Strategy

The Company was formed to seek and identify situations where a merger of management expertise, improving operating performance, freeing up cashflow for investment and implementation of a focused investment and M&A strategy can unlock growth in their core markets and often into new territories and adjacent sectors.

The Company's objective is to generate attractive long-term returns for shareholders and to enhance value by supporting sustainable growth, acquisitions and performance improvements within the acquired companies.

There has been significant transformative impact of digital technologies over the past quarter of a century. Across all sectors, businesses have increasingly embraced digitalisation to optimise their processes, operations, and engagement. Implementing these technologies has become essential for driving cost efficiencies, generating returns on investments, and gaining a competitive edge in the digital landscape. It is worth noting that sectors and businesses with the highest level of digitalisation have experienced significant productivity growth.

While the potential of digitalisation has been recognised, the adoption of new digital strategies by businesses and consumers was, until recently, somewhat limited by various barriers, including companies' willingness to invest in and embrace these technologies. However, the global restrictions imposed by the Covid-19 pandemic have shattered these barriers and compelled businesses to become more agile, resulting in a remarkable acceleration of digitalisation. Despite cost-cutting measures implemented due to the pandemic, organisations have increased their spending on digital transformation as they rapidly adapt their business models.

We firmly believe that the current macroeconomic environment presents substantial investment opportunities in companies well-positioned to harness the structural changes arising from this unprecedented acceleration of digitalisation. These changes have profoundly impacted the way people live, work, and consume, as well as how businesses operate, engage with customers, and conduct sales. Consequently, businesses offering digital solutions, software, and services that enable and support digitalisation are expected to experience sustained demand for their products.

In line with this strategy, we announced our proposed acquisition of five software and services businesses. This acquisition will create an initial platform on which we can build both organically and through further acquisitions. It will provide us with a strong foundation to capitalise on the growing digitalisation trends and expand our presence in the market.

However, it is important to note that there will likely be significant competition for the acquisition of further opportunities we explore. This competition may originate from strategic buyers, sovereign wealth funds, special purpose acquisition companies, and public and private investment funds. Many of these competitors have established themselves with extensive experience in identifying and completing acquisitions and possess greater technical, financial, and human resources compared to our company. As a result, we may incur costs, such as due diligence and financing, for an acquisition or investment opportunity that we may not be able to successfully conclude.

Our management team boasts substantial experience in the software and services sector, having invested in and operated a range of high-performing businesses. We have successfully driven operational excellence within these enterprises, leading to organic growth. Moreover, we have a proven track record of targeted and accretive mergers and acquisitions in the software sector, having completed more than 85 bolt-on acquisitions. This expertise, combined with our proposed acquisition, positions us well to build a robust platform for future growth, both organically and through strategic acquisitions, in the rapidly evolving digital landscape.

Activity and Share Capital

In respect to the offer made for M&C, on 8 September 2022, the Company published an acceleration statement in accordance with Rule 31.5 of the Takeover Code and on 30 September 2022, the Company did not receive sufficient acceptances to reach the 90% acceptance condition, and the Final Offer lapsed.

On the 8 June the company conditionally agreed to acquire the entire issued and outstanding share capital of five software businesses from Capita plc for a combined enterprise value of approximately £33 million in cash.

In the year ended 31 December 2022, the acquisitions generated a total revenue of approximately £35 million, with approximately 74% of the revenue being recurring or from Software-as-a-Service (SaaS).

The transaction will be funded by the Company's cash reserves.

The acquired businesses include: 

The acquisitions are subject to and conditional upon National Security and Investment Act approval.

Financial Performance

The Company's profit after taxation for the year to 30 June 2023 was £1,432,008 (2022: loss £7,715,383). The Company incurred administrative expenses, largely in respect of the two main projects within the year relating to the M&C Saatchi plc offer and acquisitions from Capita plc, during the year of £432,021 (2022: £2,750,468), other losses related to the fair value adjustment of our investment in M&C Saatchi plc of £960,000 (2022: £4,800,000l), dividends receivable from M&C Saatchi plc of £180,000 (2022: £nil), received interest of £3,217,537 (2022: £346,917) and at 30 June 2023 held a cash balance of £104,696,281 (2022: £104,169,997). After deducting costs accrued in respect of operating and transaction-related expenses, the net asset position was £123,185,690 (2022: £121,657,829), resulting in a Net Asset Value per share (NAV) of 92.9pence (2022: 91.3pence).

