REG - Blue Star Capital - Final Results
07/03/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230307:nRSG0777Sa&default-theme=true
RNS Number : 0777S Blue Star Capital plc 07 March 2023
7 March 2023
Blue Star Capital plc
("Blue Star" or the "Company")
Final Results for the year ended 30 September 2022
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 2022.
Highlights
· The Company's two principal investments, representing
approximately 90% of the portfolio's value, continue to make strong progress.
· The Company incurred a pre-tax loss for the period of
£1,301,008, (2021: profit £2,129,315) The main factors behind this
difference were the write-off of four of the esports investments made in 2019
and the reduction in valuation of the company's quoted portfolio. The
operating expenses of the Company were broadly unchanged but have been reduced
by 20% since September 2022 and will be further reduced where possible.
· The cash position of the Company at 30 September 2022 was
£86,575, compared with £296,106 as at 30 September 2021.
· Post year end, the Company increased its cash balance to
£179,000 through the disposal of its remaining shareholding in NFT
Investments and some of its shareholding in Guild Esports plc. The current
value of the quoted investments held by the Company is approximately
£147,000.
The Annual Report and notice of Annual General Meeting ("AGM") will be posted
to shareholders shortly and will be available to view on the Company's website
http://www.bluestarcapital.co.uk (http://www.bluestarcapital.co.uk) .
The AGM will be held at the offices of Cairn Financial Advisers LLP, 80
Cheapside, 3(rd) Floor, EC2V 6EE on 31 March 2023 at 10.30 a.m. 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 10:30 a.m. on 29 March
2023.
Tony Fabrizi Chief Executive Officer of Blue Star Capital plc, commented:
"The last year was one of consolidation with our main two portfolio companies
making strong progress. The strategic review, undertaken in September 2022,
led to the decision to focus attention on the Company's two principal
investments and to manage the business, if possible, without issuing further
equity. Overall, we are pleased with recent progress and the Board views the
future with confidence."
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) 777 178 2434
Tony Fabrizi
Cairn Financial Advisers LLP +44 (0) 20 7213 0880
(Nominated Adviser & Broker)
Jo Turner / Liam Murray
Chairman's Statement
Blue Star Capital plc ("the Company" or "Blue Star") provides investors with
exposure to a portfolio of geographically diverse quoted and unquoted
companies in high-growth, disruptive technology sectors. The current portfolio
is heavily weighted towards private investments with over 90% of the portfolio
invested in two private companies.
During the period, the Company's Net Asset Value ("NAV") decreased by 10% to
£11,414,507 (2021: £12,715,515) with the Company incurring a pre-tax loss of
£1,301,008 (2021: profit £2,129,315). The decline in NAV and loss for the
year principally reflected the write down of four esports investments and the
loss incurred on some of the Company's quoted investments. The Company ended
the year with cash of £86,575 and this has been increased subsequently
through the sale of some of the Company's quoted investments post year end to
a current balance of approximately £179,000. The current value of the quoted
investments held by the Company is approximately £147,000
In September 2022 and after my appointment as executive Chairman, the Board
set out its strategy for the next two years. The key objective being to manage
the current portfolio with the aim of maximising the value of the Company's
principal investments. As part of this focus, the Board also announced that it
did not intend to make any further investments without first obtaining
shareholder approval and to also endeavour to manage the business without any
further equity raises. The cost base of the company has also been reduced on
an annualised basis by around 20%.
We provide the following portfolio company highlights for the period ended 30
September 2022.
Esports
The Esports market, according to Statista, is projected to reach US$1.6bn in
2023 rising to US$2.35bn by 2027 on the back of continued user growth
alongside increases in Revenue Per User. China remains the number one market
for Esports, followed by the US, South Korea, Germany and the UK.
Our original portfolio of esports companies consisted of eight businesses with
Dynasty Media & Gaming being the most significant. In the portfolio review
undertaken in September 2022, the Board indicated that it was likely to take a
prudent approach to the unquoted esports portfolio businesses and following a
detailed review and the lack of any clear progress with certain of these
investee companies the decision has been taken to provide in full against
three of these investments (The Drops Esports, Diemens Esports and Formation
Esports SAS) and to write off in full the Convertible Loan Note to the Dibs
Esports Corp. Of the remaining investments, their values are carried by Blue
Star as follows; Dynasty, on the basis of its last private fundraising, at
approximately £5.6m; Guild is retained at market value; Googly is carried at
its most recent fundraising valuation with our shareholding being valued at
approximately £65,000 and Paidia esports Inc, our most recent private
investment, is retained at cost of approximately £65,300.
