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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Fastforward Innovations Limited | LSE:FFWD | London | Ordinary Share | GG00BRK9BQ81 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 8.25 | 8.00 | 8.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMFFWD
RNS Number : 1618Z
FastForward Innovations Limited
24 May 2016
Hot Features
Premium
24 May 2016
FASTFORWARD INNOVATIONS LIMITED
(formerly Kuala Innovations Limited and Kuala Limited)
RESULTS FOR THE YEARED 31 MARCH 2016
KEY POINTS
* GBP10,739,000 was raised from the issue of Ordinary
Shares during the year.
* The Company changed its name from Kuala Limited to
Kuala Innovations Limited, with effect from 28 July
2015, and then to FastForward Innovations Limited,
with effect from 24 November 2015.
* A new Investing Policy was adopted which is available
on the Company's website.
* On 29 October 2015, the Company announced that it had
substantially implemented its new investing policy in
accordance with Rule 15 of the AIM Rules.
* Net assets at 31 March 2016 of GBP10,277,000 (2015:
net assets of GBP463,000).
* Appointments of Jim Mellon as Co-Chairman and Lorne
Abony as Chief Executive Officer of the Company.
* The Company acquired seven investments in the year
with an additional investment acquired post year end.
Further details of these eight investments are set
out at in the Report of the Chief Executive Officer
and note 12 .
The 2016 Annual Financial Report & Accounts will
be available shortly on the Company's website: www.fstfwd.co.
Copies can be obtained in hard copy form free of
charge, from Legis House, 11 New Street, St Peter
Port, Guernsey, GY1 2PF.
Lorne Abony will host a results conference call at
4:30 p.m. British Summer Time on Wednesday, 1(st)
June, 2016. Details of how to register for and join
this call will be published shortly.
For further information please visit www.fstfwd.co
or contact:
James Biddle (Nomad) Guy Miller and Lucy Williams
Beaumont Cornish Limited (Broker)
Tel: +44 207 628 3396 Peterhouse Corporate Finance
limited
Tel: +44 207 220 9795
--------------------------------------------------------------- --------------------------------
CO-CHAIRMAN'S STATEMENT
We are pleased to present the results of FastForward
Innovations Limited (the "Company") for the year
ended 31 March 2016.
Last year Stephen Dattels wrote that 2015 had been
a year of change for the Company and the same can
be said for this year.
Structural and board changes
Jim Mellon joined Stephen Dattels as Co- Chairman
of the Company on 13 July 2015. On 28 July 2015,
shareholders approved a change in investment policy,
and the name of the Company was changed from Kuala
Limited to Kuala Innovations Limited. Subsequently,
on 24 November 2015, the name was changed again to
FastForward Innovations Limited which reinforced
the Company's new core investing philosophy. To reflect
our new approach to investment, the Company launched
a new brand image and new website.
However, the most significant event during the year
was the appointment of Lorne Abony, firstly as a
director on 6 January 2016 and then his later appointment
as Chief Executive Officer on the 27 January 2016.
Lorne brings energy and a unique style to the Company,
and the significant progress made by the Company
since the start of the year is largely as a result
of his hard work.
Share Capital
This has been an active year for raising capital
into the Company. Full details of the raises are
given in Note 17 of these results and we do appreciate
the support of shareholders which has enabled us
to raise GBP10,739,000 through five placing events
during the year. This has not only enabled us to
invest funds in the projects which are detailed below,
but has also broadened our shareholder base, introducing
a number of key industry players onto our register
which we see as beneficial to the Company as a whole.
We also hold a substantial cash balance which can
be deployed quickly to secure future investments
which complement our portfolio.
Investments
The Company has moved from holding no strategic investments
at the start of the year to a position of holding
seven strategic and exciting investments at this
year end which have the potential to deliver substantial
returns to shareholders. Full details of these investments
are set out in the Report of the Chief Executive
Officer and our view is that these investments have
the potential for short and medium term liquidity
events, which will both create value enhancing opportunities
and realisation windows. These investments are all
characterised by their ability to disrupt markets
through the innovative use of technology whether
in the Educational Technology space (Vemo Education,
Inc ("Vemo") and Vested Finance, Inc ("Schoold")),
blockchain technology (SatoshiPay Limited ("Satoshipay")
and Factom, Inc ("Factom")), biotech/healthcare (Intensity
Therapeutics, Inc ("Intensity Therapeutics") and
The Diabetic Boot Company Limited ("DBC")) or media
and content (Yooya Media (formerly, Entertainment
Direct Asia Limited) ("Yooya")). We will continue
to search for technological sectors where smaller
companies can make a significant impact on their
market and generate outsized returns for our Company
and its shareholders. Finally we would like to thank
our fellow directors and our shareholders for their
support throughout the year.
Results and Share Price
The share price increased during the period by 137%
from the 31 March 2015 price of 6.5p to 15.375p per
Ordinary Share at 31 March 2016.
The net assets of the Company at 31 March 2016 were
GBP10,277,000 (2015: GBP463,000), equal to 7.85p
net assets per Ordinary Share (2015: 1.69p net assets
per Ordinary Share).
Outlook
The decision to move the Company's investment strategy
away from natural resources and energy into investing
into disruptive technology is an exciting one for
this Company. We expect the year ahead to be at least
as busy for the Company as the year under review
as Lorne Abony drives the growth and development
of our portfolio, supported by the rest of the Board
and management team. We believe that his approach
will continue to add value to our shareholders and
so we look forward to 2016 with enthusiasm.
Stephen Dattels Jim Mellon
23 May 2016
REPORT OF THE CHIEF EXECUTIVE OFFICER
Introduction
It is truly a pleasure to make my first Report of
the Chief Executive Officer to shareholders. I was
first introduced to the Company by my good friend,
Stephen Dattels, and was intrigued by the concept
he and Jim Mellon had created. I took the opportunity
to invest into the Company before enthusiastically
accepting the chance to firstly join the Board of
Directors and then be asked to accept the position
as Chief Executive Officer.
This has been a year of hugely positive change for
the Company as it moved its focus and investment
policy from targeting the resources and energy sector
to creating a portfolio of exciting start-up companies
in the high tech space, as will be detailed later
in my report. The change of focus is reflected in
the decision to change the name of the Company, firstly
to Kuala Innovations Limited, and subsequently to
FastForward Innovations Limited.
I believe that attractive investment returns can
be generated from investing in emerging technologies
that will shape the future. Again, what attracted
me to the Company was the practical demonstration
of Jim Mellon's philosophy in his book Fast Forward:
The Technologies and Companies Shaping Our Future.
Strategy
Our strategy is to invest in visionary entrepreneurs
developing innovative technologies that solve problems
in their industries. It is my view the investments
made to date have enormous potential for significant
shareholder value creation. Beyond this, preliminary
analysis indicates that each company is delivering
results ahead of their respective business plans
and budgets. As previously announced, I will provide
a comprehensive market update with greater detail
around our strategy, specific investment criteria
and about our investments and their respective prospects
in due course.
During the first half of 2016, I plan to make further
investments into businesses which complement our
existing portfolio. The second half of 2016 will
likely see a heavy emphasis on seeking to crystallize
the value of those businesses at valuations well
in excess of the value that we acquired our interests;
those events could take the form of investments by
third parties at higher valuations, IPOs or sales.
Performance and valuation
The Company's Net Asset Value ("NAV") per share stands
at 7.85p per share compared to 1.69p at 31 March
2015. More importantly, our share price moved from
6.5p per share at 31 March 2015 to 15.375p per share
at 31 March 2016, and we have consistently traded
at a premium to NAV. In my view, this reflects that
our shareholders understand the potential locked
up in the Company.
The portfolio of investments is entirely comprised
of unquoted start-up companies, all of which have
been acquired during the year. Initially we have
deemed the fair value of the investments to be the
cost of acquisition unless there is an event or factor,
as defined under accounting standards, which causes
the Directors to consider that another measure of
fair value should be used. No such events occurred
before the year end, so, although I see potential
in many of our investments, no uplift in value has
been recorded at this time.
Portfolio
The table below lists the Company's holdings at the
end of March 2016. It details the stake that those
positions represent in the investee companies.
Holding Share Category Country Number Valuation Percentage
Class of of shares at 31 of
incorporation held March investee
at 31 2016 equity
March held
2016
Intensity Series
Therapeutics, A Biotech/
Inc Preferred Healthcare USA 250,000 GBP348,000 2.60%
The Diabetic
Boot Company Biotech/
Limited Ordinary Healthcare England 25,978 GBP347,000 4.86%
SatoshiPay Blockchain
Limited Ordinary Tech England 1,471 GBP127,000 10.00%
Factom, Series Blockchain
Inc Seed Tech USA 400,000 GBP279,000 2.63%
Vemo Series
Education, Seed-1
Inc Preferred Edtech USA 527,059 GBP367,000 4.37%
Vemo Series
Education, Seed-2
Inc Preferred Edtech USA 1,000,000 GBP696,000 8.28%
Series Media
Seed and
Yooya Media Preferred Content BVI 27,255 GBP1,323,000 15.00%
Vested Series
Finance, Seed-1
Inc Preferred Edtech USA 1,078,035 GBP751,000 9.25%
--------------- ----------- ------------ --------------- ---------- -------------- -----------
Total investments GBP4,238,000
value
Cash, prepayments GBP6,039,000
and net
accruals
Net asset GBP10,277,000
value
Investee Companies
Intensity Therapeutics, Inc
Intensity Therapeutics is a product development biotechnology
company whose mission is to greatly extend the lives
of patients with cancer. The Company is using its
proprietary DfuseRxSM platform technology to create
novel immune-based therapeutic products for a new
and emerging field of cancer treatment known as in
situ vaccination. Its lead product INT230-6 has demonstrated
remarkable activity in multiple animal cancer models.
The drug must be made meticulously, analyzed properly,
released appropriately and documented correctly to
assure acceptability to the US Food and Drugs Administration
(the "FDA"). A potent drug is critical to treating
patients successfully. I have spent time with the
Intensity team and know they are proceeding expeditiously,
but it would be unwise to hurry the manufacturing
development or take shortcuts so I expect that the
first clinical trial of the product will commence
in early 2017.
The Diabetic Boot Company Limited
DBC, which trades under the name "Pulseflow", has
developed a new form of diabetic friendly footwear
with integrated offloading capabilities and the patented
Pulseflow technology which aids in the promotion
of blood flow and improved circulation in one product.
