TIDMANIC
RNS Number : 8119V
Agronomics Limited
16 December 2021
Agronomics Limited
("Agronomics" or the "Company")
Annual audited results for the year ending 30 June 2021
Notice of AGM
The Board of Agronomics, a leading listed investor in cellular
agriculture, is pleased to announce its annual results for the year
ending 30 June 2021.
Copies of the 2021 Audited Report and Financial Statements are
being posted to shareholders and will shortly be available from the
Company's website www.agronomics.im
The Company will post its Notice of Annual General Meeting
("AGM") to Shareholders at the same time. The AGM will be held at
the Sanderson Suite, Claremont Hotel, Loch Promenade, Douglas, Isle
of Man IM1 2LX at 11:00 a.m. on Tuesday, 02 February 2022.
The Board has considered how best to deal with the practical
arrangements for the meeting in light of the unique circumstances
of the ongoing COVID-19 pandemic. The Board considers it important
that all shareholders should have the opportunity to exercise their
voting rights at the AGM. To this end, the Company invites
shareholders to complete the voting proxy form as early as
possible. Shareholders may also submit questions to the Company
Secretary either in writing at the registered office or by email to
denham@burnbrae.com prior to the meeting and as early as
possible.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014, as
it forms part of UK Domestic Law by virtue of the European Union
(Withdrawal) Act 2018. Upon the publication of this announcement,
this inside information is now considered to be in the public
domain.
For further information please contact:
Agronomics Beaumont Cenkos Peterhouse TB Cardew
Limited Cornish Limited Securities Capital
Plc Limited
The Company Nomad Joint Broker Joint Broker Public Relations
Richard Reed Roland Cornish Giles Balleny Lucy Williams Ed Orlebar
Denham Eke James Biddle Michael Johnson Charles Goodfellow Joe McGregor
+44 (0) 20 7930
0777
+44 (0) 1624 +44 (0) 7738 724
639396 +44 (0) 207 +44 (0) 207 +44 (0) 207 630
info@agronomics.im 628 3396 397 8900 469 0936 agronomics@tbcardew.com
Chairman's statement
I am pleased to present the Annual Report for Agronomics Limited
("Agronomics" or the "Company") for the year ended 30 June
2021.
Since the adoption of the new investing policy in April 2019,
Agronomics has enjoyed rapid expansion, largely due to the
establishment of a strong and diverse portfolio within the field of
cellular agriculture. In addition, there are also merging tailwinds
of changing consumer perceptions and the necessity for identifying
sustainable technology solutions to mitigate climate change.
The urgent need to address critical issues such as climate
change has never been more apparent, with 16 of the 17 hottest
years occurring in the 21st century, and notably intense wildfires
in Siberia, Turkey and California all in the past year. We have
witnessed deadly heat waves in Canada and horrific floods in parts
of Germany, China and Nepal.
In the year of COP26, the eyes of the world are on global
leaders to find solutions to the climate crisis, yet the role of
conventional agriculture has not taken centre stage. Notably,
intensive animal agriculture is now estimated to account for 18% of
global greenhouse gas emissions, with another 12% generated by
deforestation in favour of crops grown, in creating the need to
accelerate the development of technologies to reduce this, cellular
agriculture offers one viable methodology. The Agronomics portfolio
is now comprehensive, covering all major protein categories
including beef, pork, chicken, finfish, egg proteins, dairy
proteins, crustaceans as well as materials such as leather and
cotton.
2021 continued to see lives upturned by the impact of the
ongoing COVID-19 pandemic. It is no coincidence that this virus is
zoonotic in nature, with 75% of all new pathogens originating in
animals. Intensively farmed animals not only provide the perfect
breeding ground for new and devastating pandemics, but they are
also the recipients of 80% of the global supply of antibiotics -
driving the continued rise of antibiotic resistance. If we continue
on our path of animal dependence, future pandemics will be
inevitable, and should it be bacterial in origin as opposed to
viral, the loss of human life could make COVID-19 seem minor in
comparison.
The time is now to decouple our planet's obsession with the
cruel, intensive farming of animals, and begin building a
sustainable food system that will be capable of meeting the global
population's ever-growing demand for protein, without causing
irreversible damage to the natural environment in the process.
Our current investment portfolio shows considerable promise for
future growth given the scale of opportunity to invest in the
nascent alternative foods sector, and the Board will continue to
seek new opportunities in line with its Investing Policy.
Approach to Risk and Corporate Governance
"The Company's general risk appetite is a moderate, balanced one
that allows it to maintain appropriate growth, profitability and
scalability, whilst ensuring full corporate compliance."
The Group's primary risk drivers include: -
Strategic, Reputational, Credit, Operational, Market, Liquidity,
Foreign Exchange, Capital and Funding, Compliance and Conduct.
Our risk appetite has been classified under an "impact" matrix
defined as Zero, Low, Medium and High. Appropriate steps are
underway to ensure the prudential control monitoring of risks to
the Company and a suitable committee and reporting structure, under
the Chairmanship of the Chairman, will be formed to undertake this
essential requirement. Further details of the Corporate Governance
Statement, including the role and responsibilities of the Chairman
and an explanation as to how the QCA Code has been applied, will be
found on pages 7 to 10 of this report.
At the General Meeting of the Company on 16 April 2019,
shareholders adopted the following new Investing Policy:
"The Company will invest in opportunities within the Life
Sciences sector, concentrating on, but not being limited to,
environmentally friendly alternatives to the traditional production
of meat and plant-based nutrition sources ("Clean Food"). The
Company will focus on investments that provide scalable and
commercially viable opportunities."
Further details of the new Investing Policy can be on the
Company's website at www.agronomics.im .
In line with the new Investing Policy, a number of significant
investments were made, which are discussed below.
Investment Review
During the year, the Company completed a number of acquisitions
and a number of investments had positive revaluations, as detailed
below.
On 1 September 2020, the Company participated in the Series A
financing of Solar Foods Oy ("Solar Foods"), investing EUR3.0
million for 1,127 Series A Preferred Shares. Solar Foods was
founded in 2018 by a team of scientists at VTT Research Centre,
Finland, including CEO Dr Pasi Vainikka and CTO Dr Juha-Pekka
Pitkänen. Solar Foods develops a sustainable protein called
Solein(R) a microorganism that grows utilising airborne carbon
dioxide and hydrogen via the electrolysis of water. The protein is
natural and has already been shown to have a high level of
versatility in existing foods including meat-free burgers, yoghurts
and granola bars. This overall offers a promising solution to
disconnect global food production from animal-based
agriculture.
On 25 September 2020, Agronomics committed a total of US$ 4.1
million (approximately GBP3.2 million) to the Series B financing of
Mosa Meat B.V.'s ("Mosa Meat"), with the payments being made over
two equal tranches. Tranche 1 was paid fully during September 2020,
with tranche 2 being due before June 2022 at the earliest. The
total number of shares to be issued is dependent on the timing of
Mosa Meat achieving certain operational milestones in relation to
the production of pre-defined quantities of cultivated meat
(produced in a bioreactor) which is demonstrated to be
nutritionally comparable to conventional meat. The amount due under
tranche 2 has been recognised as a commitment in the balance
sheet.
On 29 September 2020, Shiok Meats Pte. Ltd. ("Shiok Meats")
completed a US$ 12.6 million Series A financing led by Aqua-Spark
Cooperatieve UA ("Aqua-Spark"), based in the Netherlands. The
initial convertible loan note investment, plus accrued interest,
converted into Series A shares, at a 28% uplift to book value and
equates to an internal rate of return of 31.8%.
On 15 October 2020, LIVEKINDLY Collective ("LIVEKINDLY")
completed a US$ 135 million financing through convertible
securities. On 30 March 2021, the LIVEKINDLY completed a US$ 335
million Series B raise, inclusive of the US$ 135 million
convertible loan note raised and announced in October 2020.
Following this, the Company recognised an unrealised gain of US$
2.55 million and an IRR of 73%. The Series B round was led by The
Rise Fund and joined by Rabo Corporate Investments, S2G Ventures as
well as other existing and mission-aligned investors.
On 19 November 2020, the Company purchased a US$ 5 million
Convertible Promissory Note ("CPN") from BlueNalu Inc ("BlueNalu"),
an existing portfolio company focused on cell-based seafood
products. Agronomics currently holds 192,005 shares of BlueNalu,
comprised of 43,357 Seed Preferred Shares and 148,648 Series A
Preferred Shares, with a book value, excluding the CPN investment,
of GBP2,602,456. Assuming the CPN is subscribed in full and a
Qualified Financing occurs at a price equal to the agreed valuation
cap of the CPN, Agronomics will have an approximate equity interest
of 5.85% of issued shares following conversion and would value
Agronomics' position at approximately GBP13.4 million. BlueNalu
closed the debt financing in January 2021, raising US$ 60
million.
On 9 December 2020, Agronomics completed a subscription of US$
50,000 in the form of a Simple Agreement for Future Equity ("SAFE")
in CellX Limited ("CellX"). CellX is a China-based cellular
agriculture company, focussing on cell-based pork and seafood
products initially. CellX was founded in 2020, with the intention
of showcasing its first prototypes in 2021. On 28 May 2021, CellX
completed its Seed Funding Round, resulting in the SAFE investment
held by the Company converting into 230,681 preferred shares,
leading to a 500% uplift in to the US$50,000 investment.
On 16 December 2020, Agronomics completed a US$ 2.0 million
investment in the form of a Simple Agreement for Future Equity
("SAFE") in SuperMeat the Essence of Meat ("SuperMeat").
SuperMeat's initial focus is on cultivated chicken products, and
unveiled its sustainable restaurant experience, The Chicken, in Tel
Aviv Israel, earlier this year, where individuals are invited to
taste SuperMeat's cultivated chicken. The SAFE will convert at a
price per share reflecting the lower of the valuation cap or at a
25 percent discount to the share price of SuperMeat's next equity
round. We expect that upon conversion of the SAFE at the completion
of SuperMeat's next equity fundraise and, assuming a pre-money
valuation of US$ 150 million, Agronomics will hold approximately
2.22% of SuperMeat's fully diluted share capital.
On 18 February 2021, Agronomics completed a further EUR2 million
investment in Meatable B.V. ("Meatable") for 1,197 Series A
preferred shares, bringing the total amount invested in Meatable to
EUR5 million. The Company now holds 4,752 preferred shares,
representing a fully diluted equity interest of 5.7%. Following the
investment, Agronomics has recognised an unrealised gain of EUR2.95
million, and an IRR of 95%. This Series A round closed in March
2021, with Meatable raising US$ 47 million from leading life
science and food investors including Section 32, DSM Venturing, Dr.
Rick Klausner and Dr. Jeffrey Leiden, as well as participation from
existing investors. On 13 May 2021, the Company completed a
secondary purchase of 117 shares in Meatable, increasing its stake
to 5.84% on a fully diluted basis.
On 25 February 2021, the Company announced a US$ 0.5 million
convertible loan note ("CLN") investment in VitroLabs Inc, an
existing portfolio company focused on producing genuine leather
hides from cultivating cells, without the need to slaughter
animals.
