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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Red Capital Plc | LSE:REDC | London | Ordinary Share | JE00BLB56J12 | 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% | 29.50 | 28.00 | 31.00 | 29.50 | 28.00 | 29.50 | 0.00 | 08:00:06 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-holdng Companies,nec | 0 | -208k | -0.0208 | -14.18 | 2.95M |
From Jun 2021 to Jun 2024
TIDMREDC
RNS Number : 7882J
Red Capital PLC
29 April 2022
29 April 2022
Red Capital Plc
("Red Capital" or the "Company")
Full Year Results for the period ended 31 December 2021
Red Capital Plc (LSE: REDC) has today published its Annual Report and Financial Statements for the period ended 31 December 2021 (the "Annual Report").
In accordance with Listing Rule 9.6.1 copies of the Annual Report have been submitted to the UK Listing Authority and will shortly be available to view on the Company's website at https://www.redcapitalplc.com/ and will be shortly available for inspection from the National Storage Mechanism at: https://data.fca.org.uk/#/nsm/nationalstoragemechanis m .
LEI: 213800O4A398G6GL7270
Enquiries
Tessera - Strategic Adviser Tony Morris +44 (0) 7742 189145
Chairman's Statement
For the 9 month period ended 31 December 2021
CHAIRMAN'S STATEMENT
I am pleased to present the financial results for Red Capital Plc ("Red", the "Company") and its subsidiary (together the "Group") for the period ended 31 December 2021, which covers nine months of trading since the Company's incorporation on 31 March 2021.
Since establishing the Company on the Standard List of the Main Market of the London Stock Exchange in 2021, as a team we have remained focused on executing our strategy and continue to assess investment and acquisition opportunities where we believe there to be sustainable growth potential both organically, and through acquisition. These will typically be fundamentally sound assets, where tangible opportunities exist to drive strategic, operational and performance improvements.
Despite some prevailing general macroeconomic uncertainty, we remain extremely positive regarding prospects within our chosen areas of focus across business services and technology sectors. With Red, we have an ideal platform from which we can execute our buy-and-build strategy and we look forward to updating shareholders in due course as our investment and acquisition plans develop during the new financial year.
I would like to take this opportunity to thank our shareholders for both their support at IPO and while we diligently continue to source and evaluate a number of exciting propositions, that if secured, we believe have the potential to deliver value for our shareholders.
David Williams
Chairman
28 April 2022
Report of the Directors
For the 9 month period ended 31 December 2021
REPORT OF THE DIRECTORS
The Directors of the Company present their report for the period ended 31 December 2021.
PRINCIPAL ACTIVITY AND BUSINESS REVIEW
For the financial period ended 31 December 2021, the Company's principal activity was a holding company, which has actively pursued its strategy through the sourcing and assessment of acquisition and investment opportunities in the business services and technology sectors.
On 19 November 2021, the Company successfully listed its ordinary shares onto the Main Market of the London Stock Exchange.
RESULTS
During the period, Red recorded a loss of GBP220,843 and the loss per share was 11.5p, reflecting moderate monthly operating expenses of the Company as well as transaction expenses occurred during its IPO, which completed in November 2021. The Company had cash reserves at the end of the period of GBP829,065.
DIVIDS
At this point in the Company's development, it does not anticipate declaring any dividends in the foreseeable future. As such, the Directors do not recommend the payment of a dividend for the period.
FUTURE DEVELOPMENTS
The Directors expect to continue to execute the Company's strategy in sourcing and assessing acquisition and investment opportunities across its stated sectors of focus.
KEY PERFORMANCE INDICATORS
The Board continues to focus on maximising shareholder value by sourcing, assessing and where in the interest of shareholders to do so, investing in and acquiring businesses within the business services and technology sectors.
Follow completion of the Company's inaugural transaction, the Board will be in a position to identify and develop its key performance indicators for on-going monitoring and management.
GOING CONCERN
The Directors, having made due and careful enquiry, are of the opinion that the Company has adequate working capital to execute its operations and has the ability to access additional financing, if required, over the next 12 months. The Company's unaudited cash balance as at 22 April 2022 was GBP808,688, and excluding the consummation of any investment or acquisition which will likely require specific funding, has adequate resources available to fund its on-going forecast operating expenses for at least twelve months following approval of the financial statements. The Directors, therefore, have made an informed judgement at the time of approving the financial statements, that there is a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. As a result, the Directors have adopted the going concern basis of accounting in preparing the annual financial statements (see Note 2).
RISK MANAGEMENT
In order to execute the Group's strategy, the Company and its subsidiaries will be exposed to both financial and non-financial risks. The Board has overall responsibility for the Group's risk management and it is the Board's role to consider whether those risks identified by management are acceptable within the Group's strategy and risk appetite. The Board therefore periodically reviews the principal risks and considers how effective and appropriate the controls that management has in place to mitigate the risk exposure are and will make recommendations to management accordingly.
