TIDMTEK
RNS Number : 6743X
Tekcapital plc
14 August 2018
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
14 August 2018
Tekcapital plc
("Tekcapital", "the Company" or "the Group")
Half Yearly Report
for the period ending 31 May 2018
Tekcapital plc (AIM: TEK) a UK intellectual property (IP)
investment group focused on creating marketplace value from
university technology announces its results for the six month
period ended 31 May 2018.
Financial highlights
-- Total revenue of US$1,278,413
o Revenue from services increased by c. 29% to US$639,561 (H1
2017: $495,876(1) ) reflecting continued growth of technology
transfer services
o Net increase of US$638,852 in fair value of portfolio
companies
-- Profit before tax of US$105,996 compared to profit of
US$1,554,796 in H1 2017, with the change primarily due to
first-time recognition of fair value of portfolio companies in H1
2017.
-- Cash balance of US$1,418,889 (30 November 2017:US$1,797,729) and no debt
-- Net assets up 35% at 31 May 2018: US$10,746,031 (H1 2017: 7,974,906)
-- Net asset per share at 31 May 2018: US$0.25 (H1 2017: US$0.19).
Operational highlights: Corporate
-- Investment in the Latin America market has resulted in the
expansion of Invention Evaluator (IE) sales and business
relationships with the following universities and
organisations:
o Universidad San Sebastian
o Universidad Mayor
o Fundacion COPEC
o Universidad Adolfo Ibañez
o Andes Pacific Technology Access Hub
o Corfo (Chilean economic development agency)
o Universidad Federico Santa María
o INACAP
o Universidad Santiago de Chile
-- Global expansion of our technology transfer services was
aided by the addition of new lines of sales:
o Invention Evaluator has developed a new report at the request
of StartUp Chile, the leading startup accelerator in Latin America.
Start-Up Chile supports several hundred companies a year, and these
reports would assist their start-up companies on an on-going basis.
Management believes this new IE report will further strengthen
growth in services revenue in future periods.
o Successfully developed and delivered an advanced technology
commercialization programme in Santiago, Chile with HUB APTA and
the Chilean Biotechnology Association. This programme will provide
training services, Invention Evaluator reports and our software
apps to our Chilean customers. The programme included participants
from 13 Chilean research universities and two other research
institutions. The sponsor of this unique programme was the Chilean
government Agency CORFO, the main Chilean agency focused on
entrepreneurship, innovation and competitiveness. University
training programmes represent a new line of service business for
Tekcapital, and we are optimistic about delivering more of them in
future periods.
-- Tekcapital has recently appointed Michael S Rosen as Managing
Director of Academic & Entrepreneurship Training to accelerate
the growth of our Latin America business. Mr. Rosen has worked with
leading research universities where he has trained university
faculty on the creation of start-ups. Previously, he held senior
management positions with Fortune 500 companies such as Pfizer,
Bristol-Myers Squibb and Searle/Monsanto. Mr. Rosen also spent 12
years as President/CEO of European and U.S. biotech and medical
device companies. He is fluent in both Spanish and Portuguese.
Operational highlights: Portfolio Companies
-- Belluscura has reported continued progress with its portable
oxygen concentrator (POC) programme. The POC market is currently
projected to reach US$1.7b by 2022. Belluscura plans to file a
510(K) application with the US FDA in 2018. Tekcapital's ownership
interest in Belluscura is now 8,129,488 shares, representing
approximately 33% of the issued share capital.
-- During the reporting period, Belluscura plc completed a
private funding round raising gross proceeds of US$1.33 million, by
way of a placing (the Belluscura Placing) of a total of 7,388,179
new ordinary shares of GBP0.13p each (the Belluscura Placing
Shares). Tekcapital has invested US$250,000 in the private
placement and converted loans to Belluscura of US$210,090 to
equity. Tekcapital also received a three-year warrant to purchase
1,273,078 new shares in Belluscura at GBP0.13p per share.
-- As announced on 5 February 2018, Belluscura also added a Vice
President of Operations, Dr. Paul Bray, PhD. Amongst other duties
Dr. Bray is working on the FDA clearance process. To learn more,
please visit www.belluscura.com.