Details of the four Esports investments are provided below.
Dynasty Media & Gaming
Dynasty has set out to solve two major challenges that currently exist within
the gaming industry. First, large consumer brands know they need to engage
with gamers but struggle to do so. Dynasty solves this problem by providing a
complete white-label gaming ecosystem including communities, esports,
tournaments, rewards and gaming stores. Second, game publishers lack
sufficient local resources or distribution partners to maximise specific
market opportunities. Dynasty's network, via major telcos and other B2C
platforms that will directly connect to hundreds of millions of gamers,
provides the scale the game developers seek.
In April 2022 the Company announced that Dynasty had secured three additional
multi-year partnership agreements with large-scale organisations. Under the
first partnership agreement with Maxis, Malaysia's leading telecoms operator,
a Dynasty-built and managed platform was launched to millions of potential
customers. The second partnership agreement was signed with Spark, New
Zealand's largest telco, which enjoys a dominant market position and premium
brand presence. Finally, the third multi-year agreement was secured with
Googly, a market-leading Indian group that operates within the digital
payments, sports, and media industries.
In October 2022, Dynasty announced that it has signed a distribution agreement
with Indosat Ooredoo Hutchison ("IOH"), Southeast Asia's second largest
telecommunications company, with almost 100 million subscribers in Indonesia.
This agreement will see Dynasty deliver Web3 Play to Earn ("P2E") games,
developed by Pioneer Media Holdings Inc, to IOH which will actively promote to
their extensive subscriber base. Indonesia is Southeast Asia's leading gaming
market, with over 200 million gamers generating nearly US$2 billion in annual
gaming revenues. The first P2E title, which has been localised for the
Indonesian gaming market, is due to launch in the next few months, and
additional titles are planned to be released throughout 2023.
Dynasty has also entered into a 50/50 joint venture in Australia with Lets
Play Live ("LPL"). LPL is the regions leading esports tournament organiser and
content creator with over 400,000 existing customers and long-term
partnerships with the world's leading games publishers. Launching in Australia
next month, the platform will instantly become the most significant gaming
platform and community in Australia.
It is important to note that all of the above contracts are based on Dynasty's
revised business model of a hybrid 'SaaS plus revenue share' model with
Dynasty delivering what it describes as a genuine managed service solution.
In summary, Dynasty has signed six contracts and is currently live on three
platforms. The Company is in discussions with an increasing number of large
organisations excited by Dynasty's offering and expects to announce new large
contacts later this year. Against this background, we remain confident that
Dyansty is well positioned to achieve significant growth in 2023.
To date, the Company has invested approximately £968,000 in Dynasty and based
on Dynasty's valuation of US$50 million in its latest fundraising round in
April 2021, the Company's holding in Dynasty is valued at approximately US$6.5
million (approximately £5.6 million).
Guild Esports PLC
Guild Esports PLC is a global teams organisation and lifestyle brand, which
was the first esports organisation to list on the London Stock Exchange. Since
its formation, Guild has won 8 major esports tournaments and currently runs
five teams across four different games.
In the last financial year, Guild brought in significant revenues through the
signing of sponsorship agreements with global brands. Some of Guild's leading
brand partners include Bitstamp, one of the world's best-established
cryptocurrency exchanges, which signed as Official Cryptocurrency Partner in
January 2022, in a three-year deal worth £4.5 million. In August 2022, Guild
renewed and expanding its existing deal with Samsung; Samsung Display is now
Guild's Official Display Partner and Samsung TV/AV is Guild's Official TV
Partner for the UK and Ireland.
Guild's largest sponsorship deal to date was signed with Sky UK Ltd., one of
Europe's leading media and entertainment companies. The three-year global
sponsorship agreement signed in September 2022 is understood to be one of the
largest ever esports sponsorships signed in Europe. Sky is now Guild's
Official Premier Partner and has gained exclusive naming rights to Guild's
Shoreditch HQ, the Sky Guild Gaming Centre. Guild opened this new HQ in
January 2022, providing a state-of-the-art physical space for the Guild
Academy and to support other commercial opportunities.
Guild is co-owned by David Beckham, and in September 2022 Guild renegotiated
its brand ambassador agreement with Beckham's image rights company, reducing
Guild's minimum payment obligations by £7.5m over the next two years. Beckham
instead receives 20% of Guild's sponsorship and merchandising revenues,
demonstrating his ongoing faith in Guild's business model and ability to
attract high-quality sponsors.
