TIDMFINS TIDMFNWR
RNS Number : 9560X
Financials Acquisition Corp
28 April 2023
Financials Acquisition Corp
Annual Report for the period to 31 December 2022
Page(s)
Directors' Report 1-4
Chairman's Statement 5
Board of Directors 6-8
Corporate Governance Statement 9-13
Report of the Audit Committee 14-15
Independent Auditor's Report 16-22
Statement of Financial Position 23
Statement of Comprehensive Income 24
Statement of Changes in Equity 25
Statement of Cash Flows 26
Notes to the Financial Statements 27-47
Company Summary
The Directors of Financials Acquisition Corp (the "Company") are
pleased to submit their Annual Report and Audited Financial
Statements (the "Financial Statements") for the period from date of
incorporation to 31 December 2022.
Financials Acquisition Corp (the "Company"), is an exempted
company with limited liability, incorporated under the laws of the
Cayman Islands on 31 August 2021. The Company is registered with
the Registrar of Companies in the Cayman Islands under
incorporation number 380273 and has its registered office at SIX,
Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman,
KY1-1111, Cayman Islands.
Principal Activity
The Company is a special purpose acquisition company (a "SPAC"),
formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganisation or similar business
combination (a "Business Combination"). The Company aims to
identify and acquire a company or business operating principally
(or adjacent to) the insurance or broader financial services
industry.
The Company was admitted to trading on the main market of the
London Stock Exchange on 13 April 2022, having raised
GBP150,000,000 in its initial public offering (the "IPO") of
15,000,000 Class A Ordinary Shares ("Ordinary Shares") at GBP10.00
per share (the "Offering") with matching warrants being issued
concurrently with the delivery of the Ordinary Shares to
subscribers of Ordinary Shares in the Offering on the basis of
one-half (1/2) of one (1) warrant per Ordinary Share ("Public
Warrants"). Additionally, GBP4,500,000 was raised via the Company's
Overfunding Subscription of 450,000 Ordinary Shares which were
issued to the Overfunding Sponsor Entity.
The proceeds of the Offering were placed in an escrow account as
outlined in the prospectus for the IPO (the "Prospectus"). At the
same time as the Offering the Company raised GBP3,875,000 from the
private placement of 3,875,000 Sponsor Warrants at GBP1.00 per
Sponsor Warrant, the proceeds of which were held outside of the
escrow account to cover the costs relating to the IPO and running
costs as outlined in the Prospectus.
Business Combination
Since the completion of its IPO, the Company's leadership team
has been focused on identifying a potential target for the business
combination within the meaning of the Prospectus (the "Business
Combination"). This process is ongoing and the Company will
continue its search with the aim to complete a business combination
within 15 months following the Admission Date (13 April 2022),
subject to two three-month extension periods under conditions
outlined in the Prospectus.
The proceeds of the Company's IPO, GBP154,500,000, were placed
in its escrow account held at HSBC Bank plc (the "Escrow Account").
All amounts contributed to the Escrow Account are held for the
benefit of the Company and the Ordinary Shareholders as further
described in the Prospectus
Principal Risks and Uncertainties
Please refer to the following sections of the Prospectus for the
Company's principal risks and uncertainties.
- Risk Factors (pages 9 to 39)
The Company's risk management objectives and policies are
consistent with those disclosed in the Prospectus. Additional risks
or circumstances not known to the Company, or currently believed
not to be material, could individually or cumulatively, later turn
out to have a material impact on the Company's business, revenue,
assets, liquidity, capital resources or net income .
Going concern
The Company's operation is restricted to structuring and
completing its Business Combination, the Board have assessed the
viability of the Company until the Business Combination Deadline,
taking account of the Company's current position and the potential
impact of the principal risks outlined in this statement.
The Company has 15 months from the admission date to complete a
business combination, subject to two three-month extension periods
if approved (the "Business Combination Deadline"). The Company
currently believes it has sufficient funds to cover operating costs
through to the initial deadline. If the board were to seek an
extension then additional funds would need to be raised to cover
operating costs. The costs related to the Company are expected to
be covered by the proceeds of the issuance of the Sponsor Warrants
as part of the Offering process.
The Sponsor Entity, the Overfunding Sponsor Entity (as defined
in the Prospectus) or their affiliates may provide up to
GBP1,500,000 of additional funds to the Company through the
issuance of debt instruments, such as promissory notes, to fund
excess costs, which may be converted into additional Sponsor
Warrants (as defined in the Prospectus) at a price of GBP1.00 per
Sponsor Warrant at the option of the lender.
The Company will have until the Business Combination Deadline to
complete a Business Combination, subject to any extension period
being granted. If the Company has not completed a Business
Combination by such time (or the expiry of any extension period),
it will: cease all operations except for the purpose of winding up;
as promptly as reasonably possible, redeem the Ordinary Shares, and
as promptly as reasonably possible following such redemption,
subject to the approval of the remaining shareholders and the
Directors, liquidate and dissolve.
The events and conditions that management considers relevant to
the Company's ability to continue as a going concern include the
limited time frame remaining to the Business Combination Deadline
and market conditions inclusive of competition and potential
geopolitical events.
Management remain focused on completing a Business Combination
by the Business Combination Deadline. Having considered all
relevant information, management have concluded that there are no
material uncertainties related to the identified events or
conditions that may cast significant doubt on the Company's ability
to continue as a going concern. Reaching the conclusion that there
is no material uncertainty involves significant judgement.
Going concern (continued)
In addition, such opinion is not dependent on the Company
completing a Business Combination by the Business Combination
Deadline. It is important to note that nothing in this analysis
implies that the Company would be unable to meet its debts as they
fall due or to fulfil the above mentioned redemptions of redeemable
Ordinary Shares should the Company not complete a Business
Combination by the Business Combination Deadline.
Corporate Governance
As an exempted company incorporated under the laws of the Cayman
Islands with a standard listing on the London Stock Exchange's main
market, the Company has no statutory obligation or listing
requirement to adopt a corporate governance code. However, the
Company has to voluntarily observe the requirements of the UK
Corporate Governance Code insofar as appropriate for a SPAC in its
pre-merger stage.
-- The Directors' Corporate Governance Statement in respect of
its governance obligations can be found on pages 8 to 9.
-- The Board has established an Audit Committee, comprised of
two independent directors, to provide oversight and preserve the
integrity of the Company's financial reporting process and internal
controls and risk management systems, and to monitor the statutory
audit of the Company's annual financial statements. The Report of
the Audit Committee can be found on pages 11 to 14.
Related Party Transactions
The main related party transactions are outlined in the "Related
Party Transactions" section of the Prospectus. Refer to note 10 -
Related party transactions for disclosure within the Financial
Statements.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and Financial Statements in accordance with applicable laws and
regulations. The Board confirms that to the best of their
knowledge:
- the Financial Statements, prepared in accordance with IFRS as
issued by IASB, give a true and fair view of the assets,
liabilities, financial position and profit of the Company, as
required by Disclosure and Transparency Rule ("DTR")
4.1.12R;and
- the Director's Report includes a fair review of the
development and performance of the business during the period, and
the position of the Company at the end of the year, together with a
description of the principal risks and uncertainties that the
Company faces, as required by DTR 4.1.8R and DTR 4.1.9R.
The Board is responsible for keeping adequate accounting records
that are sufficient to show and explain the Company's transactions
and disclose with reasonable accuracy, at any time, the financial
position of the Company, and that enable them to ensure that the
Financial Statements comply with the Companies Act (As Revised) of
the Cayman Islands. The Board is also responsible for the
maintenance and integrity of the corporate and financial
information included on the Company's website. Legislation in the
Cayman Islands governing the preparation and dissemination of
Financial Statements may differ from legislation in other
jurisdictions.
Signed on behalf of the Board by:
Andrew Rear (Executive Chairman)
28 April 2023
Chairman's Statement
Dear Shareholders,
It is with pleasure that I present the Financial Statements of
Financials Acquisition Corp. (the "Company") for the period from 31
August 2021 (date of incorporation) to 31 December 2022.
The highlight of the period was the Company's admission to
trading on the main market of the London Stock Exchange on 13 April
2022 raising GBP154,500,000 million from an offer of new shares.
Our ability to raise this capital during one of the quietest
markets for equity capital market ("ECM") activity both in London
and globally vindicated the strength of our investment case.
The capital markets volatility created by inflationary concerns,
central bank response, the impact of the COVID-19 pandemic and of
course, the continuing geopolitical tension has created both
headwinds and volatility. The competition for and hence the
valuation of assets in the private markets has continued to decline
during our search period. We are mindful of the impact of the above
factors (especially inflation) on the fundamentals of the assets in
our target universe. Despite this we continue to find exciting
opportunities that meet our criteria and which we believe would be
received well by the public markets.
We remain confident that we will be able to announce a business
combination within the time constraints referred to in the
Prospectus.
Andrew Rear (Executive Chairman)
28 April 2023
Board of Directors
The Board is responsible for leading and controlling the Company
and has overall authority for the management and conduct of its
business, strategy and development. The Board is also responsible
for ensuring the maintenance of a sound system of internal controls
and risk management (including financial, operational and
compliance controls) and for reviewing the overall effectiveness of
systems in place as well as for the approval of any changes to the
capital, corporate and/or management structure of the Company.
The Board comprises six members, details of which are set out
below. Notwithstanding the acquisition of indirect interests in
Class B Ordinary shares ("Sponsor Shares") by acquiring
participating interests in the membership capital of the Sponsor,
Mr William Allen is considered to be independent as the level of
his interests in the share capital of the Company is not
sufficiently material to his personal circumstances to exert any
material influence over his actions, nor is his shareholdings
material to the Company. Mr Paul Jardine, Mr Nic Gorey, Ms Shobha
Frey and Mr David Morant are also considered to be independent. Mr
Andrew Rear is not considered to be independent.
Andrew Rear holds a directorship in Medgulf, a company listed on
the Saudi Arabian stock exchange. Other than that, none of the
directors holds a directorship position in other public
companies.
Andrew Rear, Executive Chairman
Andrew Rear is the Executive Chairman of the Company and a
member of the Sponsor Entity's Management Team. Mr. Rear is an
insurance industry executive with over 20 years' experience in the
global insurance industry. From 2010 to 2020 Mr Rear was an
executive at Munich Re. In 2016 Mr Rear set up Munich Re Digital
Partners a separate operating division tasked with investing in the
Insurtech industry and supporting the industry with reinsurance
capacity. Prior to this Mr Rear was an operating chief executive
across the life reinsurance operations in the UK, Ireland, Africa
and Asia Pacific for Munich Re. From 2000 to 2010 Mr Rear was part
of the team that built Oliver Wyman's insurance consulting business
in Europe and from 2008 until his departure Mr Rear was in charge
of this business.
At Munich Re Digital Partners Mr Rear was responsible for
investments totalling almost US$400m in 11 Insurtech startups. The
highest profile investments include Bought By Many, Next Insurance,
Ticker and Hippo with growth rates between first investment and
latest or exit valuations of 65x, 32x, 16x and 15x respectively.
