REG - Seraphim Space I.T. - Interim Results
13/03/2024 07:00
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RNS Number : 6011G Seraphim Space Investment Trust PLC 13 March 2024
SERAPHIM SPACE INVESTMENT TRUST PLC
(the "Company" or "SSIT")
Interim Results
Seraphim Space Investment Trust plc (LSE: SSIT), the world's first listed
SpaceTech investment company, announces its interim results for the six-month
period ended 31 December 2023.
The full Interim Report can be found here
(https://url.jer.m.mimecastprotect.com/s/Zl39CL8z9rFl4ExgTqSV8T?domain=investors.seraphim.vc)
. A summary is set out below.
Financial Summary
31 Dec-23 30 Jun-23 Change 31 Dec-22 Change
NAV £224.3m £222.4m 0.9% £222.0m 1.0%
NAV per share 94.57p 92.90p 1.8% 92.74p 2.0%
Portfolio valuation £198.0m £187.4m 5.6% £181.2m 9.2%
Portfolio fair value vs. cost 101.0% 98.5% - 97.2% -
Liquid resources £26.8m £35.3m £40.9m -
Market capitalisation £81.6m £64.6m 26.2% £108.2 -24.6%
Share price 34.4p 27.0p 27.4% 45.2p -23.9%
-Discount/+premium -63.6% -70.9% - -51.3% -
Ongoing charges 1.90% 1.89% 1.88%
Number of shares in issue 237.2m 239.4m -0.9% 239.4m -0.9%
Financial Highlights
· £5.7m deployed in the period, across three new investments and
three follow-on investments.
· Portfolio valuation up £10.6m to £198.0m, driven by additional
investments, unrealised fair value net gains and a small unrealised FX gain.
· Main driver of underlying fair value increase was D-Orbit,
reflective of a €100m transaction that reached a conditional completion post
period. This has been partially offset by reductions in the fair value of
other companies.
· ICEYE (20.2% of NAV as at 31 December 2023), the largest holding,
became EBITDA profitable during the period.
· 82% of the portfolio by fair value has a robust cash runway, with
60% fully funded based on latest projections from the companies' management
teams and 22% funded for 12 months or more from 31 December 2023.
Portfolio Snapshot
31 Dec-23
Top 10 investment as % of fair value 85.4%
Private portfolio fair value vs. cost 121.5%
Listed portfolio fair value vs. cost 13.2%
Money raised by portfolio companies(1,2) >£185m
Proportion of portfolio by fair value that is fully funded(1) 60.1%
Number of portfolio companies that are fully funded or have 12 months or more 23
of cash runway(1)
Average cash runway of portfolio that is not fully funded from 31 December 12 months
2023(1,3)
(1) Source: Portfolio company data.
(2) Between 1 July 2023 and 31 December 2023.
(3) Fair value weighted average number of months of cash runway from 31
December 2023 for the portfolio companies that are not fully funded,
representing 39.7% of the portfolio fair value.
Portfolio Key Developments
· Based on portfolio company management projections, a number of
the companies have now achieved, or are expected to achieve in 2024,
profitability at EBITDA level.
· Of the eight existing portfolio companies that raised rounds, six
had participation from or were led by external investors. Participation of
external investors demonstrates the attractiveness of the portfolio companies
to new investors.
· Three companies raised flat or up rounds, which is a testament to
the strong performance of these companies.
· Three companies closed funding rounds at reduced valuations
relative to their previous round. In two instances, this was due to
underperformance against previous expectations. In the other instance, the
round was significant and represented only a modest reduction against the
previous round, which was raised at the height of the market in late 2021.
· ICEYE (20.2% of NAV as at 31 December 2023) continued growth of
both its data and missions businesses with four new satellites deployed,
adding to its own SAR constellation and key customer Bayant ordering an
additional two SAR satellites. The company has now achieved profitability at
EBITDA level.
· D-Orbit (14.4% of NAV as at 31 December 2023) closed a €100m
equity round and successfully launched its 12(th) and 13(th) ION Satellite
Carrier missions, making the company the clear global leader in orbital
transfer vehicles.
· HawkEye 360 (9.4% of NAV as at 31 December 2023) announced the
second and final close of the company's Series D-1 funding round, bringing the
total series to $68m. The company used part of the proceeds to acquire RF
Solutions, a provider of secure, precise, geospatial intelligence from Maxar
Intelligence.
· SatVu (4.9% of NAV as at 31 December 2023) successfully
commissioned its first satellite and entered commercial operations. However,
the satellite experienced an anomaly after around six months of operations
which led to a failure of the satellite that will impact commercial operations
until another satellite can be launched. The company is working on the matter
with its suppliers and in parallel is progressing development of its second
satellite.
· Tomorrow.io (1.8% of NAV as at 31 December 2023) completed the
second close of its Series E funding round, bringing total proceeds to $99m.
Published peer reviewed research shows that precipitation data from its two
pathfinder satellites is roughly on par with the leading ground-based weather
radars, offering a more cost-effective solution and enabling global coverage.
· Voyager (non-top 10 investment) entered a joint venture with
Airbus to develop the Starlab space station, significantly expanding its
access to the European market. Northrop Grumman's termination of its
independent space station program and its subsequent partnership with Voyager
has had several benefits, bringing increased NASA funding, improving the
competitive landscape and strengthening Voyager's Starlab space station.
Transactions Completed During H1
Company Segment Sub-sector HQ Type Cost
(£m)
ALL.SPACE Downlink Ground terminals UK Follow-on 2.8
Skylo Downlink US New investment 1.6
2 early stage investments New investment 0.9
2 early stage investments Follow-on 0.5
Total 5.7
Will Whitehorn, Chair of Seraphim Space Investment Trust plc, commented: "With
the existential challenges posed by heightened geopolitical tensions and
climate change, the counter-cyclical nature of the space sector continues to
result in its outperforming the wider market. This trend is reflected in
SSIT's portfolio, which continues to exhibit a healthy growth trajectory and
an ongoing ability to attract fresh investment from public and private capital
markets.
The portfolio overall remains well capitalised, with multiple key holdings now
indicating they have sufficient cash reserves to operate through to cashflow
breakeven. We are also encouraged that several of our more mature holdings are
now either already, or are projected to become during 2024, EBITDA positive,
including our largest holding, ICEYE."
Mark Boggett, Chief Executive Officer, Seraphim Space Manager LLP, said: "The
period has marked continued strong performance for SSIT's portfolio as well as
the wider SpaceTech ecosystem, reflecting the strong fundamentals that are
driving ever-growing traction for top-performing SpaceTech companies. Record
numbers of SpaceTech VC investments have been closed during recent quarters,
with the last six months having seen a notable recovery in levels of growth
funding rounds, an encouraging sign for prospects in 2024.
These trends are reflected in SSIT's portfolio, which has continued the
positive cadence of fundraising. Eight companies closed new funding rounds
during the period, once again with the majority of these rounds being led by
new investors, a healthy indicator given generalist investors are spoilt for
choice in terms of investment opportunities given the wider downturn in the VC
market.
Although mindful of the difficulties some companies may face in accessing
additional capital, overall, we remain positive about the prospects for the
portfolio in 2024 and we are satisfied that SSIT continues to have the cash
reserves required to meet the anticipated funding needs of the portfolio for
the year ahead and beyond. This has enabled us to deploy a modest amount of
capital into a handful of new investments, including Skylo, the satellite
communications direct to cellphone trailblazer, capitalising on the current
favourable investor conditions."
Analyst and Investor Presentations
There will be a webinar for equity analysts at 09:30 (UK time) today and an
online presentation for retail investors at 11:00 (UK time) today. To register
for either event, please contact SEC Newgate by email
at seraphim@secnewgate.co.uk (mailto:seraphim@secnewgate.co.uk) .
Both webinars will be hosted by the Seraphim Space Manager LLP's CEO, Mark
Boggett.
- Ends -
Media Enquiries
Seraphim Space Manager LLP (via SEC Newgate)
Mark Boggett, CEO / James Bruegger, CIO / Rob Desborough
SEC Newgate (Communications advisers) seraphim@secnewgate.co.uk (mailto:seraphim@secnewgate.co.uk)
Clotilde Gros / Bob Huxford +44 (0) 20 3757 6767
Deutsche Numis
Mark Hankinson / Gavin Deane / Neil Coleman +44 (0) 20 7545 8000
J.P. Morgan Cazenove
William Simmonds / Jérémie Birnbaum / Rupert Budge +44 (0) 20 7742 4000
Ocorian Administration (UK) Limited seraphimteam@ocorian.com (mailto:seraphimteam@ocorian.com)
Lorna Zimny +44 (0) 28 9078 5880
Notes to Editors
About Seraphim Space Investment Trust plc
Seraphim Space Investment Trust plc (the "Company") is the world's first
listed fund focused on SpaceTech. The Company seeks exposure predominantly to
early and growth stage private financed SpaceTech businesses that have the
potential to dominate globally and that are sector leaders with first mover
advantages in areas such as climate, communications, mobility and cyber
security.