At the year end the Company held 21,951,500 shares in Guild with a valuation
of £471,957. Subsequently, the Company sold 10 million shares and its
shareholding in Guild currently stands at 11,951,500 shares equivalent to
approximately 2% of Guild's total issued share capital.
Other Esports investments
The Company's remaining two esports investments are performing in line with
management expectations. Googly underwent a major reorganisation in 2021,
following which Blue Star's shareholding was reduced to 0.6%. In conjunction
with the reorganisation, Googly raised US$2 milllion at a US$10 million
valuation placing a value on the Company's shareholding of approximately
£65,000. The Googly platform is in beta launch at present and is expected to
live shortly. The initial feedback has been very positive. Paidia, is an
all-women's esports business which has achieved significant growth. The market
positioning of Paidia is attracting significant attention both from the media
as well as large global brands. The Company invested approximately £59,000
into Paidia in 2021 and is carrying the investment at cost.
Blockchain and decentralised finance
SatoshiPay
SatoshiPay's mission is to connect the world through instant payments. To
achieve this ambition, SatoshiPay is initially focussing on building the
Pendulum Network Project ("Pendulum") which was established in June 2021.
Pendulum aims to establish the missing link between fiat currency and De-Fi
ecosystems through a sophisticated smart contract network. It is intended that
the Pendulum network will connect De-Fi to the larger foreign exchange market,
aggregating stablecoin liquidity for fiat currencies in liquidity pools of
automated market makers ("AMMs"). This technology allows nearly instant
foreign exchange with low slippage and fees while eliminating counterparty
risks. With AMMs all users are additionally able to provide liquidity in any
chosen currency and earn yield from that activity.
Having incubated Pendulum from June 2021, SatoshiPay announced in November
2021, that Pendulum had raised US$5 million in an oversubscribed private sale
round of its upcoming PEN token from strategic partners. Since raising these
funds Pendulum and SatoshiPay have achieved the following key milestones:
• secured a place on the Berkeley University
blockchain Xcelerator program and received a grant from the Web3 Foundation to
build a bridge (Spacewalk Bridge) between Stellar and Substrate-based
parachains.
• launched a second parachain project, Amplitude,
in June 2022 and won a Kusama parachain auction on 4 July 2022, achieving $1.2
million in contributions. Amplitude went live on 11 August 2022 and serves as
a testing ground for the future Pendulum parachain, with new features first
being rolled out on Amplitude.
• SatoshiPay achieved profitability in the year
ended 31 December 2021 and is expected to continue to be profitable in 2022.
• developed close relationships with a number of
large crypto organisations such as Web3 Foundation, Parity and Stellar
Development Foundation and a growing reputation generally in the blockchain
ecosystem.
• SatoshiPay successfully incubated the 0xAmber
AMM Project for which it secured 5 per cent of 0xAmber's future tokens. Amber
is a novel AMM design for low-risk, single-sided liquidity provision,
significantly lower slippage and fees compared to other AMM designs.
Post year end, in late December 2022, Pendulum announced that it had completed
a crowdloan and was set to become a Polkadot Parachain. The Campaign was the
fastest parachain crowdloan in the history of the Polkadot ecosystem, reaching
a hardcap of 300,000 $DOT (approximately £1.14 million) in approximately
three minutes. The Campaign marked the highest auction hardcap since May 2022
in the Polkadot ecosystem and is seen as a demonstration of the strong support
and enthusiasm for Pendulum's integration into this ecosystem.
In February 2023, Pendulum announced it was now live on the Polkadot mainnet.
The mainnet launch is the first phase of a three phase Pendulum launch roadmap
and marks a significant milestone for both the project and its community.
Phase two will be the token transfer event that allows for the transfer of
tokens. The availability of the PEN token on exchanges will be achieved in the
third phase. This third step is crucial because it will allow new users to
access and utilise the Pendulum blockchain. Pendulum also announced that it
was its intention to complete the launch roadmap by March 2023.
Outside of Pendulum and its linked business opportunities, SatoshiPay owns
100% of Dtransfer which was established in 2019 as a cross-border payment
solution on blockchain. The directors of SatoshiPay believe the money transfer
market is primed for disruption and the launch of Pendulum is an important
step in SatoshiPay entering this market. SatoshiPay plan on reinvigorating
their efforts with Dtransfer once the Pendulum launch is successfully
completed.
The successful incubation of Pendulum followed by 0xAmber.com (formerly:
Amber.com) provides the board of SatoshiPay with confidence that they are well
positioned to incubate other DeFi applications with a stablecoin, foreign
exchange or business focus.
