TIDMWWW
RNS Number : 3042Z
SuperSeed Capital Limited
15 May 2023
SUPERSEED CAPITAL LIMITED
("SuperSeed" or the "Company")
FINAL RESULTS FOR THE FINANCIAL YEARED 31 DECMEBER 2022
SuperSeed, a company established as a Venture Capital fund of
funds for early-stage technology investing, announces that the
final results for the financial year ended 31 December 2022, as
detailed below, have been fully extracted from the Annual Report
and Audited Financial Statements for the period from incorporation
on 6 October 2021 to 31 December 2022, and have been approved by
the Board of Directors.
In the coming days, the full Annual Report and Audited Financial
Statements will be available on the Company's website at:
https://www.superseed.com/investors/superseed-capital/documents/
.
Chairman's Statement
Introduction
It is my pleasure to make my maiden statement on the inaugural audited
financial statements published for the Company since its admission
to trading on Aquis Stock Exchange Growth Market in January 2022.
The IPO represented a significant milestone for the Company and
came at a very difficult time for the market. It was the only closed
ended listed investment company to have an IPO during the calendar
year. The IPO provided the Company with the opportunity to permit
investors to invest into a listed fund with liquidity and no minimum
investment which can access opportunities in seed stage venture
capital portfolio companies through funds managed by SuperSeed Ventures
LLP. As a result, the Board is confident that the Company will deliver
value to its shareholders in the years to come.
The focus was to secure a GBP2m funding which was successfully achieved
on Admission, latterly this has been augmented with a GBP1m loan
facility, allowing the Company to continue to meet its capital commitments
to SuperSeed II LP (the "Fund") which has in turn deployed its drawn
capital into eight new investments that are strongly positioned
to take advantage of exceptional growth opportunities. The Company
has also entered into share swap arrangements with shareholders
of two of the Fund's portfolio companies further increasing its
issued share capital to GBP2,365,606.
The Company became a member of the Association of Investment Companies
and has adopted the AIC Code of Corporate Governance which ensures
that it meets the required standards of governance and ESG, which
are expected by investors and stakeholders. It is an honour to lead
such a dynamic and forward-thinking organisation, and I am excited
about the opportunities that lie ahead.
Investment Policy
The Company invests in early-stage European software and AI businesses
which have technologies that are disruptive to the traditional services
sector. A typical investment will offer the prospect of high growth
and the potential to scale. The Company's objective is to provide
long-term capital growth to shareholders.
Performance
I am pleased to report that the Company has performed well with
an increase in the Company's NAV from inception to 101p per share,
which is all the more creditable when compared to the performance
of 794 UK-domiciled funds, only 17% of which managed to show positive
growth(1) . Accordingly, we are pleased with the Company's performance
which give us confidence in its current value and future prospects.
Revenue in SuperSeed II LP's (the "Fund") portfolio companies was
up 200% for 2022 as a whole, averaging 9.6% compound monthly growth.
The Company continues to actively review potential acquisition targets
at various stages of development and operating in a number of geographic
regions, all of which have potential global relevance.
(1) https://www.morningstar.co.uk/uk/news/230527/2022s-best-and-worst-performing-funds.aspx
Stakeholders
I would like to extend my sincere thanks to our stakeholders, including
my fellow board members, the Company's investment manager, administrator,
investors, and investee companies, for their contributions to SuperSeed's
success over the past year. The investment manager has demonstrated
exceptional commitment, resilience, and dedication in supporting
the growth and success of the Company. The Board is also grateful
to our investors for their continued support and confidence in our
vision and strategy. The Fund's investee companies have played a
crucial role in our success, and we are proud to partner with them
in their journey.
New Joiners
Over the reporting period we have welcomed Mrs Colette Taylor to
the Board as a permanent, alternate director to Mr Andrew Hatton.
As a very small Company it is important that costs are controlled
and the board is acutely aware of the requirement to have greater
diversity. The board hope that Colette's addition as an alternate
director will ensure that the Board is not only the right size for
the Company's market capitalisation and stage of development, with
an appropriate and diverse balance of skills, knowledge and experience
but also has greater diversity.
Pipeline
The investment pipeline of the Fund remains strong and the Company's
investment manager continues to have visibility over large swathes
of the opportunities in European SaaS and AI.
ESG
The Company and its investment manager, SuperSeed Ventures LLP,
recognises the importance of ESG and governance considerations in
building a sustainable and resilient business. As an investment
fund with no staff and premises the Company's main effort to ensure
positive ESG outcomes are achieved is by monitoring the actions
of our investment manager and our portfolio companies, further details
of which can be found here: https://www.superseed.com/journal/superseed-esg-policies-and-investment-strategy/
.