The Company is listed on the Premium Segment of the London Stock Exchange.
Further information is available at: https://investors.seraphim.vc
(https://investors.seraphim.vc/) .
About Seraphim Space Manager LLP
Seraphim Space Manager LLP ("Seraphim Space" or the "Manager") is based in the
UK and manages Seraphim Space Investment Trust plc.
Further information is available at www.seraphim.vc (http://www.seraphim.vc/)
.
Notes to the editors:
Investment Manager
The Company is managed by Seraphim Space Manager LLP (the "Investment Manager"
or "Seraphim Space"), one of the world's leading SpaceTech investment groups.
The Investment Manager's team consists of seasoned venture capitalists and
some of the space sector's most successful entrepreneurs who scaled their
businesses to multi-billion Dollar outcomes.
The Investment Manager has supported more than 100 SpaceTech companies across
its fund management and accelerator activities since 2016 and has a proven
track record of delivering value.
Positioned at the heart of the global SpaceTech ecosystem, the Investment
Manager has a differentiated model, using information asymmetry generated from
its global deal flow, partnerships with leading industry players and primary
research to back the most notable emerging SpaceTech companies shaping a new
industrial revolution.
The Investment Manager is a signatory to the UN Principles for Responsible
Investment ("UN PRI"). Its first UN PRI report is due in 2024.
Key Highlights
As at 31 December 2023
Key Performance Indicators
For the period from 1 July 2023 to 31 December 2023
NAV per share movement(1) Share price movement(1)
1.8% 27.4%
Discount (as at 31 December 2023)(1) Ongoing charges(1)
-63.6% 1.90%
Fair value vs. cost (as at 31 December 2023)(1)
101.0%
Financial Summary
31 December 2023 30 June 2023
Change 31 December 2022 Change
NAV £224.3m £222.4m 0.9% £222.0m 1.0%
NAV per share(1) 94.57p 92.90p 1.8% 92.74p 2.0%
Portfolio valuation £198.0m £187.4m 5.6% £181.2m 9.2%
Fair value vs. cost(1) 101.0% 98.5% 97.2%
Liquid resources £26.8m £35.3m £40.9m
Market capitalisation £81.6m £64.6m 26.2% £108.2m -24.6%
Share price(1) 34.4p 27.0p 27.4% 45.2p -23.9%
-Discount/+premium(1) -63.6% -70.9% -51.3%
Ongoing charges(1) 1.90% 1.89% 1.88%
Number of shares in issue 237.2m 239.4m -0.9% 239.4m -0.9%
(1) Alternative performance measure - see Alternative Performance Measures
Portfolio Snapshot
As at 31 December 2023
Fair value Top 10 investments
£198.0m
as % of fair value
85.4%
(30 June 2023: £187.4m)
(30 June 2023: 85.7%)
Listed portfolio
fair value vs. cost
13.2%
Private portfolio (30 June 2023: 13.0%)
fair value vs. cost
121.5%
(30 June 2023: 119.2%) Percentage of portfolio by fair value that is fully funded(1)
60.1%
Money raised by
portfolio companies(1,2)
>$185m
Number of portfolio companies that are fully funded or have 12 months or more Average cash runway of portfolio that is not fully funded from 31 December
of cash runway(1) 2023(1,3)
12 months
23
(1) Source: Portfolio company date.
(2) Between 1 July 2023 and 31 December 2023.
(3) Fair value weighted average (as defined in the Glossary) number of months
of cash runway from 31 December 2023 for the portfolio companies that are not
fully funded, representing 39.7% of the portfolio fair value. Source:
Portfolio company data.
Portfolio Key Developments
· ICEYE continued growth of both its data and missions businesses
with four new satellites deployed, adding to its own SAR constellation, and
key customer Bayanat ordering an additional two SAR satellites. The company
has now achieved profitability at EBTIDA level.
· Tomorrow.io completed the second close of its Series E funding
round, bringing total proceeds to $99m. Published peer reviewed research shows
that precipitation data from its two pathfinder satellites is roughly on par
with the leading ground-based weather radars, offering a more cost-effective
solution and enabling global coverage.
· D-Orbit successfully launched its 12(th) and 13(th) ION Satellite
Carrier missions, making the company the clear global leader in orbital
transfer vehicles.
· HawkEye 360 announced the second and final close of the company's
Series D-1 funding round, bringing the total Series D-1 to $68m. The company
used part of the proceeds to acquire RF Solutions, a provider of secure,
precise, geospatial intelligence from Maxar Intelligence.
· Voyager entered a joint venture with Airbus to develop the
Starlab space station, significantly expanding its access to the European
market. Northrop Grumman's termination of its independent space station
program and its subsequent partnership with Voyager has had several benefits,
bringing increased NASA funding, improving the competitive landscape and
strengthening Voyager's Starlab space station.
· SatVu successfully commissioned its first satellite and entered
commercial operations. However, the satellite experienced an anomaly after
around six months of operations which led to a failure of the satellite that
will impact commercial operations until another satellite can be launched. The
company is working on the matter with its suppliers and in parallel is
progressing development of its second satellite.
Chair's Statement
"With the existential challenges posed by heightened geopolitical tensions and
climate change, the counter-cyclical nature of the space sector continues to
result in its outperformance of the wider market. This trend is reflected in
SSIT's portfolio, which continues to exhibit both a healthy growth trajectory
and an ongoing ability to attract fresh investment from public and private
capital markets alike.
The portfolio overall remains well capitalised, with multiple key holdings now
indicating that they have sufficient cash reserves to operate through to
cashflow breakeven. We are also encouraged that several of our more mature
holdings are now either already, or are projected to become during 2024,
EBITDA positive, including our largest holding, ICEYE."
Will Whitehorn
Chair
I am pleased to present the third Interim Report of Seraphim Space Investment
Trust PLC, covering the period from 1 July 2023 to 31 December 2023 (the
"Period").
The macroeconomic climate in the second half of 2023 continued to be
challenging, and I would like to thank all shareholders for their ongoing
support.
Progress in the Period
During the Period, the Company invested £5.7m in three new portfolio
companies and three existing portfolio companies, leading to a portfolio of 33
active SpaceTech companies valued at £198.0m at 31 December 2023. In
addition, the Company had £26.8m of cash reserves at the Period end.
As outlined in my reports for previous periods, the Company has deliberately
slowed the pace of deployment due to the difficult global macroeconomic
environment in order to reserve cash to follow its rights in existing
portfolio companies whilst continuing to actively seek to invest smaller
amounts in new target companies. As explained in the Investment Manager's
Report, overall, the portfolio continues to be well-capitalised. In addition,
the Investment Manager's Report includes a detailed review of the performance
of the portfolio companies.
NAV
Over the Period, the Company's net assets increased by 0.9%, from £222.4m to
£224.3m at 31 December 2023, driven by an increase in the fair value of the
portfolio, which was partially offset by running costs and buying back shares.
The NAV per share increased by 1.8%, from 92.90p to 94.57p at the Period end,
driven by the fair value increase and the impact of the share buy-backs.
The private companies in the portfolio continue to account for the majority of
the portfolio (88.2% by number and 97.5% by fair value). The fair value of the
private portfolio increased over the Period, reaching 121.5% vs. cost (121.4%
excluding FX impact) at the Period end.
The listed element of the portfolio remained depressed (13.2% fair value vs.
cost) as performance continued to suffer broadly in line with the overall SPAC
market (three of the four listed companies listed as part of SPAC mergers in
2021).
There was minimal impact from foreign exchange variations (+£0.2m, +0.08p per
share) in the Period.
Share Price
As at 31 December 2023, the Company's share price was 34.4p, an increase of
27.4% from 27.0p at 30 June 2023. However, the share price remained depressed,
at a discount of 63.6% vs. the NAV per share at the Period end, due to the
general global macroeconomic environment and the volatility experienced by
growth and smaller technology stocks and alternative investment vehicles.
