REG - Financials Acqn.Corp Financials Acqn-FNWR - Interim Report for the period ended 30 June 2023
29/09/2023 13:45
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RNS Number : 2167O Financials Acquisition Corp 29 September 2023
Financials Acquisition Corp
Unaudited Condensed Interim Financial Report
For the period from 1 January 2023 to 30 June 2023
Page(s)
Interim Board Report 1-4
Unaudited Condensed Statement of Financial Position 5
Unaudited Condensed Statement of Comprehensive Income 6
Unaudited Condensed Statement of Changes in Equity 7
Unaudited Condensed Statement of Cash Flows 8
Notes to the Unaudited Condensed Interim Financial Statements 9-31
Company Summary
The Directors of Financials Acquisition Corp (the "Company") are pleased to
submit their Annual Report and Audited Financial Statements (the "Financial
Statements") for the period ended 30 June 2023.
Financials Acquisition Corp (the "Company"), is an exempted company with
limited liability, incorporated under the laws of the Cayman Islands on 31
August 2021. The Company is registered with the Registrar of Companies in the
Cayman Islands under incorporation number 380273 and has its registered office
at SIX, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111,
Cayman Islands.
Principal Activity
The Company is a special purpose acquisition company (a "SPAC"), formed for
the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganisation or similar business combination (a "Business
Combination"). The Company aims to identify and acquire a company or business
operating principally (or adjacent to) the insurance or broader financial
services industry.
The Company was admitted to trading on the main market of the London Stock
Exchange on 13 April 2022, having raised £150,000,000 in its initial public
offering (the "IPO") of 15,000,000 Class A Ordinary Shares ("Ordinary Shares")
at £10.00 per share (the "Offering") with matching warrants being issued
concurrently with the delivery of the Ordinary Shares to subscribers of
Ordinary Shares in the Offering on the basis of one-half (1/2) of one (1)
warrant per Ordinary Share ("Public Warrants"). Additionally, £4,500,000 was
raised via the Company's Overfunding Subscription of 450,000 Ordinary Shares
which were issued to the Overfunding Sponsor Entity.
The proceeds of the Offering were placed in an escrow account as outlined in
the prospectus for the IPO (the "Escrow Account" and "Prospectus"
respectively). At the same time as the Offering the Company raised £3,875,000
from the private placement of 3,875,000 Sponsor Warrants at £1.00 per Sponsor
Warrant, the proceeds of which were held outside of the Escrow Account to
cover the costs relating to the IPO and running costs as outlined in the
Prospectus.
Business Combination
Since the completion of its IPO, the Company's leadership team has been
focused on identifying a potential target for the business combination within
the meaning of the Prospectus (the "Business Combination"). This process is
ongoing and the Company will continue its search with the aim to complete a
business combination within 15 months following the Admission Date (13 April
2022), subject to two three-month extension periods under conditions outlined
in the Prospectus, or as otherwise extended with shareholder approval.
The proceeds of the Company's IPO, £154,500,000, were placed in its Escrow
Account which is held at HSBC Bank plc. All amounts contributed to the Escrow
Account are held for the benefit of the Company and the Ordinary Shareholders
as further described in the Prospectus.
On 21 June 2023, the Company announced that it had recently identified a
business combination opportunity which could involve the Company raising
additional capital and becoming a listed operating company deploying funds
into the Lloyds of London insurance market (the "Proposed Transaction").
Principal Risks and Uncertainties
Please refer to the following sections of the Prospectus for the Company's
principal risks and uncertainties.
- Risk Factors (pages 9 to 39)
The Company's risk management objectives and policies are consistent with
those disclosed in the Prospectus. Additional risks or circumstances not known
to the Company, or currently believed not to be material, could individually
or cumulatively, later turn out to have a material impact on the Company's
business, revenue, assets, liquidity, capital resources or net income.
Going concern
The Company's operation is restricted to structuring and completing its
Business Combination, the Board have assessed the viability of the Company
until the Business Combination Deadline of 13 July 2023, taking account of the
Company's current position and the potential impact of the principal risks
outlined in this statement.
The Company has 15 months from the admission date to complete a business
combination, subject to two three-month extension periods if approved, or as
otherwise extended with shareholder approval (the "Business Combination
Deadline"). The Company has sufficient funds to cover operating costs through
to the initial deadline. The costs related to the Company's IPO and working
capital requirements up to the initial Business Combination Deadline were
covered by the proceeds of the issuance of the Sponsor Warrants as part of the
Offering process.
On 23 June 2023, the Company called an Extraordinary General Meeting to extend
the Business Combination Deadline to 30 December 2023, for the purpose of
implementing the Proposed Transaction, which was approved by shareholders at
the Extraordinary General Meeting held on 10 July 2023 (the "Extension").
In relation to the Extension, the Company expects to be able to secure
additional funds for general working capital purposes from certain related
parties of the Company and an announcement will be made by the Company as and
when such arrangements have been entered into. In addition, to the extent that
the Company is unable to raise additional funds to pay third party adviser
costs (and other costs) related to the implementation of the Business
Combination, the Company expects to structure the costs associated with the
implementation of the Business Combination in such a manner so as to ensure
that such costs are only payable upon the consummation of the Business
Combination or, in the event that a Business Combination cannot be consummated
by the Business Combination Deadline, upon a winding-up of the Company out of
the Escrow Account ahead of Ordinary Shareholders pursuant to the terms of the
Articles of Association of the Company.
The Company will have until the Business Combination Deadline to complete a
Business Combination, subject to any extension period being granted. If the
Company has not completed a Business Combination by such time (or the expiry
of any extension period), it will: cease all operations except for the purpose
of winding up; as promptly as reasonably possible, redeem the Ordinary Shares,
and as promptly as reasonably possible following such redemption, subject to
the approval of the remaining shareholders and the Directors, liquidate and
dissolve.
The events and conditions that management considers relevant to the Company's
ability to continue as a going concern include the limited time frame
remaining to the Business Combination Deadline and market conditions inclusive
of competition and potential geopolitical events.
Management remain focused on completing a Business Combination by the Business
Combination Deadline. Having considered all relevant information, management
have concluded that there are no material uncertainties related to the
identified events or conditions that may cast significant doubt on the
Company's ability to continue as a going concern. Reaching the conclusion that
there is no material uncertainty involves significant judgement.
Going concern (continued)
In addition, such opinion is not dependent on the Company completing a
Business Combination by the Business Combination Deadline. It is important to
note that nothing in this analysis implies that the Company would be unable to
meet its debts as they fall due or to fulfil the above mentioned redemptions
of redeemable Ordinary Shares should the Company not complete a Business
Combination by the Business Combination Deadline.
Corporate Governance
As an exempted company incorporated under the laws of the Cayman Islands with
a standard listing on the London Stock Exchange's main market, the Company has
no statutory obligation or listing requirement to adopt a corporate governance
code. However, the Company has to voluntarily observe the requirements of the
UK Corporate Governance Code insofar as appropriate for a SPAC in its
pre-merger stage.
· The Directors' Corporate Governance Statement in respect of its
governance obligations can be found on pages 8 to 9.
· The Board has established an Audit Committee, comprised of two
independent directors, to provide oversight and preserve the integrity of the
Company's financial reporting process and internal controls and risk
management systems, and to monitor the statutory audit of the Company's annual
financial statements. The Report of the Audit Committee can be found on pages
11 to 14.
