Half-year Report

RNS Number : 4573D

Blue Star Capital plc

29 June 2021

 

29 June 2021

Blue Star Capital plc

("Blue Star" or "the Company")

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

Chief Executive's Statement

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

Financials

Blue Star reported a loss for the period of £494,543 compared with a loss of £189,460 for the six months ended 31 March 2020, with the increase mainly accounted for by adverse foreign exchange movements on the investment portfolio. 

Net assets increased to £8,927,019 compared to £5,969,917 for the six months ended 31 March 2020. Subsequent to the period end, portfolio company Dynasty Esports PTE successfully completed a financing round resulting in a post-money valuation of USD$50 million in April 2021.  Having exercised our antidilution rights to maintain our holding at 13 per cent, Blue Star's investment, based on this valuation, increased from approximately £1,300,000 to approximately £4,600,000 which is expected to be reflected in the Company's full year net assets.

Blue Star's cash position at 31 March 2021 was £59,491 compared to a balance of £7,379 at 31 March 2020. Following the period end, in April 2021, the Company raised approximately £1.02 million by way of a placing of new shares and subsequently made a further investment approximately £466,000 into Dynasty eSports Pte and £200,000 into the NFT Investments plc.

Portfolio Highlights

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

Esports

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

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

Dynasty Esports PTE  

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

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

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

Guild Esports plc  

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

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

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

Blockchain/Payments

SatoshiPay

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

More recently, SatoshiPay on a pre- money valuation of £19m, announced a research and development grant to assist it with building Pendulum, a suite of open, decentralised protocols on which smart contracts can be developed and executed. It is the intention for Pendulum to act as a second layer on top of Stellar, with additional bridges to two of the most popular smart contract platforms, Ethereum and Polkadot.

Sthaler Limited

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

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

Leaf Mobile ("Leaf")

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

In April 2021, Leaf announced revenue of   $80.5M   in for the year ended   31 December 2020, representing a 116 per cent. increase over 2019 revenue of   CAD$37.2 million.

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

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

Outlook

The recent esports announcements relating to Guild and Dynasty have helped to illustrate the upside from our esports investment portfolio and the Board remains highly confident that this area of investment offers the potential for a significant improvement in net asset value. Our long-term shareholdings in payment companies SatoshiPay and Sthaler continue to progress and, while taking time to mature, provide another exciting area of investment. Overall, we are pleased with progress over the period, and, in particular, the further advances made since the period end, and look to the future with confidence.

Derek Lew

Chief Executive

Blue Star Capital plc Derek Lew, Chief Executive [phone] Cairn Financial Advisers LLP Nominated Adviser Jo Turner / Liam Murray Stanford Capital Partners Limited Broker Patrick Claridge / John Howes / Bob Pountney [phone] [phone]

 

 

 

Statement of Comprehensive Income

for the six months ended 31 March 2021

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

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

Statement of Financial Position

as at 31 March 2021

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

 

Statement of changes in equity as at 31 March 2021

	Share   capital		Share   premium		Other    reserves		Retained   earnings		Total
Six months ended	£		£		£		£		£
31 March 2021 At 1 October 2020	4,133,251		9,074,957		143,210		(4,024,856)		9,326,562
Loss for the period and total comprehensive income	-		-		-		(494,543)		(494,543)
Shares issued in period	95,000		-		-		-		95,000
Exercise of warrants	-		-		(29,716)		29,716		-
Lapse of warrants	-		-		(17,204)		17,204		-
At 31 March 2021	4,228,251		9,074,957		96,290		(4,472,479)		8,927,019

Six months ended
31 March 2020
At 1 October 2019	2,142,584		8,852,724		64,190		(5,850,121)		5,209,377
Loss for the period and
total comprehensive
income	-		-		-		(189,460)		(189,460)
Shares issued in period	950,000		-		-		-		950,000
At 31 March 2020	3,092,584		8,852,724		64,190		(6,039,581)		5,969,917

Year ended
30 September 2020
At 1 October 2019	2,142,584	8,852,724		64,190		(5,850,121)	5,209,377
Profit for the year and total
comprehensive income	-	-		-		1,714,155	1,714,155
Shares issued in year	1,990,667	277,833		-		-	2,268,500
Share issue costs	-	(55,600)		-		-	(55,600)
Lapse of warrants	-	-		(64,190)		64,190
Exercise of warrants	-	-		(46,920)		46,920	-
Share based payment	-	-		190,130		-	190,130
At 30 September 2020	4,133,251		9,074,957		143,210  (4,024,856)			9,326,562

Statement of cash flows

for the six months ended 31 March 2021

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

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

1.  Basis of preparation

The principal accounting policies used for preparing the Interim Accounts are those the Company expects to apply in its financial statements for the year ending 30 September 2021 and are unchanged from those disclosed in the Company's Report and Financial Statements for the year ending 30 September 2020.

The financial information for the six months ended 31 March 2021 and for the six months ended 31 March 2020 have neither been audited nor reviewed by the Company's auditors.

2.  Critical accounting estimates and judgements

The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Fair value of financial instruments:

The Company holds investments that have been designated at fair value through profit or loss on initial recognition. The Company determines the fair value of these financial instruments that are not quoted, using valuation techniques, contained in the IPEVC guidelines. These techniques are significantly affected by certain key assumptions. Other valuation methodologies such as discounted cash flow analysis assess estimates of future cash flows and it is important to recognise that in that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately.

In certain circumstances, where fair value cannot be readily established, the Company is required to make judgements over carrying value impairment, and evaluate the size of any impairment required.

3.  Loss per ordinary share

The calculation of a basic loss per share is based on the loss for the period attributable to equity holders of the Company and on the weighted average number of shares in issue during the period.

4.  Share capital

On 9 November 2020, 95,000,000 new ordinary shares were issued at a price of 0.1p per share from the exercise of 95,000,000 warrants. The exercise has raised £95,000.

 

END

 

 

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