Half-year Report
04/09/2023 07:00
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RNS Number : 1904L Macaulay Capital PLC 04 September 2023
4 September 2023
Macaulay Capital PLC
("Macaulay Capital" or the "Company")
Interim Results
Macaulay Capital PLC (AQSE: MCAP), which was formed to originate and manage
corporate transactions, raise funds from third parties, invest its own funds
alongside those of external investors and to manage its investment portfolio
with the aim of maximising its value, announces its interim results for the
six months ended 30 June 2023. A copy of these results is available on the
Company's website.
This announcement contains inside information for the purposes of
the UK Market Abuse Regulation and the Directors of the Company are
responsible for the release of this announcement.
ENDS
Enquiries:
Macaulay Capital PLC
Clive Milner +44 (0)20 3946 5980
Cairn Financial Advisers LLP (AQSE Corporate Adviser)
James Caithie +44 (0)20 7213 0880
Louise O'Driscoll
Oberon Capital (Broker)
Chris Crawford +44 (0)20 3179 5304
For more information please visit: www.macaulaycapital.com
(http://www.macaulaycapital.com/)
Chairman's Statement
It is now just over a year since our admission to trading on the Aquis Stock
Exchange Growth Market, when we raised a total of £2 million before costs, at
20p per share.
By introducing investors and investing directly ourselves, the Company and its
subsidiary, Macaulay Management Limited (together "the Group") provide a
combination of growth and replacement capital to established private
companies. This helps them to finance their future development as well as
facilitating partial exits for founder investors and incentivising the
management teams.
For our investors, we structure investments typically as a combination of
redeemable loan stock and equity. This gives investors the ability to have
much of their capital repaid over time, together with an equity interest in
the investee company. We aim to provide investors with a good return on
their investment and, because shares in qualifying private companies benefit
from Business Relief, they can be transferred free of Inheritance Tax.
As at 30 June 2023, our cash was £368,453 and the value of our investments
was £900,000 (at cost). In the six months to 30 June 2023, our revenues
were £213,946, on which we incurred losses of £107,566, which was expected
while we build our business to the point at which, as a trading business, it
breaks even and then becomes profitable.
The Horner Family remains the largest shareholder block with a total of 2.1
million shares (21.0%), which will by July 2024 increase by a further 6
million shares to 8.1 million shares (50.3%), through the exercise of warrants
priced at 25p per share.
Trading Activities
On 13 March 2023 and as set out in our Aquis admission document, we announced
that we had taken over the management of the investment portfolio (the "Legacy
Portfolio") of five private companies from Chelverton Asset Management Limited
("CAM"). Under the agreements with the relevant companies, the Group is
responsible for monitoring their performance, which usually includes taking a
board position, for which we are entitled to monthly management fees and
potential performance fees on exit.
On 23 March 2023 we announced the completion of the secondary management
buy-out of Camloc Motion Control Limited, an established Midlands based
precision engineering business which manufactures compression struts and
dampers. This was bought from a private equity fund, and we partnered with
the incumbent management team. We invested £700,000 of the total fundraise
of approximately £1.55 million and it remains our intention to sell down
£500,000 of our investment in due course. 96.5 per cent. of our investment
is in 8% loan stock, which means that we are earning a significant revenue
return on our investment.
On 5 June 2023 we announced the completion of a transaction where we raised
£940,000 to be invested in Kelda Showers Limited, a company which has
developed a disruptive water and energy saving solution to the shower
market. The transaction, which was in ordinary shares and expected to be
eligible for EIS, was supported by Kelda's management and existing
shareholders, together with new investors. Whilst the Group did not itself
invest in Kelda as the investment was entirely in ordinary shares, David
Horner and Richard Bucknell invested personally an aggregate of £120,000, and
the Group earned a transaction fee and is entitled to a monthly monitoring
fee.
Post year end, on 21 August 2023 we announced that a trade buyer had acquired
all of the shares held by the B Share Investors in Qualification Check Limited
("QCL"). QCL was one of the five companies in the Legacy Portfolio and is a
leading provider of global qualification verification services. The B Share
Investors were introduced by CAM and for those who invested in February 2017,
the sale price is a gross money multiple return of 7.3 times, taking into
account EIS relief, and the gain will be free of CGT; and for those who
invested in March 2021, the sale price is a gross money multiple return of 3.8
times, before CGT, management and performance fees. These fees are to be
shared by the Group and CAM with the net amount receivable by the Group being
£211,751.
