REG - Agronomics Limited - Final Results and Notice of AGM
16/12/2021 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211216:nRSP8119Va&default-theme=true
RNS Number : 8119V Agronomics Limited 16 December 2021
Agronomics Limited
("Agronomics" or the "Company")
Annual audited results for the year ending 30 June 2021
Notice of AGM
The Board of Agronomics, a leading listed investor in cellular agriculture, is
pleased to announce its annual results for the year ending 30 June 2021.
Copies of the 2021 Audited Report and Financial Statements are being posted
to shareholders and will shortly be available from the Company's
website www.agronomics.im (http://www.agronomics.im)
The Company will post its Notice of Annual General Meeting ("AGM") to
Shareholders at the same time. The AGM will be held at the Sanderson Suite,
Claremont Hotel, Loch Promenade, Douglas, Isle of Man IM1 2LX at 11:00 a.m. on
Tuesday, 02 February 2022.
The Board has considered how best to deal with the practical arrangements for
the meeting in light of the unique circumstances of the ongoing COVID-19
pandemic. The Board considers it important that all shareholders should have
the opportunity to exercise their voting rights at the AGM. To this end, the
Company invites shareholders to complete the voting proxy form as early as
possible. Shareholders may also submit questions to the Company Secretary
either in writing at the registered office or by email to denham@burnbrae.com
(mailto:denham@burnbrae.com) prior to the meeting and as early as possible.
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014, as it forms part
of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018.
Upon the publication of this announcement, this inside information is now
considered to be in the public domain.
For further information please contact:
Agronomics Beaumont Cenkos Peterhouse Capital TB Cardew
Limited Cornish Limited Securities Plc Limited
The Company Nomad Joint Broker Joint Broker Public Relations
Richard Reed Roland Cornish Giles Balleny Lucy Williams Ed Orlebar
Denham Eke James Biddle Michael Johnson Charles Goodfellow Joe McGregor
+44 (0) 1624 639396 +44 (0) 207 628 3396 +44 (0) 207 397 8900 +44 (0) 207 469 0936 +44 (0) 20 7930 0777
info@agronomics.im +44 (0) 7738 724 630
agronomics@tbcardew.com
Chairman's statement
I am pleased to present the Annual Report for Agronomics Limited ("Agronomics"
or the "Company") for the year ended 30 June 2021.
Since the adoption of the new investing policy in April 2019, Agronomics has
enjoyed rapid expansion, largely due to the establishment of a strong and
diverse portfolio within the field of cellular agriculture. In addition, there
are also merging tailwinds of changing consumer perceptions and the necessity
for identifying sustainable technology solutions to mitigate climate change.
The urgent need to address critical issues such as climate change has never
been more apparent, with 16 of the 17 hottest years occurring in the 21st
century, and notably intense wildfires in Siberia, Turkey and California all
in the past year. We have witnessed deadly heat waves in Canada and horrific
floods in parts of Germany, China and Nepal.
In the year of COP26, the eyes of the world are on global leaders to find
solutions to the climate crisis, yet the role of conventional agriculture has
not taken centre stage. Notably, intensive animal agriculture is now
estimated to account for 18% of global greenhouse gas emissions, with another
12% generated by deforestation in favour of crops grown, in creating the need
to accelerate the development of technologies to reduce this, cellular
agriculture offers one viable methodology. The Agronomics portfolio is now
comprehensive, covering all major protein categories including beef, pork,
chicken, finfish, egg proteins, dairy proteins, crustaceans as well as
materials such as leather and cotton.
2021 continued to see lives upturned by the impact of the ongoing COVID-19
pandemic. It is no coincidence that this virus is zoonotic in nature, with 75%
of all new pathogens originating in animals. Intensively farmed animals not
only provide the perfect breeding ground for new and devastating pandemics,
but they are also the recipients of 80% of the global supply of antibiotics -
driving the continued rise of antibiotic resistance. If we continue on our
path of animal dependence, future pandemics will be inevitable, and should it
be bacterial in origin as opposed to viral, the loss of human life could make
COVID-19 seem minor in comparison.
The time is now to decouple our planet's obsession with the cruel, intensive
farming of animals, and begin building a sustainable food system that will be
capable of meeting the global population's ever-growing demand for protein,
without causing irreversible damage to the natural environment in the process.
Our current investment portfolio shows considerable promise for future growth
given the scale of opportunity to invest in the nascent alternative foods
sector, and the Board will continue to seek new opportunities in line with its
Investing Policy.
Approach to Risk and Corporate Governance
"The Company's general risk appetite is a moderate, balanced one that allows
it to maintain appropriate growth, profitability and scalability, whilst
ensuring full corporate compliance."
The Group's primary risk drivers include: -
Strategic, Reputational, Credit, Operational, Market, Liquidity, Foreign
Exchange, Capital and Funding, Compliance and Conduct.
Our risk appetite has been classified under an "impact" matrix defined as
Zero, Low, Medium and High. Appropriate steps are underway to ensure the
prudential control monitoring of risks to the Company and a suitable committee
and reporting structure, under the Chairmanship of the Chairman, will be
formed to undertake this essential requirement. Further details of the
Corporate Governance Statement, including the role and responsibilities of the
Chairman and an explanation as to how the QCA Code has been applied, will be
found on pages 7 to 10 of this report.
At the General Meeting of the Company on 16 April 2019, shareholders adopted
the following new Investing Policy:
''The Company will invest in opportunities within the Life Sciences sector,
concentrating on, but not being limited to, environmentally friendly
alternatives to the traditional production of meat and plant-based nutrition
sources ("Clean Food"). The Company will focus on investments that provide
scalable and commercially viable opportunities."
Further details of the new Investing Policy can be on the Company's website at
(http://www.agronomics.im/) www.agronomics.im (http://www.agronomics.im/) .
In line with the new Investing Policy, a number of significant investments
were made, which are discussed below.
Investment Review
During the year, the Company completed a number of acquisitions and a number
of investments had positive revaluations, as detailed below.
On 1 September 2020, the Company participated in the Series A financing of
Solar Foods Oy ("Solar Foods"), investing €3.0 million for 1,127 Series A
Preferred Shares. Solar Foods was founded in 2018 by a team of scientists at
VTT Research Centre, Finland, including CEO Dr Pasi Vainikka and CTO Dr
Juha-Pekka Pitkänen. Solar Foods develops a sustainable protein called
Solein® a microorganism that grows utilising airborne carbon dioxide and
hydrogen via the electrolysis of water. The protein is natural and has already
been shown to have a high level of versatility in existing foods including
meat-free burgers, yoghurts and granola bars. This overall offers a promising
solution to disconnect global food production from animal-based agriculture.
On 25 September 2020, Agronomics committed a total of US$ 4.1 million
(approximately £3.2 million) to the Series B financing of Mosa Meat B.V.'s
("Mosa Meat"), with the payments being made over two equal tranches. Tranche 1
was paid fully during September 2020, with tranche 2 being due before June
2022 at the earliest. The total number of shares to be issued is dependent on
the timing of Mosa Meat achieving certain operational milestones in relation
to the production of pre-defined quantities of cultivated meat (produced in a
bioreactor) which is demonstrated to be nutritionally comparable to
conventional meat. The amount due under tranche 2 has been recognised as a
commitment in the balance sheet.
On 29 September 2020, Shiok Meats Pte. Ltd. ("Shiok Meats") completed a US$
12.6 million Series A financing led by Aqua-Spark Cooperatieve UA
("Aqua-Spark"), based in the Netherlands. The initial convertible loan note
investment, plus accrued interest, converted into Series A shares, at a 28%
uplift to book value and equates to an internal rate of return of 31.8%.
On 15 October 2020, LIVEKINDLY Collective ("LIVEKINDLY") completed a US$ 135
million financing through convertible securities. On 30 March 2021, the
LIVEKINDLY completed a US$ 335 million Series B raise, inclusive of the US$
135 million convertible loan note raised and announced in October 2020.
Following this, the Company recognised an unrealised gain of US$ 2.55 million
and an IRR of 73%. The Series B round was led by The Rise Fund and joined by
Rabo Corporate Investments, S2G Ventures as well as other existing and
mission-aligned investors.
On 19 November 2020, the Company purchased a US$ 5 million Convertible
Promissory Note ("CPN") from BlueNalu Inc ("BlueNalu"), an existing portfolio
company focused on cell-based seafood products. Agronomics currently holds
192,005 shares of BlueNalu, comprised of 43,357 Seed Preferred Shares and
148,648 Series A Preferred Shares, with a book value, excluding the CPN
investment, of £2,602,456. Assuming the CPN is subscribed in full and a
Qualified Financing occurs at a price equal to the agreed valuation cap of the
CPN, Agronomics will have an approximate equity interest of 5.85% of issued
shares following conversion and would value Agronomics' position at
approximately £13.4 million. BlueNalu closed the debt financing in January
2021, raising US$ 60 million.
On 9 December 2020, Agronomics completed a subscription of US$ 50,000 in the
form of a Simple Agreement for Future Equity ("SAFE") in CellX Limited
("CellX"). CellX is a China-based cellular agriculture company, focussing on
cell-based pork and seafood products initially. CellX was founded in 2020,
with the intention of showcasing its first prototypes in 2021. On 28 May 2021,
CellX completed its Seed Funding Round, resulting in the SAFE investment held
by the Company converting into 230,681 preferred shares, leading to a 500%
uplift in to the US$50,000 investment.
On 16 December 2020, Agronomics completed a US$ 2.0 million investment in the
form of a Simple Agreement for Future Equity ("SAFE") in SuperMeat the Essence
of Meat ("SuperMeat"). SuperMeat's initial focus is on cultivated chicken
products, and unveiled its sustainable restaurant experience, The Chicken, in
Tel Aviv Israel, earlier this year, where individuals are invited to taste
SuperMeat's cultivated chicken. The SAFE will convert at a price per share
reflecting the lower of the valuation cap or at a 25 percent discount to the
share price of SuperMeat's next equity round. We expect that upon conversion
of the SAFE at the completion of SuperMeat's next equity fundraise and,
assuming a pre-money valuation of US$ 150 million, Agronomics will hold
approximately 2.22% of SuperMeat's fully diluted share capital.
On 18 February 2021, Agronomics completed a further €2 million investment in
Meatable B.V. ("Meatable") for 1,197 Series A preferred shares, bringing the
total amount invested in Meatable to €5 million. The Company now holds 4,752
preferred shares, representing a fully diluted equity interest of 5.7%.
Following the investment, Agronomics has recognised an unrealised gain of
€2.95 million, and an IRR of 95%. This Series A round closed in March 2021,
with Meatable raising US$ 47 million from leading life science and food
investors including Section 32, DSM Venturing, Dr. Rick Klausner and Dr.
Jeffrey Leiden, as well as participation from existing investors. On 13 May
2021, the Company completed a secondary purchase of 117 shares in Meatable,
increasing its stake to 5.84% on a fully diluted basis.
