TIDMFINS TIDMFNWR
RNS Number : 2167O
Financials Acquisition Corp
29 September 2023
Financials Acquisition Corp
Unaudited Condensed Interim Financial Report
For the period from 1 January 2023 to 30 June 2023
Page(s)
Interim Board Report 1-4
Unaudited Condensed Statement of Financial Position 5
Unaudited Condensed Statement of Comprehensive Income 6
Unaudited Condensed Statement of Changes in Equity 7
Unaudited Condensed Statement of Cash Flows 8
Notes to the Unaudited Condensed Interim Financial Statements 9-31
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 ended 30
June 2023.
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 "Escrow Account" and
"Prospectus" respectively). 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, or as otherwise extended with
shareholder approval .
The proceeds of the Company's IPO, GBP154,500,000, were placed
in its Escrow Account which is held at HSBC Bank plc. 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.
On 21 June 2023, the Company announced that it had recently
identified a business combination opportunity which could involve
the Company raising additional capital and becoming a listed
operating company deploying funds into the Lloyds of London
insurance market (the "Proposed Transaction").
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 of
13 July 2023, 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, or as otherwise extended with shareholder approval
(the "Business Combination Deadline"). The Company has sufficient
funds to cover operating costs through to the initial deadline. The
costs related to the Company's IPO and working capital requirements
up to the initial Business Combination Deadline were covered by the
proceeds of the issuance of the Sponsor Warrants as part of the
Offering process.
On 23 June 2023, the Company called an Extraordinary General
Meeting to extend the Business Combination Deadline to 30 December
2023, for the purpose of implementing the Proposed Transaction,
which was approved by shareholders at the Extraordinary General
Meeting held on 10 July 2023 (the "Extension").
In relation to the Extension, the Company expects to be able to
secure additional funds for general working capital purposes from
certain related parties of the Company and an announcement will be
made by the Company as and when such arrangements have been entered
into. In addition, to the extent that the Company is unable to
raise additional funds to pay third party adviser costs (and other
costs) related to the implementation of the Business Combination,
the Company expects to structure the costs associated with the
implementation of the Business Combination in such a manner so as
to ensure that such costs are only payable upon the consummation of
the Business Combination or, in the event that a Business
Combination cannot be consummated by the Business Combination
Deadline, upon a winding-up of the Company out of the Escrow
Account ahead of Ordinary Shareholders pursuant to the terms of the
Articles of Association of the Company.
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,
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)
26/9/2023
Financials Acquisition Corp
Unaudited Condensed Statement of Financial Position
As at 30 June 2023
30 June 31 December
2023 2022
(Unaudited) (Audited)
Note GBP GBP
------------------------------------------- ---- ------------ ------------
Assets
Current assets
Cash and cash equivalents 5 84,183 203,264
Restricted cash 5 158,934,183 155,984,100
Trade and other receivables 51,575 74,191
Total assets 159,069,941 156,261,555
------------------------------------------- ---- ------------ ------------
Liabilities and shareholders' equity
Non-current liabilities
Redeemable ordinary shares 7 149,870,215 148,214,847
Current liabilities
Derivative liabilities 3 266,250 305,000
Accrued expenses 738,243 1,109
Due to related party 10 26,060 26,060
Total liabilities 150,900,768 148,547,016
------------------------------------------- ---- ------------ ------------
Shareholders' equity
Issued share capital 7 4,494,614 4,494,614
Other reserves 36,140,970 22,419,507
Accumulated loss (32,466,411) (19,199,582)
------------------------------------------- ---- ------------ ------------
Total shareholders' equity 8,169,173 7,714,539
------------------------------------------- ---- ------------ ------------
Total liabilities and shareholders' equity 159,069,941 156,261,555
------------------------------------------- ---- ------------ ------------
The Condensed Interim Financial Statements were approved and
authorized for issue by the Board of Directors on 29 September 2023
and signed on its behalf by:
Andrew Rear
Executive Chairman
Financials Acquisition Corp
Unaudited Condensed Statement of Comprehensive Income
For the period from 1 January 2023 to 30 June 2023
For the period from 31 August 2021
For the period from 1 January 2023 (date of incorporation) to 30 June
to 30 June 2023 2022
Note GBP GBP
------------------------------------- ---- ------------------------------------ -----------------------------------
Income
Interest income 2,950,083 153,051
Total income 2,950,083 153,051
------------------------------------- ---- ------------------------------------ -----------------------------------
Expenses
Share-based payment expense 8 13,721,463 5,913,117
Professional fees 845,477 216,688
Listing and regulatory fees 10,000 187,580
Directors and officers insurance
fees 22,615 56,351
Share issue costs 7 - 24,372
Other expenses 739 303
Total expenses 14,600,294 6,398,411
------------------------------------- ---- ------------------------------------ -----------------------------------
Net investment loss (11,650,211) (6,245,360)
------------------------------------- ---- ------------------------------------ -----------------------------------
Net change in unrealised
gain/(loss) on financial
liabilities
Net change in unrealised
gain/(loss) on financial
liabilities 3 38,750 (1,067,500)
------------------------------------- ---- ------------------------------------ -----------------------------------
Net gain/(loss) on financial
liabilities 38,750 (1,067,500)
------------------------------------- ---- ------------------------------------ -----------------------------------
Net loss before finance expense (11,611,461) (7,312,860)
------------------------------------- ---- ------------------------------------ -----------------------------------
Finance expense 7 1,655,368 691,612
Total comprehensive loss for
the period (13,266,829) (8,004,472)
------------------------------------- ---- ------------------------------------ -----------------------------------
Basic and dilutive net loss per
share 9 (3.08) (2.80)
All items in the above statement derive from continuing
operations.
