AdvancedAdvT Limited ESEF Annual Report, Aug 1, 2023
AdvancedAdvT Limited (AIMX:ADVT)
ESEF Annual Report
2023-08-01
For: 2023-06-30
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Added on
October 27, 2026
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AdvancedAdvT Limited
Registered in BVI with company number 2040954
UK Companies house number FC037739
Consolidated Financial Statements for the year to
30 June 2023
1
Contents
Chairperson’s Report ............................................................................................................................... 2
Management Report ............................................................................................................................... 4
Responsibility Statement ......................................................................................................................... 9
Independent Auditor’s Report to the Members of Advancedadvt Limited ........................................... 10
Consolidated Statement of Comprehensive Income ............................................................................. 15
Consolidated Statement of Financial Position ....................................................................................... 16
Consolidated Statement of Changes in Equity ...................................................................................... 17
Consolidated Statement of Cash Flows ................................................................................................. 18
Notes to the Consolidated Financial Statements .................................................................................. 19
Advisors ................................................................................................................................................. 35
Risks ....................................................................................................................................................... 36
2
Chairperson’s Report
Highlights
•
Agreement to acquire five software businesses from Capita plc for a combined enterprise value of
approximately £33m in cash
1
•
Strong position to execute on strategy given the opportunities in current economic climate
•
Net assets of £123.2m as at 30 June 2023 (£121.6m at 30 June 2022)
•
Unaudited Net Asset Value (NAV) of 92.9
2
pence per share (91.3p 30 June 2022)
•
Cash of £104.7m at 30 June 2023 (£104.2m at 30 June 2022)
•
Reported £1.43m profit for the year. Interest income from cash deposits offset operating costs, project
costs and fair value changes of financial assets
Chairperson’s Statement
Acquisition of Capita businesses
I am pleased to report that 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. This is an important step towards
delivering our objective of completing business combinations and generating attractive long-term returns for
shareholders.
The acquired businesses include:
•
CIBS - Financial and Business Solutions for public and private sectors
•
CHKS and Synaptic - Governance Risk and Compliance (GRC) for the Healthcare and Financial Services
sectors
•
Retain/WFM - Global Professional Services and Workforce Automation Software for Private and Public
Sectors
These businesses will provide us with a solid foundation and platform with an opportunity to build through a
combination of organic and acquisitive growth.
Strategic approach
Despite facing a wide range of macroeconomic challenges, our commitment to a disciplined approach remains
unwavering. The consistent adoption of digital technologies has been impressive, as consumers, businesses, and
governments navigate through increasing economic and geopolitical uncertainties. Throughout these
uncertainties, technology continues to play a pivotal role in enhancing business resilience, efficiency, and
decision-making. The importance of digital solutions in delivering productivity and gaining a competitive edge
remains as crucial as ever.
Our strategy revolves around evaluating high-quality businesses in our pipeline based on a set of key
characteristics. These characteristics align with our vision and enable businesses to consistently generate long-
term value. We seek businesses with highly predictable revenue streams, strong customer retention, products or
services that possess high barriers to entry, extensive growth opportunities, significant free cash flow generation,
and well-run establishments in fragmented industries with consolidation potential. The reported acquisitions
embody all these characteristics.
It is our intention to actively seek synergistic investment opportunities in businesses that are well-positioned to
benefit from the ongoing structural changes resulting from the rapid digitalisation and the prevailing
macroeconomic environment.
1
The Acquisitions were subject to and conditional upon National Security and Investment Act approval received on 25 July 2023.
2
NAV per share estimated using 10 day VWAP price of 156p for the M&C Saatchi shares held as a Financial asset at fair value through profit
or loss
3
We will support the teams of the businesses we acquire to deliver strong organic growth – both in existing sectors
as well as new areas including data, analytics, managed service and digital transformation opportunities.
M&C Saatchi plc (“M&C”)
In early 2022 we identified an opportunity to invest in an area which has the potential to deliver significant digital
related growth and opportunity. We purchased 9.82% of the share capital of M&C and followed up with an offer
to acquire the remainder of M&C. Despite some shareholder support, we did not receive sufficient acceptances
and our offer lapsed.
As a significant shareholder, we will continue to assess all potential value creation opportunities for M&C. We are
pleased with the appointment of Zillah Byng-Thorne as non-executive Chair (recently appointed Executive Chair)
and Chris Sweetland as a non-executive director as we continue to support them in the value creation
opportunities that exist across that business.
Outlook
Given the significant macroeconomic uncertainty and disruption, we firmly believe that this environment will
present numerous opportunities to leverage the reported acquisitions success with both organic and acquisitive
growth. We will remain vigilant in identifying and seizing the right investment opportunities, allowing us to further
strengthen our market position and generate sustainable value in the long run.
With our substantial war chest and our disciplined approach, we are well placed to execute M&A that is both
synergistic and accretive over the longer term.
We will continue to actively pursue discussions on potential target businesses that align with our strategic vision
and leverage the value of announced acquisitions. With a proactive approach, resources and expanded
capabilities, we aim to leverage the changing landscape to deliver enhanced value and drive continued growth.
Finally, I would like to take this opportunity to thank all my fellow shareholders for their continued support over
this financial year.
Vin Murria OBE
Chairperson
27 July 2023
AdvancedAdvT Limited
Management Report
4
Management Report
I present to shareholders the audited consolidated Financial Statements of AdvancedAdvT Limited (the
“Company”) for the year to 30 June 2023 (the “Financial Statements”), consolidating the results of AdvancedAdvT
Limited and its subsidiaries (collectively, the “Company” or “AdvT” or “Group”).
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
AdvancedAdvT Limited
Management Report
5
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:
•
CIBS - Financial and Business Solutions for public and private sectors
•
CHKS and Synaptic - Governance Risk and Compliance (GRC) for the Healthcare and Financial Services
sectors
•
Retain/WFM - Global Professional Services and Workforce Automation Software for Private and Public
Sectors
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.
AdvancedAdvT Limited
Management Report
6
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.
The Directors of the Company who have served during the year and at the date of this report are:
Vin Murria (Chairperson)
Gavin Hugill (Chief Operating Officer)
Mark Brangstrup Watts (Non-Executive Director)
Karen Chandler (Non-Executive Director)
Directors’ Interests
Other than Vin Murria, who holds 13.14 per cent. of the issued share capital of the Company as at 30 June 2023
and at the date of this report, the other Directors have no direct interests in the Ordinary Shares of the Company.
All of the Directors have interests in the participation shares, as detailed in note 15 to the Financial Statements.
AdvancedAdvT Limited
Management Report
7
During the year Mark Brangstrup Watts ceased to be a managing partner of Marwyn Investment Management
LLP
3
which holds 15.41 per cent. of the issued share capital of the Company as at 30 June 2023 and at the date of
this report. Mark Brangstrup Watts also ceased being a managing partner of Marwyn Capital LLP during the year,
a firm which previously provided corporate finance advice to the Company and currently provides managed
services support. Details of the related party transactions which occurred during the year are disclosed in note
17.
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.
Substantial Shareholdings
As at 31 May 2023 L(the latest practicable date prior to the publication of this Report), the following had disclosed
an interest in the issued ordinary share capital of the Company (being 3% or more of the voting rights in the
Company) complying with the requirements of the Disclosure and Transparency Rules (the “DTRs”):
Ordinary Shares
Held
Percentage of Issued
Share Capital
Marwyn Investment Management LLP
20,525,000
15.41%
BGF Investment Management Limited
20,000,000
15.02%
Vin Murria & Sunil Bhalla
17,500,000
13.14%
Artemis Fund Managers Limited
10,769,778
8.09%
CRUX Asset Management
8,244,737
6.19%
Amati Global Investors Limited
8,000,000
6.01%
Investec Wealth & Investment
7,117,760
5.34%
Gresham House Asset Management Limited
6,700,165
5.03%
Chelverton Asset Management Limited
6,000,000
4.50%
Canaccord Genuity Wealth Management
4,396,200
3.30%
Directors’ Emoluments
Directors’ emoluments during the year are disclosed in note 5.
Board Interaction
Board meetings are held formally on a quarterly basis and diarised in advance. Ad hoc meetings are held by the
Board of Directors as and when required. The Chairman is primarily responsible for the running of the Board. The
Board understands that it is critical for Board meetings to be well managed and balanced for the business to
successfully deliver and achieve its strategy. The Chairman is responsible for the Board meeting agenda, which,
for periodic meetings, is agreed in advance of each Board meeting and prepared based on an agreed Board
standing agenda. The board pack is prepared and circulated to the Board approximately a week prior to the
meeting. For ad hoc meetings, the agenda is agreed with the Chairman and circulated to the Board along with
supporting papers as soon as practicable prior to the meeting. Board packs capture all ongoing corporate
governance requirements. The Board is presented with papers to support its discussions including timely financial
information, investor relations information, subsidiary management reporting and details of potential acquisition
targets and current status.
