TIDMSHH
RNS Number : 5979R
Safe Harbour Holdings PLC
30 June 2020
30 June 2020
LEI number: 213800AU26HH5KXBS796
Safe Harbour Holdings plc
("Safe Harbour" or the "Company" together with its subsidiaries,
the "Group")
Management update and publication of annual report and financial
statements
Safe Harbour, an investment vehicle established with the
objective of generating compounding returns for shareholders
through an acquisitive growth strategy in B2B distribution or
business services, announces that Rodrigo Mascarenhas has ceased to
be Chief Executive Officer of the Company to allow him to focus on
other business interests, effective immediately.
Chairman, Avril Palmer-Baunack, stated: "The Board thanks
Rodrigo for his efforts in listing the Company and seeking a
platform acquisition, and we wish him the very best for the
future."
Safe Harbour also announces the publication of its results for
the year ended 31 December 2019, during which the Group reported a
loss after tax of GBP2.4 million, reflecting operating expenses
associated with the pursuit of its investment strategy.
The Group had GBP23.2 million of aggregate cash reserves and a
NAV per share of approximately 83 pence as at 29 June 2020, being
the latest practicable date prior to the publication of these
Financial Statements.
The Directors are actively consulting with shareholders
regarding the future direction of the Company and intend to provide
a further update in the AGM Notice & Circular to be sent to
shareholders on 7 July 2020.
The Annual Report & Financial Statements is being made
available to shareholders today on the Company's website at
www.safeharbourplc.com .
Electronic Communications
In accordance with the Company's Articles of Association, Safe
Harbour's annual report and financial statements will be made
available to shareholders electronically. Shareholders who also
wish to receive a hard copy should contact the Company Secretary
via safeharbour@axiocs.com with the details of their
shareholding.
Enquiries:
Cenkos Securities plc (Nominated Adviser and Joint Broker)
Tel: +44 (0)207 397 8900
Stephen Keys
Harry Hargreaves
Tulchan Communications (PR Adviser)
Tel: +44 (0)207 353 4200
Matt Low
Amber Ahluwalia
Tom Murray
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014.
James Brotherton is the Chief Financial Officer of Safe Harbour
Holdings plc, which has offices at 11 Buckingham Street, London,
WC2N 6DF.
Safe Harbour Holdings plc
Annual Report and Financial Statements
For the year ended 31 December 2019
SAFE HARBOUR HOLDINGS PLC
Company number 123821
STRATEGIC REPORT
On behalf of the Board I present to our shareholders the annual
report and audited financial statements of Safe Harbour Holdings
plc (the "Company") for the year ended 31 December 2019 (the
"Financial Statements"), consolidating the results of Safe Harbour
Holdings plc, Safe Harbour Holdings UK Limited and Safe Harbour
Holdings Jersey Limited (collectively, the "Group" or "Safe
Harbour").
Impact of COVID-19
The rapid spread of COVID-19 has had an unprecedented effect on
people's day-to-day lives and their local economies, and has had a
substantial impact on businesses which continue to face significant
challenges in these difficult times.
In response to the challenges presented by COVID-19, governments
and regulators across the world have provided businesses with
support and flexibility to enable them to best respond to the
difficulties they face. Whilst the London Stock Exchange announced
on 26 March 2020 that companies listed on its AIM market ("AIM")
can apply for an extension of three months to their reporting
deadline for the publication of their annual audited accounts, the
Company has chosen to release its Financial Statements in line with
its existing deadline.
The Company retains significant liquidity in the form of its
cash reserves. As at 29 June 2020 we held GBP23.2 million in
available cash with which to continue to execute our strategy. The
Board believes that the corrections in public and private equity
valuations seen since the full extent of the COVID-19 crisis became
apparent will provide Safe Harbour and shareholders with
significant potential opportunities over the course of the next
twelve months.
Strategy
Safe Harbour's current strategy is to become a global leader in
B2B distribution and/or business services, through a well-executed
buy-and-build strategy, drawing upon the team's managerial and
operational experience in consolidation and integration to drive
business transformation to achieve attractive, long-term
compounding returns for our shareholders.
Safe Harbour intends to acquire a controlling stake in a
platform asset of scale, which operates in a sector demonstrating a
large addressable market opportunity, a steady growth outlook, and
a high level of fragmentation allowing the deployment of a
meaningful buy-and-build strategy to capitalise on economies of
scale. It is likely that this platform asset will have operations
in the UK, Europe, or North America. We seek businesses that
demonstrate stable operating performance and high cash flow
conversion, and benefit from competitive barriers to entry. Safe
Harbour's strategy remains to prioritise assets outside competitive
auction processes and situations where the Directors believe Safe
Harbour has a distinct advantage in acquiring the assets at
attractive valuations.
We believe that the publicly-listed nature of our vehicle offers
us flexibility in structuring transactions and allows us to unlock
opportunities that may not otherwise be available to typical
financial sponsors.
Overview of the year
Since listing on AIM in March 2018, the Company has actively
pursued its stated strategy, exploring several potential platform
acquisition opportunities.
During 2019 the Company engaged at a detailed level with a
number of potential acquisition targets. It was however unable to
complete a platform acquisition for a variety of reasons, most
notably differing views of fair valuation with vendors. Our
disciplined approach to asset selection and valuation last year has
been justified in light of the significant corrections in public
and private valuations seen since the start of 2020. Each of these
engagements was managed in-house utilising the extensive
transaction expertise of the Executive Directors alongside the
Company's corporate finance advisers, thereby allowing the Company
to conserve its cash resources.
During the year we strengthened our board with the appointment
of James Brotherton as Chief Financial Officer. James joined Safe
Harbour from Tyman plc, where he had been CFO since 2010,
successfully consolidating multiple acquisitions across various
geographies and end markets.
Results
The Group's loss after taxation for the year was GBP2.4 million
(31 December 2018: GBP2.3 million). The Group's Net Asset Value per
share at 31 December 2019 was 88.981 pence per share (2018: 97.884
pence per share).
The Group had GBP24.5 million of aggregate cash reserves as at
31 December 2019 (2018: GBP26.9 million). Having raised gross
proceeds of GBP32.7 million from equity issuances since
incorporation in 2016, this represents a GBP8.2 million cash spend
to 31 December 2019, with GBP2.4 million of this relating to
non-recurring project costs including diligence expenses, advisory
fees and costs related to the IPO and establishment of Safe
Harbour.
Dividend policy
The Company has not yet acquired a trading business and the
Directors therefore consider it inappropriate to make a forecast of
the likely level of any future dividends. The Directors intend to
determine the Company's dividend policy following completion of the
Company's first acquisition and, in any event, will only commence
the payment of dividends when it becomes commercially prudent to do
so. There are no arrangements in place under which future dividends
are to be waived or agreed to be waived.
Risks
The Directors have carried out an assessment of the principal
risks facing the Group including those that would threaten its
business model, future performance, solvency or liquidity. Further
detail in relation to the risks faced by the Group is set out in
the Corporate Governance Report.
Outlook
In accordance with our mandate as an acquisition vehicle, we
have evaluated multiple assets that meet Safe Harbour's investment
criteria. We have a disciplined approach to asset selection and
require completion of thorough due diligence prior to making
investments. As such, while we have yet to conclude terms on a
Platform Acquisition, we remain active in pursuing targets across
our broad global mandate and confident about acquiring an
attractive platform business for our shareholders.
Pursuant to the AIM Rules for Companies, as the Company had not
substantially implemented its investment policy within 18 months of
admission, the renewal of the investment policy will be subject to
approval by shareholders at the forthcoming 2020 annual general
meeting ("AGM") of the Company (the "Continuation Vote").
The Board believes that the corrections in public and private
equity valuations seen since the full extent of the COVID-19 crisis
became apparent will provide Safe Harbour and shareholders with
significant potential opportunities over the course of the next
twelve months.
Safe Harbour has highly experienced Directors who have managed
and operated businesses in a variety of different markets. The
Company has net cash resources and retains the flexibility of being
able to access public equity markets. Rodrigo Mascarenhas ceased to
be CEO and Executive Director of the Company on 30 June 2020 to
allow him to focus on other business interests. The Board thanks
Rodrigo for his efforts in listing the Company and seeking a
platform acquisition, and we wish him the very best for the future.
Following recent discussions with shareholders, the Board is
actively considering the future strategy of the Company and intends
to provide further information on this to shareholders in the AGM
notice and circular which will be made available to shareholders on
7 July 2020 ahead of the AGM scheduled for 31 July 2020.
Avril Palmer-Baunack
Chairman
30 June 2020
SAFE HARBOUR HOLDING PLC
Company number 123821
GOVERNANCE | REPORT OF THE DIRECTORS
Principal activities
The Company has been formed to acquire a platform trading asset
engaged in B2B distribution and/or business services (a "Platform
Acquisition"). Following completion of a Platform Acquisition, the
Directors intend to implement an operating strategy focused on
generating shareholder value through organic and inorganic growth,
including potential complementary bolt-on acquisitions. The Company
has raised GBP32.7 million, in aggregate, since incorporation and
those funds are being used to carry out due diligence on potential
Platform Acquisitions and for general working capital purposes.
Results and dividends
For the year ended 31 December 2019, the Group made a loss of
GBP2.4 million (31 December 2018: GBP2.3 million).
It is the policy of the Company's board of Directors (the
"Board") that, prior to a Platform Acquisition, no dividends will
be paid. Following a Platform Acquisition, and subject to the
availability of distributable reserves, dividends will be paid to
shareholders when the Directors believe it is appropriate and
commercially prudent to do so.
Statement of going concern
The Group had cash resources of GBP24.5 million at 31 December
2019 and as at 29 June 2020 the Group held GBP23.2 million in
available cash . The Directors have considered the financial
position of the Group and have reviewed forecasts and budgets for a
period of 12 months following the approval of the Financial
Statements. As a result, the Directors have concluded that, at the
date of approval of the Financial Statements, the Company and the
Group have sufficient resources for the next 12 months and can
continue to execute its stated strategy. Accordingly, it is
appropriate to adopt the going concern basis in the preparation of
the Financial Statements.
As set out in the Strategic Report, the renewal of the
investment policy through the Continuation Vote is dependent on
shareholder approval at the AGM. This dependence on shareholder
approval constitutes a material uncertainty that may cast
significant doubt on the Company's ability to continue as a going
concern. The Financial Statements do not include any adjustments
that would result from the basis of preparation being
inappropriate.
Substantial shareholdings
At 31 December 2019 and at the date of this report, the
following interests in 3% or more of the issued ordinary shares had
been notified to the Company.
Shareholders Ordinary Percentage
shares held of shareholding
Marwyn Asset Management Limited 8,333,336 30.6%
Invesco Asset Management Limited 7,083,333 26.0%
Aberdeen Standard Investments 5,444,392 19.9%
Marathon Asset Management Limited 2,666,666 9.8%
BlackRock Investment Management 1,597,275 5.9%
JNE Partners 833,333 3.1%
Directors
The Directors of the Company who served during the year and/or
subsequent to the date of this report are:
Avril Palmer-Baunack, Non-Executive Chairman
Date of appointment: 20 February 2018
Avril Palmer-Baunack has over 20 years of executive experience
with leading businesses in the automotive, support services,
industrial engineering and insurance services sectors. Through a
number of high profile industry roles, Avril has acquired
significant experience in acquisitive growth strategies and a track
record of delivering shareholder value in a public environment.
Since April 2015, Avril has been Executive Chairman of BCA
Marketplace ("BCA") Europe's leading B2B car auction and vehicle
buying service operator. Under Avril's management, BCA has
successfully executed an ambitious growth plan based on substantial
organic and inorganic growth, completing a number of bolt-on
acquisitions as well as delivering a range of operational
enhancements, with private equity firm TDR Capital acquiring the
entire share capital of BCA at a premium of 25% to the closing
price on 19 June 2019.
Avril was also Non-Executive Chairman of Redde plc, a UK-based,
market leading accident management company, a position she held
from September 2011 until she stepped down in May 2019. Avril led
the turnaround of this business, which included a refinancing
concluded in February 2013.
Avril has also held a broad range of executive roles in other
sectors, with experience in companies engaged in vehicle salvage,
car hire, auctions, transportation, distribution, logistics,
vehicle processing and infrastructure. Avril was previously
Executive Chairman and Deputy Chief Executive Officer of Stobart
Group plc, one of the largest British multimodal logistics
companies with interests in transport, distribution and
infrastructure.
Prior to this Avril was Chief Executive Officer of Autologic
Holdings plc, the largest finished vehicle logistics company in the
UK and Europe. She joined Autologic from Universal Salvage plc,
where she held the position of Chief Executive Officer from March
2005 until the sale of the company to Copart UK Ltd in June 2007
achieving a share price increase of almost two and a half
times.
Rodrigo Mascarenhas, Chief Executive Officer
Date of appointment: 26 May 2017
Cessation of appointment: 30 June 2020
Rodrigo has an 18 year track record in the B2B distribution
sector. His experience includes international expansion and
consolidation, integration and turn-around strategies in emerging
markets.