Given the discrepancy of performance between NAV and share price, the Board
announced a share repurchase programme on 13 July 2023. During the Period, the
Company bought back a total of 2,186,344 shares (0.9% of the shares in issue
on 12 July 2023) at an aggregate cost of £1.0m, increasing the NAV per share
by 0.44p. The shares bought back are being held in treasury.
Capital Allocation Policy
As explained above, the Company continues to trade on a substantial discount
to NAV, in common with other peers in the market. Each year, the Company seeks
shareholder approval at the AGM to have the ability to repurchase shares. A
buy-back of shares is usually in the interests of all shareholders as it helps
to stabilise the share price, and, when trading at a substantial discount to
NAV, it also increases NAV per share. Despite this positive impact, it also
reduces the liquid resources of the Company as the capital used for buy-backs
can no longer be used for investments.
The Board regularly considers multiple factors to determine the best use of
the Company's capital, including the positive impact on NAV per share from
buy-backs, the opportunity cost of using capital for buy-backs, potential
returns from investments and the need to support portfolio companies through
follow-on investment.
Earnings and Dividend
The Company made a revenue loss after tax of £1.9m for the Period, equal to
(0.80)p per share.
The Company is focused on achieving capital growth over the long term. Given
the nature of the Company's investments, we do not anticipate recommending to
pay a dividend in the foreseeable future.
Responsible Investment
During the Period, the Investment Manager continued to use its proprietary due
diligence tool in order to assess sustainability opportunities and ESG risks
associated with each potential investment. In addition, the Investment Manager
has started a process to measure its carbon emissions, with the aim of
considering reduction targets and offsets on the back of this measurement.
Events After the Period End
In January 2024, D-Orbit secured €100m in the first close of its Series C
funding round, cementing its global leadership position in space logistics and
advancing its global expansion.
AST SpaceMobile, one of our listed holdings, closed over $200m in funding from
AT&T, Google and Vodafone in January 2024.
The Company's share price has experienced some recovery post the Period end,
closing at 51.7p on 11 March 2024, equivalent to a discount of 45.3% to the 31
December 2023 NAV per share.
Outlook
The overall prospects for both the SSIT portfolio and the space sector as a
whole would appear to be robust. The secular tail winds relating to heightened
geopolitical tensions and urgent challenges posed by climate change are
expected to continue to drive demand for SpaceTech's unique capabilities.
We are cautiously optimistic about improving macroeconomic conditions and
continued positive momentum within the SpaceTech investment market.
Indications of inflation being tamed and interest rates having peaked has
resulted in some evidence of improved sentiment in both the private and public
markets. We note that these developments may have contributed to the recovery
in SSIT's share price post the period end, albeit the share price remains at a
substantial discount to NAV.
We believe that 2024 could be a pivotal year for much of the portfolio. For
those portfolio companies that are well capitalised, we anticipate strong
growth prospects at the expense of their less well capitalised peers. For
those that are less well capitalised and not performing as strongly,
fundraising may continue to be a challenge, potentially leading to painful
belt-tightening being required to extend cash runways through to the end of
the year as they seek recovery.
Given limited cash reserves, we will continue to be judicious in selecting
which companies to provide additional capital to, whilst also remaining open
to well capitalised, compelling new investment opportunities. We continue to
believe that SSIT's current cash reserves are sufficient to meet the near-term
capital needs of the portfolio.
Will Whitehorn
Chair
12 March 2024
Investment Manager's Report
"The Period was marked by continued strong performance for SSIT's portfolio,
as well as the wider SpaceTech ecosystem too. SpaceTech investment activity
continues to outperform the wider VC market, reflecting the strong
fundamentals that are driving ever-growing traction for top-performing
SpaceTech companies. Record numbers of SpaceTech VC investments have been
closed during recent quarters, with the last six months having seen a notable
recovery in levels of growth funding rounds - an encouraging sign for
prospects in 2024.
These trends are reflected in SSIT's portfolio, which has continued the
positive cadence of fundraising. Eight companies closed new funding rounds
during the Period, once again with the majority of these rounds being led by
new investors - a healthy indicator given generalist investors are spoilt for
choice in terms of investment opportunities given the wider downturn in the VC
market.
Gains in fair value during the Period relating to some of these funding rounds
have been partially offset by reductions in fair value elsewhere in the
portfolio due to a combination of technical setbacks (SatVu) and
underperformance (Altitude Angels and Xona Space Systems).
Although mindful of the difficulties some companies may face in accessing
additional capital, overall, we remain positive about the prospects for the
portfolio in 2024. With companies representing 60% of the portfolio by fair
value now having indicated that they are projecting to have sufficient cash to
operate through to profitability, and with several key holdings targeting
EBITDA profitability in 2024, we are satisfied that SSIT continues to have the
cash reserves required to meet the near-term funding needs of the portfolio.
This has enabled us to deploy a modest amount of capital into a handful of new
investments, capitalising on the current favourable investor conditions."
Mark Boggett
CEO, Seraphim Space Manager LLP
Overview
Overall, the first half of H1 FY23/24 saw a continuation of our strategy
implemented in the previous fiscal year as a reaction to the changing global
macroeconomic environment and the resulting effects on the alternative
investing sector.
In line with this strategy, and against the backdrop of general uncertainty in
the market, we continued to focus on cash preservation for SSIT and management
of its existing investment portfolio, both in terms of protecting existing
value and driving additional value.
We worked with the management teams of our portfolio companies to optimise
cash runways, facilitated funding rounds to allow for further value creation
and acted as a sounding board for strategic decisions. These activities have
proven successful, in that eight of our existing portfolio companies closed
financing rounds in H1 FY23/24, including three of our top 10 holdings. It was
encouraging to see that most of these rounds were priced equity rounds led by
large and reputable new investors. We are very pleased that 23 of our private
holdings have cash runways of at least 12 months from 31 December 2023.
We continued to support our portfolio companies in select investment rounds
while balancing the need for cash preservation at the SSIT level. At the same
time, we continued looking for well-priced investment opportunities with
attractive risk-return profiles for the Company. While the bar for new
investments remains very high, we continue to monitor the market for
opportunities and are in due diligence with a handful of companies.
Market overview
· SpaceTech venture capital ("VC") investment in 2023 was flat
year-on-year while general VC investment was down 35% over the same period.
· SpaceTech VC investment showed signs of accelerating, with two
continuous quarters of growth in H2 CY23, following declines between Q1 CY22
and Q2 CY23, compared to sevenquarters of decline in general VC investment.
· SpaceTech VC investment continued to show increasing numbers of
deals every quarter; Q4 CY23 had the highest number of deals ever as
increasing numbers of investment-worthy startups continue to be founded.
· SpaceTech is proving to be highly resilient in an uncertain
economic environment driven by increasing interest in defence, global security
and climate change mitigation.
Valuation policy
In respect of private company valuations, fair value is established by using
recognised valuation methodologies, in accordance with the International
Private Equity and Venture Capital Valuation ("IPEV") Guidelines. The Company
has a valuation policy for unquoted securities to provide an objective,
consistent and transparent basis for estimating their fair value in accordance
with IFRS as well as the IPEV Guidelines. The unquoted securities valuation
policy and the associated valuation procedures are subject to review on a
regular basis, and updated, as appropriate, in line with industry best
practice.
In summary, the Company determines fair value in accordance with the IPEV
Guidelines by focusing on updating the enterprise value (either through there
being a new funding round or through a valuation calibration exercise or
adjustment for milestones) and then applying the implied equity value (based
on adjustments for new debt, etc) to the company's capital structure (i.e.
preference stack). In the event of commercial (or technical) underperformance
of a portfolio company, a write down can then also be applied, typically in
increments of 25%, to reduce fair value.
All valuations are considered on a quarterly basis and calibrated against the
price of the last funding round. In addition, the Company undertakes a
recalibration, across an increased number of datapoints, for the material
portfolio companies (i) whose last funding rounds took place more than 12
months earlier or (ii) which had experienced a significant milestone event or
material under- or over-performance (each a "recalibration event"). This
process entails assessing the enterprise value following the most recent round
against a composite of four elements: observable market data (where possible),
recent relevant private investment transactions, public market valuations of
comparable companies and the company's internal metrics and performance. This
exercise further strengthens the valuation process with the goal of preserving
shareholder confidence in the NAV during volatile market conditions and will
be conducted when a recalibration event occurs and every quarter thereafter
until a new priced funding round is completed.
