Final Results

RNS Number : 1350N

Advancedadvt Limited

28 September 2021

 

LEI: 254900WYO35S1T334A28

AdvancedAdvT Limited

(the "Company")

Audited Results for the period ended 30 June 2021

In compliance with Listing Rule 14.3.6, a copy of the Annual Financial Report will also shortly be submitted to the National Storage Mechanism. It will be available on both the 'Shareholder Documents' page of the Company's website at   www.advancedadvt.com and https://data.fca.org.uk/#/nsm/nationalstoragemechanism  

Enquiries:  

Company Secretary

Antoinette Vanderpuije   020 7004 2700

Singer Capital Markets - Broker   020 7496 3000

Phil Davies

George Tzimas

Chairman's Report

Fellow Shareholders, 2021 was a productive initial period for AdvancedAdvT. In March 2021 the Group raised £130m of new capital through a placing of 130m shares at 100p each and we are delighted with the quality of the investors which have backed our strategy.  Over the period, we remained focused on executing our objective to complete a business combination and generate attractive long term returns for shareholders.

COVID-19 has accelerated the adoption of technology and removed perceived barriers. We believe the trend to increased digitalisation of business processes and operations will continue as we return to a new normal and businesses seek to maintain competitiveness and ensure productivity. Businesses providing software and tools enabling digitalisation will be expected to maintain an increased demand for their products.

We therefore believe investment opportunities will continue to present themselves in the software sector and continue to evaluate high-quality businesses against a common set of characteristics which we believe are essential to our strategy and which we believe best position a business to consistently generate long-term value:

• highly predictable revenue streams;

• high customer retention;

• products or services with high barriers to entry;

• extensive growth opportunities;

• significant free cash flow generation; and

• well run businesses in fragmented industries with potential for consolidation.

The high availability of capital has created a very competitive environment for high quality businesses, increasing their enterprise value. Our ability to identify opportunities early and our flexible share structure, which can facilitate a broad range of future transactions, is an essential element of our proposition. We have been, and will continue to be, engaged in both early stage and more mature stage opportunities. The size and stage of the opportunity will naturally affect the timing of a successful investment.

Several potential opportunities proved sufficiently compelling to merit careful consideration and evaluation. These were businesses which we believed could have potentially met our objectives, however, we also note the importance of being highly selective of those opportunities and investing at the right valuation. We actively pursued one opportunity in the software sector prior to the fundraising undertaken in March 2021, however, this did not lead to a successful transaction.

We have been proactively engaging with both previously known and many new exceptional businesses and as we head towards 2022, we have a robust and growing pipeline of what we believe are businesses that closely match our target characteristics.

Finally, I would like to sincerely thank all my fellow shareholders. We will remain patient, disciplined, and hard at work to reward your faith in us.

Vin Murria OBE
Chairman

27 September 2021

Management Report

Herewith are the condensed consolidated Financial Statements of AdvancedAdvT Limited (formerly Marwyn Acquisition Company I Limited) (the "Company") for the period from incorporation on 31 July 2020 to 30 June 2021 (the "Financial Statements"), consolidating the results of AdvancedAdvT Limited and MAC I (BVI) Limited (collectively, the "Group" or "AdvT") .

Strategy

The Company was incorporated with limited liability under the laws of the British Virgin Islands under the BVI Companies Act on 31 July 2020 and subsequently listed on the Main Market of the London Stock Exchange on 4 December 2020. The Company has been formed for the purpose of effecting a merger, share exchange, asset acquisition, share or debt purchase, reorganisation, or similar business combination with one or more businesses. The Company's objective is to generate attractive long term returns for shareholders and to enhance value by supporting sustainable growth, acquisitions and performance improvements within the acquired companies.

Over the last 25 years companies across all sectors have increasingly adopted new digital technologies to optimise business processes and operations. Implementing these new technologies has become central to driving cost efficiencies and gaining a competitive advantage in a digital world, where sectors and businesses with the highest level of digitalisation display the largest productivity growth.

Despite the opportunities presented by digitalisation, pre Covid-19 adoption of new technologies by businesses and consumers was in part restricted by the willingness of companies to invest in and adopt new systems and technologies.

