Final Results

Macaulay Capital PLC

22 March 2024

 

22 March 2024

Macaulay Capital PLC

("Macaulay Capital" or the "Company")

Final Results

Macaulay Capital PLC (AQSE: MCAP), which was formed to originate and manage corporate transactions, raise funds from third parties, invest its own funds alongside those of external investors and to manage its investment portfolio with the aim of maximising its value, announces its final results for the year ended 31 December 2023.

Copies of the annual report will be sent today to shareholders along with the Notice of the Company's Annual General Meeting which will take place on Friday 26 April 2024 at noon at 11 Laura Place, Bath, BA2 4BL.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

Enquiries:

Macaulay Capital PLC
Clive Milner	[phone]
Cairn Financial Advisers LLP (AQSE Corporate Adviser)
James Caithie Louise O'Driscoll Emily Staples	[phone]
Oberon Capital (Broker)
Chris Crawford	[phone]

For more information please visit: www.macaulaycapital.com

Chairman's Statement

Introduction

These accounts are the Company's first full year accounts since its admission to trading on the Aquis Stock Exchange Growth Market (AQSE) in July 2022, when we raised a total of £2 million before costs, at 20p per share.

As at 31 December 2023, the Group's net assets stood at £1,361,811, which included investments valued at £900,000 and cash of £338,484.  In the year to 31 December 2023, our revenues were £539,225, on which we incurred losses of £76,195.  Both our revenue and losses were better than budget, principally due to performance fees we received on the successful exit of one of our portfolio companies, Qualification Check Limited ("QCL"), to which I will return later.  Although we expect to incur losses while we build our business, we intend that, as a trading business, we will in due course break even and then become profitable.

The Horner Family increased its stake during the year through a purchase of 200,000 shares at 22.5p per share in the market and remains the largest shareholder block with a total of 2.3 million shares (23% of the Company's issued share capital), which will increase by August 2024 by up to a further 6 million shares, to 8.3 million shares (51.9%), through the exercise of warrants priced at 25p per share.  

Strategy

Our strategy is to build an investment origination business focused on unquoted companies, generating fees (transactions and ongoing) and investing alongside external investors and management. We believe that private companies represent an attractive asset class and, as the chart below shows, the performance of private companies, as measured by the ten-year time weighted rate of return, has been consistently stronger and less volatile than that of public companies.

We target smaller private companies with an enterprise value of £2-10 million, with proven businesses which have established niches or developed other defensible qualities that enable them to maintain and grow their activities over an extended period of time.  We are thus different from many private equity funds which seek to invest in larger companies, in high growth sectors often with novel or disruptive business models.

In addition, because the sector that we target is of less interest to many investors and thus less competitive, we are able to structure investments at attractive valuations, typically in a combination of redeemable loan stock and equity.  This means that investors can expect a yield on their investment, and for most of their capital to be repaid over time, together with an equity interest in the investee company.  Also, because shares in private companies benefit from Business Relief, investors will be able to transfer their shares free of inheritance tax. 

Our target market can be illustrated as shown below:

Together with our co-investors, we provide a combination of growth and replacement capital to investee companies, which helps them to finance their future development as well as facilitating partial exits for founder investors and incentivising ongoing management through equity ownership. We believe it important that, where we can, we co-invest alongside the investors we introduce as this not only demonstrates our belief in the investee companies but also aligns our interests with our co-investors and the investee companies.

Portfolio companies

We now have seven portfolio companies which includes four previously managed by Chelverton Asset Management ("CAM", the "Legacy Portfolio").  We identified the other three portfolio companies - Vale Foods Holdings Limited, New Star Industries Limited and Kelda Showers Limited and helped to agree the terms and structure of the transactions as well as arranging some or all of the investments. 

