REG - 450 PLC - Annual Financial Report
27/09/2023 07:00
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RNS Number : 7429N 450 PLC 27 September 2023
LEI number: 2138004EUUU11OVHZW75
450 plc
(the "Company")
Publication of Annual Report and Financial Statements for the year ended 30
June 2023
The Company announces the publication of its Annual Report and Financial
Statements for the year ended 30 June 2023.
The Annual Report and Financial Statements are also available on the
'Shareholder Documents' page of the Company's website at www.450plc.com.
Enquiries:
450 plc
Tel: +44(0)207 004 2700
Waheed Alli
James Corsellis
Numis Securities Limited (Nominated Adviser and Broker)
Tel: +44(0)207 260 1000
Kevin Cruickshank
Jamie Loughborough
Formerly Marwyn Acquisition Company Plc
Annual Report and Audited Consolidated Financial Statements
For the year ended 30 June 2023
CHAIR'S STATEMENT AND STRATEGIC REPORT
I present to shareholders the Annual Report and Audited Consolidated Financial
Statements (the "Financial Statements") of 450 Plc (the "Company") (formerly
Marwyn Acquisition Company Plc) for the year ended 30 June 2023, consolidating
the results of the Company, MAC (BVI) Limited and WHJ Limited, (collectively,
the "Group" or "450"). 450 is listed on the Alternative Investment Market
("AIM") of the London Stock Exchange.
Activity in the year and strategy
On 6 November 2022, I was appointed as Chair of the Company. I have over 30
years' experience across the media, retail, entertainment and technology
sectors, having launched and grown a number of highly successful private and
public businesses in my career. Following my appointment, in line with my
industry expertise, the Company adopted a new investing policy to focus on
building a market leader in the traditional and digital creative industries,
capitalising on the ongoing transformation of the content, media and
technology sectors.
It is anticipated that the Company will acquire controlling or non-controlling
stakes in one or more businesses or companies (quoted or private) on a
long-term basis, including the consideration of public offers for, or mergers
with, existing listed businesses. The investments made by the Company may be
in the form of equity or other types of capital investment.
The Directors believe that opportunities exist to create significant value for
shareholders through properly executed, acquisition-led growth strategies
arising within the traditional and digital creative industries encompassing
the content, media and technology sectors. The Company's principal focus will
be on making investments in the UK, Europe or North America and will target
companies with either a well-established presence in their specific segments
or companies which are in a position to become leaders in their specific
segments.
The ongoing digital transformation of the media and entertainment industries
and widespread adoption of digital media has led to a fundamental change in
the way content is created, consumed and engaged with. Audiences and consumers
are engaging with content across multiple formats, including experiential and
immersive media, utilising both physical and digital delivery, alongside the
associated emergence of augmented and virtual reality technologies. The
Investing Policy is included in full on the Company's website at
www.450plc.com.
The Company also announced the appointment of Tom Basset as a non-executive
Director and the resignation of Mark Brangstrup Watts during the period, both
effective from 6 November 2022.
During the year to 30 June 2023 WHJ Limited was summarily wound up and a new
subsidiary, MAC (BVI) Limited, was incorporated to provide the Group's new
long term incentive plan. Incentive Shares were issued during the year to
Waheed and Marwyn Long Term Incentive LP as set out in note 17.
Outlook
The Directors remain excited by the potential opportunities they are
identifying and engaging with in the content, media and technology sectors.
The Directors expect the shift in patterns of content creation and consumption
to continue given technology tailwinds and changes in consumer habits. Various
operational models and approaches will continue to be assessed to determine
those that are best placed to capture growth and scale profitably. The
Directors remain cautious in relation to valuations given the current
financing and economic environment, with increasing scope for those
opportunities that offer the greatest potential for shareholder value to
emerge.
Results
The Group's loss after taxation for the year to 30 June 2023 was £788,165
(2022: £359,101). The Group incurred £904,746 of administrative expenses
during the year (2022: £359,101), received interest of £116,581 (2022:
£Nil) and at 30 June 2023 held a cash balance of £4,148,886 (2022:
£4,845,891).
Dividend policy
The Company has not yet acquired a trading operation and it is therefore
inappropriate to make a forecast of the likelihood of any future dividends.
The Directors intend to determine the Company's dividend policy following
completion of a platform acquisition and, in any event, will only commence the
payment of dividends when it becomes commercially prudent to do so.
Waheed Alli
Chair
26 September 2023
GOVERNANCE - REPORT OF THE DIRECTORS
The Directors present the Financial Statements for the year ended 30 June
2023.
Principal Activities & Strategy
Following the appointment of Waheed Alli, the Company's strategy was refined
to focus on the acquisition of a platform trading asset within the traditional
and digital creative industries encompassing the content, media and technology
sectors. The Company will consider the acquisition of private companies and
public offers for, and mergers with, existing listed businesses, in the UK and
internationally with the investment objective being to provide shareholders
with attractive total returns through capital appreciation.
The Directors believe that opportunities exist to create significant value for
shareholders through properly executed, acquisition-led growth strategies
arising within these sectors. The Company's principal focus will be on making
investments in the UK, Europe or North America and will target companies with
either a well-established presence in their specific segments or companies
which are in a position to become leaders in their specific segments.
During the period since Waheed's appointment, the Company has worked to
identify and pursue potential acquisition opportunities within its sectoral
focus but remains diligent on value.
Results and Dividends
For the year to 30 June 2023, the Group's loss was £788,165 (2022:
£359,101).
It is the policy of the Company's board of Directors (the "Board") that prior
to the acquisition or investment in a trading entity, no dividends will be
paid. Following this, and subject to the availability of distributable
reserves, dividends will be paid to shareholders when the Directors believe it
is appropriate and commercially prudent to do so.
Statement of Going Concern
The Financial Statements have been prepared on a going concern basis, which
assumes that the Group will continue to be able to meet its liabilities as
they fall due for the foreseeable future. The Group had net assets of
£4,093,022 at the statement of financial position date, which included a cash
balance of £4,148,886. The Directors have considered the financial position
of the Group and reviewed forecasts and budgets for a period of at least 12
months following the approval of these financial statements.
The Directors have considered macro environmental factors that have impacted
both the global and domestic economy, including the ongoing war in Ukraine,
the high rates of inflation being experiences by the UK economy and the
related increase in interest rates. The Directors are comfortable that the
Company has significant and sufficient cash reserves to pursue its investment
strategy and have concluded that it remains appropriate to use the going
concern basis of accounting for the Financial Statements. Subject to the
structure of an acquisition, the Company may need to raise additional funds
for an acquisition in the form of equity and/or debt.
Financial Risk Profile
The Group's financial instruments are mainly comprised of cash, payables and
receivables that arise directly from the Group's operations. Details of the
risks relevant to the Group are included on pages 44 to 47.
Substantial Shareholdings
The Company has been notified that the shareholders listed below held a
beneficial interest of 3 per cent. or more of the Company's issued share
capital as at the date of approval of the Financial Statements.
Ordinary Shares Percentage of Issued
Held
Share Capital
Marwyn Investment Management LLP 639,685,278 95.36%
Stated Capital
Details of the stated capital of the Company during the year are set out in
note 14 to the Financial Statements.
Directors
Mark Brangstrup Watts, Executive Director, resigned from his position on 6
November 2022. Tom Basset was appointed as a Non-Executive Director on 6
November 2022. Waheed Alli was appointed as Chair on 6 November 2022. Further
information on the Directors of the Company at the date of this report are:
Waheed Alli, Chair
Waheed has over 30 years' experience across the media, retail, entertainment,
and technology sectors, having launched and grown a number of highly
successful private and public businesses in his career.
Waheed co-founded Planet 24, a TV production company which produced shows such
as The Big Breakfast, The Word and Survivor (created by Charlie Parsons).
Planet 24 was sold to Carlton Productions, now known as ITV Studios, in 1999.
Waheed co-founded TV production company, Shine, and was Chair of production
company Chorion plc, including during its time as a listed business between
2003 and 2006 delivering share price growth of over 275%.
As Founder and CEO of Silvergate Media, Waheed acquired the IP and
distribution rights to The Octonauts in 2011, establishing international
partnerships with Netflix, Disney, and Nickelodeon before selling Silvergate
Media to Sony in 2019.
Waheed was also Chair of ASOS plc between 2001 and 2012 where he oversaw
market capitalisation growth from £12.3 million at IPO to £1.9 billion.
Waheed Alli has served as a member of the House of Lords since 1998.
James Corsellis, Director
James brings extensive public company experience as well as management and
corporate finance expertise across a range of sectors and an extensive network
of relationships with co-investors, advisers and other business leaders.
Previously James has served as a director of the following companies: a
non-executive director of BCA Marketplace Limited (formerly BCA Marketplace
Plc) from July 2014 to December 2017, Advanced Computer Software from October
2006 to August 2008, non-executive chairman of Entertainment One Limited from
January 2007 to March 2014 and remaining on the board as a non-executive
director until July 2015, non-executive director of Breedon Aggregates Limited
from March 2009 to July 2011 and as CEO of icollector Plc from 1994-2001
amongst others. James was educated at Oxford Brookes University, the Sorbonne
and London University.
James is currently managing partner of Marwyn Capital LLP and Marwyn
Investment Management LLP, an executive director of Silvercloud Holdings
Limited, the chairman of MAC Alpha Limited and Marwyn Acquisition Company III
Limited, and a director of Marwyn Acquisition Company II Limited and Palmer
Street Limited.
Sanjeev Gandhi, Independent Non-Executive Director
Sanjeev has managed change, innovation and growth as a Chair, non-executive
and executive director in the media and technology, consumer, investment
management and social impact sectors. Following an early career as a
consultant with the Telecoms Strategy and Policy Group at Coopers &
Lybrand and at the BBC as Head of Strategic Development, Sanjeev became one of
the first employees of Yahoo! Europe in early 1998 where he led strategy and
distribution and was a key member of the first management team and European
board.
In 2003, as the son of immigrant parents Sanjeev was inspired to create Reach
to Teach, an innovative charity providing primary education for some of the
world's most under privileged communities in rural India. In 2008 Larry
Ellison, the founder of the software giant Oracle, became his co-founder
describing Reach to Teach as 'the most incredible initiative changing the
lives of tens of thousands of children'.
Sanjeev is currently a trustee at the Fidelity Foundation where he oversees
investments and stewardship. Until December 2021 he was a non-executive
director of the England & Wales Cricket Board where he oversaw the launch
of the new '100' super league. Sanjeev also chaired the Eden Project until the
end of 2020 through a time of enormous change.
Tom Basset, Non-Executive Director
Tom has extensive experience working across a range of sectors in the
origination and assessment of new investment opportunities, transaction
execution, coordinating capital market and M&A processes and providing
strategic corporate advice to management teams. Tom joined Marwyn in 2010,
where he now leads the Investment Team and is also a member of the Investment
Committee. Prior to Marwyn, Tom spent six years at Deloitte across the
Assurance & Advisory and Private Equity Transaction Services groups. Tom
is a qualified Chartered Accountant and graduated from Durham University with
a BA (Hons) in Economics.
Tom is a non-executive director of Marwyn Acquisition Company III limited and
MAC Alpha Limited and a director of Silvercloud Holdings Limited.
