Final Results

RNS Number : 9355P

Marwyn Materials Limited

01 April 2009

 



1 April 2009

Marwyn Materials Limited (the 'Company')

Publication of Annual Report, Notice of Annual General Meeting and Results since Incorporation

The Directors of Marwyn Materials Limited are pleased to announce that the Annual Report and Accounts for the period ended 31 December 2008 and the Notice of the Annual General Meeting have today been posted to all shareholders.

Copies of the Annual Report and Accounts will be available, free of charge, for a period of one month at the Company's registered office at Elizabeth House, 9 Castle Street, St Helier, Jersey, JE2 3RT.

The Annual General Meeting will be held at Elizabeth House, 9 Castle Street, St Helier, Jersey, JE2 3RT on Tuesday, 28 April 2009 at 2 p.m. Details of the results of Marwyn Materials Limited for the period from incorporation to 31December 2008 are given below.

Acquisition strategy

Marwyn Materials Limited was incorporated in August 2007 and listed in June 2008 and it is intended that it will acquire and manage companies and businesses in the UK and international building materials industry, as described in the Company's AIM admission document dated 6 June 2008.  The Directors' intention is to acquire controlling stakes in one or more quoted or unquoted profitable businesses or companies by way of a reverse takeover and to use these as a platform for further acquisitions.

The Company will need to raise additional funds for these purposes. The Company may also acquire minority stakes in UK and international quoted companies with the initial funds raised. It is the Directors' belief that if this strategy is properly executed, shareholder value can be created through market consolidation.

The Directors intend to take an active approach to investments made by the Company and to adhere to the following investment guidelines:

Geographic focus: The Company intends to invest internationally with its focus being on the UK, European and US building materials markets.

Sector focus: The Company intends to focus on the UK and international building materials industries. The Directors believe that opportunities exist to create value for Shareholders through a properly executed, acquisition-led strategy in these industries.

Target companies: The Company will target companies which are profitable and which fit into the stated geographic and sector guidelines.

Types of investment and control of investments: It is anticipated that the Company will acquire controlling stakes in one or more quoted or unlisted profitable businesses or companies and may also acquire minority stakes in UK and international quoted companies.

This has continued to be the Company's strategy throughout the period to 31 December 2008.

The existing AIM rules require that where an AIM listed company is an investing company, shareholder approval for its investing strategy must be sought on an annual basis. The Board therefore proposes to seek shareholder approval for the Company to continue its current acquisition strategy at the forthcoming Annual General Meeting on 28 April 2008. The Board unanimously recommends that shareholders approve the resolution.

Results

The loss before taxation for the period 31 December 2008 was £742,495. As at 31 December 2008, Marwyn Materials Limited's net cash balances amounted to £12.8 million.

Dividends

It is the Board's policy, as described in the Company's AIM admission document, that prior to making the first acquisition no dividends will be paid. Following the first acquisition, subject to availability of distributable reserves, dividends will be paid to shareholders when the Directors believe it is appropriate and prudent to do so. However, the main focus of the Company will be delivering capital growth for shareholders.

Outlook

The Group continues vigorously to pursue its stated acquisition strategy. The deteriorating economic situation has resulted in a significant decline in the market capitalisation of some companies in the building materials sector and the announcement of several disposal programmes. The short term trading outlook for building materials businesses remains difficult and we continue to review a number of opportunities to acquire attractive assets at a cyclical low point for the industry. We anticipate that 2009 will present numerous further acquisition opportunities in our target sector. Certain of these are already under review.  

