28 February 2014
Blue Star Capital plc
("Blue Star" or the "Company")
Final Results for the year ended 30 September 2013
Notice of AGM
Blue Star is pleased to announce its annual results for the year ending 30 September 2013.
Chairman's statement
I only recently joined the Board as Non-Executive Chairman on 19th November 2013 and the period covered by this Chairman's Statement and the financial statements therefore pre-empted my involvement. However, with the help of my co-director I am pleased to report on Blue Star Capital Plc's ("Blue Star" or "the Company") results for the year ended 30 September 2013.
On 7th January 2013, the Company announced the acquisition of one of its investee companies, Visimetrics (UK) Limited ("Visimetrics"), including its subsidiary OmniPerception Limited ("OmniPerception") by Digital Barriers Plc ("Digital Barriers"). At that time Blue Star's fully diluted shareholding in Visimetrics was valued at £113,336. The initial cash consideration payable to Blue Star Capital following certain retentions by Digital Barriers in relation to working capital adjustments was approximately £47,000. The maximum effective consideration payable to Blue Star Capital including any deferred consideration payable in shares in Digital Barriers was approximately £137,000.
On 25th April 2013, the Company announced that it had raised £43,750, before expenses, through the issue of 17,500,000 shares at a price of 0.25p per share.
This funding was used to repay £20,000 of the Loan referred to below and the balance to provide working capital.
Post the year end, the Company announced on 7th October 2013 that it had raised £150,000, before expenses, through a subscription for 50,000,000 shares at 0.3p per share, capitalised loans totalling £150,000 at 0.3p per share and adopted a broader investing policy. These proposals were approved at a Meeting of the Company's shareholders on 30th October 2013. Under the new investing policy, the Board can now consider investments in media, technology and gaming in addition to the original mandate of investing in companies engaged in Homeland security.
On 19th November 2013, Blue Star announced a further conversion and repayment of the Loan with £167,377 converting at 0.4p per share and £40,000 being repaid.
On 24th December 2013 the Company announced its first new investment following the change in investing policy, a further subscription to raise £200,000, before expenses, at 0.5p per share, and a further Loan conversion of £61,070 at 0.5p per share. The new investment was in Oak Media Limited ("OAK"), an early stage gaming technology aggregator which intends to supply solutions to mainstream brands and broadcast operators. The Company agreed to invest £100,000 in OAK in return for 90 per cent. of the issued share capital of OAK. Under the terms of the Company's investment and in order to incentivise OAK's management team, upon OAK achieving various milestones in the development of the business, the Company's shareholding in OAK would reduce to a minimum of 50 per cent of OAK's issued share capital.
OAK has been formed in order to take advantage of the global growth in gaming for entertainment amid a fast changing regulatory environment. OAK intends to become an aggregator of the best gaming technologies and to provide the best available gaming solutions, so it can enter the lucrative gaming market with modest investment and make rapid returns.
OAK believes that over the next five years, leading brands and broadcast TV will play an increasingly larger role in gaming growth and player recruitment, as the following market forces emerge:
· relaxation in regulatory rules worldwide - particularly in the USA;
· the need for brands to migrate to other strong revenue lines;
· gaming for entertainment providing low cost and compelling mass market programming;
· the trust of mainstream TV amongst a large population demographic aiding player recruitment;
· the growth in interactive TV in other areas of viewing; and
· consolidation in the market due to niche one country gaming companies needing mainstream and international distribution.
OAK aims to position itself as the supplier of choice to mainstream brands and broadcast TV operations, especially those with international reach, to create a global broadcast gaming solution with selected partners.
A further repayment and conversion of Loan was announced on 30th December 2013 with the Company repaying £96,000 and converting £26,000 of the Loan at 0.5p per share. Following the various Loan repayments and conversions, the Loan now stands at £85,292. Loan holders have agreed to waive interest on the Loan until 31 March 2014.
In terms of the historic investments, Shareholders will recall that in June 2011, the Company announced the acquisition of one of its investee companies, Zimiti Limited ("Zimiti") by Digital Barriers. Under the terms of that acquisition, Digital Barriers acquired the entire issued share capital of Zimiti for an initial consideration of £1.5 million in cash. In addition, dependent on the successful satisfaction by Zimiti of certain financial and operational targets further deferred consideration up to a maximum total consideration of £10.0m was potentially available. Unfortunately Zimiti failed to meet its targets and no further consideration was received. As a result the Company has provided in full on the carrying value of Zimiti deferred consideration of £479,655.
The Company reported a loss for the year of £703,345 (2012: £1,439,325) principally reflecting the write down in deferred consideration of £479,655. During the year, administration costs continued to fall to £98,801 from (2012: £361,508) reflecting the ongoing steps taken by the board to reduce costs.
There have been a number of changes to the Company's portfolio during the year and details are set out below. The investment holdings are set out in note 12.
1. DISRUPTIVE TECH LIMITED
In August 2011, eSeekers and Disruptive Tech Limited ("DTL") entered into an agreement by which the net profits realised by eSeekers and DTL from the mutual ownership and exploitation of their interests (whether revenue or capital in nature) were to be shared in proportion to the number of issued shares in the capital of each of eSeekers and DTL. Further, the agreement included the undertaking that eSeekers and DTL would work together to seek a permanent and comprehensive structure for combining the two businesses into one single corporate structure as soon as reasonably practicable.
Blue Star was informed in November 2013 that eSeekers and DTL had agreed the terms for a combination of the two businesses and as a result of this combination, Blue Star's shareholding in eSeekers had become a 1.76 per cent. shareholding in DTL.
DTL is a Gibraltar based investing company that has recently completed an investment round that allowed it to add holdings in Freeformers, a digital training business, and Deep Ventures, an accelerator of early stage tech businesses, to sit in DTL's portfolio alongside the holdings previously owned by eSeekers. Both Freeformers and Deep Ventures are registered in England and Wales and are co-located in London.
