SEED INNOVATIONS LIMITED
ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
SEED INNOVATIONS LIMITED
CONTENT
Directors and Advisers
Chairman's Statement
Report of the Chief Executive Officer
Investment Portfolio Report
Investing Policy
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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4
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www.seedinnovations.co
Incorporated under
the Companies (Guernsey) Law, 2008, as amended.
REGISTERED IN GUERNSEY No. 44403
2
SEED INNOVATIONS LIMITED
DIRECTORS & ADVISERS
Directors
Ian Burns (Non - Executive Chairman)
Edward McDermott (Chief Executive Officer)
Lance De Jersey (Executive Director)
Luke Cairns (Non-Executive Director)
Advisers
Administrator, Secretary and Registered Office
Obsidian Fund Services Limited
PO Box 343
Obsidian House, La Rue D'Aval
Vale
Guernsey GY6 8LB
Registrar
Share Registrars Limited (from 14 March 2022)
27/28 Eastcastle Street
London
W1W 8DH
Brokers
Shard Capital Partners LLP
Floor 3
70 Saint Mary Axe
London
EC3A 8BE
Investor Relations
St Brides Partners Ltd
Warnford Court
29 Throgmorton Street
EC2N 2AT
Nominated Adviser
Beaumont Cornish Limited
Building 3, Chiswick Park
566 Chiswick High Road
London
W4 5YA
Independent Auditor
Grant Thornton Limited
St James Place
St James Street
St Peter Port
Guernsey GY1 2NZ
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
EC2A 2EW
3
SEED INNOVATIONS LIMITED
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
The financial year to 31 March 2023 has been a particularly challenging year with the persistent, and continuing, macro-economic and
political factors impacting stock market stability. While we believe there have been some signs of green shoots of late, we still face a
rather volatile appetite for public markets and investor activity, across all sectors and particularly in small caps, remains unstable. That
said, we remain optimistic about SEED's ability to deliver sustainable growth over the long term and believe that, over time, the underlying
value of our portfolio will be more accurately reflected in our share price which currently sits at a disproportionately low value to our
NAV.
There is no denying that early-stage investing continues to be challenging. However, we are confident that the current negative
period, like previous ones, will create opportunities for SEED and produce a cohort of companies that, in the long term, will create value
for our shareholders. Furthermore, by pursuing a balanced approach in the stage of maturity of our investments we are able to mitigate
the challenges for earlier stage investments as companies which have been nearing liquidity events but may have put transactions on
hold during the recent malaise may start looking at fundraisings or IPOs as the markets open up as they inevitably will. We are in the
fortunate position of currently having nearly £2.5 million cash in the bank and can capitalise on these opportunities.
In the last few months, we have been working closely with our portfolio companies to help them navigate this difficult period. This often
involves helping founders see a path forward to make their companies leaner, more efficient, and more valuable. Strong and effective
management is key to the success of any company, but perhaps more so at the early stages of their development. Unfortunately, not all
are successful, and a small number of our companies have fallen victim to these difficult market conditions. On the other hand, several
others have been successful at raising capital against this very challenging economic backdrop and rising risk aversion. We are
encouraged by this since it demonstrates that companies with strong traction and differentiated business models can maintain access
to capital.
We continue to develop our diverse portfolio by focusing on our core objective of providing investors with exposure to disruptive growth
opportunities that would normally be inaccessible to private investors.
Our board remains fully committed to our investment philosophy and achieving our goals with discipline and diligence. By focusing on
our core competencies, we are optimistic we can bring significant uplift value to our shareholders and thrive in even the toughest markets.
Our team possesses significant expertise in recognising and leveraging the most favourable opportunities, demonstrated by our early
seed level entry into Clean Food Group last year.
I would like to take this opportunity to acknowledge that we share our investors’ frustrations in what is perceived sometimes as a lack of
deal flow from the Company, however, it is worth saying that whilst we evaluate numerous opportunities throughout the year we believe
it is vital to look for quality over quantity and we are not alone in striving for the higher quality deals. Sometimes commercial sensitivities,
particularly amongst our private company investments, need to be respected and carefully managed, and this can sometimes limit what
we can say publicly. All this said, however, it does bring me back to the core focus of SEED and that is to provide investors with exposure
to disruptive growth opportunities that would normally be inaccessible to private investors.
While we have seen many investors in our space change strategies, this is not the case with SEED. Quite the contrary, we remain steadfast
in our goal to work with outstanding entrepreneurs and build world-class businesses that create material value for our shareholders. Our
deal flow remains robust, and we are optimistic that the current environment will offer superior opportunities to deploy our cash reserves
and in turn, create long-lasting value for our investors.
Ian Burns
Non-Executive Chairman
26 June 2023
4
SEED INNOVATIONS LIMITED
REPORT OF THE CHIEF EXECUTIVE OFFICER
FOR THE YEAR ENDED 31 MARCH 2023
With inflation persisting, conflict in Ukraine continuing, and global central banks rate changes remaining uncertain, investor sentiment
remains cautious, not helped by some major upsets in financial markets such as the collapse of Silicon Valley Bank earlier this year. There
has been a particularly significant impact on growth stocks over the last 18 months as investors shift their focus towards assets that are
less affected by turbulent conditions. Small caps, unfortunately, have yet to fully recover and may take some time to do so. That said,
recent weeks have seen the market looking a little more positive with an increase in liquidity. Our balanced portfolio of
liquid, pre-
liquidity and long-term investments is therefore creating a stable basis for the Company’s next phase of growth and development.
SEED has a unique opportunity to invest in companies that have solid fundamentals and are currently at attractive valuations amidst
ongoing macroeconomic factors. Our well-connected team is continuously seeking out innovative companies that are utilising disruptive
technologies and we are eager to support these businesses and bring value through our expertise, our network and our capital.
At SEED, we remain committed to our investment policy of providing exposure to disruptive growth opportunities that are typically
inaccessible to private investors. Our extensive network of contacts continues to present us with various new investment
opportunities in sectors that align with our investment strategy and have previously delivered, or have the potential to deliver, robust
returns. In addition, we are seeing short-term investing in opportunistic deals given our access to public market trading opportunities.
This may include IPOs, reverse takeovers, or secondary fundraisings, across sectors, but where there are significant levels of liquidity that
will look to generate shorter-term returns for our investors. In keeping with our Investing Policies, any such opportunities will be limited
to no more than 15 per cent of our NAV at the date of the transaction.
We have seen several advances in the portfolio during the period under review, perhaps most notably the offer for Leap Gaming by IMG
Arena US, LLC, announced in December 2022. This completed in April, post-period end, and saw the first tranche of sale proceeds
received, being €3 million (£2.7 million). The divestment importantly means that SEED is not committed to continually fund a legacy
company which does not align with our current investment strategy. Furthermore, the proceeds of the sale will provide us with additional
funds to invest in other projects where we see better synergy with our own skill sets and experience, married with opportunity for growth
and investment return.
Other positive advances in the portfolio include the £6.2 million all share merger of South West Brands with OTO International Limited
("OTO") which completed post year-end on 20 April 2023. OTO is a premium wellness brand renowned for its use of holistic plant
ingredients and CBD in its portfolio products. SEED has become a 1.4% shareholder in OTO, equating to a blended return of 1.18 times
the original investment. We are also particularly looking forward to developments from Northern Leaf, following its successful £3 million
pre-IPO fundraise, with a future IPO currently targeted for this year, and Avextra AG, that closed a c.€17 million (c.£15 million) capital
raise in March this year to expand sales and distribution channels of their product portfolio into new European markets, expedite
Cannabis-based medication clinical trials, advance its R&D activities as well as further its expansion into the German market.
