REG - MAC Alpha Limited - Annual Financial Report
28/10/2022 07:00
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RNS Number : 4088E MAC Alpha Limited 28 October 2022
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN
OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA,
JAPAN, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA OR ANY JURISDICTION IN
WHICH IT WOULD BE UNLAWFUL TO DO SO.
LEI number: 254900LOBYWJWYSAB947
MAC Alpha Limited
(the "Company")
Publication of Annual Report & Financial Statements for the period ended
30 June 2022
The Company announces the publication of its results for the period ended 30
June 2022.
The Annual Report & Financial Statements are also available on the
'Shareholder Documents' page of the Company's website at www.macalpha.com
(http://www.macalpha.com) .
Enquiries:
Company Secretary
Antoinette Vanderpuije - +44(0)207 004 2700
MAC ALPHA LIMITED
Consolidated Financial Statements for the period from incorporation on 11
October 2021 to 30 June 2022
MANAGEMENT REPORT
We present to shareholders the audited consolidated financial statements of
MAC Alpha Limited (the "Company") for the period from incorporation on 11
October 2021 to 30 June 2022 (the "Financial Statements"), consolidating the
results of MAC Alpha Limited and its subsidiary, MAC Alpha (BVI) Limited
(collectively, the "Group").
Strategy
The Company was incorporated on 11 October 2021 and subsequently listed on the
Main Market of the London Stock Exchange on 24 December 2021. The Company has
been formed for the purpose of effecting a merger, share exchange, asset
acquisition, share or debt purchase, reorganisation, or similar business
combination with one or more businesses. 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.
While a broad range of sectors will be considered by the Directors, those
which they believe will provide the greatest opportunity and which the Company
will initially focus on include:
• Automotive & Transport
• Business-to-Business Services
• Clean Technology
• Consumer & Luxury Goods
• Financial Services, Banking & Fin Tech
• Insurance, Reinsurance & InsurTech, &
Other Vertical Marketplaces
• Media & Technology
• Healthcare & Diagnostics
The Directors may consider other sectors if they believe such sectors present
a suitable opportunity for the Company.
The Company will seek to identify situations where a combination of management
expertise, improving operating performance, freeing up cashflow for investment
and implementation of a focussed buy and build strategy can unlock growth in
their core markets and often into new territories and adjacent sectors.
Activity
During the period the Directors have engaged with a number of potential
management teams, attracted by the Company's flexible structure and main
market listing. Desktop due diligence has been conducted on respective
sectoral opportunities in which the prospective management teams have
extensive experience. While none of these opportunities have yet progressed to
the appointment of a management partner, or completing a platform acquisition,
a number of discussions remain ongoing.
Results
The Group's loss after taxation for the period to 30 June 2022 was £266,043.
Of the costs incurred in the period, £61,872 relates to non-recurring project
costs. During the period, the Company raised £700,000 through the issue of
equity (excluding expenses) and held a cash balance at the period end of
£282,244. The Group has not yet acquired an operating business and as such is
not yet income generating.
Directors
The Directors of the Company have served as directors for the period from
incorporation until the date of this report. The Directors are:
James Corsellis (Chairman); and
Mark Brangstrup Watts.
Directors' Biographies
James Corsellis
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 a managing partner of Marwyn Capital LLP and Marwyn Investment
Management LLP, an executive director of Silvercloud Holdings Limited, and the
chairman of Marwyn Acquisition Company Plc, Marwyn Acquisition Company III
Limited. James is also a director of Marwyn Acquisition Company II Limited.
Mark Brangstrup Watts
Mark has many years of experience deploying long term investment strategies in
the public markets. Mark brings his background in strategic consultancy to the
management team, having been responsible for strategic development projects at
a range of international companies including Ford Motors Company (US), Cummins
(Japan) and 3M (Europe).
Previously Mark has served a director of the following companies: a
non-executive director of Zegona Communications Plc from January 2015 to May
2020, BCA Marketplace Limited (formerly BCA Marketplace Plc) from July 2014 to
December 2017, Advanced Computer Software from October 2006 to September 2012,
Entertainment One Limited from June 2009 to July 2013, Silverdell Plc from
March 2006 to December 2013, Inspicio Holdings Limited from October 2005 to
February 2008 and Talarius Limited September 2005 to February 2007 amongst
others. Mark has a BA in Theology and Philosophy from King's College, London.
Mark is a managing partner of Marwyn Capital LLP and Marwyn Investment
Management LLP, an executive director of Silvercloud Holdings Limited, and a
director of AdvancedAdvT Limited, Marwyn Acquisition Company Plc, Marwyn
Acquisition Company II Limited and Marwyn Acquisition Company III Limited.
Dividend Policy
The Company has not yet acquired a trading business 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 an acquisition and, in any event, will only commence the payment
of dividends when it becomes commercially prudent to do so.
Key Performance Indicators
The Company has not yet acquired a trading business and therefore no key
performance indicators have been set as it is inappropriate to do so.
Stated Capital
Details of the share capital of the Company during the period are set out in
note 12 to the Financial Statements.
