Interim Report for the period ended 31 Dec 2022
31/03/2023 08:00
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RNS Number : 9164U Marwyn Acquisition Company II Ltd 31 March 2023
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LEI: 2549008KZ7HM27V4O637
Marwyn Acquisition Company II Limited
(the "Company")
Interim Report for the period ended 31 December 2022
The Company announces its interim results for the period ended 31 December
2022.
The Interim Report is 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
FGS Global - PR Adviser
Rollo Head 07768 994 987
Chris Sibbald 07855 955 531
Investec Bank plc - Financial Adviser 020 7597 5970
Chris Baird
Carlton Nelson
Alex Wright
N.M. Rothschild & Sons Limited - Financial Adviser 020 7280 5000
Peter Nicklin
Shannon Nicholls
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 2022
MANAGEMENT REPORT
I present to shareholders the unaudited interim condensed consolidated
financial statements of Marwyn Acquisition Company II Limited (the "Company")
for the six months to 31 December 2022 (the "Consolidated 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 incorporated on 31 July 2020 and
subsequently listed on the Main Market of the London Stock Exchange on 4
December 2020. The vehicle is led by Chairman Mark Hodges, who was previously
CEO of ReAssure, prior to which he held senior executive plc board positions
at a number of large financial services and consumer businesses including
Centrica, Towergate and Aviva.
The Company is backed by Marwyn who have launched 11 previous comparable
acquisition vehicles that have acquired platform businesses, which include
Advanced Computer Software, BCA Marketplace, Breedon Aggregates and
Entertainment One.
The company is pursuing its stated investment strategy of seeking acquisition
opportunities in the financial services, consumer and technology sectors.
The Directors believe that the current market backdrop has, amongst a range of
drivers, four notable interrelated themes, shaping a clear customer need that
remains largely unmet.
1. Changing Population and demographics
Per recent estimates, there are currently 21 million people aged 55 and over
in the UK (2020) and 99 million people aged 55 and over in the US (2021).
This global trend is likely to have a significant impact on economies, social
care systems and household finances and the Directors believe future financial
solutions will need to reflect an increasing level of intergenerational
financial and social dependencies with financial products, advice and life
solutions needing to be tailored to meet a spectrum of complex
multi-generational needs.
2. Wealth transfer and the role of families
Intergenerational wealth transfer is expected to exceed US$68 trillion, with
£5.5 trillion of this in the UK, underpinning the increasing importance of
the role played by families in providing future financial solutions.
· In the UK, one in every two first-time buyers aged under 35 is
receiving financial support from their parents;
· 71% of these new homeowners say they would not have been likely to
buy without financial support from family or friends;
· 75% of parents provide financial support to children who have left
home;
· 43% of parents with children aged 30+ say they are helping them
financially;
· In the US in 2018, families and friends supported one in every five
existing home buyers with the purchase of 1.2 million homes, financing US$317
billion worth of homes; and
· US parents are spending US$500 billion on their adult children per
annum.
3. Social and non-financial family support
· 5.4 million people in the UK provide unpaid care for a friend or
family member with over 1.4 million people providing fifty or more hours of
care per week. The peak age of carers in the UK is 55-64 with 29% of adults
providing care and 22% of people aged over 65 providing unpaid care.
· In the US, where 53 million people are providing unpaid care to an
adult with health or functional needs, 61% of these carers are fully employed
and 45% say caregiving had at least one financial impact (e.g. stopped saving
or took on more debt).
· 10 million caregivers (25% of US caregivers) fall into the
millennial age range (22-37), of which, 73% are employed but also spend an
average of 21 hours a week caring for loved ones.
4. Concentration of wealth
· In the UK, household wealth is principally concentrated in property
(36%) and pension assets (42%)
· In the US, household wealth is similarly concentrated in pensions
(20%), real estate (24%) and equities (27%).