Directors' Interests
James Corsellis and Tom Basset have an indirect beneficial interest in the A
ordinary shares issued by MAC (BVI) Limited which were issued during the year
to Marwyn Long Term Incentive LP and are disclosed in note 17 of these
Financial Statements.
Waheed Alli has a direct interest in the A ordinary shares issued by MAC (BVI)
Limited, as disclosed in note 17.
James Corsellis is the managing partner of Marwyn Investment Management LLP
("MIM LLP"), and Tom Basset is a partner of MIM LLP. MIM LLP is the manager of
the Marwyn Fund (the "Marwyn Fund" comprises of Marwyn Value Investors II LP,
MVI II Co-invest LP, Marwyn Value Investors LP and Marwyn Value Investors
Limited), the Marwyn Fund holds 95.36% of the Company's issued ordinary
shares. Mark Brangstrup Watts was a director of the Company until 6 November
2022, up until this date Mark Brangstrup Watts was also a managing partner of
MIM LLP.
James Corsellis is the managing partner of Marwyn Capital LLP ("MC LLP"), and
Tom Basset is a partner of MC LLP. MC LLP provides corporate finance and
managed services support to the Group.
The Directors hold no other direct interests in the Ordinary Shares of the
Company.
Save for the issues as disclosed above, no Director has or has had any
interest in any transaction which is or was unusual in its nature or
conditions or significant to the business of the Group. There were no loans or
guarantees granted or provided by the Company and/or any of its subsidiaries
to or for the benefit of any of the Directors.
Directors' Emoluments
Directors' emoluments during the year are disclosed on page 19.
Statement of Directors' Responsibilities
The directors are responsible for preparing financial statements for each
financial year which give a true and fair view, in accordance with applicable
Jersey law and International Financial Reporting Standards and IFRS
Interpretations Committee interpretations as adopted by the European Union
(collectively, "EU adopted IFRS" or "IFRS"), of the state of affairs of the
Company and of the profit or loss of the Company for that year. In preparing
those financial statements, the directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The directors confirm that they have complied with the above requirements in
preparing the financial statements.
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with
The Companies (Jersey) Law, 1991. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Independent Auditor
Baker Tilly Channel Islands Limited ("BTCI") was re-elected as the Company's
independent auditor during the year. BTCI has expressed its willingness to
continue to act as auditor to the Group, a resolution in relation to their
appointment will be put to shareholders at the next Annual General Meeting.
Disclosure of Information to Auditor
Each of the Directors in office at the date the Report of the Directors is
approved, whose names and functions are listed in the Report of the Directors
confirm that, to the best of their knowledge:
· the Group Financial Statements, which have been prepared in
accordance with IFRS as adopted by the European Union, give a true and fair
view of the assets, liabilities, financial position and loss of the Group;
· the Report of the Directors includes a fair review of the
development and performance of the business and the position of the Group and
Company, together with a description of the principal risks and uncertainties
that it faces;
· so far as they are aware, there is no relevant audit information
of which the Group's auditor is unaware; and
· they have taken all the steps that they ought to have taken as a
Director in order to make themself aware of any relevant audit information and
to establish that the Group's auditor is aware of that information.
On behalf of the Board
Waheed Alli
Chair
26 September 2023
GOVERNANCE - CORPORATE GOVERNANCE REPORT
Overview
The Directors recognise the importance of sound corporate governance
commensurate with the size and current nature of the Company. The Company has
adopted the Quoted Companies Alliance Corporate Governance Code ("QCA Code" or
the "Code") and established an Audit and Risk Committee and Nomination and
Remuneration Committee.
The Company is led by its Chair Waheed Alli (appointed 6 November 2022),
Director James Corsellis, Independent Non-Executive Director Sanjeev Gandhi
and Non-Executive Director Tom Basset (appointed 6 November 2022), who are
highly experienced and knowledgeable and are considered to be best placed to
lead the Company at this particular time as the Company pursues the
identification and execution of an acquisition or investment in a trading
entity. The biographies of the Directors are detailed on
(http://www.wilmcoteplc.com/about-us/board-of-directors) pages 5 and 6. The
Company's Chair has responsibility for leading the Board effectively and
overseeing the Company's corporate governance model.
Based on the current composition of the Board and the nature of the Company's
ongoing activities, the Board has implemented simplified corporate governance
arrangements to best meet the needs of the business at this time. The
Directors are committed to maintaining the appropriate levels of corporate
governance for the nature and extent of the activities of the Company and will
therefore revisit the corporate governance arrangements as the business
further evolves.
The membership of the board committees during the year was as follows:
Audit and Risk Committee Nomination and Remuneration Committee
Chair: Chair:
Sanjeev Gandhi (appointed as Chair of the committee effective 24 May 2022).
Sanjeev Gandhi (appointed as Chair of the committee effective 24 May 2022).
Members: Members:
James Corsellis
James Corsellis
Waheed Alli
Waheed Alli
The Directors are aware that Committee composition should differ to that of
the Board and where possible should consist of a majority of independent
directors. The Directors are committed to re-considering the Board and
Committee composition as the nature and activities of the Company evolves.
The purpose of this report is to broadly set out how the Company complies with
the QCA Code and explain the areas of non-compliance (see the 'Deviations from
the Code' section below). The Company provides a detailed assessment of its
compliance with the Code on its website
https://www.450plc.com/investors/Corporate-Governance/default.aspx
(https://www.450plc.com/investors/Corporate-Governance/default.aspx) and will
continue to provide updates on its compliance with the QCA Code via the
website and in each annual report.
Detail on the Company's strategy is included on page 2 and the Group's
principal risks are described on pages 44 to 47.
Board and Committee updates
Sanjeev Gandhi is the Independent Non-Executive Director and chair of the
Audit and Risk Committee and Nomination and Remuneration Committee.
The Company is currently pursuing its investment strategy, which is set out on
page 2, and it is believed that the current Directors' experience makes them
best placed to lead the Company in identifying, evaluating and completing its
initial acquisition. The Directors' biographies are detailed on pages 5 and 6
of these Financial Statements.
The Directors are committed to further re-considering the Board and Committee
composition as the business evolves.
Board Interaction
The Board meets formally at least four times a year, but the Directors also
regularly meet on an informal basis. The Chair is primarily responsible for
the running of the Board. The Board understands that it is critical for Board
meetings to be well managed and balanced in order for the business to
successfully deliver and achieve its strategy. The Chair is responsible for
the Board meeting agenda, which, for periodic meetings, is agreed in advance
of each Board meeting and prepared based on the board annual agenda cycle. For
ad hoc meetings this is agreed in advance and published as soon as
practicable. Board packs are circulated to the Board in advance of each
meeting and capture all ongoing corporate governance requirements. The Board
is presented with papers to support its discussions including timely financial
information, investor relations information, and details of potential
acquisition targets and deal progress.
The Group's culture is to openly and frequently discuss any important issues
both at and outside of formal meetings.
All Board members have full access to the Group's advisers for seeking
professional advice at the Company's expense.
Board Attendance
Formal Board meetings Ad hoc Board meetings
Held Attended Held Attended
Waheed Alli (appointed 6 November 2022) 3* 3 -* -
Mark Brangstrup Watts (resigned 6 November 2022) 2* 2 2* 2
James Corsellis 5 5 2 2
Sanjeev Gandhi 5 5 2 2
Tom Basset (appointed 6 November 2022) 3* 3 -* -
* meetings held since the director's appointment date or until their
resignation date.
Deviations from the Code
One of the ten principles of the QCA Code is to maintain the board as a
well-functioning, balanced team led by the chair. To achieve this principle,
the QCA Code requires a balance between executive and non-executive Directors
and at least two independent non-executive directors to be in place. The
Company deviates from the QCA Code in this respect, as the Company's Board is
currently one Executive Director, two Non-Executive Directors and one
Independent Non-Executive Director. The Board believes that the Board
composition is appropriate for the Company's current operations and provides
an appropriate mix of experience, expertise, and skills to support the
business of the Group in its current form as is discussed further below. The
Board remains committed to reviewing its composition to ensure it remains
appropriate as the Company's operations evolve.
The QCA Code states that companies should have in place a board evaluation
process based on clear and relevant objectives. The Directors consider that
the board is not yet of a sufficient size for a full board evaluation to make
commercial and practical sense. During the frequent Board meetings and calls,
the Directors can discuss any areas where they feel a change would be
beneficial for the Company, and the Company Secretary and specialist external
advisers remain on hand to provide impartial advice. As the Company grows, it
intends to expand the composition of the Board and, with this expansion,
intends to establish a formal board effectiveness review.
Board Committees
The Board established two principal committees, the Audit and Risk Committee
and the Nomination and Remuneration Committee (the "Committees"), to assist
the Board in the execution of its duties. If the need should arise, the Board
may set up additional committees as appropriate. The Committees' terms of
reference are available on the Company's website, www.450plc.com
(http://www.450plc.com) , or by request from the Company Secretary. Each of
the Committees is authorised, at the Company's expense, to obtain legal or
other professional advice to assist in carrying out its duties. No person
other than a Committee member is entitled to attend the meetings of these
Committees, except by invitation of the Chair of that Committee. The Company's
auditors BTCI are invited to attend meetings of the Audit and Risk Committee
as appropriate.
Sanjeev Gandhi is the chair of the Committees. The Directors are aware that
Committee composition should differ to that of the Board and where possible
should consist of a majority of independent directors. The Directors are
committed to re-considering the Board and Committee composition as the nature
and activities of the Company evolves.
For the year ended 30 June 2023 the following committee meetings were held:
Audit and Risk Committee meetings Nomination and Remuneration Committee meetings
Held Attended Held Attended
Waheed Alli 2* 2 1* 1
Mark Brangstrup Watts 2* 2 2* 2
James Corsellis 2* 2 2* 2
Sanjeev Gandhi 4 4 4 4
* meetings held since the date of the director's appointment to the Committee,
or until the date of their resignation from the Committee.
The Audit and Risk Committee report and Nomination and Remuneration Committee
report are included on pages 16 to 17 and 18 to 20 respectively of these
Financial Statements.
The Company also recognises the importance of having systems and procedures in
place to ensure compliance by the Board, the Company, and its applicable
employees in relation to dealings in securities of the Company and the
management of inside information in accordance with the UK market abuse regime
("UK MAR"). The Board has established a Disclosure Committee, which currently
consists of Tom Basset and James Corsellis and has adopted a share dealing
code for this purpose. The Directors believe that these procedures and
policies adopted by the Board are appropriate for the Company's size and
complexity and that it complies with UK MAR.
Board Diversity
The Board considers diversity to be much broader than the traditional
definition which focuses on, amongst other things: race, gender, age, beliefs,
disability, ethnic origin, marital status, religion, and sexual orientation.
Productive Board discussions require a breadth of experience and perspectives
achieved through hiring board members with diverse experience. Board directors
shall be appointed in order to bring required skills, knowledge and experience
and are expected to positively impact the chemistry and dynamics of the Board.
Following Waheed's appointment to the Board and the refinement of the
Company's investing strategy, the Board now comprises individuals that
collectively have the experience within the sectoral focus, but also the
expertise through many years of experience in identifying, executing and
developing businesses. Waheed, Sanjeev and James have held a number of
previous senior positions across the media, technology, consumer, investment
management and social impact sectors, and all four directors have extensive
experience of identifying, pursuing and executing acquisition opportunities.
