TIDMMCII
RNS Number : 0957D
Marwyn Capital II Limited
16 March 2011
The directors present their first annual report and consolidated
financial statements for the period from 4 December 2009 (the date
of incorporation) to 31 December 2010. The consolidated financial
statements are those of Marwyn Capital II Limited ("the Company")
and its subsidiary, together "the Group".
Principal activities and business review
The Company was established to acquire one or more quoted or
unquoted businesses or companies (in whole or in part) initially by
way of a reverse takeover. The Company was admitted to London's
Alternative Investment Market ("AIM") in December 2009. The Group
is seeking acquisitions wholly or mainly in the UK in the
healthcare, testing and inspection and leisure sectors.
Since listing in December 2009, the Company has pursued its
stated strategy. The Board of Directors (the "Board") continue to
review a number of potential acquisition opportunities. The Board
continues to monitor and control its planned levels of expenditure
in the pre-acquisition phase.
Key risks
Strategy execution
The Group's future success is dependent upon its ability to
identify and execute successful acquisitions and/or investments.
There can be no assurance that the Group will be able to conclude
agreements with any target business and/or shareholders in the
future. In addition, the Group may face competition from other
organisations which may be larger and/or better funded than
itself.
Sector risk
The Group will be subject to the risks associated with the
sectors of investment and targets in which it invests.
Disposals
The Group may make investments that it cannot realise through
trade sale or flotation at an acceptable price. Some investments
may be lost through insolvency. Any of these circumstances could
have a negative impact on the profitability and value of the
Group.
Directors and employees
The Group will be highly dependent on the expertise and
continued service of the Directors. These individuals could
terminate their employment agreements at any time and their loss
may have an adverse effect on the Group's business.
In addition, there is a risk that the Group will not be able to
recruit executives of sufficient expertise or experience to
maximise any opportunities that present themselves, or that
recruiting and retaining those executives is more costly or takes
longer than expected. The failure to attract and retain those
individuals may adversely affect the Group's operations.
Potential dilution from the incentivisation of management and
Marwyn Management Partners L.P.
The Group has in place an incentivisation scheme through which
the Group's future management and Marwyn Management Partners L.P.
will be rewarded for increases in shareholder value, subject to
certain growth and vesting conditions. It is intended that future
management will subscribe for Management Participation Shares and
the Company has also granted Marwyn Management Partners L.P. a
Participation Option as part of these incentivisation schemes. The
Company may purchase the Management Participation Shares either for
the issue of new ordinary shares or for cash at its discretion. The
Company may also be required to issue new ordinary shares pursuant
to the Marwyn Participation Option.
To this end the Company has the authority to issue up to 20
percent by number of equity securities of its fully diluted issued
share capital from time to time, in order to satisfy the potential
requirement to issue these ordinary shares. If the Company elects
to issue ordinary shares in order to satisfy the incentivisation
schemes, the existing Shareholders may face significant
dilution.
Need for additional financing and dilution
Existing cash balances are likely to be insufficient to fund in
full suitable acquisitions and/or investments identified by the
Board. Accordingly, the Group may need to seek additional sources
of financing to implement its strategy. There can be no assurance
that the Group will be able to raise those funds, whether on
acceptable terms or at all. If further financing is obtained by
issuing equity securities or convertible debt securities, existing
Shareholders may be diluted and the new securities may carry
rights, privileges and preferences superior to the existing
ordinary shares. The Group may seek debt finance to fund all or
part of any future acquisitions. There can be no assurance that the
Group will be able to raise those debt funds, whether on acceptable
terms or at all. If debt financing is obtained, the Group's ability
to raise further finance and its ability to operate its business
may be subject to restrictions.
The City Code
The Company is incorporated in the Cayman Islands, the City Code
does not apply to the Company. The laws of the Cayman Islands
applicable to the Company do not contain any provisions similar to
those in the City Code which are designed to regulate the way in
which takeovers are conducted. The Company is not subject to
regulation in the Cayman Islands.
Any person or persons acting in concert will be able to acquire
shares in the Company which, when taken together with the shares
already held by them, carry 30 percent or more of the voting rights
in the Company without being required to make a general offer for
the entire issued share capital of the Company. Additionally, any
party intending to acquire all or a substantial part of the issued
share capital of the Company will not be obliged to comply with the
provisions of the City Code including, for example, as to
announcements, equality of treatment for shareholders as to value
and type of consideration offered, the prohibition on favourable
conditions that are not extended to all shareholders, the
information that must be sent to shareholders on a takeover, the
requirement for independent advice to be provided to the Board on a
takeover and for such advice to be made known to shareholders. The
Company will also not be subject to the overall scrutiny and
sanctions of the UK Panel on Takeovers and Mergers.
