Interim / Quarterly Report • Sep 30, 2022
Interim / Quarterly Report
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DISRUPTIVE CAPITAL ACQUISITION COMPANY LIMITED
For the six-month period from 1 January 2022 to 30 June 2022
| Page(s) | |
|---|---|
| Company Overview | 3 |
| Summary Information | 4 |
| Chair Statement | 5 |
| Directors | 6 |
| Interim Management Report | 7 - 10 |
| Statement of Directors Responsibilities | 11 |
| Independent Review Report | 12 - 13 |
| Unaudited Condensed Statement of Financial Position | 14 |
| Unaudited Condensed Statement of Comprehensive Income | 15 |
| Unaudited Condensed Statement of Cash Flows | 16 |
| Unaudited Condensed Statement of Changes in Equity | 17 |
| Notes to the Unaudited Condensed Financial Statements | 18 - 28 |
| Key Advisers and Contact Information | 29 |
Defined terms throughout this Interim Financial Report have the meanings given in the Definitions section of the Company's Prospectus dated 6 October 2021, unless the context otherwise require.
Disruptive Capital Acquisition Company Limited (the "Company") is a special purpose acquisition company ("SPAC") incorporated on 29 April 2021 under the laws of Guernsey as a non-cellular company limited by shares. The Company's Ordinary Shares and Warrants (as defined in its Prospectus) were admitted to trading on Euronext Amsterdam, the regulated market operated by Euronext Amsterdam N.V. ("Euronext Amsterdam") on 7 October 2021.
The company focuses solely on undertaking a Business Combination (legal merger, amalgamation, share exchange, asset and/or liability acquisition, share purchase, reorganisation or similar business combination) with a target business or entity operating in the financial services sector in Western and/or Northern Europe., although it may pursue an acquisition opportunity in any industry, sector or geographical region.
| Listing | Euronext Amsterdam |
|---|---|
| Share Price | £10.00 (30 June 2022) |
| Warrant Price | £0.60 (30 June 2022) |
| Market Capitalisation | £131.3m |
| Current / Future Anticipated Dividend | Nil |
| Dividend Payment Dates | n/a |
| Currency | Pounds Sterling (£) |
| Launch Date / Share Price (nominal) | £0.0001 |
| Incorporation and Domicile | Guernsey |
| Legal advisors – Dutch Law | Stibbe N.V. |
| Legal advisors – UK Law | Herbert Smith Freehills LLP |
| Legal advisors – Guernsey Law | Ogier (Guernsey) LLP |
| Administrator | JTC Fund Solutions (Guernsey) Limited |
| Auditor | BDO LLP |
| Market Makers | J.P. Morgan Securities Plc |
| SEDOL, ISIN, LEI | GG00BMB5XZ39 |
| Year End | 31 December |
| Stocks & Shares ISA | Eligible |
| Website | www.disruptivecapitalac.com |
Dear Shareholders,
It's my pleasure to update you on the excellent progress we have made since my last statement. Since the IPO, the Company has worked tirelessly to find an excellent business that is a leader in its sector, with a large sticky client base and a future of growth. Against a backdrop of a continuing war in Ukraine, high energy prices and inflation and a challenged US SPAC market, your company was delighted to announce on 15 September that it was exploring a Business Combination with Saxo Bank. The company's ability to unlock such a high quality opportunity speaks to the hard work, proprietary network and reputation of our team.
Saxo Bank is a leading Fintech specialist with more than 850,000 clients and over EUR 85 bn in client assets. Its 'state of the art' investment platforms and technology power individuals and institutions to trade and invest in capital market products and services. The purpose of the potential combination is to bring Saxo Bank public, raise its profile and accelerate its growth strategy. Saxo is well capitalised so there will be no primary issue of shares. The potential transaction values the outstanding shares of Saxo Bank (before the Business Combination) at a 'pro forma' aggregate amount of at least EUR 2 bn.
Your company will solicit interest from shareholders and other investors in this secondary offer and I look forward to providing further updates as we progress.
Wolf Becke Chair
29 September 2022
The Statutory Board of Directors (the "Board") is composed of the following Statutory Directors (the "Directors"):
Wolf Becke is an independent non-executive director and chair of the Board (the "Chair"). He was a member of the Board of Directors of Swiss Life Holding AG between 2012 and 2017, a member of the Board of Directors of Vitality Life Ltd between 2016 and 2020, and a member of the Board of Directors of Discovery Holdings Europe Ltd between 2016 and 2020. He served for over 20 years on the executive board of Hannover Re., including as the chief executive officer of Hannover Life Re, from 1999 to 2011. He also serves as a committee member for Pension SuperFund Capital GP II Limited.
Edmund Truell is the executive director of the Company. He is a director and the managing partner of Disruptive Capital GP Limited, the Sponsor. His investment track record has a lifetime average net realised IRR of approximately 33% with over £9 billion of investments across the past 27 years of his private equity career, in either chief executive officer or investment committee chair roles. In 1988, he led the management buyout of Hambro European Ventures, which he co-founded in 1987 and ran from 1993, to form Duke Street Capital, a top ten European private equity firm, which generated an aggregate net 31% realised IRR from its inception until its sale in 2007. Whilst leading Duke Street Capital, he created Duchess 1, the first collateralized debt obligation fund in Europe, in 2001 which raised €1 billion. Portfolio companies of Duke Street Capital included Xafinity, a large provider of business process outsourcing services including pension administration, consultancy and provision of pension software, where he introduced to the business model cross selling as well as capital and IT to support growth in software and consultancy to the insurance sector. After a few acquisitions to bolster its market position, Xafinity was sold to Advent to form Equiniti in 2010. Sporting Index, an FCA regulated spread betting business, was another portfolio company of Duke Street Capital, where he terminated the non-core business to grow market shares in sports, professionalised sales and marketing and invested in new product development, information technology and distribution channels. In 2007, he co-founded with his late brother, Daniel Truell, the Pension Insurance Corporation, one of the United Kingdom's largest ever start-ups. As its chief executive officer, he developed the Pension Insurance Corporation into a leader in the UK bulk annuity market, which has £49.6 billion in assets and 273,500 pension scheme members each as at December 2020. As Chairman of the London Pension Fund Authority, a position he held from 2012 to 2015, he led the first ever public sector pension merger, with Lancashire and Berkshire and transformed UK public sector funds. He also restructured the entire management team and transformed the asset and liability management of the London Pension Fund Authority, while the funding improved from 50% to 93% of liabilities. He was also an architect of the £260 billion SuperPools consolidation. In 2018, he co-founded the Pension SuperFund, aiming to consolidate UK private sector pension funds across this £2.1 trillion sector (as at 2018).