On 25 February 2021, the Company announced a US$ 0.5 million convertible loan
note ("CLN") investment in VitroLabs Inc, an existing portfolio company
focused on producing genuine leather hides from cultivating cells, without the
need to slaughter animals.
On 8 April 2021, Solar Foods Oy received a €10 million capital loan from the
Finnish Climate Fund, in order to build a new demonstration facility in
Finland.
On 21 April 2021, Legendairy Foods GmbH completed its rebranding to Formo as a
consumer-facing brand, at the forefront of the future of cultivated dairy.
Formo is the leading European player in the precision fermentation space,
focusing on animal-free dairy products.
On 24 June 2021, Agronomics sold its entire holding in Insilico Medicine, Inc,
for total proceeds of US$ 0.670 million, representing an IRR 54%. Insilico
Medicine was a legacy portfolio holding, acquired between June 2017 and July
2018.
Financial Review
The Company recorded a net operating profit of £9,743,418 for the year (2020:
£551,173), prior to accounting for the Shellbay fee due. Taking into account
a fee of £7,394,360 (2020: Nil) due to Shellbay and an irrecoverable VAT
charge on Shellbay fees of £1,478,872 (2020: Nil), the Company incurred a net
profit after taxation of £1,019,841 (2020: £611,731). Our investment income,
including net unrealised gains, reflected a gain of £10,669,991 (2020:
£656,377). Following the amendments to the Shellbay Investments Limited
("Shellbay") fee agreement, a fee of £7,394,360 was recognised at year end.
The calculation of the fee payable to Shellbay based on this agreement, is
detailed in Note 2 to these accounts and is calculated as 15% of the increase
in the Company's audited Net Assets pre-fee deduction for the period 1 July
2020 to 30 June 2021. For the year to 30 June 2021, this figure is
£8,215,956. Shellbay has elected to take its full fee in shares and, as a
gesture of goodwill, has also agreed to contribute £821,595 towards the
irrecoverable VAT potentially due on this fee.
The fair value of our invested assets increased substantially to £38,770,676
(2020: £16,740,656), and cash and equivalents stood at £62,436,497 (2020:
£2,789,097). Our total assets stood at £101,652,840 (2020: £19,547,961).
Total liabilities stood at £1,623,024 (2020: £131,083). As a result, the net
asset value per share at 30 June 2021 was 12.51 pence (2020: 5.85 pence).
Financing activity
During the year, the Company completed two successful and over-subscribed
funding rounds, raising total gross proceeds of £75.6 million, issuing
467,989,722 new ordinary shares, and receiving net proceeds of £72.2 million.
Funds totalling £11.9 million have been deployed in acquiring investments in
line with the Company's investing policy.
Strategy and Outlook
Our current investment portfolio shows considerable promise for future growth
given the scale of opportunity to invest in the nascent alternative foods
sector, and the Board will continue to seek new opportunities in line with its
Investing Policy.
Richard Reed
Non-Executive Chairman
15 December 2021
Directors' report
The Directors of Agronomics Limited (the "Company") take pleasure in
presenting the Directors' report and financial statements for the year ended
30 June 2021.
Principal activity
Agronomics Limited is a Company domiciled in the Isle of Man. The Company's
strategy is to create value for Shareholders through investing in companies
that operate in the nascent industry of modern foods, which are
environmentally friendly alternatives to the traditional production of meat
and plant-based sources.
Further details of the investing policy can be found on the Company's website
at www.agronomics.im (http://www.agronomics.im) .
Results and transfer to reserves
The results and transfers to reserves for the year are set out on pages 20 and
22.
The Company recorded a net operating profit of £9,743,418 for the year (2020:
£551,173), prior to accounting for any consulting fee due. Taking into
account a consulting fee of £7,394,360 (2020: Nil) and an irrecoverable VAT
charge on the consulting fee of £1,478,872 (2020: Nil), the Company achieved
a net profit after taxation of £1,019,841 (2020: £611,731).
Dividend
The Directors do not propose the payment of a dividend (2020: £nil).
Policy and practice on payment of creditors
It is the policy of the Company to agree appropriate terms and conditions for
its transactions with suppliers by means of standard written terms to
individually negotiated contracts. The Company seeks to ensure that payments
are always made in accordance with these terms and conditions.
Financial risks
Details relating to the financial risk management are set out in note 8 to the
financial statements.
Directors
The Directors who served during the year and to date were:
Jim Mellon Executive
Denham Eke Executive Finance Director
Anderson Whamond Non-Executive Resigned 31 July 2020
Richard Reed Independent Non-Executive Chairman
David Giampaolo Independent Non-Executive
Directors' interests
As at 30 June 2021, the interests of the Directors and their families (as such
term is defined in the AIM Rules for Companies) in the share capital of the
Company are as follows:
Ordinary shares
30 June 2021 30 June 2020
Jim Mellon(1) 113,426,242 65,092,909
Denham Eke(2) - -
Anderson Whamond - -
Richard Reed 3,818,181 3,818,181
David Giampaolo 2,000,000 2,000,000
(1) Galloway Limited, a company where Jim Mellon is considered to be the
ultimate beneficial owner, holds 113,426,242 Ordinary shares.
(2 )Denham Eke is Managing Director of Galloway Limited.
Significant shareholdings
Except for the interests disclosed in this note, the Directors are not aware
of any holding of ordinary shares as at 30 June 2021 representing 3% or more
of the issued share capital of the Company:
Number of Percentage of total
ordinary shares issued capital
Jim Mellon (1) 113,426,242 14.19%
HSBC Global Custody Nominee (UK) 74,286,653 9.30%
Hargreaves Landsdown (Nominees) 60,128,212 7.53%
Aurora Nominees 39,249,980 4.91%
Interactive Investor Services 32,398,681 4.06%
Nortrust Nominees Limited 30,538,794 3.82%
Pershing Nominees Limited 27,709,076 3.47%
Chase Nominees Limited 25,830,800 3.23%
Note:
(1) Jim Mellon's shareholding consists of 113,426,242 shares held by
Galloway Limited. Galloway Limited is a company where Jim Mellon is considered
to be the ultimate beneficial owner. Denham Eke is a director of Galloway
Limited.
Auditors
KPMG Audit LLC, being eligible, have expressed their willingness to continue
in office.
On behalf of the Board
Denham Eke
Director
15 December 2021
18 Athol Street
Douglas
Isle of Man
IM1 1JA
British Isles
Corporate Governance Statement
Corporate Governance Report
The Board of Agronomics (the "Board") is committed to best practice in
corporate governance throughout the Company (the "Company"). The Directors
have agreed to comply with the provisions of the Quoted Companies Alliance
("QCA") Corporate Governance Code for Small and Mid-Size Quoted Companies
(2018) to the extent which is appropriate to its nature and scale of
operations. This report illustrates how the Company complies with those
principles.
QCA Principle 1: Establish a strategy and business model which promotes
long-term value for shareholders
The strategy and business operations of the Company are set out in the
Chairman's Statement on pages 2 to 4.
The Company's strategy and business model and amendments thereto are developed
by the Chairman and his senior management team and approved by the Board. The
management team is responsible for implementing the strategy and managing the
business at an operational level.
The Company's overall strategic objective is to develop a profitable and
sustainable platform for investing in the nascent industry of modern foods
which are environmentally friendly alternatives to the traditional production
of meat and plant-based sources of nutrition.
The Company operates in an inherently high-risk sector and this is reflected
in the principal risks and uncertainties.
In executing the Company's strategy and operational plans, management will
typically confront a range of day-to-day challenges associated with these key
risks and uncertainties and will seek to deploy the identified mitigation
steps to manage these risks as they manifest themselves.
QCA Principle 2: Seek to understand and meet shareholder needs and
expectations
The Company via the Chairman seeks to maintain a regular dialogue with both
existing and potential new shareholders in order to communicate the Company's
strategy and progress and to understand the needs and expectations of
shareholders.
Beyond the Annual General Meeting, the Chairman and, where appropriate, other
members of the senior management team or Board will meet with investors and
analysts to provide them with updates on the Company's business and to obtain
feedback regarding the market's expectations of the Company.
The Company's investor relations activities encompass dialogue with both
institutional and private investors. From time to time, the Company attends
private investor events, providing an opportunity for those investors to meet
with representatives from the Company in a more informal setting.
QCA Principle 3: Take into account wider stakeholder and social
responsibilities and their implications for long-term success
The Company is aware of its corporate social responsibilities and the need to
maintain effective working relationships across a range of stakeholders. These
include the Company's advisors, suppliers and investee companies. The
Company's operations and working methodologies take account of the need to
balance the needs of all of these stakeholders while maintaining focus on the
Board's primary responsibility to promote the success of the Company for the
benefit of its members as a whole. The Company endeavours to take account of
feedback received from stakeholders, and where appropriate, ensures any
amendments are consistent with the Company's longer-term strategy.
The Company takes due account of any impact that its activities may have on
the environment and seeks to minimise this impact wherever possible.
QCA Principle 4: Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The Board is responsible for the systems of risk management and internal
control and for reviewing their effectiveness. Internal controls are designed
to manage rather than eliminate risk and provide reasonable but not absolute
assurance against material misstatement or loss. Through the activities of the
Company Audit, Risk and Compliance Committee, the effectiveness of these
internal controls is reviewed annually.
A comprehensive budgeting process is completed once a year and is reviewed and
approved by the Board. The Company's results, compared with the budget, are
reported to the Board on a monthly basis.
The Company maintains appropriate insurance cover in respect of actions taken
against the Directors because of their roles, as well as against material loss
or claims against the Company. The insured values and type of cover are
comprehensively reviewed on a periodic basis.
The senior management team meets at least monthly to consider new risks and
opportunities presented to the Company, making recommendations to the Board
and/or Company Audit, Risk and Compliance Committee as appropriate.
QCA Principle 5: Maintain the board as a well-functioning, balanced team led
by the chair
The Company's Board currently comprises three Non-executive Directors and one
Executive Director.
All of the Directors are subject to election by shareholders at the first
Annual General Meeting after their appointment to the Board and will continue
to seek re-election at least once every three years.
The Board is responsible to the shareholders for the proper management of the
Company and intends to meet at least four times a year to set the overall
direction and strategy of the Company, to review operational and financial
performance and to advise on management appointments. All key operational
decisions are subject to Board approval.
Richard Reed, David Giampaolo and Anderson Whamond (resigned on 31 July 2020),
all Non-executive Directors, are considered to be independent. The QCA Code
suggests that a board should have at least two independent Non-executive
Directors. The Board considers that the current composition and structure of
the Board of Directors is appropriate to maintain effective oversight of the
Company's activities for the time being.
However, following the resignation of Anderson Whamond, the Board are
reviewing a number of potential replacements and hope to make a further
announcement in due course.
Non-executive Directors receive their fees in the form of a basic cash
emolument. The Executive Director does not receive a salary. The current
remuneration structure for the Board's Executive and Non-executive Directors
is deemed to be proportionate.