The Next Insurance investment was made in its 2017 Series A at a
valuation of $120m and upsized in 2019, investing a further $250m
at $875m. In the last Series E capital raise in March 2021, Next
Insurance was valued at $4bn post-money. The Hippo investment was
made in its 2018 Series C at a $315m valuation. In March 2021 Hippo
announced a business combination with Reinvent Technology Partners
Z at a valuation of $5bn. The Bought By Many investment was made in
its Series A at a $35.9m valuation. In its Series D capital raise
in June 2021, Bought By Many was valued at $2.35bn post-money.
Other investments include Spruce, Wrisk and Acko with growth rates
between first investment and latest exit valuation of 11.7x, 5.5x
and 1.3x respectively. Further investments made include Trov,
Inshur, Slice, and Neos. Munich Re Digital Partners also supported
these operations with reinsurance capital which allowed a deeper
understanding of the particular businesses.
Since leaving Munich Re Digital Partners in March 2021, Mr Rear
has continued to be heavily involved in the Insurtech industry. He
is Non-Executive Chairman at Buckle and a Non-Executive Director at
Ticker. He is also an industry partner at the private equity firm
Motive Partners.
Board of Directors (continued)
William Allen, Chief Executive Officer
William Allen is the Chief Executive Officer of the Company and
a member of the Sponsor Entity's Management Team. Mr Allen is an
experienced capital markets executive focused on the global
insurance industry. From 2012 to 2020 Mr Allen was a Managing
Director at Keefe, Bruyette & Woods covering institutional
accounts across North America. From 2008 to 2012, Mr Allen
performed a similar role at Fox-Pitt Kelton during which time it
was acquired by the Macquarie Group. Prior to this Mr Allen was an
Insurance Analyst in London focusing on the reinsurance and Lloyd's
of London market with Bear Stearns International.
At Keefe, Bruyette & Woods, Mr Allen was involved in capital
market transactions across the financial sector. This included
numerous IPOs, private capital raises and M&A situations. Mr
Allen's regular commentary on the sector was highly respected and
distributed extensively across the buy-side and corporations. Mr
Allen continued to be heavily involved in the insurance sector,
advising chief executives and boards on capital raising activity
and speaking at industry conferences. Mr Allen helped corporations
with marketing activities to buy-side investors and led trips to
the UK, Monte Carlo, Asia and the U.S. to meet industry
professionals. Mr Allen has an extensive network of industry and
buy-side contacts which will aid the capital raising and access to
target companies.
At Bear Stearns, Mr Allen was a highly rated Insurance Analyst
and became Managing Director at the age of 25. Mr Allen's contacts
within the industry and latterly in the insurance linked securities
market helped him develop a reputation as a leading expert on the
industry.
In July 2020 Mr Allen left Keefe, Bruyette & Woods to
establish WFSA Capital which is an advisory boutique established to
take advantage of the rising prices in the traditional insurance
industry and the capital dislocation post COVID-19, the rise of
Insurtech and alternative capital. During this time Mr Allen has
worked with several of the 'Class of 2020' speciality insurers,
Insurtechs and SPACs on their capital raising strategies.
Paul Jardine, Senior Independent Non-Executive Director
Paul Jardine is the Senior Independent Non-Executive Director of
the Company. Mr Jardine is an experienced public company insurance
executive. As Chief Operating Officer of Catlin from 2004 to 2015
Mr Jardine performed many investor and public markets duties. Mr
Jardine also led Catlin through the acquisition by AXA XL of the XL
Group. Mr Jardine is currently a Non-Executive Chairman of Asta and
Chaucer as well as a Non-Executive Director at Akinova and an
advisor for ECMS. Prior to Catlin, Mr Jardine was chief actuary of
Equitas and a partner of PWC.
Nic Gorey, Independent Non-Executive Director
Nic Gorey is an Independent Non-Executive Director of the
Company. Mr Gorey is a serial entrepreneur and a recognised leader
in digital marketing. In 2009 Mr Gorey was approached by Facebook
to partner in building a platform to optimise advertising campaigns
via Facebook advertising's application programming interface. Mr
Gorey founded Rocketer, which runs online advertising campaigns and
lead generation through artificial intelligence and machine
learning processes to optimise conversion. Rocketer works globally
with 70 financial services partners.
Board of Directors (continued)
Shobha Frey, Independent Non-Executive Director
Shobha Frey is an Independent Non-Executive Director of the
Company. Ms Frey is a private growth investor with expertise in
insurance investing. Prior to this Ms Frey was an Equity Analyst
and Portfolio Manager focused on the global insurance industry at
Putnam. Ms Frey managed a financials sleeve at K-Capital and
international equities for the Harvard Management Company.
David Morant, Independent Non-Executive Director
David Morant is an Independent Non-Executive Director of the
Company . Prior to this, he was Managing Director within two NYSE
listed companies - Eneti and Scorpio Tankers. He enjoyed a long
career as a Portfolio Manager at both CQS and SAC Global. He
started his career as an analyst at Soros Fund Management after
graduate training in Investment Banking and Equity Research at
JPMorgan in London .
Directors' Meetings and Attendance
The Board conducts Board meetings and committee meetings in
accordance with the articles of incorporation of the Company.
Attendance at ad hoc meetings via telephone or video conference
links will be permitted where due notice is given in accordance
with the articles of incorporation and all participants can hear
each other clearly. Board packs will be circulated prior to the
meeting unless circumstances dictate otherwise. The Board will
ensure that minutes are taken at each meeting and subsequently
approved by the Board.
Board -
Board - additional Other
Name formal meetings meetings Audit Committee Committee
----------------------- ----------------- ------------ ---------------- -----------
Number of meeting held
in the period 9 - - -
Andrew Rear, Executive
Chairman 9 - - -
Paul Jardine 7 - - -
Nic Gorey 6 - - -
Shobha Frey 9 - - -
David Morant 8 - - -
Corporate Governance Statement
Compliance
As an exempted company incorporated under the laws of the Cayman
Islands with a standard listing on the London Stock Exchange's main
market, the Company has no statutory obligation or listing
requirement to adopt a corporate governance code. However, the
Company intends to voluntarily observe the requirements of the UK
Corporate Governance Code insofar as appropriate for a SPAC in its
pre-merger stage.
Therefore, the Company does not comply with the Governance Code
in the following respects:
- the Executive Chairman and Chief Executive Officer will not be
paid a fee for their services and, as is customary for SPACs, will
be wholly incentivised by their interest in the Sponsor Shares and
Sponsor Warrants and accordingly the Board considers provisions
relating to executive compensation to be inapplicable to the
Company;
- the Company's Executive Chairman, Mr. Rear, is not considered
to be independent and therefore the Company does not comply with
the requirements of the UK Corporate Governance Code in relation to
the requirement for the chairman to be independent on appointment.
The Board considers that this is reflective of his importance to
the Company at this stage and is not detrimental to the Board's
overall effectiveness or role in promoting the long-term
sustainable success of the Company;
- the Company may only enter into an agreement in respect of a
Business Combination with the prior approval of a majority of those
Directors the Board considers independent for the purposes of the
UK Corporate Governance Code and for the purposes of such approval,
the following Directors shall be excluded from voting and taking
part in the Board's consideration of the Business Combination: (i)
any Director who is, or an associate of whom is, a director of the
target entity that is the subject of the Business Combination or of
a subsidiary undertaking of such target entity; and (ii) any
Director who has a conflict of interest in relation to such target
entity or a subsidiary undertaking of such target entity;
- the Independent Non-Executive Directors will not be paid a fee
for their services and instead, in return for an investment by each
of them of GBP100,000, they hold 66,262 Sponsor Shares and 57,767
Sponsor Warrants directly in their own names, an interest which has
been deemed by the Board to be non-material for the purposes of
establishing their independence;
- upon completion of the Business Combination, the Independent
Non-Executive Directors are each entitled to be awarded 10,000
ordinary shares in the post-Business Combination entity for nominal
value, an interest which, together with their holding of Sponsor
Shares and Sponsor Warrants, has been deemed by the Board to be
nonmaterial for the purposes of establishing their
independence;
- the UK Corporate Governance Code also recommends the
submission of all directors for re-election at annual intervals. No
Director will be required to submit for re-election until the first
annual general meeting of the Company following the Business
Combination;
- until the Business Combination is made the Company will not
have nomination or remuneration or risk committees. Following the
Business Combination, the Board intends to put in place nomination,
remuneration and risk committees; and
- prior to a Business Combination, only holders of the Sponsor
Shares will be entitled to vote on the appointment or removal of
directors. Holders of Ordinary Shares will not be entitled to vote
on the appointment (and/or removal) of directors during such time.
In addition, prior to a Business Combination, holders of a majority
of the Sponsor Shares may remove a member of the Board for any
reason.
Climate Related Emissions and Energy Performance
The Company is currently considered a low energy user, with
energy consumption being below the minimum for disclosure (below
40,000 kwh). The Board recognises its responsibility and is
committed to monitor its energy usage as its activities continue to
scale. The Company shall collect, collate and openly disclose the
Company's energy usage and impact on climate and environmental
conditions.
Committees
If the need should arise in the future, for example following
the Business Combination, the Board may set up committees as it
deems appropriate to the size and nature of the Company.
Share dealing
As at the date of the Prospectus the Board has adopted a share
dealing code which is consistent with the rules of the UK Market
Abuse Regulation. The Board is responsible for taking all proper
and reasonable steps to ensure compliance with such share dealing
code by the Directors.
Composition and Independence of the Board
As at 31 December 2022, the Board comprised six Directors who
are listed above. The Company has no employees. The biographies of
the Board members can be found on pages 4 to 6.
The number of the Directors shall be not less than two and there
shall be no maximum number unless otherwise determined by the
Company by Ordinary Resolution.
The Role of the Board
The Board is the Company's governing body and has overall
responsibility for maximising the Company's performance by
directing and supervising the affairs of the business and meeting
the appropriate interests of shareholders and relevant
stakeholders, while enhancing the value of the Company and ensuring
protection of investors. A summary of the Board's responsibilities
is as follows:
- statutory obligations and public disclosure
- strategic matters and financial reporting
- appointment and removal of Directors and setting Directors remuneration
- risk assessment and management including reporting compliance,
governance, monitoring and control and other matters having a
material effect on the Company.
The Board's responsibilities for the Annual Report and Financial
Statements are set out in the Statement of Directors'
Responsibilities on page 2.
Directors' Remuneration
It is the responsibility of the Board as a whole to determine
and approve the Directors' remuneration, having regard to the level
of fees payable to non-executive Directors in the industry
generally, the role that individual Directors fulfil in respect of
Board, Committee responsibilities and the time committed to the
Company's affairs. No individual Director is entitled to vote in
relation to his own remuneration.
Directors undertake to provide services to the Company and be
paid an annual fee for such services in accordance with each
Directors letter of appointment. No director emoulments have been
paid during the year
Section 172 statement
Although the Company is not domiciled in the UK, the Company is
voluntarily meeting any obligations under the 2018 UK Corporate
Governance Code, including section 172 of the Companies Act
2006.
