TIDMZEG
RNS Number : 8532N
Zegona Communications PLC
27 September 2023
NOT FOR DISTRIBUTION, PUBLICATION OR RELEASE, IN WHOLE OR IN
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ZEGONA COMMUNICATIONS PLC ("Zegona")
LEI: 213800ASI1VZL2ED4S65
27 SEPTEMBER 2023
ZEGONA ANNOUNCES INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2023
London, England, Zegona Communications PLC (LSE: ZEG) announces
its results and publishes its Interim Financial Statements for the
six months ended 30 June 2023.
Enquiries
Zegona Communications plc
Tel: +44 (0)20 3004 2017
Kim Lowe: kim@zegona.com
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.
Unaudited Condensed Consolidated Interim Financial
Statements
For the six months ended 30 June 2023
Identifying the right acquisition target within European TMT to
deliver attractive returns to shareholders
Over the last 6 months we have continued to focus on identifying
and pursuing the right opportunity within the European
telecommunications market where we can again successfully apply our
proven "buy-fix-sell" strategy to generate attractive returns for
our shareholders. We remain patient and disciplined in our approach
and are encouraged by the stabilisation in both the economic
outlook and telecommunications market trends, which contribute to
the confidence we have in our ability to find the right next
investment for Zegona.
The major geo-political and macro-economic challenges from 2022
have continued to impact European economies in 2023, affecting
consumer confidence, the cost of capital and medium-term growth
expectations. The telecommunications sector has shown its strong
defensive qualities but has not been immune to the broader economic
and political trends. In particular, the market for mergers and
acquisitions in European TMT assets has continued to be affected
with lower deal volumes and values than in the previous three
years.
During the first 6 months of 2023 we have seen a significant
improvement particularly in the debt capital markets, with much
greater availability of funding for businesses such as Zegona to
finance their acquisitions. We have also recently seen reduced
volatility in the equity markets with valuations, including in the
telecommunications market, now stabilising at more attractive
levels. This combination is positive for Zegona, creating the right
environment for finding attractive investment opportunities which
can also be delivered. We are committed to maintaining our strong
financial discipline and will not be prepared to proceed with an
acquisition if it does not meet our strict financial criteria.
We are in discussions with Vodafone Group plc ("Vodafone") in
connection with the potential acquisition of Vodafone's Spanish
business (the "Potential Acquisition"), and with banks in relation
to its financing, but the Potential Acquisition remains subject to,
amongst other things, agreement on final terms with Vodafone,
completion of its due diligence exercise and formalisation of the
funding arrangements. Therefore, there is no certainty that the
Potential Acquisition will proceed, nor as to the final terms of
any such Potential Acquisition.
Zegona' s performance
Zegona made a loss for the period from continuing operations of
EUR1.8 million, compared to a loss of EUR1.9 million in the
comparative period in H1 2022. The EUR1.8 million loss during the
first half of 2023 is related to the corporate operating costs of
Zegona. Corporate costs principally represent the salary and
benefit costs of Zegona's employees and other professional fees,
are lower than the equivalent costs in 2022, and are in line with
expectations for the six months ended June 30, 2023. Zegona has
continued to finance itself from its cash reserves and had EUR3.8
million as of 11 September 2023. As discussed in note 4 to the
interim financial statements, Zegona has maintained its EUR5.1
million income tax receivable in respect of amount paid by Company
to HMRC against charging notices in light of European Commission's
decision that UK Controlled Foreign Company legislation constituted
illegal state aid.
As further discussed in Note 2 to the financial statements
however, there are certain risks which are unlikely, but could
threaten Zegona's ability to continue as a going concern if they
transpire. As a result, we have concluded that it is appropriate to
prepare the financial statements on a going concern basis, but
there is a material uncertainty that may cast significant doubt on
our ability to continue as a going concern.
Risks
The principal and emerging risks and uncertainties faced by
Zegona have not changed significantly since our annual report for
the year ended 31 December 2022 (the "2022 Annual Report").
