10
September 2024
Global Connectivity Plc (the
"Company" or "GCON")
Interim Results
for the six months ended 30 June 2024
Global Connectivity Plc (AQSE:
GCON), through its investment in Rural Broadband Solutions Holdings
Limited ("RBSHL") and thereby an indirect investor in Voneus
Limited ("Voneus"), a leading provider of Broadband Services to
rural areas of the UK, today announces its unaudited half year
results for the six months ended 30 June 2024.
Overview
- It is still less
than 12 months since GCON became an indirect investor in Voneus as
a result of the merger between Voneus and RBSHL backed by two major
international infrastructure investors, the mission of which was to
meet the needs of hard-to-reach, rural and market town communities
in the UK for fast, reliable broadband connectivity.
- In September 2023,
when the merger took effect, it was announced that Voneus had
available up to £250 million of new shareholder capital and debt
funding. In the short period between then and 30 June 2024, a
substantial amount of that capital has been regularly and
vigorously deployed to grow the business in respect of all
essential KPIs including number of homes passed, those fit for
service and, importantly, customer sales.
- We expected that,
as a result, this significant capital investment would lead to an
increase in the rate of growth of the business and also to the
shareholding in Voneus of RBSHL which at 30 June 2024 reached
39.7%. The net asset value of GCON enjoyed a consequent increase in
GCON's derived ownership and asset value compared to 31 December
2023.
Financial Highlights
- Net assets increased by
£9.4 million from £7.8 million at 31 December 2023 to £17.2 million
at 30 June 2024.
- As at 30 June 2024 the
net asset value per share is 4.75p (31 December 2023:
2.16p)
- The Company has
estimated the fair value of its investment in RBSHL, an unquoted
company, and recognised an increase in that fair value.
- As at 30 June 2024,
GCON had current cash of £318 thousand with additional funding due
by 31 December 2024.
- Running costs of GCON
have for a quoted company been kept at a minimal level.
Operational Highlights
- The management of
Voneus has expanded and is an integrated and cohesive unit with
consequent benefits for recent and future operating
performance.
Outlook
- The
increase in pace of investment into Voneus has meant that business
progress has exceeded our expectations, with homes passed,
including work in progress, exceeding 100,000.
- The
£75 million investment threshold after which GCON stands to be
diluted, was exceeded in August 2024.
- Any
incurred dilution should be compared and measured against the rise
in value of Voneus, the future outlook for its business and the
shareholding percentage owned by RBSHL in Voneus.
- Our
cash resources enable us to maintain our carried investment
position in Voneus and to consider the short- and medium-term
merits of investing to mitigate dilution.
- We
continue our search for compelling investment opportunities in
alternative relevant services sectors.
The
Directors of Global Connectivity Plc accept responsibility for the
contents of this announcement.
This announcement contains information which, prior to its
disclosure, was inside information as stipulated under Regulation
11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310
(as amended).
- ENDS -
For
more information, contact:
Keith Harris
Executive Chairman
Global Connectivity plc
Email: info@globalconnectivityplc.com
https://www.globalconnectivityplc.com/
Claire Louise Noyce
AQSE Stock Exchange Corporate Advisor and Corporate
Broker
Hybridan LLP
Tel: +44 20 3764 2341
Email: claire.noyce@hybridan.com
www.hybridan.com
Chairman's Statement
Since the merger, in September 2023,
which created Voneus in its current form, we have based the value
of GCON's (derived) shareholding in the company on sensible and
conservative principles. In the process, we took into consideration
the equity value of Voneus which reflected the latest round of
equity capital funding, the increasing stake owned by RBSHL in
Voneus and GCON's actual percentage ownership of RBSHL.
The interim and audited final year
valuations, as at 30 June 2023 and 31 December 2023 respectively,
reflected this methodology. As noted, since the September
2023 merger, there has been significant investment by the main
shareholders to a level where the original total financial targets
envisaged at the time of the merger are close to being reached.
