LEI number: 2138004EUUU11OVHZW75

4 October 2021

Marwyn Acquisition Company plc

(the "Company")

Publication of Annual Report & Financial Statements for the year ended 30 June 2021

The Company announces the publication of its results for the year ended 30 June 2021.

The Annual Report & Financial Statements are also available on the 'Shareholder Documents' page of the Company's website at www.marwynacplc.com.

Enquiries:

Marwyn Acquisition Company

Tel: +44(0)207 004 2700

Mark Brangstrup Watts

James Corsellis

Numis Securities Limited (Nominated Adviser and Broker)

Tel: +44(0)207 260 1000

Kevin Cruickshank

Jamie Loughborough

Marwyn Acquisition Company Plc

Annual Report and Audited Financial Statements

For the year ended 30 June 2021

CHAIRMAN'S STATEMENT AND STRATEGIC REPORT

I present to shareholders the Annual Report and Consolidated Audited Financial Statements (the "Financial Statements") of Marwyn Acquisition Company plc (the "Company") (formerly Wilmcote Holdings plc) for the year ended 30 June 2021, consolidating the results of the Company, WHJ Limited, Wilmcote Group Limited, WCH Group Limited, Arrow US Holdings Inc and Arrow Canadian Holdings Limited (collectively the "Group" or "MAC").

Strategy
Marwyn Acquisition Company plc is listed on AIM on the London Stock Exchange and was established to provide shareholders with attractive total returns achieved through capital appreciation. The Directors believe that opportunities exist to create significant value for shareholders through properly executed, acquisition-led growth strategies, in the industrials, manufacturing, engineering, construction, building products or support services sectors. The investment policy is included in full on the Company's website at https://www.marwynacplc.com/investors/investment-policy/default.aspx.

Overview of the Year        

During the year, the Company has considered a number of investment opportunities introduced to it, engaging in discussions with target companies and management teams to explore potential platform acquisitions, particularly those opportunities considered most suitable to an AIM listing and providing the greatest potential to create shareholder value.

Outlook

The Directors see the recent market disruption as having accelerated structural change in certain sectors, with the emergence of related investment opportunities expected to continue. The Directors remain highly cognisant of selecting and progressing those opportunities where the Company's structure and access to the public markets can provide a solution not otherwise available to a vendor, and at a valuation appropriate to the situation and potential for shareholder value creation.  Vendors are increasingly pursuing transactions with listed acquisition companies to access public markets. This alongside the Company's board of directors and listing on AIM, mean that the Company is well positioned to execute its investment strategy. 

Results

The Group's loss after taxation for the year to 30 June 2021 was £0.7 million (2020: £2.2 million). The Group incurred £0.7 million of administrative expenses during the year (2020: £2.2 million), received interest of £1k (2020: £0.01 million) and at 30 June 2021 held a cash balance of £5.2 million (2020: £6 million).

Dividend policy

It is the Board's policy that prior to the acquisition or investment in a trading entity, no dividends will be paid. The Company has not yet acquired a trading operation and we therefore consider it inappropriate to make a forecast of the likelihood of any future dividends. Following an acquisition or investment, and subject to the availability of distributable reserves, dividends will be paid to shareholders when the Directors believe it is appropriate and commercially prudent to do so.

REPORT OF THE DIRECTORS

The Directors present their Annual Report and audited Financial Statements for the year to 30 June 2021.

Principal Activities

The Company was formed to acquire a platform trading asset in the downstream and specialty chemicals sector. At the Company's annual general meeting held on 12 December 2019, the Company's shareholders approved a broadening of the Company's investment policy to include investment opportunities in adjacent sectors, reflecting the breadth of deal flow seen and a broader range of potential investment structures.

The Company intends to focus on the industrials, manufacturing, engineering, construction, building products and support services sectors. We believe that opportunities exist to create value for shareholders through a properly executed, acquisition-led strategy in one of these sectors. We may either seek to recruit sector-leading executive management in advance of an acquisition, or alternatively may consider identifying acquisition opportunities with impressive incumbent management teams that require a catalyst to unlock growth.

Results and Dividends

For the year to 30 June 2021, the Group's loss was £0.7 million (2020: £2.2 million).

It is the policy of the Company's board of Directors (the "Board") that prior to the Platform Acquisition, no dividends will be paid. Following this, and subject to the availability of distributable reserves, dividends will be paid to shareholders when the Directors believe it is appropriate and commercially prudent to do so.

Statement of Going Concern

The Financial Statements have been prepared on a going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The Group had cash resources of £5.2 million at 30 June 2021 and has net assets of £5.2 million. The Directors have considered the financial position of the Group and have reviewed forecasts and budgets for a period of at least 12 months following the approval of the Financial Statements. Subject to the structure of any potential transaction, the Company may need to raise additional funds for the acquisition in the form of equity and/or debt, which has not been factored into the Director's going concern assessment as this will be dependent on the size and nature of a future platform acquisition. Furthermore, the Directors have considered the expected impact of the Covid-19 pandemic on the Group's forecast cashflows and liabilities, concluding that prior to completing a transaction, the pandemic has no material impact on the Group due to the nature of its operations. As a result, the Directors have concluded that, at the date of approval of the Financial Statements, the Company and the Group have sufficient resources for the foreseeable future and can continue to execute its stated strategy. Accordingly, it is appropriate to adopt the going concern basis in the preparation of the Financial Statements.

Financial Risk Profile

The Group's financial instruments are mainly comprised of cash, payables and receivables that arise directly from the Group's operations. Details of the risks relevant to the Group are included on pages 48 to 52.

Substantial Shareholdings 

The Company has been notified that the shareholders listed below held a beneficial interest of 3 per cent. or more of the Company's issued share capital as at the date of approval of the Financial Statements.

Stated Capital

Details of the stated capital of the Company during the year are set out in note 14 to the Financial Statements.

Directors
The Directors of the Company who served during the period are:

James Corsellis, Executive Chairman

James brings extensive public company experience as well as management and corporate finance expertise across a range of sectors and an extensive network of relationships with co-investors, advisers and other business leaders.

Previously he has served as a director of the following companies: a non-executive director of BCA Marketplace from July 2014 to December 2017 and Advanced Computer Software from October 2006 to August 2008, Non Executive Chairman of Entertainment One from January 2007 to March 2014 and remaining on the board as non-executive director until July 2015, non-executive director of Breedon Aggregates from March 2009 to July 2011 and as CEO of icollector Plc from 1994-2001. James was educated at Oxford Brookes University, the Sorbonne and London University.

James is currently a Managing Partner of Marwyn Capital LLP and Marwyn Investment Management LLP. James is a non-executive director of AdvancedAdvT Limited, and Chairman of Marwyn Acquisition Company II Limited and Marwyn Acquisition Company III Limited. James is also an executive director of Silvercloud Holdings Limited.

Mark Brangstrup Watts, Executive Director

Mark has many years of experience deploying private equity investment strategies in the public markets. Mark brings his background in strategic consultancy to the management team having been responsible for strategic development projects for a range of international companies including Ford Motor Company (US), Cummins (Japan) and 3M (Europe).

Previously Mark has served as a director of the following companies: a non-executive director of Zegona Communications Plc from January 2015 to May 2020, BCA Marketplace from July 2014 to December 2017, Advanced Computer Software from October 2006 to September 2012, Entertainment One from June 2009 to July 2013, Silverdell Plc from March 2006 to December 2013, Inspicio Holdings Limited from October 2005 to February 2008 and Talarius Limited September 2005 to February 2007 amongst others. Mark has a BA in Theology and Philosophy from King's College, London.

Mark is currently a Managing Partner of Marwyn Capital LLP and Marwyn Investment Management LLP and director of Marwyn Acquisition Company II Limited and Marwyn Acquisition Company III Limited. Mark is also an executive director of Silvercloud Holdings Limited.

Directors' Interests

The Directors have no direct interests in the Ordinary Shares of the Company. The Executive Directors have interests in the participation shares, as detailed in note 17 to the Financial Statements.

James Corsellis and Mark Brangstrup Watts are managing partners of Marwyn Investment Management LLP which manages 95.36 per cent. of the issued share capital of the Company as at 30 June 2021. James Corsellis and Mark Brangstrup Watts are also managing partners of Marwyn Capital LLP, a firm which provides corporate finance advice and managed services support to the Group.  James Corsellis and Mark Brangstrup Watts are the ultimate beneficial owners of Axio Capital Solutions Limited ("Axio"), Axio provided accounting and company secretarial services to the Company until 31 December 2020. Details of the related party transactions which occurred during the period are disclosed in note 18.

Save for the holding of participation shares as disclosed in note 17, no Director has or has had any interest in any transaction which is or was unusual in its nature or conditions or significant to the business of the Group. There were no loans or guarantees granted or provided by the Company and/or any of its subsidiaries to or for the benefit of any of the Directors.

Directors' Emoluments

Directors' emoluments during the year are disclosed on page 19.

Statement of Directors' Responsibilities

The directors are responsible for preparing financial statements for each financial year which give a true and fair view, in accordance with applicable Jersey law and International Financial Reporting Standards, of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements, the directors are required to:

·     select suitable accounting policies and then apply them consistently;

·     make judgements and estimates that are reasonable and prudent;

·    state whether applicable accounting standards 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 confirm that they have complied with the above requirements in preparing the financial statements.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with The Companies (Jersey) Law, 1991. 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.

