TIDMJTWO TIDMJTOW
RNS Number : 0118Z
J2 Acquisition Limited
14 May 2019
14 May 2019
J2 ACQUISITION LIMITED (THE "COMPANY")
Report and unaudited financial statements
from 1 September 2018 to 28 February 2019 with comparative
periods
J2 Acquisition Limited (the "Company") has today published its
report and unaudited financial statements from 1 September 2018 to
28 February 2019 with comparative periods ("Interim
Financials").
The Interim Financials will shortly be available at
http://www.j2acquisitionlimited.com.
J2 Acquisition Limited
Report and unaudited financial statements
from 1 September 2018 to 28 February 2019 with comparative
periods
Contents
Chairman's Statement
Report of Directors
Principal Risks and Uncertainties
Statements of Comprehensive Income (Loss)
Statements of Financial Position
Statement of Changes in Equity
Statements of Cash Flows
Notes to the financial statements
Corporate information
Chairman's Statement
It is with pleasure that I present to you, the shareholders, the
report and unaudited financial statements of J2 Acquisition Limited
(the "Company") for the period from 1 September 2018 to 28 February
2019 with comparative periods.
The Company
On 10 October 2017, the Company completed its initial public
offering. The offering raised gross proceeds of US$1.25 billion,
consisting of US$1.21 billion through the placement of ordinary
shares ("Ordinary Shares") with matching warrants ("Warrants") at a
placing price of US$10.00 per Ordinary Share and a further US$40
million through the subscription of 4,000,000 preferred shares
("Founder Preferred Shares") (with Warrants being issued to the
subscriber of Founder Preferred Shares on the basis of one Warrant
per Founder Preferred Share) also at US$10 per Founder Preferred
Share. The Company was admitted to trading with a standard listing
on the main market of the London Stock Exchange on 10 October 2017
("Admission"). As at 28 February 2019, the Company had 121,032,500
Ordinary Shares in issue. The net proceeds from the IPO are easily
accessible when required.
As set out in the Company's prospectus dated 5 October 2017 (the
"Prospectus"), the Company was formed to undertake an acquisition
of a target company or business. 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.
The Board of Directors continues to review a number of
acquisition targets and will remain disciplined in only proceeding
with an acquisition that it believes can produce attractive returns
to the Company's shareholders.
Financial Results
During the period commenced 1 September 2018 and ended 28
February 2019, the Company has incurred operating costs of US$1.96
million. These expenses were more than offset by net investment and
other income totalling approximately US$13.85 million.
Principal Risks and Uncertainties
The Company set out in the Prospectus the principal risks and
uncertainties that could impact its performance; these principal
risks and uncertainties remain unchanged since that document was
published and apply in the period to 28 February 2019. Your
attention is drawn to the Prospectus for the detailed assessment. A
copy of the Prospectus is available on the Company's website
(www.j2acquisitionlimited.com) and was submitted to the National
Storage Mechanism and is available for inspection at
www.morningstar.co.uk/uk/nsm.
Related Parties
Related party disclosures are given in note 12 to these
financial statements.
Lord Myners of Truro CBE
Chairman
9 May 2019
Report of Directors
The Directors have pleasure in submitting their report and the
unaudited financial statements for the period from 1 September 2018
through 28 February 2019 with comparative periods.
Status and activities
The Company was incorporated with limited liability under the
laws of the British Virgin Islands under the BVI Business Companies
Act 2004 (as amended) (the "BVI Companies Act") on 18 September
2017. The address of the Company's registered office is Ritter
House, Wickhams Cay II, Road Town, Tortola, VG 1110, British Virgin
Islands. The Ordinary Shares and Warrants were admitted for trading
on the Main Market of the London Stock Exchange on 10 October 2017,
after raising gross proceeds of US$1.25 billion for a potential
acquisition (an "Acquisition").
The Company was formed to undertake an acquisition of a target
company or business. 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
its 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 listing on the Official
List and to trading on the London Stock Exchange or admission to an
alternative stock exchange. The Company expects to acquire a
controlling interest in a target company or business. The Company
(or its successor) 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 will not be limited to a particular industry or
geographic region. The Company may subsequently 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 will be subject to Board
approval, including by a majority of the Company's Non-Founder
Directors (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.
If the Acquisition has not been announced by the second
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 Preferred Shares, to the
extent assets are available) or that the Company continue to pursue
the Acquisition for a further 12 months from the second anniversary
of Admission. The Board's recommendation will then be put to a
shareholder vote (from which the Directors and Mariposa Acquisition
IV, LLC (the "Founder Entity") will abstain).
The Company has identified the following criteria and guidelines
that it believes are important in evaluating potential acquisition
opportunities. It will generally use these criteria and guidelines
in evaluating acquisition opportunities. However, it may also
decide to enter into the Acquisition of a target company or
business that does not meet these criteria and guidelines:
-- financial condition and results of operations;
-- growth potential;
-- brand recognition and potential;
-- experience and skill of management and availability of additional personnel;
-- capital requirements;
-- stage of development of the business and its products or services;
-- existing distribution or other sales arrangements and the potential for expansion;
-- degree of current or potential market acceptance of the products or services;
-- proprietary aspects of products and the extent of intellectual property or other
-- protection for products or formulas;
-- impact of regulation and potential future regulation on the business;
-- regulatory environment of the industry;
-- seasonal sales fluctuations and the ability to offset these fluctuations through
-- other acquisitions, introduction of new products, or product line extensions; and
-- the amount of working capital available.
Results and dividends
For the period from 1 September 2018 to 28 February 2019, the
Company's income was US$11.89 million.