Our Portfolio
We now have seven portfolio companies. Three of the companies - Devonvale (a
manufacturer of flapjacks, cakes and cereal bars based in Honiton), Camloc and
Kelda Showers - were identified by us and we helped to structure the
investment, agreed terms and arranged the investment.
The other four portfolio companies are from the Legacy Portfolio. As noted
above, we have recently arranged an exit by our investors from QCL.
Investors
A business imperative continues to be the broadening of the pool of potential
investors for the investment opportunities that we create, and this is where
we are focusing our marketing efforts.
We believe that the area of the market that we are targeting for investment is
underserved, which will enable us to create shareholder value for our
investors through the identification of opportunities to invest in established
companies at attractive valuations. We believe that our offering should be
of great interest to High Net Worth individuals and family offices,
particularly in a time of rising Inheritance Tax assessments.
We also stress to potential investors the importance of investing across a
range of our opportunities to reduce their investment risk.
Outlook
We continue to see a wide range of interesting investment opportunities to
consider. Our investment process is rigorous and time-consuming, and because
we are highly selective, often unrewarding. However, we believe that this
robust selection process is essential to achieve good returns for us and our
fellow investors.
We are pleased with the progress made to date and expect this to continue in
the second half of the year.
Finally, and on behalf of the Board, I would like to thank our shareholders,
employees, and advisers for their support.
Lindsay Mair
Chairman
4 September 2023
Condensed Consolidated Statement of Comprehensive Income
for the 6 months ended 30 June 2023
6 months to Period to
30 June 2023 31 December 2022
(unaudited) (audited)
Notes £ £
Income 213,946 118,737
Other expenses (319,593) (502,827)
Loss on ordinary activities before interest and taxation (105,647) (384,090)
Loan interest (1,919) (904)
Loss on ordinary activities before taxation (107,566) (384,994)
Taxation - -
(107,566) (384,994)
Loss on ordinary activities after taxation
Loss per Ordinary share in pence 3 (1.08) (3.85)
Condensed Consolidated Balance Sheet at 30 June 2023
30 June 2023 31 December 2022
(unaudited) (audited)
£ £
Fixed assets
Tangible assets 3,517 4,219
Investments at fair value through profit or loss 900,000 200,000
903,517 204,219
Current assets
Debtors: amounts falling due within one year 90,612 104,962
Cash at bank and in hand 368,453 1,189,219
459,065 1,294,181
Creditors: amounts falling due within one year
(32,142) (60,394)
Other creditors and accruals
426,923 1,233,787
Net current assets
1,330,440 1,438,006
Net assets
Capital and reserves
Called up share capital 1,000,000 1,000,000
Share premium account 823,000 823,000
Profit and loss account (492,560) (384,994)
Shareholders' funds 1,330,440 1,438,006
Condensed Consolidated Statement of Changes in Equity
for the 6 months ended 30 June 2023
Called up Share premium Profit and loss account Total
share capital account equity
£ £ £ £
Period to 31 December 2022 (audited)
At 13 May 2022 - - - -
Total comprehensive income for the period:
Loss for the period - - (384,994) (384,994)
Transactions with Shareholders
recorded directly to equity:
Issue of Ordinary shares 1,000,000 1,000,000 - 2,000,000
Share issue expenses (including irrecoverable VAT) - (177,000) - (177,000)
At 31 December 2022 1,000,000 823,000 (384,994) 1,438,006
Period to 30 June 2023 (unaudited)
Total comprehensive income for the period:
Loss for the period - - (107,566) (107,566)
At 30 June 2023 1,000,000 823,000 (492,560) 1,330,440
Condensed Consolidated Cash Flow for the 6 months ended 30 June 2023
6 months to Period ended
30 June 2023 31 December 2022
(unaudited) (audited)
£ £
Cash flows used in operating activities:
Loss for the year (107,566) (384,994)
Adjusted for:
Depreciation of assets 702 1,407
Interest paid 1,919 904
Decrease/(increase) in debtors 14,350 (104,962)
(Decrease)/increase in creditors (28,252) 60,394
Net cash used in operating activities (118,847) (427,251)
Cash used in investing activities:
Purchase of investments (700,000) (200,000)
Purchase of fixed assets - (5,626)
Net cash used in investing activities (700,000) (205,626)
Cash flows (used in)/generated from financing activities:
