TIDMADVT
RNS Number : 4863H
Advancedadvt Limited
28 July 2023
------
LEI: 254900WYO35S1T334A28
28 July 2023
AdvancedAdvT Limited
(the "Company")
Audited results for the year ended 30 June 2023
AdvancedAdvT Limited (LSE: ADVT) announces that it has published
its audited results for the financial year ended 30 June 2023.
Highlights
-- Agreement to acquire five software businesses from Capita
plc for a combined enterprise value of approximately GBP33m
in cash
-- Strong position to execute on strategy given the opportunities
in current economic climate
-- Net assets of GBP123.2m as at 30 June 2023 (GBP121.6m at
30 June 2022)
-- Unaudited Net Asset Value (NAV) of 92.9(1) pence per share
(91.3p 30 June 2022)
-- Cash of GBP104.7m at 30 June 2023 (GBP104.2m at 30 June
2022)
-- Reported GBP1.43m profit for the year. Interest income from
cash deposits offset operating costs, project costs and
fair value changes of financial assets
Chairperson's Report
Acquisition of Capita businesses
I am pleased to report that on the 8 June 2023 the Group
conditionally agreed to acquire five software businesses from
Capita plc for a combined enterprise value of approximately GBP33m
in cash. This is an important step towards delivering our objective
of completing business combinations and generating attractive
long-term returns for shareholders.
The acquired businesses include:
-- CIBS - Financial and Business Solutions for public and private
sectors
-- CHKS and Synaptic - Governance Risk and Compliance (GRC)
for the Healthcare and Financial Services sectors
-- Retain/WFM - Global Professional Services and Workforce
Automation Software for Private and Public Sectors
These businesses will provide us with a solid foundation and
platform with an opportunity to build through a combination of
organic and acquisitive growth.
The acquisitions were subject to and conditional upon National
Security and Investment Act approval received on 25 July 2023. More
information following in due course.
Strategic approach
Despite facing a wide range of macroeconomic challenges, our
commitment to a disciplined approach remains unwavering. The
consistent adoption of digital technologies has been impressive, as
consumers, businesses, and governments navigate through increasing
economic and geopolitical uncertainties. Throughout these
uncertainties, technology continues to play a pivotal role in
enhancing business resilience, efficiency, and decision-making. The
importance of digital solutions in delivering productivity and
gaining a competitive edge remains as crucial as ever.
Our strategy revolves around evaluating high-quality businesses
in our pipeline based on a set of key characteristics. These
characteristics align with our vision and enable businesses to
consistently generate long-term value. We seek businesses with
highly predictable revenue streams, strong customer retention,
products or services that possess high barriers to entry, extensive
growth opportunities, significant free cash flow generation, and
well-run establishments in fragmented industries with consolidation
potential. The reported acquisitions embody all these
characteristics.
It is our intention to actively seek synergistic investment
opportunities in businesses that are well-positioned to benefit
from the ongoing structural changes resulting from the rapid
digitalisation and the prevailing macroeconomic environment.
We will support the teams of the businesses we acquire to
deliver strong organic growth - both in existing sectors as well as
new areas including data, analytics, managed service and digital
transformation opportunities.
M&C Saatchi plc ("M&C")
In early 2022 we identified an opportunity to invest in an area
which has the potential to deliver significant digital related
growth and opportunity. We purchased 9.82% of the share capital of
M&C and followed up with an offer to acquire the remainder of
M&C. Despite some shareholder support, we did not receive
sufficient acceptances and our offer lapsed.
As a significant shareholder, we will continue to assess all
potential value creation opportunities for M&C. We are pleased
with the appointment of Zillah Byng-Thorne as non-executive Chair
(recently appointed Executive Chair) and Chris Sweetland as a
non-executive director as we continue to support them in the value
creation opportunities that exist across that business.
Outlook
Given the significant macroeconomic uncertainty and disruption,
we firmly believe that this environment will present numerous
opportunities to leverage the reported acquisitions success with
both organic and acquisitive growth. We will remain vigilant in
identifying and seizing the right investment opportunities,
allowing us to further strengthen our market position and generate
sustainable value in the long run.
With our substantial war chest and our disciplined approach, we
are well placed to execute M&A that is both synergistic and
accretive over the longer term.
