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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gloo Networks | LSE:GLOO | London | Ordinary Share | GB00BYVTYD43 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 47.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMGLOO
RNS Number : 7022J
Gloo Networks PLC
30 June 2017
Gloo Networks plc
("Gloo" or "the Company")
Full year results for the year ended 31 March 2017
London, 30 June 2017 - Gloo Networks plc, a digital transformation company that aims to acquire and develop trusted media brands, announces its annual results for the year ended 31 March 2017.
Over the year, Gloo Networks generated a loss after taxation of GBP4.4 million, reflecting operating expenses and diligence costs incurred in the continued pursuit of its investment strategy. At 31 March 2017, Gloo Networks held over GBP23.5 million in cash.
Rebecca Miskin, Gloo's Chief Executive Officer, commented: "We have been actively pursuing our stated investment strategy, reaching advanced discussions with a number of key targets in both Europe and the US. Key criteria for our platform acquisition include scale, predictability and strong cash flow generation. At the same time, we maintain a disciplined approach to valuation."
"The work we have performed to date further validates our strategy and we remain highly confident in our ability to execute an attractive acquisition. We look forward to updating shareholders on our progress prior to the forthcoming AGM scheduled for September 2017."
The financial statements will also be available on the Company's website at www.gloonetworks.com.
Enquiries:
Liberum Capital Limited (Nominated Adviser and Joint Broker)
Tel: +44 20 3100 2000
Neil Elliot
Chris Clarke
Jonathan Wilkes-Green
Numis Securities Limited (Joint Broker)
Tel: +44 20 7260 1000
Lorna Tilbian
Nick Westlake
Teneo (PR Adviser)
London - United Kingdom
Tel: +44 20 7240 2486
Chloe Maier
CHAIRMAN'S STATEMENT AND STRATEGIC REPORT
I am pleased to present to our Shareholders the Audited Consolidated Financial Statements and Audited Company Financial
Statements for the year ended 31 March 2017. The Audited Consolidated Financial Statements consolidate the results of Gloo
Networks plc ("the Company") and Gloo Networks Jersey Limited (together, the "Group").
Strategy
Gloo Networks plc is a digital transformation company that aims to connect some of the world's most-loved content with its most-valued consumers. It intends to acquire trusted consumer brands in the media sector that appeal to attractive socio-economic groups and use data and technology to change their business models to ultimately unlock value and increase profitability. The Company is led by digital transformation expert Rebecca Miskin (Chief Executive Officer), Bill Davis (Chief Financial Officer) who joined the Company on 1 July 2016, and Juan Lopez-Valcarcel (Chief Product and Operations Officer). Arnaud de Puyfontaine, Chief Executive Officer at Vivendi, serves as Non-Executive Chairman of the Company. The team's deep industry relationships have enabled access to a range of investment opportunities including companies that are not known to be 'sellers'.
Since inception in August 2015, the Company has been active in its target market pursuing its stated investment strategy. We have evaluated and completed comprehensive diligence efforts on a number of businesses in Europe and the US. Key criteria for our platform acquisition include amongst others scale, predictability and cash flow generation. At the same time, we maintain a disciplined approach to valuation. Whilst all of the businesses we have engaged with have demonstrated excellent qualities, we have not concluded discussions to date, due to one or more of these criteria not having been met.
We will maintain our disciplined approach to valuation to ensure we maximise our opportunity to create value for shareholders. The team's deep industry relationships have opened up unrivalled access to a range of investment opportunities and while discussions with these targets have been slower than anticipated, they show promise and are ongoing.
The ongoing digital and technological disruption of the media and content industries remains a fundamental dynamic driving potential acquisition opportunities and verifying the Company's core investment hypothesis. The Company will continue to adopt a disciplined and rigorous approach to assessing acquisition opportunities and remains well positioned to secure a suitable platform acquisition with a pipeline of opportunities currently under review. At the same, the Company will continue to control its planned level of expenditures during the pre-acquisition phase.
Results
The results presented in the Consolidated and Company Financial Statements are not directly comparable as the prior period was for the period from incorporation on 16 February 2015 to 31 March 2016. The Consolidated loss after taxation for the year ended 31 March 2017 was GBP4,435,262 (31 March 2016: GBP2,666,998). In the year, the Group incurred GBP4,520,042 (31 March 2016: GBP2,739,701) of administrative expenses, received interest of GBP84,780 (31 March 2016: GBP72,703) and at the year end held a cash balance of GBP23,485,780 (31 March 2016: GBP27,242,121).
Dividend Policy
The Company will consider its dividend policy following its first acquisition.
Risks
The Directors have carried out a robust assessment of the principal risks facing the Company including those that would threaten its business model, future performance, solvency or liquidity. Further detail in relation to the risks faced by the Company is set out in note 17 and on page 38.
Outlook
The Company continues to be encouraged by the number of opportunities in the market and the Company's access to such potential transactions. The work the Company has performed to date continues to validate our investment strategy and the Company remains highly confident in its ability to execute an attractive acquisition from the extensive number of opportunities available to us.
AIM Rule 8 requires that where an AIM-listed company is an investing company, shareholder approval for its investment strategy must be sought at the first annual general meeting ("AGM") to take place once 18 months have elapsed since the company's flotation on AIM and the company has not made an acquisition. The Board therefore proposes to seek approval for the Group to continue its current acquisition strategy at the forthcoming AGM scheduled for September 2017. The Board unanimously recommends that Shareholders approve the appropriate resolution. The Company anticipates providing a further update ahead of the AGM.
On behalf of the Board
Hot Features
Premium
Arnaud de Puyfontaine Rebecca Miskin
Chairman Director and Chief Executive
Officer
29 June 2017 29 June 2017
REPORT OF THE DIRECTORS
The Directors are pleased to submit their Report and the Audited Consolidated and Company Financial Statements for the year ended 31 March 2017.
Results and dividends
For the year to 31 March 2017, the Consolidated loss was GBP4,435,262 (31 March 2016: GBP2,666,998).
It is the Board's policy that prior to making the first acquisition, no dividends will be paid. Following the first acquisition, subject to availability of distributable reserves, dividends will be paid to shareholders when the Directors believe it is appropriate and prudent to do so.
Future developments
The Company continues to look for opportunities in line with its defined investment strategy being the acquisition and development of businesses with an aggregate enterprise value at the time of acquisition of between GBP250 million and GBP1 billion. Gloo intends to acquire businesses that appeal to attractive socio-economic groups, and through the use of data and technology, ensure these businesses fully realise their digital potential, thereby unlocking value and increasing profitability.
Share capital
Details of any shares issued by the Company are set out in note 15 of the financial statements.
Directors
The Directors of the Company who served during the period and subsequent to the date of this report are:
Arnaud de Puyfontaine, Non-Executive Chairman
Date of appointment: 14 December 2015
Arnaud de Puyfontaine's career in the media and communications industry has spanned over 25 years during which time he has reshaped the European/US media landscape in a variety of international roles including Chief Executive of Hearst UK, Editions Mondadori and Emap. Arnaud is currently Chief Executive of Vivendi SA, the international media content and entertainment group. He was appointed Vivendi CEO after joining the group in November 2013 as Senior Executive Vice President of Media and Content activities.
Vivendi is the parent of Universal Music Group, the world's largest music company, and Canal+ Group, a European leader in pay TV and European TV and film production.
Previously, Arnaud was the Chief Executive Officer of Hearst UK, part of Hearst Corporation. In 2011, he led the acquisition and integration of 102 brands from the Lagardère Group, before being appointed Managing Director of Western Europe in August 2013.
At Hearst Corporation, Arnaud worked alongside Gloo Networks' Chief Executive Officer Rebecca Miskin, and successfully managed an iconic media portfolio which included Cosmopolitan, Elle, Good Housekeeping and Harper's Bazaar.
Prior to this, Arnaud was Chairman and Chief Executive Officer of Editions Mondadori France, becoming General Head of all digital business for the Mondadori Group.
Arnaud joined Emap France in 1995, where he was a member of the founding team and responsible for Télé Poche, Studio Magazine and the establishment of the Emap Star Division. He was appointed Chief Executive Officer of Emap France in 1998 and joined the board of Emap Plc in 2000.
Arnaud de Puyfontaine is a graduate of the ESCP, the Multimedia Institute and Harvard Business School and was named Chevalier (Knight) of the Légion d'honneur in 2015.
Rebecca Miskin, Chief Executive Officer
Date of appointment: 16 February 2015
Rebecca is a global business leader with an international digital transformation track record of over 20 years.
Before Gloo Networks, Rebecca acted as Digital Strategy Director and Change Agent at Hearst Corporation where she led the post-acquisition integration of Hachette Filipacchi UK. During this time, Rebecca successfully increased revenue, operating profit and operating margins, whilst doubling the company's digital traffic, securing their position as the largest UK magazine publisher online.
Previously, Rebecca joined NBC Universal's international headquarters in London and was subsequently moved to New York to spearhead the turnaround of iVillage Networks, part of a group of digital businesses purchased for US$600 million. Before NBC Universal, she also held successful roles at Time Inc., Excite and Reed Elsevier.
Since 2011, Rebecca has held the position of non-executive director on the board of Centaur Media plc where she is chair of the remuneration committee and a member of both the audit and nomination committees.
Rebecca is also actively engaged in international executive and digital mentoring and has proven herself to be an exceptional business partner to young, emerging talent.
