TIDMEVRA
RNS Number : 9288L
EverArc Holdings Limited
15 January 2021
EVERARC HOLDINGS LIMITED
ANNUAL FINANCIAL REPORT
EverArc Holdings Limited has today published its report and
audited financial statements from incorporation on 8 November 2019
to 31 October 2020 ("Annual Financial Report"). The Annual
Financial Report will shortly be available at:
www.everarcholdings.com .
In compliance with Listing Rule 14.3.6, a copy of the Annual
Financial Report will also shortly be submitted to the National
Storage Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Co-Chairmens' Statement
Fellow Shareholders,
2020 was a productive inaugural year for EverArc.
Despite the turbulent market backdrop, we remained focused on
our goal of acquiring an exceptionally high-quality business to
provide our shareholders private equity-like returns with the
liquidity of a public market.
We evaluate every acquisition opportunity relative to our target
economic criteria, which we believe best position a business to
consistently generate our long-term target returns across economic
and market cycles:
-- predictable and growing revenue streams;
-- secular growth tailwinds;
-- products or services that account for critical but small portions of larger value streams;
-- significant free cash flow generation with high returns on tangible capital; and
-- businesses in fragmented industries with potential for opportunistic consolidation.
The events of 2020 reinforced our focus on these target
criteria.
While the private transaction market was effectively closed for
a portion of 2020, and remains tepid in various sectors including
Industrials and (to a lesser extent) Services, our origination and
diligence activities ran at full throttle throughout the year.
A handful of potentially actionable opportunities proved
sufficiently compelling to merit significant diligence and careful
consideration. These were excellent businesses which, we believe,
could have potentially met our target returns. These businesses,
however, fell short of the high bar we set for our platform
acquisition, and we decided to keep the bat on our shoulder and
wait for an even better pitch.
We are comfortable that we will see this pitch. We have spent
much of 2020 proactively deepening our knowledge of, and
relationships with, some of the most compelling businesses we have
come across in our collective careers. We also got to know some new
exceptional businesses that closely match our target economic
criteria.
While the current environment is uniquely dynamic and
unpredictable around transaction timing, we enter 2021 with a
robust and growing list of what we believe are exceptionally
high-quality businesses that match our target criteria, and that
should meet our long-term target equity returns. We are confident
that we will acquire such a business in our search window.
In closing, we would like to sincerely thank our founding
shareholders, who we consider our long-term partners. We will
remain patient, disciplined, and hard at work to reward your faith
in us.
W.Nicholas Howley
William Nicholas Thorndike, Jr
Co-Chairmen
14 January 2021
Report of the Directors
The financial statements on pages 18 to 32 were approved by the
Board of Directors on 2021 and signed on their behalf by William
Nicholas Thorndike, Jr.
The Directors have pleasure in submitting their Report and the
audited financial statements for the period ended 31 October
2020.
Status and activities
The Company was incorporated with limited liability under the
laws of the British Virgin Islands under the BVI Companies Act on 8
November 2019. The address of the Company's registered office is
Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin
Islands. The Company's Ordinary Shares and Warrants were admitted
for trading on the Main Market of the London Stock Exchange on 17
December 2019, after raising gross proceeds of US$340,000,000 on
its initial public offering ("IPO") from the placing of Ordinary
Shares (with matching Warrants) at a placing price of US$10 per
Ordinary Share. Further gross proceeds of US$71,400,000 were raised
in January 2020 from a placing of Ordinary Shares at a placing
price of US$10.50 per Ordinary Share.
As set out in the Prospectus dated 12 December 2019 and
published by the Company in connection with the IPO (the
"Prospectus"), the Company was formed to undertake an acquisition
of a target company or business ("Acquisition"). There is no
specific expected target value for the Acquisition and the Company
expects that any funds not used for the Acquisition will be used
for future acquisitions, internal or external growth and expansion,
purchase of outstanding debt and working capital in relation to the
acquired company or business. Following completion of the
Acquisition, the objective of the Company is expected to be to
operate the acquired business and implement an operating strategy
with a view to generating value for shareholders through
operational improvements as well as potentially through additional
complementary acquisitions following the Acquisition. Following the
Acquisition, the Company intends to seek re-admission of the
enlarged group to such listing venue as is appropriate for it based
on the industry, geographic focus and track record of the company
or business acquired, subject to fulfilling the relevant
eligibility criteria at the time.
The Company expects to acquire a controlling interest in a
target company or business. The Company may consider acquiring a
controlling interest constituting less than the whole voting
control or less than the entire equity interest in a target company
or business if such opportunity is attractive; provided, the
Company (or its successor) would acquire a sufficient portion of
the target entity such that it could consolidate the operations of
such entity for applicable financial reporting purposes. In
connection with an Acquisition, the Company may issue additional
Ordinary Shares which could result in the Company's then existing
Shareholders owning a minority interest in the Company following
the Acquisition.
The Company's efforts in identifying a prospective target
company or business are not limited to a particular industry or
geographic region. However, given the experience of the Company's
founders, William N. Thorndike, Jr., W. Nicholas Howley, Tracy
Britt Cool, Vivek Raj and Haitham Khouri (the "Founders"), the
Company expects to focus on acquiring an operating company or
business with a significant proportion of its activities in North
America. The Company may seek to raise further capital for the
purposes of the Acquisition.
Unless required by applicable law or other regulatory process,
no Shareholder approval will be sought by the Company in relation
to the Acquisition. The Acquisition, as well as the associated
governance and capital structure decisions, will be subject to
Board approval by an Acquisition Approval Majority (as defined in
the Prospectus).
The determination of the Company's post-Acquisition strategy and
whether any of the Directors will remain with the combined company
and on what terms will be made at or prior to the time of the
Acquisition.
In the event that an Acquisition has not been announced by the
third anniversary of Admission, the Board will recommend to
Shareholders either that the Company be wound up (in order to
return capital to Shareholders and holders of the Founder Shares,
to the extent assets are available) or that the Company continue to
pursue the Acquisition for a further 12 months from the third
anniversary of Admission. The Board's recommendation will then be
put to a Shareholder vote (from which the Directors and the
Founders will abstain).
The Company has identified the following core economic
attributes that it believes are important in evaluating potential
acquisition opportunities. These are closely aligned with the
economic attributes that members of the Founder team have
collectively and consistently targeted in businesses that they have
managed, acquired or invested in previously. The Company will
generally use these attributes in evaluating acquisition
opportunities. However, it may also decide to enter into the
Acquisition of a target company or business that does not have
these attributes.
