Lifeline SPAC I Plc
Business ID 3229349-3
Board of Directors’ Report and Financial Statements
13 August – 31 December 2021
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Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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Content
Board of Directors’ Report ...................................................................................................................... 4
Financial Statements ............................................................................................................................ 13
Income Statement ................................................................................................................................. 13
Balance Sheet ...................................................................................................................................... 14
Statement of Changes in Equity ........................................................................................................... 15
Statement of Cash Flows ...................................................................................................................... 16
Notes to the Financial Statement .......................................................................................................... 17
1. General Information ................................................................................................................. 17
2. Basis of Preparation ................................................................................................................ 18
3. Fair Value Measurement ......................................................................................................... 18
4. Financial Assets and Liabilities ................................................................................................ 19
5. Income Tax .............................................................................................................................. 22
6. Employee Benefits Expenses .................................................................................................. 23
7. Equity ....................................................................................................................................... 24
8. Accounting Estimates and Judgements ................................................................................... 24
9. Other Operating Expenses ...................................................................................................... 25
10. Employee Benefits Expenses .............................................................................................. 25
11. Share Based Payments ....................................................................................................... 26
12. Financial Income and Expense ........................................................................................... 28
13. Earnings per Share ............................................................................................................. 28
14. Receivables ......................................................................................................................... 29
15. Cash and Cash Equivalents ................................................................................................ 30
16. Equity .................................................................................................................................. 30
17. Liabilities .............................................................................................................................. 36
18. Contingent Liabilities ........................................................................................................... 37
19. Related Party Transactions ................................................................................................. 37
20. Board and Management Remuneration .............................................................................. 37
21. Principles of Capital Management ....................................................................................... 39
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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22. Financial Risk Management ................................................................................................ 39
23. Events after the Reporting Period ....................................................................................... 40
Signatures of the Financial Statements ................................................................................................ 41
Auditor’s Note ....................................................................................................................................... 41
Auditor’s Report .................................................................................................................................... 42
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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Board of Directors’ Report
Lifeline SPAC I
Lifeline SPAC I is a Finnish Special Purpose Acquisition Company founded for corporate acquisitions. We raised capital with an offering and listed on the SPAC segment of the regulated market of Nasdaq Helsinki. Our objective is to carry out an acquisition within 24-36 months from the IPO.
We offer investors an opportunity to invest in companies that retail investors or many institutional investors otherwise would not be able to invest in, because these kinds of investments are typically made by later-stage private equity funds. Our aim is to generate profit for shareholders and increase the value of the target company by supporting its growth and development also after the acquisition 1 .
The so-called sponsors of Lifeline SPAC I are partners of the Lifeline Ventures venture capital firms 2 Timo Ahopelto, Kai Bäckman, Petteri Koponen and Juha Lindfors (the ”Sponsors”).
Investment Strategy
The primary strategy of Lifeline SPAC I is to identify and acquire an unlisted target company with high growth potential operating in the technology sector. The core of our strategy is to carry out the acquisition through a share consideration, in which case the funds raised by the company from the IPO will be used to finance the growth of the target company.
Our investment strategy includes detecting such corporate acquisition targets and carrying out such acquisitions that will provide considerable long-term value to shareholders. We are seeking a target company with excellent long-term growth and internationalization potential that we, along with our Sponsors, can support and accelerate.
Our target segments include, for instance, enterprise software, healthtech, climate technology, digital consumer products and services, as well as robotics and hardware. These technology segments represent markets that are extremely large globally, with also a very strong growth outlook.
Generally speaking, the Company’s investment strategy is rooted in the notion that the best possible way of creating value for the shareholders in the long term is to select a target company whose growth and development may be supported through leveraging the company’s extensive expertise and experience as well as its international contact network.
1 The Company’s Sponsors, members of the Board of Directors and management have committed to a lock-up of 24 months in respect of their series A shares after the completion of the Acquisition.
2 LLV Fund Management Ltd., Lifeline Ventures Fund Management Ltd. and the funds managed by them
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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Financial development
Lifeline SPAC I’s operating loss for the financial period 13 August 31 December 2021 was EUR 7.0 million and the loss for the financial period was EUR 7.2 million. Earnings per share (basic and diluted) was EUR -4,27 3 . Typically for a SPAC company in the search phase, the Company had no revenue during the financial period.
The majority of the Company’s operating expenses consisted of personnel expenses, as a result of the treatment of subscriptions for Sponsor and Founder Warrants and series B shares made by the Company’s Sponsors, members of the Board of Directors and management as transactions under IFRS 2 Share-based Payments. The Company recorded a total of approximately EUR 6.8 million expenses in employee benefits from the difference between the subscription prices and the fair values of the warrants and the series B shares. This one-off expense had no cash flow effect.