-- Lucyd pte ltd ("Lucyd") completed a Token Generation event
(TGE) to secure contributions of approximately $6m for the
development of augmented reality (AR) smartglasses and execution of
its business plan. Lucyd is seeking to introduce a prototype AR
product in March 2019. The market for AR is expected to grow to
US$36.4b by 2023 according to Greenlight Insights. Lucyd recently
announced it has appointed Gina Avila as Global Marketing
Manager.
-- Lucyd pte ltd announced on 4 July 2018 that Lucyd Pte Ltd has
appointed Dr Ira A. Clement, a licensed optometrist, as a science
advisor.
-- Lucyd has filed a new Patent Application No. 16/022,097 to
improve the utility of Augmented Reality glasses. The application
is directed to smartglasses, with prescription lenses, and methods
to control the presentation and display of information related to
mobile device tasks that can be performed with these
smartglasses.
-- On August 3, 2018 Lucyd launched an eShop to make it easy for
anyone to acquire advanced prescription eyewear or smart glasses
and to create, share and experience AR content. The eShop is the
first online optics store to provide prescription filled, bone
conducting, Bluetooth enabled eyeglasses that enable the wearer to
answer their phone, listen to music and communicate with Siri(R) or
other similar AI apps. To learn more, please visit
www.lucyd.co.
-- Salarius has developed a patented process for producing
nano-particle edible salt crystals. Independent tests have shown
that the use of its edible salt crystals for topical food
applications can deliver the same taste but half of the sodium
versus traditional salt. The mission of Salarius is to
commercialize low-sodium Microsalt to improve the nutritional
content of food and the health of individuals worldwide. To achieve
this mission, the company is exploring the launch of both a
low-sodium table salt and the establishment of a reduced sodium
snack brand. The low sodium ingredient market is estimated to reach
US$1.76bn by 2025 according to Future Market Insights.(2)
-- Salarius announced on 22 May 2018 that it has also added
Eduardo Souchon and Steve McCready to its board of directors, both
with relevant Fortune 500 company experience.
-- Victor H. Manzanilla has been appointed as CEO of Salarius as
announced on 1 August 2018. Mr Manzanilla has previously served as
founder of VHM Global Research, Marketing Director of Office Depot
(office products chain with approximately 1,400 stores) and Brand
Manager at Procter & Gamble (NYSE: PG) amongst other executive
positions. Additionally, Mr Manzanilla has purchased 2.5% of the
shares of Salarius through his consulting firm VHM Global Research
for $50,000.
Dr. Clifford Gross, Chairman said: 'We are pleased to report
successful half-year performance for the Group, which has noted
increases in service revenue while achieving important development
milestones for the successful commercialization of technologies for
three of its portfolio companies. We believe our unique approach of
acquiring and commercialising university IP innovations, coupled
with providing a range of IP value creation services to
universities and corporates, has uniquely positioned us to create
market value from university discoveries more efficiently than
traditional IP investment companies.'
For further information, please contact:
Tekcapital Plc Via Walbrook PR
Clifford M. Gross, Ph.D.
finnCap Ltd (Nominated Adviser and Joint
Broker) +44 (0) 20 7220 0500
Geoff Nash/ Max Bullen-Smith (Corporate
Finance)
Camille Gouchez (ECM)
Dowgate Capital Stockbrokers (Joint Broker) +44 (0) 1293 517744
David Poutney / James Serjeant
Walbrook PR Ltd +44 (0) 20 7933 8780
Paul Cornelius / Helen Cresswell / Sam tekcapital@walbrookpr.com
Allen
Tekcapital plc - The World's Largest University Network for Open
Innovation
Tekcapital's objective is to create value from investing in new,
university-developed intellectual properties. Additionally, using
its proprietary discovery search engine, linked to 4,500+
universities in 160 countries, coupled with expert scientific
review, Tekcapital provides a range of IP investment services to
make it easy for organisations to find, evaluate and acquire
university-developed technology. Tekcapital plc is quoted on the
AIM market of the London Stock Exchange (AIM: symbol TEK) and is
headquartered in Oxford, in the UK. For more information, please
visit www.tekcapital.com.
LEI: 213800GOJTOV19FIFZ85
CHAIRMAN STATEMENT
Summary
Tekcapital is passionate about creating value from university
intellectual property ("IP"). During the past half-year we have
made good progress.
The Group seeks to create value from its ability to identify and
acquire promising new university IP, which management believes is
ready to be commercialised, in addition to providing technology
transfer investment services. In the first half of 2018, we
continued to increase our revenues from services while undertaking
significant efforts to improve the value of our portfolio
companies.
