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Advancedadvt Limited - Half-year Report

11/03/2022
RNS Number : 4247E
Advancedadvt Limited
11 March 2022
 

AdvancedAdvT Limited

11 March 2022

 

 

LEI: 254900WYO35S1T334A28

 

AdvancedAdvT Limited

("AdvancedAdvT" or the "Company")

Unaudited Interim Report for the period ended 31 December 2021

 

The Company announces its unaudited interim results for the period ended 31 December 2021.

 Overview

•      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, to generate attractive long term returns for shareholders and to enhance value by supporting sustainable growth, acquisitions and performance improvements within the acquired companies.

•      The Company remained focused on executing its objective of completing a business combination with one or more businesses, by seeking and actively evaluating a number of high-quality targets.

•      The Board believes the trend to increased data creation and digitalisation of business processes and operations will continue to present investment opportunities for high-quality businesses with the potential to generate long-term value.

•      On 5 January 2022, the Company acquired a c9.82 per cent shareholding in M&C Saatchi PLC ("M&C"), which triggered the current suspension of trading in the Company's shares on the London Stock Exchange. The Company viewed this as an attractive investment opportunity in a market which is experiencing significant digital transformation and growth.

•      The Company remains in discussion with M&C with respect to a possible merger; further announcements will be made as and when appropriate. There can be no certainty that a firm offer under Rule 2.7 of The City Code on Takeovers and Mergers (the "Code") will be made for M&C.

•      The Group reported a loss of £0.2m for the six-month period to 31 December 2021 arising from administrative expenses net of interest income earned on its cash resources.

•      Net cash at the period end was £129.2m.

Chairperson's statement

Fellow Shareholders, the last 6 months of 2021 continued to be a productive period for AdvancedAdvT. We remained focused on our objective to complete a business combination and generate attractive long term returns for shareholders.

The high availability of capital and appetite for premium-quality businesses, has to date created a very competitive environment and resulted in increased valuations. Our ability to identify opportunities early combined with significant capital and a flexible share structure, which can facilitate a broad range of future transactions, continue to be core elements of our proposition.

Covid-19 has accelerated the adoption of technology and removed perceived barriers. We believe the trend to increased digitalisation of business processes, operations and engagement will continue as we return to a new normal. Businesses will seek to maintain competitiveness, improve their users experience and deliver on productivity and ESG mandates. Businesses enabling these outcomes through digital products will be expected to maintain an increased demand for their offerings.

The Company has been conducting a thorough market search, engaging with multiple advisors, across both private and public markets. We have continued to measure each opportunity against a common set of characteristics which help identify underlying value with significant addressable market and potential.

The Company acquired a c.9.82 per cent shareholding in M&C on the 5 January 2022 and subsequently entered discussions with the board of M&C exploring an opportunity for a possible merger. Further announcements will be made as and when appropriate. There can be no certainty that a firm offer under Rule 2.7 of the Code will be made for M&C.

Vin Murria OBE
Chairperson
10 March 2022

Enquiries: 

 

Company Secretary

Antoinette Vanderpuije - 020 7004 2743

 

Meare Consulting (Financial PR to the Company)

Adrian Duffield - 07990 858548 

 

Singer Capital Markets - Broker - 020 7496 3000

Phil Davies

George Tzimas

The Interim Report is also available on the 'Shareholder Documents' page of the Company's website at www.advancedadvt.com and the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Management Report

Herewith are the unaudited interim condensed consolidated financial statements of AdvancedAdvT Limited (formerly Marwyn Acquisition Company I Limited) (the "Company") for the six months to 31 December 2021 (the "Consolidated Interim Financial Statements"), consolidating the results of AdvancedAdvT Limited and MAC I (BVI) Limited (collectively, the "Group").

 

Activity, Strategy & Outlook

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 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.

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 reticence of companies to invest in digital strategies 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 technology sector having invested in and/or operated a range of high performing software and digital services 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 85 acquisitions between them.