On 8 April 2021, Solar Foods Oy received a EUR10 million capital
loan from the Finnish Climate Fund, in order to build a new
demonstration facility in Finland.
On 21 April 2021, Legendairy Foods GmbH completed its rebranding
to Formo as a consumer-facing brand, at the forefront of the future
of cultivated dairy. Formo is the leading European player in the
precision fermentation space, focusing on animal-free dairy
products.
On 24 June 2021, Agronomics sold its entire holding in Insilico
Medicine, Inc, for total proceeds of US$ 0.670 million,
representing an IRR 54%. Insilico Medicine was a legacy portfolio
holding, acquired between June 2017 and July 2018.
Financial Review
The Company recorded a net operating profit of GBP9,743,418 for
the year (2020: GBP551,173), prior to accounting for the Shellbay
fee due. Taking into account a fee of GBP7,394,360 (2020: Nil) due
to Shellbay and an irrecoverable VAT charge on Shellbay fees of
GBP1,478,872 (2020: Nil), the Company incurred a net profit after
taxation of GBP1,019,841 (2020: GBP611,731). Our investment income,
including net unrealised gains, reflected a gain of GBP10,669,991
(2020: GBP656,377). Following the amendments to the Shellbay
Investments Limited ("Shellbay") fee agreement, a fee of
GBP7,394,360 was recognised at year end. The calculation of the fee
payable to Shellbay based on this agreement, is detailed in Note 2
to these accounts and is calculated as 15% of the increase in the
Company's audited Net Assets pre-fee deduction for the period 1
July 2020 to 30 June 2021. For the year to 30 June 2021, this
figure is GBP8,215,956. Shellbay has elected to take its full fee
in shares and, as a gesture of goodwill, has also agreed to
contribute GBP821,595 towards the irrecoverable VAT potentially due
on this fee.
The fair value of our invested assets increased substantially to
GBP38,770,676 (2020: GBP16,740,656), and cash and equivalents stood
at GBP62,436,497 (2020: GBP2,789,097). Our total assets stood at
GBP101,652,840 (2020: GBP19,547,961). Total liabilities stood at
GBP1,623,024 (2020: GBP131,083). As a result, the net asset value
per share at 30 June 2021 was 12.51 pence (2020: 5.85 pence).
Financing activity
During the year, the Company completed two successful and
over-subscribed funding rounds, raising total gross proceeds of
GBP75.6 million, issuing 467,989,722 new ordinary shares, and
receiving net proceeds of GBP72.2 million. Funds totalling GBP11.9
million have been deployed in acquiring investments in line with
the Company's investing policy.
Strategy and Outlook
Our current investment portfolio shows considerable promise for
future growth given the scale of opportunity to invest in the
nascent alternative foods sector, and the Board will continue to
seek new opportunities in line with its Investing Policy.
Richard Reed
Non-Executive Chairman
15 December 2021
Directors' report
The Directors of Agronomics Limited (the "Company") take
pleasure in presenting the Directors' report and financial
statements for the year ended 30 June 2021.
Principal activity
Agronomics Limited is a Company domiciled in the Isle of Man.
The Company's strategy is to create value for Shareholders through
investing in companies that operate in the nascent industry of
modern foods, which are environmentally friendly alternatives to
the traditional production of meat and plant-based sources.
Further details of the investing policy can be found on the
Company's website at www.agronomics.im .
Results and transfer to reserves
The results and transfers to reserves for the year are set out
on pages 20 and 22.
The Company recorded a net operating profit of GBP9,743,418 for
the year (2020: GBP551,173), prior to accounting for any consulting
fee due. Taking into account a consulting fee of GBP7,394,360
(2020: Nil) and an irrecoverable VAT charge on the consulting fee
of GBP1,478,872 (2020: Nil), the Company achieved a net profit
after taxation of GBP1,019,841 (2020: GBP611,731).
Dividend
The Directors do not propose the payment of a dividend (2020:
GBPnil).
Policy and practice on payment of creditors
It is the policy of the Company to agree appropriate terms and
conditions for its transactions with suppliers by means of standard
written terms to individually negotiated contracts. The Company
seeks to ensure that payments are always made in accordance with
these terms and conditions.
Financial risks
Details relating to the financial risk management are set out in
note 8 to the financial statements.
Directors
The Directors who served during the year and to date were:
Jim Mellon Executive
Denham Eke Executive Finance Director
Anderson Whamond Non-Executive Resigned 31
July 2020
Richard Reed Independent Non-Executive
Chairman
David Giampaolo Independent Non-Executive
Directors' interests
As at 30 June 2021, the interests of the Directors and their
families (as such term is defined in the AIM Rules for Companies)
in the share capital of the Company are as follows:
Ordinary shares
30 June
2021 30 June 2020
----------------- ------------ -------------
Jim Mellon(1) 113,426,242 65,092,909
Denham Eke(2) - -
Anderson Whamond - -
Richard Reed 3,818,181 3,818,181
David Giampaolo 2,000,000 2,000,000
(1) Galloway Limited, a company where Jim Mellon is considered
to be the ultimate beneficial owner, holds 113,426,242 Ordinary
shares .
(2) Denham Eke is Managing Director of Galloway Limited .
Significant shareholdings
Except for the interests disclosed in this note, the Directors
are not aware of any holding of ordinary shares as at 30 June 2021
representing 3% or more of the issued share capital of the
Company:
Number of Percentage
ordinary shares of total
issued capital
Jim Mellon (1) 113,426,242 14.19%
HSBC Global Custody Nominee (UK) 74,286,653 9.30%
Hargreaves Landsdown (Nominees) 60,128,212 7.53%
Aurora Nominees 39,249,980 4.91%
Interactive Investor Services 32,398,681 4.06%
Nortrust Nominees Limited 30,538,794 3.82%
Pershing Nominees Limited 27,709,076 3.47%
Chase Nominees Limited 25,830,800 3.23%
Note:
(1) Jim Mellon's shareholding consists of 113,426,242 shares
held by Galloway Limited. Galloway Limited is a company where Jim
Mellon is considered to be the ultimate beneficial owner. Denham
Eke is a director of Galloway Limited.
Auditors
KPMG Audit LLC, being eligible, have expressed their willingness
to continue in office.
On behalf of the Board
Denham Eke
Director
15 December 2021
18 Athol Street
Douglas
Isle of Man
IM1 1JA
British Isles
Corporate Governance Statement
Corporate Governance Report
The Board of Agronomics (the "Board") is committed to best
practice in corporate governance throughout the Company (the
"Company"). The Directors have agreed to comply with the provisions
of the Quoted Companies Alliance ("QCA") Corporate Governance Code
for Small and Mid-Size Quoted Companies (2018) to the extent which
is appropriate to its nature and scale of operations. This report
illustrates how the Company complies with those principles.
QCA Principle 1: Establish a strategy and business model which
promotes long-term value for shareholders
The strategy and business operations of the Company are set out
in the Chairman's Statement on pages 2 to 4.
The Company's strategy and business model and amendments thereto
are developed by the Chairman and his senior management team and
approved by the Board. The management team is responsible for
implementing the strategy and managing the business at an
operational level.
The Company's overall strategic objective is to develop a
profitable and sustainable platform for investing in the nascent
industry of modern foods which are environmentally friendly
alternatives to the traditional production of meat and plant-based
sources of nutrition.
The Company operates in an inherently high-risk sector and this
is reflected in the principal risks and uncertainties.
In executing the Company's strategy and operational plans,
management will typically confront a range of day-to-day challenges
associated with these key risks and uncertainties and will seek to
deploy the identified mitigation steps to manage these risks as
they manifest themselves.
QCA Principle 2: Seek to understand and meet shareholder needs
and expectations
The Company via the Chairman seeks to maintain a regular
dialogue with both existing and potential new shareholders in order
to communicate the Company's strategy and progress and to
understand the needs and expectations of shareholders.
Beyond the Annual General Meeting, the Chairman and, where
appropriate, other members of the senior management team or Board
will meet with investors and analysts to provide them with updates
on the Company's business and to obtain feedback regarding the
market's expectations of the Company.
The Company's investor relations activities encompass dialogue
with both institutional and private investors. From time to time,
the Company attends private investor events, providing an
opportunity for those investors to meet with representatives from
the Company in a more informal setting.
QCA Principle 3: Take into account wider stakeholder and social
responsibilities and their implications for long-term success
The Company is aware of its corporate social responsibilities
and the need to maintain effective working relationships across a
range of stakeholders. These include the Company's advisors,
suppliers and investee companies. The Company's operations and
working methodologies take account of the need to balance the needs
of all of these stakeholders while maintaining focus on the Board's
primary responsibility to promote the success of the Company for
the benefit of its members as a whole. The Company endeavours to
take account of feedback received from stakeholders, and where
appropriate, ensures any amendments are consistent with the
Company's longer-term strategy.
The Company takes due account of any impact that its activities
may have on the environment and seeks to minimise this impact
wherever possible.
QCA Principle 4: Embed effective risk management, considering
both opportunities and threats, throughout the organisation
The Board is responsible for the systems of risk management and
internal control and for reviewing their effectiveness. Internal
controls are designed to manage rather than eliminate risk and
provide reasonable but not absolute assurance against material
misstatement or loss. Through the activities of the Company Audit,
Risk and Compliance Committee, the effectiveness of these internal
controls is reviewed annually.
A comprehensive budgeting process is completed once a year and
is reviewed and approved by the Board. The Company's results,
compared with the budget, are reported to the Board on a monthly
basis.
The Company maintains appropriate insurance cover in respect of
actions taken against the Directors because of their roles, as well
as against material loss or claims against the Company. The insured
values and type of cover are comprehensively reviewed on a periodic
basis.
The senior management team meets at least monthly to consider
new risks and opportunities presented to the Company, making
recommendations to the Board and/or Company Audit, Risk and
Compliance Committee as appropriate.
QCA Principle 5: Maintain the board as a well-functioning,
balanced team led by the chair
The Company's Board currently comprises three Non-executive
Directors and one Executive Director.
All of the Directors are subject to election by shareholders at
the first Annual General Meeting after their appointment to the
Board and will continue to seek re-election at least once every
three years.
The Board is responsible to the shareholders for the proper
management of the Company and intends to meet at least four times a
year to set the overall direction and strategy of the Company, to
review operational and financial performance and to advise on
management appointments. All key operational decisions are subject
to Board approval.
Richard Reed, David Giampaolo and Anderson Whamond (resigned on
31 July 2020), all Non-executive Directors, are considered to be
independent. The QCA Code suggests that a board should have at
least two independent Non-executive Directors. The Board considers
that the current composition and structure of the Board of
Directors is appropriate to maintain effective oversight of the
Company's activities for the time being.
However, following the resignation of Anderson Whamond, the
Board are reviewing a number of potential replacements and hope to
make a further announcement in due course.
Non-executive Directors receive their fees in the form of a
basic cash emolument. The Executive Director does not receive a
salary. The current remuneration structure for the Board's
Executive and Non-executive Directors is deemed to be
proportionate.
