Interim Financial Statements - 31 December 2023
08/03/2024 07:00
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RNS Number : 0657G Marwyn Acquisition Company II Ltd 08 March 2024
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN
OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA,
JAPAN, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA OR ANY JURISDICTION IN
WHICH IT WOULD BE UNLAWFUL TO DO SO.
LEI: 2549008KZ7HM27V4O637
Marwyn Acquisition Company II Limited
(the "Company")
Interim Financial Statements for the period ended 31 December 2023
The Company announces the publication of its Interim Financial Statements for
the period ended 31 December 2023.
The Interim Financial Statements are also available on the 'Shareholder
Documents' page of the Company's website at www.marwynac2.com
(http://www.marwynac2.com) .
Enquiries:
Company Secretary
Antoinette Vanderpuije - 020 7004 2700
WH Ireland - Corporate Broker 020 7220 1666
Harry Ansell
Katy Mitchell
MARWYN ACQUISITION COMPANY II LIMITED
Unaudited Interim
Condensed Consolidated Financial Statements for the six months ended 31
December 2023
MANAGEMENT REPORT
We present to shareholders the unaudited condensed consolidated financial
statements of Marwyn Acquisition Company II Limited (the "Company") for the
six months to 31 December 2023 (the "Interim Financial Statements"),
consolidating the results of Marwyn Acquisition Company II Limited and its
subsidiary MAC II (BVI) Limited (collectively, the "Group" or "MAC").
Strategy
The Company is an acquisition vehicle listed on the standard segment of the
London Stock Exchange. The Company's investment strategy is to seek
acquisition opportunities in the financial services, consumer and technology
sectors.
Strategy Execution
The Company intends to execute its strategy through a combination of selective
Merger and Acquisition ("M&A") of platform and bolt-on businesses,
potential strategic partnerships with established financial services operators
as well as ongoing operational improvements. Target company market segments,
principally expected to be in the UK and US, may include, but are not limited
to:
· FinTech digital platforms;
· Digital content platforms;
· Life and pensions;
· Life-insurance assets;
· Lifetime mortgages and equity release;
· Wealth managers and advisers;
· Brokerage and associated services;
· Mortgage advisory;
· Healthcare related services;
· Estate planning and associated legal and tax services; and
· Later life planning and assisted care services.
Activity
The Company has continued through the period to both identify and progress
potential acquisition opportunities across a range of sectors. The Company
has evaluated a number of target businesses during the period remaining
focussed on pursuing a platform acquisition from which the Company can further
develop and grow through the execution of its long-term business strategy.
The flexible structure of the Company remains attractive in unlocking
proprietary deal flow and to support the execution of a buy and build strategy
utilising the benefits of the Company's listed status and the potential for
significant shareholder value creation.
Results
The Group's loss after taxation for the period to 31 December 2023 was
£767,293 (31 December 2022: £1,213,621). The Group held a cash balance at
the period end of £6,762,967 (as at 30 June 2023: £7,783,448).
Dividend Policy
The Company has not yet acquired a trading business and it is therefore
inappropriate to make a forecast of the likelihood of any future dividends.
The Directors intend to determine the Company's dividend policy following
completion of an acquisition and, in any event, will only commence the payment
of dividends when it becomes commercially prudent to do so.
Directors
The Directors of the Company have served as directors during the period and
until the date of this report as set out below:
Mark Hodges (Chairman);
Will Self (Chief Executive Officer);
James Corsellis (Non-Executive Director); and
Cathryn Riley (Non-Executive Director)
Corporate Governance
As a company with a Standard Listing, the Company is not required to comply
with the provisions of the UK Corporate Governance Code and given the size and
nature of the Group, the Directors have decided not to adopt the UK Corporate
Governance Code. Nevertheless, the Board is committed to maintaining high
standards of corporate governance and will consider whether to voluntarily
adopt and comply with the UK Corporate Governance Code as part of any Business
Acquisition, taking into account the Company's size and status at that time.
The Company currently complies with the following principles of the UK
Corporate Governance Code:
· The Company is led by an effective and entrepreneurial board of
directors, whose role is to promote the long term sustainable success of the
Company, generating value for shareholders and contributing to wider society;
· The Board ensures that it has the policies, processes,
information, time and resources it needs in order to function effectively and
efficiently; and
· The Board ensures that the necessary resources are in place for
the Company to meet its objectives and measure performance against them.
Given the size and nature of the Company, the Board has not established any
committees and intends to make decisions as a whole. If the need should arise
in the future, for example following any acquisition, the Board may set up
committees and may decide to adopt the UK Corporate Governance Code.
Risks
The Company's Audited Annual Report and Consolidated Financial Statements for
the year ended 30 June 2023, which are available on the Company's website, set
out the risk management and internal control systems for the Group and
identifies the risks that the Directors consider to be most relevant to the
Company based on its current status. The Directors are of the opinion that
there have been no changes to the risks faced by the Company since the
publication of the Annual Report and Consolidated Financial Statements and
that these remain applicable for the remaining six months of the year.