We will continue to actively pursue discussions on potential
target businesses that align with our strategic vision and leverage
the value of announced acquisitions. With a proactive approach,
resources and expanded capabilities, we aim to leverage the
changing landscape to deliver enhanced value and drive continued
growth.
Finally, I would like to take this opportunity to thank all my
fellow shareholders for their continued support over this financial
year.
Vin Murria OBE
Chairperson
(1) NAV per share estimated using 10 day VWAP price of 156p for
the M&C Saatchi shares held as a Financial asset at fair value
through profit or loss
Enquiries:
Company Secretary 020 7004 2700
Antoinette Vanderpuije
Singer Capital Markets (Broker) 020 7496 3000
Phil Davies
George Tzimas
Meare Consulting 07990 858548
Adrian Duffield
KK Advisory (Investor Relations) 020 7039 1901
Kam Basil
A copy of the Annual Financial Report will shortly be available
on both the 'Shareholder Documents' page of the Company's website
at www.advancedadvt.com and
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Strategy
The Company was formed to seek and identify situations where a
merger of management expertise, improving operating performance,
freeing up cashflow for investment and implementation of a focused
investment and M&A strategy can unlock growth in their core
markets and often into new territories and adjacent sectors.
The Company's objective is to generate attractive long-term
returns for shareholders and to enhance value by supporting
sustainable growth, acquisitions and performance improvements
within the acquired companies.
There has been significant transformative impact of digital
technologies over the past quarter of a century. Across all
sectors, businesses have increasingly embraced digitalisation to
optimise their processes, operations, and engagement. Implementing
these technologies has become essential for driving cost
efficiencies, generating returns on investments, and gaining a
competitive edge in the digital landscape. It is worth noting that
sectors and businesses with the highest level of digitalisation
have experienced significant productivity growth.
While the potential of digitalisation has been recognised, the
adoption of new digital strategies by businesses and consumers was,
until recently, somewhat limited by various barriers, including
companies' willingness to invest in and embrace these technologies.
However, the global restrictions imposed by the Covid-19 pandemic
have shattered these barriers and compelled businesses to become
more agile, resulting in a remarkable acceleration of
digitalisation. Despite cost-cutting measures implemented due to
the pandemic, organisations have increased their spending on
digital transformation as they rapidly adapt their business
models.
We firmly believe that the current macroeconomic environment
presents substantial investment opportunities in companies
well-positioned to harness the structural changes arising from this
unprecedented acceleration of digitalisation. These changes have
profoundly impacted the way people live, work, and consume, as well
as how businesses operate, engage with customers, and conduct
sales. Consequently, businesses offering digital solutions,
software, and services that enable and support digitalisation are
expected to experience sustained demand for their products.
In line with this strategy, we announced our proposed
acquisition of five software and services businesses. This
acquisition will create an initial platform on which we can build
both organically and through further acquisitions. It will provide
us with a strong foundation to capitalise on the growing
digitalisation trends and expand our presence in the market.
However, it is important to note that there will likely be
significant competition for the acquisition of further
opportunities we explore. This competition may originate from
strategic buyers, sovereign wealth funds, special purpose
acquisition companies, and public and private investment funds.
Many of these competitors have established themselves with
extensive experience in identifying and completing acquisitions and
possess greater technical, financial, and human resources compared
to our company. As a result, we may incur costs, such as due
diligence and financing, for an acquisition or investment
opportunity that we may not be able to successfully conclude.
Our management team boasts substantial experience in the
software and services sector, having invested in and operated a
range of high-performing businesses. We have successfully driven
operational excellence within these enterprises, leading to organic
growth. Moreover, we have a proven track record of targeted and
accretive mergers and acquisitions in the software sector, having
completed more than 85 bolt-on acquisitions. This expertise,
combined with our proposed acquisition, positions us well to build
a robust platform for future growth, both organically and through
strategic acquisitions, in the rapidly evolving digital
landscape.
Activity and Share Capital
In respect to the offer made for M&C, on 8 September 2022,
the Company published an acceleration statement in accordance with
Rule 31.5 of the Takeover Code and on 30 September 2022, the
Company did not receive sufficient acceptances to reach the 90%
acceptance condition, and the Final Offer lapsed.
