REG - Blue Star Capital - Final Results
21/03/2024 07:15
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RNS Number : 7583H Blue Star Capital plc 21 March 2024
21 March 2024
Blue Star Capital plc
("Blue Star" or the "Company")
Final Results for the year ended 30 September 2023
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 2023.
Operating and financial summary
- The Company incurred a pretax loss for the period of £6,329,473
compared to a loss for the previous period of £1,301,008.
- The main factors behind this year's significant loss were the write
down in value of the Company's investments in Dynasty Media & Gaming and
Sthaler and losses incurred on the realisation of the Company's quoted
investments.
- The operating expenses of the Company have been significantly reduced
from £517,003 to £201,118
- The cash position of the Company at 30 September 2023 was £63,158
compared with £86,575 in the previous period.
- The formal sales process for SatoshiPay is ongoing and the Company
will update shareholders as appropriate. The Company has a 27.9% interest in
SatoshiPay which is valued on the basis of the last external fund raise in
2019 at approximately £4.65 million.
- The Company's Net Asset value per share is 0.11p
- Post year end a decision was taken by the management of Dynasty to
merge with Googly. To help support Dynasty through this transitioning phase,
Blue Star invested US$75,000 in a US$3 million fundraise undertaken by Dynasty
in November 2023. The Convertible Loan Note has a two-year expiry period, is
non-interest bearing and convertible at a discount of 50 per cent to Dynasty's
next funding round.
The Annual Report and notice of Annual General Meeting ("AGM") will be posted
to shareholders shortly and will be available to view on the Company's website
http://www.bluestarcapital.co.uk (http://www.bluestarcapital.co.uk)
The AGM will be held at the offices of Cairn Financial Advisers LLP, 80
Cheapside, 3rd Floor, EC2V 6EE on 17 April 2024 at 10.30 a.m. Shareholders
wishing to vote on any matters of business at the AGM are encouraged to do so
through completion of a proxy form which can be completed and submitted to the
Company. Proxies should be completed and returned in accordance with the
instructions on the form of proxy by no later than 10.30 a.m. on 15 April
2024.
Tony Fabrizi Executive Chairman of Blue Star Capital plc, commented:
"The last year was one of considerable disappointment for all those connected
with Blue Star. The material and unexpected write down in value in our
investment in Dynasty has had a significantly detrimental impact on the
Company's net asset value and this has obviously impacted sentiment towards
the Company. Our focus is on securing an attractive offer for our shareholding
in SatoshiPay later this year at which point the Board will consult with
shareholders over the Company's future."
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014.
For further information, please contact:
Blue Star Capital plc +44 (0) 777 178 2434
Tony Fabrizi
Cairn Financial Advisers LLP +44 (0) 20 7213 0880
(Nominated Adviser & Broker)
Jo Turner / Liam Murray
Chairman's Statement
Blue Star Capital plc ("the Company" or "Blue Star") provides investors with
exposure to a portfolio of geographically diverse companies in high-growth,
disruptive technology sectors.
During the period, the Company's Net Asset Value ("NAV") decreased by 53% to
£5,329,347 (2022: £11,414,507) with the Company incurring a pre-tax loss of
£6,328,408 (2022: loss £1,301,008). The significant decline in NAV and loss
for the year principally reflect the write down of our investments in Dynasty
Media & Gaming and Sthaler plus the losses incurred on the realisation of
the Company's quoted investments. The Company ended the year with cash of
£63,158 (2022: £86,575).
In September 2022, the Board set out its strategy for the next two years. The
key components were to refrain from making any new investments while it sought
offers for its shareholdings in SatoshiPay and Dynasty. The Board also advised
that, if possible, it would endeavour to manage the business without any
further equity raises.
We provide the following portfolio company overviews for the year ended 30
September 2023.
Blockchain and decentralised finance
SatoshiPay's mission is to connect the world through instant payments. To
achieve this ambition, SatoshiPay is initially focusing on building the
Pendulum Network Project ("Pendulum").
Pendulum, a smart-blockchain infrastructure technology company, aims to
decentralize forex and traditional finance, by providing the missing link
between fiat currency and De-Fi ecosystems through a sophisticated smart
contract network. Pendulum is committed to advancing foreign exchange
("Forex") trading into the blockchain space to integrate a tranche of the
US$6.6 trillion traded daily in Forex markets.
In the period under review, Pendulum has achieved a number of key operational
milestones, most notably:
• In December 2022 Pendulum completed its
crowdloan as a precursor to it becoming a Polkadot Parachain. Pendulum's
crowdloan was the fastest parachain crowdloan in the history of the Polkadot
ecosystem.
• Pendulum parachain went live on Polkadot mainnet
in February 2023 and the corresponding utility token called PEN was listed on
MEXC in March 2023.
• In March 2023 Pendulum announced the development
of "Spacewalk", its blockchain bridge connecting the Stellar and Polkadot
networks. This innovative bridge is intended to facilitate the transfers of
multiple stablecoins, advancing interoperability in the blockchain space.
Pendulum described Spacewalk as a trust-minimized bridge that supports the
smooth and seamless transfer of stable assets between the two ecosystems,
allows closer collaboration in the De-Fi sector and drives synergies between
traditional fintech services and the De-Fi sector.
• In December 2023, an HRMP channel was opened
with Moonbeam Network helping to demonstrate Pendulum's partnerships strategy.
This launch helped enable additional functionalities for the PEN token and
stablecoin activities within the Moonbeam ecosystem and assisted with the
listing of PEN on Moonbeam's DEX Stellaswap in early January 2024.
SatoshiPay currently owns around 5% of the PEN tokens and has a service
contract with Pendulum to provide software development.