Roger Le Tissier is a non-executive director of the Company. He holds several non-executive director positions with leading asset managers, private equity general partners, insurance, pension companies and charities. Previously, he was a partner of the law firm and fiduciary group Ogier and the founder partner of Ogier, Guernsey from its inception in 1998 until 2013. He also serves as a non-executive director of Pension SuperFund and Long Term Assets Limited.
Dimitri Goulandris is an independent non-executive director of the Company. He is the founder and management partner of Cycladic, focusing on investments in small and medium-sized enterprises. Previously, he ran the European operations of the private equity firm Whitney & Co. He spent eight years at Morgan Stanley in the private equity group and within the investment bank.
The Company was incorporated on 29 April 2021 under the laws of Guernsey as a non-cellular company limited by shares. The Company's Ordinary Shares and Warrants were admitted to trading on Euronext Amsterdam on 7 October 2021.
The Company had an initial offering of up to 12,500,000 Ordinary Shares and up to 6,250,000 Warrants. The Company offered the Ordinary Shares and Warrants in the form of Units, each consisted of one Ordinary Share and ½ of a redeemable Warrant.
The Company intends to focus on undertaking a Business Combination (legal merger, amalgamation, share exchange, asset and/or liability acquisition, share purchase, reorganisation or similar business combination) with a target business or entity operating in the financial services sector in Western and/or Northern Europe. The Company aims to utilise a focused acquisition strategy with a particular emphasis on target businesses with attractive growth and business prospects, but which may, for example, lack a dedicated management team or otherwise lacks the resources to manage their business in the most effective manner, including because such business is considered a non-core part of a larger financial institution.
The Company believes that current profound and rapid changes in the financial services sector provide significant opportunities. The Company believes that continued regulatory change, low or negative real interest rates, undermanaged balance sheets, technology-enabled new entrants, economic dislocation due to COVID-19 and the impact of Brexit will open many strategies to re-examination. The Company believes, based on the Leadership Team's track record in the financial services sector and knowledge of the industry dynamics, that these continuing industry trends and dynamics will result in the emergence of potential targets at favourable valuations, including distressed and non-core business segments within groups with otherwise inherently resilient business models.
The Company intends, as part of any Business Combination, to focus on a single existing target business or entity for acquisition thus it would reduce risk through diversification.
The Company anticipates structuring a Business Combination such that the post-Business Combination company will be the listed entity (whether the Company or another entity is the surviving entity after the Business Combination) and that the Ordinary Shareholders will own a minority interest in such post-Business Combination entity, depending on the valuations ascribed to the target company or business and the Company in a Business Combination. It is expected that the Company will pursue a Business Combination in which, in order to fund the full cost of the acquisition in excess of the amounts available to the Company through the Escrow Account, it issues a substantial number of new Ordinary Shares in exchange for all of the issued and outstanding share capital of a target, and/or issues a substantial number of new Ordinary Shares to third parties for cash in connection with financing a Business Combination. As a result, the post-Business Combination entity's majority shareholders are expected to be the sellers of the target and/or third-party equity investors, whilst the Ordinary Shareholders immediately prior to the Business Combination are expected to own a minority interest in the post-Business Combination entity.
The Company has identified a potential business combination opportunity with Saxo Bank A/S and is in the process of soliciting interest from its investors in order to support the business combination. The potential transaction values the outstanding shares of Saxo Bank (before a Business Combination) at a pro forma aggregate amount of at least EUR2 billion.
No binding agreement has been entered into and there can be no assurance that a Business Combination nor listing of Saxo Bank shares will be achieved.
The Company was established with an initial period of 15 months post IPO, with the option of a three month extension subject to shareholder consent. At the date of this report, the Company has identified a potential business combination opportunity as disclosed above and has reasonable grounds to believe that the going concern basis of preparation is appropriate however there remains a material risk that the business combination will not be successful. If the business combination were not completed the company would enter into liquidation and the Ordinary Shares and Warrants delisted and funds returned to Ordinary Shareholders from the Escrow account. This is further discussed in note 3.
The Directors are responsible for supervising the overall management of the Company. Portfolio exposure has been limited by the guidelines which are detailed within the Principal Activities and Investment Policy section of the annual report.
The principal risks facing the Company, include but are not limited to, the following:
An explanation of these principal risks and how they are managed is set out below.
The Company expects the Business Combination to relate to a single target company or business. Accordingly, the prospects of the Company's success following the Business Combination may be:
As a result, returns for Ordinary Shareholders may be adversely affected if growth in the value of the target is not achieved or if the value of the target company or business or any of its material assets is written down.
Following the Business Combination, the Company will be dependent on the income generated by the target company or business in order to meet its own expenses and operating cash requirements. If the target company or business is unable to generate sufficient cash flow, the Company may be unable to pay its expenses or make distributions and dividends on the Ordinary Shares. An inappropriate strategy or poor execution of strategy may lead to underperformance.