Rodrigo joined Safe Harbour from his role as Business Area Head
and Managing Director for LATAM (Latin America, Spain &
Israel), of Bunzl plc ("Bunzl"), the FTSE-100 UK distribution
conglomerate. During Rodrigo's tenure at Bunzl he was responsible
for both the M&A and operational strategy of the division,
successfully integrating over 30 acquisitions into the business and
delivering double-digit revenue growth.
Rodrigo began his career in 1999 as a co-founder of
Americanas.com, one of the first e-commerce start-ups in Latin
America and today listed as B2W Inc. in Brazil, initially backed by
its parent company Lojas Americanas, the leading Brazilian retail
chain.
In 2002, Rodrigo moved to Goodyear to become the Truck Business
Director for Spain and Portugal. Based in Madrid, he completed the
turnaround of the division, successfully merging the Goodyear and
Dunlop brands. In 2004, he became the General Manager in Central
Eastern Europe and was based in the Czech Republic.
Rodrigo holds a Business Management degree from Faculdade de
Ciencias Economicas (Brazil), an MBA in Finance, Economics and
Management from Case Western Reserve University and an Owner's
President Management Program Certificate from Harvard Business
School.
James Brotherton, Chief Financial Officer
Date of appointment: 12 June 2019
James joined Safe Harbour from Tyman plc, where he had been CFO
since 2010. Tyman is a leading international supplier of engineered
components to the door and window industry which more than doubled
in size and profitability during James' tenure as CFO.
While in his executive role with Tyman, James delivered and
successfully integrated numerous acquisitions across multiple
jurisdictions that created significant value for Tyman shareholders
as part of Tyman's international growth strategy. Prior to Tyman,
James was a director in the investment banking division of
Citigroup, having also worked for HSBC and Ernst & Young.
Since 2017, James has been a director of the Quoted Companies
Alliance ("QCA") and he sits as one of the QCA's alternates on The
Panel on Takeovers and Mergers.
James has a Bachelor of Science degree in Economics and Politics
from Loughborough University and is a Chartered Accountant.
Mark Brangstrup Watts, Executive Director
Date of appointment: 26 August 2016
As co-founder of Marwyn in 2002, Mark has many years of
experience deploying private equity investment strategies in the
public markets. Marwyn's highly acquisitive portfolio companies
have delivered approximately 100 bolt-on acquisitions with Mark
offering significant M&A, ECM and corporate finance
experience.
Mark brings his background in strategic consultancy to the
management team having been responsible for strategic development
projects for international clients including Ford Motor Company
(US), Cummins (Japan) and 3M (Europe).
Mark is a Managing Partner in Marwyn Capital LLP and Marwyn
Investment Management LLP. Mark is currently an Executive Director
of Le Chameau Group plc, Safe Harbour Holdings plc and Wilmcote
Holdings plc. Mark is also a Non-Executive Director of Marwyn Asset
Management Limited and was previously a Non-Executive Director of
BCA, Zegona Communications plc, Advanced Computer Software plc,
Entertainment One Ltd, Melorio plc, Inspicio plc and Talarius plc,
amongst others.
It is currently intended that, following the completion of the
Company's Platform Acquisition, Mark will adopt a non-executive
role.
Mark is a member of the Audit and Risk Committee and a member of
the Nomination and Remuneration Committee.
James Corsellis, Executive Director
Date of appointment: 26 August 2016
James has over 16 years of investment management and corporate
finance expertise. Marwyn's 16 portfolio platforms to date have
generated approximately GBP2.7bn of proprietary deal flow, with
James having experienced a broad array of sectors and developed an
extensive network of relationships with co-investors, advisers and
other business leaders.
James brings an entrepreneurial mind-set to the management team,
having co-founded Marwyn alongside Mark Brangstrup Watts, and prior
to that founded one of the earliest strategic technology
consultancies. James was also previously Chief Executive Officer of
icollector plc, a leading provider of live auction trading
platforms, later negotiating its joint venture with eBay.
James is a Managing Partner of Marwyn Capital LLP and Marwyn
Investment Management LLP, and is a Non-Executive Director of
Marwyn Asset Management Limited. Portfolio level executive
directorships include Wilmcote Holdings plc and Le Chameau Group
plc.
James was previously on the board of BCA, Breedon Aggregates Ltd
and Advanced Computer Software plc, and was Chairman of
Entertainment One Ltd, amongst others.
It is currently intended that, following the completion of the
Company's Platform Acquisition, James will adopt a non-executive
role.
James is the Chairman of the Audit and Risk Committee and a
member of the Nomination and Remuneration Committee.
Chris Cole, Independent Non-Executive Director
Date of appointment: 14 November 2018
Chris co-founded WSP Group plc in 1974, growing the company into
an international engineering and design consultancy business
focused on the built environment, and driving its merger with
Toronto listed Genivar Inc. Chris was appointed Non-Executive
Chairman of the enlarged group, WSP Global Inc., in 2012. Chris was
Non-Executive Chairman of Ashtead Group plc, stepping down in
September 2018. In October 2019, Chris stepped down from his
Non-Executive Chairman position at Redcentric plc.
Since 2014, Chris has also held Non-Executive Chairman roles at:
Applus Services S.A., a testing, inspection and certification
business; and Tracsis plc, a provider of software and services for
the transport sector.
Chris has a degree in Environmental Engineering from London
South Bank University and is a UK qualified Chartered Engineer.
Chris is the Chairman of the Nomination and Remuneration
Committee and a member of the Audit and Risk Committee.
Directors' interests
The Directors have no direct interests in the ordinary shares of
the Company but have interests in the Incentive Shares, as detailed
in note 18 to the Financial Statements.
James Corsellis and Mark Brangstrup Watts are Non-Executive
Directors and ultimate beneficial owners of Marwyn Asset Management
Limited, which is the manager of the Marwyn funds which held
approximately 30.6% of the issued share capital as at 31 December
2019. James Corsellis and Mark Brangstrup Watts are also managing
partners of Marwyn Capital LLP, a firm which provides corporate
finance advice to the Company and are the ultimate beneficial
owners of Axio Capital Solutions Limited ("Axio"), which provides
administration, company secretarial and accounting services to the
Group. Details of the related party transactions which occurred
during the year are disclosed in note 19 to the Financial
Statements.
Save for the issue of Incentive Shares as disclosed in note 18
and related party transactions as disclosed in note 19, no Director
has or has had any interest in any transaction which is or was
unusual in its nature or conditions or significant to the business
of the Group. There were no loans or guarantees granted or provided
by the Company and/or any of its subsidiaries to or for the benefit
of any of the Directors.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulation.
The Directors are required to prepare Financial Statements for
each financial period. The Directors have prepared the Financial
Statements in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the European Union. Under company
law, the Directors must not approve the Financial Statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Group and of the profit or loss of the Group for
that period. In preparing the Financial Statements, the Directors
are required to:
-- Select suitable accounting policies and then apply them consistently;
-- State whether applicable IFRSs as adopted by the European
Union have been followed for the Financial Statements, subject to
any material departures disclosed and explained in the Financial
Statements;
-- Make judgements and accounting estimates that are reasonable and prudent; and
-- Prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the
Financial Statements comply with the Companies (Jersey) Law 1991
and Article 4 of the IAS Regulation.
The Directors are also responsible for safeguarding the assets
of the Group and for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of Financial Statements
may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and Financial
Statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Group's performance, business model and strategy.
Independent auditor
PricewaterhouseCoopers LLP ("PwC") was appointed auditor of the
Group for the year ended 31 December 2019, the third year that PwC
has audited the Group. The Directors have reason to believe that
PwC conducted an effective audit. The Directors have provided the
auditor with full access to all the books and records of the Group.
PwC has expressed its willingness to continue to act as auditor to
the Group and a resolution for PwC's re-appointment will be
proposed at the forthcoming annual general meeting.
Directors' confirmations
Each of the Directors, whose names and functions are listed in
the Report of the Directors confirm that, to the best of his or her
knowledge:
-- the Financial Statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
loss of the Group; and
-- the Report of the Directors includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that it faces.
Auditor's information
In the case of the Directors in office at the date the Report of
the Directors is approved:
-- so far as they are aware, there is no relevant audit
information of which the Group's auditor is unaware; and
-- they have taken all the steps that they ought to have taken
as Directors in order to make themselves aware of any relevant
audit information and to establish that the Group's auditor is
aware of that information.
On behalf of the Board
Avril Palmer-Baunack James Brotherton
Chairman Chief Financial
30 June 2020 Officer
30 June 2020
SAFE HARBOUR HOLDING PLC
Company number 123821
GOVERNANCE | CORPORATE GOVERNANCE REPORT
Overview
This Corporate Governance Report (the "Report") forms part of
the Report of the Directors and has been approved by the Board and
signed on its behalf as though it were a part of the Report of the
Directors. The Directors recognise the importance of sound
corporate governance commensurate with the size of the Group and
the interests of shareholders and remain committed to evolving the
corporate governance arrangements as the business grows.
The Board has adopted the Quoted Companies Alliance Corporate
Governance Code (the "QCA Code" or the "Code"). The Company intends
to re-evaluate its corporate governance framework upon completion
of a Platform Acquisition.
The following sections of this Report detail how Safe Harbour
applies the QCA Code.
The Board of Directors
The Group is led and controlled by an effective Board. The Board
at the date of this Report comprises Non-Executive Chairman Avril
Palmer-Baunack, independent Non-Executive Director Chris Cole and
three Executive Directors, James Brotherton (Chief Financial
Officer "CFO"), Mark Brangstrup Watts and James Corsellis. Rodrigo
Mascarenhas ceased his role as Chief Executive Officer and
Executive Director on 30 June 2020.
Biographical details of the Directors appear on pages 5 to
7.
The Chairman is responsible for leading the Board effectively
and overseeing the adoption, delivery and communication of the
Group's corporate governance model. The Chairman must display clear
vision and focus on strategy, capitalising on the skills,
experience, characteristics and qualities of the Board and
fostering a positive governance culture throughout the Group. All
Board members have full access to the Group's advisers for seeking
professional advice at the Company's expense and the Group's
culture is to openly discuss important issues and frequently engage
with Board members outside of formal meetings. The Group's wider
organisational structure has clear lines of responsibility.
Operating and financial responsibility for all subsidiary companies
is the responsibility of the Board.
One of the ten principles of the QCA Code is to maintain 'the
board as a well-functioning, balanced team led by the chair', and
Avril has led the Board as Non-Executive Chairman since her
appointment on 20 February 2018. The QCA Code requires a balance
between Executive and Non-Executive Directors and at least two
independent Non-Executive Directors to be in place. The Company
deviates from the QCA Code in this respect, as the Board currently
only has one independent Non-Executive Director, Chris Cole.
James Brotherton, as CFO, provides additional financial
expertise. At this stage, the Company does not currently conduct an
operating business and therefore its operations, finances and
transactions are relatively simple, and the requisite
administrative functions have been effectively outsourced.
The Board believes that the Board composition is appropriate for
the Company's current operations and provides an appropriate mix of
experience, expertise and skills to support the business of the
Group in its current form as it pursues a Platform Acquisition. The
Board remains committed to regularly reviewing its composition to
ensure it remains appropriate. At or around the time of a Platform
Acquisition, it is anticipated that the composition of the Board
will be re-evaluated in the context of the corporate governance
framework of the enlarged group.
Board interaction
The Board meets formally at least six times a year but also
meets on an ad hoc basis where necessary. Meetings are prepared for
using a standing agenda capturing all ongoing corporate governance
requirements which is updated to incorporate all relevant and ad
hoc business or matters of interest. The Board is presented with
papers from management to support its discussions including
financial information, shareholder analysis and investor relations
information, management reporting and details of acquisition
targets and deal progress.
The Board's culture is to openly discuss any important issues
and frequently engage and constructively challenge each other, both
at and outside of formal meetings, with all the Board members
actively participating at meetings.
Board attendance
Meeting attendance has been shown for each individual. The
'held' columns reflect the number of meetings held during 2019 or
since the date of their appointment.
Board meetings Nomination and Audit and Risk
Remuneration Committee Committee Meetings
Meetings
Held Attended Held Attended Held Attended
---------------------- ------ --------- --------------- -------- ------------
Rodrigo Mascarenhas 9 9 n/a n/a n/a n/a
------ --------- --------- --------------- -------- ------------
Mark Brangstrup
Watts 9 9 3 3 4 4
------ --------- --------- --------------- -------- ------------
James Corsellis 9 7 3 3 4 4
------ --------- --------- --------------- -------- ------------
Avril Palmer-Baunack 9 9 n/a n/a n/a n/a
------ --------- --------- --------------- -------- ------------
Chris Cole 9 8 3 3 4 4
------ --------- --------- --------------- -------- ------------
James Brotherton 5 5 n/a n/a n/a n/a
------ --------- --------- --------------- -------- ------------
The ad hoc Board meetings were held principally to discuss
possible acquisition targets and the appointment of James
Brotherton.