3
Marwyn Investment Management LLP is the manager of Marwyn Value Investors II LP (“MVI II”), the entity which beneficially owns 15.41%
of the ordinary shares issued by the Company and 1 sponsor share in the Company.
AdvancedAdvT Limited
Management Report
8
The Company’s culture is to openly and frequently discuss any important issues both at and outside of formal
meetings.
All Board members have full access to the Company’s advisers for seeking professional advice at the Company’s
expense.
Risks
The Directors have carried out a robust assessment of the principal risks facing the Company including those that
would threaten its business model, future performance, solvency, or liquidity. The Company has published its
principal risks in the Company’s prospectuses dated 4 December 2020, 18 March 2021 and 31 March 2022. The
Directors are of the opinion that the risks detailed in the Company’s prospectus dated 31 March 2022 remain
applicable for the current financial year. Details of the risks faced by the Company are set out at the end of this
report (pages 36 onwards). The prospectus and detailed risks can also be found on the Company’s website
4
.
The Company’s risk management framework incorporates a risk assessment that identifies and assesses the
strategic, operation 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 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 with which the directors interact ensures that risks, or changes to the nature of the Company’s
existing risks, are identified, discussed, and analysed quickly. The Company’s governance framework, including
formal periodic board meetings with standing agendas, ensures that the Company has a formal framework in
place to manage the review, consideration, and formal approval of the risk register, including risk assessment.
4
https://s26.q4cdn.com/993376269/files/doc_downloads/2022/08/18/AdvT-Prospectus-PDF-v0.372-(2).pdf
AdvancedAdvT Limited
Responsibility Statement
9
Responsibility Statement
Each of the Directors confirms that, to the best of his or her knowledge:
(a) these Financial Statements, which have been prepared in accordance with IFRS and give a true and
fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole;
(b) these Financial Statements comply with the requirements of DTR 4.1;
(c) the Management report includes a fair review of the development and performance of the business
and the position of the Company, and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face; and
(d) the annual report and Financial Statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess the Company’s position and
performance, business model and strategy.
Neither the Company nor the Directors accept any liability to any person in relation to the financial report except
to the extent that such liability could arise under applicable law.
Details on the Company’s Board of Directors can be found on the Company’s website at www.advancedadvt.com.
Auditors
Details of auditors’ remuneration are set out in Note 6 to the financial statements.
The auditors, Baker Tilly Channel Islands Limited, have expressed their willingness to continue in office.
This report was approved by the Board of Directors on 27 July 2023 and were signed on its behalf by:
Vin Murria OBE
Chairman
27 July 2023
AdvancedAdvT Limited
Independent Auditor’s Report to the Members of AdvancedAdvT Limited
10
Independent Auditor’s Report to the Members of Advancedadvt Limited
Opinion
We have audited the consolidated financial statements of AdvancedAdvT Limited (the ‘Company’ and together
with each of its subsidiaries, 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.
AdvancedAdvT Limited
Independent Auditor’s Report to the Members of AdvancedAdvT Limited
11
Key audit matter
How our audit addressed the
matter
Key observations communicated
to those charged with governance
Investment Ownership and
Valuation
The risk that the Company does
not hold the rights and obligations
in the respective investments and
the value the investments are
materially misstated.
2023: £18,240,000 (2022:
£19,200,000)
Refer to note 10 in the financial
statements for further detail.
We obtained and agreed the
investment held at year end to an
independent custodian
confirmation.
For the Company’s level 1
investment we have agreed the
value, price and level of trading
used in determining the
investment value to a third-party
source (LSE website). We have
agreed the fair value of the
investment and the unrealised
movement to the client
investment schedule.
We have nothing to report to
those charged with governance.
Disclosure related to Capita Plc
acquisition
A conditional agreement has been
entered into by the Company to
acquire the share capital of five
software businesses from Capita
plc. This would constitute a
reverse merger under the listing
rules and from discussions with
management is expected to be
completed post audit report date.
There is a risk that the post
balance sheet even note is not
inline with IFRS requirements,
specifically IFRS3, Business
Combinations.
Refer to note 19 in the financial
statements for further detail.
We obtained details of the
transaction and reviewed
managements post balance sheet
event disclosure.
We have ensured that the
disclosure is numerically accurate.
We have obtained a confirmation
from MHA MacIntyre Hudson,
who are acting as advisors on the
acquisition, that the transaction
will not be completed by the audit
report date. As a result, we are
comfortable that the disclosure is
complete.
As the transaction had not been
completed before the audit report
date, we determined no further
disclosure required.
We have nothing to report to
those charged with governance
from our testing.
Our Application of Materiality
Materiality for the consolidated financial statements as a whole was set at £4,305,000 (PY: £3,041,000),
determined with reference to a benchmark of Net Assets, of which it represents 3.5% (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.
AdvancedAdvT Limited
Independent Auditor’s Report to the Members of AdvancedAdvT Limited
12
Performance materiality was set at 70% (PY: 70%) of materiality for the consolidated financial statements as a
whole, which equates to £3,013,000 (PY: £2,128,000). We applied this percentage in our determination of
performance materiality with regard to the Company being listed on the main market of the London Stock
Exchange.
We reported to the board of directors any uncorrected omissions or misstatements exceeding £215,000 (PY:
£151,950), as well as to those that warranted reporting on qualitative grounds.
In addition, we have allocated specific materiality for finance income, administrative expenses, trade and other
receivables and trade and other payables. We considered a threshold of £20,060 (PY: £120,000) to be an indicator
of materiality for these specific areas based on 2% (PY: 1.5%) of total expenses. Specific materiality has been used
in these areas due to their lower value and to ensure we have performed adequate audit work in these areas. The
specific performance materiality for these areas was also set at 70% (PY: 70%) and equates to £14,050 (PY:
£84,600). We report, to the board of directors, all corrected and uncorrected misstatements we identified
through our audit, in these areas, with a value in excess of £1,000 (PY: £6,000) in addition to other audit
misstatements below that threshold that we believe warranted reporting on qualitative grounds.
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.
AdvancedAdvT Limited
Independent Auditor’s Report to the Members of AdvancedAdvT Limited
13
Responsibilities of the Directors
As explained more fully in the Directors’ responsibilities statement set out on page 9, the Directors are responsible
for the preparation of consolidated financial statements that give a true and fair view in accordance with IFRSs,
which includes such internal control as the Directors determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the Group and
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.
The Directors are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
• Enquiry of management to identify any instances of non-compliance with laws and regulations, including
actual, suspected or alleged fraud;
• Reading minutes of meetings of the Board of Directors;
• Review of professional invoices;
• Review of management’s significant estimates and judgements for evidence of bias;
• Review for undisclosed related party transactions;
• Obtained and reviewed bank statements as well as reviewed ledgers and minutes to ensure revenue is
complete and as per our expectations;
• 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.
AdvancedAdvT Limited
Independent Auditor’s Report to the Members of AdvancedAdvT Limited
14
Other Matters which we are Required to Address
We were appointed by AdvancedAdvT Limited on 22 September 2021 to audit the consolidated financial
statements. Our total uninterrupted period of engagement is 3 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 board of directors 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 17 July 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: 27 July 2023
AdvancedAdvT Limited
Consolidated Statement of Comprehensive Income
15
Consolidated Statement of Comprehensive Income
The Company’s activities derive from continuing operations.
The Notes on pages 19 to 34 form an integral part of these Financial Statements.
Year
ended
Year
ended
30 June
30 June
2023
2022
Note
Audited
Audited
£
£
Administrative expenses
6
(1,005,529 )
(3,262,300 )
Other losses
10
(960,000 )
(4,800,000 )
Operating loss
(1,965,529 )
(8,062,300 )
Finance Income
7
Profit/ (Loss) before income taxes
(7,715,383 )
Income tax
8
Profit/ (Loss) for the year
(7,715,383 )
Total comprehensive Profit/ (Loss) for the year attributable to
owners of the parent
(7,715,383 )
Profit/ (Loss) per ordinary share (£)
Basic
9
(0.06 )
Diluted
9
(0.06 )
AdvancedAdvT Limited
Consolidated Statement of Financial Position
16
Consolidated Statement of Financial Position
Note
As at
30 June 2023
As at
30 June 2022
£
£
Non-current assets
Financial asset at fair value through profit or loss
10
Current assets
Trade and other receivables
11
Cash and cash equivalents
12
Total current assets
Total assets
Equity and liabilities
Equity
Sponsor share
14
Ordinary shares
14
Warrant reserve
3
Warrant cancellation reserve
Share-based payment reserve
15
Accumulated losses
(8,829,400 )
(10,261,408 )
Total equity
Current liabilities
Trade and other payables
13
Total liabilities
Total equity and liabilities
The Notes on pages 19 to 34 form an integral part of these Financial Statements.