As the Company had not completed its first investment or acquisition in the period, it has limited financial statements and/or historical financial data, and limited trading history. As such, the Company during the period was subject to the risks and uncertainties associated with an early-stage acquisition company, including the risk that the Company will not achieve its investment objectives and that the value of an investment could decline and may result in the partial or complete loss of capital invested. The past performance of investee companies or assets managed by the Directors will not necessarily be a guide to future business, results of operations, financial condition or prospects of the Company.
In order to mitigate against these risks, the Directors will continue to undertake thorough due diligence on investment opportunities and acquisition targets, to a level considered reasonable and appropriate by the Company on a case-by-case basis, including the potential commissioning of third-party specialist reports as appropriate. Following completion of any investment or acquisition, it is intended that any investments or assets will be managed by the Directors and assisted by the Company's professional advisers.
Financial Risk Management
The Directors consider the Group to be exposed to the following financial risks:
a. Price risk: the price paid for securities is subject to market movement that will have an impact on the operations of the Group;
b. Cash flow interest rate risk: the Group has significant cash balances which exposed it to movement in the market interest rates; and
c. Liquidity risk: the Group manages its cash requirements to balance cash availability and the generation of interest income.
Given the relatively small size and operation of the Group in the period, the Directors have not delegated the responsibility of risk monitoring to a sub-committee of the Board, but closely monitor the risks on a periodic basis. The Directors consider their exposure in the financial period to have been low. Refer to Note 14 for assessment of the risks arising from financial instruments.
Non-financial Risk Management
The non-financial risk factors for the period ended 31 December 2021 did not materially change from those set out in the Red's Prospectus dated 16 November 2021.
GREENHOUSE GAS EMISSIONS, ENERGY CONSUMPTION AND ENERGY EFFICIENCY
As the Company has not completed its first acquisition and has on only two Directors, limited travel and no premises, the Directors do not consider any disclosure under the Task Force on Climate-related Financial Disclosures is required at this juncture, however the Company will continue to review this position as it executes its investment and acquisition strategy.
POLITICAL CONTRIBUTIONS
The Company has made no political contributions during the period.
CHARITABLE DONATIONS
The Company has made no charitable donations during the period.
POST BALANCE SHEET EVENTS
Details of post balance sheet events are disclosed in Note 20.
SHARE CAPITAL
Details of the Company's share capital is set out in Note 15. The Company's share capital consists of one class of ordinary share, which does not carry rights to fixed income. As at 31 December 2021, there were 10,000,000 ordinary shares of 1p par value each in issue.
SIGNIFICANT SHAREHOLDERS
As at 22 April 2022, the Company had been advised of the following notifiable interests (whether directly or indirectly held) in voting rights.
Name Shareholding Percentage -------------------------------- ------------ ---------- David Williams 3,500,000 35.0% Simon Webster 2,000,000 20.0% The Bank of New York (Nominees) Limited 576,000 5.8% Stephen Ball 300,000 3.0% Mark Best 300,000 3.0% David Jenkins 300,000 3.0% Guy Le Sueur 300,000 3.0% Robin Southwell OBE 300,000 3.0% Giles Willits 300,000 3.0%
As at 22 April 2022, the Directors in aggregate held 5,500,000 ordinary shares, which represents 55.0 per cent. of the Company's issued share capital.
COMPANY DIRECTORS
The Directors during the period and summaries of their experience are set out below.
David Williams Non-executive Chairman (aged 68)
David has over 36 years' experience in investment markets, serving as Chairman in executive and non-executive capacities for a number of public and private companies. He has overseen the development of these companies, raising in excess of GBP1 billion of capital to support both organic and acquisitive growth initiatives.
David was the original founder of Marwyn Capital LLP, the award-winning investment management company. David was also formerly Chairman of Entertainment One Ltd. (LSE: ETO), Zetar plc, and Oxford BioDynamics Plc (AIM: OBD), and non-executive director of Breedon Group plc (AIM: BREE). He currently serves as Non-executive Chairman of the AIM-quoted cyber security business, Shearwater Group plc (AIM: SWG) and Main Market listed Acceler8 Ventures Plc (LSE: AC8) and is a non-executive director of Bay Capital Plc (LSE: BAY).
Simon Webster Non-Executive Director (age 52)
Simon is a highly experienced software and technology entrepreneur, and most recently was Chief Executive Officer of CPA Global, a global leader in intellectual property software and tech-enabled services. Simon led CPA Global over a 20-year period, growing it from an initial GBP50 million business into $6.0 billion of enterprise value before its merger with NYSE listed Clarivate Plc (NYSE: CCC) in October 2020.
His early career was spent in the UK financial services sector leading business change, delivering technology transformations and supporting M&A transactions.
Simon has been investing in and working with founders of growth businesses as Founder and CEO of SHUFL Capital since 2010. He is also a Fellow of the Chartered Institute of Management Accountants.
