REG - Bay Capital PLC - Full Year Results for the period ended 31 Dec 2023
24/04/2024 07:00
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RNS Number : 7744L Bay Capital PLC 24 April 2024
24 April 2024
Bay Capital Plc
("Bay Capital" or the "Company")
Full Year Results for the period ended 31 December 2023
Bay Capital Plc (LSE: BAY) has today published its Annual Report and Financial
Statements for the period ended 31 December 2023 (the "Annual Report").
In accordance with Listing Rule 9.6.1 copies of the Annual Report have been
submitted to the FCA and will shortly be available to view on the Company's
website at https://www.baycapitalplc.com/ (https://www.baycapitalplc.com/) and
for inspection from the National Storage Mechanism
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanis
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) m
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
LEI: 213800F59868OZQU6E56
Enquiries
Tessera Investment Management Limited
Tony Morris +44 (0) 7742 189145
Chairman's Statement
I am pleased to present the financial results for Bay Capital Plc ("Bay", or
the "Company") and its subsidiary (together the "Group") for the year ended 31
December 2023.
Since establishing the Company in 2021, we have remained focused on
implementing our strategy and continue to assess acquisition opportunities
where we believe there to be sustainable growth potential either organically
or through acquisition. During the year, we progressed a number of these
opportunities, some to advanced stages, and although we are yet to complete
our inaugural transaction, the majority of our IPO placing proceeds remain
intact and we continue to advance a number of interesting opportunities from
our acquisition pipeline.
We remain positive about the prospects of our sectors of focus across the
broader industrials market, particularly given the current trough in the
economic cycle we find ourselves in. This continues to present a series of
opportunities at potentially interesting entry points, which if secured, we
believe have the potential to create shareholder value.
We thank our loyal shareholders for their continued support while we
diligently pursue our inaugural acquisition, and look forward to updating in
due course as our plans progress.
Peter Tom CBE
Chairman
23 April 2024
Report of the Directors
The Directors of the Company present their report for the year ended 31
December 2023.
PRINCIPAL ACTIVITY AND BUSINESS REVIEW
For the financial year ended 31 December 2023, the Group and Company's
principal activity was that of a holding group and company respectively. The
Group and Company have actively pursued their strategy through the sourcing
and assessment of acquisition and investment opportunities in the industrial,
construction and business services sectors, together with software and
technology companies which service those industries.
RESULTS
During the year, Bay recorded a loss of £1,306,686 (2022: loss of £251,321)
and the loss per share was 1.87p (2022: loss per share of 0.36p), reflecting
moderate monthly operating expenses of the Group and costs relating to
acquisition activity. The Group and Company had cash reserves at the end of
the year of £6,067,461 (2022: £6,458,073).
DIVIDENDS
At this point in the Company's development, it does not anticipate declaring
any dividends in the foreseeable future. As such, the Directors do not
recommend the payment of a dividend for the year.
FUTURE DEVELOPMENTS
The Directors expect to continue to execute the Group's strategy in sourcing
and assessing acquisition and investment opportunities across its stated
sectors of focus.
KEY PERFORMANCE INDICATORS
The Board continues to focus on maximising shareholder value by sourcing,
assessing and where in the interest of shareholders to do so, investing in and
acquiring growing businesses within the industrial, construction and business
services sectors.
Following completion of the Company's inaugural transaction, the Board will be
in a position to identify and develop its key performance indicators for
on-going monitoring and management.
GOING CONCERN
The Directors, having made due and careful enquiry, are of the opinion that
the Group and Company have adequate working capital to execute their
operations over the next 12 months. The Group and Company's unaudited cash
balance as at 12 April 2024 was £5,212,927, and excluding the consummation of
any investment or acquisition which will likely require specific funding, have
adequate resources available to fund the on-going forecasted operating
expenses for at least twelve months following approval of the financial
statements. The Directors, therefore, have made an informed judgement, at the
time of approving the financial statements, that there is a reasonable
expectation that the Group and Company have adequate resources to continue in
operational existence for the foreseeable future. As a result, the Directors
have adopted the going concern basis of accounting in preparing the annual
financial statements (see Note 2).
RISK MANAGEMENT
In order to execute the Group's strategy, the Company and its subsidiaries
will be exposed to both financial and non‑financial risks. The Board has
overall responsibility for the Group's risk management and it is the Board's
role to consider whether those risks identified by management are acceptable
within the Group's strategy and risk appetite. The Board therefore
periodically reviews the principal risks and considers how effective and
appropriate the controls that management has in place to mitigate the risk
exposure are and will make recommendations to management accordingly.
As the Company had not completed its first investment or acquisition in the
period, it has limited financial statements and/or historical financial data,
and limited trading history. As such, the Company during the period was
subject to the risks and uncertainties associated with an early-stage
acquisition company, including the risk that the Company will not achieve its
investment objectives and that the value of an investment could decline and
may result in the partial or complete loss of capital invested. The past
performance of investee companies or assets managed by the Directors will not
necessarily be a guide to future business, results of operations, financial
condition or prospects of the Company.
In order to mitigate against these risks, the Directors will continue to
undertake thorough due diligence on investment opportunities and acquisition
targets, to a level considered reasonable and appropriate by the Company on a
case‑by‑case basis, including the potential commissioning of third-party
specialist reports as appropriate. Following completion of any investment or
acquisition, it is intended that any investments or assets will be managed by
the Directors and assisted by the Company's professional advisers.
