TIDMFFWD
RNS Number : 9177T
FastForward Innovations Limited
06 July 2018
6(th) July 2018
FastForward Innovations Limited
("FastForward" or the "Company")
RESULTS FOR THE YEARED 31(ST) MARCH 2018
FastForward Innovations is pleased to announce its audited
results for the year ended 31(st) March 2018.
KEY POINTS
- Net assets at 31(st) March 2018 of GBP13,534,000 (2017: net assets of GBP10,101,000).
- NAV per Share increase from 7.60p to 10.18p.
- The Company acquired three investments in the year, including
a significant investment in a Canadian medical Cannabis business,
and successfully disposed of this investment post year end for a
gain of nearly 500%. Further details of these investments are set
out at in the Report of the Chief Executive Officer.
(-) Vistra Fund Services (Guernsey) Limited were appointed
Company Secretary on 8(th) December 2017.
- Expanded the board with the appointment of Ed McDermott on 12(th) February 2018.
- Brought in a significant and strategic investor with Peter
Saladino becoming the equal largest shareholder of FFWD with 9.37%
acquired at 17.6p. on 7(th) March 2018.
- The Company became an Authorised Closed-ended Investment Scheme on 3(rd) May 2018.
Maximizing shareholder value and creating liquidity events is a
task which can take a significant period of time to achieve. All of
our investee companies are private start-ups which do not or, for
commercial reasons cannot, communicate regularly and publicly with
the market and our shareholders which can be frustrating. However
we endeavor to release updates wherever possible on our portfolio
assets. Our investing policy allied to our broad range of contacts
and expertise and fleetness of foot enable us to move quickly when
we see an opportunity.
The 2018 Annual Financial Report & Accounts will be
available shortly on the Company's website: www.fstfwd.co. Copies
can be obtained in hard copy form free of charge, from 11 New
Street, St Peter Port, Guernsey, GY1 2PF and are being posted to
Shareholders.
For further information please visit www.fstfwd.co or
contact:
FastForward Innovations Limited info@fstfwd.co
Sue Saunders/ Ian Burns
Beaumont Cornish Limited (Nomad) Tel: +44 (0) 207 628 3396
James Biddle / Roland Cornish
Optiva Securities Limited (Broker) Tel: +44 (0) 203 411 1881
Jeremy King
------------------------------------------------------------
CAUTIONARY STATEMENT
The AIM Market of London Stock Exchange plc does not accept
responsibility for the adequacy or accuracy of this release. No
stock exchange, securities commission or other regulatory authority
has approved or disapproved the information contained herein. All
statements, other than statements of historical fact, in this news
release are forward-looking statements that involve various risks
and uncertainties, including, without limitation, statements
regarding potential values, the future plans and objectives of
FastForward Innovations Ltd. There can be no assurance that such
statements will prove to be accurate, achievable or recognizable in
the near term.
Actual results and future events could differ materially from
those anticipated in such statements. These and all subsequent
written and oral forward-looking statements are based on the
estimates and opinions of management on the dates they are made and
are expressly qualified in their entirety by this notice.
FastForward Innovations assumes no obligation to update
forward-looking statements should circumstances or management's
estimates or opinions change.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014
Extracts of the 2018 Annual Financial Report & Accounts are
set out below:
Chairman's Statement
I am pleased to present the audited annual report and financial
statements of FastForward Innovations Limited (the "Company" or
"FastForward") for the year ended 31 March 2018.
I wrote in December 2017 of my confidence that our shareholders
would see real value creation during the rest of the financial year
and my expectations have been realised. In particular Nuuvera, our
largest mark to market investment, was listed and quickly acquired
by Aphria Inc. creating a significant gain for Fast Forward which
has been realised subsequent to the current year end. Nuuvera is a
typical example of the types of deal we are constantly reviewing in
a nascent sector which has the potential to disrupt the market
norms. Companies capable of disrupting existing market places
remain our focus and we are fortunate to have regular deal flow
from the highest quality sources.
Also as mentioned at the half year, your board listened
carefully to shareholders who indicated concerns over liquidity in
our share price. We were able to use a portion of our cash reserves
to buy back shares which not only provided exit liquidity to those
wanting realise gains on shares held but also enabled us to enhance
future returns for our remaining shareholders. Your board has
resolved to cease the buyback programme both in response to
dialogue with shareholders, a change in market sentiment and our
excitement at the quality of potential deals in the pipeline some
of which have been completed and announced since the year end.
It was a pleasure to welcome Ed McDermott to our board of
directors. With over 10 years' experience in the management,
financing and development of small companies he has broad
experience in a number of sectors. Ed brings his experience of the
London listed environment and his knowledge of smaller companies
and has already "hit the ground running" by representing Fast
Forward at events such as my Master Investor show. Ed has been
regularly liaising with our investee companies and continues to
assist the board with business development. This year we also
clarified our regulatory status by becoming authorised as a Fund by
the Guernsey Financial Services Commission. While regulation adds a
layer of complexity to our days to day operation, it adds to
shareholder confidence that our activity is well controlled and
operated. Additionally we believe the company is now more
attractive to institutional investors.
I have mentioned before that FastForward is, in some ways, a
frustrating company in that while your board is working every day
to enhance the value of current investments and to evaluate
potential new investments, this work must be carried out
confidentially particularly in the new regulatory environment. This
can frustrate shareholders and commentators, but be assured that,
as your Chairman, I am always pushing my colleagues to ensure that
all pertinent information we are able to release is published
promptly. As a number of our portfolio assets mature, I believe the
delivery of news from our investee companies will be more regular
and of a more material nature.
FastForward is an exciting company working in a dynamic
environment across a number of significant growth sectors, we feel
very fortunate to have this opportunity. I and my colleague
directors remain confident that we can continue to grow and develop
FastForward by sourcing and developing deals which will continue to
maximise returns for shareholders.
Results
The net assets of the Company at 31 March 2018 were
GBP13,534,000 (2017: GBP10,101,000), equal to net assets of 10.18p
per Ordinary Share (2017: 7.60p per Ordinary Share).
Jim Mellon
5 July 2018
Report of the Chief Executive Officer
Introduction
It is truly a pleasure to make my report of the Chief Executive
Officer to shareholders.
Strategy
I have continued our strategy to invest in visionary
entrepreneurs developing innovative technologies that solve
problems in their industries or create new markets. As I have
highlighted previously, this period has been characterized by
efforts to crystallize value for our shareholders and where
appropriate to act nimbly to generate liquidity for our
company.
Performance and valuation
The Company's basic and diluted Net Asset Value ("NAV") per
share stands at 10.18p per share compared to 7.60p at 31 March
2017.
Our share price moved from 8.62p per share at 31 March 2017 to
18.35p at 31 March 2018, we have consistently traded at a premium
to NAV which in my view reflects that our shareholders understand
the potential locked up in the Company.
Portfolio
The table below lists the Company's holdings at the end of March
2018. It details the stake that those positions represent in the
investee companies.
Number
of shares
held at Valuation
Country 31 March at 31 March
Holding Share Class Category of incorporation 2018 2018
('000)
Fralis LLC (Leap
Gaming) Units Gaming Nevis 970 2,771
--------------------- -------------------- ------------- ------------------- ----------- ------------------------
Intensity
Therapeutics, Biotech/
Inc Series A Preferred Healthcare USA 250,000 799
--------------------- -------------------- ------------- ------------------- ----------- ------------------------
Biotech/
Aphria Common Healthcare Canada 1,063,800 6,728
--------------------- -------------------- ------------- ------------------- ----------- ------------------------
The Diabetic
Boot Company Biotech/
Limited Ordinary Healthcare England 25,978 -
--------------------- -------------------- ------------- ------------------- ----------- ------------------------
Blockchain
Factom, Inc Series Seed Tech USA 400,000 507
--------------------- -------------------- ------------- ------------------- ----------- ------------------------
Pref Series
Vemo Education, Seed-1 Pref
Inc Series Seed-2 Edtech USA 3,527,059 256
--------------------- -------------------- ------------- ------------------- ----------- ------------------------
Series Seed Media and
Yooya Media Preferred Content BVI 27,255 1,349
--------------------- -------------------- ------------- ------------------- ----------- ------------------------
Vested Finance, Series Seed-1
Inc Preferred Edtech USA 3,288,436 -
--------------------- -------------------- ------------- ------------------- ----------- ------------------------
Total investments
value 12,410
Cash, prepayments and net accruals 1,124
Net asset value 13,534
========================
Investee Companies
Intensity Therapeutics, Inc
Intensity Therapeutics was established on the understanding that
solid tumour cancers consist of well-defined visible growths and
unseen micro-metastases. Cancer is thus both a regional and a
systemic disease - each component has different physical
properties. To have an effective treatment one must destroy (or
remove) both the existing large observable tumours as well as all
the unseen cell-based micro metastases (which can be anywhere in
the body).
Intensity's new approach treats both the macro and the micro
aspects of the disease. When injected directly into tumours (dose
locally) its products have high tumour dispersion and cell
penetration properties. These injected compounds directly kill the
tumour cells. The local cell death results in the creation of
antigenic sites that stimulate the adaptive immune system (act
globally). The immune response helps to destroy or regress the
injected tumour and eliminates secondary tumours and micro
metastases as well. Using its DfuseRxSM platform technology,
Intensity can create novel cell penetrating formulations of proven
anti-cancer agents for a given cancer type. In mice, Intensity's
products can completely regress (CR) large tumours and eliminate
small metastases. Animals that had a CR became fully resistant to
re-inoculation of the same cancer throughout their lives. In
addition, as the drugs remain in the tumours and doses are low,
systemic toxicities can be avoided.
On February 27th Intensity reported that following intratumoral
drug injections into the superficial lesions of six patients with
either ovarian, thyroid, head and neck or skin cancers, there were
no dose limiting toxicities due to the product. Intensity's
investigators also reported only three local drug-related,
mild-to-moderate reversible adverse events. There were no
drug-related serious adverse events, no systemic adverse events and
no procedure-related adverse events. These results were consistent
with the observed low systemic exposure levels of the active agents
comprising the drug, INT230-6.
Intensity also reported that following the review of all patient
data, the Study Steering Committee (SSC) decided to initiate
treatment in patients with deep tumours (cohort B1) at low dose and
to increase the frequency and dose for superficial tumours. As a
result, the study has now enrolled and dosed a sentinel patient's
deep tumour, a bile duct carcinoma in the liver and a second
patient's squamous cell carcinoma in the arm.
With the opening of the higher frequency cohort, Intensity was
able to increase the first dose from 5 to 20 mL and have now dosed
20 mL. Drug-related adverse events continue to be minor, mostly
regarding low grade pain at the injected tumour site. Patients
receiving the multiple injections at a proper dose to tumour volume
ratio, have maintained stable disease during treatment, although
Intensity does not know whether the injected tumours have been
killed in those patients. There is visual evidence of tumour
necrosis in injected tumours.
While Intensity had over $5 million in cash at the end of Q1
2018, patient enrolment is increasing rapidly. To retain fiscal
strength and assure Intensity achieves its objectives. Post the
year end Intensity commenced the sale of a limited amount of Series
B convertible preferred shares to raise up to $9 million which is
expected to successfully close over the summer. FastForward has
committed to take up sufficient shares to maintain is percentage
holding in Intensity.
The Diabetic Boot Company Limited
DBC, which trades under the name "Pulseflow", has developed a
new form of diabetic friendly footwear with integrated offloading
capabilities and the patented Pulseflow technology which aids in
the promotion of blood flow and improved circulation in one
product.