Related Party Transactions
The main related party transactions are outlined in the "Related Party
Transactions" section of the Prospectus. Refer to note 10 - Related party
transactions for disclosure within the Financial Statements
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable laws and regulations. The Board
confirms that to the best of their knowledge:
- the Financial Statements, prepared in accordance with IFRS, give a true
and fair view of the assets, liabilities, financial position and profit of the
Company, as required by Disclosure and Transparency Rule ("DTR") 4.1.12R;and
- the Director's Report includes a fair review of the development and
performance of the business during the period, and the position of the Company
at the end of the year, together with a description of the principal risks and
uncertainties that the Company faces, as required by DTR 4.1.8R and DTR
4.1.9R.
The Board is responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy, at any time, the financial position of the Company, and
that enable them to ensure that the Financial Statements comply with the
Companies Act (As Revised) of the Cayman Islands. The Board is also
responsible for the maintenance and integrity of the corporate and financial
information included on the Company's website. Legislation in the Cayman
Islands governing the preparation and dissemination of Financial Statements
may differ from legislation in other jurisdictions.
Signed on behalf of the Board by:
Andrew Rear (Executive Chairman)
26/9/2023
Financials Acquisition Corp
Unaudited Condensed Statement of Financial Position
As at 30 June 2023
30 June 31 December
2023 2022
(Unaudited) (Audited)
Note £ £
Assets
Current assets
Cash and cash equivalents 5 84,183 203,264
Restricted cash 5 158,934,183 155,984,100
Trade and other receivables 51,575 74,191
Total assets 159,069,941 156,261,555
Liabilities and shareholders' equity
Non-current liabilities
Redeemable ordinary shares 7 149,870,215 148,214,847
Current liabilities
Derivative liabilities 3 266,250 305,000
Accrued expenses 738,243 1,109
Due to related party 10 26,060 26,060
Total liabilities 150,900,768 148,547,016
Shareholders' equity
Issued share capital 7 4,494,614 4,494,614
Other reserves 36,140,970 22,419,507
Accumulated loss (32,466,411) (19,199,582)
Total shareholders' equity 8,169,173 7,714,539
Total liabilities and shareholders' equity 159,069,941 156,261,555
The Condensed Interim Financial Statements were approved and authorized for
issue by the Board of Directors on 29 September 2023 and signed on its behalf
by:
Andrew Rear
Executive Chairman
Financials Acquisition Corp
Unaudited Condensed Statement of Comprehensive Income
For the period from 1 January 2023 to 30 June 2023
For the period from 1 January 2023 to 30 June 2023 For the period from 31 August 2021 (date of incorporation) to 30 June 2022
Note £ £
Income
Interest income 2,950,083 153,051
2,950,083 153,051
Total income
Expenses
Share-based payment expense 8 13,721,463 5,913,117
Professional fees 845,477 216,688
Listing and regulatory fees 10,000 187,580
Directors and officers insurance fees 22,615 56,351
Share issue costs 7 - 24,372
Other expenses 739 303
14,600,294 6,398,411
Total expenses
(11,650,211) (6,245,360)
Net investment loss
Net change in unrealised gain/(loss) on financial liabilities
Net change in unrealised gain/(loss) on financial liabilities 3 38,750 (1,067,500)
Net gain/(loss) on financial liabilities 38,750 (1,067,500)
(11,611,461) (7,312,860)
Net loss before finance expense
Finance expense 7 1,655,368 691,612
(13,266,829) (8,004,472)
Total comprehensive loss for the period
Basic and dilutive net loss per share 9 (3.08) (2.80)
All items in the above statement derive from continuing operations.
Financials Acquisition Corp
Unaudited Condensed Statement of Changes in Equity
For the period from 1 January 2023 to 30 June 2023
Accumulated loss Total shareholders' equity
Other reserves*
Share capital
£ £ £ £
As at 1 January 2023 4,494,614 22,419,507 (19,199,582) 7,714,539
Share-based payment reserve - 13,721,463 - 13,721,463
Total comprehensive loss for the period - - (13,266,829) (13,266,829)
As at 30 June 2023 4,494,614 36,140,970 (32,466,411) 8,169,173
Accumulated loss Total shareholders' equity
Other reserves*
Share capital
£ £ £ £
As at 31 August 2021 (date of incorporation) - - - -
Issued share capital and sponsor warrants 4,500,305 8,470,617 - 12,970,922
Share cancellation (5,691) - - (5,691)
Total comprehensive loss for the period (8,004,472) (8,004,472)
- -
As at 30 June 2022 4,494,614 8,470,617 (8,004,472) 4,960,759
* Sponsor Warrants have been accounted for as a capital contribution in other
reserves. Please see notes 2 and 7 for further details.
Financials Acquisition Corp
Unaudited Condensed Statement of Cash Flows
For the period from 1 January 2023 to 30 June 2023
For the period from 1 January 2023 to 30 June 2023 For the period from 31 August 2021 (date of incorporation) to 30 June 2022
£ £
Cash flows from operating activities
Total comprehensive loss for the period (13,266,829) (8,004,472)
Adjustments to reconcile total comprehensive loss for the period to net cash
provided by operating activities:
Net change in unrealised (gain)/loss on financial liabilities (38,750) 1,067,500
Share-based payment expense 13,721,463 5,913,117
Finance expense 1,655,368 691,612
Changes in:
Trade and other receivables 22,616 (172,191)
Accrued expenses 737,134 50,712
Due to related party - 26,060
Net cash provided by / (used in) operating activities 2,831,002 (427,662)
Cash flows from investing activities
Increase in restricted cash (2,950,083) (154,653,051)
Net cash used in investing activities (2,950,083) (154,653,051)
Cash flows from financing activities
Proceeds from sponsor and overfunding shares - 4,500,305
Share cancellation - (5,691)
Proceeds from issued share capital and public warrants - 145,882,057
Proceeds from issuance of sponsor warrants (including other reserves) - 3,875,000
Payment of share issue costs - 1,275,000
Net cash provided by financing activities - 155,526,671
Net change in cash and cash equivalents (119,081) 445,958
Cash and cash equivalents at beginning of the period 203,264 -
Cash and cash equivalents at end of the period 84,183 445,958
1. General information
Financials Acquisition Corp (the "Company"), is an exempted company with
limited liability, incorporated under the laws of the Cayman Islands on 31
August 2021. The Company is registered with the Registrar of Companies in the
Cayman Islands under incorporation number 380273 and has its registered office
in Grand Cayman, Cayman Islands.
The Company is a special purpose acquisition company (a "SPAC"), formed for
the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganisation or similar business combination (a "Business
Combination"). The Company aims to identify and acquire a company or business
operating principally (or adjacent to) the insurance or broader financial
services industry.
The Company is sponsored by FINSAC LLP (the "Sponsor Entity") and FINSAC II
LLP (the "Overfunding Sponsor Entity").
The Company was admitted to trading on the main market of the London Stock
Exchange on 13 April 2022, having raised £150,000,000 in its initial public
offering (the "IPO") of 15,000,000 Class A Ordinary Shares ("Ordinary Shares")
at £10.00 per share (the "Offering") with matching warrants being issued
concurrently with the delivery of the Ordinary Shares to subscribers of
Ordinary Shares in the Offering on the basis of one-half (1/2) of one (1)
warrant per Ordinary Share ("Public Warrants"). Additionally, £4,500,000 was
raised via the Company's Overfunding Subscription of 450,000 Ordinary Shares
which were issued to the Overfunding Sponsor Entity.