On 5 January 2021, the Company acquired 12,000,000 ordinary shares of M&C at a price of £2.00 per share, representing a non-controlling interest of c.9.82 per cent. of the current issued share capital of M&C, a business which the Board believes is well positioned to take advantage of the structural change arising from an acceleration of digitalisation brought about by the current macroeconomic environment. The Company views this as a good investment opportunity and has subsequently entered discussions with the board of M&C exploring an opportunity for a possible merger. There can be no certainty that a firm offer under Rule 2.7 of the Code will be made for M&C. The Company has significant deployable capital to pursue its stated strategy with, or without, M&C.

Results                                                                                               

The Group's loss after taxation for the six months to 31 December 2021 was £218,548 (period to 31 December 2020 loss £246,976[2]). The Group held a cash balance at the period end of £129,231,390.

 

Dividend Policy

The Company has not yet acquired a trading operation and it is therefore inappropriate to make a statement on the likelihood of any future dividends. The Directors intend to determine the Company's dividend policy following completion of a platform acquisition and, in any event, will only commence the payment of dividends when it becomes commercially prudent to do so.

 

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, information, time and resources it needs in order 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 the Board as a whole would make decisions. If the need should arise in the future, for example following any acquisition, the Board may set up committees as appropriate.

 

Risks

The Directors have carried out a robust assessment of the principal risks facing the Group 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 and 18 March 2021 and the principal risks are also set out in the Company's audited financial statements to 30 June 2021. The Directors are of the opinion that the risks detailed in the Company's prospectus dated 18 March 2021, the audited financial statements to 30 June 2021, and those risks detailed below, are applicable for the remaining six months of the financial year. Details of the risks faced by the Group are set out on pages 11-20 of the prospectus dated 18 March 2021  which can be found on the Company's website www.advancedadvt.com.

The Company's sole non-cash asset is a minority shareholding in M&C Saatchi

The value of the Company's holding of shares in M&C remains subject to typical risks associated with the holding of shares in listed equity securities. The investment in M&C will be accounted for as an asset held at fair value and will be revalued to market value at the end of every reporting period with gains or losses on revaluation taken to the statement of comprehensive income. Further, any fall in the share price of M&C would have a corresponding negative effect on the value of the M&C investment.

Readmission may not take place or may not take place when expected.

As the investment in M&C constituted a reverse takeover under the Listing Rules, trading in the Company's  ordinary shares have been suspended. The Company is in discussions with the FCA and the London Stock Exchange regarding the re-admission of the Company's shares to trading on the London Stock Exchange.  The application for Readmission is subject to the approval (subject to satisfaction of any conditions which are attached to such approval) of the FCA and the London Stock Exchange.

Responsibility Statement

Each of the Directors confirms that, to the best of their knowledge:

(a) these Consolidated Interim Financial Statements, which have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b) these Consolidated Interim Financial Statements comply with the requirements of DTR 4.2

Neither the Company nor the Directors accept any liability to any person in relation to the interim 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 website at www.advancedadvt.com.

 

Vin Murria OBE
Chairperson
10 March 2022

Condensed Consolidated Statement of Comprehensive Income

 

 

Six months
ended

Period
ended

 

 

31 December

31 December

 

 

2021

2020

 

Note

Unaudited

Unaudited

 

 

£

£

 

 

 

 

Administrative expenses

2

(237,894)

(246,976)

 

 

 

 

Operating loss

 

(237,894)

(246,976)

 

 

 

 

Finance Income

 

19,346

-

 

 

 

 

Loss before income taxes

 

(218,548)

(246,976)

 

 

 

 

Income tax

3

-

-

 

 

 

 

Loss for the period

 

(218,548)

(246,976)

 

 

 

 

Total comprehensive loss for the period attributable to owners of the parent

 

 

(218,548)

 

(246,976)

 

 

 

 

Loss per ordinary share (£)

 

 

 

Basic

4

(0.00)

(0.35)

Diluted

4

(0.00)

(0.35)

 

The Group's activities derive from continuing operations.