SatoshiPay also successfully incubated the 0xAmber AMM Project (now called
Nabla.fi) for which it secured 5 per cent of the future tokens. Nabla is a
novel AMM design for low-risk, single-sided liquidity provision,
significantly lower slippage and fees compared to other AMM designs. The
nabla.fi team are about to launch their novel-design decentralized exchange
with oracle-guided pricing and single-sided liquidity provision for maximum
capital efficiency and attractive FX rates on chain.
During the period, the SatoshiPay team took the decision to mothball
Dtransfer, given the need to focus resources on Pendulum and Nabla. However,
the successful incubation of Pendulum followed by Nabla provides the board of
SatoshiPay with confidence that they are well positioned to incubate other
DeFi applications with a stablecoin, FOREX or business focus.
In its most recent results to 31 December 2022, SatoshiPay achieved turnover
of €2.93 million and profits after tax of €587,000.
Blue Star currently has a 27.9% interest in SatoshiPay's share capital, which
is valued on the basis of the last external fund raise in 2019 at
approximately £4.65 million. As previously announced, Benchmark International
have been appointed to undertake a formal sales process for SatoshiPay which
may lead to the sale of all or part of Blue Star's shareholding in SatoshiPay.
There is no guarantee that this exercise will result in a whole or partial
sale, but the Board believes it's important to undertake such a process so as
to obtain a better understanding of SatoshiPay's current and potential value.
Esports
To date we have invested approximately £2.5 million in our Esports portfolio
which originally consisted of eight companies, with the main investments being
£712,665 in Guild and £969,268 in Dynasty. In last year's accounts we wrote
off four of those investments and started the year with investments in
Dynasty, Googly, Paidia and Guild. These investments were carried at either
cost or last private fundraising for our private investments or market value
for our quoted investments.
Details of the four Esports investments are provided below.
Dynasty Media & Gaming
Dynasty's original business plan was to provide its gaming platform to large
telecoms companies, for which it initially had much success, generating fixed
monthly license fee income. However, operational complexities, including the
need to support several different and highly customised platforms, led to a
pivot to focus on launching B2C platforms with more strategically aligned and
complementary partners and in the process, maintaining control of its products
and contact with the end users. As a result of extensive technology
development, Dynasty's platform has now moved to a single code base, meaning
time to launch in new markets has been reduced from at least nine months to
one month.
As previously reported, Dynasty believes it has built the leading and most
comprehensive gaming/esports platform globally, which combines the following
key features, licenses, and accreditations in one single platform:
• Enterprise grade international esports
tournament engine accredited and endorsed by major international games
publishers including Riot, Activision and Supercell to run professional
leagues and mass market grassroots esports feeder leagues.
• The only enterprise grade esports platform and
gaming shop that:
o supports international standard professional esports tournaments for both
PC and Mobile games, the world's fastest growing gaming sector;
o is optimised for key hyper-growth 'mobile first' markets. Dynasty
optimised its mobile experience to 30MB, perfect for mobile first markets
such as India, Africa, SEA and LATAM;
o incorporates a payment wallet, subscription engine, digital voucher and
top up shop, with full security accreditation;
o can deliver and launch a fully branded, fully functional partner platform
within 4 weeks. This has been enabled by a single code cloud-based code
structure.
· Full customer relationship management campaign engine to increase
monetisation and engagement.
· Unique User Generated Tournament engine that allows users to
create entry fee and prize pool tournaments, sharing in platform monetisation.
· The only enterprise grade esports and gaming shop with an AI
Academy, allowing players to improve in game performance.
Dynasty now has live B2C platforms in several key gaming markets including
Googly in India, Lets Play Live in Australia and New Zealand and Lightning
Dragon in Philippines. Further details on these platforms are summarised
below:
Googly: Dynasty advises that India is the world's fastest growing gaming
market, with over 750 million gamers forecast in the country by the end of
2026, spending more than US$6.7 billion. By most metrics, the rate of growth
in gaming in India is more than double the average of the rest of the world -
this includes more mature, slower growth markets like North America and
Europe, but also accelerating regions such as Latin America and Southeast
Asia. The future growth of gaming in India will continue to be almost entirely
driven by mobile, fuelled by a young population of digital natives, increasing
wealth, and mass smartphone adoption. Googly's platform offering provides
India's gamers a diverse, immersive experience, catering to all levels of
casual and competitive gaming, including - leaderboards, live broadcasts,
engaging content, unique user-generated prizepool tournaments, and a market
leading games shop.
Lets Play Live: The platform was launched in June 2023 with the Company's
50/50 JV partner Lets Play Live, the region's leading tournament organiser and
gaming content creator. Within the first six months of operation, the
platform has already become Oceania's largest and most successful gaming
platform with over 420,000 users. Major official publisher-led national and
regional tournaments secured with an extensive calendar scheduled throughout
2024 for leading games titles including Valorant, Fortnite, and Clash Royale.
Lightning Dragon: The platform was recently launched with large media
conglomerate Vera Media Group. Lightning Dragon has already secured
significant partnerships including PayMaya, one of the region's leading
payment providers with over 40 million users in the Philippines, and Razer,
one of the world's largest gaming brands. Lightning Dragon expects to announce
several more strategic marketing partnerships in the coming weeks across
sectors including TV, radio, telcos, retail, esports tournament organisers and
gaming content creators.
Dynasty's management believe their new business model will allow them to
become cash-flow positive later this year. Within their business model, India
is the largest contributor and given the importance of the Indian market and
the financial support provided by Googly and its shareholders to Dynasty over
the last 9 months, a decision was taken late last year to merge Dynasty and
Googly. To help support Dynasty through this transitioning phase, Blue Star
invested US$75,000 in a US$3 million fundraise undertaken by Dynasty in
November 2023. The Convertible Loan Note had a two-year expiry period, was
non-interest bearing and converted at a discount of 50 per cent to Dynasty's
next funding round.
