REG - Admiral Acquisition - Interim Report and Financial Statements
23/08/2023 07:15
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RNS Number : 1223K Admiral Acquisition Limited 23 August 2023
FOR IMMEDIATE RELEASE
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN,
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APPLICABLE LAWS OF THAT JURISDICTION
Admiral Acquisition Limited
23 August 2023
Interim Report and Financial Statements
Admiral Acquisition Limited (the "Company"), today announced the publication
of its report and unaudited financial statements for the period from
incorporation on 15 December 2022 to 31 May 2023 (the "Interim Report and
Financial Statements"). Copies of the Interim Report and Financial Statements
will be available on the Company's website at www.admiralacquisition.com
(http://www.admiralacquisition.com) and are set out in full below.
For further information please contact:
Oak Fund Services (Guernsey) Limited, Company Secretary +44 (0) 1481 723450
James Christie
Hannah Crocker
About Admiral
Admiral (LSE: ADMR) is a British Virgin Islands company founded by Sir Martin
E. Franklin, Ian G.H. Ashken, Desiree DeStefano, Michael E. Franklin, Robert
A.E. Franklin, and James E. Lillie. The Company was created to pursue its
objective of acquiring a target company or business (the "Acquisition"). There
is no specific expected target value for the Acquisition and the Company
expects that any funds not used for the Acquisition will be used for future
acquisitions, internal or external growth and expansion, purchase of
outstanding debt and/or working capital in relation to the acquired company or
business. The Company's efforts in identifying a prospective target business
will not be limited to a particular industry or geographic region.
Important Notices
This announcement does not contain or constitute an offer of, or the
solicitation of an offer to buy or subscribe for, securities to any person in
any jurisdiction including the United States, Australia, Canada, Japan or
South Africa. The securities referred to herein have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities Act") and may not
be offered, sold, transferred or delivered, directly or indirectly, in or into
the United States absent registration under the Securities Act or an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act. There will be no public offer of the securities in the United
States.
This announcement is an advertisement and not a prospectus and does not
constitute or form part of, and should not be construed as, an offer to sell
or issue, or a solicitation of any offer to buy or subscribe for, any
securities, nor should it or any part of it form the basis of, or be relied on
in connection with, any contract or commitment whatsoever. Investors should
not subscribe for or purchase any securities referred to in this announcement
except on the basis of information in the Prospectus published by the Company
in connection with such securities. This announcement is only addressed to,
and directed at, persons in member states of the European Economic Area and
the United Kingdom who are "qualified investors" within the meaning of Article
2(e) of Regulation (EU) 2017/1129 as amended. In the United Kingdom, this
announcement is directed only at "qualified investors" within the meaning of
Article 2(e) of Regulation (EU) 2017/1129 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 (as amended) who are
also (i) persons having professional experience in matters relating to
investments who fall within the definition of "investment professionals" in
Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the "Order"), or (ii) persons who are high
net worth bodies corporate, unincorporated associations or partnerships or
trustees of high value trusts as described in Article 49(2) of the Order; or
(iii) other persons to whom it may lawfully be communicated. Under no
circumstances should persons of any other description rely or act upon the
contents of this announcement.
LEI: 213800ZDFRNC8QXEZ48
Chairman's Statement
It is with pleasure that I present to you, the shareholders, the report and
unaudited financial statements of Admiral Acquisition Limited (the
''Company'') for the period from incorporation on 15 December 2022 to 31 May
2023.
The Company
The Company raised gross proceeds of US$539.5 million in its initial public
offering (''IPO''), through the placing of ordinary shares of no par value in
the capital of the Company (''Ordinary Shares'') (with matching (''Warrants'')
to subscribe for Ordinary Shares issued at a placing price of US$10.00 per
Ordinary Share and a further US$10.5 million through the subscription of the
founder preferred shares of no par value (''Founder Preferred Shares'') (with
Warrants being issued on the basis of one Warrant per Founder Preferred Share)
at a price of US$10.50 per Founder Preferred Share). The Company was admitted
to the Official List of the FCA by way of a standard listing and to trading on
the main market of the London Stock Exchange on 22 May 2023 (''Admission'').
As at 18 August 2023, the Company had 53,975,000 Ordinary Shares and
54,975,000 Warrants in issue. The net proceeds from the IPO are easily
accessible when required.
As set out in the Company's prospectus dated 17 May 2023 (the "Prospectus"),
the Company was formed to undertake an acquisition of a target company or
business. There is no specific expected target value for the acquisition and
the Company expects that funds not used for the acquisition, if any, will be
used for future acquisitions, internal or external growth and expansion,
purchase of outstanding debt and/or working capital in relation to the
acquired company or business. Following completion of the acquisition, the
objective of the Company is expected to be to operate the acquired business
and implement an operating strategy with the objective of building and growing
the business and generating value for the Company's shareholders
(''Shareholders'') through operational improvements as well as potentially
through additional complementary acquisitions.
The Board of Directors continues to review a number of acquisition targets and
will remain disciplined in only proceeding with an acquisition that it
believes it can produce attractive returns to its Shareholders.
Financial Results
During the period commenced 15 December 2022 and ended 31 May 2023, the
Company has incurred operating costs of US$248,000. These expenses were
offset by investment income totalling approximately US$659,000. Costs of
Admission of US$10.5 million were recorded as an offset to the gross proceeds
from the IPO in the Company's Balance Sheet.
Principal Risks and Uncertainties
The Company set out in the Prospectus the principal risks and uncertainties
that could impact its performance; the Directors consider that these principal
risks and uncertainties remain unchanged since that document was published and
apply for the period of the remaining six months of the financial year. Your
attention is drawn to the Principal Risks and Uncertainties section on page 11
for a summary of these and to the Prospectus for the detailed assessment. A
copy of the Prospectus is available on the Company's website
(www.admiralacquisition.com (https://www.admiralacquisition.com/) ) and was
submitted to the National Storage Mechanism and is available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Related Parties
Related party disclosures are given in note 7 to these financial statements.
Rory Cullinan
Chairman
18 August 2023
Report of the Directors
The Directors have pleasure in submitting their Report and the unaudited
financial statements for the period from 15 December 2022 through 31 May 2023.
Status and activities
The Company was incorporated with limited liability under the laws of the
British Virgin Islands under the BVI Business Companies Act, 2004, on 15
December 2022. The address of the Company's registered office is Ritter House,
Wickhams Cay II, Road Town, Tortola, VG 1110, British Virgin Islands. The
Ordinary Shares and Warrants were admitted for trading on the main market of
the London Stock Exchange on 22 May 2023. The Company raised gross proceeds of
US$539.5 million in its IPO and a further US$10.5 million through the
subscription of Founder Preferred Shares for a potential acquisition of a
target company or business (which may be in the form of a merger, capital
stock exchange, asset acquisition, stock purchase, scheme of arrangement,
reorganization or similar business combination) of an interest in an operating
company or business (an ''Acquisition''). Costs of Admission of US$10.5
million were paid in relation to the IPO, resulting in net proceeds of
US$539.5 million.