QCA Principle 6: Ensure that between them the Directors have the
necessary up-to-date experience, skills and capabilities
The Board considers that the Executive Director and
Non-executive Directors are of sufficient competence and calibre to
add strength and objectivity to its activities and bring
considerable experience in the operational and financial
development of the Company.
The Directors' biographies are detailed on the Company's website
www.agronomics.im .
The Board regularly reviews the composition of the Board to
ensure that it has the necessary breadth and depth of skills to
support the ongoing development of the Company.
The Chairman, in conjunction with the Finance Director, ensures
that the Directors' knowledge is kept up to date on key issues and
developments pertaining to the Company, its operational environment
and to the Directors' responsibilities as members of the Board.
During the course of the year, Directors received updates from the
Finance Director and various external advisers on a number of
corporate governance matters.
Directors' service contracts or appointment letters make
provision for a Director to seek professional advice in furtherance
of his or her duties and responsibilities, normally via the Company
Secretary.
QCA Principle 7: Evaluate board performance based on clear and
relevant objectives, seeking continuous improvement
Internal evaluation of the Board, the Committees and individual
Directors is undertaken on an annual basis in the form of peer
appraisal and discussions to determine their effectiveness and
performance as well as the Directors' continued independence.
The results and recommendations that come out of the appraisals
for the Directors shall identify the key corporate and financial
targets that are relevant to each Director and their personal
targets in terms of career development and training. Progress
against previous targets is also assessed where relevant.
QCA Principle 8: Promote a corporate culture that is based on
ethical values and behaviours
The Board seeks to maintain the highest standards of integrity
and probity in the conduct of the Company's operations. With the
Company being a vehicle for holding investment, it has no employees
and limited capacity to effect changes in culture in companies it
is affiliated with. However, the Board will strive to ensure that
the Company's in which it has an interest in, act in an ethical
manner.
The Board ensures that all portfolio companies have policies in
place to comply with applicable governance laws and regulations,
such as anti-bribery and modern-day slavery.
The Board has a zero-tolerance approach to breaches of these
laws and regulations. The Board promotes ethical behaviour
throughout the portfolio, through directions to the Company's
investment advisors in relation to the ethical management of the
portfolio.
QCA Principle 9: Maintain governance structures and processes
that are fit for purpose and support good decision- making by the
board
The Role of the Board
The Board is collectively responsible for the long-term success
of the organisation. Its principal function is to determine the
strategy and policies of the Company within an effective control
framework which enables risk to be assessed and managed.
The Board ensures that the necessary financial and human
resources are in place for the Company to meet its objectives and
that business and management performance is reviewed. Furthermore,
the Board ensures that the Company operates within its
constitution, relevant legislation and regulation and that proper
accounting records and effective systems of business control are
established, maintained, documented and audited.
There are at least four formal Board meetings each year. All
Board members have the benefit, at the Company's expense, of
liability insurance in respect of their responsibilities as
Directors and have access to independent legal or other
professional advice if required. The Board has a formal schedule of
matters which are reserved for its consideration and it has
established three committees to consider specific issues in greater
detail, being the Company Audit, Risk and Compliance, Remuneration
and Nomination Committees. The Terms of Reference for each of these
Committees are published on the Company's website.
The Chairman
The Chairman is responsible for leading the Board, ensuring its
effectiveness in all aspects of its role, promoting a culture of
openness of debate and communicating with the Company's members on
behalf of the Board. The Chairman sets the direction of the Board
and promotes a culture of openness and debate by facilitating the
effective contribution of Non-executive Directors and ensuring
constructive relations between Executive and Non-executive
Directors. The Chairman also ensures that Directors receive
accurate, timely and clear information. In doing so, this fosters a
positive corporate governance culture throughout the Company.
The Chief Executive Officer
At present, the Company does not have a Chief Executive Officer.
Instead, the responsibility for managing the Company's business and
operations within the parameters set by the Board is held by the
Finance Director.
Non-executive Directors
The Non-executive Directors are responsible for bringing
independent judgement to the discussions held by the Board, using
their breadth of experience and understanding of the business.
Their key responsibilities are to constructively challenge and
contribute to strategic proposals, and to monitor performance,
resources, and standards of conduct, compliance and control, whilst
providing support to executive management in developing the
Company.
The Board has established a Company Audit, Risk and Compliance
Committee ("ARCC"), a Remuneration Committee and a Nominations
Committee with formally delegated duties and responsibilities.
Following the resignation of Anderson Whamond on 31 July 2020,
Richard Reed chairs the ARCC, David Giampaolo chairs the
Remuneration Committee and the Nominations Committee is comprised
of the whole board.
Company Audit, Risk and Compliance Committee
The Company Audit, Risk and Compliance Committee (the "ARCC")
meets at least two times each year is chaired by Richard Reed. The
external auditors attend by invitation. Its role is to be
responsible for reviewing the integrity of the financial statements
and the balance of information disclosed in the accompanying
Directors' Report, to review the effectiveness of internal controls
and risk management systems and recommend to the Board (for
approval by the members) the appointment or re-appointment of the
external auditor. The ARCC reviews and monitors the external
auditor's objectivity, competence, effectiveness and independence,
ensuring that if it or its associates are invited to undertake
non-audit work it will not compromise auditor objectivity and
independence.
Further information can be found within the Company Audit, Risk
and Compliance Report contained within this Annual Report.
Remuneration Committee
The Remuneration Committee intends to meet at least once a year
and comprises of two Non-executive Directors. It is chaired by
David Giampaolo and is responsible for determining the remuneration
of the Executive Director, the Company Secretary and other members
of the management. Committee members do not take part in
discussions concerning their own remuneration.
Further information can be found within the Remuneration Report
contained within this Annual Report.
Nomination Committee
The Nomination Committee is comprised of the whole Board. It is
chaired by the Chairman of the Board and is responsible for making
recommendations to the Board on matters relating to the composition
of the Board, including Executive and Non-executive Director
succession planning, the appointment of new Directors and the
election and re-election of Directors. The Nomination Committee
only meets as matters arise.
Appointments to the Board
The principal purpose of the Nomination Committee is to
undertake the assessment of the balance of skills, experience,
independence and knowledge on the Board against the requirements of
the business, with a view to determining whether any shortages
exist. Having completed the assessment, the Committee makes
recommendations to the Board accordingly. Appointments to the Board
are made on merit, with due regard to the benefits of diversity.
Within this context, the paramount objective is the selection of
the best candidate, irrespective of background, and it is the view
of the Board that establishing quotas or targets for the diversity
of the Board is not appropriate.
All Director appointments must be approved by the Company's
Nominated Adviser, as required under the AIM Rules, before they are
appointed to the Board.
Prior to appointment, Non-executive Directors are required to
demonstrate that they are able to allocate sufficient time to
undertake their duties.
Re-election
The Company's Rules require that all Directors are submitted for
election at the AGM following their first appointment to the Board.
Thereafter all directors will submit themselves for re-election at
least once every three years, irrespective of performance.
Board and committee attendance
The number of formal scheduled Board and committee meetings held
and attended by Directors during the year was as follows: -
Board ARCC Nomination Remuneration
Richard Reed 15/16 2/2 - -
David Giampaolo 15/16 2/2 - -
Jim Mellon 15/16 - - -
Denham Eke 16/16 2/2 - -
QCA Principle 10: Communicate how the company is governed and is
performing by maintaining a dialogue with shareholders and other
relevant stakeholders
The Company places a high priority on regular communications
with its various stakeholders and aims to ensure that all
communications concerning the Company's activities are clear, fair
and accurate. The Company's website is regularly updated, and users
can register to be alerted when announcements or details of
presentations and events are posted onto the website.
Notices of General Meetings of the Company can be found here:
https://agronomics.im/latest-news/ .
The results of voting on all resolutions in general meetings are
posted to the Company's website, including any actions to be taken
as a result of resolutions for which votes against have been
received from at least 20 per cent of independent shareholders.
Approval
This report was approved by the Board of Directors on 15
December 2021 and signed on its behalf by:
Denham Eke
Finance Director
Audit, Risk and Compliance Committee Report
The Directors ensure the Company complies with the provisions of
the Quoted Companies Alliance ("QCA") Corporate Governance Code for
Small and Mid-Size Quoted Companies (2018) to the extent which is
appropriate to its nature and scale of operations.
This report illustrates how the Company complies with those
principles in relation to its Audit, Risk and Compliance Committee
(the "ARCC").
Membership
Following the resignation of Anderson Whamond on 31 July 2020,
the Committee comprises of one Non-Executive Director, being
Richard Reed and one Executive Director, being Denham Eke. The
composition of the Committee has been reviewed during the year and
the Board is satisfied that the Committee members have the relevant
financial experience and the expertise to resource and fulfil its
responsibilities effectively, including those relating to risk and
controls.
Meetings
The Committee meets two times a year, including the review of
the interim and full year results. Other Directors and
representatives from the external auditors attend by
invitation.
Duties
The Committee carries out the duties below for the Company, as
appropriate:
-- Monitors the integrity of the financial statements of the
Company, including annual and half-yearly reports, interim
management statements, and any other formal announcement relating
to financial performance, reviewing significant financial reporting
issues and judgements which they contain.
-- Reviews and challenges the consistency of the information
presented within the financial statements, compliance with stock
exchange or other legal requirements, accounting policies and the
methods used to account for significant or unusual
transactions.
-- Keeps under review the effectiveness of the Company's
internal controls and risk management systems.
-- KPMG Audit LLC was appointed as auditor in 2011 and the ARCC
will oversee the relationship with them including meetings when
considered appropriate to discuss their remit and review the
findings and any issues with the annual audit. It will also review
their terms of appointment, and plans to meet them once a year
independent of management and will consider and make
recommendations to the Board, to be put to the Company for approval
at the Annual General Meeting, in relation to the appointment,
re-appointment and removal of the Company's external auditor. There
are no contractual restrictions in place in respect of the auditor
choice.
-- The Committee is governed by a Terms of Reference and a copy
of this is available on the Company's website.
2021 Annual Report
During the year, ARCC confirms that it has received sufficient,
reliable and timely information from management and the external
auditors to enable it to fulfil its responsibilities.
The Committee has satisfied itself that there are no
relationships between the auditor and the Company which could
adversely affect the auditor's independence and objectivity.
All internal control and risk issues that have been brought to
the attention of ARCC by the external auditors have been considered
and the Committee confirms that it is satisfied that management has
addressed the issues or has plans to do so.
The Company has a number of policies and procedures in place as
part of its internal controls and these are subject to continuous
review and as a minimum are reviewed by ARCC on an annual
basis.
-- ARCC has reviewed and discussed together with management and
the external auditor the Company's financial statements for the
year ended 30 June 2021 and reports from the external auditor on
the planning for and outcome of their reviews and audit. The key
accounting issues and judgements considered relating to the
Company's financial statements and disclosures were as follows:
o Valuation of unquoted investments GBP38,114,174;
o Going concern - ARCC reviewed the going concern position of
the Company, taking into account the 12-month cash flow forecasts.
ARCC is satisfied that preparing the financial statements on a
going concern basis is appropriate. Disclosures are included in
note 1.
