TIDMMAC3
RNS Number : 7507Q
Marwyn Acquisition Company III Ltd
29 October 2021
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: 254900YT8SO8JT2LGD15
Marwyn Acquisition Company III Limited
(the "Company")
Publication of the Financial Statements for the period ended 30
June 2021
The Company announces the publication of its results for the
period ended 30 June 2021.
The Financial Statements are also available on the 'Shareholder
Documents' page of the Company's website at www.marwynac3.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
WH Ireland Limited - Corporate Broker - + 44 (0) 207 220
1666
Harry Ansell
Katy Mitchell
MARWYN ACQUISITION COMPANY III LIMITED
Group Consolidated Financial Statements for the period from
incorporation on 31 July 2020 to 30 June 2021
MANAGEMENT REPORT
We present to shareholders the audited consolidated financial
statements of Marwyn Acquisition Company III Limited (the
"Company") for the period from incorporation on 31 July 2020 to 30
June 2021 (the "Consolidated Financial Statements"), consolidating
the results of Marwyn Acquisition Company III Limited and its
subsidiary, MAC III (BVI) Limited (collectively, the "Group" or
"MAC") .
Strategy
The Company was incorporated on 31 July 2020 and subsequently
listed on the Main Market of the London Stock Exchange on 4
December 2020. The Company has been formed for the purpose of
effecting a merger, share exchange, asset acquisition, share or
debt purchase, reorganisation or similar business combination with
one or more businesses. The Company's objective is to generate
attractive long term returns for shareholders and to enhance value
by supporting sustainable growth, acquisitions and performance
improvements within the acquired companies.
The Directors believe there is significant opportunity to invest
in companies that are positioned to take advantage of the
structural change arising from an unprecedented acceleration of
digitalisation brought about by the current macroeconomic
environment, affecting the way people live, work and consume, and
the way businesses operate, engage and sell to customers.
While a broad range of sectors will be considered by the
Directors, those which they believe will provide the greatest
opportunity and which the Company will initially focus on
include:
-- Media & Entertainment;
-- Technology & Software;
-- Consumer E-commerce;
-- Healthcare & Diagnostics; and
-- Business-to-Business Services.
The Directors may consider other sectors if they believe such
sectors present a suitable opportunity for the Company.
The Company will seek to identify situations where a combination
of management expertise, improving operating performance, freeing
up cashflow for investment, and implementation of a focussed buy
and build strategy can unlock growth in their core markets and
often into new territories and adjacent sectors.
Activity
During the period, the Directors have continued to progress the
Company's strategy in seeking appropriate management partners and
considering the optimal capital structure to execute the Company's
strategy.
As announced in April 2021, this has included exploring the
potential for a further equity raise of up to GBP200m of redeemable
shares and warrants, prior to the identification of an acquisition.
The Directors believe that being able to demonstrate the Company's
access to equity capital alongside the management team's past track
record of successful fundraising and transaction execution, will
further enhance the Company's competitiveness in accessing high
quality businesses with which to combine. Furthermore, the
Directors believe that the structure and flexibility that the MAC
corporate structure affords, and close alignment between management
incentivisation and long-term shareholder returns, including the
absence of the highly dilutive promote structure commonly found in
other acquisition company models, gives the Company a significant
advantage over its competitors.
In connection with the Company's ongoing activities, an accrual
has been made for costs associated with a further equity raise at
the balance sheet date as described in more detail in note 12.
There is currently no certainty that the potential capital raise
will take place nor of its terms should it do so.
Results
The Group's loss after taxation for the period to 30 June 2021
was GBP636,141. Of the costs incurred in the period, GBP 265,768
relates to non-recurring project costs. During the period, the
Company raised GBP12,439,701 through the issue of equity (net of
expenses) and held a cash balance at the period end of
GBP12,255,385. The Group has not yet acquired an operating business
and as such is not yet income generating.
Directors
The Directors of the Company have served as directors for the
period from incorporation until the date of this report. The
Directors are:
James Corsellis (Chairman); and
Mark Brangstrup Watts.
Directors' Biographies
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 a director of Marwyn Acquisition Company Plc,
AdvancedAdvT Limited and Marwyn Acquisition Company II 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
and Marwyn Acquisition Company II 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 period
are set out in note 14 to the Consolidated 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 announced that it had 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.
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.
-- 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. The Company's prospectus is available on the
Company's website: www.marwynac3.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 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 significant asset is cash. As at the statement of
financial position date the Group's cash balance was GBP12,255,385.
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 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.
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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.