Turning to the medicinal cannabis market in general, the sector has been beaten up throughout the past year, something to a large extent
explained by the reluctance from policymakers in the United States around federal cannabis reform. However, we remain optimistic
about the medium-to-long-term prospects of the industry on a global scale. This is supported by President Biden’s initiation in October
2022 of an administrative review of federal marijuana scheduling, and separately by recent US bipartisan support for the SAFE Banking
Act. While we don’t have any direct exposure to cannabis operators in the U.S., we’re aware of the importance of regulatory
developments across the pond given how correlated global cannabis valuations are. With SEED having already established an investment
profile in this sector, we maintain our exposure to the opportunities within it and therefore are well-positioned to take advantage of the
investment opportunities that arise in the medical cannabis space and positive regulatory developments. As a company, we still believe
there are excellent opportunities in the medium to long term. We are closely plugged into this sector and have the necessary expertise
and resources to quickly adapt to any changes in the landscape.
5
SEED INNOVATIONS LIMITED
REPORT OF THE CHIEF EXECUTIVE OFFICER (continued)
FOR THE YEAR ENDED 31 MARCH 2023
Moving forward, SEED's investment strategy of diversification into life sciences and biotechnology sectors allows the Company to leverage
its resources and know-how across multiple sectors, providing opportunities for growth and maximising returns while mitigating
investment risks. A key example of this is SEED's investment in Clean Food Group, a biotech company focused on cellular agriculture and
the commercialisation of bio-equivalent palm oil production by fermentation.
We remain dedicated to supporting the continued growth of our investee companies while we develop our strategy of providing
access to investment opportunities in sectors often inaccessible to the smaller investor. With cash available to invest, we are able to move
quickly on any favourably priced opportunities with the potential for excellent long-term value.
The net asset value of the Company at 31 March 2023 was £16,032,000. (31 March 2022: £20,461,000), equal to net assets of 7.54p
per Ordinary Share (31 March 2022: 9.62p per Ordinary Share).
The table below lists the Company’s holdings at 31 March 2023 and 31 March 2022.
Holding
Share
Class
Category
Portfolio %
Country of
Incorpor-
ation
Number of
Shares Held at
31 March 2023
Valuation at 31
March 2023
£'000
Number of
Shares Held at
31 March 2022
Valuation at 31
March 2022
£'000
Fralis LLC
(Leap Gaming)
Avextra Pharma
GmbH
Juvenescence
Ltd
Clean Food
Group Limited
Northern Leaf
Ltd
Little Green
Pharma
Inveniam Capital
Partners
South West
Brands
Portage
Biotech Inc.
Yooma
Wellness Inc
CiiTECH
Limited
Vemo
Education, Inc.
Units
Loan
Ordinary
Ordinary
Ordinary
Shares
Convertible
Loan
Ordinary
Preferred
Shares
Convertible
Loan
Ordinary
Common
Shares
Convertible
Loan
Pref Series
Seed 2
Biotech/
Healthcare
Biotech/
Healthcare
Food
Technology
Biotech/
Healthcare
Biotech/
Healthcare
CBD
Wellness
Biotech/
Healthcare
CBD
Wellness
CBD
Wellness
Edtech
Total Investment Value
Cash and receivables, net of payables and accruals
Net Asset Value
Gaming
Nevis
30.40%
1.48%
Germany
27.69%
1,512
N/A
5,142
4,870
236
4,436
1,512
N/A
4,962
180
7,586
684
4,281
Isle of Man
15.96%
128,205
2,556
128,205
2,410
England
6.03%
5,850,000
Jersey
5.99%
-
965
960
4,600,000
-
46
660
Australia
4.46%
7,324,796
715
7,324,796
2,028
Fintech
USA
3.72%
2.64%
1.04%
0.59%
86,810
-
37,623
England
BVI
Canada
0.00%
4,427,609
England
0.00%
-
USA
0.00%
1,000,000
86,810
-
50,123
4,427,609
-
1,000,000
596
423
167
94
-
-
-
16,019
14
16,032
562
476
251
351
188
-
19,524
937
20,461
The movement in the portfolio value of negative £3.5 million is attributable to the negative revaluation of Leap to sale price (-£3.2 million);
unrealised losses on listed investments (-£1.8 million); write-off of remaining value in CiiTech & Yooma (-£0.2 million); and offset by
positive movements of Clean Food Group (+£0.9 million); Northern Leaf (+£0.3 million); and South West Brands (+£0.1 million).
6
SEED INNOVATIONS LIMITED
REPORT OF THE CHIEF EXECUTIVE OFFICER (continued)
FOR THE YEAR ENDED 31 MARCH 2023
During the year £387,000 in cash was deployed as additional commitments in existing investments.
Expenses have continued to be controlled over the period, reducing to £744,000 (2022: £928,000), representing 4.64% of closing NAV
(2022: 4.54%).
Whilst little cash was held at the end of the reporting period (£30,000), this was significantly increased in April by receipt of the first
half of proceeds (and repayment of the Term Loan) from Leap Gaming, resulting in cash held at the end of May 2023 of approximately
£2.5 million.
Ed McDermott CEO
26 June 2023
7
SEED INNOVATIONS LIMITED
INVESTMENT PORTFOLIO REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The following is a new insertion to the Annual Report, bringing a summary of the portfolio of investments held by the Company, together
with select updates on the underlying investee companies, into a single report for ease of reference of shareholders rather than spreading
over the Chairman’s and CEO Reports as previously.
This report is separated by liquidity profile of the underlying investments, from those liquid investments which could more easily be
realised to cash by virtue of their own public markets listings, toward those longer term investments which are less liquid and so likely to
take a longer time and more planning and work to get to a position for sale via a liquidity event or M&A activity.
Liquid Investments
Little Green Pharma (‘LGP’)
Little Green Pharma is an ASX-Listed (Ticker: LGP) vertically integrated medicinal cannabis business with operations from cultivation and
production through to manufacturing and distribution. During the period, LGP made large strides in advancing its global expansion
strategy with early penetration into key markets. SEED owns 7,324,796 ordinary shares in LGP representing 2.45% of LGP's issued
share capital.
LGP has seen strong progress as it fast-tracks its European growth strategy of partnering with quality global distribution partners to gain
market share in Europe, notable progress in the period under review included:
• LGP achieved revenue of ~A$20 million (unaudited) for the financial year ended 31 March 2023, up from A$10.3 million for the
prior 9-month financial year ended 31 March 2022, while reducing its loss after tax by A$9.1 million from A$18.3 million to
A$9.2 million. Cash in the bank at year end was A$12.4m. The A$4.1 million balance of its Canopy loan was repaid post year
end, in early April 2023 (noted below).
• LGP noted key milestones in its quarterly activities report and Appendix 4C for the period ending 31 March 2023: A$6.7 million
in customer cash receipts, up from A$6.0 million in the previous quarter and up from A$3.0 million in the prior March
quarter.
• Increase in flower sales in Australia by nearly 50% for the period ending 31 March 2023 from previous quarter.
• LGP repaid Canopy in full the loan associated with the purchase of LGP’s Danish facility, fully discharging the debt.
