REG - ACG Acquisition Co. - Financial Results
30/04/2024 07:00
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RNS Number : 4910M ACG Acquisition Company Limited 29 April 2024
ACG ACQUISITION COMPANY LIMITED
("ACG")
30 April 2024
Financial Results
ACG Acquisition Company Limited is pleased to announce the release of its
Audited Financial Statements for the 18-month period ended 31 December 2023,
approved by the Board of Directors on the 29 April 2024. The Audited
Financial Statements are set out below in their full unedited form.
For further information, please contact:
Palatine
Communications advisor
Conal Walsh / Andreas Grueter / Richard Seed
acg@palatine-media.com (mailto:acg@palatine-media.com)
About ACG
ACG Acquisition Company Limited is a SPAC looking to benefit from favourable
price conditions for new economy metals and other mining materials.
The Company aims to optimise its expertise in global mining by combining with
a mining company that produces materials characterised by supply constraints
and rising long-term demand. The combined entity will capitalise on the need
for resource security and geographic supply diversification, as well as the
global energy transition.
ACG's team has extensive M&A experience built through decades spent at
blue-chip multinationals in the sector. The team brings a significant network,
including access to many mining companies as well as a commitment to ESG
principles and strong corporate governance.
Forward looking information
Some of the information in these materials may contain projections or other
forward-looking statements regarding future events or the future financial
performance of ACG. You can identify forward looking statements by terms such
as "expect", "believe", "anticipate", "estimate", "intend", "will", "could",
"may" or "might" the negative of such terms or other similar expressions. ACG
wishes to caution you that these statements are only predictions and that
actual events or results may and often do differ materially. ACG does not
intend to update these statements to reflect events and circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events. Any forward-looking statements reflect ACG's current view with respect
to future events and many factors could cause the actual results to differ
materially from those contained in projections or forward-looking statements
of ACG, including, among others, general economic conditions, the competitive
environment, rapid technological and market change in the industries ACG
operates in, as well as many other risks specifically related to ACG and its
operations. Forward-looking statements speak only as of the date they are
made.
ACG ACQUISITION COMPANY LIMITED
AUDITED FINANCIAL STATEMENTS
For the 18-month period ending 31 December 2023
ACG ACQUISITION COMPANY LIMITED
Contents
Company Information (#_Toc164700639) (#_Toc164700639)
Business Review and Strategic Summary (#_Toc164700640) (#_Toc164700640)
Chairman's Statement (#_Toc164700641) (#_Toc164700641)
Directors' report (#_Toc164700642) (#_Toc164700642)
Independent Auditor's Report to the members of ACG Acquisition Company Limited
(#_Toc164700643) (#_Toc164700643)
Statement of Comprehensive Income (#_Toc164700644) (#_Toc164700644)
Statement of Financial Position (#_Toc164700645) (#_Toc164700645)
Statement of Changes in Equity (#_Toc164700646) (#_Toc164700646)
Statement of Cash Flows (#_Toc164700647) (#_Toc164700647)
Notes to the Financial Statements (#_Toc164700648) (#_Toc164700648)
ACG ACQUISITION COMPANY LIMITED
Company Information
Directors Artem Volynets - Executive Director and Acting Chair
Hendrik Johannes Faul - Independent Non-Executive Director
Mark Cutis - Independent Non-Executive Director
Fiona Paulus (Senior Independent Non-Executive Director - appointed 15(th)
November 2023)
Registered office Craigmuir Chambers
PO Box 71
Road Town, Tortola
VG1110, BVI
Registered Agent Harneys Corporate Services Limited
Craigmuir Chambers
PO Box 71
Road Town, Tortola
VG1110, BVI
Sole Global Co-ordinator and bookrunner Citibank, N.A,
CGC Centre, Canada Square
Canary Wharf, E14 5LB
Registrar Link Market Services (Guernsey) Limited,
PO Box 627,
St Peter Port,
Guernsey, GY1 4PP
Legal advisors to the Company as to US and English law Cleary Gottlieb Steen & Hamilton LLP
2 London Wall Place,
London, EC2Y 5AU
Legal advisors to the Company as to BVI law Harneys Corporate Services Limited
Craigmuir Chambers
PO Box 71
Road Town, Tortola
VG1110, BVI
Depository Link Group,
Central Square
29 Wellington Street
Leeds, LS1 4DL
Independent Auditors RSM UK Audit LLP
25 Farringdon Street,
London, EC4A 4AB
Company number 2067083 (registered in BVI)
Business Review and Strategic Summary
The Directors present their Management Summary for the period ended 31 December 2023.
REVIEW OF BUSINESS STRATEGY AND BUSINESS MODEL
ACG Acquisition Company Limited (the "Company") was incorporated and
registered in the British Virgin Islands under the BVI Business Companies Act
2004 with a registration number 2067083. The Company is a Special Purpose
Acquisition Company ("SPAC") incorporated for the purpose of acquiring a
majority (or otherwise controlling) stake in a company or operating business
through a merger, demerger, share exchange, asset acquisition, share purchase,
reorganisation or similar transaction. The Company intends to focus on the
metals and mining sector globally (excluding Russia) with a particular focus
on emerging markets.
The Company's main objective is to undertake an acquisition of a target
company or business. This acquisition was initially planned to occur within 12
months after 12 October 2022 (the "Initial Acquisition Deadline"), subject to
an initial three-month extension period (the "First Extension Period"). On 28
September 2023, a partial redemption of Class A Ordinary Shares ("Public
Shares") was affected. See note 5 to the financial statements for further
details.
Subsequently, on 25 October 2023 an Extraordinary General Meeting (EGM) was
held, and through Public Shareholder (holders of Class A Ordinary Shares)
approval the Acquisition Deadline was extended to 25 January 2024. On 25
January 2024, an additional EGM led to the Acquisition Deadline being extended
further to 30 June 2024 (the "Extended Acquisition Deadline").
During 2023 the Company announced that it had agreed the acquisition of two
cash-generative mining operations in Brazil, producing nickel sulphide and
copper concentrates with low carbon emissions. This transaction did not close
as a result of a significant reduction in underlying commodity prices, which
meant that we were unable to renegotiate acceptable transaction terms which
ultimately meant there was insufficient value in the transaction for
shareholders at the negotiated purchase price.
Subsequent to the Balance Sheet date, commodity prices have been more stable,
and the Company is progressing negotiations and due diligence regarding an
acquisition of a mine whose operations are principally focused on copper
concentrates.
The acquisition process
In evaluating prospective acquisition targets, the Company conducts thorough
due diligence which encompasses, among other things, meetings with incumbent
management and key employees, document reviews, interviews of customers and
suppliers, inspection of facilities, as well as a review of financial,
operational, legal and other information that is made available to the
Company. The Company also utilises the Directors' operational and capital
planning experience. These processes ensure that the risk to shareholders'
capital is mitigated to the extent these processes are able to identify
additional risks.
Principal risks and uncertainties
The Company's business activities expose it to a variety of risks, including
financing and cashflow risks, and strategic and other emerging risks in the
course of identifying and completing a suitable acquisition. The Directors do
not believe that the identification and analysis of Key Performance Indicators
(KPIs) is necessary for an understanding of the business (currently). Relevant
KPIs will be established once an acquisition is completed.
The following is a summary of key risks that, alone or in combination with
other events or circumstances, the Board has determined could have a material
adverse effect on the Company's business, financial condition, results of
operations and prospects. In making the selection, the Company has considered
circumstances such as the probability of the risk of their occurrence, the
potential impact on the business, and the level of attention that management
would have to devote in order to mitigate any potential impact:
· There is no assurance that the Company will be able to
complete an Acquisition by 30 June 2024, which could result in a loss of part,
or all, of the Shareholders' investment;
Management Summary (continued)
· Any due diligence conducted by the Company in connection with
the Acquisition may not have revealed all the liabilities and risks of the
target, which could have a material adverse effect on the Company's financial
condition or results of operations;
· The Company is dependent upon the Co-Sponsors and/or the
Sponsor Director to execute the Acquisition, and the loss of the services of
such parties could materially adversely affect the Company;
· The Company may not be able to raise sufficient funds (debt
or equity) to fund the Acquisition; and
· Even if the Company is able to complete the Acquisition as
announced, there can be no assurance that the Company will be successful in
executing its strategy or business plan in the future, which could materially
adversely affect the Company and its Shareholders.
To help address the above risks, the Company has retained the services of
consultants and third party advisors who are, together with the Directors and
management, working to negotiate and execute an Acquisition in an effective
manner, with the aim of minimising these concerns.
Emerging risks
The Board, on an ongoing basis, identifies and monitors emerging risks. The
Board will then assess the likelihood and impact of any such emerging risks
and will discuss and agree appropriate strategies to mitigate and/or manage
the identified risks. Emerging risks are managed through discussion of their
likelihood and impact at each quarterly Board meeting. Should an emerging risk
be determined to have any potential impact on the Company, appropriate
mitigating controls and processes are implemented in response.
Taskforce on climate-related Financial Disclosure ("TCFD")
The Company is not required to report and provide disclosure in connection
with TCFD. Further, given no acquisition has closed, there are no relevant
TCFD disclosures to be reported.
In considering potential acquisition targets, the Company will assess existing
and future plans of any target company to mitigate the risk of, and identify
opportunities associated with, climate change and be in a position to satisfy
the related financial disclosure requirements. Those potential targets with
clear strategies in place to address this very important issue will be given
prominence.
Chairman's Statement
Dear Shareholders,
It is with pleasure that I present the financial statements of ACG Acquisition
Company Limited for the 18-month period ended 31 December 2023.