This financial backing has occurred in parallel with the
strengthening of the experienced management team of Voneus and as a
result the business has grown in all material respects.
Our valuation methodology produces a
fair value of our investment in Voneus of £15.9 million as at 30
June 2024. In August 2024, a further capital injection by
shareholders into Voneus took place. After careful consideration we
elected at this time not to invest to maintain our 15% ownership of
RBSHL, but even allowing for the resulting dilution to 11.8% we
show a valuation of £13.6 million.
Based on progress to date, should
further equity funding be made at a higher valuation and should the
Company elect not to participate then, whilst our percentage
ownership RBSHL would decrease, the effects of the dilution should
be mitigated.
The importance of reliable and fast
broadband to homes and businesses in rural areas is now well
recognised. The new government has acknowledged this as recently
evidenced by the Department for Science, Innovation &
Technology in an announcement in August 2024 in pledging to invest
£800 million to bring gigabit-capable broadband to an initial
96,000 homes, with a further intention to cover a further 215,000
homes in coming months. Voneus is ideally positioned to take full
advantage of the government's shared objective of closing the
digital divide. Its performance data point to a fast rollout within
its existing footprint, increasing installations with negligible
churn. I look forward with optimism to being a part of that
successful growth.
Keith Harris
Chairman
9 September 2024
Income
Statement
|
|
|
(Unaudited)
Period
from 1 January 2024 to 30 June 2024
|
(Unaudited)
Period
from 1 January 2023 to 30 June 2023
|
(Audited)
Year ended 31
December 2023
|
|
|
Note
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Net gain on financial assets at fair
value through profit or loss
|
6
|
9,507
|
3,171
|
3,171
|
|
Other administration fees and
expenses
|
3
|
(150)
|
(139)
|
(248)
|
|
Operating profit
|
|
9,357
|
3,032
|
2,923
|
|
|
|
|
|
|
|
Finance income
|
|
2
|
1
|
3
|
|
Net
finance income
|
|
2
|
1
|
3
|
|
|
|
|
|
|
|
Profit before income tax
|
|
9,359
|
3,033
|
2,926
|
|
|
|
|
|
|
|
Income tax expense
|
4
|
-
|
-
|
-
|
|
Profit for the period
|
|
9,359
|
3,033
|
2,926
|
|
|
|
|
|
|
|
Basic and diluted profit per share (pence)
|
5
|
2.59
|
0.84
|
0.81
|
Statement of Comprehensive
Income
|
|
|
(Unaudited)
Period
from 1 January 2024 to 30 June 2024
|
(Unaudited)
Period
from 1 January 2023 to 30 June 2023
|
(Audited)
Year ended 31
December 2023
|
|
|
Note
|
£'000
|
£'000
|
£'000
|
|
Profit for the period
|
|
9,359
|
3,033
|
2,926
|
|
|
|
|
|
|
|
Other comprehensive
expense
|
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Total comprehensive income for the period
|
|
9,359
|
3,033
|
2,926
|
|
|
|
|
|
|
Balance Sheet
|
|
|
(Unaudited)
As at
30
June 2024
|
(Unaudited)
As at
30
June 2023
|
(Audited)
As at
31
December 2023
|
|
|
Note
|
£'000
|
£'000
|
£'000
|
|
Assets
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Amounts due from related
parties
|
7
|
-
|
275
|
-
|
|
Other financial assets
|
6
|
15,882
|
6,375
|
6,375
|
|
Subscriptions due
|
|
-
|
950
|
-
|
|
Total non-current assets
|
|
15,882
|
7,600
|
6,375
|
|
Current assets
|
|
|
|
|
|
Amounts due from related
parties
|
7
|
33
|
308
|