The global restrictions caused by Covid-19 have helped to break down these barriers and forced businesses to become more agile which has considerably accelerated digitalisation. Despite businesses cutting costs because of the Covid-19 pandemic, spending on digital transformation has increased as organisations rapidly adapt their business models. A McKinsey study[1] found that the pandemic had sped up the adoption of digital technologies by several years, and that most companies will need to build new digital businesses to stay economically viable.

We therefore believe there is significant opportunity to invest in companies that are positioned to take advantage of the structural change arising from an unprecedented acceleration of digitalisation brought about by the current macroeconomic environment, affecting the way people live, work and consume, and the way businesses operate, engage and sell to customers.

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 management team have significant experience in the software sector having invested in and/or operated a range of high performing software businesses. Management has successfully driven operational excellence within these businesses to deliver organic growth and has a track record of carrying out targeted accretive M&A in the software sector, having completed more than 40 bolt-on acquisitions.

The £130 million fundraise[2] confirms our belief that leading investors are now embracing the use of public markets to deploy significant amounts of capital through listed acquisition companies, and that blue-chip institutional investors are supporting listed acquisition companies both pre and post-acquisition. Likewise, vendors are increasingly pursuing transactions with listed acquisition companies to access public markets.  This alongside the Company's management team and investment strategy mean the Directors are confident in the Company's ability to execute its investment strategy.

Activity & Share Capital

The Company was incorporated on 31 July 2020 and subsequently listed on the Main Market of the London Stock Exchange on 4 December 2020.

On 31 December 2020, Vin Murria was appointed as Chairman of the Company, with experience in the software, technology and support services sectors, having executed a number of highly successful growth strategies over her career to date.

On 4 February 2021, the Company announced the issue of 2,500,000 A Ordinary Shares for £1 per share, with matching warrants, to provide additional working capital to the support the Company in the execution of its stated investment strategy.  This amount was drawn down under the forward purchase agreement entered into by the Company on IPO.  The Company actively pursued an investment opportunity in the software sector during the first few months of 2021, however, this did not lead to a successful transaction, resulting in abort costs of £1.85 million.

With strong investor support for the Company's management team and strategy, on 18 March 2021 the Company announced that it had raised a total of £130 million by way of a placing of, and subscription for, new ordinary shares at 100p per share. The new ordinary shares were admitted to the standard segment of the Official List and to trading on the London Stock Exchange's Main Market on 23 March 2021 ("Admission"). It was further announced that the A Ordinary Shares would be converted into Ordinary shares and the matching A warrants would be waived effective on 23 March 2021, as disclosed in more detail in note 13.  On the same date, the Company also announced the appointment of Gavin Hugill as Chief Operating Officer with effect from 12 April 2021 as well as the appointment of Karen Chandler as Non-Executive Director and the resignation of Mark Brangstrup Watts, both of which were effective from Admission.

Outlook

We believe that the significant market disruption is likely to result in accelerated structural change in certain sectors and the associated emergence of investment opportunities. However, we also note the importance of being highly selective of those opportunities and will seek out situations whereby target businesses meet our criteria characteristics and deliver against our objective. We continue to progress discussions in relation to potential target businesses.

Results  

The Group's loss after taxation for the period to 30 June 2021 was £2,546,025. The Group incurred £2,552,079 of administrative expenses during the period, received interest of £6,054 and at 30 June 2021 held a cash balance of £129,224,447. After deducting costs accrued in respect of operating and transaction-related expenses, the net asset position was £129,277,358.

Dividend Policy

It is the Board's policy that prior to the acquisition or investment in a trading entity, 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 or investment, and subject to the availability of distributable reserves, dividends will be paid to shareholders when the Directors believe it is appropriate and commercially prudent to do so.

Statement of Going Concern

The Financial Statements have been prepared on a going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The Group had cash resources of £129,224,447 at 30 June 2021 and net assets of £129,277,358. We have considered the financial position of the Group and have reviewed forecasts and budgets for a period of at least 12 months following the approval of the Financial Statements.

Ongoing costs and expenses incurred in connection with seeking to identify acquisition opportunities (excluding any project specific costs incurred in pursuit of an acquisition opportunity) are estimated to be no more than £500,000 per annum. 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 platform acquisition.