Dividend Policy

It is the Board's policy that prior to an acquisition, no dividends will be paid. The Company has not yet acquired a trading operation and we therefore consider it inappropriate to make a forecast of the likelihood of any future dividends. Following an acquisition, and subject to the availability of distributable reserves, dividends will be paid to shareholders when the Directors believe it is appropriate and commercially prudent to do so.

Statement of Going Concern

The directors believe that the Company will continue to be able to meet its liabilities as they fall due for the foreseeable future. The Company had cash resources of £104,696,281 at 30 June 2023 and net assets of £123,185,690. We have considered the financial position of the Company and have reviewed forecasts and budgets for a period of at least 12 months following the approval of the Financial Statements.

Subject to the structure of any potential transaction the Company may need to raise additional funds for the acquisition in the form of equity and/or debt, which has not been factored into our going concern assessment as this will be dependent on the size and nature of the acquisitions.

Furthermore, we have considered the expected impact of the Covid-19 pandemic, Ukraine conflict and global financial markets on the Company's forecast cashflows and liabilities, concluding that prior to completing a transaction, the market challenges have no material impact on the Company due to the nature of its operations. As a result, we have concluded that, at the date of approval of the Financial Statements, the Company has sufficient resources for the foreseeable future and can continue to execute its stated strategy. Accordingly, it is appropriate to adopt the going concern basis in the preparation of the Financial Statements.

Corporate Governance

As a company with a Standard Listing, the Company is not required to comply with the provisions of the UK Corporate Governance Code. Nevertheless, the Board is committed to maintaining high standards of corporate governance and will consider whether to voluntarily adopt and comply with the UK Corporate Governance Code as part of any acquisition, taking into account the Company's size and status at that time.

The Company currently complies with the following principles of the UK Corporate Governance Code:

·      The Company is led by an effective and entrepreneurial Board, whose role is to promote the long-term sustainable success of the Company, generating value for shareholders and contributing to wider society.

·      The Board ensures that it has the policies, processes, internal control framework, information, time and resources it needs to function effectively and efficiently.

·      The Board ensures that the necessary resources are in place for the company to meet its objectives and measure performance against them.

Given the size and nature of the Company, the Board has not established any committees and intends to make decisions as a whole. If the need should arise in the future, for example following any acquisition, the Board may set up committees as appropriate.

Consolidated Statement of Comprehensive Income    

The Company's activities derive from continuing operations.

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

The Notes form an integral part of these Financial Statements.

Notes to the Consolidated Financial Statements

1.   SEGMENT INFORMATION

The Board of Directors is the Company's chief operating decision-maker. As the Company has not yet commenced trading, the Board of Directors considers the Company as a whole for the purposes of assessing performance and allocating resources, and therefore the Company has one reportable operating segment.

2.   ADMINISTRATIVE EXPENSES BY NATURE

The Company's independent auditor, Baker Tilly Channel Islands Limited, has fees amounting to £18,070 for the final year end audit.

3.   FINANCE INCOME

4.   TAXATION

The central management and control of the Company is exercised in the UK and accordingly the Company is treated as tax resident in the UK.

Reconciliation of effective rate and tax charge:  

As at 30 June 2023, cumulative tax losses available to carry forward against future trading profits were £2,425,877 subject to agreement with HM Revenue & Customs. Prior to an acquisition, there is no certainty as to future profits and no deferred tax asset is recognised in relation to these carried forward losses.

UK companies can carry forward trading losses indefinitely and can be carried back 1 year (or in certain limited circumstances up to 3 years). Companies have 4 years from the end of the tax year in question to report losses, either on a tax return or in writing to HMRC.

5.   PROFIT/(LOSS) PER ORDINARY SHARE

Basic EPS is calculated by dividing the profit or loss attributable to equity holders of a company by the weighted average number of ordinary shares in issue during the year. Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

The Company had previously issued 700,000 warrants, each of which is convertible into one ordinary share. The Company made a loss in the prior year, which would result in the warrants being anti-dilutive. Therefore, the warrants have not been included in the calculation of diluted earnings per share in the prior year.

6.   INVESTMENTS

Principal subsidiary undertakings of the Company

The Company directly owns the whole of the issued ordinary share capital of its subsidiary undertaking. Details of the Company's subsidiary are presented below:

The registered office of MAC I (BVI) Limited Commerce House, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands VG1110.

