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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 |
From Apr 2019 to Apr 2024
TIDMFFWD
RNS Number : 2751K
FastForward Innovations Limited
12 December 2018
12 December 2018
FastForward Innovations Limited
("FastForward" or the "Company")
Results for the six months ended 30 September 2018
The Board of AIM-traded FastForward Innovations Limited is pleased to announce its unaudited interim results for the period ended 30 September 2018. The 2018 Interim Results will be available shortly on the Company's website: www.fstfwd.co/.
Hot Features
Premium
For further information on the Company -
FastForward Innovations Limited
info@fstfwd.co
Tel: +44 (0) 1481 754145
Chris Bougourd/Ian Burns/Ed McDermott
Beaumont Cornish Limited (Nomad)
Tel: +44 (0) 207 628 3396
James Biddle/Roland Cornish
Optiva Securities Limited (Broker)
Tel: +44 (0) 203 411 1881
Jeremy King/Graeme Dickson
FASTFORWARD INNOVATIONS LIMITED
UNAUDITED CONDENSED HALF-YEARLY REPORT AND FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 SEPTEMBER 2018
INVESTING POLICY
The Company's Investing Policy is to invest in and/or acquire companies which have significant intellectual property rights which they are seeking to exploit, principally within the technology sector (including digital 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.
In selecting investment opportunities, the Board will focus on businesses, assets and/or projects that are available at attractive valuations and hold opportunities to unlock embedded value. Where appropriate, the Board may seek to invest in businesses where it may influence the business at a board level, add its expertise to the management of the business, and utilize its industry relationships and access to finance; as such investments are likely to be actively managed.
The Company's interest in a proposed investment and/or acquisition may range from a minority position to full ownership and may comprise one investment or multiple investments. The proposed investments may be in either quoted or unquoted companies; are likely to be made by direct acquisitions or through an immediate investment; and may be in companies, partnerships, earn-in joint ventures, debt or other loan structures. The Board may focus on investments where intrinsic value can be achieved from the restructuring of investments or merger of complementary businesses.
The Board expects that investments will typically be held for the medium to long term, although short term disposal of assets cannot be ruled out if there is an opportunity to generate an attractive return for Shareholders. The Board will place no minimum or maximum limit on the length of time that any investment may be held.
There is no limit on the number of projects into which the Company may invest and the Company's financial resources may be invested in a number of propositions or in just one investment, which may be deemed to be a reverse takeover under the AIM Rules. The Directors intend to mitigate risk by appropriate due diligence and transaction analysis. Any transaction constituting a reverse takeover under the AIM Rules will also require Shareholder approval. The Board considers that as investments are made, and new promising investment opportunities arise, further funding of the Company may also be required.
Where the Company builds a portfolio of related assets it is possible that there may be cross holdings between such assets. The Company does not currently intend to fund any investments with debt or other borrowings but may do so if appropriate. Investments 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 Board may also offer new Ordinary Shares by way of consideration as well as or in lieu of 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 will conduct initial due diligence appraisals of potential businesses or projects and, where it believes that further investigation is warranted, it intends to appoint appropriately qualified persons to assist. The Board believes it has a broad range of contacts through which it is likely to identify various opportunities which may prove suitable. The Board believes its expertise will enable it to determine quickly which opportunities could be viable and so progress quickly to formal due diligence. The Company will not have a separate investment manager. The Board proposes to carry out a comprehensive and thorough project review process in which all material aspects of a potential project or business will be subject to rigorous due diligence, as appropriate. Due to the nature of the sector in which the Company is focused it is unlikely that cash returns will be made in the short to medium term; rather the Company expects a focus on capital returns over the medium to long term.
CHAIRMAN'S STATEMENT
I am pleased to present the report and financial statements of FastForward Innovations Limited (the "Company" or "FastForward") for the six months ended 30 September 2018.
The last six months has been a period of great activity for FastForward with a focal point being the disposal of our holding of Aphria Inc. for a gain of C$11.4 million over a 14 month hold period. This profit entirely justified our decision to invest in Medical Cannabis and the work we carried out to overcome the legal and regulatory challenges associated with the Cannabis industry. We continue to review other opportunities within this space.
