Zegona Communications plc
Annual Report
For the Year Ended 31 December 2022
ZEGONA COMMUNICATIONS PLC
CONTENTS
STRATEGIC REPORT |
Page
Chairman’s Statement 1
Strategy and Business Model 2
Business and Financial Review 4
Risks 6
Viability Statement 8
DIRECTORS’ REPORT |
Corporate Responsibility 10
Other Matters 13
Directors’ Responsibility Statements 15
GOVERNANCE |
Profiles of the Directors 17
Corporate Governance Statement 19
Audit and Risk Committee Report 24
Nomination and Remuneration Committee Report 28
Directors’ Remuneration Report 31
Independent Auditor’s Report to the members of Zegona Communications plc 39
FINANCIAL STATEMENTS |
Consolidated Statement of Comprehensive Income 47
Consolidated Statement of Other Comprehensive Income 48
Consolidated Statement of Financial Position 49
Company Statement of Financial Position 50
Consolidated Statement of Changes in Equity 51
Company Statement of Changes in Equity 53
Consolidated Statement of Cash Flows 55
Company Statement of Cash Flows 56
Notes to the Financial Statements 57
OTHER INFORMATION |
Notice of Annual General Meeting 81
Explanatory Notes to the Resolutions 87
Advisers 91
STRATEGIC REPORT | CHAIRMAN'S STATEMENT
1
ZEGONA COMMUNICATIONS PLC
I am pleased to present Zegona’s annual report for 2022.
Searching for the next Buy-Fix-Sell Opportunity
In the past year we have continued to focus on finding the right opportunity within the European
telecommunications market where we can again successfully apply our proven “buy-fix-sell” strategy to generate
attractive returns for our shareholders. We believe that we sold our investment in Euskaltel at a particularly good
time and despite plenty of opportunities to make an acquisition in 2022, we instead chose to stay patient and
disciplined as we believed more attractive opportunities would emerge later in the year and in early 2023. This
has indeed been the case and while we are not yet in a position to announce a new acquisition, we are currently
actively working on a short-list of opportunities which we believe offer significant upside potential.
The past year has been marked by significant geo-political and macro-economic developments that have
impacted European economies. In particular, the ongoing war in Ukraine has created uncertainty and has led to
increased commodity prices and inflation. Other developments, such as changes in government leadership and
trade policies, have also resulted in more constrained financial market conditions.
These developments had an impact on the telecommunications sector in 2022. While the sector has performed
well overall, it has not been immune to the broader economic and political trends. In particular, the market for
mergers and acquisitions in European TMT assets has been affected. Overall, the level of European TMT mergers
and acquisitions in 2022 has been lower than in the previous three years in terms of both deal value and volume.
There have been several notable deals announced in the space, including the merger of Orange and MásMóvil in
Spain (July 2022) and Vodafone’s sale of its Hungarian business to 4iG (August 2022).
During the second half of the year in particular, macro-economic challenges such as the rapid increase in interest
rates by central banks have had a significant impact on the availability and pricing of debt and equity funding
for businesses seeking to make acquisitions. This has made it more challenging for companies to pursue their
desired acquisition targets. In addition, the availability of acquisition targets was affected by these factors, with
some companies delaying their sales processes while they waited for financial market conditions to improve.
Since the end of 2022, however, we have seen new targets becoming available as businesses have adjusted to
the new market dynamics. This allied with significant improvements in the availability of debt funding and with
equity markets also having recovered, means we are now far more confident in our ability to find and complete
a new acquisition.
Throughout the last year, we have continued to search for new opportunities. We have been active on a number
of proprietary transactions where we see material upside potential. However, we have maintained our strong
financial discipline and have not been prepared to make an acquisition if it does not meet our strict financial
criteria.
As discussed in Note 2 to the financial statements, we believe we have sufficient time and resources to continue
to be patient and disciplined in our search for the right opportunity. We also believe that this approach will be
rewarded as market conditions stabilise. While challenges remain in the current environment, we are optimistic
that we will be able to make an acquisition during the coming year which can deliver attractive returns for our
shareholders.
Annual general meeting
The next AGM will be held at 10 Snow Hill, London, EC1A 2AL at 10:30 am on 20 June 2023. The AGM is an
opportunity for shareholders to vote on certain aspects of Zegona’s business. The Directors will also be available
to answer any shareholder questions prior to and after the meeting.
Eamonn O’Hare
Chairman and Chief Executive Officer
6 April 2023
STRATEGIC REPORT | STRATEGY AND BUSINESS MODEL
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ZEGONA COMMUNICATIONS PLC
Vision
• Execute our Buy-Fix-Sell strategy in the European TMT sector
• Focus on businesses that require active change and fundamental improvement to realise their full value
• Target significant long-term growth in shareholder value
Opportunity
Changing market dynamics in the TMT industry create multiple investment opportunities:
• Demand for data and speed: Data consumption is growing strongly with customers willing to pay for speed
and reliability. Gigabit broadband is increasingly offered in many markets but network roll-outs and upgrades
need to be efficient.
• Digital convergence: The fixed/mobile divide is increasingly disappearing for users, meaning significant
growth in more valuable triple and quad play
1
customers who are combining mobile and fixed services.
This has driven an increase in merger and acquisition (“M&A”) activity and improvements in economics for
converged players since mobile data delivery is heavily dependent on high capacity fixed networks.
• Industry consolidation: The sector has seen heightened M&A activity. Many private equity owners are
looking to sell assets as economies return to growth and industry players are focusing on their core regions,
delivering cost reductions and price repair to rebuild margins. Consolidation has also created opportunity
as businesses are spun out by the major industry players to meet regulatory requirements and strategic
objectives, creating opportunity for Zegona.
• Infrastructure monetisation: The opportunity to enhance value through separating off and monetising
infrastructure assets, started with mobile towers but has expanded to other assets including fixed networks.
This creates new commercial options, both through providing a route for incremental value creation and
in the remaining ‘servco’ operations which may not have been the main focus of attention in the initial
infrastructure led transaction.
• Broad range of attractive assets: Our flexibility in terms of size, geography and category opens a broad
universe of attractive target assets across the TMT market. We have identified many businesses of an
appropriate scale, including operators which are active in one or more of the mobile, mid-sized cable, fixed
fibre network, B2B
2
, and network infrastructure sectors.
Advantage
A number of factors make Zegona well positioned to access attractive deals and deliver value:
• Strong, aligned management team: Our management team has a proven track record of delivering
superior business performance and investor returns. During 2017, it successfully sold Telecable and was
then instrumental in returning Euskaltel to growth. This enabled us to initiate consolidation discussions with
MásMovíl that lead to it acquiring Euskaltel in July 2021. The team has extensive real-world experience in
senior operational roles in large public telecommunications companies and its interests are also strongly
aligned with shareholders through a long-term incentive scheme that links remuneration directly to growth
in shareholder value.
• Entrepreneurial focus: We have considerable freedom in the projects we pursue and the ways we create
value. Unlike most private equity businesses, Zegona is free to choose the optimal period to hold assets and
can realise value using a range of approaches, of which a sale of the asset is only one. This also permits a
focus on fundamental business improvements that are value accretive rather than relying on high leverage
and multiple expansion. We are also able to act quickly on acquisition opportunities while still maintaining
financial discipline. This is especially attractive to potential sellers and a key differentiator.
1 Quad play: customers with four services (pay TV, fixed voice, broadband and mobile).
2 Business to Business.
STRATEGIC REPORT | STRATEGY AND BUSINESS MODEL
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ZEGONA COMMUNICATIONS PLC
• Major global investors: Zegona benefits from having a number of global public equity asset managers
3
with a long-term outlook as shareholders. The strong support which we have from such shareholders was
illustrated by our successful placement of over £100 million of equity in February 2019 which enabled us to
become Euskaltel’s largest shareholder and drive change within the business. We have an effective investor
relations programme which maintains regular contact with our major current and potential shareholders.
Strategy
We seek to provide shareholders with an attractive total return, primarily through appreciation in the value
of Zegona’s assets. Our strategy focuses on making investments in strategically sound businesses within the
European TMT sector that require active change to realise their full value, thereby creating significant long-term
returns through fundamental business improvements. The main elements of Zegona’s strategy are set out below
but our overall approach is to deal with each opportunity and situation individually as it arises. For example, in
the case of the investment in Euskaltel, our successful strategy was to increase our ownership position and work
constructively with the Euskaltel Board and management to improve the performance of the business and make
it more attractive to potential buyers, thereby encouraging industry consolidation.
We evaluate potential investments using a disciplined set of financial and strategic criteria. We focus on:
• Target businesses with an enterprise value range of £1-5 billion, although we may deviate outside of this
range if we believe the returns are sufficiently attractive;
• TMT, network-based communications and entertainment businesses, primarily in Europe;
• Strategically sound businesses with established market positions and limited expected downside risk, but
which have scope for fundamental improvement that is realistically achievable;
• Appropriate financial leverage (usually 3-4x EBITDA
4
); and
• Multiple viable exit options pre-identified.
Many businesses across the TMT sector currently deliver sub-optimal returns which could be significantly
improved. We work with management to deliver fundamental business improvements, such as:
• Changing the business market position;
• Being actively involved in the management of the business to drive operational improvements;
• Instilling strong discipline around cost efficiency;
• Investing in products, services and other value-accretive activities to drive top line growth;
• Focusing on operating profitability and cash generation;
• Ensuring a balanced and efficient capital structure;
• Innovative techniques to separate and monetise infrastructure assets; and
• Value enhancing bolt-on acquisitions/divestments.
Buyer interest is stimulated as the performance of each investment improves, providing Zegona with a range of
options to crystallise the value it has created:
• We identify the optimal time to crystallise the value we have created, with flexibility to adapt to market
changes and other opportunities;
• Zegona’s publicly listed structure allows shareholders to realise value at any time and provides multiple
options for value delivery; and
• Following a successful crystallisation, the value created will be reinvested or returned to shareholders.
3 Those with holdings in 3% or more of the issued ordinary shares of the Company are listed on page.
4 Operating profit excluding depreciation of property, plant and equipment and amortisation of intangible assets.
STRATEGIC REPORT | BUSINESS AND FINANCIAL REVIEW
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ZEGONA COMMUNICATIONS PLC
Review of Zegona’s continuing corporate and other activities
Loss for the period from continuing operations
Zegona’s corporate and other activities resulted in a net loss for the period from continuing operations of
€3.3 million (2021: €34.3 million net loss) which principally comprised:
Operating loss
Operating loss totalled €3.3 million (2021: €34.0 million) and included:
• €3.3 million (2021: €4.6 million) for Zegona’s ongoing corporate operations, with the reduction mainly
driven by the retirement of one of the members of Zegona’s senior management during the period. The
management team have performed a comprehensive review of operating costs during 2022, seeking to
ensure the business is operating as efficiently as possible by eliminating expenditure where possible,
reducing headcount and re-negotiating key supplier terms. As a result, we expect the costs of Zegona’s
ongoing corporate operations to reduce by approximately 10% in 2023 compared to 2022 and circa 30 – 35%
compared to the average of 2020-2022.
• €34 thousand (2021: €29.1 million) of Incentive scheme costs which were the amortisation of the fair value
of the Third Calculation Period of the Management Incentive Scheme. The substantial reduction in the period
is due to the €25.7 million payments to management in 2021 upon the redemption of the Second Calculation
Period (see note 17 to the financial statements).
• €26 thousand (2021: €0.3 million) for significant project costs, principally professional fees paid in conjunction
with exploring new opportunities.
Net finance income
Net finance income totalled €21 thousand (2021: €0.2 million of costs) and comprises interest earned on cash
deposits recognised within Finance Income net of bank charges and overdraft interest recognised within Finance
Costs.
Other Comprehensive Income
Exchange differences on translation resulted in a loss of €0.6 million (2021: gain €0.6 million). The variance year
on year arises as a result of movements in the closing €:£ exchange rates as the functional currency of Sterling
(“£”) is translated into the presentational currency of euro (“€”).
Financial Position
Zegona’s Net Assets at 31 December 2022 were €10.5 million (2021: €14.5 million) which substantially comprised
the Income tax receivable of €4.9 million and Cash and cash equivalents of €5.9 million. The reduction in the
period is due to the use of cash to pay for Zegona’s ongoing operating expenses during 2022 and the settlement
of accruals and other payables at 31 December 2021.
Zegona’s ongoing prospects
While Zegona has undertaken a comprehensive exercise to minimise its ongoing operating costs, it will continue
to incur operating losses until it is able to make a new investment in a profitable business. We continue to see
a very healthy environment for acquisitions across the industry, which has continued to see significant deal
activity despite the war in Ukraine and the economic challenges it has created. While there are some short-term
challenges, especially with raising debt financing, we believe we will be rewarded by remaining patient and
disciplined and will not pursue a transaction unless we are confident that it meets our strict financial criteria.
Until we are able to make such an investment, Zegona will need to fund its operations with its current cash
reserves or raise additional capital. We believe we have retained sufficient capital to provide adequate time and
resources to remain patient and secure another attractive investment opportunity without raising additional
capital and have £4.5 million (€5.3 million) of cash on hand at 6 April 2023. While we continue to search for
our next investment, our ongoing costs are reasonably predictable and controllable and we expect that as long
as Zegona does not incur any material unforeseen costs, its cash reserves can fund the business until the first
quarter of 2025.
STRATEGIC REPORT | BUSINESS AND FINANCIAL REVIEW
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ZEGONA COMMUNICATIONS PLC
As further discussed in Note 2 to the financial statements however, there are certain risks which are unlikely, but
could threaten Zegona’s ability to continue as a going concern if they transpire. As a result, we have concluded
that it is appropriate to prepare the financial statements on a going concern basis, but there is a material
uncertainty that may cast significant doubt on our ability to continue as a going concern.
Shareholder remuneration
Up to the sale of Euskaltel, Zegona was committed to paying dividends to shareholders and in 2021 continued
to pass through 100% of dividends it received from Euskaltel. Zegona declared a first interim dividend on 21
December 2020 at a rate of 2.2p per share, totalling £4.8 million (€5.6 million) which was paid on 9 March 2021.
Zegona also paid a second interim dividend of 2.6p per share, totalling £5.7 million (€6.7 million) on 23 July 2021.
Following the sale of Euskaltel, Zegona has ceased paying dividends and expects not to pay further dividends
until such time as it has an income generating asset.
STRATEGIC REPORT | RISKS
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ZEGONA COMMUNICATIONS PLC
Principal and emerging risks
We have carried out robust assessments of the principal and emerging risks facing Zegona including those that
would threaten our business model, future performance, solvency or liquidity. Detailed consideration is given to
all of these risk factors by the Audit and Risk Committee and the board of Directors (the “Board”).
Principal and emerging risks
Risk title Risk rating
Change in risk assessment
since the last Annual Report
Ability to maintain sufficient resources to
identify and complete new acquisitions High ↑ Increased
Ability to create value in acquired businesses Moderate ↔ No change
Loss of key management Low ↔ No change
Foreign exchange Moderate ↔ No change
The description, impact and mitigation of these risks are set out below:
Ability to maintain sufficient resources to identify and complete new acquisitions
Following the sale of its investment in Euskaltel, Zegona meets its day to day working capital requirements,
including the costs of evaluating new acquisitions, from cash balances. At 6 April 2023, Zegona had approximately
€5.3 million of cash and we are making progress on finding another attractive investment opportunity within the
European TMT sector where we can again apply our successful Buy-Fix-Sell strategy.
The success of Zegona’s future investment strategy following the disposal of our interest in Euskaltel depends
on our ability to acquire a suitable target at a price that allows for acceptable returns. Zegona’s current cash
resources are enough to allow us to continue searching for new acquisitions for a reasonable period of time, but
we cannot be certain how long this will take. The passage of time and the consequent reduction in Zegona’s cash
reserves has caused this risk to increase during the year. There is also no guarantee that we will be successful in
making a further investment during this period for a number of reasons, which could include:
• We may face competition for attractive assets from other investors with greater resources than us;
• We may not receive sufficient support from our existing Shareholders to raise additional equity, and new
equity investors may be unwilling to invest;
• Lenders may be unwilling to extend sufficient debt financing on reasonable term; and
• We may fail to complete an agreed acquisition for reasons beyond our control.
If we do attempt an acquisition which is ultimately unsuccessful this would result in us incurring related costs for
items such as legal and due diligence fees. These costs could be a significant proportion of our remaining cash
and could materially adversely affect subsequent attempts to identify and acquire another target business, or
even threaten our ability to continue as a going concern without raising further capital.
Ability to create value in acquired businesses
If Zegona is successful in acquiring a new business, there is a risk of unforeseen liabilities being later discovered
which were not uncovered or known at the time of the transaction which may have an impact on the value
created for shareholders.
In addition, the success of Zegona’s acquisitions depends on our ability to implement the necessary strategic,
operational and financial change programmes in order to refocus the acquired business and improve its
performance. Implementing these change programmes may require significant modifications, including changes
to business assets, operating and financial processes, business systems, management techniques and personnel,
including senior management. There is a risk that we will not be able successfully to implement such change
programmes within a reasonable timescale and cost.
STRATEGIC REPORT | RISKS
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ZEGONA COMMUNICATIONS PLC
We have a disciplined approach to valuation and, ultimately, we are only prepared to make investments at the
right price and after undertaking a thorough due diligence process. When evaluating potential investments, we
focus on targets that have strong fundamentals, high-quality customer offerings and strong market positions but
which are underperforming their potential and have scope to generate long term sustainable performance and
cash flow improvements.
Loss of key management
Zegona’s operations are currently managed by the Chief Executive Officer, supported by the Chief Operating
Officer, the Investment Director and the Chief Financial Officer. The absence or loss of key management could
significantly impede our financial plans, though there has been no such absence or loss since Zegona was founded.
