SEED INNOVATIONS LIMITED
(Formerly FastForward Innovations Limited)
ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
SEED Innovations Limited
Content
Directors and Advisers
Investing Policy
Chairman's Statement
Report of the Chief Executive Officer
Directors
Report of Directors
Independent Auditor’s Report
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Page No.
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www.seedinnovations.co
Incorporated under
the Companies (Guernsey) Law, 2008, as amended.
REGISTERED IN GUERNSEY No. 44403
SEED Innovations Limited
Directors and Advisers
Directors
Ian Burns (Non - Executive Director) – appointed Non-Executive Chairman 15 May 2020
Edward McDermott (Executive Director) – appointed Chief Executive Officer 15 May 2020
Lance De Jersey (Executive Director)
Luke Cairns (Non-Executive Director)
Lorne Abony (Chief Executive Officer) – resigned 15 May 2020
Lance De iersey(Finance Director)
Administrator, Secretary and Registered Office
Vistra Fund Services (Guernsey) Limited
11 New Street
St Peter Port
Guernsey
GY1 2PF
Registrar
Link Market Services (Guernsey) Limited
PO Box 627
Bulwer Avenue
St Sampson
Guernsey
GY2 4LH
Brokers
Shard Capital Partners LLP
23rd Floor, 20 Fenchurch
St, Bridge
London
EC3M 3BY
Investor Relations
St Brides Partners Ltd
100 Bishopsgate
London
EC2N 4AG
Advisers
Nominated Adviser
Beaumont Cornish Limited
Building 3, Chiswick Park
566 Chiswick High Road
London
W4 5YA
Independent Auditor
Grant Thornton Limited
PO Box 313
Lefebvre House
Lefebvre House, Lefebvre Street
St Peter Port
Guernsey
GY1 3TF
Guernsey Legal Adviser to the Company
Collas Crill
Glategny Esplanade
St Peter Port
Guernsey
GY1 1WN
English Legal Adviser to the Company
Hill Dickinson LLP
The Broadgate Tower
20 Primrose Street
London2EW
London
EC2A 2EW
1
SEED Innovations Limited
Investing Policy
For the year ended 31 March 2021
“The Board proposes to invest in companies which, in normal circumstances, individual investors may have limited
access to.
Investments sought will be in sectors which have, or have the potential for, significant intellectual property, principally
in the wellness and life sciences sectors (including biotech, longevity of life and pharmaceuticals) along with aligned
technology sectors (including artificial intelligence and digital delivery). Equally the Board will consider investments in
established industries where the business is applying new technologies and/or ‘know how’ to enhance its offering or
taking established business models or products to new markets. In keeping with its desire to provide its shareholders
with access to investments they may otherwise not be able to participate in, the Board also intends to apply a portion
of the portfolio to opportunistic investments which may, by exception, fall outside the above criteria but represent good
potential for short term returns. Such investments will be limited at 15% of the Company’s NAV and would typically be
in fundraisings by listed companies or as part of an IPO.
Initially the geographical focus will be North America and Europe, but investments may also be considered in other
regions to the extent that the Board considers that valuable opportunities exist, and positive returns can be achieved.
In selecting investment opportunities, the Board will focus on businesses, assets and/or projects that are available at
attractive valuations and hold opportunities to unlock embedded value. In line with the existing portfolio it is expected
that investments will be in SMEs with sub £100 million valuations but with the potential for significant growth. Where
appropriate, the Board may seek to invest in businesses where it may influence the business at a board level, add its
expertise to the management of the business, and utilise its industry relationships and access to finance. The extent
that the Company will be a passive or active shareholder will depend on the interest held and the maturity of the
investee company.
The Company's interests in a proposed investment and/or acquisition will range from minority positions to full
ownership and will comprise multiple investments. The proposed investments may be in either quoted or unquoted
companies; are likely to be made by direct acquisitions or investments; and may be in companies, partnerships, earn-in
joint ventures, debt or other loan structures, joint ventures or direct or indirect interests in assets or businesses.
The Company will pursue a balanced portfolio of an even mixture of early stage, pre-liquidity event and liquid
investments which it will aim to hold within the portfolio for 2-4 years, 6-24 months and up to 12 months respectively.
Whilst the target is to have the portfolio split fairly evenly between the different stages of liquidity there will be no set
criteria for which the Company will hold an investment and the proportion of the portfolio which will be represented by
each investment type.
There is no limit on the number of projects into which the Company may invest. The Directors intends to mitigate risk
by appropriate due diligence and transaction analysis. The Board considers that as investments are made, and new
promising investment opportunities arise, further funding of the Company may also be required.
Where the Company builds a portfolio of related assets it is possible that there may be cross holdings between such
assets. The Company does not currently intend to fund any investments with debt or other borrowings but may do so if
appropriate. Investments are expected to be mainly in the form of equity, with debt potentially being raised later to
fund the development of such assets. Investments in later stage assets are more likely to include an element of debt to
equity gearing. The Board may also offer new Ordinary Shares by way of consideration as well as or in lieu of cash,
thereby helping to preserve the Company's cash for working capital and as a reserve against unforeseen contingencies
including, for example, delays in collecting accounts receivable, unexpected changes in the economic environment and
operational problems.
2
SEED Innovations Limited
Investing Policy (continued)
For the year ended 31 March 2021
The Board will conduct initial due diligence appraisals of potential businesses or projects and, where it believes that
further investigation is warranted, it intends to appoint appropriately qualified persons to assist. The Board believes it
has a broad range of contacts through which it is likely to identify various opportunities which may prove suitable. The
Board believes its expertise will enable it to determine quickly which opportunities could be viable and so progress
quickly to formal due diligence. The Company will not have a separate investment manager. The Board proposes to
carry out a comprehensive and thorough project review process in which all material aspects of a potential project or
business will be subject to rigorous due diligence, as appropriate. Due to the nature of the sectors in which the Company
is focused it is unlikely that cash returns will be made in the short to medium term on the majority of its portfolio; rather
the Company expects a focus on capital returns over the medium to long term.”
3
SEED Innovations Limited
Chairman’s Statement
For the year ended 31 March 2021
It gives me great pleasure to present the Company’s Annual report and audited financial statements for the
year ended 31 March 2021 as Chairman. Despite the testing macro environment, this year has once again been
a positive year for the newly rebranded SEED Innovations Limited (“SEED Innovations”), (previously FastForward
Innovations Limited), as we continue to evolve our portfolio and focus on fulfilling our core objective of
providing investors with exposure to disruptive growth opportunities that have significant potential and would
normally be inaccessible to private investors. Not only have we been able to make some exciting investments
into new companies, we have seen a number of successful and very profitable exits for the Company, further
details of which I will discuss below.
Our recent name change from FastForward Innovations (“FastForward Innovations”) to SEED Innovations, which
was finalised at a shareholders EGM held on 9 July 2021, reflects our repositioning from a generalist technology
fund to one that continues to invest in disruptive technologies, however, now puts more of a significant focus
on investing within the medical cannabis, health and wellness space. With the cannabis sector forecasted to
reach a value of £16.5bn in the next decade and the health and wellness space predicted to near $4.24bn by
2026, we believe our shift in positioning will result in momentous growth in the years to come.
During the year we have made further investments into a number of progressive companies within the health,
wellness, and medical cannabis space to both expand and balance out the liquidity of our portfolio.
The first investment was into Yooma Wellness Inc, a company whose strategy is to build a vertically‐integrated
global leader in the manufacturing, marketing, distribution, and sale of wellness products including hemp seed
oil and hemp‐derived and cannabinoid ingredients. In February 2021 Yooma completed a reverse takeover of
Globalive Technology Inc. and began trading on the Canadian Securities Exchange, helping build the momentum
of the company further.
We also invested in Little Green Pharma, a vertically integrated, medicinal cannabis business with operations
from cultivation and production through to manufacturing and distribution. Little Green Pharma is ASX‐listed
and holds ambitious, but highly realisable plans to expand globally. It is seeing very positive demand from
customers not just domestically in Australia, but around the globe including in Germany with some large
purchase orders have recently been received, and more recently with announcement of the acquisition of an
operational cultivation and production facility in Denmark, further accelerating its EU expansion strategy.
We also made two further investments – one into South West Brands Limited, a female led, multi‐brand
consumer goods group developed specifically for the CBD industry, and the second into Northern Leaf, a
leading Jersey based medical cannabis cultivator. The Board strongly believes that the investments into both
South West Brands and Northern Leaf will be long term hold investments and will be catalysts for
generating notable returns for SEED Innovations’ shareholders.
In February 2021, we invested £62,500 as part of a £6 million oversubscribed placing undertaken by Kanabo
Group Plc on its admission to trading on the London Stock Exchange, further developing SEED Innovations’
exposure to the medical cannabis industry. Following strong initial trading, we took the decision to realise most
of this small investment, making a profit of c.£139,000, an increase of 223% in value. Similarly, we invested
£17,215 as part of a heavily oversubscribed placing undertaken by Cellular Goods Plc, which commenced
trading on the London Stock Exchange in February 2021. We sold this in early March, resulting in a profit of
£54,563, to provide a total return of 4.15 times the original investment. Despite only being invested in the two
companies for a short period of time, and being disappointed by the heavy initial scale‐back, the returns
achieved highlight the team's ability to identify profitable investments within the cannabis sector.
4
SEED Innovations Limited
Chairman’s Statement (continued)
For the year ended 31 March 2021
Importantly, we sold our entire interest in the cannabis firm EMMAC Life Sciences in March 2021 for just over £5 million
as part of a takeover by North American cannabis consumer products group Curaleaf Holdings Inc. Our entire 6.7 million
shares in EMMAC as well as a £750,000 convertible loan note was sold for a recorded profit of approximately £1.9
million, delivering an overall return of 1.86 times of our original investment. This was a positive outcome for our
company and we were delighted with the return on the original investment which further increased our confidence in
our investment strategy and our ability to deliver financial gains in the cannabis sector.
Our investments in the biotechnology sector also continued to advance. Portage Biotech Inc. announced it had listed on
the NASDAQ on October 28, 2013, an exchange that is well known for the success of its biotechnology companies.
Along with Portage's pipeline of products that are targeted for clinical testing in 2021, its listing has enabled the firm to
continue to catalyse research and development to produce a higher volume of quality clinical programs through its
development strategy, commercial insights, and deep network of industry relationships.
Online gaming group Leap Gaming continued to showcase its exceptional growth within the market with a number of
successes. Most recently, it created a unique new vintage betting product, EuroLeague Legends, which was launched by
IMG Arena in partnership with EuroLeague Basketball. EuroLeague Basketball, which has been an IMG Arena partner
since 2015, is the organiser of Europe's premier professional basketball competition the Turkish Airlines EuroLeague and
also runs the 7DAYS EuroCup. The extension of the partnership between the two companies with the launch of the new
product will have a significant impact on Leap Gaming, adding another important revenue stream to its suite of products
across the global gaming operators. A number of new partnerships were also formed including with 888Sport, one of
the world’s most popular gaming entertainment and solutions providers, and with Stoiximan/Betano, the leading online
gaming operator in Greece. The grant of a Gaming Supply Licence in Malta is expected to open up its pool of potential
operators that it can now work with in new territories including but not limited to Germany, South Africa, Mexico, and
the US.
In February 2021, we made a further investment of €153,031, GBP equivalent of £173,994 (fx 0.87518) into Leap Gaming,
as a result of the business delivering remarkable growth throughout the past year. Leap is now exploring a potential
listing on the UK market which I believe will help expedite the growth of the company further.
Vemo Education continued to show promising growth as it implemented and managed income share agreement
programmes for its partners; an agreement between a school and student to defer some of their cost in exchange for a
fixed percentage of their post-graduation income for a fixed period. Vemo doubled its ISA volume in 2020 and increased
the number of colleges and universities using its products circa. 17% to over 70.
On the corporate side, we were pleased with the support we received from new and existing shareholders during the
year with a total of just over £4 million of new money raised. The funds raised will be used to continue to support and
invest in opportunities in line with our strategy to be an investment destination for individuals and institutions seeking
exposure to the unique opportunities your board have access to.
During the period, there were some changes at board level, which included my appointment as Chairman and Ed
McDermott stepping up into the role of CEO. Lorne Abony stepped down from the position of Chairman and CEO to
continue his work with, amongst others, Yooma. As announced just after period end on 1 April 2021, we were delighted
to have Alfredo Pascual join our team as Vice President of Investment Analysis. A key hire for the Company, in this role
Alfredo's focus will be on sourcing and evaluating investment opportunities in the burgeoning European medical
cannabis industry as well as supporting the growth of SEED Innovations’ portfolio companies in the sector. Alfredo’s
vast experience, sector knowledge and contacts will be invaluable to our shareholders as our investment focus
increasingly leans towards health, wellness and medical cannabis.
5
SEED Innovations Limited
Chairman’s Statement (continued)
For the year ended 31 March 2021
Looking ahead, I believe that SEED Innovations will continue to evolve, and proceed in investing in rapidly growing
sectors particularly within the area of health, wellness, and medical cannabis, a sector that as previously highlighted is
set for momentous growth. With a robust cash position and having accomplished excellent NAV progression, we are
well placed to deliver significant long-term value to shareholders.
I would also like to take this opportunity to thank all our long standing shareholders and loyal backers, as well as those
new to the register, our executive team and my fellow board members for their assistance. I look forward to reporting
on our progress over the coming months as we commence this truly exciting next step as SEED Innovations and continue
to expand our development within a space which, I believe, to be truly exciting.
Results
The net assets of the Company at 31 March 2021 were £24.94 million (2020: £14.24 million), equal to net assets of
11.72p per Ordinary Share (2020: 8.82p per Ordinary Share).
Looking ahead, as I mentioned previously, whilst we will continue to support our investments in the life sciences and
technology spaces, we are increasingly streamlining our investment focus into areas where we have significant
expertise, namely primarily health, wellness and medical cannabis. We have a solid track record in the medical cannabis
space and are confident that with the recent guidance from the FCA there are a number of both early and late stage
opportunities that have the potential to deliver value for our shareholders. I look forward to providing further updates
with regard to the continued development of our core assets and potential new opportunities in this space.
Ian Burns
Non-Executive Chairman
14th July 2021
6
SEED Innovations Limited
Report of the Chief Executive Officer
For the year ended 31 March 2021
Investing in cutting edge technologies; supporting world-leading entrepreneurs as they build their businesses; and
working with a select group of highly driven, financial and industry experts at SEED Innovations. I consider myself
extremely fortunate to hold the position of CEO in this progressive company, which I assumed in May last year.