We delivered the following technology transfer investment
services for our corporate and university clients which provided
revenue from services of US$639,561 in the period, excluding our
portfolio companies and product sales:
Invention Discovery Identify university IP available for
license. Our bespoke reports create a pipeline of compelling
university IP for potential acquisition or licensing candidates
Invention Evaluator Assess the market potential of new
technology. An on-line service providing objective analysis for new
IP
Vortechs Group Technology transfer experts for hire. More than a
decade of experience in finding the right technology transfer
professionals for universities and others, worldwide
IP Search App Global university IP search app. Instantly search
worldwide university PCT (Patent Corporate Treaty) applications and
patents on your smartphone.
TEK Training Services Foundational training to individuals,
professional teams, new tech transfer offices and government
agencies to enhance their ability to commercialize university
innovations.
These services provide the dual benefit of strengthening our IP
supplier network, which we view as a competitive advantage, while
generating service revenues to reduce our operating expenses. These
services include our original Invention Discovery service,
strengthened by two business and product acquisitions and the
development of a new search App.
In 2018, the Group has continued systematic offering and
geographical expansion, resulting in the increase in service
revenue. The Group's investment in new markets, such as Latin
American, as well as new offerings including university trainings
and IE startup reports provides further growth opportunities.
Tekcapital also recently added Michael S Rosen, an executive with
relevant experience gathered in Fortune 500 companies, as Managing
Director of Academic & Entrepreneurship Training to accelerate
growth of our Latin America business. The Group's goal is to
continue to expand its current services in Latin America and
Europe.
In addition to the above, the Group seeks to create value from
its ability to identify and acquire promising new university IP,
which management believes is ready to be commercialised. This is
achieved through the establishment of portfolio companies coupled
with the acquisition of the proprietary IP rights. Our goal as a
business is to use our global university network, combined with our
science advisory board, to acquire the rights to additional high
value intellectual properties. Utilising these properties, we then
seek to produce meaningful returns on invested capital that exceed
our cost of capital.
Consistent with these objectives, our portfolio companies have
developed materially during the reporting period.
We are sincerely appreciative of our dedicated, creative and
hardworking team that is continuously striving to enhance the value
of Tekcapital and thankful to our shareholders for their interest,
patience and support.
Current Trading and Outlook
Having continued to develop and expand Tekcapital's existing
business, the Board is confident that continued investment in
growth and our portfolio companies remains the right strategy.
Further, we believe that we are executing on our strategy and this
is likely to result in further increases in returns on invested
capital, and profitability in the future. Whilst it is clear that
the Company is progressing well we anticipate fluctuations in our
net asset values from period to period due to individual portfolio
company performance, valuations and changes in market conditions
and macro-economic financial conditions.
Because of the quickening pace of innovation, an increasing
number of companies are making ever faster and more disruptive use
of innovative ideas sourced exogenously. We believe this should
result in increased service revenues in the future and enhancement
of the combined value of our portfolio companies.
Dr Clifford M Gross
Chairman and CEO
13 August 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 May 2018
Notes Six months Six months Year ended
ended 31 May ended 31 30 November
2018 May 2017 2017
Unaudited Unaudited Audited
US$ US$ US$
Continuing Operations
Revenue from services 639,561 495,876 813,714
Revenue from products - 139,453 139,453
Net unrealised profit
on the revaluation of
investments 8 638,852 2,944,193 6,083,225
Profit on derecognition
of subsidiaries - 226,656 226,656
-------------- ------------------- -------------
Total Revenue 1,278,413 3,806,178 7,263,048
Cost of sales (371,774) (502,618) (692,610)
Gross Profit 906,639 3,303,560 6,570,438
Administrative expenses (800,643) (1,748,764) (2,417,284)
