REG - Agronomics Limited - Final Results
20/12/2022 09:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221220:nRST3091Ka&default-theme=true
RNS Number : 3091K Agronomics Limited 20 December 2022
20 December 2022
Agronomics Limited
("Agronomics" or the "Company")
Annual audited results for the year ending 30 June 2022
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 2022.
Copies of the 2022 Audited Report and Financial Statements are being posted to
shareholders and will shortly be available from the Company's website,
https://agronomics.im/investors/ (https://agronomics.im/investors/) , in the
investor portal section, under the financial reports tab.
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 10:00 a.m. on
Thursday, 02 February 2023.
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
prior to the meeting and as early as possible.
Financial Highlights
· Net Asset Value per share on 30 June 2022 was 14.85 pence per
share, up 18.7% from a year earlier (2021: 12.51 pence per share)
· The carrying amount of invested assets is £94,813,088 (2021:
£38,770,676) - an increase of 145%, and cash and equivalents and cash
deposits stood at £51,482,501 (2021: £62,436,497)
· During the year, the company completed a successful funding
round, raising total gross proceeds of £32 million, issuing 30,492,206 new
ordinary shares, and receiving net proceeds of £31.3 million
· The total assets stand at £146,398,248 (2021: £101,652,840)
Operational Highlights
· Agronomics made fifteen investments, leading nine deals, seven of
which were follow-ons, and eight of the investments were made into new
companies within the cellular agriculture sector
· Agronomics formed its first two companies - cultivated pet food
company Good Dog Food, and a contract manufacturer in precision fermentation -
Liberation Labs
· Agronomics participated in five Series A funding rounds with an
average investment of ~ US$ 4.6 million, as well as two Seed funding rounds
and one pre-Seed bridge round with an average investment of US$ 3.5 million.
· Agronomics participated in its first Series C deal, investing US$
8 million in The EVERY Company in an oversubscribed Series C Round totalling
US$ 175m
Post-period End Highlights
· Agronomics invested an additional US$ 3.5 million in the US$ 20
million Seed round of Liberation Labs Holding, the precision fermentation
contract manufacturer. In June 2022, Agronomics invested US$ 627,000 in the
initial round of financing for Liberation Labs
· Led by Agronomics with an investment of approximately AU$15m
(£8.7m), All G Foods, an Australian precision fermentation dairy company,
announced it had raised AU$ 25m with completion of its Series A
· Bond Pet Foods completed its US$ 17.5m Series A financing, led by
ADM Ventures and Cavallo Ventures, with other prominent investors also
participating. Agronomics first invested £150k in Bond Pet Foods in September
2019, and subject to audit will now carry this position at a book value of US$
933k, representing a MOIC of 6.22x
Jim Mellon, Executive Director of Agronomics Limited, commented:
"This financial year has been another strong year of growth for Agronomics and
its diverse portfolio within the field of cellular agriculture. We have made
investments in new and existing portfolio companies across three main areas;
cultivated meat and material, precision fermentation and enabling
technologies.
Our conservative valuation methodology leads us to believe that there is
significant intrinsic value within our portfolio, and we remain well
positioned to identify attractive opportunities in the sector. Our strategy
will continue to be to develop a platform for investing in environmentally
friendly alternatives to traditional meat products and plant-based sources of
nutrition in a way that is both sustainable and profitable. Agronomics' NAV
per share on 30 June 2022 rose 18.7% when compared to a year earlier and we
now have over 20 portfolio companies.
Looking ahead, the industry recently saw the first approval of cultivated meat
product in the US by the FDA. This was a landmark event for the field of
cellular agriculture and moves us further along the path to full scale
commercialisation. We look forward to further approvals from within
Agronomics' leading portfolio of companies and we expect to start seeing
regulatory approvals across our portfolio in major protein categories from
2024."
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES 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 VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS
SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
For further information please contact:
Agronomics Beaumont Canaccord Cenkos Peterhouse Capital
Limited Cornish Limited Genuity Limited Securities Plc Limited TB Cardew
The Company Nomad Joint Broker Joint Broker Joint Broker Public Relations
Richard Reed Roland Cornish Andrew Potts Giles Balleny Lucy Williams Ed Orlebar
Denham Eke James Biddle Harry Rees Max Gould Charles Goodfellow Alistair Walker
Alex Aylen Michael Johnson
(Head of Equities)
+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 (mailto:info@agronomics.im) +44 (0) 207 523 8000 +44 (0) 7738 724 630
agronomics@tbcardew.com (mailto: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 2022.
This financial year, Agronomics continued to enjoy rapid expansion,
establishing a strong and diverse portfolio within the field of cellular
agriculture, which now covers all major protein categories. In the prior
year's Chairman's statement, we commented on the turmoil caused by the
COVID-19 pandemic to global supply chains and in 2022, we have seen even
greater disruption caused by Russia's invasion of Ukraine and the war that
persists.
The progress within our portfolio has been somewhat overshadowed by the
material change in the macroeconomic environment. The war has highlighted the
fragility of our existing supply chains, and the need for more consistent and
sustainable methods of producing traditional agricultural products such as
meat and dairy. We are currently in a period of surging global inflation,
which is particularly notable with the world-wide rise in food prices. Recent
reports from the Food and Agricultural Organisation of the United Nations
indicate that these rising prices manifest themselves in the developing world
by increasing hunger and malnutrition.
We continue to recognise cellular agriculture as the only technology with the
potential to decarbonise the world's protein production system, while meeting
the protein needs of the growing global population as it expands to ~10
billion around 2050. Our investments focus on the production of cultivated
meat, directly from cells, as opposed to slaughtering an animal, as well as
precision fermentation and enabling technologies to support these categories.
Precision fermentation is the use of microorganisms as cell factories to
produce valuable animal proteins such as dairy, egg or collagen. We
acknowledge that unless these production methods can achieve cost parity with
current conventional production methods, then large scale production, broad
based adoption and resultant impact will be minimal. Thus, our key focus is on
large protein categories and companies with truly scalable technologies and
processes.
