New Energy One Acquisition Corporation Plc
Interim Report for the period ended 31 October 2023
New Energy One Acquisition Corporation Plc, (LSE: NEOA) the "Company", a special purpose acquisition company admitted to trading on the London Stock Exchange, today announces its unaudited interim results for the period from 1 May 2023 and ended 31 October 2023.
Volker Beckers, Chair of the Board, NEOA said:
"During the reporting period we saw significant momentum, both legislative and corporate action, in energy transition related businesses. The UK public equities markets have been challenging and investor appetite for new issuances remains an obstacle to NEOA's ability to effect a business combination."
The interim results are set out below.
This announcement contains inside information for the purposes of the Market Abuse Regulation (EU) NO. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
- Ends -
For further information please contact:
| New Energy One Acquisition Corporation plc | |
| Sanjay Mehta | Sanjay.mehta@energyone.je |
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| Media FGS Global (Communications Advisor) Email: NEOA@fgsglobal.com
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| Chiara Albertini | +44 (0) 20 7073 6294 |
| Kendall Bitonte | +44 (0) 20 7073 6305 |
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About New Energy One Acquisition Corporation Plc
NEOA has been formed for the purpose of effecting a business combination with targets that are positioned to participate in or benefit from the global transition towards a low carbon economy, what is called the "Energy Transition", which are headquartered in, or which have or are expected to have a substantial nexus to, Europe.
NEOA is sponsored by LiveStream LLC ("LiveStream") and Eni International B.V. ("Eni"), a wholly owned subsidiary of Eni S.p.A (each of Livestream and Eni being a "Sponsor" and together, the "Sponsors"). LiveStream is an investment company formed by one of NEOA's executive Directors, Sanjay Mehta.
NEOA has a highly experienced executive team (the "Executive Team") who collectively have more than 20 years of proprietary fund management and principal investment experience, and more than 60 years of extensive capital markets, corporate finance and operational experience in the energy industry. The Executive Team is supported by a strong independent board of Directors and group of strategic advisors with broad market expertise and deep industry contacts, including with companies that are at the heart of the Energy Transition.
Disclaimer
This announcement (including the interim financial report) includes forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. Forward-looking statements are statements that are not historical facts and may be identified by words such as "plans", "targets", "aims", "believes", "expects", "anticipates", "intends", "estimates", "will", "may", "continues", "should" and similar expressions. By their nature, forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future, many of which are outside the control of the Company. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements and. accordingly, undue reliance should not be placed on any forward-looking statements. Forward-looking statements speak only as at the date at which they are made, and the Company undertakes no obligation to update any forward-looking statements.
Interim Management Report and Financial Statements
Principal activity
New Energy One Acquisition Corporation Plc, (the "Company"), is a public Company incorporated and registered in England and Wales on 08 November 2021 with a registration number 13727820 as a special purpose acquisition company ("SPAC").
NEOA is sponsored by LiveStream LLC ("Livestream") and Eni International B.V. ("Eni"), a wholly owned subsidiary of Eni S.p.A (each of Livestream and Eni being a "Sponsor"). LiveStream is an investment company formed by one of NEOA's executive Directors, Sanjay Mehta.
The Company had an initial period of 15 months from the date on which the Company listed on the London Stock Exchange. The original deadline to complete a business combination was 16 June 2023. On 14 June 2023, the business combination deadline was extended by shareholder resolution to 15 March 2024. If the Company fails to complete a business combination prior to the extended deadline, it will cease all operations except for the purposes of winding up, redeem the ordinary shares (to the extent possible) and subsequently commence a members' voluntary liquidation pursuant to the terms of the memorandum and articles of association of the Company.
Business Combination
The Company anticipates structuring a Business Combination such that the post-Business Combination entity will be the listed entity (whether or not the Company or another entity is the surviving entity following the Business Combination) and that the Ordinary Shareholders will own a minority interest in such post-Business Combination entity, depending on the valuations ascribed to the target company or business and the Company in a Business Combination. It is expected that the Company will pursue a Business Combination in which it issues a substantial number of new Ordinary Shares in exchange for all or a majority of the issued and outstanding share capital of a target, and/or issues a substantial number of new Ordinary Shares to third parties in connection with financing a Business Combination. As a result, the post-Business Combination entity's majority shareholders are expected to be the sellers of the target and/or third-party equity investors, while the holders of Ordinary Shares immediately prior to the Business Combination are expected to own a minority interest in the post-Business Combination entity.
Financial Summary
During the period the majority of the Company's administrative expenditure was related to ongoing costs of running a plc and fair value adjustments relating to the Company's financial instruments. The loss before tax for the period was £3.5m (2022: £8.0m).
Trade and other receivables as at 31 October 2023 were £670k (2022: £861k). The cash balance as at 31 October 2023 was £21.4m (2022: £177.4m), which included £19.3m of funds held in escrow (2022: £176.1m).
Trade and other payables at 31 October 2023 were £1.3m (2022: £183k). Overall, at the period-end, net assets were £14.7m (2022: £11.7m).
Outlook
NEOA operates on the belief that significant investments in technology, alternative fuels and infrastructure will be required across multiple sectors to achieve a tangible reduction in emissions, with a large and growing market of solutions emerging across the Energy Transition value chain. Investing in super charging industrial decarbonisation across hard to abate sectors such as crude oil refining, steel production, cement, extraction, aviation and shipping is key to commitments given by the governments of U.K and E.U countries to achieve 1.5 degrees Celsius and net zero targets.
The Board and the management have reviewed and diligently continue to scan investment opportunities and potential acquisition targets that are positioned to benefit from the global transition towards a low carbon economy.
The Board and the management are encouraged by the continued proactive legislative, budgetary and tax incentive support by the governments in the UK, EU countries and USA for making investments in energy transition projects towards the governments' net zero emission's commitments. Not only does progress need to escalate in the nearer future as we approach these targets, but more viable large scale generation projects need to happen to support the "energy independence agenda". Additional technologies like CCUS, biogas and hydrogen, to name a few, will supplement the transition providing diversity and a natural technology hedge to the future generation mix.