The Directors recognise their individual and collective duty to
act in good faith and in a way that is most likely to promote the
success of the Company for the benefit of its members as a whole,
whilst also having regard, amongst other matters, to the Company's
key stakeholders and the likely consequences of any decisions taken
during the year, as set out below:
The interests of the Company's employees
The Company has no direct employees and maintains close working
relationships with the employees of the Adviser, Administrator and
Custodian who undertake the Company's main functions.
The need to foster the Company's business relationships with
suppliers, customers and others
The Board maintains close working relationships with all key
suppliers and those responsible for delivering the Company's
strategy. The contractual relationship with each supplier and their
performance is formally reviewed each year.
The impact of the Company's operations on the community and the
environment
Objective of the Company is to deliver a private company into
the public domain that has strong corporate governance, is
environmentally focused and socially responsible. Identifying a
target company is key to the decision making process of the Board
when reviewing target companies.
The desirability of the Company maintaining a reputation for
high standards of business conduct
The Chair is responsible for setting expectations concerning the
Company's culture and the Board ensures that its core values of
integrity and accountability are demonstrated in all areas of the
Company's operations.
The need to act fairly between Shareholders of the Company
The Board, in conjunction with the Adviser, will engage actively
with Shareholders, most significantly in their consultations
relating to the Business Combination, which can only be approved by
a majority vote of the Public Shareholders.
Anti-bribery and Corruption
The Board has adopted an anti-bribery and anti-corruption policy
designed to ensure that the Company complies with all applicable
laws, standards and expectations in relation to anti-bribery and
anti-corruption matters.
Criminal Finances Act
The Board of the Company has a zero-tolerance commitment to
preventing persons associated with it from engaging in criminal
facilitation of tax evasion. The Board has satisfied itself in
relation to its key service providers that they have reasonable
provisions in place to prevent the criminal facilitation of tax
evasion by their own associated persons and will not work with
service providers who do not demonstrate the same zero tolerance
commitment to preventing persons associated with it from engaging
in criminal facilitation of tax evasion.
Board Committees
Audit Committee
The Audit Committee will assist the Board in discharging its
responsibilities with regard to financial reporting, external and
internal audits and controls, including reviewing and monitoring
the integrity of the Company's annual and interim financial
statements, reviewing and monitoring the extent of the non-audit
work undertaken by external auditors, advising on the appointment
of external auditors, overseeing the Company's relationship with
its external auditors, reviewing the effectiveness of the external
audit process and reviewing the effectiveness of the Company's risk
management and internal control review function. The ultimate
responsibility for reviewing and approving the annual report and
accounts and half-yearly reports will remain with the Board. The
Audit Committee will give due consideration to all applicable laws
and regulations, including the provisions of the UK Corporate
Governance Code and the requirements of the Listing Rules.
The Audit Committee is chaired by David Morant and its other
members are Shobha Frey and Paul Jardine. The Disclosure Guidance
and Transparency Rules require that a majority of members of the
Audit Committee be independent and that at least one member has
competence in accounting and/or auditing. Furthermore, the members
of the Audit Committee must have competence relevant to the sector
that the issuer is operating. In addition, the UK Governance Code
recommends that the Audit Committee should comprise at least three
independent non-executive directors and that at least one member
has recent and relevant financial experience. The Board considers
that the Company complies with the requirements of the UK Corporate
Governance Code in these respects. The Audit Committee will meet at
least three times a year.
Market Disclosure Committee
The Board has established a Market Disclosure Committee in order
to ensure timely and accurate disclosure of all information that is
required to be so disclosed to the market to meet the legal and
regulatory obligations and requirements arising from the listing of
the Company's securities on the London Stock Exchange, including
the Listing Rules, the Disclosure Guidance and Transparency Rules
and the UK Market Abuse Regulation. The market disclosure committee
will meet as often as necessary to fulfil its responsibilities.
Meetings may be called by the Company Secretary at the request of
any member of the market disclosure committee. The market
disclosure committee must have at least three members. Members of
the market disclosure committee are appointed by the Board.
Nomination and Remuneration Committees
No remuneration committee or nomination committee will be
constituted prior to any Business Combination. The Board as a whole
will instead review its size, structure and composition and the
scale and structure of the Directors' fees (taking into account the
interests of Shareholders and the performance of the Company).
The Directors are aware that a nomination committee is
recommended by the Governance Code to lead the process for Board
appointments and that the Governance Code recommends that the
majority of the committee be independent non-executive directors.
To the extent that additional individuals may be added to the
Board, the Company may consider setting up a nomination
committee.
Conflicts
It has not been deemed necessary to establish a conflicts
committee. Conflicts procedures relating to the Directors and the
Sponsor are set out in the Articles of Incorporation. To the extent
issues arise, these will be dealt with by the Board on a
case-by-case basis.
The Company is not prohibited from pursuing a Business
Combination with a target company that is affiliated with the
Sponsor Entity, the Overfunding Sponsor Entity and any of their
respective affiliates.
In the event the Company seeks to complete the Business
Combination with a Target Business that is affiliated with any of
the Directors, the Company's Memorandum and Articles of Association
provide that where a Director has a conflict of interest in
relation to the target or a subsidiary undertaking of the target,
the Company must publish, in sufficient time before the Business
Combination General Meeting, a statement by the Board that the
proposed Business Combination is fair and reasonable as far as the
Ordinary Shareholders are concerned and that in making such
statement the Directors have been so advised by an appropriately
qualified and independent adviser.
In addition, the Company's Articles of Association provide that
the Company may only enter into a Business Combination, including
any definitive agreement in respect of a Business Combination with
the prior approval of its Board and for the purposes of such
approval by board resolution, the following Directors shall be
excluded from voting and taking part in the Board's consideration
of the Business Combination: (i) any Director who is, or an
associate of whom is, a director of the target entity that is the
subject of the Business Combination or of a subsidiary undertaking
of such target entity; and (ii) any Director who has a conflict of
interest in relation to such target entity or a subsidiary
undertaking of such target entity.
Internal Control Review and Risk Management System
The Board proposes to follow the guidance published by the UK's
Financial Reporting Council on internal controls, which sets out
that, in determining what constitutes a sound system of internal
controls, a board should consider:
- the nature and extent of the risks which they regard as
acceptable for the Company to bear within its particular
business;
- the threat of such risks becoming reality;
- the Company's ability to reduce the incidence and impact on
business if the risk crystallises; and
- the costs and benefits resulting from operating relevant controls.
The Board is aware of the need to conduct regular risk
assessments to identify any deficiencies in the controls currently
operating over all aspects of the Company. The Board is responsible
for a formal risk assessment on an annual basis but will also
report by exception of any material changes during the year.
Report of the Audit Committee
Pursuant to a resolution of the Board, the Company has
established an Audit Committee comprising David Morant, Shobha Frey
and Paul Jardine as its members. The members of the Audit Committee
are appointed, suspended and dismissed by the Non-Executive
Directors. Executive Directors shall not be members of the Audit
Committee.
The duties of the Audit Committee include:
- informing the Board of the results of the statutory audit and
explaining how the statutory audit has contributed to the integrity
of the financial reporting and the role the Audit Committee has
fulfilled in this process;
- monitoring the financial reporting process and making
proposals to safeguard the integrity of the process;
- monitoring the effectiveness of the internal control systems
and the risk management system with respect to financial
reporting;
- monitoring the statutory audit of the annual financial
statements, and in particular the process of such audit;
- monitoring the independence of the external Auditor; and
- adopting procedures with respect to the selection of the external Auditor.
The Audit Committee shall meet as often as is deemed necessary,
and at least three times in each full financial year. Any member of
the Committee may request a meeting, as may the Company's external
Auditor.
Financial Reporting and Audit
The Audit Committee has reviewed, considered and recommended to
the Board, the approval of the contents of the Audited Financial
Statements and Annual Report, together with the external Auditor's
report thereon. The Audit Committee focused on compliance with
legal requirements, accounting standards and the relevant Listing
Rules, with specific consideration given to the accurate
classification of the Company's share capital and warrants. The
ultimate responsibility for reviewing and approving the Audited
Financial Statements and Annual Report remains with the Board.
External Auditor
The Audit Committee is responsible for making recommendations on
the appointment, re-appointment or removal of the Auditor. PKF
Littlejohn LLP, was appointed as the first Auditor of the Company
following a tender process. Subsequent to the period end, the Audit
Committee received and reviewed the audit plan and report from the
Auditor. Periodically, the Audit Committee may meet privately with
the Auditor without the Company's advisers being present.
To assess the effectiveness of the Auditor, the Audit Committee
reviewed:
- The Auditor's fulfilment of the agreed audit plan and variations from it;
- The Auditor's report to the Audit Committee highlighting the
major issues that arose during the course of the audit; and
- Feedback from the Company's Adviser and Administrator
evaluating the performance of the audit team.
External Auditor (continued)
The remuneration to PKF Littlejohn LLP and to other PKF
Littlejohn LLP member firms for the audit of the Company's annual
financial statements amounts to GBP60,000.
Internal controls
The Audit Committee is responsible for ensuring that an
effective system of internal financial and non-financial controls
and risk management is maintained, and for reviewing and monitoring
the effectiveness of those controls. The controls are designed to
ensure proper accounting records are maintained, that the financial
information on which the business decisions are made and which is
issued for publication is reliable, and that the assets of the
Company are safeguarded. Such a system of internal financial
controls can only provide reasonable and not absolute assurance
against misstatement or loss. The Adviser, Administrator and
Custodian together will maintain a system of internal control on
which they will report to the Audit Committee. The Audit Committee
has considered the need for an internal audit function, and has
concluded that, given that the Company has no employees and little
activity as it is currently constituted, such a level of oversight
is not currently required. The Committee notes that the Adviser,
Administrator and Custodian maintain systems of internal control on
which they will be required to report to the Board, in order to
provide sufficient assurance to the Company that a sound system of
risk management and internal control, which safeguards
Shareholders' investment and the Company's assets, is
maintained.
The Audit Committee has considered non-financial areas of risk
such as disaster recovery and staffing levels of its service
providers, and considers that adequate arrangements are in
place.
On behalf of the Audit Committee
David Morant
Audit Committee Chair
28 April 2023
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF FINANCIALS
ACQUISITION CORP
Opinion
We have audited the financial statements of Financials
Acquisition Corp (the 'company') for the period ended 31 December
2022 which comprise the Statement of Financial Position, the
Statement of Comprehensive Income, the Statement of Changes in
Equity, the Statement of Cash Flows and notes to the financial
statements, including significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards as issued by the International Accounting Standards Board
("IFRS").
In our opinion, the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2022 and of its loss for the period then
ended; and
-- have been properly prepared in accordance with IFRS as issued
by the International Accounting Standards Board.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (ISAs) 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 company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the, 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
evaluation of the directors' assessment of the company's ability to
continue to adopt the going concern basis of accounting
included:
-- Reviewing management's formal assessment of the company's
going concern status which included cash flow forecasts for the
period up to the business combination deadline and checking the
arithmetical accuracy of the cash flow forecast model;
-- Challenged management over whether there would still be
sufficient funds remaining to continue as a going concern after
settling any costs related to an aborted transaction in such a
scenario ;
-- Obtained management's downside scenarios to consider the
possibilities that would result in a nil cash position during the
going concern period and evaluated the impact and availability of
mitigating actions available to management to avoid this outcome;
and
-- Assessed if the going concern disclosures in the financial
statements were sufficient and appropriately reflect the going
concern assessment.