Outlook
The Directors are excited about the nature and quality of potential
acquisition opportunities for the Company and the wider scale of the
opportunity and unmet need in the customer, product and addressable markets
identified. The Directors believe that the successful execution of the
strategy, including platform and follow-on M&A, performance improvements
and sustainable growth, has the potential to generate significant long term
returns for shareholders.
Each of the Directors confirms that, to the best of their knowledge:
(a) these Interim Financial Statements, which have been prepared in accordance
with IAS 34 "Interim Financial Reporting" as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Company ; and
(b) these Interim Financial Statements comply with the requirements of DTR
4.2.
Neither the Company nor the Directors accept any liability to any person in
relation to the interim financial report except to the extent that such
liability could arise under applicable law.
Details on the Company's Board of Directors can be found on the Company
website at www.marwynac2.com (http://www.marwynac2.com) .
Mark Hodges
Chairman
7 March 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Six months ended
31 December 31 December
2023 2022
Note Unaudited Unaudited
£'s £'s
Administrative expenses 6 (1,082,083) (1,177,027)
Total operating loss (1,082,083) (1,177,027)
Finance income 187,790 90,406
Movement in fair value of warrants 13 127,000 (127,000)
Loss for the period before tax (767,293) (1,213,621)
Income tax 7 - -
Loss for the period (767,293) (1,213,621)
Total other comprehensive income - -
Total comprehensive loss for the period (767,293) (1,213,621)
Loss per ordinary share
Basic and diluted (pence) 8 (0.0604) (0.0956)
The Group's activities derive from continuing operations.
The Notes on pages 9 to 22 form an integral part of these Interim Financial
Statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
31 December 30 June
2023 2023
Note Unaudited Audited
£'s £'s
Assets
Current assets
Other receivables 10 52,392 235,620
Cash and cash equivalents 11 6,762,967 7,783,448
Total current assets 6,815,359 8,019,068
Total assets 6,815,359 8,019,068
Equity and liabilities
Equity
Ordinary Shares 14 326,700 326,700
A Shares 14 10,320,000 10,320,000
Sponsor Share 14 1 1
Share-based payment reserve 15, 17 223,396 201,641
Accumulated losses 15 (6,865,806) (6,098,513)
Total equity 4,004,291 4,749,829
Current liabilities
Trade and other payables 12 271,068 602,239
Warrants 13 2,540,000 2,667,000
Total liabilities 2,811,068 3,269,239
Total equity and liabilities 6,815,359 8,019,068
The Notes on pages 9 to 22 form an integral part of these Interim Financial
Statements.
The Interim Financial Statements were approved by the Board of Directors on 7
March 2024 and were signed on its behalf by:
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY.
Notes Ordinary shares A Shares Sponsor Share Share based payment reserve Accumulated losses Total equity
£'s £'s £'s £'s £'s £'s
Balance at 1 July 2022 326,700 10,320,000 1 171,129 (2,570,614) 8,247,216
Total comprehensive loss for the period - - - - (1,213,621) (1,213,621)
Share-based payment charge 17 - - - 14,652 - 14,652
Balance as at 31 December 2022 326,700 10,320,000 1 185,781 (3,784,235) 7,048,247
Notes Ordinary shares A Shares Sponsor Share Share based payment reserve Accumulated losses Total equity
£'s £'s £'s £'s £'s £'s
Balance as at 1 July 2023 326,700 10,320,000 1 201,641 (6,098,513) 4,749,829
Total comprehensive loss for the period - - - - (767,293) (767,293)
Share-based payment charge 17 - - - 21,755 - 21,755
Balance as at 31 December 2023 326,700 10,320,000 1 223,396 (6,865,806) 4,004,291
The Notes on pages 9 to 22 form an integral part of these Interim Financial
Statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Six months ended
31 December 31 December
2023 2022
Note Unaudited Unaudited
£'s £'s
Operating activities
Loss for the period (767,293) (1,213,621)
Adjustments to reconcile total operating loss to net cash flows:
Finance income (187,790) (90,406)
Fair Value (gain) / loss on warrant liability 13 (127,000) 127,000
Share based payment expense 17 21,755 14,652
Working capital adjustments:
Decrease / (increase) in trade and other receivables and prepayments 10 183,228 (80,920)
Decrease in trade and other payables 12 (331,171) (9,623)
Net cash flows used in operating activities (1,208,271) (1,252,918)
Investing activities
Interest received 187,790 90,406
Net cash flows used in investing activities 187,790 90,406
Net decrease in cash and cash equivalents (1,020,481) (1,162,512)
Cash and cash equivalents at the beginning of the period 7,783,448 10,254,198
Cash and cash equivalents at the end of the period 11 6,762,967 9,091,686
The Notes on pages 9 to 22 form an integral part of these Interim Financial
Statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Marwyn Acquisition Company II Limited was incorporated on 31 July 2020 in the
British Virgin Islands ("BVI") as a BVI business company (registered number
2040956) under the BVI Business Company Act, 2004. The Company was listed on
the Main Market of the London Stock Exchange on 4 December 2020 and has its
registered address at Commerce House, Wickhams Cay 1, P.O. Box 3140, Road
Town, Tortola, VG1110, British Virgin Islands and UK establishment (BR022831)
at 11 Buckingham Street, London WC2N 6DF.
