TIDMMAC2
RNS Number : 7885D
Marwyn Acquisition Company II Ltd
24 October 2022
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA,
CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN, ANY MEMBER STATE OF
THE EUROPEAN ECONOMIC AREA OR ANY JURISDICTION IN WHICH IT WOULD BE
UNLAWFUL TO DO SO
LEI: 2549008KZ7HM27V4O637
Marwyn Acquisition Company II Limited
(the "Company")
Publication of the Financial Statements for the period ended 30
June 2022
The Company announces the publication of its results for the
period ended 30 June 2022.
The Financial Statements are also available on the 'Shareholder
Documents' page of the Company's website at www.marwynac2.com .
Enquiries:
Company Secretary
Antoinette Vanderpuije - 020 7004 2700
Finsbury - PR Adviser
Rollo Head 07768 994 987
Chris Sibbald 07855 955 531
Investec Bank plc - Financial Adviser 020 7597 5970
Christopher Baird
Carlton Nelson
Alex Wright
N.M. Rothschild & Sons Limited - Financial Adviser 020 7280 5000
Peter Nicklin
Shannon Nicholls
WH Ireland Limited - Corporate Broker - + 44 (0) 207 220
1666
Harry Ansell
Katy Mitchell
MARWYN ACQUISITION COMPANY II LIMITED
Consolidated Financial Statements
For the year ended 30 June 2022
MANAGEMENT REPORT
We present to shareholders the audited consolidated financial
statements of Marwyn Acquisition Company II Limited (the "Company")
for the year ended 30 June 2022 (the "Financial Statements"),
consolidating the results of Marwyn Acquisition Company II Limited
and its subsidiary, MAC II (BVI) Limited (collectively, the
"Group").
Strategy
Marwyn Acquisition Company II is an acquisition vehicle listed
on the standard segment of the London Stock Exchange. 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 GBP5.5 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. Target company market segments, principally expected
to be in the UK and US, may include, but are not limited to:
-- FinTech digital platforms;
-- Digital content platforms;
-- Life and pensions;
-- Life-insurance assets;
-- Lifetime mortgages and equity release;
-- Wealth managers and advisers;
-- Brokerage and associated services;
-- Mortgage advisory;
-- Healthcare related services;
-- Estate planning and associated legal and tax services; and
-- Later life planning and assisted care services.
Activity
The Company 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.
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 GBP1 per C
share in order to raise up to an aggregate of GBP500 million.
On 20 June 2022, the Company announced the appointment of Mark
Hodges as Chairman. In connection with this appointment, the
strategy of the Company was refined as set out above. Mark Hodges'
biography is set out on page 4. During the year and to the date of
this report, the Company has continued to assess potential
acquisition opportunities in line with its stated strategy.
Results
The Group's total comprehensive loss for the year to 30 June
2022 was GBP1,934,518 (period ended 30 June 2021: GBP636,096). Of
the costs incurred in the year, GBP793,214 (period ended 30 June
2021: GBP263,769) relates to non-recurring project costs. The Group
held a cash balance at the year end of GBP10,254,198 (2021:
GBP12,255,387). The Group has not yet acquired an operating
business and as such is not yet income generating.
In connection with the Company's ongoing activities, an asset
has been recorded for costs associated with a further equity raise
at the balance sheet date as disclosed in Note 10. There is
currently no certainty that the potential capital raise will take
place nor of its terms should it do so.
Directors
The Directors during the year and subsequently are:
Mark Hodges (Chairman) - appointed 19 June 2022
James Corsellis - stepped down as Chairman effective 19 June
2022 and remains a director of the Company
Mark Brangstrup Watts
Directors' Biographies
Mark Hodges
Mark Hodges is the Chairman of the Company and has over 30
years' experience across the financial services and consumer
sectors, including extensive FTSE 100 PLC board experience with
Centrica plc and Aviva plc. As former CEO of ReAssure, Mark led the
business through the GBP425m acquisition of Quilter's UK Heritage
business and oversaw the sale of Reassure to Phoenix Group Holdings
in 2020 for GBP3.25bn. At the time of the sale, ReAssure had
approximately GBP80bn of assets under administration, 4 million
customers and approximately 2,500 employees.
Previously, Mark was CEO of Centrica's GBP11bn revenue consumer
division, which included British Gas in the UK, Bord Gais in
Ireland, Direct Energy in the US and Hive globally. Mark was hired
from outside the energy sector as a change agent to simplify and
modernise the business to make it more efficient, more
customer-focused and less product-led. Mark's mandate included the
improvement of digital channels, the growth of new revenue streams,
and to drive cultural change. During his tenure, Mark oversaw a
growth in the Hive customer base from approximately 200,000
customers to more than 1.3 million.
Before this, Mark led Towergate Insurance, a 5,000-employee
business with revenue of more than GBP400m and serving
approximately 2 million customers. Mark was responsible for
formulating the group strategy and oversaw the acquisition of 50
specialist insurance businesses, significantly bolstered the new
executive team and management below executive level, oversaw the
complete rebuild of governance and operational control frameworks
to bring in line with regulatory standards, and carried out a
fundamental operational restructuring, including the establishment
of a market leading 400 person contact centre in Manchester.
Mark previously spent more than 20 years with Aviva across a
variety of senior finance, planning and strategy roles, including
CEO of UK Life and Pensions and latterly as Aviva UK Chief
Executive and board member of Aviva plc. As CEO of Aviva UK, Mark
led a business with annual revenues of GBP15bn, GBP1.4bn in
operating profits, and approximately 20,000 staff. Mark's
highlights at Aviva include the creation of a new strategy for the
UK business and implementation of a new operating model to create
the largest composite insurer in the UK that saw a return to growth
of the General Insurance business, developing a vision for the
integrated UK business that generated significant annual cost
savings and led to sustained outperformance of the UK Life
Business, and leading the turnaround in the UK Life Insurance
business to deliver growth, reduced costs, improved profitability,
improved customer service (NPS), and improved people engagement as
well as overseeing the brand change from Norwich Union to Aviva.
During his tenure with Norwich Union, Mark was involved in the
acquisition of London & Edinburgh in 1996, demutualised and
floated Norwich Union on the London Stock Exchange in 1997 and
merged with CGU in 2000. He subsequently oversaw the acquisition of
RAC PLC in 2005 for GBP1.25bn
James Corsellis
James brings extensive public company experience as well as
management and corporate finance expertise across a range of
sectors and an extensive network of relationships with
co-investors, advisers and other business leaders.
Previously James has served as a director of the following
companies: a non-executive director of BCA Marketplace Limited
(formerly BCA Marketplace Plc) from July 2014 to December 2017,
Advanced Computer Software from October 2006 to August 2008,
non-executive chairman of Entertainment One Limited from January
2007 to March 2014 and remaining on the board as a non-executive
director until July 2015, non-executive director of Breedon
Aggregates Limited from March 2009 to July 2011 and as CEO of
icollector Plc from 1994-2001 amongst others. James was educated at
Oxford Brookes University, the Sorbonne and London University.
James is a managing partner of Marwyn Capital LLP and Marwyn
Investment Management LLP, an executive director of Silvercloud
Holdings Limited, and the chairman of Marwyn Acquisition Company
Plc, Marwyn Acquisition Company III Limited and MAC Alpha
Limited.