Strategy
Whilst leaning towards capitalising on our knowledge in the health, wellness, and medical cannabis arenas, first and
foremost our strategy is to invest in visionary entrepreneurs developing innovative technologies. Accordingly, our
portfolio includes a broad mix of companies, which are at the forefront of their industries and have in common a thirst
for pioneering new ideas.
Performance and valuation
The Company’s Net Asset Value (“NAV”) per share at the end of the year improved to 11.72p per share from 8.82p at
31 March 2021 thanks, in part, to the acquisition of Yooya Media by, and our subsequent investment in, Yooma Corp
and the continued growth of Leap Gaming.
Portfolio
The table below lists the Company’s holdings at 31 March 2021 and 31 March 2020.
Holding
Share Class
Category
Country of
Incorp-
oration
Portfolio
%
Number of
Shares Held
at 31 March
2021
Valuation at
31 March
2021
£,000
Number of
shares held
at 31 March
2020
Valuation at
31 March
2020
£'000
Fralis LLC
(Leap Gaming)
EMMAC Life
Sciences Ltd
Yooma
Wellness Inc
Juvenescence
Limited
Portage
Biotech Inc.
Little Green
Pharma
Northern Leaf
Ltd
South West
Brands
Units
Loan
Ordinary
Loan
Common
Shares
Ordinary
Ordinary
Ordinary
Convertible
Loan
Convertible
Loan
Vemo
Education, Inc.
Pref Series
Seed 2
Biotech /
Healthcare
CBD
Wellness
Biotech /
Healthcare
Biotech /
Healthcare
Biotech /
Healthcare
Biotech /
Healthcare
CDB
Wellness
Gaming
Nevis
England
39.41%
1.07%
14.32%
7.32%
1,512
N/A
6,666,667
N/A
Canada
13.89%
4,007,165
9,174
249
3,333
1,703
3,234
1,512
-
7,148
6,666,667
2,400
-
27,255
-
50
BVI
BVI
9.89%
128,205
2,301
128,205
2,561
5.96%
68,306
1,389
12,980,610
946
Australia
3.57%
2,146,462
Jersey
2.58%
England
1.08%
-
-
831
600
252
-
-
-
-
-
-
Edtech
USA
0.92%
1,000,000
214
1,000,000
267
Factom, Inc.
Series Seed
Series A
Blockchain
Tech
USA
-
-
400,000
5,911,330
-
400,000
-
-
Total Investment Value
Cash and receivables, net of payables and accruals
Net Asset Value
23,280
1,659
24,939
-
13,372
866
14,238
7
SEED Innovations Limited
Report of the Chief Executive Officer (continued)
For the year ended 31 March 2021
Portfolio (continued)
Liquid Investments
Yooma Wellness Inc. (‘Yooma’) (investment position: c. 12.97% of NAV)
Yooma is an emerging global marketer and distributor of cannabinoid and hemp-derived wellness products,
headquartered in Toronto with offices in Tokyo, UK, France, and Los Angeles. Yooma's mission is to build a vertically
integrated global leader in the manufacturing, marketing, distribution, and sale of wellness products including hemp
seed oil and hemp-derived and cannabinoid (CBD) ingredients. The company leverages strategically curated sales
channels and ecommerce networks to deliver a diverse mix of wellness products through subsidiaries in Japan,
the United Kingdom, France and the United States.
Post period end, in June 2021, Yooma announced its withdrawal from operating in China following China's National
Medical Products Administration
"List of Prohibited Use Cosmetic
Ingredients". Beijing proposed the new legislation in March, with the China National Institute for Food and Drug Control
inviting comments and suggestions from industry participants on its plans to list cannabis sativa and CBD as prohibited
components of cosmetics. As a result of this announcement, a number of online marketplaces, including those which
Yooma had historically relied on to distribute its CBD wellness products, have restricted promotion and marketing efforts
for CBD products, such as keyword and traffic generating tools, platform events and live streams.
(NMPA) adding CBD
its
to
Whilst this is disappointing, Yooma is experiencing significant growth in other markets exceeding its expectations and
expect any long term effects to be minimal helped by an agreement with EMMAC Life Sciences Group (‘EMMAC’), giving
it exclusive rights to distribute EMMAC’s wellness brands, including Blossom, MYO, Hello Joya and What the Hemp, in
Japan, Taiwan and Australia as well as non-exclusive distribution rights in certain other global markets.
Portage Biotech, Inc (‘Portage’) (investment position: c. 5.57% of NAV)
Portage is an emerging biotechnology company developing an immunotherapy-focused pipeline to treat a broad range
of cancers. Its focus is to combine its own technology with already proven immune-boosting PD1 agents and to this
end, Portage has a pipeline of products targeted for clinical testing in 2021 and a growing roster of notable partnerships.
During the year, Portage’s subsidiary companies have shown significant promise. Intensity Therapeutics Inc.
(‘Intensity’), which is pioneering a new immune-based approach to treat solid cancer tumours, has been particularly
busy. Amongst other activity, it entered into a clinical trial collaboration agreement with New York Stock Exchange
listed Bristol Myers Squibb Company, a leader in the cancer immunotherapy space, to evaluate the safety and efficacy
of its lead product, INT230-6, when dosed in combination with Bristol Myers Squibb's Cytotoxic T Lymphocyte-
Associated Antigen 4 immune checkpoint inhibitor Yervoy®. It also announced new efficacy and safety data from the
ongoing Phase 1/2 clinical study of INT230-6, which supported the hypothesis that dosing a substantial proportion of a
patient’s tumour burden with INT230-6 may cause enough tumour killing and immune activation to provide the patient
with extended survival.
Other emerging biotech investee companies include Saugatuck Therapeutics Ltd, which achieved initial proof of concept
of its nanolipogel formulation and is now exploring multiple PD1 based co-formulations with small molecules and other
DNA aptamers. Equally, Stimunity S.A.S, a parasbased cancer immunotherapy company, is making excellent headway
and is now focused on manufacturing its STING-activating cGAMP Virus-Like Particle technology that can stimulate the
immune system and the quality of the anti-tumoral response.
To focus on its core immuno-oncology assets, Portage divested its three legacy businesses: Portage Pharmaceuticals
Limited (PPL), and its subsidiaries Portage Glasgow Limited and EyGen Limited, to Juvenescence Ltd. Under the terms
of the agreement, Portage may be entitled to up to USD$244 million in future milestone payments.
On the corporate side, Portage raised US$6.7 million through a non-brokered private placement in June 2020, to provide
resources for the continued development of its portfolio. Later in the year, backed with a solid track record of
supporting a pipeline of products, many of which are targeted for clinical testing this year, Portage listed on the NASDAQ
in February 2021, an exchange that is well known for the success of its biotechnology companies.
8
SEED Innovations Limited
Report of the Chief Executive Officer (continued)
For the year ended 31 March 2021
Portfolio (continued)
Little Green Pharma (‘LGP’) (investment position: c. 3.33% of NAV)
A new addition to our portfolio is ASX-listed Little Green Pharma, a vertically integrated, medicinal cannabis business
with ambitious, but highly realisable, plans to expand globally. Following our initial investment in LGP in February 2021,
SEED has increased its holding to 2.0% of LGP’s issued share capital.
LGP has an indoor cultivation facility and manufacturing facility in Western Australia to produce its own-branded range
of GMP-grade medicinal cannabis products and very recently announced the acquisition, in conjunction with a A$27.2
million placing, of a fully operational GACP cultivation and GMP licensed medicinal cannabis facility in Denmark which
will accelerate LGP’s planned expansion by two years and is consistent with LGP’s EU expansion strategy. With a growing
range of products containing differing ratios of active ingredients, LGP supplies medical-grade cannabis products to
Australian and overseas markets. Recently, it has made progress in the establishment of offshore distribution channels
including to the UK, Germany, and New Zealand to further strengthen its geographic reach. In Germany, LGP recently
secured an increased A$2.5m purchase order for its high THC cannabis flower medicine, reflecting the demand from
Germany and the confidence in LGP's quality and supply.
Soon after our investment, LGP announced that it was chosen to be a partner in a large scale, two-year cannabis study
launched by the University of Sydney known as the QUEST Initiative. Under the agreement, LGP will supply all the
medicinal cannabis oil products to the 2,100 enrolled patients, as well as provide funding for study costs. The QUEST
Initiative aims to be one of the world’s largest longitudinal studies investigating the quality of life and health economics
on patients with chronic disease prescribed medicinal cannabis.
Post period-end in June 2021 we invested a further £1.5 million in LGP in the placing mentioned above, increasing our
holding to 7,324,796 shares representing approximately 3.15% of LGP’s enlarged share capital. This reflects the fact
that we have been pleased with their ambitious growth strategy, which has delivered beyond our expectations.
Pre-liquidity Investments
Fralis LLC (trading as Leap Gaming - ‘Leap’) (investment position: c. 37.78% of NAV)
Leap is a developer and provider of 3D gaming technology and products with a focus on virtual sports and virtual casino,
partnering with top-tier online and land-based gaming companies to provide advanced gaming products for end-users.
During the year under review, Leap made great strides forward with a raft of notable successes that demonstrate its
world-leading ability to develop totally unique and innovative products that challenge other gaming developers
worldwide and take gaming experiences to new levels.
Its relationship with its strategic partner, IMG Arena, has been particularly productive with several new products jointly
developed and launched. These included an official virtual tennis product launched in partnership with ATP Media, the
global sales, broadcast production and distribution arm of the ATP Tour, a worldwide top-tier tennis tour organised by
the Association of Tennis Professionals, and a new vintage betting product in partnership with EuroLeague basketball.
Furthermore, IMG Arena began offering bookmakers a virtual sports betting product for the NASCAR US stock car racing
series, as well as distributing the international betting streaming rights for the first time.
A number of new partnerships were also formed: 888Sport (‘888’), one of the world’s most popular gaming
entertainment and solutions providers, will now host a selection of Leap’s ultra-realistic 3D virtual sports games and
offer several of its popular titles through 888casino; and Stoiximan/Betano, the leading online gaming operator in
Greece and one of the fastest growing in Europe with more than 300,000 active users in sports betting, virtual sports,
casino and fantasy sports, now offers Leap’s complete portfolio of virtual sports through its online brands.
Having been granted a Gaming Supply Licence in Malta, Leap anticipates that its pool of potential operators that it can
now work with will further increase and that its expansion into new territories including but not limited to Germany,
South Africa, Mexico, and the US, will accelerate during 2021.
9
SEED Innovations Limited
Report of the Chief Executive Officer (continued)
For the year ended 31 March 2021
Portfolio (continued)
Notably, in the year ended December 2020, year-on-year, daily active users were up 135%, transactions were up 170%,
turnover was up 56% and Gross Gaming Revenue was up 86%. Organic growth projections suggest turnover is likely to
nearly double in two years from 2020. With this background, Leap is now exploring options for a UK listing; to support
this, I joined its Board in November 2020.
Juvenescence Ltd (‘Juvenescence’) (investment position: c. 9.23% of NAV)
Juvenescence is a therapeutics and development company developing multiple therapeutics focused on improving and
extending human lifespans. By utilising a coalition of best scientists, physicians, and investors across its four distinct
divisions, it aims to create cutting-edge therapies and products that disrupt the thinking and behaviour around ageing.
In line with this, it formed a joint venture with biotechnology company, G3 Therapeutics, which focused on applying
deep molecular profiling and deep learning to tackle aging. Known as Juvenomics, the joint venture is built on the unique
combination of G3 Therapeutics’ proprietary, multi-omic biological dataset, consisting of trillions of proprietary
datapoints collected in the GLOBAL Clinical Study (NCT01738828) of over 7,500 patients, and the unique machine
learning platforms assembled by Juvenescence.
Other alliances formed during the year included a partnership between its subdivision JuvLife and Evgen Pharma plc,
which sees JuvLife deploying Evgen’s Sulforadex® stabilisation technology to create and manufacture a nutritional health
supplement containing a defined and stable dose of sulforaphane, derived from natural sources.
The Juvenescence team includes highly experienced drug developers, entrepreneurs, marketers, and investors with a
significant history of success in the pharmaceutical and consumer health sectors. This team was further strengthened
with the appointment of Dr. David Roblin MD FMedSci to its Board of Directors, who has an extensive background in
the pharmaceutical industry. Post period end, it also appointed a new Chief Scientific Officer, Dr. Grazia Piizzi, PhD, who
has more than 15 years of experience in the global pharmaceutical and biotech industry.
South West Brands (investment position: c. 1.01% of NAV)
We have high expectations for one of our newest investments, SWB, an early-stage UK CBD brand business, which is
looking to launch several new celebrity-endorsed products in the coming months. Its all-female management team, led
by CEO Rebekah Hall, who is a pioneer in the burgeoning CBD market in Europe and regarded as one of the foremost
experts on CBD consumer products, has a first mover advantage given there are very few brands with real equity in the
cannabinoid wellness vertical.
SWB is currently focused on launching a pipeline of new CBD brands across multiple product verticals, including its first
new brands in the menstrual cycle care and beauty categories. At the end of June 2021, SWB announced their intention
to float on the London Stock Exchange and we look forward to reporting further on this significant development for
them.
Longer Term Investments
Northern Leaf Ltd (‘Northern Leaf’) (investment position: c. 2.41% of NAV)
Post period end, on 1 April 2021, the Company invested £600,000 in Jersey based medical cannabis cultivator Northern
Leaf via 24-month Convertible Loan Notes as part of a £14 million pre-IPO funding round.
Northern Leaf is leading the development of a new industry for the British Isles, creating centres of excellence, using
state-of-the-art tracking systems and robust policies and procedures to ensure the highest levels of quality from seed
to sale. In December 2020, it was granted the first UK commercial high THC medical cannabis license since UK based
GW Pharmaceuticals in 1998. It is now accelerating its capital expenditure programme into extraction, manufacturing
and formulation equipment and explore strategic partnerships as it seeks to become a European market leader in the
supply of high-quality EU-GMP grade medical cannabis flower and oil to the rapidly growing European medical cannabis
market where patient demand continues to accelerate.
10
SEED Innovations Limited
Report of the Chief Executive Officer (continued)
For the year ended 31 March 2021
Portfolio (continued)
Vemo Education (investment position: c. 0.86% of NAV)
VEMO is an education technology company founded to address the student debt crisis by developing income share
agreement programmes and deferred tuition plans and partnering with higher education institutions to make these
funding options available to students. In 2020, Vemo doubled its ISA volume and increased the number of colleges and
universities using its products circa 17% to over 70. This trend has continued into 2021. VEMO has recently partnered
with Edmit, used by millions of students and families to demystify the financial aid process and make better-informed
decisions about college, and launched the Edmit Guarantee designed to prevent students from borrowing too much and
to reduce the risk of unnecessary debt, which often suppresses college-going aspiration, or encourages students to
choose lower-cost colleges that might actually lead to a lower return on investment.