On the 8 June the company conditionally agreed to acquire the
entire issued and outstanding share capital of five software
businesses from Capita plc for a combined enterprise value of
approximately GBP33 million in cash.
In the year ended 31 December 2022, the acquisitions generated a
total revenue of approximately GBP35 million, with approximately
74% of the revenue being recurring or from Software-as-a-Service
(SaaS).
The transaction will be funded by the Company's cash
reserves.
The acquired businesses include:
-- CIBS - Financial and Business Solutions for public and private
sectors
-- CHKS and Synaptic - Governance Risk and Compliance (GRC)
for the Healthcare and Financial Services sectors
-- Retain/WFM - Global Professional Services and Workforce
Automation Software for Private and Public Sectors
The acquisitions are subject to and conditional upon National
Security and Investment Act approval.
Financial Performance
The Company's profit after taxation for the year to 30 June 2023
was GBP1,432,008 (2022: loss GBP7,715,383). The Company incurred
administrative expenses, largely in respect of the two main
projects within the year relating to the M&C Saatchi plc offer
and acquisitions from Capita plc, during the year of GBP432,021
(2022: GBP2,750,468), other losses related to the fair value
adjustment of our investment in M&C Saatchi plc of GBP960,000
(2022: GBP4,800,000l), dividends receivable from M&C Saatchi
plc of GBP180,000 (2022: GBPnil), received interest of GBP3,217,537
(2022: GBP346,917) and at 30 June 2023 held a cash balance of
GBP104,696,281 (2022: GBP104,169,997). After deducting costs
accrued in respect of operating and transaction-related expenses,
the net asset position was GBP123,185,690 (2022: GBP121,657,829),
resulting in a Net Asset Value per share (NAV) of 92.9pence (2022:
91.3pence).
Dividend Policy
It is the Board's policy that prior to an acquisition, no
dividends will be paid. The Company has not yet acquired a trading
operation and we therefore consider it inappropriate to make a
forecast of the likelihood of any future dividends. Following an
acquisition, and subject to the availability of distributable
reserves, dividends will be paid to shareholders when the Directors
believe it is appropriate and commercially prudent to do so.
Statement of Going Concern
The directors believe that the Company will continue to be able
to meet its liabilities as they fall due for the foreseeable
future. The Company had cash resources of GBP104,696,281 at 30 June
2023 and net assets of GBP123,185,690. We have considered the
financial position of the Company and have reviewed forecasts and
budgets for a period of at least 12 months following the approval
of the Financial Statements.
Subject to the structure of any potential transaction the
Company may need to raise additional funds for the acquisition in
the form of equity and/or debt, which has not been factored into
our going concern assessment as this will be dependent on the size
and nature of the acquisitions.
Furthermore, we have considered the expected impact of the
Covid-19 pandemic, Ukraine conflict and global financial markets on
the Company's forecast cashflows and liabilities, concluding that
prior to completing a transaction, the market challenges have no
material impact on the Company due to the nature of its operations.
As a result, we have concluded that, at the date of approval of the
Financial Statements, the Company has sufficient resources for the
foreseeable future and can continue to execute its stated strategy.
Accordingly, it is appropriate to adopt the going concern basis in
the preparation of the Financial Statements.
Corporate Governance
As a company with a Standard Listing, the Company is not
required to comply with the provisions of the UK Corporate
Governance Code. Nevertheless, the Board is committed to
maintaining high standards of corporate governance and will
consider whether to voluntarily adopt and comply with the UK
Corporate Governance Code as part of any acquisition, taking into
account the Company's size and status at that time.
The Company currently complies with the following principles of
the UK Corporate Governance Code:
-- The Company is led by an effective and entrepreneurial Board,
whose role is to promote the long-term sustainable success of the
Company, generating value for shareholders and contributing to
wider society.
-- The Board ensures that it has the policies, processes,
internal control framework, information, time and resources it
needs to function effectively and efficiently.
-- The Board ensures that the necessary resources are in place
for the company to meet its objectives and measure performance
against them.
Given the size and nature of the Company, the Board has not
established any committees and intends to make decisions as a
whole. If the need should arise in the future, for example
following any acquisition, the Board may set up committees as
appropriate.
