REG - Blue Star Capital - Half-year Report
30/06/2022 07:16
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RNS Number : 7304Q Blue Star Capital plc 30 June 2022
30 June 2022
Blue Star Capital plc
("Blue Star" or "the Company")
Half-Yearly Results
Half-yearly Results for the Six Months Ended 31 March 2022
Blue Star Capital (AIM: BLU), the investing company with a focus on esports,
technology and its applications within media and gaming, announces its
half-yearly results for the six months ended 31 March 2022.
Financial Highlights:
· Decrease in the mark-to-market value of the portfolio, as of 31
March 2022, of £937,941 (1H21: £19,684 decrease) resulting in Net Assets of
£11,718,709 (FY21: £12,715,515)
· Net Cash, as of 31 March 2022, of £113,416 (FY21: £296,106)
For further information, please contact:
Blue Star Capital plc Via Vox Markets
Derek Lew
Cairn Financial Advisers LLP (Nominated Adviser) +44 (0) 20 7213 0880
Jo Turner / Liam Murray
Stanford Capital Partners Limited (Broker) +44 (0) 20 3650 3650
Patrick Claridge / John Howes / Bob Pountney
Vox Markets
Kat Perez bluestarcapaital@voxmarkets.co.uk (mailto:bluestarcapaital@voxmarkets.co.uk)
www. (http://www.VoxMarkets.co.uk/listings/LON/BLU) Vox
(http://www.VoxMarkets.co.uk/listings/LON/BLU) M
(http://www.VoxMarkets.co.uk/listings/LON/BLU) arkets.co.uk/listings/LON/BLU
(http://www.VoxMarkets.co.uk/listings/LON/BLU)
About Blue Start Capital
Blue Star Capital plc ("the Company" or "Blue Star") provides investors with
exposure to a global portfolio of quoted and unquoted companies that operate
at the leading edge of high-growth and disruptive technology sectors.
Our portfolio focuses on new technologies particularly in the areas of
esports, decentralised finance and blockchain. Our current portfolio consists
of 11 innovative, disruptive, global businesses where eight have a focus on
the rapidly growing esports and mobile gaming markets, two working across the
fields of decentralised finance and payments and one in the area of
Non-Fungible Tokens.
Chairman's Statement
It was a productive period for our portfolio of investee companies and below I
provide the following portfolio company highlights, inclusive of updates, for
the six-month period ended 31 March 2022 and any subsequent developments.
Esports and Mobile Gaming
Esports
According to Newzoo, the games market analytics company, there are now more
than 2.7 billion gamers globally, with gaming overtaking social media as the
largest consumption of screen time in most developed markets.
By 2023, Newzoo predicts the games market will be worth $200.8 billion per
annum, with the number of players worldwide surpassing the three-billion mark.
Guild Esports plc ("Guild")
Since September 2021, Guild has achieved several operational milestones
attracting strategic partnerships with major brands such as Selfridges London,
Samsung Electronics UK, Sony's PlayStation and Bitstamp, the world's
longest-running crypto exchange.
In October 2021, Guild successfully launched Apex Legends Team to compete in
the Apex Legends Global Series and achieved success wining two new trophies.
In November 2021, Guild won its fourth major esports trophy after one of its
Fortnight players won first place in the Fortnite Champion Series Grande
Royale and a fifth trophy at a later Fortnite series during the year.
In June 2022, Guild opened a new HQ in Shoreditch, located at the heart of the
capital's booming technology hub. It will also be the home for its global
esports Guild Academy. The academy will provide state-of-the-art training
facilities for gamers and is expected to deliver additional commercial
opportunities for Guild including content sponsorship and naming rights for
the building itself.
Guild has several potentially significant sponsorship deals with tier 1 brands
at advanced stages of negotiations and, whilst there is no certainty when
these prospects may get signed, the board of Guild remains confident of its
overall new business plans for 2022.
To date, the Company has invested approximately £706,000 in Guild for 5.95%
of Guild's total issued share capital. During the period the Guild share price
decreased from 5.1p per share to 1.95p, resulting in a fair value decrease of
the holding of approximately £915,000 to £646,076 as of 31 March 2022.