During the year, we increased our exposure to precision fermentation
companies, adding new names including two egg protein producers - The EVERY
Company and Onego Bio Limited, and contract manufacturer for precision
fermentation scale-up - Liberation Labs Holdings Inc. These companies offer
near term paths to revenue generation and commercialisation, targeting
multi-billion-dollar global markets. It should be emphasised here that a
number of precision fermentation products are already on the market and
selling in the US, including The EVERY Company's egg protein, following
regulatory approval via the US Food and Drug Administration's (FDA) Generally
Recognised as Safe (GRAS) framework. Post 30 June 2022, we also added All G
Foods Pty Ltd to the portfolio, which is a precision fermentation dairy
company, that has unique technology around the formation of casein micelles,
focused on the Asia-Pacific (APAC) market.
In November 2022, we witnessed what we consider to be a seminal moment for the
field of cellular agriculture, with the US FDA issuing its first "No
Questions" letter with respect to the safety of UPSIDE Foods' cultivated
chicken product. This is one of the final steps in being able to
commercialise cultivated meat in what is one of the largest and highest value
markets globally. In this instance, the leadership demonstrated by the FDA
(a globally recognised regulator) in the regulation of novel food products is
a major step forward and paves the way for Agronomics' portfolio companies and
others to gain regulatory approval in the near future.
The Biden administration recently unveiled a new strategy to eliminate hunger
in the US by 2030, which included a nutrition and health investor coalition to
catalyse a US$ 2.5 billion private investment into start-up companies
pioneering new ways of addressing food security. In early 2022, we also saw
China, the world's largest consumer of meat, specify cultivated meat and
precision fermentation in its five-year agricultural plan for the first
time. Numerous new companies in the sector have been receiving notable grant
funding, including portfolio company Solar Foods, which received €10 million
from the Finnish Climate Fund. Solar Foods Limited received regulatory
approval from the Singapore Food Agency (SFA) in October 2022, for the
commercialisation of Solein, grown from carbon dioxide and electricity. The
Dutch government has set aside €60 million to invest in cellular
agriculture. It is also encouraging that the cellular agriculture sector
continues to draw in investment and interest from renowned sovereign wealth
funds such as Temasek International Pte Limited in Singapore as well as Middle
Eastern sovereign wealth funds, as they try to execute on their food security
initiatives.
Plant-based meat companies have come under scrutiny in recent months over
evidence of flat-line sales and failure to capture meaningful market share.
This implies that plant-based meat products have failed to date to deliver on
acceptable taste and low prices to compete against conventional products.
Plant-based meat sales have not met their targets in recent months, even
experiencing a 0.5% decrease year on year in the US in 2021 after seeing a 46%
increase in 2020, bringing into question its ability to compete and ultimately
replace conventional agriculture on a meaningful scale. Whilst the plant-based
sector has created intrigue and a narrative for more sustainable food systems
through innovation, we identify cellular agriculture as the ultimate solution
for delivering the exact same sensory experience that consumers are used to
eating, while being produced in a much more efficient manner.
It would be remiss not to comment on the significant change in sentiment
towards venture funding markets, and capital markets more broadly, which has
seen funding rounds taking longer to complete in 2022, and valuation
expectations declining sharply when compared with 2021. Fortunately,
Agronomics' conservative valuation methodology still leads us to believe that
there is significant intrinsic value within the portfolio, which has not yet
been able to be recognised under IFRS.
Further, with Agronomics having cash as at 30 June 2022 of £51 million
following its successful last fundraise in December 2021 of £32 million, we
believe we are well positioned to capitalise on this market environment, to
identify attractive opportunities in the sector, at lower valuations than
previously contemplated, as well as continuing to support our portfolio, with
the ultimate goal of creating value for our shareholders.
Within the portfolio, the leaders have validated their technology at a
small-scale, and demonstrated proof of concept, with the ongoing focus now to
reduce costs, scale-up and achieve regulatory approval in a major jurisdiction
for the sale of their products if required. We expect to start seeing
regulatory approvals across our portfolio in major protein categories from
2024.
Details regarding principal risks and uncertainties that apply to the Company
can be found in Note 8.
Investment Review
During the financial year, Agronomics made a number of investments in new and
existing portfolio companies inclusive of assisting in the formation of two
companies and participating in its first Series C deal. Agronomics made
fifteen investments, seven of which were follow-ons, and eight were into new
companies within the cellular agriculture sector and Agronomicsled ninedeals.
Agronomics participated in five Series A funding rounds with an average
investment of ~ US$ 4.6 million, as well as two Seed funding rounds and one
pre-Seed bridge round with an average investment of US$ 3.5 million.
Agronomics also had a number of positive revaluation events, five in total,
with an average multiple on invested capital (MOIC) of 2.61x for these deals
only.
In the first half of the financial year, Agronomics led three funding rounds.
This included leading existing portfolio company and cultivated leather
company VitroLabs Series A funding round, one Seed funding round in cultivated
cocoa company California Cultured and one pre-Seed bridge round in the form of
a SAFE (Simple Agreement for Future Equity) in cultivated wagyu beef company
Ohayo Valley.
In second half of the financial year, Agronomics continued to focus on leading
deals to ensure achieving favourable terms and controlling interest in its
portfolio companies as well as securing board representation. The Company led
five deals including 2 Series A funding rounds in existing cultivated poultry
company SuperMeat and cultivated meat company CellX, and one Seed funding
round in precision fermentation egg company Onego. In this period, Agronomics
formed its first two companies - a cultivated pet food company Good Dog Food,
and a contract manufacturer in precision fermentation - Liberation Labs.
Liberation Labs is Agronomics' first investment in a supporting technology to
help precision fermentation companies to scale.
The full commentary on the activities for the financial year can be found
below.
On 13 September 2021, portfolio company Formo Bio GmbH (Formo, previously
LegenDairy Foods GmbH) raised a US$ 50 million Series A funding round led by
EQT Ventures. Agronomics participated in the round, subscribing for 1,191
Series A Preferred Shares, with a €3.15 million investment. Agronomics now
holds a total of 4,030 shares in Formo, representing an equity ownership of
5.94% on a fully diluted basis. Agronomics co-led Formo's €4 million Seed
round in December 2019, with a €1 million investment for 2,839 Series Seed
Preferred Shares, which saw a 7.5x uplift on the original investment.