These core economic attributes include:
-- predictable and growing revenue streams;
-- products or services that account for critical but small portions of larger value streams;
-- significant free cash flow generation with high returns on tangible capital;
-- secular growth tailwinds; and
-- businesses in fragmented industries with potential for opportunistic consolidation.
Results and dividends
For the period ended 31 October 2020, the Company's loss was
US$947,832.
It is the Company's policy that no dividends will be declared
until after the Acquisition.
The Company's current intention is to retain any earnings for
use in its business operations, and the Company does not anticipate
declaring any dividends in the foreseeable future. The Company will
only pay dividends to the extent that to do so is in accordance
with all applicable laws.
Share capital
General:
As at 31 October 2020, the Company had in issue 40,832,500
Ordinary Shares and 100 Founder Shares.
34,030,000 Ordinary Shares were issued on 17 December 2019 at
US$10 per share (34,000,000 were issued in the IPO and a further
30,000 were issued to the Non-Founder Directors in conjunction with
the IPO). Each Ordinary Share was issued with a matching Warrant as
described below. A further 6,800,000 Ordinary Shares (with no
matching Warrants) were issued on 15 January 2020 at US$10.50 per
share. On 15 April 2020, 2,500 Ordinary Shares were issued on the
exercise of 10,000 Warrants held by an investor at an exercise
price of US$12 per share. There are no Ordinary Shares held in
treasury.
100 Founder Shares were issued to the EverArc Founders LLC (the
Founder Entity") on 14 November 2019 at US$10 per share.
Founder Shares:
Details of the Founder Shares can be found in note 11 to the
financial statements, and are incorporated into this Report by
reference.
Voting rights:
Holders of Ordinary Shares have the right to receive notice of
and to attend and vote at any meetings of members except in
relation to any Resolution of Members that the Directors, in their
absolute discretion determine is necessary or desirable: (i) in
connection with a merger or consolidation in relation to, in
connection with or resulting from the Acquisition (including at any
time after the Acquisition has been made); or (ii) to approve
matters in relation to, in connection with or resulting from the
Acquisition (whether before or after the Acquisition has been
made). Each holder of shares being present in person or by proxy at
a meeting will, upon a show of hands, have one vote and upon a poll
each such holder of shares present in person or by proxy will have
one vote for each share held by him.
In the case of joint holders of a share, if two or more persons
hold shares jointly each of them may be present in person or by
proxy at a meeting of members and may speak as a member, and if one
or more joint holders are present at a meeting of persons, in
person or by proxy, they must vote as one.
Restrictions on voting:
No member shall, if the Directors so determine, be entitled in
respect of any share held by him to attend or vote (either
personally or by proxy) at any meeting of members or separate class
meeting of the Company or to exercise any other right conferred by
membership in relation to any such meeting if he or any other
person appearing to be interested in such shares has failed to
comply with a notice requiring the disclosure of shareholder
interests and given in accordance with the Company's articles of
association (the "Articles") within 14 calendar days, in a case
where the shares in question represent at least 0.25% of their
class, or within seven days, in any other case, from the date of
such notice. These restrictions will continue until the information
required by the notice is supplied to the Company or until the
shares in question are transferred or sold in circumstances
specified for this purpose in the Articles.
Transfer of shares:
Subject to the terms of the Articles, any member may transfer
all or any of his certificated shares by an instrument of transfer
in any usual form or in any other form which the Directors may
approve. The Directors may accept such evidence of title of the
transfer of shares (or interests in shares) held in uncertificated
form (including in the form of depositary interests or similar
interests, instruments or securities) as they shall in their
discretion determine. The Directors may permit such shares or
interests in shares held in uncertificated form to be transferred
by means of a relevant system of holding and transferring shares
(or interests in shares) in uncertificated form.
No transfer of shares will be registered if, in the reasonable
determination of the Directors, the transferee is or may be a
Prohibited Person (as defined in the Articles), or is or may be
holding such shares on behalf of a beneficial owner who is or may
be a Prohibited Person. The Directors shall have power to implement
and/or approve any arrangements they may, in their absolute
discretion, think fit in relation to the evidencing of title to and
transfer of interests in shares in the Company in uncertificated
form (including in the form of depositary interests or similar
interests, instruments or securities).
Rights to appoint and remove Directors
Subject to the BVI Companies Act and the Articles, the Directors
shall have power at any time, and from time to time, without
sanction of the members, to appoint any person to be a Director,
either to fill a casual vacancy or as an additional Director.
Subject to the BVI Companies Act and the Articles, the members may
by a Resolution of Members appoint any person as a Director and
remove any person from office as a Director.
The Directors may from time to time appoint one or more of their
body to the office of managing director or to any other office for
such term and at such remuneration and upon such terms as they
determine.
Powers of the Directors
Subject to the provisions of the BVI Companies Act and the
Articles, the business and affairs of the Company shall be managed
by, or under the direction or supervision of, the Directors. The
Directors have all the powers necessary for managing, and for
directing and supervising, the business and affairs of the Company.
The Directors may exercise all the powers of the Company to borrow
or raise money (including the power to borrow for the purpose of
redeeming shares) and secure any debt or obligation of or binding
on the Company in any manner including by the issue of debentures
(perpetual or otherwise) and to secure the repayment of any money
borrowed, raised, or owing by mortgage, charge, pledge, or lien
upon the whole or any part of the Company's undertaking property or
assets (whether present or future) and also by a similar mortgage,
charge, pledge, or lien to secure and guarantee the performance of
any obligation or liability undertaken by the Company or any third
party.
Directors and their interests
The Directors of the Company who served during the period and
subsequent to the date of this Report are:
Name Position Date of appointment
W.Nicholas Howley Founder and Non-Executive 13 November 2019
Director
---------------------------- --------------------
Tracy Britt Cool Founder and Non-Executive 14 November 2019
Director
---------------------------- --------------------
William Nicholas
Thorndike, Jr Founder and Non-Executive 14 November 2019
Director
---------------------------- --------------------
Michael Tobin Independent Non-Executive 4 December 2019
OBE Director
---------------------------- --------------------
Bram Belzberg Independent Non-Executive 4 December 2019
Director
---------------------------- --------------------
Adam Luke Hall Independent Non-Executive 4 December 2019
Director
---------------------------- --------------------
John Staer Independent Non-Executive 4 December 2019
Director
---------------------------- --------------------
During the period the Company issued the following shares and
warrants to Directors of the Company:
Ordinary Percentage Warrants
Shares of Ordinary
Shares in
issue
Number % Number
W. Nicholas Howley 595,239 1.46 500,000
William Nicholas Thorndike,
Jr 500,000 1.22 500,000
Tracy Britt Cool 30,000 0.07 30,000
Michael Tobin OBE 7,500 0.02 7,500
Bram Belzberg 7,500 0.02 7,500
Adam Luke Hall 7,500 0.02 7,500
John Staer 7,500 0.02 7,500
Directors' remuneration
The fees to directors during the period to 31 October 2020 were
as follows:
US$
Michael Tobin OBE 66,781
Bram Belzberg 66,781
Adam Luke Hall 66,781
John Staer 66,781
Each of the Directors has entered into a Director's Letter of
Appointment with the Company. Under the Independent Non-Founder
Directors' letters of appointment, they are each entitled to a fee
of US$75,000 per annum, payable quarterly in arrears. Prior to an
Acquisition the Founder Directors will not be entitled to fees or
other remuneration.
