TIDMGCON
RNS Number : 9045N
Global Connectivity PLC
28 September 2023
Global Connectivity Plc (the "Company" or "GCON")
Interim Results
Global Connectivity Plc (AQSE: GCON), a leading provider of
broadband services to rural areas of the UK through its investment
in Rural Broadband Holdings Solutions Limited, today announces its
unaudited half year results for the six months ended 30 June
2023.
Overview
- Since completion of its transaction with Tiger Infrastructure
Partners LP ("Tiger"), Global Connectivity Plc has been in a period
of transition as its subsidiaries are now owned by Rural Broadband
Solutions Holdings Ltd (RBSHL) in which the Company continues to
own a 15% stake.
- Following the merger with Voneus Broadband and the acquisition
of Broadway Partners, GCON's involvement in the broadband market
has now been consolidated and it is expected that the Company's
asset value will be further enhanced.
Financial Highlights
- Net assets were up by GBP3.0m compared to 31 December 2022
mainly as a result of a net gain on financial assets at fair value
through profit or loss of GBP3.2m.
- The Company has estimated the fair value of its investment in
RBSHL, an unquoted equity instrument, and recognised an increase in
fair value based on the information provided by the investee
company.
- As at 30 June 2023, the current cash was circa GBP33k.
However, the standard running costs have reduced significantly (by
36% on the same period of the previous year) and the directors
expect GBP0.55m to be received from SWS in repayment of the
intercompany loan over the next 18 months.
Operational Highlights
- Macquarie Capital, the Israel Infrastructure Fund and Tiger
Infrastructure Partners have merged SWS Broadband and Cadence
Networks with Voneus Broadband, and simultaneously acquired
Broadway Partners.
- The combined group will be funded with up to GBP250 million in
new capital from the three shareholders and bank lenders to advance
the company's and the UK government's shared objective of closing
the digital divide.
- The combined company has a target to serve over 350,000 premises across the UK.
Outlook
- GCON's involvement in the broadband fibre market is now anchored.
- It can therefore be expected that the process of seeking
suitable investments to further the growth of GCON will
accelerate.
-S
For further information please contact:
Keith Harris
Executive Chairman
Global Connectivity Plc
Email: info@globalconnectivityplc.com
https://www.globalconnectivityplc.com/
Claire Louise Noyce
AQSE Stock Exchange Corporate Adviser & Corporate Broker
Hybridan LLP
Tel: +44 20 3764 2341
Email: claire.noyce@hybridan.com
www.hybridan.com
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the "
UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
Chairman's Statement
SIGNIFICANT DEVELOPMENT
In my Chairman's Statement in our Final Accounts for the year
ended 31 December 2022, published on 27 June 2023, I reflected on
the anticipated benefits to GCON of our financial and strategic
relationship with Tiger Infrastructure Partners Fund III LP
("Tiger"). These arise from the transaction we entered into which
led to the formation of Rural Broadband Solutions Holdings Limited
("RBSHL"), the company now owned 85% by Tiger and 15% by GCON.
I am pleased to report that, within a year of signing the
agreement with Tiger, RBSHL has been part of a significant
transaction with Tiger, both for the development of the whole UK
rural broadband market and for GCON. Earlier this week, on 25
September 2023, GCON announced that Macquarie Capital, the Israel
Infrastructure Fund and Tiger (through RBSHL) have merged their
fibre broadband interests, and simultaneously acquired Broadway
Partners.
The combined group will operate under the name Voneus Broadband,
under which Macquarie Capital has been operating since investing in
this business sector, in 2019. The combined group will be funded
with up to GBP250 million from its three major shareholders and
bank lenders to accelerate its progress and the UK government's
shared objective of closing the digital divide. These consolidation
and financial developments place Voneus in a game-changing position
to service the needs of hard-to-reach communities with broadband
connectivity. The company has a target to serve over 350,000
premises across the UK.
This transaction creates a business of substantial scale that
can benefit from numerous synergies including improved cost
economies, a larger future build pipeline and diversified
contractor relationships. The component parts which now make up
Voneus operate in adjacent geographical areas.
The capital contribution to the new group will be funded
disproportionately so that RBSHL will increase its stake in Voneus
Broadband from the current 32%. There are no capital demands on
GCON, and it has protection from dilution, in respect of its
ownership of the combined company, until Tiger's capital
contribution exceeds GBP75 million.
Separately, over the past several months, the board of GCON has
been actively investigating appropriate investment opportunities in
a variety of technically based businesses that enhance connectivity
either between consumers or companies that provide services to
consumers where enhanced connectivity is essential. We have
declined to pursue two of these opportunities due to these (on more
detailed examination) not fulfilling all the criteria that the
Company has with respect to suitability, fit and growth potential
and are advancing discussions in respect of a further two. Now that
GCON's involvement in the broadband fibre market is anchored, it
can be expected that the process of seeking suitable investments to
further the growth of GCON will accelerate.