Vale Foods Holdings Limited, which trades as Devonvale, is a manufacturer of flapjacks, cakes and cereal bars based in Honiton, Devon, and was our first investee company.  In May 2022, ahead of joining AQSE, we raised £1 million in a combination of ordinary shares (£86,000 for 40% of the equity) and unsecured loan notes (£914,000).  Of the £1 million, we invested £200,000, which includes an 8% equity interest. On 18 December 2023 we announced that we had provided Devonvale with £125,000 of a £275,000 bridging loan that it took on in order to finance new premises required to accommodate increased demand for its products. We intend to refinance this loan by the end of December 2024.

In March 2023 we undertook our second transaction. New Star Industries Limited, which trades as Camloc, is an established Midlands based precision engineering business which manufactures compression struts and dampers. We invested £700,000 out of a total fund raising of £1.55 million, giving us a 23.8% equity interest in the secondary buy-out from a private equity fund. Whilst we intend to sell down £500,000 of this investment to other investors in due course, 96.6% of it comprises 8% loan notes, which means that while we continue to hold these loan notes we are earning a significant revenue return on the investment.

In June 2023 we completed a transaction in relation to Kelda Showers Limited ("Kelda"), a company which has developed a disruptive water and energy-saving solution for the shower market.  We raised £940,000 from investors, including Kelda's management and existing shareholders, but, on this occasion, the Group did not itself invest as the investment was entirely in ordinary shares that were expected to be eligible for EIS relief, for which the Group is not eligible. The Group received an arrangement fee of £47,000 in respect of the transaction however and continues to receive an annual management fee from Kelda.

In addition to the above three companies, during the year we managed an investment portfolio of five private companies, (now four following the QCL exit), previously managed by CAM. Under the agreements with the relevant companies, we are responsible for monitoring their performance on behalf of investors previously introduced by CAM.  This includes a board position, for which we are entitled to monthly management fees and potential performance fees on exit.

QCL

QCL is a leading provider of global qualification verification services.  In August 2023, we announced that a trade buyer had acquired all of the shares held by the B Share Investors in QCL, who had been introduced by CAM.  For those who invested in February 2017, the sale price was a gross money multiple return of 7.3 times, taking into account EIS relief, and the gain is free of CGT. For those who invested in March 2021, the sale price was a gross money multiple return of 3.8 times, before CGT, and before management and performance fees payable on the exit.   The management and performance fees were shared by Macaulay and CAM with the net amount received by Macaulay being £211,751.

Investors  

We believe that the area of the market that we target for investment is underserved.  This gives us the opportunity to generate good returns for investors by identifying established private companies at attractive valuations: the QCL exit is an excellent example of what we are seeking to achieve. 

Whilst we believe it important that investors invest across a range of our opportunities to reduce their investment risk, we are confident that the potential for significant capital returns and the fact that the equity is transferable free of inheritance tax, should mean that our offering is of great interest to High-Net-Worth individuals and Family Offices.

Accordingly, and as we have said previously, a business imperative is to look for ways to broaden the pool of potential investors for the investment opportunities that we identify.  This is where we are focusing our marketing efforts. 

Outlook

Whilst we did not introduce any new investments to our investors in the second half of 2023, we have a number of highly promising investment opportunities in our pipeline.  Our investment process is rigorous and time-consuming, and we are highly selective, but we hope to bring some of these opportunities to fruition in the first half of 2024.

Overall, we believe that we are on track and are pleased with the progress that we have made to date and look forward to the remainder of 2024.

Finally, and on behalf of the Board, I would like to thank our Shareholders, employees, advisers and our co-investors for their support.

Lindsay Mair

Chairman

21 March 2024

Consolidated Statement of Comprehensive Income

for the Year Ended 31 December 2023

		Year ended	Period ended
		31 December	31 December
		2023	2022
	Notes
Income	4	539,225	118,737
Other expenses	5/6	(613,501)	(502,827)
Loss on ordinary activities before interest and taxation		(74,276)	(384,090)
Interest		(1,919)	(904)
Loss on ordinary activities before taxation		(76,195)	(384,994)
Taxation	7	-	-
Loss on ordinary activities after taxation		(76,195)	(384,994)
Loss per Ordinary share in pence	9	(0.76)p	(3.85)p

The notes form part of these financial statements.