During the year ended 31 March 2018, the application of a new
product specific code from the U.S. Centres for Medicare &
Medicaid Services ("Medicare") for PulseFlowDF by Diabetic Boot was
rejected. As management expects Medicare to require additional
clinical data and justification of product need in the US market
before granting a code, there is no definite timeline to do so. In
addition, in view of the recurring operating losses of Diabetic
Boot, the Directors of the Company consider that indicators of
impairment existed in respect of the investment in Diabetic Boot
and accordingly, an impairment loss of GBP347k has been recognised
in profit or loss for the Company's interests in Diabetic Boot for
the year ended 31 March 2018.
Factom Inc.
Factom is a platform technology company providing "Blockchain as
a service" based on selling scalable enterprise focussed
technology. The Company's applications leverage the immutability of
blockchain and the scalability of the Factom network, to create an
industry agnostic platform.
While Blockchain technology has a broad array of use cases,
Factom has focussed its efforts to date on disrupting traditional
forms of record keeping and has had early success in applying its
platform to disrupt mortgage, medical records and security.
Post year end Factom has opened up a $50 million "Series B"
funding round to scale the platform and add talent, leading to the
next phase of feature development and sales growth so that it can
capitalise on the substantial market opportunity. FastFoward has
committed to taking up its pro rata share of this raise.
Vemo Education, Inc
In the year ended 31 December 2017 Vemo processed over $25
million in ISA funding requests which was three times more than in
the previous year. 16 schools issued over 1,000 ISA's in 2017 with
the ISA book growing by 261% year on year. This continued progress
in attracting capital for our school clients should open up
opportunities for growth. Vemo is engaged with several large,
stable partners who could differentiate Vemo in the market.
Vemo anticipates favourable revenue recognition ruling in 2018
that will enable it to capitalize on its growing servicing
portfolio.
Yooya Media (formerly Entertainment Direct Asia)
Yooya develops and delivers end-to-end online video solutions
for content producers, rights owners, and advertisers in China. The
company now distributes, manages, or tracks video content on
forty-five video distribution platforms in China.
With China already the world's largest market for online video
by a wide margin and continuing to grow exponentially, demand for
expertise and solutions such as Yooya provides continues to grow
attractively. Leading traditional social media channels in China
such as Weibo and Wechat, for example, are turning increasingly to
video.
Building on its existing technology, the company is now in the
early phases of deploying new blockchain-based solutions for the
registration and collateralization of media rights and assets in
China.
Yooya set a new sales record in May of 2018 and was profitable
for the month. Management remains bullish on mid-term revenue
prospects for the company and its ability to execute on its
ambitious growth and development targets, the early stage of the
company and highly competitive nature of its chosen market
notwithstanding.
Fralis LLC (trading as Leap Gaming)
Leap Gaming is a B2B developer of high-end gaming applications
whose games are already offered by leading online and retail gaming
operators around the world generating tens of thousands of
engagement points with end-users. Leap gaming positions itself in
the forefront of realistic 3D game production, which is
instrumental for offering high end, immersive and customisable
gaming content.
Through 2017 Leap Gaming has more than quadrupled its
customer-base and the total number of Daily Active Users who engage
with its products. Gross Gaming Yield generated through Leap
Gaming's products increased by more than 5 times throughout
2017.
On 20th November 2017 FastForward announced that the Company was
in negotiations to sell its entire holding in Leap Gaming.
After the year end FastForward announced that following
negotiations, the decision to sell our holding had been replaced by
a decision to invest further funds into Leap Gaming in conjunction
with IMG Media Ltd. The Board's original decision to dispose of
Leap Gaming was predicated on Leap's need to join with a strategic
partner to facilitate its continued growth. While there was an
expectation that this could only be brought about by a FastForward
disposal, the deal concluded with IMG Media Ltd has enabled Leap to
align itself with a leading global brand while FastFoward maintains
and enhances its investment in a company at the forefront of an
industry which will benefit from rapid regulatory change,
particularly in the USA. Leap will benefit from the undoubted
global expertise and platform offered to it by IMG.
Moon Active Limited
We completed the sale of our entire holding of shares in
investee company Moon Active for cash consideration of US$750,000
on 18th September 2017. The sale of Moon Active represents an
increase (including exchange rate affects) of approximately 53% in
value since the time of the Company's original investment in July
2016.
Vested Finance, Inc. ("Kickwheel" formerly known as
"Schoold")
Kickwheel was a data-driven mobile app for college counselling,
financial aid advising and recruitment. Operating as a marketplace
for post-secondary education the company offers "messaging
mentorship" for prospective students, while equipping partner
universities with its proprietary technology to reach and recruit
the digital native generation. In anticipation of the subsequently
aborted deal with Longo Media, in August 2017, Kickwheel raised
finance buy way of a Convertible Promissory Note in which
FastForward invested $175,000 In January 2018, Kickwheel carried
out a capital raise in which FastForward subscribed for shares at a
cost of $200,000.
It became clear in early 2018 that Kickwheel will require
further funding to continue to operate but a prerequisite to new
funding was the requirement for Convertible Loan Note holders to
agree to take equity for their loan balance. All lenders (including
FastForward) agreed except one and Kickwheel's management was
unable to find a funding solution. Therefore Kickwheel has been
placed in liquidation.
Aphria Inc. (Nuuvera Inc.)
On 2nd January 2018 Nuuvera announced the completion of the
qualifying transaction under the policies of the TSX Venture
Exchange as well as the completion of the previously announced C$20
million financing at a price of C$2.50 per Share.
On 28th January 2018 Aphria Inc. announced an offer to purchase
Nuuvera (subsequently amended on 20 February 2018) under which
Aphria acquired each share of Nuuvera for consideration comprising
C$1 in cash and 0.3546 of an Aphria share for each Nuuvera share.
The transaction closed on 23rd March 2018.
After the year end FastForward disposed of the entire holding of
Aphria Inc. generating proceed of C$14.4 million
Fund raising and changes to share capital
During the year the Company announced its intention to enter
into a share repurchase programme. The programme was undertaken
given the Directors' belief that the market price, particularly
given the portfolio developments during the year, significantly
undervalued the underlying value of the Company's investment
portfolio.
As a result of this programme 2,255,000 shares were repurchased
by the Company during the year, at a total cost of GBP385,000. This
takes the total number of shares bought back by the Company, and
held as Treasury shares, to 5,413,623.
Conclusion
This has been a year when our strategy has been vindicated
through the profitable disposal of Moon Active and most notably
Nuuvera. I continue to be highly motivated to find and close deals
which where we can grow and develop value for the benefit of our
shareholders.
Lorne Abony
July 2018
Directors
Jim Mellon (Chairman)
Mr Mellon is an entrepreneur with interests in a number of
sectors. After leaving Oxford, where he studied Philosophy,
Politics and Economics, he worked in Asia and the United States in
two fund management companies, GT Management and Thornton
Management (Asia) Limited, before founding Regent Pacific Group
Limited in 1991 which was subsequently quoted on the Hong Kong
Stock Exchange. He was also a co-founder of UraMin Inc. and Red
Dragon Resources, both mining groups.
Mr Mellon spends most of his time developing start-up
opportunities in undervalued sectors, currently concentrating on
life sciences, robotics and FinTech. He is also the co-author of
four books: "Wake Up!", "The Top 10 Investments for the Next Ten
Years", "Cracking the Code" and "Fast Forward". In addition, Mr
Mellon is chairman of Plethora Solutions Holdings Pie, Manx
Financial Group Pie and Port Erin BioPharma Investments Limited,
and a non-executive director of Charlemagne Capital Limited, Condor
Gold Pie and West African Minerals Corporation, all listed on AIM.
He is also a director of Portage Biotech Inc. and Miraculins Inc.,
both quoted in Canada.
Lorne Abony (CEO)
Mr Abony is a well-known technology and media entrepreneur whose
many successful tech ventures include the 2001 co-founding of FUN
Technologies Inc ("FUN"), an AIM listed company.
In 2004 as CEO of FUN, Mr Abony became the youngest CEO of a
listed company on the Toronto Stock Exchange ("TSX"), and he sold
FUN in 2006 to Liberty Media Corporation for CA$484 million.
Mr Abony is the former CEO of Mood Media Corporation, the
world's largest integrated provider of in-store customer experience
solutions, providing services to over 580,000 locations globally.
In this role, Mr. Abony oversaw a public company listed on both the
Toronto and London Stock Exchanges with offices in 48 countries,
employing over 2,300 employees. Mr Abony has raised over CA$1
billion through the public and private debt and equity markets,
including over CA$100 million for Petopia.com, CA$190 million for
FUN Technologies and over CA$820 million for Mood Media
Corporation.
Mr Abony's entrepreneurial and investment interests focus on
companies with market disrupting technologies and in industries
with favourable macroeconomic trends such as FinTech (financial
technology) and EdTech (education technology). Mr Abony currently
serves as the executive chairman of investee company Verna
Education Inc ("Verna"), an EdTech company focused on collaborating
with higher education institutions to develop and implement
alternatives to traditional debt-dependent student financing
options. He is also the executive chairman of Schoold Inc
("Schoold"), a mobile app that acts as a student's complete college
admissions and career counselor by using machine learning, crowd
sourcing, natural language processing and social media analytics.
In addition to his board seats at Verna and Schoold, Mr. Abony is
also lead director of Glu Mobile Inc (NASDAQ: GLUU), a leading
global developer and publisher of free-to-play games for smart
phone and tablet devices .
Mr Abony was born and raised in Toronto. He received his
undergraduate degree from McGill University and after graduating
from the University of Windsor law school in 1994 with an LLB and
the University of Detroit Mercy with a J .D. (Juris Doctor), he
practiced corporate and securities law at a large Toronto law firm.
Mr Abony subsequently earned his MBA from Columbia Business School
and embarked on his successful and continuing entrepreneurial
career.
Ian Burns (COO and CFO)
Mr Burns is the founder and senior executive Director of Via
Executive Limited, a specialist management consulting company and
the managing director of Regent Mercantile Holdings Limited, a
privately owned investment company.
Mr Burns is currently a non-executive director and audit
committee chairman of three London listed companies, Phaunos Timber
Fund Limited, River and Mercantile UK Micro Cap Investment Company
Limited and Twenty Four Income Fund Limited. He is also the chief
financial officer of Circum Minerals Limited and a non-executive
director of Darwin Property Management (Guernsey) Limited and
Premier Asset Management (Guernsey) Limited.
Mr Burns was previously the finance director of AIM-listed Polo
Resources Limited and an executive director of Anson Fund
Management Limited and Group Managing Director of Investec Trust.
He is the former chairman of the Guernsey Association of Trustees.
He is also a fellow of both the Institute of Chartered Accountants
in England & Wales and the Chartered Institute of Securities
and Investment.
Edward McDermott (Non Executive Director)
Mr McDermott has over 10 years' experience in the management,
financing and development of small companies. He also has broad
experience in a number of sectors including natural resources,
technology, financial services, retail and leisure.
Mr McDermott is currently a Non-Executive Director of AIM listed
Fishing Republic Plc and a Non-Executive Director of Emmerson Plc
listed on the Official List (Standard Listing). He is part of the
corporate finance team at Optiva Securities Limited, the Company's
Broker. He has previously served as a Director of AIM listed
Stellar Resources Plc and Noricum Gold Ltd.
Report of the Directors
The Directors are pleased to present their annual report and
financial statements for the year ended 31 March 2018.