On 24 December 2021 the Company issued 700,000 ordinary shares and matching
warrants for a total price of £700,000. 90% of the ordinary shares and
matching warrants were issued to an entity managed by Marwyn Investment
Management LLP ("MIM LLP") and these are still held by this entity as at the
date of this report. The remaining 10% were issued to third party investors,
including a number of senior executive managers of previous successful
acquisition companies launched by Marwyn.
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 and given the size and
nature of the Group the Directors have decided not to adopt 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,
information, time and resources it needs in order 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 and may decide to comply with the UK Corporate Governance Code.
Risks
A robust risk assessment was carried out by the Directors of the Company,
along with its advisers, in preparation for the Company's IPO on 24 December
2021 and the Directors have identified a wide range of risks, which are set
out in the Company's prospectus dated 24 December 2021. The Company's
prospectus is available on the Company's website: www.macalpha.com
(www.macalpha.com) .
The Company's risk management framework incorporates a risk assessment that
identifies and assesses the strategic, operational and financial risks facing
the business and mitigating controls. The risk assessment is documented
through a risk register which categorises the key risks faced by the business
into:
· Business risks;
· Shareholder risks;
· Financial and procedural risks; and
· Risks associated with the acquisition process.
The risk assessment identifies the potential impact and likelihood of each of
the risks detailed on the risk register and mitigating factors/actions have
also been identified.
The Company's risk management process includes both formal and informal
elements. The size of the Board and the frequency in which they interact
ensures that risks, or changes to the nature of the Company's existing risks,
are identified, discussed and analysed quickly. The Company has a formal
framework in place to manage the review, consideration and formal approval of
the risk register, including the risk assessment.
The Group's only significant asset is cash. As at the statement of financial
position date the Group's cash balance was £282,244. Price, credit, liquidity
and cashflow risk are not considered to be significant due to the simple
nature of the Company's assets and liabilities and the current activities
undertaken by the Group. As the Group's assets are predominantly cash and cash
equivalents, market risk, and liquidity risk are not currently considered to
be material risks to the Group. The Directors have reviewed the risk of
holding a singular concentration of assets as predominantly all credit assets
held are cash and cash equivalents, however, do not deem this a material risk.
The risk is mitigated by all cash and cash equivalents being held with
Barclays Bank plc, which holds a short-term credit rating of P-1, as issued by
Moody's. The Directors have set out below the principal risks faced by the
business. These are the risks the Directors consider to be most relevant to
the Company based on its current status. The risks referred to below do not
purport to be exhaustive and are not set out in any particular order of
priority.
Key risk Explanation
The Company requires further funding to pursue its stated investment strategy. The Company does not currently have sufficient cash to pursue its stated
investment strategy. On 16 December 2021, the Company entered into a forward
purchase agreement ("FPA") with Marwyn Value Investors II LP and Marwyn
General Partner II Limited, under which the Company has the ability to
drawdown up to £20 million, which may be drawndown for working capital
purposes and to fund due diligence on potential acquisition targets, through
the issue of unlisted A shares. Any drawdown under the FPA is subject to the
prior approval of Marwyn Investment Management LLP (the manager of the Marwyn
Fund) and the satisfaction of conditions precedent.
The Company could incur costs for transactions that may ultimately be There is a risk that the Company may incur substantial legal, financial and
unsuccessful. 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.
The Company may not be able to complete an acquisition and may face The Company's future success is dependent upon its ability to not only
significant competition for acquisition opportunities. identify opportunities but also to execute a successful acquisition. 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 required to acquire any target
business, fund future operating expenses after the initial twelve months, or
incur the expense of due diligence for the pursuit of acquisition
opportunities in accordance with its investment objective.
There may also be significant competition for 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. Therefore,
the Company may identify an investment opportunity in respect of which it
incurs costs, for example through due diligence and/or financing, but the
Company cannot assure investors that it will be successful against such
competition. Such competition may cause the Company to incur significant costs
but be unsuccessful in executing an acquisition.
The success of the Company's investment objective is not guaranteed. The Company's return will be reliant upon the performance of the assets
acquired and the Company's investment objective from time to time. The success
of the investment objective depends on the Directors' ability to identify
investments in accordance with the Company's strategy and to interpret market
data and predict market trends 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 investment objective is not successfully implemented, this could
adversely impact the business, development, financial condition, results of
operations and prospects of the Company.
Directors Interests
The Directors have no direct interests in the ordinary shares of the Company.
The Directors have interests in the Company's long term incentive plan, as
detailed in note 15 to the Financial Statements. James Corsellis and Mark
Brangstrup Watts are managing partners of Marwyn Investment Management LLP
which manages 90% per cent of the ordinary shares and matching warrants. James
Corsellis and Mark Brangstrup Watts are also managing partners of Marwyn
Capital LLP, a firm which provides corporate finance, company secretarial and
ad-hoc managed services support to the Company. Details of the related party
transactions which occurred during the period are disclosed in note 16 to the
Financial Statements, save for the participation in the Company's long term
incentive plan as disclosed in note 15 to the Financial Statements. 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.