 

Condensed Consolidated Statement of Financial Position

 

 

As at

31 December

2021

As at

30 June

2021

 

Note

Unaudited

Audited

 

 

£ 

£  

Current assets

 

 

 

Trade and other receivables

 

19,558

229,746

Cash and cash equivalents

 

129,231,390

129,224,447

Total current assets

 

129,250,948

129,454.193

 

 

 

 

Total assets

 

129,250,948

129,454,193

 

 

 

 

Equity and liabilities

 

 

 

Equity

 

 

 

Sponsor share

 

2

2

Ordinary shares

 

131,166,131

131,166,131

Warrant reserve

 

98,000

98,000

Warrant cancellation reserve

 

350,000

350,000

Share-based payment reserve

 

257,281

209,250

Accumulated losses

 

(2,764,573)

(2,546,025)

Total equity

 

129,106,841

129,277,358

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

 

144,107

176,835

Total liabilities

 

144,107

176,835

 

 

 

 

Total equity and liabilities

 

129,250,948

129,454,193 

 

The financial statements were approved by the Board of Directors on 10 March 2022 and were signed on its behalf by:

 

 

Vin Murria                                                                              James Corsellis

Chairperson                                                                           Director                                     

 

Consolidated Statement of Changes in Equity

 

Notes

 

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 (Audited)

 

131,166,131 

 -  

 2 

 98,000 

350,000

 209,250 

(2,546,025)

129,277,358 

Total comprehensive loss for the period

 

-

-

-

-

-

-

(218,548)

(218,548)

Share-based payment expense

 

-

-

-

-

-

48,031

-

48,031

Balance as at 31 December 2021(unaudited)

 

131,166,131

-

2

98,000

350,000

257,281

(2,764,573)

129,106,841

 

 

 

Consolidated Statement of Cash Flows

 

 

Six months

ended

31 December

2021

For the period

ended

31 December

2020

 

Note

Unaudited

Unaudited

 

 

£

£

 

 

 

 

Operating activities

 

 

 

Loss for the period

 

(218,548)

(246,976)

 

 

 

 

Adjustments to reconcile total operating loss to net cash flows:

 

 

 

Deduct interest income

 

(19,346)

-

Add back share-based payment expense

 

48,031

154,960

Working capital adjustments:

 

 

 

        Decrease / (increase) in trade and other receivables and

        Prepayments

 

210,188

(20,192)

       (Decrease) / increase in trade and other payables

 

(32,728)

210,648

Net cash flows used in operating activities

 

(12,403)

98,440

 

 

 

 

Financing activities

 

 

 

Proceeds from issue of ordinary share capital and matching warrants

 

-

700,001

Proceeds from issue of A share capital in MAC I (BVI) Limited

 

-

15,000

Cost of share issuance 

 

-

(275,300)

Interest income

 

19,346

-

Net cash flows from financing activities

 

19,346

439,701

 

 

 

 

Net increase in cash and cash equivalents

 

6,943

538,141

Cash and cash equivalents at the beginning of the period

 

129,224,447

-

Cash and cash equivalents at the end of the period

 

129,231,390

538,141

 

 

Notes to the Condensed Consolidated Financial Statements

1.   SEGMENT INFORMATION

The Board of Directors is the Group's chief operating decision-maker. As the Group has not yet acquired a trading business, 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

 

Six months
ended 31

December

2021

Unaudited

For the period
ended 31

December

2020

Unaudited

 

£

£

Group administrative expenses by nature

 

 

Directors' fees

111,340

-

Professional fees

32,396

46,967

Non-recurring project costs

(3,039)

43,705

Listing fees

44,288

793

Share based payment expense

48,031

154,960

Branding and website cost

3,637

527

Travel and entertainment

611

-

Bank charges

630

24

 

237,894

246,976

 

3.   TAXATION

 

Six months ended 31 December 2021

Unaudited

For the period ended 31 December 2020

Unaudited

 

£

£

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:  

 

Six months ended 31

December

2021

Unaudited

For the period ended 31

December

2020

Unaudited

 

£

£

Loss on ordinary activities before tax

(218,548)