Eurox Group GmbH (‘Eurox’)
Post period end, on 5 July 2021, we made an investment of €3 million in Eurox, a German-based, revenue generating,
European vertically integrated medical cannabis company. Eurox will give FFWD direct exposure to the German cannabis
market, the largest in Europe by a long way. With its main operations being in Germany, Portugal and the UK, it is well
positioned in the medical cannabis sector to become a leading vertically integrated medical cannabis leader on the
continent. FFWD has a 8.85% holding in Eurox. The investment gives us further exposure to the cannabis sector.
CiiTECH Limited
Again post period end, on 6 July, we invested £175,000 in UK and Israel based consumer healthcare and research
company CiiTECH Limited (‘CiiTECH’) via 18-month Convertible Loan Notes as part of a £2.0 million funding round.
CiiTECH is a brand-building, consumer focused company dedicated to ongoing cannabis research and the
commercialisation of cannabis products. It uses its partnerships with leading institutions and scientists to create niche
consumer brands. The company continually innovates as it strives to create the best science-led brands in the cannabis
sector. CiiTECH is currently funding a range of clinical studies aimed at unravelling the large range of minor cannabinoids,
bringing better understanding and more effective products to market.
On 24 May 2021, CiiTECH signed a letter of intent with London Stock Exchange listed Fragrant Prosperity Holdings
Limited (LSE: FPP) in relation to a potential acquisition by FPP of the business by way of a reverse takeover for a
consideration of £17.5 million to be satisfied by the issue of ordinary shares in the capital of FPP at a price of 5.25 pence
per ordinary share. The transaction is conditional upon the completion of customary due diligence, amongst other
conditions, and we look forward to reporting on their progress.
Factom (investment position: c. 0.00% of NAV)
Factom continues to investigate offers for its intellectual property, however, the Company does not expect any
meaningful return should this come to fruition as the Chapter 11 creditors need to be paid before equity holders and
any consideration remaining is unlikely to be in cash, but rather in stock in an acquirer.
Exited Investments
EMMAC Life Sciences (‘EMMAC’) (investment position: c. 20.20% of NAV)
Our journey with European medical cannabis company EMMAC, epitomises our strategy to identify and invest in
opportunities that have the potential to provide a return at a liquidity event. In this case, we first invested in EMMAC
in March 2019 and until 2021 continued to provide financial and advisory support. Post period end, in April 2021,
EMMAC was acquired by Curaleaf Holdings Inc., a leading medical and wellness cannabis operator in the US. SEED
Innovations recorded a profit on the sale of approximately £1.9 million, to deliver an overall return of 1.86 times its
original investment.
11
SEED Innovations Limited
Report of the Chief Executive Officer (continued)
For the year ended 31 March 2021
Portfolio (continued)
Not only was this an excellent and quick turnaround for SEED Innovations given it provided immediate cash that enables
us to explore and invest in other companies, but EMMAC’s sale to Curaleaf represented a turning point for the European
cannabis M&A landscape.
Historically, while the US and Canadian markets have focused on investing in their own home-grown companies or other
more mature international markets, we are now seeing a sea-change in attitude. In February 2021, NASDAQ listed Jazz
Pharmaceuticals announced the acquisition of UK-based GW Pharmaceuticals. A month later, in March, Curaleaf
announced the acquisition of EMMAC, which it completed in April, pipping Jazz to the post by a month.
This reshaping of the international cannabis market and increased confidence/interest in the UK and European markets,
will, we believe, continue to gain momentum.
Kanabo Group Plc (‘Kanabo’)
We invested in Kanabo, which is focused on the distribution of cannabis derived products for medical patients, and THC-
free CBD products for consumers, ahead of its London Stock Exchange listing in February 2021. Following strong initial
trading, and given this was a very minor investment, we quickly realised most of this small investment, making a profit
of £136,852, which was more than twice the amount invested.
Cellular Goods Plc ('Cellular Goods')
Similarly, we invested £17,215 as part of a heavily oversubscribed £13 million placing at a price of 5 pence undertaken
by Cellular Goods, which commenced trading on the London Stock Exchange on 26 February 2021. We sold this in early
March, resulting in a profit of £54,563, to provide a total return of 4.15 times the original investment.
Conclusion
As highlighted above, the year under review and post period end was fast paced and filled with activity as we
increasingly steered the business towards a new focus on the hyper-growth sectors of health, wellness, and medical
cannabis, investing in several exciting new businesses and exiting others that reached liquidity events to generate
notable returns. Looking ahead, and if the first few months of the 2021 financial year are anything to go by, this trend
is likely to continue.
We look forward to continuing to support our existing investee companies as they advance through their various
growth trajectories and investing in new, equally exciting opportunities. With a robust cash position and having
accomplished excellent NAV progression, we are well positioned to deliver significant value to shareholders.
Ed McDermott
CEO
14 July 2021
12
SEED Innovations Limited
Directors
Ian Burns (Non-Executive Chairman)
Mr Burns is a fellow of both the Institute of Chartered Accountants in England & Wales and a member of STEP. He is
the founder and Executive Director of Via Executive Limited, a specialist management consulting company and the
Managing Director of Regent Mercantile Holdings Limited, a privately-owned investment company. He is licensed by
the Guernsey Financial Services Commission as a personal fiduciary.
Mr Burns is currently a Non-Executive Director and audit committee chairman of River & Mercantile UK Micro Cap Ltd
and Twenty Four Income Fund Limited. He is also a Non-Executive Director of Darwin Property Management
(Guernsey) Limited, Curlew Capital Guernsey Limited and Premier Asset Management (Guernsey) Ltd. as well as
Chairman of One Hyde Park Limited.
Edward McDermott (Chief Executive Officer)
Mr McDermott, a former investment banker, has nearly 20 years’ experience in the management, financing, and
strategic development of growth companies. He has broad experience in several high growth sectors and previously
held several Executive and Non-Executive roles with publicly quoted companies. As a finance specialist, he has been
pivotal in raising over $750m for public and private companies during his career.
Mr McDermott is a co-founder and was Managing Director of Europe’s largest medical cannabis company, EMMAC
Life Sciences, which was acquired by Curaleaf international in a deal worth over $400m. He has previously held a
number of Executive and Non-Executive roles with publicly quoted companies.
Lance De Jersey (Finance Director)
Mr De Jersey is a member of the Institute of Chartered Secretaries and Administrators and The Institute of Directors.
He previously headed Partners Group’s Guernsey office, serving on the Guernsey boards and chairing the Risk & Audit
and AML committees and was a member of the Investment Oversight committee. He has over ten years’ experience
in private equity investment administration and management.
In the past, Mr De Jersey has owned and operated retail franchises, marketed and sold small businesses as a business
broker and worked as a financial adviser in New Zealand. He is currently a Non-Executive Director of Pearl Holding
Limited (an investment fund managed by Partners Group) and is former secretary and vice chairman of the Channel
Island Private Equity and Venture Capital Association.
Luke Cairns (Non-Executive Director)
Mr Cairns is a highly experienced finance professional with a strong network having worked in the City of London for
19 years in corporate finance. A Guernsey resident, Mr Cairns was previously Head of Corporate Finance and Managing
Director at Northland Capital Partners, an AIM focused Nomad and Broker, and has worked with many growth
companies across a number of sectors and regions on a wide range of transactions, including IPOs, secondary
fundraisings, corporate restructurings and takeovers. Mr Cairns has also held directorships on both listed and private
companies across various sectors.
13
SEED Innovations Limited
Report of Directors
For the year ended 31 March 2021
The Directors are pleased to present their Annual Report and the audited financial statements of SEED Innovations
Limited (the “Company”) for the year ended 31 March 2021.
Status and Activities
The Company is a closed-ended investment company.
The Company is domiciled and incorporated as a limited liability company in Guernsey.
The registered office of the Company is 11 New Street, St Peter Port, Guernsey, GY1 2PF.
The Company is listed on Alternative Investment Market, a market operated by the London Stock Exchange ("AIM").
With effect from 3 May 2018 the Company has been authorised as a closed-ended investment scheme by the Guernsey
Financial Services Commission (the "GFSC") under Section 8 of the Protection of Investors (Bailiwick of Guernsey) Law,
1987 and the Authorised Closed-Ended Investment Schemes Rules 2008.
Changes during the year
On 15 May 2020, Mr Abony resigned as CEO and Interim Executive Chairman and agreed to defer payment of
remuneration due of £250,000 as at date of resignation. He was succeeded by Mr Burns as Non-Executive Chairman
and Mr McDermott as CEO, effective 15 May 2020. During the year he received 2,472,446 ordinary shares from the
Treasury shares of the Company in settlement of the deferred remuneration. Refer to note 18 for more details.
Changes after the year-end
On 9 July 2021, the shareholders approved the change of name from FastForward Innovations Limited to SEED
Innovations Limited and the adoption of new Memorandum & Articles of Incorporation at an Extraordinary General
Meeting. At the same meeting, the Directors authority to issue new shares without pre-emption rights and to buy
back shares on the market were re-affirmed.
Results
The results of the Company for the year are shown on page 24. The Company made a profit for the year of £6.5 million
(2020: Loss £5 million).
Dividends
The Company did not pay any dividends during the year (2020: £Nil) and the Directors do not propose a final dividend
for the year (2020: £Nil).
Investments
Details of the Company’s investments are disclosed in the Report of the Chief Executive Officer and notes 12, 13 and
19.
Taxation
The Company has been granted exemption from Guernsey taxation under the terms of the Income Tax (Exempt
Bodies) (Guernsey) Ordinance 1989 so that the Company is exempt from Guernsey taxation on income arising outside
Guernsey and bank interest receivable in Guernsey. The Company’s Guernsey tax exemption fee is £1,200 per annum.
Material Contracts
The Company’s material contracts are with:
• Vistra Fund Services (Guernsey) Limited (“Vistra”), which acts as Administrator and Company Secretary;
• Link Market Services (Guernsey) Limited, which acts as Registrar;
• Beaumont Cornish Limited, which acts as Nominated Adviser; and
• Optiva Securities Limited, which acted as Broker until 22 September 2020.
• Shard Capital, which acts as Broker (since 22 September 2020)
14
SEED Innovations Limited
Report of Directors (continued)
For the year ended 31 March 2021
Directors
The present members of the Board are listed on page 13 of this report. Changes to the Board during the year are
disclosed on page 16. There are service contracts in place between each of the Directors and the Company. Details of
Directors’ remuneration, bonuses and Options granted to the Directors are disclosed in note 7.
Mr Burns is the legal and beneficial owner of Smoke Rise Holdings Limited, which held 1,374,024 (0.65%) Ordinary
Shares in the Company at 31 March 2021 and the date of signing this report.
Mr Abony held 14,843,211 (9.19%) Ordinary Shares in the Company at 31 March 2020, he received a further 2,472,446
shares on 29 January 2021 (see note 18). The entirety of his enlarged holding of 17,194,590 shares was then
transferred to Mrs Rhonda Abony on 30 January 2021. As a result, Mr Abony held no shares in the Company on 31
March 2021 or at the date of signing this report.
Mr De Jersey held 400,000 (0.19%) Ordinary Shares in the Company at 31 March 2021 and at the date of signing this
report.
Further details are explained in note 18.
Substantial Interests as at date of signing
The following interests in 3% or more of the issued Ordinary Shares of the Company:
Investors:
Rhonda Abony
Peter Saladino
Jim Mellon
Richard Hackett
Norbert Teufelburger
Number of Ordinary
Shares
Percentage of Share
Capital
17,784,388
17,194,590
14,783,722
9,817,478
7,557,005
8.36%
8.08%
6.95%
4.61%
3.55%
Going Concern
After making reasonable enquiries, and assessing all data relating to the Company’s liquidity, the Directors have a
reasonable expectation that the Company has adequate resources to continue in operational existence for the
foreseeable future and do not consider there to be any threat to the going concern status of the Company. For this
reason, they continue to adopt the going concern basis in preparing the financial statements.
The Directors note that the Company has sufficient cash and cash equivalent resources to meet its obligations for at
least one year after the approval of these financial statements.
Corporate Governance
As a Guernsey incorporated company and under the AIM Rules for Companies, the Company is not required to comply
with the UK Corporate Governance Code published by the Financial Reporting Council (the “FRC Code”). However, the
Directors place a high degree of importance on ensuring that high standards of Corporate Governance are maintained
and that the Company complies with the Finance Sector Code on Corporate Governance, issued by the Guernsey
Financial Services Commission.
Board Responsibilities
At 31 March 2021, the Board comprised of two Executive Directors, being Messrs. De Jersey and McDermott; and two
Non-Executive Directors, Mr Burns, and Mr Cairns.
The Board has engaged Vistra to undertake the administrative duties of the Company. Clearly documented contractual
arrangements are in place with this service provider which define the areas where the Board has delegated
responsibility to it.
15
SEED Innovations Limited
Report of Directors (continued)
For the year ended 31 March 2021
Board Responsibilities (continued)
The Company holds at least three Board meetings per year, at which the Directors will review the Company's
investments and all other important issues to ensure control is maintained over the Company's affairs.
The Company is self-managed, in that day-to-day investment management recommendations are made by the
Executive Directors, supported by analysis provided by the Board and the VP of Investment Analysis.
Board Committees
Audit Committee
Mr Cairns was appointed chairman of the audit committee with effect from 5 June 2020, succeeding Mr Burns. All
other Directors are members of the Audit Committee.
The Audit Committee meets at least once a year and provides a forum through which the Company’s Auditor reports
to the Board. The Audit Committee examines the effectiveness of the Company’s internal controls, the Annual Report
and Financial Statements, the Auditor’s remuneration and engagement as well as the Auditor’s independence and any
non-audit services provided by them. The Audit Committee receives information from the Administrator, the Company
Secretary and the Auditor. The Audit Committee has formal written terms of reference, which are available upon
request from the Company Secretary.
Remuneration and Nomination Committee
Mr Burns is chairman of the Remuneration and Nomination Committee. Mr Cairns is a member of the Remuneration
and Nomination Committee. The function of the Remuneration and Nomination Committee is to consider the
remuneration, and the appointment and reappointment, of Directors.
The Company is committed to the principle of diversity and equal opportunities. The Board will continue to review the
composition of the Board to ensure it has the appropriate structure, diversity and skills to meet the needs of the
Company as it develops.