The Company’s other operating expenses, totalling EUR 0.1 million, consisted mainly of administrative services related to company’s operations .
The Company’s financial expenses, totalling EUR 0.2 million, consisted mainly of costs related to the IPO, which had been allocated as an expense to the financial period.
The Company’s return on equity during the financial period was -366.2% 4 .
Financial Position and Cash Flow
Lifeline SPAC I’s balance sheet total on 31 December was EUR 102.2 million. The EUR 100 million proceeds raised from the issue of series A shares in the IPO have been deposited in an escrow account and are therefore presented in other receivables in the Company’s balance sheet. Series A shares are financial instruments subject to IAS 32 and, due to the redemption clause included in them, the share subscription prices have been recognised in current and non-current financial liabilities and measured at amortised cost using the effective interest rate method.
At the end of the financial period, the Company’s cash and bank receivables were EUR 2.0 million. If the Company needs additional working capital for the search of the target company and its operations, the Company’s Sponsors have undertaken to subscribe for a maximum of 200,000 series A shares of the Company at a subscription price of EUR 10.00 per share.
The Company’s cash flow from operating activities totalled EUR -0.4 million. There was no cash flow from investing activities during the financial period. Cash flow from financing activities totalled EUR 2.4 million, consisting of proceeds raised through the IPO, deposit to the escrow account, proceeds raised
3 Earnings per share = Profit for the financial period / Weighted average number of series B-shares during the period. Redeemable series A-shares as well as Founder and Sponsor Warrants are not taken into account as dilutive potential ordinary shares in the calculation of earnings per share.
4 Return on equity = Profit for the financial period / Shareholders equity (average)
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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through subscriptions for Sponsor and Founder Warrants and series B shares by the Company’s Sponsors, members of the Board of Directors and management, as well as the total cost of the IPO.
At the end of the financial period, the Company’s equity ratio was 3.8% 5 and shareholders’ equity per share was EUR 1.57 6 .
Shares, Shareholders and Share Price Development
Lifeline SPAC I’s share capital was EUR 80,000 in the end of the financial period and the number of shares totalled 12,500,000. Lifeline SPAC I has two series of shares. Series A shares (FI4000512496) are listed on the SPAC segment of the regulated market of Nasdaq Helsinki. Series B shares (FI4000512124) are held by the Company’s Sponsors, members of the Board of Directors and management and are not publicly traded. In the end of the financial period, the number of series A shares totalled 10,000,000 and the number of series B shares 2,500,000.
The average weighted number of series B shares during the financial period was 1,685,616.
All of the Company’s shares carry equal voting and economic rights, except for the redemption condition of series A shares and the exclusion of the right to dividend and distribution of assets and of the right to distributive share in the dissolution of the Company of series B shares. Series B shares can be converted into series A shares if the conditions set out in the Articles of Association, which are described in the Company’s listing prospectus, are met.
In accordance with the Company’s Articles of Association, the Company’s sponsors and the Company’s founder-CEO Tuomo Vähäpassi have, until the acquisition and two years thenceforth, together the right upon written notice to the company to appoint two members of the Board, in aggregate. The General Meeting appoints the other from three to six ordinary members. The Board of Directors elects a Chair from among its members.
Lifeline SPAC I had a total of 2,987 shareholders on 31 December 2021. The twenty largest registered shareholders held a total of 69.7% of all the Company’s shares. Nominee-registered shareholders held a total of 3.3% of all the Company’s shares.
5 Equity ratio = Shareholders’ equity / (Balance sheet total – Advance payments received)
6 Shareholders’ equity per share = Equity / Number of series B-shares at the end of the financial period
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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The Company’s 20 largest shareholders at the end of the financial period were as follows:
Shareholder
A-shares
B-shares
Total
% of shares
1
Oy G.W.Sohlberg Ab
1,000,000
0
1,000,000
8.00
2
Anchor Oy Ab
1,000,000
0
1,000,000
8.00
3
Varma Mutual Pension Insurance Company
900,000
0
900,000
7.20
4
Ahlstrom Invest B.V
700,000
0
700,000
5.60
5
Mandatum Life Insurance Company Limited
515,514
0
515,514
4.12
6
TSOEH Oy
35,000
375,000
410,000
3.28
7
Heikintorppa Oy
400,000
0
400,000
3.20
8
Wipunen Varainhallinta Oy
400,000
0
400,000
3.20
9
TA Ventures Oy
0
394,302
394,302
3.15
10
Långdal Ventures Oy
0
394,302
394,302
3.15
11
Decurion Ventures Oy
0
394,302
394,302
3.15
12
Sofki Oy
0
394,302
394,302
3.15
13
Sijoitusrahasto Visio Allocator
324,338
0
324,338
2.59
14
Säästöpankki Korko Plus-Sijoitusrahasto
310,000
0
310,000
2.48
15
Illusian Oy
50,000
194,118
244,118
1.95
16
Sijoitusrahasto Säästöpankki Pienyhtiöt
230,000
0
230,000
1.84
17
Kaleva Mutual Insurance Company
210,000
0
210,000
1.68
18
Julius Tallberg Corp.