The Directors who held office during the period and their beneficial interest in the share capital of the Company at 31 December 2021 were as follows:
Hot Features
Premium
31 December
2021
David Williams 3,500,000
Simon Webster 2,000,000
------------
5,500,000
------------
DIRECTORS REMUNERATION
The Chairman and Non-Executive Director are each entitled to fees of GBP30,000 and GBP20,000 per annum for their respective roles within the Company, as per their service agreements entered into on 15 November 2021. All Director fees have been accrued in the period. There are no other benefits paid to Directors outside of their service fees, save for ordinary course reimbursable expenses properly incurred in the performing their duties as Directors. The Company does not operate a pension scheme.
Salary Benefits 31 December
in kind 2021 Total
Director GBP GBP GBP
------- --------- ------------
David Williams 3,534 - 3,534
Simon Webster 2,356 - 2,356
------- --------- ------------
5,890 - 5,890
------- --------- ------------
In addition to the Directors' fee entitlements outlined above, the Directors are also participants in the Subco Incentive Scheme and holders of warrants as detailed below.
SUBCO INCENTIVE SCHEME
The Directors believe that the success of the Company will depend to a high degree on the future performance of key employees and advisers in executing and supporting the Company's growth strategy. The Company has therefore established equity-based incentive arrangements which are, and will continue to be, an important means of retaining, attracting and motivating key employees, consultants and advisers, and also for aligning the interests of the Directors with those of shareholders.
On 12 November 2021, the Group created a new Subco Incentive Scheme within its wholly owned subsidiary Red Capital Subco Limited. Under the terms of the Subco Incentive Scheme, scheme participants are only rewarded if a predetermined level of shareholder value is created over a three to five year period or upon a change of control of the Company or Subco (whichever occurs first), calculated on a formula basis by reference to the growth in market capitalisation of the Company, following adjustments for the issue of any new ordinary shares and taking into account dividends and capital returns ("Shareholder Value"), realised by the exercise by the beneficiaries of a put option in respect of their shares in Subco and satisfied either in cash or by the issue of new ordinary shares at the election of the Company.
Under these arrangements in place, participants are entitled up to 15 per cent. of the Shareholder Value created, subject to such Shareholder Value having increased by at least 12.5 per cent. per annum compounded over a period of between three and five years from Admission, or following a change of control of the Company or Subco.
In order to implement the Subco Incentive Scheme, the Company as sole shareholder of Subco, approved the creation of a new share class in Subco (the "B Shares"). At the same time the Subco's existing ordinary shares were redesignated A Shares. The B Shares do not have voting or dividend rights.
On 12 November, David Williams, Chairman of the Company, Simon Webster, a Non-Executive Director of the Company, and Kathleen Long and Anthony Morris, Directors of Tessera Investment Management Limited, became the first participants in the Subco Incentive Scheme ("Founder Participants"), and as such, the proportion of Shareholder Value attaching to the Subco Incentive Scheme is 11 per cent. of a total cap of 15 per cent.
The Founder Participants and their respective holdings are outlined below.
Participant Subco B shares
held
David Williams 50,000
Simon Webster 40,000
Kathleen Long 10,000
Anthony Morris 10,000
---------------
110,000
---------------
WARRANTS
On 15 November 2021, the Company constituted 10,000,000 warrants on the terms of an instrument under which the Company issued 6,000,000 warrants to certain existing shareholders of the Company including the Directors, and a further 4,000,000 warrants on admission of the Company to the Main Market of the London Stock Exchange.
The warrants are exercisable at any time from the date of completion of the inaugural transaction (an investment or acquisition) made by the Company where the consideration for such transaction is at least GBP10 million at a price of GBP0.10 per ordinary share. These warrants can be exercised through application to the Company. The warrants will not be listed on the London Stock Exchange or any other publicly traded market.
The Directors' respective warrant holdings are detailed below.
Participant Date of grant Exercise No. of ordinary
price shares to which
the grant relates
15 November
David Williams 2021 GBP0.10 3,500,000
15 November
Simon Webster 2021 GBP0.10 2,000,000
-------------------
5,500,000
-------------------
CORPORATE GOVERNANCE
As a Jersey company and a company with a Standard Listing, the Company is not required to comply with the provisions of the UK Corporate Governance Code 2018. Furthermore, there is no applicable regime of corporate governance to which the directors of a Jersey company must adhere over and above the general fiduciary duties and duties of care, skill and diligence imposed on such directors under Jersey law. Notwithstanding this, the Directors are committed to maintaining high standards of corporate governance and will be responsible for carrying out the Company's objectives and implementing its business strategy.
All investment, acquisition, divestment and other strategic decisions are considered and determined by the Board. The Board provides leadership within a framework of prudent and effective controls. The Board has established the corporate governance values of the Company and has overall responsibility for setting the Company's strategic aims, defining the business plan and strategy and managing the financial and operational resources of the Company.