Opportunities for a new approach to family-focussed financial solutions
With the combination of these social and macroeconomic conditions and trends,
the Directors believe all generations are facing increasingly challenging
financial situations which are creating several problems to be solved. The
Directors believe there is a well-defined need and opportunity, now more than
ever, for clear and impartial support and solutions to be provided to, and
shared amongst, friends, family and peers.
Strategy Execution
The Company intends to execute its strategy through a combination of selective
M&A of platform and bolt-on businesses, potential strategic partnerships
with established financial services operators as well as ongoing operational
improvements in any acquired businesses. 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
Through the period to date we have made good progress in the development of
the Company's strategy, the composition of the Board and in identifying and
progressing a pipeline of potential executive management appointments, target
M&A opportunities and potential future commercial partnerships. The
Directors remain excited about delivering on the Company's objective of
generating long term returns for shareholders and enhancing value of the
acquired businesses by supporting sustainable growth, further acquisitions,
and performance improvements with the acquired companies.
On 7 November 2022, the Company announced the appointment of Cathryn Riley as
Non-executive Director. Cathryn is a highly experienced financial services
industry executive and non-executive director, having worked across both
public and private markets. She has had a wide-ranging career covering
insurance, customer services, IT, operations and human resources. She was
previously Group Chief Operations Director at Aviva plc, where she worked for
17 years, in roles including Group CIO, UK Commercial Director, CIO/COO Europe
and COO. Prior to Aviva, Cathryn was general manager of transformation at
BUPA, as well as a consultant in the financial services division of Coopers
& Lybrand. On 7 November 2022, the Company also announced that Mark
Brangstrup Watts had resigned from the Board.
On 27 March 2023, the Company announced that Will Self commenced his role as
Chief Executive Officer - Pensions Division, to lead the identification,
acquisition, and integration of pensions businesses for the Group, leading the
advancement of the Group's stated investment strategy. Will joins the Group
from Curtis Banks Group PLC (CBP:LON) where he was Chief Executive Officer.
Prior to this, he was Chief Executive Officer of Suffolk Life, a division of
Legal & General. He holds a variety of non-executive roles and an MBA from
Cranfield.
On 29 March 2022, the Company announced the launch of a 12-month placing
programme (the "Placing Programme") pursuant to which the Company has the
ability to issue up to 500 million C ordinary redeemable shares ("C Shares")
at an issue price of £1 per C share in order to raise up to an aggregate of
£500 million. The Placing Programme lapses on 31 March 2023, at which time
£723,592 of costs incurred which are currently included in current asset
deferred costs (refer to Note 3) will be taken to the profit and loss account
and recorded under non-recurring project, professional and diligence costs.
The Directors believe that allowing the current Placing Programme to lapse
saves the significant legal and professional fees and management time that
would be incurred in its renewal whilst the focus remains firmly on
identifying the Company's platform acquisition, but also does not preclude the
Company from issuing a further placing programme prospectus in the future
should the use of C shares be considered particularly advantageous at that
time for the ongoing strategic direction of the Company.
Results
The Group's loss after taxation for the period to 31 December 2022 was
£1,213,621 (period to 31 December 2021: loss of £658,746). The Group held a
cash balance at the period end of £9,091,686 (as at 30 June 2021:
£10,254,198).
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.
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, whose role is to
promote the long term sustainable success of the Company, generating value for
shareholders and contributing to wider society.
* The Board ensures that it has the policies, processes, information, time and
resources it needs in order to function effectively and efficiently.
* The Board ensures that the necessary resources are in place for the company to
meet its objectives and measure performance against them.
Given the size and nature of the Company, the Board has not established any
committees and intends 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 comply with the UK Corporate Governance Code.
Risks
The Directors, alongside the Company's advisers, have performed a robust risk
assessment and have identified a wide range of risks, which are set out in the
Company's prospectuses dated 4 December 2020 (in relation to the Company's
IPO) and 31 March 2022 (in relation to the Placing Programme. The Company's
prospectuses are available on the Company's website: www.marwynac2.com. The
Company's audited annual report and financial statements for the year ended 30
June 2022, 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 financial statements and that these remain applicable for the
remaining six months of the year.