Status and Activities
The Company is a closed-ended investment company. The Company's
investing policy is disclosed on page 1 of this report.
The Company is domiciled and incorporated as a limited liability
company in Guernsey.
The registered office of the Company is 11 New Street, St Peter
Port, Guernsey, GY1 2PF.
The Company is listed on the Alternative Investment Market
("AIM") of the London Stock Exchange Plc.
With effect from 3 May 2018 the Company has been authorised as a
Closed-ended investment scheme by the Guernsey Financial Services
Commission (the "GFSC") under Section 8 of the Protection of
Investors (Bailiwick of Guernsey) Law, 1987 and the Authorised
Closed-Ended Investment Schemes Rules.
Changes during the year
On 20 November 2017 Vistra Fund Services (Guernsey) Limited was
appointed as the Company Secretary in place of Joshua Epstein.
Results
The results attributable to shareholders for the year are shown
on page 20. The Company made a profit for the year of GBP3,804,000
(2017: Restated Loss GBP559,000).
The figures reported last year were a originally a gain of
GBP19,000. These have been restated this year as a result of
management identifying an inconsistency between the accounting
policy for the valuation of the employee stock options and the
actual valuation methodology used. This has resulted in an
additional charge of GBP578,000 to the Statement of Comprehensive
Income, with a corresponding adjustment to the Employee Stock
Option Reserve.
Dividends
The Company did not pay any dividends during the year (2017:
GBPNil) and the Directors do not propose a final dividend for the
year (2017: GBPNil).
Investments
Details of the Company's investments are disclosed in the Report
of the Chief Executive Officer and notes 13, 14 and 19.
Taxation
The Company has been granted exemption from Guernsey taxation
under the terms of The Income Tax (Exempt Bodies) (Guernsey)
Ordinance 1989 so that the Company is exempt from Guernsey taxation
on income arising outside Guernsey and bank interest receivable in
Guernsey. The Company's Guernsey tax exemption fee is GBP1,200 per
annum.
Material Contracts
The Company's material contracts are with:
-- Vistra Fund Services (Guernsey) Limited ("Vistra"), which
acts as Administrator and Company
Secretary;
-- Link Market Services (Guernsey) Limited (formerly known as
Capita Registrars), which acts as
Registrar;
-- Beaumont Cornish Limited, which acts as Nominated Adviser;
and
-- Optiva Securities Limited, which acts as Broker.
Directors
The present members of the Board are listed on page 8 and 9 of
this report. Changes to the board during the year and post year end
are disclosed on pages 2 and 43. There are no service contracts in
place between the Directors and the Company. Details of Directors'
remuneration, bonuses and Options granted to the Directors are
disclosed in note 8.
Mr Mellon is a life tenant of a trust which owns Galloway
Limited, which held 10,425,991 (7.98%) Ordinary Shares in the
Company at 31 March 2018 and at the date of signing this
report.
Mr Burns is the legal and beneficial owner of Smoke Rise
Holdings Limited, which held 1,374,024 (1.02%) Ordinary Shares in
the Company at 31 March 2018 and the date of signing this
report.
Mr Abony held 12,248,434 (9.37%) Ordinary Shares in the Company
at 31 March 2018 and at the date of signing this report.
Substantial Interests
The following interests in 3% or more of the issued Ordinary
Shares of the Company:
Number of Ordinary Shares Percentage of Share Capital
Funds managed by:
P Saladino 12,248,436 9.37%
Lorne Abony 12,248,434 9.37%
Galloway Limited 10,425,991 7.98%
Norbert Teufelburger 8,184,802 6.26%
Russell Geyser 5,911,876 4.52%
Gigi Levy 4,678,363 3.58%
Darlington Portfolio Nominees 4,030,912 3.08%
Going Concern
After making reasonable enquiries, and assessing all data
relating to the Company's liquidity, the Directors have a
reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future and do
not consider there to be any threat to the going concern status of
the Company. For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
Corporate Governance
As a Guernsey incorporated company and under the AIM Rules for
Companies, the Company is not required to comply with the UK
Corporate Governance Code published by the Financial Reporting
Council (the "FRC Code"). However, the Directors place a high
degree of importance on ensuring that high standards of Corporate
Governance are maintained and that the Company complies with the
Finance Sector Code on Corporate Governance, issued by the Guernsey
Financial Services Commission.
Board Responsibilities
The Board currently comprises three Executive Directors, being
Mr Burns, Mr Abony and Mr Mellon and one Non-Executive Director, Mr
McDermott.
The Board has engaged Vistra Fund Services (Guernsey) Limited to
undertake the administrative duties of the Company. Clearly
documented contractual arrangements are in place with this service
provider which define the areas where the Board has delegated
responsibility to it. The Company holds at least three Board
meetings per year, at which the Directors will review the Company's
investments and all other important issues to ensure control is
maintained over the Company's affairs.
The Company is self-managed, in that day-to-day investment
management recommendations are made by the Executive Directors.
Board Committees
Audit Committee
Mr Burns is chairman of the Audit Committee. All other Directors
are members of the Audit Committee.
The Audit Committee meets at least once a year and provides a
forum through which the Company's Auditor reports to the Board. The
Audit Committee examines the effectiveness of the Company's
internal controls, the Annual Report and Financial Statements, the
Auditors' remuneration and engagement as well as the Auditor's
independence and any non-audit services provided by them. The Audit
Committee receives information from the Administrator, the Company
Secretary and the Auditor. The Audit Committee has formal written
terms of reference, which are available upon request from the
Company Secretary.
Nomination Committee
Mr Burns is chairman of the Nomination Committee. All other
Directors are members of the Nomination Committee. The function of
the Nomination Committee is to consider the appointment and
reappointment of Directors.
The Company is committed to the principle of diversity and equal
opportunities. The board will continue to review the composition of
the Board to ensure it has the appropriate structure, diversity and
skills to meet the needs of the Company as it develops.
Shareholders vote on the re-appointment of at least one Director
at each Annual General Meeting ("AGM"), with every Director's
appointment being voted on by Shareholders every three years. Mr Ed
McDermott will be proposed for election at the forthcoming AGM.
Board Meetings
All members of the Board are expected to attend each Board
meeting and to arrange their schedules accordingly, although
non-attendance may be unavoidable in certain circumstances.
Directors' attendance at Board and Committee meetings during the
financial year is set out below.
Board Meetings Committee Meetings
Ian Burns (appointed 12 November 2014) 6/6 1/1
Jim Mellon (appointed 13 July 2015) 4/6 1/1
Lorne Abony (appointed 6 January 2016) 5/6 0/1
Ed McDermott (appointed 12 February 2018) N/A N/A
Dialogue with Shareholders
The Directors are always available to enter into dialogue with
shareholders. All ordinary shareholders will have the opportunity,
and indeed are encouraged, to attend and vote at future Annual
General Meetings during which the Board will be available to
discuss issues affecting the Company. The Board stays abreast of
shareholders' views via regular updates from the Chairman and the
Nominated Adviser based on meetings they may have held with
shareholders.
The Board monitors the trading activity and shareholder profile
on a regular basis and maintains contact with the Company's Broker
to ascertain the views of shareholders. Shareholder sentiment is
also ascertained by the careful monitoring of the premium/discount
that the Ordinary Shares are traded at in the market when compared
to those experienced by similar companies.
The Company reports formally to shareholders twice a year.
Additionally, current information is provided to shareholders on an
ongoing basis through the Company website. The Company Secretary
monitors the voting of the shareholders and proxy voting is taken
into consideration when votes are cast at the Annual General
Meeting.
Litigation
The Company is not engaged in any litigation or claim of
material importance, nor, so far as the Directors are aware, is any
litigation or claim of material importance pending or threatened
against the Company.
Internal Control and Financing
The Board is responsible for establishing and maintaining the
Company's system of internal control. Internal control systems are
designed to meet the particular needs of the Company and the risks
to which it is exposed, and, by their very nature, provide
reasonable, but not absolute, assurance against material
misstatement or loss. The key procedures which have been
established to provide effective internal controls are as
follows:
-- Vistra Fund Services (Guernsey) Limited is responsible for
the provision of administration and Company Secretarial duties
;
-- The Board clearly defines the duties and responsibilities of
the service providers and advisers in the terms of their contracts;
and
-- The Board reviews financial information produced by the Administrator on a regular basis.
The Company does not have an internal audit department. All of
the Company's administrative functions are delegated to independent
third parties and it is therefore felt that there is no need for
the Company to have an internal audit facility.
The Board feels that the procedures employed by the service
providers adequately mitigate the risks to which the Company is
exposed.
Risk Profile
Financial Risks
The Company's financial instruments comprise investments, cash
and cash equivalents, and various items such as receivables and
payables that arise directly from the Company's operations.
The main risks arising from holding these financial instruments
are market risk (including price risk, currency risk and interest
rate risk), credit risk and liquidity risk. Further details are
given in note 19 to the financial statements.
Independent Auditor
PricewaterhouseCoopers CI LLP has expressed its willingness to
continue to act as Auditor to the Company and a resolution for its
reappointment will be proposed at the forthcoming Annual General
Meeting.
Statement of Directors' Responsibilities
The Directors are responsible for preparing financial statements
for each financial year which give a true and fair view, in
accordance with applicable Guernsey law and International Financial
Reporting Standards, of the state of affairs of the Company and of
the profit or loss of the Company for that year. In preparing those
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether International Financial Reporting Standards
have been followed, subject to any material departures disclosed
and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company
transactions, disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies (Guernsey) Law, 2008.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are also responsible for the maintenance and
integrity of the website on which these financial statements are
published. The work carried out by the auditor does not involve
consideration of these matters and, accordingly, the auditor
accepts no responsibility for any changes that may have occurred to
the financial statements since they were initially presented on the
website.
Legislation in Guernsey governing the preparation and
dissemination of the financial statements may differ from
legislation in other jurisdictions.
Disclosure of Information to the Auditor
The Directors who held office at the date of approval of this
Report confirm that, so far as they are aware, there is no relevant
audit information of which the Company's Auditor is unaware and
each Director has taken all the steps that he ought to have taken
as a Director to make himself aware of any relevant audit
information and to establish that the Company's Auditor is aware of
that information.
On behalf of the Board
Ian Burns Ed McDermott
Director Director
5 July 2018.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF FASTFORWARD
INNOVATIONS LIMITED
Report on the audit of the financial statements
______________________________________________________________________________________
Our opinion
In our opinion, the financial statements give a true and fair
view of the financial position of Fastforward Innovations Limited
(the "Company") as at 31 March 2018, and of its financial
performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards and
have been properly prepared in accordance with the requirements of
The Companies (Guernsey) Law, 2008.
______________________________________________________________________________________
What we have audited
The Company's financial statements comprise:
-- the statement of financial position as at 31 March 2018;
-- the statement of comprehensive income for the year then ended;
-- the statement of changes in equity for the year then ended;
-- the statement of cash flows for the year then ended; and
-- the notes to the financial statements, which include a
summary of significant accounting policies.
______________________________________________________________________________________
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing ("ISAs"). Our responsibilities under those
standards are further described in the Auditor's responsibilities
for the audit of the financial statements section of our
report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
________________________________________________________________________________
Independence
We are independent of the Company in accordance with the
International Ethics Standards Board for Accountants' Code of
Ethics for Professional Accountants ("IESBA Code"). We have
fulfilled our other ethical responsibilities in accordance with the
IESBA Code.