Consolidated Balance Sheet

as at 31 December 2023

			2023		2022
	Notes		£		£
Fixed assets
Tangible assets	10		2,813		4,219
Investments at fair value through profit or loss	11		900,000		200,000
			902,813		204,219
Current assets
Debtors: amounts falling due within one year	13	175,503		104,962
Cash at bank and in hand		338,484		1,189,219
		513,987		1,294,181
Creditors: amounts falling due within one year
Other creditors and accruals	14	(54,989)		(60,394)
Net current assets			458,998		1,233,787
Net assets			1,361,811		1,438,006
Capital and reserves
Called up share capital	15		1,000,000		1,000,000
Share premium account	2.17		823,000		823,000
Profit and loss account			(461,189)		(384,994)
Shareholders' funds			1,361,811		1,438,006

The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 21 March 2024.

Lindsay Mair                                                              

Director                                                                      

The notes form part of these financial statements.

Company Balance Sheet

as at 31 December 2023

			2023		2022
	Notes		£		£
Fixed assets
Investments in subsidiary	12		1,000,000		1,000,000
			1,000,000		1,000,000
Current assets
Debtors: amounts falling due within one year	13	323,408		28,517
Cash at bank and in hand		259,873		1,082,652
		583,281		1,111,169
Creditors: amounts falling due within one year
Other creditors and accruals	14	(34,944)		(390,814)
Net current assets			548,337		720,355
Net assets			1,548,337		1,720,355
Capital and reserves
Called up share capital	15		1,000,000		1,000,000
Share premium account			823,000		823,000
Profit and loss account			(274,663)		(102,645)
Equity Shareholders' funds			1,548,337		1,720,355

The financial statements were approved and authorised for issue by the Board on 21 March 2024 and were signed on its behalf by

Lindsay Mair

Director

The notes form part of these financial statements.

Consolidated Statement of Changes in Equity

for the Year Ended 31 December 2023

	Called up              share     capital	Share      premium        account	Profit and loss account	Total         Equity Shareholders' Funds
	£	£	£	£
At 1 January 2023	1,000,000	823,000	(384,994)	1,438,006
Total comprehensive income for the period:
Loss for the period	-	-	(76,195)	(76,195)
At 31 December 2023	1,000,000	823,000	(461,189)	1,361,811

	Called up              share     capital	Share      premium        account	Profit and loss account	Total         Equity Shareholders' Funds
	£	£	£	£
At 13 May 2022	-	-	-	-
Total comprehensive income for the period:
Loss for the period	-	-	(384,994)	(384,994)
Transactions with Shareholders recorded directly to equity:
Issue of Ordinary shares	1,000,000	1,000,000	-	2,000,000
Expenses of share issue	-	(175,000)	-	(175,000)
Irrecoverable VAT on share issue expenses	-	(2,000)	-	(2,000)
At 31 December 2022	1,000,000	823,000	(384,994)	1,438,006

The notes form part of these financial statements.

Company Statement of Changes in Equity

 for the Year Ended 31 December 2023

	Called up            share    capital	Share   premium    account	Profit and loss account	Total         Equity Shareholders' Funds
	£	£	£	£
At 1 January 2023	1,000,000	823,000	(102,645)	1,720,355
Total comprehensive income for the period:
Loss for the period	-	-	(172,018)	(172,018)
At 31 December 2023	1,000,000	823,000	(274,663)	1,548,337

	Called up share capital	Share   premium    account	Profit and loss account	Total         Equity Shareholders' Funds
	£	£	£	£
At 13 May 2022	-	-	-	-
Total comprehensive income for  the period:
Loss for the period	-	-	(102,645)	(102,645)
Transactions with Shareholders recorded directly to equity:
Issue of Ordinary shares	1,000,000	1,000,000	-	2,000,000
Expenses of share issue	-	(175,000)	-	(175,000)
Irrecoverable VAT on share issue expenses	-	(2,000)	-	(2,000)
At 31 December 2022	1,000,000	823,000	(102,645)	1,720,355

The notes form part of these financial statements.