Shareholders vote on the re-appointment or election of at least one Director at each Annual General Meeting (“AGM”),
with every Director’s appointment being voted on by Shareholders every three years. Mr Burns will be proposed for
re-election at the forthcoming AGM.
Board Meetings
All members of the Board are expected to attend each Board meeting and to arrange their schedules accordingly,
although non-attendance may be unavoidable in certain circumstances. Directors’ attendance at Board and
Committee meetings during the financial year is set out below.
Board Meetings Committee Meetings
Ian Burns (appointed 12 November 2014)
Ed McDermott (appointed 12 February 2018)
Lance De Jersey (appointed 3 January 2019)
Luke Cairns (appointed 3 January 2020)
Lorne Abony (appointed 6 January 2016, resigned 15 May 2020)
*Attendance from 1 April 2020 till date of resignation
12/13
12/13
13/13
13/13
*1/1
3/3
2/3
3/3
3/3
*-
Dialogue with Shareholders
The Directors are always available to enter into dialogue with shareholders. All ordinary shareholders will have the
opportunity, and indeed are encouraged, to attend (providing any continuing restrictions as a result of the COVID-19
pandemic so allow) and vote at future Annual General Meetings during which the Board will be available to discuss
issues affecting the Company.
The Board monitors the trading activity and shareholder profile on a regular basis and maintains contact with the
Company's Broker to ascertain the views of shareholders. Shareholder sentiment is also ascertained by the careful
monitoring of the premium/discount that the Ordinary Shares are traded at in the market when compared to those
experienced by similar companies.
16
SEED Innovations Limited
Report of Directors (continued)
For the year ended 31 March 2021
Dialogue with Shareholders (continued)
The Company reports formally to shareholders twice a year. Additionally, current information is provided to
shareholders on an ongoing basis through the Company website and RNS announcements. The Company Secretary
monitors the voting of the shareholders and proxy voting is taken into consideration when votes are cast at the Annual
General Meeting.
Litigation
The Company is not engaged in any litigation or claim of material importance, nor, so far as the Directors are aware,
is any litigation or claim of material importance pending or threatened against the Company.
Internal Control and Financing
The Board is responsible for establishing and maintaining the Company's system of internal control. Internal control
systems are designed to meet the particular needs of the Company and the risks to which it is exposed, and, by their
very nature, provide reasonable, but not absolute, assurance against material misstatement or loss. The key
procedures which have been established to provide effective internal controls are as follows:
•
Vistra Fund Services (Guernsey) Limited is responsible for the provision of administration and Company
Secretarial duties;
The Board clearly defines the duties and responsibilities of the service providers and advisers in the terms of
their contracts; and
The Board reviews financial information produced by the Administrator on a regular basis.
•
•
The Company does not have an internal audit department. All of the Company's administrative functions are delegated
to independent third parties and it is therefore felt that there is no need for the Company to have an internal audit
facility.
The Board feels that the procedures employed by the service providers adequately mitigate the risks to which the
Company is exposed.
Risk Profile
Financial Risks
The Company's financial instruments comprise investments, cash and cash equivalents, and various items such as
receivables and payables that arise directly from the Company's operations.
The main risks arising from holding these financial instruments are market risk (including price risk, currency risk and
interest rate risk), credit risk and liquidity risk. Further details are given in note 19 to the financial statements.
Independent Auditor
PricewaterhouseCoopers CI LLP has resigned as auditor to the Company and Grant Thornton Limited was appointed
as auditor of the Company effective from 09 December 2020. Grant Thornton has indicated their willingness to act
and will be considered for re-appointment at the next AGM.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and Financial Statements for each financial year which
give a true and fair view, in accordance with applicable Guernsey law and International Financial Reporting Standards
as issued by the international Standards Board, of the state of affairs of the Company and of the profit or loss of the
Company for that year. In preparing those financial statements, the Directors are required to:
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether International Financial Reporting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
•
17
SEED Innovations Limited
Report of Directors (continued)
For the year ended 31 March 2021
Statement of Directors’ Responsibilities (continued)
The Directors confirm that they have complied with the above requirements in preparing the financial statements.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company transactions, disclose with reasonable accuracy at any time the financial position of the Company and enable
them to ensure that the financial statements comply with the requirements of the Companies (Guernsey) Law, 2008.
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are also responsible for the maintenance and integrity of the website on which these financial
statements are published. The work carried out by the auditor does not involve consideration of these matters and,
accordingly, the auditor accepts no responsibility for any changes that may have occurred to the financial statements
since they were initially presented on the website.
Legislation in Guernsey governing the preparation and dissemination of the financial statements may differ from
legislation in other jurisdictions.
Disclosure of Information to the Auditor
The Directors who held office at the date of approval of this Report confirm that, so far as they are aware, there is no
relevant audit information of which the Company’s Auditor is unaware and each Director has taken all the steps that
he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that
the Company’s Auditor is aware of that information.
On behalf of the Board
Ian Burns
Director
Date: 14th July 2021
Lance De Jersey
Director
Date: 14th July 2021
18
Independent auditor’s report
To the members of SEED Innovations Limited
Opinion
We have audited the Financial Statements of SEED Innovations Limited for the year ended 31 March
2021, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the
Statement of Changes in Equity, the Statement of Cash Flows and the Notes to the Financial Statements,
including a summary of significant accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial Reporting Standards (“IFRSs”) issued by the
International Accounting Standards Board (“IASB”).
In our opinion, the Company’s Financial Statements:
give a true and fair view of the state of the Company’s affairs as at 31 March 2021 and of the Company’s
profit for the year then ended;
are in accordance with IFRSs issued by the IASB; and
comply with the Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) and applicable law. Our
responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the
Financial Statements’ section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the Financial Statements in Guernsey, including the International
Code of Ethics for Professional Accountants (including International Independence Standards) issued by the
International Ethics Standards Board for Accountants, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Other matter
The Financial Statements of the Company for the year ended 31 March 2020 were audited by another auditor
who expressed an unmodified opinion on those financial statements on 25 August 2020.
Our approach to the audit
Overview of our audit approach
Materiality
Our overall materiality was £496k, which represents 2% of the Company’s
total equity.
Materiality Scoping
Key audit
matters
Key audit matters
Valuation of unquoted investments.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality
determine our audit scope for the Company. This enables us to form an opinion on the Financial Statements.
We consider size, risk profile, the organisation of the Company and effectiveness of controls, including
controls and changes in the business environment when assessing the level of work to be performed.
All audit work was performed directly by the audit engagement team. The audit was led from Guernsey and
we engaged our internal valuation specialists who assisted us in auditing the valuation of unquoted
investments.
19 19
Key audit matters
Key audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the Financial Statements of the
current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These
matters included those that had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context
of our audit of the Financial Statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
Key Audit Matter
How our scope addressed the matter
Descript
ion
Au
es
Our
results
Key observations communicated
to the Audit Committee
We reported to the Audit
Committee that, overall, the
valuation of the Company’s
unquoted investments were
materially correct, in
accordance with IFRS and
within our estimated range.
Valuation of unquoted
investments (2021: £18.04
million and 2020: £12.43
million)
77% (2020: 93%) of the
carrying value of the
Company’s investments,
consist of unquoted
investments which are valued
using different valuation
techniques, as described in
Notes 3 e), 4 and 13 to the
Financial Statements.
The valuation is subjective,
with a high level of judgement
and estimation linked to the
determination of the fair
values. As a result, there is a
risk of an inappropriate
valuation method being
applied, together with the risk
of inappropriate inputs to the
model/calculation being
selected.
The valuation of unquoted
investments are the key
driver of the Company’s net
asset value and total return.
Incorrect valuation could
have a significant impact on
the net asset value of the
Company and therefore the
return generated for
shareholders.
Refer to the Report of the
Chief Executive Officer,
Report of Directors,
Accounting policies in
Notes 3 e), and Notes 4
and 13 to the Financial
Statements for additional
information.
Our audit procedures consisted of:
We updated our understanding of the Company’s
processes, policies and methodologies, including
the use of industry specific measures, and policies
for valuing unquoted investments held by the
Company and we performed walkthrough tests to
assess the design and implementation of key
controls;
We obtained and inspected the valuation models
and supporting data to assess whether the data
used is appropriate and relevant, and discussed
these with management to evaluate whether the fair
value of unquoted investments is reasonably stated,
challenging the assumptions made by management;
We agreed valuation inputs that do not require
specialist knowledge to independent sources and
tested the arithmetical accuracy of the Company’s
calculations;
We agreed the valuation models to the portfolio
statement in the Financial Statements;
For a sample of unquoted investments, we engaged
our own internal private equity valuation specialists
to:
o assist us to determine whether the
methodologies used to value unlisted
investments were consistent with methods
usually used by market participants for similar
types of investments;
o use their knowledge of the market to assess and
corroborate management’s market related
judgements and valuation inputs (i.e. discount
rates, EBITDA multiples and comparable data)
by reference to comparable transactions, and
independently compiled databases/indices; and
o assist us in determining whether the Company’s
specialists were appropriately qualified and
independent.
Evaluated the appropriateness of the valuation
methodologies under IFRS and whether appropriate
disclosures were made in the Financial Statements.
20 20
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of
identified misstatements on the audit and of uncorrected misstatements, if any, on the Financial Statements
and in forming the opinion in the auditor’s report. Materiality was determined as follows:
Financial statements
materiality
“Financial statements materiality” is the magnitude of misstatement in the Financial
Statements that, individually or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of these Financial Statements. We use materiality in
determining the nature, timing and extent of our audit work.
Financial statements
materiality threshold
We determined materiality for the Company to be £496k which approximates 2% of the
Company’s total equity. (2020: £355k on 2.5% of the Company’s total equity as determined
by PricewaterhouseCoopers CI LLP)
Significant judgements
made by auditor in
determining the
materiality
Company total equity provided a basis for determining the nature, timing and extent of risk
assessment procedures, identifying and assessing the risk of material misstatement and
determining the nature, timing and extent of further audit procedures. We believe that
Company’s total equity provides us with the best measure of planning materiality as the
Company’s primary performance measures for internal and external reporting are based on
total equity.
Financial Statements materiality for the current year is lower than the level that we determined
for the year ended 31 December 2019 to reflect the decrease in the Company’s total equity
to 31 December 2020.
Performance materiality
used to drive the extent
of our testing
“Performance” materiality is the application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level the probability that the
aggregate uncorrected and undetected misstatements exceeds materiality for the Financial
Statements as a whole.
Performance materiality
threshold
We determined performance materiality for the Company to be £298k which approximates
60% of Financial Statements materiality.
Significant judgements
made by the auditor in
determining performance
materiality
Based on our assessment, together with our assessment of the Company’s overall control
environment, our judgement was that the overall performance materiality (i.e. our tolerance
for misstatements in an individual account or balance) for the Company should be 60% of
materiality. Our objective in adopting this approach was to ensure that total uncorrected and
undetected audit differences in the Financial Statements did not exceed our materiality level.
Reporting threshold
“Reporting threshold” is an amount below which we identified misstatements are considered
as being clearly trivial.
Threshold for reporting
We agreed with the Audit Committee that we would communicate to them all audit differences
in excess of £25k (2020: £17k as determined by PricewaterhouseCoopers CI LLP) which is
set at 5% of materiality for the Financial Statements as a whole, as well as differences below
that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluated uncorrected misstatements against both the quantitative measured of
materiality discussed above and considering other relevant qualitative considerations in
forming our opinion.
21 21
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report set out on pages 1 to 12, other than the Financial Statements and our
auditor’s report thereon. Our opinion on the Financial Statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with the
Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement of the Financial Statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies (Guernsey)
Law, 2008 requires us to report to you if, in our opinion:
proper accounting records have not been kept by the Company; or
the Financial Statements are not in agreement with the accounting records; or
we have not obtained all the information and explanations, which to the best of our knowledge and belief,
are necessary for the purposes of our audit.
Responsibilities of directors for the Financial Statements
As explained more fully in the directors’ responsibilities statement set out on pages 17 to 18, the directors are
responsible for the preparation of the Financial Statements which give a true and fair view in accordance with
IFRSs, and for such internal control as the directors determine is necessary to enable the preparation of
Financial Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these Financial Statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
22 22
Auditor’s responsibilities for the audit of the Financial Statements
(cont.)
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the Financial Statements, including
the disclosures, and whether the Financial Statements represent the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Section 262 of the
Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Wynand Pretorius
For and on behalf of Grant Thornton Limited
Chartered Accountants
St Peter Port
Guernsey
Date: 14 July 2021
23
SEED Innovations Limited
Statement of Comprehensive Income
For the year ended 31 March 2021
Net realised gain on disposal of financial assets designated at fair value
through profit and loss
Net unrealised gain/(loss) in fair value of financial assets designated at
fair value through profit and loss
Year ended
31 March
2021
£’000
Year ended
31 March
2020
£’000
443
165
6,864
(4,148)
Notes
12
12
Interest income on investments at fair value through profit and loss
31
69
Total investment income/(loss)
7,338
(3,914)
Other Income
Bank interest income
Arrangement fee
Total other income
Expenses
Directors' remuneration and expenses
Recognition of Directors’ share-based payment expense
Legal and professional fees
Other expenses
Administration fees
Adviser and broker’s fees
7
7
8
6
2
45
47
(258)
(47)
(166)
(193)
(77)
(95)
12
-
12
(427)
(162)
(172)
(147)
(97)
(74)
Total expenses
(836)
(1,079)
Net profit/(loss) before losses and gains on foreign currency exchange
6,549
(4,981)
Net foreign exchange loss
Total comprehensive income/(loss) for the year
(20)
(15)
6,529
(4,996)
Earnings/(loss) per Ordinary Share – basic and diluted
10
3.74p
(3.09)p
The Company has no recognised gains or losses other than those included in the results above and therefore, no
separate Statement of Comprehensive Income has been presented.
All the items in the above statement are derived from continuing operations.
The accompanying notes on pages 28 to 51 form an integral part of these financial statements.
24
SEED Innovations Limited
Statement of Financial Position
As at 31 March 2021
Non-current assets
Financial assets designated at fair value through profit or loss
Current assets
Other receivables
Cash and cash equivalents
Total assets
Current liabilities
Other payables
Total liabilities
Net assets
Equity
Share capital
Deferred share reserve
Employee stock option reserve
Other distributable reserves
Total equity
Notes
31 March 2021
£’000
31 March 2020
£’000
12
14
15
16
16
7
23,280
13,372
53
1,675
1,728
50
1,213
1,263
25,008
14,635
(69)
(69)
(397)
(397)
24,939
14,238
2,127
-
180
22,632
24,939
1,615
630
1,263
10,730
14,238
Net assets per Ordinary Share – basic and diluted
17
11.72p
8.82p
The financial statements on pages 24 to 51 were approved by the Board of Directors on 14th July 2021 and were signed
on their behalf by:
Ian Burns
Director
Lance De Jersey
Director
The accompanying notes on pages 28 to 51 form an integral part of these financial statements.