________________________________________________________________________________
Our audit approach
Overview
Materiality
* Overall materiality was GBP338,000 which represents
2.5% of net assets.
------------------------------------------------------------------
Audit scope
* We conducted our audit of the Company's financial
statements from information provided by Vistra Fund
Services (Guernsey) Limited (the "Administrator and
Secretary") and Ian Burns (Chief Operating Officer).
* We conducted our audit work in Guernsey and we
tailored the scope of our audit by taking into
account the types of investments held within the
Company, the involvement of the parties referred to
above, the accounting processes and controls, and the
industry in which the Company operates.
------------------------------------------------------------------
Key audit matters
* Valuation of Investments
------------------------------------------------------------------
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we considered where the directors made
subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits, we also addressed the risk of management override of
internal controls, including amongst other matters, consideration
of whether there was evidence of bias that represented a risk of
material misstatement due to fraud. We tailored the scope of our
audit in order to perform sufficient work to enable us to provide
an opinion on the financial statements as a whole, taking into
account the structure of the Company, the accounting processes and
controls, and the industry in which the Company operates.
________________________________________________________________________________
Materiality
The scope of our audit was influenced by our application of
materiality. An audit is designed to obtain reasonable assurance
whether the financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They
are considered material if individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
Based on our professional judgement, we determined certain
quantitative thresholds for materiality, including the overall
materiality for the financial statements as a whole as set out in
the table below. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures and to evaluate the
effect of misstatements, both individually and in aggregate on the
financial statements as a whole.
Overall materiality GBP338,000
How we determined it 2.5% of Net Assets
----------------------------------------
Rationale for the materiality We believe net assets to be the
benchmark most appropriate basis for determining
materiality since this is a key
consideration for investors when
assessing financial performance.
It is also a generally accepted
measure used for companies in
this industry. We also considered
the nature of the underlying
investments.
----------------------------------------
We agreed with those charged with governance that we would
report to them misstatements identified during our audit above
GBP16,900, as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
_______________________________________________________________________________
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in
the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matter How our audit addressed the Key
audit matter
--------------------------------------------- -----------------------------------------
Valuation of Financial assets We spent time with the Chief Operating
designated at fair value through Officer to understand the investment
profit or loss portfolio, including the movements
Financial assets designated at during the year. We also understood
fair value through profit or loss and evaluated management's approach,
at the year end of GBP12.4 million processes and controls in determining
comprise predominantly of investments fair value.
in early stage private equity
/ venture capital. We performed detailed testing
over the acquisition cost of any
These financial assets constitute new investments during the year
a material part of the statement through obtaining the purchase
of financial position and mostly agreements.
comprise investments into the
level 3 classification of IFRS We performed detailed testing
13 "Fair Value Measurement" for over management's assessment of
which observable market data is fair value, including obtaining
limited. supporting information for the
assumptions that management were
The judgements exercised in determining making.
the fair value could significantly
impact the net asset value of We also obtained documentation
the Company and this is considered to support the fair value basis
to be a key source of estimation adopted by management.
uncertainty as described in notes
3e and 4 of the financial statements. We did not identify any material
The specific areas of judgement issues from our procedures.
includes the access, accuracy
and reliability of available data
specific to that investment as
well as the method that management
ascertain is most appropriate
for the fair valuation, along
with the assumptions that management
make.
Other information
The directors are responsible for the other information. The other
information comprises the Investing Policy, the Chairman's Statement,
the Report of the Chief Executive Officer, the Directors, the
Report of the Directors and the Directors and Advisers page (but
does not include the financial statements and our auditor's report
thereon).
Other than as specified in our report, our opinion on the financial
statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above
and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
_______________________________________________________________________________
Responsibilities of the directors for the financial statements
The directors are responsible for the preparation of financial
statements that give a true and fair view in accordance with International
Financial Reporting Standards, the requirements of Guernsey law
and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters relating to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional
judgement and maintain professional scepticism throughout the
audit. We also:
* Identify and assess the risks of material
misstatement of the financial statements, whether due
to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of
internal control.
* Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness
of the Company's internal control.
* Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by the directors.
* Conclude on the appropriateness of the director's use
of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions
that may cast significant doubt on the Company's
ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to
the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's
report. However, future events or conditions may
cause the Company to cease to continue as a going
concern.
* Evaluate the overall presentation, structure and
content of the financial statements, including the
disclosures, and whether the financial statements
represent the underlying transactions and events in a
manner that achieves fair presentation.
We communicate with those charged with governance regarding, among
other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance,
we determine those matters that were of most significance in the
audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in
our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Under The Companies (Guernsey) Law, 2008 we are required to
report to you if, in our opinion:
-- we have not received all the information and explanations we require for our audit;
-- proper accounting records have not been kept; or
-- the financial statements are not in agreement with the accounting records.
We have no exceptions to report arising from this
responsibility.
This report, including the opinion, has been prepared for and
only for the members as a body in accordance with Section 262 of
The Companies (Guernsey) Law, 2008 and for no other purpose. We do
not, in giving this opinion, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Joanne Peacegood
For and on behalf of PricewaterhouseCoopers CI LLP
Chartered Accountants and Recognised Auditor
Guernsey
Channel Islands
6 July 2018
Statement of Comprehensive Income
as at 31 March 2018
Year ended Year ended
31 March 31 March
2018 2017
Notes GBP'000 GBP'000
Investment gains Restated
Income from financial assets designated
at fair value through profit and loss - -
Net realised gain on disposal of financial
assets at fair value 13 7,233 -
Net unrealised change in fair value
of financial assets designated at fair
value through profit and loss 13 (3,060) 373
Donations received 18 - 159
Total investment gains 4,173 532
Income
Bank interest income 3 1
Total income 3 1
Expenses
Fair value movement of Director's share
options 5,8 (1) (121)
Directors' remuneration and expenses 8 (29) (369)
Legal and professional fees (64) (187)
Adviser and broker's fees 5 (97) (256)
Administration fees (53) (59)
Other expenses 9 (101) (411)
Total expenses (345) (1,403)
Net gain/(loss) from operating activities
before losses and gains
on foreign currency exchange 3,831 (870)
----------- -----------
Net foreign exchange (losses)/gains (27) 311
Total comprehensive income for the
year 3,804 (559)
=========== ===========
Earnings per Ordinary Share - basic
and diluted 11 2.87p (0.42p)
The Company has no recognised gains or losses other than those
included in the results above and therefore, no separate Statement
of Comprehensive Income has been presented.
All the items in the above statement are derived from continuing
operations.
The accompanying notes on pages 24 to 42 form an integral part
of these financial statements.
Statement of Financial Position
as at 31 March 2018
31 March 31 March
2018 2017
Notes GBP'000 GBP'000
Restated
Non-current assets
Financial assets designated at fair
value through profit or loss 13 5,682 9,955
--------- ---------
Current assets
Financial assets designated at fair
value through profit or loss 13 6,728 -
Other receivables 15 1,086 35
Cash and cash equivalents 72 164
7,886 199
Total assets 13,568 10,154
--------- ---------
Current liabilities
Payables and accruals (34) (53)
Total liabilities (34) (53)
Net assets 13,534 10,101
========= =========
Equity
Share capital 16 1,306 1,329
Deferred share reserve 16 630 630
Employee stock option reserve 5 1,086 1,075
Other reserve 2,293 2,293
Distributable reserves 8,219 4,774
Total equity 13,534 10,101
========= =========
Net assets per Ordinary Share - basic
and diluted 17 10.18p 7.60p
The financial statements on pages 20 to 42 were approved by the
Board of Directors on 5 July 2018 and were signed on their behalf
by:
Ian Burns Ed McDermott
Director Director
The accompanying notes on pages 24 to 42 form an integral part
of these financial statements.
Statement of Changes in Equity
For the year ended 31 March 2018
Employee
Deferred stock
Share Shares Other option Distributable
Capital reserve reserve reserves reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 31 March
2016 Note 1,309 630 2,293 895 5,150 10,277
Total comprehensive income
for the year - - - - 19 19
Transactions with shareholders
Issue of Ordinary Shares 20 - - - 183 203
Employee share scheme
- value
of employee services - - - (398) - (398)
Balance as at 31 March
2017 - As originally
stated 1,329 630 2,293 497 5,352 10,101
Adjustment to prior year
figures 5 - - - 578 (578) -
Balance as at 31 March
2017 - Restated 1,329 630 2,293 1,075 4,774 10,101
Total comprehensive income
for the year - - - - 3,804 3,804
Transactions with shareholders
Acquisition of Treasury
Shares (23) - - - (359) (382)
Employee share scheme
- value
of employee services - - - 11 - 11
Balance as at 31 March
2018 1,306 630 2,293 1,086 8,219 13,534
-------- --------- -------- --------- -------------- --------
The accompanying notes on pages 24 to 42 form an integral part
of these financial statements.
Statement of Cash Flows
For the year ended 31 March 2018
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/9177T_1-2018-7-6.pdf
Notes to the Financial Statements
For the year ended 31 March 2018
1. General Information
The Company is an authorised closed-ended investment company.
The Company is domiciled and incorporated as a limited liability
company in Guernsey. The registered office of the Company is 11 New
Street, St Peter Port, Guernsey, GY1 2PF.
The Company's Ordinary Shares are traded on AIM, a market
operated by the London Stock Exchange.
With effect from 3 May 2018 the Company has been authorised as a
Closed-ended investment scheme by the Guernsey Financial Services
Commission (the "GFSC") under Section 8 of the Protection of
Investors (Bailiwick of Guernsey) Law, 1987 and the Authorised
Closed-Ended Investment Schemes Rules.
2. Basis of Preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB"),
interpretations issued by the IFRS Interpretations Committee
("IFRSIC") applicable to companies reporting under IFRS and
applicable legal and regulatory requirements of Guernsey Law and
reflect the following policies, which have been adopted and applied
consistently.
The financial statements have been prepared on a historic cost
basis, as modified by the revaluation to fair value of certain
financial assets and financial liabilities (including derivative
instruments).
Changes and amendments to existing standards effective in the
year commencing 1 April 2017
The Company has adopted all revisions and amendments to IFRS
issued by the IASB, which may be relevant to and effective for the
Company's financial statements for the annual period beginning 1
April 2017.
No new standards or interpretations adopted during the year had
an impact on the reported financial position or performance of the
Company.
Standards, amendments and interpretations issued but not yet
effective
The IASB has issued/revised the following relevant standards
with an effective date after the date of these financial
statements:
IFRS 9 - Financial Instruments (effective date: 1 January
2018)
IFRS 15 - Revenue from Contracts with Customers (effective date:
1 January 2018)
No other relevant standards, interpretations or amendments have
been issued by the IASB with an effective date after the date of
these financial statements. The Directors have chosen not to early
adopt the above standards.
IFRS 9: Financial Instruments with regards to recognition and
measurement, is effective for the Company for the first time in the
period commencing 1 April 2018.
The implementation of this new financial reporting standard may
have an impact on the financial instruments held by the Company,
however, it is the opinion of the Directors that regardless of
whether the financial assets held by the Company are classified as
debt or equity, that the treatment as at fair value through profit
or loss will remain the applicable method of recognition and hence
there is no expected impact on the net asset value of the Company.
There is however expected to be additional disclosures included in
future financial statements of the Company to comply with
requirements of IFRS 9, which will likely include the judgements
applied by management in the classification and subsequent
recognition of the financial instruments held.
