REG - Advancedadvt Limited - Audited results for the year ended 30 June 2023
28/07/2023 07:00
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RNS Number : 4863H Advancedadvt Limited 28 July 2023
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LEI: 254900WYO35S1T334A28
28 July 2023
AdvancedAdvT Limited
(the "Company")
Audited results for the year ended 30 June 2023
AdvancedAdvT Limited (LSE: ADVT) announces that it has published its audited
results for the financial year ended 30 June 2023.
Highlights
• Agreement to acquire five software businesses from Capita plc for a combined
enterprise value of approximately £33m in cash
• Strong position to execute on strategy given the opportunities in current
economic climate
• Net assets of £123.2m as at 30 June 2023 (£121.6m at 30 June 2022)
• Unaudited Net Asset Value (NAV) of 92.9(1) pence per share (91.3p 30 June
2022)
• Cash of £104.7m at 30 June 2023 (£104.2m at 30 June 2022)
• Reported £1.43m profit for the year. Interest income from cash deposits
offset operating costs, project costs and fair value changes of financial
assets
Chairperson's Report
Acquisition of Capita businesses
I am pleased to report that on the 8 June 2023 the Group conditionally agreed
to acquire five software businesses from Capita plc for a combined enterprise
value of approximately £33m in cash. This is an important step towards
delivering our objective of completing business combinations and generating
attractive long-term returns for shareholders.
The acquired businesses include:
• CIBS - Financial and Business Solutions for public and private sectors
• CHKS and Synaptic - Governance Risk and Compliance (GRC) for the Healthcare
and Financial Services sectors
• Retain/WFM - Global Professional Services and Workforce Automation Software
for Private and Public Sectors
These businesses will provide us with a solid foundation and platform with an
opportunity to build through a combination of organic and acquisitive growth.
The acquisitions were subject to and conditional upon National Security and
Investment Act approval received on 25 July 2023. More information following
in due course.
Strategic approach
Despite facing a wide range of macroeconomic challenges, our commitment to a
disciplined approach remains unwavering. The consistent adoption of digital
technologies has been impressive, as consumers, businesses, and governments
navigate through increasing economic and geopolitical uncertainties.
Throughout these uncertainties, technology continues to play a pivotal role in
enhancing business resilience, efficiency, and decision-making. The importance
of digital solutions in delivering productivity and gaining a competitive edge
remains as crucial as ever.
Our strategy revolves around evaluating high-quality businesses in our
pipeline based on a set of key characteristics. These characteristics align
with our vision and enable businesses to consistently generate long-term
value. We seek businesses with highly predictable revenue streams, strong
customer retention, products or services that possess high barriers to entry,
extensive growth opportunities, significant free cash flow generation, and
well-run establishments in fragmented industries with consolidation potential.
The reported acquisitions embody all these characteristics.
It is our intention to actively seek synergistic investment opportunities in
businesses that are well-positioned to benefit from the ongoing structural
changes resulting from the rapid digitalisation and the prevailing
macroeconomic environment.
We will support the teams of the businesses we acquire to deliver strong
organic growth - both in existing sectors as well as new areas including data,
analytics, managed service and digital transformation opportunities.
M&C Saatchi plc ("M&C")
In early 2022 we identified an opportunity to invest in an area which has the
potential to deliver significant digital related growth and opportunity. We
purchased 9.82% of the share capital of M&C and followed up with an offer
to acquire the remainder of M&C. Despite some shareholder support, we did
not receive sufficient acceptances and our offer lapsed.
As a significant shareholder, we will continue to assess all potential value
creation opportunities for M&C. We are pleased with the appointment of
Zillah Byng-Thorne as non-executive Chair (recently appointed Executive
Chair) and Chris Sweetland as a non-executive director as we continue to
support them in the value creation opportunities that exist across that
business.