Enquiries:

Marwyn Materials Limited 

Peter Tom                                         020 7389 6800 

Simon Vivian                                     020 7389 6800

Cenkos Securities plc

Nicholas Wells                                   020 7397 8920

  CONSOLIDATED BALANCE SHEET

As at 31 December 2008

	Note		2008
			£
Assets
Receivables			14,195
Cash and cash equivalents	14		12,806,100
Total current assets			12,820,295
Total assets			12,820,295
Equity
Share capital	16		13,262,480
Equity-settled employee benefits reserve	16		680
Accumulated losses	16		(742,495)
Total equity attributable to the shareholders of the Company			12,520,665
Total equity			12,520,665
Non-current liabilities
Taxation	11		1,913
Total non-current liabilities			1,913
Current liabilities
Trade and other payables	15		297,717
Total current liabilities			297,717
Total liabilities			299,630
Total equity and liabilities			12,820,295

The Group and the Company financial statements were approved and authorised for issue by the Board of Directors on 31 March 2009 and signed on its behalf by:

Peter Tom CBE                                Simon Vivian

Chairman                                          Chief Executive

BALANCE SHEET

As at 31 December 2008

	Note		2008
			£
Assets
Investment in subsidiaries	12		-
Loan to group company	13		100,000
Total non-current assets			100,000
Receivables			10,697
Cash and cash equivalents	14		12,759,709
Total current assets			12,770,406
Total assets			12,870,406
Equity
Share capital	16		13,262,480
Equity-settled employee benefits reserve	16		680
Accumulated losses	16		(753,181)
Total equity attributable to the shareholders of the Company			12,509,979
Liabilities
Trade and other payables	15		360,427
Total current liabilities			360,427
Total liabilities			360,427
Total equity and liabilities			12,870,406

CONSOLIDATED INCOME STATEMENT

For the period from 15 August 2007 to 31 December 2008

			2008
	Note		£
Interest income	10		249,716
Employee expenses	7		(116,764)
Professional and consultancy expenses	8		(761,317)
Other expenses	9		(112,217)
			(990,298)
Results from operating activities			(740,582)
Loss before income tax			(740,582)
Income tax expense	11		(1,913)
Loss for the period			(742,495)
Attributable to:
Equity holders of the Company	16		(742,495)
Loss for the period			(742,495)
Earnings per share
Basic and diluted loss per share	18		(1.4p)

All the Group's activities derive from continuing operations.

INCOME STATEMENT

For the period from 15 August 2007 to 31 December 2008

			2008
	Note		£
Interest income	10		250,182
Employee expenses	7		(23,342)
Professional and consultancy expenses	8		(912,587)
Other expenses	9		(67,434)
			(1,003,363)
Results from operating activities			(753,181)
Loss before income tax			(753,181)
Income tax expense	11		-
Loss for the period			(753,181)
Attributable to:
Equity holders of the Company	16		(753,181)
Loss for the period			(753,181)
Earnings per share
Basic and diluted loss per share	18		(1.4p)

All the Company's activities derive from continuing operations.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period from 15 August 2007 to 31 December 2008

	Share capital	Equity-settled employee benefits reserve	Accumulated losses	Total
	£	£	£	£
Balance at 15 August 2007	-	-	-	-
Loss for the period	-	-	(742,495)	(742,495)
Recognition of share-based payments	-	680	-	680
Issue of ordinary shares	13,600,000	-	-	13,600,000
Costs directly related to the issue of capital	(337,520)	-	-	(337,520)
Balance at 31 December 2008	13,262,480	680	(742,495)	12,520,665

For more detail of the Group's reserves, see Note 16.

All the Group's activities derive from continuing operations.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the period from 15 August 2007 to 31 December 2008

			2008
		Note	£
Cash flows from operating activities:
Interest received			239,019
Payments to suppliers and employees			(695,399)
Net cash generated by operating activities			(456,380)
Cash flows from financing activities:
Proceeds from issue of share capital			13,600,000
Payment for share issue costs			(337,520)
Net cash from financing activities			13,262,480
Net increase in cash and cash equivalents			12,806,100
Cash and cash equivalents on 15 August 2007			-
Cash and cash equivalents at 31 December 2008		14	12,806,100

NOTES TO THE FINANCIAL STATEMENTS

For the period from 15 August 2007 to 31 December 2008

 

1.                  Reporting entity

 

Marwyn Materials Limited (the “Company”) is a company domiciled in Jersey. The address of the Company’s registered office is Elizabeth House, 9 Castle Street, St Helier, Jersey, JE2 3RT.