So far as the directors are 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 or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Independent Auditors

On 29 June 2021, the Company announced the appointment of Baker Tilly Channel Islands Limited ("Baker Tilly") as the Company's independent auditor with effect from the date of the announcement. Baker Tilly has expressed its willingness to continue to act as auditor to the Group and the approval of Company auditor is subject to shareholder approval at the next Annual General Meeting.

Disclosure of Information to Auditors

Each of the Directors in office at the date the Report of the Directors is approved, whose names and functions are listed in the Report of the Directors confirm that, to the best of their knowledge:

·    the Group Financial Statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Group;

·    the Report of the Directors includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces;           

·      so far as he is aware, there is no relevant audit information of which the Group's auditors are unaware; and

·      he 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 Group's auditors are aware of that information.

On behalf of the Board

James Corsellis

Chairman

1 October 2021

CORPORATE GOVERNANCE REPORT

Overview

The Directors recognise the importance of sound corporate governance commensurate with the size and current nature of the Company. The Company elected to adopt the Quoted Companies Alliance Corporate Governance Code ("QCA Code" or the "Code") and established an Audit and Risk Committee and Nomination and Remuneration Committee on 1 October 2018.

The Company is led by its Executive Chairman, James Corsellis and Executive Director Mark Brangstrup Watts, who are both knowledgeable and considered to be best placed to lead the Company in seeking to identify either a sector-leading executive management team in advance of an acquisition or acquisition opportunities with impressive incumbent management teams. The biographies of the Directors are detailed on page 4. The Company's Chairman has responsibility for leading the Board effectively and overseeing the Company's corporate governance model.

Based on the current composition of the Board and the nature of the Company's ongoing activities, the Board have implemented simplified corporate governance arrangements to best meet the needs of the business at this time. The Directors are committed to maintaining the appropriate levels of corporate governance for the nature and extent of the activities of the Company and will therefore revisit the corporate governance arrangements as the business evolves, an executive management team is appointed, or a Platform Acquisition has completed.

James and Mark are the sole members of the Audit and Risk Committee and Nomination and Remuneration Committee as at the date of this report. The Directors are aware that Committee composition should differ to that of the Board and where possible should consist of a majority of independent directors. The Directors are committed to re-considering the Board and Committee composition as the nature and activities of the Company evolves.

The purpose of this report is to broadly set out how the Company complies with the QCA Code and explain the areas of non-compliance (see the 'Deviations from the Code' section below). The Company provides a detailed assessment of its compliance with the Code on its website https://www.marwynacplc.com/investors/Corporate-Governance/default.aspx and will continue to provide updates on its compliance with the QCA Code via the website and in each annual report.

Detail on the Company's strategy is included on page 2 and the Group's principal risks are described on pages 45 to 49.

Board and Committee updates

During the year and subsequently, the Board consisted of James Corsellis as Executive Chairman and Mark Brangstrup Watts. James Corsellis and Mark Brangstrup Watts have significant management expertise and extensive experience completing acquisitions in multiple jurisdictions. The Company is currently pursing its revised investment policy, which is set out on page 2, and it is believed that the current directors experience makes them best placed to lead the Company in identifying, evaluating and completing its Platform Acquisition.  

The Director's biographies are detailed on page 4 of these Financial Statements.

The size and nature of the business will change once a sector leading management team, or an acquisition opportunity with an impressive incumbent management team is identified and the Directors are committed to

re-considering the Board and Committee composition at this time.

Board Interaction

The Board meets formally at least four times a year, but the Directors also regularly meet on an informal basis. The Chairman is primarily responsible for the running of the Board. The Board understands that it is critical for Board meetings to be well managed and balanced in order for the business to successfully deliver and achieve its strategy. The Chairman is responsible for the Board meeting agenda, which, for periodic meetings, is agreed in advance of each Board meeting and prepared based on the board annual agenda cycle and for ad hoc meetings this is agreed in advance and published as soon as practicable. Board packs are circulated to the Board in advance of each meeting and capture all ongoing corporate governance requirements. The Board is presented with papers to support its discussions including timely financial information, investor relation information, subsidiary management reporting and details of potential acquisition targets and deal progress.

The Group's culture is to openly and frequently discuss any important issues both at and outside of formal meetings.

All Board members have full access to the Group's advisers for seeking professional advice at the Company's expense.

Board Attendance

Deviations from the Code

One of the ten principles of the QCA Code is to maintain 'the board as a well-functioning, balanced team led by the chair'. To achieve this principle, the QCA Code requires a balance between executive and non-executive Directors and at least two independent non-executive directors to be in place.  The Company deviates from the QCA Code in this respect, as the Company's Board currently consists of two Executive Directors.

The Board believes that the Board composition is appropriate for the Company's current operations and provides an appropriate mix of experience, expertise and skills to support the business of the Group in its current form. The Board remains committed to reviewing its composition to ensure it remains appropriate as the Company's operations evolve.

The QCA Code states that companies should have in place a board evaluation process based on clear and relevant objectives. The Board don't believe that it will be beneficial to undertake a board effectiveness review whilst the board consists of two directors. The Board intend to establish a formal board effectiveness review once the board composition is expanded in due course.

Board Committees

On 1 October 2018, the Board established two principal committees, the Audit and Risk Committee and the Nomination and Remuneration Committee (the "Committees"), to assist the Board in the execution of its duties. If the need should arise, the Board may set up additional committees as appropriate. The Committees' terms of reference are available on the Company's website, www.marwynacplc.com, or by request from the Company Secretary. Each of the Committees is authorised, at the Company's expense, to obtain legal or other professional advice to assist in carrying out its duties. No person other than a Committee member is entitled to attend the meetings of these Committees, except by invitation of the Chairman of that Committee. The Company's auditors Baker Tilly are invited to attend meetings of the Audit and Risk Committee as appropriate.

The current committee membership for both the Audit and Risk Committee and the Nomination and Remuneration Committee is the same as the Board membership, being Mark Brangstrup Watts (Chairman of both Committees) and James Corsellis. The Directors are aware that Committee composition should differ to that of the Board and where possible should consist of a majority of independent directors. The Directors are committed to re-considering the Board and Committee composition as the nature and activities of the Company evolves.

For the year ended 30 June 2021 the following committee meetings were held:

The Audit and Risk Committee report and Nomination and Remuneration Committee report are included on pages 14 and 15 respectively of these Financial Statements.  

The Company also recognises the importance of having systems and procedures in place to ensure compliance by the Board, the Company, and its applicable employees in relation to dealings in securities of the Company and the management of inside information in accordance with the UK market abuse regime ("UK MAR"). The Board has established a Disclosure Committee, which currently consists of Mark Brangstrup Watts and James Corsellis and adopted a share dealing code for this purpose. The Directors believe that these procedures and policies adopted by the Board are appropriate for the Company's size and complexity and that it complies with MAR.

Board Diversity

The Board considers diversity to be much broader than the traditional definition which focuses on, amongst other things: race, gender, age, beliefs, disability, ethnic origin, marital status, religion and sexual orientation. Productive Board discussions require a breadth of experience and perspectives achieved through hiring board members with diverse experience. Board directors shall be appointed in order to bring required skills, knowledge and experience and are expected to positively impact the chemistry and dynamics of the Board.

The Board currently consists of two directors, both of whom are male. It is believed that the Board has the experience and skills for the Group to either identify a sector-leading executive management team or an acquisition opportunity with an impressive incumbent management team. Details on the experience of the Directors are included on page 4 of these Financial Statements.

Once an executive management team is in place/acquisition opportunity progressed the Board and committee composition will be revisited to ensure that it meets the changing needs of the business. During the recruitment process for new directors, the Nomination and Remuneration Committee will ensure that the diversity of the Board is considered.

Risk Management and Internal Controls       
The Board is responsible for establishing and maintaining the Company's systems for both risk management and internal controls and reviewing the effectiveness of both. Internal control systems are designed to meet the particular needs of the Company and Group and the particular risks to which it is exposed. The procedures are designed to manage rather than eliminate risk and, by their nature, can only provide reasonable but not absolute assurance against material misstatement or loss.

The role of reviewing and challenging the risk identification and risk management process across the business including the risks in connection with a potential acquisition has been delegated to the Audit and Risk Committee.

The Group does not have a separate internal audit function as the Board does not feel this is necessary due to the current size of the business and the simplicity and low volume of transactions, coupled with the nature and the extent of internal controls, management and Board oversight and involvement.

The Group has a formal and informal risk management process. The size of the Board and the frequency in which they interact ensures that identified risks are communicated both formally, upon review and consideration of the risk register, and informally in regular conversations between Directors on business operations and strategic progress.

The risk register categorises risks into key business risks, risks associated with the successful completion of an acquisition, shareholder risks and financial and procedural risks. A risk assessment has been performed identifying the potential impact and likelihood of each risk and mitigating factors/actions have also been identified. The risk register, including the risk assessment is reviewed and discussed by the Audit and Risk Committee who propose to the Board any updates for formal adoption.

Principal risks faced by the Group are explained in detail on pages 45 to 49. The main risks faced by the Group are those which might jeopardise the successful completion of an acquisition. MAC has come within days of successfully completing two transactions and as such have incurred significant transaction related costs. Whilst the risk remains that future losses arise from the pursuit of future transactions, the Directors consider the management of the Company's exposure to financial costs of progressing and securing a successful acquisition a key priority and as such have implemented the following robust risk mitigation procedures:

·   reducing the target size of potential acquisitions to consider taking one or more controlling or noncontrolling stakes, in businesses with an enterprise value generally expected to be up to £500 million;

·   seeking appropriate risk-sharing measures with professional service providers and, to the extent possible, with vendors;

·   continuing the model of early stage market sounding and consultation with potential investors throughout the transaction process; and

·  maintaining a flexible attitude to which international capital markets/exchanges would provide the optimal environment for initial and future capital raising.