Dynasty Gaming and Media ("Dynasty")
Dynasty, the leading mass-market, white label B2B gaming and media platform
ecosystem, secured three additional multi-year partnership agreements during
the period.
These partnership agreements, with large-scale organisations, include
Malaysia's leading telecoms operator, New Zealand's largest telco and a
market-leading Indian company, include both fixed licence fees up front and
ongoing managed services revenue share terms over the term of the license.
Long-term investors will recall Dynasty's initial business model was a typical
'SaaS' structure based on collecting monthly licence fees over a minimum
24-month contract. However, going forward, the business has adopted a hybrid
'SaaS plus revenue share' model with Dynasty delivering what it describes as a
genuine managed service solution.
Under the new commercial model, Dynasty anticipates that the revenue share
component will contribute more than 85% of its total revenue within the next
12 months. The company remains in dialogue with all parties regarding a
potential listing of the company's shares on the Australian Stock Exchange
("ASX"). However, there are several interesting discussions ongoing that could
potentially that may lead a different outcome to an IPO on the ASX. We remain
reassured that the board of Dynasty will continue to act on the best interests
of all its shareholders.
To date, the Company has invested approximately £968,000 in Dynasty based on
Dynasty's valuation of US$50 million in the last fundraising round. As of 31
March 2022, the Company's holding in Dynasty is valued at approximately US$6.5
million (approximately £4.8 million).
Mobile Gaming
East Sides Games ("ESG")
ESG has achieved several major milestones, including the global launch of
RuPaul's Drag Race Superstar mobile game, which occurred on 25 October 2021,
surpassing 1 million downloads and over 150,000 active average daily users,
which is the highest daily active users for any of its active games.
By November 2021, RuPaul's Drag Race Superstar had become the number one
ranking role playing or simulation game in the iOS App Store across 44
countries and ranked in the top 10 in 67 countries. In addition, the game
reached the top 100 grossing games in 40 countries on iOS.
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 East Side Games
Group Inc, 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. East Side Games Group
Inc., shares traded at CAD$2.90 as of 31 March 2022, valuing Blue Star's
holding at approximately £110,399.
DeFi, Payments and NFT
SatoshiPay
In the period under review, SatoshiPay saw the positive momentum with Pendulum
raising $5.0 million, via the private sale of PEN tokens, to fund further
development. The new funding allows for SatoshiPay to be contractually
retained to continue to develop Pendulum blockchain.
Pendulum is an open source blockchain built on the stable and existing
Substrate framework that aims to establish the missing link between fiat and
the DeFi ecosystems through a sophisticated smart contract network.
In November 2021, SatoshiPay presented a demonstration of Pendulum at the
"Meridian 2021", a forum that gathers experts in finance, policy, and
technology.
With funding for Pendulum in place, SatoshiPay took the timely decision in
January 2022 to appoint Meinhard Benn as Chairman and Alexander Wilke as CEO.
After co-founding SatoshiPay in 2014 and leading the company as CEO for seven
years, Meinhard's new role will focus on the long-term vision of SatoshiPay
and strategic networking, while Alex, who joined SatoshiPay as Chief
Operations Officer in 2016, will take over the CEO duties. In addition to
other internal promotions and strategic hires, we believe SatoshiPay is now
structured for rapid scale-up and well-placed to deliver further Pendulum
milestones.
Post period end, Pendulum received a grant from the Web3 Foundation for
developing Spacewalk. Spacewalk is the first bridge between the Stellar
network and the Polkadot/Kusama ecosystems. It is implemented as a Substrate
pallet and allows any Substrate-based blockchain to implement a direct Stellar
bridge.
Pendulum will implement Spacewalk as a Substrate pallet, a component that can
be plugged into any Substrate based blockchain. Stellar is not smart contract
capable, therefore the Spacewalk bridge design is based on XCLAIM. XCLAIM is a
framework for achieving decentralised, trustless and efficient cross-chain
transfers.
XCLAIM has been further improved by Interlay for the open-source Bitcoin
bridge "interBTC". Spacewalk is based on the interBTC implementation with the
term interBTC being used for both the bridge and for Bitcoin that is available
on a Substrate-based chain.