Statement of Going Concern
The Financial Statements are prepared on a going concern basis, which assumes
the Group will continue to be able to meet its liabilities as they fall due
for the foreseeable future. The Group had cash resources of £282,244 at 30
June 2022 and had net assets of £225,474. 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 the Financial
Statements. The Company has entered into a forward purchase agreement ("FPA")
with Marwyn Value Investors II LP and Marwyn General Partner II Limited, under
which the Company has the ability to drawdown up to £20 million, which may be
drawndown for working capital purposes and to fund due diligence on potential
acquisition targets, through the issue of unlisted A shares. Any drawdown
under the FPA is subject to the prior approval of Marwyn Investment Management
LLP (the manager of the Marwyn Fund) and the satisfaction of conditions
precedent. Marwyn Investment Management LLP has confirmed that it intends to
provide the financial resources necessary for the Group to continue as a going
concern for a period of at least 12 months from the date of these financial
statements.
Subject to the structure of any potential transaction, the Company will need
to raise additional funds for the acquisition in the form of equity and/or
debt, which is not factored into the Director's going concern assessment as
this is dependent on the size and nature of a future acquisition. The
Directors have considered the ongoing impact of the Covid-19 pandemic,
conflict in Ukraine and current macro-economic factors on the Group's forecast
cashflows and liabilities, concluding that prior to completing a transaction,
these have no material impact on the Group due to the nature of its
operations.
Based on this review the Directors are satisfied that at the date of approval
of the Financial Statements, the Company and the Group have sufficient
resources to continue to pursue its stated strategy.
Outlook
While no appointment of an executive management team or platform acquisition
has yet been completed, the Directors remain highly confident in delivering
the stated investment strategy, particularly in the current environment which
is likely to provide differentiated deal flow at more attractive valuations
than has been the case in recent years.
RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Financial Statements in
accordance with applicable laws and regulations, including the BVI Business
Companies Act, 2004. The Directors have prepared the Financial Statements for
the period from incorporation to 30 June 2022, which give a true and fair view
of the state of affairs of the Group and the profit or loss of the Group for
that period.
The Directors have acted honestly and in good faith and in what the Directors
believes to be in the best interests of the Company.
The Directors have chosen to use International Financial Reporting Standards
as adopted by the European Union ("IFRS") in preparing the Financial
Statements. International Accounting Standard 1 requires that financial
statements present fairly for each financial period the group's financial
position, financial performance and cash flows. This requires the faithful
presentation of the effects of transactions, other events and conditions in
accordance with the definitions and recognition criteria for assets,
liabilities, income and expenses set out in the International Accounting
Standards Board's "Framework for the preparation and presentation of financial
statements". In virtually all circumstances, a fair presentation will be
achieved by compliance with all applicable IFRS.
A fair presentation also requires the Directors to:
· select consistently and apply appropriate accounting policies;
· present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable information;
· make judgements and accounting estimates that are reasonable and
prudent;
· provide additional disclosures when compliance with the specific
requirements in IFRS is insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the entity's
financial position and financial performance;
· state that the Group has complied with IFRS, 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 are also required to prepare financial statements in accordance
with the rules of the London Stock Exchange for companies trading securities
on the Stock Exchange.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Group, for safeguarding the assets, for taking reasonable steps for the
prevention and detection of fraud and other irregularities and for the
preparation of financial statements.
Financial information is published on the Group's website. The maintenance and
integrity of this website is the responsibility of the Directors; the work
carried out by the auditor does not involve consideration of these matters
and, accordingly, the auditor's accept no responsibility for any changes that
may occur to the financial statements after they are presented initially on
the website. Legislation in the British Virgin Islands governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions
Directors' Responsibilities Pursuant to DTR4
In compliance with the Listing Rules of the London Stock Exchange, the
Directors confirm to the best of their knowledge:
· The Financial Statements have been prepared in accordance with IFRS and
give a true and fair view of the assets, liabilities, financial position and
loss of the Group.
· The management report includes a fair review of the development and
performance of the business and the financial position of the Group, together
with a description of the principal risks and uncertainties that it faces.
Independent Auditor
Baker Tilly Channel Islands Limited ("BTCI") was appointed as the Company's
independent auditor during the period. BTCI has expressed its willingness to
continue to act as auditor to the Group.
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:
· 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.
This Directors' Report was approved by the Board of Directors on 28 October
2022 and is signed on its behalf.
By Order of the Board
James Corsellis
Chairman
27 October 2022
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MAC ALPHA LIMITED
Opinion
We have audited the consolidated financial statements of MAC Alpha Limited
(the "Company" and, together with its subsidiary, MAC Alpha (BVI) Limited, the
"Group"), which comprise the consolidated statement of financial position as
at 30 June 2022, and the consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash
flows for the period 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 2022, and of its consolidated financial performance
and its consolidated cash flows for the period then ended in accordance with
International Financial Reporting Standards as adopted by the European Union
(IFRSs); and
· have been prepared in accordance with the requirements of the BVI
Business Company Act 2004, 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, were
of most significance in our audit of the consolidated financial statements of
the current period 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.
These matters were addressed in the context of our audit of the consolidated
financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Key audit matter How our audit addressed the matter Key observations communicated to those charged with governance
Equity and Warrants Issuance Our audit procedures included, but were not limited to: Based on the procedures performed, we are satisfied that management's
judgements and estimates in respect of the valuation and classification of
The warrants issued to investors are subject to judgement in both Classification: warrants for the period ended 30 June 2022 along with the related disclosures
classification and valuation.
in the consolidated financial statements are appropriate.