It is the Board's policy that prior to making the first
Acquisition, no dividends will be paid. Following the first
Acquisition, subject to applicable solvency requirements, dividends
will be paid to shareholders if and when the Directors believe it
is appropriate and prudent to do so.
Share capital
General:
As at 28 February 2019, the Company had in issue 121,032,500
Ordinary Shares and 4,000,000 Founder Preferred Shares.
4,000,000 Founder Preferred Shares were in issue on 10 October
2017. There are no Founder Preferred Shares held in Treasury. Each
Founder Preferred Share was issued at US$10.00 per share with a
Warrant as described in note 10.
121,032,500 Ordinary Shares were issued on 10 October 2017
(121,000,000 were issued in the IPO at US$10.00 per share and
32,500 were issued to the Non-Founder Directors in conjunction with
the IPO). There are no Ordinary Shares held in Treasury. Each
Ordinary Share was issued with a Warrant as described in note
10.
Founder Preferred Shares:
Details of the Founder Preferred Shares can be found in note 10
to the financial statements, and are incorporated into this Report
by reference.
Securities carrying special rights:
Save as disclosed above in relation to the Founder Preferred
Shares, no person holds securities in the Company carrying special
rights with regard to control of the Company.
Voting rights:
Holders of Ordinary Shares and Founder Preferred Shares have the
right to receive notice of and to attend and vote at any meetings
of members except, in the case of the holders of Ordinary Shares,
in relation to any Resolution of Members that the Directors, in
their absolute discretion (acting in good faith) 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 BVI Business Companies Act and 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.
For so long as an initial holder of Founder Preferred Shares
(being a Founding Entity together with its affiliates) holds 20% or
more of the Founder Preferred Shares in issue, such holder shall be
entitled to nominate up to three persons as Directors of the
Company and the Directors shall appoint such persons. In the event
such holder notifies the Company to remove any Director nominated
by him the other Directors shall remove such Director, and in the
event of such a removal the relevant holder shall have the right to
nominate a Director to fill such vacancy.
No Director has a service contract with the Company, nor are any
such contracts proposed. There are no pension, retirement or other
similar arrangements in place with the Directors nor are any such
arrangements proposed.
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
James E. Lillie Founder and Non-Executive Director 19 September 2017
----------------------------------- --------------------
Sir Martin E. Franklin, KGCN Founder and Non-Executive Director 19 September 2017
----------------------------------- --------------------
Rory Cullinan Independent Non-Executive Director 19 September 2017
----------------------------------- --------------------
Jean-Marc Huët Independent Non-Executive Director 19 September 2017
----------------------------------- --------------------
Brian Kaufmann Non-Executive Director 19 September 2017
----------------------------------- --------------------
Thomas V. Milroy Independent Non-Executive Director 19 September 2017
----------------------------------- --------------------
Lord Myners of Truro CBE Chairman 19 September 2017
----------------------------------- --------------------
As of 9 May 2019, all of the Directors listed above continue to
serve as Directors of the Company. As at 9 May 2019, the Directors
have the following interests in the Company's securities:
Percentage of issued No. of Founder Preferred
Director No. of Ordinary Shares Ordinary Shares Shares
James E. Lillie[1] -------- -------- -------------
----------------------- ----------------------------- ------------------------------
Sir Martin E. Franklin,
KGCN[2] 6,000,000 4.96 4,000,000
----------------------- ----------------------------- ------------------------------
Rory Cullinan 7,500 0.001 -------------
----------------------- ----------------------------- ------------------------------
Jean-Marc Huët 7,500 0.001 -------------
----------------------- ----------------------------- ------------------------------
Brian Kaufmann[3] -------- -------- -------------
----------------------- ----------------------------- ------------------------------
Thomas V. Milroy 7,500 0.001 -------------
----------------------- ----------------------------- ------------------------------
Lord Myners of Truro CBE 10,000 0.001 --------------
----------------------- ----------------------------- ------------------------------
[1] Mr. Lillie holds an indirect pecuniary interest of
approximately 20 per cent. in the Founder Entity.
[2] Represents the interests held by the Founder Entity. Mr.
Franklin is a beneficial owner and the manager of the Founder
Entity and, as such, may be considered to have beneficial ownership
of all the Founder Entity's interests in the Company
[3] Mr. Kaufmann, who was invited by the Founders to join the
Board, is a Portfolio Manager at Viking Global Investor LP. Viking
Global Opportunities Liquid Portfolio Sub-Master LP, an affiliate
of Viking Global Investor LP, has an interest in 25,000,000
Ordinary Shares and 25,000,000 Warrants (being 20.66 per cent of
the Ordinary Shares and Warrants in issue).
Directors' remuneration
Each of the Directors entered into a Director's letter of
appointment with the Company dated 5 October 2017. Under the
letters of appointment, Rory Cullinan, Thomas V. Milroy and
Jean-Marc Huët are entitled to a fee of $75,000 per annum and Lord
Myners, as Chairman, is entitled to receive a fee of $100,000 per
annum. Fees are payable quarterly in arrears. On the date of
Admission, the Company issued 32,500 Ordinary Shares and Warrants
in aggregate to independent Non-Founder Directors in lieu of their
first year's annual cash remuneration. The shares were valued at
US$10.00 per share and are being expensed over the one-year service
period. Martin E. Franklin, James E. Lillie and Brian Kaufmann do
not receive a fee in connection with their appointment as
Non-Executive Directors of the Company. In addition, all of the
Directors are entitled to be reimbursed by the Company for travel,
hotel and other expenses incurred by them in the course of their
directors' duties relating to the Company.