Keith Harris
Chairman
27 September 2023
I ncome Statement
(Unaudited) (Unaudited) (Audited)
Period from 1 January Period from 1 January Year ended 31 December
2023 to 30 June 2023 2022 to 30 June 2022 2022
Note GBP'000 GBP'000 GBP'000
--------------------------- ----- -------------------------- -------------------------- --------------------------
Turnover - - -
Cost of sales - - -
--------------------------- ----- -------------------------- -------------------------- --------------------------
Gross profit - - -
Net gain on financial
assets at fair value
through profit or loss 6 3,171 - -
Other administration fees
and expenses 3 (139) (347) (338)
Management services
recharges - 51 82
--------------------------- ----- -------------------------- -------------------------- --------------------------
Operating profit/(loss) 3,032 (296) (256)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Finance income 1 - -
Reversal)/(increase) of
impairment of
intercompany loan - (356) 616
Net finance
income/(expense) 1 (356) 616
--------------------------- ----- -------------------------- -------------------------- --------------------------
Profit/(loss) before
income tax 3,033 (652) 360
Income tax expense 4 - - -
--------------------------- ----- -------------------------- -------------------------- --------------------------
Profit/(loss) for the
period 3,033 (652) 360
--------------------------- ----- -------------------------- -------------------------- --------------------------
Basic and diluted
profit/(loss) per share
(pence) 5 0.84 (0.18) 0.10
--------------------------- ----- -------------------------- -------------------------- --------------------------
Statement of Comprehensive Income
(Unaudited) (Unaudited) (Audited)
Period from 1 January Period from 1 January Year ended 31 December
2023 to 30 June 2023 2022 to 30 June 2022 2022
Note GBP'000 GBP'000 GBP'000
-------------------------- ------ -------------------------- -------------------------- --------------------------
Profit/(loss) for the period 3,033 (652) 360
Other comprehensive - - -
expense
Total comprehensive
income/(expense) for the period 3,033 (652) 360
---------------------------------- -------------------------- -------------------------- --------------------------
Balance Sheet
(Unaudited) (Unaudited) (Audited)
As at 30 June 2023 As at 30 June 2022 As at 31 December 2022
Note GBP'000 GBP'000 GBP'000
----------------------------------------- ----- -------------------- -------------------- ------------------------
Assets
Non-current assets
Investment in subsidiaries - 1,966 -
Amounts due from related parties 7 275 - 275
Other financial assets 6 6,375 - 3,204
Subscriptions due 950 950 950
----------------------------------------- ----- -------------------- -------------------- ------------------------
Total non-current assets 7,600 2,916 4,429
----------------------------------------- ----- -------------------- -------------------- ------------------------
Current assets
Amounts due from related parties 7 308 881 483
Trade and other receivables 8 24 29 89
Cash at bank 33 140 24
----------------------------------------- ----- -------------------- -------------------- ------------------------
Total current assets 365 1,050 596
----------------------------------------- ----- -------------------- -------------------- ------------------------
Total assets 7,965 3,966 5,025
----------------------------------------- ----- -------------------- -------------------- ------------------------
Equity
Capital and reserves attributable to
owners of the Parent:
Issued share capital 3,619 3,619 3,619
Warrant reserve 77 77 77
Share option reserve 288 301 278
Retained earnings 3,925 (120) 892
----------------------------------------- ----- -------------------- -------------------- ------------------------
Total equity 7,909 3,877 4,866
----------------------------------------- ----- -------------------- -------------------- ------------------------
Liabilities
Current liabilities
Trade and other payables 9 56 89 159
Total current liabilities 56 89 159
----------------------------------------- ----- -------------------- -------------------- ------------------------
Total liabilities 56 89 159
----------------------------------------- ----- -------------------- -------------------- ------------------------
Total equity and liabilities 7,965 3,966 5,025
----------------------------------------- ----- -------------------- -------------------- ------------------------
The financial statements were approved and authorised for issue
by the Board of Directors on 27 September 2023 and signed on its
behalf by:
Keith Harris Selwyn Lewis
Director Director
Statement of Changes in Equity
Share capital Share premium Warrant reserve Share Retained earnings/ Total
Option (deficit)
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Unaudited
Balance at 1 January
2022 3,619 - 77 257 532 4,485
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Comprehensive expense
Loss for the period - - - - (652) (652)
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Total comprehensive
expense for the
period - - - - (652) (652)
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Transactions with
owners
Share based payments
relating to share
options - - - 44 - 44
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Total transactions
with owners - - - 44 - 44
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Balance at 30 June
2022 3,619 - 77 301 (120) 3,877
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Audited
Balance at 1 January
2022 3,619 - 77 257 532 4,485
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Comprehensive income
Profit for the year - - - - 360 360
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Total comprehensive
income for the year - - - - 360 360