Details of the merger were announced on 13 March 2024, in which Dynasty has
entered into an agreement to acquire the entire assets and business of Googly
for a purchase consideration of approximately US$7.6 million in an all-share
acquisition that values the combined entity at US$15m. In addition, the
Company has also been informed that a number of Convertible Loan Note holders
in Dynasty also intend to convert post the Acquisition and the Company has
decided that it will also convert its US$75,000 Convertible Loan at that
point.
Blue Star has been an investor in Dynasty since 2019 and pre the merger with
Googly and the conversion of all outstanding Convertible Loan Notes, had a
shareholding of approximately 13%. Additionally, the Company had a
shareholding of 0.6% of Googly. Post the merger and pre conversion of the
Convertible Loan Notes, the Company holds approximately 6.3% of the fully
diluted share capital of Dynasty. Assuming all Convertible Loan Notes convert,
this holding is expected to fall to around 2.4%.
Guild Esports PLC
Guild Esports PLC is a global teams organisation and lifestyle brand, which
was the first esports organisation to list on the London Stock Exchange.
At the year end the Company held 8,951,500 shares in Guild with a valuation of
£51,471. Subsequently, the Company sold its remaining shareholding in Guild.
Paidia
Paidia is an all-women's esports business which has achieved significant
growth. The market positioning of Paidia is attracting significant attention
both from the media as well as large global brands. The Company invested
approximately
£59,000 into Paidia in 2021 and is carrying the investment based on the last
external valuation in August 2023 at £105,910.
Other investments
Sthaler Limited
Sthaler is a Digital Identity business which enables an individual to identify
themselves using the unique vein patterns within a finger. Its FinGo ID
platform uses a biometric called VeinID which instantly recognises an
individual through the unique pattern of veins inside each finger. FinGo Pay
is approved to authenticate multiple payment types including payment cards and
real-time payments (bank-to-bank).
At the beginning of 2023, Sthaler's management calculated that the Company
needed to raise around £4 million to fund it through to a point where it was
self-sustaining. It began a process of reaching out to existing shareholders
and some new investors to seek their support for such a raise. Although there
was general support for the business, market conditions and the lack of
secured projects meant that investors were unwilling to support at previous
valuations. After considerable efforts, Sthaler's management decided to
significantly reduce the valuation in order to recapitalise the business and
raise the needed funding. At the end of 2023, Sthaler reduced the valuation to
£2 million pre money and secured support from a number of shareholders. This
raise is still ongoing but is expected to close shortly at between £3.5
million - £4 million.
Although the Company continues to believe Sthaler retains significant
potential, our focus is on our two main investments which combined with our
limited cash resources, meant that we did not participate in the round.
At the year end, Blue Star's shareholding in Sthaler was approximately 0.68%
but will fall to around 0.24% post the current fund raise completing. On this
basis, Blue Star's holding will be valued at approximately £13,600, compared
with a cost of £50,000.
East Sides Games and NFT Investments PLC To provide working capital the
Company disposed of its shareholdings in NFT Investments during the year and
East Side Games post year-end.
Outlook
Last year was clearly extremely disappointing for everyone connected with Blue
Star with significant write-downs in a number of our investments. We
supported all our investee businesses to the extent possible and continue to
believe they have potential to become successful businesses in the future. Our
main investment is in SatoshiPay which is currently engaged in a sales process
which may or may not lead to an offer. While this process is ongoing the Board
has agreed to take its remuneration in shares and has taken actions to
eliminate all non-essential spending. Once the SatoshiPay sales process is
complete, the Board intends to carry out a process of consultation with
shareholders to determine the future direction of the Company.
Anthony Fabrizi
Executive Chairman
21 March 2024
Strategic Report
The Directors present their strategic report on the Company for the year ended
30 September 2023.
Review of Business and Analysis Using Key Performance Indicators
The full year's loss was £6,328,408 compared to a loss of £1,301,008 for the
year ended 30 September 2022.
Net assets have decreased to £5,329,347 at 30 September 2023, changing from
£11,414,507 at 30 September 2022. The cash position at the end of the year
decreased to £63,158 from £86,575 as at 30 September 2022.
During the year, there was a fair value decrease in the company's investment
assets of £5,762,911 (2022: £445,223 loss). A full review of the company's
portfolio investments is provided in the Chairman's statements.
Key Performance Indicators
The Board monitors the activities and performance of the Company on a regular
basis. The indicators set out below have been used by the Board to assess
performance over the year to 30 September 2023. The main KPIs for the Company
are listed as follows:
2023 2022
Valuation of investments £5,291,806 £11,390,278
Cash and cash equivalents £63,158 £86,575
Net current assets £37,541 £24,229
Loss before tax £6,328,408 £1,301,008
Net asset value per share 0.11p 0.23p
Investing Policy
Assets or companies in which the Company can invest
The Company can invest in assets or companies in, inter alia, the following
sectors:
• Technology;
• Gaming and esports; and
• Media
The Company's geographical range is mainly UK companies but considers
opportunities globally and will actively co- invest in larger deals.
The Company can take positions in investee companies by way of equity, debt or
convertible or hybrid securities.
Whether investments will be active or passive investments.
The Company's investments are passive in nature but may be actively managed.
The Company may be represented on, or observe, the boards of its investee
companies.
Holding period for investments
The Company's investments are likely to be illiquid and consequently are to be
held for the medium to long term.
Spread of investments and maximum exposure limits, policy in relation to
cross-holdings and investing restrictions The Company does not have any
maximum exposure limits, limits on cross-holdings or other investing
restrictions. Under normal circumstances, it is the Directors' intention not
to invest more than 10% of the Company's gross assets in any individual
company (calculated at the time of investment). The Company has accumulated a
27.9% stake in SatoshiPay, which the Board believes represents a strong
opportunity to generate significant shareholder value.