Consolidated Statement of Comprehensive Income
Year Year
ended ended
30 June 30 June
2023 2022
Audited Audited
GBP GBP
Administrative expenses (1,005,529) (3,262,300)
Other losses (960,000) (4,800,000)
----------- -------------
Operating loss (1,965,529) (8,062,300)
Finance Income 3,397,537 346,917
----------- -------------
Profit/ (Loss) before income taxes 1,432,008 (7,715,383)
Income tax - -
----------- -------------
Profit/ (Loss) for the year 1,432,008 (7,715,383)
=========== =============
Total comprehensive Profit/ (Loss)
for the year attributable to owners
of the parent 1,432,008 (7,715,383)
=========== =============
Profit/ (Loss) per ordinary share
(GBP)
Basic 0.01 (0.06)
Diluted 0.01 (0.06)
The Company's activities derive from continuing operations.
Consolidated Statement of Financial Position
As at As at
30 June 30 June
2023 2022
GBP GBP
Non-current assets
Financial asset at fair value through
profit or loss 18,240,000 19,200,000
----------- ------------
18,240,000 19,200,000
Current assets
Trade and other receivables 1,010,423 101,485
Cash and cash equivalents 104,696,281 104,169,997
Total current assets 105,706,704 104,271,482
Total assets 123,946,704 123,471,482
=========== ============
Equity and liabilities
Equity
Sponsor share 2 2
Ordinary shares 131,166,131 131,166,131
Warrant reserve 98,000 98,000
Warrant cancellation reserve 350,000 350,000
Share-based payment reserve 400,957 305,104
Accumulated losses (8,829,400) (10,261,408)
----------- ------------
Total equity 123,185,690 121,657,829
Current liabilities
Trade and other payables 761,014 1,813,653
----------- ------------
Total liabilities 761,014 1,813,653
----------- ------------
Total equity and liabilities 123,946,704 123,471,482
=========== ============
Consolidated Statement of Changes in Equity
Sponsor Ordinary Class Warrant Warrant Share Accumulated Total
share shares A shares reserves Cancellation based losses equity
GBP GBP GBP GBP Reserve payment GBP GBP
GBP reserve
GBP
Balance as at - - - - - - - -
31 July 2020
Issuance of 1
ordinary share - 1 - - - - - 1
Redesignation
of 1 ordinary
share 1 (1) - - - - - -
Issuance of
700,000
ordinary
shares
and matching
warrants - 602,000 - 98,000 - - - 700,000
Share issue
costs - (275,300) - - - - - (275,300)
Issuance of
2,500,000
Class A shares
and matching
warrants - - 2,150,000 350,000 - - - 2,500,000
Conversion of
2,500,000
Class
A shares - 2,150,000 (2,150,000) (350,000) 350,000 - - -
Issuance of
130,000,000
ordinary
shares - 130,000,000 - - - - - 130,000,000
Share issue
costs - (1,310,569) - - - - - (1,310,569)
Issuance of 1
sponsor share 1 - - - - - - 1
Total
comprehensive
loss for the
period - - - - - - (2,546,025) (2,546,025)
Share-based
payment
expense - - - - - 209,250 - 209,250
Balance as at
30 June 2021 2 131,166,131 - 98,000 350,000 209,250 (2,546,025) 129,277,358
Total
comprehensive
loss for the
year - - - - - - (7,715,383) (7,715,383)
Share-based
payment
expense - - - - - 95,854 - 95,854
Balance as at
30 June 2022 2 131,166,131 - 98,000 350,000 305,104 (10,261,408) 121,657,829
Total
comprehensive
profit for the
year - - - - - - 1,432,008 1,432,008
Share-based
payment
expense - - - - - 95,853 - 95,853
------- ----------- ----------- ---------- ------------- -------- ---------------- -----------
Balance as at
30 June 2023 2 131,166,131 - 98,000 350,000 400,957 (8,829,400) 123,185,690
------- ----------- ----------- ---------- ------------- -------- ---------------- -----------
Consolidated Statement of Cash Flows
For the For the year
year ended ended
30 June 30 June 2022
2023
GBP GBP
Operating activities
Profit/ (Loss) for the period 1,432,008 (7,715,383)
Adjustments to reconcile total operating
loss to net cash flows:
Deduct interest income (2,953,473) (281,430)
Fair Value adjustment on Financial
Asset 960,000 4,800,000
Add back share based payment expense 95,853 95,854
Working capital adjustments:
(Increase)/ Decrease in trade and
other receivables and
Prepayments (908,938) 128,261
(Decrease)/Increase in trade and other
payables (1,052,639) 1,636,818
----------- -------------
Net cash flows used in operating activities (2,427,189) (1,335,880)
Investing Activities
Purchase of Financial Asset - (24,000,000)
Interest income 2,953,473 281,430
----------- -------------
Net cash flows from/(used in) investing
activities 2,953,473 (23,718,570)
Net increase/(decrease) in cash and
cash equivalents 526,284 (25,054,450)
Cash and cash equivalents at the beginning
of the year 104,169,997 129,224,447
----------- -------------
Cash and cash equivalents at the end
of the year 104,696,281 104,169,997
=========== =============
The Notes form an integral part of these Financial
Statements.
