TIDMBLU

RNS Number : 4573D

Blue Star Capital plc

29 June 2021

29 June 2021

Blue Star Capital plc

("Blue Star" or "the Company")

Half-yearly Results for the six months ended 31 March 2021

Chief Executive's Statement

I am pleased to report Blue Star's half-yearly results for the period ended 31 March 2021.

Financials

Blue Star reported a loss for the period of GBP494,543 compared with a loss of GBP189,460 for the six months ended 31 March 2020, with the increase mainly accounted for by adverse foreign exchange movements on the investment portfolio.

Net assets increased to GBP8,927,019 compared to GBP5,969,917 for the six months ended 31 March 2020. Subsequent to the period end, portfolio company Dynasty Esports PTE successfully completed a financing round resulting in a post-money valuation of USD$50 million in April 2021. Having exercised our antidilution rights to maintain our holding at 13 per cent, Blue Star's investment, based on this valuation, increased from approximately GBP1,300,000 to approximately GBP4,600,000 which is expected to be reflected in the Company's full year net assets.

Blue Star's cash position at 31 March 2021 was GBP59,491 compared to a balance of GBP7,379 at 31 March 2020. Following the period end, in April 2021, the Company raised approximately GBP1.02 million by way of a placing of new shares and subsequently made a further investment approximately GBP466,000 into Dynasty eSports Pte and GBP200,000 into the NFT Investments plc.

Portfolio Highlights

Blue Star Capital provides exposure to a portfolio of primarily unquoted companies in high growth sectors. Our Portfolio consists of 11 companies, eight with a focus on esports or gaming and three blockchains/payments. We provide the following portfolio company highlights, inclusive of updates for the six-month period ended 31 March 2021 and any subsequent developments.

Esports

The global esports market is a rapidly growing economy. An audience of nearly 500 million viewers regularly stream competitive gaming tournaments and related content. In terms of revenues, the industry exceeded US$1bn for the first time in 2019 and is forecast to reach over US$1.5bn by 2023, from sources including sponsorship, media rights, merchandise and tickets.

The growing professionalisation of the esports industry has been attracting increasing investment capital into the space and Blue Star has made investments in a portfolio of exciting early-stage businesses.

Dynasty Esports PTE

Since June 2020, Dynasty has signed a number of Software as a Service (SaaS) agreements for the provision of its platform, notably to the largest telecoms carrier in the Middle East to launch a branded Dynasty platform in a number of the region's key esports and gaming countries.

With Blue Star's participation, in April 2021, Dynasty raised US $5 million on a post-money valuation of US $50 million. This funding will allow Dynasty to continue to develop its Esports Platform Management platform, with the intention to focus on enhanced player personalisation, games publishing, rights management and the use of Al to support automated experience in coaching and media creation.

Following the successful fundraising in April 2021, Dynasty further announced its intention to seek an IPO on the Australian Stock Exchange (ASX) within 12 months. Additionally, Dynasty reported two key hires to the senior leadership team, David Baxby as Dynasty's Chairman and Daniel Horan as Dynasty's Chief Customer Officer. David has over 25 years of service in executive positions and brings over 10 years of public company non-executive directorship experience, including as CEO of Asia Pacific Region for Virgin Group and co-CEO of Virgin Group, the $6 billion family office with responsibility for all of Virgin Group's global investments. Daniel has more than 20 years of experience performing in key executive positions for leading telecommunications (and related) companies, including as Chief Commercial Officer for Vodafone Qatar and Chief Marketing Officer for Axis Indonesia (formerly a Saudi Telecom Company). During the last 10 years, David was involved in bringing a number of platform-based commercial partnerships to life for the telcos he has represented, including Spotify, NBA, Disney, Netflix and Google. Daniel brings working knowledge of how large telecommunications companies operate and has experience creating and building successful platform ecosystem partnerships.

Guild Esports plc

Since its admission to trading on the standard segment of the London Stock Exchange in October 2020, Guild has achieved a number of milestones, including attracting major sponsorship deals including Subway, a European fintech Company, Hyper X, a gaming peripheral brand, and Samsung. Guild has launched merchandising opportunities including in-game decals and a clothing range that has a social following of over 10.5 million.

Guild has successfully built teams comprised of top-ranked players to compete in major tournaments for Fortnite (ranked 1 in Europe), Valorant (ranked 5 in Europe), Rocket League (ranked 4 in Europe) and FIFA (ranked 7 in Europe).

Guild achieved success with two recent titles; in March 2021, Guild achieved its first trophy win in the European Grand finals of the Fortnite Champion Series. This was followed by a second trophy win at the EU Spring Regional Rocket League Champion Series in April 2021.

Blockchain/Payments

SatoshiPay

In the period under review, SatoshiPay entered into an agreement with German Bankhaus von der Heydt in December 2020 to become the first user of the bank's fully compliant Euro-backed stablecoin ("EURB"), which will be integrated with DTransfer. The agreement provides SatoshiPay with a stable on- and off-ramp for EURB transactions with instant EUR-based bank transfers within the single Europe payments area.