Since our admission to the main market of the London Stock Exchange on 12
October 2022, we have been actively negotiating a number of acquisitions in
the metals and mining sector.
The costs incurred in the period are associated with an acquisition
opportunity which we progressed significantly during 2023 for two
cash-generative mining operations in Brazil, producing nickel sulphide and
copper concentrates with low carbon emissions. This transaction did not close
as a result of a significant reduction in underlying commodity prices, which
ultimately meant insufficient value in the transaction for shareholders at the
negotiated purchase price.
We have subsequently identified other compelling prospects which have the
potential to deliver attractive returns; we have a particular focus on
"critical metal" assets in emerging markets which are either already in
production or in advanced development stages.
Subsequent to the Balance Sheet date, the Company is progressing negotiations
and due diligence regarding an acquisition of a mine whose operations were
principally focused on copper concentrates.
On behalf of the Board, I thank you for your valued support.
Artem Volynets
Executive Director and Acting Chairman
29 April 2024
Directors' report
The Directors present their report for the 18-month period ended 31 December 2023.
Principal activities
ACG Acquisition Company Limited (the "Company" or "ACG"), a public limited
company incorporated in British Virgin Islands with Registered Number 2067083
under the BVI Business Companies Act 2004 (as amended) (the "BVI Companies
Act"). The address of its registered office is Craigmuir Chambers, PO Box 71,
Road Town, Tortola, British Virgin Islands.
The principal activity of the Company is that of a Special Purpose Acquisition
Company ("SPAC") incorporated for the purposes of acquiring a majority (or
otherwise controlling) stake in a company or operating business through a
merger, demerger, share exchange, share purchase, reorganization or similar
transaction (an "Acquisition"). The Company intends to focus on the metals and
mining sector globally (excluding Russia) with a particular focus on emerging
markets.
Results and Dividends
The Company recorded a loss for the 18-month period before taxation of
$25,937,410 (loss for the period from 22 June 2021 to 30 June 2022:
$2,728,440).
The loss before tax figure is comprised of administration costs (refer to note
10) of $20,930,476 (2022: $2,736,912), net finance costs (refer to note 4) of
$7,739,000 (2022: $8,472 income), and gain on derivatives (refer to note 6) of
$2,732,066 (2022: $nil).
The Directors do not recommend payment of a dividend (2022: $nil).
The Directors have considered the future prospects and developments of the
Company in detail in the Business Review and Strategic Summary.
Financial Instruments and risk management
Please refer to note 2 for details on financial instruments and risk
management policies.
Directors and Directors' interests
The following Directors have held office during the period and to the date of
these financial statements:
Artem Volynets
Hendrik Johannes Faul
Mark Cutis
Peter Whelan (Resigned 10(th) November 2023)
Warren Gilman (Resigned 29(th) April 2024)
Fiona Paulus (Appointed 15(th) November 2023)
Remuneration policy
The base fees for the Non- executive Directors / Chairman were set at IPO and
were not increased during period.
Directors' remuneration for the 18-month period ending 31 December 2023
(unaudited)
The Directors' remuneration details during the period of this report were as
follows:
Artem Volynets Peter Whelan Fiona Paulus Mark Hendrik Johannes Faul Warren Gilman
Cutis
$ $ $ $ $ $
Fixed Pay
Base fees 425,000 126,263 10,082 97,634 97,634 97,634
Total fixed pay 425,000 126,263 10,082 97,634 97,634 97,634
Other Pay
Additional fees - 12,626 3,151 30,511 30,511 30,511
Total Other pay - 12,626 3,151 30,511 30,511 30,511
Total remuneration 425,000 138,889 13,233 128,145 128,145 128,145
In the comparative period from incorporation to 30 June 2022, total
remuneration paid to Artem Volynets in his role as Executive Director was
$270,835. Remuneration of the remaining independent non-executive Directors
commenced from the date of the Company's admission in October 2022.
Share interests and incentives as at 31 December 2023 (unaudited)
Director Shares held directly Share warrants held directly Shares held indirectly Share warrants held indirectly
Artem Volynets* - - 187,305 1,297,798
*Artem Volynets is 50.42% shareholder of ACG Mining Limited that held 371,490
Class B shares and 2,573,974 Sponsor Warrants as 31 December 2023. No changes
in Directors' interests or Directors holding office have occurred between the
end of the reporting period and the date of this report.
Share Capital
Details of the Company's issued share capital, together with details of the
movements during the year, are shown in Note 5. The Company has two classes of
ordinary shares, and all shares have equal voting rights.
Substantial shareholdings in the Company
The Directors are aware of the following direct and indirect interests
comprising more than 3% of the issued Class B share capital of the Company, as
the last practicable date before the publication of this report. The following
information has been received in accordance with Rule 5 of the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority ("DTR")
from holders of notifiable interests in the Company's issued share capital.
Holder Class B Ordinary Shares Total Voting rights
De Heerd Investments Limited 1,207,540 27.1%
ACP II Trading LLC 1,207,539 27.1%
ACG Mining Limited 371,490 8.3%
System 2 Master Fund Limited 365,625 8.2%
Pembroke Heritage Fund Limited 263,337 5.9%
Symonds Securities Limited 209,989 4.7%
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual report and financial
statements in accordance with applicable laws and regulations.
The Directors are required under the Listing Rules of the Financial Conduct
Authority to prepare the company financial statements in accordance with
UK-adopted International Accounting Standards. The financial statements are
required by UK-adopted International Accounting Standards to present fairly
the financial position and performance of the company. The Directors are
satisfied that the financial statements give a true and fair view of the state
of affairs of the company and the profit and loss of the company for the
financial period and, therefore, achieve a fair presentation.
Directors' Report (continued)
In preparing the financial statements the directors have:
• Selected suitable accounting policies and then apply
them consistently;
• Made judgements and accounting estimates that are
reasonable and prudent;
• Stated whether they have been prepared in accordance
with UK-adopted International Accounting Standards; and
• Prepared 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 records and underlying documentation
that are sufficient to show and explain the Company's transactions and enable
the financial position of the Company to be determined with reasonable
accuracy at any time, and for complying with the BVI Business Companies Act
2004. 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.
Website publication
The financial statements are published on the Company's website
[www.acgcorp.co]. The work carried out by the auditor does not involve
consideration of the maintenance and integrity of this website and
accordingly, the Auditor accepts no responsibility for any changes that have
occurred to the financial statements since they were initially presented on
the website. Visitors to the website need to be aware that legislation in the
United Kingdom covering the preparation and dissemination of the financial
statements may differ from legislation in their jurisdiction.
Corporate governance
As a Company listed on the standard segment of the LSE, there is no
requirement to comply with the UK Corporate Governance Code, which is
applicable to all companies whose securities are admitted to trading to the
premium segment of the Official List. Nevertheless, the Directors are
committed to maintaining high standards of corporate governance and propose so
far as is practicable given the Company's size and nature, to voluntarily
adopt and comply with certain aspects of the Quoted Companies Alliance (QCA)
Code (which is publicly available at
www.theqca.com/qca-corporate-governance-code-public/). At Admission, all
directors with the exception of the Executive Director, are acting as
independent members of the Board within the meaning of the QCA Code. In
particular, it is noted that, given the composition of the Board, there are at
least two independent non-executive directors. A full review of the operation
of the Company's processes and procedures against the QCA Code will be
undertaken on completion of an acquisition, taking into account the structure
and requirements of the enlarged group.
The structure of the Board will be reviewed further as and when the activities
of the Company progress to a sufficient size and complexity to require
additional independent oversight. It is intended that additional non-executive
directors will be appointed in the near future, once prospective acquisitions
have been identified and completed, or sooner and the independence of such
directors will be one of the factors taken into account at such time prior to
any acquisition being made.
Following completion of an acquisition, the Company plans on appointing new
directors (including more independent directors if required) and the Directors
will establish suitable remuneration, nomination and audit committees at the
time of completion of an acquisition. The Company will adopt further
provisions of the QCA Code as relevant at that time. When such adoption
occurs, this will be duly notified to the Shareholders and announced
accordingly.
The Audit Committee, chaired by Mark Cutis, monitors the integrity of the
interim and Audited Financial Statements and formal announcements relating to
the Group's financial performance. It reviews significant financial reporting
issues, accounting policies and disclosures, key judgements, reviews the
effectiveness of internal controls, as well as overseeing the engagement and
scope of the external audit.
In respect of the Company's system of internal controls and its effectiveness,
the Directors:
· are satisfied that they have carried out a robust assessment of
the principal risks facing the Company, including those that would threaten
its business model, future performance, solvency or liquidity; and
· have reviewed the effectiveness of the risk management and
internal control systems including material financial, operational and
compliance controls (including those relating to the financial reporting
process) and no significant failings or weaknesses were identified.
Directors' Report (continued)
Following the completion of an acquisition the Company will re-evaluate its
corporate governance policies and procedures in line with the size and
operations of an enlarged group. This will include an assessment and
implementation of the Company's policy and objectives concerning diversity
(which is currently not in place due to the early stage of the company's
development), and composition of management and board committees. At the same
time, the Company will review any additional risk management and internal
control processes that need to be put in place.
The Company will report to its shareholders as to its compliance with the QCA
Code on an ongoing basis and will publish an updated Corporate Governance
statement annually.
Statement as to disclosure of information to auditors
The Directors who held office at the date of approval of the Directors' Report
confirm that, so far as they are each aware, there is no relevant audit
information of which the Company's auditor is unaware; and each Director has
taken all the steps that he ought to have taken as a Director to make himself
aware of any relevant audit information and to establish that the Company's
Auditor is aware of that information.