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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 Consolidated
Financial Statements. James Corsellis and Mark Brangstrup Watts are
managing partners of Marwyn Investment Management 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 advice, company secretarial services and ad-hoc managed
services support to the Company. Details of the related party
transactions which occurred during the period are disclosed in note
18 to the Consolidated Financial Statements, save for the
participation in the Company's long term incentive plan as
disclosed in note 17 to the Consolidated 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.
Outlook
We believe there is significant opportunity to invest in
businesses that have the potential to be long term beneficiaries of
the changes to their respective sectors and the underlying
acceleration of digitalisation that the current macro environment
has brought about. We are actively considering the optimal route
for shareholders for the Company to execute a platform acquisition,
which includes the potential further equity raise as discussed
above of up to GBP200m ahead of a specific target being identified.
We are confident in delivering the Company's strategy and creating
significant value for our shareholders.
RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Group
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
period from incorporation to 30 June 2021, which present fairly the
state of affairs of the Group and the profit or loss of the Group
for that period.
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 period 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 group financial statements have been prepared in
accordance with IFRS and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the
Group.
-- 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 they face.
This Directors' Report was approved by the Board of Directors on
29 October 2021 and is signed on its behalf.
By Order of the Board
James Corsellis
Chairman
29 October 2021
INDEPENT AUDITOR'S REPORT
Independent auditor's report to the members of Marwyn
Acquisition Company III Limited
Opinion
We have audited the financial statements of Marwyn Acquisition
Company III Limited and its subsidiary (the 'group') for the period
ended 30 June 2021 which comprise:
- Consolidated Statement of Comprehensive Income;
- Consolidated Statement of Financial Position;
- Consolidated Statement of Changes in Equity;
- Consolidated Statement of Cash Flows; and
- Notes to the Consolidated Financial Statements, including a
summary of significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRS) as adopted by the European Union.
In our opinion, the consolidated financial statements:
- give a true and fair view of the state of the group's affairs
as at 30 June 2021 and of the group's loss for the period then
ended; and
- have been properly prepared in accordance with IFRS as adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the 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 financial statements in the UK, including the
FRC's Ethical Standard, as applied to listed entities, 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our audit procedures to evaluate the directors' assessment of
the group's ability to continue to adopt the going concern basis of
accounting included but were not limited to:
- Undertaking an initial assessment at the planning stage of the
audit to identify events or conditions that may cast significant
doubt on the group's ability to continue as a going concern;
- Making enquiries of the directors to understand the period of
assessment considered by them, the assumptions they considered and
the implication of those when assessing the group's future
financial position and performance;
- Challenging the appropriateness of the directors' assumptions
in their assessment of the group's ability to continue as a going
concern; and
- Evaluating the appropriateness of the directors' disclosures
in the financial statements on going concern.
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's ability to continue as a going concern for a period of at
least twelve months from when the 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.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, 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 financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
We summarise below the key audit matters in forming our audit
opinion above, together with an overview of the principal audit
procedures performed to address each matter and, where relevant,
key observations arising from those procedures. These matters,
together with our findings, were communicated to those charged with
governance through our Audit Completion Report.
Key audit matter How our audit responded to the
key audit matter
========================================== ===============================================================
Classification and valuation
of warrants
===============================================================
Refer to the Accounting Policies
(page 19-23); and Note 13
of the Consolidated Financial
Statements (page 26-27)
The warrants issued to investors
are subject to judgement in
both classification and valuation.
The classification of the
warrants is complex and must
consider the nature and details
of the instruments contracts
to determine the correct classification
between equity and liabilities.
Further the fair value of
these warrants was determined
using the Black Scholes option
pricing methodology which
considered the exercise price,
expected volatility, risk
free rate, expected dividends
and expected term of the warrants
which is complex and involves
estimates and judgements.
Classification:
Key figures * We obtained an understanding of management's
assessment for the classification of these
GBP1,778k instruments and the rationale for their
Fair value of Warrants classification.
* We utilised financial reporting specialists to review
the classification of these instruments and
management's assessment in accordance with IAS 32 and
IFRS 9 and we challenged management on their
assessment.
Valuation:
* We obtained the valuation report prepared by
management's expert.
* In conjunction with Mazars internal valuation experts,
we performed the review of and validation of the
valuation assumptions, methodology and calculations
in respect of the valuation of the instruments and
determined whether it was in accordance with the
requirements of IFRS 9 and IFRS 13.
Disclosure:
* We reviewed the relevant disclosures in the
consolidated financial statements in accordance with
the requirements of the IFRS as adopted by the
European Union.