In this regard, the Board, so far as is practicable given the Company's size and stage of its development, has voluntarily adopted the QCA Code as its chosen corporate governance framework. There are certain provisions of the QCA Code which the Company will not adhere to currently, and their adoption will be delayed until such time as the Directors believe it is appropriate to do so. It is anticipated that this will occur concurrently with the Company's first material investment or acquisition.
Following such an acquisition, the Company will seek to develop its corporate governance stance, and will address key differences to the QCA Code including the implementation of audit, remuneration and nomination committees with appropriate terms of reference, the publication of KPIs, and the development of a corporate and social responsibility policy.
ROLE OF THE BOARD
The Board is responsible for the management of the business of the Company, setting the strategic direction of the Company and establishing the policies of the Company. It is the Directors' responsibility to oversee the financial position of the Company and monitor the business and affairs of the Company, on behalf of the shareholders, to whom they are accountable. The primary duty of the Directors is to act in the best interests of the Company at all times. The Board also addresses issues relating to internal control and the Company's approach to risk management and has formally adopted an anti-corruption and bribery policy.
The Company does not have a separate investing committee and therefore the Board as a whole will be responsible for sourcing acquisitions and ensuring that opportunities are in conformity with the Company's strategy.
The Company holds four formal Board meetings a year, with unscheduled meetings as matters arise which require the attention of the Board. Formal Board meetings are timed to link to key events in the Company's corporate calendar. Outside the scheduled and unscheduled meetings of the Board, the Directors maintain frequent contact with each other to keep them fully briefed on the Company's operations.
INTERNAL CONTROLS
The Board acknowledges its responsibility for establishing and monitoring the Group's systems of internal control. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Group's systems are designed to provide the Directors with reasonable assurance that problems can be identified on a timely basis and dealt with appropriately.
The Group maintains an appropriate process for financial reporting. The annual budget is reviewed and approved by then Board before being formally adopted.
Other key procedures that have been established and which are designed to provide effective control are as follows:
Management structure - The Board meets regularly on a formal and informal basis to discuss all issues affecting the Group.
Investment appraisal - The Group has a robust framework for investment appraisal and approval is required by the Board, where appropriate.
Share dealing and inside information - the Company has adopted a share dealing code regulating trading and confidentiality of inside information for the Directors and other persons discharging managerial responsibilities (and their persons closely associated) which contains provisions appropriate for a company whose shares are admitted to trading on the Official List (particularly relating to dealing during closed periods which will be in line with the Market Abuse Regulation). The Company takes all reasonable steps to ensure compliance by the Directors and any relevant employees with the terms of that share dealing code.
The Board reviews the effectiveness of the systems of internal control and considers the major business risks and the control environment. No significant deficiencies have come to light during the period and no weaknesses in internal financial control have resulted in any material losses, or contingencies which would require disclosure, as recommended by the guidance for Directors on reporting on internal financial control.
The Directors are focused on careful management of the Company's cash and financial resources through Board level approvals. At such time that the Company completes an acquisition, the Directors anticipate that the Company's financial position and prospects procedures regime will be updated and expanded as necessary to cater for the nature of the Company's business following completion of its inaugural investment or acquisition.
BOARD EVALUATION
In the period, the Board evaluation process was limited to an ongoing informal evaluation of the performance of the Board by each Director. This will be replaced by a formal, annual evaluation process once the Company has completed its first acquisition.
EXTERNAL ADVISERS
The Board accessed the following external advisers during the period and post the period end:
Mayer Brown International LLP and Ogier (Jersey) LLP - legal
Tessera Investment Management Limited - capital markets and M&A
JTC Plc - company secretarial, governance and regulatory filings
CONFLICTS OF INTEREST
A Director has a duty to avoid a situation in which he or she has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company. The Board has satisfied itself that there are no conflicts of interest where the Directors have appointments on the Boards of, or relationships with, companies outside the Company. Furthermore, the Board requires Directors to declare all appointments and other situations which could result in a possible conflict of interest, and therefore believes it has a robust framework to deal with any conflict of interest should it arise.
RELATIONS WITH SHAREHOLDERS
The Chairman is the Group's principal spokesperson with investors, fund managers, the press and other interested parties. As well as the Annual General Meeting with shareholders, the other Directors may give formal presentations at investor road shows following the announcement of interim and full year results.
Notice of this year's Annual General Meeting will shortly be sent to shareholders.
DISCLOSURE OF INFORMATION TO THE AUDITOR
So far as the Directors are aware, there is no relevant audit information of which the Company's auditor is unaware, and each Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
The Directors confirm to the best of their knowledge that:
-- the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as whole;
-- the Chairman's Statement and Report of the Directors includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
-- the annual report and accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
AUDITOR
The auditor, MHA MacIntyre Hudson, will be proposed for re-appointment at the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD
David Williams
Chairman
28 April 2022
Statement of Directors Responsibilities
For the 9 month period ended 31 December 2021
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' report and the financial statements in accordance with applicable law and regulations.