Rebecca holds a joint honours degree from the University of London and a Masters in European Business Management from Cranfield University's School of Management.
Bill Davis, Chief Financial Officer
Date of appointment: 1 July 2016
Prior to joining Gloo Networks, Bill Davis was the Chief Financial Officer at Blackboard Inc., where he was responsible for the company's financial operations, information technology, corporate development and its central business operations group that oversaw Blackboard's new and renewal sales operations.
Between 2012 and 2016, Bill led Blackboard's optimisation efforts, and successfully developed and implemented Blackboard's M&A strategy, leading to the acquisition of several businesses including a number of cross-border transactions.
Before joining Blackboard in May 2012, Bill was the Chief Financial Officer for nearly 10 years at Allscripts Healthcare Solutions, where he oversaw revenue growth from $80 million in 2002 to c.$1.4 billion in 2012, with revenue increasing at a compounded annual growth rate of approximately 25 per cent.
While at Allscripts, Bill helped lead several strategic transactions, including Allscripts' $270 million acquisition of A4 Health Systems in 2006, the $90 million acquisition of Extended Care Information Networks in 2007, and the
$880 million merger with Misys Healthcare in 2008. In 2010, Bill helped lead Allscripts's $1.2 billion merger with Eclipsys Corporation.
Prior to Allscripts, Bill was the Chief Financial Officer of Lante Corporation, a technology consulting firm, where he helped lead the company's IPO in 2000 and subsequent sale in 2002.
Bill began his career at PricewaterhouseCoopers and holds a Bachelor of Science in Accounting from the University of Cincinnati and a master's degree from Northwestern University. He is also a Certified Public Accountant.
Juan Lopez-Valcarcel, Chief Product and Operations Officer
Date of appointment: 24 March 2015
Juan is a global digital product and operations expert with 20 years experience.
Prior to Gloo Networks, Juan served as Pearson plc's Chief Digital Officer of International Operations, where he led all digital product strategy, engineering and digital partnerships outside North America and also held executive responsibilities over data science, user experience and efficacy.
Previously, Juan worked at NBC Universal in New York as Vice President for Strategy at iVillage Networks and General Manager for its display business. Before NBC Universal, he led product and technology transformation projects for media and technology companies in the US and Europe as part of Booz Allen (now Strategy&).
Juan started his digital career in 1996 as co-founder of the first local internet portal in Spain and continues to be actively engaged in the digital community as an angel investor and mentor.
He is a member of the International Academy of Digital Arts & Sciences and was appointed in 2015 as an Association Member of BUPA, the international healthcare company.
Juan holds a double degree in Law & Economics from ICADE University (Spain) and an MBA from INSEAD.
Mark Brangstrup Watts, Executive Director
Date of appointment: 16 February 2015
Mark Brangstrup Watts founded Marwyn, the asset management and corporate finance group, in 2002 with James Corsellis. Mark is joint managing partner of Marwyn Capital LLP, which provides corporate finance advice, and Marwyn Investment Management LLP, which provides asset management solutions and investment advisory services (both of which are regulated by the Financial Conduct Authority). Mark is a director of Marwyn Asset Management Limited, a regulated fund manager and also a trustee of the Marwyn Trust, a charity focused on initiatives supporting education and entrepreneurship for young people in disadvantaged communities. Mark has a beneficial interest in Axio Capital Solutions Limited, the company secretary of the Company. Marwyn has launched 18 companies in partnership with experienced management teams across a variety of sectors, typically executing buy and build strategies. Mark has held board positions on several Official List and AIM listed companies, including Entertainment One Limited, Advanced Computer Software plc, Inspicio plc and Talarius plc.
It is currently intended that, following the completion of the Company's first acquisition, Mark will adopt a non- executive role.
James Corsellis, Executive Director
Date of appointment: 16 February 2015
James Corsellis founded Marwyn, the asset management and corporate finance group, in 2002 with Mark Brangstrup Watts. James is joint Managing Partner of Marwyn Capital LLP, which provides corporate finance advice, and Marwyn Investment Management LLP, which provides asset management solutions and investment advisory services, (both of which are regulated by the Financial Conduct Authority). James is a director of Marwyn Asset Management Limited, a regulated fund manager, and also a trustee of the Marwyn Trust, a charity focused on initiatives supporting education and entrepreneurship for young people in disadvantaged communities. James has a beneficial interest in Axio Capital Solutions Limited, the company secretary of the Company. Marwyn has launched 18 companies across a variety of sectors with James providing support to these companies, using his experience of working with a number of companies in various roles (including as Chairman of Entertainment One Limited and director of Breedon Aggregates Limited, Concateno plc and Catalina Holdings Limited) as well as his operating experience as the CEO and founder of technology business, iCollector plc and CM Interactive.
It is currently intended that, following the completion of the Company's first acquisition, James will adopt a non- executive role.
Directors' interests
The Directors have no direct interests in the Ordinary shares of the Company but have interests in the Participation shares which are detailed in note 18.
Directors' remuneration
The emoluments of the individual Directors for the year are detailed in note 6.
Substantial shareholdings
At 30 June 2017 the following interests in 3% or more of the issued Ordinary shares had been notified to the Company.
Shareholders % Shareholding ===================================== ========================================= Funds managed by Marwyn Asset Management Limited 34.9% Invesco Asset Management Limited 16.3% Ruffer LLP 9.8% City Financial Investment Company Limited 9.8% Magnetar Financial (UK) LLP 5.5% Hargreave Hale Limited 5.0% Standard Life Investments Limited 4.9% Herald Investment Management Limited 3.3%
Independent auditors
The Directors have reason to believe that PricewaterhouseCoopers LLP conducted an effective audit. The Directors have provided the auditors with full access to all of the books and records of the Company. PricewaterhouseCoopers LLP has expressed its willingness to continue to act as auditors to the Company and a resolution for its re-appointment will be proposed at the forthcoming Annual General Meeting.
Corporate governance
The Directors recognise the importance of sound corporate governance commensurate with the size of the Group and the interests of the shareholders. The Group is governed by the Board of Directors. The Board comprises a Non-Executive Director, Arnaud de Puyfontaine and five Executive Directors: Rebecca Miskin, Bill Davis, Juan Lopez-Valcarcel, Mark Brangstrup Watts and James Corsellis. It is intended that Mark Brangstrup Watts and James Corsellis will adopt non-executive roles following the completion of the Company's first acquisition. So far as is practicable, taking into account the size and nature of the Company, the Directors intend to comply with the Quoted Companies Alliance Corporate Governance Guidelines for Smaller Quoted Companies to the extent appropriate to the size and nature of the Company, upon completion of the first acquisition by the Company.
Audit and risk committee
At present, the Company does not consider it necessary to establish an audit committee given the nature of its board structure and operations. The Board will undertake all functions that would normally be delegated to the audit committee, including reviewing annual and interim results, receiving reports from its auditors, agreeing the auditors' remuneration and assessing the effectiveness of the audit and internal control environment. Where necessary the Board will obtain specialist external advice from either its auditors or other advisers. The Board will establish an audit committee upon completion of the first acquisition by the Company.
Nomination and remuneration committee
The Company does not intend to establish remuneration and nomination committees until the completion of the Company's first acquisition as those committees are not currently appropriate given the nature of the Company's board structure and operations. Accordingly, the Board will review the remuneration of the Directors annually and agree reasonable and market standard (as regards level) non-executive fees, based upon market information sourced from appropriate external consultants. Consideration will be given by the Board to future succession plans for members of the Board, as well as consideration as to whether the Board has the skills required to manage the Company effectively. The Board intends to establish remuneration and nomination committee upon completion of the first acquisition by the company.
Share dealing
In 2016, the Company adopted a compliance manual in relation to its ongoing obligations under the new European Union Market Abuse Regulations ("MAR") which became effective on 3 July 2016. The Company's share dealing code was reviewed and updated to reflect the requirements of MAR at that time. The Company has systems in place to ensure compliance by the Board, the Company, and its 'applicable employees' (as defined in the AIM Rules for Companies) with the provisions of the AIM Rules for Companies relating to dealings in securities of the Company and MAR. The Directors believe that the share dealing code and MAR Compliance Manual adopted by the Board is appropriate for a Company quoted on AIM. The Board will comply with Rule 21 of the AIM Rules for Companies relating to Directors' dealings and will take all reasonable steps to ensure compliance by the Company's 'applicable employees'.
Relations with Shareholders
The Directors are always available for communication with Shareholders and all Shareholders have the opportunity, and are encouraged, to attend and vote at the Annual General Meetings of the Company during which the Board will be available to discuss issues affecting the Company. The Board stays informed of Shareholders' views via regular meetings and other communications.
Statement of going concern
On the basis of current financial projections and facilities available, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future and, accordingly, consider that it is appropriate to adopt the going concern basis in preparing these financial statements.
Internal control
The Board is responsible for establishing and maintaining the Company's system of internal control and reviewing its effectiveness. Internal control systems are designed to meet the particular needs of the Company and the particular risks to which it is exposed. The procedures are designed to manage rather than eliminate risk and by their nature can only provide reasonable but not absolute assurance against material misstatement or loss.
The Board has reviewed the Company's risk management and control systems and believes that the controls are satisfactory given the nature and size of the Company.