The Company has been formed for the purpose of effecting a merger, share
exchange, asset acquisition, share or debt purchase, reorganisation or similar
business combination with one or more businesses. The Company has one
subsidiary, MAC II (BVI) Limited (together with the Company, the "Group").
2. ACCOUNTING POLICIES
(a) Basis of preparation
These Condensed Consolidated Financial Statements ("Interim Financial
Statements") have been prepared in accordance with IAS 34 Interim Financial
Reporting and are presented on a condensed basis.
The Interim Financial Statements do not include all the information and
disclosures required in the annual financial statements and should be read in
conjunction with the Group's Annual Report and Consolidated Financial
Statements for the year ended 30 June 2023 ("2023 Annual Report"), which is
available on the Company's website www.marwynac2.com
(https://www.marwynac2.com/) . Accounting policies applicable to these Interim
Financial Statements are consistent with those applied in the 2023 Financial
Statements.
(b) Going concern
The Interim Financial Statements have been prepared on a going concern basis,
which assumes that the Group will continue to be able to meet its liabilities
as they fall due for 12 months from the date of approval. The Directors have
considered the financial position of the Group and have reviewed forecasts and
budgets for a period of at least 12 months following the approval of the
Interim Financial Statements.
At 31 December 2023, the Group has net assets of £4,004,291 (30 June 2023:
£4,749,829), net assets excluding warrant liabilities of £6,544,291 (30 June
2023: £7,416,829) and a cash balance of £6,762,967 (30 June 2023:
£7,783,448). The Company has sufficient resources to continue to pursue its
investment strategy which may include effecting a merger, share exchange,
asset acquisition, share or debt purchase, reorganisation or similar business
combination with one or more businesses.
Subject to the structure of any acquisition, the Company may need to raise
additional funds to finance the acquisition in the form of equity and/or debt.
The capital structure of the Company enables it to issue different types of
shares in order to raise equity to fund an acquisition. The ability of the
Company to raise additional funds in relation to an acquisition may affect its
ability to complete that acquisition. Other factors outside of the Company's
control may also impact on the Company's ability to complete that acquisition.
The key risks relating to the Company's ability to execute its stated strategy
are set out in its 2023 Annual Report, which is available on the Company's
website.
The Company entered into a forward purchase agreement ("FPA") on 27 November
2020 with Marwyn Value Investors II LP (''MVI II LP'') of up to £20 million,
which may be drawn for general working capital purposes and to fund due
diligence costs. Any drawdown is subject to the prior approval of MVI II LP
and the satisfaction of conditions precedent. As at 31 December 2023, the
Company has drawn down £12 million under the FPA.Whilst the FPA provides a
mechanism for the Company to raise additional funds, as any drawdown is not
under the exclusive control on the Company, all cashflow and working capital
forecasts have been prepared without any further draw down on the FPA being
assumed.
The Directors have considered the macroeconomic backdrop and the ongoing
operating costs expected to be incurred by the business over at least the next
12 months. Based on their review the Directors have concluded that there are
no material uncertainties relating to going concern of the Group and as such
the Interim Financial Statements have been prepared on a going concern basis,
which assumes that the Group will continue to be able to meet its liabilities
as they fall due within the next 12 months from the date of approval of the
Interim Financial Statements.
(c) New standards and amendments to International Financial Reporting
Standards
New standards and amendments to International Financial Reporting Standards
The International Financial Reporting Standards ("IFRS") applicable to the
Interim Financial Statements of the Group for the six-month period to 31
December 2023 have been applied.
Standards issued but not yet effective
The following standards are issued but not yet effective. The Group intends to
adopt these standards, if applicable, when they become effective. It is not
expected that these standards will have a material impact on the Group.
Standard Effective date
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7*); 1 January 2024
Non-current Liabilities with Covenants (Amendments to IAS 1); 1 January 2024
Amendments to IFSR 16 - Lease liability in sale and leaseback; 1 January 2024
Amendments to IAS 1 Presentation of Financial Statements: Classification of 1 January 2024
Liabilities as Current or Non-current*; and
Amendments to IAS 21 Lack of Exchangeability. 1 January 2025
*Subject to endorsement by the EU
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group's Interim Financial Statements under IFRS
requires the Directors to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities. Estimates and judgements are continually evaluated and
are based on historical experience and other factors including expectations of
future events that are believed to be reasonable under the circumstances.
Actual results may differ from these estimates.
Significant estimates and accounting judgements
Valuation of warrants
The Company has issued matching warrants for both its issues of ordinary
shares and A shares. For every share subscribed for, each investor was also
granted a warrant ("Warrant") to acquire a further share at an exercise price
of £1.00 per share (subject to a downward adjustment under certain
conditions). Previously, the Warrants were exercisable at any time until five
years after the issue date; effective 31 March 2022 the exercise date for the
Warrants was extended to the 5th anniversary of a business acquisition, as
detailed in Note 13. The Warrants are valued using the Black-Scholes option
pricing methodology which considers the exercise price, expected volatility,
risk free rate, expected dividends, and expected term of the
Warrants.
