Interim report

Bay Capital Plc

("Bay Capital" or the "Company")

Interim report for the six months ended 30 June 2021

Bay Capital Plc (LSE: BAY) announces its unaudited condensed interim results from incorporation on 31 March 2021 to 30 June 2021.

Strategy

The Company was established in 2021 to pursue opportunities in the industrial, construction and business services sectors, and software and technology companies which service those industries.

It has a flexible approach, enabling it to deploy capital in minority or majority investments, or full acquisitions across the UK and internationally.

Results and developments in the period from incorporation to 30 June 2021

The Company's loss after taxation was £89,500, reflecting operating expenses incurred during its admission to the Main Market of the London Stock Exchange.

As at 30 June 2021, the Company had yet to complete any placings associated with its admission to the Main Market of the London Stock Exchange and as such, its cash balance at the period end only reflected the £2 of share capital raised at the Company's incorporation on 31 March 2021.

Developments in the post period end and outlook

On 26 August 2021, Peter Tom CBE was appointed Chairman of the Company, joining David Williams as its other Director.

In August 2021, the Company completed its pre-IPO placing with its Directors and founder shareholders, raising gross placing proceeds of £3.0 million through the issuance of 30 million new ordinary shares at £0.10 per share.

In September 2021, the Company completed its IPO placing, raising incremental gross placing proceeds of £4.0 million through the issuance of 40 million new ordinary shares at £0.10 per share.

Following the placings, the Company's total issued share capital increased to 70 million ordinary shares of £0.01 par value each, and its cash balance increased to £7 million.

On 30 September 2021, the Company completed its IPO process and obtained a standard listing on the Official List of the Financial Conduct Authority, with its shares admitted to trading on the Main Market of the London Stock Exchange under the ticker BAY.

From admission, Bay Capital will continue to pursue its investment and acquisition strategy and is currently assessing both domestic and international opportunities within its chosen sectors of interest.

Enquiries: 

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period from incorporation on 31 March 2021 to 30 June 2021

The Company has no items of other comprehensive income.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period from incorporation on 31 March 2021 to 30 June 2021

CONSOLIDATED STATEMENT OF CASH FLOWS

For the period from incorporation on 31 March 2021 to 30 June 2021

NOTES TO THE GROUP FINANCIAL INFORMATION

1.   General information

The Company was incorporated on 31 March 2021 as Bay Capital Limited, a private limited company under the laws of Jersey with registered number 134743. On 8 September 2021 and post period end, the Company was re-registered as an unlisted public limited company and its name was changed to Bay Capital Plc. The Company is the parent company of Bay Capital Subco Limited (a private limited company under the laws of Jersey with registered number 134744).

The address of its registered office is 28 Esplanade, St. Helier, Channel Islands, JE2 3QA, Jersey.

The Company has been incorporated for the purpose of identifying suitable acquisition opportunities in accordance with the Group's investment and acquisition strategy with a view to creating shareholder value. The Group will retain a flexible investment and acquisition strategy which will, subject to appropriate levels of due diligence, enable it to deploy capital in target companies by way of minority or majority investments, or full acquisitions where it is in the interests of shareholders to do so. This will include transactions with target companies located in the UK and internationally.

2.   Basis of preparation

These interim condensed consolidated financial statements and accompanying notes have neither been audited nor reviewed by the Company's auditor.

The principal accounting policies applied in the preparation of the interim condensed consolidated financial statements are set out below. These policies have been consistently applied to the period presented, unless otherwise stated.

The interim condensed consolidated financial statements have been prepared in accordance with IFRS using the measurement bases specified by IFRS for each type of asset, liability, income and expense.

The interim condensed consolidated financial statements are presented in £ unless otherwise stated.

These interim condensed consolidated financial statements were approved by the Board of Directors on 28 September 2021.

Comparative figures

No comparative figures have been presented as the interim condensed consolidated financial statements cover the period from incorporation on 31 March 2021 to 30 June 2021.

Going concern

The interim condensed consolidated financial statements have been prepared on a going concern basis.

The basis for this conclusion is as a result of the projected monthly financial forecasts prepared and reviewed by the Directors contained in the working capital board memorandum approved by the Board of the Company as part of its admission process to the Main Market of the London Stock Exchange. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the interim condensed consolidated financial statements.

3.   Significant accounting policies

The interim condensed consolidated financial statements are based on the following policies which have been consistently applied:

Basis of consolidation

The interim condensed consolidated financial statements incorporate the results of Bay Capital Plc and its subsidiary.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

·      Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

·      Exposure, or rights, to variable returns from its involvement with the investee

·      The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

·      The contractual arrangement(s) with the other vote holders of the investee

·      Rights arising from other contractual arrangements

·      The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the interim condensed consolidated financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and on demand deposits due within three months with banks and other financial institutions, that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Equity

Ordinary shares are classified as equity.