Financial risk profile
The Company's financial instruments comprise mainly of cash and various items such as payables and receivables that arise directly from the Company's operations. Details of the risks relevant to the Group are included in the notes to the financial statements and on pages 38 to 41.
Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under applicable company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group and company for that period. In preparing the financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable IFRSs as adopted by the European Union have been followed for the group financial statements and IFRSs as adopted by the European Union have been followed for the company financial statements, subject to any material departures disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.
The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Company's performance, business model and strategy.
Each of the Directors, whose names and functions are listed in the Chairman's Statement and Strategic Report confirm that, to the best of their knowledge:
-- the group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the group;
-- the company financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the company; and
-- the Chairman's Statement and Strategic Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces.
Disclosure of information to Auditors
In the case of each Director in office at the date the Directors' Report is approved:
-- so far as the director is aware, there is no relevant audit information of which the Group and Company's auditors are unaware; and
-- they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Group and Company's auditors are aware of that information.
Directors' insurance
The Company also purchased and maintained throughout the financial period Directors' and Officers' liability insurance in respect of itself and its Directors. This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
On behalf of the Board
Rebecca Miskin Bill Davis
Director and Chief Executive Director and Chief
Officer Financial Officer
29 June 2017 29 June 2017
Independent auditors' report to the members of Gloo Networks plc
Report on the financial statements
Our opinion
In our opinion:
-- Gloo Networks plc's group financial statements and company financial statements (the "financial statements") give a true and fair view of the state of the group's and of the company's affairs as at 31 March 2017 and of the group's loss and the group's and the company's cash flows for the year then ended;
-- the group financial statements have been properly prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union;
-- the company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
What we have audited
The financial statements, included within the Annual Report and Audited Consolidated Financial Statements (the "Annual Report"), comprise:
-- the consolidated and company statements of financial position as at 31 March 2017; -- the consolidated statement of comprehensive income for the year then ended; -- the consolidated and company statements of cash flows for the year then ended; -- the consolidated and company statements of changes in equity for the year then ended; and
-- the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.
The financial reporting framework that has been applied in the preparation of the financial statements is IFRSs as adopted by the European Union, and applicable law and, as regards the company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
-- the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and
-- the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.
In addition, in light of the knowledge and understanding of the group, the company and their environment obtained in the course of the audit, we are required to report if we have identified any material misstatements in the Strategic Report and the Report of the Directors. We have nothing to report in this respect.
Other matters on which we are required to report by exception
Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
-- we have not received all the information and explanations we require for our audit; or
-- adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
-- the company financial statements are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility.
Directors' remuneration
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors' remuneration specified by law are not made. We have no exceptions to report arising from this responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors' Responsibilities Statement set out on page 9, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland) ("ISAs (UK & Ireland)"). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:
-- whether the accounting policies are appropriate to the group's and the company's circumstances and have been consistently applied and adequately disclosed;
-- the reasonableness of significant accounting estimates made by the directors; and -- the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors' judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. With respect to the Strategic Report and Report of the Directors, we consider whether those reports include the disclosures required by applicable legal requirements.
Philip Stokes (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London
29 June 2017
-- The maintenance and integrity of the Gloo Networks plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
-- Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Consolidated Consolidated
year ended period
31 March to
Note 2017 31
March
2016
=========================== ====================== ===================== =====================
GBP GBP
Administrative expenses 7 (4,520,042) (2,739,70251)
===================== =====================
Operating loss (4,520,042) (2,739,701)
Interest income 84,780 72,703
===================== =====================
Interest income 84,780 72,703
===================== =====================
Loss before income tax (4,435,262) (2,666,998)
===================== =====================
Income tax 9 - -
===================== =====================
Net loss (4,435,262) (2,666,998)
Total other comprehensive - -
income/(loss)
===================== =====================
Total comprehensive loss (4,435,262) (2,666,998)
===================== =====================
Attributable to:
Owners of the parent (4,435,262) (2,666,998)
Loss per ordinary share 8
Basic and diluted loss per
share attributable to
ordinary equity holders
of the parent (GBP) (0.173) (0.182)
The Group's activities derive from continuing operations.
The notes on pages 21 to 37 are an integral part of these Consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated Consolidated
as at as at
31 March 31 March
Note 2017 2016
=============================== ====== ========================== ==========================
GBP GBP
Assets
Non-current assets
Fixed assets 10 1,117 -
========================== ==========================
Total non-current assets 1,117 -
Current assets
Cash and cash equivalents 13 23,485,780 27,242,121
Other receivables 12 167,542 135,696
========================== ==========================
Total current assets 23,653,322 27,377,817
========================== ==========================
Total assets 23,654,439 27,377,817
========================== ==========================
Current liabilities
Trade and other payables 14 816,186 202,524
========================== ==========================
Total liabilities 816,186 202,524
Capital and reserves attributable to
equity holders of the parent
Share capital 15 256,000 256,000
Share premium 15 29,551,492 29,551,492
Share-based payment reserve 16 133,021 34,799
Retained earnings 16 (7,102,260) (2,666,998)
========================== ==========================
Total equity 22,838,253 27,175,293
========================== ==========================
Total equity and liabilities 23,654,439 27,377,817
========================== ==========================
The notes on pages 21 to 37 are an integral part of these Consolidated financial statements.
The Consolidated Financial Statements on pages 14 to 17 and related notes on pages 21 to 37 were approved by the Board of Directors on 29 June 2017 and were signed on its behalf by:
Rebecca Miskin Bill Davis Director and Chief Executive Director and Chief Financial Officer Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-
based
Share Share payment Retained Total
Note capital premium reserve earnings equity
============ ========= ================ ================ ============== ============== =================
GBP GBP GBP GBP GBP
Balance as - - - - -
at
16 February
2015
Loss for the
period - - - (2,666,998) (2,666,998)
Issue of
share
capital 15 305,998 30,464,000 - - 30,769,998
Share issue
costs 15 - (912,508) - - (912,508)
Share
redemption 15 (49,998) - - - (49,998)
Share-based
payments 18 - - 34,799 - 34,799
================ ================ ============== ============== =================
Balance as
at
31 March
2016 256,000 29,551,492 34,799 (2,666,998) 27,175,293
================ ================ ============== ============== =================
Share-
based
Share Share payment Retained Total
Note capital premium reserve earnings equity
============ ========== ================ ================ ============== ============== =================
GBP GBP GBP GBP GBP
Balance as
at
1 April
2016 256,000 29,551,492 34,799 (2,666,998) 27,175,293
Loss for the
year - - - (4,435,262) (4,435,262)
Issue of
share
capital 15 - - - - -
Share issue
costs 15 - - - - -
Share
redemption 15 - - - - -
Share-based
payments 18 - - 98,222 - 98,222
================ ================ ============== ============== =================
Balance as
at
31 March
2017 256,000 29,551,492 133,021 (7,102,260) 22,838,253
================ ================ ============== ============== =================
The notes on pages 21 to 37 are an integral part of these Consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Consolidated Consolidated
for the for the
year ended period
31 March ended to
Note 2017 31 March
2016
================================== ============= ========================= =========================
GBP GBP
Cash flows from operating activities
Operating loss (4,520,042) (2,739,701)
Adjustments to reconcile loss before operating
loss to net operating cash flows:
Increase in trade and other
receivables 12 (31,846) (135,696)
Increase in trade and other
payables 14 613,662 202,524
Share-based payment expense 18 98,222 34,799
Depreciation expense 240 -
Other (1,357) -
========================= =========================
Net cash used in operating
activities (3,841,121) (2,638,074)
========================= =========================
Cash flows from financing activities
Bank interest received 84,780 72,703
Redemption of reclassified
preference shares to equity 15 - (49,998)
Proceeds from issue of share
capital 15 - 30,769,998
Share issue costs 15 - (912,508)
========================= =========================
Net cash generated from financing
activities 84,780 29,880,195
========================= =========================
Net (decrease)/increase in
cash and cash equivalents (3,756,341) 27,242,121
Cash and cash equivalents
at beginning of the year/period 27,242,121 -
========================= =========================
Cash and cash equivalents
at the end of the year/period 13 23,485,780 27,242,121
========================= =========================
The notes on pages 21 to 37 are an integral part of these Consolidated financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
Company Company
as at as at
31 March 31 March
Note 2017 2016
=============================== ====== ======================= =======================
GBP GBP
Assets
Non-current assets
Investment in subsidiaries 11 800 476
Fixed assets 10 1,117 -
======================= =======================
Total non-current assets 1,917 476
Current assets
Cash and cash equivalents 13 23,485,780 27,242,121
Other receivables 12 2,495,314 1,410,250
======================= =======================
Total current assets 25,981,094 28,652,371
======================= =======================
Total assets 25,983,011 28,652,847
======================= =======================
Current liabilities
Trade and other payables 14 812,186 198,454
======================= =======================
Total liabilities 812,186 198,454
Capital and reserves attributable to
equity holders of the parent
Share capital 15 256,000 256,000
Share premium 15 29,551,492 29,551,492
Share-based payment reserve 16 133,021 34,799
Retained earnings 16 (4,769,688) (1,387,898)
======================= =======================
Total equity 25,170,825 28,454,393
======================= =======================
Total equity and liabilities 25,983,011 28,652,847
======================= =======================
The notes on pages 21 to 37 are an integral part of these Company financial statements.