Operating Profit/(Loss) 105,996 1,554,796 4,153,154
Finance income - - -
Gain/(Loss) before taxation 105,996 1,554,796 4,153,154
Income tax expense 5 (1,194) (1,406) (1,406)
-------------- -------------------
Gain/(Loss) after taxation 104,802 1,553,390 4,151,748
============== =================== =============
Other comprehensive income/(loss)
Foreign exchange gain/(loss) (51,796) 359,983 424,230
Total comprehensive income/(loss) 53,006 1,913,373 4,575,978
============== =================== =============
Gain/(Loss) attributable
to:
Equity holders of the
parent 104,802 1,785,585 4,487,533
Non-controlling interests - (232,195) (335,785)
-------------- ------------------- -------------
104,802 1,553,390 4,151,748
Total comprehensive income/(loss)
attributable to:
Equity holders of the
parent 53,006 2,041,863 4,808,059
Non-controlling interests - (128,490) (232,081)
-------------- ------------------- -------------
53,006 1,913,373 4,575,978
Gain/(Loss) per share 6
Basic earnings per share 0.002 0.044 0.108
Diluted earnings per
share 0.002 0.043 0.108
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 May 2018
Notes As at 31 As at 31 As at 30 November 2017
May 2018 May 2017
Unaudited Unaudited Audited
US$ US$ US$
Assets
Non-current assets
Intangible assets 7 838,769 841,727 838,769
Financial assets at fair value through profit and
loss 8 8,411,856 4,148,349 7,307,696
Property, plant and equipment 41,435 4,624 6,005
----------- ---------------- -----------------------
9,292,060 4,994,700 8,152,470
Current Assets
Trade and other receivables 345,157 440,711 963,911
Inventory - - -
Cash and cash equivalents 1,418,889 3,135,803 1,797,729
----------- ---------------- -----------------------
1,764,046 3,576,514 2,761,640
Total Assets 11,056,106 8,571,214 10,914,110
=========== ================ =======================
Liabilities
Current liabilities
Trade and other payables 309,575 595,808 237,649
Current income tax liabilities 500 500 500
Loans and borrowings - - -
----------- ---------------- -----------------------
Total liabilities 310,075 596,308 238,149
Net Assets 10,746,031 7,974,906 10,675,961
Equity
Share capital 9 264,221 264,221 264,221
Share premium 9 9,271,098 9,271,098 9,271,098
Retained earnings 1,053,692 (1,704,982) 931,826
Translation reserve 229,189 216,738 280,985
Merger reserve (72,169) (72,169) (72,169)
Total equity attributable to equity holders of the
parent 10,746,031 7,974,906 10,675,961
Non-controlling interests - - -
Total Equity and Liabilities 11,056,106 8,571,214 10,914,110
=========== ================ =======================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 May 2018
Attributable to equity holders of the parent
---------------------------------------------
Share Share Translation Merger Retained Total Non-controlling Total
capital Premium Reserve Reserve Earnings interest Equity
US$ US$ US$ US$ US$ US$ US$ US$
Unaudited
Balance at 1
December 2017 264,221 9,271,098 280,985 (72,169) 931,826 10,675,961 - 10,675,961
Comprehensive
income
Profit for the
period - - - - 104,802 104,802 - 104,802
Other
comprehensive
income - - (51,796) - - (51,796) - (51,796)
Share based
payments - - - - 17,064 17,064 - 17,064
Issue of - - - - - - - -
ordinary shares
Warrants - - - - - - - -
exercised
Balance at 31 May
2018 264,221 9,271,098 229,189 (72,169) 1,053,692 10,746,031 - 10,746,031
======== ========== ============ ========= ============ =========== ================ ===========
Unaudited
Balance at 1
December 2016 228,052 6,377,383 (39,540) (72,169) (3,778,052) 2,715,674 421,400 3,137,074
Comprehensive
income
Profit for the
period - - - - 1,785,585 1,785,585 (232,195) 1,553,390
Other
comprehensive
income - - 256,278 - - 256,278 103,705 359,983
Share based
payments - - - - 31,868 31,868 - 31,868
Issue of ordinary
shares 34,879 2,814,385 - - - 2,849,264 - 2,849,264
Warrants
exercised 1,290 79,330 - - - 80,620 - 80,620
New funds into
non-controlling
interest - - - - - - 323,300 323,300
(Loss)/Gain
arising from
change in
non-controlling
interest - - - - 255,617 255,617 (255,617) -
Elimination of
NCI as a result
of change in the
accounting
policy - - - - - - (360,593) (360,593)
-------- ---------- ------------ --------- ------------ ----------- ---------------- -----------
Balance at 31 May
2017 264,221 9,271,098 216,738 (72,169) (1,704,982) 7,974,906 - 7,974,906
======== ========== ============ ========= ============ =========== ================ ===========
Share Share Translation Merger Retained Earnings Total Non-controlling Total
capital Premium Reserve Reserve interest Equity
US$ US$ US$ US$ US$ US$ US$ US$
Audited
Balance at 30
