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Share Name Share Symbol Market Type Share ISIN Share Description
Summerway Capital Plc LSE:SWC London Ordinary Share GB00BDQYGP38 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 85.00 84.00 86.00 85.00 85.00 85.00 0.00 00:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 0.0 -0.2 -3.6 - 5

Summerway Capital PLC Final Results

29/01/2020 7:00am

UK Regulatory (RNS & others)


Summerway Capital (LSE:SWC)
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TIDMSWC

RNS Number : 2255B

Summerway Capital PLC

29 January 2020

29 January 2020

Summerway Capital plc

("Summerway" or the "Company")

Audited results for the year ended 31 August 2019

Summerway Capital plc announces its maiden audited consolidated results for the year ended 31 August 2019.

CHAIRMAN'S STATEMENT

Introduction

I am pleased to present the financial results for Summerway Capital PLC ("Summerway") for the period ended 31 August 2019, being the first full year since the Company's incorporation on 31 August 2018. Summerway Capital floated on the AIM market of the London Stock Exchange on 19 October 2019.

As an investing company (as defined by the AIM Rules for Companies), the Company's investing policy is to acquire companies or businesses which the Directors believe have the potential for strategic, operational and performance improvement so as to enhance Shareholder value in the wider household and consumer goods sector. The political backdrop of 2019 and the resulting uncertainty on the financial markets caused us to act with caution. At the time of writing, post the December election, there is increased certainty and consequently we are already seeing more interesting opportunities.

Business Review

Summerway was established in August 2018 and upon its admission to AIM on 19 October 2018, the Company raised GBP6.08 million before expenses through the issue of 6,080,000 shares at a price of GBP1.00 per share. Since admission, the Company has actively pursued its investment strategy.

During the period the costs associated with the admission to the London Stock Exchange were GBP347,454 (5.7% of the funds raised) and the costs of operating the Company were GBP166,542 (2.7% of funds raised).

Summerway recorded an accounting loss of GBP191,320 and the loss per share was 3.6p and had cash reserves at the end of the period of GBP5,647,837 with no debt financing.

The Directors continue to actively consider and review a number of investment opportunities and acquisition targets. Although the Board has evaluated a number of potential acquisition targets, it has not yet identified a suitable investment opportunity and as such, it has not yet substantially implemented its investing policy. Given the period of time since its admission to AIM, the Company is seeking shareholder approval of its ongoing investing policy. Further details of the investing policy resolution are set out in the Company's notice of annual general meeting, which accompanies this document.

Future Developments

We will continue to evaluate acquisition and investment opportunities. The Board is committed to keeping operating costs to a 'bare' minimum until such time as a deal has been concluded. I hope to be able to announce Summerway's first investment in the coming twelve months.

Alexander Anton

Chairman

Enquiries:

 
 Summerway Capital 
 Mark Farmiloe                                020 7440 7520 
 
 N+1 Singer (Nominated Adviser and Broker) 
 Sandy Fraser / Lauren Kettle                 020 7496 3000 
 

LEI Code: 213800YXCATORT475807

Consolidated Statement of Comprehensive Income for the year ended 31 August 2019

 
                                                             Year ended 
                                                         31 August 2019 
                                                  Note 
-----------------------------------------------  -----  --------------- 
                                                                    GBP 
 
 
 Administrative expenses                           7          (205,882) 
                                                        --------------- 
 Operating loss                                               (205,882) 
 
 Finance income                                     9            14,562 
                                                        --------------- 
 Finance income                                                  14,562 
 
 Loss before income tax                                       (191,320) 
                                                        --------------- 
 
 Income tax                                        11                 - 
                                                        --------------- 
 Net loss for the period                                      (191,320) 
 Total other comprehensive income                                     - 
                                                        --------------- 
 Total comprehensive loss                                     (191,320) 
                                                        =============== 
 
 Attributable to: 
 Owners of the Company                                        (191,320) 
 
 Loss per ordinary share 
 Basic and diluted loss per share attributable 
  to ordinary equity holders of the Company        12           (3.60)p 
 

The Company's activities derive from continuing operations.