In August 2022, the UK government also announced a shortlist of 20 projects for the next licensing stage of carbon capture utilisation and storage (CCUS). Building on the momentum in 2022, in December 2023, the UK Government announced the launch of the Track-1 Expansion process in HyNet, following the agreement of Heads of Terms with the CO? Transport and Storage Company (T&SCo) in October.
The agreement of Heads of Terms with the T&SCo in the East Coast Cluster (ECC) was reached on the key commercial principles through the Heads of Terms with the East Coast Cluster T&SCo, The Northern Endurance Partnership.
The Board and the management have been working diligently towards effecting a business combination, however, challenging public equity market conditions remain an obstacle to NEOA effecting a business combination. UK and global macroeconomic conditions have dampened investor sentiment for new issuances with a knock-on effect on IPOs in 2023, which is likely to continue in 2024.
Sanjay Mehta
Executive Director
30 January 2024
Condensed Statement of Total Comprehensive Income
For the six months ended 31 October 2023
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Six months to 31 October 2023 (unaudited) £ |
Six months to 31 October 2022 (unaudited) £ |
Period ended 30 April 2023 (audited) £ |
| | Note |
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| Continuing operations | | | | |
| Administrative expenses | | (1,909,963) | (397,254) | (2,145,398) |
| Fair value loss | 12 | (2,311,000) | (3,872,000) | (5,172,500) |
| Operating loss | | (4,220,963) | (4,269,254) | (7,317,898) |
| | | | | |
| Finance income | 6 | 1,924,236 | 1,079,132 | 4,022,126 |
| Finance expense | 6 | (989,067) | (4,820,364) | (12,917,316) |
| Loss before taxation | | (3,285,794) | (8,010,486) | (16,213,088) |
| Taxation | 4 | (202,293) | - | (615,844) |
| Total comprehensive loss for the period attributable to the equity owners | | (3,488,087) | (8,010,486) | (16,828,932) |
| | | | | |
| Loss per share | | | | |
| Basic and diluted in pence | 5 | (0.56) | (1.29) | (3.51) |
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| | | |
Condensed Statement of Financial Position
As at 31 October 2023
| |
Note |
31 October 2023 (unaudited) |
31 October 2022 (unaudited) |
30 April 2023 (audited) |
| ASSETS | | £ | £ | £ |
| Current assets | | | | |
| Other receivables | 7 | 670,039 | 861,218 | 569,682 |
| Cash and cash equivalents | 8 | 2,063,647 | 1,225,439 | 1,054,079 |
| Restricted cash | 9 | 19,314,827 | 176,129,431 | 179,022,126 |
| Total current assets | | 22,048,513 | 178,216,088 | 180,645,887 |
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| Total assets | | 22,048,513 | 178,216,088 | 180,645,887 |
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| LIABILITIES | | | | |
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| Trade and other payables | 10 | 1,320,147 | 182,864 | 700,258 |
| Borrowings | 11 | 2,428,047 | - | - |
| Corporation tax | | 818,137 | - | 615,844 |
| Derivative liabilities | 12 | 2,776,000 | 12,342,000 | 465,000 |
| Redeemable ordinary shares | 13 | 2,250 | 153,993,568 | 160,672,766 |
| Total current liabilities | | 7,344,581 | 166,518,432 | 162,453,868 |
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| Total liabilities | | 7,344,581 | 166,518,432 | 162,453,868 |
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| NET ASSETS | | 14,703,932 | 11,697,656 | 18,192,019 |
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| EQUITY | | | | |
| Share capital | 13 | 56,220 | 56,220 | 56,220 |
| Capital contribution | | 3,517,500 | 3,517,500 | 3,517,500 |
| Other reserves | | (2,114) | (151,852,295) | (151,852,295) |
| Retained earnings | | 11,132,326 | 159,976,231 | 166,470,594 |
| TOTAL EQUITY | | 14,703,932 | 11,697,656 | 18,192,019 |
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Approved by the Board on 30 January 2024.
Sanjay Mehta
Executive Director
Condensed Statement of Changes in Equity
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| Share capital | Share premium | Capital contribution | Other reserves | Retained earnings | Total equity |
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| Note | £ | £ | £ | £ | £ | £ |
| Balance on 1 May 2023 |
| 56,220 | - | 3,517,500 | (151,852,295) | 166,470,594 | 18,192,019 |
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| Loss for the period |
| - | - | - | - | (3,488,087) | (3,488,087) |
| Total comprehensive loss for the period |
| - | - | - | - | (3,488,087) | (3,488,087) |
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| Cancel reserve relating to redeemable ordinary shares | 13 | - | - | - | 151,850,181 | (151,850,181) | - |
| Total transactions with owners | | - | - | - | 151,850,181 | (151,850,181) | - |
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| As at 31 October 2023 |
| 56,220 | - | 3,517,500 | (2,114) | 11,132,326 | 14,703,932 |
For the six months ended 31 October 2023
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| Share capital | Share premium | Capital contribution | Other reserves | Retained earnings | Total equity |
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| £ | £ | £ | £ | £ | £ |
| Balance on 1 May 2022 | | 56,220 | - | 3,517,500 | (151,852,295) | 167,986,717 | 19,708,142 |
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| | | | | | | |
| Loss for the period | | - | - | - | - | (8,010,486) | (8,010,486) |
| Total comprehensive loss for the period | | - | - | - | - | (8,010,486) | (8,010,486) |
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| As at 31 October 2022 |
| 56,220 | - | 3,517,500 | (151,852,295) | 159,976,231 | 11,697,656 |
Condensed Statement of Changes in Equity
Period ended 30 April 2023
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| Share capital | Share premium | Capital contribution | Other reserves | Retained earnings | Total equity |
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| £ | £ | £ | £ | £ | £ |
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| As at incorporation |
| - | - | - | - | - | - |
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| Loss for the period |
| - | - | - | - | (16,828,932) | (16,828,932) |
| Total comprehensive loss for the period |
| - | - | - | - | (16,828,932) | (16,828,932) |
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| Issue of deferred shares |
| 50,000 | - | - | - | - | 50,000 |
| Issue of sponsor shares |
| 4,375 | - | - | - | - | 4,375 |
| Issue of redeemable ordinary shares, net of issue costs |
| 1,845 | 18,269,731 | - | - | - | 18,271,576 |
| Issue of sponsor warrants |
| - | - | 3,517,500 | - | - | 3,517,500 |
| Modification of warrants and sponsor warrants |
| - | - | - | - | 13,177,500 | 13,177,500 |
| Capital reduction |
| - | (18,269,731) | - | (151,852,295) | 170,122,026 | - |
| Total transactions with owners |
| 56,220 | - | 3,517,500 | (151,852,295) | 183,299,526 | 35,020,951 |