Substantial shareholdings
As at 9 May 2019 (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"):
Date of disclosure to Notified percentage of
Shareholder Number of Ordinary Shares Company voting rights[4]
Viking Global Opportunities
Liquid Portfolio Sub-Master
LP 25,000,000 12 October 2017 20.66%
-------------------------- ----------------------------- ----------------------------
Senator Investment Group LP 10,000,000 12 October 2017 8%
-------------------------- ----------------------------- ----------------------------
[4] 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.
Corporate Governance Statement
The Company is a British Virgin Islands 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 April
2016. 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. In addition, the
Company does not comply with the requirements of the Code in
relation to the requirement to have a senior independent
director.
-- 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 completion of the Company's first acquisition, the
Company will not have nomination, remuneration, audit or risk
committees. The Board as a whole instead reviews 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), takes responsibility for the
appointment of independent auditors and payment of their audit fee,
monitors and reviews the integrity of the Company's financial
statements, including the Company's internal control and risk
management arrangements in relation to its financial reporting
process, and takes responsibility for any formal announcements on
the Company's financial performance. Following the Company's first
acquisition, the Board intends to put in place nomination,
remuneration, audit and risk committees.
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 have considered the financial position of the
Company and have concluded that it is appropriate to prepare the
financial statements 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.
Details of the risks relevant to the Company are included in the
notes to the financial statements and on page 12 of this
report.
Branches
At the date of this Report, the Company does not have any
branches.
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 12 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 International Accounting Standards Board. 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 period. 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 as adopted by the
International Accounting Standards Board have been followed,
subject to any material departures disclosed and explained in the
financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are 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 ensure that
the financial statements comply with Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and hence for 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.j2acquisitionlimited.com. 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 a Company's performance,
business model and strategy.
Each of the Directors, who are in office and whose names and
functions are listed under "Corporate Information", confirms that,
to the best of his knowledge:
-- the Company financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, 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 ought to have
taken as a director in order to make himself 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
Lord Myners of Truro CBE
Chairman
9 May 2019
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 Company's
prospectus dated 5 October 2017. 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
or its industry
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.
-- 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 James. E Lillie, Martin E.
Franklin and Ian G.H. Ashken (collectively, the "Founders") to
identify potential acquisition opportunities and to execute the
Acquisition and 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 will allocate a portion of their time to other
businesses leading to the potential for conflicts of interest in
their determination as to how much time to devote to the Company's
affairs.
-- The Company may be required to issue additional Ordinary
Shares pursuant to the terms of the Founder Preferred Shares, which
would dilute existing Ordinary Shareholders.
Taxation
-- The Company may be a "passive foreign investment company" for
U.S. federal income tax purposes and adverse tax consequences could
apply to U.S. 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.
Statements of Comprehensive Income (Loss) for the six months
ended 28 February 2019 and the period from 18 September 2017
(inception) to 28 February 2018 (Unaudited)
18 September
2017
For the six to 28 February
months ended 2018
28 February
2019
Note US $ US $
----- -------------- ---------------
Investment income 7 13,711,449 5,327,708
Other income 144,352 19,586
Expenses 3 (1,961,868) (664,221)
Non-cash charge related to Founder
Preferred Shares 6 - (163,043,551)
Non-cash charge related to warrant
redemption liability 10 - (1,210,325)
Operating income (loss) 11,893,933 (159,570,803)
-------------- ---------------
Income (Loss) and Total Comprehensive
Income (Loss) for the Period 11,893,933 (159,570,803)
============== ===============
Basic and diluted income (loss)
per ordinary share 8 0.10 (1.48)
-------------- ---------------
The notes on pages 19 to 33 form an integral part of these
financial statements.
Statements of Financial Position as at 28 February 2019 and 31
August 2018 (Unaudited)
28 February 31 August 2018
2019
Note US$ US$
----- ---------------------------- ----------------------------
Assets
Current assets
Cash and cash equivalents 10,029,463 11,672,995
Short-term investments 7 1,243,905,962 1,230,357,747
Prepayments and other assets 9 65,508 117,595
Total Assets 1,254,000,933 1,242,148,337
---------------------------- ----------------------------
Liabilities
Current liabilities
Accruals - 139,377
---------------------------- ----------------------------
Total current liabilities - 139,377
Non-current liabilities
Warrant redemption liability 10 1,210,325 1,210,325
---------------------------- ----------------------------
Total non-current liabilities 1,210,325 1,210,325
---------------------------- ----------------------------
Total liabilities 1,210,325 1,349,702
---------------------------- ----------------------------
Net assets 1,252,790,608 1,240,798,635
---------------------------- ----------------------------
Equity
Founder Preferred Share Capital 10 40,000,000 40,000,000
Ordinary Share Capital - - -
nominal value
Ordinary Share Capital share
premium 10 1,187,547,637 1,187,547,637
Retained earnings 25,242,971 13,250,998
Total equity 1,252,790,608 1,240,798,635
============================ ============================
Net asset value per share 8 10.02 9.92
============================ ============================
--
The notes on pages 19 to 33 form an integral part of these
financial statements.
