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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mac Alpha Limited | LSE:MACA | London | Ordinary Share | VGG5869Z1045 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 175.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-holdng Companies,nec | 0 | -323k | - | N/A | 0 |
From May 2022 to May 2024
TIDMMACA
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 .
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 GBP266,043. Of the costs incurred in the period, GBP61,872 relates to non-recurring project costs. During the period, the Company raised GBP700,000 through the issue of equity (excluding expenses) and held a cash balance at the period end of GBP282,244. 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 GBP700,000. 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 .
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 GBP282,244. 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.
Hot Features
Premium
Key risk Explanation
The Company The Company does not currently have sufficient
requires further cash to pursue its stated investment strategy.
funding to On 16 December 2021, the Company entered into
pursue its a forward purchase agreement ("FPA") with Marwyn
stated investment Value Investors II LP and Marwyn General Partner
strategy. II Limited, under which the Company has the ability
to drawdown up to GBP20 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 There is a risk that the Company may incur substantial
could incur legal, financial and advisory expenses arising
costs for from unsuccessful transactions which may include
transactions public offer and transaction documentation, legal,
that may ultimately accounting and other due diligence which could
be unsuccessful. have a material adverse effect on the business,
financial condition, results of operations and
prospects of the Company.
--------------------------------------------------------
The Company The Company's future success is dependent upon
may not be its ability to not only identify opportunities
able to complete but also to execute a successful acquisition.
an acquisition There can be no assurance that the Company will
and may face be able to conclude agreements with any target
significant business and/or shareholders in the future and
competition failure to do so could result in the loss of an
for acquisition investor's investment. In addition, the Company
opportunities. 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 The Company's return will be reliant upon the
of the Company's performance of the assets acquired and the Company's
investment investment objective from time to time. The success
objective of the investment objective depends on the Directors'
is not guaranteed. 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 GBP282,244 at 30 June 2022 and had net assets of GBP225,474. 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 GBP20 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
INDEPENT 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 Key observations
the matter communicated to those
charged with governance
Equity and Warrants Our audit procedures Based on the procedures
Issuance included, but were performed, we are
The warrants issued not limited to: satisfied that management's
to investors are subject Classification: judgements and estimates
to judgement in both We obtained an understanding in respect of the
classification and of management's assessment valuation and classification
valuation. for the classification of warrants for the
The classification of these instruments period ended 30 June
of the warrants is and the rationale 2022 along with the
complex and must consider for their classification. related disclosures
the nature and details We reviewed, in conjunction in the consolidated
of the instruments' with our Technical financial statements
contracts to determine Director the classification are appropriate.
the correct classification of these instruments We have nothing to
between equity and and management's assessment report to those charged
liabilities. in accordance with with governance from
Further the fair value IAS 32 and IFRS 9 our testing.
of these warrants and we challenged
was determined using management on their
the Black Scholes assessment.
option pricing methodology Valuation:
which considered the We obtained the valuation
exercise price, expected report prepared by
volatility, risk free management's expert.
rate, expected dividends We performed the review
and expected term of and validation
of the warrants which of the valuation assumptions,
is complex and involves methodology and calculations
estimates and judgements. in respect of the
Financial Statement valuation of the instruments
Impact: and determined whether
GBP105,000 it was in accordance
Fair Value of Warrants with the requirements
of IFRS 9 and IFRS
The accounting policies 13.
on page 20 sets out Disclosure:
the treatment applied We reviewed the relevant
by management, and disclosures in the
related disclosures consolidated financial
are presented in Note statements in accordance
12. 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 GBP5,600, 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 GBP3,950. 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 GBP282, 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 .
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 GBP'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 GBP
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 GBP'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
Share
Based
Ordinary Sponsor Payment Warrant Accumulated Total
Notes Shares Share Reserve reserve losses equity
---------- --------------------- ------------- ---------------- ------------------ ----------
GBP's GBP's GBP's GBP's GBP's GBP'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 GBP'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 share 12 700,001
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 GBP282,244 at 30 June 2022 and had net assets of GBP225,474. 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 GBP20 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 1 January
(Amendments to IAS 37); 2022
Property, Plant and Equipment: Proceeds before Intended 1 January
Use (Amendments to IAS 16); 2022
Annual Improvements to IFRS Standards 2018-2020 (Amendments 1 January
to IFRS 1, IFRS 9, IFRS 16 and IAS 41); 2022
Amendments to IFRS 3: References to Conceptual Framework; 1 January
2022
Amendments to IAS 1 Presentation of Financial Statements: 1 January
Classification of Liabilities as Current or Non-current*; 2023
Disclosure of accounting policies (Amendments to 1 January
IAS 1); 2023
Extension of temporary exemption of applying IFRS 1 January
9 (Amendments to IFRS 4) 2023
Deferred Tax relating to Assets and Liabilities arising 1 January
from a Single Transaction (Amendments to IAS 12); 2023
Initial Application of IFRS 17 and IFRS 9 - Comparative 1 January
Information Amendment to IFRS 17)*; 2023
Definition of accounting estimates (Amendments to 1 January
IAS 8); 2023
Amendments to IFRS 17 Insurance contracts; 1 January
2023
Amendment to IFRS 16 Leases: Lease Liability in a 1 January
sale & leaseback*. 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 GBP1 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 GBP1.00 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 GBP1 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
GBP'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 (GBP's) (266,043)
Weighted average in issue 502,290
Basic and diluted loss per ordinary
share (GBP'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:
Proportion
Proportion of ordinary
of ordinary shares
Nature of Country shares held held by
Subsidiary business of incorporation by parent the Group
------------------------- ------------ ------------------- ------------- -------------
Incentive
MAC Alpha (BVI) Limited 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
GBP's
Amounts receivable within one year:
Prepayments 9,602
9,602
--------
10. CASH AND CASH EQUIVALENTS
As at
30 June
2022
GBP'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
GBP'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
GBP's
700,000 ordinary shares of no par value 319,000
1 sponsor share of no par value 1
Ordinary
Ordinary share stated Sponsor
shares of capital share of
no par value GBP no par value
------------- -------------- -------------
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 GBP1 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 GBP1 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 GBP1, 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 GBP105,000 was recorded in the warrant reserve.
Costs of GBP276,000 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
GBP'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 GBP0.01 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 Number Unrestricted IFRS
per A ordinary of A ordinary market value 2 Fair
share shares at grant value
date
GBP's GBP's GBP's
Marwyn Long
Term Incentive
LP GBP0.01 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 GBP52,516 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 GBP67,516 and the amount payable by MLTI for 2,000 A ordinary shares of GBP15,000. There are no service conditions attached to the MLTI shares, and hence the expense of GBP52,516 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 GBP23,382 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 GBP150,000 has been charged in relation to the establishment of the Company and the subsequent listing, of which GBPNil is outstanding at period end.
MCLLP has incurred costs of GBP312 in respect of the incorporation and listing of the Company, of which GBPnil was outstanding at the period end. During the period, Marwyn Capital LLP charged GBP76,755 in respect of services supplied of which GBP29,891 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 GBP15,351 (refer note 6). Fees payable for the period ended 30 June 2022 in respect of procedures of a potential capital markets transaction were GBP6,000.
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 Depository
Company Secretary
Conyers Corporate Services (BVI) Link Market Services Trustees
Limited Limited
Commerce House The Registry
Wickhams Cay 1 34 Beckenham Road
Road Town Beckenham
VG1110 Kent
Tortola BR3 4TU
English legal advisers to the Registrar
Company
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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