Financials Acquisition Corp
Unaudited Condensed Statement of Changes in Equity
For the period from 1 January 2023 to 30 June 2023
Share capital Other reserves* Accumulated loss Total shareholders' equity
GBP GBP GBP GBP
-------------------------------- --------------- ----------------- ---------------- ---------------------------
As at 1 January 2023 4,494,614 22,419,507 (19,199,582) 7,714,539
Share-based payment
reserve - 13,721,463 - 13,721,463
Total comprehensive loss for the
period - - (13,266,829) (13,266,829)
As at 30 June 2023 4,494,614 36,140,970 (32,466,411) 8,169,173
--------------------------------- --------------- ----------------- ---------------- ---------------------------
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 8,470,617 - 12,970,922
Share cancellation (5,691) - - (5,691)
Total comprehensive loss for the
period - - (8,004,472) (8,004,472)
As at 30 June 2022 4,494,614 8,470,617 (8,004,472) 4,960,759
--------------------------------- --------------- ----------------- ---------------- ---------------------------
* Sponsor Warrants have been accounted for as a capital
contribution in other reserves. Please see notes 2 and 7 for
further details.
Financials Acquisition Corp
Unaudited Condensed Statement of Cash Flows
For the period from 1 January 2023 to 30 June 2023
For the period from 31 August 2021
For the period from 1 January 2023 to (date of incorporation) to 30 June
30 June 2023 2022
GBP GBP
------------------------------------- ------------------------------------- -------------------------------------
Cash flows from operating activities
Total comprehensive loss for the
period (13,266,829) (8,004,472)
Adjustments to reconcile total
comprehensive loss for the period
to net cash provided by operating
activities:
Net change in unrealised (gain)/loss
on financial liabilities (38,750) 1,067,500
Share-based payment expense 13,721,463 5,913,117
Finance expense 1,655,368 691,612
Changes in:
Trade and other receivables 22,616 (172,191)
Accrued expenses 737,134 50,712
Due to related party - 26,060
Net cash provided by / (used in)
operating activities 2,831,002 (427,662)
-------------------------------------- ------------------------------------- -------------------------------------
Cash flows from investing activities
Increase in restricted cash (2,950,083) (154,653,051)
-------------------------------------- ------------------------------------- -------------------------------------
Net cash used in investing activities (2,950,083) (154,653,051)
-------------------------------------- ------------------------------------- -------------------------------------
Cash flows from financing activities
Proceeds from sponsor and
overfunding shares - 4,500,305
Share cancellation - (5,691)
Proceeds from issued share capital
and public warrants - 145,882,057
Proceeds from issuance of sponsor
warrants (including other reserves) - 3,875,000
Payment of share issue costs - 1,275,000
Net cash provided by financing
activities - 155,526,671
-------------------------------------- ------------------------------------- -------------------------------------
Net change in cash and cash
equivalents (119,081) 445,958
Cash and cash equivalents at
beginning of the period 203,264 -
-------------------------------------- ------------------------------------- -------------------------------------
Cash and cash equivalents at end of
the period 84,183 445,958
-------------------------------------- ------------------------------------- -------------------------------------
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 "Escrow Account" and
"Prospectus" respectively). 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, or as otherwise extended with shareholder approval
.
