REG - Bay Capital PLC - Results for the period ended 31 December 2021
29/04/2022 07:00
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RNS Number : 7877J Bay Capital PLC 29 April 2022
29 April 2022
Bay Capital Plc
("Bay Capital" or the "Company")
Full Year Results for the period ended 31 December 2021
Bay Capital Plc (LSE: BAY) has today published its Annual Report and Financial
Statements for the period ended 31 December 2021 (the "Annual Report").
In accordance with Listing Rule 9.6.1 copies of the Annual Report have been
submitted to the UK Listing Authority and will shortly be available to view
on the Company's website at https://www.baycapitalplc.com/
(https://www.baycapitalplc.com/) and will be shortly available for
inspection from the National Storage Mechanism
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanis
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) m
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
LEI: 213800F59868OZQU6E56
Enquiries
Tessera - Strategic Adviser
Tony Morris +44 (0) 7742 189145
Montfort Communications
Olly Scott +44 (0) 78 1234 5205
CHAIRMAN'S STATEMENT
I am pleased to present the financial results for Bay Capital Plc ("Bay", the
"Company") and its subsidiary (together the "Group") for the period ended 31
December 2021, which covers nine months of trading since the Company's
incorporation on 31 March 2021.
Since establishing the Company on the Standard List of the Main Market of the
London Stock Exchange in 2021, we have remained focused on implementing our
strategy and continue to assess investment and acquisition opportunities where
we believe there to be sustainable growth potential either organically or
through acquisition. These will typically be fundamentally sound assets, where
tangible opportunities exist to drive strategic, operational and performance
improvements.
Despite macroeconomic and geopolitical uncertainty, we remain extremely
positive about the prospects of our sectors of focus across industrials,
construction and business services sectors, together with software and
technology companies which service those industry verticals. We have an ideal
platform from which we can execute our buy-and-build strategy and we look
forward to updating shareholders in due course as our investment and
acquisition plans develop during the new financial year.
We thank our shareholders for their support through our IPO and while we
diligently continue to source and evaluate a number of exciting propositions
that if secured, we believe have the potential to create shareholder value.
Peter Tom CBE
Chairman
28 April 2022
REPORT OF THE DIRECTORS
The Directors of the Company present their report for the period ended 31
December 2021.
PRINCIPAL ACTIVITY AND BUSINESS REVIEW
For the financial period ended 31 December 2021, the Company's principal
activity was as a holding company, which has actively pursued its strategy
through the sourcing and assessment of acquisition and investment
opportunities in the industrial, construction and business services sectors,
together with software and technology companies which service those
industries.
On 30 September 2021, the Company successfully listed its ordinary shares onto
the Main Market of the London Stock Exchange.
RESULTS
During the period, Bay recorded a loss of £309,084 and the loss per share was
1.1p, reflecting moderate monthly operating expenses of the Company as well as
transaction expenses occurred during its IPO, which completed in September
2021. The Company had cash reserves at the end of the period of £6,720,238.
DIVIDENDS
At this point in the Company's development, it does not anticipate declaring
any dividends in the foreseeable future. As such, the Directors do not
recommend the payment of a dividend for the period.
FUTURE DEVELOPMENTS
The Directors expect to continue to execute the Company's strategy in sourcing
and assessing acquisition and investment opportunities across its stated
sectors of focus.
KEY PERFORMANCE INDICATORS
The Board continues to focus on maximising shareholder value by sourcing,
assessing and where in the interest of shareholders to do so, investing in and
acquiring growing businesses within the industrial, construction and business
services sectors.
Following completion of the Company's inaugural transaction, the Board will be
in a position to identify and develop its key performance indicators for
on-going monitoring and management.
GOING CONCERN
The Directors, having made due and careful enquiry, are of the opinion that
the Company has adequate working capital to execute its operations and has the
ability to access additional financing, if required, over the next 12 months.
The Company's unaudited cash balance as at 22 April 2022 was £6,666,378, and
excluding the consummation of any investment or acquisition which will likely
require specific funding, has adequate resources available to fund the
on-going forecasted operating expenses for at least twelve months following
approval of the financial statements. The Directors, therefore, have made an
informed judgement, at the time of approving the financial statements, that
there is a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. As a result, the
Directors have adopted the going concern basis of accounting in preparing the
annual financial statements (see Note 2).
RISK MANAGEMENT
In order to execute the Group's strategy, the Company and its subsidiaries
will be exposed to both financial and non-financial risks. The Board has
overall responsibility for the Group's risk management and it is the Board's
role to consider whether those risks identified by management are acceptable
within the Group's strategy and risk appetite. The Board therefore
periodically reviews the principal risks and considers how effective and
appropriate the controls that management has in place to mitigate the risk
exposure are and will make recommendations to management accordingly.
As the Company had not completed its first investment or acquisition in the
period, it has limited financial statements and/or historical financial data,
and limited trading history. As such, the Company during the period was
subject to the risks and uncertainties associated with an early-stage
acquisition company, including the risk that the Company will not achieve its
investment objectives and that the value of an investment could decline and
may result in the partial or complete loss of capital invested. The past
performance of investee companies or assets managed by the Directors will not
necessarily be a guide to future business, results of operations, financial
condition or prospects of the Company.