Using the proceeds of sale of Aphria we have been able to make investments into Juvenescence and Vogogo as well as increase our interest in Factom, Leap Gaming and Intensity. I am excited by the prospects for all the companies in our portfolio. As a board we are constantly working with investee management teams to maximize shareholder value but, as we have explained before, much of this work must be carried out beyond the glare of publication to the wider world.
FastForward has more contact with its shareholders than many other AIM listed companies and I appreciate the support of our shareholder list. It was particularly pleasing to receive shareholder support, alongside Lorne Abony and myself, for our placing in August.
Finally, we were very pleased to be authorised as a Closed-ended investment scheme by the Guernsey
Financial Services Commission (the "GFSC") during the period and to become members of the Associated of Investment Companies ("AIC"). Both will make our company a more attractive investment opportunity for institutional funds and private investors alike.
Results
The net assets of the Company at 30 September 2018 were GBP18,418,000 (31 March 2018: GBP13,534,000), equal to net assets of 11.40p per Ordinary Share (31 March 2018: 10.18p per Ordinary Share).
Jim Mellon
11 December 2018
REPORT OF THE CHIEF EXECUTIVE OFFICER
Introduction
It is truly a pleasure to make my report of the Chief Executive Officer to shareholders.
Strategy
This has been a busy period for the Company as we rotated out of our investment in Aphria into a new series of investments which are all characterised by their high quality propositions and increased our investment in a number of portfolio companies.
Performance and valuation
The Company's Net Asset Value ("NAV") per share stands at 11.40p per share compared to 10.18p at 31 March 2018. Our share price moved from 18.35p per share at 31 March 2018 to 12.28p per share at 30 September 2018.
Portfolio
The table below lists the Company's holdings as at 30 September 2018.
Number
of shares
Country held at Valuation
of 30 September at 30 September
Holding Share Class Category incorporation 2018 2018
(GBP '000)
Fralis LLC
(Leap Gaming) Units Gaming Nevis 1,512 4,838
Intensity
Therapeutics, Series A Biotech/
Inc Preferred Healthcare USA 250,000 822
Intensity
Therapeutics, Series B Biotech/
Inc Preferred Healthcare USA 38,458 173
Biotech/
Juvenescence Ordinary Healthcare England 128,205 1,533
The Diabetic
Boot Company Biotech/
Limited Ordinary Healthcare England 25,978 -
Blockchain
Factom, Inc Series Seed Tech USA 400,000 548
Blockchain
Factom, Inc SAFE Advance Tech USA - 4,599
Vemo Pref Series
Education, Seed-1 Pref
Inc Series Seed-2 Edtech USA 3,527,059 276
Convertible
Debenture Blockchain
Vogogo Inc Units Tech Canada 23,000 1,287
Series Seed Media and
Yooya Media Preferred Content BVI 27,255 1,456
Vested
Finance, Inc Series Seed-1
("Kickwheel") Preferred Edtech USA 3,288,436 -
--------------- ---------------- ------------- ---------------- ------------------------ ------------------------
Total investments value 15,532
Cash and other net current assets 2,886
Net asset value 18,418
========================
Investee companies
Intensity Therapeutics, Inc.
Intensity Therapeutics ("Intensity") was established on the understanding that solid tumour cancers consist of well-defined visible growths and unseen micro-metastases. Cancer is thus both a regional and a systemic disease - each component has different physical properties. To have an effective treatment one must destroy (or remove) both the existing large observable tumours as well as all the unseen cell-based micro metastases (which can be anywhere in the body).
Intensity completed recruitment and dosed 7 new patients during this period. These patients were enrolled in the higher dose, every-two-week dosing cohort. So far there has been only 1 drug-related grade 3 adverse events (temporary pain at the injection site). There have been no drug related systemic adverse events normally associated with the drugs, no procedure-related adverse events and no dose limiting toxicities. Most adverse events were low grade and transient.
There are signs of clinical benefit. There has been an observed abscopal effect. An abscopal effect in the treatment of metastatic cancer is observed shrinkage of untreated tumours concurrently with shrinkage of tumours that used the localized treatment (e.g. our intratumoral treatment or radiation, etc.) Intensity treated a 60-year-old subject with metastatic chordoma, a rare spinal cancer. The patient had prior surgery, radiation and five regimens of chemotherapy, immunotherapy or targeted therapy. Prior to receiving Intensity's drug this patient's tumours always showed interval growth on each subsequent imaging scan since 2015. 4 months after the initial treatment the cross section of the tumour decreased by 58%.