Jersey Company law requires the directors to prepare financial statements for each financial period. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the United Kingdom ("IFRS"). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and estimates that are reasonable and prudent;
-- state whether the Group financial statements have been prepared in accordance with IFRS as adopted by the United Kingdom;
-- state whether the Company financial statements have been prepared in accordance with FRS 101 "Reduced Disclosure Framework"; and
-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The maintenance and integrity of the Group's website is the responsibility of the Directors. The work carried out by the auditors does not involve the consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred in the accounts since they were initially presented on the website. Legislation in Jersey governing the preparation and dissemination of the accounts and the other information included in annual reports may differ from legislation in other jurisdictions.
Consolidated statement of comprehensive income
For the 9 month period ended 31 December 2021
2021
Note GBP
Administrative expenses (220,843)
Loss before taxation 6 (220,843)
Taxation charge 7 -
----------
Loss for the period (220,843)
Total comprehensive loss for the period (220,843)
==========
Loss per share (pence)
Basic and diluted 8 (11.5p)
==========
The notes below form part of these consolidated Financial Statements.
Consolidated statement of Financial Position
As at 31 December 2021
31 December 31 December
2021 2021
Note GBP GBP
Current assets
Cash and cash equivalents 11 829,065
Other receivables 12 2,583
Total current assets 831,648
------------
Total assets 831,648
------------
Current liabilities
Other payables 13 57,281
Total current liabilities 57,281
Total liabilities 57,281
------------
Total net assets 774,367
============
Equity
Issued share capital 15 100,000
Share premium 16 894,998
Capital redemption reserve 16 2
Share based payment reserve 18 210
Retained deficit 16 (220,843)
Total equity 774,367
============
The consolidated financial statements were approved and authorised for issue by the Board on 28 April 2022 and were signed on its behalf by:
David Williams
Chairman
The notes below form part of these consolidated Financial Statements.
Consolidated statement of changes in equity
For the 9 month period ended 31 December 2021
Share Share Capital Share Retained
capital premium redemption based deficit Total
reserve payment
Notes reserve
GBP GBP GBP GBP GBP GBP
Balance at incorporation
date 2 - - - - 2
Loss for the period - - - - (220,843) (220,843)
Transactions with
owners in their capacity
as owners:
Issue of new ordinary
shares 15 99,998 899,998 2 - - 999,998
Ordinary share issue
costs - (5,000) - - - (5,000)
Share based payment 18 - - - 210 - 210
At 31 December 2021 100,000 894,998 2 210 (220,843) 774,367
See note 15 of the notes for full details of the capital movements during the period.
The notes below form part of these consolidated Financial Statements.
Consolidated statement of cash flows
For the 9 month period ended 31 December 2021
2021
GBP
Operating activities
Loss before taxation (220,843)
Adjustments for:
Share based payment charge 210
Operating cash flows before changes in working
capital (220,633)
Increase in other receivables (2,583)
Increase in other payables 57,281
----------
Net cash outflows from operating activities (165,935)
----------
Financing activities
Issue of ordinary shares 1,000,000
Ordinary share issue costs (5,000)
Net cash inflows from financing activities 995,000
----------
Net increase in cash and cash equivalents 829,065
Cash and cash equivalents at beginning of the period -
Cash and cash equivalents at end of the period 829,065
==========
The notes below form part of these consolidated Financial Statements.
Notes forming part of the consolidated financial statements
For the 9 month period ended 31 December 2021
1 General information
The Company was incorporated on 31 March 2021 as Red Capital Limited, a private limited company under the laws of Jersey with registered number 134737. On 8 September 2021 the Company was re-registered as an unlisted public limited company and its name was changed to Red Capital Plc. On 19 November 2021 the Company shares were admitted to trading onto the Main Market of the London Stock Exchange. The Company is the parent company of Red Capital Subco Limited (a private limited company under the laws of Jersey with registered number 134741).
The address of its registered office is 28 Esplanade, St. Helier, Channel Islands, JE2 3QA, Jersey. The Group has been incorporated for the purpose of identifying suitable acquisition opportunities in accordance with the Group's investment and acquisition strategy with a view to creating shareholder value. The Group will retain a flexible investment and acquisition strategy which will, subject to appropriate levels of due diligence, enable it to deploy capital in target companies by way of minority or majority investments, or full acquisitions where it is in the interests of shareholders to do so. This will include transactions with target companies located in the UK and internationally.
2 Accounting policies
The principal policies adopted in the preparation of the consolidated financial statements are as follows:
(a) Basis of preparation
These consolidated financial statements have been prepared in accordance with the requirements of International Financial Reporting Standards as adopted by the United Kingdom ("IFRS")and the requirements of the Companies (Jersey) Law 1991.