Major shareholder
Approximately 41 percent of the Company's issued share capital
is held by Marwyn Value Investors L.P.. Marwyn Value Investors L.P.
will therefore be able to exercise significant influence over the
Company's corporate actions without requiring the approval of the
Company's other Shareholders.
Furthermore, the City Code does not apply to any further
purchases of the ordinary shares which Marwyn Value Investors L.P.
may or may not make.
Results and dividends
For the period from incorporation (4 December 2009) to 31
December 2010, the Group's loss before and after tax was
GBP825,712.
It is the Board's policy that, prior to making the first
acquisition, no dividends will be paid. Following the first
acquisition, subject to availability of distributable reserves,
dividends will be paid to shareholders when the Board believes it
is appropriate and prudent to do so. Accumulated losses for the
period of GBP825,712 have been transferred to reserves.
Directors
The directors of the Company who served during the period are
shown below. Details of the Directors' interests in the shares of
the Company and details of any related party transactions relevant
to the Directors are shown in note 13.
The following Directors have held office during the period and
to the date on which these consolidated financial statements were
approved, unless as otherwise noted:
David Williams Appointed 4 December 2009 & resigned 18 March 2010
Mark Watts Appointed 4 December 2009
Paul Cookson Appointed 4 December 2009
Paul Everitt Appointed 18 March 2010
Going concern
On the basis of current financial projections and the expected
cash needs of the Group, the Directors have a reasonable
expectation that the Group and the Company have adequate resources
to continue in operational existence for at least another 12 months
from the date of approval of these consolidated financial
statements and, accordingly, consider that it is appropriate to
adopt the going concern basis in preparing these consolidated
financial statements.
Independent auditor
The Board confirms that the auditor, KPMG Channel Islands
Limited, has had access to all relevant information in conducting
its audit. KPMG Channel Islands Limited, has expressed willingness
to continue in office and a resolution to reappoint KPMG Channel
Islands Limited will be proposed at the forthcoming Annual General
Meeting.
Annual General Meeting
The notice of the Annual General Meeting will be forwarded to
shareholders under separate cover.
On behalf of the Board
15 March 2011
Paul Cookson Paul Everitt
Director Director
The directors are responsible for preparing the financial
statements in accordance with applicable law and International
Financial Reporting Standards.
The directors are required to prepare financial statements for
each financial period which give a true and fair view of the state
of affairs of the Company and of the profit or loss of the Company
for that period. In preparing these financial statements, the
directors are required to:
-- select suitable accounting policies and apply them
consistently;
-- make judgments and estimates which 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 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 Law (2010
Revision) as applicable in the Cayman Islands. 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.
Approved by the Board of Directors
Paul Cookson
Director
15 March 2011
As at 31 December 2010
Note 2010
GBP
-------------------------------------------------- ----- ----------
Assets
Receivables 8,587
Cash and cash equivalents 3,912,902
----------
Current assets 3,921,489
==========
Total assets 3,921,489
==========
Equity
Share capital 9 49,000
Share premium 9 4,665,094
Accumulated losses (825,712)
----------
Equity attributable to the owners of the Company 3,888,382
----------
Liabilities
Trade and other payables 8 33,107
Current liabilities 33,107
----------
Total liabilities 33,107
==========
Total equity and liabilities 3,921,489
==========
The consolidated financial statements on pages 5 to 20 were
approved and authorised for issue by the Board of Directors on 15
March 2011and signed on its behalf by:
Paul Cookson Paul Everitt
Director Director
For the period from 4 December 2009 (date of incorporation) to
31 December 2010
2010
Note GBP
Administration expenses 7 (825,712)
Results from operating activities (825,712)
----------
Loss for the period (825,712)
==========
Attributable to:
Equity holders of the Company (825,712)
----------
Loss for the period (825,712)
==========
Earnings per share
----------
Basic and diluted loss per share 6 (1.78p)
==========
All the Group's activities derive from continuing
operations.
