Final Results

RNS Number : 3084G
Blue Star Capital plc
01 March 2018
 

Blue Star Capital plc

("Blue Star" or the "Company")

 

 

Final Results for the year ended 30 September 2017

 

Blue Star Capital plc (AIM: BLU) is pleased to announce its final results for the year ended 30 September 2017.

Highlights:

·      Net assets of £3,513,262 (2016: £1,757,165)

·      Loss for the period of £188,713 (2016: loss of £165,005)

·      Acquired a 31% shareholding in SatoshiPay Ltd, a blockchain business focused on nanopayments

·      Cash position at 30 September 2017 of £37,970 (2016: 51,184)

·      The Company raised £500,000 before expenses through a further issue of equity shortly after the year end

The Annual Report and notice of Annual General Meeting ("AGM") will be posted to shareholders shortly and will be available to view on the Company's website http://www.bluestarcapital.co.uk.

The AGM will be held at the offices of Cairn Financial Advisers LLP, Cheyne House, Crown Court, 62-63 Cheapside, London, EC2V 6AX on 26 March 2018 at 12.00 p.m.

 

Tony Fabrizi Chief Executive Officer of Blue Star Capital plc, commented:

 

"The last year has seen the Company make considerable progress with the acquisition of a sizeable shareholding in SatoshiPay. The Board is confident that SatoshiPay has the potential to deliver significant value for Blue Star shareholders and it looks forward to working with SatoshiPay's management in unlocking that value."

 

For further information, please contact:

 

Blue Star Capital plc

 


Tony Fabrizi

+44 (0) 777 178 2434





Cairn Financial Advisers LLP

+44 (0) 20 7213 0880

(Nominated Adviser)


Emma Earl/Jo Turner




Smaller Company Capital Limited

+44 (0) 203 651 2911

(Broker)

Rupert Williams/Jeremy Woodgate

 



 

It is the Directors' understanding that Sthaler is having ongoing discussions with a large number of organisations regarding the commercialisation of its technology. Whilst there is no guarantee that these discussions will result in commercial sales in the short term or at all, the Directors remain optimistic of an exciting future for Sthaler. Further details regarding Sthaler are available at its website www.sthaler.com. 

www.satoshipay.io 

The full year's pre-tax loss was £188,713 compared to a pre-tax loss of £165,005 for the year ended 30 September 2016.

Key Performance Indicators

Assets or Companies in which the Company can invest

·     Technology;

·     Gaming; and

·     Media.

Whether investments will be active or passive investments

Holding period for investments

The Company's investments are likely to be illiquid and consequently are to be held for the medium to long term.

Spread of investments and maximum exposure limits, Policy in relation to cross-holdings and Investing Restrictions

Policy in relation to gearing

The Directors may exercise the powers of the Company to borrow money and to give security over its assets. The Company may also be indirectly exposed to the effects of gearing to the extent that investee companies have outstanding borrowings.

 

 

Returns and Distribution Policy

It is anticipated that returns from the Company's investment portfolio will arise upon realisation or sale of its investee companies, rather than from dividends received. Whilst it is not possible to determine the timing of exits, the Board will seek to return capital to shareholders when appropriate.

Life of the Company

The Company has an indefinite life dependent on obtaining sufficient funding.

 

 

Notes


2017

£


2016

£







Revenue



-


-

Fair valuation movements in financial assets designated at fair value through profit or loss

10


118,300


8,700

Loss on disposal of investments



-


(20,445)




118,300


(11,745)

Administrative expenses



(307,021)


(154,760)

 

Operating loss

3


(188,721)


(166,505)







Finance income

4


8


1,500


Loss before and after taxation and total comprehensive loss for the year



(188,713)


(165,005)

 

 Loss per ordinary share:

Basic and diluted loss per share on loss for the year

9


 

(0.02p)


(0.03p)

 

 

Notes

 2017

£


 2016

£

Non-current assets





Financial assets at fair value through profit or loss

10

3,496,864


1,706,237






Current assets





Trade and other receivables

11

11,766


30,925

Cash and cash equivalents

12

37,970


51,184

 

Total current assets


49,736


82,109

 

Total assets


3,546,600


1,788,346

 

 





Current liabilities





Trade and other payables

13

33,338


31,181

 

Total liabilities


33,338


31,181

 

Net assets


3,513,262


1,757,165

 

 





Shareholders' equity





Share capital

14

1,702,901


500,163

Share premium account


8,382,647


7,704,765

Other reserves


64,190


36,327

Retained earnings


(6,636,476)


(6,484,090)

 