Change in risk assessment
Risk title Risk rating since
the 2022 Annual Report
--------------------------------------- ------------------ -------------------------------
Ability to maintain sufficient
resources to identify and complete High No change
new acquisitions
------------------ -----------------------------
Ability to create value in Moderate No change
acquired businesses
------------------ -----------------------------
Loss of key management Low No change
------------------ -----------------------------
Foreign exchange Moderate No change
------------------ -----------------------------
These risks have the potential to affect Zegona's results and
financial position during the remainder of 2023. A more detailed
explanation of risks and uncertainties is set out on pages 6 to 7
of the 2022 Annual Report
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 as adopted for use in the UK; and
-- the interim management report includes a fair review of the
information required by DTR 4.2.7R of the Disclosure Guidance and
Transparency Rules, being an indication of important events that
have occurred during the first six months of the financial year and
their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
-- DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
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 2023
Independent review report to Zegona Communications plc
Conclusion
We have been engaged by Zegona Communications PLC ("the
Company") to review the Condensed Consolidated Interim financial
statements in the half-yearly financial report for the six months
ended 30 June 2023 which comprises the Condensed Consolidated
Statement of Comprehensive Income, Condensed Consolidated Statement
of Financial Position, Condensed Consolidated Statement of Changes
in Equity, Condensed Consolidated Statement of Cash Flows and the
related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the Condensed Consolidated Interim
financial statements in the half-yearly financial report for the
six months ended 30 June 2023 is not prepared, in all material
respects, in accordance with IAS 34 Interim Financial Reporting as
adopted for use in the UK and the Disclosure Guidance and
Transparency Rules ("the DTR") of the UK's Financial Conduct
Authority ("the UK FCA").
Material uncertainty related to going concern
We draw attention to note 2(b) to the Condensed Consolidated
Interim financial statements which indicates that Zegona remains
actively searching for investment opportunities, whilst meeting
working capital requirements from cash balances held. These events
and conditions, along with the other matters explained in note
2(b), constitute a material uncertainty that may cast significant
doubt on the group's ability to continue as a going concern.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410
Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use
in the UK. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Whilst the company has previously produced a half-yearly report
containing a condensed set of financial statements, those financial
statements have not previously been subject to a review by an
independent auditor. As a consequence, the review procedures set
out above have not been performed in respect of the comparative
period for the six months ended 30 June 2022.
Conclusions relating to going concern
The directors have prepared the Condensed Consolidated Interim
financial statements on the going concern basis. As stated above,
they have concluded that a material uncertainty related to going
concern exists.
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the directors have
inappropriately adopted the going concern basis of accounting, or
that the directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the Group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with UK- adopted international
accounting standards.
The directors are responsible for preparing the condensed set of
financial statements included in the half- yearly financial report
in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of 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.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Simon Richardson
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square, London, E14 5GL 27 September 2023
For the six months ended 30 June
Unaudited Unaudited
2023 2022
Notes EUR000 EUR000
Administrative and other operating
expenses:
Corporate costs (1,691) (1,834)
Incentive scheme costs 5 (35) (34)
Significant project costs 6 (55) (26)
---------------- ---------------
Operating loss (1,781) (1,894)
Finance income 12 -
Finance costs (3) -
Net foreign exchange loss (2) -
---------------- ---------------
Loss for the period before income
tax (1,774) (1,894)
Income tax expense - -
---------------- ---------------
Loss for the period (1,774) (1,894)
---------------- ---------------
Loss for the period attributable to
equity holders of the parent (1,774) (1,894)
================ ===============
EUR
EUR
Earnings per share - total operations
Basic and diluted earnings per share
attributable to ordinary equity holders
of the parent (0.33) (0.36)
Earnings per share
Basic and diluted earnings per share
attributable to
ordinary equity holders of the parent (0.33) (0.36)
The accompanying notes are an integral part of the unaudited
condensed consolidated interim financial statements.