Independence of the Board
Under the QCA Code, the Board is required to make a judgement as
to its independence. The Code states that "it may not be possible
in growing companies to meet all the objective criteria demanded of
the largest listed companies. Regardless, it is important for any
board to foster an attitude of independence of character and
judgement". The Board has considered whether its Directors are
independent in character and judgement and whether there are
relationships or circumstances which are likely to affect, or could
appear to affect, the Director's judgement. The Code also requires
the Board to state its reasons why a director may be considered
independent if there are grounds to question the independence.
Avril Palmer-Baunack was appointed Non-Executive Chairman on 20
February 2018. Avril has over 20 years' executive experience across
the UK automotive, support services, industrial engineering and
insurance services sectors. Avril is not deemed to be independent
in view of her previous working relationship with James Corsellis
and Mark Brangstrup Watts (having all served on the Board of BCA)
and her participation in the Transaction Success Fee (as described
in further detail in the Company's Admission Document dated 1 March
2018). Notwithstanding this prior working relationship, it is
considered that Avril has sufficient experience to lead the Board
effectively and provide guidance and challenge with the requisite
objectivity.
The Board considers Chris Cole to be independent in character
and judgement and strongly believes that he has no relationships or
circumstances which are likely to affect, or could appear to
affect, his judgement as an independent Non-Executive Director.
Board Committees
The Board has established two committees with effect from 20
November 2018, the Audit and Risk Committee and the Nomination and
Remuneration Committee (together, the "Committees"), to assist the
Board in the execution of its duties. If the need should arise, the
Board may set up additional committees as appropriate. The terms of
reference for the Committees are available on the Company's
website. Each of the Committees is authorised, at the Company's
expense, to obtain legal or other professional advice to assist in
carrying out its duties. No person other than a Committee member is
entitled to attend the meetings of these Committees, except by
invitation of the Chairman of that Committee. Axio is the secretary
of the Committees. It is anticipated that the Company's auditor,
PwC, will be invited to attend meetings of the Audit and Risk
Committee.
Membership of the Committees is as follows:
Audit and Risk Committee Nomination and Remuneration
Committee
Chairman James Corsellis Chris Cole
------------------------- ----------------------------
Member Chris Cole Mark Brangstrup Watts
------------------------- ----------------------------
Member Mark Brangstrup Watts James Corsellis
------------------------- ----------------------------
The composition of the Committees will be reviewed regularly by
the Nomination and Remuneration Committee. The Board recognises
that, where possible, the Committees should consist of a majority
of independent Non-Executive Directors and, as such, the
composition of the Committees will be reviewed on the appointment
of any further independent Non-Executive Directors to the
Board.
Each Committee has prepared a report which is included on pages
18 and 20.
The Company also recognises the importance of having systems and
procedures in place to ensure compliance by the Board, the Company,
and its applicable employees in relation to dealings in securities
of the Company and the management of inside information in
accordance with the EU Market Abuse Regulation (2014/596/EU)
("MAR"). The Board has established a Disclosure Committee, which
consisted of Rodrigo Mascarenhas, Mark Brangstrup Watts and James
Corsellis up to 30 June 2020, then subsequent to the cessation of
Rodrigo's appointment on 30 June 2020, James Brotherton replaced
Rodrigo on the Disclosure Committee. The Company has adopted a MAR
compliance manual and share dealing code to ensure ongoing
compliance with MAR. The Directors believe that these procedures
and policies adopted by the Board are appropriate for the Company's
size and complexity and that it complies with MAR.
Board diversity
The Board considers diversity to be much broader than the
traditional definition which focuses on race, gender, age, beliefs,
disability, ethnic origin, marital status, religion and sexual
orientation. Productive Board discussions require a breadth of
experience and perspectives achieved through hiring Board members
with diverse backgrounds and experience. Directors shall be
appointed in order to bring the required skills, knowledge and
experience and are expected to impact the chemistry and dynamics of
the Board positively.
The Board is currently led by a female Non-Executive Chairman,
with support from three other male Executive Directors along with
one male independent Non-Executive Director. It is believed that
the Board has the requisite experience and skills for the Company
to achieve its immediate objective of acquiring a Platform
Acquisition. The composition of the Board will continue to be
considered as the Company progresses with its stated strategy.
Details of the experience of the current Directors are included on
pages 5 to 7.
Around the time of a Platform Acquisition, the Board and
Committee composition will be revisited to ensure that they meet
the changing needs of the business. During the recruitment process
for new Directors, the Nomination and Remuneration Committee will
ensure that the diversity of the Board is considered in detail.
Board effectiveness
As discussed further in the Nomination and Remuneration
Committee report, the Board has carried out its initial Board
effectiveness review. The findings of the review were very
positive. It was noted that as the Company has not yet completed a
Platform Acquisition its operations remain simple. The Board's
focus continues to be the identification and pursuit of potential
acquisition opportunities in line with the Company's stated
strategy. Recommendations for the year ahead included considering
the impact of COVID-19 on the Company's strategy and, in response,
the Board's views in this regard have been included in these
Financial Statements.
Principal risks
The Board has carried out robust assessments of the principal
risks facing Safe Harbour, including those that threaten its
business model, future performance, solvency and liquidity, as set
out below. Detailed consideration is given to all of these risk
factors by the Audit and Risk Committee and the Board.
Risk title Risk rating
-------------------------------- ------------
Unsuccessful transaction costs High
Timing of investments High
Key management risk Moderate
Acquisition of targets Moderate
Change in investment policy Moderate
Additional funding requirements Moderate
Unsuccessful transaction costs
There is a risk that the Company may incur substantial legal,
financial and advisory expenses arising from unsuccessful
transactions which may include transaction documentation, legal,
accounting and other due diligence. The Company may need to raise
additional funds in order to continue to pursue its investment
strategy if its operating and unsuccessful transaction costs reduce
its cash balance below that required to execute a Platform
Acquisition in accordance with its investment strategy.
To mitigate this risk, monthly management information is
provided to the CFO and material detailing expenses incurred and a
forward-looking cash flow forecast is included in the periodic
Board meetings. All third party engagements for acquisition-related
work are reviewed by the corporate finance advisers and agreed and
signed off by the Board. All of the costs incurred during potential
acquisitions are closely monitored and updated on a real time
basis.
Timing of investments and Continuation Vote
The Company cannot accurately predict how long it will actually
take to deploy the capital available to it or whether it will be
able to do so at all. Any significant delay or inability to find a
suitable acquisition may have a material adverse effect on the
business, financial condition, results of operations and prospects
of the Company.
Pursuant to the AIM Rules for Companies, as the Company had not
substantially implemented its investment policy within 18 months of
its admission to AIM, the renewal of the investment policy, as
recommended by the Directors, will be subject to approval by
shareholders at the 2020 AGM.
Assuming the Continuation Vote is passed, the Company will
continue to fulfil its objectives for at least the next twelve
months from the date of approval of these Financial Statements. If
the Continuation Vote is not passed, the Directors would intend to
bring forward further proposals, which may include a proposal to
return funds to shareholders.
In the event of a decision to return funds to shareholders,
there can be no assurance as to the particular amount or value of
the remaining assets at such future time of any such distribution
either as a result of costs from an unsuccessful acquisition or
from other factors, including disputes or legal claims which the
Company is required to pay out, the cost of the liquidation event
and dissolution process, applicable tax liabilities or amounts due
to third party creditors. Upon distribution of assets on a
liquidation event, such costs and expenses will result in investors
receiving less than the initial subscription price and investors
who acquired ordinary shares after admission potentially receiving
less than they invested.
Key management risk
The key management risk had been reduced during the year through
the appointment of James Brotherton as CFO however the Board
acknowledges that the cessation of Rodrigo's role as CEO and
Executive Director on 30 June 2020 necessitates that the Board
communicates to shareholders the Board's intention in relation to
the Company's ongoing strategy. The current Board has extensive,
relevant and appropriate experience as the Company seeks to acquire
a Platform Acquisition. Further detail on the Company's strategy
will be provided in the AGM notice and circular which will be made
available to shareholders on 7 July 2020.
The Board of Safe Harbour is small and aligned to the business'
objectives. The remuneration packages are considered to be
appropriate and James Brotherton is included in the long-term
incentive plan to align his potential return with that of
shareholders. The Nomination and Remuneration Committee reviews the
Executive Directors' salaries on an annual basis to ensure they
remain appropriate.
Acquisition of targets
Although the Company has identified a number of potential
investment opportunities, it is not currently in formal or
exclusive discussions with any asset vendors. The Company's future
success is dependent upon its ability to not only identify
opportunities but also to execute successful acquisitions and/or
investments. There can be no assurance that the Company will be
able to conclude agreements with any target business and/or
shareholders in the future and failure to do so could result in the
loss of an investor's investment. In addition, the Company may not
be able to raise the additional funds required to acquire any
target business and fund its working capital requirements.
The Directors of Safe Harbour have experience, knowledge and a
track record of executing acquisitions. All members of the
management team are highly experienced and have excellent knowledge
of the B2B distribution and business services market allowing them
to focus efficiently on high quality businesses which are
fundamentally sound.
The management team of Safe Harbour has good contacts across the
sector and maintains close contact with banks and brokers to keep
it aware of target availability. The culture within the team
facilitates open lines of communication and shareholder relations
are maintained increasing the capacity of the business to raise
capital.
Change in investment policy
The investment policy may be modified and altered from time to
time with the approval of shareholders. It is therefore possible
that the approaches adopted to achieve the Company's investment
objectives in the future may be different from those the Directors
currently expect to use. Any such change may have a material
adverse effect on the business, financial condition, results of
operations and prospects of the Company.
Should any change in investment policy be considered, this will
take into account the skills and knowledge of the Board. An open
dialogue will be maintained with shareholders.
Additional fundraising requirements
When a suitable Platform Acquisition or future bolt-on
acquisition is identified, it is expected that the Company will
need to raise further capital to fund such an acquisition and/or
facilitate the development of such acquisition. There is no
guarantee that the Company will be able to raise such capital, and
this may prejudice the Company's ability to make and develop such
acquisitions. This inability to raise further capital may have a
material adverse effect on the business, financial condition,
results of operations and prospects of the Company.
The ongoing business needs of the platform asset will be fully
analysed as part of the acquisition due diligence in order to
assess future funding requirements and an open and active dialogue
will be maintained with major shareholders.
Internal controls
The Board is responsible for establishing and maintaining the
Company's systems for both risk management and internal controls
and reviewing the effectiveness of both with the assistance of the
Audit and Risk Committee. Internal control systems are designed to
meet the particular needs of the Company and Group and the
particular risks to which it is exposed. The procedures are
designed to manage rather than eliminate risk and, by their nature,
can only provide reasonable but not absolute assurance against
material misstatement or loss.
The Directors regularly review risks faced by the Company and
assess those which they believe have the greatest potential impact
on the business in its current form, including those which may
jeopardise the successful acquisition of the Company's platform
asset and the ongoing liquidity and solvency of the Group.
The recruitment, retention and engagement of an experienced
management team is considered central to ensuring the successful
acquisition of the Company's platform asset. The Directors have
extensive experience and knowledge, and the Company has established
an incentive scheme to motivate the Executive Directors and align
their interests with those of the shareholders. The Non-Executive
Chairman and independent Non-Executive Director provide
constructive challenge, expertise and experience to Board
discussions which, alongside the Company's prudent approach to
pre-acquisition due diligence, is regarded as a further measure to
mitigate risks applicable to the acquisition of a platform
asset.
The Company has implemented financial procedures including
controls over cash management, the safeguarding of cash, and
monthly cash forecasting and budgeting to mitigate the risk of
insolvency. The Company has in place numerous internal controls in
relation to financial reporting, such as the segregation of roles
between those preparing and those reviewing financial information.
In addition, the Company has established a multi-tier review
process with reviews undertaken by individuals with the appropriate
level of seniority and experience, reducing the risk of
misstatement and fraud. On a monthly basis, detailed financial
information, including a balance sheet, profit and loss, actual
cash flow and detailed cash flow forecast and expense breakdowns
are reviewed by the CFO. Summary financial information is also
tabled at the periodic Board meetings where it is discussed in
detail by the Board.
The Company does not have a separate internal audit function as
the Board does not feel this is necessary due to the current size
of the business and the simplicity and low volume of transactions,
coupled with the nature and the extent of internal controls,
management and Board oversight and involvement.
Company culture
The Board promotes a dynamic, entrepreneurial and transparent
culture. The recruitment of highly skilled, adaptable, driven and
experienced Directors is fundamental to executing the Company's
strategy. The Board therefore fosters a forum whereby openness,
constructive challenge and innovation are actively encouraged.
Succession planning
Given the size, composition and nature of the Company at this
stage in its evolution, the creation and implementation of
succession plans are not considered to be appropriate or relevant.