As a Board, it is believed that they collectively provide the Company with the
necessary mix of experience, skills and personal qualities required to deliver
on the Company's strategy.
Details on the experience of the Directors are included on pages 5 to 6 of
these Financial Statements.
Once an acquisition opportunity is progressed the Board and committee
composition will be revisited to ensure that it meets the changing needs of
the business. During the recruitment process for new directors, the Nomination
and Remuneration Committee will ensure that the diversity of the Board is
considered.
Risk Management and Internal Controls
The Board is responsible for establishing and maintaining the Company's
systems for both risk management and internal controls and reviewing the
effectiveness of both. Internal control systems are designed to meet the
particular needs of the Company and Group and the particular risks to which it
is exposed. The procedures are designed to manage rather than eliminate risk
and, by their nature, can only provide reasonable but not absolute assurance
against material misstatement or loss.
The role of reviewing and challenging the risk identification and risk
management process across the business including the risks in connection with
a potential acquisition has been delegated to the Audit and Risk Committee.
On at least an annual basis (or more frequently should the activities of the
business require), the Audit and Risk Committee formally reviews the risk
register and considers whether any updates to the relevant risks or their
mitigation is required.
The Group does not have a separate internal audit function as the Board does
not feel this is necessary due to the current size of the business and the
simplicity and low volume of transactions, coupled with the nature and the
extent of internal controls and Board oversight and involvement.
The Group has a formal and informal risk management process. The size of the
Board and the frequency in which they interact ensures that identified risks
are communicated both formally, upon review and consideration of the risk
register, and informally in regular conversations between Directors on
business operations and strategic progress.
The Board considers the effectiveness of its risk management processes,
procedures and internal control systems through its monthly review and
challenge of the financial information prepared for the Group, discussion of
the quarterly information presented at formal board meetings, and
consideration of the audit findings memorandum prepared by the Auditor in
respect of the audit of the annual financial statements.
The risk register categorises risks into key business risks, risks associated
with the successful completion of an acquisition, shareholder risks and
financial and procedural risks. A risk assessment has been performed
identifying the potential impact and likelihood of each risk and mitigating
factors/actions have also been identified. The risk register, including the
risk assessment is periodically reviewed and discussed by the Audit and Risk
Committee who propose to the Board any updates for formal adoption.
Principal risks faced by the Group are explained in detail on pages 44 to 47.
The main risks faced by the Group are those which might jeopardise the
successful completion of an acquisition.
The Group has previously come within days of successfully completing two
transactions and as such have incurred significant transaction related costs.
Whilst the risk remains that future losses arise from the pursuit of future
transactions, the Directors consider the management of the Company's exposure
to financial costs of progressing and securing a successful acquisition a key
priority and as such have implemented the following robust risk mitigation
procedures:
· continuing to perform thorough due diligence of potential
acquisition targets prior to materially progressing third party advisers and
incurring incremental costs;
· seeking appropriate risk-sharing measures with professional
service providers and, to the extent possible, with vendors;
· continuing the model of early stage market sounding and
consultation with potential investors throughout the transaction process; and
· maintaining a flexible attitude to which international capital
markets/exchanges would provide the optimal environment for initial and future
capital raising.
The Company also continues to implement financial procedures including
controls over cash management, the safeguarding of cash, and monthly cash
forecasting and budgeting. The Company also has in place numerous internal
controls in relation to financial reporting, such as the segregation of roles
between those preparing and those reviewing financial information. In
addition, the Company has established a multi-tier review process with reviews
undertaken by individuals with the appropriate level of seniority and
experience, reducing the risk of misstatement and fraud.
Currently, the Directors are provided with summary financial information,
including a balance sheet, profit and loss and cash flow information.
The Board is aware of the importance of an effective risk management process
reflective of the size and complexity of the business and believes that the
processes described above are suitable for the business in its current form.
At or around the time an operating business is acquired, the Board will review
the risks to which the new enlarged group is exposed, and an enhanced risk
management process will be put in place.
Company Culture
The Board promotes a dynamic, entrepreneurial, and transparent culture. The
recruitment of highly skilled, adaptable, driven and experienced directors is
fundamental to executing the Company's strategy. The Board therefore fosters a
forum whereby openness, constructive challenge and innovation are actively
encouraged.
The Company is small, and as at the date of this report consists of four
directors. The Company's culture is therefore set by the Board and
demonstrated through Board interaction. The Chair in his role of leading the
Board, managing Board meetings and encouraging constructive challenge between
Board members is central to setting the tone from the top.
Once additional directors are appointed, a Board effectiveness review will be
the key method in which the Company's culture is monitored and reviewed.
Succession Planning
Given the size, composition and nature of the Company at this stage in its
evolution, the creation and implementation of succession plans are not
considered to be appropriate or relevant and as such no succession planning is
in place. Once an initial acquisition has been made, succession planning will
be revisited by the Board.
Directors' Terms of Service
The Articles of Association of the Company require that, at each annual
general meeting of the Company, one third of the Directors retire from office
and offer themselves for re-election, and each Director shall retire from
office and stand for re-election at least every three years. Furthermore, each
Director appointed in the year since the previous annual general meeting shall
stand for election at the subsequent annual general meeting.
The Directors' service contracts establish the time commitment each Director
must devote to the Company. Waheed Alli, Tom Basset and James Corsellis are to
devote the time necessary to ensure the proper performance of their duties.
Sanjeev Gandhi's time commitment is expected to be a minimum of two to three
days per month, however, is expected to increase during times of increased
activity.
Continued Professional Development
The Board considers and reviews the requirement for continued professional
development. The Board undertakes to ensure that their awareness of
developments in corporate governance and the regulatory framework is current,
as well as remaining knowledgeable of any industry specific updates. The
Company's professional advisers and Nomad all serve to strengthen this
development by providing guidance and updates as required.
Chair
The Chair is responsible for leading the Board effectively and overseeing the
adoption, delivery, and communication of the company's corporate governance
model. The Chairman displays a clear vision and focus on strategy,
capitalising on the skills, experience, characteristics, and qualities of the
Board and fostering a positive governance culture throughout the Group.
Company Secretary
The QCA Code provides details on the roles and responsibilities of the Company
Secretary within a Company. The Company Secretary for the Group is Crestbridge
Corporate Services Limited ("Crestbridge") which was appointed on 31 December
2020, Crestbridge is supported by Marwyn Capital LLP ("MC LLP") which provides
company secretarial and governance support.
Together, Crestbridge and MC LLP perform the function of Company Secretary as
outlined in the Code. The role includes preparing for and running effective
Board and Committee meetings, including the timely dissemination of
appropriate information. In addition, the Company Secretary is responsible for
assisting the Directors in ensuring that the Group entities are managed,
controlled and administered within the parameters of their governing documents
and are compliant with regulatory compliance and filing obligations.
MC LLP further supports the role of Crestbridge ensuring open lines of
communication between all professional advisers, shareholders, and the Board.
External Advisors
Since listing, the Company has pursued its investment strategy and as such has
engaged several advisors to facilitate this. A list of current key external
service providers is included on page 48.
Relationships with key resources and external advisers are developed and
maintained through an open dialogue to ensure that the Company is able to draw
upon their expertise and assistance when required.
Conflicts of Interest
The Articles of Association of the Company provide for a procedure for the
disclosure and management of risks associated with Directors' conflicts of
interest. At each Board meeting, a list of directorships for each Director is
tabled to the meeting with any potential conflicts being discussed in detail.
Notwithstanding that no material conflict of interest has arisen during the
year and to date, the Board considers these procedures to have operated
effectively.
Relations with Shareholders
The Board is always available for communication with shareholders and the
Directors frequently encourage engagement constructively with current and
potential shareholders. All shareholders have the opportunity, and are
encouraged, to attend and vote at the annual general meeting of the Company
during which the Board will be available to discuss issues affecting the
Company.
Annual General Meeting
The AGM is an opportunity for shareholders to vote on certain aspects of the
Company's business. The next AGM of the Company will be scheduled in due
course and held on or before 31 December 2023. The Financial Statements and
related papers will be available on the Company's website at www.450plc.com
(https://450plc.com/home/default.aspx) when published.
GOVERNANCE - AUDIT AND RISK COMMITTEE REPORT
Audit and Risk Committee Chair's Statement
I present the Audit and Risk Committee Report for the year ended 30 June 2023.
I have chaired the committee since my appointment on 24 May 2022. The roles
and responsibilities of the Audit and Risk Committee are set out in its terms
of reference, which are available on the Company's website and from the
Company Secretary.
The Audit and Risk Committee are responsible for the:
· review and challenge of the risk identification and risk
management process across the business including the risks in connection with
a potential acquisition;
· management of relations with the external auditor to ensure that
the annual audit is effective, objective, independent and of high quality;
· oversight of the relationship with the external auditor to ensure
it remains appropriate and, that the service is appropriately priced; and
· review of the Company's draft corporate reporting, including the
annual report and financial statements.
The Audit and Risk Committee has met four times in the year to 30 June 2023.
The key matters we have discussed during this period were the:
· review of the Company's annual report and financial statements
for the year to 30 June 2022, including the Audit and Risk Committee Report;
· review of the Company's interim financial statements for the
six-month period ended 31 December 2022;
· review of the audit planning documentation, reporting timeline
and audit fees for the 30 June 2023 year end audit;
· review of risk identification and risk management processes,
including review of updates to the Company's risk register;
· review of updates to the Company's Financial Position and
Prospects Procedures Memorandum and revised QCA Code summary, including
related updates made to the Company's website following the director changes
in November 2022;
· review and consideration of the Company's policies and procedures
including Market Abuse Regulations policy, the associated share dealing code,
tax evasion risk assessment and whistleblowing policy; and
· consideration of the need for an internal audit department.
In addition to the above, the Audit and Risk Committee recommended the
re-appointment of Baker Tilly Channel Islands Limited as the Company's
external auditor. Auditor independence, reputation, experience and fee quote
among other factors were considered by the Board in determining the external
auditor appointment. The total amount recognised for non-audit services during
the year was £nil.
Subsequently to 30 June 2023, in respect of the Financial Statements, the
Audit and Risk Committee evaluated the audit process and the external auditor,
reviewed the going concern assumption, and considered whether the Annual
Report and Financial Statements are fair, balanced and understandable. As part
of the review, the Board received a report from the external auditor on its
audit.
Sanjeev Gandhi
Committee Chair
26 September 2023
GOVERNANCE - NOMINATION AND REMUNERATION REPORT
Nomination and Remuneration Committee Chair's Statement
I present the Nomination and Remuneration Report for the year ended 30 June
2023. The Report includes a summary of the committee's work during the year,
details of the Company's application of its remuneration philosophy, and
amounts earned by the Directors during the current year. I have chaired the
committee since my appointment on 24 May 2022.
The roles and responsibilities of the Nomination and Remuneration Committee
are set out in its terms of reference, which are available on the Company's
website and from the Company Secretary. The Nomination and Remuneration
Committee are responsible for making recommendations to the Board for the
matters set out in its terms of reference, whilst the responsibility for
establishing the Company's overall approach to remuneration lies with the
Board.
During the year the Nomination and Remuneration Committee met four times. The
committee discussed and agreed the nomination and remuneration report included
in the 30 June 2022 annual report and financial statements and undertook the
work required in relation to the appointment of Waheed Alli and Tom Basset in
November 2022.
