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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 Apr 2023 to Apr 2024
TIDMMACA
RNS Number : 4592P
MAC Alpha Limited
10 October 2023
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: 254900LOBYWJWYSAB947
MAC Alpha Limited
(the "Company")
Publication of the Annual Report and Financial Statements for the year ended 30 June 2023
The Company announces the publication of its Annual Report and Financial Statements for the year ended 30 June 2023.
The Annual Report and Financial Statements are also available on the 'Shareholder Documents' page of the
Company's website at www.mac-alpha.com .
Enquiries:
Company Secretary
Antoinette Vanderpuije - 020 7004 2700
MAC ALPHA LIMITED
Annual Report and Audited Consolidated Financial Statements
For the year ended 30 June 2023
MANAGEMENT REPORT
We present to shareholders the audited consolidated financial statements of MAC Alpha Limited (the "Company") for the year ended 30 June 2023 (the "Financial Statements"), consolidating the results of MAC Alpha Limited and its subsidiary, MAC Alpha (BVI) Limited (collectively, the "Group" or "MAC") .
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; and -- 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 year 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 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, discussions remain active.
Results
The Group's total comprehensive loss for the year to 30 June 2023 was GBP323,463 (period from incorporation to 30 June 2022: GBP266,043). Of the costs incurred in the year, GBP15,798 (period from incorporation to 30 June 2022: GBP61,872) relates to non-recurring project costs. During the year, the Company raised GBP600,000 (period from incorporation to 30 June 2022: GBP700,000) through the issue of equity (excluding expenses) and held a cash balance at 30 June 2023 of GBP554,446 (2022: 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 who served during the year are:
James Corsellis (Chairman);
Tom Basset (Non-Executive Director) (appointed 6 November 2022);
Antoinette Vanderpuije (Non-Executive Director) (appointed 6 November 2022); and
Mark Brangstrup Watts (Executive Director) (resigned 6 November 2022).
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 currently the managing partner of Marwyn Capital LLP and Marwyn Investment Management LLP, an executive director of Silvercloud Holdings Limited, the chairman of Marwyn Acquisition Company III Limited, and a director of 450 Plc, Marwyn Acquisition Company II Limited and Plamer Street Limited.
Tom Basset
Tom has extensive experience working across a range of sectors in the origination and assessment of new investment opportunities, transaction execution, coordinating capital market and M&A processes and providing strategic corporate advice to management teams. Tom joined Marwyn in 2010, where he now leads the Investment Team and is also a member of the Investment Committee. Prior to Marwyn, Tom spent six years at Deloitte across the Assurance & Advisory and Private Equity Transaction Services groups. Tom is a qualified Chartered Accountant and graduated from Durham University with a BA (Hons) in Economics.
Tom is a non-executive director of 450 plc and Marwyn Acquisition Company III limited and a director of Silvercloud Holdings Limited.
Antoinette Vanderpuije
Antoinette has been a partner of the Marwyn group for over ten years and leads the Finance, Markets and Regulation Team. She has extensive M&A and board experience with a particular focus on corporate governance, regulation and listing requirements, transaction tax structuring and incentive planning. Antoinette has supported numerous private and public companies with their day-to-day finance, company secretarial and operational requirements and worked on numerous U.K. and cross border M&A transactions in sectors as varied as online sales, transport, media, chemicals and manufacturing and distribution.
Antoinette is also a member of Marwyn's Investment Committee and previously ran Marwyn's award-winning in-house administration business.
Antoinette previously worked in the finance team at Arcadia Group and prior to that with Bourner Bullock Chartered Accountants. She is a Chartered Accountant, a Chartered Tax Advisor and holds a BA from University College London.
Antoinette is a non-executive director of Marwyn Acquisition Company III Limited and a director of Silvercloud Holdings 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.