DBC received clearance from the US FDA in December
2015, and since then has been putting into place
the systems needed to operate there and obtaining
the Centers for Medicare & Medicaid Service ("CMS")
and state-by-state approvals needed to begin selling
the product under the name of their US subsidiary.
A new US sales office and storage facility in Cleveland,
Ohio is fully operational with all the quality, inventory
control and billing systems that are needed for the
Company to trade as a Durable Medical Equipment ("DME")
supplier. Approval to sell has been achieved for
the majority of US States already. The result of
the audit by CMS is expected shortly and a favourable
outcome will allow sales to commence in the second
quarter of 2016 to Medicare and Medicaid patients
in the US.
DBC has full contracted distribution partners in
the following countries: Austria, Australia, Canada,
Germany, Mexico & South America, Saudi Arabia, Switzerland,
and New Zealand. The countries in bold type have
already placed orders, and the others will order
as soon as regulatory affairs clearance is in place.
SatoshiPay Limited
The emergence of Machine-to-Machine and the Internet-of-Things,
as well as the rising demand for audio and video
streaming services, all create a need for near-instant,
micro-amount settlement mechanisms. The growing adoption
of ad-blocking on both the consumer and ISP level
is forcing online publishers to move away from ad-based
business models. SatoshiPay offers the solution to
these needs. With its first-mover advantage, SatoshiPay
is in a strong position to capture and defend a substantial
market share.
While there are competitors in the market, none provide
the same disrupting technological approach to the
monetisation method as SatoshiPay, which is based
on cutting-edge blockchain technology, allowing for
cheaper, faster, and more secure payment services.
SatoshiPay launched the beta version of its product
in the first quarter of 2016 and is now working to
validate and scale the business model. They are working
to successfully complete a joint venture project
with Visa Inc, through its innovation department
Visa Europe Collab, which will further the mainstream
adoption of its product. Key objectives for Satoshipay
in the next 12 months are to identify and exploit
the market opportunities for the nanopayment technology
and gain substantial traction in the developer communities
with the open API platform.
Factom Inc
Factom's Blockchain technology secures data for large
private and public organizations by publishing encrypted
data or a cryptographically unique fingerprint of
the data to Factom's immutable, distributed ledger.
This immutable data serves as a "proof of existence"
and source of truth for all future business processes.
Factom is an irreversible publishing engine (write
once, never erase). Factom removes the need for blind
trust by providing precise, verifiable, and immutable
audit trail.
Factom reached more than 150,000 entries in the Factom
network by the end of 2015 and continues to show
the product to large enterprise potential clients.
In February, Factom announced it had entered into
a Memorandum of Understanding Agreement ("MOU") with
a Chinese partner iSoftstone to provide business
advice and technical knowledge to help shape a smart
city solution and to provide data storage, auditing
and verification for several regions in China. I
have spent time with the Factom team in Dallas and
know that they are market leaders in their niche
field.
Vemo Education, Inc
Vemo works with higher education institutions and
their affiliates in the USA to effectively design
and implement unique alternatives to traditional
debt-dependent education finance options. During
the year Vemo announced that it was providing technical
advice to Purdue University to research ISAs - agreements
in which investors front a student's money for college
in exchange for a percentage of the student's post-graduation
income.
Just after the year end, Vemo announced that it had
entered into a contract with Holberton School to
oversee its tuition pricing and payment processes.
Yooya Media (formerly Entertainment Direct Asia)
Yooya is one of the first digital networks of its
kind in China built specifically to connect and unify
the three linchpins of the online video market in
China: rights owners, distribution platforms, and
brand constituents. Yooya has been instrumental in
helping content producers monetize China's fragmented
online video market by providing a single platform
for content distribution, rights management, and
advertising solutions. Yooya brings together many
key components essential to the equation, including
licensing at scale, automated ad sales, consolidated
data & analytics, and dramatically simplified content
distribution. To do this, they have assembled a one-of-a-kind
team that combines unique China-centric technology
expertise, a strong solutions-oriented focus, and
decades of experience in licensing, rights, and content
management in both Asian and Western contexts.
At the year end, Yooya announced that it has now
achieved over four billion lifetime views, with more
than 2.75 billion added in the last seven months
of the year. The combination of an increasing number
of distribution partners and a growing stream of
compelling new content on the platform drove this
astounding 25% month-over-month growth. This growth
reflect the exploding popularity and enormous power
of online video in China, but more importantly for
rights owners and advertisers, it means that finally
there is a viable managed platform on which to build
better monetization and more effective video-based
advertising.
One of the conditions of our acquisition was that
we were entitled to appoint a director to the board
of Yooya and this enables me not only to maintain
a complete understanding of the business progress
but also to leverage the skills and knowledge available
to Yooya's benefit.
Vested Finance, Inc ("Schoold")
Schoold transforms college and career planning by
using technology to educate, inform and inspire users
about their prospects for a successful future. Schoold
is a big-data driven college and career counsellor
mobile app with proprietary technologies that exploit
leading data science. As a mobile app, Schoold owns
and maintains all aspects of content and user experience
while benefitting from increased utility among its
target student demographic. Schoold features the
tools and resources that it believes are most important
to users including college, major and career discovery,
individualised matching, predictive admissions chances,
and financial aid support. Schoold's customised interface
narrows the universe of college and career data to
a manageable, relevant amount of information that
can be easily navigated, explored, and outcomes assessed.
Schoold's app was launched towards the end of the
year and by year end the Company had surpassed 500,000
downloads.
Fund raising and changes to share capital
During the period the Company has placed shares as
follows:
Date Number of shares Amount raised Note
issued (GBP)
2 June 1,110,170 65,278 1
2 June 1,439,751 84,657
4 September 2,000,000 100,000
10 September 6,946,480 347,324 2
11 September 2,000,000 100,000
10 November 8,187,500 655,000
26 November 2,500,000 200,000
8 January 4,328,425 346,274 3
11 January 39,668,200 3,173,456
12 February 37,426,901 5,614,035
Note 1 Shares issued as consideration for services
provided (see note 19).
Note 2 Shares issued in consideration for the acquisition
of 25,978 shares of The Diabetic Boot Company Limited
Note 3 Shares issued in consideration for the acquisition
of 527,059 shares of Vemo Education Inc
As at the start of the year, 44,674,283 warrants
granted under the warrant instrument dated 3 May
2015 were outstanding. Exercise notices in respect
of a total of 1,055,466 ordinary shares at an exercise
price of 5 pence per Ordinary Share were received
generating aggregate gross exercise proceeds of GBP52,773.30.
The remaining 43,618,817 warrants lapsed on 28 May
2015.
In February 2016 the Company completed a buyback
of 3,158,623 shares at a total cost of GBP347,448.
The Redeemed Shares were acquired from certain shareholders
of the Company who had invested in the Company when
it was focused on natural resources (pre-13 July
2015) and who had approached the Company setting
out their intention to sell the shares in the market.
Given that the Company had recently completed a placing
to raise funds at 15 pence per share, the Directors
determined that it would be inappropriate to actively
place out such shares, and agreed a price of 11 pence
per share for the entire block.
I would like to thank all our shareholders for your
support during the year. I am especially pleased
to welcome a number of key and substantial shareholders
who not only bring capital into the company but a
willingness to engage with and assist the Board in
searching out new and exciting potential investments.
Management team
I am very comfortable saying that I am truly excited
by the Board of Directors and management team we
have put together and I thank each and every one
for their hard work so far. Our shareholders benefit
from the years of experience and expertise of the
Company's management team to identify opportunities
in emerging technologies which are never seen outside
of a small group of private equity funds. All Directors
have shown their commitment by personally investing
in the Company.
On 17 February 2016, we announced the creation of
Options over the Company shares to Stephen Dattels,
Jim Mellon and myself. The option scheme, which may
be extended to other Directors and senior managers
as we build a world class management team, has been
designed to align any benefit to the Company's share
price.
Outlook
I believe that attractive investment returns can
be generated from investing in emerging technologies
that will shape the future. We stand on the brink
of a technological revolution that will fundamentally
alter the way we live, work, and relate to one another.
In its scale, scope, and complexity, the transformation
will be unlike anything humankind has experienced
before [1]. Your Company is ideally placed to benefit
from this revolution.