Agronomics led cultivated leather company VitroLabs Inc's (VitroLabs) Series A
funding round with a US$ 7 million investment, announced on 20 September 2021.
With the completion of the US$ 46 million raise being announced on 4th May
2022. Agronomics holds a 11.15% equity ownership on a fully diluted basis and
has the right to a board seat. Investors who joined the round include
BESTSELLER's Invest FWD, global luxury group Kering, Khosla Ventures, actor
and environmentalist Leonardo DiCaprio, New Agrarian and Regeneration.VC.
Agronomics previously invested US$ 3.5 million in VitroLabs via SAFEs and
CLNs, which converted into Series A shares on completion of this funding
round.
Agronomics led California Cultured Inc.'s (California Cultured) US$ 4 million
Seed funding round with a US$ 2.2 million investment, announced on 20 October
2021. The financing is in the form of a SAFE (Simple Agreement for Future
Equity). Joining the round includes global venture firm SOSV's IndieBio. The
SAFE is expected to convert into Preferred Stock of California Cultured at a
future equity financing round by California Cultured of at least US$ 4
million, providing an approximate equity ownership of 18.33 per cent on a
fully diluted basis. Following the close of the round, Agronomics will have
the right to a directorship in California Cultured. At the discretion of the
Agronomics, the SAFE is convertible into equity following 12 months from
issue. California Cultured is a food-tech company based in Davis, California,
U.S., which harnesses cell culture technology to produce cocoa products. The
application of cellular agriculture to produce plants or plant-derived
ingredients has to date not been extensively commercialised. Using cocoa cell
cultures to produce valuable cocoa products, such as cocoa powder, chocolate,
cocoa butter and flavanols is considered an exciting opportunity.
On 26 October 2021, Agronomics invested a further €3 million into existing
portfolio company Solar Foods Oy (Solar Foods) in its €6 million bridge
funding round, in the form of a Convertible Loan Note (CLN). Also joining this
round included existing investors CPT Capital and Happiness Capital Limited
and new investor, LOSA Group. The CLN is expected to convert to give
Agronomics an approximate equity ownership of 5.3%, inclusive of its prior
investment announced in September 2020. In the past year, Solar Foods has made
strong R&D progress and is now focused on building its new demonstration
facility that is set to be operational early 2023. Solar Foods' novel
technology has recently been recognised by NASA as part of their Deep Space
Food Challenge - looking for new solutions to feed astronauts.
Agronomics invested US$ 8 million in The EVERY Company (EVERY, formerly Clara
Foods Co.), for an equity stake on a fully diluted basis of 1.31%, with the
investment announced on 4 November 2021. EVERY raised an oversubscribed Series
C Round totalling US$ 175 million. EVERY is a leading precision fermentation
company with a key focus on the commercialisation of proteins traditionally
derived from animals. Recently, EVERY launched the world's first animal-free
egg protein and collaborated with the juice brand Pressed to produce smoothies
containing their protein. This recent fundraise will help drive the scale up
of its animal-free protein platform.
On 19 November 2021, Agronomics led Ohayo Valley Inc's (Ohayo Valley) Pre-Seed
funding round with a subscription of US$ 1.5 million in the form of a Simple
Agreement for Future Equity (SAFE), Ohayo Valley is a cultivated meat company,
initially focused on producing cultivated Wagyu ribeye steak, before expanding
to other beef products. Ohayo Valley was founded in 2020 by Dr Jess Krieger.
Combined, the cofounding team brings 20 years of experience in the cultivated
meat sector, including Jess' previous position as CSO for Artemys Foods, where
Dr Krieger led the development of the Artemys Burger prototype. The SAFE is
expected to convert into preferred shares in Ohayo Valley at a future equity
financing round of at least US$ 1.5 million, giving Agronomics an approximate
equity ownership of 18.75%. Agronomics has the right to a board seat.
Agronomics acquired a stake in precision fermentation collagen company Geltor,
Inc (Geltor) via a secondary transaction announced on 21 February 2022.
Agronomics acquired from an existing shareholder 1,069,593 Preferred Stock in
Geltor, a company focused on producing designer proteins for use in the
cosmetic industry, for total consideration of US$ 9,499,525. This represents
an equity stake in Geltor, on a fully diluted basis, of 2.20%. The
consideration paid to the vendor comprised US$ 6,785,375 in cash from the
Company's own resources and US$ 2,714,150 to be satisfied through the issuance
of 8,676,951 new Ordinary Shares in Agronomics priced at 23 pence per share.
On 22 February 2022, Agronomics made a €6.9 million investment in Onego Bio
Ltd (Onego Bio), a company developing sustainable and animal free egg protein,
as part of a €10 million Seed fundraising round. Agronomics today holds an
equity stake on a fully diluted basis of 19.94% and secured a board seat.
Onego Bio is a spin-out from VTT Technical Research Centre of Finland Ltd
(VTT), one of Europe's leading research institutions. The company harnesses
precision fermentation to develop egg proteins without the need for
traditional agriculture, with the aim of providing people with sustainable,
delicious and animal free egg protein. It was founded in Helsinki in 2021 by
CEO Maija Itkonen, CTO Chris Landowski, and COO Jussi Joensuu, after many
years of developing and researching their precision fermentation technology
whilst at VTT. Demand for alternative egg white protein continues to grow, due
to the environmental and welfare concerns associated with animal husbandry and
continued global pressure on suppliers to go cage-free.
Agronomics co-led the Series A financing for portfolio company SuperMeat The
Essence of Meat Ltd (SuperMeat) on 8 March 2022, with a US$ 10 million
investment, subscribing for 188,158 Series A Preferred Shares. SuperMeat is a
leading cultivated chicken meat company based in Israel. The funding round was
co-led alongside New Agrarian Company Limited ("New Agrarian"). Following the
close of the funding round, Agronomics appointed a board member to SuperMeat
and owns a 9.82% equity interest on a fully diluted basis.