33
|
|
Subscriptions due
|
|
950
|
-
|
950
|
|
Trade and other
receivables
|
8
|
25
|
24
|
27
|
|
Cash at bank
|
|
318
|
33
|
461
|
|
Total current assets
|
|
1,326
|
365
|
1,471
|
|
Total assets
|
|
17,208
|
7,965
|
7,846
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Capital and reserves attributable to
owners of the Parent:
|
|
|
|
|
|
Issued share capital
|
|
3,619
|
3,619
|
3,619
|
|
Warrant reserve
|
|
77
|
77
|
77
|
|
Share option reserve
|
|
309
|
288
|
299
|
|
Retained earnings
|
|
13,177
|
3,925
|
3,818
|
|
Total equity
|
|
17,182
|
7,909
|
7,813
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade and other payables
|
9
|
26
|
56
|
33
|
|
Total current liabilities
|
|
26
|
56
|
33
|
|
Total liabilities
|
|
26
|
56
|
33
|
|
Total equity and liabilities
|
|
17,208
|
7,965
|
7,846
|
The financial statements were
approved and authorised for issue by the Board of Directors on 9
September 2024 and signed on its behalf by:
Keith
Harris
Selwyn Lewis
Director
Director
Statement of Changes in
Equity
|
|
Share
capital
|
Warrant
reserve
|
Share
Option
Reserve
|
Retained
earnings/ (deficit)
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Unaudited
|
|
|
|
|
|
|
Balance at 1 January 2023
|
3,619
|
77
|
278
|
892
|
4,866
|
|
Comprehensive income
|
|
|
|
|
|
|
Profit for the period
|
-
|
-
|
-
|
3,033
|
3,033
|
|
Total comprehensive income for the
period
|
-
|
-
|
-
|
3,033
|
3,033
|
|
Transactions with owners
|
|
|
|
|
|
|
Share based payments relating to
share options
|
-
|
-
|
10
|
-
|
10
|
|
Total transactions with
owners
|
-
|
-
|
10
|
-
|
10
|
|
Balance at 30 June 2023
|
3,619
|
77
|
288
|
3,925
|
7,909
|
|
|
|
|
|
|
|
|
Audited
|
|
|
|
|
|
|
Balance at 1 January 2023
|
3,619
|
77
|
278
|
892
|
4,866
|
|
Comprehensive income
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
2,926
|
2,926
|
|
Total comprehensive income for the
year
|
-
|
-
|
-
|
2,926
|
2,926
|
|
Transactions with owners
|
|
|
|
|
|
|
Share based payments relating to
share options
|
-
|
-
|
21
|
-
|
21
|
|
Total transactions with
owners
|
-
|
-
|
21
|
-
|
21
|
|
Balance at 31 December 2023
|
3,619
|
77
|
299
|
3,818
|
7,813
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
Balance at 1 January 2024
|
3,619
|
77
|
299
|
3,818
|
7,813
|
|
Comprehensive expense
|
|
|
|
|
|
|
Profit for the period
|
-
|
-
|
-
|
9,359
|
9,359
|
|
Total comprehensive income for the
period
|
-
|
-
|
-
|
9,359
|
9,359
|
|
Transactions with owners
|
|
|
|
|
|
|
Share based payments relating to
share options
|
-
|
-
|
10
|
-
|
10
|
|
Total transactions with
owners
|
-
|
-
|
10
|
-
|
10
|
|
Balance at 30 June 2024
|
3,619
|
77
|
309
|
13,177
|
17,182
|
Cash Flow Statement
|
|
|
(Unaudited)
Period
from 1 January 2024 to 30 June 2024
|
(Unaudited)
Period
from 1 January 2023 to 30 June 2023
|
(Audited)
Year
ended
31 December 2023
|
|
|
Note
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
Profit for the period before
tax
|
|
9,359
|
3,033
|
2,926
|
|
Adjustments for:
|
|
|
|
|
|
Net gain on financial
assets at fair value through profit or loss
|
|
(9,507)
|
(3,171)
|
(3,171)
|
|
Finance
income
|
|
(2)
|
(1)
|
(3)
|
|
Share based payments relating to
share options
|
|
10
|
10
|
21
|
|
Operating loss before changes in working
capital
|
|
(140)
|
(129)
|
(227)
|
|
Decrease in trade and other
receivables
|
|
2
|
65
|
62
|
|
