TIDMJUSH
RNS Number : 3990L
Justice Holdings Limited
29 July 2011
JUSTICE HOLDINGS LIMITED
Symbol: JUSH 29 July 2011
Interim Report for the period commenced 7 February 2011 and
ended 30 June 2011 (Unaudited)
Justice Holdings Limited ("Justice" or the "Company") today
publishes its Interim Report for the period commenced 7 February
2011 and ended 30 June 2011.
Justice was admitted to the London Stock Exchange (the
"Admission") on 17 February 2011, raising gross proceeds of
GBP900.0 million in its initial public offering ("IPO"). As set out
in the Justice Holdings Limited Prospectus dated 14 February 2011
(the "Prospectus"), the Company was formed with the strategy of
acquiring a target business which is expected to have an enterprise
value of between GBP1.0 billion and GBP7.0 billion, though a target
business with a smaller or larger enterprise value may be
considered. The Company's efforts in identifying a prospective
target business are not limited to a particular industry or
geographic region. The Board of Directors (the "Board") has
commenced the implementation of the Company strategy by beginning
the process to review a number of acquisition targets. A copy of
the Prospectus has been submitted to the National Storage Mechanism
and is available for viewing at: www.hemscott.com/nsm.do.
Financial Position
On 17 February 2011, Justice raised gross proceeds of GBP900.0
million and, as of 30 June 2011, has 90,057,000 ordinary shares in
issue.
Total expenses incurred by the Company in connection with the
Admission were GBP19.0 million, which was GBP2.0 million below the
estimate disclosed in the Prospectus of GBP21.0 million.
As at 30 June 2011, the Company had cash and cash equivalent
balances of approximately GBP882.1 million (equivalent to GBP9.78
per ordinary share), and net assets attributable to ordinary
shareholders of GBP881.9 million. The net proceeds from the IPO,
which are easily accessible when required, have been invested in
instruments available from the Sterling denominated money markets
and/or are being held at commercial banks that are at least AA
rated or better at the time of deposit.
Period ended
(in GBP'000) 30 June 2011
Administration costs (42,520)
Costs associated with Admission (19,003)
OPERATING LOSS (61,523)
Finance income 1,428
LOSS FOR THE PERIOD (60,095)
Basic loss per share (pence) 66.73
Adjusted loss per share (pence) 45.63
Priority Return Sum per share (pence) 978
Administration costs include a non-cash charge of GBP41,360.
Further details are available in note 10 of the notes to the
interim financial statements.
The adjusted loss used in the adjusted loss per share does not
include the costs associated with the Admission. The Priority
Return Sum per share has been calculated with reference to the
expected minimum value per share that ordinary shareholders are
entitled to on a winding up of the Company as set out in the
Prospectus. Further details are available in note 7 of the notes to
the interim financial statements.
Enquiries:
International Administration (Guernsey) Limited
Company Secretary
Attn: Mark Woodall
Tel: +44 1481 723450
JUSTICE HOLDINGS LIMITED
Interim Report for the Period to
30 June 2011
Company overview
The Directors present their report together with the unaudited
interim financial statements of Justice Holdings Limited for the
period ended 30 June 2011. The first year end for the Company is 31
December 2011.
Justice Holdings Limited was incorporated in the British Virgin
Islands on 7 February 2011 and its principal activity is that of a
holding company formed with the strategy of acquiring a target
business (the "Acquisition") which is expected to have an
enterprise value of between GBP1.0 billion and GBP7.0 billion,
though a target business with a smaller or larger enterprise value
may be considered. The Company's efforts in identifying a
prospective target business are not limited to a particular
industry or geographic region.
Results and Dividends
The results for the period are shown in the unaudited Income
Statement.
The Directors do not recommend the payment of a dividend in
respect of the period ended 30 June 2011.
Principal risks and uncertainties
The Company holds a significant portion of its net assets as
cash and cash equivalents. 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 Sterling denominated
money markets and/or at commercial banks that are at least AA rated
or better at the time of deposit. As of 30 June 2011, approximately
GBP868.7 million was held in AAA rated instruments available from
the Sterling denominated money markets. 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 may not be able to identify or complete a suitable
acquisition. The success of the Company's business strategy is
dependent on its ability to identify sufficient suitable
acquisition opportunities and to complete an Acquisition on terms
that are consistent with the Company's stated objectives. While the
Board believes that an Acquisition can be completed before the
third anniversary of Admission there is no certainty that it will
achieve this objective if it is unable to identify a suitable
target and execute a transaction.