We aim to retain our key staff by offering remuneration packages at market rates, as well as long term incentives
through the issue of Management Shares and other management incentive plans. The management team is
small which places a natural limit on the volume of deal flow that can be addressed. The management team
itself along with the Non-Executive Directors continually challenge the focus of the business and the allocation
of resources amongst projects.
Foreign exchange
Foreign currency translation risk exists due to the Company operating, and having equity denominated, in a
different functional currency (GBP) to that of many of its likely acquisition targets. Since the disposal of Euskaltel
and the Return of Capital, there are no material assets or liabilities denominated in foreign currencies or
transactions in foreign currencies. This means there is currently minimal risk to Zegona’s results of operations,
however fluctuations in the exchange rate between Sterling and other European currencies could cause potential
future acquisitions to become more expensive in Sterling, and therefore potentially less desirable.
The Board and the Chief Financial Officer control and monitor financial risk management, including foreign
currency risk, in accordance with the internal policy and the strategic plan defined by the Board.
STRATEGIC REPORT | VIABILITY STATEMENT
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ZEGONA COMMUNICATIONS PLC
Longer term viability statement
Zegona’s prospects
In accordance with provision 31 of the 2018 UK Corporate Governance Code, we have assessed Zegona’s prospects
over a longer period than the twelve months required by the “going concern” provision. This assessment has
taken into account Zegona’s current position, its strategy, the risk appetite of the Board and the principal risks
and uncertainties which are described in detail in this Strategic Report.
Zegona’s position changed fundamentally in 2021 with the sale of its investment in Euskaltel and the Return
of Capital. Zegona no longer has an investment in an underlying operating business and is now solely focussed
on identifying another attractive investment opportunity within the European TMT sector where we can again
apply our successful Buy-Fix-Sell strategy. Until Zegona identifies and successfully executes a new investment,
it meets its day to day working capital requirements, including the costs of evaluating new acquisitions, from its
cash balances. While Zegona does have a small overdraft facility, this is repayable on demand, and it does not
currently have other assets upon which it can raise additional liquidity.
The assessment period
We continue to believe that three years – in this case the three years to December 2025 – is the appropriate
period over which Zegona should assess its viability for the following reasons:
• Three years allows us to assess a full range of possibilities and covers Zegona’s investment cycle; and
• A three-year period enables us to make an appropriate assessment of Zegona’s principal risks.
The assessment process and key assumptions
The Directors approve a 3-year forecast on an annual basis which is sufficiently detailed to explain all cash inflows
(primarily interest on cash deposits) and outflows (which are primarily corporate costs) and includes a description
of all reasonably possible risks and opportunities. Each month, an analysis of actual performance against the
forecast is performed and updated frequently. The most recent forecast is used as the base case (“Base Case”)
for the viability assumption without any significant adjustment except for the addition of a £120 thousand per
year contingency to account for unforeseen day-to-day expenditure.
Zegona’s operations are now focused on finding the next investment opportunity and its ongoing running costs
have been comprehensively reviewed during 2022 to ensure they are as low as possible with the result that
ongoing costs in 2023 are expected to be circa 10% lower than in 2022. Costs are also relatively predictable as the
most significant ongoing costs are the salary costs of the Board and management team. Until a new investment
is made, no management bonuses will be paid. The most significant element of uncertainty is whether Zegona
will incur substantial professional fees for costs such as legal advice and due diligence related to an unsuccessful
attempt to acquire a new investment. Such costs are inherently unpredictable, so while a contingency is included
in the base case for routine professional fees that would be expected to support Zegona’s day-to-day operations,
no amounts are included for any significant aborted transactions. To further increase prudence, no cash inflow is
assumed for the recovery of the Income Tax Receivable (see note 14 to the financial statements).
Equally, completing a new acquisition would likely represent a significant upside to the viability assessment since
the addition of an income generating asset would deliver cash inflows to allow Zegona to fund its operation as
well as giving the opportunity to raise additional capital in connection with the funds to complete the acquisition.
The ability to execute such acquisitions, their timing and size are however inherently uncertain so no amounts
have been included in the base case.
We believe that this approach fairly represents the future prospects of Zegona while also properly considering the
principal and emerging risks (as discussed on page 6). In terms of risks, we believe that the principal consequence
should any of the risks occur would be to make it more difficult for Zegona to execute a new acquisition. Since the
Base Case already assumes that there will be no new acquisition, there is no need to add any additional downside
to the Base Case
STRATEGIC REPORT | VIABILITY STATEMENT
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ZEGONA COMMUNICATIONS PLC
In addition to the Base Case, the Directors identified a severe but plausible downside scenario in which Zegona
incurs significant costs on unsuccessful acquisitions which was further used to stress test the base numbers.
Given the nature of Zegona’s current operations, the day-to-day contingency included in the base case and
generally high level of predictability of its costs, the downside scenario differs from the Base Case only by the
inclusion of £ 2.0 million for aborted costs on unsuccessful acquisitions, assumed to be incurred by the end of
2023. Zegona believes the £2.0 million represents costs associated with a medium-to-significant sized failed
transaction and is consistent with costs it has previously incurred on similar sized transactions.
Results of the assessment
The assessment showed that in the Base Case, Zegona would have sufficient cash to continue in operation for at
least 12 months from the date of issuance of this report throughout the assessment period without taking any
mitigating actions available to it in the base-case. In the downside scenario, Zegona would only be able to absorb
around £1.7 million of abort costs.
Over the full 3 year assessment period however, both the Base Case and the downside scenario showed that
without the upside impact of completing a new acquisition Zegona will need to seek additional funding during
the viability assessment period, even if it takes further liquidity enhancing actions that are in its control such as
reducing discretionary expenditure. Without such actions, the Base Case assumes Zegona would need to seek
additional funding during the first quarter of 2025.
Statement of viability
Taking into account Zegona’s current position and principal and emerging risks and uncertainties, the Directors
confirm that we expect Zegona will be able to continue in operation and meet its liabilities as they fall due over
the three years from the issuance of this annual report only if it is able to successfully complete a new acquisition
and obtain financing to do so or otherwise obtain additional funding during the period.
The Strategic Report was approved by the Board on 6 April 2023 and is signed on its behalf by:
Eamonn O’Hare
Chairman and Chief Executive Officer
DIRECTORS' REPORT | CORPORATE RESPONSIBILITY
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ZEGONA COMMUNICATIONS PLC
Corporate social responsibility
We recognise our obligations to act responsibly, ethically and with integrity in our dealings with staff, suppliers
and the environment as a whole. We are committed to being a socially responsible business.
Our people
We value and respect the unique contributions of each individual, and we are committed to ensuring that every
employee is treated with dignity and respect and has a meaningful opportunity to contribute to Zegona’s success.
Zegona’s employees are encouraged actively to engage with charitable activities.
Zegona recognises that a productive workforce requires a breadth of experience and perspectives which is
achieved through hiring individuals with diversity of age, gender or educational and professional backgrounds.
Given the size of the business and the very limited turnover of staff, Zegona achieves this on a case-by-case basis
by ensuring that when it does appoint new members of staff or the board, it places diversity at the heart of its
decision-making process to ensure it achieves both a diverse and a high performing workforce.
Board Directors and senior managers have been appointed to bring required skills, knowledge and experience.
During 2022 and 2021, all individuals that have been appointed have diverse backgrounds including, two female
independent Non-Executive Directors. The Nomination and Remuneration Committee will continue to consider
the diversity of the Board for further new appointments.
The table below shows the breakdown of our workforce at the end of 2022.
Male Female Total
Board Directors 4 2 6
Senior management 2 – 2
Other staff – 2 2
Total 6 4 10
Culture
Ethical values and behaviours are embedded in the corporate culture which the Board upholds. The Directors
foster a culture where transparency, openness, integrity and constructive challenge are actively encouraged, and
the Board works closely with senior management to ensure a positive culture.
Human rights
As part of our effort to conduct business in an ethical manner, Zegona has not engaged in and will not engage in
business practices or activities that compromise fundamental human rights.
Environmental and climate matters
Climate risk management
The Chairman and the Zegona Board oversees and has ultimate responsibility for Zegona’s sustainability
initiatives, disclosures, and reporting. This includes, but is not limited to, climate risks and opportunities. As a
shell company, Zegona is exempt from providing the disclosures required by the Taskforce on Climate-related
Financial Disclosures (“TCFD”), however this section provides an overview of Zegona’s approach to managing the
very limited climate risks it currently faces. Details of how the Board delegates risk management authority across
the business is described in the Risk management overview on pages 6 and 7. The Zegona management team
have day-to-day responsibility for assessing and managing climate-related risks and opportunities.
We are committed to minimising Zegona’s impact on the environment. As it is presently constituted, Zegona’s
environmental impact is minimal and climate-related risks and opportunities are extremely limited until it
acquires another business. At present, Zegona has no operating investments and only 6 full time employees.
These employees perform largely information-based roles and they all work from home as Zegona no longer
maintains business premises. The only environmental impact currently is from business travel, which has been
DIRECTORS' REPORT | CORPORATE RESPONSIBILITY
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ZEGONA COMMUNICATIONS PLC
extremely limited in the past three years and is expected to continue to be lower than previously as a result of
the post-pandemic shift towards virtual tools.
Zegona’s overall environmental impact is therefore minimal, with total CO
2
emissions less than the average for
a single UK household. Zegona’s approach is therefore to seek to maintain lean working arrangements, use
technology to minimise business travel and encourage employees to recycle, minimise energy wastage, and do
their part to ensure that Zegona acts responsibly.
If Zegona continues to operate as it is presently constituted it is therefore difficult to identify any climate related
risks in the short, medium or long term that could significantly impact the business. For this reason, Zegona does
not presently feel it is appropriate or necessary to apply metrics or targets to assess climate related risks beyond
the Greenhouse gas reporting presented below.
Clearly, Zegona does not intend to continue operating in its present form indefinitely, we intend to make
acquisitions and disposals that will profoundly change the scale and climate-related risk profile of the business
and the process for identifying and managing them. Is not possible to reach any sensible conclusions today about
which risks Zegona may be exposed to in the future without knowing what businesses it will acquire. While it may
be possible to identify generic risks across the European TMT market, the climate-related risks of each business
will differ enormously, as will the processes to identify, assess and manage them.
While it is not possible to know today what climate related risks it will inherent, Zegona is conscious that such
risks and opportunities will exist in any potential acquisition and considers that the most important objective is
to ensure these are properly understood in the due diligence phase of any transaction so appropriate decisions
can be taken on risk mitigation tools. Zegona’s Board have concluded that the most appropriate way to address
this is to ensure that climate-related risk are specifically scoped in when undertaking due diligence on acquisition
targets.
Greenhouse gas emissions
Considering the non-material environmental impacts of Zegona’s business as described in this report,
management takes the view that greenhouse gas emissions are the most important metric to track and against
which future targets may be set.
We have compiled our greenhouse gas (“GHG”) emissions in accordance with the Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013 (“SECR”). Calculations follow the GHG Protocol Corporate
Accounting and Reporting Standard (revised edition). The GHG reporting period aligns with the financial
statements and boundaries are defined using the financial control approach. GHG emissions are broken down
into three categories; reporting is required only on scope 1 and 2:
Scope 1 emissions: Direct emissions from sources owned or controlled by Zegona.
Scope 2 emissions: Indirect emissions attributable to Zegona due to its consumption of purchased electricity.
Scope 3 emissions: Other indirect emissions associated with activities that support or supply Zegona’s operations.
DIRECTORS' REPORT | CORPORATE RESPONSIBILITY
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ZEGONA COMMUNICATIONS PLC
Zegona has no Scope 1 emissions. Zegona Scope 2 and Scope 3 emissions for the year to 31 December 2022 and
comparative previous period are shown below:
Global tonnes of CO2e
2022 2021
Scope 2 (electricity) – –
Per €m operating expenses – –
Scope 3 (water consumption, business travel) 4.5 4.5
Per €m operating expenses 1.35 0.12
All emission factors have been selected from the emissions conversion factors published annually by the
Department for Environment, Food and Rural Affairs and the International Energy Agency. Scope 2 and Scope
3 emissions have decreased in 2022 due to homeworking arrangements and restrictions on travel imposed in
response to the COVID-19 pandemic.
No further energy and carbon information is disclosed as the Group is exempt on the grounds of being a low
energy user within the meaning of SECR.
At the present time, Zegona does not consider it appropriate to set emissions reduction targets, particularly
given the low levels of emissions already achieved. Zegona does not currently hold any investments. When
investments are held, Zegona will keep under review whether it would be appropriate to support investee
companies in tracking metrics and setting targets.
Board engagement with our key stakeholders
Section 172 of the Companies Act 2006 requires a Director of a company to act in the way he or she considers, in
good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.
In doing this, section 172 requires a Director to have regard, among other matters, to: the likely consequences
of any decision in the long term; the interests of the company’s employees; the need to foster the company’s
business relationships with suppliers, and others; the impact of the company’s operations on the community
and the environment; the desirability of the company maintaining a reputation for high standards of business
conduct; and the need to act fairly with members of the company.
The Directors give careful consideration to the factors set out above in discharging their duties under section 172.
More information about who our key stakeholders are and how we engage with them is provided on page 23.
DIRECTORS' REPORT | OTHER MATTERS
13
ZEGONA COMMUNICATIONS PLC
General
Details of the directors can be found on pages 17 to 19. A discussion on the role of the board, including the
powers of the company’s directors can be found in the Corporate Governance Statement beginning on page 19.
The rules relating to the appointment and replacement of directors and details of any agreements with the
company and its directors or employees for compensation for loss of office or employment that occurs because
of a takeover bid can be found in the Directors’ Remuneration Report beginning on page 31.
Result
For the year ended 31 December 2022, Zegona’s loss before tax from continuing operations was €3.3 million
(2021: €34.3 million). Other comprehensive loss was €0.6 million (2021: gain of €0.6 million). Therefore, the total
comprehensive loss for 2022 was €4.0 million (2021: gain of €80.5 million). Reviews of performance and likely
future developments are set out in the Strategic Report on pages 1 to 9.
Dividends
In accordance with its policy of not paying any dividends until it owns a material operating asset, the Company
did not declare or pay any dividends in 2022 (2021: €12.3 million).
Contracts of significance
There were no significant contracts to report.
Events since the end of the financial year
There have been no material events since the end of the financial year.
Capital structure
The Company’s capital structure is comprised of 6,172,424 ordinary shares of £0.01 each (“Ordinary Shares”).
The holders of Ordinary Shares have the right to receive notice of, attend and vote at all general meetings of
the Company. Holders of Ordinary Shares have the right to participate in dividends and any surplus capital on a
winding up pari passu as amongst themselves. Where the winding up of the Company entails or is concurrent
with the winding up of the Company’s subsidiary, Zegona Limited, the assets available for distribution among
the holders of Ordinary Shares will be reduced by such amount as is required to satisfy the rights (if exercised) of
Management Shares (as defined in the Directors’ Remuneration Report on page 31, with further details set out
in note 17 to the financial statements).
Share buy-back programme
The shareholders passed a resolution to authorise Zegona to make market purchases of up to 15% of its current
issued ordinary share capital (within specified price parameters) in the 2022 AGM, which expires on the earlier
of the end of 2023 AGM or 18 months after the date of 2022 AGM. A resolution to renew this authority is
proposed for the 2023 AGM. It is intended that we will exercise this authority only if the Board considers that it
is in the best interests of Zegona at the time, for instance if the traded price of the Company’s ordinary shares
is substantially below the value of its net assets. Any shares repurchased by Zegona may be held in treasury and
subsequently resold for cash, cancelled or used for employee share scheme purposes.
Internal control and Financial Risk Management
A description of the main features of Zegona’s internal control and risk management arrangements in relation to
the financial reporting process can be found in the Audit and Risk Report on page 24. Details of the company’s
financial risk management activities and use of financial instruments can be found in note 10 and note 11 to the
financial statements.
Significant agreements subject to change of control provisions
Zegona Limited has issued Management Shares as part of Zegona’s incentive arrangements. On a change of
control of Zegona, subject to the requirements of the Articles of Association of Zegona Limited, the Management
Shares can be exercised with their value being delivered either through the issue of ordinary shares or in cash.
DIRECTORS' REPORT | OTHER MATTERS
14
ZEGONA COMMUNICATIONS PLC
Substantial shareholders
At 31 December 2022 and up to the date of approval of this report, Zegona had been notified under DTR 5 of the
following holdings in 3% or more of the issued ordinary shares, which are all held indirectly by asset managers:
Asset manager
Shareholding at
6 April 2023
% of ordinary
share capital
as at 6 April
2023
Shareholding at
31 December
2022
% of ordinary
share capital
as at
31 December
2022
Zegona board and management
5
1,803,294 29.22% 1,804,336 29.33%
Marwyn Asset Management 774,321 12.54% 774,321 12.54%
Artemis Investment Management 586,691 9.51% 586,691 9.51%
Fidelity Management & Research 403,107 6.53% 403,107 6.53%
Fidelity Investments Limited 398,717 6.46% 398,717 6.46%
Credit Suisse 255,969 4.15% 255,969 4.15%
Aberforth Partners LLP 243,744 3.95% 243,744 3.95%
4,465,843 72.36% 4,466,885 72.47%
Independent auditor
KPMG has expressed its willingness to continue to act as auditor to Zegona and a resolution for its re-appointment
will be proposed at the 2023 AGM. KPMG has confirmed that it remains independent of Zegona.
Political donations
Zegona does not make any political donations or contributions to political parties and has no intention of altering
this policy.
Disclosure of information to the auditor
Each of the persons who is a Director at the date of approval of this report confirms that, so far as the Director
is aware, there is no relevant audit information of which Zegona’s auditor is unaware; and each Director has
taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit
information and to establish that Zegona’s auditor is aware of that information.
Statement of going concern
The Directors have considered all available information, including specific consideration of forecast financial
information, about the possible future outcomes of events and changes of conditions, and the realistically
possible responses to such events and conditions that are available to the Directors. The Board believes it is
appropriate to prepare the Financial Statements on the going concern basis but, as discussed in note 2 to the
financial statements, has concluded that there is a material uncertainty affecting Zegona’s ability to continue in
business or meet its liabilities as they fall due for the next 12 months.
