TIDMFFWD
RNS Number : 1281X
FastForward Innovations Limited
26 August 2020
FastForward Innovations Ltd / AIM: FFWD / Sector: Closed End
Investments
26 August 2020
FastForward Innovations Ltd ("FastForward" or, "FFWD")
Final Results
FastForward Innovations Ltd, the AIM quoted company focusing on
making investments in fast growing and industry leading businesses,
is pleased to announce its final results for the year ended 31
March 2020.
Highlights from Investments
-- Leap Gaming delivered a 95% year-on-year increase in revenues
for January to May 2020 compared to the same period in 2019, and
secured 30 new customers and/or partnerships
-- Juvenescence announced the formation of Juvenomics Limited, a
joint venture with G3 Therapeutics, a trailblazer biotechnology
company leveraging biological big data for drug discovery and
development
-- EMMAC announced the signing of a non-binding letter of intent
relating to a business combination with Andina Acquisition Corp.,
pursuant to which EMMAC would become a publicly traded company on
the NASDAQ Stock Market
-- Yooma announced that Globalive Technology Inc. had signed a
binding letter of intent to acquire Yooma subject to various
conditions
-- Portage announced a 100:1 share consolidation effective on 3
June 2020 and the raising of an additional $6.98 million by a share
issuance of 698,145 shares
-- Vemo doubled its school count to over 60 colleges and public
universities on its platform and has helped its partners process
over $100 million in ISAs in 2019
-- Diabetic Boot Company insoles and footwear products are now
on the FP10 NHS prescription system for one hospital, with three
other hospitals ready to come on board post-COVID and the
expectation of further adoption
**S**
For further information on the Company please visit
www.fstfwd.co or contact:
Ed McDermott / Lance FastForward Innovations Email: info@fstfwd.co
de Jersey Ltd
James Biddle / Roland Beaumont Cornish Tel: +44 (0) 207 628 3396
Cornish Limited,
Nomad
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Jeremy King Optiva Securities Tel: +44 (0) 203 411 1881
Limited,
Broker
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Isabel de Salis / Beth St Brides Partners Tel: +44 (0)207 236 1177
Melluish Ltd,
Financial PR
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Extracts of the 2020 Annual Financial Report & Accounts are
set out below:
Chairman's Statement
I am pleased to present the annual report and audited financial
statements of the Company for the year ended 31 March 2020 as
non-executive Chairman.
This has largely been a positive year for FastForward as we
focus on delivering our core objective of providing investors with
exposure to disruptive growth opportunities that have near-term
re-rating potential and would otherwise be inaccessible.
During the last 12 months, several of our eight investee
companies have been active, with a number of them showing
particular promise.
Our investments within the medical cannabis space have been
particularly exciting. At the end of the year under review, EMMAC
Life Sciences ('EMMAC') announced that it has secured
pharmaceutical wholesaler and narcotics handling permits for
Germany, enabling it to generate immediate revenues from this major
medical cannabis market, which ranks No.1 in Europe and No.3
worldwide. Post year end, on 19 May 2020, EMMAC announced that
Medalchemy, its GMP certified manufacturing site in Alicante,
Spain, had secured approval from the Spanish Health Authorities to
manufacture medical cannabis extracts as active pharmaceutical
ingredients. The GMP license extension allows Medalchemy to
manufacture medical cannabis APIs with delta 9-tetrahydrocannabinol
for commercial purposes, establishing EMMAC as the first European
cannabis company to do so.
The momentum behind EMMAC continues to build. In July 2020,
EMMAC announced the signing of a non-binding letter of intent
relating to a business combination with Andina Acquisition Corp.,
pursuant to which EMMAC would become a publicly traded company on
the NASDAQ Stock Market. On successful completion, this would
enhance the liquidity of FastForward's holding in EMMAC and provide
a robust platform for the growth of the business. I look forward to
providing further updates as this progresses.
Our investments in the biotechnology sector are also progressing
well. Notably, Portage Biotech Inc. ('Portage') has been
particularly active since 15 April 2020, when trading of the
company's common shares resumed on the Canadian Stock Exchange
("CSE"). This enabled Portage to focus on delivering on its goal to
facilitate the delivery of the critical funding needed to enable
turnkey execution of commercially-informed development plans. In
line with this, Portage has since made noteworthy further
investments in two of its portfolio companies after significant
development milestones were reached. Post year end, Portage
announced a 100:1 share consolidation effective on 3 June 2020 and
the raising of an additional $6.98 million via a share issuance of
698,145 shares as announced on 26 June 2020, the proceeds of which
allowed Portage to accelerate its programmes and take advantage of
new value creating opportunities.
On a note of caution, it would be remiss not to refer to the
ongoing COVID-19 pandemic (the 'Pandemic'). Until there is greater
clarity on the Pandemic's long-term consequences, concerns over its
impact are likely to affect most of our investee businesses in some
way; amongst other things, it is naturally a more challenging
market for fundraising, which could delay the roll-out of future
growth plans. At the same time, certain companies could or have
prospered during the Pandemic year.
Online gaming group Leap Gaming ('Leap') is one such company,
with daily turnovers increasing significantly as well as an
exciting new business pipeline increasing by similar multiples. As
an example of its high calibre work, on 1 April 2020 Leap announced
that its strategic partner, IMG Arena ('IMG'), was launching an
official virtual tennis product jointly developed by the two
companies. This first-ever officially branded virtual tennis
product, which uses state of the art motion capture technology to
create extremely realistic experiences for its customers, features
logos from the ATP Masters 1000 series along with official
tournament names, to deliver an authentic experience. This same
partnership has enabled IMG to offer bookmakers a virtual sports
betting product for the NASCAR US stock car racing series, as well
as distributing the international betting streaming rights for the
first time.
Post year end in June 2020, Leap provided updates on the
extension of two further partnerships, one with 888Sport and
another with Stoixman/Betano. Leap has expanded its geographic
footprint delivering a 123% year-on-year increase in gross gaming
and a 95% year-on-year increase in revenues for January to May 2020
compared to the same period in 2019. The Board strongly believes
these recent developments could increase the potential for
liquidity opportunities in a very reasonable timeframe.
Not all our investments have experienced quite such a smooth
ride. For example, our investee company Factom has experienced
significant difficulties during the year and we took the prudent
decision to write the value of the investment down to nothing.
Subsequently we have been working with Factom on a restructuring
following their announcement of filing for Chapter 11 bankruptcy
and, subject to Court approval, we have agreed to convert our SAFE
into equity equivalent to 30.39% of the issued share capital of the
company. Whilst there are still a number of factors to be resolved
this at least gives us a meaningful stake in the business as it
seeks to recapitalise and move forward. However, given our strategy
is to invest across a broad range of companies, risk is spread
appropriately.
On the corporate side, as announced on 18 May 2020, Ed
McDermott, who was previously a Non-Executive Director of the
Company, has been appointed Chief Executive Officer ("CEO"), and I
have been appointed Non-Executive Chairman, taking over from Lorne
Abony who has stepped down from his board positions at FastForward
to focus on his new position as a Non-Executive Director of Yooma
Corp. ('Yooma') and to pursue his other business interests. Lorne
has been a huge support for FastForward, and we are delighted that
we will continue to work with him in his capacity as a Director of
four of our investee companies, EMMAC, Leap, Vemo Education and
Yooma (see Chief Executive Officer statement for more information
about this new investment).
As our financial statements highlight, there has been variation
within the portfolio with regard to performance. Some of our
investee companies have increased in valuation including EMMAC by
GBP400,000 and Leap by GBP1.6 million, both of which have performed
particularly strongly. The rest of the portfolio can be seen in the
valuation report below.
Looking ahead, despite several macro themes causing a volatile
market, I believe FastForward has a great opportunity to scale up
and focus the capital we generate in the areas of life sciences,
longevity, healthcare, and cannabinoid therapies. With the
potential listings of EMMAC and Yooma the liquidity of our
portfolio is becoming more balanced than ever before and is
reflective of the new investment strategy adopted in July. I look
forward to updating shareholders as our investment portfolio
advances and strengthens.
Resu lts
The net assets of the Company at 31 March 2020 were
GBP14,238,000 (2019: GBP19,072,000), equal to net assets of 8.82p
per Ordinary Share (2019: 11.81p per Ordinary Share).
Ian Burns
Non-Executive Chairman
25 August 2020
Report of the Chief Executive Officer
Introduction
I am delighted to make my inaugural report to shareholders as
the CEO of the Company, having taken over from Lorne Abony. Not
only has Lorne been a great mentor to me, but during his time on
the Board, he has developed an excellent platform for investors of
any size to gain exposure to opportunities that are too often
reserved for super high net worth investors or venture capital
funds.
Strategy
During the year, we have maintained focus on our strategy to
provide investors with exposure to disruptive growth opportunities
that have near-term re-rating potential and which would otherwise
be inaccessible. As is the nature of investing in early stage
venture capital investments, our investments have performed to
varying degrees of success and it has become apparent that as a
Board we want to capitalise on our knowledge in the health and
wellness arena and focus primarily on future investments within
those sectors.
Portfolio
The table below lists the Company's holdings at 31 March 2019
and 31 March 2020.