QCA Principle 6: Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities
The Board considers that the Executive Director and Non-executive Directors
are of sufficient competence and calibre to add strength and objectivity to
its activities and bring considerable experience in the operational and
financial development of the Company.
The Directors' biographies are detailed on the Company's website
www.agronomics.im (http://www.agronomics.im) .
The Board regularly reviews the composition of the Board to ensure that it has
the necessary breadth and depth of skills to support the ongoing development
of the Company.
The Chairman, in conjunction with the Finance Director, ensures that the
Directors' knowledge is kept up to date on key issues and developments
pertaining to the Company, its operational environment and to the Directors'
responsibilities as members of the Board. During the course of the year,
Directors received updates from the Finance Director and various external
advisers on a number of corporate governance matters.
Directors' service contracts or appointment letters make provision for a
Director to seek professional advice in furtherance of his or her duties and
responsibilities, normally via the Company Secretary.
QCA Principle 7: Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
Internal evaluation of the Board, the Committees and individual Directors is
undertaken on an annual basis in the form of peer appraisal and discussions to
determine their effectiveness and performance as well as the Directors'
continued independence.
The results and recommendations that come out of the appraisals for the
Directors shall identify the key corporate and financial targets that are
relevant to each Director and their personal targets in terms of career
development and training. Progress against previous targets is also assessed
where relevant.
QCA Principle 8: Promote a corporate culture that is based on ethical values
and behaviours
The Board seeks to maintain the highest standards of integrity and probity in
the conduct of the Company's operations. With the Company being a vehicle for
holding investment, it has no employees and limited capacity to effect changes
in culture in companies it is affiliated with. However, the Board will strive
to ensure that the Company's in which it has an interest in, act in an ethical
manner.
The Board ensures that all portfolio companies have policies in place to
comply with applicable governance laws and regulations, such as anti-bribery
and modern-day slavery.
The Board has a zero-tolerance approach to breaches of these laws and
regulations. The Board promotes ethical behaviour throughout the portfolio,
through directions to the Company's investment advisors in relation to the
ethical management of the portfolio.
QCA Principle 9: Maintain governance structures and processes that are fit for
purpose and support good decision- making by the board
The Role of the Board
The Board is collectively responsible for the long-term success of the
organisation. Its principal function is to determine the strategy and policies
of the Company within an effective control framework which enables risk to be
assessed and managed.
The Board ensures that the necessary financial and human resources are in
place for the Company to meet its objectives and that business and management
performance is reviewed. Furthermore, the Board ensures that the Company
operates within its constitution, relevant legislation and regulation and that
proper accounting records and effective systems of business control are
established, maintained, documented and audited.
There are at least four formal Board meetings each year. All Board members
have the benefit, at the Company's expense, of liability insurance in respect
of their responsibilities as Directors and have access to independent legal or
other professional advice if required. The Board has a formal schedule of
matters which are reserved for its consideration and it has established three
committees to consider specific issues in greater detail, being the Company
Audit, Risk and Compliance, Remuneration and Nomination Committees. The Terms
of Reference for each of these Committees are published on the Company's
website.
The Chairman
The Chairman is responsible for leading the Board, ensuring its effectiveness
in all aspects of its role, promoting a culture of openness of debate and
communicating with the Company's members on behalf of the Board. The Chairman
sets the direction of the Board and promotes a culture of openness and debate
by facilitating the effective contribution of Non-executive Directors and
ensuring constructive relations between Executive and Non-executive Directors.
The Chairman also ensures that Directors receive accurate, timely and clear
information. In doing so, this fosters a positive corporate governance culture
throughout the Company.
The Chief Executive Officer
At present, the Company does not have a Chief Executive Officer. Instead, the
responsibility for managing the Company's business and operations within the
parameters set by the Board is held by the Finance Director.
Non-executive Directors
The Non-executive Directors are responsible for bringing independent judgement
to the discussions held by the Board, using their breadth of experience and
understanding of the business. Their key responsibilities are to
constructively challenge and contribute to strategic proposals, and to monitor
performance, resources, and standards of conduct, compliance and control,
whilst providing support to executive management in developing the Company.
The Board has established a Company Audit, Risk and Compliance Committee
("ARCC"), a Remuneration Committee and a Nominations Committee with formally
delegated duties and responsibilities. Following the resignation of Anderson
Whamond on 31 July 2020, Richard Reed chairs the ARCC, David Giampaolo chairs
the Remuneration Committee and the Nominations Committee is comprised of the
whole board.
Company Audit, Risk and Compliance Committee
The Company Audit, Risk and Compliance Committee (the "ARCC") meets at least
two times each year is chaired by Richard Reed. The external auditors attend
by invitation. Its role is to be responsible for reviewing the integrity of
the financial statements and the balance of information disclosed in the
accompanying Directors' Report, to review the effectiveness of internal
controls and risk management systems and recommend to the Board (for approval
by the members) the appointment or re-appointment of the external auditor. The
ARCC reviews and monitors the external auditor's objectivity, competence,
effectiveness and independence, ensuring that if it or its associates are
invited to undertake non-audit work it will not compromise auditor objectivity
and independence.
Further information can be found within the Company Audit, Risk and Compliance
Report contained within this Annual Report.
Remuneration Committee
The Remuneration Committee intends to meet at least once a year and comprises
of two Non-executive Directors. It is chaired by David Giampaolo and is
responsible for determining the remuneration of the Executive Director, the
Company Secretary and other members of the management. Committee members do
not take part in discussions concerning their own remuneration.
Further information can be found within the Remuneration Report contained
within this Annual Report.
Nomination Committee
The Nomination Committee is comprised of the whole Board. It is chaired by the
Chairman of the Board and is responsible for making recommendations to the
Board on matters relating to the composition of the Board, including Executive
and Non-executive Director succession planning, the appointment of new
Directors and the election and re-election of Directors. The Nomination
Committee only meets as matters arise.
Appointments to the Board
The principal purpose of the Nomination Committee is to undertake the
assessment of the balance of skills, experience, independence and knowledge on
the Board against the requirements of the business, with a view to determining
whether any shortages exist. Having completed the assessment, the Committee
makes recommendations to the Board accordingly. Appointments to the Board are
made on merit, with due regard to the benefits of diversity. Within this
context, the paramount objective is the selection of the best candidate,
irrespective of background, and it is the view of the Board that establishing
quotas or targets for the diversity of the Board is not appropriate.
All Director appointments must be approved by the Company's Nominated Adviser,
as required under the AIM Rules, before they are appointed to the Board.
Prior to appointment, Non-executive Directors are required to demonstrate that
they are able to allocate sufficient time to undertake their duties.
Re-election
The Company's Rules require that all Directors are submitted for election at
the AGM following their first appointment to the Board. Thereafter all
directors will submit themselves for re-election at least once every three
years, irrespective of performance.
Board and committee attendance
The number of formal scheduled Board and committee meetings held and attended
by Directors during the year was as follows: -
Board ARCC Nomination Remuneration
Richard Reed 15/16 2/2 - -
David Giampaolo 15/16 2/2 - -
Jim Mellon 15/16 - - -
Denham Eke 16/16 2/2 - -
QCA Principle 10: Communicate how the company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders
The Company places a high priority on regular communications with its various
stakeholders and aims to ensure that all communications concerning the
Company's activities are clear, fair and accurate. The Company's website is
regularly updated, and users can register to be alerted when announcements or
details of presentations and events are posted onto the website.
Notices of General Meetings of the Company can be found here:
https://agronomics.im/latest-news/ (https://agronomics.im/latest-news/) .
The results of voting on all resolutions in general meetings are posted to the
Company's website, including any actions to be taken as a result of
resolutions for which votes against have been received from at least 20 per
cent of independent shareholders.
Approval
This report was approved by the Board of Directors on 15 December 2021 and
signed on its behalf by:
Denham Eke
Finance Director
Audit, Risk and Compliance Committee Report
The Directors ensure the Company complies with the provisions of the Quoted
Companies Alliance ("QCA") Corporate Governance Code for Small and Mid-Size
Quoted Companies (2018) to the extent which is appropriate to its nature and
scale of operations.
This report illustrates how the Company complies with those principles in
relation to its Audit, Risk and Compliance Committee (the "ARCC").
Membership
Following the resignation of Anderson Whamond on 31 July 2020, the Committee
comprises of one Non-Executive Director, being Richard Reed and one Executive
Director, being Denham Eke. The composition of the Committee has been reviewed
during the year and the Board is satisfied that the Committee members have the
relevant financial experience and the expertise to resource and fulfil its
responsibilities effectively, including those relating to risk and controls.
Meetings
The Committee meets two times a year, including the review of the interim and
full year results. Other Directors and representatives from the external
auditors attend by invitation.
Duties
The Committee carries out the duties below for the Company, as appropriate:
§ Monitors the integrity of the financial statements of the Company,
including annual and half-yearly reports, interim management statements, and
any other formal announcement relating to financial performance, reviewing
significant financial reporting issues and judgements which they contain.
§ Reviews and challenges the consistency of the information presented
within the financial statements, compliance with stock exchange or other legal
requirements, accounting policies and the methods used to account for
significant or unusual transactions.
§ Keeps under review the effectiveness of the Company's internal controls
and risk management systems.
§ KPMG Audit LLC was appointed as auditor in 2011 and the ARCC will oversee
the relationship with them including meetings when considered appropriate to
discuss their remit and review the findings and any issues with the annual
audit. It will also review their terms of appointment, and plans to meet them
once a year independent of management and will consider and make
recommendations to the Board, to be put to the Company for approval at the
Annual General Meeting, in relation to the appointment, re-appointment and
removal of the Company's external auditor. There are no contractual
restrictions in place in respect of the auditor choice.
§ The Committee is governed by a Terms of Reference and a copy of this is
available on the Company's website.
2021 Annual Report
During the year, ARCC confirms that it has received sufficient, reliable and
timely information from management and the external auditors to enable it to
fulfil its responsibilities.
The Committee has satisfied itself that there are no relationships between the
auditor and the Company which could adversely affect the auditor's
independence and objectivity.
All internal control and risk issues that have been brought to the attention
of ARCC by the external auditors have been considered and the Committee
confirms that it is satisfied that management has addressed the issues or has
plans to do so.
The Company has a number of policies and procedures in place as part of its
internal controls and these are subject to continuous review and as a minimum
are reviewed by ARCC on an annual basis.
§ ARCC has reviewed and discussed together with management and the external
auditor the Company's financial statements for the year ended 30 June 2021 and
reports from the external auditor on the planning for and outcome of their
reviews and audit. The key accounting issues and judgements considered
relating to the Company's financial statements and disclosures were as
follows:
o Valuation of unquoted investments £38,114,174;
o Going concern - ARCC reviewed the going concern position of the Company,
taking into account the 12-month cash flow forecasts. ARCC is satisfied that
preparing the financial statements on a going concern basis is appropriate.
Disclosures are included in note 1.
