TIDMTEK
RNS Number : 0380M
Tekcapital plc
06 May 2020
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
06 May 2020
Tekcapital PLC
("Tekcapital", the Company" or the "Group")
Final Results for the year-ended 30 November 2019
Record Net Assets and Revenue for the Period
Tekcapital plc (AIM: TEK), the UK intellectual property (IP)
investment group focused on creating marketplace value from
university technology, announces its audited results for the year
ended 30 November 2019.
Financial highlights
-- Net Assets increased 40% to US$22.25m, a record level (2018: US$16.13m)
-- NAV per share US$0.35 (2018: US$0.30)
-- Portfolio valuation increased 48% to US$20.3m (2018: US$13.70m)
-- Total revenue US$7.72m (2018: US$6.83m)
- Revenue from services increased 15% to US$1.20m (2018:
US$1.04m)
- Net increase of US$6.52m in fair value of portfolio companies
(2018: US$5.79m)
-- Profit before tax: US$5.52m (2018: US$4.55m)
-- Reduction of operating expenses by 7% to US$1.59m (2018: US$1.72m).
-- Service revenues cover approximately 55% of cost base (cost of sales and operating expenses)
-- Placing to raise US$0.9m completed in July 2019.
Operational highlights: Material Portfolio Companies
Salarius(R) (91.7% ownership) www.salarius.co
-- Successfully launched MicroSalt(R) with the first three commercial accounts secured.
-- Approximately 25 companies are testing MicroSalt(R) for
inclusion in their snack food products.
-- Appointed Mike Marrotte, V.P. Sales. Top performing sales
leader and revenue growth strategist
-- Appointed Javier Contreras as COO to further its
commercialization efforts (formerly of The Clorox Company).
-- Completed development and consumer packaging of its
SaltMe!(R) line of full flavour, reduced sodium potato chips in 4
flavours.
-- Engaged a leading natural food wholesaler & food broker for retail placement of SaltMe!(R)
-- Engaged two leading food ingredient brokers, Accurate
Ingredients, Inc. and Hanks Brokerage Inc., to sell MicroSalt(R) to
snack food companies throughout the U.S.
-- Filed additional patent on coverage of MicroSalt(R) directed to improve low-sodium salt.
Lucyd(R) (100% ownership) www.lucyd.co
-- Launched sales of Lucyd Loud 3.0 audio glasses, proper
prescription glasses that can be used to listen to music, answer
your mobile phone or talk to Siri(R).
-- On track to launch Lucyd Loud Lyte in the H2 2020. Lucyd Lyte
is the first prescription Bluetooth glasses that looks like
traditional glasses in terms of style and form factor.
-- Filed additional patent protection on Lucyd modular eyewear
and trademark protection on Glasses as a Service (GaaS).
Guident (100% ownership) www.guident.co
-- Filed a new patent application for controlling autonomous
vehicles after an accident (patent was allowed by the USPTO post
period end)
-- Guident exclusively licensed a patent application from
Michigan State University for an AV communication and safety
network.
-- Guident exclusively licensed patent # 9,964,948 from FIU
which enables remote control of an AV by a human operator when
necessary
-- Begun its B2B marketing program to develop partnerships with vehicle OEM's to provide remote tele-monitoring and control centre IP & technology for autonomous vehicles and land-based delivery drones.
Belluscura(R) (18.9% ownership) www.belluscura.com
-- Continued progress with its patented portable oxygen concentrator programme
-- Belluscura raised US $2.7m in 2019 at 15p/share to continue
with its FDA clearance and go to market strategy equating to a post
money valuation of US $9m.
-- Belluscura anticipates receiving 510(K) clearance from the US FDA in H1 2020
-- Post end of period, Belluscura filed an additional patent
application covering devices and systems for treating people
suffering from acute respiratory distress caused by the
Coronavirus.
Operational highlights: Corporate
-- Strengthened the board of directors with the appointments of
Lord David Willets and Mr. Louis Castro as independent
non-executive directors
Dr. Clifford Gross, Executive Chairman said: "I'm glad to report
that through the collective efforts of our dedicated and capable
team we have achieved record results in 2019. The continued
development of our portfolio companies combined with improved
service revenues has resulted in solid financial performance,
whilst we simultaneously reduced our operating expenses by 7%."
Post period end portfolio company highlights
-- On December 12, 2019, Salarius Ltd secured national food
ingredient broker for Microsalt(R). Accurate Ingredients provides
network of experienced sales representatives on east and west coast
of the United States.
-- On 24 January 2020, Salarius Ltd secured additional food
ingredient broker partner for sales of Microsalt(R). The agreement
with Hanks Brokerage Inc. covers primarily snack food companies in
the southwestern United States.
-- On 10 February 2020, Belluscura has filed an additional
patent application (17 patents filed or licensed to-date) entitled
"Improved Extracorporeal Membrane Oxygenation Device, System and
Related Methods," covering devices and systems for treating people
suffering from acute respiratory distress caused by the
Coronavirus.
-- In February 2020, Salarius Ltd's executives exercised stock
options resulting in Tekcapital's ownership being reduced from
97.5% to 91.7%.
-- On 2 March 2020, Salarius Ltd announced North American
distribution agreement for launch of SaltMe!(R) snacks. This
agreement represents an important milestone for Salarius' new
potato chip snack line, enabling unprecedented reach of SaltMe!(R)
products into consumer outlets of every size in North America.
-- On 4 March 2020, Salarius Ltd announced sales partnership
agreement with iLevel Brands Inc as part of its launch of North
America sales of SaltMe!(R). This agreement, combined with their
previously announced distribution agreement on 2 March 2020, will
expand Salarius' market penetration and brand awareness for its new
potato chip snack line with retail brand placements across the
entire East Coast, Midwest and Southwest geographic areas of the
United States.
-- On 16 March 2020, Belluscura plc announced the filing of a
patent application on a modular, portable oxygen enrichment
ventilation system for treating patients suffering from COPD and
ARDS brought on by such diseases as COVID-19.
-- On 24 March 2020, Salarius Ltd announced it has received an
order from its distribution partner to launch sales of its new
SaltMe!(R) full flavor-low sodium snacks in 71 stores beginning in
May 2020.
-- On 26 March 2020, Lucyd Ltd announced it has filed patent and
trademark on its forthcoming Vyrb(TM) app. Vyrb users will be able
to active a world of smartphone actions with their voice in just
moments, including social media posting. The app is designed to
improve utility of Lucyd Bluetooth(R) glasses and wireless
hearables.
-- On 8 April 2020, Guident Ltd announced significant management
additions including appointment of Harald Braun as Company's CEO
and appointment of Daniel Grossman as the company's Chief Revenue
Officer. The company also appointed Michael Trank as VP Software
Development and Dr. Gabriel Castenada as Lead Architect, Artificial
Intelligence Software. Guident has also announced that it has
received a Notice of Allowance from the United States Patent and
Trademark Office for its patent application # 16/386,530 entitled
"Methods and Systems for Emergency Handoff of an Autonomous
Vehicle" and has filed an additional patent entitled, "Intelligent
Remote Monitoring and Control of Autonomous Vehicles".
-- On 24 April 2020, Lucyd Ltd announced launch of its
Bluetooth(R)-enabled glasses on the website of US superstore chain
Walmart Inc.
Posting of Annual Report and Accounts
The Company's annual report and accounts for the year ended 30
November 2019 will be posted to shareholders in due course and will
be available on the Company's website www.tekcapital.com
shortly.
For further information, please contact:
Tekcapital Plc Via Flagstaff
Clifford M. Gross, Ph.D.
SP Angel Corporate Finance LLP
(Nominated Adviser and Broker) +44 (0) 20 3470 0470
Richard Morrison/Charlie Bouverat (Corporate
Finance)
Abigail Wayne / Rob Rees (Corporate Broking)
Flagstaff Strategic and Investor Communications +44 (0) 20 7129 1474
Tim Thompson/Andrea Seymour/Fergus Mellon
About Tekcapital plc
Tekcapital creates value from investing in new,
university-developed intellectual properties and provides a range
of IP investment services to make it easy for organisations to
commercialise university-developed technology. Tekcapital is quoted
on the AIM market of the London Stock Exchange (AIM: symbol TEK)
and is headquartered in Oxford, in the UK. For more information,
please visit www.tekcapital.com
LEI: 213800GOJTOV19FIFZ85
Chairman's statem ent
Tekcapital brings innovations from lab to market that enhance
safety and health and improve the quality of life. In 2019, all our
active portfolio companies have made significant progress and
portfolio holdings value increased by 48%. We have also grown our
service revenues by 15%, including portfolio company management
fees and R&D related tax credits. As a result, our profits and
net assets ended the year at record levels.
Key portfolio companies
Using our proprietary global university network, we provide
services to universities and companies to help them commercialize
their innovations. Over the past four years, using these services,
we have built a compelling group of portfolio companies to
commercialize high value properties we have uncovered. We believe
that when you couple commercialization ready, compelling university
IP with strong senior management, vibrant companies will emerge,
net assets will grow, returns on invested capital will outperform
the sector and exits will occur faster. When we realise exits
through trade sales or IPO's, the Group's goal is to distribute a
portion of the proceeds as a special dividend to our
shareholders.
Salarius is a food tech business that owns a patented process to
produce nanoparticle sized salt. These small crystals dissolve
faster on the tongue, so you need to use less salt, while still
having the same salty taste. Less salt means about 50% less sodium.
Less sodium means a reduced likelihood of developing heart disease,
the world's number one killer. Post-period, Salarius has added
additional senior management with Fortune 500 company manufacturing
experience and is expected to begin selling Salarius salt and
snacks in Q4. According to Future Market Insights, the low sodium
ingredient market is estimated to reach US$1.76bn by 2025.
Tekcapital owns 91.7% of Salarius.
Key Investment Rationale: Whilst consumers continue to crave
salted snacks, there is a significant trend for better for you,
health conscious foods that taste good. As heart disease continues
to rise and represents the leading cause of premature death in the
world, reducing sodium in the foods we eat is of paramount and
continuing importance.
Lucyd has built a new, online eyeglass business that combines
technology with traditional eyewear. Recently they introduced Lucyd
Loud 3.0 upgraded Bluetooth(R) eyewear. This product combines
proper prescription glasses with Bluetooth technology that you can
use to answer your phone, listen to music , and talk with Siri(R).
The product has been well received and the company is focused on
expanding its sales with retail distribution through sporting goods
and other specialty stores in 2020. Lucyd has also developed and
filed approximately 20 patents on modular Bluetooth eyewear that
enables the consumer to quickly and inexpensively change the look
of their glasses. The company anticipates launching this new
product in 2020 along with Lucy Lyte, the first Bluetooth
prescription eyewear, that look like regular glasses in terms of
their streamlined form factor . According to Statista, the current
online market for eyewear is $3.8b per year. Tekcapital owns 100%
of Lucyd.
Key Investment Rationale: Digital assistants have gained
significant prominence amongst consumers of all ages. Individuals
want to stay connected to their digital lives throughout the day.
Lucyd's Bluetooth(R) enabled glasses facilitate seamless
connectivity whilst providing glasses that correct vision and
protect the eyes with fashion forward frames at an affordable
price. Additionally, the pedestrian accidents and deaths are on the
rise partially from distractions caused by mobile devices. Lucyd
can help deal with this problem.
Guident owns or holds the exclusive licence to a group of
patents that together we believe improve the safety of autonomous
vehicles and land-based autonomous delivery drones. Guident has
significantly increased its intellectual capital in 2019 with
several additional patent acquisitions and one in-house developed
property. Guident has begun its B2B marketing program and seeks to
develop partnerships with vehicle OEM's to provide remote tele
monitoring and control centres for autonomous vehicles amongst
other services. Such monitoring has recently been required by law
in the State of Florida and other jurisdictions. According to
Statista, the US market for Autonomous vehicles is projected to
reach $6 billion by 2025. Tekcapital owns 100% of Guident.
Key Investment rationale : Autonomous vehicles and ground based
delivery drones are about to make their entrance on the world's
roads. They hold the potential to significantly reduce accidents
and transportation costs. We believe that ensuring the safety of
these vehicles with software apps for primary use cases including
accident remediation coupled with remote monitoring and control
centres, will be required for rapid consumer adoption.
Belluscura has developed an improved portable oxygen
concentrator to provide on-the-go supplemental O(2) , with user
replaceable filter cartridges. When a patient's disease progresses,
they now can upgrade the filter cartridge to provide more liters of
O(2) per minute, rather than having to replace an expensive medical
device. This cost savings will be beneficial to patients and
insurance companies and should help make healthcare more affordable
as per Belluscura's mission. Belluscura raised US $2.7m in 2019 at
15p/share to continue with its FDA clearance and go to market
strategy. Post money valuation US $9m for the entire business.
Belluscura anticipates receiving 510(K) clearance from the US FDA
in H1 2020. Upon receipt of clearance from the FDA, the Directors
believe that Belluscura's value should significantly increase.