We obtained an understanding of management's assessment for the classification
The classification of the warrants is complex and must consider the nature and of these instruments and the rationale for their classification. We have nothing to report to those charged with governance from our testing.
details of the instruments' contracts to determine the correct classification
between equity and liabilities. We reviewed, in conjunction with our Technical Director the classification of
these instruments and management's assessment in accordance with IAS 32 and
Further the fair value of these warrants was determined using the Black IFRS 9 and we challenged management on their assessment.
Scholes option pricing methodology which considered the exercise price,
expected volatility, risk free rate, expected dividends and expected term of Valuation:
the warrants which is complex and involves estimates and judgements.
We obtained the valuation report prepared by management's expert.
Financial Statement Impact:
We performed the review of and validation of the valuation assumptions,
£105,000 methodology and calculations in respect of the valuation of the instruments
and determined whether it was in accordance with the requirements of IFRS 9
Fair Value of Warrants and IFRS 13.
Disclosure:
The accounting policies on page 20 sets out the treatment applied by We reviewed the relevant disclosures in the consolidated financial statements
management, and related disclosures are presented in Note 12. in accordance with the requirements of the IFRS as adopted by the European
Union and performed a financial statement disclosure checklist utilising
specialist software.
Our application of Materiality
Materiality for the consolidated financial statements as a whole was set at
£5,600, determined with reference to a benchmark of Net Assets, of which it
represents 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% of materiality for the consolidated
financial statements as a whole, which equates to £3,950. We applied this
percentage in our determination of performance materiality because we did not
identify any factors indicating an elevated level of risk.
We reported to the Board of Directors any uncorrected omissions or
misstatements exceeding £282, in addition to those that warranted reporting
on qualitative grounds.
All Group companies were within the scope of testing by the Group audit team.
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 consolidated 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.
Responsibilities of the Directors
As explained more fully in the Statement of Directors' responsibility
statement set out on pages 8 and 9, the Directors are responsible for the
preparation of consolidated financial statements that give a true and fair
view in accordance with IFRSs, 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;
· Obtained and reviewed bank statements as well as reviewed ledgers
and minutes to ensure revenue 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
(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 Mac Alpha Limited on 27 July 2022 to audit the
consolidated financial statements. Our total uninterrupted period of
engagement is 1 year.
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.
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 22 September 2022. 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
Date: 27 October 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Period from incorporation to
30 June
2022
Note £'s
Administrative expenses 6 266,043
Operating loss 266,043
Finance income -
Loss before income taxes 266,043
Income tax -
Loss for the period 266,043
Total other comprehensive income -
Total comprehensive loss for the period 266,043
Loss per share £
Basic and diluted 7 (0.530)
The Group's activities derive from continuing operations.
The notes on pages 18 to 29 form an integral part of these Financial
Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
30 June 2022
Assets Note £'s
Current assets
Other receivables 9 9,602
Cash and cash equivalents 10 282,244
Total current assets 291,846
Total assets 291,846
Equity and liabilities
Equity
Ordinary Shares 12 319,000
Sponsor share 12 1
Warrant reserve 12 105,000
Share-based payment reserve 15 67,516
Accumulated losses (266,043)
Total equity 225,474
Current liabilities
Trade and other payables 11 66,372
Total liabilities 66,372
Total equity and liabilities 291,846
The notes on pages 18 to 29 form an integral part of these Financial
Statements.
The Financial Statements were approved by the Board of Directors on 27 October
2022 and were signed on its behalf by:
James Corsellis Mark Brangstrup Watts
Chairman Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Notes Ordinary Shares Sponsor Share Share Based Payment Reserve Warrant reserve Accumulated Total equity
losses
£'s £'s £'s £'s £'s £'s
Balance at incorporation - - - - - -
Issuance of 1 ordinary share 12 1 - - - - 1
Redesignation of 1 ordinary share 12 (1) 1 - - - -
Issuance of 700,000 ordinary shares and matching warrants 12 595,000 - - 105,000 - 700,000
Share issue costs 12 (276,000) - - - - (276,000)
Total comprehensive loss for the period - - - - (266,043) (266,043)
Share-based payment charge 15 - - 67,516 - - 67,516
Balance at 30 June 2022 319,000 1 67,516 105,000 (266,043) 225,474
The notes on pages 18 to 29 form an integral part of these Financial
Statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended
30 June
2022
Note £'s
Operating activities
Loss for the period (266,043)
Adjustments to reconcile total operating loss to net cash flows:
Share-based payment expense 15 52,516
Working capital adjustments:
Increase in other receivables (9,602)
Increase in trade and other payables 66,372
Net cash flows used in operating activities (156,757)
Financing activities
Proceeds from issue of ordinary share capital, matching warrants and 1 sponsor 12 700,001
share
Proceeds from issue of ordinary A shares 15,000
Costs directly attributable to equity raise (276,000)
Net cash flows received from financing activities 439,001
Net increase in cash and cash equivalents 282,244
Cash and cash equivalents at the beginning of the period -
Cash and cash equivalents at the end of the period 10 282,244
The notes on pages 18 to 29 form an integral part of these Financial
Statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
MAC Alpha Limited was incorporated on 11 October 2021 in the British Virgin
Islands ("BVI") as a BVI business company (registered number 2078235) under
the BVI Business Company Act, 2004. The Company was listed on the Main Market
of the London Stock Exchange on 24 December 2021 and has its registered
address at Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola,
VG1110, British Virgin Islands.