Financial Risk Management
The Directors considered the Group to be exposed to the following financial
risks:
a. Price risk: the price paid for securities is subject to market
movement that will have an impact on the operations of the Group;
b. Cash flow interest rate risk: the Group has significant cash
balances which exposed it to movement in the market interest rates; and
c. Liquidity risk: the Group manages its cash requirements through
detailed forecasting and planning for amount and timing of payments and
receipts of interest income, to ensure cash resources are available when
required.
Given the relatively small size and operation of the Group in the year, the
Directors did not delegate the responsibility of risk monitoring to a
sub-committee of the Board, but closely monitored the risks on a periodic
basis. The Directors consider their exposure in the financial year to have
been low. Refer to Note 14 for assessment of the risks arising from financial
instruments.
Non-financial Risk Management
The non-financial risk factors for the year ended 31 December 2023 did not
materially change from those set out in Bay's Prospectus dated 27 September
2021.
GREENHOUSE GAS EMISSIONS, ENERGY CONSUMPTION AND ENERGY EFFICIENCY
As the Company has not completed its first acquisition and has only two
Directors and one employee, limited travel and no premises, the Directors do
not consider any disclosure under the Task Force on Climate-related Financial
Disclosures is required at this juncture, however the Company will review this
position as it executes its investment and acquisition strategy.
POLITICAL CONTRIBUTIONS
The Company has made no political contributions during the year.
CHARITABLE DONATIONS
The Company has made no charitable donations during the year.
POST BALANCE SHEET EVENTS
There have been no significant post balance sheet events. See Note 20.
SHARE CAPITAL
Details of the Company's share capital is set out in Note 15. The Company's
share capital consists of one class of ordinary share, which does not carry
rights to fixed income. As at 31 December 2023, there were 70,000,000 ordinary
shares of 1p par value each in issue.
SIGNIFICANT SHAREHOLDERS
As at 12 April 2024, the Company had been advised of the following notifiable
interests (whether directly or indirectly held) in voting rights.
Name Shareholding Percentage
JIM Nominees Limited 16,759,802 23.9%
Hermco Property Limited* 15,000,000 21.4%
David Williams 14,250,000 20.4%
Huntress (CI) Nominees Limited 5,853,230 8.4%
* Nominee entity holding indirect and direct interests of Peter Tom CBE,
Chairman of the Company
As at 12 April 2024, the Directors in aggregate held 29,250,000 ordinary
shares, which represents 41.8 per cent. of the Company's issued share capital.
The Directors who held office during the year and their beneficial interest in
the share capital of the Company at 31 December 2023 were as follows:
31 December 2023
Hermco Property Limited* 15,000,000
David Williams 14,250,000
29,250,000
* Peter Tom's shareholding is held via Hermco Property Limited
COMPANY DIRECTORS (BOARD)
The Directors during the year and summaries of their experience are set out
below.
Peter Tom CBE Chairman
Peter is one of the aggregates industry's longest serving and most experienced
executives, holding high-profile executive and non-executive roles serving
publicly listed and private organisations in the industry, sport and the
not‑for-profit sector. He most recently served as Executive Chairman of
Breedon Group, (LSE: BREE) the UK's largest independent aggregates business,
which he co-founded with David Williams (a Director of the Company) and Simon
Vivian in 2008. Under Peter's leadership, Breedon grew from a £13 million
listed cash shell into a business worth £1.5 billion, leading the
consolidation of the UK aggregates industry.
Prior to establishing Breedon, Peter was the Chief Executive Officer and
latterly Non-Executive Chairman of Aggregate Industries, which he developed
into a leading international building materials group before negotiating its
sale to Holcim for £1.8 billion in 2005. His early career was spent at Bardon
Hill Quarries, where he rose to become Chief Executive of the Bardon Group Plc
in 1985. He went on to lead Bardon's merger with Evered Plc in 1991 and the
enlarged group's subsequent merger with CAMAS in 1997 to form Aggregate
Industries Plc.
In 2006, Peter was awarded a CBE for services to Business and Sport. He holds
Honorary Degrees from both Leicester and De Montfort University and is
Chairman of Leicester Rugby Football Club, (Leicester Tigers) a role he has
held for more than 20 years following a playing career comprising 130
appearances for the club as a lock forward between 1963 and 1968.
David Williams Non-Executive Director
David has significant experience in investment markets, serving as Chairman in
executive and non-executive capacities for a number of public and private
companies. He has overseen the development of these companies, raising in
excess of £1 billion of capital to support both organic and acquisitive
growth initiatives.
David was the original founder of Marwyn Capital LLP, the award-winning
investment management company. David was also formerly Chairman of
Entertainment One Ltd. (LSE: ETO), Zetar Plc, and Waste Recycling Group Plc,
and Non-Executive director of Breedon Group Plc (LSE: BREE). He currently
serves as Non-Executive Chairman of the AIM-quoted cyber security business,
Shearwater Group Plc (AIM: SWG) and Main Market listed Acceler8 Ventures Plc
(LSE: AC8) and Red Capital Plc (LSE: REDC).