Mark Brangstrup Watts
Mark has many years of experience deploying long term investment
strategies in the public markets. Mark brings his background in
strategic consultancy to the management team, having been
responsible for strategic development projects at a range of
international companies including Ford Motors Company (US), Cummins
(Japan) and 3M (Europe).
Previously Mark has served a director of the following
companies: a non-executive director of Zegona Communications Plc
from January 2015 to May 2020, BCA Marketplace Limited (formerly
BCA Marketplace Plc) from July 2014 to December 2017, Advanced
Computer Software from October 2006 to September 2012,
Entertainment One Limited from June 2009 to July 2013, Silverdell
Plc from March 2006 to December 2013, Inspicio Holdings Limited
from October 2005 to February 2008 and Talarius Limited September
2005 to February 2007 amongst others. Mark has a BA in Theology and
Philosophy from King's College, London.
Mark is a managing partner of Marwyn Capital LLP and Marwyn
Investment Management LLP, an executive director of Silvercloud
Holdings Limited, and a director of Marwyn Acquisition Company Plc,
Marwyn Acquisition Company III Limited, MAC Alpha Limited and
AdvancedAdvT Limited.
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.
Key Performance Indicators
The Company has not yet acquired a trading business and
therefore no key performance indicators have been set as it is
inappropriate to do so.
Stated Capital
Details of the stated capital of the Company during the year are
set out in Note 14 to the Financial Statements.
On 4 December 2020 the Company issued 700,000 ordinary shares
and matching warrants for a total price of GBP700,000. 75% of the
ordinary shares and matching warrants were issued to an entity
managed by Marwyn Investment Management LLP ("MIM LLP"), the
remaining 25% were issued to senior executive managers of previous
successful acquisition companies launched by Marwyn.
On 20 April 2021, the Company issued 12 million A shares to an
entity managed by MIM LLP (with class A warrants being issued on
the basis of one class A warrant per A share), for a total price of
GBP12,000,000.
On 29 March 2022, the Company announced the launch of the
Placing Programme pursuant to which the Company has the ability to
issue up to 500 million C Shares at an issue price of GBP1 per C
share in order to raise up to an aggregate of GBP500 million. As at
the date of these Financial Statements, no C Shares have been
issued.
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 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 comply with the UK Corporate Governance Code.
Risk management and internal control systems
A robust risk assessment was carried out by the Directors of the
Company, along with its advisers, in preparation for the Company's
IPO on 4 December 2020 and the Directors have identified a wide
range of risks, which are set out in the Company's prospectus dated
4 December 2020. As part of the launch of the Placing Programme an
updated robust risk assessment was carried out by the Directors of
the Company, along with its advisers and the wide range of risks
identified are set out in the Company's prospectus dated 31 March
2022.
The Company's prospectuses are available on the Company's
website: www.marwynac2.com .
The Company's risk management framework incorporates a risk
assessment that identifies and assesses the strategic, operational
and financial risks facing the business and mitigating controls.
The risk assessment is documented through a risk register which
categorises the key risks faced by the business into:
-- Business risks;
-- Shareholder risks;
-- Financial and procedural risks; and
-- Risks associated with the acquisition process.
The risk assessment identifies the potential impact and
likelihood of each of the risks detailed on the risk register and
mitigating factors/actions have also been identified.
The Company's risk management process includes both formal and
informal elements. The size of the Board and the frequency in which
they interact ensures that new risks, or changes to the nature of
the Company's existing risks, are identified, discussed and
analysed quickly. The Company's governance framework, including
formal periodic board meetings with standing agendas, ensures that
the Company has a formal framework in place to manage the review,
consideration and formal approval of the risk register, including
risk assessment.
The Group's only significant asset is cash. As at the statement
of financial position date the Group's cash balance was
GBP10,254,198 (2021: GBP12,255,387). Price, credit, liquidity and
cashflow risk are not considered to be significant due to the
simple nature of the Company's assets and liabilities and the
current activities undertaken by the Group. The Directors have
reviewed the risk of holding a singular concentration of assets and
do not deem this a material risk, as set out in Note 16 of these
financial statements. The Directors have set out below the
principal risks faced by the business. These are the risks the
Directors consider to be most relevant to the Company based on its
current status. The risks referred to below do not purport to be
exhaustive and are not set out in any particular order of
priority.
Key risk Explanation
The Company There is a risk that the Company may incur substantial
could incur legal, financial and advisory expenses arising
costs for from unsuccessful transactions which may include
transactions public offer and transaction documentation, legal,
that may ultimately accounting and other due diligence which could
be unsuccessful. have a material adverse effect on the business,
financial condition, results of operations and
prospects of the Company.
-------------------------------------------------------------
The Company The Company's future success is dependent upon
may not be its ability to not only identify opportunities
able to complete but also to execute a successful acquisition.
an acquisition. There can be no assurance that the Company will
be able to conclude agreements with any target
business and/or shareholders in the future and
failure to do so could result in the loss of an
investor's investment. In addition, the Company
may not be able to raise the additional funds
required to acquire any target business, fund
future operating expenses after the initial twelve
months, or incur the expense of due diligence
for the pursuit of acquisition opportunities in
accordance with its investment objective.
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The Company There may be significant competition for some
may face significant or all of the acquisition opportunities that the
competition Company may explore. Such competition may for
for acquisition example come from strategic buyers, sovereign
opportunities. wealth funds, special purpose acquisition companies
and public and private investment funds, many
of which are well established and have extensive
experience in identifying and completing acquisitions.
A number of these competitors may possess greater
technical, financial, human and other resources
than the Company. Therefore, the Company may identify
an investment opportunity in respect of which
it incurs costs, for example through due diligence
and/or financing, but the Company cannot assure
investors that it will be successful against such
competition. Such competition may cause the Company
to incur significant costs but be unsuccessful
in executing an acquisition or may result in a
successful acquisition being made at a significantly
higher price than would otherwise have been the
case which could materially adversely impact the
business, financial condition, result of operations
and prospects of the Company.
-------------------------------------------------------------
Even if the The success of any of the Group's acquisitions
Group completes may depend in part on the Group's ability to implement
the Business the necessary technological, strategic, operational
Acquisition, and financial change programmes in order to transform
any technological, the acquired business and improve its financial
strategic, performance. Implementing change programmes within
operating an acquired business may require significant modifications,
and financial including changes to hardware and other business
improvements assets, operating and financial processes and
proposed and technology, software, business systems, management
implemented techniques and personnel, including senior management.
may not be
successful. There is no certainty that the Group will be able
to successfully implement such change programmes
within a reasonable timescale and cost, and any
inability to do so could have a material adverse
impact on the Company's performance and prospects.
Specifically, in the context of operational improvements
and financial performance, the Company may not
be able to propose and implement effective operational
improvements for the target business with which
the Group completes an acquisition. Such target
businesses may not be able to generate the expected
margins or cash flows. Although the Group assesses
each target business, these assessments are subject
to a number of assumptions and estimates concerning
markets, profitability, growth, interest rates
and company and asset valuations. The Group's
assessments of, and assumptions regarding, target
businesses may prove to be incorrect and actual
developments may differ significantly from the
Group's expectations. In addition, even if the
Group completes an acquisition, general economic
and market conditions or other factors outside
the Company's control make the Company's operating
strategies difficult or impossible to implement.