Lorne Abony
23 May 2016
[1] Source: World Economic Forum: The Fourth Industrial
Revolution
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2016
Year ended Year ended
31 March 31 March
Note 2016 2015
GBP'000 GBP'000
Investment gains and losses
Income from derivative financial
instruments designated at fair
value through profit and loss 14 149 79
Loss on derivative financial instruments
designated at fair value through
profit and loss 14 (163) (68)
Unrealised gain on investments
at fair value through profit and
loss 12 159 -
------------ ------------
Total investment gains and losses 145 11
Income
Bank interest income 1 1
------------ ------------
Total income 1 1
Expenses
Directors' remuneration 7 (1,228) (17)
Legal and professional fees (173) (67)
Nominated Adviser and Broker fees (157) (28)
Other expenses 8 (187) (91)
------------ -------------
Total expenses (1,745) (203)
------------ ------------
Net loss from operating activities
before gains and losses on foreign
exchange (1,599) (191)
Net foreign exchange gains 126 4
------------ ------------
Total comprehensive loss for the
year attributable to the shareholders (1,473) (187)
------------ ------------
Loss per Ordinary
Share: * basic and diluted 10 (2.69)p (1.28)p
STATEMENT OF FINANCIAL POSITION
as at 31 March 2016
31 March 31 March
Note 2016 2015
GBP'000 GBP'000
Non-current assets
Financial assets designated at
fair value through profit or loss 12 4,238 -
---------- ----------
Total non-current assets 4,238 -
Current assets
Financial instruments within the
margin account 14 - 294
Other receivables and prepayments 15 4,714 7
Cash and cash equivalents 1,415 237
---------- ----------
Total current assets 6,129 538
---------- ----------
Total assets 10,367 538
---------- ----------
Current liabilities
Other payables and accrued expenses 16 (90) (46)
Financial liabilities designated
at fair value through profit or
loss:
* Derivative financial instruments 12 - (29)
---------- ----------
Total liabilities (90) (75)
---------- ----------
Net assets 10,277 463
---------- ----------
Equity
Share capital 17 1,309 274
Deferred share reserve 17 630 630
Employee stock option reserve 895 -
Other reserve 2,293 2,293
Distributable reserve 5,150 (2,734)
---------- ----------
Total equity 10,277 463
---------- ----------
Net assets per Ordinary Share
- basic 18 7.85p 1.69p
Net assets per Ordinary Share
- diluted 18 7.82p 1.69p
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2016
Employee
Deferred stock
Share Shares Other option Distributable
Note capital reserve reserve reserves reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March
2014 700 - 2,293 - (3,027) (34)
Total comprehensive
loss for the year
Loss for the year - - - - (187) (187)
Transactions with shareholders
Subdivision of Ordinary
Shares prior to subscription (630) 630
Issue of Ordinary Shares 17 204 - - - 480 684
---------- ---------- ---------- ---------- ---------- ----------
Balance at 31 March
2015 274 630 2,293 - (2,734) 463
Total comprehensive
loss for the year
Loss for the year - - - - (1,473) (1,473)
Transactions with shareholders
Issue of Ordinary Shares 17 1,067 - - - 9,672 10,739
Acquisition of Treasury
Shares 17 (32) - - (315) (347)
Employee share scheme
- value of employee
services 17 - - - 895 - 895
---------- ---------- ---------- ---------- ---------- ----------
Balance at 31 March
2016 1,309 630 2,293 895 5,150 10,277
---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CASH FLOWS
for the year ended 31 March 2016
Year ended Year ended
31 March 31 March
2016 2015
GBP'000 GBP'000
Cash flows from operating activities
Bank interest received 1 1
Legal and professional fees paid (108) (67)
Nominated Adviser and Broker fees
paid (166) (28)
Directors' remuneration paid (329) (17)
Other expenses paid (145) (134)
---------- ----------
Net cash outflow from operating
activities (747) (245)
Cash flows from investing activities
Purchases of investments at fair (3,385) -
value through profit or loss
Transferred from/(to) broker 240 (246)
---------- ----------
Net cash outflow from investing
activities (3,145) (246)
Cash flows from financing activities
Proceeds from issue of Ordinary
Shares 5,423 684
Payments for Ordinary Shares brought (347) -
back
---------- ----------
Net cash inflow from financing
activities 5,076 684
---------- ----------
---------- ----------
Increase in cash and cash equivalents 1,184 193
---------- ----------
Cash and cash equivalents at beginning
of the year 237 44
Increase in cash and cash equivalents 1,184 193
Foreign exchange movement (6) -
---------- ----------
Cash and cash equivalents at the
end of the year 1,415 237
---------- ----------
Year ended Year ended
Significant non-cash transactions note 31 March 31 March
2016 2015
GBP'000 GBP'000
Issue of Ordinary Shares for investment 12 693 -
---------- ----------
Issue of Ordinary Shares for consultancy
services 19 65 -
---------- ----------
The financial information set out in this announcement
does not constitute the Company's statutory financial
statements for the year ended 31 March 2016.
NOTES TO THE RESULTS
for the year ended 31 March 2016
1. General Information
The Company is a closed-ended investment company.
The Company is domiciled and incorporated as a limited
liability company in Guernsey.
The registered office of the Company is 1(st) Floor,
Royal Chambers, St Julian's Avenue, St Peter Port,
Guernsey, GY1 3JX.
The Company's Ordinary Shares are traded on AIM,
a market operated by the London Stock Exchange.
The Company held an Extra-Ordinary General Meeting
("EGM") on 28 July 2015, where the shareholders voted
in favour of the following resolution:
* A new Investing Policy was adopted which is detailed
on Company's website.
* The Company changed its name from Kuala Limited to
Kuala Innovations Limited.
Following the change in Investing Policy, the Company
acquired seven new investments, with a further investment
acquired after the year end. Details of these investments
are disclosed in the Report of the Chief Executive
Officer and in note 12.
Subsequently, the Company held an EGM on 23 November
2015, where the shareholders voted in favour of changing
the Company name from Kuala Innovations Limited to
FastForward Innovations Limited.
2. Basis of Preparation
The results have been prepared in accordance with
International Financial Reporting Standards ("IFRS")
as issued by the International Accounting Standards
Board ("IASB"), interpretations issued by the IFRS
Interpretations Committee ("IFRSIC") applicable to
companies reporting under IFRS and applicable legal
and regulatory requirements of Guernsey Law and reflect
the following policies, which have been adopted and
applied consistently.
The results have been prepared on a historic cost
basis, as modified by the revaluation to fair value
of certain financial assets and financial liabilities
(including derivative instruments).
The results were authorised for issuance by the Board
of Directors on 23 May 2016.
Changes and amendments to existing standards effective
in the year commencing 1 April 2015
The Company has adopted the following revisions and
amendments to IFRS issued by the IASB, which may
be relevant to and effective for the Company's results
for the annual period beginning 1 April 2015:
IFRS Financial Instruments: Disclosures - Deferral
7 of mandatory effective date of IFRS 9 and amendments
to transition disclosures
IFRS Fair Value Measurement - Scope of the portfolio
13 exception
During the year, the Company did not adopt any standards
or interpretations that had an impact on the reported
financial position or performance of the Company.
Standards, amendments and interpretations issued
but not yet effective
The IASB has issued/revised the following relevant
standards with an effective date after the date of
these results:
International Accounting Standards (IAS/IFRS) Effective
date
IFRS Financial Instruments: Disclosures - 1 January
7 Additional guidance regarding servicing 2016
contracts
IFRS Financial Instruments 1 January
9 2018
IFRS Revenue from Contracts with Customers 1 January
15 2018
IAS Presentation of Financial Statements 1 January
1 - Amendments resulting from the disclosure 2016
initiative
No other relevant standards, interpretations or amendments
have been issued by the IASB with an effective date
after the date of these results. The Directors have
chosen not to early adopt the above standards and
amendments to standards and they do not anticipate
that they, with the exception of IFRS 9, would have
a material impact on the Company's results in the
period of initial application. A full assessment
of the impact of IFRS 9 has not yet been performed.
3. Significant Accounting Policies
a) Income recognition
Interest income is recognised on an accruals basis using
the effective interest method and includes bank interest
and interest from debt securities.
Dividend income is recognised when the right to receive
payment is established.
b) Expenses
All expenses are accounted for on an accruals basis
and, with the exception of share issue costs, are charged
through the Statement of Comprehensive Income in the
period in which they are incurred.
c) Taxation
The Company is exempt from taxation in Guernsey. However,
in some jurisdictions, investment income and capital
gains are subject to withholding tax deducted at the
source of the income. The Company presents the withholding
tax separately from the gross investment income, if
any, in the Statement of Comprehensive Income. For the
purpose of the Statement of Cash Flows, cash inflows
from financial assets are presented net of withholding
taxes when applicable.
d) Share based payments
Share-based compensation benefits are provided to key
employees via the Employees Option Plan, i.e. an equity-settled
share-based payment plan. Information relating to this
plan is set out in note 7 to the Results.
The fair value of options granted under the Employee
Option Plan is recognised as an employee benefits expense
with a corresponding increase in equity. The total amount
to be expensed is determined by reference to the fair
value of the options granted:
* including any market performance conditions;
* excluding the impact of any service and non-market
performance vesting conditions; and
* including the impact of any non-vesting conditions.
The total expense is recognised over the vesting period,
which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of
each period, the Company revises its estimates of the
number of options that are expected to vest based on
the non-market vesting and service conditions. It recognises
the impact of the revision to original estimates, if
any, in the Statement of Comprehensive Income, with
a corresponding adjustment to equity.
When the options are exercised, the Company transfers
the appropriate amount of shares to eligible employee
with no cash settlement involved.
e) Investments designated at fair value through profit
or loss
Classification
The Company classifies its investments in debt and equity
securities, and related derivatives, as financial assets
at fair value through profit or loss. These financial
assets are designated by the management of the Company
at fair value through profit or loss on acquisition.
Financial assets designated at fair value through profit
or loss at inception are those that are not classified
as held for trading but are managed and their performance
evaluated on a fair value basis in accordance with the
Company's documented Investing Policy. It is the Company's
policy for the management to evaluate the information
about these financial assets on a fair value basis together
with other related financial information.
Assets in this category are classified as current assets
if they are expected to be realised within 12 months
of the year end date. Those not expected to be realised
within 12 months of the year end date will be classified
as non-current.
Recognition/derecognition
Regular-way purchases and sales of investments are recognised
on the trade date - the date on which the Company commits
to purchase or sell the investment.
Financial assets are derecognised when the Company loses
control over the contractual rights that comprise that
asset. This occurs when rights are realised, expire
or are surrendered and the rights to receive cash flows
from the investments have expired or have been transferred
and the Company has transferred substantially all risks
and rewards of ownership. Realised gains and losses
on fair value through profit or loss assets sold are
calculated as the difference between the sales proceeds
and cost. Financial assets that are derecognised and
corresponding receivables from the buyer for the payment
are recognised as of the date the Company has transacted
an unconditional disposal of the assets.
Measurement
Financial assets and liabilities designated at fair
value through profit or loss are initially recognised
at fair value. Transaction costs are expensed through
the Statement of Comprehensive Income. Subsequent to
initial recognition, all financial assets and financial
liabilities at fair value through profit or loss are
measured at fair value. Gains and losses arising from
changes in the fair value of the financial assets and
liabilities at fair value through profit or loss are
presented through the Statement of Comprehensive Income
within `investment gains and losses' in the period in
which they arise.
Interest income from financial assets designated at
fair value through profit or loss is recognised through
the Statement of Comprehensive Income within other income
using the effective interest rate method. Dividend income
from investments designated at fair value through profit
or loss is recognised through the Statement of Comprehensive
Income within dividend income when the Company's right
to receive payments is established.
Fair value estimation
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement
date.
The fair value of financial instruments traded in active
markets (such as publicly traded securities) is based
on quoted market prices at the financial reporting date.
The quoted market price used for these financial assets
held by the Company is the current bid price.
The Company monitors trade prices and volumes taking
place a few days before and after the year-end date,
in order to assess whether the trade prices used at
each valuation date are representative of fair value.
If a significant movement in fair value occurs subsequent
to the close of trading up to midnight in a particular
stock exchange on the year end date, valuation techniques
will be applied to determine the fair value.
The fair value of financial instruments that are not
traded in an active market (for example unquoted private
companies) is determined by using valuation techniques
in accordance with the International Private Equity
and Venture Capital Valuation Guidelines (IPEV Guidelines).
The Company uses a variety of methods and makes assumptions
that are based on market conditions existing at each
financial reporting date. Valuation techniques used
include the use of comparable recent arm's length transactions,
discounted cash flow analysis, option pricing models
and other valuation techniques commonly used by market
participants.