Top 10 holdings' enterprise value ("EV") recalibrations
Changes in EV relate to either new funding rounds or adjustments from
quarterly valuation recalibration exercises. It is worth noting that as a
result of the downside protections in place, where there were reductions in
underlying EV, these have not necessarily translated directly into
commensurate reductions in fair value. Therefore, while the underlying EV of
the private companies within the top 10 holdings has increased by 1.8%, the
aggregate fair value of the Company's investments in them has increased by
8.5% (both on a fair value weighted average basis), due to the companies
experiencing reductions in EV suffering from less of a reduction in their fair
value.
Portfolio cash runway
· 82% of the portfolio by fair value has a robust cash runway, with
60% fully funded based on latest projections from the companies' management
teams and 22% funded for 12 months or more from 31 December 2023.
· The management teams of seven companies (five of which are top 10
holdings) are projecting that the companies are fully funded.
· Eight companies representing 17% of the fair value of the
portfolio have less than 12 months of cash runway. These companies are
reducing cash burn, increasing their focus on government business development
and grants to increase revenues and reduce costs and extend runway. The
companies are actively fundraising and, where appropriate, acquisition
processes are under consideration.
· We note that it is not atypical for venture capital backed
companies to have less than 12 months cash runway. Most companies typically
raise on c18-month cycles. To date, our portfolio companies that have required
additional financing to extend their cash runways have been able to raise the
necessary funding.
· Excluding the fully funded companies, the remainder of the
portfolio has a fair value weighted average cash runway of 12 months.
Portfolio fundraising activity
· More than $185m in aggregate was raised by portfolio companies
during the Period.
· Of the eight existing portfolio companies that raised rounds, six
had participation from or were led by external investors. Participation of
external investors demonstrates the attractiveness of the portfolio companies
to new investors.
· Three companies raised flat or up rounds, which is a testament to
the strong performance of these companies.
· Three companies closed funding rounds at reduced valuations
relative to their previous round. In two instances this was as a result of
underperformance against previous expectations. In the other instance, the
round was a sizeable one and represented only a modest reduction against the
previous round which was raised at the height of the market in late 2021.
· SSIT also invested in three new companies in H1 FY23/24. These
investments increase SSIT's exposure to the Communications, Beyond Earth
(next-gen SpaceTech) and Product sectors, which we see being key growth
drivers for the SpaceTech sector with high return potential.
Investment Activity
In the six months ended 31 December 2023
Company Segment HQ Type Cost
£m
ALL.SPACE Downlink UK Follow-on 2.8
Skylo Downlink US New investment 1.6
2 early stage investments New investment 0.9
2 early stage investments Follow-on 0.5
Total 5.7
Skylo is making standards-based 'Direct-to-Device' satellite connectivity a
reality today, enabling 'always on everywhere' for both consumer mobile phones
and enterprise IoT endpoints, two significant market opportunities that are
projected to grow rapidly. Skylo stands out in the sector through a
combination of having a product in market, traction with commercial customers
and deep ties with the relevant ecosystem, including satellite operators,
regulators, chipmakers and mobile network operators. In December 2023, the
Company completed a $2m (£1.6m) investment into Skylo's $37m Series A
investment round led by major investors, Intel Capital and Innovation
Endeavors, with participation from a strong syndicate.
In July 2023, the Company completed a $3.5m (£2.8m) follow-on investment into
ALL.SPACE's Series C round, alongside a number of existing and new investors.
With this funding, ALL.SPACE plans to invest in the remaining development to
get its first production model into market and grow its sales efforts.
Portfolio Performance
In the six months ended 31 December 2023
Holdings
31 December 2023
30 June 2023
Company Sub-sector HQ Cost(1) Fair value(1) % of NAV fair value
£m
£m
£m
ICEYE Earth Observation Europe 39.6 45.4 20.2% 45.5
D-Orbit In-orbit Services Europe 11.7 32.2 14.4% 21.4
ALL.SPACE Ground Terminals UK 22.2 23.9 10.7% 21.2
HawkEye 360 Earth Observation US 18.6 21.1 9.4% 20.6
LeoLabs Data Platforms US 11.7 13.1 5.8% 12.4
SatVu Earth Observation UK 6.7 11.0 4.9% 14.7
Astroscale In-orbit Services RoW 9.4 9.8 4.4% 9.8
PlanetWatchers Data Analytics UK 5.6 4.8 2.1% 4.8
Tomorrow.io Data Platforms US 4.2 3.9 1.8% 3.9
QuadSAT Communications Europe 2.6 3.9 1.7% 3.9
Top 10 investments 132.4 169.1 75.4% 158.2
Other investments (11) 55.3 9.4% 24.6
21.2
Non-material investments (13) 8.3 3.4% 4.6
7.6
Total investments 195.9 88.2% 187.4
198.0
Net current assets 26.4 11.8% 35.0
Total assets 224.3 100.0% 222.4
(1) Includes new and follow-on investments, where relevant, made since 30 June
2023 of £5.7m in aggregate.
Private portfolio
· The private portfolio, which comprises the main part of the
Company's investments representing 97.5% of fair value and 86.1% of NAV,
performed solidly, with its fair value closing the Period at 121.5% vs. cost
(121.4% excluding FX gains).
· In aggregate, the fair value of the private portfolio increased
5.7% over the Period.
· The private holdings continue to develop their commercial
products, with robust revenue and bookings growth driven by solid fundamentals
in core focus areas such as global security and climate/sustainability.
· A significant increase in the fair value of D-Orbit (fair value
vs. cost: 275%), driven by a funding round which closed soon after the Period
end, more than offset fair value reductions experienced by other private
portfolio companies.
· Fair value reductions in the private portfolio included SatVu
(fair value vs. cost: 163%) due to the setback from its failed satellite, and
Altitude Angel (fair value vs. cost: 97%) and Xona Space Systems (fair value
vs. cost: 65%), both due to underperformance.
Listed portfolio
· As explained in previous periods, public companies which listed
via SPAC transactions suffered significant share price falls in 2022 and 2023.
· During the Period, there was stabilisation in the fair value of
the Company's listed holdings in aggregate, reaching £4.9m, up 1.3% from 30
June 2023.
· The listed portfolio (11.8% of the portfolio by number of
companies) represented just 2.2% of NAV and 2.5% of portfolio fair value at
the end of the Period (fair value vs. cost: 13.2%).
· Spire Global (NYSE: SPIR; fair value vs. cost: 18%) and AST
SpaceMobile (NASDAQ: ASTS; fair value vs. cost: 49%) have both delivered well
commercially over the last year, and both experienced fair value increases in
the Period.
· Arqit (NASDAQ: ARQQ; fair value vs. cost: 4%) continues to
experience share price declines, with a further £1.3m reduction in fair value
during the Period.
Quarterly valuation changes in the three months ended 31 December 2023
· During the quarter ended 31 December 2023, the fair value fell by
£3.5m, reducing fair value to 101.0% vs. cost (104.0% excluding FX losses).
· £5.9m in FX losses in the quarter was partly offset by an
underlying fair value increase of £2.4m.
· Fair value increases during the quarter at D-Orbit, Xona Space
Systems, AST SpaceMobile and Spire Global were largely offset by fair value
decreases at SatVu and Altitude Angel.
Performance of the Company
In the six months ended 31 December 2023
Portfolio Attribution
· £2.5m in new investments and £3.3m of follow-ons in the Period.
· Increase in unrealised fair value of £4.6m and unrealised FX
gain of £0.2m during the Period.
· £198.0m fair value of portfolio at the end of the Period.
· 250bps increase in closing portfolio fair value vs. portfolio
cost, including FX movements.
NAV
· NAV slightly increased over the Period to £224.3m (30 June 2023:
£222.4m).
· The portfolio fair value (including FX movements) increased by
£4.8m over the Period.
· 2.2m shares were bought back during the Period at an aggregate
cost of £1.0m.
· The NAV per share increased from 92.90p to 94.57p over the
Period.
· £26.8m liquid resources (11.9% of NAV) at 31 December 2023 (30
June 2023: £35.3m).
The Company is targeting an annualised total return on the Company's portfolio
of at least 20% over the long term. The Company has no formal benchmark index
but has tracked its NAV per share and share price movements against the
following the indices for reference.
· MSCI World Aerospace and Defense Index (£) - a significant
proportion of portfolio companies' revenues are derived from the broader
aerospace and defence industry and/or have governments as significant
customers.
· MSCI World Climate Change Index (£) - a significant proportion
of portfolio companies' revenues are derived from climate change products and
services.
· FTSE All-Share Index (£) - the Company is listed on the London
Stock Exchange.
· NASDAQ (£) - the Company invests in SpaceTech, a subset of the
broader technology market, and two of its listed holdings are listed on
NASDAQ.