-------------------------------------------------------------
Directors interests
The Directors have no direct interests in the ordinary shares of
the Company. The Directors have interests in the Company's long
term incentive plan, as detailed in Note 17 to the Financial
Statements. James Corsellis and Mark Brangstrup Watts are managing
partners of MIM LLP which manages 75% per cent of the ordinary
shares and matching warrants, and 100% of the A shares and matching
A warrants issued by the Company. James Corsellis and Mark
Brangstrup Watts are also managing partners of Marwyn Capital LLP,
a firm which provides corporate finance, company secretarial and
ad-hoc managed services support to the Company. Details of the
related party transactions which occurred during the year are
disclosed in Note 18 to the Financial Statements, save for the
participation in the Company's long term incentive plan as
disclosed in Note 17 to the Financial Statements. There were no
loans or guarantees granted or provided by the Company and/or any
of its subsidiaries to or for the benefit of any of the
Directors.
Statement of Going Concern
The Financial Statements have been prepared on a going concern
basis, which assumes that the Group will continue to be able to
meet its liabilities as they fall due for the foreseeable future.
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 Financial Statements.
At 30 June 2022, the Group has net assets of GBP8,247,216 (2021:
GBP10,180,565) and a cash balance of GBP10,254,198 (2021:
GBP12,255,387). 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. As set out
in the Management Report, during 2022, the Company has launched the
PlacingProgramme, under which the Company has the ability to raise
up to GBP500 million via the issuance of C Shares. No C Shares have
yet been issued as at the date of these Financial Statements. The
Company can also raise capital via the issuance of further ordinary
shares or via the issuance of unlisted B shares which would be
issued in conjunction with a private placement memorandum to
qualifying institutional investors, and exchangeable into listed
ordinary shares on re-admission. 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 on page 7.
The Company also entered into a forward purchase agreement
("FPA") on 27 November 2020 with Marwyn Value Investors II LP ("MVI
II LP") of up to GBP20 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 30 June 2022 GBP12 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.
Furthermore, the Directors have considered the ongoing impact of
the Covid-19 pandemic, conflict in Ukraine and current
macro-economic factors on the Group's forecast cashflows and
liabilities, concluding that prior to completing a transaction,
these have no material impact on the Group due to the nature of its
operations.
The Directors have also considered 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 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 Financial
Statements.
Outlook
The Directors believe that the current market backdrop provides
a compelling need for a new approach to family-focussed financial
solutions, with the opportunity to build a business through
selective M&A and a strategic vision to address this. The
Company continues to progress discussions regarding potential
acquisition opportunities, as well as potential executive
management appointments, which the Directors believe can deliver
both the shareholder returns and broader stakeholder benefits that
can be generated from a successful execution of the strategy.
RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the consolidated
financial statements in accordance with applicable laws and
regulations, including the BVI Business Companies Act, 2004. The
Directors have prepared the financial statements for the year to 30
June 2022, which give a true and fair view of the state of affairs
of the Group and the loss of the Group for that year.
The Directors have acted honestly and in good faith and in what
the Directors believes to be in the best interests of the
Company.
The Directors have chosen to use International Financial
Reporting Standards as adopted by the European Union ("IFRS") in
preparing the Group's financial statements. International
Accounting Standard 1 requires that financial statements present
fairly for each financial year the group's financial position,
financial performance and cash flows. This requires the faithful
presentation of the effects of transactions, other events and
conditions in accordance with the definitions and recognition
criteria for assets, liabilities, income and expenses set out in
the International Accounting Standards Board's "Framework for the
preparation and presentation of financial statements". In virtually
all circumstances, a fair presentation will be achieved by
compliance with all applicable IFRS.
A fair presentation also requires the Directors to:
-- select consistently and apply appropriate accounting
policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- make judgements and accounting estimates that are reasonable
and prudent;
-- provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance;
-- state that the Group has complied with IFRS, subject to any
material departures disclosed and explained in the financial
statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are also required to prepare financial statements
in accordance with the rules of the London Stock Exchange for
companies trading securities on the Stock Exchange.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Group, for safeguarding the assets, for
taking reasonable steps for the prevention and detection of fraud
and other irregularities and for the preparation of financial
statements.
Financial information is published on the Group's website. The
maintenance and integrity of this website is the responsibility of
the Directors; the work carried out by the auditor does not involve
consideration of these matters and, accordingly, the auditor's
accept no responsibility for any changes that may occur to the
financial statements after they are presented initially on the
website. Legislation in the British Virgin Islands governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Directors' Responsibilities Pursuant to DTR4
In compliance with the Listing Rules of the London Stock
Exchange, the Directors confirm to the best of their knowledge:
-- The Financial Statements have been prepared in accordance
with IFRS and give a true and fair view of the assets, liabilities,
financial position and loss of the Group; and
-- The management report includes a fair review of the
development and performance of the business and the financial
position of the Group, together with a description of the principal
risks and uncertainties that it faces.
Independent Auditor
Baker Tilly Channel Islands Limited ("BTCI") was appointed as
the Company's independent auditor during the year. BTCI has
expressed its willingness to continue to act as auditor to the
Group.
Disclosure of Information to Auditor
Each of the Directors in office at the date the Report of the
Directors is approved, whose names and functions are listed in the
Report of the Directors, confirm that, to the best of their
knowledge:
-- so far as they are aware, there is no relevant audit
information of which the Group's auditor is unaware; and
-- they have taken all the steps that they ought to have taken
as a Director in order to make themself aware of any relevant audit
information and to establish that the Group's auditor is aware of
that information.
This Directors' Report was approved by the Board of Directors on
21 October 2022 and is signed on its behalf.
By Order of the Board
Mark Hodges
Chairman
21 October 2022
INDEPENT AUDITOR'S REPORT
Independent auditor's report to the members of Marwyn
Acquisition Company II Limited
Opinion
We have audited the consolidated financial statements of Marwyn
Acquisition Company II Limited (the "Company" and, together with
its subsidiary, MAC II (BVI) Limited, the "Group"), which comprise
the consolidated statement of financial position as at 30 June
2022, and the consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated financial
statements:
-- give a true and fair view of the consolidated financial
position of the Group as at 30 June 2022, and of its consolidated
financial performance and its consolidated cash flows for the year
then ended in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs); and
-- have been prepared in accordance with the requirements of the
BVI Business Company Act 2004, as amended.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are
relevant to our audit of the consolidated financial statements in
Jersey, including the FRC's Ethical Standard, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
consolidated financial statements of the current period and include
the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by us, including those
which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of
the engagement team. These matters were addressed in the context of
our audit of the consolidated financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key audit matter How our audit addressed Key observations
the matter communicated to those
charged with governance
Equity and Warrants Our audit procedures Based on the procedures
Issuance included, but were performed, we are
The warrants issued not limited to: satisfied that management's
to investors are subject Classification: judgements and estimates
to judgement in both We obtained an understanding in respect of the
classification and of management's assessment valuation and classification
valuation. for the classification of warrants for the
The classification of these instruments year ended 30 June
of the warrants is and the rationale 2022 along with the
complex and must consider for their classification. related disclosures
the nature and details We reviewed, in conjunction in the consolidated
of the instruments' with our Technical financial statements
contracts to determine Director the classification are appropriate.