On 14 March 2022, GALY CO. (GALY) raised a Series A financing where Agronomics
has invested a further US$ 1 million subscribing for 364,710 Series A
Preferred Stock. Agronomics owns a 4.15% equity stake in GALY on a fully
diluted basis. GALY is a leading plant cell culture company with disruptive
technology for growing cotton from cells in a laboratory facility rather than
utilising traditional soil-based methods. It is headquartered in Boston, US,
with research also in Sao Paulo, Brazil. Agronomics first invested in GALY in
2020, with a US$ 500,000 investment in the form of a SAFE. This SAFE converted
to 909,090 Series A Preferred Shares, representing a MOIC of 4.94x. In
aggregate, Agronomics holds 1,273,800 Series A Preferred Stock in GALY.
Agronomics completed a follow-on investment on 6 May 2022, investing a further
US$ 2 million into Chinese cultivated meat company CellX Limited (CellX),
subscribing for 857,363 preferred shares (the Subscription). CellX is a
leading cultivated meat company based in Shanghai. Agronomics first invested
in CellX in December 2020, with a US$ 50,000 investment in the form of a SAFE.
This SAFE converted to 230,681 preferred shares as stated in the 28th May 2021
announcement
(https://www.londonstockexchange.com/news-article/ANIC/announces-the-conversion-of-cellx-safe/14995460?showDisclaimer=true&lang=en)
. Agronomics holds 1,088,044 preferred shares, for a 5.14% equity ownership in
CellX, on a fully diluted basis.
On 20 June 2022, Agronomics led the founder's round of Liberation Labs
Holdings Inc (Liberation Labs) through an initial investment of US$ 627k for a
47% equity stake. Liberation Labs aims to become the global leader of
precision fermentation with purpose-built production facilities for industrial
biotechnology. As more companies approach commercialisation, the need for
large-scale, cost competitive manufacturing capacity will increase
dramatically. Liberation Labs was formed to address this ever-widening gap in
fermentation capacity. Liberation Labs is currently evaluating 6 geographies
to locate its first fit-for-purpose facility which, once built, will have a
total fermentation capacity in the millions of litres. This will hopefully be
the first of many facilities around the world helping precision fermentation
companies with much needed precision fermentation capacity.
Agronomics announced on 29 September 2021, the disposal of its total holding
of 40,000 shares in Oritain Global Limited (Oritain) for NZ$ 1.36 million
(approximately £0.7 million), representing an IRR of 74%. Agronomics invested
in Oritain in December 2019. The proceeds have since been used to fund new and
existing opportunities within cellular agriculture.
At 30 June 2022, the following investments are held by the Company:
Investee Invested capital Unrealised gain/(loss) from acquisition Fair value
£ £ £
BlueNalu 6,094,898 1,341,634 7,436,532
LIVEKINDLY Collective 2,329,916 2,239,695 4,569,611
Formo 3,523,812 5,684,792 9,208,604
New Age Eats 563,173 (563,173) -
Meatable 4,504,140 2,498,819 7,002,959
Mosa Meat 1,617,375 (110,962) 1,506,413
Solar Foods 5,273,739 (62,715) 5,211,024
Tropic Biosciences 2,300,610 169,447 2,470,057
Shiok Meats 396,447 (396,447) -
Rebellyous Foods 278,971 8,431 287,402
Vitrolabs 7,615,260 2,873,079 10,488,339
Bond Pet Foods 121,394 649,135 770,529
GALY 1,120,625 1,747,360 2,867,985
SuperMeat 9,406,135 6,238,654 15,644,789
Onego Bio 5,781,582 188,232 5,969,814
CellX 1,643,889 446,004 2,089,893
The EVERY Company 5,945,864 712,077 6,657,941
Ohayo Valley 1,114,849 118,815 1,233,664
California Cultured 1,608,521 209,902 1,818,423
Good Protein Fund 75,681 6,442 82,123
Clean Food Group 323,000 - 323,000
Geltor 7,211,284 637,704 7,848,988
Good Dog Food 500,000 - 500,000
Liberation Labs 514,589 - 514,589
Laverock Therapeutics - 15 15
Legacy investments 489,869 (179,475) 310,394
70,355,623 24,457,465 94,813,088
Note - unrealised gains and losses include fair value adjustments, and foreign
exchange adjustments
Financial Review
The Company recorded a net operating profit of £12,920,927 for the year
(2021: £9,743,418) - an increase of 32.61%, prior to accounting for the
Shellbay fee due. Taking into account a fee of £4,562,548 (2021: £7,394,360)
due to Shellbay, the Company recorded a net profit after taxation of
£8,358,379 (2021: £1,019,841). Our investment income, including net
unrealised gains, reflected a gain of £6,423,869 (2021: £10,669,991).
Unrealised foreign exchange gains of £6,513,031 (2021: loss of £107,275)
have been recognised in profit and loss.
The carrying amount of invested assets is £94,813,088 (2021: £38,770,676) -
an increase of 144.55%, and cash and equivalents and cash deposits stood at
£51,482,501 (2021: £62,436,497). Our total assets stood at £146,398,248
(2021: £101,652,840). Total liabilities stood at £2,485,346 (2021:
£1,623,024), which includes the cash portion of the Shellbay fee due of
£2,281,274. As a result, the net asset value per share at 30 June 2022 was
14.85 pence (2021: 12.51 pence).
Financing activity
During the year, the Company completed a successful funding round, raising
total gross proceeds of £32 million, issuing 30,492,206 new ordinary shares,
and receiving net proceeds of £31.3 million. Funds totaling £42 million have
been deployed in making 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 cellular agriculture sector,
and the Board will continue to seek new opportunities in line with its
Investing Policy, details of which can be found on the Company website -
https://agronomics.im/investors/ (https://agronomics.im/investors/) .
Richard Reed
Non-Executive Chairman
19 December 2022
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 2022.
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 22 and
24.
The Company recorded a net operating profit of £12,920,927 for the year
(2021: £9,743,418), prior to accounting for any Shellbay fee due. Taking into
account a Shellbay fee of £4,562,548 (2021: £7,394,360), the Company
achieved a net profit after taxation of £8,358,379 (2021: £1,019,841).
The net asset value per share at 30 June 2022 was 14.85 pence (2021: 12.51
pence).