In order to mitigate against these risks, the Directors will continue to
undertake thorough due diligence on investment opportunities and acquisition
targets, to a level considered reasonable and appropriate by the Company on a
case-by-case basis, including the potential commissioning of third-party
specialist reports as appropriate. Following completion of any investment or
acquisition, it is intended that any investments or assets will be managed by
the Directors and assisted by the Company's professional advisers.
Financial Risk Management
The Directors consider the Group to be exposed to the following financial
risks:
a. Price risk: the price paid for securities is subject to market movement
that will have an impact on the operations of the Group;
b. Cash flow interest rate risk: the Group has significant cash balances
which exposed it to movement in the market interest rates; and
c. Liquidity risk: the Group manages its cash requirements to balance cash
availability and the generation of interest income.
Given the relatively small size and operation of the Group in the period, the
Directors have not delegated the responsibility of risk monitoring to a
sub-committee of the Board, but closely monitor the risks on a periodic basis.
The Directors consider their exposure in the financial period to have been
low. Refer to Note 14 for assessment of the risks arising from financial
instruments.
Non-financial Risk Management
The non-financial risk factors for the period ended 31 December 2021 did not
materially change from those set out in the Bay's Prospectus dated 27
September 2021.
GREENHOUSE GAS EMISSIONS, ENERGY CONSUMPTION AND ENERGY EFFICIENCY
As the Company has not completed its first acquisition and has on only two
Directors, limited travel and no premises, the Directors do not consider any
disclosure under the Task Force on Climate-related Financial Disclosures is
required at this juncture, however the Company will continue to review this
position as it executes its investment and acquisition strategy.
POLITICAL CONTRIBUTIONS
The Company has made no political contributions during the period.
CHARITABLE DONATIONS
The Company has made no charitable donations during the period.
POST BALANCE SHEET EVENTS
Details of post balance sheet events are disclosed in Note 20.
SHARE CAPITAL
Details of the Company's share capital is set out in Note 15. The Company's
share capital consists of one class of ordinary share, which does not carry
rights to fixed income. As at 31 December 2021, there were 70,000,000 ordinary
shares of 1p par value each in issue.
SIGNIFICANT SHAREHOLDERS
As at 22 April 2022, the Company had been advised of the following notifiable
interests (whether directly or indirectly held) in voting rights.
Name Shareholding Percentage
JIM Nominees Limited 16,759,802 23.9%
Hermco Property Limited* 15,000,000 21.4%
David Williams 14,250,000 20.4%
Huntress (CI) Nominees Limited 6,032,350 8.6%
* Nominee entity holding indirect and direct interests of Peter Tom CBE,
Chairman of the Company
As at 22 April 2022, the Directors in aggregate held 29,250,000 ordinary
shares, which represents 41.8 per cent. of the Company's issued share capital.
COMPANY DIRECTORS
The Directors during the period and summaries of their experience are set out
below.
Peter Tom CBE Non-executive Chairman (aged 81)
Peter is one of the aggregates industry's longest serving and most experienced
executives, holding high-profile executive and non-executive roles serving
publicly listed and private organisations in the industry, sport and the
not-for-profit sector.
He most recently served as Executive Chairman of Breedon Group, (AIM: BREE)
the UK'S largest independent aggregates business, which he co-founded with
David Williams (a Director of the Company) and Simon Vivian in 2008. Under
Peter's leadership, Breedon grew from a £13 million AIM-listed cash shell
into a business worth £1.5 billion, leading the consolidation of the UK
aggregates industry.
Prior to establishing Breedon, Peter was the Chief Executive Officer and
latterly Non-executive Chairman of Aggregate Industries, which he developed
into a leading international building materials group before negotiating its
sale to Holcim for £1.8 billion in 2005. His early career was spent at Bardon
Hill Quarries, where he rose to become Chief Executive of the Bardon Group plc
in 1985. He went on to lead Bardon's merger with Evered plc in 1991 and the
enlarged group's subsequent merger with CAMAS in 1997 to form Aggregate
Industries plc.
In 2006, Peter was awarded a CBE for services to Business and Sport. He holds
Honorary Degrees from both Leicester and De Montfort University and is
Chairman of Leicester Rugby Football Club, (Leicester Tigers) a role he has
held for more than 20 years following a playing career comprising 130
appearances for the club as a lock forward between 1963 and 1968.
David Williams Non-Executive Director (age 68)
David has over 36 years' experience in investment markets, serving as Chairman
in executive and non-executive capacities for a number of public and private
companies. He has overseen the development of these companies, raising in
excess of £1 billion of capital to support both organic and acquisitive
growth initiatives.
David was the original founder of Marwyn Capital LLP, the award-winning
investment management company. David was also formerly Chairman of
Entertainment One Ltd. (LSE: ETO), Zetar plc, and Oxford BioDynamics Plc (AIM:
OBD), and non-executive director of Breedon Group plc (AIM: BREE). He
currently serves as Non-executive Chairman of the AIM-quoted cyber security
business, Shearwater Group plc (AIM: SWG) and Main Market listed Acceler8
Ventures Plc (LSE: AC8) and Red Capital Plc (LSE: REDC).
