-19 pandemic in general, technology
related sectors show continued resilience and substantial growth
potential, presenting a number of investment and acquisition
opportunities for the Directors to consider under the Group's new
investing policy.
BUSINESS REVIEW
For the financial year ended 31 August 2020, the Group has
actively pursued its investment strategy, and post the period end
in January 2021, changed strategic direction to focus on investment
and acquisition opportunities across the software, SaaS and digital
technologies and services sectors.
During the period, Summerway recorded an accounting loss of
GBP174,511 (2019: GBP191,320) and the loss per share was 2.85p
(2019: 3.60p) and had cash reserves at the end of the period (and
therefore prior to the recently completed placing) of GBP5,487,991
(2019: GBP5,647,837) with no debt financing.
The Directors continue to actively consider and review a number
of investment opportunities and acquisition targets under the
Group's new investing policy. Although the Company has only
recently received Shareholder approval for its new investing
policy, it is required under the AIM Rules, to seek shareholder
approval of its investing policy again at the forthcoming annual
general meeting. Further details of the investing policy resolution
are set out in the notice of annual general meeting, which
accompanies this document.
FUTURE DEVELOPMENTS
We will continue to evaluate investment and acquisition
opportunities within the Group's revised investing policy. As a
Board we are committed to minimising operating costs during the
period until such time as a deal has been concluded. I hope to be
able to announce Summerway's first transaction in the coming twelve
months.
Key Performance Indicators, Risk Management and Section 172 are
included in the Group's audited annual financial statements.
Vin Murria OBE
Chairman
Enquiries:
Summerway Capital
Tony Morris (Director) 020 7440 7520
N+1 Singer (Nominated Adviser and Broker)
Sandy Fraser / Amanda Gray 020 7496 3000
Consolidated Statement of Comprehensive Income for the year
ended 31 August 2020
Year ended Year ended
31 August 2020 31 August 2019
Note
---------------------------------- ----- -------------- ---------------
GBP GBP
Administrative expenses 7 (186,552) (205,882)
-------------- ---------------
Operating loss (186,552) (205,882)
Finance income 9 12,041 14,562
-------------- ---------------
Loss before income tax 10 (174,511) (191,320)
-------------- ---------------
Income tax 11 - -
-------------- ---------------
Loss for the year (174,511) (191,320)
Total other comprehensive income - -
-------------- ---------------
Total comprehensive loss (174,511) (191,320)
-------------- ---------------
Attributable to:
Ordinary equity holders of the
Company (174,511) (191,320)
Loss per ordinary share
Basic and diluted loss per share
attributable to ordinary equity
holders of the Company 13 (2.85)p (3.60)p
The Group's activities derive from continuing operations.
Consolidated Statement of Financial Position as at 31 August
2020
As at As at
31 August 31 August
2020 2019
Note
---------------------------------- ---- --------- ---------
GBP GBP
Assets
Current assets
Cash and cash equivalents 5,487,991 5,647,837
Other receivables 15 9,779 15,670
--------- ---------
Total current assets 5,497,770 5,663,507
Total assets 5,497,770 5,663,507
--------- ---------
Current liabilities
Trade and other payables 17 29,715 20,941
--------- ---------
29,715 20,941
Non-current liabilities
Incentive shares 18 12,000 12,000
Total liabilities 41,715 32,941
--------- ---------
Net Assets 5,456,055 5,630,566
--------- ---------
Capital and reserves attributable
to equity holders of the parent
Share capital 16 61,300 61,300
Share premium reserve 5,711,086 5,711,086
Capital redemption reserve 49,500 49,500
Accumulated losses (365,831) (191,320)
--------- ---------
Total Equity 5,456,055 5,630,566
--------- ---------
SUMMERWAY CAPITAL PLC
Consolidated Statement of Changes in Equity for the year ended
31 August 2020
Notes Share Deferred Share Capital Accumulated Total
capital shares Premium Redemption losses equity
reserve reserve
--------- --------- ---------- ------------ ------------ ----------
GBP GBP GBP GBP GBP GBP
Balance as at - - - - - -
31 August 2018
Issue of initial