Outlook
The Board is of the view that the combination of an established,
successful and hands-on investment manager with access to an attractive
seed portfolio as well as an identified and growing pipeline of
investments in the SaaS and AI space, makes this a compelling investment.
We remain committed to our vision and strategy of supporting the
growth of innovative and high-potential AI companies, while adhering
to high standards of governance and ESG practices. We welcome our
new shareholders and look forward to working with them and successfully
delivering on our investment strategy.
Joseph Truelove
Chairman
SuperSeed Capital Limited
Investment Manager's Report
As we enter 2023, we are in the middle of three major transitions:
1. Zero Interest Rate Policy (ZIRP) --> Inflation and higher
Interest
Rates
2. Globalisation --> Global Power Rivalry
3. Internet & Mobile --> Next-Gen AI
We have only seen the beginning of the disruption caused by these
transitions. The next decade will see an upheaval of business unlike
anything we have seen in our lifetimes. The challenges will be immense
but the opportunities will be profound.
Opportunities in software investing
As the world changes and industries are dislocated, lots of new
investment opportunities emerge. When measuring using the return
on investment method, the biggest investment opportunities continue
to be in software. In the past decade, SaaS has already been an
attractive investment category. And the value created by SaaS companies
only increases when they embed advanced AI into their platforms.
SuperSeed exists to back Europe's best B2B SaaS founders at the
earliest stages, and to help them build great companies. In the
short term, our portfolio companies enable their customers to drive
revenue growth and efficiency savings using next-generation software
and AI. In the long-term, they have an opportunity to create category
defining global technology companies.
The current investing landscape
In 2021 we started seeing something we haven't seen for a long time:
inflation. In response, central banks have increased interest rates
to reduce liquidity and cool down economies.
This policy change has done exactly what was expected. Liquidity
has come down, and with less money sloshing around, so have the
frothy valuations of 2020 and 2021.
The tech sector went through a massive valuation correction in 2022.
From the peak in November 2021 to the trough in November 2022, EMCLOUD
(the Bessemer Emerging Cloud Index - an index of 75 publicly listed
SaaS/Cloud companies) declined by 62%. It's not quite the dotcom
collapse, but it is a meaningful drop.
During the same period, the median forward revenue multiple declined
from 15x out of the ordinary increase while 4.5-5x is the norm since
2017. (it's since recovered to 5x). Investment valuations are now
back to where they were in 2017.
The upside of "back-to-basics"
Counterintuitive as this may sound, the reduction in valuations
is largely a great thing for serious technology start-up founders
and investors. Frothy valuations and abundance of capital drove
all the wrong behaviours. Too much capital spent on unproductive
endeavours. And too much competition for talent and customer attention.
All of this has been replaced with a "back-to-basics" focus on strong
unit economics and how to build good companies. This makes it easier
for founders to focus on what matters, and for investors to buy
into the best companies at appropriate valuations.
Strong performance in the SuperSeed portfolio
At SuperSeed, we have always focused on the fundamentals. Essentially,
we are about helping founders build good companies with strong unit
economics and sensible distribution models.
This approach served the portfolio well in 2022. While SuperSeed's
companies were subject to declining valuation multiples just like
everyone else, robust revenue more than made up for the multiple
contraction.
Essentially, companies in the Fund's portfolio more than tripled
SaaS revenue over the course of 2022. In essence, top line grew
faster than revenue multiples declined. The result of this was that
the Fund was up more than 23% over the year.
Outlook for 2023
Financial markets continue to be turbulent in 2023, and we don't
expect to see valuation multiples increase meaningfully in the short
term. However, the wider market backdrop leads to many exciting
investment opportunities in 2023 - especially in AI.
Generative AI is a concept that has been building for years, but
it really came to the forefront of the tech industry in 2022. Over
the past decade, AI/machine learning has primarily been used for
classification. Show an algorithm lots of data, and it can help
figure out whether it is a cat or a dog; a working product or a
defective product; a stock to buy or a stock to sell: classification.
With generative AI, the field of AI is taking a great leap forward.
It's no longer just about classifying things into neat categories
but about creating new things. At first, as digital objects (e.g.
a digital product design), but this now also extends to physical
objects. An example of this is our portfolio company Ai Build which
helps high-end manufacturers in automotive and aerospace use AI
and 3D printing to create new products, faster and more efficiently.
The outlook for the Fund's portfolio in 2023 is very encouraging.
Revenue for the existing portfolio is expected to more than double
over the course of the year, and in parallel we will be adding existing
new AI/SaaS companies to the portfolio.
2023 is a great time to build technology companies, and an excellent
time to back the best technology founders to help them on their
journey. We look forward to an exciting year ahead for both our
portfolio and the wider software/AI industry.