DIRECTORS' REMUNERATION
The two Directors of the company during the year, Peter Tom and David
Williams, were each entitled to fees of £30,000 and £20,000 per annum for
their respective roles within the Company, as per their service agreements
entered into on 14 September 2021. There were no other benefits paid to these
Directors outside of their service fees, save for ordinary course reimbursable
expenses properly incurred in the performing of their duties as Directors.
31 December
Benefits 2023
Salary in kind Total
Director £ £ £
Peter Tom CBE* 30,000 - 30,000
David Williams 20,000 - 20,000
50,000 - 50,000
* Peter Tom's fees are paid through Rise Rocks Limited, a company wholly owned
by him
In addition to the Director fees outlined above, the Directors are also
participants in the Subco Incentive Scheme and holders of warrants as detailed
below.
SUBCO INCENTIVE SCHEME
The Directors believe that the success of the Company will depend to a high
degree on the future performance of key employees and advisers in executing
and supporting the Company's growth strategy. The Company has therefore
established equity-based incentive arrangements which are, and will continue
to be, an important means of retaining, attracting and motivating key
employees, consultants and advisers, and also for aligning the interests of
the Directors with those of shareholders.
On 14 September 2021, the Group created a new Subco Incentive Scheme within
its wholly owned subsidiary Bay Capital Subco Limited. Under the terms of the
Subco Incentive Scheme, scheme participants are only rewarded if a
predetermined level of shareholder value is created over a three to five year
period or upon a change of control of the Company or Subco (whichever occurs
first), calculated on a formula basis by reference to the growth in market
capitalisation of the Company, following adjustments for the issue of any new
ordinary shares and taking into account dividends and capital returns
("Shareholder Value"), realised by the exercise by the beneficiaries of a put
option in respect of their shares in Subco and satisfied either in cash or by
the issue of new ordinary shares at the election of the Company.
Under these arrangements in place, participants are entitled up to 15 per
cent. of the Shareholder Value created, subject to such Shareholder Value
having increased by at least 10 per cent. per annum compounded over a period
of between three and five years from admission, or following a change of
control of the Company or Subco.
In order to implement the Subco Incentive Scheme, the Company as sole
shareholder of Subco, approved the creation of a new share class in Subco (the
"B Shares"). At the same time the Subco's existing ordinary shares were
redesignated A Shares. The B Shares do not have voting or dividend rights.
On 14 September 2021, Hermco Property Limited (a company controlled by Peter
Tom, Chairman of the Company), David Williams, a Non-Executive Director of the
Company, and Kathleen Long and Anthony Morris, Directors of Tessera Investment
Management Limited, became the first participants in the Subco Incentive
Scheme ("Founder Participants"). As such, the proportion of Shareholder Value
attaching to the Subco Incentive Scheme is 11 per cent. of a total cap of 15
per cent.
The Participants and their respective B share holdings as at 31 December 2023
are outlined below.
Participant Subco
Hermco Property Limited* 50,000
David Williams 40,000
Kathleen Long 10,000
Anthony Morris 10,000
110,000
* Nominee entity holding indirect and direct interests of Peter Tom CBE,
Chairman of the Company
WARRANTS
On 13 September 2021, the Company constituted 70,000,000 warrants on the terms
of an instrument under which the Company issued 30,000,000 warrants to certain
existing shareholders of the Company including the Directors, and a further
40,000,000 warrants on admission of the Company to the Main Market of the
London Stock Exchange.
The warrants are exercisable at any time from the date of completion of the
inaugural transaction (an investment or acquisition) made by the Company where
the consideration for such transaction is at least £10 million at a price of
£0.10 per ordinary share. These warrants can be exercised through application
to the Company. The warrants will not be listed on the London Stock Exchange
or any other publicly traded market.
The Directors' respective warrant holdings are detailed below.
No. of ordinary
shares to
which the grant
Participant Date of grant Exercise price relates
Hermco Property Limited* 13 September 2021 £0.10 15,000,000
David Williams 13 September 2021 £0.10 14,250,000
29,250,000
* Nominee entity holding indirect and direct interests of Peter Tom CBE,
Chairman of the Company
CORPORATE GOVERNANCE
As a Jersey company and a company with a Standard Listing, the Company is not
required to comply with the provisions of the UK Corporate Governance Code
2018. Furthermore, there is no applicable regime of corporate governance to
which the directors of a Jersey company must adhere over and above the general
fiduciary duties and duties of care, skill and diligence imposed on such
directors under Jersey law. Notwithstanding this, the Directors are committed
to maintaining high standards of corporate governance and will be responsible
for carrying out the Company's objectives and implementing its business
strategy. All investment, acquisition, divestment and other strategic
decisions are considered and determined by the Board.
At present, the Board reviewed investment and acquisition opportunities on an
as required basis, and met regularly with its Strategic Advisor to discuss
possible inorganic growth opportunities, as well as monitor deal flow and
investment and acquisitions in progress, and review the Company's strategy to
ensure that it remains aligned to the delivery of shareholder value. Those
investment and acquisition opportunities that are assessed by the Board (with
support from its Strategic Advisor) are considered in light of the investment
and acquisition criteria as detailed in the Company's Prospectus.