On 5 March 2023, pursuant to the forward purchase agreement ("FPA") with Marwyn Value Investors II LP, the Company raised GBP600,000 through the issue of 600,000 A shares ("A Shares") (with Class A Warrants ("A Warrants") being issued on the basis of one Class A Warrant per A Share) at a price of GBP1 per share. The A Shares are ordinary equity shares with the same economic rights as the Company's ordinary shares but without voting rights. They are convertible into ordinary shares on a one-for-one basis at the time at which the Company next publishes a prospectus or equivalent document in relation to a future listing of shares.
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 of directors ("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; and
-- 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 risks relevant to the Company are formally reviewed by the Board on at least an annual basis, with more frequent updates being made as and when circumstances require. 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 balance sheet date the Group's cash balance was GBP554,446 (2022: 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 FPA with Marwyn Value Investors II LP and Marwyn
stated investment General Partner II Limited, under which the Company
strategy. 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. On 5 March 2023, pursuant
to the FPA the Company drew down GBP600,000.
-------------------------------------------------------------------
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 is the managing partner of Marwyn Investment Management LLP ("MIM LLP"), and Antoinette Vanderpuije and Tom Basset are partners in MIM LLP which manages 95% per cent of the ordinary share capital and matching warrants and 100% of the ordinary share capital and matching A warrants. James Corsellis is also the managing partner of Marwyn Capital LLP ("MC LLP"), and Antoinette Vanderpuije and Tom Basset are partners in MC 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 year 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 GBP554,446 (2022: GBP282,244) at 30 June 2023 and net assets of GBP502,011 (2022: 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.
On 16 December 2021, the Company entered into a forward purchase agreement ("FPA") with Marwyn Value Investors II LP ("MVI II LP") of up to GBP20 million, which may be drawn for general working capital purposes and to fund due diligence costs. Any drawdown is subject to the prior approval of MVI II LP and the satisfaction of conditions precedent. On 5 March 2023, the Company drew down GBP600,000 under the FPA and accordingly issued 600,000 A shares and 600,000 matching A warrants as set out in the FPA.
The Directors have reviewed the working capital model for the Group, which includes the drawdown under the FPA, in detail and are satisfied that the Company will have sufficient cash to meet its ongoing operating costs. Subject to the structure of an acquisition, the Company will likely need to raise additional funds for an acquisition in the form of equity and/or debt.
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
The Directors continue to identify and develop opportunities with potential management partners, across a variety of sectors, and believe the listed status and structure of the Company position it well to capitalise on these opportunities in the current market environment.
RESPONSIBILTY 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 year to 30 June 2023, 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 year.
The Directors have acted honestly and in good faith and in what the Directors believe 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 ("EU adopted IFRS" or "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 accepts 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; and
-- 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") remains the Company's independent auditor for the year ended 30 June 2023 and 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:
-- the Financial Statements, which have been prepared in accordance with EU adopted IFRS, present fairly the assets, liabilities, financial position and loss of the Group;
-- the Report of the Directors includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces;
-- 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 9 October 2023 and is signed on its behalf.
By Order of the Board
James Corsellis
Chairman
9 October 2023
INDEPENT AUDITOR'S REPORT
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 2023, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year 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 2023, and of its consolidated financial performance and its consolidated cash flows for the year 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.
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Our Application of Materiality
Materiality for the consolidated financial statements as a whole was set at GBP20,000 (PY: GBP5,600), determined with reference to a benchmark of net assets, of which it represents 4% (PY: 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% (PY: 70%) of materiality for the consolidated financial statements as a whole, which equates to GBP14,000 (PY: 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 Audit Committee any uncorrected omissions or misstatements exceeding GBP1,000 (PY: GBP282), in addition to those that warranted reporting on qualitative grounds.
The work on all the components was performed 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 Directors' responsibilities statement set out on page 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'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; -- 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.
The Company is required to include these financial statements in an annual financial report prepared using the single electronic reporting format specified in the TD ESEF Regulation. The auditor's report provides no assurance over whether the annual financial report has been prepared in accordance with that format.
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 to audit the consolidated financial statements. Our total uninterrupted period of engagement is 2 years.
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. Our audit opinion is consistent with the additional report to the audit committee in accordance with ISAs.