FastForward participated in Intensity's sale of Series B Preferred Stocks. The funding will be used to achieve key objectives of product development, including the on-going clinical trial and phase 2 cohorts. Funds will also be used to increase the number of hospitals in the study, file regulatory documents in Europe, conduct new product research, produce additional clinical supplies and provide for legal, patent and other general administrative & corporate purposes. FastForward was also granted a conditional warrant to subscribe for further shares in Intensity which would have been exercised had Intensity not been able to raise sufficient funds. Actually Intensity raised more funds than its original target.
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.
The management of Diabetic Boot are making progress in their efforts to sign licence agreements with appropriate distributors in the US, Europe, Asia and Middle East.
Factom Inc.
Factom is a platform technology company providing "Blockchain as a service" based on selling scalable enterprise focussed technology. The Company's applications leverage the immutability of blockchain and the scalability of the Factom network, to create an industry agnostic platform.
In July FastForward made our biggest ever investment when we entered into an agreement with Factom under which we advanced US$6 million to Factom, which will be converted at a future date at a 25 percent discount to the price of Factom's proposed Series B fundraising. In addition, the Company had the right to invest up to an additional US$9 million, on the same terms, by not later than 30 September 2018. I have spent time and attended a number of Factom's presentations to potential investors as they seek to close their $50 million "Series B" funding round, and this has increased my confidence about the validity and potential upside for this investment.
Vemo Education, Inc.
Vemo enables universities in the USA to offer income based financing to their students and has established itself as the clear leader in the student Income Sharing Agreement market. It is generating revenue and anticipates being profitable in the next 18 months. Vemo is currently completing a fund raising at a premium to our carrying value of the investment.
Yooya Media (formerly Entertainment Direct Asia)
Yooya is one of China's largest independent business-to-business online video networks. The company manages and tracks video content on over forty-five online video distribution platforms in China, including Alibaba's Youku, Baidu's iQiyi, and Tencent Video. Yooya's network includes hundreds of content creators delivering billions of video views each month. Yooya is also backed by Dream Incubator (TSE:4310), and other investors.
For more information on the company please visit http://www.yooya.com/
In China, the world's largest online video market - with nearly 610 million online video users on some fifty competing online video platforms generating over 31.9 billion hours of video viewing per month- validating actual traffic and performance data for online video is a growing problem for brands and advertisers alike, particularly as brands and advertisers continue to transition from increasingly less effective display and social media marketing to significantly more powerful online video marketing.
Yooya has adopted Factom for its open-source blockchain solutions that deliver highly transparent and data-centric solutions without the requirement for unwieldy new tokens, specialized cryptocurrencies, proprietary wallets, or other similar overhead. Few if no other protocols offer the scale required to keep up with Chinese media demand.
Juvenescence Limited ("Juvenescence")
In June we invested $2 million in Juvenescence. Chaired by Jim Mellon, Juvenescence is building a pipeline of anti-ageing approaches that gives its investors exposure to numerous "shots on goal" across the major areas of ageing biology. Following its successful investment of its Series A round, Juvenescence is currently looking to raise significant additional investment funds at a premium to our carrying value
Fralis LLC (trading as Leap Gaming)
Leap Gaming is a B2B developer of high-end gaming applications whose games are already offered by leading online and retail gaming operators around the world generating tens of thousands of engagement points with end-users. Leap gaming positions itself in the forefront of realistic 3D game production, which is instrumental for offering high end, immersive and customisable gaming content. Leap Gaming is perfectly placed to exploit the rapid technological and regulatory changes occurring globally.
As I explained in our year end accounts FastForward decided to invest further funds into Leap Gaming in conjunction with global media giant, IMG Media Ltd. and subsequently we were able to buy further stock from a minority shareholder to bring our holding up to 44.9%.
Vogogo Inc. ("Vogogo")
I believe in the potential of crypto-currencies despite its current short term malaise. Vogogo represents an opportunity to expand on our crypto-currency exposure. I have tracked the early development of Vogogo. The Company has an excellent management team which I believe will generate significant shareholder value. The investment is unusual for FastForward as it has an 8% annual yield, some down-side protection while retaining exposure to the potential upside equity value of Vogogo should the price of Bitcoin appreciate and Vogogo succeed in its future expansion plans.