By order of the Board
Eamonn O’Hare
Chairman and Chief Executive Officer
6 April 2023
5 Including Zegona management, directors and related holdings.
DIRECTORS' REPORT | DIRECTORS’ RESPONSIBILITY
15
ZEGONA COMMUNICATIONS PLC
STATEMENTS
15
STATEMENTS
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Strategic Report, Directors’ Report, Directors’ Remuneration
Report, Corporate Governance Report and the Zegona group and parent company Financial Statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent Company financial statements for each financial
year. Under that law they are required to prepare the Group financial statements in accordance with UK-adopted
international accounting standards and applicable law and have elected to prepare the parent Company financial
statements on the same basis.
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 parent Company and of the Group’s profit or
loss for that period. In preparing each of the Group and parent Company financial statements, the directors are
required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant, reliable and prudent;
• state whether they have been prepared in accordance with UK-adopted international accounting standards;
• assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of
the parent Company and enable them to ensure that its financial statements comply with the Companies Act
2006. They are 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, and have general
responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
DIRECTORS' REPORT | DIRECTORS’ RESPONSIBILITY
16
ZEGONA COMMUNICATIONS PLC
STATEMENTS
16
HEAD_2nd_Line
Responsibility statement of the Directors in respect of the Annual Financial Report
We confirm that to the best of our knowledge:
• The Financial Statements, prepared in accordance with the applicable set of accounting standards, give a
true and fair view of the assets, liabilities, financial position and profit or loss of the parent company and the
undertakings included in the consolidation taken as a whole;
• The Strategic Report includes a fair review of the development and performance of the business and the
position of the issuer and the undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and
• The Annual Report as a whole is fair, balanced and understandable and provides the information necessary
for shareholders to assess Zegona’s position and performance, business model and strategy.
By order of the Board
Eamonn O’Hare
Chairman and Chief Executive Officer
6 April 2023
GOVERNANCE | PROFILES OF THE DIRECTORS
17
ZEGONA COMMUNICATIONS PLC
Eamonn O’Hare, Chairman and CEO (appointed 19 January 2015)
Eamonn has spent over two decades as a board member and senior executive of some of the world’s fastest
growing consumer and technology businesses. From 2009 to 2013 he was CFO and main board director of the
UK’s leading entertainment and communications business, Virgin Media. Eamonn helped lead the successful
transformation of this business and its strategic sale to Liberty Global for US$24 billion, crystallising US$14 billion
of incremental shareholder value. From 2005 to 2009, he served as the CFO for the UK division of one of the
world’s largest retailers, Tesco plc. Before joining Tesco, Eamonn was CFO and main board director of Energis
Communications and helped lead the turnaround of this high profile UK telecommunications company. Prior to
this, he spent 10 years at PepsiCo Inc. in senior executive roles in Europe, Asia and the Middle East. Eamonn’s
early career was spent in the aerospace industry with companies that included Rolls Royce and British Aerospace.
Eamonn has a degree in Aerospace Engineering from the Queen’s University Belfast and an MBA from the London
Business School.
Robert Samuelson, Executive Director and COO (appointed 19 January 2015)
Robert was Executive Director Group Strategy of Virgin Media from 2011 to 2014, during which time he was
centrally involved in the sale of the business to Liberty Global and in the post-merger integration process. Prior to
this, Robert was a managing partner at Virgin Group with global responsibility for developing and realising returns
from Virgin’s telecommunications and media businesses. Before joining Virgin Group, Robert was a director at
Arthur D Little Ltd, where he co-led the European corporate finance practice, providing strategic advice to major
European telecommunications operators. His early career was spent with British Aerospace and Royal Ordnance
in engineering and production management roles.
Robert studied Natural Sciences at Cambridge University and has an MBA from Cranfield School of Management.
Richard Williams, independent Non-Executive Director (appointed 9 November 2015)
Richard is an experienced Non-Executive Director with significant board level experience in both public and
private companies and currently holds a number of Non-Executive Director roles. Richard spent most of his
executive career in European telecommunications, most recently as a Director of Investor Relations at Altice,
and prior to that, Virgin Media. Richard led Virgin Media’s investor relations activity through to the acquisition of
the company by Liberty Global in 2013. Richard then joined Altice, where he supported the company’s IPO and
Altice’s acquisition of SFR and Portugal Telecom.
Richard is a member of both the Nomination and Remuneration Committee and the Audit and Risk Committee.
Richard is a qualified Chartered Accountant.
Ashley Martin, independent Non-Executive Director (appointed 6 February 2017)
Ashley brings a wealth of complementary experience to the Board. Ashley was Audit Committee Chair at
Rightmove plc from 2009 to 2018 and, in that role, gained valuable insight into an entrepreneurial, high-growth
consumer technology business. On 1 September 2018, Ashley was appointed as a non-executive director of the
international research data and analytics group YouGov plc. Ashley has also enjoyed a successful executive career
spanning 35 years in larger listed companies, with a particular focus on mergers and acquisitions. Ashley was
Global Chief Financial Officer of private equity-backed Engine Holding LLC, and was previously the Group Finance
Director of Rok plc, the building services group, and Group Finance Director of the media services company,
Tempus plc.
Ashley is a qualified Chartered Accountant and is Chair of the Audit and Risk Committee and a member of the
Nomination and Remuneration Committee.
Kjersti Wiklund, independent Non-Executive Director (appointed 5 February 2020)
Kjersti brings significant experience from a series of senior global telecommunications roles, including as director
of group technology operations at Vodafone and chief operating officer of VimpelCom Russia. Kjersti has also
held senior executive positions at Kyivstar, Digi Telecommunications and Telenor.
GOVERNANCE | PROFILES OF THE DIRECTORS
18
ZEGONA COMMUNICATIONS PLC
PROFILES OF THE DIRECTORS
Kjersti has also gained valuable insight into an entrepreneurial, high growth consumer technology company as
Remuneration Committee Chair at Trainline plc. She was previously a non-executive director of Laird plc in the
UK, Cxense ASA and Fast Search & Transfer ASA in Norway and Telescience Inc in the USA and is currently a non-
executive director of Babcock International Group PLC and Spectris PLC.
Kjersti is a member of the Audit and Risk Committee.
Suzi Williams, independent Non-Executive Director (appointed 5 February 2020)
Suzi brings skills and experience from over 25 years in telecommunications, media and consumer businesses in
the UK and internationally. This includes a decade as Chief Brand and Marketing Officer at BT plc. Prior to that,
she was Commercial Development Director at Capital Radio Group and held senior commercial leadership roles
at Orange, the BBC, KPMG Consulting, and Procter & Gamble.
Suzi is currently a non executive director and chair of remuneration at FTSE 100 JD Sports plc, and NED and Chair
of nominations at Telecom Plus plc. She also advises a number of early stage technology and AI businesses and is
an advisor to Gresham House private equity.
Previously she held NED and Remco Chair roles at Workspace Group Plc, and at The AA plc (the latter from 2015
until March 2021). Suzi was also a member of The Great Advisory board , promoting British business overseas.
Suzi Chairs the Nomination and Remuneration Committee.
GOVERNANCE | CORPORATE GOVERNANCE STATEMENT
19
ZEGONA COMMUNICATIONS PLC
CORPORATE GOVERNANCE STATEMENT
Overview
The corporate governance report, presented here, forms part of the Directors’ Report and as such it has been
approved by the Board and signed on its behalf by the Chairman.
We recognise the importance of sound corporate governance commensurate with the size of Zegona. Corporate
governance provides the framework within which we form our decisions and build our business. The Board is
focused on creating long-term sustainable growth for our shareholders and value for all our stakeholders, and
we strongly believe our corporate governance framework helps us achieve this goal. It is our commitment to
continue to seek opportunities to improve our corporate governance arrangements.
The following sections of this report show how Zegona applies the main provisions set out in the 2018 UK Corporate
Governance Code (the “Code”), issued by the Financial Reporting Council (“FRC”), as would be required by the
Listing Rules of the Financial Conduct Authority (“FCA”) as applicable to non-FTSE 350 companies if Zegona were
admitted to the Premium segment of the Official List, and how Zegona meets the relevant information provisions
of the Disclosure and Transparency Rules of the FCA (the “DTR”).
Zegona’s principal risks are described on pages 6 to 7. The Directors’ Report on pages 10 to 16 also contains
information required to be included in this statement of corporate governance.
The Board of Directors
Zegona is led and controlled by an effective Board. The Board at the date of approval of this report comprises
two Executive Directors and four independent Non-Executive Directors. The two Executive Directors are Eamonn
O’Hare (Chairman and Chief Executive Officer (“CEO”)) and Robert Samuelson (Chief Operating Officer (“COO”)).
The Non-Executive Directors are Richard Williams, Ashley Martin, Kjersti Wiklund and Suzi Williams.
Biographical details of all Directors and details of their committee membership at the date of approval of this
report appear on pages 17 to 18. Consideration of the Board size and composition is kept under regular review
by the Nomination and Remuneration Committee.
Powers and operation of the Board
In exercising its duty to promote the success of Zegona, the Board is responsible for overseeing the management
of Zegona and, in doing so, may exercise its powers, subject to any relevant laws, regulations and Zegona’s
Articles of Association. The Board is presented with papers from management concerning financial information,
information on investor relations and details of acquisition targets and deal progress, which it takes into account
in discussions and in the decision-making process under section 172 of the Companies Act 2006.
Eamonn O’Hare, as the Chairman and CEO, is primarily responsible for the running of the Board and for the
day-to-day running of Zegona. All Board members have full access to Zegona’s advisers for seeking professional
advice at Zegona’s expense and our culture is to discuss openly any important issues and frequently engage
with Board members outside of formal meetings. The operating and financial responsibility for all subsidiary
companies is the responsibility of the Board.
The Board has adopted a Board Charter, available on Zegona’s website, which sets out:
• the Board’s collective vision on Zegona’s strategy and objectives;
• the Board’s approach to the conduct of its business and the parameters within which it will operate, including
the management of any Board or investor disagreements; and
• the Board’s agreed focus areas for further action.
The Board meets formally at least six times a year but also frequently meets additionally on an ad hoc basis
where necessary. The Directors are encouraged to have free and open contact with management at all levels and
full access to all relevant available information. The Executive Directors actively and constructively encourage
challenge and seek input from the Non-Executive Directors to draw on their extensive experience and knowledge.
The Board believes that the role of the Non-Executive Directors in providing independent challenge is a vital
component of an effective Board.
GOVERNANCE | CORPORATE GOVERNANCE STATEMENT
20
ZEGONA COMMUNICATIONS PLC
CORPORATE GOVERNANCE STATEMENT
The Board delegates the day to day responsibility for running Zegona to the executive management, however
there are a number of matters which are required to be or should only be decided by the Board of directors as a
whole in accordance with the UK Corporate Governance Code. An updated schedule of Matters reserved for the
Board, approved by the Board on 9 June 2020, can be found on Zegona’s website
6
Board committees
The Board has established two principal committees, the Audit and Risk Committee and the Nomination and
Remuneration Committee, to assist it in the execution of its duties. If the need should arise, the Board may set
up additional committees as appropriate. The committees’ terms of reference are available on Zegona’s website,
www.zegona.com, or by request from the Company Secretary. Each of the committees is authorised, at Zegona’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.
Current membership of the committees is shown on pages 17 to 19. The composition of these committees
is reviewed regularly, taking into consideration the recommendations of the Nomination and Remuneration
Committee.
Independence of the Board
The Code specifies that the Board should identify in the annual report each Non-Executive Director it considers to
be independent. The Board considers that Ashley Martin, Richard Williams, Kjersti Wiklund and Suzi Williams are
independent Non-Executive Directors for the purposes of the Code and have no relationships or circumstances
which are likely to affect, or could appear to affect, their judgement as Directors.
Board and committee attendance
Attendance at the Board and committee meetings held during 2022 was:
Board
Nomination and
Remuneration
Committee
Audit and Risk
Committee
Eamonn O’Hare 5/5 – –
Robert Samuelson 5/5 – –
Richard Williams 5/5 2/2 3/3
Ashley Martin 5/5 2/2 3/3
Suzi Williams 5/5 2/2 –
Kjersti Wiklund 5/5 – 2/3
Directors’ terms of service
Zegona’s Articles of Association require each Director to retire from office and offer themself for re-election or
election, as the case may be, at each AGM. Accordingly, each of the Directors will retire from office at the 2023
AGM and seek to be re-elected by Zegona’s shareholders. The Chairman is satisfied that the performance of the
Directors continues to be effective and demonstrates their ongoing commitment to the role and as such supports
their re-election.
6 https://www.zegona.com/investor-relations/shareholder-information.aspx.
GOVERNANCE | CORPORATE GOVERNANCE STATEMENT
21
ZEGONA COMMUNICATIONS PLC
The Executive Directors have service contracts which may be terminated on no less than 12 months’ notice
by either party. The Non-Executive Directors each have current service contracts which can be terminated
on 6 months’ notice. All Non-Executive Directors’ continued service is dependent on annual re-election by
shareholders and the annual Board effectiveness review. Details of the unexpired terms of the service contracts
are set out in the Directors’ Remuneration Report.
Conflicts of interest
Zegona’s Articles of Association provide for a procedure for the disclosure and management of risks associated
with Directors’ conflicts of interest. Zegona’s Board Charter sets out the process for managing significant Board
or investor disagreements and/or conflicts. Notwithstanding that no material conflict of interest has arisen in the
year, the Board considers these procedures to have operated effectively.
Company secretary
Crestbridge Corporate Services Limited was appointed Zegona’s Company Secretary on 24 February 2021. The
Company Secretary assists the directors in ensuring Zegona is managed, controlled and administered within
the parameters of its governing and constitutional documents. All Directors have access to the advice of the
Company Secretary, which is responsible for guiding the Board on all governance matters.
Compliance with the UK Corporate Governance Code
The Code sets out a number of principles in relation to board leadership and company purpose; division of
responsibilities; composition, succession and evaluation; audit, risk and internal control; and remuneration. A
copy of the Code is available on the FRC’s website at www.frc.org.uk.
Following admission to the Main Market the Board has voluntarily (as Zegona has a Standard Listing) complied
with the UK Corporate Governance Code except in the instances set out below:
Combined Chairman and CEO
Provision 9 of the Code recommends that the roles of Chairman and the Chief Executive Officer should not be
exercised by the same person and that the Chairman should be independent on appointment. Zegona does
not comply with this requirement. The Board presently believes that Eamonn O’Hare’s skills, knowledge and
leadership have enabled him to effectively perform both roles. Zegona also maintains a schedule of Matters
reserved for the Board which prevents Eamonn from authorising certain corporate actions without a formal
resolution of the Board which is re-enforced by the Board’s culture of detailed review and robust challenge on
significant matters. As discussed below, the board consider that it is important that this should continue to be
kept under active review.
Zegona has paid close attention to this matter since its incorporation and has formally reconsidered it on a
number of occasions. This matter has also been actively reconsidered both as part of the EY-facilitated exercise
to develop Zegona’s Board Charter in 2018/19 and as part of each of Zegona’s annual assessments of Board
effectiveness. The Board considers that it is not appropriate to separate the roles at present given the significant
simplification of the business since the sale of the investment in Euskaltel and the Return of Capital. The Board
remains aware of this area of non-compliance, and it will ensure that this matter continues to be kept under
active review, in particular if the structure of Zegona changes again by making another significant investment.
GOVERNANCE | CORPORATE GOVERNANCE STATEMENT
22
ZEGONA COMMUNICATIONS PLC
Appointment of a Senior Independent Director (“SID”)
Provision 12 of the Code recommends that one Non-Executive Director should be appointed as a senior
independent director to provide a sounding board for the chair and serve as an intermediary for the other
Directors and shareholders. Zegona does not currently have a SID, and this has been the subject of active
consideration since Zegona’s formation. The Board fully recognises the value that can be provided by a SID and
was intending to appoint one following its 2020 AGM, however the difficulties of remote working during the
Covid-19 pandemic and the ongoing shareholder engagement exercise being led by the Chairs of the two Board
committees at the time meant that Zegona concluded it was not appropriate to make an appointment. Zegona
still considers this conclusion is valid, especially since the significant simplification of the business since the sale
of the investment in Euskaltel and the Return of Capital. The Board will reconsider whether it should appoint a
SID in conjunction with its ongoing active consideration of whether it remains appropriate for the Chairman and
CEO roles to be combined.
Employee engagement
Provisions 2, and 5 provide guidance for the implementation of procedures meant to ensure Zegona engages
with and monitors its workforce. Given Zegona currently has only five employees (excluding Directors), the Board
believes the implementation of any formal steps or procedures to engage with the workforce are not required as
informal communications occur regularly between all employees and the Executive Directors, including weekly
team meetings.
Equalisation of pension arrangements
Provision 38 recommends that the pension contribution rate for the Executive Directors be the same as for the
majority of the workforce. During the year, this was not the case however, this has been resolved in 2023, when
the rate paid to the Executive Directors was equalised with the rate paid to the majority of the workforce.
Evaluation of the Board, committees and individual Directors
The Board has conducted an annual evaluation of its own performance and that of its committees by means of
a questionnaire requiring written responses from the Directors. To ensure independence and objectivity, the
questionnaire was designed, administered and reviewed on a confidential basis. The questionnaire was drafted
having regard to the balance of skills, experience, independence and knowledge contributed by its members,
as well as the successful operation of the Board as a unit, its diversity and the other key factors relevant to
its effectiveness. The anonymous responses were sent to each Non-Executive Director for consideration and
discussion at a meeting of the full Board.