For the period from 4 December 2009 (date of incorporation) to
31 December 2010
Accumulated
Share capital Share premium losses Total
GBP GBP GBP GBP
-------------------- -------------- -------------- ------------ ----------
Balance at
incorporation - - - -
Loss for the period - - (825,712) (825,712)
Issue of ordinary
shares 49,000 4,851,000 - 4,900,000
Costs directly
related to the
issue of ordinary
shares - (185,906) - (185,906)
Balance at 31
December 2010 49,000 4,665,094 (825,712) 3,888,382
============== ============== ============ ==========
For the period from 4 December 2009 (date of incorporation) to
31 December 2010
2010
GBP
---------------------------------------------- ----------
Cash flows from operating activities:
Payments to suppliers and employees (801,192)
----------
Net cash used in operating activities (801,192)
----------
Cash flows from financing activities:
Proceeds from the issue of share capital 4,900,000
Payment for share issue costs (185,906)
Net cash generated from financing activities 4,714,094
----------
Net increase in cash and cash equivalents 3,912,902
----------
Cash and cash equivalents on incorporation -
----------
Cash and cash equivalents at 31 December
2010 3,912,902
==========
1. Reporting entity
Marwyn Capital II Limited (the "Company") is an exempted company
limited by shares and domiciled in the Cayman Islands. The address
of the Company's registered office is PO Box 309, Ugland House,
Grand Cayman, KY1-1104, Cayman Islands. The Company was
incorporated on 4 December 2009.
The consolidated financial statements of the Company as at and
for the period ended 31 December 2010 comprise the Company and its
subsidiary, Marwyn Capital Investments II Limited (together
referred to as the "Group" and individually as "Group entities").
The Group primarily is involved in the pursuit of target
investments in the healthcare, testing and inspection and leisure
sectors.
The Company is listed on AIM.
2. Basis of preparation
Statement of compliance
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
(IFRSs). The consolidated financial statements were authorised for
issue by the Board of Directors (the "Board") on 15 March 2011.
Basis of measurement
The consolidated financial statements have been prepared on the
historical cost basis.
Functional and presentation currency
Items included in the consolidated financial statements of each
of the Group's entities are measured using the currency of the
primary economic environment in which the entities operate (the
'functional currency'). The consolidated financial statements are
presented in British Pounds (GBP), which is the Group's and
Company's functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at period-end exchange rates
of monetary assets and liabilities denominated in foreign
currencies are recognised in the Consolidated Statement of
Comprehensive Income.
Use of estimates and judgements
The preparation of the consolidated financial statements in
conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. Estimating fair value for
share-based payment transactions requires determining the most
appropriate valuation model, which is dependent on the terms and
conditions of the grant. This estimate also requires determining
the most appropriate inputs to the valuation model including the
expected life of the share option, volatility and dividend yield
and making assumptions about them.
Changes to International Financial Reporting Standards
In preparing these financial statements, the Group has adopted
the following relevant amendments to accounting standards which
became effective for this first accounting period:
-- Amendments to IAS 27 'Consolidated and Separate Financial
Statements'
-- Revised IFRS 3 'Business Combinations'
-- Amendments to IFRS 1 'Additional Exemptions for First-time Adopters'
-- Amendments to IFRS 2 'Group Cash-settled Share-based Payment
Transactions'
The adoption of these interpretations and amendments thereto has not had a
significant effect on the consolidated financial statements. The following
forthcoming amendments to accounting standards will become effective for
accounting periods beginning on or after 1 January 2011:
-- Improvements to IFRSs (2010 )
-- IAS 24 Related Party Disclosures (2009)
-- IFRS 9 Financial Instruments (2009), effective November 2013
3. Significant accounting policies
The accounting policies set out below have been applied
consistently by the Group entities.
Basis of consolidation
Subsidiaries are entities controlled by the Company. Control
exists when the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that
currently are exercisable are taken into account. The consolidated
financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases. The accounting
policies of subsidiaries have been changed when necessary to align
them with the policies adopted by the Company and the Group.
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
The financial statements of the Company have not been included
within these consolidated financial statements. There is no
material difference between the financial statements of the Company
and those of the Group as there is only one subsidiary company with
immaterial assets and liabilities and no profit or loss.
Receivables
Receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
After initial measurement, such financial assets are subsequently
measured at amortised cost using the effective interest rate
method, less impairment. Amortised cost is calculated by taking
into account any discount or premium on acquisition. The
amortisation is included in finance income in the income statement.
The losses arising from impairment are recognised in the income
statement in finance costs.