To manage that risk the Company will typically have several potential target companies under review at any one time in various stages of analysis. The Company intends to closely scrutinise the management of a target company or business when evaluating the desirability of effecting a Business Combination. The Company has identified general criteria and guidelines for evaluating prospective target companies and businesses. As part of the due diligence process, the Board expects to determine whether a target is a suitable candidate for the Business Combination, considering the results of operations, financial condition and prospects of a potential overall arrangement.
If the Company fails to complete a Business Combination, it will not be able to generate any revenues, which would effectively prevent the Company from paying dividends to Shareholders. The proceeds held in the Escrow Account could bear a negative rate of interest in the future, which could reduce the amount of cash in the Escrow Account such that the per-share redemption amount received by Ordinary Shareholders may be less than the expected £10.27 per Ordinary Share.
Market risk arises from uncertainty about the future operating performance and market response to the Company's Business Combination with the target company.
The Company's investment approach is to invest in only one company at a time. Such investment concentration may subject the Company to greater market fluctuation and loss than might result from a diversified investment portfolio.
Investors may be unable to sell their Ordinary Shares and/or Warrants unless a viable market can be established and maintained. Accordingly, the Ordinary Shares and Warrants may not be suitable for short-term investment. Admission on the Euronext Amsterdam should not be taken as implying that there will be an active trading market for the Ordinary Shares and Warrants. Even with an active trading market, the market price for the Ordinary Shares and Warrants may fall below the Offer Price. The Sponsor and each of the Directors will be bound by Lock-up Arrangements. The market price of the Ordinary Shares and Warrants could decline if, following the end of any lock-up period, a substantial number of Ordinary Shares are sold by the Sponsor, the Directors and/or its affiliates in the public market or if there is a perception that such sales could occur.
As part of such Business Combination, it is expected that the management of any target company or business will assume board positions in the post-Business Combination entity. It is further expected that the Company will pursue a Business Combination in which it issues a substantial number of new Ordinary Shares in exchange for all the issued and outstanding share capital of a target, and/or issue a substantial number of new Ordinary Shares to third parties for cash in connection with financing a Business Combination. As a result, the post-Business Combination entity's majority shareholders are expected to be the sellers of the target and/or third-party equity investors, while the Ordinary Shareholders immediately prior to the Business Combination are expected to own a minority interest in the post-Business Combination entity. Such third parties may have economic or other business interests or goals that are inconsistent with the Company's business interests and goals. As a result of the foregoing, the Ordinary Shareholders and Directors may not be able to exert material influence or control over the target company or business following completion of the Business Combination.
The target business' success may be dependent on the skills and expertise of certain employees or contractors. If any of these individuals resign or become otherwise unavailable, the target business may be materially adversely impacted. As a mitigating factor, the Company is likely to evaluate the personnel of the target business and may determine that it requires increased support to operate and manage the target business in accordance with the Company's overall business strategy.
Following the Business Combination Completion Date, the Company may be subject to significant liabilities of a target business, if not identified during the due diligence process, which could contribute to poor operational performance, undermine any attempt to restructure, operate and/or grow the target business in line with the Company's business plan and could have a material adverse effect on the Company's business, results of operations, financial condition and prospects. However, prior to the Business Combination, as part of the fair determination of the consideration for a target business, and as part of evaluating the risks associated with such a target business, the Company will endeavour to consider the financial and operational performance, and overall resilience of the target business considering the challenges of COVID-19, the Ukraine war and similar disruptive events.
The Company may focus on completing a Business Combination with a complex business or line of business that it believes would benefit from operational improvements and/or fast-growing companies that it believes would benefit from support in such growth. If the Company is not able to achieve the desired operational improvements, the Company may not achieve the gains that the Company anticipates. However, the Company believes that the Leadership Team's proven operational ability and track record, demonstrated over 30 years of experience in buybuild-transform strategies in respect of financial services investments offers a highly differentiated value proposition. The sourcing, valuation, diligence and execution capabilities of the Leadership Team are expected to provide the Company with a substantial pipeline of opportunities from which to evaluate and select a business that will benefit from its expertise.
To manage the risk, all operational risk is reviewed by the Board at each Board meeting. Further, at each Board meeting, the Board would receive reports from the Company Secretary and Administrator in respect of administration matters and duties performed by it on behalf of the Company. The Company is subject to laws and regulations enacted by national, regional and local governments. In particular, the Company will be required to comply with, certain requirements of Euronext Amsterdam, under Dutch law and under Guernsey law. Compliance with, and monitoring of, applicable laws and regulations will be monitored by the Board.
Other risks faced by the Company are described in detail within the Company's Prospectus and can be obtained at www.disruptivecapitalac.com.
The Directors are responsible for preparing the Interim Report and Condensed Financial Statements, and confirm to the best of their knowledge:
• the condensed financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting.
Wolf Becke Chairman Date: 29 September 2022
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with International Accounting Standard 34: Interim Financial Reporting.
We have been engaged by the company to review the condensed set of financial statements in the halfyearly financial report for the six months ended 30 June 2022 which comprises the statement of financial position, the statement of comprehensive income, the statement of cashflows, the statement of changes in equity, and notes to the financial statements, including a summary of significant accounting policies.
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the company are prepared in accordance with International Financial Reporting Standards ("IFRS") which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB") and International Financial Reporting Interpretations Committee ("IFRIC"). The condensed set of financial statements included in this halfyearly financial report has been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting.
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of Conclusion section of this report. We draw attention to note 3) i) Going concern of the financial statements which indicates that if the Company does not complete a business combination prior to the Business Combination Deadline, the company must be dissolved and liquidated. The Business Combination Deadline is 15 months after the settlements date (October 2021), subject to an initial 3 month extension period, followed by a second 3-month extension period, if deemed applicable and approved by a Shareholder vote.
These conditions indicate the existence of a material uncertainty, which may cast significant doubt about the company's ability to continue as a going concern. Our review conclusion is not modified in respect of this matter.