Looking Forward
Given the current nature and activities of the Company there are no
significant proposed changes to the director remuneration packages for the
year ahead. However, to the extent that the nature and size of the business
changes going forward, the Board composition will be revisited and
appointments reflective of the roles undertaken.
Introduction to Directors' Remuneration Report
The information included in this report is not subject to audit unless
specifically indicated.
The remuneration philosophy of the Company is that executive remuneration
should be aligned with the long-term interest of the shareholders. The Company
also believes that remuneration should be proportionate, transparent,
performance based, encourage sustainable value creation and support the
delivery of the business strategy by attracting the highest calibre personnel.
This philosophy is reflected in our remuneration structure.
The Board feels very strongly that the Directors' remuneration should be
linked to the creation and delivery of attractive returns to shareholders.
Although the Board feels it is important to remunerate senior executives
through their basic pay and benefits at market levels commensurate with their
peers. Accordingly, a new Long-Term Incentive Plan ("LTIP") was put in place
in conjunction with the appointment of Waheed Alli to provide an incentive
that is aligned with shareholders' interests.
Long Term Incentive Arrangements
The Directors believe that the success of the Company will depend to a high
degree on the future performance of its management team. In conjunction with
the appointment of Waheed Alli, the Group has put in place the new LTIP, to
ensure alignment between Shareholders, and those responsible for delivering
the Company's strategy and attract and retain the best executive management
talent. The LTIP will only reward the participants if shareholder value is
created. This ensures alignment of the interests of management directly with
those of Shareholders.
Waheed Alli, James Corsellis and Tom Basset have a beneficial interest in the
LTIP as disclosed in note 17.
The general principles of the LTIP are:
· Proportionate: to the role being undertaken by the participants
and reflecting the participants' value to delivering outstanding, sustainable
shareholder returns;
· Transparent: the compensation structure and its associated terms
should be transparent to investors and the impact of the scheme clearly
communicated to investors on an ongoing basis;
· Performance Based: minimum performance criteria should be based
on equity profits generated, taking into account all equity issuance over the
lifetime of the relevant measurement period, subject to minimum preferred
returns; and
· Encourage Sustainable Value Creation: incentive arrangements
should be structured to encourage the creation of sustainable returns through
long term vesting and performance measurement periods.
The Board strongly believes that such a clear and transparent incentive
framework will be aligned with the Company's strategy for growth and provides
a strong platform for the future success of the Company.
More detail on the LTIP is included in note 17 of these Financial Statements.
Directors' Basic and Performance Related Pay:
The below table sets out the remuneration of each Director during the year and
prior year:
For the year ended 30 June 2023 *Waheed James Corsellis *Tom **Mark Brangstrup Watts Sanjeev Gandhi
Alli Basset
£'000 £'000 £'000 £'000 £'000
Fees - 9 - 3 50
- 9 - 3 50
For the year ended 30 June 2022 James Corsellis Mark Brangstrup Watts Sanjeev Gandhi
£'000 £'000 £'000
Fees 8 8 5
8 8 5
*Waheed Alli and Tom Basset were appointed on 6 November 2022.
**Mark Brangstrup Watts resigned on 6 November 2022.
Included in Director fees and employee salary costs is £61,914 for director
fees of which £8,888 was paid to James Corsellis, £3,026 was paid to Mark
Brangstrup Watts and £50,000 was paid to Sanjeev Gandhi. Tom Basset does
not receive a fee for his role as director of the Company.
Waheed Alli does not receive a fee for his directorship, however, under the
terms of his appointment letter if a platform acquisition is completed during
his appointment, Waheed Alli is entitled to the payment of a one-off
transaction fee of an amount equal to £25,000 per calendar month elapsed
between the date of his appointment and a platform acquisition being
completed. This is disclosed in further detail in note 17.
Director Service Contract Provisions
New director and senior management service contracts are prepared alongside
the Company's legal counsel, and new practices/guidance are considered at the
point these are drafted.
The appointment letters for all directors set out clearly the notice period,
termination clauses and claw black clauses for each of the Directors. In all
instances directors are required to step down from their position should this
be voted for by the shareholders.
Shareholder Vote
At the 2022 AGM held on 5 December 2022, 100% of shareholders who voted, voted
in favour on the resolution for the re-election of James Corsellis, Sanjeev
Gandhi, Waheed Alli and Tom Basset. Details on the final results of the AGM
including all voting information can be found on the Company's website.
Performance Evaluation
Set out on page 11 of the Report of the Directors, the Directors consider that
the board is not yet of a sufficient size for a full board evaluation to make
commercial and practical sense. In frequent Board meetings and calls, the
Directors can discuss any areas where they feel a change would be beneficial
for the Company, and the Company Secretary and specialist external advisers
remain on hand to provide impartial advice. As the Company
grows, it intends to expand the composition of the Board and, with this
expansion, intends to establish a formal board effectiveness review.
Comparison Against Market Performance
The Company does not yet own an operating business, and as such an
illustration of the Company's share price as a comparison to the market is not
presented within this report. No performance related bonuses have been paid
within the year or prior year.
Risks
The Board are mindful of the potential risks associated with its remuneration
policy. The Board aims to provide a structure that encourages an acceptable
level of risk-taking (by benchmarking against shareholder returns) and an
optimal remuneration mix. The Board has considered the risks relating to the
LTIP and is satisfied that the Company's governance procedures mitigate these
risks appropriately.
The Board seeks to ensure that its approach to remuneration drives behaviour
aligned to the long-term interests of the Company and its shareholders.
Looking Ahead
The Directors are seeking to identify an initial Acquisition.
Once the Company has made its first acquisition, the objectives of the
enlarged Group will be established; at this point the Directors' service
contracts will be revisited and as part of this process the Nomination and
Remuneration Committee will consider the most appropriate key performance
indicators for the Directors.
Sanjeev Gandhi
Committee Chair
26 September 2023
INDEPENDENT AUDITOR'S REPORT
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF 450 PLC
We have audited the consolidated financial statements of 450 Plc, formerly
Marwyn Acquisition Company plc (the "Company" and, together with its
subsidiaries, MAC (BVI) Limited and WHJ Limited , the "Group"), which comprise
the consolidated statement of financial position as at 30 June 2023, and the
consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then
ended, and notes to the consolidated financial statements, including a summary
of significant accounting policies.
In our opinion, the accompanying consolidated financial statements:
· Give a true and fair view of the consolidated financial position
of the Group as at 30 June 2023, and of its consolidated financial performance
and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards as adopted by the European Union
(EU adopted IFRS); and
· have been prepared in accordance with the requirements of the
Companies (Jersey) Law 1991, as amended.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs) and applicable law. Our responsibilities under those standards are
further described in the Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Jersey, including the FRC's
Ethical Standard, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, are
of most significance in our audit of the consolidated financial statements of
the current year 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.
We have determined that there are no key audit matters to be communicated in
our report.
Our Application of Materiality
Materiality for the consolidated financial statements as a whole was set at
£163,000 (PY: £120,000), determined with reference to a benchmark of Net
Assets, of which it represents 4% (PY: 2.5%).
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 consolidated financial statements as a whole.
Performance materiality was set at 70% (PY: 70%) of materiality for the
consolidated financial statements as a whole, which equates to £114,000 (PY:
£84,000). We applied this percentage in our determination of performance
materiality as the Company is listed on AIM of the London Stock Exchange which
raises our risk profile.
We report to the Audit and Risk Committee any uncorrected omissions or
misstatements exceeding £8,000 (PY: £6,000), as well as those that warranted
reporting on qualitative grounds.
Conclusions relating to Going Concern
In auditing the consolidated financial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the preparation of
the financial statements is appropriate.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and Company's ability to
continue as a going concern for a period of at least twelve months from when
the consolidated financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Other Information
The other information comprises the information included in the annual report
other than the consolidated financial statements and our auditor's report
thereon. The Directors are responsible for the other information contained
within the annual report. Our opinion on the consolidated financial statements
does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we
are required to determine whether this gives rise to a material misstatement
in the consolidated financial statements themselves. If, based on the work
performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to Report by Exception
In the light of the knowledge and understanding of the Group and its
environment obtained in the course of the audit, we have not identified
material misstatements in the Directors' report.
We have nothing to report in respect of the following matters in relation to
which the Companies (Jersey) Law 1991, as amended, requires us to report to
you if, in our opinion:
· proper accounting records have not been kept;
· proper returns adequate for the audit have not been received from
branches not visited by us;
· the consolidated financial statements are not in agreement with
the accounting records and returns; or
· we have not obtained all information and explanation that, to the
best of our knowledge and belief, was necessary for the audit.
Responsibilities of the Directors
As explained more fully in the Statement of Directors' responsibilities
statement set out on page 7 the Directors are responsible for the preparation
of consolidated financial statements that give a true and fair view in
accordance with EU adopted IFRS, and for such internal control as the
Directors determine is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, the Directors are
responsible for assessing the Group and 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 management either intends
to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
The Directors are responsible for overseeing the Group's financial reporting
process.
Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial
statements.
The extent to which our procedures are capable of detecting irregularities,
including fraud, is detailed below:
· Enquiry of management to identify any instances of non-compliance
with laws and regulations, including actual, suspected or alleged fraud;
· Reading minutes of meetings of the Board of Directors;
· Review of legal invoices;
· Review of management's significant estimates and judgements for
evidence of bias;
· Review for undisclosed related party transactions;
· Obtain and review reviewed bank statements and recalculated the
finance income in line with the relevant agreement to ensure it is complete
and as per our expectation;
· Using analytical procedures to identify any unusual or unexpected
relationships; and
· Undertaking journal testing, including an analysis of manual
journal entries to assess whether there were large and/or unusual entries
pointing to irregularities, including fraud.
A further description of the auditor's responsibilities for the audit of the
financial statements is located at the Financial Reporting Council's website
at www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor's report.
Other Matters which we are Required to Address
We were appointed by 450 Plc to audit the consolidated financial statements.
Our total uninterrupted period of engagement is 3 years.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the Group and we remain independent of the Group in conducting our
audit. Our audit opinion is consistent with the additional report to the audit
committee in accordance with ISAs.
Use of this Report
This report is made solely to the Members of the Company, as a body, in
accordance with our letter of engagement dated 5 September 2023. Our audit
work has been undertaken so that we might state to the Members those matters
we are required to state to them in an auditor's report 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 its Members, as a body,
for our audit work, for this report, or for the opinions we have formed.
Sandy Cameron
For and on behalf of Baker Tilly Channel Islands Limited
Chartered Accountants
St Helier, Jersey
26 September 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
30 June 30 June
2023
2022
Notes £'000 £'000
Administrative expenses 7 (905) (359)
Total Operating loss (905) (359)
Finance income 5 117 -
Loss before income taxes (788) (359)
Income tax 8 - -
Loss for the year (788) (359)
Total other comprehensive income - -
Total comprehensive loss for the year (788) (359)
Loss per ordinary share
Basic and diluted (pence) 9 (0.1175) (0.0535)
The Group's activities derive from continuing operations.