• LGP secured firm commitments in March 2023 for a A$5 million placement from new and existing institutional investors.
The placement was oversubscribed with support from sophisticated investors. The funds will be used to repay the balance
outstanding of the loan note with Canopy Growth Corporation ("Canopy") as well as for working capital and costs of the offer.
Total funds raised post this transaction in LGP's financial year are at the time of this report at A$10.1m.
• LGP entered a Strategic Alliance with Health Insurance Fund of Australia Pty Ltd to establish a proof-of concept mental health
treatment facility with capability to deliver psychedelic assisted psychotherapy to eligible patients. The health economics study
is to inform future health insurance coverage, whilst the two parties have agreed an exclusivity period to negotiate joint
development of further treatment centres, announced in March 2023.
• LGP’s wholly owned subsidiary and operator of LGP's psychedelics business, Reset Mind Sciences Limited ("Reset"), received
Human Research Ethics Committee approval to conduct clinical trials into efficacy and safety of psilocybin assisted therapy,
announced on the 15 February 2023.
• LGP and its psychedelics focused subsidiary Reset welcomed the decision by the Therapeutic Goods Administration to change
the classification of psilocybin and MDMA to allow prescribing by authorised psychiatrists, announced in February 2023. Which
means Australia will become the first market in the world to recognise psychedelics as medicines and paves the way for
the use of psilocybin for the treatment of treatment resistant depression and MDMA for PTSD outside of a clinical trial
environment.
• In January 2023, LGP noted record quarterly customer cash receipts of A$6.0 million and very strong growth in LGP Danish
flower sales in Australia in its quarterly results for the period ending 31 December 2022.
• The success of LGP's export strategy was formally recognised by its win in the International Health category at the 60th
Australian National Export Awards and also at the WA State Export Awards in October 2022.
• Partnered with German cannabis pioneer, Cannamedical, for the supply of bulk medicinal cannabis from Denmark to Germany,
with a potential value of over A$4.5 million (€3 million) over two years, the fourth medicinal cannabis supply agreement with
key wholesalers and distributors in Germany that LGP has announced in 2022.
8
SEED INNOVATIONS LIMITED
INVESTMENT PORTFOLIO REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2023
• Signed an offtake agreement with long-standing distribution partner Demecan in Germany, representing an annual revenue
opportunity of approximately A$9 million (€6 million) post ramp-up for its Danish facility.
• Signed a two-year A$2 million medicinal cannabis supply agreement with Ilios Santé in Germany, to purchase minimum annual
quantities of a high-THC white-label medicinal cannabis flower product being developed by LGP. The Agreement represents
continued validation of LGP's key strategy of developing bespoke, high-value white label strains for export to lucrative
jurisdictions.
In our opinion, the achievements made within the reporting period further consolidates LGP's growing industry reputation as one of the
leading global pure-play medicinal cannabis suppliers operating in Europe making LGP undervalued compared to its peers. LGP is valued
at market price and SEED continues to believe that LGP is undervalued respective to peers given its performance.
Portage Biotech, Inc (‘Portage’)
NASDAQ listed Portage (Ticker: PRTG) 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 and a growing roster of notable partnerships.
During the reporting period Portage acquired the outstanding minority interest (approximately 22%) of invariant natural killer T (iNKT
agonist) platform. Portage also remains focused on advancing two broad platforms, its invariant natural killer T cell (iNKT) agonists and
its newly acquired adenosine antagonists, PORT-6 (A2AR inhibitor) and PORT-7 (A2BR inhibitor). COVID-related backlogs for activating
clinical trial sites and staff shortages have made expansion of the PORT-2 study in the United Kingdom challenging. As a result, Portage
has prepared a parallel company-sponsored study, IMPORT-201, to be launched in the United States and European Union to mitigate the
slowdown in the United Kingdom.
Portage is marked to market. Analysts continue to predict target prices above SEED’s US$10 per share cost price, however market price
at year-end was US$3.09 and although showing some gains since, remains at a significant discount to cost. This said, it is worth
remembering that SEED has previously (June 2021) sold shares at a profit and has made an overall profit on Portage to date, with the
remaining holding representing further unrealised profit on the overall position.
Pre-liquidity Investments
Being investee companies with a communicated intent to pursue a liquidity event such as a market listing, or M&A transaction, in the
near to medium term.
South West Brands Limited (‘SWB’)
SWB is a London-based, pioneering multi-brand consumer goods group focusing on the health & wellness segment, utilising plant
ingredients (including CBD) to create unique and efficacious products.
Outside the reporting period in April 2023, SWB entered into a Sale & Purchase Agreement for the sale of SWB to OTO International
Limited (‘OTO’) for an enterprise value of £6,235,000 to be paid in OTO shares. SEED is therefore now invested in OTO rather than SWB,
albeit at the reporting date of financial statements, the holding was still in SWB.
OTO is an omni-channel premium wellness brand, whose positioning as the premium wellness brand of choice has enabled the business
to build three diversified and robust revenue streams (including retail, spa and e-commerce) across multiple territories including the UK,
USA, Japan and Europe. The offering, on completion, consists of an exciting and uniquely positioned portfolio of brands in fast growing
consumer sectors, with products perfectly positioned to take a market share across beauty, female wellness, personal care and spa.
SEED has received a total of £423,000 in OTO ordinary shares following conversion of the Convertible Loan Notes SEED holds in SWB and
will be repaid cash of £167,000, being repayment of the £150,000 8% Convertible Loan Note, plus accrued interest of £17,000, invested
on 4 October 2021. Following a total investment into SWB of £500,000 by SEED, the total return represented by the sale is
£590,000, a blended return of 1.18 times the original investment.
9
SEED INNOVATIONS LIMITED
INVESTMENT PORTFOLIO REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2023
Future reporting of the investment will be of the new and continuing shareholding in OTO of 71,502 shares (1.4% of OTO).
Juvenescence Ltd ('Juvenescence')
Juvenescence is a life sciences company developing therapies and consumer products to modify and support heathy aging focused on
improving and extending human lifespans. By utilising a coalition of best scientists, physicians, and investors across its four divisions, it
aims to create cutting-edge therapies and products that disrupt the thinking and behaviour around ageing. Juvenescence has a broad
portfolio of products in development and is driving innovation amongst two divisions: JuvTherapeutics - Focused on traditional
prescription medicines to modify aging and prevent diseases, and JuvLife- Consumer products that manage aging and help increase health
span.
During the period Juvenescence, through its JuvLife Division, joined Banco Português de Fomento and 200M Fund in a co-investment
in Chrysea Laboratories, a synthetic biology company developing high-value and difficult to source natural products, using proprietary
synthetic biology platforms. Juvenescence and Chrysea will collaborate to develop and commercialise one of Chrysea’s products.
Other advances for Juvenescence included a successful raise of US$8 million from its investee company Morphoceuticals which is
pioneering the use of artificial intelligence-guided electroceuticals to regenerate limbs, repair tissues, and regenerate organs.
Juvenescence remains valued at Series B raise price. Subsequent debt rounds support this price, however a Series C round or public
markets listing are still eagerly awaited.
Northern Leaf Ltd ('Northern Leaf')
Northern Leaf is focused on becoming a key player in the European medical cannabis supply chain, having already built a secure
operational facility in Jersey. Northern Leaf is leading the development of a new industry for the British Isles, using state-of-the-art
tracking systems and robust policies and procedures to ensure the highest levels of quality from seed to sale.