More recently, SatoshiPay on a pre- money valuation of GBP19m, announced a research and development grant to assist it with building Pendulum, a suite of open, decentralised protocols on which smart contracts can be developed and executed. It is the intention for Pendulum to act as a second layer on top of Stellar, with additional bridges to two of the most popular smart contract platforms, Ethereum and Polkadot.

Sthaler Limited

In July 2021, Sthaler announced that, FinGo, the fintech behind the world's first biometric identity authentication and payments platform, had entered a strategic partnership with Mastercard to provide it with access to the white labelled Mastercard Payment Gateway Services which it considers will enable FinGo to grow its footprint internationally.

Sthaler reported that with digital payments on the rise and an increased focus on security, FinGo's biometric authentication will make payments simpler, quicker and more secure.

Leaf Mobile ("Leaf")

LEAF completed the acquisition of East Side Games Inc. for approximately CAD$159 million in February 2021 and graduated from the TSX Venture Exchange to commence trading on the Toronto Stock Exchange.

In April 2021, Leaf announced revenue of $80.5M in for the year ended 31 December 2020, representing a 116

per cent. increase over 2019 revenue of   CAD$37.2 million. 

On 8 February 2021, Blue Star's then CEO, Tony Fabrizi, announced his retirement. We would like to thank Tony for his 10 years of leadership at Blue Star, during which time the portfolio of companies, including those discussed above, were acquired. With Tony's departure, Brian Rowbotham, a capital markets veteran with over 30 years of experience, joined the Blue Star board of directors. Brian is a Fellow of the Institute of Chartered Accountants in England and Wales, has held Board positions in stockbroking and fund management and has worked on a number of successful flotations, acquisitions and disposals. He has also held non-executive directorships in a number of quoted and unquoted companies.

During the period, the board restructured directors' compensation to better align the interests of each director with Blue Star's shareholders. In this regard, aggregate salaries have been reduced and Blue Star intends to put in place a management incentive scheme, which it did not previously have, with time and performance criteria.

Outlook

The recent esports announcements relating to Guild and Dynasty have helped to illustrate the upside from our esports investment portfolio and the Board remains highly confident that this 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, in particular, the further advances made since the period end, and look to the future with confidence.

Derek Lew

Chief Executive

 
Blue Star Capital plc 
  Derek Lew, Chief Executive             +44 20 3608 3019 
 Cairn Financial Advisers LLP 
  Nominated Adviser 
  Jo Turner / Liam Murray 
                                        +44 20 7213 0880 
  Stanford Capital Partners Limited 
  Broker 
  Patrick Claridge / John Howes / Bob 
  Pountney                               +44 20 3815 8880 
 

Statement of Comprehensive Income

for the six months ended 31 March 2021

 
                                                   Unaudited                   Audited 
                                                                            Year ended 
                                           Six months ended 31 March      30 September 
                                                                         ------------- 
                                                   2021          2020             2020 
                                    Note            GBP           GBP              GBP 
 
Revenue                                               -             -                - 
Loss arising from investments 
 held at fair value through 
 profit or loss:                               (19,684)             -        2,056,698 
Other fair value losses                               -       (8,414)                - 
 
                                               (19,684)       (8,414)        2,056,698 
Foreign exchange movements                    (318,991)       (8,849)          135,241 
Administrative expenses                       (159,379)     (172,245)        (484,400) 
                                          -------------  ------------   -------------- 
 
Operating loss                                (498,054)     (189,508)        1,707,539 
Finance income                                    3,511            48            6,616 
 
Loss before and after 
 taxation and total comprehensive 
 income for the period                        (494,543)     (189,460)        1,714,155 
                                          -------------  ------------   -------------- 
 
Loss per ordinary share: 
Basic (loss)/earnings 
 per share                           3          (0.01p)       (0.01p)            0.05p 
Diluted (loss)/earnings 
 per share                           3          (0.01p)       (0.01p)            0.05p 
                                          -------------  ------------   -------------- 
 
 

The loss for the period was derived from continuing operations and is attributable to equity shareholders.

Statement of Financial Position

as at 31 March 2021

 
                                                        Unaudited                                      Audited 
                                                                                                    Year ended 
                                                Six months ended 31 March                         30 September 
                                                                                       ----------------------- 
                                                         2021                    2020                     2020 
                               Note                       GBP                     GBP                      GBP 
Non-current assets 
Investments                                         8,740,719               5,820,215                9,063,432 
Convertible loan note                                 143,725                       -                  156,181 
                                     ------------------------   ---------------------  ----------------------- 
                                                    8,884,444               5,820,215                9,219,613 
Current assets 
 Trade and other receivables                           18,813                 166,103                    2,668 
Cash and cash equivalents                              59,491                   7,379                  132,167 
                                     ------------------------   ---------------------  ----------------------- 
                                                       78,304                 173,482                  134,835 
Total assets                                        8,962,748               5,993,697                9,354,448 
Current liabilities 
 Trade and other payables                              35,729                  23,780                   27,886 
                                     ------------------------   ---------------------  ----------------------- 
Total current liabilities                              35,729                  23,780                   27,886 
                                     ------------------------   ---------------------  ----------------------- 
Net assets                                          8,927,019               5,969,917                9,326,562 
Shareholders' equity 
 Share capital                    4                 4,228,251               3,092,584                4,133,251 
Share premium account            4                  9,074,957               8,852,724                9,074,957 
Other reserves                                         96,290                  64,190                  143,210 
Retained earnings                                 (4,472,479)             (6,039,581)              (4,024,856) 
                                     ------------------------   ---------------------  ----------------------- 
                                                    8,927,019               5,969,917                9,326,562 
 