the correct classification of these instruments We have nothing to
between equity and and management's assessment report to those charged
liabilities. in accordance with with governance from
Further the fair value IAS 32 and IFRS 9 our testing.
of these warrants and we challenged
was determined using management on their
the Black Scholes assessment.
option pricing methodology Valuation:
which considered the We obtained the valuation
exercise price, expected report prepared by
volatility, risk free management's expert.
rate, expected dividends We performed the review
and expected term of and validation
of the warrants which of the valuation assumptions,
is complex and involves methodology and calculations
estimates and judgements. in respect of the
Financial Statement valuation of the instruments
Impact: and determined whether
GBP2,413,000 it was in accordance
Fair Value of Warrants with the requirements
of IFRS 9 and IFRS
The accounting policies 13.
on pages 22 and 23 Disclosure:
sets out the treatment We reviewed the relevant
applied by management, disclosures in the
and related disclosures consolidated financial
are presented in Note statements in accordance
13. with the requirements
of the IFRS as adopted
by the European Union
and performed a financial
statement disclosure
checklist utilising
specialist software.
------------------------------- ------------------------------
Other matter
The financial statements for the period ended 30 June 2021 were
audited by the previous auditor, as listed on page 35 of the
financial statements, who expressed an unmodified opinion on those
statements on 29 October 2021.
Our application of Materiality
Materiality for the consolidated financial statements as a whole
was set at GBP211,000, determined with reference to a benchmark of
Net Assets, of which it represents 2.5%.
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an
acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material
amount across the consolidated financial statements as a whole.
Performance materiality was set at 70% of materiality for the
consolidated financial statements as a whole, which equates to
GBP147,700. We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
We reported to the Board of Directors any uncorrected omissions
or misstatements exceeding GBP10,550, in addition to those that
warranted reporting on qualitative grounds.
All Group companies were within the scope of testing by the
Group audit team.
Conclusions relating to Going Concern
In auditing the consolidated financial statements, we have
concluded that the Directors' use of the going concern basis of
accounting in the preparation of the consolidated financial
statements is appropriate.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group and Company's ability to continue as a going concern for a
period of at least twelve months from when the consolidated
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Other information
The other information comprises the information included in the
annual report other than the consolidated financial statements and
our auditor's report thereon. The Directors are responsible for the
other information contained within the annual report. Our opinion
on the consolidated financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our
knowledge obtained in the course of the audit, or otherwise appears
to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in
the consolidated financial statements themselves. If, based on the
work performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of the Directors
As explained more fully in the Directors' responsibility
statement set out on pages 10 and 11, the Directors are responsible
for the preparation of consolidated financial statements that give
a true and fair view in accordance with IFRSs, and for such
internal control as the Directors determine is necessary to enable
the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the
Directors are responsible for assessing the Group and Company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the
Company or to cease operations, or has no realistic alternative but
to do so.
The Directors are responsible for overseeing the Group's
financial reporting process.
Auditor's responsibilities for the audit of the consolidated
financial statements
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue
an auditor's report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
consolidated financial statements.
The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below:
-- Enquiry of management to identify any instances of
non-compliance with laws and regulations, including actual,
suspected or alleged fraud;
-- Reading minutes of meetings of the Board of Directors;
-- Review of legal invoices;
-- Review of management's significant estimates and judgements for evidence of bias;
-- Review for undisclosed related party transactions;
-- Obtained and reviewed bank statements as well as reviewed
ledgers and minutes to ensure finance income is complete and as per
our expectation;
-- Using analytical procedures to identify any unusual or unexpected relationships; and
-- Undertaking journal testing, including an analysis of manual
journal entries to assess whether there were large and/or unusual
entries pointing to irregularities, including fraud.
A further description of the auditor's responsibilities for the
audit of the financial statements is located at the Financial
Reporting Council's website at
www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Other matters which we are required to address
We were appointed by Marwyn Acquisition Company II on 23 August
2022 to audit the consolidated financial statements. Our total
uninterrupted period of engagement is 1 year.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the Group and we remain independent of the
Group in conducting our audit.
Use of this Report
This report is made solely to the Members of the Company, as a
body, in accordance with our letter of engagement dated 22
September 2022. Our audit work has been undertaken so that we might
state to the Members those matters we are required to state to them
in an auditor's report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and its Members, as a body, for
our audit work, for this report, or for the opinions we have
formed.
Sandy Cameron
For and on behalf of Baker Tilly Channel Islands Limited
Chartered Accountants
St Helier, Jersey
Date: 21 October 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Period
30 June ended
2022 30 June
2021
Note GBP's GBP's
Administrative expenses 6 (1,314,001) (636,100)
Operating loss (1,314,001) (636,100)
Finance income 14,483 4
Movement in fair value of warrants 13 (635,000) -
Loss before income taxes (1,934,518) (636,096)
Income tax 7 - -
============ =========
Loss for the year/period (1,934,518) (636,096)
Total other comprehensive income - -
Total comprehensive loss for the year/period (1,934,518) (636,096)
============ =========
Loss per share GBP's GBP's
Basic and diluted 8 (0.1523) (0.2130)
The Group's activities derive from continuing operations.
The notes on pages 20 to 35 form an integral part of these
Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 June 30 June
2022 2021
Assets Note GBP's GBP's
Current assets
Other receivables 10 805,360 651,708
Cash and cash equivalents 11 10,254,198 12,255,387
----------- ----------
Total current assets 11,059,558 12,907,095
Total assets 11,059,558 12,907,095
----------- ----------
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 17 171,129 169,960
Accumulated losses (2,570,614) (636,096)
----------- ----------
Total equity 8,247,216 10,180,565
Current liabilities
Trade and other payables 12 399,342 948,530
Warrants 13 2,413,000 1,778,000
----------- ----------
Total liabilities 2,812,342 2,726,530
Total equity and liabilities 11,059,558 12,907,095
----------- ----------
The notes on pages 20 to 35 form an integral part of these
Financial Statements.
The Financial Statements were approved by the Board of Directors
on 21 October 2022 and were signed on its behalf by:
Mark Hodges James Corsellis
Chairman Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
based
Ordinary Sponsor payment Accumulated Total
Note Shares A Shares Share reserve losses equity
---------- ----------- -------- --------- ------------ -----------
GBP's GBP's GBP's GBP's GBP's GBP's
Balance at - - - - - -
incorporation
Issuance of
1 ordinary share 1 - - - - 1
Redesignation
of 1 ordinary
share (1) - 1 - - -
Issuance of
700,000 ordinary
shares(1) 14 602,000 - - - - 602,000
Share issue
costs 14 (275,300) - - - - (275,300)
Issuance of
12,000,000 A
shares(1) 14 - 10,320,000 - - - 10,320,000
Total comprehensive
loss for the
period - - - - (636,096) (636,096)
Share-based
payment charge 17 - - - 169,960 - 169,960
Balance at
30 June 2021 326,700 10,320,000 1 169,960 (636,096) 10,180,565
---------- ----------- -------- --------- ------------ -----------
Share
based
Ordinary Sponsor payment Accumulated Total
Note Shares A Shares Share reserve losses equity
--------- ----------- -------- --------- ------------ ------------
GBP's GBP's GBP's GBP's GBP's GBP's
Balance at
1 July 2021 326,700 10,320,000 1 169,960 (636,096) 10,180,565
Total comprehensive
loss for the
year - - - - (1,934,518) (1,934,518)
Share-based
payment charge 17 - - - 1,169 - 1,169
Balance at
30 June 2022 326,700 10,320,000 1 171,129 (2,570,614) 8,247,216
--------- ----------- -------- --------- ------------ ------------
The notes on pages 20 to 35 form an integral part of these
Financial Statements.
