TIDMZEG
RNS Number : 1394N
Zegona Communications PLC
28 September 2021
NOT FOR DISTRIBUTION, PUBLICATION OR RELEASE, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES
OR CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY
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RELEASE WOULD BE UNLAWFUL.
ZEGONA COMMUNICATIONS PLC ("Zegona")
LEI: 213800ASI1VZL2ED4S65
28 SEPTEMBER 2021
Interim report for the six months ended 30 June 2021
Zegona announces its interim results for the six months ended 30
June 2021.
Enquiries
Tavistock (Public Relations adviser)
Tel: +44 (0)20 7920 3150
Lulu Bridges - lulu.bridges@tavistock.co.uk
Jos Simson - jos.simson@tavistock.co.uk
About Zegona
Zegona was established in 2015 with the objective of investing
in businesses in the European Telecommunications, Media and
Technology sector and improving their performance to deliver
attractive shareholder returns. Zegona is led by former Virgin
Media executives Eamonn O'Hare and Robert Samuelson.
ZEGONA COMMUNICATIONS PLC
Unaudited Condensed Consolidated Interim
Financial Statements
For the six months ended 30 June 2021
MANAGEMENT REPORT
The successful completion of Zegona's strategy in Spain
On 28 March 2021, MásMóvil, the fourth largest
telecommunications operator in Spain launched a tender offer to
acquire 100% of Euskaltel for EUR11.17 per share in cash (the
"Offer"). The Offer valued Euskaltel's equity at EUR2.0 billion
which equated to an Enterprise Value of EUR3.5 billion and valued
Euskaltel at 10.1x EBITDA and 21x Operating Cash Flow, a
significant premium to European telecommunications multiples [1] .
The offer price was subsequently adjusted to EUR11.00 per share
following the payment by Euskaltel of a EUR0.17 per share dividend
on 17 June, 2021 which Zegona passed on to its shareholders in
full. The tender offer was declared unconditional with a 97.67%
acceptance rate on 5 August 2021 and Zegona successfully tendered
all of its shares, receiving EUR421.3 million on 11 August 2021.
Eamonn O'Hare and Robert Samuelson resigned as directors of
Euskaltel on 10 August, 2021. The completion of MásMóvil's
acquisition of Euskaltel underscores the success of our strategy in
Spain and p rovides significant value creation for Zegona
shareholders. The Offer, together with the dividend we passed on in
July delivered proceeds of EUR428 million.
Commitment to swiftly return the proceeds
On 24 May 2021, the Board announced that if the sale of its
investment in Euskaltel was successful it planned to return GBP335
million in cash to Shareholders. It also announced the commitment
of Zegona's Managers, subject to certain conditions [2] , to
re-invest up to GBP4 million in aggregate of the proceeds from the
Management Incentive Scheme back into Zegona by subscribing for new
Zegona ordinary shares. On 23 July 2021, Zegona began this return
of cash to shareholders with a GBP5.7 million dividend payment.
After paying this dividend, Zegona has now committed to return
the balance of the GBP335 million, being at least GBP329.3 million,
via an on-market share buyback by way of a tender offer at a price
of GBP1.535 per share. This tender offer has been overwhelmingly
approved by shareholders and will close on 5 October 2021, with
cash payments expected shortly thereafter.
Following the tender offer and taking account of Zegona's
anticipated net asset balance at this time, shareholders will have
received a total return of 92.3% [3] on their Net Invested
Capital.
Zegona' s performance
Zegona made a loss for the period of EUR20.4 million compared to
a profit of EUR7.1 million in the same period in 2020. This is
principally due to the change in the reporting of its investment in
Euskaltel and the recognition of a liability of EUR21.1 million in
respect of the management incentive scheme.
During the six months ended June 30, 2020, Zegona recognised its
investment in Euskaltel as an associate and recognised an EUR8.5
million share of Euskaltel's profits reflecting its 21.44%
ownership. During the six months ended June 30, 2021, Zegona
concluded that the investment should be accounted for as an asset
held for sale and as a discontinued operation from the date of the
announcement of MásMóvil's tender offer . This meant that from that
date, the investment was recorded at the lower of its carrying
amount and fair value less costs to sell with no further
recognition of Zegona's share of Euskaltel's profits. Zegona also
recognised a gain of EUR5.7 million related to a Deal Contingent
Forward Purchase Agreement to hedge the proceeds of the sale into
Sterling. Operating and other costs during the period to 30 June
2021 remained at similar levels to those incurred in the comparable
period in 2020.
Dividends
Zegona has made two dividend payments in 2021, with 2.2 pence
per share paid on 9 March and a further 2.6
pence per share paid on 23 July 2021. In total, 4.8 pence per
share or GBP10.5 million has been paid to shareholders in 2021.
Zegona has been consistent in its commitment to paying dividends,
with more than GBP45.8 million being paid to shareholders since
2016. Following the successful sale of our investment in Euskaltel
and completion of the tender offer in October 2021, we do not
expect to pay further dividends until we acquire another income
generating asset.
Outlook
Following the anticipated return of capital to our shareholders
and related transactions [4] , we expect to have approximately
GBP9.6 million of cash with no material liabilities. We have
already commenced looking for another attractive investment
opportunity within the European TMT sector where we can again apply
our successful buy-fix-sell strategy . Our focus remains on
businesses that require active change to realise full value,
creating long-term returns through fundamental business
improvements.
We see a very healthy environment for investments across the
broader European TMT industry. The market is large and fragmented,
with well over 100 European operators, of which over half fit our
desired investment scale. We are seeing increased deal activity and
greater availability of assets driven by ongoing market
consolidation and convergence. We believe this will continue over
the coming years, creating fertile ground to both buy and sell
assets and once again create significant shareholder value.
Risks
Risks prior to the disposal of Euskaltel . The Directors are of
the opinion that the principal risks and uncertainties faced by the
Group prior to the disposal of the investment in Euskaltel were the
same as in 2020. A more detailed explanation of risks and
uncertainties is set out on pages 12 to 15 of the Annual Report for
the year ended 31 December 2020.
Once MásMóvil had launched its tender offer to acquire 100% of
Euskaltel, Zegona entered into a Deal Contingent Forward Purchase
Agreement in order to fix the exchange rate at which it would
convert the anticipated proceeds from the sale. This forward
purchase agreement removed FX risk from the transaction and
resulted in Zegona receiving a Euro/Sterling exchange rate of 1.16,
which compares favourably to the spot rate of 1.18 at the time
Zegona received its Euro proceeds.