Holding Share Category Country Number Valuation Number Valuation
Class of incorporation of shares at of shares at
held at held
31 March at 31
2020 March
2019
31 March 31 March
2020 2019
(GBP'000) (GBP'000)
Juvenescence Series Biotech/
Ltd A Healthcare BVI 128,205 2,561 128,205 2,419
----------------- -------------- ------------ ------------------ -------------------- ---------------- ---------------- ----------------
EMMAC Life
Sciences Biotech/
Ltd Ordinary Healthcare England 6,666,667 2,400 6,666,667 2,000
----------------- -------------- ------------ ------------------ -------------------- ---------------- ---------------- ----------------
Factom, Series Blockchain
Inc Seed Tech USA 400,000 - 400,000 546
----------------- ------------ ------------------
SAFE note - - - 4,584
-------------- ------------------------------------------------- -------------------- ---------------- ---------------- ----------------
Fralis LLC
(Leap Gaming) Units Gaming Nevis 1,512 7,148 1,512 5,533
----------------- -------------- ------------ ------------------ -------------------- ---------------- ---------------- ----------------
Series Media
Seed and
Yooya Media* Preferred Content BVI 27,255 50 27,255 1,451
----------------- -------------- ------------ ------------------ -------------------- ---------------- ---------------- ----------------
Series
Intensity A Preferred
Therapeutics, & Series Biotech/
Inc B Preferred Healthcare USA - - 288,458 992
----------------- -------------- ------------ ------------------ -------------------- ---------------- ---------------- ----------------
Portage Biotech
Biotech /
Inc. Ordinary Healthcare BVI 12,980,610 946 - -
----------------- -------------- ------------ ------------------ -------------------- ---------------- ---------------- ----------------
Vemo Education, Pref Series
Inc Seed 1 Edtech USA - - 2,527,059 337
----------------- ------------ ------------------
Series
Seed-2 1,000,000 267 1,000,000 248
-------------- ------------------------------------------------- -------------------- ---------------- ---------------- ----------------
Convertible
Vogogo Debentures Blockchain
Inc/Cryptologic & Warrants Tech Canada - - - 494
----------------- -------------- ------------ ------------------ -------------------- ---------------- ---------------- ----------------
The Diabetic
Boot Company Biotech/
Limited Ordinary Healthcare England 25,978 - 25,978 -
----------------- -------------- ------------ ------------------ -------------------- ---------------- ---------------- ----------------
Total investments
value 13,372 18,604
Cash and receivables, net of payables and
accruals 866 468
Net asset value 14,238 19,072
================ ================
Transfer of Yooya Media to Yooma Corp. subsequent to year end is
explained in detail on Page 8.
Investee Companies Review
Leap Gaming (investment position: c. 50.2% of NAV) ('Leap') is a
gaming developer, which creates ultra-realistic 3D games deployed
on multiple platforms. Through its strong partnerships with gaming
operators worldwide, Leap delivers diverse, immersive, and
innovative sports betting and casino content. Leap currently offers
14 virtual sports products, seven scheduled and six in instant
suite, an innovation developed by Leap, which empowers users to
create their own experience in their own time rather than having to
wait for 'scheduled' events. This has been a huge success with
sales of the product increasing by 240% year-on-year.
During the last 12 months, Leap has significantly advanced its
pipeline of products and the partnerships through which they are
deployed. Early in the year Leap announced a new partnership with
established online betting and gaming platform Mansion Casino
('Mansion') around the distribution of Leap's game portfolio across
Mansion's international footprint. This represents a further
high-profile client that has recognised the capabilities and track
record of Leap and its ability to develop cutting edge immersive
games that appeal to a global audience. Leap has also seen the
benefits of its strategic partnership with IMG Arena including the
launch of a jointly developed official virtual tennis product
featuring logos from the ATP Masters 1000 series along with
official tournament names guaranteeing the delivery of an authentic
experience, as well as a new virtual sports betting product for the
NASCAR US stock car racing series.
Leap has 30 new customers signed and/or partnerships agreed, and
has expanded its geographic footprint delivering a 123%
year-on-year increase in gross gaming and a 95% year-on-year
increase in revenues for January to May 2020 compared to the same
period in 2019. To support this rapid growth FastForward invested a
further EUR117,647 as part of a pro rata allocation of a EUR250,000
loan being provided by all shareholders in June 2020. Leap has
established itself as a leader in virtual gaming and continues to
develop and utilise partnerships that have the potential to take
its business to another level.
Factom Inc. (investment position: c. 0% of NAV) ('Factom')
provides blockchain solutions that preserve, ensure, and validate
digital assets. As announced on 14 April 2020, discussions are
ongoing as to whether Factom is going to be restructured, receive
new investment, or be wound up. In any of these cases, it is likely
that the continuing value of FastForward's investment or any amount
received by the sale of assets will be a fraction of that invested.
As such, in the interim and until there is more clarity on the
value that can be attributed to the Factom investment by virtue of
progress along one of the possible scenarios, FastForward has
written off the complete investment.
Factom filed for Chapter 11 bankruptcy protection on 18 June
2020, under the application of which they applied for the SAFE note
held by the Company to be cancelled with no further liability to
FastForward. Subsequent to this filing, the Company filed motions
opposing this course of action and at the same time continued to
engage with Factom management regarding the potential conversion of
the SAFE note into equity in Factom, resulting in agreement being
reached for the conversion of the SAFE note to equity (subject to
approval by the US Bankruptcy Court and shareholders of Factom) as
announced on 30 July 2020.
Should such approvals be given, and following conversion, the
Company would hold 6,311,330 shares in Factom, representing 30.39%
of the then issued share capital. Further updates will be provided
as soon as commercial conditions allow.
Juvenescence Ltd. (investment position: c. 18% of NAV) is a
biopharmaceutical company developing a pipeline of therapeutic
assets focused on modifying human aging. Juvenescence has raised
$168 million to date. Juvenescence in-licenses or uses joint
ventures to acquire assets that it develops. Post year end, in June
2020, Juvenescence announced the formation of Juvenomics Limited, a
joint venture between Juvenescence and G3 Therapeutics, a
trailblazer biotechnology company leveraging biological big data
for drug discovery and development.
Juvenomics, its latest development platform, is built on the
unique combination of G3 Therapeutics' proprietary, multi-omic
biological dataset consisting of trillions of proprietary
datapoints collected in the GLOBAL Clinical Study of over 7,500
patients, and the unique machine learning platforms assembled by
Juvenescence. Juvenomics will focus on developing validated
nutraceuticals and medicines to combat aging and aging-related
diseases such as those of the musculoskeletal system.
The science surrounding the pathology and process of aging is
rapidly accelerating, providing a number of therapeutic
opportunities for Juvenescence to in-license or joint venture and
develop . We look forward to providing further updates as
Juvenescence's portfolio continues to advance into clinical trials
and monetization.
EMMAC Life Sciences Group (investment position: c. 16.9% of NAV)
('EMMAC') is Europe's leading independent cannabis company,
bringing together pioneering science and research with cutting-edge
cultivation, extraction, and production. During the year under
review, EMMAC significantly expanded its distribution network
across various jurisdictions.
On 18 February 2020, EMMAC announced the successful export of
400 kilograms of medical cannabis to the Bazelet Group, the largest
medical cannabis company in Israel. This was a major milestone for
EMMAC and an agreement that it hopes to build on, further
establishing itself in the mature Israeli medical cannabis market.
In line with EMMAC's business strategy to strengthen its position
in the European medical cannabis and wellness markets, it launched
the UK's first operational distance pharmacy dedicated to
fulfilling medical cannabis prescriptions. Further to this, on 19
May 2020, EMMAC announced that Medalchemy, EMMAC's GMP certified
manufacturing site in Alicante, Spain, has secured approval from
the Spanish Health Authorities to manufacture medical cannabis
extracts as active pharmaceutical ingredients. The GMP licence
extension allows Medalchemy to manufacture medical cannabis APIs
with delta 9-tetrahydrocannabinol for commercial purposes. EMMAC is
the first European cannabis company to do this, further
establishing its presence in all aspects of the cannabis supply
chain and ensuring it is well placed to meet the rapidly growing
demands of the market, driven by regulatory change and consumer
demand.
In July 2020, EMMAC announced the signing of a non-binding
letter of intent relating to a business combination with Andina
Acquisition Corp., pursuant to which EMMAC would become a publicly
traded company on the NASDAQ Stock Market with EMMAC's shareholders
rolling over all of their equity in EMMAC into the combined public
company. On successful completion, this would crystallise the value
and enhance the liquidity of FastForward's holding in EMMAC and
provide a robust platform for the growth of the business. As
Europe's largest independent cannabis company, EMMAC is an
extremely attractive investment opportunity and the Andina team
possess the relevant experience to add significant value as its
strategic partner. Following this, on 28 July 2020, EMMAC also
announced that Medalchemy, its Good Manufacturing Practice
certified manufacturing site in Alicante, Spain has secured
approval from the Spanish Health Authorities to cultivate medical
cannabis, further strengthening its position in Europe.
Yooya (investment position: c. 0.35% of NAV) ('Yooya') has
subsequently been acquired on 22 April 2020 by Yooma Corp in a
share swap transaction (see below) and a further cash investment of
$1 million made in Yooma. The investment position of 0.35% /
valuation of $61,500 (GBP50,000) above is based on the $390,000
($0.03 per share) price paid in Yooma stock to Yooya shareholders
(as announced 23 April 2020), however the subsequent Yooma
fundraising at $0.65 per share would indicate a much higher
valuation of Yooma as at 18 May 2020 of $1.3M.
Yooma Corp. (investment by share swap of Yooya shares on 22
April 2020 and a further $1 million cash investment made on 18 May
2020) ('Yooma') has a business plan that includes partnering with
some of Pan-Asia's leading social and e-commerce platforms creating
the first Hemp and CBD focused lifestyle company in Asia.
Initially, it will focus on hemp-based wellness products in China
but will expand to include licensed CBD products in new territories
as the business develops. Yooma has built a high calibre
international team of multi-cultural, multi-language industry
professionals who specialise in building new to market brands,
leveraging live streaming, social media marketing and e-commerce
distribution channels.
On 13 July 2020, Yooma announced that Globalive Technology Inc.