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 5 September 2023. 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: 9 October 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Period ended
30 June 30 June
2023 2022
Note GBP's GBP's
Administrative expenses 6 (331,885) (266,043)
----------
Total operating loss (331,885) (266,043)
Finance income 8,422 -
----------
Loss before income taxes (323,463) (266,043)
Income tax - -
---------- ============
Loss for the year / period (323,463) (266,043)
Total other comprehensive income - -
----------
Total comprehensive loss for the
year / period (323,463) (266,043)
========== ============
Loss per ordinary share GBP's GBP's
Basic and diluted 7 (0.3625) (0.5297)
The Group's activities derive from continuing operations.
The notes on pages 19 to 31 form an integral part of these Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 June 2023 30 June 2022
Assets Note GBP's GBP 's
Current assets
Other receivables 9 6,621 9,602
Cash and cash equivalents 10 554,446 282,244
------------- -------------
Total current assets 561,067 291,846
Total assets 561,067 291,846
============= =============
Equity and liabilities
Equity
Ordinary shares 12 319,000 319,000
A shares 12 498,000 -
Sponsor share 12 1 1
Warrant reserve 12, 13 105,000 105,000
Warrant reserve A shares 12, 13 102,000 -
Share-based payment reserve 13, 15 67,516 67,516
Accumulated losses 13 (589,506) (266,043)
------------- -------------
Total equity 502,011 225,474
Current liabilities
Trade and other payables 11 59,056 66,372
-------------
Total liabilities 59,056 66,372
Total equity and liabilities 561,067 291,846
============= =============
The notes on pages 19 to 31 form an integral part of these Financial Statements.
The Financial Statements were issued and approved by the Board of Directors on 9 October 2023 and were signed on its behalf by:
James Corsellis Tom Basset Chairman Non-Executive Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
Warrant based
Ordinary Sponsor Warrant reserve payment Accumulated Total
shares A shares share reserve A shares reserve losses equity
---------- ----------- ---------- --------- ----------- --------- ------------ ----------
GBP's GBP's GBP's GBP's GBP's GBP's GBP's GBP's
Balance at - - - - - - - -
incorporation
Issuance of 1
ordinary share 1 - - - - - - 1
Redesignation
of 1 ordinary
share (1) - 1 - - - - -
Issuance of 700,000
ordinary shares
and matching
warrants 595,000 - - 105,000 - - - 700,000
Share issue costs (276,000) - - - - - - (276,000)
Total comprehensive
loss for the
period - - - - - - (266,043) (266,043)
Share-based payment
charge - - - - - 67,516 - 67,516
----------- ----------- ---------
Balance at 30
June 2022 319,000 - 1 105,000 - 67,516 (266,043) 225,474
========== =========== ========== ========= =========== ========= ============ ==========
Share
Warrant based
Ordinary Sponsor Warrant reserve payment Accumulated Total
shares A shares share reserve A shares reserve losses equity
--------- ----------- ---------- --------- ----------- --------- ------------ ----------
GBP's GBP's GBP's GBP's GBP's GBP's GBP's GBP's
Balance at 1
July 2023 319,000 - 1 105,000 - 67,516 (266,043) 225,474
Issuance of 600,000
A shares and
matching
warrants - 498,000 - - 102,000 - - 600,000
Total comprehensive
loss for the year - - - - - - (323,463) (323,463)
---------
Balance at 30
June 2023 319,000 498,000 1 105,000 102,000 67,516 (589,506) 502,011
========= =========== ========== ========= =========== ========= ============ ==========
The notes on pages 19 to 31 form an integral part of these Financial Statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Period ended
30 June 30 June
2023 2022
Note GBP's GBP's
Operating activities
Loss for the year / period (323,463) (266,043)
Adjustments to reconcile total operating
loss to net cash flows:
Finance income (8,422) -
Share-based payment expense 15 - 52,516
Working capital adjustments:
Decrease / (Increase) in other receivables 2,981 (9,602)
(Decrease) / Increase in trade and other
payables (7,316) 66,372
Net cash flows used in operating activities (336,220) (156,757)
---------- ------------
Investing activities
Interest received 8,422 -
---------- ------------
Net cash flows received from investing
activities 8,422
---------- ------------
Financing activities
Proceeds from issue of A shares and matching
A warrants 12 600,000 -
Proceeds from issue of ordinary shares,
matching warrants and 1 sponsor share 12 - 700,001
Proceeds from issue of incentive shares 15 - 15,000
Costs directly attributable to equity
raise 12 - (276,000)
Net cash flows received from financing
activities 600,000 439,001
---------- ------------
Net increase in cash and cash equivalents 272,202 282,244
Cash and cash equivalents at the beginning
of the year / period 282,244 -
---------- ------------
Cash and cash equivalents at the end
of the year / period 10 554,446 282,244
========== ============
The notes on pages 1 9 to 31 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 year ended 30 June 2023 have been prepared in accordance with International Financial Reporting Standards and IFRS Interpretations Committee interpretations as adopted by the European Union (collectively, "EU adopted IFRS" or "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. The comparative reporting period represents the period from incorporation, being 11 October 2021, to 30 June 2022 and accordingly the periods are not directly comparable.