Taxation

Income tax for the period is based on the taxable income for the year. Taxable income differs from profit as reported in the statement of comprehensive income for the period as there are some items which may never be taxable or deductible for tax and other items which may be deductible or taxable in other periods. Income tax for the period is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the interim condensed consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted, or substantially enacted, by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

4.   Critical accounting estimates and judgments

In preparing the interim condensed consolidated financial statements, the Directors have to make judgments on how to apply the Group's accounting policies and make estimates about the future. The Directors do not consider there to be any critical judgments that have been made in arriving at the amounts recognised in the interim condensed consolidated financial statements.

5.   Investments

Principal subsidiary undertakings of the Group

The Company directly owns the ordinary share capital of its subsidiary undertakings as set out below:

The address of the registered office of Bay Capital Subco Limited (the "Subco") is 28 Esplanade, St. Helier, Channel Islands, JE2 3QA, Jersey. The Subco was incorporated on 31 March 2021 and prepares its own financial statements for the period ended 31 December each year.

The A ordinary shares have full voting rights, full rights to participate in a dividend and full rights to participate in a distribution of capital. The B ordinary shares have been issued pursuant to the Company's Subco Incentive Scheme as set out in Note 13.

6.   Cash and cash equivalents

7.   Trade and other payables

The Company has also recognised a contingent liability of £80,125, which relates to transaction support, admission fees and printing expenses. These expenses are contingent on the Company being admitted to the Main Market of the London Stock Exchange, and as at 30 June 2021, the Directors of the Company were uncertain as to whether this event would take place. The Directors have therefore recognised this amount as a contingent liability.

8.   Share capital and share premium

9.   Earnings per share

10.  Financial instruments

Financial risk management objectives and policies

The Group's major financial instrument comprises its bank balance. The risks associated with this financial instrument, and the policies on how to mitigate this risk are set out below. The Directors manage and monitor these exposures to ensure appropriate measures are implemented in a timely and effective manner.

Credit risk

The Group's credit risk is wholly attributable to its cash balance. The credit risk from its cash and cash equivalents is deemed to be low due to the nature and size of the balances held as of 30 June 2021.

Interest rate risk

As of 30 June 2021, the Group had no exposure to interest rate risk.

Currency risk

All monetary assets and liabilities and all transactions of the Group are denominated in its functional currency. As such, the Group is exposed to no foreign currency risk.

Fair value of financial assets and liabilities

There is no material difference between the fair value of the Group's financial asset and its carrying value in the interim condensed consolidated financial statements.

11.  Related party transactions

On incorporation, the Company issued 1 ordinary share of £1 par value at £1 per ordinary share for cash consideration of £1 to David Williams, a Director.

12.  Ultimate controlling party

As of 30 June 2021, the Company had no ultimate controlling party by virtue of its entire issued share capital of 2 ordinary shares being held 1 ordinary share by David Williams and 1 ordinary share by Tessera Investment Management Limited.

13.  Post balance sheet events

Re-registration

On 26 August 2021, the Company resolved to re-register from a limited company to an unlisted public limited company. This re-registration was approved on 8 September 2021 by the Jersey Registrar and the Company's name was changed to Bay Capital Plc on 8 September 2021.

Directorate changes

On 26 August 2021, the Company appointed a new Director, Peter Tom CBE. Peter joined the Group as a Chairman.

Capital reorganisation

On 19 August 2021 the Company resolved to subdivide its ordinary share capital by 100:1 in order to reduce the nominal value of the ordinary shares from £1 each to £0.01 each. This resulted in a post subdivision share capital of 200 ordinary shares, which were then redesignated into 20 ordinary shares of £0.01 par value each and 180 deferred shares of £0.01 par value each. On 19 August 2021, in accordance with article 5B of the Articles, the Company redeemed for nil consideration the deferred shares.

Subscription and issue of equity

On 25 August 2021 and following the Company's capital reorganisation, the Company completed its pre-IPO placing raising £2,999,998 through the issuance of 29,999,980 new ordinary shares of the Company. 14,249,990 ordinary shares were subscribed for by David Williams, Director and shareholder of the Company, 15,000,000 ordinary shares were subscribed for by Hermco Property Limited, a company wholly owned by Peter Tom, Director of the Company, and 249,990 ordinary shares were subscribed for by Tessera Investment Management Limited, also a shareholder in the Company. In addition, a further 500,000 ordinary shares were subscribed for by another investor.

On 30 September 2021, the Company completed its IPO placing raising £4,000,000 through the issuance of 40,000,000 new ordinary shares of the Company.

Following completion of the pre-IPO and IPO placings, the Company's total issued share capital as at admission is 70,000,000 ordinary shares of £0.01 par value each, and at admission, the Company's cash balance increased to £7 million.