Following the cessation of Rodrigo's appointment, the Board
continues to engage with shareholders and consider the Company's
ongoing strategy and further clarification will be given in the AGM
notice and circular which will be made available to shareholders on
7 July 2020.
Once a platform asset has been acquired, succession planning
will be revisited by the Board.
Directors' terms of service
The articles of association of the Company require that, at each
annual general meeting of the Company, one third of the Directors
retire from office and offer themselves for re-election, and each
Director shall retire from office and stand for re-election at
least every three years. Furthermore, each Director appointed in
the period since the previous annual general meeting shall stand
for election at the subsequent annual general meeting. Avril Palmer
Baunack and James Corsellis will both stand for election at the
next annual general meeting of the Company.
The Directors' service contracts establish the time commitment
each Director must devote to the Company. James Brotherton is
required to commit all of his time during normal office hours, and
such other time as may reasonably be required, in the performance
of his role. Mark Brangstrup Watts, James Corsellis, Avril
Palmer-Baunack and Chris Cole are to devote the time necessary to
ensure the proper performance of their duties as detailed in their
respective service contracts.
Continued professional development
The Board considers and reviews the requirement for continued
professional development. The Board undertakes to ensure that the
Directors' awareness of developments in corporate governance and
the regulatory framework is current, and that they are up-to-speed
with all industry-specific updates. The Company Secretary,
Nominated Adviser and specialist external advisers all serve to
strengthen this development by providing guidance and updates as
required.
Company Secretary
The QCA Code provides details on the roles and responsibilities
of the Company Secretary within a Company. The Company Secretary
for the Group is Axio.
Axio performs the function of Company Secretary as outlined in
the Code. The role includes preparing for and running effective
Board meetings, including the timely dissemination of appropriate
information. In addition, the Company Secretary is responsible for
assisting the Directors in ensuring that group entities are
managed, controlled and administered within the parameters of their
governing documents and are compliant with regulatory requirements
and filing obligations.
Axio has established direct lines of communication with each of
the Directors and provides information, advice and guidance as
required.
Axio plays an active and central role in ensuring good
governance and provides an additional point of contact between the
Company and its advisers on matters of governance and investor
relations.
External advisers
The Company is currently pursuing its investment strategy and as
a result it is expected that further advisers and industry experts
will be engaged to help facilitate this. A list of current key
external service providers is included on page 44.
Relationships with key resources and external advisers are
developed and maintained through an open dialogue to ensure that
the Company is able to draw upon their expertise and assistance
when required.
Conflicts of interest
The articles of association of the Company provide for a
procedure for the disclosure and management of risks associated
with Directors' conflicts of interest. At each Board meeting, a
list of directorships for each Director is tabled at the meeting
with any potential conflicts discussed in detail. No material
conflict of interest has arisen to date and the Board considers
that the conflicts procedures have operated effectively.
Relations with stakeholders
Safe Harbour does not currently have an operating business and
therefore has a very limited number of stakeholders given that Safe
Harbour has no customers and its suppliers are primarily
professional advisers.
The Board is always available for communication with
shareholders, and the Directors frequently engage constructively
with current and potential shareholders. The Board stays informed
of shareholders' views via regular meetings and through its
Nominated Adviser. All shareholders have the opportunity, and are
encouraged, to attend and vote at the annual general meeting of the
Company during which the Board will be available to discuss issues
affecting the Company.
Annual general meeting
In accordance with the QCA Code, the Company published the
results of its 2019 annual general meeting on the Corporate
Governance page of the Company's website. The 2020 annual general
meeting is scheduled to take place on 31 July 2020.
SAFE HARBOUR HOLDING PLC
Company number 123821
GOVERNANCE | AUDIT AND RISK COMMITTEE REPORT
Effective from 20 November 2018, the Board established an Audit
and Risk Committee to further strengthen the Company's corporate
governance framework. The Audit and Risk Committee is delegated
responsibility for oversight of Safe Harbour's financial reporting,
internal controls, risk management and relationship with the
external auditor. Membership of the Audit and Risk Committee is
detailed on page 12 and the committee's role and responsibilities
are set out in its terms of reference, which are available on the
Company's website and from the Company Secretary.
The Audit and Risk Committee is responsible for all matters
required to be handled by the Audit and Risk Committee as set out
by the QCA Code, including:
-- The review and challenge of the risk identification and risk
management process across the business including the risks in
connection with a potential acquisition;
-- The management of relations with the external auditor to
ensure that the annual audit is effective, objective, independent
and of high quality;
-- The oversight of the relationship with the external auditor
to ensure it remains appropriate and that the service is
appropriately priced; and
-- The review of the Company's draft corporate reporting,
including the interim report and the annual report and audited
financial statements.
During the year the Audit and Risk Committee undertook the
following activities:
-- Reviewed the Financial Statements for the 2018 year-end and
the 2019 interim financial statements, including the going concern
assumption, and considered whether the financial statements were
fair, balanced and understandable. As part of the 2018 year-end
review, the Board received a report from the external auditor on
its audit;
-- Reviewed the critical accounting judgements and estimates
used in preparing the financial statements and ensured adequate
disclosure on the issues and how they were addressed were included
in the financial statements;
-- Reviewed and approved the committee report included in the
2018 year-end financial statements;
-- Reviewed and agreed the scope of the audit work to be
undertaken by the external auditor and considered the
appropriateness of the audit fees to be paid, as well as the
independence and objectivity of the auditor;
-- Reviewed and made a recommendation to the Board with regard
to the re-appointment of the external auditor, taking into account
the auditor's effectiveness and independence, partner rotation and
other factors which may impact the external auditor's
re-appointment;
-- Reviewed management's updates to Safe Harbour's main control
document, the Financial Position and Prospects Memorandum, and risk
register;
-- Considered the processes in place to generate forecasts of
cash flows, including the reasonableness and consistent use of
assumptions; and
-- Reviewed the effectiveness of the Group's risk management and
internal controls and disclosures made in the Financial Statements
on this matter.
Risk management and internal controls systems
The Board has reviewed the Company's risk management and
internal control systems and believes that the controls and risk
management approach are satisfactory given the current nature and
size of the Company and Group. At or around the time an operating
business is acquired, the Board will further review the risks to
which the new enlarged group is exposed, and an appropriate risk
management process will be put in place.
Independence of external auditor
The Board reappointed PwC as external auditor during the year.
The auditor's independence, reputation, experience and fee quote
(among other factors) were considered by the Committee in
determining its recommendation to the Board in relation to the
external auditor's appointment.
PwC has not been engaged by the Company during the year to
provide any non-audit services. PwC has also confirmed that it
believes that it has remained independent.
James Corsellis
Chairman of the Audit and
Risk Committee
30 June 2020
SAFE HARBOUR HOLDING PLC
Company number 123821
GOVERNANCE | NOMINATION AND REMUNERATION COMMITTEE REPORT
Effective from 20 November 2018, the Board established a
Nomination and Remuneration Committee. The roles and
responsibilities of the Nomination and Remuneration Committee are
set out in its terms of reference, which are available on the
Company's website and from the Company Secretary.
The Nomination and Remuneration Committee is responsible for all
matters required to be handled by the Nomination and Remuneration
Committee as set out by the QCA Code, including:
-- Ensuring that the Company can recruit and retain high quality
executives through packages which are fair and attractive, but not
excessive;
-- Developing remuneration packages which motivate the Directors
and senior management team and support the delivery of the business
in the short, medium and long term;
-- Ensuring that interests of the Executive Directors and senior
management are aligned with the interests of medium to long-term
shareholders; and
-- Encouraging executives to operate within the risk parameters set by the Board.
During the year the Nomination and Remuneration Committee
undertook the following activities:
-- Agreed the appointment of James Brotherton, the issuance to
him of incentive shares, his brought forward start date and related
market announcements in relation his appointment;
-- Established the metrics to be applied in relation to the
discretionary element of the Executive Directors' bonuses for 2019,
including ensuring that the incentive scheme for Executive
Directors is designed to align their interests with those of medium
to longer term shareholders;
-- Reviewed and approved the committee report included in the
2018 year-end financial statements;
-- Considered the composition and balance of the Board in
conjunction with the Company's requirements and the provisions of
the QCA Code; and
-- Conducted a board effectiveness evaluation and discussed key
findings with the board as a whole.
Remuneration report
The information included in this report is not subject to audit.
The Nomination and Remuneration Committee Report, including the
remuneration report, has been prepared by the Board in conjunction
with the Nomination and Remuneration Committee for the year. The
objectives of the Board in relation to nomination and remuneration
are set out above.
Annual statement
The remuneration policy of the Company is that executive
remuneration should be simple and transparent and support the
delivery of the business strategy by attracting the highest calibre
of personnel. This philosophy is reflected in our remuneration
structure.
The Board feels very strongly that Directors' remuneration
should be linked to the creation and enhancement of shareholder
value. Although the Board feels it is important to remunerate
senior executives through their basic pay and benefits at market
levels commensurate with their peers, the Incentive Share Scheme
has been designed to provide ongoing remuneration in alignment with
shareholders' interests. The Incentive Share Scheme, described
below, has been in place since before the Company's IPO.
Incentive Share Scheme
Subject to shareholders achieving a 10% preferred return per
annum on a compounded basis on their net invested capital (the
"Preferred Return"), the holders of the Incentive Shares are
entitled, on exercise, to an aggregate return of 16% (of which A1
shares as a class are entitled to 11% and A2 Shares to 5%) of the
excess in the market value of the Company over and above its
aggregate paid up share capital, allowing for any dividends and
other capital returns.
The purpose of the A3 shares is to ensure that if an A1 or A2
shareholder exercises their Incentive Shares before the rest of the
A shareholders, then any of the 16% growth in value by the first
exerciser may be allocated to the remaining A shareholders on a pro
rata basis through the A3 shares. This will result in A
shareholders in aggregate receiving 16% of growth in value,
provided that the vesting conditions are satisfied.
The Incentive Shares are subject to certain vesting conditions,
at least one of which must be (and continue to be) satisfied in
order for a holder of Incentive Shares to exercise his or her
redemption rights and which ends on the fifth anniversary of the
date of a Platform Acquisition or such later date as is agreed
between the Company and the holders of at least 90% of the ordinary
shares, A1 shares, A2 shares and A3 shares.
The vesting conditions are as follows:
(i) it is later than the third anniversary of a Platform Acquisition;
(ii) a sale of all or a material part of the business of Safe
Harbour Holdings Jersey Limited ("SHHJL");
(iii) a sale of all of the issued ordinary shares of SHHJL or a merger of SHHJL;
(iv) a winding up of SHHJL occurring; or
(v) a sale or change of control of the Company.
The Incentive Shares are subject to a three-year vesting period
and will lapse after five years. The vesting period commences from
the date of a Platform Acquisition. On exercise, it is anticipated
that the Incentive Shares will be settled in ordinary shares of the
Company. On issue, James Brotherton is required to retain such
ordinary shares for a minimum period of 6 months subject to
provisions in relation to the sale of shares (i) for the payment of
tax; (ii) with prior consent from the parent; (iii) pursuant to an
order made by court; (iv) pursuant to an offer made by the parent
to purchase its own shares which is made on identical terms to all
A shareholders; or (v) if there is a cessation of duties where an A
shareholder is no longer a director of any group company.
As at 31 December 2019, the following incentive shares were in
issue:
Number of A1/A2 Number of A3
Incentive Shareholder Incentive shares Incentive shares
------------------ ------------------
PRX Trust (A1)* 540 600
Marwyn Long Term Incentive
LP (A2)** 500 500
James Brotherton (A1) 270 300
1,310 1,400
================== ==================
The Incentive Share Scheme has been designed to align the
Company's shareholders' interests and the shareholders' expected
typical ownership period. The Board strongly believes that this
clear and transparent incentive framework is aligned with the
Company's strategy for growth and provides a strong platform for
the future success of the Company.
It is anticipated that the exercise of Incentive Shares will
result in management receiving ordinary shares in the Company.
Those shareholdings could be substantial and should further align
management and shareholders.
* Rodrigo Mascarenhas is beneficially interested in the PRX
Trust. As detailed in note 21 to the Financial Statements, Rodrigo
ceased to be CEO and Executive Director on 30 June 2020 and, on the
same date, agreed to sell his incentive shares back to Safe Harbour
Holdings Jersey Limited on completion of which they will be
immediately cancelled.
**James Corsellis and Mark Brangstrup Watts are beneficially
interested in Marwyn Long Term Incentive LP.
Directors' basic and performance-related pay:
The below table sets out the remuneration of each Director
during the year ended 31 December 2019:
Rodrigo Mark Brangstrup James Corsellis Avril Chris James Brotherton
Mascarenhas Watts Palmer-Baunack Cole
GBP GBP GBP GBP GBP GBP
Salary/fee 350,000 14,829 14,829 200,000 75,000 175,000
Guaranteed 150,000 - - - - -
bonus
Taxable benefits 4,711 - - - - 5,761
Taxable benefits include private medical, dental, life insurance
and travel insurance.