Dividend
The Directors do not propose the payment of a dividend (2021: £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:
James Mellon Executive
Denham Eke Executive Finance Director
Richard Reed Independent Non-Executive Chairman
David Giampaolo Independent Non-Executive
Directors' interests
As at 30 June 2022, 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 2022 30 June 2021
James Mellon(1) 149,145,611 113,426,242
Denham Eke(2) 213,445 -
Richard Reed 6,354,412 3,818,181
David Giampaolo 2,434,783 2,000,000
(1) Galloway Limited, a company where James Mellon is considered to be the
ultimate beneficial owner, holds 149,145,611 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 2022 representing 3% or more
of the issued share capital of the Company:
Number of Percentage of total
ordinary shares issued capital
James Mellon (1) 149,145,611 15.25%
Chase Nominees Limited 39,533,515 4.08%
Hargreaves Lansdown (Nominees) 36,617,639 3.78%
HSBC Global Custody Nominee (UK) 35,000,000 3.61%
Note:
(1) James Mellon's shareholding consists of 149,145,611 shares held by
Galloway Limited. Galloway Limited is a company where James 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
19 December 2022
1st Floor, Viking House
St Paul's Square
Ramsey, Isle of Man
IM8 1GB
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 6.
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.
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 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 two Non-executive Directors and two
Executive Directors.
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 and David Giampaolo, 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.
Non-executive Directors receive their fees in the form of a basic cash
emolument. 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 Directors 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. Richard Reed chairs the ARCC, James
Mellon chairs the Remuneration Committee, and the Nominations Committee is
chaired by Richard Reed and comprised of the whole board.
Company Audit, Risk and Compliance Committee
The Company Audit, Risk and Compliance Committee 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 and one Executive Director. It is chaired by
James Mellon 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 23/23 2/2 - 2/2
David Giampaolo 23/23 2/2 - 2/2
James Mellon 23/23 - - 2/2
Denham Eke 23/23 2/2 - 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 19 December 2022 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
The Committee comprises of two Non-Executive Directors, being Richard Reed and
David Giampaolo, 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.
2022 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 2022 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:
§ Valuation of unquoted investments £94,813,088;
§ 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.
Richard Reed
Chairman ARCC
19 December 2022
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 people in the competitive local and wider markets;
§ The Company offers a competitive remuneration package to encourage
enhanced performance and rewards individual contributions to the success of
the Company, in a fair and responsible manner;
§ 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.
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 organisations.
Executive Directors Remuneration
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 Executive Directors is assessed using benchmarks from a group of comparable
organisations.
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 Directors provides for a notice period
of six months.
The Procedure for Determining Remuneration
The Remuneration Committee, comprising two Non-executive Directors and one
Executive Director, is responsible for setting the remuneration of the
Executive Directors and is chaired by James Mellon. 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:
2022 2021
£ £
Emoluments - salaries, bonuses, and taxable benefits - -
- fees 85,000 24,167
85,000 24,167
Directors' Emoluments
Bonus Termination 2022 2021
Fees £ payments Benefits Total Total
£ £ £ £ £
Executive - salary
Denham Eke - - - - - -
James Mellon* 15,000 - - - 15,000 -
Non-executive - fees
Anderson Whamond** - - - - - 833
Richard Reed 40,000 - - - 40,000 11,667
David Giampaolo 30,000 - - - 30,000 11,667
Aggregate emoluments 85,000 - - - 85,000 24,167
* In addition to director fees, further 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 (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.
James Mellon
Chairman of Remuneration Committee
19 December 2022
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
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;
· 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.
Report of the Independent Auditors, KPMG Audit LLC, to the members of Agronomics Limited
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
2022, 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 2022 and of the Company's profit for the year then ended;
· have been properly prepared in accordance with UK-adopted
international accounting standards; 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 the FRC Ethical Standard 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 2021):
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 £91,171,230 Internal Controls: Documenting and assessing the design and implementation of
2022: £97,978,610, (2021 £38,770,676) (2021: £38,054,470). The underlying portfolio of investments held by the the investment valuation processes and controls.
subsidiary comprises the entirety of its net assets. The Company also holds
Refer to Page 13 for Audit, Risk and Compliance Committee Report, note 1(b) unquoted investments directly amounting to £6,807,380 (2021: £59,704). Test of Detail: Auditing the accounts of the subsidiary as part of the audit
(use of estimates and judgement), 1(d) (accounting policy for financial
of the Company, including assessing the accounting policies adopted by the
instruments) and note 8 (fair value of financial instruments) disclosures 65% (2021: 37%) 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 our own 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 area of our audit given that it represents a Challenging managements' assumptions and inputs: Challenging the directors on
significant portion of the Company's total assets and involves the use of key judgments affecting investee company valuations, such as the achievement
significant judgments and subjective assumptions. The effect of these matters of key milestones or potential dilution impacts of recent transactions. Our
is that as part of our risk assessment, we determined that the valuation of work included consideration of events which occurred subsequent to the year
unquoted investments has a high degree of estimation uncertainty, with a end up until the date of this report.
potential range of reasonable outcomes greater than our materiality for the
financial statements as a whole and possibly many times that amount. 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 £1,200,000
(2021: £800,000), determined with reference to a benchmark of total
assets of £149,625,885, of which it represents approximately 0.8% (2021:
0.8%).
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% (2021: 65%) of materiality for the financial
statements as a whole, which equates to £780,000 (2021: £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 £60,000 (2021: £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 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
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
19 December 2022
Statement of comprehensive income
for the year ended 30 June 2022
2022 2021
Note £ £
Income
Net income from financial instruments at fair value through profit and loss 3 6,423,869 10,669,991
──────── ────────
6,423,869 10,669,991
Operating expenses
Directors' fees 2 (85,000) (24,167)
Other operating costs 4 (1,753,868) (795,131)
Foreign exchange gains/(losses) 6,513,031 (107,275)
──────── ────────
Profit from operating activities 5 11,098,032 9,743,418
Other costs
Consulting fee 2 (4,562,548) (7,394,360)
Recoverable / (Irrecoverable) VAT 2 1,478,872 (1,478,872)
──────── ────────
Profit after consulting fee 8,014,356 870,186
Interest received 344,023 149,655
──────── ────────
Profit before taxation 8,358,379 1,019,841
Taxation 1(h) - -
──────── ────────
Profit for the year 8,358,379 1,019,841
Other comprehensive income - -
──────── ────────
Total comprehensive profit for the year 8,358,379 1,019,841
════════ ════════
Basic profit per share (pence) 11 0.95 0.22
Diluted profit per share (pence) 11 0.91 0.20
The Directors consider that the Company's activities are continuing.
