TIDMSHH
RNS Number : 8872B
Safe Harbour Holdings PLC
12 June 2019
12 June 2019
LEI number: 213800AU26HH5KXBS796
Safe Harbour Holdings plc
("Safe Harbour" or the "Company" together with its subsidiaries,
the "Group")
Publication of Annual Report & Financial Statements
and
Notice of AGM
London, 12 June 2019 - Safe Harbour, a company established with
the objective of creating value for its investors through the
acquisition and subsequent development of assets engaged in the
provision of B2B distribution and/or business services, announces
the publication of its results for the year ended 31 December 2018,
and its Notice of Annual General Meeting.
Safe Harbour initially intends to acquire a controlling stake in
a platform asset of scale which operates in a sector demonstrating
a large addressable market opportunity, a steady growth outlook,
and a high level of fragmentation. It is likely that this platform
asset will have an enterprise value in the region of GBP250 million
to GBP1.5 billion and will hold a market-leading position in the
UK, North America or Europe. The initial acquisition is intended to
provide a platform for the creation of significant shareholder
value through a well-executed buy-and-build strategy.
For the year ended 31 December 2018, the Group reported a loss
after tax of GBP2.3 million, reflecting operating expenses and due
diligence costs associated with its investment strategy to secure a
platform acquisition.
The Group had GBP25.9 million of aggregate cash reserves as at
11 June 2019, being the latest practicable date prior to the
publication of these Financial Statements.
The Annual Report & Financial Statements and Notice of
Annual General Meeting are being posted to shareholders today and
are available to view on the Company's website at
www.safeharbourplc.com.
Safe Harbour's Annual General Meeting will be held at Covington
& Burling LLP, 265 Strand, London, WC2R 1BH at 10.00 a.m. on
Thursday 11 July 2019.
Electronic Communications
In accordance with the Company's Articles of Association, Safe
Harbour's annual reports and financial statements and notices of
annual general meetings will be sent to shareholders through
electronic communications going forward. Shareholders who also wish
to receive hard copies of these documents should contact the
Company Secretary via safeharbour@axiocs.com with the details of
their shareholding.
Rodrigo Mascarenhas, Safe Harbour's CEO, commented:
"We continue to focus on identifying a platform acquisition that
meets our target criteria. The combination of a broad universe of
potential assets in attractive sectors and a highly disciplined
investment approach gives me confidence in our ability to build a
world-class, market-leading business that delivers long-term
compounding returns for our shareholders. During the year I was
pleased to further strengthen our Board by welcoming Chris Cole as
independent Non-Executive Director and James Brotherton as Chief
Financial Officer, both of whom bring a wealth of experience to
Safe Harbour."
Enquiries:
Cenkos Securities plc (Nominated Adviser and Joint Broker)
Tel: +44(0)207 397 8900
Stephen Keys
Harry Hargreaves
Tulchan Communications (PR Adviser)
Tel: +44 20 7353 4200
Suniti Chauhan
Matt Low
Amber Ahluwalia
Safe Harbour Holdings plc
Annual Report and Financial Statements
For the year ended 31 December 2018
SAFE HARBOUR HOLDINGS PLC
Company number 123821
CHAIRMAN'S STATEMENT AND STRATEGIC REPORT
I hereby present to our shareholders the annual report and
audited financial statements of Safe Harbour Holdings plc (the
"Company") for the year ended 31 December 2018 (the "Financial
Statements"), consolidating the results of Safe Harbour Holdings
plc, Safe Harbour Holdings UK Limited and Safe Harbour Holdings
Jersey Limited (collectively, the "Group" or "Safe Harbour").
Strategy
Safe Harbour aims to become a global leader in B2B distribution
and/or business services, through a well-executed buy-and-build
strategy. As a team, we intend to draw upon our managerial and
operational experience in consolidation and integration to drive
business transformation to achieve attractive, long-term
compounding returns for our shareholders.
Safe Harbour initially intends to acquire a controlling stake in
a platform asset of scale, which operates in a sector demonstrating
a large addressable market opportunity, a steady growth outlook,
and a high level of fragmentation allowing the deployment of a
meaningful buy-and-build strategy to capitalise on economies of
scale. It is likely that this platform asset will have operations
in the UK, Europe, or North America with an enterprise value in the
region of GBP250 million to GBP1.5 billion. We seek businesses that
demonstrate stable operating performance and high cash flow
conversion, and benefit from competitive barriers to entry. Safe
Harbour will prioritise assets outside competitive auction
processes and situations where the Directors believe Safe Harbour
has a distinct advantage in acquiring the assets at attractive
valuations.
We believe that the publicly-listed nature of our vehicle offers
us flexibility in structuring transactions and provides us with
access to deep pools of capital which will allow us to unlock
opportunities that may not otherwise be available to typical
financial sponsors.
Overview of the year
Safe Harbour successfully listed on the AIM market of the London
Stock Exchange on 15 March 2018, raising GBP22.7 million before
expenses through the placing of 18,916,665 shares at a price of 120
pence per share, in addition to the GBP10.0 million already raised
from funds managed by Marwyn Asset Management Limited. Since
admission, the Company has actively pursued its stated strategy
exploring several potential Platform Acquisition opportunities.
We have further strengthened our board and corporate governance
since Avril Palmer-Baunack's appointment as Non-Executive Chairman
in February 2018. Chris Cole joined us in November 2018 as an
independent Non-Executive Director, and more recently James
Brotherton has agreed to join us as Chief Financial Officer and an
Executive Director with effect on or before 1 August 2019. We are
delighted to welcome Chris and James to the team. They bring a
wealth of experience and expertise to Safe Harbour.
James joins Safe Harbour from Tyman plc, where he has been CFO
since 2010, successfully consolidating multiple acquisitions across
various geographies and end markets. Chris co-founded WSP Group
plc, growing the business into an international engineering and
design consultancy, and executing its merger with Toronto-listed
Genivar Inc, and has also been the non-executive chairman of
various other successful London-listed companies.
Results
The Group's loss after taxation for the year was GBP2.3 million
(for the period from incorporation on 26 August 2016 to 31 December
2017: GBP2.5 million).
The Group had GBP26.9 million of aggregate cash reserves as at
31 December 2018 (2017: GBP7.8 million). Having raised gross
proceeds of GBP32.7 million from equity issuances since
incorporation in 2016, this represents a GBP5.8 million cash spend
to 31 December 2018, with GBP2.4 million of this relating to
non-recurring project costs including diligence expenses, advisory
fees and costs related to the IPO and establishment of Safe
Harbour.
Dividend policy
The Company has not yet acquired a trading business and the
Directors therefore consider it inappropriate to make a forecast of
the likely level of any future dividends. The Directors intend to
determine the Company's dividend policy following completion of the
Company's first acquisition and, in any event, will only commence
the payment of dividends when it becomes commercially prudent to do
so. There are no arrangements in place under which future dividends
are to be waived or agreed to be waived.
Risks
The Directors have carried out an assessment of the principal
risks facing the Group including those that would threaten its
business model, future performance, solvency or liquidity. Further
detail in relation to the risks faced by the Group is set out in
the Corporate Governance Report.
Outlook
In accordance with our mandate as an acquisition vehicle, we
have evaluated multiple assets that meet Safe Harbour's investment
criteria. We have a disciplined approach to asset selection and
require completion of thorough due diligence prior to making
investments. As such, while we have yet to conclude terms on a
Platform Acquisition, we remain active in pursuing targets across
our broad global mandate and remain confident about acquiring an
attractive platform business for our shareholders. We expect to
provide further updates in due course.
Avril Palmer-Baunack Rodrigo Mascarenhas
Chairman Chief Executive
11 June 2019 Officer
11 June 2019
SAFE HARBOUR HOLDING PLC
Company number 123821
GOVERNANCE |REPORT OF THE DIRECTORS
Principal activities
The Company has been formed to acquire a platform trading asset
engaged in B2B distribution and/or business services (a "Platform
Acquisition"). Following completion of a Platform Acquisition, the
Directors intend to implement an operating strategy focused on
generating shareholder value through organic and inorganic growth,
including potential complementary bolt-on acquisitions. The Company
has raised GBP32.7 million, in aggregate, since incorporation and
those funds are being used to carry out due diligence on potential
Platform Acquisitions and for general working capital purposes.
Results and dividends
For the year ended 31 December 2018, the Group made a loss of
GBP2,324,006 (for the period from incorporation on 26 August 2016
to 31 December 2017: GBP2,537,970).
It is the policy of the Company's board of Directors (the
"Board") that, prior to the Platform Acquisition, no dividends will
be paid. Following the Platform Acquisition, and subject to the
availability of distributable reserves, dividends will be paid to
shareholders when the Directors believe it is appropriate and
commercially prudent to do so.
Statement of going concern
The Group had cash resources of GBP26.9 million at 31 December
2018. The Directors have considered the financial position of the
Group and have reviewed forecasts and budgets for a period of 12
months following the approval of the Financial Statements. As a
result, the Directors have concluded that, at the date of approval
of the Financial Statements, the Company and the Group have
sufficient resources for the next 12 months and can continue to
execute its stated strategy. Accordingly, it is appropriate to
adopt the going concern basis in the preparation of the Financial
Statements.
Substantial shareholdings
At 31 December 2018 and at the date of this report, the
following interests in 3% or more of the issued ordinary shares had
been notified to the Company.
Shareholders Ordinary Percentage
shares held of shareholding
Marwyn Asset Management Limited 8,333,336 30.58%
Invesco Asset Management Limited 7,083,333 25.99%
Woodford Investment Management Limited 7,041,666 25.84%
Marathon Asset Management Limited 2,666,666 9.79%
Consulta Limited 1,250,000 4.59%
MSD Partners Europe LLP 833,333 3.06%
Stated capital
Details of shares issued by the Company during the year are set
out in note 15 to the Financial Statements.
Directors
The Directors of the Company who served during the year and/or
subsequent to the date of this report are:
Avril Palmer-Baunack, Non-Executive Chairman
Date of appointment: 20 February 2018
Avril Palmer-Baunack has over 20 years of executive experience
with leading businesses in the automotive, support services,
industrial engineering and insurance services sectors. Through a
number of high profile industry roles, Avril has acquired
significant experience in acquisitive growth strategies and a track
record of delivering shareholder value in a public environment.
Since July 2014, Avril has been Executive Chairman of BCA
Marketplace plc ("BCA") Europe's leading B2B car auction and
vehicle buying service operator. Under Avril's management, BCA has
successfully executed an ambitious growth plan based on substantial
organic and inorganic growth with five acquisitions completed to
date as well as numerous operational enhancements.
Avril was also Non-Executive Chairman of Redde plc, a UK-based,
market leading accident management company, a position she held
from September 2011 until her resignation on 1 May 2019 with three
months' notice. Avril has led the turnaround of this business,
which included a refinancing concluded in February 2013.
Avril has also held a broad range of executive roles in other
sectors, with experience in companies engaged in vehicle salvage,
car hire, auctions, transportation, distribution, logistics,
vehicle processing and infrastructure. Avril was previously
Executive Chairman and Deputy Chief Executive Officer of Stobart
Group plc, one of the largest British multimodal logistics
companies with interests in transport, distribution and
infrastructure.
Prior to this Avril was Chief Executive Officer of Autologic
Holdings plc, the largest finished vehicle logistics company in the
UK and Europe. She joined Autologic from Universal Salvage plc,
where she held the position of Chief Executive Officer from March
2005 until the sale of the company to Copart UK Ltd in June 2007
achieving a share price increase of almost two and a half
times.
Rodrigo Mascarenhas, Chief Executive Officer
Date of appointment: 26 May 2017
Rodrigo has a 17-year track record in the B2B distribution
sector. His experience includes international expansion and
consolidation, integration and turn-around strategies in emerging
markets.
Rodrigo joined Safe Harbour from his role as Business Area Head
and Managing Director for LATAM (Latin America, Spain &
Israel), of Bunzl plc ("Bunzl"), the FTSE-100 UK distribution
conglomerate. During Rodrigo's tenure at Bunzl he was responsible
for both the M&A and operational strategy of the division,
successfully integrating over 30 acquisitions into the business and
delivering double-digit revenue growth.
Rodrigo began his career in 1999 as a co-founder of
Americanas.com, one of the first e-commerce start-ups in Latin
America and today listed as B2W Inc. in Brazil, initially backed by
its parent company Lojas Americanas, the leading Brazilian retail
chain.
In 2002, Rodrigo moved to Goodyear to become the Truck Business
Director for Spain and Portugal. Based in Madrid, he completed the
turnaround of the division, successfully merging the Goodyear and
Dunlop brands. In 2004, he became the General Manager in Central
Eastern Europe and was based in the Czech Republic.