Key observations
Based on our procedures performed,
we are satisfied that the management's
judgements and estimates in respect
of the valuation and classification
of warrants for the period ended
30 June 2021 along with the related
disclosures in the consolidated
financial statements are appropriate
.
========================================== ===============================================================
Emphasis of Matter - recognition and classification of
prepayments relating to a possible further equity raise
We draw your attention to note 3 of the consolidated financial
statements, which describes the critical accounting judgements made
in respect of the recognition and classification of prepayments
relating to a possible further equity raise. An amount of
GBP592,827 has been recognised as a prepayment at period end which
management intend to be taken as a deduction from equity on the
issuance of shares in the future. However, there is no certainty
that a future issuance of shares will take place. In the event that
a further equity raise is not concluded, these costs will be
expensed to profit or loss. Our opinion is not modified in respect
of this matter.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and on the financial
statements as a whole. Based on our professional judgement, we
determined materiality for the financial statements as a whole as
follows:
Consolidated financial statements
====================== ======================================================
Overall materiality GBP509k
How we determined We calculated overall materiality at 5% of total
it equity.
Rationale Total equity has been used as the basis for overall
for benchmark materiality as the group is not trading and is
applied an investment vehicle, the main transactions in
the period relate to the raising of capital and
therefore we considered that total equity was
the most appropriate basis for materiality.
====================== ======================================================
As part of our audit we determined performance materiality being
an amount set by us that is less than overall materiality to reduce
to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole. Based on our professional
judgement, we determined performance materiality as follows:
Consolidated financial statements
==================== ======================================================
Performance GBP356k
materiality
How we determined 70% of overall materiality.
performance
materiality We set performance materiality at this level taking
into account the fact that this is our first period
of engagement.
==================== ======================================================
We agreed with the directors that we would report to them
misstatements identified during our audit above GBP15k as well as
misstatements below that amount that, in our view, warranted
reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we assessed the risk of material
misstatement in the financial statements, whether due to fraud or
error, and then designed and performed audit procedures responsive
to those risks. In particular, we looked at where the directors
made subjective judgements such as making assumptions on
significant accounting estimates.
We tailored the scope of our audit to ensure that we performed
sufficient work to be able to give an opinion on the financial
statements as a whole. We used the outputs of a risk assessment,
our understanding of the group, its environment, controls and
critical business processes, to consider qualitative factors in
order to ensure that we obtained sufficient coverage across all
financial statement line items.
The group is principally accounted for as one and therefore our
audit scope included an audit of the Company and its subsidiary.
All Group companies were within the scope of our audit testing.
We also tested the consolidation process and carried out
analytical procedures to confirm our conclusion that there were no
significant risks of material misstatement of the aggregated
financial information.
Other information
The other information comprises the information included in the
annual report other than the financial statements and our auditor's
report thereon. The directors are responsible for the other
information. Our opinion on the 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.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
course of audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have 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 Directors
As explained more fully in the Directors' Responsibilities
statement set out on page 7 to 8, the directors are responsible for
the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and the parent 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 the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the 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 (UK) 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 financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud.
Based on our understanding of the group and its industry, we
identified that the principal risks of non-compliance with laws and
regulations related to rules and regulations applicable to listed
entities and UK and overseas tax legislation, and we considered the
extent to which non-compliance might have a material effect on the
financial statements. We also considered those laws and regulations
that have a direct impact on the preparation of the financial
statements.
We evaluated the directors' and management's incentives and
opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls) and
determined that the principal risks were related to posting manual
journal entries to manipulate financial performance and position,
management bias through judgements and assumptions in significant
accounting estimates, in particular in relation to the valuation of
warrants and share based payments, and significant one-off or
unusual transactions.
Our audit procedures were designed to respond to those
identified risks, including non-compliance with laws and
regulations (irregularities) and fraud that are material to the
financial statements. Our audit procedures included but were not
limited to:
- Discussing with the directors and management their policies
and procedures regarding compliance with laws and regulations;
- Communicating identified laws and regulations throughout our
engagement team and remaining alert to any indications of
non-compliance throughout our audit; and
- Considering the risk of acts by the group which were contrary
to the applicable laws and regulations, including fraud.
Our audit procedures in relation to fraud included but were not
limited to:
- Making enquiries of the directors and management on whether
they had knowledge of any actual, suspected or alleged fraud;
- Gaining an understanding of the internal controls established
to mitigate risks related to fraud;
- Discussing amongst the engagement team the risks of fraud; and
- Addressing the risks of fraud through management override of
controls by performing journal entry testing.