The directors are responsible for preparing the half-yearly financial report in accordance with International Accounting Standard 34: Interim Financial Reporting. In preparing the half-yearly financial report, 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.
In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Our report has been prepared in accordance with the terms of our engagement to assist the Company and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
BDO LLP Chartered Accountants London, UK 29 September 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
| Unaudited 30/06/2022 GBP |
Unaudited 30/06/2021 GBP |
Audited 31/12/2021 GBP |
||
|---|---|---|---|---|
| Notes | ||||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 4 | 565,023 | 1,249,643 | |
| Cash - restricted | ਪ | 128,423,501 | 128,128,578 | |
| Trade and other receivables | 12,814 | 12,813 | ||
| TOTAL ASSETS | 129,001,338 | 129,391,034 | ||
| Liabilities | ||||
| Current liabilities | ||||
| Trade and other payables | 5 | (486,758) | (376,891) | |
| (486,758) | (376,891) | |||
| Non-current liabilities | ||||
| Warrants | 6 | (6,960,938) | (6,960,938) | |
| Redeemable ordinary shares | 6 | (124,601,563) | (124,601,563) | |
| (131,562,501) | (131,562,501) | |||
| Net liabilities | (3,047,921) | (2,548,358) | ||
| Equity | ||||
| Ordinary share capital | 7 | (2,541,846) | (2,539,205) | |
| Retained eamings | (506,075) | (9,153) | ||
| Total equity | (3,047,921) | (2,548,358) |
The financial statements on pages 14 to 28 were approved by the board of Directors and authorised for issue on 26 September 2022. They were signed on the Company's behalf by:
Wolf Becke Roger Le Tissier Director Director
Date: 29 September 2022 Date: 29 September 2022
| Unaudited 01/01/2022 30/06/2022 GBP |
Unaudited 29/04/2021 30/06/2021 GBP |
Audited 29/04/2021 31/12/2021 GBP |
||
|---|---|---|---|---|
| Notes | ||||
| Income | ||||
| Interest income | 4 | 294,923 | - | 3,578 |
| Realised gain on foreign exchange | - | - | 908 | |
| 294,923 | - | 4,486 | ||
| Expenses | ||||
| Legal and professional fees | 672,920 | - | 11,449 | |
| Audit fees | 34,126 | - | - | |
| Administration fees | 84,657 | - | 1,596 | |
| Other expenses | 141 | - | 594 | |
| 791,844 | - | 13,639 | ||
| Net (loss) before taxation | (496,921) | - | (9,153) | |
| Income taxes | - | - | - | |
| Total comprehensive (loss) for the period | (496,921) | - | (9,153) | |
| Basic and diluted earnings per share | 11 | (0.16) | - | (0.00293) |
The above results are in respect of continuing operations of the Company.
| Unaudited 01/01/2022 to 30/06/2022 GBP |
Unaudited 29/04/2021 to 30/06/2021 GBP |
Audited 29/04/2021 to 31/12/2021 GBP |
||
|---|---|---|---|---|
| Notes | ||||
| Operating activities | ||||
| Net loss for the period | (496,921) | - | (9,153) | |
| Items not affecting cash: | ||||
| Increase in trade and other receivables | - | - | (12,813) | |
| Increase in trade and other payables | 5 | 109,867 | - | - |
| Net cash flows used in operating activities | (387,054) | - | (21,966) | |
| Investing activities | ||||
| Cash - restricted | 4 | (294,923) | - | (128,128,578) |
| Reclassification of restricted cash to cash and cash equiv. | 128,423,501 | |||
| Net cash flows used in investing activities | 128,128,578 | - | (128,128,578) | |
| Financing activities | ||||
| Proceeds from issue of ordinary shares | - | - | 124,601,563 | |
| Proceeds from issue of sponsor shares | - | - | 313 | |
| Share issue costs paid | (2,643) | - | (2,162,626) | |
| Proceeds from issue of warrants | - | - | 3,437,500 | |
| Proceeds from issue of sponsor warrants | - | - | 3,523,438 | |
| Net cash flows used in financing activities | (2,643) | - | 129,400,188 | |
| Change in cash and cash equivalents | 127,738,881 | - | 1,249,644 | |
| Cash and cash equivalents at beginning of the period | 1,249,643 | - | - | |
| Cash and cash equivalents at end of the period | 128,988,524 | - | 1,249,644 | |
| Being: | ||||
| Cash - unrestricted | 565,023 | 1,249,644 | ||
| Cash - restricted | 128,423,501 | - | ||
| 128,988,524 | 1,249,644 | |||
As at 31 December 2021 the cash held in escrow was restricted for a period of greater than 12 months and did not meet the definition of Cash and cash equivalents. At 30 June 2022 the term remaining on the escrow arrangement is less than 12 months and the restricted balances have been redesignated as cash and cash equivalents.
| Period ended 30 June 2021 (unaudited) | Notes | Sponsor shares GBP |
Retained earnings GBP |
Total equity GBP |
|---|---|---|---|---|
| Balance as at 29 April 2021 | - | - | - | |
| Ordinary shares issued | - | - | - | |
| Total comprehensive (loss) for the period | - | - | - | |
| Expenses relating to listing / IPO | - | - | - | |
| Balance as at 30 June 2021 | - | - | - | |
| Period ended 30 June 2022 (unaudited) | ||||
| Balance as at 1 January 2022 | (2,539,205) | (9,153) | (2,548,358) | |
| Total comprehensive (loss) for the period | - | (496,921) | (496,921) | |
| Expenses relating to listing / IPO | (2,642) | - | (2,642) | |
| Balance as at 30 June 2022 | (2,541,847) | (506,074) | (3,047,921) | |
| Period ended 31 December 2021 (audited) | ||||
| Balance as at 29 April 2021 | - | - | - | |
| Ordinary shares issued | 7 | 313 | - | 313 |
| Total comprehensive (loss) for the period | - | (9,153) | (9,153) | |
| Expenses relating to listing / IPO | (2,539,518) | - | (2,539,518) | |
| Balance as at 31 December 2021 | (2,539,205) | (9,153) | (2,548,358) |
The Company is a non-cellular special purpose acquisition company ("SPAC"), limited by shares, registered and incorporated in Guernsey under The Companies (Guernsey) Law, 2008 (as amended) (the "Law") on 29 April 2021 with registration number 69150. The Company's registered address is First Floor, 10 Lefebvre Street, St Peter Port, Guernsey, GY1 2PE. Disruptive Capital GP Limited is the Company's sponsor (the "Sponsor Entity").