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Transactions with
owners
Share based payments
relating to share
options - - - 21 - 21
Total transactions
with owners - - - 21 - 21
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Balance at 31 December
2022 3,619 - 77 278 892 4,866
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Unaudited
Balance at 1 January
2023 3,619 - 77 278 892 4,866
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Comprehensive expense
Profit for the period - - - - 3,033 3,033
Total comprehensive
income for the period - - - - 3,033 3,033
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Transactions with
owners
Share based payments
relating to share
options - - - 10 - 10
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Total transactions
with owners - - - 10 - 10
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Balance at 30 June
2023 3,619 - 77 288 3,925 7,909
----------------------- -------------- -------------- ---------------- --------- ---------------------- --------
Cash Flow Statement
(Unaudited) (Unaudited) (Audited)
Period from 1 January Period from 1 January Year ended 31 December
2023 to 30 June 2023 2022 to 30 June 2022 2022
Note GBP'000 GBP'000 GBP'000
-------------------------- ------ -------------------------- -------------------------- --------------------------
Cash flows from operating
activities
Profit/(loss) for the period
before tax 3,033 (652) 360
Adjustments for:
Net gain on financial (3,171) - -
assets at fair value
through profit or loss
Finance income (1) - -
Increase/(reversal) of
impairment of amounts due from
related parties - 356 (616)
Share based payments relating to
share options 10 20 21
Operating loss before changes in
working capital (129) (276) (235)
Decrease/(increase) in trade and
other receivables 65 34 (26)
(Decrease)/increase in trade and
other payables (103) (49) 21
---------------------------------- -------------------------- -------------------------- --------------------------
Cash used in operations (167) (291) (240)
Interest received 1 - -
Net cash used in operating
activities (166) (291) (240)
---------------------------------- -------------------------- -------------------------- --------------------------
Cash flows from investing
activities
Investment in subsidiary - -
Repayment from/(loan to)
subsidiary 175 (594) (521)
Reorganisation costs - - (240)
Net cash generated from/(used in)
investing activities 175 (594) (761)
Cash flows from financing
activities
Issue of shares - - -
Net cash (used - - -
in)/generated from
financing activities
-------------------------- ------ -------------------------- -------------------------- --------------------------
Net increase/(decrease) in cash
and cash equivalents 9 (885) (1,001)
Cash and cash equivalents at
beginning of the period 24 1,025 1,025
Cash and cash equivalents at end
of the period 33 140 24
---------------------------------- -------------------------- -------------------------- --------------------------
Notes to the Financial Statements
1 General Information
These interim financial statements do not include all of the
information required for full annual financial statements and
should be read in conjunction with the financial statements of the
Company as at and for the year ended 31 December 2022 which have
been prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the UK.
The interim financial statements for the six months ended 30
June 2023 are unaudited and have not been reviewed by the Company's
auditors MAH, Chartered Accountants . The comparative interim
figures for the six months ended 30 June 2022 are also
unaudited.
2 Basis of preparation
The accounting policies applied by the Company in the
preparation of these condensed interim financial statements are the
same as those applied by the Company in its financial statements
for the year ended 31 December 2022.
3 Other administration fees and expenses
Period ended Period ended Year ended
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
-------------------------------- -------------------------- -------------------------- ----------------------------
Audit fees 10 8 15
Directors' remuneration and
fees 46 59 112
Directors' insurance cover 8 11 21
Professional fees 15 75 133
Reorganisation costs* - 130 (50)
Share based payment expense 10 21 21
Other expenses 50 43 86
-------------------------------- -------------------------- -------------------------- ----------------------------
Administration fees and
expenses 139 347 338
-------------------------------- -------------------------- -------------------------- ----------------------------
* costs incurred last year were able to be recovered from Tiger
when the reorganisation completed on 25 October 2022
Included within other administration fees and expenses are the
following:
Directors' remuneration
The maximum amount of basic remuneration payable by the Company
by way of fees to the Non-executive Directors permitted under the
Articles of Association is GBP200,000 per annum. All Directors are
each entitled to receive reimbursement of any expenses incurred in
relation to their appointment. Mr Langoulant and Mr Lewis are
entitled to receive an annual fee of GBP6,000. Mr Stone was
entitled to receive an annual fee of GBP15,000 up to his date of
resignation on 28 November 2022.
Executive Directors' fees
The Chairman is entitled to an annual fee of GBP80,000 (2022:
GBP90,000 but permitted a reduction when he was receiving fees from
Secure Web Services Limited whilst it was a wholly owned
subsidiary).
All directors' remuneration and fees
Total fees and basic remuneration (including VAT where
applicable) paid to the Directors for the period ended 30 June 2023
amounted to GBP46,066 (30 June 2022: GBP58,688) and was split as
below. Directors' insurance cover amounted to GBP7,959 (30 June
2022: GBP10,562).