The principal risk therefore is that an Acquisition does not
take place by 17 February 2014. At that time, the Board will
recommend to Shareholders either that the Company be wound up by
ordinary resolution (in order to return to Shareholders, to the
extent assets are available, the Priority Return Sum and any other
remaining distributable assets) or that the Company continue to
pursue the Acquisition for a further year. A more comprehensive
description of risks and uncertainties was included in the
Prospectus.
JUSTICE HOLDINGS LIMITED
Interim Report for the Period to
30 June 2011
Directors
The Directors of the Company who served during the period and
subsequently, all of whom are Non-Executive, are:
Lord Myners of Truro, Chairman (Independent) (appointed 7 February
CBE 2011)
Alun Cathcart Independent Non-Executive (appointed 7 February
Director 2011)
Nouriel Roubini Independent Non-Executive (appointed 7 February
Director 2011)
Miguel Pais do Amaral Non-Executive Director (appointed 7 February
2011)
Nicolas Berggruen Non-Executive Director (appointed 7 February
2011)
Martin E. Franklin Non-Executive Director (appointed 7 February
2011)
William A. Ackman Non-Executive Director (appointed 19 April
2011)
Alan C. Parker Independent Non-Executive (appointed 19 April
Director 2011)
Each of Lord Myners, Mr. Cathcart, Mr. Roubini, Mr. Amaral and
Mr. Parker are sometimes referred to herein individually as a
"Non-Founder Director" and collectively as the "Non-Founder
Directors".
Secretary
The Secretary of the Company during the period and subsequently
is:
International Administration (Guernsey) Limited
Responsibility statement
The Directors confirm that this set of interim financial
statements has been prepared in accordance with IAS 34 as adopted
by the European Union, and that the Interim Report herein includes
a fair view of the information required by the Financial Services
Authority's Listing Rules, including the Disclosure and
Transparency Rules 4.2.7 and 4.2.8, namely:
-- an indication of important events that have occurred during
the period commenced 7 February 2011 and ended 30 June 2011 and
their impact on the interim financial statements, and a description
of the principal risks and uncertainties for the remaining six
months of the financial year; and
-- material related party transactions in the period commenced 7
February 2011 and ended 30 June 2011.
By Order of the Board
Lord Myners of Truro, CBE 29 July 2011 Chairman
Registered Office
Nemours Chambers Road Town Tortola British Virgin Islands
Independent review report to the members of Justice Holdings
Limited
Introduction
We have been engaged by the Company to review the interim
financial statements in the Interim Report for the period commenced
7 February 2011 and ended 30 June 2011, which comprises the Company
Income Statement, Company Balance Sheet, Company Statement of
Changes in Equity, Company Statement of Cash Flows and related
notes. We have read the other information contained in the Interim
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Directors' responsibilities
The Interim Report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the Interim Report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Services
Authority.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with IFRSs as adopted by the
European Union. The set of financial statements included in this
Interim Report has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting", as adopted
by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the interim financial statements in the Interim Report based on our
review. This report, including the conclusion, has been prepared
for and only for the Company for the purpose of the Disclosure and
Transparency Rules of the Financial Services Authority and for no
other purpose. We do not, in producing this report, accept or
assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with the International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of the interim financial statements
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements in the
Interim Report for the period commenced 7 February 2011 and ended
30 June 2011 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP Chartered Accountants 1 Embankment
Place London WC2N 6RH 29 July 2011
Notes:
(a) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
JUSTICE HOLDINGS LIMITED
Company Income Statement For the Period Commenced 7 February
2011 and ended 30 June 2011
2011
Unaudited
Note GBP'000
Administration Costs (42,520)
Costs associated with Admission (19,003)
Operating loss 5 (61,523)
Finance income 1,428
Loss before tax (60,095)
Taxation 6 -
Loss for the period (60,095)
The operating loss for the period relates to losses from
continuing operations and there has been no other comprehensive
income in the period.