There is no specific expected target value for the Acquisition and the Company
expects that funds not used for the Acquisition, if any, will be used for
future acquisitions, internal or external growth and expansion, purchase of
outstanding debt and/or working capital in relation to the acquired company or
business. Following the completion of any Acquisition, the objective of the
Company is expected to be to operate the acquired business and implement an
operating strategy with the objective of building and growing the business and
generating value for its Shareholders through operational improvements as well
as potentially through additional complementary acquisitions. Following the
Acquisition, the Company intends to seek re-admission of the enlarged group to
such listing venue as is appropriate for it based on the industry, geographic
focus and track record of the company or business acquired, subject to
fulfilling the relevant eligibility criteria at the time. The Company expects
to acquire a controlling interest in a target company or business. The Company
(or its successor) may consider acquiring a controlling interest constituting
less than the whole voting control or less than the entire equity interest in
a target company or business if such opportunity is attractive; provided, the
Company (or its successor) would acquire a sufficient portion of the target
entity such that it could consolidate the operations of such entity for
applicable financial reporting purposes (and, in any event, would not be
required to register as an investment company under the U.S. Investment
Company Act of 1940, as amended). In connection with an Acquisition, the
Company may issue additional Ordinary Shares which could result in the
Company's then existing Shareholders owning a minority interest in the Company
following the Acquisition.
The Company's efforts in identifying a prospective target company or business
will not be limited to a particular industry or geographic region. The
Company may subsequently seek to raise further capital for the purposes of the
Acquisition.
Unless required by applicable law or other regulatory process, no Shareholder
approval will be sought by the Company in relation to the Acquisition. The
Acquisition will be subject to Board approval, including by a majority of the
Company's Board, including a majority of those Directors of the Board from
time to time considered by the Board to be independent for the purposes of
the UK Corporate Governance Code issued by the Financial Reporting Council
(the ''FRC'') in the UK from time to time (the ''Code'') (or any other
appropriate corporate governance regime complied with by the Company from time
to time) together with the chairman of the Board provided that such person was
considered by the Board to be independent on appointment for the purposes of
the UK Corporate Governance Code (or any other appropriate corporate
governance regime complied with by the Company from time to time).
The determination of the Company's post-Acquisition strategy and whether any
of the Directors will remain with the combined company and on what terms will
be made at or prior to the time of the Acquisition.
In the event that the Acquisition has not been announced by the second
anniversary of Admission, the Board will recommend to Shareholders either that
the Company be wound up (in order to return capital to Shareholders and
holders of the Founder Preferred Shares, to the extent assets are available)
or that the Company continue to pursue the Acquisition for a further 12 months
from the second anniversary of Admission. The Board's recommendation will then
be put to a Shareholder vote (from which the Directors, the Founders and
Mariposa Acquisition IX, LLC (the ''Founder Entity'') will abstain).
Report of the Directors (Continued)
The Company has identified the following criteria and guidelines that it
believes are important in evaluating potential acquisition opportunities. It
will generally use these criteria and guidelines in evaluating acquisition
opportunities but the Company may decide to complete an Acquisition that does
not meet these criteria and guidelines:
· leading competitive industry position with a defensible moat;
· a company with strong underlying free cash flow characteristics;
· an established company or business with a proven track record;
· experienced management team; and
· diversified customer and supplier base.
In addition, the Company expects to consider a variety of factors with respect
to potential acquisition opportunities, including, among others:
· financial condition and results of operations;
· growth potential;
· brand recognition and potential;
· experience and skill of management and availability of additional
personnel;
· capital requirements;
· stage of development of the business and its products or services;
· existing distribution or other sales arrangements and the potential
for expansion;
· degree of current or potential market acceptance of the products or
services;
· proprietary aspects of products and the extent of intellectual
property or other protection for products or formulas;
· impact of regulation and potential future regulation on the
business;
· regulatory environment of the industry;
· seasonal sales fluctuations and the ability to offset these
fluctuations through other acquisitions, introduction of new products, or
product line extensions; and
· the amount of working capital available.
Results
For the period from incorporation on 15 December 2022 to 31 May 2023, the
Company's net income was US$411,000.
Share capital
General:
As at 31 May 2023, the Company had in issue 53,975,000 Ordinary Shares and
1,000,000 Founder Preferred Shares. In addition, the Company has 54,975,000
Warrants in issue.
1 Founder Preferred Share was issued on 21 December 2022 with a further
999,999 Founder Preferred Shares issued on 22 May 2023. There are no Founder
Preferred Shares held in Treasury. Each Founder Preferred Share was issued at
US$10.50 per share with an associated Warrant as described in note 4.
Report of the Directors (Continued)
Share capital (Continued)
53,975,000 Ordinary Shares were issued on 22 May 2023 (53,950,000 were issued
in the IPO at US$10.00 per share and 25,000 were issued, in aggregate, to Rory
Cullinan, Melanie Stack and Thomas V. Milroy (the ''Independent Non-Founder
Directors'') in connection with the IPO. There are no Ordinary
Shares held in Treasury. Each Ordinary Share was issued with an associated
Warrant as described in note 4.
Founder Preferred Shares:
Details of the Founder Preferred Shares can be found in note 4 to the
financial statements and are incorporated into this Report by reference.
Securities carrying special rights:
Other than as disclosed above in relation to the Founder Preferred Shares, no
person holds securities in the Company carrying special rights with regard to
control of the Company.
Voting rights:
Holders of Ordinary Shares and Founder Preferred Shares have the right to
receive notice of and to attend and vote at any meetings of members except, in
relation to any Resolution of Members that the Directors, determine is (i)
necessary or desirable in connection with a merger or consolidation in
relation to, in connection with or resulting from the Acquisition (including
at any time after the Acquisition has been made); or (ii) to approve matters
in relation to, in connection with or resulting from the Acquisition (whether
before or after the Acquisition has been made). Each Shareholder entitled to
attend and being present in person or by proxy at a meeting will, upon a show
of hands, have one vote and upon a poll each such Shareholder present in
person or by proxy will have one vote for each share held by him.
In the case of joint holders of an Ordinary Share, if two or more persons hold
an Ordinary Share jointly, each of them may be present in person or by proxy
at a meeting of members and may speak as a member, and if one or more joint
holders are present at a meeting of members, in person or by proxy, they must
vote as one.
Restrictions on voting:
No member shall, if the Directors so determine, be entitled in respect of any
share held by him to attend or vote (either personally or by proxy) at any
meeting of members or separate class meeting of the Company or to exercise any
other right conferred by membership in relation to any such meeting if he or
any other person appearing to be interested in such shares has failed to
comply with a notice requiring the disclosure of shareholder interests and
given in accordance with the Company's articles of association (the
''Articles'') within 14 calendar days, in a case where the shares in question
represent at least 0.25 per cent. of their class, or within seven days, in any
other case, from the date of such notice. These restrictions will continue
until the information required by the notice is supplied to the Company or
until the shares in question are transferred or sold in circumstances
specified for this purpose in the Articles.