Richard Reed
Chairman ARCC
15 December 2021
Report of the Remuneration Committee
As an Isle of Man registered company there is no requirement to
produce a Directors' Remuneration Report. However, the Board
follows best practice and therefore has prepared such a report.
The Directors have agreed to comply with the provisions of the
Quoted Companies Alliance ("QCA") Corporate Governance Code for
Small and Mid-Size Quoted Companies (2018) to the extent which is
appropriate to its nature and scale of operations.
This report illustrates how the Company complies with those
principles in relation to directors' remuneration.
The Level and Components of Non-Executive Directors
Remuneration
The Remuneration Policy reflects the Company's business strategy
and objectives as well as sustained and long-term value creation
for shareholders. In addition, the policy aims to be fair and
provide equality of opportunity, ensuring that:
-- the Company is able to attract, develop and retain
high-performing and motivated employees in the competitive local
and wider markets;
-- employees are offered a competitive remuneration package to
encourage enhanced performance and are, in a fair and responsible
manner, rewarded for their individual contribution to the success
of the Company;
-- it reflects the Company's culture and values; and
-- there is full transparency of the Remuneration Policy.
In line with the Board's approach, which reflects that adopted
within other comparable organisations, the Remuneration Policy
provides for the reward of the Non-Executive Directors through fees
and other benefits.
Non-Executive Directors Emoluments
The remuneration for the Non-Executive Directors reflects their
responsibilities. It comprises fees, and may include eligibility to
participate in an annual bonus scheme, private healthcare and share
option incentives, when any of these are considered
appropriate.
Annual bonus scheme payments are not pensionable and are not
contracted.
The Executive Finance Director does not currently receive any
fees for his services. However, based on the Company's performance
and cash flow position, the Executive Finance Director may be
eligible to participate in an annual bonus scheme. Bonus payments
are not pensionable.
The Committee believes that share ownership by executives
strengthens the link between their personal interests and those of
shareholders. Options will be granted to executives periodically at
the discretion of the Remuneration Committee. The grant of share
options is not subject to fixed performance criteria. This is
deemed to be appropriate as it allows the Committee to consider the
performance of the executives and the contribution of the
individual executives and, as with annual bonus payments,
illustrates the relative importance placed on performance-related
remuneration.
Except when required by statute, the Company does not intend to
contribute to the personal pension plans of Directors in the
forthcoming year.
Executive Directors' Contractual Terms
The service contract of the Executive Director provides for a
notice period of six months.
Non-executive Directors' Remuneration
Non-executive Directors do not receive any benefits other than
their fees and travelling expenses for which they are reimbursed.
The level of fees payable to Non-executive Directors is assessed
using benchmarks from a group of comparable biopharma
organisations.
The Procedure for Determining Remuneration
The Remuneration Committee, comprising two Non-executive
Directors, is responsible for setting the remuneration of the
Executive Director and is chaired by Richard Reed. Committee
members do not take part in discussions concerning their own
remuneration. The basic Non-executive Director fee is set by the
Chairman. The Chairman of the Committee reports at the Board
meeting following a Committee meeting.
It is the view of the Committee that Directors' remuneration
awarded across the Company for the year has been in accordance with
the Company's stated Remuneration Policy and, on behalf of the
Committee I recommend that you endorse this report. An analysis of
Directors' emoluments is as follows:
2021 2020
GBP GBP
----------- ------------------------------------------ ------ ------
Emoluments - salaries, bonuses and taxable benefits - -
- fees 24,167 30,000
------------------------------------------------------ ------ ------
24,167 30,000
------------------------------------------------------ ------ ------
Directors' Emoluments
Termination 2021 2020
Fees Bonus payments Benefits Total Total
GBP GBP GBP GBP GBP GBP
--------------------- ------- ------ ------------ ----------- ------- ------
Executive - salary
Denham Eke - - - - - -
Non-executive - fees
Jim Mellon* - - - - - -
Anderson Whamond** 833 - - - 833 10,000
Richard Reed 11,667 - - - 11,667 10,000
David Giampaolo 11,667 - - - 11,667 10,000
Aggregate emoluments 24,167 - - - 24,167 30,000
--------------------- ------- ------ ------------ ----------- ------- ------
* Any emoluments are subject to an agreement with Shellbay
Investments Limited ("Shellbay"), whereby Shellbay shall be
entitled to an annual fee equal to the value of 15% of any increase
between the Company's net asset value ("NAV") on a per issued share
basis at the start of a reporting period and 30 June each year
during the term of the New Shellbay Agreement, with the first
reporting period being from 1 July 2020 to 30 June 2021, and
annually thereafter (please see Note 2 to the Accounts).
** Resigned 31 July 2020
Approval
The report was approved by the Board of directors and signed on
behalf of the Board.
David Giampaolo
Chairman of Remuneration Committee
15 December 2021
Statement of Directors' Responsibilities in Respect of the
Directors' Report and the Financial Statements
The Directors are responsible for preparing the Directors'
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 have
elected to prepare the financial statements in accordance with
International Financial Reporting Standards as adopted by the
European Union (IFRSs as adopted by the EU), as applicable to an
Isle of Man company 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 its profit or
loss for that period. In preparing the financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable, relevant and reliable;
-- state whether they have been prepared in accordance with IFRSs as adopted by the EU;
-- assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and
-- use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
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
its financial statements comply with the Isle of Man Companies Act
2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the Isle of Man governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Our opinion is unmodified
We have audited the financial statements of Agronomics Limited
(the "Company"), which comprise the statement of financial position
as at 30 June 2021, the statements of comprehensive income, changes
in equity and cash flows for the year then ended, and notes,
comprising significant accounting policies and other explanatory
information.
In our opinion, the accompanying financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 30 June 2021 and of the Company's profit for the year
then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards as adopted by the EU; and
-- have been properly prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities are described below. We have fulfilled our ethical
responsibilities under, and are independent of the Company in
accordance with, UK ethical requirements including FRC Ethical
Standards, as applied to listed entities. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion.
Key audit matters: our assessment of the risks of material
misstatement
Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. 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. In arriving at our
audit opinion above, the key audit matter was as follows (unchanged
from 2020):
The risk Our response
Valuation of unquoted investments Subjective valuation Our audit procedures included:
(including investment in subsidiary The Company's investment in Internal Controls: Documenting and
and other unquoted investments subsidiary is stated at fair value of assessing the design and
held) GBP38,054,470 (2020: Nil). implementation of the investment
(2021: GBP38,114,174, 2020: The underlying portfolio of valuation processes and controls.
GBP16,237,975) investments held by the subsidiary Test of Detail: Auditing the accounts
Refer to note 1(b) (use of estimates comprises the entirety of its of the subsidiary as part of the
and judgement), 1(d) (accounting net assets. The Company also holds audit of the Company,
policy for financial unquoted investments directly including assessing the accounting
instruments) and note 8 (fair value amounting to GBP59,704 (2020: policies adopted by the subsidiary to
of financial instruments) and the GBP16,237,975). ensure these are
Audit, Risk and Compliance 37% (2020: 83.1%) of the Company's consistent with the Company's
Report. total assets (by value) are held in accounting policies. In particular,
investments where no ensuring that the portfolio
quoted market price is available. of investments held by the subsidiary
Unquoted investments held directly by is stated at fair value and ensuring
the Company, and indirectly net asset value
through the underlying portfolio in of the subsidiary represents fair
its subsidiary, are measured at fair value.
value, which is established Use of KPMG Specialists: Involving
in accordance with the International valuation specialists to challenge
Private Equity and Venture Capital management assumptions
Valuation Guidelines used to support the fair value
by using measurements of value such prices.
as comparison with prices of recent Challenging managements' assumptions
orderly transactions, and inputs: Challenging the directors
where available, requires the use of on key judgments
significant judgments and subjective affecting investee company
assumptions. The valuations, such as the achievement
preparation of the fair value of key milestones or potential
estimate for the unquoted investments dilution impacts of recent
and related disclosures transactions. Our work included
is a significant area of our audit consideration of events which
given that it represents a occurred
significant portion of the Company's subsequent to the year end up until
total assets and involves the use of the date of this report.
significant judgments and subjective Assessing observable inputs: Where a
assumptions, which recent transaction has been used as a
requires special audit consideration basis to value
because of the likelihood and a holding, we obtained an
potential magnitude of understanding of the circumstances
misstatements to the valuation of the surrounding the transaction such
financial instruments. as whether it was considered to be on
an arms-length basis and suitable as
an input into a
valuation.
Methodology choice: In the context of
observed industry best practice and
the provisions of
the International Private Equity and
Venture Capital Valuation Guidelines,
we challenged the
appropriateness of the valuation
basis selected.
Assessing disclosures: Consideration
of the appropriateness, in accordance
with relevant
accounting standards, of the
disclosures in respect of unquoted
investments and the significant
inherent uncertainty associated with
valuing such investments.
Our application of materiality and an overview of the scope of
our audit
Materiality for the financial statements as a whole was set at
GBP800,000, determined with reference to a benchmark of total
assets of GBP101,652,840, of which it represents approximately 0.8%
(2020: 1.0%).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an
acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material
amount across the financial statements as a whole. Performance
materiality for the Company was set at 65% (2020: 65%) of
materiality for the financial statements as a whole, which equates
to GBP520,000. We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected
identified misstatements exceeding GBP40,000, in addition to other
identified misstatements that warranted reporting on qualitative
grounds.
Our audit of the Company was undertaken to the materiality level
specified above, which has informed our identification of
significant risks of material misstatement and the associated audit
procedures performed in those areas as detailed above.
Going concern
The directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Company
or to cease its operations, and as they have concluded that the
Company's financial position means that this is realistic. They
have also concluded that there are no material uncertainties that
could have cast significant doubt over its ability to continue as a
going concern for at least a year from the date of approval of
thefinancial statements (the "going concern period").
In our evaluation of the directors' conclusions, we considered
the inherent risks to the Company's business model and analysed how
those risks might affect the Company's financial resources or
ability to continue operations over the going concern period. The
risks that we considered most likely to affect the Company's
financial resources or ability to continue operations over this
period were:
-- Availability of capital to meet operating costs and other financial commitments; and
-- The recoverability of financial assets subject to credit risk.
We considered whether these risks could plausibly affect the
liquidity in the going concern period by comparing severe, but
plausible downside scenarios that could arise from these risks
individually and collectively against the level of available
financial resources indicated by the Company's financial
forecasts.
We considered whether the going concern disclosure in note 1(b)
to the financial statements gives a full and accurate description
of the directors' assessment of going concern.
Our conclusions based on this work:
-- we consider that the directors' use of the going concern
basis of accounting in the preparation of the financial statements
is appropriate;
-- we have not identified, and concur with the directors'
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast
significant doubt on the the Company's ability to continue as a
going concern for the going concern period; and
-- we found the going concern disclosure in the notes to the
financial statements to be acceptable.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they
were made, the above conclusions are not a guarantee that the
Company will continue in operation.