Directors' statement pursuant to the Disclosure and Transparency Rules
The Directors are responsible for preparing the financial statements in
accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority ("DTR") and with UK adopted International
Accounting Standards.
Each of the directors, whose names and functions are listed in the Board of
Directors section, confirm that, to the best of each person's knowledge:
a) the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and loss of the company; and
b) the Annual Report includes a fair review of the development and
performance of the business and the position of the company, together with a
description of the principal risks and uncertainties that they face.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the ACG Acquisition Company
Limited website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
On behalf of the board
Artem Volynets (Executive Director and Acting Chair)
29 April 2024
BOARD OF DIRECTORS
Artem Volynets (age 56) - Executive Director and acting Chair
Mr. Volynets has 25 years of experience in mergers and acquisitions, capital
markets, and senior corporate management roles. He has led multiple private
and public transactions in the metals and mining industry.
Mr. Volynets established ACG Mining Limited in 2014, as an advisory and
investment management firm registered in BVI, through which he worked on a
number of cross border transactions in the mining and metals sector in
Eurasian emerging markets. These transactions utilised his extensive
experience of M&A-led sector consolidation, his local knowledge and
networks, and his global industry and investor connections.
Fiona Paulus (age 64) - Senior Independent Non-Executive Director
Ms. Paulus has extensive global investment banking experience, having held
senior management roles with a number of leading international investment
banks including Credit Suisse, ABN AMRO Bank, and Citigroup. Additionally, Ms.
Paulus has advised companies and private equity firms on strategic initiatives
in the energy and resources sectors across more than 70 countries. She is a
Senior Adviser in the Metals & Mining business at Gleacher Shacklock LLP
and is a Non-Executive Director at Interpipe Group, JSW Steel Limited and
Nostrum Oil & Gas plc.
Ms. Paulus is a member of the Audit Committee and the Remuneration &
Nomination Committee.
Mark Cutis (age 70) -Independent Non-Executive Director
Mark Cutis is a seasoned banking and capital markets executive with extensive
global experience having actively managed portfolios of assets as CIO and CEO
on behalf of both private and state-owned capital managers. Mr Cutis has held
senior management roles at Bank of America, Morgan Stanley, Merrill Lynch,
UniCredit and the European Bank for Reconstruction and Development.
Mr Cutis is chair of the Audit Committee and a member of the Remuneration
& Nomination Committee.
Hendrik Johannes Faul (age 61) -Independent Non-Executive Director
Hendrik Faul has over 30 years of mining industry experience as both a
qualified mining engineer and as a senior corporate manager, with demonstrated
ESG leadership experience as well as operational and project execution
experience across 5 continents.
Mr. Faul is a NED of London listed gold company Centamin plc, a position he
has held since July 2020. He has also been a NED of Johannesburg listed Master
Drilling Group Ltd since June 2020. Mr. Faul was Chairman of the International
Copper Association from 2016 to 2018.
Mr Faul is a member of the Audit Committee.
Independent Auditor's Report to the members of ACG Acquisition Company Limited
Opinion
We have audited the financial statements of ACG Acquisition Company Limited
(the 'company') for the period ended 31 December 2023 which comprise the
statement of financial position as at the accounting reference date, the
statement of comprehensive income, statement of changes in equity and
statement of cash flows for the period then ended, and notes to the financial
statements, including a summary of significant accounting policies. The
financial reporting framework that has been applied in their preparation is
applicable law and UK-adopted International Accounting Standards.
In our opinion the financial statements:
· give a true and fair view of the state of the company's affairs
as at 31 December 2023 and of its loss for the period then ended; and
· have been properly prepared in accordance with UK-adopted
International Accounting Standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed public interest entities and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Summary of our audit approach
Key audit matters · Classification and measurement of financial instruments
Materiality · Overall materiality: $209,000
· Performance materiality: $156,000
Scope Our audit procedures covered 100% of expenses, 100% of total assets and 100%
of loss before tax.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on the overall audit strategy, the allocation of
resources in the audit and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
In addition to the matter described in the Material uncertainty related to
going concern section we have determined the matters described below to be the
key audit matters to be communicated in our report.
Classification and measurement of financial instruments
Key audit matter description The company has used a number of financial instruments to facilitate its
investment and acquisition strategy, including redeemable shares ("A shares"),
sponsor shares ("B shares"), warrants associated with both the A shares and B
shares and sponsor loans.
The instruments have complex terms and the classification of each instrument
as debt or equity under IAS 32 requires management judgement. The subsequent
measurement of warrants at fair value requires management to select an
appropriate
valuation model and inputs into that model, both of which involve significant
management judgements and estimates.
The company's accounting policies and the critical accounting judgements and
estimates made by management are disclosed in note 2 to the financial
statements.
The classification and measurement of these financial instruments is
considered to be a key audit matter based on the level of judgement involved
and the audit effort allocated to these instruments, including the use of
specialists and experts.
How the matter was addressed in the audit We addressed this matter by:
· Obtaining management's accounting papers setting out the key
estimates and judgements made.
· Checking that the terms of the instruments referred to in the
accounting papers and financial statement disclosures were consistent with
signed agreements.
· Challenging management on the appropriateness of key judgements
with reference to available accounting standards and guidance.
· Consulting with financial instrument specialists as part of our
audit team to assist with our assessment and challenge of management.
· With respect to the warrant valuation, assessing the expertise
and independence of management's valuation expert and engaging an auditor's
expert to assist with our assessment of the appropriateness of the valuation
methodology.
· Auditing the disclosures in the financial statements to check for
compliance with IFRS 7 and IFRS 9.
Key observations Based on the results of the procedures described above, we consider
management's assessment of the classification and measurement of financial
instruments to be reasonable and appropriately disclosed.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which
help us to determine the nature, timing and extent of our audit procedures.
When evaluating whether the effects of misstatements, both individually and on
the financial statements as a whole, could reasonably influence the economic
decisions of the users we take into account the qualitative nature and the
size of the misstatements. Based on our professional judgement, we determined
materiality as follows:
Overall materiality $209,000
Basis for determining overall materiality 1% of expenses (excluding finance expense)
Rationale for benchmark applied Expenses considered key benchmark for sponsors as indicative of utilisation of
funds in order to achieve objective of an acquisition.
Performance materiality $156,000
Basis for determining performance materiality 75% of overall materiality
Reporting of misstatements to the Audit Committee Misstatements in excess of $10,400 and misstatements below that threshold
that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
The company has been subject to a full scope audit.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which indicates that
the company is dependent on continuing support from sponsors to fund its
operations up to the date of an acquisition. In order to complete an
acquisition, the company will need to raise funds from a combination of
sources including equity and debt. Furthermore, if no acquisition is
completed by the Extended Acquisition Deadline of 30 June 2024 then the
current expectation is that the company will be wound up.
As stated in note 2, these events or conditions, along with the other matters
as set forth in note 2, indicate that a material uncertainty exists that may
cast significant doubt on the company's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the entity's ability to continue to adopt the going concern
basis of accounting included discussions with management and assessment of the
availability of sponsor funding.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out
on pages 7 and 8, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
The extent to which the audit was considered capable of detecting
irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations.
The objectives of our audit are to obtain sufficient appropriate audit
evidence regarding compliance with laws and regulations that have a direct
effect on the determination of material amounts and disclosures in the
financial statements, to perform audit procedures to help identify instances
of non-compliance with other laws and regulations that may have a material
effect on the financial statements, and to respond appropriately to identified
or suspected non-compliance with laws and regulations identified during the
audit.
In relation to fraud, the objectives of our audit are to identify and assess
the risk of material misstatement of the financial statements due to fraud, to
obtain sufficient appropriate audit evidence regarding the assessed risks of
material misstatement due to fraud through designing and implementing
appropriate responses and to respond appropriately to fraud or suspected fraud
identified during the audit.
However, it is the primary responsibility of management, with the oversight of
those charged with governance, to ensure that the entity's operations are
conducted in accordance with the provisions of laws and regulations and for
the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud, the audit engagement team:
· obtained an understanding of the nature of the industry and
sector, including the legal and regulatory framework that the company operates
in and how the company is complying with the legal and regulatory framework;
· inquired of management, and those charged with governance, about
their own identification and assessment of the risks of irregularities,
including any known actual, suspected or alleged instances of fraud;
· discussed matters about non-compliance with laws and regulations
and how fraud might occur including assessment of how and where the financial
statements may be susceptible to fraud having obtained an understanding of the
effectiveness of the control environment.
The most significant laws and regulations were determined as follows:
Legislation / Regulation Additional audit procedures performed by the audit engagement team included:
IFRS/UK-adopted · Review of the financial statement disclosures and testing to
supporting documentation; and
·
IAS/Listing Rules
· Completion of disclosure checklists to identify areas of
non-compliance.
The areas that we identified as being susceptible to material misstatement due
to fraud were:
Risk Audit procedures performed by the audit engagement team:
Management override of controls · Testing the appropriateness of journal entries and other
adjustments;
· Assessing whether the judgements made in making accounting
estimates are indicative of a potential bias; and
· Evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
A further description of our responsibilities for the audit of the financial
statements is included in Appendix 1 of this auditor's report. This
description, which is located on page 16, forms part of our auditor's report.
Other matters which we are required to address
Following the recommendation of those charged with governance, we were
appointed by the directors on 20 April 2022 to audit the financial statements
for the period ending 30 June 2022 and subsequent financial periods.
The period of total uninterrupted consecutive appointments is two financial
periods, covering the period from incorporation to 30 June 2022 (prior to the
company's listing on the London Stock Exchange on 7 October 2022) and the 18
month period ended 31 December 2023.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the company and we remain independent of the company in conducting
our audit.