25
SEED Innovations Limited
Statement of Changes in Equity
For the year ended 31 March 2021
Balance as at 31 March 2019
Note
Total comprehensive loss for the year
Transactions with shareholders
Employee share scheme - value
of employee services
Transfer of value of lapsed options
Balance as at 31 March 2020
Total comprehensive profit for the year
Transactions with shareholders
Issue of Ordinary Shares
Costs of issuing of ordinary shares
Employee share scheme - value
of employee services
Transfer of deferred shares
Transfer of value of lapsed options
7
7
16
7
7
Share Capital
-
£'000
1,615
-
-
1,615
-
512
-
-
-
-
Deferred shares
reserve*
£'000
Employee stock
option reserves
£'000
Other distributable
reserves
£'000
Total
£'000
630
1,233
15,594
19,072
-
-
-
630
-
-
-
-
(630)
-
-
(4,996)
(4,996)
162
(132)
-
132
162
-
1,263
-
-
-
47
-
(1,130)
10,730
6,529
14,238
6,529
3,844
(231)
-
630
1,130
4,356
(231)
47
-
-
Balance as at 31 March 2021
2,127
-
180
22,632
24,939
* Refer to Note 16 for Deferred shares reserve.
The accompanying notes on pages 28 to 51 form an integral part of these financial statements.
26
SEED Innovations Limited
Statement of Cash Flows
For the year ended 31 March 2021
Cash flows from operating activities
Total comprehensive income/(loss) for the year
Adjustments for:
Net (loss)/profit on fair value adjustments on financial assets at
FVTPL
Realised gain on fair value adjustments on financial assets at FVTPL
Foreign exchange movement
Directors’ share based expense
Finance income
Changes in working capital:
(Increase)/decrease in other receivables and prepayments
(Decrease)/increase in other payables and accruals
Net cash outflow from operating activities
Cash flows from investing activities
Acquisition of financial assets at fair value through profit or loss
Investment income
Disposal of financial assets at fair value through profit or loss
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Issue of Ordinary Shares
Costs of issuing Ordinary Shares
Net cash inflow from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents brought forward
Increase in cash and cash equivalents
Foreign exchange movement
Cash and cash equivalents carried forward
12
12
14
15
13
13
16
Year ended
31 March 2021
£’000
Year ended
31 March 2020
£’000
6,529
(4,996)
(6,864)
(443)
20
47
(33)
(3)
(70)
4,148
(165)
15
162
(81)
62
249
(817)
(606)
(3,736)
-
1,166
(1,033)
81
2,282
(2,570)
1,330
4,100
(231)
3,869
482
1,213
482
(20)
1,675
-
-
-
724
504
724
(15)
1,213
27
The accompanying notes on pages 28 to 51 form an integral part of these financial statements.
SEED Innovations Limited
Notes to the Financial Statements
For the year ended 31 March 2021
1. General Information
Fast Forward Innovations Limited (the “Company”) is an authorised closed-ended investment scheme. The Company is
domiciled and incorporated as a limited liability company in Guernsey. The registered office of the Company is 11 New
Street, St Peter Port, Guernsey, GY1 2PF.
The Company's objective is to invest in disruptive technologies with significant intellectual property rights which they
are seeking to exploit, principally within the technology sector (including digital and content focused businesses), life
sciences sectors (including biotech and pharmaceuticals) and health and wellness sectors. This includes investing in the
cannabinoid sector where there has been increased investor momentum due to regulation changes, and as companies’
profiles grow and investment in the sector becomes more mainstream. The Company’s main geographical focus will be
in North America and Europe though investments may also be considered in other regions to the extent that the Board
considers that valuable opportunities exist, and positive returns can be achieved. The objective of the Company is to
also provide its investors with exposure to disruptive growth opportunities, with a mix of liquid, pre-liquid and longer
term investments, which taken together greatly reduces the risk of the portfolio whilst giving much clearer visibility on
potential returns.
The Company’s Ordinary Shares are quoted on AIM, a market operated by the London Stock Exchange and is authorised
as a Closed-ended investment scheme by the Guernsey Financial Services Commission (the "GFSC") under Section 8 of
the Protection of Investors (Bailiwick of Guernsey) Law, 1987 and the Authorised Closed-Ended Investment Schemes
Rules.
2. Basis of Preparation
The financial statements of the Company have been prepared in accordance with International Financial Reporting
Standards ("IFRS") as issued by the international Standards Board (“IASB”) and applicable legal and regulatory
requirements of the Companies (Guernsey) Law, 2008. The financial statements have been prepared under the historical
cost convention except for financial assets at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed in Note 4.
In the current year, the Company has adopted all the applicable new and revised standards and interpretations issued
by the IASB and the International Financial Reporting Interpretations Committee ("IFRIC") of the IASB that are relevant
to its operations and effective for annual reporting periods beginning on or after 1 April 2020. The adoption of the
standards and interpretations has not had a significant impact on the content or presentation of these financial
statements; refer below for additional consideration.
(a) Standards and amendments to existing standards effective 1 January 2020
There are no standards, amendments to standards or interpretations that are effective for annual periods beginning on
1 January 2020 that have a material effect on the financial statements of the Company.
(b) New standards, amendments and interpretations effective after 1 January 2020 and have not been early adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning
after 1 January 2021 and have not been early adopted in preparing these financial statements. None of these are
expected to have a material effect on the financial statements of the Company.
28
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
3. Significant Accounting Policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
a) Investment Income
Investment income is recognised on an accruals basis using the effective interest method and includes bank
interest and interest from debt securities. Dividend income from investments designated at fair value through
profit or loss is recognised through the Statement of Comprehensive Income within dividend income when the
Company’s right to receive payments is established
b) Expenses
All expenses are accounted for on an accruals basis and, with the exception of share issue costs, are charged through
the Statement of Comprehensive Income in the period in which they are incurred. Costs of issuing equity instruments
are accounted for as a deduction from equity, net of any related income tax benefit.
c) Taxation
The Company is exempt from taxation in Guernsey. However, in some jurisdictions, investment income and capital gains
are subject to withholding tax deducted at the source of the income. The Company presents the withholding tax
separately from the gross investment income, if any, in the Statement of Comprehensive Income. For the purpose of
the Statement of Cash Flows, cash inflows from financial assets are presented net of withholding taxes when applicable.
d) Share based payments
Share-based compensation benefits are provided to key employees via the Employee Share Option Plan and individual
Share Option agreements (together the “Options”). Details relating to the Options are set out in note 7 to the financial
statements.
These Options are measured at fair value at the date of grant and expensed through the Statement of Comprehensive
Income on a straight line basis over the vesting period, based on the estimate of Options that will eventually vest. For
those Options with market related vesting conditions, the fair value is determined using the Monte Carlo simulation
model at the grant date. The fair value of Options issued with non-market vesting conditions has been calculated using
the Black Scholes model.
At the end of each period, the Company revises its estimates of the number of Options that are expected to vest based
on the non-market vesting and service conditions. Should services cease be provided to the Company by any employee,
no further expense will be charged in relation to any non-vested Options.
When Options expire, or Options holders no longer provide services to the Company, any amounts in relation to these
Options which have been credited to the Share Option Reserve within Equity will be transferred to Distributable
Reserves.
The Company does not operate any cash-settled Options with cash alternatives as defined in IFRS 2. All Options issued
will be settled through Equity, with all Option expenses having a corresponding increase in Equity.
e) Financial instruments
Financial instruments are classified into financial assets and financial liabilities.
(i) Recognition and initial measurement
Financial assets at fair value through profit or loss are recognised initially on the trade date, which is the date on
which the Company becomes a party to the contractual provisions of the instrument. Other financial assets and
liabilities are recognised on the date they are originated.
Financial assets at fair value through profit or loss are initially recognised at fair value, with transaction costs
recognised in profit or loss. Financial assets or financial liabilities not at fair value through profit or loss are initially
recognised at fair value plus transaction costs that are directly attributable to its acquisition or issue.
29
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
3. Significant Accounting Policies (continued)
e) Financial instruments (continued)
(ii) Classification
Business model assessment
On initial recognition, the Company classifies financial assets as measured at amortised cost or fair value through
profit or loss (“FVTPL”).
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
as at FVTPL:
•
•
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
the contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest (“SPPI”).
All other financial assets are classified as measured at FVTPL.
In making an assessment of the objective of the business model in which a financial asset is held, the Company
considers all of the relevant information about how the business is managed, including:
•
•
•
•
•
the documented investment strategy and the execution of this strategy in practice. This includes whether the
investment strategy focuses on earning contractual interest income, maintaining a particular interest rate
profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash
outflows or realising cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Company’s management;
the risks that affect the performance of the business model (and the financial assets held within that business
model) and how those risks are managed;
how the Investment Manager is compensated: e.g. whether compensation is based on the fair value of the
assets managed or the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and
expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered
sales for this purpose, consistent with the Company’s continuing recognition of the assets.
The Company has determined that it has two business models:
•
•
Held-to-collect business model: this includes cash and cash equivalents and other receivables. These financial
assets are held to collect contractual cash flows; and
Other business model: this includes investment in unquoted securities that were not held for trading
purposes. These financial assets are managed and their performance is evaluated, on a fair value basis.
(iii) Assessment whether contractual cash flows are SPPI
For the purpose of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition.
‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the
principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g.
liquidity risk and administrative costs), as well as profit margin.
In assessing whether the contractual cash flows are SPPI, the Company considers the contractual terms of the
instrument. This includes assessing whether the financial asset contains a contractual term that could change the
timing or amount of contractual cash flows such that it would not meet this condition.
30
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
3. Significant Accounting Policies (continued)
e) Financial instruments (continued)
In making the assessment, the Company considers:
•
•
•
•
•
contingent events that would change the amount and timing of cash flows;
leverage features;
prepayment and extension terms;
terms that limit the Company’s claim to cash flows from specified assets (e.g. non-recourse loans); and
features that modify consideration of the time value of money (e.g. periodical reset of interest rates).
(iv) Reclassification
Financial assets are not reclassified subsequent to their initial recognition unless the Company was to change its
business model for managing financial assets, in which case all affected financial assets would be reclassified on
the first day of the first reporting period following the change in the business model.
(v) Subsequent measurement
Financial assets at fair value through profit or loss
These assets are subsequently measured at fair value. Net gains and losses, excluding any interest or dividend
income and including foreign exchange gains and losses are recognised in profit or loss in ‘Net gain/(loss) on fair
valuation of financial assets at FVTPL’ in the statement of profit or loss and other comprehensive income.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. Interest income is
recognised in ‘interest income calculated using the effective interest method’, foreign exchange gains and losses
are recognised in the statement of profit or loss and other comprehensive income and impairment is recognised
in ‘impairment losses on financial instruments’ in the statement of profit or loss and other comprehensive income.
Any gain or loss on derecognition is also recognised in profit or loss.
(vi) Financial liabilities – classification and subsequent measurement
Non - derivative financial liabilities
The Company initially recognises debt securities issued and subordinated liabilities on the date that they are
originated. All other financial liabilities (including liabilities designated as at fair value through profit or loss) are
recognised initially on the trade date, which is the date that the Company becomes a party to the contractual
provisions of the instrument. The Company derecognises a financial liability when its contractual obligations are
discharged, cancelled or expired.
The Company classifies non-derivative financial liabilities into the other financial liabilities category. Such financial
liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured at amortised cost using the effective interest method. Other
liabilities include other payables and accruals.
(vii) Fair Value measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value of financial assets and liabilities traded in
active markets (such as publicly traded derivatives and trading securities) are based on quoted market prices at
the close of trading on the reporting date. The Company utilises the last traded market price for both financial
assets and financial liabilities where the last traded price falls within the bid-ask spread. In circumstances where
the last traded price is not within the bid-ask spread, management will determine the point within the bid-ask
spread that is most representative of fair value.
31
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
3. Significant Accounting Policies (continued)
e) Financial instruments (continued)
If a significant movement in fair value occurs subsequent to the close of trading up to midnight on the year end
date, valuation techniques will be applied to determine the fair value. A significant event is any event that occurs
after the last market price for a security, close of market or close of the foreign exchange, but before the Company’s
valuation time that materially affects the integrity of the closing prices for any security, instrument, currency or
securities affected by that event so that they cannot be considered ‘readily available’ market quotations.
The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation
techniques in accordance with the International Private Equity and Venture Capital Valuation (IPEV) Guidelines.
The Company uses a variety of methods and makes assumptions that are based on market conditions existing at
each reporting date. Valuation techniques used include the use of comparable recent ordinary transactions
between market participants, reference to other instruments that are substantially the same, discounted cash flow
analysis, option pricing models and other valuation techniques commonly used by market participants making the
maximum use of market inputs and relying as little as possible on entity-specific inputs.
Transfers between levels of the fair value hierarchy
Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting
period.
(viii) Amortised cost measurement
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial
liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation
using the effective interest method of any difference between the initial amount recognised and the maturity
amount and for financial assets adjusted for any loss allowance.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability
and of allocating the interest income or interest expense over the relevant year. The effective interest rate is the
rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial
instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial
liability at initial recognition. When calculating the effective interest rate, the Company estimates the future cash
flows considering all contractual terms of the financial instruments but not the future credit losses.
(ix) Impairment
The Company recognises loss allowances for Expected Credit Losses (“ECL”) on financial assets measured at
amortised cost.
The Company measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are
measured at 12-month ECLs:
•
•
Financial assets that are determined to have low credit risk at the reporting date; and
Other financial assets and bank balances for which credit risk (i.e. the risk of default occurring over the
expected life of the asset) has not increased significantly since initial recognition.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and qualitative information and analysis,
based on the Company’s historical experience and informed credit assessment and including forward-looking
information.
The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days
past due.
32
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
3. Significant Accounting Policies (continued)
e) Financial instruments (continued)
The Company considers a financial asset to be in default:
• when the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the
Company to actions such as realising assets (if any is held); or
the financial asset is more than 90 days past due.
