REG - Marwyn AcqCo III Ltd - Interim Financial Statements - 31 December 2023
28/03/2024 07:00
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RNS Number : 5955I Marwyn Acquisition Company III Ltd 28 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,
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WHICH IT WOULD BE UNLAWFUL TO DO SO.
LEI: 254900YT8SO8JT2LGD15
Marwyn Acquisition Company III 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.marwynac3.com
(http://www.marwynac3.com) .
Enquiries:
Company Secretary
Antoinette Vanderpuije - 020 7004 2700
WH Ireland - Corporate Broker 020 7220 1666
Harry Ansell
Katy Mitchell
Marwyn Acquisition Company III Limited
Unaudited Interim
Condensed Consolidated Financial Statements for the six months ended 31
December 2023
MANAGEMENT REPORT
We present to shareholders the unaudited interim condensed consolidated
financial statements (the "Interim Financial Statements") of Marwyn
Acquisition Company III Limited (the "Company") for the six months to 31
December 2023, consolidating the results of Marwyn Acquisition Company III
Limited and its subsidiary MAC III (BVI) Limited (collectively, the "Group" or
"MAC").
Strategy
The Company was incorporated on 31 July 2020 and subsequently listed on the
Main Market of the London Stock Exchange on 4 December 2020. 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's objective is to
generate attractive long term returns for shareholders and to enhance value by
supporting sustainable growth, acquisitions, and performance improvements
within the acquired companies.
While a broad range of sectors will be considered by the Directors, those
which they believe will provide the greatest opportunity and which the Company
will initially focus on include:
• Automotive & Transport;
• Clean Technology;
• Consumer & Luxury Goods;
• Banking & FinTech;
• Insurance, Reinsurance & InsurTech & Other Vertical Marketplaces;
• Media & Entertainment;
• Healthcare & Diagnostics; and
• Business-to-Business Services.
The Directors may consider other sectors if they believe such sectors present
a suitable opportunity for the Company.
The Company will seek to identify situations where a combination of management
expertise, improving operating performance, freeing up cashflow for
investment, and implementation of a focussed buy and build strategy can unlock
growth in their core markets and often into new territories and adjacent
sectors.
Activity
During the period, the Directors have noted a marked increase in the volume of
inbound opportunities and introductions to potential management partners, a
number of whom the Company has engaged in discussions with. The Directors
believe that in the current constrained financing environment, a listed cash
shell becomes an increasingly attractive vehicle for industry-leading
management partners to execute buy and build strategies.
Results
The Group's profit after taxation for the period to 31 December 2023 was
£237,150 (31 December 2022: loss of £509,128). The Group held a cash balance
at the period end of £10,032,534 (as at 30 June 2023: £10,079,604). The
Group has not yet acquired an operating business and as such is not yet
generating income from trading activities.
Directors
The Directors of the Company have served as directors during the period and
until the date of this report as set out below:
James Corsellis (Chairman)
Antoinette Vanderpuije
Tom Basset
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; 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 continue to progress discussions with a number of potential
management partners and investment opportunities across a range of sectors. As
a listed cash shell, with the flexibility of the MAC structure, the Directors
believe the Company is well-positioned to execute a buy and build strategy,
once the management partner has been appointed and the investment hypothesis
narrowed to a specific sectoral opportunity. The Directors look forward to
updating shareholders in due course.
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.marwynac3.com (http://www.marwynac3.com) .
James Corsellis
Chairman
27 March 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months
ended ended
31 December 31 December
2023 2022
Note Unaudited Unaudited
£'s £'s
Administrative expenses 6 (271,560) (358,238)
Total operating loss (271,560) (358,238)
Finance income 254,710 103,110
Movement in fair value of warrants 13 254,000 (254,000)
Profit / (loss) for the period before tax 237,150 (509,128)
Income tax 7 - -
Profit / (loss) for the period 237,150 (509,128)
Total other comprehensive income - -
Total comprehensive profit / (loss) for the period 237,150 (509,128)
Profit / (loss) per ordinary share
Basic 8 0.0187 (0.0401)
Diluted 8 (0.0011) (0.0401)
The Group's activities derive from continuing operations.