The Company also continues to implement financial procedures including controls over cash management, the safeguarding of cash, and monthly cash forecasting and budgeting. The Company also has in place numerous internal controls in relation to financial reporting, such as the segregation of roles between those preparing and those reviewing financial information. In addition, the Company has established a multi-tier review process with reviews undertaken by individuals with the appropriate level of seniority and experience, reducing the risk of misstatement and fraud.

Currently, the Directors are provided with summary financial information, including a balance sheet, profit and loss and actual cash flow.

The Board are aware of the importance of an effective risk management process reflective of the size and complexity of the business and believe that the processes described above are suitable for the business in its current form. At or around the time an operating business is acquired, the Board will review the risks to which the new enlarged group is exposed, and an enhanced risk management process will be put in place.

Company Culture

The Board promotes a dynamic, entrepreneurial and transparent culture. The recruitment of highly skilled, adaptable, driven and experienced directors are fundamental to executing the Company's strategy. The Board therefore fosters a forum whereby openness, constructive challenge and innovation are actively encouraged.

The Company is small, and as at the date of this report consists of two directors. The Company's culture is therefore set by the Board and demonstrated through Board interaction. The Chairman in his role of leading the Board, managing Board meetings and encouraging constructive challenge between Board members is central to setting the tone from the top.

Once additional directors are appointed, a Board effectiveness review will be the key method in which the Company's culture is monitored and reviewed.

Succession Planning

Given the size, composition and nature of the Company at this stage in its evolution, the creation and implementation of succession plans are not considered to be appropriate or relevant and as such no succession planning is in place. Once a Platform Acquisition has been made, succession planning will be revisited by the Board.

Directors' Terms of Service

The Articles of Association of the Company require that, at each annual general meeting of the Company, one third of the Directors retire from office and offer themselves for re-election, and each Director shall retire from office and stand for re-election at least every three years. Furthermore, each Director appointed in the period since the previous annual general meeting shall stand for election at the subsequent annual general meeting. Accordingly, James Corsellis will retire from office at the Company's forthcoming annual general meeting and seek to be re-elected by the Company's shareholders. The Company is satisfied that James's performance continues to be effective and demonstrates his ongoing commitment to the role and as such supports his re-election.

The Directors' service contracts establish the time commitment each Director must devote to the Company. Mark Brangstrup Watts and James Corsellis are to devote the time necessary to ensure the proper performance of their duties.

Continued Professional Development

The Board considers and reviews the requirement for continued professional development. The Board undertakes to ensure that their awareness of developments in corporate governance and the regulatory framework is current, as well as remaining knowledgeable of any industry specific updates. The Company's professional advisers and, Nomad all serve to strengthen this development by providing guidance and updates as required.

Chairman

The Chairman is responsible for leading the Board effectively and overseeing the adoption, delivery and communication of the company's corporate governance model. The Chairman displays a clear vision and focus on strategy, capitalising on the skills, experience, characteristics and qualities of the Board and fostering a positive governance culture throughout the Group. 

Company Secretary

The QCA Code provides details on the roles and responsibilities of the Company Secretary within a Company. The Company Secretary for the Group is Crestbridge Corporate Services Limited ("Crestbridge") who were appointed on 31 December 2020, Crestbridge are supported by One Advisory Limited ("One") who provide company secretarial and governance support.

Together, Crestbridge and One perform the function of Company Secretary as outlined in the Code. The role includes preparing for and running effective Board and Committee meetings, including the timely dissemination of appropriate information. In addition, the Company Secretary is responsible for assisting the Directors in ensuring that the Group entities are managed, controlled and administered within the parameters of their governing documents and are compliant with regulatory compliance and filing obligations. 

Marwyn Capital LLP further supports the role of Crestbridge and One, in respect of both the company secretarial function and the finance function for the Group as required, ensuring open lines of communication between all professional advisers, shareholders and the Board.

External Advisors

Since listing the Company has pursued its investment strategy and as such has engaged several advisors to help facilitate this. A list of current key external service providers is included on page 50

Relationships with key resources and external advisers are developed and maintained through an open dialogue to ensure that the Company is able to draw upon their expertise and assistance when required.

Conflicts of Interest

The Articles of Association of the Company provide for a procedure for the disclosure and management of risks associated with Directors' conflicts of interest. At each Board meeting, a list of directorships for each Director is tabled to the meeting with any potential conflicts being discussed in detail. Notwithstanding that no material conflict of interest has arisen in the period, the Board considers these procedures to have operated effectively.

Relations with Shareholders

The Board is always available for communication with shareholders and the Executive Directors frequently encourage engagement constructively with current and potential shareholders. All shareholders have the opportunity, and are encouraged, to attend and vote at the annual general meeting of the Company during which the Board will be available to discuss issues affecting the Company.

Annual General Meeting

The AGM is an opportunity for shareholders to vote on certain aspects of the Company's business.  The next AGM of the Company will be scheduled in due course and held on or before 31 December 2021.  The Financial Statements and related papers will be available on the Company's website at www.marwynacplc.com.  

AUDIT AND RISK REPORT

Audit and Risk

I present the Audit and Risk Committee Report for the year ended 30 June 2021. I have chaired the committee since establishment on 1 October 2018, with James Corsellis serving as a member throughout. The roles and responsibilities of the Audit and Risk Committee are set out in its terms of reference, which are available on the Company's website and from the Company Secretary. The Audit and Risk Committee are responsible for the:

o  review and challenge of the risk identification and risk management process across the business including the risks in connection with a potential acquisition;

o  management of relations with the external auditor to ensure that the annual audit is effective, objective, independent and of high quality;

o  oversight of the relationship with the external auditor to ensure it remains appropriate and, that the service is appropriately priced; and 

o  review of the Company's draft corporate reporting, including the annual report and accounts.

The Audit and Risk Committee has met four times in the year to 30 June 2021. The key matters we have discussed during this period were the:

o  review of the Company's annual report and financial statements for the year to 30 June 2020, including the Audit and Risk Committee Report;

o  review of the audit planning documentation, reporting timeline and audit fees;

o  review of risk identification and risk management processes, including review of updates to the Company's risk register;

o  review of updates to the Company's Financial Position and Prospects Procedures Memorandum and revised QCA Code summary, including related updates made to the Company's website;

o  review and consideration the Company's policies and procedures including Market Abuse Regulations policy specifically noting the application of UK MAR, the associated share dealing code, tax evasion risk assessment and whistleblowing policy;

o  consideration of the need for an internal audit department; and

o  review of the Company's interim financial statements for the six-month period ended 31 December 2020.

In addition to the above the Audit and Risk Committee recommended the appointment of Baker Tilly as the Company's external auditor. Auditor independence, reputation, experience and fee quote among other factors were considered by the Board in determining the external auditor appointment. The total amount recognised for non-audit services during the year was £nil.

In respect of the Financial Statements the Audit and Risk Committee evaluated the audit process and the external auditor, reviewed the going concern assumption, and considered whether the Annual Report and Financial Statements are fair, balanced and understandable. As part of the review, the Board received a report from the external auditor on its audit.

Nomination and Remuneration Report

Nomination and Remuneration Committee Chairman's Statement

I present the Nomination and Remuneration Report for the year ended 30 June 2021. The Report includes a summary the committee's work during the year, details of the Company's application of its remuneration philosophy, and amounts earned by the Directors during the current year.

 I have chaired the committee since it was established on 1 October 2018 with James Corsellis serving as a member throughout this period.

The roles and responsibilities of the Nomination and Remuneration Committee are set out in its terms of reference, which are available on the Company's website and from the Company Secretary. The Nomination and Remuneration Committee are responsible for making recommendations to the Board for the matters set out in its terms of reference, whilst the responsibility for establishing the Company's overall approach to remuneration lies with the Board.

During the year, the Nomination and Remuneration Committee met twice. The key matters we have discussed were:

o  a review of the Company's terms of reference; and

o  review and approval of the Nomination and Remuneration Report for inclusion in the 30 June 2020 annual report and financial statements.

Looking Forward

Given the current nature and activities of the Company there are no significant proposed changes to the executive director remuneration packages for the year ahead. However, to the extent that the nature and size of the business changes going forward, the Board composition will be revisited and appointments reflective of the roles undertaken.  

Mark Brangstrup Watts

Committee Chairman

1 October 2021

Introduction to Directors' Remuneration Report

The information included in this report is not subject to audit unless specifically indicated.

The remuneration philosophy of the Company is that executive remuneration should be simple, clear and transparent and support the delivery of the business strategy by attracting the highest calibre personnel.  This philosophy is reflected in our remuneration structure.

The Board feels very strongly that the Directors' remuneration should be linked to the creation and delivery of attractive returns to shareholders.  Although the Board feels it is important to remunerate senior executives through their basic pay and benefits at market levels commensurate with their peers, the participation share scheme has been designed to provide ongoing remuneration in alignment with shareholders' interests. The participation share scheme has been in place since before the Company's IPO and the appropriateness of its current terms and structure will continue to be assessed in light of circumstances at the time of appointing a new executive management team or completing a platform acquisition.

Participation Share Scheme

The Directors believe that the success of the Company will depend to a high degree on the future performance of its management team. The Company established incentive arrangements which will only reward the participants if shareholder value is created, thereby aligning the interests of management directly with those of shareholders (the "Participation Share Scheme").