Aphria Inc ("Aphria")
The Company completed the sale of all of its shares in Aphria Inc. by mid-June. Including cash received as part of the sale of Nuuvera Inc. to Aphria, the Company realised gross cash proceeds of approximately C$14.4 million. The sales were completed ahead of legislation in Canada to legalise recreational marijuana use and sales. We remain keen to find further opportunities to invest within the Cannabis space, within the bounds of the current legal and regulatory framework placed on us.
Vested Finance, Inc. ("Kickwheel" formerly known as "Schoold")
As I explained at the year end, the management of Kickwheel was unable to locate a funding solution so the company was placed into liquidation. This was concluded on 29 October 2018 with no funds being returned to shareholders.
Fund raising and changes to share capital
During the period the Company raised GBP4 million by a placing of shares at 13p. I appreciate the support shown by key shareholders, including our Chairman, in our company and its future prospects.
Conclusion
The disposal of Aphria both vindicated our strategy and approach to investing as well as giving us an opportunity to expand our portfolio both by widening our range of projects and making follow on investments into existing successful projects. I, together with the rest of your board, will continue to work hard to maximise returns for our shareholders.
Lorne Abony
11 December 2018
DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing these unaudited condensed half-yearly financial statements, which have not been reviewed or audited by the Company's independent auditors, and are required to:
-- prepare the unaudited half-yearly financial statements in accordance with International Accounting Standard 34: Interim Financial Reporting;
-- include a fair review of important events that have occurred during the period, and their impact on the unaudited half-yearly financial statements, together with a description of the principal risks and uncertainties of the Company for the remaining six months of the financial year as detailed in the Chairman's Statement; and
-- include a fair review of related party transactions that have taken place during the six month period which have had a material effect on the financial position or performance of the Company, together with disclosure of any changes in related party transactions from the last annual financial statements which have had a material effect on the financial position of the Company in the current period.
The Directors confirm that the unaudited condensed half-yearly financial statements comply with the above requirements and are signed on behalf of the Board of Directors by:
Jim Mellon
Director
11 December 2018
CONDENSED HALF-YEARLY STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2018
1 April 1 April
2018 to 2017 to
30 September 30 September
2018 2017
(unaudited) (unaudited)
Restated
Note GBP'000 GBP'000
Investment gains and losses
Realised (loss)/gain on investments at
fair value through profit and loss 6 (418) 356
Unrealised gain on investments at fair
value through profit and loss 6 1,686 1,840
Interest income on investments at fair 33 -
value through profit and loss
------------- -------------
Total investment gains 1,301 2,196
Income
Bank interest income 2 1
Total income 2 1
Expenses
Legal and professional fees (90) (7)
Nominated Adviser and broker's fees (58) (29)
Administration fees (40) (23)
Other expenses (99) (22)
Fair value movement of Special Adviser
share options 5 (5) (64)
Fair value movement of Directors' share 5,
options 13 (78) 176
Directors' remuneration 13 (127) -
Total expenses (497) 31
Net profit from operating activities before
gains and losses on foreign currency exchange 806 2,228
------------- -------------
Net foreign currency exchange gain/(loss) 69 (3)
Total comprehensive profit for the period 875 2,225
============= =============
Profit per Ordinary Share - basic and
diluted 8 0.62p 1.67p
All the items in the above statement are derived from continuing operations.