Consolidated Statement of Financial Position as at 31 August 2019

 
                                                                As at 
                                                            31 August 
                                                                 2019 
                                                      Note 
----------------------------------------------------  ----  --------- 
                                                                  GBP 
Assets 
Current assets 
Cash and cash equivalents                                   5,647,837 
Other receivables                                      13      15,670 
                                                            --------- 
Total current assets                                        5,663,507 
 
Total assets                                                5,663,507 
                                                            --------- 
 
Current liabilities 
Trade and other payables                               15      20,941 
                                                            --------- 
                                                               20,941 
Non-current liabilities 
Incentive shares                                       16      12,000 
                                                            --------- 
                                                               12,000 
Total liabilities                                              32,941 
                                                            --------- 
Net Assets                                                  5,630,566 
                                                            ========= 
 
Capital and reserves attributable to equity holders 
 of the parent 
Share capital                                          14      61,300 
Share premium reserve                                       5,711,086 
Capital redemption reserve                                     49,500 
Accumulated losses                                          (191,320) 
                                                            --------- 
Total Equity                                                5,630,566 
                                                            ========= 
 
 

Consolidated Statement of Changes in Equity for the year ended 31 August 2019

 
                         Notes      Share   Deferred       Share       Capital   Accumulated       Total 
                                  capital     shares     Premium    Redemption        losses      equity 
                                                         reserve       reserve 
                                ---------  ---------  ----------  ------------  ------------  ---------- 
                                      GBP        GBP         GBP           GBP           GBP         GBP 
 Issue of initial 
  shares                           50,000          -           -             -             -      50,000 
 Shares split                    (49,500)     49,500           -             -             -           - 
 Cancellation 
  of deferred shares                    -   (49,500)           -        49,500             -           - 
 Issue of shares                   60,800          -   6,019,200             -             -   6,080,000 
 Share issue costs                      -          -   (308,114)             -             -   (308,114) 
 Loss for the 
  period                                -          -           -             -     (191,320)   (191,320) 
                                ---------  ---------  ----------  ------------  ------------  ---------- 
 Balance as at 
  31 August 2019                   61,300          -   5,711,806        49,500     (191,320)   5,630,566 
                                ---------  ---------  ----------  ------------  ------------  ---------- 
 

Consolidated Statement of Cash Flows for the year ended 31 August 2019

 
                                                                     Year ended 
                                                                 31 August 2019 
                                                        Note 
----------------------------------------------------  --------  --------------- 
                                                                            GBP 
 
 Cash flows from operating activities 
 Operating loss                                                       (205,882) 
 
 Adjustments to reconcile loss before income tax 
  to operating cash flows: 
 Increase in other receivables                           13            (15,670) 
 Increase in trade and other payables                   15,16            32,941 
 Bank interest received                                                  14,562 
                                                                --------------- 
 Net cash used in operating activities                                (174,049) 
                                                                --------------- 
 
 Cash flows from financing activities 
 Proceeds from issue of share capital                       14        6,130,000 
 Share issue costs                                                    (308,114) 
 Net cash generated from financing activities                         5,821,886 
                                                                --------------- 
 
 
 Net increase in cash and cash equivalents                            5,647,837 
 Cash and cash equivalents at beginning of the 
  period                                                                      - 
 Cash and cash equivalents at the end of the period                   5,647,837 
                                                                =============== 
 
 

Notes to the Financial Statements for the year ended 31 August 2019

   1.   GENERAL INFORMATION 

Summerway Capital plc is an investing company (for the purposes of the AIM Rules for Companies) and is incorporated in England and Wales and domiciled in the United Kingdom (company number: 11545912). It is a public limited company and the address of the registered office is Fleetworks, 26 Farringdon Street, London EC4A 4AB. The Company is the parent company of Summerway Subco Limited (company number: 11565845). The activity of the Company is the acquisition and subsequent development of businesses which are either headquartered in the UK, or that have substantial operations in the UK. The Company is principally focused on opportunities in the wider household and consumer goods sector, including retail and consumer brands, particularly where there is an opportunity to introduce operational and performance improvements, including new technologies and associated operating and value leverage.