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
approximately £4.72 million. It has been the Board's view for some time that
the valuation of SatoshiPay may have increased significantly since the last
fund raise in 2019. In order to assess the market value of SatoshiPay the
Board of Blue Star is looking to carry out a formal sales process at an
appropriate time in the next twelve months which may lead to the sale of all
or part of its shareholding in SatoshiPay. There is no guarantee that this
exercise will result in a whole or partial sale but the Board believes it's
important to undertake such a process so as to obtain a better understanding
of SatoshiPay's current and potential value.
Other investments
Sthaler Limited
Sthaler is a Digital Identity business which enables an individual to identify
themselves 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. FinGo Pay
is approved to authenticate multiple payment types including payment cards and
real-time payments (bank-to-bank).
During the period under review, Sthaler secured partnerships in Australia,
Poland, UK and Egypt in the following sectors: general retail, healthcare and
gaming. Nick Dryden, the founder, has changed roles, moving to Executive
Chairman and Billy Dally, formerly of Goldman Sachs and Dubai Holdings, has
been appointed Chief Executive officer.
Blue Star's shareholding in Sthaler is approximately 0.7% at 30 September 2022
and is valued on the basis of Sthaler's last completed fundraise, valuing Blue
Star's holding at approximately £394,412, compared with a cost of £50,000.
East Sides Games ("ESG")
ESG is a leading creator of free to play mobile games and owns a number of
successful games titles. In January 2022, ESG announced a multi-year
partnership with BBC Studios, the commercial subsidiary of the global British
Broadcasting Corporation ("BBC"), for the worldwide release of a free-to-play
mobile title based on the Doctor Who franchise.
In April 2020, Blue Star invested approximately £57,000 into ESG, formerly
known as LEAF, at a price of CAD$1.60 per consolidated share (following a 10:1
share consolidation which occurred in July 2021), prior to listing the shares
on the TSX Venture Exchange. ESG's shares traded at CAD$1.75 as of 30
September 2022, valuing Blue Star's holding at approximately £71,400.
NFT Investments plc
The Company held 5,750,000 shares in NFT Investments plc which at the period
end were valued at approximately
£57,000 and, as part of the Company's strategy of selling non-core
investments, these were sold on 14 November 2022.
Outlook
The Company has set out a clear strategy for maximising shareholder value over
the next two years and is focused on achieving the key objectives it has set.
The two key investments are well positioned to deliver on their strategies,
and we will continue supporting them wherever possible. While Blue Star is a
long-term shareholder, we must consider the most appropriate time to exit our
investments and this will be a key consideration in the next twelve months.
Overall, we believe the portfolio has significant upside and look forward to
working with our portfolio companies to realise this value.
Anthony Fabrizi
Executive Chairman
7 March 2023
Strategic Report
The Directors present their strategic report on the Company for the year ended
30 September 2022.
Review of Business and Analysis Using Key Performance Indicators
The full year's loss was £1,301,008 compared to a profit of £2,129,315 for
the year ended 30 September 2021.
Net assets have decreased to £11,414,507 at 30 September 2022, changing from
£12,715,515 at 30 September 2021. The cash position at the end of the year
decreased to £86,575 from £296,106 as at 30 September 2021.
During the year, there was a fair value decrease in the company's investment
assets of, £445,223 (2021: £2,459,412 gain). A full review of the company's
portfolio investments is provided in the Chairman's statements.
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 2022. The main KPIs for the Company
are listed as follows:
2022 2021
Valuation of investments £11,390,278 £12,367,204
Cash and cash equivalents £86,575 £296,106
Net current assets £24,229 £197,465
(Loss)/Profit before tax (£1,301,008) £2,129,315
2022 2021
Valuation of investments £11,390,278 £12,367,204
Cash and cash equivalents £86,575 £296,106
Net current assets £24,229 £197,465
(Loss)/Profit before tax (£1,301,008) £2,129,315
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 globally 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 27.9% stake in SatoshiPay, and a 13% stake in
Dynasty, both of which investments the Board believes represents rare
opportunities to generate significant shareholder value.
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 may 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 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
Anthony Fabrizi
Executive Chairman
7 March 2023
Directors' Report
The Directors present their report together with the audited financial
statements for the year ended 30 September 2022.
Results and dividends
The trading results for the year ended 30 September 2022 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 (2021:
£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
Anthony Fabrizi Appointed on 16 September 2022
Brian Rowbotham
Sean King
Derek Lew Resigned on 16 September 2022
On 16 September 2022, Anthony Fabrizi was appointed as Executive Chairman and
Derek Lew resigned.