CONDENSED STATEMENT OF FINANCIAL POSITION
as at 30 September 2018
30 September 31 March
2018 2018
(unaudited) (audited)
Note GBP'000 GBP'000
Non-current assets
Financial assets designated at fair value
through profit or loss 6 15,532 5,682
--------------------------- ----------
Current assets
Financial assets designated at fair value
through profit or loss - 6,728
Other receivables 122 1,086
Cash and cash equivalents 2,998 72
3,120 7,886
Total assets 18,652 13,568
--------------------------- ----------
Current liabilities
Payables and accruals (234) (34)
Total liabilities (234) (34)
Net assets 18,418 13,534
=========================== ==========
Capital and reserves attributable to equity
holders of the Company
Share capital 12 1,614 1,306
Deferred share reserve 12 630 630
Employee stock option reserve 1,169 1,086
Other reserve 2,293 2,293
Distributable reserves 12,712 8,219
Total equity shareholders' funds 18,418 13,534
=========================== ==========
Net assets per Ordinary Share - basic
and diluted 11 11.40p 10.18p
CONDENSED HALF-YEARLY STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2018 (unaudited)
Employee
Deferred stock
Share shares Other option Distributable
capital reserve reserve reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March
2018 1,306 630 2,293 1,086 8,219 13,534
Total comprehensive
profit for the period - - - - 875 875
Transactions with
shareholders
Issue of Ordinary
Shares (note 12) 308 - - 3,618 3,926
Employee share scheme
- value of employee
services - - - 83 - 83
Balance at 30 September
2018 1,614 630 2,293 1,169 12,712 18,418
================== ========= ========= ========= ============== ========
for the six months ended 30 September 2017 (unaudited)
Employee
Deferred stock
Share shares Other option Distributable
capital reserve reserve reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Note
Balance as at 31 March
2017 - As orginally
stated 1,329 630 2,293 497 5,352 10,101
Prior year adjustment 5 - - - 578 (578) -
------------------ --------- --------- --------- -------------- --------
Balance at 31 March 2017
- Restated 1,329 630 2,293 1,075 4,774 10,101
Total comprehensive profit
for the period - - - - 2,146 2,146
Employee share scheme
- value of employee
services - - - (33) - (33)
Adjustment to prior
period figures 5 - - - (79) 79 -
Balance at 30 September
2017 - Restated 1,329 630 2,293 963 6,999 12,214
================== ========= ========= ========= ============== ========
CONDENSED HALF-YEARLY STATEMENT OF CASH FLOWS
for the six months ended 30 September 2018
1 April 2018 1 April 2017
to to
30 September 30 September
2018 2017
(unaudited) (unaudited)
GBP'000 GBP'000
Cash flows from operating activities
Bank interest received 2 1
Nominated Adviser and broker's fees paid (116) (29)
Legal and professional fees paid (105) (14)
Administration fees paid (29) (36)
Other expenses paid (50) (13)
Directors' remuneration paid (71) -
Net cash outflow from operating activities (369) (91)
Cash flows from investing activities
Purchase of investments (9,007) -
Sale of investments 8,307 855
Net cash (outflow)/inflow from investing
activities (700) 855
Cash flows from financing activities
Proceeds from issue of Ordinary Shares 3,926 -
Net cash inflow from financing activities 3,926 -
Increase in cash and cash equivalents 2,857 764
============= =============
Cash and cash equivalents brought forward 72 164
Increase in cash and cash equivalents 2,857 764
Foreign exchange movement 69 (3)
Cash and cash equivalents carried forward 2,998 925
============= =============
NOTES TO THE CONDENSED HALF-YEARLY FINANCIAL STATEMENTS
for the six months ended 30 September 2018
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 11 New Street, St Peter Port, Guernsey, GY1 2PF.
With effect from 3 May 2018 the Company has been authorised as a Closed-ended investment scheme by the Guernsey Financial Services Commission (the "GFSC") under Section 8 of the Protection of Investors (Bailiwick of Guernsey) Law, 1987 and the Authorised Closed-Ended Investment Schemes Rules.
The Company's Ordinary Shares are traded on AIM, a market operated by the London Stock Exchange.
2. Statement of Compliance
These condensed half-yearly financial statements, which have not been independently reviewed or audited by the Company auditors, have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the audited financial statements for the year ended 31 March 2018.
The unaudited condensed half-yearly financial statements were approved by the Board of Directors on 11 December 2018.
3. Significant Accounting Policies
These unaudited condensed half-yearly financial statements have adopted the same accounting policies as the last audited financial statements, which were prepared in accordance with International Financial Reporting Standards ("IFRS"), issued by the International Accounting Standards Board, interpretations issued by the IFRS Interpretations Committee and applicable legal and regulatory requirements of Guernsey Law and reflect the accounting policies as disclosed in the Company's last audited financial statements, which have been adopted and applied consistently.
The Company has adopted IFRS 9 'Financial instruments' retrospectively from 1 April 2018, but with certain permitted exceptions. IFRS 9 replaces the majority of IAS 39 and covers the classification, measurement and de-recognition of financial assets and financial liabilities, introducing a new impairment model for financial assets based on expected losses rather than incurred losses. As disclosed in the annual audited financial statements as at 31 March 2018 there were no changes in classification of financial assets or liabilities expected as a result of the implementation of this standard, and no changes have been required.