The valuation techniques also consider the original
transaction price and take into account the relevant
developments since the acquisition of the investments
and other factors pertinent to the valuation of the
investments, with reference to such rights in connection
with realisation, recent third-party transactions of
comparable types of instruments, and reliable indicative
offers from potential buyers. In determining fair value,
the Company may rely on the financial data of investee
portfolio companies and on estimates by the management
of the investee portfolio companies as to the effect
of future developments.
Notwithstanding the above, the variety of valuation
bases adopted and the quality of management information
provided by the underlying investments, means that there
are inherent limitations in determining the value of
the investments. The amount realised on the sale of
those investments may differ from the values reflected
in these results and the difference may be significant.
f) Offsetting of Financial Instruments
Financial assets and financial liabilities are offset
and reported net by counterparty in the Statement of
Financial Position, when there is currently a legally
enforceable right to offset the recognised amounts and
there is an intention to settle on a net basis, or realise
the asset and settle the liability simultaneously. A
current legally and contractually enforceable right
to offset must not be contingent on a future event.
Furthermore, it must be legally and contractually enforceable
in (i) the normal course of business; (ii) the event
of default; and (iii) the event of insolvency or bankruptcy
of the Company and all of the counterparties. The Company's
agreement with LOM Stockbrokers Limited does not provide
for a master netting arrangement and therefore, the
amounts due to/from LOM Stockbrokers Limited are shown
gross in the Statement of Financial Position.
g) Financial instruments within the margin account
The financial instruments within the margin account
comprises cash balances held at the Company's clearing
brokers and cash collateral pledged to counterparties
related to derivative contracts. Cash that is related
to securities sold, not yet purchased, is restricted
until the securities are purchased. Financial instruments
held within the margin account consist of cash received
from brokers to collateralize the Company's derivative
contracts and amounts transferred from the Company's
bank account.
h) Cash and cash equivalents
Cash and cash equivalents, comprising cash balances
and call deposits which are held to maturity, are carried
at cost. Cash and cash equivalents are defined as cash
in hand, demand deposits, bank overdrafts and short-term
highly liquid investments with original maturities of
three months or less and subject to insignificant risk
of changes in value.
i) Other receivables
Other receivables are carried at the original invoice
amount, less allowance for doubtful receivables and
include receivables against issuance of Ordinary Shares.
Provision is made when there is objective evidence that
the Company will be unable to recover balances in full.
Balances are written off when the probability of recovery
is assessed as being remote.
j) Other payables and accrued expenses
Payables and accrued expenses are recognised initially
at fair value and subsequently stated at amortised cost.
The difference between the proceeds and the amount payable
is recognised over the period of the payable using the
effective interest method. As at the year ended, the
carrying amount of other payables and accrued expenses
approximate their fair value.
k) Foreign currency translation
Functional and presentation currency
The Company's Ordinary Shares are denominated in Sterling
and are traded on AIM in Sterling. The primary activity
of the Company is detailed in the Investing Policy.
The performance of the Company is measured and reported
to the investors in Sterling and the majority of the
expenses incurred by the Company are in Sterling. Consequently,
the Board of Directors considers that Sterling is the
currency that most faithfully represents the effects
of the underlying transactions, events and conditions.
The results are presented in Sterling, which is the
Company's functional and presentation currency. All
amounts are rounded to the nearest thousand.
Transactions and balances
Foreign currency transactions are translated into the
functional currency using rates approximating to the
exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation
at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised through
the Statement of Comprehensive Income. Translation differences
on non-monetary financial assets and liabilities, such
as financial assets designated at fair value through
profit or loss, are recognised through the Statement
of Comprehensive Income within the net unrealised change
in fair value of investments.
l) Net assets per share
The net assets per Ordinary Share disclosed on the face
of the Statement of Financial Position is calculated
by dividing the net assets of the Company as at the
year end by the number of Ordinary Shares in issue at
the year end.
Loss per Ordinary Share is calculated by dividing the
net loss for the year by the weighted average number
of Ordinary Shares in issue during the year.
m) Loss per share
Basic loss per share:
Basic loss per share is calculated by dividing:
* the loss attributable to owners of the Company,
excluding any costs of servicing equity other than
ordinary shares; and
* by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for
bonus elements, if any, in ordinary shares issued
during the year and excluding treasury shares.
Diluted loss per share:
Diluted loss per share adjusts the figures used in the
determination of basic loss per share to take into account:
* the after tax effect of interest and other financing
costs associated with dilutive potential ordinary
shares; and
* the weighted average number of additional ordinary
shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
n) Transaction costs
Transaction costs are legal and professional fees incurred
to structure a deal to acquire the investments designated
as financial assets at FVTPL. They include the upfront
fees and commissions paid to agents, advisers, brokers
and dealers and due diligence fees. Transaction costs,
when incurred, are immediately recognised in statement
of comprehensive income as an expense.
o) Contributed equity
Ordinary shares are classified as equity. Where the
Company purchases its own equity share (e.g. as the
result of a share buy-back), the consideration paid,
including any directly attributable incremental costs,
is deducted from equity attributable to the owners of
the Company as treasury shares until the shares are
cancelled or reissued. The Company has held all treasury
shares purchased in the year and has presented them
in the Statement of Changes in Equity as a deduction
from contributed equity.
p) Assessment as an investment entity
Entities that meet the definition of an investment
entity within IFRS 10 are required to measure their
investee companies at fair value through profit or
loss. The criteria (per IFRS 10) which define an investment
entity are, as follows:
* An entity that obtains funds from one or more
investors for the purpose of providing those
investors with investment services;
* An entity that commits to its investors that its
business purpose is to invest funds solely for
returns from capital appreciation, investment income
or both; and
* An entity that measures and evaluates the performance
of substantially all of its investments on a fair
value basis.
The Company meets the above criteria and is therefore
categorised as an investment entity within IFRS 10.
4. Critical Accounting Estimates and Judgements
The preparation of results in conformity with IFRS
requires the management to make judgements, estimates
and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions
are based on historical experience and various other
factors that are believed to be reasonable under the
circumstances, the results of which form the basis
of making the judgements about carrying values of assets
and liabilities that are not readily apparent from
other sources. Actual results may differ from these
estimates.
The management make estimates and assumptions concerning
the future. The resulting accounting estimates will,
by definition, seldom equal the related actual results.
The management believes that the underlying assumptions
are appropriate and that the results are fairly presented.
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 outlined below:
Judgements
Going Concern
After making reasonable enquiries, and assessing all
data relating to the Company's liquidity, the management
have a reasonable expectation that the Company has
adequate resources to continue in operational existence
for the foreseeable future and do not consider there
to be any threat to the going concern status of the
Company. For this reason, they continue to adopt the
going concern basis in preparing the results.
Assessment as an investment entity
In determining the Company's meeting the definition
of an investment entity in accordance with IFRS 10,
the Company considered the following:
* the Company has raised the commitments from a number
of investors in order to raise capital to invest and
to provide the investors management services with
respect to these private equity investments;
* the Company intends to generate capital and income
returns from its investments which will, in turn, be
distributed to the investors; and
* the Company evaluates its investments' performance on
a fair value basis, in accordance with the policies
set out in these results.
Although, the Company met all three defining criteria,
the management has also assessed the business purpose
of the Company, the investment strategies for the private
equity investments, the nature of any earnings from
the private equity investments and the fair value model.
The management made this assessment in order to determine
whether any additional areas of judgement exist with
respect to the typical characteristics of an investment
entity versus those of the Company. The management
concludes that from the assessments made the Company
meets the criteria of an investment Company within
IFRS 10.
Part of the assessment in relation to meeting the business
purpose aspects of the IFRS 10 criteria also requires
consideration of exit strategies. Given that the Company
does not intend to hold investments indefinitely, the
management have determined that the Company's investment
plans support its business purpose as an investment
entity.
The Board has also concluded that the Company meets
the additional characteristics of an investment entity,
in that: it is intended that in future it will have
more than one investment; the investments will predominantly
be in the form of equities, derivatives and similar
securities; it has more than one investor and the majority
of its investors are not related parties.
Estimates and assumptions
Fair Value of financial instruments
The fair values of securities that are not quoted in
an active market are determined by using valuation
techniques as explained in the IPEV Guidelines, primarily
earnings multiples, discounted cash flows and recent
comparable transactions. The models used to determine
fair values are validated and periodically reviewed
by the Company. The inputs in the earnings multiples
models include observable data, such as earnings multiples
of comparable companies to the relevant portfolio company,
and unobservable data, such as forecast earnings for
the portfolio company. In discounted cash flow models,
unobservable inputs are the projected cash flows of
the relevant portfolio company and the risk premium
for liquidity and credit risk that are incorporated
into the discount rate. However, the discount rates
used for valuing equity securities are determined based
on historic equity returns for other entities operating
in the same industry for which market returns are observable.
Management uses models to adjust the observed equity
returns to reflect the actual equity financing structure
of the valued equity investment. Models are calibrated
by back-testing to actual results/exit prices achieved
to ensure that outputs are reliable.
Valuation of Options
The fair values of the Options are measured using the
Black-Scholes model. The Black-Scholes model is considered
an acceptable model where options are subject to market
conditions as defined within IFRS 2.
The Black-Scholes model takes into account the following
factors when calculating the fair value of the share
options at grant date:
* any market vesting conditions;
* the expected term of the options (see below);
* the expected volatility of the company's share price
as at grant date;
* the risk-free rate of return available at grant date;
* the company's share price at grant date;
* the expected dividends on the company's shares over
the expected term of the options; and
* the exercise (strike) price of the options.
The expected term of the options is assumed to be 5
years from the grant date. However, the options can
be exercised at any point after vesting and within
a 10 year period from the grant date. As the management
of the Company are unsure as to when the options will
be exercised, it is assumed they will be exercised
half way through the 10 year period from grant date
to lapse date which is 5 years.
5. Segmental Information
In accordance with International Financial Reporting
Standard 8: Operating Segments, it is mandatory for
the Company to present and disclose segmental information
based on the internal reports that are regularly reviewed
by the Board in order to assess each segment's performance
and to allocate resources to them.