Post-period SEED secured a 60% uplift on the Company’s original investment into Northern Leaf. SEED originally invested in Northern Leaf
via a 2-year £600,000 Convertible Loan Note as part of a c.£14M raise by Northern Leaf. Following a successful equity raise of c.£3 million,
this CLN (principle and accrued interest of approximately 20%) has converted in accordance with the terms of the CLN into 1,236,331
preference shares in Northern Leaf, representing 2.2% of the enlarged equity of Northern Leaf.
At the price of the recent raise, SEEDs holding is valued at £960,000, a 60% uplift (1.6X) including accrued interest compared to the
original investment.
Northern Leaf is also targeting an IPO for later this year.
Fralis LLC (trading as Leap Gaming - 'Leap')
Leap is a developer of high-end virtual-sports, slots, and casino applications serving hundreds of gaming brands and generating tens of
thousands of engagement points with end-users. Leap's attention to detail in its solutions and services is manifested in the modular
engagement terms it offers to its operating partners and its ability to provide seamless experiences across mobile, desktop and retail
environments. Leap is licensed by the MGA and certified for other jurisdictions worldwide, including the United Kingdom, Sweden, the
Netherlands, Romania, South Africa and Greece.
10
SEED INNOVATIONS LIMITED
INVESTMENT PORTFOLIO REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2023
Following the announcement made on 7th December 2022, we are pleased to confirm that the sale of Leap is now complete and
unconditional, as announced outside the reporting period on 11 April 2023. The shareholders of Leap entered into a Share Purchase
Agreement ("SPA") on December 7th, 2022, for the sale of the entire issued share capital of Leap to IMG Arena US, LLC ("IMG") at an
enterprise value of €14 million. This transaction is known as the Leap Transaction.
Sale proceeds due to SEED were paid / are due as follows:
• Received €2.8 million (£2.4 million), being 50% of the sale proceeds due to SEED under the agreement (and after
adjustment for working capital and repayment of debt); and
• Received €268,000 (£235,000) being repayment of Leap's €250,000 term loan (as announced on 8 June 2022), together
with accrued interest.
• The second tranche of sale proceeds, being €2.8 million (calculated as the remaining 50% of the sale proceeds and subject only
to any claims under customary warranties & indemnities,), is expected to be received in April 2024, being the 12-month
anniversary of Completion, as per the terms of the SPA.
The expected total blended return on investment over all the Leap investments is disappointing at approximately 4%, albeit this is skewed
by losses made on units purchased at high prices in 2018 (when the Gaming market was trading strongly). By comparison, the more
recent Convertible Loan Notes ("CLNs") acquired by SEED's current management in 2020 & 2021 returned approximately 36% (being
approximately €1M against a cost of €733K). SEED intends to use the proceeds received for making further investments in accordance
with its investing policy.
Longer term Investments
Being typically early stage investments and often in the value creation phase of development, working toward initial sales and/or
profitability. Some positions may have been held for some years already, with no communicated plans for a public market liquidity event,
nor publicised plans for a sale by M&A. Where progress in development has been achieved or further upside within an acceptable
timeframe now seems unlikely, SEED may be working with the investee company to identify a route to a liquidity event, or may
independently to find a purchaser for just its own holding in the investee company.
Inveniam Capital Partners ('Inveniam')
Inveniam is a private fintech company which built Inveniam.io, a powerful technology platform that utilises big data, AI and blockchain
technology to provide surety of data and high-functioning use of that data in a distributed data ecosystem. Inveniam has built Inveniam.io,
the data operating system for delivering access, transparency, and trust in the value and performance of private market assets.
11
SEED INNOVATIONS LIMITED
INVESTMENT PORTFOLIO REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2023
During this period Inveniam has partnered with Apex Group a global financial services provider. Through the partnership, Inveniam
and Apex Group will use Inveniam’s patented blockchain technology and the Inveniam.io data operating system to deliver digitally
credentialed, higher-functioning private asset data for more consistent, fully auditable valuations.
Inveniam and Rialto Markets also announced a partnership, with Inveniam making a capital investment into Rialto Markets and will
support the burgeoning market with connectivity into its private market data eco-system. Inveniam via Inveniam.io, is the operating
system for private market data that drives price discovery and automated waterfall calculation
Post-period Inveniam has also partnered with Cushman & Wake, a leading global real estate services operator, to deliver a tech stack that
will further the global trading of private market assets with real-time data surveillance.
The stock is being carried at same price as at March 2022 ($8.51 per share) in the absence of visible transactions in shares or equity raises
in the interim. Inveniam have raised new funding via debt instruments in the intervening period and expect a Series B during 2023 which
will hopefully result in a positive revaluation at future valuation points.
Clean Food Group Limited (‘CFG’)
CFG was co-founded by CEO Alex Neves and Co-Chairman Ed McDermott in 2021, with the goal of becoming the leading independent UK
cultivated food ingredients business. CFG is a British based food Technology Company which aims to become the leading independent
UK cultivated food business. CFG are developing a sustainable yeast technology that produces cultivated, sustainable alternatives to palm
oil and soy protein, two ingredients in food and cosmetics with currently massive and still growing demand and negative environmental
impact. CFG has gathered a knowledgeable board of directors and an experienced advisory team which is familiar with biotechnology,
life sciences and high-growth industries.
Later in the reporting period, CFG announced its partnership with Doehler Ventures, the venture arm of Doehler Group GmbH, a
global producer, marketer and provider of technology-driven natural ingredients and systems. As an influential player in the Nutrition &
Technology ecosystem, Doehler Ventures is dedicated to supporting early-stage start-ups, making this partnership a significant milestone
for CFG. This collaboration presents a unique opportunity for CFG to further demonstrate its potential as a commercially scalable
production methodology and could potentially drive the next uplift in valuation for the company. This partnership marks a remarkable
achievement for CFG, particularly as a young company, and underscores the recognition of its value and potential by a well-respected
industry leader.
CFG received a total investment of £171,000 from SEED, divided into two parts. The first investment of £46,000 was made in March 2022
for 4.6 million shares during the seed round. The second investment of £125,000 for 1.25 million shares was made during the "Friends &
Family" funding round, which raised £1.65 million and was led by Agronomics Limited, an AIM-traded company focused on cellular
agriculture and cultivated meat.
Yooma Wellness Inc. ('Yooma')
Yooma (dual listed on the Canadian CSE and London AQUIS, with Tickers: YOOM.CN and YOOM.AQ respectively) is engaged in the
marketing and sale of wellness products including hemp seed oil and hemp-derived and cannabinoid (CBD) ingredients.
Disappointingly, Yooma has continued to perform poorly and is now written down to zero, with little chance of a recovery in fortunes
expected and the existing business being sold down to cover costs. Traded volumes have historically been low, with recent trades at very
low prices. It is a sad fact of early stage investing that some investments will be lost as the underlying company fails to realise their
business plans and attain a sustainable business model. This said, listed vehicles such as this are often repurposed for new opportunities
and as such SEED will hold its position against the possibility of a future restructuring which might offset some of this loss.
12
SEED INNOVATIONS LIMITED
INVESTMENT PORTFOLIO REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2023
Vemo Education Inc. ('Vemo')
VEMO is an education technology company founded to address the student debt crisis by developing income share agreement ('ISA')
programmes and deferred tuition plans and partnering with higher education institutions to make these funding options available to
students.