Trade Payables
After initial recognition, payables are subsequently measured at
amortised cost using the effective interest rate method. Gains and
losses are recognised in the income statement when the liabilities
are derecognised as well as through the effective interest rate
method amortisation process. Amortised cost is calculated by taking
into account any discount or premium on acquisition. The
amortisation is included in finance costs in the income
statement.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks and other short-term highly liquid investments
with original maturities of three months or less.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares are
recognised as a deduction from equity, net of any tax effects.
Impairment of financial assets
A financial asset is assessed at each reporting date to
determine whether there is any objective evidence that it is
impaired. A financial asset is considered to be impaired if
objective evidence indicates that a loss event has occurred after
the initial recognition of the asset and that the loss event had a
negative effect on the estimated future cash flows of that asset
that can be estimated reliably.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount, and the present value of the estimated future cash flows
discounted at the original effective interest rate.
Individually significant financial assets are tested for
impairment on an individual basis. The remaining financial assets
are assessed collectively in groups that share similar credit risk
characteristics.
All impairment losses are recognised in the Consolidated
Statement of Comprehensive Income.
An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was
recognised. For financial assets measured at amortised cost, the
reversal is recognised in the Consolidated Statement of
Comprehensive Income.
Taxation
The Company is an exempted company registered in the Cayman
Islands and as such is not subject to taxation in the Cayman
Islands or anywhere else.
Earnings per share
The Group presents basic and diluted earnings per 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 determined by
adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for
the effects of all dilutive potential to ordinary shares.
Determination of fair values
A number of the Group's accounting policies and disclosures
require the determination of fair value, for both financial and
non-financial assets and liabilities. Fair values have been
determined for measurement and/or disclosure purposes based on the
following methods. When applicable, further information about the
assumptions made in determining fair values is disclosed in the
notes specific to that asset or liability.
(i) Receivables
The fair value of receivables is estimated at the present value
of future cash flows, discounted at the market rate of interest at
the reporting date. This fair value is determined for disclosure
purposes.
(ii) Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is
calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at
the reporting date.
(iii) Share-based payment transactions
In accordance with IFRS2, share-based payment arrangements in
which the Group receives goods or services as consideration for its
own equity instruments are accounted for as equity-settled share
based payment transactions, regardless of how the equity
instruments are obtained by the Group.
The Marwyn Participation Option entitles Marwyn Management
Partners L.P. to subscribe for ordinary shares at an exercise price
equal to their nominal value subject to certain growth and vesting
conditions. The fair value of share entitlements granted is
recognised as an expense with a corresponding increase in equity.
The fair value of the share entitlements is measured at grant date
and spread over the period during which the holders become
unconditionally entitled to them. The fair value of the share
entitlements granted is measured taking into account the terms and
conditions upon which they were granted. The amount recognised as
an expense is adjusted to reflect the actual number of share
entitlements that vest. The schemes are equity settled and
therefore, there is no requirement to re-assess the value at each
balance sheet date.
The fair value of the Marwyn Participation Option is measured
using Monte Carlo sampling. Measurement inputs include the share
price on the measurement date, the exercise price of the instrument
and expected volatility (based on an evaluation of the Company's
historic volatility). Service and non-market performance conditions
attached to the transactions are not taken into account in
determining fair value.
4. Financial risk management
Overview
The Group has exposure to the following risks from its use of
financial instruments:
-- Credit risk
-- Liquidity risk
-- Market risk
This note presents information about the Group's exposure to
each of the above risks, the Group's objectives, policies and
processes for measuring and managing risk, and the Group's
management of capital. Further quantitative disclosures are
included throughout these consolidated financial statements.
Risk Management Framework
The Board has overall responsibility for the establishment and
oversight of the Group's risk management framework. The Board is
responsible for developing and monitoring the Group's risk
management policies.
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 to limits.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group's activities.
The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their roles and
obligations.
4.1 Credit risk
Credit risk is the risk of financial loss to the Group if a
counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group's
investments in cash.
The creditworthiness of the Group's banks has been under
constant scrutiny during the period. Before placing cash with a
bank and following such placement, the Group has due consideration
to both investment return and credit risk.
4.2 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 meets all liabilities from cash reserves. The Group's
liability for operating expenses is monitored on an ongoing basis
to ensure cash resources are adequate to meet liabilities as they
fall due.
4.3 Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising return.
Currency risk
The Group has no foreign currency risk as all transactions and
balances are in Sterling (GBP).