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 2022 30 September 2021
Number of ordinary Shares Number of ordinary Shares
Warrants Warrants
Anthony Fabrizi - - 77,000,000 -
Sean King 18,250,000 - 18,250,000 -
Derek Lew 211,527,778 - 211,527,778 -
Brian Rowbotham - - - -
Following the year-end, 170,000,000, 30,000,000, and 50,000,000 warrants were
granted to the Directors Anthony Fabrizi, Sean King and Brian Rowbotham
respectively (see note 22).
Significant shareholders
As at 24 February 2023, 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:
Percentage of issued share capital
Number of Ordinary Shares
Nicolas Slater 582,730,468 11.67%
Mark White 377,204,275 7.56%
Pioneer Media Holdings Inc 322,916,333 6.47%
Derek Lew 211,527,778 4.24%
Paniolo Ventures Limited 208,333,333 4.17%
K Rattan 150,000,000 3.00%
Related party transactions
Related party transactions and relationships are disclosed in note 19.
Going concern
The Company has reported a loss for the year excluding fair value loss on the
valuation of investments and foreign exchange movements of £855,785.
The Company had cash reserves at the year-end of £86,575 and a portfolio of
investment companies which include listed investments. The Directors have
prepared a cashflow forecast which indicates that additional funds will be
required during the year to continue to operate as per the forecast. These
funds will be raised through the sale of its listed investments, some of which
were sold in November 2022 raising £189,571. As set out in the Strategic
Report, if necessary, the Board will also consider the need to raise
additional funds by a further issue of new Ordinary shares.
The Directors therefore consider that the Company will be able to secure
sufficient cash inflows for the Company to continue its activities for not
less than 12 months from the date of approval of these financial statements;
they have therefore prepared the financial statements on a going concern
basis.
Events after the reporting date
Events after the reporting date are disclosed in note 22.
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
Executive Chairman
7 March 2023
Statement of Comprehensive Income
For the year ended 30 September 2022
2022 2021
Note £ £
Revenue - -
Loss on disposal of investments (338,836) -
Fair valuation movements in financial instruments designated
at fair value through profit or loss 11 (445,223) 2,459,412
(784,059) 2,459,412
Administrative expenses 3 (517,003) (337,304)
Operating (loss)/profit 4 (1,301,062) 2,122,108
Finance income 5 54 7,207
(Loss)/Profit before and after taxation and total comprehensive
income for the year (1,301,008) 2,129,315
(Loss)/Profit per ordinary share:
Basic earnings per share on (loss)/profit for the year 10 (0.03p) 0.05p
Diluted earnings per share on (loss)/profit for the year 10 (0.03p) 0.05p
The notes form part of these financial statements.
Statement of Financial Position
For the year ended 30 September 2022
2022 2021
Note £ £
Non-current assets
Financial assets at fair value through profit or loss 11 11,390,278 12,367,204
Convertible loan note 12 - 150,846
Total non-current assets 11,390,278 12,518,050
Current assets
Trade and other receivables 13 8,072 135,501
Cash and cash equivalents 14 86,575 296,106
Total current assets 94,647 431,607
Total assets 11,484,925 12,949,657
Current liabilities
Trade and other payables 15 70,418 234,142
Total liabilities 70,418 234,142
Net assets 11,414,507 12,715,515
Shareholders' equity
Share capital 16 4,892,774 4,892,774
Share premium account 9,575,072 9,575,072
Other reserves - -
Retained earnings (3,053,339) (1,752,331)
Total shareholders' equity 11,414,507 12,715,515
The financial statements were approved by the Board, authorised for issue on 7
March 2023 and were signed on its behalf by:
Anthony Fabrizi
Director
Registered number: 05174441
The notes form part of these financial statements.
Statement of Changes in Equity
For the year ended 30 September 2022
Share capital Share premium Other reserves Retained earnings
£ £ £ £ Total
£
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
Year ended 30 September 2022
At 1 October 2021 4,892,774 9,575,072 - (1,752,331) 12,715,515
Loss for the year and total
comprehensive income - - - (1,301,008) (1,301,008)
At 30 September 2022 4,892,774 9,575,072 - (3,053,339) 11,414,507
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.
The notes form part of these financial statements.