   2.   BASIS OF PREPARATION 

The financial information does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The figures for the year ended 31 August 2019 are an abridged version of the Group's financial statements which will be reported on by the Group's auditors before dispatch to the shareholders and filing with the Registrar of Companies and as such do not contain full disclosures under International Financial Reporting Standards ("IFRS"). The preliminary announcement was approved by the Board and authorised for issue on 28 January 2020. The Group's statutory financial statements for the year ended 31 August 2019 received an audit report which was unqualified and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying their report or a statement under section 498(2) or section 498(3) of the Companies Act 2006.

The Company was incorporated on 31 August 2018 and therefore there are no comparative figures.

The financial statements are presented in Pounds Sterling. All amounts, unless otherwise stated, have been rounded to the nearest Pound.

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying those accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in Note 5.

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all years presented, unless otherwise stated.

   3.   PRINCIPAL ACCOUNTING POLICIES 
   2.1     NEW STANDARDS, AMMENTS AND INTERPRETATIONS 

The Company and Group applied standards, amendments and interpretations which are effective for annual periods commencing on or after 1 September 2018. There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early. The most significant of these are:

   --      IFRS 16 - Leases (effective for periods commencing on or after 1 January 2019); 

-- IFRIC 23 - Uncertainty over Income Tax Positions (effective for periods commencing on or after 1 January 2019);

-- Annual improvements to IFRSs 2015 - 2017 Cycle (IFRS 3 - Business Combinations, IFRS 11 - Joint Arrangements, IAS 12 - Income Taxes and IAS 23 - Borrowing Costs) (effective for periods commencing on or after 1 January 2019).

The Group does not currently expect any material impact of the above standards or any other standards issued by the IASB, but not yet effective.

   2.2     BASIS OF CONSOLIDATION 

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiary undertakings). Where necessary, adjustments are made to the financial statements of the subsidiaries to bring their accounting policies in line with those of the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. Summerway Subco Limited's accounting reference date is 30 September and so adjustments are made as necessary for inclusion in the consolidation.

   2.3     GOING CONCERN 

The Directors are satisfied that the Company and Group have adequate resources to continue in business for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

   2.3     SEGMENT REPORTING 

The accounting policy for identifying segments is based on internal management reporting information which is reviewed by the chief operating decision maker. The Company and Group are considered to have a single business segment, being the identification and acquisition of companies or businesses.

   2.4     FOREIGN CURRENCIES 

Assets and liabilities in foreign currencies are translated into Sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into Sterling at the rates of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating result.

   2.5     TAXATION 

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantively enacted by the statement of financial position date.

The tax currently payable is based on the taxable profit for the year. Taxable profit/(loss) differs from the net profit/(loss) reported in the statement of comprehensive income as it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from the initial recognition (other than in a business combination) of other assets or liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case deferred tax is also dealt with in equity.

   2.6     CURRENT VERSUS NON-CURRENT CLASSIFICATION 

The Company and Group present assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:

-- expected to be realised or intended to be sold or consumed in the normal operating cycle; or

   --      held primarily for the purpose of trading; or 
   --      expected to be realised within twelve months after the reporting period; or 

-- cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

All other assets are classified as non-current.

A liability is current when:

   --      it is expected to be settled in the normal operating cycle; or 
   --      it is held primarily for the purpose of trading; or 
   --      it is due to be settled within twelve months after the reporting period; or 

-- there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting date.

The Company and Group classify all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

   2.7   INVESTMENTS 

Investments in subsidiaries are recorded at cost less any provision for permanent diminution in value.

   2.8   FINANCIAL INSTRUMENTS 

Financial assets and liabilities are recognised in the Company's and Group's statement of financial position when the Company and Group becomes a party to the contractual provisions of the instrument. The Company's and Group's financial instruments comprise cash, trade and other receivables and trade and other payables.

Trade, group and other receivables

Trade receivables are initially measured at their transaction price. Group and other receivables are initially measured at fair value plus transaction costs.

