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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Financials Acquisition Corp | LSE:FINS | London | Ordinary Share | KYG3439B1032 | ORD GBP0.0001 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,000.00 | 950.00 | 1,050.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2022 to Apr 2024
TIDMFINS TIDMFNWR
RNS Number : 4077B
Financials Acquisition Corp
30 September 2022
Financials Acquisition Corp
Unaudited Condensed Interim Financial Report
For the period from 31 August 2021 (date of incorporation) to 30 June 2022
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Page(s)
Interim Board Report 1-3
Unaudited Condensed Statement of Financial Position 4
Unaudited Condensed Statement of Comprehensive Income 5
Unaudited Condensed Statement of Changes in Equity 6
Unaudited Condensed Statement of Cash Flows 7
Notes to the Unaudited Condensed Interim Financial Statements 8-25
Overview
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.
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 8 April 2022, having raised GBP154,500,000 in its initial public offering (the "IPO") of 15,450,000 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").
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 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 of 13 April 2022 (the "Admission Date"), 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.
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 30 June 2022.
The highlight of the period was the Company's admission to trading on the main market of the London Stock Exchange on 8 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)
30 September 2022
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 .
Related Party Transactions
The main related party transactions are outlined in the "Related Party Transactions" section of the Prospectus. Refer to note 9 - Related party transactions for disclosure within the Financial Statements.
Responsibility Statement
The Directors are responsible for preparing the Interim Report and Financial Statements in accordance with applicable laws and regulations. The Board confirms that to the best of their knowledge:
-- The condensed set of Financial Statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';
-- The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and their impact on the condensed Financial Statements and description of principal risks and uncertainties for the remaining six months of the year); and
-- The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions and changes therein); and
-- The condensed set of Financial Statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer as required by DTR 4.2.10R.
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)
30 September 2022
30 June
2022
(unaudited)
Note GBP
------------------------------------------- ---- ------------
Assets
Current assets
Cash and cash equivalents 5 445,958
Restricted cash 5 154,653,051
Trade and other receivables 172,191
Total assets 155,271,200
------------------------------------------- ---- ------------
Liabilities and shareholder's equity
Non-current liabilities
Redeemable ordinary shares 6 146,573,669
Current liabilities
Derivative liabilities 3 3,660,000
Trade and other payables 50,712
Due to related party 9 26,060
Total liabilities 150,310,441
------------------------------------------- ---- ------------
Shareholder's equity
Share capital 6 4,494,614
Other reserves 8,470,617
Accumulated loss (8,004,472)
------------------------------------------- ---- ------------
Total shareholder's equity 4,960,759
------------------------------------------- ---- ------------
Total liabilities and shareholder's equity 155,271,200
------------------------------------------- ---- ------------
The Condensed Interim Financial Statements were approved and authorized for issue by the Board of Directors on 30 September 2022 and signed on its behalf by:
Andrew Rear
Executive Chairman
For the period from 31 August 2021 (date of
incorporation) to 30 June 2022
(unaudited)
Note GBP
------------------------------------------------------- ---- -----------------------------------------------------
Income
Interest income 153,051
Total income 153,051
------------------------------------------------------- ---- -----------------------------------------------------
Expenses
Share-based payment expense 5,913,117
Professional fees 216,688
Listing and regulatory fees 187,580
Directors and officers insurance 56,351
Share issue costs 24,372
Other expenses 303
Total expenses 6,398,411
------------------------------------------------------- ---- -----------------------------------------------------
Net investment loss (6,245,360 )
------------------------------------------------------- ---- -----------------------------------------------------
Net change in unrealised loss on financial
liabilities
Net change in unrealised loss on financial
liabilities (1,067,500)
------------------------------------------------------- ---- -----------------------------------------------------
Net loss on financial liabilities (1,067,500)
------------------------------------------------------- ---- -----------------------------------------------------
Finance expense 6 (691,612)
Total comprehensive loss for the period (8,004,472)
------------------------------------------------------- ---- -----------------------------------------------------
Basic and dilutive net loss per share 8 (2.80)
All items in the above statement derive from continuing operations.