4. SEGMENT INFORMATION
The Board of Directors is the Group's chief operating decision-maker. As the
Group has not yet acquired an operating business, the Board of Directors
considers the Group as a whole for the purposes of assessing performance and
allocating resources, and therefore the Group has one reportable operating
segment.
5. EMPLOYEES AND DIRECTORS
Employment cost for the Group during the period:
Six months ended 31 December 2023 Six months ended 31 December 2022
Unaudited Unaudited
£'s £'s
Employment costs for the Group during the period
Directors' salaries 359,315 135,694
Staff salaries 40,000 -
Pension contributions 14,141 -
Social security costs 55,710 18,901
Short term employment benefits 6,010 -
475,176 154,595
The Board considers the Directors of the Company, to be the key management
personnel of the Group.
During the six months ended 31 December 2023, the Company had four (31
December 2022: three) serving directors: James Corsellis, Mark Hodges,
Catherine Riley and Will Self. The Company had one employee at the period end
who was not a director during the period (2022: None).
Mark Hodges, Cathryn Riley and Will Self received remuneration under the terms
of their director service agreements.
The Company's subsidiary has issued Incentive Shares directly to Will Self and
Mark Hodges, with James Corsellis indirectly beneficially interested in the
Incentive Shares through his indirect interest in MLTI, further detail is
disclosed in Note 17.
6. ADMINISTRATIVE EXPENSES
Six months ended 31 December 2023 Six months ended 31 December 2022
Unaudited Unaudited
£'s £'s
Group expenses by nature
Personnel costs (Note 5) 475,176 154,595
Professional support 455,719 436,348
Non-recurring project, professional and due diligence costs 115,500 557,332
Share based payment expense (Note 17) 21,755 14,652
Audit Fees 11,625 9,750
Sundry expenses 2,308 4,350
1,082,083 1,177,027
7. TAXATION
Six months ended 31 December 2023 Six months ended 31 December 2022
Unaudited Unaudited
£'s £'s
Analysis of tax in period
Current tax on loss for the period - -
Total current tax - -
Reconciliation of effective rate and tax charge:
Six months ended 31 December 2023 Six months ended 31 December 2022
Unaudited Unaudited
£'s £'s
Loss on ordinary activities before tax (767,293) (1,213,621)
Expenses not deductible for tax purposes (104,036) 592,144
Loss on ordinary activities subject to corporation tax (871,327) (621,476)
Loss on ordinary activities multiplied by the rate of corporation tax in the (217,832) (118,080)
UK of 25% (2022: 19%)
Effects of:
Losses carried forward for which no deferred tax recognised 217,832 118,080
Total taxation charge - -
The Group is tax resident in the UK. As at 31 December 2023, cumulative tax
losses available to carry forward against future trading profits were
£5,824,473 (As at 30 June 2023: £4,953,146) subject to agreement with HM
Revenue & Customs. There is currently no certainty as to future profits
and no deferred tax asset is recognised in relation to these carried forward
losses. Under UK Law, there is no expiry for the use of tax losses.
8. LOSS PER ORDINARY SHARE
Basic Earnings per share ("EPS") is calculated by dividing the loss
attributable to equity holders of the company by the weighted average number
of ordinary shares and A shares in issue during the period. Diluted EPS is
calculated by adjusting the weighted average number of ordinary shares and A
shares outstanding to assume conversion of all dilutive potential ordinary
shares and A shares. The Company being loss making in both this period and
comparative period would mean that any exercise would be anti-dilutive.
The Company maintains different share classes, of which ordinary shares, A
shares and Sponsor Shares were in issue in the current period and prior
period. The key difference between ordinary shares and A shares is that the
ordinary shares are traded with voting rights attached. The ordinary share and
A share classes both have equal rights to the residual net assets of the
Company, which enables them to be considered collectively as one class per the
provisions of IAS 33. The sponsor share has no distribution rights so has been
ignored for the purposes of IAS 33.
Refer to Note 13 (warrant liability) and to Note 17 (share-based payments) for
instruments that could potentially dilute basic EPS in the future.
Six months ended 31 December 2023 Six months ended 31 December 2022
Unaudited Unaudited
Loss attributable to owners of the parent (£'s) (767,293) (1,213,621)
Weighted average shares in issue 12,700,000 12,700,000
Basic and diluted loss per ordinary share (£'s) (0.0604) (0.0956)
9. SUBSIDIARY
Marwyn Acquisition Company II Limited is the parent company of the Group, the
Group comprises of Marwyn Acquisition Company II Limited and the following
subsidiary as at 31 December 2023:
Nature of business Country of incorporation Proportion of ordinary shares held directly by parent
Company Name
MAC II (BVI) Limited Incentive vehicle British Virgin Islands 100%
The share capital of MAC II (BVI) Limited consists of both ordinary shares and
Incentive Shares. The Incentive Shares are non-voting and disclosed in more
detail in Note 17.