(1) The amounts raised from issuance of ordinary shares and
matching warrants and A shares and matching A warrants were
required to be split between equity and warrant liability based on
the fair value attributable to these. Therefore, the amounts shown
should be considered alongside the warrant liability as detailed in
Note 13.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the
For the period
year ended ended 30
30 June June
2022 2021
Note GBP's GBP's
Operating activities
Loss for the year (1,934,518) (636,096)
Adjustments to reconcile total operating
loss to net cash flows:
Finance income (14,483) (4)
Fair Value loss on warrant provision 13 635,000 -
Share-based payment expense 17 1,169 154,960
Working capital adjustments:
(Increase) in other receivables (153,652) (651,708)
(Decrease)/Increase in trade and other
payables (596,188) 948,530
Net cash flows used in operating activities (2,062,672) (184,318)
------------------ ----------
Investing activities
Interest received 14,483 4
----------
Net cash flows received from investing 14,483 4
activities
------------------ ----------
Financing activities
Proceeds from issue of ordinary shares
and matching warrants 13 - 700,001
Proceeds from issue of A shares and
matching warrants 13 - 12,000,000
Proceeds from issue of ordinary A share
capital in MAC II (BVI) limited 47,000 15,000
Costs directly attributable to equity
raise - (275,300)
----------
Net cash flows received from financing
activities 47,000 12,439,701
------------------ ----------
Net (decrease)/increase in cash and
cash equivalents (2,001,189) 12,255,387
Cash and cash equivalents at the beginning
of the year/period 12,255,387 -
------------------ ----------
Cash and cash equivalents at the end
of the year/period 11 10,254,198 12,255,387
------------------ ----------
The notes on pages 20 to 35 form an integral part of these
Financial Statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Marwyn Acquisition Company II Limited was incorporated on 31
July 2020 in the British Virgin Islands ("BVI") as a BVI business
company (registered number 2040956) under the BVI Business Company
Act, 2004. The Company was listed on the Main Market of the London
Stock Exchange on 4 December 2020 and has its registered address at
Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola,
VG1110, British Virgin Islands and UK establishment (BR022831) at
11 Buckingham Street, London WC2N 6DF.
The Company has been formed for the purpose of effecting a
merger, share exchange, asset acquisition, share or debt purchase,
reorganisation or similar business combination with one or more
businesses. The Company has one subsidiary, MAC II (BVI) Limited
(together with the Company, the "Group").
2. ACCOUNTING POLICIES
(a) Basis of preparation
The Financial Statements for the year ended 30 June 2022 have
been prepared in accordance with International Financial Reporting
Standards and IFRS Interpretations Committee interpretations as
adopted by the European Union (collectively, "IFRS") and are
presented in British pounds sterling, which is the presentational
currency of the Group. The Financial Statements have been prepared
under the historical cost basis, except for the revaluation of
certain financial instruments that will be measured at fair value
at the end of each reporting year, as explained in the accounting
policies below. The comparative reporting period represents the
period from incorporation, being 31 July 2020, to 30 June 2021.
The principal accounting policies adopted in the preparation of
the Financial Statements are set out below. The policies have been
consistently applied throughout the current and prior periods
presented.
(b) Going concern
The Financial Statements have been prepared on a going concern
basis, which assumes that the Group will continue to be able to
meet its liabilities as they fall due for the foreseeable future.
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 Financial Statements.
At 30 June 2022, the Group has net assets of GBP8,247,216 (2021:
GBP10,180,565) and a cash balance of GBP10,254,198 (2021:
GBP12,255,387). 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. As set out in the Management Report, during 2022, the
Company has launched the Placing Programme, under which the Company
has the ability to raise up to GBP500 million via the issuance of C
Shares. No C Shares have yet been issued as at the date of these
Financial Statements. The Company can also raise capital via the
issuance of further ordinary shares or via the issuance of unlisted
B shares which would be issued in conjunction with a private
placement memorandum to qualifying institutional investors, and
exchangeable into listed ordinary shares on re-admission. 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 on page 7.
The Company also entered into a forward purchase agreement
("FPA") on 27 November 2020 with Marwyn Value Investors II LP ("MVI
II LP") of up to GBP20 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 30 June 2022 GBP12 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.
Furthermore, the Directors have considered the ongoing impact of
the Covid-19 pandemic, conflict in Ukraine and current
macro-economic factors on the Group's forecast cashflows and
liabilities, concluding that prior to completing a transaction,
these have no material impact on the Group due to the nature of its
operations.
The Directors have also considered 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 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 Financial
Statements.
(c) New standards and amendments to International Financial Reporting Standards
Standards, amendments and interpretations 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 currently expected that these standards
will have a material impact on the Group.
Standard Effective
date
Onerous Contracts - Cost of Fulfilling a Contract 1 January
(Amendments to IAS 37); 2022
Property, Plant and Equipment: Proceeds before Intended 1 January
Use (Amendments to IAS 16); 2022
Annual Improvements to IFRS Standards 2018-2020 (Amendments 1 January
to IFRS 1, IFRS 9, IFRS 16 and IAS 41); 2022
Amendments to IFRS 3: References to Conceptual Framework; 1 January
2022
Amendments to IAS 1 Presentation of Financial Statements: 1 January
Classification of Liabilities as Current or Non-current*; 2023
Disclosure of accounting policies (Amendments to 1 January
IAS 1); 2023
Extension of temporary exemption of applying IFRS 1 January
9 (Amendments to IFRS 4) 2023
Deferred Tax relating to Assets and Liabilities arising 1 January
from a Single Transaction (Amendments to IAS 12); 2023
Initial Application of IFRS 17 and IFRS 9 - Comparative 1 January
Information Amendment to IFRS 17); 2023
Definition of accounting estimates (Amendments to 1 January
IAS 8); 2023
Amendments to IFRS 17 Insurance contracts; 1 January
2023
Amendment to IFRS 16 Leases: Lease Liability in a 1 January
sale & leaseback*. 2024
* Subject to EU endorsement
(d) Basis of consolidation
Subsidiaries are entities controlled by the Company. Control
exists when the Company is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The
financial information of subsidiaries is fully consolidated from
the date that control commences until the date that control
ceases.
Intragroup balances, and any gains and losses or income and
expenses arising from intragroup transactions, are eliminated in
preparing the consolidated financial information.
(e) Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
The Group initially recognises financial assets and financial
liabilities at fair value. With the exception of warrants,
financial assets and liabilities are subsequently remeasured at
amortised cost using the effective interest rate.