The Company has in place an executive incentive scheme (the "Management LTIP") through which members of the previous management team were to be rewarded for increases in shareholder value, subject to certain conditions including a preferred return for Shareholders being satisfied. As at the date of this report there are no members of the Management LTIP, however the Company expects that, once appointed, the new management team will be party to a long term incentive scheme whose structure will be based on the Management LTIP.

Under the Management LTIP, participants subscribe for A1 Shares in WHJ Limited ("WHJL") which they can give notice to redeem between the third and fifth anniversaries of the Platform Acquisition (or earlier if there is an exit event). Subject to delivering a compound annual growth rate on Shareholders' invested capital in the Company (taking dividends and any prior return of capital into account) equal to or greater than 10 per cent. per annum (the "Shareholder Preferred Return"), the A1 Shares may be redeemed for an aggregate value equivalent to 10 per cent. of the excess of the market value of the Company (adjusted for any dividends or capital returns) over and above its aggregate paid up share capital (the "Shareholder Value Growth").

Upon receipt of a notice to redeem to WHJL, the Company and the holders of A1 Shares will have the right to elect that the A1 Shares that would otherwise have been redeemed are instead exchanged for Ordinary Shares. If Ordinary Shares are issued to satisfy the redemption of A1 Shares, Shareholders will experience dilution at the time of any redemption by reference to a fixed proportion of the Shareholder Value Growth they will have benefited from. If neither the Company nor the holders of A1 Shares exercise such right, the holders of A1 Shares will receive cash, which would instead reduce the Company's cash resources on an equivalent basis.

In addition, Marwyn Long Term Incentive LP ("MLTI"), in which James Corsellis and Mark Brangstrup Watts are beneficially interested, has subscribed for A2 Shares in WHJL (the "Marwyn Performance Shares"). The Marwyn Performance Shares are intended to reward Marwyn for its central role in the formation of the Company, completion of the Platform Acquisition and ongoing involvement in the development and execution of the Company's strategy to deliver value to all Shareholders, taking into account Marwyn's track record of shareholder value creation. In the event that the Shareholder Preferred Return on all equity invested has been satisfied between the third and fifth anniversary of the Platform Acquisition (or earlier if there is an exit event), MLTI will be entitled to redeem the Marwyn Performance Shares for five per cent. of the Shareholder Value Growth at the time of giving such notice for cash or Ordinary Shares on the same basis as the A1 Shares.  If Ordinary Shares are issued to satisfy the redemption of the Marwyn Performance Shares, Shareholders will experience dilution at the time of any redemption by reference to a fixed proportion of the Shareholder Value Growth they will have benefited from. If they are redeemed in cash, the redemption would instead reduce the Company's cash resources on an equivalent basis.

The Management LTIP and Marwyn Performance Shares have been designed to align the Company's shareholders' interests and the shareholders' expected typical ownership period.  The Board strongly believes that this clear and transparent incentive framework is aligned with the Company's strategy for growth and provides a strong platform for the future success of the Company. The design of the Participation Share Scheme and any replacement scheme will ensure that it is:

More detail on the Management LTIP and Marwyn Performance Shares is included in note 17 of these Financial Statements.

It is anticipated that the exercise of the Management LTIP or Marwyn Performance Shares will result in management receiving Ordinary Shares in the Company. Those shareholdings could be substantial and should further align management and shareholders.

Directors' Basic and Performance Related Pay:

The below table sets out the remuneration of each Director during the year and prior period:

*Adrian Whitfield, Kevin Dangerfield and John McAdam left the Company on 21 October 2019 and included in the above are amounts payable to these directors under the terms of their termination agreements as applicable.

There was no change to the remuneration package of James Corsellis and Mark Brangstrup Watts during the year. Neither James nor Mark receive any taxable benefits.

John McAdam was appointed as Director effective 1 October 2018 and subsequently stepped down from this position on 21 October 2019. His annual salary was £50,000 which is considered to be market rate for an independent non-executive director of a business of this nature. Under the terms of John's service agreement he was entitled to six months' notice, and this was paid in full on his departure.

Adrian Whitfield stepped down from his position as CEO of the Company on 21 October 2019. Adrian's remuneration package included an annual salary of £300,000 per year and a contractual bonus of £100,000. Adrian also participated in the Management LTIP. Under the terms of Adrian's settlement agreement, he received £198,000 on his departure from the Company and was reimbursed for the cost of his Management LTIP.

Kevin Dangerfield was appointed as director of the Company on 1 July 2019. Kevin's remuneration package included an annual salary of £350,000 per annum, along with an annual discretionary bonus as decided by the Nomination and Remuneration Committee. Kevin was also entitled to a payment of 20 per cent of salary in lieu of contributions to the Company's pension scheme and an annual car allowance of £11,000. On Kevin's departure from the Company he was paid £175,000 in lieu of notice, equivalent to six months' pay and reimbursed for the cost of his Management LTIP.

Director Service Contract Provisions

New director and senior management service contracts are prepared alongside the Company's legal counsel, and new practices/guidance are considered at the point these are drafted.

The employment contracts set out clearly the notice period, termination clauses and claw black clauses for each of the Directors. In all instances directors are required to step down from their position should this be voted for by the shareholders.

Legal advisors were engaged to assist with the termination of Adrian Whitfield, Kevin Dangerfield and John McAdam's employment contracts during the prior year.

Shareholder Vote

At the 2020 AGM, 95.7% of shareholders who voted on the resolution for the re-election of Mark Brangstrup Watts voted in favour.

Performance Evaluation

Set out on page 8 of the Report of the Directors, the board effectiveness review will take place once additional board members are appointed.

Comparison Against Market Performance

The Company does not yet own an operating business, and as such an illustration of the Company's share price as a comparison to the market is not presented within this report. No performance related bonuses have been paid within the year or prior year.

Risks

The Board are mindful of the potential risks associated with its remuneration policy. The Board aims to provide a structure that encourages an acceptable level of risk-taking (by benchmarking against shareholder returns) and an optimal remuneration mix. The Board has considered the risk involved in the Participation Share Scheme and is satisfied that the Company's governance procedures mitigate these risks appropriately.

The Board seeks to ensure that its approach to remuneration drives behaviour aligned to the long-term interests of the Company and its shareholders. 

Looking Ahead

The Directors are seeking to identify a sector-leading executive management team in advance of a Platform Acquisition or identify acquisition opportunities with impressive incumbent management teams.

Once the Company has made its first acquisition, the objectives of the enlarged Group will be established; at this point the Directors' service contracts will be revisited and as part of this process the Nomination and Remuneration Committee will consider the most appropriate key performance indicators for the Directors.

On behalf of the Board

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MARWYN ACQUISITION COMPANY PLC

Opinion

We have audited the consolidated financial statements (the "Financial Statements"), included within the Annual Report and Financial Statements (the "Annual Report") of Marwyn Acquisition Company plc (formerly Wilmcote Holdings plc) (the "Company", and together with its subsidiaries the "Group") for the year ended 30 June 2021 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the related notes including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as adopted by the European Union ("IFRS").

In our opinion, the financial statements:

·      give a true and fair view of the state of the Group's affairs as at 30 June 2021 and of its loss for the year then ended;

·      have been properly prepared in accordance with IFRS; and

·      have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the Financial Statements, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other matter

The Financial Statements of the Group for the year ended 30 June 2020 were audited by the previous auditor, as listed on the Advisers page, who expressed an unmodified opinion on those consolidated financial statements on 3 November 2020.

An overview of the scope of our audit

Our audit approach is risk based and focuses on identification of key business risks and those areas of operation that are considered significant to the results for the year and the position at the balance sheet date. It focuses on the robustness and effectiveness of the Group's internal control environment established by management to ensure sound operational and financial control and the mitigation of risk.

The audit approach is a balance between systems and controls reliance, analytical review and detailed substantive testing (including obtaining independent third-party confirmations) and is determined by assessment of the internal control environment and factors influencing inherent risk.

During our preliminary and planning phases of our audit, we gained an understanding of the business environment, including internal controls at the administrator, along with the Board of Directors and respective Committees (referred to for purposes of this document as "management") where these are relevant to the audit.

This ensured a robust and efficient audit at the execution stage. Where possible, we seek to validate and subsequently place reliance on the controls that are in place, in order to increase the efficiency of our audit work. Our audit comfort comes from evaluating and validating how management monitor and control the business and financial risks. 

Based on our understanding of the business mentioned above, we undertook substantive testing on significant balances, transactions and disclosures in line with our risk assessment including the results of the work performed at the planning phase.

The Group comprises the Company and five wholly owned subsidiaries. We performed a full scope audit of the Company and the Group consolidation. All other components were considered immaterial. Taken together, the audit scope accounted for 100% of the Group's total assets and 99% of the Group's total comprehensive loss.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified in our audit.

Significant risks and our response

(i)            Financial Statement Disclosures

This is our first year as auditors for the Group, so we needed to obtain comfort that the accounting policies followed are appropriate. The risks are as follows:

·      Risk of non-compliance with IFRS;

·      Incorrect application or interpretation of accounting standards causing material misstatement; and

·   Risk of non-compliance with other disclosure requirements, such as London Stock Exchange's AIM Rules for Companies, the QCA code and other applicable legislation and regulations in force.

Our response

Our audit procedures with respect to this risk included, but were not limited to:

·      Multiple layers of review of the financial statements by appropriately experienced staff; and

·   Review of the Annual Report using specialist software to assess the adequacy and completeness of financial statement disclosures.

We have no issues to note from our testing.

(ii)           Management override of controls

There is a risk of management override of controls to achieve certain predetermined outcomes in the Financial Statements and the execution of transactions.