The objective of the Company is to complete a (legal) merger, amalgamation, share exchange, asset and/or liability acquisition, share purchase, reorganization or similar business combination with a target business or entity. The Company intends to focus on undertaking a Business Combination with a target business or entity operating in the financial services sector with its headquarters or principal operations in Western and/or Northern Europe, although it may pursue an acquisition opportunity in any industry or sector. The Company will have 15 months from the Settlement Date (being the date on which the Company's shares are entered into public trading) to complete a Business Combination, subject to an initial 3-month extension period, followed by a second 3-month extension period, if deemed applicable and approved by a Shareholder vote ("Business Combination Deadline").
The Company has prepared these unaudited condensed financial statements on a going concern basis in accordance with International Accounting Standard 34 "Interim Financial Reporting". The interim financial report does not comprise statutory financial statements within the meaning of the Companies (Guernsey) Law, 2008, and should be read in conjunction with the annual financial statements as at and for the year ended 31 December 2021, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB") and International Financial Reporting Interpretations Committee ("IFRIC"). The statutory financial statements for the year ended 31 December 2021 were approved by the Board of Directors on 29 April 2022. The opinion of the Auditor on those financial statements was unqualified and did not contain an emphasis of matter. This interim financial report and unaudited condensed financial statements for the period ended 30 June 2022 has been reviewed by the Auditor but not audited.
There are a number of new and amended accounting standards and interpretations that became applicable for annual reporting periods commencing on or after 1 January 2022.
These amendments have not had a significant impact on these unaudited condensed financial statements and therefore the additional disclosures associated with first time adoption have not been made.
The preparation of the unaudited condensed financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
In preparing these unaudited condensed financial statements, the significant judgements made by management in applying the accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual financial statements for the year ended 31 December 2021.
The financial statements have been prepared on a going concern basis. The Directors are of the opinion that they will be able to complete an acquisition prior to July 2023 (subject to shareholder approval of the First and Second Extension Periods), noting in particular the intention to complete a business combination with Saxo Bank A/S, and having considered the Company's objectives and available resources along with its projected income and expenditure, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future. If the Company does not complete an acquisition in this time the Company will be wound up and funds held in escrow for investors returned to them. The Directors do not believe there is a material difference between the accounts prepared on a breakup or going concern basis.
The Company will have until the Business Combination Deadline to complete the Business Combination. If the Company fails to complete a Business Combination by the Business Combination Deadline the Company intends to: (1) cease all operations except for the purpose of winding up; (2) on a date as soon as reasonably possible after the Business Combination Deadline but not more than 10 trading days thereafter, repurchase the Ordinary Shares held by shareholders at a per share price, payable in cash, equal to the aggregate amount then on deposit in the escrow accounts (less any amounts necessary to pay (a) dissolution expenses and (b) any unpaid claims of creditors entitled to payment thereof by the Company, (3) as promptly as reasonably possible, subject to the approval of its shareholders, resolve on the dissolution of the Company and liquidate the Company's assets and liabilities in accordance with Guernsey law. There will be no liquidating distributions with respect to the Warrants, which will expire worthless if the Company fails to complete a Business Combination within the Business Combination Deadline. These conditions indicate the existence of a material uncertainty, which may cast significant doubt about the Company's ability to continue as a going concern.
The financial risk for the shareholders is largely mitigated by the fact that the Company holds £128.4 million (including accrued interest of £12,814) in the escrow account as at 30 June 2022, which can be released upon meeting strict requirements. Furthermore, the Company holds £0.5 million cash in the current account as at 30 June 2022, coming from the proceeds of the sale of the Sponsor Shares and Warrants at IPO (Capital at Risk), which is sufficient to cover working capital and other running costs and expenses. If no Business Combination is completed, the exposure of the Ordinary Shareholders is generally limited to, if any, costs that are not covered by the remaining cash available in the current account.
The Company measures the Ordinary Shares and Warrants at amortised cost.
| Unaudited 30/06/2022 GBP |
Unaudited 30/06/2021 GBP |
Audited 31/12/2021 GBP |
|
|---|---|---|---|
| Cash and cash equivalents | |||
| RBSI current account | 565.023 | 1,249,643 | |
| Restricted balances | |||
| Barclays escrow account - restricted cash | 128,423,501 | 128,128,578 |
All cash balances at period-end were held in bank accounts.
The Restricted Cash balance is held by Barclays as escrow agent. The funds held are not available to the company until completion of a business combination or on winding up of the Company following a failure to complete a business combination by the business combination deadline. Due to the uncertainty of when a business combination will occur or the proportion of shareholders who will redeem ordinary shares it has not been possible to determine whether any of this balance would be available to the Company within the next three months.
| Unaudited 30/06/2022 GBP |
Unaudited 30/06/2021 GBP |
Audited 31/12/2021 GBP |
|
|---|---|---|---|
| Audit fees | 34,126 | - | - |
| Legal and professional fees | 452,632 | - | 319,841 |
| Administration fees | - | - | 57,050 |
| 486,758 | - | 376,891 |
The Company may issue an unlimited number of shares of par value and/or no-par value or a combination of both. The Company may from time to time hold its own shares as treasury shares.