Interest rate risk
The Group maintains cash at short notice to meet ongoing
operating liabilities. The Group has no borrowings and is therefore
not exposed to a change in interest rates having an impact on its
ability to meet interest payments.
4.4 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. There were no changes in the Group's
approach to capital management during the period.
5. Segment information
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses. The Board performs regular reviews of the operating
results of the Group as a whole and makes decisions using financial
information at the entity level. Accordingly, the Board believes
that the Group has only one operating segment.
The Company raised GBP4.7m net of expenses through an issue of
ordinary shares on its admission to AIM on 24 December 2009. Until
such time as an acquisition is made, the Group's sole operation is
to seek suitable acquisition targets.
6. Earnings per share
Basic earnings per share
The calculation of basic earnings per share of 1.78p loss for
the period from incorporation to 31 December 2010 was based on the
loss attributable to ordinary shareholders of GBP825,712, and a
weighted average number of ordinary shares outstanding of 46.5m.
There is no difference between the diluted and basic loss per
share. The potential ordinary shares relating to the Marwyn
Participation Option are anti-dilutive and have been excluded from
the diluted loss per share calculation.
Weighted average number of ordinary shares
2010
Effect of issue of ordinary share on incorporation -
Effect of ordinary shares issued in December
2010 46,500,000
Weighted average number of ordinary shares
at 31 December 46,500,000
===========
7. Administration expenses
2010
GBP
Corporate finance fees 180,000
Professional fees 542,192
Administration fees 18,729
Audit fee 6,000
Non-executive director fees 7,611
Other fees 71,180
825,712
========
Corporate finance fees are payable to Marwyn Capital LLP at
GBP15,000 per month. Administration fees are payable to Axio
Capital Solutions Limited at GBP6,300 per annum plus time costs.
Non-executive directors fees are payable in respect of Paul Everitt
at GBP10,000 per annum.
8. Trade and other payables
2010
GBP
Non-executive director fees 2,500
Other trade payables 30,607
-------
33,107
=======
9. Share capital and share premium
Ordinary shares
2010
Issue of ordinary shares on incorporation 1
Issue of ordinary shares on admission to AIM 48,999,999
On issue at 31 December 49,000,000
================
The authorised share capital of the Company is GBP500,000
divided into 500,000,000 ordinary shares of 0.1p each.
All issued shares are GBP0.001 ordinary shares and are fully
paid. The ordinary shares issued on admission to AIM were placed at
10p and admitted to trading on AIM on 24 December 2009. The share
premium raised on the issue of the 49m shares was GBP4,665,094, net
of issue costs.
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share.
10. Management Participation Shares
The Directors believe that the Company's future success will
depend to a high degree on the performance of the Company's
management team, as and when such team is appointed. In order to
align the interests of management directly with those of
Shareholders, the Company has provided for the creation of
incentive arrangements which will reward such a management team in
the event that shareholder value is created.
In connection with their appointment, it is intended that the
management team of the Company will subscribe for Management
Participation Shares in Marwyn Capital Investments II Limited.
Subject to a number of provisions described below, the Management
Participation Shares can in future be sold to the Company pursuant
to the provisions of the Articles of association of Marwyn Capital
Investments II Limited for an aggregate value equivalent to 10
percent of the increase in shareholder value, being broadly defined
as the difference between the market capitalisation of the Company
at a point in time and the aggregate placing price of all ordinary
shares issued up to that point in time.
The Company may purchase the Management Participation Shares for
cash or by way of an issue of new ordinary shares at its
discretion. The Articles grant the Directors the authority to issue
such ordinary shares. The Management Participation Shares may only
be sold by management to the Company (for an aggregate value
equivalent to 10 percent of the increase in shareholder value) if
both the growth and vesting conditions (as described below) have
been satisfied. If both of these conditions have not been
satisfied, the Management Participation Shares must be sold to the
Company for their nominal value. The Management Participation
Shares must be sold to the Company on the fifth anniversary of
Re-admission (as defined in the Company's Admission document issued
in December 2009) and may not be sold or transferred to any other
party without the prior written consent of the Company.
Growth condition
The growth condition takes into account the price at which all
ordinary shares are issued, the date on which they are issued, any
dividends paid on the ordinary shares and any capital returned to
Shareholders and requires the compound annual growth of the
Company's share price to be at least 12.5 percent per annum. The
growth condition will be measured from the date of Admission.