Rodrigo holds a Business Management degree from Faculdade de
Ciencias Economicas (Brazil), an MBA in Finance, Economics and
Management from Case Western Reserve University and an Owner's
President Management Program Certificate from Harvard Business
School.
James Brotherton, Chief Financial Officer Designate (effective
on or before 1 August 2019)
Date of announcement of appointment: 14 March 2019
James joins Safe Harbour from Tyman plc, where he was CFO since
2010. Tyman is a leading international supplier of engineered
components to the door and window industry and has more than
doubled in size and profitability during James' tenure as CFO.
While in his executive role with Tyman plc, James delivered and
successfully integrated numerous acquisitions across multiple
jurisdictions that have created significant value for Tyman
shareholders as part of Tyman's international growth strategy.
Prior to Tyman, James was a director in the investment banking
division of Citigroup, having also worked for HSBC and Ernst &
Young.
Since 2017, James has also been a director of the Quoted
Companies Alliance.
James has a Bachelor of Science degree in Economics and Politics
from Loughborough University and is a Chartered Accountant.
Mark Brangstrup Watts, Executive Director
Date of appointment: 26 August 2016
As co-founder of Marwyn in 2002, Mark has many years of
experience deploying private equity investment strategies in the
public markets. Marwyn's highly acquisitive portfolio companies
have delivered approximately 100 bolt-on acquisitions with Mark
offering significant M&A, ECM and corporate finance
experience.
Mark brings his background in strategic consultancy to the
management team having been responsible for strategic development
projects for international clients including Ford Motor Company
(US), Cummins (Japan) and 3M (Europe).
Mark is a Managing Partner in Marwyn Capital LLP and Marwyn
Investment Management LLP. Mark is currently an Executive Director
of Le Chameau Group plc, Safe Harbour Holdings plc and Wilmcote
Holdings plc. Mark is also a Non-Executive Director of Marwyn Asset
Management Limited and Zegona Communications plc and was previously
a Non-Executive Director of BCA, Advanced Computer Software plc,
Entertainment One Ltd, Melorio plc, Inspicio plc and Talarius plc,
amongst others.
It is currently intended that, following the completion of the
Company's Platform Acquisition, Mark will adopt a non-executive
role.
Mark is a member of the Audit and Risk Committee and a member of
the Nomination and Remuneration Committee.
James Corsellis, Executive Director
Date of appointment: 26 August 2016
James has over 15 years of investment management and corporate
finance expertise. Marwyn's 16 portfolio platforms to date have
generated approximately GBP2.7bn of proprietary deal flow, with
James having experienced a broad array of sectors and developed an
extensive network of relationships with co-investors, advisers and
other business leaders.
James brings an entrepreneurial mind-set to the management team,
having co-founded Marwyn alongside Mark Brangstrup Watts, and prior
to that founded one of the earliest strategic technology
consultancies. James was also previously Chief Executive Officer of
icollector plc, a leading provider of live auction trading
platforms, later negotiating its joint venture with eBay.
James is a Managing Partner of Marwyn Capital LLP and Marwyn
Investment Management LLP, and is a Non-Executive Director of
Marwyn Asset Management Limited. Portfolio level executive
directorships include Wilmcote Holdings plc and Le Chameau Group
plc.
James was previously on the board of BCA, Breedon Aggregates Ltd
and Advanced Computer Software plc, and was Chairman of
Entertainment One Ltd, amongst others.
It is currently intended that, following the completion of the
Company's Platform Acquisition, James will adopt a non-executive
role.
James is the Chairman of the Audit and Risk Committee and a
member of the Nomination and Remuneration Committee.
Chris Cole, Independent Non-Executive Director
Date of appointment: 14 November 2018
Chris co-founded WSP Group plc in 1974, growing the company into
an international engineering and design consultancy business
focused on the built environment, and driving its merger with
Toronto listed Genivar Inc. Chris was appointed Non-Executive
Chairman of the enlarged group, WSP Global Inc., in 2012. Chris was
Non-Executive Chairman of Ashtead Group plc, stepping down in
September 2018.
Since 2014, Chris has also held Non-Executive Chairman roles at:
Redcentric plc, a managed services provider; Applus Services S.A.,
a testing, inspection and certification business; and Tracsis plc,
a provider of software and services for the transport sector.
Chris has a degree in Environmental Engineering from London
South Bank University and is a UK qualified Chartered Engineer.
Chris is the Chairman of the Nomination and Remuneration
Committee and a member of the Audit and Risk Committee.
Directors' interests
The Directors have no direct interests in the ordinary shares of
the Company but have interests in the Incentive Shares, as detailed
in note 19 to the Financial Statements.
James Corsellis and Mark Brangstrup Watts are Non-Executive
Directors and ultimate beneficial owners of Marwyn Asset Management
Limited, which is the manager of the Marwyn funds which held
approximately 30.6% of the issued share capital as at 31 December
2018. James Corsellis and Mark Brangstrup Watts are also managing
partners of Marwyn Capital LLP, a firm which provides corporate
finance advice and accounting services to the Company and are the
ultimate beneficial owners of Axio Capital Solutions Limited
("Axio"), which provides administration and company secretarial
services to the Group. Details of the related party transactions
which occurred during the year are disclosed in note 20 to the
Financial Statements.
Save for the issue of Incentive Shares as disclosed in note 19
and related party transactions as disclosed in note 20, no Director
has or has had any interest in any transaction which is or was
unusual in its nature or conditions or significant to the business
of the Group. There were no loans or guarantees granted or provided
by the Company and/or any of its subsidiaries to or for the benefit
of any of the Directors.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulation.
The Directors are required to prepare financial statements for
each financial period. The Directors have prepared the Financial
Statements in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the European Union. 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 Group and of the profit or loss of the Group for
that period. In preparing the Financial Statements, the Directors
are required to:
-- Select suitable accounting policies and then apply them consistently;
-- State whether applicable IFRSs as adopted by the European
Union have been followed for the Financial Statements, subject to
any material departures disclosed and explained in the Financial
Statements;
-- Make judgements and accounting estimates that are reasonable and prudent; and
-- Prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the
Financial Statements comply with the Companies Law (Jersey) 1991
and Article 4 of the IAS Regulation.
The Directors are also responsible for safeguarding the assets
of the Group and for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and Financial
Statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Group's performance, business model and strategy.
Independent auditors
On 20 February 2018, PricewaterhouseCoopers LLP ("PwC") was
appointed auditors of the Group for the financial statements for
the year ended 31 December 2018, the second year that PwC has
audited the Group. The Directors have reason to believe that PwC
conducted an effective audit. The Directors have provided the
auditors with full access to all the books and records of the
Group. PwC has expressed its willingness to continue to act as
auditors to the Group and a resolution for PwC's re-appointment
will be proposed at the forthcoming annual general meeting.
Directors' confirmations
Each of the Directors, whose names and functions are listed in
the Report of the Directors confirm that, to the best of his or her
knowledge:
-- the Financial Statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
loss of the Group; and
-- the Report of the Directors includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that it faces.
Auditors' information
In the case of the Directors in office at the date the
Directors' Report is approved:
-- so far as they are aware, there is no relevant audit
information of which the Group's auditors are unaware; and
-- they have taken all the steps that they ought to have taken
as Directors in order to make themselves aware of any relevant
audit information and to establish that the Group's auditors are
aware of that information.
On behalf of the Board
Avril Palmer-Baunack Rodrigo Mascarenhas
Chairman Chief Executive
11 June 2019 Officer
11 June 2019
SAFE HARBOUR HOLDING PLC
Company number 123821
GOVERNANCE | CORPORATE GOVERNANCE REPORT
Overview
This Corporate Governance Report (the "Report") forms part of
the Report of the Directors and has been approved by the Board and
signed on its behalf as though it were a part of the Report of the
Directors. The Directors recognise the importance of sound
corporate governance commensurate with the size of the Group and
the interests of shareholders and remain committed to evolving the
corporate governance arrangements as the business grows.
During the year, the Board adopted the Quoted Companies Alliance
Corporate Governance Code (the "QCA Code" or the "Code"), in line
with the London Stock Exchange's recent changes to the AIM Rules
for Companies requiring all AIM-quoted companies to adopt a
recognised corporate governance code, explain how the company
complies with that code's requirements and identify and explain
areas of non-compliance. The Company intends to re-evaluate its
corporate governance framework upon completion of a Platform
Acquisition.
The following sections of this Report detail how Safe Harbour
applies the QCA Code.
The Board of Directors
The Group is led and controlled by an effective Board. The Board
at the date of this Report comprises Non-Executive Chairman Avril
Palmer-Baunack, independent Non-Executive Director Chris Cole and
three Executive Directors, Rodrigo Mascarenhas (Chief Executive
Officer ("CEO")), Mark Brangstrup Watts and James Corsellis. James
Brotherton will join the Company as a Chief Financial Officer
("CFO") and Executive Director on or before 1 August 2019.
Biographical details of the Directors appear on pages 5 to
7.
The Chairman is responsible for leading the Board effectively
and overseeing the adoption, delivery and communication of the
Group's corporate governance model. The Chairman must display clear
vision and focus on strategy, capitalising on the skills,
experience, characteristics and qualities of the Board and
fostering a positive governance culture throughout the Group. All
Board members have full access to the Group's advisers for seeking
professional advice at the Company's expense and the Group's
culture is to openly discuss important issues and frequently engage
with Board members outside of formal meetings. The Group's wider
organisational structure has clear lines of responsibility.
Operating and financial responsibility for all subsidiary companies
is the responsibility of the Board.
One of the ten principles of the QCA Code is to maintain 'the
board as a well-functioning, balanced team led by the chair', and
Avril has led the Board as Non-Executive Chairman since her
appointment on 20 February 2018. The QCA Code requires a balance
between Executive and Non-Executive Directors and at least two
independent Non-Executive Directors to be in place. The Company
deviates from the QCA Code in this respect, as the Board currently
only has one independent Non-Executive director, Chris Cole.
The Company has approved the appointment of James Brotherton as
CFO, effective on or before 1 August 2019, to provide additional
requisite financial expertise. At this stage, the Company does not
currently conduct an operating business and therefore its
operations, finances and transactions are relatively simple, and
the requisite administrative functions have been effectively
outsourced.
The Board believes that the Board composition is appropriate for
the Company's current operations and provides an appropriate mix of
experience, expertise and skills to support the business of the
Group in its current form as it pursues a Platform Acquisition. The
Board remains committed to regularly reviewing its composition to
ensure it remains appropriate. At or around the time of the
Platform Acquisition, it is anticipated that the composition of the
Board will be re-evaluated in the context of the corporate
governance framework of the enlarged group.
Board interaction
The Board meets formally at least six times a year but also
meets on an ad hoc basis where necessary. Meetings are prepared for
using a standing agenda capturing all of the ongoing corporate
governance requirements which is updated to incorporate all
relevant and ad hoc business or matters of interest. The Board is
presented with papers from management to support its discussions
including financial information, shareholder analysis and investor
relations information, subsidiary management reporting and details
of acquisition targets and deal progress.
The Board's culture is to openly discuss any important issues
and frequently engage and constructively challenge each other, both
at and outside of formal meetings, with all the Board members
actively participating at meetings.
Board attendance
Meeting attendance has been shown for each individual. The
'held' columns reflect the number of meetings held during 2018 or
since the date of their appointment.
Board meetings Nomination and Remuneration
Committee Meetings
(established on 20
November 2018)
Held Attended Held Attended
----------------------- ------ ---------- ------------------
Rodrigo Mascarenhas 17 16 n/a n/a
------ --------- ---------- ------------------
Mark Brangstrup Watts 17 14 1 1
------ --------- ---------- ------------------
James Corsellis 17 16 1 1
------ --------- ---------- ------------------
Avril Palmer-Baunack 15 14 n/a n/a
------ --------- ---------- ------------------
Chris Cole 1 1 1 1
------ --------- ---------- ------------------
The ad hoc Board meetings were held principally to discuss and
approve the initial public offering of the Company's shares on AIM
and the appointment of Chris Cole.
There have been no Audit and Risk Committee meetings held in
2018 following this committee's establishment on 20 November
2018.
Independence of the Board
Under the QCA Code, the Board is required to make a judgement as
to its independence. The Code states that "it may not be possible
in growing companies to meet all the objective criteria demanded of
the largest listed companies. Regardless, it is important for any
board to foster an attitude of independence of character and
judgement". The Board has considered whether its Directors are
independent in character and judgement and whether there are
relationships or circumstances which are likely to affect, or could
appear to affect, the Director's judgement. The Code also requires
the Board to state its reasons why a director may be considered
independent if there are grounds to question the independence.