Risks following the disposal of Euskaltel . Upon the sale of the
investment in Euskaltel, the risks faced by Zegona changed
significantly and will continue to develop as Zegona pursues or
completes further acquisitions. Following the disposal of the
investment in Euskaltel, the Directors have revised their
assessment of the principal risks facing Zegona and have concluded
that the principal risks are:
Ongoing ability to identify and complete new acquisitions
Following the sale of its investment in Euskaltel, Zegona meets
its day to day working capital requirements, including the costs of
evaluating new acquisitions, from cash balances. Following the
anticipated return of capital and related transactions [5] , we
expect to have approximately GBP9.6 million of cash with
approximately GBP0.6 million of liabilities. We have already
commenced looking for another attractive investment opportunity
within the European TMT sector where we can again apply our
successful buy-fix-sell strategy.
The success of Zegona's future investment strategy following the
disposal of our interest in Euskaltel depends on our ability to
identify, raise appropriate funding for and successfully acquire an
available and suitable target. Our cash balance of approximately
GBP9.6 million is sufficient to enable us to continue searching for
new acquisitions for a reasonable period of time, but we are not
certain how long this will take and there is no guarantee that we
will be successful in making a further investment during this
period. For example, there may be significant competition in some
or all of the acquisition opportunities that we may explore from
competitors with greater technical, financial, human and other
resources than us. Such competition may cause us to be unsuccessful
in executing an acquisition or may result in a successful
acquisition being made at a higher price than would otherwise have
been the case.
Even if an agreement is reached relating to a proposed
acquisition, we may fail to complete it for reasons beyond our
control. Any failure to reach an agreement or complete on a
potential acquisition may result in a loss to the Company of the
related costs incurred, which could be a significant proportion of
our remaining cash and materially adversely affect subsequent
attempts to identify and acquire another target business or even
our ability to continue as a going concern without raising further
capital.
Even if we successfully identify and agree a new acquisition at
an acceptable price, we may not receive sufficient support from our
existing Shareholders to raise additional equity, and new equity
investors may be unwilling to invest on terms that are favourable
us, or at all. Lenders or investors may be unwilling to extend
sufficient debt financing to us on attractive terms, or at all.
To the extent that the additional equity and/or debt financing
required for a new investment cannot be secured on acceptable terms
we may be compelled either to restructure or abandon a particular
acquisition target, or proceed with acquisitions on less favourable
terms, which may reduce our return on the investment.
Ability to create value in acquired businesses
If Zegona is successful in acquiring a new business, there is a
risk of unforeseen liabilities being later discovered which were
not uncovered or known at the time of the due diligence process
which may have an impact on the value created for shareholders. In
addition, the success of Zegona's acquisitions depends on our
ability to implement the necessary strategic, operational and
financial change programmes in order to refocus the acquired
business and improve its performance. Implementing these change
programmes may require significant modifications, including changes
to business assets, operating and financial processes, business
systems, management techniques and personnel, including senior
management. There is a risk that we will not be able to
successfully implement such change programmes within a reasonable
timescale and cost.
We have a disciplined approach to valuation and, ultimately, we
are only prepared to make investments at the right price and after
undertaking a thorough due diligence process. When evaluating
potential investments, we focus on targets that have strong
fundamentals, high-quality offerings and strong market positions
but which are underperforming their potential and have scope to
generate long term sustainable performance and cash flow
improvements.
Key management
Zegona's operations are currently managed by the Chief Executive
Officer, supported by the Chief Operating Officer, the Investment
Director and the Chief Financial Officer. The absence or loss of
key management could significantly impede our financial plans,
though there has been no such absence or loss since Zegona was
founded.
We aim to retain our key staff by offering remuneration packages
at market rates, as well as long term incentives through the issue
of Management Shares and other management incentive plans. The
management team is small which places a natural limit on the volume
of deal flow that can be addressed. The management team itself
along with the Non-Executive Directors continually challenge the
focus of the business and the allocation of resources amongst
projects.
Brexit
The UK ceased to be a member state of the European Union on 31
January 2020. In December 2020, the UK and EU signed the UK-EU
Trade and Cooperation Agreement (the "TCA"). This agreement governs
the relationship between the EU and the UK following the end of the
transition period agreed after the UK officially left the EU. The
agreement provides for free trade in goods and limited mutual
market access in services, as well as for cooperation mechanisms in
a range of policy areas, transitional provisions about EU access to
UK fisheries, and UK participation in some EU programs. On 31
December 2020, the UK ceased to be a member of the EU Single Market
and Customs Union.
While the TCA does clarify a number of matters concerning the
UK's ongoing legal, political and economic relationship with the
EU, there are number of areas that are not covered. Due to this and
the size and importance of the UK economy, it is possible that the
UK's exit from the EU may continue to be a source of instability in
the international markets, create significant currency
fluctuations, and/or otherwise adversely affect trading agreements
or similar cross-border co-operation arrangements (whether
economic, tax (including the tax treatment of cross border
payments), fiscal, legal, regulatory or otherwise) for the
foreseeable future. Such continued uncertainty could have an
adverse impact on the number or attractiveness of acquisition
opportunities available to Zegona.
The long-term effects of Brexit will depend on any agreements
(or lack thereof) between the UK and the EU and, in particular, any
arrangements for the UK to retain access to EU markets.
Additionally, the exchange rate of Sterling vis-a-vis other
currencies may continue to be relatively volatile, which could
result in increasing costs of non-sterling denominated expenses and
other obligations and in changes in the value of non-sterling
denominated assets. Furthermore, UK regulatory requirements could
be subject to significant change and could place an additional
burden on Zegona.
Foreign exchange
Foreign currency translation risk exists due to the Company
operating, and having equity denominated, in a different functional
currency (GBP) to that of many of its likely acquisition targets.
Since the disposal of Euskaltel and the conversion of the proceeds
into Sterling, there are no material assets or liabilities
denominated in foreign currencies or transactions in foreign
currencies. This means there is currently minimal risk to Zegona's
results of operations, however fluctuations in the exchange rate
between Sterling and other European currencies could cause
potential future acquisitions to become more expensive in Sterling,
and therefore potentially less desirable.