· Dow Jones Global Technology Index (£) - the Company invests
globally in SpaceTech, a subset of the broader technology market.
· S&P Kensho Space Index (£) - the Company invests globally in
SpaceTech, a subset of the broader space sector.
· Goldman Sachs Future Tech Leaders Equity ETF (£) - the Company
invests globally in SpaceTech, a subset of the broader technology market.
As explained in the Share Price section, the Company's share price has been
significantly more volatile than its NAV per share.
Mark Boggett
CEO
Seraphim Space Manager LLP
Investment Manager
12 March 2024
( )
( )
Top 10 Investments
ICEYE D-Orbit ALL.SPACE HawkEye 360 LeoLabs
Web www.iceye.com (http://www.iceye.com) www.dorbit.space (http://www.dorbit.space) www.all.space (http://www.all.space) www.he360.com (http://www.he360.com) www.leolabs.space (http://www.leolabs.space)
HQ Finland Italy UK US US
Taxonomy Platform / Earth Observation Launch / In-orbit Services Downlink / Ground Terminals Platform / Earth Observation Product / Data Platforms
Status Private / Soonicorn Private / Soonicorn Private / Minicorn Private / Soonicorn Private / Minicorn
Stake category >5-10% >5-10% >10-15% 0-5% 0-5%
Fair value vs. cost 115% 275% 108% 113% 112%
Valuation method Premium to price of recent investment Calibrated price of recent investment (post Period) Partial write down to price of recent investment Calibrated price of recent investment Calibrated price of recent investment
Description ICEYE operates the world's first and largest constellation of miniaturised D-Orbit is the market leader in the space logistics and orbital transportation ALL.SPACE is aiming to create a mesh network of satellite connectivity by HawkEye 360 operates the world's largest satellite constellation collecting LeoLabs is providing the mapping service for space by deploying a network of
satellites that use radar to image the earth both during the day and night, services industry. developing an antenna capable of connecting to any satellite in any radio frequency signals to identify and geolocate previously invisible ground-based antennas capable of detecting objects as small as 2cm as far as
even through cloud. ICEYE's radar technology has the ability to monitor change constellation in any orbit. activities. 1,000km away.
in near real-time.
Total estimated long-term addressable market $10bn+ $1-5bn $10bn+ $10bn+ $1-5bn
Key sectors addressed Insurance, defence, climate Space logistics, datacentres Communications, defence, transport Maritime, defence Space, insurance, defence
Principal UN SDG alignment: 13, 11, 2 9, 8, 12 9, 8, 10 9, 16, 8 9, 12, 17
SatVu Astroscale PlanetWatchers Tomorrow.io QuadSAT
Web www.satellitevu.com (http://www.satellitevu.com) www.astroscale.com (http://www.astroscale.com) www.planetwatchers.com (http://www.planetwatchers.com) www.tomorrow.io (http://www.tomorrow.io) www.quadsat.com (http://www.quadsat.com)
HQ UK Japan UK US Denmark
Taxonomy Platform / Earth Observation Beyond Earth / In-orbit Services Analyse / Data Analytics Platform / Data Platforms Downlink / Communications
Status Private / Minicorn Private / Soonicorn Private / Seedcorn Private / Soonicorn Private / Seedcorn
Stake category >15-25% 0-5% >25-50% 0-5% >10-15%
Fair value vs. cost 163% 104% 86% 93% 151%
Valuation method Partial write down to price of recent investment Calibrated price of recent investment Partial write down to price of recent investment Calibrated price of recent investment Calibrated price of recent investment
Description SatVu is aiming to monitor the heat signatures of any building on the planet Astroscale is a global leader of space sustainability solutions. It is PlanetWatchers has developed an AI-enabled analytics platform using satellite Tomorrow.io is powering actionable weather insights around the world. The QuadSAT has developed a novel technique for testing and calibrating satellite
in near real time to determine valuable insights into economic activity, currently developing a set of capabilities around satellite monitoring, radar imagery for crop monitoring, insurance and automated insurance claims company's mission is to help countries, businesses and individuals better antennas by using drones to mimic the position and movement of satellites.
energy efficiency and carbon footprint. refuelling, upgrading, repairing and disposal to enable a vibrant in-orbit assessments. manage their weather-related challenges with the best information and Helping ensure antennas perform optimally and avoid signals interference has
economy. insights. broad applicability across both the satellite communication and broader
terrestrial telecoms industry.
Total estimated long-term addressable market $1-5bn $1-5bn $5-10bn $30bn+ $1-5bn
Key sectors addressed Energy, property, defence, climate Space, defence Agriculture, insurance, climate Logistics, aviation, maritime, government civil, government defence Space, telecoms
Principal UN SDG alignment: 7, 11, 13 9, 8, 12 12, 2, 8 8, 12, 9 8, 9
CORPORATE GOVERNANCE
Principal and Emerging Risks and Uncertainties
The Directors have a process for identifying, evaluating and managing the
principal and emerging risks facing the Company. This process was in operation
during the Period and continues in place up to the date of this report.
The principal risks facing the Company are investment return risk, discount
risk, portfolio company performance risk, public company share price
volatility risk, macroeconomic risk, valuation risk, realisation risk, foreign
exchange risk, liquidity risk, key person risk and ESG risk. An explanation
of these risks, their potential impact and how they are managed is set out in
'Principal and emerging risks and uncertainties' section of the Company's
Annual Report for the year ended 30 June 2023, which is available on the
Company's website (https://investors.seraphim.vc/
(https://investors.seraphim.vc/) ).
During the period, the Board has continued to review the Company's principal
risks and uncertainties and considers that they have not changed materially
since 16 October 2023, the date of the Company's 2023 Annual Report, and are
not expected to change materially for the remainder of the Company's financial
year.
Directors' Responsibilities Statement
Responsibility Statement
We confirm to the best of our knowledge that:
· the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting;
· the Interim Management Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule 4.2.7R
(being an indication of important events that have occurred during the Period,
their impact on the condensed set of financial statements and a description of
the principal risks and uncertainties for the remaining six months of the
financial year); and
· the Interim Management Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rule 4.2.8R
(being any related party transactions that have taken place in the Period and
that have materially affected the financial position or performance of the
Company during the Period and any changes in the related party transactions
described in the last Annual Report that could have a material effect on the
financial position or performance of the Company in the Period).
This responsibility statement was approved by the Board on 12 March 2024.
On behalf of the Board
Will Whitehorn
Chair
12 March 2024
Condensed Statement of Comprehensive Income
For the six months ended 31 December 2023
For the period ended For the period ended
31 December 2023
31 December 2022
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Investment gain/(loss)
Net gain/(loss) on investments held at fair value through profit or loss 8 - 4,817 4,817 - (14,927) (14,927)
- 4,817 4,817 - (14,927) (14,927)
Expenses
Management fee 4 (1,422) - (1,422) (1,543) - (1,543)
Performance fee 4 - - - - - -
Other operating expenses 5 (772) - (772) (931) - (931)
Total expenses (2,194) - (2,194) (2,474) - (2,474)
Operating (loss)/profit for the period (2,194) 4,817 2,623 (2,474) (14,927) (17,401)
Finance income
Interest income 295 - 295 93 - 93
Total finance income 295 - 295 93 - 93
(Loss)/profit for the period before tax (1,899) 4,817 2,918 (2,381) (14,927) (17,308)
Tax 6 - - - - - -
(Loss)/profit for the period after tax (1,899) 4,817 2,918 (2,381) (14,927) (17,308)
Profit per share
Basic and diluted (losses)/earnings per share (pence) (0.80) 2.03 1.23 0.99 6.24 (7.23)
All Revenue and Capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in either period.
The Total column of this statement is the profit and loss account of the
Company, and the Revenue and Capital columns represent supplementary
information prepared under guidance issued by the Association of Investment
Companies.
The accompanying notes form an integral part of these financial statements.
Condensed Statement of Financial Position
As at 31 December 2023
31 December 2023 30 June 2023
£'000 £'000
Note
Non-current assets
Investments at fair value through profit or loss 8 197,958 187,428
197,958 187,428
Current assets
Trade and other receivables 9 61 88
Cash and cash equivalents 10 26,782 35,309
26,843 35,397
Current liabilities
Trade and other payables 11 (473) (428)
(473) (428)
Net current assets 26,370 34,969
Net assets 224,328 222,397
Equity
Share capital 12 2,394 2,394
Share premium 12 60,377 60,377
Treasury shares 12 (987) -
Other reserves 12 173,176 173,176
Retained losses (10,632) (13,550)
Total shareholders' funds 224,328 222,397
Number of shares in issue at period end 13 237,198,584 239,384,928
Net assets per share (pence) 94.57 92.90
The interim financial statements were approved and authorised for issue by the
Board of Directors on 12 March 2024 and signed on its behalf by:
Will Whitehorn Sue
Inglis
Chair
Director
The accompanying notes form an integral part of these financial statements.