Cash Flow Statement
For the year ended 30 September 2022
2022 2021
Note £ £
Operating activities
(Loss)/profit for the year (1,301,008) 2,129,315
Adjustments:
Finance income 5 (54) (7,207)
Fair value losses/(gains) 445,278 (2,454,053)
Impairment of convertible note 12 150,846 -
Loss on disposal of investments 338,836 -
Working capital adjustments
Decrease/(Increase) in trade and other receivables 127,429 (132,833)
(Decrease)/Increase in trade and other payables (163,725) 206,256
Net cash used in operating activities (402,398) (258,522)
Investing activities
Proceeds from sale of investments 192,867 -
Purchase of investments - (844,360)
Interest received - 7,183
Net cash from/(used by) investing activities 192,867 (837,177)
Financing activities
Proceeds from issue of equity - 1,259,638
Net cash generated from financing activities - 1,259,638
Net (decrease)/increase in cash and cash equivalents (209,531) 163,939
Cash and cash equivalents at start of the year 14 296 106 132,167
Cash and cash equivalents at end of the year 14 86,575 296 106
The notes form part of these financial statements.
Notes to the Financial Statements
For the year ended 30 September 2022
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 listed on the Alternative Investment Market (AIM) market of the
London Stock Exchange plc. The financial statements are presented in Pound
Sterling (£) and rounded to the nearest £1.
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.
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.
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 £855,785.
The Company had cash reserves at the year-end of £86,575 and a portfolio of
investment companies which include listed investments. The Directors have
prepared a cashflow forecast which indicates that additional funds will be
required during the year to continue to operate as per the forecast. These
funds will be raised through the sale of its listed investments, some of which
were sold in November 2022 raising £189,571. If necessary, the Board will
also consider the need to raise additional funds by a further issue of new
Ordinary shares.
The Directors therefore consider that the company will be able to secure
sufficient cash inflows for the Company to continue its activities for not
less than 12 months from the date of approval of these financial statements;
they have therefore prepared the financial statements on a going concern
basis.
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 2021. Their adoption has not had
any material impact on the disclosures or on the amounts reported in these
financial statements:
Standards/interpretations Application
IFRS 7 Financial Instruments: Disclosure.
Amendments regarding replacement issues in the context of the IBOR reform
IFRS 9 Financial Instruments
Amendments regarding replacement issues in the context of the IBOR reform
IFRS 16 Leases
Amended by Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to
IFRS 16)
IAS 39 Financial Instruments: recognition and measurement
Amendments regarding replacement issues in the context of the IBOR reform
New standards, amendments and interpretations not yet adopted
Standards/interpretations Application Effective date
IFRS 3 Business combination
Amendments updating a reference to the Conceptual Framework. 01/01/2022
IFRS 16 Leases
Amendments to clarify how a seller-lessee subsequently measures sale and 01/01/2024
leaseback transactions.
IAS 1 Presentation of Financial Statements
Amendments regarding the classification of liabilities 01/01/2024
Amendments regarding the disclosure of accounting policies 01/01/2023
Amendments regarding the disclosure of accounting policies 01/01/2024
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors
Amendments regarding the definition of accounting estimates 01/01/2023
IAS 10 Events after the reporting date
Amendments resulting from Deferred Tax related to Assets and Liabilities 01/01/2023
arising from a Single Transaction
IAS 12 Income Taxes
Amendments resulting from Deferred Tax related to Assets and Liabilities 01/01/2023
arising from a Single Transaction
IAS 16 Property, Plant and Equipment
Amendments prohibiting a company from deducting from the cost of property, 01/01/2022
plant and equipment amounts received from selling items produced while the
company is preparing the asset for its intended use.
IAS 37 Provision, Contingent Liabilities, Contingent Assets Amendments regarding the
costs to include when assessing whether a contract is onerous
01/01/2022
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;
IV. On a net asset basis, again applying a discount to reflect the
illiquidity of the investment; or
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, it's 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.
3. Nature of expenses
2022 2021
£ £
Directors remuneration 156,750 117,667
Legal and professional fees 164,330 144,520
Impairment of convertible note 150,846 -
Foreign exchange movement on convertible loan note - 12,519
Other expenses 45,077 62,598
517,003 337,304
4. Operating (loss)/profit
2022 2021
£ £
This is stated after charging:
Auditor's remuneration - statutory audit fees 14,275 14,100
5. Finance income
2022 2021
£ £
Interest received on short term deposits 54 24
Interest receivable on convertible loan note - 7,183
54 7207
6. Share based payments
Share warrants
2022 2022 2021 2021
Weighted average exercise Weighted average exercise price (p)
price (p)
Number Number
Outstanding at the beginning of the year 0.25 591,666,667 0.21 1,448,333,333
Lapsed during year 0.25 (591,666,667) 0.17 (428,333,333)
Exercised during the year - - 0.16 (428,333,333)
Outstanding at the end of the year - - 0.25 591,666,667
The contracted average remaining life of warrants at 30 September 2021 was 0.1
years.