The Non-Founder Directors opted to have their first year's
annual remuneration settled by the issue of 7,500 Ordinary Shares
each at US$10 per Ordinary Share.
Substantial shareholdings
As at 14 January 2021 (the latest practicable date prior to the
publication of this Report), the following had disclosed an
interest in the issued Ordinary Share capital of the Company (being
5% or more of the voting rights in the Company) in accordance with
the requirements of the Disclosure and Transparency Rules (the
"DTRs"):
Number Date of disclosure Notified
of Ordinary to Company (1) percentage
Shareholder Shares of voting
(1) rights
(1)
Senator Investment Group 24 December
LP 3,000,000 2019 8.82%
------------- ------------------- ------------
Select Equity Group, L.P. 5,500,000 21 January 2020 13.47%
------------- ------------------- ------------
Third Point LLC 4,600,000 6 March 2020 11.27%
------------- ------------------- ------------
(1) Since the date of disclosures to the Company, the interest
of any person listed above in Ordinary Shares may have increased or
decreased without any obligation on the relevant person to make
further notification to the Company pursuant to the DTRs.
Change of control
The Company is not party to any significant contracts that are
subject to change of control provisions in the event of a takeover
bid. There are no agreements between the Company and its Directors
or employees providing compensation for loss of office or
employment that occurs because of a takeover bid.
The Directors have provided the auditors with full access to all
of the books and records of the Company.
Corporate Governance Statement
The Company is a BVI registered company with a standard listing
on the London Stock Exchange. For as long as the Company has a
standard listing it is not required to comply or explain
non-compliance with the UK Corporate Governance Code (the "Code")
issued by the Financial Reporting Council ("FRC") in July 2018.
However, the Company is firmly committed to high standards of
corporate governance and maintaining a sound framework through
which the strategy and objectives of the Company are set and the
means of attaining these objectives and monitoring performance are
determined. At Admission, the Company therefore stated its
intention to voluntarily comply with the Code. The Code is
available on the FRC's website, www.frc.co.uk . The Company also
complies with the corporate governance regime applicable to the
Company pursuant to the laws of the British Virgin Islands.
As at the date of this Report, the Company is in compliance with
the Code with the exception of the following:
-- Given the wholly non-executive composition of the Board,
certain provisions of the Code (in particular the provisions
relating to the division of responsibilities between the Chairman
and chief executive and executive compensation) are considered by
the Board to be inapplicable to the Company.
-- The Company's Co-Chairmen, Mr. Thorndike and Mr. Howley, are
not considered to be independent and therefore the Company does not
comply with the requirements of the U.K. Corporate Governance Code
in relation to the requirement for the chairman to be independent
on appointment. The Board considers that this is reflective of
their importance to the Company at this stage and is not
detrimental to the Board's overall effectiveness or role in
promoting the long-term sustainable success of the Company. The
Board is comprised of a majority of independent directors and the
Acquisition will require the approval of a majority of those
Directors which the Board considers independent for the purposes of
the U.K. Corporate Governance Code. The Company's senior
independent director, currently Mr. Tobin, will also be available
for regular engagement with shareholders in order to understand
their views on governance and performance.
-- The Code also recommends the submission of all directors for
re-election at annual intervals. No Director will be required to
submit for re-election until the first annual general meeting of
the Company following the Company's first acquisition.
-- Until the Acquisition is made, the Company will not have
nomination, remuneration, audit or risk committees. The Board as a
whole will instead review its size, structure and composition, the
scale and structure of the Directors' fees (taking into account the
interests of Shareholders and the performance of the Company), take
responsibility for the appointment of auditors and payment of their
audit fee, monitor and review the integrity of the Company's
financial statements and take responsibility for any formal
announcements on the Company's financial performance. Following the
Acquisition, the Board intends to put in place nomination,
remuneration, audit and risk committees.
-- The Code recommends the inclusion of a viability statement in
addition to the statement of going concern. This is not considered
by the Board to be applicable given the Company's activities prior
to an acquisition.
Share dealing
As at the date of this Report, the Board has voluntarily adopted
a share dealing code which is consistent with the rules of the
Market Abuse Regulation 596/2014 (the "Market Abuse Regulation").
The Board is responsible for taking all proper and reasonable steps
to ensure compliance with the Market Abuse Regulation by the
Directors.
Relations with Shareholders
The Directors are available for communication with shareholders
and all shareholders will have the opportunity, and are encouraged,
to attend and vote at any future Annual General Meeting of the
Company, the first of which will take place within 18 months
following completion of the Acquisition, during which the Board
will be available to discuss issues affecting the Company.
Statement of going concern
The Directors, having considered the financial position of the
Company for a period of at least 12 months from the date of
approval of the financial statements, have a reasonable expectation
and belief that the Company has adequate resources to continue in
operational existence for the foreseeable future given the
available cash and forecast cash outflows. Thus, the financial
statements are prepared on a going concern basis.
Internal control
The Board is responsible for determining the nature and extent
of the significant risks it is willing to take in achieving its
strategic objectives. The Board maintains sound risk management and
internal control systems. The Board has reviewed the Company's risk
management and control systems and believes that the controls are
satisfactory given the nature and size of the Company. Controls
will be reviewed following completion of its first acquisition.
Financial Risk Profile
The Company's financial instruments comprise mainly of cash and
cash equivalents, and various items such as payables and
receivables that arise directly from the Company's operations. The
Board has conducted a robust assessment of the Company's emerging
and principal risks including those that would threaten its
business model, future performance, solvency or liquidity. Details
of the risks relevant to the Company are included in the notes to
the financial statements and on page 11 of this report.
Management Report
For the purposes of compliance with DTR 4.1.5R(2), DTR 4.1.8R
and DTR4.1.11R, the required content of the "Management Report" can
be found in this Report of Directors and the Principal Risks and
Uncertainties section on page 11 of this report.
