REG - Blue Star Capital - Final Results
25/03/2022 13:00
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RNS Number : 0857G Blue Star Capital plc 25 March 2022
25 March 2022
Blue Star Capital plc
("Blue Star" or the "Company")
Final Results for the year ended 30 September 2021
Blue Star Capital plc (AIM: BLU), the investing company with a focus on
esports, technology and its applications within media and gaming, announces
its final results for the year ended 30 September 2021.
Highlights:
· Net assets have grown by approximately 36 per cent. over the year
increasing to £12,715,515 (2020: £9,326,562).
· pre-tax profits have increased by approximately 24 per cent. to
£2,129,135 (2020: £1,714,155).
· The cash position of the Company at 30 September 2021 was £296,106
compared to £132,167 in the corresponding period in 2020.
The Annual Report and notice of Annual General Meeting ("AGM") has today been
posted to shareholders and will shortly be available to view on the Company's
website www.bluestarcapital.co.uk (http://www.bluestarcapital.co.uk) .
The AGM will take place on 19 April 2022 at 10:00 a.m. at the offices of
Fladgate LLP, 10 Great Queen Street, London WC2B 5DG. Only the formal business
set out in the notice of AGM will be considered at the AGM.
Shareholders wishing to vote on any matters of business at the AGM are
encouraged to do so through completion of a proxy form which can be completed
and submitted to the Company. Proxies should be completed and returned in
accordance with the instructions on the form of proxy by no later than 10:00
a.m. on 13 April 2022.
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014.
For further information, please contact:
Blue Star Capital plc +44 (0) 20 3608 3019
Derek Lew
Cairn Financial Advisers LLP +44 (0) 20 7213 0880
(Nominated Adviser)
Jo Turner / Liam Murray
Stanford Capital Partners Limited +44 (0) 20 3650 3650
(Broker)
Patrick Claridge / John Howes / Bob Pountney
Chairman's Statement
Blue Star Capital plc ("the Company" or "Blue Star") provides investors with
exposure to a global portfolio of quoted and unquoted companies in
high-growth, disruptive technology sectors. It consists of 11 companies, eight
with a focus on esports and mobile gaming, one within each of decentralised
finance, payments and NFT sectors, all of which are demonstrating a strong
investment potential and growing investor interest.
During the period, the Company's Net Asset Value has grown by 36%, increasing
to £12,715,515 (2020: £9,326,562) with pre-tax profits up 24% to £2,129,135
(2020: £1,714,155).
SatoshiPay had a positive year in its development of its blockchain payment
technology culminating in the (post period) announcement of its subsidiary
Pendulum's successful €5m raise and launch of the Pen token. SatoshiPay is
capitalising on the new business models that are emerging as the demand and
use of crypto continues to increase and there is ever greater reliance on
decentralised ledger technologies. Decentralised finance solutions ("De-Fi"),
such as SatoshiPay's DTransfer, may be one of the most promising emerging
sectors to date. According to Coindesk, De-Fi has an estimated market size
of around $100 Billion. The Pen token will further the development of the
on-ramps and off-ramps that will be utilised by DTransfer and other De-Fi
solutions.
Adding to our strategy of investing in early-stage, high growth, disruptive
technology businesses is our investment in NFT Investments plc, which was
floated on the London AQSE Growth Market in April 2021. NFT Investments was
established to take advantage of the many opportunities that the nascent
non-fungible token sector offers.
Our portfolio approach continues broadly to deliver strong performances and we
provide the following portfolio company highlights for the period ended 30
September 2021 and subsequent material post balance sheet developments.
Esports
It was an extremely busy period for esports in general as market participation
grew significantly during the period with a number of lighthouse events
bringing the industry to the attention of mainstream sports media. This was
exemplified by recent news that esports may be included as a pilot event at
the 2022 Commonwealth Games with plans for esports to be part of the full
programme by the 2026 Games.
According to GrandView Research, the esports gaming market was valued at
approximately US$1.1 billion in 2019 with an expected CAGR of 24% to 2027. As
the audience reach (players and viewers) continues to expand, the industry is
expected to generate revenue of US$6.1 billion by 2027 through sponsorship,
merchandising, licensing, broadcasting and tournaments. Newzoo estimates that
by 2023, the number of esports viewers globally will grow to 646 million.
Given the anticipated growth in the market and the diverse array of commercial
opportunities, the Board remains firmly committed to esports in the belief
that it will constitute a significant proportion of the global sports industry
Our portfolio of esports companies is headlined by Dynasty (renamed Dynasty
Media & Gaming in a post period announcement) and Guild Esports PLC, each
of which have successfully launched their products, and the remaining six (The
Drops Esports, Diemens Esports PTY, Formation Esports SAS, Googly Esports plc,
The Dibs Esports Corp and Paidia esports Inc) are continuing to develop their
businesses. The Board remains confident in the strong underlying trends in
esports and believes in the benefit of the portfolio approach when investing
in early-stage companies, and that there continues to be value to be achieved
moving forward from the esports portfolio. The Board will continue to monitor
their progress and will update the market when appropriate to do so.
Dynasty Media & Gaming
Dynasty is a Singapore-based business providing a gaming and media platform
bringing together the entire gaming ecosystem into one single integrated
solution. The result for Dynasty's customers is a powerful tool for
acquiring and retaining high value users and customers, while creating
meaningful, long-term value.
During the period, Dynasty's first partner platform went live in Malaysia with
a soft launch of its proprietary EPM platform with the Malaysia esports
Federation (www.mesf.gg). The Company also strengthened its management team
with a number of senior appointments. Further agreements pending including the
development of a fully embedded e-commerce gaming shop that includes a
partnership with Boost, Malaysia's largest eWallet provider.
In January 2021, Dynasty reported its first monthly profit, at an operating
level, increasing monthly cash inflow with a strong balance sheet following
its successful funding round raising US$5 million at a post-money valuation of
US$50 million, in April 2021
Blue Star exercised its antidilution rights and invested approximately
US$650,000 (approximately £535,000) to maintain its holding in Dynasty at
approximately 13 percent of Dynasty's issued share capital.
To date, the Company has invested approximately £968,000 in Dynasty and based
on Dynasty's valuation of US$50 million in this latest fundraising round, the
Company's holding in Dynasty is valued at approximately US$6.5 million
(approximately £4.8 million).
Guild Esports PLC
Guild Esports plc, is a UK based company, with a focus on the European esports
market and, in October 2020, the first esports organisation to list on the
London Stock Exchange.
In March 2021, Guild Esports won its first major trophy in the European Grand
Finals of the Fortnite Champion Series, which was followed by a second trophy
win at the EU Spring Regional Rocket League Champion Series in April 2021.