 

The Company was incorporated on 15 August 2007 as Gracechurch Street Capital Limited and changed its name to Marwyn Materials Limited on 4 June 2008.

 

The financial statements of the Company as at and for the period ended 31 December 2008 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Group primarily is involved in the acquisition of a target investment.

 

2.                  Basis of preparation

 

(a) Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs).

 

The financial statements were authorised for issue by the Board of Directors on 31 March 2009.

 

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis.

 

(c) Functional and presentation currency

These financial statements are presented in Sterling (GBP), which is the Company’s functional currency.

 

(d) Use of estimates and judgements

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

 

 

3.                  Segment reporting

 

Business segments

The Company raised GBP£13.26m net of expenses through an issue of ordinary shares on its admission to AIM on 12 June 2008. Until such time as an acquisition is made, the Group’s sole operation will remain the seeking of a suitable target whilst investing shareholders’ funds with a focus on investment return balanced by liquidity and market risk. 

 

Geographical segments

Marwyn Materials Limited is based in Jersey. The Group has established an operating company in the U.K. to help actively seek an acquisition.

 

 

4.                  Employee expenses

	2008		2008
	Company		Group
	£		£
Wages and salaries	-		79,663
Equity-settled share-based payments	680		680
Compulsory social security contributions	-		13,759
Non-executive Directors’ fees	22,662		22,662
	23,342		116,764

For details of equity-settled share based payments see Note 19.

 

5.                  Professional and consultancy expenses

	2008		2008
	Company		Group
	£		£
Professional fees	293,796		295,018
Consultancy fees	466,299		466,299
Consultancy fees paid to Marwyn Materials UK Limited	144,492		-
	904,587		761,317

 

6.                  Other expenses

	2008		2008
	Company		Group
	£		£
Rent	8,000		37,250
Legal fees	26,550		26,550
Sundry expenses	40,884		48,417
	75,434		112,217

 

Marwyn Materials UK Limited has in place an operating lease for office accommodation with Marwyn Partners Limited until June 2011. Payments made under operating leases were £29,250 during the period. Non-cancellable operating lease rentals are as follows:

 

	2008		2008
	Company		Group
	£		£
Less than one year	-		60,000
Between one and five year	-		85,000
More than five years	-		-
	-		145,000

 

 

 

 

7.                  Interest income

	2008		2008
	Company		Group
	£		£
Interest income on bank deposits	249,716		249,716
Interest on loan to Marwyn Materials UK Limited	466		-
	250,182		249,716

 

8.                  Income tax expense

	2008		2008
	Company		Group
	£		£
Current period tax expense	-		1,913
Income tax expense from continuing operations	-		1,913

 

Reconciliation of effective tax rate:

	2008		2008
	Company		Group
	£		£
Loss for the period	(753,181)		(740,582)
Income tax at the Company’s domestic rate of 0%	-		-
Effect of tax rates in foreign jurisdictions*	-		1,913
Income tax expense recognised	-		1,913

 

*The parent company is resident in Jersey and has a zero percent tax rate. The Group has a subsidiary operation in the U.K. which pays tax at a higher rate of 20% on taxable profits of £9,566 in the period.

 

9.                  Investment in subsidiaries

 

Company:

	Principal activity	Country of incorporation	Voting and ownership interest	Cost
Marwyn Materials UK Limited*	Acquisition sourcing	UK	100%	£1.00
Marwyn Materials Investments Limited	Issue of incentive shares	Jersey	100%	£0.02

 

*Marwyn Materials UK Limited is indirectly held by the Company via Marwyn Materials Investments Limited.