The primary responsibility for the prevention and detection of
irregularities including fraud rests with both those charged with
governance and management. As with any audit, there remained a risk
of non-detection of irregularities, as these may involve collusion,
forgery, intentional omissions, misrepresentations or the override
of internal controls.
As a result of our procedures, we did not identify any key audit
matters relating to irregularities. The risks of material
misstatement that had the greatest effect on our audit, including
fraud, are discussed under "Key audit matters" within this
report.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at www.frc.org.uk/auditorsresponsibilities . This
description forms part of our auditor's report.
Use of the audit report
This report is made solely to the company's members as a body.
Our audit work has been undertaken so that we might state to the
company's 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 the company's members as a body
for our audit work, for this report, or for the opinions we have
formed.
Mazars LLP
Chartered Accountants
Tower Bridge House
St Katharine's Way
London
E1W 1DD
United Kingdom
29 October 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Period ended
30 June
2021
Note GBP's
Administrative expenses 6 (636,141)
Operating loss (636,141)
Loss before income taxes (636,141)
Income tax 7 -
==============
Loss for the period (636,141)
Total other comprehensive income -
Total comprehensive loss for the period (636,141)
==============
Loss per share GBP
Basic and diluted 8 (0.2130)
The Group's activities derive from continuing operations.
The notes on pages 19 to 33 form an integral part of these Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
30 June 2021
Assets Note GBP 's
Current assets
Other receivables 10 635,690
Cash and cash equivalents 11 12,255,385
--------------
Total current assets 12,891,075
Total assets 12,891,075
==============
Equity and liabilities
Equity
Ordinary Shares 14 326,700
A Shares 14 10,320,000
Sponsor share 14 1
Share-based payment reserve 17 169,960
Accumulated losses (636,141)
--------------
Total equity 10,180,520
Current liabilities
Trade and other payables 12 932,555
Warrants 13 1,778,000
--------------
Total liabilities 2,710,555
Total equity and liabilities 12,891,075
==============
The notes on pages 19 to 33 form an integral part of these Financial Statements.
The Financial Statements were approved by the Board of Directors
on 29 October 2021 and were signed on its behalf by:
James Corsellis Mark Brangstrup Watts
Chairman Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary Sponsor Share based Accumulated Total
Notes Shares A Shares Share payment 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 - - - - (636,141) (636,141)
Share-based
payment charge 17 - - - 169,960 - 169,960
Balance at 30
June 2021 326,700 10,320,000 1 169,960 (636,141) 10,180,520
========== ==================== ============= ================ ================== ===========
The notes on pages 19 to 33 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 period
ended
30 June
2021
Note GBP's
Operating activities
Loss for the period (636,141)
Adjustments to reconcile total operating
loss to net cash flows:
Share-based payment expense 17 154,960
Working capital adjustments:
Increase in other receivables (635,690)
Increase in trade and other payables 932,555
Net cash flows used in operating activities (184,316)
--------------
Financing activities
Proceeds from issue of ordinary shares 14 700,001
Proceeds from issue of A shares 14 12,000,000
Proceeds from issue of ordinary A share
capital in MAC III (BVI) limited 15,000
Costs directly attributable to equity raise (275,300)
Net cash flows received from financing
activities 12,439,701
--------------
Net increase in cash and cash equivalents 12,255,385
Cash and cash equivalents at the beginning -
of the period
--------------
Cash and cash equivalents at the end of
the period 11 12,255,385
==============
The notes on pages 19 to 33 form an integral part of these
Financial Statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Marwyn Acquisition Company III Limited was incorporated on 31
July 2020 in the British Virgin Islands ("BVI") as a BVI business
company (registered number 2040967) under the BVI Business Company
Act, 2004. The Company was listed on the Main Market of the London
Stock Exchange on 4 December 2020 and has its registered address at
Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola,
VG1110, British Virgin Islands and UK establishment 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 III (BVI) Limited
(together with the Company the "Group").
2. ACCOUNTING POLICIES
(a) Basis of preparation
The Financial Statements for the period from incorporation to 30
June 2021 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 period, as explained in
the accounting policies below. This is the Group's first set of
financial statements since incorporation and as such no
comparatives have been presented.
The principal accounting policies adopted in the preparation of
the Financial Statements are set out below. The policies have been
consistently applied throughout the period presented.
(b) Going concern
At 30 June 2021, the Group has net assets of GBP10,180,520 and a
cash balance of GBP12,255,385. 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 the
period end 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.