Furthermore, Guild Esports became the first esports organisation to sign an
EMEA-wide sponsorship deal with Subway in March 2021 with a two-year
multi-million-pound sponsorship deal covering 55 markets across the EMEA
region, becoming its 'Official Quick-Service Restaurant Partner'. This
sponsorship deal was the third revenue-generating agreement signed by Guild
since its IPO in October 2020.
To date, the Company has invested approximately £706,000 in Guild equivalent
to a shareholding of 5.95% of the total issued share capital. At the Year end
the valuation was £1,561,606.
Leaf Mobile Inc. ("Leaf")
LEAF is a leading creator of free to play mobile games and owns a number of
successful games titles, including its recent launch of The Office: Somehow We
Manage. It is focussed on delivering highly engaging games that produce
enduring player engagement. Leaf listed on the TSX Venture Exchange in Canada
in April 2020.
In February 2021, Leaf Mobile completed its acquisition of 100% of East Side
Games Inc. for around C$159m and subsequently graduated from the TSX-V to the
TSX and is the leading publicly traded mobile game company in Canada.
In April 2020, Blue Star invested approximately £57,000 into LEAF at a price
of CAD$1.60 per consolidated share (following a 10:1 share consolidation which
occurred in July, 2021), prior to LEAF's listing on the TSX Venture Exchange.
LEAF's shares traded at a price of CAD$3.04 at the end of the period, valuing
Blue Star's holding in LEAF at approximately £111,000.
Decentralised Finance
It was a productive period for all the Company's investee companies spanning
Blockchain, decentralised finance and payments and the rapidly expanding NFT
market. Most notably SatoshiPay is now preparing to complete its first
cross-border payments on Pendulum network, following its successful launch of
its Pen tokens.
SatoshiPay
SatoshiPay supplies payment and money transfer infrastructure based on
blockchain technology to digital industries and globally operating SMEs.
Having initially focussed on building a micropayment infrastructure and
platform the decision was taken to use the same technology and experience to
move into B2B cross border payments service for businesses.
In December 2020, SatoshiPay announced that, in respect of DTransfer, it had
signed an agreement with German Bankhaus von der Heydt ("BDVH") to become the
first user of the bank's fully compliant euro-backed stablecoin ("EURB").
BDVH, in partnership with Bitbond, has introduced EURB on the Stellar network.
Bitbond was responsible for the development and integration of EURB and BDVH
provides its banking infrastructure and regulatory framework. EURB is the
first fiat asset directly backed by a banking institution on Stellar and will
allow instant money transfer on blockchain.
SatoshiPay intends to integrate EURB into its cross-border money transfer
service. BDVH establishes a stable on and off-ramp for EURB transactions
with instant EUR-based bank transfers within the Single Euro Payments Area
(which comprises 36 European member-states). This will provide users with an
easy solution to instantly send and receive euro-based payments.
In June 2021, SatoshiPay received an R&D grant from Stellar Development
Foundation which has been used to kickstart the development of the Pendulum
Network Project ("Pendulum") and develop a proof-of-concept implementation of
Pendulum.
SatoshiPay proposed the idea for Pendulum as a way to bring more complex
features to its open-source network, Stellar, without sacrificing the
network's efficiency.
Pendulum is being built around two large blockchain ecosystems, 'Stellar' and
'Polkadot', an open source blockchain that aims to establish the missing link
between fiat currency and De-Fi ecosystems through a sophisticated smart
contract network.
De-Fi has emerged in the past year and is positioned to profoundly disrupt
traditional financial services like trading, credit/lending, and
yield-generating accounts. The decentralised finance industry grew in value by
over twentyfold in 2020 alone and reached more than $60 billion in Total Value
Locked in smart contracts as of May 2021.
It is intended that SatoshiPay's Pendulum network will connect De-Fi to the
larger foreign exchange market, building automated market makers to introduce
scalable liquidity pools for fiat currencies as well as creating yield earning
opportunities for fiat token holders. As such, SatoshiPay expects to become
involved in an increasing number of opportunities within the De-Fi space, a
market which is currently estimated at $100 billion.
The Directors of Satoshi Pay expect that Pendulum will enable the business to
enter the 'protocol space', something they view as a significant opportunity
to increase its impact in the blockchain ecosystem.
Blue Star currently has a 27.9% interest in SatoshiPay's share capital, which
is valued on the basis of the last external fund raise in 2019 at £4.6
million. It is the Board's view that the valuation of SatoshiPay may have
increased significantly since the last fund raise given the launch of
DTransfer and Pendulum.
Payments and NFT
Sthaler Limited
Sthaler is a biometric identity and payments technology business which enables
an individual to identify themselves and pay using the unique vein patterns
within a finger. Its FinGo ID platform uses a biometric called VeinID which
instantly recognises an individual through the unique pattern of veins inside
each finger.
Overall, the Board is pleased with progress at Sthaler over the last year and
believes the recent (post period) appointment of Dermot Smurfit to the Board
is an indication that the business is well positioned to optimise the value of
its Fingo ID platform.
Blue Star's shareholding in Sthaler is approximately 0.8% at 30 September 2021
and is valued on the basis of Sthaler's last completed fundraise at
approximately £387,000, compared with a cost of £50,000.
NFT Investments
In April 2021, the Company invested a further £200,000 in the IPO of NFT
Investments plc, which admitted to trading on the London AQSE Growth Market.
NFT Investments has been launched by the co-founders of Argo Blockchain plc to
invest in non-fungible tokens, a specialised class of assets that certifies
authenticity and proof of ownership of digital assets.
NFT Investments is one of the world's first pure-play investment companies
focused exclusively on investing in NFTs to launch on a stock market in any
major jurisdiction worldwide.
The Company had previously made an investment, of £50,000, in an earlier
funding round of NFT Investment and, as a result of the further investment,
holds 9,000,000 ordinary shares representing approximately 0.9 per cent. of
NFT's issued share capital valued at £248,000 at the year end.
Post-period highlights:
Post period end, SatoshiPay, Leaf, Guild, NFT Investments and Sthaler released
further positive news.
In November 2021, SatoshiPay's raised $5m in an oversubscribed private sale
round of its PEN token from strategic partners in order to advance its
development. It quickly followed the news in January 2022 by announcing a
series of senior management appointments and promotions to support the
expansion of its Pendulum business as DTransfer is being readied for its first
Pendulum-based cross border money transfers.
Later in December 2021, Leaf Mobile announced its intention to change its name
to East Side Games Group, with trading symbol EAGR on the TSX, and the
appointment of Jason Bailey as Executive Chair of the Company's Board of
directors in addition to his existing role as Chief Revenue Officer.
In December 2021, Guild Esports signed Nicolas Villalba ("Nicolas99fc"), who
has ranked in the top 3 FIFA players worldwide since 2018 and Argentina's
second highest esports earner and signed a three-year global sponsorship deal
in January 2022 with Bitstamp, one of the world's longest-running crypto
exchanges, for £4.5 million, making it the company's exclusive official
cryptocurrency exchange partner. It also announced trading in its shares
commenced on the OTCQB Venture Market in the US during the month.