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
company'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.
In relation to the entity's reporting on how they have applied
the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors' statement in the
financial statements about whether the director's considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing
and extent of our audit procedures. We determined materiality for
the financial statements as a whole to be GBP385,700.
The benchmark for materiality was selected as 5% of net assets.
Net assets was deemed to be the most appropriate metric for
materiality because the entity is a special purpose acquisition
company, established to enact business combination. We believe that
the main focus of the users of the financial statements is the
recoverability of the assets invested in the company. The
percentage applied to this benchmark has been selected to bring
into scope all significant classes of transactions, account
balances and disclosures relevant to the shareholders, and also to
ensure that matters that would have a significant impact on the
results during the period were appropriately considered.
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the nature and extent
of our testing of account balances, classes of transactions and
disclosures. We have used 60% of materiality as performance
materiality since this is our first period of audit and the first
set of financial statements prepared by the company, hence there
was limited expectation on the number or quantum of potential
misstatements. This resulted in a performance materiality threshold
of GBP269,900.
We agreed with the audit committee that we would report to the
committee all individual audit differences identified during our
audit in excess of GBP19,200 in addition to other audit
misstatements below that threshold that we believe warrant
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our
opinion.
Our approach to the audit
Our audit is risk based and is designed to focus our efforts on
the areas at greatest risk of material misstatement, aspects
subject to significant management judgement as well as greatest
complexity, risk and size.
As part of designing our audit, we determined materiality, as
above, and assessed the risk of material misstatement in the
financial statements. In particular, we looked at areas involving
significant accounting estimates and judgement by the directors and
considered future events that are inherently uncertain. These areas
of estimation and judgement included the valuation of public and
private warrants and Class B ordinary shares, covered in the Key
audit matters section of our report below.
We also addressed the risk of management override of internal
controls, including among other matters consideration of whether
there was evidence of bias that represented a risk of material
misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, 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.
Key Audit Matter How the scope of our audit responded
to the key audit matter
Accounting treatment and
valuation of complex financial
instruments (Notes 2 and
7)
======================================================================
On 13 April 2022, the company As part of our audit, we have performed
was admitted to trading on the following procedures:
the main market of the London Class A ordinary shares
Stock Exchange having raised * Reviewed the appropriateness of the accounting policy
a total of GBP154.5 million for the public shares through a review of the terms
to be used in a future business of the share agreement and checked whether it is in
combination. In relation accordance with IAS 32. We also challenged
to this, the company issued management's treatment of the issue of public shares
the following: as a financial liability rather than an equity
* 15,000,000 Class A Ordinary shares of the company at instrument, as well as challenging key assumptions
a price of GBP10.00 per share, with matching warrants such as the timing of the cash payment in relation to
being issued concurrently with the delivery of the the redemption of the ordinary shares and
Ordinary Shares to subscribers of Ordinary Shares in corroborated our findings against the prospectus.
the Offering on the basis of one-half (1/2) of one
(1) warrant per Ordinary Share ("Public Warrants");
* Challenged management on the classification of the
financial liability as a liability measured at
* 3,862,500 Class B Ordinary shares (comprising amortised cost and confirmed whether this was in line
1,931,250 B1 Shares, 965,625 B2 Shares and 965,625 with the requirements of IFRS 9 Financial
B3) Sponsor Shares at a price of GBP0.0001 per share; Instruments.
and
* Recalculated the carrying amount of the liability as
* 3,875,000 Sponsor Warrants at a price of GBP1 per at 31 December 2022 and the interest expense for the
warrant. period then ended.
The following are the accounting Class B Ordinary shares ('Sponsor
judgments in relation to shares')
the financial instruments * Reviewed the sponsor purchase agreement to assess
above: whether the issue of shares to the sponsors
* Class A Ordinary shares constitutes share-based payments, representing the
issue of shares for services relating to the
acquisition, or the advice and research provided in
Holders of redeemable Class advance of an acquisition. We assessed the
A ordinary shares are entitled appropriateness of the accounting policy for the
to redeem all or a portion sponsor shares by checking whether it is in
of their ordinary shares accordance with IFRS 2;
upon the completion of the
business combination. Furthermore,
they are also mandatorily * Obtained management's valuation report performed by
redeemable if an acquisition their expert and assessed the competence and
is not completed within the independence of management's expert;
prescribed period. Redemption
features result in an outflow
and the company has no unconditional * Challenged management on the fair value of the
liability to avoid such an options as at grant date. Specialists within the
outflow hence management audit team were used to review the appropriateness of
classified the financial the fair value of the options as at the grant date;
instrument as financial liability
under IAS 32 Financial Instruments:
Presentation.
======================================================================
* Class B Ordinary Shares ('Sponsor shares') * Tested the option calculations and computation of the
annual charge for mathematical accuracy. This
included agreeing the fair value of options issued
The Sponsor Entity has provided and the associated charge over the appropriate
services in the form of expertise vesting period; and
and guidance to assist the
company in achieving the
business combination, in * Reviewed the disclosures in the financial statements
exchange for the trading to ensure that they are appropriate.
of its sponsor shares hence
management accounted for
the shares in accordance Public and sponsor warrants
with IFRS 2 Share-based Payments. * Reviewed the appropriateness of the accounting policy
The difference between the for the public and sponsor warrants through a review
total consideration received of the terms of the warrants agreement and comparing
by the company for the sponsor the policy with the requirements of IAS 32. We also
shares and their fair value challenged management's treatment of the issue of
at the grant date will be warrants as a financial liability rather than an
pro-rated over the period equity instrument, as well as challenging key
to the business combination assumptions such as the timing of the cash payment in
deadline. relation to the redemption of the ordinary shares and
* Public and sponsor warrants corroborated our findings against the prospectus;
Management considered sponsor * Challenged management on the classification of the
warrants as a puttable financial financial liability as liability measured at FVPL and
instrument that includes check whether it is in line with the requirements of
a contractual obligation IFRS 9;
for the issuer to redeem
that instrument for cash
or another financial asset * Obtained management's valuation report performed by
(in this case, an ordinary their expert and assessed the competence and
share) upon exercise. The independence of management's expert;
sponsor and public warrants
do not entitle the holder
to a pro rata share of the * Challenged management on the fair value of the public
entity's assets in the event and sponsor warrants. Specialists within the audit
of the entity's liquidation team were used to review the appropriateness of the
and are therefore classified fair value of the options as at the issue date and
as a financial liability period-end date;
in accordance with section
16 of IAS 32.
Due to the complexity and * Recalculated the unrealised gains and losses
judgment involved in the recognised during the period using the fair value of
determination of the valuation the warrants determined by our valuations team; and
and accounting treatment
of financial instrument,
the ordinary shares, public * Reviewed the disclosures in the financial statements
warrants, sponsor warrants to ensure that they are appropriate.
and sponsor shares, there
is a risk that these are
not accounted for in line Observations
with required accounting Based on our audit procedures we
standards. were satisfied that the accounting
treatment and valuation of these complex
financial instruments was reasonable.
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 contained within the annual report. Our opinion
on the fiinancial statements does not cover the other information
and 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 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 financial statements
themselves. 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.
Corporate governance statement
We have reviewed the directors' statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the company's compliance with the
provisions of the UK Corporate Governance Code specified for our
review by the Listing Rules.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
-- Directors' statement with regards the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 2;
-- Directors' explanation as to their assessment of the entity's
prospects, the period this assessment covers and why the period is
appropriate set out on page 2;
-- Directors' statement on whether they have a reasonable
expectation that the company will be able to continue in operation
and meet its liabilities set out on page 2;
-- Directors' statement that they consider the annual report and
the financial statements, taken as a whole, to be fair, balanced
and understandable set out on page 3;
-- Board's confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on page
9;
-- The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out on page 12; and
-- The section describing the work of the audit committee set out on page 13.
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities, 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 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 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 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.
Audit Report
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. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the company and the sector in
which it operates to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through
discussions with management and our expertise in the sector
-- We determined the principal laws and regulations relevant to
the company in this regard to be those arising from IFRS as issued
by the International Accounting Standards Board, FCA Rules and the
relevant laws and regulations in Cayman Islands.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the company with those laws and regulations. These procedures
included, but were not limited to:
o conducting enquiries of management regarding potential
instances of non-compliance;
o reviewing RNS announcements;
o reviewing legal and professional fees ledger accounts; and
o reviewing board minutes and other correspondence from
management.
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that the potential for management
bias existed in relation to key management judgements such as the
valuation of public and private warrants and Class B ordinary
shares. We addressed these as outlined in the Key audit matters
section of our report above.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
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 our report
This report is made solely to the company's members, as a body,
in accordance with our engagement letter dated 26 October 2022. 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.
[Signature]
Mark Ling (Engagement Partner) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Registered Auditor London E14 4HD 28(th) April 2023
31 December
2022
Note GBP
------------------------------------------- ---- ------------
Assets
Current assets
Cash and cash equivalents 5 203,264
Restricted cash 5 155,984,100
Trade and other receivables 74,191
Total assets 156,261,555
------------------------------------------- ---- ------------
Liabilities and shareholders' equity
Non-current liabilities
Redeemable ordinary shares 7 148,214,847
Current liabilities
Derivative liabilities 3 305,000
Accrued expenses 1,109
Due to related party 10 26,060
Total liabilities 148,547,016
------------------------------------------- ---- ------------
Shareholders' equity
Issued share capital 7 4,494,614
Other reserves 22,419,507
Accumulated loss (19,199,582)
------------------------------------------- ---- ------------
Total shareholders' equity 7,714,539
------------------------------------------- ---- ------------
Total liabilities and shareholders' equity 156,261,555
------------------------------------------- ---- ------------
The Financial Statements were approved and authorised for issue
by the Board of Directors on 28 April 2023 and signed on its behalf
by:
Andrew Rear
Executive Chairman
For the period from 31 August 2021 (date of
incorporation) to 31 December 2022
Note GBP
------------------------------------------------------- ---- -----------------------------------------------------
Income
Interest income 1,484,100
Total income 1,484,100
------------------------------------------------------- ---- -----------------------------------------------------
Expenses
Share-based payment expense 8 19,862,007
Professional fees 483,320
Listing and regulatory fees 211,864
Directors and officers insurance fees 56,351
Share issue costs 7 24,372
Other expenses 478
Total expenses 20,638,392
------------------------------------------------------- ---- -----------------------------------------------------
Net investment loss (19,154,292)
------------------------------------------------------- ---- -----------------------------------------------------
Net change in unrealized gain on financial
liabilities
Net change in unrealized gain on financial
liabilities 3 2,287,500
------------------------------------------------------- ---- -----------------------------------------------------
Net loss before finance expense (16,866,792)
------------------------------------------------------- ---- -----------------------------------------------------
Finance expense 7 2,332,790
Total comprehensive loss for the period (19,199,582)
------------------------------------------------------- ---- -----------------------------------------------------
Basic and dilutive net loss per share 9 (5.64)
All items in the above statement derive from continuing
operations.