Richard Reed
Chairman ARCC
15 December 2021
Report of the Remuneration Committee
As an Isle of Man registered company there is no requirement to produce a
Directors' Remuneration Report. However, the Board follows best practice and
therefore has prepared such a report.
The Directors have agreed to comply with the provisions of the Quoted
Companies Alliance ("QCA") Corporate Governance Code for Small and Mid-Size
Quoted Companies (2018) to the extent which is appropriate to its nature and
scale of operations.
This report illustrates how the Company complies with those principles in
relation to directors' remuneration.
The Level and Components of Non-Executive Directors Remuneration
The Remuneration Policy reflects the Company's business strategy and
objectives as well as sustained and long-term value creation for shareholders.
In addition, the policy aims to be fair and provide equality of opportunity,
ensuring that:
§ the Company is able to attract, develop and retain high-performing and
motivated employees in the competitive local and wider markets;
§ employees are offered a competitive remuneration package to encourage
enhanced performance and are, in a fair and responsible manner, rewarded for
their individual contribution to the success of the Company;
§ it reflects the Company's culture and values; and
§ there is full transparency of the Remuneration Policy.
In line with the Board's approach, which reflects that adopted within other
comparable organisations, the Remuneration Policy provides for the reward of
the Non-Executive Directors through fees and other benefits.
Non-Executive Directors Emoluments
The remuneration for the Non-Executive Directors reflects their
responsibilities. It comprises fees, and may include eligibility to
participate in an annual bonus scheme, private healthcare and share option
incentives, when any of these are considered appropriate.
Annual bonus scheme payments are not pensionable and are not contracted.
The Executive Finance Director does not currently receive any fees for his
services. However, based on the Company's performance and cash flow position,
the Executive Finance Director may be eligible to participate in an annual
bonus scheme. Bonus payments are not pensionable.
The Committee believes that share ownership by executives strengthens the link
between their personal interests and those of shareholders. Options will be
granted to executives periodically at the discretion of the Remuneration
Committee. The grant of share options is not subject to fixed performance
criteria. This is deemed to be appropriate as it allows the Committee to
consider the performance of the executives and the contribution of the
individual executives and, as with annual bonus payments, illustrates the
relative importance placed on performance-related remuneration.
Except when required by statute, the Company does not intend to contribute to
the personal pension plans of Directors in the forthcoming year.
Executive Directors' Contractual Terms
The service contract of the Executive Director provides for a notice period of
six months.
Non-executive Directors' Remuneration
Non-executive Directors do not receive any benefits other than their fees and
travelling expenses for which they are reimbursed. The level of fees payable
to Non-executive Directors is assessed using benchmarks from a group of
comparable biopharma organisations.
The Procedure for Determining Remuneration
The Remuneration Committee, comprising two Non-executive Directors, is
responsible for setting the remuneration of the Executive Director and is
chaired by Richard Reed. Committee members do not take part in discussions
concerning their own remuneration. The basic Non-executive Director fee is set
by the Chairman. The Chairman of the Committee reports at the Board meeting
following a Committee meeting.
It is the view of the Committee that Directors' remuneration awarded across
the Company for the year has been in accordance with the Company's stated
Remuneration Policy and, on behalf of the Committee I recommend that you
endorse this report. An analysis of Directors' emoluments is as follows:
2021 2020
£ £
Emoluments - salaries, bonuses and taxable benefits - -
- fees 24,167 30,000
24,167 30,000
Directors' Emoluments
Bonus Termination 2021 2020
Fees £ payments Benefits Total Total
£ £ £ £ £
Executive - salary
Denham Eke - - - - - -
Non-executive - fees
Jim Mellon* - - - - - -
Anderson Whamond** 833 - - - 833 10,000
Richard Reed 11,667 - - - 11,667 10,000
David Giampaolo 11,667 - - - 11,667 10,000
Aggregate emoluments 24,167 - - - 24,167 30,000
* Any emoluments are subject to an agreement with Shellbay Investments Limited
("Shellbay"), whereby Shellbay shall be entitled to an annual fee equal to the
value of 15% of any increase between the Company's net asset value ("NAV") on
a per issued share basis at the start of a reporting period and 30 June each
year during the term of the New Shellbay Agreement, with the first reporting
period being from 1 July 2020 to 30 June 2021, and annually thereafter (please
see Note 2 to the Accounts).
** Resigned 31 July 2020
Approval
The report was approved by the Board of directors and signed on behalf of the
Board.
David Giampaolo
Chairman of Remuneration Committee
15 December 2021
Statement of Directors' Responsibilities in Respect of the Directors' Report
and the Financial Statements
The Directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law they have elected to prepare the financial
statements in accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs as adopted by the EU), as applicable to
an Isle of Man company and applicable law.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of its profit or loss for that period. In preparing
the financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable, relevant and
reliable;
· state whether they have been prepared in accordance with IFRSs as
adopted by the EU;
· assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that its financial statements comply with the Isle of
Man Companies Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the Isle of Man governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Our opinion is unmodified
We have audited the financial statements of Agronomics Limited (the
"Company"), which comprise the statement of financial position as at 30 June
2021, the statements of comprehensive income, changes in equity and cash
flows for the year then ended, and notes, comprising significant accounting
policies and other explanatory information.
In our opinion, the accompanying financial statements:
· give a true and fair view of the state of the Company's affairs as
at 30 June 2021 and of the Company's profit for the year then ended;
· have been properly prepared in accordance with International
Financial Reporting Standards as adopted by the EU; and
· have been properly prepared in accordance with the requirements of
the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities are described
below. We have fulfilled our ethical responsibilities under, and are
independent of the Company in accordance with, UK ethical requirements
including FRC Ethical Standards, as applied to listed entities. We believe
that the audit evidence we have obtained is a sufficient and appropriate basis
for our opinion.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were
of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these
matters. In arriving at our audit opinion above, the key audit matter was
as follows (unchanged from 2020):
The risk Our response
Valuation of unquoted investments (including investment in subsidiary and Subjective valuation Our audit procedures included:
other unquoted investments held)
The Company's investment in subsidiary is stated at fair value of £38,054,470 Internal Controls: Documenting and assessing the design and implementation of
(2021: £38,114,174, 2020: £16,237,975) (2020: Nil). The underlying portfolio of investments held by the subsidiary the investment valuation processes and controls.
comprises the entirety of its net assets. The Company also holds unquoted
Refer to note 1(b) (use of estimates and judgement), 1(d) (accounting policy investments directly amounting to £59,704 (2020: £16,237,975). Test of Detail: Auditing the accounts of the subsidiary as part of the audit
for financial instruments) and note 8 (fair value of financial instruments)
of the Company, including assessing the accounting policies adopted by the
and the Audit, Risk and Compliance Report. 37% (2020: 83.1%) of the Company's total assets (by value) are held in subsidiary to ensure these are consistent with the Company's accounting
investments where no quoted market price is available. Unquoted investments policies. In particular, ensuring that the portfolio of investments held by
held directly by the Company, and indirectly through the underlying portfolio the subsidiary is stated at fair value and ensuring net asset value of the
in its subsidiary, are measured at fair value, which is established in subsidiary represents fair value.
accordance with the International Private Equity and Venture Capital Valuation
Guidelines by using measurements of value such as comparison with prices of Use of KPMG Specialists: Involving valuation specialists to challenge
recent orderly transactions, where available, requires the use of significant management assumptions used to support the fair value prices.
judgments and subjective assumptions. The preparation of the fair value
estimate for the unquoted investments and related disclosures is a significant Challenging managements' assumptions and inputs: Challenging the directors on
area of our audit given that it represents a significant portion of the key judgments affecting investee company valuations, such as the achievement
Company's total assets and involves the use of significant judgments and of key milestones or potential dilution impacts of recent transactions. Our
subjective assumptions, which requires special audit consideration because of work included consideration of events which occurred subsequent to the year
the likelihood and potential magnitude of misstatements to the valuation of end up until the date of this report.
the financial instruments.
Assessing observable inputs: Where a recent transaction has been used as a
basis to value a holding, we obtained an understanding of the circumstances
surrounding the transaction such as whether it was considered to be on an
arms-length basis and suitable as an input into a valuation.
Methodology choice: In the context of observed industry best practice and the
provisions of the International Private Equity and Venture Capital Valuation
Guidelines, we challenged the appropriateness of the valuation basis selected.
Assessing disclosures: Consideration of the appropriateness, in accordance
with relevant accounting standards, of the disclosures in respect of unquoted
investments and the significant inherent uncertainty associated with valuing
such investments.
Our application of materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at £800,000,
determined with reference to a benchmark of total assets of £101,652,840,
of which it represents approximately 0.8% (2020: 1.0%).
In line with our audit methodology, our procedures on individual account
balances and disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that individually
immaterial misstatements in individual account balances add up to a material
amount across the financial statements as a whole. Performance materiality for
the Company was set at 65% (2020: 65%) of materiality for the financial
statements as a whole, which equates to £520,000. We applied this percentage
in our determination of performance materiality because we did not identify
any factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified
misstatements exceeding £40,000, in addition to other identified
misstatements that warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level specified
above, which has informed our identification of significant risks of material
misstatement and the associated audit procedures performed in those areas as
detailed above.
Going concern
The directors have prepared the financial statements on the going concern
basis as they do not intend to liquidate the Company or to cease its
operations, and as they have concluded that the Company's financial position
means that this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt over its ability
to continue as a going concern for at least a year from the date of approval
of thefinancial statements (the "going concern period").
In our evaluation of the directors' conclusions, we considered the inherent
risks to the Company's business model and analysed how those risks might
affect the Company's financial resources or ability to continue operations
over the going concern period. The risks that we considered most likely to
affect the Company's financial resources or ability to continue operations
over this period were:
· Availability of capital to meet operating costs and other financial
commitments; and
· The recoverability of financial assets subject to credit risk.
We considered whether these risks could plausibly affect the liquidity in the
going concern period by comparing severe, but plausible downside scenarios
that could arise from these risks individually and collectively against the
level of available financial resources indicated by the Company's financial
forecasts.
We considered whether the going concern disclosure in note 1(b) to the
financial statements gives a full and accurate description of the directors'
assessment of going concern.
Our conclusions based on this work:
· we consider that the directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate;
· we have not identified, and concur with the directors' assessment
that there is not, a material uncertainty related to events or conditions
that, individually or collectively, may cast significant doubt on the the
Company's ability to continue as a going concern for the going concern period;
and
· we found the going concern disclosure in the notes to the financial
statements to be acceptable.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the above conclusions are not
a guarantee that the Company will continue in operation.
Fraud and breaches of laws and regulations - ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud ("fraud risks") we
assessed events or conditions that could indicate an incentive or pressure to
commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
· enquiring of management as to the Company's policies and procedures
to prevent and detect fraud as well as enquiring whether management have
knowledge of any actual, suspected or alleged fraud;
· reading minutes of meetings of those charged with governance; and
· using analytical procedures to identify any unusual or unexpected
relationships.