The Company has been formed for the purpose of effecting a merger, share
exchange, asset acquisition, share or debt purchase, reorganisation or similar
business combination with one or more businesses. The Company has one
subsidiary, MAC Alpha (BVI) Limited (together with the Company the "Group").
2. ACCOUNTING POLICIES
(a) Basis of preparation
The Financial Statements for the period from incorporation 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, "IFRS") and are presented in British pounds
sterling, which is the presentational currency of the Group and the functional
currency and presentational currency of the Company.
The Financial Statements have been prepared under the historical cost basis.
This is the Group's first set of financial statements since incorporation and
as such no comparatives have been presented.
The principal accounting policies adopted in the preparation of the Financial
Statements are set out below. The policies have been consistently applied
throughout the period presented.
(b) Going concern
The Financial Statements are prepared on a going concern basis, which assumes
the Group will continue to be able to meet its liabilities as they fall due
for the foreseeable future. The Group had cash resources of £282,244 at 30
June 2022 and had net assets of £225,474. 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 the Financial
Statements. The Company has entered into a forward purchase agreement ("FPA")
with Marwyn Value Investors II LP and Marwyn General Partner II Limited, under
which the Company has the ability to drawdown up to £20 million, which may be
drawn down for working capital purposes and to fund due diligence on potential
acquisition targets, through the issue of unlisted A shares. Any drawdown
under the FPA is subject to the prior approval of Marwyn Investment Management
LLP (the manager of the Marwyn Fund) and the satisfaction of conditions
precedent. Marwyn Investment Management LLP has confirmed that it intends to
provide the financial resources necessary for the Group to continue as a going
concern for a period of at least 12 months from the date of these financial
statements.
Subject to the structure of any potential transaction, the Company will need
to raise additional funds for the acquisition in the form of equity and/or
debt, which is not factored into the Director's going concern assessment as
this is dependent on the size and nature of a future acquisition. The
Directors have considered the ongoing impact of the Covid-19 pandemic,
conflict in Ukraine and current macro-economic factors on the Group's forecast
cashflows and liabilities, concluding that prior to completing a transaction,
these have no material impact on the Group due to the nature of its
operations.
Based on this review the Directors are satisfied that at the date of approval
of the Financial Statements, the Company and the Group have sufficient
resources to continue to pursue its stated strategy.
New standards and amendments to International Financial Reporting Standards
Standards, amendments and interpretations effective and adopted by the Group:
The accounting policies adopted in the presentation of these Financial
Statements reflect the adoption of the below listed new standards, amendments
and interpretations effective for periods beginning on or after 1 January
2021: Interest rate benchmark reform (Phase 2 Amendments to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and IFRS 16) and Covid-19 related rent concessions (Amendments
to IFRS 16). None of these new standards, amendments or interpretations have
had a material impact on the Group.
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
Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37); 1 January 2022
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 1 January 2022
16);
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, 1 January 2022
IFRS 16 and IAS 41);
Amendments to IFRS 3: References to Conceptual Framework; 1 January 2022
Amendments to IAS 1 Presentation of Financial Statements: Classification of 1 January 2023
Liabilities as Current or Non-current*;
Disclosure of accounting policies (Amendments to IAS 1); 1 January 2023
Extension of temporary exemption of applying IFRS 9 (Amendments to IFRS 4) 1 January 2023
Deferred Tax relating to Assets and Liabilities arising from a Single 1 January 2023
Transaction (Amendments to IAS 12);
Initial Application of IFRS 17 and IFRS 9 - Comparative Information Amendment 1 January 2023
to IFRS 17)*;
Definition of accounting estimates (Amendments to IAS 8); 1 January 2023
Amendments to IFRS 17 Insurance contracts; 1 January 2023
Amendment to IFRS 16 Leases: Lease Liability in a sale & leaseback*. 1 January 2024
* Subject to EU endorsement
(c) 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 in these Financial Statements 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 these Financial
Statements.
(d) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
The Group initially recognises financial assets and financial liabilities at
fair value. Financial assets and liabilities are subsequently remeasured at
amortised cost using the effective interest rate.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash balances at banks.
(f) Stated capital
Ordinary shares, A shares and sponsor shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are
recognised in equity as a deduction from the proceeds.
(g) Corporation tax
There is no corporate, income or other tax of the British Virgin Islands
imposed by withholding or otherwise on BVI companies. The Company will
therefore not have any tax liabilities or deferred tax in the BVI. The Company
is exempt from all provisions of the Income Tax Act of the British Virgin
Islands.
(h) 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 period. Diluted EPS is
calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all potential dilutive ordinary shares.
(i) Share based payments
The A ordinary shares in MAC Alpha (BVI) Limited (the "Incentive Shares"),
represent equity-settled share-based payment arrangements under which the
Company 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 Directors and others providing similar
services are measured at the fair value of the equity instruments at the grant
date. Fair value is determined using an appropriate valuation technique,
further details of which are given in note 15. 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.