Our response

Our audit procedures with respect to management override of controls included, but were not limited to:

·      Review of all minutes of meetings of the Board of Directors;

·    Journal entry testing including enquiry and agreeing to source documents for significant management journals, unusual journals, year end journals and post year end journals; and

·     Review of the general control environment, including walkthroughs of adequate controls which reduce the risk of management override of controls.

We have no issues to note from our testing.

(iii)          Covid-19

The COVID-19 pandemic has caused significant economic uncertainty across the globe, leading to declines in global markets. This could impact the Group directly when considering the impact on the appropriateness of the going concern basis of accounting. The ability of the Group to make investments may also be adversely impacted.

Our response

The audit team recognises the uncertainty arising globally as a result of COVID-19. We performed the following to assess the Group's going concern status:

·    Review of the balance sheet position and cash flow forecasts for a period at least 12 months from the date of signing the financial statements; and

·     Critically assess the reasonableness of these forecasts and perform sensitivity analysis.

Global markets generally appear to have rebounded well following the initial impact of Covid-19, and the audit team considers the going concern basis of accounting to be an appropriate and reasonable basis on which to prepare the Financial Statements.

Our application of materiality 

In accounting terms, a material error is one that, if it were unadjusted, would cause a user of the financial statements to alter their view of those statements or the results or the financial position of the entity being reported on. Materiality, therefore, is incapable of monetary definition since it has both quantitative and qualitative elements. Auditors examine accounts on a test basis. The level of testing we have carried out is based on our assessment of the risk that an item in the Financial Statements may be materially misstated.

We assess risk both at the overall financial statement level and at the individual item level. The nature and volume of audit work we have conducted is directly related to our risk assessments. We plan the audit to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements does not exceed materiality for the Financial Statements as a whole.

In making our assessment and being cognisant of the challenges of defining materiality, we considered a threshold of £52,000 to be an indicator of materiality for the Financial Statements as a whole. This threshold was based on approximately 1% of total assets. Assets are considered to be the most important benchmark for the primary users of the Financial Statements. Performance materiality has been determined as 70% of our materiality threshold. This has been determined with regard to the Company being listed on AIM and the fact that this is a first-year audit.

We have reported, to the Audit and Risk Committee, all corrected and uncorrected misstatements we identified through our audit with a value in excess of our trivial threshold of £2,600, in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.

All components within the Group were audited to the Group materiality disclosed above. There were no balances within the components that required a separate component materiality.

Conclusions relating to going concern

In auditing the Financial Statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the Annual Report, other than the audited financial statements and our auditor's report thereon. The Directors are responsible for the other information. Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Matters on which we are required to report by exception

In light of our knowledge and understanding of the Group and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors' report.

We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991, as amended, requires us to report to you if, in our opinion whether:

·      proper accounting records have not been kept by the Group;

·      proper returns adequate for the audit have not been received from branches not visited by us;

·      the Group's accounts are not in agreement with the accounting records and returns; and

·     we have not obtained from the Group all information and explanation that, to the best of our knowledge and belief, was necessary for the audit.

Responsibilities of Directors

As explained more fully in the statement of Directors' responsibilities on page 5, the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the Financial Statements, the Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

·         Enquiry of management to identify any instances of non-compliance with laws and regulations, including actual, suspected or alleged fraud;

·             Reading minutes of meetings of the Board of Directors;

·             Review of legal invoices;

·             Review for undisclosed related party transactions;

·         Undertaking journal testing, including an analysis of manual journal entries to assess whether there were large and/or unusual entries pointing to irregularities, including fraud.

·             We performed analytical procedures on significant and material balances, notably being financial assets and equity, corroborating the information therein with underlying agreements; and

·       We confirmed bank balances to third party confirmations and reviewed the controls associated with the bank reconciliations and processing of payments.

A further description of our responsibilities for the audit of the financial statements is available on the Financial Reporting Councils website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of this report

This report is made solely to the Members of the Company, as a body in accordance with Article 113A of the Companies (Jersey) Law 1991 and for no other purpose. Our audit work has been undertaken so that we might state to the Members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Members, as a body, for our audit work, for this report, or for the opinions we have formed.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

The Group's activities derive from continuing operations.

The notes on pages 31 to 44 form an integral part of these Financial Statements. 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The notes on pages 31 to 44 form an integral part of these Financial Statements.

The Financial Statements were approved by the Board of Directors on 1 October 2021 and were signed on its behalf by:

The notes on pages 31 to 44 form an integral part of these Financial Statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The notes on pages 31 to 44 form an integral part of these Financial Statements.

CONSOLIDATED STATEMENT OF CASHFLOWS

The notes on pages 31 to 44 form an integral part of these Financial Statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.   GENERAL INFORMATION

Marwyn Acquisition Company Plc ("Marwyn", or the "Company"), an "investing company" for the purposes of the AIM Rules for Companies ("AIM Rules"), is incorporated in Jersey (company number 123424) and domiciled in the United Kingdom. It is a public limited company with its registered office at 47 Esplanade, St Helier, Jersey, JE1 0BD and is registered as a UK establishment (BR019423) with its address at 11 Buckingham Street, London, WC2N 6DF.  The Company is the parent (directly and indirectly) of a number of subsidiaries (together with the Company, collectively the "Group"), as detailed in note 10. The activity of the Company is the acquisition and subsequent development of assets engaged in the industrials, manufacturing, engineering, construction, building products or support services sectors.

2.   ACCOUNTING POLICIES

(a)    Basis of preparation

The Financial Statements for the year ended 30 June 2021 and the comparative year to 30 June 2020 have been prepared in accordance with International Financial Reporting Standards and IFRS Interpretations Committee interpretations as adopted by the European Union (collectively, "IFRS") and are presented in British pounds sterling, which is the presentational currency of the Group and the functional currency and presentational currency of the Company.  All values are rounded to the nearest thousand (£000) except where otherwise indicated. The Financial Statements have been prepared under the historical cost convention.

The principal accounting policies adopted in the preparation of the Financial Statements are set out below. The policies have been consistently applied throughout the periods presented. 

(b)   Going concern

The Financial Statements have been prepared on a going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The Group has net assets of £5.2m at the statement of financial position date, which includes cash of £5.2m. The Directors have considered the expected impact of the Covid-19 pandemic on the Group's forecast cashflows and liabilities, concluding that prior to completing a transaction, the pandemic has no material impact on the Group due to the nature of its operations. As such the Directors are comfortable that the Company has significant and sufficient cash reserves to pursue its investment strategy and have concluded that it remains appropriate to use the going concern basis of accounting for the Financial Statements. Subject to the structure of an acquisition, the Company may need to raise additional funds for an acquisition in the form of equity and/or debt.

(c)    New standards and amendments to International Financial Reporting Standards

Standards, amendments and interpretation effective and adopted by the Group:

The accounting policies adopted in the presentation of these Financial Statements reflect the adoption of the below listed new standards, amendments and interpretations effective for periods beginning on or after 1 January 2019: IFRS 16 Leases, Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures and IFRIC 23 Uncertainty over Income Tax Treatments. None of these new standards, amendments or interpretations have had a material impact on the Group.

Standards, amendments and interpretations issued but not yet effective:

The following standards are issued but not yet effective. The Group intends to adopt these standards, if applicable, when they become effective. It is not currently expected that these standards will have a material impact on the Group.

(d)   Basis of consolidation

Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial information of subsidiaries is fully consolidated from the date that control commences until the date that control ceases.

Intragroup balances, and any gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial information.

(e)   Financial instruments - initial recognition and subsequent measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at fair value through profit or loss ("FVPL"), amortised cost, or fair value through other comprehensive income ("FVOCI").

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. In order for a financial asset to be classified and measured at amortised cost or FVOCI, it needs to give rise to cash flows that are 'solely payments of principal and interest' on the principal amount outstanding (the "SPPI Criterion").

Financial assets are initially measured at their fair value plus, for those financial assets not at fair value through profit or loss, transaction costs.

Subsequent measurement

For the purposes of subsequent measurement, all of the Group's financial assets to date have been classified as financial assets at amortised cost. Financial assets at amortised cost comprise of assets that are held within a business model with the objective to hold the financial assets in order to collect contractual cash flows that meet the SPPI Criterion. This category includes the Group's cash and cash equivalents and other receivables. These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses, interest income, foreign exchange gains and losses and impairment losses are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

The Group has not classified any assets as being financial assets at FVOCI or FVPL.

Derecognition

A financial asset is primarily derecognised and removed from the consolidated statement of financial position when the rights to receive cash flows from the asset have expired.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or as payables, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of payables, net of directly attributable transaction costs. The Group's financial liabilities comprise of trade and other payables.

Subsequent measurement

Financial liabilities are subsequently measured at amortised cost and in the case of interest-bearing financial liabilities at amortised cost using the effective interest rate method. Gains and losses are recognised in the Statement of Comprehensive Income when the liabilities are derecognised.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

(f)    Cash and cash equivalents

Cash and cash equivalents comprise cash balances at banks.

(g)    Stated capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are recognised in stated capital as a deduction from the proceeds.

(h)   Corporation tax

Corporation tax for the period presented comprises current and deferred tax.

Current tax is the expected tax payable on the taxable income for the period. Taxable profit differs from profit reported in the consolidated statement of comprehensive income because some items of income and expense are taxable or deductible in different years, or may never be taxable or deductible. Current tax is the expected tax payable on the taxable income for the period. The Group's current tax is calculated using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to taxes payable in respect of previous periods.

Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax is accounted for using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(i)     Pension benefits

During prior years, the Group has paid contributions to externally-administered pension plans on behalf of employees. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an expense using the accruals basis. No pension payments have been made in the current year.

(j)     Loss per ordinary share

The Group presents basic earnings per ordinary share ("EPS") data for its ordinary shares.  Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

(k)    Share based payments

The A1 Shares in WHJ Limited ("WHJL") (the "A1 Shares" or the "Participation Shares") and the A2 Shares in WHJL (the "A2 Shares") represent equity-settled share-based payment arrangements under which the Group receives services as a consideration for the additional rights attached to these equity shares, over and above their nominal price.

Equity-settled share-based payments to certain of the Directors and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value is expensed, with a corresponding increase in equity, on a straight-line basis from the grant date to the expected exercise date. Where the equity instruments granted are considered to vest immediately, the services are deemed to have been received in full, with a corresponding expense and increase in equity recognised at grant date.  

The dilutive effect of outstanding share-based payments is reflected as share dilution in the computation of diluted EPS.

3.   CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group's Financial Statements under IFRS requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Significant estimates

For the year ended 30 June 2021 and the comparative year end, the Directors do not consider that they have made any significant estimates which would materially affect the balances and results reported in these Financial Statements.

Significant judgements

For both the year ended 30 June 2021 and the comparative year end, the Directors do not consider that they have made any significant judgements which would materially affect the balances and results reported in these Financial Statements. 

4.   SEGMENT INFORMATION

The Board of Directors is the Group's chief operating decision-maker. As the Group has not yet acquired an operating business, the Board of Directors considers the Group as a whole for the purposes of assessing performance and allocating resources, and therefore the Group has one reportable operating segment.

5.   FINANCE INCOME

6.   EMPLOYEES AND DIRECTORS

(a)   Employment costs for the Group during the year:

Included within wages and salaries is £16,000 directors salaries which was paid to James Corsellis and Mark Brangstrup Watts (2020 : £16,000).

(b)   Key management compensation

The Board considers the Directors of the Company, to be the key management personnel of the Group. Details of the amounts paid to key management personnel are detailed in the Nomination and Remuneration Report on pages 16 to 20.

(c)    Employed persons

The average monthly number of persons employed by the Group (including Directors) during the year was as follows:

7.   ADMINISTRATIVE EXPENSES

8.   INCOME TAX

Reconciliation of effective rate and tax charge:

The Group is tax resident in the UK. As at 30 June 2021, cumulative tax losses available to carry forward against future trading profits were £25.8m (2020: £25.1m) subject to agreement with HM Revenue & Customs. Prior to a Platform Acquisition, there is no certainty as to future profits and no deferred tax asset is recognised in relation to these carried forward losses. Under UK Law, there is no expiry for the use of tax losses.

9.   LOSS PER ORDINARY SHARE

Basic EPS is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the period. Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The weighted average number of shares has not been adjusted in calculating diluted EPS as there are no instruments which have a current dilutive effect.

Refer to note 17 for instruments that could potentially dilute basic EPS in the future.

10.   SUBSIDIARIES

Subsidiary undertakings of the Group

The Company owns, directly or indirectly, the whole of the issued and fully paid ordinary share capital of its subsidiary undertakings. The subsidiary undertakings of the Company and Group as at 30 June 2021 are:

There are no restrictions on the Company's ability to access or use the assets and settle the liabilities of the Company's subsidiaries. Arrow US Holdings Inc and Arrow Canadian Holdings Limited were established as US and Canadian acquisition vehicles for Project Arrow.

The registered office of WHJ Limited is 47 Esplanade, St Helier, Jersey, JE1 0BD. The registered office of Wilmcote Group Limited and WCH Group Limited was 11 Buckingham Street, London, WC2N 6DF up until the date of dissolution. The registered address for Arrow US Holdings Limited was 1209 Orange Street, Wilmington, New Castle, Delaware, 19801 up until the date of dissolution. The registered address for Arrow Canadian Holdings Limited was 1055 West Hastings Street, Suite 1700, Vancouver, BC, V6E 2E9, up until the date of dissolution.

11.   OTHER RECEIVABLES

12.   CASH AND CASH EQUIVALENTS

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with a minimum short-term credit rating of P-1, as issued by Moody's, are accepted. The utilisation of credit limits is regularly monitored.

13.   TRADE AND OTHER PAYABLES

14.   STATED CAPITAL

On incorporation, 2 ordinary shares of no par value were issued at £1.20 per share for aggregate consideration of £2.40.  On 21 March 2017, a further 8,333,334 ordinary shares of no par value were issued at £1.20 for an aggregate consideration of £10,000,001. Following the Company's admission to AIM on 17 August 2017, a further 12,500,000 ordinary shares of no par value were issued at £1.20 for an aggregate consideration of £15,000,000. £630,427 of costs directly attributable to the August 2017 share issue have been taken against stated capital. 

On 13 December 2019, a further 650,000,000 ordinary shares of no par value were issued at £0.01 for an aggregate consideration of £6,500,000. £78,000 of costs directly attributable to the December 2019 share issue were taken against stated capital during the year. No shares were issued in the year ended 30 June 2021.

The holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per ordinary share at meetings of the Company.

15.   RESERVES

The following describes the nature and purpose of each reserve within shareholders' equity:

Accumulated losses

Cumulative losses recognised in the Consolidated Statement of Comprehensive Income.

Share based payment reserve

The share based payment reserve is the cumulative amount recognised in relation to the equity-settled share based payment scheme as further described in note 17.

16.   FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS

The Group has the following categories of financial instruments as at 30 June 2021:

All financial instruments are classified as current assets and current liabilities. There are no non-current financial instruments as at 30 June 2021 or 30 June 2020.

The fair value and book value of the financial assets and liabilities are materially equivalent.

The Group has exposure to the following risks from its use of financial instruments:

·    Market risk;

·    Liquidity risk; and

·    Credit risk

This note presents information about the Group's exposure to each of the above risks and the Group's objectives, policies and processes for measuring and managing these risks.

The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.

Treasury activities are managed on a Group basis under policies and procedures approved and monitored by the Board. These are designed to reduce the financial risks faced by the Group which primarily relate to movements in interest rates.

Market risk

The Group's activities primarily expose it to the risk of changes in interest rates due to the significant cash balance held; however, any change in interest rates will not have a material effect on the Group. The Group's operations are predominately in GBP, its functional currency and accordingly minimal translation exposures arise in receivables or payables.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The Group currently meets all liabilities from cash reserves.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The main credit risk relates to the cash held with financial institutions. The Company manages its exposure to credit risk associated with its cash deposits by selecting counterparties with a high credit rating with which to carry out these transactions. The counterparty for these transactions is Barclays Bank plc, which holds a short-term credit rating of P-1, as issued by Moody's. The Group's maximum exposure to credit risk is the carrying value of the cash on the Consolidated Statement of Financial Position.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain future development of the business. Capital includes stated capital, and all other equity reserves attributable to the equity holders of the Company and totals £5.2 million as at 30 June 2021 (£5.9 million as at 30 June 2020). There were no changes in the Group's approach to capital management during the year and the Company's capital management policy will be revisited once a Platform Acquisition has been identified.

17.   SHARE-BASED PAYMENTS

Management Long Term Incentive Arrangements

Implementation of the Group share scheme - Participation Shares

Arrangements have been put in place to create incentives for those who are expected to make key contributions to the success of the Group.  Success depends upon the sourcing of attractive investment opportunities, effective execution of transactions, and the subsequent integration and optimisation of target businesses.  Accordingly, an incentive scheme has been created to reward key executive contributors for the creation of value once all investors have received a preferential level of return.  In order to make these arrangements most efficient, they are based around a subscription for shares in WHJL by the key contributors through the "Participation Shares".

On being offered, the Company will purchase the Participation Shares either for cash or for the issue of new ordinary shares at its discretion, with the expectation being that new shares will be issued.  The valuation of the Participation Shares is discussed below.  The Participation Shares may only be sold on this basis if both the growth and at least one of the vesting conditions have been satisfied.  If the growth condition has not been satisfied on or before the fifth anniversary of a Platform Acquisition (or such later date as WHJL and the holders of 90 per cent. of the ordinary shares, A1 Shares and A2 Shares in WHJL agree) the Participation Shares must be sold to the Company or, at its election, redeemed by WHJL and in both cases at a price per Participation Share equal to its subscription price unless and to the extent that the Nomination & Remuneration Committee determines otherwise.

Participation Shares

As at 1 July 2019, Adrian Whitfield and Kevin Dangerfield held 500 and 100 A1 shares respectively. Following their departure from the Group these A1 shares were cancelled in accordance with the leaver provisions discussed below.

As at 30 June 2021, there are no Participation Shares in issue (2020: nil). 

Grant date

The date at which the entity and another party agree to a share-based payment arrangement, for accounting purposes, is the grant date.

Growth Condition

The growth condition requires the compound annual growth of the Company's equity value to be at least 10 per cent. per annum.  The growth condition takes into account new shares issued, dividends and capital returned to shareholders.

Service Conditions and Leaver Provisions

There are leaver provisions in relation to the Participation Shares which are set out in the subscription agreements entered into between the holders of the A1 Shares and WHJL.