Following a significant decline in recent years, coupled with regulatory pressure and negative press for their underlying student
Income Sharing Agreements, Vemo has ultimately failed. This is now considered a total loss and Vemo will not be reported on in
future updates.
Avextra (formally Eurox Group GmbH) ('Avextra')
Avextra is a German-based, vertically integrated medical cannabis company focused on intensifying its investment in pharmaceutical
development internationally while maintaining the highest European pharmaceutical quality standards to expand its Avextra-branded
pharmaceutical products.
Over the course of the reporting period, in April 2022, SEED invested a further €176,474 into Avextra’s fundraise of € 4.4M which was
held at a 62% premium to its July 2021 fundraise, with the funds being used for development of the Portuguese facility and further
acceleration of product development. Eurox Group GmbH rebranded to Avextra to emphasise its clear focus on the highest quality
cannabis extracts and its commitment to the development of evidence-based cannabis medicines.
In October Avextra successfully raised c. €7.4 million via a secured convertible loan note (‘CLN’), SEED did not partake in the fundraise.
The funds will be used to support Avextra's launch in Germany, R&D activities including the start of clinical studies, as well as
furthering the expansion of their Portuguese operations.
Avextra successfully exported EU-GMP standardised cannabis extracts manufactured in its German facility to its distribution partner in
the United Kingdom. The Export is a significant milestone that validates the regulatory pathway for medical cannabis products from
Germany.
Post period saw Avextra close a €17 million capital raise, a number which includes a previously announced €7.4 million from the first close
of the round. The fundraise will be used to expand sales and distribution channels of Avextra's product portfolio into new European
markets, expedite Cannabis-based medication clinical trials, advance its R&D activities as well as further its expansion into the German
market.
CiiTech Limited (‘CiiTECH’)
CiiTECH was an established research-led cannabis healthcare company. It used its partnerships with leading institutions and scientists to
create consumer focused brands, company dedicated to ongoing cannabis research and the commercialisation of cannabis
products and the best science-led brands.
As previously reported, the SEED management had written the value of the holding to nil following the uncertainty of required future
fundraisings and the potential ongoing viability of the company as a result. The company failed to raise funds and was put into
Administration and has been wound up. This is a total loss and will be removed from future reporting.
13
SEED INNOVATIONS LIMITED
INVESTING POLICY
FOR THE YEAR ENDED 31 MARCH 2023
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 £100m 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 intend 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.
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.
14
SEED INNOVATIONS LIMITED
INVESTING POLICY (continued)
FOR THE YEAR ENDED 31 MARCH 2023
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.
15
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.
Ed McDermott (Chief Executive Officer)
Mr McDermott, a former investment banker, has over 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 and Partners Group Private Equity
Performance Holdings Limited (both investment funds 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.
16
SEED INNOVATIONS LIMITED
REPORT OF DIRECTORS
FOR THE YEAR ENDED 31 MARCH 2023
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 2023.
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 PO Box 343, Obsidian House, La Rue D'Aval, Vale, Guernsey GY6 8LB.
The Company is quoted 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, 2020 and the Authorised Closed-
Ended Investment Schemes Rules 2021.
Results
The results of the Company for the year are shown on page 26. The Company made a loss for the year of £4.5 million (2022: Loss £4.5
million).
Dividends
The Company did not pay any dividends during the year (2022: £Nil) and the Directors do not propose a final dividend for the year
(2022: £Nil).
Investments
Details of the Company’s investments are disclosed in the Investment Portfolio Report and notes 12, 13 and 19.
Material Contracts
The Company’s material contracts are with:
• Obsidian Fund Services Limited (“Obsidian”), which acts as Administrator and Company Secretary;
• Share Registrars Limited, which acts as Registrar;
• Beaumont Cornish Limited, which acts as Nominated Adviser; and
• Shard Capital, which acts as Broker.
Directors
The present members of the Board are listed on page 3 of this report. There were no changes to the Board during the year. 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 1,674,024 (0.79%) Ordinary Shares (2022:
1,374,024 (0.65%)) in the Company at 31 March 2023 and the date of signing this report.
17
SEED INNOVATIONS LIMITED
REPORT OF DIRECTORS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
Mr De Jersey held 400,000 (0.19%) (2022: 400,000) Ordinary Shares in the Company at 31 March 2023 and at the date of signing this
report.
Mr McDermott held 4,680,000 (2.2%) Ordinary Shares (2022: Nil) in the Company at 31 March 2023 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:
Peter Saladino
Jim Mellon
Norbert Teufelberger
Richard Hackett
Number of
Ordinary Shares
17,194,590
14,783,722
7,205,005
7,122,952
Percentage of Share Capital
8.08%
6.95%
3.39%
3.35%
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 2023, 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 Obsidian 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.
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.
18
SEED INNOVATIONS LIMITED
REPORT OF DIRECTORS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
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. Messrs. McDermott & Cairns 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.
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)
Board Meetings
6/7
7/7
7/7
7/7
Committee Meetings
3/3
2/3
3/3
2/3
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 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.
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 Regulatory News Service ('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.
19
SEED INNOVATIONS LIMITED
REPORT OF DIRECTORS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
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:
• Obsidian Fund Services Limited is responsible for the provision of administration and Company Secretarial duties;
• The Board 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
Grant Thornton Limited was appointed as auditor of the Company effective from 9 December 2020.
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.
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.
20
SEED INNOVATIONS LIMITED
REPORT OF DIRECTORS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
Statement of Directors’ Responsibilities (continued)
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
Director
26 June 2023
Director
26 June 2023
21
INDEPENDENT AUDITOR’S REPORT
To the members of Seed Innovations Limited
Opinion
We have audited the financial statements of Seed Innovations Limited (the “Company”) for the year ended 31
March 2023, 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..
In our opinion, the financial statements:
give a true and fair view of the state of the Company’s affairs as at 31 March 2023 and of the Company’s
loss for the year then ended;
are in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International
Accounting Standards Board (“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
International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code), together with the ethical
requirements that are relevant to our audit of the financial statements in Guernsey, and we have fulfilled our
other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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. 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.
The key audit matter
How the matter was addressed in our audit
Valuation of unquoted investments (2023: £16.02
million and 2022: £19.52 million)
95% (2022: 86%) of the carrying value of the
Company’s investments, consist of unquoted
investments which are valued using different
valuation techniques and involve significant
judgment, as described in Notes 3 d), 4 and 13 to the
financial statements.
The valuations are 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 which might result in
the fair value being materially misstated.
The valuation of unquoted investments is 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
d), and Notes 4 and 13 to the financial statements
for additional information.
Our audit procedures consisted of:
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 confirmed our
understanding by performing 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 to independent sources and
supporting evidence obtained from management, and
tested the arithmetical accuracy of the Company’s
calculations;
We agreed the valued per the valuation models to the
portfolio statement in the financial statements; and
We evaluated the appropriateness of the valuation
methodologies used and whether appropriate disclosures
were made in the financial statements in accordance with
IFRS.;
19
The key audit matter
How the matter was addressed in our audit
Our result
We have no material matters arising from our audit work on
the valuation of unquoted investments that we wish to bring
to your attention.
Other information in the Annual Report
The Directors are responsible for the other information. The other information comprises the information
included in the Annual Report and Audited Financial Statements but does not include the financial statements
and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and, 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 in 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.