IFRS 15: Revenue from Contracts with Customers is also effective
for the Company for the first time in the period commencing 1 April
2018.
The Directors have assessed the requirements of IFRS 15 and have
determined that there will be no material impact expected on the
recognition and measurement of income in the financial statements
as a result of the implementation of IFRS 15. The Directors arrived
at this conclusion as the Company has not been established to earn
revenue, as IFRS 15 applies to, but rather to generate capital and
other gains from the management and disposal of its investments
into financial instruments.
3. Significant Accounting Policies
a) Investment Income
Interest income is recognised on an accruals basis using the
effective interest method and includes bank interest and interest
from debt securities.
Dividend income from investments designated at fair value
through profit or loss is recognised through the Statement of
Comprehensive Income within dividend income when the Company's
right to receive payments is established.
b) Expenses
All expenses are accounted for on an accruals basis and, with
the exception of share issue costs, are charged through the
Statement of Comprehensive Income in the period in which they are
incurred.
c) Taxation
The Company is exempt from taxation in Guernsey. However, in
some jurisdictions, investment income and capital gains are subject
to withholding tax deducted at the source of the income. The
Company presents the withholding tax separately from the gross
investment income, if any, in the Statement of Comprehensive
Income. For the purpose of the Statement of Cash Flows, cash
inflows from financial assets are presented net of withholding
taxes when applicable.
d) Share based payments
Share-based compensation benefits are provided to key employees
via the Employees Option Plan, i.e. an equity-settled share-based
payment plan. Information relating to this plan is set out in note
8 to the financial statements.
The fair value of options granted under the Employee Option Plan
is recognised as an employee benefits expense with a corresponding
increase in equity. The total amount to be expensed is determined
by reference to the fair value of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions; and
-- including the impact of any non-vesting conditions.
The total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the Company revises
its estimates of the number of options that are expected to vest
based on the non-market vesting and service conditions. It
recognises the impact of the revision to original estimates, if
any, in the Statement of Comprehensive Income, with a corresponding
adjustment to equity.
When the options are exercised, the Company transfers the
appropriate amount of shares to eligible employee with no cash
settlement involved.
e) Investments designated at fair value through profit or
loss
Classification
The Company classifies its investments in debt and equity
securities, and related derivatives, as financial assets at fair
value through profit or loss. These financial assets are designated
by the management of the Company at fair value through profit or
loss on acquisition.
Financial assets designated at fair value through profit or loss
at inception are those that are not classified as held for trading
but are managed and their performance evaluated on a fair value
basis in accordance with the Company's documented Investing Policy.
It is the Company's policy for the management to evaluate the
information about these financial assets on a fair value basis
together with other related financial information.
Assets in this category are classified as current assets if they
are expected to be realised within 12 months of the year end date.
Those not expected to be realised within 12 months of the year end
date will be classified as non-current.
Recognition/derecognition
Regular-way purchases and sales of investments are recognised on
the trade date - the date on which the Company commits to purchase
or sell the investment.
Financial assets are derecognised when the Company loses control
over the contractual rights that comprise that asset. This occurs
when rights are realised, expire or are surrendered and the rights
to receive cash flows from the investments have expired or have
been transferred and the Company has transferred substantially all
risks and rewards of ownership. Realised gains and losses on
investments sold are calculated as the difference between the sales
proceeds and cost. Financial assets that are derecognised and
corresponding receivables from the buyer for the payment are
recognised as of the date the Company has transacted an
unconditional disposal of the assets.
Measurement
Financial assets and liabilities designated at fair value
through profit or loss are initially recognised at fair value.
Transaction costs are expensed through the Statement of
Comprehensive Income. Subsequent to initial recognition, all
financial assets and financial liabilities at fair value through
profit or loss are measured at fair value. Gains and losses arising
from changes in the fair value of the financial assets and
liabilities at fair value through profit or loss are presented
through the Statement of Comprehensive Income within `Net
unrealised change in fair value of financial assets designated at
fair value through profit and loss' in the period in which they
arise.
Interest income from financial assets designated at fair value
through profit or loss is recognised through the Statement of
Comprehensive Income within other income using the effective
interest rate method.
Fair value estimation
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The fair value of financial instruments traded in active markets
(such as publicly traded securities) is based on quoted market
prices at the financial reporting date. The quoted market price
used for these financial assets held by the Company is the current
bid price.
The Company monitors trade prices and volumes taking place a few
days before and after the year-end date, in order to assess whether
the trade prices used at each valuation date are representative of
fair value. If a significant movement in fair value occurs
subsequent to the close of trading up to midnight in a particular
stock exchange on the year end date, valuation techniques will be
applied to determine the fair value.
The fair value of financial instruments that are not traded in
an active market (for example unquoted private companies) is
determined by using valuation techniques in accordance with the
International Private Equity and Venture Capital Valuation
Guidelines (IPEV Guidelines). The Company uses a variety of methods
and makes assumptions that are based on market conditions existing
at each financial reporting date. Valuation techniques used include
the use of comparable recent arm's length transactions, discounted
cash flow analysis, option pricing models and other valuation
techniques commonly used by market participants.
The valuation techniques also consider the original transaction
price and take into account the relevant developments since the
acquisition of the investments and other factors pertinent to the
valuation of the investments, with reference to such rights in
connection with realisation, recent third-party transactions of
comparable types of instruments, and reliable indicative offers
from potential buyers. In determining fair value, the Company may
rely on the financial data of investee portfolio companies and on
estimates by the management of the investee portfolio companies as
to the effect of future developments.
Notwithstanding the above, the variety of valuation bases
adopted and the quality of management information provided by the
underlying investments, means that there are inherent limitations
in determining the value of the investments. The amount realised on
the sale of those investments may differ from the values reflected
in these financial statements and the difference may be
significant.
f) Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and
reported net by counterparty in the Statement of Financial
Position, when there is currently a legally enforceable right to
offset the recognised amounts and there is an intention to settle
on a net basis, or realise the asset and settle the liability
simultaneously. A current legally and contractually enforceable
right to offset must not be contingent on a future event.
Furthermore, it must be legally and contractually enforceable in
(i) the normal course of business; (ii) the event of default; and
(iii) the event of insolvency or bankruptcy of the Company and all
of the counterparties.
g) Financial instruments within the margin account
The financial instruments within the margin account comprised
cash balances held at the Company's clearing brokers and cash
collateral pledged to counterparties related to derivative
contracts. Cash that is related to unsettled securities trades is
restricted until final settlement is made. Financial instruments
held within the margin account consist of cash received from
brokers to collateralize the Company's derivative contracts and
amounts transferred from the Company's bank account.
h) Cash and cash equivalents
Cash and cash equivalents, comprising cash balances and call
deposits which are held to maturity, are carried at cost. Cash and
cash equivalents are defined as cash in hand, demand deposits, bank
overdrafts and short-term highly liquid investments with original
maturities of three months or less and subject to insignificant
risk of changes in value.
i) Other receivables
Other receivables are carried at the original invoice amount,
less allowance for doubtful receivables and include receivables
against issuance of Ordinary Shares. Provision is made when there
is objective evidence that the Company will be unable to recover
balances in full. Balances are written off when the probability of
recovery is assessed as being remote.
j) Other payables and accrued expenses
Payables and accrued expenses are recognised initially at fair
value and subsequently stated at amortised cost. The difference
between the proceeds and the amount payable is recognised over the
period of the payable using the effective interest method. As at
the year ended, the carrying amount of other payables and accrued
expenses approximate their fair value.
k) Foreign currency translation
Functional and presentation currency
The Company's Ordinary Shares are denominated in Sterling and
are traded on AIM in Sterling. The primary activity of the Company
is detailed in the Investing Policy on page 1. The performance of
the Company is measured and reported to the investors in Sterling
and the majority of the expenses incurred by the Company are in
Sterling. Consequently, the Board of Directors considers that
Sterling is the currency that most faithfully represents the
effects of the underlying transactions, events and conditions. The
financial statements are presented in Sterling, which is the
Company's functional and presentation currency. All amounts are
rounded to the nearest thousand.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using rates approximating to the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised
through the Statement of Comprehensive Income. Translation
differences on non-monetary financial assets and liabilities, such
as financial assets designated at fair value through profit or
loss, are recognised through the Statement of Comprehensive Income
within the net unrealised change in fair value of investments.
l) Net assets per share
The net assets per Ordinary Share disclosed on the face of the
Statement of Financial Position is calculated by dividing the net
assets of the Company as at the year-end by the number of Ordinary
Shares in issue at the year end.
Earnings per Ordinary Share is calculated by dividing the net
profit/loss for the year by the weighted average number of Ordinary
Shares in issue during the year.
m) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
-- the profit attributable to owners of the Company, excluding
any costs of servicing equity other than ordinary shares; and
-- by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements, if any, in
ordinary shares issued during the year and excluding treasury
shares.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account:
-- the after tax effect of interest and other financing costs
associated with dilutive potential ordinary shares; and
-- the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
n) Transaction costs
Transaction costs are legal and professional fees incurred to
structure a deal to acquire the investments designated as financial
assets at fair value through profit or loss. They include the
upfront fees and commissions paid to agents, advisers, brokers and
dealers and due diligence fees. Transaction costs, when incurred,
are immediately recognised in the Statement of Comprehensive Income
as an expense.
o) Contributed equity
Ordinary shares are classified as equity. Where the Company
purchases its own equity share (e.g. as the result of a share
buy-back), the consideration paid, including any directly
attributable incremental costs, is deducted from equity
attributable to the owners of the Company as treasury shares until
the shares are cancelled or reissued. The Company has held all
treasury shares purchased in the year and has presented them in the
Statement of Changes in Equity as a deduction from contributed
equity.
p) Assessment as an investment entity
Entities that meet the definition of an investment entity within
IFRS 10 are required to measure their investee companies at fair
value through profit or loss. The criteria (per IFRS 10) which
define an investment entity are, as follows:
-- An entity that obtains funds from one or more investors for
the purpose of providing those investors with investment
services;
-- An entity that commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income or both; and
-- An entity that measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Company meets the above criteria and is therefore
categorised as an investment entity within IFRS 10.
4. Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with IFRS
requires the Board to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The Board make estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results.
The Directors believe that the underlying assumptions are
appropriate and that the financial statements are fairly presented.
Estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year are outlined below:
Judgements
Going Concern
After making reasonable enquiries, and assessing all data
relating to the Company's liquidity, management has a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future and do not
consider there to be any threat to the going concern status of the
Company. For this reason, they continue to adopt the going concern
basis in preparing the financial statements.
Assessment as an investment entity
In determining the Company meeting the definition of an
investment entity in accordance with IFRS 10, it has considered the
following:
-- the Company has raised the commitments from a number of
investors in order to raise capital to invest and to provide
investor management services with respect to these private equity
investments;
-- the Company intends to generate capital and income returns
from its investments which will, in turn, be distributed to the
investors; and
-- the Company evaluates its investment performance on a fair
value basis, in accordance with the policies set out in these
financial statements.
Although the Company met all three defining criteria, management
has also assessed the business purpose of the Company, the
investment strategies for the private equity investments, the
nature of any earnings from the private equity investments and the
fair value model. Management made this assessment in order to
determine whether any additional areas of judgement exist with
respect to the typical characteristics of an investment entity
versus those of the Company. Management have therefore concluded
that from the assessments made, the Company meets the criteria of
an investment Company within IFRS 10.