Transfer of shares:
Subject to the BVI Business Companies Act, 2004 (as amended) (the ''BVI
Companies Act'') and the terms of the Articles, any member may transfer all or
any of his certificated shares by an instrument of transfer in any usual form
or in any other form which the Directors may approve. The Directors may accept
such evidence of title of the transfer of shares (or interests in shares) held
in uncertificated form (including in the form of depositary interests or
similar interests, instruments or securities) as they shall in their
discretion determine. The Directors may permit such shares or interests in
shares held in uncertificated form to be transferred by means of a relevant
system of holding and transferring shares (or interests in shares) in
uncertificated form.
Report of the Directors (Continued)
Transfer of shares (Continued)
No transfer of shares will be registered if, in the reasonable determination
of the Directors, the transferee is or may be a Prohibited Person (as defined
in the Articles) or is or may be holding such shares on behalf of a beneficial
owner who is or may be a Prohibited Person. The Directors shall have power to
implement and/or approve any arrangements they may, think fit in relation to
the evidencing of title to and transfer of interests in shares in the Company
in uncertificated form (including in the form of depositary interests or
similar interests, instruments or securities).
Rights to appoint and remove Directors
Subject to the BVI Companies Act and the Articles, the Directors shall have
power from time to time, without sanction of the members, to appoint any
person to be a Director, either to fill a casual vacancy or as an additional
Director. Subject to the BVI Companies Act and the Articles, the members may
by a Resolution of Members appoint any person as a Director and remove any
person from office as a Director.
For so long as the initial holders of Founder Preferred Shares (being the
Founder Entity together with its affiliates and permitted transferees) holds
20 per cent. or more of the Founder Preferred Shares in issue, such holders
shall be entitled to nominate up to three persons as Directors of the Company
and the Directors shall appoint such persons.
In the event such holders notify the Company to remove any Director nominated
by them the other Directors shall remove such Director, and in the event of
such a removal the relevant holders shall have the right to nominate a
Director to fill such vacancy.
No Director has a service contract with the Company, nor are any such
contracts proposed. There are no pension, retirement, benefits or other
similar arrangements in place with the Directors nor are any such arrangements
proposed.
Powers of the Directors
Subject to the provisions of the BVI Companies Act and the Articles, the
business and affairs of the Company shall be managed by, or under the
direction or supervision of, the Directors. The Directors have all the powers
necessary for managing, and for directing and supervising, the business and
affairs of the Company. The Directors may exercise all the powers of the
Company to borrow or raise money (including the power to borrow for the
purpose of redeeming shares) and secure any debt or obligation of or binding
on the Company in any manner including by the issue of debentures (perpetual
or otherwise) and to secure the repayment of any money borrowed, raised, or
owing by mortgage, charge, pledge, or lien upon the whole or any part of the
Company's undertaking property or assets (whether present or future) and also
by a similar mortgage, charge, pledge, or lien to secure and guarantee the
performance of any obligation or liability undertaken by the Company or any
third party.
Directors and their interests
The Directors of the Company who served during the period and subsequent to
the date of this Report are:
Date of appointment
Name Position
Sir Martin E. Franklin Founder and Non-Executive Director 15 December 2022
Robert A.E. Franklin Founder and Non-Executive Director 4 May 2023
Melanie Stack Independent Non-Executive Director 4 May 2023
Thomas V. Milroy Independent Non-Executive Director 4 May 2023
Rory Cullinan Chairman and Independent Non-Executive Director 4 May 2023
Report of the Directors (Continued)
Directors and their interests (Continued)
As of 18 August 2023, all of the Directors listed above continue to serve as
Directors of the Company. As at 18 August 2023 (the latest practicable date
prior to the publication of this Report), the Directors have the following
interests in the Company's securities:
Director No. of Ordinary Shares Percentage of issued Ordinary Shares No. of Warrants No. of Founder Preferred Shares
Sir Martin E. Franklin (1) 8,950,000 16.60 9,950,000 1,000,000
Robert A.E. Franklin - - - -
Rory Cullinan 10,000 0.02 10,000 -
Melanie Stack 7,500 0.01 7,500 -
Thomas V. Milroy 7,500 0.01 7,500 -
(( 1 )) Represents an interest held by the Founder Entity. Sir Martin E.
Franklin is the managing member of the Founder Entity and controls 100 per
cent. of the voting and dispositive power of the Founder Entity. The Founders
(as defined below), in aggregate, hold an indirect pecuniary interest of
approximately 69 per cent in the Founder Entity.
Directors' remuneration
Each of the Directors entered into a Director's letter of appointment with the
Company dated 17 May 2023. Under the Independent Non-Founder Directors'
letters of appointment, Thomas V. Milroy and Melanie Stack are entitled to a
fee of US$75,000 per annum and Rory Cullinan, as Chairman, is entitled to
receive a fee of US$100,000 per annum. Fees are payable quarterly in arrears.
During the period from 15 December 2022 to 31 May 2023, the Company issued
25,000 Ordinary Shares, in aggregate, to the Independent Non-Founder Directors
in lieu of their first year's annual cash remuneration. The Ordinary Shares
were valued at US$10.00 per share and are being expensed over the one-year
service period. Sir Martin E. Franklin and Robert A.E. Franklin do not receive
a fee in connection with their appointment as Non-Executive Directors of the
Company. In addition, all of the Directors are entitled to be reimbursed by
the Company for travel, hotel and other expenses incurred by them in the
course of their directors' duties relating to the Company.
Substantial shareholdings
As at 18 August 2023 (the latest practicable date prior to the publication of
this Report), the following had disclosed an interest in the issued Ordinary
Share capital of the Company (being 5% or more of the voting rights in the
Company) in accordance with the requirements of the Disclosure and
Transparency Rules (the ''DTRs''):
Number of Ordinary Shares Date of disclosure to Company Notified
percentage of voting rights (2)
Shareholder
Viking Global Investors LP 10,000,000 23 May 2023 18.53%
Progeny 3, Inc. 10,000,000 25 May 2023 18.53%
Mariposa Acquisition IX, LLC 8,950,000 22 May 2023 16.58%
(2) Since the date of disclosures to the Company, the interest of any person
listed above in Ordinary Shares may have
increased or decreased without any obligation on the relevant person to make
further notification to the Company
pursuant to the DTRs.
Report of the Directors (Continued)
Change of control
The Company is not party to any significant contracts that are subject to
change of control provisions in the event of a takeover bid. There are no
agreements between the Company and its Directors or employees providing
compensation for loss of office or employment that occurs because of a
takeover bid.
Corporate Governance Statement
The Company is a British Virgin Islands registered company with a standard
listing on the main market of the London Stock Exchange. For as long as the
Company has a standard listing it is not required to comply or explain
non-compliance with the Code. However, the Company is firmly committed to high
standards of corporate governance and maintaining a sound framework through
which the strategy and objectives of the Company are set and the means of
attaining these objectives and monitoring performance are determined. At
Admission, the Company therefore stated its intention to voluntarily observe
the requirements of the Code. The Code is available on the FRC's website,
www.frc.co.uk (http://www.frc.co.uk) . The Company also complies with the
corporate governance regime applicable to the Company pursuant to the laws of
the British Virgin Islands.