As set out in the Management Report, the Company is actively
considering the potential further equity raise of up to GBP200
million of redeemable shares and warrants, prior to the
identification of an acquisition. Should the potential equity raise
not be completed, 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 alongside or subsequent to the appointment of industry
leading executives to the Company. 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
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 pages 5 and 6. Based on the current cash position,
the Company has sufficient resources to continue to pursue its
stated investment strategy.
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 Consolidated 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.
(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 2022
(Amendments to IAS 37);
Property, Plant and Equipment: Proceeds before 1 January 2022
Intended Use (Amendments to IAS 16);
Annual Improvements to IFRS Standards 2018-2020 1 January 2022
(Amendments to IFRS 1, IFRS 9, IFRS 16 and
IAS 41);
Amendments to IFRS 3: References to Conceptual 1 January 2022
Framework;
Amendments to IAS 1 Presentation of Financial 1 January 2023
Statements: Classification of Liabilities as
Current or Non-current*
Disclosure of accounting policies (Amendments 1 January 2023
to IAS 1)*;
Definition of accounting estimates (Amendments 1 January 2023
to IAS 8)*;
Amendments to IFRS 17 Insurance contracts* 1 January 2023
* 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 profit and loss. 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 period presented comprises current and
deferred tax.
Current tax is the expected tax payable on the taxable income
for the period, 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. Deferred tax assets are reduced to
the extent that it is not probable that the related tax benefit
will be realised.
(i) Loss per ordinary share
The Group presents basic earnings per ordinary share ("EPS")
data for its ordinary shares. 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 period. 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 A ordinary shares in MAC III (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 future share issues.
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 future share issues.
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.
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.
This modification fails the fixed for fixed test, as outlined in
IAS 32 para 16, that requires the Company to provide a fixed number
of Shares for a fixed amount of cash. This liability is required to
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. This is due to the proceeds received from the issue of
equity deemed to have been received for both the issue of the
shares and the warrants attached.
Recognition and classification of prepayment relating to a
possible further equity raise
As announced by the Company on 20 April 2021, the Company is
actively considering a possible further equity raise of up to
GBP200 million to support the Company's stated strategy. In
relation to this, an accrual has been made for costs incurred at
the balance sheet date totalling GBP713,160. The Directors have
considered each of the accrued 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 Profit or Loss.
At the period end, GBP592,827 has been included in current asset
prepayments (refer to note 10) as these costs are 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 prepayments 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 profit and loss.
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). The Warrants are
exercisable at any time until five years after the issue date. The
Warrants were valued using the Black-Scholes option pricing
methodology which considered 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 Warrants.
Other disclosures relating to the Group's exposure to risk and
uncertainties are included in note 16.
4. SEGMENT INFORMATION
The Board of Directors is the Group's chief operating
decision-maker. As the Group has not yet acquired an operating
business, the Board of Directors considers the Group as a whole for
the purposes of assessing performance and allocating resources, and
therefore the Group has one reportable operating segment.
5. EMPLOYEES AND DIRECTORS
The Group does not have any employees. During the period ended
30 June 2021, the Company had two directors: James Corsellis and
Mark Brangstrup Watts, neither director received remuneration under
the terms of their director service agreements. The Company's
subsidiary has issued Incentive Shares as more fully disclosed in
note 17 in which the Directors are indirectly beneficially
interested.
6. ADMINISTRATIVE EXPENSES
For the period
ended 30 June
2021
GBP's
Group expenses by nature
Non-recurring project, professional and diligence
costs 265,768
Professional support 176,347
Audit fees payable to Mazars LLP for their audit
of the Group (Note 20) 35,000
Share-based payment expenses (Note 17) 154,960
Other expenses 4,066
636,141
==============
7. INCOME TAX
For the period
ended 30 June
2021
GBP's
Analysis of tax in period
Current tax on loss for the period -
--------------
Total current tax -
==============
Reconciliation of effective rate and For the period
tax charge: ended 30 June
2021
GBP's
Loss on ordinary activities before
tax (636,141)
--------------
Loss multiplied by the rate of corporation
tax in the UK of 19% (120,867)
Effects of:
Other disallowable expenditure 29,973
Tax losses not utilised 90,894
Total taxation charge -
==============
The Group is tax resident in the UK. As at 30 June 2021,
cumulative tax losses available to carry forward against future
trading profits were GBP478,387 subject to agreement with HM
Revenue & Customs. There is currently no certainty as to future
profits and no deferred tax asset is recognised in relation to
these carried forward losses. Under UK Law, there is no expiry for
the use of tax losses.
8. LOSS PER ORDINARY SHARE
Basic EPS is calculated by dividing the loss attributable to
equity holders of the company by the weighted average number of
ordinary shares in issue during the period. Diluted EPS is
calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all dilutive potential
ordinary shares. The weighted average number of shares has not been
adjusted in calculating diluted EPS as there are no instruments
which have a current dilutive effect.