(Ticker: LVVEF) had signed a binding letter of intent to acquire
("LOI") Yooma subject to various conditions. The LOI indicates a
further increase of the potential carrying value of the enlarged
Yooma investment by the Company from $2.33M to $2.66M (+14%), with
the additional benefit of the improved liquidity afforded by the
resultant Globalive investment being listed on the TSXV.
FastForward continues to monitor developments and will provide
further updates in due course.
Portage Biotech Inc. (investment position: c. 6.6% of NAV)
('Portage') is a unique entity in the world of biotechnology,
enabling research and development to produce more clinical
programmes and maximise potential returns by eliminating typical
overhead costs associated with many biotechnology companies.
To this end, it provides funding and advice to a portfolio of
nine subsidiary companies; projects under development include
research and treatments for various cancers, eye disease and acute
kidney injury.
During the year, Portage supported several significant
advancements across its portfolio of companies. On 31 January 2020,
it announced a further investment of $950,000 into one of its
portfolio companies, iOx Therapeutics Ltd. ('iOx'), a UK-based
immunoconcology company. This will support the commencement of
human studies to collect safety data for iOx's drug treatment in
cancer patients, which represents a major milestone in its
work.
As announced on 16 April 2020, the trading of Portage's common
shares on the CSE resumed following the revocation of a
Failure-to-File Cease Trade Order issued against Portage on 2
August 2019. Following this, in May 2020, Portage made additional
investments, providing vital funding to two of its portfolio
companies, Stimunity S.A.S and Saugatuck Therapeutics Ltd. Post
year end, Portage announced a 100:1 share consolidation effective
on 3 June 2020 and the raising of an additional $6.98 million by a
share issuance of 698,145 shares as announced on 26 June 2020. The
company is performing well despite difficult market conditions and
I look forward to updating shareholders on other advances across
its portfolio in due course.
Vemo Education (investment position: c. 1.9% of NAV) ('Vemo') is
one of the leading US providers of Income Share Agreement
programmes ('ISAs'), which enable students to defer some of their
costs to a US college or university in exchange for a fixed
percentage of their post-graduation income for a fixed period. This
increases transparency around student experiences, helping schools
improve, compete, succeed, and fundamentally change the
relationship they have with students. During 2019, Vemo has doubled
its school count to over 60 colleges and public universities on its
platform and has helped its partners process over $100 million in
ISAs.
The Diabetic Boot Company (investment position: 0% of NAV)
("DBC") is focused on the treatment of diabetic foot ulcers. Its
lead product is the PulseFlow(R) a new form of diabetic friendly
footwear with integrated offloading capabilities and patented
technology which aids in the promotion of blood flow and improved
circulation in one product. Due to slow development and significant
uncertainty this investment has been valued at nil since March
2018. Since being written down, the company has been supported by
finance provided by Jim Mellon which will have a dilutive effect on
the stake held by FastForward. During the year DBC has completed a
restructuring, refining its market approach and re-engaging with UK
health care. DBC opened an office inside the NHS accelerator
facility in Liverpool, leading to DBC receiving NIHR support for
two extensive evaluation studies in Liverpool and Kings College
London, paid for by the NHS. DBC insoles and footwear products are
now on the FP10 NHS prescription system for one hospital, with
three other hospitals ready to come on board post-COVID and the
expectation of further adoption.
Cryptologic (investment position: Sold) is a Canadian listed
company involved in cryptocurrency mining. FastForward sold its
entire debenture investment in Cryptologic during the year from
(late 2019 to January 2020) for proceeds of CAD$1.5M (c.GBP908K)
against an initial cost of CAD$2.3M (c.GBP1.3M). This position had
however previously been written down to the CAD$863K (GBP494K) in
March 2019 and as such the disposal represented a gain of c.GBP414K
over the March 2019 valuation, but a loss of GBP395K compared to
original cost.
Conclusion
The past 12 months have undoubtedly brought some challenges for
FastForward (in particular the writing off of the entire value of
the investment in Factom and the sale of Yooya to Yooma at a much
lower price than the previous carrying value). However, as has been
evidenced above, a large portion of our investments have continued
to make positive advances and reach significant milestones in their
development whilst we have managed to restructure some of those
which had been struggling giving us a real chance of a return on
investment when they might otherwise have been lost.
With this in mind, I am excited about what the next year will
bring, and I am firm in my belief that through narrowing our
sectoral focus for future investment and streamlining our existing
portfolio to also reflect this, we are well positioned to deliver
value over the short-to-medium term and reach a share price that is
more reflective of our underlying NAV.
Ed McDermott
CEO
Investing Policy
The Investing Policy of FastForward Innovations Limited (the
"Company" or "FastForward") was updated to the following by
Shareholders Resolution at an Extraordinary General Meeting held on
13 July 2020.
"The Board proposes to invest in companies which, in normal
circumstances, individual investors may have limited access to.
Investments sought will be in sectors which have, or have the
potential for, significant intellectual property, principally in
the wellness and life sciences sectors (including biotech,
longevity of life and pharmaceuticals) along with aligned
technology sectors (including artificial intelligence and digital
delivery). Equally the Board will consider investments in
established industries where the business is applying new
technologies and/or 'know how' to enhance its offering or taking
established business models or products to new markets. In keeping
with its desire to provide its shareholders with access to
investments they may otherwise not be able to participate in, the
Board also intends to apply a portion of the portfolio to
opportunistic investments which may, by exception, fall outside the
above criteria but represent good potential for short term returns.
Such investments will be limited at 15% of the Company's NAV and
would typically be in fundraisings by listed companies or as part
of an IPO.
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.
In selecting investment opportunities, the Board will focus on
businesses, assets and/or projects that are available at attractive
valuations and hold opportunities to unlock embedded value. In line
with the existing portfolio it is expected that investments will be
in SMEs with sub GBP100m valuations but with the potential for
significant growth. Where appropriate, the Board may seek to invest
in businesses where it may influence the business at a board level,
add its expertise to the management of the business, and utilise
its industry relationships and access to finance. The extent that
the Company will be a passive or active shareholder will depend on
the interest held and the maturity of the investee company.
The Company's interests in a proposed investment and/or
acquisition will range from minority positions to full ownership
and will comprise multiple investments. The proposed investments
may be in either quoted or unquoted companies; are likely to be
made by direct acquisitions or investments; and may be in
companies, partnerships, earn-in joint ventures, debt or other loan
structures, joint ventures or direct or indirect interests in
assets or businesses.
The Company will pursue a balanced portfolio of an even mixture
of early stage, pre-liquidity event and liquid investments which it
will aim to hold within the portfolio for 2-4 years, 6-24 months
and up to 12 months respectively. Whilst the target is to have the
portfolio split fairly evenly between the different stages of
liquidity there will be no set criteria for which the Company will
hold an investment and the proportion of the portfolio which will
be represented by each investment type.
There is no limit on the number of projects into which the
Company may invest. The Directors intends to mitigate risk by
appropriate due diligence and transaction analysis. The Board
considers that as investments are made, and new promising
investment opportunities arise, further funding of the Company may
also be required.
Where the Company builds a portfolio of related assets it is
possible that there may be cross holdings between such assets. The
Company does not currently intend to fund any investments with debt
or other borrowings but may do so if appropriate. Investments 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 Board may also offer new
Ordinary Shares by way of consideration as well as or in lieu of
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 will conduct initial due diligence appraisals of
potential businesses or projects and, where it believes that
further investigation is warranted, it intends to appoint
appropriately qualified persons to assist. The Board believes it
has a broad range of contacts through which it is likely to
identify various opportunities which may prove suitable. The Board
believes its expertise will enable it to determine quickly which
opportunities could be viable and so progress quickly to formal due
diligence. The Company will not have a separate investment manager.
The Board proposes to carry out a comprehensive and thorough
project review process in which all material aspects of a potential
project or business will be subject to rigorous due diligence, as
appropriate. Due to the nature of the sectors in which the Company
is focused it is unlikely that cash returns will be made in the
short to medium term on the majority of its portfolio; rather the
Company expects a focus on capital returns over the medium to long
term."
Directors
Ian Burns (formerly Non-Executive Director, appointed
Non-Executive Chairman from 15 May 2020)
Mr Burns is a fellow of both the Institute of Chartered
Accountants in England & Wales and a member of STEP. He is the
founder and 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. He is licensed by the Guernsey Financial Services
Commission as a personal fiduciary.
Mr Burns is currently a Non-Executive Director and audit
committee chairman of River & Mercantile UK Micro Cap Ltd and
Twenty Four Income Fund Limited. He is also a Non-Executive
Director of Darwin Property Management (Guernsey) Limited, Curlew
Capital Guernsey Limited and Premier Asset Management (Guernsey)
Ltd. as well as Chairman of One Hyde Park Limited.
Edward McDermott (formerly Non-Executive Director, appointed
Chief Executive Officer from 15 May 2020)
Mr McDermott, a former investment banker, has over 15 years'
experience in the management, financing and strategic development
of growth companies. He has broad experience in a number of high
growth sectors. As a finance specialist he has been pivotal in
raising over GBP500m for public and private companies during his
career.
Mr McDermott is a co-founder and UK Managing Director of medical
cannabis company EMMAC Life Sciences. He currently serves as a
Non-Executive Director of LSE quoted Emmerson Plc. He has
previously held a number of Executive and Non-Executive roles with
publicly quoted companies.
Lance De Jersey (Finance Director)
Mr De Jersey is a member of the Institute of Chartered
Secretaries and Administrators and The Institute of Directors. He
previously headed Partners Group's Guernsey office, serving on the
Guernsey boards and chairing the Risk & Audit and AML
committees and was a member of the Investment Oversight committee.
He has over eight years' experience in private equity investment
administration and management.
In the past, Mr De Jersey has owned and operated retail
franchises, marketed and sold small businesses as a business broker
and worked as a financial adviser in New Zealand. He is currently a
Non-Executive Director of Pearl Holding Limited (an investment fund
managed by Partners Group) and is former secretary and vice
chairman of the Channel Island Private Equity and Venture Capital
Association.