The notes on pages 29 to 43 form an integral part of these Financial
Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 June 2023 30 June 2022
Notes £'000 £'000
Assets
Current assets
Other receivables 11 55 25
Cash and cash equivalents 12 4,149 4,846
Total current assets 4,204 4,871
Total assets 4,204 4,871
Equity and liabilities
Equity
Stated capital 14 30,792 30,792
Share-based payment reserve 15, 17 80 205
Accumulated losses 15 (26,779) (26,196)
Total equity attributable to equity holders 4,093 4,801
Current liabilities
Trade and other payables 13 111 70
Total liabilities 111 70
Total equity and liabilities 4,204 4,871
The notes on pages 29 to 43 form an integral part of these Financial
Statements.
The Financial Statements were approved and authorised for issue by the Board
of Directors on 26 September 2023 and were signed on its behalf by:
Waheed Alli James Corsellis
Chairman Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated capital Share based payment Accumulated Total equity
reserve losses
Notes £'000 £'000 £'000 £'000
Balance as at 1 July 2021 30,792 205 (25,837) 5,160
Loss and total comprehensive loss for the year - - (359) (359)
Balance as at 30 June 2022 30,792 205 (26,196) 4,801
Stated capital Share based payment Accumulated Total equity
reserve losses
Notes £'000 £'000 £'000 £'000
Balance as at 1 July 2022 30,792 205 (26,196) 4,801
Dissolution of WHJ Limited 17 - (205) 205 -
Share based payment 17 - 80 - 80
Loss and total comprehensive loss for the year - - (788) (788)
Balance as at 30 June 2023 30,792 80 (26,779) 4,093
The notes on pages 29 to 43 form an integral part of these Financial
Statements
CONSOLIDATED STATEMENT OF CHANGES IN CASH FLOWS
For the year ended For the year ended
30 June 30 June
Notes 2023 2022
£'000 £'000
Operating activities
Loss for the year (788) (359)
Adjustments to reconcile total operating loss to net cash flows:
Deduct finance income 5 (117) -
Add back share based payment expense 17 59 -
Working capital adjustments:
(Increase)/decrease in receivables and prepayments (30) 4
Increase/(decrease) in trade and other payables 20 (21)
Net cash flows used in operating activities (856) (376)
Investing activities
Interest received 5 117 -
Net cash flows used in investing activities 117 -
Financing activities
Proceeds from issue of A Shares in MAC (BVI) Limited 42 -
Net cash flows from financing activities 42 -
Net decrease in cash and cash equivalents (697) (376)
Cash and cash equivalents at the beginning of the year 4,846 5,222
Cash and cash equivalents at the end of the year 12 4,149 4,846
The notes on pages 29 to 43 form an integral part of these Financial
Statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
450 Plc ("450", or the "Company") (formerly Marwyn Acquisition Company Plc),
an "investing company" for the purposes of the AIM Rules for Companies ("AIM
Rules"), is incorporated in Jersey (company number 123424) and domiciled in
the United Kingdom. It is a public limited company with its registered office
at 47 Esplanade, St Helier, Jersey, JE1 0BD and is registered as a UK
establishment (BR019423) with its address at 11 Buckingham Street, London,
WC2N 6DF. The Company has had two wholly owned subsidiaries during the year
(together with the Company, collectively the "Group") as detailed in note 10.
The activity of the Company is the acquisition and subsequent development of
assets engaged in the media, retail, entertainment and technology sectors.
2. ACCOUNTING POLICIES
(a) Basis of preparation
The Financial Statements for the year ended 30 June 2023 and the comparative
year to 30 June 2022 have been prepared in accordance with International
Financial Reporting Standards and IFRS Interpretations Committee
interpretations as adopted by the European Union (collectively, "EU adopted
IFRS" or "IFRS") and are presented in British pounds sterling, which is the
functional currency and presentational currency of the Company. All values are
rounded to the nearest thousand (£000) except where otherwise indicated. The
Financial Statements have been prepared under the historical cost convention.
The principal accounting policies adopted in the preparation of the Financial
Statements are set out below. The policies have been consistently applied
throughout the years presented.
(b) Going concern
The Financial Statements have been prepared on a going concern basis, which
assumes that the Group will continue to be able to meet its liabilities as
they fall due for the foreseeable future. The Group has net assets of
£4,093,022 at the statement of financial position date, which includes a cash
balance of £4,148,886. The Directors have considered the financial position
of the Group and reviewed forecasts and budgets for a period of at least 12
months following the approval of these financial statements.
The Directors have considered macro environmental factors that have impacted
both the global and domestic economy, including the ongoing war in Ukraine,
the high rates of inflation being experiences by the UK economy and the
related increase in interest rates. The Directors are comfortable that the
Company has significant and sufficient cash reserves to pursue its investment
strategy and have concluded that it remains appropriate to use the going
concern basis of accounting for the Financial Statements. Subject to the
structure of an acquisition, the Company may need to raise additional funds
for an acquisition in the form of equity and/or debt.
(c) New standards and amendments to International Financial Reporting
Standards
Standards, amendments and interpretations issued but not yet effective:
The following standards are issued but not yet effective. The Group intends to
adopt these standards, if applicable, when they become effective. It is not
currently expected that these standards will have a material impact on the
Group.
Standard Effective date
Extension of temporary exemption of applying IFRS 9 (Amendments to IFRS 4); 1 January 2023
Amendments to IFRS 17 Insurance contracts; 1 January 2023
Disclosure of accounting policies (Amendments to IAS 1); 1 January 2023
Definition of accounting estimates (Amendments to IAS 8); 1 January 2023
Deferred Tax relating to Assets and Liabilities arising from a Single 1 January 2023
Transaction (Amendments to IAS 12);
International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12); 1 January 2023
Initial Application of IFRS 17 and IFRS 9 - Comparative Information Amendment 1 January 2023
to IFRS 17);
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7); 1 January 2024
Non-current Liabilities with Covenants (Amendments to IAS 1); 1 January 2024
Amendment to IFRS 16 Leases: Lease Liability in a sale & leaseback; 1 January 2024
Amendments to IAS 1 Presentation of Financial Statements: Classification of 1 January 2024
Liabilities as Current or Non-current*; and
Amendments to IAS 21- Effects of Changes in Foreign Exchange Rates : Lack of 1 January 2025
Exchangeability*
* Subject to EU endorsement
(d) Basis of consolidation
Subsidiaries are entities controlled by the Company. Control exists when the
Company is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power
over the entity. The financial information of subsidiaries is fully
consolidated from the date that control commences until the date that control
ceases.
Intragroup balances, and any gains and losses or income and expenses arising
from intragroup transactions, are eliminated in preparing the consolidated
financial information.
(e) Financial instruments
Financial assets and financial liabilities are recognised in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets are initially measured at their fair value plus transaction
costs. Financial assets are subsequently carried at amortised cost using the
effective interest rate method less provision for impairment.
Financial liabilities are initially measured at their fair value plus
transaction costs. Financial liabilities are subsequently carried at amortised
cost using the effective interest rate method.
The Group does not hold any financial instruments that are classified at fair
value through the profit and loss or at fair value through other comprehensive
income.
(f) Finance Income
Finance income comprises interest income on funds deposited. Interest income
is recognised as it accrues in the profit and loss using the effective
interest method.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances at banks.
(h) Stated capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares are recognised in stated capital as a
deduction from the proceeds.
(i) Corporation tax
Corporation tax for the year presented comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the period.
Taxable profit differs from profit reported in the consolidated statement of
comprehensive income because some items of income and expense are taxable or
deductible in different years or may never be taxable or deductible. Current
tax is the expected tax payable on the taxable income for the period. The
Group's current tax is calculated using tax rates enacted or substantially
enacted at the balance sheet date, and any adjustment to taxes payable in
respect of previous periods.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
(j) Loss per ordinary share
The Group presents basic earnings per ordinary share ("EPS") data for its
ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year. Diluted EPS is
calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all dilutive potential ordinary shares.
(k) Share based payments
The Redeemable A Shares issued by MAC (BVI) Limited ("Incentive Shares")
represent equity-settled share-based payment arrangements under which the
Group receives services as a consideration for the additional rights attached
to these equity shares, over and above their nominal price.
Equity-settled share-based payments to certain of the Directors and others
providing similar services are measured at the fair value of the equity
instruments at the grant date. The fair value is expensed, with a
corresponding increase in equity, on a straight-line basis from the grant date
to the expected exercise date. Where the equity instruments granted are
considered to vest immediately, the services are deemed to have been received
in full, with a corresponding expense and increase in equity recognised at
grant date.
The dilutive effect of outstanding share-based payments is reflected as share
dilution in the computation of diluted EPS.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group's Financial Statements under IFRS requires the
Directors to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities. Estimates and judgements are continually evaluated and are based
on historical experience and other factors including expectations of future
events that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates.
Significant judgements
For both the year ended 30 June 2023 and the comparative year end, the
Directors do not consider that they have made any significant judgements which
would materially affect the balances and results reported in these Financial
Statements.
Significant estimates
There are significant estimates and assumptions used in the valuation of the
Incentive Shares which have been issued in the year. Management has considered
at the grant date, the probability of a successful first acquisition by the
Group and the potential range of value for the Incentive Shares, based on the
circumstances on the grant date. The fair value of the Incentive Shares and
related share-based payment expense was calculated using a Monte Carlo
valuation model. Further details of the issuance of incentive shares during
the year is disclosed in note 17 of these Financial Statements.
4. SEGMENT INFORMATION
The Board of Directors is the Group's chief operating decision-maker. As the
Group has not yet acquired an operating business, the Board of Directors
considers the Group as a whole for the purposes of assessing performance and
allocating resources, and therefore the Group has one reportable operating
segment.
5. FINANCE INCOME
For the year For the year
ended 30 June ended 30 June
2023
2022
£'000 £'000
Interest on bank deposits 117 -
117 -
6. EMPLOYEES AND DIRECTORS
(a) Employment costs for the Group during the year:
For the year For the year
ended 30 June ended 30 June
2023
2022
£'000 £'000
Director fees and employee salaries 81 22
Social security costs 8 1
Total employment costs expense 89 23
As at 30 June 2023 the Group had one employee (2022: no employees). During the
year ended 30 June 2023, the Company had the following directors: James
Corsellis, Mark Brangstrup Watts (resigned 6 November 2022), Waheed Alli
(appointed 6 November 2022), Tom Basset (appointed 6 November 2022) and
Sanjeev Gandhi.
Included in Director fees and employee salary costs is £61,914 for director
fees of which £8,888 was paid to James Corsellis, £3,026 was paid to Mark
Brangstrup Watts, and £50,000 was paid to Sanjeev Gandhi. Tom Basset does not
receive a fee for his role as director of the Company.
Waheed Alli does not receive a fee for his directorship, however, under the
terms of his appointment letter if a platform acquisition is completed during
his appointment, Waheed Alli is entitled to the payment of a one-off
transaction fee of an amount equal to £25,000 per calendar month elapsed
between the date of his appointment and a platform acquisition being
completed. This is disclosed in further detail in note 19.
(b) Key management compensation
The Board considers the Directors of the Company to be the key management
personnel of the Group. Details of the amounts paid to key management
personnel are detailed in the Nomination and Remuneration Report on pages 18
to 20.