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| As at 30 April 2023 |
| 56,220 | - | 3,517,500 | (151,852,295) | 166,470,594 | 18,192,019 |
Condensed Statement of Cash Flows
For the six months ended 31 October 2023
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Six months to 31 October 2023 (unaudited) |
Six months to 31 October 2022 (unaudited) |
| | Note | £ | £ |
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| | |
| Cash flows from operating activities | | | |
| Loss before taxation | | (3,285,794) | (8,010,486) |
| Adjustments for non-cash/non-operating items: | | | |
| Fair value movements on derivatives | | 2,311,000 | 3,872,000 |
| Effective interest on redeemable ordinary shares | 6 | 961,020 | 4,820,364 |
| Interest on borrowings | 11 | 28,047 | - |
| Finance income | 6 | (1,924,236) | (1,079,132) |
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| Cash used in operating activities before changes in working capital | | (1,909,963) | (397,254) |
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| Changes in working capital | |
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| Increase in other receivables | 7 | (100,357) | (696,134) |
| Increase in trade and other payables | 10 | 619,888 | 514,579 |
| Net cash used in operating activities | | (1,390,432) | (578,809) |
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| Cash flows from investing activities | |
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| Decrease/(increase) in restricted cash | 9 | 159,707,299 | (1,079,132) |
| Finance income received | 6 | 1,924,236 | 1,079,132 |
| Net cash generated from investing activities | | 161,631,535 | - |
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| Cash flows from financing activities | |
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| Redemption of redeemable ordinary shares | 13 | (161,631,535) | - |
| Proceeds from borrowings | 11 | 2,400,000 | - |
| Net cash used in financing activities | | (159,231,535) | - |
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| Net increase/(decrease) in cash and cash equivalents | | 1,009,568 | (578,809) |
| Cash and cash equivalents at the beginning of the period | | 1,054,079 | 1,804,248 |
| Cash and cash equivalents at the end of the period | 8 | 2,063,647 | 1,225,439 |
Notes to the Interim Report for six months ended 31 October 2023
1. General information
New Energy One Acquisition Corporation Plc (the "Company") is a public Company incorporated in England and Wales. The Company is domiciled in England and its registered office is 201 Temple Chambers, 3-7 Temple Avenue, London, United Kingdom, EC4Y 0DT.
The principal activity of the Company is that of identifying and acquiring a business developing and/or supporting the application of renewable energy in an innovative sector which is expected to result in a reverse takeover of the Company within the meaning of the rules of the Access segment of the Main Market.
2. Accounting policies
The principal accounting policies applied in the preparation of the interim financial information are set out below.
Basis of preparation
The interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as contained in UK-adopted International Accounting Standards. These interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Accordingly, the interim financial statements should be read in conjunction with the annual report of the period ended 30 April 2023 (the "Annual Financial Statements") which was prepared in accordance with UK-adopted International Accounting Standards.
The Annual Financial Statements constitute statutory accounts as defined in section 434 of the Companies Act 2006 and a copy of these statutory accounts has been delivered to the Registrar of Companies. The auditor's report on the Annual Financial Statements was not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the reports and did not contain statements under section 498(2) or (3) of the Companies Act 2006. The accounting policies adopted in the preparation of the interim financial statements are consistent with those used to prepare the Company's Annual Financial Statements for the period ended 30 April 2023 and the comparative reporting period.
The interim financial information has been prepared on a historical cost basis unless otherwise specified within these accounting policies.
The interim financial information has been presented in Pound Sterling (£), being the functional and presentational currency of the Company. Amounts are rounded to the nearest £.
There are no new standards, interpretations and amendments that are in issue but not yet effective which are expected to have a material effect on the Company's future financial statements.
Going concern
The Company is a special purpose acquisition company ("SPAC") that has been formed for the sole purpose of effecting a Business Combination. The Company had a period of 15 months from the date on which the Company listed on the London Stock Exchange, 16 March 2022, to do so, the deadline being 16 June 2023 (the original Business Combination Deadline). On 14 June 2023, a general meeting was held, whereby the Company amended its articles of association, and the original Business Combination Deadline was extended by shareholder resolution to 15 March 2024. In the absence of a Business Combination by the extended Business Combination Deadline, the Company will cease all operations except to commence a members' voluntary liquidation and redeem the ordinary shares (to the extent possible), as per the prospectus dated 9 March 2022, and the announcement dated 14 June 2023. The Company does not have a right to extend the life of the Company beyond the extended Business Combination Deadline of 15 March 2024 in the absence of an amendment to its articles of association
Prior to the general meeting, pursuant to the articles of association, ordinary shareholders were given the right to redeem their ordinary shares, as the Business Combination had not completed by the original Business Combination Deadline. 99.99% of ordinary shareholders chose to redeem, and these funds were repaid from the funds sat in escrow, on 28 June 2023.
The Company has considered its ability to continue as a going concern for the period to 30 November 2024. Eni had committed to inject £3.6 million as a working capital loan. During the period ended 31 October 2023, Eni advanced £2,400,000 of the committed £3,600,000 working capital loan to the Company. The Company has included these cash inflows in a detailed financial forecast until 15 March 2024, the extended Business Combination Deadline.
The key assumptions used in the financial forecast include:
- base fixed costs of approximately £30,000 per month until the extended Business Combination Deadline, including a contingency; and
- additional costs in relation to the identification and assessment of the potential Business Combination, based on preliminary and existing agreements with advisors.