Luke Cairns (Non-Executive Director, appointed 3 January
2020)
Mr Cairns is a highly experienced finance professional with a
strong network having worked in the City of London for 19 years in
corporate finance. A Guernsey resident, Mr Cairns was previously
Head of Corporate Finance and Managing Director at Northland
Capital Partners, an AIM focused Nomad and Broker, and has worked
with many growth companies across a number of sectors and regions
on a wide range of transactions, including IPOs, secondary
fundraisings, corporate restructurings and takeovers. Mr Cairns has
also held directorships on both listed and private companies across
various sectors and provides advisory and consultancy services to
SMEs.
Report of the Directors
The Directors are pleased to present their annual report and the
audited financial statements for the year ended 31 March 2020.
Status and Activities
The Company is a 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 is listed on AIM, a market operated by the London
Stock Exchange ("AIM").
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 21 August 2019 Mr Mellon resigned as Director and Chairman of
the Company and was succeeded on an interim basis by Lorne
Abony.
On 3 January 2020, Mr Cairns was appointed as Non-Executive
Director of the Company. Mr Cairns' biography is on page 11.
Changes after the year-end
On 15 May 2020, Mr Abony resigned as CEO and Interim Executive
Chairman and accepted to defer remuneration payment of GBP250,000
as at date of resignation. He was succeeded by Mr Burns as
Non-Executive Chairman and Mr McDermott as CEO, effective 15 May
2020.
Results
The results of the Company for the year are shown on page 24.
The Company made a loss for the year of GBP4,996,000 (2019: Profit
GBP1,408,000).
Dividends
The Company did not pay any dividends during the year (2019:
GBPNil) and the Directors do not propose a final dividend for the
year (2019: GBPNil).
Investments
Details of the Company's investments are disclosed in the Report
of the Chief Executive Officer and notes 12, 13 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, 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 11 of this
report. Changes to the board during the year are disclosed on page
12. There is a service contract in place between Mr De Jersey and
the Company. No other Director has a service contract. Details of
Directors' remuneration, bonuses and Options granted to the
Directors are disclosed in note 7.
Mr Burns is the legal and beneficial owner of Smoke Rise
Holdings Limited, which held 1,374,024 (0.85%) Ordinary Shares in
the Company at 31 March 2020 and the date of signing this
report.
Mr Abony held 14,843,211 (9.19%) Ordinary Shares in the Company
at 31 March 2020 and at the date of signing this report.
Mr De Jersey held 400,000 (0.25%) Ordinary Shares in the Company
at 31 March 2020 and at the date of signing this report.
Further details are explained in note 18.
Substantial Interests as at date of signing
The following interests in 3% or more of the issued Ordinary
Shares of the Company:
Number of Ordinary Percentage of
Shares Share Capital
Investors:
Jim Mellon* 16,283,722 10.08%
Peter Saladino 15,284,590 9.46%
Lorne Abony 14,843,211 9.19%
Norbert Teufelburger 8,184,802 5.07%
Richard Hackett 8,107,111 5.02%
*Mr Mellon is a life tenant of a trust which owns Galloway
Limited, which held 10,425,992 (6.46%) Ordinary Shares in the
Company. Mr Mellon also holds 5,857,730 (3.63%) Ordinary shares in
the Company at 31 March 2020 and at the date of signing this
report.
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.
Whilst note 21 details the uncertainty of coronavirus'
(COVID-19) impact, the Directors note that the Company has
sufficient cash and cash equivalent resources to meet its
obligations for at least one year after the approval of these
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
At 31 March 2020, the Board comprised two Executive Directors,
being Messrs Abony & De Jersey and three Non-Executive
Directors, Mr Burns, Mr McDermott and Mr Cairns.
Following the resignation of Mr Abony on 15 May and the
appointment of Mr McDermott as CEO, there are now two Executive
Directors (Messrs McDermott and De Jersey) and two Non-Executive
Directors (Messrs Burns and Cairns). 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 was chairman of the Audit Committee at 31 March 2020.
He was succeeded in this position by Mr Cairns with effect from 5
June 2020. 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. Mr Cairns is a
member 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 or election 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 Luke Cairns 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) 14/14
7/7
Jim Mellon (appointed 13 July 2015, resigned 21 August 2019) 2/14 1/7
Lorne Abony (appointed 6 January 2016, resigned 15 May 2020) 6/14 0/7
Ed McDermott (appointed 12 February 2018) 14/14
7/7
Lance De Jersey (appointed 3 January 2019) 14/14
7/7
Luke Cairns (appointed 3 January 2020) 2/14
0/7
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 (providing any continuing
restrictions as a result of the COVID-19 pandemic so allow) and
vote at future Annual General Meetings during which the Board will
be available to discuss issues affecting the Company.
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 and RNS announcements.
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
Lance De Jersey Ian Burns
Director Director
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 2020, 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 2020;
-- 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
description of the 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 GBP355,000 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
Lance De Jersey, the Finance Director of the company.
* We conducted our audit work in Guernsey and we
tailored the scope of our audit by taking into
account the types of investments held by 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 financial assets designated at fair
value through profit or loss
* Impact of Covid-19 on the company
* Accounting treatment of the share-based payment
scheme
------------------------------------------------------------------
Audit scope
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 among 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
company 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 company materiality GBP355,000 (2019: GBP476,800)
How we determined it 2.5% of net assets
---------------------------------
Rationale for the materiality We believe net asset value is
benchmark the most appropriate basis for
determining materiality since
this is a key area of focus for
stakeholders in assessing the
performance of the company. It
is also a generally accepted
measure used for companies in
the industry.
---------------------------------
We agreed with those charged with governance that we would
report to them misstatements identified during our audit above
GBP17,000, 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
judgment, 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 held discussions with management
designated at fair value through in order to update our understanding
profit or loss of the process over the preparation
Financial assets designated at and review of investment valuations
fair value through profit or and obtained an understanding
loss at the year end of GBP13.4 of the portfolio performance
million, as detailed under note for the year.
13, comprise investments in early We obtained the supporting valuation
stage private equity/venture workbooks and reports from management
capital entities operating primarily and performed the following substantive
in technology and life science audit procedures:
sectors. * For the valuations supported by third party
independent valuation experts' reports commissioned
The investment balance represents or obtained by management (which comprised 93% of the
the most significant balance portfolio), we evaluated the reliability of the
on the statement of financial reports by considering the experts' credibility and
position and, due to the high objectivity, assessed the reasonableness of the
levels of management estimate valuation models and we reviewed the valuation
and judgment involved in valuing reports in order to identify any caveats with regards
the investments, as detailed to the impact of Covid-19 which could impair the
under notes 3(e) and 4, is considered reliability of the valuations performed;
a key area of focus in the audit.
* We performed stress analysis on certain investments
where highly judgmental inputs or assumptions would
have resulted in a range of valuation outcomes and we
did not note material deviations in this analysis;
* We assessed the valuation methodology applied to each
investment valuation in the portfolio and ensured the
investments are valued in accordance with the
company's stated accounting policy; and
* We checked the mathematical accuracy of the valuation
calculations and corroborated key inputs where
appropriate.
We further considered the appropriateness
of disclosures made on the financial
statements regarding investment
valuation in accordance with
IFRS 13.
Based on the audit procedures
performed and results of our
testing, we have not identified
any exceptions that required
reporting to management.
---------------------------------------
Impact of Covid-19 on the company
The development of the Covid-19 We discussed management's assessment
pandemic during March 2020 has of the impact of Covid -19 on
resulted in a significant impact the company, and we note that
on the global economy and, given the two key areas affected by
the timing of the pandemic, has the pandemic include investment
an impact on the year end results valuation and the ability of
of the company, with continued the company to continue as a
uncertainty affecting the markets going concern.
post year end, as disclosed under Based on our discussions with
note 21. management and review of the
portfolio performance, we understand
that there has been a range of
impact felt across the investment
portfolio with certain investments
positively affected and some
suffering slightly but, given
the nature of the investments,
no significant adverse impact
has been noted. Specific procedures
have been performed to address
the higher risk of uncertainty
in our scrutiny of the third
party valuation reports and by
performing a more detailed assessment
of the underlying investments'
viability prospects.
With regards to the going concern
assessment of the company, we
have obtained management's going
concern assessment and cash flow
forecast and have noted that
management have modelled an appropriate
'worst case' scenario as well
as formalised mitigating actions
for cash saving options should
these measures be required.
We enquired to ensure management
is satisfied with the operational
resilience of all key service
providers and no issues were
identified.
Based on our procedures performed
we did not identify any concerns
regarding the impact of Covid-19
that required reporting to management.
---------------------------------------- ------------------------------------------
Accounting treatment of the share-based Our audit team included members
payment scheme with specialised knowledge and
The share-based payment scheme, experience of share-based payments
as detailed under note 7, has and IFRS 2 . We have updated
an immaterial impact on the statement our understanding of the system
of comprehensive income in the and controls in place around
current year (GBP162,000); however the share-based payment scheme
the Employee stock option reserve in the current year and we note
balance is material (GBP1.263 that there have not been any
million) and due to the complexity new issues of options nor any
of IFRS 2, we have considered modifications to the scheme terms,
this to be a key audit matter. the only change in the current
year was the exit of one director
from the scheme (as disclosed
under note 7).
Accounting treatment of the share-based In the prior year the board engaged
payment scheme (continued) a third party expert to review
the initial valuation performed
as at grant date and issue an
updated valuation report and
the accounting entries required
to account for the scheme over
the remainder of the vesting
period were agreed between the
board, the expert and the administrator.
We obtained management's supporting
workings for the current year
expense, we verified key inputs
in the computation to the valuation
report and confirmed the vesting
computation and expense for the
current year is appropriate and
accurate.