In January 2022, NFT Investments announced the proposed acquisition of Pluto
Digital plc ("Pluto"), a crypto technology and venture company, for a total
consideration of £96m. The shares in NFT Investments were subsequently
suspended from trading pursuant to shareholder approval for NFT Investments to
issue 2.4 billion new shares in NFT, which would constitute a Reverse Takeover
under the AQSE rules.
Outlook
The Board believes the Company's portfolio has achieved some significant
operational and financial milestones during the period. In particular, the
Company is pleased that, whilst some have raised additional funds in the
private equity markets, others have chosen to list their shares on a regulated
exchange to both raise additional funds and deliver liquidity for early-stage
investors such as Blue Star. Given the increase in NAV, plus the cash reserves
and liquidity provided by our listed investments, the Board is confident that
is well-funded and positioned to perform well over the coming years.
Derek Lew
Chairman
Strategic Report
The Directors present their strategic report on the Company for the year ended
30 September 2021.
Review of Business and Analysis Using Key Performance Indicators
The full year's profit was £2,129,315 compared to a profit of £1,714,155 For
the year ended 30 September 2020.
Net assets have increased to £12,715,515 at 30 September 2021, changing from
£9,326,562 at 30 September 2020.
The cash position at the end of the year increased to £296,106 from £132,167
as at 30 September 2020.
Key Performance Indicators
The Board monitors the activities and performance of the Company on a regular
basis. The indicators set out below have been used by the Board to assess
performance over the year to 30 September 2021. The main KPIs for the Company
are listed as follows:
2021 2020
Valuation of investments £12,367,204 £9,063,432
Cash and cash equivalents £296,106 £132,167
Net current assets £197,465 £106,949
Profit before tax £2,129,315 £1,714,155
Investing Policy
Assets or companies in which the Company can invest
The Company can invest in assets or companies in, inter alia, the following
sectors:
● Technology;
● Gaming and esports; and
● Media
The Company's geographical range is mainly UK companies but considers
opportunities in the mainland EU and will actively co-invest in larger deals.
The Company can take positions in investee companies by way of equity, debt or
convertible or hybrid securities.
Whether investments will be active or passive investments
The Company's investments are passive in nature but may be actively managed.
The Company may be represented on, or observe, the boards of its investee
companies.
Holding period for investments
The Company's investments are likely to be illiquid and consequently are to be
held for the medium to long term.
Spread of investments and maximum exposure limits, Policy in relation to
cross-holdings and investing restrictions
The Company does not have any maximum exposure limits, limits on
cross-holdings or other investing restrictions. Under normal circumstances, it
is the Directors intention not to invest more than 10% of the Company's gross
assets in any individual company (calculated at the time of investment). The
Company has accumulated a 27.7% stake in SatoshiPay, which the Board believes
represents a rare opportunity to generate significant shareholder value. In
addition, the Company has accumulated stakes above 10% in some of its esports
investments which are early stage and expected to be diluted over time.
Policy in relation to gearing
The Directors may exercise the powers of the Company to borrow money and to
give security over its assets. The Company may also be indirectly exposed to
the effects of gearing to the extent that investee companies have outstanding
borrowings.
Returns and distribution policy
It is anticipated that returns from the Company's investment portfolio will
arise upon realisation or sale of its investee companies, rather than from
dividends received. Whilst it is not possible to determine the timing of
exits, the Board will seek to return capital to shareholders when appropriate.
Life of the Company
The Company has an indefinite life dependent on obtaining sufficient funding.
Future developments
The Company is continuing to develop an investment portfolio with the capacity
for substantial growth and increases in value.
Promotion of the Company for the benefit of the members as a whole
The Director's believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as required
by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
● Consider the likely consequences of any decision in the long term,
● Act fairly between the members of the Company,
● Maintain a reputation for high standards of business conduct,
● Consider the interests of the Company's employees,
● Foster the Company's relationships with suppliers, customers and
others, and
● Consider the impact of the Company's operations on the community
and the environment.
The following paragraphs summarise how the Directors fulfil their duties:
The Company is quoted on AIM and its members will be fully aware, through
detailed announcements, shareholder meetings and financial communications, of
the Board's broad and specific intentions and the rationale for its decisions.
The Board recognises its responsibility for setting and maintaining a high
standard of behaviour and business conduct. There is no special treatment for
any group of shareholders and all material information is disseminated through
appropriate channels and available to all through the Company's news releases
and website.
When selecting investments, issues such as the impact on the community and the
environment have actively been taken into consideration. The Company's
approach is to use its position to promote positive change for the people with
whom it interacts.
The Company is committed to being a responsible business. The Company pays its
employees and creditors promptly and keeps its costs to a minimum to protect
shareholders funds. There were no employees in the Company other than the 3
Directors in the current and prior-year and therefore effectiveness of
employee policies is not relevant for the Group.
Principal risks and uncertainties
The Company seeks investments in late-stage venture capital and early-stage
private equity opportunities, which by their very nature allow a diverse
portfolio of investments within different sectors and geographic locations.
The Company's primary risk is loss or impairment of investments. This is
mitigated by careful management of the investment and in particular, only
continuing to support those investments which demonstrate potential to achieve
a positive exit and decisively determining those which do not. Portfolio
and capital management techniques are fully applied according to industry
standard practice.
It will be necessary to raise additional funds in the future by a further
issue of new Ordinary shares or by other means. However, the ability to fund
future investments and overheads in Blue Star Capital Plc as well as the
ability of investments to return suitable profit cannot be guaranteed,
particularly in the current economic climate.
The Company may not be able to identify suitable investment opportunities and
there is no guarantee that investment opportunities will be available, and the
Company may incur costs in conducting due diligence into potential investment
opportunities that may not result in an investment being made.
The value of companies similar to those in Blue Star Capital's portfolio and
in particular those at an early stage of development, can be highly volatile.
The price at which investments are made, and the price which the Company may
realise for its investment, will be influenced by a large number of factors,
some specific to the Company and its operations and some which may affect the
sector.
By Order of the Board
Derek Lew
Chairman
Directors' Report
The Directors present their report together with the audited financial
statements for the year ended 30 September 2021.
Results and dividends
The trading results for the year ended 30 September 2021 and the Company's
financial position at that date are shown in the attached financial
statements.
The Directors do not recommend the payment of a dividend for the year (2020:
£nil).
Principal activities and review of the business
The principal activity of the Company is to invest in the technology and the
esports and gaming sectors. A review of the business is included within the
Chairman's Statement and Strategic Report.