The Company Financial Statements on pages 18 to 20 and related notes on pages 21 to 37 were approved by the Board of Directors on 29 June 2017 and were signed on its behalf by:
Rebecca Miskin Bill Davis Director and Chief Director and Chief Executive Officer Financial Officer
COMPANY STATEMENT OF CHANGES IN EQUITY
Share-
based
Share Share payment Retained Total
Note capital premium reserve earnings equity
============ ========= ================ ================ ============== ============== =================
GBP GBP GBP GBP GBP
Balance as - - - - -
at
16 February
2015
Loss for the
period - - - (1,387,898) (1,387,898)
Issue of
share
capital 15 305,998 30,464,000 - - 30,769,998
Share issue
costs 15 - (912,508) - - (912,508)
Share
redemption 15 (49,998) - - - (49,998)
Share-based
payments 18 - - 34,799 - 34,799
================ ================ ============== ============== =================
Balance as
at
31 March
2016 256,000 29,551,492 34,799 (1,387,898) 28,454,393
================ ================ ============== ============== =================
Share-
based
Share Share payment Retained Total
Note capital premium reserve earnings equity
============ ========== ================ ================ ============== ============== =================
GBP GBP GBP GBP GBP
Balance as
at
1 April
2016 256,000 29,551,492 34,799 (1,387,898) 28,454,393
Loss for the
year - - - (3,381,790) (3,381,790)
Issue of
share
capital 15 - - - - -
Share issue
costs 15 - - - - -
Share
redemption 15 - - - - -
Share-based
payments 18 - - 98,222 - 98,222
================ ================ ============== ============== =================
Balance as
at
31 March
2017 256,000 29,551,492 133,021 (4,769,688) 25,170,825
================ ================ ============== ============== =================
The notes on pages 21 to 37 are an integral part of these Company financial statements.
COMPANY STATEMENT OF CASHFLOWS
Company Company
for the for the
year period
ended ended
Note 31 March to 31
2017 March
2016
================================== =============== ===================== ===================
GBP GBP
Cash flows from operating activities
Operating loss (3,466,570) (1,460,601)
Adjustments to reconcile loss before operating
loss to net operating cash flows:
Increase in trade and other
receivables 12 (1,085,064) (1,410,250)
Increase in trade and other
payables 14 613,732 198,454
Share-based payment expense 18 98,222 34,799
Depreciation expense 240 -
Other (1,357) -
===================== ===================
Net cash used in operating
activities (3,840,797) (2,637,598)
===================== ===================
Cash flows from investing activities
Investment in subsidiary 11 (324) (476)
===================== ===================
Net cash used in investing
activities (324) (476)
===================== ===================
Cash flows from financing activities
Bank interest received 84,780 72,703
Redemption of reclassified
preference shares to equity 15 - (49,998)
Proceeds from issue of share
capital 15 - 30,769,998
Share issue costs 15 - (912,508)
===================== ===================
Net cash generated from financing
activities 84,780 29,880,195
===================== ===================
Net (decrease)/increase in
cash and cash equivalents (3,756,341) 27,242,121
Cash and cash equivalents
at beginning of the year/period 27,242,121 -
===================== ===================
Cash and cash equivalents
at the end of the year/period 13 23,485,780 27,242,121
===================== ===================
The notes on pages 21 to 37 are an integral part of these Company financial statements.
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Gloo Networks plc (the "Company") is a digital transformation company incorporated in England and Wales and domiciled in the United Kingdom. It is a public limited company with company number 09441537 and has its registered office at 20 Buckingham Street, London, WC2N 6EF. The Company wholly owns Gloo Networks Jersey Limited (collectively, the "Group"), which was incorporated on the formation of the Group.
2. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these Consolidated and Company financial statements are set out below. These policies have been consistently applied to all the periods presented.
(a) Basis of preparation
The Company was incorporated on 16 February 2015.
The Consolidated Financial Statements represent the year ended 31 March 2017, with the comparative period from incorporation to 31 March 2016, and have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union (IFRS EU), and with those parts of the Companies Act 2006 as applicable to companies reporting under IFRS.
The financial statements of the Company comprise the statement of financial position, statement of changes in equity, the cash flow statement and related notes. In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements in International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB') and endorsed by the EU and makes amendments where necessary in order to comply with the Companies Act 2006. The Company has also taken advantage of the exemption under Section 408 of the Companies Act 2006 from presenting its own profit and loss account.
The Consolidated and Company Financial Statements are prepared in accordance with IFRS EU under the historical cost convention and are presented in British Pounds Sterling, which is the presentational and functional currency of the Group and Company.
The preparation of financial statements in conformity with IFRS EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group and Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Consolidated and Company Financial Statements are disclosed in note 3.
(b) New standards and amendments to International Financial Reporting Standards
Standards, amendments and interpretation effective and adopted by the Group and Company:
The accounting policies adopted in the presentation of the financial statements of the Group and Company reflect the adoption of the following new standards for annual periods beginning on or after 1 January 2016, none of which had a material effect on the Group or Company.
Standard Effective
Date
============================================== ==================
Amendments to IFRS 11 - Accounting for 1 January
Acquisitions of Interests in Joint Operations 2016
Amendments to IAS 1 - Disclosure Initiative 1 January
2016
Amendments to IAS 27 - Equity Method 1 January
in Separate Financial Statements 2016
Annual improvements (2012-2014) 1 January
2016
Amendments to IAS 16 and IAS 41 - Bearer 1 January
plants 2016
Amendments to IFRS 10, IFRS 12 and IAS 1 January
28: Investment Entities - Applying the 2016
Consolidation Exception
Amendments to IAS 16 - Property, plant 1 January
and equipment and IAS 38, Intangible 2016
assets, on depreciation and amortisation
============================================== ==================
Standards issued but not yet effective:
The following standards are issued but not yet effective. The Group and Company intend to adopt these standards, if applicable, when they become effective. The effects of IFRS 15 and IFRS 16 are yet to be assessed. It is not expected that any of the remaining standards will have a material impact on the Group and Company.
IFRS 14 Regulatory Deferral Accounts 1 January
20162
Amendments to IAS 12: Recognition of 1 January
Deferred Tax Assets for Unrealised Losses 20171
IFRS 17 - Insurance contracts 1 January
20211
IFRS 15 - Revenue from Contracts with 1 January
Customers 20183
IFRS 9 - Financial instruments 1 January
20183
IFRS 16 - Leases 1 January
20191
Amendments to IFRS 2: Classification
and Measurement of Share-based Payment 1 January
Transactions 20181
Amendments to IFRS 4: Applying IFRS
9 Financial Instruments with IFRS 4 1 January
Insurance Contracts 20181
1 subject to EU endorsement
2 interim standard not endorsed by the EU
3 have been endorsed, but are not yet effective
(c) Going concern
The Financial Statements have been prepared on a going concern basis, which assumes that both the Group and Company will continue to be able to meet their liabilities as they fall due for the foreseeable future. As both the Group and Company have significant cash reserves, the Directors have concluded it remains appropriate to use the going concern basis.
(d) Basis of consolidation
Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial information of subsidiaries is fully consolidated from the date that control commences until the date that control ceases.
Intragroup balances, and any gains and losses or income and expenses arising from intragroup transactions are eliminated on consolidation.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less.
(f) Fixed assets
Fixed assets are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation of assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:
- Furniture, fittings and equipment 3-8 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within 'Other income' in the income statement.
(g) Financial liabilities
Both the Group and Company recognise a financial liability on assuming a financial obligation and derecognise financial liabilities when, and only when, their obligations are discharged, cancelled or they expire.
(h) Interest income and expenses
Interest income on cash deposits, and expenses are accounted for on an accruals basis.
(i) Costs directly attributable to the issue of equity
Share issue costs are placing expenses directly relating to the issue of the Company's shares. These expenses include fees payable under share placement agreements, printing, and distribution costs and legal fees and any other applicable expenses. All such costs are charged to equity and deducted from the proceeds received.
(j) Investments
Investments in subsidiaries are valued at cost less provision for impairment.
(k) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in share premium as a deduction from the proceeds.
(l) Corporation tax
Corporation tax for the period presented comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to taxes payable in respect of previous periods.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(m) Loss per ordinary share
The Group presents basic earnings per ordinary share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.
(n) Share-based transactions
Equity-settled share-based payments ("Participation shares") to Directors and others providing similar services are measured at the fair value of the equity instruments at the grant date, taking into account any market performance conditions. The fair value is expensed through administrative expenses, with a corresponding increase in equity through the share-based payment reserve, on a straight line basis over the period that the employees become unconditionally entitled to the awards.
(o) Pension benefits
The Group operates a defined contribution pension scheme and pays contributions to privately administered pension plans on behalf of employees as contractually agreed, or the equivalent contribution is paid in cash to the employee. Accounting of the contributions to pension schemes is in line with the treatment of a defined contribution scheme. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an expense on the accruals basis and are included within administrative expenses in the Consolidated Statement of Comprehensive Income.
(p) Loan and other receivables
Loans and other receivables are non-derivative financial assets with fixed determinable payments that are not quoted in an active market. They are included in current assets. The Group and Company's loans and receivables comprise trade and other receivables and cash and cash equivalents in the Consolidated and Company Statement of Financial Position (notes 12 and 13). If collection of the amounts is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Consolidated and Company Financial Statements under IFRS 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.
