TIDMBLU
RNS Number : 4403R
Blue Star Capital plc
30 June 2020
30 June 2020
Blue Star Capital plc
("Blue Star" or "the Company")
Half-yearly Results for the six months ended 31 March 2020
Chairman's Statement
I am pleased to report Blue Star's half-yearly results for the
period ended 31 March 2020.
Financials
Blue Star reported a loss for the period of GBP189,460 compared
with a loss of GBP494,543 for the six months ended 31 March 2019.
The results for the period ending 31 March 2019 included a
substantial loss relating to non-cash adjustments to the carrying
value of investments. The ongoing running costs of the business
have been maintained at a similar level to last year.
Net assets increased to GBP5,969,917 compared to GBP5,209,377 at
the Company's last financial year end of 30 September 2019 and
reflected the fund raise of GBP900,00 (before expenses) undertaken
in November 2019. This equates to a net asset value per share of
approximately 0.19 pence.
Blue Star's cash position at 31 March 2020 was GBP7,379 compared
to a balance of GBP120,828 at 30 September 2019. The Company's
working capital position is dependent on new funds being made
available to it and post the period end the Company successfully
raised GBP500,000 before expenses on 9 June 2020.
Portfolio Review
I would like to provide the following information on our
portfolio companies, inclusive of updates for the six-month period
ended 31 March 2020 and any subsequent developments of note.
SatoshiPay
Company Description
SatoshiPay provides an innovative two-way digital payments
platform with applications across a number of segments within the
global payment industry. The SatoshiPay platform is powered by the
Stellar network, which is a leading global blockchain network and
payment technology. SatoshiPay is targeting three segments within
the global payments industry, each of which represents a
substantial market opportunity:
The SatoshiPay platform has unique advantages in each of the
three markets:
-- Micro-payments represent a growing market segment. These are
transactions that can be as low as a few cents and are often
uneconomical using conventional payment technologies. Applications
include online publishing (pay per view), gaming and consumer
reward programmes. The SatoshiPay platform offers instant
end-to-end payments at a level of commission that makes payments
viable for merchants and customers. SatoshiPay has commercial
partnerships in place with online publishers such as Axel Springer
and Börsenmedien.
-- Digital wallets are a mechanism allowing consumers to make
payments using their mobile or desktop device. The Solar wallet
from SatoshiPay, powered by the Stellar Network, has more than 25k
instalments in 40 countries. It is recommended by the Stellar
Development Foundation, which coordinates the Stellar network.
-- B2B cross-border payments are the most recent market for
SatoshiPay. In November 2019, the company announced the new
SatoshiPay B2B service, using the same technical platform as the
existing products. This is the largest segment in the global
payments market and represents an exciting growth opportunity for
SatoshiPay.
Recent developments at SatoshiPay
On 28 May 2020, the Stellar Development Foundation ("SDF")
announced that it had made a strategic investment of $550,000 by
way of convertible loan notes into SatoshiPay. This investment will
be used to support the development of SatoshiPay's B2B solution for
commercial, cross-border payments and its digital wallets.
SatoshiPay was one of the first businesses to use Stellar
commercially and has, to date, processed EUR650,000 in payments
from over 200,000 accounts.
SDF is a key partner of SatoshiPay providing maintenance and
partner support for the Stellar decentralised ledger network. This
investment will enhance the already strong relationship that exists
between the two organisations. The convertible loan notes are
expected to convert at the time of SatoshiPay's next round of
funding.
SatoshiPay is currently testing its B2B payments solution and
expects to have a public beta product launch live sometime in the
fourth quarter of 2020. SatoshiPay advises that the reaction to the
product continues to be very positive with a number of potential
clients already signed for when the product goes live.
Blue Star's holding in SatoshiPay
The Company's shareholding in SatoshiPay was acquired for
GBP1,876,788 and represents 27.9 per cent, of SatoshiPay as at 30
March 2020. This investment has a carrying value of
GBP4,745,787.
Esports portfolio
The global esports market is a rapidly growing economy. More
than 200 million viewers regularly stream competitive gaming
tournaments and related content, with a broader fan-base of up to
900 million occasional viewers. In terms of revenues, the industry
exceeded US$1bn for the first time in 2019 and is forecast to reach
over US$1.8bn in 2021.
The growing professionalisation of the esport industry has been
attracting increasing investment capital into the space and Blue
Star has made investments in a portfolio of early-stage businesses
with potential to enter the top tier. In October 2019 Blue Star
announced a GBP900k investment in the esports market, comprising
six e-sport companies, each valued around GBP150k. I will discuss
each of these companies below.