The following table shows the movement of the issued redeemable ordinary shares during the period:
| Redeemable ordinary shares | Number of shares | Ordinary shares GBP |
|
|---|---|---|---|
| As at 30 June 2021 (unaudited) | - | - | |
| Issued during the period: | Ordinary shares | 12,500,002 | 121,562,500 |
| Sponsor shares | 312,500 | 3,039,063 | |
| Treasury shares | 187,500 | - | |
| As at 31 December 2021 (audited) | 13,000,002 | 124,601,563 | |
| Issued during the period: | Ordinary shares | - | - |
| Sponsor shares | - | - | |
| Treasury shares | - | - | |
| As at 30 June 2022 (unaudited) | 13,000,002 | 124,601,563 | |
The Company has also issued 3,125,000 Sponsor Shares to Disruptive Capital GP Limited, at the nominal value of £0.0001 per share. The Sponsor Shares are not part of the Offering and will not be admitted to listing or trading on any trading platform. See note 7.
The Ordinary Shares will rank, pari passu, with each other and ordinary shareholders will be entitled (subject to the terms set out in the Company's Prospectus) to dividends and other distributions declared and paid on them. Each Ordinary Share carries distribution and liquidation and the right to attend and to cast one vote at a general meeting of the Company (including at the Business Combination general meeting). If any Ordinary Shares are held in treasury, such Ordinary Shares shall not be voted at any general meeting of the Company and no dividend may be declared or paid and no other distribution of the Company's assets may be made in respect of such Ordinary Shares.
On incorporation, the Company issued two (2) Founder Shares to Fiordland GP Limited acting in its capacity as general partner of the Truell Intergenerational Family Limited Partnership Incorporated. These two (2) Founder Shares were subsequently converted into Ordinary Shares.
On listing, the Company issued 12,500,000 Units to investors, comprising 12,500,000 Ordinary Shares at a nominal value of £0.0001 per share and 6,250,000 redeemable warrants (the "Offering"). Each unit is comprised of one (1) Ordinary Share of the Company, as well as one half (1/2) of a redeemable Warrant (Note 7).
The Company subsequently issued 312,500 Units to Disruptive Capital GP Limited, comprising 312,500 Ordinary Shares and 156,250 redeemable warrants.
The Company subsequently issued 187,500 Units to Disruptive Capital GP Limited, comprising 187,500 Ordinary Shares and 93,750 redeemable warrants. These Units were immediately repurchased by the Company and are held as Treasury Shares.
Due to the contractual stipulations on issued ordinary shares, these instruments have been classified as financial liabilities in accordance with IAS 32.
The Warrants and Founder Warrants are accounted for as liabilities in accordance with IAS 32 and are measured at fair value as at each reporting period. Changes in the fair value of the Warrants and Founder Warrants are recorded in the statement of profit or loss for each period.
The Warrants will expire on the date that is five years following the Business Combination Completion Date, or earlier upon redemption of the Warrants or liquidation of the Company. If the Company does not complete a Business Combination by the stated deadline, the Sponsor Warrants will expire worthless.
Each whole Warrant entitles an eligible Warrant Holder to purchase one Ordinary Share at a price of £11.50 per Ordinary Share, subject to adjustments as set out in the Company's Prospectus, at any time commencing five days following the date of completion of a Business Combination. The Warrants will expire on the date that is five years following the Business Combination Completion Date, or earlier upon redemption of the Warrants or liquidation of the Company. A Warrant Holder may exercise only whole Warrants at a given time.
In addition, the Company has also issued 2,291,667 Sponsor Warrants to Disruptive Capital GP Limited, at the nominal value of £1.50 per sponsor warrant. The Sponsor Warrants are not part of the Offering and will not be admitted to listing or trading on any platform.
| Warrants | Number of warrants | Warrants GBP |
|
|---|---|---|---|
| As at 30 June 2021 (unaudited) | - | - | |
| Issued during the period: | Warrants | 6,250,000 | 3,437,500 |
| Sponsor warrants | 156,250 | 85,938 | |
| Treasury warrants | 93,750 | - | |
| As at 31 December 2021 (audited) | 6,500,000 | 3,523,438 | |
| Issued during the period: | Warrants | - | - |
| Sponsor warrants | - | - | |
| Treasury warrants | - | - | |
| As at 30 June 2022 (unaudited) | 6,500,000 | 3,523,438 |
| Sponsor warrants - not traded | Number of warrants | Warrants GBP |
|---|---|---|
| As at 30 June 2021 (unaudited) | - | - |
| Issued during the period | 2,291,667 | 3,437,501 |
| As at 31 December 2021 (audited) | 2,291,667 | 3,437,501 |
| Issued during the period | - | - |
| As at 30 June 2022 (unaudited) | 2,291,667 | 3,437,501 |
| Total as at 30 June 2022 (unaudited) | 8,791,667 | 6,960,939 |
As at 30 June 2022 and 31 December 2021 and considering the absence of trading activity on the Warrants and that the Company has not commenced with income-generating operations as yet, it has been considered that the fair value of the Warrants and Founder Warrants corresponds to the nominal value.
The Company may issue an unlimited number of shares of par value and/or no-par value or a combination of both. The Company may from time to time hold its own shares as treasury shares.
| Sponsor shares | Number of shares | Ordinary shares GBP |
|---|---|---|
| As at 30 June 2021 (unaudited) | - | - |
| Issued during the period: | 3,125,000 | 313 |
| Share costs paid | - | (2,539,517) |
| As at 31 December 2021 (audited) | 3,125,000 | (2,539,204) |
| Issued during the period: | - | - |
| Share costs paid | - | (2,642) |
| As at 30 June 2022 (unaudited) | 3,125,000 | (2,541,846) |
The Company also issued redeemable ordinary shares (see note 6).