 

  

10.              Loan to group company

 

Company:

		2008
		£
Marwyn Materials UK Limited		100,000
		100,000

 

The loan is unsecured, pays interest at 12m LIBOR plus 150bps and is repayable on 1 December 2010.

 

11.              Cash and cash equivalents

	2008		2008
	Company		Group
	£		£
Bank balances	12,759,709		12,806,100
Cash and cash equivalents in the statement of cash flows	12,759,709		12,806,100

 

The exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 20.

 

12.              Trade and other payables

	2008		2008
	Company		Group
	£		£
Professional and consultancy fees	288,468		288,468
Amount due to Marwyn Materials UK Limited	68,459		-
Liability for Participation Shares	3,500		3,500
Other creditors	-		5,749
	360,427		297,717

 

13.              Capital and reserves

 

Reconciliation of movement in capital and reserves

Company:

	Share capital	Equity-settled employee benefits reserve	Accumulated losses	Total equity
	£	£	£	£
Loss for the period	-	-	(753,181)	(753,181)
Issue of ordinary shares on incorporation	2	-	-	2
Recognition of share-based payments	-	680	-	680
Issue of ordinary shares during the period	13,599,998	-	-	13,599,998
Costs directly related to the issue of capital	(337,520)	-	-	(337,520)
Balance at 31 December 2008	13,262,480	680	(753,181)	12,509,979

 

Group:

	Share capital	Equity-settled employee benefits reserve	Accumulated losses	Total equity
	£	£	£	£
Loss for the period	-	-	(742,495)	(742,495)
Issue of ordinary shares on incorporation	2		-	2
Recognition of share-based payments	-	680	-	680
Issue of ordinary shares during the period	13,599,998	-	-	13,599,998
Costs directly related to the issue of capital	(337,520)	-	-	(337,520)
Balance at 31 December 2008	13,262,480	680	(742,495)	12,520,665

 

14.              Share capital

 

Company and Group:

		Ordinary shares
		2008
Issue of ordinary shares on incorporation		2
Issue of ordinary shares on admission to AIM		135,999,998
On issue at 31 December		136,000,000

 

The Company has no limit to the number of ordinary shares which may be issued. The ordinary shares have no par value. All issued shares are fully paid.

 

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

 

15.              Earnings per share

 

Group:

Basic earnings per share

The calculation of basic earnings per share at 31 December 2008 (1.4p loss) was based on the loss attributable to ordinary shareholders of £742,495 and a weighted average number of ordinary shares outstanding of 54.6m. 

 

Diluted earnings per share  

The calculation of diluted earnings per share at 31 December 2008 (1.4p loss) was based on the loss attributable to ordinary shareholders of £742,495 and the weighted average outstanding ordinary shares of 54.6m. The Participation Shares in issuance during the period are not included in the calculation of weighted average outstanding ordinary shares for the diluted earnings per share calculation as the effect is anti-dilutive. 

 

Company:

Basic earnings per share

The calculation of basic earnings per share at 31 December 2008 (1.4p loss) was based on the loss attributable to ordinary shareholders of £753,181 and a weighted average number of ordinary shares outstanding of 54.6m. 

 

Diluted earnings per share  

The calculation of diluted earnings per share at 31 December 2008 (1.4p loss) was based on the loss attributable to ordinary shareholders of £753,191 and the weighted average outstanding ordinary shares of 54.6m. The Participation Shares in issuance during the period are not included in the calculation of weighted average outstanding ordinary shares for the diluted earnings per share calculation as the effect is anti-dilutive. 

 

16.              Share-based payment arrangements

 

Under share-based payment arrangements established by the Group to incentivise Directors, key employees and others providing similar services, Participation Shares were issued, via the Company’s subsidiary, Marwyn Materials Investments Limited, to Directors and key employees (“Management Participation Shares”) and Marwyn Management Partners LLP (“Marwyn”), a related party (“Marwyn Participation Shares”); together “the Participation Shares”.