The annual salary for Rodrigo Mascarenhas was GBP350,000, paid
monthly in arrears, with a guaranteed minimum annual bonus of
GBP150,000 and a discretionary bonus of up to GBP100,000, paid
annually. The annual salary for James Brotherton is GBP300,000,
with an annual discretionary bonus of up to GBP150,000. Mark
Brangstrup Watts and James Corsellis are paid fees equal to the
prevailing national minimum wage for 35 hours per week. During the
year they received fees of GBP14,829 each. James Brotherton, Mark
and James Corsellis are all incentivised through the Incentive
Share Scheme. Following the cessation of Rodrigo's appointment, as
set out in note 21 to the Financial Statements, upon the completion
of the buy-back of the shares held by PRX Trust Rodrigo will no
longer hold any interest in the Incentive Shares.
In determining Rodrigo and James Brotherton's salaries for the
year ended 31 December 2019, their experience and anticipated
contribution to the business were considered. Going forward, James
Brotherton, Mark and James Corsellis' roles are all expected to
change as the business evolves, in particular the expectations,
responsibilities and demands are expected to change significantly
following the completion of a Platform Acquisition, and as such
their remuneration packages will be reviewed at this time.
Upon completion of a Platform Acquisition, Avril Palmer-Baunack
and Marwyn Capital LLP (of which James Corsellis and Mark
Brangstrup Watts are managing partners) will each receive a fee
which is dependent on the completion of a Platform Acquisition by
the Group (the "Platform Acquisition Bonus"). They will each
receive an additional cash bonus of an amount equal to one-third of
1% of the Total Enterprise Value(1) where the Total Enterprise
Value is GBP1 billion or more, two-thirds of 1% where the Total
Enterprise Value is less than GBP250 million and otherwise one
third of X, where:
X = 2% - (Total Enterprise Value - GBP250 million) * 1%
GBP750 million
The annual fee for Avril Palmer-Baunack is GBP 200,000 , paid
monthly in arrears. Chris Cole's annual Non-Executive Director fee
is GBP 75,000 , paid monthly in arrears.
Once the Company has made a Platform Acquisition, the objectives
of the enlarged group will be established; at this point the
Director's service contracts will be revisited and as part of this
process the Nomination and Remuneration Committee will consider the
most appropriate key performance indicators for the Directors and
senior management.
(1) The total enterprise value of a business or company acquired
by the Group calculated as the total value of the consideration
paid by the Group for the acquired equity or assets (as the case
may be) plus the net debt of the acquired business or company, such
net debt to be reduced pro-rata where less than 100 per cent. of
the entire issued share capital of the target business or company
is acquired, as calculated by the Board acting reasonably and in
good faith.
Performance evaluation
The Board has conducted an annual evaluation of its own
performance and that of its committees by means of a questionnaire
requiring written responses from the Directors. To ensure
independence and objectivity, the questionnaire was designed,
administered and reviewed on a confidential basis by the Company
Secretary. The questionnaire was drafted having regard to the
balance of skills, experience, independence and knowledge
contributed by its members, as well as the successful operation of
the Board as a unit, its diversity and other factors relevant to
its effectiveness.
The resulting report compiled by the Company Secretary,
analysing responses and drawing anonymous conclusions, was tabled
for discussion at a meeting of the Nomination and Remuneration
Committee. A summary of the conclusions reached by the Nomination
and Remuneration Committee was then discussed by the Board.
The findings of the review were very positive. It was noted that
as the Company has not yet completed a Platform Acquisition its
operations remain simple. The Board's focus continues to be the
identification and pursuit of potential acquisition opportunities
in line with the Company's stated strategy. Recommendations for the
year ahead included considering the impact of COVID-19 on the
Company's strategy. The Board's views in this regard have been
included in these Financial Statements.
Risks
The Board is mindful of the potential risks associated with its
remuneration policy. The Board aims to provide a structure that
encourages an acceptable level of risk-taking (by benchmarking
against shareholder returns) and an optimal remuneration mix. Going
forward the Nomination and Remuneration Committee intends to
undertake annual evaluations to ensure its policy achieves the
correct balance and does not encourage excessive risk taking. The
Board has considered the risk involved in the Incentive Share
Scheme and the Platform Acquisition Bonus and is satisfied that the
Company's governance procedures mitigate these risks
appropriately.
The Board has sought to ensure that its approach to remuneration
drives behaviour aligned to the long-term interests of the Company
and its shareholders.
Chris Cole
Chairman of the Nomination and Remuneration Committee
30 June 2020
SAFE HARBOUR HOLDINGS PLC
Company number 123821
INDEPENT AUDITORS' REPORT
Report on the audit of the financial statements
Opinion
In our opinion, Safe Harbour Holdings plc's Group financial
statements (the "financial statements"):
-- give a true and fair view of the state of the Group's affairs
as at 31 December 2019 and of its loss and cash flows for the year
then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union; and
-- have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
We have audited the financial statements, included within the
Annual Report and Audited Consolidated Financial Statements (the
"Annual Report"), which comprise: Group Statement of Comprehensive
Income; Group Statement of Financial Position; Group Statement of
Changes in Equity; Group Statement of Cash Flows; and the Notes to
the Financial Statements, which include a description of the
significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities under ISAs (UK) are further described in the
Auditors' responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remained independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC's Ethical
Standard, as applicable to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements.
Material uncertainty related to going concern - Group
In forming our opinion on the Group financial statements, which
is not modified, we have considered the adequacy of the disclosure
made in note 2 to the financial statements concerning the Group's
ability to continue as a going concern. AIM Rule 8 requires that,
if after 18 months from admission to the AIM, an investing company
has not substantially implemented its investment policy, it is
required to seek the consent of its shareholders at the next Annual
General Meeting ("AGM") to approve its current investment policy,
and on an annual basis thereafter, until such time that its
investing policy has been substantially implemented. Should a vote
against the current investment policy occur, the Board would be
expected to propose amendments to its investing policy and seek
shareholder approval for material change to its investment policy,
as soon as possible. If the revised investment policy is also not
approved, the guidance notes to AIM Rule 8 says the Group should
consider options, including the potential for return of funds to
investors and closing down. Given that the Group is yet to conclude
terms on a potential acquisition target within 18 months of
admission to the AIM (i.e. the period covering March 2018 -
September 2019), the Board needs to obtain approval for their
investment policy from shareholders at the 2020 AGM, scheduled for
July 2020. These conditions, along with the other matters explained
in note 2 to the financial statements, indicate the existence of a
material uncertainty which may cast significant doubt about the
Group's ability to continue as a going concern. T he Group
financial statements do not include the adjustments that would
result if the Group was unable to continue as a going concern.
Our audit approach
Overview
* Overall Group materiality: GBP242,000 (2018:
GBP269,000), based on 1% of total assets.
=======================================================================
* The Group has three entities (the Company and two
wholly owned subsidiaries). The engagement was scoped
such that all material balances from the Company and
its subsidiaries were subject to full scope audit
work and tested in the context of materiality,
ensuring that untested amounts remained immaterial
for the Group.
=======================================================================
* Key Audit Matters:
o Valuation of incentive shares; and
o Impact of COVID-19.
* Both of these matters impact the Group as a whole.
=========================================================================
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors'
professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had
the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the
results of our procedures thereon, were addressed in the context of
our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on
these matters. In addition to going concern, described in the
Material uncertainty related to going concern section above, we
determined the matters described below to be the key audit matters
to be communicated in our report. This is not a complete list of
all risks identified by our audit.
Key audit matter How our audit addressed the key
audit matter
========================================= ============================================
Valuation of incentive shares Whilst the total charge to the
(Group) - Note 18 Group Statement of Comprehensive
The Group provides benefits to Income for the year ended 31 December
senior management and others 2019 is not material to the financial
in the form of share-based payments, statements, we have performed procedures
whereby services are rendered on the valuation ascribed to the
by individuals and they receive awards by management and the resultant
rights to shares in exchange. charge to the Group Statement of
This was in the form of incentive Comprehensive Income, in the context
shares, and are classified by of our significant risk assessment
the Group as equity-settled share-based for the year ended 31 December
payments, in accordance with 2019 with respect to valuation
IFRS 2 Share Based Payments. of share-based awards. As such,
there were several judgements made
On March 2019, 270 A1 shares around the valuation, and on the
and 300 A3 shares were issued accounting treatment of, the newly
to the Group's CFO. These awards issued incentive shares.
were accounted for as equity-settled
share-based payments, consistent We agreed the number and date of
with the previously issued tranches the new A1 and A3 shares to the
of incentive shares. The A1 shares Group's CFO to subscription letters
were valued at GBP305.40 per without exception, and we validated
share with a total valuation that the terms of the newly issued
of GBP82,458 and the A3 shares incentive shares were consistent
had at a value of GBP14.75 per with those issued previously.
share resulting in a total valuation We engaged our internal valuation
of GBP4,425. In line with the experts to provide advice on the
previous share issuances, the assumptions used by management,
valuation of these incentive particularly on share price volatility
shares was based on assumptions and the risk-free rate assumptions
including size of investment, underpinning the valuation of the
likelihood of an acquisition, incentive shares. We also performed
expected volatility and expected sensitivity analysis on management's
term. assumptions and noted that varying
assumptions did not lead to material
The accounting for share-based differences in the valuation of
payments incorporates a judgemental the incentive shares.
option value and in determining
the fair value of share-based We validated that the charge recognised
awards, management must apply to the current year Group Statement
and disclose critical accounting of Comprehensive Income was mathematically
estimates and judgements. The accurate for all incentive shares
Group originally valued the newly issued (including those issued
issued incentive shares using in previous periods). We also ensured
an external valuation expert, the appropriateness of the related
which performed a Monte Carlo disclosures in note 18 of the financial
simulation where inputs such statements.
as volatility rate, risk free
rate, and probability of acquisition
are subject to judgement and
estimation uncertainty. The Group's
valuation approach and the assumptions
underpinning the resulting valuation,
are also consistent with that
applied when valuing the previously
issued tranches of incentive Notwithstanding that approval from
shares. shareholders is required under
AIM Rule 8 for the Group to continue
The Group financial statements to operate, we are satisfied with
for the year ended 31 December the disclosures made in the Report
2019 reflect a movement within of the Directors and the Notes
the Statement of Changes in Equity to the Financial Statements with
of GBP20,715, and disclose a respect to the material uncertainty
closing share-based payment reserve related to going concern. Refer
of GBP108,784. These figures to the section "Material uncertainty
reflect both the costs of the related to going concern - Group"
tranches issued prior to 2019, earlier in the auditors' report.
and the newly issued incentive
shares to the Group's CFO in We performed a run rate analysis
2019, pro-rated between 1 January to assess the ability of the Group
2019 and 31 December 2019. to continue to operate for another
year without making an acquisition.
Impact of COVID-19 (Group) During the year ended 31 December
Since the 2019 year end, the 2019, the Group reported a loss
scale and impact of the COVID-19 of GBP2.4m, which is roughly equivalent
pandemic on the global economy to the net decrease in cash and
has increased significantly, cash equivalents during the year
especially since 11 March 2020, (from GBP26.9m to GBP24.5m). These
when the World Health Organisation figures are also relatively consistent
confirmed the disease as a global with the loss reported in the prior
pandemic. year (GBP2.3m). As such, the risk
that the Group would report a loss
There has been a limited impact of GBP24.5m (its cash position
of COVID-19 on the Group's day at 31 December 2019) over the next
to day operations, given that 12 months is remote, given the
it is yet to make an acquisition track record established over the
(therefore not yet generating past two years is low. Therefore,
revenue), and that most of the we concur with management's assessment
Group's costs (payroll costs that from a liquidity perspective
and management fees) remain fixed the Group can continue to operate
every month. as a going concern for at least
the next twelve months, assuming
However, COVID-19 may cause further shareholder approval is provided
uncertainty surrounding the Group's at the 2020 Annual General Meeting
ability to make future acquisitions, in line with AIM Rule 8.
due to adverse market conditions
and the lack of investor appetite. Aside from cash and cash equivalents
This would have further implications of GBP24.5m at 31 December 2019,
on the Group's ability to continue the Group does not hold material
as a going concern owing to AIM financial assets, therefore the
Rule 8, which requires shareholder risk that such assets are not recoverable
approval to continue. is remote.
We read the disclosure in the Strategic
Report regarding the impact of
COVID-19 and a possible positive
impact from the pandemic resulting
through corrections in private
and public equity valuations, presenting
the Group with significant opportunities
in the next twelve months. Given
the uncertainty surrounding the
COVID-19 pandemic and the fact
that any modelling that seeks to
predict how the global economy
will recover is inherently uncertain
(and therefore any upside to the
Group as a result of decreased
valuations is also uncertain),
we considered this disclosure in
conjunction with the other disclosures
related to COVID-19 and going concern
in the Annual Report and Audited
Consolidated Financial Statements.
We are satisfied that the impact
of COVID-19 has been disclosed
appropriately.
========================================= ============================================
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in
which it operates.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Overall Group materiality GBP242,000 (2018: GBP269,000).