Condensed Statement of Changes in Equity
For the six months ended 31 December 2023 Retained (losses)/earnings
Share capital Share premium Treasury shares Special distributable reserve Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening net assets attributable to shareholders 2,394 60,377 - 173,176 (8,789) (4,761) 222,397
Repurchase of ordinary shares 12 - - (987) - - - (987)
Total comprehensive (expense)/income for the period - - - - (1,899) 4,817 2,918
Total shareholders' funds at 31 December 2023 2,394 60,377 (987) 173,176 (10,688) 56 224,328
For the six months ended 31 December 2022 Retained (losses)/earnings
Share capital Share premium Treasury shares Special distributable reserve Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening net assets attributable to shareholders 2,394 60,377 - 173,176 (4,286) 7,655 239,316
Total comprehensive expense for the period - - - (2,381) (14,927) (17,308)
Total shareholders' funds at 31 December 2022 2,394 60,377 - 173,176 (6,667) (7,272) 222,008
The accompanying notes form an integral part of these financial statements.
Condensed Statement of Cash Flows
For the six months ended 31 December 2023
For the period ended For the period ended
31 December 2023 31 December 2022
Note £'000 £'000
Cash flows from operating activities
Profit /(loss) for the period before tax 2,918 (17,308)
Adjustments for:
Purchase of investments (5,713) (17,623)
Disposal of investments 8 - 3,341
Unrealised movement in fair value of investments 8 (4,817) 12,967
Realised loss on disposal of investments 8 - 1,960
Movement in payables 11 45 (73)
Movement in receivables 9 27 31
Net cash used in operating activities (7,540) (16,705)
Cash flows from financing activities
Share buy-backs 12 (987) -
Net cash generated from financing activities (987) -
Net movement in cash and cash equivalents during the period (8,527) (16,705)
Cash and cash equivalents at the beginning of the period 35,309 57,650
Cash and cash equivalents at the end of the period 10 26,782 40,945
The accompanying notes form an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 31 December 2023
1. General Information
The Company is an externally managed closed-ended investment company,
incorporated in England and Wales on 14 May 2021 with registered number
13395698. The Company's ordinary shares were admitted to trading on the London
Stock Exchange's main market on 14 July 2021.
2. Material Accounting Policies
Basis of preparation
The condensed financial statements have been prepared in accordance with
UK-adopted IAS 34 Interim Financial Reporting. Where presentational guidance
set out in the AIC SORP is consistent with the requirements of UK-adopted IAS,
the Directors have sought to prepare the condensed financial statements on a
basis compliant with the recommendations of the AIC SORP. In particular,
supplementary information which analyses the Statement of Comprehensive Income
between items of a revenue and capital nature has been presented alongside the
total Statement of Comprehensive Income. The determination of whether an item
should be recognised as revenue or capital is carried out in accordance with
the principles and recommendations set out in the AIC SORP. The Directors have
chosen to apply the non-allocation approach, so all indirect costs are charged
to the Revenue column of the Statement of Comprehensive Income.
The same accounting policies, presentation and methods of computation are
followed in these condensed financial statements as were applied in the
preparation of the Company's annual financial statements for the year ended 30
June 2023. These accounting policies are expected to be applied in the
Company's financial statements for the year ended 30 June 2024.
The annual financial statements were prepared on the historic cost basis, as
modified for the measurement of certain financial instruments held at fair
value through profit or loss and in accordance with UK-adopted International
Accounting Standards and those parts of the Companies Act 2006 applicable to
companies under International Financial Reporting Standards.
These condensed financial statements do not constitute statutory accounts as
defined in section 434 of the Companies Act 2006 and do not include all
information and disclosures required in an Annual Report. They should be read
in conjunction with the Company's Annual Report for the year ended 30 June
2023.
In these financial statements values are rounded to the nearest thousand
(£'000).
Going concern
The Company's cash balance at 31 December 2023 was £26.8m which was
sufficient to cover its liabilities of £0.5m at that date and any foreseeable
expenses for a period of at least 12 months from the date of approval of these
financial statements, including in severe but plausible downside scenarios.
The Company's cash balance is comprised of cash held on deposit with
substantial global financial institutions with strong credit ratings and the
risk of default by the counterparties is considered extremely low. The major
cash outflows of the Company are expected to be for the acquisition of new
and/or follow-on investments, which are discretionary. The Company is
closed-ended and there is no requirement for the Company to buy back or redeem
shares.
Heightened inflation rates and interest rates continue to depress the
macroeconomic environment, impacting global markets. Capital markets and the
Company's share price and investments continue to experience volatility which
remains a risk to the Company. The Directors and Investment Manager continue
to consider the following specific key potential impacts:
· increased volatility in the fair value of investments;
· uncertainty regarding the Company's ability to raise additional
capital and support the existing portfolio; and
· disruptions to business activities of the underlying investments.
In considering these key potential impacts, the Directors and Investment
Manager have assessed them with reference to the Company's risk framework and
mitigation measures in place.
Having made inquiries, the Board is satisfied that the Company's service
providers have robust processes in place in order to continue to provide the
required level of services to the Company, and to maintain compliance with
laws and regulations, in the face of the challenges arising as a result of the
weak macroeconomic environment. There have been no operational difficulties
encountered or disruption in service to date.
Based on the assessment outlined above, including the various risk mitigation
measures in place, the Directors do not consider that the impact of a weak
global macroeconomic environment has created a material uncertainty over the
assessment of the Company as a going concern.
On the basis of this review, and after making due enquiries, the Directors
have a reasonable expectation that the Company has adequate resources to
continue in operational existence for at least 12 months from the date of
approval of these financial statements. Accordingly, they continue to adopt
the going concern basis in preparing the financial statements.
3. Significant Accounting Judgements, Estimates and Assumptions
The preparation of the financial statements requires the application of
estimates which may affect the results reported in the financial statements.
Estimates, by their nature, are based on judgement and available information.
Further details of these judgements, estimates and assumptions made by the
Directors are given in the annual financial statements for the year ended 30
June 2023.
4. Management and Performance Fees
Management fee
Under the Investment Management Agreement, the Investment Manager is entitled
to a management fee of 1.25% per annum of NAV up to £300m and 1.00% per annum
of NAV above £300m, payable quarterly in advance.
Management fees incurred in the Period were £1.42m (2022: £1.54m), of which
£Nil was payable to the Investment Manager as at 31 December 2023.
Performance fee
Under the Investment Management Agreement, the Investment Manager is also
entitled to a performance fee of 15% over an 8% hurdle with full catch-up,
calculated on NAV annually. The performance fee is only payable where the
adjusted NAV at the end of a performance period exceeds the higher of the
performance hurdle and a high water mark. The accrued performance fee will
only be paid to the extent that the aggregate of the net realised profits on
unlisted investments, net unrealised gains on listed investments and income
received from investments during the relevant performance period is greater
than the performance fee payable and, to the extent that such aggregate is
less than the performance fee payable, an amount equal to the difference shall
be carried forward and included in the performance fee payable as at the end
of the next performance period. Subject to the Takeover Code, the Investment
Manager is required to reinvest 15% of any performance fee paid in shares of
the Company. Full details of the performance fee are set out in the
Company's IPO prospectus, which is available on the Company's website
(https://investors.seraphim.vc/ (https://investors.seraphim.vc/) ).
No performance fee was accrued for or paid to the Investment Manager for the
Period.
5. Operating Expenses
Period ended Period ended
31 December 2023
31 December 2022
£'000 £'000
Legal & professional fees 186 258
Administration & depository fees 128 111
Directors' fees 114 115
Insurance expense 11 12
Irrecoverable VAT 26 66
Audit of statutory financial statements 50 33
Other operating expenses 257 336
Total operating expenses 772 931
6. Tax
As an investment trust, the Company is exempt from UK corporation tax on
capital gains arising on the disposal of shares. Capital profits from its
creditor loan relationships or derivative contracts are exempt from UK tax
where the profits are accounted for through the Capital column of the
Statement of Comprehensive Income, in accordance with the AIC SORP.
No tax liability has been recognised in the financial statements.