The Directors have exercised judgement and made assumptions in relation to the classification and valuation of the equity settled Participation shares, and the calculation of the fair value of the scheme at the grant date. These assumptions are disclosed in note 18.
For the periods presented, the Directors do not consider that they have made any other significant estimates, judgement or assumptions that would materially affect the balances reported in these financial statements.
4. SEGMENT INFORMATION
The Board of Directors is the Group's chief operating decision-maker. As the Group had not yet made an acquisition as of 31 March 2017, the Group is organised and operates as one segment.
5. OPERATIONAL LOSS
The operating loss is stated after charging auditors' remuneration of GBP25,000 (31 March 2016: GBP25,000). The total auditors' remuneration related to fees payable for the audit of the parent company and consolidated financial statements of GBP25,000 (31 March 2016: GBP25,000) and fees payable for non-audit services of GBP285,000 (31 March 2016: GBP48,575).
6. EMPLOYEES AND DIRECTORS
(a) Staff costs for the Group during the year/period:
For the For the
year ended period
31 March ended
2017 31 March
2016
================================== ====================== ====================
GBP GBP
Wages and salaries 2,028,822 1,178,458
Social security costs 155,961 151,152
Other pension costs 68,037 66,167
Share-based payment expense 98,152 34,869
Other employment related expenses 229,417 101,089
====================== ====================
Total employment cost expense 2,580,389 1,531,735
====================== ====================
(b) Directors' emoluments
The Board considers the Directors of the Company to be the key management personnel of the Group.
Bill Davis received a salary of GBP319,820 (31 March 2016: GBPnil) during the year. Bill's fixed annual salary is $550,000, effective from 1 July 2016, payable monthly in arrears and his pension benefits for the year are GBP15,041. Bill's Health and Welfare benefits for the year amounted to GBP29,921 (31 March 2016: GBPnil). During the year, Bill was entitled to receive a bonus of GBP474,283 (31 March 2016: GBPnil) as outlined in his service agreement. Bill's annual bonus targeted at 195 per cent of salary per year is based on both the performance of the Company and the Executive's performance.
Juan Lopez-Valcarcel, received a salary of GBP235,000 (31 March 2016: GBP287,724) during the year, and pension benefits of GBP23,500 (31 March 2016: GBP29,293). Juan's fixed annual salary is GBP235,000, effective from 12 January 2015, payable monthly in arrears, plus a pension contribution of 10 per cent of his fixed annual salary. Juan's private medical insurance contribution for the year amounted to GBP3,758. During the year Juan received an annual bonus of GBP164,500 (31 March 2016: GBP227,918) as outlined in his service agreement. The annual bonus of up to 100 per cent of salary per year is subject to an annual review.
Rebecca Miskin, received a salary of GBP295,000 (31 March 2016: GBP363,445) during the year, and pension benefits of GBP29,496 (31 March 2016: GBP36,874). Rebecca's fixed annual salary is GBP295,000, effective from 8 January 2015, payable monthly in arrears, plus a pension contribution of 10 per cent of her fixed annual salary. During the year Rebecca received an annual bonus of GBP106,250 (31 March 2016: GBP122,602) as outlined in her service agreement. The annual bonus of up to GBP125,000 per year is subject to an annual review.
Rebecca Miskin's service agreement contains a bonus arrangement, which is dependent on the completion of each acquisition of a trading business or company by the Group, until such point where the Total Enterprise Value of all acquired businesses or companies is equal to or greater than GBP200 million.
Up until this condition is satisfied, Rebecca shall be entitled to a cash bonus of an amount equal to 0.5 per cent of the enterprise value of the transaction, as calculated by the Board (or the Remuneration Committee, if one has been established) in its sole and absolute discretion. If the Director's employment ceases prior to the completion of such acquisitions, Rebecca shall be entitled to receive a fair proportion of the bonus.
Arnaud de Puyfontaine received a director fee of GBP75,000 (31 March 2016: GBP22,177) during the year. Arnaud's director fee is GBP75,000, effective from 15 December 2015, payable monthly in arrears. Arnaud's director fee will be reviewed upon completion of the Company's first acquisition.
Mark Brangstrup Watts and James Corsellis are paid fees equal to the prevailing national minimum wage for 35 hours per week. During the period they each received a director fee of GBP13,154 (31 March 2016: GBP13,534).
There were no share options exercised during the year (31 March 2016: GBPnil). The Participation shares owned by Directors are described in note 18. Share-base payment expense includes fair value of the Participation shares as disclosed in the accounting policies as well as subscription price paid by the Company on behalf of Rebecca Miskin, Bill Davis and Juan Lopez-Valcarcel.
(c) Key management compensation
The table below details the aggregate compensation paid in respect of the members of the Board of Directors including the Executive Directors.
For the For the
year ended period
31 March ended
2017 31 March
2016
================================= ====================== ====================
GBP GBP
Salaries and short term employee
benefits 951,128 704,145
Directors' bonuses 745,033 350,520
Post-employment benefits 68,037 66,167
Share-based payment expense 98,152 34,869
====================== ====================
1,862,350 1,155,701
====================== ====================
(d) Employed persons
The average monthly number of persons employed by the Group (including Directors) during the year was as follows:
Average Average
for the for the
year ended period
2017 ended
2016
========== ===================== ===================
Number Number
of employees of employees
Directors 5 4
Other 3 1
===================== ===================
8 5
===================== ===================
(e) Pension benefits
The amount recognised as an expense for the payments made into employees' private pension arrangements was GBP68,037 (31 March 2016: GBP66,167). The amount paid in lieu of payment into a private pension arrangement was GBP15,041 (31 March 2016: GBP21,459).
7. EXPENSES BY NATURE
For the For the
year ended period
31 March ended
2017 31 March
2016
========================== ====================== ====================
GBP GBP
Consolidated expenses by nature
Staff related costs 2,580,389 1,531,735
Office costs 92,428 101,495
Legal & professional fees 937,436 723,036
Project costs 637,163 285,085
Other expenses 272,626 98,350
====================== ====================
4,520,042 2,739,701
====================== ====================
8. LOSS PER ORDINARY SHARE
Basic earnings per ordinary share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. Participation shares (refer note 18) have not been included in the calculation of diluted earnings per share because they are not dilutive for the year/ period presented as options haven't yet vested.
For the year For the
ended 31 March period
2017 ended
31 March
2016
=============================== ======================================== ===================
GBP GBP
Consolidated
Loss attributable to the Group (4,435,262) (2,666,998)
Weighted average number of
ordinary shares in issue 25,600,000 14,636,785
Basic and diluted loss per
share (0.173) (0.182)
9. INCOME TAX
For the For the
year period
ended ended
31 March 31 March
2017 2016
GBP GBP
Analysis of credit in year/period
Current tax on loss for the year/period - -
====================== ======================
Total current tax - -
====================== ======================
Reconciliation of Consolidated effective rate and tax charge:
For the For the
year ended period
31 March ended
2017 31 March
2016
======================================= ====================== ====================
GBP GBP
Loss on ordinary activities before
tax (4,435,262) (2,666,998)
====================== ====================
Loss on ordinary activities multiplied
by the rate of corporation tax
in the UK of 20.00%/20.11% (887,052) (536,333)
Effects of:
Unrecognised losses 887,052 536,333
====================== ====================
Total taxation credit - -
====================== ====================
The company is in its pre-acquisition phase and therefore is not recognising a deferred tax asset due to the uncertainty of future taxable income. The first accounts of the Group were prepared for the period longer than twelve months therefore, the comparative period effective tax rate was 20.11% rather than 20%.
10. FIXED ASSETS
Consolidated and Company
As at As at
31 March 31 March
2017 2016
==================== ======================= =======================
Office equipment GBP GBP
Cost
Opening balance - -
Additions 1,357 -
======================= =======================
1,357 -
======================= =======================
Accumulated depreciation
Opening balance - -
Charge for the year (240) -
======================= =======================
(240) -
======================= =======================
Net book value
Opening balance - -
======================= =======================
1,117 -
======================= =======================
11. INVESTMENTS
(a) Subsidiary undertakings of the Group
The Company directly owns the whole of the issued and fully paid ordinary share capital of its subsidiary undertaking.
The subsidiary undertaking of the Company as at 31 March 2017 is presented below:
Proportion
Proportion of ordinary
Country of ordinary shares
Subsidiary Nature of of shares held by
business incorporation held by the
parent Group
================ ==================== =================== =================== ===============
Gloo Networks Incentive
Jersey Limited vehicle Jersey 100% 100%
There are no restrictions on the Company's ability to access or use the assets and settle the liabilities of the Company's subsidiary. The Company's subsidiary has issued Participation shares to management as detailed in note 18. The subsidiary's registered office is One Waverley Place, Union Street, St Helier, JE1 1AX, Jersey.
As at As at
31 March 31 March
2017 2016
================== ======================= =======================
Company GBP GBP
Cost or valuation 800 476
======================= =======================
Net book value 800 476
======================= =======================
During the year, the Company had subscribed for the remaining 324 authorised but unissued ordinary shares in its subsidiary at a price of GBP1 per share.
12. OTHER RECEIVABLES
All receivables are current. There is no material difference between the book value and the fair value of the other receivables.