Avril Palmer-Baunack was appointed Non-Executive Chairman on 20
February 2018. Avril has over 20 years' executive experience across
the UK automotive, support services, industrial engineering and
insurance services sectors. Avril is not deemed to be independent
in view of her previous working relationship with James Corsellis
and Mark Brangstrup Watts (having all served on the Board of BCA)
and her participation in the Transaction Success Fee (as described
in further detail in the Company's Admission Document dated 1 March
2018). Notwithstanding this prior working relationship, it is
considered that Avril has sufficient experience to lead the Board
effectively and provide guidance and challenge with the requisite
objectivity.
The Board considers Chris Cole to be independent in character
and judgement and strongly believes that he has no relationships or
circumstances which are likely to affect, or could appear to
affect, his judgement as an independent Non-Executive Director.
Board Committees
The Board has established two committees with effect from 20
November 2018, the Audit and Risk Committee and the Nomination and
Remuneration Committee (together, the "Committees"), to assist the
Board in the execution of its duties. If the need should arise, the
Board may set up additional committees as appropriate. The terms of
reference for the Committees are available on the Company's
website. Each of the Committees is authorised, at the Company's
expense, to obtain legal or other professional advice to assist in
carrying out its duties. No person other than a Committee member is
entitled to attend the meetings of these Committees, except by
invitation of the Chairman of that Committee. Axio is the secretary
of the Committees. It is anticipated that the Company's auditors,
PwC, will be invited to attend meetings of the Audit and Risk
Committee.
Membership of the Committees is as follows:
Audit and Risk Committee Nomination and Remuneration
Committee
Chairman James Corsellis Chris Cole
------------------------- ----------------------------
Member Chris Cole Mark Brangstrup Watts
------------------------- ----------------------------
Member Mark Brangstrup Watts James Corsellis
------------------------- ----------------------------
The composition of the Committees will be reviewed regularly by
the Nomination and Remuneration Committee. The Board recognises
that, where possible, the Committees should consist of a majority
of independent Non-Executive Directors and, as such, the
composition of the Committees will be reviewed on the appointment
of any further independent Non-Executive Directors to the
Board.
Each Committee has prepared a report which is included on pages
18 and 20.
The Company also recognises the importance of having systems and
procedures in place to ensure compliance by the Board, the Company,
and its applicable employees in relation to dealings in securities
of the Company and the management of inside information in
accordance with the EU Market Abuse Regulation (2014/596/EU)
("MAR"). The Board has established a Disclosure Committee, which
consists of Rodrigo Mascarenhas, Mark Brangstrup Watts and James
Corsellis and adopted a MAR compliance manual and share dealing
code for this purpose. The Directors believe that these procedures
and policies adopted by the Board are appropriate for the Company's
size and complexity and that it complies with MAR.
Board diversity
The Board considers diversity to be much broader than the
traditional definition which focuses on race, gender, age, beliefs,
disability, ethnic origin, marital status, religion and sexual
orientation. Productive Board discussions require a breadth of
experience and perspectives achieved through hiring Board members
with diverse backgrounds and experience. Directors shall be
appointed in order to bring the required skills, knowledge and
experience and are expected to impact the chemistry and dynamics of
the Board positively.
The Board is currently led by a female Non-Executive Chairman,
with a Brazilian-born CEO who runs the Company with support from
two other male Executive Directors along with one male independent
Non-Executive Director. Effective on or before 1 August 2019, James
Brotherton will join the Board and as such it will comprise of four
male Executive Directors. It is believed that the Board has the
requisite experience and skills for the Company to achieve its
immediate objective of acquiring a business in the B2B distribution
and/or business services sector. The composition of the Board will
continue to be considered as the Company progresses with its stated
strategy. Details of the experience of the current Directors are
included on pages 5 to 7.
Around the time of a Platform Acquisition, the Board and
Committee composition will be revisited to ensure that they meet
the changing needs of the business. During the recruitment process
for new Directors, the Nomination and Remuneration Committee will
ensure that the diversity of the Board is considered in detail.
Board effectiveness
The Board has not undertaken a Board effectiveness review during
the year but, in consideration of the time elapsed since
incorporation, the Board believes it will be beneficial to conduct
an annual evaluation of its own performance and is committed to
undertaking its first evaluation in the twelve months following
publication of these Financial Statements.
The Board intends to carry out the initial Board effectiveness
review by means of a questionnaire requiring written responses from
the Directors. To ensure independence and objectivity, the Board
intends for the questionnaire to be designed, administered and
reviewed on a confidential basis by the Company Secretary. The
questionnaire will have due regard to the balance of skills,
experience, independence and knowledge contributed by members of
the Board, as well as the successful operation of the Board as a
unit, its diversity and other factors relevant to its
effectiveness. The questionnaire will ask the Directors a range of
questions to provoke an analysis of how Board meetings are run,
including an assessment of the meeting agendas and Board materials
received, to assess whether the meetings are conducive to effective
performance, are flexible and encourage debate. The Directors will
be required to assess whether Board members attend and actively
contribute to meetings, as well as their thoughts on Board
composition, risk management processes, director remuneration,
external advisers, performance of the Company Secretary and
personal development, among other things.
Principal risks
The Board has carried out robust assessments of the principal
risks facing Safe Harbour, including those that threaten its
business model, future performance, solvency and liquidity, as set
out below. Detailed consideration is given to all of these risk
factors by the Audit and Risk Committee and the Board.
Risk title Risk rating
-------------------------------- ------------
Unsuccessful transaction costs High
Timing of investments High
Key management risk Moderate
Acquisition of targets Moderate
Change in investment policy Moderate
Additional funding requirements Moderate
Unsuccessful transaction costs
There is a risk that the Company may incur substantial legal,
financial and advisory expenses arising from unsuccessful
transactions which may include transaction documentation, legal,
accounting and other due diligence. The Company may need to raise
additional funds in order to continue to pursue its investment
strategy if its operating and unsuccessful transaction costs reduce
its cash balance below that required to execute a Platform
Acquisition in accordance with its investment strategy.
To mitigate this risk, monthly management information is
provided to the CEO and material detailing expenses incurred and a
forward-looking cash flow forecast is included in the periodic
Board meetings. All third party engagements for acquisition-related
work are reviewed by the corporate finance advisers and agreed and
signed off by the Board. All of the costs incurred during potential
acquisitions are closely monitored and updated on a real time
basis.
Timing of investments
The Company cannot accurately predict how long it will actually
take to deploy the capital available to it or whether it will be
able to do so at all. Any significant delay or inability to find a
suitable acquisition may have a material adverse effect on the
business, financial condition, results of operations and prospects
of the Company
Pursuant to the AIM Rules for Companies, if the Company has not
substantially implemented its investment policy within 18 months of
admission, the investment policy will be subject to approval by
shareholders at the 2020 annual general meeting of the Company and
annually thereafter.
The management team of Safe Harbour is fully aware of the time
constraints under the AIM Rules. Work is ongoing to identify and
acquire a target business before the need for shareholder approval
to continue the investment policy. In the event that an acquisition
has not be made within this timeframe, the Board will consider the
appropriateness of seeking shareholder approval to continue the
investment policy and to the extent permitted under MAR,
communication will be maintained with the Company's major
shareholders throughout.
Key management risk
The Company is highly dependent on the expertise and continued
service of the Directors. The commercial insight of Rodrigo
Mascarenhas in particular should help provide the Company with a
competitive edge. However, subject to any minimum terms included in
contracts, the Directors could give notice to terminate their
employment agreements at any time and their loss may have an
adverse effect on the Company's business.
The management team of Safe Harbour is small and aligned to the
business' objectives. The remuneration packages are considered to
be appropriate and Rodrigo Mascarenhas is included in the long-term
incentive plan to align his potential return with that of
shareholders. The Nomination and Remuneration Committee reviews the
Executive Directors' salaries on an annual basis to ensure their
salaries remain appropriate.
Acquisition of targets
Although the Company has identified a number of potential
investment opportunities, it is not currently in formal or
exclusive discussions with any asset vendors. The Company's future
success is dependent upon its ability to not only identify
opportunities but also to execute successful acquisitions and/or
investments. There can be no assurance that the Company will be
able to conclude agreements with any target business and/or
shareholders in the future and failure to do so could result in the
loss of an investor's investment. In addition, the Company may not
be able to raise the additional funds required to acquire any
target business and fund its working capital requirements.
The Directors of Safe Harbour have experience, knowledge and a
track record of executing acquisitions. All members of the
management team are highly experienced and have excellent knowledge
of the B2B distribution and business services market allowing them
to focus efficiently on high quality businesses which are
fundamentally sound.
The management team of Safe Harbour has good contacts across the
sector and maintains close contact with banks and brokers to keep
it aware of target availability. The culture within the team
facilitates open lines of communication and shareholder relations
are maintained increasing the capacity of the business to raise
capital.
Change in investment policy
The investment policy may be modified and altered from time to
time with the approval of shareholders. It is therefore possible
that the approaches adopted to achieve the Company's investment
objectives in the future may be different from those the Directors
currently expect to use. Any such change may have a material
adverse effect on the business, financial condition, results of
operations and prospects of the Company.
Should any change in investment policy be considered, this will
take into account the skills and knowledge of the Board. An open
dialogue will be maintained with shareholders.
Additional fundraising requirements
When a suitable Platform Acquisition or future bolt-on
acquisition is identified, it is expected that the Company will
need to raise further capital to fund such an acquisition and/or
facilitate the development of such acquisition. There is no
guarantee that the Company will be able to raise such capital, and
this may prejudice the Company's ability to make and develop such
acquisitions. This inability to raise further capital may have a
material adverse effect on the business, financial condition,
results of operations and prospects of the Company.
The ongoing business needs of the platform asset will be fully
analysed as part of the acquisition due diligence in order to
assess future funding requirements and an open and active dialogue
will be maintained with major shareholders.
Internal controls
The Board is responsible for establishing and maintaining the
Company's systems for both risk management and internal controls
and reviewing the effectiveness of both with the assistance of the
Audit and Risk Committee. Internal control systems are designed to
meet the particular needs of the Company and Group and the
particular risks to which it is exposed. The procedures are
designed to manage rather than eliminate risk and, by their nature,
can only provide reasonable but not absolute assurance against
material misstatement or loss.
The Directors regularly review risks faced by the Company and
assess those which they believe have the greatest potential impact
on the business in its current form, including those which may
jeopardise the successful acquisition of the Company's platform
asset and the ongoing liquidity and solvency of the Group.
The recruitment, retention and engagement of an experienced
management team is considered central to ensuring the successful
acquisition of the Company's platform asset. The Directors have
extensive experience and knowledge, and the Company has established
an incentive scheme to motivate the Executive Directors and align
their interests with those of the shareholders. The Non-Executive
Chairman and independent Non-Executive Director provide
constructive challenge, expertise and experience to Board
discussions which, alongside the Company's prudent approach to
pre-acquisition due diligence, is regarded as a further measure to
mitigate risks applicable to the acquisition of a platform
asset.
The Company has implemented financial procedures including
controls over cash management, the safeguarding of cash, and
monthly cash forecasting and budgeting to mitigate the risk of
insolvency. The Company has in place numerous internal controls in
relation to financial reporting, such as the segregation of roles
between those preparing and those reviewing financial information.
In addition, the Company has established a multi-tier review
process with reviews undertaken by individuals with the appropriate
level of seniority and experience, reducing the risk of
misstatement and fraud. On a monthly basis, summary financial
information, including a balance sheet, profit and loss, actual
cash flow and detailed cash flow forecast, is reviewed by the CEO.
Financial information is also tabled at the periodic Board meetings
where it is discussed in detail by the Board.
The Company does not have a separate internal audit function as
the Board does not feel this is necessary due to the current size
of the business and the simplicity and low volume of transactions,
coupled with the nature and the extent of internal controls,
management and Board oversight and involvement.
Company culture
The Board promotes a dynamic, entrepreneurial and transparent
culture. The recruitment of highly skilled, adaptable, driven and
experienced Directors and senior management is fundamental to
executing the Company's strategy. The Board therefore fosters a
forum whereby openness, constructive challenge and innovation are
actively encouraged.
Succession planning
Given the size, composition and nature of the Company at this
stage in its evolution, the creation and implementation of
succession plans are not considered to be appropriate or relevant
and as such no specific individual (or group of individuals) have
been identified (or are capable of being identified) to succeed
Rodrigo Mascarenhas as CEO.