Period ended 31 December 2023
Revenue Capital Total
£'000 £'000 £'000
UK corporation tax charge on profits for the Period at 25% - - -
Period ended 31 December 2023
Revenue Capital Total
£'000 £'000 £'000
Return on ordinary activities before tax (1,899) 4,817 2,918
(Loss)/profit on ordinary activities multiplied by standard rate of (475) 1,204 729
corporation tax in the UK of 25%
Effects of:
Non-taxable gains on investments - (1,204) (1,204)
Disallowable Expenses 2 - 2
Excess management expenses not utilised in the Period 473 - 473
Total tax charge - - -
As at 31 December 2023 the Company has not recognised a deferred tax asset of
£2,578,708 arising as a result of having unutilised management expenses
carried forward at the Period end of £10,314,832 based on a corporation tax
rate of 25%. These expenses will only be utilised if the tax treatment of the
Company's income and chargeable gains changes or if the Company's investment
profile changes.
Deferred tax is not provided on capital gains and losses arising on the
revaluation or disposal of investments because the Company meets (and intends
to continue to meet for the foreseeable future) the conditions for approval as
an investment trust company.
7. Earnings Per Share
Period ended 31 December 2023 Period ended 31 December 2022
Revenue Capital Total Revenue Capital Total
(Loss)/profit attributable to equity - £'000 (1,899) 4,817 2,918 (2,381) (14,927) (17,308)
Weighted average number of ordinary shares in issue 237,754,730 239,384,928
Basic and diluted (losses)/earnings per share in the period (pence) (0.80) 2.03 1.23 (0.99) (6.24) (7.23)
8. Investments Held at Fair Value Through Profit or Loss
Period ended 31 December 2023 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Opening balance 3,171 1,637 182,620 187,428
Investment additions - - 5,713 5,713
Change in fair value (503) 514 4,623 4,634
Change in fair value - foreign exchange movement 37 13 133 183
Net (loss)/gain on investments held at fair value through profit or loss (466) 527 4,756 4,817
Closing balance 2,705 2,164 193,089 197,958
Year ended 30 June 2023 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Opening balance 16,236 2,373 167,474 186,083
Investment additions - - 17,102 17,102
Investment disposals (3,341) - - (3,341)
Transfers from Level 3 to Level 1 103 - (103) -
Loss on disposals (1,358) - (602) (1,960)
Change in fair value (7,569) (525) 4,427 (3,667)
Change in fair value - foreign exchange movement (900) (211) (5,678) (6,789)
Net loss on investments held at fair value through profit or loss (9,827) (736) (1,853) (12,416)
Closing balance 3,171 1,637 182,620 187,428
During the year ended 30 June 2023 investments with a fair value at 30 June
2023 of £0.1m were transferred from Level 3 to Level 1 due to the Nightingale
IPO and listing in November 2022.
Fair value measurements
The Company measures fair value using the following fair value hierarchy that
prioritises the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). The three
levels of the fair value hierarchy under IFRS 13 are as follows:
Level 1: Quoted price (unadjusted) in an active market
for an identical instrument.
Level 2: Valuation techniques based on observable
inputs, either directly (i.e. as prices) or indirectly (i.e. derived from
prices). This category includes instruments valued using quoted prices in
active markets for similar instruments, quoted prices for identical or similar
instruments in markets that are considered less than active or other valuation
techniques for which all significant inputs are directly or indirectly
observable from market data.
Level 3: Valuation techniques using significant
unobservable inputs. This category includes all instruments for which the
valuation technique includes inputs that are not based on observable data and
the unobservable inputs have a significant effect on the instrument's
valuation. This category includes instruments that are valued based on quoted
prices for similar instruments for which significant unobservable adjustments
or assumptions are required to reflect differences between the instruments.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. For this purpose, the
significance of an input is assessed against the fair value measurement in its
entirety. If a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that measurement is a
Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement
in its entirety requires judgement, considering factors specific to the asset
or liability.
The determination of what constitutes 'observable' requires significant
judgement by the Company. The Company considers observable data to be market
data that is readily available, regularly distributed or updated, reliable and
verifiable, not proprietary and provided by independent sources that are
actively involved in the relevant market.
The objective of the valuation techniques used is to arrive at a fair value
measurement that reflects the price that would be received if an asset was
sold or a liability transferred in an orderly transaction between market
participants at the measurement date.
The following table analyses, within the fair value hierarchy, the Company's
investments measured at fair value at 31 December 2023.
As at 31 December 2023 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed investments 2,705 2,164 - 4,869
Unlisted investments - - 193,089 193,089
2,705 2,164 193,089 197,958
As at 30 June 2023 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed investments 3,171 1,637 - 4,808
Unlisted investments - - 182,620 182,620
3,171 1,637 182,620 187,428
The Level 1 investments were valued by reference to the closing bid prices of
each portfolio company on the reporting date.
Due to their nature, the unlisted investments are always expected to be
classified as Level 3 as these are not traded and their fair values will
contain unobservable inputs.
Significant unobservable inputs for Level 3 valuations
The fair value of unlisted securities is established with reference to the
International Private Equity and Venture Capital Association Valuation
Guidelines and the Company may base valuations on the
calibrated price of recent investment in the portfolio companies, comparable
milestones or multiples of earnings or revenues where applicable. An
assessment will be made at each measurement date as to the most appropriate
valuation methodology.
The valuation methodologies applied involve subjectivity in their significant
unobservable inputs and the table below outlines these inputs.
Valuation methodology Fair value (£m) Unobservable input
Level 1
Available market price 2,705 n/a
Level 2
Available market price 2,164 n/a
Level 3
Calibrated price of recent investment (<3 months) 2,148 Transaction price and company performance
Calibrated price of recent investment (3-6 months) 35,040 Transaction price and company performance
Calibrated price of recent investment (>6 months) 22,483 Transaction price and company performance
Calibrated price of recent investment (>12 months) 7,636 Transaction price and company performance
Premium to price of recent investment 45,398 Premium percentage
Partial write down to price of recent investment 44,551 Write down percentage
Discount to price of recent investment (post Period) 32,248 Uncertainty discount
Milestone multiples 3,585 Weightings and discount to comparables/ multiples
Total 197,958
Details of significant holdings as required by Schedule 4 of The Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulation 2008 are
set out below.
Name Country of incorporation Class of share held % of nominal value Capital & reserves (£) Profit/ (loss) (£) Year-end of data Notes
Bamboo Systems Group Limited UK A Preference 47% (1,355,598) Not publicly available 31-Dec-20 In administration as of 21-Nov-21
PlanetWatchers (UK) Limited UK Series Seed 2 Preference 78% 12,106,431 Not publicly available 31-Dec-22 -
Pre-Series A Preference
29%
Series A Preference
43%
9. Trade and Other Receivables
31 December 2023 30 June 2023
£'000 £'000
Prepayments 41 78
VAT receivable 20 10
61 88
10. Cash and Cash Equivalents
Cash and cash equivalents comprise cash held by the Company and available on
demand. Cash and cash equivalents were as follows:
31 December 2023 30 June 2023
£'000 £'000
Cash on demand 26,782 35,309
26,782 35,309
11. Trade and Other Payables
31 December 2023 30 June 2023
£'000 £'000
Accruals 334 313
Trade creditors 139 115
473 428
12. Share Capital
Date Issued and fully paid Number of ordinary shares Share capital Treasury shares Share premium Other reserves Total
£'000 £'000 £'000 £'000 £'000
30-Jun-23 Opening balance 239,384,928 2,394 - 60,377 173,176 235,947
31-Dec-23 Share buy-backs in the Period (2,186,344) - (987) - - (987)
31 December 2023 237,198,584 2,394 (987) 60,377 173,176 234,960
On 13 July 2023, the Company announced a share repurchase programme to
repurchase ordinary shares in the Company. During the Period, 2,186,344 shares
were purchased (2022: Nil). The Company holds 2,186,344 of its ordinary shares
in treasury and has 237,198,584 ordinary shares in issue (excluding treasury
shares).
13. Net Asset Value Per Share
31 December 2023 30 June 2023
Net assets (per Statement of Financial Position) £224.3m £222.4m
Number of ordinary shares issued (excluding treasury shares) 237,198,584 239,384,928
Net asset value per share 94.57p 92.90p
14. Related Party and Investment Manager Transactions
Directors
As at 31 December 2023, the Company had four non-executive Directors.
Directors' fees (excluding employer national insurance contributions) for the
period ended 31 December 2023 amounted to £100k (2022: £100k), of which
£Nil was outstanding at the Period end (2022: £Nil).