(246,976)

Expenses not deductible for tax purposes

48,031

24,861

Loss on ordinary activities subject to corporation tax

(170,517)

222,115

Loss on ordinary activities multiplied by the rate of corporation tax in the UK of 19%

(32,398)

(42,202)

Effects of:

 

 

Losses carried forward for which no deferred tax recognised

32,398

42,202

Total taxation charge

-

-

At 31 December 2021, cumulative tax losses available to carry forward against future trading profits were £2,522,292 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 attributable to equity holders of a company by the weighted average number of ordinary shares in issue during the year. Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

 

The Company 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.

 

The Company has issued two sponsor shares, the sponsor shares have no right to receive distributions and so have been ignored for the purposes of IAS 33

 

 

Six months

ended 31

December

2021

Unaudited

For the Period

Ended 31

December

2020

Unaudited

Loss attributable to owners of the parent

(218,548)

(246,976)

Weighted average number of ordinary shares in issue

133,200,000

700,000

Weighted average number of ordinary shares for diluted EPS

133,200,000

700,000

Basic and diluted loss per ordinary share (£'s)

0.00

0.35

 

5.   FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS

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

 

As at 31 December 2021

Unaudited

As at

30 June

 2021

Audited

 

£

£

Financial assets measured at amortised cost

 

 

Cash and cash equivalents

129,231,390

129,224,447

Other receivables

1

2

 

129,231,391

129,224,449

 

 

 

 

 

 

Financial liabilities measured at amortised cost

 

 

Trade and other payables

144,106

176,835

 

144,106

176,835

The fair value and book value of the financial assets and liabilities are materially equivalent.

As the Group's assets are predominantly cash and cash equivalents, market risk and liquidity risk are not currently considered to be material risks to the Group.  There have been no changes to the Group's risk management policies or treasury management since 30 June 2021.

 

6.   RELATED PARTY TRANSACTIONS

James Corsellis and Mark Brangstrup Watts are the managing partners of 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 Marwyn Value Investors II LP.  MVI II Holdings I LP holds 15.41% of the Company's Ordinary Shares and 1 Sponsor Share.

James Corsellis and Antoinette Vanderpuije have a beneficial interest in the Incentive Shares 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 £13,150 in respect of company secretarial and managed service support. MCLLP incurred costs of £2,283, which it recharged the Company during the period.

7.   COMMITMENTS AND CONTINGENT LIABILITIES

There were no commitments or contingent liabilities outstanding at 31 December 2021 that requires disclosure or adjustment in these financial statements.

8.   POST BALANCE SHEET EVENTS

Investment in M&C Saatchi plc ("M&C")

On 5 January 2022, the Company acquired 12,000,000 ordinary shares of M&C at a price of £2.00 per share, representing a non-controlling interest of c.9.82 per cent. of the current issued share capital of M&C, viewing this as an attractive investment opportunity. 

On the 7 January 2022 the Company announced its interest in exploring a share exchange merger with M&C triggering the commencement of a 28 days "Put-up or shut up" ("PUSU") period.

On 3 February 2022 M&C disclosed the proposed terms and an extension to the PUSU period until the 3rd March 2022. Under the proposed terms, the Company would offer each M&C shareholder 1.939 new ordinary shares in the Company and 40 pence in cash for each M&C ordinary share. The Company would also make a mix and match facility available, whereby (subject to matching opposite elections being made by other M&C shareholders), M&C shareholders would be offered the opportunity to vary the proportions of ordinary shares in the Company and cash to be received by them. The Company has also indicated that it would increase its all-share alternative proposal such that M&C shareholders would receive 2.347 new ordinary shares in the Company for each M&C ordinary share.

On 3 March 2022 M&C Saatchi announced a further extension to the PUSU deadline, now 31 March 2022. There can be no certainty that a firm offer under Rule 2.7 of the Code will be made for M&C.

 

[2] Period ended 31 December 2020 relates to the date of incorporation on 30 July 2020 to the 31 December 2020.

 

 

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