The proceeds of the Offering were placed in an escrow account as outlined in
the Prospectus for the IPO (the "Escrow Account" and "Prospectus"
respectively). At the same time as the Offering, the Company raised
£3,875,000 from the private placement of 3,875,000 Sponsor Warrants(as
defined in the Prospectus) at £1.00 per Sponsor Warrant the proceeds of which
were held outside of the Escrow Account to cover the costs relating to the IPO
and running costs as outlined in the Prospectus.
Since the completion of its IPO, the Company's leadership team has been
focused on identifying a potential target for the Business Combination. This
process is ongoing and the Company will continue its search with the aim to
complete a Business Combination within 15 months following the admission date
of 13 April 2022, subject to two three-month extension periods under
conditions outlined in the Prospectus, or as otherwise extended with
shareholder approval.
On 21 June 2023, the Company announced that it had recently identified a
business combination opportunity which could involve the Company raising
additional capital and becoming a listed operating company deploying funds
into the Lloyds of London insurance market (the "Proposed Transaction"). On 23
June 2023, the Company called an Extraordinary General Meeting to extend the
Business Combination Deadline to 30 December 2023, for the purpose of
implementing the Proposed Transaction, which was approved by shareholders at
the Extraordinary General Meeting held on 10 July 2023.
These Financial Statements have not been audited or reviewed by our auditors.
2. Principal accounting policies
The Company is not presently engaged in any activities other than those which
are required in connection with the selection, structuring and completion of a
Business Combination.
The Financial Statements have been prepared in accordance with applicable law,
the Company's principal documents and International Financial Reporting
Standards ("IFRS") as issued by the International Accounting Standards Board
("IASB"). This is the first year of audit and no historic audited financial
information is available other than the prospectus.
The Company had no operations and therefore no segmental information is
presented. The following accounting policies have been applied consistently in
dealing with items which are considered material in relation to the Company's
Financial Statements:
2. Principal accounting policies (continued)
Basis of presentation
The Financial Statements have been prepared in accordance with applicable law,
the Company's principal documents and International Financial Reporting
Standards ("IFRS").
The Financial Statements are presented in British Pounds ("GBP" or "£"),
which is the Company's presentation and functional currency.
Going concern
The Financial Statements have been prepared on a going concern basis.
Following the Offering and prior to the completion of any Business
Combination, the Company will not engage in any operations, other than in
connection with the selection, structuring and completion of a Business
Combination.
The Company has 15 months from the admission date to complete a business
combination, subject to two three-month extension periods if approved, or as
otherwise extended with shareholder approval (the "Business Combination
Deadline"). The Company has sufficient funds to cover operating costs through
to the initial deadline. The costs related to the Company's IPO and working
capital requirements up to the initial Business Combination Deadline were
covered by the proceeds of the issuance of the Sponsor Warrants as part of the
Offering process.
On 23 June 2023, the Company called an Extraordinary General Meeting to extend
the Business Combination Deadline to 30 December 2023, for the purpose of
implementing the Proposed Transaction, which was approved by shareholders at
the Extraordinary General Meeting held on 10 July 2023 (the "Extension").
In relation to the Extension, the Company expects to be able to secure
additional funds for general working capital purposes from certain related
parties of the Company and an announcement will be made by the Company as and
when such arrangements have been entered into. In addition, to the extent that
the Company is unable to raise additional funds to pay third party adviser
costs (and other costs) related to the implementation of the Business
Combination, the Company expects to structure the costs associated with the
implementation of the Business Combination in such a manner so as to ensure
that such costs are only payable upon the consummation of the Business
Combination or, in the event that a Business Combination cannot be consummated
by the Business Combination Deadline, upon a winding-up of the Company out of
the Escrow Account ahead of Ordinary Shareholders pursuant to the terms of the
Articles of Association of the Company.
The Company will have until the Business Combination Deadline to complete a
Business Combination, subject to any extension period being granted. If the
Company has not completed a Business Combination by such time (or the expiry
of any extension period), it will: cease all operations except for the purpose
of winding up; as promptly as reasonably possible, redeem the Ordinary Shares,
and as promptly as reasonably possible following such redemption, subject to
the approval of the remaining shareholders and the Directors, liquidate and
dissolve.
The events and conditions that management considers relevant to the Company's
ability to continue as a going concern include the limited time frame
remaining to the Business Combination Deadline and market conditions inclusive
of competition and potential geopolitical events.
Management remain focused on completing a Business Combination by the Business
Combination Deadline. Having considered all relevant information, management
have concluded that there are no material uncertainties related to the
identified events or conditions that may cast significant doubt on the
Company's ability to continue as a going concern. Reaching the conclusion that
there is no material uncertainty involves significant judgement.
In addition, such opinion is not dependent on the Company completing a
Business Combination by the Business Combination Deadline. It is important to
note that nothing in this analysis implies that the Company would be unable to
meet its debts as they fall due or to fulfil the above mentioned redemptions
of redeemable Ordinary Shares should the Company not complete a Business
Combination by the Business Combination Deadline.
2. Principal accounting policies (continued)
New and amended standards and interpretations applied
The following accounting standards and updates were applicable in the
reporting period but did not have a material impact on the Company:
- Amendments to IFRS 1 and IFRS 9 Annual Improvements to IFRS
2018-2020
- Amendments to IFRS 3: Business Combinations
- Amendments to IAS 16: Property, Plant and Equipment
- Amendments to IAS 37: Provisions, Contingent Liabilities and
Contingent Assets
- IFRS 17: Insurance Contracts
- Amendments to IAS 17: Insurance Contracts
- Amendments to IAS 8: Accounting Policies, Changes in Accounting
Estimates and Errors
- Amendments to IAS 12: Income Taxes
- Amendments to IAS 1: Presentation of Financial Statements
New and amended standards and interpretations not applied
There are no new and amended standards and interpretations in issue that are
applicable to the Company but are not yet effective and therefore, have not
been adopted by the Company:
The Company has considered the IFRS's in issue but not yet effective and do
not consider any to have a material impact on the Company.
Financial assets and liabilities
(i) Recognition and initial measurement
The Company initially recognises financial assets and financial liabilities on
the date it becomes a party to the contractual provisions of the instrument.
Any gains and losses arising from changes in fair value of the financial
assets or financial liabilities at fair value through profit or loss ("FVTPL")
are recorded in the statement of comprehensive income.
Financial assets and financial liabilities are measured initially at fair
value plus or minus, for an item not at FVTPL, transaction costs that are
directly attributable to its acquisition or issue.
(ii) Classification and subsequent measurement
Financial assets
On initial recognition, the Company classifies financial assets as measured at
amortised cost or FVTPL.
A financial asset is measured at amortised cost if it meets both of the
following conditions and is not designated as at FVTPL:
- It is held within a business model whose objective is to hold assets
to collect contractual cash flows; and
2. Principal accounting policies (continued)
Financial assets and liabilities (continued)
(ii) Classification and subsequent measurement (continued)
Financial assets (continued)
- Its contractual terms give rise on the specified dates to cash flows
that are solely payments of principal and interest.