(c) Employed persons
The average monthly number of persons employed by the Group (including
Directors) during the year was as follows:
For the year For the year
ended 30 June ended 30 June
2023
2022
number number
Employees 1 -
Directors 4 2
5 2
7. ADMINISTRATIVE EXPENSES
For the year For the year
ended 30 June ended 30 June
2023
2022
£'000 £'000
Group expenses by nature
Employment costs 89 23
Non-recurring project, professional and diligence costs 222 -
Professional support 523 327
Share-based payment expenses (Note 17) 59 -
Other expenses 12 9
905 359
8. INCOME TAX
For the year For the year
ended 30 June ended 30 June
2023
2022
£'000 £'000
Analysis of tax in year
Current tax on loss for the year - -
Total current tax - -
Reconciliation of effective rate and tax charge:
For the year For the year
ended 30 June ended 30 June
2023
2022
£'000 £'000
Loss on ordinary activities before tax (788) (359)
Loss multiplied by the rate of corporation tax in the UK of 25 percent (2022: (197) (68)
19 percent).
Effects of:
Expenses not deductible for tax 15 -
Tax losses not utilised 182 68
Total taxation charge - -
On 22 December 2022, the Group disposed of its WHJ Limited, its wholly owned
subsidiary. The effect of this was the of loss of brought forward tax losses
of £2,415,000.
The Group is tax resident in the UK. As at 30 June 2023, cumulative tax losses
available to carry forward against future trading profits were £24,176,730
(2022: £26,164,000) subject to agreement with HM Revenue & Customs. Prior
to a Platform Acquisition, there is no certainty as to future profits and no
deferred tax asset is recognised in relation to these carried forward losses.
9. LOSS PER ORDINARY SHARE
Basic EPS is calculated by dividing the profit attributable to equity holders
of the company by the weighted average number of ordinary shares in issue
during the year. Diluted EPS is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares.
For the year For the year
ended 30 June ended 30 June
2023
2022
Loss attributable to owners of the parent (£'000) (788) (359)
Weighted average number of ordinary shares in issue 670,833,336 670,833,336
Weighted average number of ordinary shares for diluted EPS 670,833,336 670,833,336
Basic and diluted loss per ordinary share (pence) (0.1175) (0.0535)
Refer to note 17 for instruments that could potentially dilute basic EPS in
the future.
10. INVESTMENTS
Principal subsidiary undertaking
The Company is the parent of the Group, the Group comprises of the Company and
during the year the following subsidiaries. As at 30 June 2023, WHJ Limited
had been summarily wound up and therefore MAC (BVI) was the sole subsidiary:
Subsidiary Nature of business Country of incorporation Proportion of ordinary shares held by parent Dissolution Date Proportion of ordinary shares held by the Group
WHJ Limited Incentive vehicle Jersey 100% 22 December 2022 100%
MAC (BVI) Limited Incentive vehicle British Virgin Islands 100% - 100%
There are no restrictions on the Company's ability to access or use the assets
and settle the liabilities of the Company's subsidiary.
The registered office of WHJ Limited was 47 Esplanade, St Helier, Jersey, JE1
0BD. The registered office of MAC (BVI) Limited is Commerce House, Wickhams
Cay 1, Road Town, Tortola, British Virgin Islands, VG1110.
11. OTHER RECEIVABLES
As at As at
30 June
30 June
2023
2022
£'000 £'000
Amounts receivable within one year:
Prepayments 26 19
VAT receivable 29 6
55 25
12. CASH AND CASH EQUIVALENTS
As at As at
30 June
30 June
2023
2022
£'000 £'000
Cash and cash equivalents
Cash at bank 4,149 4,846
4,149 4,846
Credit risk is managed on a group basis. Credit risk arises from cash and cash
equivalents and deposits with banks and financial institutions. For banks and
financial institutions, only independently rated parties with a minimum
short-term credit rating of P-1, as issued by Moody's, are accepted.
13. TRADE AND OTHER PAYABLES
As at As at
30 June
30 June
2023
2022
£'000 £'000
Amounts falling due within one year:
Trade payables 6 39
Accruals 50 31
A Ordinary share liability (Note 17) 21 -
Amounts due to related parties (Note 18) 34 -
111 70
14. STATED CAPITAL
As at As at
30 June
30 June
2023
2022
£'000 £'000
Authorised
Unlimited ordinary shares of no par value - -
Issued and fully paid
Ordinary shares of no par value 670,833,336 670,833,336
Stated capital (£'000) 30,792 30,792
The holders of ordinary shares are entitled to receive dividends as declared
and are entitled to one vote per ordinary share at meetings of the Company. No
shares were issued in the year ended 30 June 2023, or during the year ended 30
June 2022.
15. RESERVES
The following describes the nature and purpose of each reserve within
shareholders' equity:
Accumulated losses
Cumulative losses recognised in the Consolidated Statement of Comprehensive
Income.
Share based payment reserve
The share based payment reserve is the cumulative amount recognised in
relation to the equity-settled share based payment scheme as further described
in note 17.
16. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Group has the following categories of financial instruments as at 30 June
2023:
As at As at
30 June
30 June
2023
2022
£'000 £'000
Financial assets measured at amortised cost
Cash and cash equivalents (Note 12) 4,149 4,846
4,149 4,846
Financial liabilities measured at amortised cost
Trade and other payables (Note 13) 77 70
Due to related parties (Note 18) 34
111 70
All financial instruments are classified as current assets and current
liabilities. There are no non-current financial instruments as at 30 June 2023
(2022: None).
The fair value and book value of the financial assets and liabilities are
materially equivalent.
The Group has exposure to the following risks from its use of financial
instruments:
· Market risk;
· Liquidity risk; and
· Credit risk.
This note presents information about the Group's exposure to each of the above
risks and the Group's objectives, policies and processes for measuring and
managing these risks.
The Group's risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls and
to monitor risks and adherence limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group's
activities.
Treasury activities are managed on a Group basis under policies and procedures
approved and monitored by the Board. These are designed to reduce the
financial risks faced by the Group which primarily relate to movements in
interest rates.
Market risk
The Group's activities primarily expose it to the risk of changes in interest
rates due to the significant cash balance held; however, any change in
interest rates will not have a material effect on the Group. The Group's
operations are predominately in GBP, its functional currency and accordingly
minimal translation exposures arise in receivables or payables.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group's approach to managing
liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage
to the Group's reputation. The Group currently meets all liabilities from cash
reserves.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a
financial loss for the other party by failing to discharge an obligation. The
main credit risk relates to the cash held with financial institutions. The
Company manages its exposure to credit risk associated with its cash deposits
by selecting counterparties with a high credit rating with which to carry out
these transactions. The counterparty for these transactions is Barclays Bank
plc, which holds a short-term credit rating of P-1, as issued by Moody's. The
Group's maximum exposure to credit risk is the carrying value of the cash on
the Consolidated Statement of Financial Position.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain
creditor and market confidence and to sustain future development of the
business. Capital includes stated capital, and all other equity reserves
attributable to the equity holders of the Company and totals £4,093,022 as at
30 June 2023 (2022: £4,800,905). There were no changes in the Group's
approach to capital management during the year and the Company's capital
management policy will be revisited once an initial acquisition has been
identified.
17. SHARE-BASED PAYMENTS
Management Long Term Incentive Arrangements
On 3 November 2022, the Company incorporated a new subsidiary, MAC (BVI)
Limited (the "Subsidiary"), whose purpose is to create the new LTIP, to ensure
alignment between Shareholders, and those responsible for delivering the
Company's strategy and attract and retain the best executive management
talent.
The LTIP will only reward the participants if shareholder value is created.
This ensures alignment of the interests of management directly with those of
Shareholders. Under the LTIP, Redeemable A Shares ("Incentive Shares") are
issued by the Subsidiary.
Waheed Alli and MLTI (in which James Corsellis and Tom Basset are beneficially
interested) have acquired Incentive Shares in accordance with the Group's new
LTIP. The Company's previous incentive plan was terminated during the year
through the winding up of WHJ Limited, a direct subsidiary of the Company.
Waheed Alli and MLTI are the only participants in the LTIP, but it is the
expectation that participants in the LTIP may ultimately include any further
members of the Company's management team as well as senior executives of the
acquired businesses or companies as part of their respective executive
compensation schemes.
Preferred Return
The incentive arrangements are subject to the Company's shareholders achieving
a preferred return of at least 7.5 per cent. per annum on a compounded basis
on the basis of a starting net asset value of £4,800,905, being the audited
net asset value of the Company as at 30 June 2022 (the "Starting NAV"),
through to the date of exercise (with dividends and returns of capital being
treated as a reduction in the amount invested at the relevant time) (the
"Preferred Return").
Incentive Value
Subject to a number of provisions detailed below, if the Preferred Return and
at least one of the vesting conditions have been met, the holders of the
Incentive Shares can give notice to redeem their Incentive Shares for
Ordinary Shares for an aggregate value equivalent to a maximum of 20 per cent.
of the "Growth", where Growth means the excess of the total equity value of
the Company and other shareholder returns over and above the Starting NAV (20
per cent. of the Growth being the "Incentive Value"). The Incentive Value
will be shared between holders of the lncentive Shares pro rata to their
holdings.
Save where vesting is as a result of an in-specie distribution, or as a result
of aggregate cash dividends and cash capital returns to the Shareholders being
greater than or equal to aggregate subscription proceeds received by the
Company, the total equity value of the Company is based on the live takeover
offer, sale price or merger value, or, absent such an exit event, the market
value of the Company based on the preceding 30 day volume weighted average
price of the Ordinary Shares (excluding any trades made by persons discharging
managerial responsibility or persons closely associated with them). Where
vesting is because of an in-specie distribution or as a result of aggregate
cash dividends and cash capital returns to the Shareholders being greater than
or equal to aggregate subscription proceeds received by the Company, the total
equity value of the Company is based on the post-distribution market value.
Shareholder returns take account of prior dividends and other capital returns
to shareholders.
The value of the Incentive Shares is reduced to the extent that their value
would otherwise prevent Shareholders from achieving the Preferred Return.
Grant date
The grant date of the Incentive Shares is the date that such shares are
issued.
Redemption/exercise
Unless otherwise determined and subject to the redemption conditions having
been met, the Company and the holders of the Incentive Shares have the right
to exchange each Incentive Share for Ordinary Shares, which will be dilutive
to the interests of the holders of Ordinary Shares. However, if the Company
has sufficient cash resources and the Company so determines, the Incentive
Shares may instead be redeemed for cash. It is currently expected that in the
ordinary course, Incentive Shares will be exchanged for Ordinary Shares.
However, the Company retains the right to redeem the Incentive Shares for cash
instead. Circumstances where the Company may exercise this right include, but
are not limited to, where the Company is not authorised to issue additional
Ordinary Shares or on the winding-up or takeover of the Company.
Any holder of Incentive Shares who exercises their Incentive Shares prior to
other holders is entitled to their proportion of the Incentive Value to the
date that they exercise but no more. Their proportion is determined by the
number of Incentive Shares they hold relative to the total number of issued
shares of the same class.
Vesting Conditions and Vesting Period
The Incentive Shares are subject to certain vesting conditions, at least one
of which must be (and continue to be) satisfied in order for a holder of
Incentive Shares to exercise its redemption right.