According to Global Market Insights, the medical portable O(2)
market is currently $1.4bn a year and growing by more than
$100m/year1. Post end of period, Belluscura has filed an additional
patent application (17 patents filed or licensed to-date) entitled
"Improved Extracorporeal Membrane Oxygenation Device, System and
Related Methods," covering devices and systems for treating people
suffering from acute respiratory distress caused by the
Coronavirus. The latest patent application covers devices and
systems for treating people suffering from ARDS including patients
suffering from the coronavirus. Belluscura and Separation Design
are designing and developing next generation, cost-effective,
portable ECMO technology to treat ARDS patients. Tekcapital owns
18.9% of Belluscura.
Key Investment rationale : Chronic obstructive pulmonary disease
("COPD") afflicts more than 250 million individuals worldwide and
is growing due to the aging population, smoking and air pollution.
Further, as a result of the COVID-19 pandemic, individuals who
recover may have residual lung damage. Many of these individuals
could benefit from the supplemental oxygen provided by portable
oxygen concentrators. Belluscura's patented approach to enable
users to upgrade their portable oxygen concentrators as their
disease progresses rather than purchase a new unit will make
healthcare more affordable for these patients and their insurance
providers.
Corporate
Tekcapital has strengthened the board of directors with the
appointments of Lord David Willetts and Mr. Louis Castro.
Rt Hon Lord Willetts FRS is President of the Resolution
Foundation and former U.K. Minister for Universities and Science.
He served as the Member of Parliament for Havant (1992-2015), and
previously worked at HM Treasury and the No. 10 Policy Unit. Lord
Willetts is a visiting Professor at King's College London, former
Chair of the British Science Association and a member of the
Council of the Institute for Fiscal Studies.
Louis Castro is a highly experienced and well qualified Director
and Chartered Accountant with some thirty years spent in industry
and in financial services, including positions as Chief Executive,
Finance Director and Non-Executive Director of several AIM listed
companies. He was previously the CFO at Eland Oil & Gas plc
where he had full executive responsibility for finance, legal,
corporate finance and a budget of over US$150m. Louis is a Fellow
of the Institute of Chartered Accountants of England &
Wales.
We are seeing continued growth of technology transfer services
and have released a new version of the Invention Evaluator
tri-lingual website for expansion of its service offerings
throughout Latin America. Consulting sales are up approximately 15%
Y-O-Y and currently cover approximately 55% of our administrative
costs. One of our goals is to have all of our administrative costs
covered by our service revenue in future periods.
Principal Risks and Uncertainties
The specific financial risks are discussed in the notes to the
financial statements. Other risks are as follows:
- the principal financial risks of the business relate to the
value of the Group's portfolio companies. We believe that the fair
value of each portfolio company is a time dependent valuation that
may be impaired if the business does not achieve it milestones,
growth trajectory, product development, capital raises or other key
performance metrics. Individually and as a group our portfolio
companies have a material impact on our financial performance. This
risk of individual portfolio company negative performance may be
ameliorated as our portfolio becomes more diverse and increases in
value.
- the principal operational risk of the business is management's
ability to assist our portfolio companies in achieving their goals
and ultimate exits whilst increasing our service revenues.
- the Group is dependent on its executive team and directors for
its operations and ultimate success and there can be no assurance
that it will be able to retain the services of these key personnel
in the future.
- the COVID-19 epidemic may produce negative economic activities
which could reduce the Group's economic performance Further, until
the Group covers all of its operating costs from service revenue
and or exits it will seek to raise additional capital to fund
operations and follow-on investments in portfolio companies.
Post Period End Fundraisings
Post end of period, the Company announced that it had completed
a fundraising of $0.96 million gross through the placing of
14,800,000 new ordinary shares with new and existing investors at a
price of 5 pence per share. The issue of the new shares and receipt
of the proceeds from the fundraising were received during February
2020.
Post end of period, the Company announced that it had raised
US$1.15 million (before expenses) by means of a conditional
fundraise through the issue of, in aggregate 9,250,000 placing
shares at 10 pence per share. The placing will be subject to
Tekcapital's shareholders approval at a general meeting on 19 May
2020.
Current Trading and Outlook
Having continued to develop and expand Tekcapital's existing
business, the Board is confident that continued investment in our
portfolio companies remains the right approach for long-term value
creation. Additionally, we are currently exploring early stage
venture funding for a number of our portfolio companies. Further,
we believe that we are executing on our strategy and this should
result in further increases in returns on invested capital as our
portfolio companies continue to mature towards exits.
Whilst it is clear that the Company is progressing very well,
net asset values will fluctuate from period to period due to
individual portfolio company performance, valuations and changes in
market conditions and macro-economic financial conditions including
the recent Coronavirus epidemic. We are grateful for the patience
and support of our shareholders. We are also sincerely appreciative
of our dedicated, creative and incredibly hardworking team without
which, none of the results reported herein would be possible.
Dr Clifford M Gross
Chairman and CEO
05 May 2020
Tekcapital Plc
Consolidated Statement of comprehensive income
For the year ended 30 November 2019
Group Note Year ended Year ended
30 November 30 November
2019 2018
US $ US $
-------------------------------------- ------ ---------------- ---------------
Continuing Operations
Revenue from services 6 1,200,551 1,040,830
Unrealised profit on the revaluation
of investments 12 6,516,813 5,792,264
Total Revenue 7,717,364 6,833,094
-------------------------------------- ------ ---------------- ---------------
Cost of sales (606,166) (559,630)
Gross Profit 7,111,198 6,273,464
-------------------------------------- ------ ---------------- ---------------
Administrative expenses 7 (1,590,563) (1,717,570)
Operating Profit 5,520,635 4,555,894
-------------------------------------- ------ ---------------- ---------------
Profit on ordinary activities
before income tax 5,520,635 4,555,894
Income tax expense 9 (2,345) (1,269)
Profit after tax for the year 5,518,290 4,554,625
Other comprehensive income
Foreign exchange (loss)/profit 31,855 (135,342)
-------------------------------------- ------ ---------------- ---------------
Total other comprehensive
(loss)/income 31,855 (135,342)
-------------------------------------- ------ ---------------- ---------------
Total comprehensive profit
for the year 5,550,145 4,419,283
-------------------------------------- ------ ---------------- ---------------
Profit per share
Basic earnings per share 10 0.095 0.103
Diluted earnings per share 10 0.095 0.103
- -
The Group has used the exemption under S408 CA 2006 not to
disclose the Company income statement.
Items in the statement above are disclosed net of tax.
Tekcapital Plc
Consolidated Statement of financial position
At 30 November 2019
Group Note As at As at
30 November 30 November
2019 2018
US $ US $
----------------------------------- ------ --- -------------- --------------
Assets
Non-current assets
Intangible assets 13 838,770 838,769
Financial assets at fair value
through profit and loss 12 20,335,925 13,704,354
Convertible loan notes 15 476,122 250,000
Property, plant and equipment 14 17,353 33,489
----------------------------------- ------ --- -------------- --------------
21,668,170 14,826,612
----------------------------------- ------ --- -------------- --------------
Current assets
Trade and other receivables 15 815,866 429,373
Cash and cash equivalents 16 472,899 1,165,442
----------------------------------- ------ --- -------------- --------------
1,288,765 1,594,815
----------------------------------- ------ --- -------------- --------------
Total assets 22,956,935 16,421,427
Current liabilities
Trade and other payables 20 310,160 285,957
Current income tax liabilities 500 500
Deferred Revenue 118,595 -
----------------------------------- ------ --- -------------- --------------
429,255 286,457
----------------------------------- ------ --- -------------- --------------
Total liabilities 429,255 286,457
----------------------------------- ------ --- -------------- --------------
Net assets 22,527,680 16,134,970
----------------------------------- ------ --- -------------- --------------
Equity attributable to the owners
of the Parent
Ordinary shares 18 372,984 326,036
Share premium 18 10,993,546 10,218,805
Retained earnings 19 11,055,821 5,516,655
Translation Reserve 19 177,498 145,643
Merger Reserve 19 (72,169) (72,169)
Total Equity 22,527,680 16,134,970
----------------------------------- ------ --- -------------- --------------
Tekcapital Plc
Company Statement of financial position
At 30 November 2019
Company Note As at As at
30 November 30 November
2019 2018
US $ US $
----------------------------- ------ ---------------- --------------
Assets
Non-current assets
Intangible assets 13 - -
Investment in subsidiaries 11 1,959,003 1,955,013
Financial assets at fair
value through profit and
loss 12 1,804,120 1,126,315
Convertible Loan Notes 15 476,122 250,000
----------------------------- ------ ---------------- --------------
4,239,245 3,331,328
----------------------------- ------ ---------------- --------------
Current assets
Trade and other receivables 15 2,321,731 1,752,385
Cash and cash equivalents 16 112,114 698,694
----------------------------- ------ ---------------- --------------
2,433,845 2,451,079
----------------------------- ------ ---------------- --------------
Total assets 6,673,090 5,782,407
Current Liabilities
Trade and other payables 20 484,375 470,808
484,375 470,808
----------------------------- ------ ---------------- --------------
Total liabilities 484,375 470,808
----------------------------- ------ ---------------- --------------
Net assets 6,188,715 5,311,599
----------------------------- ------ ---------------- --------------
Equity attributable to the
owners of the parent
Ordinary shares 18 372,984 326,036
Share Premium 18 10,993,546 10,218,805
Retained Earnings 19 (5,079,729) (5,131,273)
Translation Reserve 19 (98,086) (101,969)
----------------------------- ------ ---------------- --------------
Total Equity 6,188,715 5,311,599
----------------------------- ------ ---------------- --------------
The Company's profit before tax for the year ended 30 November
2019 was $30,688.
Tekcapital Plc
Consolidated Statement of changes in equity
For the year ended 30 November 2019
Attributable to equity holders of the parent company
-----------------------------------------------------------------
Ordinary Share Translation Merger Profit Total Equity
Group Note Shares Premium Reserve reserve and loss US $
US $ US $ US $ US $ account
US $
----------------------- ------- ----------- ----------- -------------- ---------- ----------- ---------------
Balance at 30 November
2017 264,221 9,271,098 280,985 (72,169) 931,826 10,675,961
Share issue 18 61,815 1,097,216 1,159,031
Cost of share issue 18 - (149,509) - - - (149,509)
Profit for the year 19 - - - - 4,554,625 4,554,625
Other comprehensive
income 19 - - (135,342) - - (135,342)
Share based payments 26 - - - - 30,204 30,204
Balance at 30 November
2018 326,036 10,218,805 145,643 (72,169) 5,516,655 16,134,970
----------------------- ------- ----------- ----------- -------------- ---------- ----------- ---------------
Share issue 18 46,948 892,018 938,966
Cost of share issue 18 - (117,277) - - - (117,277)
Profit for the year 19 - - - - 5,518,290 5,518,290
Other comprehensive
income 19 - - 31,855 - - 31,855
Share based payments 26 - - - - 20,876 20,876
Balance at 30 November
2019 372,984 10,993,546 177,498 (72,169) 11,055,821 22,527,680
----------------------- ------- ----------- ----------- -------------- ---------- ----------- ---------------
Share premium - amount subscribed for share capital in excess of
nominal value, net of directly attributable costs.
Translation reserve - amount subscribed for foreign exchange
differences recognised in Other Comprehensive Income.
Merger reserve - amount subscribed for share capital in excess
of nominal value in relation to the qualifying acquisition of
subsidiary undertakings .
Profit and loss account - cumulative net gains and losses
recognised in the consolidated statement of comprehensive
income.
Tekcapital PLC
Company Statement of changes in equity
For the year ended 30 November 2019
Attributable to owners of the parent company
Ordinary Share Translation Retained Total
Company Note Shares Premium Reserve earnings Equity
US $ US $ US $ US $ US $
------------------------ ------- ----------- ----------- -------------- ------------ ------------
Balance at 30 November
2017 264,221 9,271,098 77,277 (4,241,264) 5,371,332
Share issue 18 61,815 1,097,216 - - 1,159,031
Cost of share issue 18 - (149,509) - - (149,509)
Profit for the year 19 - - - (920,213) (920,213)
Other comprehensive
income 19 - - (179,246) - (179,246)
Share based payments 26 - - - 30,204 30,204
Balance at 30 November
2018 326,036 10,218,805 (101,969) (5,131,273) 5,311,599
------------------------ ------- ----------- ----------- -------------- ------------ ------------
Share issue 18 46,948 892,018 - - 938,966
Cost of share issue 18 - (117,277) - - (117,277)
Profit for the year 19 - - - 30,668 30,668
Other comprehensive
loss 19 - - 3,883 - 3,883
Share based payments 26 - - - 20,876 20,876
Balance at 30 November
2019 372,984 10,993,546 (98,086) (5,079,729) 6,188,715
------------------------ ------- ----------- ----------- -------------- ------------ ------------
Share premium - amount subscribed for share capital in excess of
nominal value, net of directly attributable issue costs.
Translation reserve - amount subscribed for foreign exchange
differences recognized in Other Comprehensive Income.
Profit and loss account - cumulative net gains and losses
recognised in the consolidated financial statements of
comprehensive income.