Blue Star's £300,000 investment in DTL (formerly eSeekers) was made in 2007 and its holding in the company was valued at £1.121m as at 30 September 2013. Blue Star has been informed that DTL has completed a round of external investment fund post year end at a pre-money valuation of £75.0m. On the basis of this valuation, Blue Star's holding in DTL would in future be valued at £1.6m.
2 VIGILANT APPLICATIONS LIMITED
Vigilant Applications is a software development company specialising in security solutions for monitoring and shaping user behaviour at a PC or 'end point'. Its VigilancePro agent software is deployed in the enterprise space in both the public and private sector for monitoring professional standards, securing data and compliance. VigilancePro Retail applies the products unique capabilities to the monitoring of all activity at an Electronic Point of Sale (EPOS). Through its patented technology it is able to integrate with existing security infrastructure (CCTV) to provide irrefutable real-time remote reporting of all transaction activity within a retail environment.
Vigilant Applications raised external funding in August 2013 at a small discount to the Company's holding value and as a result the Company has reduced the value of its holding to £88,000 from £117,000.
Vigilant Applications continues to make good progress in both the Enterprise and Retail fields. VigilancePro Retail has been re-branded as LiveStore to reflect the full range of its capabilities in providing real-time data from retail environments using existing in-store IT (http://www.livestore.uk.com/). Originally trialled and deployed in the QSR sector (Quick Service Restaurant) primarily for loss-prevention, LiveStore has now been installed in Supermarket and Convenience stores. Plans are underway for trial deployments in Hospitality, Fashion and Department Stores.
Vigilant Applications is expecting further sales of the Enterprise product during 2014 to Police forces in the UK where VigilancePro is currently used to help maintain internal professional standards. The company has recently appointed two experienced re-seller/partners to further exploit the Financial Services and Local Government sectors.
Financials
The Company has continued to reduce costs wherever possible, both in its cost base and ongoing investment operations. The Company's cash position at the end of the year was £34,005 (2012: £36,937) and the Company's net assets totalled £519,241, pre the uplift of £477,021 in the DTL valuation announced post year end.
Outlook
The Directors are encouraged by developments at the Company since the year end. The Loan has been reduced from £601,832 at 30 September 2013 to £85,292 now. The Company has structured an attractive investment in OAK which it believes offers tremendous potential and the Company's main investment in DTL has increased in carrying value from its year end valuation of £1,120,515 to £1,553,160. Despite this progress much work still needs to be done to repair the Company's fortunes and accordingly the board are continuing to review various strategic options available to the Company. However, the Company is in a much improved position and the Board are committed to continuing this improvement in the current year.
Graham Parr
Chairman
27 February 2014
Contacts:
Blue Star Capital plc
Graham Parr, Chairman +44 778 891 6111
Tony Fabrizi, Chief Executive +44 777 178 2434
Daniel Stewart & Company plc
Nominated Adviser & Broker
David Hart/Ciaran Walsh/Martin Lampshire +44 20 7776 6550
Square1 Consulting
David Bick/Mark Longson +44 207 929 5599
Review of Business and Analysis using Key Performance Indicators
The full year's pre-tax loss was £703,345 compared to a pre-tax loss of £1,439,325 for the year ended 30 September 2012.
The cash position at the end of the year fell to £34,005 from £36,936 as at 30 September 2012. Since the year end the Company has raised further funds and made an investment in OAK Media Limited, details of which are provided in the Chairman's Statement.
Key Performance Indicators
The Board monitors the activities and performance of the Company on a regular basis. The indicators set out below have been used by the Board to assess performance over the year to 30 September 2013. The main KPIs for the Company are listed as follows:
H |
2013 |
2012 |
Cash and cash equivalents |
£34,005 |
£36,936 |
Net current liabilities |
£689,453 |
£33,520 |
Loss before tax |
£(703,345) |
£(1,439,325) |
Valuation of investments |
£1,208,694 |
£1,188,607 |
Investing Policy
Assets or Companies in which the Company can invest
The company can invest in assets or companies in the following sectors:
· Gaming;
· Media;
· Technology;
· Homeland security.
The Company's geographical range is mainly UK companies but considers opportunities in the mainland EU and will actively co-invest in larger deals.
The Company can take positions in investee companies by way of equity, debt or convertible or hybrid securities.
Whether investments will be active or passive investments
The Company's investments are passive in nature, but may be actively managed. The Company may be represented on, or observe, the boards of its investee companies.
Holding period for investments
The Company's investments are likely to be illiquid and consequently are to be held for the medium to long term.
Spread of investments and maximum exposure limits, Policy in relation to cross-holdings and Investing Restrictions
The Company does not have any maximum exposure limits, limits on cross-holdings or other investing restrictions. Under normal circumstances, it is the Directors intention not to invest more than 10% of the Company's gross assets in any individual company (calculated at the time of investment).
Policy in relation to gearing
The Directors may exercise the powers of the Company to borrow money and to give security over its assets. The Company may also be indirectly exposed to the effects of gearing to the extent that investee companies have outstanding borrowings.
Returns and Distribution Policy
It is anticipated that returns from the Company's investment portfolio will arise upon realisation or sale of its investee companies, rather than from dividends received. Whilst it is not possible to determine the timing of exits, the Board will seek to return capital to shareholders when appropriate.
Life of the Company
The Company has an indefinite life dependent on obtaining sufficient funding.
Future Developments
The Company is continuing to develop an investment portfolio with the capacity for substantial growth and increases in value. Since the year end, the Company agreed to invest £100,000 in OAK Media Limited in return for 90 per cent. of the issued share capital of OAK. Details on OAK are provided in the Chairman's Statement.
Principal risks and uncertainties
The Company seeks investments in late stage venture capital and early stage private equity opportunities, which by their very nature allow a diverse portfolio of investments within different sectors and geographic locations. The risk is loss or impairment of investments.
This is mitigated by careful management of the investment and in particular, only continuing to support those investments which demonstrate potential to achieve a positive exit and decisively determining those which do not. Portfolio and capital management techniques are fully applied according to industry standard practice.