•
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial
instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12
months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the
Company is exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all
cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and
the cash flows that the Company expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-
impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
•
•
•
•
significant financial difficulty of the borrower or issuer;
it is probable that the borrower will enter bankruptcy or other financial reorganisation;
the underlying project is put on hold; and
breach of contract such as a default or being more than 90 days past due.
Presentation of allowance for ECLs in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of
the assets. Impairment losses including reversals of impairment losses and gains are disclosed separately in the
statement of profit or loss and other comprehensive income.
Write-off
The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof.
33
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
3. Significant Accounting Policies (continued)
e) Financial instruments (continued)
(ix) Derecognition
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is
derecognised where:
•
•
•
•
The rights to receive cash flows from the asset have expired; or
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement;
and
Either (a) the Company has transferred substantially all the risks and rewards of the asset; or
(b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset but
has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement and has neither transferred nor retained substantially all the risks and rewards of the asset nor
transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in
the asset. The Company derecognises a financial liability when the obligation under the liability is discharged,
cancelled or has expired.
(x) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Company has a legal right to offset the amounts and it intends either to settle
on a net basis or to realise the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis for gains and losses from financial instruments at fair value
through profit or loss and foreign exchange gains and losses.
f) Cash and cash equivalents
Cash comprises of cash at bank. Cash equivalents are short-term highly liquid investments that are readily convertible
to known amounts of cash, are subject to an insignificant risk of changes in value and are held for the purpose of meeting
short-term cash commitments rather than for investment or other purposes.
g) Foreign currency translation
Functional and presentation currency
The Company’s Ordinary Shares are denominated in Sterling and are traded on AIM in Sterling. The primary activity of
the Company is detailed in the Investing Policy on page 2. The performance of the Company is measured and reported
to the investors in Sterling and the majority of the expenses incurred by the Company are in Sterling. Consequently, the
Board of Directors considers that Sterling is the currency that most faithfully represents the effects of the underlying
transactions, events and conditions. The financial statements are presented in Sterling, which is the Company’s
functional and presentation currency. All amounts are rounded to the nearest thousand.
Transactions and balances
Foreign currency transactions are translated into the functional currency using rates approximating to the exchange
rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised through the Statement of Comprehensive Income. Translation differences on non-
monetary financial assets and liabilities, such as financial assets designated at fair value through profit or loss, are
recognised through the Statement of Comprehensive Income within the net unrealised change in fair value of
investments.
34
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
3. Significant Accounting Policies (continued)
h) Net assets per share
The net assets per Ordinary Share disclosed on the face of the Statement of Financial Position is calculated by dividing
the net assets of the Company as at the year-end by the number of Ordinary Shares in issue at the year end.
i) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
•
•
the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary
shares; and
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements, if any, in ordinary shares issued during the year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
•
•
the after tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and
the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
j) Transaction costs
Transaction costs are the incremental costs that are directly attributable to the acquisition, issue or disposal of a financial
asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired,
issued or disposed of the financial instrument. Transaction costs are legal and professional fees incurred to structure a
deal to acquire the investments designated as financial assets at fair value through profit or loss. They include the
upfront fees and commissions paid to agents, advisers, brokers and dealers and due diligence fees..
k) Equity
Ordinary shares are classified as equity. Where the Company purchases its own equity share (e.g. as the result of a share
buy-back), the consideration paid, including any directly attributable incremental costs, is deducted from equity
attributable to the owners of the Company as treasury shares until the shares are cancelled or reissued. The Company
will present any Treasury shares acquired in the Statement of Changes in Equity as a deduction from ordinary shares.
Employee Stock Option
Employee stock options are valued when they are granted using the current accounting standard's fair value technique.
However, the value of the options may be calculated at the conclusion of the vesting period or when they are exercised.
Other Distributable Reserve
The Company's cumulative profits and losses are known as distributable reserves. From time to time, the Company may
transfer any sum that it considers to be close to distributable reserve. (For example, if ordinary shares are sold for more
than their par value, the excess will be moved to other distributable reserves.)
l) Assessment as an investment entity
Entities that meet the definition of an investment entity within IFRS 10 are required to measure their investee
companies at fair value through profit or loss. The criteria (per IFRS 10) which define an investment entity are, as follows:
•
•
•
An entity that obtains funds from one or more investors for the purpose of providing those investors with
investment services;
An entity that commits to its investors that its business purpose is to invest funds solely for returns from capital
appreciation, investment income or both; and
An entity that measures and evaluates the performance of substantially all of its investments on a fair value
basis.
The Company meets the above criteria and is therefore categorised as an investment entity within IFRS 10.
35
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
3. Significant Accounting Policies (continued)
j) Going concern
After making reasonable enquiries, and assessing all data relating to the Company’s liquidity, the Directors have a
reasonable expectation that the Company has adequate resources to continue in operational existence for the
foreseeable future and do not consider there to be any threat to the going concern status of the Company. For this
reason, they continue to adopt the going concern basis in preparing the financial statements.
The Directors note that the Company has sufficient cash and cash equivalent resources to meet its obligations for at
least one year after the approval of these financial statements.
4. Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with IFRS requires the Board to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates.
The Board make estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results.
The Directors believe that the underlying assumptions are appropriate and that the financial statements are fairly
presented. Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are outlined below:
Judgements
Assessment as an investment entity
In determining the Company meeting the definition of an investment entity in accordance with IFRS 10, it has considered
the following:
•
the Company has raised the commitments from a number of investors in order to raise capital to invest and to
provide investor management services with respect to these private equity investments;
the Company intends to generate capital and income returns from its investments which will, in turn, be
distributed to the investors; and
the Company evaluates its investment performance on a fair value basis, in accordance with the policies set
out in these financial statements.
•
•
Although the Company met all three defining criteria, management has also assessed the business purpose of the
Company, the investment strategies for the private equity investments, the nature of any earnings from the private
equity investments and the fair value model. Management made this assessment in order to determine whether any
additional areas of judgement exist with respect to the typical characteristics of an investment entity versus those of
the Company. Management have therefore concluded that from the assessments made, the Company meets the criteria
of an investment Company within IFRS 10.
Part of the assessment in relation to meeting the business purpose aspects of the IFRS 10 criteria also requires
consideration of exit strategies. Given that the Company does not intend to hold investments indefinitely, management
have determined that the Company’s investment plans support its business purpose as an investment entity.
The Board has also concluded that the Company meets the additional characteristics of an investment entity, in that: it
holds more than one investment; the investments will predominantly be in the form of equities, derivatives and similar
securities; it has more than one investor and the majority of its investors are not related parties.
36
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
4. Critical Accounting Estimates and Judgements (continued)
Estimates and assumptions
Fair value of securities not quoted in an active market.
The Company may value positions by using its own models or commissioning valuation reports from professional third-
party valuers. The models used in either case are based on valuation methods and techniques generally recognised as
standard within the industry and in accordance with International Private Equity and Venture Capital Valuation (IPEV)
Guidelines. The inputs into these models are primarily earnings multiples and discounted cash flows. The inputs in the
earnings multiple’s models include observable data, such as the earnings multiples of comparable companies to the
relevant portfolio company, and unobservable data, such as forecast earnings for the portfolio company. In discounted
cash flow models, unobservable inputs are the projected cash flows of the relevant portfolio company and the risk
premium for liquidity and credit risk that are incorporated into the discount rate. In some instances, the cost of an
investment is the best measure of fair value in the absence of further information. Models are calibrated by back-testing
to actual results/exit prices achieved to ensure that outputs are reliable, where possible.
Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty),
volatilities and correlations require management to make estimates. Changes in assumptions about these factors could
affect the reported fair value of financial instruments. The sensitivity to unobservable inputs is based on management’s
expectation of reasonable possible shifts in these inputs, taking into consideration historical volatility and estimations
of future market movements.
The determination of what constitutes ‘observable’ requires significant judgement by the Company. The Company
considers observable data to be market data that is readily available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
Valuation of Options
The fair values of the Options are measured using the Black-Scholes model, for those options with non-market vesting
conditions, and a Monte Carlo Simulation model for those Options with market related vesting conditions.
The key estimates and assumptions which are used as inputs in these valuation models are as follows;
•
•
•
•
•
•
•
•
any market vesting conditions;
the expected vesting period;
the term of the options;
the expected volatility of the Company’s share price as at grant date;
the risk-free rate of return available at grant date;
the Company’s share price at grant date;
the expected dividends on the Company’s shares over the expected term of the options; and
the exercise (strike) price of the options.
For those Options which did not vest immediately on issue, non- market vesting conditions, the expected vesting period
of the options is estimated to be 5 years from the grant date. 5 years is deemed to be a realistic timeframe in which the
performance conditions can be expected to be achieved.
However, the options can be exercised (subject to market conditions being met where applicable) at any point after
vesting and prior to the Option expiry date.
5. Segmental Information
In accordance with IFRS 8: Operating Segments, it is mandatory for the Company to present and disclose segmental
information based on the internal reports that are regularly reviewed by the Board in order to assess each segment’s
performance and to allocate resources to them.
Operating segments are reported in a manner consistent with the internal reporting used by the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board as a whole. The board is responsible for the
Company's entire portfolio and considers the business to have a single operating segment. Asset allocation decisions
are based on a single, integrated investment strategy, and the Company’s performance is evaluated on an overall basis.
37
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
6. Administration Fees
Vistra Fund Services (Guernsey) Limited (“Vistra”) is entitled to an administration fee of £56,265 per annum. The
administrator is also entitled to an additional fee of £2,558 for each formal board meeting held and £10,230 per annum
for Compliance oversight services and an annual fee for the provision of a Privacy Officer, in respect of the pertinent
Data Protection Legislation.
The Administrator is also entitled to recover by way of reimbursement from the Company, transaction costs associated
with the provision of specific services and reasonable out-of-pocket expenses incurred in the performance of its services
to include any of the Administrator’s approved services.
In the year ended 31 March 2021, a total of £77,000 (2020: £97,000) was charged to the Statement of Comprehensive
Income, of which, £11,000 was payable at the financial reporting date (2020: £23,000).
7. Director’s Remuneration
The Board agreed the following compensation packages for the Directors of the Company.
•
•
•
•
•
Lorne Abony was entitled to an annual remuneration of £250,000, payable monthly in arrears which decreased to
£100,000 per annum, effective from 1 January 2020 until his date of termination. The Company also granted Mr
Abony Options over 12,131,548 ordinary shares at 20 pence per share. The terms of the Options are explained
below. Mr Abony resigned on 15 May 2020 and agreed to defer payment of £250,000 in accrued but uninvoiced
fees for the 2019 calendar year as at the termination date for a period of 12 months. Mr. Abony was issued
2,941,177 shares in settlement of these accrued fees in January 2021. His options expired in February 2021 and
the reserve in relation to these was released to Other Distributable Reserves as mentioned in Note 16.
Ian Burns is entitled to an annual remuneration of £36,000 per annum.
Ed McDermott is entitled to an annual remuneration of £92,808. This includes a Director Fee of £80,000 per annum
and an annual reimbursement of £12,808 effective from 01 June 2020 for amounts paid or payable as employers
NIC contributions to HMRC. The Company has also granted Mr McDermott Options over 1,000,000 ordinary shares
at 19 pence per share and further Options over 1,000,000 ordinary shares at 25 pence per share. Terms of the
Options are explained below.
Lance De Jersey is entitled to an annual remuneration of £80,000 per annum.
Luke Cairns is entitled to an annual remuneration of £36,000 per annum.
Additional information on Directors' Remuneration is noted in related parties. Refer to note 18.
Following the approval to grant Options, the number of share options held by each Director at 31 March 2021 was as
follows:
Date
Granted
Options issued
% of issued
shares on fully
diluted basis
Exercise price
(pence)
Weighted average
contractual
remaining life
Ed McDermott
13-Feb-18
1,000,000
Ed McDermott
13-Feb-18
1,000,000
2,000,000
0.47%
0.47%
0.94%
19
25
3
3
Fair value of the Options as the year end are as below:
Opening Balance
Options lapse for the year
Recognition of Directors share based expense
Year ended
31 March 2021
£'000
1,263
(1,130)
47
180
Year ended
31 March 2020
£'000
1,233
(132)
162
1,263
38
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
7. Directors’ Remuneration (continued)
During the period 12,131,548 options issued to Mr Abony, the former Chairman of the Company, lapsed. The total
Employee Share Option Reserve in relation to Mr Abony of £1,130,000 has been transferred to Other Distributable
Reserves through the Statement of Changes in Equity.
Upon exercise the options entitle the holder to one Ordinary Share of 1p in the Issued Share Capital of the Company.
Following the grant of the Options to Mr Abony, 50% of the Options vested immediately, 25% of the Options shall vest
after 12 months (subject to the weighted average price of the Company’s ordinary shares rising above 25 pence for ten
consecutive trading days), and the balance of 25% shall vest after 24 months (subject to the weighted average price of
the Company’s Ordinary Shares rising above 35 pence for ten consecutive trading days).
On the grant of the Options to Mr McDermott 33% of the Options vested immediately, 33% of the Options vested after
12 months and the balance of 34% shall vest after 24 months, on the same weighted average share price terms as for
the other Directors, above.
The vesting terms have not yet been achieved for any of the options which did not vest immediately.
Subject to vesting (which is accelerated in the event of a change of control), the Options may only be exercised while
the party remains, or in the three month period after they cease to be, an “eligible employee” of the Company (as such
term is defined in the Option Agreements) and within a five year term from the date of grant. The Options may be
exercised on a cash-less basis subject to agreement of the Board at such time.
No Options were exercised during the year as at no point during the year did the share price of the Company exceed
the Exercise price of any of the Options which had vested.
Share Option measurement of fair value
For those Options with market related vesting conditions, the fair value is determined using the Monte Carlo simulation
model at the grant date. The fair value of Options issued with non-market vesting conditions has been calculated using
the Black Scholes model. Services and non-market performance conditions attached to the arrangements were not
taken into account in measuring fair value as explained in note 3(d) and 4.
In addition, the model inputs used in the measurement of the fair values at grant dates were as follows:
Weighted Average Fair value
Share price
Exercise price
Annualised expected volatility
Annual risk free interest rate
Grant date
13-Feb-18
12.35 pence
20.13 pence
19 pence
75.48%
1.17%
Grant date
Grant date
13-Feb-18
17-Feb-16
11.82 pence
10.06 pence
20.13 pence
18.00 pence
25 pence
20 pence
75.48%
1.17%
70.09%
0.86%
39
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
7. Directors’ Remuneration (continued)
The expected life of all options are 5 years from grant date and no dividends are expected to be paid. Expected volatility
has been based on an evaluation of the historical volatility of the Company’s share price. The total fair value of the share
Options issued, as at the date of granting, is estimated to be £241,718.