Tekcapital Plc
Consolidated Statement of cash flows
For the year ended 30 November 2019
Group Note For the year For the year
ended ended
30 November 30 November
2019 2018
US $ US $
---------------------------------- ------ ------------------ -------------
Cash flows from operating
activities
Cash outflows from operations 24 (1,397,294) (866,377)
Tax paid (2,345) (1,269)
Net cash outflows from operating
activities (1,399,639) (867,646)
---------------------------------- ------ ------------------ -------------
Cash flows from investing
activities
Purchase of financial assets
at fair value through profit
and loss* 12 (111,810) (693,413)
Purchases of property, plant
and equipment 14 (862) (45,841)
Proceeds from sale of property,
plant and equipment - 80
Net cash outflows from investing
activities (112,672) (739,174)
Cash flows from financing
activities
Proceeds from issuance of
ordinary shares 18 938,966 1,159,031
Costs of raising finance 18 (117,277) (149,508)
Net cash outflows from financing
activities 821,689 1,009,523
---------------------------------- ------ ------------------ -------------
Net (decrease) in cash and
cash equivalents (690,622) (597,297)
Cash and cash equivalents
at beginning of year 15 1,165,442 1,797,729
Exchange (losses)/gains on
cash and cash equivalents (1,921) (34,990)
Cash and cash equivalents
at end of year 15 472,899 1,165,442
---------------------------------- ------ ------------------ -------------
* No significant non-cash transaction occurred during the
period.
Notes
1. General Information
Tekcapital PLC is a company incorporated in England and Wales
and domiciled in the UK. The address of the registered office is
detailed on page 1 of these financial statements. The Company is a
public limited company, which listed on the AIM market of the
London Stock Exchange in 2014. The principal activity of the parent
company is that of an investment entity and that of the Group is to
provide universities and corporate clients with a wide range of
technology transfer services. The Group and the parent company also
acquire exclusive licences for disruptive technologies it has
acquired for its own portfolio, for subsequent
commercialisation.
The principal accounting policies applied in the preparation of
these consolidated and parent company financial statements are set
out below. These policies have been consistently applied to all the
years presented, unless otherwise stated.
Amounts presented in this report are rounded to nearest
US$1.
2. Accounting policies
2.1 Statement of compliance
The consolidated financial statements of Tekcapital PLC Group
have been prepared in accordance with International Financial
Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS
IC) as adopted by the European Union and the Companies Act 2006
applicable to companies reporting under IFRS. The consolidated
financial statements have been prepared under the historical cost
convention. The consolidated financial statements comprise the
financial statements of Tekcapital plc and its subsidiaries,
Tekcapital Europe Ltd and Tekcapital LLC.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgment or complexity, or areas where assumptions
and estimates are significant to the consolidated financial
statements are disclosed in note 4.
The consolidated financial statements of the parent company have
been prepared in accordance with Financial Reporting Standard 101
"Reduced disclosure framework" ('FRS 101'). The company will
continue to prepare its financial statements in accordance with
FRS101 on an ongoing basis until such time as it notifies
shareholders of any change to its chosen accounting framework.
The Company financial statements have been prepared using the
historical cost convention except where other measurement basis are
required to be applied and in accordance with IFRS under FRS 101.
In accordance with FRS101, the company has taken advantage of the
following exemptions:
-- IAS 7, 'Statement of Cash Flows'
-- Requirements of IAS 24, 'Related Party Disclosures' to
disclose related party transactions entered into between two or
more members of a group.
2.1.1 Going concern
The Group and the Company meets its day to day working capital
requirements through its service offerings and monies raised
through the issues of equity. The Group's forecasts and projections
indicate that the Group and the Company have sufficient cash
reserves to operate within the level of its current facilities.
Whilst it is the Group's and the Company's intention to rely on the
available cash reserves, future income generated from its growing
service offerings and reductions in its cost base, a negative
variance in the forecasts and projections would make the Group's
ability to continue as a going concern dependent on an additional
fund raise. If the Group's forecasts are not achieved, the
Directors would seek to raise the additional funds through equity
issues. Whilst the COVID-19 epidemic is contributing to uncertainty
in the markets and the full impact is difficult to measure, at the
time of approving the accounts after making enquiries, the
Directors have a reasonable expectation that the Group and the
Company have adequate resources to continue in operational
existence for the foreseeable future. The Group and the Company
therefore continue to adopt the going concern basis in preparing
both its consolidated financial statements and for its own
financial statements.
2.1.2 Changes in accounting policy and disclosures
New standards and interpretations not yet adopted by the
Group
IFRS 16 Leases
IFRS 16 was issued in January 2016 and is effective for
accounting periods beginning on or after 1 January 2019. The Group
has not chosen to early adopt this standard and will adopt it for
the accounting period beginning 1 December 2019. Directors do not
expect any material impact on the consolidated financial
statements, as most of its operating lease commitment disclosed in
Note 25 (US$61,925) will be satisfied by 1 December 2019.
No other issued but not endorsed amendments to IFRS will have a
material impact on the Group's financial statements once they
become endorsed and effective.
New standards and interpretations adopted by the Group:
IFRS 9
IFRS 9 was issued in July 2014 and is effective for accounting
periods on or after 1 January 2018. The Group has adopted the full
retrospective method of adoption; however, the adoption of this
standard has not had an impact on the financial performance or
position of the Group for the year or comparative period.
IFRS 15 Revenue from contracts with customers
IFRS 15 was issued in September 2015 and is effective for
accounting periods beginning on or after 1 January 2018.
The Group has adopted IFRS 15 on 1 December 2018, effectively
replacing IAS 18 used by the Group previously. The Group has
adopted the full retrospective method of adoption; however, the
adoption of this standard has not had an impact on the financial
performance or position of the Group for the year or comparative
period.
Additional disclosures were included in Note 6 to satisfy the
IFRS disclosure requirements.
2.2 Business combinations
Tekcapital PLC was incorporated on 3 February 2014 and on 18
February 2014 entered into an agreement to acquire the issued share
capital of Tekcapital Europe Limited by way of share issue. On 19
February 2014 it acquired the issued share capital of Tekcapital
LLC also by share issue. This has been accounted for as a common
control transaction under IFRS 3 using the pooling of interest
method by using the nominal value of shares exchanged in the
business combination and no fair value adjustment. The consolidated
financial statements comprise the financial statements of
Tekcapital PLC and all subsidiaries controlled by it. Subsidiaries
are entities that are controlled by the Group. Control is achieved
when the Group has the power to govern the financial and operating
policies of an entity so as to obtain economic benefit from its
activities. Inter-company transactions, balances and unrealised
gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated when necessary amounts
reported by subsidiaries have been adjusted to conform to the
Group's accounting policies.
2.3 Foreign currencies
(a) Functional and presentation currency
These consolidated financial statements are presented in US
Dollars which is the presentation currency of the Group. This is
because the majority of the Group's transactions are undertaken in
US Dollars. Each subsidiary within the Group has its own functional
currency which is dependent on the primary economic environment in
which that subsidiary operates. Effective 1 December 2014
Tekcapital PLC and Tekcapital Europe Limited changed their
functional currency to UK Sterling. This is because, the primary
economic activity of these entities is undertaken in the UK.
(b) Transactions and balances
Foreign currency transactions are translated into functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at the year-end exchange
rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement. Foreign exchange
gains and losses that relate to borrowings and cash and cash
equivalents are presented in the income statement within 'finance
income or costs'.
(c) Group companies
The results and financial position of all Group entities (none
of which has the currency of a hyper-inflationary economy) that
have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are
translated at the closing exchange rates at the date of that
balance sheet.
(ii) income and expense for each income statement are translated
at the average rates of exchange during the period (unless this
average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the rate on the dates of the
transactions)
(iii) all resulting exchange differences are recognised in other comprehensive income.
2.4 Investment in subsidiaries
Investments in subsidiaries including Tekcapital Europe Ltd and
Tekcapital LLC are recognised initially at cost. The cost of the
investment includes transactions costs. The carrying amounts are
reviewed at each reporting dated to determine whether there is any
indication of impairment.
Investments in portfolio companies are held at fair value
through the profit and loss. Directors' judgment was exercised in
determination that the Group meets the following criteria and
should be recognized as an investment entity under IFRS 10 par. 27.
Directors re-evaluated the below criteria and concluded they were
met as at 30 November 2019:
-- Obtains funds from one or more investors for the purpose of
providing clients with investment management services
-- Commits to its investors that its business purpose is to
invest funds solely for return from capital appreciation,
investment income or both
-- Measures and evaluate the performance of substantially all of
its investments on a fair value basis.
Tekcapital's IP search and technology transfer investment
services represent investment advisory services, and therefore
Tekcapital Europe Limited and Tekcapital LLC continue to be treated
as subsidiaries and are consolidated in the Group financial
statements. These services may be provided to investors, clients
and third parties. The Board considers that the criteria are met in
the group's current circumstances.
The Board envisages that Tekcapital's shareholder returns will
derive primarily from mid to long-term capital appreciation of a
portion of its intellectual property investments, as well as from
providing IP investment services to clients. Consequently, the
Group's portfolio companies are measured at fair value in
accordance with IFRS 9 as disclosed in Note 2.9.
2.5 Non-controlling interests
Losses applicable to non-controlling interests in a subsidiary
are allocated to the non-controlling interests, even if doing so
causes the non-controlling interests to have a deficit balance.
Adjustments to non-controlling interests arising from transactions
that do not involve the loss of control are based on a
proportionate amount of the net assets of the subsidiary. Upon the
loss of control the assets and liabilities of the subsidiary, any
non-controlling interests and other components of equity related to
the subsidiary are derecognised. Any resulting gain or loss is
recognised in the profit and loss.
2.6 Property, plant and equipment
Property, plant and equipment is stated at historical cost less
accumulated depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the
income statement during the financial period in which they are
incurred.
Depreciation of assets are calculated to write off the cost less
the estimated residual value of tangible fixed assets by equal
instalments over the estimated useful economic lives as
follows:
Furniture - 3 years
Computer equipment - 3 years
Leasehold improvements - 5 years
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period. An
asset's carrying amount is written down immediately to its
recoverable amount if the assets carrying value is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount and are recognised within 'Other
gains / (losses) - net' in the income statement. When re-valued
assets are sold, the amounts are included in other reserves are
transferred to retained earnings.
2.7 Intangible assets
(a) Invention Evaluator
This is an intangible asset and a piece of computer software
acquired for use by one of the subsidiaries of the Group and is
shown at original cost of purchase less impairment losses.
Under IAS38, this asset is regarded by the Directors as being an
intangible asset with an indefinite useful life. The Directors
believe that the asset is unique in that no competitor offering
currently exists, the service appeals globally to many types of
clients including Fortune 100 companies, there is no expectation of
obsolescence in the foreseeable future, and the service provided by
the asset generates sufficient ongoing revenue streams.
Consequently, no write down in the value of this asset either by
way of amortisation or impairment has occurred in this financial
year. In the Directors' opinion this asset has an indefinite useful
life.
(b) Computer software and website development
Costs associated with maintaining computer software programmes
and the Company website are recognised as an expense as incurred.
Development costs that are directly attributable to the design and
testing of identifiable and unique software products controlled by
the Group are recognised as intangible assets when the following
criteria are met:
(i) it is technically feasible to complete the software product
so that it will be available for use;
(ii) management intends to complete the software product and use or sell it;
(iii) there is an ability to use or sell the software product;
(iv) it can be demonstrated how the software product will
generate probable future economic benefits;
(v) adequate technical, financial and other resources to
complete the development and to use or sell the
software product are available; and
(vi) the expenditure attributable to the software product during
its development can be reliably
measured.
Computer software development costs recognised as assets are
amortised over their estimated useful lives, which do not exceed
four years.
(c) Licences
Costs associated with the acquisition of Licences for
technologies with the express purpose of developing them further
for a commercial market are recognised as an intangible asset when
they meet the criteria for capitalisation. That is, they are
separately identifiable and measurable and it is probable that
economic benefit will flow to the entity.
Further development costs attributable to the Licenced
technology and recognised as an intangible asset when the following
criteria are met:
(i) it is technically feasible to complete the technology for
commercialisation so that it will be available for use;
(ii) management intends to complete the technology and use or sell it;
(iii) there is an ability to use or sell the technology;
(iv) it can be demonstrated how the technology will generate
probable future economic benefits;
(v) adequate technical, financial and other resources to
complete the development and to use or sell the technology are
available; and
(vi) the expenditure attributable to the technology during its
development can be reliably measured.
Licences and their associated development costs are amortised
over the life of the licence or the underlying patents, whichever
is shorter.
(d) Vortechs Group
This is an intangible asset acquired for use by one of the
subsidiaries of the Group and is valued at original cost of
purchase.
Under IAS38, the Group's Vortechs Group asset is regarded by the
Directors as being an intangible asset with an indefinite useful
life. The Directors believe that this asset is unique as it
operates in a niche market, it generates an ongoing revenue stream,
and there is no expectation of obsolescence. This asset meets the
requirements of IAS38 as it is separately identifiable, controlled
by the Group, the cost can be measured reliably, and as a result of
owning this asset future economic benefits in the form of service
revenue are generated for the Group.
In the opinion of the Directors this asset as an indefinite
useful life and there has been no amortisation or impairment
provided in the current year.
2.8 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or
intangible assets not ready to use are not subject to amortisation
and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying value exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are largely independent cash inflows, (CGUs). Prior impairments of
non-financial assets (other than goodwill) are reviewed for
possible reversal at each reporting date.