We have evaluated the relevant
financial statement disclosures
and confirmed that the disclosures
are appropriate and in accordance
with IFRS 2.
Based on the audit procedures
performed and results of our
testing, we have not identified
any exceptions in the share-
based payment scheme that require
reporting to management.
Other information
The directors are responsible for the other information. The
other information comprises all the information included in the
Annual Report and Audited Financial Statements (the "Annual
Report") but does not include the financial statements and our
auditor's report thereon.
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 related 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 directors' 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 over a period of at least
twelve months from the date of approval of the financial
statements. 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.
________________________________________________________________________________
Use of this report
This independent auditor's report, including the opinions, 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 these opinions, 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.
________________________________________________________________________________
Report on other legal and regulatory requirements
_________________________________________________________________________
Company Law exception reporting
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.
________________________________________________________________________________
Ross Alexander Houlihan Burne
For and on behalf of PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
25 August 2020
FastForward Innovations Limited
Statement of Comprehensive Income
For the year ended 31 March 2020
Year ended Year ended
31 March 31 March
2020 2019
Notes GBP'000 GBP'000
Net realised gain/(loss) on disposal of
financial
assets at fair value through profit and
loss 12 165 (1,795)
Net unrealised change in fair value of financial
assets designated at fair value through
profit and loss 12 (4,148) 4,134
Interest income on investments at fair value
through profit and loss 69 84
Total investment (loss)/income (3,914) 2,423
Other Income
Bank interest income 12 21
Total other income 12 21
Expenses
Directors' remuneration and expenses 7 (427) (320)
Recognition of Directors share based expense 7 (162) (216)
Legal and professional fees (172) (162)
Other expenses 8 (147) (179)
Administration fees (97) (74)
Adviser and broker's fees (74) (168)
Loan interest - (2)
Total expenses (1,079) (1,121)
Net (loss)/profit before losses and gains
on foreign currency exchange (4,981) 1,323
--------------------- -----------
Net foreign exchange (loss)/gain (15) 85
Total comprehensive (loss)/income for the
year (4,996) 1,408
===================== ===========
(Loss)/earnings per Ordinary Share - basic
and diluted 10 (3.09)p 0.93p
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.
FastForward Innovations Limited
Statement of Financial Position
As at 31 March 2020
31 March 31 March
2020 2019
Notes GBP'000 GBP'000
Non-current assets
Financial assets designated at fair
value through
profit or loss 12 13,372 18,604
--------- ---------
Current assets
Other receivables 14 50 112
Cash and cash equivalents 1,213 504
1,263 616
Total assets 14,635 19,220
--------- ---------
Current liabilities
Payables and accruals 15 (397) (148)
Total liabilities (397) (148)
Net assets 14,238 19,072
========= =========
Equity
Share capital 16 1,615 1,615
Deferred share reserve 16 630 630
Employee stock option reserve 7 1,263 1,233
Other distributable reserves 10,730 15,594
Total equity 14,238 19,072
========= =========
Net assets per Ordinary Share - basic
and diluted 17 8.82p 11.81p
The financial statements on pages 24 to 47 were approved by the
Board of Directors on ----25 August 2020 and were signed on their
behalf by:
Lance De Jersey Ian Burns
Director Director
FastForward Innovations Limited
Statement of Changes in Equity
For the year ended 31 March 2020
Other
Deferred shares Employee stock distributable
Share Capital reserve* option reserves reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 31
March 2018 Note 1,307 630 1,086 10,511 13,534
Total
comprehensive
income
for the year - - - 1,408 1,408
Transactions with
shareholders
Issue of Ordinary
Shares 16 308 - - 3,692 4,000
Costs of issuing
of Ordinary
shares 16 - - - (97) (97)
Employee share
scheme - value
of employee
services 7 - - 227 - 227
Transfer of value
of lapsed
options 7 (80) 80 -
Balance as at 31
March 2019 1,615 630 1,233 15,594 19,072
Total
comprehensive
loss
for the year - - - (4,996) (4,996)
Transactions with
shareholders
Employee share
scheme - value
of employee
services 7 - - 162 - 162
Transfer of value
of lapsed
options 7 - - (132) 132 -
Balance as at 31
March 2020 1,615 630 1,263 10,730 14,238
-------------- ---------------- ----------------- ------------------ --------
FastForward Innovations Limited
Statement of Cash Flows
For the year ended 31 March 2020
Year ended Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Bank interest received 12 21
Interest income on investments 96 57
Other income 3 -
Adviser and broker's fees paid (115) (220)
Legal and professional fees paid (223) (91)
Administration fees paid (86) (74)
Other expenses paid (99) (137)
Loan Interest paid (1) (2)
Directors' remuneration paid (168) (276)
Purchase of investments - (11,141)
Disposal of investments 1,248 8,307
Net cash inflow/(outflow) from operating
activities 667 (3,556)
----------- -----------
Cash flows from financing activities
Issue of Ordinary Shares - 4,000
Costs of issuing Ordinary Shares - (97)
Net cash inflow from financing activities - 3,903
----------- -----------
Increase in cash and cash equivalents 667 347
=========== ===========
Cash and cash equivalents brought forward 504 72
Increase in cash and cash equivalents 667 347
Reclassification of broker account
to cash and cash equivalents 56 -
Foreign exchange movement (14) 85
Cash and cash equivalents carried forward 1,213 504
=========== ===========
Notes to the Financial Statements
1. General Information
Fast Forward Innovations Limited (the "Company") is an
authorised closed-ended investment scheme. 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 objective is to invest in and/or acquire companies
with significant intellectual property rights which they are
seeking to exploit, principally within the technology sector
(including digital and content focused businesses) and life
sciences sectors (including biotech and pharmaceuticals).
Initially, the geographical focus will be North America and Europe
though 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. The objective of the Company
is to also provide its investors with exposure to disruptive growth
opportunities that have near-term re-rating potential and would
otherwise be inaccessible.
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 of the Company have been prepared in
accordance with International Financial Reporting Standards
("IFRS") and applicable legal and regulatory requirements of The
Companies (Guernsey) Law, 2008. The financial statements have been
prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. The
areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the
financial statements, are disclosed in Note 4.
In the current year, the Company has adopted all the applicable
new and revised standards and interpretations issued by the
International Accounting Standards Board ("IASB") and the
International Financial Reporting Interpretations Committee
("IFRIC") of the IASB that are relevant to its operations and
effective for annual reporting periods beginning on or after 1
April 2019. The adoption of the standards and interpretations has
not had a significant impact on the content or presentation of
these financial statements; refer below for additional
consideration.
(a) Standards and amendments to existing standards effective 1
January 2019
There are no standards, amendments to standards or
interpretations that are effective for annual periods beginning on
1 January 2019 that have a material effect on the nancial
statements of the Company.
(b) New standards, amendments and interpretations effective
after 1 January 2019 and have not been early adopted
A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning after 1
January 2019, and have not been early adopted in preparing these
nancial statements. None of these are expected to have a material
effect on the nancial statements of the Company.
3. Significant Accounting Policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
a) Investment Income
Investment 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 Employee Share Option Plan and individual Share Option
agreements (together the "Options"). Details relating to the
Options are set out in note 7 to the financial statements.
These Options are measured at fair value at the date of grant
and expensed through the Statement of Comprehensive Income on a
straight line basis over the vesting period, based on the estimate
of Options that will eventually vest. For those Options with market
related vesting conditions, the fair value is determined using the
Monte Carlo simulation model at the grant date. The fair value of
Options issued with non-market vesting conditions has been
calculated using the Black Scholes model.
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. Should services cease be
provided to the Company by any employee, no further expense will be
charged in relation to any non vested Options.
When Options expire, or Options holders no longer provide
services to the Company, any amounts in relation to these Options
which have been credited to the Share Option Reserve within Equity
will be transferred to Distributable Reserves.
The Company does not operate any cash-settled Options with cash
alternatives as defined in IFRS 2. All Options issued will be
settled through Equity, with all Option expenses having a
corresponding increase in Equity.
e) Financial instruments
Under IFRS 9, on initial recognition, a financial asset is
classified as measured at:
-- Amortised cost;
-- Fair value through other comprehensive income ("FVOCI") - debt investment;
-- FVOCI - equity investment; or
-- Fair value through profit or loss ("FVTPL").
The classification of financial assets under IFRS 9 is generally
based on the business model in which a financial asset is managed
and its contractual cash flow characteristics. The Company has
financial assets that are measured at FVTPL and amortised cost.
Cash and cash equivalents and receivables are carried out at
amortised cost.
Regular 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 at fair value through profit
or loss are initially recognised at fair value. Transaction costs
are expensed as incurred in the Statement of Comprehensive
Income.
Financial assets are derecognised when the rights to receive
cash flows from the investments have expired or the Company has
transferred substantially all risks and rewards of ownership.
Subsequent to initial recognition, all nancial assets and
nancial liabilities at FVTPL are measured at fair value. Gains and
losses arising from changes in the fair value of the ' nancial
assets or nancial liabilities at FVTPL' category are presented in
the Statement of Comprehensive Income within other net changes in
fair value of nancial assets and liabilities at FVTPL.
Dividend income from nancial assets at FVTPL is recognised in
the Statement of Comprehensive Income within dividend income when
the Company's right to receive payments is established. Interest on
debt securities at fair value through pro t or loss is recognised
in the Statement of Comprehensive Income.
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 assets and liabilities traded in active markets (such as
publicly traded derivatives and trading securities) are based on
quoted market prices at the close of trading on the reporting date.
The Company utilises the last traded market price for both
financial assets and financial liabilities where the last traded
price falls within the bid-ask spread. In circumstances where the
last traded price is not within the bid-ask spread, management will
determine the point within the bid-ask spread that is most
representative of fair value.