The vesting conditions are as follows:
i. it is later than the third anniversary of the
initial acquisition;
ii. a sale of all or substantially all of the revenue
or net assets of the business of the Subsidiary in combination with the
distribution of the net proceeds of that sale to the Company and then to its
shareholders;
iii. a sale of all of the issued ordinary shares of the
Subsidiary or a merger of the Subsidiary in combination with the distribution
of the net proceeds of that sale or merger to the Company's shareholders;
iv. where by corporate action or otherwise, the Company
effects an in-specie distribution of all or substantially all of the assets of
the Group to the Company's shareholders;
v. aggregate cash dividends and cash capital returns
to the Company's Shareholders are greater than or equal to aggregate
subscription proceeds received by the Company;
vi. a winding-up of the Company;
vii. a winding-up of the Subsidiary; or
viii. a sale, merger or change of control of the Company.
If any of the vesting conditions described in paragraphs (ii) to (viii) above
are satisfied before the third anniversary of the initial acquisition, the
Incentive Shares will be treated as having vested in full.
Compulsory redemption
If the Preferred Return is not satisfied on the seventh anniversary of the
date of the initial acquisition, the Incentive Shares must be sold to the
Company or, at its election, redeemed by the Subsidiary, in both cases at a
price per Incentive Share equal to 1 penny, unless and to the extent that the
Company's Nomination and Remuneration Committee determines otherwise.
Leaver, lock-in and clawback provisions
In addition to the vesting conditions above, it is expected that a lock-in
period, leaver provisions, and malus and clawback provisions, in relation to
the Incentive Shares may be set out in acquisition agreements which management
participants in the LTIP will be asked to enter into to acquire their shares.
Waheed Alli has agreed that his Incentive Shares will vest on a straight-line
basis over 3 years from the date of the Business Acquisition, save on an exit
event when the Incentive Shares will vest in full (subject to the wider
vesting conditions that apply to all of the Incentive Shares). If Waheed Alli
is deemed a good leaver, he will keep his vested Incentive Shares, but
otherwise (including if there has been no Business Acquisition) he will
forfeit all of his Incentive Shares upon his departure from the Group.
Either the Ordinary Shares received upon exercise of the Incentive Shares
and/or the remaining Incentive Shares held by Waheed Alli may be clawed back
if Waheed Alli commits: (i) gross misconduct; (ii) fraud (iii) a criminal
act, or (iv) a material breach of any post termination covenants or
restrictions in his contract with the Company (if applicable), in each case as
determined by the Board in its absolute discretion (acting reasonably and in
good faith); or if the Company materially restates the audited consolidated
accounts of the Group (excluding for any reason of change in accounting
practice or accounting standards) and the Nomination & Remuneration
Committee of the Company (acting in good faith) concludes that, had such
audited consolidated accounts been correct at the time of exchange of such
Incentive Shares, Waheed Alli would not have received the full payment which
he was owed (or the full number of Ordinary Shares he was issued). In such
circumstances, it is also possible for the nomination & remuneration
committee to require Waheed Alli to pay to the Company or the Subsidiary an
amount equal to any cash received by him in exchange for some or all of his
Incentive Shares together with the net proceeds of the sale of any securities
received by him (i.e., through a distribution in specie) less any tax paid or
payable.
Waheed Alli has agreed that if he exchanges some or all of his Incentive
Shares for an allotment of Ordinary Shares, he shall not be permitted to enter
into any agreement to give effect to any transfer of the Ordinary Shares so
allotted at any time during the period of 12 months and one day following the
date of such allotment save in certain limited circumstances.
As there are conditions whereby the unvested portion of the Incentive Shares
issued to Waheed Alli can be redeemed or acquired at the lower of the (i) the
subscription price or (ii) the market value for such Incentive Shares, the
amount received on the issue of Incentive Shares to Waheed Alli of £21,000 is
recognised as a liability in the Financial Statements.
The Incentive Shares in which MLTI holds its interest are not subject to any
such vesting provisions, and therefore the unrestricted market value received
on the issue of Incentive Shares to MLTI is recorded in the share-based
payment reserve with the corresponding expense being recognised on the date of
issue.
Holding of Incentive Shares
MLTI and Waheed Alli hold Incentive Shares entitling them to aggregate to 100
per cent. of the Incentive Value. Any future management partners or senior
executive management team members receiving Incentive Shares will be dilutive
to the interests of existing holders of Incentive Shares, however the share of
the Growth of the Incentive Shares in aggregate will not increase.
The following shares were issued on 6 November 2022:
Holder Nominal Price Issue price per A share Number of A ordinary shares Unrestricted market value at grant date IFRS 2 Fair value
£'s £'s £'s
Waheed Alli £0.01 10.50 2,000 21,000 72,000
Marwyn Long Term Incentive LP £0.01 10.50 2,000 21,000 72,000
A valuation of the incentive shares has been prepared by Deloitte LLP dated 4
November 2022 to determine the fair value of the Incentive Shares in
accordance with IFRS 2 at grant date.
There are significant estimates and assumptions used in the valuation of the
Incentive Shares. Management has considered at the grant date, the probability
of a successful first acquisition by the Company and the potential range of
value for the Incentive Shares, based on the circumstances on the grant date.
The fair value of the Incentive Shares granted under the scheme was calculated
using a Monte Carlo model. The fair value uses an ungeared volatility of 25
per cent, and an expected term of seven years. The Incentive Shares are
subject to the Preferred Return being achieved, which is a market performance
condition, and as such has been taken into consideration in determining their
fair value. A risk-free rate of 4.1 per cent. has been applied. The model
incorporates a range of probabilities for the likelihood of an acquisition
being made of a given size.
Expense related to Incentive Shares
An expense of £59,283 (2022: £Nil) has been recognised in the Statement of
Comprehensive Income in respect of the Incentive Shares issued during the
year.
There is a service condition associated with the shares issued to Waheed Alli,
which requires the fair value charge associated with his shares to be
allocated over the minimum vesting period. This vesting period is estimated to
be 4 years from the date of grant. Accordingly, for the year ended 30 June
2023, an amount of £8,283 (2022: £Nil) was expensed to the profit and loss
account.
There are no service conditions attached to the MLTI shares and as result the
fair value at grant date net of the amount paid by MLTI for the unrestricted
market value which totals £51,000 was expensed to the profit and loss account
on issue.
The share based payment reserve includes the IFRS2 fair value of the Incentive
Shares issued to MLTI of £72,000 plus the cost of £8,283 (2022: Nil)
expensed to the profit and loss account for the year to 30 June 2023 relating
to the Incentive Shares issued to Waheed Alli.
Reclassification of Marwyn performance shares expense
MLTI held 100% of the A2 Shares in WHJ Limited at the date of dissolution of
WHJ Limited. These shares were forfeited as part of the dissolution and as a
result the cumulative charge held in the share-based payment reserve of
£205,465 has been transferred to accumulated losses.
18. RELATED PARTY TRANSACTIONS
The AIM Rules define a related party as any (i) director of the Company or its
subsidiary, (ii) a substantial shareholder, being any shareholders holding at
least 10 per cent. of a share class or (iii) an associate of those parties
identified in (i) or (ii).
James Corsellis and Tom Basset have served as directors of the Company during
the year. James Corsellis is the managing partner of Marwyn Investment
Management Limited ("MIM LLP") and Tom Basset is a partner of MIM LLP, MIM LLP
is the manager of the Marwyn Fund, the Marwyn Fund holds 95.36% of the
Company's issued ordinary shares. Mark Brangstrup Watts was a director of the
Company until 6 November 2022, up until this date Mark Brangstrup Watts was
also a managing partner of MIM LLP.
James Corsellis and Tom Basset have an indirect beneficial interest in the A
ordinary shares issued by MAC (BVI) Limited which were issued during the year
to Marwyn Long Term Incentive LP and are disclosed in note 17 of these
Financial Statements. Waheed Alli has a direct interest in the A ordinary
shares issued by MAC (BVI) Limited, also as disclosed in note 17.
James Corsellis is also the managing partner of MC LLP and Tom Basset is a
partner in MC LLP, which provides corporate finance and managed services
support to the Group. During the year, Marwyn Capital LLP charged £335,485
(2022: £149,357) in respect of managed services and corporate finance costs,
£53,968 for recharged expenses (2022: Nil), and £11,913 (excluding VAT)
(2022: £16,547) for James Corsellis' and Mark Brangstrup Watts' directors'
fees. Marwyn Capital LLP was owed an amount of £34,405 the balance sheet date
(2022: £24,470). Mark Brangstrup Watts was a managing partner of MC LLP up
until 6 November 2022.
Compensation of key management personnel of the Group is included in the
Nomination and Remuneration Report. Interests in the LTIP are detailed in Note
17.
19. COMMITMENTS AND CONTINGENT LIABILITIES
On 6 November 2022, Waheed Alli was appointed as Chair of the Company, as part
of Waheed's appointment the Company entered into a service agreement under
which Waheed does not receive a director fee for his role as Chair, however,
if a platform acquisition is completed during his appointment, Waheed Alli is
entitled to the payment of a one-off transaction fee of an amount equal to
£25,000 for each calendar month elapsed between the date of his appointment
and a platform acquisition being completed (a "Transaction Fee"). If no
platform acquisition is completed during Waheed Alli's term of appointment,
then no Transaction Fee will be payable. The Transaction Fee is calculated by
taking £25,000 multiplied by the number of whole calendar months which have
elapsed since 6 November 2022.
20. INDEPENDENT AUDITORS' REMUNERATION
Baker Tilly Channel Islands Limited ("BCTI") was reappointed as auditor at the
AGM on 5 December 2022. BTCI is expected to incur audit fees for the year
ended 30 June 2023 of £19,740 (2022: £16,775). BTCI has charged £Nil in
2023 for non-audit services to the Group (2022: £nil).
21. POST BALANCE SHEET EVENTS
There have been no material post balance sheet events that would require
disclosure or adjustment to these Financial Statements.
RISKS
Risks applicable to investing in the Company
An investment in the ordinary shares involves a high degree of risk. No
assurance can be given that shareholders will realise a profit or will avoid
loss on their investment. The Board has identified a wide range of risks,
and the risks considered most relevant to the Company, based on its current
status are detailed on the following pages. The risks referred to below, do
not purport to be exhaustive and are not set out in any order of priority. If
any of the following events identified below occur, the Company's business,
financial condition, capital resources, results and/or future operations and
prospects could be materially adversely affected.
Risks rating to the Company's future business and potential structure
•The Company's ability to complete an acquisition
Although the Company has historically identified a number of potential
investment opportunities, it does not currently have an investment opportunity
that is materially progressed and is not currently in formal or exclusive
discussions with any asset vendors. The Company's future success is dependent
upon its ability to not only identify opportunities but also to execute
successful acquisitions and/or investments. There can be no assurance that the
Company will be able to conclude agreements with any target business and/or
shareholders in the future and failure to do so could result in the loss of an
investor's investment. In addition, the Company may not be able to raise the
additional funds if required to acquire a target business and fund its working
capital requirements in accordance with its Investing Policy.
Pursuant to the AIM Rules for Companies, as the Company has not yet
substantially implemented its Investing Policy, its Investing Policy is now
subject to shareholder approval at each AGM.
Should shareholders reject the Investing policy and elect to wind up the
Company and return funds (after payment of the expenses and liabilities of the
Company) to Shareholders, there can be no assurance as to the particular
amount or value of the remaining assets at such future time of any such
distribution either as a result of costs from an unsuccessful acquisition or
from other factors, including disputes or legal claims which the Company is
required to pay out, the cost of the liquidation event and dissolution
process, applicable tax liabilities or amounts due to third party creditors.