All financial assets not classified as measured at amortised cost as described
above are measured at FVTPL.
Financial assets classified at amortised cost are subsequently measured at
amortised cost using the effective interest method. The amortised cost is
reduced by impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.
Financial assets classified at FVTPL are subsequently measured at fair value.
Net gains and losses, including any interest income and foreign exchange gains
and losses, are recognised in profit or loss.
Financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL.
A financial liability is classified as at FVTPL if it is classified as
held-for-trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net
gains or losses, including any interest, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using
the effective interest method. Interest expense and foreign exchange gains and
losses are recognised in profit or loss. Any gain or loss on derecognition is
also recognised in profit or loss.
(iii) Amortised cost
The amortised cost of a financial asset or financial liability is the amount
at which the financial asset or financial liability is measured on initial
recognition minus the principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference between
that initial amount and the maturity amount and, for financial assets,
adjusted for any loss allowance.
(iv) 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 in the principal or, in its absence, the most
advantageous market to which the Company has access at that date. The fair
value of a liability reflects its non-performance risk.
2. Principal accounting policies (continued)
Financial assets and liabilities (continued)
(iv) Fair value measurement (continued)
When available, the Company measures the fair value of an instrument using the
quoted price in an active market for that instrument. A market is regarded as
'active' if transactions for the asset or liability take place with sufficient
frequency and volume to provide pricing information on an ongoing basis. The
Company measures instruments quoted in an active market at a mid-price,
because this price provides a reasonable approximation of the exit price.
If there is no quoted price in an active market, then the Company uses
valuation techniques that maximise the use of relevant observable inputs and
minimise the use of unobservable inputs. The chosen valuation technique
incorporates all of the factors that market participants would take into
account in pricing a transaction.
The Company recognises transfers between levels of the fair value hierarchy as
at the end of the reporting period during which the change has occurred.
(v) Impairment
The Company recognises loss allowances for Expected Credit Losses ("ECLs") on
financial assets measured at amortised cost.
The Company measures loss allowances at an amount equal to lifetime ECLs,
except for the following, which are measured at 12-month ECLs:
- financial assets that are determined to have low credit risk at the
reporting date; and
- other financial assets for which credit risk has not increased
significantly since initial recognition.
When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating ECLs, the Company
considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Company's historical
experience and informed credit assessment and including forward-looking
information.
The Company assumes that the credit risk on a financial asset has increased
significantly if it is more than 30 days past due.
The Company considers a financial asset to be in default when:
- the borrower is unlikely to pay its credit obligations to the
Company in full, without recourse by the Company to actions such as realising
security (if any is held); or
- the financial asset is more than 90 days past due.
The Company considers a financial asset to have low credit risk when the
credit rating of the counter party is equivalent to the globally understood
definition of 'investment grade'. The Company considers this to be BBB or
higher per Standard and Poor's.
2. Principal accounting policies (continued)
Financial assets and liabilities (continued)
(v) Impairment (continued)
Lifetime ECLs are the ECLs that result from all possible default events over
the expected life of a financial instrument. 12-month ECLs are the portion of
ECLs that result from default events that are possible within the 12 months
after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months). The maximum period considered when
estimating ECLs is the maximum contractual period over which the Company is
exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are
measured as the present value of all cash shortfalls (i.e. the difference
between the cash flows due to the entity in accordance with the contract and
the cash flows that the Fund expects to receive). ECLs are discounted at the
effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Company assesses whether financial assets carried
at amortised cost are credit-impaired. A financial asset is 'credit-impaired'
when one or more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following
observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract such as a default or being more than 90 days
past due; or
- it is probable that the borrower will enter bankruptcy or other
financial reorganisation.
Presentation of allowance for ECLs in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted
from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off when the Company
has no reasonable expectations of recovering a financial asset in its entirety
or a portion thereof.
(vi) Derecognition
The Company derecognises a financial asset when the contractual rights to the
cash flows from the asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all of the
risks and rewards of ownership of the financial asset are transferred or in
which the Company neither transfers nor retains substantially all of the risks
and rewards of ownership and does not retain control of the financial asset.
2. Principal accounting policies (continued)
Financial assets and liabilities (continued)
(vi) Derecognition (continued)
On derecognition of a financial asset, the difference between the carrying
amount of the asset (or the carrying amount allocated to the portion of the
asset that is derecognised) and the consideration received (including any new
asset obtained less any new liability assumed) is recognised in the statement
of comprehensive income. Any interest in such transferred financial assets
that is created or retained by the Company is recognised as a separate asset
or liability.
The Company derecognises a financial liability when its contractual
obligations are discharged or cancelled, or expire. On derecognition of a
financial liability, the difference between the carrying amount extinguished
and the consideration paid (including any non-cash assets transferred or
liabilities assumed) is profit or loss.
Expenses
All expenses are accounted for on an accrual basis and are presented as
expense items, except for expenses that are incidental to the disposal of an
investment which are deducted from the disposal proceeds, and expenses related
to the issue of shares which are netted against the financial instruments they
are allocated to. For equity instruments, these reduce share capital, for
derivative liabilities these are expensed immediately and for liabilities
these initially reduce the liability and are subsequently accreted to the
Statement of Comprehensive Income over time.
Prepayments
These represent assets for amounts paid prior to the end of the financial
period, for which services are yet to be provided to the Company.
Accrued expenses
These amounts represent liabilities for services provided to the Company prior
to the end of the financial period, which are unpaid. Accrued expenses are
recognised initially at fair value. The best evidence of the fair value of a
financial instrument at initial recognition is normally the transaction price.
Subsequent measurement is at amortised cost using the effective interest
method.
Share issue costs
Share issue cost have been incurred in relation to the issue of the share
capital encompassing Ordinary Shares, Public Shares and Warrants. Where shares
are classified as equity, share issue costs are recognised in equity. Ordinary
Shares not subject to the Inside Letter (as per the Prospectus) have been
classified as liabilities, due to the redemption facility attached to these
Shares. Share issue costs attributed to these shares are amortised to the
Statement of Comprehensive Income using the effective interest method. For
warrants the share issue costs are recognised immediately in the Statement of
Comprehensive Income.
2. Principal accounting policies (continued)
Cash and restricted cash
Cash represents cash deposits held at financial institutions. Cash is held for
meeting short-term liquidity requirements, rather than for investment
purposes. Cash is held at major financial institutions.
Use of judgements and estimates
The preparation of Financial Statements in accordance with IFRS requires the
Board to make judgements, estimates and assumptions that affect the
application of policies and the reported amounts of assets and liabilities and
income and expenses. The estimates and associated assumptions are based on
various factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making the judgements about carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on a semi-annual basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The principal judgements and estimates are as follows:
Share-based payments
Regarding the Sponsor Shares issued by the Company, the Board has exercised
judgement in determining whether the Sponsor Shares should be treated as a
financial instrument (IAS 32) or share based payments (IFRS 2).
IFRS 2 applies to any transaction in which an entity receives goods or
services as part of a share based payment arrangement. Careful consideration
of all facts and circumstances, such as whether the rights of the Sponsor
Shareholders differ from those of the Ordinary Shareholders, is required to
determine if IFRS 2 applies. In making this determination, the following
factors have been considered.