Rodrigo is central to the Company achieving its immediate goal
of acquiring a platform asset; he has exceptional experience and
knowledge on which the Company's strategy has been built. Once a
platform asset has been acquired, succession planning will be
revisited by the Board.
Directors' terms of service
The Articles of Association of the Company require that, at each
annual general meeting of the Company, one third of the Directors
retire from office and offer themselves for re-election, and each
Director shall retire from office and stand for re-election at
least every three years. Furthermore, each Director appointed in
the period since the previous annual general meeting shall stand
for election at the subsequent annual general meeting. Chris Cole
and James Brotherton will both stand for election at the next
annual general meeting of the Company following their respective
appointment dates.
The Directors' service contracts establish the time commitment
each Director must devote to the Company. Rodrigo Mascarenhas is
required to commit the whole of his time during normal office
hours, and such other time as may reasonably be required, in the
performance of his role, as will James Brotherton from the date of
his appointment. Mark Brangstrup Watts, James Corsellis, Avril
Palmer-Baunack and Chris Cole are to devote the time necessary to
ensure the proper performance of their duties as detailed in their
respective service contracts.
Continued professional development
The Board considers and reviews the requirement for continued
professional development. The Board undertakes to ensure that the
Directors' awareness of developments in corporate governance and
the regulatory framework is current, and that they are up-to-speed
with all industry-specific updates. The Company Secretary,
Nominated Adviser and specialist external advisers all serve to
strengthen this development by providing guidance and updates as
required.
Company Secretary
The QCA Code provides details on the roles and responsibilities
of the Company Secretary within a Company. The Company Secretary
for the Group is Axio.
Axio performs the function of Company Secretary as outlined in
the Code. The role includes preparing for and running effective
Board meetings, including the timely dissemination of appropriate
information. In addition, the Company Secretary is responsible for
assisting the Directors in ensuring that group entities are
managed, controlled and administered within the parameters of their
governing documents and are compliant with regulatory requirements
and filing obligations.
Axio has established direct lines of communication with each of
the Directors and provides information, advice and guidance as
required.
Axio plays an active and central role in ensuring good
governance and provides an additional point of contact between the
Company and its advisers on matters of governance and investor
relations.
External advisers
The Company is currently pursuing its investment strategy and as
a result it is expected that further advisers and industry experts
will be engaged to help facilitate this. A list of current key
external service providers is included on page 46.
Relationships with key resources and external advisers are
developed and maintained through an open dialogue to ensure that
the Company is able to draw upon their expertise and assistance
when required.
Conflicts of interest
The Articles of Association of the Company provide for a
procedure for the disclosure and management of risks associated
with Directors' conflicts of interest. At each Board meeting, a
list of directorships for each Director is tabled to the meeting
with any potential conflicts being discussed in detail.
Notwithstanding that no material conflict of interest has arisen in
the period, the Board considers these procedures to have operated
effectively.
Relations with stakeholders
Safe Harbour does not currently have an operating business and
therefore has a very limited number of stakeholders given that Safe
Harbour has no customers and its suppliers are primarily
professional advisers. The Directors have frequent interactions
with Safe Harbour's small workforce.
The Board is always available for communication with
shareholders, and the Directors frequently engage constructively
with current and potential shareholders. The Board stays informed
of shareholders' views via regular meetings and through its
Nominated Adviser. All shareholders have the opportunity, and are
encouraged, to attend and vote at the annual general meeting of the
Company during which the Board will be available to discuss issues
affecting the Company.
Annual general meeting
The Company has not published the results of historical voting
on its website. The Company will disclose this information going
forward, beginning with the publication of the results of its 2019
annual general meeting.
SAFE HARBOUR HOLDING PLC
Company number 123821
GOVERNANCE |AUDIT AND RISK COMMITTEE REPORT
Effective from 20 November 2018, the Board established an Audit
and Risk Committee to further strengthen the Company's corporate
governance framework. The Audit and Risk Committee is delegated
responsibility for oversight of Safe Harbour's financial reporting,
internal controls, risk management and relationship with the
external auditors. Membership of the Audit and Risk Committee is
detailed on page 12 and the committee's role and responsibilities
are set out in its terms of reference, which are available on the
Company's website and from the Company Secretary.
Prior to the establishment of the Audit and Risk Committee, the
Board was responsible for all matters normally handled by an Audit
and Risk Committee, as set out by the QCA Code, including:
-- the review and challenge of the risk identification and risk
management process across the business including the risks in
connection with a potential acquisition;
-- the management of relations with the external auditors to
ensure that the annual audit is effective, objective, independent
and of high quality;
-- the oversight of the relationship with the external auditors
to ensure it remains appropriate and that the service is
appropriately priced; and
-- the review of the Company's draft corporate reporting,
including the annual report and audited financial statements.
In particular, the Board undertook the following activities,
prior to the establishment of the Audit and Risk Committee:
-- Reviewed the 2017 financial statements and 2018 interim
financial statements, including the going concern assumption, and
considered whether the financial statements are fair, balanced and
understandable. As part of the review, the Board received a report
from the external auditors on its audit;
-- Considered the processes in place to generate forecasts of
cash flows, including the reasonableness and consistent use of
assumptions;
-- Reviewed the effectiveness of the Group's risk management and
internal controls and disclosures made in the financial statements
on this matter; and
-- Reviewed and agreed the scope of the audit work to be
undertaken by the external auditors and assessed their independence
and approved the fees to be paid.
Since the Committee's formation on 20 November 2018, the
Committee has assumed these responsibilities and has been actively
involved in the audit process for the year ended 31 December 2018,
including having:
-- Reviewed the Financial Statements, including the going
concern assumption and considered whether the Financial Statements
are fair, balanced and understandable. The Committee also reviewed
the critical accounting judgements and estimates used in preparing
the financial statements and ensured adequate disclosure on the
issues and how they were addressed are included in the Financial
Statements. As part of the review, the Committee received reports
from the external auditors on its audit;
-- Reviewed and agreed the scope of the audit work to be
undertaken by the external auditors and assessed the audit and
non-audit services fees to be paid, as well as the independence and
objectivity of the auditors;
-- Reviewed and made a recommendation to the Board with regard
to the re-appointment of the external auditors, taking into account
auditors' effectiveness and independence, partner rotation and
other factors which may impact the external auditors'
re-appointment; and
-- Reviewed management's updates to Safe Harbour's main control
document, the Financial Position and Prospects Memorandum, and risk
register.
Risk management and internal controls systems
The Board has reviewed the Company's risk management and
internal control systems and believes that the controls and risk
management approach are satisfactory given the current nature and
size of the Company and Group. At or around the time an operating
business is acquired, the Board will further review the risks to
which the new enlarged group is exposed, and an appropriate risk
management process will be put in place.
Independence of external auditors
The Board appointed PwC as external auditors during the year.
The auditors' independence, reputation, experience and fee quote
(among other factors) were considered by the Committee in
determining its recommendation to the Board in relation to the
external auditors' appointment.
PwC has been engaged by the Company to provide other services in
the year, including the reporting accountant role on both the
Company's IPO and due diligence fees in respect of a potential
Platform Acquisition target. The reporting accountant role is
aligned with that of the Company's auditors and is not considered
by the Board to impinge on the independence of the external
auditors. PwC has also confirmed that it believes that it has
remained independent. The total amount paid for non-audit services
during the year was GBP40,000 (2017: GBP175,000 of which GBP55,000
relates to the Company's IPO and GBP120,000 relates to the due
diligence fees in respect of a potential Platform Acquisition
target).
James Corsellis
Chairman of the Audit and Risk Committee
11 June 2019
SAFE HARBOUR HOLDING PLC
Company number 123821
GOVERNANCE |NOMINATION AND REMUNERATION COMMITTEE REPORT
Effective from 20 November 2018, the Board established a
Nomination and Remuneration Committee. The roles and
responsibilities of the Nomination and Remuneration Committee are
set out in its terms of reference, which are available on the
Company's website and from the Company Secretary.
Prior to the establishment of the Nomination and Remuneration
Committee, the Board was responsible for all Nomination and
Remuneration duties as set out in the QCA Code, with the
overarching objectives being to:
-- Ensure that the Company can recruit and retain high quality
executives through packages which are fair and attractive, but not
excessive;
-- Develop remuneration packages which motivate the Directors
and senior management team and support the delivery of the business
in the short, medium and long term;
-- Align the interests of the Executive Directors and senior
management with the interests of medium to long-term shareholders;
and
-- Encourage executives to operate within the risk parameters set by the Board.
During the year, to help facilitate the objectives of its
Nomination and Remuneration related duties, the Board:
-- Established the remuneration package for the Executive
Directors, including an incentive scheme for Executive Directors
and senior management designed to align their interests with those
of medium to longer term shareholders;
-- Recruited a high-quality candidate for senior management to
support the Executive Directors in achieving the Company's stated
strategy;
-- Considered the composition and balance of the Board in
conjunction with the Company's requirements and the provisions of
the QCA Code and appointed Chris Cole as an independent
Non-Executive Director to further strengthen the Board. The Board
believes that the appointment of Chris provides independent
challenge, has further strengthened the capabilities of the Board,
and demonstrates the positive intent to continue to challenge and
enhance the Group's corporate governance framework as the business
grows and evolves;
-- Decided to establish a Nomination and Remuneration Committee
and delegated responsibility to this committee; and
-- Reviewed the value of the incentive scheme for the Company's management and core investor.
Since the Committee's formation on 20 November 2018, the
Committee has assumed these responsibilities and has approved the
annual guaranteed bonus to Rodrigo Mascarenhas.
Remuneration report
The information included in this report is not subject to audit
unless specifically indicated. The Nomination and Remuneration
Committee Report, including the remuneration report, has been
prepared by the Board in conjunction with the Nomination and
Remuneration Committee for the year. The objectives of the Board in
relation to nomination and remuneration are set out above.
Annual statement
The remuneration policy of the Company is that executive
remuneration should be simple and transparent and support the
delivery of the business strategy by attracting the highest calibre
personnel. This philosophy is reflected in our remuneration
structure.
The Board feels very strongly that Directors' remuneration
should be linked to the creation and enhancement of shareholder
value. Although the Board feels it is important to remunerate
senior executives through their basic pay and benefits at market
levels commensurate with their peers, the Incentive Share Scheme
has been designed to provide ongoing remuneration in alignment with
shareholders' interests. The Incentive Share Scheme, described
below, has been in place since before the Company's IPO.
Incentive Share Scheme
Subject to shareholders achieving a 10% preferred return per
annum on a compounded basis on their net invested capital (the
"Preferred Return"), the holders of the Incentive Shares are
entitled, on exercise, to an aggregate return of 16%. (of which A1
Shares as a class are entitled to 11% and A2 Shares to 5%) of the
excess in the market value of the Company over and above its
aggregate paid up share capital, allowing for any dividends and
other capital returns.
The purpose of the A3 Shares is to ensure that if an A1 or A2
shareholder exercises their Incentive Shares before the rest of the
A shareholders, then any of the 16% growth in value by the first
exerciser may be allocated to the remaining A shareholders on a pro
rata basis through the A3 Shares. This will result in A
shareholders in aggregate receiving 16% of growth in value,
provided that the vesting conditions are satisfied.
The Incentive Shares are subject to certain vesting conditions,
at least one of which must be (and continue to be) satisfied in
order for a holder of Incentive Shares to exercise his or her
redemption rights and which ends on the fifth anniversary of the
date of the Platform Acquisition or such later date as is agreed
between the Company and the holders of at least 90% of the ordinary
shares, A1 Shares, A2 Shares and A3 Shares.
The vesting conditions are as follows:
(i) it is later than the third anniversary of the Platform Acquisition;
(ii) a sale of all or a material part of the business of Safe
Harbour Holdings Jersey Limited ("SHHJL");
(iii) a sale of all of the issued ordinary shares of SHHJL or a merger of SHHJL;
(iv) a winding up of SHHJL occurring; or
(v) a sale or change of control of the Company.
The Incentive Shares are subject to a three-year vesting period
and will lapse after five years. The vesting period commences from
the date of the Platform Acquisition. On exercise, it is
anticipated that the incentive shares will be settled in ordinary
shares of the Company. On issue, Rodrigo Mascarenhas and James
Brotherton are required to retain such ordinary shares for a
minimum of 6 months subject to provisions in relation to the sale
of shares (i) for the payment of tax; (ii) with prior consent from
the parent; (iii) pursuant to an order made by court; (iv) pursuant
to an offer made by the parent to purchase its own shares which is
made on identical terms to all A shareholders; or (v) if there is a
cessation of duties where an A shareholder is no longer a director
of any group company.