Cash and cash equivalents

The Company and Group manage short-term liquidity through the holding of cash and highly liquid interest-bearing deposits. Only deposits that are readily convertible into cash with maturities of three months or less from inception, with no penalty of lost interest, are shown as cash and cash equivalents.

Impairment of financial assets

An impairment loss is recognised for the expected credit losses on financial assets when there is an increased probability that the counterparty will be unable to settle an instrument's contractual cash flows on the contractual due dates, a reduction in the amounts expected to be recovered, or both. The probability of default and expected amounts recoverable are assessed using reasonable and supportable past and forward-looking information that is available without undue cost or effort.

The Group does not currently have trade receivables. For group and other receivables, the measurement of impairment losses depends on whether the financial asset is 'performing', 'underperforming' or 'non-performing' based on the company's assessment of increases in the credit risk of the financial asset since its initial recognition and any events that have occurred before the year-end which have a detrimental impact on cash flows. The financial asset moves from 'performing' to 'underperforming' when the increase in credit risk since initial recognition becomes significant.

In assessing whether credit risk has increased significantly, the company compares the risk of default at the year-end with the risk of a default when the investment was originally recognised using reasonable and supportable past and forward-looking information that is available without undue cost.

The risk of a default occurring takes into consideration default events that are possible within 12 months of the year-end ("the 12-month expected credit losses") for 'performing' financial assets, and all possible default events over the expected life of those receivables ("the lifetime expected credit losses") for 'underperforming' financial assets.

Impairment losses and any subsequent reversals of impairment losses are adjusted against the carrying amount of the receivable and are recognised in profit or loss.

Financial liabilities and equity

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Company and Group becomes a party to the contractual provisions of the instrument.

Trade, group and other payables

Trade, group and other payables are initially measured at fair value, net of direct transaction costs and subsequently measured at amortised cost.

Derecognition of financial assets (including write-offs) and financial liabilities

A financial asset (or part thereof) is derecognised when the contractual rights to cash flows expire or are settled, or when the contractual rights to receive the cash flows of the financial asset and substantially all the risks and rewards of ownership are transferred to another party.

When there is no reasonable expectation of recovering a financial asset it is derecognised ('written off'). The gain or loss on derecognition of financial assets measured at amortised cost is recognised in profit or loss.

A financial liability (or part thereof) is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

   2.9   EQUITY 

An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at fair value on initial recognition net of transaction costs.

Equity comprises the following:

   --      Called up share capital represents the nominal value of the equity shares; 

-- Share premium represents the excess over nominal value of the fair value of consideration received from the equity shares, net of expenses of the share issue;

-- Capital redemption reserve is a statutory, non-distributable reserve into which amounts are transferred following the redemption or purchase of a Company's own shares;

-- Retained deficit represent accumulated net gains and losses from incorporation recognised in the Statement of Comprehensive Income

   4.   CAPITAL MANAGEMENT 

The Company defines capital as the total equity of the Company. The objective of the Company's capital management is to ensure that it makes the maximum use of its capital to support its business and to maximise shareholder value. There are no external constraints on the Company's capital.

   5.   CRITICAL JUDGEMENTS AND ACCOUNTING ESTIMATES 

The Company and Group make certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual expenditure may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Valuation and classification of incentive share scheme

As described in the Remuneration Committee's Report on page 10 the Board has implemented an incentive scheme during the year via the issue of 999,999 B shares of GBP0.01 in the subsidiary undertaking, to the Executive Directors of the Company at a price of GBP0.012 per share.

Critical judgements and accounting estimates have been exercised by management in respect of the incentive shares:

-- in determining the classification of the incentive shares as a financial liability rather than equity in the statement of financial position, as the B shares issued in the subsidiary do not contain any voting rights and are not permitted to participate in any ordinary dividends declared by the Company.

-- in presenting the financial liability as non-current in the statement of financial position as the valuation mechanism in the incentive share arrangement is measured over a three-year and five-year period; and

-- in assessing the most appropriate valuation method to apply to estimate the fair value of the incentive share liability as at 31 August 2019. See note 18 for further details.