========================== =========================================================
How we determined 1% of total assets.
it
========================== =========================================================
Rationale for benchmark The entity is a special purpose acquisition
applied company that was incorporated in 2016, and subsequently
underwent an IPO in 2018 leading to an increase
in cash (assets). This entity has not yet incurred
any revenue and incurs limited management expenses
during the period - through fixed fees from
its service organisation (Axio) and from an
entity related to one of its shareholders, Marwyn.
The only payroll that the entity incurs is directors'
fees. Consequently, there are limited expenses
incurred within the Group Statement of Comprehensive
Income. Moreover, users are focused on total
assets in advance of platform acquisition activity,
at which point entity will be a profit-oriented
entity and generate turnover. Therefore, we
have used total assets as a benchmark for materiality.
========================== =========================================================
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above GBP24,200 (2018:
GBP26,900) as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our auditors'
report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we
identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to
report that fact. We have nothing to report based on these
responsibilities.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of Directors'
responsibilities set out on page 8, the directors are responsible
for the preparation of the financial statements in accordance with
the applicable framework and for being satisfied that they give a
true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditors' responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors' report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors' report.
Use of this report
This report, including the opinions, has been prepared for and
only for the Company's members as a body in accordance with Article
113A of the Companies (Jersey) Law 1991 and for no other purpose.
We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
7. Other required reporting
Companies (Jersey) Law 1991 exception reporting
Under the Companies (Jersey) Law 1991 we are required to report
to you if, in our opinion:
-- we have not received all the information and explanations we require for our audit
-- proper accounting records have not been kept by the company,
or proper returns adequate for our audit have not been received
from branches not visited by us; or
-- the company financial statements are not in agreement with
the accounting records and returns
We have no exceptions to report arising from this
responsibility.
Philip Stokes
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants
London
30 June 2020
SAFE HARBOUR HOLDINGS PLC
Company number 123821
GROUP STATEMENT OF COMPREHENSIVE INCOME
Group Group
Year ended Year ended
31 December 31 December
Note 2019 2018
GBP GBP
----- ------------- -------------
Administrative expenses 5 (2,645,416) (2,446,602)
------------- -------------
Operating loss (2,645,416) (2,446,602)
Finance income 8 198,410 122,596
------------- -------------
Loss before income tax (2,447,006) (2,324,006)
Income tax 9 - -
------------- -------------
Loss for the year (2,447,006) (2,324,006)
Total other comprehensive - -
income
Total comprehensive loss for
the year attributable to owners
of the parent (2,447,006) (2,324,006)
============= =============
Loss per ordinary share
Basic and diluted loss per
share attributable to ordinary
equity holders of the parent 17 (0.0898) (0. 1383 )
The Group's activities derive from continuing operations.
The notes on pages 31 to 43 form an integral part of these
Financial Statements.
SAFE HARBOUR HOLDINGS PLC
Company number 123821
GROUP STATEMENT OF FINANCIAL POSITION
Group Group
as at as at
31 December 31 December
Note 2019 2018
----- ------------ ------------
GBP GBP
Assets
Non-current assets
Property, plant and equipment 2,020 1,302
------------ ------------
Total non-current assets 2,020 1,302
Current assets
Other receivables 11 58,246 73,454
Cash and cash equivalents 12 24,494,291 26,904,510
------------ ------------
Total current assets 24,552,537 26,977,964
Total assets 24,554,557 26,979,266
============ ============
Capital and reserves attributable
to equity holders of the
parent
Stated capital 14 31,447,419 31,447,419
Share-based payment reserve 18 108,784 88,069
Accumulated losses (7,308,982) (4,861,976)
------------ ------------
Total equity 24,247,221 26,673,512
Current liabilities
Trade and other payables 13 307,336 305,754
------------ ------------
Total liabilities 307,336 305,754
Total equity and liabilities 24,554,557 26,979,266
============ ============
The notes on pages 31 to 43 form an integral part of these
Financial Statements.
The Financial Statements on pages 27 to 43 were approved by the
Board of Directors on 30 June 2020 and were signed on its behalf
by:
James Brotherton Avril Palmer-Baunack
Chief Financial Officer Chairman
SAFE HARBOUR HOLDINGS PLC
Company number 123821
GROUP STATEMENT OF CHANGES IN EQUITY
Share-based
Stated payment Accumulated Total
Note capital reserve losses equity
------------ ------------ ------------ ------------
GBP GBP GBP GBP
Balance at 1 January
2019 31,447,419 88,069 (4,861,976) 26,673,512
Loss and total comprehensive
loss for the year - - (2,447,006) (2,447,006)
Share-based payment
expense 18 - 20,715 - 20,715
------------ ------------ ------------ ------------
Balance at 31 December
2019 31,447,419 108,784 (7,308,982) 24,247,221
============ ============ ============ ============
Balance at 1 January
2018 10,000,003 78,784 (2,537,970) 7,540,817
Loss and total comprehensive
loss for the period - - (2,324,006) (2,324,006)
Issue of ordinary
shares 14 22,699,998 - - 22,699,998
Share issue costs 14 (1,252,582) - - (1,252,582)
Share-based payment
expense 18 - 9,285 - 9,285
------------ ------------ ------------ ------------
Balance at 31 December
2018 31,447,419 88,069 (4,861,976) 26,673,512
============ ============ ============ ============
The notes on pages 31 to 43 form an integral part of these
Financial Statements.
SAFE HARBOUR HOLDINGS PLC
Company number 123821
GROUP STATEMENT OF CASH FLOWS
Group Group
for the year for the year
ended 31 ended 31
December December
Note 2019 2018
------ -------------- --------------
GBP GBP
Operating activities
Loss before income tax (2,447,006) (2,324,006)
Adjustments to reconcile loss before
income tax to net cash flows:
Finance income 8 (198,410) (122,596)
Depreciation expense 1,316 935
Share-based payment expense 18 20,715 8,280
Working capital adjustments:
Decrease in deferred costs - 177,000
Decrease in other receivables 11 15,207 13,389
Decrease in trade and other payables
(1) 13 (7,776) (208,490)
Net cash flows used in operating
activities (2,615,954) (131,482)
Investing activities
Purchase of office equipment (2,038) -
Interest received 198,410 122,596
Net cash flows generated from investing
activities 196,372 122,596
Financing activities
Proceeds from issue of share capital 14 - 22,699,998
Share issue costs 14 - (1,252,582)
Proceeds from issue of ordinary
A Share capital 18 9,363 2,211
-------------- --------------
Net cash flows generated from financing
activities 9,363 21,449,627
Net (decrease)/increase in cash
and cash equivalents (2,410,219) 19,116,735
Cash and cash equivalents at beginning
of the year 26,904,510 7,787,775
Cash and cash equivalents at the
end of the year 12 24,494,291 26,904,510
============== ==============
The notes on pages 31 to 43 form an integral part of these
Financial S tatements.
(1) GBP9,363 (2018: GBP1,206) represents proceeds from issue of
A1 and A3 Shares that are classified in trade and other payables in
the Statement of Financial Position and as proceeds from the issue
of ordinary A Share capital in the Statement of Cash Flows.
SAFE HARBOUR HOLDINGS PLC
Company number 123821
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Safe Harbour Holdings plc (the "Company") is an investing
company for the purposes of the AIM Rules for Companies ("AIM
Rules"), is incorporated in Jersey and domiciled in the United
Kingdom (company number: 123821). It is a public limited company
and the address of the registered office is One Waverley Place,
Union Street, St Helier, Jersey, JE1 1AX, with a UK establishment
address of 11 Buckingham Street, London, WC2N 6DF. The Company is
the parent company of Safe Harbour Holdings UK Limited (company
number: 10348545) ("SHHUK") and Safe Harbour Holdings Jersey
Limited (company number: 121981) ("SHHJL"), (collectively, the
"Group"). The activity of the Company is the acquisition and
subsequent development of assets engaged in business-to-business
distribution and/or business services.
2. ACCOUNTING POLICIES
(a) Basis of preparation
The Financial Statements for the year ended 31 December 2019 and
the comparative year to 31 December 2018 have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union and IFRS Interpretations Committee
interpretations (collectively, "IFRSs"), and with those parts of
applicable law as relevant to companies reporting under IFRSs.
The Financial Statements are prepared under the historical cost
convention and are presented in British pounds sterling, which is
the presentational and functional currency of the Company.
The principal accounting policies adopted in the preparation of
the Financial Statements are set out below. The policies have been
consistently applied throughout the periods presented.
(b) New standards and amendments to IFRSs
Standards, amendments and interpretation effective and adopted
by the Group:
The accounting policies adopted in the presentation of these
Financial Statements reflect the adoption of the standards
effective for periods beginning on or after 1 January 2019, none of
which had a material effect on the Group.
Standard Effective
Date
IFRS 16 Leases 1 January
2019
IFRIC 23 Uncertainty over Income Tax Treatments 1 January
2019
Amendments to IAS 28: Long-term Interests in Associates 1 January
and Joint Ventures 2019
Amendments to IAS 19: Plan Amendment, Curtailment 1 January
or Settlement 2019
Amendments to IFRS 9: Prepayment Features with 1 January
Negative Compensation 2019
Following adoption of IFRS 16 Leases, the Company has taken the
exemption contained under IFRS 16 to not apply IFRS 16 requirements
to its lease as it is short-term in nature (less than 12 months)
and low in value.
Standards issued but not yet effective:
The following standards are issued but not yet effective. The
Group intends to adopt these standards, if applicable, when they
become effective. It is not currently expected that these standards
will have a material impact on the Group.
Standard Effective
date
Amendments to References to the Conceptual Framework 1 January
in IFRS Standards 2020
Amendments to IAS 1 and IAS 8: Definition of Material 1 January
2020
Amendments to IFRS 9, IAS 39 and IFRS 7: Interest 1 January
Rate Benchmark Reform 2020
Amendments to IFRS 3 Business Combinations 1 January
2020*
IFRS 17 Insurance Contracts 1 January
2021*
Amendments to IAS 1 Presentation of Financial 1 January
Statements: Classification of Liabilities as Current 2022*
or Non-current
* subject to EU endorsement
There are no other standards, amendments or interpretations in
issue but not yet adopted that the Directors anticipate will have a
material effect on the reported income or net assets of the
Group.
(c) Going concern
The Group had cash resources of GBP24.5 million at 31 December
2019. The Directors have considered the financial position of the
Group and have reviewed forecasts and budgets for a period of 12
months following the approval of the Financial Statements. As a
result, the Directors have concluded that, at the date of approval
of the Financial Statements, the Company and the Group have
sufficient resources for the next 12 months and can continue to
execute its stated strategy. Accordingly, it is appropriate to
adopt the going concern basis in the preparation of the Financial
Statements.
As set out in the Chairman's Statement and Strategic Report, the
renewal of the investment policy through the Continuation Vote is
dependent on shareholder approval at the AGM. This dependence on
shareholder approval constitutes a material uncertainty that may
cast significant doubt on the Company's ability to continue as a
going concern. The Financial Statements do not include any
adjustments that would result from the basis of preparation being
inappropriate.
(d) Basis of consolidation
Subsidiaries are entities controlled by the Company. Control
exists when the Company is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The
financial information of subsidiaries is fully consolidated from
the date that control commences until the date that control
ceases.
Intragroup balances, and any gains and losses or income and
expenses arising from intragroup transactions, are eliminated on
consolidation.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with a maturity of three months or less.
(f) Deferred costs
Deferred costs are capitalised on the Group Statement of
Financial Position if they represent qualifying transaction costs
that are incurred in anticipation of, and directly related to an
issuance of equity instruments, and span more than one reporting
period. These costs are deferred on the Statement of Financial
Position until equity instruments are recognised and subsequently
reclassified as a deduction from equity. If the equity instruments
are not subsequently issued, the costs are reclassified as an
expense.
(g) Revenue and expenses
Interest income from financial assets is recognised using the
effective interest method as finance income in the Group Statement
of Comprehensive Income.
Administrative expenses are recognised on an accrual basis, i.e.
when the actual flow of the services they represent occurs,
regardless of when the resulting monetary or financial flow
arises.
(h) Costs directly attributable to the issue of equity
Share issue costs are placing expenses directly relating to the
issue of the Company's shares. These expenses include fees payable
under share placement agreements, printing, and distribution costs
and legal fees and any other applicable expenses. All such costs
are charged to equity and deducted from the proceeds received.
(i) Property, plant and equipment
Property, plant and equipment is measured initially at
acquisition cost and subsequently carried net of any accumulated
depreciation and any accumulated impairment losses.
Property, plant and equipment is depreciated systematically on
the basis of the estimated useful life of the items, and the cost
of the assets is distributed on a straight-line basis over the
estimated useful lives, which for computer equipment is 3
years.
Items of property, plant and equipment are de-recognised when
they are sold or when no future economic benefit is expected to be
obtained from their continuing use. The gain or loss arising on the
disposal or de-recognition of an item of property, plant and
equipment is determined as the difference between the proceeds from
the sale and the carrying amount of the asset and is recognised in
the Group Statement of Comprehensive Income.