The new impairment model applies to the Company's financial assets, including trade receivables. No impairment provisions were made on transition to IFRS 9. The trade receivables of the Company were reviewed, and the inclusion of specific expected credit loss provision was deemed unnecessary as any such provision would not have a material impact. In addition, the cash balances held by the Company, which are also subject to IFRS 9, are held by counterparties whose investment ratings confirm a low credit risk and no impairment provisions are required on these balances. As such there is no expected impact on the net asset value of the Company.
4. Critical Accounting Estimates and Judgments
The preparation of financial statements in conformity with IFRS requires management to make judgments, 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 judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Management makes estimates and assumptions concerning the future of the Company. The resulting accounting estimates will, by definition, seldom equal the related actual results. Management believe that the underlying assumptions are appropriate and that the financial statements 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:
Judgments
Going concern
After making reasonable enquiries, and assessing all data relating to the Company's liquidity, the directors 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 financial statements.
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 International Private Equity and Venture Capital Valuation Guidelines ("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. Prior Period Adjustment
During the preparation of the March 2018 annual financial statements management identified that the calculation methodology used to arrive at the Fair Value of the Employee Share Options was incorrect. The calculation was not performed in line with the Company's stated accounting policy, as described in note 3d of the Company's annual financial statements - Share based payments, and the valuation estimates as described in note 4 above.
As per the annual financial statements for the year ended 31 March 2018, the opening reserves of the Company have been restated. In the interim statements for 2017 an amount of GBP65,000 was credited to the Statement of Comprehensive Income. Based on the revised valuation, for the period ended 30 September 2017 a credit to the Statement of Comprehensive Income of GBP176,000 should have been made, a difference of GBP111,000. The corresponding entry to this adjustment is to increase the Employee Stock Option Reserve by the same amount. Overall this error had no impact on the Net Assets of the Company.
Also restated is the amount due to the Company adviser, Mr Teufelberger, who is not a Director of the Company. Originally GBP32,000 was charged during the period to 30 September 2017. This is restated to GBP64,000 and is reflected in the adviser fees within the Statement of Comprehensive Income.
The impact on earnings for period to 30 September 2017 is to adjust the original total comprehensive income for the year from GBP2,146,000 to a GBP2,225,000, with the Earnings per Share being restated from 1.61p to 1.67p.
6. Investments designated at fair value through profit or loss
A reconciliation of the opening and closing balances of assets designated at fair value through profit or loss classified as Level 3 is as follows:
30 September 30 September
2018 2017
GBP'000 GBP'000
Opening valuation 5,682 9,955
Purchases 7,836 -
Disposal proceeds - (855)
Realised gains - 356
Net unrealised change in fair value of financial
assets 728 1,840
14,246 11,296
=========================== ==========================
A reconciliation of the opening and closing balances of assets designated at fair value through profit or loss classified as Level 1 is shown below:
30 September 30 September
2018 2017
GBP'000 GBP'000
Opening valuation 6,728 -
Purchases 1,304 -
Disposal proceeds (7,286) -
Realised gains (418) -
Net unrealised change in fair value of financial 958 -
assets
1,286 -
-------------------------- --------------------------
Total value of investments at fair value through
profit or loss 15,532 11,296
========================== ==========================
There were no transfers between fair value hierarchy levels during the period (2017: None).
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; and -- discounted cash flow.
7. 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. The single segment is investments in companies which have significant intellectual property rights which they are seeking to exploit, principally within the technology sector (including digital technology, gaming 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 financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. At 30 September 2018 the cross section of segment assets between geographical focus and economic sectors were as follows:
Geographical Focus Technology Life sciences Total
sector sector
Private equity investments GBP'000 GBP'000 GBP'000
- North America 6,710 995 7,705
- Europe - 1,533 1,533
- Middle East - - -
- Other 6,294 - 6,294
Total segment assets 13,004 2,528 15,532
=========== ============== ========
Segment liabilities
Segment liabilities are measured in the same way as in the financial statements. These liabilities are allocated based on the operations of the segment. At 30 September 2018 there were no segmented liabilities.