Notes to the Consolidated Financial Statements
1. SEGMENT INFORMATION
The Board of Directors is the Company's chief operating
decision-maker. As the Company has not yet commenced trading, the
Board of Directors considers the Company as a whole for the
purposes of assessing performance and allocating resources, and
therefore the Company has one reportable operating segment.
2. ADMINISTRATIVE EXPENSES BY NATURE
For the For the year
year ended ended
30 June 30 June
2023 2022
Company administrative expenses by nature GBP GBP
Directors' fees 223,734 224,302
Professional fees 155,256 110,584
Non-recurring project costs 432,021 2,750,468
Listing fees 52,248 69,295
Share based payment expense 95,853 95,854
Branding and website cost 39,966 6,910
Travel and entertainment 5,301 3,654
Bank charges 1,150 1,233
----------- ------------
1,005,529 3,262,300
=========== ============
The Company's independent auditor, Baker Tilly Channel Islands
Limited, has fees amounting to GBP18,070 for the final year end
audit.
3. FINANCE INCOME
For the For the year
year ended ended 30
30 June 2023 June 2022
GBP GBP
Interest from cash and cash equivalents 3,217,537 346,917
Dividends from listed equity securities 180,000 -
------------- --------------
3,397,537 346,917
============= ==============
4. TAXATION
For the For the year
year ended ended 30
30 June 2023 June 2022
GBP GBP
Analysis of tax in year
Current tax on profits for the year - -
------------- ------------
Total current tax - -
============= ============
The central management and control of the Company is exercised
in the UK and accordingly the Company is treated as tax resident in
the UK.
Reconciliation of effective rate and tax charge:
For the For the year
year ended ended 30
30 June 2023 June 2022
GBP GBP
Profit/ (Loss) on ordinary activities before
tax 1,432,008 (7,715,383)
Expenses not deductible for tax purposes 1,059,623 4,896,942
Over allowance for the tax charge recognised
in the prior year - 252,708
------------- ------------
Profit/ (Loss)on ordinary activities subject
to corporation tax 2,491,631 (2,565,733)
Profit/ (Loss)on ordinary activities multiplied
by the rate of corporation tax in the UK
of 25% (2022: 19%) 622,908 (487,489)
Effects of:
Losses (utilised)/ carried forward for which
no deferred tax recognised (622,908) 487,489
------------- ------------
Total taxation charge - -
============= ============
As at 30 June 2023, cumulative tax losses available to carry
forward against future trading profits were GBP2,425,877 subject to
agreement with HM Revenue & Customs. Prior to an acquisition,
there is no certainty as to future profits and no deferred tax
asset is recognised in relation to these carried forward
losses.
UK companies can carry forward trading losses indefinitely and
can be carried back 1 year (or in certain limited circumstances up
to 3 years). Companies have 4 years from the end of the tax year in
question to report losses, either on a tax return or in writing to
HMRC.
5. PROFIT/(LOSS) PER ORDINARY SHARE
Basic EPS is calculated by dividing the profit or loss
attributable to equity holders of a company by the weighted average
number of ordinary shares in issue during the year. Diluted EPS is
calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all dilutive potential
ordinary shares.
The Company had previously issued 700,000 warrants, each of
which is convertible into one ordinary share. The Company made a
loss in the prior year, which would result in the warrants being
anti-dilutive. Therefore, the warrants have not been included in
the calculation of diluted earnings per share in the prior
year.