Our audit opinion is consistent with the additional report to the audit
committee in accordance with ISAs (UK).
Use of our report
This report is made solely to the company's members, as a body, in accordance
with our engagement letter dated 27 February 2024. 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.
In due course, as required by the Financial Conduct Authority (FCA) Disclosure
Guidance and Transparency Rules, these financial statements will form part of
the Annual Financial Report prepared in Extensible Hypertext Markup Language
(XHTML) format and filed on the National Storage Mechanism of the UK FCA. This
auditor's report provides no assurance over whether the annual financial
report has been prepared in XHTML format.
Graham Ricketts (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
Date: 29 April 2024
Appendix 1 - Auditor's Responsibilities for the Audit of the Financial
Statements
As part of an audit in accordance with ISAs (UK), we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. We include
an explanation in the auditor's report of the extent to which the audit was
capable of detecting irregularities, including fraud.
· Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
company's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
directors.
· Conclude on the appropriateness of the directors' use of the
going concern basis of accounting and based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the company's ability to continue as a going
concern. If we conclude that the use of the going concern basis of accounting
is appropriate and no material uncertainties have been identified, we report
these conclusions in the auditor's report. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor's report
to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future
events or conditions may cause the company to cease to continue as a going
concern.
· Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that
achieves fair presentation (i.e. gives a true and fair view).
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, including
the FRC's Ethical Standard as applied to listed entities, and communicate with
them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
We are required to include in the auditor's report an explanation of how we
evaluated the directors' assessment of the company's ability to continue as a
going concern and, where relevant, key observations arising with respect to
that evaluation.
Statement of Comprehensive Income
For the 18 months ended 31 December 2023
18 months For the period
ended 22 Jun 2021 to
Notes 31 Dec 2023 30 June 2022
$ $
Administrative expenses 10 (20,930,476) (2,736,912)
Operating loss (20,930,476) (2,736,912)
Finance income 4 6,684,043 8,472
Finance expense 4 (14,423,043) -
Gain on derivatives 6 2,732,066 -
Loss for the period before tax (25,937,410) (2,728,440)
Income tax expense - -
Loss after tax and total comprehensive loss for the period (25,937,410) (2,728,440)
Loss per share
Basic and diluted loss per share 9 (10.12) (13,642.20)
All items in the above statement derive from continuing operations.
Statement of Financial Position
As at 31 December 2023
31 Dec 2023 30 June 2022
Notes
$ $
Current assets
Cash and cash equivalents 3 1,453,793 4,539,407
Other receivables 206,179 47,074
Total assets 1,659,972 4,586,481
Current liabilities
Redeemable Public Share liabilities 5 291,867 -
Derivative financial instruments 6 770,231 -
Trade and other payables 7 843,925 1,075,921
Total liabilities 1,906,023 1,075,921
Net (liabilities)/assets (246,051) 3,510,560
Capital and reserves
Called up share capital 5 2,031,250 -
Share subscription advances and sponsor loans 15,425,300 6,239,000
Other equity reserve 10,963,249 -
Accumulated losses (28,665,850) (2,728,440)
Total shareholders' funds (246,051) 3,510,560
The Financial Statements were approved and authorised for issue by the Board
of Directors on 29 April 2024 and signed on its behalf by:
Mr. Artem Volynets
Director
Company number: 2067083
Statement of Changes in Equity
For the 18 months ended 31 December 2023
Share Share subscription advances and sponsor loans Other equity reserve Accumulated losses
capital Total
$ $ $ $ $
1 July 2022 - 6,239,000 - (2,728,440) 3,510,560
Total comprehensive loss for the period - - - (25,937,410) (25,937,410)
- 6,239,000 - (28,665,850) (22,426,850)
Transactions with owners recorded directly in equity
Repayment of share subscription advances*
- (2,000,000) - - (2,000,000)
Issue of share capital and sponsors warrants on IPO**
31,250 (4,239,000) 10,963,249 - 6,755,499
Sponsor loans received*** - 15,425,300 - - 15,425,300
Class B shares subscription**** 2,000,000 - - - 2,000,000
31 December 2023 2,031,250 15,425,300 10,963,249 (28,665,850) (246,051)
* On 1 September 2022, an agreement with a sponsor was terminated and
$2,000,000 was repaid, thereby reducing the amount of pre-funded subscriptions
to $4,239,000.
** On IPO on 7 October 2022, 3,125,000 Class B ordinary shares were issued to
sponsors for $0.01 per share, which has been allocated to share capital. In
addition, 13,348,750 warrants were issued to sponsors for $1 per warrant. The
fair value of the sponsor warrants on issue ($2,385,422) was recognised as a
derivative financial liability, with the balance of the consideration received
from the sponsors (including $4,239,000 of pre-funded subscriptions and less
$79 of transaction costs related to the issue of the Class B shares) being
recognised in equity (other equity reserve).
*** Sponsor loans received in the period are classified as equity instruments
- please refer to the critical accounting judgements section, and to note 8
for further details on Sponsor Loan agreements.
**** On 21 December 2023, 1,333,333 Class B ordinary shares were allotted for
$1.50 per share.
Share Share subscription advances and sponsor loans Other equity reserve Accumulated losses
capital Total
$ $ $ $ $
22 June 2021 - - - - -
Total comprehensive loss for the period - - - (2,728,440) (2,728,440)
- - - (2,728,440) (2,728,440)
Transactions with owners recorded directly in equity
Share subscription advances - 6,239,000 - - 6,239,000
30 June 2022 - 6,239,000 - (2,728,440) 3,510,560
Statement of Cash Flows
For the 18 months ended 31 December 2023
Note 18 months For the period 22 Jun 2021 to 30 June 2022
ended
31 Dec 2023
$ $
Cash flows from operating activities
Loss for the period (25,937,410) (2,728,440)
Adjustments for:
(2,732,066)
Gain on derivatives 6 -
Finance income 4 (257,008) (8,472)
Finance expense 4 7,996,008 -
Increase in other receivables (159,105) (47,074)
(Decrease)/increase in trade and other payables (745,804) 1,075,921
Net cash outflows from operating activities (21,835,385) (1,708,065)
Cash flows from investing activities
Interest income 257,008 8,472
Interest on restricted funds* 6,427,035 -
Net cash inflows from investing activities 6,684,043 8,472
Cash flows from financing activities
Issue of Public Shares 5 125,000,000 -
Redemption of Public Shares 5 (134,683,481) -
Issue of Sponsor Shares 2,031,250 -
Issue of Sponsor Warrants 9,109,750 -
Share issue costs settled during the period -
(2,817,091)
Sponsor loans received 15,425,300 -
Advance Share/Warrant Subscriptions (repaid)/received
(2,000,000) 6,239,000
Net cash inflows from financing activities 12,065,728 6,239,000
Net (decrease)/increase in cash and cash equivalents
(3,085,614) 4,539,407
Cash and cash equivalents, beginning of period
4,539,407 -
Cash and cash equivalents, end of period 3 1,453,793 4,539,407
* Restricted cash held in escrow accrues interest for the benefit of Class A
shareholders. Payment of interest to Class A shareholders in the period is
included within the redemption of public shares figure presented in financing
activities.
Notes to the Financial Statements
For 18 months ended 31 December 2023
1. Corporate information
ACG Acquisition Company Limited is a company limited by shares incorporated in
the British Virgin Islands under the BVI Business Companies Act 2004 (as
amended) (the "BVI Companies Act").
The Company is a Special Purpose Acquisition Company ("SPAC") formed for the
purpose of effecting a merger, demerger, share exchange, asset acquisition,
share purchase, reorganisation or similar business combination with, or
acquisition of, a business or company operating in the metals and mining
sector globally (excluding Russia) with a particular focus on emerging
markets. The shares of the company were admitted to trading on the London
Stock Exchange Main Market on 12 October 2022.
The financial statements as at and for the 18-months ending 31 December 2023
are available at www.acgcorp.co (http://www.acgcorp.co) .
These financial statements represent the results of the Company as of and for
the 18 months ended 31 December 2023. The comparative period represents the
period from the date of incorporation on 22 June 2021 to 30 June 2022, and
therefore the results are not directly comparable. The accounting reference
date was changed to align with the reporting date of a target acquisition.
2. Accounting policies
Basis of preparation and measurement
The financial statements of the Company have been prepared on a historical cost basis, as modified by the revaluation of financial instruments measured at fair value through profit or loss, or otherwise noted.
The Financial Statements have been prepared in accordance with UK-adopted
international accounting standards.
The Company is not presently engaged in any activities other than those which
are required in connection with the selection, structuring and completion of
an acquisition in a target business by means of a merger, share exchange,
share purchase, contribution in kind, asset acquisition or combination of
these methods.
The Financial Statements are presented in US Dollars ("USD"), which is the
Company's functional and presentational currency, and have been prepared under
the historical cost convention, with the exception of certain balances held at
fair value, rounded to the nearest whole USD. The Company considers the USD to
be the currency of the primary economic environment in which the Company
incurs the majority of its costs and the one that most faithfully represents
the economic effects of the underlying transactions, events and conditions.
The Company had no operations and therefore no segmental information is
presented.
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the Company's
Financial Statements.