Dynasty Esports PTE is a Singapore-based business addressing the
Malaysian market. Malaysia is already a rapidly growing market for
e-sport, and we believe that this will be accelerated by a
programme of government investment that is already underway, aimed
at making Malaysia a regional hub in the e-sport industry. In this
regard, we are delighted at the recent announcement from Dynasty
that it has signed a five year exclusive partnership agreement with
Malaysia eSports Federation ("MESF",) via its Kuala Lumpur based
subsidiary Dynasty eSports (M) Sdn Bhd, to provide its esports
Portal Management ("EPM") platform to enable effective management
and control of the esports ecosystem within Malaysia.
Dynasty's EPM platform will be fully white-labelled, customised
and branded for MESF and will bring together the main elements of
the esports ecosystem being the players, the organisations and the
tournaments, under one single integrated digital platform with the
intention of providing a shared national and global view of the
esports industry.
Under the Terms of the partnership agreement, MESF will actively
endorse, promote and drive all esports related traffic in Malaysia
to the EPM platform. MESF will also regulate and ensure that all
domestic esports events, leagues or tournaments in Malaysia will be
exclusively hosted on the MESF platform as the single destination
site for esports. Tournaments and leagues attempting to operate
outside of the MESF Platform will not be licensed or authorised by
MESF which is expected to have the effect of any such event being
blocked.
Dynasty will generate income throughout the term of the
partnership via a matrix of revenue streams Including management
fees, advertising, sponsorship, exclusive eSports broadcast rights
(both nationally and internationally), and other revenue share
arrangements with MESF.
Blue Star's shareholding in Dynasty is 13.7%.
Guild Esports plc ("Guild") is a London-based esports team
operator. On 25 June 2020, Guild announced its global launch and
association with David Beckham, an investor in Guild. Guild is
developing a talent pipeline in the UK, based on the traditional
academy model, with the intention that the most able players are
coached and nurtured by industry leaders in order to attain the
skillset required to compete professionally. A roster of scouts
will continually find and sign the best young talent.
Guild has established a management team of esports veterans with
experience as professional players, coaches and esports media.
Guild Executive Chairman, Carleton Curtis, is well-known in the
industry and architect of the Overwatch League and Call Of Duty
Leagues. Prior to joining Guild, he held senior esports roles at
Activision Blizzard and Red Bull. His expertise complements David
Beckham's position in the world of mainstream sports to create a
unique esports proposition.
Guild intends to develop into various esports disciplines over
the course of the 2020/2021 season with its first team making its
debut in autumn 2020 expecting to compete in the most popular
titles including Rocket League, EA Sports FIFA, and Fortnite. The
Company's ambition is to build a culture of excellence around its
brand and digital presence.
At the same time and connected to the launch, the Company
announced that it was making a further investment of GBP480,000
into the Guild in order to retain its shareholding at 11.7 per
cent. The investment has been made at a price of 6p per share,
which compares to the Company's initial investment at 1p per
share.
Googly is an esports tournament operator based in India. This is
a large and fast-growing esports market, with prize money more than
doubling each year in 2017, 2018 and 2019 (data from AFK Gaming).
Googly is actively engaged in conversations regarding the
development of its business and I am hopeful we will have news
later this year. Blue Star's shareholding in Googly is just over
11%.
The Drops is an esport team operator, based in Canada, which
will field teams in Rocket League, Fortnite, FIFA, and
CounterStrike Global Offensive. In February 2020 The Drops
announced that it had exchanged letters of intent for its entire
share capital to be acquired by Fibersources Corporation, an entity
listed on the TSX Venture Exchange, in an all-share deal, allowing
The Drops to achieve market listed status. Furthermore, The Drops
announced that it intended to cancel some founder shares, which
would increase Blue Star's holding from 13.6% to 18.6%. We are
awaiting further news on this transaction which has been impacted
by recent events connected to Covid 19.
Diemens Esports , formerly The Cubs, operates in the Australian
market. In February 2020 Diemens announced its intention to merge
with Critical Hit Entertainment PTY Ltd (CHE) and should the
transaction proceed, Blue Star's stake in the combined entity will
be 6.6%. The board of Blue Star is still awaiting news regarding
the proposed transaction.
The Dibs is an esports team operator based in Los Angeles that
will field an all-female teams in major e-sport tournaments. This
business is at an early stage, with the potential to grow strongly.
Blue Star holds a US$185k convertible loan note, which will
represent a 13.7% holding in The Dibs Esport Corp upon
conversion.
Sthaler Limited ("Sthaler")
Company Description
In June 2015 the Company invested GBP50,000 in Sthaler Limited,
an early stage identity and payments technology business which
enables a consumer to identify themselves and pay using just their
finger at retail points of sale.
Sthaler was founded in 2012 when it was introduced as a
biometric identity authentication and payment platform into the UK
live entertainment industry with British Telecom and
Bancorp/Elavon. The system, named Fingopay, uses a biometric called
VeinID which instantly recognises an individual through the unique
pattern of veins inside each finger. In same year, the Company also
entered into a long-term partnership with Hitachi for exclusive use
of Fingopay across many areas of the globe.