Outlook
In the work we have done over the period, including the progression of our
strategy and customer proposition, we are even more convinced of the scale and
scope of the opportunity. We are actively progressing discussions regarding
further appointments to the Company's executive management team to capitalise
on this and are continuing to develop and evaluate a pipeline of potential
platform acquisitions and commercial partnerships, at varying stages of
progression. We look forward to updating our shareholders in due course with
regards further progress.
RESPONSIBILITY STATEMENT
Each of the Directors confirms that, to the best of their knowledge:
(a) these Consolidated Interim Financial Statements, which have been prepared
in accordance with IAS 34 "Interim Financial Reporting" as adopted by the
European Union, give a true and fair view of the assets, liabilities,
financial position and profit or loss of MAC; and
(b) these Consolidated Interim Financial Statements comply with the
requirements of DTR 4.2.
Neither the Company nor the Directors accept any liability to any person in
relation to the interim financial report except to the extent that such
liability could arise under applicable law.
Details on the Company's Board of Directors can be found on the Company
website at www.marwynac2.com (http://www.marwynac2.com) .
Mark Hodges
Chairman
31 March 2023
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Six months ended
31 December 31 December
2022 2021
Note Unaudited Unaudited
£ £
Administrative expenses 6 (1,177,027) (785,746)
Total operating loss (1,177,027) (785,746)
Finance income 90,406 -
Fair value (loss)/gain on warrant provision 13 (127,000) 127,000
Loss for the period before tax (1,213,621) (658,746)
Income tax 7 - -
Loss for the period (1,213,621) (658,746)
Total other comprehensive income -
Total comprehensive loss for the period (1,213,621) (658,746)
Loss per ordinary share
Basic and diluted 8 (0.10) (0.05)
The Group's activities derive from continuing operations.
The Notes on pages 11 to 23 form an integral part of these Consolidated
Interim Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
31 December 30 June
2022 2022
Note Unaudited Audited
£ £
Assets
Current assets
Other receivables 10 886,280 805,360
Cash and cash equivalents 11 9,091,686 10,254,198
Total current assets 9,977,966 11,059,558
Total assets 9,977,966 11,059,558
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 15 185,781 171,129
Accumulated losses (3,784,235) (2,570,614)
Total equity 7,048,247 8,247,216
Current liabilities
Trade and other payables 12 389,719 399,342
Warrants 13 2,540,000 2,413,000
Total liabilities 2,929,719 2,812,342
Total equity and liabilities 9,977,966 11,059,558
The Notes on pages 11 to 23 form an integral part of these Consolidated
Interim Financial Statements.
The financial statements were approved by the Board of Directors on 31 March
2023 and were signed on its behalf by:
Mark Hodges James Corsellis
Chairman Director
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Notes Ordinary shares A Shares Sponsor share Share based payment reserve Accumulated losses Total equity
£ £ £ £ £ £
Balance as 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 expense 15 - - - 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
£ £ £ £ £ £
Balance at 1 July 2021 326,700 10,320,000 1 169,960 (636,096) 10,180,565
Total comprehensive loss for the period - - - - (658,746) (658,746)
Balance as at 31 December 2021 326,700 10,320,000 1 169,960 (1,294,842) 9,521,819
The Notes on pages 11 to 23 form an integral part of these Consolidated
Interim Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Six months ended
31 December 31 December
2022 2021
Note Unaudited Unaudited
£ £
Operating activities
Loss for the period (1,213,621) (658,746)
Adjustments to reconcile total operating loss to net cash flows:
Less: Finance income (90,406) -
Add back/(deduct) fair value movement on warrant liability 13 127,000 (127,000)
Add back share based payment expense 15 14,652 -
Working capital adjustments:
(Increase) / decrease in trade and other receivables and prepayments (80,920) 405,773
Decrease in trade and other payables (9,623) (157,716)
Net cash flows used in operating activities (1,252,918) (537,689)
Investing activities
Interest received 90,406 -
Net cash flows used in investing activities 90,406 -
Net decrease in cash and cash equivalents (1,162,512) (537,689)
Cash and cash equivalents at the beginning of the period 10,254,198 12,255,387
Cash and cash equivalents at the end of the period 11 9,091,686 11,717,698
The Notes on pages 11 to 23 form an integral part of these Consolidated
Interim Financial Statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM 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, British Virgin Islands VG1110 and UK establishment 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 wholly owned subsidiary, MAC II (BVI) Limited
(together with the Company the "Group").