Statement of Changes in Equity for the six months ended 28
February 2019 and the period from 18 September 2017 (inception) to
28 February 2018 (Unaudited)
Nominal
Founder Ordinary Ordinary Retained Total Equity
Preferred Share Share Capital Earnings
Shares Capital Share Premium
Capital Nominal
Value
Note US$ US$ US$ US$ US$
----- ----------------- ----------- ---------------------- -------------------------- ------------------------
Balance as
of 31 August
2018 40,000,000 - 1,187,547,637 13,250,998 1,240,798,635
Share-based
compensation
- directors 11 - - - 98,040 98,040
Income and total
comprehensive
income for the
period - - - 11,893,933 11,893,933
----------------- ----------- ---------------------- -------------------------- ------------------------
Balance as
of 28
February
2019 40,000,000 - 1,187,547,637 25,242,971 1,252,790,608
================= =========== ====================== ========================== ========================
Balance at - - - - -
inception,
18 September
2017
Issue of
shares 10 40,000,000 - 1,210,325,000 163,043,551 1,413,368,551
Issue costs 10 - - (22,777,363) - (22,777,363)
Share-based
compensation
- directors 11 - - - 73,530 73,530
Loss and
total
comprehensive
expense for
the period - - - (159,570,803) (159,570,803)
----------------- ----------- ---------------------- -------------------------- ------------------------
Balance as
of 28
February
2018 40,000,000 - 1,187,547,637 3,546,278 1,231,093,915
================= =========== ====================== ========================== ========================
The notes on pages 19 to 33 form an integral part of these
financial statements.
Statements of Cash Flows for the six months ended 28 February
2019 and the period from 18 September 2017 (inception) to 28
February 2018 (Unaudited)
For the
For the period from
six months 18 September
ended 2917 to
28 February 28 February
2019 2018
Note US$ US$
----- ---------------------------- ----------------------------
OPERATING ACTIVITIES:
Net income (loss) 11,893,933 (159,570,803)
Elimination of non-cash items:
Charge related to Founder Preferred
Shares 6 - 163,043,551
Charge related to warrant redemption
liability 10 - 1,210,325
Unrealized loss (gain) on short-term
investments 7 204,517 5,327,708)
Charge related to directors' remuneration
settled in shares 11 40,628 121,874
Charge related to director options 11 98,040 73,530
Movements in working capital:
Decrease (increase) in prepaids and
other assets 11,459 (75,129)
(Decrease) increase in accruals (139,377) 8,331
Net cash provided by (used in) operating
activities 12,109,200 (516,029)
---------------------------- ----------------------------
INVESTING ACTIVITIES:
Purchase of short-term investments (2,674,549,351) (1,208,070,186)
Sale of short-term investments 2,660,796,619 -
---------------------------- ----------------------------
Net cash used in investing activities (13,752,732) (1,208,070,186)
---------------------------- ----------------------------
FINANCING ACTIVITIES:
Issuance of Founder Preferred Shares
and Associated Warrants 10 - 40,000,000
Issuance of Ordinary Shares and Associated
Warrants 10 - 1,210,000,000
Share issue expenses 10 - (22,777,363)
---------------------------- ----------------------------
Net cash provided by financing activities - 1,227,222,637
---------------------------- ----------------------------
Net (decrease) increase in cash and
cash equivalents (1,643,532) 18,636,422
Cash and cash equivalents at beginning 11,672,995 -
of period
---------------------------- ----------------------------
Cash and cash equivalents at end of
period 10,029,463 18,636,422
============================ ============================
NON-CASH FINANCING ACTIVITIES:
Issuance of Ordinary Shares for directors'
remuneration 11 - 325,000
============================ ============================
The notes on pages 19 to 33 form an integral part of these
financial statements.
Notes to the financial statements for the six months ended 28
February 2019
1. General information
The Company was incorporated with limited liability under the
laws of the British Virgin Islands under the BVI Companies Act (as
amended) (the "BVI Companies Act") on 18 September 2017. The
address of the Company's registered office is Ritter House,
Wickhams Cay II, Tortola, VG 1110, British Virgin Islands. The
Ordinary Shares and Warrants were admitted for trading on the Main
Market of the London Stock Exchange on 10 October 2017, after
raising gross proceeds of US$1.21 billion (and a further US$40
million through the subscription of Founder Preferred Shares and
additional Warrants) for a potential acquisition (an
Acquisition).
2. Principal accounting policies
The principal accounting policies applied in these financial
statements are set out below.
2.1 Basis of preparation
These financial statements are prepared under the historical
cost convention and are in accordance with International Financial
Reporting Standards and its interpretations as issued by the
International Accounting Standards Board ("IASB") and those parts
of the BVI Business Companies Act applicable under IFRS.
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.
The financial statements are prepared on the historical cost
basis with the exception of financial instruments and share based
payments, and Founder Preferred Shares which are stated at fair
value.
Accounting policies have been consistently applied.
There are no new accounting standards adopted which have a
material impact on these financial statements. Refer to 2.9 for
more information on new IFRSs not yet adopted.
2.2 Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future given the cash funds available and the current forecast cash
outflows. Thus, the Company continues to adopt the going concern
basis of accounting in preparing the financial statements. If the
Company has not announced an Acquisition by the second 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 Preferred Shares, to the extent assets
are available) or that the Company continue to pursue the
Acquisition for a further 12 months from the second anniversary of
Admission. The Board's recommendation will then be put to a
shareholder vote (from which the Directors and Mariposa Acquisition
IV, LLC (the "Founder Entity") will abstain).
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 is 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.
2.4 Short-term investments
Classification
The Company classifies its investment in U.S. Treasury Bills as
short-term investments. This financial asset is designated by the
Directors at fair value through profit or loss at inception.
Short-term investments at inception are financial instruments
that are not classified as held for trading but 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 short-term investments 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. Short-term investments are initially
recognised at fair value. Transaction costs are expensed as
incurred in the statements of comprehensive income (loss).
