24. WARRANT LIABILITY (CONTINUED)
On 4 December 2020, the Company issued 700,000 Ordinary Shares and matching warrants at a price of £1 for
one ordinary share and matching warrant. Under the terms of the warrant instrument (“Warrant Instrument”),
warrant holders are able to acquire one ordinary share per warrant at a price of £1 per ordinary share, subject
to a downward price adjustment depending on future share issues prior to or in conjunction with the Company’s
acquisitions.
On 20 April 2021, the Company issued 12,000,000 A shares and matching warrants at a price of £1 for one A
share and matching A warrant instrument. Under the terms of the A warrant instrument (“A Warrant
Instrument”), warrant holders are able to acquire one ordinary share per warrant at a price of £1 per ordinary
share, subject to a downward price adjustment depending on future share issues.
Effective 31 March 2022, both the Warrant Instrument and A Warrant Instrument were amended such that the
long stop date was extended to the fifth anniversary of an initial acquisition by a member of the Group (which
may be in the form of a merger, share exchange, asset acquisition, share or debt purchase, reorganisation or
similar transaction) of a business. In conjunction with the Acquisition, the A Warrants were cancelled, leaving
only the Ordinary Shares Warrants in issue. On 9 October 2024 the Company completed its initial acquisition,
and accordingly, the Ordinary Shares Warrants were fully vested and are now exercisable for 5 years from the
date of the Acquisition.
In the period from issuance to 30 June 2024, warrants were accounted for as level 3 derivative liability
instruments and were measured at fair value at grant date and each subsequent balance sheet date. The Warrant
Instrument and A Warrant Instruments were separately valued at the date of grant. For both the Ordinary Shares
Warrants and A Warrants, the combined market value of one share and one warrant was considered to be £1,
in line with the market price paid by third party investors. A Black-Scholes option pricing methodology was used
to determine the fair value, which considered the exercise prices, expected volatility, risk free rate, expected
dividends and expected term.
For the year ended 30 June 2024 a different approach to valuing the Ordinary Shares Warrants and A warrants
has been used. In years prior to 30 June 2024, both the Ordinary Shares Warrants and Ordinary Share and A
warrant and A share have been valued at a combined price of £1. At 30 June 2024, the market value of £1 per
ordinary share has been used, being the price that the New Ordinary Shares were subscribed for without any
matching warrants. As the A shares were converted into Ordinary Shares, and the matching A warrants
surrendered and cancelled on 4 July 2024 it was not appropriate to value the A shares at £1 at 30 June 2024,
instead, the Company continued to use an aggregate value of £1 for an A share and A Warrant.
At 30 June 2024, the fair value of the Warrant Instrument was assessed as 24p per warrant and the fair value of
the A Warrant Instrument was assessed as 16p per warrant. The result of change in fair value of the warrants
was a fair value gain of £579,000 (2023: loss of £254,000). The Directors were responsible for determining the
fair value of the warrants at each reporting date, the underlying calculations are prepared by Deloitte LLP.
On 4 July 2024, the Company announced the successful placing of and subscription for 30 million New Ordinary
Shares, at a price of £1 per share. On this date the Company also announced that the 12,000,000 A Warrants
then in issue have been surrendered and cancelled. The cumulative unrealised gain of £240,000 relating to A
warrants then in issue has been taken to the profit and loss as a fair value gain, the initial fair value ascribed to
the A warrants has been transferred to the warrant cancellation reserve within equity.
As the new ordinary shares were issued at £1 each, this supported the Directors’ view that the downward
adjustment clause in the Warrant Instrument is highly unlikely to be relevant and therefore that the warrants
meet the fixed for fixed criteria of IAS 32. Accordingly, the Ordinary Shares Warrants were reclassified to equity
on 4 July 2024 at their fair value at 30 June 2024 and therefore will no longer be revalued at each period end
date. The Ordinary Shares Warrants are potentially dilutive and have been included in the EPS calculation.