Share capital Other reserves* Accumulated loss Total shareholders' equity
GBP GBP GBP GBP
-------------------------------- --------------- ----------------- ---------------- ---------------------------
As at 31 August 2021 (date of
incorporation) - - - -
Issued share capital and
sponsor warrants 4,500,305 - - 4,500,305
Share cancellation (5,691) - - (5,691)
Share based payment
reserve - 22,419,507 22,419,507
Total comprehensive loss for the
period - - (19,199,582) (19,199,582)
As at 31 December 2022 4,494,614 22,419,507 (19,199,582) 7,714,539
--------------------------------- --------------- ----------------- ---------------- ---------------------------
* Sponsor Warrants have been accounted for as a capital
contribution in other reserves. Please see notes 2 and 7 for
further details.
For the period from
31 August 2021 (date of incorporation) to
31 December 2022
GBP
-------------------------------------------------------------------- ------------------------------------------
Cash flows from operating activities
Total comprehensive loss for the period (19,199,582)
Adjustments to reconcile total comprehensive loss for the period
to net cash provided by operating
activities:
Net change in unrealised gain on financial liabilities (2,287,500)
Share-based payment expense 19,862,007
Finance expense 2,332,790
Changes in:
Trade and other receivables (74,191)
Accrued expenses 1,109
Due to related party 186,252
Net cash provided by operating activities 820,885
---------------------------------------------------------------------- ------------------------------------------
Cash flows from investing activities
Increase in restricted cash (155,984,100)
---------------------------------------------------------------------- ------------------------------------------
Net cash used in investing activities (155,984,100)
---------------------------------------------------------------------- ------------------------------------------
Cash flows from financing activities
Proceeds from sponsor and overfunding shares 4,494,614
Proceeds from issued share capital and public warrants 150,000,000
Proceeds from issuance of sponsor warrants (including other
reserves) 3,714,808
Payment of share issue costs (2,842,943)
Net cash provided by financing activities 155,366,479
---------------------------------------------------------------------- ------------------------------------------
Net change in cash and cash equivalents 203,264
Cash and cash equivalents at beginning of the period -
-------------------------------------------------------------------- ------------------------------------------
Cash and cash equivalents at end of the period 203,264
---------------------------------------------------------------------- ------------------------------------------
1. General information
Financials Acquisition Corp (the "Company"), is an exempted
company with limited liability, incorporated under the laws of the
Cayman Islands on 31 August 2021. The Company is registered with
the Registrar of Companies in the Cayman Islands under
incorporation number 380273 and has its registered office in Grand
Cayman, Cayman Islands.
The Company is a special purpose acquisition company (a "SPAC"),
formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganisation or similar business
combination (a "Business Combination"). The Company aims to
identify and acquire a company or business operating principally
(or adjacent to) the insurance or broader financial services
industry.
The Company is sponsored by FINSAC LLP (the "Sponsor Entity")
and FINSAC II LLP (the "Overfunding Sponsor Entity").
The Company was admitted to trading on the main market of the
London Stock Exchange on 13 April 2022, having raised
GBP150,000,000 in its initial public offering (the "IPO") of
15,000,000 Class A Ordinary Shares ("Ordinary Shares") at GBP10.00
per share (the "Offering") with matching warrants being issued
concurrently with the delivery of the Ordinary Shares to
subscribers of Ordinary Shares in the Offering on the basis of
one-half (1/2) of one (1) warrant per Ordinary Share ("Public
Warrants"). Additionally, GBP4,500,000 was raised via the Company's
Overfunding Subscription of 450,000 Ordinary Shares which were
issued to the Overfunding Sponsor Entity.
The proceeds of the Offering were placed in an escrow account as
outlined in the Prospectus for the IPO (the "Prospectus"). At the
same time as the Offering, the Company raised GBP3,875,000 from the
private placement of 3,875,000 Sponsor Warrants(as defined in the
Prospectus) at GBP1.00 per Sponsor Warrant the proceeds of which
were held outside of the escrow account to cover the costs relating
to the IPO and running costs as outlined in the Prospectus.
Since the completion of its IPO, the Company's leadership team
has been focused on identifying a potential target for the Business
Combination. This process is ongoing and the Company will continue
its search with the aim to complete a Business Combination within
15 months following the admission date of 13 April 2022, subject to
two three-month extension periods under conditions outlined in the
Prospectus.
2. Principal accounting policies
The Company is not presently engaged in any activities other
than those which are required in connection with the selection,
structuring and completion of a Business Combination.
The Financial Statements have been prepared in accordance with
applicable law, the Company's principal documents and International
Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB"). This is the
first year of audit and no historic audited financial information
is available other than the prospectus.
The Company had no operations and therefore no segmental
information is presented.
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Company's Financial Statements:
2. Principal accounting policies (continued)
Basis of presentation
The Financial Statements have been prepared in accordance with
applicable law, the Company's principal documents and International
Financial Reporting Standards ("IFRS").
The Financial Statements are presented in British Pounds ("GBP"
or "GBP"), which is the Company's presentation and functional
currency.
Going concern
The Financial Statements have been prepared on a going concern
basis. Following the Offering and prior to the completion of any
Business Combination, the Company will not engage in any
operations, other than in connection with the selection,
structuring and completion of a Business Combination.
The Company has 15 months from the admission date to complete a
business combination, subject to two three-month extension periods
if approved (the "Business Combination Deadline"). The Company
currently believes it has sufficient funds to cover operating costs
through to the initial deadline. If the board were to seek an
extension then additional funds would need to be raised to cover
operating costs. The costs related to the Company are expected to
be covered by the proceeds of the issuance of the Sponsor Warrants
as part of the Offering process, as disclosed in note 7.
The Sponsor Entity, the Overfunding Sponsor Entity (as defined
in the Prospectus) or their affiliates may provide up to GBP
1,500,000 of additional funds to the Company through the issuance
of debt instruments, such as promissory notes, to fund excess
costs, which may be converted into additional Sponsor Warrants (as
defined in the Prospectus) at a price of GBP1.00 per Sponsor
Warrant at the option of the lender.
The Company will have until the Business Combination Deadline to
complete a Business Combination, subject to any extension period
being granted. If the Company has not completed a Business
Combination by such time (or the expiry of any extension period),
it will: cease all operations except for the purpose of winding up;
as promptly as reasonably possible, redeem the Ordinary Shares, and
as promptly as reasonably possible following such redemption,
subject to the approval of the remaining shareholders and the
Directors, liquidate and dissolve.
The events and conditions that management considers relevant to
the Company's ability to continue as a going concern include the
limited time frame remaining to the Business Combination Deadline
and market conditions inclusive of competition and potential
geopolitical events.
Management remain focused on completing a Business Combination
by the Business Combination Deadline. Having considered all
relevant information, management have concluded that there are no
material uncertainties related to the identified events or
conditions that may cast significant doubt on the Company's ability
to continue as a going concern. Reaching the conclusion that there
is no material uncertainty involves significant judgement.
In addition, such opinion is not dependent on the Company
completing a Business Combination by the Business Combination
Deadline. It is important to note that nothing in this analysis
implies that the Company would be unable to meet its debts as they
fall due or to fulfill the above mentioned redemptions of
redeemable Ordinary Shares should the Company not complete a
Business Combination by the Business Combination Deadline.
2. Principal accounting policies (continued)
New and amended standards and interpretations applied
The following accounting standards and updates were applicable
in the reporting period but did not have a material impact on the
Company:
- Amendments to IFRS 1 and IFRS 9 Annual Improvements to IFRS 2018-2020
- Amendments to IFRS 3: Business Combinations
- Amendments to IAS 16: Property, Plant and Equipment
- Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets
New and amended standards and interpretations not applied
The following new and amended standards and interpretations in
issue are applicable to the Company but are not yet effective and
therefore, have not been adopted by the Company:
- IFRS 17: Insurance Contracts (effective 1 January 2023)
- Amendments to IAS 17: Insurance Contracts (effective 1 January 2023)
- Amendments to IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors
(effective 1 January 2023)
- Amendments to IAS 12: Income Taxes (effective 1 January 2023)
- Amendments to IAS 1: Presentation of Financial Statements (effective 1 January 2023)
The Company has considered the IFRS's in issue but not yet
effective and do not consider any to have a material impact on the
Company.
Financial assets and liabilities
(i) Recognition and initial measurement
The Company initially recognises financial assets and financial
liabilities on the date it becomes a party to the contractual
provisions of the instrument. Any gains and losses arising from
changes in fair value of the financial assets or financial
liabilities at fair value through profit or loss ("FVTPL") are
recorded in the statement of comprehensive income.
Financial assets and financial liabilities are measured
initially at fair value plus or minus, for an item not at FVTPL,
transaction costs that are directly attributable to its acquisition
or issue.
(ii) Classification and subsequent measurement
Financial assets
On initial recognition, the Company classifies financial assets
as measured at amortised cost or FVTPL.
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
- It is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
2. Principal accounting policies (continued)
Financial assets and liabilities (continued)
(ii) Classification and subsequent measurement (continued)
Financial assets (continued)
- Its contractual terms give rise on the specified dates to cash
flows that are solely payments of principal and interest.
All financial assets not classified as measured at amortised
cost as described above are measured at FVTPL.
Financial assets classified at amortised cost are subsequently
measured at amortised cost using the effective interest method. The
amortised cost is reduced by impairment losses. Interest income,
foreign exchange gains and losses and impairment are recognised in
profit or loss. Any gain or loss on derecognition is recognised in
profit or loss.
Financial assets classified at FVTPL are subsequently measured
at fair value. Net gains and losses, including any interest income
and foreign exchange gains and losses, are recognised in profit or
loss.
Financial liabilities
Financial liabilities are classified as measured at amortised
cost or FVTPL.
A financial liability is classified as at FVTPL if it is
classified as held-for-trading, it is a derivative or it is
designated as such on initial recognition. Financial liabilities at
FVTPL are measured at fair value and net gains or losses, including
any interest, are recognised in profit or loss.
Other financial liabilities are subsequently measured at
amortised cost using the effective interest method. Interest
expense and foreign exchange gains and losses are recognised in
profit or loss. Any gain or loss on derecognition is also
recognised in profit or loss.
(iii) Amortised cost
The amortised cost of a financial asset or financial liability
is the amount at which the financial asset or financial liability
is measured on initial recognition minus the principal repayments,
plus or minus the cumulative amortisation using the effective
interest method of any difference between that initial amount and
the maturity amount and, for financial assets, adjusted for any
loss allowance.
(iv) Fair value measurement
'Fair value' is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the
principal or, in its absence, the most advantageous market to which
the Company has access at that date. The fair value of a liability
reflects its non-performance risk.