The findings of the review were generally positive. The Board noted that 2022 was significantly less eventful than
the previous year with the board continuing to work well as it supported the management team in identifying
an attractive new investment. The review also highlighted a number of areas that the Board believe could be
beneficial for it to continue to work on to further improve its effectiveness. The Board is currently considering
which of these it should prioritise in 2023 and how it should address them.
Whistleblowing policy
All employees are encouraged to raise genuine concerns about possible improprieties in the conduct of Zegona’s
business, whether in matters of financial reporting or other malpractices, at the earliest opportunity and in an
appropriate way. Zegona has put in place a whistleblowing policy to facilitate this, and the aims of this policy are:
• to encourage employees to report suspected wrongdoing as soon as possible, in the knowledge that their
concerns will be taken seriously and investigated as appropriate, and that their confidentiality will be respected;
• to provide employees with guidance as to how to raise those concerns; and
• to reassure employees that they should be able to raise genuine concerns in good faith without fear of
reprisals, even if they turn out to be mistaken.
GOVERNANCE | CORPORATE GOVERNANCE STATEMENT
23
ZEGONA COMMUNICATIONS PLC
Share dealing
Zegona has in place systems to ensure compliance by the Board and its applicable employees in relation to
dealings in securities of Zegona. We believe that the share dealing code adopted by the Board is appropriate
for Zegona’s size and complexity and that it complies with the EU Market Abuse Regulation (2214/596/EU).
The Board complies with these provisions and takes all reasonable steps to ensure compliance by Zegona’s
‘applicable employees.
Relations with Zegona’s stakeholders
Zegona does not currently have an operating business and, until it does so again, has a limited number of
stakeholders outside of its shareholders and employees given that Zegona has no customers and its suppliers are
primarily professional advisers. All Directors have frequent interactions with Zegona’s small workforce and the
whole of the workforce are generally intimately involved with all key operating decisions.
The Board is always available for communication with shareholders and the Executive Directors frequently
engage constructively with current and potential shareholders, with feedback regularly discussed in depth at
Board meetings. This has been supplemented in the last two years with the consultations with major shareholders
undertaken by management and the Committee Chairs.
In addition, all shareholders have the opportunity, and are encouraged, to attend and vote at the general
meetings during which the Board is available to discuss issues affecting Zegona. Barclays Bank plc and Canaccord
Genuity Limited, as Zegona’s joint corporate broker, provides reports and attend Board meetings, as appropriate,
to provide feedback to the Non-Executive Directors on shareholders’ views.
GOVERNANCE | AUDIT AND RISK COMMITTEE REPORT
24
ZEGONA COMMUNICATIONS PLC
I am pleased to present the 2022 report of the Audit and Risk Committee (the “A&RC”). The A&RC is an essential
part of Zegona’s governance framework, to which the Board has delegated oversight of Zegona’s financial
reporting, internal controls, risk management and the relationship with the external auditor.
In discharging its duties, the A&RC embraces its role of protecting the interests of shareholders with respect to
the integrity of financial information published by Zegona, control effectiveness and the effectiveness of the
audit process
7
.
Committee membership and meetings
The members of the A&RC during 2022 were Ashley Martin (Chairman), Richard Williams and Kjersti Wiklund,
all of whom are independent Non-Executive Directors as required by provision 24 of the Code. The Board has
determined that Ashley Martin has recent and relevant financial experience due to his previous CFO roles at
listed and private equity backed businesses. Both Ashley and Richard qualified as Chartered Accountants. In line
with the Code, the A&RC as a whole possesses competence relevant to the sector in which Zegona operates
through the digital media and consumer experience of Ashley Martin and the telecommunications experience of
Richard Williams and Kjersti Wiklund.
The A&RC normally meets at least three times a year with additional meetings arranged if necessary. In 2022,
the A&RC met in March, September and December and has subsequently met in April. The scheduling of these
meetings is designed to be aligned with the financial reporting timetable, thereby enabling the A&RC to review
the interim financial report, the audit plan ahead of the year end audit and the annual report, as well as to
maintain a view of the internal controls and risk management processes throughout the year.
The Company Secretary acts as secretary to the A&RC. The A&RC invites the Chief Financial Officer to all meetings
and other members of the finance and management team as may be appropriate for the business of the meeting,
as well as senior representatives of the external auditor. The A&RC meets separately with the external auditors
to seek their views without management present, and the A&RC Chair keeps in touch with the Chief Financial
Officer as well as other members of the management team and the lead audit partner periodically outside of
formal meetings. The A&RC has the right to invite any other Directors and/or employees to attend meetings
where this is considered appropriate.
The A&RC Chair reports formally to the Board on the key matters considered at each A&RC and minutes of those
meetings are circulated to the Board.
Committee effectiveness
The effectiveness of the A&RC was considered by the Board as part of the annual Board effectiveness evaluation.
The feedback was positive and confirmed that the A&RC remains effective and provides robust challenge.
7 The A&RC’s role and responsibilities are set out in its terms of reference, which are available on Zegona’s website and from the
Company Secretary.
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ZEGONA COMMUNICATIONS PLC
Activities during the year
Since the last Audit and Risk Committee Report, the A&RC has undertaken the following activities:
Financial reporting:
• Confirmed that the Financial Statements were fair balanced and understandable. In this respect, the A&RC
considered, inter alia:
– the key messages in the annual report and their consistent application in the front and back end of the
report;
– whether the whole story is presented and whether any sensitive material has been omitted; and
– whether there is a clear and cohesive framework for the annual report.
• Reviewed the going concern assumption and the assessment forming the basis of the longer-term viability
statement. The A&RC reviewed the work undertaken by management to assess Zegona’s resilience to the
principal risks and confirmed that a 3-year assessment period remained appropriate.
• Considered the key judgements and estimates made by management in preparing the Financial Statements,
as follows:
– Going Concern – The A&RC reviewed Management’s assessment of the entity’s ability to continue as a
going concern, which involved reviewing the underlying assumptions around on-going cash flows and
challenging Management’s judgments around Zegona’s ability to meet liabilities as they fall due for a
period of at least twelve months from the approval of the financial statements, including considering
whether these judgements were consistent with Zegona’s strategic position and its current acquisition
pipeline. The A&RC also reviewed the appropriateness of management’s conclusion that the going
concern basis is appropriate but that there is a material uncertainty over Zegona’s ability to continue as
a going concern. The A&RC also reviewed the proposed disclosure around going concern in the annual
report.
– Accounting treatment and valuation of the incentive arrangements – the A&RC reviewed and agreed
with management’s estimate of the final value of the Third Calculation Period of the Management
Incentive Scheme.
– Recoverability of the income tax receivable – The A&RC reviewed the conclusions related to the
ongoing activity around the EU Commission decision that the Group Financing Exemption contained
within the UK’s Controlled Foreign Company (“CFC”) legislation constituted State Aid. The Committee
noted that Zegona had recognised an income tax receivable in relation to the two charging notices paid
during 2021 in the amount of £4.4 million (€5.2 million). The A&RC noted Management’s conclusion
that while it is finely balanced, it remains more likely than not that the appeals made by other UK
taxpayers and the UK Government will be successful and ultimately Zegona will not incur any liability and
therefore the receivable remains recoverable. The A&RC reviewed the third-party advice and agreed
with management’s conclusion.
In all of the above judgements, the A&RC also considered KPMG’s audit findings and reports by Management to
the A&RC in support of the positions adopted.
Other activities during the year:
• Reviewed the effectiveness of Zegona’s risk management and internal controls and disclosures made
in the annual report on this matter, including the review of an annual assurance statement provided by
management assessing the effectiveness of Zegona’s risk management and internal control systems;
• Reviewed and agreed the scope of the audit work to be undertaken by the external auditor and assessed the
audit and non-audit fees to be paid, as well as the independence and objectivity of the auditor;
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ZEGONA COMMUNICATIONS PLC
• Considered the effectiveness of the external audit process, following the receipt of feedback from the
management team, Executive Directors, Non-Executive Directors and other service providers involved in the
audit process;
• Reviewed and made a recommendation to the Board with regard to the re-appointment of the external
auditor, taking into account auditor effectiveness and independence, the recent partner rotation and other
factors which may impact the external auditor’s re-appointment;
• Assess any potential threats to independence that were reported by KPMG. The A&RC considered KPMG
to be independent and KPMG, in accordance with professional ethical standards, provided the A&RC with
written confirmation of its independence for the duration of 2022;
• Reviewed the need for an internal audit function and made a recommendation to the Board;
• Reviewed the interim Financial Statements, including the critical accounting judgements and estimates used
in preparing them;
• Reviewed management’s updates to Zegona’s risk register; and
• Reviewed Zegona’s whistleblowing policy and anti-bribery and anti-corruption policy.
External auditor
Our external auditor, KPMG LLP (“KPMG”), has now completed its seventh audit and the A&RC was involved in
the process to select the new current audit partner for the 2021 audit. Zegona will not be required to tender for
the audit until the 2026 financial year end. KPMG continues to provide robust challenge to management and
independent reports to the Committee on specific financial reporting and judgements.
KPMG was appointed as Zegona’s external auditor on 15 December 2016. In line with applicable regulations,
Simon Richardson was appointed as the lead engagement partner in April 2021, after the previous partner had
issued his fifth annual audit opinion.
During 2022, there were no non-audit fees paid to KPMG. The A&RC has set a threshold of €11,000 (£10,000) for
pre-approving non-audit fees.
Risk management and internal control systems
The Board is responsible for establishing and maintaining Zegona’s system of internal control and reviewing its
effectiveness. The Board has delegated the annual review of the adequacy and effectiveness of Zegona’s internal
financial controls and internal control and risk management systems to the A&RC.
Internal control systems are designed to meet the needs of Zegona and the risks to which it is exposed to
ensure the integrity of the financial and accounting information, promote accountability and prevent fraud. 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.
Zegona does not have a separate internal audit function as the Board does not feel this is currently necessary due
to the size of the business and the simplicity and low volume of transactions, coupled with the nature and the
extent of internal controls and Board oversight and involvement. The A&RC will continue to regularly review the
need for an internal audit function as the business evolves and develops.
Zegona’s risk management framework incorporates a risk assessment that identifies and assesses the strategic,
operational and financial risks facing the business, mitigating controls, and appropriate corrective actions, if and
when needed. This assessment is continually updated by management and reviewed and discussed by the A&RC
at least twice per year.
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ZEGONA COMMUNICATIONS PLC
Zegona has in place a robust internal controls system over financial reporting, which encompasses a mixture of
detective, preventative and corrective controls, including:
• Entity level controls which encompass guidelines for Zegona’s governance, financial analysis and integrity,
and its adherence to applicable laws and professional standards;
• Systems and procedures in place to identify, assess, control and monitor principal and emerging strategic,
commercial, financial and regulatory risks are considered by the Board regularly;
• A team of professional advisers including legal, capital markets, M&A, accounting, regulatory, and PR
providing advice to management and the Board;
• A schedule of Matters reserved for the Board to ensure that the Board is involved in all critical decisions of
Zegona which is reviewed regularly;
• A comprehensive system of budgeting, forecasting and monthly reporting and rigorous analytical review
procedures;
• A comprehensive risk register which is reviewed at least twice a year and updated to take account of
developments within Zegona; and
• Segregation of duties for all financial reporting and accounts payable critical tasks.
Through the above procedures, the Board with advice from the A&RC has reviewed the effectiveness of the
internal control system throughout the year and up to the day of this report. No significant control findings or
weaknesses have been identified from this review.
Ashley Martin
Chairman of the Audit and Risk Committee
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ZEGONA COMMUNICATIONS PLC
COMMITTEE REPORT
28
HEAD_2nd_LineCOMMITTEE
REPORT
On behalf of the Board, I am pleased to present the Nomination and Remuneration Committee (“the Committee”)
Report for the year ended 31 December 2022.
The Committee met twice during 2022, supported by a number of full board discussions and the matters we
discussed are set out on page 29. The following pages set out the Committee’s activities and decisions made in
the year. Zegona is committed to transparency, equivalence and engagement with shareholders on these most
important matters and we have continued to make progress this year.
Zegona’s performance and context – Continuing to search for the next opportunity
Following last year’s successful sale of Euskaltel, management has been looking for Zegona’s next investment
in the European Telecommunications market. We have been active on a number of proprietary transactions
where we see material upside potential while maintaining strong financial discipline. This approach has served
us well in the current macro-economic environment as we are now seeing an increased pipeline of even better
opportunities where we have the potential to drive significant value.
This success forms the backdrop of the key remuneration matters that we have dealt with in the year, as detailed
below:
Remuneration decisions for 2022- Reviewing outcomes against company performance
2022 Bonus and salaries
The Committee have concluded that the Executive Director’s salary and benefit arrangements should remain
unchanged. After listening to the views of key shareholders in previous years, and in accordance with its
previously announced policy, both the Executive Directors and Zegona’s senior management team were not
eligible to earn a bonus in 2022.
Application of remuneration policy for 2023
Following a review of the executive remuneration arrangements for 2023 and listening to shareholder feedback,
the Committee agreed that there would be no increase in base salary for either of the Executive Directors and
as such their salaries will remain unchanged for the year ahead. In line with corporate governance best practice,
the pension contribution for both of the Executive Directors has been reduced in 2023 to 19% to be the same as
the contribution available to the majority of the workforce.
The Committee has also agreed that given the fact that Zegona now has significantly less capital and no underlying
asset it would not be appropriate to put in place the opportunity to earn bonuses to senior management in 2023
until such time as Zegona makes a new investment. This will remain under review during 2023.
I would like to take the opportunity again to thank shareholders for their engagement and feedback and look
forward to your support at the upcoming AGM in June.
Suzi Williams
Chair of the Nomination and Remuneration Committee
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ZEGONA COMMUNICATIONS PLC
COMMITTEE REPORT
29
HEAD_2nd_Line
The role of the Nomination and Remuneration Committee
The Committee is responsible for nomination and remuneration matters, from the recruitment and retention of
high calibre individuals to the design of appropriate incentivisation mechanisms (and the ongoing monitoring of
performance against these) while delivering value creation for shareholders and other key stakeholders.
The role of the Committee continues to be ensuring that the Directors are appropriately rewarded, through
making recommendations regarding remuneration policy and framework. The Committee monitors and reviews
the effectiveness of the Remuneration Policy and considers its impact and compatibility with remuneration
policies across the wider workforce. To facilitate this remit, the Committee is provided with information and
context on pay, benefits and incentive structures in place across Zegona to support its decision making.
Membership, attendance and other activities
The members of the Committee are Suzi Williams (Chairman), Richard Williams, and Ashley Martin. All members
of the Committee are independent.
In 2022, the Committee met twice and has subsequently met in April. The Company Secretary attends these
meetings and Executive Directors are invited at the Chairman’s discretion. The scheduling of the formal Committee
meetings is designed to be aligned with the Committee’s recurring annual activities, including: setting of bonus
metrics and evaluation of performance against them; overseeing the performance evaluation of the Board, its
principal Committees and individual directors; overseeing succession planning for the Board and key members of
the senior management team, taking into account expertise and diversity; and reviewing the annual nominations
and remuneration report contained within the annual report.
In addition to the matters discussed above, since the last Nomination and Remuneration Committee Report, the
Committee has also:
• Reviewed the remuneration package for the Executive Directors and management team for 2023, including
concluding that no bonuses will be paid until such time as Zegona owns a material underlying asset;
• Reviewed the recommendations arising from the 2022 Board effectiveness review, its committees and its
individual Directors and, where appropriate, proposed actions to address those recommendations; and
• Reviewed workforce remuneration and its alignment to Zegona’s purpose, values and strategy.
Advisers
The Committee received input and advice from external advisers on specific topics during 2021. The Committee
formally engaged PwC LLP’s (“PwC”) as an adviser in 2021, however no advice has been sought in respect of
2022.
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ZEGONA COMMUNICATIONS PLC
COMMITTEE REPORT
30
HEAD_2nd_Line
Executive pay at a glance
Base salary
Purpose Current policy 2022 Implementation 2023 Implementation
To reflect market value of
the role and individual’s
performance and
contribution and enable
Zegona to recruit and
retain Executive Directors
of sufficient calibre to
drive Zegona’s ambitions.
Reviewed every twelve months.
Base salary increases are applied in
line with the outcome of the review. In
respect of existing Executive Directors, it is
anticipated that no salary increases will be
considered before Zegona completes its next
investment.
No salary increases
for either Executive
Director
No salary increases
for either Executive
Director
Pension contributions
Purpose Current policy 2022 Implementation 2023 Implementation
To provide a market
competitive pension.
Pension contributions are made to the
individual’s private pension arrangements
or paid to them in cash in lieu of such
arrangements. In 2022, Executive Directors
received a pension contribution of up to
20% of base salary. This was reduced in 2023
to 19%, which is the same as the amounts
available to a majority of the workforce.
20% contribution Contribution reduced
to 19%
Other benefits
Purpose Current policy 2022 Implementation 2023 Implementation
To provide market
competitive benefits.
Benefits may include car allowances,
personal tax advice, private medical
insurance, critical life and death in
service cover. Benefits may vary by role
and individual circumstances and will be
reviewed periodically.
No change No change
Annual cash bonus
Purpose Current policy 2022 Implementation 2023 Implementation
Purpose
To incentivise delivery of
Zegona’s annual financial
and strategic goals.
Performance is measured on an annual basis
for each Executive Director in respect of
each financial period.
The maximum annual bonus available is
100% of base salary per annum.
The Committee retains discretion to apply
malus or clawback provisions.
No bonuses paid to
senior management
until Zegona owns a
material underlying
asset
No bonuses to
be paid to senior
management until
Zegona owns a
material underlying
asset
Management Incentive Scheme
Purpose Current policy 2022 Implementation 2023 Implementation
To drive performance,
aid retention and align
the interests of Executive
Directors and senior
management with
shareholders over the
long term.
The Committee may allocate Management
Shares in Zegona Limited to Executive
Directors or senior management.
Zegona’s management incentive scheme
entitles participants in aggregate to receive
up to 15% of the growth in value of Zegona
subject to a shareholders’ 5% per annum
preferred return.