Policy in relation to gearing
The Directors may exercise the powers of the Company to borrow money and to
give security over its assets. The Company may also be indirectly exposed to
the effects of gearing to the extent that investee companies have outstanding
borrowings.
Returns and distribution policy
It is anticipated that returns from the Company's investment portfolio will
arise upon realisation or sale of its investee companies, rather than from
dividends received. Whilst it is not possible to determine the timing of
exits, the Board will seek to return capital to shareholders when appropriate.
Life of the Company
The Company has an indefinite life.
Future developments
The Company is working with its largest investee business, SatoshiPay, to
establish an independent valuation and potential offer for the business. If an
offer is accepted the Board will then consult with shareholders on whether to
reinvest this cash realised from the SatoshiPay share sale or make some form
of cash distribution to shareholders.
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
three Directors in the current and prior-year and therefore effectiveness of
employee policies is not relevant for the Group.
Principal risks and uncertainties
The Company seeks investments in late-stage venture capital and early-stage
private equity opportunities, which by their very nature allow a diverse
portfolio of investments within different sectors and geographic locations.
The Company's primary risk is loss or impairment of investments. This is
mitigated by careful management of the investment and in particular, only
continuing to support those investments which demonstrate potential to achieve
a positive exit and decisively determining those which do not. Portfolio and
capital management techniques are fully applied according to industry standard
practice.
It may be necessary to raise additional funds in the future by a further issue
of new Ordinary shares or by other means. However, the ability to fund future
investments and overheads in Blue Star Capital Plc as well as the ability of
investments to return suitable profit cannot be guaranteed, particularly in
the current economic climate.
The value of companies similar to those in Blue Star Capital's portfolio and
in particular those at an early stage of development, can be highly volatile.
The price at which investments are made, and the price which the Company may
realise for its investment, will be influenced by a large number of factors,
some specific to the Company and its operations and some which may affect the
sector.
By Order of the Board
Anthony Fabrizi
Executive Chairman
21 March 2024
Directors' Report
The Directors present their report together with the audited financial
statements for the year ended 30 September 2023.
Results and dividends
The trading results for the year ended 30 September 2023 and the Company's
financial position at that date are shown in the enclosed financial
statements.
The Directors do not recommend the payment of a dividend for the year (2022:
£nil).
Principal activities and review of the business
The principal activity of the Company is to invest in the technology, esports
and gaming sectors. A review of the business is included within the Chairman's
Statement and Strategic Report.
Directors serving during the year
Anthony Fabrizi
Brian Rowbotham Resigned on 9 October 2023
Sean King
On 9 October 2023, Brian Rowbotham resigned and Anthony Fabrizi was appointed
as Company Secretary.
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 2023 30 September 2022
Number of ordinary Shares Warrants Number of ordinary Shares Warrants
Anthony Fabrizi - 170,000,000 - -
Sean King 18,250,000 30,000,000 18,250,000 -
Brian Rowbotham - 50,000,000 - -
Significant
Shareholders
As at 13 March 2024, 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
Nicolas Slater 582,730,468 11.44%
Pioneer Media Holdings Inc 322,916,333 6.34%
Derek Lew 211,527,778 4.15%
Paniolo Ventures Limited 208,333,333 4.09%
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 loss on the
valuation of investments of £565,497 (2022: £855,785).
The Company had cash reserves at the year-end of £63,158 (2022: £86,575).
Post year-end, the Company raised £75,487 from the sale of its remaining
listed investments. In addition, the Company raised £100,000, pre expenses,
pursuant to a placing of 100,000,000 new ordinary shares at a price of 0.1p
per new ordinary share (refer to note 21).
The Directors have prepared detailed financial forecasts and cash flows
looking beyond 12 months from the date of the approval of these financial
statements. In developing these forecasts, the Directors have made assumptions
based upon their view of the current and economic conditions that are expected
to prevail over the forecast period. The Directors estimate that the cash held
by the Company, together with known receivables, will be sufficient to
support the current level of activities to the end of the third quarter of
2024. The Directors have concluded that the ability of the Company to raise
further funds in the future represents a material uncertainty which may cast
significant doubt on the Company's ability to continue as a going concern.
The Directors are continuing to explore sources of finance available to the
Company, including the sale of further investments and they have a reasonable
expectation that they will be able to secure sufficient cash inflows for the
Company to continue its activities for not less than 12 months from the date
of approval of these financial statements. On this basis, the Directors
continue to adopt the going concern basis in preparing these accounts.
Streamlined Energy and Carbon Reporting (SECR)
The Company is a low energy user and as such is exempt from reporting under
these regulations.
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
Anthony Fabrizi
Executive Chairman
21 March 2024
Statement of Comprehensive Income
For the year ended 30 September 2023
2023 2022
Note £ £
Revenue - -
Loss on disposal of investments (122,196) (338,836)
Fair valuation movements in financial instruments designated
at fair value through profit or loss 11 (5,762,911) (445,223)
(5,885,107) (784,059)
Share based payments 6 (243,248) -
Administrative expenses 3 (201,118) (517,003)
Operating (loss)/profit 4 (6,329,473) (1,301,062)
Finance income 5 1,065 54
(Loss)/Profit before and after taxation and total comprehensive
income for the year (6,328,408) (1,301,008)
(Loss)/Profit per ordinary share:
Basic earnings per share on (loss)/profit for the year 10 (0.13p) (0.03p)
Diluted earnings per share on (loss)/profit for the year 10 (0.13p) (0.03p)
The notes form part of these financial statements.