Fraud and breaches of laws and regulations - ability to
detect
Identifying and responding to risks of material misstatement due
to fraud
To identify risks of material misstatement due to fraud ("fraud
risks") we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to
commit fraud. Our risk assessment procedures included:
-- enquiring of management as to the Company's policies and
procedures to prevent and detect fraud as well as enquiring whether
management have knowledge of any actual, suspected or alleged
fraud;
-- reading minutes of meetings of those charged with governance; and
-- using analytical procedures to identify any unusual or unexpected relationships.
As required by auditing standards, and taking into account
possible incentives or pressures to misstate performance and our
overall knowledge of the control environment, we perform procedures
to address the risk of management override of controls, in
particular the risk that management may be in a position to make
inappropriate accounting entries, and the risk of bias in
accounting estimates such as valuation of unquoted investments. On
this audit we do not believe there is a fraud risk related to
revenue recognition because the Company's revenue streams are
simple in nature with respect to accounting policy choice, and are
easily verifiable to external data sources or agreements with
little or no requirement for estimation from management. We did not
identify any additional fraud risks.
We performed procedures including:
-- identifying journal entries and other adjustments to test
based on risk criteria and comparing any identified entries to
supporting documentation;
-- incorporating an element of unpredictability in our audit procedures; and
-- assessing significant accounting estimates for bias.
Further detail in respect of valuation of unquoted investments
is set out in the key audit matter section of this report.
Identifying and responding to risks of material misstatement due
to non-compliance with laws and regulations
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the financial
statements from our sector experience and through discussion with
management (as required by auditing standards), and from inspection
of the Company's regulatory and legal correspondence, if any, and
discussed with management the policies and procedures regarding
compliance with laws and regulations. As the Company is regulated,
our assessment of risks involved gaining an understanding of the
control environment including the entity's procedures for complying
with regulatory requirements.
The Company is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation and taxation legislation and we assessed the extent of
compliance with these laws and regulations as part of our
procedures on the related financial statement items.
The Company is subject to other laws and regulations where the
consequences of non-compliance could have a material effect on
amounts or disclosures in the financial statements, for instance
through the imposition of fines or litigation or impacts on the
Company's ability to operate. We identified financial services
regulation as being the area most likely to have such an effect,
recognising the regulated nature of the Company's activities and
its legal form. Auditing standards limit the required audit
procedures to identify non-compliance with these laws and
regulations to enquiry of management and inspection of regulatory
and legal correspondence, if any. Therefore, if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-compliance
with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remains a higher risk of
non-detection of fraud, as this may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The
other information comprises the information included in 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 an audit
opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information 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.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 14,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; 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 they either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities
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 our
opinion in an auditor's report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) 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 the financial
statements.
A fuller description of our responsibilities is provided on the
FRC's website at www.frc.org.uk/auditorsresponsibilities .
The purpose of this report and restrictions on its use by
persons other than the Company's members, as a body
This report is made solely to the Company's members, as a body,
in accordance with section 80(C) 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.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM1 1LA
15 December 2021
Statement of comprehensive income
for the year ended 30 June 2021
2021 2020
Notes GBP GBP
Income
Net income from financial instruments at fair value through
profit and loss 3 10,669,991 1,277,366
---------------- ----------------
10,669,991 1,277,366
Operating expenses
Directors' fees 2 (24,167) (30,000)
Other operating costs 4 (795,131) (691,534)
Foreign exchange losses (107,275) (4,659)
---------------- ----------------
Profit from operating activities 5 9,743,418 551,173
Other costs
Consulting fee 2 (7,394,360) -
Irrecoverable VAT 2 (1,478,872) -
---------------- ----------------
Profit after consulting fee 870,186 551,173
Interest received 149,655 60,558
---------------- ----------------
Profit before taxation 1,019,841 611,731
Taxation 1(h) - -
---------------- ----------------
Profit for the year 1,019,841 611,731
Other comprehensive income - -
---------------- ----------------
Total comprehensive profit for the year 1,019,841 611,731
Basic profit per share (pence) 11 0.22 0.66
Diluted profit per share (pence) 11 0.13 0.66
The Directors consider that the Company's activities are
continuing.
The notes on pages 24 to 38 form an integral part of these
financial statements.
Statement of financial position
as at 30 June 2021
2021 2020
Notes GBP GBP
Current assets
Financial assets at fair value
through profit or loss 7,8 38,770,676 16,740,656
Trade and other receivables 445,667 18,208
Cash and cash equivalents 62,436,497 2,789,097
---------------- ----------------
Total assets 101,652,840 19,547,961
Equity and liabilities
Capital and reserves
Share capital 6 799 331
Share premium 6 91,278,407 19,080,138
Share reserve 6 7,394,360 -
Accumulated earnings 1,356,250 336,409
---------------- ----------------
100,029,816 19,416,878
Current liabilities
Trade and other payables 9 1,623,024 131,083
---------------- ----------------
Total liabilities 1,623,024 131,083
---------------- ----------------
Total equity and liabilities 101,652,840 19,547,961
The notes on pages 24 to 38 form an integral part of these
financial statements.
These financial statements were approved by the Board of
Directors on 15 December 2021 and were signed on their behalf
by:
Denham Eke
Director
Statement of changes in equity
for the year ended 30 June 2021
Notes Share Share Accumulated
Capital Premium (Deficit)/Earnings Total
GBP GBP GBP GBP
Balance at 30 June 2019 6 23 1,890,142 (275,322) 1,614,843
Total comprehensive profit
for the year - - 611,731 611,731
Capitalised share issue
costs - (498,413) - (498,413)
Shares issued during the
year 6 308 17,688,409 - 17,688,717
---------------- ---------------- ---------------- ----------------
Balance at 30 June 2020 6 331 19,080,138 336,409 19,416,878
Notes Share Share Share Accumulated
Capital Premium Reserve Earnings Total
GBP GBP GBP GBP GBP
Balance at 30
June 2020 6 331 19,080,138 - 336,409 19,416,878
Total
comprehensive
profit for
the year - - - 1,019,841 1,019,841
Capitalised
share issue
costs - (3,451,025) - - (3,451,025)
Shares issued
during the
year 6 468 75,649,294 - - 75,649,762
Recognition of
share reserve 6 - - 7,394,360 - 7,394,360
---------------- ---------------- ---------------- ---------------- ----------------
Balance at 30
June 2021 6 799 91,278,407 7,394,360 1,356,250 100,029,816
The notes on pages 24 to 38 form an integral part of these
financial statements.
Statement of cash flows
for the year ended 30 June 2021
2021 2020
Notes GBP GBP
Cash flows from operating activities
Operating profit for the year 1,019,841 611,731
Purchase of investments 8 (11,839,007) (14,152,777)
Proceeds from sale of investments 8 628,632 -
Non-cash interest income (149,655) (60,557)
Realised and unrealised gains on investments 3 (10,669,991) (1,277,366)
Consulting fee to be settled in shares 2 7,394,360 -
-------------- --------------
Operating outflows before changes in working capital (13,615,820) (14,878,969)
Change in trade and other receivables (427,457) (6,012)
Change in trade and other payables 9 1,687,123 65,822
Share issue costs settled in shares 187,000 -
-------------- --------------
Net cash used in operating activities (12,169,154) (14,819,159)
-------------- --------------
Cash flows from financing activities
Proceeds from issue of shares 73,367,580 17,447,558
Proceeds from loan 10 1,900,000 -
Share issue commissions paid (3,451,026) (257,254)
-------------- --------------
Net cash from financing activities 71,816,554 17,190,304
-------------- --------------
Increase in cash and cash equivalents 59,647,400 2,371,145
Cash and cash equivalents at beginning of year 2,789,097 417,952
-------------- --------------
Cash and cash equivalents at the end of year 62,436,497 2,789,097
The notes on pages 24 to 38 form an integral part of these
financial statements.
1 Accounting policies
Agronomics Limited is a Company domiciled in the Isle of Man.
The Company's strategy is to create value for Shareholders through
investing in companies that operate in the nascent industry of
modern foods, which are environmentally friendly alternatives to
the traditional production of meat and plant-based sources.
The principal accounting policies are set out below.
a) Statement of compliance
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and its
interpretations as adopted by the European Union.
There has been no material impact on the financial statements of
new standards/interpretations that have come into effect during the
current year.
b) Basis of preparation
The financial statements are prepared under the historical cost
convention except where assets and liabilities are required to be
stated at their fair value.
Use of estimates and judgment
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and 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 estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision only
affects that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
Judgements made by the Directors in the application of IFRS, as
adopted by the EU, that have a significant impact on the financial
statements and estimates with a significant risk of material
adjustment in the next financial year relate to valuation of
financial assets at fair value through profit or loss. The
determination of fair values for financial assets for which there
is no observable market price requires judgment as to the selection
of valuation techniques as described in accounting policy 1(d). For
financial instruments that trade infrequently and have little price
transparency, fair value is less objective, and requires varying
degrees of judgement and estimation depending on liquidity,
concentration, uncertainty of market factors, pricing assumptions
and other risks affecting the specific instrument. The portfolio
companies are all in the start-up/development stage and in the
biotechnology and biopharmaceutical sector. By their nature, such
companies are difficult to value, as they have little or no track
record regarding sales and margins and may be subject to continued
funding being available in order to continue in operation. The
eventual outcome may differ materially from the value estimate. See
also note 8 in respect of the valuation of financial
instruments.
Going concern
The financial statements have been prepared on a going concern
basis, taking into consideration the level of cash and liquid
investments held by the Company. The Directors have a reasonable
expectation that the Company will have adequate resources for its
continuing existence and projected activities for the foreseeable
future, and for these reasons, continue to adopt the going concern
basis in preparing the financial statements for the year ended 30
June 2021.
Functional and presentation currency
These financial statements are presented in Pound Sterling (GBP)
which is the Company's functional currency and rounded to the
nearest pound.
c) Net income from financial instruments at fair value through profit and loss
Any realised and unrealised gains and losses on investments are
presented within 'net income from financial instruments at fair
value through profit or loss'.
Interest income earned during the period, is accrued on a time
apportionment basis, by reference to the principal outstanding and
the effective rate applicable.
Dividend income is recognised when a security held goes
ex-dividend. Dividends are shown as net cash received, after the
deduction of withholding taxes.
d) Financial instruments
Recognition and initial measurement
The Company recognises financial assets and financial
liabilities at fair value through profit and loss ("FVTPL") on the
trade date, which is the date on which the Company becomes party to
the contractual provisions of the instrument. A financial asset or
financial liability is measured initially at fair value plus, for
an item not at FVTPL, transaction costs that are directly
attributable to its acquisition or issue.
Classification
On initial recognition, the Company classifies financial assets
as measured at amortised cost or FVTPL.
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 payment of principal and interest
("SPPI").
All other financial assets of the Company are measured at
FVTPL.
Business model assessment
In making an assessment of the objective of the business model
in which a financial asset is held, the Company considers all of
the relevant information about how the business is managed,
including:
-- the documented investment strategy and the execution of this
strategy in practice. This includes whether the investment strategy
focuses on earning contractual interest income, maintaining a
particular interest rate profile, matching the duration of the
financial assets to the duration of any related liabilities or
expected cash outflows or realising cash flows through the sale of
the assets;
-- how the performance of the portfolio is evaluated and reported to the Company's management;
-- the risks that affect the performance of the business model
(and the financial assets held within that business model) and how
those risks are managed;
-- how the investment manager is compensated: e.g. whether
compensation is based on the fair value of the assets managed or
the contractual cash flows collected; and
-- the frequency, volume and timing of sales of financial assets
in prior periods, the reasons for such sales and expectations about
future sales activity.