- Should a Business Combination be successfully achieved, a proportion of
the Sponsor Shares will automatically convert into Ordinary Shares at no
further cost to the Sponsor Shareholders. As the aggregate issue price of the
Sponsor Shares was £25,000, this represents a considerable discount to the
price paid by Ordinary Shareholders for their Ordinary Shares;
- The number of Sponsor Shares that may be converted to Ordinary Shares
may increase further, subject to certain performance-related conditions
subsequent to the Business Combination;
- Notwithstanding that the Sponsor Entity is providing its services to
the Company in an equivalent capacity to an employment relationship, the
conversion of the Sponsor Shares to Ordinary Shares is entirely contingent on
the successful consummation of a Business Combination, and no reward will
accrue to the Sponsor Entity for its services in the event that a Business
Combination is not consummated.
Accordingly, the Board has exercised judgement in determining that the Sponsor
Shares fall under the scope of IFRS 2 as equity-settled share based payments.
The fair value at the grant date of equity-settled share based payments is
generally recognised as an expense with a corresponding increase in equity
over the vesting period.
2. Principal accounting policies (continued)
Use of judgements and estimates (continued)
Share based payment (continued)
The deemed grant date of the Ordinary Shares will determine the point at which
the Ordinary Shares will be accounted for under IFRS 2. The Board has
determined that the effective grant date for the Ordinary Shares is the point
of consummation of a Business Combination, and not the original date of issue
of the Sponsor Shares for the following reasons:
- No contractual obligation on the part of the Company to deliver cash
or any other financial asset to holders of the Sponsor Shares exists prior to
a Business Combination, and the Sponsor Shareholders are not entitled to any
preferential terms over holders of Ordinary Shares;
- Should the Sponsor Entity fail to successfully achieve a Business
Combination, then the Sponsor Shares will not be eligible for conversion to
Ordinary Shares and the Sponsor Entity will receive no material compensation
for their work in attempting to identify a target acquisition;
- Under the Insider Letters, the Sponsor Entity has agreed to waive its
right to any liquidating distributions from the Escrow Account; and
The Sponsor Entity has provided services in the form of expertise and guidance
to assist the Company in achieving the Business Combination, in exchange for
the trading of its Sponsor Shares which has been recorded as share-based
payments. The difference between the total consideration received by the
Company for the Sponsor Shares and their fair value at the grant date will be
pro-rated over the period to the Business Combination deadline.
Sponsor Warrants
Similarly to Sponsor Shares, the Board has exercised judgement in determining
whether the Sponsor Warrants should be treated as a financial instrument (IAS
32) or share based payments (IFRS 2). IFRS 2 applies to any transaction in
which an entity receives goods or services as part of a share-based payment
arrangement. That determination requires careful consideration of all the
facts and circumstances, such as whether the rights of the Sponsor Warrant
holders differ from those of the Public Warrant holders. The board have
determined that Sponsor Warrants do not fall within the scope of IFRS 2 for
the following reasons:
- The Sponsor Warrants were issued at a price of £1.00 per warrant and are
exercisable at a price of £11.50 per Ordinary Share, which do not represent
preferential terms to those afforded to Public Warrant holders;
- No further Sponsor Warrants are receivable for zero or discounted
consideration;
- The commercial basis for the issue of Sponsor Warrants is to provide
sufficient capital to cover the Company's listing costs and operating expenses
until the achievement of a Business Combination, without diluting the value of
the Ordinary Shareholders' shares;
- There are no service conditions attached to the Sponsor Warrants;
- Sponsor Warrant holders have no different rights from Public Warrant
holders in the event of a successful Business Combination or the failure to
achieve such a combination.
The Board's judgement is that the Sponsor Warrants are a puttable financial
instrument that includes a contractual obligation for the issuer to redeem
that instrument for cash or another financial asset (in this case, an Ordinary
Share) upon exercise. The Sponsor Warrants do not entitle the holder to a pro
rata share of the entity's assets in the event of the entity's liquidation and
are therefore classified as a financial liability in accordance with section
16 of IAS 32.
2. Principal accounting policies (continued)
Use of judgements and estimates (continued)
Deferred underwriting fee
Barclays Bank PLC, HSBC Bank plc and Numis Securities Limited ("the
Underwriters" of the Company's Placing) are potentially entitled to a deferred
underwriting fee. The Board has exercised judgement in determining that at the
period-end no liability in relation to this fee exists as IAS 32 requires the
recognition of the worst-case liability which would be to repay the funds
raised to shareholders if no business combination is completed. This
underwriting fee is only payable on the completion of a Business Combination.
Fair value of derivative financial instruments at fair value through profit or
loss
The Company recognises its investment in derivative instruments (Public
Warrants and Sponsor Warrants) initially at fair value at date of issuance
with any subsequent movement in fair value between the issuance date and the
reporting date being recognised as a fair value movement through profit and
loss. A third party valued the warrants using an appropriate valuation model
and determined the fair value at the date of issuance to be £0.17 per warrant
for the Public Warrants and £0.34 per warrant for the Sponsor Warrants, and
determined the fair value at period end to be £0.02 and £0.03 respectively.
Judgements were required for the inputs into the valuation model specifically
volatility rates of suitable comparable companies and estimated life of the
warrants.
3. Fair value measurement
A number of the Company's accounting policies and disclosures require the
measurement of fair values for financial assets and liabilities.
The Board has overall responsibility for overseeing all significant fair value
measurements, including Level 3 fair values. If the inputs used to measure the
fair value of an asset or a liability fall into different levels of the fair
value hierarchy, then 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 entire measurement.
The Board periodically reviews significant unobservable inputs and valuation
adjustments. If third party information, such as broker quotes or pricing
services, is used to measure fair values, then the Board assesses the evidence
obtained from the third parties to support the conclusion that these
valuations meet the requirements of the Standards, including the level in the
fair value hierarchy in which the valuations should be classified.
The Company measures fair values using the following fair value hierarchy that
reflects the significance of the inputs used in making the measurements.
Level 1 ‑ Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2 ‑ Inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices).
Level 3 ‑ Inputs for the asset or liability that are not based on observable market data
(that is, unobservable inputs).
3. Fair value measurement (continued)
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 in the principal or, in its absence, the most
advantageous market to which the Company has access at that date. The fair
value of a liability reflects its non‑performance risk.
When measuring the fair value of an asset or liability, the Company uses
observable market data as far as possible. The determination of what
constitutes "observable" requires significant judgment by management. Fair
values of financial assets and liabilities that are traded in active markets
are based on quoted market prices or price quotations from a broker that
provides an unadjusted price from an active market for identical instruments.
A market is regarded as "active" if transactions for the asset or liability
take place with sufficient frequency and volume to provide pricing information
on an on‑going basis.
The determination of fair value for financial assets and financial liabilities
for which there is no observable market price requires the use of valuation
techniques. For financial instruments that trade infrequently and have little
price transparency, fair value is less objective, and requires varying degrees
of judgment depending on liquidity, concentration, uncertainty of market
factors, pricing assumptions and other risks affecting the specific
instrument.
The objective of valuation techniques is to arrive at a fair value measurement
that reflects the price that would be received to sell the asset or paid to
transfer the liability in an orderly transaction between market participants
at the measurement date.