Statement of Financial Position
For the year ended 30 September 2023
2023 2022
Note £ £
Non-current assets
Financial assets at fair value through profit or loss 11 5,291,806 11,390,278
Convertible loan note 11 - -
Total non-current assets 5,291,806 11,390,278
Current assets
Trade and other receivables 12 6,459 8,072
Cash and cash equivalents 13 63,158 86,575
Total current assets 69,617 94,647
Total assets 5,361,423 11,484,925
Current liabilities
Trade and other payables 14 32,076 70,418
Total liabilities 32,076 70,418
Net assets 5,329,347 11,414,507
Shareholders' equity
Share capital 15 4,892,774 4,892,774
Share premium account 9,575,072 9,575,072
Other reserves 243,248 -
Retained earnings (9,381,747) (3,053,339)
Total shareholders' equity 5,329,347 11,414,507
The financial statements were approved by the Board, authorised for issue on
20 March 2024 and were signed on its behalf by:
Anthony Fabrizi
Director
Registered number: 05174441
The notes form part of these financial statements.
Statement of Changes in Equity
For the year ended 30 September 2023
Share capital Share premium Other reserves Retained earnings
£ £ £ £ Total
£
Year ended 30 September 2022
At 1 October 2021 4,892,774 9,575,072 - (1,752,331) 12,715,515
Loss for the year and total
comprehensive income - - - (1,301,008) (1,301,008)
At 30 September 2022 4,892,774 9,575,072 - (3,053,339) 11,414,507
Year ended 30 September 2023
At 1 October 2022 4,892,774 9,575,072 - (3,053,339) 11,414,507
Loss for the year and total
comprehensive income - - - (6,328,408) (6,328,408)
Share based payments - - 243,248 - 243,248
At 30 September 2023 4,892,774 9,575,072 243,248 (9,381,747) 5,329,347
Share capital
Share capital represents the nominal value on the issue of the Company's
equity share capital, comprising £0.001 ordinary shares.
Share premium
Share premium represents the amount subscribed for the Company's equity share
capital in excess of nominal value.
Other reserves
Other reserves represent the cumulative cost of share-based payments.
Retained earnings
Retained earnings represent the cumulative net income and losses of the
Company recognised through the statement of comprehensive income.
The notes form part of these financial statements.
Cash Flow Statement
For the year ended 30 September 2023
2023 2022
Note £ £
Operating activities
Loss for the year (6,328,408) (1,301,008)
Adjustments:
Finance income 5 (1,065) (54)
Fair value losses 5,762,911 445,278
Impairment of convertible note - 150,846
Loss on disposal of investments 122,196 338,836
Share based payment 243,248 -
Working capital adjustments
Decrease in trade and other receivables 1,613 127,429
Decrease in trade and other payables (38,342) (163,725)
Net cash used in operating activities (237,847) (402,398)
Investing activities
Proceeds from sale of investments 213,365 192,867
Interest received 1,065 -
Net cash from investing activities 214,430 192,867
Net cash generated from financing activities - -
Net decrease in cash and cash equivalents (23,417) (209,531)
Cash and cash equivalents at start of the year 13 86,575 296 106
Cash and cash equivalents at end of the year 13 63,158 86,575
The notes form part of these financial statements.
Notes to the Financial Statements
For the year ended 30 September 2023
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 England
and Wales with registered number: 05174441 The address of its registered
office is Griffin House, 135 High Street, Crawley RH10 1DQ.
The Company is listed on the Alternative Investment Market (AIM) market of the
London Stock Exchange plc. The financial statements are presented in Pound
Sterling (£) and rounded to the nearest £1.
Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these
financial statements are set out below.
These policies have been consistently applied to all the years presented,
unless otherwise stated.
Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards, International Accounting
Standards and Interpretations (collectively IFRS) issued by the International
Accounting Standards Board (IASB) as adopted by the United Kingdom ("UK
adopted IFRS") and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
These financial statements have been prepared under the historical cost
convention, as modified by the revaluation of assets and liabilities held at
fair value.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Company's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant in the financial
statements, are disclosed in note 2.
Going concern
The Company has reported a loss for the year excluding fair value gain on the
valuation of investments of £565,497.
The Company had cash reserves at the year-end of £63,158 and a portfolio of
investment companies which include quoted investments which can be easily
liquidated should further funds be required.
Post year-end, the Company raised £75,487 from the sale of its remaining
quoted investments. In addition, the Company raised £100,000 pursuant to a
placing of 100,000,000 new ordinary shares at a price of 0.1p per new ordinary
share (refer to note 21).
The Directors have prepared detailed financial forecasts and cash flows
looking beyond 12 months from the date of the approval of these financial
statements. In developing these forecasts, the Directors have made assumptions
based upon their view of the current and economic conditions that are expected
to prevail over the forecast period. The Directors estimate that the cash held
by the Company, together with known receivables, will be sufficient to
support the current level of activities to the end of the third quarter of
2024. The Directors have concluded that the ability of the Company to raise
further funds in the future represents a material uncertainty which may cast
significant doubt on the Company's ability to continue as a going concern.
The Directors are continuing to explore sources of finance available to the
Company, including the sale of further investments and they have a reasonable
expectation that they will be able to secure sufficient cash inflows for the
Company to continue its activities for not less than 12 months from the date
of approval of these financial statements. On this basis, the Directors
continue to adopt the going concern basis in preparing these accounts.
Accordingly, these accounts do not contain any adjustments to the carrying
amount or classification of assets and liabilities that would result if the
Company were 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 2022. Their adoption has not had
any material impact on the disclosures or on the amounts reported in these
financial statements
Standards/interpretations Application
IFRS 9 Financial Instruments
Amendments resulting from Annual Improvements to IFRS Standards 2018-2020
(fees in the '10 per cent' test for derecognition of financial liabilities)
IFRS 16 Property, Plant and Equipment
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 its intended use
IFRS 37 Provisions, Contingent Liabilities and Contingent Assets
Amendments regarding the costs to include when assessing whether a contract is
onerous
New standards, amendments and interpretations not yet adopted
Interpretations Application Effective date
IFRS 4 Insurance Contracts 01/01/2023
Amendments regarding the expiry date of the deferral approach
IFRS 7 Financial Instruments: Disclosure 01/01/2024
Amendments regarding supplier finance arrangements
IFRS 16 Leases
Amendments to clarify how a seller-lessee subsequently measures sale and 01/01/2024
leaseback transactions.