175,000
0
175,000
1.40
19
Op-alternative Portfolio -erikoissijoitusrahasto
170,000
0
170,000
1.36
20
Livränteanstalten Hereditas
150,000
0
150,000
1.20
20 largest shareholders in total
6,569,852
2,146,326
8,716,178
69.73
During the review period, the highest share price of the series A shares of Lifeline SPAC I on Nasdaq Helsinki was EUR 13.50, the lowest EUR 10.52, and the volume-weighted average price EUR 12.04. At the end of the review period, the closing price of the share was EUR 13.00, and the total market value of series A shares was EUR 130 million 7 . A total of 0.8 million series A shares were traded on Nasdaq Helsinki during the review period, corresponding to 7.6% of all series A shares.
In addition to series A and B shares, the Company issued a total of 2,833,333 Sponsor and Founder Warrants during the review period, each of which entitles the holder to subscribe for one series A share under certain conditions. The terms of Sponsor and Founder Warrants are described in the Company’s listing prospectus. If all of the issued Sponsor and Founder Warrants were exercised to subscribe new
7 Market value = Number of shares at the end of the financial period x Share price at the end of the financial period
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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series A shares, the new shares would represent approximately 18.5% of all shares and votes in the Company 8 .
In addition, on 30 September 2021, the Company’s Board of Directors decided to issue a maximum of 3,333,333 Investor Warrants for subscription to the holders of the Company’s series A shares in connection with the completion of the Acquisition. Investor Warrants will be issued to those shareholders who have not voted against the Acquisition at the General Meeting and have not demanded the redemption of their series A shares after the General Meeting deciding on the Acquisition. Each Investor Warrant entitles the holder to subscribe for one of the Company’s series A shares under certain conditions. The terms of the Sponsor, Founder and Investor Warrants are described in the Company’s listing prospectus.
The Company’s Board of Directors, Management Team and Personnel
By unanimous resolution of the Company’s shareholders on 28 September 2021, Timo Ahopelto, Alain- Gabriel Courtines, Caterina Fake, Irena Goldenberg and Petteri Koponen were elected to the Board of Directors of Lifeline SPAC I for a term beginning on 30 September 2021 and ending at the end of the next Annual General Meeting. Timo Ahopelto was elected as a Chairman and Alain-Gabriel Courtines as a Vice-Chairman.
By unanimous resolution of the Company’s shareholders on 28 September 2021, the Board of Directors was granted with the following authorisations:
The Board of Directors was authorised to resolve upon the issuance of new series A shares and/or of own series A shares held by the Company in one or more instalments against or without payment. The amount of the new series A shares to be issued and/or series A shares held by the Company to be conveyed pursuant to the authorisation shall not exceed the total of 10,000,000 series A shares. The Board of Directors is authorised to decide on the conditions of the issuance of shares or conveyance of the shares held by the Company, including deviation from the shareholders’ pre-emptive subscription right. This authorisation was fully utilised in connection with the IPO in October 2021.
The Board of Directors was authorised to decide on the issuance of new series A shares and/or conveyance of the series A shares held by the Company in one or more instalments against or without payment, and the issuance of special rights entitling to shares and/or share option rights by one or several decisions. The number of shares to be issued pursuant to the authorisation and the amount of shares issued or conveyed by virtue of the authorisation to issue special rights entitling to shares shall not exceed 9,000,000 series A shares. The Board of Directors is entitled to decide on the terms of the share issue or conveyance of the shares held by the Company and/or terms of the special rights entitling to shares or share option rights, including
8 Before any potential new shares subscribed with Investor Warrants
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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deviation from the shareholders’ pre-emptive subscription right. The authorisation is valid until 28 September 2026. Based on this authorisation, the Board of Directors resolved that no more than 3,333,333 Investor Warrants are offered for subscription to the holders of the Company’s series A shares in connection with the completion of the Acquisition under certain conditions.