It will be necessary to raise additional funds in the future by a further issue of new Ordinary Shares or by other means. However the ability to fund future investments and overheads in Blue Star Capital Plc as well as the ability of investments to return suitable profit cannot be guaranteed, particularly in the current economic climate.
The Company may not be able to identify suitable investment opportunities and there is no guarantee that investment opportunities will be available and the Company may incur costs in conducting due diligence into potential investment opportunities that may not result in an investment being made.
The value of companies similar to those in Blue Star Capital's portfolio and in particular those at an early stage of development, can be highly volatile. The price at which investments are made, and the price which the Company may realise for its investment, will be influenced by a large number of factors, some specific to the company and its operations and some which may affect the sector.
Results and dividends
The Directors present their report together with the audited financial statements for the year ended 30 September 2013.
The trading results for the year ended 30 September 2013 and the Company's financial position at that date are shown in the attached financial statements.
The Directors do not recommend the payment of a dividend for the year (2012: £nil).
Principal activities and review of the business
The principal activity of the Company is to invest in the Homeland Security, media, technology and gaming sectors. A review of the business is included within the Chairman's Statement and Strategic Report.
Directors serving during the year
Lord Dear |
Resigned 19 November 2013 |
Anthony Fabrizi |
|
Graham Parr |
Appointed 19 November 2013 |
Noel Lyons |
Resigned 31 May 2013 |
Peter Varnish |
Resigned 28 June 2013 |
General Sir Michael Wilkes |
Resigned 31 May 2013 |
Directors' Interests
The Directors at the date of these financial statements who served and their interest in the ordinary shares of the Company are as follows:
|
Number of Ordinary Shares |
Graham Parr |
- |
Anthony Fabrizi |
9,426,203 |
Significant shareholders
As at 10 February 2014 so far as the directors are aware, the parties (other than the interests held by Directors) who are directly or indirectly interested in 3% or more of the nominal value of the Company's share capital is as follows:
|
Number of Ordinary Shares |
Percentage of issued share capital |
Highland Fund Management Ltd |
65,000,000 |
16.63% |
Blue Square Equity Investments Limited |
49,700,409 |
12.72% |
Nigel Robertson |
33,382,219 |
8.54% |
AA Management Ltd |
30,000,000 |
7.63% |
General
The Company has third party Directors and Officers indemnity insurance in place.
Related party transactions
The Company has entered into certain related party transactions and these are disclosed in note 20.
Events after the reporting date
Events subsequent to the balance sheet date are detailed in note 18 to the financial statements.
Political Donations
There were no political donations during the current or prior year.
Auditors
In so far as each of the Directors is aware:
· there is no relevant audit information of which the Company's auditors are unaware; and
· the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.
Adler Shine LLP has indicated their willingness to continue in office and a resolution to re-appoint them will be proposed at the Annual General Meeting.
On behalf of the board of Directors
Anthony Fabrizi
Chief Executive Officer
27 February 2014
Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law they are required to prepare financial statements in accordance with IFRS as adopted by the European Union and applicable law.
Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss for the year. In preparing the Company financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether the financial statements have been prepared in accordance with IFRSs as adopted by the EU;
· prepare the financial statements on a going concern basis unless it is inappropriate
· to assume the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and 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 Act 2006. 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.
Website publication
Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Auditor's Report
We have audited the financial statements of Blue Star Capital Plc for the year ended 30 September 2013, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities set out on page 10, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
· give a true and fair view of the state of the Company's affairs as at 30 September 2013 and of the Company's loss for the year then ended;
· have been properly prepared in accordance with IFRSs as adopted by the European Union; and
· have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter - Going concern
In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made in note 1 to the financial statements concerning the Company's ability to continue as a going concern. The going concern assumption is predicated on one of two scenarios, either the receipt of funds from the sale of certain investments in order to fund working capital and the repayment of the shareholder loan or an equity fundraising to provide working capital and the repayment of the shareholder loan. The receipt of these funds is not yet certain. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
1 adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or
2 the Company financial statements are not in agreement with the accounting records and returns; or
3 certain disclosures of directors' remuneration specified by law are not made; or
4 we have not received all the information and explanations we require for our audit.
Christopher Taylor (Senior Statutory Auditor) For and on behalf of Adler Shine LLP, statutory auditor Aston House Cornwall Avenue London N3 1LF
27 February 2014
Adler Shine LLP is a limited liability partnership registered in England and Wales (with registered number OC301724).