There are no restrictions on the parent company's ability to access or use the
assets and settle the liabilities of the Company's subsidiary The registered
office of MAC II (BVI) Limited is Commerce House, Wickhams Cay 1, P.O. Box
3140, Road Town, Tortola, VG1110, British Virgin Islands. MAC II (BVI) Limited
has a UK establishment (BR023602) at 11 Buckingham Street, London, WC2N 6DF.
10. OTHER RECEIVABLES
As at As at
31 December 2023 30 June
2023
Unaudited Audited
£'s £'s
Amounts receivable in one year:
Prepayments 28,596 20,689
Due from a related party (Note 18) 1 1
VAT receivable 23,795 214,930
52,392 235,620
There is no material difference between the book value and the fair value of
the receivables. Receivables are considered to be past due once they have
passed their contracted due date. Other receivables are all current.
11. CASH AND CASH EQUIVALENTS
As at As at
31 December 2023 30 June
2023
Unaudited Audited
£'s £'s
Cash and cash equivalents
Cash at bank 6,762,967 7,783,448
6,762,967 7,783,448
Credit risk is managed on a group basis. Credit risk arises from cash and cash
equivalents and deposits with banks and financial institutions. For banks and
financial institutions, only independently rated parties with a minimum
short-term credit rating of P-1, as issued by Moody's, are accepted.
12. TRADE AND OTHER PAYABLES
As at As at
31 December 2023 30 June
2023
Unaudited Audited
£'s £'s
Amounts falling due within one year:
Trade payables 3,700 165,661
Due to a related party (Note 18) 58,588 179,192
Accruals 104,498 158,602
Other tax liabilities 38,335 30,345
Other creditors 547 3,039
A1 ordinary share liability (Note 17) 65,400 65,400
271,068 602,239
There is no material difference between the book value and the fair value of
the trade and other payables.
All trade payables are non-interest bearing and are usually paid within 30
days.
13. WARRANT LIABLITY
£'s
Fair value of warrants at 1 July 2022 2,413,000
Fair value movement of warrants:
Warrant liability - ordinary warrants 7,000
Warrant liability - A warrants 120,000
Total fair value movement 127,000
Fair value of warrants at 31 December 2022 2,540,000
Fair value movement of warrants:
Warrant liability - ordinary warrants 14,000
Warrant liability - A warrants 240,000
Total fair value movement 254,000
Fair value of warrants at 30 June 2023 2,667,000
Fair value movement of warrants:
Warrant liability - ordinary warrants (7,000)
Warrant liability - A warrants (120,000)
Total Fair value movement (127,000)
Fair value of warrants at 31 December 2023 2,540,000
On 4 December 2020, the Company issued 700,000 ordinary shares and matching
warrants at a price of £1 for one ordinary share and matching warrant. Under
the terms of the warrant instrument ("Warrant Instrument"), warrant holders
are able to acquire one ordinary share per warrant at a price of £1 per
ordinary share, subject to a downward price adjustment depending on future
share issues. Warrants are fully vested and are exercisable for 5 years from
the date of the Business Acquisition.
On 20 April 2021, the Company issued 12,000,000 A shares and matching warrants
at a price of £1 for one A share and matching A warrant. Under the terms of
the A warrant instrument ("A Warrant Instrument"), warrant holders are able to
acquire one ordinary share per warrant at a price of £1 per ordinary share,
subject to a downward price adjustment depending on future share
issues. Warrants are fully vested and are exercisable for 5 years from the
date of the Business Acquisition.
Effective 31 March 2022, both the Warrant Instrument and A Warrant Instrument
were amended such that the long stop date was extended to the fifth
anniversary of an initial acquisition by a member of the Group (which may be
in the form of a merger, share exchange, asset acquisition, share or debt
purchase, reorganisation or similar transaction) of a business ("Business
Acquisition"). Previously the warrants were exercisable for 5 years from the
date of issue.
Warrants are accounted for as a level 3 derivative liability instruments and
are measured at fair value at grant date and each subsequent balance sheet
date. The warrants and A warrants were separately valued at the date of grant.
For both the warrants and A warrants, the combined market value of one share
and one Warrant was considered to be £1, in line with the market price paid
by third party investors. A Black-Scholes option pricing methodology was used
to determine the fair value, which considered the exercise prices, expected
volatility, risk free rate, expected dividends and expected term.
On 31 December 2023, the fair value was assessed as 20p per warrant, the
result of which is a fair value gain of £127,000 (period ended 31 December
2022: loss £127,000). The Directors are responsible for determining the fair
value of the warrants at each reporting date, the underlying calculations are
prepared by Deloitte LLP.