In addition, as part of the investment and acquisition screening process, the
Company will augment Board and Strategic Advisor capability on a case by case
basis as required with industry and operating partner input, where deep domain
expertise can be accessed. The Board provides leadership within a framework of
prudent and effective controls. The Board has established the corporate
governance values of the Company and has overall responsibility for setting
the Company's strategic aims, defining the business plan and strategy and
managing the financial and operational resources of the Company.
In this regard, the Board, so far as is practicable given the Company's size
and stage of its development, has voluntarily adopted the QCA Code as its
chosen corporate governance framework. There are certain provisions of the QCA
Code which the Company will not currently adhere to, and their adoption will
be delayed until such time as the Directors believe it appropriate to do so.
It is anticipated that this will occur concurrently with the Company's first
material investment or acquisition.
The Company will seek to develop its corporate governance position, and will
address key differences to the QCA Code. Specifically, it is anticipated this
will include:
i. the augmentation of the Board with suitably qualified
additional executive and non-executive directors including independents;
ii. the implementation of audit, remuneration and nomination
committees with appropriate terms of reference;
iii. a formalised annual evaluation and review process covering the
Board and Committees, including succession planning;
iv. the publication of KPIs;
v. the development of a corporate and social responsibility policy;
and
vi. an enhanced risk management and governance framework tailored to
the operating assets and strategic direction of the enlarged entity.
ROLE OF THE BOARD
The Board is responsible for the management of the business of the Group,
setting the strategic direction of the Group and establishing the policies of
the Group. It is the Directors' responsibility to oversee the financial
position of the Group and monitor the business and affairs of the Group, on
behalf of the shareholders, to whom they are accountable. The primary duty of
the Directors is to act in the best interests of the Group and Company at all
times. The Board also addresses issues relating to internal control and the
Group's approach to risk management and has formally adopted an
anti-corruption and bribery policy.
The Group does not have a separate investing committee and therefore the Board
as a whole will be responsible for sourcing acquisitions and ensuring that
opportunities conform with the Group's strategy.
The Group holds four formal Board meetings a year, with unscheduled meetings
as matters arise which require the attention of the Board. Formal Board
meetings are timed to link to key events in the Group's corporate calendar.
Outside the scheduled and unscheduled meetings of the Board, the Directors
maintain frequent contact with each other to keep them fully briefed on the
Group's operations.
INTERNAL CONTROLS
The Board acknowledges its responsibility for establishing and monitoring the
Group's systems of internal control. Although no system of internal control
can provide absolute assurance against material misstatement or loss, the
Group's systems are designed to provide the Directors with reasonable
assurance that problems can be identified on a timely basis and dealt with
appropriately.
The Group maintains an appropriate process for financial reporting. The annual
budget is reviewed and approved by the Board before being formally adopted.
Other key procedures that have been established and which are designed to
provide effective control are as follows:
Management structure - The Board meets regularly on a formal and informal
basis to discuss all issues affecting the Group.
Investment appraisal - The Group has a robust framework for investment
appraisal and approval is required by the Board, where appropriate.
Share dealing and inside information - the Company has adopted a share dealing
code regulating trading and confidentiality of inside information for the
Directors and other persons discharging managerial responsibilities (and their
persons closely associated) which contains provisions appropriate for a
company whose shares are admitted to trading on the Official List
(particularly relating to dealing during closed periods which will be in line
with the Market Abuse Regulation). The Company takes all reasonable steps to
ensure compliance by the Directors and any relevant employees with the terms
of that share dealing code.
The Board reviews the effectiveness of the systems of internal control and
considers the major business risks and the control environment. No significant
deficiencies have come to light during the period and no weaknesses in
internal financial control have resulted in any material losses, or
contingencies which would require disclosure, as recommended by the guidance
for Directors on reporting on internal financial control.
The Directors are focused on careful management of the Group's cash and
financial resources through Board level approvals. At such time that the Group
completes an acquisition, the Directors anticipate that the Group's financial
position and prospects procedures regime will be updated and expanded as
necessary to cater for the nature of the Group's business following completion
of its inaugural investment or acquisition.
BOARD EVALUATION
In the year, the Board evaluation process was limited to an ongoing informal
evaluation of the performance of the Board by each Director. This will be
replaced by a formal, annual evaluation process once the Group has completed
its first acquisition.
EXTERNAL ADVISERS
The Board accessed the following external advisers during the year and post
the year end:
Mayer Brown International LLP and Ogier (Jersey) LLP - legal
Tessera Investment Management Limited - capital markets and M&A
JTC Plc - company secretarial, governance and regulatory filings
CONFLICTS OF INTEREST
A Director has a duty to avoid a situation in which he or she has, or can
have, a direct or indirect interest that conflicts, or possibly may conflict,
with the interests of the Company. The Board has satisfied itself that there
are no conflicts of interest where the Directors have appointments on the
Boards of, or relationships with, companies outside the Company. Furthermore,
the Board requires Directors to declare all appointments and other situations
which could result in a possible conflict of interest, and therefore believes
it has a robust framework to deal with any conflict of interest should it
arise.
RELATIONS WITH SHAREHOLDERS
The Chairman is the Group's principal spokesperson with investors, fund
managers, the media and other interested parties. As well as the Annual
General Meeting with shareholders, the other Director may give formal
presentations at investor road shows following the announcement of interim
and full year results.