Vesting condition
The vesting condition is a time period which ends on the third
anniversary following Re-admission or, if earlier, on the sale or
change of control of the Company. However, if the growth condition
is not met on the third anniversary, the vesting period will be
extended until the fifth anniversary following Re-admission or, if
earlier, when the growth condition is met. If the growth condition
has not been met by the end of the vesting period, the Management
Participation Shares must be sold to the Company for their nominal
value.
No Management Participation Shares have been issued to date.
11. Marwyn Participation Option
The Company has also entered into a performance participation
agreement with Marwyn Management Partners LP. Marwyn Management
Partners LP has been granted an option to subscribe for ordinary
Shares pursuant to the Marwyn Participation Option Agreement which,
subject to the conditions described below, may be exercised to
subscribe for ordinary Shares at an exercise price equal to their
nominal value.
The number of ordinary shares that may be subscribed for
pursuant to the Marwyn Participation Option Agreement is the number
that will give Marwyn Management Partners LP a gain (calculated
after deducting the exercise price) equivalent to 10 percent of the
increase in shareholder value, being broadly defined as the
difference between the market capitalisation of the Company at a
point in time and the aggregate placing price of all ordinary
shares issued up to that point in time. The Articles of Association
grant the Directors the authority to issue such ordinary
shares.
The Marwyn Participation Option may only be exercised if both
the growth and vesting conditions (as described below) have been
satisfied. The Marwyn Participation Option will lapse on the fifth
anniversary of Re-admission.
Growth condition
The growth condition takes into account the price at which all
ordinary shares are issued, the date on which they are issued, any
dividends paid on the ordinary shares and any capital returned to
Shareholders and requires the compound annual growth of the
Company's share price to be at least 12.5 percent per annum. The
growth condition will be measured from the date of Admission.
Vesting condition
The vesting condition is a time period which ends on the third
anniversary following Re-admission or, if earlier, on the sale or
change of control of the Company. However, if the growth condition
is not met on the third anniversary, the vesting period will be
extended until the fifth anniversary following Re-admission or, if
earlier, when the growth condition is met. If the growth condition
has not been met by the end of the vesting period, the Marwyn
Participation Option will lapse for no consideration.
Fair value of Marwyn Participation Option
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. The Marwyn Participation
Option was fair valued at nil at the grant date. The grant-date
fair value was determined using Monte Carlo sampling. Expected
volatility is estimated at nil based on the Company being a
'shell-company' with no trading history at the measurement date.
The inputs used in the measurement of the fair values at grant date
of the share-based payment plans were as follows:
Fair value of Marwyn Participation Option
and assumptions 2010
Fair value at grant date GBPnil
Share price at grant date GBP0.001
Exercise price GBP0.001
Expected volatility 0%
When the Marwyn Participation Option was issued, the Company was
an unlisted shell-company and had not entered into any transactions
up to that date other than the issue of 1 Ordinary Shares for
GBP0.001. The model takes into account the lack of trading history
of the Company and the absence of any deals or transactions to date
at the grant date. In the current period, no charge has been made
as an expense in the Statement of Comprehensive Income in respect
of the Marwyn Participation Option.
Other than the Marwyn Participation Option there were no other
options in existence at any time during the reporting period.
12. Financial instruments
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in note 3 to the
consolidated financial statements.
Categories of financial instruments
Carrying amount of financial assets:
2010
GBP
Receivables (including cash and cash equivalents)
at amortised cost 3,920,215
3,920,215
==========
Carrying amount of financial liabilities:
2010
GBP
Trade and other liabilities at amortised
cost 33,107
33,107
=======
Credit risk
Exposure to credit risk
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at the
reporting date was:
2010
GBP
Cash and cash equivalents 3,912,902
Receivables 7,313
3,920,215
==========
Impairment losses
There was no impairment on receivables during the period and
there are no overdue or impaired receivables at the period end.
Liquidity risk
The following are the contractual maturities of financial
liabilities excluding the impact of netting agreements:
Carrying Contractual 6 months
amount cash flows or less 2-5 years
Accruals 33,107 33,107 33,107 -
33,107 33,107 33,107 -
========= ============ ========= ==========
Currency risk
Exposure to currency risk
All of the Group's transactions and balances are in Sterling and
therefore the Group has no exposure to currency risk.