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 GBP554,446 (2022: GBP282,244) at 30 June 2023 and net assets of GBP502,011 (2022: 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.
On 16 December 2021, the Company entered into a forward purchase agreement ("FPA") with Marwyn Value Investors II LP ("MVI II LP") of up to GBP20 million, which may be drawn for general working capital purposes and to fund due diligence costs. Any drawdown is subject to the prior approval of MVI II LP and the satisfaction of conditions precedent. On 5 March 2023, the Company drew down GBP600,000 under the FPA and accordingly issued 600,000 A shares and 600,000 matching A warrants as set out in the FPA.
The Directors have reviewed the working capital model for the Group, which includes the drawdown under the FPA, in detail and are satisfied that the Company and the Group will have sufficient cash to meet its ongoing operating costs. Subject to the structure of an acquisition, the Company will likely need to raise additional funds for an acquisition in the form of equity and/or debt.
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.
(c) New standards and amendments to International Financial Reporting Standards
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
Extension of temporary exemption of applying IFRS 1 January
9 (Amendments to IFRS 4); 2023
Amendments to IFRS 17 Insurance contracts; 1 January
2023
Disclosure of accounting policies (Amendments to 1 January
IAS 1); 2023
Definition of accounting estimates (Amendments 1 January
to IAS 8); 2023
Deferred Tax relating to Assets and Liabilities 1 January
arising from a Single Transaction (Amendments to 2023
IAS 12);
International Tax Reform - Pillar Two Model Rules 1 January
(Amendments to IAS 12); 2023
Initial Application of IFRS 17 and IFRS 9 - Comparative 1 January
Information Amendment to IFRS 17); 2023
Supplier Finance Arrangements (Amendments to IAS 1 January
7 and IFRS 7)*; 2024
Non-current Liabilities with Covenants (Amendments 1 January
to IAS 1); 2024
Amendment to IFRS 16 Leases: Lease Liability in 1 January
a sale & leaseback; 2024
Amendments to IAS 1 Presentation of Financial Statements: 1 January
Classification of Liabilities as Current or Non-current*;and 2024
Amendments to IAS 21 Lack of exchangeability. 1 January
2025
* Subject to EU endorsement
(d) 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.
(e) 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.
(f) Cash and cash equivalents
Cash and cash equivalents comprise cash balances at banks.
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) Warrants
The Company has issued Ordinary shares and with matching warrants and A shares and with matching A Warrants. Under the terms of the warrant instruments, warrant holders are able to acquire one corresponding share per warrant at a price of GBP1 per 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
On 24 December 2021, the Company issued 700,000 ordinary shares and matching warrants (" 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. The Warrants are exercisable at any time until five years after the IPO date, being 24 December 2021. Further on 5 March 2023, the Company issued 600,000 A shares and matching Class A Warrants (" A Warrants ") being issued on the basis of one Class A Warrant per A Share at a price of GBP1 per share. The Warrants are exercisable at any time until five years after the IPO date being 24 December 2021.
