TIDMTEK
RNS Number : 9990T
Tekcapital plc
28 July 2022
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
28 July 2022
Tekcapital plc
("Tekcapital", the "Company" or the "Group")
Unaudited Half-yearly Report for the period ending 31 May
2022
Company delivered record NAV (US$77m) and NAV/share
(US$0.51)
Tekcapital Plc (AIM: TEK), (OTCQB: TEKCF), the UK intellectual
property investment group focused on transforming university
technologies into valuable products that can improve people's
lives, is pleased to announce its results for the six-month period
ended 31 May 2022.
Financial highlights
-- Net Assets increased 13% to US$76.9m (30 November 2021: US$68.1m).
-- NAV per share increased 6% to US$0.51 (30 November 2021: US$0.48).
-- Portfolio valuation increased 16% to US$74.3m (30 November 2021:US$63.9m).
-- Total income was US$8.0m (H1 2021: US$14.5m), driven
primarily by the net increase of US$7.5m in the fair value of
portfolio companies (H1 2021: US$13.8m).
-- Profit after tax: US$6.7m (H1 2021: US$13.0m).
-- Completed US$2.5m share placement during the period (H1 2021: US$5.3m).
Operational highlights: Portfolio Companies
Belluscura(R) Plc ("Belluscura") www.belluscura.com
-- Awarded a Distribution and Pricing Agreement ("DAPA") from
the United States Defense Logistics Agency ("DLA"), one of the
largest buyers in the world, for the X-PLO2R(R).
-- Executed an agreement with InnoMax Medical Technology to
manufacture its X-PLO2R(R) portable oxygen concentrator in China,
which is expected to more than double its manufacturing capacity
whilst accelerating its international expansion. Nearly 100 million
people in China have chronic obstructive pulmonary disease
("COPD"). This cohort is 4X larger than the U.S. COPD
population.
-- Following the agreement, Belluscura completed placement for
GBP5.7 million net of placing expenses to fund the purchase of raw
material inventory and manufacturing non-recurring engineering
costs in connection with the recently announced global
manufacturing agreement in China.
-- Tekcapital owns 14% of shares of Belluscura plc, valued at US$18.9m as of 31 May 2022.
Lucyd(R) Ltd ("Lucyd") www.lucyd.co
-- Innovative Eyewear has filed an S1 registration statement
with the SEC and is seeking to effectuate an IPO to be traded on
the NASDAQ under the ticker: LUCY, which it seeks to consummate as
soon as practicable depending upon market conditions.
-- Announced it has been approved by DICK's Sporting Goods(R) to
provide its Lucyd Lyte(R) smart eyewear on dickssportinggoods.com
and by BestBuy.ca to place its products on Best Buy's Canadian
ecommerce site.
-- Sales growth of its smart eyewear by over 100% in Q1 2022 compared to Q1 2021 [1] .
-- Tekcapital owns 100% of shares of Lucyd Ltd, valued at
US$27.1m as of 31 May 2022. Lucyd Ltd owns approximately 81% of
shares in Innovative Eyewear, Inc. its US operating subsidiary.
Guident Ltd ("Guident") www.guident.co
-- Has been selected as a vendor by the Jacksonville
Transportation Authority (JTA)'s Procurement Review Committee for
JTA Proposal No. P-22-010 entitled "JTA Test Environment" to
provide remote monitoring and control services for three years.
This major project will commence in August 2022.
-- Announced it is working with Airspan Networks (NYSE American:
MIMO) to provide customers with connectivity and software solutions
for autonomous vehicles for smart city applications, using CBRS
(Citizens Broadband Radio Service) spectrum.
-- Announced that it filed its 8th patent application covering
improvements to its remote monitoring and control centre for AVs.
The U.S. patent application #17/579,203 is entitled: "Near
Real-Time Data and Video Streaming System for a Vehicle, Robot or
Drone."
-- Announced that its Regenerative Shock Absorber ("RSA")
prototypes have been fabricated and are being evaluated by
independent test facilities to confirm their performance and
capabilities. Guident is currently in discussions with potential
customers and strategic partners to potentially manufacture and use
their RSA's.
-- Tekcapital owns 100% of shares of Guident Ltd, valued at
US$18.1m as of 31 May 2022. Guident owns approximately 91% of
shares in Guident CORP, its US operating subsidiary.