For the For the
year ended year ended
30 June 30 June
2023 2022
Profit/ (Loss) attributable to owners of
the parent 1,432,008 (7,715,383)
Weighted average number of ordinary shares
in issue 133,200,000 133,200,000
Weighted average number of ordinary shares
for diluted EPS 133,200,000 133,200,000
Basic profit/ (loss) per ordinary share
(GBP) 0.01 (0.06)
Diluted Profit per ordinary share (GBP) 0.01 -
6. INVESTMENTS
Principal subsidiary undertakings of the Company
The Company directly owns the whole of the issued ordinary share
capital of its subsidiary undertaking. Details of the Company's
subsidiary are presented below:
Proportion Proportion
of ordinary of ordinary
shares shares
Nature of Country of held by held by
Subsidiary business incorporation parent the Company
--------------------- ------------ ---------------- ------------- -------------
Incentive
MAC I (BVI) Limited vehicle BVI 100% 100%
The registered office of MAC I (BVI) Limited Commerce House,
Wickhams Cay 1, Road Town, Tortola, British Virgin Islands
VG1110.
Details of the indirectly held subsidiaries are presented
below:
Proportion of ordinary
Nature of Country of shares held by the
Subsidiary business incorporation Group
--------------------- ------------------ ---------------- -----------------------
ADV Holding Group England and
Limited Holding company Wales 100%
ADV Finance Holding England and
Limited Holding company Wales 100%
ADV People Holding England and
Limited Holding company Wales 100%
ADV US Inc. Holding company USA 100%
ADV Data Holding England and
Limited Holding company Wales 100%
Financial assets of the Company
The Company directly owns equity investments for which the
Company has not elected to recognise fair value gains and losses
through Other Comprehensive Income.
As at 30 As at 30
June 2023 June 2022
GBP GBP
Level 1 Financial assets at fair value through
profit or loss (FVTPL) 18,240,000 19,200,000
18,240,000 19,200,000
=========== ===========
There were no transfers between levels for fair value
measurements during the year. The Company's policy is to recognise
transfers into and out of fair value hierarchy levels as at the end
of the reporting period.
a) Level 1: The fair value of financial instruments traded in
active markets (such as publicly traded derivatives, and equity
securities) is based on quoted market prices at the end of the
reporting period. The quoted market price used for financial assets
held by the Company is the current bid price. These instruments are
included in level 1.
b) Level 2: The fair value of financial instruments that are not
traded in an active market (e.g. over-the counter derivatives) is
determined using valuation techniques that maximise the use of
observable market data and rely as little as possible on
entity-specific estimates. If all significant inputs required to
fair value an instrument are observable, the instrument is included
in level 2.
c) Level 3: If one or more of the significant inputs is not
based on observable market data, the instrument is included in
level 3. This is the case for unlisted equity securities. During
the year, the following gains/(losses) were recognised in profit or
loss:
For year
For year ended
ended 30 30 June
June 2023 2022
GBP GBP
Fair value (losses) on equity investments
at FVTPL recognised in other (losses) (960,000) (4,800,000)
(960,000) (4,800,000)
=========== ============
7. CASH AND CASH EQUIVALENTS
As at 30 As at 30
June 2023 June 2022
GBP GBP
Cash and cash equivalents
Cash at bank 47,741,876 64,169,997
Deposits on call 56,954,405 40,000,000
------------ ------------
104,696,281 104,169,997
============ ============
Credit risk is managed on a Company basis. Credit risk arises
from cash and cash equivalents and deposits with banks and
financial institutions. For banks and financial institutions, only
independently rated parties with a minimum short-term credit rating
of P-1, as issued by Moody's, are accepted.
8. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Company has the following categories of financial
instruments at the year end:
As at As at
30 June 30 June 2022
2023
GBP GBP
Financial assets measured at amortised cost
Cash and cash equivalents 104,696,281 104,169,997
Other receivables 509,553 65,488
Financial assets at fair value through profit
or loss (FVTPL) 18,240,000 19,200,000
----------- -------------
123,445,834 123,435,485
----------- -------------
Financial liabilities measured at amortised
cost
Trade and other payables 761,014 1,813,653
----------- -------------
761,014 1,813,653
----------- -------------
The Company has exposure to the following risks from its use of
financial instruments:
-- Market risk;
-- Liquidity risk; and
-- Credit risk
This note presents information about the Company's exposure to
each of the above risks and the Company's objectives, policies and
processes for measuring and managing these risks.