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 short-term investments
are measured at fair value. Gains and losses arising from changes
in the fair value of the short-term investments category is
presented in the statements of comprehensive income (loss) as
investment income 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 statements of comprehensive income (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 sheets 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
Cash represents cash at banks. There were no cash equivalents at
28 February 2019 and 31 August 2018.
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 Share-based payments
The Founder Preferred Shares (and attached warrants),
Non-Founder Director shares (and attached warrants) and
non-executive director options represent equity-settled share-based
arrangements under which the Company receives services as a
consideration for the additional rights attached to these equity
shares, over and above their nominal price. The fair value of the
grant of Founder Preferred Shares (and attached warrants) in excess
of any purchase price received is recognised as an expense. In
addition, the Company has granted options to the non-executive
directors. The Company also issued shares (and attached warrants)
to Non-Founder Directors, which are recognised as expense over the
one-year service period. The fair value of the Founder Preferred
Shares and the options is determined using a valuation model.
The total amount to be expensed as a respective share-based
payment charge is determined by reference to the fair value of the
awards granted:
-- including any market performance condition;
-- excluding the impact of any service and non-market performance vesting conditions; and
-- including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in
assumptions about the number of awards that are expected to
vest.
The total expense is recognised in the income statements with a
corresponding credit to equity over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied. The Company does not begin to recognise expense
associated with share-based awards with performance conditions
until it is probable that the performance condition will be
achieved.
2.9 Fair Value of Warrants
Warrants not subject to IFRS2 are valued at the redemption value
of $0.01 as financial instruments. The Warrants are compound
financial instruments with a liability recognised and the remainder
in equity.
2.10 New accounting standards
The Company applied all applicable standards and applicable
interpretations published by the IASB for the periods presented.
The Company did not adopt any standard or interpretation published
by the IASB for which the mandatory application date is on or after
1 March 2019.
The Company adopted the following new standards that are
effective for the six months ended 28 February 2019:
IFRS 9, Financial Instruments, ("IFRS 9") introduced new
requirements for classification and measurement of financial
assets, accounting for financial liabilities and a new general
hedge accounting standard. The Company adopted IFRS 9 on 1
September 2018. IFRS 9 did not impact the Company's classification
and measurement of financial assets and liabilities.
IFRS 15, Revenue from Contracts with Customers, ("IFRS 15")
establishes a comprehensive framework for determining whether, how
much and when revenue is recognized. It replaced IAS 18 Revenue,
IAS 11 Construction Contracts and related interpretations. The
Company adopted IFRS 15 on 1 September 2018. IFRS 15 did not have
an impact on the Company's financial statements.
2.11 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 Board is of the
opinion that there is only a single operational segment being the
investment in US Treasury Bills as disclosed in note 7. As a
result, no segment information has been provided as the Company
only accumulates its funds raised for investment in US Treasury
Bills.
2.12 Share capital
Founder Preferred 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.
2.13 Auditor remuneration
During the six months ended 28 February 2019 and the period ended 28 February 2018, the company
obtained the following services from the auditors:Six months ended 28 February 2019 US$
Fees payable to the Company's auditor for due diligence services $312,130
Fees payable to the Company's auditor for audit services $34,665
Period ended 28 February 2018
Fees payable to the Company's auditor for Capital Markets Services in relations to the Company's
IPO. $125,000
2.14 Critical accounting judgements and key sources of estimation uncertainty
There were no critical estimate or judgements in the period.
3. Expenses
Period From
18 September
Six Months Ended 2017 to 28 February
28 February 2019 2018
US$ US$
Legal and professional fees 1,240,833 125,811
General and administrative
expenses 282,869 225,264
Directors' remuneration (including
share-based compensation
charge) 270,671 195,404
Management fees 150,000 117,742
Listing fees 17,495 -
1,961,868 664,221
=============================== ==================================
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
maximize the use of observable inputs and minimize 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 of 28 February 2019 and 31 August 2018, short-term
investments of US$1,243,905,962 and $1,230,357,747, respectively,
were categorized as Level 2 securities. There were no transfers
between Levels during the periods presented.
6. Charge Related to Founder Preferred Shares
The total charge related to Founder Preferred Shares and
warrants for the period ended 28 February 2018 was US$163,043,551.
There were no charges related to Founder Preferred Shares and
warrants for the six months ended 28 February 2019.
The Company has outstanding Founder Preferred Shares issued to
its founders, which have been accounted for in accordance with IFRS
2 "Share-based payment" as equity-settled share-based payment
awards. The fair value of the Founder Preferred Shares over and
above their purchase price was determined as US$161,678,265 at the
grant date. The preferred share awards do not have any vesting or
service conditions and vested immediately on the date of the grant.
Accordingly, the aggregate non-cash charge relating to the Founder
Preferred Shares for the period ended 28 February 2018 was
US$161,678,265. The fair value of the awards was determined using a
Monte Carlo valuation model and was based on the following
assumptions:
Number of securities issued 4,000,000
Vesting period Immediate
Assumed price upon acquisition US$10.00
Probability of winding-up 50.0%
Probability of acquisition 65.5%
Time to acquisition 1.5 years
Volatility (post-acquisition) 35.1%
Risk free interest rate 2.33%
Expected volatility was estimated with reference to a
representative set of listed companies taking into account the
circumstances of the Company.
The probability and timing of an Acquisition has been estimated
only for the purposes of valuing the Founders Preferred Shares as
of October 2017 and no assurance can be given that the Acquisition
will occur at all or in any particular timeframe.
Warrants
Additionally, the Company has outstanding warrants issued to its
Founder Entity. The warrants do not have any vesting or service
conditions and vested immediately on the date of the grant.
Accordingly, the aggregate non-cash charge relating to the warrants
for the period ended 28 February 2018 was US$1,365,286. The fair
value of the awards was determined using a Monte Carlo valuation
model and was based on the following assumptions:
Share Price US$10.00
Exercise Price US$11.50
Risk-Free Rate 1.62%
Dividend Yield -
Probability of Acquisition 65.50%
Post-Acquisition Volatility 33.42%
Expected volatility was estimated with reference to a
representative set of listed companies taking into account the
circumstances of the Company.