The Board and the Chief Financial Officer control and monitor
financial risk management, including foreign currency risk, in
accordance with the internal policy and the strategic plan defined
by the Board.
RESPONSIBILITY STATEMENT
Statement of Directors' Responsibility
We confirm to the best of our knowledge:
-- the unaudited condensed consolidated interim financial
statements have been prepared in accordance with IAS 34 Interim
Financial Reporting; and
-- the interim management report includes a fair review of the
information required by Disclosure and Transparency Rule 4.2.7R and
Disclosure and Transparency Rule 4.2.8R.
Neither the Company nor the directors accept any liability to
any person in relation to the half-year financial report except to
the extent that such liability could arise under English law.
Accordingly, any liability to a person who has demonstrated
reliance on any untrue or misleading statement or omission shall be
determined in accordance with section 90A and schedule 10A of the
Financial Services and Markets Act 2000.
Details on the Company's Board of Directors can be found on the
Company website at www.zegona.com.
By order of the Board
Eamonn O'Hare
Chairman and CEO
27 September 2021
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended
30 June
Unaudited Unaudited
2021 2020
Note EUR 000 EUR 000
Continuing operations
Administrative and other operating
expenses:
Corporate costs (2,102) (2,219)
Incentive scheme costs (21,063) ` (44)
Significant project costs (790) (109)
------------ -----------
Operating loss (23,955) (2,372)
Finance income 4 136 12
Finance costs 4 (1,363) (317)
Net foreign exchange (loss)/gain (366) 1,347
------------ -----------
(Loss) for the period before
income tax (25,548) (1,330)
Income tax expense - -
------------ -----------
Loss for the period from continuing
operations (25,548) (1,330)
------------ -----------
Discontinued operation
------------ -----------
Profit for the period from discontinued
operation 3 5,159 8,469
------------ -----------
(Loss)/Profit for the period
attributable to equity holders
of the parent (20,389) 7,139
============ ===========
EUR EUR
Earnings per share - total operations
Basic and diluted earnings per
share attributable to ordinary
equity holders of the parent (0.09) 0.03
Earnings per share - continuing
operations
Basic and diluted earnings per
share attributable to ordinary
equity holders of the parent (0.12) (0.01)
The accompanying notes are an integral part of the unaudited
condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE
INCOME
For the six months
ended 30 June
Unaudited Unaudited
2021 2020
Note EUR000 EUR000
(Loss)/Profit for the period (20,389) 7,139
Other comprehensive profit/(loss) -
items that will or may
be reclassified subsequently to profit
or loss
Exchange differences on translation
of foreign operations 79 (929)
Exchange differences arising from discontinued
operation 14,998 (22,215)
Total comprehensive loss for the period,
net of tax, attributable to equity holders
of the parent (5,312) (16,005)
=========== ==========
The accompanying notes are an integral part of the unaudited
condensed consolidated interim financial statements .
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited
As at 30 As at 31
June December
2021 2020
Notes EUR000 EUR000
Assets
Non-current assets
Property, plant and equipment 38 12
Interest in associate - 322,737
=========== ==========
38 322,749
Current assets
Derivatives 5,645 39
Prepayments and other receivables 6 5,298 170
Financial assets measured at fair value
through profit or loss 7 6,400 7,499
Cash and cash equivalents 12,310 15,244
Assets held for sale 8 326,646 -
=========== ==========
356,299 22,952
=========== ==========
Total assets 356,337 345,701
=========== ==========
Equity and liabilities
Equity
Share capital 2,821 2,821
Other reserves 12 284,151 289,643
Share-based payment reserve 12 - 799
Foreign currency translation reserve 12 8,193 (6,884)
Retained earnings 12 25,683 46,072
=========== ==========
Total equity attributable to equity
holders of the Parent 320,848 332,451
Current liabilities
Accruals and other payables 10 1,732 2,279
Incentive scheme liability 11 22,165 -
Bank borrowings 9 11,592 10,971
=========== ==========
35,489 13,250
=========== ==========
Total liabilities 35,489 13,250
=========== ==========
Total equity and liabilities 356,337 345,701
=========== ==========
The accompanying notes are an integral part of the unaudited
condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
Share-based currency
payment translation Retained
Share capital Other Reserves reserve reserve earnings Total equity
Note EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
Balance at 1
January
2021 2,821 289,643 799 (6,884) 46,072 332,451
Loss for the
period - - - - (20,389) (20,389)
Other
comprehensive
income 12 - - - 15,077 - 15,077
Reclassification
of incentive
arrangements 11 - - (799) - - (799)
Dividend paid 13 - (5,492) - - - (5,492)
-------------- --------------- -------------- --------------- ---------- -------------
Balance at 30
June
2021 (unaudited) 2,821 284,151 - 8,193 25,683 320,848
============== =============== ============== =============== ========== =============
Balance at 1
January
2020 2,855 304,556 105 11,819 32,000 351,335
Profit for the
period - - - - 7,139 7,139
Other
comprehensive
loss - - - (23,144) - (23,144)
Cancellation of
shares purchased (28) (2,884) - - - (2,912)
Redemption of
Management
Shares - - (24) - 68 44
Dividend paid - (5,080) - - - (5,080)
-------------- --------------- -------------- --------------- ---------- -------------
Balance at 30
June
2020 (unaudited) 2,827 296,592 81 (11,325) 39,207 327,382
============== =============== ============== =============== ========== =============
The accompanying notes are an integral part of the unaudited
condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30
June
Unaudited Unaudited
2021 2020
EUR 000 EUR000
Operating activities
(Loss) before income tax (25,548) (1,330)
Adjustments to reconcile profit
before income tax from continuing
operations to operating cash flows:
Depreciation of property, plant
and equipment 7 1
Share based payment expense 21,063 44
Net foreign exchange gains/(losses) 366 (1,347)
Finance income (136) (12)
Finance costs 1,363 317
Working capital adjustments:
(Increase) in trade and other receivables (5,128) (43)
(Decrease) in trade and other payables (241) (1,964)
Interest received - 12
Interest paid (157) (260)
-------------- --------------
Net cash flows used in operating
activities (8,411) (4,582)
============== ==============
Investing activities
Purchase of property, plant and
equipment (33) (7)
Purchases of interest in associate
and of non-current financial assets
measured at fair value through profit
or loss - (1,690)
Net cash flows (used in) investing
activities (33) (1,697)
-------------- --------------
Net cash flows from discontinued
investing activities 10,635 5,320
============== ==============
Financing activities
Dividend paid to shareholders (5,492) (5,080)
Cancellation of shares purchased - (2,912)
Net cash flows (used in) financing
activities (5,492) (7,992)
============== ==============
Net (decrease) in cash and cash
equivalents (3,301) (8,951)
Net foreign exchange differences 367 (181)
Cash and cash equivalents at 1 January 15,244 27,035
-------------- --------------
Cash and cash equivalents at 30
June 12,310 17,903
============== ==============
The accompanying notes are an integral part of the unaudited
condensed consolidated interim financial statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. GENERAL INFORMATION
The unaudited condensed consolidated interim financial
statements of Zegona Communications plc (the "Company" or the
"Parent") and its subsidiaries (collectively, "Zegona") for the six
months ended 30 June 2021 (the "Interim Financial Statements") were
authorised for issue in accordance with a resolution of the
Directors on 27 September 2021. The Company is incorporated and
domiciled in England and has its registered office at 8 Sackville
St, Mayfair, London W1S 3DG.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The Interim Financial Statements have been prepared in
accordance with IAS 34 Interim Financial Reporting and are
presented on a condensed basis. The Interim Financial Statements do
not constitute statutory accounts within the meaning of section
434(3) of the Companies Act 2006 (the "Companies Act").