If the holder leaves in circumstances in which he or she is deemed to be a "Good Leaver" (being any reason other than a bad leaver circumstance), then depending on circumstances, generally he or she may be required to sell his or her A1 Shares to WHJL at the subscription price, a specified price or the market value, or may retain his or her A1 Shares, or a combination of these provisions. Generally, a holder will be entitled to retain the full number of A1 Shares (subject to the vesting provisions set out below) if he or she is still an employee on the third anniversary of the Platform Acquisition. Any holder deemed to be a "Bad Leaver" (such as termination of employment for gross misconduct, fraud or criminal acts) will be required to sell his A1 Shares back to WHJL for a total consideration of £1.

As there are conditions whereby the holders of A1 Shares can sell their shares to WHJL for the price they paid, the amounts received from the issue of A1 Shares is recognised as a liability in the Financial Statements. As at 30 June 2021, no A1 Shares are in issue and as such no liability has been recognised (2020: £nil).

Vesting Conditions and Vesting Period

The A1 Shares are subject to certain vesting conditions, at least one of which must be (and continue to be) satisfied in order for a holder of Participation Shares to exercise their redemption rights, such right beginning on the third anniversary and ending on the fifth anniversary of the date of the Platform Acquisition or such later date as is agreed between the Company and the holders of at least 90 per cent. of the ordinary shares in WHJL, A1 Shares and A2 Shares.

The vesting conditions are as follows:

(i)         it is later than the third anniversary of the Platform Acquisition;

(ii)        a sale of all or a material part of the business of WHJL;

(iii)       a sale of all of the issued ordinary shares of WHJL or a merger of WHJL;

(iv)       a winding up of WHJL; or

(v)        a sale, merger or change of control of the Company.

If any of the vesting conditions described in paragraphs (ii) to (v) above are satisfied before the third anniversary of the Platform Acquisition, the A1 Shares will be treated as having vested in full.

Value

Subject to the provisions detailed above, the Participation Shares can be sold to, or redeemed by, the Company for an aggregate value equivalent to 10 per cent. of the excess in the market value of the Company over and above its aggregate paid up share capital, allowing for any dividends and other capital movements.

Valuation of Participation Shares

The fair value of the Participation Shares granted under the scheme were calculated using a Monte Carlo model. The fair value uses an ungeared volatility of 25 per cent. and is based on a weighted average share price over the vesting period. An expected term input of four years has been used, being the midpoint of the period of time between the date on which an acquisition is expected to take place and the start and end of the redemption period. The Participation Shares are subject to a growth condition, which is a market performance condition, and as such has been taken into consideration in determining their fair value. The risk-free rate is taken from zero-coupon UK Government bonds with a redemption period in line with the expected term. The model incorporates a range of probabilities for the likelihood of an acquisition being made of a given size.

Expense related to Participation Shares

No charge for the participation shares has been recognised in the Consolidated Statement of Comprehensive Income in the year (2020: £348,000). The A1 shares were fully cancelled during the year ended 30 June 2020, and the total expense £431,000 was recycled from share Based Payment Reserve to the Accumulated Losses reserve.

Marwyn Performance Shares

Marwyn Long Term Incentive LP ("MLTI"), in which James Corsellis and Mark Brangstrup Watts are beneficially interested, has subscribed for all of the A2 Shares in WHJL (the "Marwyn Performance Shares"). The Marwyn Performance Shares, which were issued prior to the initial public offering of the Company on AIM, are intended to reward Marwyn for its key contribution in the creation of shareholder value, taking into account Marwyn's track record of shareholder value creation.

The Marwyn Performance Shares are subject to the same growth, vesting and redemption conditions as the A1 Shares. In the event that the relevant conditions (including the growth condition, being a compound 10 per cent. annual growth on all equity invested over a three to five-year period) are satisfied, MLTI is entitled to redeem the Marwyn Performance Shares for an aggregate value equivalent to five per cent. of the shareholder value growth.

Expense related to the Marwyn Performance Shares

As the Marwyn Performance Shares do not have any service conditions, their fair value on grant date was recognised immediately as an expense in the year ended 30 June 2018. Consequently, there is no expense in relation to the Marwyn Performance Shares in the current or prior year.

18.   RELATED PARTY TRANSACTIONS

The AIM Rules define a related party as any (i) director of the Company or its subsidiary, (ii) a substantial shareholder, being any shareholders holding at least 10 per cent. of a share class or (iii) an associate of those parties identified in (i) or (ii).

James Corsellis and Mark Brangstrup Watts are the managing partners of the Marwyn Group. Funds managed by Marwyn Investment Management LLP of which James Corsellis and Mark Brangstrup Watts are both managing partners, hold 95.36 per cent. of the Company's issued ordinary shares.

James Corsellis and Mark Brangstrup Watts have an indirect beneficial interest in the A2 Shares as described in note 17.

James Corsellis and Mark Brangstrup Watts are the managing partners of Marwyn Capital LLP which provides corporate finance advice and effective 1 January 2021 managed services support to the Company. The provision of office services was terminated on 20 November 2019. During the year, Marwyn Capital LLP charged £325,900 (2020: £670,000) in respect of services supplied, £16,000 (excluding VAT) (2020: £16,000) for James Corsellis' and Mark Brangstrup Watts' directors' fees and £nil (2020: £1,000) in respect of expenses incurred on behalf of the Group. Marwyn Capital LLP was owed an amount of £30,000 at the balance sheet date (2020: £52,000).

James Corsellis and Mark Brangstrup Watts are the ultimate beneficial owners of Axio Capital Solutions Limited which provided financial and accounting services, transactional support, company secretarial, and administrative services to the Company until 31^st December 2020. During the year, Axio Capital Solutions Limited charged £180,000 (2020: £433,000) in respect of services supplied and £nil (2020: £7,000) in respect of expenses incurred on behalf of the Group. Axio Capital Solutions Limited was owed an amount of £nil at the balance sheet date (2020: £30,000).

James Corsellis and Mark Brangstrup Watts are the ultimate beneficial owners of Marwyn Partners Limited and Marwyn Investment Management LLP which both incurred costs on behalf of the Group in the prior year which they recharged. During the year, Marwyn Partners Limited charged £nil (2020: £22,000) in respect of recharged costs and at 30 June 2021 the Company had recognised a receivable of £nil from Marwyn Partners Limited (2020: £1,000 payable by the Company). Marwyn Investment Management LLP charged £nil (2020: £40,000) in respect of recharged costs, of which £nil was outstanding at 30 June 2021 (2020: £nil).

Compensation of key management personnel of the Group is included in the Nomination and Remuneration Report. Holdings of Participation Shares and Marwyn Performance Shares are detailed in Note 17.

19.   COMMITMENTS AND CONTINGENT LIABILITIES

There were no commitments or contingent liabilities outstanding at 30 June 2021 which would require disclosure or adjustment in these Financial Statements.

20.   INDEPENDENT AUDITORS' REMUNERATION

In the year ended 30 June 2021, the Group appointed Baker Tilly Channel Islands Limited as the Group's independent auditor, replacing PricewaterhouseCoopers LLP. Baker Tilly are expected to incur audit fees for the year ended 30 June 2021 of £15,325 (2020: £38,025).  Baker Tilly has charged £nil in 2021 for non-audit services to the Group (2020: £nil).

21. POST BALANCE SHEET EVENTS

There have been no material post balance sheet events that would require disclosure or adjustment to these Financial Statements.

RISKS

Risks applicable to investing in the Company 

An investment in the ordinary shares involves a high degree of risk. No assurance can be given that shareholders will realise a profit or will avoid loss on their investment.  The Board has identified a wide range of risks, and the risks considered most relevant to the Company, based on its current status are detailed on the following pages. The risks referred to below, do not purport to be exhaustive and are not set out in any order of priority. If any of the following events identified below occur, the Company's business, financial condition, capital resources, results and/or future operations and prospects could be materially adversely affected.

Risks rating to the Company's future business and potential structure 

·   The Company's ability to complete an acquisition

Although the Company has historically identified a number of potential investment opportunities, it does not currently have an investment opportunity that is materially progressed and is not currently in formal or exclusive discussions with any asset vendors. The Company's future success is dependent upon its ability to not only identify opportunities but also to execute successful acquisitions and/or investments. There can be no assurance that the Company will be able to conclude agreements with any target business and/or shareholders in the future and failure to do so could result in the loss of an investor's investment. In addition, the Company may not be able to raise the additional funds required to acquire any target business and fund its working capital requirements in accordance with its Investment Policy.

Pursuant to the AIM Rules for Companies, as MAC has not yet substantially implemented its investment policy its investment policy is now subject to shareholder approval

Should shareholders reject the investment policy and elect to wind up the Company and return funds (after payment of the expenses and liabilities of the Company) to Shareholders, there can be no assurance as to the particular amount or value of the remaining assets at such future time of any such distribution either as a result of costs from an unsuccessful acquisition or from other factors, including disputes or legal claims which the Company is required to pay out, the cost of the liquidation event and dissolution process, applicable tax liabilities or amounts due to third party creditors. Upon distribution of assets on a liquidation event, such costs and expenses will result in investors receiving less than the initial subscription price and investors who acquired Ordinary Shares after Admission potentially receiving less than they invested.

·   The Company may face significant competition for acquisition opportunities

There may be significant competition in some or all of the acquisition opportunities that the Company may explore. Such competition may for example come from strategic buyers, sovereign wealth funds, special purpose acquisition companies and public and private investment funds, many of which are well established and have extensive experience in identifying and completing acquisitions. A number of these competitors may possess greater technical, financial, human and other resources than the Company. The Company cannot assure investors that it will be successful against such competition. Such competition may cause the Company to be unsuccessful in executing an acquisition or may result in a successful acquisition being made at a significantly higher price than would otherwise have been the case which could materially adversely impact the business, financial condition, result of operations and prospects of the Company.