3.1 Valuation techniques
To value the warrant liabilities, the valuation specialist uses proprietary
valuation models such as Black Scholes Pricing Model. Judgement and estimation
are usually required for the selection of the appropriate valuation model to
be used.
Valuation models that employ significant unobservable inputs require a high
degree of judgement and estimation in the determination of fair value. Some or
all of the significant inputs into these models may not be observable in the
market and are derived from market prices or rates or are estimated based on
assumptions. Assumptions and inputs used in the valuation models include a
risk-free interest rate, time to business combination deadline, probability of
business combination and volatility. In order to estimate volatility,
valuation techniques include comparison with similar instruments for which
observable market prices exist.
3.2 Fair value hierarchy
The following table summarises the valuation of the Company's financial
instruments within the fair value hierarchy levels at 30 June 2023:
Level 1 Level 2 Level 3 Total
£ £ £ £
Derivative liabilities - - 266,250 266,250
- - 266,250 266,250
3. Fair value measurement (continued)
The following table summarises the valuation of the Company's financial
instruments within the fair value hierarchy levels at 31 December 2022:
Level 1 Level 2 Level 3 Total
£ £ £ £
Derivative liabilities - - 305,000 305,000
- - 305,000 305,000
3.3 Changes in level 3 measurement
The following table presents the changes in the Company's financial
instruments classified in level 3 of the fair value hierarchy for the period
ended 30 June 2023:
30 June 2023 31 December 2022
£ £
Beginning of period 305,000 -
Proceeds from sponsor warrants and public warrants - 2,592,500
Net change in unrealised gain on financial liabilities (38,750) (2,287,500)
End of period 266,250 305,000
There were no transfers between levels for the period.
3.4 Significant unobservable inputs
The following table summarises the valuation techniques and significant
unobservable inputs used for the Company's financial instruments classified in
level 3 as of 30 June 2023, and also provides information about the
sensitivity of the year end fair value measurement to changes in the most
significant inputs:
Fair value Valuation technique Unobservable inputs Range of inputs (weighted average)
£
Derivative liabilities - Sponsor warrants 116,250 Black-Scholes Pricing Model Expected volatility 4.6%
Risk free rate 4.0%
Derivative liabilities - Public warrants 150,000 Binomial Option Pricing Model Expected volatility 4.6%
Risk free rate 4.0%
266,250
3. Fair value measurement (continued)
3.4 Significant unobservable inputs (continued)
The following table summarises the valuation techniques and significant
unobservable inputs used for the Company's financial instruments classified in
level 3 as of 31 December 2022, and also provides information about the
sensitivity of the year end fair value measurement to changes in the most
significant inputs:
Fair value Valuation technique Unobservable inputs Range of inputs (weighted average)
£
Derivative liabilities - Sponsor warrants 155,000 Black-Scholes Pricing Model Expected volatility 2.9%
Risk free rate 3.9%
Derivative liabilities - Public warrants 150,000 Binomial Option Pricing Model Expected volatility 2.9%
Risk free rate 3.9%
305,000
The fair value of sponsor warrant and public warrants liabilities are
determined by the Board upon consultation with a valuation specialist with
reference to significant unobservable inputs. The valuation specialist has
used the Black-Scholes Pricing Model and Binomial Option Pricing Model
respectively, incorporating expected volatility, expected term and the
risk-free rate, to value the warrant liabilities. Warrants are accounted for
as derivative liabilities measured at FVTPL at each reporting period, in
accordance with IFRS 9 and IAS 32. Changes in the fair value of the warrants
are recorded in the Statement of Comprehensive Income.
4. Acquisition
The Company made no acquisitions during the period from 1 January 2023 to 30
June 2023.
5. Cash
The amounts available to the Company in the current accounts are used to cover
the costs relating to the offering and admission, search for a company or
business for a Business Combination and other running costs.
30 June 31 December 2022
2023
£ £
Restricted cash 158,934,183 155,984,100
Cash and cash equivalents 84,183 203,264
Total 159,018,366 156,187,364
The Escrow Agent may only release the funds within the Escrow Account in
accordance with the terms of the Escrow Agreement, which meets the
requirements set out in Listing Rule 5.6.18AG(2) (save for the minor
departures from this rule which are disclosed in the Prospectus).
The Escrow Agreement provides that the Company and a trustee, which was
appointed by the Company to provide escrow trustee services in connection with
the Escrow Account, will jointly deliver an instruction to the Escrow Agent to
release the funds in escrow only in the event that circumstances described in
the Prospectus for the release of the funds in escrow have occurred, and that
as requested by the Escrow Agent the Company will deliver evidence of the
circumstances for release having occurred to the Escrow Agent prior to
delivering an instruction for release to the Escrow Agent. Such circumstances
are, in accordance with LR 5.6.18AG(2) (save for the minor departures from
this rule which are disclosed in the Prospectus): (i) to provide consideration
for a Business Combination that has been approved by the Directors of the
Company and the Ordinary Shareholders (excluding the Excluded Persons), in
accordance with the requirements of the Articles of Association of the Company
and the Listing Rules; (ii) to repurchase the Ordinary Shares for which a
redemption right was validly exercised; and (iii) to repurchase the Ordinary
Shares and Public Warrants and commence liquidation.
6. Financial risk management
The Company is exposed to market risk, credit risk and liquidity risk. The
risk management policies employed by the Company to manage these risks are
discussed below:
(a) Market risk
Market risk is the risk that changes in market factors such as foreign
exchange rates, interest rates and equity prices will affect the Company's
income and/or the value of its holdings in financial instruments.
6. Financial risk management (continued)
(a) Market risk (continued)
Foreign currency risk
Currency risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in foreign exchange
rates. During the period ended 30 June 2023, the Company had no financial
instrument denominated in a currency other than its operational and reporting
currency, and therefore was not exposed to foreign currency risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. The Company's cash and cash equivalents are non-interest-bearing,
however the restricted cash balance consists of amounts held in an Escrow
Account which accrue interest at a variable rate and therefore exposed to
interest rate risk.
As at 30 June 2023, if interest rates had been 0.5% higher/lower, with all
other variables held constant, the Company's bank interest received for the
period would have been £795,092 (31 December 2022: £772,500) higher or
lower.
As at end of the reporting period, the Company's exposure to interest rate
risk is considered to be for £159,018,366 (31 December 2022: £154,500,000).
The Company is exposed to risks associated with the effects of fluctuations in
the prevailing levels of interest rates on its financial position and cash
flows. Although these interest are not hedged however the Company regularly
monitors the cash balances for any adverse interest rate fluctuations.
Price risk is the risk that changes in market prices will affect the value of
the Company's financial assets or liabilities at fair value through profit or
loss. The Company is exposed to price risk in respect of its Public Warrants
and Sponsor Warrants, which are measured at fair value using an appropriate
valuation model.
As at 30 June 2023, if prices had been 5% higher/lower, the net fair value of
the Company's financial assets or liabilities at fair value through profit or
loss subject to price risk would increase/decrease by £13,312 (31 December
2022: £15,250).
The Company will analyse the risk of individual assets and evaluate the market
risk through its daily operation, by reviewing the latest development of
financial markets and the release of economic data.
The Company's overall exposures to financial asset values are monitored on an
on going basis.