Consolidated Cash Flow

for the Year Ended 31 December 2023

		2023	2022
		£	£
Cash flows used in operating activities:
Loss for the year		(76,195)	(384,994)
Adjusted for:
Depreciation of assets		1,406	1,407
Interest paid		1,919	904
Increase in debtors		(70,541)	(104,962)
(Decrease)/increase in creditors		(5,405)	60,394
Net cash used in operating activities		(148,816)	(427,251)
Cash used in investing activities:
Purchase of investments		(700,000)	(200,000)
Purchase of fixed assets		-	(5,626)
Net cash used in investing activities		(700,000)	(205,626)
Cash flows (used in)/ generated from financing activities:
Issue of Ordinary shares		-	2,000,000
Share issue expenses (including irrecoverable VAT)		-	(177,000)
Interest paid		(1,919)	(904)
Net cash (used in)/ generated from financing activities		(1,919)	1,822,096
Net (decrease)/increase in cash and cash equivalents		(850,735)	1,189,219
Reconciliation of net cash flow to movement in net cash:
(Decrease)/ increase in cash		(850,735)	1,189,219
Net cash at start of period		1,189,219	-
Net cash at end of period		338,484	1,189,219

The notes form part of these financial statements.
.

Notes to the financial statements

Year ended 31 December 2023

1       General information

       Macaulay Capital Plc was incorporated on 13 May 2022 for the purpose of acquiring Macaulay Management Limited ("MML"). MML was incorporated on 14 October 2021 and was formed to originate and manage corporate transactions, raise funds from third parties, invest the Group's own funds alongside those of external investors and to manage the Group's investment portfolio with the aim of maximising its value. Macaulay Capital Plc acquired the entire issued share capital of MML on 14 June 2022.

          The Company is a public limited company, which is incorporated and registered in England and Wales (Registered number: 14105915).

          The registered office address is The Office Suite, Den House, Den Promenade, Teignmouth, TQ14 8SY.

2       Accounting policies

2.1 Basis of preparation of financial statements

          The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

          The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements.

          The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).

          The following principal accounting policies have been applied:

2.2     Basis of consolidation

             The consolidated financial statements incorporate the results of the Company and its subsidiary MML, (together the Group), as if they form a single entity using merger accounting. On the establishment of the Company as the ultimate parent of the Group, no change in ownership occurred and the entity was established for the purpose of acquiring MML. Therefore, the requirements of purchase method accounting did not apply.

          The financial statements of the subsidiary are prepared for the year ended 31 December 2023 using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them are eliminated on consolidation.

2.3     Going concern

Company law requires the Directors to consider the appropriateness of the going concern basis when preparing the financial statements. At 31 December 2023, the Group had cash balances of approximately £0.3 million and has access to £1.5 million from the exercise of the Founder Warrants as detailed in Note 15. Having reviewed cash flow forecasts for the period to 31 December 2025, the Directors confirm that they consider that the going concern basis is appropriate. This review included consideration of the Group's financial position in respect of its cash flows and investment commitments (of which there are none of significance), the working arrangements of key service providers, the impact of the conflicts in Ukraine and the Middle East and the current economic environment. In addition, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern.

The Directors believe that the Group has sufficient resources to continue in operational existence for the foreseeable future. Thus, they have adopted the going concern basis of accounting in preparing the annual financial statements.

2.4     Revenue recognition

Income from arrangement fees is recognised when the investment has been completed. Invoices for monitoring fees are raised in line with each agreement. Fixed returns on debt securities are recognised on a time-apportioned basis so as to reflect the effective yield. Interest income is recognised in the consolidated profit and loss account using the effective interest method.