The Directors who held office during the period and their beneficial interest
in the share capital of the Company at 31 December 2021 were as follows:
31 December 2021
Hermco Property Limited* 15,000,000
David Williams 14,250,000
29,250,000
* Peter Tom's shareholding is held via Hermco Property Limited
DIRECTORS REMUNERATION
The Chairman and Non-Executive Director are each entitled to fees of £30,000
and £20,000 per annum for their respective roles within the Company, as per
their service agreements entered into on 14 September 2021. There are no other
benefits paid to Directors outside of their service fees, save for ordinary
course reimbursable expenses properly incurred in the performing their duties
as Directors. The Company does not operate a pension scheme.
Salary Benefits in kind 31 December 2021 Total
Director £ £ £
Peter Tom CBE* 2,500 - 2,500
David Williams 5,000 - 5,000
7,500 - 7,500
* Peter Tom's fees are paid through Rise Rocks Limited, a company wholly owned
by Peter Tom CBE
In addition to the Director fees outlined above, the Directors are also
participants in the Subco Incentive Scheme and holders of warrants as detailed
below.
SUBCO INCENTIVE SCHEME
The Directors believe that the success of the Company will depend to a high
degree on the future performance of key employees and advisers in executing
and supporting the Company's growth strategy. The Company has therefore
established equity-based incentive arrangements which are, and will continue
to be, an important means of retaining, attracting and motivating key
employees, consultants and advisers, and also for aligning the interests of
the Directors with those of shareholders.
On 14 September 2021, the Group created a new Subco Incentive Scheme within
its wholly owned subsidiary Bay Capital Subco Limited. Under the terms of the
Subco Incentive Scheme, scheme participants are only rewarded if a
predetermined level of shareholder value is created over a three to five year
period or upon a change of control of the Company or Subco (whichever occurs
first), calculated on a formula basis by reference to the growth in market
capitalisation of the Company, following adjustments for the issue of any new
ordinary shares and taking into account dividends and capital returns
("Shareholder Value"), realised by the exercise by the beneficiaries of a put
option in respect of their shares in Subco and satisfied either in cash or by
the issue of new ordinary shares at the election of the Company.
Under these arrangements in place, participants are entitled up to 15 per
cent. of the Shareholder Value created, subject to such Shareholder Value
having increased by at least 10 per cent. per annum compounded over a period
of between three and five years from Admission, or following a change of
control of the Company or Subco.
In order to implement the Subco Incentive Scheme, the Company as sole
shareholder of Subco, approved the creation of a new share class in Subco (the
"B Shares"). At the same time the Subco's existing ordinary shares were
redesignated A Shares. The B Shares do not have voting or dividend rights.
On 14 September 2021, Hermco Property Limited (a company controlled by Peter
Tom, Chairman of the Company), David Williams, a Non-Executive Director of the
Company, and Kathleen Long and Anthony Morris, Directors of Tessera Investment
Management Limited, became the first participants in the Subco Incentive
Scheme ("Founder Participants"), and as such, the proportion of Shareholder
Value attaching to the Subco Incentive Scheme is 11 per cent. of a total cap
of 15 per cent.
The Founder Participants and their respective holdings are outlined below.
Participant Subco B shares held
Hermco Property Limited* 50,000
David Williams 40,000
Kathleen Long 10,000
Anthony Morris 10,000
110,000
* Nominee entity holding indirect and direct interests of Peter Tom CBE,
Chairman of the Company
WARRANTS
On 13 September 2021, the Company constituted 70,000,000 warrants on the terms
of an instrument under which the Company issued 30,000,000 warrants to certain
existing shareholders of the Company including the Directors, and a further
40,000,000 warrants on admission of the Company to the Main Market of the
London Stock Exchange.
The warrants are exercisable at any time from the date of completion of the
inaugural transaction (an investment or acquisition) made by the Company where
the consideration for such transaction is at least £10 million at a price of
£0.10 per ordinary share. These warrants can be exercised through application
to the Company. The warrants will not be listed on the London Stock Exchange
or any other publicly traded market.
The Directors' respective warrant holdings are detailed below.
Participant Date of grant Exercise price No. of ordinary shares to which the grant relates
Hermco Property Limited* 13 September 2021 £0.10 15,000,000
David Williams 13 September 2021 £0.10 14,250,000
29,250,000
* Nominee entity holding indirect and direct interests of Peter Tom CBE,
Chairman of the Company
CORPORATE GOVERNANCE
As a Jersey company and a company with a Standard Listing, the Company is not
required to comply with the provisions of the UK Corporate Governance Code
2018. Furthermore, there is no applicable regime of corporate governance to
which the directors of a Jersey company must adhere over and above the general
fiduciary duties and duties of care, skill and diligence imposed on such
directors under Jersey law. Notwithstanding this, the Directors are committed
to maintaining high standards of corporate governance and will be responsible
for carrying out the Company's objectives and implementing its business
strategy.
All investment, acquisition, divestment and other strategic decisions are
considered and determined by the Board. The Board provides leadership within a
framework of prudent and effective controls. The Board has established the
corporate governance values of the Company and has overall responsibility for
setting the Company's strategic aims, defining the business plan and strategy
and managing the financial and operational resources of the Company.