Total shareholders' equity


3,513,262


1,757,165


Share capital


Share premium


Other reserves


Retained earnings


Total


£


£


£


£


£











Year ended 30 September 2016










At 1 October 2015

471,663


7,688,265


36,327


(6,319,085)


1,877,170

Loss for the year and total comprehensive income

-


-


-


(165,005)


(165,005)

Shares issued in year

28,500


16,500


-


-


45,000












At 30 September 2016

500,163


7,704,765


36,327


(6,484,090)


1,757,165











Year ended 30 September 2017










At 1 October 2016

500,163


7,704,766


36,327


(6,484,090)


1,757,166

Loss for the year and total comprehensive income

-


-


-


(188,713)


(188,713)

Shares issued in year

1,202,738


772,381


-


-


1,975,119

Share issue costs

-


(94,500)


-


-


(94,500)

Lapsed warrants

-


-


(36,327)


36,327


-

Share based payments

-


-


64,190


-


64,190


At 30 September 2017

1,702,901


8,382,647


64,190


(6,636,476)


3,513,262













2017


2016


Note

 £


 £

Operating activities





Loss for the year


(188,713)


(165,005)

Adjustments:





Finance income


(8)


(1,500)

Fair value gains


(118,300)


(8,700)

Loss on disposal


-


20,445

Share based payments


22,887


-

Working capital adjustments





Decrease in trade and other receivables


19,159


576

Increase/(decrease) in trade and other payables


2,158


(43,605)

 

 

 

 

 

Net cash used in operating activities


(262,817)


(197,789)






Investing activities





Purchase of investments


(1,205,905)


-

Loan issued


-


(25,000)

Interest received


8


1,500

Proceeds from sale of investments


-


200,000






Net cash (used by)/generated from investing activities


(1,205,897)


176,500






Financing activities





Proceeds from issue of equity


    1,550,000


45,000

Share issue costs


 (94,500)


-






Net cash generated from financing activities


1,455,500


45,000






Net (decrease)/increase in cash and cash equivalents


(13,214)


23,711

Cash and cash equivalents at start of the year

12

51,184


27,473






Cash and cash equivalents at end of the year

12

37,970


51,184

1.   Accounting policies

General information

Blue Star Capital Plc (the Company) invests principally in the media, technology and gaming sectors.

The Company is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is Griffin House, 135 High Street, Crawley RH10 1DQ.

The Company is listed on the AIM market of the London Stock Exchange plc.

Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The historical cost convention has been applied as modified by the revaluation of assets and liabilities held at fair value.

Associates are those entities in which the Company has significant influence, but no control, over the financial and operating policies. Investments that are held as part of the Company's investment portfolio are carried in the statement of financial position at fair value even though the Company may have significant influence over those companies. This treatment is permitted by IAS 28 Investment in Associates, which requires investments held by venture capital organisations to be excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss and accounted for in accordance with IAS 39, with changes in fair value recognised in the statement of comprehensive income in the period of the change. The Company has no interests in associates through which it carries on its business.

Going concern

The financial statements have been prepared on the going concern basis, which assumes that the Company will be able to meet its liabilities as they fall due.

At 30 September 2017, the Company had cash balances of £37,970 and net current assets of £16,398. During the year the Company has raised £1,550,000 before expenses.

On 24 October 2017 the Company placed 178,571,429 Ordinary shares in the Company at a price of 0.28 pence per share raising gross proceeds of £500,000.

Revenue recognition

Revenue is recognised to the extent that it is possible that the economic benefits will flow to the Company and the revenue can be reliably measured. The Company provides consulting services and recognises revenue in the period in which the services are provided. Revenue is measured at the fair value of the consideration received, excluding value added taxes.

Financial assets

The Company classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Company has not classified any of its financial assets as held to maturity or available for sale.

(a)  Early stage investments: these are investments in immature companies, including seed, start-up and early stage investments. Such investments are valued at cost less an provision considered necessary, until no longer viewed as an early stage or unless significant transactions involving an independent third party arm's length, values the investment at a materially different value:

(b)  Development stage investments: such investments are in mature companies having a maintainable trend of sustainable revenue and from which an exit, by way of floatation or trade sale, can be reasonably foreseen. An investment of this stage is periodically re-valued by reference to open market value. Valuation will usually be by one of five methods as indicated below:

I.    At cost for at least one period unless such basis is unsustainable;

II.    On a third party basis based on the price at which a subsequent significant investment is made involving a new investor;

III.   On an earnings basis, but not until at least a period since the investment was made, by applying a discounted price/earnings ratio to the profit after tax, either before or after interest; or

IV.  On a net asset basis, again applying a discount to reflect the illiquidity of the investment.

V.   In a comparable valuation by reference to similar businesses that have objective data representing their equity value.