2.5     Income

         Income is attributable to the principal activities of the Group which are to manage corporate transactions, raise funds from third parties, invest the Group's own funds alongside those of external investors and to manage the Group's investment portfolio.

         All of the reported revenue and operational results for the year derive from the Group's principal activities and its investments and are recognised on an accruals basis. The Group is not reliant on any one customer.

2.6     Tangible fixed assets

Tangible fixed assets are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the methods below:

Computer equipment - 4 years straight line.

2.7     Investment in subsidiaries

Investments in subsidiaries are measured at cost less any accumulated impairment in value.

2.8     Financial instruments

The Group only enters into basic financial instruments and transactions that result in the recognition of financial assets and liabilities such as trade debtors, investments and debt instruments and other debtors and creditors. The Company has adopted section 11 of FRS 102 on the recognition and measurement of financial instruments.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the statement of comprehensive income.

2.9     Investments

Investments are measured initially at cost and at subsequent reporting dates at fair value and derecognised at the trade date. Accordingly, as permitted by FRS 102, investments in shares and loan notes upon their initial recognition are designated as investments at fair value through profit or loss on the basis that they qualify as a group of assets managed, and whose performance is evaluated, on a fair value basis in accordance with a documented investment strategy.  Investments at fair value through profit or loss are measured initially at transaction price (not adjusted for transaction costs) and at subsequent reporting dates at fair value. The changes in fair value of investments are recognised in profit or loss and are treated as unrealised holding gains or losses.  Purchases and sales of investments are recognised in the financial statements at the date of the transaction (trade date).

2.10    Debtors

Short-term debtors are measured at transaction price, less any impairment.

2.11   Cash and cash equivalents

Cash comprises cash at bank 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.

For the purpose of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above.

2.12    Creditors

Short-term creditors are measured at the transaction price.  Other financial liabilities, should they arise, will be measured initially at fair value net of transaction costs, and will be measured subsequently at amortised cost using the effective interest method.

2.13   Pensions - contributory pension plan

The Group previously operated a contributory plan for its employees. Once the contributions have been paid the Group has no further payment obligations. 

In the previous period the contributions were recognised as an expense in the profit and loss account when they fell due. The current employees have opted out of the Scheme and hence there is no charge in the profit and loss account.

2.14   Earnings per share

Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year.   

Diluted earnings per share is calculated by adjusting the earnings and number of shares for the effects of dilutive options and other dilutive potential ordinary shares.

2.15   Dividend policy

         The Company expects that returns to Shareholders will be delivered primarily through an appreciation in the price of the Ordinary Shares rather than by capital distribution through regular dividends.

2.16    Current and deferred taxation

         The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

         The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:

•    The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;

•    Where they relate to timing differences in respect of interests in subsidiaries and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

         Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

2.17  Reserves

         Share premium account

         The share premium account represents the accumulated premium paid for shares issued in previous periods above their nominal value less issue expenses. This is a reserve forming part of non-distributable reserves. The following items are taken to this reserve:

•            costs associated with the issue of equity; and

•            premium on the issue of shares.

         Profit and loss account

This reserve holds the accumulation of profits and losses reduced by any dividends paid to Shareholders.

3.      Judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements requires the Board to make judgements and estimates regarding the application of policies and affecting the reported amounts of assets, liabilities, income and expenses. Estimates and assumptions mainly relate to the fair valuation of the fixed asset investments particularly unquoted investments. Estimates are based on historical experience and other assumptions that are considered reasonable under the circumstances. The estimates and the assumptions are under continuous review with particular attention paid to the carrying value of the investments.