Management information for the Company as a whole is
provided internally to the management for decision-making
purposes. The management's asset allocation decisions
are based on an, integrated investment strategy and
the Company's performance is evaluated on an overall
basis. Prior to the change in Investing Policy on 28
July 2015, the single segment was deemed to be the
natural resources and/or energy sector, primarily in
Africa. Following the change in Investing Policy, the
segments is investments in companies which have significant
intellectual property rights which they are seeking
to exploit, principally within the technology sector
(including digital technology, and content focused
businesses) and the life sciences sectors (including
biotech and pharmaceuticals). Initially the geographical
focus will be North America and Europe but investments
may also be considered in other regions to the extent
that the Board considers that valuable opportunities
exist and positive returns can be achieved.
Segment assets
The internal reporting provided to the Board for the
Company's assets, liabilities and performance is prepared
on a consistent basis with the measurement and recognition
principles of IFRS.
Segment assets are measured in the same way as in the
results. These assets are allocated based on the operations
of the segment and the physical location of the asset.
At 31 March 2016 the cross section of segment assets
between geographical focus and economic sectors were
as follows:
Year ended 31 March 2016
Technology Life sciences
Geographical Focus sector sector Total
Private equity investments GBP'000 GBP'000 GBP'000
* North America 2,093 348 2,441
* Europe 127 347 474
* Southeast Asia 1,323 - 1,323
------------ ------------ ---------
Total segment assets 3,543 695 4,238
------------ ------------ ---------
Segment liabilities
Segment liabilities are measured in the same way as
in the results. These liabilities are allocated based
on the operations of the segment. At the 31 March 2016
there were no segmented liabilities.
Other profit and loss disclosures
The Company's derivative financial instrument income
and losses was derived from investments whose business
focus is in the energy sector. Following the change
of investing policy on 28 July 2015, the Company ceased
trading in energy sector focused investments. The other
revenue generated by the Company during the year was
interest of GBP1,000 (2015: GBP1,000), arising from
cash and cash equivalents, which was generated in Guernsey,
and an unrealised gain on private equity investments.
At 31 March 2016 the cross section of the unrealised
gain on private equity investments between geographical
focus and economic sectors were as follows:
Year ended 31 March 2016
Technology Life sciences
Geographical Focus sector sector Total
Private equity investments GBP'000 GBP'000 GBP'000
* North America 121 18 139
* Europe 9 - 9
* Southeast Asia 11 - 11
------------ ------------ ------------
Total unrealised gain on private
equity investments 141 18 159
------------ ------------ ------------
In the year ended 31 March 2016 there were no segmented
expenses.
6. Administration Fees
Elysium Fund Management Limited ("Elysium") was entitled
to an administration fee from the Company at a rate
of 0.1% per annum (subject to a minimum of GBP100,000
per annum) of the Net Asset Value of the Company together
with an amount equal to the long term borrowings invested
by the Company calculated at the close of business
on each calculation day, payable quarterly in arrears.
However, it was agreed during the prior year that the
administration fee would be reduced to GBP24,000 per
annum, with effect from 1 October 2014, until any further
recapitalisations occurred in the Company. With effect
from 1 January 2016, the administration fee was increased
to GBP48,000 per annum.
In the year ended 31 March 2016, a total of GBP46,000
(2015: GBP46,000) was incurred in respect of administration
fees, of which, GBP28,000 was payable at the financial
reporting date (2015: GBP6,000).
7. Directors' Remuneration
On 1 February 2016, the Board agreed the following
compensation packages for the Directors of the Company,
with effect from 1 January 2016, except for share options
which are applicable from 17 February 2016:
* Lorne Abony is entitled to an annual salary of
GBP250,000, payable monthly in arrears, and a
discretionary bonus; under this he was awarded a
bonus of GBP100,000. In addition, the Company will
pay Mr Abony's rental expense for an office amounting
to up to US$30,000 per annum, a personal assistant
amounting to up to US$60,000 per annum and health
insurance. The Company has also granted Mr Abony
Options over 8% of the issued shares (on a fully
diluted basis) at 20 pence per share. The terms of
the Options are explained below.
* Stephen Dattels is entitled to an annual salary of
GBP50,000, payable quarterly in arrears. In addition,
the Company has granted Mr Dattels Options over 2% of
the issued shares (on fully diluted basis) at 20
pence per share. The terms of the Options are
explained below.
* Jim Mellon is entitled to an annual salary of
GBP30,000, payable quarterly in arrears. In addition,
the Company has granted Mr Mellon Options over 1% of
the issued shares (on fully diluted basis) at 20
pence per share. The terms of the Options are
explained below.
* Ian Burns is entitled to an annual salary of
GBP25,000, payable quarterly in arrears, plus a
one-off Director's bonus of GBP25,000 for work
carried out since joining the Board in November 2014.
* Bryan Smith is entitled to an annual salary of
GBP15,000, payable quarterly in arrears, plus a
one-off Director's bonus of US$15,000 for work
carried out since joining the Board in March 2015.
Following the approval to grant Options, the number
of share options held by each Directors is as follows:
Date Options issued % of issued Exercise
Granted shares on price
fully diluted
basis
17
February
Lorne Abony 2016 12,131,548 8% 20 pence
17
Stephen February
Dattels 2016 3,032,887 2% 20 pence
17
February
Jim Mellon 2016 1,516,444 1% 20 pence
---------------- -------
16,680,879 11%
---------------- -------
The Options entitles the holder upon exercise to one
Ordinary Share of 1 pence in the Issued Share Capital
of the Company. Following the grant of the Options,
50% of the Options vested immediately, 25% of the Options
shall vest after 12 months (subject to the weighted
average price of the Company's ordinary shares rising
above 25 pence for ten consecutive trading days), and
the balance of 25% shall vest after 24 months (subject
to the weighted average price of the Company's Ordinary
Shares rising above 35 pence for ten consecutive trading
days). Subject to vesting (which is accelerated in
the event of a change of control), the Options may
only be exercised while the party remains, or in the
six month period after they cease to be, an "eligible
employee" of the Company (as such term is defined in
the Option Agreements) and within a five year term
from the date of grant. The Options may be exercised
on a cash-less basis subject to agreement of the Board
at such time.
Share Option measurement of fair value
The fair value of the Options has been measured using
the Black-Scholes model. Services and non-market performance
conditions attached to the arrangements were not taken
into account in measuring fair value as explained in
note 3(d) and 4.
The following market the following market conditions
have been incorporated into the fair value calculation
of the Options at the grant date and year ended 31
March 2016:
* 25% of the share awards vest from year 1 onwards
subject to the weighted average price of the share
price exceeding 25 pence for a minimum of 10 trading
days; and
* 25% of the share awards vest from year 2 onwards
subject to the weighted average price of the share
price exceeding 35 pence for a minimum of 10 trading
days.
In addition, the model inputs used in the measurement
of the fair values at grant date and the year ended
31 March 2016 were as follows:
Year ended Grant date
31 March 17 February
2016 2016
Fair value 5.3364 9.2281
pence pence
Share price 15.375
pence 18.00 pence
Exercise price 20 pence 20 pence
Annualised expected volatility 70.09% 70.09%
Expected life 5 years 5 years
Expected dividends nil nil
Annual risk free interest rate 0.86% 0.86%
Expected volatility has been based on an evaluation
of the historical volatility of the Company's share
price.
Reconciliation of outstanding Options
Year ended Year ended
31 March 31 March
2016 2015
Number Number
of options of options
Granted 17 February 2016 and closing
balance at 31 March 2016 16,680,879 -
---------------- ------------
Exercisable at 31 March 2016 8,340,439 -
---------------- ------------
The Options outstanding at 31 March 2015 had an exercise
price of 20 pence per share and a contractual life
of 5 years.
The total fair value of the share Options is estimated
to be GBP1,539,000, of which, GBP895,000 is the estimated
liability at 31 March 2016.
Directors' remuneration
Year ended
Year ended 31 March 31 March
2016 2015
Directors' Value Total Total
Remuneration of Options
issued
GBP'000 GBP'000 GBP'000 GBP'000
Stephen Dattels (appointed
on 12 November 2014) 63 163 226 -
Ian Burns (appointed on
12 November 2014) 31 - 31 -
Bryan Smith (appointed on
20 March 2015) 19 - 19 -
Jim Mellon (appointed on
13 July 2015) 8 81 89 -
Lorne Abony (appointed on
6 January 2016) 212 651 863 -
Nicholas Brook (resigned
on 12 November 2014) - - - 8.4
Kevin McCabe (resigned on
12 November 2014) - - - 8.4
------------ ------------ --------- ------------
333 895 1,228 17
------------ ------------ --------- ------------
No bonuses other than as detailed above or pension
contributions were paid or were payable on behalf of
the Directors.
Details of the Directors' interests in the share capital
are set out in note 19.
8. Other Expenses
Year ended Year ended
31 March 31 March
2016 2015
GBP'000 GBP'000
Administration fees (note 6) 46 46
Marketing expenses 44 -
Directors' expenses 25 -
Regulatory and listing fees 22 12
Registrar fees 19 13
Audit fees 18 10
Directors' and Officers' liability insurance 5 5
Other expenses 8 5
------------ ------------
187 91
------------ ------------
9. Tax effects of other comprehensive income
The Income Tax Authority of Guernsey has granted the
Company exemption from Guernsey income tax under the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989
and the income of the Company may be distributed or
accumulated without deduction of Guernsey income tax.
Exemption under the above mentioned Ordinance entails
payment by the Company of an annual fee of GBP1,200
for each year in which the exemption is claimed. It
should be noted, however, that interest and dividend
income accruing from the Company's investments may
be subject to withholding tax in the country of origin.
There were no tax effects arising from the other comprehensive
income disclosed in the Statement of Comprehensive
Income (31 March 2015: nil).
10. Loss per Ordinary Share
The loss per Ordinary Share of 2.69p (2015: 1.28p)
is based on the loss for the year of GBP1,473,000 (2015:
loss of GBP187,000) and on a weighted average number
of 54,750,152 Ordinary Shares in issue during the year
(2015: 14,617,541 Ordinary Shares).
Although the average price of the Ordinary Shares during
the year was above the exercise price of the Broker
Warrants, there was no dilutive effect, as the Company
made a loss in the year. Therefore, the basic and diluted
loss per Ordinary Share were the same.
The average share price of the Ordinary Shares during
the year was below the exercise price of the Options
(exercise price of 20.00 pence). Therefore, as at 31
March 2016 the Options had no dilutive effect.
11. Dividends
During the year ended 31 March 2016, no dividend was
paid to shareholders (2015: nil). The Directors do
not propose a final dividend for the year ended 31
March 2016 (2015: nil).