31 March 2021
Ian Burns (appointed on 12 November 2014)
Lorne Abony (appointed on 6 January 2016)
Ed McDermott (appointed 12 February 2018)
Lance De Jersey (appointed 3 January 2019)
Luke Cairns (appointed 3 January 2020)
Jim Mellon (Resigned on 21 August 2019)
Directors’
Remuneration
£'000
36
16
91
80
36
(29)
230
Discretionary
Bonus
£'000
14
-
-
-
14
28
Recognition of
share based
expense
£'000
-
15
32
-
-
Total
£'000
50
31
123
80
50
47
334
During the year, Director fees payable to Jim Mellon in the amount of £29,274 were written down.
31 March 2020
Ian Burns (appointed on 12 November 2014)
Jim Mellon (appointed on 13 July 2015;
resigned on 21 August 2019)
Lorne Abony (appointed on 6 January 2016)
Ed McDermott (appointed 12 February 2018)
Lance De Jersey (appointed 3 January 2019)
Luke Cairns (appointed 3 January 2020)
Directors’
Remuneration
£'000
27
12
254
50
75
9
427
Discretionary
Bonus
£'000
-
-
-
-
-
-
-
Recognition of
share based
expense
£'000
-
8
122
32
-
-
162
Total
£'000
27
20
376
82
75
9
589
No pension contributions were paid or were payable on behalf of the Directors. Details of the Directors’ interests in the
share capital are set out in note 17.
8. Other expenses
Marketing expenses
Other Directors’ related expenses
Regulatory and listing fees
Registrar fees
Audit fees
Directors’ and Officers’ liability insurance
Other expenses
Year ended
31 March 2021
£'000
-
-
43
47
36
5
62
193
Year ended
31 March 2020
£'000
2
22
13
28
40
6
36
147
40
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
9. Tax effects of other comprehensive income
The Income Tax Authority of Guernsey has granted the Company exemption from Guernsey income tax under the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and the income of the Company may be distributed or
accumulated without deduction of Guernsey income tax. Exemption under the above mentioned Ordinance entails
payment by the Company of an annual fee of £1,200 for each year in which the exemption is claimed. It should be noted,
however, that interest and dividend income accruing from the Company’s investments may be subject to withholding
tax in the country of origin.
There were no tax effects arising from the other comprehensive income disclosed in the Statement of Comprehensive
Income (2020: £Nil).
10. Earnings per Ordinary Share
The profit per Ordinary Share of £3.74p (2020: loss per Ordinary Share of 3.09p) is based on the profit for the year of
£6,528,647 (2020: loss £4,996,000) and on a weighted average number of 174,590,793 Ordinary Shares in issue during
the year (2020: 161,500,105 Ordinary Shares).
The basic and diluted earnings per Ordinary Share were the same. The average share price of the Ordinary Shares during
the year was below the exercise price of the Options (exercise prices of 19.00 pence, 20.00 pence and 25.00 pence) and
Warrants (exercise price 12.75p). Therefore, as at 31 March 2021 neither the Options nor the Warrants had a dilutive
effect.
11. Dividends
During the year ended 31 March 2021, no dividend was paid to shareholders (2020: £Nil). The Directors do not propose
a final dividend for the year ended 31 March 2021 (2020: £Nil).
12. Financial Assets and Liabilities Designated at Fair Value through Profit or Loss
Financial assets designated at fair value through profit or loss
Fair value of investments brought forward
Purchases during the year
Disposals proceeds during the year
Capitalised interest on convertible loan
Realised gains on disposals
Net unrealised gain / (loss) in fair value
Fair value of investments carried forward
31 March 2021
£'000
31 March 2020
£'000
13,372
3,736
(1,166)
31
443
6,864
23,280
18,604
1,033
(2,282)
-
165
(4,148)
13,372
Details of the investments held are given in the Report of the Chief Executive and at the Company’s website.
13. Fair value of financial instruments
IFRS 13 requires the Company to classify financial instruments at fair value using a fair value hierarchy that reflects the
significance of the inputs used in making the measurement. The fair value hierarchy has the following levels:
•
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can
access at the year-end date;
Level 2 - Those involving inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices); and
Level 3 - Those with inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
•
•
41
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
13. Fair value of financial instruments (continued)
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined
on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose,
the significance of an input is assessed against the fair value measurement in its entirety.
If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs,
that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors specific to the asset or liability.
The determination of what constitutes ‘observable’ requires judgement by the Company. The Company considers
observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable,
not proprietary, and provided by independent sources that are actively involved in the relevant market.
The valuations used to determine fair values are validated and periodically reviewed by experienced personnel, in most
cases this validation and review is undertaken by members of the Board, however professional third-party valuation
firms are used for some valuations and the Company also has access to a network of industry experts by virtue of the
personal networks of the directors and substantial shareholders (including Messrs Mellon and Abony). The valuations
prepared by the Company or received from third parties are in accordance with the IPEV Guidelines. The valuations,
when relevant, are based on a mixture of:
•
Market approach (utilising EBITDA or Revenue multiples, industry value benchmarks and available market
prices approaches);
Income approach (utilising Discounted Cash Flow, Replacement Cost and Net Asset approaches);
Price of a recent transaction when transaction price/cost is considered indicative of fair value; and
Proposed sale price.
•
•
•
As at 31 March 2021, three investments were valued as Level one investments within the fair value hierarchy, with the
value being taken from the published bid price available as at that date (2020: One investment).
The remaining seven investments were included within the Level 3 category and subject to a Level 3 valuation approach.
Of these seven positions, two were valued by way of third-party valuation reports. (2020: Four of the seven Level 3
positions were valued by third party valuers). By value, 38% of the portfolio value was ascertained by way of such third
party valuations (2020: 92%).
Whilst it is not intended that third party valuations will be commissioned for every investee company subject to Level 3
classification for each valuation point, the Board of the Company will continue to commission reports where deemed
preferable.
Where investments are considered to be Level 3 investments for valuation purposes, it is required under IFRS 13 that
information be provided about the significant unobservable inputs used in the fair value measurement. In the case of
the Company a balance is necessary in providing commentary on such inputs, whilst at the same time not disclosing
information about these private companies which they have indicated cannot be published (primarily for competitive
reasons). The table below provides a summary of the valuations subject to unobservable inputs across the Company’s
investment portfolio, split by valuation methodology and an indicative aggregate value of the effect of either a more
positive or negative valuation approach, without publication of specific metrics which could be identified as relating to
any one investee company.
42
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
13. Fair value of financial instruments (continued)
Valuation Basis
Aggregate
Valuation
£’000
Unobservable input
Range (input)
Sensitivit
y used
Effect on fair value
75th percentile revenue
multiple of comparable
guideline public companies
2.4x -
6.8x
(6.0x)
-0.5x /
+0.5x
£'000
£'000
(266)
265
Third-party
valuation report
9,636
75th percentile revenue
multiple of comparable
guideline company
transactions
2.4x -
8.6x
(5.1x)
-0.5x /
+0.5x
(266)
265
recent
(deal
Price
of
transaction
price)
Total
Discounted cash flows:
Discount rate
n/a
(55%)
8,191
Deal price concluded post year
end
-
-
-5% /
+5%
-5% /
+5%
371
(309)
(409)
409
23,280
A reconciliation of the opening and closing balances of assets designated at fair value through profit or loss classified
as Level 1 is shown below:
Fair value of investments brought forward
Purchases during the year
Transfer from Level 3 to Level 1
Disposals proceeds during the year
Realised gains/(losses) on disposals
Net unrealised change in fair value
Fair value of investments carried forward
31 March 2021
£'000
946
1,883
50
(1,166)
443
3,299
5,455
31 March 2020
£'000
494
1,033
-
(908)
(396)
723
946
There was a transfer between levels during the year. As part of its strategy to expand its offering worldwide and fully
utilise its multi-channel, multi-platform distribution channels, Yooma completed an RTO of Globalive Technology Inc.
and began trading on the Canadian Securities Exchange on 11 February 2021 under the ticker YOOM.
A reconciliation of the opening and closing balances of assets designated at fair value through profit or loss classified as
Level 3 is shown below:
Fair value of investments brought forward
Purchases during the year
Transfer from Level 3 to Level 1
Disposals proceeds during the year
Capitalised interest on convertible loan
Realised gains on disposals
Net unrealised change in fair value
Fair value of investments carried forward
31 March 2021
£'000
12,426
1,853
(50)
-
31
-
3,565
17,825
31 March 2020
£'000
18,110
-
-
(1,374)
-
561
(4,871)
12,426
43
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
14. Other receivables
Other receivables
Prepayments
15. Payables and accruals
LOM Financial (Bermuda) Limited
Audit fees
Director’s fees
Legal & professional fees
Administration fees
Other Payables
31 March 2021
£'000
4
49
53
31 March 2020
£'000
7
43
50
31 March 2021
£'000
31 March 2020
£'000
-
28
-
24
11
6
69
2
38
304
25
23
5
397
Ordinary shares were issued to Lorne Abony from the treasury shares against the fees accrued for Lorne Abony for £
250,000 in previous year. Additional information on Directors' Remuneration is noted in related parties. Refer to note
16 for additional information.
16. Share Capital, Warrants, Options, Treasury shares and Other distributable reserves
Authorised:
1,910,000,000 Ordinary Shares of 1p (2020: 1,910,000,000
Ordinary Shares)
100,000,000 Deferred Shares of 0.9p (2020: 100,000,000
Deferred Shares)
Allotted, called up and fully paid:
212,747,395 Ordinary Shares of 1p (2020: 161,500,105
Ordinary Shares)
Nil Deferred Shares of 0.9p (2020: 70,000,709 Deferred
Shares)
Share options
Warrants
Treasury Shares:
2,472,446 Treasury Shares of 1p (2020: 5,413,623)
31 March 2021
£’000
31 March 2020
£’000
19,100
900
20,000
19,100
900
20,000
(i)
(ii)
2,127
1,615
-
630
(iii)
2,000,000
14,131,548
(vi)
24,117,762
(v)
25
-
54
44
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
16. Share Capital, Warrants, Options, Treasury shares and Other distributable reserves (Continued)
(i) Ordinary Shares
During the year, the Company issued 48,235,525 additional Ordinary shares across two placings. On 20 November
2020, the Company issued 23,529,646 Ordinary Shares of 1p each (the ‘First Placing Shares’) at a price of 8.5p per
Placing Share (the “Placing Price”) to a number of new investors raising gross proceeds of approximately £2million
(together the ‘First Placing’), furthermore 70,588 new Ordinary shares were issued to its advisor St. Brides Partners
against advisory fees of £6,000. On 29 January 2021, a further 24,705,879 Ordinary shares were issued in a second
placing (the “Second Placing Shares”). The Second Placing Shares were issued at the same Placing Price as the First
Placing Shares. Finally, and as noted below, the company also transferred 2,941,177 Ordinary shares to Mr. Abony from
the treasury shares held in settlement of accrued director fees payable of £ 250,000. The cost of raising the capital for
the year amounted to £ 230,647.
Opening balance as at 01 April
Ordinary shares issued at par
Treasury shares converted to Ordinary shares at par
2021
No. of Shares
161,500,105
48,306,113
2,941,177
2020
No. of Shares
161,500,105
-
-
£'000
1,615
-
-
£'000
1,615
483
29
Closing balance as at 31 March
212,747,395
2,127
161,500,105
1,615
(ii) Deferred Shares
In aggregate (not per share), the holders of Deferred Shares were entitled to receive up to £1 only as a preferred
dividend or distribution. The Deferred Shares had zero economic value. The holders of Deferred Shares, in respect
of their holdings of Deferred Shares, had no right to receive notice of any general meeting of the Company, nor the
right to attend, speak or vote at any such general meeting. The Company has the right to transfer the Deferred
Shares to such persons as it wishes, without the consent of the holders of the Deferred Shares, and to cancel
Deferred Shares with the consent of such transferee. During the year, £630,000 Deferred Shares were transferred and
cancelled, releasing to other distributable reserves (2020: Nil).
Opening balance as at 01 April
Transferred to Distributable reserves
Closing balance as at 31 March
2021
2020
£'000
630
(630)
£'000
630
-
-
630
(iii) Options
During the year 12,131,548 options issued to Mr Abony, the former CEO and Interim Chairman of the Company, lapsed.
The total Employee Share Option Reserve in relation to Mr Abony of £1,130,000 has been transferred to Other
Distributable Reserves through the Statement of Changes in Equity. The remaining options granted relate to Ed
McDermott. Refer to note 18 for additional information.
(iv) Directors’ Authority to Allot Shares
The Directors are generally and unconditionally authorised to exercise all the powers of the Company to allot relevant
securities. As approved at the Company Extraordinary General Meeting on 9 July 2021, the Directors may determine up
to a maximum aggregate nominal amount of 100% of the issued share capital during the period until the following
Annual General Meeting. The Guernsey Companies Law does not limit the power of Directors to issue shares or impose
any pre-emption rights on the issue of new shares.
45
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
16. Share Capital, Warrants, Options, Treasury shares and Other distributable reserves (Continued)
(v) Shares held in Treasury
During the year Mr. Lorne Abony received 2,941,177 Ordinary shares from the Treasury shares against the Directors fees
payable to him of £ 250,000. As a result, the Company has a total of 2,472,446 ordinary shares held as Treasury shares
(2020: 5,413,623). No shares were repurchased during the year (2020: Nil).
Opening balance as at 01 April
Treasury shares converted to Ordinary shares
2021
No. of Shares
5,413,623
(2,941,177)
£'000
54
(29)
2020
No. of Shares
5,413,623
-
£'000
54
-
Closing balance as at 31 March
2,472,446
25
5,413,623
54
(vi) Warrants
During the year the Company has issued one warrant for every two Placing Shares (the "Placing Warrants"). Shard
Capital are sole brokers to the Placings. The Company issued 48,235,525 Ordinary shares at the Placings at a price of
8.5p per placing share resulting in 24,117,762 Placing Warrants being issued. Each Placing Warrant will entitle the
holder to subscribe for one further ordinary share of £0.01 in the capital of the Company upon payment of 12.75 pence
per share on or before that date which is 24 months from the Settlement Date.