Notice of this year's Annual General Meeting will shortly be sent to
shareholders.
DISCLOSURE OF INFORMATION TO THE INDEPENDENT AUDITOR
So far as the Directors are aware, there is no relevant audit information of
which the Group and Company's independent auditor is unaware, and each
Director has taken all the steps that he ought to have taken as a Director in
order to make himself aware of any relevant audit information and to establish
that the Group and Company's independent auditor is aware of that information.
The Directors confirm to the best of their knowledge that:
· the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Group and
Company and the undertakings included in the consolidation taken as whole;
· the Chairman's Statement and Report of the Directors
includes a fair review of the development and performance of the business and
the position of the Group and Company and the undertakings included in the
consolidation taken as a whole, together with a description of the principal
risks and uncertainties that they face; and
· the annual report and accounts, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Group and Company's position and performance,
business model and strategy.
INDEPENDENT AUDITOR
The independent auditor, PKF Littlejohn LLP, will be proposed for
re-appointment at the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD
David Williams
Non-Executive Director
23 April 2024
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors' report and the
financial statements in accordance with applicable law and regulations.
Jersey Company law requires the directors to prepare financial statements for
each financial year. Under that law the directors have elected to prepare the
financial statements in accordance with International Financial Reporting
Standards as adopted by the United Kingdom ("IFRS"). Under company law, the
Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group and
Company and of the profit or loss of the Group for that year.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable and
prudent;
· state whether the Group financial statements have been
prepared in accordance with IFRS as adopted by the United Kingdom;
· state whether the Company financial statements have been
prepared in accordance with FRS 101 "Reduced Disclosure Framework"; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Group and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the financial statements
comply with the Companies (Jersey) Law 1991. They are also responsible for
safeguarding the assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The maintenance and integrity of the Group's website is the responsibility of
the Directors. The work carried out by the independent auditors does not
involve the consideration of these matters and, accordingly, the independent
auditors accept no responsibility for any changes that may have occurred in
the accounts since they were initially presented on the website. Legislation
in Jersey governing the preparation and dissemination of the accounts and the
other information included in annual reports may differ from legislation in
other jurisdictions.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
Year ended Year ended
31 December 2023 31 December 2022
Note £ £
Administrative expenses (1,357,452) (253,635)
Operating loss 6 (1,357,452) (253,635)
Interest receivable 50,766 2,314
Loss on ordinary activities before taxation (1,306,686) (251,321)
Taxation charge 7 - -
Loss and total comprehensive loss for the year (1,306,686) (251,321)
Loss per share (pence)
Basic and diluted 8 (1.87p) (0.36p)
All activities in both the current and the prior year relate to continuing
operations.
The notes below form part of these consolidated financial statements.
Consolidated Statement of Financial Position
As at 31 December 2023
31 December 31 December 31 December 31 December
2023 2023 2022 2022
Note £ £ £ £
Current assets
Cash and cash equivalents 11 6,067,461 6,458,073
Trade and other receivables 12 8,079 8,022
Total current assets 6,075,540 6,466,095
Total assets 6,075,540 6,466,095
Current liabilities
Trade and other payables 13 958,674 53,522
Total current liabilities 958,674 53,522
Total liabilities 958,674 53,522
Total net assets 5,116,866 6,412,573
Equity
Issued share capital 15 700,000 700,000
Share premium 16 6,258,748 6,258,748
Capital redemption reserve 16 2 2
Share-based payment reserve 18 25,207 14,228
Retained deficit 16 (1,867,091) (560,405)
Total equity 5,116,866 6,412,573
The consolidated financial statements were approved and authorised for issue
by the Board on 23 April 2024 and were signed on its behalf by:
David Williams
Non-Executive Director
The notes below form part of these consolidated financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Share-
Capital based
Share Share redemption payment Retained
capital premium reserve reserve deficit Total
Note £ £ £ £ £ £
At 1 January 2022 700,000 6,258,748 2 3,249 (309,084) 6,652,915
Loss for the year - - - - (251,321) (251,321)
Transactions with owners in their capacity as owners:
Share-based payment 18 - - - 10,979 - 10,979
At 31 December 2022 700,000 6,258,748 2 14,228 (560,405) 6,412,573
Loss for the year Transactions with owners in their capacity as owners: - - - - (1,306,686) (1,306,686)
Share-based payment 18 - - - 10,979 - 10,979
At 31 December 2023 700,000 6,258,748 2 25,207 (1,867,091) 5,116,866
The notes below form part of these consolidated financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
Year ended Year ended
31 December 2023 31 December 2022
£ £
Operating activities
Loss before taxation (1,306,686) (251,321)
Adjustments for:
Interest receivable (50,766) (2,314)
Share-based payment charge 10,979 10,979
Operating cash flows before changes in working capital (1,346,473) (242,656)
Increase in trade and other receivables (57) (5,700)
Increase/(decrease) in trade and other payables 905,152 (16,123)
Net cash outflows from operating activities (441,378) (264,479)
Financing activities
Interest received 50,766 2,314
Net cash inflow from financing activities 50,766 2,314
Net decrease in cash and cash equivalents (390,612) (262,165)
Cash and cash equivalents at beginning of the year 6,458,073 6,720,238
Cash and cash equivalents at end of the year 6,067,461 6,458,073
The notes below form part of these consolidated financial statements.