For the six months ended 30 June
Unaudited Unaudited
2023 2022
Note EUR000 EUR000
Loss for the period (1,774) (1,894)
Other comprehensive profit/(loss)
- items that will or may be reclassified
subsequently to profit or loss
Exchange differences on translation 7 359 (313)
--------- ---------------
Total comprehensive loss for the period,
net of tax, attributable to equity
holders of the parent (1,415) (2,207)
========= ===============
Unaudited
As at 30 As at
June 31 December
2023 2022
Notes EUR000 EUR000
Assets
Non-current assets
Property, plant and equipment 7 13
Income tax receivable 4 5,121 4,961
================== ====================
5,128 4,974
Current assets
Prepayments and other receivables 49 75
Cash and cash equivalents 4,307 5,890
================== ====================
4,356 5,965
================== ====================
Total assets 9,484 10,939
================== ====================
Equity and liabilities
Equity
Share capital 7 311 311
Capital redemption reserve 7 2,565 2,565
Share premium reserve 7 3,049 3,049
Share-based payment reserve 7 100 65
Foreign currency translation reserve 7 (6,563) (6,922)
Retained earnings 7 9,695 11,469
================== ====================
Total equity attributable to equity
holders of the Parent 9,157 10,537
Current liabilities
Accruals and other payables 327 402
================== ====================
Total liabilities 327 402
================== ====================
Total equity and liabilities 9,484 10,939
================== ====================
Foreign
Share-based currency Capital Share
Share payment translation Retained redemption premium
capital reserve reserve earnings reserve reserve Total
equity
(Unaudited) Note EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
Balance at 1
January
2023 311 65 (6,922) 11,469 2,565 3,049 10,537
Loss for the
period - - - (1,774) - - (1,774)
Other
comprehensive
income - - 359 - - - 359
Share-based
payment
expense 5 - 35 - - - - 35
------------------- ------------------- ----------------- ------------- ------------------ ------------ --------
Balance at 30
June
2023 311 100 (6,563) 9,695 2,565 3,049 9,157
=================== =================== ================= ============= ================== ============ ========
Share- Foreign
based currency Capital Share
Share payment translation Retained redemption premium Shares
capital reserve reserve earnings reserve reserve to be Total
issued equity
(Unaudited) Note EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
Balance at 1
January
2022 301 31 (6,284) 14,782 2,565 1,616 1,443 14,454
Loss for the
period - - - (1,894) - - - (1,894)
Other
comprehensive
income - - (313) - - - - (313)
Share-based
payment
expense 5 - 34 - - - - - 34
----------------- ---------- ----------------- ------------- ------------------ ------------ ------- --------
Balance at 30
June
2022 301 65 (6,597) 12,888 2,565 1,616 1,443 12,281
================= ========== ================= ============= ================== ============ ======= ========
ZEGONA COMMUNICATIONS PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six
months ended 30
June
Unaudited Unaudited
2023 2022
EUR000 EUR000
Operating activities
Loss before income tax (1,774) (1,894)
Adjustments to reconcile profit before
income tax from continuing operations
to operating cash flows:
Depreciation of property, plant and
equipment 6 7
Share based payment expense 35 34
Net foreign exchange gains/(losses) 2 -
Finance income (12) -
Finance costs 3 -
Working capital adjustments:
Decrease/ (Increase) in Prepayments
and other
receivables 26 (97)
Decrease in trade and other payables (75) (663)
Interest received 12 -
Interest paid (3) -
------------------ -----------------
Net cash flows used in operating activities (1,780) (2,613)
================== =================
Financing activities
Proceeds from bank borrowing - 412
------------------ -----------------
Net cash flows (used in) financing
activities - 412
================== =================
Net decrease in cash and cash equivalents (1,780) (2,201)
Net foreign exchange differences 197 (186)
Cash and cash equivalents at 1 January 5,890 10,556
------------------ -----------------
Cash and cash equivalents at 30 June 4,307 8,169
================== =================
The accompanying notes are an integral part of the unaudited
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 2023 (the "Interim Financial Statements") were
authorised for issue in accordance with a resolution of the
Directors on 25 September 2023. 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
This condensed set of financial statements (the "Interim
Financial Statements") has been prepared in accordance with IAS 34
Interim Financial Reporting as adopted for use in the UK. The
annual financial statements of the group are prepared in accordance
with UK-adopted international accounting standards. As required by
the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority, the condensed set of financial statements has
been prepared applying the accounting policies and presentation
that were applied in the preparation of the company's published
consolidated financial statements for the year ended 31 December
2022. 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 2022 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
2022 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) drew attention by way of emphasis
without qualifying their report to a material uncertainty in
respect of going concern, and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act.