Consolidated
As at As at
31 March 31 March
2017 2016
================== ======================= =======================
GBP GBP
Amounts falling due within one year
Prepayments 80,329 19,626
Other receivables 87,213 116,070
======================= =======================
167,542 135,696
======================= =======================
Company
As at As at
31 March 31 March
2017 2016
============================= ===================== =====================
GBP GBP
Amounts falling due within one year
Amounts due from subsidiary 2,329,355 1,278,137
Prepayments 78,746 18,043
Other receivables 87,213 114,070
===================== =====================
2,495,314 1,410,250
===================== =====================
The Directors expect that "Amounts due from subsidiary" will be settled at the time of the first acquisition.
13. CASH AND CASH EQUIVALENTS
Consolidated and Company
As at As at
31 March 31 March
2017 2016
============= ======================= =======================
GBP GBP
Cash and cash equivalents
Cash at bank 23,485,780 27,242,121
======================= =======================
23,485,780 27,242,121
======================= =======================
Cash and cash equivalents comprise balances held at Barclays Bank plc and are all held by the Company.
Credit risk is managed on a Group basis, Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with a minimum short-term credit rating of P-1, as issued by Moody's are used by the Group.
14. TRADE AND OTHER PAYABLES
Consolidated
As at As at
31 March 31 March
2017 2016
====================================== ======================= =======================
GBP GBP
Trade payables 242,541 113,925
Accruals 535,088 27,150
Other tax and national insurance
payable 32,436 47,998
Other creditors 6,121 13,451
======================= =======================
816,186 202,524
======================= =======================
Trade and other payables due within
1 year 816,186 202,524
Trade and other payables due after - -
1 year
======================= =======================
816,186 202,524
======================= =======================
Company
As at As at
31 March 31 March
2017 2016
====================================== ======================= =======================
GBP GBP
Trade payables 242,541 113,925
Accruals 535,088 27,150
Other tax and national insurance
payable 32,436 26,542
Other creditors 2,121 30,837
======================= =======================
812,186 198,454
======================= =======================
Trade and other payables due within
1 year 812,186 198,454
Trade and other payables due after - -
1 year
======================= =======================
812,186 198,454
======================= =======================
There is no material difference between the book value and the fair value of the trade and other payables.
15. CALLED UP SHARE CAPITAL
Consolidated and Company
As at As at
31 March 31 March
2017 2016
================================ ======================= =======================
GBP GBP
Allotted, called and fully paid
25.6 million ordinary shares of
GBP0.01 each 256,000 256,000
======================= =======================
256,000 256,000
======================= =======================
On incorporation, 200 ordinary shares of GBP0.01 each and 49,998 preference shares of GBP1.00 each in the capital of the Company were issued. The ordinary shares were each issued at a premium of GBP1,000 per ordinary share and the preference shares were issued at nominal value. Since then, the Company has issued the following shares:
(i) 250 ordinary shares at a premium of GBP1,000 on 29 April 2015;
(ii) 224,995 ordinary shares at a premium of GBP1.19 per share on 6 July 2015;
(iii) 1 ordinary share at a premium of GBP1.49 on 6 July 2015;
(iv) 374,554 ordinary shares by way of bonus issue out of the Company's share premium on 6 July 2015; and
Upon the Company's admission to AIM, a further 25,000,000 ordinary shares were issued at GBP1.20 per share resulting in total premium on transaction of GBP29,750,000. Total transaction costs taken to share premium in relation to this issue of shares were GBP912,508.
On 6 July 2015 the holders of the redeemable preference shares signed a deed of waiver to irrevocably and unconditionally waive their rights to redeem the 49,998 redeemable preference shares of GBP1.00 each held by them in the Company. The financial effect of this waiver was that the redeemable preference shares were reclassified at the date of the waiver from a liability to equity as the Company was no longer under an obligation to repay the redeemable preference shares on demand from the holders. These shares were fully redeemed on admission to AIM.
The share premium account at 31 March 2017 totalled GBP29,551,492.
All issued shares are fully paid. The holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at general meetings of the Company.
At 31 March 2017, 150 Participation shares were issued as disclosed in note 18.
16. RESERVES
The following describes the nature and purpose of each reserve within shareholders' equity:
Share premium
The amount subscribed for share capital in excess of nominal value less any costs directly attributable to the issue of new shares.
Retained earnings
Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.
Share-based payment reserve
The Share-based payment reserve is the cumulative amount recognised in relation to the equity settled share- based payment scheme as further described in note 18.
17. INSTRUMENTS AND ASSOCIATED RISKS
The Group and Company have the following categories of financial instruments at the year end:
Consolidated
As at As at
31 March 31 March
2017 2016
========================== ======================= =======================
GBP GBP
Loans and receivables
Cash and cash equivalents 23,485,780 27,242,121
Other receivables 167,542 135,696
======================= =======================
23,653,322 27,377,817
======================= =======================
Financial liabilities at amortised cost
Trade payables 242,541 113,925
======================= =======================
242,541 113,925
======================= =======================
Company
As at As at
31 March 31 March
2016 2016
========================== ======================= =======================
GBP GBP
Loans and receivables
Cash and cash equivalents 23,485,780 27,242,121
Other receivables 2,495,314 1,410,250
======================= =======================
25,981,094 28,652,371
======================= =======================
Financial liabilities at amortised costs
Trade payables 242,541 113,925
======================= =======================
242,541 113,925
======================= =======================
There is no material difference between the fair value and book value of the financial assets and liabilities. The Group has exposure to the following risks from its use of financial instruments:
-- Market risk -- Liquidity risk -- Credit risk
This note presents information about the Group's exposure to each of the above risks and the Group's objectives, policies and processes for measuring and managing these risks.
The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.
Treasury activities are managed on a Group basis under policies and procedures approved and monitored by the Board. These are designed to reduce the financial risks faced by the Group which primarily relate to movements in interest rates.
Market risk
The Group's activities primarily expose it to the risk of changes in interest rates due to the significant cash balance currently held however any change in interest rates will not have a material effect on the Group. The Group's operations are entirely in their functional currency and accordingly, no translation exposures arise in trade receivables or trade payables.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
The Group currently meets all liabilities from cash reserves. The Group's liability for operating expenses is monitored on an ongoing basis to ensure cash resources are adequate to meet liabilities as they fall due.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The main credit risk relates to the cash held with financial institutions. The Company manages its exposure to credit risk associated with its cash deposits by selecting counterparties with a high credit rating with which to carry out these transactions. The counterparty for these transactions is Barclays Bank plc, which holds a short-term credit rating of P-1, as issued by Moody's. The Company's maximum exposure to credit risk is the carrying value of the cash on the balance sheet.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain future development of the business. There were no changes in the Group's approach to capital management during the year.
18. SHARE-BASED PAYMENTS
Implementation of share incentive plan - Participation shares
Arrangements were put in place shortly after the Company's formation to create incentives for those who are expected to make key contributions to the success of the Group. The Group's success depends upon the sourcing of attractive investment opportunities, the improvement of the target businesses, and their subsequent growth or sale to realise attractive returns for shareholders. Accordingly, an incentive scheme was created to reward key contributors to the creation of value. At the year end, a total of GBP133,021 (31 March 2016: GBP34,799) was recorded in the share-based payment reserve. This is based on a grant date fair value of GBP226,200 (31 March 2016: GBP150,200) spread over the vesting period (defined below) and recognised for the period between the grant date (defined below) and the reporting date.
On being offered, the Company may purchase the Participation shares either for cash or for the issue of new Ordinary shares at its discretion. The Company expects to settle in the issue of new Ordinary shares and has therefore recognised this as an equity settled scheme. The valuation of the Participation shares is discussed below. The Participation shares may only be sold on this basis if both the growth and at least one of the vesting conditions (defined on the next page) have been satisfied. If these conditions have not been satisfied at the fifth anniversary of Gloo Networks plc's Admission to AIM "Admission" (i.e. 11 August 2020), the Participation shares must be sold to the Company at the subscription price. Details of the Participation shares issued are shown on the next page.
Participation shares
Gloo Networks Jersey Limited issued Participation shares to Rebecca Miskin, Juan Lopez-Valcarcel, Marwyn Long Term Incentive LP, in which James Corsellis and Mark Brangstrup Watts hold indirect interests, Puyfamily Société Civile an entity in which Arnaud de Puyfontaine is interested and to Bill Davis.
Grant date
The date at which the entity and another party agree to a share-based payment arrangement, for accounting purposes is the grant date. The grant dates for the majority of the Participation shares (120), issued to Rebecca Miskin, Juan Lopez-Valcarcel and Marwyn Long Term Incentive LP is 5 June 2015. 10 shares were issued on 4 December 2015 to Puyfamily Société Civile and the remaining 20 shares were issued to Bill Davis on 17 June 2016. This is in line with when the share-based payments were awarded.
Growth condition
The Growth Condition is that the compound annual growth of the Company's equity value must be at least 10% per annum. The Growth Condition takes into account new shares issued, dividends and capital returned to shareholders.
Vesting conditions and Vesting period
The Participation shares are subject to certain vesting conditions, at least one of which must be (and continue to be) satisfied in order for a holder of the Participation shares to exercise his or her redemption rights.
The vesting period is a period during which the vesting conditions are to be satisfied. The vesting period ends on 11 August 2020.