Outlook
Given the significant macroeconomic uncertainty and disruption, we firmly
believe that this environment will present numerous opportunities to leverage
the reported acquisitions success with both organic and acquisitive growth. We
will remain vigilant in identifying and seizing the right investment
opportunities, allowing us to further strengthen our market position and
generate sustainable value in the long run.
With our substantial war chest and our disciplined approach, we are well
placed to execute M&A that is both synergistic and accretive over the
longer term.
We will continue to actively pursue discussions on potential target businesses
that align with our strategic vision and leverage the value of announced
acquisitions. With a proactive approach, resources and expanded capabilities,
we aim to leverage the changing landscape to deliver enhanced value and drive
continued growth.
Finally, I would like to take this opportunity to thank all my fellow
shareholders for their continued support over this financial year.
Vin Murria OBE
Chairperson
(1)NAV per share estimated using 10 day VWAP price of 156p for the M&C
Saatchi shares held as a Financial asset at fair value through profit or loss
Enquiries:
Company Secretary 020 7004 2700
Antoinette Vanderpuije
Singer Capital Markets (Broker) 020 7496 3000
Phil Davies
George Tzimas
Meare Consulting 07990 858548
Adrian Duffield
KK Advisory (Investor Relations) 020 7039 1901
Kam Basil
A copy of the Annual Financial Report will shortly be available on both the
'Shareholder Documents' page of the Company's website at www.advancedadvt.com
and https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Strategy
The Company was formed to seek and identify situations where a merger of
management expertise, improving operating performance, freeing up cashflow for
investment and implementation of a focused investment and M&A strategy can
unlock growth in their core markets and often into new territories and
adjacent sectors.
The Company's objective is to generate attractive long-term returns for
shareholders and to enhance value by supporting sustainable growth,
acquisitions and performance improvements within the acquired companies.
There has been significant transformative impact of digital technologies over
the past quarter of a century. Across all sectors, businesses have
increasingly embraced digitalisation to optimise their processes, operations,
and engagement. Implementing these technologies has become essential for
driving cost efficiencies, generating returns on investments, and gaining a
competitive edge in the digital landscape. It is worth noting that sectors and
businesses with the highest level of digitalisation have experienced
significant productivity growth.
While the potential of digitalisation has been recognised, the adoption of new
digital strategies by businesses and consumers was, until recently, somewhat
limited by various barriers, including companies' willingness to invest in and
embrace these technologies. However, the global restrictions imposed by the
Covid-19 pandemic have shattered these barriers and compelled businesses to
become more agile, resulting in a remarkable acceleration of digitalisation.
Despite cost-cutting measures implemented due to the pandemic, organisations
have increased their spending on digital transformation as they rapidly adapt
their business models.
We firmly believe that the current macroeconomic environment presents
substantial investment opportunities in companies well-positioned to harness
the structural changes arising from this unprecedented acceleration of
digitalisation. These changes have profoundly impacted the way people live,
work, and consume, as well as how businesses operate, engage with customers,
and conduct sales. Consequently, businesses offering digital solutions,
software, and services that enable and support digitalisation are expected to
experience sustained demand for their products.
In line with this strategy, we announced our proposed acquisition of five
software and services businesses. This acquisition will create an initial
platform on which we can build both organically and through further
acquisitions. It will provide us with a strong foundation to capitalise on the
growing digitalisation trends and expand our presence in the market.
However, it is important to note that there will likely be significant
competition for the acquisition of further opportunities we explore. This
competition may originate from strategic buyers, sovereign wealth funds,
special purpose acquisition companies, and public and private investment
funds. Many of these competitors have established themselves with extensive
experience in identifying and completing acquisitions and possess greater
technical, financial, and human resources compared to our company. As a
result, we may incur costs, such as due diligence and financing, for an
acquisition or investment opportunity that we may not be able to successfully
conclude.
Our management team boasts substantial experience in the software and services
sector, having invested in and operated a range of high-performing businesses.