As at 31 December 2018, the following incentive shares were in
issue:
Number of A1/A2 Number of A3
Incentive Shareholder Incentive shares Incentive shares
------------------ ------------------
PRX Trust (A1)* 540 600
Marwyn Long Term Incentive
LP (A2)** 500 500
1,040 1,100
================== ==================
The Incentive Share Scheme has been designed to align the
Company's shareholders' interests and the shareholders' expected
typical ownership period. The Board strongly believes that this
clear and transparent incentive framework is aligned with the
Company's strategy for growth and provides a strong platform for
the future success of the Company.
It is anticipated that the exercise of Incentive Shares will
result in management receiving ordinary shares in the Company.
Those shareholdings could be substantial and should further align
management and shareholders.
* Rodrigo Mascarenhas is beneficially interested in the PRX
Trust
**James Corsellis and Mark Brangstrup Watts are beneficially
interested in Marwyn Long Term Incentive LP
Directors' basic and performance-related pay:
The below table sets out the remuneration of each Director
during the year ended 31 December 2018:
Rodrigo Mark Brangstrup James Corsellis Avril Palmer-Baunack Chris Cole
Mascarenhas Watts
GBP GBP GBP GBP GBP
Salary/fee 350,000 14,156 14,156 172,051 10,000
Guaranteed bonus 150,000 - - - -
Taxable benefits 4,640 - - - -
504,640 14,156 14,156 172,051 10,000
Taxable benefits include private medical, dental and travel
insurance.
The annual salary for Rodrigo Mascarenhas is GBP350,000, paid
monthly in arrears, with a guaranteed minimum annual bonus of
GBP150,000 and a discretionary bonus of up to GBP100,000, paid
annually. Mark Brangstrup Watts and James Corsellis are paid fees
equal to the prevailing national minimum wage for 35 hours per
week. During the year they received fees of GBP14,156 each.
Rodrigo, Mark and James are all incentivised through the Incentive
Share Scheme.
In determining Rodrigo's salary, his experience and anticipated
contribution to the business were considered. Rodrigo, Mark and
James' roles are all expected to change as the business evolves, in
particular the expectations, responsibilities and demands are
expected to change significantly following the completion of the
Platform Acquisition, and as such their remuneration packages will
be reviewed at this time.
Rodrigo Mascarenhas' service agreement contains a bonus
arrangement, which is dependent on the completion of the Platform
Acquisition by the Group (the "Platform Acquisition Bonus").
Rodrigo will be entitled to an additional cash bonus of an amount
equal to one-third of 1% of the Total Enterprise Value(1) where the
Total Enterprise Value is GBP1 billion or more, two-thirds of 1%
where the Total Enterprise Value is less than GBP250 million and
otherwise one third of X, where:
X = 2% - (Total Enterprise Value - GBP250 million) * 1%
GBP750 million
Upon completion of the Platform Acquisition, Avril
Palmer-Baunack and Marwyn Capital LLP (of which James Corsellis and
Mark Brangstrup Watts are managing partners) will each receive a
fee equal to Rodrigo's cash bonus referred to in the preceding
paragraph.
Avril Palmer-Baunack, who joined the Board on 20 February 2018,
received a salary of GBP172,051 during the year. Avril's fixed
annual fee is GBP200,000, paid monthly in arrears. Chris Cole, who
joined the Board on 14 November 2018, received fees of GBP10,000
during the year. Chris's annual Non-Executive Director fee is
GBP75,000, paid monthly in arrears.
Once the Company has made its Platform Acquisition, the
objectives of the enlarged group will be established; at this point
the Director's service contracts will be revisited and as part of
this process the Nomination and Remuneration Committee will
consider the most appropriate key performance indicators for the
Directors and senior management.
(1) The total enterprise value of a business or company acquired
by the Group calculated as the total value of the consideration
paid by the Group for the acquired equity or assets (as the case
may be) plus the net debt of the acquired business or company, such
net debt to be reduced pro-rata where less than 100 per cent. of
the entire issued share capital of the target business or company
is acquired, as calculated by the Board acting reasonably and in
good faith.
Performance evaluation
The Board is committed to undertaking a Board evaluation within
the next 12 months, as set out on page 13. The Nomination and
Remuneration Committee will review the results of the evaluation
and, where appropriate, make recommendations to the Board.
Risks
The Board is mindful of the potential risks associated with its
remuneration policy. The Board aims to provide a structure that
encourages an acceptable level of risk-taking (by benchmarking
against shareholder returns) and an optimal remuneration mix. Going
forward the Nomination and Remuneration Committee intends to
undertake annual evaluations to ensure its policy achieves the
correct balance and does not encourage excessive risk taking. The
Board has considered the risk involved in the Incentive Share
Scheme and the Platform Acquisition Bonus and is satisfied that the
Company's governance procedures mitigate these risks
appropriately.
The Board has sought to ensure that its approach to remuneration
drives behaviour aligned to the long-term interests of the Company
and its shareholders.
Chris Cole
Chairman of the Nomination and Remuneration Committee
11 June 2019
SAFE HARBOUR HOLDINGS PLC
Company number 123821
INDEPENT AUDITORS' REPORT
Report on the audit of the financial statements
Opinion
In our opinion, Safe Harbour Holdings plc's Group financial
statements (the "financial statements"):
give a true and fair view of the state of the Group's affairs as
at 31 December 2018 and of its loss and cash flows for the year
then ended;
have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union; and
have been prepared in accordance with the requirements of the
Companies (Jersey) Law 1991.
We have audited the financial statements, included within the
Annual Report and Audited Financial Statements (the "Annual
Report"), which comprise: the Group Statement of Comprehensive
Income; the Group Statement of Financial Position; the Group
Statement of Changes in Equity; the Group Statement of Cash Flows;
and the notes to the financial statements, which include a
description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities under ISAs (UK) are further described in the
Auditors' responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remained independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC's Ethical
Standard, as applicable to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements.
Our audit approach
Overview
Overall Group materiality: GBP269,000 (2017: GBP80,500), based on 1% of
total assets.
==================================================================================
The Group is comprised of three entities (the Company and two wholly-owned
subsidiaries). The engagement was scoped such that all material balances
from the Company and its subsidiaries were subject to full scope audit work
and tested in the context of our materiality.
==================================================================================
* Key audit matter: Valuation of share-based payments
===================================================================================
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors'
professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had
the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the
results of our procedures thereon, were addressed in the context of
our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on
these matters. This is not a complete list of all risks identified
by our audit.
Key audit matter How our audit addressed the key audit matter
---------------------------------------------------------- ==========================================================
Valuation of share-based payments (Group)
The Group provides benefits to senior management and Whilst the total charge to the Group Statement of
others in the form of share-based payments, Comprehensive Income for the year ended
whereby services are rendered by individuals and they 31 December 2018 is not material to the financial
receive rights to shares in exchange. statements, we have performed procedures
This was in the form of incentive shares. On 29 September on the valuation ascribed to the awards by management and
2016, the Group issued 540 'A1' the resultant charge to the Group
incentive shares to the Group's CEO, and 500 'A2' Statement of Comprehensive Income, in the context of our
incentive shares to Marwyn Long Term Incentive significant risk assessment for the
LP, a related party of the Group. These share-based year ended 31 December 2018 with respect to valuation of
payment transactions are classified by share-based awards. This is based
the Group as equity-settled share-based payments. on the fact that there were several judgements made in
the prior year around the valuation
On 20 February 2018, 600 new 'A3' incentive shares were of the schemes and on the accounting treatment of the
issued to the Group's CEO, and 500 newly issued incentive shares.
A3 shares were issued to Marwyn Long Term Incentive LP.
These awards were accounted for in In spite of the time lag between legal cancellation and
accordance with IFRS 2 Share-based Payments as reissuance, the new A1 shares were
equity-settled share-based payments. The shares a replacement of the old awards in substance and we
had a par value at GBP0.01 per share and the total validated that the terms of the newly
subscription price for these shares was issued A1 and A3 shares did not change.
GBP2,211. This was based on assumptions including size of
investment, likelihood of an acquisition, We concur with management that accounting for the legal
likelihood of an IPO, expected volatility and expected cancellation and reissuance of the
term. CEO's awards is appropriately accounted for under IFRS 2
as a modification. Specifically,
On 16 August 2018, the A1 and A3 shares previously issued we have considered whether the Group identified the
to the Group's CEO were bought back instrument as a replacement, based on
by the Group and subsequently cancelled. On 27 September examining the terms of the newly issued awards, and what
2018, new replacement A1 and A3 shares was communicated to the CEO as a
were issued by Safe Harbour Holdings Jersey Limited to a beneficiary of the trust to which the new awards were
trust of which the Group's CEO is issued. As such, since the terms of
beneficiary, which have been treated as replacement awards the newly issued A1 and A3 shares are the same (except
under IFRS 2. for the fact that they are now issued
to a different party), we are comfortable that the
Whilst considered a cancellation of the original share intention of the new shares are as a reissuance
awards and subsequent re-issuance in rather than a cancellation.
legal form, the Group has accounted for this change as a
modification as this is considered Accounting for the above event as a modification is
to be the substance of the matter, and has therefore appropriate for the replacement incentive
applied modification accounting. The shares, and the 2018 share-based payment reserve is
accounting treatment is therefore to continue to use the supportable in the context of the prior
original valuation by the Group's period valuation, vesting period and other assumptions.
external valuation expert as the basis for these A1 and A3
shares. We performed procedures to agree the issuance of the new
A3 shares issued in 2018 to subscription
The accounting for share-based payments incorporates a letters, and we have also obtained a valuation memo from
judgemental option value and in determining management's valuation expert to
the fair value of share-based awards, management have to support assumptions underpinning the valuation of these
apply and disclose critical accounting shares, particularly around the size
estimates and judgements. The Group originally valued the of the acquisition and the likelihood of IPO. We have
options, assisted by an external evaluated these assumptions for reasonableness
valuation expert, using a Monte Carlo simulation in 2016, and concur with management that the valuation of the
where inputs such as volatility incentive shares is supportable. We also
rate, risk free rate, probability of IPO and probability validated the appropriateness of the related disclosures
of acquisition require judgement. in note 19 of the financial statements.
The Group financial statements for the year ended 31
December 2018 reflected a movement within
the Statement of Changes in Equity of GBP9,285.
Refer to notes 2 and 19 in the Group financial statements.
========================================================== ==========================================================
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in
which it operates.
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits, we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud. Procedures designed and executed to
address these risks included procedures to test journal entries and
post-close adjustments, testing and evaluating management's key
accounting estimates for reasonableness and consistency and
undertaking cut-off procedures to verify proper cut-off of
expenses. In addition, we incorporate an element of
unpredictability into our audit work each year.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Overall Group materiality GBP269,000 (2017: GBP80,500).
=============================== =====================================================================================
How we determined it 1% of total assets.
=============================== =====================================================================================
Rationale for benchmark applied The entity is a special purpose acquisition company and accordingly, has incurred
expenses
in relation to its flotation on the AIM in 2018. Users are focused on total assets in
advance
of any potential platform acquisition activity, at which point the entity will be a
profit
oriented entity and such a basis would be considered more appropriate.
=============================== =====================================================================================
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above GBP26,900 (2017:
GBP8,050) as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
ISAs (UK) require us to report to you when:
the directors' use of the going concern basis of accounting in
the preparation of the financial statements is not appropriate;
or
the directors have not disclosed in the financial statements any
identified material uncertainties that may cast significant doubt
about the Group's ability to continue to adopt the going concern
basis of accounting for a period of at least twelve months from the
date when the financial statements are authorised for issue.
We have nothing to report in respect of the above matters.
However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the Group's
ability to continue as a going concern. For example, the terms on
which the United Kingdom may withdraw from the European Union are
not clear, and it is difficult to evaluate all of the potential
implications on the Group's trade, customers, suppliers and the
wider economy.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our auditors'
report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we
identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to
report that fact. We have nothing to report based on these
responsibilities.
With respect to the Strategic Report and Report of the
Directors, we also considered whether the disclosures required by
the Companies (Jersey) Law 1991 have been included.
Based on the responsibilities described above and our work
undertaken in the course of the audit, ISAs (UK) require us also to
report certain opinions and matters as described below.
Strategic Report and Report of the Directors
In our opinion, based on the work undertaken in the course of
the audit, the information given in the Strategic Report and Report
of the Directors for the year ended 31 December 2018 is consistent
with the financial statements and has been prepared in accordance
with applicable legal requirements.