2.9 Financial assets
2.9.1 Classification
The Group and the Company classify their financial assets
depending on the purpose for which the asset was acquired.
Management determines the classification of its financial assets at
initial recognition.
During the financial year the Group and the Company held
investments into portfolio companies classified as equity
investments. They are included in current assets and are measured
at fair value through profit and loss in accordance with IFRS
9.
The Company also has loans, convertible loan notes and
receivables that are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
are included in current assets, except for maturities that are
greater than 12 months after the end of the reporting year. These
are classified as non-current assets. The Group's loans and
receivables comprise 'trade and other receivables' in the balance
sheet. The Group also has cash and cash equivalents.
All short-term liabilities are measured at cost, the Group does
not hold any long-term financial liabilities.
2.9.2 Recognition and measurement
The Company's investments into the portfolio companies are
recognised on the acquisition or formation date and measured at
fair value through profit or loss in accordance with IFRS 9.
Loans and receivables are recognised on the trade date in which
the transaction took place and are recognised at their fair value
(which equates to cost) with transaction costs expensed in the
income statement. Financial assets are derecognised when the rights
to receive cash flows from the loans or receivables have been
collected, expired or transferred and the Group has subsequently
transferred substantially all risks and rewards of ownership. Short
term financial liabilities are initially measured at fair value and
subsequently measured at amortised cost using the effective
interest rate method.
2.9.3 Fair value
Financial instruments are measured at fair value including
investments in portfolio companies, cash and cash equivalents,
trade and other receivables, trade and other payables, and
borrowings. This measurement policy does not apply to subsequent
measurement at amortised cost of short-term financial liabilities
and trade receivables.
The Group measures portfolio companies using valuation
techniques appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use of
unobservable inputs. Our fair value valuation policy is as
follows:
-- The fair value of new portfolio companies is estimated at the
cost of the acquired IP or equity plus associated expenses to
facilitate the acquisition.
-- Existing portfolio companies are valued as follows:
Ø If a market transaction such as third-party funding has
occurred during the past 18 months we will value our ownership in
the portfolio company at this observed valuation, taking account of
any observed material changes during the period.
Ø In the absence of a recent market transaction, fair value will
be estimated by alternative methods and where appropriate by an
external, qualified valuation expert. The valuation technique used
fall under Level 2 - Observable techniques other than quoted prices
and Level 3 - other techniques as defined by IFRS 13.
Due to their short-term nature, the carrying value of cash and
cash equivalents, trade and other receivables, and trade and other
payables approximate their fair value. The fair value of borrowings
equals their carrying amounts, as the impact of discounts is not
significant.
2.10 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount
reported in the balance sheet when there is a legally enforceable
right to offset the recognised amounts and there is the intention
to settle on a net basis or realise the asset and settle the
liability simultaneously.
2.11 Impairment of financial assets
The Group assesses at the end of each reporting year whether
there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or group of
financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of
one or more events that have occurred after the initial recognition
of the asset (a 'loss event') and the loss event (or events) has an
impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors
or a group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other
financial reorganisation, and where observable data indicate that
there is a measurable decrease in the estimated future cash flows,
such as changes in arrears or economic conditions that correlate
with defaults.
For the loans and receivables category, the amount of the loss
is measured as the difference between the assets carrying amount
and the present value of estimated future cash flows (excluding
future credit losses that have not been incurred) discounted at the
financial asset's original effective interest rate. The carrying
amount of the asset is reduced and the amount of the loss is
recognised in the consolidated income statement. If a loan or
held-to maturity investment has a variable interest rate, the
discount rate for measuring any impairment loss is the current
effective interest rate determined under the contract. As a
practical expedient, the Group may measure impairment on the basis
of an instrument's fair value using an observable market price.
If, in a subsequent year, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as the
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in the
consolidated income statement.
2.12 Trade receivables
Trade receivables are amounts due from customers for the
provision of services performed in the ordinary course of business.
Collection is normally expected within three months or less (in the
normal operating cycle of the business) and is classified as
current assets. In the rare circumstances that they exceed a period
of greater than one year they are presented as non-current assets.
In some instances, the Group accepts convertible loan notes for
trade debts these are held separately on the statement of financial
position until maturity or disposal on the open market. Any value
received which is greater or less than the value of the original
debt is taken to the consolidated statement of comprehensive
income.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less any provision for impairment.
2.13 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash
equivalents includes cash in hand, deposits held at call with other
banks, other short term highly liquid investments with maturities
of three months or less and bank overdrafts. In the consolidated
statement of financial position, bank overdrafts are shown within
borrowings in current liabilities.
2.14 Share capital
Ordinary Shares
Ordinary shares are classified as equity.
Share premium
The share premium account has been established to represent the
excess of proceeds over the nominal value for all share issues,
including the excess of the exercise share price over the nominal
value of the shares on the exercise of share options as and when
they occur. Incremental costs directly attributable to the issue of
new ordinary shares and new shares options are shown in equity as a
deduction, net of tax, from the proceeds.
Merger Reserve
The consolidated financial statements are accounted for using
the 'pooling of interests' method', which treats the Group as if it
had been combined throughout the current and comparative accounting
periods. Pooling of interests principles for this combination gave
rise to a merger reserve in the consolidated statement of financial
position, being the difference between the nominal value of new
shares issued by the Company for the acquisition of the shares of
the subsidiary and the subsidiary's own share capital.
Non-controlling interest
Non-controlling interest is the portion of equity ownership in a
subsidiary not attributable to the parent company.
2.15 Trade payables
Trade payables are obligations to pay for goods and services
that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of business if longer). If not, they are presented
as non-current liabilities.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest rate method.
2.16 Share based payments
The Group operates a number of equity-settled, share-based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) of the
Group. The fair value of the employee services received in exchange
for the grant of options is recognised as an expense. The total
amount to be expensed is determined by reference to the fair value
of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time period); and
-- excluding the impact of any non-vesting conditions (for
example the requirement of the employees to save).
Assumptions about the number of options that are expected to
vest include consideration of non-market vesting conditions. The
total expense is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the
impact of the revision to the originally estimates, if any, in the
income statement, with a corresponding adjustment to equity.
When the options are exercised, the Group issues new shares. The
proceeds received net of any directly attributable transactions
costs are credited to share capital (nominal value) and share
premium when the options are exercised.
2.17 Current and deferred tax
The tax expense for the year comprises current and deferred tax.
Tax is recognised in the consolidated income statement, except to
the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
The current income tax charge is calculated on the basis of tax
laws enacted or substantively enacted at the balance sheet date in
the countries where the Company and its subsidiaries operate and
generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary timing
differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not recognised if
they arise from the initial recognition of goodwill; deferred
income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the balance
sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability
is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable
temporary differences arising from investments in subsidiaries
except for deferred income tax liability where the timing of the
reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred income tax assets are recognised on deductible
temporary differences arising from investments in subsidiaries only
to the extent that it is probable the temporary difference will
reverse in full in the future and there is sufficient taxable
profit available against which the temporary difference can be
utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle balances on a net
basis.
2.18 Provisions
Provisions and any other anticipated foreseen liabilities are
recognised: when the Group has a present legal or constructive
obligation as a result of past events; it is probable that an
outflow of resources will be required to settle the obligation; and
the amount has been reliably estimated. Restructuring provisions
comprise lease termination penalties, and employee termination
payments. Provisions are not recognised for future operating
losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering a class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to the passage of time is recognised as an interest
expense.
2.19 Leases
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Rentals payable under the operating leases are charged to income
on a straight-line basis over the term of the relevant lease.
2.20 Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable, and represents amounts receivable for the
services supplied, stated net of discounts, and value added taxes.
The Group recognises revenue when the contract is identified,
performance obligation is determined, transaction price is
determined and allocated to performance obligation in accordance
with IFRS 15.
The Group also recognises an unrealised profit/loss on the
revaluation of investments in share of portfolio companies in
accordance with the fair value policy outlined in Note 2.9.
Provision of services
The Group provides following lines of services:
- Invention Evaluator services: provision of reports assessing
potential of any new technology. Revenue is recognized upon
delivery of a complete report
- IP Acquisition Opportunities services: provision of reports
identifying attractive university developed IP. Revenue is
recognised upon delivery of a complete report
- Tech transfer recruitment services: recruitment services
specialising in technology transfer executives. Revenue is
recognised when the placement is successfully completed
- Training services: custom solutions for new tech transfer
offices, spin out companies and accelerators delivered via in
person trainings. Revenue is recognised over time based on
completion stage of each session.
Interest income
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable.
3. Financial Risk Management
3.1 Financial risk factors
(a) Portfolio Risk/Investments Risk Management
Investment into portfolio companies held by the Group requires
long-term commitment with no certainty of return.
The fair value of each portfolio company represents the best
estimate at a point in time and may be impaired if the business
does not perform as well as expected, directly impacting the
Group's value and profitability. This risk is mitigated as the size
of the portfolio increases. The Group performed sensitivity
analysis with regards to assumptions used in determination of fair
value of the portfolio in Note 12.
The Group also regularly monitors portfolio companies' liquidity
required for returns to occur.
(b) Credit Risk
Credit risk is managed on a Group basis. In order to minimise
this risk, the Group endeavours to only deal with companies that
are demonstrable creditworthy, and the Directors continuously
monitor the exposure. The Group's maximum exposure to credit risk
for the components of financial position at 30 November 2019 and
2018 is the carrying amount of its current trade and other
receivables as illustrated in Note 15.
The Group monitors credit risk related to performance of
portfolio companies, including considerations related to
recoverability of convertible loan notes issued. Progress is
monitored and regular discussions are held with management of
portfolio companies to assess commercial progress and financial
information provided. The Group also monitors credit risk related
to creditor amounts due from portfolio companies.
(c) Liquidity Risk Management
Cash flow forecasting is performed on a Group basis. The
Directors monitor rolling forecasts of the Group's liquidity
requirements to ensure it has sufficient cash to meet operational
needs. At the reporting date the Group held bank balances of US
$472,899. Post period end, the Group completed a post period end
placement for US$0.9m and a conditional placing for US$1.15m. All
amounts shown in the consolidated statement of financial position
under current assets and current liabilities mature for payment
within one year, with Trade and Other Receivables exceeding Trade
and Other Payables by US$ 505,706.
(d) Financial Risk Management
The Company's Directors review the financial risk of the Group.
Due to the early stage of its operations the Group has not entered
into any form of financial instruments to assist in the management
of risk during the period under review.
(e) Market Risk Management
Due to low value and number of financial transactions that
involve foreign currency and the fact that the Group has no
borrowings to manage, the Directors have not entered into any
arrangements, adopted or approved the use of derivative financial
instruments to assist in the management of the exposure of these
risks. It is their view that any exchange risks on such
transactions are negligible.
The Group also regularly monitors risk related to fair value of
financial instruments held such as convertible loan notes held.
(f) Foreign exchange risk
Foreign exchange risk arises when individual Group entities
enter into transactions denominated in a currency other than their
functional currency. The Group's policy is, where possible, to
allow Group entities to settle liabilities denominated in their
functional currency, with the cash generated from their own
operations in that currency. Where Group entities have liabilities
denominated in a currency other than their functional currency (and
have insufficient reserves of that currency to settle them), cash
already denominated in that currency will, where possible, be
transferred from elsewhere within the Group.
A sensitivity analysis has been performed to assess the exposure
of the Group to foreign exchange movements. If the exchange rate
weakened by 10 percent then the effect on the gain before tax would
decrease by US$33,177 and equity would decrease by US$37,788.
(g) Impact of the COVID-19 pandemic
The current Coronavirus epidemic may produce negative economic
activities which could reduce the company's economic performance
and the performance of its portfolio companies in ways that are
difficult to quantify at this juncture. It may cause a recession in
the markets in which the Group operates, reduce the Group's net
asset values, revenue, cash flow, access to investment capital and
other factors which could negatively impact the Group.
3.2 Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders, benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of
capital.
In order to adjust or maintain the capital structure, the Group
may adjust the level of dividends paid to its shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
borrowings. The Group has no external borrowings. This policy is
periodically reviewed by the Directors, and the Group's strategy
remains unchanged for the foreseeable future.
The capital structure of the Group consists of cash and bank
balances and equity consisting of issued share capital, reserves
and retained losses of the Group. The Directors regularly review
the capital structure of the Company and consider the cost of
capital and the associated risks with each class of capital. The
Company has no external borrowings and this has no impact on the
gearing levels of the Group as at 30 November 2019.
The Company's historic cost of capital has been the cost of
securing equity financings, which have averaged around 10%. The
company's long-term financial goal is to optimise its returns on
invested capital (ROIC) in excess of our weighted average cost of
capital (WACC) and as such create value for our shareholders. The
method the Company seeks to employ for achieving this is to utilise
its structural intellectual capital developed through its Discovery
Search Network, its Invention Evaluator service and its Vortechs
Group Service to mitigate selection bias and improve returns on
invested capital. Ultimately, management will seek to monetize
these returns with exits from its investments in portfolio
companies.
4. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. The Directors made the following judgements:
- determination as to the classification of the Group as an
investment entity as discussed in Note 2.4
- determination of operating segments as disclosed in Note 5
- determination of reliance of the Group's portfolio companies
on funding to achieve their fair values discussed in Note 12.