Blue Star Capital Plc
Statement of Comprehensive Income
for the year ended 30 September 2013
|
|
|
|
|
Notes |
2013 £ |
2012 £ |
Profit/(loss) arising from investments held at fair value through profit or loss: |
|
|
|
Investments |
12 |
(36,802) |
(633,699) |
Impairment of deferred consideration receivable |
13 |
(479,655) |
(444,430) |
Profit on disposal of investments |
|
4,898 |
- |
|
|
|
|
|
|
(511,559) |
(1,078,129) |
|
|
|
|
Other income |
|
- |
3,128 |
Administrative expenses |
|
(98,798) |
(361,508) |
|
|
|
|
Operating loss |
3 |
(610,357) |
(1,436,509) |
Finance income |
4 |
43,615 |
80,137 |
Finance costs |
5 |
(136,603) |
(82,953) |
|
|
|
|
Loss before and after taxation and total comprehensive loss for the year |
|
(703,345) |
(1,439,325) |
|
|
|
|
|
|
|
|
Loss per ordinary share: Basic and diluted loss per share on loss for year |
10 |
(0.40)p |
(0.90)p |
Blue Star Capital Plc
Statement of Financial Position
for the year ended 30 September 2013
|
|
|
|
|
Notes |
2013 £ |
2012 £ |
Non-current assets |
|
|
|
Property, plant & equipment |
11 |
- |
- |
Investments |
12 |
1,208,694 |
1,188,607 |
|
|
|
|
|
|
1,208,694 |
1,188,607 |
|
|
|
|
Current assets |
|
|
|
Trade and other receivables |
13 |
37,350 |
564,863 |
Cash and cash equivalents |
14 |
34,005 |
36,936 |
|
|
|
|
Total current assets |
|
71,355 |
601,799 |
|
|
|
|
Total assets |
|
1,280,049 |
1,790,406 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
15 |
158,976 |
151,590 |
Borrowings |
16 |
601,832 |
483,729 |
|
|
|
|
Total liabilities |
|
760,808 |
635,319 |
|
|
|
|
Net assets |
|
519,241 |
1,155,087 |
|
|
|
|
Shareholder equity |
|
|
|
Share capital |
17 |
192,942 |
168,020 |
Share premium account |
|
6,815,347 |
6,772,770 |
Retained earnings |
|
(6,489,048) |
(5,785,703) |
|
|
|
|
Total shareholders' equity |
|
519,241 |
1,155,087 |
The financial statements were approved by the board and authorised for issue on 27 February 2014 and were signed on its behalf by:
Anthony Fabrizi
Chief Executive Officer
Registered number: 05174441
Blue Star Capital Plc
Statement of Changes in Equity
for the year ended 30 September 2013
|
Share capital £ |
Share premium £ |
Retained earnings £ |
Total £ |
Year ended 30 September 2012 |
|
|
|
|
At 1 October 2011 |
150,261 |
6,464,876 |
(4,361,977) |
2,253,160 |
Loss for the year and total comprehensive income and expense |
- |
- |
(1,439,325) |
(1,439,325) |
Shares issued in the year |
17,759 |
320,144 |
- |
337,903 |
Share issue costs |
- |
(12,250) |
- |
(12,250) |
Share based payments |
- |
- |
15,599 |
15,599 |
At 30 September 2012 |
168,020 |
6,772,770 |
(5,785,703) |
1,155,087 |
Year ended 30 September 2013 |
|
|
|
|
At 1 October 2012 |
168,020 |
6,772,770 |
(5,785,703) |
1,155,087 |
Loss for the year and total comprehensive income and expense |
- |
- |
(703,345) |
(703,345) |
Shares issued in year |
24,922 |
42,577 |
- |
67,499 |
At 30 September 2013 |
192,942 |
6,815,347 |
(6,489,048) |
519,241 |
Share capital
Share capital represents the nominal value on the issue of the Company's equity share capital, comprising £0.001 ordinary shares.
Share premium
Share premium represents the amount subscribed for the Company's equity share capital in excess of nominal value.
Retained earnings
Retained earnings represent the cumulative net income and losses of the Company recognised through the statement of comprehensive income along with the fair value of the equity settled share based payments.
FOR THE YEAR ENDED 30 SEPTEMBER 2013 |
Notes |
£ 2013 |
£ 2012 |
Operating activities Loss for the year |
|
(703,345) |
(1,439,325) |
Adjustments: Finance income |
|
(43,615) |
(80,137) |
Finance costs |
|
136,603 |
82,953 |
Fair value losses/(gains) |
|
36,802 |
633,699 |
Impairment of deferred consideration receivable |
|
479,655 |
444,430 |
Profit on disposal of investments Shares issued in lieu of salary |
|
(4,898) - |
- 92,904 |
Share based payments Working capital adjustments Increase in trade and other receivables |
6 |
- (7,335) |
15,599 (42,867) |
Increase / (decrease) in trade and other payables |
|
32,635 |
(179,927) |
Net cash used in operating activities |
|
(73,498) |
(472,671) |
Investing activities Interest received |
|
10 |
93 |
Proceeds from sale of investments |
|
46,807 |
- |
Net cash generated from investing activities |
|
46,817 |
93 |
Financing activities Proceeds from issue of equity shares |
|
43,750 |
245,000 |
Reduction in borrowings Share issue costs |
|
(20,000) - |
- (12,250) |
Net cash generated from financing activities |
|
23,750 |
232,750 |
Net (decrease)/increase in cash and cash equivalents |
|
(2,931) |
(239,828) |
Cash and cash equivalents at start of the year |
14 |
36,936 |
276,764 |
Cash and cash equivalents at end of the year |
14 |
34,005 |
36,936 |
Notes to the Accounts
1. Accounting policies
General information
Blue Star Capital Plc (the Company) invests principally in the Homeland Security, media, technology and gaming sectors.
The Company is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is Griffin House, 135 High Street, Crawley RH10 1DQ.
The Company is listed on the London Stock Exchange's AIM.
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The historical cost convention has been applied as modified by the revaluation of assets and liabilities held at fair value.
Going concern
The financial statements have been prepared on the going concern basis, which assumes that the Company will be able to meet its liabilities as they fall due.
At 30 September 2013, the Company had cash balances of £34,005 but net current liabilities of £689,453. Since the year end the Company has completed a number of equity fundraisings and repaid a proportion of the loan, as detailed in note 18.
The Company is seeking to progress the sale of certain investments or raise further funds to provide the Company with additional working capital. However, this is not certain and the amount realised may or may not provide sufficient funds to cover the repayment of the remaining loan and the on-going working capital needs of the Company. Should these expected transactions not take place, the Company would need to obtain alternative finance. There can be no certainty that further financing will be available.
These conditions constitute a material uncertainty that may cast doubt about the Company's ability to continue as a going concern. The financial statements do not contain the adjustments that would result if the Company were unable to continue as a going concern.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.
Depreciation is calculated to write off the cost of property, plant and equipment less estimated residual values over their expected useful lives as follows:
Office equipment 25% per annum, straight line
Impairment provisions are made if the carrying value of an asset exceeds the recoverable amount.
Financial assets
The Company classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Company has not classified any of its financial assets as held to maturity or available for sale.
The Company's accounting policy for each category is as follows;
Fair value through profit or loss
Financial assets at fair value through profit or loss are either financial assets held for trading or other investments that have been designated at fair value through profit or loss on
initial recognition.
Financial assets at fair value through profit or loss are initially recognised at fair value and any gains or losses arising from subsequent changes in fair value are presented in the statement of comprehensive income in the period in which they arise.