Mads Jensen
Managing Director
SuperSeed Ventures LLP
Statement of Comprehensive Income
for the period from incorporation on 6 October 2021 to 31 December
2022
6 October
2021
to
31 December
2022
Notes GBP
Income
Investment income 379
Unrealised gain on investments held at fair
value through profit or loss 7 260,581
Bank interest income 2,347
Total income 263,307
------------
Expenses
Administration fees 13 27,432
Audit fees 21,000
Directors' fees 13 18,000
Establishment costs 194,298
Insurance 1,316
Legal & professional fees 40,838
Regulatory fees 14,839
Sundry expenses 1,599
Total expenses 319,322
------------
Total profit and comprehensive income for
the period (56,015)
============
Basic earnings per share 6 (0.037115)
Diluted earnings per share 6 (0.036791)
All the above items are derived from continuing
operations.
There is no other comprehensive income for
the period.
Statement of Financial Position
as at 31 December 2022
2022
Notes GBP
Non-current assets
Investments 7 1,799,616
Total non-current assets 1,799,616
----------
Current assets
Trade and other receivables 8 11,025
Cash and cash equivalents 235,089
----------
Total current assets 246,114
----------
Total assets 2,045,730
==========
Current liabilities
Trade and other payables 9 21,745
----------
Total current liabilities 21,745
----------
Total liabilities 21,745
==========
Net assets 2,023,985
==========
Equity
Share capital 11 2,080,000
Retained earnings (56,015)
Total equity 2,023,985
----------
Net asset value per ordinary share 0.973070
Statement of Changes in Equity
for the period from incorporation on 6 October 2021 to 31
December 2022
Share Retained Total
Capital Earnings
GBP GBP GBP
Ordinary Shares issued on incorporation 1 - 1
Issue of Ordinary Shares 2,079,999 - 2,079,999
Total comprehensive income for
the period - (56,015) (56,015)
Balance as at 31 December
2022 2,080,000 (56,015) 2,023,985
---------- ---------- ----------
Statement of Cash Flows
for the period from incorporation on 6 October 2021 to 31 December
2022
2022
GBP
Cash flows from/(used in) operating activities
Net profit for the period (56,015)
Unrealised gain on investment revaluation (260,581)
Movement in receivables (11,025)
Movement in payables 21,745
Net cash flow used in operating activities (305,876)
------------
Cash flows used in investing activities
Purchase of investments (1,539,035)
Net cash flow used in investing activities (1,539,035)
------------
Cash flows from financing activities
Proceeds from issue of shares 2,080,000
Net cash flow from financing activities 2,080,000
------------
Net movement in cash and cash equivalents during
the period 235,089
Cash and cash equivalents at the beginning of
the period -
Cash and cash equivalents at the end of the period 235,089
============
Notes to the Financial Statements
for the period from incorporation on 6 October 2021 to 31 December
2022
General Information
1
The Company was incorporated on 6 October 2021 in Guernsey, as
a non-cellular company limited by shares under The Companies
(Guernsey) Law, 2008 (as amended) ("Company Law"). The Company
is regulated by the Guernsey Financial Services Commission as
a Registered Closed-ended Collective Investment Scheme pursuant
to the The Protection of Investors (Bailiwick of Guernsey) Law,
2020 and the Registered Collective Investment Schemes Rules and
Guidance 2021.
The main purpose of the Company is to carry on business as a
fund-of-funds. The Company will invest in technology-led innovation
primarily through unquoted funds managed directly and indirectly
through Fund II by SuperSeed Ventures LLP, the Investment Manager,
with the objective of maximising investors' long-term total returns
- principally through capital appreciation.
Significant accounting policies
2
The principal accounting policies applied in the preparation
of these financial statements are set out below. These policies
have been adopted consistently in the preparation of the financial
statements unless otherwise stated.
No comparative figures have been presented as the Company's financial
information covers the period from incorporation on 6 October
2021.
Basis of accounting
These financial statements are prepared in accordance with International
Financial Reporting Standards ("IFRS") as issued by the International
Accounting Standards Board ("IASB") and The Companies (Guernsey)
Law, 2008. These financial statements have been prepared under
the historical cost convention, as modified by the revaluation
of financial assets and financial liabilities at fair value through
profit or loss.
Functional and presentational
a) currency
The financial statements are presented in British Pound Sterling
("GBP" or "GBP"), which is the Company's functional currency
as the Company's primary business transactions and majority
of overall transactions are conducted in GBP. The Directors
consider GBP as the currency that most faithfully represents
the economic effects of the underlying transactions, events
and conditions of the Company.