shares 50,000 - - - - 50,000
Shares split (49,500) 49,500 - - - -
Cancellation
of deferred shares - (49,500) - 49,500 - -
Issue of shares 60,800 - 6,019,200 - - 6,080,000
Share issue costs - - (308,114) - - (308,114)
Loss for the
year - - - - (191,320) (191,320)
--------- --------- ---------- ------------ ------------ ----------
Balance as at
31 August 2019 61,300 - 5,711,086 49,500 (191,320) 5,630,566
--------- --------- ---------- ------------ ------------ ----------
Loss for the
year - - - - (174,511) (174,511)
--------- --------- ---------- ------------ ------------ ----------
Balance as at
31 August 2020 61,300 - 5,711,086 49,500 (365,831) 5,546,055
--------- --------- ---------- ------------ ------------ ----------
Consolidated Statement of Cash Flows for the year ended 31
August 2020
Year ended Year ended
31 August 31 August
2020 2019
Note
------------------------------------------ -------- ---------- -----------
GBP GBP
Cash flows from operating activities
Operating loss (186,552) (205,882)
Adjustments to reconcile loss before
income tax to operating cash flows:
Decrease/(increase) in other receivables 15 5,891 (15,670)
Increase in trade and other payables 17,18 8,774 32,941
Bank interest received 12,041 14,562
---------- -----------
Net cash used in operating activities (159,846) (174,049)
---------- -----------
Cash flows from financing activities
Proceeds from issue of share capital 16 - 6,130,000
Share issue costs - (308,114)
---------- -----------
Net cash generated from financing
activities - 5,821,886
---------- -----------
Net (decrease)/ increase in cash and
cash equivalents (159,846) 5,647,837
Cash and cash equivalents at beginning
of the period 5,647,837 -
---------- -----------
Cash and cash equivalents at the end
of the period 5,487,991 5,647,837
---------- -----------
Notes to the Financial Statements for the year ended 31 August
2020
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 subsequent development of companies across the
software, SaaS and digital technologies and services sectors, where
the Directors believe there are tangible opportunities to drive
strategic, operational and performance improvement, either as a
standalone entity or as a result of broader initiatives.
2. BASIS OF PREPARATION
The above audited financial information does not constitute
statutory financial statements as defined in section 434 of the
Companies Act 2006. The above figures for the year ended 31 August
2020 have been extracted from the Group's financial statements
which have been reported on by the Group's auditors and received an
audit opinion which was unqualified and did not include any
reference to matters to which the auditors drew attention by way of
emphasis without qualifying their report or a statement under
section 498(2) or section 498(3) of the Companies Act 2006. The
Group's statutory financial statements for the year ended 31 August
2019 have been lodged with the Registrar of Companies. These
financial statements received an audit report which was unqualified
and did not include any reference to matters to which the auditors
drew attention by way of emphasis without qualifying their report
or a statement under section 498(2) or section 498(3) of the
Companies Act 2006. The financial statements for the year ended 31
August 2020 will be dispatched to the shareholders and filed with
the Registrar of Companies.
The financial statements have been prepared in accordance with
International Accounting Standards in conformity with the
requirements of the Companies Act 2006. The financial statements
have been prepared under the historical cost convention.
The financial statements are presented in Pounds Sterling. All
amounts, unless otherwise stated, have been rounded to the nearest
Pound.
The preparation of financial statements in compliance with
adopted International Accounting Standards in conformity with the
requirements of the Companies Act 2006 requires the use of certain
critical accounting estimates. It also requires management to
exercise judgement in applying those accounting policies. The areas
where significant judgements and estimates have been made in
preparing these financial statements and their effect are disclosed
in Note 5.
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all years presented, unless otherwise
stated.