Part of the assessment in relation to meeting the business
purpose aspects of the IFRS 10 criteria also requires consideration
of exit strategies. Given that the Company does not intend to hold
investments indefinitely, management have determined that the
Company's investment plans support its business purpose as an
investment entity.
The Board has also concluded that the Company meets the
additional characteristics of an investment entity, in that: it
holds more than one investment; the investments will predominantly
be in the form of equities, derivatives and similar securities; it
has more than one investor and the majority of its investors are
not related parties.
Estimates and assumptions
Fair Value of financial instruments
The fair values of securities that are not quoted in an active
market are determined by using valuation techniques as explained in
the IPEV Guidelines, primarily earnings multiples, discounted cash
flows and recent comparable transactions. The models used to
determine fair values are validated and periodically reviewed by
the Company. In some instances the cost of an investment is the
best measure of fair value in the absence of further information.
The inputs in the earnings multiples models include observable
data, such as the earning multiples of comparable companies to the
relevant portfolio company, and unobservable data, such as forecast
earnings for the portfolio company. In discounted cash flow models,
unobservable inputs are the projected cash flows of the relevant
portfolio company and the risk premium for liquidity and credit
risk that are incorporated into the discount rate. However, the
discount rates used for valuing equity securities are determined
based on historic equity returns for other entities operating in
the same industry for which market returns are observable.
Management uses models to adjust the observed equity returns to
reflect the actual equity financing structure of the valued equity
investment. Models are calibrated by back-testing to actual
results/exit prices achieved to ensure that outputs are reliable,
where possible.
Valuation of Options
The fair values of the Options are measured using the
Black-Scholes model. The Black-Scholes model is considered an
acceptable model where options are subject to market conditions as
defined within IFRS 2. The Black-Scholes model takes into account
the following factors when calculating the fair value of the share
options at grant date:
-- any market vesting conditions;
-- the expected term of the options (see below);
-- the expected volatility of the company's share price as at grant date;
-- the risk-free rate of return available at grant date;
-- the company's share price at grant date;
-- the expected dividends on the company's shares over the
expected term of the options; and
-- the exercise (strike) price of the options.
The expected term of the options is assumed to be 5 years from
the grant date. However, the options can be exercised at any point
after vesting and within a 10 year period from the grant date. As
the management of the Company are unsure as to when the options
will be exercised, it is assumed they will be exercised half way
through the 10 year period from grant date to lapse date which is 5
years.
5. Prior Period Adjustment
In the preparation of the financial statements for the year
ended 31 March 2017 an error was made in the calculation of the
charge to be taken to the Statement of Comprehensive Income in
relation to the Employee Share Options. The calculation was not
performed in line with the Company's stated accounting policy, as
described in note 3d - Share based payments, and the valuation
estimates as described in note 4.
In the statements for 2017 an amount of GBP398,000 was credited
to the Statement of Comprehensive Income. During the preparation of
these financial statements management have identified that the
correct treatment for 2017 should have been a charge to the
Statement of Comprehensive Income of GBP181,000, a difference of
GBP579,000. The corresponding entry to this adjustment is to
increase the Employee Stock Option Reserve by the same amount.
Overall this error had no impact on the Net Assets of the
Company.
Also, part of this restatement relates to an amount due to the
Company adviser, Mr Teufelberger, who is not a Director of the
Company. The amounts relating to this restatement, nil during 2017
restated to GBP59,000, are reflected in the adviser fees within the
Statement of Comprehensive Income.
The impact on earnings for 2017 is to reduce the original total
comprehensive income for the year from GBP19,000, to a loss of
GBP559,000, with the Earnings per Share for 2017 being restated
from 0.01p to a loss of 0.42p.
6. Segmental Information
In accordance with International Financial Reporting Standard 8:
Operating Segments, it is mandatory for the Company to present and
disclose segmental information based on the internal reports that
are regularly reviewed by the Board in order to assess each
segment's performance and to allocate resources to them.
Management information for the Company as a whole is provided
internally to the Directors for decision-making purposes. Their
asset allocation decisions are based on an integrated investment
strategy and the Company's performance is evaluated on an overall
basis. The primary segment the Company invests in is investments in
companies which have significant intellectual property rights which
they are seeking to exploit, principally within the technology
sector (including digital technology, and content focused
businesses) and the life sciences sectors (including biotech and
pharmaceuticals). Initially the geographical focus will be North
America and Europe but investments may also be considered in other
regions to the extent that the Board considers that valuable
opportunities exist and positive returns can be achieved.
Segment assets
The internal reporting provided to the Board for the Company's
assets, liabilities and performance is prepared on a consistent
basis with the measurement and recognition principles of IFRS.
Segment assets are measured in the same way as in the financial
statements. These assets are allocated based on the operations of
the segment and the physical location of the asset. At 31 March
2018 the cross section of segment assets between geographical focus
and economic sectors were as follows:
Year ended 31 March 2018
Geographical Focus Technology Life sciences Total
sector sector
Private equity investments GBP'000 GBP'000 GBP'000
- North America 763 7,527 8,290
- Other 4,120 - 4,120
Total segment assets 4,883 7,527 12,410
=========================== ========================== =======================
Segment liabilities
Segment liabilities are measured in the same way as in the
financial statements. These liabilities are allocated based on the
operations of the segment. At the 31 March 2018 there were no
segmented liabilities.
Other profit and loss disclosures
The other revenue generated by the Company during the year was
interest of GBP3,000 (2017: GBP1,000), arising from cash and cash
equivalents, which was generated in Guernsey, distributions
received from private equity investments, realised and unrealised
gains on private equity investments. In the year ended 31 March
2018 there were no segmented expenses. At 31 March 2018 the cross
section of the distributions, realised and unrealised gains on
private equity investments between geographical focus and economic
sectors were as follows:
Year ended 31 March 2018
Technology Life sciences
Geographical Focus sector sector Total
Private equity investments GBP'000 GBP'000 GBP'000
- North America 5,305 (562) 4,743
- Europe (3) (347) (350)
- Middle East (32) - (32)
- Other (188) - (188)
Total segment gains 5,082 -909 4,173
============================== ========================== ==========================
7. Administration Fees
Vistra Fund Services (Guernsey) Limited was entitled to an administration
fee of GBP45,000 per annum until 13 December 2017. With effect
from this date the fee was increased to GBP50,000 per annum, with
an additional fee of GBP2,500 for each formal board meeting held.
In the year ended 31 March 2018, a total of GBP51,000 (2017: GBP59,000)
was incurred in respect of administration fees, of which, GBPNil
was payable at the financial reporting date (2017: GBP23,000).
8. Directors' Remuneration
On 1 February 2016, the Board agreed the following compensation
packages for the Directors of the Company, with effect from 1 January
2016, except for share options which are applicable from 17 February
2016:
* Lorne Abony is entitled to an annual salary of
GBP250,000, payable monthly in arrears, and a
discretionary bonus. In addition, the Company will
pay Mr Abony's rental expense for an office amounting
to up to US$30,000 per annum, a personal assistant
amounting to up to US$60,000 per annum and health
insurance. Mr Abony has waived his entitlement to
fees for the year. The Company has also granted Mr
Abony Options over 9% of the issued shares (on a
fully diluted basis) at 20 pence per share. The terms
of the Options are explained below.
* Stephen Dattels, who resigned on 31 March 2017, was
entitled to an annual salary of GBP50,000, payable
quarterly in arrears. Mr Dattels agreed to waive his
fees for the final quarter of the financial year
ended 31 March 2017. In addition, the Company had
granted Mr Dattels Options over 2% of the issued
shares (on fully diluted basis) at 20 pence per
share. These options expired on 30 September 2017.
* Jim Mellon is entitled to an annual salary of
GBP30,000, payable quarterly in arrears. Mr Mellon
agreed to waive his Directors fees for the period 1
April 2017 until 30 September 2017. In addition, the
Company has granted Mr Mellon Options over 1% of the
issued shares (on fully diluted basis) at 20 pence
per share. The terms of the Options are explained
below.
* Ian Burns is entitled to an annual salary of
GBP25,000, payable quarterly in arrears. Mr Burns
agreed to waive his fees for the period from 1
January 2017 to 30 September 2017. With effect from 1
October 2017 Mr Burns has agreed to reduce his
Directors fee to GBP18,000 per annum.
-- Ed McDermott is entitled to an annual salary of GBP40,000,
payable quarterly in arrears. The Company has also granted Mr
McDermott Options over 1% of the issued shares (on a fully diluted
basis) at 19 pence per share and further Options over 1% of the
issued shares (on a fully diluted basis) at 25 pence per share.
Terms of the Options are explained below.
Following the approval to grant Options, the number of share
options held by each Director is as follows:
% of issued
shares on Exercise
Options fully diluted price
Date Granted issued basis (pence)
Lorne Abony 17-Feb-16 12,131,548 9% 20
Jim Mellon 17-Feb-16 1,516,444 1% 20
Ed McDermott 13-Feb-18 1,000,000 1% 19
Ed McDermott 13-Feb-18 1,000,000 1% 25
15,647,992 12%
----------------------- ---------------
The Options entitles the holder upon exercise to one Ordinary
Share of 1p in the Issued Share Capital of the Company. Following
the grant of the Options to Mr Abony and Mr Mellon, 50% of the
Options vested immediately, 25% of the Options shall vest after 12
months (subject to the weighted average price of the Company's
ordinary shares rising above 25 pence for ten consecutive trading
days), and the balance of 25% shall vest after 24 months (subject
to the weighted average price of the Company's Ordinary Shares
rising above 35 pence for ten consecutive trading days). The
vesting terms have not yet been achieved for the options which did
not vest immediately.
On the grant of the Options to Mr McDermott 33% of the Options
vested immediately, 33% of the Options shall vest after 12 months
and the balance of 34% shall vest after 24 months, on the same
weighted average share price terms as for the other Directors,
above.
Subject to vesting (which is accelerated in the event of a
change of control), the Options may only be exercised while the
party remains, or in the six month period after they cease to be,
an "eligible employee" of the Company (as such term is defined in
the Option Agreements) and within a five year term from the date of
grant. The Options may be exercised on a cash-less basis subject to
agreement of the Board at such time.
Share Option measurement of fair value
The fair value of the Options has been measured using the
Black-Scholes model. Services and non-market performance conditions
attached to the arrangements were not taken into account in
measuring fair value as explained in note 3(d) and 4.
The following market conditions have been incorporated into the
fair value calculation of the Options at the grant dates and year
ended 31 March 2018:
-- 25%, or 33% for Mr McDermott, of the share awards vest from
year 1 onwards subject to the weighted average price of the share
price exceeding 25 pence for a minimum of 10 trading days; and
-- 25%, or 34% for Mr McDermott, of the share awards vest from
year 2 onwards subject to the weighted average price of the share
price exceeding 35 pence for a minimum of 10 trading days.