We have successfully driven operational excellence within these enterprises,
leading to organic growth. Moreover, we have a proven track record of targeted
and accretive mergers and acquisitions in the software sector, having
completed more than 85 bolt-on acquisitions. This expertise, combined with our
proposed acquisition, positions us well to build a robust platform for future
growth, both organically and through strategic acquisitions, in the rapidly
evolving digital landscape.
Activity and Share Capital
In respect to the offer made for M&C, on 8 September 2022, the Company
published an acceleration statement in accordance with Rule 31.5 of the
Takeover Code and on 30 September 2022, the Company did not receive sufficient
acceptances to reach the 90% acceptance condition, and the Final Offer lapsed.
On the 8 June the company conditionally agreed to acquire the entire issued
and outstanding share capital of five software businesses from Capita plc for
a combined enterprise value of approximately £33 million in cash.
In the year ended 31 December 2022, the acquisitions generated a total revenue
of approximately £35 million, with approximately 74% of the revenue being
recurring or from Software-as-a-Service (SaaS).
The transaction will be funded by the Company's cash reserves.
The acquired businesses include:
• CIBS - Financial and Business Solutions for public and private sectors
• CHKS and Synaptic - Governance Risk and Compliance (GRC) for the Healthcare
and Financial Services sectors
• Retain/WFM - Global Professional Services and Workforce Automation Software
for Private and Public Sectors
The acquisitions are subject to and conditional upon National Security and
Investment Act approval.
Financial Performance
The Company's profit after taxation for the year to 30 June 2023 was
£1,432,008 (2022: loss £7,715,383). The Company incurred administrative
expenses, largely in respect of the two main projects within the year relating
to the M&C Saatchi plc offer and acquisitions from Capita plc, during the
year of £432,021 (2022: £2,750,468), other losses related to the fair value
adjustment of our investment in M&C Saatchi plc of £960,000 (2022:
£4,800,000l), dividends receivable from M&C Saatchi plc of £180,000
(2022: £nil), received interest of £3,217,537 (2022: £346,917) and at 30
June 2023 held a cash balance of £104,696,281 (2022: £104,169,997). After
deducting costs accrued in respect of operating and transaction-related
expenses, the net asset position was £123,185,690 (2022: £121,657,829),
resulting in a Net Asset Value per share (NAV) of 92.9pence (2022: 91.3pence).
Dividend Policy
It is the Board's policy that prior to an acquisition, no dividends will be
paid. The Company has not yet acquired a trading operation and we therefore
consider it inappropriate to make a forecast of the likelihood of any future
dividends. Following an acquisition, and subject to the availability of
distributable reserves, dividends will be paid to shareholders when the
Directors believe it is appropriate and commercially prudent to do so.
Statement of Going Concern
The directors believe that the Company will continue to be able to meet its liabilities as they fall due for the foreseeable future. The Company had cash resources of £104,696,281 at 30 June 2023 and net assets of £123,185,690. We have considered the financial position of the Company and have reviewed forecasts and budgets for a period of at least 12 months following the approval of the Financial Statements.
Subject to the structure of any potential transaction the Company may need to raise additional funds for the acquisition in the form of equity and/or debt, which has not been factored into our going concern assessment as this will be dependent on the size and nature of the acquisitions.
Furthermore, we have considered the expected impact of the Covid-19 pandemic, Ukraine conflict and global financial markets on the Company's forecast cashflows and liabilities, concluding that prior to completing a transaction, the market challenges have no material impact on the Company due to the nature of its operations. As a result, we have concluded that, at the date of approval of the Financial Statements, the Company has sufficient resources for the foreseeable future and can continue to execute its stated strategy. Accordingly, it is appropriate to adopt the going concern basis in the preparation of the Financial Statements.
Corporate Governance
As a company with a Standard Listing, the Company is not required to comply
with the provisions of the UK Corporate Governance Code. Nevertheless, the
Board is committed to maintaining high standards of corporate governance and
will consider whether to voluntarily adopt and comply with the UK Corporate
Governance Code as part of any acquisition, taking into account the Company's
size and status at that time.