If a signi cant movement in fair value occurs subsequent to the
close of trading up to midnight on the year end date, valuation
techniques will be applied to determine the fair value. A signi
cant event is any event that occurs after the last market price for
a security, close of market or close of the foreign exchange, but
before the Company's valuation time that materially affects the
integrity of the closing prices for any security, instrument,
currency or securities affected by that event so that they cannot
be considered 'readily available' market quotations.
The fair value of nancial assets and liabilities that are not
traded in an active market is determined using valuation
techniques. The Company uses a variety of methods and makes
assumptions that are based on market conditions existing at each
reporting date. Valuation techniques used include the use of
comparable recent ordinary transactions between market
participants, reference to other instruments that are substantially
the same, discounted cash ow analysis, option pricing models and
other valuation techniques commonly used by market participants
making the maximum use of market inputs and relying as little as
possible on entity-speci c inputs.
Transfers between levels of the fair value hierarchy
Transfers between levels of the fair value hierarchy are deemed
to have occurred at the beginning of the reporting
period.
Financial assets at amortised cost
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
-- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
-- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at amortised cost are initially measured at
fair value plus transaction costs that are directly attributed to
its acquisition, unless it is a trade receivable without a
significant financing component which is initially measured at its
transaction price.
These assets are subsequently measured at amortised cost using
the effective interest method. The amortised cost is reduced by
impairment losses as detailed below.
Fair values of financial assets at amortised cost, which are
determined for disclosure purposes, are calculated based on the
present value of future principal and interest cash flows,
discounted at the market rate of interest at the reporting date
only if the discounting is material.
(i) Receivables
Receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market, but
also incorporate other types of contractual monetary assets.
Trade and other receivables that were classified as loans and
receivables and measured at initial recognition at fair value and
subsequently measured at amortised cost under IAS 39 are now
classified at amortised cost using the effective interest.
(ii) Cash and cash equivalents
Cash and cash equivalents are carried at amortised cost and
comprise cash in current accounts, demand deposits and other
short-term highly liquid investments with original maturities of
three months or less that are readily convertible to a known amount
of cash and are subject to an insignificant risk of changes in
value.
(iii) Trade and other payables
Trade payables and other short-term monetary liabilities are
initially recognised at fair value and subsequently carried at
amortised cost using the effective interest rate method. The effect
of discounting on these financial instruments is not considered to
be material.
f) 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 2. 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.
g) 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.
h) 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.
i) 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.
j) 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 will present any
Treasury shares acquired in the Statement of Changes in Equity as a
deduction from contributed equity.
k) 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
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
Fair value of securities not quoted in an active market
The Company may value positions by using its own models or
commissioning valuation reports from professional third party
valuers. The models used in either case are based on valuation
methods and techniques generally recognised as standard within the
industry and in accordance with IPEV Guidelines. The inputs into
these models are primarily earnings multiples and discounted cash
ows. The inputs in the earnings multiple's models include
observable data, such as the earnings 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. In some instances, the cost of an investment is the best
measure of fair value in the absence of further information. Models
are calibrated by back-testing to actual results/exit prices
achieved to ensure that outputs are reliable, where possible.
Models use observable data, to the extent practicable. However,
areas such as credit risk (both own and counterparty), volatilities
and correlations require management to make estimates. Changes in
assumptions about these factors could affect the reported fair
value of nancial instruments. The sensitivity to unobservable
inputs is based on management's expectation of reasonable possible
shifts in these inputs, taking into consideration historical
volatility and estimations of future market movements.
The determination of what constitutes 'observable' requires
signi cant judgement by the Company. The Company considers
observable data to be market data that is readily available,
regularly distributed or updated, reliable and veri able, not
proprietary, and provided by independent sources that are actively
involved in the relevant market.
Valuation of Options
The fair values of the Options are measured using the
Black-Scholes model, for those options with non-market vesting
conditions, and a Monte Carlo Simulation model for those Options
with market related vesting conditions.
The key estimates and assumptions which are used as inputs in
these valuation models are as follows;
-- any market vesting conditions;
-- the expected vesting period;
-- the term of the options;
-- 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.
For those Options which did not vest immediately on issue, non-
market vesting conditions, the expected vesting period of the
options is estimated to be 5 years from the grant date. 5 years is
deemed to be a realistic timeframe in which the performance
conditions can be expected to be achieved.
However, the options can be exercised (subject to market
conditions being met where applicable) at any point after vesting
and prior to the Option expiry date.
5. 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.
Operating segments are reported in a manner consistent with the
internal reporting used by the chief operating decision-maker. The
chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the board as a whole. The board is responsible
for the Company's entire portfolio and considers the business to
have a single operating segment. Asset allocation decisions are
based on a single, integrated investment strategy, and the
Company's performance is evaluated on an overall basis.
6. Administration Fees
Vistra Fund Services (Guernsey) Limited was entitled to an
administration fee of GBP50,000 per annum, amended to GBP55,000 per
annum with effect from 4 April 2018 and increased again to
GBP56,265 from 1 January 2020, with an additional fee of GBP2,500
(increased to GBP2,558 from 1 January 2020) for each formal board
meeting held and GBP10,000 per annum for Compliance oversight
services (increased to GBP10,230 from 1 January 2020).
The Administrator is also entitled to recover by way of
reimbursement from the Company, transaction costs associated with
the provision of specific services and reasonable out-of-pocket
expenses incurred in the performance of its services to include any
of the Administrator's approved services.
In the year ended 31 March 2020, a total of GBP97,000 (2019:
GBP74,000) was charged to the Statement of Comprehensive Income, of
which, GBP23,000 was payable at the financial reporting date (2019:
GBP5,000).
7. Directors' Remuneration
The Board agreed the following compensation packages for the Directors
of the Company.
-- Lorne Abony was entitled to an annual remuneration of
GBP250,000, payable monthly in arrears, decreased to GBP100,000 per
annum, effective from 1 January 2020 until his date of termination
and a discretionary bonus. The Company has also granted Mr Abony
Options over 8% of the issued shares (on a fully diluted basis) at
20 pence per share. The terms of the Options are explained below.
Mr Abony resigned on 15 May 2020 and agreed to defer payment of
GBP250,000 in accrued but uninvoiced fees for the 2019 calendar
year as at the termination date for a period of 12 months.
-- Ian Burns was entitled to an annual remuneration of
GBP24,000, payable quarterly in arrears which was increased to
GBP36,000 per annum with effect from 1 January 2020.
-- Ed McDermott is entitled to an annual remuneration of
GBP50,000, payable quarterly in arrears. This was increased to
GBP80,000 per annum, with effect from 1 January 2020. 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.
-- Lance De Jersey is entitled to an annual remuneration of GBP80,000 per annum.
-- Jim Mellon was entitled to an annual remuneration of
GBP30,000 per annum until his resignation to 21 August 2019. Mr
Mellon had a remuneration accrued of GBP11,774 as at 31 March
2020.
-- Luke Cairns is entitled to an annual remuneration of
GBP36,000 per annum, effective from the date of his appointment on
3 January 2020.
Following the approval to grant Options, the number of share
options held by each Director at 31 March 2020 was as follows:
Weighted
% of issued average
shares on contractual
Options fully diluted Exercise remaining
Date Granted issued basis price (pence) life
Lorne Abony 17-Feb-16 12,131,548 8% 20 1
Ed McDermott 13-Feb-18 1,000,000 1% 19 3
Ed McDermott 13-Feb-18 1,000,000 1% 25 3
14,131,548 10%
--------------------- --------------
During the year 1,516,444 options issued to Mr Mellon, the
former Chairman of the Company, lapsed. The total Employee Share
Option Reserve in relation to Mr Mellon of GBP132,000 has been
transferred to Other Distributable Reserves through the Statement
of Changes in Equity.
Upon exercise the options entitle the holder to one Ordinary
Share of 1p in the Issued Share Capital of the Company. Following
the grant of the Options to Mr Abony, 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).
On the grant of the Options to Mr McDermott 33% of the Options
vested immediately, 33% of the Options vested 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.
The vesting terms have not yet been achieved for any of the
options which did not vest immediately.
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 three 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.
No Options were exercised during the year as at no point during
the year did the share price of the Company exceed the Exercise
price of any of the Options which had vested.
Share Option measurement of fair value
For those Options with market related vesting conditions, the
fair value is determined using the Monte Carlo simulation model at
the grant date. The fair value of Options issued with non-market
vesting conditions has been calculated 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.
In addition, the model inputs used in the measurement of the
fair values at grant dates were as follows:
Grant date Grant date Grant date
13-Feb-18 13-Feb-18 17-Feb-16
Weighted Average Fair
value 12.35 pence 11.82 pence 10.06 pence
Share price 20.13 pence 20.13 pence 18.00 pence
Exercise price 19 pence 25 pence 20 pence
Annualised expected
volatility 75.48% 75.48% 70.09%
Annual risk free interest
rate 1.17% 1.17% 0.86%
The expected life of all options are 5 years from grant date and
no dividends are expected to be paid. Expected volatility has been
based on an evaluation of the historical volatility of the
Company's share price. The total fair value of the share Options
issued, as at the date of granting, is estimated to be
GBP1,617,000.
31 March 2020
Recognition
Directors' of share based
Remuneration expense Total
GBP'000 GBP'000 GBP'000
Ian Burns (appointed on 12 November
2014) 27 - 27
Jim Mellon (appointed on 13 July
2015; resigned on 21 August 2019) 12 8 20
Lorne Abony (appointed on 6 January
2016) 254 122 376
Ed McDermott (appointed 12 February
2018) 50 32 82
Lance De Jersey (appointed 3 January
2019) 75 - 75
Luke Cairns (appointed 3 January
2020) 9 - 9
427 162 589
============== ================ ========
31 March 2019
Recognition
Directors' of share based
Remuneration expense Total
GBP'000 GBP'000 GBP'000
Ian Burns (appointed on 12 November
2014) 41 - 41
Jim Mellon (appointed on 13 July
2015) 18 17 35
Lorne Abony (appointed on 6 January
2016) 208 133 341
Ed McDermott (appointed 12 February
2018) 40 66 106
Lance De Jersey (appointed 3 January
2019) 13 - 13
320 216 536
============== ================ ==========
No 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 17.