The fair value of unlisted securities is established using International Private Equity and Venture Capital ("IPEVC") guidelines. The valuation methodology used most commonly by the Company is the 'price of recent investment' contained in the IPEVC valuation guidelines. The following considerations are used when calculating the fair value using the 'price of recent investment' guidelines:
· Where the investment being valued was itself made recently, its cost will generally provide a good indication of fair value;
· Where there has been any recent investment by third parties, the price of that investment will provide a basis of the valuation;
· If there is no readily ascertainable value from following the 'price of recent investment' methodology, the company considers alternative methodologies in the IPEVC guidelines, being principally discounted cash flows and price earnings multiples requiring management to make assumptions over the timing and nature of future earnings and cash flows when calculating fair value;
· Where a fair value cannot be readily estimated the investment is reported at the carrying value at the previous reporting date unless there is evidence that the investment has been impaired.
Loans and receivables
The Company's loans and receivables comprise cash and cash investment in the balance sheet and loans receivable from third parties.
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less.
For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
Loans receivable from third parties are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method.
Financial liabilities
The Company classifies its financial liabilities in the category of financial liabilities measured at amortised cost. The Company does not have any financial liabilities at fair value through profit or loss.
Financial liabilities measured at amortised cost
Financial liabilities measured at amortised cost include:
Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method.
Finance income
Finance income relates to interest income arising on cash and cash equivalents held on deposit and interest accrued on loans receivable. Finance income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
Operating loss
Operating loss is stated after crediting all items of operating income and charging all items of operating expense.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/ (assets) are settled/ (recovered).
Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of the cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Present obligations under onerous leases are recognised and measured as provisions. An onerous contract is considered to exist where the company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
|
|
Effective for accounting periods beginning on or after: |
IFRS 2,3,8, 16,24,36 |
Amendments resulting from Annual improvements 2010-2012 Cycle |
1 July 2014 |
IFRS 3, 13, IAS 40 |
Amendments resulting from Annual improvements 2011-2013 Cycle |
1 July 2014 |
IFRS 7 |
Deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures |
1 January 2015 |
IFRS 9 |
Deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures |
1 January 2015 |
IFRS 10 |
Amendments for investment entities |
1 January 2014 |
IFRS 12 |
Amendments for investment entities |
1 January 2014 |
IAS 19 |
Employee Benefits - Amended to clarify the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service |
1 July 2014 |
IAS 27 |
Amendments for investment entities |
1 January 2014 |
IAS 32 |
Financial Instruments: Presentation - Amendments to application guidance on the offsetting of financial assets and financial liabilities |
1 January 2014 |
IAS 39 |
Financial Instruments: Recognition and Measurement - Amendments for novation of derivatives |
1 January 2014 |
IFRIC 21 |
Levies |
1 January 2014 |
The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements other than in terms of presentation.
Share-based payments
All services received in exchange for the grant of any share based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options/warrants awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets).
Share based payments are ultimately recognised as an expense in the Statement of Comprehensive Income with a corresponding credit to the retained earning reserve in equity, net of deferred tax where applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options/warrants expected to vest. Non-market vesting conditions are included in assumptions about the number of options/warrants that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options/warrants expected to vest differs from previous estimates. No adjustment is made to the expense or share issue cost recognised in prior periods if fewer share options ultimately are exercised than originally estimated.
Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium.
Where share options are cancelled, this is treated as an acceleration of the vesting period of the options. The amount that otherwise would have been recognised for services received over the remainder of the vesting period is recognised immediately within the Statement of Comprehensive Income.
2. Critical accounting estimates and judgements
The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are those in relation to:
Fair value of financial instruments
The Company holds investments that have been designated at fair value through profit or loss on initial recognition. The Company determines the fair value of these financial instruments that are not quoted, using valuation techniques such as Black Scholes option pricing. These techniques are significantly affected by certain key assumptions, such as discount rates. Other valuation methodologies such as discounted cash flow analysis assess estimates of future cash flows and it is important to recognise that in that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately.
In certain circumstances, where fair value cannot be readily established, the Company is required to make judgements over carrying value impairment, and evaluate the size of any impairment required.
The methods and assumptions applied, and the valuation techniques used, are disclosed in note 12.
Share based payments
The calculation of the fair value of equity-settled share based awards and the resulting charge to the statement of comprehensive income requires assumptions to be made regarding future events and market conditions. These assumptions include the future volatility of the Company's share price. These assumptions are then applied to a recognised valuation model in order to calculate the fair value of the awards. Details of these assumptions are set out in note 6.
Estimate of the fair value of contingent consideration
The Company has contingent consideration receivable on the disposal of certain unquoted investments. This has been designated at fair value based upon the discounted cash flows of the expected receivable using a post-tax discount rate.
The methods and assumptions applied, and the valuation techniques used, are disclosed in note 13.
3. Operating Loss
|
2013 £ |
2012 £ |
This is stated after charging: |
|
|
Auditor's remuneration - statutory audit fees |
12,000 |
16,000 |
Share based payments |
- |
15,599 |
4. |
Finance income |
£ 2013 |
£ 2012 |
|
Unwinding of discount on deferred consideration |
43,605 |
80,044 |
|
Interest received on short term deposits |
10 |
93 |
|
|
43,615 |
80,137 |
5. |
Finance costs |
2013 £ |
2012 £ |
|
Interest on shareholder loans |
96,603 |
40,453 |
|
Repayment premium on shareholder loans |
40,000 |
42,500 |
|
|
136,603 |
82,953 |
6. |
Share based payments |
|
|
The Company operates an unapproved scheme for executive directors and employees, and a corresponding unapproved scheme for non-executive directors. Under both unapproved schemes, one third of the options vest if the average share price of the Company exceeds 6p for three consecutive months; similarly one third vest if its average share price exceeds 9p for three consecutive months and the final third vest if the average share price exceeds 12p for three consecutive months.
|
Weighted |
|
Weighted |
2012 |
average |
|
average |
exercise |
2013 |
exercise |
price (p) |
Number |
price (p) |
Number |
Outstanding at the beginning of the year |
4.5 |
3,132,046 |
4.5 |
9,199,282 |
Lapsed during the year |
- |
- |
4.5 |
(6,067,236) |
|
4.5 |
3,132,046 |
4.5 |
3,132,046 |
The exercise price of options outstanding at the end of the year was 4.5p (2012: 4.5p) and their weighted average contractual life was 2 years (2012: 3 years).