In light of the knowledge and understanding of the Group and its
environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic Report and
Report of the Directors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of directors'
responsibilities set out on page 8, the directors are responsible
for the preparation of the financial statements in accordance with
the applicable framework and for being satisfied that they give a
true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditors' responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors' report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors' report.
Use of this report
This report, including the opinions, has been prepared for and
only for the Company's members as a body in accordance with Chapter
3 of Part 16 of the Companies (Jersey) Law 1991 and for no other
purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other required reporting
Companies (Jersey) Law 1991 exception reporting
Under the Companies (Jersey) Law 1991 we are required to report
to you if, in our opinion:
-- We have not received all the information and explanations we require for our audit; or
-- Certain disclosures of directors' remuneration specified by law are not made.
We have no exceptions to report arising from this
responsibility.
Philip Stokes (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
11 June 2019
SAFE HARBOUR HOLDINGS PLC
Company number 123821
GROUP STATEMENT OF COMPREHENSIVE INCOME
Group Group
year ended period to
31 December 31 December
Note 2018 2017
GBP GBP
----- ------------- ------------
Administrative expenses 5 (2,446,602) (2,537,970)
------------- ------------
Operating loss (2,446,602) (2,537,970)
Finance income 8 122,596 -
------------- ------------
Loss before income tax (2,324,006) (2,537,970)
Income tax 9 - -
------------- ------------
Loss for the year/period (2,324,006) (2,537,970)
Total other comprehensive - -
income
Total comprehensive loss for
the year/period, attributable
to owners of the parent (2,324,006) (2,537,970)
============= ============
Loss per Ordinary Share
Basic and diluted loss per
share attributable to ordinary
equity holders of the parent 18 (0.1383) (0.3272)
The Group's activities derive from continuing operations.
The notes on pages 32 to 45 form an integral part of these
Financial Statements.
SAFE HARBOUR HOLDINGS PLC
Company number 123821
GROUP STATEMENT OF FINANCIAL POSITION
Group Group
as at as at
31 December 31 December
Note 2018 2017
----- ------------ ------------
GBP GBP
Assets
Non-current assets
Property, plant and equipment 1,302 2,237
Total non-current assets 1,302 2,237
Current assets
Deferred costs 11 - 177,000
Other receivables 12 73,454 86,843
Cash and cash equivalents 13 26,904,510 7,787,775
------------ ------------
Total current assets 26,977,964 8,051,618
Total assets 26,979,266 8,053,855
============ ============
Capital and reserves attributable
to equity holders of the
parent
Stated capital 15 31,447,419 10,000,003
Share-based payment reserve 19 88,069 78,784
Accumulated losses (4,861,976) (2,537,970)
------------ ------------
Total equity 26,673,512 7,540,817
Current liabilities
Trade and other payables 14 305,754 513,038
------------ ------------
Total liabilities 305,754 513,038
Total equity and liabilities 26,979,266 8,053,855
============ ============
The notes on pages 32 to 45 form an integral part of these
Financial Statements.
The Financial Statements on pages 28 to 45 were approved by the
Board of Directors on 11 June 2019 and were signed on its behalf
by:
Rodrigo Mascarenhas Avril Palmer-Baunack
Chief Executive Officer Chairman
SAFE HARBOUR HOLDINGS PLC
Company number 123821
GROUP STATEMENT OF CHANGES IN EQUITY
Share-based
Stated payment Accumulated Total
Note capital reserve losses equity
------------ ------------ ------------ ------------
GBP GBP GBP GBP
Balance at 1 January
2018 10,000,003 78,784 (2,537,970) 7,540,817
Loss and total comprehensive
loss for the year - - (2,324,006) (2,324,006)
Issue of ordinary
shares 15 22,699,998 - - 22,699,998
Share issue costs 15 (1,252,582) - - (1,252,582)
Share-based payment
expense 19 - 9,285 - 9,285
------------ ------------ ------------ ------------
Balance at 31 December
2018 31,447,419 88,069 (4,861,976) 26,673,512
============ ============ ============ ============
Balance at 26 August - - - -
2016
Loss and total comprehensive
loss for the period - - (2,537,970) (2,537,970)
Issue of ordinary
shares 15 10,000,003 - - 10,000,003
Share-based payment
expense 19 - 78,784 - 78,784
------------ ------------ ------------ ------------
Balance at 31 December
2017 10,000,003 78,784 (2,537,970) 7,540,817
============ ============ ============ ============
The notes on pages 32 to 45 form an integral part of these
Financial Statements.
SAFE HARBOUR HOLDINGS PLC
Company number 123821
GROUP STATEMENT OF CASH FLOWS
Group Group
for the year for the period
ended 31 ended 31
December December
Note 2018 2017
------ -------------- ----------------
GBP GBP
Operating activities
Loss before income tax (2,324,006) (2,537,970)
Adjustments to reconcile loss before
income tax to net cash flows:
Finance income 8 (122,596) -
Depreciation expense 935 744
Share-based payment expense 19 8,280 68,148
Working capital adjustments:
Decrease/(increase) in deferred
costs 11 177,000 (177,000)
Decrease/(increase) in other receivables 12 13,389 (86,843)
(Decrease)/increase in trade and
other payables(1) 14 (208,490) 505,748
Interest received 8 122,596 -
Net cash flows used in operating
activities (2,332,892) (2,227,173)
Investing activities
Purchase of office equipment - (2,981)
Net cash flows used in investing
activities - (2,981)
Financing activities
Proceeds from issue of share capital 15 22,699,998 10,000,003
Share issue costs 15 (1,252,582) -
Proceeds from issue of ordinary
A Share capital 19 2,211 17,926
-------------- ----------------
Net cash flows generated from financing
activities 21,449,627 10,017,929
Net increase in cash and cash equivalents 19,116,735 7,787,775
Cash and cash equivalents at beginning
of the period 7,787,775 -
Cash and cash equivalents at the
end of the period 13 26,904,510 7,787,775
============== ================
The notes on pages 32 to 45 form an integral part of these
Financial Statements.
(1) GBP1,206 (2017: GBP7,290) represents proceeds from issue of
A1 and A3 Shares that are classified in trade & other payables
in the Statement of Financial Position and as proceeds from the
issue of ordinary A Share capital in the Statement of Cash
Flows.
SAFE HARBOUR HOLDINGS PLC
Company number 123821
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Safe Harbour Holdings plc (the "Company") is an investing
company for the purposes of the AIM Rules for Companies ("AIM
Rules"), is incorporated in Jersey and domiciled in the United
Kingdom (company number: 123821). It is a public limited company
and the address of the registered office is One Waverley Place,
Union Street, St Helier, Jersey, JE1 1AX, with a UK establishment
address of 11 Buckingham Street, London, WC2N 6DF. The Company is
the parent company of Safe Harbour Holdings UK Limited (company
number: 10348545) ("SHHUK") and Safe Harbour Holdings Jersey
Limited (company number: 121981) ("SHHJL"), (collectively, the
"Group"). The activity of the Company is the acquisition and
subsequent development of assets engaged in business-to-business
distribution and/or business services.
2. ACCOUNTING POLICIES
(a) Basis of preparation
The Financial Statements represent the year ended 31 December
2018, with the comparative period from 26 August 2016 to 31
December 2017, and have been prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union and IFRS Interpretations Committee interpretations
(collectively, "IFRSs"), and with those parts of applicable law as
relevant to companies reporting under IFRSs.
The Financial Statements are prepared under the historical cost
convention and are presented in British pounds sterling, which is
the presentational and functional currency of the Company.
The principal accounting policies adopted in the preparation of
the Financial Statements are set out below. The policies have been
consistently applied throughout the periods presented.
(b) New standards and amendments to IFRSs
Standards, amendments and interpretation effective and adopted
by the Group:
The accounting policies adopted in the presentation of these
Financial Statements reflect the adoption of the standards
effective for periods beginning on or after 1 January 2018, none of
which had a material effect on the Group.
Standard Effective
Date
Amendments to IFRS 4: Applying IFRS 9 Financial 1 January
Instruments with IFRS 4 Insurance Contracts 2018
IFRS 9: Financial Instruments 1 January
2018
IFRS 15: Revenue from Contracts with Customers 1 January
2018
IFRIC 22: Foreign Currency Transactions and Advance 1 January
Consideration 2018
Amendments to IFRS 2: Classification and Measurement 1 January
of Share-based Payment Transactions 2018
Amendments to IAS 40: Transfers of Investment 1 January
Property 2018
IFRS 9 'Financial Instruments' amends the classification and
measurement models for financial assets and adds new requirements
to address the impairment of financial assets. It also introduces a
new hedge accounting model to more closely align hedge accounting
with risk management strategy and objectives. The standard requires
companies to make an election on whether gains and losses on equity
instruments measured at fair value should be recognised in the
income statement or other comprehensive income, with no recycling.
IFRS 9 has been adopted by the Group but has had no material effect
on the Group's results.
The Group has applied IFRS 15 'Revenue from Contracts with
Customers' under the cumulative effect method. IFRS 15 amends the
guidance on identifying performance obligations, accounting for
licences of intellectual property and the principal versus agent
assessment (gross versus net revenue presentation permitted).
Adopting IFRS 15 has not had a material impact on the timing of
revenue recognition or any material impact on accounting for
revenue.
Standards issued but not yet effective:
The following standards are issued but not yet effective. The
Group intends to adopt these standards, if applicable, when they
become effective. It is not currently expected that these standards
will have a material impact on the Group.
Standard Effective
Date
IFRS 16: Leases 1 January
2019
IFRIC 23: Uncertainty over income tax treatments 1 January
2019
Amendments to IFRS 9: Prepayment features with 1 January
negative compensation 2019
Amendments to IAS 28: Long-term interests in associates 1 January
and joint ventures 2019
Amendments to IAS 19: Plan amendment, curtailment 1 January
or settlement 2019*
Amendments to IFRS 3 Business combinations 1 January
2020*
Amendments to IAS 1 and IAS 8: Definition of material 1 January
2020*
IFRS 17: Insurance contracts 1 January
2021*
* subject to EU endorsement
IFRS 16 'Leases' specifies how to recognise, measure, present
and disclose leases. The standard provides a single lease
accounting model and requires lessees to recognise right of use
assets and lease liabilities on the balance sheet for all
applicable leases. Under IFRS 16, a contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. The Group is currently assessing the impact of IFRS
16 on the relevant accounting policy, including whether exemptions
will be applied (such as low-value or short-term exemptions).
There are no other standards, amendments or interpretations in
issue but not yet adopted that the Directors anticipate will have a
material effect on the reported income or net assets of the
Group.
(c) Going concern
The Financial Statements have been prepared on a going concern
basis, which assumes that the Group will continue to be able to
meet its liabilities as they fall due for the 12-month period from
the date of approval of these Financial Statements. As the Group
has significant cash reserves, the Directors have concluded it
remains appropriate to use the going concern basis.
(d) Basis of consolidation
Subsidiaries are entities controlled by the Company. Control
exists when the Company is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The
financial information of subsidiaries is fully consolidated from
the date that control commences until the date that control
ceases.
Intragroup balances, and any gains and losses or income and
expenses arising from intragroup transactions, are eliminated on
consolidation.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with a maturity of three months or less.
(f) Deferred costs
Deferred costs are capitalised on the Group Statement of
Financial Position if they represent qualifying transaction costs
that are incurred in anticipation of, and directly related to an
issuance of equity instruments, and span more than one reporting
period. These costs are deferred on the Statement of Financial
Position until equity instruments are recognised and subsequently
reclassified as a deduction from equity. If the equity instruments
are not subsequently issued, the costs are reclassified as an
expense.
(g) Revenue and expenses
Interest income from financial assets is recognised using the
effective interest method as finance income in the Group Statement
of Comprehensive Income.
Administrative expenses are recognised on an accrual basis, i.e.
when the actual flow of the services they represent occurs,
regardless of when the resulting monetary or financial flow
arises.
(h) Costs directly attributable to the issue of equity
Share issue costs are placing expenses directly relating to the
issue of the Company's shares. These expenses include fees payable
under share placement agreements, printing, and distribution costs
and legal fees and any other applicable expenses. All such costs
are charged to equity and deducted from the proceeds received.
(i) Property, plant and equipment
Property, plant and equipment is measured initially at
acquisition cost and subsequently carried net of any accumulated
depreciation and any accumulated impairment losses.
Property, plant and equipment is depreciated systematically on
the basis of the estimated useful life of the items, and the cost
of the assets is distributed on a straight-line basis over the
estimated useful lives, which for computer equipment is 3
years.