Directors serving during the year
Derek Lew
Brian Rowbotham Appointed on 8 February 2021
Sean King
Anthony Fabrizi Resigned on 8 February 2021
On 9 February 2021, Derek Lew also assumed the role of Chief Executive
Officer.
Directors' interests
The Directors at the date of these financial statements who served, and their
interest in the ordinary shares of the Company, are as follows:
30 September 2021 30 September 2020
Number of Warrants Number of Warrants
ordinary Shares ordinary Shares
Anthony Fabrizi 77,000,000 - 62,000,000 65,000,000
Sean King 18,250,000 - 18,250,000 -
Derek Lew 211,527,778 - 138,750,000 130,000,000
Brian Rowbotham - - - -
Significant shareholders
As at 22 March 2022 so far as the Directors are aware, the parties (other than
the interests held by Directors) who are directly or indirectly interested in
3% or more of the nominal value of the Company's share capital is as follows:
Number of Percentage of issued share capital
Ordinary Shares
Mark White 549,395,525 11.00%
Nicolas Slater 500,119,024 10.17%
Pioneer Media Holdings Inc 329,916,333 6.60%
Paniolo Ventures Limited 208,333,333 4.80%
Derek Lew 211,527,778 4.20%
Related party transactions
Related party transactions and relationships are disclosed in note 18.
Going concern
The Company has reported a loss for the year excluding fair value gain on the
valuation of investments and foreign exchange movements of £317,588.
The Company had cash reserves at the year-end of £296,106 and a portfolio of
investment companies which include listed investments which can be easily
liquidated should further funds be required.
The Directors therefore consider that the company has adequate resources to
continue its operational existence for the foreseeable future.
The Company's employees carry out their duties remotely, via the network
infrastructure in place. As a result, there was no disruption to the
operational activities of the Company during the COVID-19 social distancing
and working from home restrictions. All key business functions continue to
operate at normal capacity and overall, our investment portfolio has been
relatively unaffected by the impact of COVID-19.
Events after the reporting date
Events after the reporting date are disclosed in note 21.
Political Donations
There were no political donations during the current or prior year.
Provision of information to Auditor
In so far as each of the Directors are aware at the time of approval of the
report:
● there is no relevant audit information of which the Company's
auditor is unaware; and
● the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information and to
establish that the auditor is aware of that information.
Auditor
Adler Shine LLP have expressed their willingness to continue as auditor and a
resolution to re-appoint Adler Shine LLP will be proposed at the Annual
General Meeting.
On behalf of the board of Directors
Derek Lew
Chairman
Statement of Comprehensive Income
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Notes 2021 2020
£ £
Revenue - -
Fair valuation movements in financial instruments designated at fair value 11 2,772,447 2,056,698
through profit or loss
2,772,447 2,056,698
Administrative expenses 3 (650,339) (349,159)
4 2,122,108 1,707,539
Operating profit
Finance income 5 7,207 6,616
Profit before and after taxation and total comprehensive income for the year 2,129,315 1,714,155
Profit per ordinary share:
Basic earnings per share on profit for the year 10 0.05p
0.05p
Diluted earnings per share on profit for the year 10 0.05p 0.05p
Statement of Financial Position
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Notes 2021 2020
£ £
Non-current assets
Financial assets at fair value through profit or loss 11 9,063,432
12,367,204
Convertible loan note 12 150,846 156,181
Total non-current assets 12,518,050 9,219,613
Current assets
Trade and other receivables 13 135,501 2,668
Cash and cash equivalents 14 296,106 132,167
Total current assets 431,607 134,835
12,949,657 9,354,448
Total assets
Current liabilities
Trade and other payables 15 234,142 27,886
Total liabilities 234,142 27,886
Net assets 12,715,515 9,326,562
Shareholders' equity
Share capital 16 4,892,774 4,133,251
Share premium account 9,575,072 9,074,957
Other reserves - 143,210
Retained earnings (1,752,331) (4,024,856)
Total shareholders' equity 12,715,515 9,326,562
Statement of Changes in Equity
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Share capital Share premium Other reserves Retained earnings Total
£ £ £ £ £
Year ended 30 September 2020
At 1 October 2019 2,142,584 8,852,724 64,190 (5,850,121) 5,209,377
Profit for the year and total comprehensive income - - - 1,714,155 1,714,155
Shares issued in year 1,990,667 277,833 - - 2,268,500
Lapse of warrants - - (64,190) 64,190 -
Share issue costs - (55,600) - - (55,600)
Exercise of warrants - (46, 920) 46,920 -
Share based payment - 190,130 - 190,130
At 30 September 2020 4,133,251 9,074,957 143,210 (4,024,856) 9,326,562
Year ended 30 September 2021
At 1 October 2020 4,133,251 9,074,957 143,210 (4,024,856) 9,326,562
Profit for the year and total comprehensive income - - - 2,129,315 2,129,315
Shares issued in year 759,523 500,115 - - 1,259,638
Exercise of warrants - - (54,704) 54,704 -
Lapse of warrants - - (88,506) 88,506 -
At 30 September 2021 4,892,774 9,575,072 - (1,752,331) 12,715,515
Share capital
Share capital represents the nominal value on the issue of the Company's
equity share capital, comprising £0.001 ordinary shares.
Share premium
Share premium represents the amount subscribed for the Company's equity share
capital in excess of nominal value.
Other reserves
Other reserves represent the cumulative cost of share-based payments.
Retained earnings
Retained earnings represent the cumulative net income and losses of the
Company recognised through the statement of comprehensive income.
Cash Flow Statement
FOR THE YEAR ENDED 30 SEPTEMBER 2021
2021 2020
Note £ £
Operating activities
Profit for the year 2,129,315 1,714,155
Adjustments:
Finance income (7,207) (6,616)
Fair value gains (2,772,447) (2,056,698)
Foreign exchange 318,394 (134,636)
Share based payment net charge - 190,130
Working capital adjustments
(Increase)/decrease in trade and other receivables (132,833) 7,003
Increase in trade and other payables 206,256 4,575
Net cash used in operating activities (258,522) (282,087)
Investing activities
Purchase of convertible loan notes - (156,181)
Increase in investments (844,360) (1,769,909)
Interest received 7,183 6,616
Net cash used by from investing activities (837,177) (1,919,474)
Financing activities
Proceeds from issue of equity 1,259,638 2,268,500
Share issue costs - (55,600)
Net cash generated from financing activities 1,259,638 2,212,900
Net increase in cash and cash equivalents 163,939 11,339
Cash and cash equivalents at start of the year 14 132,167 120,828
Cash and cash equivalents at end of the year 14 296 106 132,167
Note to the financial statements
1. Accounting policies
General information
Blue Star Capital Plc (the Company) invests principally in the media,
technology and gaming sectors.