 

On being offered, the Company may purchase the Participation Shares either for cash or for the issue of new Ordinary Shares at its discretion. The value of the Participation Shares is discussed below. The Participation Shares may only be sold on this basis if both the Growth and Vesting Conditions have been satisfied. If these conditions have not been satisfied the Participation Shares must be sold to the Company for a nominal amount.

 

Details of the Participation Shares issued during and outstanding at the period end are shown below. None of the Participation Shares were forfeited, exercised or expired during the period.

 

 

Growth Condition

The Growth Condition is that the compound annual growth of the Company’s equity value must be at least 12.5% per annum. The Growth Condition takes into account new shares issued, dividends and capital returned to Shareholders.

 

Vesting Condition

The Participation Shares are subject to a vesting period ending on 6 June 2011. If however, the Growth Condition is not met on 6 June 2011, it will be extended to 6 June 2013, or if earlier, when the Growth Condition is met. The vesting period will also end on the sale or change of control of the Company.

 

Value

Subject to the provisions detailed above, the Management Participation Shares and Marwyn Participation Shares can each be sold to the Company for an aggregate value equivalent to 10% of the increase in “Shareholder Value” in the Company. Shareholder Value is broadly defined as the increase in market capitalisation of all Ordinary Shares of the Company issued up to the date of sale, allowing for any dividends and other capital movements.

 

Management Participation Shares

Under a management incentive scheme, 10,000 Management Participation Shares have been created and Directors and key employees have been allotted and purchased a number of those shares, as shown in the table below. 

 

The following table shows the Management Participation Shares issued to employees:

 

Issued to:	Participation in increase in “Shareholder Value”	Issue price	Number of Participation shares	Nominal value of Participation shares
Peter Tom	4%	£0.50	2,000	£1,000
Simon Vivian	4%	£0.50	2,000	£1,000
Ian Peters	2%	£0.50	1,000	£500
			5,000	£2,500

 

Marwyn Participation Shares

The Group has entered into a performance participation agreement with Marwyn Management Partners LLP (“Marwyn”) under which Marwyn has agreed to assist the Company in meeting its business strategy. In exchange, the Group has issued Participation Shares to Marwyn, a related party, as shown in the table below:

 

Issued to:	Participation in increase in “Shareholder Value”	Issue price	Number of  Participation shares	Nominal value of Participation shares
Marwyn Management Partners LLP	10%	£0.10	10,000	£1,000

 

Valuation of Participation Shares

When the Participation Shares were issued, the Company was an unlisted shell-company and had not entered into any transactions up to that date other than the issue of 2 Ordinary Shares for £2. The fair value estimation placed on the Participation Shares took into account the lack of trading history of the Company and the absence of any deals or transactions to date. The total amount paid for the Participation Shares, being the nominal value of £3,500, was considered to be the best estimation of the fair value.

 

In the current period, £680 has been recognised in total as an expense in the income statement in respect of Participation Shares.

 

17.              Financial instruments

 

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements.

 

Categories of financial instruments

Carrying amount of financial assets:

		2008		2008
		£		£
		Company		Group
Loan and receivables (including cash and cash equivalents)		12,870,406		12,820,295
		12,870,406		12,820,295

Carrying amount of financial liabilities:

		2008		2008
		Company		Group
		£		£
Amortised cost		360,427		299,630
		360,427		299,630

 

Credit risk

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

 

		2008		2008
		Company		Group
		£		£
Cash and cash equivalents		12,759,709		12,806,100
Loans and receivables		110,697		14,195
		12,870,406		12,820,295

 

Impairment losses

There was no impairment on receivables during the period and there are no overdue or impaired receivables at the period end.

 

Liquidity risk

The following are the contractual maturities of financial liabilities and excluding the impact of netting agreements:

 

Company:

	Carrying	Contractual	6 months
	amount	cash flows	or less	2-5 years
Accruals	360,427	360,427	360,427	-
	360,427	360,427	360,427	-

Group:

	Carrying	Contractual	6 months
	amount	cash flows	or less	2-5 years
Accruals	299,630	299,630	297,717	1,913
	299,630	299,630	297,717	1,913

 

Currency risk

Exposure to currency risk

All of the Group’s transactions and balances are in Sterling and therefore the Group has no exposure to currency risk.