In this regard, the Board, so far as is practicable given the Company's size
and stage of its development, has voluntarily adopted the QCA Code as its
chosen corporate governance framework. There are certain provisions of the QCA
Code which the Company will not currently adhere to, and their adoption will
be delayed until such time as the Directors believe it is appropriate to do
so. It is anticipated that this will occur concurrently with the Company's
first material investment or acquisition.
Following such an acquisition, the Company will seek to develop its corporate
governance stance, and will address key differences to the QCA Code including
the implementation of audit, remuneration and nomination committees with
appropriate terms of reference, the publication of KPIs, and the development
of a corporate and social responsibility policy.
ROLE OF THE BOARD
The Board is responsible for the management of the business of the Company,
setting the strategic direction of the Company and establishing the policies
of the Company. It is the Directors' responsibility to oversee the financial
position of the Company and monitor the business and affairs of the Company,
on behalf of the shareholders, to whom they are accountable. The primary duty
of the Directors is to act in the best interests of the Company at all times.
The Board also addresses issues relating to internal control and the Company's
approach to risk management and has formally adopted an anti-corruption and
bribery policy.
The Company does not have a separate investing committee and therefore the
Board as a whole will be responsible for sourcing acquisitions and ensuring
that opportunities conform with the Company's strategy.
The Company holds four formal Board meetings a year, with unscheduled meetings
as matters arise which require the attention of the Board. Formal Board
meetings are timed to link to key events in the Company's corporate calendar.
Outside the scheduled and unscheduled meetings of the Board, the Directors
maintain frequent contact with each other to keep them fully briefed on the
Company's operations.
INTERNAL CONTROLS
The Board acknowledges its responsibility for establishing and monitoring the
Group's systems of internal control. Although no system of internal control
can provide absolute assurance against material misstatement or loss, the
Group's systems are designed to provide the Directors with reasonable
assurance that problems can be identified on a timely basis and dealt with
appropriately.
The Group maintains an appropriate process for financial reporting. The annual
budget is reviewed and approved by then Board before being formally adopted.
Other key procedures that have been established and which are designed to
provide effective control are as follows:
§ Management structure - The Board meets regularly on a formal and informal
basis to discuss all issues affecting the Group.
§ Investment appraisal - The Group has a robust framework for investment
appraisal and approval is required by the Board, where appropriate.
§ Share dealing and inside information - the Company has adopted a share
dealing code regulating trading and confidentiality of inside information for
the Directors and other persons discharging managerial responsibilities (and
their persons closely associated) which contains provisions appropriate for a
company whose shares are admitted to trading on the Official List
(particularly relating to dealing during closed periods which will be in line
with the Market Abuse Regulation). The Company takes all reasonable steps to
ensure compliance by the Directors and any relevant employees with the terms
of that share dealing code.
The Board reviews the effectiveness of the systems of internal control and
considers the major business risks and the control environment. No significant
deficiencies have come to light during the period and no weaknesses in
internal financial control have resulted in any material losses, or
contingencies which would require disclosure, as recommended by the guidance
for Directors on reporting on internal financial control.
The Directors are focused on careful management of the Company's cash and
financial resources through Board level approvals. At such time that the
Company completes an acquisition, the Directors anticipate that the Company's
financial position and prospects procedures regime will be updated and
expanded as necessary to cater for the nature of the Company's business
following completion of its inaugural investment or acquisition.
BOARD EVALUATION
In the period, the Board evaluation process was limited to an ongoing informal
evaluation of the performance of the Board by each Director. This will be
replaced by a formal, annual evaluation process once the Company has completed
its first acquisition.
EXTERNAL ADVISERS
The Board accessed the following external advisers during the period and post
the period end:
Mayer Brown International LLP and Ogier (Jersey) LLP - legal
Tessera Investment Management Limited - capital markets and M&A
Montfort Communications Limited - public relations
JTC Plc - company secretarial, governance and regulatory filings
CONFLICTS OF INTEREST
A Director has a duty to avoid a situation in which he or she has, or can
have, a direct or indirect interest that conflicts, or possibly may conflict,
with the interests of the Company. The Board has satisfied itself that there
are no conflicts of interest where the Directors have appointments on the
Boards of, or relationships with, companies outside the Company. Furthermore,
the Board requires Directors to declare all appointments and other situations
which could result in a possible conflict of interest, and therefore believes
it has a robust framework to deal with any conflict of interest should it
arise.
RELATIONS WITH SHAREHOLDERS
The Chairman is the Group's principal spokesperson with investors, fund
managers, the media and other interested parties, alongside support provided
by the Company's communications advisers. As well as the Annual General
Meeting with shareholders, the other Directors may give formal presentations
at investor road shows following the announcement of interim and full period
results.
Notice of this year's Annual General Meeting will shortly be sent to
shareholders.
DISCLOSURE OF INFORMATION TO THE AUDITOR
So far as the Directors are aware, there is no relevant audit information of
which the Company's auditor is unaware, and each Director has taken all the
steps that he ought to have taken as a Director in order to make himself aware
of any relevant audit information and to establish that the Company's auditor
is aware of that information.
The Directors confirm to the best of their knowledge that:
§ the financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as whole;
§ the Chairman's Statement and Report of the Directors includes a fair review
of the development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they
face; and
§ the annual report and accounts, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to
assess the Company's position and performance, business model and strategy.