The vesting conditions are as follows:
(i) a sale of all or a material part of the business of Gloo Networks Jersey Limited;
(ii) a sale of all of the issued ordinary shares of Gloo Networks Jersey Limited occurring;
(iii) a winding up of Gloo Networks Jersey Limited occurring;
(iv) a sale or change of control of the Company; or
(v) it is later than the third anniversary of Admission (i.e. 11 August 2018).
Rebecca Miskin, Bill Davis, Juan Lopez-Valcarcel and Arnaud de Puyfontaine have agreed that if they cease to be involved in the Company during the period from the Admission date to and including the third anniversary of the Admission date then in certain circumstances a proportion of their Participation shares may be forfeited in accordance with the leaver provisions in their subscription agreements.
Value
Subject to the provisions detailed above, the Participation shares can be sold to the Company for an aggregate value equivalent to 15% of the increase in "Shareholder Value" in the Company. Shareholder Value is broadly defined as the increase in market capitalisation of all Ordinary shares of the Company issued up to the date of sale, allowing for any dividends and other capital movements.
Holding of Participation shares
Participation shares have been created and shares have been allocated and issued as shown in the table below.
Number
Nominal of Subscription Fair value
price Participation price at grant
per shares date
share
================== ======================= ========================= ===================== ====================
GBP GBP GBP
Marwyn Long Term
Incentive LP 1 50 2,00 50,550
Rebecca Miskin 1 50 50 50,550
Juan Lopez -
Valcarcel 1 20 20 20,220
Bill Davis 1 20 20 76,000
Puyfamily
Société
Civile - Arnaud
de Puyfontaine 1 10 2,000 28,880
========================= ===================== ====================
150 4,090 226,200
========================= ===================== ====================
Valuation of Participation shares
The Participation shares allocated pursuant to employee shareholder agreements with Gloo Networks Jersey Limited, have been accounted for in accordance with IFRS 2, "Share-Based Payments".
Details of the value of the Participation shares are set out below, based on 100% of the shares granted coming to vest:
Employee Shareholder
Shares
Number of Participation
shares granted 150
Exercise price n/a
Vesting period/date From the third anniversary
of Admission to the fifth
Anniversary
Fair value of shares at GBP226,200
grant
As at the year end, GBP98,222 (31 March 2016: GBP34,799) has been recognised as a share-based payment reserve in relation to the Participation shares. The full fair value amount of Marwyn Long Term Incentive LP's A shares of GBP50,550 has been recognised in the Consolidated Statement of Comprehensive Income and in a share based payment reserve within the Consolidated and Company Statement of Financial Position as at the year end, as the participant is not required to complete a specified period of service and the options are therefore deemed to have vested immediately.
The value of the Participation shares granted under the scheme has been calculated using a Monte Carlo model. The fair value is based on a weighted average of GBP30.72 million raised on Admission and ungeared volatility of 20% based on a weighted average share price over the vesting period. An expected term input range of between two and four years has been used, being the likely period of time between the date on which an acquisition takes place and the start and end of the redemption period. The participation shares are subject to a growth condition, which is a market performance condition, and as such has been taken into consideration in determining their fair value. The risk-free rate of return for the Awards was taken from zero-coupon UK Government bonds with a redemption period in line with the expected term. An average value of between 0.65% (2 years) and 1.10% (4 years) has been sourced from Thomson Datastream as at each date of grant. Due to the narrow range of risk free rates, a risk free rate of 1.00% for all scenarios has been used. The model incorporates a range of probabilities for the likelihood of an acquisition being made of a given size.
19. RELATED PARTY TRANSACTIONS
In the opinion of the Directors, there is no single controlling party. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party, or the parties are under common control or influence, in making financial or operational decisions.
Mark Brangstrup Watts and James Corsellis are managing partners of Marwyn Capital LLP which provides corporate finance advice and various office and finance support services to the Company. During the year Marwyn Capital LLP charged a total of GBP305,967 (31 March 2016: GBP360,815) (net of VAT as applicable). Marwyn Capital LLP was owed an amount of GBP25,648 (31 March 2016: GBP24,957) at the balance sheet date.
Pre-Admission, MVI LP subscribed for a total of 600,000 ordinary shares as detailed in note 15. On Admission MVI LP subscribed for 8,933,333 ordinary shares at GBP1.20 per share pursuant to a subscription agreement dated 31 July 2015. As at 31 March 2017, MVI LP held its subscribed ordinary shares via Marwyn Value Investors II LP ("MVI II"). MVI LP and MVI II are managed by Marwyn Asset Management Limited, the company of which Mark Brangstrup Watts and James Corsellis are directors and ultimate beneficial owners.
Mark Brangstrup Watts and James Corsellis are the ultimate beneficial owners of Axio Capital Solutions Limited which provides company secretarial, administrative and accounting services to the Group. During the year Axio Capital Solutions Limited charged GBP62,199 (31 March 2016: GBP63,453) in respect of services supplied. Axio Capital Solutions Limited was owed an amount of GBP1,316 (31 March 2016: GBP2,983) at the balance sheet date.
Marwyn Long Term Incentive LP, a partnership in which James Corsellis and Mark Brangstrup Watts are indirectly beneficially interested, holds Participation shares as disclosed in note 18.
Puyfamily Société Civile, an entity in which Arnaud de Puyfontaine is beneficially interested, holds Participation shares as disclosed in note 18.
Gloo Networks Jersey Limited entered into employee shareholders agreements with each of Rebecca Miskin, Bill Davis and Juan Lopez-Valcarcel pursuant to which each waived certain employment rights in return for receipt of Participation shares.
At 31 March 2017, Gloo Networks Jersey, the subsidiary, owed GBP2,329,355 (31 March 2016: GBP1,278,137) to the Company for services paid on its behalf.
20. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding at 31 March 2017 that require disclosure or adjustment in these financial statements.
21. COMPANY LOSS FOR THE PERIOD
The Company has not presented its own statement of comprehensive income as permitted by section 408 of the Companies Act 2006. The loss and total comprehensive loss for the period and the total loss attributable to shareholders was GBP3,381,790 (31 March 2016: GBP1,387,898).
22. POST BALANCE SHEET EVENTS
There have been no material post balance sheet events that would require disclosure or adjustment to these financial statements.
RISKS
Risks applicable to investing in the Company
There are a number of potential risks and uncertainties which could have a material impact on the Company's performance. The Board, which has overall responsibility for risk management and internal controls within the context of achieving the company's objectives has identified the following risks which it considers to be the most significant for investors in the Company. These risks do not purport to be exhaustive and are not set out in any particular order of priority. If any of the following events identified below occur, the Company's business, financial condition, capital resources, results and/or future operations and prospects could be materially adversely affected. In that case, the market price of the Ordinary Shares could decline and investors may lose part or all of their investment. Additional risks and uncertainties not currently known to the Board or which the Board currently deem immaterial may also have an adverse effect on the Company's business. In particular, the Company's performance may be affected by changes in the market and/or economic conditions and in legal, regulatory and tax requirements.
Market and competition risks
-- The Company has a limited operating history
The Company was incorporated on 16 February 2015. The Company has limited financial statements and/ or historical financial data. The Company is therefore subject to all of the risks and uncertainties associated with any new business enterprise including the risk that the Company will not achieve its investment objectives and that the value of an investment in the Company could decline and may result in the total loss of all capital invested. The past performance of companies, assets or funds managed by the Directors, or persons affiliated with them, in other ventures, is not necessarily a guide to the future business, results of operations, financial condition or prospects of the Company.
-- Industry-specific risks
It is anticipated that that the Company will invest in businesses with a particular focus on the UK and US (and, to a lesser extent, other European) internet and media sectors. These sectors are in a transitional period and the ability of the Company to generate transactional income streams will be closely tied to the Company's ability to capture and analyse consumer data accurately, the loyalty of consumers to any acquired brand, as well as overall levels of consumer demand, which may be affected by factors beyond the Company's control, such as changes in global and local economic activity levels as well as foreign exchange risks from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.
Key management risks
The Company relies heavily on a small number of key individuals, in particular the Directors, to identify, acquire and manage suitable assets, companies and/ or businesses. The retention of their services cannot be guaranteed. Accordingly the loss of any such key individual may have a material adverse effect on the business, financial condition, results of operations and prospects of the Company. In addition, there is a risk that the Company will not be able to recruit executives of sufficient expertise or experience to maximise any opportunities that present themselves, or that recruiting and retaining those executives is more costly or takes longer than expected. The failure to attract and retain those individuals may adversely affect the Company's operations.
Investment and financial risks
-- Acquisition of targets
The Company's ability to implement the Investment Policy, as defined in the Admission document, may be limited by its ability to identify and acquire suitable acquisitions or suitable ancillary acquisitions. Suitable opportunities may not always be readily available. The Company's initial and future acquisitions may be delayed or made at a relatively slow rate because, inter alia:
- the Company intends to conduct detailed due diligence prior to approving acquisitions;
- the Company may conduct extensive negotiations in order to secure and facilitate an acquisition;
- it may be necessary to establish certain structures in order to facilitate an acquisition;
- competition from other investors, market conditions or other factors may mean that the Company cannot identify attractive acquisitions or such acquisitions may not be available at the rate the Company currently anticipates;
- the Company may be unable to agree acceptable terms;
- the Company may be unable to raise bank finance on terms the Directors consider reasonable; or
- the Company may need to raise further capital to make acquisitions and/or fund the assets or businesses invested in, which may not be achieved.