3. PRINCIPAL ACCOUNTING POLICIES
3.1 NEW STANDARDS, AMMENTS AND INTERPRETATIONS
The Company and Group applied standards, amendments and
interpretations which are effective for annual periods commencing
on or after 1 September 2019. There were no material effects of
adopting these. There are a number of standards, amendments to
standards, and interpretations which have been issued by the IASB
that are effective in future accounting periods that the group has
decided not to adopt early. The most significant of these are:
-- Amendments to IFRS 9, IAS 39 and IFRS17: Interest Rate
Benchmark Reform (applicable for accounting periods beginning on or
after 1 January 2020)
-- Amendments to IAS 1 and IAS 8: Definition of Material
(applicable for accounting periods commencing on or after 1 January
2020)
-- Amendments to References to the Conceptual Framework in IFRS
Standards (applicable for accounting periods commencing on or after
1 January 2020)
-- Amendments to IFRS3 'Business Combinations' (applicable for
accounting periods commencing on or after 1 January 2020).
The Group does not currently expect any material impact of the
above standards or any other standards issued by the IASB, but not
yet effective.
3.2 BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiary undertakings). Where necessary, adjustments are
made to the financial statements of the subsidiaries to bring their
accounting policies in line with those of the Group. All
intra-Group transactions, balances, income and expenses are
eliminated on consolidation. Summerway Subco Limited's accounting
reference date is 30 September and so adjustments are made as
necessary for inclusion in the consolidation.
3.3 GOING CONCERN
The Directors continue to take a prudent approach to cost
management and seek to minimise expenditure ahead of consummating
the Company's inaugural investment or acquisition. Following
completion of the recently announced placing which occurred on 15
January 2021, the Company's unaudited cash balance as at 29 January
2021 was GBP7.1 million. As a result of this, the Directors are
satisfied that the Company and Group have adequate resources to
continue in business for at least twelve months from approval of
these financial statements, particularly with regards to a
contracted annualised cash expenditure for the Company, which is in
the region of GBP0.5 million prior to completion of any investment
or acquisition. For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
3.4 SEGMENT REPORTING
The accounting policy for identifying segments is based on
internal management reporting information which is reviewed by the
chief operating decision maker. The Company and Group are
considered to have a single business segment, being the
identification and acquisition of companies or businesses.
3.5 FOREIGN CURRENCIES
Assets and liabilities in foreign currencies are translated into
Sterling at the rates of exchange ruling at the statement of
financial position date. Transactions in foreign currencies are
translated into Sterling at the rates of exchange ruling at the
date of the transaction. Exchange differences are taken into
account in arriving at the operating result.
3.6 TAXATION
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantively enacted by the statement of
financial position date.
The tax currently payable is based on the taxable profit for the
year. Taxable profit/(loss) differs from the net profit/(loss)
reported in the statement of comprehensive income as it excludes
items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or
deductible.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which the
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary differences arise
from the initial recognition (other than in a business combination)
of other assets or liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the statement of
comprehensive income, except when it relates to items charged or
credited directly to equity, in which case deferred tax is also
dealt with in equity.
3.7 CURRENT VERSUS NON-CURRENT CLASSIFICATION
The Company and Group present assets and liabilities in the
statement of financial position based on current/non-current
classification. An asset is current when it is:
-- expected to be realised or intended to be sold or consumed in
the normal operating cycle; or
-- held primarily for the purpose of trading; or
-- expected to be realised within twelve months after the reporting period; or
-- cash or cash equivalents unless restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting date.
All other assets are classified as non-current.
A liability is current when:
-- it is expected to be settled in the normal operating cycle; or
-- it is held primarily for the purpose of trading; or
-- it is due to be settled within twelve months after the reporting period; or
-- there is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
date.
The Company and Group classify all other liabilities as
non-current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
3.8 INVESTMENTS
Investments in subsidiaries are recorded at cost less any
provision for permanent diminution in value.
3.9 FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognised in the Company's
and Group's statement of financial position when the Company and
Group becomes a party to the contractual provisions of the
instrument. The Company's and Group's financial instruments
comprise cash, trade and other receivables and trade and other
payables.
Trade, group and other receivables
Trade receivables are initially measured at their transaction
price. Group and other receivables are initially measured at fair
value plus transaction costs.