November 2016 228,052 6,377,383 (39,540) (72,169) (3,778,052) 2,715,674 421,400 3,137,074
Share issue 34,879 3,017,010 3,051,889 3,051,889
Cost of share
issue - (202,625) - - - (202,625) - (202,625)
Gain/(loss) for
the year - - - - 4,487,533 4,487,533 (335,785) 4,151,748
Other
comprehensive
income - - 320,525 - - 320,525 103,705 424,230
Share based
payments - - - - 70,318 70,318 - 70,318
Warrants
exercised 1,290 79,330 - - - 80,620 - 80,620
New funds into
non-controlling
interest - - - - - - 323,300 323,300
Gain/(loss)
arising from
change in NCI - - - - 152,026 152,026 (152,026) -
Derecognition of
NCI as a result
of change in the
accounting
policy - - - - - - (360,593) (360,593)
-------- ---------- ------------ --------- ------------------- ----------- ---------------- -----------
Balance at 30
November 2017 264,221 9,271,098 280,985 (72,169) 931,826 10,675,961 - 10,675,961
-------- ---------- ------------ --------- ------------------- ----------- ---------------- -----------
Share capital represents the amount subscribed for share capital
at nominal value.
Share premium represents the amount subscribed for share capital
in excess of nominal value and net of any directly attributable
issue costs.
The merger reserve arose on the share for share exchange
undertaken by the Company with Tekcapital Europe Limited on 18
February 2014.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 May 2018
Six months Six months For the
ended ended year ended
Group Note 31 May 2018 31 May 30 Nov
2017 2017
US $ US $ US $
------------------------------------ -------- ----------------------- ------------- ------------
Cash flows from operating
activities
Cash used in operations (345,397) (1,363,134) (2,739,179)
Taxation paid (1,994) (1,406) (2,206)
Net cash used in operating
activities (347,391) (1,364,540) (2,741,385)
---------------------------------------------- ----------------------- ------------- ------------
Cash flows from investing
activities
Deemed disposal of subsidiary,
net of cash acquired - (596,176) (596,176)
Purchases of property, plant
and equipment (44,558) (3,733) (15,755)
Purchases of intangible assets - (43,132) (43,277)
Interest received - - -
Net cash used in investing
activities (44,558) (643,041) (655,208)
Cash flows from financing
activities
Proceeds from issuance of
ordinary shares - 3,051,889 3,051,889
Costs of raising finance - (202,625) (202,625)
Proceeds from the exercise
of warrants - 80,620 80,620
Cash from non-controlling
interest - 323,300 323,300
Net cash from financing activities - 3,253,184 3,253,184
---------------------------------------------- ----------------------- ------------- ------------
Net (decrease)/increase in
cash and cash equivalents (391,950) 1,245,603 (143,410)
Cash and cash equivalents
at beginning of year 1,797,729 1,839,603 1,839,603
Exchange gain/(loss) on cash
and cash equivalents 13,110 50,597 (101,536)
Cash and cash equivalents
at end of year 1,418,889 3,135,803 1,797,729
---------------------------------------------- ----------------------- ------------- ------------
Notes to the financial information
1. General information
Tekcapital PLC is a company incorporated in England and Wales
and domiciled in the UK. The address of the registered office is 12
New Fetter Lane, London, United Kingdom, EC4A 1JP. The Company is a
public limited company, which is listed on the AIM market of the
London Stock Exchange in 2014.
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
2. Basis of preparation
The financial information for the six months ended 31 May 2018
set out in this interim financial information is unaudited and does
not constitute statutory financial statements.
The interim condensed financial information has been presented
in US Dollars ("$").
3. Accounting policies
3.1 Statement of compliance
The accounting policies applied by the Group in these unaudited
half year results are consistent with those applied in the annual
financial statements for the year ended 30 November 2017.
The financial statements of Tekcapital PLC Group have been
prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as
adopted by the European Union and the Companies Act 2006 applicable
to companies reporting under IFRS. The financial statements have
been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgment or complexity, or areas where assumptions
and estimates are significant to the consolidated financial
statements are disclosed in note 4 of the FY 2017 accounts. The
estimates have not changed since then other than addition of the
new estimates related to valuation of Salarius Ltd as disclosed in
Note 8, including relevant sensitivity analysis.