Of the total number of options outstanding at the end of the year, nil (2012: nil) had vested and were exercisable at the end of the year. All the options lapsed after the year end.
The following information is relevant in the determination of the fair value of options granted under the equity share based remuneration schemes operated by the Company.
Date of grant |
6 October 2009 |
|
|
Option pricing model used |
Black-Scholes |
Share price at date of grant (in pence) |
4.5p |
Exercise price (in pence) |
4.5p |
Contractual life (days) |
1,460 |
Expected volatility |
78% |
Risk free interest rate |
5% |
Fair value per option |
3p |
The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical analysis of daily share prices over the Company's life.
The Black-Scholes valuation technique was adopted because, in the opinion of the directors, the market based vesting conditions were not materially sensitive to the valuation.
Share warrants
The Company entered into a shareholder loan agreement on 28 April 2011 with certain existing shareholders. The arrangement also included the issue of 15,000,000 warrants to subscribe for ordinary shares at £0.02 pence per share, exercisable at any time during the period commencing 31 March 2011 and ending 31 March 2014. The charge to the profit and loss account for the current year is £nil.
|
Weighted |
2013 |
Weighted |
2012 |
average |
|
average |
exercise |
|
exercise |
price (p) |
Number |
price (p) |
Number |
Outstanding at the beginning of the year |
2 |
15,000,000 |
2 |
15,000,000 |
|
2 |
15,000,000 |
2 |
15,000,000 |
The exercise price of warrants outstanding at the end of the year was 2p (2012: 2p) and their weighted average contractual life was 1 year (2012: 2 years).
Of the total number of warrants outstanding at the end of the year, all had vested and were exercisable at the end of the year.
The following information is relevant in the determination of the fair value of warrants granted during the year under the equity share based remuneration schemes operated by the Company.
Date of grant |
28 April 2011 |
|
|
Option pricing model used |
Black-Scholes |
Share price at date of grant (in pence) |
3p |
Exercise price (in pence) |
2p |
Contractual life (days) |
1,095 |
Expected volatility |
28% |
Risk free interest rate |
1.24% |
Fair value per option |
1p |
The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical analysis of daily share prices over a three year period.
The Black-Scholes valuation technique was adopted because, in the opinion of the directors, the market based vesting conditions were not materially sensitive to the valuation.
The share-based expense (note 3) comprises:
|
2013 |
2012 |
£'000 |
£'000 |
Equity-settled schemes |
- |
(54,960) |
Share warrants |
- |
70,559 |
|
- |
15,599 |
7. |
Staff costs, including directors |
2013 £ |
2012 £ |
|
Wages and salaries |
- |
212,970 |
|
Social security costs |
- |
17,211 |
|
Other pension costs |
- |
10,000 |
|
|
- |
240,181 |
During the year the company had an average of 4 employees who were administrative (2012: 1). The employees were both directors and key management personnel of the company.
8. |
Directors' and key management personnel |
2013 £ |
2012 £ |
Director Lord Dear |
Emoluments |
- |
28,000 |
|
Pension Share Options |
- - |
- 7,419 |
Dr Richard Leaver |
Emoluments |
- |
95,720 |
|
Pension |
- |
10,000 |
|
Share Options |
- |
(73,506) |
Anthony Fabrizi |
Emoluments Pension Share Options |
- - - |
26,250 - - |
Noel Lyons |
Emoluments Pension Share Options |
- - - |
21,000 - - |
General Sir Michael Wilkes |
Emoluments Pension Share Options |
- - - |
21,000 - 5,564 |
Peter Varnish |
Emoluments Pension Share Options |
- - - |
21,000 - 5,564 |
Graham Parr |
Emoluments Pension Share Options |
- - - |
- - - |
|
|
- |
168,011 |
|
|
|
|
|
There were no Directors in the Company's defined contribution pension scheme during the year (2012: 1).
The value of the share options were computed using the Black-Scholes option pricing methodology, with a 5 year volatility of 78% and evenly divided over the five year period from issue (6 October 2009).
9. Taxation
The tax assessed on loss before tax for the year differs to the applicable rate of corporation tax in the UK for small companies of 20% (2012: 20%). The differences are explained below:
|
2013 £'000 |
2012 £'000 |
Loss before tax |
(703,345) |
(1,439,325) |
Loss before tax multiplied by effective rate of corporation |
|
|
tax of 20% (2012 - standard rate of 20%) |
(140,669) |
(287,865) |
Effect of: |
|
|
Expenses not deductible for tax purposes |
33,084 |
139,880 |
Capital losses utilised |
87,210 |
72,877 |
Other adjustments |
(1,764) |
- |
Losses carried forward |
22,139 |
75,108 |
Tax charge in the income statement |
- |
- |
The Company has incurred tax losses for the year and a corporation tax expense is not anticipated. The amount of the unutilised tax losses has not been recognised in the financial statements as the recovery of this benefit is dependent on future profitability, the timing of which cannot be reasonably foreseen. The unrecognised deferred tax asset at 30 September 2013 is £496,162 (2012: £474,023).
10. Loss per ordinary share
The earnings and number of shares used in the calculation of loss/earnings per ordinary share are set out below:
|
2013 |
2012 |
Basic: |
|
|
Loss for the financial period |
£(703,345) |
£(1,439,325) |
|
|
|
Weighted average number of shares |
174,902,055 |
160,731,542 |
Loss per share (pence) |
(0.40) |
(0.90) |
The share options in issue do not have any dilutive effect at the year-end date.