Notes forming part of the Consolidated Financial Statements
For the year ended 31 December 2023
1 General information
The Company was incorporated on 31 March 2021 as Bay Capital Limited, a
private limited company under the laws of Jersey with registered number
134743. On 8 September 2021 the Company was re-registered as an unlisted
public limited company and its name was changed to Bay Capital Plc. On 30
September 2021 the Company shares were admitted to trading onto the Main
Market of the London Stock Exchange. The Company is the parent company of
Bay Capital Subco Limited (a private limited company under the laws of Jersey
with registered number 134744).
The address of its registered office is 28 Esplanade, St. Helier, Channel
Islands, JE2 3QA, Jersey.
The Group has been incorporated for the purpose of identifying suitable
acquisition opportunities in accordance with the Groups investment and
acquisition strategy with a view to creating shareholder value. The Group will
retain a flexible investment and acquisition strategy which will, subject to
appropriate levels of due diligence, enable it to deploy capital in target
companies by way of minority or majority investments, or full acquisitions
where it is in the interests of shareholders to do so. This will include
transactions with target companies located in the UK and internationally.
2 Accounting policies
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these consolidated financial
statements.
The principal policies adopted in the preparation of the consolidated
financial statements are as follows:
(a) Basis of preparation
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards, this announcement does not itself
contain sufficient information to comply with those standards. The Company
expects to publish full financial statements that comply with International
Financial Reporting Standards in April 2024.
The consolidated financial statements are prepared on the historical cost
basis.
(b) Basis of consolidation
The consolidated financial statements present the results of the Company and
its subsidiaries (the "Group") as if they formed a single entity. Intercompany
transactions and balances between Group companies are therefore eliminated
in full.
Where the Group has control over a Company, it is classified as a subsidiary.
The Group controls a Company if all three of the following elements are
present: power over the Company, exposure to variable returns from the
Company, and the ability of the Group to use its power to affect those
variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the consolidated statement of
financial position, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially authorised at their fair values at the
acquisition date. The acquisition related costs are included in the
consolidated statement of comprehensive income on an accruals basis. The
results of acquired operations are included in the consolidated statement of
comprehensive income from the date on which control is obtained.
(c) Functional and presentational currency
The Group's functional and presentational currency for these financial
statements is the pound sterling.
(d) Going concern
The Directors, having made due and careful enquiry, are of the opinion that
the Group has adequate working capital to execute its operations over the
next 12 months. The Group's unaudited cash balance as at 12 April 2024 was
£5,212,927, and excluding the consummation of any investment or acquisition
which will likely require specific funding, has adequate resources available
to fund the on-going forecasted operating expenses for at least twelve months
following approval of the financial statements. The Directors, therefore, have
made an informed judgement, at the time of approving the financial statements,
that there is a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future. As a result,
the Directors have adopted the going concern basis of accounting in preparing
the annual financial statements.
(e) Employee benefits
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis
and are expensed as the related service is provided. A liability authorised
for the amount expected to be paid under short-term cash bonus or
profit‑sharing plans if the Group has a present legal or constructive
obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
(f) Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax
authorised in the income statement except to the extent that it relates to it
authorised in other comprehensive income or directly in equity, in which case
it is recognised in other comprehensive income or equity respectively.
Current tax is the expected tax payable or receivable on the taxable income or
loss for the year, using tax rates and laws enacted or substantively enacted
at the balance sheet date.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not
provided for: the initial recognition of goodwill; the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit other
than in a business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates and laws enacted or substantively enacted at
the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the temporary
difference can be utilised.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits with
an original maturity of three months or less from inception, held for meeting
short term commitments.
(h) Financial assets and liabilities
The Group's financial assets and liabilities comprise cash and cash
equivalents and accruals. Financial assets are stated at amortised cost less
provision for expected credit losses. Financial liabilities are stated at
amortised cost.
(i) Share-based payments
The Group operates an equity-settled share-based payment plan. The fair value
of the employee services received in exchange for the grant of options is
recognised as an expense over the vesting period, based on the Group's
estimate of awards that will eventually vest, with a corresponding increase in
equity as a share-based payment reserve.
This plan includes market-based vesting conditions for which the fair value at
grant date reflects and are therefore not subsequently revisited. The fair
value is determined using a binomial model.
(j) Warrants
Warrants issued as part of share issues have been determined as equity
instruments under IAS 32. Since the fair value of the shares issued at the
same time as the warrants is equal to the price paid, these warrants, by
deduction, are considered to have been issued at fair value.
(k) Accounting standards issued
The following amendments to standards were issued and adopted in the year,
with no material impact on the financial statements (all effective for annual
periods beginning on or after 1 January 2023):
· IFRS 17 Insurance Contracts
· Disclosure of Accounting Policies (Amendments to IAS 1)
· Definition of Accounting Estimates (Amendments to IAS 8)
· Deferred Tax related to Assets and Liabilities arising from
a Single Transaction (Amendments to IAS 12)
There were no other new accounting standards issued that have been adopted in
the year.