4. Going concern
The Group meets its day to day working capital requirements
through its service offerings, bank facilities and monies raised in
follow-on offerings. The Group's forecasts and projections indicate
that the Group has sufficient cash reserves to operate within the
level of its current facilities, if the group forecasts are not
achieved the Directors are confident that additional funds could be
raised through equity issues if required. After making enquiries,
the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future.
The Company therefore continues to adopt the going concern basis
in preparing both its consolidated financial statements and for its
own financial statements.
5. Taxation
Immaterial charge of $1,194 has arisen in the six-month period
ended 31 May 2018 (31 May 2017: $1,406).
6. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of Ordinary Shares outstanding during the period.
Diluted earnings per share is calculated by dividing the
earnings attributable to ordinary shareholders by the sum of
weighted average number of (1) Ordinary Shares outstanding during
the period and (2) Ordinary Shares to be issued assuming exercise
of outstanding stock options with intrinsic value above $0 at 31
May 2018.
Six months Six months Year ended 30 November 2017
ended 31 May 2018 ended 31 May 2017
US$ US$ US$
Profits/(Losses) attributable to
equity holders of the Company 104,802 1,785,585 4,487,533
Weighted average number of Ordinary
Shares in issue:
Basic 42,654,707 41,001,118 41,512,012
Diluted 42,654,707 41,264,580 41,718,262
Basic profit (loss) per share ($) 0.002 0.044 0.108
Diluted profit (loss) per share ($) 0.002 0.043 0.108
7. Intangible Assets
Purchased intangible assets
-------------------------------------------------
Website Vortechs Invention
Licenses development US $ Evaluator Total
US $ US $ US $ US $
------------------------------ ----------- ------------- --------- ----------- ----------
Costs
At 1 December 2016 621,871 26,002 500,000 333,815 1,481,688
Additions 35,973 - - 7,159 43,132
Disposals (657,989) (657,989)
At 31 May 2017 - 26,002 500,000 340,974 866,976
------------------------------ ----------- ------------- --------- ----------- ----------
At 1 December 2016 621,871 26,002 500,000 333,815 1,481,688
Additions 36,118 - - 7,159 43,277
Disposals (657,989) (2,205) (660,194)
Exchange difference - 2,119 - - 2,119
At 30 November 2017 - 28,121 500,000 338,769 866,890
------------------------------ ----------- ------------- --------- ----------- ----------
Additions - - - - -
At 31 May 2018 - 28,121 500,000 338,769 866,890
------------------------------ ----------- ------------- --------- ----------- ----------
Accumulated amortisation
and impairment
At 1 December 2016 (51,781) (20,149) - - (71,930)
Amortisation for the
period (20,955) (4,370) - - (25,325)
De-recognition due
to the change in the
accounting policy 72,736 - - - 72,736
Exchange difference - (730) - - (730)
At 31 May 2017 - (25,249) - - (25,249)
------------------------------ ----------- ------------- --------- ----------- ----------
As 1 December 2016 (51,781) (20,149) - - (71,930)
Amortisation for the
period (20,955) (5,994) - - (26,949)
Disposals 72,736 72,736
Foreign currency translation - (1,978) - - (1,978)
At 30 November 2017 - (28,121) - - (28,121)
------------------------------ ----------- ------------- --------- ----------- ----------
Amortisation for the - - - - -
period
De-recognition due - - - - -
to the change in the
accounting policy
Foreign currency translation - - - - -
At 31 May 2018 - (28,121) - - (28,121)
------------------------------ ----------- ------------- --------- ----------- ----------
Net book value
At 31 May 2017 - 753 500,000 340,974 841,727
------------------------------ ----------- ------------- --------- ----------- ----------
At 30 November 2017 - - 500,000 338,769 838,769
------------------------------ ----------- ------------- --------- ----------- ----------
At 31 May 2018 - - 500,000 338,769 838,769
------------------------------ ----------- ------------- --------- ----------- ----------
8. Financial Assets at Fair Value through Profit or Loss
Group's investments in portfolio companies are listed below and
classified as equity instruments. The principal place of business
for portfolio companies listed below is England and Wales.