(j) Stated capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
stated capital as a deduction from the proceeds.
(k) Corporation tax
Corporatio n tax comprises the sum of current and deferred tax
for the period.
Current tax is the expected tax payable on the taxable income
for the period. Taxable profit differs from profit reported in the
Group Statement of Comprehensive Income because some items of
income and expense are taxable or deductible in different years or
may never be taxable or deductible. The Group's current tax is
calculated using tax rates enacted or substantially enacted at the
balance sheet date, and any adjustment to taxes payable in respect
of previous periods.
Deferred tax is the tax expected to be payable or recoverable in
the future arising from temporary 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. It is accounted for using the balance sheet liability
method.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realised.
(l) Earnings per ordinary share
Basic earnings per share ("EPS") is calculated by dividing the
profit or loss attributable to holders of ordinary shares of the
Company by the weighted average number of ordinary shares
outstanding during the year.
Diluted EPS is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all
potentially dilutive ordinary shares.
(m) Share-based transactions
The A1, A2 and A3 Shares issued by SHHJL (the "Incentive
Shares") represent equity-settled share-based payment arrangements
under which the Company receives services as a consideration for
the additional rights attached to these equity shares, over and
above their nominal price.
Equity-settled share-based payments to certain Directors and
others providing similar services are measured at the fair value of
the equity instruments at the grant date. The fair value is
expensed through administrative expenses, with a corresponding
increase in equity through the share-based payment reserve, on a
straight-line basis over the period that the Directors or others
providing similar services become unconditionally entitled to the
awards. Where the equity instruments granted are considered to vest
immediately, the services are deemed to have been received in full,
with a corresponding expense and increase in equity recognised at
grant date.
The dilutive effect of outstanding share-based payments is
reflected as share dilution in the computation of diluted EPS.
(n) Retirement benefits
The Group pays contributions to privately administered pension
plans on behalf of employees as contractually agreed, or the
equivalent contribution is paid in cash to the employee. The Group
has no further payment obligations once the contributions have been
paid. The contributions are recognised as an expense on the
accruals basis and are included within administrative expenses in
the Group Statement of Comprehensive Income.
(o) Trade and other payables
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of business
from suppliers.
Trade and other payables are recognised initially at fair value,
net of directly attributable transaction costs, and subsequently
measured at amortised cost using the effective interest method.
Gains and losses are recognised in profit or loss when the
liabilities are de-recognised.
Trade and other payables are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Financial Statements under IFRSs requires
the Directors to consider estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities. Estimates and judgements are
continually evaluated and are based on historical experience and
other factors including expectations of future events that are
believed to be reasonable under the circumstances. Actual results
may differ from these estimates.
There are significant estimates and assumptions used in the
valuation of the Incentive Shares. Management has considered, at
the grant date, the probability of a successful first acquisition
by the Company ("Platform Acquisition") and the potential range of
values for the Incentive Shares, based on the circumstances on the
grant date. The fair value of the Incentive Shares and related
share-based payments were calculated using a Monte Carlo valuation
model. A summary of the terms is set out in note 18.
For the year to 31 December 2019, the Directors do not consider
that they have made any other significant estimates, judgements or
assumptions that would materially affect the balances reported in
these Financial S tatements.
4. SEGMENT INFORMATION
The Board of Directors is the Group's chief operating
decision-maker. As the Group had not yet made an acquisition as at
31 December 2019, the Board of Directors considers the Group as a
whole for the purposes of assessing performance and allocating
resources, and therefore the Group has one reportable operating
segment.
5. ADMINISTRATIVE EXPENSES
For the year For the period
ended 31 December to 31 December
2019 2018
-------------------- ----------------
GBP GBP
Group expenses by nature
Staff-related costs 1,129,416 901,839
Office costs 70,782 68,503
Legal and professional fees 1,245,834 1,143,353
Non-recurring project, diligence
and Group establishment costs - 176,880
Depreciation expense 1,316 935
Other expenses 198,068 155,092
--------------------
2,645,416 2,446,602
==================== ================
Non-recurring project costs are those incurred on projects that
are considered to be one-off or non-recurring in nature. These
projects are usually related to acquisitions where incremental and
identifiable external costs are incurred by the Group in order to
make or evaluate the potential transaction, even if it is not
consummated, or relate to recruitment of Directors.
6. AUDITOR'S REMUNERATION
The operating loss is stated after charging auditor's
remuneration of GBP 30,000 . The total auditor's remuneration
related to fees payable for the audit of the Financial S tatements
(2018: GBP26,900) and fees payable for non-audit services was GBP
nil (2018: GBP40,000).
7. STAFF-RELATED COSTS
For the year For the period
ended 31 December to 31 December
2019 2018
-------------------- ----------------
GBP GBP
Salaries, bonuses and staff
benefits 1,000,359 761,420
Social security costs 107,686 95,398
Share-based payment expense 20,715 8,280
Other employment related expenses 656 36,741
-------------------- ----------------
Total employment costs 1,129,416 901,839
==================== ================
Compensation of key management personnel
The Board considers the Directors of the Company to be the key
management personnel of the Group. Details of the amounts paid to
key management personnel are detailed in the Nomination and
Remuneration Committee Report on page 22 .
There were no share options exercised during the period. The
Incentive Shares owned by Directors are described in note 18 .
Employed persons
The average monthly number of persons employed by the Group
(including Executive Directors but excluding Non-Executive
Directors) during the period by activity was as follows:
For the year For the year
ended 31 December ended 31 December
2019 2018
------------------- -------------------
Number of Number of
employees employees
Operations 4 3
Administration - 1
-------------------
4 4
=================== ===================
8. FINANCE INCOME
For the year
For the year ended 31
ended 31 December December
2019 2018
------------------- -------------
GBP GBP
Interest on bank deposits 198,410 122,596
-------------------
198,410 122,596
=================== =============
9. INCOME TAX
For the year For the year
ended 31 December ended 31 December
2019 2018
------------------- -------------------
GBP GBP
Current tax expense
Current year - -
-------------------
Income tax expense for the year - -
=================== ===================
Reconciliation of effective tax rate
For the year For the period
ended 31 December to 31 December
2019 2018
------------------- ----------------
GBP GBP
Loss before tax (2,447,006) (2,324,006)
At UK statutory income tax rate
(19%) (464,931) (441,561)
Effects of:
Depreciation for the year in excess
of capital allowance 168 189
Other disallowable expenditure 5,459 1,813
Tax losses not utilised 459,304 439,559
Income tax expense - -
=================== ================
The Company is in its pre-acquisition phase and therefore is not
recognising any deferred tax assets due to the uncertainty of
future taxable income. The Company and all its subsidiaries are
tax-resident in the UK. Under English law, there is no expiry for
the use of tax losses. Losses brought forward were GBP3,513,805,
GBP2,615,339 of losses arose during the year, and losses of
GBP197,979 were utilised in the year, resulting in GBP5,931,165 of
losses to be carried forward to utilise in future years.
10. INVESTMENT IN SUBSIDIARIES
The Group directly or indirectly owns the whole of the issued
and fully paid ordinary share capital of its subsidiary
undertakings.
The subsidiary undertakings of the Company as at 31 December 2019 are presented below:
Proportion
of ordinary Proportion
shares of ordinary
Nature of Country held by shares held
Subsidiary business of incorporation parent by the Group
Safe Harbour Holdings
UK Limited Dormant company England 100% 100%
Safe Harbour Holdings
Jersey Limited Incentive vehicle Jersey 99.97% 100%
There are no restrictions on the Company's ability to access or
use the assets and settle the liabilities of the Company's
subsidiaries. SHHJL has issued Incentive Shares to management as
detailed in note 18.
11. OTHER RECEIVABLES
As at 31 December As at 31 December
2019 2018
------------------ ------------------
Amounts falling due within
one year GBP GBP
VAT recoverable 16,671 31,414
Prepayments 41,575 42,040
------------------ ------------------
58,246 73,454
================== ==================
12. CASH AND CASH EQUIVALENTS
As at 31 December As at 31 December
2019 2018
------------------- ------------------
GBP GBP
Cash at bank 24,494,291 26,904,510
24,494,291 26,904,510
=================== ==================
Credit risk is managed on a Group basis. Credit risk arises from
cash and cash equivalents and deposits with banks and financial
institutions. For banks and financial institutions, only
independently rated parties with a minimum short-term credit rating
of P-1, as issued by Moody's, are used by the Group.
13. TRADE AND OTHER PAYABLES
As at 31 December As at 31 December
2019 2018
------------------ ------------------
Amounts falling due within
one year GBP GBP
Trade payables 113,445 115,631
Accruals 39,570 151,563
Other tax and national insurance
payable 136,155 29,755
Other payables 18,166 8,805
307,336 305,754
================== ==================
There is no material difference between the book value and the
fair value of the trade and other payables.
14. STATED CAPITAL
As at 31 December As at 31 December
Authorised 2019 2018
------------------ ------------------
Unlimited ordinary shares of
no par value
Stated capital GBP GBP
27,250,001 ordinary shares
of no par value 32,700,001 32,700,001
Share issue cost (1,252,582) (1,252,582)
31,447,419 31,447,419
================== ==================
On incorporation of SHHUK, 2 ordinary shares of no par value
were issued at GBP1.19 per share for aggregate consideration of
GBP2.38. On 29 September 2016 a further 8,333,334 ordinary shares
of no par value were issued at GBP1.20 for an aggregate
consideration of GBP10,000,000.80.
On incorporation of Safe Harbour Holdings plc ("SHH plc"), a
contribution agreement was entered into between SHH plc, Marwyn
Value Investors LP ("MVI") and Marwyn Value Investors II LP ("MVI
II") under which the shares held by MVI and MVI II in SHHUK were
contributed to SHH plc in consideration for 879,252 and 7,454,084
ordinary shares of no par value issued by SHH plc to MVI and MVI II
respectively.
Following the Company's admission to AIM on 15 March 2018, a
further 18,916,665 ordinary shares of no par value were issued at
GBP1.20 for an aggregate consideration GBP22,699,998. GBP1,252,582
of costs directly attributable to the shares issued have been taken
against stated capital.
All issued shares are fully paid. The holders of ordinary shares
are entitled to receive dividends as declared and are entitled to
one vote per share at meetings of the Company.
15. RESERVES
The following describes the nature and purpose of each reserve
within shareholders' equity:
Accumulated losses
Cumulative losses recognised in the Group Statement of
Comprehensive Income.
Share-based payment reserve
The share-based payment reserve is the cumulative amount
recognised in relation to the equity-settled share-based payment
scheme as further described in note 18.
16. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity. The Group has the following
categories of financial instruments:
As at 31 December As at 31 December
2019 2018
------------------ ------------------
Financial assets measured at GBP GBP
amortised cost
Cash and cash equivalents 24,494,291 26,904,510
24,494,291 26,904,510
================== ==================
Financial liabilities measured
at amortised cost
Trade payables 113,445 115,631
Accruals 39,575 151,563
------------------ ------------------
153,020 267,194
================== ==================
The Directors consider that the carrying amounts of the
financial assets and liabilities recognised in the Financial
Statements equate to their fair values.
The Group has exposure to the following risks from its use of
financial instruments:
-- Market risk;
-- Liquidity risk; and
-- Credit risk.
This note presents information about the Group's exposure to
each of the above risks and the Group's objectives, policies and
processes for measuring and managing these risks.
The Group's risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence limits. Risk
management policies and systems are reviewed regularly to reflect
changes in market conditions and the Group's activities.
Treasury activities are managed on a Group basis under policies
and procedures approved and monitored by the Board. These are
designed to reduce the financial risks faced by the Group which
primarily relate to movements in interest rates.
Market risk
The Group's activities primarily expose it to the risk of
changes in interest rates due to the significant cash balance
currently held; however, any change in interest rates will not have
a material effect on the Group. The Group's operations are entirely
in their functional currency and accordingly no translation
exposures arise.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation.
The Group currently meets all liabilities from cash reserves.
The Group's liability for operating expenses is monitored on an
ongoing basis to ensure cash resources are adequate to meet
liabilities as they fall due.
Credit risk
Credit risk is the risk that one party to a financial instrument
will cause a financial loss for the other party by failing to
discharge an obligation. The main credit risk relates to the cash
held with financial institutions. The Company manages its exposure
to credit risk associated with its cash deposits by selecting
counterparties with a high credit rating with which to carry out
these transactions. The counterparty for these transactions is
Barclays Bank plc, which holds a short-term credit rating of P-1,
as issued by Moody's. The Company's maximum exposure to credit risk
is the carrying value of the cash on the balance sheet.
Capital management
The Board's policy is to maintain a strong capital base so as to
maintain creditor and market confidence and to sustain future
development of the business. There were no changes in the Group's
approach to capital management during the period.
For the purpose of the Group's capital management, capital
includes issued capital and all other equity reserves attributable
to the equity holders of the Company. The primary objective of the
Group's capital management is to maximise shareholder value.