The Company is a public limited company incorporated and domiciled in the
United Kingdom. The address of its registered office is Griffin House, 135
High Street, Crawley RH10 1DQ.
The Company is quoted on the AIM market of the London Stock Exchange Group
plc.
Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively IFRS) issued by the International Accounting
Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and
with those parts of the Companies Act 2006 applicable to companies reporting
under IFRS.
These financial statements have been prepared under the historical cost
convention, as modified by the revaluation of assets and liabilities held at
fair value.
Associates are those entities in which the Company has significant influence,
but no control, over the financial and operating policies. Investments that
are held as part of the Company's investment portfolio are carried in the
statement of financial position at fair value even though the Company may have
significant influence over those companies. This treatment is permitted by IAS
28 Investment in Associates, which requires investments held by venture
capital organisations to be excluded from its scope where those investments
are designated, upon initial recognition, as at fair value through profit or
loss and accounted for in accordance with IFRS 9, with changes in fair value
recognised in the statement of comprehensive income in the period of the
change. The Company has no interests in associates through which it carries on
its business.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Company's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant in the financial
statements, are disclosed in note 2.
The Company is an investment entity and, as such, does not consolidate the
investment entities it controls. The Company's interests in subsidiaries are
recognised at fair value through profit and loss.
Going concern
The Company has reported a loss for the year excluding fair value gain on the
valuation of investments and foreign exchange movements of £317,588.
The Company had cash reserves at the year-end of £296,106 and a portfolio of
investment companies which include listed investments which can be easily
liquidated should further funds be required.
The Directors therefore consider that the company has adequate resources to
continue its operational existence for the foreseeable future.
Although the Directors have a reasonable expectation that the Company has
adequate resources to continue its operational existence for the foreseeable
future the successful completion of future fund raisings constitutes a
material uncertainty that may cast doubt over the Company's ability to
continue as a going concern. The financial statements do not contain the
adjustments that would result if the Company was unable to continue as a going
concern.
New standards, amendments and interpretations adopted by the Company
The following IFRS or IFRIC interpretations were effective for the first time
for the financial year beginning 1 October 2020. Their adoption has not had
any material impact on the disclosures or on the amounts reported in these
financial statements:
Standards/ Application
interpretations
IFRS 16 Amendments to provide lessees with an exemption from assessing whether a
COVID-19 related rent concession is a lease modification
IAS 1 & IAS 8 amendments Amendments regarding the definition of materiality
IFRS 3 amendments Amendments to clarify the definition of a business and amendments updating a
reference to the conceptual framework
New standards, amendments and interpretations not yet adopted
Standards/ Application
interpretations
IAS 1 amendments Presentation of Financial Statements: Classification of Liabilities as Current
or Non-Current.
Effective: Annual periods beginning on or after 1 January 2023
IFRS 3 amendments Business Combinations - Reference to the Conceptual Framework.
Effective: Annual periods beginning on or after 1 January 2022
IFRS 7, IFRS 9, IFRS 16 Amendments regarding replacement issues in the contract of IBOR reform.
Effective: Annual periods beginning on or after 1 January 2021
IFRS 16 Amended by Covid-19 Related Rent Concessions beyond 30 June 2021 (amendment to
IFRS 16)
Effective: Annual periods beginning on or after 1 April 2021
New standards, amendments and interpretations not yet adopted (continued)
IAS 8 Amendments regarding the definition of accounting estimates
Effective Annual periods beginning on or after 1 January 2023
IAS 12 Amendments resulting from Deferred tax related to Assets and Liabilities
arising from a single transaction.
Effective Annual periods beginning on or after 1 January 2023
IAS 16 amendments Amendments prohibiting a company from deducting from the cost of property
plant and equipment amounts received from selling items produced while the
company is preparing the asset for intended use.
Effective: Annual periods beginning on or after 1 January 2022
IAS 37 amendments Amendments regarding the costs to include when assessing whether a contract is
onerous.
Effective: Annual periods beginning on or after 1 January 2022
IFRS 1, IFRS 9, IFRS 16, IAS41 Annual Improvements to IFRS Standards 2018-2020 Cycle. (Fees in the '10 per
cent' test for derecognition of financial liabilities) Effective: Annual
periods beginning on or after 1 January 2022
There are no IFRS's or IFRIC interpretations that are not yet effective that
would be expected to have a material impact on the Company.
Financial assets
The Company classifies its financial assets into one of the categories
discussed below, depending on the purpose for which the asset was acquired.
The Company has not classified any of its financial assets as held to maturity
or available for sale.
The Company's accounting policy for each category is as follows:
Fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets
designated upon initial recognition as at fair value through profit or loss.
Financial assets designated at fair value through the profit or loss are those
that have been designated by management upon initial recognition. Management
designated the financial assets, comprising equity shares and warrants, at
fair value through profit or loss upon initial recognition due to these assets
being part of the Company's financial assets, which are managed and their
performance evaluated on a fair value basis.
Financial assets at fair value through the profit or loss are recorded in the
statement of financial position at fair value. Changes in fair value are
recorded in "Fair valuation movements in financial assets designated at fair
value through profit or loss".
Financial assets, comprising equity shares and warrants, are valued in
accordance with the International Private Equity and Venture Capital ("IPEVC")
guidelines.
(a) Early-stage investments: these are investments in immature companies,
including seed, start-up and early-stage investments. Such investments are
valued at cost less any provision considered necessary, until no longer viewed
as an early stage
(b) or unless significant transactions involving an independent
third-party arm's length, values the investment at a materially different
value:
(c) Development stage investments: such investments are in mature
companies having a maintainable trend of sustainable revenue and from which an
exit, by way of floatation or trade sale, can be reasonably foreseen. An
investment of this stage is periodically re-valued by reference to open market
value. Valuation will usually be by one of five methods as indicated below:
I. At cost for at least one period unless such basis is unsustainable;
II. On a third-party basis based on the price at which a subsequent
significant investment is made involving a new investor;
III. On an earnings basis, but not until at least a period since the
investment was made, by applying a discounted price/earnings ratio to the
profit after tax, either before or after interest; or
IV. On a net asset basis, again applying a discount to reflect the illiquidity
of the investment.
V. In a comparable valuation by reference to similar businesses that have
objective data representing their equity value.
(d) Quoted investments: such investments are valued using the quoted
market price, discounted if the shares are subject to any particular
restrictions or are significant in relation to the issued share capital of a
small quoted company.
At each balance sheet date, a review of impairment in value is undertaken by
reference to funding, investment or offers in progress after the balance sheet
date and provisions is made accordingly where the impairment in value is
recognised.
The Company uses the following hierarchy for determining and disclosing the
fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets
or liabilities.
Level 2: other techniques for which all inputs which have a significant
effect on the recorded fair value are observable, either directly or
indirectly.
Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks, other short term highly liquid investments with original maturities of
three months or less.