As required by auditing standards, and taking into account possible incentives
or pressures to misstate performance and our overall knowledge of the control
environment, we perform procedures to address the risk of management override
of controls, in particular the risk that management may be in a position to
make inappropriate accounting entries, and the risk of bias in accounting
estimates such as valuation of unquoted investments. On this audit we do not
believe there is a fraud risk related to revenue recognition because the
Company's revenue streams are simple in nature with respect to accounting
policy choice, and are easily verifiable to external data sources or
agreements with little or no requirement for estimation from management. We
did not identify any additional fraud risks.
We performed procedures including:
· identifying journal entries and other adjustments to test based on
risk criteria and comparing any identified entries to supporting
documentation;
· incorporating an element of unpredictability in our audit procedures;
and
· assessing significant accounting estimates for bias.
Further detail in respect of valuation of unquoted investments is set out in
the key audit matter section of this report.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected
to have a material effect on the financial statements from our sector
experience and through discussion with management (as required by auditing
standards), and from inspection of the Company's regulatory and legal
correspondence, if any, and discussed with management the policies and
procedures regarding compliance with laws and regulations. As the Company is
regulated, our assessment of risks involved gaining an understanding of the
control environment including the entity's procedures for complying with
regulatory requirements.
The Company is subject to laws and regulations that directly affect the
financial statements including financial reporting legislation and taxation
legislation and we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial statement
items.
The Company is subject to other laws and regulations where the consequences of
non-compliance could have a material effect on amounts or disclosures in the
financial statements, for instance through the imposition of fines or
litigation or impacts on the Company's ability to operate. We identified
financial services regulation as being the area most likely to have such an
effect, recognising the regulated nature of the Company's activities and its
legal form. Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of management and
inspection of regulatory and legal correspondence, if any. Therefore, if a
breach of operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk
that we may not have detected some material misstatements in the financial
statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, the further removed
non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the inherently limited
procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection
of fraud, as this may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures
are designed to detect material misstatement. We are not responsible for
preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual report but does
not include the financial statements and our auditor's report thereon. Our
opinion on the financial statements does not cover the other information and
we do not express an audit opinion or any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 14, the directors
are responsible for: the preparation of the financial statements including
being satisfied that they give a true and fair view; such internal control as
they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error;
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 they either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue our opinion in an auditor's report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC's website
at www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) .
The purpose of this report and restrictions on its use by persons other than the Company's members, as a body
This report is made solely to the Company's members, as a body, in accordance
with section 80(C) of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM1 1LA
15 December 2021
Statement of comprehensive income
for the year ended 30 June 2021
2021 2020
Notes £ £
Income
Net income from financial instruments at fair value through profit and loss 3 10,669,991 1,277,366
──────── ────────
10,669,991 1,277,366
Operating expenses
Directors' fees 2 (24,167) (30,000)
Other operating costs 4 (795,131) (691,534)
Foreign exchange losses (107,275) (4,659)
──────── ────────
Profit from operating activities 5 9,743,418 551,173
Other costs
Consulting fee 2 (7,394,360) -
Irrecoverable VAT 2 (1,478,872) -
──────── ────────
Profit after consulting fee 870,186 551,173
Interest received 149,655 60,558
──────── ────────
Profit before taxation 1,019,841 611,731
Taxation 1(h) - -
──────── ────────
Profit for the year 1,019,841 611,731
Other comprehensive income - -
──────── ────────
Total comprehensive profit for the year 1,019,841 611,731
════════ ════════
Basic profit per share (pence) 11 0.22 0.66
Diluted profit per share (pence) 11 0.13 0.66
The Directors consider that the Company's activities are continuing.
The notes on pages 24 to 38 form an integral part of these financial
statements.
Statement of financial position
as at 30 June 2021
2021 2020
Notes £ £
Current assets
Financial assets at fair value through profit or loss 7,8 38,770,676 16,740,656
Trade and other receivables 445,667 18,208
Cash and cash equivalents 62,436,497 2,789,097
──────── ────────
Total assets 101,652,840 19,547,961
════════ ════════
Equity and liabilities
Capital and reserves
Share capital 6 799 331
Share premium 6 91,278,407 19,080,138
Share reserve 6 7,394,360 -
Accumulated earnings 1,356,250 336,409
──────── ────────
100,029,816 19,416,878
Current liabilities
Trade and other payables 9 1,623,024 131,083
──────── ────────
Total liabilities 1,623,024 131,083
──────── ────────
Total equity and liabilities 101,652,840 19,547,961
════════ ════════
The notes on pages 24 to 38 form an integral part of these financial
statements.
These financial statements were approved by the Board of Directors on 15
December 2021 and were signed on their behalf by:
Denham Eke
Director
Statement of changes in equity
for the year ended 30 June 2021
Notes Share Share Accumulated
Capital Premium (Deficit)/Earnings Total
£ £ £ £
Balance at 30 June 2019 6 23 1,890,142 (275,322) 1,614,843
Total comprehensive profit for the year - - 611,731 611,731
Capitalised share issue costs - (498,413) - (498,413)
Shares issued during the year 6 308 17,688,409 - 17,688,717
──────── ──────── ──────── ────────
Balance at 30 June 2020 6 331 19,080,138 336,409 19,416,878
════════ ════════ ════════ ════════
Notes Share Share Share Accumulated
Capital Premium Reserve Earnings Total
£ £ £ £ £
Balance at 30 June 2020 6 331 19,080,138 - 336,409 19,416,878
Total comprehensive profit for the year - - - 1,019,841 1,019,841
Capitalised share issue costs - (3,451,025) - - (3,451,025)
Shares issued during the year 6 468 75,649,294 - - 75,649,762
Recognition of share reserve 6 - - 7,394,360 - 7,394,360
──────── ──────── ──────── ──────── ────────
Balance at 30 June 2021 6 799 91,278,407 7,394,360 1,356,250 100,029,816
════════ ════════ ════════ ════════ ════════
The notes on pages 24 to 38 form an integral part of these financial
statements.
Statement of cash flows
for the year ended 30 June 2021
2021 2020
Notes £ £
Cash flows from operating activities
Operating profit for the year 1,019,841 611,731
Purchase of investments 8 (11,839,007) (14,152,777)
Proceeds from sale of investments 8 628,632 -
Non-cash interest income (149,655) (60,557)
Realised and unrealised gains on investments 3 (10,669,991) (1,277,366)
Consulting fee to be settled in shares 2 7,394,360 -
─────── ───────
Operating outflows before changes in working capital (13,615,820) (14,878,969)
Change in trade and other receivables (427,457) (6,012)
Change in trade and other payables 9 1,687,123 65,822
Share issue costs settled in shares 187,000 -
─────── ───────
Net cash used in operating activities (12,169,154) (14,819,159)
─────── ───────
Cash flows from financing activities
Proceeds from issue of shares 73,367,580 17,447,558
Proceeds from loan 10 1,900,000 -
Share issue commissions paid (3,451,026) (257,254)
─────── ───────
Net cash from financing activities 71,816,554 17,190,304
─────── ───────
Increase in cash and cash equivalents 59,647,400 2,371,145
Cash and cash equivalents at beginning of year 2,789,097 417,952
─────── ───────
Cash and cash equivalents at the end of year 62,436,497 2,789,097
═══════ ═══════
The notes on pages 24 to 38 form an integral part of these financial
statements.
1 Accounting policies
Agronomics Limited is a Company domiciled in the Isle of Man. The Company's
strategy is to create value for Shareholders through investing in companies
that operate in the nascent industry of modern foods, which are
environmentally friendly alternatives to the traditional production of meat
and plant-based sources.
The principal accounting policies are set out below.
a) Statement of compliance
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and its interpretations as adopted by
the European Union.
There has been no material impact on the financial statements of new
standards/interpretations that have come into effect during the current year.
b) Basis of preparation
The financial statements are prepared under the historical cost convention
except where assets and liabilities are required to be stated at their fair
value.
Use of estimates and judgment
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision only affects that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
Judgements made by the Directors in the application of IFRS, as adopted by the
EU, that have a significant impact on the financial statements and estimates
with a significant risk of material adjustment in the next financial year
relate to valuation of financial assets at fair value through profit or loss.
The determination of fair values for financial assets for which there is no
observable market price requires judgment as to the selection of valuation
techniques as described in accounting policy 1(d). For financial instruments
that trade infrequently and have little price transparency, fair value is less
objective, and requires varying degrees of judgement and estimation depending
on liquidity, concentration, uncertainty of market factors, pricing
assumptions and other risks affecting the specific instrument. The portfolio
companies are all in the start-up/development stage and in the biotechnology
and biopharmaceutical sector. By their nature, such companies are difficult to
value, as they have little or no track record regarding sales and margins and
may be subject to continued funding being available in order to continue in
operation. The eventual outcome may differ materially from the value estimate.
See also note 8 in respect of the valuation of financial instruments.
Going concern
The financial statements have been prepared on a going concern basis, taking
into consideration the level of cash and liquid investments held by the
Company. The Directors have a reasonable expectation that the Company will
have adequate resources for its continuing existence and projected activities
for the foreseeable future, and for these reasons, continue to adopt the going
concern basis in preparing the financial statements for the year ended 30 June
2021.
Functional and presentation currency
These financial statements are presented in Pound Sterling (£) which is the
Company's functional currency and rounded to the nearest pound.
c) Net income from financial
instruments at fair value through profit and loss
Any realised and unrealised gains and losses on investments are presented
within 'net income from financial instruments at fair value through profit or
loss'.
Interest income earned during the period, is accrued on a time apportionment
basis, by reference to the principal outstanding and the effective rate
applicable.
Dividend income is recognised when a security held goes ex-dividend. Dividends
are shown as net cash received, after the deduction of withholding taxes.
d) Financial instruments
Recognition and initial
measurement
The Company recognises financial assets and financial liabilities at fair
value through profit and loss ("FVTPL") on the trade date, which is the date
on which the Company becomes party to the contractual provisions of the
instrument. A financial asset or financial liability is measured initially at
fair value plus, for an item not at FVTPL, transaction costs that are directly
attributable to its acquisition or issue.
Classification
On initial recognition, the Company classifies financial assets as measured at
amortised cost or FVTPL.
A financial asset is measured at amortised cost if it meets both of the
following conditions and is not designated as at FVTPL:
· it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
· its contractual terms give rise on specified dates to cash flows
that are solely payment of principal and interest ("SPPI").
All other financial assets of the Company are measured at FVTPL.
Business model assessment
In making an assessment of the objective of the business model in which a
financial asset is held, the Company considers all of the relevant information
about how the business is managed, including:
· the documented investment strategy and the execution of this
strategy in practice. This includes whether the investment strategy focuses on
earning contractual interest income, maintaining a particular interest rate
profile, matching the duration of the financial assets to the duration of any
related liabilities or expected cash outflows or realising cash flows through
the sale of the assets;
· how the performance of the portfolio is evaluated and reported to
the Company's management;
· the risks that affect the performance of the business model (and
the financial assets held within that business model) and how those risks are
managed;
· how the investment manager is compensated: e.g. whether
compensation is based on the fair value of the assets managed or the
contractual cash flows collected; and
· the frequency, volume and timing of sales of financial assets in
prior periods, the reasons for such sales and expectations about future sales
activity.