The notes on pages 26 to 40 form an integral part of these financial
statements.
Statement of financial position
as at 30 June 2022
2022 2021
Note £ £
Assets
Financial assets at fair value through profit or loss 7,8 94,813,088 38,770,676
Cash deposits 20,024,175 -
Trade and other receivables 102,659 445,667
Cash and cash equivalents 31,458,326 62,436,497
──────── ────────
Total assets 146,398,248 101,652,840
════════ ════════
Equity and liabilities
Capital and reserves
Share capital 6 968 799
Share premium 6 129,855,667 91,278,407
Share reserve 6 4,341,639 7,394,360
Accumulated earnings 9,714,629 1,356,250
──────── ────────
143,912,903 100,029,816
Liabilities
Trade and other payables 9 2,485,345 1,623,024
──────── ────────
Total liabilities 2,485,345 1,623,024
──────── ────────
Total equity and liabilities 146,398,248 101,652,840
════════ ════════
The notes on pages 26 to 40 form an integral part of these financial
statements.
These financial statements were approved by the Board of Directors on 19
December 2022 and were signed on their behalf by:
Denham Eke
Director
Statement of changes in equity
for the year ended 30 June 2022
Note 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
Profit for the year - - - 1,019,841 1,019,841
Transactions with owners of the company
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
════════ ════════ ════════ ════════ ════════
Note Share Share Share Accumulated
capital premium reserve earnings Total
£ £ £ £ £
Balance at 30 June 2021 6 799 91,278,407 7,394,360 1,356,250 100,029,816
Total comprehensive profit for the year
Profit for the year - - - 8,358,379 8,358,379
Transactions with owners of the company
Shares issued during the year 6 169 39,439,051 (7,394,360) - 32,044,860
Capitalised share issue costs 6 - (861,791) - - (861,791)
Recognition of share reserve 6 - - 4,341,639 - 4,341,639
──────── ──────── ──────── ──────── ────────
Balance at 30 June 2022 6 968 129,855,667 4,341,639 9,714,629 143,912,903
════════ ════════ ════════ ════════ ════════
The notes on pages 26 to 40 form an integral part of these financial
statements.
Statement of cash flows
for the year ended 30 June 2022
2022 2021
Note £ £
Cash flows from operating activities
Operating profit for the year 8,358,379 1,019,841
Purchase of investments 8 (42,032,410) (11,839,007)
Proceeds from sale of investments 8 696,456 628,632
Interest income (341,329) (149,655)
Realised and unrealised gains on investments 3 (12,362,604) (10,669,991)
Consulting fee to be settled in shares 2 2,281,274 7,394,360
─────── ───────
Operating outflows before changes in working capital (43,400,234) (13,615,820)
Change in trade and other receivables 318,395 (427,457)
Change in trade and other payables 9 873,841 1,687,123
Share issue costs settled in shares - 187,000
─────── ───────
Net cash used in operating activities (42,207,998) (12,169,154)
─────── ───────
Cash flows from financing activities
Proceeds from issue of shares 32,057,951 73,367,580
Proceeds from loan 10 - 1,900,000
Share issue commissions paid (861,791) (3,451,026)
Cash interest received 57,842 -
─────── ───────
Net cash from financing activities 31,254,002 71,816,554
─────── ───────
Cash flows from investing activities
Bank deposits not considered cash and cash equivalents (net) (20,024,175) -
─────── ───────
Net cash from investing activities (20,024,175) -
─────── ───────
(Decrease) / increase in cash and cash equivalents (30,978,171) 59,647,400
Cash and cash equivalents at beginning of year 62,436,497 2,789,097
─────── ───────
Cash and cash equivalents at the end of year 31,458,326 62,436,497
═══════ ═══════
The notes on pages 26 to 40 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").
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, 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
2022.
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 translated into the
functional currency at the exchange rate at the reporting date. Non-monetary
assets and liabilities that are measured at fair value in a foreign exchange
currency are translated into the functional currency at the exchange rate when
the fair value was determined. Non-monetary items that are measured based on
historical cost in a foreign currency are translated at the exchange rate at
the date of the transaction.
Foreign currency differences are generally recognised in profit or loss and
presented as foreign exchange gains / (losses).
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)
Classification of liabilities as current or non-current (Amendments to IAS 1) 1 January 2024
IFRS 17 Insurance Contracts 1 January 2023
Amendments to IFRS 17 1 January 2023
Disclosure of Accounting Policies (Amendments to IAS1 and IFRS Practice 1 January 2023
Statement 2)
Definition of Accounting Estimate (Amendments to IAS 8) 1 January 2023
Deferred Tax related Asset and Liabilities Arising from a Single Transaction - 1 January 2023
Amendments to IAS 12 Income Taxes
Sale or Contribution of Assets between an Investor and its Associate or Joint 1 January 2023
Ventures (Amendments to FRS 10 and IAS 28)
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 are no other standards, amendments or interpretations to
existing standards that are not yet effective, that would have a material
impact on the Company's reported results.
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 and in accordance with IFRS.
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.
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 2022 were as
follows:
2022 2021
£ £
Anderson Whamond (resigned 31 July 2020) - 833
Richard Reed 40,000 11,667
David Giampaolo 30,000 11,667
James Mellon 15,000 -
─────── ───────
85,000 24,167
═══════ ═══════
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 certain services to Agronomics. 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.
Under the updated terms, Shellbay will provide certain services to Agronomics,
including:
- Reviewing prospective asset purchases;
- Procuring and coordinating due diligence in relation to any
target approved by the Company;
- Providing appropriate information to the Board in relation to
any proposed acquisition or disposal opportunity;
- Providing transaction support services as requested by the
Company;
- Assisting in operating, developing and commercialising any
intellectual property and/or assets of the Company (including by way of joint
venture, licensing agreement or other partnership);
- Developing new markets and/or territories for assets and/or
intellectual property owned by the Company (including by way of manufacturing,
distribution and/or branding partnerships);
- Supplying the Board with regular reports on the progress of
companies and intellectual property where the Company has an interest
(including any financings);
- Assisting with recruitment of management teams and operational
supply chain partners for relevant products and intellectual property; and
- The services of James Mellon as Executive Director of the
Company.