AUDITOR
The auditor, MHA MacIntyre Hudson, will be proposed for re-appointment at the
forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD
David Williams
Non-Executive Director
28 April 2022
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' report and the
financial statements in accordance with applicable law and regulations.
Jersey Company law requires the directors to prepare financial statements for
each financial period. Under that law the directors have elected to prepare
the financial statements in accordance with International Financial Reporting
Standards as adopted by the United Kingdom ("IFRS"). Under company law the
Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Company and
of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
§ select suitable accounting policies and then apply them consistently;
§ make judgements and estimates that are reasonable and prudent;
§ state whether the Group financial statements have been prepared in
accordance with IFRS as adopted by the United Kingdom;
§ state whether the Company financial statements have been prepared in
accordance with FRS 101 "Reduced Disclosure Framework"; 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 are responsible for keeping proper accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
(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.
The maintenance and integrity of the Group's website is the responsibility of
the Directors. The work carried out by the auditors does not involve the
consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred in the accounts since
they were initially presented on the website. Legislation in Jersey governing
the preparation and dissemination of the accounts and the other information
included in annual reports may differ from legislation in other jurisdictions.
Consolidated statement of comprehensive income
For the 9 month period ended 31 December 2021
2021
Note £
Administrative expenses (309,084)
Loss before taxation 6 (309,084)
Taxation charge 7 -
Loss for the period (309,084)
Total comprehensive loss for the period (309,084)
Loss per share (pence)
Basic and diluted 8 (1.1p)
The notes below form part of these consolidated Financial Statements.
Consolidated statement of Financial Position
As at 31 December 2021
31 December 31 December
2021 2021
Note £ £
Current assets
Cash and cash equivalents 11 6,720,238
Other receivables 12 2,322
Total current assets 6,722,560
Total assets 6,722,560
Current liabilities
Other payables 13 69,645
Total current liabilities 69,645
Total liabilities 69,645
Total net assets 6,652,915
Equity
Issued share capital 15 700,000
Share premium 16 6,258,748
Capital redemption reserve 16 2
Share based payment reserves 17 3,249
Retained deficit 16 (309,084)
Total equity 6,652,915
The consolidated financial statements were approved and authorised for issue
by the Board on 28 April 2022 and were signed on its behalf by:
David Williams
Non-Executive Director
The notes below form part of these consolidated Financial Statements.
Consolidated statement of changes in equity
For the 9 month period ended 31 December 2021
Notes
Share capital Share premium Capital redemption reserve Share based payment reserve Retained deficit
Total
£ £ £ £ £ £
Balance at incorporation date 2 - - - - 2
Loss for the period - - - - (309,084) (309,084)
Transactions with owners in their capacity as owners:
Issue of new ordinary shares 15 699,998 6,298,748 2 - - 6,998,748
Ordinary share issue costs - (40,000) - - - (40,000)
Share based payment 18 - - - 3,249 - 3,249
At 31 December 2021 700,000 6,258,748 2 3,249 (309,084) 6,652,915
See note 15 of the notes for full details of the capital movements during the
period.
The notes below form part of these consolidated Financial Statements.
Consolidated statement of cash flows
For the 9 month period ended 31 December 2021
2021
£
Operating activities
Loss before taxation (309,084)
Adjustments for:
Share based payment charge 3,249
Operating cash flows before changes in working capital (305,835)
Increase in other receivables (2,322)
Increase in other payables 69,645
Net cash outflows from operating activities (238,512)
Financing activities
Issue of ordinary shares 6,998,750
Ordinary share issue costs (40,000)
Net cash inflows from financing activities 6,958,750
Net increase in cash and cash equivalents 6,720,238
Cash and cash equivalents at beginning of the period -
Cash and cash equivalents at end of the period 6,720,238
The notes below form part of these consolidated Financial Statements.
Notes forming part of the consolidated financial statements
For the 9 month period ended 31 December 2021
1 General information
The Company was incorporated on 31 March 2021 as Bay Capital Limited, a
private limited company under the laws of Jersey with registered number
134743. On 8 September 2021 the Company was re-registered as an unlisted
public limited company and its name was changed to Bay Capital Plc. On 30
September 2021 the Company shares were admitted to trading onto the Main
Market of the London Stock Exchange. The Company is the parent company of Bay
Capital Subco Limited (a private limited company under the laws of Jersey with
registered number 134744).
The address of its registered office is 28 Esplanade, St. Helier, Channel
Islands, JE2 3QA, Jersey. The Group has been incorporated for the purpose of
identifying suitable acquisition opportunities in accordance with the Group's
investment and acquisition strategy with a view to creating shareholder value.
The Group will retain a flexible investment and acquisition strategy which
will, subject to appropriate levels of due diligence, enable it to deploy
capital in target companies by way of minority or majority investments, or
full acquisitions where it is in the interests of shareholders to do so. This
will include transactions with target companies located in the UK and
internationally.
2 Accounting policies
The principal policies adopted in the preparation of the consolidated
financial statements are as follows:
(a) Basis of preparation
These consolidated financial statements have been prepared in accordance with
the requirements of International Financial Reporting Standards as adopted by
the United Kingdom ("IFRS") and the requirements of the Companies (Jersey) Law
1991.
No comparative figures have been presented as the consolidated financial
statements cover the period from incorporation on 31 March 2021 to 31 December
2021.