The Financial Statements were approved by the Board of Directors on 27 July 2023 and were signed on its
behalf by:
Vin Murria Mark Brangstrup Watts
Chairman Director
AdvancedAdvT Limited
Consolidated Statement of Changes in Equity
17
Consolidated Statement of Changes in Equity
Notes
Sponsor
share
£
Ordinary
shares
£
Class A
shares
£
Warrant
reserves
£
Warrant
Cancellation
Reserve
£
Share based
payment
reserve
£
Accumulated
losses
£
Total equity
£
Balance as at 31 July 2020
-
-
-
-
-
-
-
Issuance of 1 ordinary share
14
Redesignation of 1 ordinary share
14
(1 )
Issuance of 700,000 ordinary shares and
matching warrants
14
Share issue costs
14
(275,300 )
(275,300 )
Issuance of 2,500,000 Class A shares and
matching warrants
Conversion of 2,500,000 Class A shares
(2,150,000 )
(350,000 )
Issuance of 130,000,000 ordinary shares
Share issue costs
14
(1,310,569 )
(1,310,569 )
Issuance of 1 sponsor share
14
Total comprehensive loss for the period
(2,546,025 )
(2,546,025 )
Share-based payment expense
15
Balance as at 30 June 2021
(2,546,025 )
Total comprehensive loss for the year
(7,715,383 )
(7,715,383 )
Share-based payment expense
15
Balance as at 30 June 2022
(10,261,408 )
Total comprehensive profit for the year
Share-based payment expense
15
Balance as at 30 June 2023
(8,829,400 )
The Notes on pages 19 to 34 form an integral part of these Financial Statements.
AdvancedAdvT Limited
Consolidated Statement of Cash Flows
18
Consolidated Statement of Cash Flows
Note
For the year
ended
30 June 2023
For the year
ended
30 June 2022
£
£
Operating activities
Profit/ (Loss) for the period
(7,715,383 )
Adjustments to reconcile total operating loss to net cash flows:
Deduct interest income
(2,953,473 )
(281,430 )
Fair Value adjustment on Financial Asset
Add back share based payment expense
Working capital adjustments:
(Increase)/ Decrease in trade and other receivables and
Prepayments
(908,938 )
(Decrease)/Increase in trade and other payables
(1,052,639 )
Net cash flows used in operating activities
(2,427,189 )
(1,335,880 )
Investing Activities
Purchase of Financial Asset
10
(24,000,000 )
Interest income
Net cash flows from/(used in) investing activities
(23,718,570 )
Net increase/(decrease) in cash and cash equivalents
(25,054,450 )
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
12
The Notes on pages 19 to 34 form an integral part of these Financial Statements.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
- 19 -
Notes to the Consolidated Financial Statements
1. GENERAL INFORMATION
the Main Market of the London Stock Exchange on 4 December 2020 and has its registered address at Commerce
held subsidiaries named in note 10 (together with the Company, the “Company” or “Group”).
2. ACCOUNTING POLICIES
(a) Basis of preparation
These Financial Statements have been prepared in accordance with International Financial Reporting Standards
('IFRS'), as adopted by EU, and are presented in British pounds sterling, which is the presentational and functional
currency of the Company. The Financial Statements present the results for the year to 30 June 2023 with a
comparative year to 30 June 2022.
Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
• certain financial assets and liabilities (investments) – measured at fair value or revalued amount.
Critical accounting estimates
The preparation of the Financial Statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the consolidated entity's accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the Financial Statements, are disclosed in note 3.
(b) Going concern
At 30 June 2023, the Group has net assets of £123,185,690 and a cash balance of £104,696,281. The Company
has sufficient resources to continue to pursue its investment strategy which may include effecting a merger, share
exchange, asset acquisition, share or debt purchase, reorganisation or similar business combination with one or
more businesses. Subject to the structure of any acquisition, the Company may need to raise additional funds to
finance the acquisition in the form of equity and/or debt. The ability of the Company to raise additional funds in
relation to an acquisition may affect its ability to complete that acquisition. Other factors outside of the
Company’s control may also impact on the Company’s ability to complete that acquisition. Details of the risks
faced by the Company are set out at the end of this report (pages 36 onwards).
The Directors have also considered the expected impact of the Covid-19 pandemic and Ukraine conflict on the
Company’s forecast cashflows and liabilities, concluding that prior to completing a transaction, the pandemic and
conflict has 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.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
20
(c) New standards and amendments to International Financial Reporting Standards
Standards, amendments and interpretation effective and adopted by the Company
IFRSs applicable to the Financial Statements of the Company have been applied for the year ending 30 June 2023
and for the comparative year.
Standards issued but not yet effective
The following standards are issued but not yet effective. The Company intends to adopt these standards, if
applicable, when they become effective. It is not expected that these standards will have a material impact on
the Company.
Standard
Effective date
Amendments to IFRS 3: References to Conceptual Framework;
1 January 2023
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current
or Non-current*;
1 January 2023
Disclosure of accounting policies (Amendments to IAS 1);
1 January 2023
Extension of temporary exemption of applying IFRS 9 (Amendments to IFRS 4)
1 January 2023
Deferred Tax relating to Assets and Liabilities arising from a Single Transaction (Amendments to
IAS 12);
1 January 2023
Initial Application of IFRS 17 and IFRS 9 – Comparative Information Amendment to IFRS 17)*;
1 January 2023
Definition of accounting estimates (Amendments to IAS 8);
1 January 2023
Amendments to IFRS 17 Insurance contracts
1 January 2023
* Subject to EU endorsement
(d) Basis of consolidation
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls
an entity when the consolidated entity 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 to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They
are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated
entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the consolidated entity.
(e) Cash and cash equivalents
Cash is cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.
(f) Stated capital
Ordinary shares and sponsor shares are classified as equity. Incremental costs directly attributable to the issue of
new shares are shown in the associated stated capital as a deduction from the proceeds.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
21
(g) Share based payments
The A ordinary shares in MAC I (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.
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. 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.
(h) Warrants
On 4 December 2020, the Company issued 700,000 ordinary shares and matching warrants. Under the terms of
the warrant instrument, warrant holders can acquire one ordinary share per warrant at a price of £1 per ordinary
share. Warrants are accounted for as equity instruments under IAS 32 and are measured at fair value at the date
of issue. Fair value of the warrants has been calculated using a Black Scholes option pricing methodology and
details of the estimates and judgements used in determining the fair value of the warrants are set out in note 3.
(i) Corporation tax
Corporation tax for the year presented comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially
enacted at the balance sheet date, and any adjustment to taxes payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is not probable that
the related tax benefit will be realised.
(j) Earnings per ordinary share
Earnings per ordinary share (“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 year. Diluted earnings
per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares.
(k) 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.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at fair value through profit or loss
(“FVTPL”), amortised cost, or fair value through other comprehensive income (“FVOCI”).
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
22
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Company’s business model for managing them. In order for a financial asset to be classified
and measured at amortised cost or FVOCI, it needs to give rise to cash flows that are ‘solely payments of principal
and interest’ on the principal amount outstanding (the “SPPI Criterion”).
Financial assets are initially measured at their fair value plus, for those financial assets not at fair value through
profit or loss, transaction costs.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect its contractual
cash flows, and
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are
categorised at FVTPL. Further, irrespective of the business model used, financial assets whose contractual cash
flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial
instruments fall into this category, except for those designated and effective as hedging instruments, for which
the hedge accounting requirements apply.
The category also contains an equity investment. The Company accounts for the investment at FVTPL and did not
make the irrevocable election to account for the investment in M&C Saatchi plc at FVOCI. The fair value was
determined in line with the requirements of IFRS 13 ‘Fair Value Measurement’.
Assets in this category are measured at fair value with gains or losses recognised in profit or loss.
The fair values of financial assets in this category are determined by reference to active market transactions or
using a valuation technique where no active market exists.
Derecognition
A financial asset is primarily derecognised and removed from the consolidated statement of financial position
when the rights to receive cash flows from the asset have expired.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss.