At 30 September 2022, the Company had no warrants in issue.
7. Staff costs, including Directors
2022 2021
£
£
Wages and salaries 107,750 42,667
Share-based payments - 50,000
Social security costs - 7,130
107,750 99,797
During the year the Company had an average of 3 employees who were management
(2021: 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 2022 is as follows:
Salary Fees Share based payments Compensation for loss of office Total
2022
D Lew 68,750 - - 25,000 93,750
B Rowbotham 39,000 - - - 39,000
S King - 24,000 - - 24,000
107,750 24,000 - 25,000 156,750
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
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% (2021: 19%). The
differences are explained below:
2022 2021
£
£
(Loss)/ Profit before tax (1,301,008) 2,129,315
Profit) before tax multiplied by effective rate of corporation tax of 19% (247,191) 404,570
(2021:19%)
Effect of:
Loss on disposal of investments 64,379 -
Fair value gain on investments 84,721 (526,765)
Capital losses (18,862) -
Capital allowances (168) (204)
Expenses not deductible for tax purposes - 36
Losses carried forward 117,121 122,363
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
2022 is £81,058 (2021: £817,710).
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:
2022 2021
Basic:
(Loss)/Profit for the financial period (1,301,008) 2,129,315
Weighted average number of shares 4,992,772,996 4,617,745,344
(Loss)/Earnings per share (pence) (0.03) 0.05
Fully Diluted:
(Loss)/Profit for the financial period (1,301,008) 2,129,315
Weighted average number of shares 4,992,772,996 4,617,745,344
(Loss)/Earnings per share (pence) (0.03) 0.05
As at the end of the financial period ended 30 September 2022, there were no
share warrants in issue, which had an anti-dilutive effect on the weighted
average number of shares.
11. Investments
Investments 2022 2021
£ £
At start of year 12,367,204 9,063,432
Additions - 844,360
Disposals (531,703) -
Net fair value (loss)/gain for the year (445,223) 2,459,412
At end of year 11,390,278 12,367,204
During the year the Company reduced it's shareholding in Guild Esports plc and
NFT Investment's plc in order to raise working capital. This reduction
resulted in a loss on disposal of £338,836. The Company also impaired its
smaller unquoted esports investments.
Quoted Investments 2022 2021
£ £
Quoted investments (as previously stated) 599,482 1,672,929
Transfer from unquoted - 247,500
Quoted investments (as restated) 599,482 1,920,429
Unquoted Investments 2022 2021
£ £
Unquoted investments (as previously stated) 10,790,796 10,694,275
Transfer to quoted investments - (247,500)
Unquoted investments (as restated) 10,790,796 10,446,775
The comparative figures for quoted and unquoted investments has been restated
as a quoted investment had previously been miscategorised under quoted
investments.
The country of incorporation for all investments held at 30 September 2022 are
listed below:
Country of Incorporation
£
Dynasty Media & Gaming 5,550,322 Singapore
Guild Esports PLC 471,957 United Kingdom
East Side Group (Formerly Leaf Mobile Inc) 71,462 Canada
SatoshiPay Limited 4,715,219 United Kingdom
Sthaler Limited 394,412 United Kingdom
NFT Investments PLC 56,063 United Kingdom
Paidia Esports Inc 65,337 Canada
Googly Media Holdings PTE. Limited 65,506 Singapore
11,390,278
The methods used to value the 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
2022 2021
£ £
Convertible loan note - 150,846
- 150,846
On 11 October 2019, the Company invested US$185,000 in convertible loan notes
issued by The Dibs Esports Corp. The loan notes carried interest of 5% per
annum and had a 36-month life span.
After a review conducted by the Directors, the Directors considered that there
was doubt as to the recoverability of this asset and have fully provided
against the amount owed.
13. Trade and other receivables
2022 2021
£ £
Prepayments 3,175 771
Other receivables 4,897 134,730
8,072 135,501
In the prior year, included within other receivables was a £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
2022 2021
£ £
Cash at bank and in hand 86,575 296,106
86,575 296,106
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
2022 2021
£ £
Trade payables 31,793 13,948
Accruals 33,162 14,731
Other payables 5,463 205,463
70,418 234,142
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
2022 2022 2021 2021
£
£
Number Number
At 1 October 4,992,772,996 4,892,774 4,233,249,519 4,133,251
Shares issued in the year - - 759,523,477 759,523
At 30 September 4,992,772,996 4,892,774 4,992,772,996 4,892,774
During the year ended 30 September 2022 there were no shares issued.