(c)  Quoted investments: such investments are valued using the quoted market price, discounted if the shares are subject to any particular restrictions or are significant in relation to the issued share capital of a small quoted company.

2.       Critical accounting estimates and judgements

3.       Operating loss


2017
£


2016

£

This is stated after charging:





Auditor's remuneration - statutory audit fees


11,679


11,280

 

4.       Finance income

2017
£


2016
£

Interest received on short term deposits

8


1,500



8


1,500

 

5.       Share based payments

On 4 July 2017, the Company granted 25,000,000 warrants to Director Anthony Fabrizi at an exercise price of 0.25p and 42,500,000 warrants at an exercise price of 0.6p and 42,500,000 warrants at an exercise price of 0.8p to Coinsilium Group Limited, each of which can be exercised up until June 2020. The charge to the profit and loss account was £22,887 (2016: £nil). The charge to the cost of investment in Satoshipay was £41,303 (2016: £nil).

 

2017

Weighted average exercise price (p)


2017

 

 

 

Number


2016

Weighted average exercise price (p)


2016

 

 

 

Number

 

Outstanding at the beginning of the year

1.24


33,000,000


1.24


33,000,000

Lapsed during year

(1.24)


(33,000,000)


-


-

Issued during year

0.6


110,000,000


-


-

 

Outstanding at the end of the year

0.6


110,000,000


1.24


33,000,000

The contracted average remaining life of warrants at the year end was 2.92 years (2016: 0.02 years).

The following information is relevant in the determination of the fair value of warrants granted during the year under the equity share based remuneration schemes operated by the Company.

 

Date of grant

4 July 2017

4 July 2017

4 July 2017

Option pricing model used

Black-Scholes

Black-Scholes

Black-Scholes

Share price at date of grant (in pence)

0.22p

0.22p

0.22p

Exercise price (in pence)

0.6p

0.8p

0.25p

Contractual life (years)

3

3

3

Expected volatility

85%

85%

85%

Risk free interest rate

0.32%

0.32%

0.32%

Fair value per warrant

0.05p

0.04p

0.09p

The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical analysis of daily share prices over a one year period.

The Black-Scholes valuation technique was adopted because, in the opinion of the Directors, the market based vesting conditions were not materially sensitive to the valuation.

6.       Staff costs, including Directors


2017
£


2016

£






Wages and salaries

61,111


65,000

Social security costs

6,453


4,489



67,564


69,489

During the year the Company had an average of 2 employees who were management (2016: 3).

The employees were both Directors and key management personnel of the Company.

7.       Directors' and key management personnel


2017


2016

Director


Total


Total






Anthony Fabrizi

Emoluments

35,000


30,000


Warrants

22,887


-






Graham Parr

Fees

9,862


20,000






William Henbrey

Emoluments

16,250


15,000








83,999


65,000






Included in the above amounts is £nil of accrued but unpaid emoluments at 30 September 2017 (30 September 2016 - £16,249).

8.       Taxation

The tax assessed on loss before tax for the year differs to the applicable rate of corporation tax in the UK for small companies of 19.5% (2016: 20%). The differences are explained below:

 

2017
£


2016

£





Loss before tax

(188,713)


(165,005)





(Loss)/profit before tax multiplied by effective rate of corporation tax of 19.5% (2016 - standard rate of 20%)

(36,799)

 

(33,001)

Effect of:




(Profit)/loss on disposal of investments

(79)

 

14,089

Capital losses / (unrealised gains) carried forward

(23,068)

 

(11,740)

Capital gains

-

 

5,430

Capital allowances

(463)

 

(579)

Expenses not deductible for tax purposes

9,271

 

-

Losses carried forward

51,138

 

25,801

Tax charge in the income statement

-

 

-


The Company has incurred tax losses for the year and a corporation tax expense is not anticipated. The amount of the unutilised tax losses has not been recognised in the financial statements as the recovery of this benefit is dependent on future profitability, the timing of which cannot be reasonably foreseen.  The unrecognised and revised deferred tax asset at 30 September 2017 is £574,857 (2016: £557,417).

9.       Loss per ordinary share

 

The earnings and number of shares used in the calculation of loss/earnings per ordinary share are set out below:

2017


2016

Basic:




Loss for the financial period

£ (188,713)


£ (165,005)

Weighted average number of shares

1,082,876,693


493,181,749

Loss per share (pence)

(0.02)


(0.03)





Fully Diluted:




Loss for the financial period

£ (188,713)


£ (165,005)

Weighted average number of shares

1,082,876,693


493,181,749

Loss per share (pence)

(0.02)


(0.03)


As at the end of the financial period there were 110,000,000 share warrants in issue, which had an anti-dilutive effect on the weighted average number of shares.