2. ACCOUNTING POLICIES
(a) Basis of preparation
The Consolidated Interim Financial Statements have been prepared in accordance
with IAS 34 Interim Financial Reporting and are presented on a condensed
basis.
The Consolidated 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 2022, which is available on
the Company's website www.marwynac2.com. Accounting policies applicable to
these Consolidated Interim Financial Statements are consistent with those
applied in the Group's Annual Report and Consolidated Financial Statements for
the period ended 30 June 2022.
(b) Going concern
The Consolidated 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 twelve months from the date
of approval.
(c) New standards and amendments to International Financial Reporting
Standards
New standards and amendments to International Financial Reporting Standards
The accounting policies adopted in the preparation of these Consolidated
Interim Financial Statements are consistent with those followed in the
preparation of the Group's audited consolidated financial statements for the
year ended 30 June 2022, which were prepared in accordance with International
Financial Reporting Standards ("IFRS"), as adopted by the European Union,
updated to adopt those standards which became effective for periods starting
on or before 1 July 2022: Onerous Contracts - Cost of Fulfilling a Contract
(Amendments to IAS 37), Property, Plant and Equipment: Proceeds before
Intended Use (Amendments to IAS 16), Annual Improvements to IFRS Standards
2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41), Amendments to
IFRS 3: References to Conceptual Framework (all of which had an effective date
of 1 January 2022). None of these standards have had a material impact on the
Group.
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
Amendments to IAS 1 Presentation of Financial Statements: Classification of 1 January 2023
Liabilities as Current or Non-current*
Disclosure of accounting policies (Amendments to IAS 1) 1 January 2023
Definition of accounting estimates (Amendments to IAS 8) 1 January 2023
Amendments to IFRS 17 Insurance contracts 1 January 2023
Amendments to IFRS 4 - Extension of temporary exemption of applying IFRS 9 1 January 2023
Amendments to IAS 12 Income Taxes: Deferred tax related to assets and 1 January 2023
liabilities arising from a similar transaction
Amendments to IFSR 16 - Lease liability in sale and leaseback* 1 January 2024
Amendments to IAS 1 - Liabilities with covenants* 1 January 2024
*Subject to endorsement by the EU
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group's 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 accounting judgements
Recognition and classification of costs relating to a possible further equity
raise
As at the period end, £723,592 has been included in current asset deferred
costs (refer to note 10) as these costs are directly attributable to a future
issuance of shares under the Placing Programme. As detailed in the Management
Report and note 19, the Placing Programme lapses on 31 March 2023, and as
such, on this date the £723,592 of costs incurred which are currently
included in current asset deferred costs will be taken to the profit and loss
account and recorded under non-recurring project, professional and diligence
costs.
Key sources of estimation uncertainty
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). Effective 31 March 2022, the exercise date for the Warrants was
extended to the 5(th) anniversary of a Business Acquisition, prior to this
date the Warrants were exercisable at any time until five years after the
issue date. 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 a trading business, the Board of Directors
considers the Group as a whole for the purposes of assessing performance and
allocating resources, and therefore the Group has one reportable operating
segment.
5. EMPLOYEES AND DIRECTORS
Employment cost for the Group during the period:
For six months For six months
Ended 31 December 2022 Ended 31 December 2021
Unaudited Unaudited
£ £
Employment costs for the Group during the period
Directors' fees 135,694 -
Social security costs 18,901 -
154,595 -
The board considers the Directors of the company, along with senior employees,
to be the key management personnel of the Group.