2. Principal accounting policies (continued)
Financial assets and liabilities (continued)
(iv) Fair value measurement (continued)
When available, the Company measures the fair value of an
instrument using the quoted price in an active market for that
instrument. A market is regarded as 'active' if transactions for
the asset or liability take place with sufficient frequency and
volume to provide pricing information on an ongoing basis. The
Company measures instruments quoted in an active market at a
mid-price, because this price provides a reasonable approximation
of the exit price.
If there is no quoted price in an active market, then the
Company uses valuation techniques that maximise the use of relevant
observable inputs and minimise the use of unobservable inputs. The
chosen valuation technique incorporates all of the factors that
market participants would take into account in pricing a
transaction.
The Company recognises transfers between levels of the fair
value hierarchy as at the end of the reporting period during which
the change has occurred.
(v) Impairment
The Company recognises loss allowances for Expected Credit
Losses ("ECLs") on financial assets measured at amortised cost.
The Company measures loss allowances at an amount equal to
lifetime ECLs, except for the following, which are measured at
12-month ECLs:
- financial assets that are determined to have low credit risk at the reporting date; and
- other financial assets for which credit risk has not increased
significantly since initial recognition.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating ECLs, the Company considers reasonable and supportable
information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information
and analysis, based on the Company's historical experience and
informed credit assessment and including forward-looking
information.
The Company assumes that the credit risk on a financial asset
has increased significantly if it is more than 30 days past
due.
The Company considers a financial asset to be in default
when:
- the borrower is unlikely to pay its credit obligations to the
Company in full, without recourse by the Company to actions such as
realising security (if any is held); or
- the financial asset is more than 90 days past due.
The Company considers a financial asset to have low credit risk
when the credit rating of the counter party is equivalent to the
globally understood definition of 'investment grade'. The Company
considers this to be BBB or higher per Standard and Poor's.
2. Principal accounting policies (continued)
Financial assets and liabilities (continued)
(v) Impairment (continued)
Lifetime ECLs are the ECLs that result from all possible default
events over the expected life of a financial instrument. 12-month
ECLs are the portion of ECLs that result from default events that
are possible within the 12 months after the reporting date (or a
shorter period if the expected life of the instrument is less than
12 months). The maximum period considered when estimating ECLs is
the maximum contractual period over which the Company is exposed to
credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the
entity in accordance with the contract and the cash flows that the
Fund expects to receive). ECLs are discounted at the effective
interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Company assesses whether financial
assets carried at amortised cost are credit-impaired. A financial
asset is 'credit-impaired' when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the
following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract such as a default or being more than 90 days past due; or
- it is probable that the borrower will enter bankruptcy or other financial reorganisation.
Presentation of allowance for ECLs in the statement of financial
position
Loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off
when the Company has no reasonable expectations of recovering a
financial asset in its entirety or a portion thereof.
(vi) Derecognition
The Company derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of
the financial asset are transferred or in which the Company neither
transfers nor retains substantially all of the risks and rewards of
ownership and does not retain control of the financial asset.
2. Principal accounting policies (continued)
Financial assets and liabilities (continued)
(vi) Derecognition (continued)
On derecognition of a financial asset, the difference between
the carrying amount of the asset (or the carrying amount allocated
to the portion of the asset that is derecognised) and the
consideration received (including any new asset obtained less any
new liability assumed) is recognised in the statement of
comprehensive income. Any interest in such transferred financial
assets that is created or retained by the Company is recognised as
a separate asset or liability.
The Company derecognises a financial liability when its
contractual obligations are discharged or cancelled, or expire. On
derecognition of a financial liability, the difference between the
carrying amount extinguished and the consideration paid (including
any non-cash assets transferred or liabilities assumed) is profit
or loss.
Expenses
All expenses are accounted for on an accrual basis and are
presented as expense items, except for expenses that are incidental
to the disposal of an investment which are deducted from the
disposal proceeds, and expenses related to the issue of shares
which are netted against the financial instruments they are
allocated to. For equity instruments, these reduce share capital,
for derivative liabilities these are expensed immediately and for
liabilities these initially reduce the liability and are
subsequently accreted to the Statement of Comprehensive Income over
time.
Prepayments
These represent assets for amounts paid prior to the end of the
financial period, for which services are yet to be provided to the
Company.
Accrued expenses
These amounts represent liabilities for services provided to the
Company prior to the end of the financial period, which are unpaid.
Accrued expenses are recognised initially at fair value. The best
evidence of the fair value of a financial instrument at initial
recognition is normally the transaction price. Subsequent
measurement is at amortised cost using the effective interest
method.
Share issue costs
Share issue cost have been incurred in relation to the issue of
the share capital encompassing Ordinary Shares, Public Shares and
Warrants. Where shares are classified as equity, share issue costs
are recognised in equity. Ordinary Shares not subject to the Inside
Letter (as per the Prospectus) have been classified as liabilities,
due to the redemption facility attached to these Shares. Share
issue costs attributed to these shares are amortised to the
Statement of Comprehensive Income using the effective interest
method. For warrants the share issue costs are recognised
immediately in the Statement of Comprehensive Income.
2. Principal accounting policies (continued)
Cash and restricted cash
Cash represents cash deposits held at financial institutions.
Cash is held for meeting short-term liquidity requirements, rather
than for investment purposes. Cash is held at major financial
institutions.
Use of judgements and estimates
The preparation of Financial Statements in accordance with IFRS
requires the Board to make judgements, estimates and assumptions
that affect the application of policies and the reported amounts of
assets and liabilities and income and expenses. The estimates and
associated assumptions are based on various factors that are
believed to be reasonable under the circumstances, the results of
which form the basis of making the judgements about carrying values
of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on a
semi-annual basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and
future periods if the revision affects both current and future
periods.
The principal judgements and estimates are as follows:
Share-based payments
Regarding the Sponsor Shares issued by the Company, the Board
has exercised judgement in determining whether the Sponsor Shares
should be treated as a financial instrument (IAS 32) or share based
payments (IFRS 2).
IFRS 2 applies to any transaction in which an entity receives
goods or services as part of a share based payment arrangement.
Careful consideration of all facts and circumstances, such as
whether the rights of the Sponsor Shareholders differ from those of
the Ordinary Shareholders, is required to determine if IFRS 2
applies. In making this determination, the following factors have
been considered.
- Should a Business Combination be successfully achieved, a
proportion of the Sponsor Shares will automatically convert into
Ordinary Shares at no further cost to the Sponsor Shareholders. As
the aggregate issue price of the Sponsor Shares was GBP25,000, this
represents a considerable discount to the price paid by Ordinary
Shareholders for their Ordinary Shares;
- The number of Sponsor Shares that may be converted to Ordinary
Shares may increase further, subject to certain performance-related
conditions subsequent to the Business Combination;
- Notwithstanding that the Sponsor Entity is providing its
services to the Company in an equivalent capacity to an employment
relationship, the conversion of the Sponsor Shares to Ordinary
Shares is entirely contingent on the successful consummation of a
Business Combination, and no reward will accrue to the Sponsor
Entity for its services in the event that a Business Combination is
not consummated.
Accordingly, the Board has exercised judgement in determining
that the Sponsor Shares fall under the scope of IFRS 2 as
equity-settled share based payments. The fair value at the grant
date of equity-settled share based payments is generally recognised
as an expense with a corresponding increase in equity over the
vesting period.
2. Principal accounting policies (continued)
Use of judgements and estimates (continued)
Share based payment (continued)
The deemed grant date of the Ordinary Shares will determine the
point at which the Ordinary Shares will be accounted for under IFRS
2. The Board has determined that the effective grant date for the
Ordinary Shares is the point of consummation of a Business
Combination, and not the original date of issue of the Sponsor
Shares for the following reasons:
- No contractual obligation on the part of the Company to
deliver cash or any other financial asset to holders of the Sponsor
Shares exists prior to a Business Combination, and the Sponsor
Shareholders are not entitled to any preferential terms over
holders of Ordinary Shares;
- Should the Sponsor Entity fail to successfully achieve a
Business Combination, then the Sponsor Shares will not be eligible
for conversion to Ordinary Shares and the Sponsor Entity will
receive no material compensation for their work in attempting to
identify a target acquisition;
- Under the Insider Letters, the Sponsor Entity has agreed to
waive its right to any liquidating distributions from the Escrow
Account; and
The Sponsor Entity has provided services in the form of
expertise and guidance to assist the Company in achieving the
Business Combination, in exchange for the trading of its Sponsor
Shares which has been recorded as share-based payments. The
difference between the total consideration received by the Company
for the Sponsor Shares and their fair value at the grant date will
be pro-rated over the period to the Business Combination
deadline.
Sponsor Warrants
Similarly to Sponsor Shares, the Board has exercised judgement
in determining whether the Sponsor Warrants should be treated as a
financial instrument (IAS 32) or share based payments (IFRS 2).
IFRS 2 applies to any transaction in which an entity receives goods
or services as part of a share-based payment arrangement. That
determination requires careful consideration of all the facts and
circumstances, such as whether the rights of the Sponsor Warrant
holders differ from those of the Public Warrant holders. The board
have determined that Sponsor Warrants do not fall within the scope
of IFRS 2 for the following reasons:
- The Sponsor Warrants were issued at a price of GBP1.00 per
warrant and are exercisable at a price of GBP11.50 per Ordinary
Share, which do not represent preferential terms to those afforded
to Public Warrant holders;
- No further Sponsor Warrants are receivable for zero or discounted consideration;
- The commercial basis for the issue of Sponsor Warrants is to
provide sufficient capital to cover the Company's listing costs and
operating expenses until the achievement of a Business Combination,
without diluting the value of the Ordinary Shareholders'
shares;
- There are no service conditions attached to the Sponsor Warrants;
- Sponsor Warrant holders have no different rights from Public
Warrant holders in the event of a successful Business Combination
or the failure to achieve such a combination.
The Board's judgement is that the Sponsor Warrants are a
puttable financial instrument that includes a contractual
obligation for the issuer to redeem that instrument for cash or
another financial asset (in this case, an Ordinary Share) upon
exercise. The Sponsor Warrants do not entitle the holder to a pro
rata share of the entity's assets in the event of the entity's
liquidation and are therefore classified as a financial liability
in accordance with section 16 of IAS 32.
2. Principal accounting policies (continued)
Use of judgements and estimates (continued)
Deferred underwriting fee
Barclays Bank PLC, HSBC Bank plc and Numis Securities Limited
("the Underwriters" of the Company's Placing) are potentially
entitled to a deferred underwriting fee. The Board has exercised
judgement in determining that at the period-end no liability in
relation to this fee exists as IAS 32 requires the recognition of
the worst-case liability which would be to repay the funds raised
to shareholders if no business combination is completed. This
underwriting fee is only payable on the completion of a Business
Combination and will be paid from the funds held in the Escrow
account.
Fair value of derivative financial instruments at fair value
through profit or loss
The Company recognises its investment in derivative instruments
(Public Warrants and Sponsor Warrants) initially at fair value at
date of issuance with any subsequent movement in fair value between
the issuance date and the reporting date being recognised as a fair
value movement through profit and loss. A third party valued the
warrants using an appropriate valuation model and determined the
fair value at the date of issuance to be GBP0.17 per warrant for
the Public Warrants and GBP0.34 per warrant for the Sponsor
Warrants, and determined the fair value at period end to be GBP0.02
and GBP0.04 respectively. Judgements were required for the inputs
into the valuation model specifically volatility rates of suitable
comparable companies and estimated life of the warrants.