Decrease in trade and other
payables
|
|
(7)
|
(103)
|
(126)
|
|
Cash used in operations
|
|
(145)
|
(167)
|
(291)
|
|
Interest received
|
|
2
|
1
|
3
|
|
Net
cash used in operating activities
|
|
(143)
|
(166)
|
(288)
|
|
Cash flows from investing activities
|
|
|
|
|
|
Repayment from subsidiary
|
|
-
|
175
|
725
|
|
Net
cash generated from investing activities
|
|
-
|
175
|
725
|
|
Net increase/(decrease) in cash and
cash equivalents
|
|
(143)
|
9
|
437
|
|
Cash and cash equivalents at
beginning of the period
|
|
461
|
24
|
24
|
|
Cash and cash equivalents at end of the
period
|
|
318
|
33
|
461
|
Notes to the Financial
Statements
1
General Information
These interim financial statements
do not include all of the information required for full annual
financial statements and should be read in conjunction with the
financial statements of the Company as at and for the year ended 31
December 2023 which have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the UK.
The interim financial statements for
the six months ended 30 June 2024 are unaudited and have not been
reviewed by the Company's auditors MAH,
Chartered Accountants. The comparative
interim figures for the six months ended 30 June 2023 are also
unaudited.
2
Basis of preparation
The accounting policies applied by
the Company in the preparation of these condensed interim financial
statements are the same as those applied by the Company in its
financial statements for the year ended 31 December
2023.
3
Other administration fees and expenses
|
|
Period
ended
30 June
2024 (Unaudited)
|
Period
ended
30 June
2023 (Unaudited)
|
Year
ended
31
December 2023 (Audited)
|
|
Audit fees
|
8
|
10
|
15
|
|
Directors' remuneration and
fees
|
60
|
46
|
62
|
|
Directors' insurance
cover
|
7
|
8
|
16
|
|
Professional fees
|
17
|
15
|
34
|
|
Share based payment
expense
|
10
|
10
|
21
|
|
Other expenses
|
48
|
50
|
100
|
|
Administration fees and expenses
|
150
|
139
|
248
|
Included within other administration
fees and expenses are the following:
Directors' remuneration
The maximum amount of basic
remuneration payable by the Company by way of fees to the
Non-executive Directors permitted under the Articles of Association
is £200,000 per annum. All Directors are each entitled to receive
reimbursement of any expenses incurred in relation to their
appointment. Mr Langoulant and Mr Lewis are entitled to receive an
annual fee of £10,000 (2023: £6,000).
Executive Directors' fees
The Chairman is entitled to an
annual fee of £100,000 (2023: £80,000).
All
directors' remuneration and fees
Total fees and basic remuneration
(including VAT where applicable) paid to the Directors for the
period ended 30 June 2024 amounted to £60,448 (30 June 2023:
£46,066) and was split as below. Directors' insurance cover
amounted to £7,489 (30 June 2023: £7,959).
All
directors' remuneration and fees
|
|
Period
ended
30 June
2024 (Unaudited)
|
Period
ended
30 June
2023 (Unaudited)
|
Year
ended
31
December 2023 (Audited)
|
|
Selwyn Lewis
|
5
|
3
|
6
|
|
Michael Langoulant
|
5
|
3
|
6
|
|
Keith Harris
|
50
|
40
|
80
|
|
Outstanding fees for former director
waived
|
-
|
-
|
(31)
|
|
Expenses reimbursed
|
-
|
-
|
1
|
|
|
60
|
46
|
62
|
4
Taxation
The Company is resident in the Isle
of Man for taxation purposes. The Isle of Man has a 0% rate of
corporate income tax (2023: 0%) to which the Company is
subject.