11. |
Property, plant and equipment |
|
£ |
|
Cost |
|
|
|
At 1 October 2011 |
|
29,935 |
|
Additions |
|
- |
|
At 30 September 2012 and 30 September 2013 |
|
29,935 |
|
Depreciation |
|
|
|
At 1 October 2011 |
|
29,935 |
|
Charge for the year |
|
- |
|
At 30 September 2012 and 30 September 2013 |
|
29,935 |
|
Net book value |
|
|
|
|
At 30 September 2013 |
|
|
- |
|
At 30 September 2012 |
|
|
- |
|
At 30 September 2011 |
|
|
- |
|
|
|
2013 |
2012 |
12. |
Investments |
|
£ |
£ |
|
At start of year |
|
1,188,607 |
1,822,306 |
|
Additions |
|
116,998 |
- |
|
Disposals |
|
(60,109) |
- |
|
Fair value loss for the year |
|
(36,802) |
(633,699) |
|
At end of year |
|
1,208,694 |
1,188.607 |
|
|
|
|
Book value |
|
Unquoted investments |
Class of shares/investment |
|
and fair value £ |
|
Vigilant Applications Limited |
Ordinary 1p |
|
88,169 |
|
Disruptive Tech. Limited |
Ordinary 1p |
|
1,120,515 |
|
Medcenter Holdings Inc |
Common shares US$0.01 |
|
- |
|
|
US$12 strike price warrants |
|
- |
|
|
US$18 strike price warrants |
|
- |
|
|
|
|
1,208,684 |
All of the above investments are incorporated in the United Kingdom barring Medcenter Holdings Inc, which is a company incorporated in the Cayman Islands and Disruptive Tech. Limited which is based in Gibraltar. The methods used to value these unquoted investments are described below.
Fair value
The fair value of unquoted investments is established using valuation techniques. These include the use of recent arm's length transactions, the Black-Scholes option pricing model and discounted cash flow analysis. Where a fair value cannot be estimated reliably the investment is reported at the carrying value at the previous reporting date in accordance with International Private Equity and Venture Capital ("IPEVC") guidelines.
The Company assesses at each balance sheet date whether there is any objective evidence that the unquoted investments are impaired. The unquoted investments are deemed to be impaired, if and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an incurred 'loss event') and that loss event (or events) has an impact on the estimated future fair value of the investments that can be reliably measured.
13. |
Trade and other receivables |
2013 £ |
2012 £ |
|
Prepayments |
2,276 |
- |
|
Other receivables |
29,177 |
562,393 |
|
Social security and other taxes |
5,897 |
2,470 |
|
|
37,350 |
564,863 |
|
Current Non-current |
37,350 - |
564,863 - |
|
|
37,350 |
564,863 |
The directors consider that the carrying value of trade and other receivables approximates to their fair value. Included within other receivables is an amount of £18,201 relating to contingent consideration receivable on the disposal of OmniPerception (2012: £436,050 relating to contingent consideration receivable on the disposal of Zimiti Limited). The fair value of the contingent consideration is based upon the discounted cash flows of the expected receivable using a post-tax discount rate of 10%. The Directors have assessed the fair value of the deferred consideration receivable to be £20,157 (2012: £484,500) and consequently this figure has been used in the calculation of discounted fair value. An amount of £479,655 has been expensed to statement of comprehensive income in respect of deferred consideration no longer recoverable.
|
2013 |
2012 |
14. |
Cash and cash equivalents |
£ |
£ |
|
Cash at bank and in hand |
10,000 |
7,031 |
|
Treasury reserve deposit |
24,005 |
29,905 |
|
|
34,005 |
36,936 |
Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with an original maturity of three months or less. The directors consider that the carrying value of cash and cash equivalents approximates to their fair value.
15. |
Trade and other payables |
2013 £ |
2012 £ |
|
Trade payables |
75,102 |
51,958 |
|
Accruals |
27,548 |
54,512 |
|
Other payables |
37,246 |
3,245 |
|
Social security and other taxes |
19,080 |
41,875 |
|
|
158,976 |
151,590 |
All trade and other payables fall due for payment within one year. The directors consider that the carrying value of trade and other payables approximates to their fair value.
|
2013 |
2012 |
16. |
Borrowings |
£ |
£ |
|
Secured loan |
601,832 |
483,729 |
|
Current Non-current |
601,832 - |
483,729 - |
The Company entered into a shareholder loan agreement on 28 April 2011 with certain existing shareholders. These shareholders agreed to lend the Company £400,000 (the "Loan") reduced on a pound for pound basis by the amount of any realisation made by the Company on the sale of any of the Company's investment assets.
The Company agreed an extension to the Loan with the shareholders on a number of occasions.
As at 30 September 2013, the amount outstanding under the Loan (including interest and repayment premium) was £601,832 ("Revised Principal"). The Revised Principal will accrue interest until the earlier of a) repayment of the Loan or b) the Final Redemption Date at a rate of 2.0% per month, or part month, from 30 September 2013 until repayment in full or the Final Redemption Date.
Since the year end, the Final Redemption Date has been changed, certain loan repayments have been made and the Loan holders agreed to waive interest on the Loan, full details of which are provided by note 18.
17. |
Share capital |
2013 Number |
2013 £ |
2012 Number |
2012 £ |
|
Issued and fully paid At 1 October |
168,020,316 |
168,020 |
150,260,935 |
150,261 |
|
Shares issued in the year |
24,921,875 |
24,922 |
17,759,381 |
17,759 |
|
At 30 September |
192,942,191 |
192,942 |
168,020,316 |
168,020 |
During the year the following shares were issued:
|
Number |
£ |
Issue price per share |
19 October 2012 |
7,421,875 |
7,422 |
0.32p |
30 April 2013 |
17,500,000 |
17,500 |
0.25p |
|
24,921,875 |
24,922 |
|
18. Events after the reporting date
On 7 October 2013, the Company raised £150,000 (before expenses) through the issue of 50,000,000 new Ordinary Shares at an issue price of 0.3 pence per Ordinary Share.
On 24 December 2013, the Company raised £200,000 before expenses by way of a subscription of 40,000,000 New Ordinary Shares at a price of 0.5p per share. The Company used the net proceeds of the subscription to fund its investment in OAK Media Limited ("OAK") on the terms described below.