The Directors also make estimates and assumptions concerning the
future. The resulting accounting estimates will by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying value of the assets and liabilities
within the next financial year are detailed below.
Key Key assumption Potential Potential Note
estimate/judgment impact impact reference
area within in the for
the next longer sensitivity
financial term analysis
year
Valuation of In applying valuation techniques ü ü Note 12
unquoted equity to determine the fair value
investments of unquoted equity investments
the Group and the Company
make estimates and assumptions
regarding the future potential
of the investments. The policy
of the Group and the Company
is to value new portfolio
companies at cost of the
acquired IP or equity plus
associated expenses to facilitate
the acquisition. Existing
portfolio companies are valued
using either a market transaction
such as third-party funding
or, in the absence of a recent
market transaction, by alternative
methods and where appropriate
by an external, qualified
valuation expert.
The fair value of Guident
Limited reflects the fair
value of the Guident's net
assets. This value is primarily
based on its IP portfolio
detailed in Note 12, valued
using the royalty relief
method. The estimates used
in this valuation include
market size market penetration
used to determine projected
sales, the royalty relief
rate and the discount factor.
These estimates are key to
calculation of the net present
value of future cashflows
associated with the patent.
The fair value calculation
assumes Guident Limited obtains
sufficient funding to execute
their strategy.
The fair value of Salarius
Limited reflects the fair
value of the Salarius' net
assets. This value is primarily
based on the US patent 8,900,650
valued using the royalty
relief method. The estimates
used in this valuation include
market size market penetration
used to determine projected
sales, the royalty relief
rate and the discount factor.
These estimates are key to
calculation of the net present
value of future cashflows
associated with the patent.
The fair value calculation
assumes Salarius Limited
obtains sufficient funding
to execute their strategy.
The fair value of Lucyd Limited
reflects:
- Lucyd's ecommerce platform
valued by estimating the
net present value of future
cashflows associated with
the e-shop. Key assumptions
used in estimating future
cash flows are projected
profits including market
size and market penetration
used to determine projected
sales, and a discount factor
applied for the net present
value of future cashflows
from the platform.
* Lucyd's trademark value based on the Net book value
stated at cost.
--------------------------------------------------------------------- --------------------- --------------------- -----------------------
Useful life The Directors have considered ü ü Note 13
of Invention the useful life of the Invention
Evaluator website Evaluator website to be indefinite
because of the uniqueness
of the service it provides
and that there is no competitor
in the market in which the
Group operates who is able
to provide a similar service.
The Directors undertake an
annual review that considers
an appropriateness of the
use of an indefinite useful
life in addition to impairment
review and if required make
a provision in the financial
statements.
--------------------------------------------------------------------- --------------------- --------------------- -----------------------
Useful life The Directors have considered ü ü Note 13
of Vortechs the useful life of Vortechs
Group Group to be indefinite because
of the ongoing service revenue
that is being generated.
The business operates in
a specialised market, with
few competitors. The Directors
undertake an annual review
that considers an appropriateness
of the use of an indefinite
useful life in addition to
impairment review and if
required make a provision
in the financial statements.
--------------------------------------------------------------------- --------------------- --------------------- -----------------------
Deferred Taxes Deferred tax is the tax expected ü ü Note 22
to be payable or recoverable
on differences between the
carrying amounts of assets
and liabilities in the financial
statements and the corresponding
tax bases used in the computation
of taxable profit, and is
accounted for using the balance
sheet liability method. Deferred
tax assets are recognised
to the extent that it is
probable that taxable profits
will be available against
which deductible temporary
differences can be utilised.
The carrying amount of deferred
tax assets is reviewed at
each balance sheet date and
reduced to the extent that
it is no longer probable
that sufficient taxable profits
will be available to allow
all or part of the asset
to be recovered. Deferred
tax is calculated at the
tax rates that are expected
to apply in the period when
the liability is settled
or the asset is realised
based on tax laws and rates
that have been enacted or
substantively enacted at
the balance sheet date. The
Group did not recognize deferred
tax liability on fair value
gains associated with the
revaluation of shares in
its portfolio companies due
to availability of the substantial
shareholdings exemption.
This is considered a permanent
difference and not a temporary
difference.
--------------------------------------------------------------------- --------------------- --------------------- -----------------------
5. Segmental reporting
The Directors consider the business to have three segments for
reporting purposes under IFRS 8 which are:
-- professional services, including the provision of recruitment
services via Vortechs Group, provision of reports and services
provided to locate and transfer technologies to customers, as well
as R&D tax relief credits and provision of management services
to its portfolio companies. The activities grouped under this
segment share similar economic characteristics of provision of
intellectual property services to third party services;
-- licensing and investment activities, including acquiring
licences for technologies, portfolio company investment,
development and commercialisation. The activities share the goal of
increasing the fair value of investments made into portfolio
companies by the Group.
Segmental revenues and results
2019 Professional Licensing & TOTAL
Consolidated income Services Investment
statement US $ US $ US $
------------------------------- ---------------- ------------- ------------
Net Revenue 1,170,733 6,516,813 7,687,546
Interest Income 29,818 29,818
Cost of Sales (606,166) (606,166)
Administrative Expenses (503,840) (1,069,725) (1,573,565)
Depreciation and Amortisation (4,249) (12,749) (16,998)
Group operating profit 56,478 5,464,157 5,520,635
Profit on ordinary activities
before income tax 56,478 5,464,157 5,520,635
Profit tax expense (586) (1,759) (2,345)
Profit after tax 55,892 5,462,398 5,518,290
------------------------------- ---------------- ------------- ------------
2018 Professional Licensing TOTAL
Consolidated income Services & Investment
statement US $ US $ US $
------------------------------- ------------- --------------- ------------
Net revenue 1,040,830 5,792,264 6,833,094
Cost of sales (559,630) - (559,630)
Administrative expenses (629,483) (1,070,017) (1,699,500)
Depreciation and amortisation (4,517) (13,553) (18,070)
Group operating profit/(loss) (152,800) 4,708,694 4,555,894
Profit/(Loss) on ordinary
activities before income
tax (152,800) 4,708,694 4,555,894
Income tax expense (317) (952) (1,269)
Profit/(Loss) after
tax (153,117) 4,707,742 4,554,625
------------------------------- ------------- --------------- ------------
Segment assets and liabilities
2019 Professional Licensing TOTAL
Consolidated statement Services and Investment US $
of financial position US $ US $
------------------------- ------------- ---------------- -----------
Assets 1,614,014 21,342,921 22,956,935
Liabilities (429,255) (429,255)
Net assets 1,184,759 21,342,921 22,527,680
------------------------- ------------- ---------------- -----------
2018 Professional Licensing Other TOTAL
Consolidated statement Services Activities US $ US $
of financial position US $ US $
------------------------- ------------- ------------ ---------- -----------
Assets 1,901,195 14,386,512 133,720 16,421,427
Liabilities (214,842) (42,969) (28,646) (286,457)
Net assets 1,686,353 14,343,543 (105,074) 16,134,970
------------------------- ------------- ------------ ---------- -------------
Geographical information
2019 2018
US $ US $
---------------- ---------- ----------
United Kingdom 6,516,813 6,068,109
United States 1,200,551 764,985
---------------- ---------- ----------
Total revenue 7,717,364 6,833,094
---------------- ---------- ----------
Geographical information
2019 2018
US $ US $
--------------------------- ------------ ------------
United Kingdom
Assets 21,342,921 14,386,512
Liabilities - (42,969)
United States 1,614,014 2,034,915
Assets (429,255) (243,488)
Liabilities
--------------------------- ------------ ------------
Total Net Assets 22,527,680 16,134,970
--------------------------- ------------ ------------
The Group's operations are now strictly divided between those of
professional services or licensing and investment, therefore no
amounts are presented under "Other" compared to previous years.
6. Revenue from Services
The below table discloses disaggregated Revenue from "Services
by their nature/categories as well as timing of the revenue. Please
refer to Note 12 for disaggregation of Group's Unrealized profit on
the revaluation of investments.
Group Transferred Transferred Total Transferred Transferred Total
at a point over time 2019 at a point over time 2018
in time US$ in time US$
Major service
lines:
Sales of Invention
Evaluator 199,184 - 199,184 247,593 - 247,593
Tech transfer
recruitment services
Technology reports 454,452 - 454,452 381,380 - 381,380
Training services
Management services 45,800 - 45,800 44,000 - 44,000
R & D relief
income* - - - - 90,000 90,000
Loan convertible
interest income - -
Other - 413,278 413,278 - 181,474 181,474
- 58,019 58,019 - 94,371 94,371
- 29,818 29,818 - - -
- - - - 2,012 2,012
----------------------- ----------------------- --------------------- ----------------------- ----------------------- ---------------------
Total Revenue
from Services 699,436 501,115 1,200,551 672,973 367,857
1,040,830
* The Group received an R&D tax relief, the directors
consider this to be income.
All of the Group's major service lines are sold directly to
consumers and not through intermediaries. All revenue recognised in
the reporting period represent performance obligations satisfied in
the current period.
7. Expenses
7.1 Expenses by nature
Group 2019 2018
US $ US $
------------------------------- ---------- -----------
Depreciation of property
plant and equipment 16,998 18,070
Research and development
expenses 173,947 204,968
Other administration expenses 1,463,289 1,564,320
Foreign exchange movements (63,671) (69,788)
-------------------------------- ---------- -----------
Total expenses 1,590,563 1,717,570
-------------------------------- ---------- -------------
Included in the Other administration expenses is the amount of
US$ 65,848 related to payments under operating lease for the office
rental agreement also referenced in Note 25.
7.2 Auditor remuneration
Group 2019 2018
US $ US $
-------------------------------------------- ------------ -----------------------
Fees payable to the Group's auditor
and its associated for the audit
of the Group and Company financial
statements 95,313 77,912
Fees payable to the Company's auditor
and its associates for other
* The audit of company's subsidiaries 15,920 16,277
111,233 94,189
------------------------------------------------ -------- --------------
8. Employees
8.1 Directors' emoluments
Group 2019 2018
US $ US $
---------------------- --------------- ---------------
Directors emoluments 264,799 264,938
Total 264,799 264,938
----------------------- --------------- ---------------
The highest paid Director received a salary of $187,760 (2018:
$191,865) and benefits of $21,050 (2018: $15,253). The highest paid
Director received a bonus of $0 (2018: $0). The highest paid
Director did not exercise any share options or receive any shares
from the Company during the current year. No termination benefits,
post-employment benefits were provided to Directors. Total of
short-term benefits in kind of US$21,050 were provided during the
year. The amounts in the table above do not include Employers NI in
the amount of US$14,447.
Key management personnel (including Directors and Group
Financial Controller) received salary of US$368,042, excluding
Stock Base Compensation disclosed in Directors Remuneration Report.
Please also refer to Director's Report.
8.2 Employee benefit expense
Group 2019 2018
US $ US $
-------------------------------------------- -------- --------
Wages and salaries including restructuring
costs and other termination benefits 275,765 296,751
Social security costs 40,644 43,453
Share options granted to directors
and employees 20,876 32,775
Total 337,285 372,979
--------------------------------------------- -------- --------
8.3 Average number of people employed
Group 2019 2018
------------------------------------- ----- -----
Average number of people (including
executive directors) employed
Operations 4 4
Management 2 2
Total average headcount 6 6
-------------------------------------- ----- -----
Average number of employees with the Company in 2019 and 2019
was two (Management).
To enhance flexibility and improve cost control, the Group
utilizes consultants for scientific review, administrative and
operations support, software development and other
knowledge-intensive services.
9. Income tax expense
Group 2019 2018
US $ US $
----------------------------------------------------- ----------------- ------------
Current tax
Current tax on profits for the year 2,345 1,269
Total current tax 2,345 1,269
------------------------------------------------------ ----------------- ------------
Income tax expense 2,345 1,269
------------------------------------------------------ ----------------- ------------
Group 2019 2018
US $ US $
----------------------------------------------------- ----------------- ------------
Profit before tax 5,520,635 4,555,894
------------------------------------------------------ ----------------- ------------
Tax calculated at domestic tax rates
applicable to profits 1,048,921 774,502
Tax effects of:
* Expenses not deductible for tax purposes 19,155 15,444
* Income not taxable (1,238,195) (1,057,017)
* Capital allowances in excess of depreciation 3,230 2,150
* Unrelieved tax losses and other deductions 169,235 266,190
Total corporation tax 2,345 1,269
------------------------------------------------------ ----------------- ------------
The weighted average applicable tax rate was 19% (2018: 17%).
The Group applied 17% tax rate in FY 2018 based on expectation of
corporation tax rate adjustment that did not materialise.
Unused tax losses for which no deferred tax assets have been
recognised is attributable to the uncertainty over the
recoverability of those losses through future profits.
10. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of Ordinary Shares outstanding during the period.
Diluted earnings per share is calculated by dividing the
earnings attributable to ordinary shareholders by the sum of
weighted average number of (1) Ordinary Shares outstanding during
the period and (2) any dilutive potential Ordinary Shares
outstanding at 30 November 2019.