The Company issued 3,125,000 Sponsor Shares to Disruptive Capital GP Limited, at the nominal value of £0.0001 per share. The Sponsor Shares are not part of the Offering and will not be admitted to listing or trading on any trading platform.
The Sponsor Shares will rank, pari passu, with each other and holders of sponsor shares will be entitled to dividends and other distributions declared and paid on them. The sponsor shares are convertible on a one-to-one basis into ordinary shares, on successful completion of a Business Combination.
As the Sponsor Shares issued by the Company are not considered redeemable, the Company classifies these as equity.
The following related parties have been identified during the period and as at period end:
| Name of related party | Nature of relationship |
|---|---|
| Fiordland GP Limited acting in its capacity as general partner of the Truell Intergenerational Family Limited Partnership Incorporated |
Founder |
| Disruptive Capital GP Limited | Sponsor & major shareholder |
| Edmund Truell | Executive Director |
| Roger Le Tissier | Executive Director and indirect shareholder |
| Wolf Becke | Independent Non-executive Director and Chair and indirect shareholder |
| Dimitri Goulandris | Independent Non-executive Director and Chair and indirect shareholder |
| Unaudited 30/06/2022 GBP |
Audited 31/12/2021 GBP |
|
|---|---|---|
| 6 Sponsor Warrants |
||
| 2,291,667 not traded | 3,437,501 | 3,437,501 |
| 156,250 redeemable | 85,938 | 85,938 |
| Sponsor Shares 7 |
||
| 3,125,000 non-redeemable | 313 | 313 |
| 312,500 redeemable Ordinary Shares | 3,039,063 | 3,039,063 |
The Company is exposed to financial risks that are managed through a process of identification, measurement and monitoring and subject to risk limits and other controls. The objective of the Company is, consequently, to achieve an appropriate balance between risk and benefits, and to minimise potential adverse effects arising from its financial activity.
The main risks arising from the Company's financial instruments are market risk, credit risk and liquidity risks. Management reviews policies for managing each of these risks and they are summarised below. These policies have remained unchanged since the beginning of the period to which these financial statements relate.
Market risk is defined as "the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in variables such as equity price, interest rate and foreign currency rate".
Changes in industry conditions, competition, political and diplomatic events, tax, environmental and other laws and other factors, can substantially and either adversely or favourably affect the value of the securities in which the Company invests and, therefore, the Company's performance and prospects.
In addition, and as the Warrants are recognised at fair value and are liabilities on the balance sheet of the Company, the Company is also exposed to the volatility of the Warrants. The Company's liabilities may then deviate over time because Warrant prices can fluctuate due to changing market conditions.
Equity price risk is the risk of unfavourable changes in the fair values of equity investments as a result of changes in the value of individual shares. As at the period end, the Company did not hold any equity investments.
The Company's policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At 30 June 2022, the Company is not exposed to changes in market interest rates as no borrowing arrangements have been entered into.
Most of the Company's transactions are carried out in the functional currency.
To mitigate the Company's exposure to foreign currency risk, non-functional currency cash flows are monitored in accordance with the Company's risk management policies.
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation, expected credit losses are measured using probability of default, exposure at default and loss given default. Management considers both historical analysis and forward-looking information in determining an expected credit loss.
Besides the cash held at RBSI to fund the operational costs of the Company, the Company utilises an escrow account at Barclays for the proceeds received from the Company's Offering. The table below shows the maximum exposure to credit risk for each component of the statement of financial position:
| Unaudited 30/06/2022 |
Unaudited | Audited 31/12/2021 |
|||
|---|---|---|---|---|---|
| 30/06/2021 | |||||
| Notes | GBP | GBP | GBP | ||
| Cash and cash equivalents incl. Restricted | |||||
| balances(1) | য | 128,988,524 | 129,378,221 | ||
| Total maximum exposure to credit risk | 128.988.524 | 129.378.221 |
(1) The Company's cash is held at both RBSI and Barclays PLC, which have a credit rating of A3 and A1 respectively as per Moody's for the period ended 30 June 2022. Cash that is held with counterparties has been assessed for probability of default as a result no loss allowance has been recognised based on 12-month expected credit losses as any such impairment would be wholly insignificant to the Company.
Liquidity risk is the risk that the Company will encounter in realising its non-cash assets or otherwise raising funds to meet financial commitments. As at the period end, the Company's assets consist solely of cash and cash equivalents and an immaterial receivable balance.
Liquidity risk is managed and monitored weekly by the administrator of the Company. The Company manages its liquidity risk by a combination of maintaining cash levels to fund short-term operating expenses and retained profits.
A summary table with maturity of financial assets and liabilities of the Company is presented. The amounts disclosed in the tables are the contractual undiscounted cash flows. Undiscounted cash flows in respect of balances due within 12 months generally equal their carrying amounts in the statement of financial position as the impact of discounting is not significant.
The maturity analysis of financial instruments as at 30 June 2022:
| 30/06/2022 (unaudited) | Demand and less than 1 month |
Less than 1 year |
More than 1 year |
Tota | |
|---|---|---|---|---|---|
| Notes | GBP | GBP | GBP | GBP | |
| Financial assets | |||||
| Cash and cash equivalents | য | 128,988,524 | 128,988,524 | ||
| Trade and other receivables | 12,814 | 12,814 | |||
| Financial liabilities | |||||
| Redeemable ordinary shares | 6 | (124,601,563) | (124,601,563) | ||
| Warrants | 6 | (6,960,938) | (6,960,938) | ||
| Trade and other payables | 5 | (486,758) | (486,758) |
The redeemable ordinary shares and warrants have been classified as payable in less than one year as the Company has not completed a business combination as at the date of approval of these financial statements. However, as further disclosed in this report, a target company has been identified and the directors are of the opinion that sufficient support will be provided by the Company's shareholders in order to successfully complete the business combination.