The Interim Financial Statements do not include all the
information and disclosures required in the annual financial
statements, and should be read in conjunction with Zegona's annual
financial statements as at 31 December 2020 which are available on
the Company's website, www.zegona.com . However, selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in Zegona's
financial position and performance since the last annual financial
statements.
The comparative figures for the financial year ended 31 December
2020 are not the company's statutory accounts for that financial
year. Those accounts have been reported on by the company's auditor
and delivered to the registrar of companies. The report of the
auditor was (i) unqualified, (ii) did not include a reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
(b) Going concern
The Interim Financial Statements have been prepared on the going
concern basis, which the directors consider to be appropriate for
the reasons outlined below.
Zegona's Directors have assessed the going concern assumptions
during the preparation of the Condensed Consolidated Financial
Statements. There are no events or conditions that give rise to
doubt the ability of Zegona to continue as a going concern for a
period of twelve months after the preparation of the Condensed
Consolidated Financial Statements. The assessment includes the
review of Zegona cashflow forecast and budget, which included
considerations on expected developments in liquidity, debt and
capital as well as the potential impact of the on-going COVID-19
pandemic. The Directors have also considered sensitivities in
respect of potential downside scenarios in concluding that Zegona
is able to continue in operation for a period of at least twelve
months from the date of approving the Condensed Consolidated
Financial Statements.
Following the sale of its investment in Euskaltel, the sale of
its rights to receive contingent consideration from Euskaltel and
the repayment of its outstanding debt, Zegona meets its day to day
working capital requirements from cash balances. Following the
anticipated return of GBP329.3 million of capital, the anticipated
payment of GBP25.7 million to management under the terms of the
incentive scheme and the anticipated subscription for GBP2.6
million of new Zegona shares by management - all in October 2021 -
Zegona anticipates that it will have approximately GBP 9.6 million
of cash with approximately GBP0.6 million of liabilities. Following
these transactions, Zegona will continue to execute its
buy-fix-sell strategy across the European TMT sector.
The Directors have prepared cash flow forecasts for a period of
12 months from the date of approval of these Interim Financial
Statements, which indicate that, taking account of reasonably
possible downsides, including possible impacts of the Covid-19
outbreak, Zegona will have sufficient funds to meet its liabilities
as they fall due for that period. Accordingly, the Directors have
continued to adopt the going concern basis in preparing the Interim
Financial Statements.
(c) New standards, interpretations and amendments adopted by Zegona
The accounting policies adopted in the preparation of the
Interim Financial Statements are consistent with those followed in
the preparation of Zegona's annual consolidated financial
statements for the year ended 31 December 2020, which were prepared
in accordance with international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union ("IFRSs as adopted by the EU"), and with those
parts of the Companies Act 2006 as applicable to companies
reporting under international accounting standards. Zegona has not
early adopted any other standard, interpretation or amendment that
has been issued but is not yet effective.
Standards, amendments and interpretations effective and adopted
by Zegona:
The accounting policies adopted in the presentation of the
Interim Financial Statements reflect the adoption of the following
amendments for annual periods beginning on or after 1 January 2021,
none of which had a material effect on Zegona.
Standard Effective date
Amendments to IFRS 9, IAS 39 and IFRS 7- Phase 1 January 2021
2- Interest Rate Benchmark Reform
(d) Critical accounting judgements and estimates
The preparation of the Interim Financial Statements 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.