IAS 1 Presentation of Financial Statements 01/01/2023
Amendments regarding the disclosure of accounting policies Amendments
regarding the classification of liabilities
Classification of Liabilities as Current or Non-current and Non-current 01/01/2024
Liabilities with Covenants
IAS 7 Statement of Cash Flows 01/01/2024
Amendments to specify the disclosure requirements regarding supplier finance
arrangements
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors 01/01/2024
Amendments regarding the definition of accounting estimates
IAS 21 Income Taxes 01/01/2023
Amendments regarding deferred tax on leases and decommissioning obligations
Amendments to provide a temporary exception to the requirements regarding
deferred tax assets and liabilities related to pillar two income taxes
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.
Financial assets
The Company uses the following hierarchy for determining and disclosing the
fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets
or liabilities.
Level 2: other techniques for which all inputs which have a significant
effect on the recorded fair value are observable, either directly or
indirectly.
Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks, other short term highly liquid investments with original maturities of
three months or less.
For the purpose of the cash flow statement, cash and cash equivalents consist
of cash and cash equivalents as defined above, net of outstanding bank
overdrafts.
Financial liabilities
The Company classifies its financial liabilities in the category of
financial liabilities measured at amortised cost. The Company does not have
any financial liabilities at fair value through profit or loss.
Financial liabilities measured at amortised cost
Financial liabilities measured at amortised cost include:
Trade payables and other short-term monetary liabilities, which are initially
recognised at fair value and subsequently carried at amortised cost using the
effective interest rate method.
Finance income
Finance income relates to interest income arising on cash and cash equivalents
held on deposit and interest accrued on loans receivable. Finance income is
accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable.
Operating loss
Operating loss is stated after crediting all items of operating income and
charging all items of operating expense.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount
of an asset or liability in the balance sheet differs from its tax base.
Recognition of deferred tax assets is restricted to those instances where it
is probable that taxable profit will be available against which the
difference can be utilised.
The amount of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the balance sheet date and are
expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered).
Provisions
Provisions are recognised when the Company has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Company
will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period,
taking into account the risks and uncertainties surrounding the obligation.
When a provision is measured using the cash flows estimated to settle the
present obligation, it's carrying amount is the present value of the cash
flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, a receivable is recognised as an
asset if it is virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
Present obligations under onerous leases are recognised and measured as
provisions. An onerous contract is considered to exist where the Company has a
contract under which the unavoidable costs of meeting the obligations under
the contract exceed the economic benefits expected to be received from the
contract.
Share-based payments
All services received in exchange for the grant of any share-based
remuneration are measured at their fair values. These are indirectly
determined by reference to the fair value of the share options/warrants
awarded. Their value is appraised at the grant date and excludes the impact of
any non-market vesting conditions (for example, profitability and sales
growth targets).
Share based payments are ultimately recognised as an expense in the Statement
of Comprehensive Income with a corresponding credit to other reserves in
equity, net of deferred tax where applicable. If vesting periods or other
vesting conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options/warrants
expected to vest. Non-market vesting conditions are included in assumptions
about the number of options/warrants that are expected to become exercisable.
Estimates are subsequently revised, if there is any indication that the number
of share options/warrants expected to vest differs from previous estimates. No
adjustment is made to the expense or share issue cost recognised in prior
periods if fewer share options ultimately are exercised than originally
estimated.
Upon exercise of share options, the proceeds received net of any directly
attributable transaction costs up to the nominal value of the shares issued
are allocated to share capital with any excess being recorded as share
premium.
Where share options are cancelled, this is treated as an acceleration of the
vesting period of the options. The amount that otherwise would have been
recognised for services received over the remainder of the vesting period is
recognised immediately within the Statement of Comprehensive Income.
2. Critical accounting estimates and judgements
The Company makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are those in relation to:
Fair value of financial instruments
The Company holds investments that have been designated at fair value through
profit or loss on initial recognition. The Company determines the fair value
of these financial instruments that are not quoted, using valuation
techniques, contained in the IPEVC guidelines. These techniques are
significantly affected by certain key assumptions. Other valuation
methodologies such as discounted cash flow analysis assess estimates of
future cash flows and it is important to recognise that in that regard, the
derived fair value estimates cannot always be substantiated by comparison with
independent markets and, in many cases, may not be capable of being realised
immediately.
In certain circumstances, where fair value cannot be readily established, the
Company is required to make judgements over carrying value impairment, and
evaluate the size of any impairment required.
The methods and assumptions applied, and the valuation techniques used, are
disclosed in note 11.
Share based payment
The estimate of share based payments costs requires management to select an
appropriate valuation model and make decisions about various inputs into the
model including the volatility of its own share price, the probable life of
the options, the vesting date of options where non-market performance
conditions have been set and the risk free interest rate.
3. Nature of expenses
2023 2022
£ £
Directors remuneration 100,067 156,750
Legal and professional fees 41,361 164,330
Impairment of convertible note - 150,846
Other expenses 59,690 45,077
201,118 517,003
4. Operating loss
2023 2022
£ £
This is stated after charging:
Auditor's remuneration - statutory audit fees 19,000 14,275
5. Finance income
2023 2022
£ £
Interest received on short term deposits 1,065 54
1,065 54
6. Share based payments
Share warrants
2023 2023 2022 2022
Weighted average exercise Weighted average exercise price (p)
price (p)
Number Number
Outstanding at the beginning of the year - - 0.25 591,666,667
Lapsed during year - - 0.25 (591,666,667)
Granted during the year 0.37 250,000,000 - -
Exercised during the year - - - -
Outstanding at the end of the year 0.37 250,000,000 - -
The contracted average remaining life of warrants at 30 September 2023 was 2.3
years (2022: 0.1 years).