OAK is an early stage gaming technology aggregator which intends to supply solutions to mainstream brands and broadcast operators. The Company has agreed to invest £100,000 in OAK in return for 90 per cent of the issued share capital of OAK. Under the terms of the Company's investment, in order to incentivise OAK's management team, upon OAK achieving various milestones in the development of the business, the Company's shareholding in OAK would reduce to a minimum of 50 per cent of OAK's issued share capital. As part of the investment, the directors of OAK, Andrew Middleton and Adrian Finn (the "OAK Directors") have received a total of three million new warrants each ("OAK Warrants"). The OAK Warrants granted to the OAK Directors are exercisable at a price of 0.6p until 6 October 2016. In addition to OAK Warrants issue, a third party has received three million new warrants as an introduction fee to the OAK investment. The warrants granted to the third party are exercisable at a price of 0.6p until 6 October 2016.
On 31 January 2014, the Company agreed an extension to the shareholder loan ("the Loan") entered into on 28 April 2011, and thereafter extended. The original amount of the Loan was £400,000, which with the accrued interest, had originally been due for repayment by 31 March 2012. Since the year end the Company has made a number of repayments of the Loan in the form of both cash repayments and equity conversions. The amount outstanding under the Loan is now £85,292, including interest and repayment premium already accrued. To preserve Company cash and aid the implementation of the Company's investing policy, the Loan holders have agreed to waive interest on the Loan until the Final Redemption Date, which has now been deferred until 31 March 2014.
19. Financial instruments
Categories of financial assets and liabilities
The following tables set out the categories of financial instruments held by the company:
|
Loans and receivables |
|
2013 |
2012 |
Financial assets |
Notes |
£ |
£ |
Trade and other receivables |
13 |
130,323 |
564,863 |
Cash and cash equivalents |
14 |
34,005 |
36,937 |
|
|
164,328 |
601,800 |
|
Notes |
Held for trading £ |
Fair value through profit or loss designated upon initial recognition £ |
Total £ |
Investments |
12 |
|
|
|
At 30 September 2013 |
|
- |
1,208,694 |
1,208,694 |
At 30 September 2012 |
|
- |
1,188,607 |
1,188,607 |
Fair value measurement |
|
Notes |
Level 1 £ |
Level 2 £ |
Level 3 £ |
Investments |
12 |
|
|
|
At 30 September 2013 |
|
- |
1,208,694 |
- |
At 30 September 2012 |
|
- |
1,188,607 |
436,050 |
|
Financial liabilities measured at amortised cost |
|
2013 |
2012 |
Financial liabilities |
Notes |
£ |
£ |
Trade payables |
15 |
75,102 |
51,958 |
Accruals |
15 |
27,548 |
113,241 |
|
|
102,650 |
165,199 |
The Company's financial instruments comprise investments held for trading, cash and cash equivalents and trade payables that arise directly from the Company's operations. The main purpose of these instruments is to invest in portfolio companies. Investments held for trading and other investments have been held at fair value through profit and loss. The main risks arising from holding these financial instruments is market risk and credit risk.
Interest rate risk
The Company's exposure to changes in interest rates relate primarily to cash and cash equivalents. Cash and cash equivalents is held either on current or on short term deposits at floating rates of interest determined by the relevant bank's prevailing base rate. The Company seeks to obtain a favourable interest rate on its cash balances through the use of bank treasury deposits. Any reasonable change in interest rate would not have a material impact on finance income that the Company could receive in the course of a year, based on the current level of cash and cash equivalents either held in current accounts or short term deposits.
Market risk
All trading instruments are subject to market risk, the potential that future changes in market conditions may make an instrument less valuable, due to fluctuations in security prices, as well as interest and foreign exchange rates. Market risk is directly impacted by the volatility and liquidity in the markets in which the related underlying assets are traded.
Sensitivity analysis
The following table looks at the impact on net result and net assets based on a given movement in the fair value of all the investments;
10% movement either way will result in £120,869 profit or (loss)
20% movement either way will result in £241,739 profit or (loss)
30% movement either way will result in £362,608 profit or (loss)
Borrowing facilities
The operations to date have been financed through the placing of shares and investor loans. It is Board policy to keep borrowing to a minimum, where possible.
Liquidity risks
The Company seeks to manage liquidity risk by ensuring sufficient liquid assets are available to meet foreseeable needs and to invest liquid funds safely and profitably. All cash balances are immediately accessible and the Company holds no trades payable that mature in greater than 3 months, hence a contractual maturity analysis of financial liabilities has not been presented. Since these financial liabilities all mature within 3 months, the directors believe that their carrying value reasonably equates to fair value.
Credit risk
The Company's credit risk is attributable to cash held on deposit at financial institutions.
Cash is deposited with reputable financial institutions with a high credit rating. The maximum credit risk relating to cash and cash equivalents is equal to their carrying value of £34,005 (2012: £36,937).
Capital Disclosure
As in previous years, the Company defines capital as issued capital, reserves and retained earnings as disclosed in statement of changes in equity. The Company manages its capital to ensure that the Company will be able to continue to pursue strategic investments and continue as a going concern. The Company does not have any externally imposed financial requirements.
20. Related party transactions
At the year end, Anthony Fabrizi was owed £33,375 (2012: £39,116) in current borrowings and accrued interest.
Lord Dear, former chairman of Blue Star Capital, was a director of investee company OmniPerception Limited.
21. Operating lease commitments
At the balance sheet date the company had no outstanding commitments under operating leases.
22. Ultimate Controlling Party
The Company considers that there is no ultimate controlling party.
In accordance with AIM Rule 20, the Company's audited Reports and Financial Statements for the financial year ended 30 September 2013 have been posted on the Company's website and have been sent to those shareholders who have elected to receive the report by post. The Annual General Meeting will be held on Thursday 27 March 2014 at the offices Daniel Stewart & Company Plc, Becket House, 36 Old Jewry, London EC2R 8DD at 2.00pm. The Notice and Form of proxy has been posted to shareholders and is available via the Company's website www.bluestarcapital.co.uk.