In addition, the model inputs used in the measurement of the
fair values at grant dates and the year ended 31 March 2017 were as
follows:
Grant date Grant date Grant date
13-Feb-18 13-Feb-18 17-Feb-16
9.2281
Fair value 11.2775 pence 9.9964 pence pence
Share price 20.13 pence 20.13 pence 18.00 pence
Exercise price 19 pence 25 pence 20 pence
Annualised expected
volatility 65.66% 65.66% 70.09%
Expected life 5 years 5 years 5 years
Expected dividends Nil Nil nil
Annual risk free interest
rate 0.86% 0.86% 0.86%
31 March 2018
Increase
in value
Directors' of Options
Remuneration issued Total
GBP'000 GBP'000 GBP'000
Ian Burns (appointed on 12 November
2014) 9 - 9
Jim Mellon (appointed on 13 July
2015) 15 15 30
Lorne Abony (appointed on 6 January
2016) - 121 121
Ed McDermott (appointed 12 February
2018) 5 50 55
Stephen Dattels ( resigned 31
March 2017) - (185) (185)
29 1 30
------------------------- ------------------------ ------------------------
31/03/2017 - Restated
Increase
in value
Directors' of Options
Remuneration issued Total
GBP'000 GBP'000 GBP'000
Stephen Dattels (resigned 31
March 2017) 39 22 61
Ian Burns (appointed on 12 November
2014) 19 - 19
Jim Mellon (appointed on 13 July
2015) 30 11 41
Lorne Abony (appointed on 6 January
2016) 278 88 366
Bryan Smith (resigned 17 November
2016) 3 - 3
369 121 490
------------------------- ----------------------- ------------------------
No bonuses or pension contributions were paid or were payable on
behalf of the Directors. Details of the Directors' interests in the
share capital are set out in note 18.
9. Other expenses
Year ended Year ended
31 March
31 March 2018 2017
GBP'000 GBP'000
Marketing expenses - 33
Directors' expenses 2 211
Regulatory and listing fees 27 16
Registrar fees 35 18
Audit fees 42 23
Directors' and Officers' liability
insurance 4 5
Other expenses (9) 105
101 411
-------------- -----------
10. Tax effects of other comprehensive income
The Income Tax Authority of Guernsey has granted the Company
exemption from Guernsey income tax under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989 and the income of the Company
may be distributed or accumulated without deduction of Guernsey
income tax. Exemption under the above mentioned Ordinance entails
payment by the Company of an annual fee of GBP1,200 for each year
in which the exemption is claimed. It should be noted, however,
that interest and dividend income accruing from the Company's
investments may be subject to withholding tax in the country of
origin.
There were no tax effects arising from the other comprehensive
income disclosed in the Statement of Comprehensive Income (2017:
GBPNil).
11. Earnings per Ordinary Share
The earnings per Ordinary Share of 2.87p (2017 Restated: Loss
0.42p, Originally Earnings 0.01p) is based on the earnings for the
year of GBP3,804,000 (2017:Restated Loss GBP559,000, Originally
Earnings GBP19,000) and on a weighted average number of 132,533,026
Ordinary Shares in issue during the year (2017: 132,651,181
Ordinary Shares).
The basic and diluted earnings per Ordinary Share were the same.
The average share price of the Ordinary Shares during the year was
below the exercise price of the Options (exercise prices of 19.00
pence, 20.00 pence and 25.00 pence). Therefore as at 31 March 2018
the Options had no dilutive effect.
12. Dividends
During the year ended 31 March 2018, no dividend was paid to
shareholders (2017: GBPNil). The Directors do not propose a final
dividend for the year ended 31 March 2018 (2017: GBPNil).
13. Financial Assets and Liabilities Designated at Fair Value
through Profit or Loss
31 March 31 March
2018 2017
GBP'000 GBP'000
Financial assets designated at fair
value through profit or loss
Fair value of investments brought
forward 9,955 4,238
Purchases during the year 7,849 5,185
Disposals proceeds during the year (9,565) -
Realised gains on disposals 7,231 -
Donations received - 159
Net unrealised change in fair value (3,060) 373
Fair value of investments carried
forward 12,410 9,955
============================= =============================
Details of the investments held are given in the Report of the
Chief Executive and at the Company's website. See note 18 for
details of the donation received.
14. Fair value of financial instruments
IFRS 13 requires the Company to classify financial instruments
at fair value using a fair value hierarchy that reflects the
significance of the inputs used in making the measurement. The fair
value hierarchy has the following levels:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities that the Company can access at the year-end
date (Level 1);
-- Those involving inputs other than quoted prices included
within Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices)
(Level 2); and
-- Those with inputs for the asset or liability that are not
based on observable market data (unobservable inputs) (Level
3).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. For this purpose, the
significance of an input is assessed against the fair value
measurement in its entirety.
If a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that
measurement is a Level 3 measurement. Assessing the significance of
a particular input to the fair value measurement in its entirety
requires judgement, considering factors specific to the asset or
liability.
The determination of what constitutes 'observable' requires
significant judgement by the Company. The Company considers
observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively
involved in the relevant market.
The valuations used to determine fair values are validated and
periodically reviewed by experienced personnel and are in
accordance with the International Private Equity and Venture
Capital Valuation Guidelines. The valuations, when relevant, are
based on a mixture of:
-- third party financing (if available);
-- cost, where the investment has been made during the year and
no further information has been available to indicate that cost is
not an appropriate valuation;
-- proposed sale price;
-- discount to NAV calculations;
-- discount to last traded price;
-- discounted cash flow; and
-- discount to bid prices of PLUS quoted investments.
A reconciliation of the opening and closing balances of assets
designated at fair value through profit or loss classified as Level
1 is shown below:
31 March 31 March
2018 2017
GBP'000 GBP'000
Fair value of investments brought
forward 306 127
Purchases during the year 7,704 -
Disposals proceeds during the year (303) -
Realised gains on disposals 185 -
Net unrealised change in fair value (1,164) 179
Fair value of investments carried
forward 6,728 306
---------------------------- -----------------------------
A reconciliation of the opening and closing balances of assets
designated at fair value through profit or loss classified as Level
3 is shown below:
31 March 31 March
2018 2017
GBP'000 GBP'000
Fair value of investments brought
forward 9,649 4,111
Purchases during the year 145 5,185
Disposals proceeds during the year (9,262) -
Realised gains on disposals 7,046 -
Net unrealised change in fair value (1,896) 353
Fair value of investments carried
forward 5,682 9,649
---------------------------- -----------------------------
15. Other receivables and prepayments
31 March 31 March
2018 2017
GBP'000 GBP'000
Other receivables 33 11
Distribution receivable 921 -
Amount due from Broker 100 -
Prepayments 32 24
1,086 35
------------------------------- -----------------------------
16. Share Capital, Warrants and Options
31 March 2018 31 March
2017
GBP'000 GBP'000
Authorised:
1,910,000,000 Ordinary Shares
of 1p (2017: 1,910,000,000 Ordinary
Shares) 19,100 19,100
100,000,000 Deferred Shares
of 0.9p (2017: 100,000,000 Deferred
Shares) 900 900
-------------- ------------------------
20,000 20,000
-------------- ------------------------
Allotted, called up and fully
paid:
130,730,875 Ordinary Shares
of 1p (2017: 132,985,875 Ordinary
Shares) 1,306 1,329
-------------- ------------------------
70,700,709 Deferred Shares of
0.9p (2016: 70,700,709) 630 630
-------------- ------------------------
Options:
Share options 16,647,992 17,680,879
-------------- ------------------------
Deferred Shares
In aggregate (not per share), the holders of Deferred Shares
shall be entitled to receive up to GBP1 only as a preferred
dividend or distribution. The Deferred Shares have zero economic
value. The holders of Deferred Shares, in respect of their holdings
of Deferred Shares, shall not have the right to received notice of
any general meeting of the Company, nor the right to attend, speak
or vote at any such general meeting. The Company has the right to
transfer the Deferred Shares to such persons as it wishes, without
the consent of the holders of the Deferred Shares, and to cancel
Deferred Shares with the consent of such transferee.
Options
On the appointment of Mr McDemott to the Board of Directors he
was granted 2 million Options over Ordinary Shares in the Company.
33% of the Options vested immediately, 33% of the Options shall
vest after 12 months and the balance of 34% shall vest after 24
months, on the same weighted average share price terms as for the
other Directors, as disclosed in note 8.
The options granted to Mr Stephen Dattels expired during the
year, on 30 September 2017, six months after his resignation as a
Director of the Company
Directors' Authority to Allot Shares
The Directors are generally and unconditionally authorised to
exercise all the powers of the Company to allot relevant securities
and subject to the terms the Directors may determine up to a
maximum aggregate nominal amount of GBP5,000,000 (representing
5,000,000,000 Sub-Ordinary Shares of GBP0.001 each, or 500,000,000
New Ordinary Shares of GBP0.01 each). Authority under this
resolution will expire on the date falling five years after the
date of the Annual General Meeting. The Guernsey Companies Law does
not limit the power of Directors to issue shares or impose any
pre-emption rights on the issue of new shares.
Accordingly, the Directors are generally and unconditionally
authorised to allot securities in the Company up to the authorised
but unissued share capital of the Company, any such power not to be
limited in duration.
Changes in share capital during the year
During the year the Company announced its intention to enter
into a share repurchase programme. The programme was undertaken
given the Directors' belief that the market price, particularly
given the portfolio developments during the year, significantly
undervalued the underlying value of the Company's investment
portfolio.
As a result of this programme 2,255,000 shares were repurchased
by the Company during the year, at a total cost of GBP385,000. This
takes the total number of shares bought back by the Company, and
held as Treasury shares, to 5,413,623.
17. Net Assets per Ordinary Share
Basic and diluted
The basic and diluted net asset value per Ordinary Share is
based on the net assets attributable to equity shareholders of
GBP13,534,000 (2017: GBP10,101,000) and on 130,730,875 Ordinary
Shares (2017: 132,985,875 Ordinary Shares) in issue at the end of
the year. The share price of the Ordinary Shares at 31 March 2018
of 18.35 pence (2017: 8.62 pence) was below the exercise price of
any of the Options (lowest exercise price of 19.00 pence).
Therefore, as at 31 March 2018 the Options had no dilutive
effect.
18. Related Parties
Mr Mellon, a director of FastForward, is a life tenant of a
trust which owns Galloway Limited ("Galloway"), which held
10,425,991 (2017: 10,425,991) Ordinary Shares in the Company at 31
March 2018 and at the date of signing this report.
At 31 March 2018 FastForward held 25,978 Ordinary Shares in The
Diabetic Boot Company Ltd ("DBC"). Galloway also hold shares in
DBC. The combined shareholding in DBC is in excess of 30%.
Mr Burns, a director of FastForward, is the legal and beneficial
owner of Smoke Rise Holdings Limited ("Smoke"), which held
1,374,024 (2017: 1,374,024) Ordinary Shares in the Company at 31
March 2018 and at the date of signing this report.
Mr Abony, a director of FastForward, held 12,248,436 (2017:
24,496,871) Ordinary Shares in the Company at 31 March 2018 and at
the date of signing this report.
In March 2017, FastForward was transferred an additional
2,000,000 shares in Vemo Education Inc by Mr Abony. The transfer
performed was for nil consideration, however, at the date of
transfer the fair value of the shares equated to GBP159,000 (note
13). As at 31 March 2018 FastForward held 3,527,059 (2017:
3,527,059) non-assessable series-2 preferred stocks in Vemo
Education. Inc ("Vemo"), a company related by virtue of common
shareholdings with Mr Abony. Mr Abony is also the non-executive
Chairman of Vemo.
As at 31 March 2018 FastForward holds a total of 3,288,436
(2017: 1,938,909) shares in Schoold. Mr Abony is a substantial
shareholder and the non-executive chairman of Schoold.
Mr McDermott is part of the corporate finance team at Optiva
Securities Limited, the Company's Broker. A total of GBP38,000 was
incurred by the Company in respect of Broker fees to Optiva
Securities Limited during the year.
The Directors' remuneration for the year ended 31 March 2018 is
disclosed in note 8. The Directors consider that there is no
immediate or ultimate controlling party.