(j) Warrants
On 24 December 2021, the Company issued 700,000 ordinary shares and matching
warrants. Under the terms of the warrant instrument, warrant holders are able
to acquire one ordinary share per warrant at a price of £1 per ordinary
share. Warrants are accounted for as equity instruments under IAS 32 and are
measured at fair value at grant date. Fair value of the warrants has been
calculated using a Black Scholes option pricing methodology and details of
these estimates and judgements used in determining fair value of the warrants
are set out in note 3.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
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.
Critical accounting judgements
Classification of warrants
As part of the Company's initial fundraising on IPO, the Company issued
ordinary shares to a number of investors. For every ordinary share subscribed
for, each investor was also granted a warrant ("Warrant") to acquire a further
ordinary share at an exercise price of £1.00 per share. The Warrants are
exercisable at any time until five years after the IPO date, being 24 December
2021.
Warrants can only be classified as equity if they will be settled only by the
issuer exchanging a fixed amount of cash or another financial asset for a
fixed number of its own equity instruments. The warrant instrument contains
exercise price adjustment ("Exercise Price Adjustment"), whereby if the
ordinary shares are issued at less than £1 before or as part of an
acquisition then the exercise price equals the discounted issue price, as a
result the fixed-for-fixed requirement is breached. However, it is the opinion
of the Directors that whilst the Exercise Price Adjustment exists, the
likelihood of this being used is remote, and therefore it is most appropriate
for the Warrants to be classified as equity.
Key sources of estimation uncertainty
Valuation of incentive shares
There are significant estimates and assumptions used in the valuation of the A
ordinary Shares in MAC Alpha (BVI) Limited the ("Incentive Shares").
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. A summary of the terms is set out in note
15.
Valuation of warrants
The Warrants were valued using the Black Scholes option pricing methodology
which considered the exercise price, expected volatility, risk free rate,
expected dividends and expected term of the Warrants.
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. EMPLOYEES AND DIRECTORS
The Group does not have any employees. During the period ended 30 June 2022,
the Company had two directors: James Corsellis and Mark Brangstrup Watts,
neither director received remuneration under the terms of their director
service agreements. The Company's subsidiary has issued Incentive Shares as
more fully disclosed in note 15 in which the Directors are indirectly
beneficially interested.
6. ADMINISTRATIVE EXPENSES
Period from incorporation to 30 June
2022
£'s
Group expenses by nature
Non-recurring project, professional and due diligence costs 61,872
Professional support 131,842
Audit fees payable in respect of the audit of the Group (Note 18) 15,351
Share-based payment expenses (Note 15) 52,516
Other expenses 4,462
266,043
7. LOSS PER ORDINARY SHARE
Basic EPS is calculated by dividing the profit/ loss attributable to equity
holders of the company by the weighted average number of ordinary shares in
issue during the period. Diluted EPS is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion of all
dilutive potential ordinary shares. The weighted average number of shares has
not been adjusted in calculating diluted EPS as there are no instruments which
have a current dilutive effect.
The Company has 700,000 ordinary shares and 1 sponsor share in issue at 30
June 2022. The sponsor share has no rights to distribution and so has been
ignored for the purposes of IAS 33.
Refer to note 15 (share based payments) for instruments that could potentially
dilute basic EPS in the future.
For the period
ended 30 June
2022
Loss attributable to owners of the parent (£'s) (266,043)
Weighted average in issue 502,290
Basic and diluted loss per ordinary share (£'s) (0.5297)
8. SUBSIDIARY
Subsidiary undertaking of the Group
The Company owns the whole of the issued and fully paid ordinary share capital
of its subsidiary undertaking. The subsidiary undertaking of the Company as at
30 June 2022 is:
Nature of business Country of incorporation Proportion of ordinary shares held by parent Proportion of ordinary shares held by the Group
Subsidiary
MAC Alpha (BVI) Limited Incentive vehicle BVI 100% 100%
The share capital of MAC Alpha (BVI) Limited consists of both ordinary shares
and A ordinary shares. The A ordinary shares are held by Marwyn Long Term
Incentive LP (''MLTI'') and are non-voting. Further detail on the Incentive
Shares is given in note 15.
The registered office of MAC Alpha (BVI) Limited is Commerce House, Wickhams
Cay 1, P.O. Box 3140, Road Town, Tortola, VG1110, British Virgin Islands.
9. OTHER RECEIVABLES
As at
30 June
2022
£'s
Amounts receivable within one year:
Prepayments 9,602
9,602
10. CASH AND CASH EQUIVALENTS
As at
30 June
2022
£'s
Cash and cash equivalents
Cash at bank 282,244
282,244
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.
11. TRADE AND OTHER PAYABLES
As at
30 June
2022
£'s
Amounts falling due within one year:
Trade payables 33,149
Accruals 33,223
66,372
There is no material difference between the book value and the fair value of
the trade and other payables. All trade payables are non-interest bearing and
are usually paid within 30 days.