No comparative figures have been presented as the consolidated financial statements cover the period from incorporation on 31 March 2021 to 31 December 2021.
(b) Basis of consolidation
The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
Where the Group has control over a Company, it is classified as a subsidiary. The Group controls a Company if all three of the following elements are present: power over the Company, exposure to variable returns from the Company, and the ability of the Group to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the consolidated statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The acquisition related costs are included in the consolidated statement of comprehensive income on an accruals basis. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained.
(c) Functional and presentational currency
The Group's functional and presentational currency for these financial statements is the pound sterling.
(d) Going concern
The Directors, having made due and careful enquiry, are of the opinion that the Company has adequate working capital to execute its operations and has the ability to access additional financing, if required, over the next 12 months. The Company's unaudited cash balance as at 22 April 2022 is GBP808,688, and excluding the consummation of any investment or acquisition which will likely require specific funding, has adequate resources available to fund the on-going forecasted operating expenses for at least twelve months following approval of the financial statements. The Directors, therefore, have made an informed judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. As a result, the Directors have adopted the going concern basis of accounting in preparing the annual financial statements.
(e) Employee benefits
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
(f) Taxation
Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the balance sheet date.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits with an original maturity of three months or less, held for meeting short term commitments.
(h) Financial assets and liabilities
The Group's financial assets and liabilities comprise cash and other payables.
Other payables are not interest bearing and are stated at their amortised cost.
(i) Share-based payments
The Group operates an equity-settled share-based payment plan. The fair value of the employee services received in exchange for the grant of options is recognised as an expense over the vesting period, based on the Group's estimate of awards that will eventually vest, with a corresponding increase in equity as a share-based payment reserve.
This plan includes market-based vesting conditions for which the fair value at grant date reflects and are therefore not subsequently revisited. The fair value is determined using a binomial model.
(j) Warrants
Warrants issued as part of share issues have been determined as equity instruments under IAS 32. Since the fair value of the shares issued at the same time as the warrants is equal to the price paid, these warrants, by deduction, are considered to have been issued at fair value.
(k) Accounting standards issued
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 - Interest Rate Benchmark Reform - Phase 2 (effective for annual periods beginning on or after 1 January 2021) were issued and adopted in the period, with no material impact on the financial statements.
There were no other new accounting standards issued have been adopted in the period.
(l) Standards in issue but not yet effective
At the date of authorisation of these financial statements there were amendments to standards which were in issue but which were not yet effective and which have not been applied. The principal ones were:
-- Amendment to IFRS 16, 'Leases' - COVID-19 related rent concessions. Extension of the practical expedient (effective for annual period beginning on or 1 April 2021)
-- A number of narrow-scope amendments to IFRS 3, IAS 16, IAS 37 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16 (effective for annual periods beginning on or after 1 January 2022)
-- Amendments to IAS 1, Presentation of financial statements on classification of liabilities (effective date deferred until accounting periods starting not earlier than 1 January 2024)
-- Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8 (effective for annual periods beginning on or after 1 January 2023.
-- Amendment to IAS 12 - deferred tax related to assets and liabilities arising from a single transaction (effective for annual periods beginning on or after 1 January 2023)
-- The Directors do not expect the adoption of these amendments to standards to have a material impact on the financial statements.
3 Accounting estimates and judgements
In preparing the consolidated financial statements, the Directors have to make judgments on how to apply the Group's accounting policies and make estimates about the future. The Directors do not consider there to be any critical estimates or judgments that have been made in arriving at the amounts recognised in the consolidated financial statements.
4 Employees
Staff costs, including Directors, consist of: 2021
GBP
Wages and salaries 5,890
Share based payments 172
_______
6,062
_______
2021
Number
The average number of employees, including Directors, 2
during the period was: _______
5 Directors' remuneration
The Company Directors are considered the only key management personnel and their remuneration was as follows:
2021
GBP
Directors' emoluments 5,890
Share-based payments (note 18) 172
________
6,062
________
The Chairman's fees are paid through Rise Rocks Limited, a Company wholly owned by the Chairman.
6 loss
2021
GBP
This has been arrived at after charging:
Professional services 60,491
Listing expenses 106,473
Fees payable to the Company's auditor for the audit
of the parent and consolidated accounts 20,000
7 Taxation
2021
GBP
Jersey corporation tax
Corporation tax on loss for the period -
Total taxation on loss on ordinary activities -
9 month period
ended 31
Dec 2021
GBP
Loss before tax (220,843)
________
Tax for financial service companies at 10% (22,084)
Effect of:
Tax losses on which a deferred tax asset has not
been recognised 22,084
________
Total taxation on loss on ordinary activities -
________
8 Earnings per share
Earnings per share is calculated by dividing the loss after tax for the period by the weighted average number of shares in issue for the period, these figures being as follows:
2021
GBP
Loss used in basic and diluted EPS
, being loss after tax (220,843)
Adjustments:
Share based remuneration 210
Adjusted earnings used in adjusted EPS (220,633)
________
The Subco Incentive Scheme share options (note 18) have not been included in the diluted EPS on the basis that they are anti-dilutive, however they may become dilutive in future periods.