With the exception of the classification of the investment in
Euskaltel as an asset held for sale and a discontinued operation,
there have been no material changes to the significant judgements
and estimates made by the Directors as at and for the year ended 31
December 2020. The main judgements and estimates used by the
Directors in applying the accounting policies of Zegona that had
the greatest impact on the Interim Financial Statements are as
follows:
-- Classification of discontinued operations and assets held for sale (note 8)
-- Recoverability of the tax receivable (note 6)
-- Recognition and measurement of share-based payments transactions (note 11)
3. SEGMENT INFORMATION
Continuing
Six months to 30 June Operations- Discontinued
2021 Central costs operation Consolidated
--------------- ------------- -------------
EUR000 EUR000 EUR 000
Depreciation and amortisation (7) - (7)
Incentive scheme costs (21,063) - (21,063)
Other operating expenses (2,885) - (2,885)
--------------- ------------- -------------
Operating loss (23,955) - (23,955)
Finance income 1 - 1
Finance costs (1,363) - (1,363)
Net foreign exchange gains (366) - (366)
Gain on derivative instruments 135 5,571 5,706
Share of loss of associate - (412) (412)
(Loss)/profit for the
period (25,548) 5,159 (20,389)
=============== ============= =============
Continuing
Six months to 30 June Operations- Discontinued
2020 Central costs operation Consolidated
--------------- ------------- -------------
EUR000 EUR000 EUR 000
Depreciation and amortisation (1) - (1)
Incentive scheme costs (44) - (44)
Other operating expenses (2,327) - (2,327)
--------------- ------------- -------------
Operating loss (2,372) - (2,372)
Finance income 12 - 12
Finance costs (317) - (317)
Net foreign exchange gains 1,347 - 1,347
Share of profit of associate - 8,469 8,469
(Loss)/profit for the
period (1,330) 8,469 7,139
=============== ============= =============
4. FINANCE INCOME AND COSTS
For the 6 months ended
30 June
2021 2020
Note EUR000 EUR000
Bank interest 1 12
G ain on derivative 135 -
------------- ----------
Finance income 136 12
============= ==========
Loss on fair value of contingent
consideration 7 (1,085) -
Interest on bank borrowings (278) (317)
------------- ----------
Finance costs (1,363) (317)
============= ==========
5. FINANCIAL INSTRUMENTS
The classification by category of the financial instruments held
by Zegona is as follows:
Amortised Amortised
Fair Value costs Fair Value costs
2021 2021 2020 2020
EUR000 EUR000 EUR000 EUR000
Prepayments and other receivables - 5,298 - 170
Derivatives (Level 2) 5,645 - 39 -
Financial assets designated
at fair value (level 3) 6,400 - 7,499 -
Cash and cash equivalents - 12,310 - 15,244
Total current financial
assets 12,045 17,608 7,538 15,414
============= ========== ============= ==========
Accruals and other payables - 1,732 - 2,279
Incentive Scheme Liability 22,165
Bank borrowings - 11,592 - 10,971
---- ------- -------
Total current financial
liabilities - 35,489 - 13,250
==== ======= =======
For the financial assets measured at fair value through profit
or loss, the Directors have determined that no transfers have
occurred between levels in the fair value hierarchy from 31
December 2020 to 30 June 2021. The Directors consider that the
carrying amounts of the financial instruments measured at amortised
cost equate to their fair values.
Derivatives (Level 2)
On 7 April 2021, Zegona entered into a Deal Contingent Forward
Purchase Agreement ("DCF") with Barclays Bank PLC to hedge the full
amount of proceeds to be received on the successful completion of
the tender offer to acquire Euskaltel. Under the terms of the DCF,
if the tender offer successfully completed on any date between 7
July 2021 and 7 January 2022 and Zegona received proceeds as
expected, it would be obligated to sell EUR430 million at a fixed
exchange rate. If the tender offer did not complete, Zegona would
not be obligated to transact. The actual rate at which the contract
would settle was dependent on the exact settlement date but was
within a range of 1.1563 GBP/EUR and 1.1556 GBP/EUR.
Zegona settled the DCF in two tranches, first settling EUR7.7
million on 14 July 2021 in respect of the Euskaltel dividend passed
on to Zegona shareholders at a rate of 1.1563 GBP/EUR and secondly
settling EUR422.3 million on 13 August 2021 in respect of the
proceeds received from the sale of its investment in Euskaltel at a
rate of 1.1561 GBP/EUR, receiving GBP365.3 million.
The DCF is recognised as a financial asset at Fair Value Through
Profit and Loss with the fair value of EUR5.6 million at 30 June
2021 being calculated using prevailing market forward foreign
exchange rates and therefore allocated to level 2 in the fair value
hierarchy. Since this instrument has been entered into entirely to
fix the Sterling value of the Euskaltel proceeds, changes in fair
value are recognised within discontinued operations.
Financial assets designated at fair value (level 3)
Financial assets designated at fair value consist entirely of
the contingent consideration receivable from the sale of Telecable
which is wholly valued using unobservable inputs as discussed in
note 7.
6. PREPAYMENTS AND OTHER RECEIVABLES
Prepayments and other receivables include a GBP4.4 million
(EUR5.1 million) receivable, which represents the charging notice
paid in March 2021 to HMRC in relation to the European Commission
(the "EC") state aid investigation into the Group Financing
Exemption contained within the UK's Controlled Foreign Company
("CFC") legislation which concluded that the Group Financing
Exemption amounted to illegal state aid in certain
circumstances.
Whilst various appeals against this decision are ongoing, the UK
Government is required to recover the State Aid and HMRC issued
Zegona with a charging notice in February 2021 in the amount of
GBP4.1 million (EUR4.8 million). Zegona strongly disagrees with
HMRC's interpretation and has submitted an appeal against the
determination and the notice which was accepted by HMRC on 8 March
2021. This appeal is likely to be stayed until the final outcome of
all appeals to the EU Courts in respect of the EU Commission's
original decision are known, which may take several years. As
required by law, Zegona paid the notice in full on 4 March 2021
(within 30 days of receipt). In June 2021, Zegona also received a
second notice for GBP251,711 (EUR335,651) in respect of interest,
which it paid in July 2021.
The issuance of charging notices is a collection mechanism only
and not an arbitration on the merits of the on-going litigation.
Consequently, the issuance and the settlement of the charging
notices does not change Zegona's view that while it is finely
balanced, it remains more likely than not that the appeals made by
other UK taxpayers and the UK Government will be successful and
ultimately Zegona will not incur any liability and therefore no
provision is required in respect of this matter.
In accordance with the provisions of IFRIC 23, Zegona has
recognised a receivable against both HMRC charging notices and will
continue to evaluate the recoverability of this receivable until a
final resolution is reached. Should future developments cause
Zegona to conclude that it is no longer more likely than not that
the appeals made by other UK taxpayers and the UK Government will
be successful, Zegona will write down the receivable and recognise
an expense of GBP4.4 million. Given the expected return of capital
(see note 15) this would result in a significant portion of
Zegona's net assets being written down.
7. CURRENT FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS
The current financial assets balance of EUR 6.4 million (31
December 2020: EUR7.5 million) comprises solely the contingent
consideration receivable from the sale of Telecable.
At December 31 2020, the fair value of the contingent
consideration was EUR7.5 million, which primarily reflected
Zegona's high confidence at the time in the base case assumption
that the full EUR8.7 million recorded in Euskaltel's financial
statements would be paid.
Following the issuance of Zegona's financial statements for the
year ended 31 December 2020, it became apparent that Euskaltel
would in fact seek either substantially to reduce and delay the
payment, or require Zegona to deliver a financial instrument to
cover any risk in the tax assets at Zegona's cost. Each of these
alternatives was not acceptable to Zegona, so it irrevocably sold
all of its rights (and associated obligations) to the contingent
payment to a third party for EUR6.4 million in cash, which was
received on 10 August 2021.