12. Financial Assets and Liabilities Designated at Fair
Value Through Profit or Loss
31 March 31 March
2016 2015
GBP'000 GBP'000
Financial assets designated at fair
value through profit or loss
Opening valuation - -
Purchases 4,079 -
Net unrealised change in fair value
of financial assets 159 -
--------------- ---------------
Closing valuation 4,238 -
--------------- ---------------
Closing book cost 4,079 -
Closing unrealised gain 159 -
--------------- ---------------
Closing valuation 4,238 -
--------------- ---------------
31 March 31 March
2016 2015
GBP'000 GBP'000
Financial liabilities designated at
fair value through profit or loss
Derivative financial instruments - (29)
--------------- ---------------
Net (expense)/income from financial assets and financial
liabilities through profit or loss
Year
ended
31 March
Year ended 31 March 2016 2015
------------------------------------------------------------------ ---------------
Total
Premium Realised Unrealised investment
received loss gain losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Derivative financial
instruments 149 (192) 29 (14) 11
--------------- --------------- --------------- --------------- ---------------
See note 3e, note 4, note 13 and note 14 regarding the
classification, recognition, derecognition, measurement
and fair value estimation of financial assets designated
at fair value through profit or loss.
Since shareholders approved a change in the Company's
Investing Policy, the Company has acquired seven investments
with a further investment acquired post year end. Further
details of these investments are set out below, in the
Report of the Chief Executive Officer and at the Company's
website.
The Diabetic Boot Company Limited
In September 2015, the Company acquired 25,978 (4.86%)
ordinary shares of The Diabetic Boot Company Limited
("DBC") from Regent Mercantile Holdings Limited ("Regent")
and Galloway, for GBP347,000. The consideration paid
was the issue of 6,946,480 new Ordinary Shares in the
Company of 5 pence per share, allocated equally between
Regent and Galloway.
SatoshiPay Limited
In September 2015, the Company acquired 1,471 (10%)
ordinary shares of SatoshiPay at a price of GBP108.76
per share, for total cash consideration of US$160,000,
equivalent to GBP127,000 as at the year end date.
Intensity Therapeutics, Inc
In October 2015, the Company acquired 250,000 (3.5%)
preferred series A shares of Intensity Therapeutics,
at a price of US$2.00 per share, for total cash consideration
of US$500,000, equivalent to GBP348,000 as at the year
end date.
Factom, Inc
In October 2015, the Company acquired 400,000 (3.64%)
seed series shares in Factom at a price of US$1.00 per
share, for total cash consideration of US$400,000, equivalent
to GBP279,000 as at the year end date.
Vemo Education, Inc
In November 2015, the Company acquired 1,000,000 (8.28%)
non-assessable shares of series-2 preferred stock in
Vemo at a price of US$1.00 per share, for total cash
consideration of US$1,000,000, the equivalent of GBP696,000
as at the year end date.
In December 2015, the Company purchased a further 527,059
(4.37%) non-assessable shares of series-1 preferred
stock in Vemo from Mr Abony at a price of US$1.00 per
share, for US$527,059, equivalent to GBP367,000 as at
the year end date. The consideration paid was the issue
of 4,328,425 new Ordinary Shares in the Company of 8
pence per share.
Yooya Media (formerly, Entertainment Direct Asia Limited)
In January 2016, the Company acquired 12,910 (7.49%)
series seed preferred shares in Yooya at a price of
US$69.71 per share, for total cash consideration of
US$900,000.
In February 2016, the Company purchased a further 14,345
(7.51%) series seed preferred shares in Yooya at a price
of US$69.71 per share, for total cash consideration
of US$1,000,000.
At 31 March 2015, the Company held a total of 27,255
(15%) series seed preferred shares in Yooya with a total
purchase cost amounting to US$1,900,000, equivalent
to GBP1,323,000 as at the year end date.
Vested Finance, Inc
In January 2016, the Company acquired 1,078,035 (9.1%)
seed series shares in Schoold at a price of US$0.9376
per share, for total cash consideration of US$1,000,000,
equivalent to GBP751,000 as at the year end date.
Fralis LLC
In April 2016, the Company acquired 693 (29.4%) preferred
units in Fralis LLC ("Fralis") at a price of US$3,605.77
per share, for total cash consideration of US$2,500,000,
equivalent to GBP1,711,000.
Energy Select Sector SPDR Fund
During the year ended 31 March 2016 and prior to the
EGM held on 28 July 2015 to change the Company's Investing
Policy, the Company incurred a net loss of GBP14,000
(31 March 2015: net income of GBP11,000) from selling
short-term put options on the Energy Select Sector SPDR
Fund ("ESSSF"), which is an Exchange Traded Fund that
tracks the performance of the Energy Select Sector Index.
At the time the Company's Investing Policy was changed
all the open positions were closed.
13. Fair value of financial instruments
IFRS 13 requires the Company to classify financial
instruments at fair value using a fair value hierarchy
that reflects the significance of the inputs used in
making the measurement. The fair value hierarchy has
the following levels:
* Quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Company can
access at the year-end date (Level 1);
* Those involving inputs other than quoted prices
included within Level 1 that are observable for the
asset or liability, either directly (as prices) or
indirectly (derived from prices) (Level 2); and
* Those with inputs for the asset or liability that are
not based on observable market data (unobservable
inputs) (Level 3).
The level in the fair value hierarchy within which
the fair value measurement is categorised in its entirety
is determined on the basis of the lowest level input
that is significant to the fair value measurement in
its entirety. For this purpose, the significance of
an input is assessed against the fair value measurement
in its entirety. If a fair value measurement uses observable
inputs that require significant adjustment based on
unobservable inputs, that measurement is a Level 3
measurement. Assessing the significance of a particular
input to the fair value measurement in its entirety
requires judgement, considering factors specific to
the asset or liability.
The determination of what constitutes 'observable'
requires significant judgement by the Company. The
Company considers observable data to be that market
data that is readily available, regularly distributed
or updated, reliable and verifiable, not proprietary,
and provided by independent sources that are actively
involved in the relevant market.
Financial assets/(liabilities) Level Level Level Total
designated at fair value 1 2 3 GBP'000
through profit or loss GBP'000 GBP'000 GBP'000
31 March 2016 investee funds
- private equity - - 4,238 4,238
---------- ---------- ---------- ----------
31 March 2015 derivative
financial instruments (29) - - (29)
---------- ---------- ---------- ----------
Transfers between levels
There were no transfers between levels during the year
(2015: none).
Fair value of unquoted securities
The valuations used to determine fair values are validated
and periodically reviewed by experienced personnel
and are in accordance with the International Private
Equity and Venture Capital Valuation Guidelines. The
valuations, when relevant, are based on a mixture of:
* third party financing (if available);
* cost, where the investment has been made during the
year and no further information has been available to
indicate that cost is not an appropriate valuation;
* proposed sale price;
* discount to NAV calculations;
* discount to last traded price;
* discounted cash flow; and
- discount to bid prices of PLUS quoted investments.
A reconciliation of the opening and closing balances
of assets/(liabilities) designated at fair value through
profit or loss classified as Level 3 is shown below:
31 March 31 March
2016 2015
GBP'000 GBP'000
Fair value of Level 3 financial instruments - -
at 1 April
Acquisition of Level 3 financial instruments 4,079 -
Net unrealised change in fair value
of Level 3 financial instruments 159 -
---------- ----------
Fair value of Level 3 financial instruments
at 31 March 4,238 -
---------- ----------
14. Derivative Contracts
In the normal course of business, the Company enters
into derivative contracts for investment purposes. Typically,
derivative contracts serve as components of the Company's
investing policy and are utilised primarily to structure
the portfolio to economically match the investment objectives
of the Company. These instruments are subject to various
risks, similar to non-derivative instruments, including
market, credit and liquidity risk (see Note 21). The
Company manages these risks on an aggregate basis along
with the risks associated with its investing activities
as part of its overall risk management policy.
The Company's derivative trading activities are primarily
the purchase and sale of listed options. These derivatives
are reported at fair value in the Statement of Financial
Position. Changes in fair value are reflected in the
statement of comprehensive income.
15. Other receivables and prepayments
31 March 31 March
2016 2015
GBP'000 GBP'000
Issued Ordinary Shares 4,700 -
Prepayments 14 7
--------------- ---------------
4,714 7
--------------- ---------------
The Issued Ordinary Shares receivable of GBP4,700,000
relates to amounts held by the Company's legal adviser
from equity raising activities pending completion of
the required anti money laundering due diligence. Post
year end, GBP4,200,000 of the Issued Ordinary Shares
receivable was transferred to the Company's bank account,
with GBP500,000 being retained in a client account on
behalf of the Company by the Company's legal adviser.
16. Other payables and accruals
The carrying value of other payables and accruals equate
to their fair value.
17. Share Capital, Warrants and Options
31 March 31 March
2016 2015
GBP'000 GBP'000
Authorised:
1,910,000,000 Ordinary Shares of 1p
(2015: 1,910,000,000 Ordinary Shares) 19,100 19,100
100,000,000 Deferred Shares of 0.9p
(2015: 100,000,000 Deferred Shares) 900 900
--------------- ---------------
20,000 20,000
--------------- ---------------
Allotted, called up and fully paid:
130,949,822 Ordinary Shares of 1p (2015:
27,445,552 Ordinary Shares) 1,309 274
70,700,709 Deferred Shares of 0.9p (2015:
70,700,709) 630 630
--------------- ---------------
Warrants: 31 March 31 March
2016 2015
Existing Warrants - 44,674,283
Subscription Anti-Dilution Warrants - 158,400,000
Broker Warrants - 823,366
Options: 31 March 31 March
2016 2015
Share options 16,680,879 -
Warrants
Each Existing Warrant and Subscription Anti-Dilution
Warrant entitled the warrant-holder to subscribe for
one Ordinary Share in cash at any time from 29 May 2012
to 29 May 2015 at a price of 5.0 pence per Ordinary
Share. Neither of the Warrants was admitted to listing
or trading on any stock exchange.
In May 2015, the Company received notice to exercise
1,055,466 Warrants at an exercise price of 5.0 pence
each. As a result of the Warrant exercise, 31,664 Broker
Warrants were issued to Peterhouse Corporate Finance
Limited ("Peterhouse"). All of the remaining Existing
Warrants and Subscription Anti-Dilution Warrants expired
on 29 May 2015.