Investment Manager
Seraphim Space Manager LLP has been appointed as the Company's exclusive
Investment Manager and AIFM and is responsible for the day-to-day operation
and management of the Company's investment portfolio, subject at all times to
the overall supervision of the Board.
For the provision of services under the Investment Management Agreement, the
Investment Manager earns a management fee and performance fee, as disclosed in
note 4.
15. Ultimate Controlling Party
In the opinion of the Board, on the basis of the shareholdings disclosed to
it, the Company has no ultimate controlling party.
16. Subsequent Events
Please refer to 'Overview' section for details of the subsequent events in the
normal course of business. There are no other significant subsequent events.
Alternative Performance Measures
We assess the Company's performance using a variety of measures, some of which
are not specifically defined under UK-adopted International Accounting
Standards and are therefore termed 'APMs'. Our APMs, which are shown below,
are reconciled, where appropriate, to the financial statements through the
narrative below. The Board believes that each of the APMs, which are typically
used within the listed investment company sector, provide additional useful
information to shareholders to help assess the Company's performance.
Share price movement
Share price movement in the period, expressed as a percentage.
31 December 2023 vs. 30 June 2023
Share price on 30 June 2023 a 27.0p
Share price on 31 December 2023 b 34.4p
Movement (b-a)/a 27.4%
31 December 2023 vs. 31 December 2022
Share price on 31 December 2022 a 45.2p
Share price on 31 December 2023 b 34.4p
Movement (b-a)/a -23.9%
NAV per share movement
Net asset value per share movement in period, expressed as a percentage.
31 December 2023 vs. 30 June 2023
NAV per share on 30 June 2023 a 92.90
NAV per share on 31 December 2023 b 94.57
Movement (b-a)/a 1.8%
31 December 2023 vs. 31 December 2022
NAV per share on 31 December 2022 a 92.74p
NAV per share on 31 December 2023 b 94.57p
Movement (b-a)/a 2.0%
-Discount/+premium
The amount by which the market price per share of a listed investment company
is either lower (discount) or higher (premium) than the NAV per share,
expressed as a percentage of the NAV per share.
31 December 2023 30 June
2023
NAV per share (note 14 to the financial statements) a 94.57p 92.90p
Share price b 34.40p 27.00p
-Discount/+premium (b-a)/a -63.6% -70.9%
Ongoing Charges
Operating costs incurred in the period, charged to Revenue or Capital in the
Statement of Comprehensive Income, calculated as a percentage of the average
published net assets in respect of the period. Operating costs exclude, for
this purpose, any performance fee, the costs of acquiring and disposing of
investments, any finance costs, taxation and any costs not expected to recur
in the foreseeable future. The calculation is performed in accordance with
the guidelines issued by the AIC. The table below represents the twelve-month
period to the date shown in each case.
31 December 2023 30 June 2023
£'000 £'000
Investment management fee (note 4 to the financial statements) 2,791 2,912
Other operating expenses (note 5 to the financial statements) 1,692 1,851
Less non-recurring operating expenses (236) (442)
Ongoing charges a 4,247 4,321
Average quarterly NAV b 223,834 228,604
Ongoing charges ratio a/b 1.90% 1.89%
The ongoing charges calculated above may differ from the ongoing costs
provided in the Company's Key Information Document ("KID"), which represent a
12-month period and are calculated in line with the Packaged Retail and
Insurance-based Investment Products Regulation. The ongoing costs in the KID
include investment transaction costs.
Portfolio Fair Value vs. Cost
The amount by which the fair value of the assets in the portfolio at the end
of the period has changed in relation to the aggregate cost of the assets
(adjusted for any disposals), expressed as a percentage of the aggregate cost.
31 December 2023 30 June 2023
£m £m
Portfolio fair value (note 8 to the financial statements) a 198.0 187.4
Aggregate cost of the assets (adjusted for any disposals) b
195.9 190.2
Portfolio fair value vs. cost a/b 101.03% 98.50%
Glossary
Administrator or Company Secretary: Ocorian Administration (UK) Limited.
AI: artificial intelligence.
AIC: The Association of Investment Companies, the trade body for listed
closed-ended investment companies.
AIC SORP: The Statement of Recommended Practice for the Financial Statements
of Investment Trust Companies and Venture Capital Trusts, issued by the AIC as
amended from time to time.
Average quarterly NAV : Calculated as the mean NAV at each of the four quarter
end periods throughout the 12 months ended at the period end.
Board: the Board of Directors of the Company.
Bookings: contracted future revenues.
Company or SSIT: Seraphim Space Investment Trust PLC.
CY: Calendar year, a one-year period that begins on 1 January and ends on 31
December.
Directors: the Directors of the Company.
Discount: the share price of a listed investment company is rarely the same as
its NAV per share. When the share price is lower than the NAV per share it is
said to be trading at a discount. The discount is the difference between the
share price and the NAV per share, expressed as a percentage of the NAV per
share.
ESG: environmental, social and governance.
EV: enterprise value.
Fair value weighted average: an average for multiple portfolio companies
weighted by each portfolio company's relative fair value.
FV: fair value.
FX: foreign exchange.
IAS: International Accounting Standard.
IFRS: the International Financial Reporting Standards, being the
principles-based accounting standards, interpretations and the framework by
that name issued by the International Accounting Standards Board, to the
extent they have been adopted by the UK.
IoT: the interconnection via the internet of computing devices embedded in
everyday objects, enabling them to send and receive data.
Investment Management Agreement: the Investment Management Agreement entered
into between the Investment Manager and the Company.
Investment Manager or Seraphim Space: Seraphim Space Manager LLP.
IPEV: the International Private Equity and Venture Capital Association
IPO: initial public offering, being an offering by a company of its share
capital to the public with a view to seeking an admission of its shares to a
recognised stock exchange.
London Stock Exchange: London Stock Exchange PLC.
NASDAQ: National Association of Securities Dealers Automated Quotations.
NAV or net asset value: the value of the assets of the Company less its
liabilities as calculated in accordance with its accounting policies (or, in
the context of an ordinary share, the NAV of the Company divided by the number
of ordinary shares in issue (but excluding any treasury shares)).
Period: the Company's accounting period to which this interim report relates,
being the period commencing on 1 July 2023 and ending on 31 December 2023.
Premium: a premium occurs when the share price of a listed investment company
is higher than the NAV per share. The premium is the difference between the
share price and the NAV per share, expressed as a percentage of the NAV per
share.
SAR: Synthetic Aperture Radar.
SPAC: special purpose acquisition company.
SpaceTech: in the context of a business, an organisation which relies on
space-based connectivity and/or precision, navigation and timing signals or
whose technology or services are already addressing, originally derived from
or of potential benefit to the space sector.
Total return: The total return on an investment comprises both changes in the
NAV per share or share price and dividends paid to shareholders and is
calculated on the basis that all historic dividends have been reinvested in
the NAV or shares on the date the shares become ex-dividend.
Treasury shares: the Company has the authority to make market purchases of its
ordinary shares for retention as treasury shares for future reissue, resale,
transfer or cancellation. Treasury shares do not receive distributions and the
Company is not entitled to exercise the voting rights attaching to them.
VC: venture capital.
Corporate Information
Registered Office
5th Floor
20 Fenchurch Street
London
EC3M 3BY
Board of Directors
Will Whitehorn (Chair)
Sue Inglis (Senior Independent Director)
Christina McComb
Angela Lane
Investment Manager
Seraphim Space Manager LLP
2nd Floor
One Fleet Place
London
EC4M 7WS
Administrator and Company Secretary
Ocorian Administration (UK) Limited
5th Floor
20 Fenchurch Street
London
EC3M 3BY
Corporate Brokers
Deutsche Numis, London Branch
Winchester House
1 Great Winchester Street
London
EC2N 2DB
J.P. Morgan Securities PLC
25 Bank Street
Canary Wharf
London
E14 5JP
Legal Adviser
Stephenson Harwood LLP
1 Finsbury Circus London
EC2M 7SH
Depositary
Ocorian Depositary (UK) Limited
5th Floor
20 Fenchurch Street
London
EC3M 3BY
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Independent Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Custodian
Liberum Wealth
1st Floor Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey
GY1 3JX
Public Relations and Communications Adviser
SEC Newgate
14 Greville Street
London
EC1N 8SB
Identifiers
Website: https://investors.seraphim.vc/ (https://investors.seraphim.vc/)
ISIN GB00BKPG0138
Ticker SSIT
SEDOL BKPG013
GIIN GXNBCF.99999.SL.826
Registered Company Number 13395698
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