Allocation of share issue and listing costs

In accordance with IAS 32 - 'Financial Instruments: Presentation', incremental costs that are directly attributable to issuing new shares should be deducted from equity and costs that relate to the stock market listing (i.e. not directly attributable to issuing new shares), should be recorded as an expense in the income statement. IAS 32 states that costs relating to both share issuance and listing should be allocated between the two functions on a rational and consistent basis.

Judgement has been applied by the Board in allocating the costs associated with the company's initial public offering and issue of new shares. Issue costs capitalised and deducted against share premium of GBP308,114 relate to specific legal and professional fees due to the company's NOMAD, legal advisors and reporting accountant fees. These are all services provided in respect of both the admission to AIM and associated share issue. As the Company was incorporated with the objective of listing on AIM, the capital base after the listing is almost entirely due to shares raised as part of the listing and thus, the full costs above have been recognised in equity as a deduction against share premium. Other costs of GBP39,340 have been recognised directly in profit and loss and are directly attributable to the company's listing only.

   6.   SEGMENTAL REPORTING 

For management purposes, the Company and Group are considered to have one single business segment, being the identification and acquisition of companies and businesses. The Group comprises Summerway Capital PLC and its subsidiary company Summerway SubCo Limited. The two companies do not transact with each other. Further segment information is therefore not presented in the financial statements.

   7.   ADMINISTRATION EXPENSES 
 
                                                                   Year ended 
                                                                    31 August 
                                                                         2019 
                                                                ------------- 
                                                                          GBP 
 Group expenses by nature 
 One-off costs related to the 
  listing                                                              39,340 
 Staff related costs                                                   51,978 
 Office costs                                                          35,660 
 NOMAD, registrar and Stock Exchange 
  costs                                                                38,834 
 Audit and accountancy costs                                           31,993 
 Other expenses                                                         8,077 
                                                                      205,882 
                                                                ============= 
 
 
 
   8.   EMPLOYEES AND DIRECTORS 
 
                                  2019 
                                   GBP 
 
 Wages and salaries             49,500 
 Social security costs               - 
 Other pension costs                 - 
                               ------- 
                                49,500 
                               ======= 
 

The average monthly number of employees during the year, including the Directors, was 4.

Key management personnel

The Directors are currently considered to be the key management personnel of the Group. The total remuneration paid to Directors during the year was GBP49,500. There were no pension contributions paid on behalf of the Directors.

   9.   FINANCE INCOME 
 
                                 2019 
                                  GBP 
 Finance income: 
 Deposit account interest      14,562 
                              ------- 
 

10. LOSS BEFORE INCOME TAX

The loss before income tax is stated after charging:

 
                                   2019 
                                    GBP 
 Auditor's remuneration: 
   Audit fees                    19,200 
   Review of interim report       4,800 
   Corporate finance             30,075 
                                ------- 
                                 54,075 
                                ------- 
 

11. INCOME TAX

The Group has reported a loss of GBP191,320 in the first reporting period since incorporation. No revenue has been generated in the period and no significant differences exist between the tax charge of GBPNil recognised in the financial statements and that calculated by applying the standard rate of United Kingdom corporation tax. No deferred tax asset is recognised on these losses as at 31 August 2019 due to uncertainty over the expected timing of future profits with which to offset the losses.

12. LOSS PER SHARE

Basic loss per ordinary share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

 
                                              Year ended 
                                               31 August 
                                                    2019 
                                          -------------- 
 
 
 Loss attributable to the owners 
  of the Company                           GBP (191,320) 
 Weighted average number of ordinary 
  shares in issue                              5,313,781 
 Basic and diluted loss per share               (3.60) p 
 
 

13. OTHER RECEIVABLES

All receivables are current. There is no material difference between the book value and the fair value of receivables.

 
                                       As at 
                                   31 August 
                                        2019 
                                 ----------- 
                                         GBP 
 Amounts falling due within 
  one year 
 Prepayments                          10,027 
 Other receivables                     5,643 
                                      15,670 
                                 =========== 
 

14. CALLED UP SHARE CAPITAL

 
                                         As at 
                                     31 August 
                                          2019 
                                   ----------- 
                                           GBP 
 Issued 
 6,130,000 ordinary shares of 
  1p each                               61,300 
 
                                        61,300 
                                   =========== 
 

On incorporation on 31 August 2018 the issued share capital of the Company consisted of 50,000 ordinary shares of GBP1 each.