(b) Credit risk
Credit risk is the risk that a counterparty to a financial instrument will
fail to discharge an obligation or commitment that it has entered into with
the Company, resulting in a financial loss to the Company. The Company is
exposed to credit risk arising from its restricted cash, cash and cash
equivalents and other receivables.
6. Financial risk management (continued)
(a) Credit risk (continued)
The maximum credit risk exposure in relation to the Company's cash balances is
best represented by the carrying value of the cash and cash equivalents,
amounts held in escrow balances and other receivables in the Statement of
Financial Position.
The Company seeks to mitigate the credit risk attached to its cash and cash
equivalents and amounts held in escrow by placing all cash with reputable
banking institutions with a credit rating of A (or equivalent) or higher as
determined by an internationally recognised rating agency.
Cash and cash equivalents are held with Barclays Bank plc, which has a Fitch
long-term credit rating of A+, a Moody's long-term credit rating of A1 and an
S&P long-term credit rating of A.
Amounts held in escrow are held with HSBC Bank plc, which has a Fitch
long-term credit rating of A+, a Moody's long-term credit rating of A3 and an
S&P long-term credit rating of A-.
(b) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting
obligations associated with its financial liabilities.
The table below analyses how quickly the Company's assets can be liquidated to
meet the obligation of maturing liabilities.
Maturity Analysis
As at 30 June 2023 < 1 month >12 months No stated maturity Total
£ £ £ £
Assets
Restricted cash - 158,934,183 - 158,934,183
Cash and cash equivalents 84,183 - - 84,183
Trade and other receivables 51,575 - - 51,575
135,758 158,934,183 - 159,069,941
Liabilities
Redeemable ordinary shares - 149,870,215 - 149,870,215
Derivative liabilities - 266,250 - 266,250
Due to related party 26,060 - - 26,060
Accrued expense 738,243 - - 738,243
764,303 150,136,465 - 150,900,768
6. Financial risk management (continued)
(b) Liquidity risk (continued)
As at 31 December 2022 < 1 month >12 months No stated maturity Total
£ £ £ £
Assets
Restricted cash - 155,984,100 - 155,984,100
Cash and cash equivalents 203,264 - - 203,264
Trade and other receivables 74,191 - - 74,191
277,455 155,984,100 - 156,261,555
Liabilities
Redeemable ordinary shares - 148,214,847 - 148,214,847
Derivative liabilities - 305,000 - 305,000
Due to related party 26,060 - - 26,060
Accrued expense 1,109 - - 1,109
27,169 148,519,847 148,547,016
The Company is exposed to liquidity risk as the positions in which the company
invests may not be able to get liquidated quickly without negatively affecting
the share prices. It is the Companies policy to maintain conservative levels
of liquidity to ensure it has the ability to meet its obligations as they fall
due.
(c) Capital risk management
The capital structure of the Company consists of equity attributable to
holders of Sponsor Shares and non-redeemable Public Shares, redeemable Public
Shares issued (see note 7) and retained earnings.
7. Capital instruments
The following summarises the issued share capital as at 30 June 2023 and 31
December 2022.
No. of shares £
Redeemable Class A ordinary shares of £10 par value ("Ordinary Shares") 15,000,000
150,000,000
Non-redeemable Class A ordinary shares of £10 par value ("Ordinary Shares") 450,000
4,475,304
Class B ordinary shares of £0.0001 par value, issued at £0.005 ("Sponsor 3,862,500
Shares")
19,310
19,312,500
154,494,614
Class A ordinary shares ("Ordinary Shares")
Further to publication of its Prospectus on 7 April 2022, the Company
completed the placing of 15,000,000 Ordinary Shares of the Company at a price
of £10.00 per share, with matching warrants being issued concurrently with
the delivery of the Ordinary Shares to subscribers of Ordinary Shares in the
Offering on the basis of one-half (1/2) of one (1) warrant per Ordinary Share
("Public Warrants"). Additionally, 450,000 Ordinary Shares were issued to the
Overfunding Sponsor Entity via the Company's Overfunding Subscription.
On 13 April 2022, the Company announced the admission of 154,500,000 Ordinary
Shares to trading on the London Stock Exchange's main market for listed
securities ("LSE").
As at 30 June 2023 and 31 December 2022, the 450,000 Ordinary shares issued to
the Overfunding Sponsor Entity, these share are subject to the Insider Letter
(see Prospectus), in which, inter alia, removes the right of redemption
attached to these Ordinary Shares, which are accordingly classified as equity.
These shares 450,000 Ordinary Shares alongside with the 3,682,500 Class B
Ordinary shares make up share capital net of issuance costs of £24,696.
Ordinary Shares carry the right to receive dividends and other distributions
declared on them, and (save as provided in the Prospectus) holders of Ordinary
Shares are entitled to one vote per share at a general shareholders' meeting
of the Company, including a vote on the proposed business combination.
7. Capital instruments (continued)
Class A ordinary shares ("Ordinary Shares") (continued)
Holders of redeemable Ordinary Shares are entitled to redeem all or a portion
of their Ordinary Shares upon the completion of the business combination.
Accordingly, these Ordinary Shares are classified as liabilities in the
Company's Statement of Financial Position and are measured at amortised cost.
Ordinary Shares 30 June 2023 31 December 2022
£ £
Opening balance 148,214,847 -
Proceeds of issue of Ordinary Shares - 150,000,000
Less: initial recognition of Public Warrants - (1,275,000)
Less: share issue costs - (2,842,943)
Effective interest accretion 1,655,368 2,332,790
149,870,215 148,214,847
Class B ordinary shares ("Sponsor Shares")
During the period ended 31 December 2022, the Sponsor and the Directors
subscribed to a total of 3,862,500 (comprising 1,931,250 B1 Shares, 965,625 B2
Shares and 965,625 B3) Sponsor Shares at a price of £0.0001 per share.
Upon completion of the Business Combination, the entire sub-class of B1 Shares
shall automatically convert on a one-for-one basis (subject to adjustment in
certain circumstances) into such number of Ordinary Shares as will be equal,
in the aggregate, on an as-converted basis, to 10% of the total number of
Ordinary Shares issued and outstanding immediately following the completion of
the Offering. In addition, the entire sub-class of B2 Shares and the entire
sub-class of B3 Shares shall automatically convert on a one-for-one basis
(subject to adjustment in certain circumstances) into Ordinary Shares in two
further tranches (each of which shall equal 5% of the total number of Ordinary
Shares issued and outstanding immediately following the completion of the
Offering) after the Business Combination subject to certain
performance-related conditions.
Subject to the variation of certain voting rights and powers in respect of the
Business Combination, Sponsor Shares carry the same shareholder rights as
Ordinary Shares. However, the Company's Sponsor and Directors have entered
into an Inside Letter with the Company, under which they have agreed to waive
their redemption rights in respect of the Sponsor Shares or any Ordinary
Shares acquired as a result of conversion in connection with the Business
Combination. Accordingly, the Sponsor Shares are classified as equity in the
Company's Statement of Financial Position.
Public warrants
On 13 April 2022, 7,500,000 Public Warrants, the right to which was included
in the issue of Ordinary Shares in the Company, were admitted to trading on
LSE.
7. Capital instruments (continued)
Public warrant (continued)
Each Public Warrant gives the holder the right to subscribe for one Ordinary
Share at a price of £11.50 at any time commencing 30 days following the
completion of the Business Combination.