Incentive may be exercised between 3
and 5 years after each renewal or on
the occurrence of certain specific events
including a sale of Zegona’s main assets and
return of net proceeds to shareholders.
No change No change
GOVERNANCE | DIRECTORS’ REMUNERATION REPORT
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ZEGONA COMMUNICATIONS PLC
All disclosures in the Directors’ remuneration report are unaudited unless otherwise stated. The annual report on
remuneration gives details on the amounts earned in the year ended 31 December 2022 and how the Directors’
remuneration policy will be applied in 2023. This remuneration report will be subject to an advisory vote at the
2023 AGM.
2022 Executive Directors remuneration summary (Audited)
In the interests of clarity, since the Executive Directors’ salaries are set and paid in Sterling, the table has been
presented in both Sterling and euros (Zegona’s presentational currency). These tables only include remuneration
received by the Executive Directors In respect of their employment by Zegona.
Executive Directors (Sterling)
Eamonn O’Hare
(Chairman & CEO)
Robert Samuelson
(COO)
2022
£
2021
£
2022
£
2021
£
Base salary 563,000 563,000 419,000 419,000
Pension contributions 112,600 112,600 83,800 83,800
Taxable benefits 21,321 21,321 21,321 21,321
Company health insurance scheme
8,582 7,271 8,152 6,954
Total fixed pay 705,503 704,192 532,273 531,075
Annual cash bonus – – – –
Management Incentive Scheme redemptions – 15,218,252 – 7,609,126
Total variable pay – 15,218,252 – 7,609,126
Total fixed and variable pay 705,503 15,922,444 532,273 8,140,221
Executive Directors (euros)
Eamonn O’Hare
(Chairman & CEO)
Robert Samuelson
(COO)
2022
£
2021
£
2022
£
2021
£
Base salary 658,811 653,582 490,305 486,414
Pension contributions 131,762 130,716 98,061 97,283
Taxable benefits 24,950 24,751 24,950 24,751
Company health insurance scheme 10,043 8,441 9,539 8,073
Total fixed pay 825,565 817,490 622,855 616,521
Annual cash bonus – – – –
Management Incentive Scheme redemptions – 17,666,748 – 8,833,374
Total variable pay – 17,666,748 – 8,833,374
Total fixed and variable pay 825,565 18,484,238 622,855 9,449,895
None of the Executive Directors’ remuneration in 2022 was attributable to Zegona’s share price growth. No
discretion has been exercised to determine remuneration as a result of either Zegona’s share price appreciation
or depreciation.
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ZEGONA COMMUNICATIONS PLC
Components of remuneration: Base salary
In 2022 and for 2023, following a review of the executive remuneration arrangements in both periods, the
Committee agreed that there would be no increase in base salary for either of the Executive Directors and as
such their salaries remained unchanged in 2022 and will do so for 2023.
Components of remuneration: Pension contributions
Implementation in 2022
In 2022 both Executive Directors received a pension contribution of 20% of their base salary.
Implementation in 2023
In line with corporate governance best practice, the pension contribution for both of the Executive Directors
was reduced from 1 January 2023 to 19% to be the same as the contribution available to the majority of the
workforce.
Components of remuneration: Taxable benefits and Company Health Insurance Scheme
In 2022 both Executive Directors received car allowances, personal tax advice, private medical insurance, and
death in service cover, which will continue in 2023.
Components of remuneration: Annual cash bonus
Implementation in 2022
No bonuses were awarded to either the Executive Directors or other members of Zegona’s senior management
team in respect of 2022 because the Committee had previously concluded in 2021 that it is not appropriate
for the Executive Directors or of Zegona’s senior management team to receive any bonus for any period when
Zegona does not own a material underlying asset.
Implementation in 2023
The Committee will continue to apply the same policy not to pay any bonus the Executive Directors or any
of Zegona’s senior management team for any period when Zegona does not own a material underlying asset.
Should Zegona make a new acquisition during 2023, the Committee will develop appropriate bonus targets at
the appropriate time.
Components of remuneration: Management Incentive Scheme
Although the Committee feels it is important to remunerate and incentivise the Executive Directors through their
basic pay, benefits and annual bonus, it also feels very strongly that Executive Directors’ long-term incentives
should be linked to the creation and delivery of real returns to shareholders. A key element of Zegona’s
remuneration policy for the Executive Directors and senior management is Management Shares in Zegona
Limited, which were put in place when Zegona was founded and were designed to provide ongoing remuneration
closely aligned with shareholders.
Overview of the scheme
The holders of the Management Shares are entitled to 15% of the growth in value of Zegona during a series of
up to five separate Calculation Periods, provided that ordinary shareholders achieve a 5% per annum Preferred
Return
8
in each Calculation Period. The first Calculation Period began in 2015 and ended in 2020. The second
Calculation Period ended during 2021, at which point the third Calculation Period began.
Holders have the right to end each Calculation Period by redeeming 99% of their Management Shares at any
time between the third and fifth anniversaries of the beginning of the Calculation Period, although a Calculation
Period may also end upon certain specified events such as a winding up, takeover, or a change of control of
Zegona, or if Zegona sells all or substantially all of its assets and distributes the net proceeds to shareholders.
Upon redemption, if the Preferred Return has been met, holders of the Management Shares receive 15% of
the increase in value of Zegona in either Zegona ordinary shares or cash at the discretion of Zegona’s Board at
the time of the exercise on advice from the Committee in accordance with the Articles. If the Preferred Return
8 Return (a 5% per annum return on a compounded basis on shareholders' net investment).
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33
ZEGONA COMMUNICATIONS PLC
has not been achieved, no payment is made. It is currently anticipated that the exercise of Management Shares
could result in management receiving ordinary shares, which, depending on the amount of value created, could
potentially lead to management becoming a significant shareholder.
Upon redemption of the Management Shares, a new Calculation Period automatically begins with the remaining
shares retaining the entitlement to 15% of the growth in value of Zegona for the next Calculation Period,
provided the Preferred Return is achieved over this period. The starting value against which the growth in value
and the Preferred Return are calculated (the “Baseline”) at the beginning of the new Calculation Period is set at
the higher of the Market Capitalisation of Zegona, defined as 30-day VWAP, and the Net Shareholder Invested
Capital on that date.
Each time a new Calculation Period begins, the renewal of the Management Shares’ rights is subject to a vote by
Zegona’s shareholders at the next Annual General Meeting (“AGM”). If shareholders representing 75 per cent or
more of the shares vote against the renewal at the AGM, the Management Shares are redeemed for no value.
There was such a vote at the 2022 AGM to ratify the commencement of the Third Calculation Period, with 98.03%
of votes in favour.
Scheme developments in 2022
There was a vote at the 2022 AGM to ratify the commencement of the Third Calculation Period, with 98.03% of
votes in favour.
Illustration of scheme value
To explain how Zegona’s Management Incentive Scheme operates, we have set out here an illustration of how
much value would be earned by the management team assuming a hypothetical exercise date of 31 December
2022, even though the Management Shares were not exercisable at that date
9
.
The illustration assumes that the exercise was based on the market value of Zegona’s ordinary shares at the
hypothetical exercise date and, since the deemed market capitalisation of £4.9 million was lower than both the
Preferred Return target and the net invested capital, the holders of the Incentive Shares would have received no
payment.
9 The scheme will actually become exercisable either on 14 October 2024, or at the date that certain specific conditions such as a
takeover or a Board change of control occur as explained in note 17 to the Consolidated Financial Statements. At the date of this
report, none of these conditions have occurred and the rights under the incentive schemes are not exercisable.
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ZEGONA COMMUNICATIONS PLC
Since 14 October 2021 (£)
Net invested capital
10
9,194,592
At 31 December 2022 (£)
Number of shares 6,172,424
Average share price
11
0.795
Deemed market capitalisation 4,907,103
Shortfall in value per the incentive scheme (4,287,489)
Split between:
Management Shares 15% –
Ordinary Shares 85% (4,287,489)
Shareholders’ net invested capital at 31 December 2022 was calculated as follows:
Net invested capital
(unadjusted)
£
5% pa
Preferred Return
at 31 Dec 2022
£
Preferred
Return hurdle
at 31 Dec 2022
£
Baseline Value – 14 October, 2021 6,700,452 408,827 7,109,279
Share Issue – October 2021 1,276,360 75,493 1,351,853
Share Issue – November 2022 1,217,780 8,613 1,226,393
As at 31 December 2022 9,194,592 492,933 9,687,525
Shares outstanding 6,172,424 6,172,424 6,172,424
Per share (£) 1.490 0.080 1.569
10 Calculated in accordance with Zegona Limited’s Articles of Association as the sum of Zegona Communications plc’s subscription
proceeds minus dividends and capital returns.
11 Calculated in accordance with Zegona Limited’s Articles of Association as the volume weighted average mid-market price of Zegona
Communications plc’s ordinary shares for the previous 30 trading days to 31 December 2022.
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ZEGONA COMMUNICATIONS PLC
2022 Non-Executive Directors remuneration summary (Audited)
The remuneration of the Non-Executive Directors during the year is detailed below. Non-Executive Directors
fee is a basic fixed salary of £50,000 with a fixed increment of £10,000 if the Non-Executive Director is Chair of
a Committee. In the interest of clarity, since the Non-Executive Directors’ salaries are set and paid in Sterling,
the table has been presented in both Sterling and euros (Zegona’s presentational currency). There have been no
payments to anyone who was not a director of the company at the time the payment was made, but who had
been a director of the company before that time.
Non-Executive Directors fees
12
2022
£
2021
£
2022
€
2021
€
Richard Williams 50,000 50,000 58,509 58,045
Ashley Martin 60,000 60,000 70,211 69,654
Kjersti Wiklund 50,000 50,000 58,509 58,045
Suzi Williams 60,000 60,000 70,211 69,654
Total 220,000 220,000 257,439 255,398
There is no element of the Non-Executive Directors’ remuneration that is linked to the performance of the
business.
Summary of total shareholder return and Chief Executive remuneration.
The total shareholder return graph below shows the value as at 31 December 2022 of £100 invested on IPO on
19 March 2015, compared with £100 invested in the OMSCI Europe/Communication Telecom Services Index. The
Committee considers this index to be appropriate for the purposes of this comparison because it includes mostly
European telecommunications companies. The data shown below assumes that all cash returns to shareholders
made by Zegona (including the share buyback) are immediately reinvested in ordinary shares. The maximum
value of £159.6 in October 2021 reflects the return Zegona achieved from the disposal of its investment in
Euskaltel before reducing its share capital by 98%. The reduction in the shaded area reflects the trading value of
Zegona’s significantly reduced capital base since October 2021.
12 The Non-Executive Directors have not received any other form of remuneration during the current or prior year.
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ZEGONA COMMUNICATIONS PLC
The single figure remuneration for the Chief Executive over the same period, together with the outcomes of the
respective annual incentive awards, is presented in the following table
2015
13
2016 2017 2018 2019 2020 2021 2022
Total remuneration
€m 0.67 0.77 1.29 0.71 1.25 1.27 18.48 0.83
Annual bonus
(% of maximum) 0% 0% 100% 0%
14
94% 75% 0%
15
0%
16
Comparison of Directors’ and employees’ pay and relative importance of spend on pay
The following table compares the changes in each Director’s pay with changes in employee pay between 2021
and 2022:
Base salary
change %
Taxable
benefits
change %
Annual cash
bonus
change %
Executive Directors
Eamonn O’Hare 0% 4.6% n/a
Robert Samuelson 0% 4.2% n/a
Non-executive Directors
Richard Williams 0% n/a n/a
Ashley Martin 0% n/a n/a
Kjersti Wiklund 0% n/a n/a
Suzi Williams 0% n/a n/a
Employees 0% 0% 0%
The table below shows the relative importance of the spend on remuneration paid to or receivable by all
employees in Zegona when compared to distributions to shareholders by way of dividend or share buyback:
2022
€000
2021
€000
Employee pay 2,212 32,776
Returns to shareholders – 400,698
Of which:
Dividends – 12,169
Capital Return – 388,529
13 Period from incorporation on 19 January 2015 to 31 December 2015.
14 Eamonn did meet several indicators of achievement in relation to his 2018 bonus objectives, however Eamonn waived his 2018 bonus
in order to maximise the cash raised from the equity placing in February 2019.
15 Eamonn met a significant majority of the indicators of achievement in relation to the 2021 bonus scheme, however in connection with
the Return of Capital he agreed to waive any amounts due.
16 No bonuses will be paid until Zegona owns an operating asset.
GOVERNANCE | DIRECTORS’ REMUNERATION REPORT
37
ZEGONA COMMUNICATIONS PLC
Directors’ terms and conditions
Service contract duration
Director
Contract
duration Notice period
Eamonn O’Hare
e
Unlimited* 12 months
Robert Samuelson Unlimited* 12 months
Richard Williams Unlimited* 6 months
Ashley Martin Unlimited* 6 months
Kjersti Wiklund Unlimited* 6 months
Suzi Williams Unlimited* 6 months
* Under the terms of the service agreements, these appointments are contingent on annual re-election by shareholders and completion
of the annual Board effectiveness review.
Other than payments for notice periods, the service agreements contain no entitlements to termination
payments. There are no malus or clawback provisions in respect of base salary, pension contributions or benefits,
however, the Committee retains discretion to apply such provisions in the case of any bonus award paid to an
Executive Director whose appointment is subsequently terminated.
External appointments
Executive Directors are allowed to accept external appointments with the consent of the Board as long as these
are not likely to lead to conflicts of interests or significant time commitments. Executive Directors are allowed to
retain the fees paid.
Reappointment
Under the terms of Zegona’s Articles of Association, all Directors will be proposed for re-election at the 2023
AGM. All Board members have service contracts and details of the unexpired terms of these service contracts
are set out above.
Compensation for loss of office (Audited)
The Directors are not entitled to any special compensation for loss of office pursuant to their directorship
or employment contracts following a change of control. However, certain changes of control will entitle the
Directors to exercise rights held by them as holders of Management pursuant to the long-term incentive plan in
force in respect of Zegona. No payments for loss of office were made in either 2022 or 2021.
Directors’ interests in ordinary shares (Audited)
The Committee intends to keep under consideration the need to adopt formal requirements or guidelines in
connection with the building of shareholdings in Zegona by Executive Directors. During the year, no such formal
requirements or guidelines were adopted and the Committee remains of the view that no such requirements
or guidelines are currently needed given that the Executive Directors acquired ordinary shares in the Placing
and their interests are significantly aligned with shareholders through their participation in the Management
Incentive Scheme.
GOVERNANCE | DIRECTORS’ REMUNERATION REPORT
38
ZEGONA COMMUNICATIONS PLC
The shareholdings of the Directors at 31 December 2022 are set out below. There have been no changes in the
shareholdings of the Directors from 31 December 2022 to the date of this report.
Director Number of shares
% of issued
share capital
Eamonn O’Hare 1,067,462 17.29%
Robert Samuelson 525,561 8.51%
Richard Williams 1,153 0.02%
Ashley Martin 212 0.00%
Kjersti Wiklund – –
Suzi Williams – –
In addition the directors owned the following Management Shares in Zegona Limited
Participation in
growth in
value
Number of
Management
Shares
Nominal value
of Management
Shares
Eamonn O’Hare 8.88% 305,000 £305
Robert Samuelson 4.44% 152,500 £153
Zegona senior management 1.68% 57,964 £58
515,464 £516
The following information provided in this part of the Directors’ Remuneration Report is not subject to audit.
Review of workforce remuneration matters
Although there are only a small number of employees in Zegona, in line with the provisions of the UK Corporate
Governance Code, the Committee continues to review the effectiveness of the remuneration framework for
Zegona’s workforce. This involves being kept up to date with changes in workforce remuneration and ensuring
that workforce remuneration continues to remain aligned to Zegona’s purpose, values and strategy.
Statement of voting at General Meetings
The following table sets out the voting results in respect of the resolutions to approve the Directors’ Remuneration
Report and the Directors’ Remuneration Policy:
Date of AGM
For the
resolution
Against the
resolution
Votes
withheld
Directors’ Remuneration Report
for the year ended 31 December 2021 28 June 2022 98.21% 1.79% –
(Votes cast) 3,704,882 67,352 13,223,833
Directors’ Remuneration Policy 28 June 2022 98.21% 1.79% –
(Votes cast) 3,704,882 67,352 13,223,833
Suzi Williams
Chair of the Nomination and Remuneration Committee
6 April 2023
1. Our opinion is unmodified
We have audited the financial statements of Zegona
Communications plc (“the Company”) for the year
ended 31 December 2022 which comprise the
Consolidated Statement of Comprehensive Income,
Consolidated Statement of Other Comprehensive
Income, Consolidated Statement of Financial Position,
Company Statement of Financial Position, Consolidated
Statement of Changes in Equity, Company Statement of
Changes in Equity, Consolidated Statement of Cash
Flows, Company Statement of Cash Flows, and the
related notes, including the accounting policies in note
2.
In our opinion:
— the financial statements give a true and fair view of
the state of the Group’s and of the parent
Company’s affairs as at 31 December 2022 and of
the Group’s loss for the year then ended;
— the Group financial statements have been properly
prepared in accordance with UK-adopted
international accounting standards;
— the parent Company financial statements have been
properly prepared in accordance with UK-adopted
international accounting standards and as applied in
accordance with the provisions of the Companies
Act 2006; and
— the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities are described
below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our report
to the audit committee.
We were first appointed as auditor by the directors on 21
November 2016. The period of total uninterrupted
engagement is for the seven financial years ended 31
December 2022. We have fulfilled our ethical
responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including
the FRC Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that standard
were provided.