The fast progress of Pendulum and the Polkadot ecosystem may accelerate the
mission at SatoshiPay to offer instant cross-border payments on blockchain
sooner than expected with further news expected in the near future while Solar
Wallet continues to be in maintenance mode with a recent update patch released
to the market. This release includes a minor change for adding funds with
Moonpay, which was required from March 2022.
As of 31 March 2021, total equity funding to date for SatoshiPay was €4.6m
with Blue Star currently holding 27.9% of SatoshiPay's issued share capital,
worth £4.5m, based on the last external fund raise in 2019.
It is the Board's view that the valuation of SatoshiPay may have increased
significantly since the last fund raise given the operational progress of
Pendulum. However, no revaluation work on SatoshiPay has been undertaken since
2019.
Sthaler
Earlier in the year, Sthaler's biometric technology platform, FinGo, partnered
with the RBC Group, a pioneer in automated retail design and manufacturing of
vending machines.
In February 2022, FinGo entered into a strategic partnership with the leading
security access service provider, Croma Security Solutions. The new alliance
will strengthen each company's world-leading solutions in the provision of
non-invasive biometric technology, expanding access to FinGo's Vein ID
platform to Croma's global customer base.
Post period end, FinGo unveiled the World's first vein iD enabled vending
machine where users can pay and prove their age through a simple scan of their
finger. The Company remains confident the age verification service,
"FinGoVend" is expected to lead the way in 'unattended retail' for
age-restricted products such as alcoholic drinks, e-cigarettes and vapes.
Blue Star invested £50,000 in exchange for approximately 0.8% Sthaler's
issued share capital. As of 31 March 2022, the company's holding in Stahler is
currently valued at approximately £387,000, based on Sthaler's last completed
fundraise.
NFT Investments ("NFT")
NFT Investments raised £35m (Gross) and listed on the AQSE Stock Exchange in
London in April 2021. Since admission, the Company made seven investments and
one exit in early-stage growth technology and media businesses engaged in NFTs
and digital assets totalling approximately £5.8m. NFT also established
significant positions in cryptocurrencies BNB, Bitcoin, Ether, XBD, FLOW and
DOT.
As at 31 December 2021, NFT had a Net Asset Value of £34.38m, equivalent to
3.43p per share, comprising cash and cash equivalents of £21.9m and net book
value of investments, including cryptocurrencies, of £12.5m.
The Company had previously made an investment of £50,000 in an earlier
funding round of NFT Investments and, as a result of further investment,
currently holds 9,000,000 ordinary shares representing approximately 0.9 per
cent of NFT's issued share capital. The Company's holding in NFT was valued at
£223,000 at the period end.
Outlook
The Board believes that the Company's portfolio has continued to achieve
significant operational and financial milestones during the period.
Importantly, the Board maintains its confidence in the strong underlying
trends across the sectors within which it is invested in and believes in the
benefit of the portfolio approach when investing in early-stage companies out
ways the inherent risks.
Given the increase in NAV of the overall portfolio since inception, plus
sufficient cash reserves, improving liquidity provided by our listed
investments and the increasing investor interest in the activities of our
portfolio companies, the Board is confident that it is both well-funded and
well-positioned to perform strongly in the second half of 2022 and beyond.
Derek Lew
Chairman
29 June 2022
Statement of Comprehensive Income
for the six months ended 31 March 2022
Unaudited Audited
Six months ended 31 March Year ended
30 September
2022 2021 2021
£ £ £
Revenue - - -
Fair valuation movements in financial instruments designated at fair value (937, 941) (19,684) 2,772,447
through profit or loss:
(937, 941) (19,684) 2,772,447
Foreign exchange movements 37,904 (318,991) (325,554)
Administrative expenses (100,642) (159,379) (324,785)
Operating (loss)/profit (1,000,679) (498,054) 2,122,108
Finance income 3,873 3,511 7,207
(Loss)/profit before and after taxation and total comprehensive income for (996,806) (494,543) 2,129,315
the period
Loss per ordinary share:
Basic (loss)/earnings per share (0.02p) (0.01p) 0.05p
Diluted (loss)/earnings per share (0.02p) (0.01p) 0.05p
The loss for the period was derived from continuing operations and is
attributable to equity shareholders.