Cash and cash equivalents
The Company and Group manage short-term liquidity through the
holding of cash and highly liquid interest-bearing deposits. Only
deposits that are readily convertible into cash with maturities of
three months or less from inception, with no penalty of lost
interest, are shown as cash and cash equivalents.
Impairment of financial assets
An impairment loss is recognised for the expected credit losses
on financial assets when there is an increased probability that the
counterparty will be unable to settle an instrument's contractual
cash flows on the contractual due dates, a reduction in the amounts
expected to be recovered, or both. The probability of default and
expected amounts recoverable are assessed using reasonable and
supportable past and forward-looking information that is available
without undue cost or effort.
The Group does not currently have trade receivables. For group
and other receivables, the measurement of impairment losses depends
on whether the financial asset is 'performing', 'underperforming'
or 'non-performing' based on the company's assessment of increases
in the credit risk of the financial asset since its initial
recognition and any events that have occurred before the year-end
which have a detrimental impact on cash flows. The financial asset
moves from 'performing' to 'underperforming' when the increase in
credit risk since initial recognition becomes significant.
In assessing whether credit risk has increased significantly,
the company compares the risk of default at the year-end with the
risk of a default when the investment was originally recognised
using reasonable and supportable past and forward-looking
information that is available without undue cost.
The risk of a default occurring takes into consideration default
events that are possible within 12 months of the year-end ("the
12-month expected credit losses") for 'performing' financial
assets, and all possible default events over the expected life of
those receivables ("the lifetime expected credit losses") for
'underperforming' financial assets.
Impairment losses and any subsequent reversals of impairment
losses are adjusted against the carrying amount of the receivable
and are recognised in profit or loss.
Financial liabilities and equity
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Company and Group
becomes a party to the contractual provisions of the
instrument.
Trade, group and other payables
Trade, group and other payables are initially measured at fair
value, net of direct transaction costs and subsequently measured at
amortised cost.
Derecognition of financial assets (including write-offs) and
financial liabilities
A financial asset (or part thereof) is derecognised when the
contractual rights to cash flows expire or are settled, or when the
contractual rights to receive the cash flows of the financial asset
and substantially all the risks and rewards of ownership are
transferred to another party.
When there is no reasonable expectation of recovering a
financial asset it is derecognised ('written off'). The gain or
loss on derecognition of financial assets measured at amortised
cost is recognised in profit or loss.
A financial liability (or part thereof) is derecognised when the
obligation specified in the contract is discharged, cancelled or
expires.
3.10 EQUITY
An equity instrument is any contract that evidences a residual
interest in the assets of the company after deducting all of its
liabilities. Equity instruments issued by the Company are recorded
at fair value on initial recognition net of transaction costs.
Equity comprises the following:
-- Called up share capital represents the nominal value of the equity shares;
-- Share premium represents the excess over nominal value of the
fair value of consideration received from the equity shares, net of
expenses of the share issue;
-- Capital redemption reserve is a statutory, non-distributable
reserve into which amounts are transferred following the redemption
or purchase of a Company's own shares;
-- Retained deficit represent accumulated net gains and losses
from incorporation recognised in the Statement of Comprehensive
Income
4 CAPITAL MANAGEMENT
The Company defines capital as the total equity of the Company.
The objective of the Company's capital management is to ensure that
it makes the maximum use of its capital to support its business and
to maximise shareholder value. There are no external constraints on
the Company's capital.
5 CRITICAL JUDGEMENTS AND ACCOUNTING ESTIMATES
The Company and Group make certain estimates and assumptions
regarding the future. Estimates and judgements are continually
evaluated based on historical experience and other factors,
including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual
expenditure may differ from these estimates and assumptions. The
estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below:
Valuation and classification of incentive share scheme
The Board implemented an incentive scheme during the financial
year ended 31 August 2019 via the issue of 999,999 B shares of
GBP0.01 in the subsidiary undertaking, to the Executive Directors
of the Company at a price of GBP0.012 per share.