(l) Standards in issue but not yet effective
At the date of authorisation of these financial statements there were no
mandatory amendments to standards which were in issue, but which were not yet
effective.
3 Accounting estimates and judgements
In preparing the consolidated financial statements, the Directors have to make
judgments on how to apply the Group's accounting policies and make estimates
about the future. The Directors do not consider there to be any critical
estimates or judgments that have been made in arriving at the amounts
recognised in the consolidated financial statements with the exception of the
valuation of share-based payments. Please see Note 18 for further details.
4 Employees
Staff costs, including Directors, consist of:
2023 2022
£ £
Wages and salaries 87,884 50,000
Pension costs 1,133 -
89,017 50,000
Pension costs related to the company's defined contribution pension scheme.
Contributions outstanding at 31 December 2023 were £1,133 (2022: £Nil).
2023 2022
Number Number
The average number of employees, including Directors, during the year was: 3 2
5 Directors' remuneration
2023 2022
£ £
Directors' emoluments 50,000 50,000
50,000 50,000
The Chairman's fees are paid through Rise Rocks Limited, a Company wholly
owned by the Chairman. The two Company Directors and the Company Chief
Financial Officer are considered the only key management personnel. In 2023,
the total emoluments for key management personnel were £93,365 (2022:
£50,000).
6 Operating loss
2023 2022
£ £
This has been arrived at after charging:
Professional services 149,470 151,392
Acquisition related costs 1,018,601 -
Fees payable to the Company's independent auditor for the audit of the parent 25,000 22,000
and consolidated accounts
7 Taxation
2023 2022
£ £
Jersey corporation tax
Corporation tax on loss for the year - -
Total taxation on loss on ordinary activities - -
Deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which the deductible temporary
differences and carry forward tax losses/credits can be utilised. Accordingly,
the Group has not recognised deferred tax assets in respect of deductible
temporary differences and carry forward tax losses as at 31 December 2023 and
31 December 2022 respectively, as it is not probable at year end that relevant
taxable profits will be available in the future. There are no expiry dates on
these tax losses as at the year end. The unrecognised deferred tax asset is
summarised below:
Tax losses and unrecognised deferred tax asset carried forward
2023 2022
£ £
Cumulative temporary differences and carry forward tax losses 1,867,091 560,405
Unrecognised deferred tax asset on above at 10% (based on the enacted 186,709 56,041
tax rate at the date of signing the financial statements)
8 Earnings per share
Earnings per share is calculated by dividing the loss after tax for the year
by the weighted average number of shares in issue for the year, these figures
being as follows:
2023 2022
£ £
Loss used in basic and diluted EPS, being loss after tax (1,306,686) (251,321)
Adjustments:
Share-based payment charge 10,979 10,979
Adjusted earnings used in adjusted EPS (1,295,707) (240,342)
The Subco Incentive Scheme share options (Note 18) have not been included in
the diluted EPS on the basis that they are anti-dilutive, however they may
become dilutive in future periods.
2023 2022
Number Number
Weighted average number of ordinary shares of 1p each used as the denominator 70,000,000 70,000,000
in calculating basic and diluted EPS
Loss per share
Basic and diluted (1.87p) (0.36p)
Adjusted - basic and diluted (1.85p) (0.34p)
9 Adjusted earnings before interest, tax, depreciation and amortisation
(Adjusted EBITDA)
2023 2022
£ £
Operating loss (1,357,452) (253,635)
EBITDA loss (1,357,452) (253,635)
Share-based payment charge 10,979 10,979
Adjusted EBITDA loss (1,346,473) (242,656)
10 Subsidiaries
The Company directly owns the ordinary share capital of its subsidiary
undertakings as set out below:
Proportion of Proportion of
A ordinary B ordinary
Nature Country of shares held shares held
Subsidiary of business incorporation by Company by Company
Bay Capital Subco Limited Intermediate holding Jersey, Channel 100 per cent. 0 per cent.
company Islands
The address of the registered office of Bay Capital Subco Limited (the
"Subco") is 28 Esplanade, St. Helier, Channel Islands, JE2 3QA, Jersey. The
Subco was incorporated on 31 March 2021.
The A ordinary shares have full voting rights, full rights to participate in a
dividend and full rights to participate in a distribution of capital. The B
ordinary shares have been issued pursuant to the Company's Subco Incentive
Scheme.
11 Cash and cash equivalents
2023 2022
£ £
Cash and cash equivalents 6,067,461 6,458,073
6,067,461 6,458,073
12 Trade and other receivables
2023 2022
£ £
Prepayments 8,079 8,022
8,079 8,022
13 Trade and other payables
2023 2022
Current trade and other payables £ £
Accruals 948,263 53,522
Other tax and social security 8,136 -
Payroll related creditors 2,275 -
958,674 53,522
14 Financial instruments
The Group's financial assets and liabilities mainly comprise cash, and trade
and other payables. The carrying value of all financial assets and liabilities
equals fair value given their short term in nature.
Financial assets measured at
amortised cost
2023 2022
£ £
Current financial assets
Cash and cash equivalents 6,067,461 6,458,073
6,067,461 6,458,073
Financial liabilities measured at
amortised cost
2023 2022
£ £
Current financial liabilities
Accruals 948,263 53,522
Payroll related creditors 2,275 -
950,538 53,522
Credit risk
The Group's credit risk is wholly attributable to its cash balance. All cash
balances are held at a reputable bank in Jersey. The credit risk from its cash
and cash equivalents is deemed to be low due to the nature and size of the
balances held.