Transfers of financial assets to third parties in transactions that do not
qualify for derecognition are not considered sales for this purpose,
consistent with the company's continuing recognition of the assets.
The Company has determined that it has two business models.
Held-to-collect business model: this includes cash and cash equivalents. These
financial assets are held to collect contractual cash flow.
Other business model: this includes debt securities, equity investments both
quoted and unquoted. These financial assets are managed and their performance
is evaluated, on a fair value basis.
Fair value measurement
principles
The fair value of investment holdings of listed investments is based on
their quoted market prices at the reporting date on a recognised exchange or
in the case of non-exchange traded instruments, sourced from a reputable
counterparty, without any deduction for estimated future selling costs.
Financial assets are priced at their closing bid prices, while financial
liabilities are priced at their closing offer prices.
Company assets may, at any time include securities and other financial
instruments or obligations that are thinly traded or for which no market
exists and/or which are restricted as to their transferability under
securities laws.
If a quoted market price is not available on a recognised stock exchange, or a
market is not sufficiently active for the market price to be considered
reliable, or if a price is not available from a reputable counterparty, fair
value of the financial instruments may be estimated by the Directors using
valuation techniques, including use of recent arm's length market
transactions, reference to the current fair value of another instrument that
is substantially the same, discounted cash flow techniques, option pricing
models or any other valuation technique that provides a reliable estimate of
prices obtained in actual market transactions.
The Company recognizes transfers between levels of the fair value hierarchy as
at the end of the reporting period during which the change occurred.
Reclassifications
Financial assets are not reclassified subsequent to their initial recognition
unless the Company were to change its business model for managing financial
assets, in which case all affected financial assets would be reclassified on
the first day of the first reporting period following the change in the
business model.
Impairment
The Company recognises loss allowances for Expected Credit Losses ("ECLs") on
financial assets measured at amortised cost.
The Company measures loss allowances at an amount equal to lifetime ECLs,
except for the following, which are measured at 12-month ECLs:
· financial assets that are determined to have low credit risk at
the reporting date; and
· other financial assets for which credit risk (i.e. the risk of
default occurring over the expected life of the asset) has not increased
significantly since initial recognition.
Derecognition
The Company derecognises a financial asset when the contractual rights to the
cash flows from the asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all of the
risks and rewards of ownership of the financial asset are transferred or in
which the Company neither transfers nor retains substantially all of the risks
and rewards of ownership and does not retain control of the financial asset.
On derecognition of a financial asset, the difference between the carrying
amount of the asset (or the carrying amount allocated to the portion of the
asset that is derecognised) and the consideration received (including any new
asset obtained less any new liability assumed) is recognised in profit or
loss. Any interest in such transferred financial assets that is created or
retained by the Company is recognised as a separate asset or liability.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with
maturities of three months or less from the acquisition date that are subject
to an insignificant risk of changes in fair value.
Trade and other receivables
Trade and other receivables originated by the Company are initially recognised
at fair value and subsequently stated at amortised cost less impairment
losses.
Trade and other payables
Trade and other payables are initially recognised at fair value less directly
attributable transaction costs. Subsequently they are measured at amortised
cost using the effective interest method.
e) Share capital and share premium
Ordinary shares are classified as equity. The ordinary shares of the Company
have a par value of £0.000001 each. Excess proceeds received for the issue of
shares has been credited to share premium. Incremental costs directly
attributable to the issue of ordinary shares are recognised as a deduction
from equity, net of any tax effects.
f) Foreign currencies
Transactions in foreign currencies are translated into the functional currency
at the rate ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are retranslated into functional
currency at the rate of exchange ruling at the reporting date. All differences
are taken to the income statement.
Non-monetary assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate at the date
of the transaction.
g) New standards and interpretations
not yet adopted
A number of new standards, amendments to standards and interpretations are not
yet effective for the year, and have not been applied in preparing these
historical financial statements:
New/revised International Accounting Standards / International Financial EU Effective date
Reporting Standards ("IAS/IFRS")
(accounting periods commencing on or after)
Annual Improvements to IFRS Standards 2018-2020 1 January 2022
Reference to the Conceptual Framework (Amendments to IFRS3) 1 January 2022
Classification of Liabilities as Current or Non-Current (Amendments to IAS1) 1 January 2023
Disclosure of Accounting Policies (Amendments to IAS1 and IFRS Practice 1 January 2023
Statement 2)
Definition of Accounting Estimates (Amendments to IAS8) 1 January 2023
The Directors do not expect the adoption of the standards and interpretations
to have a material impact on the financial statements in the period of initial
application.
There has been no material impact on the Company's financial statements of new
standards or interpretations that have come into effect during the current
reporting period.
h) Taxation
The Company is subject to income tax at a rate of 0% in the Isle of Man, and
accordingly, no tax has been provided for in these financial statements.
The Company may be subject to withholding taxes in relation to income from
investments, or investment realisation proceeds or gains, and such amounts
will be accounted for as incurred.
i) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business, being investing in companies that operate in the nascent
industry of modern foods, which are environmentally friendly alternatives to
the traditional production of meat and plant-based sources. Information
presented to the Board of Directors for the purpose of decision making is
based on this single segment.
j) Investment entity
The Company is an investment entity and measures investments in its
subsidiaries at FVTPL. In determining whether the Company meets the definition
of an investment entity, management considered the Company structure as a
whole. In particular, when assessing the existence of investment exit
strategies and whether the Company or its subsidiary has more than one
investment, management took into consideration the fact that the subsidiary
was formed in order to hold investments on behalf of the Company. Management
concluded that the Company and the subsidiary each meet the definition of an
investment entity. Consequently, management concluded that the Company should
not consolidate the subsidiary.
k) Comparative information
Where appropriate, figures in the comparative financial year have been
reclassified in order to present them in a manner consistent with the current
financial period.
2 Directors' and consulting fees
The fees of Directors who served during the year ended 30 June 2021 were as
follows:
2021 2020
£ £
Anderson Whamond (resigned 31 July 2020) 833 10,000
Richard Reed 11,667 10,000
David Giampaolo 11,667 10,000
─────── ───────
24,167 30,000
═══════ ═══════
Denham Eke was appointed as a Director on 30 May 2012 and currently receives
no remuneration for providing his services.
On 6 May 2011, Shellbay Investments Limited ("Shellbay") entered into a Letter
of Appointment with the Company to provide the services of Jim Mellon as
Non-Executive Chairman of the Company. In May 2021, following shareholder
feedback and in consultation with the Company's advisers, the terms of this
agreement were altered, on the basis that from May 2021 new arrangements would
be put in place to (i) ensure the terms of Shellbay's appointment were
consistent with market standard terms for commensurate services; (ii) provide
greater transparency and corporate governance regarding the role of Shellbay;
and (iii) establish a remuneration structure fully aligned with shareholders,
and acceptable to existing and future investors. The effective date for the
updated agreement is 01 July 2020.
Shellbay shall be entitled to an annual fee equal to the value of 15% of any
increase between the Company's net asset value ("NAV") on a per issued share
basis at the start of a reporting period and 30 June ("Closing NAV Date") each
year during the term of the New Shellbay Agreement, with the first reporting
period being from 1 July 2020 to 30 June 2021, and annually thereafter. The
opening and closing NAV for each period will be based on the audited financial
statements of the Company for the relevant financial year, with the opening
NAV for each reporting period being the higher of (i) 5.86 pence per share
(the highest annual audited NAV per share since the Company adopted its
current investment policy and reported NAV per share in September 2019)), and
(ii) the highest NAV per share reported at a Closing Date for the previous
reporting periods during the term of the agreement (establishing a rolling
high-watermark for Shellbay to qualify for such fee). Any increase in NAV per
share will then be applied to the total issued share capital at the end of the
relevant period for the purposes of determining the 15% fee. Any change in NAV
per share that arises from funds raised at a premium or discount to the
existing NAV per share will therefore be considered for the purposes of
calculating Shellbay's fee by reference to the annual audited accounts (for
clarity being an increase in respect of a premium and a decrease in respect of
a discount).
At the election of the Company, the Shellbay fee shall be payable either in
whole or in part by the issue of new shares at a price equal to the mid-price
on the last day of the relevant Qualifying Period (being the Company's
accounting year from 1 July to 30 June) or grant of nil price warrants over
shares; or in cash; or (with the agreement of Shellbay), in cash-equivalents
(such as shares), and other assets held by the Company. Shellbay has agreed
with the Company that any fee due for the first reporting period will be taken
in shares to the equivalent value of the fee (with shares issued at the
mid-market price of Ordinary Shares at close of markets on the last day of the
Qualifying Period, being 30 June 2021).
During the year, a fee of £7,394,360 was accrued for and recorded in profit
and loss (2020: Nil), with Shellbay having elected to take its full fee in
shares (Note 6). The Shellbay fee is calculated as follows:
Net asset value at 1 July 2020 £19,416,878
Total issued shares at 1 July 2020 331,616,661
Net asset value per share at 1 July 2020 5.85 pence
Net asset value at 30 June 2021 (pre Shellbay fee) £101,550,011
Total issued shares at 30 June 2021 799,606,383
Net asset value per share at 30 June 2021 12.70 pence
Increase in net asset value per share 6.85 pence
Increase in net asset value subject to Shellbay fee £54,773,037
───────
15% Shellbay fee based on Net Asset Value per share increase £8,215,956
VAT at 20% £1,643,191
50% waiver on VAT granted by Shellbay £821,596
───────
Shellbay fee due £7,394,360
═══════
Due to Shellbay being registered outside the UK and Isle of Man VAT area, the
recognition of the consulting fee has resulted in a potential irrecoverable
VAT charge of £1,478,872 being charged to profit and loss, with a
corresponding VAT payable on the balance sheet. Should the Company
subsequently become registered for VAT and be successful in reclaiming all or
part of the VAT associated with the consulting fee, then Agronomics undertakes
to add an ex-gratia amount to the next annual bill from Shellbay, equal to the
pro rata part of the waived fee relative to amount of VAT on the fee
subsequently recovered by the Company See note 9.
3 Net gain/(loss) from financial instruments at fair value
through profit and loss
Derived from financial assets held mandatorily at
fair value through profit or loss at initial recognition:
2021 2020
£ £
Net realised gains on sale of investments 260,104 -
─────── ───────
260,104 -
═══════ ═══════
Net unrealised gain on investments 10,409,886 1,277,366
Net realised gain on investments 260,105 -
─────── ───────
10,669,991 1,277,366
═══════ ═══════
For the year ended 30 June 2020, £620,989 of foreign exchange gains
previously included within 'Foreign exchange (losses)/gains' in the Statement
of Comprehensive Income have been reclassified and included within 'Net income
from financial instruments at fair value through profit or loss' in the
comparative 2020 figures in order to align the presentation with the current
year. The reclassified amount relates to the foreign currency movement on
investments held at fair value through profit or loss. There is no impact from
this reclassification on net assets or the net result for that period.