2011
Notes Pence
Loss per share attributable to the ordinary equity
holders of the Company:
- Basic loss per share 7 66.73
- Diluted loss per share 7 66.73
The notes on pages 9 to 16 are an integral part of these
financial statements
JUSTICE HOLDINGS LIMITED
Company Balance Sheet At 30 June 2011
2011
Unaudited
Note GBP'000
Current assets
Cash and cash equivalents 8 882,137
Total current assets 882,137
Current liabilities
Other payables and accrued expenses (272)
Total current liabilities (272)
Net assets and net current assets 881,865
Equity
Called up share capital 9 900,600
Retained Loss (18,735)
Total shareholders' equity 881,865
Approved on behalf of the Board by
Lord Myners of Truro, CBE
29 July 2011
Chairman
The notes on pages 9 to 16 are an integral part of these
financial statements
JUSTICE HOLDINGS LIMITED
Company Statement of Shareholders Equity
At 30 June 2011
(GBP'000)
Share Retained
Note capital Loss Total
Loss for the
period - (60,095) (60,095)
Issue of ordinary
share capital 9 900,570 - 900,570
Issue of Founder
shares 9 15 - 15
Issue of Founder
securities 9 15 - 15
Reserve for
Founder Shares,
Founder Securities
and Share
Matching Awards 10 - 41,360 41,360
Balance as
at
30 June 2011 900,600 (18,735) 881,865
The notes on pages 9 to 16 are an integral part of these
financial statements
JUSTICE HOLDINGS LIMITED
Statement of Cash Flows For the Period Commenced 7 February 2011
and ended 30 June 2011
2011
Unaudited
Notes GBP'000
Cash flows from operating activities
Cash consumed by operations 11 (378)
Net cash flows from operating activities (378)
Cash flows from investing activities
Interest received 1,428
Net cash flows from investing activities 1,428
Cash flows from financing activities
Costs paid in association with Admission (19,003)
Proceeds from issue of Founder Shares
and Founder Securities 30
Proceeds from issue of ordinary shares 900,060
Net cash flows from financing activities 881,087
Net increase in cash and cash equivalents 882,137
Cash and cash equivalents at start of
the period 8 -
Cash and cash equivalents at end of the
period 8 882,137
The notes on pages 9 to 16 are an integral part of these
financial statements
JUSTICE HOLDINGS LIMITED
Notes to the Interim Financial Statements
30 June 2011
1 General information
The Company was incorporated in the British Virgin Islands on 7
February 2011. The address of the Company's registered office is
Nemours Chambers, Road Town, Tortola, British Virgin Islands.
The Company's ordinary shares are listed on the London Stock
Exchange.
The interim financial information was approved and authorised
for issue in accordance with a resolution of the Directors on 29
July 2011.
The financial information contained in the interim financial
statements is unaudited. The Company Income Statement, Company
Statement of Changes in Equity and Company Statement of Cash Flows
for the interim period commenced 7 February 2011 and ended 30 June
2011, and the Company Balance Sheet as at 30 June 2011 and related
notes have been reviewed by the auditors and their report to the
Company is set out herein.
2 Basis of preparation
These interim financial statements are prepared in accordance
with the Disclosure and Transparency Rules of the Financial
Services Authority and with IAS 34 'Interim Financial Reporting'.
They do not include all of the information required for full annual
financial statements. As the Company was incorporated on 7 February
2011, there is no comparative information.
The Directors have, at the time of approving the interim
financial statements, a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. Thus, the Company continues to adopt the going
concern basis of accounting in preparing the interim financial
statements.
The interim financial statements and notes thereto are presented
in Pounds Sterling (GBP), which is the Company's presentation
currency and are rounded to the nearest thousand.
3 Accounting policies
The accounting policies applied in these interim financial
statements are consistent with those expected to be applied in the
annual financial statements for the year ending 31 December
2011.
3.1 Standards, amendments and interpretations
The Company adopted all current International Financial
Reporting Standards ("IFRSs"), as adopted by the European Union,
upon incorporation. There are no new accounting standards that will
have an impact on these interim financial statements.
3.2 Segmental reporting
IFRS 8 requires the Company to disclose information about its
operating segments and the geographic areas in which it operates.
It requires identification of operating segments on the basis of
internal reports that are regularly reviewed by the entity's chief
operating decision maker in order to allocate resources to the
segment and assess its performance. As no operating activities are
carried out in the Company, no operating segments can be identified
and therefore no segmental information has been presented.
3.3 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held
at call with banks, and other short-term highly liquid investments.
Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash, generally have an
original maturity of 90 days or less and are subject to an
insignificant risk of adverse changes in value. However, certain
deposits of greater duration can be classified as cash equivalents
if the funds can be withdrawn at short notice with an insignificant
risk of adverse changes in value.