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 current
reporting period will be settled 50% in cash and 50% in shares (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 2022).
During the year, a fee of £4,562,548 (30 June 2021: £7,394,360) was accrued
for and recorded in profit and loss (2021: £7,394,360). The Shellbay fee is
calculated as follows:
Audited net asset value at 30 June 2021 £100,029,816
Audited total issued shares at 30 June 2021 799,606,383
Audited net asset value per share at 30 June 2021 12.51 pence
Net asset value at 30 June 2022 (pre Shellbay fee) £146,194,180
Total issued shares at 30 June 2022 969,269,715
Net asset value per share at 30 June 2022 15.08 pence
Increase in net asset value per share 2.57 pence
Increase in net asset value subject to Shellbay fee £24,939,686
───────
15% Shellbay fee based on Net Asset Value per share increase £3,740,953
Add: 2021 Shellbay fee waived £821,595
───────
Total Shellbay fee due £4,562,548
═══════
During the year, Agronomics completed its VAT registration. Following this,
the irrecoverable VAT amount of £1,478,872 was recovered. The Shellbay fee
waived in the prior year of £821,595 is therefore due to Shellbay for the
current year.
At the election of Agronomics, the Shellbay fee will be equally settled by
issuing Agronomics shares and cash. Refer to note 6 and 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:
2022 2021
£ £
Realised gains on sale of investments 440,322 260,104
═══════ ═══════
Unrealised gains on investments 9,655,460 10,409,886
Unrealised losses on investments (3,671,913) -
─────── ───────
Net unrealised gains on investments 5,983,547 10,409,886
═══════ ═══════
Net income from financial instruments at fair value through profit and loss 6,423,869 10,669,991
═══════ ═══════
4 Other operating costs
2022 2021
£ £
Auditors' fees 81,149 37,797
Marketing 141,083 41,569
Professional fees 1,031,973 639,706
Sundry expenses 499,663 76,059
─────── ───────
1,753,868 795,131
═══════ ═══════
The Company has no employees.
5 Profit/(loss) from operating activities
Profit/(loss) from operating activities is stated
after charging:
2022 2021
£ £
Auditors' fees 81,149 37,797
Directors' fees 85,000 24,167
═══════ ═══════
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.
2022 2021
£ £
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 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
════════ ════════ ════════ ════════
Issued during the year for cash 139,171,126 139 32,044,721 -
Issued during the year to settle share reserve
30,492,206 30 7,394,330 (7,394,360)
Recognition of share reserve - - - 4,341,639
Share issue costs capitalised - - (861,791) -
─────── ─────── ─────── ───────
Balance at 30 June 2022 969,269,715 968 129,855,667 4,341,639
════════ ════════ ════════ ════════
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
2022 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 2022
have no dilutive effect on basic earnings per share.
As part of the fundraise completed during December 2021, the Company issued
warrants attached to the fundraising shares on a 1-for-1 basis, and as such,
138,368,193 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 30 pence per warrant. The warrants in issue at 30 June 2022 have
no dilutive effect on basic earnings per share.
Reconciliation of warrants in issue
2022 2021
Number Number
Balance at 1 July 297,727,274 -
Issued during the year 138,368,193 297,727,274
Exercised during the year (802,933) -
─────── ───────
Balance at 30 June 435,292,534 297,727,274
═══════ ═══════
Consulting fee due to Shellbay
In settlement of the Shellbay fee outstanding at 30 June 2021, 30,492,206 new
ordinary shares were issued to Shellbay.
As discussed in note 2, a consulting fee due to Shellbay of £4,562,548 has
been recognised (2021: £7,394,360). Shellbay has agreed with the Company that
any fee due for the current reporting period will be settled 50% in cash and
50% in shares (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
2022). As a result, 14,257,963 new ordinary shares (2021: 30,492,206 new
ordinary shares) will be issued to Shellbay at a price of 16 pence per share.
A Share Reserve has been recognised relating to these shares to be issued. The
shares to be issued to Shellbay have a dilutive effect on basic earnings per
share. Refer to Note 11.
Investment in Geltor, Inc
In part consideration of the investment, US$ 2,714,150 is to be satisfied
through the issuance of 8,676,951 new Ordinary Shares in Agronomics priced at
23 pence per share. A Share Reserve has been recognised relating to these
shares to be issued. The shares to be issued to Geltor, Inc have a dilutive
effect on basic earnings per share. Refer to Note 11.
Settlement of broker fee
Share issue costs incurred in relation to the fund raise completed during
December 2021 include commission fees which were partly paid in the Company's
shares, with no vesting conditions attached to such shares. The fair value of
the portion of the commission fees which was settled in shares was determined
indirectly on the basis of the subscription price of such shares on the
subscription date. During the year, 524,325 shares with a fair value of £0.23
per share, equal to subscription price, were issued as part payment of
commissions fees.
7 Financial assets at fair value through profit or loss
During the prior 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.
2022 2021
£ £
Quoted 250,691 656,502
Unquoted 6,795,650 59,704
Investment in subsidiary 87,766,747 38,054,470
─────── ───────
94,813,088 38,770,676
═══════ ═══════
7 Financial assets at fair value through profit or loss
(continued)
The composition of the investments held, both directly and indirectly through
the Subsidiary in the underlying portfolio, is as follows:
2022 2021
£ £
Equities 84,942,939 28,349,567
Convertible loan notes and SAFEs* 9,870,149 10,421,109
─────── ───────
94,813,088 38,770,676
═══════ ═══════
* 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 - Fair value of financial
instruments section - regarding the valuation of investments.
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, cash balances, and cash deposits, 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 and cash
deposits 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. Cash balances are available on demand, with cash
deposits having varying maturities up to 6 months.