The probability and timing of an Acquisition has been estimated
only for the purposes of valuing the Founder Preferred Shares
issued as in October 2017 and no assurance can be given that the
Acquisition will occur at all or in any particular timeframe.
7. Short-term investments
The Company holds zero coupon U.S. Treasury Bills. In accordance
with IFRS 9, the Company records these investments at unamortized
cost. The original maturities of the zero-coupon U.S. Treasury
Bills were greater than three months, but as of 28 February 2019
their remaining maturities were all within three months of the
period end. Due to the proximity of the maturity date, the
unamortized cost of the short-term investments approximates fair
market value. At 28 February 2019 and 31 August 2018 these zero
coupon U.S. Treasury Bills had a cost of US$1,239,534,736 and
US$1,225,782,005, respectively, and a fair value of
US$1,243,905,962 and US$1,230,357,747, respectively. The increase
(decrease) in value during the period from the six months ended 28
February 2019 and the period ended 28 February 2018 was
US$(204,535) and US$2,282,917, respectively, and was recorded as
investment income. The Company also realised US$13,915,984 and
US$3,044,791 of investment income during the six months ended 28
February 2019 and the period ended 28 February 2018,
respectively.
8. Income (loss) per share and net asset value per share
The income per share calculation for the six months ended 28
February 2019 is based on income for the period of US$11,893,933
the weighted average number of Ordinary Shares and Founder
Preferred Shares of 125,032,500. The loss per share calculation for
the period ended 28 February 2018 is based on a loss for the period
of US$(159,570,803) and the weighted average number of Ordinary
Shares and Founder Preferred Shares of 107,497,454.
The 121,032,500 Warrants and 162,500 Options are considered
non-dilutive at 28 February 2019 and 28 February 2018.
Net asset value per share as at 28 February 2019 and 31 August
2018 is based on net assets of US$1,252,790,608 and
US$1,240,798,635, respectively, divided by the 121,032,500 Ordinary
Shares and 4,000,000 Founder Preferred Shares in issue at both 28
February 2019 and 31 August 2018.
9. Prepayments and other assets
28 February 2019 31 August 2018
US$ US$
Prepaid insurance and administrative
fees 17,295 68,256
Accrued interest receivable 23,213 8,711
Prepaid directors' fees 25,000 40,628
65,508 117,595
=============================== ===============================
10. Share capital
The authorised shares of the Company as at 28 February 2019 and
31 August 2018 are as follows:
US$
Authorised
Unlimited number of Ordinary -
Shares of no par value
===================================
Founder Preferred Shares Number US$
Balance at beginning of - -
period
Issued during the period 4,000,000 40,000,000
Balance at end of period 4,000,000 40,000,000
=================================== ==================================
Ordinary Shares Number US$
Balance at beginning of - -
period
Issued during the period 121,032,500 1,187,547,637
Balance at end of period 121,032,500 1,187,547,637
=================================== ==================================
4,000,000 Founder Preferred Shares were issued on 10 October
2017 at US$10.00 per share. There are no Founder Preferred Shares
held in Treasury. Each ordinary share and Founder Preferred Share
was issued with a Warrant as described below.
121,032,500 Ordinary Shares were issued on 10 October 2017
(121,000,000 were issued in the IPO at US$10.00 per share and
32,500 were issued to the non-founder directors in conjunction with
the IPO in lieu of cash directors' remuneration for one year).
There are no Ordinary Shares held in Treasury. Each Ordinary Share
was issued with a Warrant as described below.
Issue costs of US$22,777,363 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 Preferred 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 Preferred Shares had been
converted into Ordinary Shares immediately prior to the
winding-up;
(b) the right, together with the holders of the Founder
Preferred Shares, 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, pro rata
to the number of fully paid up shares held by the holder, as if the
Ordinary Shares and Founder Preferred Shares constituted one class
of share and as if for such purpose the Founder Preferred Shares
had been converted into Ordinary Shares immediately prior to such
distribution; 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 Preferred Shares
The Founder Entity has also committed US$40,000,000 of capital
for 4,000,000 Founder Preferred Shares (with Warrants being issued
on the basis of one Warrant per Founder Preferred Share). The
Founder Preferred Shares are intended to have the effect of
incentivising the Founders to achieve the Company's objectives.
Commencing from consummation of the Acquisition, and only once
the Average Price (as defined in the Prospectus) per Ordinary Share
for any ten consecutive Trading Days (as defined in the Prospectus)
following Admission is at least US$11.50, a holder of Founder
Preferred Shares will be entitled to receive an "Annual Dividend
Amount", payable in Ordinary Shares or cash, at the sole option of
the Company.
In the first Dividend Year (as defined in the Prospectus) in
which such dividend becomes payable, such dividend will be equal in
value to (a) 20 per cent. of the increase in the market value of
one Ordinary Share, being the difference between $10.00 and the
Dividend Price (as defined in the Prospectus), multiplied by (b)
such number of Ordinary Shares equal to the Preferred Share
Dividend Equivalent (as defined in the Prospectus).
Thereafter, the Annual Dividend Amount will only become payable
if the Dividend Price during any subsequent Dividend Year is
greater than the highest Dividend Price in any preceding Dividend
Year in which a dividend was paid in respect of the Founder
Preferred Shares. Such Annual Dividend Amount will be equal in
value to 20 per cent. of the increase in the Dividend Price over
the highest Dividend Price in any preceding Dividend Year
multiplied by the Preferred Share Dividend Equivalent.
For the purposes of determining the Annual Dividend Amount, the
Dividend Price is the Average Price per Ordinary Share for the last
ten consecutive Trading Days in the relevant Dividend Year (the
"Dividend Determination Period").