As at the date of this Report, the Company is in compliance with the Code with
the exception of the following:
· Given the wholly non-executive composition of the Board, certain
provisions of the Code (in particular the provisions relating to the division
of responsibilities between the Chairman and chief executive and executive
compensation), are considered by the Board to be inapplicable to the Company.
In addition, the Company does not comply with the requirements of the Code in
relation to the requirement to have a senior independent director.
· The Code also recommends the submission of all directors for
re-election at annual intervals. No Director will be required to submit for
re-election until the first annual general meeting of the Company following
the Company's first acquisition.
· Until completion of the Company's first acquisition, the Company will
not have nomination, remuneration, audit or risk committees. The Board as a
whole instead reviews its size, structure and composition, the scale and
structure of the Directors' fees (taking into account the interests of
Shareholders and the performance of the Company), takes responsibility for the
appointment of auditors and payment of their audit fee, monitors and reviews
the integrity of the Company's financial statements, including the Company's
internal control and risk management arrangements in relation to its financial
reporting process, and takes responsibility for any formal announcements on
the Company's financial performance. Following the Company's first
acquisition, the Board intends to put in place nomination, remuneration, audit
and risk committees.
Share dealing
As at the date of this Report, the Board has voluntarily adopted a share
dealing code which is consistent with the rules of the Market Abuse Regulation
(596/2014/EU) as it forms part of UK domestic law by virtue of the European
Union (Withdrawal) Act 2018 (as amended) (the ''Market Abuse Regulation'').
The Board is responsible for taking all proper and reasonable steps to ensure
compliance with the Market Abuse Regulation by the Directors.
Relations with Shareholders
The Directors are always available for communication with shareholders and all
shareholders will have the opportunity, and are encouraged, to attend and vote
at the Annual General Meetings of the Company during which the Board will be
available to discuss issues affecting the Company.
Statement of going concern
The Directors have considered the financial position of the Company, taking
into account the current cash resources available and expected run rate
expenses and have concluded that it is appropriate to prepare the financial
statements on a going concern basis.
Report of the Directors (Continued)
Internal control
The Board is responsible for determining the nature and extent of the
significant risks it is willing to take in achieving its strategic objectives.
The Board maintains sound risk management and internal control systems. The
Board has reviewed the Company's risk management and control systems and
believes that the controls are satisfactory given the nature and size of the
Company. Controls will be reviewed following completion of its first
acquisition.
Financial Risk Profile
The Company's financial instruments comprise mainly of cash and cash
equivalents, and various items such as payables and receivables that arise
directly from the Company's operations.
Branches
At the date of this Report, the Company does not have any branches.
Interim Management Report
For the purposes of compliance with DTR 4.2.3 (2) and DTR 4.2.7 (2), the
required content of the "Interim Management Report" can be found in this
Report of Directors and the Principal Risks and Uncertainties section on page
11.
Directors' Responsibilities
The Directors of the Company (as listed in the Report) are responsible for
preparing the Report and the financial statements in accordance with
applicable law and regulations.
The Directors have prepared the Company's financial statements in accordance
with United States of America generally accepted accounting principles (U.S.
GAAP) and the DTRs. 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 company and of the profit or loss of the company for that
period. In preparing these financial statements, the directors are required
to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable U.S. GAAP have been followed, subject to
any material departures disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the company will continue in business.
A copy of the interim financial statements is available on our website
www.admiralacquisition.com (http://www.admiralacquisition.com) . The Directors
consider that the interim report accounts, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's performance, business model and strategy.
Each of the Directors, who are in office and whose names and functions are
listed on page 25, confirms that, to the best of his or her knowledge:
the Company financial statements, which have been prepared in accordance
with U.S. GAAP, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
the interim management report includes a fair review of the information
required by:
DTR 4.2.7R, being: (i) an indication of important events that have occurred
during the first six months of the financial year, and their impact on the
condensed set of financial statements; and (ii) a description of the principal
risks and uncertainties for the remaining six months of the financial year;
and
DTR 4.2.8R, being: (i) related parties transactions that have taken place in
the first six months of the current financial year and that have materially
affected the financial position or the performance of the enterprise during
that period; and (ii) any changes in the related parties transactions
described in the last annual report that could have a material effect on the
financial position or performance of the enterprise in the first six months of
the current financial year.
Report of the Directors (Continued)
Directors' indemnities
As at the date of this Report, indemnities granted by the Company to the
Directors are in force to the extent permitted under BVI law. The Company also
maintains Directors' and Officers' liability insurance, the level of which is
reviewed annually.
By order of the Board
Rory Cullinan
Chairman
18 August 2023
Principal Risks and Uncertainties
The Board has identified the following principal risks and uncertainties
facing the Company as set out in the Prospectus. The risks referred to below
do not purport to be exhaustive and are not set out in any particular order of
priority. Additional risks and uncertainties not currently known to the Board
or which the Board currently deem immaterial may also have an adverse effect
on the Company's business. In particular, the Company's performance may be
affected by changes in the market and/or economic conditions and in legal,
regulatory and tax requirements.
Key information on the key risks that are specific to the issuer or its
industry
Business Strategy
• The Company is a newly formed entity with no operating history and has not
yet identified any potential target company or business for the Acquisition.
• The Company may acquire either less than whole voting control of, or less
than a controlling equity interest in, a target, which may limit its
operational strategies.
• The Company may be unable to complete the Acquisition in a timely manner
or at all or to fund the operations of the target business if it does not
obtain additional funding.
The Company's relationship with the Directors, the Founders and the Founder
Entity and conflicts of interest
• The Company is dependent on its Directors and Mariposa Capital, LLC
(''Mariposa Capital'') to identify potential acquisition opportunities and to
execute the Acquisition and the loss of the services of any of them could
materially adversely affect it.
• Sir Martin E. Franklin, Robert A.E. Franklin, Michael E. Franklin, James
E. Lillie, Ian G.H. Ashken and Desiree A. DeStefano (collectively, the
''Founders''), the Founder Entity and Mariposa Capital are currently
affiliated and the Founders, the Founder Entity, Mariposa Capital and the
Directors, may in the future become affiliated with entities engaged in
business activities similar to those intended to be conducted by the Company
and may have conflicts of interest in allocating their time and business
opportunities.
• The Directors will allocate a portion of their time to other businesses
leading to the potential for conflicts of interest in their determination as
to how much time to devote to the Company's affairs, which could have a
negative impact on the Company's ability to complete the Acquisition.
• The Company may be required to issue additional Ordinary Shares pursuant
to the terms of the Founder Preferred Shares, which could dilute the value of
existing Ordinary Shares.
Taxation
• The Company may be a ''passive foreign investment company'' for U.S.
federal income tax purposes and adverse tax consequences could apply to U.S.
investors.
Key information on the key risks that are specific to the securities
The Ordinary Shares and Warrants
• The Standard Listing of the Ordinary Shares and Warrants will not afford
Shareholders the opportunity to vote to approve the Acquisition.
• The Warrants can only be exercised during the Subscription Period and to
the extent a Warrant holder has not exercised its Warrants before the end of
the Subscription Period, those Warrants will lapse, resulting in the loss of a
holder's entire investment in those Warrants.