Foreign currency translation
b)
Monetary assets and liabilities are translated from currencies
other than GBP ("foreign currencies") to GBP (the "functional
currency") at the rate prevailing at the period end date.
Income and expenses are translated from foreign currencies
to the functional currency at the rate prevailing at the
date of the transaction. Exchange differences are recognised
in the Statement of Comprehensive Income.
Foreign currency transaction gains and losses on financial
instruments classified as fair value through profit or loss
are included in the Statement of Comprehensive Income.
Financial instruments
c)
Financial assets and financial liabilities are recognised
in the Company's Statement of Financial Position when the
Company becomes a party to the contractual provisions of
the instrument. Financial assets and financial liabilities
are only offset and the net amount reported in the Statement
of Financial Position and Statement of Comprehensive Income
when there is a currently enforceable legal right to offset
the recognised amounts and the Fund intends to settle on
a net basis or realise the asset and liability simultaneously.
The Company's financial assets comprise of receivables and
cash at amortised cost and investments held at fair value
through profit and loss.
Receivables
With the exception of receivables related to investments,
receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active
market. They principally comprise trade and other receivables.
They are initially recognised at fair value plus transaction
costs that are directly attributable to the acquisition,
and subsequently carried at amortised cost using the effective
interest rate method, less provisions for impairment. The
effect of discounting on these financial instruments is not
considered to be material.
For assets measured at amortised cost, IFRS 9 requires an
assessment of impairment based on providing for expected
losses. The Company has chosen to apply an impairment approach
similar to the simplified approach for expected credit losses
under IFRS 9 for the Company's receivables. Therefore, the
Company does not track changes in credit risk, but instead
recognises a loss allowance based on life time expected credit
losses at each reporting date. This approach takes into account
historic observed loss rates over the expected life of the
receivables, and is adjusted for forward looking estimates.
Investments at fair value through profit or loss
(i) Classification
The Company classifies its investments as financial assets
at fair value through profit or loss. These financial
assets are designated by the Company at fair value through
profit or loss at inception.
(ii) Recognition
Purchase and sales of investments will be recognised on
the trade date which is the date on which the Company
commits to purchase or sell the investment. Investment
purchases which involve earn-out payments or similar deferred
payments will be accounted for at the best estimate of
fair value, any subsequent changes in these fair value
estimates are recognised in the Statement of Comprehensive
Income as part of the changes in fair value of financial
assets held at fair value through profit or loss.
(iii) Measurement
The investments will be initially recognised at cost,
being the fair value of consideration given. Subsequently
such assets are carried at fair value and the changes
in fair value are recognised in the profit and loss.
(iv) Derecognition of financial
assets
A financial asset (in whole or in part) is derecognised
either:
-- When the Company has transferred substantially all the
risks and rewards of ownership; or
-- When it has neither transferred nor retained substantially
all the risks and rewards and when it no longer has
control over the assets or a portion of the asset; or
-- When the contractual right to receive cash flow has
expired.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, demand
deposits and highly liquid investments readily convertible
to known amounts of cash with an original maturity of three
months or less and are subject to an insignificant risk of
changes in value. As at 31 December 2022 cash and cash equivalents
consists only of cash at bank.
Fair value estimation
d)
International Financial Reporting Standard 13, "Fair Value
Measurement" recommends investments treated as "financial
assets at fair value through profit or loss" to be subsequently
measured at fair value. IFRS 13 defines fair value as the
price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction in the principal
(or most advantageous) market at the measurement date under
current market conditions. Fair value under IFRS 13 is an
exit price regardless of whether that price is directly observable
or estimated using another valuation technique.
The Board has delegated responsibility for carrying out the
fair valuation of the Company's portfolio to the Investment
Manager.
Investments are reported as having the fair value estimated
by the Investment Manager at the reporting date. The fair
value of the Company's investments in SuperSeed Fund II LP
and other future investments will be calculated in accordance
with International Private Equity and Venture Capital ("IPEV")
valuation guidelines. Under IPEV guidelines, the fair value
of unquoted investments can be calculated using a number
of approaches, broadly categorised under three headings,
Income Approach, Market Approach and Replacement Cost.
Given the type and stage of investments, the Investment Manager
will seek to take a Market Approach where possible, most
often based on calibration to the price of the recent investment
and market multiples. Alternative methodologies may be considered
in accordance with IPEV.
It is the opinion of the Directors, that the IPEV valuation
methodology used in deriving a fair value is not materially
different from the fair value requirements of IFRS 13.