The amounts used for the purposes of calculating an Annual
Dividend Amount and the relevant numbers of Ordinary Shares are
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.
If there is more than one holder of Founder Preferred Shares,
each Annual Dividend Amount shall be divided between the holders of
Founder Preferred Shares pro rata to the number of Founder
Preferred Shares held by them on the relevant Dividend Date. The
Annual Dividend Amount will be paid on the relevant Payment Date by
the issue to each holder of Founder Preferred Shares of such number
of Ordinary Shares as is equal to the pro rata amount of the Annual
Dividend Amount to which they are entitled divided by the Dividend
Price.
The Founder Preferred Shares will participate in any dividends
on the Ordinary Shares on an as converted basis. In addition,
commencing on and after consummation of the Acquisition, where the
Company pays a dividend on its Ordinary Shares the Founder
Preferred Shares will also receive an amount equal to 20 per cent
of the dividend which would be distributable on such number of
Ordinary Shares equal to the Preferred Share Dividend Equivalent.
All such dividends on the Founder Preferred Shares will be paid
contemporaneously with the dividends on the Ordinary Shares. For so
long as an initial holder of Founder Preferred Shares (being the
Founder Entity together with its affiliates and permitted
transferees) holds 20 per cent. or more of the Founder Preferred
Shares in issue, such holder shall be entitled to nominate up to
three persons as directors of the Company and the Directors shall
appoint such persons. On Admission, the Directors so nominated and
appointed were James E. Lillie and Martin E. Franklin.
The Founder Preferred 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) on the
last day of the seventh full financial year of the Company
following completion of the Acquisition (or if any such date is not
a Trading Day, the first Trading Day immediately following such
date).
A holder of Founder Preferred Shares may require some or all of
his Founder Preferred Shares to be converted into an equal number
of Ordinary Shares (subject to such adjustments as the Directors in
their absolute discretion determine to be fair and reasonable in
the event of a consolidation or subdivision of the Ordinary Shares
in issue after the date of Admission or otherwise as determined in
accordance with the Articles) by notice in writing to the Company,
and in such circumstances those Founder Preferred Shares the
subject of such conversion request shall be converted into Ordinary
Shares five Trading Days after receipt by the Company of the
written notice. In the event of a conversion at the request of the
holder, no Annual Dividend Amount shall be payable in respect of
the converted Founder Preferred Shares for the Dividend Year in
which the date of conversion occurs.
If there is more than one holder of Founder Preferred Shares, a
holder of Founder Preferred Shares may exercise its rights
independently of any other holder of Founder Preferred Shares.
On the liquidation of the Company, an Annual Dividend Amount
shall be payable in respect of a shortened Dividend Year which
shall end on the Trading Day immediately prior to the date of
commencement of liquidation, following which the holders of Founder
Preferred Shares shall have the right to a pro rata share (together
with Shareholders) in the distribution of the surplus assets of the
Company.
The Founder Preferred Shares carry the same voting rights as are
attached to the Ordinary Shares being one vote per Founder
Preferred Share. Additionally, the Founder Preferred 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.
Warrants
The Company has issued 125,032,500 Warrants to the purchasers of
both Ordinary Shares and Founder Preferred Shares (including the
32,500 Warrants that were issued to non-founder directors in
connection with their appointment). Each Warrant has a term of 3
years following an Acquisition and entitles a Warrant holder to
subscribe for one-third of an Ordinary Share upon exercise.
Warrants will be exercisable in multiples of three for one Ordinary
Share at a price of US$11.50 per whole Ordinary Share.
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).
As a contingent obligation to redeem for cash, a separate
liability of US$1,210,325 (US$0.01 per non-founder Warrant), which
represents the fair value, was recognised in the period from
inception to 28 February 2018. As of 28 February 2019 and 31 August
2018, the warrant redemption liability balance was
US$1,210,325.
11. Share-based compensation
On 10 October 2017, the Company issued 162,500 options on its
Ordinary Shares to its non-executive directors that vest upon an
Acquisition; continued service until that time is required for
vesting. The options expire on the 5th anniversary following an
Acquisition and have an exercise price of $11.50 per share (subject
to such adjustment as the Directors consider appropriate in
accordance with the terms of the Option Deeds).
The Company estimated the grant date fair value of each option
at US$1.81 using a Black-Scholes model with the following
assumptions:
Share Price US$10.00
Exercise Price US$11.50
Risk-Free Rate 2.15%
Dividend Yield -
Probability of Acquisition 65.50%
Post-Acquisition Volatility 32.99%
Share-based compensation expense of US$98,040 and US$73,530 has
been recognised for these options in the accompanying financial
statements for the six months ended 28 February 2019 and the period
ended 28 February 2018, respectively. Unamortised share-based
compensation expense of US$24,513 as at 28 February 2019 will be
recognised over the remaining estimated vesting period of
approximately 0.13 years.
Also, during the period ended 28 February 2018, the Company
issued 32,500 Ordinary Shares and Warrants in aggregate to
independent non-founder directors for their first year's annual
remuneration. The shares were valued at US$10.00 per share and are
being expensed over the one-year service period.
12. Related party and material transactions
On October 10, 2017, the Company completed its initial public
offering. The offering raised gross proceeds of US$1.25 billion,
consisting of US$1.21 billion through the placement of Ordinary
Shares (with Matching Warrants) at a placing price of US$10.00 per
Ordinary Share and a further US$40 million through the subscription
of 4,000,000 Founder Preferred Shares (with Warrants being issued
to the subscriber of Founder Preferred Shares on the basis on one
Warrant per Founder Preferred Share) by the Founder and Mariposa
Acquisition IV, LLC.