Other profit and loss disclosures
At 30 September 2018 the cross section of the realised losses, unrealised gains and interest income generated from private equity investments between geographical focus and economic sectors were as follows:
Geographical Focus Technology Life sciences Total
sector sector
Private equity investments GBP'000 GBP'000 GBP'000
- North America 104 622 726
- Europe - 43 43
- Middle East - - -
- Other 532 - 532
Total gains on investments 636 665 1,301
=========== ============== ========
All the Company's investment portfolio income was derived from its investments whose business focus is in the sectors as described above. The only other revenue generated by the Company during the period was interest of GBP2,000 (30 September 2017: GBP1,000), arising from cash and cash equivalents, which was generated in Guernsey. The Company is domiciled in Guernsey.
8. Profit per Ordinary Share - basic and diluted
The profit per Ordinary Share of 0.62p (30 September 2017 Restated: 1.67p) is based on the profit for the period of GBP875,000 (30 September 2017 Restated: GBP2,225,000) and on a weighted average number of 140,651,009 Ordinary Shares in issue during the period (30 September 2017: 132,985,875 Ordinary Shares).
The share price of the Ordinary Shares throughout the period, and as at 30 September 2018, was below the lowest exercise price of the Options (lowest exercise price of 19.00 pence). Therefore, at no point during the period, or as at 30 September 2018, did the Options have any dilutive effect.
9. Dividends
The Directors do not propose an interim dividend for the period ended
30 September 2018 (30 September 2017: GBPNil).
10. Tax Effects of Other Comprehensive
Income
There were no tax effects arising from income disclosed in the Statement
of Comprehensive Income (30 September 2017: Nil).
11. Net Assets per Ordinary Share
Basic and diluted
The basic net assets value per Ordinary Share is based on the net assets
attributable to equity shareholders of GBP18,418,000 (31 March 2018:
GBP13,534,000) and on 161,500,104 Ordinary Shares in issue at the end
of the period (31 March 2018: 130,730,875 Ordinary Shares).
The share price of the Ordinary Shares throughout the period and as at
30 September 2018 was below the lowest exercise price of the Options
(lowest exercise price of 19.00 pence). Therefore, at no point during
the period, or as at 30 September 2018, did the Options have any dilutive
effect.
12. Share Capital and Options
30 September 31 March
2018 2018
GBP'000 GBP'000
Authorised:
1,910,000,000 Ordinary Shares of 1p 19,100 19,100
100,000,000 Deferred Shares of 0.9p 900 900
20,000 20,000
================= ===============
Allotted, called up and fully paid:
161,500,104 Ordinary Shares of 1p 1,614 1,306
70,700,709 Deferred Shares of 0.9p 630 630
================= ===============
30 September 31 March
2018 2018
Options:
Share options 16,647,992 16,647,992
Ordinary Shares
During the period the Company issued 30,769,230 new Ordinary Shares at a price of 13p per share.
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. No movement in deferred shares has occurred in the period.
Options
No issue of Options has occurred during the current period.
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. The 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.
13. Related Parties
Mr Mellon, a director of the Company, has an interest in 16,283,722 Ordinary Shares of the Company (31 March 2018: 10,425,991). Mr Mellon is a life tenant of a trust which owns Galloway Limited ("Galloway"), which held 10,425,991 (31 March 2018: 10,425,991) Ordinary Shares in the Company and Mr Mellon directly owns 5,857,731 shares in the Company as at 30 September 2018 (31 March 2018: Nil).
At 30 September 2018 the Company held 25,978 (31 March 2018: 25,978) Ordinary Shares in The Diabetic Boot Company Ltd ("DBC"). Galloway and Regent Pacific Group Limited also hold shares in DBC. The combined shareholding in DBC is in excess of 30%. Regent Pacific Group is deemed to be a related party as Mr Mellon is Chairman of Regent Pacific Group Limited.
Mr Burns, a director of the company, is the legal and beneficial owner of Smoke Rise Holdings Limited ("Smoke"), which held 1,374,024 (31 March 2018: 1,374,024) Ordinary Shares in the Company at 30 September 2018 and at the date of signing this report.
Mr Abony, a director of the company, held 14,843,000 (31 March 2018: 12,248,436) Ordinary Shares in the Company at 30 September 2018 and at the date of signing this report.
Mr Mellon is entitled to an annual salary of GBP30,000, payable quarterly in arrears. Mr Mellon elected to waive his salary for the period from 1 April 2018 until 31 August 2018.
Mr Burns was entitled to an annual salary of GBP18,000, payable quarterly in arrears. This was increased to GBP50,000 per annum with effect from 1 May 2018.