12. STATED CAPITAL
Authorised
Unlimited ordinary shares of no par value
Unlimited A shares of no par value
Unlimited B shares of no par value
100 sponsor shares of no par value
Issued and fully paid As at 30 June 2022
£'s
700,000 ordinary shares of no par value 319,000
1 sponsor share of no par value 1
Ordinary shares of no par value Sponsor share of no par value
Ordinary share stated capital
£
Issued and fully paid
Opening number of shares on incorporation 1 1 -
Capital reorganisation:
Sponsor share of no par value (1) (1) 1
Shares issued during the period:
Ordinary shares of no par value 700,000 595,000 -
Issue costs taken against stated capital (276,000)
Closing number of shares at period end 700,000 319,000 1
On incorporation, the Company issued 1 ordinary share of no par value to MVI
II Holdings I LP . On 28 October 2021, it was resolved that updated memorandum
and articles ("Updated M&A") be adopted by the Company and with effect
from the time the Updated M&A be registered with the Registrar of
Corporate Affairs in the British Virgin Islands, the 1 ordinary share which
was in issue by the Company be redesignated as 1 sponsor share of no par value
(the "Sponsor Share").
On 24 December 2021, the Company issued 700,000 ordinary shares and matching
warrants ("Warrants") at a price of £1 for one ordinary share and matching
Warrant. Under the terms of the warrant instrument, warrant holders are able
to acquire one ordinary share per warrant at a price of £1 per ordinary
share. Warrants are accounted for as equity instruments under IAS 32 and are
measured at fair value at grant date, the combined market value of one
ordinary share and one warrant was considered to be £1, in line with the
market price paid by third party investors. A Black Scholes option pricing
methodology was used to determine the fair value of the Warrants, which
considered the exercise price, expected volatility, risk free rate, expected
dividends and expected term. Warrants have been assigned a fair value of 15p
per Warrant and each ordinary share has been valued at 85p per share,
therefore, on issuance of the Warrants £105,000 was recorded in the warrant
reserve.
Costs of £276,000 directly attributable to the equity raise have been taken
against stated capital during the period.
Holders of ordinary shares are entitled to receive notice and attend and vote
at any meeting of members and have the right to a share in any distribution
paid by the Company and a right to a share in the distribution of the surplus
assets of the Company on a winding up.
The Sponsor Share confers upon the holder no right to receive notice and
attend and vote at any meeting of members, no right to any distribution paid
by the Company and no right to a share in the distribution of the surplus
assets of the Company on a winding up. Provided the holder of the Sponsor
Share holds directly or indirectly 5 per cent. or more of the issued and
outstanding shares of the Company (of whatever class other than any Sponsor
Shares), they have the right to appoint one director to the Board.
Provided the holder of the Sponsor Share holds directly or indirectly 5 per
cent. or more of the issued and outstanding shares of the Company (of whatever
class other than any Sponsor Shares) or is a holder of incentive shares the
Company must receive the prior consent of the holder of the Sponsor Share in
order to:
· issue any further Sponsor Shares;
· issue any class of shares on a non pre-emptive basis where the
Company would be required to issue such share pre-emptively if it were
incorporated under the UK Companies Act 2006 and acting in accordance with the
Pre-Emption Group's Statement of Principles; or
· amend, alter, or repeal any existing, or introduce any new
share-based compensation or incentive scheme in respect of the Group; and
· take any action that would not be permitted (or would only be
permitted after an affirmative shareholder vote) if the Company were admitted
to the Premium Segment of the Official List.
The holder of the Sponsor Share has the right to require that: (i) any
purchase or redemption by the Company of its shares; or (ii) the Company's
ability to amend the Memorandum and Articles, be subject to a special
resolution of members whilst the Sponsor (or an individual holder of a Sponsor
Share) holds directly or indirectly 5 per cent. Or more of the issued and
outstanding shares of the Company (of whatever class other than any Sponsor
Shares) or are a holder of incentive shares.
13. 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 15.
Warrant reserve
The warrant reserve includes the cumulative fair value of warrants issued as
valued on the grant of the warrants.
14. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Group has the following categories of financial instruments as at 30 June
2022:
As at
30 June
2022
£'s
Financial assets measured at amortised cost
Cash and cash equivalents (Note 10) 282,244
282,244
Financial liabilities measured at amortised cost
Trade and other payables (Note 11) 66,372
66,372
All financial instruments are classified as current assets and current
liabilities. There are no non-current financial instruments as at 30 June
2022.
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. As the Group's assets are
predominantly cash and cash equivalents, market risk and liquidity risk are
not currently considered to be material risks to the Group.
15. SHARE-BASED PAYMENTS
Management Long Term Incentive Arrangements
The Group has put in place a Long-Term Incentive Plan ("LTIP"), to ensure
alignment between Shareholders, and those responsible for delivering the
Company's strategy and to 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. As at the balance sheet date, an executive management team is
not yet in place and as such Marwyn Long Term Incentive LP ("MLTI") is the
only participant in the LTIP.
Once an executive management team is appointed, they will participate in the
LTIP and this will be dilutive to MLTI. Under the LTIP, A ordinary shares
("Incentive Shares") are issued by the Subsidiary.
As at the statement of financial position date, MLTI had subscribed for
redeemable A ordinary shares of £0.01 each in the Subsidiary entitling it to
100 percent of the incentive value.