Critical judgements and accounting estimates have been exercised
by management in respect of the incentive shares:
-- in determining the classification of the incentive shares as
a financial liability rather than equity in the statement of
financial position, as the B shares issued in the subsidiary do not
contain any voting rights and are not permitted to participate in
any ordinary dividends declared by the Company;
-- in presenting the financial liability as non-current in the
statement of financial position as the valuation mechanism in the
incentive share arrangement is measured over a three-year and
five-year period; and
-- in assessing the most appropriate valuation method to apply
to estimate the fair value of the incentive share liability as at
31 August 2020. See Note 18 for further details.
6 SEGMENTAL REPORTING
For management purposes, the Company and Group are considered to
have one single business segment, being the identification and
acquisition of companies and businesses. The Group comprises
Summerway Capital Plc and its subsidiary company Summerway SubCo
Limited. The two companies do not transact with each other. Further
segment information is therefore not presented in these financial
statements.
7 ADMINISTRATION EXPENSES
Year ended Year ended
31 August 31 August
2020 2019
GBP GBP
Group expenses by nature
One-off costs related to the
listing - 39,340
Staff related costs 54,780 51,978
Office costs 21,890 35,660
NOMAD, registrar and Stock Exchange
costs 46,391 38,834
Audit, accountancy & professional
costs 50,997 31,993
Other expenses 12,494 8,077
----------- -------------
186,552 205,882
----------- -------------
8 EMPLOYEES AND DIRECTORS
Group and Group and
company company
2020 2020
GBP GBP
Wages and salaries 54,000 49,500
Social security costs - -
Other pension costs - -
---------- ----------
54,000 49,500
---------- ----------
The average monthly number of employees during the year,
including the Directors, was 4.
Key management personnel
The Directors are currently considered to be the key management
personnel of the Group. The total remuneration paid to Directors
during the year was GBP54,000 (2019: GBP49,500). There were no
pension contributions paid on behalf of the Directors.
9 FINANCE INCOME
Group and Group and company
company
2020 2019
GBP GBP
Finance income:
Deposit account interest 12,041 14,562
10 LOSS BEFORE INCOME TAX
The loss before income tax is stated after charging:
2020 2019
GBP GBP
Auditor's remuneration:
Audit fees 19,200 19,200
Interim report fees - 4,800
Reporting accountant fees - 30,075
------- -------
19,200 54,075
------- -------
11 INCOME TAX
The Group and Company has reported a loss of GBP174,511 (2019:
GBP191,320). No revenue has been generated in the period and no
significant differences exist between the tax charge of GBPNil
recognised in these financial statements and that calculated by
applying the standard rate of United Kingdom corporation tax. No
deferred tax asset is recognised on these losses as at 31 August
2020 due to uncertainty over the expected timing of future profits
with which to offset the losses.
12 LOSS OF THE PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, the
income statement of the Parent Company is not presented as part of
these financial statements. The parent Company's loss for the
financial year was GBP174,511 (2019: GBP191,320).
13 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.
Year ended Year ended
31 August 31 August
2020 2019
Loss attributable to the owners
of the Company GBP (174,511) GBP (191,320)
Weighted average number of ordinary
shares in issue 6,130,000 5,313,781
Basic and diluted loss per share (2.85) p (3.60) p
14 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 999,999 B ordinary shares of
GBP0.012.
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%
As the Company's total investment holding in the subsidiary is
GBP0.01 no investment value is presented in the statement of
financial position.
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 so prepares
its own financial statements for the period ended 30 September each
year. The subsidiary was dormant throughout the year to 30
September 2020 and it is therefore exempt from audit by virtue of
s479A of Companies Act 2006.
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
are not to be redeemed and are not liable to be redeemed.
The B ordinary shares have been issued to the Directors to
facilitate the Subsidiary Incentive Scheme. Further details of the
Subsidiary Incentive Scheme can be found on pages 42 and 43 of the
Company's Placing and Admissions document published on 16 October
2018 and in Notes 5, 18 and 22.
15 OTHER RECEIVABLES - GROUP
All receivables are current. There is no material difference
between the book value and the fair value of receivables.