During the six months ended 31 December 2022, the Company had the following
directors: James Corsellis, Mark Brangstrup Watts (resigned 6 November 2022),
Mark Hodges (appointed 19 June 2022) and Catherine Riley (appointed 6
November). The Company has not had any employees since incorporation.
Mark Hodges was appointed as a Non-Executive Director and Chairman. Under the
terms of his appointment letter, he is entitled to an annual fee of £250,000.
Mark Hodges has a direct interest in the Incentive Shares as disclosed in note
15 and received a signing on fee of £61,238 of which £47,000 was used to pay
the subscription for his Incentive Shares.
Cathryn Riley was appointed as a Non-Executive Director and under the terms of
her appointment letter, she is entitled to an annual fee of £70,000.
James Corsellis has a beneficial interest in the incentive shares issued by
the Company's subsidiary during the period. Mark Brangstrup Watts had a
beneficial interest in the incentive shares whilst he served as a director of
the Company. This is disclosed in note 15. Neither Mark nor James received a
director fee.
6. ADMINISTRATIVE EXPENSES
For six months For six months
ended 31 December 2022 ended 31 December 2021
Unaudited Unaudited
£ £
Group expenses by nature
Employment costs 154,595 -
Professional support 434,998 202,062
Non-recurring project, professional and due diligence costs 557,332 551,531
Share based payment expense 14,652 -
Audit Fees 9,750 22,500
Other expenses 5,700 9,653
1,177,027 785,746
7. TAXATION
For six months For six months
ended 31 December 2022 ended 31 December 2021
Unaudited Unaudited
£ £
Analysis of tax in period
Current tax on profits for the period - -
Total current tax - -
Reconciliation of effective rate and tax charge:
For six months For six months
ended 31 December 2022 ended 31 December 2021
Unaudited Unaudited
£ £
Loss on ordinary activities before tax (1,213,621) (658,746)
Expenses not deductible for tax purposes 146,856 122
Loss on ordinary activities subject to corporation tax (1,066,765) 658,624
Loss on ordinary activities multiplied by the rate of corporation tax in the (202,685) (125,139)
UK of 19% (2021: 19%)
Effects of:
Losses carried forward for which no deferred tax recognised 202,685 125,139
Total taxation charge - -
The Group is tax resident in the UK. As at 31 December 2022, cumulative tax
losses available to carry forward against future trading profits were
£2,786,043 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 EPS is calculated by dividing the loss attributable to equity holders of
the company by the weighted average number of ordinary shares in issue during
the period. Diluted EPS is calculated by adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares. The weighted average number of shares has not been adjusted
in calculating diluted EPS as there are no instruments which have a current
dilutive effect. The Company has issued warrants, which are each convertible
into one ordinary share. The Group made a loss in the current period, which
would result in the warrants being anti-dilutive. Therefore, the warrants have
not been included in the calculation of diluted earnings per share.
The Company maintains three different share classes, being ordinary shares, A
shares and sponsor shares. The key difference between ordinary shares and A
shares is that the ordinary shares are listed and have voting rights attached.
The 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 rights to distribution rights
so has been ignored for the purposes of IAS 33.
Refer to note 13 (warrant liability) and to note 15 (share-based payments) of
these Consolidated Interim Financial Statements for instruments that could
potentially dilute basic EPS in the future.
For six months ended 31 December 2022 For six months ended 31 December 2021
Unaudited Unaudited
Loss attributable to owners of the parent (£'s) (1,213,621) (658,746)
Weighted average shares in issue 12,700,000 12,700,000
Basic and diluted loss per ordinary share (£'s) (0.10) (0.05)
9. INVESTMENTS
Principal subsidiary undertakings of the Group
The Company is the parent of the Group, the Group comprises of the Company and
the following subsidiary as at 31 December 2022:
Nature of business Country of incorporation Proportion of ordinary shares held by parent Proportion of ordinary shares held by the Group
Subsidiary
MAC II (BVI) Limited Incentive vehicle BVI 100% 100%
There are no restrictions on the parent company's ability to access or use the
assets and settle the liabilities of the parent 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 31 December 2022 As at 30
June 2022
Unaudited Audited
£ £
Amounts receivable in one year:
Prepayments 45,379 17,634
Deferred costs 723,592 723,592
Due from a related party (note 17) 1 42,001
VAT receivable 117,308 22,133
886,280 805,360
There is no material difference between the book value and the fair value of
the receivables.