Salarius(R) Ltd ("Salarius") www.salarius.co
-- Appointed Rick Guiney as CEO. Rick has more than 35 years of
experience in the food industry, including 30+ years as President
& CEO of Classic Snacks, Inc., where he pioneered the ground-up
development of the business and transformed it into a
market-leading direct distribution company in the food industry.
Classic Snacks quickly became a nationwide snack food packager and
distributor to airlines, restaurants, hotels, country clubs, bars,
taverns, and retail private label customers.
-- Appointed Dan Emery as a non-executive member of its board of
directors. Dan has more than 25 years of experience in the food
industry, including 15 years as vice president of sales and
marketing at Pilgrim's Pride, during which time sales grew from
US$970 million to US$8.5 billion, with a balance between retail and
food service.
-- Successfully completed roll-out of SaltMe! crisps to Kroger
Company, the United States largest supermarket by revenue. [2] The
roll-out has been expanded from 1,800 stores to 2,200 stores.
-- Received a VC seed investment of US$400K at $1.29/share, a
29% uplift over its prior period valuation.
-- Tekcapital owns 97.2% ownership of Salarius Ltd, valued at
US$7.0m as of 31 May 2022. Salarius owns approximately 73% of
shares in Microsalt Inc, its US operating subsidiary.
Operational highlights: Corporate
As part of our continuing efforts to develop our team and expand
our services:
-- Tekcapital delivered the English webinar series " Technology Transfer: The Development of New Commercialization Paradigms". The webinar was delivered to more than 60 participants from USA, Canada and South Africa.
-- Tekcapital delivered the Spanish webinar series "The
Development of New Commercialization Paradigms In LATAM." The
webinar was delivered to more than 80 participants from Colombia,
Chile, Mexico and Peru.
-- Tekcapital participated as a sponsor and exhibitor at the
2022 U.S. Central Region meeting held by the Association of
University Technology Managers (AUTM).
-- Tekcapital participated at several networking events held by
PraxisAuril and LicenciArte, where key tech-transfer industry
players connected.
Post period end highlights:
-- MicroSalt(R) announced that it has executed its first bulk
B2B MicroSalt order in the US, placed its SaltMe (TM) brand of
low-sodium potato chips into over 3,000 retail stores nationwide in
the U.S., and begun test marketing the first MicroSalt(R)
salt-shakers for food service, restaurants and retail sale.
-- Salarius Ltd changed its name to MicroSalt Ltd, consistent
with its global strategy to enhance brand recognition for MicroSalt
as it accelerates the growth of its business.
-- Belluscura announced the launch of its Bluetooth(R) enabled,
next generation XPLOR(R) portable oxygen concentrator. The next
generation X-PLOR provides more oxygen by weight than any portable
oxygen concentrator in its class and with its new Nomad Health(TM)
App, patients can connect other Bluetooth(R) devices such as their
iPhone(R) or Android phone, Nonin(R) or Masimo(R) pulse oximeters,
and Fitbit(R) wearables.
-- Belluscura announced that in addition to selling its products
through distributors it has commenced selling its X-PLOR oxygen
concentrators direct to consumers from the following website:
www.xploroxygen.com .
Dr. Clifford M. Gross, Chairman said : "We are glad to report
solid half-year performance for the Group. Our key portfolio
companies are all revenue generating, progressing well, have
capable management, and should reach significant additional
milestones by the end of 2022. We are excited about what we have
achieved in the first half of 2022 and about our potential
near-term growth and performance."
For further information, please contact:
Tekcapital Plc Via Flagstaff
Clifford M. Gross, Ph.D.
SP Angel Corporate Finance LLP
(Nominated Adviser and Broker) +44 (0) 20 3470 0470
Richard Morrison/Charlie Bouverat (Corporate
Finance)
Abigail Wayne / Rob Rees (Corporate Broking)
Flagstaff Strategic and Investor Communications +44 (0) 20 7129 1474
Tim Thompson/Andrea Seymour/Fergus Mellon
About Tekcapital plc
Tekcapital creates value from investing in new,
university-developed discoveries that can enhance people's lives
and provides a range of technology transfer services to help
organisations evaluate and commercialise new technologies.
Tekcapital is quoted on the AIM market of the London Stock Exchange
(AIM: symbol TEK) and is headquartered in the UK. For more
information, please visit www.tekcapital.com .