Mr McDermott is entitled to an annual salary of GBP40,000, payable quarterly in arrears.
Mr Abony is entitled to an annual salary of GBP250,000, payable monthly in arrears. Mr Abony has elected to waive his fees for the period to 31 August 2018, however he has received a bonus payment of GBP62,500 for the additional work he performed during the period regarding the new investments entered into and the capital raising.
On 23 July 2018 Mr Abony provided the Company with a 12 month unsecured loan of $800,000, at an interest rate of 7%. The Loan was repaid in tranches during August 2018. Interest on the loan amounted to GBP2,282.
On 23 July 2018 Mr Burns provided the Company with a 12 month unsecured loan of $50,000. No interest was payable on this loan. The Loan was repaid on 13 August 2018.
Directors' remuneration for the period totalled GBP 127,112 (30 September 2017: GBPNil - All Directors waived their remuneration during this period).
Share options in the Company, held by the Directors, recognised as an employee benefit during the period totalled GBP78,000 (30 September 2017: Restated: decrease GBP176,000, which included a write back of value for options issued to former Director Stephen Dattels, which lapsed at 30 September 2017).
As at 30 September 2018 the Company held 3,527,059 (31 March 2018: 3,527,059) non-assessable series-2 preferred stocks in Vemo Education. Inc. ("Vemo"), a company related by virtue of common shareholdings with Mr Abony. Mr Abony is also the non-executive Chairman of Vemo.
As at 30 September 2018 the Company holds a total of 3,288,436 (31 March 2018: 3,288,436) shares in Kickwheel. Mr Abony is a substantial shareholder of Kickwheel. Please refer to note 14 regarding post year end developments on Kickwheel.
Mr Mellon has directly and indirectly subscribed for US$7.5m of Series A shares in Juvenescence on the same terms as the Company. Following this subscription Mr Mellon is interested in 20.6%. of Juvenescence shares on a fully diluted basis. Mr Mellon is Chairman of Juvenescence.
In addition, Mr Lorne Abony has subscribed US$1m for Series A shares of Juvenescence Limited on the same terms as the Company. Also, Regent Mercantile Holdings Limited ("Regent"), a company in which Mr Ian Burns is a Director, is a shareholder of Juvenescence. Regent hold in 0.34% of Juvenescence (on a fully diluted basis).
Mr McDermott is part of the corporate finance team at Optiva Securities Limited, the Company's Broker. A total of GBP106,000 was incurred by the Company in respect of Broker fees to Optiva Securities Limited during the period. (30 September 2017 : GBP12,500), including GBP96,000 which was directly related to the Share Capital raised during the period.
The Directors consider that there is no immediate or ultimate controlling party.
14. Events after the financial reporting date
The Company received confirmation from the liquidator of Kickwheel that no distributions would be made to its investors as it had insufficient funds to pay its existing creditors in full. Kickwheel was formally dissolved on 18 October 2018.
15. Capital management policy and procedures
The Company does not ordinarily 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.
DIRECTORS
Jim Mellon (Chairman)
Ian Burns (Chief Operating Officer and Chief Financial Officer)
Lorne Abony (Chief Executive Officer)
Edward McDermott (Non Executive Director)
ADVISERS
Administrator, Secretary and Registered Office Nominated Adviser
Vistra Fund Services (Guernsey) Limited Beaumont Cornish Limited
11 New Street 2nd Floor
St Peter Port Bowman House
Guernsey 29 Wilson Street
GY1 2PF London
Registrar Independent Auditor
Link Market Services Limited PricewaterhouseCoopers CI LLP
PO Box 627 Royal Bank Place
Bulwer Avenue 1 Glategny Esplanade
St Sampsons St Peter Port
Guernsey Guernsey
GY2 4LH GY1 4ND
Brokers Guernsey Legal Adviser to the Company
Optiva Securities Limited Collas Crill
2 Mill Street Glategny Esplanade
London St Peter Port
W1S 2AT Guernsey
Special Adviser English Legal Adviser to the Company
Norbert Teufelberger Hill Dickinson LLP
11 New Street The Broadgate Tower
St Peter Port 20 Primrose Street
London EC2A 2EW
Guernsey London EC2A 2EW
GY1 2PF
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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December 12, 2018 07:52 ET (12:52 GMT)
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