Transfers of financial assets to third parties in transactions
that do not qualify for derecognition are not considered sales for
this purpose, consistent with the company's continuing recognition
of the assets.
The Company has determined that it has two business models.
Held-to-collect business model: this includes cash and cash
equivalents. These financial assets are held to collect contractual
cash flow.
Other business model: this includes debt securities, equity
investments both quoted and unquoted. These financial assets are
managed and their performance is evaluated, on a fair value
basis.
Fair value measurement principles
The fair value of investment holdings of listed investments is
based on their quoted market prices at the reporting date on a
recognised exchange or in the case of non-exchange traded
instruments, sourced from a reputable counterparty, without any
deduction for estimated future selling costs. Financial assets are
priced at their closing bid prices, while financial liabilities are
priced at their closing offer prices.
Company assets may, at any time include securities and other
financial instruments or obligations that are thinly traded or for
which no market exists and/or which are restricted as to their
transferability under securities laws.
If a quoted market price is not available on a recognised stock
exchange, or a market is not sufficiently active for the market
price to be considered reliable, or if a price is not available
from a reputable counterparty, fair value of the financial
instruments may be estimated by the Directors using valuation
techniques, including use of recent arm's length market
transactions, reference to the current fair value of another
instrument that is substantially the same, discounted cash flow
techniques, option pricing models or any other valuation technique
that provides a reliable estimate of prices obtained in actual
market transactions.
The Company recognizes transfers between levels of the fair
value hierarchy as at the end of the reporting period during which
the change occurred.
Reclassifications
Financial assets are not reclassified subsequent to their
initial recognition unless the Company were to change its business
model for managing financial assets, in which case all affected
financial assets would be reclassified on the first day of the
first reporting period following the change in the business
model.
Impairment
The Company recognises loss allowances for Expected Credit
Losses ("ECLs") on financial assets measured at amortised cost.
The Company measures loss allowances at an amount equal to
lifetime ECLs, except for the following, which are measured at
12-month ECLs:
-- financial assets that are determined to have low credit risk at the reporting date; and
-- other financial assets for which credit risk (i.e. the risk
of default occurring over the expected life of the asset) has not
increased significantly since initial recognition.
Derecognition
The Company derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of
the financial asset are transferred or in which the Company neither
transfers nor retains substantially all of the risks and rewards of
ownership and does not retain control of the financial asset.
On derecognition of a financial asset, the difference between
the carrying amount of the asset (or the carrying amount allocated
to the portion of the asset that is derecognised) and the
consideration received (including any new asset obtained less any
new liability assumed) is recognised in profit or loss. Any
interest in such transferred financial assets that is created or
retained by the Company is recognised as a separate asset or
liability.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with maturities of three months or less from the
acquisition date that are subject to an insignificant risk of
changes in fair value.
Trade and other receivables
Trade and other receivables originated by the Company are
initially recognised at fair value and subsequently stated at
amortised cost less impairment losses.
Trade and other payables
Trade and other payables are initially recognised at fair value
less directly attributable transaction costs. Subsequently they are
measured at amortised cost using the effective interest method.
e) Share capital and share premium
Ordinary shares are classified as equity. The ordinary shares of
the Company have a par value of GBP0.000001 each. Excess proceeds
received for the issue of shares has been credited to share
premium. Incremental costs directly attributable to the issue of
ordinary shares are recognised as a deduction from equity, net of
any tax effects.
f) Foreign currencies
Transactions in foreign currencies are translated into the
functional currency at the rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated into functional currency at the rate of
exchange ruling at the reporting date. All differences are taken to
the income statement.
Non-monetary assets and liabilities that are measured in terms
of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
g) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and
interpretations are not yet effective for the year, and have not
been applied in preparing these historical financial
statements:
New/revised International Accounting EU Effective date
Standards / International Financial (accounting periods commencing
Reporting Standards ("IAS/IFRS") on or after)
----------------------------------------- ----------------------------------
Annual Improvements to IFRS Standards 1 January 2022
2018-2020
----------------------------------------- ----------------------------------
Reference to the Conceptual Framework 1 January 2022
(Amendments to IFRS3)
--------------------------------------- ----------------------------------
Classification of Liabilities as 1 January 2023
Current or Non-Current (Amendments
to IAS1)
--------------------------------------- ----------------------------------
Disclosure of Accounting Policies 1 January 2023
(Amendments to IAS1 and IFRS Practice
Statement 2)
--------------------------------------- ----------------------------------
Definition of Accounting Estimates 1 January 2023
(Amendments to IAS8)
--------------------------------------- ----------------------------------
The Directors do not expect the adoption of the standards and
interpretations to have a material impact on the financial
statements in the period of initial application.
There has been no material impact on the Company's financial
statements of new standards or interpretations that have come into
effect during the current reporting period.
h) Taxation
The Company is subject to income tax at a rate of 0% in the Isle
of Man, and accordingly, no tax has been provided for in these
financial statements.
The Company may be subject to withholding taxes in relation to
income from investments, or investment realisation proceeds or
gains, and such amounts will be accounted for as incurred.
i) Segmental reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investing in companies that
operate in the nascent industry of modern foods, which are
environmentally friendly alternatives to the traditional production
of meat and plant-based sources. Information presented to the Board
of Directors for the purpose of decision making is based on this
single segment.
j) Investment entity
The Company is an investment entity and measures investments in
its subsidiaries at FVTPL. In determining whether the Company meets
the definition of an investment entity, management considered the
Company structure as a whole. In particular, when assessing the
existence of investment exit strategies and whether the Company or
its subsidiary has more than one investment, management took into
consideration the fact that the subsidiary was formed in order to
hold investments on behalf of the Company. Management concluded
that the Company and the subsidiary each meet the definition of an
investment entity. Consequently, management concluded that the
Company should not consolidate the subsidiary.
k) Comparative information
Where appropriate, figures in the comparative financial year
have been reclassified in order to present them in a manner
consistent with the current financial period.
2 Directors' and consulting fees
The fees of Directors who served during the year ended 30 June
2021 were as follows:
2021 2020
GBP GBP
Anderson Whamond (resigned 31 July 2020) 833 10,000
Richard Reed 11,667 10,000
David Giampaolo 11,667 10,000
-------------- --------------
24,167 30,000
Denham Eke was appointed as a Director on 30 May 2012 and
currently receives no remuneration for providing his services.
On 6 May 2011, Shellbay Investments Limited ("Shellbay") entered
into a Letter of Appointment with the Company to provide the
services of Jim Mellon as Non-Executive Chairman of the Company. In
May 2021, following shareholder feedback and in consultation with
the Company's advisers, the terms of this agreement were altered,
on the basis that from May 2021 new arrangements would be put in
place to (i) ensure the terms of Shellbay's appointment were
consistent with market standard terms for commensurate services;
(ii) provide greater transparency and corporate governance
regarding the role of Shellbay; and (iii) establish a remuneration
structure fully aligned with shareholders, and acceptable to
existing and future investors. The effective date for the updated
agreement is 01 July 2020.
Shellbay shall be entitled to an annual fee equal to the value
of 15% of any increase between the Company's net asset value
("NAV") on a per issued share basis at the start of a reporting
period and 30 June ("Closing NAV Date") each year during the term
of the New Shellbay Agreement, with the first reporting period
being from 1 July 2020 to 30 June 2021, and annually thereafter.
The opening and closing NAV for each period will be based on the
audited financial statements of the Company for the relevant
financial year, with the opening NAV for each reporting period
being the higher of (i) 5.86 pence per share (the highest annual
audited NAV per share since the Company adopted its current
investment policy and reported NAV per share in September 2019)),
and (ii) the highest NAV per share reported at a Closing Date for
the previous reporting periods during the term of the agreement
(establishing a rolling high-watermark for Shellbay to qualify for
such fee). Any increase in NAV per share will then be applied to
the total issued share capital at the end of the relevant period
for the purposes of determining the 15% fee. Any change in NAV per
share that arises from funds raised at a premium or discount to the
existing NAV per share will therefore be considered for the
purposes of calculating Shellbay's fee by reference to the annual
audited accounts (for clarity being an increase in respect of a
premium and a decrease in respect of a discount).
At the election of the Company, the Shellbay fee shall be
payable either in whole or in part by the issue of new shares at a
price equal to the mid-price on the last day of the relevant
Qualifying Period (being the Company's accounting year from 1 July
to 30 June) or grant of nil price warrants over shares; or in cash;
or (with the agreement of Shellbay), in cash-equivalents (such as
shares), and other assets held by the Company. Shellbay has agreed
with the Company that any fee due for the first reporting period
will be taken in shares to the equivalent value of the fee (with
shares issued at the mid-market price of Ordinary Shares at close
of markets on the last day of the Qualifying Period, being 30 June
2021).
During the year, a fee of GBP7,394,360 was accrued for and
recorded in profit and loss (2020: Nil), with Shellbay having
elected to take its full fee in shares (Note 6). The Shellbay fee
is calculated as follows:
Net asset value at 1 July 2020 GBP19,416,878
Total issued shares at 1 July 2020 331,616,661
Net asset value per share at 1 July 2020 5.85 pence
Net asset value at 30 June 2021 (pre Shellbay GBP101,550,011
fee)
Total issued shares at 30 June 2021 799,606,383
Net asset value per share at 30 June 2021 12.70 pence
Increase in net asset value per share 6.85 pence
Increase in net asset value subject to Shellbay GBP54,773,037
fee
--------------
15% Shellbay fee based on Net Asset Value GBP8,215,956
per share increase
VAT at 20% GBP1,643,191
50% waiver on VAT granted by Shellbay GBP821,596
--------------
Shellbay fee due GBP7,394,360
Due to Shellbay being registered outside the UK and Isle of Man
VAT area, the recognition of the consulting fee has resulted in a
potential irrecoverable VAT charge of GBP1,478,872 being charged to
profit and loss, with a corresponding VAT payable on the balance
sheet. Should the Company subsequently become registered for VAT
and be successful in reclaiming all or part of the VAT associated
with the consulting fee, then Agronomics undertakes to add an
ex-gratia amount to the next annual bill from Shellbay, equal to
the pro rata part of the waived fee relative to amount of VAT on
the fee subsequently recovered by the Company See note 9.
3 Net gain/(loss) from financial instruments at fair value through profit and loss
Derived from financial assets held mandatorily at fair value
through profit or loss at initial recognition:
2021 2020
GBP GBP
Net realised gains on sale of investments 260,104 -
-------------- --------------
260,104 -
Net unrealised gain on investments 10,409,886 1,277,366
Net realised gain on investments 260,105 -
-------------- --------------
10,669,991 1,277,366
For the year ended 30 June 2020, GBP620,989 of foreign exchange
gains previously included within 'Foreign exchange (losses)/gains'
in the Statement of Comprehensive Income have been reclassified and
included within 'Net income from financial instruments at fair
value through profit or loss' in the comparative 2020 figures in
order to align the presentation with the current year. The
reclassified amount relates to the foreign currency movement on
investments held at fair value through profit or loss. There is no
impact from this reclassification on net assets or the net result
for that period.