19. Financial Risk Management
Treasury policies
The objective of the Company's treasury policies is to manage
the Company's financial risk, secure cost effective funding for the
Company's operations and to minimise the adverse effects of
fluctuations in the financial markets on the value of the Company's
financial assets and liabilities on reported profitability and on
cash flows of the Company.
The Company finances its activities with cash and short-term
deposits, with maturities of three months or less. Other financial
assets and liabilities, such as receivables and payables, arise
directly from the Company's operating activities. Derivative
instruments may be used to change the economic characteristics of
financial instruments in accordance with the Company's treasury
policies.
The financial assets and liabilities of the Company were:
31 March 31 March
2018 2017
GBP'000 GBP'000
Financial assets at fair value through
profit or loss
Investments 12,410 9,955
------------------------------- -----------------------------
Financial assets at amortised cost
Other receivables 1,086 35
Cash and cash equivalents 72 164
1,158 199
------------------------------- -----------------------------
Financial liabilities at amortised cost
Other payables 34 53
------------------------------- -----------------------------
The main risks arising from the Company's financial assets and
liabilities are credit risk, liquidity risk and market risk, and
are set out below, together with the policies currently applied by
the Board for their management. Market risk comprises three types
of financial risk, being interest rate risk, currency risk and
other price risk, being the risk that the fair value or future cash
flows will fluctuate because of changes in market prices other than
from interest rate and currency risks.
Credit risk
The Company takes on exposure to credit risk, which is the risk
that one party will cause a financial loss for the other party by
failing to discharge an obligation.
The Company's credit risk is primarily attributable to its other
receivables and cash and cash equivalents. In order to mitigate
credit risk, the Company seeks to trade only with reputable
counterparties that the management believe to be creditworthy.
The credit risk on cash and cash equivalents is limited by using
banks with high credit ratings assigned by international
credit-rating agencies.
At the year end, the entire amount of cash and cash equivalents
of GBP72,000 (100.00%) was placed with HSBC Bank plc (2017:
GBP164,000). The Moody's credit rating for HSBC Bank plc was Aa3 as
at 31 March 2018.
Liquidity risk
Liquidity risk is the risk that the Company may not be able to
generate sufficient cash resources to settle its obligations in
full as they fall due or can only do so on terms that are
materially disadvantageous. The Company invests in private
equities, which, by their very nature, are illiquid. During the
year the Company has chosen to dispose of specific investments when
appropriate opportunities arose. The Company incurs a range of
fixed expenses for which it can budget. As such it can
appropriately plan as to how to maintain a sufficient cash balances
to meet its working capital requirements.
Should it be identified that additional cash resources are
required, the Company would propose to issue further equity to the
market.
The contractual undiscounted cash flows of the Company's
financial liabilities, which are equal to the fair value of the
Company's financial liabilities, are all payable within three
months to the sum of GBP34,000 (2017: GBP53,000). The Company has
no contractual commitment to invest further in any of its existing
investments.
The Board monitors the Company's liquidity position on a regular
basis. In addition, the Company's Administrator continually
monitors the Company's liquidity position and reports to the Board
when appropriate.
Market risk
(i) Price risk
The Company's private equity investments and derivative
financial instruments are susceptible to price risk arising from
uncertainties about future values of the private equity investments
or derivative financial instruments. This price risk is the risk
that the fair value or future cash flows will fluctuate because of
changes in market prices, whether those changes are caused by
factors specific to the individual investment or financial
instrument or its holder or factors affecting all similar financial
instruments or investments traded in the market, if any.
During the year, the Company did not hedge against movements in
the value of its private equity investments. A 10%
increase/decrease in the fair value of private equity investments
would result in a GBP1,241,000 (2017: GBP995,000) increase/decrease
in the net asset value.
ii) Currency risk
The Company regularly holds assets (both monetary and
non-monetary) denominated in currencies other than the functional
currency (Sterling). It is therefore exposed to currency risk, as
the value of the financial instruments denominated in other
currencies will fluctuate due to changes in exchange rates.
Foreign currency risk, as defined in IFRS 7, arises as the
values of recognised monetary assets and monetary liabilities
denominated in other currencies fluctuate due to changes in foreign
exchange rates. IFRS 7 considers the foreign exchange exposure
relating to non-monetary assets and liabilities to be a component
of market price risk, not foreign currency risk. The Company
monitors the exposure on all foreign-currency-denominated assets
and liabilities.
The Company monitors its exposure to foreign exchange rates and,
where exposure is considered significant, appropriate measures
would be adopted to minimise these exposures. As at 31 March 2018,
a proportion of the net financial assets of the Company were
denominated in currencies other than Sterling as follows:
31 March 31 March 2017
2018
US Dollar GBP'000 GBP'000
Cash and cash equivalents 72 164
CAD Dollar
Other receivables 1,021 -
--------- -------------------
Net currency exposure 1,093 164
--------- -------------------
At 31 March 2018, if the exchange rate of the US Dollar had
strengthened/weakened by 10% against the Sterling, with all other
variables remaining constant, the increase/(decrease) in the profit
for the year would amount to +/- GBP7,200 (2017: +/-
GBP16,400).
At 31 March 2018, if the exchange rate of the CAD Dollar had
strengthened/weakened by 10% against the Sterling, with all other
variables remaining constant, the increase/(decrease) in the profit
for the year would amount to +/- GBP102,100 (2017: Nil).
iii) Interest rate risk
The Company currently funds its operations through the use of
equity. Cash at bank, the majority of which was in US Dollars at
the year end, is held at variable rates. At the year end, the
Company's financial liabilities did not suffer interest and thus
were not subject to any interest rate risk. It is unlikely that
interest rates would decrease by as much as 1% as they are
currently less than 1%. Any decrease in the interest rate to a
minimum of 0% would have an insignificant impact on the interest
income received by the Company.
20. Capital Management Policy and Procedures
The Company's capital structure is derived solely from the issue
of Ordinary and Deferred Shares.
The Company does not currently intend to fund any investments
through debt or other borrowings but may do so if appropriate.
Investments in early stage assets are expected to be mainly in the
form of equity, with debt potentially being raised later to fund
the development of such assets. Investments in later stage assets
are more likely to include an element of debt to equity gearing.
The Company may also offer new Ordinary Shares by way of
consideration as well as cash, thereby helping to preserve the
Company's cash for working capital and as a reserve against
unforeseen contingencies including, for example, delays in
collecting accounts receivable, unexpected changes in the economic
environment and operational problems.
The Board monitors and reviews the structure of the Company's
capital on an ad hoc basis. This review includes:
-- The need to obtain funds for new investments, as and when they arise
-- The current and future levels of gearing
-- The need to buy back Ordinary Shares for cancellation or to
be held in treasury, which takes account of the difference between
the net asset value per Ordinary Share and the Ordinary Share
price
-- The current and future dividend policy; and
-- The current and future return of capital policy.
The Company is not subject to any externally imposed capital
requirements.
21. Events after the Financial Reporting Date
On 3 May 2018 it was confirmed that the Company has been
authorised as a Closed-ended investment scheme by the Guernsey
Financial Services Commission (the "GFSC") under Section 8 of the
Protection of Investors (Bailiwick of Guernsey) Law, 1987 and the
Authorised Closed-Ended Investment Schemes Rules.
A full disposal of the investment in Aphria was concluded on 10
June 2018 for CAD 14.4m / GBP8.3m. The disposal was completed ahead
of legislation in Canada to legalise recreational marijuana use and
sales. Such a change in legislation impedes our ability to continue
to hold shares (due to restrictions as a Guernsey incorporated and
regulated company with shares listed on a stock exchange in the
UK).
The Company announced on 12 June 2018 that it had concluded an
agreement with Leap Gaming under the terms of which the Company
will subscribe for 306 new Preferred A Units at a price per Unit of
EUR3,265.31, total investment value of EUR1m. The price per unit
gives Leap a pre-money valuation of approximately EUR8m.
The Company announced on 19 June 2018 that it has subscribed
US$2m for a 0.8% equity interest in the Series A shares of
Juvenescence Limited, a BVI incorporated private company developing
therapies to slow, halt and potentially reverse ageing. The
Juvenescence founders include Mr Jim Mellon, the Non-Executive
Chairman of the Company. Mr Mellon is directly and indirectly
subscribing for US$7.5m of Series A shares in Juvenescence on the
same terms as the Company. Following this subscription Mr Mellon
will be interested in 20.6 per cent. of Juvenescence shares on a
fully diluted basis.
In addition, Mr Lorne Abony, the Chief Executive Officer of the
Company is subscribing US$1 m for Series A shares of Juvenescence
Limited on the same terms as the Company. Also, Regent Mercantile
Holdings Limited ("Regent"), a company of which Mr Ian Burns, a
Director of the Company, is a Director, is an existing shareholder
of Juvenescence but is not subscribing as part of this Juvenescence
Series A Funding. Following the Juvenescence Series A Funding,
Regent will be interested in 0.34% of Juvenescence (on a fully
diluted basis).
The Company announced on 22 June 2018 that it has subscribed for
2,300 units, CAD$2.3m, in Vogogo Inc. ("Vogogo"), a CSE-listed
Canadian technology company focused on the mining, exchange and
payments of Crypto-currencies. Each unit consists of $1,000
principal amount of two year Debentures and 1,000 Warrants. An
interest coupon of 8% per annum on outstanding Debentures is
payable semi-annually in arrears. Subject to regulatory approval,
the Debentures will be convertible into common shares of Vogogo at
a conversion price of C$0.50 per Common Share. Each Warrant will
entitle the holder to acquire one Common Share of Vogogo at a price
of $0.70 per share for a period of two years,
There are no other material events subsequent to year end which
require disclosure.
Directors and Advisers
For the year ended 31 March 2018
Directors
Jim Mellon (Chairman)
Ian Burns (Chief Operating Officer and Chief Financial Officer)
Lorne Abony (Chief Executive Officer)
Edward McDermott - appointed 12 February 2018 (Non Executive Director)
Administrator, Secretary and Registered Office Nominated Adviser
Vistra Fund Services (Guernsey) Limited Beaumont Cornish Limited
11 New Street 2nd Floor
St Peter Port Bowman House
Guernsey 29 Wilson Street
GY1 2PF London
EC2M 2SJ
Registrar Independent Auditor
Link Market Services (Guernsey) Limited PricewaterhouseCoopers CI LLP
(formerly Capita Registrars (Guernsey) Limited) Royal Bank Place
PO Box 627, Bulwer Avenue 1 Glategny Esplanade
St Sampsons St Peter Port
Guernsey Guernsey
GY2 4LH GY1 4ND
Brokers Guernsey Legal Adviser to the Company
Optiva Securities Limited Collas Crill
2 Mill Street Glategny Esplanade
London St Peter Port
W1S 2AT Guernsey
GY1 1WN
English Legal Adviser to the Company Company Secretary (until 20 November 2017)
Hill Dickinson LLP Joshua Epstein
The Broadgate Tower 11 New Street
20 Primrose Street St Peter Port
London EC2A 2EW Guernsey
GY1 2PF
Special Adviser
Norbert Teufelberger
11 New Street
St Peter Port
Guernsey
GY1 2PF
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UNVSRWUABRAR
(END) Dow Jones Newswires
July 06, 2018 12:44 ET (16:44 GMT)
Seed Innovations (LSE:SEED)
Historical Stock Chart
From Apr 2024 to May 2024
Seed Innovations (LSE:SEED)
Historical Stock Chart
From May 2023 to May 2024