(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 approval of the Interim Financial Statements. The
assessment includes the review of Zegona cashflow forecast and
budget, which included considerations on expected developments in
liquidity, debt and capital. The Directors have also considered
sensitivities in respect of potential severe but plausible downside
scenarios in concluding that Zegona is likely to be able to
continue in operation for a period of at least twelve months from
the date of approving the Interim Financial Statements.
Zegona is continuing to execute its Buy-Fix-Sell strategy which
currently involves actively searching for another attractive
investment opportunity within the European TMT sector and it now
meets its day to day working capital requirements while it does
this from cash balances. During this period, Zegona's ongoing costs
are reasonably predictable and controllable and in 2022 and 2023
Zegona also performed a comprehensive review of operating costs to
ensure the business is operating as efficiently as possible by
eliminating expenditure where possible, reducing headcount and
re-negotiating key supplier terms. Following this review, the
Directors are reasonably comfortable that provided Zegona does not
incur any material unforeseen costs, Zegona's cash holdings of
GBP3.3 million at 11 September 2023 should be sufficient to fund
the business until at least the first quarter of 2025, which is
more than twelve months after the approval of these Consolidated
Financial Statements.
In performing their assessment, the Directors however also
recognized that Zegona's ability to continue as a going concern
could be compromised in each (or a combination of) two main
scenarios which it does not necessarily consider likely, but which
are plausible:
1. While Zegona currently believes the European TMT market does
provide for a number of attractive investment opportunities in the
coming years, it is still possible that Zegona may be unable, for a
number of reasons, to:
a) identify and successfully negotiate an acceptable agreement
to acquire a new investment that it feels is able to meet its
financially disciplined criteria for attractive returns to its
investors in a reasonable period of time
b) Secure sufficient equity and/or debt financing for the
identified acquisition on terms that still allow Zegona to create
sufficient value to deliver those attractive investor returns.
If this does happen, the Directors and the Management team could
conclude that it is no longer in
investors' best interests to continue to seek alternative
investments.
2. Zegona may incur costs in connection with an unsuccessful
deal or deals ("abort costs") large enough to exhaust its cash
reserves. The Directors' going concern review suggests that without
taking any other cost saving actions, Zegona could absorb
approximately GBP0.8 million in such abort costs during the next
twelve months without exhausting its cash reserves. The Directors
considered this unlikely, since expenditure at this level would
only happen on a relatively small sub-set of transactions and
Zegona has historically been successful in minimizing transaction
fees and controlling them during the negotiation and diligence
phase such that costs are only incurred when the likelihood of
success is high. It is however possible in some larger and more
complex transactions which fail at a very late stage that fees in
excess of GBP0.8 million could be incurred, or that Zegona could
have multiple failed transactions with cumulative abort costs in
excess of this level.
Due to the existence of these two scenarios, the Directors
believe that it is still appropriate to prepare the financial
statements on a going concern basis. However, there are indications
of the existence of a material uncertainty related to events or
conditions that may cast significant doubt on the group's and the
company's ability to continue as a going concern and, therefore,
that the group and company may be unable to realise their assets
and discharge their liabilities for at least twelve months from the
date of approving the Interim Financial Statements. The Interim
financial statements do not include any adjustments that would
result from the basis of preparation being inappropriate.
