Macaulay Capital PLC Half-year Report (1904L)

TIDMMCAP

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.

S 

Enquiries:

 
 Macaulay Capital PLC 
 Clive Milner                                    [phone] 
 
 Cairn Financial Advisers LLP (AQSE Corporate 
  Adviser) 
 James Caithie 
  Louise O'Driscoll                              [phone] 
 
 Oberon Capital (Broker) 
 Chris Crawford                                  [phone] 
 
   For more information please visit:   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 GBP2 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 GBP368,453 and the value of our investments was GBP900,000 (at cost). In the six months to 30 June 2023, our revenues were GBP213,946, on which we incurred losses of GBP107,566, 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 GBP700,000 of the total fundraise of approximately GBP1.55 million and it remains our intention to sell down GBP500,000 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 GBP940,000 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 GBP120,000, 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 GBP211,751.

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 
                                                                           31 December 
                                             30 June 2023                         2022 
                                              (unaudited)                    (audited) 
                                      Notes           GBP                          GBP 
 
 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                                               -                            - 
                                             ------------  --------------------------- 
 
  Loss on ordinary activities after 
  taxation                                      (107,566)                    (384,994) 
                                             ------------  --------------------------- 
 
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) 
                                                 GBP                   GBP 
 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 
  Other creditors and accruals   (32,142)              (60,394) 
                                 --------             --------- 
 
  Net current assets                         426,923             1,233,787 
                                           ---------             --------- 
 
  Net assets                               1,330,440             1,438,006 
                                           ---------             --------- 
 
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              Total 
                                share capital                    account           loss account               equity 
                                             GBP                    GBP                     GBP                    GBP 
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) 
                                                     GBP               GBP 
 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 (GBP)                     (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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September 04, 2023 02:00 ET (06:00 GMT)