Warrants
Warrants are accounted for as derivative liability instruments
under IAS 32 and are measured at fair value at the date of issue
and remeasured at each subsequent reporting date with changes in
fair value being recognised in the Statement of Comprehensive
Income. Fair value of the warrants has been calculated using a
Black-Scholes option pricing methodology and details of the
estimates and judgements used in determining the fair value of the
warrants are set out in Note 3. The warrant liability will be
derecognised when the liability is extinguished either through
exercise or expiry.
(f) Cash and cash equivalents
Cash and cash equivalents comprise cash balances at banks.
(g) Equity
Ordinary shares, A shares and sponsor shares are classified as
equity. Incremental costs directly attributable to the issue of new
shares are recognised in equity as a deduction from the
proceeds.
(h) Corporation tax
Corporation tax for the year presented comprises current and
deferred tax.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantially enacted at
the balance sheet date. Deferred tax is provided using the balance
sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. A
deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised.
(i) Loss per ordinary share
The Group presents basic earnings per ordinary share ("EPS")
data for its ordinary shares and A shares as disclosed in more
detail in Note 8. Basic EPS is calculated by dividing the profit or
loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the
year. Diluted EPS is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all
potential dilutive ordinary shares.
(j) Share based payments
The A1 ordinary shares and A2 ordinary shares in MAC II (BVI)
Limited (the "Incentive Shares"), represent equity-settled
share-based payment arrangements under which the Group receives
services as a consideration for the additional rights attached to
these equity shares.
Equity-settled share-based payments to Directors and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. Fair value is determined
using an appropriate valuation technique, further details of which
are given in Note 17. The fair value is expensed, with a
corresponding increase in equity, on a straight-line basis from the
grant date to the expected exercise date. Where the equity
instruments granted are considered to vest immediately as the
services are deemed to have been received in full, the fair value
is recognised as an expense with a corresponding increase in equity
recognised at grant date.
(k) Warrants
On 4 December 2020, the Company issued 700,000 ordinary shares
and matching warrants. Under the terms of the warrant instrument,
warrant holders are able to acquire one ordinary share per warrant
at a price of GBP1 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.
On 20 April 2021, the Company issued 12,000,000 A shares and
matching A warrants at a price of GBP1 for one ordinary 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 GBP1 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 accounted for as derivative liability instruments
under IAS 32 and are measured at fair value at the date of issue
and each subsequent balance sheet date. Fair value of the warrants
has been calculated using a Black-Scholes option pricing
methodology and details of the estimates and judgements used in
determining the fair value of the warrants are set out in Note
3.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
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.
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 GBP1.00 per share (subject to
a downward adjustment under certain conditions). In the prior
period, the Warrants were exercisable at any time until five years
after the issue date; effective 31 March 2022, the exercise date
for the Warrants was extended to the 5(th) anniversary of a
Business Acquisition, as detailed in Note 13. The Warrants are
valued using the Black-Scholes option pricing methodology which
considers the exercise price, expected volatility, risk free rate,
expected dividends, and expected term of the Warrants.
Valuation of Incentive Scheme
The Company has issued Incentive Shares as part of the creation
of a long-term incentive scheme which is valued using a Monte Carlo
model. This model requires estimation and judgment surrounding the
inputs of exercise price, expected volatility, risk free rate,
expected dividends, and expected term of the Incentive Shares. The
Ordinary A share liability held represents the subscription price
of shareholders where there is an option to redeem the shares for
cash should a shareholder be classified as a good leaver (refer to
Note 17). Any redemption for cash in this scenario would be made at
the lower of market value and the subscription price. The Directors
estimate the subscription price to be materially equivalent to
their underlying market value.
Other disclosures relating to the Group's exposure to risk and
uncertainties are included in Note 16.
Critical accounting judgements
Classification of warrants
The Directors consider the warrants to represent a derivative
liability due to the potential modification of the exercise price
under certain conditions that the Directors believe are possible to
occur. This modification results in the warrants failing the 'fixed
for fixed' test, as outlined in IAS 32 para 16, which is required
to recognise the warrants as equity instruments. This test requires
the Company to provide a fixed number of shares for a fixed amount
of cash on exercise of the warrants which would not be the case
should the exercise price be modified. Accordingly, the warrants
are recognised as derivative liabilities, whereby the fair value
must be assessed at each balance sheet date with a review of the
underlying inputs undertaken.
The initial fair value recognised for the warrants affects the
corresponding entry in equity recognised for the issue of shares as
the proceeds are required to be allocated between equity and
liability as one share and matching warrant was issued for GBP1 in
aggregate and therefore the proceeds received from the issue of
equity is deemed to have been received for both the issue of the
shares and the corresponding warrants.
Recognition and classification of costs relating to a possible
further equity raise
In connection with a potential acquisition, the Company has
continued to actively consider a possible further equity raise and
on 29 March 2022, the Company announced that it was launching the
Placing Programme. In relation to this, GBP723,592 (2021:
GBP592,827) of costs incurred have been included in current asset
deferred costs (refer to Note 10) The Directors have considered
each of these costs to determine whether:
(i) they are directly attributable to the issuance of shares,
and therefore would be taken as a deduction from equity on the
issuance of further equity, or;
(ii) they should be taken directly to the Statement of Comprehensive Income as expenses.
At the year end, these costs are considered to be directly
attributable to a future issuance of shares which the Directors
intend to conclude within the next 12 months, at which point these
costs would be subsequently reclassified from deferred costs to
equity. However, there is no certainty that this capital raise will
take place. If this further equity raise is not concluded, these
costs will be expensed to the Statement of Comprehensive
Income.
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 other than the Board of
Directors. During the year ended 30 June 2022, the Company had
three Directors: James Corsellis, Mark Brangstrup Watts and Mark
Hodges. Mark Hodges was the only Director to receive remuneration
under the terms of his director service agreement. The Company's
subsidiary has issued Incentive Shares directly to Mark Hodges
during the year ended 30 June 2022, he is currently the only
Director to hold shares directly, the other Directors are
beneficially interested through their indirect interest in Marwyn
Long Term Incentive LP. Further detail is disclosed in Note 17.
(a) Employment costs for the Group during the year:
For the For the
year period
ended 30 ended 30
June June
2022 2021
GBP's GBP's
Wages and salaries 8,333 -
Social security costs 10,356 -
Signing on fee 61,238 -
--------- ---------
Total employment costs expense 79,927 -
--------- ---------
On the 19 June 2022, 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 GBP250,000
and received a signing on fee of GBP61,238 of which GBP47,000 was
used to pay the subscription for his Incentive Shares as further
detailed in Note 17.
(b) Key management compensation
The Board considers the Directors of the Company to be the key
management personnel of the Group.