2021
Number
Weighted average number of ordinary shares of
1p each used as the denominator in calculating
basic and diluted EPS 1,922,729
________
Earnings/(loss) per share
Basic and diluted (11.5p)
Adjusted - basic and diluted after the adjustments
in the table above (11.5p)
9 Adjusted earnings before interest, tax, depreciation
and amortisation (Adjusted EBITDA)
2021
GBP
Loss before tax (220,843)
EBITDA loss (220,843)
Share based remuneration 210
Adjusted EBITDA loss (220,633)
==========
10 Subsidiaries
The Company directly owns the ordinary share capital of its subsidiary undertakings as set out below:
Subsidiary Nature of business Country of Proportion of A Proportion of
incorporation ordinary shares held B ordinary shares
by Company held by Company
Red Capital Subco Intermediate holding Jersey, Channel 100 percent 0 percent
Limited company Islands
The address of the registered office of Red Capital Subco Limited (the "Subco") is 28 Esplanade, St. Helier, Channel Islands, JE2 3QA, Jersey. The Subco was incorporated on 31 March 2021.
The A ordinary shares have full voting rights, full rights to participate in a dividend and full rights to participate in a distribution of capital. The B ordinary shares have been issued pursuant to the Company's Subco Incentive Scheme and hold no voting or dividend rights or rights to distributions.
11 Cash and cash equivalents
2021
GBP
Cash and cash equivalents 829,065
________
12 Trade and other receivables
2021
GBP
Prepayments 2,583
________
13 Trade and other payables
2021
Current trade and other payables GBP
Accruals 57,281
________
14 Financial instruments
The Group's financial assets and liabilities comprise cash, and trade and other payables. The carrying value of all financial assets and liabilities equals fair value given their short term nature.
Financial assets
measured at amortised
cost
2021
GBP
Current financial assets
Cash and cash equivalents 829,065
________
Financial liabilities
measured at amortised
cost
2021
GBP
Current financial liabilities
Accruals 57,281
________
Credit risk
The Group's credit risk is wholly attributable to its cash balance. All cash balances are held at a reputable bank in Jersey. The credit risk from its cash and cash equivalents is deemed to be low due to the nature and size of the balances held.
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 liquidity risk is to ensure that sufficient liquidity is available to meet foreseeable requirements and to invest funds securely and profitably.
The following table details the contractual maturity of financial liabilities based on the dates the liabilities are due to be settled:
Financial liabilities:
Less than More than
1 year 2 to 5 Years 5 years Total
GBP GBP GBP GBP
Accruals 57,281 - - 57,281
______ ______ ______ ______
At 31 December 2021 57,281 - - 57,281
_______ _______ ______ _______
15 Share capital
Allotted, called up and fully
paid
2021 2021
Number GBP
Ordinary shares of 1p each:
At incorporation date 2 -
Issued in the period 9,999,998 100,000
_________ _________
At 31 December 10,000,000 100,000
_________ _________
On incorporation on 31 March 2021, the Company had an authorised share capital of GBP10,000 divided into 10,000 ordinary shares of par value of GBP1 each, of which one ordinary share was issued to each of David Williams, Chairman of the Company and Tessera Investment Management Limited. The two ordinary shares were each issued for consideration of GBP1.00 per share.
On 28 October 2021, the Company sub-divided its share capital. Pursuant to the sub-division, the two ordinary shares of GBP1.00 each in the issued share capital of the Company were split into 200 ordinary shares. Following the sub-division, 180 ordinary shares were re-designated as deferred shares of par value GBP0.01 each. Following the sub-division and re-designation, the issued share capital of the Company was comprised of 20 ordinary shares and 180 deferred shares and the Company had an authorised share capital of GBP10,000 divided into 999,800 ordinary shares of par value GBP0.01 each and 200 deferred shares of a par value GBP0.01 each. The deferred shares were redeemed and subsequently cancelled, with a capital redemption reserve created of equivalent value as per note 16.
On 28 October 2021, in accordance with article 5B of the Articles, the Company redeemed for nil consideration the deferred shares. Any amounts standing to the credit of any nominal or share premium account relating to deferred shares that were redeemed were credited to a capital reserve of the Company and are available for use in accordance with the Companies Law.
On 29 October 2021, the Company increased its authorised share capital to GBP100,000 and issued and allotted 5,999,980 ordinary shares at a price of GBP0.10 per ordinary share to the certain shareholders and investors, for aggregate consideration of GBP599,998 in cash. Immediately following that issue and allotment, the issued share capital of the Company was comprised of 6,000,000 ordinary shares.