4 Other operating costs
2021 2020
£ £
Auditors' fees 37,797 56,307
Bank charges 1,158 930
Insurance 7,748 7,134
Professional fees 639,706 552,306
Sundry expenses 108,722 74,857
─────── ───────
795,131 691,534
═══════ ═══════
The Company has no employees.
5 Profit/(loss) from operating activities
Profit/(loss) from operating activities is stated
after charging:
2021 2020
£ £
Auditors' fees 37,797 56,307
Directors' fees 24,167 30,000
═══════ ═══════
6 Share capital, share premium and share reserve
Each share in the Company confers upon the
shareholder:
· the right to one vote at a meeting of the shareholders or on any
resolution of shareholders;
· the right to an equal share in any dividend paid by the Company, and
· the right to an equal share in the distribution of the surplus assets
of the Company on its liquidation.
The Company may by resolution of Directors redeem,
purchase or otherwise acquire all or any of the shares in the Company subject
to regulations set out in the Company's Articles of Association.
2021 2020
£ £
Authorised
2,000,000,000 Ordinary shares of £0.000001 2,000 2,000
════════ ════════
No. of Share Share Share
Shares Capital Premium Reserve
£ £ £
Issued
Balance at 30 June 2019 23,195,558 23 1,890,142 -
Issued during the year 308,421,103 308 17,688,409 -
Share issue costs capitalised - - (498,413) -
─────── ─────── ─────── ───────
Balance at 30 June 2020 331,616,661 331 19,080,138 -
Issued during the year 467,989,722 468 75,649,294 -
Share issue costs capitalised - - (3,451,025) -
Recognition of share reserve - - - 7,394,360
─────── ─────── ─────── ───────
Balance at 30 June 2021 799,606,383 799 91,278,407 7,394,360
════════ ════════ ════════ ════════
Capital management
The Company manages its capital to maximise the return to shareholders through
the optimisation of equity. The capital structure of the Company as at 30 June
2021 consists of equity attributable to equity holders of the Company,
comprising issued capital, share premium and accumulated earnings as
disclosed.
The Company manages its capital structure and makes adjustments to it in light
of economic conditions and the strategy approved by shareholders. To maintain
or adjust the capital structure, the Company may make dividend payments to
shareholders, return capital to shareholders or issue new shares and release
the share premium account. No changes were made in the objectives, policies or
processes during the year under review.
Warrants
As part of the fundraise completed during June 2021, the Company issued
warrants attached to the fundraising shares on a 1-for-1 basis, and as such,
297,727,274 warrants were issued to investors who participated in the
fundraise. The warrants are exercisable quarterly over a period of two years,
at a price of 28.5 pence per warrant. The warrants in issue at 30 June 2021
have a dilutive effect on basic earnings per share. Refer to Note 11.
Consulting fee due to Shellbay
As discussed in note 2, a consulting fee due to Shellbay of £7,394,360 has
been recognised. Shellbay has elected to take its full fee in shares. The
shares will be issued at a price equal to the mid-price on the last day of the
relevant Qualifying Period, being 30 June 2021. As a result, 30,492,206 new
ordinary shares will be issued to Shellbay in full settlement of the
consulting fee. A Share Reserve has been recognised relating to the shares to
be issued. The shares to be issued to Shellbay have a dilutive effect on basic
earnings per share. Refer to Note 11.
7 Financial assets at fair value through profit or loss
During the year the Company established a new wholly owned subsidiary entity,
Agronomics Investment Holdings Limited ("the Subsidiary" or "AIHL"), which now
holds the majority of the portfolio of unquoted investments previously held
directly by the Company. Unquoted investments were transferred by the Company
into AIHL at their respective carrying amounts. The investment in subsidiary
is stated at fair value through profit or loss in accordance with the IFRS 10
Investment Entity Consolidation Exception. The fair value of the investment in
Subsidiary is based on the year-end net asset value of the Subsidiary.
Additions and disposals regarding the investment in subsidiary are recognised
on trade date.
2021 2020
£ £
Quoted 656,502 502,681
Unquoted 59,704 16,237,975
Investment in subsidiary 38,054,470 -
─────── ───────
38,770,676 16,740,656
═══════ ═══════
The composition of the investments held, both directly and indirectly through
the Subsidiary in the underlying portfolio, is as follows:
2021 2020
£ £
Equities 28,349,567 13,779,460
Convertible loan notes and SAFEs* 10,421,109 2,961,196
─────── ───────
38,770,676 16,740,656
═══════ ═══════
* A SAFE is a Simple Agreement for Future Equity. SAFE Agreements have similar
characteristics to Convertible Loans and are designed to provide an early
investor with an "edge" ahead of a larger planned funding. The edge is
typically conversion of funds advanced for new equity at a discount to the
subsequent raise.
These financial instruments were mandatorily held as at fair value through
profit or loss on initial recognition. See note 8 regarding the valuation of
investments.
On 24 September 2020, the Subsidiary acquired an investment in Mosa Meats B.V.
("Mosa Meat"). The investment was split into two tranches (Tranche I and
Tranche II), with the first close of Tranche I occurring 24 September, while
Tranche II can be called at any time after 31 March 2022. Agronomics has
committed a total of US$ 4.1 million (approximately £3.2million), split into
US$ 2.05 million for Tranche I and US$ 2.05 million for Tranche II. The total
number of shares to be issued is subject to upward revision (as tabled below),
dependent on the timing of Mosa Meat achieving certain operational milestones
in relation to the production of pre-defined quantities of cultivated meat,
which is demonstrated to be nutritionally comparable to conventional meat.
Date Milestone is Achieved Agronomics Series B Preferred Shares
Before 30 June 2022 11,184
Q3 2022 11,374
Q4 2022 11,578
Q1 2023 11,799
Q2 2023 12,038
8 Financial instruments
Financial Risk Management
The Company has risk management policies that systematically view the risks
that could prevent it from achieving its objectives. These policies are
intended to manage risks identified in such a way that opportunities to
deliver the Company's objectives are achieved. The Company's risk management
takes place in the context of day-to-day operations and normal business
processes such as strategic and business planning. The Directors have
identified each risk and are responsible for coordinating and continuously
improving risk strategies, processes and measures in accordance with the
Company's established business objectives.
The Company's principal financial instruments consist
of investments, cash, receivables and payables arising from its operations and
activities. The main risks arising from the Company's financial instruments
and the policies for managing each of these risks are summarised below.
Credit Risk
Credit risk is the risk of loss associated with the counterparty's inability
to fulfil its obligations. The Company's credit risk is primarily attributable
to receivables and cash balances, with the maximum exposure being the reported
balance in the statement of financial position. The Company has a nominal
level of debtors and as such the Company believes that the credit risk to
these is minimal. The Company holds available cash with licensed banks and
financial institutions. The Company considers the credit ratings of banks in
which it holds funds in order to reduce exposure to credit risk. The funds are
available on demand.
The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at the reporting date was:
Carrying amount Carrying amount
2021 2020
£ £
Cash and cash equivalents 62,436,497 2,789,097
Trade and other receivables 378,591 -
─────── ───────
62,815,088 2,789,097
═══════ ═══════
All of cash and cash equivalent balances are held in A+ credit rated financial
institutions. The Company considers that ECL exposures have low credit risk
based on the external credit ratings of the financial institutions.
Market price risk
Market price risk is the risk that the market price will fluctuate due to
macro-economic issues such as changes in market factors specific to that
security, market interest rates and foreign exchange rates.
The Company is exposed to significant market price risks as financial
instruments recognised directly by the Company and indirectly by the
Subsidiary are linked to market price volatility.
A 10% increase/decrease in market value of investments held by the Company and
its subsidiary would increase/decrease equity and profit by £ 3,877,068
(2020: £1,674,066). Taking into account the Shellbay consulting fee, the
increase/decrease in equity and profit would be £4,458,628 (2020: no
consulting fee accrual recognised).
Liquidity risk
The Company is exposed to liquidity risk to the
extent that it holds investments that it may not be able to sell quickly at
close to fair value.
The risk is managed by the Company by means of cash flow planning to ensure
that future cash requirements are anticipated and, where financial instruments
have to be sold to meet these requirements, the process is carried out in a
controlled manner intended to minimise the liquidity risk involved.
The residual undiscounted contractual maturities of financial liabilities are
as follows:
30 June 2021
Less than 1 month 1-3 months 3 months to 1 year 1-5 years Over 5 years No stated maturity Total
£ £ £ £ £ £
Financial liabilities
Trade and other payables 1,623,024 - - - - - 1,623,024
1,623,024 - - - - - 1,623,024
30 June 2020
Less than 1 month 1-3 months 3 months to 1 year 1-5 years Over 5 years No stated maturity Total
£ £ £ £ £ £
Financial liabilities
Trade and other payables 131,083 - - - - - 131,083
131,083 - - - - - 131,083
Interest rate risk
A significant share of the Company's assets is comprised of cash held at
banks. As a result, the Company is subject to risk due to fluctuations in the
prevailing level of market interest rates. However, income earned from bank
interest is not considered material to the Company's performance or financial
position.
The Company holds investments in convertible loan notes ("CLN"), which attract
interest income. The rates of interest are fixed for each CLN investment held,
which results in a reduced interest rate risk.
Fair values of financial assets and liabilities
At 30 June 2021, the carrying amounts of cash resources, trade and other
receivables, and trade and other payables approximate fair value due to their
short-term maturities.
Foreign currency risk
The Company is exposed to foreign currency risk on fluctuations related to
financial assets and liabilities held directly itself and indirectly via its
subsidiary that are denominated in a number of currencies. The Investment in
Subsidiary is held in Sterling. The analysis below reflects the underlying
currency exposure in the Subsidiary's portfolio.
GBP equivalents as at 30 June 2021
Financial assets at fair value through profit and loss Cash at bank Total by currency
£ £ £
USD 20,651,131 2,425,345 23,076,476
CAD 1,203 - 1,203
NZD 252,589 - 252,589
EUR 17,642,270 - 17,642,270
─────── ─────── ───────
38,547,193 2,425,345 40,972,538
═══════ ═══════ ═══════
GBP equivalents as at 30 June 2020
Financial assets at fair value through profit and loss Cash at bank Total by currency
£ £ £
HKD 118,511 - 118,511
USD 12,092,482 4,149 12,096,631
CAD 307 - 307
NZD 249,663 - 249,663
EUR 4,265,015 36,315 4,301,330
─────── ─────── ───────
16,725,978 40,464 16,766,442
═══════ ═══════ ═══════
The following significant exchange rates applied during the year:
Average Average
rate for rate for
active year active year
2021 2020
HKD - 9.82545
USD 1.34806 1.26051
CAD - 1.69122
NZD - 1.98190
EUR 1.12876 1.13972
Year-end Year-end Year-end Year-end
rate rate rate rate
2021 2020 2019 2017
HKD - 9.55293 9.913 10.149
USD 1.38310 1.23261 1.269 1.300
CAD 1.71450 1.68144 1.661 1.688
NZD 1.97950 2.00270 -
EUR 1.16670 1.11494 -
Sensitivity analysis
A 5% percent strengthening of Sterling against the relevant currencies above
at 30 June 2021 and 30 June 2020 would have decreased equity and profit for
the year by the amounts shown below. The analysis assumes that all other
variables, in particular interest rates, remain constant.