Items of property, plant and equipment are de-recognised when
they are sold or when no future economic benefit is expected to be
obtained from their continuing use. The gain or loss arising on the
disposal or de-recognition of an item of property, plant and
equipment is determined as the difference between the proceeds from
the sale and the carrying amount of the asset and is recognised in
the Group Statement of Comprehensive Income.
(j) Stated capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
stated capital as a deduction from the proceeds.
(k) Corporation tax
Corporation tax comprises the sum of current and deferred tax
for the period.
Current tax is the expected tax payable on the taxable income
for the period. Taxable profit differs from profit reported in the
Group Statement of Comprehensive Income because some items of
income and expense are taxable or deductible in different years or
may never be taxable or deductible. The Group's current tax is
calculated using tax rates enacted or substantially enacted at the
balance sheet date, and any adjustment to taxes payable in respect
of previous periods.
Deferred tax is the tax expected to be payable or recoverable in
the future arising from temporary 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. It is accounted for using the balance sheet liability
method.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realised.
(l) Loss per Ordinary Share
Basic earnings per share ("EPS") is calculated by dividing the
profit or loss attributable to holders of ordinary shares of the
Company by the weighted average number of ordinary shares
outstanding during the period.
Diluted EPS is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all
potentially dilutive ordinary shares.
(m) Share-based transactions
The A1, A2 and A3 Shares issued by SHHJL (the "Incentive
Shares") represent equity-settled share-based payment arrangements
under which the Company receives services as a consideration for
the additional rights attached to these equity shares, over and
above their nominal price.
Equity-settled share-based payments to certain of the Directors
and others providing similar services are measured at the fair
value of the equity instruments at the grant date. The fair value
is expensed through administrative expenses, with a corresponding
increase in equity through the share-based payment reserve, on a
straight-line basis over the period that the Directors or others
providing similar services become unconditionally entitled to the
awards. Where the equity instruments granted are considered to vest
immediately, the services are deemed to have been received in full,
with a corresponding expense and increase in equity recognised at
grant date.
The dilutive effect of outstanding share-based payments is
reflected as share dilution in the computation of diluted EPS.
(n) Retirement benefits
The Group pays contributions to privately-administered pension
plans on behalf of employees as contractually agreed, or the
equivalent contribution is paid in cash to the employee. The Group
has no further payment obligations once the contributions have been
paid. The contributions are recognised as an expense on the
accruals basis and are included within administrative expenses in
the Group Statement of Comprehensive Income.
(o) Trade and other payables
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of business
from suppliers.
Trade and other payables are recognised initially at fair value,
net of directly attributable transaction costs, and subsequently
measured at amortised cost using the effective interest method.
Gains and losses are recognised in profit or loss when the
liabilities are de-recognised.
Trade and other payables are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Financial Statements under IFRSs requires
the Directors to consider estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities. Estimates and judgements are
continually evaluated and are based on historical experience and
other factors including expectations of future events that are
believed to be reasonable under the circumstances. Actual results
may differ from these estimates.
There are significant estimates and assumptions used in the
valuation of the Incentive Shares. Management has considered, at
the grant date, the probability of a successful first acquisition
by the Company ("Platform Acquisition") and the potential range of
value for the Incentive Shares, based on the circumstances on the
grant date. The fair value of the Incentive Shares and related
share-based payments were calculated using a Monte Carlo valuation
model. A summary of the terms is set out in note 19.
For the year to 31 December 2018, the Directors do not consider
that they have made any other significant estimates, judgements or
assumptions that would materially affect the balances reported in
these Financial Statements.
4. SEGMENT INFORMATION
The Board of Directors is the Group's chief operating
decision-maker. As the Group had not yet made an acquisition as at
31 December 2018, the Board of Directors considers the Group as a
whole for the purposes of assessing performance and allocating
resources, and therefore the Group has one reportable operating
segment.
5. ADMINISTRATIVE EXPENSES
For the year For the period
ended 31 December to 31 December
2018 2017
-------------------- ----------------
GBP GBP
Group expenses by nature
Staff-related costs 901,839 885,259
Office costs 68,503 106,327
Legal and professional fees 1,143,353 714,430
Non-recurring project, diligence
and Group establishment costs 176,880 781,546
Depreciation expense 935 744
Other expenses 155,092 49,664
--------------------
2,446,602 2,537,970
==================== ================
Non-recurring project costs are those incurred on projects that
are considered to be one-off or non-recurring in nature. These
projects are usually related to acquisitions where incremental and
identifiable external costs are incurred by the Group in order to
make or evaluate the potential transaction, even if it is not
consummated, or relate to recruitment of Directors.
6. AUDITORS' REMUNERATION
The operating loss is stated after charging auditors'
remuneration of GBP26,900. The total auditors' remuneration related
to fees payable for the audit of the Financial Statements was
GBP26,900 (2017: GBP20,000) and fees payable for non-audit services
was GBP40,000 (2017: GBP175,000).
7. STAFF-RELATED COSTS
For the year For the period
ended 31 December to 31 December
2018 2017
-------------------- ----------------
GBP GBP
Salaries, bonuses and staff
benefits 761,420 642,528
Social security costs 95,398 81,971
Share-based payment expense 8,280 68,148
Other employment related expenses 36,741 92,612
-------------------- ----------------
Total employment costs 901,839 885,259
==================== ================
Compensation of key management personnel
The Board considers the Directors of the Company to be the key
management personnel of the Group. Details of the amounts paid to
key management personnel are detailed in the Nomination and
Remuneration Committee Report on page 22.
There were no share options exercised during the period. The
Incentive Shares owned by Directors are described in note 19.
Employed persons
The average monthly number of persons employed by the Group
(including Executive Directors but excluding Non-Executive
Directors) during the period by activity was as follows:
For the year For the period
ended 31 December to 31 December
2018 2017
------------------- ----------------
Number of Number of
employees employees
Operations 3 3
Administration 1 1
-------------------
4 4
=================== ================
8. FINANCE INCOME
For the year For the period
ended 31 December to 31 December
2018 2017
------------------- ----------------
GBP GBP
Interest on bank deposits 122,596 -
-------------------
122,596 -
=================== ================
9. INCOME TAX
For the year For the period
ended 31 December to 31 December
2018 2017
------------------- ----------------
GBP GBP
Current tax expense
Current year/period - -
-------------------
Income tax expense for the
year/period - -
=================== ================
Reconciliation of effective tax rate
For the year For the period
ended 31 December to 31 December
2018 2017
------------------- ----------------
GBP GBP
Loss before tax (2,324,006) (2,537,970)
At UK statutory income tax rate
(19% (2017: 19.22%)) (441,561) (487,798)
Effects of:
Depreciation for the year/period
in excess of capital allowance 189 144
Other disallowable expenditure 1,813 41,866
Tax losses not utilised 439,559 445,788
Income tax expense - -
=================== ================
The Company is in its pre-acquisition phase and therefore is not
recognising any deferred tax assets due to the uncertainty of
future taxable income. The Company and all its subsidiaries are
tax-resident in the UK. Under English law, there is no expiry for
the use of tax losses.
10. INVESTMENT IN SUBSIDIARIES
(a) Subsidiary undertakings of the Group
The Group directly or indirectly owns the whole of the issued
and fully paid ordinary share capital of its subsidiary
undertakings.
The subsidiary undertakings of the Company as at 31 December
2018 are presented below:
Proportion
of ordinary Proportion
shares of ordinary
Nature of Country held by shares held
Subsidiary business of incorporation parent by the Group
Safe Harbour Holdings
UK Limited Dormant company England 100% 100%
Safe Harbour Holdings
Jersey Limited Incentive vehicle Jersey 99.97% 100%
There are no restrictions on the Company's ability to access or
use the assets and settle the liabilities of the Company's
subsidiaries. SHHJL has issued Incentive Shares to management as
detailed in note 19.
11. DEFERRED COSTS
As at 31 December As at 31 December
2018 2017
-------------------- ------------------
GBP GBP
Consultancy fees - 82,000
Legal fees - 95,000
--------------------- ------------------
- 177,000
===================== ==================
Deferred costs were recognised against equity subsequent to 31
December 2017, in connection with the Company's flotation on
AIM.
12. OTHER RECEIVABLES
As at 31 December As at 31 December
2018 2017
------------------ ------------------
GBP GBP
Amounts falling due within
one year
VAT recoverable 31,414 71,768
Prepayments 42,040 15,075
------------------ ------------------
73,454 86,843
================== ==================
13. CASH AND CASH EQUIVALENTS
As at 31 December As at 31 December
2018 2017
------------------- ------------------
GBP GBP
Cash at bank 26,904,510 7,787,775
26,904,510 7,787,775
=================== ==================
Credit risk is managed on a Group basis. Credit risk arises from
cash and cash equivalents and deposits with banks and financial
institutions. For banks and financial institutions, only
independently rated parties with a minimum short-term credit rating
of P-1, as issued by Moody's, are used by the Group.
14. TRADE AND OTHER PAYABLES
As at 31 December As at 31 December
2018 2017
------------------ ------------------
GBP GBP
Amounts falling due within
one year
Trade payables 115,631 149,657
Accruals 151,563 336,692
Other tax and national insurance
payable 29,755 19,092
Other creditors 8,805 7,597
305,754 513,038
================== ==================
There is no material difference between the book value and the
fair value of the trade and other payables.
15. STATED CAPITAL
As at 31 December As at 31 December
2018 2017
------------------ ------------------
GBP GBP
Authorised
Unlimited ordinary shares of
no par value
Issued and fully paid
8,333,336 ordinary shares of
no par value 10,000,003 10,000,003
18,916,665 ordinary shares
of no par value 22,699,998 -
Share issue cost (1,252,582) -
31,447,419 10,000,003
================== ==================
On incorporation of SHHUK, 2 ordinary shares of no par value
were issued at GBP1.19 per share for aggregate consideration of
GBP2.38. On 29 September 2016 a further 8,333,334 ordinary shares
of no par value were issued at GBP1.20 for an aggregate
consideration of GBP10,000,000.80.
On incorporation of Safe Harbour Holdings plc ("SHH plc"), a
contribution agreement was entered into between SHH plc, Marwyn
Value Investors LP ("MVI") and Marwyn Value Investors II LP ("MVI
II") under which the shares held by MVI and MVI II in SHHUK were
contributed to SHH plc in consideration for 879,252 and 7,454,084
ordinary shares of no par value issued by SHH plc to MVI and MVI II
respectively.
Following the Company's admission to AIM on 15 March 2018, a
further 18,916,665 ordinary shares of no par value were issued at
GBP1.20 for an aggregate consideration GBP22,699,998. GBP1,252,582
of costs directly attributable to the shares issued have been taken
against stated capital.
All issued shares are fully paid. The holders of ordinary shares
are entitled to receive dividends as declared and are entitled to
one vote per share at meetings of the Company.
16. RESERVES
The following describes the nature and purpose of each reserve
within shareholders' equity:
Accumulated losses
Cumulative losses recognised in the Group Statement of
Comprehensive Income.
Share-based payment reserve
The share-based payment reserve is the cumulative amount
recognised in relation to the equity-settled share-based payment
scheme as further described in note 19.
17. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity. The Group has the following
categories of financial instruments:
As at 31 December As at 31 December
2018 2017
------------------ ------------------
GBP GBP
Financial assets measured at
amortised cost
Cash and cash equivalents 26,904,510 7,787,775
26,904,510 7,787,775
================== ==================
Financial liabilities measured
at amortised costs
Trade payables 115,631 149,657
Accruals 151,563 336,692
------------------ ------------------
267,194 486,349
================== ==================
The Directors consider that the carrying amounts of the
financial assets and liabilities recognised in the Financial
Statements equate to their fair values.
The Group has exposure to the following risks from its use of
financial instruments:
-- Market risk;
-- Liquidity risk; and
-- Credit risk.
This note presents information about the Group's exposure to
each of the above risks and the Group's objectives, policies and
processes for measuring and managing these risks.
The Group's risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence limits. Risk
management policies and systems are reviewed regularly to reflect
changes in market conditions and the Group's activities.
Treasury activities are managed on a Group basis under policies
and procedures approved and monitored by the Board. These are
designed to reduce the financial risks faced by the Group which
primarily relate to movements in interest rates.
Market risk
The Group's activities primarily expose it to the risk of
changes in interest rates due to the significant cash balance
currently held; however, any change in interest rates will not have
a material effect on the Group. The Group's operations are entirely
in their functional currency and accordingly no translation
exposures arise.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation.