On 12 October 2018 each ordinary share of GBP1.00 each in the capital of the Company was sub-divided into 1 ordinary share of GBP0.01 each and 1 deferred share of GBP0.99 each.

On 19 October 2018 Alexander Anton and Benjamin Shaw each gifted 16,667 deferred shares of GBP0.99 each and Mark Farmiloe gifted 16,666 deferred shares of GBP0.99 each arising on the sub-division of the ordinary shares of GBP1.00 each referred to above held by him to the Company for cancellation and the Board resolved to cancel all such gifted deferred shares.

On 19 October 6,080,000 ordinary of GBP0.01 each were issued pursuant to a placing at a price of GBP1 per share and together the existing ordinary 6,130,000 ordinary shares were admitted to trading on AIM.

15. TRADE AND OTHER PAYABLES

There is no material difference between the book value and the fair value of the trade and other payables.

 
                                        As at 
                                    31 August 
                                         2019 
                                   ---------- 
                                          GBP 
 Trade payables                           941 
 Accruals                              19,200 
 Other tax and social security 
  payables                                800 
 Amounts owed to subsidiary 
  undertakings                              - 
                                   ---------- 
                                       20,941 
                                   ========== 
 

16. NON-CURRENT LIABILITIES

 
                             As at 
                         31 August 
                              2019 
                       ----------- 
                               GBP 
 Incentive shares           12,000 
 
                            12,000 
                       =========== 
 

The incentive shares liability is estimated at fair value through profit and loss using level 3 fair value measurement techniques.

Fair values are categorised into different levels in a fair value hierarchy based on the degree to which the inputs to the measurement are observable and the significance of the inputs to the fair value measurement in its entirety:

-- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

-- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

-- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The B shares issued by the subsidiary under the incentive scheme were deemed to have an implied aggregate subscription price of GBP12,000, based on the nominal value per B share plus a premium. The initial subscription price of the incentive shares remains the best estimate of the fair value of the liability associated with the incentive shares as none of the criteria for potential value creation have been met as at 31 August 2019. The fair value of the liability is assessed at each reporting date with any changes accounted for as a fair value gain or loss and recognised directly in the statement of comprehensive income.

17. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

Carrying amount of financial assets

The carrying amounts of financial assets by category were:

 
                                      As at 
                                  31 August 
                                       2019 
                                 ---------- 
                                        GBP 
 Financial assets measured 
  at amortised cost: 
 - Cash and cash equivalents      5,647,837 
 - Other receivables                  5,643 
                                  5,653,480 
                                 ========== 
 

Carrying amount of financial liabilities

The carrying amounts of financial liabilities by category were:

 
                                         As at 
                                     31 August 
                                          2019 
                                    ---------- 
                                           GBP 
 Financial liabilities measured 
  at amortised cost: 
 - Trade and other payables             20,141 
 - Group payables                            - 
 
 Financial liabilities measured 
  at fair value through profit 
  and loss: 
 - Incentive shares liability           12,000 
                                        32,141 
                                    ========== 
 

The carrying amounts of financial assets and financial liabilities reasonably approximate to fair value.

Risks arising from financial instruments

Credit risk

The risk that counterparties will fail to settle amounts due to the company predominantly arises from cash and cash equivalents. Credit risk on cash and cash equivalents is limited by depositing funds with banks with high credit ratings assigned by international credit rating agencies.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group closely monitors its cash position to ensure that it has sufficient funds to meet the obligations of the Group as they fall due.

18. RELATED PARTY DISCLOSURES

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.

Under the terms of their respective service agreements, the Executive Directors are each paid a salary of GBP1,000 per calendar month, in each case payable monthly in arrears. The Non-Executive Director is paid a monthly fee of GBP1,500 per calendar month.