The Company maintains three different share classes, being
ordinary shares, A shares and sponsor shares. The key difference
between ordinary shares and A shares is that the ordinary shares
are traded with voting rights attached. The share classes both have
equal rights to the residual net assets of the company, which
enables them to be considered collectively as one class per the
provisions of IAS 33. The sponsor share has no rights to
distribution rights so has been ignored for the purposes of IAS
33.
Refer to note 13 (warrants) and note 17 (share based payments)
for instruments that could potentially dilute basic EPS in the
future.
For the period
ended 30 June
2021
Loss attributable to owners of the
parent (GBP's) (636,141)
Weighted average in issue 2,986,827
Basic and diluted loss per ordinary
share (GBP's) (0.2130)
9. LIST OF CONSOLIDATED COMPANIES
Marwyn Acquisition Company III Limited is the parent company of
the Group, the Group comprises of Marwyn Acquisition Company III
Limited and the following subsidiary as at 30 June 2021:
Proportion
of ordinary
shares held
Nature of directly
Company name business Country of incorporation by parent
---------------- ------------ -------------------------- -------------
MAC III (BVI) Incentive British Virgin
Limited vehicle Islands 100%
The share capital of MAC III (BVI) Limited consists of both
ordinary shares and A ordinary shares. The A ordinary shares are
held by Marwyn Long Term Incentive LP ("MLTI") and are non-voting.
Further detail on the Incentive Shares is given 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 III (BVI) Limited
is Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town,
Tortola, VG1110, British Virgin Islands.
10. OTHER RECEIVABLES
As at
30 June
2021
GBP's
Amounts receivable within one year:
Prepayments 597,485
Other debtors (Note 14) 1
VAT receivable 38,204
--------
635,690
========
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.
Prepayments at the period end includes professional costs of
GBP592,827 incurred in connection with a potential equity raise
that will be deducted from equity should the equity raise complete.
This is discussed in further detail in note 12 and outlined in the
critical accounting judgements in note 3.
11. CASH AND CASH EQUIVALENTS
As at
30 June
2021
GBP's
Cash and cash equivalents
Cash at bank 12,255,385
----------
12,255,385
==========
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
30 June
2021
GBP's
Amounts falling due within one year:
Trade payables 70,694
Due to a related party (Note 18) 65,319
Accruals 796,542
932,555
========
There is no material difference between the book value and the
fair value of the trade and other payables.
In connection with the Company's exploration of a potential
further equity raise as announced to the market on 20 April 2021,
the Company has incurred professional adviser costs in the period
to the balance sheet date totalling GBP713,160. Of this amount,
GBP592,827 has been taken to prepayments as can be seen in note 10
as it directly relates to the potential issuance of share capital
and therefore, should this further equity raise be completed, would
be reflected in equity. The remaining GBP120,333 has been taken to
the profit and loss account and is included within non-recurring
project, professional and diligence costs.
The accruals of GBP713,160 are non-interest bearing and are
expected to be settled within 12 months and have been classified as
current. This is further outlined in the critical accounting
judgements in note 3.
All trade payables are non-interest bearing and are usually paid
within 30 days.
13. WARRANT LIABLITY
As at
30 June
2021
GBP's
Amounts falling due within one year:
Warrant liability - ordinary shares 98,000
Warrant liability - A shares 1,680,000
1,778,000
=========
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 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 future share issues. Warrants are fully
vested at the period end and are immediately exercisable for 5
years from the date of issue.
On 20 April 2021, the Company issued 12,000,000 A shares and
matching warrants at a price of GBP1 for one A share and matching A
warrant. Under the terms of the warrant instrument, warrant holders
are able to acquire one ordinary share per warrant at a price of
GBP1 per ordinary share, subject to a downward price adjustment
depending on future share issues. Warrants are fully vested at the
period end and are immediately exercisable for 5 years from the
date of issue.
Warrants are accounted for as a level 3 derivative liability
instruments and are measured at fair value at grant date and each
subsequent balance sheet date. The warrants and A warrants were
separately valued at the date of grant. For both the warrants and A
warrants, the combined market value of one share and one Warrant
was considered to be GBP1, in line with the market price paid by
third party investors. A Black-Scholes option pricing methodology
was used to determine the fair value, which considered the exercise
prices, expected volatility, risk free rate, expected dividends and
expected term.