Principal Risks and Uncertainties (Continued)
• The Warrants are subject to mandatory redemption and therefore the Company
may redeem a Warrantholder's unexpired Warrants prior to their exercise at a
time that is disadvantageous to a Warrantholder, thereby making those Warrants
worthless.
• The issuance of Ordinary Shares pursuant to the exercise of the Warrants
will dilute the value of a Shareholder's Ordinary Shares.
Balance Sheet
As of 31 May 2023 (Unaudited)
31 May 2023
ASSETS US$
(in thousands, except share amounts)
Current assets
Cash and cash equivalents 138,018
Marketable securities at fair value 402,204
Prepayments and other assets 410
Total assets 540,632
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accrued expenses
496
Total current liabilities 496
Total liabilities 496
Shareholders' equity
Founder Preferred Shares, no par value; unlimited authorised shares; 1,000,000
shares issued and outstanding as of 31 May 2023
-
Ordinary Shares, no par value; unlimited authorised shares; 53,975,000 shares
issued and outstanding as of 31 May 2023
-
54,975,000 Warrants issued and outstanding as of 31 May 2023 -
Additional paid-in capital (Net of costs) 539,725
Retained earnings 411
Total shareholders' equity 540,136
Total liabilities and shareholders' equity 540,632
The notes on pages 16 to 24 form an integral part of these unaudited financial
statements.
Statement of Income for the period ended from incorporation on 15 December 2022 to 31 May 2023 (Unaudited)
For the period from
incorporation on 15 December 2022 to
31 May 2023
US$
(in thousands, except share and per share amounts)
Operating expenses:
General and administrative (249)
Loss from operations (249)
Other income:
Investment income 660
Total other income 660
Net income 411
Basic and diluted income per ordinary share 0.0076
Weighted average Ordinary Shares outstanding, basic 53,975,000
Weighted average Ordinary Shares outstanding, diluted 54,975,000
The notes on pages 16 to 24 form an integral part of these unaudited financial
statements.
Statement of Shareholders' Equity for the period from incorporation on 15
December 2022 to 31 May 2023 (Unaudited)
Preferred Shares Ordinary Shares Warrants
No. of Shares US$ No. of Shares US$ No. of Warrants US$
Balance as of incorporation, 15 December 2022 1 - - -
Issue of shares 999,999 53,950,000 - - -
Issue of warrants - - - - 54,975,000 -
Issue costs - - - - - -
Share-based compensation - directors - - 25,000 - - -
Net income - - - - - -
Balance as at 31 May 2023 1,000,000 - 53,975,000 - 54,975,000 -
Additional paid in capital Retained earnings Total Equity
US$ US$ US$
(in thousands, except share amounts) (in thousands, except share amounts) (in thousands, except share amounts)
Balance as of incorporation, 15 December 2022 - - -
Issue of shares 550,000 - 550,000
Issue of warrants - - -
Issue costs (10,525) - (10,525)
Share-based compensation - directors 250 - 250
Net income - 411 411
Balance as at 31 May 2023 539,725 411 540,136
The notes on pages 16 to 24 form an integral part of these unaudited financial
statements.
Statement of Cash Flows for the period from incorporation on 15 December 2022
to 31 May 2023 (Unaudited)
For the period from
incorporation on 15 December 2022 to
31 May 2023
US$
(in thousands)
Net income 411
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Unrealised gain on marketable securities (489)
Changes in operating assets and liabilities:
Prepaids and other assets (410)
Accruals 496
Other 1
Net cash provided by operating activities 9
INVESTING ACTIVITIES:
Purchase of marketable securities - short-term (401,716)
Net cash used in investing activities (401,716)
FINANCING ACTIVITIES:
Proceeds from issuance of Founder Preferred Shares and Warrants 10,500
Proceeds from issuance of Ordinary Shares and Warrants, net 529,225
Net cash provided by financing activities 539,725
Net increase in cash and cash equivalents 138,018
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period 138,018
The notes on pages 16 to 24 form an integral part of these unaudited financial
statements.
1. Organisation
The Company was incorporated with limited liability under the laws of the
British Virgin Islands under the BVI Business Companies Act, 2004, on 15
December 2022. The address of the Company's registered office is Ritter House,
Wickhams Cay II, Road Town, Tortola, VG 1110, British Virgin Islands. The
Ordinary Shares and Warrants were admitted for trading on the main market of
the London Stock Exchange on 22 May 2023. The Company raised gross proceeds of
US$539.5 million in its initial public offering (''IPO''), through the placing
of ordinary shares of no par value in the capital of the Company (''Ordinary
Shares'') (with matching warrants (''Warrants'') to subscribe for Ordinary
Shares issued) at a placing price of US$10.00 per Ordinary Share and a further
US$10.5 million through the subscription of the founder preferred shares of no
par value (''Founder Preferred Shares'') (with Warrants being issued on the
basis of one Warrant per Founder Preferred Share) at a price of US$10.50 per
Founder Preferred Share for a potential acquisition of a target company or
business (which may be in the form of a merger, capital stock exchange, asset
acquisition, stock purchase, scheme of arrangement, reorganization or similar
business combination) of an interest in an operating company or business (an
''Acquisition''). The Company was admitted to the Official List of the FCA by
way of a standard listing and to trading on the main market of the London
Stock Exchange on 22 May 2023 (''Admission''). Costs of Admission of US$10.5
million were paid in relation to the IPO, resulting in net proceeds of
US$539.5 million.
2. Summary of significant Accounting Policies
Basis of preparation
The accompanying financial statements are presented in U.S. dollars rounded to
the nearest thousand and have been prepared in accordance with accounting
principles generally accepted in the United States of America (''U.S. GAAP'').
and pursuant to the accounting and disclosure rules and regulations of the
London Stock Exchange.
As the Company was incorporated on 15 December 2022, there is no comparative
information.
Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future given the cash funds
available and the current forecast cash outflows. Thus, the Company
continues to adopt the going concern basis of accounting in preparing the
financial statements.
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP
requires the Company to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash and Cash Equivalents
While cash held by financial institutions may at times exceed federally
insured limits, the Company believes that no material credit or market risk
exposure exists due to the high quality of the institutions. The Company has
not experienced any losses on such accounts. The Company considers all
highly liquid investments purchased with a maturity of three months or less
from the date of purchase to be cash equivalents. The Company has US$138.0
million of cash and cash equivalents as of 31 May 2023.
Investments in Marketable Securities
Marketable securities are stated at fair value as determined by the most
recently traded price of each security at the balance sheet date. All
unrealised gains and losses are reported in investment income in the
statements of income.
Fair Value Measurements
Fair value is determined using the principles of ASC 820, Fair Value
Measurement. Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value hierarchy prioritises and
defines the inputs to valuation techniques as follows:
• Level 1- Observable quoted prices (unadjusted) for identical assets or
liabilities in active markets.
• Level 2-Quoted prices for similar assets and liabilities in active markets,
quoted prices in markets that are not active, or inputs which are observable,
either directly or indirectly, for substantially the full term of the asset or
liability.
• Level 3-Unobservable inputs that reflect the Company's own assumptions about
the assumptions market participants would use in pricing the asset or
liability in which there is little, if any, market activity for the asset or
liability at the measurement date.