All financial liabilities are recognised initially at fair value and, in the case of payables, net of directly attributable
transaction costs.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost and in the case of interest-bearing financial
liabilities at amortised cost using the effective interest rate method. Gains and losses are recognised in the
Statement of Comprehensive Income when the liabilities are derecognised.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
23
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the 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.
Key sources of estimation uncertainty
Share-based payment transactions
There are significant estimates and assumptions used in the valuation of the A ordinary shares in MAC I (BVI)
Limited (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 values 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.
Ordinary share warrants
As part of the Company’s initial fundraising on IPO, the Company issued ordinary shares to a number of investors.
For every ordinary share subscribed for, each investor was also granted a warrant (“Warrant”) to acquire a further
ordinary share at an exercise price of £1.00 per share. The Warrants are exercisable at any time until five years
after the IPO date, being 4 December 2020. 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. Of these factors estimates and judgement are required when determining the
expected volatility, dividends, and warrant term.
Critical accounting judgements
Coronavirus (COVID-19) pandemic and Ukraine conflict
Judgement has been exercised in considering the impact that both the Coronavirus (COVID-19) pandemic and
Ukraine conflict has had, or may have, on the Company based on known information. This consideration extends
to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in
which the consolidated entity operates. Other than as addressed in the risks at the end of this report, there does
not currently appear to be either any significant impact upon the Financial Statements or any significant
uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at
the reporting date or subsequently because of both the Coronavirus (COVID-19) pandemic and Ukraine conflict
based on the Company’s current position and operations.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers
it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
For the year to 30 June 2023, the Directors do not consider that they have made any other significant estimates,
judgments or assumptions which would materially affect the balances and results reported in these Financial
Statements.
4. 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.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
24
5. EMPLOYEES AND DIRECTORS
(a) Employment costs for the Company during the year:
For the year
ended 30 June
2023
For the year
ended 30 June
2022
£
£
Wages and salaries
190,000
190,000
Pension contributions
7,000
7,000
Social security costs
24,425
24,299
Other employment related expenses
2,309
3,003
Total employment costs expense
223,734
224,302
On 31 December 2020, Vin Murria OBE was appointed as Chairman of the Company. Under the terms of Vin
Murria OBE’s appointment letter, Vin was entitled to a fee of £50,000 per annum. As at 23 March 2021 Vin waived
her entitlement to fees until completion of the first acquisition. Mark Brangstrup Watts is also not currently
receiving director’s fees, however, on completion of the first acquisition, it is currently intended that Mark will
also receive a fee for his services. Karen Chandler is both entitled and receiving an annual fee of £50,000 for her
services as a non-executive director.
(b) Key management compensation
The Board considers the Directors of the Company to be the key management personnel of the Company.
(c) Employed persons
The average monthly number of persons employed by the Company (including Directors) during the year was as
follows:
For the year
ended 30 June
2023
For the year
ended 30 June
2022
number
Number
Directors
2
2
2
2
Included within accruals is £nil, which relates to unpaid directors’ remuneration.
6. ADMINISTRATIVE EXPENSES BY NATURE
For the year
ended
30 June 2023
For the year
ended
30 June 2022
Company administrative expenses by nature
£
£
Directors’ fees
223,734
224,302
Professional fees
155,256
110,584
Non-recurring project costs
432,021
2,750,468
Listing fees
52,248
69,295
Share based payment expense
95,853
95,854
Branding and website cost
39,966
6,910
Travel and entertainment
5,301
3,654
Bank charges
1,150
1,233
1,005,529
3,262,300
The Company’s independent auditor, Baker Tilly Channel Islands Limited, has fees amounting to £18,070 for the
final year end audit.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
25
7. FINANCE INCOME
For the year
ended 30 June
2023
For the year
ended 30 June
2022
£
£
Interest from cash and cash equivalents
3,217,537
346,917
Dividends from listed equity securities
180,000
-
3,397,537
346,917
8. TAXATION
For the year
ended 30 June
2023
For the year
ended 30 June
2022
£
£
Analysis of tax in year
Current tax on profits for the year
-
-
Total current tax
-
-
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:
For the year
ended 30 June
2023
For the year
ended 30 June
2022
£
£
Profit/ (Loss) on ordinary activities before tax
1,432,008
(7,715,383)
Expenses not deductible for tax purposes
1,059,623
4,896,942
Over allowance for the tax charge recognised in the prior year
-
252,708
Profit/ (Loss)on ordinary activities subject to corporation tax
2,491,631
(2,565,733)
Profit/ (Loss)on ordinary activities multiplied by the rate of corporation tax in
the UK of 25% (2022: 19%)
622,908
(487,489)
Effects of:
Losses (utilised)/ carried forward for which no deferred tax recognised
(622,908)
487,489
Total taxation 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.
9. 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.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
26
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.
For the year
ended 30 June
2023
For the year
ended 30 June
2022
Profit/ (Loss) attributable to owners of the parent
1,432,008
(7,715,383)
Weighted average number of ordinary shares in issue
133,200,000
133,200,000
Weighted average number of ordinary shares for diluted EPS
133,200,000
133,200,000
Basic profit/ (loss) per ordinary share (£)
0.01
(0.06)
Diluted Profit per ordinary share (£)
0.01
-
10. 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:
Subsidiary
Nature of business
Country of
incorporation
Proportion
of ordinary
shares held
by parent
Proportion of
ordinary
shares held by
the Company
MAC I (BVI) Limited
Incentive vehicle
BVI
100%
100%
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:
Subsidiary
Nature of business
Country of
incorporation
Proportion of ordinary shares
held by the Group
ADV Holding Group Limited
Holding company
England and Wales
100%
ADV Finance Holding Limited
Holding company
England and Wales
100%
ADV People Holding Limited
Holding company
England and Wales
100%
ADV US Inc.
Holding company
USA
100%
ADV Data Holding Limited
Holding company
England and Wales
100%
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
27
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.
As at 30 June
2023
As at 30 June
2022
£
£
Level 1 Financial assets at fair value through profit or loss (FVTPL)
18,240,000
19,200,000
18,240,000
19,200,000
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:
For year ended
30 June 2023
For year ended
30 June 2022
£
£
Fair value (losses) on equity investments at FVTPL recognised in other
(losses)
(960,000)
(4,800,000)
(960,000)
(4,800,000)
11. TRADE AND OTHER RECEIVABLES
As at 30 June
2023
As at 30 June
2022
£
£
Amounts receivable in one year:
Prepayments
106,129
11,271
Other receivables
509,553
65,488
VAT receivable
394,741
24,726
1,010,423
101,485
Other receivables are all current.
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.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
28
12. CASH AND CASH EQUIVALENTS
As at 30 June
2023
As at 30 June
2022
£
£
Cash and cash equivalents
Cash at bank
47,741,876
64,169,997
Deposits on call
56,954,405
40,000,000
104,696,281
104,169,997
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.
13. TRADE AND OTHER PAYABLES
As at 30 June
2023
As at 30 June
2022
£
£
Amounts falling due within one year:
Trade payables
111,129
125,768
Accruals
534,041
1,572,041
A ordinary share liability
115,844
115,844
761,014
1,813,653
There is no material difference between the book value and the fair value of the trade and other payables.
14. EQUITY AND RESERVES
Stated capital
Stated capital
Authorised
Unlimited ordinary shares of no par value
Unlimited A shares of no par value
100 sponsor shares of no par value
As at 30 June
2023
As at 30 June
2022
Issued
£
£
133,200,000 ordinary shares of no par value
131,166,131
131,166,131
2 sponsor shares of no par value
2
2
Ordinary and Sponsor share rights
Holders of ordinary shares are entitled to receive notice and attend and vote at any meeting of members, 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.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
29
The Sponsor Shares:
• confer upon the holders no rights to dividends or distributions (including on the Company’s liquidation);
• confer upon the holders no right to receive notice of or attend and vote as a member at any meeting of
members (provided that if at any time the Sponsor Shares are the only shares in issue each holder of
Sponsor Shares shall have the right to receive notice of, attend and vote as a member at any meeting of
members);
• are not convertible or exchangeable for any other class or series of shares of the Company;
• for so long as the 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), the holder
of a Sponsor Share has the right to appoint one director to the Board;
• confer upon any holder the right to require that: (i) any purchase of Ordinary Shares; or (ii) the
Company’s ability to amend the Memorandum and Articles, be subject to a special resolution of
members whilst a holder of a Sponsor Share holds directly or indirectly 5 per cent. or more of the issued
and outstanding shares of the Company or a holder of a Sponsor Share also hold Incentive Shares.