Zegona considers that the subsequent sale of its rights to
receive the contingent consideration constitutes an adjusting post
balance sheet event in accordance with IAS 10 Events after the
reporting period and has therefore used this information to
conclude that the value of the contingent consideration at 30 June
2021 was EUR6.4 million.
8. ASSETS HELD FOR SALE
At 30 June 2021, Zegona owned 38.3 million shares (2020: 38.3
million) in Euskaltel, a Spanish telecommunications company
incorporated in Spain and operating in the Basque Country, Asturias
and Galicia under regional brands and nationally across Spain under
the Virgin telco brand, which represents approximately 21.44% (31
December 2020: 21.44%) of the ordinary shares and voting rights of
Euskaltel.
On 29 March 2021, Zegona announced that a subsidiary of MásMóvil
Ibercom, S.A.U ("MásMóvil"), the Spanish fourth national operator,
had launched a Tender Offer to acquire all of the outstanding
shares of Euskaltel for EUR11.17 per share. The offer price was
subsequently adjusted to EUR11.00 per share following the payment
by Euskaltel of a EUR0.17 per share dividend on 17 June, 2021.
The tender offer was declared unconditional with a 97.67%
acceptance rate on 5 August 2021 and Zegona successfully tendered
all of its shares, receiving EUR421.3 million on 11 August 2021.
Eamonn O'Hare and Robert Samuelson resigned as directors of
Euskaltel on 10 August, 2021.
Up to the announcement of MásMóvil's tender offer on 28 March
2021, Zegona had accounted for its investment in Euskaltel as an
associate. From 28 March 2021, Zegona concluded that the two
conditions for classifying the investment as an asset held for sale
in paragraph 7-10 of IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations had been met. Accordingly, the investment
in Euskaltel as an associate was classified as both held for sale
and as a discontinued operation from March 28, 2021. The changes in
the carrying value of Zegona's investment during the six months
ended 30 June 2021 have been as follows:
Assets held Interest Fair Value
for sale in Associate
EUR000 EUR000 EUR000
Balance at 31 December 2020 - 322,737 335,105
Zegona's share of loss [6] - (454) -
Dividend received - (5,362) -
Foreign exchange differences - 16,147 -
------------ -------------- -----------
Balance at 28 March 2021 - 333,068 367,275
============ ============== ===========
Reclassification to Assets
held for sale 333,068 (333,068) -
Dividend received [7] (5,273) - -
Foreign exchange differences (1,149) - -
------------ -------------- -----------
Balance at 30 June 2021 326,646 - 420,509
============ ============== ===========
As required by IAS 5.15, at 30 June 2021, the investment in
Euskaltel has been recorded at EUR326.6million, being the lower of
its carrying amount and fair value [8] less costs to sell at that
date.
A share pledge over 1,663,158 Euskaltel shares granted by Zegona
to Euskaltel with respect to certain tax assets generated in favour
of Telecable was released by Euskaltel on 19 May 2021.
A share pledge over 32,155,563 Euskaltel shares granted by
Zegona to Barclays as security for its loan was released by
Barclays on 29 June 2021.
9. BANK BORROWINGS
In December 2020, the Company extended its credit facility with
Barclays Bank PLC ("Barclays") for a total of GBP15 million. The
amount drawn remained unchanged at GBP10 million. Interest was
payable quarterly in arrears on the drawn amount at a rate of 2.6%
per annum above the 3-month LIBOR interest rate. A commitment fee
of 0.6% per annum was payable on the undrawn amount of GBP5
million. The Company had the right to prepay the loan at any
time.
The Barclays facility was due to mature on 14 October 2021.
Additionally, any amounts outstanding would have become immediately
repayable on the occurrence of certain events of default including
a drop in the value of Euskaltel shares to EUR3.42 or below, a
change of control of Euskaltel or Zegona and other customary events
of default. The Barclays facility was secured by a pledge over 32.2
million Euskaltel shares.
The facility was repaid and terminated on 13 August 2021 using
the proceeds of the sale of the investment in Euskaltel.
10. ACCRUALS AND OTHER PAYABLES
30 June 31 December
2021 2020
EUR000 EUR000
Trade payables 304 372
Accrued interest 73 57
Other accruals 1,355 1,850
1,732 2,279
======= ===========
11. MANAGEMENT INCENTIVE SCHEME
The holders of the Management Shares are entitled to 15% of the
growth in value of Zegona during a series of separate Calculation
Periods, provided that ordinary shareholders achieve a 5% Preferred
Return [9] in each Calculation Period.
The first Calculation Period began on 14 August 2015 and in
accordance with the scheme rules, Zegona management redeemed its
Management Shares on 25 June 2020. On the redemption date, the
value of Zegona's shares (based on the 30-day volume weighted
average price "VWAP") was below the level required for the
Preferred Return to be met so Zegona management received no
payment.
Following the redemption, 51,546,370 Management Shares in Zegona
Limited remain allotted, issued and fully paid as shown in the
table below:
Participation Number of Nominal value
in Management of Management
growth in Shares Shares
value
Eamonn O'Hare 8.88% 30,500,000 GBP3.05
Robert Samuelson 4.44% 15,250,000 GBP1.53
Zegona senior management 1.68% 5,796,370 GBP0.58
=========== ==============
51,546,370 GBP5.16
=========== ==============
At the 2021 AGM held on 30 June, 2021, Zegona's shareholders
voted to renew the management incentive, thereby ratifying the
terms of the second Calculation Period that automatically began
upon delivery of the redemption notices on 25 June 2020. Throughout
the second Calculation Period, management are entitled to 15% of
the growth in value of Zegona over the new Calculation Period,
provided the Preferred Return is achieved over this period. The
starting value against which the growth in value and the Preferred
Return are calculated (the "Baseline") at the beginning of the new
Calculation Period was set at GBP0.955 per Zegona share [10] .
Under IFRS 2, the new Calculation Period constitutes a new
share-based payment award for which the holders of the Management
Shares began to render services from June 25, 2020. However, for
the purposes of IFRS 2, the grant date of the award was 30 June
2021, when Zegona's shareholders voted to ratify the renewal of the
management incentive scheme at Zegona's 2021 AGM.