The Company currently complies with the following principles of the UK
Corporate Governance Code:
· The Company is led by an effective and entrepreneurial Board,
whose role is to promote the long-term sustainable success of the Company,
generating value for shareholders and contributing to wider society.
· The Board ensures that it has the policies, processes, internal
control framework, information, time and resources it needs to function
effectively and efficiently.
· The Board ensures that the necessary resources are in place for
the company to meet its objectives and measure performance against them.
Given the size and nature of the Company, the Board has not established any
committees and intends to make decisions as a whole. If the need should arise
in the future, for example following any acquisition, the Board may set up
committees as appropriate.
Consolidated Statement of Comprehensive Income
Year Year
ended
ended
30 June 30 June
2023 2022
Audited Audited
£ £
Administrative expenses (1,005,529) (3,262,300)
Other losses (960,000) (4,800,000)
Operating loss (1,965,529) (8,062,300)
Finance Income 3,397,537 346,917
Profit/ (Loss) before income taxes 1,432,008 (7,715,383)
Income tax - -
Profit/ (Loss) for the year 1,432,008 (7,715,383)
Total comprehensive Profit/ (Loss) for the year attributable to owners of the
parent
1,432,008 (7,715,383)
Profit/ (Loss) per ordinary share (£)
Basic 0.01 (0.06)
Diluted 0.01 (0.06)
The Company's activities derive from continuing operations.
Consolidated Statement of Financial Position
As at As at
30 June 2023 30 June 2022
£ £
Non-current assets
Financial asset at fair value through profit or loss 18,240,000 19,200,000
18,240,000 19,200,000
Current assets
Trade and other receivables 1,010,423 101,485
Cash and cash equivalents 104,696,281 104,169,997
Total current assets 105,706,704 104,271,482
Total assets 123,946,704 123,471,482
Equity and liabilities
Equity
Sponsor share 2 2
Ordinary shares 131,166,131 131,166,131
Warrant reserve 98,000 98,000
Warrant cancellation reserve 350,000 350,000
Share-based payment reserve 400,957 305,104
Accumulated losses (8,829,400) (10,261,408)
Total equity 123,185,690 121,657,829
Current liabilities
Trade and other payables 761,014 1,813,653
Total liabilities 761,014 1,813,653
Total equity and liabilities 123,946,704 123,471,482
Consolidated Statement of Changes in Equity
Sponsor share Ordinary shares Class A shares Warrant reserves Warrant Cancellation Reserve Share based payment reserve Accumulated losses Total equity
£ £ £ £ £ £ £ £
Balance as at 31 July 2020 - - - - - - - -
Issuance of 1 ordinary share - 1 - - - - - 1
Redesignation of 1 ordinary share 1 (1) - - - - - -
Issuance of 700,000 ordinary shares and matching warrants - 602,000 - 98,000 - - - 700,000
Share issue costs - (275,300) - - - - - (275,300)
Issuance of 2,500,000 Class A shares and matching warrants - - 2,150,000 350,000 - - - 2,500,000
Conversion of 2,500,000 Class A shares - 2,150,000 (2,150,000) (350,000) 350,000 - - -
Issuance of 130,000,000 ordinary shares - 130,000,000 - - - - - 130,000,000
Share issue costs - (1,310,569) - - - - - (1,310,569)
Issuance of 1 sponsor share 1 - - - - - - 1
Total comprehensive loss for the period - - - - - - (2,546,025) (2,546,025)
Share-based payment expense - - - - - 209,250 - 209,250
Balance as at 30 June 2021 2 131,166,131 - 98,000 350,000 209,250 (2,546,025) 129,277,358
Total comprehensive loss for the year - - - - - - (7,715,383) (7,715,383)
Share-based payment expense - - - - - 95,854 - 95,854
Balance as at 30 June 2022 2 131,166,131 - 98,000 350,000 305,104 (10,261,408) 121,657,829
Total comprehensive profit for the year - - - - - - 1,432,008 1,432,008