The Warrants and A 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 instruments contain an exercise price adjustment (" Exercise Price Adjustment "), whereby if the corresponding 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 and A 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 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 year ended 30 June 2023, the Company had four serving directors as detailed on page 3, no director received remuneration under the terms of their director service agreements (2022: 2 directors and GBPnil). 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
Year ended Period ended
30 June 30 June
2023 2022
GBP's GBP's
Group expenses by nature
Professional support 288,477 131,842
Non-recurring project, professional
and due diligence costs 15,798 61,872
Audit fees payable in respect of the
audit of the Group (Note 18) 18,094 15,351
Share-based payment expenses (Note
15) - 52,516
Other expenses 9,516 4,462
----------
331,885 266,043
========== ============
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 maintains different share classes, of which ordinary shares, A shares and sponsor shares were in issue in the current year, and ordinary shares and sponsor shares were in issue in the prior period. The key difference between ordinary shares and A shares is that the ordinary shares are traded with voting rights attached and the A shares are not listed and do not carry voting rights. The ordinary share and A share classes both have equal rights to the residual net assets of the Company, which enables them to be considered collectively as one class per the provisions of IAS 33.
The sponsor share has no distribution rights 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.
Year ended Period ended
30 June 30 June
2023 2022
Loss attributable to owners of the
parent (GBP's) (323,463) (266,043)
Weighted average in issue 892,329 502,290
Basic and diluted loss per ordinary
share (GBP's) (0.3625) (0.5297)
8. INVESTMENTS
Principal subsidiary undertakings of the Group
The Company owns directly the whole of the issued ordinary share capital of its subsidiary undertaking. Details of the Company's subsidiary are presented below:
Proportion Proportion
of ordinary of ordinary
Nature of Country shares held shares held
Subsidiary business of incorporation by parent by the Group
----------------- ------------ ------------------- ------------- --------------
MAC Alpha (BVI) Incentive
Limited vehicle BVI 100% 100%
The share capital of MAC Alpha (BVI) Limited consists of both ordinary shares and A ordinary shares (the "Incentive Shares"). The Incentive 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 As at
30 June 30 June
2023 2022
GBP's GBP's
Amounts receivable within one year:
Prepayments 6,621 9,602
--------
6,621 9,602
======== ========
There is no material difference between the book value and the fair value of the receivables. Receivables are considered to be past due once they have passed their contracted due date. Other receivables are all current.
10. CASH AND CASH EQUIVALENTS
As at As at
30 June 30 June
2023 2022
GBP's GBP's
Cash and cash equivalents
Cash at bank 554,446 282,244
-------- --------
554,446 282,244
======== ========
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 As at
30 June 30 June
2023 2022
GBP's GBP's
Amounts falling due within one year:
Trade payables 5,430 3,258
Accruals 42,116 31,625
Due to a related party (Note 16) 11,510 31,489
--------
59,056 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
As at As at
30 June 30 June
2023 2022
GBP's GBP's
Issued and fully paid
700,000 ordinary shares of no par
value 319,000 319,000
600,000 A shares of no par value 498,000 -
1 sponsor share of no par value 1 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 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 were taken against stated capital at the issuance date.
On 5 March 2023, the Company issued 600,000 A shares and matching A Warrants at a price of GBP1 for one A share and matching A Warrant. Under the terms of the warrant instrument, warrant holders are able to acquire one A share per warrant at a price of GBP1 per A share. A 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 A share and one A 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 A Warrants, which considered the exercise price, expected volatility, risk free rate, expected dividends and expected term. A Warrants have been assigned a fair value of 17p per A Warrant and each A share has been valued at 83p per share, therefore, on issuance of the Warrants GBP102,000 was recorded in the warrant reserve. There were no costs directly attributable to the issue of shares.
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 A Shares are ordinary equity shares with the same economic rights as the Company's ordinary shares but without voting rights.