LEI: 213800GOJTOV19FIFZ85
General Risk Factors and Forward-Looking Statements
This Report is directed only at Relevant Persons and must not be
acted on or relied upon by persons who are not Relevant Persons.
Any other person who receives this Report should not rely or act
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represent and warrant that: (i) they are a person who falls within
the above descrip-tion of persons entitled to receive the Report;
(ii) they have read, agreed and will comply with the contents of
this notice. The securities mentioned herein have not been and will
not be, registered under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), or under any U.S. State securities
laws, and may not be offered or sold in the United States of
America or its territories or possessions (the "United States")
unless they are registered under the Securities Act or pursuant to
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Republic of Ireland, the Republic of South Africa or any other
jurisdiction in which it may be unlawful to do so, and it should
not be delivered or distributed, directly or indirectly, into or
within any such jurisdictions.
Investors must rely on their own examination of the legal,
taxation, financial and other consequences of an investment in the
Com-pany, including the merits of investing and the risks involved.
Prospective investors should not treat the contents of this Report
as advice relating to legal, taxation or investment matters and are
advised to consult their own professional advisers concerning any
acquisition of shares in the Company. Certain of the information
contained in this Report has been obtained from published sources
prepared by other parties. Certain other information has been
extracted from unpublished sources prepared by other parties which
have been made available to the Company. The Company has not
carried out an independent investigation to verify the accuracy and
completeness of such third-party information. No responsibility is
accepted by the Company or any of its directors, officers,
em-ployees or agents for the accuracy or completeness of such
information.
All statements of opinion and/or belief contained in this Report
and all views expressed represent the directors' own current
as-sessment and interpretation of information available to them as
at the date of this Report. In addition, this Report contains
certain "forward-looking statements", including but not limited to,
the statements regarding the Company's overall objectives and
strategic plans, timetables and capital expenditures.
Forward-looking statements express, as at the date of this Report,
the Company's plans, estimates, valuations, forecasts, projections,
opinions, expectations or beliefs as to future events, results or
performance. Forward-looking statements involve a number of risks
and uncertainties, many of which are beyond the Company's control,
and there can be no assurance that such statements will prove to be
accurate. No assurance is given that such forward looking
statements or views are correct or that the objectives of the
Company will be achieved. Further, valuations of Company's
portfolio investments and net asset value can and will fluctuate
over time due to a wide variety of factors both company specific
and macro-economic. Changes in net asset values can have a
significant impact on revenue and earnings of the Company and its
future prospects. Additionally, the current Coronavirus pandemic
may produce negative economic activities which could reduce the
company's economic performance and the performance of its portfolio
companies in ways that are difficult to quantify at this juncture.
It may cause a downturn in the markets in which the Company
operates, reduce the Company's net asset values, revenue, cash
flow, access to investment capital and other factors which could
negatively impact the Company. As a result, the reader is cautioned
not to place reliance on these statements or views and no
responsibility is accepted by the Company or any of its directors,
officers, employees or agents in respect thereof. The Company does
not undertake to update any forward-looking statement or other
information that is contained in this Report. Neither the Company
nor any of its shareholders, directors, officers, agents, employees
or advisers take any responsibility for, or will accept any
liability whether direct or indirect, express or implied,
contractual, tortious, statutory or otherwise, in respect of, the
accuracy or completeness of the information contained in this
Report or for any of the opinions contained herein or for any
errors, omissions or misstatements or for any loss, howsoever
arising, from the use of this Report. Neither the issue of this
Report nor any part of its contents is to be taken as any form of
contract, commitment or recommendation on the part of the Company
or the directors of the Company. In no circumstances will the
Company be responsible for any costs, losses or expenses incurred
in connection with any appraisal, analysis or investigation of the
Company. This Report should not be considered a recommendation by
the Company or any of its affiliates in relation to any prospective
acquisition or disposition of shares in the Company. No
undertaking, Report, warranty or other assurance, express or
implied, is made or given by or on behalf of the Company or any of
its affiliates, any of its directors, of-ficers or employees or any
other person as to the accuracy, completeness or fairness of the
information or opinions contained in this Report and no
responsibility or liability is accepted for any such information or
opinions or for any errors or omissions.