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 23,781 20,780
Cash and cash equivalents 11 10,032,534 10,079,604
Total current assets 10,056,315 10,100,384
Total assets 10,056,315 10,100,384
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, 17 169,960 169,960
Accumulated losses 15 (2,988,075) (3,225,225)
Total equity 7,828,586 7,591,436
Current liabilities
Trade and other payables 12 68,729 95,948
Warrants 13 2,159,000 2,413,000
Total liabilities 2,227,729 2,508,948
Total equity and liabilities 10,056,315 10,100,384
The Interim Financial Statements were approved by the Board of Directors on 27
March 2024 and were signed on its behalf by:
James Corsellis Antoinette Vanderpuije
Chairman Director
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary A Sponsor Share Accumulated Total
shares Shares share based losses equity
payment
reserve
£'s £'s £'s £'s £'s £'s
Balance as at 1 July 2022 326,700 10,320,000 1 169,960 (1,773,103) 9,043,558
Total comprehensive loss for the period - - - - (509,128) (509,128)
Balance as at 31 December 2022 326,700 10,320,000 1 169,960 (2,282,231) 8,534,430
Ordinary A Sponsor Share Accumulated Total
shares Shares share based losses equity
payment
reserve
£'s £'s £'s £'s £'s £'s
Balance as at 1 July 2023 326,700 10,320,000 1 169,960 (3,225,225) 7,591,436
Total comprehensive profit for the period - - - - 237,150 237,150
Balance as at 31 December 2023 326,700 10,320,000 1 169,960 (2,988,075) 7,828,586
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months
ended ended
31 December 31 December
2023 2022
Note Unaudited Unaudited
£'s £'s
Operating activities
Profit / (loss) for the period 237,150 (509,128)
Adjustments to reconcile total operating profit / (loss) to net cash flows:
Finance income (254,710) (103,110)
Fair Value (gain) / loss on warrant liability 13 (254,000) 254,000
Working capital adjustments:
Increase in trade and other receivables and prepayments 10 (3,001) (9,257)
Decrease in trade and other payables 12 (27,219) (38,532)
Net cash flows used in operating activities (301,780) (406,027)
Investing activities
Interest received 254,710 103,110
Net cash flows used in investing activities 254,710 103,110
Net decrease in cash and cash equivalents (47,070) (302,917)
Cash and cash equivalents at the beginning of the period 10,079,604 10,483,374
Cash and cash equivalents at the end of the period 11 10,032,534 10,180,457
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Marwyn Acquisition Company III Limited was incorporated on 31 July 2020 in the
British Virgin Islands ("BVI") as a BVI business company (registered number
2040967) 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 (BR022832)
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 III (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 the 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 Financial Statements for the
year ended 30 June 2023 (the "2023 Annual Report"), which is available on the
Company's website, www.marwynac3.com (http://www.marwynac3.com) . Accounting
policies applicable to these Interim Financial Statements are consistent with
those applied in 2023 Annual Report.
(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 within twelve 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 £7,828,586 (30 June 2023:
£7,591,436), net assets excluding warrant liabilities of £9,987,586 (30 June
2023: £10,004,436) and a cash balance of £10,032,534 (30 June 2023:
£10,079,604). 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. At 31 December 2023 £12 million
had been drawn down 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 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 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 EU endorsement
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 29 April 2022, the exercise date for the
Warrants was extended to the 5th anniversary of a Business Acquisition, as
defined 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
The Group does not have any employees. During the six months ended 31 December
2023, the Company had three serving Directors: James Corsellis, Antoinette
Vanderpuije, and Tom Basset, no Director received remuneration or fees under
the terms of their director service agreements.
James Corsellis, Antoinette Vanderpuije, and Tom Basset have a beneficial
interest in the incentive shares issued by the Company's subsidiary as
detailed in Note 17.
6. ADMINISTRATIVE EXPENSES
For six months For six months
ended 31 ended 31
December 2023 December 2022
Unaudited Unaudited
£'s £'s
Group expenses by nature
Professional support 258,879 267,791
Non-recurring project, professional and due diligence costs - 74,943
Audit Fees 11,647 9,750
Other expenses 1,034 5,754
271,560 358,238
7. TAXATION
For six months For six months
ended 31 ended 31
December 2023 December 2022
Unaudited Unaudited
£'s £'s
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 ended 31
December 2023 December 2022
Unaudited Unaudited
£'s £'s
Profit / (loss) on ordinary activities before tax 237,150 (509,128)
Expenses not deductible for tax purposes (252,922) 696,064
(Loss)/ profit on ordinary activities subject to corporation tax (15,772) 186,936
(Loss)/ profit on ordinary activities multiplied by the rate of corporation (3,943) 35,518
tax in the UK of 25% (2022: 19%)
Effects of:
(Loss)/ profit carried forward for which no deferred tax recognised 3,943 (35,518)
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
£1,249,554 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 profit
attributable to equity holders of the company by the combined weighted average
number of ordinary shares and A shares in issue during the period. Diluted EPS
is calculated by adjusting the combined weighted average number of ordinary
shares and A shares outstanding to assume conversion of all instruments that
are potentially dilutive to the ordinary shares and A shares.