8. Other expenses
Year ended Year ended
31 March
31 March 2020 2019
GBP'000 GBP'000
Marketing expenses 2 3
Other Directors' related expenses 22 1
Regulatory and listing fees 13 23
Registrar fees 28 37
Audit fees 40 42
Directors' and Officers' liability insurance 6 5
Other expenses 36 68
147 179
============================= ===========
9. 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 (2019:
GBPNil).
10. Earnings per Ordinary Share
The loss per Ordinary Share of GBP3.09p (2019: earnings per
Ordinary Share of 0.93p) is based on the loss for the year of
GBP4,996,000 (2019: income GBP1,408,000) and on a weighted average
number of 161,500,105 Ordinary Shares in issue during the year
(2019: 151,046,997 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 2020
the Options had no dilutive effect.
11. Dividends
During the year ended 31 March 2020, no dividend was paid to
shareholders (2019: GBPNil). The Directors do not propose a final
dividend for the year ended 31 March 2020 (2019: GBPNil).
12. Financial Assets and Liabilities Designated at Fair Value
through Profit or Loss
31 March 31 March
2020 2019
GBP'000 GBP'000
Financial assets designated at fair value
through profit or loss
Fair value of investments brought forward 18,604 12,410
Purchases during the year 1,033 11,141
Disposals proceeds during the year (2,282) (7,286)
Realised gains/(losses) on disposals 165 (1,795)
Net unrealised (loss)/gain in fair value (4,148) 4,134
Fair value of investments carried forward 13,372 18,604
========= =========
Details of the investments held are given in the Report of the
Chief Executive and at the Company's website.
13. 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
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, in most cases this
validation and review is undertaken by members of the Board,
however professional third-party valuation firms are used for some
valuations and the Company also has access to a network of industry
experts by virtue of the personal networks of the directors and
substantial shareholders (including Messrs Mellon and Abony). The
valuations prepared by the Company or received from third parties
are in accordance with the International Private Equity and Venture
Capital Valuation Guidelines. The valuations, when relevant, are
based on a mixture of:
-- Market approach (utilising EBITDA or Revenue multiples,
industry value benchmarks and available market prices
approaches);
-- Income approach (utilising Discounted Cash Flow, Replacement Cost and Net Asset approaches);
-- Price of a recent transaction when transaction price/cost is
considered indicative of fair value; and
-- proposed sale price.
As at 31 March 2020, 1 investment was valued as a Level 1
investment within the fair value hierarchy, with the value being
taken from the published price available as at that date (2019: 1
investment).
The remaining seven investments were included within the Level 3
category and subject to a Level 3 valuation approach. Of these
seven positions, four were valued by way of third-party valuation
reports, three of which were commissioned by the Company and the
fourth by the investee company. (2019: Five of the eight Level 3
positions were valued by third party valuers). By value, 92% of the
portfolio value was ascertained by way of such third party
valuations (2019: 55%).
Whilst it is not intended that third party valuations will be
commissioned for every investee company subject to Level 3
classification for each valuation point, the Board of the Company
will continue to commission reports where deemed preferable.
Where investments are considered to be Level 3 investments for
valuation purposes, it is required under IFRS 13 that information
be provided about the significant unobservable inputs used in the
fair value measurement. In the case of the Company a balance is
necessary in providing commentary on such inputs, whilst at the
same time not disclosing information about these private companies
which they have indicated cannot be published (primarily for
competitive reasons). The table below provides a summary of the
valuations subject to unobservable inputs across the Company's
investment portfolio, split by valuation methodology and an
indicative aggregate value of the effect of either a more positive
or negative valuation approach, without publication of specific
metrics which could be identified as relating to any one investee
company.
Valuation Aggregate Valuation Methodologies Positive Case Negative Average
Basis Valuation used Case Variance
Variance* Variance*
GBP'000 % GBP'000 % GBP'000 %
Third-party
valuation
report 12,376 Combination of: 17 2,144 8 (1,026) 9
(i) Market Approach
(comparable companies
multiples, available
market prices,
discounting for
lack of control
/ marketability);
and
(ii) Income Approach
(discounted cash
flow) valuations.
Multiple approaches
were used for
some valuations,
with weightings
applied to give
a hybrid valuation(*)
Price of recent 50 Deal price concluded - - - - -
transaction post year end
(deal price)
Nil valuation - Directors assessment - - - - -
Quoted price 946 Quoted price from - - - - -
an active market
----------- ------------------------ --- -------------------- --------- ----------
Total 13,372 16 2,114 8 (1,026) 8
=========== ======================== === ==================== ========= ==========
*Variances are based upon alternative valuation approaches used
by valuers resulting in greater or lesser valuations, particularly
in the weighted, hybrid valuations mentioned.
Based on above weighted average variance shown above, a further
sensitivity calculation can be undertaken to demonstrate the effect
of a +/- 8% variance across the investment portfolio of the
Company:
31 March 31 March
2020 2019
GBP'000 GBP'000
Aggregate Valuation per Financial Statements 13,372 18,110
Effect of + / - 8% variance on portfolio valuation 1,070 1,449
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
2020 2019
GBP'000 GBP'000
Fair value of investments brought forward 494 6,728
Purchases during the year 1,033 1,304
Disposals proceeds during the year (908) (7,286)
Realised (losses)/gains on disposals (396) (418)
Net unrealised change in fair value 723 166
Fair value of investments carried forward 946 494
========= =========
There have been no transfers between levels during the year.
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
2020 2019
GBP'000 GBP'000
Fair value of investments brought forward 18,110 5,682
Purchases during the year - 9,837
Disposals proceeds during the year (1,374) -
Realised (losses)/gains on disposals 561 (1,377)
Net unrealised change in fair value (4,871) 3,968
Fair value of investments carried forward 12,426 18,110
========= =========
14. Other receivables
31 March
2020 31 March 2019
GBP'000 GBP'000
Other receivables 7 7
Amount due from Broker - 56
Debenture interest due - 27
Prepayments 43 22
50 112
========= ==============
15. Payables and accruals
31 March
2020 31 March 2019
GBP'000 GBP'000
Current liabilities
Payables and accruals 397 148
397 148
========= ==============
Payables and accruals include Director fee accrued for Lorne
Abony amounting to GBP275,000 as at 31 March 2020. Following the
resignation of Lorne Abony on 15 May 2020, it was agreed to defer
payment of GBP250,000 of these accrued fees for 12 months.
16. Share Capital, Warrants and Options
31 March 31 March
2020 2019
GBP'000 GBP'000
Authorised:
1,910,000,000 Ordinary Shares of 1p
(2019: 1,910,000,000 Ordinary Shares) 19,100 19,100
100,000,000 Deferred Shares of 0.9p
(2019: 100,000,000 Deferred Shares) 900 900
----------- -----------
20,000 20,000
----------- -----------
Allotted, called up and fully paid:
161,500,105 Ordinary Shares of 1p
(2019: 161,500,105 Ordinary Shares) 1,615 1,615
----------- -----------
70,000,709 Deferred Shares of 0.9p
(2019: 70,000,709) 630 630
----------- -----------
Options:
Share options 14,131,548 15,647,992
----------- -----------
Ordinary Shares
During the year the Company did not issue new Ordinary Shares
(2019: 30,769,230 of 1p each (the "Placing Shares") at a price of
13p per Placing Share and share issue costs amounted to
GBP96,761).
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 receive 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.
Directors' Authority to Allot Shares
The Directors are generally and unconditionally authorised to
exercise all the powers of the Company to allot relevant
securities. As approved at the Company Annual General Meeting on 9
October 2019 the Directors may determine up to a maximum aggregate
nominal amount of 10% of the issued share capital during the period
until the following Annual General Meeting, this authority was
increased at an Extraordinary General Meeting held on 13 July 2020
to 100% of the issued share capital during the period until the
next 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.
Shares held in Treasury
As a result of share repurchases in prior years, at year end the
Company has a total of 5,413,623 ordinary shares held as Treasury
shares (2019: 5,413,623). No shares were repurchased during the
year (2019: Nil).
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
GBP14,238,000 (2019: GBP19,072,000) and on 161,500,105 Ordinary
Shares (2019: 161,500,105 Ordinary Shares) in issue at the end of
the year. The share price of the Ordinary Shares at 31 March 2020
of 7.25 pence (2019: 9.59 pence) was below the exercise price of
any of the Options (lowest exercise price of 19.00 pence).
Therefore, as at 31 March 2020 the Options had no dilutive
effect.
18. Related Parties
The Directors' remuneration for the year ended 31 March 2020 is
disclosed in note 7. The Directors consider that there is no
immediate or ultimate controlling party.
Jim Mellon
Mr Mellon, Chairman of the Company until 21 August 2019, is a
life tenant of a trust which owns Galloway Limited ("Galloway"),
which held 10,425,992 (31 March 2019: 10,425,991) Ordinary Shares
in the Company as at 31 March 2020 and at the date of signing this
report. Mr Mellon also holds 5,857,730 (31 March 2019: 5,857,730)
shares directly in his own name as at 31 March 2020. Total direct
or indirect holding was 16,283,822 shares (31 March 2019:
16,283,822).
At 31 March 2020, the Company held 25,978 (31 March 2019:
25,978) Ordinary Shares in The Diabetic Boot Company Ltd ("DBC").