 

Statement of changes in equity as at 31 March 2021

 
                                   Share             Share          Other           Retained 
                                 capital           premium       reserves           earnings            Total 
                                     GBP               GBP            GBP                GBP              GBP 
  Six months ended 
31 March 2021 
 At 1 October 2020             4,133,251         9,074,957        143,210        (4,024,856)        9,326,562 
Loss for the period 
 and total comprehensive 
 income                                -                 -              -          (494,543)        (494,543) 
Shares issued in 
 period                           95,000                 -              -                  -           95,000 
Exercise of warrants                   -                 -       (29,716)             29,716                - 
Lapse of warrants                      -                 -       (17,204)             17,204                - 
                           -------------  ----------------  -------------  -----------------  --------------- 
At 31 March 2021               4,228,251         9,074,957         96,290        (4,472,479)        8,927,019 
 
 
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 
 
 
Year ended 
30 September 2020 
At 1 October 2019          2,142,584              8,852,724               64,190  (5,850,121)          5,209,377 
Profit for the year 
 and total 
comprehensive income               -                       -                   -    1,714,155          1,714,155 
Shares issued in 
 year                      1,990,667                277,833                    -            -          2,268,500 
Share issue costs                  -                (55,600)                   -            -            (55,600) 
Lapse of warrants                  -                       -           (64,190)        64,190 
Exercise of warrants               -                       -           (46,920)        46,920                   - 
Share based payment                -                       -            190,130             -            190,130 
At 30 September 
 2020                      4,133,251         9,074,957          143,210 (4,024,856)               9,326,562 
 
 

Statement of cash flows

for the six months ended 31 March 2021

 
 
 
                                            Unaudited                 Audited 
                                                                   Year ended 
                                    Six months ended 31 March    30 September 
                                   ---------------------------  ------------- 
 
                                            2021          2020           2020 
                                             GBP           GBP            GBP 
Operating activities 
(Loss)/profit for the period           (494,543)     (189,460)      1,714,155 
Adjustments for: 
Finance income                           (3,511)          (48)        (6,616) 
Fair value losses/(gains)                 19,684         8,414    (2,056,698) 
Foreign exchange                         315,486             -      (134,636) 
Share based payment net 
 charge                                        -             -        190,130 
Working capital adjustments 
(Increase)/decrease in trade 
 and other receivables                  (16,145)     (155,828)          7,003 
Increase/(decrease) in trade 
 and other payables                        7,842           467          4,575 
                                   -------------  ------------  ------------- 
 
Net cash used in operating 
 activities                            (171,187)     (336,455)      (282,087) 
                                   -------------  ------------  ------------- 
 
Investing activities 
Increase in investments                        -     (727,042)    (1,769,909) 
Purchase of convertible 
 loan notes                                    -                    (156,181) 
Interest received                          3,511            48          6,616 
                                   -------------  ------------  ------------- 
Net cash generated from/ 
 (used in) investing activities            3,511     (726,994)    (1,919,474) 
                                   -------------  ------------  ------------- 
 
Financing activities 
Proceeds from issue of equity 
 shares                                   95,000       950,000      2,268,500 
Share issue costs                              -             -       (55,600) 
                                   -------------  ------------  ------------- 
Net cash generated by financing 
 activities                               95,000       950,000      2,212,900 
                                   -------------  ------------  ------------- 
 
 
 
Net (decrease)/ increase 
 in cash and cash equivalents           (72,676)     (113,449)         11,339 
Cash and cash equivalents 
 at beginning of the period              132,167       120,828        120,828 
                                   -------------  ------------  ------------- 
 
Cash and cash equivalents 
 at end of the period                     59,491         7,379        132,167 
                                   -------------  ------------  ------------- 
 

Notes to the Interim Financial Statements for the six months ended 31 March 2021

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 2021 and are unchanged from those disclosed in the Company's Report and Financial Statements for the year ending 30 September 2020.

The financial information for the six months ended 31 March 2021 and for the six months ended 31 March 2020 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, contained in the IPEVC guidelines. These techniques are significantly affected by certain key assumptions. Other valuation methodologies such as discounted cash flow analysis assess estimates of future cash flows and it is important to recognise that in that regard, 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 9 November 2020, 95,000,000 new ordinary shares were issued at a price of 0.1p per share from the exercise of 95,000,000 warrants. The exercise has raised GBP95,000.

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END

IR SELSMUEFSELM

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June 29, 2021 02:45 ET (06:45 GMT)

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