On 21 June 2023, the Company announced that it had recently
identified a business combination opportunity which could involve
the Company raising additional capital and becoming a listed
operating company deploying funds into the Lloyds of London
insurance market (the "Proposed Transaction"). On 23 June 2023, the
Company called an Extraordinary General Meeting to extend the
Business Combination Deadline to 30 December 2023, for the purpose
of implementing the Proposed Transaction, which was approved by
shareholders at the Extraordinary General Meeting held on 10 July
2023.
These Financial Statements have not been audited or reviewed by
our auditors.
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, or as otherwise extended with shareholder approval
(the "Business Combination Deadline"). The Company has sufficient
funds to cover operating costs through to the initial deadline. The
costs related to the Company's IPO and working capital requirements
up to the initial Business Combination Deadline were covered by the
proceeds of the issuance of the Sponsor Warrants as part of the
Offering process.
On 23 June 2023, the Company called an Extraordinary General
Meeting to extend the Business Combination Deadline to 30 December
2023, for the purpose of implementing the Proposed Transaction,
which was approved by shareholders at the Extraordinary General
Meeting held on 10 July 2023 (the "Extension").
In relation to the Extension, the Company expects to be able to
secure additional funds for general working capital purposes from
certain related parties of the Company and an announcement will be
made by the Company as and when such arrangements have been entered
into. In addition, to the extent that the Company is unable to
raise additional funds to pay third party adviser costs (and other
costs) related to the implementation of the Business Combination,
the Company expects to structure the costs associated with the
implementation of the Business Combination in such a manner so as
to ensure that such costs are only payable upon the consummation of
the Business Combination or, in the event that a Business
Combination cannot be consummated by the Business Combination
Deadline, upon a winding-up of the Company out of the Escrow
Account ahead of Ordinary Shareholders pursuant to the terms of the
Articles of Association of the Company.
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 fulfil 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
- IFRS 17: Insurance Contracts
- Amendments to IAS 17: Insurance Contracts
- Amendments to IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors
- Amendments to IAS 12: Income Taxes
- Amendments to IAS 1: Presentation of Financial Statements
New and amended standards and interpretations not applied
There are no new and amended standards and interpretations in
issue that are applicable to the Company but are not yet effective
and therefore, have not been adopted by the Company:
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.
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 GBP0.03 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 1 -- Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 -- Inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3 -- Inputs for the asset or liability that are not based 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 30
June 2023:
Level Level
1 2 Level 3 Total
GBP GBP GBP GBP
------------------------ ------- ------- -------- --------
Derivative liabilities - - 266,250 266,250
- - 266,250 266,250
------- -------------------------------- -------- --------
3. Fair value measurement (continued)
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
------- -------------------------------- -------- --------
3.3 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 30 June 2023:
30 June 31 December
2023 2022
GBP GBP
------------------------------------------- --------- -------------
Beginning of period 305,000 -
Proceeds from sponsor warrants and public
warrants - 2,592,500
Net change in unrealised gain on financial
liabilities (38,750) (2,287,500)
------------------------------------------- --------- -------------
End of period 266,250 305,000
------------------------------------------- --------- -------------
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 30 June 2023, and also
provides information about the sensitivity of the year end fair
value measurement to changes in the most significant inputs:
Fair value Valuation
GBP technique Unobservable inputs Range of inputs (weighted average)
------------------------ ---------- --------------- ------------------- ----------------------------------
Derivative liabilities Black-Scholes
- Sponsor warrants 116,250 Pricing Model Expected volatility 4.6%
Risk free rate 4.0%
Derivative liabilities - Public warrants 150,000 Binomial Option Pricing Model Expected volatility 4.6%
Risk free rate 4.0%
-------
266,250
3. Fair value measurement (continued)
3.4 Significant unobservable inputs (continued)
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 1
January 2023 to 30 June 2023.
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 .
30 June 31 December
2023 2022
GBP GBP
-------------------------- ------------- ------------
Restricted cash 158,934,183 155,984,100
Cash and cash equivalents 84,183 203,264
-------------------------- ------------- ------------
Total 159,018,366 156,187,364
-------------------------- ------------- ------------
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 of the Company 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 30 June 2023,
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 30 June 2023, 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 GBP795,092
(31 December 2022: 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 GBP159,018,366 (31
December 2022: 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 30 June 2023, 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 GBP13,312 (31 December 2022: 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 30 June 2023 GBP GBP GBP GBP
----------------------------- --------- ------------- --------- ------------
Assets
Restricted cash - 158,934,183 - 158,934,183
Cash and cash equivalents 84,183 - - 84,183
Trade and other receivables 51,575 - - 51,575
135,758 158,934,183 - 159,069,941
--------- ------------- --------- ------------
Liabilities
Redeemable ordinary shares - 149,870,215 - 149,870,215
Derivative liabilities - 266,250 - 266,250
Due to related party 26,060 - - 26,060
Accrued expense 738,243 - - 738,243
--------- ------------- --------- ------------
764,303 150,136,465 - 150,900,768
--------- ------------- --------- ------------
6. Financial risk management (continued)
(b) Liquidity risk (continued)
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.