All valuations made by the Investment Manager will be made,
in part, on valuation information provided by the portfolio
companies of SuperSeed Fund II LP alongside other future
investments. Although the Investment Manager will evaluate
all such information and data, it may not be able to confirm
the completeness, genuineness or accuracy of such information
or data. In addition, the financial reports provided by the
Portfolio Companies may be provided only on a quarterly basis
and generally will be issued one to two months after their
respective valuation dates. Consequently, each quarterly
Net Asset Value is likely to contain information that may
be out of date and require updating and completing. Shareholders
should bear in mind that the actual Net Asset Values at such
time may be materially different from the quarterly valuations.
Investment income from financial assets at fair value through
profit or loss is recognised in the Statement of Comprehensive
Income when the Company's right to receive payments is established.
Financial liabilities
e)
The classification of financial liabilities at initial recognition
depends on the purpose for which the financial liability
was issued and its characteristics.
All financial liabilities are initially recognised at fair
value net of transaction costs incurred. All purchases of
financial liabilities are recorded on trade date, being the
date on which the Company becomes party to the contractual
requirements of the financial liability. Unless otherwise
indicated, the carrying amounts of the Company's financial
liabilities approximate to their fair values. The Company's
financial liabilities consist of only financial liabilities
measured at amortised cost.
Financial liabilities measured at amortised
(i) cost
These include trade payables and other short-term monetary
liabilities, which are initially recognised at fair value
and subsequently carried at amortised cost using the effective
interest rate method.
Derecognition of financial liabilities
(ii)
A financial liability (in whole or in part) is derecognised
when the Company has extinguished its contractual obligations,
it expires or is cancelled. Any gain or loss on derecognition
is taken to the Statement of Comprehensive Income.
Segmental reporting
f)
In accordance with IFRS 8, Operating Segments, the Company
is required to present and disclose segmental information.
The Chief Operating Decision Maker, which is the Board, is
of the opinion that the Company is engaged in a single segment
of business through its investment portfolio, with the aim
of providing long-term returns through capital appreciation
to shareholders. The financial information used by the Chief
Operating Decision Maker to manage the Company presents the
business as a single segment.
Critical accounting judgements and key sources of estimation
g) uncertainty
IFRS requires the Directors to make judgements, estimates
and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
income and expenses.
Estimates and judgements are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances, the results of which form the basis
of making judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
However, uncertainty about these assumptions and estimates
could result in outcomes that could require a material adjustment
to the carrying amount of the asset or liability in future
periods.
The areas where assumptions and estimates are significant
to the financial statements include the valuation of investments.
The Company's investment into SuperSeed II LP is measured
at the net asset value of the Company's investment at year
end. The underlying investments of SuperSeed II LP are valued
in accordance with the IPEV methodology in which unlisted
investments are carried at such fair value as is considered
appropriate by the Investment Manager. Direct investments
have been valued at the price at which third party capital
has recently been raised. The models used to determine fair
values are validated and periodically reviewed by the Investment
Manager. Refer to note 2 (d) for further disclosure details.
Income and expenses
h)
Operating income and expenses have been accounted for on
an accruals basis, and are recognised in the Statement of
Comprehensive Income in the period which they are incurred.
Management fees
i)
Management fees are accounted for on an accruals basis and
are measured at the fair value of the consideration paid.
Going concern
j)
The Directors, and the Investment Manager having considered
the Company's objectives and available resources along with
its projected income and expenditure, are satisfied that
the Company has adequate resources to meet its liabilities
as they fall due and continue in operational existence for
the foreseeable future. The Company adopts an "Overcommitment
Policy" in order to reduce the cash reserves held by the
Company that have not been called by its commitment-based
investments. In order to meet ongoing investment commitments,
the Company may utilise any cash reserves held, incur borrowings,
issue new share capital or sell assets in order to realise
their value. The Directors are cognisant of potential capital
calls from underlying investments. On 28 February the Company
sold GBP1,000,000 of its commitment in SuperSeed II LP to
the investment manager SuperSeed Ventures LLP as disclosed
under note 15 to improve liquidity. Loans can also be drawn
from the Investment Adviser under the Convertible Loan Note
Instrument entered into on 14 September 2022 if required.
The Directors do not consider there to be any threat to the
going concern status of the Company.
For these reasons, the Company continues to adopt the going
concern basis in preparing the financial statements.
Adoption of new and revised standards
3
Standards issued and effective
There are new standards and amendments to existing standards
that are effective for the period beginning on 6 October 2021
and have therefore been adopted. None of these standards or amendments
have a significant impact on the Company's financial results
or position; hence they have not been disclosed.
Standards issued but not yet effective
New standards, amendments and interpretations issued but not
yet effective and not early adopted by the Company. At the date
of authorisation of these financial statements, several new,
but not yet effective, Standards and amendments to existing Standards
and Interpretations have been published by the IASB. None of
these Standards or amendments to existing Standards have been
adopted early by the Company and are not thought to have any
impact on the Company's financial results.