• confer certain control rights whilst a 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 a Sponsor Share and holds Incentive Shares, such that the Company shall not,
without the prior vote or consent of holders of all of the Sponsor Shares:
• Issue any further Sponsor Shares;
• amend, alter or repeal any existing or introduce any new share-based compensation or incentive
scheme in the Company; and
• 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 Company’s Statement of Principles; or
• 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;
15. SHARE BASED PAYMENTS
The Company has put in place a long-term incentive plan (“LTIP”), to ensure an alignment with all Shareholders,
and which reflects the high competition for the best executive management talent.
The general principles of the Company’s compensation strategy are to be:
• Proportionate: to the role and risk being taken by the participant and reflecting the participants’ value to
delivering outstanding, sustainable shareholder returns;
• Transparent: the compensation structure and its associated terms should be transparent to investors and the
impact of the scheme clearly communicated to investors on an ongoing basis;
• Performance Based: minimum performance criteria should be based on all equity issuance over the lifetime of
the relevant measurement period, subject to minimum preferred returns and based only on a share of equity
profits generated; and
• Drive Sustainable Value Creation: incentive arrangements should be structured to encourage the creation of
sustainable returns over the long term through long term vesting and a lengthy performance measurement
period.
The LTIP will only reward the participants if shareholder value is created. This ensures alignment of the interests
of management, being Vin Murria, Gavin Hugill and Karen Chandler at the balance sheet date, and Marwyn (in
which Mark Brangstrup Watts is beneficially interested through their indirect interest in Marwyn Long Term
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
30
Incentive LP (“MLTI”)) directly with those of shareholders. It is the expectation that the LTIP will ultimately include
senior executives of the acquired companies.
Preferred Return
The incentive arrangements are subject to the Company’s shareholders achieving a preferred return of at least
7.5 per cent. per annum on a compounded basis on the capital they have invested from 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 per cent. 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 per cent. of the Growth being the “Incentive Value”). 15% of
the gross incentive value is attributable to the A1 ordinary shares and 5% is attributable to the A2 ordinary shares.
Grant date
The grant date of the Incentive Shares will be deemed to be the date that such shares are issued.
Redemption / Exercise
Unless otherwise determined and subject to the redemption conditions having been met, the Company and the
holders of the Incentive Shares have the right to exchange each Incentive Share for Ordinary Shares, which will
be dilutive to the interests of the holders of Ordinary Shares. However, if the Company has sufficient cash
resources and the Company so determines, the Incentive Shares may instead be redeemed for cash.
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. However,
it is currently expected that in the ordinary course of business, Incentive Shares will be exchanged for Ordinary
Shares.
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 for a holder of Incentive Shares to exercise its redemption right, which right begins on the third
anniversary and ends on the seventh anniversary of the date of the Company’s initial acquisition.
The vesting conditions are as follows:
i. it is later than the third anniversary of the initial acquisition;
ii. a sale of all or substantially all 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 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. whereby corporate action or otherwise, the Company effects an in-specie distribution of all or
substantially all the assets of the Company to the Company’s shareholders;
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
31
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.
Leaver, lock-in and clawback provisions
In addition to the vesting conditions above, lock-in periods, leaver provisions, and clawback provisions have been
entered into by all the holders of the A1 ordinary shares in MAC I (BVI) Limited in issue at the balance sheet date.
The shares will vest on a straight-line basis over 3 years from the acquisition date, save on an exit event when the
Incentive Shares will vest in full. If deemed a good leaver vested Incentive Shares will be retained, but any
unvested shares will be forfeited.
Either cash/securities received upon exercise (for example on a distribution in specie) in the prior 36 months (less
tax amounts paid) of the Incentive Shares being exercised, and/or the remaining Ordinary shares/Incentive Shares
held may be clawed back if the holder commits: (i) gross misconduct, (ii) fraud (iii) a criminal act, or (iv) a material
breach of any post termination covenants or restrictions in the holder’s contract with the Company (if applicable),
and (v) the combination of (a) a requirement that the Parent materially restate the audited consolidated accounts
of the Parent or the Company (excluding for any reason of change in accounting practice or accounting standards);
and (b) thereafter, a determination by the Remuneration Committee (or Board until the establishment of a
Remuneration Committee – acting in good faith) that, had such audited consolidated accounts been correct at
the time of exchange of such A1 Shares, the Subscriber or any of the Subscriber’s Associates would not have
received the full payment to which he or it was owed (or the full number of Parent Ordinary Shares he or it was
issued).
Holders of the shares have agreed that if they exchange some or all their Incentive Shares for an allotment of
Ordinary Shares, they shall not be permitted to enter into an agreement to give effect to any transfer of the
Ordinary Shares so allotted at any time during the period of 12 months and one day following the date of such
allotment save in certain limited circumstances.
Holding of Incentive Shares
MLTI, Vin Murria, Gavin Hugill and Karen Chandler hold Incentive Shares entitling them 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.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
32
Issue Date
Name
Share
Designation
at balance
sheet date
Nominal
Price
Issue price
per A
ordinary
share
Number
of A
ordinary
shares
Unrestricted
market value
at grant date
IFRS 2 Fair
Value
25/11/2020
Marwyn Long Term
Incentive LP
A2
£0.01
£7.50
2,000
£15,000
£169,960
31/12/2020
Vin Murria OBE
A1
£0.01
£5.42
6,000
£32,500
£354,050
05/02/2021
Gavin Hugill
A1
£0.01
£25.56
600
£15,336
£65,040
15/02/2021
Karen Chandler
A1
£0.01
£36.67
600
£22,000
£93,415
17/03/2021
Vin Murria OBE
A1
£0.01
£4.79
9,600
£46,008
£195,120
Valuation of Incentive Shares
Valuations were performed by Deloitte using a Monte Carlo model and ascertaining a fair value at each date.
Details of the valuation methodology and estimates and judgements used in determining the fair value are noted
herewith and were 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% has been applied, based on
the average yield on a five-year UK Gilt at the valuation date. The model incorporates a range of probabilities for
the likelihood of an acquisition being made of a given size.
Expense related to Incentive Shares
The A2 shares were expensed in full in 2021. An expense of £95,853 (2022: £95,854) has been recognised in the
Statement of Comprehensive Income in respect of the A1 ordinary shares.
16. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Company has the following categories of financial instruments at the year end:
As at
30 June 2023
As at
30 June 2022
£
£
Financial assets measured at amortised cost
Cash and cash equivalents
104,696,281
104,169,997
Other receivables
509,553
65,488
Financial assets at fair value through profit or loss (FVTPL)
18,240,000
19,200,000
123,445,834
123,435,485
Financial liabilities measured at amortised cost
Trade and other payables
761,014
1,813,653
761,014
1,813,653
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
33
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.
AdvancedAdvT Limited
Notes to the Consolidated Financial Statements
34
17. 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.
18. 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.
19. 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.
AdvancedAdvT Limited
Advisors
35
Advisors
Corporate Broker
Singer Capital Markets Limited
One Bartholomew Lane
London
EC2N 2AX
Company Secretary
Antoinette Vanderpuije
11 Buckingham Street
London
WC2N 6DF
Registrar
Link Market Services (Guernsey) Limited
Mont Crevelt House, Bulwer Avenue
St Sampson, Guernsey
GY2 4LH
Registered Agent and Assistant Company Secretary
Conyers Corporate Services (BVI) Limited
Commerce House, Wickhams Cay 1
Road Town, VG1110
Tortola, British Virgin Islands
Depository
Link Market Services Trustees Limited
The Registry 34 Beckenham Road
Beckenham
Kent, BR3 4TU
Solicitors to the Company (as to English law)
Cooley (UK) LLP
22 Bishopsgate
London
EC2N 4BQ
Auditor
Baker Tilly Channel Islands Limited
First floor, Kensington Chambers
46-50 Kensington Place
St Helier Jersey JE4 0ZE
Solicitors to the Company (as to BVI Law)
Conyers Dill & Pearman
Commerce House, Wickhams Cay 1
Road Town, VG1110
Tortola, British Virgin Islands
UK establishment address
11 Buckingham Street
London
WC2N 6DF
AdvancedAdvT Limited
Risks
36
Risks
Risks applicable to investing in the Company
An investment in the ordinary shares involves a high
degree of risk. No assurance can be given that
shareholders will realise a profit or will avoid loss on
their investment. The Board has identified a wide
range of risks as set out in the Company’s prospectus
dated 31 March 2023 which can be found on the
Company’s website: www.advancedadvt.com
The board has set out below the risks 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 order of priority. If any of the
following events identified below occur, the Company's
business, financial condition, capital resources, results
and/or future operations and prospects could be
materially adversely affected.