At 30 September 2023, the Company had the following warrants in issue:
Date of grant 27 January 2023 27 January 2023
Number outstanding 200,000,000 50,000,000
Contractual life 3 years 3 years
Exercise price (pence) 0.35p 0.45p
The fair value of warrants is determined using the Black-Scholes valuation
model. The charge to the profit and loss for the year ended 30 September 2023
was £243,248 (2022: NIL).
The assumptions used in the calculation of fair value of the warrants was as
follows:
Date of grant 27 January 2023 27 January 2023
Share price at date of grant 0.235p 0.235p
Exercise price 0.35p 0.45p
Expected life (years) 2.18 2.93
Volatility 94.98% 94.98%
Risk free interest rate 3.34% 3.29%
7. Staff costs, including Directors
2023 2022
£ £
Wages and salaries 66,000 107,750
Social security costs 4,067 -
Share based payment 243,248 -
313,315 107,750
During the year the Company had an average of 3 employees who were management
(2022: 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 2023 is as follows:
Salary Fees Share based payments Compensation for loss of office Total
2023
A Fabrizi 36,000 12,000 165,145 - 213,145
B Rowbotham 30,000 - 48,649 - 78,649
S King - 18,000 29,454 - 47,454
66,000 30,000 243,248 - 339,248
Directors' remuneration for the year ended 30 September 2022 is as follows:
Salary Fees Share based payments Compensation for loss of office Total
2022
D Lew 68,750 - - 25,000 93,750
B Rowbotham 39,000 - - - 39,000
S King - 24,000 - - 24,000
107,750 24,000 - 25,000 156,750
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 25% (2022: 19%). The
differences are explained below:
2023 2022
£ £
Loss before tax (6,328,408) (1,301,008)
Loss before tax multiplied by effective rate of corporation tax of 25% (2022: (1,582,102) (247,191)
19%)
Effect of: 30,549 64,379
Loss on disposal of investments
Fair value movements on investments 1,440,728 84,721
Capital losses (30,549) (18,862)
Share based payments 60,802 -
Capital allowances - (168)
Losses carried forward 80,572 117,121
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 2023
is £1,341,055 (2022: £81,058).
From 1 April 2023 the standard rate of corporation tax increased from 19% to
25%.
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:
2023 2022
Basic:
Loss for the financial period (6,328,408) (1,301,008)
Weighted average number of shares 4,992,772,996 4,992,772,996
Loss per share (pence) (0.13) (0.03)
Fully Diluted:
Loss for the financial period (6,328,408) (1,301,008)
Weighted average number of shares 4,992,772,996 4,992,772,996
Loss per share (pence) (0.13) (0.03)
There is no difference between the diluted loss per share and the basic loss
per share presented due to the loss position of the Company. Share options and
warrants could potentially dilute basic earnings per share in the future, but
were not included in the calculation of diluted earnings per share as they are
anti-dilutive for the year presented.
11. Investments
2023 2022
£ £
At start of year 11,390,278 12,367,204
Additions - -
Disposals (335,561) (531,703)
Net fair value loss for the year (5,762,911) (445,223)
At end of year 5,291,806 11,390,278
During the year the Company reduced it's shareholding in Guild Esports plc and
NFT Investment's plc in order to raise working capital. This reduction
resulted in a loss on disposal of £122,196 (2022: £338,836).
Following year end, the Company's remaining shareholding in Guild Esports plc
was disposed together with the shareholding in East Side Group (refer to Note
21).
Investments
2023 2022
£ £
Quoted investments 69,196 599,482
Unquoted investments 5,222,610 10,790,796
5,291,806 11,390,278
The country of incorporation for all investments held at 30 September 2023 are
listed below:
£ Country of Incorporation Investment class
Dynasty Media & Gaming 412,622 Singapore Unquoted
Guild Esports PLC 51,471 United Kingdom Quoted
East Side Group (Formerly Leaf Mobile Inc) 17,725 Canada Quoted
SatoshiPay Limited 4,653,099 United Kingdom Unquoted
Sthaler Limited 13,600 United Kingdom Unquoted
Paidia Esports Inc 105,910 Canada Unquoted
Googly Media Holdings PTE. Limited 37,379 Singapore Unquoted
5,291,806
Post year-end, a decision was taken by the management of Dynasty to merge with
Googly. To help support Dynasty through this transitioning phase, Blue Star
invested US$75,000 in a US$3 million fundraise undertaken by Dynasty in
November 2023. The Convertible Loan Note has a two-year expiry period, is
non-interest bearing and convertible at a discount of 50 per cent to Dynasty's
next funding round.
Blue Star currently has a 27.9% interest in SatoshiPay's share capital, which
is valued on the basis of the last external fund raise in 2019 at
approximately £4.65million. An M&A expert has been appointed to undertake
a formal sales process for SatoshiPay which may lead to the sale of all or
part of Blue Star's shareholding in SatoshiPay.
The methods used to value the unquoted investments are described below.
Fair value
The fair value of unquoted investments is established using valuation
techniques. These include the use of quoted market prices, recent arm's length
transactions, the Black-Scholes option pricing model and discounted cash flow
analysis.
Where a fair value cannot be estimated reliably the investment is reported at
the carrying value at the previous reporting date in accordance with
International Private Equity and Venture Capital ("IPEVC") guidelines.