·   Need for additional funding and dilution

The Company has insufficient funds to fund in full suitable acquisitions and/or investments identified by the Board. Accordingly, the Company intends to seek additional sources of financing (equity and/or debt) to implement its strategy. There can be no assurance that the Company will be able to raise those funds, whether on acceptable terms or at all.

If further financing is obtained or the consideration for an acquisition is provided by issuing equity securities or convertible debt securities, Shareholders at the time of such future fundraising or acquisition may be diluted and the new securities may carry rights, privileges and preferences superior to the Ordinary Shares.

The Company may seek debt financing to fund all or part of any future acquisition. The incurrence by the Company of substantial indebtedness in connection with an acquisition could result in:

(i)            default and foreclosure on the Company's assets, if its cash flow from operations was insufficient to pay its debt obligations as they become due; or

(ii)           an inability to obtain additional financing, if any indebtedness incurred contains covenants restricting its ability to incur additional indebtedness.

Success of investment policy not guaranteed

The Company's level of profit will be reliant upon the performance of the assets acquired and the Investment Policy. The success of the Investment Policy depends on the Directors' ability to identify investments in accordance with the Company's investment objectives and to interpret market data correctly. No assurance can be given that the strategy to be used will be successful under all or any market conditions or that the Company will be able to generate positive returns for Shareholders. If the Investment Policy is not successfully implemented, this could adversely impact the business, development, financial condition, results of operations and prospects of the Company.

·   Changes in Investment Policy may occur

The Company's Investment Policy may be modified and altered from time to time with the approval of Shareholders, so it is possible that the approaches adopted to achieve the Company's investment objectives in the future may be different from those the Directors currently expect to use and which are disclosed in these Financial Statements. Any such change could adversely impact the business, development, financial condition, results of operations and prospects of the Company.

·   The Company could incur costs for transactions that may ultimately be unsuccessful

The Company has pursued a number of potential Platform Acquisitions and as a result incurred substantial legal, financial and advisory expenses. In December 2019, the Company was recapitalised and as a result the business has sufficient funds to continue to identify investment opportunities/a management team.

There is a risk that the Company may again incur substantial legal, financial and advisory expenses arising from unsuccessful transactions which may include public offer and transaction documentation, legal, accounting and other due diligence which could have a material adverse effect on the business, financial condition, results of operations and prospects of the Company.

·   Potential dilution from the incentivisation of management and Marwyn

The Company has in place an incentivisation scheme through which members of management that may be employed by the Company, certain employees of the Company and MLTI will be rewarded for increases in shareholder value, subject to certain conditions and performance hurdles. For example, MLTI has subscribed for A2 Shares as part of the incentivisation scheme. In certain circumstances, the Company may purchase the A2 Shares either for the issue of new Ordinary Shares or for cash. There is discretion for the holders of A2 Shares to exchange each A2 Share that would otherwise have been redeemed for Ordinary Shares or cash.

If Ordinary Shares are to be issued in order to satisfy the incentivisation scheme, the existing Shareholders may face significant dilution. If the Company has sufficient cash resources the incentivisation scheme may be settled with cash, thereby reducing the Company's cash resources.

·   Industry specific risks

It is anticipated that the Company will invest in businesses in varying sectors within the UK, Europe and North America. The performance of sectors in which the Company may invest may be cyclical in nature, with some correlation to gross domestic product and, specifically, levels of demand within targeted end-markets. As a result, the identified sector may be affected by changes in general economic activity levels which are beyond the Company's control but which may have a material adverse effect on the Company's financial condition and prospects. The COVID-19 pandemic may result in greater demand in certain sectors, and fewer opportunities in others. The Company has a broad investment strategy, which is not restricted by either sector or geographic focus. The COVID-19 situation is still evolving. It is therefore difficult to predict what impact COVID-19 may have on any potential investment.

The Company may acquire or make investments in companies and businesses that are susceptible to economic recessions or downturns. During periods of adverse economic conditions, the markets in which the Company operates may decline, thereby potentially decreasing revenues and causing financial losses, difficulties in obtaining access to, and fulfilling commitments in respect of, financing, and increased funding costs. In addition, during periods of adverse economic conditions, the Company may have difficulty accessing financial markets, which could make it more difficult or impossible for the Company to obtain funding for additional investments and negatively affect the Company's net asset value and operating results. Accordingly, adverse economic conditions could adversely impact the business, development, financial condition, results of operations and prospects of the Company.

In addition, the political risks associated with operating across a broad number of jurisdictions and markets could affect the Company's ability to manage or retain interests in its business activities and could have a material adverse effect on the profitability of its business following a Platform Acquisition.

Shareholder risks

·   Trading on AIM

The Ordinary Shares are admitted to trading on AIM. An investment in shares quoted on AIM may be less liquid and may carry a higher risk than an investment in shares quoted on the Official List. The AIM Rules for Companies are less demanding than those which apply to companies traded on the Premium Segment of the Official List. Further, the FCA has not itself examined or approved the contents of this document. A prospective investor should be aware of the risks of investing in such shares and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser authorised under FSMA.

·   Value and liquidity of the Ordinary Shares

It may be difficult for an investor to realise his, her or its investment. The shares of publicly traded companies can have limited liquidity and their share prices can be highly volatile.

The price at which the Ordinary Shares are traded and the price at which investors may realise their investment are influenced by a large number of factors, some specific to the Company and its operations and others which may affect companies operating within a particular sector or quoted companies generally. A relatively small movement in the value of an investment or the amount of income derived from it may result in a disproportionately large movement, unfavourable as well as favourable, in the value of the Ordinary Shares or the amount of income received in respect thereof.

Shareholders should be aware that the value of the Ordinary Shares could go down as well as up, and investors may therefore not recover their original investment. Furthermore, the market price of the Ordinary Shares may not reflect the underlying value of the Company's net assets.

The investment opportunity offered in this document may not be suitable for all recipients of this document. Shareholders are therefore strongly recommended to consult an independent financial adviser authorised under FSMA who specialises in advising on investments of this nature before making an investment decision.

·   Investing Company status

The Company is currently considered to be an Investing Company for the purposes of the AIM Rules. As a result, it may benefit from certain partial carve-outs to the AIM Rules, such as those in relation to the classification of Reverse Takeovers. Were the Company to lose Investing Company status for any reason, such carve-outs would cease to apply. It is anticipated that an acquisition may constitute a Reverse Takeover.

·   The interests of significant Shareholders may conflict with those of other Shareholders

Approximately 95 per cent. of the Company's issued share capital is held by one Shareholders. Such Shareholders are as a result able to exercise sufficient control over the Company's corporate actions so as not to require the approval of the Company's other Shareholders. The interests of such significant Shareholders may conflict with those of other holders of Ordinary Shares.

·   Dilution of Shareholders' interest as a result of additional equity fundraising

The Company intends to issue additional Ordinary Shares in subsequent public offerings or private placements to fund acquisitions or as consideration for acquisitions. As Jersey law does not grant Shareholders the benefit of pre-emption rights in relation to a further issue of Ordinary Shares, pre- emption rights have been included in the Company's Articles. However, it is possible that existing Shareholders may not always be offered the right or opportunity to participate in such future share issues, which may dilute the existing Shareholders' interests in the Company.

The Group may need to raise additional funds in the future to finance, amongst other things, working capital, expansion of the business, new developments relating to existing operations or new acquisitions. If additional funds are raised through the issuance of new equity or equity-linked securities of the Company other than on a pro rata basis to existing Shareholders, the percentage ownership of the existing Shareholders may be reduced. Shareholders may also experience subsequent dilution and/or such securities may have preferred rights, options and pre-emption rights senior to the Ordinary Shares.

·   The Company has a controlling Shareholder

Marwyn Investment Management LLP ("MIM"), the manager of the Company's largest shareholder controls approximately 95 per cent. of the issued Ordinary Shares of the Company. As a result, MIM is able to exercise significant influence to pass or veto matters requiring Shareholder approval, including future issues of Ordinary Shares and the election of directors and to veto or seek to approve fundamental changes of business. This concentration of ownership may have the effect of delaying, deferring, deterring or preventing a change in control, depriving Shareholders of the opportunity to receive a premium for their Ordinary Shares as part of a sale of the Company. The interests of MIM may not necessarily be aligned with those of the other Shareholders. Accordingly, MIM could influence the Company's business in a manner that may not be in the interests of other Shareholders. For example, MIM can approve a change of Investment Policy, can prevent special resolutions of the Company being passed and can approve ordinary resolutions of the Company without the assent of any other Shareholders. The concentration of ownership could also affect the market price and liquidity of the Ordinary Shares. If MIM seeks to influence the Company's business in a manner that may not be in the interests of other Shareholders, the Company's business, results of operations, financial condition and prospects, and the trading price of the Ordinary Shares could be adversely affected.

Risks relating to legislation and regulations

·   Legislative and regulatory risks

Any investment is subject to changes in regulation and legislation. As the direction and impact of changes in regulations can be unpredictable, there is a risk that regulatory developments will not bring about positive changes and opportunities, or that the costs associated with those changes and opportunities will be significant. In particular, there is a risk that regulatory change will bring about a significant downturn in the prospects of one or more acquired businesses, rather than presenting a positive opportunity.

·   Taxation

There can be no certainty that the current taxation regime in England and Wales or overseas jurisdictions in which the Company may operate in the future will remain in force or that the current levels of corporation taxation will remain unchanged. Any change in the tax status of the Company or to applicable tax legislation may have a material adverse effect on the financial position of the Company.

ADVISORS