(b) Basis of consolidation
The consolidated financial statements present the results of the Company and
its subsidiaries ("the Group") as if they formed a single entity. Intercompany
transactions and balances between Group companies are therefore eliminated in
full.
Where the Group has control over a Company, it is classified as a subsidiary.
The Group controls a Company if all three of the following elements are
present: power over the Company, exposure to variable returns from the
Company, and the ability of the Group to use its power to affect those
variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the consolidated statement of
financial position, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at the
acquisition date. The acquisition related costs are included in the
consolidated statement of comprehensive income on an accruals basis. The
results of acquired operations are included in the consolidated statement of
comprehensive income from the date on which control is obtained.
(c) Functional and presentational currency
The Group's functional and presentational currency for these financial
statements is the pound sterling.
(d) Going concern
The Directors, having made due and careful enquiry, are of the opinion that
the Company has adequate working capital to execute its operations and has the
ability to access additional financing, if required, over the next 12 months.
The Company's unaudited cash balance as at 22 April 2022 was £6,666,378, and
excluding the consummation of any investment or acquisition which will likely
require specific funding, has adequate resources available to fund the
on-going forecasted operating expenses for at least twelve months following
approval of the financial statements. The Directors, therefore, have made an
informed judgement, at the time of approving the financial statements, that
there is a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. As a result, the
Directors have adopted the going concern basis of accounting in preparing the
annual financial statements.
(e) Employee benefits
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis
and are expensed as the related service is provided. A liability is recognised
for the amount expected to be paid under short-term cash bonus or
profit-sharing plans if the Group has a present legal or constructive
obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
(f) Taxation
Tax on the profit or loss for the period comprises current and deferred tax.
Tax is recognised in the income statement except to the extent that it relates
to items recognised directly in equity, in which case it is recognised in
equity.
Current tax is the expected tax payable or receivable on the taxable income or
loss for the period, using tax rates enacted or substantively enacted at the
balance sheet date.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not
provided for: the initial recognition of goodwill; the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit other
than in a business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the
balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the temporary
difference can be utilised.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits with
an original maturity of three months or less, held for meeting short term
commitments.
(h) Financial assets and liabilities
The Group's financial assets and liabilities comprise cash and other payables
Other payables are not interest bearing and are stated at their amortised
cost.
(i) Share-based payments
The Group operates an equity-settled share-based payment plan. The fair value
of the employee services received in exchange for the grant of options is
recognised as an expense over the vesting period, based on the Group's
estimate of awards that will eventually vest, with a corresponding increase in
equity as a share-based payment reserve.
This plan includes market-based vesting conditions for which the fair value at
grant date reflects and are therefore not subsequently revisited. The fair
value is determined using a binomial model.
(j) Warrants
Warrants issued as part of share issues have been determined as equity
instruments under IAS 32. Since the fair value of the shares issued at the
same time as the warrants is equal to the price paid, these warrants, by
deduction, are considered to have been issued at fair value.
(k) Accounting standards issued
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 - Interest Rate
Benchmark Reform - Phase 2 (effective for annual periods beginning on or after
1 January 2021) were issued and adopted in the period, with no material impact
on the financial statements.
There were no other new accounting standards issued have been adopted in the
period.
(l) Standards in issue but not yet effective
At the date of authorisation of these financial statements there were
amendments to standards which were in issue but which were not yet effective
and which have not been applied. The principal ones were:
§ Amendment to IFRS 16, 'Leases' - COVID-19 related rent concessions.
Extension of the practical expedient (effective for annual period beginning on
or 1 April 2021)
§ A number of narrow-scope amendments to IFRS 3, IAS 16, IAS 37 and some
annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16 (effective for
annual periods beginning on or after 1 January 2022)
§ Amendments to IAS 1, Presentation of financial statements on classification
of liabilities (effective date deferred until accounting periods starting not
earlier than 1 January 2024)
§ Narrow scope amendments to IAS 1, Practice statement 2 and IAS
8 (effective for annual periods beginning on or after 1 January 2023.
§ Amendment to IAS 12 - deferred tax related to assets and liabilities
arising from a single transaction (effective for annual periods beginning on
or after 1 January 2023)
§ The Directors do not expect the adoption of these amendments to standards
to have a material impact on the financial statements.
3 Accounting estimates and judgements
In preparing the consolidated financial statements, the Directors have to make
judgments on how to apply the Group's accounting policies and make estimates
about the future. The Directors do not consider there to be any critical
estimates or judgments that have been made in arriving at the amounts
recognised in the consolidated financial statements.
4 Employees
Staff costs, including Directors, consist of: 2021
£
Wages and salaries 7,500
Share based payments 2,658
_______
10,158
_______
2021
Number
The average number of employees, including Directors, during the period was: 2
_______
5 Directors' remuneration
The Company Directors are considered the only key management personnel and
their remuneration was as follows:
2021
£
Directors' emoluments 7,500
Share-based payments (Note 18) 2,658
________
10,158
________
The Chairman's fees are paid through Rise Rocks Limited, a Company wholly
owned by the Chairman.