Taxation
4
The Company is exempt from income taxation in Guernsey under
the provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinance,
1989, as amended. An annual fee of GBP1,200 is payable and is
included in the Statement of Comprehensive Income within regulatory
fees.
Material agreements
5
Investment Manager
Under the Alternative Investment Fund Management Agreement dated
21 January 2022, the Company has appointed SuperSeed Ventures
LLP as the Company's Investment Manager to provide portfolio
and risk management services to the Company. The Investment Manager
does not charge separate fees to the Company for managing funds
where it is already paid a fee as part of a direct fund management
mandate (including the Company's investment in SuperSeed II LP).
For all other investments, the Investment Manager is entitled
to receive from the Company a management and performance fee
for the management of investments. This is calculated as being:
(a) 0.25 per cent. of the Total Portfolio Value; and
(b) 20 per cent. of the aggregate net realised profits on Investments
since the start of the relevant Calculation Period.
In each case, calculated as at the end of a Calculation Period
and payable in arrears within 30 days after the end of that Calculation
Period.
For these purposes:
"Calculation Period" means each calendar quarter, with the first
Calculation Period commencing on Admission and ending on 31 March
2022.
"Investment" means any investment or other asset (including cash)
of the Company of any description, the acquisition or holding
of which is authorised under the investment policy of the Company
from time to time, and in the case of investment commitments
into other funds the total commitment to that fund should be
regarded as an "Investment".
"net realised profits" means the net profit received by the Company
following a disposal of an Investment as recorded in its accounts
in accordance with the Company's adopted accounting policies
from time to time.
"Portfolio" means the portfolio of Investments held by the Company
directly or indirectly from time to time.
At 31 December 2022 there were no portfolio companies subject
to management fees.
Administrator
Under the Administration agreement dated 15 October 2021, Imperium
Fund Services Limited provides secretarial, directors and administration
services to the Company and is entitled to remuneration and reimbursement
of expenses as may be determined from time to time by the parties.
VSA Engagement Letter
Under the engagement letter dated 7 October 2021, the Company
appointed VSA Capital Limited to act as its Corporate Adviser
for the purposes of seeking admission of the Company's shares
to trading on the Access Segment of the Growth Market operated
by Aquis Exchange Limited, for which the Company agreed to pay
VSA Capital Limited GBP40,000 plus any applicable VAT.
AQSE Corporate Adviser Agreement
Under the AQSE Corporate Adviser agreement dated 7 October 2021,
the Company has appointed VSA Capital Limited to act as corporate
adviser and broker to the Company on an on-going basis following
admission of the Company's shares to trading on the AQSE, for
which the Company agreed to pay VSA Capital Limited a fee of
GBP40,000 plus any applicable VAT per annum payable quarterly
in advance.
Registrar
The Company utilises the services of Link Market Services (Guernsey)
Limited as a registrar in relation to the transfer and settlement
of its issued shares. Under the terms of the Registrar Agreement,
the Registrar is entitled to an annual fee of GBP3,500 per annum.
In addition, the Registrar is entitled to remuneration as may
be determined from time to time by the parties. Additional remuneration
of GBP2,916 was paid during the period.
Earnings per share
6
Earnings per share is calculated by dividing the profit or loss
for the period by the weighted average number of ordinary shares
in issue during the period.
31 December 2022
GBP
Total profit and comprehensive income
for the period (56,015)
Weighted average number of shares
in issue 1,509,234
Basic earnings per share (0.037115)
-----------------------------
Diluted weighted average number of
shares in issue 1,522,505
Diluted earnings per share - 0.036791
-----------------------------
Investments held at fair value through
7 profit or loss
31 December 2022
GBP
Cost as at inception -
Purchases during the period 1,539,035
Cost as at 31 December 2022 1,539,035
-----------------------------
Movement in fair value during the
period 260,581
Movement in fair value as at 31 December
2022 260,581
-----------------------------
Fair value at period end 1,799,616
=============================
All investments are fair valued at the period end.
The Company has committed to invest up to GBP5,500,000 in SuperSeed
II LP, of which GBP4,041,365 is unfunded as at 31 December 2022.
Trade and other receivables
8
31 December 2022
GBP
Prepayments 2,689
Prepaid investment costs 8,336
Total 11,025
------------------------
Trade and other payables
9
31 December 2022
GBP
Audit fees payable 21,000
Legal fees payable 745
Total 21,745
------------------------
Financial risk management
10
The Company's activities expose it to a variety of financial
risks including credit risk, liquidity risk, and the market risks
of interest rate risk, price risk and foreign currency risk.