In addition, Zegona Limited's Articles of Association allows
management to exercise its management shares if there is a takeover
or acquisition of Zegona (including by a scheme of arrangement), or
Zegona sells all or substantially all of its assets and distributes
the net proceeds, after satisfying any other creditors of Zegona,
to shareholders (collectively, the "Takeover provisions").
The sale of the investment in Euskaltel and the intended return
of GBP335 [11] million to shareholders by 14 October as announced
on 24 May 2021 will trigger a payment to management under those
Takeover provisions that is currently expected to be GBP25.4
million. The terms of the scheme also require this payment to be in
cash.
Consequently, Zegona has concluded that the management incentive
scheme no longer meets the criteria to be recognised as an equity
settled transaction under IFRS 2 and must be accounted for as a
cash settled transaction.
Zegona therefore reversed the EUR1.6 million previously recorded
in the Share-based payment reserve with a corresponding credit to
incentive scheme costs. At the same time, a liability was recorded
at 30 June 2021 to recognise the cash settled incentive instrument.
This liability is equal to the portion of the fair value of the
instrument for which services had been provided at 30 June 2021.
This portion is calculated by dividing the period for which
services had been provided at 30 June 2021 [12] by the total
vesting period. [13]
Zegona engaged an independent valuation specialist to estimate
the fair value of the award, who concluded that because the awards
will be triggered by the sale and the return of the net proceeds of
the sale to shareholders, it was more appropriate to value the
award by reference to the known value which will be delivered
rather than the approach in previous periods which had been to use
a Monte Carlo model.
The value of the award on the valuation date was GBP24.4
million, with a liability of GBP19.0 million being recognised at 30
June 2021 to reflect the remaining 105 days over which services are
still to be rendered. For the six months ended 30 June 2021 a net
total of EUR 21.1 million (GBP18.3 million) incentive scheme costs
were recognised [14] .
The key inputs to the model used to estimate the fair value of
the award were the amounts to be received for the sale of the
investment and the terms of Zegona Limited's Articles of
Association which stipulate the payment waterfall in the event of
the Takeover provisions being triggered. There were no items of
estimate or judgement for which a +/- 10% change would result in a
material impact on the fair value at 30 June 2021.
12. RESERVES
Foreign currency translation reserve
The foreign currency translation reserve includes the foreign
exchange differences arising from the translation of the
Consolidated Financial Statements functional currency of Sterling
("GBP") to presentational currency euro ("EUR"). This reserve is a
non-distributable reserve. The movement in this reserve for the
period is driven primarily by the movement in closing EUR:GBP
exchange rates from 1.11 at 31 December 2020 to 1.16 at 30 June
2021.
Share-based payment reserve
The share-based payment reserve represents the cumulative
build-up of the incentive scheme costs over the vesting period as
the employees gradually render service. For the period to 30 June
2021 the share-based payment reserve was Nil as the expected
exercise of the management shares by management under the takeover
provision will be in cash. More information on the share-based
Management incentive scheme can be found in Note 11. This is a
non-distributable reserve.
Retained earnings
The retained earnings reserve includes cumulative net profits
and permitted transfers from the share-based payment reserve. This
is a distributable reserve.
Other Reserves
Capital
redemption Share premium Other Total Other
reserve reserve reserve reserves
EUR'000 EUR'000 EUR'000 EUR'000
At 1 January 2021 34 108,793 180,816 289,643
Dividend paid - - (5,492) (5,492)
------------ ============== ========= --------------
At 30 June 2021 34 108,793 175,324 284,151
============ ============== ========= ==============
Capital redemption Share premium Total Other
reserve reserve Other reserve reserves
EUR'000 EUR'000 EUR'000 EUR'000
At 1 January 2020 - 108,793 195,763 304,556
Issue of shares,
net of costs 34 - (3,599) (3,565)
Dividend paid - - (11,348) (11,348)
------------------- ============== ============== --------------
At 31 December 2020 34 108,793 180,816 289,643
=================== ============== ============== ==============
Capital redemption reserve
When Zegona buys back shares out of distributable reserves and
those shares are immediately cancelled, the amount by which
Zegona's issued share capital is reduced must be transferred to the
capital redemption reserve.
The capital redemption reserve is a requirement under s692 of
the Companies Act 2006 to preserve the Company's capital and is a
non-distributable reserve.
Share premium reserve
The reserve comprises amounts subscribed for share capital in
excess of nominal value less costs directly attributable to the
issue of new shares. The share premium reserve is a requirement
under s610 of the Companies Act 2006 and is a non-distributable
reserve. As discussed in note 15 on 8 September 2021, following
approval by special resolution of the shareholders at the General
Meeting of the Company on 20 August 2021, the share premium account
of the Company was reduced to GBP100,000, as confirmed by an Order
of High Court of Justice, Chancery Division. Upon the reduction of
the share premium account, the balance of GBP95.239 million was
transferred to the Other reserve.
Other reserve
On 8 June 2016, following approval by special resolution of the
shareholders at the Annual General Meeting of the Company on 15
April 2016, the share premium account of the Company was cancelled,
as confirmed by an Order of High Court of Justice, Chancery
Division. Upon the cancellation of the share premium account, the
balance of EUR386.045 million was transferred to the Other reserve.
The Other reserve forms part of the distributable reserves of the
Company.
The Other reserve also comprise the total costs of buying back
shares (the nominal value of the shares and any premium paid),
which are charged against distributable reserves.
The Company's total distributable reserves as at 30 June 2021
were GBP135 million, which equates to EUR157 million at 30 June
2021 foreign exchange rates (2020: GBP140 million, which equates to
EUR156 million at 31 December 2020 foreign exchange rates).
13. DIVID PAID
The Company declared an interim dividend on 21 December 2020 at
a rate of 2.2p per share, totalling GBP4.8 million (EUR5.6
million). The dividend was paid on 9 March 2021.
In the comparative period, the Company declared an interim
dividend on 6 February 2020 at a rate of 2.0p per share, totalling
GBP4.5 million (EUR5.3 million), which was paid on 6 March
2020.
14. RELATED PARTY TRANSACTIONS
There were no related party transactions during the period to 30
June 2021 other than key management personnel compensation.