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 liquidity risk is to ensure that sufficient liquidity
is available to meet foreseeable requirements and to invest funds securely and
profitably.
The following table details the contractual maturity of financial liabilities
based on the dates the liabilities are due to be settled:
Financial liabilities:
Less More
than 1 year 2 to 5 Years than 5 years Total
£ £ £ £
Accruals 948,263 - - 948,263
Payroll related creditors 2,275 - - 2,275
At 31 December 2023 950,538 - - 950,538
15 Share capital
Allotted, called up and fully paid
2023 2022 2023 2022
Number Number £ £
Ordinary shares of 1p each: 70,000,000 70,000,000 700,000 700,000
At 31 December 70,000,000 70,000,000 700,000 700,000
16 Reserves
Share premium and retained earnings represent balances conventionally
attributed to those descriptions. The transaction costs relating to the issue
of shares was deducted from share premium.
Capital redemption reserve includes amounts in relation to deferred shared
capital.
The Group having no regulatory capital or similar requirements, its primary
capital management focus is on maximising earnings per share and therefore
shareholder return.
The Directors have proposed that there will be no final dividend in respect of
2023 (2022: £Nil).
17 Share Incentive Plan
On 14 September 2021, the Group created a Subco Incentive Scheme within its
wholly owned subsidiary Bay Capital Subco Limited ("Subco"). Under the terms
of the Subco Incentive Scheme, scheme participants are only rewarded if a
predetermined level of shareholder value is created over a three to five year
period or upon a change of control of the Company or Subco (whichever occurs
first), calculated on a formula basis by reference to the growth in market
capitalisation of the Company, following adjustments for the issue of any new
Ordinary shares and taking into account dividends and capital returns
("Shareholder Value"), realised by the exercise by the beneficiaries of a put
option in respect of their shares in Subco and satisfied either in cash or by
the issue of new ordinary shares at the election of the Company.
Under these arrangements in place, participants are entitled to up to a share
of 15 percent of the Shareholder Value created, subject to such Shareholder
Value having increased by at least 10 percent. per annum compounded over a
period of between three and five years from admission or following a change of
control of the Company or Subco.
18 Share-based payments
The Subco Incentive Scheme detailed in Note 17 is an equity-settled share
option plan which allows employees and advisors of the Group to sell their B
shares to the Company in exchange for a cash payment or for shares in the
Company (at the Company's election) if certain conditions are met.
These conditions include good and bad leaver provisions and that growth in
Shareholder Value of 10 percent compound per annum is delivered over a three
to five year period for the scheme to vest. This second condition is therefore
a market condition which has been taken into account in the measurement at
grant date of the fair value of the options.
The weighted average exercise price of the outstanding B share options is
£0.10 which have a weighted average contractual life remaining of 2 years 9
months. 110,000 B share options were issued in the nine-month period to
31 December 2021, all of which were outstanding at the current year end. No B
share options were exercised in the current or prior period. No B share
options have expired during the current or prior period.
The Group recognised £10,979 (2022: £10,979) of expenditure statement of
total comprehensive income in relation to equity-settled share-based payments
in the year.
The fair value of options was determined by applying a binominal model. The
expense is apportioned over the vesting period of the option and is based on
the number which are expected to vest and the fair value of these options at
the date of grant.
The inputs into the binomial model in respect of options granted in the prior
period are as follows:
Opening share price 10.0p
Expected volatility of share price 16.67%
Expected life of options 5 years
Risk-free rate 0.73%
Target increase in share price per annum 10%
Fair value of options 50.342p
Expected volatility was estimated by reference to the average 5-year
volatility of the FTSE SmallCap Index.
The target increase in Shareholder Value is laid out in the Articles of
Association of the Subco and represents the compounded target annual increase
in market capitalisation (adjusted for capital raises and dividends) that
needs to be met between the third and fifth anniversary of the Group's
admission onto the London Stock Exchange in order for the scheme to vest.
The Group did not enter into any share-based payment transactions with parties
other than employees and advisors during the current or prior period.
19 Related party transactions
Transactions with key management personnel
Key management personnel comprise the Directors and executive officers. The
remuneration of the individual Directors is disclosed in the Report of the
Directors and key management personnel in note 5.
Other transactions - Group
On 20 August 2021, the Company entered into an arm's length strategic advisory
agreement with Tessera Investment Management Limited, a Company which is a
shareholder in the Company, pursuant to which Tessera has agreed to provide
strategic and general corporate advice, and acquisition and capital raising
transaction support services to the Company.
Tessera is entitled to be paid a fixed monthly retainer fee of £5,000 per
month payable in arrears. A discretionary transaction success fee payable to
Tessera may be agreed between the Company and Tessera with such payment
payable on successful completion of an acquisition by the Company. As at 31
December 2023, Tessera was owed £Nil (2022: £6,302) by the Company.
20 Post balance sheet events
There are no events subsequent to the reporting date which would have a
material impact on the financial statements.
21 Contingent liabilities
There are no contingent liabilities at the reporting date which would have a
material impact on the financial statements.
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