2019 2018
Earnings attributable to equity holders
of the Group (US$) 5,518,290 4,554,625
Weighted average number of Ordinary
Shares in issue:
Basic 58,010,322 44,100,930
Diluted 58,918,289 44,120,817
Basic earning per share 0.095 0.103
Diluted earning per share 0.095 0.103
The effect of 2.9m share options granted in August 2019
contributed to the difference between basic weighted average number
of shares and diluted weighted average number of shares.
Post period end, the Group completed a placement of 14,800,000
new ordinary shares and a conditional placement of 9,250,00 new
ordinary shares.
11. Investments in subsidiaries
Company Shares in Loans to Total
subsidiaries subsidiaries US $
US$ US$
------------------------------------------ -------------- -------------- -----------------
Cost and net book value
As at 1 December 2018 79,265 1,875,748 1,955,013
Additions during the year - - -
Disposal during the year - - -
Foreign currency translation differences 161 3,829 3,990
------------------------------------------ -------------- -------------- -----------------
Balance at 30 November 2019 79,426 1,879,577 1,959,003
------------------------------------------ -------------- -------------- -----------------
Subsidiaries name Proportion Nature Capital Net Profit/
(consolidated) of ordinary of business and reserves (Loss)
shares directly
held
--------------------------- ----------------- ----------------- ----------------------
Direct
Provision
of Intellectual
Tekcapital Europe Limited property
England research
and Wales 100% services 16,835,932 5,949,752
Provision
of Intellectual
property
research
Tekcapital LLC USA 100% services (3,167,902) (373,561)
Indirect
The following are directly owed by Tekcapital Europe Limited
England Provider of
Lucyd Limited and Wales 100.00% high-tech eyewear (4,329,230) (258,466)
Developer of
England low sodium salt
Salarius Limited and Wales 91.7% and snack foods (545,780) (453,039)
Developer of
England autonomous vehicle
Guident Limited and Wales 100.00% valet system (276,465) (192,687)
Developer for
Smart Food Tek England baked food coating
Limited and Wales 100.00% to reduce fat 35,589 (3,271)
* As at the year end, the Company has no interest in the
ownership of any other entities or exerts any significant influence
over or provides funding which constitutes an "unconsolidated
structured entity".
All UK subsidiaries are exempt from the requirement to file
audited accounts by virtue of section 479A of the Companies Act
2006.
Tekcapital Europe Ltd (registered address 12 New Fetter Lane,
London, United Kingdom, EC4A 1JP) and Tekcapital LLC (registered
address 12000 Biscayne Boulevard, Suite 222, Miami, Florida, 33133,
United States) are consolidated by Tekcapital plc because they
continue to provide advisory services in IP search and technology
transfer.
All other entities are measured at fair value through profit and
loss based in IFRS 10 as referenced in Note 2.4. The Group provides
management service support to Lucyd Limited, Salarius Limited and
Guident Limited, as well as has provided working capital assistance
to Salarius Limited through convertible loan note financing (see
also Note 15). The Group also assists the entities with their
fundraising activities.
Registered office of all four subsidiaries owned by Tekcapital
Europe Limited: Acre House, 11-15 William Road, London, England,
NW1 3ER
12. Financial Assets at Fair Value through Profit and Loss
Group's investments in portfolio companies in the years ended 30
November 2019 and 30 November 2018 are listed below and classified
as equity instruments. The principal place of business for
portfolio companies listed below is England and Wales.
Group Proportion Additions Disposal FX reval Fair Value 30 Nov
of ordinary change 2019
shares 1 Dec
held 2018
US $ US $ US $ US $ US $ US $
Guident Limited 100.00% 8,545,103 - - - 6,981,092 15,526,195
Lucyd Limited 100.00% 3,040,616 - - 500 (1,912,094) 1,129,022
Salarius Limited 97.50% 923,830 633 - 22 908,941 1,833,426
Belluscura
Limited 18.90% 1,126,315 111,177 - 2,338 564,291 1,804,121
Smart Food Tek
Limited 100.00% 43,073 - - 89 - 43,162
eSoma Limited 100.00% 24,750 - - - (24,750) -
Non Invasive
Glucose Tek
Limited 100.00% 667 - - - (667) -
Total Balance 13,704,354 111,810 - 2,949 6,516,813 20,335,925
----------------- ------------- ----------- ---------- --------- --------- ------------------ -------------
Company Proportion Additions Disposal FX reval Fair 30 Nov
of ordinary Value 2019
shares 1 Dec change
held 2018
US $ US $ US $ US $ US $
Belluscura
Limited 18.90% 1,126,315 111,177 - 2,338 564,291 1,804,121
Total
Balance 1,126,315 111,177 - 2,338 564,291 1,804,121
------------ ------------- ------------ ----------- --------- --------- ------------ --------------
30
November
2018:
Group Proportion Additions Disposal FX reval Fair Value 30 Nov
of ordinary change 2018
shares 1 Dec
held 2017
US $ US $ US $ US $ US $
Guident
Limited 100.00% - 23,494 - (7) 8,521,616 8,545,103
Lucyd
Limited 100.00% 6,023,954 15,760 (16,757) (2,982,341) 3,040,616
Salarius
Limited 100.00% 15,128 27,466 - (708) 881,944 923,830
Belluscura
Limited 29.22% 981,762 560,090 - (60,839) (354,698) 1,126,315
Smart Food
Tek
Limited 100.00% 44,167 972 - (2,066) - 43,073
eSoma
Limited 100.00% 10,983 13,768 - (1) - 24,750
Non
Invasive
GlucoseTek
Limited 100.00% 24,199 425 - (981) (22,976) 667
eGravitas
Limited 100.00% 154,535 43,955 - (5,807) (192,683) -
Frigidus
Limited 100.00% 52,968 7,483 - (1,853) (58,598) -
Total
Balance 7,307,696 693,413 - (89,019) 5,792,264 13,704,354
------------ ------------- ------------ ----------- --------- --------- ------------ ------------
Company Proportion Additions Disposal FX reval Fair Value 30 Nov
of ordinary change 2018
shares 1 Dec
held 2017
US $ US $ US $ US $ US $
Belluscura Limited 29.22% 981,762 560,090 (60,839) 354,698 1,126,315
Total Balance 981,762 560,090 - (60,839) 354,698 1,126,315
-------------------- ------------- -------- ---------- --------- --------- ----------- ----------
Total fair value gain of $6.5m for the year reflects uplift in
value of shares of Guident and Salarius, offset mostly by reduction
in valuation of Lucyd Limited. Considering early stage of
commercialisation, fair value of remaining portfolio companies was
recorded based on the cost of acquired IP, as their carrying
amounts represent a reasonable approximation of fair value.
The valuation techniques used fall under, Level 2 - Observable
techniques, other than quoted prices, and Level 3- Other techniques
as defined by IFRS 13. These techniques were deemed to be the best
evidence of fair values considering early stage of portfolio
companies. There has been no transfer between levels during the
period. Fair value measurement hierarchy for financial assets as at
30 November 2019 with comparative amounts as of 30 November
2018:
Date of Valuation Significant Significant
observable unobservable
inputs (Level inputs (Level
Total 2) 3)
US $ US $ US $
Guident and others 30 November 2019 18,531,804 18,531,804
Belluscura Limited 30 November 2019 1,804,121 1,804,121
-------------------- ------------------- ----------- --------------- ---------------
Total Balance 30 November 2019 20,335,925 1,804,121 18,531,804
-------------------- ------------------- ----------- --------------- ---------------
Guident and others 30 November 2018 12,578,039 12,578,039
Belluscura Limited 30 November 2018 1,126,315 1,126,315
Total Balance 13,704,354 1,126,315 12,578,039
----------------------------------------- ----------- --------------- ---------------
Guident ($7.0m gain)
An external valuation by an independent patent valuation expert
was prepared for Guident' s IP portfolio including:
1. US patent 9,429, 943 ("FAMU 943")
2. International Patent Filing WO2019/147569: Visual Sensor
Fusion and Data Sharing Across Connected Vehicles (MSU 569) -added
this period
3. US Patent No. 9,964,948 (FIU 948) - added this reporting
period
The total fair value of $15.5m reflects the fair value of
Guident' s net assets as determined by:
-- Valuation of FAMU 943 of US$16.2m (2018:US$10.3m) conducted
by an external, qualified valuation expert using the Income
Approach, Royalty Relief Method. Following valuation inputs were
applied by the valuation expert:
- Total US market size of US$35b for autonomous vehicles and
drones (as the patent applies to both) for the 11 years period
ended 30 December 2033. 1% market penetration of Guident' s patent
starting in 2022 with annual increase of 1% leading to a 12% market
penetration by 2033, resulting in projected US$3b in sales of
drones/vehicles underlying licensing revenue between 2022 and 2033.
This market penetration assumption is based on a number of
factors:
o Broad protection and claims included in the IP
o The protection given to the product by its US patent, which
effectively gives Guident a barrier to entry in the US through
2033
o The strength and experience of the management team, whose
proven expertise is in the exact areas required to bring the
product to market and build the brand;
o There are no foreseeable software development barriers in the
commercialisation process o Other foreseeable challenges for
directors to deliver successful commercialisation appear to be well
within the abilities of directors to handle.
o Innovative nature of Guident's IP and the fact that the AV
market is dependent on innovators.
o Improving regulatory environment with more states in the
United States legalizing autonomous vehicles operation in 2019
including large states such as Florida and California.
The increase in FV of FAMU 943 compared to 2018 was driven by
reduction in discount factor from 18% to 17% and increase in in the
royalty rate from 5.375% to 6%.
-- Valuation of MSU 569 of US$2.8m conducted by an external,
qualified valuation expert using the Income Approach, Royalty
Relief Method. Following valuation inputs were applied by the
valuation expert:
- In January 2024, Guident also expects to introduce an
additional, complementary component featuring the MSU 569
technology (Sensory Fusion Component). This component would enable
sensory data sharing between the vehicles, providing for new safety
standard. Guident expects the Sensor Fusion Component to be sold to
customers of the Standard Initial Component when 5G is available so
as to further generate an additional $500 of revenue for each sale
of the Sensor Fusion.
For the estimate of the US market derived revenue, using the
units of underlying Autonomous Vehicles from FAMU 943, the
management assumed 10% of FAMU customers would choose to pay for
this additional safety improving capability, starting with 10% of
them in 2024 with the share growing to 40% in 2027.
For the estimate of the international market derived revenue,
the management applied comparative share of countries included in
the international filing based on authoritative literature from the
Allied Market Research report.
These market penetration assumptions are based on assumptions
similar to those considered for the patent FAMU 943.
-- Valuation of FIU 948 of US$0.3m conducted by an external,
qualified valuation expert using the Income Approach, Royalty
Relief Method. Following valuation inputs were applied by the
valuation expert:
- US sidewalk delivery drone market size of US$1.27b between
2022 and 2036. 1% market penetration starting in2022 with annual
increase leading to 25% in 2027. This market penetration rate
assumptions is based on factors analogous to those listed for FAMU
943, with additional legislative/regulatory requirements included
as well. Recent regulatory developments in United States make it
mandatory to have back-up human control operators taking control of
an AV in the event of an accident or mishap,
-- Assumptions applied to valuations of all three patents above:
- Total 6% license royalty rate, with 3% royalty attributable to
the university and 3% comprising Guident's licencing revenue based
on comparable market transactions, with the exception of 30% for
FIU 48 (whereby 2.5% is due to the university)
- Corporate income tax rate of 19% applied to projected
licensing costs saved 17% discount rate used to discount proceeds
as determined by opportunity cost (10%), inflation rate (2%) and
technology risk (5%)
- The deferred tax liability of (US$ 3.6m) recorded by Guident
based on UK corporate tax rate of 19% applied to the fair value
gain associated with the patent
- Net book value of other assets and liabilities of <(US$0.2m).
- Guident Ltd obtains sufficient funding to execute their strategy.
Salarius (US$ 0.9m gain)
An external valuation by an independent patent valuation expert
was prepared for US patent 8,900,650.
The fair value of US$ 1.8m recorded by the Group reflects the
fair value of Group's 97.5% stake in Salarius' net assets valued at
US$ 1.9m as determined by:
-- Valuation of US patent 8,900,650 of US$ 3m (2018: US$ 1.1m)
conducted by an external, qualified valuation expert using the
Income Approach, Royalty Relief Method. Following valuation inputs
were applied by the valuation expert:
- Sales of low sodium salt to snack food manufacturers ("B2B")
of US$ 44m for the 10-year period ended 2030. Market penetration of
0.5% in 2020 growing to 10% in 2030. These market penetration
assumptions are based on a number of factors. This market
penetration assumption is based on a number of factors:
o Microsalt is a unique product substantially in advance of
alternative, developed, and tested in terms of market acceptability
and ready to market;
o The protection given to the product by its US patent, which
effectively gives Salarius a barrier to entry in the US for 11 more
years;
o The strength and experience of the management team, whose
proven expertise is in the exact areas required to bring the
product to market and build the brand;
o There are no foreseeable manufacturing barriers in the
commercialisation process. Manufacturing has been established and
outsourced in 2019;
o Post period end, the company secured two food ingredient
brokerage agreements for sales of Microsalt covering multiple
geographical areas of the United States; First customers were
secured
o Other foreseeable challenges for management to deliver
successful commercialisation appear to be well within the abilities
of management to handle.