3.4 Share based payments
The Company operates equity-settled, share-based arrangements
under which it receives services as consideration for equity shares
of the Company.
The fair value of the grant of Founder Shares, Founder
Securities and Share Matching Awards is recognised as an
expense.
The total amount to be expensed 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 vesting 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. At the
end of each reporting period, the entity revises its estimates of
the number of awards that are expected to vest based on the
non-market vesting conditions. It recognises the impact of the
revision to original estimates, if any, in the income statement,
with a corresponding adjustment to equity.
3.5 Finance income
Finance income is accounted for on an accrual basis using the
effective interest method and represents income in relation to cash
and cash equivalent assets.
4 Critical accounting judgements and key sources of estimation
uncertainty
The preparation of the interim financial statements requires the
use of certain critical estimates. It also requires management to
exercise judgement in the process of applying the Company's
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the interim financial statements are disclosed
below:
The terms of the Founder Shares and Founder Securities were
summarised in the Prospectus. The successful Admission reflects,
therefore, an acceptance of the terms of the Founder Shares and
Founder Securities. Management has also considered, at the grant
date, the probability of an Acquisition being completed, and
potential range of values for the Founder Shares and Securities,
based on the circumstances at the grant date. Overall it has been
concluded that the fair value of the Founder Shares, the Founder
Securities and the share based payments calculated using the Black
Scholes simulation model has been charged to the income statement
with a corresponding credit to equity and is charged over the
vesting period of the relevant instrument. A summary of the terms
of the Founder Shares and Founder Securities and the Share Matching
Awards are set out in notes 9 and 10.
5 Operating loss
The operating loss for the period has been calculated after
deducting the following:
2011
GBP'000
Costs associated with Admission (i) 19,003
Non-Founder Director fees (ii) 510
Charge Related to Founder Shares and Founder
Securities (see note 10) 41,211
Charge Related to Share Matching Awards (see
note 10) 149
Other costs 650
61,523
(i) The costs associated with the Admission include placing and
admission fees, fees and expenses payable under the Placing
Agreement, legal, accounting, registration, printing, advertising
and distribution costs and any other applicable expenses incurred
solely for the purpose of the Admission. These costs have been
expensed as incurred.
(ii) The Non-Founder Director fees have been paid in the form of
ordinary shares issued to the Non-Founder Directors.
6 Taxation
The Company is not a financial services company under the
British Virgin Island Income Tax Law and is therefore subject to
British Virgin Island income tax at a rate of 0 per cent. If the
Company derives any income from the ownership or disposal of land
in the British Virgin Islands, such income will be subject to tax
at the rate of 20 per cent. It is not expected that the Company
will derive any such income.
7 Earnings per share
Adjusted
Loss Diluted loss Loss
per share per share per share
Loss attributable to ordinary
shareholders 60,095 60,095 41,092
Pence per ordinary share 66.73 66.73 45.63
Basic loss per ordinary share is calculated by dividing the loss
attributable to ordinary shareholders of the Company of
GBP60,095,000 by the weighted average number of ordinary shares in
issue during the period of 90,054,000.
Diluted earnings per share equal basic earnings per share at 30
June 2011 as the exercise of the Share Matching Awards by the
Non-Founder Directors is not dilutive, given the losses
arising.
The adjusted loss used in the adjusted loss per share does not
include the costs associated with the Admission of GBP19,003,000.
The Directors believe that the presentation of adjusted basic
earnings per ordinary share assists with understanding the
underlying performance of the Company.
The Founder Shares and Founder Securities are not included in
the EPS calculation as neither of the Founder Shares nor the
Founder Securities has the right to participate in earnings.
Priority Return
Sum per share
(GBP'000)
Cash raised (Net of Founder Shares and Founder
Securities) 900,060
Costs associated with Admission (19,003)
Priority Return Sum 881,057
Shares in issue 90,057
Pence per ordinary share 978
The Directors believe that the presentation of the Priority
Return Sum assists the users of the interim financial statements in
understanding the current value that would be returned to ordinary
shareholders on winding up in the event that no Acquisition takes
place.
8 Cash and cash equivalents
Cash and cash equivalents are invested in instruments
available from the sterling denominated money market
and/or deposited with banks holding credit-ratings 2011
as follows: GBP'000
AAA 868,742
AA 13,395
Cash at banks and cash equivalents 882,137
The Company aims to mitigate the risk of default by one or more
of its counterparties, regularly monitoring 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 cash balances.