The Company has also considered the period post-completion of a Business Combination. As part of the ongoing Business Combination process, the Company will carry out appropriate due diligence in order to determine the working capital and other funding requirements of the target for the remainder of the going concern period following the Business Combination.
In the unlikely event there are unforeseen working capital expenses in the lead up to completing a Business Combination, the Sponsors have the option to inject further funding of up to £3.9m through the issue of loans or subscribing for additional sponsor warrants. This is however, outside the Company's control, and has not been relied on as a readily available mitigation in management's assessment of going concern.
The Company defines a Business Combination as the completion of a merger, share exchange, asset acquisition, share purchase, reorganisation or similar business combination involving the Company either with a single company or business or simultaneously with more than one company or business.
The Company believes that there is the existence of a material uncertainty regarding a Business Combination which may cast significant doubt on the Company's ability to continue as a going concern, that being to complete a Business Combination by 15 March 2024. In order to complete a Business Combination, the following steps must be undertaken and completed:
- identify an appropriate target;
- completing satisfactory due diligence on the appropriate target;
- the completion of a Private Investment in Public Equity ("PIPE") in the event of any cash consideration and transaction costs for the Business Combination being greater than the funds available in the escrow account;
- the completion of a PIPE of a sufficient size to fund any capital and other expenditure and working capital requirements of the newly acquired business post Business Combination; and
- obtaining shareholder approval for a Business Combination.
The Company believes that a material uncertainty exists, which casts a significant doubt on the Company's ability to continue as a going concern, since following the redemption of 99.99% of its redeemable ordinary shares, the Company's free float position falls below the 10% minimum required by the FCA for a listed company on the London Stock Exchange.
The Company's plan to correct this situation within a reasonable time involve a PIPE that will result in the issuance of new ordinary shares to public shareholders, raising the free float above the minimum 10%. In the event the PIPE is unsuccessful, then the Business Combination will not be completed, the Company will be delisted from the London Stock Exchange and will commence wind-up proceedings as described above.
Currently, the FCA has not indicated that they require the free float to be above the 10% threshold prior to the extended Business Combination Deadline.
The Board considers it appropriate to prepare the Financial Statements on a going concern basis, subject to a material uncertainty in effecting a Business Combination. The Financial Statements do not include the adjustments that would result if the Company was unable to continue as a going concern.
3. Significant judgments and estimates
The preparation of the Company's interim financial statements in compliance with UK-adopted International Accounting Standards requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities at the statement of financial position date, amounts reported for revenues and expenses during the period, and the disclosure of contingent liabilities, at the reporting date.
Estimates and judgements are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.
Critical accounting judgments
Sponsor shares
In determining whether the sponsor shares should be treated as a financial instrument under IAS 32 or share-based payments under IFRS 2, the Board reviewed the rights of the Sponsor Shareholders to see if they differ from those of the Public Shareholders. Should a Business Combination be successfully achieved, 40% of the sponsor shares will automatically convert into ordinary shares at no further cost to the Sponsor Shareholders. As the issue price of each Sponsor share was £0.001, this represents a considerable discount to the price paid by the Shareholders. The remaining 60% of the sponsor shares may convert into ordinary shares in stages post-Business Combination, again, at no further cost to the Sponsor Shareholders.
Further to this, the Sponsor is providing services to the Company in an equivalent capacity to an employment relationship with the conversion of the sponsor shares to ordinary shares entirely contingent on the successful consummation of a Business Combination, and no award will accrue to the Sponsor for its services if a Business Combination is not consummated.
Based on the above, it has been determined that the sponsor shares fall under the scope of IFRS 2 equity-settled share-based payment. The fair value at the grant date of equity-settled share-based payments is generally recognised as an expense with a corresponding increase in equity over the vesting period.
The deemed grant date of the sponsor shares will determine the point at which the sponsor shares will be accounted for under IFRS 2. The effective grant date for the sponsor shares is the point of consummation of a Business Combination, and not the original date of issue of the sponsor shares. This is because there is no obligation on the part of the Company to deliver cash or any other financial asset to holders of the sponsor shares prior to a Business Combination, the sponsor shareholders are not entitled to any preferential terms over holders of sponsor shares and the sponsor shareholders have agreed to waive any right to any distributions by the Company from the escrow account. In addition to this, should the Company fail to complete a Business Combination, then the sponsor shares will not be eligible for conversion to sponsor shares and the Sponsor will receive no material compensation for their work in attempting to identify a target acquisition. As a result, no expense for such payments will be recognised until the Business Combination is consummated. At that date an expense will be recognised in the Condensed Statement of Comprehensive Income on a fair value basis.
Critical accounting estimates
Warrants
The Company is accounting for the public warrants and sponsor warrants in accordance with IAS 32 Financial Instruments: Presentation. IAS 32 provides that the Company's financial instruments shall be classified on initial recognition in accordance with the substance of the contractual arrangement and the definitions of a financial liability or an equity instrument. The sponsor warrants have substantially the same terms as the public warrants
Complexity can arise between equity and liability classifications under IAS 32 whilst assessing and interpretating certain terms of the warrant terms and conditions to determine whether the fixed-for-fixed test is applicable or not. On initial recognition, the Company believed that they had correctly recorded both the Public and Sponsor warrants correctly as financial liabilities and subsequently recorded fair value remeasurements at each reporting date.
Given the importance of preserving the Company's distributable reserves, the Company concluded that it was appropriate to amend the terms of the public warrants and the sponsor warrants to amend such clauses to ensure that the fixed for fixed criteria is met under IAS 32 and IFRS 9. The agreements were updated and approved by the Board on 19 December 2022.