Share-based payment expense - - - - - 95,853 - 95,853
Balance as at 30 June 2023 2 131,166,131 - 98,000 350,000 400,957 (8,829,400) 123,185,690
Consolidated Statement of Cash Flows
For the year ended For the year ended
30 June 2023 30 June 2022
£ £
Operating activities
Profit/ (Loss) for the period 1,432,008 (7,715,383)
Adjustments to reconcile total operating loss to net cash flows:
Deduct interest income (2,953,473) (281,430)
Fair Value adjustment on Financial Asset 960,000 4,800,000
Add back share based payment expense 95,853 95,854
Working capital adjustments:
(Increase)/ Decrease in trade and other receivables and (908,938) 128,261
Prepayments
(Decrease)/Increase in trade and other payables (1,052,639) 1,636,818
Net cash flows used in operating activities (2,427,189) (1,335,880)
Investing Activities
Purchase of Financial Asset - (24,000,000)
Interest income 2,953,473 281,430
Net cash flows from/(used in) investing activities 2,953,473 (23,718,570)
Net increase/(decrease) in cash and cash equivalents 526,284 (25,054,450)
Cash and cash equivalents at the beginning of the year 104,169,997 129,224,447
Cash and cash equivalents at the end of the year 104,696,281 104,169,997
The Notes form an integral part of these Financial Statements.
Notes to the Consolidated Financial Statements
1. SEGMENT INFORMATION
The Board of Directors is the Company's chief operating decision-maker. As the
Company has not yet commenced trading, the Board of Directors considers the
Company as a whole for the purposes of assessing performance and allocating
resources, and therefore the Company has one reportable operating segment.
2. ADMINISTRATIVE EXPENSES BY NATURE
For the year ended For the year ended
30 June 2023
30 June 2022
Company administrative expenses by nature £ £
Directors' fees 223,734 224,302
Professional fees 155,256 110,584
Non-recurring project costs 432,021 2,750,468
Listing fees 52,248 69,295
Share based payment expense 95,853 95,854
Branding and website cost 39,966 6,910
Travel and entertainment 5,301 3,654
Bank charges 1,150 1,233
1,005,529 3,262,300
The Company's independent auditor, Baker Tilly Channel Islands Limited, has
fees amounting to £18,070 for the final year end audit.
3. FINANCE INCOME
For the year ended 30 June 2023 For the year ended 30 June 2022
£ £
Interest from cash and cash equivalents 3,217,537 346,917
Dividends from listed equity securities 180,000 -
3,397,537 346,917
4. TAXATION
For the year ended 30 June 2023 For the year ended 30 June 2022
£ £
Analysis of tax in year
Current tax on profits for the year - -
Total current tax - -
The central management and control of the Company is exercised in the UK and
accordingly the Company is treated as tax resident in the UK.
Reconciliation of effective rate and tax charge:
For the year ended 30 June 2023 For the year ended 30 June 2022
£ £
Profit/ (Loss) on ordinary activities before tax 1,432,008 (7,715,383)
Expenses not deductible for tax purposes 1,059,623 4,896,942
Over allowance for the tax charge recognised in the prior year - 252,708
Profit/ (Loss)on ordinary activities subject to corporation tax 2,491,631 (2,565,733)
Profit/ (Loss)on ordinary activities multiplied by the rate of corporation tax 622,908 (487,489)
in the UK of 25% (2022: 19%)
Effects of:
Losses (utilised)/ carried forward for which no deferred tax recognised (622,908) 487,489
Total taxation charge - -
As at 30 June 2023, cumulative tax losses available to carry forward against
future trading profits were £2,425,877 subject to agreement with HM Revenue
& Customs. Prior to an acquisition, there is no certainty as to future
profits and no deferred tax asset is recognised in relation to these carried
forward losses.