The key assumptions used in determining the fair value of the Warrants are as
follows:
As at As at
31 December
30 June
2023
2023
Unaudited Audited
Combined price of a share and warrant £1 £1
Exercise price £1 £1
Expected volatility 30.0% 30.0%
Risk free rate 3.30% 4.70%
Expected dividends 0.0% 0.0%
Expected term 5(th) anniversary of the completion of a Business Acquisition 5(th) anniversary of the completion of a Business Acquisition
14. STATED CAPITAL
As at As at
31 December 30 June
2023
2023
Unaudited Audited
£'s £'s
Authorised
Unlimited ordinary shares of no par value - -
Unlimited A shares of no par value - -
100 sponsor shares of no par value - -
Issued and fully paid
700,000 ordinary shares of no par value 326,700 326,700
12,000,000 A shares of no par value 10,320,000 10,320,000
1 Sponsor Share of no par value 1 1
10,646,701 10,646,701
The ordinary shares and A shares are entitled to receive a share in any
distribution paid by the Company and a right to a share in the distribution of
the surplus assets of the Company on a winding-up. Only ordinary shares have
voting rights attached. The "Sponsor Share" confers upon the holder no right
to receive notice and attend and vote at any meeting of members, no right to
any distribution paid by the Company and no right to a share in the
distribution of the surplus assets of the Company on a winding-up. Provided
the holder of the Sponsor Share holds directly or indirectly 5 percent or more
of the issued and outstanding shares of the Company (of whatever class other
than any Sponsor Shares), they have the right to appoint one director to the
Board.
The Company must receive the prior consent of the holder of the Sponsor Share,
where the holder of the Sponsor Share holds directly or indirectly 5 percent
or more of the issued and outstanding shares of the Company, in order to:
· Issue any further Sponsor Shares;
· issue any class of shares on a non pre-emptive basis where the
Company would be required to issue such shares pre-emptively if it were
incorporated under the UK Companies Act 2006 and acting in accordance with the
Pre-Emption Group's Statement of Principles; or
· amend, alter or repeal any existing, or introduce any new
share-based compensation or incentive scheme in respect of the Group; and
· take any action that would not be permitted (or would only be
permitted after an affirmative shareholder vote) if the Company were admitted
to the Premium Segment of the Official List.
The Sponsor Share also confers upon the holder the right to require that: (i)
any purchase of ordinary shares; or (ii) the Company's ability to amend the
Memorandum and Articles, be subject to a special resolution of members whilst
the Sponsor (or an individual holder of a Sponsor Share) holds directly or
indirectly 5 percent or more of the issued and outstanding shares of the
Company (of whatever class other than any Sponsor Shares) or are a holder of
Incentive Shares.
15. RESERVES
The following describes the nature and purpose of each reserve within
shareholders' equity:
Accumulated losses
Cumulative losses recognised in the Consolidated Statement of Comprehensive
Income.
Share based payment reserve
The share based payment reserve is the cumulative amount recognised in
relation to the equity-settled share based payment scheme as further described
in Note 17.
16. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Group has the following categories of financial instruments at the period
end:
As at As at
31 December 2023 30 June
2023
Unaudited Audited
£'s £'s
Financial assets measured at amortised cost
Cash and cash equivalents (Note 11) 6,762,967 7,783,448
Due from related party (Note 18) 1 1
6,762,968 7,783,449
Financial liabilities measured at amortised cost
Trade payables (Note 12) 3,700 165,661
Accruals (Note 12) 104,498 158,602
Due to a related party (Note 18) 58,588 179,192
A1 ordinary share liability (Note 17) 65,400 65,400
232,186 568,855
Financial liabilities measured at fair value through profit and loss
Warrant Liability (Note 13) 2,540,000 2,667,000
2,540,000 2,667,000
The fair value and book value of the financial assets and liabilities are
materially equivalent.
The Group's risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls, and
to monitor risks and adherence limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group's
activities.
Treasury activities are managed on a Group basis under policies and procedures
approved and monitored by the Board. These are designed to reduce the
financial risks faced by the Group which primarily relate to movements in
interest rates. As the Group's assets are predominantly cash and cash
equivalents, market risk and liquidity risk are not currently considered to be
material risks to the Group.
17. SHARE BASED PAYMENTS
Management Long Term Incentive Arrangements
The Group has put in place a Long Term Incentive Plan ("LTIP"), to ensure an
alignment between Shareholders, and those responsible for delivering the
Company's strategy and attract and retain the best executive management
talent.
The LTIP will only reward the participants if shareholder value is created.
This ensures alignment of the interests of management directly with those of
Shareholders.
On inception of the LTIP, "Incentive Shares" were issued by the Company's
subsidiary to Marwyn Long Term Incentive LP ("MLTI"). On 17 June 2022, the
Incentive Shares in the Company's subsidiary were redesignated into A1
ordinary shares ("A1 Shares") and A2 ordinary shares ("A2 Shares") and the
Incentive shares issued to MLTI were redesignated as A2 Shares.
Mark Hodges and Will Self were issued A1 Shares on 19 June 2022 and 5 June
2023 respectively.
Preferred Return
The incentive arrangements are subject to the Company's shareholders achieving
a preferred return of at least 7.5 percent per annum on a compounded basis on
the capital they have invested from time to time (with dividends and returns
of capital being treated as a reduction in the amount invested at the relevant
time) (the "Preferred Return").