Marketable securities are recorded at fair value. The Company uses the Level
2 fair value hierarchy assumptions to measure the marketable securities as of
31 May 2023. The Company's cash and cash equivalents and accrued expenses
are carried at cost, which approximates fair value due to the short-term
nature of these instruments and are considered level 1 securities.
The inputs used to measure the fair value of an asset or a liability are
categorised within levels of the fair value hierarchy. The fair value
measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the measurement.
There have not been any transfers between the levels of the hierarchy for the
period ended 31 May 2023.
Share-based Compensation
The Company expenses share-based compensation over the requisite service
period of the awards (usually the vesting period) based on the grant date fair
value of awards. For share option grants with performance-based milestones,
the expense is recorded over the service period after the achievement of the
milestone is probable or the performance condition is achieved. The Company
estimates the fair value of share option grants using the Black-Scholes option
pricing model. An offsetting increase to shareholders' equity will be
recorded equal to the amount of the compensation expense charge. The Company
recognises forfeitures as they occur as a reduction of expense. The Company
does not have any forfeitures for the period ended 31 May 2023. See Note 4.
Founder Preferred Shares
In connection with the IPO, the Company issued 1,000,000 Founder Preferred
Shares at US$10.50 per share to Mariposa Acquisition IX, LLC (the ''Founder
Entity''), an entity controlled by Sir Martin E. Franklin. The Founder
Preferred Shares are not mandatorily redeemable and do not embody an
unconditional obligation to settle in a variable number of equity shares. As
such, the Founder Preferred Shares are classified as permanent equity in the
accompanying balance sheets. The Founder Preferred Shares are not
unconditionally redeemable or conditionally puttable by the Holder for cash.
The Founder Preferred Shares are considered an equity-like host for purposes
of assessing embedded derivative features for potential bifurcation. The
conversion features and participating dividends of the Founder Preferred
Shares
Founder Preferred Shares (Continued)
are not bifurcated and are included in permanent equity as they are clearly
and closely related to the host. The Founder Preferred Shares do not have a
par value or stated value and thus the Founder Preferred Shares have been
recorded in additional paid-in capital. See Note 4.
Warrants
The Company has Warrants issued with its ordinary shares and Founder Preferred
Shares that were determined to be equity classified in accordance with ASC
815, Derivatives and Hedging (see Note 4). The Company also issued Warrants
with shares issued to non-executive directors for compensation that were
determined to be equity classified in accordance with ASC 718 - Compensation -
Stock Compensation. The fair value of the Warrants was recorded as
additional paid-in capital on the issuance date, and no further adjustments
were made.
Earnings per Share
Basic earnings per ordinary share excludes dilution and is computed by
dividing net income by the weighted average number of ordinary shares
outstanding during the period. The Company has determined that its Founder
Preferred Shares are participating securities as the Founder Preferred Shares
participate in undistributed earnings on
an as-if-converted basis. Accordingly, the Company used
the two-class method of computing earnings per share, for ordinary shares
and Founder Preferred Shares according to participation rights in
undistributed earnings. Under this method, net income applicable to holders
of ordinary shares is allocated on a pro rata basis to the holders of ordinary
and Founder Preferred Shares to the extent that each class may share income
for the period; whereas undistributed net loss is allocated to ordinary shares
because Founder Preferred Shares are not contractually obligated to share the
loss.
Income Taxes
Income taxes are recorded in accordance with ASC 740, Accounting for Income
Taxes (ASC 740), which provides for deferred taxes using an asset and
liability approach. The Company recognises deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in
the financial statements or tax returns. The Company determines its deferred
tax assets and liabilities based on differences between financial reporting
and tax bases of assets and liabilities, which are measured using the enacted
tax rates and laws that will be in effect when the differences are expected to
reverse. Valuation allowances are provided if, based upon the weight of
available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realised. The Company does not have any
deferred taxes.
The Company accounts for uncertain tax positions in accordance with the
provisions of ASC 740. When uncertain tax positions exist, the Company
recognises the tax benefit of tax positions to the extent that the benefit
will more likely than not be realised. The determination as to whether the tax
benefit will more likely than not be realised is based upon the technical
merits of the tax position as well as consideration of the available facts and
circumstances. The Company does not have any significant uncertain tax
positions.
As a British Virgin Islands limited liability company, the Company is not
subject to any income, withholding or capital gains taxes.
Comprehensive Income
Comprehensive income is the same as net income for all periods
presented.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors as it is the body that makes strategic decisions. The Board is of
the opinion that there is only a single operational segment being the
investment in US Treasury Bills as disclosed in note 3. As a result no segment
Segment reporting (Continued)
information has been provided as the Company only accumulates its funds raised
for investment in US Treasury Bills.
Recently Adopted Accounting Pronouncements
The Financial Accounting Standards Board (FASB) issued an Accounting
Standards Update: ASU No. 2022-02, Financial Instruments-Credit Losses (Topic
326): Troubled Debt Restructurings and Vintage Disclosure (TDRs)s
(https://fasb.org/page/document?pdf=ASU%202022-02.pdf&title=ACCOUNTING%20STANDARDS%20UPDATE%202022-02%E2%80%94FINANCIAL%20INSTRUMENTS%E2%80%94CREDIT%20LOSSES%20(TOPIC%20326):%20TROUBLED%20DEBT%20RESTRUCTURINGS%20AND%20VINTAGE%20DISCLOSURES)
. The amendments in this update eliminate the accounting guidance for troubled
debt restructurings TDRs by creditors in Subtopic 310-40, Receivables-Troubled
Debt Restructurings by Creditors, while enhancing disclosure requirements for
certain loan refinancings and restructurings by creditors when a borrower is
experiencing financial difficulty. Specifically, rather than applying the
recognition and measurement guidance for TDRs, an entity must apply the loan
refinancing and restructuring guidance in paragraphs 310-20-35-9 through 35-11
to determine whether a modification results in a new loan or a continuation of
an existing loan.
For public business entities, the amendments in this Update require that an
entity disclose current-period gross write-offs by year of origination for
financing receivables and net investments in leases within the scope of
Subtopic 326-20, Financial Instruments-Credit Losses-Measured at Amortised
Cost.
Effective Date: Effective for fiscal years beginning after December 15, 2022,
and interim periods within those fiscal years. The adoption of this update did
not impact the Company's financial statements.
TH other standard update issued in the period by the FASB is: ASU No.
2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio
Layer Method
(https://fasb.org/page/document?pdf=ASU%202022-01.pdf&title=ACCOUNTING%20STANDARDS%20UPDATE%202022-01%E2%80%94DERIVATIVES%20AND%20HEDGING%20(TOPIC%20815):%20FAIR%20VALUE%20HEDGING%E2%80%94PORTFOLIO%20LAYER%20METHOD)
: These amendments clarify the accounting for and promote consistency in the
reporting of hedge basis adjustments applicable to both a single hedged layer
and multiple hedged layers as follows:
1. An entity is required to maintain basis adjustments in an existing hedge
on a closed portfolio basis (that is, not allocated to individual assets).