9 Called up share capital
2011
GBP'000
Authorised:
Unlimited number of Ordinary shares at GBP10 per
share -
15,000 Founder Shares at GBP1 per share 15
15,000 Founder Securities at GBP1 per share 15
Issued and fully paid:
90,057,000 Ordinary shares at GBP10 per share 900,570
15,000 Founder Shares (Class A shares) at GBP1 per
share 15
15,000 Founder Securities (Class B shares) at GBP1
per share 15
90,057,000 Ordinary shares at GBP10 per share 900,600
Ordinary shares
No shares were issued on incorporation. The Company's issued
ordinary share capital consists of 90,057,000 ordinary shares.
There are no shares held in Treasury, therefore the total number of
shares with voting rights in Justice is 90,057,000 ordinary shares
of no par value. Each share holds one voting right.
Founder Shares (Class A shares)
If the Company achieves its strategy of completing an
Acquisition before 17 February 2014, the Founder Shares can, in
aggregate, be converted at the holder's option into ordinary shares
equal to 6.67 per cent of the then-issued ordinary shares of the
Company. The Founder Shares do not carry any dividend rights and do
not carry voting rights except in respect of any variation or
abrogation of class rights.
Founder Securities (Class B shares)
If the Company achieves its strategy of completing an
Acquisition before 17 February 2014 and a performance condition is
satisfied, the Founder Securities can, in aggregate, be converted
at the holder's option into ordinary shares with value equal to 15%
of the increase in the share price since the date of
acquisition.
The performance condition will be satisfied if, within five
years from the completion of an Acquisition, the closing share
price reaches either of the following conditions for 20 out of 30
business days:
-- an equivalent of a compound rate of return of 8.5% on the
share from the Admission value of GBP10 and from date of
Acquisition; or
-- an increase of 25% of the share price from the Admission
value of GBP10.
The performance condition can also be satisfied in certain
circumstances after the occurrence of a change of control of the
Company.
The Founder Shares do not carry any dividend rights and do not
carry voting rights except in respect of any variation or
abrogation of class rights.
10 Reserve for Founder Shares, Founder Securities and Share
Matching Awards
Justice Holdings Limited has outstanding Founder Shares and
Founder Securities sold to its Founders and Share Matching Awards
issued to its Non-Founder Directors, all of which are described in
detail in the Prospectus. Such securities and awards have been
accounted for in accordance with "IFRS 2- Share Based Payment". The
total value of the securities and awards that were issued during
the period ended 30 June 2011 was GBP42,554,000, comprised of
GBP22,651,000 for the Founder Shares and GBP18,560,000 for the
Founder Securities (both of which amounts were expensed during the
period), and GBP1,343,000 for the Share Matching Awards (GBP149,000
of which was expensed during the period). Accordingly, the
aggregate non-cash charge relating to the Founder Shares, Founder
Securities and the Share Matching Awards for the period ended 30
June 2011 was GBP41,360,000.
Founder Shares and Founder Securities
A summary of the key terms of the Founder Shares and Founder
Securities are set out in note 9.
The Company has the option to settle its obligations under the
terms of the Founder Shares and Founder Securities by issuing
shares or the equivalent in cash. As set out in note 4, the Company
expects to settle any future obligations by the issuance of shares.
The Founder Shares and Founder Securities are deemed to have vested
immediately as no service conditions related to their issuance are
attached to them.
Founder Shares Founder Securities
No of securities sold on 14
February 2011 and in place
as at 30 June 2011 15,000 15,000
Market value of ordinary shares
at grant date GBP9.93 GBP9.93
Exercise price Nil Nil
Vesting period Immediate Immediate
Fair Value of securities at
grant date (per share) GBP1,510 GBP1,237
Black-Scholes, Binomial
Valuation models Black-Scholes Tree
Expected dividend growth Nil Nil
Time to acquisition 1.5 years 1.5 years
Acquisition probability 50% 50%
Volatility 37.47% 37.47%
Risk free interest rate 3.94% 3.94%
Marketability discount 24% 24%
The volatility of the Company prior to acquisition is assumed to
be zero, given it is a largely cash based entity. As the potential
acquisition company is unknown, the future volatility has been
calculated based on the S&P 500 index which has companies of
comparable size to the Company's likely acquisition target across a
broad range of industries.