Accordingly, the Public Warrants are classified as derivative liabilities and
were initially recognised at their fair value of £0.17 per warrant at the
admission date of 13 April 2022.
As at 30 June 2023, the Public Warrants have been valued using an appropriate
valuation model at £.02 (31 December 2022: £.02) per warrant and are
recognised in these Financial Statements at a fair value of £150,000 (31
December 2022: £150,000). The movement in fair value of £nil (31 December
2022: £1,125,000) from the admission date and period end has been recognised
through profit and loss.
Sponsor
warrants
During the period, the Sponsor and the Directors subscribed to a total of
3,875,000 Sponsor Warrants at a price of £1 per warrant. Of the £3,875,000
raised from the issue of the Sponsor Warrants, a derivative liability was
recognised at the admission date of 13 April 2022 amounting to £1,317,500.
The remainder has been allocated to other reserves as a capital contribution
to the company amounting to £2,557,500.
As at 30 June 2023, the Sponsor Warrants have been valued at £.03 (31
December 2022: £.04) per warrant and are recognised in these Financial
Statements at a total value of £116,250 (31 December 2022: £155,000). The
movement in fair value of £38,750 (31 December 2022: £1,162,500) between the
admission date and period end has been recognised through profit and loss.
Each Sponsor Warrant gives the holder the right to subscribe for one Ordinary
Share at a price of £11.50 following the completion of the Business
Combination.
8. Share based expense
The Sponsor Entity has provided services in the form of expertise and guidance
to assist the Company in achieving the Business Combination, in exchange for
the trading of its sponsor shares which has been recorded as share based
payments.
The valuation specialist has used a Monte Carlo simulation to estimate the
fair value of the sponsor shares. Non-market performance conditions have not
been taken into account when estimating the fair value such as the probability
of Business Combination. The key inputs used in the measurement of the fair
value at grant date of the sponsor shares were the initial stock price,
volatility, expected term and the restriction period after the initial
Business Combination.
As of grant date the fair value of each sponsor share is estimated. The
difference between the total consideration received by the Company for the
sponsor shares and their fair value at the grant date is. This will be
pro-rated over the period to the Business Combination Deadline and recognised
in equity as a share-based payment reserve with the associated expense
reflected in the statement of comprehensive income as share based payment
expense.
9. Earnings per share
9.1 Basic loss per share
For the period from 1 January 2023 to 30 June 2023 For the period from
£ 31 August 2021
(date of incorporation) to 30 June 2022
£
Numerator
Net loss for the period and earnings used in basic loss per share (13,266,829) (8,004,472)
Total loss for the period used in basic loss per share (13,266,829) (8,004,472)
Denominator
Weighted average number of shares used in basic loss per share 4,312,500 2,856,972
Total weighted average number of shares used in basic loss per share 4,312,500 2,856,972
Basic loss per share (3.08) (2.80)
The weighted average number of Ordinary Shares is determined by reference to
the 3,862,500 Class B Ordinary Shares and 450,000 non-redeemable Class A
Ordinary Shares. Public and Sponsor Warrants are deemed to be anti-dilutive as
the average market price of Ordinary Shares during the period did not exceed
the £11.50 exercise price of the warrants and they are therefore out of the
money and excluded from the diluted earnings per share calculation. The
15,000,000 redeemable Class A Ordinary Shares under IAS 33 are deemed to be
contingently issuable shares issuable only upon a Business Combination so
under IAS 33.24 will be excluded from the earnings per share calculations
until the Business Combination has occurred.
9. Earnings per share (continued)
9.2 Diluted loss per share
The Company has reviewed the dilution factors and concluded that there are no
instruments that have dilutive potential as at 30 June 2023 and 31 December
2022. As there is uncertainty as to the likelihood of an initial Business
Combination, the potential dilutive effects of redeemable Ordinary Shares,
Sponsor Warrants and Public Warrants have not been factored into the weighted
average number of shares. The conditions for conversion of these instruments
to equity have not been satisfied at the reporting date. When the Business
Combination has occurred, the redeemable Ordinary Shares will become equity
and will no longer be a financial liability, hence the dilutive effect is not
considered in the diluted earnings per share calculation. As a result, diluted
earnings per share is deemed to be the same as basic earnings per share as at
30 June 2023 and 31 December 2022.
10. Related party transactions
All legal entities that can be controlled, jointly controlled or significantly
influenced by the Company are considered to be a related party. Also, entities
which can control, jointly control or significantly influence the Company are
considered a related party. In addition, statutory and supervisory directors
and close relatives are regarded as related parties.
The Sponsor Entity made payments of £nil (31 December 2022: £158,703)
related to expenses paid on behalf of the Company, of which £26,060 is still
outstanding as of 30 June 2023 (31 December 2022: £26,060).
Administration expense paid to the sponsor entity was £nil (31 December 2022:
£135,000) for the period ended 30 June 2023.
Other than the issuance of Sponsor Shares and Sponsor Warrants to the Sponsor
Entity and non-executive directors, there have been no related party
transactions.
11. Income tax
The Company is domiciled in the Cayman Islands. Under the current laws of the
Cayman Islands, there is no income, estate, corporation, capital gains or
other taxes payable by the Company. As a result, no provision for Cayman
Islands' taxes has been made in the Financial Statements.
Overseas withholding taxes may be charged on certain investment income and
capital gains of the Company. No withholding taxes have been incurred or paid
during the period ended 31 December 2022.
The Company has concluded that there was no impact on the results of its
operations relating to taxation for the period ended 30 June 2023 (31 December
2022: nil).
12. Contingencies and commitments
As disclosed in the Prospectus, the underwriters of the Company's Offering are
entitled to a deferred underwriting fee payable from the Escrow Account upon
the successful completion of a Business Combination. In addition, certain fees
and expenses of certain professional advisers to the Company that were
incurred upon IPO have been deferred until successful completion of a Business
Combination or in the event that a Business Combination cannot be consummated
by the Business Combination Deadline, upon a winding-up of the Company.
.
13. Subsequent events
On 11 July 2023, at an Extraordinary General Meeting of the Company, the
Ordinary Shareholders of the Company approved the Extension and in connection
thereto redeemed 12,383,019 Ordinary Shares at the redemption amount of
£10.53 per Ordinary Share (which, pursuant to the Company's Articles of
Association that were adopted at the Extraordinary General Meeting, was
calculated so as to allow provision for creditors of the Company to be paid
out of the Escrow Account upon a winding-up of the Company). The aggregate
redemption amount was £130,393,190. The payment in respect of the redemption
of such Ordinary Shares was made on or around 17 July 2023. Following such
redemption payments, £30m remained in the Company's Escrow Account.
On 8 September 2023, the Company announced that London Innovation Underwriters
Limited ("LIU") has separately been established for the purpose of
implementing the Proposed Transaction. It is intended that the Proposed
Transaction will be implemented through a business combination with LIU, which
will seek to raise a significant sum of equity capital through a listing of
LIU on the Main Market of the London Stock Exchange. A further announcement
will be made by the Company when the business combination agreement has been
entered into. The Company has incurred, and will continue to incur,
significant third party adviser costs (and other costs) in relation to the
implementation of the Proposed Transaction.
There were no other significant period and events that require disclosure or
adjustment in these financial statements.
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