Investments at fair value through profit or loss are regularly reviewed to ensure that the fair values are appropriately stated. Unquoted investments in shares and loan notes are valued in accordance with current International Private Equity and Venture Capital Valuation (IPEVC) Valuation Guidelines, which can be found on their website at www.privateequityvaluation.com, although this does rely on subjective estimates such as appropriate sector earnings or revenue multiples, forecast results of investee companies, asset values of investee companies and liquidity or marketability of the investments held.

4    Income

	Year to	Period to
	31 December 2023	31 December 2022
	£	£
Arrangement fees	102,168	35,000
Monitoring fees	157,352	74,722
Loan note interest	56,717	9,015
Performance fees received	211,751	-
Interest received	11,237	-
	539,225	118,737

5      Other expenses

	Year to	Period to
	31 December 2023	31 December 2022
	£	£
Administration and secretarial services	29,700	10,417
Auditor's remuneration for:
-  Audit services	18,000	15,000
-  Non-audit services	-	6,319
Data and IT support	31,774	47,969
Legal & professional fees	73,606	67,701
Irrecoverable VAT	24,709	15,897
Other expenses	84,152	51,658
	261,941	214,961

The Audit fee paid by the Company was £9,500 (2022: £9,500).

6      Directors' remuneration and employee costs

	Year ended	Period to
	31 December 2023	31 December 2022
	£	£
Directors' fees	165,666	88,449
Director's healthcare	8,618	459
Staff salaries	140,001	172,975
Pension contributions	-	2,345
Employer's national insurance	37,275	23,638
	351,560	287,866

The average number of employees for the Group was 4 (2022: 4).

7         Taxation

	Year to	Period to
	31 December 2023	31 December 2022
	£	£
Analysis of charge in year
Current tax	-	-
	-	-

Factors affecting current tax charge for the year

The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 25% (2022:19%). The differences are explained below:

	Year to	Period to
	31 December 2023	31 December 2022
	£	£
Loss on ordinary activities	(76,195)	(384,994)
Theoretical tax at UK corporation tax rate of 23.52% (2022:19%)
Corporation tax	(17,921)	(73,149)
Ineligible depreciation	331	267
Expenses not deductible for tax purposes	-	-
Excess expenses for the year	17,590	72,882
Current tax charge for the year	-	-

Factors that may affect future tax charges

At 31 December 2023 the Company had surplus management expenses of £458,376 (2022: 383,587).

8          Parent company loss for the year

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own profit and loss account in these financial statements. The loss after tax of the parent company for the year was £172,018 (2022: £102,645).

9          Loss per share

The calculation of basic return per share is based on the return after tax and on a weighted average number of ordinary shares in issue in the period. Basic and diluted returns per share are the same as there are no dilutive elements on share capital.

	Year to	Period to
	31 December 2023	31 December 2022
Loss after taxation attributable to Ordinary shareholders (£)	(76,195)	(384,994)
Weighted average Ordinary shares in issue	10,000,000	10,000,000
Loss per Ordinary share - basic and diluted (pence)	(0.76)	(3.85)

10        Tangible fixed assets

	31 December 2023	31 December 2022
	Group	Group
	Computer equipment	Computer equipment
Cost or valuation	£	£
At 1 January 2023	5,626	-
Additions	-	5,626
At 31 December 2023	5,626	5,626
Depreciation
At 1 January 2023	1,407	-
Charge for the year	1,406	1,407
At 31 December 2023	2,813	1,407
Net book value at 31 December 2023	2,813	4,219

 

11     Investments

			31 December 2023	31 December 2022
	Investment in loan notes	Investment in unlisted shares	Total	Total
	£	£	£	£
Investments held at fair value through profit or loss
Opening book cost	182,800	17,200	200,000	-
Opening valuation	182,800	17,200	200,000	-
Movements in the year:
Purchases at cost	676,231	23,769	700,000	200,000
Closing valuation	859,031	40,969	900,000	200,000
Closing book cost	859,031	40,969	900,000	200,000
Closing valuation	859,031	40,969	900,000	200,000

On 20 May 2022, the Group invested in a company in the bakery industry by purchasing 17,200 Ordinary B shares at £1 per share and issuing an unsecured loan note of £182,800 with 8% interest. Interest is received as it falls due every anniversary date and the principal is to be repaid in full on 20 May 2027. 