Independent
auditor’s report
to the members of Zegona Communications plc
Overview
Materiality:
group financial
statements as a
whole
€172,000 (2021: €2,200,000)
5% of loss before tax, (2021: 0.9% of
average total assets over the past 3
years)
Coverage 100% of loss before tax
(2021: 652% of loss before tax)
Key audit matters vs 2021
Event driven Material uncertainty
relating to going concern
Recoverability of Income
tax receivable
39
2. Material uncertainty related to going concern
.
The risk Our response
Going concern
Refer to page 25 (Audit and Risk Committee
Report) and page 57 (accounting policy).
We draw attention to note 2 to the financial
statements which indicates that Zegona remains
actively searching for investment opportunities,
whilst meeting working capital requirements from
cash balances held. These events and conditions,
along with other matters explained in note 2,
constitute a material uncertainty that may cast
significant doubt on the group’s and the parent
company’s ability to continue as a going concern.
Our opinion is not modified in respect of this
matter.
Disclosure quality
The financial statements explain how the Board
has formed a judgement that it is appropriate to
adopt the going concern basis of preparation for
the Group and parent. That judgement is based
on an evaluation of the inherent risks to the
Group’s and Company’s business model and
how those risks might affect the Group’s and
Company’s financial resources and ability to
continue operations over a period of at least a
year from the date of approval of the financial
statements.
There is little judgement involved in the
directors’ conclusion that risks and
circumstances described in note 2 to the
financial statements represent a material
uncertainty over the ability of group and
company to continue as a going concern for a
period of at least a year from the date of
approval of financial statements.
However, clear and full disclosure of the facts
and the directors’ rationale for the use of the
going concern basis of preparation, including
that there is a related material uncertainty, is a
key financial statement disclosure and so was
the focus of our audit in this area. Auditing
standards require that to be reported as a key
audit matter.
Our procedures included:
— Assessing transparency:
• Considering whether the going concern
disclosure in note 2 to the financial statements
gives a full and accurate description of the
directors’ assessment of going concern, including
the identified risks and dependencies, and
related sensitivities.
Our assessment of the management’s going concern
assessment also included:
• Auditing managements’ assumption with regards
to existence and appropriateness of potential
targets; and
• Reviewing forecasts, and evaluating the costs,
liquidity and time the management has, to make
a potential investment.
Our results
We found the going concern disclosure in note 2 with
a material uncertainty to be acceptable.
40
41
3. Other key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us,
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. Going concern is a significant key audit matter and is described in section 2 of our report. We
summarise below the other key audit matters, in arriving at our audit opinion above, together with our key audit procedures to address
those matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our
results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a
whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion
on these matters.
.
The risk Our response
Recoverability of Income tax receivable
The Group has recorded a receivable for uncertain
tax position totalling € 4.9m as at 31 December
2022 (2021: € 5.2m).
Refer to page 25 (Audit and Risk Committee
Report), page 65 (accounting policy) and page 73
(financial disclosures).
Uncertain tax position
Significant uncertainty arose over the
recognition of CFC tax receivable in accordance
with IFRIC 23., following the judgement handed
down by the General Court of EU (“GCEU”) in
2022 that the CFC legislation constituted state
aid.
Our audit risk is over recoverability of tax
receivable for uncertain tax position in
accordance with IFRIC 23.
We performed the tests below rather than seeking to
rely on any of the Group's controls because the
nature of the balance is such that we would expect to
obtain audit evidence primarily through the detailed
procedures described.
Our procedures included:
— Our tax expertise: We have used our own tax
specialist to perform an assessment of the
Group’s tax position through inspecting and
critically assessing the advice that the Group has
received from external advisors. This is based on
our knowledge and expertise of the application
of the tax legislation and the specific matters of
the appeal and court process; and
— Assessing transparency: We assessed the
adequacy of the Group’s disclosures in respect of
uncertain tax position.
Our results
We found the receivable for uncertain tax position to
be acceptable (2021: acceptable).
In 2021 we performed procedures over the presentation of the Investment in Euskaltel as a discontinued operation. Given that the investment was disposed
in 2021, we have not assessed this as a risk in the 2022 audit. We also continue to perform procedures over recoverability of parent company investment in
Zegona Limited. However, the level of audit risk and the associated audit effort required was significantly reduced in 2022 due to disposal of Euskaltel in the
prior year and no new investment finalized in the current year. Accordingly these matters are not assessed as the most significant risks in our current year
audit. Therefore, these are not separately identified in our report this year.
42
4. Our application of materiality and an overview of
the scope of our audit
Materiality for the Group financial statements as a whole
was set at €172,000 (2021: €2,200,000), determined with
reference to a benchmark of group loss before tax, of
which it represents 5% (2021: 0.9% of average total assets
over the last three years).
Materiality for the parent Company financial statements
as a whole was set at €39,000 (2021: €1,300,000)
determined with reference to a benchmark of company
total assets of which it represents 1% (2021: 0.6% of
average total assets over the last three years).
In line with our audit methodology, our procedures on
individual account balances and disclosures were
performed to a lower threshold, performance materiality,
so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual
account balances add up to a material amount across the
financial statements as a whole.
Performance materiality for the financial statements as a
whole was set at 75% (2021: 75%) of materiality as a
whole, which equates to €129,000 (2021: €1,650,000) for
the Group and €30,000 (2021: €975,000) for the parent
Company. We applied this percentage in our
determination of performance materiality because we did
not identify any factors indicating an elevated level of risk.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding €8,600 (2021: €110,000), in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
In 2022 the Group audit team performed the audit of the
Group as if it was a single aggregated set of financial
information which covered 100% of total Group loss
before tax and total Group assets. The audit was
performed using the materiality and performance
materiality levels set out above.
In 2021 the group team performed full scope audits on 2
out of 5 reporting components, including the parent
company, which accounted for 100% of total Group loss
before tax and total Group assets. Having regard to the
mix of size and risk profile of the Group across the
components, the group team approved the component
materiality of €1.3m and € 1.87m to Zegona
Communications plc and Zegona Limited respectively
The scope of the audit work performed was fully
substantive as we did not rely upon the Group’s internal
control over financial reporting.
Loss before tax: €3.4m
(2021: Total assets : €16m)
Group materiality
€172,000 (2021: €2,200,000)
Loss before tax
Group materiality
€172,000
Whole financial
statements
materiality (2021:
€2,200,000)
€129,000
Whole financial
statements performance
materiality (2021: €1,650,000)
€8,600
Misstatements
reported to the
audit committee (2021: €110,000)
43
4. Our application of materiality and an overview of
the scope of our audit
Materiality for the Group financial statements as a whole
was set at €172,000 (2021: €2,200,000), determined with
reference to a benchmark of group loss before tax, of
which it represents 5% (2021: 0.9% of average total assets
over the last three years).
Materiality for the parent Company financial statements
as a whole was set at €39,000 (2021: €1,300,000)
determined with reference to a benchmark of company
total assets of which it represents 1% (2021: 0.6% of
average total assets over the last three years).
In line with our audit methodology, our procedures on
individual account balances and disclosures were
performed to a lower threshold, performance materiality,
so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual
account balances add up to a material amount across the
financial statements as a whole.
Performance materiality for the financial statements as a
whole was set at 75% (2021: 75%) of materiality as a
whole, which equates to €129,000 (2021: €1,650,000) for
the Group and €30,000 (2021: €975,000) for the parent
Company. We applied this percentage in our
determination of performance materiality because we did
not identify any factors indicating an elevated level of risk.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding €8,600 (2021: €110,000), in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
In 2022 the Group audit team performed the audit of the
Group as if it was a single aggregated set of financial
information which covered 100% of total Group loss
before tax and total Group assets. The audit was
performed using the materiality and performance
materiality levels set out above.
In 2021 the group team performed full scope audits on 2
out of 5 reporting components, including the parent
company, which accounted for 100% of total Group loss
before tax and total Group assets. Having regard to the
mix of size and risk profile of the Group across the
components, the group team approved the component
materiality of €1.3m and € 1.87m to Zegona
Communications plc and Zegona Limited respectively
The scope of the audit work performed was fully
substantive as we did not rely upon the Group’s internal
control over financial reporting.
Loss before tax: €3.4m
(2021: Total assets : €16m)
Group materiality
€172,000 (2021: €2,200,000)
Loss before tax
Group materiality
€172,000
Whole financial
statements
materiality (2021:
€2,200,000)
€129,000
Whole financial
statements performance
materiality (2021: €1,650,000)
€8,600
Misstatements
reported to the
audit committee (2021: €110,000)
5. Going concern basis of preparation
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Group
or the Company or to cease their operations, and as they have
concluded that the Group’s and the Company’s financial position
means that this is realistic for at least a year from the date of
approval of financial statements (“the going concern period”). As
stated in section 2 of our report, they have also concluded that
there is a material uncertainty related to going concern.
An explanation of how we evaluated management’s assessment
of going concern is set out in Section 2 of our report.
Our conclusions based on this work:
— we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is
appropriate;
— we have nothing material to add or draw attention to in
relation to the directors’ statement in Note 2 to the financial
statements on the use of the going concern basis of
accounting, and their identification therein of a material
uncertainty over the Group and Company’s ability to continue
to use that basis for the going concern period and we found
the going concern disclosure in note 2 to be acceptable; and
— the related statement under the Listing Rules set out on page
14 is materially consistent with the financial statements and
our audit knowledge.
6. Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to
fraud
To identify risks of material misstatement due to fraud (“fraud risks”)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
• Enquiring of directors, the audit committee and inspection of
policy documentation as to the Group’s high-level policies and
procedures to prevent and detect fraud, and the Group’s
channel for “whistleblowing”, as well as whether they have
knowledge of any actual, suspected or alleged fraud.
• Reading board, audit committee, remuneration and
nomination minutes.
• Considering remuneration incentive schemes and performance
targets for directors/senior management.
• Using analytical procedures to identify any unusual or
unexpected transactions.
As required by auditing standards, we perform procedures to address
the risk of management override of controls, in particular the risk that
Group and component management may be in a position to make
inappropriate accounting entries. On this audit we do not believe
there is a fraud risk related to revenue recognition because the
company does not have any trading operations.
We did not identify any additional fraud risks.
We performed procedures including:
• Identifying journal entries to test based on risk criteria and
comparing the identified entries to supporting documentation.
These included those posted to unusual pairings with cash entries,
and post year end journals.
44
Identifying and responding to risks of material misstatement
related to compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the financial statements from
our general commercial and sector experience, through discussion
with the directors and other management (as required by auditing
standards), and discussed with the directors and other management
the policies and procedures regarding compliance with laws and
regulations.
As the Group is regulated, our assessment of risks involved gaining
an understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effects of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation, and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts of disclosures in the financial statements, for
instance through the imposition of fines or litigation. We identified
the following areas as the most likely to have such an effect: anti-
bribery, employment law and certain aspects of company legislation
recognising the nature of the Group’s activities and its legal form.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of the
directors and other management and inspection of regulatory and
legal correspondence, if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
We discussed with the audit committee matters related to actual or
suspected breaches of laws or regulations, for which disclosure is
not necessary, and considered any implications for our audit.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
45
7. We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not
cover the other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified
material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the directors’ report;
— in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and the
viability statement, and the financial statements and our audit
knowledge.
Based on those procedures, other than the material uncertainty
related to going concern referred to above, we have nothing
further material to add or draw attention to in relation to:
— the directors’ confirmation within the viability statement on
page 9 that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those
that would threaten its business model, future performance,
solvency and liquidity;
— the longer term viability statement disclosures describing
these risks and how emerging risks are identified, and
explaining how they are being managed and mitigated; and
— the directors’ explanation in the viability statement of how
they have assessed the prospects of the Group, over what
period they have done so and why they considered that
period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the viability statement, set out on
page 9, provided as if the Company were required to comply with
the Listing Rules in relation to this matter. Based on the above
procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our audit
knowledge.
Our work is limited to assessing these matters in the context of
only the knowledge acquired during our financial statements
audit. As we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were
made, the absence of anything to report on these statements is
not a guarantee as to the Group’s and Company’s longer-term
viability.
Corporate governance disclosures
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
corporate governance disclosures and the financial statements
and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements
and our audit knowledge:
— the directors’ statement that they consider that the annual
report and financial statements taken as a whole is fair,
balanced and understandable, and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy;
— the section of the annual report describing the work of the
Audit Committee, including the significant issues that the
audit committee considered in relation to the financial
statements, and how these issues were addressed; and
— the section of the annual report that describes the review of
the effectiveness of the Group’s risk management and
internal control systems.
In addition to our audit of the financial statements, the directors
have engaged us to review their Corporate Governance
Statement as if the Company were required to comply with the
Listing Rules of the Financial Conduct Authority in relation to this
matter. Under the terms of our engagement we are required to
review the part of the Corporate Governance Statement relating
to the Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review. We have
nothing to report in this respect.
Based solely on our work on the other information described
above:
— with respect to the Corporate Governance Report
disclosures about internal control and risk management
systems in relation to financial reporting processes and
about share capital structures:
− we have not identified material misstatements therein;
and
− the information therein is consistent with the financial
statements; and
— in our opinion, the Corporate Governance Statement has
been prepared in accordance with relevant rules of the
Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority.
We are also required to report to you if a corporate governance
statement has not been prepared by the Company. We have
nothing to report in these respects.
Identifying and responding to risks of material misstatement
related to compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the financial statements from
our general commercial and sector experience, through discussion
with the directors and other management (as required by auditing
standards), and discussed with the directors and other management
the policies and procedures regarding compliance with laws and
regulations.
As the Group is regulated, our assessment of risks involved gaining
an understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effects of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation, and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts of disclosures in the financial statements, for
instance through the imposition of fines or litigation. We identified
the following areas as the most likely to have such an effect: anti-
bribery, employment law and certain aspects of company legislation
recognising the nature of the Group’s activities and its legal form.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of the
directors and other management and inspection of regulatory and
legal correspondence, if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
We discussed with the audit committee matters related to actual or
suspected breaches of laws or regulations, for which disclosure is
not necessary, and considered any implications for our audit.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
46
8. We have nothing to report on the other matters on which
we are required to report by exception
Under the Companies Act 2006, we are required to report to you
if, in our opinion:
— adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
— the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
— certain disclosures of directors’ remuneration specified by
law are not made; or
— we have not received all the information and explanations
we require for our audit.
We have nothing to report in these respects.
9.
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 49, the
directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; 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; assessing
the Group and parent Company’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
they either intend to liquidate the Group or the parent Company
or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities
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 our
opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial
statements.
The Company is required to include these financial statements in
an annual financial report prepared using the single electronic
reporting format specified in TD ESEF Regulation. The auditor’s
report provide no assurance over whether the annual financial
report has been prepared in accordance with that format.
A fuller description of our responsibilities is provided on the
FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
10. The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006 and the terms of our engagement by the Company. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s report, and the further matters we are
required to state to them in accordance with the terms agreed
with the Company, and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
Simon Richardson (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
06 April 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
47
ZEGONA COMMUNICATIONS PLC
Notes
2022
€000
2021
€000
Continuing Operations
Administrative and other operating expenses:
Corporate costs 5 (3,271 ) (4,643 )
Management Incentive Scheme costs 17 (34 ) (29,072 )
Significant project costs 6 (26 ) (295 )
Operating loss
(3,331 ) (34,010 )
Finance income 7 25 158
Finance costs 7 (4 ) (376 )
Net foreign exchange (loss) / gain
(3 ) (30 )
(Loss) for the year before income tax (3,313 ) (34,258 )
Income tax expense 8 – –
(Loss) for the period from continuing operations (3,313 ) (34,258 )
Discontinued Operations
Profit for the period from discontinued operation, net of tax 12 – 114,171
(Loss)/Profit for the period attributable to equity holders of
the parent
(3,313 ) 79,913
€ €
Earnings per share – total operations
Basic and diluted earnings per share attributable to equity
holders of the parent 22 (0.61 0.47
Earnings per share – continuing operations
Basic and diluted earnings per share attributable to equity
holders of the parent 22 (0.61 0.22
Earnings per share – discontinued operations
Basic and diluted earnings per share attributable to equity
holders of the parent 22 – 0.68
The notes on pages 57 to 80 form an integral part of these Consolidated Financial Statements.
8. We have nothing to report on the other matters on which
we are required to report by exception
Under the Companies Act 2006, we are required to report to you
if, in our opinion:
— adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
— the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
— certain disclosures of directors’ remuneration specified by
law are not made; or
— we have not received all the information and explanations
we require for our audit.
We have nothing to report in these respects.
9.
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 49, the
directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; 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; assessing
the Group and parent Company’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
they either intend to liquidate the Group or the parent Company
or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities
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 our
opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial
statements.
The Company is required to include these financial statements in
an annual financial report prepared using the single electronic
reporting format specified in TD ESEF Regulation. The auditor’s
report provide no assurance over whether the annual financial
report has been prepared in accordance with that format.
A fuller description of our responsibilities is provided on the
FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
10. The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006 and the terms of our engagement by the Company. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s report, and the further matters we are
required to state to them in accordance with the terms agreed
with the Company, and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
Simon Richardson (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
06 April 2023
CONSOLIDATED STATEMENT OF OTHER
COMPREHENSIVE INCOME
48
ZEGONA COMMUNICATIONS PLC
2022
€000
2021
€000
(Loss) for the year (3,313 ) 79,913
Other comprehensive income / (loss) – items that will or may be
reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations (638 ) 1,484
Exchange differences on translation of discontinued operations – (884 )
Total other comprehensive (loss) / income (638 ) 600
Total comprehensive loss / (income) for the year, net of tax,
attributable to equity holders of the parent
(3,951 ) 80,513
The notes on pages 57 to 80 form an integral part of these Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
49
ZEGONA COMMUNICATIONS PLC
As at
31 December
2022
€000
As at
31 December
2021
€000 Notes
Assets
Non-current assets
Property, plant and equipment 13 30
Income tax receivable 14 4,961 5,234
Current assets
Prepayments and other receivables 13 75 197
Cash and cash equivalents 10 5,890 10,556
Total assets 10,939 16,017
Equity and liabilities
Equity
Share capital 19 311 301
Capital redemption reserve 20 2,565 2,565
Share premium reserve 20 3,049 1,616
Other reserve 20 – –
Shares to be issued 20 – 1,443
Share-based payment reserve 20 65 31
Foreign currency translation reserve 20 (6,922 ) (6,284 )
Retained earnings 20 11,469 14,782
Total equity attributable to equity holders of the Parent 10,537 14,454
Current liabilities
Accruals and other payables 17 402 1,457
Bank borrowings 18 – 106
Total liabilities 402 1,563
Total equity and liabilities 10,939 16,017
The notes on pages 57 to 80 form an integral part of these Consolidated Financial Statements.