(c) Employed persons
The average monthly number of persons employed by the Group
(including Directors) during the year was as follows:
For the For the
year period
ended 30 ended 30
June June
2022 2021
number number
Directors 2 2
--------- ---------
2 2
--------- ---------
6. ADMINISTRATIVE EXPENSES
For the
For the period
year ended Ended 30
30 June June
2022 2021
GBP's GBP's
Group expenses by nature
Personnel costs 79,927 -
Non-recurring project, professional and
diligence costs 793,214 263,769
Professional support 410,298 178,347
Audit fees payable (Note 20) 20,000 35,000
Share-based payment expenses (Note 17) 1,169 154,960
Sundry expenses 9,393 4,024
----------
1,314,001 636,100
---------------- ----------
7. INCOME TAX
For the For the
year ended period
30 June Ended 30
2022 June
2021
GBP's GBP's
Analysis of tax in year
Current tax on loss for - -
the year
Total current tax - -
----------- ----------
Reconciliation of effective For the For the
rate and tax charge year ended period Ended
30 June 30 June 2021
2022
GBP's GBP's
Loss on ordinary activities before tax (1,934,518) (636,096)
----------- ----------------
Loss multiplied by the rate of corporation
tax in the UK of 19% (2021: 19%) (367,558) (120,859)
Effects of:
Other disallowable expenditure 131,780 29,973
Tax losses not utilised 235,778 90,886
----------- ----------------
Total taxation charge - -
----------- ----------------
The Group is tax resident in the UK. As at 30 June 2022,
cumulative tax losses available to carry forward against future
trading profits were GBP1,719,280, (2021: GBP478,343) 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 and A shares in issue during the year. Diluted EPS
is calculated by adjusting the weighted average number of ordinary
shares and A shares outstanding to assume conversion of all
dilutive potential ordinary shares and A shares. The Company being
loss making in both this year and comparative period means that any
exercise would be anti-dilutive.
The Company maintains different share classes, of which ordinary
shares, A shares and sponsor shares were in issue in the current
year 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 rights to
distribution rights so has been ignored for the purposes of IAS 33.
There were no B shares or C shares in issue in either the current
year or prior period.
Refer to Note 13 (warrant liability) and Note 17 (share based
payments) for instruments that could potentially dilute basic EPS
in the future.
For the For the
year period
ended 30 ended 30
June June
2022 2021
Loss attributable to owners of the
parent (GBP's) (1,934,518) (636,096)
Weighted average in issue 12,700,000 2,986,827
Basic and diluted loss per ordinary
share (GBP's) (0.1523) (0.2130)
9. SUBSIDIARY
Marwyn Acquisition Company II Limited is the parent company of
the Group, the Group comprises of Marwyn Acquisition Company II
Limited and the following subsidiary as at 30 June 2022:
Proportion
of ordinary
shares held
Country of directly by
Company name Nature of business incorporation parent
-------------- --------------------- ---------------- --------------
MAC II (BVI) British Virgin
Limited Incentive vehicle Islands 100%
The share capital of MAC II (BVI) Limited consists of both
ordinary shares and Incentive Shares. The Incentive Shares are
non-voting and disclosed in more detail in Note 17.
There are no restrictions on the parent company's ability to
access or use the assets and settle the liabilities of the 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.
10. OTHER RECEIVABLES
As at As at
30 June 30 June
2022 2021
GBP's GBP's
Amounts receivable within
one year:
Prepayments 17,634 4.658
Deferred costs 723,592 592,827
Due from related party
(Note 18) 42,001 23,964
VAT receivable 22,133 30,259
-------- --------
805,360 651,708
-------- --------
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
30 June 30 June
2022 2021
GBP's GBP's
Cash and cash equivalents
Cash at bank 10,254,198 12,255,387
---------- ----------
10,254,198 12,255,387
---------- ----------
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
30 June 30 June
2022 2021
GBP's GBP's
Amounts falling due within one year:
Trade payables 74,740 88,870
Due to a related party (Note 18) 109,735 41,355
Accruals 141,026 818,305
Other tax liabilities 26,841 -
A1 ordinary share liability (Note 17) 47,000 -
399,342 948,530
-------- --------
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
GBP's
Fair value of warrants:
At incorporation -
Fair value of warrant issuances :
Warrant liability - ordinary warrants 98,000
Warrant liability - A warrants 1,680,000
---------
Fair value of warrants at 30 June 2021 1,778,000
---------
Fair value movement of warrants :
Warrant liability - ordinary warrants 35,000
Warrant liability - A warrants 600,000
---------
Total fair value movement 635,000
---------
Fair value of warrants at 30 June 2022 2,413,000
---------
On 4 December 2020, the Company issued 700,000 ordinary shares
and matching warrants at a price of GBP1 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 GBP1 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 year end.
On 20 April 2021, the Company issued 12,000,000 A shares and
matching warrants at a price of GBP1 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 GBP1 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 year end.
Effective 31 March 2022, both the Warrant Instrument and A
Warrant Instrument were amended such that the long stop date was
extended to the fifth anniversary of an initial acquisition by a
member of the Group (which may be in the form of a merger, share
exchange, asset acquisition, share or debt purchase, reorganisation
or similar transaction) of a business ("Business Acquisition").
Previously the warrants were exercisable for 5 years from the date
of issue.
Warrants are accounted for as a level 3 derivative liability
instruments and are measured at fair value at grant date and each
subsequent balance sheet date. The warrants and A warrants were
separately valued at the date of grant. For both the warrants and A
warrants, the combined market value of one share and one Warrant
was considered to be GBP1, 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 initial recognition, Warrants had a fair value of
14p per Warrant. This remained unchanged until 30 June 2022 (the
balance sheet date) where the fair value increased to 19p per
Warrant. 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
30 June 30 June
2022 2021
Combined price of a share and GBP1 GBP1
warrant
Exercise price GBP1 GBP1
Expected volatility 30.0% 25.0%
Risk free rate 2.17% 0.32%
Expected dividends 0.0% 0.0%
Expected term 5th anniversary 5 years from
of the completion the IPO and
of a Business 4.4 years
Acquisition from the period
end date
14. STATED CAPITAL
As at As at
30 June 30 June
2022 2021
Issued and fully paid GBP's GBP's
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
---------- ----------
Total 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 GBP1 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
GBP275,300 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 GBP1 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 year ended
30 June 2022.
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. 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 fair value measurement of the Group's financial and
non-financial assets and liabilities utilities market observable
inputs and data as far as possible. Inputs used in determining fair
value measurements are categorised into different levels based on
how observable the inputs used in the valuation technique utilised
are (the "fair value hierarchy"):
Level 1: Quoted prices in active markets for identical
items;
Level 2: Observable direct or indirect inputs other than Level 1
inputs; and
Level 3: Unobservable inputs, thus not derived from market
data.
The classification of an item into the above levels is based on
the lowest level of the inputs used that has a significant effect
on the fair value measurement of the item. Transfers of items
between levels are recognised in the year they occur.
The Group has the following categories of financial instruments
as at 30 June 2022:
As at As at
30 June 30 June
2022 2021
GBP's GBP's
Financial assets measured at amortised
cost
Cash and cash equivalents (Note 11) 10,254,198 12,255,387
Due from related party (Note 18) 42,001 23,964
10,296,199 12,279,351
---------- ----------
Financial liabilities measured at
amortised cost
Trade Creditors 74,740 88,870
Due to related party (Note 18) 109,735 41,355
Accruals 141,026 818,305
A1 ordinary share liability 47,000 -
---------- ----------
372,501 948,530
---------- ----------
Financial liabilities measured at
measure at fair value to profit and
loss
Financial liabilities measured at
FVPL
Warrant Liability (Note 13) 2,413,000 1,778,000
---------- ----------
2,413,000 1,778,000
---------- ----------
All financial instruments are classified as current assets and
current liabilities. There are no non-current financial instruments
as at 30 June 2022.