For the purpose of the cash flow statement, cash and cash equivalents consist
of cash and cash equivalents as defined above, net of outstanding bank
overdrafts.
Financial liabilities
The Company classifies its financial liabilities in the category of financial
liabilities measured at amortised cost. The Company does not have any
financial liabilities at fair value through profit or loss.
Financial liabilities measured at amortised cost
Financial liabilities measured at amortised cost include:
Trade payables and other short-term monetary liabilities, which are initially
recognised at fair value and subsequently carried at amortised cost using the
effective interest rate method.
Finance income
Finance income relates to interest income arising on cash and cash equivalents
held on deposit and interest accrued on loans receivable. Finance income is
accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable.
Operating loss
Operating loss is stated after crediting all items of operating income and
charging all items of operating expense.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount
of an asset or liability in the balance sheet differs from its tax base.
Recognition of deferred tax assets is restricted to those instances where it
is probable that taxable profit will be available against which the difference
can be utilised.
The amount of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the balance sheet date and are
expected to apply when the deferred tax liabilities/ (assets) are settled/
(recovered).
Provisions
Provisions are recognised when the Company has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Company
will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period,
taking into account the risks and uncertainties surrounding the obligation.
When a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of the cash flows
(when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, a receivable is recognised as an
asset if it is virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
Present obligations under onerous leases are recognised and measured as
provisions. An onerous contract is considered to exist where the Company has
a contract under which the unavoidable costs of meeting the obligations under
the contract exceed the economic benefits expected to be received from the
contract.
Share-based payments
All services received in exchange for the grant of any share-based
remuneration are measured at their fair values. These are indirectly
determined by reference to the fair value of the share options/warrants
awarded. Their value is appraised at the grant date and excludes the impact of
any non-market vesting conditions (for example, profitability and sales growth
targets).
Share based payments are ultimately recognised as an expense in the Statement
of Comprehensive Income with a corresponding credit to other reserves in
equity, net of deferred tax where applicable. If vesting periods or other
vesting conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options/warrants
expected to vest. Non-market vesting conditions are included in assumptions
about the number of options/warrants that are expected to become exercisable.
Estimates are subsequently revised, if there is any indication that the number
of share options/warrants expected to vest differs from previous estimates. No
adjustment is made to the expense or share issue cost recognised in prior
periods if fewer share options ultimately are exercised than originally
estimated.
Upon exercise of share options, the proceeds received net of any directly
attributable transaction costs up to the nominal value of the shares issued
are allocated to share capital with any excess being recorded as share
premium.
Where share options are cancelled, this is treated as an acceleration of the
vesting period of the options. The amount that otherwise would have been
recognised for services received over the remainder of the vesting period is
recognised immediately within the Statement of Comprehensive Income.
2. Critical accounting estimates and judgements
The Company makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are those in relation to:
Fair value of financial instruments
The Company holds investments that have been designated at fair value through
profit or loss on initial recognition. The Company determines the fair value
of these financial instruments that are not quoted, using valuation
techniques, contained in the IPEVC guidelines. These techniques are
significantly affected by certain key assumptions. Other valuation
methodologies such as discounted cash flow analysis assess estimates of future
cash flows and it is important to recognise that in that regard, the derived
fair value estimates cannot always be substantiated by comparison with
independent markets and, in many cases, may not be capable of being realised
immediately.
In certain circumstances, where fair value cannot be readily established, the
Company is required to make judgements over carrying value impairment, and
evaluate the size of any impairment required.
The methods and assumptions applied, and the valuation techniques used, are
disclosed in note 11.
Share based payments
The estimates of share-based payments requires that management selects an
appropriate valuation model and make decisions on various inputs into the
model including the volatility of its own share price, the probable life of
the options before exercise, and behavioural consideration of employees.
3. Nature of expenses
2021 2020
£ £
Directors remuneration 117,667 104,291
Share based payments - 190,130
Legal and professional fees 144,520 167,833
Foreign exchange loss/(gains) 325,554 (134,636)
Other expenses 62,598 21,541
650,339 349,159
4. Operating profit
2021 2020
£
£
This is stated after charging:
Auditor's remuneration - statutory audit fees 14,100 13,000
Fair valuation movements in financial instruments 2,772,447 2,056,698
5. Finance income
2021 2020
£
£
Interest received on short term deposits 24 52
Interest receivable on convertible loan note 7,183 6,564
7,207 6,616
6. Share based payments
Share warrants
2021 2021 2020 2020
Weighted average exercise Weighted average exercise price (p)
price (p)
Number Number
Outstanding at the beginning of the year 0.21 1,448,333,333 0.6 110,000,000
Lapsed during year 0.17 (428,333,333) 0.6 (110,000,000)
Issued during year - - 0.21 1,598,333,333
Exercised during the year 0.16 (428,333,333) 0.1 (150,000,000)
Outstanding at the end of the year 0.25 591,666,667 0.21 1,448,333,333
The contracted average remaining life of warrants at year end was 0.1 years
(2020: 0.78 years).
At 30 September 2021, the Company had the following warrants in issue:
Date of grant 8 June 2020 3 August 2020
Number outstanding 225,000,000 366,666,667
Contractual life 12 months 15 months
Exercise price (pence) 0.175p 0.25p
Estimated fair value per warrant N/A N/A
The fair value of warrants is determined using the Black-Scholes valuation
model. The charge to the profit and loss account was £ NIL (2020: £190,130).
The warrants granted on 8 June and 3 August 2020 fall outside the scope of
IFRS 2 and as such no charge has been made.
7. Staff costs, including Directors
2021 2020
£
£
Wages and salaries 91,667 98,834
Share-based payments 50,000 46,681
Social security costs 7,130 5,457
148,797 150,972
During the year the Company had an average of 3 employees who were management
(2020: 3). The employees are Directors and key management personnel of the
Company.
8. Directors' and key management personnel
Directors' remuneration for the year ended 30 September 2021 is as follows:
Salary Fees Share based payments Compensation for loss of office Total
2021
A Fabrizi 26,667 - - 25,000 51,667
D Lew - - 50,000 - 50,000
B Rowbotham 16,000 - - - 16,000
S King - 24,000 - - 24,000
42,667 24,000 50,000 25,000 141,667
Derek Lew was issued 50,000,000 ordinary shares at 0.1p in respect of his
Director's fees.
Directors' remuneration for the year ended 30 September 2020 is as follows:
Salary Fees Share based payments Compensation for loss of office Total
2020
A Fabrizi 46,667 - 15,372 - 62,039
D Lew 27,500 - 31,309 - 58809
W Henbrey 1,667 - - - 1,667
S King - 23,000 - - 23,000
75,834 23,000 46,681 - 145,515
Emoluments above are paid in full at the end of both financial years.