- Sales of salty snacks ("B2C") estimated at $106m for the 10
year period ended in 2030. The projections assume Salarius chips
being sold in 300 individual stores by the end of 2020 growing
annually to the total of 16,400. This assumption is based on
factors analogous to the B2B segment, with the addition of
following factors:
o Post year-end, the company secured distribution agreement with
one of North America's largest natural food distributors for the
launch of SaltMe snacks in all 4 flavors; the distributor supplies
thousands of stores on a daily basis
o Post year-end, the company secured sales contract brokerage
agreement for sales of SaltMe snacks in all 4 flavors;
- Licence royalty rate of 8.2% with 3% royalty attributable to
the university and 5.2% comprising Salarius' licencing revenue
based on comparable market transactions
- 12% discount rate used to discount proceeds as determined by
opportunity cost (10%) and inflation rate (2%). Technology risk was
determined at 0%, as the patent describes easily manufactured salt
compositions, maybe manufactured in many production facilities
without extensive modifications. The end product has already been
manufactured and used to conduct consumer acceptance tests. Sales
and distribution channels have been established.
The increase in the fair value of US patent 8,900,650 was driven
by addition of B2C sales projections in the forecast used in the
valuation, increase in license royalty rate from 7.8% to 8.2% as
well as reduction in discount rate used from 13% to 12%.
-- The deferred tax liability of US$ 0.5m recorded by Salarius
based on UK corporate tax rate of 19% applied to the fair value
gain associated with the patent
-- Net book value of liquid assets, creditors and debtors of < $0.6m.
The value of the IP is dependent on Salarius Ltd obtaining
sufficient funding to execute their strategy.
Lucyd Ltd (US $1.9m loss)
The fair value of US$ 1.1m reflects the fair value of Lucyd's
net asset as determined by:
-- Valuation of Lucyd's significant assets performed by an
external, qualified valuation expert:
- Lucyd's e-commerce platform selling advanced and fashionable
eyewear valued at US$ 1.2m as determined by applying an 18%
discount rate on $2.2m of gross profit projected through 2023. The
17% discount rate was calculated as a total of 10% opportunity
cost, 2% inflation rate and 3% technology risk. The projections of
gross profit were reduced compared to 30 November 2018 valuation
considering more R&D and product development focus in the past
year.
- Lucyd's trademarks valued at US$ 0.2m, assessed using Cost
Approach Reproduction Method. Through cost analysis, the fair value
approximates cost recognized in Lucyd's balance sheet
-- The deferred tax liability of US$ 0.3m recorded by Lucyd
based on UK corporate tax rate of 19% applied to the fair value
gain associated with the ecommerce platform.
Lucyd will be re-valuated in subsequent reporting periods. The
future value of Lucyd could fluctuate significantly, either up or
down, based on the performance of the business and the achievement
of product development milestones.
Belluscura (US $0.6m gain)
The fair value of the holding increased by US$ 0.6m due to the
most recent private placement held at 15 pence per share in April
2019, compared to preceding placement at 10 pence per share in
December 2018 used by the Group to value its holding in Belluscura
as of 30 November 2018. The Group contributed US$ 110,000 during
this placement.
eSoma (US$ 0.02m loss)
The Group closed eSoma Limited resulting in recognition of a US$
0.02m fair value loss.
Smart Food Tek (Nil Gain / Nil loss)
The Group exercised judgment in determination of sufficiency of
portfolio companies' cash reserves, forecasts and ability to raise
money to achieve their fair values. Directors reviewed and
questioned the forecasts used, standing liquidity and working
capital balances, as well as discussed capability and plans to
raise money in the future with directors or management of portfolio
companies. Based on the review, the Group made a positive
determination as to portfolio companies' likely ability to achieve
fair values considering liquidity factors.
Description of significant unobservable inputs to valuation:
The significant unobservable inputs used in the fair value
measurement categorised within Level 3 of the fair value hierarchy,
together with a quantitative sensitivity analysis as at 30 November
2019 are shown as below. No sensitivities have been included on the
other investments not listed in the table below as their fair value
equates to cost.
Investment Valuation Significant Estimate Sensitivity of the input
Technique unobservable applied to fair value
input
Lucyd Income Discount to 17% 5% increase in the discount
Approach Future Cash factor would decrease
Flows from the Lucyd valuation
Eshop Sales by $123,000, a 5% decrease
in the discount factor
would increase the Lucyd
valuation by $149,000
Eshop adjusted $1.9m A 20% increase in net
net profit profit would increase
through December the Lucyd valuation
by $239,000. A 20% decrease
in gross profit would
decrease the Lucyd valuation
by 239,000.
Guident Income Discount to 17% 2% increase in the discount
Approach Future Cash factor would decrease
Royalty Flows from the Guident valuation
Relief licensing by $2,300,000, a 2%
Method decrease in the discount
factor would increase
the value by $3,000,000
Royalty Relief 6%(FAMU, A 1% increase in the
Rate MSU US, royalty relief rate
MSU OUS) would increase the Guident
and 30% valuation by $5,300,000,
(FIU 948) a 1% decrease in the
royalty relief rate
would decrease the valuation
by $4,700,000
Gross licensing $3.0b (FAMU), A 20% increase in the
proceeds & $286m (MSU gross licensing proceeds
gross revenue US), $189m and gross revenue would
(MSU OUS), increase the Guident
$8.8m (FIU948) valuation by $3,500,000.
A 20% decrease would
decrease the Guident
valuation by $2,800,000.
Salarius Income Discount to 12% 5% increase in the discount
Approach Future Cash factor would decrease
Royalty Flows from the Salarius valuation
Relief licensing by $644,000, a 5% decrease
Method in the discount factor
would increase the value
by $1,004,000
Licence Royalty 8.2% A 2% increase in the
Rate royalty rate would increase
the Salarius valuation
by $918,000 a 2% decrease
in the royalty rate
would decrease the Salarius
valuation by $918,000.
Projected $150m A 20% increase in the
sales projected sales would
increase the Salarius
valuation by $477,000.
A 20% decrease in the
projected sales would
decrease the Salarius
valuation by $477,000.
13. Intangible assets
Group Vortechs Website development Invention Total
Group US $ Evaluator US $
US $ US $
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2018 500,000 28,121 338,769 866,890
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2019 500,000 28,121 338,770 866,891
-------------------------- --------- -------------------- ----------- ---------
Accumulated amortisation
and impairment
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2018 - (28,121) - (28,121)
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2019 - (28,121) - (28,121)
-------------------------- --------- -------------------- ----------- ---------
Net book value
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2019 500,000 - 338,770 338,770
-------------------------- --------- -------------------- ----------- ---------
At 30 November 2018 500,000 - 338,769 338,769
-------------------------- --------- -------------------- ----------- ---------
The intangible assets presented above are included within
Professional Services segment under Note 5 disclosure. Costs of the
Group's website development have been fully amortized as of 30
November 2018.
Under IAS38, the Group's Invention Evaluator is regarded by the
Directors as being an intangible asset with an indefinite useful
life. The Directors believe that the asset is unique in that no
competitor offering currently exists, the service is already proven
to have appealed globally to many types of clients including
Fortune 100 companies, there is no expectation of obsolescence in
the foreseeable future, and the service from the use of the asset
generates sufficient ongoing revenue streams. The Directors have
carried out an impairment review and believe that the value in use
is significantly greater than book value.
The Directors have considered the recoverable amount by
assessing the value in use by considering the future cash flow
projections of the revenue generated by the Invention Evaluator
intangible, cash flows were based on the past revenue generation.
The projections were assessed for a three year period in order to
determine no impairment. The projections are based off revenue
generation at US$300k less cost of sales at the 2018 gross profit
margin, no growth has been applied forecasts. A discount factor at
10% (consistent with Group's cost of capital) was used to determine
no impairment. The revenue projections are based on company's
historical performance and existing pipeline of sales orders. The
Invention Evaluator intangible's recoverable amount exceeds its
carrying amount by US$ 34,257.
Under IAS38, the Group's Vortechs asset is regarded by the
Directors as being an intangible asset with an indefinite useful
life. The Directors believe that this asset is unique as it
operates in a niche market, it generates an ongoing revenue stream,
and there is no expectation of obsolescence. This asset meets the
requirements of IAS38 as it is:
- Separately identifiable
- The Group controls this asset
- Future economic benefits flow to the Group in the form of
service revenues from this asset
- The cost of this asset can be measured reliably
The Directors have carried out an impairment review and consider
the value in use to be greater than the book value.
The Directors have considered the recoverable amount by
assessing the value in use by considering the future cash flow
projections of the revenue generated by the Vortechs intangible,
cash flows were based on the past revenue generation plus expected
growth. The projections were assessed over a period in excess of 5
years on the basis the directors consider the projections can be
reasonably forecast. The projections are based off revenue
generation at US$400,000 per annum for 2020 and 2021 (approximating
actual revenue from 2018), reducing to US$ 300,000 for 2022, US$
350,000 for 2023 and back to US$ 400,000 until 2028. The cost of
sales element for 2020 and 2021 was determined at 90% in line with
the agreement, thereafter it drops to US$ 120,000 p.a. plus
inflation at 5%. The reduction in cost of sale is due to the end of
a term in the purchase agreement. A discount factor at 10%
(consistent with Group's cost of capital) was used to determine no
impairment. Vortech's intangible's recoverable amount exceeds its
carrying amount by US$ 518,258.
The tech-transfer recruiting is viewed by directors as permanent
part of the Group's business and its offering. This together with
the high turnover in this industry leading to continuous hiring
needs leads Directors to apply projections of over 5 years in the
impairment determination.
14. Fixed Assets
Group Leasehold Office Equipment Computer Total
Improvements US $ Equipment US $
US$ US $
--------------------------- -------------- ----------------- ----------- ---------
Closing cost 30 November
2017 - 2,042 17,306 19,348
--------------------------- -------------- ----------------- ----------- ---------
Exchange differences - 3 34 37
Additions 13,775 22,241 9,825 45,841
Disposals - (309) (309)
--------------------------- -------------- ----------------- ----------- ---------
Closing cost 30 November
2018 13,775 24,286 26,856 64,917
--------------------------- -------------- ----------------- ----------- ---------
Exchange differences 14 14
Additions - - 862 862
Closing cost 30 November
2019 13,775 24,286 27,732 65,793
--------------------------- -------------- ----------------- ----------- ---------
Accumulated depreciation
and impairment
At 30 November 2017 - (1,284) (12,059) (13,344)
--------------------------- -------------- ----------------- ----------- ---------
Depreciation charge (6,888) (4,860) (6,631) (18,379)
Disposals - - 308 308
Exchange differences - 2 (16) (14)
--------------------------- -------------- ----------------- ----------- ---------
At 30 November 2018 (6,888) (6,142) (18,398) (31,428)
--------------------------- -------------- ----------------- ----------- ---------
Depreciation charge (6,888) (4,839) (5,271) (16,998)
Exchange differences - (14) (14)
--------------------------- -------------- ----------------- ----------- ---------
At 30 November 2019 (13,775) (10,981) (23,683) (48,440)
--------------------------- -------------- ----------------- ----------- ---------
Closing net book value
--------------------------- -------------- ----------------- ----------- ---------
At 30 November 2018 6,888 18,143 8,458 33,489
--------------------------- -------------- ----------------- ----------- ---------
At 30 November 2019 - 13,304 4,049 17,353
--------------------------- -------------- ----------------- ----------- ---------
15. Trade and other receivables
Group 2019 2018
US $ US $
-------------------------------------- ---- --------- ---------
Trade receivables 144,944 59,655
Less provision for impairment of - -
trade receivables
-------------------------------------- ---- --------- ---------
Trade receivables - net 144,944 59,655
VAT recoverable 14,333 40,329
Prepayments and debtors 125,715 97,769
Receivables from related parties 530,874 231,620
-------------------------------------------- --------- ---------
Total trade and other receivables 815,866 429,373
-------------------------------------------- --------- ---------
Non-current: convertible loan notes* 476,122 250,000
-------------------------------------------- --------- ---------
Company 2019 201
US $ US $
-------------------------------------- ---------- ----------
Receivables from Group companies 2,277,783 1,697,545
VAT 9,025 30,057
Prepayments 34,923 24,783
--------------------------------------- ---------- ----------
Total trade and other receivables 2,321,731 1,752,385
--------------------------------------- ---------- ----------
Non-current: convertible loans notes 476,122 250,000
--------------------------------------- ---------- ----------
The fair value of trade and other receivables are not materially
different to those disclosed above. The Group's exposure to credit
risk related to trade receivables is detailed in Note 3 to the
consolidated financial statements.
*The Group and the Company hold three convertible loans issued
by its portfolio company, Salarius Ltd for the total of US$
600,000, of which US$440,000 was drawn. The notes were issued at
10% coupon rate and included option to convert the debt into shares
at market price (no discount against future equity placements
offered). Market rate of 10% was applied in determination of the
present value of cash flows related to both notes. The US$ 50,000
note originated in September 2018 is payable on demand, however
Directors do not anticipate the repayment before or after November
2020. The US$ 300,000 note originated in October 2018 is payable by
Salarius on 29 October 2021 (term extended during the period) or
can be converted into Salarius' equity upon occurrence of certain
conversion events. The US$ 250,000 note originated in August 2019
is payable on 01 August 2021 or can be converted into Salarius'
equity upon occurrence of certain conversion events.