Directors' Responsibilities
The Directors are responsible for preparing the Report and the
financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the company financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and its interpretations as issued by the
International Accounting Standards Board ("IASB"). Under company
law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the company and of the profit or loss of the company
for that year. In preparing these financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs and its interpretations as
issued by the IASB have been followed, subject to any material
departures disclosed and explained in the financial statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are 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 enable them to prepare the
financial statements. They are also responsible for safeguarding
the assets of the Company and hence taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the company's website. A copy of the financial statements is
placed on our website www.everarcholdings.com. Legislation in the
BVI governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors consider that the annual report and accounts,
taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the company's
performance, business model and strategy.
Each of the Directors, who are in office and whose names and
functions are listed in Corporate information, confirms that, to
the best of his knowledge:
-- the Company financial statements, which have been prepared in accordance with IFRSs and its interpretations as issued by the IASB, give a true and fair view of the assets, liabilities, financial position and loss of the Company; and
-- the management report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces.
Disclosure of information to Auditors
Each of the persons who is a Director at the date of approval of
this Report confirms that:
-- so far as the director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- each director has taken all the steps that he/she ought to
have taken as a director in order to make himself/herself aware of
any relevant audit information and to establish that the Company's
auditors are aware of that information.
Directors' indemnities
As at the date of this Report, indemnities granted by the
Company to the Directors are in force to the extent permitted under
BVI law. The Company also maintains Directors' and Officers'
liability insurance, the level of which is reviewed annually.
By order of the Board:
William NicholasThorndike, Jr
Director
14 January 2021
Principal Risks and Uncertainties
The Board has identified the following principal risks and
uncertainties facing the Company which remain unchanged from the
principal risks and uncertainties set out in the Prospectus. The
risks referred to below do not purport to be exhaustive and are not
set out in any particular order of priority. Additional risks and
uncertainties not currently known to the Board or which the Board
currently deems immaterial may also have an adverse effect on the
Company's business. In particular, the Company's performance may be
affected by changes in the market and/or economic conditions and in
legal, regulatory and tax requirements.
Key information on the key risks that are specific to the
issuer
Business Strategy
-- The Company is a newly formed entity with no operating
history and has not yet identified any potential target company or
business for the Acquisition and may be unable to complete the
Acquisition in a timely manner if at all.
-- The Company may acquire either less than whole voting control
of, or less than a controlling equity interest in, a target, which
may limit its operational strategies.
-- The Company may be unable to complete the Acquisition in a
timely manner or at all or to fund the operations of the target
business if it does not obtain additional funding.
The Company's relationship with the Directors, the Founders and
the Founder Entity and conflicts of interest
-- The Company is dependent on the Founders to identify
potential acquisition opportunities and to execute the Acquisition.
The loss of the services of any of them could materially adversely
affect it.
-- The Founders and Directors are currently affiliated and may
in the future become affiliated with entities engaged in business
activities similar to those intended to be conducted by the Company
and may have conflicts of interest in allocating their time and
business opportunities.
-- The Directors and the Founders are involved in other
businesses, which could have a negative impact on the Company's
ability to complete the Acquisition.
-- The Company may be required to issue additional Ordinary
Shares pursuant to the terms of the Founder Advisory Agreement,
which would dilute the value of existing Shareholders Ordinary
Shares.
Taxation
-- The Company may be a "passive foreign investment company" for
US federal income tax purposes and adverse tax consequences could
apply to US investors.
Key information on the key risks that are specific to the
securities
The Ordinary Shares and Warrants
-- The Standard Listing of the Ordinary Shares and Warrants will
not afford Shareholders the opportunity to vote to approve the
Acquisition.
-- The Warrants can only be exercised during the Subscription
Period and to the extent a Warrantholder has not exercised its
Warrants before the end of the Subscription Period, those Warrants
will lapse, resulting in the loss of a holder's entire investment
in those Warrants.
-- The Warrants are subject to mandatory redemption and
therefore the Company may redeem a Warrantholder's unexpired
Warrants prior to their exercise at a time that is disadvantageous
to a Warrantholder, thereby making those Warrants worthless.
-- The issuance of Ordinary Shares pursuant to the exercise of
the Warrants will dilute the value of a Shareholder's Ordinary
Shares.
Statement of Comprehensive Income for the period ended 31
October 2020
For the period
ended 31
October 2020
Note US$
Unrealised gain on investments 26,708
Investment income 1,646,166
Other income 6
Expenses 3 (2,620,712)
________
Operating loss (947,832)
________
Loss and total comprehensive loss for
the period (947,832)
Basic and diluted loss per Ordinary
and Founder share 8 (0.03)
The notes form an integral part of these financial
statements.
Statement of Financial Position as at 31 October 2020
31 October
2020
Note US$
Assets
Current assets
Cash and cash equivalents 19,997
Short-term investments 7 399,986,263
Prepayments and other assets 9 490,051
___________
Total assets 400,496,311
___________
Liabilities
Current liabilities
Payables 10 (87,599)
___________
Total current liabilities (87,599)
___________
Net assets 400,408,712
Equity
Ordinary Share Capital - nominal -
value
Ordinary Share Capital - share premium
and warrants 11 401,356,544
Accumulated losses (947,832)
___________
Total equity 400,408,712
Net asset value per share 8 US$9.80
The notes form an integral part of these financial
statements.
The financial statements were approved and authorised for issue
by the board of directors on 14 January 2021 and signed on its
behalf by:
William Nicholas Thorndike, Jr
Director
Statement of Changes in Equity for the period ended 31 October
2020
Note Ordinary Ordinary (Retained
Share Capital Share Capital losses) Total
- nominal - share
value premium
US$ US$ US$ US$
At inception, 8 November - - - -
2019
Issue of shares 11 - 411,730,000 411,730,000
Issue costs 11 - (10,373,456) - (10,373,456)
Loss and total comprehensive
loss for year - - (947,832) (947,832)
________ _________ _________ _________
Balance as at 31 October
2020 - 401,356,544 (947,832) 400,408,712
________ _________ _________ _________
There is no Other Comprehensive Income during the period.
The notes form an integral part of these financial
statements.