During the period of 2016-2019 the Company conducted several
successful authentication security trials with Hitachi, Visa,
Mastercard, Worldpay and Ernst and Young. In 2019 Fingopay was
deployed in Denmark with Nets and Dankort, the Danish national
debit card scheme. In 2020, Fingopay was piloted successfully by
the UK's Open Banking Authority with the Financial Conduct
Authority to introduce a new fraud free bank-to-bank account
payment scheme.
The largest market the company is currently targeting is Egypt,
with a population of 100 million. Fingopay is now being piloted in
Egypt by the banking industry to authenticate payment transactions
and by the Ministry of Supply to authenticate government food
subsidies. The Egyptian approach came from global television
coverage of Fingopay including CNBC, BBC, Al Jazeera and Fox, to
name just a few. In addition, Fingopay has won the following awards
this year: -- The Fintech Power 50 - Most influential, innovative
and powerful figures in the Global Fintech industry 2020 -- Card
& Payment Industry Awards - Industry Innovation of the Year
2020 -- Fast Company - Top 50 World's most Innovative Companies
2020.
Blue Star's Shareholding in Sthaler
The Company's shareholding in Sthaler is valued on the basis of
the last fundraise at approximately GBP350,000.
Outlook
The recent esports announcements relating to the Guild and
Dynasty have helped to illustrate the potential upside from our
esports investment portfolio and the Board remains highly confident
that this new area of investment offers the potential for a
significant improvement in net asset value. Our long-term
shareholdings in payment companies SatoshiPay and Sthaler continue
to progress and while taking time to mature provide another
exciting area of investment. Overall, we are pleased with progress
over the period and look to the future with confidence.
Derek Lew
Non-Executive Chairman
30 June 2020
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Blue Star Capital plc
Tony Fabrizi, Chief Executive +44 777 178 2434
Cairn Financial Advisers LLP
Nomad & Broker
Jo Turner/Liam Murray +44 20 7213 0880
Statement of Comprehensive Income
for the six months ended 31 March 2020
Unaudited Audited
Year ended
Six months ended 31 March 30 September
-------------
2020 2019 2019
Note GBP GBP GBP
Revenue - - -
Loss arising from investments
held at fair value through
profit or loss: - (288,496) (399,748)
Other fair value losses (8,414) (36,757) -
(325,253) (399,748)
Administrative expenses (181,094) (169,320) (287,662)
------------- ------------ -------------
Operating loss (189,508) (494,573) (687,410)
Finance income 48 30 2,446
Loss before and after
taxation and total comprehensive
income for the period (189,460) (494,543) (684,964)
------------- ------------ -------------
Loss per ordinary share:
Basic (loss)/earnings
per share 3 (0.01p) (0.03p) (0.03p)
Diluted (loss)/earnings
per share 3 (0.01p) (0.03p) (0.03p)
------------- ------------ -------------
The loss for the period was derived from continuing operations
and is attributable to equity shareholders.
Statement of Financial Position
as at 31 March 2020
Unaudited Audited
Six months ended 31 March Year ended 30 September
--------------------------- -----------------------
2020 2019 2019
Note GBP GBP GBP
Non-current assets
Investments 5,820,215 5,173,757 5,101,587
5,820,215 5,173,757 5,101,587
------------- ------------ -----------------------
Current assets
Trade and other receivables 166,103 8,329 10,275
Cash and cash equivalents 7,379 63,605 120,828
173,482 71,934 131,103
------------- ------------ -----------------------
Total assets 5,993,697 5,245,691 5,232,690
------------- ------------ -----------------------
Current liabilities
Trade and other payables 23,780 95,893 23,313
Total current liabilities 23,780 95,893 23,313
------------- ------------ -----------------------
Net assets 5,969,917 5,149,798 5,209,377
------------- ------------ -----------------------
Shareholders' equity
Share capital 4 3,092,584 1,892,584 2,142,584
Share premium account 4 8,852,724 8,852,724 8,852,724
Other reserves 64,190 64,190 64,190
Retained earnings (6,039,581) (5,659,700) (5,850,121)
5,969,917 5,149,798 5,209,377
------------- ------------ -----------------------
Statement of changes in equity
as at 31 March 2020
Other reserves Retained
Share capital Share premium earnings Total
-------------- -------------- -------------- ------------------ ---------
GBP GBP GBP GBP GBP
Six months ended
31 March 2020
At 1 October 2019 2,142,584 8,852,724 64,190 (5,850,121) 5,209,377
Loss for the period
and total comprehensive
income - - - (189,460) (189,460)
Shares issued in
period 950,000 - - - 950,000
At 31 March 2020 3,092,584 8,852,724 64,190 (6,039,581) 5,969,917
============== ============== ============== ================== =========
Six months ended
31 March 2019
At 1 October 2018 1,881,473 8,679,075 64,190 (5,165,157) 5,459,581
Loss for the period
and total comprehensive
income - - - (494,543) (494,543)
Shares issued in
period 11,111 188,889 - - 200,000
Share issue costs - (15,240) - - (15,240)