As at As at
31 August 31 August
2020 2019
GBP GBP
Amounts falling due within
one year
Prepayments 9,180 10,027
Other receivables 599 5,643
---------- -----------
9,779 15,670
---------- -----------
16 CALLED UP SHARE CAPITAL
As at As at
31 August 31 August
2020 2019
GBP GBP
Issued
6,130,000 ordinary shares of
1p each 61,300 61,300
61,300 61,300
---------- -----------
On incorporation on 31 August 2018 the issued share capital of
the Company consisted of 50,000 ordinary shares of GBP1 each.
On 12 October 2018 each ordinary share of GBP1.00 each in the
capital of the Company was sub-divided into 1 ordinary share of
GBP0.01 each and 1 deferred share of GBP0.99 each.
On 19 October 2018 Alexander Anton and Benjamin Shaw each gifted
16,667 deferred shares of GBP0.99 each and Mark Farmiloe gifted
16,666 deferred shares of GBP0.99 each arising on the sub-division
of the ordinary shares of GBP1.00 each referred to above held by
him to the Company for cancellation and the Board resolved to
cancel all such gifted deferred shares.
On 19 October 2018 6,080,000 ordinary of GBP0.01 each were
issued pursuant to a placing at a price of GBP1 per share and
together the existing ordinary 6,130,000 ordinary shares were
admitted to trading on AIM.
17 TRADE AND OTHER PAYABLES - GROUP
There is no material difference between the book value and the
fair value of the trade and other payables.
Group Group
As at As at
31 August 31 August
2020 2019
GBP GBP
Trade payables 315 941
Accruals 28,800 19,200
Other tax and social security
payables 600 800
Amounts owed to subsidiary
undertakings - -
---------- ----------
29,715 20,941
---------- ----------
18 NON-CURRENT LIABILITIES - GROUP
As at As at
31 August 31 August
2020 2019
GBP GBP
Incentive shares 12,000 12,000
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).
The B shares issued by the subsidiary under the incentive scheme
were deemed to have an implied aggregate subscription price of
GBP12,000, based on the nominal value per B share plus a premium.
The initial subscription price of the incentive shares 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 been met as at 31 August 2020. 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. Refer to Notes 5 and 22
for further details of the terms of the incentive scheme.
19 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS -
GROUP
Carrying amount of financial assets
The carrying amounts of financial assets by category were:
Group Group
As at As at
31 August 31 August
2020 2019
GBP GBP
Financial assets measured
at amortised cost:
- Cash and cash equivalents 5,487,991 5,647,837
- Other receivables 599 5,643
---------- ----------
5,488,590 5,653,480
---------- ----------
Carrying amount of financial liabilities
The carrying amounts of financial liabilities by category
were:
Group Group
As at As at
31 August 31 August
2020 2019
GBP GBP
Financial liabilities measured
at amortised cost:
- Trade and other payables 29,115 20,141
- Amounts owed to subsidiary
undertakings - -
Financial liabilities measured
at fair value through profit
and loss:
- Incentive shares liability 12,000 12,000
---------- ----------
41,115 32,141
---------- ----------
The carrying amounts of financial assets and financial
liabilities reasonably approximate to fair value.
Risks arising from financial instruments
Credit risk
The risk that counterparties will fail to settle amounts due to
the company predominantly arises from cash and cash equivalents.
Credit risk on cash and cash equivalents is limited by depositing
funds with banks with high credit ratings assigned by international
credit rating agencies.
Liquidity risk
Liquidity risk is the risk that an entity will encounter
difficulty in meeting obligations associated with financial
liabilities. The Group closely monitors its cash position to ensure
that it has sufficient funds to meet the obligations of the Group
as they fall due.
20 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.
Under the terms of their respective service agreements, the
Executive Directors were each paid a salary of GBP1,000 per
calendar month, in each case payable monthly in arrears. The
Non-Executive Director is paid a monthly fee of GBP1,500 per
calendar month.
As set out on page 13 of the audited financial statements the
Directors and their connected persons held a total of 1,650,000
ordinary shares in the Company, representing 26.9 per cent of the
issued share capital of the Company as at 31 August 2020.
On 17 September 2018 the Executive Directors subscribed for, in
aggregate, 999,999 B Shares in the subsidiary, Summerway Subco
Limited pursuant to the Subsidiary Incentive Scheme.