Statement of Cash Flows for the period ended 31 October 2020
For the period
ended 31
October 2020
Note US$
Cash flows from operating activities
Loss and total comprehensive loss
for the year (947,832)
Adjustments for:
Unrealised gain on short-term
investments (26,708)
Movements in working capital:
Increase in debtors and prepayments (490,051)
Increase in payables 87,599
___________
Net cash used in operating activities (1,376,992)
___________
Investing activities
Purchase of short-term investments (1,891,057,881)
Sale of short-term investments 1,491,098,326
___________
Net cash used in investing activities (399,959,555)
___________
Financing activities
Issue of Ordinary Shares and warrants 11 411,730,000
Share issue expenses 11 (10,373,456)
___________
Net cash provided by financing
activities 401,356,544
___________
Increase in cash and cash equivalents 19,997
Cash and cash equivalents at start -
of year
___________
Cash and cash equivalents at end
of year 19,997
The notes form an integral part of these financial
statements.
Notes to the financial statements for the period ended 31
October 2020
1. General information
The Company was incorporated with limited liability under the
laws of the British Virgin Islands under the BVI Companies Act on 8
November 2019. The address of the Company's registered office is
Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin
Islands. The Company's Ordinary Shares and Warrants were admitted
for trading on the Main Market of the London Stock Exchange on 17
December 2019, after raising gross proceeds of US$340,000,000 on
its initial public offering ("IPO") from the placing of Ordinary
Shares (with matching Warrants) at a placing price of US$10 per
Ordinary Share. Further gross proceeds of US$71,400,000 were raised
in January 2020 from a placing of Ordinary Shares at a placing
price of US$10.50 per Ordinary Share.
These financial statements were approved and authorised for
issue in accordance with a resolution of the
Directors on January 2021.
2. Summary of significant accounting policies
The principal accounting policies applied in these financial
statements are set out below.
2.1 Basis of preparation
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
financial assets at fair value through profit or loss and are in
accordance with International Financial Reporting Standards as
adopted by the European Union and its interpretations as issued by
the International Accounting Standards Board ("IASB") and those
parts of the BVI Business Companies Act applicable under IFRS. As
the Company was incorporated on 8 November 2019, there is no
comparative information.
The financial statements and notes thereto are presented in U.S.
dollars, which is the Company's presentational and functional
currency and are rounded to the nearest dollar, except when
otherwise indicated.
Accounting policies have been consistently applied.
There are no new accounting standards adopted which have a
material impact on these financial statements.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires the Directors to exercise judgement in the process of
applying the Company's accounting policies. Changes in assumptions
may have a significant impact on the financial statements in the
period the assumptions changed. The Directors believe that the
underlying assumptions are appropriate and that the Company's
financial statements therefore present the financial position and
results fairly. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed in note
2.13.
2.2 Going concern
The Directors have a reasonable expectation and belief that the
Company has adequate resources to continue in operational existence
for the foreseeable future given the available cash and forecast
cash outflows. Thus, the financial statements are prepared on a
going concern basis.
2.3 Foreign currency translation
Functional and presentation currency
The Company is listed on the Main Market of the London Stock
Exchange, the capital raised in the IPO and the subscription of
Founder Shares is denominated in US dollars and it is intended that
any dividends and distributions to be paid to shareholders are to
be denominated in US dollars. The performance of the Company is
measured and reported to the shareholders in US dollars, which is
the Company's functional currency. The Directors consider the US
dollar as the currency of the primary economic environment in which
the Company operates and the one that most faithfully represents
the economic effects of the underlying transactions, events and
conditions.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign currency assets and liabilities are
translated into the functional currency using the exchange rate
prevailing at the balance sheet date.
Foreign exchange gains and losses arising from translation are
included in the statement of comprehensive income.
2.4 Financial assets at fair value through profit or loss
Classification
The Company classifies its investment in US Treasury Bills as a
financial asset at fair value through profit or loss.
Financial assets classified at fair value through profit or loss
are financial instruments that are managed, and their performance
is evaluated on a fair value basis in accordance with the Company's
documented investment strategy.
The Company's policy requires the Directors to evaluate the
information about these financial assets on a fair value basis
together with other related financial information. Assets in this
category are classified as current assets if they are expected to
be realised within 12 months of the balance sheet date. Those not
expected to be realised within 12 months of the balance sheet date
will be classified as non-current.
Recognition, derecognition and measurement
Regular purchases and sales of investments are recognised on the
trade date - the date on which the Company commits to purchase or
sell the investment. Financial assets at fair value through profit
or loss are initially recognised at fair value. Transaction costs
are expensed as incurred in the statement of comprehensive income.
Financial assets are derecognised when the rights to receive cash
flows from the investments have expired or the Company has
transferred substantially all risks and rewards of ownership.
Subsequent to initial recognition, all financial assets at fair
value through profit or loss are measured at fair value. Gains and
losses arising from changes in the fair value of the 'financial
assets at fair value through profit or loss' category are presented
in the statement of comprehensive loss within net changes in fair
value of financial assets at fair value through profit or loss in
the period in which they arise.
Dividend income or distributions of a revenue nature from
financial assets at fair value through profit or loss are
recognised in the statement of comprehensive loss within dividend
income when the Company's right to receive payments is
established.
2.5 Offsetting financial instruments
Financial instruments are offset and the net amount reported in
the balance sheet only when there is legally enforceable right to
offset the recognised amounts and there is an intention to settle
on a net basis, or realise the asset and settle the liability
simultaneously.
2.6 Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits,
other short-term highly liquid investments with original maturities
of three months or less, and bank overdrafts.
2.7 Payables and accrued expenses
Payables and accrued expenses are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest method.
2.8 New accounting standards
This is the first full year set of financial statements prepared
by the Company. The Company applied all applicable standards and
applicable interpretations published by the IASB for the period
ended 31 October 2020. The Company did not adopt any standard or
interpretation published by the IASB for which the mandatory
application date is on or after 1 January 2020.
Based on the Company's existing activity, there are no new
interpretations, amendments or full standards that have been issued
but not effective or adopted for the period ended 31 October 2020
that will have a material impact on the Company.
2.9 Share-based payments
Directors' remuneration settled by the issue of Ordinary Shares
is recognised in the statement of comprehensive income based on the
issue price over the period of service to which the issue
relates,
2.10 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors as it is
the body that makes strategic decisions. The Directors are of the
opinion that there is only a single operational segment. As a
result no segment information has been provided as the Company only
accumulates its funds raised for investment in US Treasury Bills
and liquidity funds.
2.11 Share capital
Founder Shares, Ordinary Shares, and Warrants are classified as
equity. Incremental costs directly attributable to the issue of new
ordinary shares are shown in equity as a deduction, net of tax,
from the proceeds. Consideration in excess of the par value and the
fair value of the warrants is included in share premium and
warrants.