9. Taxation
The tax assessed on loss before tax for the year differs to the applicable
rate of corporation tax in the UK for small companies of 19% (2020: 19%). The
differences are explained below:
2021 2020
£
£
Profit before tax 2,129,315 1,714,155
Profit) before tax multiplied by effective rate of corporation tax of 19% 404,570 325,690
(2020:19%)
Effect of:
(Profit)/loss on disposal of investments -
Fair value gain on investments (526,765) (390,773)
Capital allowances (204) (249)
Expenses not deductible for tax purposes 36 42,964
Losses carried forward 122,363 22,368
Tax charge in the income statement - -
The Company has incurred tax losses for the year and a corporation tax expense
is not anticipated. The amount of the unutilised tax losses has not been
recognised in the financial statements as the recovery of this benefit is
dependent on future profitability, the timing of which cannot be reasonably
foreseen. The unrecognised and revised deferred tax asset at 30 September
2021 is £817,710 (2020: £717,511).
On 10 June 2021, the UK Government's proposal to increase the rate of UK
corporation tax from 19% to 25% with effect from 1 April 2023 was enacted into
UK law.
10. Earnings per ordinary share
The earnings and number of shares used in the calculation of loss/earnings per
ordinary share are set out below:
2021 2020
Basic:
Profit for the financial period 2,129,315 1,714,155
Weighted average number of shares 4,617,745,344 3,360,033,538
Earnings per share (pence) 0.05 0.05
Fully Diluted:
Profit for the financial period 2,129,315 1,714,155
Weighted average number of shares 4,617,745,344 3,397,884,005
Earnings per share (pence) 0.05 0.05
As at the end of the financial period ended 30 September 2021, there were
591,666,667 share warrants in issue, which had an anti-dilutive effect on the
weighted average number of shares.
11. Financial assets held at fair value through profit of loss
2021 2020
£ £
FV movements in investments 2,772,447 2,056,698
FV movements in convertible loan notes - -
Fair valuation movements in financial assets designated at fair value through 2,772,447 2,056,698
profit or loss
Investments 2021 2020
£ £
At start of year 9,063,432 5,101,587
Additions 844,360 1,769,906
Net fair value gain for the year 2,772,447 2,056,698
FX gain/(loss) for the year (313,035) 135,241
At end of year 12,367,204 9,063,432
Investments 2021 2020
£ £
Quoted investments 1,672,929 1,901,922
Unquoted investments 10,694,275 7,161,510
12,367,204 9,063,432
The company holds 30,626,500 shares in Guild Esports plc which at the year-end
were valued at £1,561,606. The share price of Guild Esports Plc on 15 March
2022 was 2.247p valuing the company's holding at £688,177.
The country of incorporation for all investments held at 30 September 2021 are
listed below:
Country of Incorporation
£
Dynasty Media & Gaming 4,826,405 Singapore
Guild Esports PLC 1,561,606 United Kingdom
East Side Group (Formerly Leaf Mobile Inc) 111,323 Canada
SatoshiPay Limited 4,609,226 United Kingdom
Sthaler Limited 386,744 United Kingdom
NFT Investments PLC 247,500 United Kingdom
Formation Esports SAS 115,559 United Kingdom
The Drops Esports Inc 154,091 Canada
Googly Esports Plc 156,400 United Kingdom
Diemens Esports Pty (Formerly the Cubs Esports Pty) 139,449 Australia
Paidia Esports Inc 58,901 Canada
The methods used to value these unquoted investments are described below.
Fair value
The fair value of unquoted investments is established using valuation
techniques. These include the use of quoted market prices, recent arm's
length transactions, the Black-Scholes option pricing model and discounted
cash flow analysis. Where a fair value cannot be estimated reliably the
investment is reported at the carrying value at the previous reporting date in
accordance with International Private Equity and Venture Capital ("IPEVC")
guidelines.
The Company assesses at each balance sheet date whether there is any objective
evidence that the unquoted investments are impaired. The unquoted
investments are deemed to be impaired, if and only if, there is objective
evidence of impairment as a result of one or more events that have occurred
after the initial recognition of the asset (an incurred 'loss event') and that
loss event (or events) has an impact on the estimated future fair value of the
investments that can be reliably measured.
12. Convertible loan note
2021 2020
£ £
Convertible loan note 150,846 156,181
150,846 156,181
On 11 October 2019, the Company invested US$185,000 in convertible loan notes
issued by The Dibs Esports Corp. The loan notes carry interest of 5% per annum
and have a 36-month life span.
13. Trade and other receivables
2021 2020
£ £
Prepayments 771 2,668
Other receivables 134,730 -
135,501 2,668
Included within other receivables is £122,507 receivable in respect of
exercise of warrants. This amount was received post year end.
The Directors consider that the carrying value of trade and other receivables
approximates to the fair value.
14. Cash and cash equivalents
2021 2020
£ £
Cash at bank and in hand 296,106 132,167
296,106 132,167
Cash and cash equivalents comprise cash at bank and other short-term highly
liquid investments with an original maturity of three months or less. The
Directors consider that the carrying value of cash and cash equivalents
approximates to their fair value.
15. Trade and other payables
2021 2020
£ £
Trade payables 13,948 5,030
Accruals 14,731 17,400
Other payables 205,463 5,456
234,142 27,886
Included in other payables is an amount of £200,000 payable in respect of the
company's investment in NFT Investments Plc. This amount was paid post year
end.
All trade and other payables fall due for payment within one year. The
Directors consider that the carrying value of trade and other payables
approximates to their fair value.