See discussion of Founder Preferred Shares in Note 10.
During the six months ended 28 February 2019, the Company did
not issue any shares, warrants and options to the directors of the
Company.
During the period ended 28 February 2018, the Company issued the
following shares, warrants and options to the directors of the
Company:
No. of Founder
Director No. of Ordinary Shares Preferred Shares No. of Warrants No. of Stock Options
James E. Lillie[5] -------- ------------- -------- ---------
----------------------- ------------------------ ---------------- ---------------------
Martin E. Franklin[6] 6,000,000 4,000,000 10,000,000 ---------
----------------------- ------------------------ ---------------- ---------------------
Rory Cullinan 7,500 ------------- 7,500 37,500
----------------------- ------------------------ ---------------- ---------------------
Jean-Marc Huët 7,500 ------------- 7,500 37,500
----------------------- ------------------------ ---------------- ---------------------
Brian Kaufmann[7] -------- ------------- -------- ---------
----------------------- ------------------------ ---------------- ---------------------
Thomas V. Milroy 7,500 ------------- 7,500 37,500
----------------------- ------------------------ ---------------- ---------------------
Lord Myners of Truro CBE 10,000 ------------- 10,000 50,000
----------------------- ------------------------ ---------------- ---------------------
In addition, each director holds Warrants equal to the total of
Ordinary Shares and Founder Preferred Shares held. Refer to Note 6
and Note 10 for further details on the value of the Founder
Preferred Shares and Options.
Additionally, Mariposa Capital, LLC received US$150,000 and
US$117,742 in management fees for the six months ended 28 February
2019 and the period ended 28 February 2018.
32,500 Ordinary Shares and Warrants in aggregate were issued to
independent non-founder directors. Messrs Lillie, Franklin and
Kaufmann have elected not to receive director remuneration. The
other directors opted to have their first year's annual
remuneration settled by the issue of shares at US$10.00 per share,
which are being expensed over the one-year service period. The
associated expense for each director during the period for the six
months ended 28 February 2019 and the period ended 28 February 2018
was as follows in US Dollars:
Received Up Six Months
Front Ended 18 September
28 February 2017 to 28
2019 February 2018
Rory
Cullinan 75,000 9,375 28,125
Jean-Marc
Huët 75,000 9,375 28,125
Thomas V.
Milroy 75,000 9,375 28,125
Lord Myners
of Truro
CBE
(Chairman) 100,000 12,503 37,499
325,000 40,628 121,874
=================================== =================================== =========================================
For the six months ended 28 February 2019 the directors'
remuneration which was settled in cash is as follows:
US$
Lord Myners of Truro CBE
(Chairman) 40,616
Rory Cullinan 30,462
Jean-Marc Huët 30,462
Thomas V. Milroy 30,462
132,003
============================
There was no directors' remuneration settled in cash for the
period ended 28 February 2018.
The Company incurred total issuance costs of US$22.8 million.
The details of these costs are as follows:
US$
Placement fees 20,500,000
Legal fees 1,872,865
Other expenses 325,819
Syndicate expenses 78,679
Total 22,777,363
===============================
[5] Mr. Lillie holds an indirect pecuniary interest of
approximately 20 per cent in the Founder Entity.
[6] Represents the interests held by the Founder Entity. Mr.
Franklin is a beneficial owner and the manager of the Founder
Entity and, as such, may be considered to have beneficial ownership
of all the Founder Entity's interests in the Company.
[7] Mr. Kaufmann, who was invited by the Founders to join the
Board, is a Portfolio Manager at Viking Global Investor LP.Viking
Global Opportunities Liquid Portfolio Sub-Master LP, an affiliate
of Viking Global Investor LP, has an interest in 25,000,000
Ordinary Shares and 25,000,000 Warrants (being 20.66 per cent of
the Ordinary Shares and Warrants in issue).
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 Pounds Sterling and 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 high credit quality financial institutions and in U.S
treasury bills. The Company has nominal credit risk related to U.S
treasury bills as they are backed by the United States
government.
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. The timing of the warrant
redemption liability is uncertain according to its terms as
described in Note 10.
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 instruments available from the U.S
denominated money markets and/or at commercial banks that are at
least AA rated or better at the time of deposit. As of 28 February
2019, US$1.2 billion was held in U.S. treasury bills meeting the
terms of the U.S denominated money markets as described in the
Prospectus. 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 stakeholder
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 shareholder or issue new shares.
Corporate information
Directors Legal advisers to the Company (English and US Law)
James E. Lillie Greenberg Traurig, LLP
Sir Martin E. Franklin, KGCN 8th Floor
Rory Cullinan The Shard
Jean-Marc Huët 32 London Bridge Street
Brian Kaufmann London
Thomas V. Milroy SE1 9SG
Lord Myners of Truro CBE (Chairman) Legal advisers to the Company (BVI Law)
Registered office Carey Olsen
Ritter House Carey House
Wickhams Cay II Les Banques
Road Town, Tortola St Peter Port
VG1 110 Guernsey GY1 4BZ
British Virgin Islands Depositary
Administrator and secretary Computershare Investor Services PLC
International Administration Group (Guernsey) Limited The Pavilions
Regency Court Bridgewater Road
Glategny Esplanade Bristol
St Peter Port BS 13 8AE
Guernsey Principal bankers
GY1 1WW Citigroup Global Markets Limited
Registrar 33 Canada Square
Computershare Investor Services (BVI) Limited London E14 5GL
Woodbourne Hall UBS Limited
PO Box 3162 5 Broadgate
Road Town London EC2M 2QS
Tortola
British Virgin Islands
Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFLSEAISLIA
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