Risks rating to the Company’s future business and
potential structure
• The Company may be unable to refocus and improve
the operating and financial performance of an acquired
business.
The success of any of the Company's Acquisitions may
depend in part on the Company's ability to implement
the necessary technological, strategic, operational and
financial change programmes in order to either: (i)
transform the acquired business and improve its
financial performance or (ii) continue to grow the
acquired business and expand its current operations.
Implementing change programmes within an acquired
business may require significant modifications,
including changes to hardware and other business
assets, operating and financial processes and
technology, software, business systems, management
techniques and personnel, including senior
management.
There is no certainty that the Company will be able to
successfully implement such change programmes
within a reasonable timescale and cost, and any
inability to do so could have a material adverse impact
on the Company's performance and prospects.
• Acquisitions from large corporates could attract further
complexities and risks to future financial performance
• Acquiring businesses from a large corporate poses
several risks to the Company. A notable risk is the
potential disruption to core trading activities during
the process of extracting and integrating the acquired
businesses. The uncertainty surrounding this
integration could lead to a diversion of resources and
attention from existing operations, impacting
productivity and financial performance. Additionally,
there may be challenges in aligning the cultures,
systems, and processes of the acquired businesses,
potentially leading to inefficiencies and conflicts.
Moreover, market dynamics and regulatory changes
during the acquisition phase may add further
complexity and risks to the overall process. Therefore,
a diligent planning, and a strong post-acquisition
integration plan will be important to navigate these
challenges and ensure a successful acquisition without
compromising the ongoing existing business
operations.
• The Company may not be able to complete business
combinations.
The Company's future success is dependent upon its
ability to not only identify opportunities but also to
execute on successful business combinations. There
can be no assurance that the Company will be able to
conclude agreements with any target business and/or
shareholders in the future and failure to do so could
result in the loss of an Investor's investment. In
addition, the Company may not be able to raise the
additional funds required to acquire a target business.
• The Company may face significant competition for
acquisition opportunities
There may be significant competition for some or all
the acquisition opportunities that the Company may
explore. A number of these competitors may possess
greater technical, financial, human and other
resources than the Company. Such competition may
cause the Company to incur significant costs but be
unsuccessful in executing an Acquisition or may result
in a successful Acquisition being made at a significantly
higher price than would otherwise have been the case
which could materially adversely impact the business,
financial condition, result of operations and prospects
of the Company.
AdvancedAdvT Limited
Risks
37
• The Company could incur costs for transactions that
may ultimately be unsuccessful.
There is a risk that the Company may incur substantial
legal, financial and advisory expenses arising from
unsuccessful transactions which could have a material
adverse effect on the business, financial condition,
results of operations and prospects of the Company.
• The Company may be unable to obtain additional
funding needed to implement its strategy.
The Company may seek additional sources of financing
(equity and/or debt) to implement its strategy. There
can be no assurance that the Company will be able to
raise those funds, whether on acceptable terms or at
all. Equity and/or debt financing could decrease
Shareholders' proportional ownership interests in the
Company or have a material adverse effect on its
financial condition and results of operations.
• The Marwyn Shareholder
5
Mark Brangstrup Watts and
Vin Murria OBE have interests in companies with
similar strategies to that of the Company
The Marwyn Shareholder, Mark Brangstrup Watts and
Vin Murria OBE are, and may in the future become,
affiliated with entities engaged in business activities
similar to those intended to be conducted by the
Company, including other entities established with a
similar objective to that of the Company and
investment opportunities may be taken up by the
Marwyn Shareholder, Mark Brangstrup Watts or Vin
Murria OBE and/or entities affiliated with any of them
in advance of the Company. At the date of this
document, the Marwyn Shareholder is affiliated with
450 Holdings plc, Marwyn Acquisition Company II
Limited, Marwyn Acquisition III Limited and Marwyn
Alpha Limited (being entities engaged in business
activities similar to those intended to be conducted by
the Company). At the date of this document, Vin
Murria OBE is affiliated with Plum Acquisition Corp. I
(being an entity engaged in business activities similar
to those intended to be conducted by the Company).
Each of 450 Holding plc, Marwyn Acquisition Company
II Limited, Marwyn Acquisition III Limited and Marwyn
Alpha Limited are acquisition vehicles and have net
assets which are less than £13,000,000. Marwyn
Acquisition Company plc is quoted on AIM. Plum
5
Marwyn Shareholder is defined as Marwyn Investment
Management LLP
Acquisition Corp. I is quoted on Nasdaq Capital Market
(NASDAQ).
In the course of their respective business activities, the
Marwyn Shareholder, Mark Brangstrup Watts and/or
Vin Murria OBE may become aware of investment and
business opportunities which may be appropriate for
presentation to the Company as well as the other
entities with which they are affiliated. The Marwyn
Shareholder, Mark Brangstrup Watts and/or Vin Murria
OBE may have conflicts of interest in determining to
which entity a particular business opportunity should
be presented. The Directors will seek to mitigate or
resolve any conflict of interest that has been identified
and will take appropriate action to do so - this may be
through the implementation of policies dealing with
conflicts of interest or otherwise.
• Success of investment policy not guaranteed
The reported acquisitions represent the first trading
activities since incorporation. The company will
continue to have significant cash reserves remaining
after the reported acquisitions for further business
combinations. The value of any investment in the
Company is, therefore, wholly dependent upon the
successful implementation of its investment objective.
Investors will be relying on the ability of the Company,
the Directors and the Proposed Directors to identify
potential business combinations, evaluate their merits,
conduct diligence and negotiations, raise any required
additional finance, execute such Acquisitions and
potentially hire management teams.
• Due Diligence may not identify Material facts or
circumstances
Prior to making or proposing any investment, including
on the reported acquisitions, the Company has and will
undertake due diligence on the target businesses to a
level considered reasonable and appropriate by the
Board on a case-by-case basis. Any failure to reveal all
material facts or circumstances relating to a potential
investment may have a material adverse effect on the
business, financial condition, results of operations and
prospects of the Company.
AdvancedAdvT Limited
Risks
38
• The Company may not acquire total voting control of
any target company or business
The Company may either consider acquiring total
voting control of any target company or business or
acquiring a non-controlling interest constituting less
than total voting control or less than the entire equity
interest of that target company or business if such
opportunity is considered attractive or where the
Company expects to acquire sufficient influence to
implement its strategy. In such circumstances, the
remaining ownership interest will be held by third
parties and the Company's decision-making authority
may be limited. Any third party's interests may be
contrary to the Company's interests.
• The success of the Company's investment objective not
guaranteed
The success of the investment objective depends on
the Directors' and Proposed Directors' ability to
identify and manage investments in accordance with
the Company's investment objective 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.
• Changes in Investment Policy may occur
The Company’s reported acquisitions are consistent
with the current Investment Policy. However, the
Company’s Investment Policy may be modified and
altered from time to time with the approval of
Shareholders, so it is possible that the approaches
adopted to achieve the Company’s investment
objectives in the future may be different from those
the Directors currently expect to use and which are
disclosed in these Financial Statements. Any such
change could adversely impact the business,
development, financial condition, results of operations
and prospects of the Company.
• The Group may be vulnerable to hacking, identity theft
and fraud
A failure of or breach in cybersecurity ("cyber
incidents") refers to both intentional and unintentional
events that may cause the relevant party to lose
proprietary information, suffer data corruption, or lose
operational capacity. In general, cyber incidents can
result from deliberate attacks ("cyber-attacks") or
unintentional events. Cyber-attacks include, but are
not limited to, gaining unauthorised access to digital
systems (e.g. through "hacking" or malicious software
coding) for purposes of misappropriating assets or
sensitive information, corrupting data, or causing
operational disruption). Cyber-attacks may also be
carried out in a manner that does not require gaining
unauthorised access, such as denial-of-service attacks
on websites (i.e. efforts to make network services
unavailable to intended users).
Cyber incidents may cause significant disruption and
materially impact business operations, potentially
resulting in financial losses, impediments to trading,
violations of applicable privacy and other laws,
regulatory fines, penalties, reputational damage,
reimbursement or other compensation costs, or
additional compliance costs.
While the Group has in place security measures and
guidelines in an effort to prevent hacking, identity theft
and fraud, including the loss of intellectual property, it
may not be able to fully protect itself and its customers
from unauthorised access or hacking. For example, the
Group is subject to the risk that unauthorised persons
could access its systems and fraudulently transfer
funds or obtain data on the Group and/or its clients.