Pursuant to the IPO Placing, 4,000,000 ordinary shares were issued and allotted at a price of GBP0.10 per ordinary shares to certain new investors, for aggregate consideration of GBP400,000 in cash. Warrants with the right to subscribe for further ordinary shares in the Company were issued for every ordinary share subscribed for.
Immediately following the issue and allotment, the Company's issued share capital increased to 10,000,000 ordinary shares.
All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders' meeting of the Company.
16 Reserves
Share premium and retained earnings represent balances conventionally attributed to those descriptions. The transaction costs relating to the issue of shares was deducted from share premium.
The Capital redemption reserve is made up on amounts arising from the cancellation of the deferred shares.
The Group having no regulatory capital or similar requirements, its primary capital management focus is on maximising earnings per share and therefore shareholder return.
The Directors have proposed that there will be no final dividend in respect of 2021.
17 Share Incentive Plan
On 12 November 2021, the Group created a Subco Incentive Scheme within its wholly owned subsidiary Red Capital Subco Limited ("Subco"). Under the terms of the Subco Incentive Scheme, scheme participants are only rewarded if a predetermined level of shareholder value is created over a three to five year period or upon a change of control of the Company or Subco (whichever occurs first), calculated on a formula basis by reference to the growth in market capitalisation of the Company, following adjustments for the issue of any new Ordinary shares and taking into account dividends and capital returns ("Shareholder Value"), realised by the exercise by the beneficiaries of a put option in respect of their shares in Subco and satisfied either in cash or by the issue of new ordinary shares at the election of the Company.
Under these arrangements in place, participants are entitled to up to 15 percent of the Shareholder Value created, subject to such Shareholder Value having increased by at least 12.5 percent per annum compounded over a period of between three and five years from admission or following a change of control of the Company or Subco.
18 Share based payments
The Subco Incentive Scheme detailed in Note 17 is an equity-settled share option plan which allows employees and advisors of the Group to sell their B shares to the Company in exchange for a cash payment or for shares in the Company (at the Company's election) if certain conditions are met.
These conditions include good and bad leaver provisions and that growth in Shareholder Value of 12.5 per cent. compound per annual is delivered over a three to five year period for the scheme to vest. This second condition is therefore a market condition which has been taken into account in the measurement at grant date of the fair value of the options.
The B share options have a weighted average contractual life of 4 years 10 months. 110,000 B share options were issued in the period, all of which were outstanding at the period end. No B share options were exercised in the period. No B share options have expired during the period. The weighted average exercise price of the outstanding B share options is Nil.
The Group recognised GBP210 of expenditure in the statement of total comprehensive income relating to equity-settled share-based payments in the period.
The fair value of options granted during the period is determined by applying a binominal model. The expense is apportioned over the vesting period of the option and is based on the number which are expected to vest and the fair value of these options at the date of grant.
The inputs into the binomial model in respect of options granted in the period are as follows:
Opening share price 10.0p Expected volatility of share price 16.67% Expected life of options 5 years Risk-free rate 0.92% Target increase in share price per annum 12.5% Fair value of options 7.152p
Expected volatility was estimated by reference to the average 5-year volatility of the FTSE SmallCap Index.
The target increase in Shareholder Value is laid out in the Articles of Association of the Subco and represents the compounded target annual increase in market capitalisation (adjusted for capital raises and dividends) that needs to be met between the third and the fifth anniversary of the Group's admission onto Main Market of the London Stock Exchange in order for the scheme to vest.
The Group did not enter into any share-based payment transactions with parties other than employees and advisors during the current period.
19 Related party transactions
Transactions with key management personnel
Key management personnel comprise the Directors and executive officers. The remuneration of the individual Directors is disclosed in the Report of Directors.
Other transactions - Group
On 1 November 2021, the Company entered into an arm's length strategic advisory agreement with Tessera Investment Management Limited, a Company which is a shareholder in the Company, pursuant to which Tessera has agreed to provide strategic and general corporate advice, and acquisition and capital raising transaction support services to the Company. Tessera was paid an initial transaction success fee of GBP50,000 (plus VAT) on admission for transaction management services provided to the Company in connection with admission and capital raising activities.
From admission, Tessera continues to provide strategic advisory services to the Company, including general corporate advice, and acquisition and capital raising transaction support, and is entitled to be paid a fixed monthly retainer fee of GBP5,000 (plus VAT) per month payable in arrears. A discretionary transaction success fee payable to Tessera may be agreed between the Company and Tessera with such payment payable on successful completion of an acquisition by the Company. As at 31 December 2021, Tessera was owed GBP6,935 (plus VAT) by the Company for accrued monthly retainer fees since IPO.
20 Post balance sheet events
There are no events subsequent to the reporting date which would have a material impact on the financial statements.
21 Contingent liabilities
There are no contingent liabilities at the reporting date which would have a material impact on the financial statements.
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END
FR PPUAGCUPPPGR
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April 29, 2022 02:01 ET (06:01 GMT)
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