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
2022 2021
£ £
Bank deposits 20,024,175 -
Cash and cash equivalents 31,458,326 62,436,497
Trade and other receivables 56,268 378,591
─────── ───────
51,538,769 62,815,088
═══════ ═══════
All of cash and cash equivalent and cash deposit 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 £9,481,309 (2021:
£ 3,877,068). Taking into account the Shellbay consulting fee, the
increase/decrease in equity and profit would be £10,903,505 (2021:
£4,458,628).
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 and
financial assets are as follows:
30 June 2022 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 204,071 - 2,281,274 - - - 2,485,345
204,071 - 2,281,274 - - - 2,485,345
30 June 2021
Trade and other payables 144,152 - 1,478,872 - - - 1,623,024
144,152 - 1,478,872 - - - 1,623,024
30 June 2022
Financial assets
Financial assets at fair value through profit or loss - - - - - 94,813,088 94,813,088
Bank deposits 10,024,175 - 10,000,000 - - - 20,024,175
Cash and cash equivalents 23,458,326 8,000,000 - - - - 31,458,326
Trade and other receivables 56,268 - - - - - 56,268
33,538,769 8,000,000 10,000,000 - - 94,813,088 146,351,857
30 June 2021
Financial assets
Financial assets at fair value through profit or loss - - - - - 38,770,676 38,770,676
Cash and cash equivalents 62,436,497 - - - - - 62,436,497
Trade and other receivables 378,591 - - - - - 378,591
62,815,088 - - - - 38,770,676 101,585,764
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 2022, 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 2022
Financial assets at fair value through profit and loss Cash at bank Total by currency
£ £ £
USD 65,031,554 81,983 65,113,537
EUR 28,898,815 - 28,898,815
─────── ─────── ───────
93,930,369 81,983 94,012,352
═══════ ═══════ ═══════
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
═══════ ═══════ ═══════
The following significant exchange rates applied during the year:
Average Average
rate for rate for
active year active year
2022 2021
USD 1.33208 1.34806
EUR 1.18085 1.12876
Year-end Year-end
rate rate
2022 2021
USD 1.21780 1.38310
EUR 1.16170 1.16670
Sensitivity analysis
A 10% percent strengthening of Sterling against the relevant currencies above
at 30 June 2022, and 5% at 30 June 2021, 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.
2022 Equity and Profit or loss
£
USD 6,511,354
EUR 2,889,882
2021 Equity and Profit or loss
£
USD (2,287,272)
CAD (57)
NZD (12,028)
EUR (2,507,507)
A 10% percent weakening of Sterling against the relevant currencies above at
30 June 2022, and 5% at 30 June 2021, 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 of financial instruments (continued)
Fair value hierarchy measurement at 30 June 2022
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 250,691 250,691 - -
Unquoted 6,795,650 - - 6,795,650
Investment in subsidiary 87,766,747 87,766,747
─────── ─────── ─────── ───────
94,813,088 250,691 - 94,562,397
═══════ ═══════ ═══════ ═══════
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 2021 38,126,352
Purchases 44,092,779
Disposals (256,133)
Unrealised foreign currency gain 5,940,553
Unrealised fair value gain 9,655,460
Unrealised fair value loss (3,280,099)
Accrued interest on loan note investments 283,485
───────
Closing balance at 30 June 2022 94,562,397
═══════
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
═══════
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 at 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 2022 and 30 June
2021 is consistent.
9 Trade and other payables
2022 2021
£ £
Provision for audit fee 55,000 37,797
Other provisions - 2,203
Trade creditors 149,071 104,152
Provision for irrecoverable VAT (note 2) - 1,478,872
Provision for Shellbay fee (note 2) 2,281,274 -
────── ──────
2,485,345 1,623,024
══════ ══════
Following the Company's VAT registration during the year, the irrecoverable
VAT amount recognised during the previous year has been recovered as part of
returns submitted.
As disclosed in Note 2, the Shellbay fee recognised during the year will be
settled partly in cash totalling £2,281,274 (2021: Nil).
10 Related party transactions
Under an agreement dated 1 December 2011, Burnbrae Limited, a Company for
which James 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 £31,500 (2021: £36,000) of which £3,000 was
outstanding as at the year-end (2021: £68).
Under an updated agreement dated May 2021, Shellbay Investments Limited, a
Company related to both James Mellon and Denham Eke, provides certain services
to the Company (see note 2). The charge for services provided in the year was
£4,562,548 (2021: £7,394,360), with the Company opting to settle the fee
50/50 in cash and Agronomics shares.
In accordance with the published investing policy, James Mellon holds personal
interests both directly and indirectly in the following investee companies:
AgeX Therapeutics Inc, Endurance RP, Portage Biotech Inc, SalvaRX Group PLC,
Cytox Limited, Simply Foods Inc, Shiok Meats Pte. Ltd, Good Dog Food Ltd and
Bond Pets LLC.
Edgewater Associates Limited ("Edgewater")
During the year, Directors and Officers insurance was obtained through
Edgewater, which is a 100% subsidiary of Manx Financial Group PLC ("MFG").
James Mellon and Denham Eke are Directors of MFG and Denham Eke a Director of
Edgewater.
The premium payable on the policy was £19,500 (2021: £7,748), of which £nil
was outstanding as at the year-end (2021: £nil).
11 Basic and diluted earnings per share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number
of shares in issue during the year.
The calculation of diluted earnings per share is based on the basic earnings
per share, adjusted to allow for the issue of shares, on the assumed
conversion of all dilutive share options.
2022 2021
£ £
Profit for the year 8,358,379 £1,019,841
No. No.
Weighted average number of ordinary shares in issue 877,490,411 468,460,964
Dilutive effect of shares to be issued (Note 6) 37,192,877 30,492,206
Diluted number of ordinary shares 914,683,288 498,923,170
Basic earnings per share (pence) 0.95 0.22
Diluted earnings per share (pence) 0.91 0.20
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
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 URSWRUVUUURARecent news on Agronomics
See all newsREG - Agronomics Limited - Director’s Dealing
AnnouncementREG - Agronomics Limited - Director’s Dealing
AnnouncementREG - Agronomics Limited - Director’s Dealing
AnnouncementREG - Agronomics Limited - Half-year Financial Report
AnnouncementREG - Agronomics Limited - Result of AGM
Announcement