(vii) Other Distributable Reserves
Opening balance as at 01 April
Total comprehensive profit / (loss) for the year
Premium on ordinary shares issued
Transfer of deferred shares
Transfer of value of lapsed options
Closing balance as at 31 March
17. Net Assets per Ordinary Share
2021
2020
£'000
10,730
6,298
3,844
630
1,130
22,632
£'000
15,594
(4,996)
-
-
132
10,730
Basic and diluted
The basic and diluted net asset value per Ordinary Share is based on the net assets attributable to equity shareholders
of £24,939,000 (2020: £14,238,000) and on 212,747,395 Ordinary Shares (2020: 161,500,105 Ordinary Shares) in issue
at the end of the year. The share price of the Ordinary Shares at 31 March 2021 of 8.30 pence (2020: 7.25 pence) was
below the exercise price of any of the Options (lowest exercise price of 19.00 pence) or Warrants (12.75 pence).
Therefore, as at 31 March 2021 neither the Options nor the Warrants had a dilutive effect.
18. Related Parties
(i) Directors’
The Directors’ remuneration for the year ended 31 March 2021 is disclosed in note 7. The Directors consider that there
is no immediate or ultimate controlling party.
Ian Burns
Mr Burns, Non-Executive Chairman of the Company, is the legal and beneficial owner of Smoke Rise Holdings Limited,
which held 1,374,024 (2020: 1,374,024) Ordinary Shares in the Company at 31 March 2021 and at the date of signing
this report.
Mr Burns received an annual remuneration of £36,000 (2020: £27,000) and discretionary bonus of £14,000 (2020: Nil).
There was no payable at the financial reporting date. (2020: nil).
46
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
18. Related Parties (continued)
Lorne Abony
Mr Abony, resigned as CEO and Interim Chairman of the Company on 15 May 2020. Mr Abony held no (2020: 14,843,211)
Ordinary Shares in the Company at 31 March 2021 and at the date of signing this report having transferred his entire
holding of 17,784,388 to Mrs. Rhonda Abony on 30 January 2021.
Mr Abony held 20,833,333 (2020: 20,833,333) shares in EMMAC, which equated to 7.2% (2020: 7.2%) of the shares in
issue. On 19 November 2019, Mr Abony was appointed as Chairman of the Board of Directors of EMMAC.
Mr Abony resigned on 15 May 2020 and accepted to defer remuneration payment of £250,000 as at date of resignation
for the year end 31 March 2020. As at 31 March 2021, Mr Abony holds no option (2020: 12,131,548) and during the
year received 2,472,446 ordinary shares from the Treasury shares in the settlement of the deferred remuneration
payment.
Mr Abony was entitled to £100,000 as from 1 January 2020. During the year ended 31 March 2021, he was due to receive
a total of £16,000 (2020: £97,000). There was no payable at the financial reporting date (2020: £23,000).
Ed McDermott
Mr McDermott was a co-founder of, and executive Director of, EMMAC Life Sciences Limited ("EMMAC"). Mr
McDermott owned 11,250,000 (2020: 11,250,000) shares in EMMAC, which equated to 3.9% of the shares in issue.
EMMAC was sold to Curaleaf in early April 2021, in conjunction with which transaction the Company sold its entire
interest in EMMAC to a 3rd party for £5,036,459 on 6 April 2021.
Ed McDermott is entitled to an annual remuneration of £92,808. This includes a Director Fee of £80,000 per annum and
reimbursement of £12,808 for the amounts paid or payable by him, on behalf of the Company, as employers NIC
contributions to HMRC, effective from June 2020. In 2018, the Company has also granted Mr McDermott Options over
1,000,000 Ordinary shares at 19 pence per share and further Options over 1,000,000 Ordinary shares at 25 pence per
share.
Mr McDermott held 2,000,000 options as at 31 March 2020 (2020: 2,000,000).
Mr McDermott received annual remuneration of £90,673 (2020: £50,000). There was no payable at the financial
reporting date. (2020: nil).
Lance De Jersey
Mr De Jersey, Finance Director of the Company held 400,000 ordinary shares in the Company as at 31 March 2021 and
at the date of signing of this report.
Mr De Jersey received annual remuneration of £80,000 (2020: £75,000). There was no payable at the financial reporting
date. (2020: nil).
Luke Cairns
Mr Cairns, Non-Executive Director of the Company received annual remuneration of £36,000 per annum, effective from
the date of his appointment on 3 January 2020.
Mr Cairns received annual remuneration of £36,000 (2020: £9,000) and discretionary bonus of £14,000 (2020: Nil).
There was no payable at the financial reporting date. (2020: nil).
47
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
18. Related Parties (continued)
(ii) Administrator of the Company
Vistra Fund Services (Guernsey) Limited (“Vistra”) is entitled to an administration fee of £56,265 per annum. The
administrator is also entitled to an additional fee of £2,558 for each formal board meeting held and £10,230 per annum
for Compliance oversight services.
In the year ended 31 March 2021, a total of £77,000 (2020: £97,000) was charged to the Statement of Comprehensive
Income, of which, £11,000 was payable at the financial reporting date (2020: £23,000). Please refer to note 6 for more
details.
19. Financial Risk Management
Treasury policies
The objective of the Company’s treasury policies is to manage the Company’s financial risk, secure cost effective funding
for the Company’s operations and to minimise the adverse effects of fluctuations in the financial markets on the value
of the Company’s financial assets and liabilities on reported profitability and on cash flows of the Company.
The Company finances its activities with cash, short-term deposits with maturities of three months or less and market
traded securities. Other financial assets and liabilities, such as receivables and payables, arise directly from the
Company’s operating activities. Derivative instruments may be used to change the economic characteristics of financial
instruments in accordance with the Company’s treasury policies.
The financial assets and liabilities of the Company were:
Financial assets at fair value through profit or loss
Investments
Financial assets at amortised cost
Other receivables
Cash and cash equivalents
Financial liabilities at amortised cost
Other payables
31 March 2021
£'000
31 March 2020
£'000
23,280
13,372
4
1,675
1,678
7
1,213
1,220
69
397
Prepayments of £49,000 (31 March 2020: £43,000) have been excluded from financial assets.
Credit risk
The main risks arising from the Company’s financial assets and liabilities are credit risk, liquidity risk and market risk,
and are set out below, together with the policies currently applied by the Board for their management. Market risk
comprises three types of financial risk, being interest rate risk, currency risk and other price risk, being the risk that the
fair value or future cash flows will fluctuate because of changes in market prices other than from interest rate and
currency risks.
The Company takes on exposure to credit risk, which is the risk that one party will cause a financial loss for the other
party by failing to discharge an obligation.
The Company’s credit risk is primarily attributable to its other receivables and cash and cash equivalents. In order to
mitigate credit risk, the Company seeks to trade only with reputable counterparties that the management believe to be
creditworthy.
48
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
19. Financial Risk Management (continued)
The credit risk on cash and cash equivalents is limited by using banks with high credit ratings assigned by international
credit-rating agencies. At the year end, an amount of cash and cash equivalents of £1,571,000 was placed with HSBC
Bank plc (2020: £1,207,000). Cash and cash equivalent of £2,108 (2020: £5,077) was held the Company’s broker PI
Financial Corp. Further an amount of cash and cash equivalent of £ 102,041 was held by Optiva Securities. The Moody’s
credit rating for HSBC Bank plc was Aa3 as at 31 March 2021.
Furthermore, the Company holds debt instruments - Convertible Loan notes of £ 2,804,889 which are disclosed under
financial assets designated at fair value through profit and loss. The Company’s credit risk is monitored from time to
time by the Board and no debt instruments are considered past due nor impaired.
The Company’s activities may give rise to settlement risk. ‘Settlement risk’ is the risk of loss due to the failure of an
entity to honour its obligations to deliver cash, securities or other assets as contractually agreed. For the majority of
transactions, the Company mitigates this risk by conducting settlements through a broker to ensure that a trade is
settled only when both parties have fulfilled their contractual settlement obligations. Settlement limits form part of the
credit approval and limit monitoring processes by Board.
The investment in these debt instruments is considered to be of an equal risk to the equity investments held in other
Level 3 investments as disclosed in Note 13.
Liquidity risk
Liquidity risk is the risk that the Company may not be able to generate sufficient cash resources to settle its obligations
in full as they fall due or can only do so on terms that are materially disadvantageous. The Company invests in private
equities, which, by their very nature, are illiquid. The Company incurs a range of fixed expenses for which it can budget.
As such it can appropriately plan as to how to maintain a sufficient cash balances to meet its working capital
requirements.
Should it be identified that additional cash resources are required, the Company would propose to issue further equity
to the market or to sell part of the investment(s) held in market traded securities.
The contractual undiscounted cash flows of the Company’s financial liabilities, which are equal to the fair value of the
Company’s financial liabilities, comprise of payable within one year to the sum of £69,000 (2020: £397,000). The
Company has no contractual commitment to invest further in any of its existing investments.
The Board monitors the Company’s liquidity position on a regular basis. In addition, the Company’s Administrator
continually monitors the Company’s liquidity position and reports to the Board on a quarterly basis.
Market risk
(i) Price risk
The Company’s private equity investments are susceptible to price risk arising from uncertainties about future values of
the private equity investments or derivative financial instruments. This price risk is the risk that the fair value or future
cash flows will fluctuate because of changes in market prices, whether those changes are caused by factors specific to
the individual investment or financial instrument or its holder or factors affecting all similar financial instruments or
investments traded in the market, if any. Investments that are exposed to price risk are disclosed under level 1 in note
13.
Given the higher levels of market volatility in the current year, the Directors consider 15% (2020: 15%) best represents
the margin of price risk associated with the Company risk. A 15% (2020: 15%) increase/decrease in the fair value of
investments would result in a £817,945.40 (2020: £141,782.06) increase/decrease in the net asset value.
49
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
19. Financial Risk Management (continued)
ii) Currency risk
The Company regularly holds assets (both monetary and non-monetary) denominated in currencies other than the
functional currency (Sterling). It is therefore exposed to currency risk, as the value of the financial instruments
denominated in other currencies will fluctuate due to changes in exchange rates.
Foreign currency risk, as defined in IFRS 7, arises as the values of recognised monetary assets and monetary liabilities
denominated in other currencies fluctuate due to changes in foreign exchange rates. IFRS 7 considers the foreign
exchange exposure relating to non-monetary assets and liabilities to be a component of market price risk, not foreign
currency risk. The Company monitors the exposure on all foreign-currency-denominated assets and liabilities.
The Company monitors its exposure to foreign exchange rates and, where exposure is considered significant,
appropriate measures would be adopted to minimise these exposures. As at 31 March 2021, a proportion of the net
financial assets of the Company were denominated in currencies other than Sterling as follows:
US Dollar
Cash and cash equivalents
Financial assets at fair value through profit and loss
Canadian Dollar
Cash and cash equivalents
Financial assets at fair value through profit and loss
Australian Dollar
Financial assets at fair value through profit and loss
Net currency exposure
31 March 2021
£’000
315
1,389
31 March 2020
£’000
862
946
-
3,234
831
5,769
5
50
-
1,863
At 31 March 2021, if the exchange rate of the US Dollar had strengthened/weakened by 10% against the Sterling, with
all other variables remaining constant, the increase/(decrease) in the profit for the year would amount to +/- £170,400
(2020: +/- £180,800).
At 31 March 2021, if the exchange rate of the Canadian Dollar had strengthened/weakened by 10% against the Sterling,
with all other variables remaining constant, the increase/(decrease) in the profit for the year would amount to +/-
£323,400 (2020: +/- £5,500).
At 31 March 2021, if the exchange rate of the Australian Dollar had strengthened/weakened by 10% against the Sterling,
with all other variables remaining constant, the increase/(decrease) in the profit for the year would amount to +/-
£83,100 (2020: Nil).
iii) Interest rate risk
The Company currently funds its operations through the use of equity. Cash at bank, the majority of which was in Pounds
Sterling at the year end, is held at variable rates. At the year end, the Company’s financial liabilities did not suffer interest
and thus were not subject to any interest rate risk. It is unlikely that interest rates would decrease by as much as 1% as
they are currently less than 1%. Any decrease in the interest rate to a minimum of 0% would have an insignificant impact
on the interest income received by the Company.
50
SEED Innovations Limited
Notes to the Financial Statements (continued)
For the year ended 31 March 2021
20. Capital Management Policy and Procedures
The Company’s capital structure is derived solely from the issue of Ordinary Shares.
The Company does not currently intend to fund any investments through debt or other borrowings but may do so if
appropriate. Investments in early stage assets are expected to be mainly in the form of equity, with debt potentially
being raised later to fund the development of such assets. Investments in later stage assets are more likely to include
an element of debt to equity gearing. The Company may also offer new Ordinary Shares as consideration as well as cash,
thereby helping to preserve the Company's cash for working capital and as a reserve against unforeseen contingencies
including, for example, delays in collecting accounts receivable, unexpected changes in the economic environment and
operational problems.
The Board monitors and reviews the structure of the Company’s capital on an ad hoc basis. This review includes:
•
•
•
The need to obtain funds for new investments, as and when they arise
The current and future levels of gearing
The need to buy back Ordinary Shares for cancellation or to be held in treasury, which takes account of the
difference between the net asset value per Ordinary Share and the Ordinary Share price
The current and future dividend policy; and
The current and future return of capital policy.
•
•
The Company is not subject to any externally imposed capital requirements.
21. Events after the Financial Reporting Date
The Company had announced on 10 March 2021 the sale of its holding comprising of 6,666,667 Ordinary shares and a
£750,000 convertible loan note in the investee company, EMMAC Life Sciences Limited ('EMMAC'), for cash proceeds of
c£5 million.
On 12 April 2021 the Company announced the appointment of Alfredo Pascual as Vice President of Investment Analysis
effective 1 April 2021.
In May 2021, the Company purchased an additional 370,000 shares of Little Green Pharma Ltd (“LGP”) which is listed
on Australian Stock Market (Ticker: LGP.AX). Furthermore, in June 2021, the Company acquired another 4,608,334
shares of LGP. Following the investments, the Company holds 7,324,796 ordinary shares in LGP, representing
approximately 3.15% of their issued share capital.
On 5 July 2021, the Company announced the investment of €3 million (c.£2.58million) in EUROX Group, a German-based
European vertically integrated medical cannabis company. The Company holds 4,962 shares representing
approximately 8.85% of EUROX.
On 6 July 2021, the Company announced the investment of £175,000 in CiiTech via a convertible loan note (CLN) which
raised a total of £2million.
On 7 July 2021, the Company announced a further investment of £50,000 in a pre-IPO CLN raised by South West Brands.
On 12 July 2021, the Company announced that shareholders had approved a change of company name from
FastForward Innovations Limited to SEED Innovations Limited.
There are no other material events subsequent to year end which require disclosure.
51