On 19 December 2022, the public warrants and sponsor warrants were re-measured to fair value and reclassified to equity on the Statement of Financial Position. The public warrants and the sponsor warrants now meet the criteria of equity under IAS 32 and IFRS 9, as a fixed number of ordinary shares are due to be received by warrant holders on exercise, for a fixed exercise price. Once the public warrants become exercisable, the Company can issue a redemption notice to redeem not less than all issued and outstanding public warrants for £0.01 per warrant if the market price of the shares equals or exceeds £18.00 for 20 out of 30 trading days. After the redemption notice is issued, warrant holders have not less than 30 days to exercise their warrants on the same fixed terms as above. If this redemption feature is exercised by the Company, the sponsor warrants must also be concurrently called for redemption on the same terms as the public warrants, but the sponsor warrants will be non-redeemable so long as they are held by Ente Nazionale Idrocarburi (Eni) or LiveStream or their respective permitted transferees.
The warrants have been valued using the Monte Carlo simulation of fair value, with any change in the fair value recognised in the Condensed Statement of Comprehensive Income up to the point that the warrants were reclassified to equity.
Deferred underwriting fee
The Company's underwriters are potentially entitled to a deferred underwriting fee. The board has exercised judgement in determining at the period end, no liability in relation to this fee exists as IAS 32 requires the recognition of the worst-case liability which would be to repay the funds raised to shareholders if no Business Combination is completed. This underwriting fee is only payable on completion of a Business Combination and will be paid from funds held in the escrow account.
Redeemable ordinary shares
In April 2022, it was announced that the planned court-approved capital reduction, whereby the statutory share premium paid on the issue of the redeemable ordinary shares was cancelled and transferred to distributable reserves was completed. The transferred amount sits in retained earnings. As the Company still does not an unavoidable right to avoid payment in cash, the financial liability remains. The Company has set up an 'other reserves' account in equity to account for the transfer of share premium to distributable reserves per Companies House.
Following a general meeting in May 2023, it was announced that resolutions to amend the articles of association and to extend the original Business Combination Deadline were passed, and a number of ordinary shares were redeemed, totalling 15,654,386. The amount repaid to shareholders reduced the financial liability, and the associated value was reclassified from other reserves to retained earnings.
4. Taxation
The Company's tax jurisdiction is the UK. The effective rate of corporation tax for the period ended 31 October 2023 was 25.00% (31 October 2022: 19.00%, 30 April 2023: 19.33%).
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Six months to 31 October 2023 |
Six months to 31 October 2022 |
Period ended 30 April 2023 |
| | £ | £ | £ |
| Loss for the period | (3,285,793) | (8,010,486) | (16,213,088) |
| | | | |
| Tax using the Company's effective rate of tax | (821,448) | (1,521,992) | (3,134,631) |
| Effects of: | | | |
| Disallowable expenditure | 1,023,741 | 1,436,754 | 3,543,151 |
| Tax rate changes | - | - | (3,645) |
| Capital gains | - | - | 210, 969 |
| Losses carried forward | - | 85,238 | - |
| Tax charge for the period | 202,293 | - | 615,844 |
The UK tax rate increased to 25.00% from 1 April 2023.
The tax liability for the period ended 31 October 2023 on the loss before tax of £3,285,793 was £202,293 (2022: £nil), arising on capital gains in finance income. In the period ended 30 April 2023 there was a tax liability of £615,844 also arising on capital gains in finance income. However, in the period ended October 2022 there was a taxable loss and so no tax liability has been included.
5. Earnings per share
Basic earnings per share is calculated by dividing the loss attributable in the period to equity holders of the Company by the weighted average number of ordinary shares in issue during the period. The Company is loss making throughout the period, therefore diluted earnings per share has not been considered, however the warrants in issue and the forward purchase contracts were not exercisable at the period end and therefore not dilutive.
The Company have determined that the following classes of shares are considered to be ordinary shares in its calculation of loss per share: Sponsor shares and Redeemable ordinary shares held by the sponsors. Redeemable ordinary shares held by the public have not been included due to the fact they are held as a liability on the Condensed Statement of Financial Position based on the rights attached including the ability for the holders to redeem. The Deferred shares do not carry any voting or dividend rights, they have been also excluded from the calculation.
The Sponsor shares and Redeemable ordinary shares held by the sponsors have the same rights to dividends and votes and are therefore treated as a single class in the calculation.
| |
Six months to 31 October 2023 |
Six months to 31 October 2022 |
Period ended 30 April 2023 |
| | Number | Number | Number |
| Sponsor shares | 4,375,000 | 4,375,000 | 4,375,000 |
| Redeemable ordinary shares | 1,845,396 | 1,845,396 | 1,845,396 |
| | 6,220,396 | 6,220,396 | 6,220,396 |
| | Six months to 31 October 2023 | Six months to 31 October 2022 | Period ended 30 April 2023 | ||
| | £ | £ | £ | ||
| Loss for the period attributable to equity holders of the Company | (3,488,087) | (8,010,486) | (16,828,932) | ||
| Weighted average number of ordinary shares | 6,220,396 | 6,220,396 | 4,800,899 | ||
| Loss per share |
| (1.29) | (3.51) |
6. Finance income and finance expense
|
|
Six months to 31 October 2023 |
Six months to 31 October 2022 |
Period ended 30 April 2023 |
| | £ | £ | £ |
| Interest income | 1,924,236 | 1,079,132 | 4,022,126 |
| Total finance income | 1,924,236 | 1,079,132 | 4,022,126 |
|
|
Six months to 31 October 2023 |
Six months to 31 October 2022 |
Period ended 30 April 2023 |
| | £ | £ | £ |
| Effective interest on redeemable ordinary shares | 961,020 | 4,820,364 | 12,917,316 |
| Interest on borrowings | 28,047 | - | - |
| Total finance expense | 989,067 | 4,820,364 | 12,917,316 |
7. Other receivables
|
|
As at 31 October 2023 |
As at 31 October 2022 |
As at 30 April 2023 |
| | £ | £ | £ |
| Amounts falling due within one year | 670,039 | 861,218 | 569,682 |
| Other receivables | 670,039 | 861,218 | 569,682 |
The Directors consider that the carrying amount of other receivables is approximately equal to their value.