Galloway also holds shares in DBC. The combined shareholding in DBC
is in excess of 30%.
Mr Mellon holds 20,500,000 (31 March 2019: 20,500,000) shares in
EMMAC Life Sciences Limited ("EMMAC"), which equates to 7.1% of the
shares in issue.
Mr Mellon also holds an interest in 3,783,199 shares of
Juvenescence Limited, equating to 17.75% of the issued shares.
Mr Mellon also holds an interest in 3,208,542 shares in Portage
Biotech, equating to 27.46% of the issued shares.
Mr Mellon was entitled to an annual remuneration of GBP30,000,
payable quarterly in arrears.
Mr Mellon held Nil options as at 31 March 2020 (31 March 2019:
1,516,444).
Ian Burns
Mr Burns, Non-Executive Chairman of the company, is the legal
and beneficial owner of Smoke Rise Holdings Limited ("Smoke"),
which held 1,374,024 (31 March 2019: 1,374,024) Ordinary Shares in
the Company at 31 March 2020 and at the date of signing this
report.
Regent Mercantile Holdings Limited ("Regent"), a company in
which Mr Ian Burns is a Director, is a shareholder of Juvenescence.
Regent hold 0.34% of Juvenescence (31 March 2019: 0.34%) (on a
fully diluted basis).
Mr Burns is entitled to an annual remuneration of GBP24,000
(GBP36,000 annual remuneration effective as from 1 January 2020),
payable quarterly in arrears.
Lorne Abony
Mr Abony, Chairman of the company till 15 May 2020, held
14,843,211 (31 March 2019: 14,843,211) Ordinary Shares in the
Company at 31 March 2020 and at the date of signing this
report.
As at 31 March 2020, the Company held no non-assessable series-1
preferred stocks (31 March 2019: 2,527,059) and 1,000,000 (31 March
2019: 1,000,000) non-assessable series-2 preferred stocks in Vemo
Education. Inc ("Vemo"), a company related by virtue of common
shareholdings with Mr Abony. On 13 May 2019, FastForward sold the
2,527,059 non-assessable series-1 preferred stocks.
Mr Abony holds US$1m ordinary shares of Juvenescence Limited on
the same terms as the Company.
Mr Abony holds 20,833,333 shares in EMMAC, which equates to 7.2%
of the shares in issue. On 19 November 2019, Mr Abony was appointed
as Chairman of the Board of Directors of EMMAC.
Mr Abony was entitled to an annual remuneration of GBP250,000 up
to 31 December 2019, which was reduced to GBP100,000 as from 1
January 2020.
Mr Abony resigned on 15 May 2020 and accepted to defer
remuneration payment of GBP250,000 as at date of resignation for a
period of 12 months.
Mr Abony held 12,131,548 options as at 31 March 2020 (31 March
2019: 12,131,548 ).
Ed McDermott
Mr McDermott, Chief Executive Officer of the Company was until
December 2018 a part of the corporate finance team at Optiva
Securities Limited, the Company's Broker. A total of GBP7,472 was
incurred by the Company in respect of Broker fees to Optiva
Securities Limited during the year (31 March 2019: GBP117,000).
Mr McDermott was a co-founder of, and is an executive Director
of, EMMAC Life Sciences Limited ("EMMAC"). Mr McDermott owns
11,250,000 (31 March 2019: 11,250,000) shares in EMMAC, which
equates to 3.9% of the shares in issue.
Mr McDermott is entitled to an annual remuneration of
GBP80,000.
Mr McDermott held 2,000,000 options as at 31 March 2020 (31
March 2019: 2,000,000).
Lance De Jersey
Mr De Jersey, Finance Director of the Company purchased 400,000
ordinary shares in the Company during the year. Following the
purchase his holding represents 0.25% of the Company's issued share
capital.
Mr De Jersey is entitled to an annual remuneration of GBP80,000
per annum.
Luke Cairns
Mr Cairns, Non-Executive Director of the Company is entitled to
an annual remuneration of GBP36,000 per annum, effective from the
date of his appointment on 3 January 2020.
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, short-term
deposits, with maturities of three months or less and market traded
securities. 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
2020 2019
GBP'000 GBP'000
Financial assets at fair value through profit
or loss
Investments 13,372 18,604
--------- ---------
Financial assets at amortised cost
Other receivables 7 90
Cash and cash equivalents 1,213 504
1,220 594
--------- ---------
Financial liabilities at amortised cost
Other payables 397 148
--------- ---------
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, an amount of cash and cash
equivalents of GBP1,207,000 was placed with HSBC Bank plc (2019:
GBP504,000). The remaining amount of cash and cash equivalent of
GBP5,077 (2019: GBP56,000) was held the Company's broker PI
Financial Corp. The Moody's credit rating for HSBC Bank plc was Aa3
as at 31 March 2020.
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. 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 or to sell part of the investment(s) held in market traded
securities.
The contractual undiscounted cash flows of the Company's
financial liabilities, which are equal to the fair value of the
Company's financial liabilities, comprise of payable within one
year to the sum of GBP397,000 (2019: GBP148,000). 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
on a quarterly basis.
Market risk
(i) Price risk
The Company's private equity investments 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 investments. Given the higher levels of market
volatility in the current year, the Directors consider 15% (2019:
10%) best represents the margin of price risk associated with the
Company risk. A 15% (2019: 10%) increase/decrease in the fair value
of investments would result in a GBP2,005,800 (2019: GBP1,860,000)
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 2020,
a proportion of the net financial assets of the Company were
denominated in currencies other than Sterling as follows:
31 March 31 March 2019
2020
US Dollar GBP'000 GBP'000
Cash and cash equivalents 862 415
CAD Dollar
Cash and cash equivalents 5 -
Other receivables - 57
--------- --------------
Net currency exposure 867 472
--------- --------------
At 31 March 2020, 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 +/- GBP86,200 (2019: +/-
GBP41,500).
At 31 March 2020, 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 +/- GBP500 (2019: +/- GBP5,700).
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
In March 2020, the World Health Organisation recognised an
outbreak of a new virus that causes coronavirus disease 2019
("COVID-19") as a pandemic. COVID-19 caused disruption to
businesses and economic activity which has been reflected in recent
fluctuations in global stock markets. The impact of the pandemic on
the day-to-day operations of the Company is minimal by virtue of
the Directors operating predominantly from home offices and the
Company's Administrator having successfully implemented measures to
allow its staff to do likewise. At an investment portfolio level,
the impact has varied from company to company as is discussed in
more detail in the Chairman's statement and Report of
Directors.
On 22 March 2020, the Company sold all of its shares (27,255
Series Seed Preferred shares) in Yooya Ltd to Yooma Corp. The
transfer was made for a value of US$61,500 (GBP50,000), satisfied
by issue of 2,049,616 new common shares in Yooma Corp. at an issue
price of $0.03 per share. Following the Share Exchange, the Company
held 7.88% of the issued share capital of Yooma. The Company's
interest in Yooma had an implied value of US$61,500 based on the
terms of the Share Exchange. The Company also made additional
investment of US$1m (1,538,462 shares of US$0.65 per share) in
Yooma Corp on 19 May 2020, following this additional investment the
implied value of the total holding of 3,588,078 common shares is
$2,332,250.
On 15 May 2020, Mr Lorne Abony resigned as CEO and was succeeded
by Mr Burns as Non-Executive Chairman and Mr McDermott as CEO of
the Company. Mr Abony agreed to defer payment of GBP250,000 owed by
the Company for the period of 12 months.
On 3 June 2020, it was announced that Portage had completed a
consolidation (also known as a reverse stock split) of its issued
and outstanding common shares on the basis of 100 pre-consolidation
common shares for each post-consolidation common share. On 16 June
2020, the Company made a subsequent subscription of $242,850 for
24,285 Portage shares at $10 as part of a $6.78M private placing by
Portage at the same price as the original cost price. Additionally,
subsequent to year end, the Company disposed of 2,428,500 shares in
Portage in a number of transactions for sales proceeds of $330,000
realising a gain of over 30% compared to the initial issue price
and our carrying value as at 31 March 2020.
On 18 June 2020, Factom filed for Chapter 11 bankruptcy
protection under the application of which they applied for the SAFE
note held by the Company to be written off. Subsequent to this
filing, the Company filed motions opposing this course of action
and at the same time continued to engage with Factom management
regarding the potential conversion of the SAFE note into equity in
Factom, resulting in agreement being reached for the conversion of
the SAFE note to equity (subject to approval by the US Bankruptcy
Court and shareholders of Factom) as announced on 30 July 2020.
Should such approvals be given, and following conversion, the
Company would hold 6,311,330 shares in Factom, representing 30.39%
of the then issued share capital.
The Company granted EUR117,647 to Fralis LLC (Leap Gaming) on 19
June 2020 (as part of a EUR250K loan from existing shareholders).
The loan receivable bears interest of 1.02% per month and is
repayable by 31 December 2021.
On 13 July 2020, Yooma Corp. signed a binding letter of intent
with Globalive Technology Inc. (Globalive) to complete an arm's
length reverse take-over pursuant to which Globalive will acquire
all of the issued and outstanding securi ti es of Yooma in exchange
for common shares of the company.
On 13 July 2020, the shareholders granted authority to the
Directors of the Company to issue or allot equity securities for
cash, pursuant to Article 13 of the Articles or by way of a sale of
treasury shares, up to a maximum of 100% of the issued share
capital of the Company.
On 22 July 2020, the Company's investee, EMMAC Life Sciences
announced the signing of a Non-Binding Letter of Intent for
Business Combination with Andina Acquisition Corp. III, a company
listed on NASDAQ.
There are no other material events subsequent to year end which
require disclosure.
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END
FR KKPBQQBKDAFB
(END) Dow Jones Newswires
August 26, 2020 02:00 ET (06:00 GMT)
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