2. An entity is required to immediately recognise and present the basis
adjustment associated with the amount of the dedesignated layer that was
breached in interest income. In addition, an entity is required to disclose
that amount and the circumstances that led to the breach.
3. An entity is required to disclose the total amount of the basis
adjustments in existing hedges as a reconciling amount if other areas of GAAP
require the disaggregated disclosure of the amortised cost basis of assets
included in the closed portfolio.
4. An entity is prohibited from considering basis adjustments in an existing
hedge when determining credit losses.
Effective Date: effective for fiscal years beginning after December 15, 2022,
and interim periods within those fiscal years. The adoption of this update did
not impact the Company's financial statements.
Recent Accounting Pronouncements
The following pronouncements were issued by the FASB which are not yet
effective.
ASU 2020-06
(https://viewpoint.pwc.com/dt/us/en/fasb_financial_accou/asus_fulltext/2020/asu2020-06/ASU-2020-06/asu-2020-06.html)
- Debt-Debt with Conversion and Other Options and Derivatives and
Hedging-Contracts in Entity's Own Equity: Accounting for Convertible
Instruments and Contracts in an Entity's Own Equity. Effective Fiscal years
beginning after December 15, 2023, and interim periods within those fiscal
years.
ASU 2022-03
(https://viewpoint.pwc.com/dt/us/en/fasb_financial_accou/asus_fulltext/2022/asu2022-03/asu202203/asu202203.html#pwc-topic.dita_76763230-2711-415f-ab66-3a1a5c86f94a)
- Fair Value Measurement (Topic 820): Fair Value Measurement of Equity
Securities Subject to Contractual Sale Restriction. Effective Fiscal years
beginning after December 15, 2023, and interim periods within those fiscal
years.
The Company does not expect the adoption of these recent guidance
pronouncements to have a material impact on its financial statements.
Note 3 - Marketable Securities
The Company's investment in marketable securities consists of U.S. Treasury
Bills. Investment income is recorded as a realised investment income at the
time the investment in U.S. Treasury Bills matures.
The change in the unrealised gains on these investments are included in the
statements of Income as investment income. Unrealised gains on the U.S.
Treasury Bills are summarised in thousands as follows:
US$ in thousands
Cost Gross Unrealised Gross Unrealised Loss Net Unrealised Gain Fair Value
Gain
As of 31 May 2023
U.S. Treasury Bills owned 535,671 660 - 660 536,331
Less amounts classified as cash equivalent (133,955) (172) - (172) (134,127)
U.S. Treasury Bills classified as Marketable Securities 401,716 488 - 488 402,204
US Treasury Bills within the portfolio which have a maturity of 3 months or
less from their transaction date or are due to mature within 3 months of the
balance sheet date are classified as being cash or cash equivalent. At the 31
May 2023 US Treasury Bills of US$134.0 million were recognised as being cash
or cash equivalent with US$172,000 being considered interest receivable on
those US Treasury Bills. Associated income is reflected as investment income
at the period end. The total investment income of US$660,000 within the
Statement of Income, comprises US$488,000 in respect of fair value gains and
losses and US$172,000 in respect of interest income on the US Treasury Bills
classified within cash and cash equivalents.
Note 4 - Shareholders' Equity
On 22 May 2023, the Company's IPO raised gross proceeds of US$550.0 million,
consisting of US$539.5 million through the placement of ordinary shares at
US$10.00 per share, and US$10.5 million through the subscription of 1,000,000
Founder Preferred Shares at US$10.50 per share by the Founders through the
Founder Entity. Costs of Admission of US$10.5 million were paid in relation
to the IPO, resulting in net
Note 4 - Shareholders' Equity (Continued)
proceeds of US$539.5 million. In addition, 25,000 ordinary shares were issued,
in aggregate, to the Independent Non-Founder Directors in lieu of cash
totalling a combined value US$250,000. Each ordinary share and Founder
Preferred Share was issued with a Warrant as described below.
Founder Preferred Shares
After the closing of an Acquisition, and if the Average Price (as defined in
the Articles) of the ordinary shares is at least US$11.50 per share for any
ten consecutive trading days, the holders of the Founder Preferred Shares will
be entitled to receive a dividend in the form of ordinary shares or cash, at
the option of the Company, equal to 20 per cent. of the appreciation of the
market price of ordinary shares issued to ordinary shareholders in the IPO. In
the first year an Annual Dividend Amount (as defined in the Articles) is
payable (if any), the Annual Dividend Amount will be calculated at the end of
the calendar year based on the Dividend Price, (as defined below) compared to
the initial ordinary share offering price of US$10.00 per ordinary share. In
subsequent years, the Annual Dividend Amount will be calculated based on the
appreciated Dividend Price compared to the highest Dividend Price previously
used in calculating the Annual Dividend Amount. For the purposes of
determining the Annual Dividend Amount, the Dividend Price is the Average
Price per ordinary share for the last ten consecutive trading days in the
relevant Dividend Year. Upon the liquidation of the Company, an Annual
Dividend Amount shall be payable for the shortened Dividend Year and the
holders of Founder Preferred Shares shall have the right to a pro rata share
(together with holders of the ordinary shares) in the distribution of the
surplus assets of the Company.
The Founder Preferred Shares will participate in any dividends on the ordinary
shares on an as converted basis. In addition, commencing on and after
consummation of the Acquisition, where the Company pays a dividend on its
ordinary shares the Founder Preferred Shares will also receive an amount equal
to 20 per cent of the dividend which would be distributable on such number of
ordinary shares. All such dividends on the Founder Preferred Shares will be
paid at the same time as the dividends on the ordinary shares. Dividends are
paid for the term the Founder Preferred Shares are outstanding.
The Founder Preferred shares will be automatically converted into ordinary
shares on a one for one basis upon the last day of the tenth full financial
year following an Acquisition (the Conversion). Each Founder Preferred Share
is convertible into one ordinary share at the option of the holder until the
Conversion. If there is more than one holder of Founder Preferred Shares, a
holder of Founder Preferred Shares may exercise its rights independently of
any other holder of Founder Preferred Shares.
In accordance with ASC 718 - Compensation - Stock Compensation, the Annual
Dividend Amount based on the market price of the Company's ordinary shares is
akin to a market condition award settled in shares. As the right to the
Annual Dividend Amount will only be triggered upon the Acquisition (which is
not considered probable until consummated). The fair value of the any
potential future Annual Dividend amounts to US$72.8 million, which has been
measured using a Monte Carlo method which takes into consideration different
share price paths. Following are the assumptions used in calculating the
issuance date fair value:
Number of securities issued 1,000,000
Vesting period Immediate
Assumed price upon Acquisition US$10.00
Probability of winding-up 40.50%
Probability of Acquisition 59.50%
Time to Acquisition 1.17 years
Volatility (post-Acquisition) 46.47%
Risk free interest rate 3.54%
Founder Preferred Shares (Continued)
The Founder Preferred Shares carry the same voting rights as are attached to
the Ordinary Shares being one vote per Founder Preferred Share. Additionally,
the Founder Preferred Shares alone carry the right to vote on any Resolution
of Members required, pursuant to BVI law, to approve any matter in connection
with an Acquisition, or a merger or consolidation in connection with an
Acquisition. Initial Founder Preferred Shareholders, that hold 20 per cent. of
the Founder Preferred Shares, can nominate up to three people as directors of
the Company.