6 Operating loss
2021
£
This has been arrived at after charging:
Professional services 127,644
Listing expenses 103,899
Fees payable to the Company's auditor for the audit of the parent and 20,000
consolidated accounts
7 Taxation
2021
£
Jersey corporation tax
Corporation tax on loss for the period -
Total taxation on loss on ordinary activities -
9 month period ended 31 Dec 2021
£
Loss before tax (309,084)
________
Tax for financial service companies at 10% (30,908)
Effect of:
Tax losses on which a deferred tax asset has not been recognised 30,908
________
Total taxation on loss on ordinary activities -
________
8 Earnings per share
Earnings per share is calculated by dividing the loss after tax for the period
by the weighted average number of shares in issue for the period, these
figures being as follows:
2021
£
Loss used in basic and diluted EPS, being loss after tax (309,084)
Adjustments:
Share based remuneration 3,249
Adjusted earnings used in adjusted EPS (305,835)
________
The Subco Incentive Scheme share options (note 18) have not been included in
the diluted EPS on the basis that they are anti-dilutive, however they may
become dilutive in future periods.
2021
Number
Weighted average number of ordinary shares of 1p each used as the denominator 27,345,455
in calculating basic and diluted EPS
________
Loss per share
Basic and diluted (1.1p)
Adjusted - basic and diluted after the adjustments in the table above (1.1p)
9 Adjusted earnings before interest, tax, depreciation and amortisation
(Adjusted EBITDA)
2021
£
Loss before tax (309,084)
EBITDA loss (309,084)
Share based remuneration 3,249
Adjusted EBITDA loss (305,835)
10 Subsidiaries
The Company directly owns the ordinary share capital of its subsidiary
undertakings as set out below:
Subsidiary Nature of business Country of incorporation Proportion of A ordinary shares held by Company Proportion of B ordinary shares held by Company
Bay Capital Subco Limited Intermediate holding company Jersey, Channel Islands 100 per cent. 0 per cent.
The address of the registered office of Bay Capital Subco Limited (the
"Subco") is 28 Esplanade, St. Helier, Channel Islands, JE2 3QA, Jersey. The
Subco was incorporated on 31 March 2021.
The A ordinary shares have full voting rights, full rights to participate in a
dividend and full rights to participate in a distribution of capital. The B
ordinary shares have been issued pursuant to the Company's Subco Incentive
Scheme and hold no voting or dividend rights or rights to distributions.
11 Cash and cash equivalents
2021
£
Cash and cash equivalents 6,720,238
________
12 Other receivables
2021
£
Prepayments and accrued income 2,322
________
13 Other payables
2021
Current trade and other payables £
Accruals 69,645
________
14 Financial instruments
The Group's financial assets and liabilities mainly comprise cash, and trade
and other payables. The carrying value of all financial assets and liabilities
equals fair value given their short term in nature.
Financial assets measured at amortised cost
2021
£
Current financial assets
Cash and cash equivalents 6,720,238
________
Financial liabilities
measured at amortised cost
2021
£
Current financial liabilities
Accruals 69,645
________
Credit risk
The Group's credit risk is wholly attributable to its cash balance. All cash
balances are held at a reputable bank in Jersey. The credit risk from its cash
and cash equivalents is deemed to be low due to the nature and size of the
balances held.
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 liquidity risk is to ensure that sufficient liquidity
is available to meet foreseeable requirements and to invest funds securely and
profitably.
The following table details the contractual maturity of financial liabilities
based on the dates the liabilities are due to be settled:
Financial liabilities:
Less than 1 year 2 to 5 Years More than 5 years Total
£ £ £ £
Accruals 69,645 - - 69,645
______ ______ ______ ______
At 31 December 2021 69,645 - - 69,645
_______ _______ ______ _______
15 Share capital
Allotted, called up and fully paid
2021 2021
Number £
Ordinary shares of 1p each:
At incorporation date 2 -
Issued in the period 69,999,998 700,000
_________ _________
At 31 December 70,000,000 700,000
_________ _________
On incorporation on 31 March 2021, the Company had an authorised share capital
of £10,000.00 divided into 10,000 ordinary shares of par value of £1 each,
of which one ordinary share was issued to each of the Founders. The two
ordinary shares were each issued for consideration of £1.00 per share.
On 19 August 2021, the Company sub-divided its share capital. Pursuant to the
sub-division, the two ordinary shares of £1.00 each in the issued share
capital of the Company were split into 200 ordinary shares. Following the
sub-division, 180 ordinary shares were re-designated as deferred shares of par
value £0.01 each. Following the sub-division and re-designation, the issued
share capital of the Company was comprised of 20 ordinary shares and 180
deferred shares, and the Company had an authorised share capital of £10,000
divided into 999,800 ordinary shares of par value £0.01 each and 200 deferred
shares of a par value £0.01 each. The deferred shares were redeemed and
subsequently cancelled, with a capital redemption reserve created of
equivalent value as per note 16.
On 19 August 2021, in accordance with article 5B of the Articles, the Company
redeemed for nil consideration the deferred shares. Any amounts standing to
the credit of any nominal or share premium account relating to deferred shares
that were redeemed were credited to a capital reserve of the Company and are
available for use in accordance with the Companies Law.