(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 30 June
2023 and 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 30 June 2023 and 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
30 June 2023 2022
Ordinary Shares GBP GBP
------------------------------------- ------------ ------------
Opening balance 148,214,847 -
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 1,655,368 2,332,790
149,870,215 148,214,847
------------------------------------- ------------ ------------
Class B ordinary shares ("Sponsor Shares")
During the period ended 31 December 2022, 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 30 June 2023, the Public Warrants have been valued using
an appropriate valuation model at GBP.02 (31 December 2022: GBP.02)
per warrant and are recognised in these Financial Statements at a
fair value of GBP150,000 (31 December 2022: GBP150,000). The
movement in fair value of GBPnil (31 December 2022: 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 30 June 2023, the Sponsor Warrants have been valued at
GBP.03 (31 December 2022: GBP.04) per warrant and are recognised in
these Financial Statements at a total value of GBP116,250 (31
December 2022: GBP155,000). The movement in fair value of GBP38,750
(31 December 2022: 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.
9. Earnings per share
9.1 Basic loss per share
For the period
For the period from
from 1 January 31 August 2021
2023 to 30 (date of incorporation)
June 2023 to 30 June 2022
GBP GBP
------------------------------------- ---------------- --------------------------
Numerator
Net loss for the period and earnings
used in basic loss per share (13,266,829) (8,004,472)
-------------------------------------- ---------------- --------------------------
Total loss for the period used
in basic loss per share (13,266,829) (8,004,472)
-------------------------------------- ---------------- --------------------------
Denominator
Weighted average number of shares
used in basic loss per share 4,312,500 2,856,972
-------------------------------------- ---------------- --------------------------
Total weighted average number of
shares used in basic loss per share 4,312,500 2,856,972
-------------------------------------- ---------------- --------------------------
Basic loss per share (3.08) (2.80)
-------------------------------------- ---------------- --------------------------
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 (continued)
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 30 June
2023 and 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 30 June 2023 and 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 GBPnil (31 December 2022:
GBP158,703) related to expenses paid on behalf of the Company, of
which GBP 26,060 is still outstanding as of 30 June 2023 (31
December 2022: GBP 26,060) .
Administration expense paid to the sponsor entity was GBPnil (31
December 2022: GBP135,000) for the period ended 30 June 2023.
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
30 June 2023 (31 December 2022: nil).
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 or in the event that a Business Combination
cannot be consummated by the Business Combination Deadline, upon a
winding-up of the Company.
.
13. Subsequent events
On 11 July 2023, at an Extraordinary General Meeting of the
Company, the Ordinary Shareholders of the Company approved the
Extension and in connection thereto redeemed 12,383,019 Ordinary
Shares at the redemption amount of GBP10.53 per Ordinary Share
(which, pursuant to the Company's Articles of Association that were
adopted at the Extraordinary General Meeting, was calculated so as
to allow provision for creditors of the Company to be paid out of
the Escrow Account upon a winding-up of the Company). The aggregate
redemption amount was GBP130,393,190. The payment in respect of the
redemption of such Ordinary Shares was made on or around 17 July
2023. Following such redemption payments, GBP30m remained in the
Company's Escrow Account.
On 8 September 2023, the Company announced that London
Innovation Underwriters Limited ("LIU") has separately been
established for the purpose of implementing the Proposed
Transaction. It is intended that the Proposed Transaction will be
implemented through a business combination with LIU, which will
seek to raise a significant sum of equity capital through a listing
of LIU on the Main Market of the London Stock Exchange. A further
announcement will be made by the Company when the business
combination agreement has been entered into. The Company has
incurred, and will continue to incur, significant third party
adviser costs (and other costs) in relation to the implementation
of the Proposed Transaction.
There were no other significant period and events that require
disclosure or adjustment in these financial statements.
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END
IR LLMTTMTTTBAJ
(END) Dow Jones Newswires
September 29, 2023 08:37 ET (12:37 GMT)
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