Incentive Value
Subject to a number of provisions detailed below, if the Preferred Return and
at least one of the vesting conditions have been met, the holders of the
Incentive Shares can give notice to redeem their Incentive Shares for ordinary
shares in the Company ("Ordinary Shares") for an aggregate value equivalent to
20 percent of the "Growth", where Growth means the excess of the total equity
value of the Company and other shareholder returns over and above its
aggregate paid up share capital (20 percent of the Growth being the "Incentive
Value").
Grant date
The grant date of the Incentive Shares will be the date that such shares are
issued.
Service Conditions and Leaver Provisions
There are leaver provisions in relation to the A1 Shares which are set out in
the subscription agreements entered into between the holders of the A1 Shares
and MAC II (BVI) Limited.
If the holder leaves in circumstances in which he or she is deemed to be a
"Good Leaver" (being any reason other than a bad leaver circumstance), then
the holder of the A1 Shares will be entitled to the vested portion of the A1
Shares and in respect of the remainder of the A1 Shares the holder will be
required to enter into documentation under which, at the election of the
Company or MAC II (BVI) Limited the remainder of the A1 Shares will be
compulsorily redeemed or acquired at the lower of the (i) the subscription
price or (ii) the market value for such A1 Shares or the A1 Shares may be
converted into ordinary shares in the Company. Any holder deemed to be a "Bad
Leaver" (such as termination of employment for gross misconduct, fraud or
criminal acts) will be required to sell his A1 Shares back to MAC II (BVI)
Limited for a total consideration of £0.01. As there are conditions whereby
the unvested portion of the A1 Shares can be redeemed or acquired at the lower
of the (i) the subscription price or (ii) the market value for such A1 Shares,
the amount received on the issue of A1 Shares is recognised as a liability In
the Interim Financial Statements.
Redemption / Exercise
Unless otherwise determined and subject to the redemption conditions having
been met, the Company and the holders of the Incentive Shares have the right
to exchange each Incentive Share for Ordinary Shares in the Company, which
will be dilutive to the interests of the holders of Ordinary Shares. However,
if the Company has sufficient cash resources and the Company so determines,
the Incentive Shares may instead be redeemed for cash. It is currently
expected that in the ordinary course Incentive Shares will be exchanged for
Ordinary Shares. However, the Company retains the right but not the obligation
to redeem the Incentive Shares for cash instead. Circumstances where the
Company may exercise this right include, but are not limited to, where the
Company is not authorised to issue additional Ordinary Shares or on the
winding-up or takeover of the Company.
Any holder of Incentive Shares who exercises their Incentive Shares prior to
other holders is entitled to their proportion of the Incentive Value to the
date that they exercise but no more. Their proportion is determined by the
number of Incentive Shares they hold relative to the total number of issued
shares of the same class.
Vesting Conditions and Vesting Period
The Incentive Shares are subject to certain vesting conditions, at least one
of which must be (and continue to be) satisfied in order for a holder of
Incentive Shares to exercise its redemption right. The vesting conditions are
as follows:
i. It is later than the third anniversary of the initial Business
acquisition and earlier than the seventh anniversary of the Business
Acquisition;
ii. a sale of all or substantially all of the revenue or net assets of
the business of the Subsidiary in combination with the distribution of the net
proceeds of that sale to the Company and then to its shareholders;
iii. a sale of all of the issued ordinary shares of the Subsidiary or a
merger of the Subsidiary in combination with the distribution of the net
proceeds of that sale or merger to the Company's shareholders;
iv. whereby corporate action or otherwise, the Company effects an
in-specie distribution of all or substantially all of the assets of the Group
to the Company's shareholders;
v. aggregate cash dividends and cash capital returns to the Company's
Shareholders are greater than or equal to aggregate subscription proceeds
received by the Company;
vi. a winding up of the Company;
vii. a winding up of the Subsidiary; or
viii. a sale, merger or change of control of the Company.
If any of the vesting conditions described in paragraphs (ii) to (viii) above
are satisfied before the third anniversary of the initial Business
acquisition, the A Shares will be treated as having vested in full.
Holding of Incentive Shares
MLTI, Mark Hodges and Will Self hold Incentive Shares entitling them in
aggregate to 100 percent of the Incentive Value. Any future management
partners or senior executive management team members receiving Incentive
Shares will be dilutive to the interests of existing holders of Incentive
Shares, however the share of the Growth of the Incentive Shares in aggregate
will not increase.
The following shares were in issue at 31 December 2023.
Issue date Name Share designation at balance sheet date Nominal Price Issue price per A ordinary share Number of A ordinary shares Unrestricted market value at grant date £'s IFRS 2 Fair value
£'s £'s
25 November 2020 MLTI A2 £0.01 7.50 2,000 15,000 169,960
19 June 2022 Mark Hodges A1 £0.01 23.50 2,000 47,000 166,275
5 June 2023 Will Self A1 £0.01 23.00 800 18,400 60,000
Valuation of Incentive Shares
Valuations were performed by Deloitte LLP using a Monte Carlo model to
ascertain the unrestricted market value and the fair value at grant date.
Details of the valuation methodology and estimates and judgements used in
determining the fair value are noted herewith and were in accordance with IFRS
2 at grant date.