Responsibilities of directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view in accordance
with IFRSs as issued by the IASB, 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.
20
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 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.
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, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Wynand Pretorius.
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.
21
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.
Grant Thornton Limited
Chartered Accountants
St Peter Port
Guernsey
Date: 26 June 2023
22
SEED INNOVATIONS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
Notes
12
12
7
8
Net realised loss on disposal of financial assets at fair value through profit
and loss
Net unrealised loss on revaluation of financial assets at fair value through
profit and loss
Interest income on financial assets at fair value through profit and loss
Total investment loss
Other income
Bank Interest income
Arrangement fee
Total other income
Expenses
Directors' remuneration and expenses
Recognition of Directors share based expense
Legal and professional fees
Other Expenses
Administration fees
Adviser and broker's fees
Total expenses
Net loss before losses and gains on foreign currency exchange
Net foreign currency exchange gain
Total comprehensive loss for the year
(836)
(3,056)
102
(3,790)
3
9
12
(340)
(30)
(77)
(183)
(41)
(73)
(744)
(4,522)
63
(4,459)
Loss per Ordinary share - basic and diluted
10
(2.10p)
The Company has no recognised gains or losses other than those included in the results above.
All the items in the above statement are derived from continuing operations.
The accompanying notes on pages 30 to 50 form an integral part of these financial statements.
26
Year ended
31 March
2023
£'000
Year ended
31 March
2022
£'000
(1,951)
(1,781)
104
(3,628)
-
-
-
(373)
(32)
(151)
(226)
(72)
(74)
(928)
(4,556)
46
(4,510)
(2.12p)
SEED INNOVATIONS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
Non-current assets
Financial assets at fair value through profit or loss
Current assets
Cash and cash equivalents
Other receivables
Total assets
Current liabilities
Payables and accruals
Net assets
Financed by
Share capital
Employee stock option reserve
Other distributable reserve
31 March 2023
£'000
Notes
31 March 2022
£'000
12
14
15
16
16,019
16,019
30
50
80
16,099
(67)
(67)
16,032
2,127
-
13,905
16,032
19,524
19,524
922
57
979
20,503
(42)
(42)
20,461
2,127
212
18,122
20,461
Net assets per Ordinary share - basic and diluted
17
7.54
9.62
The financial statements on pages 26 to 50 were approved by the Board of Directors on 26 June 2023 and were signed on their behalf
by:
Ian Burns
Director
Lance De Jersey
Director
27
SEED INNOVATIONS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
Share Capital
£'000
Employee share Other distributable
reserve
option reserve
£'000
£'000
Balance as at 1 April 2021
Note
2,127
Total comprehensive loss for the year
Transactions with shareholders
Employee share scheme - value of
employee services
Balance as at 31 March 2022
Balance as at 1 April 2022
Total comprehensive loss for the year
Transactions with shareholders
Employee share scheme - value of
employee services
Transfer of value of lapsed options
-
-
2,127
2,127
-
-
7
7
180
-
32
212
212
-
30
(242)
Total
£'000
24,939
(4,510)
-
32
22,632
(4,510)
-
18,122
20,461
18,122
(4,459)
-
242
20,461
(4,459)
30
-
Balance as at 31 March 2023
2,127
-
13,905
16,032
The accompanying notes on pages 30 to 50 form an integral part of these financial statements.
28
SEED INNOVATIONS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
Cash flows from operating activities
Total comprehensive loss for the year
Adjustments for:
Unrealised loss on fair value adjustments on financial assets at FVTPL
Realised loss on disposal of financial assets at FVTPL
Foreign exchange movement
Directors' share based payment expense
Finance income
Changes in working capital:
Decrease/(Increase) in other receivables and prepayments
Increase/(Decrease) 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
Disposal of financial assets at fair value through profit or loss
Net cash (outflow)/inflow from investing activities
Decrease in cash and cash equivalents
Cash and cash equivalents brought forward
Foreign exchange movement
Cash and cash equivalents carried forward
Year ended
31 March 2023
£'000
Notes
Year ended
31 March 2022
£'000
(4,459)
(4,510)
12
12
14
15
12
12
3,056
836
(63)
30
(102)
7
25
(670)
(443)
158
(285)
(955)
922
63
30
1,781
1,951
(46)
32
(104)
(4)
(27)
(927)
(5,777)
5,905
128
(799)
1,675
46
922
29
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
1. General Information
SEED 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 PO Box 343, Obsidian House, La Rue
D'Aval, Vale, GY6 8LB.
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, 2020 and the Authorised Closed-Ended Investment Schemes Guidance and Rules 2021.
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 2022. 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 April 2022
There are no standards, amendments to standards or interpretations that are effective for the annual period beginning on on or after
1 April 2022 that have a material effect on the financial statements of the Company.
(b) New standards, amendments and interpretations effective after 1 April 2022 and have not been early adopted
A number of new standards, amendments to standards and interpretations are effective for the annual periods beginning on or after 1
April 2022 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.
30
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
3. Material 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) Financial instruments
Financial instruments are classified into financial assets and financial liabilities. Financial assets and financial liabilities are recognised
when the Company becomes a party to the contractual provisions of the financial instrument.
(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.
(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”).
31
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
3. Material Accounting Policies (continued)
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.
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.
32
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
3. Material Accounting Policies (continued)
(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 the Statement of 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 on financial assets at fair value through profit or loss’, foreign exchange gains and losses are recognised in the Statement of
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.
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.
33
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
3. Material Accounting Policies (continued)
Transfers between levels of the fair value hierarchy
Where transfers between levels of the fair value hierarchy occur, they 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.
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.
34
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
3. Material Accounting Policies (continued)
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.
(x) 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.
35
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
3. Material Accounting Policies (continued)
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.
(xi) 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.
e) 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.
f) 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 4. 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.
g) 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.
h) Earnings/(Loss) per share
Basic earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing:
• the profit or loss attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares;
• 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.
36
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
3. Material Accounting Policies (continued)
Diluted earnings/(loss) per share
Diluted earnings/(loss) per share adjusts the figures used in the determination of basic earnings/(loss) per share to take into account:
• the after tax effect of interest and other financing costs associated with dilutive potential ordinary shares;
• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of
all dilutive potential ordinary shares.
i) 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.
j) 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 Share Option Reserve
Employee share 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 realised to the distributable reserve (for example, if ordinary shares are sold for more than their par value, the
excess will be moved to other distributable reserves).
k) 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 makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results.
37
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
4. Critical Accounting Estimates and Judgements (continued)
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 entity 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.
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
revenue or earnings multiples and discounted cash flows. The inputs in the revenue or earnings multiple 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.
38
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
4. Critical Accounting Estimates and Judgements (continued)
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.
5. Segmental Information
The Chief Operating Decision Maker, which is the Board, is of the opinion that the Company is engaged in a single segment of
business, through its portfolio of investments in early stage businesses, with the aim of providing capital appreciation. The financial
information used by the Chief Operating Decision Maker to manage the Company presents the business as a single segment.
Segment information is measured on the same basis as that used in the preparation of the Company’s Financial Statements.
The Company receives no revenues from external customers. Other than its investments, the Company holds no non-current assets in
any geographical area other than Guernsey.