Upon distribution of assets on a liquidation event, such costs and expenses
will result in investors receiving less than the initial subscription price
and investors who acquired Ordinary Shares after Admission potentially
receiving less than they invested.
•The Company may face significant competition for acquisition opportunities
There may be significant competition in some or all of the acquisition
opportunities that the Company may explore. Such competition may for example
come from strategic buyers, sovereign wealth funds, special purpose
acquisition companies and public and private investment funds, many of which
are well established and have extensive experience in identifying and
completing acquisitions. A number of these competitors may possess greater
technical, financial, human and other resources than the Company. The Company
cannot assure investors that it will be successful against such competition.
Such competition may cause the Company to be unsuccessful in executing an
acquisition or may result in a successful acquisition being made at a
significantly higher price than would otherwise have been the case which could
materially adversely impact the business, financial condition, result of
operations and prospects of the Company.
•Need for additional funding and dilution
The Company may have insufficient funds to fund in full suitable acquisitions
and/or investments identified by the Board. Accordingly, the Company expects
to seek additional sources of financing (equity and/or debt) to implement its
strategy. There can be no assurance that the Company will be able to raise
those funds, whether on acceptable terms or at all.
If further financing is obtained or the consideration for an acquisition is
provided by issuing equity securities or convertible debt securities,
Shareholders at the time of such future fundraising or acquisition may be
diluted and the new securities may carry rights, privileges and preferences
superior to the Ordinary Shares.
The Company may seek debt financing to fund all or part of any future
acquisition. The incurrence by the Company of substantial indebtedness in
connection with an acquisition could result in:
(i) default and foreclosure on the Company's assets, if its cash flow
from operations was insufficient to pay its debt obligations as they become
due; or
(ii) an inability to obtain additional financing, if any indebtedness
incurred contains covenants restricting its ability to incur additional
indebtedness.
•Success of Investing Policy not guaranteed
The Company's level of profit will be reliant upon the performance of the
assets acquired and the Investing Policy. The success of the Investing Policy
depends on the Directors' ability to identify investments in accordance with
the Company's investment objectives and to interpret market data correctly. No
assurance can be given that the strategy to be used will be successful under
all or any market conditions or that the Company will be able to generate
positive returns for Shareholders. If the Investing Policy is not successfully
implemented, this could adversely impact the business, development, financial
condition, results of operations and prospects of the Company.
•Changes in Investing Policy may occur
The Company's Investing Policy may be modified and altered from time to time
with the approval of Shareholders, so it is possible that the approaches
adopted to achieve the Company's investment objectives in the future may be
different from those the Directors currently expect to use and which are
disclosed in these Financial Statements. Any such change could adversely
impact the business, development, financial condition, results of operations
and prospects of the Company.
•The Company could incur costs for transactions that may ultimately be
unsuccessful
The Company has pursued a number of potential acquisitions and as a result
incurred substantial legal, financial and advisory expenses. In December 2019,
the Company was recapitalised and as a result the business has sufficient
funds to continue to identify investment opportunities.
There is a risk that the Company may again incur substantial legal, financial
and advisory expenses arising from unsuccessful transactions which may include
public offer and transaction documentation, legal, accounting and other due
diligence which could have a material adverse effect on the business,
financial condition, results of operations and prospects of the Company.
•Potential dilution from the incentivisation of management and Marwyn
The Company has in place an incentivisation scheme through which members of
management that may be employed by the Company, certain employees of the
Company and MLTI will be rewarded for increases in shareholder value, subject
to certain conditions and performance hurdles. Details on the LTIP are
disclosed in note 17 to these Financial Statements.
If Ordinary Shares are to be issued in order to satisfy the incentivisation
scheme, the existing Shareholders may face significant dilution. If the
Company has sufficient cash resources the incentivisation scheme may be
settled with cash, thereby reducing the Company's cash resources.
•Industry specific risks
It is anticipated that the Company will invest in businesses in the
traditional and digital creative industries encompassing the content media and
technology sector within the UK, Europe and North America. The performance of
sectors in which the Company may invest may be cyclical in nature, with some
correlation to gross domestic product and, specifically, levels of demand
within targeted end-markets. As a result, the identified sector may be
affected by changes in general economic activity levels which are beyond the
Company's control but which may have a material adverse effect on the
Company's financial condition and prospects. Current macro-environmental
factors, such as high inflation may result in greater demand in certain
sectors, and fewer opportunities in others.
The Company may acquire or make investments in companies and businesses that
are susceptible to economic recessions or downturns. During periods of adverse
economic conditions, the markets in which the Company operates may decline,
thereby potentially decreasing revenues and causing financial losses,
difficulties in obtaining access to, and fulfilling commitments in respect of,
financing, and increased funding costs. In addition, during periods of adverse
economic conditions, the Company may have difficulty accessing financial
markets, which could make it more difficult or impossible for the Company to
obtain funding for additional investments and negatively affect the Company's
net asset value and operating results. Accordingly, adverse economic
conditions could adversely impact the business, development, financial
condition, results of operations and prospects of the Company.
In addition, the political risks associated with operating across a broad
number of jurisdictions and markets could affect the Company's ability to
manage or retain interests in its business activities and could have a
material adverse effect on the profitability of its business following an
acquisition.
Shareholder risks
•Trading on AIM
The Ordinary Shares are admitted to trading on AIM. An investment in shares
quoted on AIM may be less liquid and may carry a higher risk than an
investment in shares quoted on the Official List. The AIM Rules for Companies
are less demanding than those which apply to companies traded on the Premium
Segment of the Official List. Further, the FCA has not itself examined or
approved the contents of this document. A prospective investor should be aware
of the risks of investing in such shares and should make the decision to
invest only after careful consideration and, if appropriate, consultation with
an independent financial adviser authorised under FSMA.
•Value and liquidity of the Ordinary Shares
It may be difficult for an investor to realise his, her or its investment. The
shares of publicly traded companies can have limited liquidity and their share
prices can be highly volatile.
The price at which the Ordinary Shares are traded and the price at which
investors may realise their investment are influenced by a large number of
factors, some specific to the Company and its operations and others which may
affect companies operating within a particular sector or quoted companies
generally. A relatively small movement in the value of an investment or the
amount of income derived from it may result in a disproportionately large
movement, unfavourable as well as favourable, in the value of the Ordinary
Shares or the amount of income received in respect thereof.
Shareholders should be aware that the value of the Ordinary Shares could go
down as well as up, and investors may therefore not recover their original
investment. Furthermore, the market price of the Ordinary Shares may not
reflect the underlying value of the Company's net assets.
The investment opportunity offered in this document may not be suitable for
all recipients of this document. Shareholders are therefore strongly
recommended to consult an independent financial adviser authorised under FSMA
who specialises in advising on investments of this nature before making an
investment decision.
•Investing Company status
The Company is currently considered to be an Investing Company for the
purposes of the AIM Rules. As a result, it may benefit from certain partial
carve-outs to the AIM Rules, such as those in relation to the classification
of Reverse Takeovers. Were the Company to lose Investing Company status for
any reason, such carve-outs would cease to apply. It is anticipated that an
acquisition may constitute a Reverse Takeover.
•The interests of significant Shareholders may conflict with those of other
Shareholders
Approximately 95 per cent. of the Company's issued share capital is held by
one Shareholder. Such Shareholder is as a result able to exercise sufficient
control over the Company's corporate actions so as not to require the approval
of the Company's other Shareholders. The interests of such significant
Shareholder may conflict with those of other holders of Ordinary Shares.
•Dilution of Shareholders' interest as a result of additional equity
fundraising
The Company expects to issue additional Ordinary Shares in subsequent public
offerings or private placements to fund acquisitions or as consideration for
acquisitions. As Jersey law does not grant Shareholders the benefit of
pre-emption rights in relation to a further issue of Ordinary Shares, pre-
emption rights have been included in the Company's Articles. However, it is
possible that existing Shareholders may not always be offered the right or
opportunity to participate in such future share issues, which may dilute the
existing Shareholders' interests in the Company.
The Group may need to raise additional funds in the future to finance, amongst
other things, working capital, expansion of the business, new developments
relating to existing operations or new acquisitions. If additional funds are
raised through the issuance of new equity or equity-linked securities of the
Company other than on a pro rata basis to existing Shareholders, the
percentage ownership of the existing Shareholders may be reduced. Shareholders
may also experience subsequent dilution and/or such securities may have
preferred rights, options and pre-emption rights senior to the Ordinary
Shares.
•The Company has a controlling Shareholder
Marwyn Investment Management LLP ("MIM"), the manager of the Company's largest
shareholder controls approximately 95 per cent. of the issued Ordinary Shares
of the Company. As a result, MIM is able to exercise significant influence to
pass or veto matters requiring Shareholder approval, including future issues
of Ordinary Shares and the election of directors and to veto or seek to
approve fundamental changes of business. This concentration of ownership may
have the effect of delaying, deferring, deterring or preventing a change in
control, depriving Shareholders of the opportunity to receive a premium for
their Ordinary Shares as part of a sale of the Company. The interests of MIM
may not necessarily be aligned with those of the other Shareholders.
Accordingly, MIM could influence the Company's business in a manner that may
not be in the interests of other Shareholders. For example, MIM can approve a
change of Investing Policy, can prevent special resolutions of the Company
being passed and can approve ordinary resolutions of the Company without the
assent of any other Shareholders. The concentration of ownership could also
affect the market price and liquidity of the Ordinary Shares. If MIM seeks to
influence the Company's business in a manner that may not be in the interests
of other Shareholders, the Company's business, results of operations,
financial condition and prospects, and the trading price of the Ordinary
Shares could be adversely affected.
Risks relating to legislation and regulations
•Legislative and regulatory risks
Any investment is subject to changes in regulation and legislation. As the
direction and impact of changes in regulations can be unpredictable, there is
a risk that regulatory developments will not bring about positive changes and
opportunities, or that the costs associated with those changes and
opportunities will be significant. In particular, there is a risk that
regulatory change will bring about a significant downturn in the prospects of
one or more acquired businesses, rather than presenting a positive
opportunity.
•Taxation
There can be no certainty that the current taxation regime in England and
Wales or overseas jurisdictions in which the Company may operate in the future
will remain in force or that the current levels of corporation taxation will
remain unchanged. Any change in the tax status of the Company or to applicable
tax legislation may have a material adverse effect on the financial position
of the Company.
ADVISERS
Nominated Adviser and Broker
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London, EC4M 7LT
Corporate Services
Marwyn Capital LLP
11 Buckingham Street
London, WC2N 6DF
Registrar
Link Market Services (Jersey) Limited
12 Castle Street
St Helier, Jersey, JE2 3RT
Company Secretary
Crestbridge Corporate Services Limited
47 Esplanade
St Helier, Jersey, JE1 0BD
Principal Banker
Barclays Bank plc
5 Esplanade
St Helier, Jersey, JE2 3QA
Solicitors to the Company
Travers Smith
10 Snow Hill
London, EC1A 2AL
Independent Auditor
Baker Tilly Channel Islands Limited
First Floor, Kensington Chambers
46-50 Kensington Place
St Helier
Jersey, JE4 0ZE
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