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:
i. issue any further Sponsor Shares;
ii. 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
iii. amend, alter, or repeal any existing, or introduce any new share-based compensation or incentive scheme in respect of the Group; and
iv. 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 is the cumulative fair value attributed to warrants issued attached to ordinary shares.
Warrant reserve A shares
The warrant reserve is the cumulative fair value attributed to warrants issued attached to A shares.
14. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Group has the following categories of financial instruments:
As at As at
30 June 30 June
2023 2022
GBP's GBP's
Financial assets measured at amortised
cost
Cash and cash equivalents (Note 10) 554,446 282,244
--------
554,446 282,244
======== ========
Financial liabilities measured at
amortised cost
Trade and other payables (Note 11) 47,546 66,372
Due to a related party (Note 16) 11,510 -
-------- --------
59,056 66,372
======== ========
The fair value and book value of the financial assets and liabilities are materially equivalent.
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. These are designed to reduce the financial risks faced by the Group which primarily relate to movements in interest rates.
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 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. Any future issuances of Incentive Shares to management will be dilutive to MLTI. Under the LTIP, Incentive Shares are issued by MAC Alpha (BVI) Limited (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 time to time (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 in the Company, 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 model. The fair value uses an ungeared volatility of 25 per cent, and an expected term of seven 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. The model incorporates a range of probabilities for the likelihood of an acquisition being made of a given size. As the shares issued to MLTI were deemed to vest on issue, the full expense of GBP52,516 relating to the issue was recognised in the Statement of Comprehensive Income for the period ended 30 June 2022.
16. RELATED PARTY TRANSACTION
James Corsellis, Antoinette Vanderpuije and Tom Basset have served as directors of the company during the year. James Corsellis is the managing partner of MIM LLP, and Antoinette Vanderpuije and Tom Basset are partners of MIM LLP, MIM LLP is the manager of the Marwyn Fund, the Marwyn Fund holds 90% of the Company's issued ordinary share capital, 100 % of the A ordinary shares and 1 Sponsor Share. Mark Brangstrup Watts was a director of the Company until 6 November 2022, up until this date Mark Brangstrup Watts was also a managing partner of MIM LLP.
Marwyn Value Investors II LP is an entity within the Marwyn Fund, the Company has entered into an FPA with Marwyn Value Investors II LP under which the Company drew down GBP600,000 on 5 March 2023.
James Corsellis is the managing partner of Marwyn Capital LLP, and Antoinette Vanderpuije and Tom Basset are also partners. Mark Brangstrup Watts was a managing partner of Marwyn Capital LLP until 6 November 2022. Marwyn Capital LLP provides corporate finance and managed services support including named company secretary, to the Company. On an ongoing basis a monthly fee of GBP10,000 per calendar month is charged for the provision of the corporate finance services, and managed services support is charged by Marwyn Capital LLP on a time spent basis. The total amount charged in the year ended 30 June 2023 by Marwyn Capital LLP was GBP179,612 (2022: GBP226,755, which included a one-off engagement fee of GBP150,000 in relation to the Company's equity raise on IPO) and they had incurred expenses on behalf of the Group, which were subsequently recharged, of GBP24,109 (2022: GBP23,693). An amount payable to Marwyn Capital LLP of GBP11,510 (2022: GBP29,891 was outstanding as at the year end.
17. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding at 30 June 2023 (2022: GBPnil) which would require disclosure or adjustment in these Financial Statements.
18. INDEPENDENT AUDITOR'S REMUNERATION
BTCI acts as the Group's independent auditor. Audit fees payable to BTCI for the year ended 30 June 2023 are GBP 18,094 (2022: GBP15,351) (refer note 6). Fees payable for the year ended 30 June 2023 in respect of procedures of a potential capital markets transaction were GBPNil (2022: 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
British Virgin Islands
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 Independent auditor
Commerce House Baker Tilly Channel Islands
Limited
Wickhams Cay 1(st) Floor Kensington Chambers
1 Road Town 46/50 Kensington Place
VG1110 St Helier
Tortola Jersey
British Virgin Islands JE04 0ZE
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