Each of these factors may have a material adverse effect on the business, financial condition, results of operations and prospects of the Company.
-- Disposals
The Company may make investments that it cannot realise through trade sale or flotation at an acceptable price. Some investments may be lost through insolvency. Any of these circumstances could have a negative impact on the profitability and value of the Company.
-- Unsuccessful transaction costs
There is a risk that the Company may incur substantial legal, financial and advisory expenses arising from unsuccessful transactions which may include transaction documentation, legal, accounting and other due diligence.
-- Timing of investments
The Company cannot accurately predict how long it will actually take to deploy the capital available to it or whether it will be able to do so at all. Any significant delay or inability to find a suitable acquisition may have a material adverse effect on the business, financial condition, results of operations and prospects of the Company.
-- Implementation of Investment Policy
In accordance with the AIM Rules for Companies, since the Company has not substantially implemented its Investment Policy within 18 months of its admission to AIM, the Company is required to seek the approval of the Shareholders of its Investment Policy at its upcoming annual general meeting. If shareholder approval is not obtained, then the Company may propose amendments to its Investment Policy and seek shareholder approval for those amendments as soon as possible. If consent is again not obtained, then the Company may take a resolving action such as returning funds to Shareholders. For the avoidance of doubt, if shareholder approval for the change is not obtained, the Company's existing Investment Policy will continue to be effective.
-- Success of Investment Policy not guaranteed
The Company's level of profit will be reliant upon the performance of the assets acquired and the Investment Policy (in both its current form and as amended from time to time). The success of the Investment Policy depends on the Directors' ability to identify investments in accordance with the Company's investment objectives and to interpret market data correctly. No assurance can be given that:
- the strategy to be used will be successful under all or any market conditions; - the Company will be able to identify opportunities meeting the Company's investment criteria; - the Company will be able to invest its capital on attractive terms; - or the Company will be able to generate positive returns for Shareholders.
If the Investment Policy is not successfully implemented, this may have a material adverse effect on the business, financial
condition, results of operations and prospects of the Company.
-- Concentration of risk
There can be no assurance that the actual investment opportunities that the Directors are able to source for the Company will not lead to a concentration of risk. To the extent that any acquisitions are concentrated in any particular niche of the internet and media sector, region, country or asset class, downturns affecting the source of the concentration may result in a total or partial loss of the value of such investments and have a material adverse effect on the business, financial condition, results of operations and prospects of the Company.
-- Material facts or circumstances not revealed in the due diligence process
Prior to making or proposing any investment, the Company will undertake legal, financial and commercial due diligence on potential investments to a level considered reasonable and appropriate by the Company on a case by case basis. However, these efforts may not reveal all material facts or circumstances that would have a material adverse effect upon the value of the investment. In undertaking due diligence, the Company will need to utilise its own resources and may be required to rely upon third parties to conduct certain aspects of the due diligence process. Further, the Company may not have the ability to review all documents relating to the investee company and assets. Any due diligence process involves subjective analysis and there can be no assurance that due diligence will reveal all material issues related to a potential investment. Any failure to reveal all material facts or circumstances relating to a potential investment may have a material adverse effect on the business, financial condition, results of operations and prospects of the Company.
Risks relating to the Ordinary Shares and their trading on AIM
-- Potential Marwyn conflicts of interest
Two of the Company's five Directors, James Corsellis and Mark Brangstrup Watts, are directors of Marwyn Asset Management Limited, the investment manager of a significant shareholder. While Marwyn has a record of long-term support for the companies in which it invests and in whose management it is involved, and the Marwyn significant shareholder has entered into a lock-up agreement in respect of its investment in the Company. The lock-in period is due to expire in August. It is possible that Marwyn's interests may differ from those of other Shareholders and that the potential for conflict between the roles of James Corsellis and Mark Brangstrup Watts as Directors of the Company and related parties of Marwyn may adversely affect the interests of the Company's other Shareholders.
-- Limited trading record for the Ordinary Shares
Since the Ordinary Shares were only quoted in August 2015, their market value is uncertain. The market price of the Ordinary Shares may be volatile and may go down as well as up and investors may therefore be unable to recover the value of their original investment. The Company's operating results and prospects from time to time may be below the expectations of market analysts and investors. Additionally, stock market conditions may affect the Ordinary Shares regardless of the performance of the Company. Stock market conditions are affected by many factors, such as general economic outlook, movements in or outlook on interest rates and inflation rates, currency fluctuations, commodity prices, changes in investor sentiment towards particular market sectors and the demand and supply of capital.
Accordingly, the market price of the Ordinary Shares may not reflect the underlying value of the Company's net assets and the price at which investors may dispose of their Ordinary Shares at any point in time may be influenced by a number of factors, only some of which may pertain to the Company while others may be outside the Company's control.
-- Further issues of Ordinary Shares could dilute the interests of existing Shareholders
The Company may in the future issue additional securities, including Ordinary Shares, as well as options, warrants and rights relating to its securities, for any purpose. Future issues may consist of Ordinary Shares or securities having greater rights and preferences and may be priced at a discount to the market price of the Ordinary Shares and/or below the prevailing net asset value of each Ordinary Share. It may not be possible for existing Shareholders to participate in such future issues by the Company and the possibility of such future issues of Ordinary Shares may cause the market price of the Ordinary Shares to decline.
-- Trading on AIM
An investment in shares traded on AIM is generally perceived to involve a higher degree of risk and to be less liquid than an investment in shares listed on the Official List. AIM has been in existence since June 1995 but its future success, and the liquidity of the market for the Ordinary Shares cannot be guaranteed. Consequently, it may be more difficult for an investor to sell his or her Ordinary Shares than it would be if the Ordinary Shares were listed on the Official List, and he or she may receive less than the amount paid. In addition, there can be no guarantee that the Company will always maintain a quotation on AIM. If it fails to retain such a quotation, investors may decide to sell their Ordinary Shares, which could have an adverse impact on the price of the Ordinary Shares. If in the future the Company decides to maintain a quotation on another exchange in addition to AIM, the level of liquidity of shares traded on AIM may decline if Shareholders choose to trade on that market rather than on AIM.
-- Value and liquidity of the Ordinary Shares
It may be difficult for an investor to realise his or her investment. The shares of publicly traded companies can have limited liquidity and their share prices can be highly volatile. The price at which the Ordinary Shares will be traded and the price at which investors may realise their investment will be influenced by a large number of factors, some specific to the Company and its operations and others which may affect companies operating within a particular sector or quoted companies generally. A relatively small movement in the value of an investment or the amount of income derived from it may result in a disproportionately large movement, unfavourable as well as favourable, in the value of the Ordinary Shares or the amount of income received in respect thereof. Investors should be aware that the value of the Ordinary Shares could go down as well as up, and investors may therefore not recover their original investment. Furthermore, the market price of the Ordinary Shares may not reflect the underlying value of the Company's net assets.
Risks relating to legislation and regulations
-- Legislative and regulatory risks
Any investment is subject to changes in regulation and legislation. As the direction and impact of changes in regulations can be unpredictable, there is a risk that regulatory developments will not bring about positive changes and opportunities, or that the costs associated with those changes and opportunities will be significant. In particular, there is a risk that regulatory change will bring about a significant downturn in the prospects of one or more acquired businesses, rather than presenting a positive opportunity.
-- Taxation
There can be no certainty that the current taxation regime in England and Wales or overseas jurisdictions within which the Company may operate will remain in force or that the current levels of corporation taxation will remain unchanged. Any change in the tax status or tax legislation may have a material adverse effect on the financial position of the Company. Investors should be aware however, that investment in the Company by way of subscription for Ordinary Shares may not be treated as a "qualifying holding" for the purposes of the venture capital trust rules (as set out in Part 6 Chapter 4 of the UK Income Tax Act 2007) because, the Company may not fulfil the requirements imposed upon it which need to be met in order for the Ordinary Shares to have qualifying holding status. Investors should also note that the venture capital trust legislation contains numerous complex conditions for a holding of Ordinary Shares to be a qualifying holding, several of which must be satisfied by the investing venture capital trust itself. The Company is not responsible for the satisfaction of such conditions.
-- Availability of tax reliefs
The Company's strategy is not influenced by whether or not capital gains tax reliefs or enterprise investment scheme reliefs are available to Shareholders and investors should not rely on the availability of those reliefs in deciding whether to invest in the Company.
-- Suitability
As an investment vehicle incorporated in England and Wales, the Company may only be marketed to, and is only suitable as an investment for, sophisticated investors with an understanding of the risks inherent in investment in emerging market jurisdictions and an ability to accept the potential total loss of all capital invested in the Company.
ADVISERS
Corporate Finance Adviser
Marwyn Capital LLP 11 Buckingham Street London, WC2N 6DF
Principal Bankers
Barclays Bank PLC 1 Churchill Place London, E14 5HP
Independent Auditors
PricewaterhouseCoopers LLP 1 Embankment Place London, WC2N 6RH
Company Secretary and Administrator
Axio Capital Solutions Limited One Waverley Place, Union Street St Helier, Jersey, JE1 1AX
Solicitors to the Company
Travers Smith LLP 10 Snow Hill London, EC1A 2AL
Registrars
Capita Registrars
The Registry, 34 Beckenham Road Beckenham, Kent, BR3 4TU
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
June 30, 2017 02:53 ET (06:53 GMT)
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