Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Warrants

v3.22.1
Warrants
 12 Months Ended
Dec. 31, 2021
Warrants [Abstract]  
Warrants

23. Warrants

 

As at December 31, 2021 there were 41,254,566 warrants outstanding. The warrants entitle the holder to purchase one Class A ordinary share of Cazoo Group Ltd at an exercise price of $11.50 per share. Until warrant holders acquire the Class A Shares upon exercise of such warrants, they have no rights with respect to the Class A Shares.

 

    Public     Private
placement		     Total  
    Number     Number     Number  
At December 31, 2019    
-
      
-
      
-
  
At December 31, 2020    
-
      
-
      
-
  
At December 31, 2021     20,124,748       21,129,818       41,254,566  

 

Public warrants are classified as Level 1 due to the use of an observable market quote in an active market. Private placement warrants are classified as Level 3 due to the use of unobservable inputs. The fair value is determined using a Black-Scholes model for the private placement warrants.

 

    Level 1     Level 2     Level 3     Total  
At December 31, 2021   £’000     £’000     £’000     £’000  
Warrants     13,418      
-
       29,274       42,692  

 

The following information is relevant in the determination of fair value of the private placement warrants at December 31, 2021:

 

    Private placement  
       
Number of warrants     21,129,818  
Exercise price   $ 11.50  
Expected term (years)     7  
Expected volatility     47.1 %
Dividend yield    
Nil
  
Risk free interest rate     1.40 %

 

Reconciliation of fair values

 

The fair value movements are set out as follows:

 

    Public     Private
placement		     Total  
    £’000     £’000     £’000  
At December 31, 2019    
-
      
-
      
-
  
                         
At December 31, 2020    
-
      
-
      
-
  
                         
Warrants issued upon acquisition of Drover    
-
       6,566       6,566  
Fair value movement    
-
       102       102  
Exercise of warrants    
-
       (6,667 )     (6,667 )
Warrants issued in the Transaction     22,475       46,887       69,362  
Fair value movement     (9,057 )     (17,614 )     (26,671 )
At December 31, 2021     13,418       29,274       42,692  

 

Sensitivity analysis

 

For the private placement warrants, a 100 basis point increase in the expected volatility rate would increase the fair value per warrant by £0.05.