Cybersecurity is of particular importance to business
operating withing the digital, software and services
sector. Any such unauthorised access, whether or not
such access results in financial loss, could result in
significant reputational damage to the Group amongst
its clients and the market generally and affected
parties could seek damages from the Group, any of
which could have a material adverse effect on its
business, financial condition, results of operations and
prospects.
Risks relating to sectors in which the Company might
invest
• Industry specific risks
The Company’s reported acquisitions are primarily
focused on the UK market but have a global reach. It is
anticipated that the Company will continue to invest in
businesses or companies in adjacent sectors globally
AdvancedAdvT Limited
Risks
39
however its principal focus will be on the UK, Europe
and North America. The performance of sectors in
which the Company may invest may be cyclical in
nature, with some correlation to gross domestic
product and, specifically, levels of demand within
targeted end-markets. As a result, the identified sector
may be affected by changes in general economic
activity levels which are beyond the Company's
control, but which may have a material adverse effect
on the Company's financial condition and prospects.
The COVID-19 pandemic may result in greater demand
in certain sectors, and fewer opportunities in others.
The Company has a broad investment strategy, which
is not restricted by either sector or geographic focus.
The COVID-19 situation is still evolving. It is therefore
difficult to predict what impact COVID-19 may have on
any potential investment. An adverse change in
economic activity could have a material adverse effect
on the profitability of the Company following an
acquisition.
• Increased competition and unanticipated actions by
competitors or customers.
The markets in which the Company and its reported
Acquisitions operate are highly competitive with
significant competition from large international
competitors and smaller regional competitors.
Competitors include large enterprise software and
services companies, regional and national software
and services companies, digital and strategy
consultants and new market participants. The Group
may lose market share to other competitors or to other
products or services that can be substituted for the
products or services of the Group. Increased
competition and unanticipated actions by competitors
or customers, which could arise as a result of, among
other things, unforeseen changes in the competitive
landscape due to the introduction of disruptive
technologies, could lead to an adverse effect on results
and hinder the Company’s growth potential. The
Company may, where the Board decides it is necessary,
invest in new facilities to allow it to maintain its key
market positions. Following an Acquisition, the ability
of the Group to compete in the software and services
sector will be dependent on its ability to develop
technological innovations, to introduce new products
and services, and to protect its intellectual property,
trade secrets and know-how.
Clients moving their accounts to competitors on
relatively short notice, choosing another provider over
the Group or placing restrictions on the representation
or servicing of competing accounts or product lines,
could have a material adverse effect on the Group’s
market share and its business, financial condition,
results of operations and prospects.
• New entrants to the market.
The Company will always be at risk that new entrants
to the market are able to procure, by way of acquisition
or licence, businesses which compete with the
Company. Any new entrant in this space could have a
disruptive effect on the Company and its ability to
implement the investment objective and deliver
significant value for Shareholders. If any new entrant
was able to establish a foothold in the market, this
could have a corresponding negative effect on the
financial prospects of the Company.
Risks relating to the M&C investment
• The Company may not be able to dispose of part or all
of its stake in M&C on favourable terms
The M&C Investment constitutes the Company's sole
asset (excluding cash) representing approximately 14.8
per cent. of the Company's net assets as at 30 June
2023, the latest practicable date prior to the
publication of these Financial Statements. There can be
no guarantee that the Company will be able to dispose
of the M&C Investment at a value equal to or more
than the value for which it was obtained. In the
Company's financial statements, the M&C Investment
is accounted for as an asset held at fair value. The
shares are revalued to market value at the end of every
reporting period with gains or losses on valuation taken
to the profit and loss account. Further, any fall in the
share price of M&C would have a corresponding
negative effect on the value of the M&C Investment
and potentially the share price of the Ordinary Shares,
which could have a material adverse impact on the
Company's performance and prospects.
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• Maintaining a minority stake in M&C could have an
adverse effect on the Company's strategy
The Company may maintain its investment in M&C.
Company decisions relating to the holding of, disposal
of, or further investment in, shares in M&C will be
affected by a broad range of factors including, without
limitation, the activities of other shareholders in M&C,
market conditions generally, and operational and
financial factors relating to M&C specifically. As a
consequence, Company decisions relating to the M&C
Investment will be more reactive than if the Company
held no existing stake in M&C. Failure by the Company
to respond effectively to any of the foregoing factors
when making investment decisions relating to M&C
could have a detrimental impact on the value of the
M&C Investment and potentially the share price of the
Ordinary Shares, which could have a material adverse
impact on the Company's performance and prospects.
To the extent that the M&C Investment is maintained,
whether in contemplation of a future offer for M&C
being made by the Company or otherwise, such
continued holding will affect the Company's strategy
and consideration of other Acquisition targets. For
example, the Company may pursue a potential
Acquisition which, in order to finance the
consideration, requires the Company to dispose of the
M&C Investment at a price which is less than its cost of
acquisition. Alternatively, the Company may be unable
to complete an Acquisition because it is unable to
dispose of the M&C Investment at a favourable price.
If the Company were to dispose of the M&C
Investment at an unfavourable price, or did not
complete another Acquisition because it could dispose
of the M&C Investment at a favourable price, any such
occurrence could lead to a material adverse effect on
the Company's results of operations, financial
condition and prospects.
• The market in which M&C operates is subject to rapid
change
Advertising markets are changing as audiences move
online and fragment. Agencies must re-orient their
models to target audiences and reflect client demands
for more integrated solutions in this more complicated
marketing environment. Technology and digital
platforms, together with the large volume of data that
these generate, are disrupting the marketing and
communication industry. This disruption is set to
continue, with Covid-19 accelerating these trends,
potentially in ways that are impossible to predict. The
Group cannot predict with certainty the changes that
may occur and the effect of those changes on the
competitiveness of its business. The competitive
environment in which M&C operates will require M&C
to continually enhance and adapt its offering, develop
and invest in new propositions and services and invest
in technology to better serve the needs of its existing
clients and to attract and retain clients. If M&C is
unable to adapt to such market changes or competitive
pressure successfully and/or develop its business and
activities in a timely fashion in response to such
changes, for example as a result of disruption caused
by Covid-19, it could have a material adverse effect on
M&C’s results of operations, financial condition and
prospects. This in turn could lead to an adverse effect
on the Company's results of operations, financial
condition and prospects.
• M&C competes for clients in a highly competitive
industry
The services industry in which M&C operates is highly
competitive. M&C competes with established players,
as well as new market participants. M&C Saatchi's
competitors include large multinational advertising
and marketing communication companies, regional
and national marketing services companies and new
market participants, such as consultancy businesses
and technology companies. M&C Saatchi's competitors
include digital and strategy consultants, in addition to
advertising, marketing and communication services
agencies and technology companies.
M&C may face significant competition from both
domestic and international competitors who have
greater capital, greater resources and superior brand
recognition than M&C and who may be able to provide
better services or adopt more aggressive pricing
policies. There is no assurance that M&C will be able to
compete successfully in such an environment.
The ability to attract new clients and to retain or
increase the amount of work from existing clients may
also in some cases be limited by client policies on
conflicts of interest which may operate to prohibit
M&C from working for two or more clients in the same
industry or sector. Further, the ability of M&C to attract
new clients may be limited by contractual provisions
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entitling existing clients to the most favourable
prevailing terms offered by M&C. In accordance with
standard industry terms, clients may, in some
instances, terminate their contractual relationship with
M&C. Such an occurrence could have a material
adverse effect on M&C’s results of operations, financial
condition and prospects. This in turn could lead to a
material adverse effect on the Company's results of
operations, financial condition and prospects.
• M&C depends on the ability to attract and retain key
people without whom it may not be able to manage its
business effectively
M&C is highly dependent on the talent, creative
abilities and technical skills of its personnel as well as
the relationships that its key employees have with
clients. Competition for experienced personnel in the
digital media and marketing industry is intense, and
M&C is vulnerable to the effects of key personnel loss.
The successful management and operations of M&C
depend on the contribution of M&C’s personnel. The
continuing success of M&C will depend, to a significant
degree, on M&C’s ability to continue to attract,
motivate and retain highly experienced and skilled
personnel. If M&C does not succeed in retaining and
attracting highly experienced and skilled personnel, it
may not be able to grow its business as anticipated.
Furthermore, the departure from M&C of any of its
highly experienced and skilled personnel, many of
whom have long term relationships with M&C’s clients,
could have a material adverse effect on M&C’s
business. Whilst M&C has ongoing employment
agreements with its key employees, their retention
cannot be guaranteed. Equally, the ability to attract
new employees with the appropriate expertise and
skills cannot be guaranteed. M&C may experience
difficulties in hiring appropriate employees and the
failure to do so may have a detrimental effect upon the
trading performance of M&C.