The Company uses different methods to measure and manage the
various types of risk to which it is exposed. These methods are
explained below.
Credit risk
a)
Credit risk refers to the risk that the counterparty to a
financial instrument will default on its contractual obligations
that it has entered into with the Company resulting in financial
loss to the Company. At 31 December 2022, the major financial
assets which were exposed to credit risk are cash and cash
equivalents, investments (note 7) and trade and other receivables
(see note 8). The maximum exposure to credit risk is represented
by the carrying value of each financial asset recognised in
the statement of financial position. The Company has no overdue
financial assets as at the period end.
The table below shows the cash balance at the reporting date
and the Standard & Poor's credit rating for the counterparty
as at 31 January 2023.
Rating Carrying Amount
31 December 2022
Silicon Valley Bank (a
division of First Citizens
Bank) BBB+ 235,089
On 10 March, Silicon Valley Bank was placed into receivership
and all deposits held by the Company were transferred to an
account held by the Investment Manager at Barclays Bank in
order to safeguard the Company's assets. At this date its
credit rating was lowered to D.
Liquidity risk
b)
Liquidity risk is the risk that the Company will encounter
difficulty in meeting its obligations arising from financial
liabilities. At 31 December 2022 the Company had GBP235,089
in cash balances. Financial liabilities consist of trade and
other payables (see Note 9).
The following table details the Company's expected maturity
for its financial liabilities as at 31 December 2022:
Total Less than More than
31 December 3 months 12 months
2022
Financial liabilities
Trade and other payables 21,745 21,745 -
================= ================= =============
The Company's investments will be, by their nature, illiquid.
As a result the Company may not be able to liquidate quickly
any part of its investment at an amount close to fair value.
In order to meet ongoing liquidity requirements, the Company
may incur borrowings, issue new share capital or sell assets
in order to realise their value.
Market risk
c)
i) Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest
rates. The Company is exposed to interest rate risk as
it has current account balances.
The Company does not have any interest bearing liabilities
and hence considers interest rate risk, in respect of
financial liabilities to be minimal. The Company monitors
market interest rates and will place interest bearing
assets at best available rates but also taking into consideration
the counterparty's credit rating and financial position.
During the period, the interest received on current accounts
and deposit accounts was immaterial, and therefore no
sensitivity analysis has been provided.
ii) Price Risk
The Company's investments will be susceptible to market
price risk arising from the business and financial uncertainties
facing individual underlying portfolio companies. The
value of investments may fall as well as rise and consequently
the Company may not be able to return all or any of the
investment made by shareholders. To manage market price
risk, the Investment Manager will review the performance
of the underlying portfolio companies and will be in
regular contact with the management of the underlying
portfolio companies for business and operational matters.
ii) Price Risk
The table below summarises the sensitivity of the Company's
investments. It is based upon the assumption that the
investments increase or decrease by 10% with all the
other variables held constant. The Directors feel that
10% best represents the margin of price risk associated
to the activity of the Company.
2022
GBP
Effect on net assets attributable to investments
of an increase in the index 188,266
Effect on net assets attributable to investments
of an decrease in the index (188,266)
iii) Foreign currency risk
As all monetary assets and liabilities and all transactions
of the Company are denominated in its functional currency,
the Company is not exposed to significant foreign currency
risk.
Financial investments measured
at fair value
IFRS 13 requires disclosure of fair value measurements by level
of the following fair value hierarchy:
-- Level 1 - Inputs that reflect unadjusted quoted prices in
active markets for identical assets or liabilities
that the Fund has the ability to access at the
measurement date;
-- Level 2 - Inputs other than quoted prices that are observable
for the asset or liability either directly or
indirectly, including inputs in markets that are
not considered to be active; and,
-- Level 3 - Inputs for the asset or liability that are not
based on observable market data (that is, unobservable
inputs).
The Company's investments have been classified within Level
3 as these investments are valued based on unobservable inputs
and trade infrequently or not at all.
The following table presents the investments carried on the
Statement of Financial Position by level within the valuation
hierarchy as at 31 December 2022.
31 December 2022 Level Level Level Total
1 2 3
GBP GBP GBP GBP
Investments - - 1,799,616 1,799,616
There have been no transfers between levels during the period.
Due to the nature of the investments, they are always expected
to be classified under Level 3.
Note 7 shows a reconciliation of all movements in the fair value
of investments categorised within Level 3 between the beginning
and the end of the reporting period.
The Company's investment into SuperSeed II LP is measured at
the net asset value of the Company's investment at year end.
Direct investments have been valued at the price at which third
party capital has recently been raised.