31 May 1 December Additions Exchange Fair value 31 May
2017 2017 difference gain/(loss) 2018
US $ US $ US $ US $ US $ US $
Lucyd Ltd 183,030 6,023,955 3,766 (11,617) (1,339,359) 4,676,745
Belluscura
Limited 3,676,123 981,762 460,090 (29,351) (6,913) 1,405,588
Salarius Ltd 14,650 15,128 - (253) 1,985,125 2,000,000
Non Invasive
Glucose Tek
Limited 24,657 24,199 - (402) - 23,797
Smart Food
Tek Limited 47,365 44,167 320 (738) - 43,749
eGravitas Limited 150,024 154,535 12,873 (2,390) - 165,018
Frigidus Ltd 52,500 52,968 - (766) - 52,202
eSoma Limited - 10,983 11,914 - - 22,897
Guidant Limited - - 21,860 - - 21,860
Total Balance 4,148,349 7,307,696 510,823 (45,517) 638,853 8,411,856
------------------------------------------------------------------ ---------- ----------- ---------- ------------ ------------- ----------
The valuation techniques used fall under, Level 2 - Observable
techniques, other than quoted prices, and Level 3- Other techniques
as defined by IFRS 13. There has been no transfer between levels
during the period. Fair value measurement hierarchy for financial
assets as at 31 May 2018:
Date of Valuation Significant Significant
observable unobservable
inputs (Level inputs (Level
Total 2) 3)
US $ US $ US $
Salarius Ltd 31 May 2018 2,000,000 - 2,000,000
Belluscura Limited 31 May 2018 1,405,588 1,405,588 -
Lucyd and others 31 May 2018 5,006,268 - 5,006,268
Total Balance 8,411,856 1,405,588 7,006,268
----------------------------------------- ---------- --------------- ---------------
Lucyd Ltd
In accordance with the Group's policy, fair value of Lucyd
Limited as of 31 May 2018 was determined by an external, qualified
valuation expert. The fair value of Lucyd Limited of $4.7m was
determined based on valuation methodology used in the 30 November
2017 valuation and resulted in fair value loss of (US$1,339,359).
This movement is attributed primarily due to volatility of
crypto-currencies (Ethereum and Bitcoin) in which the Lucyd Pte is
holding the majority of funds held.
Belluscura Ltd
During the reporting period, Belluscura plc completed a private
funding round raising gross proceeds of US$1.33 million, by way of
a placing (the Belluscura Placing) of a total of 7,388,179 new
ordinary shares of GBP0.13p each (the Belluscura Placing Shares).
Tekcapital has invested US$250,000 in the private placement and
converted loans to Belluscura of US$210,090 to equity. Tekcapital
also received a three- year warrant to purchase 1,273,078 new
shares in Belluscura at GBP0.13p per share.
Considering Belluscura's valuation as of 30 November 2017 was
based on the most recent funding round share price of GBP0.13p, no
material adjustments to the fair value as of 31 May 2018 were made.
Similarly, given the warrant was granted at GBP0.13p, the most
recent placement price, the management considered the fair value of
the warrant to be immaterial.
Salarius Ltd
Based on commercialisation advancements as of 31 May 2018, an
external valuation of Salarius Ltd was prepared valuing Group's
stake at US$2,000,000. The valuation was based on the IP and
supported with following assumptions:
-- The projected size of the sodium-reduction ingredient market
in 2025. Future Market Insights, a substantial and respected market
research firm, projects the global market for such ingredients to
have revenue of US$1.8bn at that time. The US market is projected
to be 32% of the global market, being US$562m. The snack food
sector is projected to be 26.9% of the US market, being $151m.
-- The Salarius board's forecast assuming penetration of between
1% and 5% of that market by 2025, based on a number of factors:
o Microsalt is a unique product substantially in advance of
alternative, developed, and tested in terms of market acceptability
and ready to market;
o The protection given to the product by its US patent, which
effectively gives Salarius a barrier to entry in the US for 11 more
years;
o The strength and experience of the management team, whose
proven expertise is in the exact areas required to bring the
product to market and build the brand;
o There are no foreseeable manufacturing barriers in the
commercialisation process. Manufacturing will be outsourced, and it
can be clearly foreseen that this is deliverable;
o Other foreseeable challenges for management to deliver
successful commercialisation appear to be well within the abilities
of management to handle.
-- Salarius's forecast of its turnover in 2025 is US$1.51m. This
is equivalent to the lowest end of the market penetration range
quoted above, i.e. 1%.