As the Company has made a profit in the period 31 December 2023, the Warrants
are considered potentially dilutive. Details on the Warrants in issue are
given in Note 13. In the prior year, due to the Company making a loss, the
potential exercise of the Warrants has had an antidilutive impact on EPS,
resulting in both basic and diluted EPS being the same in the prior year.
The Company has also issued Incentive Shares as detailed in Note 17, which
may, in the future, also be dilutive to the ordinary and A shareholders. The
Incentive Shares have not been included in the calculation of diluted EPS in
the current period as per IAS 33, they should be treated as outstanding until
the date from which all necessary vesting conditions are satisfied. Incentive
shares to not become exercisable until 3 to 7 years post completion of the
platform acquisition (unless certain other events have occurred as detailed in
Note 17) and therefore, as the Company has yet to complete its platform
acquisition, the Incentive Shares are not currently dilutive.
The Company maintains different share classes, of which ordinary shares, A
shares and sponsor shares were in issue in the current 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.
For six months For six months
ended 31 December 2023 ended 31 December 2022
Unaudited Unaudited
Basic
Profit / (loss) attributable to owners of the parent (£'s) 237,150 (509,128)
Weighted average shares in issue 12,700,000 12,700,000
Basic profit / (loss) per ordinary share (£'s) 0.0187 (0.0401)
Diluted
Profit / (loss) attributable to owners of the parent (£'s) 237,150 (509,128)
Effect of warrants in issue (254,000) -
Adjusted loss attributable to owners of the parent (£'s) (16,850) (509,128)
Weighted average shares in issue 12,700,000 12,700,000
Adjustment to number of shares for warrants 2,159,000 -
Adjusted weighted average shares in issue 14,859,000 12,700,000
Diluted loss per ordinary share (£'s) (0.0011) (0.0401)
The adjustment to earnings of £254,000 is required under IAS 33 for the
purposes of the calculating the diluted EPS as these are required to be
calculated as being converted at the start of the year, resulting the no fair
value gain. The adjusted weighted average shares adjustment arises from the
treasury share method using a fair value of £0.83 per share for 12,000,000
warrants over A shares and 700,00 warrants over ordinary shares respectively,
as these warrants are fully vested and represent potential ordinary shares.
Please refer to Note 13 for further information on warrants in issue.
9. SUBSIDIARY
Marwyn Acquisition Company III Limited is the parent company of the Group, the
Group comprises of the Company and the following subsidiary as at 31 December
2023:
Company name Nature of business Country of incorporation Proportion of ordinary shares held directly by parent
MAC III (BVI) Limited Incentive vehicle British Virgin Islands 100%
The share capital of MAC III (BVI) Limited (the "Subsidiary") 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 Company's ability to access or use the assets
and settle the liabilities of the Company's subsidiary. The registered
office of MAC III (BVI) Limited is Commerce House, Wickhams Cay 1, P.O. Box
3140, Road Town, Tortola, VG1110, British Virgin Islands and its UK
Establishment address is 11 Buckingham Street, London, WC2N 6DF.
10. OTHER RECEIVABLES
As at As at
31 December 30 June
2023 2023
Unaudited Audited
£'s £'s
Amounts receivable in one year:
Prepayments 18,420 14,372
Due from a related party (Note 18) 1 1
VAT receivable 5,360 6,407
23,781 20,780
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 30 June
2023 2023
Unaudited Audited
£'s £'s
Cash and cash equivalents
Cash at bank 10,032,534 10,079,604
10,032,534 10,079,604
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 3,162 6,054
Due to a related party (Note 18) 29,451 28,656
Accruals 36,116 61,238
68,729 95,948
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
Amounts falling
due within one
year
£'s
Fair value of warrants at 30 June 2022 2,032,000
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 31 December 2022 2,286,000
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 30 June 2023 2,413,000
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 31 December 2023 2,159,000
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 the price
of future shares issued prior to or in conjunction with an initial
acquisition. Warrants are fully vested at the period end.
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 the price of future shares
issued prior to or in conjunction with an initial acquisition. Warrants are
fully vested at the period end.
Effective 29 April 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 revalued at 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 price
paid by 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 17p per warrant, the
result of which is a fair value gain £254,000 (31 December 2022: loss of
£254,000). 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 25.0% 25.0%
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 5th anniversary of the completion of a Business Acquisition
14. STATED CAPITAL
Authorised
Unlimited ordinary shares of no par value
Unlimited A shares of no par value
100 sponsor shares of no par value
As at As at
31 December
30 June
2023
2023
Unaudited Audited
£'s £'s
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
On incorporation, the Company issued 1 ordinary share of no par value to MVI
II Holdings I LP. On 30 September 2020, it was resolved that updated
memorandum and articles ("Updated M&A") be adopted by the Company and with
effect from the time the Updated M&A be registered with the Registrar of
Corporate Affairs in the British Virgin Islands, the 1 ordinary share which
was in issue by the Company be redesignated as 1 sponsor share of no par value
(the "Sponsor Share").