At 31 March 2019 1,892,584 8,852,724 64,190 (5,659,700) 5,149,798
============== ============== ============== ================== =========
Year ended 30 September
2019
At 1 October 2018 1,881,473 8,679,075 64,190 (5,165,157) 5,459,581
Loss for the year
and total comprehensive
income - - - (684,964) (684,964)
Shares issued in
year 261,111 188,889 - - 450,000
Share issue costs - (15,240) - - (15,240)
At 30 September
2019 2,142,584 8,852,724 64,190 (5,850,121) 5,209,377
============== ============== ============== ================== =========
Statement of cash flows
for the six months ended 31 March 2020
Unaudited Audited
Year ended
Six months ended 31 March 30 September
--------------------------- -------------
2020 2019 2019
GBP GBP GBP
Operating activities
Loss for the period (189,460) (494,543) (684,964)
Adjustments for:
Finance income (48) (30) (2,446)
Fair value loss 8,414 325,253 391,748
Working capital adjustments
(Increase)decrease in trade
and other receivables (155,828) 57,750 265,871
Increase/(decrease) in trade
and other payables 467 (41,031) (113,612)
------------- ------------ -------------
Net cash used in operating
activities (336,455) (152,601) (143,343)
------------- ------------ -------------
Investing activities
Increase in investments (727,042) - (204,451)
Interest received 48 30 2,446
------------- ------------ -------------
Net cash generated (used
in)/from investing activities (726,994) 30 (202,005)
------------- ------------ -------------
Financing activities
Proceeds from issue of equity
shares 950,000 200,000 450,000
Share issue costs - (15,240) (15,240)
------------- ------------ -------------
Net cash generated by financing
activities 950,000 184,760 434,760
------------- ------------ -------------
Net (decrease)/ increase
in cash and cash equivalents (113,449) 32,189 89,412
Cash and cash equivalents
at beginning of the period 120,828 31,416 31,416
------------- ------------ -------------
Cash and cash equivalents
at end of the period 7,379 63,605 120,828
------------- ------------ -------------
Notes to the Interim Financial Statements
for the six months ended 31 March 2020
1. Basis of preparation
The principal accounting policies used for preparing the Interim
Accounts are those the Company expects to apply in its financial
statements for the year ending 30 September 2020 and are unchanged
from those disclosed in the Company's Report and Financial
Statements for the year ending 30 September 2019.
The financial information for the six months ended 31 March 2020
and for the six months ended 31 March 2019 have neither been
audited nor reviewed by the Company's auditors.
2. Critical accounting estimates and judgements
The Company makes certain estimates and assumptions regarding
the future. Estimates and judgements are continually evaluated
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
Fair value of financial instruments:
The Company holds investments that have been designated at fair
value through profit or loss on initial recognition. The Company
determines the fair value of these financial instruments that are
not quoted, using valuation techniques such as the price of the
most recent transaction and discounted cash flow analysis. It is
important to recognise that the derived fair value estimates cannot
always be substantiated by comparison with independent markets and,
in many cases, may not be capable of being realised
immediately.
In certain circumstances, where fair value cannot be readily
established, the Company is required to make judgements over
carrying value impairment and evaluate the size of any impairment
required.
3. Loss per ordinary share
The calculation of a basic loss per share is based on the loss
for the period attributable to equity holders of the Company and on
the weighted average number of shares in issue during the
period.
4. Share capital
On 18 October 2019, the Company announced that it was raising
GBP450,000 from a placing and that it was holding an Extraordinary
General meeting on 6(th) November to approve a second placing to
raise a further GBP450,000 at a price of 0.10p per share. The funds
raised were invested into a portfolio of six Esports companies.
On 17 February 2020, the Company allotted 50,000,000 new
ordinary shares of 0.1p each pursuant to an exercise of
warrants.
On 17 April 2020, the Company raised GBP100,000 at a price of
0.10p per share by issuing 100 million shares. The company invested
approximately GBP57,000 into Leaf Mobile Inc which subsequently
listed on the TSX Venture Exchange.
On 4 May, 2020, the Company raised GBP35,000 at a price of 0.12p
per share and invested GBP16,000 in the Guild to maintain its
shareholding at 11.7%.
On 9 June 2020, the Company raised 500,000 through the issue of
416,666.666 new ordinary shares at a price of 0.12p. The places
were also granted warrants to subscribe on a one for one basis at a
price of 0.175p and had a one year life, terminating on 8 June
2021.
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
IR SEUFWUESSEFM
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