The Company's risk management policies are established to
identify and analyse the risks faced by the Company, to set
appropriate risk limits and controls and to monitor risks and
adherence limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Company's
activities.
Treasury activities are managed on a Company basis under
policies and procedures approved and monitored by the Board. These
are designed to reduce the financial risks faced by the Company
which primarily relate to movements in interest rates.
Market risk
The Company's activities primarily expose it to the risk of
changes in interest rates due to the significant cash balance held;
however, any change in interest rates will not have a material
effect on the Company. The Company's operations are predominately
in GBP, its functional currency, and accordingly minimal
translation exposures arise in receivables or payables.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due. The Company's
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Company's reputation. The Company currently meets all liabilities
from cash reserves and the Directors believe this risk is
adequately mitigated.
Credit risk
Credit risk is the risk that one party to a financial instrument
will cause a financial loss for the other party by failing to
discharge an obligation. The main credit risk relates to the cash
held with financial institutions. The Company manages its exposure
to credit risk associated with its cash deposits by selecting
counterparties with a high credit rating with which to carry out
these transactions. The counterparty for these transactions is
Barclays Bank plc, which holds a short-term credit rating of [P-1],
as issued by Moody's. The Company's maximum exposure to credit risk
is the carrying value of the cash on the Consolidated Statement of
Financial Position reserves and the Directors believe this risk is
adequately mitigated.
Capital management
The Board's policy is to maintain a strong capital base so as to
maintain creditor and market confidence and to sustain future
development of the business. Capital includes stated capital and
all other equity reserves attributable to the equity holders of the
Company and totals GBP123.2million as at 30 June 2023 (2022:
GBP121.7million). The Directors actively monitor this. There were
no changes in the Company's approach to capital management during
the year and the Company's capital management policy will be
revisited once an Acquisition has been identified.
9. RELATED PARTY TRANSACTIONS
Antoinette Vanderpuije, the Company Secretary is a partner of
MIMLLP. MIMLLP manages MVI II Holdings I LP which is beneficially
owned by MVI II. MVI II Holdings I LP holds 15.41% of the Company's
Ordinary Shares and 1 Sponsor Share.
Mark Brangstrup Watts and Antoinette Vanderpuije have a
beneficial interest in the Incentive Shares as described in note 15
through their indirect interest in MLTI which owns 2,000 A2
ordinary shares in the capital of MAC I (BVI) Limited. Mark
Brangstrup Watts was a Managing Partner of MIMLLP and Marwyn
Capital LLP ("MCLLP") until 6 November 2022.
Antoinette Vanderpuije is a partner MCLLP. MCLLP provides
corporate finance, company secretarial and managed service support
to the Company. The Company has incurred fees of GBP17,123 in
respect of company secretarial and managed service support and
GBP136,660 in respect to project related fees, of which GBP10,277
was outstanding at the balance sheet date. MCLLP was also engaged
to provide corporate finance advice to the Company. On 18 March
2021, MCLLP and the Company entered into a side letter under which
corporate finance services would be suspended, resulting in the
fees being reduced from GBP10,000 per month to GBPnil effective on
Admission in March 2021. During the year the Company paid GBPnil
for corporate finance services to MCLLP and GBPnil was outstanding
at the balance sheet date. MCLLP incurred costs of GBP8,634, which
it recharged the Company during the year.
Directors' emoluments, in relation to Mark Brangstrup Watts, are
disclosed in note 5.
10. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding
at 30 June 2023 that requires disclosure or adjustment in these
Financial Statements.
11. POST BALANCE SHEET EVENTS
On the 8 June 2023 the Group conditionally agreed to acquire
five software businesses from Capita plc for a combined enterprise
value of approximately GBP33m in cash. The Acquisitions are subject
to and conditional upon National Security and Investment Act
approval which was duly received on 25 July 2023. At the date of
signing these financial statements the company had not completed
the acquisitions.]
No other matter or circumstance has arisen since 30 June 2023
that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations,
or the consolidated entity's state of affairs in future financial
years.
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END
IR PPUWCMUPWPUM
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July 28, 2023 02:00 ET (06:00 GMT)
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