The Board of Directors was authorised to decide on the repurchase of the Company’s own series A shares in one or several tranches. The number of own shares to be repurchased shall not exceed 10,000,000 series A shares. The authorisation is effective for until 16 March 2023.
The Company’s Board of Directors resolved on 30 September 2021 to establish a Sponsor Committee consisting of Sponsors and the Chair of the Sponsor Committee to evaluate acquisition targets and make proposals to the Company’s Board of Directors regarding possible acquisition targets. Ilkka Paananen was elected as a Chairman of the Sponsor Committee and Timo Ahopelto, Kai Bäckman, Petteri Koponen and Juha Lindfors as members.
The Company’s unanimous shareholders resolved on 22 September 2021 to appoint Audit firm KPMG Oy Ab as the auditor of the Company and Authorised Public Accountant Turo Koila as Auditor in charge.
The Company’s Management Team consists of CEO Tuomo Vähäpassi and CFO Mikko Vesterinen. Timo Ahopelto, the Chairman of the Company’s Board of Directors, actively cooperates with the Management Team and the Chairman of the Sponsor Committee Ilkka Paananen.
In addition to the CFO, the Company had no other employees during the review period.
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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The members of the Company’s Board of Directors, the members of the Sponsor Committee as well as the Company’s CEO and CFO held, directly and through their controlled entities, the Company’s shares and warrant at the end of the financial period as follows:
Name
Shareholding in Lifeline SPAC I on 31 December 2021
Timo Ahopelto Chair of the Board of Directors and member of the Sponsor Committee
394,302 series B shares 446,875 Sponsor Warrants
Alain-Gabriel Courtines Vice Chair of the Board of Directors
97,058 series B shares 109,999 Sponsor Warrants
Caterina Fake Member of the Board of Directors
97,058 series B shares 109,999 Sponsor Warrants
Irena Goldenberg Member of the Board of Directors
97,058 series B shares 109,999 Sponsor Warrants
Petteri Koponen Member of the Board of Directors and the Sponsor Committee
394,302 series B shares 446,875 Sponsor Warrants
Ilkka Paananen Chair of the Sponsor Committee
50,000 series A shares 194,118 series B shares 220,003 Sponsor Warrants
Kai Bäckman Member of the Sponsor Committee
394,302 series B shares 446,875 Sponsor Warrants
Juha Lindfors Member of the Sponsor Committee
394,302 series B shares 446,875 Sponsor Warrants
Tuomo Vähäpassi CEO
35,000 series A shares 375,000 series B shares 425,000 Founder Warrants
Mikko Vesterinen CFO
404 series A shares 62,500 series B shares 70,833 Founder Warrants
Total
85,404 series A shares 2,500,000 series B shares 495,833 Founder Warrants 2,337,500 Sponsor Warrants
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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Key Business Risks and Uncertainties
For comments on the geopolitical uncertainty due to Russia’s invasion on Ukraine, imposed sanctions and possible future sanctions and counter sanctions and their possible impacts on Lifeline SPAC I’s operations, please see section ”Events After the Reporting Period”.
The risks and uncertainties related to Lifeline SPAC I’s business are described in the listing prospectus. The key risks and uncertainties are as follows:
The Company has not previously had, nor will it prior to the Acquisition have, any operational activities with the exception of preparation of the Acquisition and negotiations, and it has not generated any revenue, and therefore it may be difficult for investors to assess the Company’s ability to attain its business targets and generate revenue in the future.
The Company may not be able to complete the Acquisition within 36 months, which may result in the discontinuation of trading in the Company’s series A shares and the Company has to be placed into liquidation, in which case there is a significant risk that the investor will not recover all the invested capital.
The Company’s success and its ability to complete a successful Acquisition is contingent upon the Company’s key personnel, the Board of Directors and the Company’s service providers.
The Company faces risks related to the Acquisition and actions aimed at completing the Acquisition may cause considerable costs, without the Acquisition being executed.
The Company may encounter considerable competition in the M&A market, which may hamper the Company’s chances of identifying acquisition objects and completing the Acquisition.
The SPAC model has not established itself in Finland, the terms for SPACs or the securities used in them have not yet been standardised and any negative publicity concerning SPACs could have a negative impact on the Company and the entire SPAC market in Finland.
If the Acquisition is completed on unfavourable terms or the business of the target company develops unfavourably, the shareholders may lose all or part of their investment.
Risks related to the target company cannot currently be evaluated, because the Company has not yet identified a potential Acquisition target.
The materialisation of the tax risks related to the Company may have an adverse effect on its taxation and financial standing.