3. Fair value measurement
A number of the Company's accounting policies and disclosures
require the measurement of fair values for financial assets and
liabilities.
The Board has overall responsibility for overseeing all
significant fair value measurements, including Level 3 fair values.
If the inputs used to measure the fair value of an asset or a
liability fall into different levels of the fair value hierarchy,
then the fair value measurement is categorised in its entirety in
the same level of the fair value hierarchy as the lowest level
input that is significant to the entire measurement.
The Board periodically reviews significant unobservable inputs
and valuation adjustments. If third party information, such as
broker quotes or pricing services, is used to measure fair values,
then the Board assesses the evidence obtained from the third
parties to support the conclusion that these valuations meet the
requirements of the Standards, including the level in the fair
value hierarchy in which the valuations should be classified.
The Company measures fair values using the following fair value
hierarchy that reflects the significance of the inputs used in
making the measurements.
Level Quoted prices (unadjusted) in active markets for
1 -- identical assets or liabilities.
Level Inputs other than quoted prices included within
2 -- Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly
(that is, derived from prices).
Level Inputs for the asset or liability that are not based
3 -- on observable market data (that is, unobservable
inputs).
3. Fair value measurement (continued)
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date in the principal or, in
its absence, the most advantageous market to which the Company has
access at that date. The fair value of a liability reflects its
non--performance risk.
When measuring the fair value of an asset or liability, the
Company uses observable market data as far as possible. The
determination of what constitutes "observable" requires significant
judgment by management. Fair values of financial assets and
liabilities that are traded in active markets are based on quoted
market prices or price quotations from a broker that provides an
unadjusted price from an active market for identical instruments. A
market is regarded as "active" if transactions for the asset or
liability take place with sufficient frequency and volume to
provide pricing information on an on--going basis.
The determination of fair value for financial assets and
financial liabilities for which there is no observable market price
requires the use of valuation techniques. For financial instruments
that trade infrequently and have little price transparency, fair
value is less objective, and requires varying degrees of judgment
depending on liquidity, concentration, uncertainty of market
factors, pricing assumptions and other risks affecting the specific
instrument.
The objective of valuation techniques is to arrive at a fair
value measurement that reflects the price that would be received to
sell the asset or paid to transfer the liability in an orderly
transaction between market participants at the measurement
date.
3.1 Valuation techniques
To value the warrant liabilities, the valuation specialist uses
proprietary valuation models such as Black Scholes Pricing Model.
Judgement and estimation are usually required for the selection of
the appropriate valuation model to be used.
Valuation models that employ significant unobservable inputs
require a high degree of judgement and estimation in the
determination of fair value. Some or all of the significant inputs
into these models may not be observable in the market and are
derived from market prices or rates or are estimated based on
assumptions. Assumptions and inputs used in the valuation models
include a risk-free interest rate, time to business combination
deadline, probability of business combination and volatility. In
order to estimate volatility, valuation techniques include
comparison with similar instruments for which observable market
prices exist.
3.2 Fair value hierarchy
The following table summarises the valuation of the Company's
financial instruments within the fair value hierarchy levels at 31
December 2022:
Level Level Level
1 2 3 Total
GBP GBP GBP GBP
------------------------ ------- ------- -------- --------
Derivative liabilities - - 305,000 305,000
- - 305,000 305,000
------- -------------------------------- -------- --------
3. Fair value measurement (continued)
3.3 Changes in level 3 measurement
The following table presents the changes in the Company's
financial instruments classified in level 3 of the fair value
hierarchy for the period ended 31 December 2022:
31 December
2022
GBP
------------------------------------------- -------------
Beginning of period -
Proceeds from Sponsor Warrants and Public
Warrants 2,592,500
Net change in unrealised gain on financial
liabilities (2,287,500)
-------------------------------------------- -------------
End of period 305,000
-------------------------------------------- -------------
There were no transfers between levels for the period.
3.4 Significant unobservable inputs
The following table summarises the valuation techniques and
significant unobservable inputs used for the Company's financial
instruments classified in level 3 as of 31 December 2022, and also
provides information about the sensitivity of the year end fair
value measurement to changes in the most significant inputs:
Range of
Fair value Valuation inputs (weighted
GBP technique Unobservable inputs average)
------------------------ ---------- --------------- ------------------- -----------------
Derivative liabilities Black-Scholes
- Sponsor warrants 155,000 Pricing Model Expected volatility 2.9%
Risk free rate 3.9%
Derivative liabilities Binomial Option
- Public warrants 150,000 Pricing Model Expected volatility 2.9%
Risk free rate 3.9%
-------
305,000
The fair value of sponsor warrant and public warrants
liabilities are determined by the Board upon consultation with a
valuation specialist with reference to significant unobservable
inputs. The valuation specialist has used the Black-Scholes Pricing
Model and Binomial Option Pricing Model respectively, incorporating
expected volatility, expected term and the risk-free rate, to value
the warrant liabilities. Warrants are accounted for as derivative
liabilities measured at FVTPL at each reporting period, in
accordance with IFRS 9 and IAS 32. Changes in the fair value of the
warrants are recorded in the Statement of Comprehensive Income.
4. Acquisition
The Company made no acquisitions during the period from 31
August 2021 (date of incorporation) to 31 December 2022.
5. Cash
The amounts available to the Company in the current accounts are
used to cover the costs relating to the offering and admission,
search for a company or business for a Business Combination and
other running costs .
31 December
2022
GBP
-------------------------- ------------
Restricted cash 155,984,100
Cash and cash equivalents 203,264
--------------------------- ------------
Total 156,187,364
--------------------------- ------------
The Escrow Agent may only release the funds within the Escrow
Account in accordance with the terms of the Escrow Agreement, which
meets the requirements set out in Listing Rule 5.6.18AG(2) (save
for the minor departures from this rule which are disclosed in the
Prospectus).
The Escrow Agreement provides that the Company and a trustee,
which was appointed by the Company to provide escrow trustee
services in connection with the Escrow Account, will jointly
deliver an instruction to the Escrow Agent to release the funds in
escrow only in the event that circumstances described in the
Prospectus for the release of the funds in escrow have occurred,
and that as requested by the Escrow Agent the Company will deliver
evidence of the circumstances for release having occurred to the
Escrow Agent prior to delivering an instruction for release to the
Escrow Agent. Such circumstances are, in accordance with LR
5.6.18AG(2) (save for the minor departures from this rule which are
disclosed in the Prospectus): (i) to provide consideration for a
Business Combination that has been approved by the Directors of the
Company and the Ordinary Shareholders (excluding the Excluded
Persons), in accordance with the requirements of the Articles of
Association and the Listing Rules; (ii) to repurchase the Ordinary
Shares for which a redemption right was validly exercised; and
(iii) to repurchase the Ordinary Shares and Public Warrants and
commence liquidation.
6. Financial risk management
The Company is exposed to market risk, credit risk and liquidity
risk. The risk management policies employed by the Company to
manage these risks are discussed below:
(a) Market risk
Market risk is the risk that changes in market factors such as
foreign exchange rates, interest rates and equity prices will
affect the Company's income and/or the value of its holdings in
financial instruments.
6. Financial risk management (continued)
(a) Market risk (continued)
Foreign currency risk
Currency risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. During the period ended 31 December
2022, the Company had no financial instrument denominated in a
currency other than its operational and reporting currency, and
therefore was not exposed to foreign currency risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Company's cash and cash
equivalents are non-interest-bearing, however the restricted cash
balance consists of amounts held in an Escrow account which accrue
interest at a variable rate and therefore exposed to interest rate
risk.
As at 31 December 2022, if interest rates had been 0.5%
higher/lower, with all other variables held constant, the Company's
bank interest received for the period would have been GBP772,500
higher or lower.
As at end of the reporting period, the Company's exposure to
interest rate risk is considered to be for GBP154,500,000. The
Company is exposed to risks associated with the effects of
fluctuations in the prevailing levels of interest rates on its
financial position and cash flows. Although these interest are not
hedged however the Company regularly monitors the cash balances for
any adverse interest rate fluctuations.
Price risk is the risk that changes in market prices will affect
the value of the Company's financial assets or liabilities at fair
value through profit or loss. The Company is exposed to price risk
in respect of its Public Warrants and Sponsor Warrants, which are
measured at fair value using an appropriate valuation model.
As at 31 December 2022, if prices had been 5% higher/lower, the
net fair value of the Company's financial assets or liabilities at
fair value through profit or loss subject to price risk would
increase/decrease by GBP15,250.
The Company will analyse the risk of individual assets and
evaluate the market risk through its daily operation, by reviewing
the latest development of financial markets and the release of
economic data.
The Company's overall exposures to financial asset values are
monitored on an on going basis.
(b) Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company, resulting in a financial loss
to the Company. The Company is exposed to credit risk arising from
its restricted cash, cash and cash equivalents and other
receivables.
6. Financial risk management (continued)
(a) Credit risk (continued)
The maximum credit risk exposure in relation to the Company's
cash balances is best represented by the carrying value of the cash
and cash equivalents, amounts held in escrow balances and other
receivables in the Statement of Financial Position.
The Company seeks to mitigate the credit risk attached to its
cash and cash equivalents and amounts held in escrow by placing all
cash with reputable banking institutions with a credit rating of A
(or equivalent) or higher as determined by an internationally
recognised rating agency.
Cash and cash equivalents are held with Barclays Bank plc, which
has a Fitch long-term credit rating of A+, a Moody's long-term
credit rating of A1 and an S&P long-term credit rating of
A.
Amounts held in escrow are held with HSBC Bank plc, which has a
Fitch long-term credit rating of A+, a Moody's long-term credit
rating of A3 and an S&P long-term credit rating of A-.
(b) Liquidity risk
Liquidity risk is the risk that an entity will encounter
difficulty in meeting obligations associated with its financial
liabilities. The table below analyses how quickly the Company's
assets can be liquidated to meet the obligation of maturing
liabilities.
Maturity Analysis
No stated
< 1 month >12 months maturity Total
As at 31 December 2022 GBP GBP GBP GBP
----------------------------- --------- ------------- --------- ------------
Assets
Restricted cash - 155,984,100 - 155,984,100
Cash and cash equivalents 203,264 - - 203,264
Trade and other receivables 74,191 - - 74,191
277,455 155,984,100 - 156,261,555
--------- ------------- --------- ------------
Liabilities
Redeemable ordinary shares - 148,214,847 - 148,214,847
Derivative liabilities - 305,000 - 305,000
Due to related party 26,060 - - 26,060
Accrued expense 1,109 - - 1,109
--------- ------------- --------- ------------
27,169 148,519,847 148,547,016
--------- ------------- --------- ------------
The Company is exposed to liquidity risk as the positions in
which the company invests may not be able to get liquidated quickly
without negatively affecting the share prices. It is the Companies
policy to maintain conservative levels of liquidity to ensure it
has the ability to meet its obligations as they fall due
6. Financial risk management (continued)
(c) Capital risk management
The capital structure of the Company consists of equity
attributable to holders of Sponsor Shares and non-redeemable Public
Shares, redeemable Public Shares issued (see note 7) and retained
earnings.