New and amended standards and interpretations applied
The following accounting standards and updates were applicable in the
reporting period but did not have a material impact on the Company:
o Amendments to IFRS 1 and IFRS 9 Annual Improvements to IFRS 2018-2020
o Amendments to IFRS 3: Business Combinations
o Amendments to IAS 16: Property, Plant and Equipment
o Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent
Assets
New and amended standards and interpretations not applied
The following new and amended standards and interpretations in issue are
applicable to the Company and are not expected to have any material impact on
the financial statements when assessed in full for annual reporting purposes:
o IFRS 17: Insurance Contracts (effective 1 January 2023)
o Amendments to IAS 17: Insurance Contracts (effective 1 January 2023)
New and amended standards and interpretations not applied (continued)
o Amendments to IAS 8: Accounting Policies, Changes in Accounting Estimates
and Errors, Definition of Accounting Estimates (effective 1 January 2023)
o Amendments to IAS 12: Income Taxes; Deferred Tax related to Assets and
Liabilities from a Single Transaction (effective 1 January 2023)
o Amendments to IAS 1: Presentation of Financial Statements and IFRS
Practice Statement 2: Disclosure of Accounting Policies (effective 1 January
2023)
New standards issued not yet effective
The following new and amended standards and interpretations in issue are
applicable to the Company and are not expected to have any material impact on
the financial statements when assessed in full for annual reporting purposes:
o Amendments to IFRS 16: Leases on sale and leaseback. These amendments
include requirements for sale and leaseback transactions in IFRS 16 to explain
how an entity accounts for a sale and leaseback after the date of the
transaction. Sale and leaseback transactions where some or all the lease
payments are variable lease payments that do not depend on an index or rate
are most likely to be impacted (effective 1 January 2024).
o Amendments to IAS 1: Non-current liabilities with covenants. These
amendments clarify how conditions with which an entity must comply within
twelve months after the reporting period affect the classification of a
liability. The amendments also aim to improve information an entity provides
related to liabilities subject to these conditions (effective 1 January 2024).
o Amendments to IAS 7 & IFRS 7: Supplier finance (with traditional
reliefs in the first year). These amendments require disclosures to enhance
the transparency of supplier finance arrangements and their effects on an
entity's liabilities, cash flows and exposure to liquidity risk. The
disclosure requirements are the IASB's response to investors' concerns that
some companies' supplier finance arrangements are not sufficiently visible,
hindering investors' analysis (effective 1 January 2024).
o Amendments to IAS 21: Lack of Exchangeability. An entity is impacted by
the amendments when it has a transaction or an operation in a foreign currency
that is not exchangeable into another currency at a measurement date for a
specified purpose. A currency is exchangeable when there is an ability to
obtain the other currency (with a normal administrative delay), and the
transaction would take place through a market or exchange mechanism that
creates enforceable rights and obligations (effective 1 January 2025).
o IFRS S1: General requirements for disclosure of sustainability-related
financial information. This standard includes the core framework for the
disclosure of material information about sustainability-related risks and
opportunities across an entity's value chain (effective 1 January 2024
(subject to endorsement of the standards by local jurisdictions)).
o IFRS S2: Climate-related disclosures. This is the first thematic standard
issued that sets out requirements for entities to disclose information about
climate-related risks and opportunities (effective 1 January 2024 (subject to
endorsement of the standards by local jurisdictions))
Financial assets
Initial recognition
Financial assets at amortised cost, which includes other receivables, amounts
held in escrow and cash and bank balances, are initially recognised at their
fair value at the date of the transaction and are subsequently measured at
amortised cost using the effective interest rate method. Cash and cash
equivalents are defined as cash in hand, demand deposits and highly liquid
investments readily convertible to known amounts of cash and subject to
insignificant risk of changes in value. Cash and cash equivalents consist of
cash at bank and deposits with a maturity of less than three months at the
date of inception.
Amounts held in escrow are made up of the proceeds of the listing, and the
Co-Sponsor Overfunding Subscription (being additional funds committed by the
Company's Co-Sponsors through subscription of further warrants). Any interest
earned is also included. Pursuant to the terms of the Escrow Agreement (being
an agreement entered into with Citibank N.A. London to ensure sums committed
by Class A Shareholders are used for no other purpose than those described in
the Company's prospectus), and in accordance with the requirements set out in
Listing Rule 5.6.18A(2), the Company may only direct the release of funds upon
the occurrence of certain events as outlined in the Company's prospectus, and
these amounts are therefore classified as restricted cash in the Statement of
Financial Position.
Subsequent measurement
Financial assets at amortised cost are subsequently carried at amortised cost
using the effective interest rate method. The amortised cost of a financial
asset is the amount at which the financial asset is measured on initial
recognition, minus principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference between the
initial amount recognised and the maturity amount, minus any allowance for
expected credit losses where relevant.
Cash and bank balances and other receivables are undiscounted. Due to their
short-term nature the discounting impact is not regarded as material.
Allowances for expected credit losses are recognised in profit or loss in the
Statement of Comprehensive Income.
Financial liabilities
Initial recognition
Financial liabilities are recognised when the Company becomes a party to the
contractual agreements of the instrument. At initial recognition financial
liabilities are measured at their fair value plus, if appropriate, any
transaction costs that are directly attributable to the issue of the financial
liability.
The Company's financial liabilities during the period are comprised of
liabilities related to the redeemable Class A ordinary shares ("Public
Shares"), trade and other payables and derivative liabilities related to the
Public and Sponsor Warrants.
Subsequent measurement
The redeemable Public Shares and trade and other payables are classified as
financial liabilities at amortised cost and are measured at amortised cost
using the effective interest rate. The amortised cost of a financial liability
is the amount at which the financial liability is measured on initial
recognition, minus principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference between the
initial amount recognised and the maturity amount. Such amortisation amounts
are recognised in the Statement of Comprehensive Income. Due to the short-term
nature of the trade and other payables, they are stated at their nominal
value, which approximates their fair value.
Public Warrants and Sponsor Warrants are derivative liabilities, which are
classified as financial liabilities at fair value through profit or loss.
Subsequent to initial recognition, the Public and Sponsor Warrants are
measured at fair value and changes thereto are recognised in the Statement of
Comprehensive Income.
The Company determines the classification of its financial liabilities at
initial recognition and re-evaluates the designation at each financial period
end.
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.
Derecognition
Financial assets are derecognised when (a) the contractual rights to the cash
flows from the asset expire or are settled, or (b) substantially all the risks
and rewards of the ownership of the asset are transferred to another party or
(c) despite having retained some significant risks and rewards of ownership,
control of the asset has been transferred to another party who has the
practical ability to unilaterally sell the asset to an unrelated third party
without imposing additional restrictions.
A financial liability is de-recognised when it is extinguished, discharged,
cancelled or expires.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, and deposits held with banks.
Restricted cash
Restricted cash represents amounts held in escrow and is made up of the
proceeds of the listing, and the Co-Sponsor Overfunding Subscription, and any
interest earned. The Company may only direct the release of funds upon the
occurrence of certain events as outlined in the Company's prospectus. See note
3 for further details.
Expenses
All expenses are accounted for on an accruals basis and are presented as
expense items, except for expenses that are incidental to the disposal of an
investment which are deducted from the disposal proceeds in arriving at gain
or loss on disposal, and expenses related to the issue of financial
instruments which are netted against the financial instruments they are
allocated to. For equity instruments, these reduce share capital, for
derivative liabilities these are expensed immediately and for liabilities
these initially reduce the liability and are subsequently accreted to the
Statement of Comprehensive Income over time.
Prepayments
Prepayments are expenses paid in advance that are amortised on a straight-line
basis over the period to which they are applicable.
Share capital and reserves
Equity represents the residual interest in the assets of the Company after
deducting all of its liabilities. Class B ordinary shares ("Sponsor Shares")
are classified as equity. The Company had issued shares with no par or nominal
value. The Share subscription reserve represents consideration received in
advance of issue of shares and warrants. The Warrant reserve represents the
surplus arising on the fair value of Sponsor Warrants on the date of issuance.
Equity
Equity is classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences
a residual interest in the assets of the Company after deducting all of its
liabilities. Equity is recorded at the amount of proceeds received, net of
issue costs. Class B ordinary shares are classified as equity in accordance
with IAS 32 - "Financial Instruments: Presentation" as these instruments
include no contractual obligation to deliver cash and the redemption mechanism
is not mandatory.
Share issue costs
Share issue cost have been incurred in relation to the issue of the Sponsor
Shares, Public Shares and Warrants. Where shares are classified as equity,
share issue costs are recognised in equity. Share issue costs attributed to
the Public shares financial liability are amortised to the Statement of
Comprehensive Income using the effective interest method. For Warrants
measured at fair value through profit or loss, share issue costs are
recognised immediately in the Statement of Comprehensive Income.
Income Taxes
As a British Virgin Islands limited liability company, the Company is not
subject to any income, withholding or capital gains taxes. The company does
not have any deferred taxes or any significant uncertain tax positions.
Critical accounting estimates and judgements
The preparation of financial statements in accordance with IFRS requires the
Board to make judgements, estimates and assumptions that affect the
application of policies and the reported amounts of assets and liabilities and
income and expenses. The estimates and associated assumptions are based on
various factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making the judgements about carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on a bi-annual basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The principal judgements and estimates are as follows:
Critical accounting judgements
Going Concern basis of preparation
The Board has assessed the Company's financial position as at 31 December 2023
and the factors that may impact the Company for a period of 12 months from the
date of signing these Financial Statements.
In the event that an acquisition does not complete, the cash flow projections
show that the Company is likely to require additional cash contributions from
Co-Sponsors. Co-Sponsors are not obliged to provide such contributions and
there is therefore a material uncertainty that may cast significant doubt on
the Company's ability to continue as a going concern in the event that an
Acquisition is not completed. If no acquisition is completed by the Extended
Acquisition deadline of 30 June 2024, then the current expectation is that the
company will be wound up.