Furthermore, we have considered the expected impact of the Covid-19 pandemic on the Group's forecast cashflows and liabilities, concluding that prior to completing a transaction, the pandemic has no material impact on the Group 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 and the Group have 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 period and at the date of this report are:

Vin Murria   (Chairman)   Appointed 31 December 2020

Gavin Hugill   (Chief Operating Officer)  Appointed 12 April 2021

James Corsellis   (Non-Executive Director)  Appointed 31 July 2020

Mark Watts  (Non-Executive Director)  Appointed 31 July 2020, resigned 23 March 2021

Karen Chandler  (Non-Executive Director)   Appointed 23 March 2021

On 5 February 2021, the Company entered into a service agreement with Gavin Hugill, under which Gavin Hugill was appointed as Chief Operating Officer of the Company with effect from 12 April 2021.

Vin Murria OBE
Chairman
27 September 2021  

Consolidated Statement of Comprehensive Income
		Period ended
		30 June 2021
		£
Administrative expenses		(2,552,079)
Operating loss		(2,552,079)
Finance Income		6,054
Loss before income taxes		(2,546,025)
Income tax		-
Loss for the period		(2,546,025)
Total comprehensive loss for the period attributable to owners of the parent		(2,546,025)
Loss per ordinary share (£)
Basic		(0.06)
Diluted		(0.06)

The Group's activities derive from continuing operations.

 

Consolidated Statement of Financial Position
	As at 30 June 2021
	£
Current assets
Trade and other receivables	229,746
Cash and cash equivalents	129,224,447
Total current assets	129,454,193
Total assets	129,454,193
Equity and liabilities
Equity
Sponsor share	2
Ordinary shares	131,166,131
Warrant reserve	98,000
Warrant cancellation reserve	350,000
Share-based payment reserve	209,250
Accumulated losses	(2,546,025)
Total equity	129,277,358
Current liabilities
Trade and other payables	176,835
Total liabilities	176,835
Total equity and liabilities	129,454,193

Consolidated Statement of Changes in Equity	Ordinary shares £	Class A shares £	Sponsor share £	Warrant reserves £	Warrant Cancellation Reserve £	Share based payment reserve £	Accumulated losses £	Total equity £
Balance as at 31 July 2020	-	-	-	-	-	-	-	-
Issuance of 1 ordinary share	1	-	-	-	-	-	-	1
Redesignation of 1 ordinary share	(1)	-	1	-	-	-	-	-
Issuance of 700,000 ordinary shares and matching warrants	602,000	-	-	98,000	-	-	-	700,000
Share issue costs	(275,300)				-			(275,300)
Issuance of 2,500,000 Class A shares and matching warrants	-	2,150,000	-	350,000	-	-	-	2,500,000
Conversion of 2,500,000 Class A shares	2,150,000	(2,150,000)	-	(350,000)	350,000	-	-	-
Issuance of 130,000,000 ordinary shares	130,000,000	-	-	-	-	-	-	130,000,000
Share issue costs	(1,310,569)	-	-	-	-	-	-	(1,310,569)
Issuance of 1 sponsor share	-	-	1	-	-	-	-	1
Total comprehensive loss for the period	-	-	-	-	-	-	(2,546,025)	(2,546,025)
Share-based payment expense	-	-	-	-	-	209,250	-	209,250
Balance as at 30 June 2021	131,166,131	-	2	98,000	350,000	209,250	(2,546,025)	129,277,358

Consolidated Statement of Cash Flows
		For the period ended 30 June 2021
		£
Operating activities
Loss for the period		(2,546,025)
Adjustments to reconcile total operating loss to net cash flows:
Deduct interest income		(6,054)
Add back share based payment expense		194,250
Working capital adjustments:
Increase in trade and other receivables		(229,746)
Increase in trade and other payables		60,991
Net cash flows from operating activities		(2,526,584)
Financing activities
Proceeds from issue of ordinary share capital and matching warrants		133,200,002
Proceeds from issue of A share capital in MAC I (BVI) Limited		130,844
Cost of share issuance		(1,585,869)
Interest income		6,054
Net cash flows from financing activities		131,751,031
Net increase in cash and cash equivalents		129,224,447
Cash and cash equivalents at the beginning of the period		-
Cash and cash equivalents at the end of the period		129,224,447