UK companies can carry forward trading losses indefinitely and can be carried
back 1 year (or in certain limited circumstances up to 3 years). Companies
have 4 years from the end of the tax year in question to report losses, either
on a tax return or in writing to HMRC.
5. PROFIT/(LOSS) PER ORDINARY SHARE
Basic EPS is calculated by dividing the profit or loss attributable to equity
holders of a 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.
The Company had previously issued 700,000 warrants, each of which is
convertible into one ordinary share. The Company made a loss in the prior
year, which would result in the warrants being anti-dilutive. Therefore, the
warrants have not been included in the calculation of diluted earnings per
share in the prior year.
For the year ended 30 June 2023 For the year ended 30 June 2022
Profit/ (Loss) attributable to owners of the parent 1,432,008 (7,715,383)
Weighted average number of ordinary shares in issue 133,200,000 133,200,000
Weighted average number of ordinary shares for diluted EPS 133,200,000 133,200,000
Basic profit/ (loss) per ordinary share (£) 0.01 (0.06)
Diluted Profit per ordinary share (£) 0.01 -
6. INVESTMENTS
Principal subsidiary undertakings of the Company
The Company directly owns the whole of the issued ordinary share capital of
its subsidiary undertaking. Details of the Company's subsidiary are presented
below:
Nature of business Country of incorporation Proportion of ordinary shares held by parent Proportion of ordinary shares held by the Company
Subsidiary
MAC I (BVI) Limited Incentive vehicle BVI 100% 100%
The registered office of MAC I (BVI) Limited Commerce House, Wickhams Cay 1,
Road Town, Tortola, British Virgin Islands VG1110.
Details of the indirectly held subsidiaries are presented below:
Nature of business Country of incorporation Proportion of ordinary shares held by the Group
Subsidiary
ADV Holding Group Limited Holding company England and Wales 100%
ADV Finance Holding Limited Holding company England and Wales 100%
ADV People Holding Limited Holding company England and Wales 100%
ADV US Inc. Holding company USA 100%
ADV Data Holding Limited Holding company England and Wales 100%
Financial assets of the Company
The Company directly owns equity investments for which the Company has not
elected to recognise fair value gains and losses through Other Comprehensive
Income.
As at 30 June 2023 As at 30 June 2022
£ £
Level 1 Financial assets at fair value through profit or loss (FVTPL) 18,240,000 19,200,000
18,240,000 19,200,000
There were no transfers between levels for fair value measurements during the
year. The Company's policy is to recognise transfers into and out of fair
value hierarchy levels as at the end of the reporting period.
a) Level 1: The fair value of financial instruments traded in active
markets (such as publicly traded derivatives, and equity securities) is based
on quoted market prices at the end of the reporting period. The quoted market
price used for financial assets held by the Company is the current bid price.
These instruments are included in level 1.
b) Level 2: The fair value of financial instruments that are not traded
in an active market (e.g. over-the counter derivatives) is determined using
valuation techniques that maximise the use of observable market data and rely
as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is
included in level 2.
c) Level 3: If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3. This is the
case for unlisted equity securities. During the year, the following
gains/(losses) were recognised in profit or loss:
For year ended 30 June 2023 For year ended
30 June 2022
£ £
Fair value (losses) on equity investments at FVTPL recognised in other (960,000) (4,800,000)
(losses)
(960,000) (4,800,000)
7. CASH AND CASH EQUIVALENTS
As at 30 June 2023 As at 30 June 2022
£ £
Cash and cash equivalents
Cash at bank 47,741,876 64,169,997
Deposits on call 56,954,405 40,000,000
104,696,281 104,169,997
Credit risk is managed on a Company 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.
8. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Company has the following categories of financial instruments at the year
end:
As at As at
30 June 2023 30 June 2022
£ £
Financial assets measured at amortised cost
Cash and cash equivalents 104,696,281 104,169,997
Other receivables 509,553 65,488
Financial assets at fair value through profit or loss (FVTPL) 18,240,000 19,200,000
123,445,834 123,435,485
Financial liabilities measured at amortised cost
Trade and other payables 761,014 1,813,653
761,014 1,813,653
The Company 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 Company's exposure to each of the
above risks and the Company's objectives, policies and processes for measuring
and managing these risks.
The Company's risk management policies are established to identify and analyse
the risks faced by the Company, 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
Company's activities.
Treasury activities are managed on a Company basis under policies and
procedures approved and monitored by the Board. These are designed to reduce
the financial risks faced by the Company which primarily relate to movements
in interest rates.
Market risk
The Company'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 Company. The
Company'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 Company will not be able to meet its
financial obligations as they fall due. The Company'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 Company's reputation. The Company currently meets all liabilities from
cash reserves and the Directors believe this risk is adequately mitigated.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a
financial loss for the other party by failing to discharge an obligation. The
main credit risk relates to the cash held with financial institutions. The
Company manages its exposure to credit risk associated with its cash deposits
by selecting counterparties with a high credit rating with which to carry out
these transactions. The counterparty for these transactions is Barclays Bank
plc, which holds a short-term credit rating of P-1 , as issued by Moody's.
The Company's maximum exposure to credit risk is the carrying value of the
cash on the Consolidated Statement of Financial Position reserves and the
Directors believe this risk is adequately mitigated.
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 £123.2million as
at 30 June 2023 (2022: £121.7million). The Directors actively monitor this.
There were no changes in the Company's approach to capital management during
the year and the Company's capital management policy will be revisited once an
Acquisition has been identified.
9. RELATED PARTY TRANSACTIONS
Antoinette Vanderpuije, the Company Secretary is a partner of MIMLLP. MIMLLP
manages MVI II Holdings I LP which is beneficially owned by MVI II. MVI II
Holdings I LP holds 15.41% of the Company's Ordinary Shares and 1 Sponsor
Share.
Mark Brangstrup Watts and Antoinette Vanderpuije have a beneficial interest in
the Incentive Shares as described in note 15 through their indirect interest
in MLTI which owns 2,000 A2 ordinary shares in the capital of MAC I (BVI)
Limited. Mark Brangstrup Watts was a Managing Partner of MIMLLP and Marwyn
Capital LLP ("MCLLP") until 6 November 2022.
Antoinette Vanderpuije is a partner MCLLP. MCLLP provides corporate finance,
company secretarial and managed service support to the Company. The Company
has incurred fees of £17,123 in respect of company secretarial and managed
service support and £136,660 in respect to project related fees, of which
£10,277 was outstanding at the balance sheet date. MCLLP was also engaged to
provide corporate finance advice to the Company. On 18 March 2021, MCLLP and
the Company entered into a side letter under which corporate finance services
would be suspended, resulting in the fees being reduced from £10,000 per
month to £nil effective on Admission in March 2021. During the year the
Company paid £nil for corporate finance services to MCLLP and £nil was
outstanding at the balance sheet date. MCLLP incurred costs of £8,634, which
it recharged the Company during the year.
Directors' emoluments, in relation to Mark Brangstrup Watts, are disclosed in
note 5.
10. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding at 30 June
2023 that requires disclosure or adjustment in these Financial Statements.
11. POST BALANCE SHEET EVENTS
On the 8 June 2023 the Group conditionally agreed to acquire five software
businesses from Capita plc for a combined enterprise value of approximately
£33m in cash. The Acquisitions are subject to and conditional upon National
Security and Investment Act approval which was duly received on 25 July 2023.
At the date of signing these financial statements the company had not
completed the acquisitions.]
No other matter or circumstance has arisen since 30 June 2023 that has
significantly affected, or may significantly affect the consolidated entity's
operations, the results of those operations, or the consolidated entity's
state of affairs in future financial years.
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