8. Cash and cash equivalents
|
|
As at 31 October 2023 |
As at 31 October 2022 |
As at 30 April 2023 |
| | £ | £ | £ |
| Cash at bank | 2,063,647 | 1,225,439 | 1,054,079 |
| | 2,063,647 | 1,225,439 | 1,054,079 |
9. Restricted cash
|
| As at 31 October 2023 |
As at 31 October 2022 |
As at 30 April 2023 |
| | £ | £ | £ |
| Restricted cash | 19,314,827 | 176,129,431 | 179,022,126 |
| | 19,314,827 | 176,129,431 | 179,022,126 |
10. Trade and other payables
|
| As at 31 October 2023 | As at 31 October 2022 | As at 30 April 2023 |
| | £ | £ | £ |
| Amounts falling due within one year | | | |
| Trade payables | 546,018 | 110,608 | 510,040 |
| Accruals | 664,593 | 929 | 110,683 |
| Amounts due from related party | 68,327 | 68,327 | 68,327 |
| Other payables | 41,208 | 3,000 | 11,208 |
| | 1,320,146 | 182,864 | 700,258 |
The Directors consider that the carrying value of trade and other payables approximates to their fair value. Included within other payables is an amount of £41,208 (31 October 2022: £3,000, 30 April 2023: £11,208) payable to Livestream (a company of which Sanjay Mehta is a Director).
11. Borrowings
|
| As at 31 October 2023 | As at 31 October 2022 | As at 30 April 2023 |
| Current | £ | £ | £ |
| Loan | 2,400,000 | - | - |
| Interest | 28,047 | - | - |
| | 2,428,047 | - | - |
During the interim period to 31 October 2023, the Company entered into a loan agreement with Eni to provide working capital for the Company. Eni agreed to provide the Company an unsecured loan of £3.6 million, payable in equal instalments in September, October and December 2023. The loan, together with all interest accrued, is repayable in full on or before the expiry date of 31 March 2024. Interest is charged at the aggregate of the applicable margin, being 3.5% per annum and the base rate.
12. Derivative liabilities
During the period ended 30 April 2023, Eni entered into a Forward Purchase Agreement with the Company to subscribe to a number of Ordinary Shares up to the lesser of 15% of the Ordinary Shares issued in a private investment in public equity transaction; and 4,100,000 Ordinary Shares at a subscription price of £10.00 per Forward Purchase Share, representing a maximum value of £41,00,000, to be issued at the time of, and conditional on completion of a Business Combination. Further, Li You Investment Corporation ("Li You"), entered into an additional Forward Purchase Agreement, on the same terms, to subscribe for 1,500,000 Ordinary Shares.
As the number of shares to be issued to both Eni and Li You will vary the forward purchase agreements are derivative instruments and are recognised at fair value at the period end. The agreements have been valued by a third-party as follows:
|
| As at 31 October 2023 | As at 31 October 2022 | As at 30 April 2023 |
| | £ | £ | £ |
| Eni | 1,222,000 | 265,000 | 163,000 |
| Li You | 1,554,000 | 632,000 | 302,000 |
| Warrants | - | 11,445,000 | - |
| Total fair value | 2,776,000 | 12,342,000 | 465,000 |
The fair value loss of £2,311,000 (31 October 2022: £3,872,000) recognised in the Condensed Statement of Comprehensive Income consists of £2,311,000 (31 October 2022: £897,000) in relation to the forward purchase contracts above, and £nil (31 October 2022: £2,975,000) in relation to the revaluation of the public and sponsor warrants from initial recognition up to the date of modification of the warrant terms and conditions which were subsequently reclassed the public and sponsor warrants from liabilities to equity. See note 14 for further detail.
13. Share capital
| Share Capital | As at 31 October 2023 | As at 31 October 2022 | As at 30 April 2023 |
|
| Number | Number | Number |
| Z deferred shares | 1 | 1 | 1 |
| Deferred shares | 50,000 | 50,000 | 50,000 |
| Redeemable ordinary shares | 1,845,396 | 1,845,396 | 1,845,396 |
| Sponsor shares | 4,375,000 | 4,375,000 | 4,375,000 |
| | 6,270,397 | 6,270,397 | 6,270,397 |
| |
|
|
|
| Share Capital | As at 31 October 2023 | As at 31 October 2022 | As at 30 April 2023 |
|
| £ | £ | £ |
| Z deferred shares | 0.01 | 0.01 | 0.01 |
| Deferred shares | 50,000 | 50,000 | 50,000 |
| Redeemable ordinary shares | 1,845 | 1,845 | 1,845 |
| Sponsor shares | 4,375 | 4,375 | 4,375 |
| | 56,220 | 56,220 | 56,220 |
Deferred shares
On incorporation, 1 share was issued at $1.00. Subsequently, this share was re-classed as a Z deferred share and held in equity.
Prior to re-registration of the Company as a public company, 50,000 deferred shares were issued to LiveStream for £1.00 providing an aggregate nominal value of £50,000. The purpose of the subscription for deferred shares was to provide the minimum authorised share capital that is necessary on incorporation of, or re-registration of, a public company, which requires share capital of nominal value of at least £50,000 (or ?57,100) and must be denominated in GBP or EUR (section 763 CA 2006).
Redeemable ordinary shares
Further to publication of its prospectus on 9 March 2022, the Company completed the placing of 17,500,000 shares in the Company at a price of £10 per share, each comprising one redeemable ordinary share and the right to receive one half of a warrant in respect of each redeemable ordinary share. 1,845,396 of the redeemable ordinary shares were issued to the Company's sponsors.
On 16 March 2022, the Company announced the admission of 17,500,000 redeemable ordinary shares, and 8,750,000 public warrants, to trading on the London Stock Exchange's main market for listed securities ("LSE").
In addition, and as disclosed in the prospectus, the sponsors subscribed for a further 4,375,000 shares, these remain unlisted as per the terms of the instruments, until a Business Combination takes place.
On 6 April 2022, pursuant to a shareholder resolution, the Company completed a share capital reduction whereby the portion of statutory share premium pertaining to the redeemable ordinary shares was cancelled. The purpose of which was to create distributable reserves to enable the redemption of ordinary shares. As the Company still has the unavoidable right to pay cash in respect of the redeemable ordinary shares, the financial liability remains. Other reserves consist of the figure pertaining to share premium in relation to the redeemable ordinary share held as a financial liability which was cancelled.