6. Administration Fees
Obsidian Fund Services Limited (“Obsidian”) was the Administrator of the Company during the year and was entitled to an administration
fee of £40,000 per annum with an additional fee of £500 per Board or Committee meeting above the eight meetings covered by the
administration fee.
In the year ended 31 March 2023, a total of £40,759 (2022: £13,787) was charged to the Statement of Comprehensive Income for
Obsidian, of which £3,333 was payable at the financial reporting date (2022: £3,333).
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.
7. Directors' Remuneration
The Board agreed the following compensation packages for the Directors of the Company.
• Ian Burns is entitled to an annual remuneration of £36,000 (2022: £36,000).
• Ed McDermott is entitled to an annual remuneration of £161,760 (2022: £161,760). The Company 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. None of the options were exercised and all have now expired.
39
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
7. Directors' Remuneration (continued)
• Lance De Jersey is entitled to an annual remuneration of £106,000 (2022: £106,000).
• Luke Cairns is entitled to an annual remuneration of £36,000 (2022: £36,000).
Additional information on Directors' Remuneration is noted in related parties. Refer to note 18.
Year ended 31 March 2023
Ian Burns
Ed McDermott
Lance De Jersey
Luke Cairns
Year ended 31 March 2022
Ian Burns
Ed McDermott
Lance De Jersey
Luke Cairns
8. Other Expenses
Regulatory and listing fees
Directors' and Officers' liability insurance
IT Costs
Consultancy fees
Salaries and Wages
Other expenses
Directors’
Discretionary
Recognition of
share based
Remuneration
£'000
Bonus
expense
Total
£'000
£'000
£'000
36
162
106
36
340
-
-
-
-
-
-
30
-
-
30
36
192
106
36
370
Directors’ Discretionary
Remuneration
£'000
Bonus
Recognition of
share based
expense
Total
£'000
£'000
£'000
36
161
110
36
343
-
15
15
-
30
-
32
-
-
32
36
208
125
36
405
Year ended
31 March 2023
£'000
Year ended
31 March 2022
£'000
27
10
7
43
84
12
183
25
3
19
57
114
8
226
40
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
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) (Amendment) Ordinance, 2012 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 (2022:
£Nil).
10. (Loss)/Earnings per Ordinary Share
The loss per Ordinary Share of 2.10p (2022: loss per Ordinary Share of 2.12p) is based on the loss for the year of £4,458,743 (2022:
loss £4,510,294) and on a weighted average number of 212,747,395 Ordinary Shares in issue during the year (2022: 212,747,395 Ordinary
Shares).
There are no dilutive effects on earnings per Ordinary Shares as all issued Options and Warrants expired without exercise during the
year.
11. Dividends
During the year ended 31 March 2023, no dividend was paid to shareholders (2022: £Nil). The Directors do not propose a final
dividend for the year ended 31 March 2023 (2022: £Nil).
12. Financial Assets designated at fair value through profit or loss
Fair value of investments brought forward
Purchases during the year
Proceeds from disposals during the year
Interest capitalised on convertible loan notes held
Realised losses on disposals during the year
Net unrealised loss on revaluation of investments
31 March 2023
£'000
31 March 2022
£'000
19,524
443
(158)
102
(836)
(3,056)
16,019
23,280
5,777
(5,905)
104
(1,951)
(1,781)
19,524
41
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
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).
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. 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 2023, 2 investments were valued as Level 1 investments within the fair value hierarchy, with the value being taken
from the published bid price available as at that date (2022: 3 investments).
The remaining eight investments were included within the Level 3 category and subject to a Level 3 valuation approach. Of these
seven positions, none were valued by way of third-party valuation reports. (2022: One of the eight Level 3 positions were valued by third
party valuers, 40% of portfolio by value).
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 2023
13. Fair value of financial instruments (continued)
Valuation Basis
Price of recent
(deal price)
Cost
Quoted price
Aggregate
Valuation
£’000
transaction 14,838
370
811
Total
16,019
Range
(input)
Sensitivity
n/a
n/a
-25% / 25%
Effect on fair value
£'000
(3,709)
£'000
3,709
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
Disposals proceeds during the year
Realised gains on disposals
Net unrealised change in fair value
Fair value of investments carried forward
31 March 2023
£'000
31 March 2022
£'000
2,632
-
(104)
4
(1,721)
811
5,455
1,922
(529)
384
(4,600)
2,632
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
Disposals proceeds during the year
Capitalised interest on loan
Realised losses on disposals
Net unrealised change in fair value
Fair value of investments carried forward
Level 1
Level 2
Level 3
Total
31 March 2023
£'000
31 March 2022
£'000
16,892
443
(54)
102
(840)
(1,335)
15,208
17,825
3,855
(5,376)
104
(2,335)
2,819
16,892
31 March 2023
£'000
811
-
15,208
16,019
31 March 2022
£'000
2,632
-
16,892
19,524
43
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
14. Other receivables
Prepaid expenses
Other receivables
15. Payables and accruals
Administration fees
Audit fees
Legal & professional fees
Other accrued expenses
31 March 2023
£'000
31 March 2022
£'000
50
-
50
56
1
57
31 March 2023
£'000
31 March 2022
£'000
3
30
6
28
67
3
29
1
9
42
16. Share Capital, Warrants, Options, Treasury shares and Other distributable reserves
Authorised:
1,910,000,000 Ordinary Shares of 1p
(2022: 1,910,000,000 Ordinary Shares)
100,000,000 Deferred Shares of 0.9p
(2022: 100,000,000 Deferred Shares)
Allotted, called up and fully paid:
212,747,395 Ordinary Shares of 1p
(2022: 212,747,395 Ordinary Shares)
Nil Deferred Shares of 0.9p (2022: Nil)
Share options
Warrants
Treasury Shares:
2,472,446 Treasury Shares of 1p
(2022: 2,472,446)
(i)
(ii)
(iii)
(vi)
(v)
(i) Ordinary Shares
During the year the Company did not issue new Ordinary Shares.
31 March 2023
£'000
31 March 2022
£'000
19,100
900
20,000
2,127
-
-
-
19,100
900
20,000
2,127
-
2,000,000
24,117,762
25
25
44
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
16. Share Capital, Warrants, Options, Treasury shares and Other distributable reserves (continued)
(ii) Deferred Shares
There were no changes to the number of deferred shares during the year.
(iii) Options
Share options relate to Ed McDermott and all expired during the year. 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. 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.
(v) Shares held in Treasury
There were no changes to the number of Shares held in Treasury during the year.
(vi) Warrants
Warrants expired unexercised during the year.
(vii) Other Distributable Reserves
Opening balance as at 1 April
Total comprehensive loss for the year
Transfer of value of lapsed options
Closing Balance as at 31 March
17. Net Assets per Ordinary Share
31 March 2023
£'000
18,122
(4,459)
242
13,905
31 March 2022
£'000
22,632
(4,510)
-
18,122
Basic and diluted
The basic and diluted net asset value per Ordinary Share is based on the net assets attributable to equity shareholders of £16,032,000
(2022: £20,461,000) and on 212,747,395 Ordinary Shares (2022: 212,747,395 Ordinary Shares) in issue at the end of the year. As all
Warrants and Options expired unexercised during the year there was no dilutive effect as at 31 March 2023.
18. Related Parties
(i) Directors’ remuneration
The Directors’ remuneration for the year ended 31 March 2023 is disclosed in note 7. The Directors consider that there is no
immediate or ultimate controlling party.