As part of the restructuring, 855,031 Broker Warrants
were issued to Peterhouse to subscribe for Ordinary
Shares equating to up to 3% of the share capital by
12 November 2016 at 3.32p per Ordinary Share. Post year
end, on 9 May 2016, the Broker Warrants were assigned
over to Stifel Nicolaus Europe Limited ("Stifel") on
the same terms as set out in the initial Warrant Deed
dated 13 November 2014. On 23 May 2016, the 855,031
Broker Warrants were exercised for a price of 3.32p
per Ordinary Share and for total consideration of GBP28,387.
Deferred Shares
In aggregate (not per share), the holders of Deferred
Shares shall be entitled to receive up to GBP1 only
as a preferred dividend or distribution. The Deferred
Shares have zero economic value. The holders of Deferred
Shares, in respect of their holdings of Deferred Shares,
shall not have the right to received notice of any general
meeting of the Company, nor the right to attend, speak
or vote at any such general meeting. The Company has
the right to transfer the Deferred Shares to such persons
as it wishes, without the consent of the holders of
the Deferred Shares, and to cancel Deferred Shares with
the consent of such transferee.
Options
See note 7 for information on Options issued during
the year.
Directors' Authority to Allot Shares
The Directors are generally and unconditionally authorised
to exercise all the powers of the Company to allot relevant
securities and, subject to the terms the Directors may
determine, up to a maximum aggregate nominal amount
of GBP5,000,000 (representing 5,000,000,000 Sub-Ordinary
Shares of GBP0.001 each, or 500,000,000 New Ordinary
Shares of GBP0.01 each). Authority under this resolution
will expire on the date falling five years after the
date of the Annual General Meeting. Guernsey Companies
Law does not limit the power of Directors to issue shares
or impose any pre-emption rights on the issue of new
shares. Accordingly, the Directors are generally and
unconditionally authorised to allot securities in the
Company up to the authorised but unissued share capital
of the Company, any such power not to be limited in
duration.
Changes in share capital during the period
As mentioned above, in May 2015, the Company received
notice to exercise 1,055,466 Warrants at an exercise
price of 5.0 pence each, for a total of GBP52,773.
On 2 June 2015, Galloway was appointed as a business
development consultant, for a six month period and was
payable a fixed fee of GBP65,278. The Company and Galloway
Limited agreed that these fees would be satisfied by
the issue of 1,110,170 new Subscription Shares of the
Company to Galloway, at a price of 5.88 pence per share.
On 2 June 2015, Galloway subscribed for 1,439,751 new
Ordinary Shares in the Company at a subscription price
of 5.88 pence per share, raising total proceeds of GBP84,657.
The Ordinary Shares rank pari passu with the Ordinary
Shares already in issue.
On 4 September 2015, the Company issued 2,000,000 new
Ordinary Shares at a price of 5 pence per share, raising
total proceeds of GBP100,000. The Ordinary Shares rank
pari passu with the Ordinary Shares already in issue.
On 10 September 2015, the Company issued 6,946,480 new
Ordinary Shares in the Company at a price of 5 pence
per share, as consideration for a GBP347,000 acquisition
of 25,978 (4.9%) ordinary shares in DBC, split equally
to Regent and Galloway.
On 11 September 2015, the Company issued 2,000,000 new
Ordinary Shares at a price of 5 pence per share, raising
total proceeds of GBP100,000. The Ordinary Shares rank
pari passu with the Ordinary Shares already in issue.
On 10 November 2015, the Company issued 8,187,500 new
Ordinary Shares of 1 pence each at a price of 8 pence
per ordinary share with a number of new investors thereby
raising GBP655,000 before expenses of approximately
GBP43,000. In addition to its fee, Beaumont Cornish
was granted 500,000 Warrants with an exercise price
of 8 pence and an expiry date of 10 November 2020.
On 26 November 2015, the Company issued 2,500,000 new
Ordinary Shares at a price of 8 pence per share, raising
total proceeds of GBP200,000. The Ordinary Shares rank
pari passu with the Ordinary Shares already in issue.
On 8 January 2016, the Company issued 4,328,425 new
Ordinary Shares in the Company at 8 pence per share,
as consideration for GBP346,274 (US$527,059) acquisition
of 527,059 (4.37%) ordinary shares in Vemo.
On 11 January 2016, the Company issued 39,668,200 new
Ordinary Shares at a price of 8 pence per share, raising
total proceeds of GBP3,173,456. The Ordinary Shares
rank pari passu with the Ordinary Shares already in
issue.
On 12 February 2016, the Company issued 37,426,901 new
Ordinary Shares at a price of 8 pence per share, raising
total proceeds of GBP5,614,035. The Ordinary Shares
rank pari passu with the Ordinary Shares already in
issue.
On 15 February 2016, the Company brought back 3,158,623
Ordinary Shares at a price of 11 pence per share, for
a total cost of GBP347,449. The Ordinary Shares redeemed
are held in treasury and had a fair value of GBP486,000
at 31 March 2016.
18. Net Assets per Ordinary Share
Basic
The basic net asset value per Ordinary Share is based
on the net assets attributable to equity shareholders
of GBP10,277,000 (2015: GBP463,000) and on 130,949,822
Ordinary Shares (2015: 27,445,552 Ordinary Shares) in
issue at the end of the year.
Diluted
The diluted net asset value per Ordinary Share is based
on the net assets attributable to equity shareholders
of GBP10,277,000 and the exercise value of the Broker
Warrants of GBP28,387, over 130,949,822 Ordinary Shares
and 855,030 Broker Warrants in issue at the end of the
year
The share price of the Ordinary Shares at 31 March 2016
of 15.375 pence (2015: 6.50 pence) was below the exercise
price of the Options (exercise price of 20.00 pence).
Therefore, as at 31 March 2016 the Options had no dilutive
effect.
Although the 31 March 2015 share price of 6.50 pence
per Ordinary Shares was above the exercise price of
the Warrants (exercise price of 3.32 pence), there was
no dilutive effect, as the exercise price was above
the NAV per share.
19. Related Parties
Mr Dattels is a discretionary beneficiary of a trust
which owns Regent, which held 15,209,248 (11.61%) Ordinary
Shares in the Company at 31 March 2016 and the date
of signing this report.
Mr Mellon (who was appointed as a Director on 13 July
2015) is a life tenant of a trust which owns Galloway,
which held 10,425,991 (7.96%) Ordinary Shares in the
Company at 31 March 2016 and at the date of signing
this report.
On 2 June 2015, Galloway was appointed as a business
development consultant, for a six month period and was
payable a fixed fee of GBP65,278. The Company and Galloway
Limited agreed that these fees will be satisfied by
the issue of 1,110,170 new Ordinary Shares of the Company
to Galloway, at a subscription price of 5.88 pence per
share.
On 2 June 2015, Galloway subscribed for 1,439,751 new
Ordinary Shares in the Company at a subscription price
of 5.88 pence per share, raising total proceeds of GBP84,657.
The Ordinary Shares rank pari passu with the Ordinary
Shares already in issue.
On 10 September, the Company purchased a total of 25,978
(4.9%) ordinary shares in DBC, equally from Regent and
Galloway. The consideration paid was the issue of 6,946,480
new Ordinary Shares in the Company of 5 pence per share,
allocated equally between Regent and Galloway.
Following the Company's acquisition in DBC, Regent held
76,764 (14.7%) ordinary shares in DBC and Galloway held
6,657 (1.3%) ordinary shares. Regent and Galloway shareholding
in DBC remained unchanged at 31 March 2016 and at the
date of signing this report.
In addition, Regent Pacific Group Limited ("Regent Pacific")
is interested in 89,753 shares of DBC, representing
17.0% of the issued shares of DBC. Mr Mellon and Mr
Dattels are both interested in the shares of Regent
Pacific, and Mr Mellon and Mr Dattels are together Co-Chairmen
of Regent Pacific.
Mr Burns is the legal and beneficial owner of Smoke
Rise Holdings Limited ("Smoke"), which held 1,374,024
Ordinary Shares in the Company.
Mr Burns is also the Managing Director of Regent.
Mr Smith held 687,832 (0.53%) Ordinary Shares in the
Company at 31 March 2016 and at the date of signing
this report.
Following a Warrant exercise on 29 May 2015, Peterhouse,
the Company's broker, was issued with a further 31,664
Broker Warrants. Peterhouse hold a total of 855,030
Broker Warrants in the Company.
In November 2015, the Company purchased 1,000,000 (8.28%)
non-assessable shares of series-2 preferred stock in
Vemo at a price of US$1.00 per share, for total cash
consideration of US$1,000,000. Mr Abony (who was appointed
as a Director on 6 January 2016) is a substantial shareholder
and the non-executive chairman of Vemo.
In December 2015, the Company purchased a further 527,059
(4.37%) non-assessable shares of series-2 preferred
stock in Vemo from Mr Abony at a price of US$1.00 per
share, for US$527,059. The consideration paid was the
issue of 4,328,425 new Subscription Shares in the Company
of 8 pence per share.
In January 2016, the Company purchased a total of 1,078,035
(9.1%) seed series shares in Schoold at a price of US$0.9376
per share, for total cash consideration of US$1,000,000.
Mr Abony is a substantial shareholder and the non-executive
chairman of Schoold.
Mr Abony held 26,438,391 (20.19%) Ordinary Shares in
the Company at 31 March 2016 and at the date of signing
this report.
The Directors' remuneration is disclosed in note 7.
Details of the amounts paid to Elysium, the Company's
Administrator and Company Secretary, are disclosed in
note 6.
The Directors consider that there is no immediate or
ultimate controlling party.
Beaumont Cornish Limited, which was appointed as Nominated
Adviser of the Company on 16 June 2016, incurred fees
during the year amounting to GBP101,000.
Capita Registrars (Guernsey) Limited, which acts as
registrar for the Company, incurred fees during the
year amounting to GBP19,000, of which GBP4,000 was payable
at the financial reporting date.
Peterhouse, which acts as Broker for the Company, incurred
fees during the year amounting to GBP51,000. Details
of Broker Warrants issued to Peterhouse are disclosed
in note 17 and 23.
20. Commitments and Contingencies
There were no capital commitments as at 31 March 2016.
21. Financial Instruments
Treasury policies
The objective of the Company's treasury policies is
to manage the Company's financial risk, secure cost
effective funding for the Company's operations and to
minimise the adverse effects of fluctuations in the
financial markets on the value of the Company's financial
assets and liabilities on reported profitability and
on cash flows of the Company.