M&C’s strong reputation as a significant content
provider makes its staff potentially attractive to
competitors. There is a risk that key personnel will
move elsewhere if offered significant increases in
remuneration with which M&C is unable to compete. If
one or more key personnel were to join a competitor
or set up business in competition with M&C, there can
be no assurance that the loss of such key personnel’s
services would not have an adverse effect on M&C’s
financial condition and results of operations. Any such
adverse effects could, in turn, lead to adverse effects
on the Company's results of operations, financial
condition and prospects.
Risks relating to legislation and regulations
• Legislative and regulatory risks
An investment is subject to changes in regulation and
legislation. As the direction and impact of changes in
regulations can be unpredictable, there is a risk that
regulatory developments will not bring about positive
changes and opportunities, or that the costs associated
with those changes and opportunities will be
significant. In particular, there is a risk that regulatory
change will bring about significant downturn in the
prospects of one or more acquired businesses, rather
than presenting a positive opportunity.
• Taxation
Any changes to the tax status of the Company or any of
its underlying subsidiaries or investments, or to tax
legislation or practice (whether in the UK or in
jurisdictions in which the Company invests), could
affect the value of investments held by the Company,
affect the Company’s ability to provide returns to
Shareholders and affect the tax treatment for
Shareholders of their investments in the Company
(including the applicable rates of tax and availability of
reliefs). In particular, the current spending by global
governments to ameliorate some of the impact of the
lockdowns imposed because of the COVID-19
pandemic may lead to increased taxation. There can be
no certainty that the current taxation regime in the UK,
or in any jurisdiction in which the Company may
operate or invest in the future, will remain in force, or
that the current levels of corporate taxation (including
UK corporation tax) will remain unchanged.
Prospective investors should consult their tax advisers
with respect to their own tax position before deciding
whether to invest in the Company.
The Company, and/or any vehicle in which the
Company has a direct or indirect interest (including the
companies in the Company), may be subject to tax
(including withholding tax and transfer taxes) in
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multiple jurisdictions outside of their home
jurisdictions. In particular, withholding tax or other
taxes may be imposed on earnings and other amounts
returned to the Company (or companies in the
Company) from investments in such jurisdictions. Local
tax incurred in various jurisdictions by the Company, or
by the companies in the Company, may not be
creditable to or deductible by the Company (or the
relevant company in the Company). Although the
Company will endeavour to minimise any such taxes
this may affect the level of returns to Shareholders.
Risks relating to the Company’s capital structure
• Investors may own significant interests in, and may
exert influence over, the Company
The Marwyn Shareholder and Vin Murria OBE each
own 15.4 per cent. and 13.1 per cent. respectively of
the issued ordinary shares of the Company. As a result,
each may possess sufficient voting power to have a
significant influence over all matters requiring
shareholder approval. The interests of the Marwyn
Shareholder and Vin Murria OBE may not always be
aligned with those of other Shareholders.
• Shareholders' interests may be diluted because of
additional equity fundraising.
The Company may issue additional Ordinary Shares or
other classes of shares in subsequent public offerings
or private placements to fund further business
combinations. BVI law does not grant Shareholders the
benefit of pre-emption rights in relation to a further
issue of Ordinary Shares (or any other class of shares)
and, save for the ability of the holders of the Sponsor
Shares to require that any issue of shares is conducted
pre-emptively, the Company's Articles do not include
pre-emption rights. The holders of the Sponsor Shares
owe no duty to holders of Ordinary Shares to require
that any share issuance be made on a pre-emptive
basis. It is possible that existing Shareholders may not
be offered the right or opportunity to participate in
such future share issues, which may dilute the existing
Shareholders' interests in the Company. Furthermore,
the issue of additional Ordinary Shares or other classes
of shares may be on more favourable terms than the
Placing.
The Company may need to raise additional funds in the
future to finance, amongst other things, expansion of
the business or new developments relating to existing
operations or new Acquisitions. If additional funds are
raised through the issuance of new equity or equity-
linked securities of the Company other than on a pro
rata basis to existing Shareholders, the percentage
ownership of the existing Shareholders may be
reduced. Shareholders may also experience
subsequent dilution (in both economic and voting
terms) and such securities issued in the future may
have preferred rights, options and pre-emption rights
senior to the Ordinary Shares. Shareholder approval is
not required for the Company to create and issue
additional classes of shares if required from time to
time, including shares that may have superior voting
rights to the Ordinary Shares, the right to receive
dividends and other distributions in priority to those
made on Ordinary Shares and that may have a
liquidation preference in any winding-up of the
Company. Save for the Sponsor Shares, no unlisted
shares exist beyond Admission.
• Shareholders are subject to potential dilution from the
incentivisation of management
The Company has in place an incentivisation scheme
through which Mark Brangstrup Watts (through his
indirect interest in MLTI), Vin Murria OBE, Karen
Chandler, Gavin Hugill and future members of
management that may be employed by the Company
will be rewarded for increases in shareholder value,
subject to certain conditions and performance hurdles.
The Incentive Shares are shares in MAC I (BVI) Limited.
Subject to the specified preferred return and at least
one of the vesting conditions being met, the holders of
the Incentive Shares will receive in aggregate 20 per
cent. of the increase in value of the Company. Unless
otherwise determined, the Company and the holders
of the Incentive Shares have the right to exchange each
Incentive Share for Ordinary Shares. If Ordinary Shares
are to be issued to satisfy the incentivisation scheme,
the existing Shareholders may face dilution. If so,
determined by the Company, the holders of Incentive
Shares may receive cash, thereby reducing the
Company's cash resources.
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• The Warrants may result in up to 0.5 per cent. dilution
for the Ordinary Shares
The Warrants are exercisable only up until 4 December
2025 at £1.00 per Ordinary Share (subject to
downwards adjustment and the winding-up of the
Company). The exercise of the Warrants will result in a
dilution of the Shareholders' interests if the value of an
Ordinary Share exceeds the exercise price payable on
the exercise of a Warrant at the relevant time. The
potential for the issue of additional Ordinary Shares
pursuant to exercise of the Warrants could have an
adverse effect on the market price of the Ordinary
Shares. Any Warrants not exercised on or before 4
December 2025 will lapse without any payment being
made to the holders of such Warrants. The Marwyn
Shareholder waived its rights to 2,500,000 Class A
Warrants during the March fundraising.
• The ability of Overseas Shareholders to bring actions or
enforce judgments against the Company, the Directors
and the Proposed Directors may be limited.
The ability of an Overseas Shareholder to bring or
enforce an action against the Company may be limited
under law. The Company is a company limited by
shares incorporated in the British Virgin Islands. The
rights of holders of Ordinary Shares are governed by
BVI law and by the Articles. The rights of Warrant
holders are governed by English law and the Warrant
Instrument. These rights may differ from the rights of
shareholders in corporations which are incorporated in
other jurisdictions. An Overseas Shareholder may not
be able to enforce a judgment against some or all the
Directors and/or the Proposed Directors. It may not be
possible for an Overseas Shareholder to effect service
of process upon the Directors and the Proposed
Directors within the Overseas Shareholder's country of
residence or to enforce against the Directors and the
Proposed Directors judgments of courts of the
Overseas Shareholder's country of residence based on
civil liabilities under that country's securities laws.
There can be no assurance that an Overseas
Shareholder will be able to enforce any judgments in
civil and commercial matters or any judgments under
the securities laws of countries other than the UK
against the Directors and the Proposed Directors or
countries other than those in which judgment is made.
In addition, English or other courts may not impose civil
liability on the Directors and the Proposed Directors in
any original action based solely on foreign securities
laws brought against the Company or the Directors or
the Proposed Directors in a court of competent
jurisdiction in England or other countries.
• Dividend payments on the Ordinary Shares are not
guaranteed.
The Company has not yet adopted a dividend policy.
The Board will determine the appropriate dividend
policy following the initial Acquisition. If the Company
does decide to pay dividends, its ability to do so will be
a function of its profitability and free cash flow. The
Company can therefore give no assurance that it will
be able to pay dividends going forward or as to the
amount of such dividends, if paid.
• ESG risks and compliance could lead to penalties and an
impact on long term value.
The Company needs to consider evolving ESG risks and
governance requirements. Non-compliance may lead
to financial penalties, reputational harm, and exclusion
from sustainable investments. Embracing sustainability
can offer opportunities like green financing and
attracting responsible investors. Proactive ESG
integration is essential for long-term value and societal
impact.