2.12 Auditor remuneration
During the period ended 31 October 2020, the Company obtained
the following services from the independent auditors:
Fees payable to the Company's auditor for the audit of the
Company's financial statements for the period ended 31 October 2020
- US$77,599
Fees payable to the Company's auditor for review of the interim
financial information - US$ 18,969
Fees payable to the Company's auditor for reporting accountant
work - US$ 147,770
2.13 Critical accounting judgements and key sources of estimation uncertainty
Management have considered the terms of the Founders Agreement
and concluded that, due to the terms of the agreement, particularly
the fact that the Company has the ability to decide whether to
accept an acquisition presented under the Agreement and there is no
penalty for the advisors specified in the contract in the event of
no work being performed, the substance of the service provided is
the Acquisition. As no Acquisition has occurred, management have
concluded that the services under the Agreement have not yet been
performed and no share based payment charge is therefore
recognised.
3. Expenses
2020
US$
Listing expenses 412,921
Legal and professional fees 1,206,416
Insurance 408,029
Directors' remuneration* 267,123
Administration fees 97,539
Audit fee 77,599
General expenses 151,085
________
2,620,712
* The Non-Founder Directors opted to have their first year's
annual remuneration settled by the issue of 7,500 Ordinary Shares
each at US$10 per Ordinary Share. The Directors' remuneration
stated above is the value of the Ordinary Shares at issue pro-rated
for the period of service.
4. Taxation
The Company is not subject to income tax or corporation tax in
the British Virgin Islands.
5. Fair value
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 determining fair
value, the Company may use various methods including market, income
and cost approaches.
Based on these approaches, the Company often utilises certain
assumptions that market participants would use in pricing the asset
or liability, including assumptions about risk and the risks
inherent in the inputs to the valuation technique. These inputs can
be readily observable, market corroborated, or generally
unobservable inputs. The Company utilises valuation techniques that
maximise the use of observable inputs and minimise the use of
unobservable inputs. Based on the observability of the inputs used
in the valuation techniques the Company is required to provide the
following information according to the fair value hierarchy. The
fair value hierarchy ranks the quality and reliability of the
information used to determine fair values.
Financial assets and liabilities carried at fair value will be
classified and disclosed in one of the following three
categories:
Level 1 - Quoted prices for identical assets and liabilities
traded in active exchange markets, such as the New York Stock
Exchange.
Level 2 - Observable inputs other than Level 1 including quoted
prices for similar assets or liabilities, quoted prices in less
active markets, or other observable inputs that can be corroborated
by observable market data. Level 2 also includes derivative
contracts whose value is determined using a pricing model with
observable market inputs or can be derived principally from or
corroborated by observable market data.
Level 3 - Unobservable inputs supported by little or no market
activity for financial instruments whose value is determined using
pricing models, discounted cash flow methodologies, or similar
techniques, as well as instruments for which the determination of
fair value requires significant management judgment or estimation;
also includes observable inputs for nonbinding single dealer quotes
not corroborated by observable market data.
The Company has various processes and controls in place to
ensure that fair value is reasonably estimated. A model validation
policy governs the use and control of valuation models used to
estimate fair value. The Company performs due diligence procedures
over third-party pricing service providers in order to support
their use in the valuation process. Where market information is not
available to support internal valuations, independent reviews of
the valuations are performed and any material exposures are
escalated through a management review process.
While the Company believes its valuation methods are appropriate
and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain
financial instruments could result in a different estimate of fair
value at the reporting date.
As at 31 October 2020 financial assets at fair value through
profit or loss of US$399,986,263 were categorised as level 2
securities. There were no transfers between levels during the
year.
6. Founder Advisory Agreement
The Company has entered into the Founder Advisory Agreement with
EverArc Founders LLC (the "Founder Entity"), which is owned and
operated by the Founders; it is intended to have the effect of
incentivising the Founders to achieve the Company's objectives. The
Founder Advisory Agreement is structured to provide a return linked
to the market value of the Ordinary Shares thus aligning the
interests of the Founders with those of the Company's shareholders
on a long-term basis.
Subject to the terms of the Founder Advisory Agreement, the
Founder Entity will, at the request of the Company: (i) prior to
consummation of the Acquisition, assist with identifying target
opportunities, due diligence, negotiation, documentation and
investor relations with respect to the Acquisition; and (ii)
following the Acquisition, provide strategic and capital allocation
advice and such other services as may from time to time be
agreed.
Commencing from consummation of the Acquisition, and provided
that the Payment Price per Ordinary Share is at least $10, for the
financial year in which the Acquisition completes and for a further
ten full financial years, the Founder Entity will be entitled to
receive the Variable Annual Advisory Amount. In the first Payment
Year in which such amount becomes payable, such amount will be
equal in value to (i) 18 per cent. of the increase in the market
value of one Ordinary Share, being the difference between $10 and
the Payment Price, multiplied by (ii) such number of Ordinary
Shares equal to the Founder Advisory Agreement Calculation
Number.
Thereafter, the Variable Annual Advisory Amount will only become
payable if the Payment Price during any subsequent Payment Year is
greater than the highest Payment Price in any preceding Payment
Year in which an amount was paid in respect of the Founder Advisory
Agreement. Such Variable Annual Advisory Amount will be equal in
value to 18 per cent. of the increase in the Payment Price over the
highest Payment Price in any preceding Payment Year multiplied by
the Founder Advisory Agreement Calculation Number.
The Variable Annual Advisory Amount, if any, will be paid on the
relevant Payment Date by the issue to the Founder Entity of such
number of Ordinary Shares as is equal to the Variable Annual
Advisory Amount to which it is entitled divided by the Payment
Price or partly in cash, at the election of the Founder Entity
provided that at least 50 per cent. of the amount payable is paid
in Ordinary Shares.
In addition, commencing from consummation of the Acquisition,
for the financial year in which the Acquisition completes and for a
further six full financial years, the Founder Entity shall be
entitled to the Fixed Annual Advisory Amount. Such amount will be
equal to such number of Ordinary Shares as is equal to 1.5 per
cent. of the Founder Advisory Agreement Calculation Number payable
on the relevant Payment Date in Ordinary Shares or partly in cash,
at the election of the Founder Entity provided that at least 50 per
cent. of the amount payable is paid in Ordinary Shares. Any cash
element will be calculated using the Payment Price.
The Founders have advised the Company that their intention is to
elect, via the Founder Entity, to receive any amounts due in
respect of either the Fixed Annual Advisory Amount or the Variable
Annual Advisory Amount in Ordinary Shares and for any cash element
to only be such amount as is required to meet any related
taxes.