(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 2022, which were prepared
in accordance with UK-adopted international accounting standards
and with those parts of the Companies Act 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 2023,
none of which had a material effect on Zegona.
Standard Effective
date
IFRS 17 Insurance Contracts 1 January
2023
Disclosure of Accounting Policies - Amendments 1 January
to IAS 1 and IFRS Practice Statement 2 2023
Definition of Accounting Estimates - Amendments 1 January
to IAS 8 2023
Deferred Tax related to Assets and Liabilities 1 January
arising from a Single Transaction - 2023
Amendments to IAS 12
(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.
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 2022. 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:
-- The recoverability of the income tax receivable (note 4)
-- Going concern (note 2(b))
3. SEGMENT INFORMATION
Following the disposal of Euskaltel in 2021, Zegona and its
subsidiaries are organised as a single business which seeks to
generate shareholder returns by applying its Buy-Fix-Sell strategy
to European TMT assets. The chief operating decision maker is
considered to be the Board, who only receive consolidated
information which does not include an analysis of either profit and
loss or assets and liabilities to any lower level. Zegona has
therefore concluded that it only has a single operating segment for
which the measure of performance is Zegona's consolidated loss for
the period from continuing operations and all amounts required to
be disclosed in accordance with paragraph 23-24 of IFRS 8 Operating
Segments are the same as the equivalent consolidated amounts
disclosed elsewhere in these financial statements. All non-current
assets are domiciled in the United Kingdom.
4. INCOME TAX RECEIVABLE
In August 2019, the European Commission (the "EC") concluded
that the Group Financing Exemption contained within the UK's
Controlled Foreign Company ("CFC") legislation amounted to illegal
state aid to the extent that there were UK Significant People or
Function ("SPF") activities involved in generating non-trading
finance profits.
Zegona engaged an independent tax adviser to undertake a review
of its historic financing structures which identified a small
proportion of activities performed by UK personnel. On this basis,
Zegona estimated that if the conclusion is upheld, a potential tax
liability of between EUR1m and EUR1.8m may exist.
The UK Government is required to recover the state aid in the
meantime and Zegona paid two charging notice issued by HMRC in
February and June of 2021 for GBP4.4 million, (EUR5.1 million)
which is 100% of the CFC tax relief received and interest thereon.
These notices are a charging mechanism only and if the decision is
annulled the money will be repaid.
Zegona submitted an appeal against the charging notices 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.
Both the UK Government and a number of other impacted taxpayers
have submitted appeals to the EU General Court to annul the
Commission's findings. On 8 June 2022, the General Court of the
Court of Justice of the European Union ("CJEU") found in favour of
the Commission's decision. The UK Government has now announced
that it has lodged an appeal of the decision with the Court of
Justice. If the UK Government's appeals are
ultimately successful, Zegona will be entitled to recover the
amounts already paid and will suffer no loss.
Despite the decision of the General Court, based on its current
assessment and also supported by external professional advice,
Zegona believes that the UK Government's appeal will likely be
successful. As a result, Zegona continues to believe that it has no
liability. A long-term current tax receivable of EUR5.1 million
(2022: EUR4.9 million) has therefore continued to be recognized in
respect of the amounts paid. Any appeal of the General Court
decision to the Court of Justice, and the progress of the UK Tax
Authority challenge into the historic financing arrangements of the
Group, will continue to be monitored by Management.
5. MANAGEMENT INCENTIVE SCHEME
Incentive scheme arrangements were put in place at Zegona's
inception in 2015 to create incentives for Zegona's management team
who have been issued Class A Ordinary Shares in the Company's
subsidiary, Zegona Limited ("Management Shares").
At 30 June 2023, a total of 515,464 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% 305,000 GBP305
Robert Samuelson 4.44% 152,500 GBP153
Zegona senior management 1.68% 57,964 GBP58
=========== ==============
515,464 GBP516
=========== ==============
During the period to 30 June 2023, no new awards were granted or
forfeited or cancelled and there were no changes to assumptions or
estimates compared to Zegona's annual financial statements as at 31
December 2022. A total expense of EUR35 thousand was recognised for
the period ended 30 June 2023, with a corresponding amount
recognised in the share-based payment reserve.