Throughout 2019, the Group had no financial covenants with which
it needed to comply.
17. LOSS PER ORDINARY SHARE
Basic earnings per ordinary share is calculated by dividing the
profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the
period. Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. Incentive
Shares (as detailed in note 18) have not been included in the
calculation of diluted earnings per share because they are not
dilutive for the years presented.
For the year For the year
ended 31 December ended 31 December
2019 2018
-------------------- -------------------
GBP GBP
Loss attributable to the owners
of the parent (2,447,006) (2,324,006)
Weighted average number of ordinary
shares in issue 27,250,001 16,799,999
Basic and diluted loss per share (0.0898) (0.1383)
18. SHARE-BASED PAYMENTS
Implementation of share incentive plan - Incentive Shares
Arrangements have been put in place to create incentives for
those who are expected to make key contributions to the success of
the Group. Success depends upon the sourcing of attractive
investment opportunities, effective execution of transactions, and
the subsequent integration and optimisation of target businesses.
Accordingly, an incentive scheme has been created to reward the key
contributors for the creation of value, once all shareholders have
received a preferential level of return. In order to make these
arrangements most efficient, they are based around a subscription
for shares in SHHJL by the PRX Trust, in which Rodrigo Mascarenhas
was beneficially interested and during 2019 by James Brotherton, in
the A1 and A3 Shares, and by Marwyn Long Term Incentive LP
("MLTI"), in which James Corsellis and Mark Brangstrup Watts have
an indirect beneficial interest, in the A2 and A3 shares. The A1,
A2 and A3 shares are collectively referred to as "Incentive
Shares". It is intended that future management appointees will also
share in the scheme and subscribe for Incentive Shares at a later
date.
On being offered, the Company will purchase the Incentive Shares
either for cash or for the issue of new ordinary shares at its
discretion, with the expectation being that new shares will be
issued. The valuation of the Incentive Shares is discussed below.
The Incentive Shares may only be sold on this basis if both the
growth and at least one of the vesting conditions have been
satisfied. If the growth condition has not been satisfied on or
before the fifth anniversary of a Platform Acquisition (or such
later date as SHHJL and the holders of 90% of the ordinary shares,
A1, A2 and A3 shares in SHHJL agree), the Incentive Shares must be
sold to the Company or, at its election, redeemed by SHHJL and in
both cases at a price per Incentive Share equal to its subscription
price unless and to the extent that the Nomination and Remuneration
Committee determines otherwise.
Incentive shares
In 2019 SHHJL issued 270 A1 shares and 300 A3 shares to James
Brotherton. In 2018 SHHJL issued 600 A3 shares to Rodrigo
Mascarenhas and 500 A3 shares to MLTI. All of these share issues
have been accounted for in accordance with IFRS 2 Share-based
Payments ("IFRS 2") as equity-settled share-based payment
awards.
On 21 August 2018, the 540 A1 Shares and 600 A3 Shares issued to
Rodrigo Mascarenhas (collectively, the "Old Incentive Shares") were
bought back by the Company and subsequently cancelled. On 4
September 2018, 540 new A1 Shares and 600 new A3 Shares were issued
to the PRX Trust (in which Rodrigo Mascarenhas is beneficially
interested) (collectively, the "New Incentive Shares "), which have
been treated as replacement awards under IFRS 2. The replacement
had no impact on the fair value of the Incentive Shares.
On 30 June 2020, Rodrigo Mascarenhas ceased to be CEO and
Executive Director of the Company. Rodrigo Mascarenhas agreed that
the 540 A1 Shares and 600 A3 Shares that were issued to the PRX
Trust will be sold back to SHHJL by the PRX Trust in accordance
with the terms of the subscription letter.
Grant date
The date at which the entity and another party agree to a
share-based payment arrangement, for accounting purposes, is the
grant date. As the New Incentive Shares are treated as replacement
awards for the Old Incentive Shares under IFRS 2, the grant date
for the New Incentive Shares is the same as the equivalent Old
Incentive Shares. The grant date for the Incentive Shares are:
Participant Grant date
----------------- ------------------
PRX Trust (A1) 26 September 2016
James Brotherton 1 June 2019
(A1)
----------------- ------------------
MLTI (A2) 26 September 2016
----------------- ------------------
PRX Trust (A3) 20 February 2018
----------------- ------------------
MLTI (A3) 20 February 2018
----------------- ------------------
James Brotherton 1 June 2019
(A3)
Growth Condition
The growth condition is that the compound annual growth of the
Company's equity value must be at least 10% per annum. The growth
condition takes into account new shares issued, dividends and
capital returned to shareholders.
Service Conditions
Rodrigo Mascarenhas and James Brotherton have agreed that if
they cease to be involved with the Group before it completes a
Platform Acquisition or in the first three years following such
acquisition then in certain circumstances a proportion of their
Incentive Shares may be forfeited. The Incentive Shares vest on a
straight-line basis over three years from the date of a Platform
Acquisition provided they leave in circumstances in which they are
deemed to be a "Good Leaver" (as defined in their subscription
agreements). They will be required to redeem their vested Incentive
Shares on the later of 180 days following a departure date or on
the third anniversary of a Platform Acquisition. If they are deemed
to be a "Bad Leaver", they will be required to sell their Incentive
Shares back to SHHJL for a total consideration of GBP1.00. As
detailed in note 21, Rodrigo Mascarenhas ceased to be CEO and
Executive Director on 30 June 2020.
On 20 February 2018, the subscription agreement with MLTI was
amended to include specific service conditions. MLTI has agreed
that if Marwyn Capital LLP ceases to have a corporate finance
agreement with the Company/Group before it completes its Platform
Acquisition or in the first three years following such acquisition,
then MLTI will be required to sell its unvested shares back to
SHHJL for a consideration of the subscription price plus any
capital contribution MLTI has made to SHHJL. The shares vest on a
straight-line basis over three years from the date of a Platform
Acquisition provided service conditions are met.
Vesting conditions and Vesting period
The Incentive Shares are subject to certain vesting conditions,
at least one of which must be (and continue to be) satisfied in
order for a holder of Incentive Shares to exercise his, her or its
redemption rights and which ends on the fifth anniversary of the
date of a Platform Acquisition or such later date as is agreed
between the Company and the holders of at least 90% of the ordinary
shares in SHHJL, A1, A2 and A3 shares.
The vesting conditions are as follows:
(i) a sale of all or a material part of the business of the Group;
(ii) a sale of all of the issued ordinary shares of the Group occurring;
(iii) a winding up of the Group occurring;
(iv) a sale, merger or change of control of the Company; or
(v) it is later than the third anniversary of the date of a Platform Acquisition.
The Incentive Shares are subject to a three-year vesting period
and will lapse after five years. The vesting period commences from
the date of completion of a Platform Acquisition.
Value
Subject to the provisions detailed above, the Incentive Shares
can be sold to the Company for an aggregate value equivalent to 16%
(of which A1 shares as a class are entitled to 11% and A2 shares to
5%) of the excess in the market value of the Company over and above
its aggregate paid up share capital, allowing for any dividends and
other capital movements.
Holding of Incentive Shares
Incentive Shares have been created and shares have been
allocated and issued as shown in the table below.
Nominal Number Subscription Fair value
price of Incentive price at grant
per share shares date
----------- -------------- ------------- -----------
GBP GBP GBP
PRX Trust (A1)* 1.00 540 13.50 47,191
PRX Trust (A3)* 0.01 600 2.01 1,206
MLTI (A2) 0.02 500 21.27 68,836
MLTI (A3) 0.01 500 2.01 1,005
James Brotherton (A1) 1.00 270 32.91 82,458
James Brotherton (A3) 0.01 300 1.59 4,425
205,121
===========
No Incentive Shares were exercisable at 31 December 2019.
* As described in note 21, on 30 June 2020, the date of the
cessation of Rodrigo's appointment, it was agreed that SHHJL would
buy back and cancel the A1 and A3 Shares issued to the PRX
Trust.
Valuation of Incentive Shares
The value of the Incentive Shares granted under the schemes has
been calculated using a Monte Carlo model. The fair value uses an
ungeared volatility of 24% and is based on a weighted average share
price over the vesting period. An expected term input of four years
has been used, being the midpoint of the period of time between the
date on which an acquisition is expected to take place and the
start and end of the redemption period. The Incentive Shares are
subject to a preferred return, which is a market performance
condition, and as such has been taken into consideration in
determining their fair value. The risk-free rate is taken from
zero-coupon UK Government bonds with a redemption period in line
with the expected term. The model incorporates a range of
probabilities for the likelihood of an acquisition being made of a
given size.
Expense related to Incentive Shares
GBP 20,715 (2018: GBP8,280) has been recognised in the Group
Statement of Comprehensive Income in the year and in a share-based
payment reserve within the Group Statement of Financial Position as
at 31 December 2019 in relation to the A1 and A3 shares together
with liabilities as at 31 December 2019 of GBP16,176 and GBP1,683
respectively.
The full A2 Share expense of GBP58,200, being the fair value
amount less the subscription proceeds, was recognised in the Group
Statement of Comprehensive Income in 2017, with the total fair
value of the A2 Shares of GBP68,836 recognised in the share-based
payment reserve within the Group Statement of Changes in Equity as
at the year end. The consideration paid by MLTI for its A3 shares
in 2018 was equal to the fair value at the grant date; therefore
GBP1,005 was recognised in the share-based payment reserve within
the Group Statement of Changes in Equity for the year ended 31
December 2018, and no additional expense was recognised.
19. RELATED PARTY TRANSACTIONS
In the opinion of the Directors, there is no single controlling
party.
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.
James Corsellis and Mark Brangstrup Watts are the managing
partners of Marwyn Capital LLP which provides corporate finance
advice and various office and finance support services to the
Company. During the year, Marwyn Capital LLP charged GBP 720,000 in
respect of services supplied, GBP29,659 in relation to directors'
fees for services provided by Mark Brangstrup Watts and James
Corsellis, and recharged costs of GBP1,014 (2018 total: GBP864,665)
(excluding VAT). As at 31 December 2019, the Company owed Marwyn
Capital LLP an amount of GBP65,074 (2018: GBP64,764).
James Corsellis and Mark Brangstrup Watts are the ultimate
beneficial owners of Marwyn Partners Limited which incurred costs
on behalf of the Group which it recharged. During the year, Marwyn
Partners Limited charged GBP 17,420 (2018: GBP9,054) in respect of
recharged costs and as at 31 December 2019 was owed GBP 2,915
(2018: GBPnil).
James Corsellis and Mark Brangstrup Watts are the ultimate
beneficial owners of Axio which provides company secretarial and
administration services to the Group. During the year, Axio charged
GBP 300,000 in respect of services provided and recharged costs of
GBP9,972 (2018 total: GBP270,546). As at 31 December 2019, the
Company owed Axio GBP 25,000 (2018: GBP25,046).
James Corsellis and Mark Brangstrup Watts are the ultimate
beneficial owners of Marwyn Investment Management LLP which
incurred costs on behalf of the Group which it recharged. During
the year, Marwyn Investment Management LLP charged GBP 24,679
(2018: GBP10,297) in respect of recharged costs and was owed GBP113
(2018: nil) at 31 December 2019.
Compensation of key management personnel of the Company is
included in note 7. Holdings of Incentive Shares are detailed in
note 18.
20. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding
at 31 December 2019 (2018: none) that require disclosure or
adjustment in these Financial Statements.
21. POST BALANCE SHEET EVENTS
On 30 June 2020 Rodrigo Mascarenhas ceased to be CEO and
Executive Director of the Company to allow him to focus on other
business interests, effective immediately. On the same date, it was
agreed that SHHJL would buy back and cancel the A1 and A3 Shares
from the PRX Trust in which Rodrigo is beneficially interested.
There have been no other material post balance sheet events that
would require disclosure or adjustment to these Financial
Statements.
SAFE HARBOUR HOLDINGS PLC
Company number 123821
ADVISERS
Corporate Finance Adviser Company Secretary and Administrator
Marwyn Capital LLP Axio Capital Solutions Limited
11 Buckingham Street One Waverley Place, Union Street,
London, WC2N 6DF St Helier, Jersey, JE1 1AX
Solicitors to the Company (Jersey Solicitors to the Company (English
Law) Law)
Ogier Covington & Burling LLP
44 Esplanade, St Helier 265 Strand
Jersey, JE4 9WG London, WC2R 1BH
Independent Auditor Registrars
PricewaterhouseCoopers LLP Link Market Services (Jersey)
1 Embankment Place Limited
London, WC2N 6RH 12 Castle Street, St Helier
Jersey, JE2 3RT
Principal Bankers Public Relations Adviser
Barclays Bank plc Tulchan Communications Group
1 Churchill Place 85 Fleet Street
London, E14 5HP London, EC4Y 1AE
Nominated Adviser
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London, EC2R 7AS
This information is provided by RNS, the news service of the
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END
FR EBLFXBQLZBBV
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