For details of valuation techniques and significant unobservable
inputs related to determining the fair value of the warrant
liability, which is classified in level 3 of the fair value
hierarchy, refer to Note 13.
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.
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. The Directors have
reviewed the risk of holding a singular concentration of assets as
predominantly all credit assets held are cash and cash equivalents,
however, do not deem this a material risk. The risk is mitigated by
all cash and cash equivalents being held with Barclays Bank plc,
which holds a short-term credit rating of P-1, as issued by
Moody's.
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 attract and retain the best
executive management talent.
The LTIP will only reward the participants if shareholder value
is created. This ensures alignment of the interests of management
directly with those of Shareholders.
On inception of the LTIP, Incentive Shares were issued by the
Company's subsidiary to Marwyn Long Term Incentive LP ("MLTI"). On
17 June 2022, the Incentive Shares in the Company's subsidiary were
redesignated into
A1 ordinary shares ("A1 Shares") and A2 ordinary shares ("A2
Shares"). 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 percent
per annum on a compounded basis on the capital they have invested
from time to time (with dividends and returns of capital being
treated as a reduction in the amount invested at the relevant time)
(the "Preferred Return").
Incentive Value
Subject to a number of provisions detailed below, if the
Preferred Return and at least one of the vesting conditions have
been met, the holders of the Incentive Shares can give notice to
redeem their Incentive Shares for ordinary shares in the Company
("Ordinary Shares") for an aggregate value equivalent to 20 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 GBP0.01. 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 from 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 Incentive Shares will be treated
as having vested in full.
Holding of Incentive Shares
MLTI and Mark Hodges hold 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 30 June 2022:
Issue
Share price Unrestricted
designation per A Number market IFRS
at balance ordinary of A value 2 Fair
sheet Nominal share ordinary at grant value
Issue date Name date Price GBP's shares date GBP's GBP's
25 November
2020 MLTI A2 GBP0.01 7.50 2,000 15,000 169,960
--------- -------------- --------- ---------- ---------- ------------- --------
Mark
19 June 2022 Hodges A1 GBP0.01 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:
Share designation
at balance Risk-free Expected
Issue date Name sheet date Volatility rate term* (years)
25 November
2020 MLTI A2 25% 0.0% 7.0
------------- ------------------- ----------- ---------- ---------------
19 June 2022 Mark Hodges A1 30% 2.2% 7.1
------------- ------------------- ----------- ---------- ---------------
*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
An expense of GBP1,169 (2021: GBP154,960) has been recognised in
the Statement of Comprehensive Income in respect of the Incentive
Shares issued during the year. 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 3.1 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.
18. RELATED PARTY TRANSACTIONS
James Corsellis and Mark Brangstrup Watts are directors of the
Company and Antoinette Vanderpuije is the Company Secretary of the
Company. Funds managed by MIM LLP of which James Corsellis and Mark
Brangstrup Watts are managing partners and Antoinette Vanderpuije
is a 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
balance sheet date. During the year MIM LLP recharged expenses of
GBP46,583 (2021: GBP11,805), of which GBPnil was outstanding at the
year end (2021: GBPnil).
James Corsellis, Mark Brangstrup Watts and Antoinette
Vanderpuije have an indirect beneficial interest in the Incentive
Shares as described in Note 17 of the Financial Statements through
their indirect interest in MLTI which owns 2,000 A2 Shares in the
capital of MAC II (BVI) Limited.
James Corsellis and Mark Brangstrup Watts are the managing
partners of Marwyn Capital LLP, and Antoinette Vanderpuije is also
a partner. Marwyn Capital LLP provides corporate finance and
managed services support, including named company secretary, to the
Company. As part of this engagement a fee of GBP150,000 was charged
in relation to the Company's equity raise on IPO, this fee was
recognised and invoiced in the period ended 30 June 2021. On an
ongoing basis a monthly fee of GBP10,000 per calendar month was
charged for the provision of the corporate finance services, with
such monthly fee increased to GBP25,000 effective 31 March 2022 on
launch of the Placing Programme and GBP50,000 per calendar month
from 19 June, being the date of Mark Hodge's appointment. As part
of the Placing Programme a one-off fee of GBP325,000 was charged in
respect of the services provided. Managed services support is
charged by Marwyn Capital LLP on a time spent basis. The total
amount charged in the year ended 30 June 2022 by Marwyn Capital LLP
for fees was GBP553,641 (period ended 30 June 2021: GBP232,400) and
they had incurred expenses on behalf of the Group, which were
subsequently recharged of GBP299,434 (period ended 30 June 2021:
GBP7,395). An amount payable to Marwyn Capital LLP of GBP97,575
(2021: GBP41,355) was outstanding as at the year end.
The Company has recharged costs associated with provision of
project services of GBP16,039 (2021: GBP23,964) inclusive of VAT to
Marwyn Acquisition Company III Limited ("MAC III"), of which GBPnil
(2021: GBP23,964) was due to the Company at year end. MAC III is
related to the Group through James Corsellis and Mark Brangstrup
Watts being directors of MAC III.
The Company has recharged costs associated with provision of
project services of GBP42,000 (2021: GBPnil) inclusive of VAT to
MAC III (BVI) Limited ("MAC III (BVI)"), of which GBP42,000 (2021:
GBPnil) was due to the Company at year end. MAC III (BVI) is
related to the Group through James Corsellis and Mark Brangstrup
Watts being directors of MAC III (BVI).
Mark Hodge's director compensation is disclosed in Note 5 and
his holdings of Incentive Shares is disclosed in Note 17.
19. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding
at 30 June 2022 which would require disclosure or adjustment in
these Financial Statements (30 June 2021: GBPNil).
20. INDEPENT AUDITOR'S REMUNERATION
On 24 August 2022, the Group appointed Baker Tilly Channel
Islands Limited as the Group's independent auditor, replacing
Mazars LLP. Audit fees payable for the year ended 30 June 2022 are
GBP20,000 (2021: GBP35,000 paid to Mazars LLP). Fees payable for
the year ended 30 June 2022 in respect of any non-audit related
procedures are GBPNil (2021: GBP17,500 paid to Mazars LLP).
21. POST BALANCE SHEET EVENTS
There have been no material post balance sheet events that would
require disclosure or adjustment in these Financial Statements
(2021: None).
ADVISERS
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
+44 (0)20 7280 5000 Kent
BR3 4TU
Company Broker Registrar
WH Ireland Limited Link Market Services (Guernsey)
Limited
24 Martin Lane Mont Crevelt House
London Bulwer Avenue
EC4R 0DR St Sampson
+44 (0)20 7220 1666 Guernsey
Company Broker GY2 4LH
Company Secretary Independent auditor
Antoinette Vanderpuije For the year ended 30 June 2022
11 Buckingham Street Baker Tilly Channel Islands
Limited
London First Floor, Kensington Chambers
WC2N 6DF 46-50 Kensington Place
Email: MAC2@marwyn.com St Helier
Jersey, JE4 0ZE
Registered Agent and Assistant For the period ended 30 June
Company Secretary 2021
Conyers Corporate Services (BVI) Mazars LLP
Limited
Commerce House Tower Bridge House
Wickhams Cay 1 St. Katharine's Way
Road Town London
VG1110 E1W 1DD
Tortola
British Virgin Islands
English legal advisers to the Registered office
Company
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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END
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