Future Outlook
Lifeline SPAC I is in the search phase, in which it identifies and analyses possible target companies with the aim to complete the Acquisition of a high growth potential Nordic technology company within
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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24-36 months of the IPO. Taken the nature of the Company’s activities as a SPAC in a search phase, the Company does not issue any specific guidance or other similar future outlook.
Board of Directors’ Proposal for Profit Distribution and Annual General Meeting 2022
Applying Finnish Accounting Standards, Lifeline SPAC I’s distributable funds on 31 December 2021 were EUR 102.1 million . Although the Company prepares its separate financial statements in accordance with IFRS standards, according to the Company’s interpretation and expert statements received by the Company, its distributable funds are primarily determined on the basis of the Finnish Companies Act and thus Finnish Accounting Standards.
The Board of Directors proposes to the General Meeting that no dividend is distributed for the financial period ended 31 December 2021.
Lifeline SPAC I’s Annual General Meeting is intended to be held on Wednesday 18 May 2022. The notice to the General Meeting will be published as a separate release .
Events After the Reporting Period
Lifeline SPAC I received a flagging notification from Mandatum Asset Management Ltd on 27 January 2022, in which the company stated that its direct and indirect holding in all shares and votes in Lifeline SPAC I Plc has exceeded the 5% threshold on 27 January 2022.
On 24 February 2022 Russia started a widespread invasion into Ukraine. As a consequence, the US, the EU and the UK amongst others have imposed sanctions targeting Russia’s ability to access capital and financial markets, sanctioning numerous individuals and banks, as well as trading in general. These sanctions, possible counter sanctions and generally heightened uncertainties may create increased turbulence in the capital markets and impact Lifeline SPAC I’s operations.
On 8 March 2022, the Company’s Board of Directors approved an updated disclosure policy, which became effective immediately. The updated disclosure policy is available on the Company’s website at
https://www.lifeline-spac1.com/corporate-governance/disclosure-policy /
.
Corporate Governance Statement
Lifeline SPAC I’s corporate governance statement will be published as a report separate from the Board of Directors’ report in the week beginning 21 March 2022 and will also be available on the Company’s website at
www.lifeline-spac1.com
after its publication.
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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Financial Statements
Income Statement
EUR
Note
13.8.-31.12.2021
Revenue
-
Employee benefits expenses
10
-6,860,987.75
Share based payments
-6,761,749.89
Wages and salaries
-85,749.45
Social security expenses
-13,488.41
Other operating expenses
9
-129,420.12
Operating profit (-loss)
-6,990,407.87
Financial income and expenses
Interest expense and other financial expenses
12
-205,978.90
Profit (-loss) before tax
-7,196,386.77
Profit (-loss) for the financial period
-7,196,386.77
Profit for the period attributable to the shareholders of the company
-7,196,386.77
Earnings per share
13
Basic earnings per share
-4.27
Diluted earnings per share
-4.27
The Company has not had any items in the comprehensive Profit and Loss
Notes are an integral part of the financial statements.
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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Balance Sheet
EUR
Note
31.12.2021
Assets
Non-current assets
Other receivables
14
100,000,000.00
Total non-current assets
100,000,000.00
Current assets
Prepayments and other receivables
14
125,204.51
Accrued income
14
89,325.04
Cash and cash equivalents
15
2,033,952.52
Total current assets
2,248,482.07
Total assets
102,248,482.07
Equity and liabilities
Equity
Issued capital
16
80,000.00
Reserve for invested unrestricted equity
16
4,284,635.82
Retained earnings / accumulated deficit
16
-434,636.88
Total equity
3,929,998.94
Non-current liabilities
Other financial liabilities (redeemable shares)
17
65,508,163.04
Total non-current liabilities
65,508,163.04
Current liabilities
Other financial liabilities (redeemable shares)
17
32,754,081.52
Accounts payable and other liabilities
17
56,238.57
Total current liabilities
32,810,320.09
Total liabilities
98,318,483.13
Total equity and liabilities
102,248,482.07
Notes are an integral part of the financial statements.
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021
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Statement of Changes in Equity
EUR
Note
Share capital
Reserve for invested unrestricted equity
Retained earnings
Total equity
13.8.2021
0.00
0.00
0.00
0.00
Issues of shares (B-series) and warrants
16
80,000.00
4,284,635.82
0.00
4,364,635.82
Share based payments
11
0.00
0.00
6,761,749.89
6,761,749.89
Profit for the period
16
0.00
0.00
-7,196,386.77
-7,196,386.77
31.12.2021
80,000.00
4,284,635.82
-434,636.88
3,929,998.94
Notes are an integral part of the financial statements.
Board of Directors’ Report and Financial Statements 13 Aug – 31 Dec 2021