16. Share capital
Issued and fully paid
2021 2021 2020 2020
£
£
Number Number
At 1 October 4,233,249,519 4,133,251 2,242,582,853 2,142,584
Shares issued in the year 759,523,477 759,523 1,990,666,666 1,990,667
At 30 September 4,992,772,996 4,892,774 4,233,249,519 4,133,251
During the year ended 30 September 2021 the following shares were issued:
Number £ Issue price
per share
9 November 2020 95,000,000 95,000 0.1p
16 April 2021 585,079,032 1,023,888 0.175p
5 May 2021 34,444,445 62,000 0.18p
5 May 2021 45,000,000 78,750 0.175p
759,523,477 1,259,638
During the year ended 30 September 2020 the following shares were issued:
Number £ Issue price
per share
18 October 2019 450,000,000 450,000 0.1p
12 November 2019 450,000,000 450,000 0.1p
19 February 2020 50,000,000 50,000 0.1p
17 April 2020 100,000,000 100,000 0.1p
17 April 2020 17,500,000 17,500 0.1p
4 May 2020 29,166,666 35,000 0.12p
9 June 2020 416,666,666 500,000 0.12p
3 August 2020 193,333,334 290,000 0.15p
1 September 2020 184,000,000 276,000 0.15p
11 September 2020 100,000,000 100,000 0.1p
1,990,666,666 2,268,500
17. Financial instruments
Categories of financial assets and liabilities
The following tables set out the categories of financial instruments held by
the Company:
Financial instruments Loans and receivables
Note 2021 2020
£ £
Trade and other receivables 13 135,501 2,668
Cash and cash equivalents 14 296,106 132,167
431,607 134,835
Designated upon initial recognition
Note Held for trading Fair value Total
through profit or loss
£ £ £
At 30 September 2021
Investments 11 - 12,367,204 12,367,204
Total financial assets - 12,367,204 12,367,204
At 30 September 2020
Investments 11 - 9,063,432 9,063,432
Total financial assets - 9,063,432 9,063,432
Fair value measurement
Note Level 1 Level 2 Level 3
£ £ £
At 30 September 2021
Investments 11 1,672,929 - 10,694,275
Total financial assets 1,672,929 - 10,694,275
At 30 September 2020
Investments 1,901,922 - 7,161,510
Total financial assets 1,901,922 - 7,161,510
Financial liabilities Financial liabilities measured at amortised cost
Note 2021 2020
£ £
Trade payables 15 13,948 5,030
Other payables 15 205,463 5,456
219,411 10,486
The Company's financial instruments comprise investments recognised at fair
value through profit and loss, cash and cash equivalents, convertible loan
notes, other receivables and trade payables that arise directly from the
Company's operations. The main purpose of these instruments is to invest in
portfolio companies. Investments are held at fair value through profit and
loss. The main risks arising from holding these financial instruments is
market risk and credit risk.
Interest rate risk
The Company's exposure to changes in interest rates relate primarily to cash
and cash equivalents. Cash and cash equivalents are held either on current or
on short term deposits at floating rates of interest determined by the
relevant bank's prevailing base rate. The Company seeks to obtain a favourable
interest rate on its cash balances through the use of bank treasury deposits.
Any reasonable change in interest rate would not have a material impact on
finance income that the Company could receive in the course of a year, based
on the current level of cash and cash equivalents either held in current
accounts or short-term deposits.
Market risk
All trading instruments are subject to market risk, the potential that future
changes in market conditions may make an instrument less valuable, due to
fluctuations in security prices, as well as interest and foreign exchange
rates. Market risk is directly impacted by the volatility and liquidity in the
markets in which the related underlying assets are traded.
Sensitivity analysis
The following table looks at the impact on net profit or loss based on a given
movement in the fair value of all the investments.
2021 2020
£ £
10% increase in fair value 1,236,720 906,343
10% decrease in fair value 1,124,291 823,948
20% increase in fair value 2,473,441 1,812,686
20% decrease in fair value 2,061,200 1,510,572
30% increase in fair value 3,710,161 2,719,030
30% decrease in fair value 2,853,970 2,091,561
Borrowing facilities
The operations to date have been financed through the placing of shares and
investor loans. It is the Board's policy to keep borrowing to a minimum,
where possible.
Liquidity risks
The Company seeks to manage liquidity risk by ensuring sufficient liquid
assets are available to meet foreseeable needs and to invest liquid funds
safely and profitably. All cash balances are immediately accessible and the
Company holds no trades payable that mature in greater than 3 months, hence a
contractual maturity analysis of financial liabilities has not been presented.
Since these financial liabilities all mature within 3 months, the Directors
believe that their carrying value reasonably equates to fair value.
Foreign currency risk management
The Company undertakes certain transactions denominated in currencies other
than pound sterling, hence exposures to exchange rate fluctuations arise. The
fair values of the Company's investments that have foreign currency exposure
at 30 September 2021 are shown below.
2021
EUR SGD CAD AUD
£ £ £ £
Fair value of investments 4,609,226 4,826,405 324,315 139,449
2020
EUR SGD CAD AUD
£ £ £ £
Fair value of investments 4,866,459 1,382,165 212,026 139,449
The Company accounts for movements in fair value of financial assets in the
comprehensive income. The following table illustrates the sensitivity of the
equity in regard to the company's financial assets and the exchange rates for
£/ Euro, £/ Singapore Dollar, £/ Canadian Dollar and £/ Australian Dollar.
It assumes the following changes in exchanges rates:
- £/EUR +/- 20% (2020: +/- 20%)
- £/SGD +/- 20% (2020: +/- 20%)
- £/CAD +/- 20% (2020: +/- 20%)
- £/AUD +/- 20% (2020: +/- 20%)
The sensitivity analysis is based on the Company's foreign currency financial
instruments held at each balance sheet date.
If £ Sterling had weakened against the currencies shown, this would have had
the following effect:
2021
EUR SGD CAD AUD
£ £ £ £
Fair value of investments 921,845 965,281 64,863 27,890
2020
EUR SGD CAD AUD
£ £ £ £
Fair value of investments 973,292 276,433 42,405 27,890
If £ Sterling had strengthened against the currencies shows, this would have
had the following effect:
2021
EUR SGD CAD AUD
£ £ £ £
Fair value of investments (768,204) (804,401) (44,236) (23,242)
2020
EUR SGD CAD AUD
£ £ £ £
Fair value of investments (811,077) (230,361) (35,338) (23,242)
The Company has also invested in a convertible loan note, denominated in USD,
of $185,000. An adverse movement in the exchange rate will impact the ultimate
amount of the investment held, a 20% weakening or strengthening in £ Sterling
would result in a profit of £30,169 (2020: 29,956) and a loss of £25,141
(2020: 24,964) respectively.
The Company's functional and presentational currency is the pound sterling as
it is the currency of its main trading environment.
Credit risk
The Company's credit risk is attributable to cash and cash equivalents and
trade and other receivables.
Cash is deposited with reputable financial institutions with a high credit
rating. The maximum credit risk relating to cash and cash equivalents and
trade and other receivables is equal to their carrying value of £ 431,607
(2020: £134,835).
Capital Disclosure
As in previous years, the Company defines capital as issued capital, reserves
and retained earnings as disclosed in statement of changes in equity. The
Company manages its capital to ensure that the Company will be able to
continue to pursue strategic investments and continue as a going concern.
The Company does not have any externally imposed financial requirements.
18. Related party transactions
The Company has a 5.95% investment in Guild Esports plc. Derek Lew, a director
of the Company, is also a non-executive director of Guild Esports plc. The
Company also has a 0.30% investment in Leaf Mobile Inc where Derek Lew a
non-executive director.
In April 2021 Derek Lew purchased an investment for £50,000 on behalf of the
company which was reimbursed in August 2021.
19. Operating lease commitments
At the balance sheet date, the Company had no outstanding commitments under
operating leases.
20. Ultimate Controlling Party
The Company considers that there is no ultimate controlling party.
21. Post Balance Sheet Events
There were no significant Post Balance Sheet Events.
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