Holders of the redeemable ordinary shares are entitled to redeem all or a portion of their shares upon completion of a Business Combination or after the original Business Combination deadline of 16 June 2023. The redeemable shares are classified as liabilities in the Company's Statement of Financial Position and are measured at amortised cost.
On 25 May 2023, the Company announced a proposal to amend the articles of association in order to extend the original Business Combination deadline, from 16 June 2023 to 15 March 2024, by shareholder resolution at a general meeting held on 14 June 2023.
Pursuant to the amendment of the articles of association and due to the fact the Business Combination was not consummated prior to the original Business Combination Deadline, ordinary shareholders had the right to redeem their shares at £10.325 each (comprising £10.00 per ordinary share representing the amount subscribed for by public shareholders in the initial public offering, together with such ordinary shareholders' pro rata entitlement to the escrow account overfunding; £0.325 per ordinary share). The redemption of ordinary shares held by the public shareholders does not trigger the repurchase or redemption of the public warrants held, and public warrant holders retain all rights in respect of any public warrants held at redemption date. Following the general meeting, it was announced that the resolutions to amend the articles of association and to extend the original Business Combination Deadline were passed, and the number of ordinary shares to be redeemed totalled 15,654,386. The redemption amounts, totalling £161,631,536, were paid to ordinary shareholders from the funds held in escrow, on 28 June 2023, leaving a balance of £18,625,159 (including interest income received between the period end and 28 June 2023). This amount was deducted from the redeemable ordinary shares liability, leaving £2,250 relating to the ordinary shares that were not redeemed. The 18,453,960 ordinary shares held by the sponsors remain in equity as it was agreed these would not be redeemed.
| Redeemable ordinary shares | As at 31 October 2023 | As at 30 April 2023 |
| B/f balance | 160,672,766 | - |
| Proceeds | - | 156,546,040 |
| Less initial recognition of public warrants | - | (4,112,500) |
| Less issue costs | - | (4,678,090) |
| Effective interest accretion | 961,019 | 12,917,316 |
| Ordinary shares redeemed at £10.325 per share | (161,631,535) | - |
| | 2,250 | 160,672,766 |
The 1,845,396 redeemable ordinary shares held by the sponsors are restricted and non-redeemable by the sponsors, therefore these are classed as equity and apportioned between share capital (£1,845) and share premium (£18,452,115), less issue costs of £182,384, prior to the capital reduction whereby the share premium portion was cancelled and transferred to retained earnings.
Sponsor shares
As mentioned above, the Company's sponsors subscribed for 4,375,000, at a nominal value of £0.001, for an aggregate value of £4,375. 75% were issued to LiveStream (held for itself, Access Capital, the Directors, strategic advisors, future advisors and future employees), and 25% to Eni. By virtue of subscribing for sponsor Shares, LiveStream and Eni are both sponsors for the purpose of the Listing Rule and are not able to vote on a Business Combination. The sponsor shares are not tradable but entitle the holder to dividends and other distributions in line with the Articles of Association. Each sponsor share entitles the holder to attend and cast one vote at a general meeting (other than the general meeting in relation to approving a Business Combination).
The sponsor shares will convert to ordinary shares on a one-for-one basis as follows:
- 40% on completion of a Business Combination;
- 30% between completion of a Business Combination and the 10th anniversary of a Business Combination if the closing price of ordinary shares is equal to or greater than £12.00 for any 10 trading days within a 30-trading day period; and
- 30% between completion of a Business Combination and the 10th anniversary of a Business Combination if the closing price of ordinary shares is equal to or greater than £14.00 for any 10 trading days within a 30-trading day period.
All sponsor shares that are issued and outstanding on the 10th anniversary of a Business Combination will be reclassified as deferred shares.
Accordingly, these sponsor shares are classified as equity. These 4,375,000 shares alongside the deferred shares, and the restricted redeemable ordinary shares, make up share capital of £56,220.
As at 31 October 2023, the Company's issued voting share capital consists of 1,845,396 redeemable ordinary shares, and 4,375,000 unlisted sponsor shares.
14. Warrants
Sponsor warrants
Alongside the sponsor shares being issued, sponsor warrants were issued to the sponsors in the same ratio as the sponsor shares. 5,250,000 Sponsor warrants were issued at £1.50 each, valued at £7,875,000, and are exercisable at £11.50 for one ordinary share, commencing on the date that is 30 days after a Business Combination. They expire on the fifth anniversary of the Business Combination completion date. On the date of initial recognition, the fair value of each Sponsor warrant was £0.87 each with the total fair value being £4,357,500.
Once the public warrants (see below), become exercisable, the Company can issue a redemption notice to redeem not less than all issued and outstanding public warrants for £0.01 per warrant if the market price of the shares equals or exceeds £18.00 for 20 out of 30 trading days. After the redemption notice is issued, warrant holders have not less than 30 days to exercise their warrants on the same fixed terms as above. If this redemption feature is exercised by the Company, the sponsor warrants must also be concurrently called for redemption on the same terms as the public warrants, but the sponsor warrants will be non-redeemable so long as they are held by Eni or LiveStream or their respective permitted transferees.
Public warrants
Each ordinary share carried an entitlement to one half of a public warrant. The public warrants carry the same terms and conditions as the sponsor warrants (other than that the sponsor warrants will be non-redeemable so long as they are held by Eni or LiveStream or their respective permitted transferees). 8,750,000 public warrants were issued at £0.26 each, valued at £2,275,000. On the date of initial recognition, the fair value of each public warrant was £0.47 each with the total fair value being £4,112,500.
Once the public warrants become exercisable, the Company can issue a redemption notice to redeem not less than all issued and outstanding public warrants for £0.01 per warrant if the market price of the shares equals or exceeds £18.00 for 20 out of 30 trading days. After the redemption notice is issued, warrant holders have not less than 30 days to exercise their warrants on the same fixed terms as above. If this redemption feature is exercised by the Company, the sponsor warrants must also be concurrently called for redemption on the same terms as the public warrants, but the sponsor warrants will be non-redeemable so long as they are held by Eni or LiveStream or their respective permitted transferees.