At 31 December 2023, the Company had net liabilities of $(246,051). As at 31
December 2023, the Company had cash and cash equivalents of $647,741, and
post-period end received a further $1,497,017 from Co-Sponsors.
On 8 January 2024, the Company announced in a Shareholders Circular and Notice
of Extraordinary General Meeting of Shareholders (the "Extension EGM") its
intention to seek Shareholder approval for and extension of the Acquisition
Deadline to 30(th) June 2024 at the Extension EGM held on 16 January 2024.
This resolution was passed at the Extension EGM.
On 25 January 2024, the Company and its Co-Sponsors entered into a side deed
to the sponsor funding agreement whereby Co-Sponsors agreed to advance up to a
further $3,000,000. This additional funding is contingent on achieving
milestones towards closing an acquisition and is intended to be released in
four tranches throughout the first half of 2024.
The first and second tranches totalling $1,000,000 attract interest at 20% per
annum. The final two tranches of funding, totalling $2,000,000 attract
interest of 25% per annum. All interest compounds semi-annually. As at the
date of this report $1,497,017 has been advanced to the Company. In line with
previous sponsor funding side deed agreements, amounts advanced pursuant to
this side deed are repayable upon completion of an acquisition.
In the event the Company completes an acquisition, the Company and its
Co-Sponsors shall discuss in good faith the repayment schedule of the
principal amount of the Sponsor Loans and any accrued interest up to the date
of repayment in the proportions in which the Sponsor Loans were made. If the
Company does not complete an acquisition, each Co-Sponsor acknowledges and
agrees that the Company will not repay the Sponsor Loans (in whole or in part)
to the Co-Sponsors in any circumstances and waives its rights to recourse
against funds in the Escrow Account in respect of the Sponsor Loans.
The Company has incurred and expects to continue to incur costs in pursuit of
its financing and acquisition plans.
The Directors have reviewed the Company's cash flow projections, both with and
without the completion of the Acquisition. In order to complete the
Acquisition, the Company will need to raise funds from a combination of
sources including equity and debt. The cash flow projections in the
Acquisition completion scenario show that the Company will have adequate
resources to continue in operational existence for the foreseeable future.
The Board has assessed the Company is expected to continue as a going concern
for a period of 12 months from the date of signing these Financial Statements
to the extent that the Company completes the Acquisition.
Critical accounting estimates and judgements (continued)
Equity classification of Sponsor Shares
On 12 October 2022, the Company admitted to trading on the London Stock
Exchange 12,500,000 redeemable Class A Ordinary Shares ("Public Shares") of no
par value, together with 6,250,000 warrants ("Public Warrants"), on the basis
of ½ of a redeemable warrant per Class A Ordinary Share, to investors at a
price of $10.00 per Class A Ordinary Share.
The Company further issued 3,125,000 Class B shares with no par value at a
price of $0.01 per share to Sponsors. Of these Class B Shares, anchor and
cornerstone investors subscribed to 832,813 and 365,625 shares, respectively,
at $0.01 per share ("Sponsor Shares").
In addition to the Class B shares, Sponsors also subscribed to 9,286,250
warrants and provided additional funding through subscription of a further
4,062,500 warrants ("Sponsor Warrants"). All Sponsor Warrants were issued at
$1.00 per warrant and are exercisable at a price of $11.50 per Public Share,
following completion of an acquisition.
The Company has exercised an accounting judgement in determining whether the
Sponsor Shares and Warrants are accounted for in accordance with IFRS 2 Share
Based Payments, or IAS 32 Financial Instruments: Presentation. Careful
consideration was afforded to the fact patterns and various rights, duties and
conditions attaching to each class of the share and warrant in issue. Upon
successful completion of an acquisition, each Class B Share issued at $0.01
per share will automatically be converted into Public Shares (Class A Shares),
representing a significant discount to the $10.00 per share paid by Public
shareholders.
In relation to certain Sponsor Shares, where the recipient is providing
services in an equivalent capacity as an employee, the Board's judgement is
that these fall under the scope of IFRS 2 to be treated as equity-settled
share-based payments.
IFRS 2 requires an expense to be recognised at the grant date fair value, with
a corresponding increase in equity over the vesting period. IFRS 2 will
therefore apply at and from the deemed grant date of the shares. The Company
has determined that the grant date of the shares will be on completion of an
acquisition. This is on the basis that there is no clarity as to the nature
and value of the instruments until the acquisition is finally approved, as
they are effectively an economic interest in the acquired business.
The conversion of Sponsor Shares to Public Shares is contingent on the
successful completion of an acquisition of a target business. No reward will
accrue to the holders of Class B Shares until such time as this takes place.
Where the holder of a Sponsor Share has not provided the Company with
services, these shares are accounted for as equity under IAS 32.
Classification and measurement of Sponsor Warrants
A similar judgement is required in accounting for the Sponsor Warrants.
Depending on the facts and circumstances these could be treated as financial
instruments under IAS 32, or share-based payments, under IFRS 2. The Board
determined that in this case IFRS 2 was not relevant, and therefore it is
correct to account for the Sponsor Warrants as financial instruments under IAS
32. In forming this judgement, the following factors are taken into account:
o Sponsor Warrant holders have not been treated preferentially to Public
Warrant Holders who received ½ of one redeemable warrant per one Class A
share subscribed. Both the Public and Sponsor Warrants are exercisable at the
same price of $11.50 per share, at any time 30 days after an acquisition date;
o No further Sponsor Warrants are receivable for nil or discounted
consideration, and there are no service conditions attached to the Sponsor
Warrants;
o The commercial basis for the issue of Sponsor Warrants is to provide
sufficient capital to cover the Company's listing costs and operating expenses
until the completion of an acquisition, without diluting the Public
Shareholdings;
o Sponsor Warrant holders have no different rights from Public Warrant
holders in the event of a successful acquisition or the failure to achieve
such a combination; and
o The Sponsor Warrants do not entitle the holder to a pro rata share of the
entity's assets in the event of the entity's liquidation.
Critical accounting estimates and judgements (continued)
Taking the above factors into consideration, it is the Board's judgement that
Sponsor Warrants are financial instruments that includes a contractual
obligation for the issuer to redeem that instrument for cash or another
financial asset (in this case, a Public Share) upon exercise, therefore the
relevant accounting treatment is determined by IAS 32.
Classification of transaction costs associated with issue of shares
The company incurred various costs in issuing its own equity instruments, most
of which are transaction costs. Transaction costs are incremental costs that
are directly attributable to the equity transaction that otherwise would have
been avoided if the equity instruments had not been issued. Transaction costs
of an equity transaction should be accounted for as a deduction from equity.
Incremental costs that are directly attributable to the equity transaction
that otherwise would have been avoided if the equity instruments had not been
issued include registration and other regulatory fees, underwriting costs and
brokerage fees, amounts paid to lawyers, accountants, investment bankers and
other professional advisers, fees and commissions paid to agents, brokers and
dealers, printing costs and stamp duties.
Costs for marketing the IPO, including the 'road show', do not meet the
definition of a transaction cost and therefore have been accounted for in the
statement of comprehensive income.
Transaction costs have been allocated to the debt or equity instrument to
which they are directly attributable where possible. Where directly
attributable costs could not be directly allocated to a debt or equity
instrument, they have been apportioned based on the gross proceeds raised by
each instrument.
Equity classification of sponsor loans
During the period, the Company through a number of side agreements, received
loan advances from sponsors to fund acquisition-related costs and ongoing
administrative expenses. The loans, including any interest payable will become
repayable or converted to equity if the Company completes a successful
acquisition. Until this takes place the Sponsors acknowledge and agree that
the Company will not repay the loans in whole or in part in any circumstances
and the Sponsors waives its rights to recourse against funds held in escrow by
the Company.
The directors have concluded that following the relevant accounting treatment
determined by IAS 32, as it is within the Company's control to complete an
acquisition, the sponsor loans should be classified as equity in the financial
statements, and included within share subscription advances and sponsor loans
in the statement of changes in equity. Further details of these sponsor
agreements are included in note 8 below.
Key sources of estimation uncertainty
Fair value of derivative financial instruments at fair value through profit or
loss
The Company recognises its derivative instruments (Public Warrants and Sponsor
Warrants) initially at fair value at date of issuance with any subsequent
movement in fair value between the issuance date and the reporting date being
recognised as a fair value movement through profit and loss.
As at 31 December 2023 a third party valued the 19,598,750 Warrants in issue
using an appropriate valuation model and determined the fair value at the date
of issuance to be $0.18 per warrant and the fair value at the period-end date
to be $0.04 per warrant.
As at 31 December 2023, judgements were required for the inputs into the
valuation model specifically average implied volatility rates of suitable
comparable companies and a reliable underlying share price as the closing
price as at the 31 December 2023 was based on one day's trading ($3.80) and
not reflective of the underlying price as demonstrated by transactions before
and almost immediately after the year end date. The valuation model uses the
October 2023 redemption price of $10.7991 as a reasonable base assumption.
Sensitivity analysis has been provided below to demonstrate the impact of
assumptions applied.