The maturity analysis of financial instruments as at 31 December 2021 is as follows:
| less than 1 month |
Less than 1 year |
More than 1 year |
Total GBP |
|
|---|---|---|---|---|
| 4 | 129,378,221 | - | - | 129,378,221 |
| 12,813 | - | - | 12,813 | |
| 6 | - | - | (124,601,563) | (124,601,563) |
| 6 | - | - | (6,960,938) | (6,960,938) |
| 5 | (376,891) | - | - | (376,891) |
| Notes | Demand and GBP |
GBP | GBP |
There is a risk that the Company does not complete a Business Combination by the stated deadline, which would trigger the redemption of redeemable instruments such as Ordinary Shares.
While the Company expects that it will have enough funds available to operate until the Business Combination Deadline, the Sponsors may fund up to £2million of excess costs through the issuance of loan or debt instruments to the Company, such as promissory notes, which may be converted into Sponsor Warrants at a price of £1.50 per Sponsor Warrant at the option of the Sponsor. Any issuance of promissory notes by the Company could mean that the amounts available to Ordinary Shareholders on a liquidation are reduced; any issue of additional warrants could (upon exercise) ultimately dilute Ordinary Shareholders reducing their overall shareholding and proportionate level of control of the Company.
The Company's capital management objectives are:
The Company manages the capital structure and adjusts it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
The Company is authorised to issue Ordinary Shares and Warrants (which are convertible into ordinary shares subject to the Company meeting specific requirement in relation to entering into a business combination, as described in the Prospectus). As at 30 June 2022, the Company's capital is represented by the Ordinary Shares and Sponsor Shares respectively, as detailed in Note 6 and 7 to these financial statements, as well as issued Warrants and Sponsor Warrants, as detailed in Note 6 to these financial statements.
As a result of the ability to issue, repurchase and resell shares, the capital of the Company can vary. The Company is not subject to externally imposed capital requirements and has no restrictions on the issue, repurchase or resale of its shares.
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: Quoted price (unadjusted) in an active market for an identical instrument.
Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using: quoted prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques for which all significant inputs are directly or indirectly observable from market data.
Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.
The level in the fair value hierarchy within which the fair value measurement was categorised in its entirety was determined based on lowest level input that was significant to the fair value measurement in its entirety. For this purpose, the significance of an input was assessed against the fair value measurement in its entirety.
If a fair value measurement used observable inputs that required significant adjustment based on unobservable inputs, then those investments were measured using Level 3 inputs. Assessing significance of a particular input to the fair value measurement in its entirety required judgment, considering factors specific to the asset or liability (see valuation techniques disclosed below). The determination of what constitutes observable required significant judgment by the Directors of the Company.
The Directors of the Company considered observable data to be market data that was readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis:
| Level 1 | Level 2 | Level 3 | Total | ||
|---|---|---|---|---|---|
| Notes | GBP | GBP | GBP | GBP | |
| Redeemable ordinary shares measured at | |||||
| amortised cost | 6 | 124,601,563 | 124,601,563 | ||
| Warrants measured at fair value | 6 | 6,960,939 | 6,960,939 | ||
| Total | 131,562,502 | - | - | 131,562,502 |
| Level 1 | Level 2 | Level 3 | Total | ||
|---|---|---|---|---|---|
| Notes | GBP | GBP | GBP | GBP | |
| Redeemable ordinary shares measured at | |||||
| amortised cost | 6 | 124,601,563 | - | - | 124,601,563 |
| Warrants measured at fair value | 6 | 6,960,939 | - | - | 6,960,939 |
| Total | 131,562,502 | - | - | 131,562,502 |
There were no transfers between levels during the period ended 30 June 2022 or 31 December 2021.
The loss per share has been calculated on a weighted-average basis and is derived by dividing the net loss for the period attributable to shareholders by the weighted-average number of shares in issue.
| Unaudited 30/06/2022 |
Unaudited 30/06/2021 |
Audited 31/12/2021 |
|
|---|---|---|---|
| Weighted average of ordinary shares in issue for basic loss per | |||
| share | 3,125,000 | 3,125,000 | |
| Total comprehensive loss for the period attributable to the | |||
| shareholders | (£496,921.00) | £0.00 | (£9,153.00) |
| Basic and diluted loss per share | (£0.16) | £0.00 | (£0.003) |
As the Company made a loss during the current period, the diluted loss per share is equal to the basic earnings per share, as the impact of incremental shares on loss per share is anti-dilutive.
No dividends were paid or declared by the Company in the period to 30 June 2022 or 31 December 2021. The Company will not pay dividends prior to the Business Combination.
On 15 September 2022 the Company announced that it had agreed to explore a business combination with Saxo Bank A/S. Further information is available on the company's website.
There have been no further material events that require disclosure.
First Floor 10 Lefebvre Street St Peter Port Guernsey GY1 2PE
J.P. Morgan Securities Plc 25 Bank Street London E14 5JP United Kingdom
Ogier (Guernsey) LLP Redwood House St Julian's Avenue St Peter Port Guernsey GY1 1WA
Allen & Overy LLP Apollolaan 15 1077 AB Amsterdam The Netherlands
BDO LLP 55 Baker Street London W1U 7EU United Kingdom
Mr Edmund Truell Dimitri Goulandris Wolf Becke Roger Le Tissier (all care of the registered office)
Cantor Fitzgerald Europe Five Churchill Place Canary Wharf London E14 5HU United Kingdom
Herbert Smith Freehills LLP Exchange House Primrose Street London EC2A 2EG United Kingdom
Stibbe N.V. Beethovenplein 10 1077 WM Amsterdam The Netherlands
Van Lanschot Kempen K.V. Beethovenstraat 300 1077 WZ Amsterdam The Netherlands 135 East 57th Street New York, NY 10022
Company Website: www.disruptivecapitalac.com
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