10.     Financial assets held at fair value through profit of loss

2017

£


2016

£


At start of year

1,706,237


1,917,982

Additions

1,672,327


-

Disposals

-


(220,445)

Net fair value gain for the year

118,300


8,700


At end of year

3,496,864


1,706,237

 

Fair value gain during the year relates to a gain in the value of £118,300 in respect of the Company's investment in Sthaler Limited.

 

Unquoted investments

Class of shares/
investment

Book value
and fair value

£

Satoshipay

Ordinary 1p

1,672,327

Disruptive Tech. Limited

Ordinary 1p

1,597,537

Sthaler

Ordinary 1p

227,000



3,496,864

All of the above investments are incorporated in the United Kingdom with the exception of Disruptive Tech. Limited which is based in Gibraltar.  The methods used to value these unquoted investments are described below.

Fair value

The fair value of unquoted investments is established using valuation techniques.  These include the use of recent arm's length transactions, the Black-Scholes option pricing model and discounted cash flow analysis.  Where a fair value cannot be estimated reliably the investment is reported at the carrying value at the previous reporting date in accordance with International Private Equity and Venture Capital ("IPEVC") guidelines.

The Company assesses at each balance sheet date whether there is any objective evidence that the unquoted investments are impaired.  The unquoted investments are deemed to be impaired, if and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an incurred 'loss event') and that loss event (or events) has an impact on the estimated future fair value of the investments that can be reliably measured.

11.     Trade and other receivables

2017

£


2016

£


Loan issued

-


25,000

Prepayments

783


-

Social security and other taxes

10,983


5,925

 

 

11,766


A loan of £25,000 was made to Oxford Real Time Limited ("ORT"). Graham Parr became a director of ORT as a condition of the loan. Interest of 5% per annum was payable on the loan. ORT's business model failed to develop as hoped and the loan was written off during the year.

The Directors consider that the carrying value of trade and other receivables approximates to the fair value.

12.     Cash and cash equivalents

2017

£


2016

£


Cash at bank and in hand

37,970


51,184

 

 

37,970



Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with an original maturity of three months or less.  The Directors consider that the carrying value of cash and cash equivalents approximates to their fair value.

13.     Trade and other payables

2017

£


2016

£


Trade payables

12,233


4,926

Accruals

21,100


26,250

Other payables

5


5

 

 

33,338


31,181

All trade and other payables fall due for payment within one year.  The Directors consider that the carrying value of trade and other payables approximates to their fair value.

14.     Share capital

Issued and fully paid

 


2017 Number


2017
 £


2016 Number


2016
 £

At 1 October

500,162,623


500,163


471,662,623


471,663

Shares issued in the year

1,202,737,690


1,202,738


28,500,000


28,500


At 30 September

1,702,900,313


1,702,901


500,162,623


500,163

 

During the year the following shares were issued:

 

Number

 

£

 

Issue price
 per share

19 January 2017

466,666,667

 

466,667

 

0.15p

4 April 2017

268,213,880

 

268,214

 

0.1585p

31 May 2017

142,857,143

 

142,857

 

0.14p

21 July 2017

325,000,000

 

325,000

 

0.2p



1,202,737,690

 

1,202,738

 

 

 

During 2016 the following shares were issued:

 

Number

 

£

 

Issue price
 per share

6 October 2015

12,500,000

 

12,500

 

0.2p

3 March 2016

16,000,000

 

16,000

 

0.125p



28,500,000

 

28,500

 

 

15.     Financial instruments

Categories of financial assets and liabilities

The following tables set out the categories of financial instruments held by the Company:


Financial assets




Loans and receivables


Note



2017


2016





 £


 £








Trade and other receivables

11



11,766


30,925

Cash and cash equivalents

12



37,970


51,184






49,736


82,109

 


Designated upon initial recognition


Note

Held for trading


Fair value through profit or loss


Total



 £


 £


 £

Investments

10






At 30 September 2017


      -  


3,496,864


3,496,864








At 30 September 2016


-


1,706,237


1,706,237

 


Fair value measurement


Note

 Level 1


 Level 2


 Level 3



 £


 £


 £

Investments

10






At 30 September 2017


                 -  


3,496,864


              -  

At 30 September 2016


                      -  


1,706,237


-

 

Financial liabilities




Financial liabilities measured at amortised cost


Note



2017


2016





 £


 £

Trade payables

13



12,233


4,926

Accruals

13



21,100


26,250

Other payables

13



5


5






33,338


31,181

The Company's financial instruments comprise investments held for trading, cash and cash equivalents and trade payables that arise directly from the Company's operations. The main purpose of these instruments is to invest in portfolio companies. Investments held for trading and other investments have been held at fair value through profit and loss.  The main risks arising from holding these financial instruments is market risk and credit risk.