5
Basic and diluted profit/(loss) per share
(a)
Basic
Basic profit/(loss) per share is
calculated by dividing the profit/(loss) attributable to equity
holders of the Company by the weighted average number of shares in
issue during the period.
|
|
|
|
|
|
|
Period
ended
30 June
2024 (Unaudited)
|
Period
ended
30 June
2023 (Unaudited)
|
Year
ended
31
December 2023 (Audited)
|
|
Profit attributable to equity
holders of the Company (£'000)
|
9,359
|
3,033
|
2,927
|
|
Weighted average number of shares in
issue (thousands)
|
361,926
|
361,926
|
361,926
|
|
Basic profit per share (pence per share)
|
2.59
|
0.84
|
0.81
|
(b)
Diluted
Diluted profit/(loss) per share is
calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all dilutive potential
ordinary shares. The company has two categories of dilutive
potential ordinary shares: warrants and share options.
Although the Company is reporting a
profit from continuing operations for the period the exercise price
of the warrants or performance criteria for the share options have
not been met and therefore exercise cannot take place yet. The
basic and diluted profit per share as presented on the face of the
Income Statement are therefore identical.
6
Other financial assets
|
Instruments measured at fair value through profit and
loss
|
30 June
2024 (Unaudited)
|
30 June
2023 (Unaudited)
|
31
December 2023 (Audited)
|
|
Start of the period
|
6,375
|
3,204
|
3,204
|
|
Net gain on financial assets at fair
value through profit or loss
|
9,507
|
3,171
|
3,171
|
|
End
of the period
|
15,882
|
6,375
|
6,375
|
|
|
|
|
|
|
Categorised as
|
|
|
|
|
Level 3 - unquoted
investments
|
15,882
|
6,375
|
6,375
|
|
Total financial assets
|
15,882
|
6,375
|
6,375
|
The infrastructure funding deal with
Tiger Infrastructure Partners Fund III LP ("Tiger") completed on 25
October 2022. As a result the Company transferred ownership of its
two previously wholly owned subsidiaries, Secure Web Services
Limited and Cadence Networks to a new intermediate holding company,
Rural Broadband Solutions Holdings Limited, of which the Company
now owns 15%. At the same time part of intercompany loan with
Secure Web Services Limited was capitalised leaving a balance of
£825,000 to be repaid over three years at a rate of £275,000 per
annum.
The Company has estimated the fair
value of its investment in Rural Broadband Solutions Holdings
Limited, an unquoted equity instrument, and recognised an increase
in fair value based on the information provided by the investee
company.
7
Amounts due from related parties
This balance is unsecured and
interest free. £32,760 (31 December 2023: £32,760) relates to
management services recharges which are repayable on
demand.
8
Trade and other receivables
|
|
30 June
2024 (Unaudited)
|
30 June
2023 (Unaudited)
|
31
December 2023 (Audited)
|
|
Prepayments
|
13
|
13
|
19
|
|
VAT receivable
|
12
|
11
|
8
|
|
Trade and other receivables
|
25
|
24
|
27
|
The fair value of trade and other
receivables approximates their carrying value.
9
Trade and other payables
|
|
30 June
2024 (Unaudited)
|
30 June
2023 (Unaudited)
|
31
December 2023 (Audited)
|
|
Other payables
|
26
|
56
|
33
|
|
Trade and other payables
|
26
|
56
|
33
|
The fair value of trade and other
payables approximates their carrying value.
10
Post
Balance Sheet Events
In August 2024, a further capital
injection by shareholders into Voneus took place. After careful
consideration the Company elected at this time not to invest to
maintain its 15% ownership of RBSHL, the resulting dilution to
11.8% has reduced the fair value of the investment from £15.9
million to £13.6 million.