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