The Directors and their connected persons hold a total of 1,650,000 ordinary shares in the Company, representing 26.9 per cent of the enlarged share capital following admission.

On 17 September 2018 the Executive Directors subscribed for, in aggregate, 999,999 B Shares in the subsidiary, Summerway Subco Limited pursuant to the Subsidiary Incentive Scheme.

Alexander Anton and Mark Farmiloe are members of VirginiaCo LLP.

Benjamin Shaw is a member of Romana Capital LLP and Sealark LLP.

VirginiaCo LLP and Romana Capital LLP are members of AFS Advisors LLP ("AFS").

The Company is party to a corporate advisory agreement dated 12 October 2018 with AFS.

Pursuant to that agreement, AFS has agreed to provide strategic and general business advice to the Company, including identifying potential investment opportunities and acquisition targets and making recommendations to the Board in respect of the acquisition and disposition of the same.

AFS will receive a transaction fee equal to 1 per cent. of the gross transaction value of any acquisition or investment undertaken by the Company during the term of the agreement or after termination of the agreement to the extent the Company completes a transaction in relation to which AFS had provided any services prior to the date notice to terminate was deemed to have been received by AFS. In addition, from legal completion of the first acquisition or investment undertaken by the Company, the Company will pay AFS a monthly retainer of GBP15,000. As at 31 August 2019 no charges have been incurred under the agreement as the legal of completion of the first acquisition has not happened.

Under the corporate advisory agreement, AFS agrees that it shall not (and shall procure that each associate of AFS shall not) introduce to any person other than the Company any acquisition of or investment in any company or business that would fall within the scope of the Investment Policy without offering the Company a right of first refusal in respect of the same (if applicable) or obtaining the prior written consent of the Company.

The appointment is for an initial term of eighteen months or such longer period as the Company is an investing company for the purposes of the AIM Rules for Companies. Thereafter the agreement shall be renewed automatically for successive periods of 12 months unless a party gives notice to the other party in writing that it wishes to terminate the agreement at least three months before the relevant renewal date.

Either party may terminate the agreement (without prejudice to any right of action accruing or already accrued to it) without penalty by notice in writing, inter alia, if the other party commits: (i) an act of fraud or negligence; (ii) or a material breach of the terms of the agreement, which has not been rectified within 60 business days of being requested in writing to do so (if such breach is capable of rectification).

The Company may also terminate the agreement if there is a change of control of AFS without the prior written consent of the Company.

The agreement shall terminate automatically if either party to the agreement: (i) enters into liquidation (except on terms previously approved in writing by the other party) or has a receiver appointed over that party or its assets; (ii) if an effective resolution is passed for the winding up of any party (other than for the purposes of a solvent reconstruction or amalgamation previously approved in writing by the other party); or (iii) if any party becomes insolvent or stops or threatens to stop carrying on business or payment of its material proven debts or make any arrangement with creditors generally.

The Company has given an indemnity in favour of AFS in respect of AFS' potential losses in carrying on its responsibilities under the agreement. The Agreement is governed by and construed in accordance with the laws of England.

The Company had desk rental agreements with Romana Capital LLP and Sealark LLP under which the Company paid GBP39,120 during the year.

The Company engaged Fraser Real Estate, a company in which Alexander Anton is an indirect shareholder and Mark Farmiloe is a Director, to provide administrative and accounting services throughout the period. The Company paid Fraser Real Estate GBP7,993 during the period for the provision of these services.

The Company's Admission Document dated 19 October 2018 sets out in detail the other related parties transactions. There have been no material changes to these arrangements and transactions since the Admission Document was published.

19. COMMITMENTS AND CONTINGENT LIABILITIES

There were no commitments or contingent liabilities outstanding at 31 August 2019 that require disclosure or adjustment in the financial statements.

20. AVAILABILITY OF THE REPORT AND ACCOUNTS

The Company's report and accounts for the year ended 31 August 2019 will be posted to shareholders tomorrow, 30 January 2020, and will also be available to download from the Company's website at www.summerwaycapital.co.uk.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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(END) Dow Jones Newswires

January 29, 2020 02:00 ET (07:00 GMT)

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