Ordinary shares
In connection with the IPO on 22 May 2023, the Company issued 53,950,000
Ordinary Shares for gross proceeds of US$539.5 million. In conjunction with
the IPO, the Company also issued an aggregate of 25,000 Ordinary Shares to the
Independent Non-Founder Directors for US$10.00 per share in lieu of their cash
directors' fees for one year. Each ordinary share was issued with a
Warrant. Ordinary shares have voting rights and winding-up rights.
Warrants
The Company issued 54,975,000 Warrants to the purchasers of both Ordinary
Shares and Founder Preferred Shares (including the 25,000 Warrants that were
issued to the Independent Non-Founder Directors in connection with their
fees). Each Warrant has a term of 3 years following an Acquisition and
entitles a Warrant holder to purchase one-fourth of an ordinary share upon
exercise. Warrants will be exercisable in multiples of three for one ordinary
share at a price of US$11.50 per whole ordinary share. The Warrants are
mandatorily redeemable by the Company at a price of US$0.01 should the average
market price of an ordinary share exceed US$18.00 for 10 consecutive trading
days (subject to any prior adjustment in accordance with the terms of the
Warrants).
Note 5 - Commitments and Contingencies
There were no known or threatened lawsuits or unasserted claims known at the
balance sheet date up to date of singing these interim unaudited financial
statements.
Note 6 - Share-based Compensation
On 17 May 2023, the Company issued its Independent Non-Founder Directors an
aggregate of 125,000 share options (the "Share Options") to purchase Ordinary
Shares of the Company that vest upon the Acquisition. The Independent
Non-Founder Directors are required to have continued service until the time of
the Acquisition to vest in the Share Options. The options expire on the 5th
anniversary following the Acquisition and have an exercise price of US$11.50
per Ordinary Share (subject to such adjustment as the Directors consider
appropriate in accordance with the terms of the Option Deeds). The Share
Options have a performance condition of vesting on an Acquisition (which is
not considered probable until an Acquisition). Therefore, in accordance with
ASC 718 - Compensation - Stock Compensation, the fair value of the awards, as
determined on the grant date, will be recognised as an expense and an increase
of additional paid-in capital upon consummation of an Acquisition.
Note 6 - Share-based Compensation (Continued)
The following table summarises the share option activity:
Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value
Options outstanding at inception - $ - $ -
Granted 125,000 $ 11.50 $ -
Options outstanding at 31 May 2023 125,000 $ 11.50 $ -
Options vested and exercisable - $ - $ -
The fair value of each Share Option was estimated at US$1.647 on the grant
date using the Black-Scholes option pricing model with the following
assumptions for the grant during the period from 17 May 2023 to 31 May 2023:
Share Price $10.00
Exercise Price $11.50
Risk-Free Rate 3.52%
Dividend Yield -
Post-Acquisition Volatility 46.39%
On 22 May 2023, the Company issued 25,000 Ordinary Shares and Warrants, in
aggregate, to Independent Non-Founder Directors for their first year's annual
fees in lieu of cash. The US$10.00 per share fair value of the Ordinary Shares
and Warrants was based on the price paid by outside shareholders in the equity
offering on 22 May 2023 (see Note 4). In accordance with ASC 718 -
Compensation - Stock Compensation, as the shares and related Warrants were
fully vested and have a non-substantive service period, the fair value of
US$10,000 was recorded as an expense on the grant date.
Note 7 - Related Parties
During the period ended 31 May 2023, 1,000,000 Founder Preferred Shares,
8,950,000 Ordinary Shares and 9,950,000 Warrants were issued to the Founder
Entity. Sir Martin E. Franklin, a Founder and Director, is a beneficial
owner and the managing member of the Founder Entity and, as such, may be
considered to have beneficial ownership of all the Founder Entity's interests
in the Company. The Founders, in aggregate, hold an indirect pecuniary
interest of approximately 69 per cent. in the Founder Entity. Other directors
were issued 25,000 Ordinary Shares and 25,000 Warrants along with 125,000
Share Options.
Note 7 - Related Parties (Continued)
Except as set forth herein, there were no other Ordinary Shares, Warrants and
options issued to the directors of the Company for the period from inception
ended 31 May 2023.
An entity owned by Sir Martin E. Franklin, Mariposa Capital, LLC, earned
advisory fees of US$10,000 for the period.
Note 8 - Earnings Per Share
Net income is allocated between the ordinary share and other participating
securities based on their participation rights. The Founder Preferred Shares
(see Note 4), represent participating securities. Earnings attributable to
Founder Preferred Shares are not included in earnings attributable to Ordinary
Shares in calculating earnings per ordinary share. For the period from 15
December 2022 to 31 May 2023, the Company excluded the Share Options to
purchase 125,000 Ordinary Shares from the diluted earnings per ordinary share
as the performance condition (see Note 6) for these Share Options was not
considered probable until the time of the Acquisition. The Company has also
excluded the Warrants in issue from such earnings on the basis they are
non-dilutive.
The following table sets forth (in US$ except share and per share amounts) the
computation of basic and diluted earnings per ordinary share using the
two-class method (see Note 2):
For the period from incorporation on
15 December 2022
through
31 May 2023
Numerator:
Net income $ 411
Adjustment for vested Founder Preferred Shares -
Net income attributable to Ordinary Shares 411
Denominator:
Weighted average shares outstanding - basic 53,975,000
Weighted average shares outstanding - diluted 54,975,000
Basic and diluted earnings per ordinary share $ 0.0076
Ordinary Shares issuable upon conversion of Founder Preferred Shares 1,000,000
Note 9 - Subsequent Events
There were no subsequent events for the period up to the date of signing the
unaudited financial statements.
Directors Legal advisers to the Company (English and US Law)
Sir Martin E. Franklin Greenberg Traurig, LLP
Robert A.E. Franklin 8th Floor
Rory Cullinan (Chairman) The Shard
Thomas V. Milroy (Independent) 32 London Bridge Street
Melanie Stack (Independent) London
SE1 9SG
Registered office
Ritter House Legal advisers to the Company (BVI Law)
Wickhams Cay II Carey Olsen
Road Town, Tortola Carey House
VG1 110 Les Banques
British Virgin Islands St Peter Port
Guernsey GY1 4BZ
Administrator and secretary
Oak Fund Services (Guernsey) Limited
PO Box 282 Depositary
Oak House Computershare Investor Services PLC
Hirzel St The Pavilions
St Peter Port
Bridgewater Road
Guernsey
Bristol
GY1 3RH
BS 13 8AE
Registrar
Principal bankers
Computershare Investor Services (BVI) Limited
Barclays PLC
Woodbourne Hall
1st Floor
PO Box 3162
Eagle Court
Road Town
Circular Road
Tortola
Douglas
British Virgin Islands
Isle of Man
IM1 1AD
Auditors
Grant Thornton LLP
30 Finsbury Square
London
EC2A 1AG
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