On 23 March 2023, the Group invested in an engineering company by purchasing 23,769 Ordinary B shares at £1 per share and issuing an unsecured loan note of £676,231 with 8% interest. Interest is received as it falls due every anniversary date and the principal is to be repaid in full on 20 May 2028. 

The fair value of the investments is established by using measures of value such as the price of recent transactions, earnings or revenue multiples, discounted cash flows and net assets. These are consistent with the IPEVC Valuation Guidelines.

Investment in shares and loan notes were valued using recent EBITDA information and relevant industry multiples, where value deemed reasonable as compared to using industry EBITDA multiple and net assets value approach.

At 31 December 31, 2023, the fair market value of the investment in shares and loan notes approximated to its carrying value.

12        Investment in subsidiary undertaking

	31 December  2023	31 December 2022
	Company	Company
	£	£
At 1 January 2023	1,000,000	-
Additions	-	1,000,000
Carrying value at 31 December 2023	1,000,000	1,000,000

At 31 December 2023 the Company held interests in the following subsidiary company

	Country of incorporation	% of capital held	% share of voting rights	Nature of business
Macaulay Management Limited	England	100%	100%	Investment company

                                The registered address of the subsidiary is the same as the Company.

13       Debtors

	Group	Company
	31 December 2023	31 December 2023
	£	£
Due within one year:
Trade debtors	27,600	-
Other debtors	126,820	-
Amounts due from subsidiary	-	314,316
Prepayments and accrued income	21,083	9,092
	175,503	323,408
	Group	Company
	31 December 2022	31 December 2022
	£	£
Due within one year:
Trade debtors	58,781	-
Other debtors	31,920	23,949
Prepayments and accrued income	14,261	4,568
	104,962	28,517

14       Creditors amounts falling due within one year

	Group	Company
	31 December 2023	31 December 2023
	£	£
Trade creditors	7,377	4,607
Other taxation and social security	11,389	6,624
Accruals and other creditors	36,223	23,713
	54,989	34,944
	Group	Company
	31 December 2022	31 December 2022
	£	£
Amounts due to subsidiary	-	350,908
Trade creditors	4,173	963
Other taxation and social security	12,155	7,391
Accruals and other creditors	44,066	31,552
	60,394	390,814

15       Called up share capital

	Group and Company
	31 December 2022 & 2023
Issued, allotted and fully paid:	Number	£
Ordinary shares of 10p each	10,000,000	1,000,000

Ordinary shares have full voting rights with 1 vote per share, they are entitled to dividends when proposed and are due a capital distribution on a company exit event.

Share options

The Company may adopt a formal incentive plan under which it contemplates awarding Share Options to Directors, employees and consultants pursuant to share option and incentive schemes approved by the Board. It is intended that any individual awards under any such scheme will be subject to vesting and/or performance conditions. The proportion of Ordinary Shares which will be made the subject of Share Options will not exceed 20 per cent. of the Company's issued Ordinary Share capital from time to time without the prior approval of the Shareholders and no Share Options are intended to be granted to David Horner.

Founder Warrants

Unconditional Founder Warrants have been issued to subscribe for 6,000,000 Ordinary Shares exercisable at £0.25 per share and which the Founder Warrant Holders have irrevocably undertaken to exercise in full within two years of admission.

Conditional Founder Warrants have been issued to subscribe for a further 5,000,000 Ordinary Shares, exercisable at the higher of £0.25 per share or the mid- market price of an Ordinary Share at the time of exercise, conditional on the exercise of Share Options and in numbers of up to a maximum of (but not exceeding) the numbers of Ordinary Shares issued following the exercise of such Share Options.