Interest rate risk

The Company's exposure to changes in interest rates relate primarily to cash and cash equivalents. Cash and cash equivalents is held either on current or on short term deposits at floating rates of interest determined by the relevant bank's prevailing base rate. The Company seeks to obtain a favourable interest rate on its cash balances through the use of bank treasury deposits. Any reasonable change in interest rate would not have a material impact on finance income that the Company could receive in the course of a year, based on the current level of cash and cash equivalents either held in current accounts or short term deposits.

Market risk

All trading instruments are subject to market risk, the potential that future changes in market conditions may make an instrument less valuable, due to fluctuations in security prices, as well as interest and foreign exchange rates. Market risk is directly impacted by the volatility and liquidity in the markets in which the related underlying assets are traded.

Sensitivity analysis

The following table looks at the impact on net result and net assets based on a given movement in the fair value of all the investments;

10%    movement either way will result in £349,686 profit or (loss) (2016: £170,624 profit or (loss))

20%    movement either way will result in £699,373 profit or (loss) (2016: £341,248 profit or (loss))

30%    movement either way will result in £1,049,059 profit or (loss) (2016: £511,872 profit or (loss)) 

Borrowing facilities

The operations to date have been financed through the placing of shares and investor loans.  It is Board policy to keep borrowing to a minimum, where possible.

Liquidity risks

The Company seeks to manage liquidity risk by ensuring sufficient liquid assets are available to meet foreseeable needs and to invest liquid funds safely and profitably. All cash balances are immediately accessible and the Company holds no trades payable that mature in greater than 3 months, hence a contractual maturity analysis of financial liabilities has not been presented. Since these financial liabilities all mature within 3 months, the Directors believe that their carrying value reasonably equates to fair value.

Credit risk

The Company's credit risk is attributable to cash held on deposit at financial institutions.

Cash is deposited with reputable financial institutions with a high credit rating. The maximum credit risk relating to cash and cash equivalents and trade and other receivables is equal to their carrying value of £49,736 (2016: £82,109).

Capital Disclosure

As in previous years, the Company defines capital as issued capital, reserves and retained earnings as disclosed in statement of changes in equity. The Company manages its capital to ensure that the Company will be able to continue to pursue strategic investments and continue as a going concern.  The Company does not have any externally imposed financial requirements.

16.     Related party transactions

On 4 July 2017 the company granted CEO Anthony Fabrizi warrants over 25 million Ordinary shares exercisable at a price of 0.25 pence per Ordinary shares, over a period of 3 years. Mr Fabrizi also subscribed to 5,242,041 Placing shares at a price of 0.2 pence per share.

17.     Operating lease commitments

At the balance sheet date, the Company had no outstanding commitments under operating leases.

18.     Ultimate Controlling Party

The Company considers that there is no ultimate controlling party.

19.     Post Balance Sheet Events

On 24 October 2017 the Company placed 178,571,429 Ordinary shares in the Company at a price of 0.28 pence per share raising gross proceeds of £500,000.

On 1 December 2017 the Company subscribed for €200,000 convertible loan notes issued by Satoshipay Limited. The loan notes are redeemable in cash on 31 December 2018 together with interest accrued at 4% per annum. Alternatively, the Company may elect to redeem the loan notes early in full upon completion by SatoshiPay of a fundraising in excess of €750,000 or in the event of certain circumstances including SatoshiPay being in financial distress.

The Company may also convert the outstanding loan notes into fully paid ordinary shares in SatoshiPay ("SatoshiPay Shares") in the event that:

i.    SatoshiPay completes a fundraising of at least €750,000; or

ii.    in the event of a change of control of SatoshiPay; or

iii.   at any time after 30 June 2018.

In the event of conversion of the loan notes into SatoshiPay Shares ("Conversion"), the outstanding loan notes would be converted at a 15% discount to the valuation of the relevant equity fundraise undertaken by SatoshiPay on or prior to the date of Conversion or the valuation of SatoshiPay at the time of a change of control of SatoshiPay. For illustrative purposes, conversion at a 15% discount to the valuation of SatoshiPay of approximately €6million (being the valuation at the time of SatoshiPay's fundraise in January 2017) would result in the Company increasing its holding in SatoshiPay by approximately 3.8%.


This information is provided by RNS
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