Issue of warrants

On 13 September 2021, the Company issued 30,000,000 warrants over 30,000,000 ordinary shares to the Directors and founder shareholders that funded the Company's £3 million pre-IPO placing.

On 30 September 2021, the Company issued 40,000,000 warrants over 40,000,000 ordinary shares to the shareholders that funded the Company's £4 million IPO placing.

The warrants are exercisable at any time from the date of completion of the inaugural transaction (an investment or acquisition) made by the Company, where the consideration for such acquisition is at least £10 million. These warrants can be exercised through application to the Company. The warrants will not be listed on the London Stock Exchange or any other publicly traded market.

The warrants have been issued on a pro rated basis to shareholders respective holdings in the issued share capital of the Company at the time of issue. If not exercised by the end of the third anniversary of admission, the warrants shall expire. The exercise price of each warrant is £0.10.

Creation of incentive scheme

On 14 September 2021, the Group created a new Subco Incentive Scheme within its wholly owned subsidiary Bay Capital Subco Limited ("Subco"). Under the terms of the Subco Incentive Scheme, scheme participants are only rewarded if a predetermined level of shareholder value is created over a three to five year period or upon a change of control of the Company or Subco (whichever occurs first), calculated on a formula basis by reference to the growth in market capitalisation of the Company, following adjustments for the issue of any new Ordinary shares and taking into account dividends and capital returns ("Shareholder Value"), realised by the exercise by the beneficiaries of a put option in respect of their shares in Subco and satisfied either in cash or by the issue of new ordinary shares at the election of the Company.

Under these arrangements in place, participants are entitled up to 15 per cent. of the Shareholder Value created, subject to such Shareholder Value having increased by at least 10 per cent. per annum compounded over a period of between three and five years from admission, or following a change of control of the Company or Subco.

In order to implement the Subco Incentive Scheme, the Company as sole shareholder of Subco, approved the creation of a new share class in Subco (the "B Shares"). At the same time the Subco's existing ordinary shares were redesignated A Shares. The B Shares do not have voting or dividend rights.

Following this, the Subco's issued share capital comprises 10 A ordinary shares of £1 par value and 150,000 B ordinary shares of £0.000001 par value.

Admission

On 30 September 2021, the Company completed its IPO process and obtained a standard listing on the Official List of the Financial Conduct Authority, with its shares admitted to trading on the Main Market of the London Stock Exchange under the ticker BAY.

Related Party Transactions

Subco Incentive Scheme

On 14 September 2021, Hermco Property Limited, owned by Peter Tom, a Director of the Company, David Williams, a Director of the Company, and Kathleen Long and Anthony Morris, Directors of Tessera Investment Management Limited, became the first participants in the Subco Incentive Scheme ("Founder Participants"), and as such, the proportion of Shareholder Value attaching to the Subco Incentive Scheme is 11 per cent. of a total cap of 15 per cent. Under the terms of the Subco Incentive Scheme, the Founder Participants each subscribed for B Shares in Subco at their unrestricted market value equating to £0.12328 value per B Share. The Founder Participants and their respective holdings are outlined below.

*owned 100% by Peter William Gregory Tom CBE

Strategic advisory agreement

On 20 August 2021, the Company entered into a strategic advisory agreement with Tessera pursuant to which Tessera has agreed to provide strategic and general corporate advice, and acquisition and capital raising transaction support services to the Company. Tessera will be entitled to an initial transaction success fee of £50,000 (plus VAT) payable on admission for transaction management services provided to the Company in connection with admission and the Company's placings. Following admission, Tessera will provide strategic advisory services to the Company, including general corporate advice, and acquisition and capital raising transaction support, and will be paid a fixed monthly retainer fee of £5,000 (plus VAT) per month payable in arrears. A success fee payable to Tessera may be agreed between the Company and Tessera at the time that an acquisition is completed, but the payment of any such success fee would be entirely at the discretion of the Directors.

Director service agreements

On 14 September 2021, each of the Directors entered into a letter of appointment with the Company. With effect from admission, Peter Tom, as Chairman of the Group, will be entitled to receive an initial gross annual fee of £30,000, through his service company Rise Rocks Limited and David Williams, as Director of the Group, will be entitled to receive an initial gross annual fee of £20,000. Director fees are payable monthly in arrears, plus the Directors shall be entitled to reimbursement of all reasonable and properly documented expenses incurred in performing their duties as directors of the Company.

Subscriptions prior to admission

On 25 August 2021, the Company issued and allotted 14,249,990 ordinary shares at a price of £0.10 per ordinary share to David Williams, a Director and founder shareholder of the Company for an aggregate consideration of £1,424,999 in cash, and issued and allotted 249,990 ordinary shares at a price of £0.10 per ordinary Share to Tessera Investment Management Limited, a founder shareholder in the Company for an aggregate consideration of £24,999 in cash.