Alexander Anton and Mark Farmiloe are members of VirginiaCo
LLP.
Benjamin Shaw is a member of Romana Capital LLP and Sealark
LLP.
VirginiaCo LLP and Romana Capital LLP are members of AFS
Advisors LLP ("AFS").
The Company is party to a corporate advisory agreement dated 12
October 2018 with AFS.
Pursuant to that agreement, AFS has agreed to provide strategic
and general business advice to the Company, including identifying
potential investment opportunities and acquisition targets and
making recommendations to the Board in respect of the acquisition
and disposition of the same.
AFS will receive a transaction fee equal to 1 per cent. of the
gross transaction value of any acquisition or investment undertaken
by the Company during the term of the agreement or after
termination of the agreement to the extent the Company completes a
transaction in relation to which AFS had provided any services
prior to the date notice to terminate was deemed to have been
received by AFS. In addition, from legal completion of the first
acquisition or investment undertaken by the Company, the Company
will pay AFS a monthly retainer of GBP15,000. As at 31 August 2020
no charges have been incurred under the agreement as the legal of
completion of the first acquisition has not happened.
Under the corporate advisory agreement, AFS agrees that it shall
not (and shall procure that each associate of AFS shall not)
introduce to any person other than the Company any acquisition of
or investment in any company or business that would fall within the
scope of the Investment Policy without offering the Company a right
of first refusal in respect of the same (if applicable) or
obtaining the prior written consent of the Company.
The appointment is for an initial term of eighteen months or
such longer period as the Company is an investing company for the
purposes of the AIM Rules for Companies. Thereafter the agreement
shall be renewed automatically for successive periods of 12 months
unless a party gives notice to the other party in writing that it
wishes to terminate the agreement at least three months before the
relevant renewal date.
Either party may terminate the agreement (without prejudice to
any right of action accruing or already accrued to it) without
penalty by notice in writing, inter alia, if the other party
commits: (i) an act of fraud or negligence; (ii) or a material
breach of the terms of the agreement, which has not been rectified
within 60 business days of being requested in writing to do so (if
such breach is capable of rectification).
The Company may also terminate the agreement if there is a
change of control of AFS without the prior written consent of the
Company.
The agreement shall terminate automatically if either party to
the agreement: (i) enters into liquidation (except on terms
previously approved in writing by the other party) or has a
receiver appointed over that party or its assets; (ii) if an
effective resolution is passed for the winding up of any party
(other than for the purposes of a solvent reconstruction or
amalgamation previously approved in writing by the other party); or
(iii) if any party becomes insolvent or stops or threatens to stop
carrying on business or payment of its material proven debts or
make any arrangement with creditors generally.
The Company has given an indemnity in favour of AFS in respect
of AFS' potential losses in carrying on its responsibilities under
the agreement. The Agreement is governed by and construed in
accordance with the laws of England.
The Company had desk rental agreement with Romana Capital LLP
under which the Company paid GBP21,750 (2019: Romana Capital LLP
and Sealark LLP GBP39,120) during the year.
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 GBP7,200 (2019: GBP7,993) during
the period for the provision of these services.
The Company's Admission Document dated 19 October 2018 sets out
in detail the other related party transactions. There have been no
material changes to these arrangements and transactions since the
Admission Document was published.
21 COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding
at 31 August 2020 that require disclosure or adjustment in these
financial statements.
22 POST BALANCE SHEET EVENTS
Amendment to Company investing policy and directorate
changes
On 15 January 2021, the Company announced that following a
unanimous vote from is Shareholders at the General Meeting held on
the same date, the Company's investing policy was changed to a
focus on investment and acquisition opportunities across the
software, SaaS and digital technologies and services sectors. 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.
Following these directorate changes, the current Board of
Directors for the Company is set out below.