The Company assesses at each balance sheet date whether there is any objective
evidence that the unquoted investments are impaired. The unquoted investments
are deemed to be impaired, if and only if, there is objective evidence of
impairment as a result of one or more events that have occurred after the
initial recognition of the asset (an incurred 'loss event') and that loss
event (or events) has an impact on the estimated future fair value of the
investments that can be reliably measured.
Convertible Loan Note
On 11 October 2019, the Company invested US$185,000 in convertible loan notes
issued by The Dibs Esports Corp. The loan notes carried interest of 5% per
annum and had a 36-month life span. In the prior year, after a review
conducted by the Directors, the Directors considered that there was doubt as
to the recoverability of this asset and fully provided against the amount
owed.
12. Trade and other receivables
2023 2022
£ £
Prepayments 3,044 3,175
Other receivables 3,415 4,897
6,459 8,072
The Directors consider that the carrying value of trade and other receivables
approximates to the fair value.
13. Cash and cash equivalents
2023 2022
£ £
Cash at bank and in hand 63,158 86,575
63,158 86,575
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.
14. Trade and other payables
2023 2022
£ £
Trade payables 3,750 31,793
Accruals 28,326 33,162
Other payables - 5,463
32,076 70,418
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.
15. Share capital
Issued and fully paid
2023 2023 2022 2022
Number £ Number £
At 1 October 4,992,772,996 4,892,774 4,992,772,996 4,892,774
Shares issued in the year - - - -
At 30 September 4,992,772,996 4,892,774 4,992,772,996 4,892,774
During the year ended 30 September 2023 there were no shares issued
(2022:NIL).
16. Financial risk management
Interest rate risk
The Company's exposure to changes in interest rates relate primarily to cash
and cash equivalents. Cash and cash equivalents are held either on current or
on short term deposits at floating rates of interest determined by the
relevant bank's prevailing base rate. The Company seeks to obtain a favourable
interest rate on its cash balances through the use of bank treasury deposits.
Any reasonable change in interest rate would not have a material impact on
finance income that the Company could receive in the course of a year, based
on the current level of cash and cash equivalents either held in current
accounts or short-term deposits.
Market risk
The Company's market risk is attributable to the financial instruments that
are held at fair value through profit and loss. The potential that future
changes in market conditions may make an instrument less valuable, due to
fluctuations in security prices, as well as interest and foreign exchange
rates. Market risk is directly impacted by the volatility and liquidity in the
markets in which the related underlying assets are traded.
Sensitivity analysis
The following table looks at the impact on net profit or loss based on a given
movement in the fair value of all the investments.
2023 2022
£ £
10% increase in fair value 529,181 1,139,028
20% decrease in fair value 1,058,361 2,278,056
30% decrease in fair value 1,587,542 3,417,083
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 2023 are shown below.
EUR SGD CAD
£ £ £
Fair value of investments 4,653,099 450,001 123,635
2022
EUR SGD CAD
£ £ £
Fair value of investments 4,715,219 5,615,289 136,799
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 and £/Canadian Dollar.
It assumes the following changes in exchanges rates:
- £/EUR +/- 20% (2021: +/- 20%)
- £/SGD +/- 20% (2021: +/- 20%)
- £/CAD +/- 20% (2021: +/- 20%)
The sensitivity analysis is based on the Company's foreign currency financial
instruments held at each balance sheet date. If £ Sterling had weakened
against the currencies shown, this would have had the following effect:
2023
EUR SGD CAD
£ £ £
Increase in fair value of investments 930,620 90,000 24,727
2022
EUR SGD CAD
£ £ £
Increase in fair value of investments 943,044 1,123,166 27,360
If £ Sterling had strengthened against the currencies shows, this would have
had the following effect:
2023
EUR SGD CAD
£ £ £
Reduction in fair value of investments (775,517) (75,000) (20,606)
2022
EUR SGD CAD
£ £ £
Reduction in fair value of investments (785,870) (935,971) (22,800)
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 £66,573
(2022: £91,472)
Capital Disclosure
As in previous years, the Company defines capital as issued capital, reserves
and retained earnings as disclosed in the 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.
17. Financial Instruments
Set out below is an overview of financial instruments held by the company:
Note 2023 2022
£ £
Financial assets at fair value through profit and loss
Investments 11 5,291,806 11,390,278
Cash and cash equivalents 13 63,158 86,575
Total 5,354,964 11,476,853
Financial assets at amortised cost
Trade and other receivables 12 - 26
Total - 26
Financial liabilities at amortised cost
Trade and other payables 14 32,076 70,418
Total 32,076 70,418
The fair value measurement of financial assets carried at fair value through
profit and loss is set out in the table below:
Note Level 1 Level 2 Level 3
£ £ £
At 30 September 2023 11 69,196 - 5,222,610
Investments
Total financial assets 69,196 - 5,222,610
At 30 September 2022
Investments 11 599,482 - 10,790,796
Total financial assets 599,482 - 10,790,796
18. Related party transactions
Sean King was paid his director's fee of £18,000 (2022: £24,000) through
Three S Ventures Limited. At the year-end an amount of £3,000 (2022: £2,000)
was included within Trade payables.
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
In October 2023, the Company's remaining shareholding in Guild Esports plc was
disposed together with the shareholding in East Side Group (Formerly Leaf
Mobile). The Company realised £75,486 proceeds from this sale.
In November 2023, the Company invested US$75,000 in Dynasty through the
purchase of a convertible loan note. The Convertible loan note has a two-year
expiry period, is non-interest bearing and convertible at a discount of 50 per
cent to Dynasty's next funding round.
On 17 January 2024, the Company raised £100,000, before expenses, pursuant to
a placing of 100,000,000 new ordinary shares at a price of 0.1p per new
ordinary share.
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