Interest rate risk
Profile
At the reporting date the interest rate profile of
interest-bearing financial instruments was:
Carrying
amount
GBP
Variable rate instruments
Financial assets 3,912,902
3,912,902
==========
All financial assets and liabilities, other than those shown in
the table above are non-interest bearing. Receivables carry no
interest entitlement.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting
date would have increased (decreased) equity and profit or loss for
12 months on interest-bearing instruments by the amounts shown
below. This analysis assumes that all other variables remain
constant.
Profit or loss and
equity
10 bp increase 10 bp decrease
GBP GBP
Cash 3,912 3,912
=============== ===============
Fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together
with the carrying amounts shown in the balance sheet, are as
follows:
Fair
Carrying amount value
GBP GBP
Cash and cash equivalents 3,912,902 3,912,902
Receivable 7,313 7,313
Trade and other payables (33,107) (33,107)
----------------
3,887,108 3,887,108
================ ==========
The carrying value of receivables, cash and cash equivalents and
payables are a reasonable approximation of fair value due to their
short-term maturity.
13. Related parties
Parent and ultimate controlling party
The Company is listed on AIM and there is no controlling
party.
Transactions with directors
The Group made the following payments to Directors or companies
connected with Directors:
Payments for Amounts owed
services during at period
the period end
GBP GBP
Paul Everitt, non-executive director 7,611 2,500
----------------- -------------
7,611 2,500
================= =============
Directors' shareholdings
No directors held shares in the Company as at the period end or
since to the date of approval of these consolidated financial
statements.
Mark Watts is a partner of Marwyn Management Partners L.P.
through which he has a 38.33% interest in the Marwyn Participation
Option entered into by the Company.
Other related parties transactions
Axio Capital Solutions Limited, a related party, was paid
GBP18,729 administration fees during the period and was due an
amount of GBP1,160 as at the balance sheet date.
Marwyn Investment Management LLP, a related party, recharged
GBP370,297 in professional fees from various parties during the
period and owed an amount of GBP2,106 as at the balance sheet date
to the Company.
Marwyn Capital LLP, a related party, recharged GBP57,530 in
professional fees from various parties and charged GBP180,000 in
corporate finance costs during the period. An amount of GBP10,704
was owed to Marwyn Capital LLP as at the balance sheet date.
Marwyn Partners Limited, a related party, recharged GBP4,590 in
professional fees from various parties and charged GBP70,500 in
office costs during the period. An amount of GBP4,965 was owed to
Marwyn Partners Limited as at the balance sheet date.
All outstanding balances with related parties are priced on an
arms length basis and are to be settled in cash within six months
of the reporting date. None of the balances is secured.
14. Subsidiary undertaking
Voting
Country of and ownership
Description incorporation interest
Marwyn Capital II Management
Investments Participation
Limited Shares Cayman Islands 100%
Independent auditor's report to the members of Marwyn Capital II
Limited
We have audited the financial statements of Marwyn Capital II
Limited for the period ended 31 December 2010 which comprise the
Consolidated Statement of Financial Position, the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Changes in Equity, Consolidated Statement of Cash Flows, and the
related notes. The financial reporting framework that has been
applied in their preparation is applicable law and International
Financial Reporting Standards.
This report is made solely to the company's members, as a body,
in accordance with our terms of engagement as detailed in our
letter of 11 March 2011. Our audit work has been undertaken so that
we might state to the company's 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 company and the
company's members as a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors'
Responsibilities set out on page 4, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility
is to audit, and express an opinion on, the financial statements in
accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board's Ethical Standards for
Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the financial statements.
Independent auditor's report to the members of Marwyn Capital II
Limited - continued
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2010 and of its loss for the period then
ended; and
-- have been prepared in accordance with the requirements of the
Companies Law (2010 Revision) as applicable in the Cayman
Islands.
KPMG Channel Islands Limited
Chartered Accountants
15 March 2011
Notes:
-- The maintenance and integrity of the website is the
responsibility of the directors or other responsible party; the
work carried out by auditors does not involve consideration of
these matters and accordingly, KPMG Channel Islands Limited accepts
no responsibility for any changes that may have occurred to the
financial statements or our audit report since 15 March 2011. KPMG
Channel Islands Limited has carried out no procedures of any nature
subsequent to 15 March 2011 which in any way extends this date.
-- Legislation in Jersey and the Cayman Islands governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions. The directors shall remain
responsible for establishing and controlling the process for doing
so, and for ensuring that the financial statements are complete and
unaltered in any way.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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