The directors present their annual report and financial statements for the year ended 31 March 2018.

The principal activity of the company continued to be that of internet service and telecommunications provider.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Knowles Warwick Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Note 1.2 of the accounting policies in the notes to the financial statement sets out the factors the directors have considered in arriving at the conclusion that it is appropriate to draw up these financial statements on the going concern basis. The investment raise of £3.5m during the financial year, combined with £3.25m in May 2018, have strengthened the capital base.

Further fundraise work is ongoing to support the company's significant potential growth plans.

This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies' regime.

Origin Broadband Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 7, Callflex Business Park, Doncaster Road, Wath-upon-Dearne, Rotherham, S63 7EF.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements have been prepared with early application of the FRS 102 Triennial Review 2017 amendments in full.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of exchange equipment. The principal accounting policies adopted are set out below.

Origin Broadband (the company) saw significant growth in 2017/18, with 177% growth in revenue combined with 192% growth in customer numbers. Having established a residential customer base, the company spent the second half of 17/18 focused on system and process improvement to support future growth in the following financial year.

The high growth experienced by the company has seen significant up-front costs combined with overhead costs and prudent bad debt assumptions leading to a full year loss to 31 March 2018 of £7.0m. During 2017/18, the company raised £3.5m in investment from our institutional EIS investor, combined with a further £3.25m raise in May 2018 that returned the business to a positive net asset position combined with increased cash funds. This final investment tranche was a combined investment between our incumbent EIS investor combined with a new VC based investor.

The company is currently working with this new VC investor to provide significant capital funding against subscriber targets which will give the business headroom to operate in the long term.

The directors have prepared financial and cash flow forecasts based on both the new investment being delivered, or alternatively no new investment and a scaled back growth plan, for at least 12 months, considering key sensitivities around churn and sales. On the basis of these forecasts, the directors have a reasonable expectation that the company will have adequate resources to continue to operate for the foreseeable future.

As a result of the above, these financial statements have been drawn up on a going concern basis.

The financial statements presented cover a 12 month period which is not entirely comparable to the prior period which was 16 months in length. The prior year was extended so that the investment received in December 2016 could be incorporated within the most recent set of financial statements.

Turnover represents amounts in respect of goods and services supplied in the year net of VAT and trade discounts and is measured at the fair value of the consideration received and receivable. Revenue from rentals and installations are recognised evenly over the contract period.

The goodwill acquired in the year ended 30 November 2014 relates to the purchase of a customer base from a competitor. Acquired goodwill is written off in equal annual installments over its estimated useful economic life, which is expected to be 10 years.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Tangible fixed assets are stated at cost or valuation less depreciation. Depreciation is provided at rates calculated to write off the cost or valuation less estimated residual value of each asset over its expected useful life, as follows:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Depreciation is charged on a monthly basis from the point of acquisition for all assets.

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

Stocks held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost, adjusted where applicable for any loss of service potential.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

The tax income represents the sum of the tax rebates due from surrendered R&D tax credits.

The tax rebate currently due is based on the surrendered enhanced R&D costs for the year. The company has significant tax losses that will be relieved when taxable profits are made.

Full provision is made for deferred tax liabilities arising from timing differences between the recognition of gains and losses in the financial statements and recognition in the tax computations.

Deferred tax arising on the losses of the business greatly exceed any deferred tax liabilities.

A net deferred tax asset is only recognised if it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. As the company cannot confidently make this assessment, deferred tax assets are only recognised to the extent that they extinguish any deferred tax liabilities.

Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the timing differences are expected to reverse.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

Deferred income and initial customer costs

Deferred income represents the part of the amount invoiced to customers that has not yet met the criteria for income recognition and this is still to be earned as income, by means of service delivery in the future.

The initial costs associated with the commencement of new customer connections are incurred on inception and are deferred over the contract term of the customer, typically 12 to 36 months. These costs are expensed to the profit & loss account as the contact term progresses, they are not capitalised as fixed assets.

During the year the company entered a dispute with a supplier acting as a reseller of Origin Broadband services. In order to cease contract with the reseller and sever ties total costs of £102,848 were incurred, of which £30,000 was in settlement. This has been treated as an exceptional item as the provision of services to resellers is not the core business of Origin Broadband and as such this has been separated to provide comparable financial statements.

The average monthly number of persons (including directors) employed by the company during the year was 75 (2017 - 46).

During the year ended 30 November 2014 the directors of the company personally undertook a revaluation of the equipment sited in exchanges that has an expected lifetime of 20 years. The revaluation is based on replacement cost of the assets in place using industry list prices and the directors knowledge of the equipment. Having performed a similar valuation at the period ended 31 March 2018 the directors believe the revaluation remains appropriate.

If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:

The options were originally issued within the year to founder shareholder directors to both incentivise and limit the erosion of their equity stake as it was diluted through repeated fundraising. The options outstanding at 31 March 2018 were cancelled as a result of the fundraise held in May 2018.

Therefore a £nil value for the options has been recorded at the year end and no adjustment to the profit & loss account for the share based payment has been made.

The company has 3 classes of share:

Ordinary shares and B Ordinary shares entitle the holders to receive notice of or to attend or vote at a general meeting and carry one vote per share. Ordinary shares and B Ordinary shares carry no right to fixed income. In the event of a distribution of profits the distribution shall be applied amongst the holders of the Ordinary and B Ordinary shares as if they constituted one class of share in proportion to the percentage of shares held by them.

Deferred shares do not entitle the holders to receive notice of or to attend or vote at a general meeting. Deferred shares do not entitle the holders to participate in any profits or assets of the company.

On 28 July 2017 49,972 B Ordinary shares of £0.01 each were issued and fully paid at a premium of £39.51 per share, for a cash consideration, to fund sales growth and meet working capital requirements.

On 4 October 2017 632 B Ordinary shares of £0.01 each were issued and fully paid at a premium of £39.51 per share, for a cash consideration, to meet working capital requirements.

On 25 January 2018 37,955 B Ordinary shares of £0.01 each were issued and fully paid at a premium of £39.51 per share, for a cash consideration, to meet working capital requirements.

On 21 May 2018 436,682 B Ordinary shares of £0.01 each were issued and fully paid at a premium of £6.87 per share, for a cash consideration, to meet working capital requirements.

On 30 May 2018 36,390 B Ordinary shares of £0.01 each were issued and fully paid at a premium of £6.87 per share, for a cash consideration, to meet working capital requirements.

As the income statement has been omitted from the filing copy of the financial statements the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:

The auditor's report was unqualified.

Emphasis of matter - going concern

We draw attention to the statement of financial position and the notes concerning going concern. On the basis that major suppliers and investors continue to support the company it can be considered a going concern and we have not seen anything to suggest that this is not the case.

However should support from creditors end or continued support from investors fail to materialise, the company does not have the cash generative ability to continue trading in its current form.

There were no contingent liabilities at the period end (2017 - £nil)

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:

During the prior period a loan from Finance Yorkshire Equity LP was written off as part of the package of measures needed to secure additional equity funding. Of the loan, £350,000 was written off and £200,000 converted into share capital. The loan balance at the period end was £nil (2017 - £nil).

Loans have been granted by the company to its directors as follows:

The loans made to directors are repayable upon demand.

Subsequent to the year end O Bryssau returned £35,000 to the company.

In common with many businesses of our size and nature we use our auditor to prepare and submit returns to the tax authorities and assist with the preparation of the financial statements.