The amounts used for the purposes of calculating the Variable
Annual Advisory Amount or the Fixed Annual Advisory Amount and the
relevant numbers of Ordinary Shares are subject to adjustment to
reflect any split or reverse split of the Ordinary Shares in issue
after the date of Admission.
Pursuant to the terms of the Founder Advisory Agreement, the
Founder Entity has the right to appoint up to six directors to the
Board.
The Founder Advisory Agreement continues until the end of the
tenth full financial year following the closing of the Acquisition
unless terminated earlier in accordance with its terms. The Founder
Advisory Agreement may be terminated by the Company at any time if
the Founder Entity engages in any criminal conduct or in wilful
misconduct which is harmful to the Company (as determined by a
court of competent jurisdiction in the State of New York). In
addition, the agreement can be terminated at any time following
consummation of the Acquisition (i) by the Founder Entity if the
Company ceases to be traded on the London Stock Exchange, New York
Stock Exchange or NASDAQ; or (ii) by the Founder Entity or the
Company if there is (A) a Sale of the Company or (B) a liquidation
of the Company.
If the Founder Advisory Agreement is terminated under (i) or
(ii)(A), the Company will pay the Founder Entity an amount in cash
equal to:
(a) the Fixed Annual Advisory Amount for the year in which
termination occurs and for each remaining year of the term of the
agreement, in each case at the Payment Price; and
(b) the Variable Annual Advisory Amount that would have been
payable for the year of termination and for each remaining year of
the term of the agreement.
In each case the Payment Price in the year of termination will
be calculated on the basis of the Payment Year ending on the
Trading Day immediately prior to the date of termination, save that
in the event of a Sale of the Company, the Payment Price will be
the price per Ordinary Share paid by the relevant third party. For
each remaining year of the term of the agreement the Payment Price
in each case will increase by 15% each year. No account shall be
taken of any Payment Price in any year preceding the termination
when calculating amounts due on termination.
On the entry into liquidation of the Company, a Variable Annual
Advisory Amount and a Fixed Annual Advisory Amount shall be payable
in respect of a shortened Payment Year which shall end on the
Trading Day immediately prior to the date of commencement of
liquidation.
The Founder Entity must provide the services of at least one
Founder at all times.
If, following the Acquisition, the Company is not the publicly
traded entity (i.e. the Company's parent company or affiliate is
publicly traded), the Company shall cause the rights and
obligations of the Company under the Agreement to be assigned to
and assumed by (on consummation of the Acquisition) such publicly
traded parent company or affiliate.
Fees will be recognised when they become due and the amount can
be calculated with reliability. There are no fees charged or
recognised under the Founder Advisory Agreement in the period.
7. Short-term investments
The Company holds zero coupon US Treasury Bills and investments
in US Treasury Liquidity Funds which at 31 October 2020 had a cost
of US$399,959,555 and a market value of US$399,986,263.
8. Loss per share and net asset value per share
The loss per share calculation for the period ended 31 October
2020 is based on loss for the period of US$(947,832) and the
weighted average number of Ordinary Shares of 36,301,525.
Net asset value per share is based on net assets of
US$400,408,712 divided by the 40,832,500 Ordinary Shares in issue
at 31 October 2020.
The Warrants are considered non-dilutive at 31 October 2020.
9. Prepayments and other assets
2020
US$
Other prepayments 488,064
Investment income receivable 1,987
_________
490,051
10. Payables
2020
US$
Audit fee accrual 77,599
Other payables 10,000
_________
87,599
11. Share capital
The authorised shares of the Company are as follows:
2020
US$
Authorised
Unlimited number of Ordinary Shares of -
no par value
Founder Shares Number
Balance at beginning of period -
Issued during the period 100
_________
Balance at end of period 100
Founder Shares US$
Balance at beginning of period -
Issued during the period 1,000
_________
Balance at end of year 1,000
Ordinary Shares Number
Balance at beginning of period -
Issued during the period 40,832,500
_________
Balance at end of period 40,832,500
Ordinary Share Capital US$
Balance at beginning of period -
Shares issued during the period 411,730,000
__________
Balance at end of period 411,730,000
100 Founder Shares were issued to the Founder Entity on 14
November 2019 at US$10 per share.
34,030,000 Ordinary Shares were issued on 12 December 2019 at
US$10 per share (34,000,000 were issued in the IPO and a further
30,000 were issued to the Non-Founder Directors in conjunction with
the IPO). Each Ordinary Share was issued with a matching Warrant as
described below. A further 6,800,000 Ordinary Shares (with no
matching Warrants) were issued on 15 January 2020 at US$10.50 per
share. On 15 April 2020, 2,500 Ordinary Shares were issued on the
exercise of 10,000 Warrants held by an investor at an exercise
price of US$12 per share.
Issue costs of US$10,373,456 were deducted from the proceeds of
issue.
Ordinary Shares
Ordinary Shares confer upon the holders (in accordance with the
Articles):
(a) Subject to the BVI Companies Act, on a winding-up of the
Company the assets of the Company available for distribution shall
be distributed, provided there are sufficient assets available, to
the holders of Ordinary Shares and Founder Shares pro rata to the
number of such fully paid up shares held by each holder relative to
the total number of issued and fully paid up Ordinary Shares as if
such fully paid up Founder Shares had been converted into Ordinary
Shares immediately prior to the winding up;
(b) the right to receive all amounts available for distribution
and from time to time to be distributed by way of dividend or
otherwise at such time as the Directors shall determine; and
(c) the right to receive notice of, attend and vote as a member
at any meeting of members except in relation to any Resolution of
Members that the Directors, in their absolute discretion (acting in
good faith) determine is: (i) necessary or desirable in connection
with a merger or consolidation in relation to, in connection with
or resulting from the Acquisition (including at any time after the
Acquisition has been made); or (ii) to approve matters in relation
to, in connection with or resulting from the Acquisition (whether
before or after the Acquisition has been made).
Founder Shares
The Founder Shares will automatically convert into Ordinary
Shares on a one for one basis (subject to such adjustments as the
Directors in their absolute discretion determine to be fair and
reasonable in the event of a consolidation or sub-division of the
Ordinary Shares in issue after the date of Admission or otherwise
as determined in accordance with the Articles) immediately
following completion of the Acquisition (or if any such date is not
a Trading Day, the first Trading Day immediately following such
date).
The Founder Shares alone carry the right to vote on any
Resolution of Members required, pursuant to BVI law, to approve any
matter in connection with an Acquisition, or a merger or
consolidation in connection with an Acquisition but otherwise have
no right to receive notice of and to attend and vote at any
meetings of members.