On 25 August 2021, the Company increased its authorised share capital to
£100,000 and issued and allotted 29,999,980 ordinary shares at a price of
£0.10 per ordinary share to the certain shareholders and investors, for
aggregate consideration of £2,999,998 in cash. Immediately following this
issue an allotment, the issued share capital of the Company was comprised of
30,000,000 ordinary shares.
Pursuant to the IPO placing, 40,000,000 ordinary shares were issued and
allotted at a price of £0.10 per ordinary share to certain new investors, for
aggregate consideration of £4,000,000 in cash. Warrants with the right to
subscribe for further ordinary shares in the Company were issued for every
ordinary share subscribed for.
Immediately following this issue and allotment, the Company's issued share
capital increased to 70,000,000 ordinary shares.
All shares are equally eligible to receive dividends and the repayment of
capital and represent one vote at the shareholders' meeting of the Company.
16 Reserves
Share premium and retained earnings represent balances conventionally
attributed to those descriptions. The transaction costs relating to the issue
of shares was deducted from share premium.
The Capital redemption reserve is made up on amounts arising from the
cancellation of the deferred shares.
The Group having no regulatory capital or similar requirements, its primary
capital management focus is on maximising earnings per share and therefore
shareholder return.
The Directors have proposed that there will be no final dividend in respect of
2021.
17 Share Incentive Plan
On 14 September 2021, the Group created a Subco Incentive Scheme within its
wholly owned subsidiary Bay Capital Subco Limited ("Subco"). Under the terms
of the Subco Incentive Scheme, scheme participants are only rewarded if a
predetermined level of shareholder value is created over a three to five year
period or upon a change of control of the Company or Subco (whichever occurs
first), calculated on a formula basis by reference to the growth in market
capitalisation of the Company, following adjustments for the issue of any new
Ordinary shares and taking into account dividends and capital returns
("Shareholder Value"), realised by the exercise by the beneficiaries of a put
option in respect of their shares in Subco and satisfied either in cash or by
the issue of new ordinary shares at the election of the Company.
Under these arrangements in place, participants are entitled to up to a share
of 15 percent of the Shareholder Value created, subject to such Shareholder
Value having increased by at least 10 percent. per annum compounded over a
period of between three and five years from admission or following a change of
control of the Company or Subco.
18 Share based payments
The Subco Incentive Scheme detailed in Note 17 is an equity-settled share
option plan which allows employees and advisors of the Group to sell their B
shares to the Company in exchange for a cash payment or for shares in the
Company (at the Company's election) if certain conditions are met.
These conditions include good and bad leaver provisions and that growth in
Shareholder Value of 10 percent compound per annual is delivered over a three
to five year period for the scheme to vest. This second condition is therefore
a market condition which has been taken into account in the measurement at
grant date of the fair value of the options.
The outstanding B share options have a weighted average contractual life of 4
years 9 months. 110,000 B share options were issued in the period, all of
which were outstanding at the period end. No B share options were exercised in
the period. No B share options have expired during the period. The weighted
average exercise price of the outstanding B share options is Nil.
The Group recognised £3,429 of expenditure statement of total comprehensive
income in relation to equity-settled share-based payments in the period.
The fair value of options granted during the period was determined by applying
a binominal model. The expense is apportioned over the vesting period of the
option and is based on the number which are expected to vest and the fair
value of these options at the date of grant.
The inputs into the binomial model in respect of options granted in the period
are as follows:
Opening share price 10.0p
Expected volatility of share price 16.67%
Expected life of options 5 years
Risk-free rate 0.73%
Target increase in share price per annum 10%
Fair value of options 50.342p
Expected volatility was estimated by reference to the average 5-year
volatility of the FTSE SmallCap Index.
The target increase in Shareholder Value is laid out in the Articles of
Association of the Subco and represents the compounded target annual increase
in market capitalisation (adjusted for capital raises and dividends) that
needs to be met between the third and fifth anniversary of the Group's
admission onto the London Stock Exchange in order for the scheme to vest.
The Group did not enter into any share-based payment transactions with parties
other than employees and advisors during the current period.
19 Related party transactions
Transactions with key management personnel
Key management personnel comprise the Directors and executive officers. The
remuneration of the individual Directors is disclosed in the Report of the
Directors.
Other transactions - Group
On 20 August 2021, the Company entered into an arm's length strategic advisory
agreement with Tessera Investment Management Limited, a Company which is a
shareholder in the Company, pursuant to which Tessera has agreed to provide
strategic and general corporate advice, and acquisition and capital raising
transaction support services to the Company. Tessera was paid an initial
transaction success fee of £50,000 (plus VAT) on admission for transaction
management services provided to the Company in connection with admission and
capital raising activities.
From admission, Tessera continues to provide strategic advisory services to
the Company, including general corporate advice, and acquisition and capital
raising transaction support, and is entitled to be paid a fixed monthly
retainer fee of £5,000 (plus VAT) per month payable in arrears. A
discretionary transaction success fee payable to Tessera may be agreed between
the Company and Tessera with such payment payable on successful completion of
an acquisition by the Company. As at 31 December 2021, Tessera was owed
£15,000 (plus VAT) by the Company for accrued monthly retainer fees since
IPO.
20 Post balance sheet events
There are no events subsequent to the reporting date which would have a
material impact on the financial statements.
21 Contingent liabilities
There are no contingent liabilities at the reporting date which would have a
material impact on the financial statements.
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