Issue of Ordinary shares - 2,000,000
Share issue expenses (including irrecoverable VAT) - (177,000)
Interest paid (1,919) (904)
Net cash (used in)/generated from financing activities (1,919) 1,822,096
Net (decrease)/increase in cash and cash equivalents (820,766) 1,189,219
Reconciliation of net cash flow to movement in net cash:
(Decrease)/increase in cash (820,766) 1,189,219
Net cash at start of period 1,189,219 -
Net cash at end of period 368,453 1,189,219
Notes to the Unaudited Financial Statements
1 General information
Macaulay Capital Plc was incorporated on 13 May 2022 for
the purpose of acquiring Macaulay Management Limited ("MML"). MML was
incorporated on 14 October 2021 and was formed to originate and manage
corporate transactions, raise funds from third parties, invest the Group's own
funds alongside those of external investors and to manage the Group's
investment portfolio with the aim of maximising its value. Macaulay Capital
Plc acquired the entire issued share capital of MML on 14 June 2022.
The Company is a public limited company, which is
incorporated and registered in England and Wales (Registered number:
14105915).
The registered office address is Suite 8, Bridge House,
Courtenay Street, Newton Abbot, TQ12 2QS.
2 Accounting policies
2.1 Basis of preparation of financial statements
The interim financial statements of the Company and its
subsidiary for the six months ended 30 June 2023, which are unaudited, have
been prepared in accordance with UK Generally Accepted Accounting Practice
("UK GAAP").
The financial information contained in the Half Yearly report does not
constitute statutory accounts as defined in Section 435 of the Companies Act
2006. The financial information for the preceding statutory reporting period
is based on the statutory accounts for the period ended 31 December 2022.
Those accounts, upon which the auditors, Hazlewoods LLP, issued a report which
was unqualified, have been delivered to the Registrar of Companies.
The financial statements have been prepared in accordance with the
accounting policies set out in the statutory accounts for the period ended 31
December 2022.
The interim financial statements are presented in sterling.
2.2 Basis of consolidation
The consolidated financial statements incorporate the
results of the Company and its subsidiary MML, (the Group), as if they form a
single entity using merger accounting. On the establishment of the Company as
the ultimate parent of the Group, no change in ownership occurred and the
entity was established for the purpose of acquiring MML. Therefore, the
requirements of purchase method accounting did not apply.
The financial statements of the subsidiary are prepared for
the 6 months to 30 June 2023 using consistent accounting policies. All
inter-company balances and transactions, including unrealised profits arising
from them, are eliminated on consolidation.
2.3 Going concern
Company law requires the Directors to consider the appropriateness of the
going concern basis when preparing the financial statements. Having reviewed
cash flow forecasts for the period to June 2024, the Directors confirm that
they consider that the going concern basis is appropriate. This review
included consideration of the Group's financial position in respect of its
cash flows and investment commitments (of which there are none of
significance), the working arrangements of key service providers, the impact
of the conflict in Ukraine and the current economic environment. In addition,
the Directors are not aware of any material uncertainties that may cast
significant doubt upon the Group's ability to continue as a going concern.
The Directors believe that the Group has sufficient resources
to continue in operational existence for the foreseeable future. Thus, they
have adopted the going concern basis of accounting in preparing the annual
financial statements.
3 Loss per share
The calculation of basic return per share is based on the return after tax and
on a weighted average number of ordinary shares in issue in the period. Normal
and diluted returns per share are the same as there are no dilutive elements
on share capital.
6 months to Period to
30 June 2023 31 December 2022
(unaudited) (audited)
Loss after taxation attributable to Ordinary shareholders (£) (107,566) (384,994)
Weighted average Ordinary shares in issue 10,000,000 10,000,000
Loss per Ordinary share - basic and diluted (pence) (1.08) (3.85)
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