There are significant estimates and assumptions used in the valuation of the
Incentive Shares. Management has considered at the grant date, the probability
of a successful first Business Acquisition by the Company and the potential
range of value for the Incentive Shares, based on the circumstances on the
grant date.
The fair value of the Incentive Shares granted under the scheme was calculated
using a Monte Carlo model with the following inputs:
Issue date Name Share designation at balance sheet date Volatility Risk-free rate Expected term* (years)
25 November 2020 MLTI A2 25% 0.0% 7.0
19 June 2022 Mark Hodges A1 30% 2.2% 7.1
5 June 2023 Will Self A1 30% 4.4% 7.2
*The expected term assumes that the Incentive Shares are exercised 7 years
post acquisition.
The Incentive Shares are subject to the Preferred Return being achieved, which
is a market performance condition, and as such has been taken into
consideration in determining their fair value. The model incorporates a range
of probabilities for the likelihood of a Business Acquisition being made of a
given size.
Expense related to Incentive Shares
An expense of £21,755 (31 December 2022: £14,652) has been recognised in the
Statement of Comprehensive Income in respect of the Incentive Shares during
the period. This has increased share-based payment reserve to £223,396 (30
June 2023: £ 201,641).There is a service condition associated with the shares
issued to both Mark Hodges and Will Self which requires the fair value charge
associated with these shares to be allocated over the minimum vesting period.
These vesting periods are estimated to be 4.0 years and 3.04 years
respectively from the date of grant.
There are no service conditions attached to the MLTI shares and as result the
fair value at grant date was expensed to the profit and loss account on issue.
18. RELATED PARTIES
James Corsellis has served as a director of the Company during the period and
Antoinette Vanderpuije is the Company Secretary of the Company. Funds managed
by Marwyn Investment Management LLP ("MIMLLP"), of which James Corsellis is
the managing partner, and Antoinette Vanderpuije is a partner, hold 75 percent
of the Company's issued ordinary shares and warrants and 100% of the A shares
and A warrants at the period end date as well as the Sponsor Share. The £1
due for the Sponsor Share remains unpaid at the period end (30 June 2022:
unpaid).
James Corsellis and Antoinette Vanderpuije have an indirect beneficial
interest in the A2 ordinary shares issued by MAC II (BVI) Limited to Marwyn
Long Term Incentive LP which is disclosed in Note 17.
Mark Hodges and Will Self have a direct interest in the A1 ordinary shares
issued by MAC II (BVI) Limited, as disclosed in Note 17.
James Corsellis is also the managing partner of Marwyn Capital LLP, and
Antoinette Vanderpuije is a partner, which provides corporate finance support,
company secretarial, administration and accounting services to the Company. On
an ongoing basis a monthly fee of £50,000 per calendar month charged for the
provision of the corporate finance services and managed services support is
charged on a time spent basis. The total amount charged in the period ended 31
December 2023 by Marwyn Capital LLP for services was £352,616 (31 December
2022: £346,012) and they had incurred expenses on behalf of the Company of
£39,399 (31 December 2022: £76,401) and of this £58,588 (30 June 2023:
£179,192) was outstanding as at the period end.
The Company has recharged costs during the period associated with provision of
project services of £Nil (31 December 2022: £10,750) to Marwyn Acquisition
Company III Limited ("MAC III"), of which £Nil (30 June 2023: £Nil) was due
to the Company at period end. MAC III is related to the Group through James
Corsellis and Antoinette Vanderpuije being directors of MAC III during the
period.
19. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding at 31 December
2023 (31 December 2022: £Nil) that require disclosure or adjustment in these
Interim Financial Statements.
20. POST BALANCE SHEET EVENTS
There have been no material post balance sheet events that would require
disclosure or adjustment to these Interim Financial Statements.
ADVISORS
Company Broker BVI legal advisers to the Company
WH Ireland Limited Conyers Dill & Pearman
24 Martin Lane Commerce House
London Wickhams Cay 1
EC4R 0DR Road Town
+44 (0)20 7220 1666 VG1110
Tortola
British Virgin Islands
Company Secretary Depository
Antoinette Vanderpuije Link Market Services Trustees Limited
11 Buckingham Street The Registry
London 34 Beckenham Road
WC2N 6DF Beckenham
Email: MAC2@marwyn.com Kent
BR3 4TU
Registered Agent and Assistant Company Secretary Registrar
Conyers Corporate Services (BVI) Limited Link Market Services (Guernsey) Limited
Commerce House Mont Crevelt House
Wickhams Cay 1 Bulwer Avenue
Road Town St Sampson
VG1110 Guernsey
Tortola GY2 4LH
British Virgin Islands
English legal advisers to the Company Independent auditor
Travers Smith LLP Baker Tilly Channel Islands Limited
10 Snow Hill First Floor, Kensington Chambers
London 46-50 Kensington Place
EC1A 2AL St Helier
Jersey, JE4 0ZE
PR Advisor Registered office
FGS Global Commerce House
1-11 John Adam Street Wickhams Cay 1
London Road Town
WC2N 6HT VG1110
Tortola
British Virgin Islands
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