 

Interest rate risk

Profile

At the reporting date the interest rate profile of interest-bearing financial instruments was:

		Carrying amount		Carrying amount
		Company		Group
		£		£
Fixed rate instruments
Financial assets (time deposits)		12,677,207		12,677,207
		12,677,207		12,677,207
Variable rate instruments
Financial assets		82,502		128,893
		82,502		128,893

 

All financial assets and liabilities, other than those shown in the table above are non-interest bearing.

 

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or loss.

 

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss for 12 months on interest-bearing instruments by the amounts shown below. This analysis assumes that all other variables remain constant.

 

	Profit or loss and equity		Profit or loss and equity
	Company	Company	Group	Group
	100 bp increase	100 bp decrease	100 bp increase	100 bp decrease
	£	£	£	£
Time deposits	127,597	(127,597)	128,061	(128,061)

 

Fair values

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:

 

	Carrying amount	Fair value	Carrying amount	Fair value
	Company	Company	Group	Group
	£	£	£	£
Loans and receivables	110,697	102,940	14,195	14,195
Cash and cash equivalents	12,759,709	12,759,709	12,806,100	12,806,100
Payables	(356,927)	(356,927)	(296,132)	(296,132)
	12,513,479	12,505,722	12,524,163	12,524,163

The carrying value of receivables, cash and payables are a reasonable approximation of fair value due to their short-term maturity. For details of the Participation Shares issued, excluded from the above table, see Note 19.

 

Interest rates used for determining fair value

The interest rate used to discount the redemption cash flow of the loan to the subsidiary is calculated by adding a credit spread to the yield on a UK government bond maturing at 2 years post the reporting date; being the closest date to the loan repayment date. The subsidiary has received no quotes for commercial loans and therefore has estimated a relevant credit spread based on market knowledge.

 

		Yield on Government security	Credit spread	Discount rate
Loan to Marwyn Materials UK Limited		1.3%	3%	4.3%

 

18.              Related parties

 

Parent and ultimate controlling party

The Company is listed on AIM and as such there is no controlling party.

 

Marwyn Investment Management LLP is the investment manager to the Marwyn Neptune Fund LP which has a significant shareholding in the Company. James Corsellis and David Williams are partners in Marwyn Investment Management LLP, and are directors of various Marwyn group companies and Marwyn Materials Limited. The following Marwyn companies are therefore deemed to be related parties of the Group.

 

Marwyn Partners Limited was paid GBP£25,000 (excluding VAT) in respect of office accommodation and Marwyn Capital LLP was paid GBP£100,000 in respect of corporate finance and administrative services.   At the balance sheet date Marwyn Partners Limited was owed an amount of £20,000 in respect of services supplied during the period.

 

At the balance sheet date the Marwyn Neptune Fund LP held 50,010,000 ordinary shares in Marwyn Materials Limited. Marwyn Management Partners LLP held Marwyn Participation Shares in the Group, details of which are disclosed in Note 19.

 

Transactions with directors

As well as Management Participation Share disclosed in Note 19, the Group also made the following payments to Directors or companies connected with Directors:

 

	Payments for services during the period	Amounts owed at period end
	£	£
Consultancy fees	97,531	-
Director salary payments	50,000	10,000
Non-executive fees	22,662	4,166
	170,193	14,166

 

Directors’ shareholdings

 

The following Directors held the indicated number of shares in the Company as at the period end:

Director:	Shares held at 31 December 2008
Peter Tom CBE	22,350,000
Simon Vivian	2,500,000
David Williams	11,000,000
James Corsellis	5,500,000
David Warr	2,500,000

 

 

END

 

 

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