15. POST BALANCE SHEET EVENTS
Interim dividends
Zegona received a dividend from Euskaltel on 17 June 2021 at a
rate of EUR0.17 per share, totalling EUR6.5 million. The dividend
was passed through to Zegona's shareholders by payment of a
dividend at a rate of 2.6p per share, totalling GBP5.7 million
(EUR6.7 million). The dividend was paid on 23 July 2021.
Sale of Euskaltel and related transactions
The tender offer launched by a subsidiary of MásMóvil to acquire
all of the outstanding shares of Euskaltel was declared
unconditional with a 99.67% acceptance rate on 5 August and Zegona
successfully tendered all of its shares, receiving EUR421.3 million
on 11 August 2021. These proceeds were used to settle the Deal
Contingent Forward Purchase Agreement on 13 August at a rate of
1.16 EUR/GBP, with Zegona receiving GBP364.4 million. On the same
day, the outstanding GBP10 million facility with Barclays was
repaid and terminated. On disposal of its investment in Euskaltel,
Zegona recorded a gain on disposal within Profit for the period
from discontinued operation of EUR91.5 million in addition to a
derivative gain of EUR8.9 million.
On 10 August 2021, Zegona sold its right to receive contingent
consideration from Euskaltel under the terms of the SPA governing
the sale of Telecable to Euskaltel in 2017 for EUR6.4 million.
Capital Reduction
On 24 May 2021, the Board announced that if the sale of its
investment in Euskaltel was successful it planned to return GBP335
million in cash to Shareholders. It also announced the commitment
of its Managers, subject to certain conditions, to re-invest up to
GBP4 million in aggregate of the proceeds from the Management
Incentive Scheme back into Zegona by subscribing for new Zegona
ordinary shares. On 23 July 2021, Zegona began this return of cash
to shareholders with a GBP5.7 million dividend payment.
After payment of this dividend, Zegona's commitment is now to
return the balance of the GBP335 million, being at least GBP329.3
million (the "Return of Capital").
The Board has determined, following advice from its legal
advisers, that the mechanism it should use is an on-market share
buyback by way of a tender offer because the Directors believe this
offers the best combination of timeliness, cost effectiveness and
tax efficiency.
In order to complete a share buyback of at least GBP329.3
million, the Company would be required to have distributable
reserves of at least that amount and in order to achieve this,
Zegona announced on 29 July that it intended to reduce its share
premium account from GBP95,339,759 to GBP100,000 (the "Capital
Reduction"). In order to comply with applicable companies
legislation, the Capital Reduction required approval by the
Shareholders at a General Meeting of the Company, confirmation by
the High Court and the registration of the Court's order at
Companies House.
On 20 August 2021, Shareholders approved the proposal to
undertake a court approved Capital Reduction with 100% of votes
cast in favour. The Court confirmed the Capital Reduction on 7
September 2021 and the Court's order was registered on 8 September
2021, making the Capital Reduction effective. Upon the reduction of
the share premium account, the balance was transferred to the Other
reserve, which forms part of the distributable reserves of the
Company.
Return of Capital
On 13 August 2021, Zegona announced the publication of a
circular for a Return of Capital of up to GBP329.3 million to
shareholders by way of a tender offer (the "Tender Offer") at a
price of GBP1.535 per share. This Tender Offer was approved by
shareholders on 6 September with 99.94% of votes cast in
favour.
Under the terms of the Tender Offer, each qualifying holder of
Zegona's ordinary shares will be entitled to sell approximately
98.0% of their shares (their "Tender Offer Entitlement") at a price
of GBP1.535 per share. Shareholders may also tender more than their
Tender Offer Entitlement and will be allocated a pro rata portion
of any Tender Offer Entitlement not used by other shareholders. The
acceptance period of the Tender Offer will close on 5 October 2021
with cash payments expected shortly thereafter.
[1] Euskaltel multiples based on its Enterprise Value divided by
its reported 2020 EBITDA (as defined by Euskaltel) of EUR342.8
million and reported 2020 Operating Cash Flow (as defined by
Euskaltel as EBITDA-Capex) of EUR164.5 million. Comparable European
Cable company multiples of 6.7x 2020 EBITDA and 13.3x 2020
Operating Cash Flow (Source: Citigroup).
[2] conditions include that the maximum ownership to be acquired
by management will be 28.1% and that the value to be paid per share
will be the net asset value per share of the business at the time
of management's investment.
[3] Calculated as the GBP364.3 million GBP consideration
received plus Zegona's expected Net Assets of GBP6.6 million on
October 14(th) 2021 immediately following the tender proceeds being
received by shareholders (excluding the tax receivable), minus the
Net Invested Capital of GBP192.8 million, all divided by the
GBP192.8 million of Net Invested Capital.
[4] Being the anticipated return of GBP329.3 million of capital,
the anticipated payment of GBP25.7 million to management under the
terms of the incentive scheme and the anticipated subscription for
GBP2.6 million of new Zegona shares by management - all in October
2021.
[5] Being the anticipated return of GBP329.3 million of capital,
the anticipated payment of GBP25.7 million to management under the
terms of the incentive scheme and the anticipated subscription for
GBP2.6 million of new Zegona shares by management - all in October
2021.
[6] Being 21.44% of Euskaltel's Comprehensive Loss of EUR2.1
million for the period.
[7] A dividend of EUR6.5 million was received on 17 June 2021
net of withholding tax of EUR1.2 million subsequently reclaimed in
July 2021.
[8] Using the closing share price on 30 June 2021 of
EUR10.98.
[9] The preferred Return is a 5% per annum return on a
compounded basis on shareholders' net investment.
[10] Being the higher of the Market Capitalisation of Zegona,
defined as 30-day VWAP, and the Net Shareholder Invested Capital on
that date.
[11] Via a GBP5.7 million dividend paid on 23 July 2021 and a
GBP329.3 million share buyback via Tender Offer announced on 13
August 2021.
[12] Being the 371 days between the commencement of the
calculation period and 30 June 2021.
[13] Being the 476 days between the commencement of the
calculation period and the expected vesting date on 14 October
2021.
[14] Being the accelerated costs of the cash settled liability
net of the reversal of the EUR1.6 million previously recorded in
the Share-based payment reserve.
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END
IR UBORRAKUKUUR
(END) Dow Jones Newswires
September 28, 2021 02:00 ET (06:00 GMT)
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