The key assumptions used in determining the fair value of the
Warrants are as follows:
Combined price of a share GBP1
and warrant
Exercise price GBP1
Expected volatility 25.0%
Risk free rate 0.32%
Expected dividends 0.0%
Expected term 5 years from
the IPO (4.4
years from period
end)
On initial recognition, Warrants had a fair value of 14p per
Warrant which remained unchanged at balance date. A 5-percentage
point in the expected volatility rate would not have a material
impact on the fair value of the Warrants.
14. SHARE CAPITAL
As at
30 June
2021
Issued and fully paid GBP's
700,000 ordinary shares of
no par value 326,700
12,000,000 A shares of no
par value 10,320,000
1 sponsor share of no par
value 1
----------
Total 10,646,701
==========
Ordinary share of no Sponsor share of no Ordinary shares of no A shares of no par
par value par value par value value
---------------------- ---------------------- ---------------------- ----------------------
Issued and fully paid
Opening number of
shares on
incorporation 1 - - -
Capital reorganisation
:
Sponsor share of no
par value (1) 1 - -
Shares issued during
the period:
Ordinary shares of no
par value - - 700,000 -
Ordinary A shares of
no par value - - - 12,000,000
---------------------- ---------------------- ---------------------- ----------------------
Closing number of
shares at period end - 1 700,000 12,000,000
====================== ====================== ====================== ======================
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 has been valued at 86p per share. Holders of
ordinary shares are entitled to receive notice and attend and vote
at any meeting of members. Costs of GBP275,300 directly
attributable to this equity raise have been taken against stated
capital during the period.
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 has been valued at 86p per share. The A shares do
not have voting rights and are not listed on any exchange. There
were no costs directly attributable to the issue of these
shares.
Both 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 period they occur.
The Group has the following categories of financial instruments
as at 30 June 2021:
As at
30 June
2021
GBP's
Financial assets measured at amortised
cost
Cash and cash equivalents (Note 11) 12,255,385
12,255,385
==========
Financial liabilities measured at amortised
cost
Trade and other payables (Note 12) 867,236
Due to a related party (Note 18) 65,319
----------
932,555
==========
Financial liabilities measured at measure
at fair value to profit and loss
Warrant Liability (Note 13) 1,778,000
----------
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 2021.
For details of the fair value hierarchy, valuation techniques,
and significant unobservable inputs related to determining the fair
value of the warrant liability, which are classified in level 3 of
the fair value hierarchy, refer to note 13 for further detail.
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.
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. As at the balance sheet date,
an executive management team is not yet in place and as such Marwyn
Long Term Incentive LP (" MLTI ") is the only participant in the
LTIP. Once an executive management team is appointed, they will
participate in the LTIP and this will be dilutive to MLTI. Under
the LTIP, A ordinary shares (" Incentive Shares ") are issued by
the Subsidiary.
As at the statement of financial position date, MLTI had
subscribed for redeemable A ordinary shares of GBP0.01 each in the
Subsidiary entitling it to 100 percent of the incentive value.
Preferred Return
The incentive arrangements are subject to the Company's
shareholders achieving a preferred return of at least 7.5 percent
per annum on a compounded basis on the capital they have invested
from time to time (with dividends and returns of capital being
treated as a reduction in the amount invested at the relevant time)
(the " Preferred Return ").
Incentive Value
Subject to a number of provisions detailed below, if the
Preferred Return and at least one of the vesting conditions have
been met, the holders of the Incentive Shares can give notice to
redeem their Incentive Shares for ordinary shares in the Company ("
Ordinary Shares ") for an aggregate value equivalent to 20 percent
of the "Growth", where Growth means the excess of the total equity
value of the Company and other shareholder returns over and above
its aggregate paid up share capital (20 percent of the Growth being
the " Incentive Value ").
Grant date
The grant date of the Incentive Shares will be the date that
such shares are issued.
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, 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 acquisition;
ii. a sale of all or substantially all of the revenue or net
assets of the business of the Subsidiary in combination with the
distribution of the net proceeds of that sale to the Company and
then to its shareholders;
iii. a sale of all of the issued ordinary shares of the
Subsidiary or a merger of the Subsidiary in combination with the
distribution of the net proceeds of that sale or merger to the
Company's shareholders;
iv. where by corporate action or otherwise, the Company effects
an in-specie distribution of all or substantially all of the assets
of the Group to the Company's shareholders;
v. aggregate cash dividends and cash capital returns to the
Company's Shareholders are greater than or equal to aggregate
subscription proceeds received by the Company;
vi. a winding-up of the Company;
vii. a winding-up of the Subsidiary; or
viii. a sale, merger or change of control of the Company.