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
17. Financial risk management
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
The Company's market risk is attributable to the financial instruments that
are held at fair value through profit and loss. 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.
2022 2021
£ £
10% increase in fair value 1,139,028 1,236,720
10% decrease in fair value 1,035,480 1,124,291
20% increase in fair value 2,278,056 2,473,441
20% decrease in fair value 1,898,380 2,061,200
30% increase in fair value 3,417,083 3,710,161
30% decrease in fair value 2,628,526 2,853,970
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 2022 are shown below.
2022
EUR SGD CAD AUD
£ £ £ £
Fair value of investments 4,715,219 5,615,289 136,799 -
2021
EUR SGD CAD AUD
£ £ £ £
Fair value of investments 4,609,226 4,826,405 324,315 139,449
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% (2021: +/- 20%)
- £/SGD +/- 20% (2021: +/- 20%)
- £/CAD +/- 20% (2021: +/- 20%)
- £/AUD +/- 20% (2021: +/- 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:
2022
EUR SGD CAD AUD
£ £ £ £
Increase in fair value of investments 943,044 1,123,166 27,360 -
2021
EUR SGD CAD AUD
£ £ £ £
Increase in fair value of investments 921,845 935,971 64,863 27,890
If £ Sterling had strengthened against the currencies shows, this would have
had the following effect:
2022
EUR SGD CAD AUD
£ £ £ £
Reduction in fair value of investments (785,870) (935,971) (22,800) -
2021
EUR SGD CAD AUD
£ £ £ £
Reduction in fair value of investments (768,204) (804,401) (44,236) (23,242)
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 £94,647
(2021: £431,607)
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. Financial Instruments
Set out below is an overview of financial instruments held by the company:
2022 2021
Note £ £
Financial assets at fair value through profit and loss
Investments 11 11,390,278 12,367,204
Cash and cash equivalents 14 86,575 296,106
Total 11,476,853 12,663,310
Financial assets at amortised cost
Trade and other receivables 13 8,072 135,501
Convertible loan note 12 - 150,846
Total 8,072 286,347
Financial liabilities at amortised cost
Trade payables 15 31,793 13,948
Other payables 15 5,463 205,463
Total 37,256 219,411
The fair value measurement of financial assets carried at fair value through
profit and loss is set out in the table below:
Fair value measurement
Level 1 Level 2 Level 3
Note £ £ £
At 30 September 2022
Investments 11 599,482 - 10,790,796
Total financial assets 599,482 - 10,790,796
At 30 September 2021
Investments 11 1,920,429 - 10,446,775
Convertible loan note 12 - - 150,846
Total financial assets 1,920,429 - 10,597,621
19. Related party transactions
The Company had a 4.23% investment in Guild Esports plc at year-end. Derek
Lew, previously a director of the Company, is also a non-executive director of
Guild Esports plc. The Company also has a 0.08% investment in Leaf Mobile Inc
where Derek Lew is a non-executive director.
Sean King was paid his directors fees of £24,000 (2021: £24,000) through
Three S Ventures Limited. At the year-end an amount of £2,000 (2021: £nil)
was included within Other payables and an amount of £2,000 (2021: £nil) was
included within Trade payables.
Prior to Anthony Fabrizi's appointment as Executive Chairman, fees of £15,000
were paid to him in respective of consultancy services provided to the
Company.
20. Operating lease commitments
At the balance sheet date, the Company had no outstanding commitments under
operating leases.
21. Ultimate Controlling Party
The Company considers that there is no ultimate controlling party.
22. Post Balance Sheet Events
On 30 January 2023 the Company granted the following warrants to the
directors, with an exercise period of 3 years.
Number of warrants granted Exercise price
Anthony Fabrizi 140,000,000 0.35p
30,000,000 0.45p
Brian Rowbotham 40,000,000 0.35p
10,000,000 0.45p
Sean King 20,000,000 0.35p
10,000,000 0.45p
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 JFMJTMTMMTIJRecent news on Blue Star Capital
See all newsREG - Blue Star Capital - Result of AGM
AnnouncementREG - Blue Star Capital - Holding(s) in Company
AnnouncementRCS - Blue Star Capital - Further re Pendulum: Spacewalk launch on Pendulum
AnnouncementREG - Blue Star Capital - Final Results
AnnouncementREG - Blue Star Capital - Dynasty Gaming and Media Merger
Announcement