-- A multiple of 2.8 has been applied to forecast 2025 turnover
to give a valuation at that point of US$4.2m
-- The 2025 valuation of Salarius has then been discounted back
to a present value using a conservative cost of capital of 10%.
That discounted value is US$2.1m, which has been rounded down to
US$2.0m.
-- The valuation of US$2.0m has been further validated by the
share acquisition in July 2018, where as a result of conditions
existing as of 31 May 2018, price of US$50,000 was agreed upon for
the sale of 2.5% stake in Salarius, albeit a related party.
Given early stage of commercialisation, fair value of remaining
portfolio companies was recorded based on the cost of acquired IP,
as their carrying amounts represent a reasonable approximation of
fair value.
Other investments (Nil Gain / Nil loss)
Under level 3 unobservable inputs. In the absence of observable
inputs the directors have considered the entities own data to
determine the fair value, which equates to the original funds
invested. They do not consider that any other available information
would materially change or give a more reliable representation of
the value.
This is the only category of financial instruments measured and
re-measured at fair value.
Description of significant unobservable inputs to valuation:
The significant unobservable input used in the fair value
measurements categorised within Level 3 of the fair value
hierarchy, together with a quantitative sensitivity analysis as at
31 May 2018 are shown as below:
Valuation Significant Estimate Sensitivity of the input
Technique unobservable applied to fair value
input
Lucyd Net Asset Discount to 66% 10% increase to the discount
Treasury tokens factor would decrease
the Lucyd valuation by
$850,000, a 10% reduction
in the discount factor
would increase the Lucyd
valuation by $850,000
Bonus Share 15% A 10% increase to the
bonus shares would decrease
the Lucyd value by $340,000,
a 10% decrease would increase
the Lucyd value by $340,000.
Salarius Market Revenue multiple 2.8 A 10% increase in the
approach, multiple would increase
revenue the Salarius value by
multiple $217,000, a decrease in
the multiple by 10% would
decreased the Salarius
value by $217,000
Discount factor 10% A 5% increase in the discount
factor would decrease
the Salarius value by
$580,000, a 5% decrease
in the discount factor
would increase the value
by $850,000
Market penetration 1% A 1% increase in the market
% penetration estimate would
increase the Salarius
valuation by $2,000,000,
a 1% decrease in the market
penetration estimate would
decrease the value by
$2,000,000.
No sensitivities have been included on the other investments
as their fair value equate to cost.
9. Share Capital
The Company's ordinary shares are of GBP0.004 par value.
All of the Company's issued ordinary shares have full voting,
dividend and capital distribution (including winding up) rights;
they do not confer any rights of redemption. The Company does not
hold any ordinary shares in treasury.
Issued and fully paid Shares Share capital Share premium
Number US$ US$
Ordinary shares of GBP0.004 each
At 1 December 2016 35,421,207 228,052 6,377,383
Shares issued in further public offering 6,968,500 34,879 2,814,385
Shares issued on exercise of warrants 265,000 1,290 79,330
As at 31 May 2017 42,654,707 264,221 9,271,098
=========== ============== ==============
At 1 December 2016 35,421,207 228,052 6,377,383
Shares issued in further public offering 6,968,500 34,879 2,814,385
Shares issued on exercise of warrants 265,000 1,290 79,330
As at 30 November 2017 42,654,707 264,221 9,271,098
=========== ============== ==============
Shares issued in further public offering - - -
Shares issued on exercise of warrants - - -
As at 31 May 2018 42,654,707 264,221 9,271,098
=========== ============== ==============
10. Related party transactions
The Group has taken advantage of the exemption in IAS 24
"related parties" not to disclose transactions with other Group
companies. During the period the Group did not employ any services
of non-Group companies meeting the definition of related
parties.
11. Interim results
The interim results for the six months ended 31 May 2018 will
not be sent to shareholders but will be available from the
Company's website at http://tekcapital.com/investors/.
- Ends -
1 Excluding Belluscura's sales from products deconsolidated as
of May 1, 2017 as a result of the recognition of Group's portfolio
companies at fair value.
2
https://www.fooddive.com/press-release/20151102-sodium-reduction-ingredient-market-revenue-is-expected-to-reach-us-17584/)
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR PJMLTMBMBBFP
(END) Dow Jones Newswires
August 14, 2018 02:00 ET (06:00 GMT)
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