16      Capital commitments

At 31 December 2023 and 2022 there were no capital commitments outstanding and no contingent liabilities.

17       Directors' interests and related party transactions (Group and Company)

The Company has taken advantage of the exemption in section 33 of FRS 102 from the requirement to disclose transactions with its wholly owned subsidiary on the grounds that consolidated financial statements are prepared by the Parent Company.

The Directors are considered to be the key management of the business. Their remuneration for the year is disclosed in note 6 of these financial statements.

The Directors and connected persons held the following interests in the voting shares of the Company at 31 December 2023.

                                                                       Number of shares         % of total voting rights

David Horner                                                    250,000                                  2.5%

Mary Horner                                                        50,000                                  0.5%   

Lindsay Mair                                                      125,000                                1.25%

For the purposes of the AQSE Growth Market Access Rulebook the parties referred to below are related parties of the Company for the reasons set out in those paragraphs.

David Horner is a related party of the Company because he is a Director of the Company; and Mary Horner, who is David Horner's wife, is for that reason an associate of David Horner and thereby a related party to the Company.

CAM, a company of which David Horner is a director and significant shareholder, is a related party of the Company because CAM is an associate of David Horner.

Each of Harry and Tom Horner is a related party of the Company for the following two reasons:

each of them will be entitled to exercise, or to control the exercise of, 10 per cent or more of the votes able to be cast on all or substantially all matters at general meetings of the Company; and each of them is a son of David Horner and, as a result, an associate of his and therefore is a related party.

Others

MML has taken over the investment management of the unquoted investment portfolio of CAM, which David Horner, a director of the Company, founded and of which he is managing director. In line with its strategy, CAM's current and future focus is on quoted companies, rather than unquoted businesses, and therefore the unquoted portfolio is now insignificant, relative to CAM's quoted company portfolio.

In the year the Company's operations manager has spent a proportion of his time working with a private business owned by David Horner and his wife.  Under this agreement, the private business paid the Group £34,500 (2022: £7,500), equivalent to the pro-rata cost of the operations manager's employment to the Group.

18     Financial instruments

The Group's financial instruments comprise securities and other investments, cash balances and debtors and creditors that arise from its operations, for example, in respect of sales and purchases awaiting settlement and debtors for accrued income.

The financial instruments of the Group fall into the following categories:

Group	At amortised                  cost	Assets at fair value through   profit or loss	Total
31 December 2023	£	£	£
Assets as per the Balance Sheet
Investments	-	900,000	900,000
Debtors	152,600	-	152,600
Cash and cash equivalents	338,484	-	338,484
Total	491,084	900,000	1,391,084
Liabilities as per the Balance Sheet
Creditors	43,600	-	43,600
Total	43,600	-	43,600
Group	At amortised                  cost	Assets at fair value through   profit or loss	Total
31 December 2022	£	£	£
Assets as per the Balance Sheet
Investments	-	200,000	200,000
Debtors	90,701	-	90,701
Cash and cash equivalents	1,189,219	-	1,189,219
Total	1,279,920	200,000	1,479,920
Liabilities as per the Balance Sheet
Creditors	48,239	-	48,239
Total	48,239	-	48,239

Company	At amortised                  cost	Assets at fair value through   profit or loss	Total
31 December 2023	£	£	£
Assets as per the balance sheet
Amounts due from subsidiary	314,316	-	314,316
Cash and cash equivalents	259,873	-	259,873
Total	574,189	-	574,189
Liabilities as per the balance sheet
Creditors	28,320	-	28,320
Total	28,320	-	28,320
Company	At amortised                  cost	Assets at fair value through   profit or loss	Total
31 December 2022	£	£	£
Assets as per the balance sheet
Other debtors	23,949		23,949
Cash and cash equivalents	1,082,652	-	1,082,652
Total	1,106,601	-	1,106,601
Liabilities as per the balance sheet
Creditors	383,423	-	383,423
Total	383,423	-	383,423

 

END