The Group currently meets all liabilities from cash reserves.
The Group's liability for operating expenses is monitored on an
ongoing basis to ensure cash resources are adequate to meet
liabilities as they fall due.
Credit risk
Credit risk is the risk that one party to a financial instrument
will cause a financial loss for the other party by failing to
discharge an obligation. The main credit risk relates to the cash
held with financial institutions. The Company manages its exposure
to credit risk associated with its cash deposits by selecting
counterparties with a high credit rating with which to carry out
these transactions. The counterparty for these transactions is
Barclays Bank plc, which holds a short-term credit rating of P-1,
as issued by Moody's. The Company's maximum exposure to credit risk
is the carrying value of the cash on the balance sheet.
Capital management
The Board's policy is to maintain a strong capital base so as to
maintain creditor and market confidence and to sustain future
development of the business. There were no changes in the Group's
approach to capital management during the period.
For the purpose of the Group's capital management, capital
includes issued capital and all other equity reserves attributable
to the equity holders of the Company. The primary objective of the
Group's capital management is to maximise shareholder value.
Throughout 2018, the Group had no financial covenants with which
it needed to comply.
18. LOSS PER ORDINARY SHARE
Basic earnings per Ordinary Share is calculated by dividing the
profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the
period. Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. Incentive
Shares (as detailed in note 19) have not been included in the
calculation of diluted earnings per share because they are not
dilutive for the periods presented.
For the year For the period
ended 31 December to 31 December
2018 2017
-------------------- ----------------
GBP GBP
Loss attributable to the owners
of the parent (2,324,006) (2,537,970)
Weighted average number of ordinary
shares in issue 16,799,999 7,756,280
Basic and diluted loss per share (0.1383) (0.3272)
19. SHARE-BASED PAYMENTS
Implementation of share incentive plan - Incentive Shares
Arrangements have been put in place to create incentives for
those who are expected to make key contributions to the success of
the Group. Success depends upon the sourcing of attractive
investment opportunities, effective execution of transactions, and
the subsequent integration and optimisation of target businesses.
Accordingly, an incentive scheme has been created to reward the key
contributors for the creation of value, once all shareholders have
received a preferential level of return. In order to make these
arrangements most efficient, they are based around a subscription
for shares in SHHJL by the PRX Trust, in which Rodrigo Mascarenhas
is beneficially interested, in the A1 & A3 Shares, and by
Marwyn Long Term Incentive LP ("MLTI"), in which James Corsellis
and Mark Brangstrup Watts have an indirect beneficial interest, in
the A2 & A3 Shares. The A1, A2 and A3 Shares are collectively
referred to as "Incentive Shares". It is intended that future
management appointees will also share in the scheme and subscribe
for Incentive Shares at a later date. In 2019, Incentive Shares
have been issued to James Brotherton.
On being offered, the Company will purchase the Incentive Shares
either for cash or for the issue of new ordinary shares at its
discretion, with the expectation being that new shares will be
issued. The valuation of the Incentive Shares is discussed below.
The Incentive Shares may only be sold on this basis if both the
growth and at least one of the vesting conditions have been
satisfied. If the growth condition has not been satisfied on or
before the fifth anniversary of a Platform Acquisition (or such
later date as SHHJL and the holders of 90% of the ordinary shares,
A1, A2 and A3 Shares in SHHJL agree), the Incentive Shares must be
sold to the Company or, at its election, redeemed by SHHJL and in
both cases at a price per Incentive Share equal to its subscription
price unless and to the extent that the Nomination and Remuneration
Committee determines otherwise.
Incentive shares
During the year, SHHJL issued 600 A3 shares to Rodrigo
Mascarenhas and 500 A3 shares to MLTI, which have been accounted
for in accordance with IFRS 2 Share-based Payments ("IFRS 2") as
equity-settled share-based payment awards.
On 21 August 2018, the 540 A1 Shares and 600 A3 Shares issued to
Rodrigo Mascarenhas (collectively, the "Old Incentive Shares") were
bought back by the Group and subsequently cancelled. On 4 September
2018, 540 new A1 Shares and 600 new A3 Shares were issued to the
PRX Trust (in which Rodrigo Mascarenhas is beneficially interested)
(collectively, the "New Incentive Shares"), which have been treated
as replacement awards under IFRS 2. The replacement had no impact
on the fair value of the Incentive Shares.
Grant date
The date at which the entity and another party agree to a
share-based payment arrangement, for accounting purposes, is the
grant date. As the New Incentive Shares are treated as replacement
awards for the Old Incentive Shares under IFRS 2, the grant date
for the New Incentive Shares is the same as the equivalent Old
Incentive Shares. The grant date for the Incentive Shares was:
Participant Grant date
--------------- ------------------
PRX Trust (A1) 26 September 2016
MLTI (A2) 26 September 2016
PRX Trust (A3) 20 February 2018
MLTI (A3) 20 February 2018
Growth Condition
The growth condition is that the compound annual growth of the
Company's equity value must be at least 10% per annum. The growth
condition takes into account new shares issued, dividends and
capital returned to shareholders.
Service Conditions
Rodrigo Mascarenhas has agreed that if he ceases to be involved
with the Group before it completes its Platform Acquisition or in
the first three years following such acquisition then in certain
circumstances a proportion of his Incentive Shares may be
forfeited. The Incentive Shares vest on a straight-line basis over
three years from the date of the Platform Acquisition provided he
leaves in circumstances in which he is deemed to be a "Good Leaver"
(as defined in his subscription agreements). He will be required to
redeem his vested Incentive Shares on the later of 180 days
following a departure date or on the third anniversary of the
Platform Acquisition. If he is deemed to be a "Bad Leaver", he will
be required to sell his Incentive Shares back to SHHJL for a total
consideration of GBP1.00.
On 20 February 2018, the subscription agreement with MLTI was
amended to include specific service conditions. MLTI has agreed
that if Marwyn Capital LLP ceases to have a corporate finance
agreement with the Company/Group before it completes its Platform
Acquisition or in the first three years following such acquisition,
then MLTI will be required to sell its unvested shares back to
SHHJL for a consideration of the subscription price plus any
capital contribution MLTI has made to SHHJL. The shares vest on a
straight-line basis over three years from the date of the Platform
Acquisition provided service conditions are met.
Vesting conditions and Vesting period
The Incentive Shares are subject to certain vesting conditions,
at least one of which must be (and continue to be) satisfied in
order for a holder of Incentive Shares to exercise his, her or its
redemption rights and which ends on the fifth anniversary of the
date of the Platform Acquisition or such later date as is agreed
between the Company and the holders of at least 90% of the ordinary
shares in SHHJL, A1, A2 and A3 Shares.
The vesting conditions are as follows:
(i) a sale of all or a material part of the business of the Group;
(ii) a sale of all of the issued ordinary shares of the Group occurring;
(iii) a winding up of the Group occurring;
(iv) a sale, merger or change of control of the Company; or
(v) it is later than the third anniversary of the date of the Platform Acquisition.
The Incentive Shares are subject to a three-year vesting period
and will lapse after five years. The vesting period commences from
the date of completion of the Platform Acquisition.
Value
Subject to the provisions detailed above, the Incentive Shares
can be sold to the Company for an aggregate value equivalent to 16%
(of which A1 shares as a class are entitled to 11% and A2 shares to
5%) of the excess in the market value of the Company over and above
its aggregate paid up share capital, allowing for any dividends and
other capital movements.
Holding of Incentive Shares
Incentive Shares have been created and shares have been
allocated and issued as shown in the table below.
Nominal Number Subscription Fair value
price of Incentive price at grant
per share shares date
----------- -------------- ------------- -----------
GBP GBP GBP
PRX Trust (A1) 1.00 540 13.50 47,191
PRX Trust (A3) 0.01 600 2.01 1,206
MLTI (A2) 0.02 500 21.27 68,836
MLTI (A3) 0.01 500 2.01 1,005
2,140 118,238
============== ===========
No Incentive Shares were exercisable at 31 December 2018.
Valuation of Incentive Shares
The value of the Incentive Shares granted under the schemes has
been calculated using a Monte Carlo model. The fair value uses an
ungeared volatility of 24% and is based on a weighted average share
price over the vesting period. An expected term input of four years
has been used, being the midpoint of the period of time between the
date on which an acquisition is expected to take place and the
start and end of the redemption period. The Incentive Shares are
subject to a preferred return, which is a market performance
condition, and as such has been taken into consideration in
determining their fair value. The risk-free rate is taken from
zero-coupon UK Government bonds with a redemption period in line
with the expected term. The model incorporates a range of
probabilities for the likelihood of an acquisition being made of a
given size.
Expense related to Incentive Shares
GBP8,280 (2017: GBP9,948) has been recognised in the Group
Statement of Comprehensive Income in the year and in a share-based
payment reserve within the Group Statement of Financial Position as
at 31 December 2018 in relation to the A1 and A3 Shares together
with liabilities as at 31 December 2018 of GBP7,290 and GBP1,206
respectively.
The full A2 Share expense of GBP58,200, being the fair value
amount less the subscription proceeds, was recognised in the Group
Statement of Comprehensive Income in 2017, with the total fair
value of the A2 Shares of GBP68,836 recognised in the share-based
payment reserve within the Group Statement of Changes in Equity as
at the year end. The consideration paid by MLTI for its A3 Shares
in 2018 was equal to the fair value at the grant date; therefore
GBP1,005 was recognised in the share-based payment reserve within
the Group Statement of Changes in Equity for the year ended 31
December 2018, and no additional expense was recognised.
20. RELATED PARTY TRANSACTIONS
In the opinion of the Directors, there is no single controlling
party.
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party, or the parties are under common
control or influence, in making financial or operational
decisions.
James Corsellis and Mark Brangstrup Watts are the managing
partners of Marwyn Capital LLP which provides corporate finance
advice and various office and finance support services to the
Company. During the year, Marwyn Capital LLP charged GBP864,665
(2017: GBP608,454) (excluding VAT) in respect of services supplied
and was owed an amount of GBP64,764 (2017: GBP58,401) at 31
December 2018.
James Corsellis and Mark Brangstrup Watts are the ultimate
beneficial owners of Marwyn Partners Limited which incurred costs
on behalf of the Group which it recharged. During the year, Marwyn
Partners Limited charged GBP9,054 (2017: GBP96,064) in respect of
recharged costs and was owed GBPnil (2017: GBP307) at 31 December
2018.
James Corsellis and Mark Brangstrup Watts are the ultimate
beneficial owners of Axio Capital Solutions Limited which provides
company secretarial services to the Group. During the year, Axio
Capital Solutions Limited charged GBP270,546 (2017: GBP254,218) in
respect of services supplied and was owed GBP25,046 (2017:
GBP8,527) at 31 December 2018.
James Corsellis and Mark Brangstrup Watts are the ultimate
beneficial owners of Marwyn Investment Management LLP which
incurred costs on behalf of the Group which it recharged. During
the year, Marwyn Investment Management LLP charged GBP10,297 (2017:
GBP102,522) in respect of recharged costs at 31 December 2018.
Compensation of key management personnel of the Company is
included in note 7. Holdings of Incentive Shares are detailed in
note 19.
21. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding
at 31 December 2018 (2017: none) that require disclosure or
adjustment in these Financial Statements.
22. POST BALANCE SHEET EVENTS
On 14 March 2019, James Brotherton was appointed as Chief
Financial Officer and an Executive Director of the Company
effective on or before 1 August 2019. On appointment, he was issued
270 A1 Shares and 300 A3 Shares.
SAFE HARBOUR HOLDINGS PLC
Company number 123821
ADVISERS
Corporate Finance Adviser Company Secretary and Administrator
Marwyn Capital LLP Axio Capital Solutions Limited
11 Buckingham Street One Waverley Place, Union Street,
London, WC2N 6DF St Helier, Jersey, JE1 1AX
Solicitors to the Company (Jersey Solicitors to the Company (English
Law) Law)
Ogier Covington & Burling LLP
44 Esplanade, St Helier 265 Strand
Jersey, JE4 9WG London, WC2R 1BH
Independent Auditors Registrars
PricewaterhouseCoopers LLP Link Market Services (Jersey)
1 Embankment Place Limited
London, WC2N 6RH 12 Castle Street, St Helier
Jersey, JE2 3RT
Principal Bankers Public Relations Adviser
Barclays Bank plc Tulchan Communications Group
1 Churchill Place 85 Fleet Street
London, E14 5HP London, EC4Y 1AE
Nominated Adviser
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London, EC2R 7AS
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
FR UASRRKRANAUR
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June 12, 2019 02:00 ET (06:00 GMT)
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