Statement of Financial Position
as at 31 March 2022
Audited
Unaudited
Six months ended 31 March Year ended
30 September
2022 2021 2021
£ £ £
Non-current assets
Investments 11,463,552 8,740,719 12,367,204
Convertible loan note 158,323 143,725 150,846
11,621,875 8,884,444 12,518,050
Current assets
Trade and other receivables 28,243 18,813 135,501
Cash and cash equivalents 113,416 59,491 296,106
141,659 78,304 431,607
Total assets 11,763,534 8,962,748 12,949,657
Current liabilities
Trade and other payables 44,825 35,729 234,142
Total current liabilities 44,825 35,729 234,142
Net assets 11,718,709 8,927,019 12,715,515
Shareholders' equity
Share capital 4,892,774 4,228,251 4,892,774
Share premium account 9,575,072 9,074,957 9,575,072
Other reserves - 96,290 -
Retained earnings (2,749,137) (4,472,479) (1,752,331)
11,718,709 8,927,019 12,715,515
Statement of changes in equity
as at 31 March 2022
Share capital Share premium Other reserves Retained earnings Total
£ £ £ £ £
Six months ended
31 March 2021
At 1 October 2020 4,892,774 9,575,072 - (1,752,331) 12,715,515
Loss for the period and total comprehensive income - - - (996,806) (996,806)
At 31 March 2022 4,892,774 9,575,072 - (2,749,137) 11,718,709
Six months ended
31 March 2020
At 1 October 2020 4,133,251 9,074,957 143,210 (4,024,856) 9,326,562
Loss for the period and total comprehensive income - - - (494,543) (494,543)
Shares issued in period 95,000 - - - 95,000
Exercise of warrants - - (29,716) 29,716 -
Lapse of warrants - - (17,204) 17,204 -
At 31 March 2021 4,228,251 9,074,957 96,290 (4,472,479) 8,927,019
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 - - - 2,129,315 2,129,315
total comprehensive income
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
Statement of cash flows
for the six months ended 31 March 2022
Unaudited Audited
Six months ended Year ended
31 March 30 September
2022 2021 2021
£ £ £
Operating activities
(Loss)/profit for the period (996,806) (494,543) 2,129,315
Adjustments for:
Finance income (3,873) (3,511) (7,207)
Fair value losses/(gains) 937,941 19,684 (2,772,447)
Foreign exchange (37,904) 315,486 318,394
Working capital adjustments
Decrease/(Increase) in trade and 107,258 (16,145) (132,833)
other receivables
(Decrease)/Increase in trade and (189,317) 7,842 206,256
other payables
Net cash used in operating activities (182,701) (171,187) (258,522)
Investing activities
Increase in investments - - (844,360)
Interest received 11 3,511 7,183
Net cash generated from/(used in) 11 3,511 (837,177)
investing activities
Financing activities
Proceeds from issue of equity shares - 95,000 1,259,638
Net cash generated by financing activities - 95,000 1,259,638
Net (decrease)/ increase in (182,690) (72,676) 163,939
cash and cash equivalents
Cash and cash equivalents at 296,106 132,167 132,167
beginning of the period
Cash and cash equivalents at 113,416 59,491 296,106
end of the period
Notes to the Interim Financial Statements
for the six months ended 31 March 2022
1. Basis of preparation
The principal accounting policies used for preparing the half-yearly accounts
are those the Company expects to apply in its financial statements for the
year ending 30 September 2021 and are unchanged from those disclosed in the
Company's Report and Financial Statements for the year ending 30 September
2021.
The financial information for the six months ended 31 March 2022 and for the
six months ended 31 March 2021 have neither been audited nor reviewed by the
Company's auditors.
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 discussed below:
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.
3. Loss per ordinary share
The calculation of a basic loss per share is based on the loss for the period
attributable to equity holders of the Company and on the weighted average
number of shares in issue during the period.
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