The Founder Shares do not carry any right to participate in any
dividends or other distributions.
Warrants
The Company has issued an aggregate of 34,030,000 Warrants to
the purchasers of Ordinary Shares and the non-Founder Directors in
connection with the IPO. As at 30 April 2020, there were 34,020,000
Warrants in issue. Each Warrant, during the subscription period,
entitles a Warrant holder to subscribe for one-fourth of an
Ordinary Share upon exercise. Warrants will be exercisable in
multiples of four for one Ordinary Share at a price of US$12 per
whole Ordinary Share.
The subscription period commenced on the date of admission (17
December 2019) and ends on the earlier of the third anniversary of
the completion of the Acquisition and such earlier date as
determined by the Warrant Instrument.
The Warrants are also subject to mandatory redemption at US$0.01
per Warrant if at any time the Average Price per Ordinary Share
equals or exceeds US$18.00 for a period of ten consecutive trading
days (subject to any prior adjustment in accordance with the terms
of the Warrant Instrument).
12. Related party and material transactions
During the period the Company issued the following Ordinary
Shares and Warrants to Directors of the Company:
Ordinary Percentage
Shares of Ordinary Warrants
Shares in
issue
2020 2020 2020
Number % Number
W. Nicholas Howley 595,239 1.46 500,000
William Nicholas Thorndike,
Jr 500,000 1.22 500,000
Tracy Britt Cool 30,000 0.07 30,000
Michael Tobin OBE 7,500 0.02 7,500
Bram Belzberg 7,500 0.02 7,500
Adam Luke Hall 7,500 0.02 7,500
John Staer 7,500 0.02 7,500
Directors' remuneration
The fees to directors during the period to 31 October 2020 were
as follows:
2020
US$
Michael Tobin OBE 66,781
Bram Belzberg 66,781
Adam Luke Hall 66,781
John Staer 66,781
The Non-Founder Directors opted to have their first year's
annual remuneration settled by the issue of 7,500 Ordinary Shares
each at US$10 per Ordinary Share. The Directors' remuneration
stated above is the value of the Ordinary Shares at issue pro-rated
for the period of service.
1,500,000 Ordinary Shares and matching Warrants were issued to
Founders on the IPO in December 2019 and a further 95,239 Ordinary
Shares were issued to Mr Howley in January 2020. This includes the
Ordinary Shares held by the Founder Directors as listed above.
In addition, the Founder Entity holds 100 Founder Shares. The
Founder Entity is owned and operated by the Founders, including Mr.
Howley, Mr. Thorndike and Ms. Britt Cool. The Founder Entity
received reimbursements of expenses of US$187,990 of which US$nil
is outstanding at the period end.
The Company incurred total issuance costs of US$10.373 million.
The details of these costs are as follows:
2020
US$
Placement fees 9,578,337
Legal fees 554,316
Other expenses 240,803
________
10,373,456
13. Financial risk management
The Company's policies with regard to financial risk management
are clearly defined and consistently applied. They are a
fundamental part of the Company's long term strategy covering areas
such as foreign exchange risk, interest rate risk, credit risk,
liquidity risk and capital management.
Financial risk management is under the direct supervision of the
Board of Directors which follows policies covering specific areas,
such as foreign exchange risk, interest rate risk, credit risk, use
of derivative and non derivative financial instruments and
investment of excess liquidity.
The Company does not intend to acquire or issue derivative
financial instruments for trading or speculative purposes and has
yet to enter into a derivative transaction.
Currency risk
The majority of the Company's financial cash flows are
denominated in United States Dollars. Currently the Company does
not carry out any significant operations in currencies outside the
above. Foreign exchange risk arises from recognised monetary assets
and liabilities. The Company does not hedge systematically its
foreign exchange risk.
Credit risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Company is exposed to credit risk
from its financing activities, including deposits with banks and
financial institutions. Credit risk from balances with banks and
financial institutions is managed by the Board. Surplus funds are
invested in US treasury bills or such money market fund instruments
as approved by the Non-Founder Directors.
Liquidity risk
The Company monitors liquidity requirements to ensure it has
sufficient cash to meet operational needs while maintaining
sufficient headroom. Such forecasting takes into consideration the
Company's debt financing plans (when applicable), compliance with
internal balance sheet ratio targets and external regulatory or
legal requirements if appropriate.
Cash flow interest rate risk
The Company has no long term borrowings and as such is not
currently exposed to interest rate risk. To mitigate against the
risk of default by one or more of its counterparties, the Company
currently holds its assets in U.S. treasuries. As of 31 October
2020, US$399.99 million was held in U.S. treasury bills. The
Company anticipates that it will continue to hold the bulk of its
assets in U.S. treasury bills until an Acquisition is consummated.
The Board regularly monitors interest rates offered by, and the
credit ratings of, current and potential counterparties, to ensure
that the Company remains in compliance with its stated investment
policy for its cash balances. The Company does not currently use
financial instruments to hedge its interest rate exposure.
Capital risk management
The Company's objectives when managing capital (currently
consisting of share capital and share premium) are to safeguard the
Company's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. In order to maintain or adjust the capital
structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders or issue new
shares.
Corporate information
Directors Legal advisers to the Company
W. Nicholas Howley (appointed (English and US Law)
13 November 2019) Greenberg Traurig, LLP
Tracy Britt Cool (appointed 8th Floor
14 November 2019) The Shard
William Nicholas Thorndike, 32 London Bridge Street
Jr. (appointed 14 November 2019) London
Michael Tobin OBE (appointed SE1 9SG
4 December 2019)
Bram Belzberg (appointed 4 December Legal advisers to the Company
2019) (BVI Law)
Adam Luke Hall (appointed 4 Maples and Calder
December 2019) 200 Aldersgate Street
John Staer (appointed 4 December 11(th) Floor
2019) London
EC1A 4HD
Registered office
Kingston Chambers Depositary
PO Box 173 Computershare Investor Services
Road Town PLC
Tortola The Pavilions
British Virgin Islands Bridgewater Road
Bristol
Administrator and secretary BS 13 8AE
Oak Fund Services (Guernsey)
Limited
Oak House
Hirzel Street
St Peter Port
Guernsey
GY1 2NP
Registrar
Computershare Investor Services
(BVI) Limited
Woodbourne Hall
PO Box 3162
Road Town
Tortola
British Virgin Islands
Independent auditors
Grant Thornton UK LLP
30 Finsbury Square
London
EC2A 1AG
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FR FLFSDLTIELIL
(END) Dow Jones Newswires
January 15, 2021 12:52 ET (17:52 GMT)
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