Ian Burns
Mr Burns is the legal and beneficial owner of Smoke Rise Holdings Limited, which held 1,674,024 (0.79%) Ordinary Shares (2022:
1,374,024 (0.65%)) in the Company at 31 March 2023 and the date of signing this report.
Mr Burns received an annual remuneration of £36,000 (2022: £36,000) with no discretionary bonus for the year (2022: Nil). There was
no payable at the financial reporting date (2022: nil).
45
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
18. Related Parties (continued)
Ed McDermott
Mr McDermott held 4,680,000 (2.2%) Ordinary Shares (2022: Nil) in the Company at 31 March 2023 and at the date of signing this
report.
Mr McDermott is entitled to an annual remuneration of £160,000 effective 1 April 2021.
Mr McDermott received annual remuneration of £161,760 (2022: £175,440) which included pension contributions of 1.1% of salary.
There was no discretionary bonus (2022: £15,000). There was a payable at the financial reporting date of £13,186 (2022: nil).
Lance De Jersey
Mr De Jersey, Finance Director of the Company held 400,000 ordinary shares in the Company as at 31 March 2023 and at the date of
signing of this report.
Mr De Jersey received annual remuneration of £106,000 (2022: £125,107). There was no discretionary bonus (2022: £15,000). There
was a payable at the financial reporting date of £8,833 (2022: nil).
Luke Cairns
Mr Cairns, Non-Executive Director of the Company is entitled to 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 (2022: £36,000) with no discretionary bonus (2022: Nil). There was no payable at
the financial reporting date. (2022: nil).
(ii) Administrator of the Company
Obsidian Fund Services Limited (“Obsidian”) was the Administrator of the Company during the year and was entitled to an administration
fee of £40,000 per annum with an additional fee of £500 per Board or Committee meeting above the eight meetings covered by the
administration fee.
In the year ended 31 March 2023, a total of £40,759 (2022: £13,787) was charged to the Statement of Comprehensive Income for
Obsidian, of which £3,333 was payable at the financial reporting date (2022: £3,333).
19. Financial Risk Management
The main risks arising from the Company’s financial instruments 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.
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.
46
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
19. Financial Risk Management (continued)
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
31 March 2023
£'000
31 March 2022
£'000
16,019
19,524
Financial assets at amortised cost
Other receivables
Cash and cash equivalents
Financial liabilities at amortised cost
Other payables
-
30
30
67
1
922
923
42
Prepayments of £50,000 (2022: £56,000) have been excluded from financial assets.
Credit risk
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 cash and cash equivalents, other receivables, short term loans and convertible
loan notes to investees. In order to mitigate credit risk, the Company seeks to trade only with reputable counterparties that the
management believe to be creditworthy.
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 £22,977 was placed with HSBC Bank plc (2022: £1,059,340). The
Moody’s counterparty risk rating for HSBC Bank plc was Aa3 as at 31 March 2023. Cash and cash equivalent of £1,637 (2022: £611)
was held the Company’s broker PI Financial Corp. Further an amount of cash and cash equivalent of £ 4,333 (2022: £12,139) was held by
Optiva Securities Limited which is authorised and regulated by the United Kingdom Financial Conduct Authority and are Members of
the London Stock Exchange.
Furthermore, the Company holds debt instruments - convertible loan notes of £1,945,000 which are classified as 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 the Board.
47
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
19. Financial Risk Management (continued)
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 £57,000 (2022: £42,000). The Company has no contractual commitment to
invest further in any of its existing investments.
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 30% (2022: 30%) best represents the margin of
price risk associated with the Company risk. A 30% (2022: 30%) increase/decrease in the fair value of investments would result in a
£242,580 (2022: £788,790) increase/decrease in the net asset value.
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. The proportion of the net financial assets of the Company were denominated in currencies
other than Sterling as follows:
48
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
19. Financial Risk Management (continued)
US Dollar
Cash and cash equivalents
Financial assets at fair value through profit and loss
Euro
Cash and cash equivalents
Financial assets at fair value through profit and loss
Canadian dollar
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 2023
£'000
31 March 2022
£'000
4
3,247
22
9,542
-
715
13,529
886
8,100
-
7,675
351
2,028
19,040
At 31 March 2023, 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 +/- £325,061 (2022: +/- £898,550).
At 31 March 2023, if the exchange rate of the Euro 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 +/- £956,365 (2022: +/- £767,500).
At 31 March 2023, 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 +/- £71,475 (2022: £202,780).
iii) Interest rate risk
The Company currently funds its operations through the use of equity. Cash at bank, the majority of which was in Euros 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.
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.
49
SEED INNOVATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 MARCH 2023
20. Capital Management Policy and Procedures (continued)
The Company is not subject to any externally imposed capital requirements.
21. Events after the Financial Reporting Date
On 11 April 2023 the Company announced that the sale of portfolio company Fralis LLC (trading as Leap Gaming, 'Leap') was to be
considered unconditional and at completion. Sale proceeds of €2.8 million (£2.4 million) being 50% of the sale proceeds due to the
Company under the agreement (and after adjustment for working capital and repayment of debt) and €268,000 (£235,000) being
repayment of the Company's €250,000 term loan were received soon after the announcement. The second tranche of sale proceeds,
being €2.8 million (calculated as the remaining 50% of the sale proceeds and subject only to any claims under customary warranties and
indemnities,), is expected to be received in April 2024, being the 12-month anniversary of Completion, as per the terms of the Sale
and Purchase Agreement ('SPA').
On 20 April 2023, the Company announced that its portfolio company, South West Brands Limited ('SWB') had entered into a SPA for the
sale of SWB to female founded OTO International Limited ('OTO') for an enterprise value of £6,235,000 to be paid in OTO shares (the
'Sale'). OTO is an omni-channel premium wellness brand renowned for its use of holistic plant ingredients and CBD in its portfolio products
and since inception in 2018 has delivered year-on-year revenue growth of 100% and is in a strong position to scale and reach profitability
in the near term, whilst continuing to build significant brand equity across multiple territories. SEED will receive a total of
£423,000 in OTO ordinary shares following conversion of the CLN's the Company holds in SWB and will be repaid cash of £167,000, being
repayment of the £150,000 8% Convertible Loan Note ('CLN') plus accrued interest of £17,000, invested on 4 October 2021. Following a
total investment into SWB of £500,000 by the Company, the total return represented by the Sale is £590,000, a blended return of 1.18
times the original investment. Following the completion of the Sale, SEED will hold 71,502 ordinary shares representing 1.4% of OTO.
On 24 April 2023 the Company announced the conversion of £600,000 Convertible Loan Notes ("CLNs") in Northern Leaf Limited
("Northern Leaf"), a Jersey based medical cannabis cultivator, following its successful £3 million pre-IPO fundraise, with a future IPO
currently targeted for this year. The Company originally invested in Northern Leaf via a 2-year £600,000 Convertible Loan Note ("CLN")
as part of a c.£14M raise by Northern Leaf (as announced 1 April 2021). Following a successful equity raise of c.£3 million, this CLN
(principle and accrued interest of approximately 20%) has converted in accordance with the terms of the CLN into 1,236,331 preference
shares in Northern Leaf, representing 2.2% of the enlarged equity of Northern Leaf. At the price of the recent raise, SEEDs holding was
valued at £960,000, a 60% uplift (1.6X) including accrued interest compared to the original investment.
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