4 Other operating costs
2021 2020
GBP GBP
Auditors' fees 37,797 56,307
Bank charges 1,158 930
Insurance 7,748 7,134
Professional fees 639,706 552,306
Sundry expenses 108,722 74,857
-------------- --------------
795,131 691,534
The Company has no employees.
5 Profit/(loss) from operating activities
Profit/(loss) from operating activities is stated after
charging:
2021 2020
GBP GBP
Auditors' fees 37,797 56,307
Directors' fees 24,167 30,000
6 Share capital, share premium and share reserve
Each share in the Company confers upon the shareholder:
-- the right to one vote at a meeting of the shareholders or on any resolution of shareholders;
-- the right to an equal share in any dividend paid by the Company, and
-- the right to an equal share in the distribution of the
surplus assets of the Company on its liquidation.
The Company may by resolution of Directors redeem, purchase or
otherwise acquire all or any of the shares in the Company subject
to regulations set out in the Company's Articles of
Association.
2021 2020
GBP GBP
Authorised
2,000,000,000 Ordinary shares
of GBP0.000001 2,000 2,000
No. of Share Share Share
Shares Capital Premium Reserve
GBP GBP GBP
Issued
Balance at 30 June 2019 23,195,558 23 1,890,142 -
Issued during the year 308,421,103 308 17,688,409 -
Share issue costs capitalised - - (498,413) -
-------------- -------------- -------------- --------------
Balance at 30 June 2020 331,616,661 331 19,080,138 -
Issued during the year 467,989,722 468 75,649,294 -
Share issue costs capitalised - - (3,451,025) -
Recognition of share reserve - - - 7,394,360
-------------- -------------- -------------- --------------
Balance at 30 June 2021 799,606,383 799 91,278,407 7,394,360
Capital management
The Company manages its capital to maximise the return to
shareholders through the optimisation of equity. The capital
structure of the Company as at 30 June 2021 consists of equity
attributable to equity holders of the Company, comprising issued
capital, share premium and accumulated earnings as disclosed.
The Company manages its capital structure and makes adjustments
to it in light of economic conditions and the strategy approved by
shareholders. To maintain or adjust the capital structure, the
Company may make dividend payments to shareholders, return capital
to shareholders or issue new shares and release the share premium
account. No changes were made in the objectives, policies or
processes during the year under review.
Warrants
As part of the fundraise completed during June 2021, the Company
issued warrants attached to the fundraising shares on a 1-for-1
basis, and as such, 297,727,274 warrants were issued to investors
who participated in the fundraise. The warrants are exercisable
quarterly over a period of two years, at a price of 28.5 pence per
warrant. The warrants in issue at 30 June 2021 have a dilutive
effect on basic earnings per share. Refer to Note 11.
Consulting fee due to Shellbay
As discussed in note 2, a consulting fee due to Shellbay of
GBP7,394,360 has been recognised. Shellbay has elected to take its
full fee in shares. The shares will be issued at a price equal to
the mid-price on the last day of the relevant Qualifying Period,
being 30 June 2021. As a result, 30,492,206 new ordinary shares
will be issued to Shellbay in full settlement of the consulting
fee. A Share Reserve has been recognised relating to the shares to
be issued. The shares to be issued to Shellbay have a dilutive
effect on basic earnings per share. Refer to Note 11.
7 Financial assets at fair value through profit or loss
During the year the Company established a new wholly owned
subsidiary entity, Agronomics Investment Holdings Limited ("the
Subsidiary" or "AIHL"), which now holds the majority of the
portfolio of unquoted investments previously held directly by the
Company. Unquoted investments were transferred by the Company into
AIHL at their respective carrying amounts. The investment in
subsidiary is stated at fair value through profit or loss in
accordance with the IFRS 10 Investment Entity Consolidation
Exception. The fair value of the investment in Subsidiary is based
on the year-end net asset value of the Subsidiary. Additions and
disposals regarding the investment in subsidiary are recognised on
trade date.
2021 2020
GBP GBP
Quoted 656,502 502,681
Unquoted 59,704 16,237,975
Investment in subsidiary 38,054,470 -
-------------- --------------
38,770,676 16,740,656
The composition of the investments held, both directly and
indirectly through the Subsidiary in the underlying portfolio, is
as follows:
2021 2020
GBP GBP
Equities 28,349,567 13,779,460
Convertible loan notes and SAFEs* 10,421,109 2,961,196
-------------- --------------
38,770,676 16,740,656
* A SAFE is a Simple Agreement for Future Equity. SAFE
Agreements have similar characteristics to Convertible Loans and
are designed to provide an early investor with an "edge" ahead of a
larger planned funding. The edge is typically conversion of funds
advanced for new equity at a discount to the subsequent raise.
These financial instruments were mandatorily held as at fair
value through profit or loss on initial recognition. See note 8
regarding the valuation of investments.
On 24 September 2020, the Subsidiary acquired an investment in
Mosa Meats B.V. ("Mosa Meat"). The investment was split into two
tranches (Tranche I and Tranche II), with the first close of
Tranche I occurring 24 September, while Tranche II can be called at
any time after 31 March 2022. Agronomics has committed a total of
US$ 4.1 million (approximately GBP3.2million), split into US$ 2.05
million for Tranche I and US$ 2.05 million for Tranche II. The
total number of shares to be issued is subject to upward revision
(as tabled below), dependent on the timing of Mosa Meat achieving
certain operational milestones in relation to the production of
pre-defined quantities of cultivated meat, which is demonstrated to
be nutritionally comparable to conventional meat.
Date Milestone is Achieved Agronomics Series B Preferred Shares
Before 30 June 2022 11,184
Q3 2022 11,374
Q4 2022 11,578
Q1 2023 11,799
Q2 2023 12,038
8 Financial instruments
Financial Risk Management
The Company has risk management policies that systematically
view the risks that could prevent it from achieving its objectives.
These policies are intended to manage risks identified in such a
way that opportunities to deliver the Company's objectives are
achieved. The Company's risk management takes place in the context
of day-to-day operations and normal business processes such as
strategic and business planning. The Directors have identified each
risk and are responsible for coordinating and continuously
improving risk strategies, processes and measures in accordance
with the Company's established business objectives.
The Company's principal financial instruments consist of
investments, cash, receivables and payables arising from its
operations and activities. The main risks arising from the
Company's financial instruments and the policies for managing each
of these risks are summarised below.
Credit Risk
Credit risk is the risk of loss associated with the
counterparty's inability to fulfil its obligations. The Company's
credit risk is primarily attributable to receivables and cash
balances, with the maximum exposure being the reported balance in
the statement of financial position. The Company has a nominal
level of debtors and as such the Company believes that the credit
risk to these is minimal. The Company holds available cash with
licensed banks and financial institutions. The Company considers
the credit ratings of banks in which it holds funds in order to
reduce exposure to credit risk. The funds are available on
demand.
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at the
reporting date was:
Carrying amount Carrying amount
2021 2020
GBP GBP
Cash and cash equivalents 62,436,497 2,789,097
Trade and other receivables 378,591 -
-------------- --------------
62,815,088 2,789,097
All of cash and cash equivalent balances are held in A+ credit
rated financial institutions. The Company considers that ECL
exposures have low credit risk based on the external credit ratings
of the financial institutions.
Market price risk
Market price risk is the risk that the market price will
fluctuate due to macro-economic issues such as changes in market
factors specific to that security, market interest rates and
foreign exchange rates.
The Company is exposed to significant market price risks as
financial instruments recognised directly by the Company and
indirectly by the Subsidiary are linked to market price
volatility.
A 10% increase/decrease in market value of investments held by
the Company and its subsidiary would increase/decrease equity and
profit by GBP 3,877,068 (2020: GBP1,674,066). Taking into account
the Shellbay consulting fee, the increase/decrease in equity and
profit would be GBP4,458,628 (2020: no consulting fee accrual
recognised).
Liquidity risk
The Company is exposed to liquidity risk to the extent that it
holds investments that it may not be able to sell quickly at close
to fair value.
The risk is managed by the Company by means of cash flow
planning to ensure that future cash requirements are anticipated
and, where financial instruments have to be sold to meet these
requirements, the process is carried out in a controlled manner
intended to minimise the liquidity risk involved.
The residual undiscounted contractual maturities of financial
liabilities are as follows:
30 June 2021
Less than 1 1-3 months 3 months to 1 1-5 years Over 5 years No stated Total
month GBP year GBP GBP maturity
GBP GBP GBP
Financial
liabilities
Trade and
other
payables 1,623,024 - - - - - 1,623,024
--------------- --------------- ----------- --------------- ---------- ------------- --------------- ----------
1,623,024 - - - - - 1,623,024
--------------- --------------- ----------- --------------- ---------- ------------- --------------- ----------
30 June 2020
Less than 1 1-3 months 3 months to 1 1-5 years Over 5 years No stated Total
month GBP year GBP GBP maturity
GBP GBP GBP
Financial
liabilities
Trade and other
payables 131,083 - - - - - 131,083
---------------- ---------------- ----------- --------------- ---------- ------------- --------------- --------
131,083 - - - - - 131,083
---------------- ---------------- ----------- --------------- ---------- ------------- --------------- --------
Interest rate risk
A significant share of the Company's assets is comprised of cash
held at banks. As a result, the Company is subject to risk due to
fluctuations in the prevailing level of market interest rates.
However, income earned from bank interest is not considered
material to the Company's performance or financial position.
The Company holds investments in convertible loan notes ("CLN"),
which attract interest income. The rates of interest are fixed for
each CLN investment held, which results in a reduced interest rate
risk.
Fair values of financial assets and liabilities
At 30 June 2021, the carrying amounts of cash resources, trade
and other receivables, and trade and other payables approximate
fair value due to their short-term maturities.
Foreign currency risk
The Company is exposed to foreign currency risk on fluctuations
related to financial assets and liabilities held directly itself
and indirectly via its subsidiary that are denominated in a number
of currencies. The Investment in Subsidiary is held in Sterling.
The analysis below reflects the underlying currency exposure in the
Subsidiary's portfolio.