If any of the vesting conditions described in paragraphs (ii) to
(viii) above are satisfied before the third anniversary of the
initial acquisition, the A Shares will be treated as having vested
in full.
Holding of Incentive Shares
MLTI holds Incentive Shares entitling it in 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 issued on 25 November 2020
Nominal Price Issue price Number Unrestricted IFRS
per A ordinary of A ordinary market value 2 Fair
share GBP's shares at grant value
date GBP's GBP's
Marwyn Long
Term Incentive
LP GBP0.01 7.50 2,000 15,000 169,960
--------------- ---------------- --------------- -------------- --------
Valuation of Incentive Shares
A valuation of the incentive shares has been prepared by
Deloitte LLP dated 12 February 2021 to determine the fair value of
the Incentive Shares 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 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. The fair value uses an
ungeared volatility of 25 per cent, and an expected term of seven
years. 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. A risk-free rate of 0 per cent. has been applied, based on
the average yield on a five-year UK Gilt at the valuation date. The
model incorporates a range of probabilities for the likelihood of
an acquisition being made of a given size.
Expense related to Incentive Shares
An expense of GBP154,960 has been recognised in the Statement of
Comprehensive Income in respect of the Incentive Shares issued to
MLTI which is the difference between the IFRS 2 valuation at grant
date of GBP169,960 and the amount payable by MLTI for 2,000 A
ordinary shares of GBP15,000. There are no service conditions
attached to the MLTI shares, and hence the expense of GBP154,960
has been recognised in the consolidated statement of comprehensive
income for the period. The fair value at grant date has been taken
to the share-based payment reserve in the statement of changes in
equity.
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 Marwyn Investment Management LLP ("MIM"),
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 statement of financial position
date. During the period MIM recharged expenses of GBP11,805, of
which GBPnil was outstanding at the period end.
James Corsellis, Mark Brangstrup Watts and Antoinette
Vanderpuije have an indirect beneficial interest in the Incentive
Shares as described in note 17 of the Consolidated Interim
Financial Statements through their indirect interest in MLTI which
owns 2,000 A ordinary shares in the capital of MAC III (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 advice,
named company secretary, and managed service support 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. On an ongoing
basis a monthly fee of GBP10,000 per calendar month is charged for
the provision of the corporate finance services and managed
services support on a time spent basis. The total amount charged in
the period ended 30 June 2021 by Marwyn Capital LLP for fees was
GBP232,400 and they had incurred expenses on behalf of the Company
of GBP7,395. GBP41,355 was outstanding as at the period end.
The Company was charged costs associated with the provision of
project services of GBP23,964 inclusive of VAT from Marwyn
Acquisition Company II Limited ("MAC II"), of which GBP23,964 was
due to MAC II at the period end. MAC II is related to the Group
through James Corsellis and Mark Brangstrup Watts being directors
of MAC II.
19. COMMITMENTS AND CONTINGENT LIABILITIES
There were no commitments or contingent liabilities outstanding
at 30 June 2021 which would require disclosure or adjustment in
these Financial Statements.
20. INDEPENT AUDITOR'S REMUNERATION
For the period ended 30 June 2021, the Group has appointed
Mazars LLP as the Group's independent auditor, replacing Baker
Tilly Channel Islands Limited. Audit fees payable to Mazars LLP for
the period ended 30 June 2021 are GBP35,000. Fees payable to Mazars
LLP for the period ended 30 June 2021 in respect of audit related
procedures in respect of a potential capital markets transaction
are GBP17,500 (refer note 12).
21. POST BALANCE SHEET EVENTS
There have been no material post balance sheet events that would
require disclosure or adjustment to these Financial Statements.
ADVISORS
Financial Adviser BVI legal advisers to the Company
Investec Bank Plc Conyers Dill & Pearman
30 Gresham St Commerce House
London Wickhams Cay 1
EC2V 7QN Road Town
+44 (0)20 7597 4000 VG1110
Financial Adviser Tortola
British Virgin Islands
Company Broker Depository
WH Ireland Limited Link Market Services Trustees
Limited
24 Martin Lane The Registry
London 34 Beckenham Road
EC4R 0DR Beckenham
+44 (0)20 7220 1666 Kent
Company Broker BR3 4TU
Company Secretary Registrar
Antoinette Vanderpuije Link Market Services (Guernsey)
Limited
11 Buckingham Street Mont Crevelt House
London Bulwer Avenue
WC2N 6DF St Sampson
Email: MAC2@marwyn.com Guernsey
GY2 4LH
Registered Agent and Assistant Independent auditor
Company Secretary
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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