The Company finances its activities with cash and short-term
deposits, with maturities of three months or less. Other
financial assets and liabilities, such as receivables
and payables, arise directly from the Company's operating
activities. Derivative instruments may be used to change
the economic characteristics of financial instruments
in accordance with the Company's treasury policies.
The financial assets and liabilities of the Company
were:
31 March 2016 31 March 2015
Assets Assets
at at fair
fair value
value through
through profit
profit Loans Other or loss Loans Other
or and financial and financial
Total loss receivables liabilities Total receivables liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Financial assets
designated at fair
value through profit
or loss 4,238 4,238 - - - - - -
Financial instrument
within the brokerage
account - - - - 294 - 294 -
Other receivables 4,700 - 4,700 - - - - -
Cash and cash
equivalents 1,415 - 1,415 - 237 - 237 -
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total financial
assets 10,353 4,238 6,115 - 531 - 531 -
Financial liabilities
Other payables and
accruals (90) - - (90) (46) - - (46)
Derivative financial
instrument - - - - (29) (29) - -
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total financial
liabilities (90) - - (90) (75) (29) - (46)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total financial
assets/(liabilities) 10,263 4,238 6,115 (90) 456 (29) 531 (46)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
The main risks arising from the Company's financial
assets and liabilities are credit risk, liquidity risk
and market risk, and are set out below, together with
the policies currently applied by the Board for their
management. Market risk comprises three types of financial
risk, being interest rate risk, currency risk and other
price risk, being the risk that the fair value or future
cash flows will fluctuate because of changes in market
prices other than from interest rate and currency risks.
Credit risk
The Company takes on exposure to credit risk, which
is the risk that one party will cause a financial loss
for the other party by failing to discharge an obligation.
The Company's credit risk is primarily attributable
to its private equity investments, other receivables
and cash and cash equivalents. In order to mitigate
credit risk, the Company seeks to trade only with reputable
counterparties that the management believe to be creditworthy.
The credit risk on cash and cash equivalents is limited
by using banks with high credit ratings assigned by
international credit-rating agencies.
At the year end, the entire amount of cash and cash
equivalents of GBP1,415,000 (100.00%) was placed with
HSBC Bank plc (2015: the highest concentration of credit
risk was GBP234,000 (98.73%) placed with HSBC Bank plc).
The Moody's credit rating for HSBC Bank plc was Aa3
as at 31 March 2016.
The Company's investment policy is to invest in start
up or early stage investments. These companies carry
a higher risk of credit failure through their inability
to raise sufficient funds to bring their technology
to a successful and profitable conclusion. The credit
risk on private equity investments is monitored by the
management who review the business plans, budgets, market
updates and management accounts of the private equity
investments on a regular basis.
Other receivables of GBP4,700,000 relates to amounts
held by the Company's legal adviser on behalf of the
Company from equity raising activities. The management
consider the credit risk to be low as the Company received
GBP4,200,000 of this amount post year end and the remaining
GBP500,000 is held by the legal adviser in a client
account on behalf of the Company.
Liquidity risk
Liquidity risk is the risk that the Company may not
be able to generate sufficient cash resources to settle
its obligations in full as they fall due or can only
do so on terms that are materially disadvantageous.
The Company invests in private equities, which, by their
very nature, are illiquid. During the year, the Company
raised GBP10,739,000 (2015: GBP684,000) via an issue
of Ordinary shares to enable the Company to acquire
investments and maintain a sufficient cash balance to
meet its working capital requirements.
The contractual undiscounted cash flows of the Company's
financial liabilities, which are equal to the fair value
of the Company's financial liabilities, are all payable
within three months to the sum of GBP90,000 (2015: GBP46,000).
The Board monitors the Company's liquidity position
on a regular basis. In addition, the Company's Administrator
continually monitors the Company's liquidity position
and reports to the Board when appropriate.
Market risk
(i) Price risk
The Company's private equity investments and derivative
financial instruments are susceptible to price risk
arising from uncertainties about future values of the
private equity investments or derivatives financial
instruments. This price risk is the risk that the fair
value or future cash flows will fluctuate because of
changes in market prices, whether those changes are
caused by factors specific to the individual investment
or financial instrument or its holder or factors affecting
all similar financial instruments or investments traded
in the market, if any.
During the year, the Company did not hedge against movements
in the value of its private equity investments. A 10%
increase/decrease in the fair value of private equity
investments would result in a GBP424,000 (4.13%) (2015:
nil) increase/decrease in the net asset value.
The Company did not hold any derivative financial instrument
at 31 March 2016.
ii) Currency risk
The Company regularly holds assets (both monetary and
non-monetary) denominated in currencies other than the
functional currency (Sterling). It is therefore exposed
to currency risk, as the value of the financial instruments
denominated in other currencies will fluctuate due to
changes in exchange rates.
Foreign currency risk, as defined in IFRS 7, arises
as the values of recognised monetary assets and monetary
liabilities denominated in other currencies fluctuate
due to changes in foreign exchange rates. IFRS 7 considers
the foreign exchange exposure relating to non-monetary
assets and liabilities to be a component of market price
risk, not foreign currency risk. The Company monitors
the exposure on all foreign-currency-denominated assets
and liabilities.
The Company monitors its exposure to foreign exchange
rates and, where exposure is considered significant,
appropriate measures would be adopted to minimise these
exposures. As at 31 March 2016, a proportion of the
net financial assets of the Company were denominated
in currencies other than Sterling as follows:
31 March 31 March
2016 2015
US Dollar GBP'000 GBP'000
Financial assets designated at fair value 3,764 -
through profit or loss
Cash and cash equivalents 1,178 -
Financial instrument within the brokerage
account - 294
Derivative financial liabilities - (29)
--------------- ---------------
Net US Dollar assets 4,942 265
Euro
Financial assets designated at fair value 127 -
through profit or loss
--------------- ---------------
Net Euro assets 127 -
--------------- ---------------
Net exposure to US Dollar and Euro 5,069 265
--------------- ---------------
At 31 March 2016, if the exchange rate of the US Dollar
and Euro had strengthened/weakened by 10% against the
Sterling, with all other variables remaining constant,
the increase/(decrease) in the profit for the year would
amount to +/- GBP507,000 (2015: +/- GBP27,000).
iii) Interest rate risk
The Company currently funds its operations through the
use of equity. Cash at bank, the majority of which was
in US Dollars at the year end, is held at variable rates.
At the year end, the Company's financial liabilities
did not suffer interest and thus were not subject to
any interest rate risk. It is unlikely that interest
rates would decrease by as much as 1% as they are currently
less than 1%. Any decrease in the interest rate to a
minimum of 0% would have an insignificant impact on
the interest income received by the Company.
The interest rate risk profile of the Company's financial
assets and financial liabilities at the year end was:
Weighted
Assets Weighted average
on which average period
Fixed Floating no interest interest until
Total rate rate is received rate maturity
31 March 2016 GBP'000 GBP'000 GBP'000 GBP'000 % years
Financial assets
Financial assets designated
at fair value through
profit or loss 4,238 - - 4,238 - n/a
Other receivables 4,700 4,700
Cash and cash equivalents 1,415 - 1,415 - n/a
---------- ---------- ---------- ----------
Total financial assets 10,353 - 1,415 8,938
Financial liabilities
Other payables and accruals (90) - - (90) - n/a
---------- ---------- ---------- ----------
Total financial liabilities (90) - - (90)
---------- ---------- ---------- ----------
Net financial Assets 10,263 - 1,415 8,864
---------- ---------- ---------- ----------
Weighted
Assets Weighted average
on which average period
Fixed Floating no interest interest until
Total rate rate is received rate maturity
GBP'000 GBP'000 GBP'000 GBP'000 % years
31 March 2015
Financial assets
Financial instrument
within the brokerage
account 294 - - 294 - n/a
Cash and cash equivalents 237 - 231 6 - n/a
---------- ---------- ---------- ----------
Total financial assets 531 - 231 300
Other payables and accruals (46) - - (46) - n/a
Derivative financial
instrument (29) - - (29) - n/a
---------- ---------- ---------- ----------
Total financial liabilities (75) - - (75)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net financial Assets 456 - 231 225
---------- ---------- ---------- ----------
As the Company's interest rate risk exposure is minimal,
it has not entered into any derivative transactions
to further reduce the interest rate risk.
22. Capital Management Policy and Procedures
The Company's capital structure is derived solely from
the issue of Ordinary and Deferred Shares.
The Company does not currently intend to fund any investments
through debt or other borrowings but may do so if appropriate.
Investments in early stage assets are expected to be
mainly in the form of equity, with debt potentially
being raised later to fund the development of such assets.
Investments in later stage assets are more likely to
include an element of debt to equity gearing. The Company
may also offer new Ordinary Shares by way of consideration
as well as cash, thereby helping to preserve the Company's
cash for working capital and as a reserve against unforeseen
contingencies including, for example, delays in collecting
accounts receivable, unexpected changes in the economic
environment and operational problems.
The Board monitors and reviews the structure of the
Company's capital on an ad hoc basis. This review includes:
* The need to obtain funds for new investments, as and
when they arise.
* The current and future levels of gearing.
* The need to buy back Ordinary Shares for cancellation
or to be held in treasury, which takes account of the
difference between the net asset value per Ordinary
Share and the Ordinary Share price.
* The current and future dividend policy; and
* The current and future return of capital policy.
The Company is not subject to any externally imposed
capital requirements.
23. Events After the Financial Reporting Date
On 10 April 2016, the Company purchased a total of 693
(29.4%) preferred units in Fralis at a price of US$3,605.77
per share, for total cash consideration of US$2,500,000.
On 14 April 2016, the Company appointed Norbert Teufelberger
as a Special Adviser. Mr Teufelberger will support the
Company's initiatives in identifying early stage investment
opportunities in the technology and gaming industry,
given his extensive experience across these sectors.
The Company has agreed to grant 1,000,000 Options over
Ordinary Shares in the Company on the same terms as
the Options granted to the Directors, on 17 February
2016 (see note 7).
On 9 May 2016, Peterhouse assigned their 855,031 Broker
Warrants over to Stifel on the same terms as set out
in the initial Warrant Deed dated 13 November 2014.
On 23 May 2016, the 855,031 Broker Warrants were exercised for a price of 3.32p per Ordinary Share and for total consideration of GBP28,387. There were no other significant events after the financial reporting date.
-- ENDS --
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKQDDNBKDNPB
(END) Dow Jones Newswires
May 24, 2016 09:34 ET (13:34 GMT)
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