Fair value adjustment
The sponsor warrants and public warrants were initially recognised as derivative liabilities due to a clause in the agreement terms which failed the 'fixed for fixed test'. The cash received in relation to the sponsor warrants which was above the fair value of the instruments has been recognised as a capital contribution (£3,517,500).
At 31 October 2022, the fair value of the sponsor warrants was £1.23 each, totalling £6,457,500 and the fair value of each public warrant was £0.57 with the total amounting to £4,987,500. A fair value loss of £2,100,000 was recognised during the period in respect of the sponsor warrants, and a fair value loss of £875,000 was recognised in respect of the public warrants.
On 19 December 2022, the terms of both the sponsor warrants and public warrants were amended which meant the variability was removed and therefore the classification was amended to equity. Therefore, there was no fair value adjustment in the income statement during the period ended 31 October 2023.
15. Financial Risk Management
The fair value hierarchy of financial instruments measure at fair value is provided below. The different levels have been defined as follows:
- Quoted prices (unadjusted), in active markets for identical assets or liabilities (level 1);
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2);
- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs), (level 3).
There have been no transfers between levels during the period. Additions to level 3 during the period are based on third party valuation reports. See note 13 for further detail.
|
| Level 1 | Level 2 | Level 3 | Total |
| | £ | £ | £ | £ |
| Derivative financial liabilities held at fair value through profit or loss | - | - | (2,776,000) | (2,776,000) |
| | - | - | (2,776,000) | (2,776,000) |
The following summarises the valuation methodologies and inputs used for derivative liabilities categorised in level 3:
| | Fair value | Valuation methodologies | Unobservable inputs |
| Derivative liabilities | 2,776,000 | Monte Carlo simulation | Volatility Probability of a Business Combination |
The following table provides information about the sensitivity of the period end fair value measurement to changes in the most significant inputs:
| Description | Significant unobservable input | Estimate of the input | Sensitivity of the fair value measurement of the input |
| Derivative liabilities | Volatility | 50% | An increase to 70% (decrease to 30%) would increase fair value by £298,000 (decrease by £286,000). |
| Derivative liabilities | Probability of no Business Combination | 75% | An increase to 95% (decrease to 50%) would decrease fair value by £2,379,000, (increase by £1,189,000). |
The Company's activities expose it to credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.
Credit Risk
Credit risk arises from cash and cash equivalents as well as outstanding receivables. Management does not expect any losses from non-performance of these receivables. The Company's exposure to credit risk is limited since it does not yet trade and does not hold trade receivables. The Company considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.
Liquidity Risk
In keeping with similar sized investment companies, the Company's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed and the Board regularly manages the working capital requirements of the Company. The
Company has minimal committed expenditure and as such the Board is able to manage its payments to ensure adequate liquid resources are available.
Management monitors rolling forecasts of the Company's cash and cash equivalent on the basis of expected cash flows. This is generally carried out by the Executive Directors in accordance with practice and limits set by the Company. At the end of the reporting period the Company held cash and cash equivalents of £2,063,648.
Price risk
The Company does not hold any equity securities and as such is not exposed to price risk.
Foreign exchange risk
The Company does not carry out any transactions or hold any balances in currencies other than Sterling, therefore it is not exposed to foreign exchange risk.
16. Related Party Transactions
From 8 November 2021 (being the date of the Company's incorporation) to date, the Company entered into the following related party transactions:
On 6 December 2021, LiveStream LLC (Company Sponsor, and a company owned solely by Sanjay Mehta), subscribed for 50,000 deferred shares, which carry no voting or dividend rights.
LiveStream and Eni (Company Sponsor) subscribed for 3,306,250 and 1,068,750 sponsor shares respectively. (See note 13). The Sponsors have entered into an agreement to waive any right to distributions by the Company from the escrow account. Additionally, LiveStream and Eni subscribed for 3,937,500 and 1,312,500 sponsor warrants respectively. (See note 14).
On IPO, Eni subscribed for 1,750,000 redeemable ordinary shares of nominal value £0.001 each, at a price of £10.00 each, for £17,500,000, and LiveStream subscribed for 95,395 redeemable ordinary shares, of nominal value £0.001, at a price of £10.00 each, for £953,950.
LiveStream agreed to incur and pay or will pay certain Offering Costs on behalf of the Company for an aggregate amount equal to £2,398,379 and the Company has agreed that such amount will be deducted from the aggregate subscription amount payable by LiveStream pursuant to the LiveStream sponsor warrant subscription agreement. As at 30 April 2023 and 31 October 2023, this amount has been recharged to the Company via invoice, so that the costs sit in the Condensed Statement of Comprehensive Income. Further, included in other receivables is an invoice to LiveStream totalling £484,969 relating to fees paid by the Company which were agreed to be funded by LiveStream in addition to the amount above.
Eni entered into a forward purchase agreement with the Company to subscribe to a number of ordinary shares up to the lesser of 15% of the ordinary shares issued in a private investment in public equity transaction; and 4,100,000 ordinary shares at a subscription price of £10.00 per forward purchase share, representing a maximum value of £41,000,000, to be issued at the time of, and conditional on completion of a Business Combination. The fair value has been recognised as a derivative liability on the Condensed Statement of Financial Position. See note 12 for further details.
Related party loans of £68,327 and £11,208 are recognised on the Condensed Statement of Financial Position as at 30 April 2023 and £68,327 and £41,208 as at 31 October 2023. The loans have been provided to the Company by Access Capital (a company of which David Kotler is a Director) and Livestream (a company of which Sanjay Mehta is a Director), respectively. The amounts are due to be repaid on completion of a Business Combination.
During the period ended 31 October 2023, Eni advanced £2,400,000 of a committed £3,600,000 working capital loan to the Company. No repayments were made during the period, and interest was accrued of £28,047. At the period end, an amount was due to Eni in relation to the working capital loan of £2,428,047.
17. Events after the reporting period
There are no events after the reporting period that require disclosure.
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