2021 Equity and Profit or loss
£
USD (2,287,272)
CAD (57)
NZD (12,028)
EUR (2,507,507)
2020 Equity and Profit or loss
£
HKD (5,643)
USD (562,519)
CAD (15)
NZD (11,889)
EUR (363,724)
A 5% percent weakening of Sterling against the relevant currencies above at 30
June 2021 and 30 June 2020 would have the equal but opposite effect on the
basis that all other variables, in particular interest rates, remain constant.
Fair value of financial instruments
The fair values of financial assets and financial liabilities that are traded
in an active market are based on quoted market prices. For all other financial
instruments, the Company and its subsidiary determine fair values using other
valuation techniques in compliance with IFRS9: Financial Instruments, IFRS13:
Fair Value Measurement, and based on the International Private Equity and
Venture Capital Valuation Guidelines ("IPEV").
For financial instruments that trade infrequently and have little price
transparency, fair value is less objective, and requires varying degrees of
judgement depending on liquidity, uncertainty of market factors, pricing
assumptions and other risks affecting the specific instrument.
The Company measures fair values using the following fair value hierarchy that
reflects the significance of the inputs used in making the measurements:
· Level 1: Inputs that are quoted market prices (unadjusted) in
active markets for identical instruments;
· Level 2: Inputs other than quoted prices included within Level 1
that are observable either directly (i.e. as prices) or indirectly (i.e.
derived from prices). This category includes instruments valued using; quoted
market 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 in which all significant inputs are
directly or indirectly observable from market data;
· Level 3: Inputs that are unobservable. 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 but for which significant
unobservable adjustments or assumptions are required to reflect differences
between the instruments.
Various valuation techniques may be applied in determining the fair value of
investments held as Level 3 in the fair value hierarchy. The objective of
valuation techniques is to arrive at a fair value measurement that reflects
the price that would be received to sell the asset or paid to transfer the
liability in an orderly transaction between market participants at the
measurement date.
Fair value hierarchy measurement at 30 June 2021
Investments in securities at fair value:
Quoted prices Significant other Significant
In active markets observable unobservable
for identical inputs Inputs
assets
Total (Level 1) (Level 2) (Level 3)
Investments
Quoted 656,502 644,324 - 12,178
Unquoted 59,704 - - 59,704
Investment in subsidiary 38,054,470 - - 38,054,470
─────── ─────── ─────── ───────
38,770,676 644,324 - 38,126,352
═══════ ═══════ ═══════ ═══════
The investment in subsidiary held by the Company is classified as level 3 in
the fair value hierarchy - being based on the net asset value of the
Subsidiary. All the underlying listed equity investments held by the
Subsidiary are classed as level 3 investments
Reconciliation of Level 3 investments:
Opening balance at 1 July 2020 16,237,975
Transfer from Level 1 to Level 3 10,974
Purchases 11,839,007
Disposals (136,187)
Unrealised foreign currency loss (1,953,413)
Unrealised fair value gain 11,978,341
Accrued interest on loan note investments 149,655
───────
Closing balance at 30 June 2021 38,126,352
═══════
Fair value hierarchy measurement at 30 June 2020
Investments in securities at fair value: Quoted prices Significant other Significant
In active markets observable unobservable
for identical inputs Inputs
assets
Total (Level 1) (Level 2) (Level 3)
Investments
Quoted 502,681 502,681 - -
Unquoted 16,237,975 - - 16,237,975
─────── ─────── ─────── ───────
16,740,656 502,681 - 16,237,975
═══════ ═══════ ═══════ ═══════
Reconciliation of Level 3 investments:
Opening balance at 1 July 2019 343,832
Purchases 14,152,777
Transfer from Level 1 to Level 3 4,011
Unrealised fair value gain 1,055,808
Unrealised FX gain 620,989
Accrued interest on loan note investments 60,558
───────
Closing balance at 30 June 2020 16,237,975
═══════
Valuation technique
In the absence of observable prices or suitable unobservable model inputs
being available and, given level 3 portfolio companies are in the
start-up/development stage and in the biotechnology/ biopharmaceutical sector,
the Board believes that a recent share transaction cost represents the best
available estimate of fair value. The price of a recent investment valuation
technique, calibrated using both financial and technological milestones, is
commonly used in a seed, start-up or early-stage situations. Where applicable,
the Company's Level 3 investments are valued at the price of each funding
round of the respective companies entered into with their shareholders,
adjusted where necessary should the Directors deem any adjustment is needed in
order to determine the fair value. The fair value of the relevant investee may
also be adjusted based on its performance against predetermined milestones.
The Directors deem all investments to be held fair value. The price of a
recent transaction is deemed most appropriate for the Company's and
Subsidiary's unquoted investments. Although the Board believes that its
estimates of fair value are appropriate, the use of different methodologies or
assumptions could lead to different measurements of fair value. The Board
continues to monitor the performance of the investee entities and the
underlying information available in order to assess whether the valuation
technique adopted and the fair value hierarchy remain appropriate.
No reasonably possible alternative assumptions
IFRS 13 requires disclosure, by class of financial instrument, if the effect
of changing one or more inputs to reasonably possible alternative assumptions
would result in a significant change to the fair value measurement. However,
where fair value is determined with reference to the price of a recent
transaction in the equity shares of the unquoted company, such a sensitivity
analysis is not relevant. As such the Directors consider there are no
reasonably possible alternative assumptions in respect of the level 3
investments held at year end.
The valuation approach adopted for the years ended 30 June 2021 and 30 June
2020 is consistent.
9 Trade and other payables
2021 2020
£ £
Provision for audit fee 37,797 47,700
Other provisions 2,203 30,000
Trade creditors 104,152 53,383
Provision for irrecoverable VAT (note 2) 1,478,872 -
────── ──────
1,623,024 131,083
══════ ══════
10 Related party transactions
Under an agreement dated 1 December 2011, Burnbrae Limited, a Company for
which Jim Mellon is the ultimate beneficial owner and Denham Eke is a
Director, provide certain services, principally accounting and administration,
to the Company. This agreement may be terminated by either party on three
months' notice. The charge for services provided in the year in accordance
with the contract was £36,000 (2020: £36,000) of which £68 was outstanding
as at the year-end (2020: £3,047).
Under an updated agreement dated May 2021, Shellbay Investments Limited, a
Company related to both Jim Mellon and Denham Eke, provide the services of Jim
Mellon as Non-Executive Chairman of the Company (see note 2). The charge for
services provided in the year was £7,394,360 (2020: £Nil), with Shellbay
electing to take its full fee in shares. A VAT charge liability and
irrecoverable VAT expense of £1,478,872 has been recognised as a result of
the Shellbay fee. Refer to Note 2 and 11.
In accordance with the published investing policy, Jim Mellon holds personal
interests both directly and indirectly in the following investee companies:
AgeX Therapeutics Inc, Regent Pacific Group Ltd, Portage Biotech Inc, SalvaRX
Group PLC, Cytox Limited, Insilico Medicine In, Simply Foods Inc, Shiok Meats
Pte. Ltd and Bond Pets LLC.
On 1 July 2020, the Company entered into a bridging-loan facility ("Galloway
Loan") with Galloway Limited, a related party wholly owned by Jim Mellon. The
facility allows the Company to draw-down up to £1.9 million, at a nil
interest rate. During September 2020, the Company fully utilised this facility
in order to acquire investments.
On 26 October 2020, the Company completed an equity fundraise of £10 million,
issuing and allotting 166,666,667 new ordinary shares. As part of the
subscription, the Galloway Loan was settled in full by issuing new ordinary
shares to Galloway Limited.
Edgewater Associates Limited ("Edgewater")
During the year, Directors and Officers insurance was obtained through
Edgewater, which is a 100% subsidiary of Manx Financial Group ("MFG"). James
Mellon and Denham Eke are Directors of MFG and Denham Eke a Director of
Edgewater.
The premium payable on the policy was £7,748 (2020: £7,134), of which £nil
was outstanding as at the year-end (2020: £nil).
11 Basic and diluted earnings per share
The calculation of basic earnings per share of the Company is based on the
profit for the year of £1,019,841 (2020: £611,731) and the weighted average
number of shares of 468,460,964 (2020: 92,152,415) in issue during the year.
Diluted earnings per share are calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares such as warrants and options. The calculation of
diluted earnings per share of the Company is based on the profit for the year
of £1,019,841 (2020: £611,731) and the diluted weighted average number of
shares of 796,650,444 (2020: 92,152,415) in issue during the year.
12 The Subsidiary
The Company has one wholly-owned subsidiary entity, Agronomics Investment
Holdings Limited, which is incorporated in the British Virgin Islands. The
Subsidiary was incorporated on 8 July 2020 under the provisions of the BVI
Business Companies Act, 2004, as a limited liability company. The principal
activity of the Subsidiary is holding investments on behalf of the Company.
13 Subsequent events
On 2 December 2021, the Company announced that it had successfully raised
gross funds of approximately £25.5 million through a placing of 92,254,805
Units at a placing price of 23 pence per share to existing and new
institutional investors. Each Unit comprised one New Ordinary Share and one
warrant to subscribe for a new Ordinary Share, exercisable at 30 pence each
and with an exercise period of two years from the Grant Date. Furthermore, in
order to provide shareholders with an opportunity to participate in the
proposed issue of new Ordinary Shares and warrants, the Company provided all
Qualifying Shareholders with the opportunity to subscribe for an aggregate of
up to 28,558,897 Open Offer Units, to raise up to approximately £6.6 million
(before expenses), on the basis of One Open Offer Unit for every 28 Existing
Ordinary Shares held on the Record Date, at 23 pence per Ordinary Share. Each
Open Offer Unit comprises one new Ordinary Share and one warrant. The
fundraise is expected to complete by the end of December 2021, with funds
being received by the Company during January 2022.
Other than above, no subsequent events have occurred that require disclosure.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR TABLTMTTBBMBRecent news on Agronomics
See all newsRCS - Agronomics Limited - Liberation Labs Announce Manufacturing Partnership
AnnouncementRCS - Agronomics Limited - Meatable and TruMeat Forge Alliance
AnnouncementRCS - Agronomics Limited - BlueNalu Expands Partnership with Nomad Foods
AnnouncementRCS - Agronomics Limited - Liberation Labs secures strategic partnership
AnnouncementREG - Agronomics Limited - Exercise of Shellbay options
Announcement