Vin Murria OBE - Chairman (appointed 15 January 2021)
Paul Gibson - Non-Executive Director (appointed 15 January
2021)
Tony Morris - Non-Executive Director (appointed 15 January
2021)
Benjamin Shaw - Non-Executive Director
David Firth - Independent Non-Executive Director
Placing and issue of equity, 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 selling shareholder on
15 January 2021.
Share capital and Directors' holdings
Following completion of the placing and the issuance of
1,903,409 new ordinary shares, the Company's total issued share
capital is 8,033,409 ordinary shares of 1p each.
As at 22 January 2021, the Directors and their connected persons
hold a total of 2,903,409 ordinary shares in the Company,
representing 36.1% of the Company's total issued share capital.
Amendments to Subsidiary Incentive Schemes
On 15 January 2021, the Company made certain adjustments to the
Subsidiary Incentive Scheme in order to recognise the proposed
change in strategic direction of the Company and the expectation
that the incoming team and others will be instrumental in leading
the execution of this revised strategy, and in turn, the
anticipated creation of Shareholder Value.
A summary of the key amendments compared to the original
Subsidiary Incentive Scheme are set out in the following table.
Item Previous Subsidiary Amended Subsidiary
Incentive Scheme Incentive Scheme
---------------------------- ---------------------------- ---------------------------
Percentage of Shareholder 10 per cent. Up to 20 per cent.
Value available to
Scheme Participants
(pre acquisition
of, or investment
in operating company)
---------------------------- ---------------------------- ---------------------------
Target compound annual 13.5 per cent. 7.5 per cent.
growth rate hurdle
---------------------------- ---------------------------- ---------------------------
Commencement date On Admission 15 January 2021
---------------------------- ---------------------------- ---------------------------
Initial Value Market capitalisation Unchanged
on Admission
---------------------------- ---------------------------- ---------------------------
Vesting period Three- to five-year Unchanged
period or upon a change
of control of the Company
or the Subsidiary
---------------------------- ---------------------------- ---------------------------
Scheme Participants, Alexander Anton - 333,333 Alexander Anton - 75,000
respective B Share Benjamin Shaw - 333,333 Benjamin Shaw - 75,000
holdings Mark Farmiloe - 333,333 Mark Farmiloe - 75,000
and current aggregate Tony Morris - 175,000
Shareholder Value Vin Murria - 1,000,000
participation Paul Gibson - 50,000
Aggregated - 1,450,000
---------------------------- ---------------------------- ---------------------------
Under the Subsidiary Incentive Scheme, participants are only
rewarded if a predetermined level of Shareholder value is created
over a three-year period, a five-year period, or upon a change of
control of the Company (whichever occurs first), which is
calculated 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.
From 15 January 2021, participants will now be entitled to up to
20 per cent. of the shareholder value created, subject to such
shareholder value having increased by 7.5 per cent. per annum
compounded over a period of between three and five years from 15
January 2021 or following a change of control of the Company or the
Subsidiary.
Related Party Disclosures
In conjunction with the corporate events announced on the 15
January 2021, the Company at the same time 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.
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 this Note 22. The
Founder Directors, the Chairman and the two Non-Executive Directors
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
Corporate advisory agreements
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) has been terminated at nil
cost to the Company.
The Company has entered in 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 will
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.
23 AVAILABILITY OF THE REPORT AND ACCOUNTS
The Company's report and accounts for the year ended 31 August
2020 will be posted to shareholders today, 2 February 2021, and
will also be available to download from the Company's website at
www.summerwaycapital.co.uk .
24 ANNUAL GENERAL MEETING
The Annual General Meeting of the Company (the "AGM") will be at
10.00am on 26 February 2021. Given the current COVID-19 pandemic,
the Company and the Board have resolved that the AGM will be held
virtually and that Shareholders will not be able to attend the AGM,
save for those Shareholders required to attend for the purposes of
establishing a quorum. Shareholders are being encouraged to vote by
way of proxy in advance of the AGM and you should appoint the
Chairman as your proxy with your voting instructions. Further
details will be set out in the notice of Annual General Meeting
which will be posted to shareholders today, 2 February 2021, and
will also be available to download from the Company's website at
www.summerwaycapital.co.uk .
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(END) Dow Jones Newswires
February 02, 2021 02:00 ET (07:00 GMT)
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