An amount of £723,592 (June 2022: £723,592) is included in deferred costs as
it directly relates to the potential issuance of share capital and therefore,
on completion of the Placing Programme, would be reflected in equity. Further
details are set out in the critical accounting judgements in note 2 and under
post balance sheet events in note 19. The Placing Programme lapses on 31 March
2023, and as such on this date the costs incurred which are currently included
in current asset deferred costs will be taken to the profit and loss account
and recorded under non-recurring project, professional and diligence costs.
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 2022 30 June 2022
Unaudited Audited
£ £
Cash and cash equivalents
Cash at bank 9,091,686 10,254,198
9,091,686 10,254,198
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 2022 30 June 2022
Unaudited Audited
£ £
Amounts falling due within one year:
Trade payables 75,346 74,740
Due to a related party (note 17) 58,670 109,735
Accruals 198,779 141,026
Other tax liabilities 9,924 26,841
A1 ordinary share liability 47,000 47,000
389,719 399,342
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 2021 1,778,000
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 2021 1,651,000
Fair value movement of warrants:
Warrant liability - ordinary warrants 42,000
Warrant liability - A warrants 720,000
Total fair value movement 762,000
Fair value of warrants at 30 June 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
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 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 at the period end and are immediately exercisable for 5 years
from the date of issue.
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 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 at the
period end and are immediately 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. At
31 December 2022, the fair value was assessed as 20p per warrant, the result
of which is a fair value loss of £127,000 (period ended 31 December 2021:
gain £127,000)
The key assumptions used in determining the fair value of the Warrants are as
follows:
As at As at
31 December
30 June
2022
2022
Unaudited Audited
Combined price of a share and warrant £1 £1
Exercise price £1 £1
Expected volatility 30.0% 25.0%
Risk free rate 3.5% 2.17%
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
A 5-percentage point in the expected volatility rate would not have a material
impact on the fair value of the Warrants.
14. SHARE CAPITAL
As at 31 December As at 30 June
2022
2022
Unaudited Audited
£ £
Authorised
Unlimited ordinary shares of no par value - -
Unlimited A shares of no par value - -
100 sponsor shares of no par value - -
Issued
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 summary winding-up. Provided the
holder of the Sponsor Share holds directly or indirectly 5 per cent. 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 per cent.
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 share 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 per cent. 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. SHARE BASED PAYMENTS
Management Long Term Incentive Arrangements
The Group has put in place a Long Term Incentive Plan ("LTIP"), to ensure an
alignment with all Shareholders, and the high competition for 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"). Effective
19 June 2022, the Incentive shares issued to MLTI were redesignated as A2
Shares and the Company's Chairman, Mark Hodges, was issued 2,000 A1 Shares.
Preferred Return
The incentive arrangements are subject to the Company's shareholders achieving
a preferred return of at least 7.5 per cent. 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 per cent. 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 per cent. 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 amounts received on the issue of A1 Shares is recognised as a
liability in the 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. where by 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 and Mark Hodges hold Incentive Shares entitling them to 100 per cent. 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 2022.
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
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
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 £14,652 (2021: £Nil) has been recognised in the Statement of
Comprehensive Income in respect of the Incentive Shares issued during the
year. At 31 December 2022, the share based payment reserve was £185,781 (31
December 2021: £171,129). There is a service condition associated with the
shares issued to Mark Hodges, which requires the fair value charge associated
with his shares to be allocated over the minimum vesting period. This vesting
period is estimated to be 4.0 years 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.
16. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Group has the following categories of financial instruments at the period
end:
As at 31 December As at 30 June
2022
2022
Unaudited Audited
£ £
Financial assets measured at amortised cost
Cash and cash equivalents 9,091,686 10,254,198
Due from related party (note 17) 1 42,001
9,091,687 10,296,199
Financial liabilities measured at amortised cost
Trade payables 75,346 74,740
Due to a related party (note 17) 58,670 109,735
Accruals 198,779 141,026
A1 ordinary share liability 47,000 47,000
379,795 372,501
Financial liabilities measured at fair value to profit and loss
Warrant Liability 2,540,000 2,413,000
2,540,000 2,413,000
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. RELATED PARTIES
Mark Brangstrup Watts and James Corsellis have served as directors 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, hold 75 per cent. 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 (31 June 2022: unpaid).
During the period MIMLLP recharged expenses of £nil (period ended 31 December
2021: £54,669), of which £nil (30 June 2022: £nil) was outstanding at the
period end. Mark Brangstrup Watts was a director of the Company until 6
November 2022, up until this date Mark Brangstrup Watts was also a managing
partner of MIMLLP.
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 15. Mark Brangstrup Watts
also had an indirect beneficial interest in the A2 ordinary shares until he
stepped down as director on 6 November 2022.
Mark Hodges has a direct interest in the A1 ordinary shares issued by MAC II
(BVI) Limited, as disclosed in note 15.
James Corsellis is also the managing partner of Marwyn Capital LLP, which
provides corporate finance support, company secretarial, administration and
accounting services to the Company. Antoinette Vanderpuije is a partner of
Marwyn Capital LLP. 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 2022 by Marwyn Capital LLP for services was
£346,012 (period ended 31 December 2021: £85,614) and they had incurred
expenses on behalf of the Company of £76,401 (period ended 31 December 2021:
£1,860) and of this £58,670 (30 June 2022: £109,735) was outstanding as at
the period end.
The Company has recharged costs during the period associated with provision of
project services of £10,750 (period ended 31 December 2021: £4,729) to
Marwyn Acquisition Company III Limited ("MAC III"), of which £nil (30 June
2022: £42,000) 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.
18. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding at 31 December
2022 (31 December 2021: Nil) that require disclosure or adjustment in these
financial statements.
19. POST BALANCE SHEET EVENTS
On 31 March 2023, the Placing Programme lapses and as such on this date
£723,592 of costs incurred which are currently included in current asset
deferred costs will be taken to the profit and loss account and recorded under
non-recurring project, professional and diligence costs.
There are no other post balance sheet events that require adjustment or
disclosure in these interim financial statements.
ADVISORS
Financial Adviser BVI legal advisers to the Company
Investec Bank Plc Conyers Dill & Pearman
30 Gresham St Commerce House
London Wickhams Cay 1
EC2V 7QN Road Town
+44 (0)20 7597 4000 VG1110
Financial Adviser Tortola
British Virgin Islands
Financial Adviser Depository
N.M. Rothschild & Sons Limited Link Market Services Trustees Limited
New Court, St Swithin's Lane The Registry
London 34 Beckenham Road
EC4N 8AL Beckenham
020 7280 5000 Kent
BR3 4TU
Company Secretary Registrar
Antoinette Vanderpuije Link Market Services (Guernsey) Limited
11 Buckingham Street Mont Crevelt House
London Bulwer Avenue
WC2N 6DF St Sampson
Email: MAC2@marwyn.com Guernsey
GY2 4LH
Registered Agent and Assistant Company Secretary Independent auditor
Conyers Corporate Services (BVI) Limited Baker Tilly Channel Islands Limited
Commerce House First floor, Kensington Chambers
Wickhams Cay 1 46-50 Kensington Place
Road Town St Helier
VG1110 Jersey
Tortola JE4 0ZE
British Virgin Islands +44 (0) 1534 755150
English legal advisers to the Company Registered office
Travers Smith LLP Commerce House
10 Snow Hill Wickhams Cay 1
London Road Town
EC1A 2AL VG1110
Tortola
British Virgin Islands
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