Notes to the Consolidated Financial Statements

1.  SEGMENT INFORMATION

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

2.  ADMINISTRATIVE EXPENSES BY NATURE

		For the period ended 30 June 2021
		£
Group administrative expenses by nature
Directors' fees		65,609
Professional fees		115,402
Non-recurring project costs		2,144,971
Listing fees		23,910
Share based payment expense		194,250
Branding and website cost		4,352
Bank charges		3,585
		2,552,079

The Group's independent auditors, Baker Tilly Channel Islands Limited, have fees amounting to £14,000 for the interim and final audit.

3.  TAXATION

		For the period ended 30 June 2021
		£
Analysis of tax in period
Current tax on profits for the period		-
Total current tax		-

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

Reconciliation of effective rate and tax charge:  

		For the period ended 30 June 2021
		£
Loss on ordinary activities before tax		(2,546,025)
Expenses not deductible for tax purposes		194,250
Loss on ordinary activities subject to corporation tax		(2,351,775)
Loss on ordinary activities multiplied by the rate of corporation tax in the UK of 19%		(446,837)
Effects of:
Losses carried forward for which no deferred tax recognised		446,837
Total taxation charge		-

As at 30 June 2021, cumulative tax losses available to carry forward against future trading profits were £2,351,775 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.

4.  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 period.   Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

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

		For the period ended 30 June 2021
Loss attributable to owners of the parent		(2,546,025)
Weighted average number of ordinary shares in issue		39,709,880
Weighted average number of ordinary shares for diluted EPS		39,709,880
Basic and diluted loss per ordinary share (£)		(0.064)

5.  CASH AND CASH EQUIVALENTS

	As at 30 June 2021
	£
Cash and cash equivalents
Cash at bank	129,224,447
	129,224,447

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

 

6.  FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS

The Group has the following categories of financial instruments at the period end:

	As at 30 June 2021
	£
Financial assets measured at amortised cost
Cash and cash equivalents	129,224,447
Other receivables	2
	129,224,449
Financial liabilities measured at amortised cost
Trade and other payables	176,835
	176,835

The Group 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 Group's exposure to each of the above risks and the Group's objectives, policies and processes for measuring and managing these risks.

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

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

Market risk

The Group'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 Group. The Group'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 Group will not be able to meet its financial obligations as they fall due. The Group'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 Group's reputation. The Group 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 Group'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 £129 million as at 30 June 2021. The Directors actively monitor this. There were no changes in the Group's approach to capital management during the period and the Company's capital management policy will be revisited once an Acquisition has been identified.

7.  RELATED PARTY TRANSACTIONS

James Corsellis and Mark Brangstrup Watts are the managing partners Marwyn Investment Management LLP ("MIMLLP") and 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.

MIMLLP incurred costs on behalf of the Group which were recharged. During the period MIMLLP recharged £11,737 in respect of costs and fees of which £nil was outstanding at period end.

James Corsellis, Mark Brangstrup Watts and Antoinette Vanderpuije have a beneficial interest in the Incentive Shares as described in note 14 through their indirect interest in MLTI which owns 2,000 A2 ordinary shares in the capital of MAC I (BVI) Limited.  

James Corsellis and Mark Brangstrup Watts are the managing partners of Marwyn Capital LLP ("MCLLP"), and Antoinette Vanderpuije is also a partner. MCLLP provides corporate finance, company secretarial and managed service support to the Company.  The Company has incurred fees of £150,740 in respect of company secretarial and managed service support, of which £740 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. During the year the Company paid £187,096 for corporate finance services to MCLLP and £nil was outstanding at the balance sheet date. MCLLP incurred costs of £4,285, which it recharged the Company during the year.

8.  POST BALANCE SHEET EVENTS

No other matter or circumstance has arisen since 30 June 2021 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.

 

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¹ https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-new-digital-edge-rethinking-strategy-for-the-postpandemic-era

[2] https://s26.q4cdn.com/993376269/files/doc_downloads/2021/08/18/AdvT-Prospectus-PDF-v0.372-(2).pdf

 

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