The Group also held a convertible loan issued by Guident Ltd in
December 2018 for the total of US$300,000, issued at 10% coupon
rate including option to convert the debt into shares at market
price (no discount against future equity placements offered). The
note can be converted into Guident's equity upon occurrence of
certain conversion events.
The Group had outstanding receivables from its portfolio
companies as at 30 November 2019 in the amount of: - US$130,912 due
from Lucyd Ltd
- US$141,849 due from Salarius Ltd
- US$254,667 due from Guident Ltd
The Company recorded a historical US$2,500,000 provision against
its receivable from one its subsidiaries, Tekcapital LLC.
16. Cash and cash equivalents
Group 2019 2018
US $ US $
--------------------------------- -------- ----------
Cash at bank and in hand 472,899 1,165,442
Total cash and cash equivalents 472,899 1,165,442
---------------------------------- -------- ----------
Company 2019 2018
US $ US $
--------------------------------- -------- --------
Cash at bank and in hand 112,114 698,694
Total cash and cash equivalents 112,114 698,694
---------------------------------- -------- --------
17. Categories of financial assets and financial liabilities
Group 2019 2018
US $ US $
---------------------------------------- ----------- -----------
Financial assets
Financial assets at fair value through
profit and loss 20,335,925 13,704,354
Loans and receivables at amortised
cost 1,291,988 679,389
Cash and equivalents 472,899 1,165,442
22,100,812 15,549,185
---------------------------------------- ----------- -----------
Financial Liabilities
Trade and other payables at amortised
cost 303,847 275,601
----------------------------------------- ----------- -----------
Company 2019 2018
US $ US $
---------------------------------------- ----------- -----------
Financial assets
Financial assets at fair value through
profit and loss 1,804,120 1,126,315
Loans and receivables at amortised
cost 2,797,853 1,997,602
Cash and equivalents 112,114 698,694
Available for sale 1,959,003 1,955,013
6,673,090 5,777,624
---------------------------------------- ----------- -----------
Financial liabilities
Trade and other payables at amortised
cost 484,375 470,809
----------------------------------------- ----------- -----------
18. Share capital and premium
Share capital
Group and Company Number Ordinary Total
of shares Shares US US $
$
--------------------------------- ----------- ----------- --------
Issued and fully paid up
At 30 November 2017 42,654,707 264,221 264,221
--------------------------------- ----------- ----------- --------
Shares issued in further public
offering 11,698,335 61,815 61,815
At 30 November 2018 54,353,042 326,036 326,036
Shares issued in further public
offering 9,375,000 46,948 46,948
At 30 November 2019 63,728,04 372,984 372,984
--------------------------------- ----------- ----------- --------
The shares have full voting, dividend and capital distribution
(including on winding up) rights; they do not confer any rights of
redemption. The following shares were issued during the year: July
2019 - 9,375,000 shares were issued in the placing of new ordinary
shares at GBP0.08p. Total proceeds of US$938,966 were netted
against cost of raising finance in the amount of US$117,277.
The Company has authorised share capital of 81,529,563, with a
nominal value of GBP0.004. Of these shares, 63,728,042 were issued
and fully paid up.
Share premium
Group and Company Share premium Total
US $ US $
--------------------------------- ---------------- -----------
At 30 November 2017 9,271,098 9,271,098
---------------------------------- ---------------- -----------
Shares issued in further public
offering 1,097,216 1,097,216
Cost of shares issued (149,509) (149,509)
---------------------------------- ---------------- -----------
As at 30 November 2018 10,218,805 10,218,805
---------------------------------- ---------------- -----------
Shares issued in further public
offering 892,018 892,018
Cost of shares issued (117,277) (117,277)
---------------------------------- ---------------- -----------
As at 30 November 2019 10,993,546 10,993,546
---------------------------------- ---------------- -----------
19. Reserves
Profit and Loss Account
Group Company
Profit and Profit and
Loss Account Loss Account
US $ US $
---------------------------- -------------- ---------------
At 30 November 2017 931,826 (4,241,264)
----------------------------- -------------- ---------------
Profit/(loss) for the year 4,554,625 (920,213)
Share based payments 30,204 30,204
At 30 November 2018 5,516,655 (5,131,273)
----------------------------- -------------- ---------------
Profit/(loss) for the year 5,518,290 30,668
Share based payments 20,876 20,876
At 30 November 2019 11,055,821 (5,079,729)
----------------------------- -------------- ---------------
Merger reserve
Group Merger reserve
US $
--------------------- ---------------
At 30 November 2018 (72,169)
----------------------- ---------------
At 30 November 2019 (72,169)
----------------------- ---------------
Translation reserve
Group Company
Translation Translation
reserve reserve
US $ US $
----------------------- ------------- -------------
At 30 November 2017 280,985 77,277
Foreign exchange loss (135,342) (179,246)
------------------------ ------------- -------------
At 30 November 2018 145,643 (101,969)
------------------------ ------------- -------------
Foreign exchange gain 31,855 3,883
At 30 November 2019 177,498 (98,086)
------------------------ ------------- -------------
20. Trade and other payables
Group 2019 2018
US $ US $
--------------------------------- -------- --------
Trade creditors 116,936 91,303
Social security and other taxes 6,089 10,357
Accruals and other creditors 187,135 184,297
---------------------------------- -------- --------
310,160 285,957
--------------------------------- -------- --------
Company 2019 2018
US $ US $
------------------------------------- ---------------- --------
Accruals and other creditors 362,863 357,529
Accruals, deferred income and other
creditors 121,512 113,279
-------------------------------------- ---------------- --------
484,375 470,808
------------------------------------- ---------------- --------
The fair values of trade and other payables are not materially
different to those disclosed above.
The Group's exposure to currency and liquidity risk related to
trade and other payables is detailed in note 3 to the accounts.
21. Deferred Revenue
The Group received a payment in the amount of US$118,595 for
Invention Evaluator reports to be delivered after 30 November 2019,
therefore the amount was recognized as deferred revenue.
22. Deferred income tax
Unused tax losses for which no deferred tax assets have been
recognised is attributable to the uncertainty over the
recoverability of those losses through future profits. A tax rate
of 19% has been used to calculate the potential deferred tax.
Group Group Company Company
2019 2018 2019 2018
Deferred tax US $ US $ US $ US $
-------------------------------- ------------ ------------ ---------- ----------
Accelerated capital allowances (3,230) (3,072) - -
Short term timing difference - - - -
Tax losses (1,791,410) (1,127,294) (435,092) (435,092)
Unprovided deferred tax asset 1,794,639 1,130,366 435,092 435,092
-------------------------------- ------------ ------------ ---------- ----------
- - - -
-------------------------------- ------------ ------------ ---------- ----------
23. Dividends
No dividend has been recommended for the year ended 30 November
2019 (2018: Nil) and no dividend was paid during the year (2018:
Nil).
24. Cash used from operations
Group 2019 2018
US $ US $
------------------------------------------------------------- ---- ---------------- -------------
Profit before income tax 5,520,635 4,555,894
Adjustments for
* Depreciation 16,998 18,070
* Share based payment expense 20,876 30,204
* Movement in foreign exchange 33,776 (11,127)
(612,615) 284,536
* Movement in trade and other receivables (6,519,761) (5,792,264)
118,595 -
* Financial assets at fair value through the profit or
loss
* Deferred revenue movement
* Trade and other payables 24,202 48,310
------------------------------------------------------------------- ---------------- -------------
Cash used (1,397,294) (866,377)
------------------------------------------------------------------- ---------------- -------------
25. Commitments
Capital commitments
The Group entered into convertible loan note agreement in
September and October 2018 with Salarius Ltd for the total amount
of US $ 350,000 (US$ 300,000 drawn by November 2019). Third
convertible loan note agreement was signed in August 2019 for the
total amount of US$250,000. US$140,000 was provided as part of that
agreement by the Group by November 2019.
Operating lease commitments
The Group's subsidiaries have various office rental
agreements.
The total un-provided minimum lease commitment under
non-cancellable operating lease are:
Group 2019 2018
US $ US $
------------------------------------- ------- --------
Arising:
No later than 1 year 61,925 59,847
Later than 1 year and no later than
5 years 61,925
Total 61,925 121,772
-------------------------------------- ------- --------
26. Share based payments
The Group operates an approved Enterprise management scheme and
an unapproved share option scheme.
The fair value of the options granted is expensed over the
vesting period and is arrived at using the Black-Scholes model. The
assumptions inherent in the use of this model are as follows:
Attribute Input
No. of options
granted 5,785,000
Share price at
date of grant GBP0.08-GBP0.46
Exercise price GBP0.08-GBP0.46
Options life in
years 5
Risk free rate 1.50%
Expected volatility 41%-60%
Expected dividend
yield 0
Fair value of options GBP0.03-GBP0.09
The weighted average fair value of options outstanding was
GBP0.05p. Volatility was calculated using Group's historical share
price performance since 2015. The share-based payment expense for
the year was $20,876 (2018: $30,204). Details of the number of
share options and the weighted average exercise price outstanding
during the year as follows:
2019 2018
------------------------------- ------------- ----------- ------------- ----------
Av. Exercise Options Av. Exercise Options
price per (Number) price per (Number)
Group and Company share GBP share GBP
------------------------------- ------------- ----------- ------------- ----------
As at 1 December 0.3164 3,585,000 0.3379 3,285,000
Granted 0.0781 2,900,00 0.0810 300,000
Exercised - - - -
Forfeited 0.2500 700,000 - -
------------------------------- ------------- ----------- ------------- ----------
As at 30 November 0.2110 5,785,000 0.3164 3,585,000
------------------------------- ------------- ----------- ------------- ----------
Exercisable as at 30 November 2,610,000* 2,951,667
------------------------------- ------------- ----------- ------------- ----------
*The weighted average exercise price for the options exercisable
as at 30 November 2019 and 30 November 2018 was GBP0.34p and
GBP0.33p respectively
The weighted average remaining contractual life is 2.65 years
(2018: 1.82 years). The weighted average fair value of options
granted during the year was GBP0.05p (2017: GBP0.07p).The range of
exercise prices for options outstanding at the end of the year was
GBP0.065p - GBP0.46p (2018: GBP0.081p - GBP0.46p).
27. Related party transactions
Details of Directors' remuneration and grant of options are
given in the Directors' report. The Group had an outstanding
payable balance in the amount of $7,379 payable to Dr Clifford
Gross as at 30 November 2019. The Group has taken advantage of the
exemption in IAS 24 "related parties" not to disclose transactions
with other Group companies.
525,000 options were held by Harrison Gross, family member of
Dr. Clifford Gross.
28. Events after the reporting period
Tekcapital Group strengthened the board of directors with post
period end appointments of Lord David Willetts (7 January 2020) and
Mr. Louis Castro (2 December 2019). The Rt Hon Lord Willetts FRS is
President of the Resolution Foundation and former U.K. Minister for
Universities and Science. He served as the Member of Parliament for
Havant (1992-2015), and previously worked at HM Treasury and the
No. 10 Policy Unit. Louis Castro is a highly experienced and well
qualified Director and Chartered Accountant with some thirty years
spent in industry and in financial services, including positions as
Chief Executive, Finance Director and Non-Executive Director of
several AIM listed companies. He was previously the CFO at Eland
Oil & Gas plc where he had full executive responsibility for
finance, legal, corporate finance and a budget of over $150m.
On 6 February 2020, Tekcapital Group completed a placing of
14,800,000 new ordinary shares at 5 pence each to raise US$962,000
before expenses.
On 18 March 2020, the Company signed an extension to Convertible
Loan agreement with Salarius Ltd dated 29 October 2018. The
extension revised the maturity date to be three years from 29
October 2018.
On 1 May 2020, Tekcapital Group completed a conditional placing
of 9,250,000 ordinary shares at 10 pence each to raise US$1,150,000
before expenses. The existing authorities to allot shares and
disapply pre-emption rights under section 551 and section 570 of
the Companies Act 2006, were insufficient to enable the Company to
allot and issue the full amount of the Placing Shares pursuant to
the Placing. Accordingly, the Placing will be conditional upon,
amongst other things, the passing of certain resolutions at a
General Meeting of the Company to allot the Placing Shares and to
disapply statutory pre-emption rights which would otherwise apply
to such allotment.
Post period end, the coronavirus pandemic emerged that may
produce negative economic activities which could reduce Group's
economic performance and the performance of its portfolio companies
in ways that are difficult to quantify at this juncture. It may
cause a recession in the markets in which the Company operates,
reduce the Company's net asset values, revenue, cash flow, access
to investment capital and other factors which could negatively
impact the Company.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KZGGKGKLGGZZ
(END) Dow Jones Newswires
May 06, 2020 02:00 ET (06:00 GMT)
Tekcapital (LSE:TEK)
Historical Stock Chart
From Apr 2024 to May 2024
Tekcapital (LSE:TEK)
Historical Stock Chart
From May 2023 to May 2024