Notes to the Financial Statements (continued)
3 Other administration fees and expenses (continued)
All directors' remuneration and fees (continued)
Period ended Period ended Year ended
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
--------------------- -------------------------- -------------------------- ----------------------------
Selwyn Lewis 3 3 6
Michael Langoulant 3 3 6
Christopher Stone - 8 14
Keith Harris 40 45 85
Expenses reimbursed - - 1
--------------------- -------------------------- -------------------------- ----------------------------
46 59 112
--------------------- -------------------------- -------------------------- ----------------------------
4 Taxation
The Company is resident in the Isle of Man for taxation
purposes. The Isle of Man has a 0% rate of corporate income tax
(2022: 0%) to which the Company is subject.
5 Basic and diluted profit/(loss) per share
(a) Basic
Basic profit/(loss) per share is calculated by dividing the
profit/(loss) attributable to equity holders of the Company by the
weighted average number of shares in issue during the period.
Period ended Period ended Year ended
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
-------------------------------- -------------------------- -------------------------- ----------------------------
Profit/(loss) attributable to
equity holders of the Company
(GBP'000) 3,033 (652) 360
Weighted average number of
shares in issue (thousands) 361,926 361,926 361,926
-------------------------------- -------------------------- -------------------------- ----------------------------
Basic profit/(loss) per share
(pence per share) 0.84 (0.18) 0.10
-------------------------------- -------------------------- -------------------------- ----------------------------
(b) Diluted
Diluted profit/(loss) per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The company
has two categories of dilutive potential ordinary shares: warrants
and share options.
Although the Company is reporting a profit from continuing
operations for the period the exercise price of the warrants or
performance criteria for the share options have not been met and
therefore exercise cannot take place yet. The basic and diluted
profit per share as presented on the face of the Income Statement
are therefore identical.
Notes to the Financial Statements (continued)
6 Other financial assets
Instruments measured at fair value 30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
through profit and loss
----------------------------------- ------------------------- ------------------------- ---------------------------
Start of the period 3,204 - -
Reclassification on reorganisation - - 3,204
Net gain on financial assets at 3,171 - -
fair value through profit or loss
----------------------------------- ------------------------- ------------------------- ---------------------------
End of the period 6,375 - 3,204
----------------------------------- ------------------------- ------------------------- ---------------------------
Categorised as
Level 3 - unquoted investments 6,375 - 3,204
----------------------------------- ------------------------- ------------------------- ---------------------------
Total financial assets 6,375 - 3,204
----------------------------------- ------------------------- ------------------------- ---------------------------
The infrastructure funding deal with Tiger Infrastructure
Partners Fund III LP ("Tiger") completed on 25 October 2022. As a
result the Company transferred ownership of its two previously
wholly owned subsidiaries, Secure Web Services Limited and Cadence
Networks to a new intermediate holding company, Rural Broadband
Solutions Holdings Limited, of which the Company now owns 15%. At
the same time part of intercompany loan with Secure Web Services
Limited was capitalised leaving a balance of GBP825,000 to be
repaid over three years at a rate of GBP275,000 per annum.
The Company has estimated the fair value of its investment in
Rural Broadband Solutions Holdings Limited, an unquoted equity
instrument, and recognised an increase in fair value based on the
information provided by the investee company.
7 Amounts due from related parties
This balance is unsecured and interest free. GBP550,000 relates
to a loan (31 December 2022: GBP725,000). GBP32,760 (31 December
2022: GBP32,760) relates to management services recharges which are
repayable on demand.
8 Trade and other receivables
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
----------------------------- ------------------------- ------------------------- ---------------------------
Prepayments 13 18 19
VAT receivable 11 11 70
----------------------------- ------------------------- ------------------------- ---------------------------
Trade and other receivables 24 29 89
----------------------------- ------------------------- ------------------------- ---------------------------
The fair value of trade and other receivables approximates their
carrying value.
9 Trade and other payables
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (Audited)
-------------------------- ------------------------- ------------------------- ---------------------------
Directors' fees payable - - 46
Other payables 56 89 113
-------------------------- ------------------------- ------------------------- ---------------------------
Trade and other payables 56 89 159
-------------------------- ------------------------- ------------------------- ---------------------------
The fair value of trade and other payables approximates their
carrying value.
10 Post Balance Sheet Events
As of 25 September 2023 Macquarie Capital, the Israel
Infrastructure Fund and Tiger Infrastructure Partners have merged
SWS Broadband and Cadence Networks with Voneus Broadband, and
simultaneously acquired Broadway Partners. The combined group will
be funded with up to GBP250 million in new capital from the three
shareholders and bank lenders.
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END
NEXFLFFDARIDFIV
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