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. As a
result of the fair value exercise of the warrants, 14p was attributed to the
warrants and therefore each ordinary share was initially valued at 86p per
share. Costs of £275,300 directly attributable to this equity raise were
taken against stated capital during the period ended 30 June 2021.
On 20 April 2021, the Company issued 12,000,000 A shares and matching A
warrants at a price of £1 for one A share and matching A warrant. As a result
of the fair value exercise of the A warrants, 14p was attributed to the A
warrants and therefore each ordinary share was initially valued at 86p per
share. There were no costs directly attributable to the issue of these shares.
There has been no issue of any share capital in the six months ending 31
December 2023.
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 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. 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) 10,032,534 10,079,604
Due from related party (Note 18) 1 1
10,032,535 10,079,605
As at As at
31 December 2023 30 June
2023
Unaudited Audited
£'s £'s
Financial liabilities measured at amortised cost
Trade payables (Note 12) 3,162 6,054
Accruals (Note 12) 36,116 61,238
Due to a related party (Note 18) 29,451 28,656
68,729 95,948
Financial liabilities measured at fair value through profit and loss
Warrant Liability 2,159,000 2,413,000
2,159,000 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. SHARE-BASED PAYMENTS
Management Long Term Incentive Arrangements
The Group has put in place a Long-Term Incentive Plan ("LTIP"), to ensure
alignment between Shareholders, and those responsible for delivering the
Company's strategy and to 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. As at the balance sheet date, an executive management team is
not yet in place and as such Marwyn Long Term Incentive LP ("MLTI") (in which
James Corsellis, Antoinette Vanderpuije and Tom Basset are indirectly
beneficially interested) is the only participant in the LTIP. Once an
executive management team is appointed, they will participate in the LTIP and
this will be dilutive to MLTI. Under the LTIP, A ordinary shares ("Incentive
Shares") are issued by the Subsidiary.
As at the statement of financial position date, MLTI had subscribed for
redeemable A ordinary shares of £0.01 each in the Subsidiary entitling it to
100 per cent of the incentive value.
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 deemed to be the date that such
shares are issued.
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 acquisition, the A
Shares will be treated as having vested in full.
Holding of Incentive Shares
MLTI holds Incentive Shares entitling them to aggregate 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 2023:
Nominal Price Issue price per A ordinary share £'s Number of A ordinary shares Unrestricted market value at grant date £'s IFRS 2 Fair value £'s
Marwyn Long Term Incentive LP £0.01 7.50 2,000 15,000 169,960
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 Share designation at balance sheet date Volatility Risk-free rate Expected term* (years)
25 November 2020 A Shares 25% 0.0% 7.0
*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 an Business Acquisition being made of a
given size.
Expense related to Incentive Shares
There are no service conditions attached to the MLTI shares and as result the
fair value at grant date of £169,960, less the subscription price of £15,000
(a net amount of £154,960) was expensed to the profit and loss account on
issue, with the total fair value being recorded in the share-based payment
reserve.
18. RELATED PARTIES
James Corsellis, Antoinette Vanderpuije and Tom Basset have served as
directors of the Company during the period. Funds managed by Marwyn Investment
Management LLP ("MIMLLP"), of which James Corsellis is a managing partner and
Antoinette Vanderpuije and Tom Basset are both partners, 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 is remains unpaid at the period end (30 June 2023:
unpaid).
James Corsellis, Tom Basset, and Antoinette Vanderpuije have a beneficial
interest in the Incentive Shares through their indirect interest in Marwyn
Long Term Incentive LP which owns 2,000 A ordinary shares in the capital of
MAC III (BVI) Limited which are disclosed in Note 17.
James Corsellis is the managing partner of Marwyn Capital LLP, and Antoinette
Vanderpuije and Tom Basset are also both partners. Marwyn Capital LLP provides
corporate finance support, company secretarial, administration and accounting
services to the Company. On an ongoing basis a monthly fee of £25,000 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 £182,690 (31 December 2022: £191,522) and they had incurred
expenses on behalf of the Company of £21,423 (31 December 2022: £25,753) and
of this £29,451 (30 June 2023: £28,656) was outstanding as at the period
end.
19. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding at 31 December
2023 (31 December 2022: £Nil) which would 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: MAC3@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
Registered office +44 (0) 1534 755150
Commerce House
Wickhams Cay 1
Road Town
VG1110
Tortola
British Virgin Islands
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