Preferred Return
The incentive arrangements are subject to the Company's shareholders achieving
a preferred return of at least 7.5 percent per annum on a compounded basis on
the capital they have invested from Admission 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 in the Company ("Ordinary Shares") for an aggregate value equivalent to
20 percent of the "Growth", where Growth means the excess of the total equity
value of the Company and other shareholder returns over and above its
aggregate paid up share capital (20 percent of the Growth being the "Incentive
Value").
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 of business, the Incentive Shares will be exchanged for
Ordinary Shares. However, the Company retains the right but not the obligation
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 and earlier than the seventh anniversary of the
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 A
Shares will be treated as having vested in full.
Holding of Incentive Shares
MLTI holds Incentive Shares entitling it in 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 25 November 2021
Nominal Price Issue price per A ordinary share Number of A ordinary shares Unrestricted market value at grant date IFRS 2 Fair value
£'s
£'s £'s
Marwyn Long Term Incentive LP £0.01 7.50 2,000 15,000 67,516
Valuation of Incentive Shares
A valuation of the incentive shares has been prepared by Deloitte LLP dated 25
November 2021 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 option model. The fair value uses an ungeared volatility
of 25 per cent, and an expected term of 7 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 0.7 per cent. has been applied, based on the
average yield on a seven-year UK Gilt at the valuation date. 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 £52,516 has been recognised in the Statement of Comprehensive
Income in respect of the Incentive Shares issued to MLTI which is the
difference between the IFRS 2 valuation at grant date of £67,516 and the
amount payable by MLTI for 2,000 A ordinary shares of £15,000. There are no
service conditions attached to the MLTI shares, and hence the expense of
£52,516 has been recognised in the consolidated statement of comprehensive
income for the period. The fair value at grant date has been taken to the
share-based payment reserve in the statement of changes in equity.
16. RELATED PARTY TRANSACTION
James Corsellis and Mark Brangstrup Watts are directors of the Company and
Antoinette Vanderpuije is the Company Secretary of the Company. James
Corsellis and Mark Brangstrup Watts are managing partners of Marwyn Investment
Management LLP ("MIMLLP"), and Antoinette Vanderpuije is a partner of MIMLLP.
MIMLLP is the manager of the Marwyn Fund, the Marwyn Fund holds 90% of the
Company's issued ordinary shares.
MVI II Holdings I LP is an entity within the Marwyn Fund. MVI II Holdings I LP
incurred costs of £23,382 in respect of the incorporation and proposed
listing of the Company, the Company repaid this amount in full during the
year.
James Corsellis and Mark Brangstrup Watts are managing partners of Marwyn
Capital LLP ("MCLLP"), and Antoinette Vanderpuije is a partner of MCLLP. MCLLP
has entered into an engagement letter with the Company for the provision of
corporate finance, company secretarial, administration and accounting
services. As part of this engagement a fee of £150,000 has been charged in
relation to the establishment of the Company and the subsequent listing, of
which £Nil is outstanding at period end.
MCLLP has incurred costs of £312 in respect of the incorporation and listing
of the Company, of which £nil was outstanding at the period end. During the
period, Marwyn Capital LLP charged £76,755 in respect of services supplied of
which £29,891 was outstanding at period end.
James Corsellis, Mark Brangstrup Watts and Antoinette Vanderpuije have an
indirect beneficial interest in the Incentive Shares as described in Note 15
of the Financial Statements through their indirect interest in MLTI which owns
2,000 A Ordinary Shares in the capital of MAC Alpha (BVI) Limited.
17. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding at 30 June
2022 which would require disclosure or adjustment in these Financial
Statements.
18. INDEPENDENT AUDITOR'S REMUNERATION
For the period ended 30 June 2022, the Group has appointed BTCI as the Group's
independent auditor. Audit fees payable to BTCI for the period ended 30 June
2022 are £15,351 (refer note 6). Fees payable for the period ended 30 June
2022 in respect of procedures of a potential capital markets transaction were
£6,000.
19. POST BALANCE SHEET EVENTS
There have been no material post balance sheet events that would require
disclosure or adjustment to these Financial Statements.
ADVISERS
Company Secretary BVI legal advisers to the Company
Antoinette Vanderpuije Conyers Dill & Pearman
11 Buckingham Street Commerce House
London Wickhams Cay 1
WC2N 6DF Road Town
Email: MACAlpha@marwyn.com VG1110
Tortola
British Virgin Islands
Registered Agent and Assistant Company Secretary Depository
Conyers Corporate Services (BVI) Limited Link Market Services Trustees Limited
Commerce House The Registry
Wickhams Cay 1 34 Beckenham Road
Road Town Beckenham
VG1110 Kent
Tortola BR3 4TU
English legal advisers to the Company Registrar
Travers Smith LLP Link Market Services (Guernsey) Limited
10 Snow Hill Mont Crevelt House
London Bulwer Avenue
EC1A 2AL St Sampson
Guernsey
GY2 4LH
Registered office Auditor
Commerce House Baker Tilly Channel Islands Limited
Wickhams Cay 1 First floor, Kensington Chambers
Road Town 46-50 Kensington Place
Tortola St Helier
British Virgin Islands Jersey
JE4 0ZE
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