Share capital Other reserves* Accumulated loss Total shareholder's equity
GBP GBP GBP GBP
-------------------------------- --------------- ----------------- ---------------- ---------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
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 6 for further details.
For the period from
31 August 2021 (date of incorporation) to
30 June 2022
(Unaudited)
GBP
-------------------------------------------------------------------- ------------------------------------------
Cash flows from operating activities
Total comprehensive loss for the period (8,004,472)
Adjustments to reconcile net loss for the period to net cash used
in operating activities:
Net change in unrealised loss on financial liabilities 1,067,500
Share-based payment expense 5,913,117
Finance expense 691,612
Changes in:
Trade and other receivables (172,191)
Trade and other payables 50,712
Due to related party 26,060
Net cash used in operating activities (427,662)
---------------------------------------------------------------------- ------------------------------------------
Cash flows from investing activities
Increase in restricted cash (154,653,051)
---------------------------------------------------------------------- ------------------------------------------
Net cash used in investing activities (154,653,051)
---------------------------------------------------------------------- ------------------------------------------
Cash flows from financing activities
Proceeds from sponsor and overfunding shares 4,494,614
Shares forfeited at no consideration (5,691)
Proceeds from Ordinary Shares 145,887,748
Proceeds from issuance of sponsor warrants (including other
reserves) 3,875,000
Proceeds from issuance of public warrants 1,275,000
Net cash generated from financing activities 155,526,671
---------------------------------------------------------------------- ------------------------------------------
Net change in cash and cash equivalents 445,958
Cash and cash equivalents at beginning of the period -
-------------------------------------------------------------------- ------------------------------------------
Cash and cash equivalents at end of the period 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 8 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 (the "Admission Date") , subject to two three-month extension periods under conditions outlined in the Prospectus.
These Financial Statements have not been audited or reviewed by our auditors. As this is the first period prepared, these financial statements do not contain comparative historical information.
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").
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 Condensed Interim Financial Statements have been prepared in accordance with IAS 34 (Interim Financial Reporting). They do not include all of the information required for a complete set of Financial Statements prepared in accordance with IFRS. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company's financial position and performance during the period.
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 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 6.
The Sponsor Entity, the Overfunding Sponsor Entity 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 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
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)
- 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 Profit and Loss over time.
Prepayments
Prepayments are expenses paid in advance that are amortised on a straight-line basis over the period to which they are applicable.
Share issue costs
Share issue cost have been incurred in relation to the issue of the Sponsor Shares, Ordinary Shares and warrants. Where shares are classified as equity, share issue costs are recognised in equity. Ordinary Shares not subject to the Insider 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.
Share-based payments (equity-settled)
The grant of the Sponsor Shares is recognised as equity-settled share-based payments under IFRS 2. Services received in exchange for the grant of any share-based payments are measured by reference to the fair value of the instruments at the grant date, which is determined to be the date of consummation of the Business Combination. Share-based payments are recognised as an expense in the Statement of Comprehensive Income.
2. Principal Accounting Policies (continued)
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)
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. The Company has recognized an expense of GBP6,120,639 for the period in the statement of comprehensive income and recognised the same amount in equity as a share-based payment within other reserves.
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, a 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 GBP0.24 and GBP0.48, 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.
Valuation techniques
The following table summarises the valuation of the Company's financial instruments within the fair value hierarchy levels at 30 June 2022:
Level Level Level
1 2 3 Total
GBP GBP GBP GBP
--------------------------- ------- ------- ---------- ----------
Private equity investments
Derivative instruments - - 3,660,000 3,660,000
- - 3,660,000 3,660,000
------- ----------------------------------- ---------- ----------
Investments whose values are based on quoted market prices in active markets are classified within level 1. As at 30 June 2022, it was the opinion of the board that no financial instruments were categorised at level 1.
Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs would be classified within level 2. As level 2 investments include positions that are not traded in active markets, and/or are subject to transfer restrictions, valuations are discounted to reflect illiquidity and/or non-transferability, which are generally based on available market information. As at 30 June 2022, it was the opinion of the board that no financial instruments were categorised at level 2.
3. Fair value measurement (continued)
Investments classified within level 3 have significant unobservable inputs as they trade infrequently. As observable prices are not available for the investments, the Investment Manager uses valuation techniques to derive their fair value. As at 30 June 2022, it was the opinion of the Board that the both sponsor and public warrants should be categorised as level 3.
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.
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 2022:
30 June
2022
GBP
------------------------------------------- ----------
Beginning of period -
Warrant proceeds from sponsor and public
warrants 2,592,500
Net change in unrealised loss on financial
liabilities 1,067,500
-------------------------------------------- ----------
End of period 3,660,000
-------------------------------------------- ----------
There were no transfers between levels for the period.
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 2021, 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)
------------------------ ---------- ----------------- ------------------- -----------------
Binomial Pricing
Derivative liabilities 3,660,000 Model Expected volatility 2.66%
Risk free rate 2.45%
The fair value of sponsor warrant liabilities are determined by the Board upon consultation with a valuation specialist with reference to significant unobservable inputs. The valuation specialist has used the Binomial Option Pricing Model, 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 30 June 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 .
30 June
2022
GBP
-------------------------- ------------
Restricted cash 154,653,051
Cash and cash equivalents 445,958
--------------------------- ------------
Total 155,099,009
--------------------------- ------------
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. Capital instruments
The following summarises the issued share capital as at 30 June 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 8 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 2022, the 450,000 Ordinary shares issued to the Overfunding Sponsor Entity 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 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.
6. Capital instruments (continued)
Class A ordinary shares ("Ordinary Shares") (continued)
Holders of 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.
30 June 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 691,612
146,573,669
------------------------------------- -------------
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 Insider 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.
6. Capital instruments (continued)
Public Warrants
On 8 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.
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 settlement date of 13 April 2022.
As at 30 June 2022, the Public Warrants have been valued using an appropriate valuation model at GBP0.24 per warrant and are recognised in these Financial Statements at a fair value of GBP1,800,000. The movement in fair value of GBP525,000 from the settlement 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 settlement 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 2022, the Sponsor Warrants have been valued at GBP0.13 per warrant and are recognised in these Financial Statements at a total value of GBP1,860,000. The movement in fair value of GBP542,500 between the settlement 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.
7. Dividends
No dividends were paid or declared by the Company during the period ended 30 June 2022.
8. Earnings per share
8.1 Basic loss per share
For the period
from
31 August 2021
(date of incorporation)
to 30 June 2022
GBP
---------------------------------------- --------------------------
Numerator
Net loss for the period and earnings
used in basic loss per share (8,004,472)
------------------------------------------ --------------------------
Total loss for the period used in basic
loss per share (8,004,472)
------------------------------------------ --------------------------
Denominator
Weighted average number of shares used
in basic loss per share 2,856,972
------------------------------------------ --------------------------
Total weighted average number of shares
used in basic loss per share 2,856,972
------------------------------------------ --------------------------
Basic loss per share (2.80)
------------------------------------------ --------------------------
The weighted average number of Ordinary Shares is determined by reference to the 19,210 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.
8.2 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 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 2022.
9. 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 GBP184,673 related to expenses paid on behalf of the Company, of which GBP26,060 is still outstanding as of 30 June 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.
10. 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 30 June 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 2022.
11. 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.
12. Subsequent events
There were no significant period and events that require disclosure or adjustment in these financial statements.
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END
IR WPUGGBUPPGCU
(END) Dow Jones Newswires
September 30, 2022 10:13 ET (14:13 GMT)
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