Details of the indirectly held subsidiaries are presented below:

Financial assets of the Company

The Company directly owns equity investments for which the Company has not elected to recognise fair value gains and losses through Other Comprehensive Income.

There were no transfers between levels for fair value measurements during the year. The Company's policy is to recognise transfers into and out of fair value hierarchy levels as at the end of the reporting period.

a)     Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.

b)    Level 2: The fair value of financial instruments that are not traded in an active market (e.g. over-the counter derivatives) is determined using valuation techniques that maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

c)     Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities. During the year, the following gains/(losses) were recognised in profit or loss:

7.   CASH AND CASH EQUIVALENTS

Credit risk is managed on a Company basis. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with a minimum short-term credit rating of P-1, as issued by Moody's, are accepted.

8.   FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS

The Company has the following categories of financial instruments at the year end:

The Company has exposure to the following risks from its use of financial instruments:

•              Market risk;

•              Liquidity risk; and

•              Credit risk

This note presents information about the Company's exposure to each of the above risks and the Company's objectives, policies and processes for measuring and managing these risks.

The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities.

Treasury activities are managed on a Company basis under policies and procedures approved and monitored by the Board. These are designed to reduce the financial risks faced by the Company which primarily relate to movements in interest rates.

Market risk

The Company's activities primarily expose it to the risk of changes in interest rates due to the significant cash balance held; however, any change in interest rates will not have a material effect on the Company. The Company's operations are predominately in GBP, its functional currency, and accordingly minimal translation exposures arise in receivables or payables.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The Company currently meets all liabilities from cash reserves and the Directors believe this risk is adequately mitigated. 

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The main credit risk relates to the cash held with financial institutions. The Company manages its exposure to credit risk associated with its cash deposits by selecting counterparties with a high credit rating with which to carry out these transactions. The counterparty for these transactions is Barclays Bank plc, which holds a short-term credit rating of [P-1], as issued by Moody's. The Company's maximum exposure to credit risk is the carrying value of the cash on the Consolidated Statement of Financial Position reserves and the Directors believe this risk is adequately mitigated.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain future development of the business. Capital includes stated capital and all other equity reserves attributable to the equity holders of the Company and totals £123.2million as at 30 June 2023 (2022: £121.7million). The Directors actively monitor this. There were no changes in the Company's approach to capital management during the year and the Company's capital management policy will be revisited once an Acquisition has been identified.

9.   RELATED PARTY TRANSACTIONS

Antoinette Vanderpuije, the Company Secretary is a partner of MIMLLP. MIMLLP manages MVI II Holdings I LP which is beneficially owned by MVI II.  MVI II Holdings I LP holds 15.41% of the Company's Ordinary Shares and 1 Sponsor Share.

Mark Brangstrup Watts and Antoinette Vanderpuije have a beneficial interest in the Incentive Shares as described in note 15 through their indirect interest in MLTI which owns 2,000 A2 ordinary shares in the capital of MAC I (BVI) Limited.  Mark Brangstrup Watts was a Managing Partner of MIMLLP and Marwyn Capital LLP ("MCLLP") until 6 November 2022.

Antoinette Vanderpuije is a partner MCLLP. MCLLP provides corporate finance, company secretarial and managed service support to the Company.  The Company has incurred fees of £17,123 in respect of company secretarial and managed service support and £136,660 in respect to project related fees, of which £10,277 was outstanding at the balance sheet date. MCLLP was also engaged to provide corporate finance advice to the Company. On 18 March 2021, MCLLP and the Company entered into a side letter under which corporate finance services would be suspended, resulting in the fees being reduced from £10,000 per month to £nil effective on Admission in March 2021. During the year the Company paid £nil for corporate finance services to MCLLP and £nil was outstanding at the balance sheet date. MCLLP incurred costs of £8,634, which it recharged the Company during the year.

Directors' emoluments, in relation to Mark Brangstrup Watts, are disclosed in note 5.  

10. COMMITMENTS AND CONTINGENT LIABILITIES

There were no commitments or contingent liabilities outstanding at 30 June 2023 that requires disclosure or adjustment in these Financial Statements.

11. POST BALANCE SHEET EVENTS

On the 8 June 2023 the Group conditionally agreed to acquire five software businesses from Capita plc for a combined enterprise value of approximately £33m in cash. The Acquisitions are subject to and conditional upon National Security and Investment Act approval which was duly received on 25 July 2023. At the date of signing these financial statements the company had not completed the acquisitions.]

No other matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.