SuperSeed II LP's investments are valued in accordance IPEV
valuation guidelines, including valuing investments at the price
at which third party capital has recently been raised, comparative
industry price earnings ratios discounted for marketability
and performance of the investment, and net asset valuations
for asset based investments.
A reasonably possible change in the net asset value used +/-10.0%
would result in:
- An increase in carrying value of GBP 169,202 or 8% (+10%)
- An decrease in carrying value of GBP (169,202) or -8% (-10%)
A reasonably possible change in the recent capital raising price
used +/-10.0% would result in:
- An increase in carrying value of GBP 19,024 or 1% (+10%)
- An decrease in carrying value of GBP (19,024) or -1% (-10%)
11 Share Capital
31 December 2022
Authorised: Number GBP
Ordinary Shares of no
par value Unlimited Unlimited
Issued:
Allotted and paid up Ordinary Shares of no par
value 2,080,000 2,080,000
On 24 November 100,000 warrants in the Company were issued at
no premium with an exercise price of 100p. Each warrant shall
entitle the warrantholder (VSA Capital Limited) to subscribe
in cash for one share at the exercise price. Each warrant is
exercisable at any time during the subscription period on or
prior to the expiry date, which is six months from the date
of issue.
The subscription rights shall automatically lapse and be of
no further effect if they have not been excercised by the expiry
date.
Shares issued pursuant to the exercise of a warrant will rank
in full for all dividends and other distributions declared,
made or paid after the relevant exercise date and rank pari
passu in all other respects with the shares in issue at that
date.
Ordinary shareholders are entitled to vote at the general meeting
of the Company, to receive dividends and to participate in the
results of the Company.
12 Capital risk management
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern in order
to provide returns to shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost
of capital.
Management assesses the Company's capital requirements in order
to maintain an efficient overall financing structure while avoiding
excessive leverage. This takes into account the warrants and
convertible loan note. The Company manages the capital structure
and makes adjustments to it in the light of changes in economic
conditions and the risk characteristics of the underlying assets.
In order to maintain or adjust the capital structure, the Company
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares, or sell assets to
reduce debt. As at 31 December 2022 the Company's capital structure
consists of 100% equity.
Related parties
13
Joseph Truelove, Andrew Hatton and Mads Jensen were Directors
of the Company during the period.
Joseph Truelove earned GBP18,000 in the period ended 31 December
2022, GBPnil of which was outstanding at 31 December 2022.
Andrew Hatton is an employee of the Administrator, whose services
include the provision of his directorship. During the period
ended 31 December 2022, the Company incurred GBP27,432 of administration
fees of which GBPnil was outstanding at the period end.
Mads Jensen is Managing Partner of the Investment Manager and
has waived any director fees payable to himself.
Ultimate controlling
14 party
In the opinion of the Directors the ultimate controlling party
is Mads Jensen.
Contingent liability
15
On 14 September a convertible loan note agreement was signed
with SuperSeed Ventures LLP. This is a loan facility of which
the aggregate principal amount of notes outstanding at any time
is limited to GBP1,000,000.
The notes when issued and outstanding shall rank pari passu,
equally and rateably, without discrimination or preference among
themselves and as obligations of the Company.
Until the notes are repaid by the Company or converted into
Shares, in each case in accordance with the provisions of this
Instrument, interest shall accrue and be paid on the principal
amount of the notes outstanding at the rate of SONIA plus 10%
per annum.
All outstanding notes shall automatically convert into fully
paid Shares of the class set out below at the Conversion Price
on written notice of the noteholder. The noteholder shall have
the right to serve a Conversion Notice on the Company at any
time to convert some or all of the notes outstanding into fully
paid Ordinary Shares at a price of GBP1.30 per Share.
Events after the end of the reporting
16 period
On 12 January 2023 a further 122,120 Ordinary shares were issued
by the Company as compensation for a further investment in Duel
Holdings Limited (formerly Daredevil Projects Limited) of GBP244,240
which was completed in December 2022.
On 28 February the Company sold GBP1,000,000 of its commitment
in SuperSeed II LP to the investment manager SuperSeed Ventures
LLP.
On 15 March 2023 a further 41,366 Ordinary shares were issued
by the Company as compensation for an investment in Kluster
Enterprises Limited of GBP45,503 which was completed in February
2023.
There are no further subsequent
events to note.
*END*
For more information, please contact:
SuperSeed Capital Limited +44(0)20 3405 3060
Mads Jensen, Investment Manager
VSA Capital - AQSE Corporate Adviser and Broker +44(0)20 3005 5000
Corporate Finance: Andrew Raca
Corporate Broking: Peter Mattsson, David Scriven
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END
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