Critical accounting estimates and judgements (continued)
Sensitivity Analysis
The following summary presents the impact of a reasonable +/- 1% change in the
average implied volatility assumption applied in the warrant valuation model:
Base Input Volatility Volatility
+1% -1%
Average implied volatility (%) 2.3648% 3.3648% 1.3648%
Fair Value (US$ per Warrant) 0.0393 0.0968 0.0045
Derivative Liability Fair Value (US$) 770,231 1,897,159 88,194
The sensitivity of the warrant valuation to the share price (+/- 10%, as well
as considering a share price of US$3.80, based on the last trade before the
year end date) is set out as follows:
Base Input +10% -10% Last trade
sensitivity sensitivity
Class A Share Value ($) 10.7791 11.87901 9.81736 3.80
Fair Value (US$ per Warrant) 0.0393 0.5440 0.0003 nil
Derivative Liability Fair Value (US$) 770,231 10,661,720 5,880 -
Fair value measurement
All financial instruments for which fair value is recognised or disclosed are
categorised within the fair value hierarchy which consists of the following 3
levels:
o Level 1 - unadjusted quoted prices in active markets for identical,
unrestricted assets or liabilities.
o Level 2 - quoted prices in markets that are not active, or financial
instruments for which all significant inputs are observable from the market,
either directly (as prices) or indirectly (as derived from prices); and
o Level 3 - prices or valuations that require inputs that are not based on
observable market data (unobservable inputs).
The Board considers observable data to be market data that is readily
available, regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively involved in
the relevant market.
Fair value measurement (continued)
The table below analyses within the fair value hierarchy the Company's
financial liabilities measured at fair value on an ongoing basis:
31 December 2023 Level 1 Level 2 Level 3 Total
$ $ $ $
Derivative liabilities (Public & Sponsor Warrants) - - 770,231 770,231
30 June 2022 Level 1 Level 2 Level 3 Total
$ $ $ $
Derivative liabilities (Public & Sponsor Warrants) - - - -
The equity-linked Public Warrants admitted to the LSE along with the Sponsor
Warrants have been classified as level 3.
Financial instruments classified within level 3 have significant unobservable
inputs as they trade infrequently. As observable prices are not available for
the investments, the Company uses valuation techniques to derive their fair
value. At 31 December 2023 it was the opinion of the Board that Sponsor
Warrants should be categorised as level 3.
The Company had no financial assets measured on a fair value basis. No
reclassifications between the three fair value categories took place during
the period.
The following summarises the valuation methodologies and inputs used for
derivative liabilities categorised in Level 3 as at 31 December 2023.
Financial Liability Fair Value USD Valuation Method Unobservable Inputs
Derivatives (Public & Sponsor Warrants) 770,231 Monis SPAC Volatility
Unlike traditional warrant valuation models, the "Monis SPAC" model takes into
account the complexity in SPAC warrants, which may be redeemed by the issuer
once the linked shares exceed a trigger price. The method is derived from a
Monte Carlo simulation adapted specifically for SPAC warrants.
Financial Instruments - risk management
The Company's financial risk management objectives are going to evolve as the
activities increase and it prepares for a business combination. The risk
management policy is set out below:
The Company reports in US Dollars. All funding requirements and financial
risks are managed based on policies and procedures adopted by the Board.
The Company is expected to be exposed to the following financial risks:
• Market risk
• Interest rate risk
• Credit risk
• Liquidity risk
• Foreign exchange risk
Financial Instruments - risk management (continued)
In common with all other businesses, the Company is exposed to risks that
arise from its use of financial instruments. The principal financial
instruments used by the Company, from which financial instrument risk arises,
are as follows:
• Trade and other receivables
• Cash and cash equivalents
• Trade payables and accruals
• Redeemable Public Share liabilities
• Derivative Financial Instruments (at fair value through profit or
loss)
To the extent financial instruments are not carried at fair value, book value
approximates to fair value at 31 December 2023.
Trade and other receivables are measured at amortised cost. Book values and
expected cash flows are reviewed by the Board and any impairment charged to
the statement of comprehensive income in the relevant period. As at 31
December 2023, there were no trade receivables. The company had other
receivables of $206,179 (2022: $47,074)
Trade and other payables are measured at amortised cost. The financial
liabilities were $1,906,023 (2022: $1,075,921) in respect of trade payables
and accruals, redeemable public share liabilities and derivatives. The
management of risk is a fundamental concern of the Company's management. This
note summarises the key risks to the Company and the policies and procedures
put in place by management to manage it.
a) Market risk
Market risk arises from the Company's use of interest-bearing financial
instruments. It is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in interest rates
(interest rate risk) or foreign exchange rates (foreign exchange risk). The
Company seeks to minimise exposure to floating rate interest risk balanced
against the need to secure sponsor funding required to complete an
acquisition.
b) Interest rate risk
Interest rate risk arises from increases in market interest rates and could
potentially arise from the use of bank overdrafts. The Company had no exposure
to interest rate risk at 31 December 2023. The Company relies on sponsors for
funding needs.
c) Foreign exchange risk
Foreign exchange risk arises from adverse movements in currency exchange
rates.
The Company, which has as its functional currency US Dollars, was exposed to
minimal levels of foreign exchange risk during the period as it did not
generate any revenue and there was an immaterial cost in Pound Sterling.
d) Credit risk
Credit risk arises from cash and cash equivalents and deposits maintained with
banks and financial institutions with credit ratings acceptable to the
management, as well as credit exposures with customers, including outstanding
receivables and committed transactions. The Company had low exposure to credit
risk as its cash and cash equivalents are held in a bank with strong credit
ratings.
e) Liquidity risk
Liquidity risk arises from the Company's management of working capital. It is
the risk that the Company will encounter difficulty in meeting its financial
obligations as they fall due. The Company has in place arrangements with its
sponsors to provide funding as required for working capital purposes.
f) Capital management
The Company's objective when maintaining capital is to safeguard the entity's
ability to continue as a going concern, so that it can continue to carry on
its normal activities.
3. Cash and cash equivalents (including restricted cash)
31 December 2023 30 June 2022
$ $
Restricted cash 806,052 -
Cash & cash equivalents 647,741 4,539,407
Total 1,453,793 4,539,407
The Company may only direct the release of restricted funds held in escrow
upon the occurrence of certain events. Restricted cash held in escrow is made
up of the proceeds of the October 2022 listing, and the Co-Sponsor Overfunding
Subscription, and any interest earned, less funds repaid to Class A
shareholders following a share redemption in October 2023, in which 99.77% of
Class A shares were redeemed. See note 5 below for further details.
Cash and cash equivalents include readily available cash on hand, and deposits
held with banks.
4. Finance income and expenses
31 December 2023 30 June 2022
Finance income $ $
Interest on restricted cash repayable to Class A shareholders 6,427,035 -
Interest on current account 257,008 8,472
6,684,043 8,472
Finance expenses
Interest on restricted cash repayable to Class A shareholders 6,427,035 -
Interest accreted on public share liabilities at amortised cost 7,996,008 -
14,423,043 -
5. Issued share capital
The following summarises the issued share capital as at 31 December 2023 and
30 June 2022.
Share Capital as at 31 December 2023
No. of shares $
Classified as a financial liability:
$10.00 redeemable Class A ordinary shares ("Public Shares") 28,268 282,680
Classified as equity:
$0.01 Class B ordinary shares ("Sponsor Shares") 3,125,000 31,250
$1.50 Class B ordinary Shares ("Sponsor Shares") 1,333,333 2,000,000
4,458,333 2,031,250
Share Capital as at 30 June 2022
No. of shares $
Ordinary shares* 200 -
200 -
*Ordinary shares issued at no par or nominal value and redesignated as Class B
ordinary shares in January 2022.
5. Issued Share Capital (continued)
Financial liabilities - Public Shares 31 December 2023 30 June 2022
$ $
Opening balance - -
Proceeds of issue of Public Shares 125,000,000 -
Less: initial recognition of Public Warrants (1,116,875) -
Less: share issue costs (2,817,011) -
Effective interest accretion 7,996,008 -
Redemption of Class A Shares (128,770,255) -
291,867 -
Class A ordinary shares ("Public Shares")
In October 2022, ACG successfully completed its IPO with the admission of
12,500,000 Class A Ordinary Shares, onto the London Stock Exchange at an
initial offering price of $10.00 per unit. 6,250,000 warrants were issued
concurrently, as each subscriber also received half of one Warrant ("Public
Warrant") with their Public Share. The Public Warrants carry a $11.50 strike
price and are redeemable in whole or in part, prior to completion of the
Acquisition. The Public Shares have been classified as a financial liability
measured at amortised cost in the Company's Statement of Financial Position.
In October 2023, following an EGM circular which included a notice providing
Class A Shareholders a right to redeem their shares, 12,471,732 (99.77% of
Class A) shares were redeemed at a price of $10.7991 per share. Funds
totalling $134,683,481 were returned to shareholders on 26 October 2023 which
included interest earned and received on the funds held on escrow as at the
redemption date, which Class A shareholders were entitled to receive.
Class B ordinary shares ("Sponsor Shares")
In October 2022, as a result of the IPO, Sponsors and Directors subscribed to
a total of 3,125,000 Sponsor Shares at a price of $0.01 per share. In December
2023, 1,333,333 new B shares were subscribed to and allotted at $1.50 per
share, taking the total number of Class B Shares to 4,458,333. The $2,000,000
gross proceeds were recognised in share capital.
Upon completion of an acquisition, the Sponsor Shares will convert on the
trading day following the consummation of the acquisition into Public Shares.
Subject to the variation of certain voting rights and powers in respect of the
acquisition, Sponsor Shares carry the same shareholder rights as Public
Shares. However, the Company's Sponsor and Directors have entered into a
lock-up arrangement with the Company, under which they have agreed to waive
their redemption rights in respect of the Sponsor Shares or any Public Shares
acquired as a result of conversion in connection with the acquisition.
Accordingly, the Sponsor Shares are classified as equity in the Company's
Statement of Financial Position.