The Financial Statements of Zegona Communications plc (registered number 09395163) were approved by the
Board of Directors on 6 April 2023 and were signed on its behalf by:
Eamonn O’Hare
Director
Robert Samuelson
Director
COMPANY STATEMENT OF FINANCIAL POSITION
50
ZEGONA COMMUNICATIONS PLC
Notes
As at
31 December
2022
€000
As at
31 December
2021
€000
Assets
Non-current assets
Property, plant and equipment 13 30
Investment in subsidiaries 9 3,655 6,824
3,668 6,854
Current assets
Prepayments and other receivables 13 1,805 3,821
Cash and cash equivalents 337 16
2,142 3,837
Total assets
5,810 10,691
Equity and liabilities
Equity
Share capital 19 311 301
Capital redemption reserve 20 2,565 2,565
Share premium reserve 20 3,049 1,616
Other reserve 20 – –
Shares to be issued 20 – 1,443
Share based payment reserve 20 65 31
Foreign currency translation reserve 20 – (61,477)
Retained earnings 20 (415) 65,486
Total equity attributable to the shareholders of the Company
5,575 9,965
Current liabilities
Accruals and other payables 15 235 620
Bank borrowings 16 – 106
Total liabilities
235 726
Total equity and liabilities
5,810 10,691
The notes on pages 57 to 80 form an integral part of these Consolidated Financial Statements.
As permitted by section s408 of the Companies Act 2006, no profit and loss account for the company is presented.
The company’s loss for the financial year was €4.0 million (2021 €124.2 million profit)
The Financial Statements of Zegona Communications plc (registered number 09395163) were approved by the
Board of Directors on 6 April and were signed on its behalf by:
Eamonn O’Hare
Director
Robert Samuelson
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
51
ZEGONA COMMUNICATIONS PLC
Note
Share
capital
€000
Share-based
payment
reserve
€000
Foreign
currency
translation
reserve
€000
Retained
earnings
€000
Capital
redemption
reserve
€000
Share
premium
reserve
€000
Shares
to be
issued
€000
Total
equity
€000
Balance at 1 January 2022 301 31 (6,284 ) 14,782 2,565 1,616 1,443 14,454
Loss for the year – – – (3,313 ) – – – (3,313 )
Other comprehensive loss – – (638 ) – – – – (638 )
Share-based payment expense 17 – 34 – – – – – 34
Issuance of shares 18 10 – – – – 1,433 (1,443 ) –
Balance at 31 December 2022
The notes on pages 57 to 80 form an integral part of these Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
52
ZEGONA COMMUNICATIONS PLC
Note
Share
capital
€000
Share-based
payment
reserve
€000
Foreign
currency
translation
reserve
€000
Retained
earnings
€000
Capital
redemption
reserve
€000
Share
premium
reserve
€000
Other
reserve
€000
Shares to
be issued
€000
Total
equity
€000
Balance at 1 January 2021 2,821 799 (6,884 ) 46,072 34 108,793 180,816 – 332,451
Profit for the year – – – 79,913 – – – – 79,913
Other comprehensive income – – 600 – – – – – 600
Dividends paid 23 – – – – – – (12,169 ) – (12,169 )
Share-based payment expense 17 – 763 – – – – – – 763
Reclassification of incentive arrangements 17 – (1,562 ) – – – – – – (1,562 )
Renewal of incentive scheme 17 – 31 – – – – – – 31
Reduction of share premium 18 – – – – – (108,679 ) 108,679 – –
Redemption of shares 18 (2,531 ) – – (111,223 ) 2,531 – (277,326 ) – (388,529 )
Issuance of shares 18 11 – – – – 1,502 – 1,443 2,956
Balance at 31 December 2021 301 31 (6,284 ) 14,782 2,565 1,616 – 1,443 14,454
The notes on pages 57 to 80 form an integral part of these Consolidated Financial Statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
53
ZEGONA COMMUNICATIONS PLC
Note
Share
capital
€000
Share-based
payment
reserve
€000
Foreign
currency
translation
reserve
€000
Retained
earnings
€000
Capital
redemption
reserve
€000
Share
premium
reserve
€000
Shares to
be issued
€000
Total
equity
€000
Balance at 1 January 2022 301 31 (61,477) 65,486 2,565 1,616 1,443 9,965
Loss for the year – – – (4,046) – – – (4,046)
Other comprehensive loss – – (378) – – – – (378)
Share-based payment expense 17 – 34 – – – – – 34
Issuance of shares 18 10 – – – – 1,433 (1,443) –
Reserves transfer 20 – – 61,855 (61,855) – – – –
Balance at 31 December 2022
311 65 – (415) 2,565 3,049 – 5,575
The notes on pages 57 to 80 form an integral part of these Consolidated Financial Statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
54
ZEGONA COMMUNICATIONS PLC
Share capital
Share-based
payment
reserve
Foreign
currency
translation
reserve
Retained
earnings
Capital
redemption
reserve
Share
premium
reserve
Other
reserve
Shares to
be issued
Total
equity
Note €000 €000 €000 €000 €000 €000 €000 €000 €000
Balance at 1 January 2021 2,821 694 (79,268) 52,510 34 108,793 180,816 – 266,400
Profit for the year – – – 124,179 – – – – 124,179
Other comprehensive income – – 17,791 – – – – – 17,791
Dividends paid 23 – – – – – – (12,169) – (12,169)
Share-based payment expense 17 – 763 – – – – – – 763
Reclassification of incentive arrangements 17 – (1,457) – – – – – – (1,457)
Renewal of incentive scheme 17 – 31 – – – – – – 31
Reduction of share premium 18 – – – – – (108,679) 108,679 – –
Redemption of shares 18 (2,531) – – (111,223) 2,531 – (277,326) – (388,529)
Issuance of shares 18
11 – – – – 1,502 – 1,443 2,956
Balance at 31 December 2021
301 31 (61,477) 65,486 2,565 1,616 – 1,443 9,965
The notes on pages 57 to 80 form an integral part of these Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
55
ZEGONA COMMUNICATIONS PLC
Note
Year ended
31 December
2022
€000
Year ended
31 December
2021
€000
Operating activities
(Loss) before income tax from continuing operations (3,313 ) (34,258 )
Adjustments to reconcile profit before income tax to
operating cash flows:
Depreciation of property, plant and equipment 16 16
Management Incentive Scheme costs 17 35 31
Net foreign exchange losses 3 30
Finance income 7 (25 ) (158 )
Finance costs 7 4 376
Working capital adjustments:
Decrease/(increase) in prepayments and other receivables 395 (5,261 )
(Decrease)/increase in accruals and other payables (1,055 ) 334
Interest received 25 21
Interest paid – (273 )
Net cash flows used in operating activities
(3,916 ) (39,142 )
Investing activities
Purchase of property, plant and equipment – (34 )
Net cash flows used in investing activities
Net cash flows from discontinued investing activities 12 – 439,547
Financing activities
Dividends paid to shareholders 23 – (12,169 )
Repurchase and cancellation of shares 18 – (388,529 )
Issuance of shares and shares to be issued 18 – 2,956
Repayment of bank borrowing 16 (106 ) (11,028 )
Net cash flows (used in) financing activities
(106 ) (408,770 )
Net (decrease) in cash and cash equivalents
(4,022 ) (8,399 )
Net foreign exchange difference (644 ) 3,711
Cash and cash equivalents at the beginning of the year 10,556 15,244
Cash and cash equivalents at the end of the year
The notes on pages 57 to 80 form an integral part of these Consolidated Financial Statements.
COMPANY STATEMENT OF CASH FLOWS
56
ZEGONA COMMUNICATIONS PLC
Note
Year ended
31 December
2022
€000
Year ended
31 December
2021
€000
Operating activities
(Loss) / Profit before income tax from continuing operations (4,046) 127,049
Adjustments to reconcile profit before income tax to
operating cash flows:
Depreciation of property, plant & equipment 16 16
Net foreign exchange losses 3 69
Finance income 7 – (418,079)
Finance costs 7 – 376
Impairment of investment in subsidiary 9 2,951 288,806
Working capital adjustments:
(Increase) / decrease in prepayments and other receivables 2,016 (3,637)
(Decrease) / increase in accruals and other payables (385) 59
Interest received – 21
Interest paid
– (273)
Net cash flows (used in)/from operating activities
555 (5,593)
Investing activities
Purchase of property, plant and equipment – (34)
Dividends received from subsidiary 9
– 417,921
Net cash flows from/ (used in) investing activities
– 417,887
Net cash flows from/ (used in) discontinued investing
activities 543
Financing activities
Dividends paid to shareholders 23 – (12,169)
Repurchase and cancellation of shares 18 – (388,529)
Issuance of shares and shares to be issued 18 – 2,956
Repayment of credit facility 16 (106) (11,028)
Payment of intercompany loan 9
– (21,907)
Net cash flows (used in) financing activities
(106) (430,677)
Net Increase / (decrease) in cash and cash equivalents 449 (17,840)
Net foreign exchange differences (128) 2,707
Cash and cash equivalents at the beginning of the year
16 15,149
Cash and cash equivalents at the end of the year
337 16
The notes on pages 57 to 80 form an integral part of these Consolidated Financial Statements.
NOTES TO THE FINANCIAL STATEMENTS
57
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
58
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
59
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
60
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
61
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
62
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
63
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
64
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
65
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
66
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
67
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
68
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
69
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
70
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
71
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
72
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
73
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
74
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
75
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
76
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NOTES TO THE FINANCIAL STATEMENTS
77
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
78
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
79
ZEGONA COMMUNICATIONS PLC
NOTES TO THE FINANCIAL STATEMENTS
80
ZEGONA COMMUNICATIONS PLC
NOTICE OF ANNUAL GENERAL MEETING
81
ZEGONA COMMUNICATIONS PLC
NOTICE is hereby given that the Annual General Meeting (the “AGM”) of Zegona Communications plc (the
“Company”) will be held at the offices of Travers Smith LLP, 10 Snow Hill, London, EC1A 2AL on 20 June 2023 at
10.30 a.m. for the transaction of the following business:
To consider and, if thought fit, to pass the following resolutions, numbers 1 to 11 of which will be proposed as
ordinary resolutions and numbers 12 to 15 of which will be proposed as special resolutions:
1. THAT the Company’s financial statements for the year ended 31 December 2022, together with the Directors’
report and the auditor’s report on those financial statements and on the auditable part of the Directors’
remuneration report, be received.
2. THAT Eamonn O’Hare be re-elected as a Director.
3. THAT Robert Samuelson be re-elected as a Director.
4. THAT Richard Williams be re-elected as a Director.
5. THAT Ashley Martin be re-elected as a Director.
6. THAT Kjersti Wiklund be re-elected as a Director.
7. THAT Suzi Williams be re-elected as a Director.
8. THAT KPMG LLP be re-appointed as auditor to the Company until the conclusion of the next annual general
meeting of the Company.
9. THAT the Directors be authorised to fix the auditor’s remuneration.
10. THAT the Directors’ remuneration report, which is set out in pages 31 to 38 of the annual report of the
Company for the year ended 31 December 2022, be approved.
11. THAT for the purposes of section 551 Companies Act 2006 (the “Act”) (and so that expressions used in this
resolution shall bear the same meanings as in the said section 551) , the Directors be and are generally and
unconditionally authorised to exercise all powers of the Company to allot:
11.1 shares and to grant such subscription and conversion rights as are contemplated by sections 551(1) (a)
and (b) of the Act respectively up to a maximum nominal amount of £22,574 to such persons and at
such times and on such terms as they think proper; and further
11.2 equity securities (as defined in section 560 of the Act) in connection with a rights issue in favour of
the holders of equity securities and any other persons entitled to participate in such issue where
the equity securities respectively attributable to the interests of such holders and persons are
proportionate (as nearly as may be) to the respective number of equity securities held by them up
to a maximum nominal amount of £22,574,
subject only to such exclusions or other arrangements as the Directors may consider necessary or expedient
to deal with treasury shares, fractional entitlements or legal or practical problems under the laws of any
territory or requirements of any recognised regulatory body or stock exchange in any territory, provided that
such authority shall expire at the conclusion of the next annual general meeting of the Company or the date
which is 18 months after the date on which this resolution is passed, whichever is the earlier, save that the
Company be and is hereby authorised to make, prior to the expiry of such periods, any offer or agreement
which would or might require such shares or rights to be allotted or granted after the expiry of the said
periods and the Directors may allot such shares or grant such rights under any such offer or agreement as if
the authority had not expired.
12. THAT if resolution 11 set out in the Notice convening this Meeting is passed, the Directors be and are hereby
authorised to allot equity securities (as defined in section 560 of the Act) for cash under the authority given
NOTICE OF ANNUAL GENERAL MEETING
82
ZEGONA COMMUNICATIONS PLC
by that resolution and/or to sell ordinary shares held by the Company as treasury shares for cash as if section
561 of the Act did not apply to any such allotment or sale, such authority to be limited to:
12.1 the allotment of equity securities in connection with an issue or offering in favour of holders of
equity securities (but in the case of an allotment pursuant to the authority granted under resolution
11.2, such power shall be limited to the allotment of equity securities by way of a rights issue only)
and any other persons entitled to participate in such issue or offering where the equity securities
respectively attributable to the interests of such holders and persons are proportionate (as nearly
as may be) to the respective number of equity securities held by or deemed to be held by them on
the record date of such allotment, subject only to such exclusions or other arrangements as the
Directors may consider necessary or expedient to deal with treasury shares, fractional entitlements
or legal or practical problems under the laws of any territory or requirements of any recognised
regulatory body or stock exchange in any territory; and
12.2 the allotment (otherwise than pursuant to paragraph 12.1 above) of equity securities up to a nominal
amount of £6,172,
such authority, unless renewed, to expire at the conclusion of the next annual general meeting of the
Company or the date which is 18 months after the date on which this resolution is passed, whichever is
the earlier, but in each case, prior to its expiry the Company may make offers, and enter into agreements,
which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the
authority expires and the Directors may allot equity securities (and sell treasury shares) under any such offer
or agreement as if the authority had not expired.
13. THAT if resolution 11 set out in the Notice convening this Meeting is passed, the Directors be and are hereby
authorised in addition to any authority granted under resolution 11 to allot equity securities (as defined in
section 560 of the Act) for cash under the authority given by that resolution and/or to sell ordinary shares
held by the Company as treasury shares for cash as if section 561 of the Companies Act 2006 did not apply
to any such allotment or sale, such authority to be:
13.1 limited to the allotment of equity securities or sale of treasury shares up to a nominal amount of
£6,172; and
13.2 used only for the purposes of financing (or refinancing, if the authority is to be used within six
months after the original transaction) a transaction which the Board of the Company determines to
be an acquisition or other capital investment of a kind contemplated by the Statement of Principles
on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the
date of this notice;
such authority, unless renewed, to expire at the conclusion of the next annual general meeting of the
Company or the date which is 18 months after the date on which this resolution is passed, whichever is
the earlier, but in each case, prior to its expiry the Company may make offers, and enter into agreements,
which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the
authority expires and the Directors may allot equity securities (and sell treasury shares) under any such offer
or agreement as if the authority had not expired.
14. THAT the Company be and is hereby generally and unconditionally authorised for the purpose of section 701
Companies Act 2006 to make market purchases (as defined in section 693 of the said Act) of ordinary shares
of £0.01 each in the capital of the Company (“ordinary shares”) provided that:
14.1 the maximum number of ordinary shares hereby authorised to be purchased is 925,864, being equal
to 14.99 per cent. of the issued ordinary shares;
14.2 the minimum price (exclusive of expenses) which may be paid for such ordinary shares is £0.01 per
share, being the nominal amount thereof;
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ZEGONA COMMUNICATIONS PLC
14.3 the maximum price (exclusive of expenses) which may be paid for such ordinary shares shall be
an amount equal to the higher of (i) 5% above the average of the middle market quotations for
such shares taken from The London Stock Exchange Daily Official List for the five business days
immediately preceding the day on which the purchase is made and (ii) the higher of the price of the
last independent trade of an ordinary share and the highest current independent bid for an ordinary
share as derived from the London Stock Exchange Trading System (SETS) ;
14.4 the authority hereby conferred shall (unless previously renewed or revoked) expire on the earlier of
the end of the next annual general meeting of the Company and the date which is 18 months after
the date on which this resolution is passed; and
14.5 the Company may make a contract to purchase its own ordinary shares under the authority conferred
by this resolution prior to the expiry of such authority, and such contract will or may be executed
wholly or partly after the expiry of such authority, and the Company may make a purchase of its own
ordinary shares in pursuance of any such contract.
15. THAT the Company be and is hereby authorised to provide notice to shareholders of general meetings of the
Company of at least 14 clear days’ notice.
BY ORDER OF THE BOARD
Secretary: Crestbridge Corporate Services Ltd
Date: 6 April 2023
Registered Office: 47 Esplanade, St Helier, Jersey, JE1 0BD
NOTICE OF ANNUAL GENERAL MEETING
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ZEGONA COMMUNICATIONS PLC
Notes:
(i) A member entitled to attend and vote at the Meeting convened by the above Notice is entitled to appoint
a proxy to exercise all or any of the rights of the member to attend and speak and vote on his behalf. A
proxy need not be a member of the Company. A member may appoint more than one proxy in relation
to the Meeting, provided that each proxy is appointed to exercise the rights attached to a different share
or shares held by that member. The right to appoint a proxy does not apply to any person to whom this
notice is sent who is a person nominated under section 146 of the Companies Act 2006 (the “Act”) to
enjoy information rights (a “Nominated Person” ) .