Share-based payments (Share Matching Awards)
On 14 February 2011, the four initial Non-Founder Directors of
the Company were granted an option to purchase a maximum of 2
shares at an option price of GBP1 for each share obtained on
Admission. On 19 April 2011, a newly-appointed Non-Founder Director
of the Company was granted an option to purchase a maximum of 2
shares at an option price of GBP1 for each share obtained on
Admission. The participation in the placement by the Non-Founder
Directors (and the participation thereafter by the newly-appointed
Non-Founder Director) was limited to a maximum of 15,000 shares per
Non-Founder Director.
In respect of the Non-Founder Directors' Share Matching Awards,
the Company has calculated the cost based upon the fair value and
taking into account the vesting period and using the Black-Scholes
methodology. This is on the basis that a maximum of 150,000
ordinary shares can be subscribed for under the Share Matching
Awards and that during the period no subscription was forfeited,
expired, exercised or exercisable. The market value of the ordinary
shares at the grant date was GBP9.93 with an exercise price of
GBP1, and the valuation has been based on the following
assumptions: a fair value of options at the grant date of GBP8.95,
1.5 years time to acquisition with a probability of acquisition of
50%, volatility of 37.47% and a risk free interest rate of 3.94%.
Based on this, the charge for the period ending 30 June 2011 is
GBP1,343,000 (of which GBP149,000 of such Share Matching Awards
amount was expensed during the period).
There are no expected forfeitures at grant date. The volatility
of the Company prior to acquisition is assumed to be zero, given it
is a largely cash based entity. As the potential acquisition
company is unknown, the future volatility has been calculated based
on the S&P 500 index which has companies of comparable size to
the Company's likely acquisition target across a broad range of
industries.
11 Cash flows from operations
2011
GBP'000
Operating loss for the period (61,523)
Add back:
Charge Related to Founder Shares and Founder Securities 41,211
Charge Related to Share Matching Awards 149
Costs associated with Admission 19,003
Other non cash movements 510
Operating cash flows before movements in working
capital (650)
Decrease in debtors -
Increase in creditors 272
Cash flows from operations (378)
12 Related party transactions
On 11 February 2011, the Company, in consideration for each of
Berggruen Acquisition Holdings III Ltd. and Marlin Equities VI, LLC
advancing the Company GBP100,000, issued an unsecured promissory
note for a principal amount of GBP100,000 to each of Berggruen
Acquisition Holdings III Ltd. and Marlin Equities VI, LLC. On 11
February 2011, the Company, in consideration for the Pershing
Square Entities advancing GBP100,000 in aggregate to the Company,
issued an unsecured promissory note for an aggregate principal
amount of GBP100,000 to such Pershing Square Entities. The terms of
the loans were that there should be no interest accrued on the
principal amount and that the loans should be repaid within 60 days
following admission. On 25 February 2011 the loans were repaid in
full and the terms of the promissory notes were therefore
satisfied.
During the period, the Company sold Founder Shares and Founder
Securities which are intended to incentivise the Founders to
achieve the Company's objectives. The Founder Shares are intended
to reward such holders for their initial capital commitment to the
Company and for completing the Acquisition, through conversion of
the Founder Shares into Ordinary Shares on terms favourable to the
Founder Entities following the Acquisition. The Founder Securities
are intended to encourage the Founders to grow the Company
following the Acquisition and to maximise value for holders of
Ordinary Shares by entitling the holders to a share of any increase
in the Company's value through the right to convert their Founder
Securities into Ordinary Shares at any time within five years
following the Acquisition once the Performance Condition has been
satisfied. The Performance Condition will be satisfied when either
the price per Ordinary Share reaches the specified levels described
in note 9 or in the event of a Change of Control. The Company has
also issued Share Matching Awards in the period and these are
discussed in further detail in note 10.
Prior to Admission, certain costs associated with the marketing,
placing and listing of shares were incurred and paid by the
Founders and recharged to Justice Holdings Limited at cost. Within
the total costs associated with the Admission, amounting to
GBP19,003,000, GBP144,000 represented recharges from related
parties. All balances had been paid at 30 June 2011.
Berggruen Holdings Inc. performs certain administrative,
investment and accounting services on behalf of the Company. The
total fees for these services from 17 February 2011 to 30 June 2011
was GBP28,000.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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