6. Derivative financial liabilities - Warrants
Public Warrants
Public Warrants are classified as derivative liabilities and were initially
recognised at their fair value of $0.18 per warrant ($1,116,875) at the
issuance date of 12 October 2022.
As at 31 December 2023, the 6,250,000 Public Warrants fair value had decreased
to $0.04 per Warrant and are recognised in these financial statements at a
fair value of $245,625.
Sponsor Warrants
During the period, sponsors subscribed to a total of 13,348,750 Sponsor
Warrants at a price of $1 per warrant. Of the $13,348,750 raised from the
issue of the Sponsor Warrants, a derivative liability was recognised at the
fair value of $0.18 per warrant ($2,385,422) at the issuance date of 12
October 2022. The remainder was allocated to the Warrant reserve as a capital
contribution to the Company.
6. Derivative financial liabilities - Warrants (continued)
As at 31 December 2023, the Sponsor Warrants have been valued at $0.04 per
warrant and are recognised in these financial statements at a total value of
$524,606.
The following table presents the total fair value movements on both public and
sponsor warrants:
18 months For the period
ended 21 Jun 2021 to
31 December 2023 30 June 2022
$ $
Opening Balance - -
Inception date fair value 3,502,297 -
Fair value gain through profit or loss (2,732,066) -
770,231 -
7. Trade & other payables
31 December 2023 30 June 2022
$ $
Trade payables 228,494 50,125
Accruals 101,624 1,025,796
Interest on restricted cash due to public shareholders 513,807 -
Total 843,925 1,075,921
Accruals relate to legal and professional, and other consultancy fees.
8. Sponsor Loans
On 19 January 2023, the Company and its Co-Sponsors entered a side deed to the
sponsor funding agreement whereby Co-Sponsors agreed to advance further
funding in the form of loans totalling $4,700,500. This additional funding
was received during the period and attracts interest at 10% per annum
compounding semi-annually. The principal amount along with any accrued
interest is repayable upon completion of an acquisition.
Of the additional funding received, $2,000,000 will be repaid in the form of
Sponsor Warrants to be issued upon completion of an Acquisition.
On 29 March 2023, the Company and its Co-Sponsors entered into a side deed to
the sponsor funding agreement whereby Co-Sponsors agreed to advance a further
$7,000,000. This additional funding attracts no interest and is repayable upon
completion of an acquisition.
On 8 June 2023, the Company and its Co-Sponsors entered into a side deed to
the sponsor funding agreement whereby Co-Sponsors agreed to advance of up to a
further $4,500,000. This additional funding attracts no interest and is
repayable upon completion of an acquisition.
On 9 June 2023, the Company and its Co-Sponsors entered into a side deed to
the sponsor funding agreement whereby it was agreed that in respect of the
side agreements 19 January, 29 March and 8 June (above), up to $2,000,000 in
Sponsor Loans may be repaid in warrants at the sole discretion of the Company;
and up to a further $10,000,000 in Sponsor Loans may be repaid in the form of
Class A ordinary shares, at the sole discretion of the Company.
On 29 September 2023, the Company and its Co-Sponsors entered into a side deed
to the sponsor funding agreement whereby Co-Sponsors agreed to advance further
funding in the form of a $200,000 loan. This additional funding was received
during the period and attracts interest at 10% per annum compounding
semi-annually. The principal amount along with any accrued interest is
repayable upon completion of an acquisition.
8. Sponsor Loans (continued)
On 22 December 2023, the Company and its Co-Sponsors entered into a side deed
to the sponsor funding agreement whereby in respect of all Sponsor loans
advanced:
In the event the Company completes an acquisition by the New Longstop Date of
August 12, 2024, the Company and its Co-Sponsors shall discuss in good faith
the repayment schedule of the principal amount of the Sponsor Loans and any
accrued interest up to the date of repayment in the proportions in which the
Sponsor Loans were made. If the Company does not complete an acquisition by
the New Longstop Date, each Co-Sponsor acknowledges and agrees that the
Company will not repay the Sponsor Loans and any accrued interest (in whole or
in part) to the Co-Sponsors in any circumstances and waives its rights to
recourse against funds in the Escrow Account in respect of the Sponsor Loans.
This side deed also contained an agreement and undertaking to transfer 5% of
Sponsor warrants for the purposes of participation in a long-term incentive
scheme, reducing in direct proportion the number Sponsor Warrants held by
Co-Sponsors.
The Sponsor Loans have been classified as equity within the advance
share/warrant subscription reserve as there is no requirement to repay the
loans unless and until completion of an Acquisition. Amounts in this reserve
represent amounts under received the Sponsor Loan side agreements during the
period.
9. Loss per share
The calculation of basic and diluted earnings per share has been based on the
following loss attributable to shareholders and weighted-average number of
ordinary shares outstanding at the year end.
For the 18-month period ended 31 December 2023 Basic & Diluted
Loss for the period $(25,937,410)
Weighted average number of shares 2,562,168
Loss per share $(10.12)
For the period 21 June 2021 to 30 June 2022 Basic & Diluted
(unaudited)
Loss for the period $(2,728,440)
Weighted average number of shares 200
Loss per share $(13,642.20)
The weighted average number of ordinary shares is determined by reference to
the Class B Ordinary shares. Public and Sponsor Warrants are deemed to be
anti-dilutive as the average market price of ordinary shares during the period
did not exceed the $11.50 exercise price of the Warrants and they are
therefore out of the money and excluded from the diluted earnings per share
calculation. The redeemable Public Shares under IAS 33 are deemed to be
contingently issuable shares issuable only upon an acquisition so are excluded
from the earnings per share calculations until an acquisition has occurred.
As the Company is reporting a net loss, unexercised warrants are deemed
anti-dilutive making the diluted earnings per share equal to the basic
earnings per share.
10. Administration expenses
Administration expenses consist of: 18 months For the period
ended 21 Jun 2021 to
31 Dec 2023 30 Jun 2022
$ $
Legal & professional costs* 19,241,537 2,035,366
Personnel & consultant costs 1,688,939 701,546
20,930,476 2,736,912
*Includes Auditors' remuneration for the period ended 31 December 2023 of
$100,000 (period ending 30 June 2022: $30,395).
11. Related party transactions
The Company's key management personnel include its directors and external
consultants providing key management personnel services to the Company. Each
director was appointed pursuant to a letter of appointment between the
respective director and the Company dated on each director's respective
appointment date.
Under the terms of the letters of appointment the Company's independent
directors each receive a fee of $80,000 per annum and will be reimbursed for
any out-of-pocket expenses incurred in connection with activities on the
Company's behalf, such as identifying and researching potential target
businesses. Additional fees are payable to independent directors who have
taken on additional board responsibilities.
During the 18-month period ended 31 December 2023, total remuneration payable
to directors was $961,557 (period ending 30 June 2022: $270,835). Please refer
to the Directors' Report for full analysis of Directors' Remuneration. Fees
payable to consultants providing key management personnel services for the
18-month period totalled $476,355 (period ending 30 June 2022: $334,371).
3,125,000 Class B shares with a $0.01 nominal value and 13,348,750 $1.00
warrants have been issued to Co-Sponsors. Of these 187,305 Class B shares and
1,297,798 sponsor warrants are held indirectly by the Sponsor Director, Artem
Volynets, by holding a 50.42% interest in ACG Mining Limited, which held
371,490 Class B shares and 2,573,974 sponsor warrants as at the reporting
date. Fees for management services provided by ACG Mining Limited during the
period of $35,000 (2022: $nil), were incurred and settled. These are included
in administration expenses.
12. Contingencies and commitments
Certain advisor and legal fee commitments exist which are subject to
completion of the transaction which total approximately $7,870,000.
In addition, and also subject to the completion of an acquisition, the
underwriter of the Company's placing is entitled to a deferred commission of
3.5% ($4,375,000) of the gross proceeds of the public (Class A) share offering
together with any VAT chargeable thereon, provided that 2% ($2,500,000) of the
3.5% shall be determined at the sole discretion of the Company. As discussed
in Note 2, other committed costs associated with pursuing the Company's
acquisition strategy have been incurred, and further fees including success
fees could be incurred on completion of an acquisition.
13. Subsequent events
On 25 January 2024, the Company and its Co-Sponsors entered into a side deed
to the sponsor funding agreement whereby Co-Sponsors agreed to advance up to a
further $3,000,000. This additional funding is contingent on achieving
milestones towards closing an acquisition, and will be released in four
tranches throughout the first half of 2024. The first and second tranches
totalling $1,000,000 attract interest at 20% per annum.
13. Subsequent events (continued)
The final two tranches of funding, totalling $2,000,000 attract interest of
25% per annum. All interest compounds semi-annually. As at the date of this
report $1,497,017 has been advanced to the Company.
In line with previous sponsor funding side deed agreements, amounts advanced
pursuant to this side deed are repayable upon completion of an acquisition.
On 8 January 2024 the Company released an Extension (to the acquisition
deadline) EGM Notice commencing a period during which Class A Shareholders
could elect to redeem their shares. The results were released on 16 January
2024, with 24,146 of the remaining 28,268 Class A shares at a price of
$28.5146 per Class A ordinary share. Funds held in escrow totalling
$688,798.67 were returned to shareholders on 8 February 2024 which included
interest earned and received on the funds held on escrow as at the redemption
date.
14. Controlling Party
As at the 31 December 2023, De Heerd Sponsor and ACP Sponsor each held 26.9%
of the total voting rights of the Company. As at the date of approval of this
document and following the further redemption of Class A shares referred to in
note 13 above, De Heerd Sponsor and ACP Sponsor each held 27.1% of the total
voting rights of the Company. There was no individual controlling shareholder
of the Company.
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