7. Capital instruments
The following summarises the issued share capital as at 31
December 2022.
No. of shares GBP
----------------------------------------- ------------- --------------
Redeemable Class A ordinary shares
of GBP10 par value ("Ordinary Shares") 15,000,000 150,000,000
Non-redeemable Class A ordinary
shares of GBP10 par value ("Ordinary
Shares") 450,000 4,475,304
Class B ordinary shares of GBP0.0001
par value, issued at GBP0.005 ("Sponsor
Shares") 3,862,500 19,310
19,312,500 154,494,614
----------------------------------------- ------------- --------------
Class A ordinary shares ("Ordinary Shares")
Further to publication of its Prospectus on 7 April 2022, the
Company completed the placing of 15,000,000 Ordinary Shares of the
Company at a price of GBP10.00 per share, with matching warrants
being issued concurrently with the delivery of the Ordinary Shares
to subscribers of Ordinary Shares in the Offering on the basis of
one-half (1/2) of one (1) warrant per Ordinary Share ("Public
Warrants"). Additionally, 450,000 Ordinary Shares were issued to
the Overfunding Sponsor Entity via the Company's Overfunding
Subscription.
On 13 April 2022, the Company announced the admission of
154,500,000 Ordinary Shares to trading on the London Stock
Exchange's main market for listed securities ("LSE").
As at 31 December 2022, the 450,000 Ordinary shares issued to
the Overfunding Sponsor Entity, these share are subject to the
Insider Letter (see Prospectus), in which, inter alia, removes the
right of redemption attached to these Ordinary Shares, which are
accordingly classified as equity. These shares 450,000 Ordinary
Shares alongside with the 3,682,500 Class B Ordinary shares make up
share capital net of issuance costs of GBP24,696.
Ordinary Shares carry the right to receive dividends and other
distributions declared on them, and (save as provided in the
Prospectus) holders of Ordinary Shares are entitled to one vote per
share at a general shareholders' meeting of the Company, including
a vote on the proposed business combination.
7. Capital instruments (continued)
Class A ordinary shares ("Ordinary Shares") (continued)
Holders of redeemable Ordinary Shares are entitled to redeem all
or a portion of their Ordinary Shares upon the completion of the
business combination. Accordingly, these Ordinary Shares are
classified as liabilities in the Company's Statement of Financial
Position and are measured at amortised cost.
31 December
2022
Ordinary Shares GBP
------------------------------------- ------------
Opening balance -
Proceeds of issue of Ordinary Shares 150,000,000
Less: initial recognition of Public
Warrants (1,275,000)
Less: share issue costs (2,842,943)
Effective interest accretion 2,332,790
148,214,847
------------------------------------- ------------
Class B ordinary shares ("Sponsor Shares")
During the period, the Sponsor and the Directors subscribed to a
total of 3,862,500 (comprising 1,931,250 B1 Shares, 965,625 B2
Shares and 965,625 B3) Sponsor Shares at a price of GBP0.0001 per
share.
Upon completion of the Business Combination, the entire
sub-class of B1 Shares shall automatically convert on a one-for-one
basis (subject to adjustment in certain circumstances) into such
number of Ordinary Shares as will be equal, in the aggregate, on an
as-converted basis, to 10% of the total number of Ordinary Shares
issued and outstanding immediately following the completion of the
Offering. In addition, the entire sub-class of B2 Shares and the
entire sub-class of B3 Shares shall automatically convert on a
one-for-one basis (subject to adjustment in certain circumstances)
into Ordinary Shares in two further tranches (each of which shall
equal 5% of the total number of Ordinary Shares issued and
outstanding immediately following the completion of the Offering)
after the Business Combination subject to certain
performance-related conditions.
Subject to the variation of certain voting rights and powers in
respect of the Business Combination, Sponsor Shares carry the same
shareholder rights as Ordinary Shares. However, the Company's
Sponsor and Directors have entered into an Inside Letter with the
Company, under which they have agreed to waive their redemption
rights in respect of the Sponsor Shares or any Ordinary Shares
acquired as a result of conversion in connection with the Business
Combination. Accordingly, the Sponsor Shares are classified as
equity in the Company's Statement of Financial Position.
Public warrants
On 13 April 2022, 7,500,000 Public Warrants, the right to which
was included in the issue of Ordinary Shares in the Company, were
admitted to trading on LSE.
7. Capital instruments (continued)
Public warrant (continued)
Each Public Warrant gives the holder the right to subscribe for
one Ordinary Share at a price of GBP11.50 at any time commencing 30
days following the completion of the Business Combination.
Accordingly, the Public Warrants are classified as derivative
liabilities and were initially recognised at their fair value of
GBP0.17 per warrant at the admission date of 13 April 2022.
As at 31 December 2022, the Public Warrants have been valued
using an appropriate valuation model at GBP.02 per warrant and are
recognised in these Financial Statements at a fair value of
GBP150,000 The movement in fair value of GBP1,125,000 from the
admission date and period end has been recognised through profit
and loss.
Sponsor warrants
During the period, the Sponsor and the Directors subscribed to a
total of 3,875,000 Sponsor Warrants at a price of GBP1 per warrant.
Of the GBP3,875,000 raised from the issue of the Sponsor Warrants,
a derivative liability was recognised at the admission date of 13
April 2022 amounting to GBP1,317,500. The remainder has been
allocated to other reserves as a capital contribution to the
company amounting to GBP2,557,500.
As at 31 December 2022, the Sponsor Warrants have been valued at
GBP.04 per warrant and are recognised in these Financial Statements
at a total value of GBP155,000. The movement in fair value of
GBP1,162,500 between the admission date and period end has been
recognised through profit and loss.
Each Sponsor Warrant gives the holder the right to subscribe for
one Ordinary Share at a price of GBP11.50 following the completion
of the Business Combination.
8. Share based expense
The Sponsor Entity has provided services in the form of
expertise and guidance to assist the Company in achieving the
Business Combination, in exchange for the trading of its sponsor
shares which has been recorded as share based payments.
The valuation specialist has used a Monte Carlo simulation to
estimate the fair value of the sponsor shares. Non-market
performance conditions have not been taken into account when
estimating the fair value such as the probability of Business
Combination. The key inputs used in the measurement of the fair
value at grant date of the sponsor shares were the initial stock
price, volatility, expected term and the restriction period after
the initial Business Combination.
As of grant date the fair value of each sponsor share is
estimated. The difference between the total consideration received
by the Company for the sponsor shares and their fair value at the
grant date is. This will be pro-rated over the period to the
Business Combination Deadline and recognised in equity as a
share-based payment reserve with the associated expense reflected
in the statement of comprehensive income as share based payment
expense.
8. Share based expense (continued)
Share Class Number of FV per share Fair Value Share base
Shares ( GBP) ( GBP) payment ( GBP)
------------- ----------- ------------- ------------ -----------------
B-1 1,931,250 9.80 18,926,057 10,874,182
B-2 965,625 8.53 8,236,685 4,732,481
B-3 965,625 7.67 7,406,247 4,255,344
------------- ----------- ------------- ------------ -----------------
19,862,007
------------- ----------- ------------- ------------ -----------------
9. Earnings per share
9.1 Basic loss per share
For the period
from
31 August 2021
(date of incorporation)
to 31 December
2022
GBP
---------------------------------------- --------------------------
Numerator
Net loss for the period and earnings
used in basic loss per share (19,199,582)
------------------------------------------ --------------------------
Total loss for the period used in basic
loss per share (19,199,582)
------------------------------------------ --------------------------
Denominator
Weighted average number of shares used
in basic loss per share 3,406,905
------------------------------------------ --------------------------
Total weighted average number of shares
used in basic loss per share 3,406,905
------------------------------------------ --------------------------
Basic loss per share (5.64)
------------------------------------------ --------------------------
The weighted average number of Ordinary Shares is determined by
reference to the 3,862,500 Class B Ordinary Shares and 450,000
non-redeemable Class A Ordinary Shares. Public and Sponsor Warrants
are deemed to be anti-dilutive as the average market price of
Ordinary Shares during the period did not exceed the GBP11.50
exercise price of the warrants and they are therefore out of the
money and excluded from the diluted earnings per share calculation.
The 15,000,000 redeemable Class A Ordinary Shares under IAS 33 are
deemed to be contingently issuable shares issuable only upon a
Business Combination so under IAS 33.24 will be excluded from the
earnings per share calculations until the Business Combination has
occurred.
9. Earnings per share
9.2 Diluted loss per share
The Company has reviewed the dilution factors and concluded that
there are no instruments that have dilutive potential as at 31
December 2022. As there is uncertainty as to the likelihood of an
initial Business Combination, the potential dilutive effects of
redeemable Ordinary Shares, Sponsor Warrants and Public Warrants
have not been factored into the weighted average number of shares.
The conditions for conversion of these instruments to equity have
not been satisfied at the reporting date. When the Business
Combination has occurred, the redeemable Ordinary Shares will
become equity and will no longer be a financial liability, hence
the dilutive effect is not considered in the diluted earnings per
share calculation. As a result, diluted earnings per share is
deemed to be the same as basic earnings per share as at 31 December
2022.
10. Related party transactions
All legal entities that can be controlled, jointly controlled or
significantly influenced by the Company are considered to be a
related party. Also, entities which can control, jointly control or
significantly influence the Company are considered a related party.
In addition, statutory and supervisory directors and close
relatives are regarded as related parties.
The Sponsor Entity made payments of GBP158,703 related to
expenses paid on behalf of the Company, of which GBP 26,060 is
still outstanding as of 31 December 2022.
Administration expense paid to the sponsor entity GBP 135,000
for the year ended 31 December 2022.
Other than the issuance of Sponsor Shares and Sponsor Warrants
to the Sponsor Entity and non-executive directors, there have been
no related party transactions.
11. Income tax
The Company is domiciled in the Cayman Islands. Under the
current laws of the Cayman Islands, there is no income, estate,
corporation, capital gains or other taxes payable by the Company.
As a result, no provision for Cayman Islands' taxes has been made
in the Financial Statements.
Overseas withholding taxes may be charged on certain investment
income and capital gains of the Company. No withholding taxes have
been incurred or paid during the period ended 31 December 2022.
The Company has concluded that there was no impact on the
results of its operations relating to taxation for the period ended
31 December 2022.
12. Contingencies and commitments
As disclosed in the Prospectus, the underwriters of the
Company's Offering are entitled to a deferred underwriting fee
payable from the Escrow account upon the successful completion of a
Business Combination. In addition, certain fees and expenses of
certain professional advisers to the Company that were incurred
upon IPO have been deferred until successful completion of a
Business Combination.
13. Subsequent events
There were no significant period and events that require
disclosure or adjustment in these financial statements.
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END
FR PPUPCCUPWGQR
(END) Dow Jones Newswires
April 28, 2023 13:02 ET (17:02 GMT)
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