(ii) To appoint a proxy, you may:
(a) Submit your proxy online at www.signalshares.com (the “Website”) by following the on-screen
instructions, in particular at the “Proxy Voting” link, by no later than 10:30 am on Friday 16 June
2023. In order to appoint a proxy using the Website, members will need to log into their Signal
Shares account, or register if they have not previously done so. To register members will need to
identify themselves with their Investor Code which is detailed on their share certificate or available
from our Registrar, Link Group, on Tel: 0371 664 0300. Calls are charged at the standard geographic
rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding public holidays
in England and Wales.
(b) Link Group, the company’s registrar, has launched a shareholder app: LinkVote+. It’s free to
download and use and gives shareholders the ability to access their shareholding record at any time
and allows users to submit a proxy appointment quickly and easily online rather than through the
post. The app is available to download on both the Apple App Store and Google Play, or by scanning
the relevant QR code below.
Apple App Store
GooglePlay
(c) If you are an institutional investor you may also be able to appoint a proxy electronically via the
Proxymity platform, a process which has been agreed by the Company and approved by the Registrar.
For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be
lodged by 10:30am on 16 June 2023 in order to be considered valid or, if the meeting is adjourned,
by the time which is 48 hours before the time of the adjourned meeting. Before you can appoint a
proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions.
It is important that you read these carefully as you will be bound by them and they will govern the
electronic appointment of your proxy. An electronic proxy appointment via the Proxymity platform
may be revoked completely by sending an authenticated message via the platform instructing the
removal of your proxy vote.
(d) You may request a hard copy form of proxy directly from our Registrar, Link Group, on Tel: 0371
664 0300 or by emailing [email protected]. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding
public holidays in England and Wales.
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ZEGONA COMMUNICATIONS PLC
To be effective the completed and signed form of proxy must be lodged at the office to Link Group,
PXS1 Central Square, 29 Wellington Street, Leeds, LS1 4DL (together with any power of attorney or
other authority under which it is signed or a notarially certified copy of such power or authority) by
no later than 10:30 am on Friday 16 June 2023.
Please indicate in the appropriate box how you wish your votes to be cast. In the absence of any
specific direction, the proxy will vote (or abstain from voting) at his or her discretion. On any other
business which properly comes before the Annual General Meeting (including any motion to amend
any resolution or to adjourn the Meeting) the proxy will vote or abstain at his or her discretion.
(e) if you hold your shares in uncertificated form, use the CREST electronic proxy appointment service
as described in the CREST manual or in the Explanatory Notes to the resolutions set out below.
(iii) Completion of the Form of Proxy or appointment of a proxy through CREST will not prevent a member
from attending and voting in person if he/she wishes to do so.
(iv) Any corporation which is a shareholder in the Company may appoint one or more corporate representatives
who may exercise on its behalf all of that corporation’s powers as a shareholder of the Company provided
that, where there is more than one corporate representative appointed, they do not attempt to exercise
the corporation’s rights in respect of the same shares.
(v) Any member or his corporate representative or proxy attending the Meeting has the right to ask any
question at the Meeting relating to the business of the Meeting.
(vi) Pursuant to section 360B of the Act and Regulation 41 of the Uncertificated Securities Regulations 2001
(as amended) , only shareholders registered in the register of members of the Company as at close of
business on Friday 16 June 2023 shall be entitled to attend and vote at the AGM in respect of the number
of shares registered in their name at such time. If the Meeting is adjourned, the time by which a person
must be entered on the register of members of the Company in order to have the right to attend and vote
at the adjourned Meeting is close of business, 48 hours before the time fixed for the adjourned Meeting.
Changes to the register of members after the relevant times shall be disregarded in determining the rights
of any person to attend and vote at the Meeting.
(vii) In the case of joint holders, the vote of the senior holder who tenders a vote whether in person or by proxy
shall be accepted to the exclusion of the votes of the other joint holders and, for this purpose, seniority
shall be determined by the order in which the names stand in the register of members of the Company in
respect of the relevant joint holding.
(viii) From the date of this notice, copies of the terms and conditions of appointment of the Non-Executive
Directors and the service contracts of the Zegona Chairman and Executive Directors are available
for inspection at the registered office of the Company, 8 Sackville Street, Mayfair, London, W1S 3DG,
during usual business hours on any weekday (Saturdays, Sundays and public holidays excluded) until the
conclusion of the AGM and will be available for inspection at the place of the AGM for at least 15 minutes
prior to and during the Meeting.
(ix) Save as set out in these notes, members who have general queries relating to the AGM should contact
Link Group on 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open
between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales. Please note
that you may not use any electronic address or other contact details provided in this notice of AGM, or any
related documents (including the Chairman’s letter and Form of Proxy) , for any purpose other than those
expressly stated.
(x) As at 6 April 2023 (being the last business day prior to the publication of this notice) the Company’s issued
share capital consists of 6,172,424 ordinary shares, carrying one vote each. Therefore, the total voting
rights in the Company as at 6 April 2023 are 6,172,424.
NOTICE OF ANNUAL GENERAL MEETING
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ZEGONA COMMUNICATIONS PLC
(xi) The information required to be published by section 311A of the Act (information about the contents of
this notice and numbers of shares in the Company and voting rights exercisable at the AGM and details
of any members’ statements, members’ resolutions and members’ items of business received after
the date of this notice) may be found at www.zegona.com. Subject to the limitations of the resolution
approved at the AGM of the Company on 15 April 2016, the Company does not intend to post or email
hard copies of shareholder related documents, such as this Report and Notice of Annual General Meeting,
to shareholders. All documents will be made available on the Company’s website, www.zegona.com.
(xii) A Nominated Person may under an agreement between him/her and the member who nominated him/
her, have a right to be appointed (or to have someone else appointed) as a proxy entitled to attend and
speak and vote at the Meeting. Nominated Persons are advised to contact the member who nominated
them for further information on this and the procedure for appointing any such proxy.
(xiii) Submission of a Proxy vote shall not preclude a member from attending and voting in person at the
meeting in respect of which the proxy is appointed or at any adjournment thereof.
(xiv) Unless otherwise indicated on the Form of Proxy, CREST, Proxymity or any other electronic voting
instruction, the proxy will vote as they think fit or, at their discretion or withhold from voting.
EXPLANATORY NOTES TO THE RESOLUTIONS
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ZEGONA COMMUNICATIONS PLC
The purpose of these notes is to explain the resolutions and business to be conducted at the Company’s AGM.
Resolutions 1 to 13 set out in the Notice detail the ordinary resolutions and resolutions and 15 to 18 detail the
special resolutions. Further explanation in relation to the resolutions is set out below.
Resolution 1 – To approve the Annual Report and Financial Statements
Resolution 1 proposes the receipt and adoption of the Annual Report, which includes the Financial Statements
of the Company for the year ended 31 December 2022, together with the Directors’ report and auditor’s report
on those Financial Statements.
The Company’s Annual Report, including the Financial Statements for the year ended 31 December 2022, is
available on the Company’s website, www.zegona.com. The Annual Report was prepared in compliance with the
requirements of the Act and the requirements of the Listing Rules of the Financial Conduct Authority that would
apply if the Company was listed on the Premium segment of the Official List as at the date of their approval by
the Board.
Resolutions 2 to 7 – Election of Directors
Resolutions 2 to 7 deal with the re-election of each Director of the Company that, subject to the Articles of
Association of the Company (the “Articles”) , is required to retire at every annual general meeting of the Company.
All Directors on the Board will retire at the AGM for this reason. Each of such Directors is offering himself for
re-election and resolutions 2 to 7 propose the re-election of such Directors. Biographies of each of the Directors
retiring in accordance with the Articles are set out on pages 17 and 18 of the Annual Report. Suzi Williams is
the chair of the Nomination and Remuneration Committee. Ashley Martin is the chair of the Audit and Risk
Committee and, if re-elected, will continue in this role.
The Chairman has confirmed that, following a performance review in line with the UK Corporate Governance
Code, all of the Directors continue to perform effectively and contributed positively to the Board meetings that
they attended during 2022 as set out on page 19 of the Annual Report and subsequently to the date of this notice.
Resolutions 8 and 9 – Re-appointment and remuneration of auditor
The appointment of KPMG LLP as auditor of the Company, which started on 18 November 2016, terminates at
the conclusion of the AGM. KPMG LLP has indicated its willingness to stand for re-appointment as auditor of the
Company until the conclusion of the annual general meeting to be held in 2023. The Directors, as well as the
Audit and Risk Committee, recommend that KPMG LLP be re-appointed and that its remuneration be fixed.
Resolution 10 – Directors’ remuneration report
In accordance with the requirements under the Act, shareholders are being asked to approve the Directors’
remuneration report set out on pages 31 to 38 of the Annual Report. The actual remuneration paid to Directors
in 2022 was made within the boundaries of the Directors’ remuneration policy approved by shareholders at the
2022 Annual General Meeting.
Resolution 11 – Directors’ authority to allot shares
The existing power granted to the Directors to allot ordinary shares expires at the conclusion of the AGM.
Accordingly, resolution 11 is proposed to renew the Directors’ authority to allot ordinary shares of up to a
maximum nominal amount of (i) £22,574 (being one-third of the Company’s issued ordinary share capital as
at 6 April 2023) to such persons and upon such conditions as the Directors may determine; and (ii) a further
maximum aggregate nominal amount of £22,574 (being one-third of the Company’s issued ordinary share capital
as at 6 April 2023) in connection with a rights issue (as defined in resolution 12 of the Notice) , 6 April 2023, being
the latest practicable date before the publication of this notice.
This request for authority to allot shares up to a maximum of two-thirds of the Company’s issued ordinary share
capital is in line with the guidelines published by the Investment Association.
The authorities sought under resolution 11 will expire on the earlier of (i) the end of the next annual general
meeting of the Company and (ii) the date which is eighteen months after the date on which this resolution is
EXPLANATORY NOTES TO THE RESOLUTIONS
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ZEGONA COMMUNICATIONS PLC
passed. The resolution replaces a similar resolution passed at the Annual General Meeting of the Company held
on 28 June 2022. The Directors have no present intention of exercising such authority. However, the Directors
consider it important to have the maximum ability and flexibility commensurate with good corporate governance
guidelines to raise finance to enable the Company to respond to market developments and conditions. No shares
are currently held by the Company in treasury.
Resolutions 12 and 13 – Disapplication of pre-emption rights
The Act requires that shares or other equity securities allotted for cash are offered first to existing shareholders
in proportion to their existing holdings. The passing of resolutions 12 and 13 would allow the Directors to allot
shares (or sell any shares which the Company may hold in treasury following a purchase of its own shares) without
first offering the securities to existing shareholders.
Accordingly, resolution 12 allows the Directors to allot shares and sell treasury shares for cash (i) in connection
with a pre-emptive offer or pre-emptive rights issue and/or (ii) otherwise up to a nominal value of £6,172,
equivalent to 10 per cent. of the total issued ordinary share capital of the Company (excluding treasury shares) as
at April 2023, being the latest practicable date prior to the date of publication of this notice, without first having
to offer them to existing shareholders in proportion to their holdings.
The Pre-Emption Group’s Statement of Principles also supports the annual disapplication of pre-emption rights
in respect of allotments of shares and sales of treasury shares for cash representing no more than an additional
10 per cent. of issued ordinary share capital (exclusive of treasury shares) , to be used only in connection with an
acquisition or specified capital investment. The Pre-Emption Group’s Statement of Principles defines “specified
capital investment” as meaning one or more specific capital investment related uses for the proceeds of an issue
of equity securities, in respect of which sufficient information regarding the effect of the transaction on the
Company, the assets the subject of the transaction and (where appropriate) the profits attributable to them is
made available to shareholders to enable them to reach an assessment of the potential return.
Accordingly, resolution 13 authorises the Directors to allot new shares pursuant to the allotment authority given
by resolution 11, or sell treasury shares, for cash up to a further nominal amount of £6,172, being an additional
10 per cent. of the entire issued share capital of the Company as at 3 April 2023, only in connection with an
acquisition or specified capital investment which is announced contemporaneously with the allotment, or which
has taken place in the preceding six-month period and is disclosed in the announcement of the allotment. If
the authority given in resolution 13 is used, the Company will publish details of the allotment in its next annual
report.
EXPLANATORY NOTES TO THE RESOLUTIONS
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ZEGONA COMMUNICATIONS PLC
The authorities will expire on the earlier of: (i) the end of the next annual general meeting of the Company; and
(ii) the date which is 18 months after the date on which this resolution is passed. This resolution replaces a similar
resolution passed at the Annual General Meeting of the Company held on 28 June 2022.
Resolution 14 – Purchases of own shares by the Company
This resolution seeks authority from shareholders for the Company to make market purchases of its own ordinary
shares, limited to the purchase of 14.99 per cent. of the ordinary shares in issue as at 6 April 2023.
The maximum and minimum prices payable are also limited in the resolution. The authority will only be exercised
if the Directors consider that there is likely to be a beneficial impact on earnings per ordinary share and that it is in
the best interests of the Company at the time. The Company will be able to hold the ordinary shares which have
been repurchased as treasury shares and re-sell them for cash, cancel them or use them for the purposes of any
employee share schemes. No options to subscribe for ordinary shares have been granted and are outstanding as
at 6 April 2023, although shares issued in the Company’s Management Incentive Schemes may be exchanged for
ordinary shares in certain circumstances.
Resolution 15 – Reduction of notice period for general meetings of the Company
This resolution seeks authority from shareholders for the Company to call general meetings at 14 clear days’
notice, as opposed to 21 clear days’ notice. While the Company’s Articles already provide that the Company can
call any general meeting (other than an annual general meeting) at 14 clear days’ notice, the Act requires that,
in order to do so, the reduction from 21 days to 14 days must be approved by way of a special resolution of the
Company’s shareholders. It is the Company’s intention to continue to call annual general meetings at 21 clear
days’ notice.
Action to be taken
You are asked to either:
1. If you hold your shares in certificated form, unlike previous years, and in order to reduce the Company’s
environmental impact, you will not receive a hard copy form of proxy for the 2023 Annual General Meeting
in the post automatically. Instead, you will be able to appoint a proxy electronically using the link www.
signalshares.com by no later than 10:30 am on Friday 16 June 2023. Details of how to appoint a proxy in this
way are set out on page 84 of this document.
2. Link Group, the company’s registrar, has launched a shareholder app: LinkVote+. It’s free to download and
use and gives shareholders the ability to access their shareholding record at any time and allows users to
submit a proxy appointment quickly and easily online rather than through the post. The app is available to
download on both the Apple App Store and Google Play, or by scanning the relevant QR code below.
Apple App Store
GooglePlay
3. If you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company and approved by the Registrar. For further
information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 10:30am on
16 June 2023 in order to be considered valid or, if the meeting is adjourned, by the time which is 48 hours
before the time of the adjourned meeting. Before you can appoint a proxy via this process you will need to
EXPLANATORY NOTES TO THE RESOLUTIONS
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ZEGONA COMMUNICATIONS PLC
have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully
as you will be bound by them and they will govern the electronic appointment of your proxy. An electronic
proxy appointment via the Proxymity platform may be revoked completely by sending an authenticated
message via the platform instructing the removal of your proxy vote.
4. if you hold your shares in uncertificated form, use the CREST electronic proxy appointment service as
described below.
Completion of the Form of Proxy or appointment of a proxy through CREST does not prevent a member from
attending and voting in person.
Shares held in uncertificated form – electronic proxy appointment through CREST
CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment
service may do so for the AGM and any adjournment(s) thereof by utilising the procedures described in the
CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who
have appointed (a) voting service provider(s) , should refer to their CREST sponsor or voting service provider(s) ,
who will be able to take the appropriate action on their behalf.
In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a
“CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & International
specifications and must contain the information required for such instructions, as described in the CREST Manual
(www. euroclear.com) . The message must be transmitted so as to be received by the issuer’s agent, Link Group
(ID RA10) , by 10:30 a.m. on Friday 16 June 2023. For this purpose, the time of receipt will be taken to be the time
(as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s
agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that
Euroclear UK & International does not make available special procedures in CREST for any particular messages.
Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions.
It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed (a) voting service provider(s) , to procure that his CREST sponsor
or voting service provider(s) take(s) ) such action as shall be necessary to ensure that a message is transmitted by
means of the CREST system by any particular time. In this connection, CREST members and, where applicable,
their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) (a)
of the Uncertificated Securities Regulations 2001 (as amended) .
ADVISERS
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ZEGONA COMMUNICATIONS PLC
Joint Corporate Brokers
J.P. Morgan Cazenove
25 Bank Street
London
E14 5JP
Telephone: +44 (0) 22 7134 4000
Barclays Bank plc
5 The North Colonnade
Canary Wharf
London
E14 4BB
Telephone: +44 (0) 22 3134 9801
Canaccord Genuity Limited
88 Wood Street
London, UK
EC2V 7QR
Telephone: +44 (0) 22 7523 8000
Auditor
KPMG LLP
15 Canada Square
London
E14 5GL
Telephone: +44 (0) 22 7311 1000
Registrar
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Telephone: +44 (0) 371 664 0391
Company Secretary
Crestbridge Corporate Services Ltd
47 Esplanade
St Helier
Jersey
JE1 0BD
Telephone: +44 (0) 1534 835 600
Solicitors to the Company
Travers Smith LLP
10 Snow Hill
London
EC1A 2AL
Telephone: +44 (0) 22 7295 3000
Milbank, Tweed, Hadley & McCloy LLP
10 Gresham Street
London
EC2V 7JD
Telephone: +44 (0) 22 7615 3000