GBP equivalents as at 30 June 2021
Financial assets at Cash at Total by currency
fair value through profit bank
and loss
GBP GBP GBP
USD 20,651,131 2,425,345 23,076,476
CAD 1,203 - 1,203
NZD 252,589 - 252,589
EUR 17,642,270 - 17,642,270
-------------- -------------- --------------
38,547,193 2,425,345 40,972,538
GBP equivalents as at 30 June 2020
Financial assets at Cash at Total by currency
fair value through profit bank
and loss
GBP GBP GBP
HKD 118,511 - 118,511
USD 12,092,482 4,149 12,096,631
CAD 307 - 307
NZD 249,663 - 249,663
EUR 4,265,015 36,315 4,301,330
-------------- -------------- --------------
16,725,978 40,464 16,766,442
The following significant exchange rates applied during the
year:
Average Average
rate for rate for
active year active year
2021 2020
HKD - 9.82545
USD 1.34806 1.26051
CAD - 1.69122
NZD - 1.98190
EUR 1.12876 1.13972
Year-end Year-end Year-end Year-end
rate rate rate rate
2021 2020 2019 2017
HKD - 9.55293 9.913 10.149
USD 1.38310 1.23261 1.269 1.300
CAD 1.71450 1.68144 1.661 1.688
NZD 1.97950 2.00270 -
EUR 1.16670 1.11494 -
Sensitivity analysis
A 5% percent strengthening of Sterling against the relevant
currencies above at 30 June 2021 and 30 June 2020 would have
decreased equity and profit for the year by the amounts shown
below. The analysis assumes that all other variables, in particular
interest rates, remain constant.
2021 Equity and Profit or loss
GBP
USD (2,287,272)
CAD (57)
NZD (12,028)
EUR (2,507,507)
2020 Equity and Profit or loss
GBP
HKD (5,643)
USD (562,519)
CAD (15)
NZD (11,889)
EUR (363,724)
A 5% percent weakening of Sterling against the relevant
currencies above at 30 June 2021 and 30 June 2020 would have the
equal but opposite effect on the basis that all other variables, in
particular interest rates, remain constant.
Fair value of financial instruments
The fair values of financial assets and financial liabilities
that are traded in an active market are based on quoted market
prices. For all other financial instruments, the Company and its
subsidiary determine fair values using other valuation techniques
in compliance with IFRS9: Financial Instruments, IFRS13: Fair Value
Measurement, and based on the International Private Equity and
Venture Capital Valuation Guidelines ("IPEV").
For financial instruments that trade infrequently and have
little price transparency, fair value is less objective, and
requires varying degrees of judgement depending on liquidity,
uncertainty of market factors, pricing assumptions and other risks
affecting the specific instrument.
The Company measures fair values using the following fair value
hierarchy that reflects the significance of the inputs used in
making the measurements:
-- Level 1: Inputs that are quoted market prices (unadjusted) in
active markets for identical instruments;
-- Level 2: Inputs other than quoted prices included within
Level 1 that are observable either directly (i.e. as prices) or
indirectly (i.e. derived from prices). This category includes
instruments valued using; quoted market prices in active markets
for similar instruments; quoted prices for identical or similar
instruments in markets that are considered less than active; or
other valuation techniques in which all significant inputs are
directly or indirectly observable from market data;
-- Level 3: Inputs that are unobservable. This category includes
all instruments for which the valuation technique includes inputs
not based on observable data and the unobservable inputs have a
significant effect on the instrument's valuation. This category
includes instruments that are valued based on quoted prices for
similar instruments but for which significant unobservable
adjustments or assumptions are required to reflect differences
between the instruments.
Various valuation techniques may be applied in determining the
fair value of investments held as Level 3 in the fair value
hierarchy. The objective of valuation techniques is to arrive at a
fair value measurement that reflects the price that would be
received to sell the asset or paid to transfer the liability in an
orderly transaction between market participants at the measurement
date.
Fair value hierarchy measurement at 30 June 2021
Investments in securities at fair value:
Quoted prices Significant Significant
In active other unobservable
markets observable Inputs
for identical inputs
Total assets (Level 3)
(Level 1) (Level 2)
Investments
Quoted 656,502 644,324 - 12,178
Unquoted 59,704 - - 59,704
Investment in subsidiary 38,054,470 - - 38,054,470
-------------- -------------- -------------- --------------
38,770,676 644,324 - 38,126,352
The investment in subsidiary held by the Company is classified
as level 3 in the fair value hierarchy - being based on the net
asset value of the Subsidiary. All the underlying listed equity
investments held by the Subsidiary are classed as level 3
investments
Reconciliation of Level 3 investments:
Opening balance at 1 July
2020 16,237,975
Transfer from Level 1 to Level
3 10,974
Purchases 11,839,007
Disposals (136,187)
Unrealised foreign currency
loss (1,953,413)
Unrealised fair value gain 11,978,341
Accrued interest on loan note
investments 149,655
--------------
Closing balance at 30 June
2021 38,126,352
Fair value hierarchy measurement at 30 June 2020
Investments in securities Quoted prices Significant Significant
at fair value: In active other unobservable
markets observable Inputs
for identical inputs
Total assets (Level 3)
(Level 1) (Level 2)
Investments
Quoted 502,681 502,681 - -
Unquoted 16,237,975 - - 16,237,975
-------------- -------------- -------------- --------------
16,740,656 502,681 - 16,237,975
Reconciliation of Level 3 investments:
Opening balance at 1 July
2019 343,832
Purchases 14,152,777
Transfer from Level 1 to Level
3 4,011
Unrealised fair value gain 1,055,808
Unrealised FX gain 620,989
Accrued interest on loan note
investments 60,558
--------------
Closing balance at 30 June
2020 16,237,975
Valuation technique
In the absence of observable prices or suitable unobservable
model inputs being available and, given level 3 portfolio companies
are in the start-up/development stage and in the biotechnology/
biopharmaceutical sector, the Board believes that a recent share
transaction cost represents the best available estimate of fair
value. The price of a recent investment valuation technique,
calibrated using both financial and technological milestones, is
commonly used in a seed, start-up or early-stage situations. Where
applicable, the Company's Level 3 investments are valued at the
price of each funding round of the respective companies entered
into with their shareholders, adjusted where necessary should the
Directors deem any adjustment is needed in order to determine the
fair value. The fair value of the relevant investee may also be
adjusted based on its performance against predetermined milestones.
The Directors deem all investments to be held fair value. The price
of a recent transaction is deemed most appropriate for the
Company's and Subsidiary's unquoted investments. Although the Board
believes that its estimates of fair value are appropriate, the use
of different methodologies or assumptions could lead to different
measurements of fair value. The Board continues to monitor the
performance of the investee entities and the underlying information
available in order to assess whether the valuation technique
adopted and the fair value hierarchy remain appropriate.
No reasonably possible alternative assumptions
IFRS 13 requires disclosure, by class of financial instrument,
if the effect of changing one or more inputs to reasonably possible
alternative assumptions would result in a significant change to the
fair value measurement. However, where fair value is determined
with reference to the price of a recent transaction in the equity
shares of the unquoted company, such a sensitivity analysis is not
relevant. As such the Directors consider there are no reasonably
possible alternative assumptions in respect of the level 3
investments held at year end.
The valuation approach adopted for the years ended 30 June 2021
and 30 June 2020 is consistent.
9 Trade and other payables
2021 2020
GBP GBP
Provision for audit fee 37,797 47,700
Other provisions 2,203 30,000
Trade creditors 104,152 53,383
Provision for irrecoverable VAT (note 1,478,872 -
2)
------------ ------------
1,623,024 131,083
10 Related party transactions
Under an agreement dated 1 December 2011, Burnbrae Limited, a
Company for which Jim Mellon is the ultimate beneficial owner and
Denham Eke is a Director, provide certain services, principally
accounting and administration, to the Company. This agreement may
be terminated by either party on three months' notice. The charge
for services provided in the year in accordance with the contract
was GBP36,000 (2020: GBP36,000) of which GBP68 was outstanding as
at the year-end (2020: GBP3,047).
Under an updated agreement dated May 2021, Shellbay Investments
Limited, a Company related to both Jim Mellon and Denham Eke,
provide the services of Jim Mellon as Non-Executive Chairman of the
Company (see note 2). The charge for services provided in the year
was GBP7,394,360 (2020: GBPNil), with Shellbay electing to take its
full fee in shares . A VAT charge liability and irrecoverable VAT
expense of GBP1,478,872 has been recognised as a result of the
Shellbay fee. Refer to Note 2 and 11.
In accordance with the published investing policy, Jim Mellon
holds personal interests both directly and indirectly in the
following investee companies: AgeX Therapeutics Inc, Regent Pacific
Group Ltd, Portage Biotech Inc, SalvaRX Group PLC, Cytox Limited,
Insilico Medicine In, Simply Foods Inc, Shiok Meats Pte. Ltd and
Bond Pets LLC.
On 1 July 2020, the Company entered into a bridging-loan
facility ("Galloway Loan") with Galloway Limited, a related party
wholly owned by Jim Mellon. The facility allows the Company to
draw-down up to GBP1.9 million, at a nil interest rate. During
September 2020, the Company fully utilised this facility in order
to acquire investments.
On 26 October 2020, the Company completed an equity fundraise of
GBP10 million, issuing and allotting 166,666,667 new ordinary
shares. As part of the subscription, the Galloway Loan was settled
in full by issuing new ordinary shares to Galloway Limited.
Edgewater Associates Limited ("Edgewater")
During the year, Directors and Officers insurance was obtained
through Edgewater, which is a 100% subsidiary of Manx Financial
Group ("MFG"). James Mellon and Denham Eke are Directors of MFG and
Denham Eke a Director of Edgewater.
The premium payable on the policy was GBP7,748 (2020: GBP7,134),
of which GBPnil was outstanding as at the year-end (2020:
GBPnil).
11 Basic and diluted earnings per share
The calculation of basic earnings per share of the Company is
based on the profit for the year of GBP1,019,841 (2020: GBP611,731)
and the weighted average number of shares of 468,460,964 (2020:
92,152,415) in issue during the year.
Diluted earnings per share are calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares such as
warrants and options. The calculation of diluted earnings per share
of the Company is based on the profit for the year of GBP1,019,841
(2020: GBP611,731) and the diluted weighted average number of
shares of 796,650,444 (2020: 92,152,415) in issue during the
year.
12 The Subsidiary
The Company has one wholly-owned subsidiary entity, Agronomics
Investment Holdings Limited, which is incorporated in the British
Virgin Islands. The Subsidiary was incorporated on 8 July 2020
under the provisions of the BVI Business Companies Act, 2004, as a
limited liability company. The principal activity of the Subsidiary
is holding investments on behalf of the Company.
13 Subsequent events
On 2 December 2021, the Company announced that it had
successfully raised gross funds of approximately GBP25.5 million
through a placing of 92,254,805 Units at a placing price of 23
pence per share to existing and new institutional investors. Each
Unit comprised one New Ordinary Share and one warrant to subscribe
for a new Ordinary Share, exercisable at 30 pence each and with an
exercise period of two years from the Grant Date. Furthermore, in
order to provide shareholders with an opportunity to participate in
the proposed issue of new Ordinary Shares and warrants, the Company
provided all Qualifying Shareholders with the opportunity to
subscribe for an aggregate of up to 28,558,897 Open Offer Units, to
raise up to approximately GBP6.6 million (before expenses), on the
basis of One Open Offer Unit for every 28 Existing Ordinary Shares
held on the Record Date, at 23 pence per Ordinary Share. Each Open
Offer Unit comprises one new Ordinary Share and one warrant. The
fundraise is expected to complete by the end of December 2021, with
funds being received by the Company during January 2022.
Other than above, no subsequent events have occurred that
require disclosure.
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END
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December 16, 2021 02:00 ET (07:00 GMT)
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