6. ADMINISTRATIVE AND OTHER OPERATING EXPENSES - SIGNIFICANT PROJECT COSTS
Significant project costs are those incurred on projects that
are considered to be one-off or non-recurring in nature, where the
costs are so material individually or collectively that the
Directors believe that they require separate presentation and
disclosure to avoid distortion of the comparability of corporate
costs between periods. The classification of projects as
significant is subjective in nature and therefore judgement is
required in its determination and is a matter of qualitative
assessment. Significant projects are usually related to acquisition
or joint venture transactions where incremental and identifiable
external costs are incurred by Zegona in order to make or evaluate
the potential transaction, even if it is not consummated.
The EUR55 thousand (2022: EUR26 thousand) of significant project
costs recognised were principally professional fees in relation to
potential acquisition opportunities.
7. RESERVES
Share-based payment reserve
The share-based payment reserve is a non-distributable reserve
that represents the cumulative build-up of the Management Incentive
Scheme costs over the vesting period as the employees gradually
render service while the Management Incentive Scheme is considered
to be an equity settled instrument.
The current balance of the reserve reflects the aggregate
amortisation of a portion of the fair value of the third
Calculation Period.
Foreign currency translation reserve
The foreign currency translation reserve is a non-distributable
reserve that includes the foreign exchange differences arising from
the translation of the Consolidated Financial Statements functional
currency of Sterling ("GBP") to presentational currency euro
("EUR"). The movement in this reserve for the period is driven
primarily by the movement in the closing EUR:GBP exchange rates
from 1.13 at 31 December 2022 to 1.17 at 30 June 2023.
Retained earnings
The retained earnings reserve includes cumulative net profits
and permitted transfers from the share-based payment reserve.
Amounts in the retained earnings reserve are typically
distributable profits.
Capital redemption reserve
The capital redemption reserve is a requirement under s692 of
the Companies Act to preserve the Company's capital and is a
non-distributable reserve. When the Company buys back shares out of
profits and those shares are immediately cancelled, the amount by
which the Company's issued share capital is reduced must be
transferred to the capital redemption reserve.
Capital redemption reserve represents the nominal value of the
214,532,103 shares repurchased in the tender offer.
Share premium reserve
The share premium reserve is a requirement under s610 of the
Companies Act and is a non-distributable reserve. The reserve
comprises amounts subscribed for share capital in excess of nominal
value less costs directly attributable to the issue of new
shares.
During 2022, the share premium reserve was increased by EUR1,443
to reflect the issuance of the 846,857 shares to Eamonn O'Hare and
Robert Samuelson that were intended to be issued in 2021.
Shares to be issued
The shares to be issued reserve is a non-distributable reserve
that relates solely to the GBP1.2 million (EUR1.4 million) of cash
received from Robert Samuelson and Eamonn O'Hare to subscribe for
shares which were not admitted in 2021. These shares were issued on
9 November 2022 and the balance on the reserve was reduced to
zero.
8. RELATED PARTY TRANSACTIONS
There were no related party transactions during the period to 30
June 2023 other than key management personnel compensation.
9. POST BALANCE SHEET EVENTS
The Company notes the press speculation regarding the potential
acquisition of Vodafone Group plc's Spanish business (the
"Potential Acquisition").
The Company confirms that it is in discussions with Vodafone
Group plc ("Vodafone") in connection with the Potential
Acquisition, and with banks in relation to its financing, but the
Potential Acquisition remains subject to, amongst other things,
agreement on final terms with Vodafone, completion of its due
diligence exercise and formalisation of the funding arrangements.
Therefore, there is no certainty that the Potential Acquisition
will proceed, nor as to the final terms of any such Potential
Acquisition.
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END
IR PPUCWBUPWUBM
(END) Dow Jones Newswires
September 27, 2023 05:35 ET (09:35 GMT)
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