Intellectual Property Risk Factors
Tekcapital's mission is to create valuable products from
university intellectual property that can improve people's lives.
Therefore, our ability to compete in the market may be negatively
affected if our portfolio companies lose some or all of their
intellectual property rights, if patent rights that they rely on
are invalidated, or if they are unable to obtain other intellectual
property rights. Our success will depend on the ability of our
portfolio companies to obtain and protect patents on their
technology and products, to protect their trade secrets, and for
them to maintain their rights to licensed intellectual property or
technologies. Their patent applications or those of our licensors
may not result in the issue of patents in the United States or
other countries. Their patents or those of their licensors may not
afford meaningful protection for our technology and products.
Others may challenge their patents or those of their licensors by
proceedings such as interference, oppositions and re-examinations
or in litigation seeking to establish the invalidity of their
patents. In the event that one or more of their patents are
challenged, a court may invalidate the patent(s) or determine that
the patent(s) is not enforceable, which could harm their
competitive position and ours. If one or more of our portfolio
company patents are invalidated or found to be unenforceable, or if
the scope of the claims in any of these patents is limited by a
court decision, our portfolio companies could lose certain market
exclusivity afforded by patents owned or in-licensed by us and
potential competitors could more easily bring products to the
market that directly compete with our own. The uncertainties and
costs surrounding the prosecution of their patent applications and
the cost of enforcement or defense of their issued patents could
have a material adverse effect on our business and financial
condition.
To protect or enforce their patent rights, our portfolio
companies may initiate interference proceedings, oppositions,
re-examinations or litigation against others. However, these
activities are expensive, take significant time and divert
management's attention from other business concerns. They may not
prevail in these activities. If they are not successful in these
activities, the prevailing party may obtain superior rights to our
claimed inventions and technology, which could adversely affect
their ability of our portfolio companies to successfully market and
commercialise their products and services. Claims by other
companies may infringe the intellectual property rights on which
our portfolio companies rely, and if such rights are deemed to be
invalid it could adversely affect our portfolio companies and
ourselves as investors in these companies.
From time to time, companies may assert, patent, copyright and
other intellectual proprietary rights against our portfolio
company's products or technologies. These claims can result in the
future in lawsuits being brought against our portfolio companies or
their holding company. They and we may not prevail in any lawsuits
alleging patent infringement given the complex technical issues and
inherent uncertainties in intellectual property litigation. If any
of our portfolio company products, technologies or activities, from
which our portfolio companies derive or expect to derive a
substantial portion of their revenues and were found to infringe on
another company's intellectual property rights, they could be
subject to an injunction that would force the removal of such
product from the market or they could be required to redesign such
product, which could be costly. They could also be ordered to pay
damages or other compensation, including punitive damages and
attorneys' fees to such other company. A negative outcome in any
such litigation could also severely disrupt the sales of their
marketed products to their customers , w hich in turn could harm
their relationships with their customers, their market share and
their product revenues. Even if they are ultimately successful in
defending any intellectual property litigation, such litigation is
expensive and time consuming to address, will divert our
management's attention from their business and may harm their
reputation and ours.
Several of our portfolio companies may be subject to complex and
costly regulation and if government regulations are interpreted or
enforced in a manner adverse to them, they may be subject to
enforcement actions, penalties, exclusion, and other material
limitations on their operations that could have a negative impact
on their financial performance. All of the above listed risks can
have a material, negative affect on our net asset value, revenue,
performance and the success of our business and the portfolio
companies we have invested in.
Chairman's statem ent
Tekcapital brings innovations from laboratory to market. In the
first half of 2022, our key portfolio companies have made
significant progress and as a result, our net assets and net assets
per share ended the period at record levels.
Key portfolio companies
Tekcapital Plc commercialises university intellectual property,
a process known as technology transfer, both for its own portfolio
and as a service for client companies.
We believe that when you couple commercialisation ready,
compelling university IP with strong senior management, you
increase the probability that vibrant companies will emerge, net
assets will grow, returns on invested capital are likely to
increase and exits, if they occur, should happen faster. When we
realise exits, the Group's goal is to distribute a portion of
proceeds as a special dividend to our shareholders.
The Company believes that there is considerable value to be
realised from its current portfolio companies and is continuing to
further assist and invest in these operations. A common theme
across our portfolio companies is that they have proprietary
intellectual property, capable management in our view, and if
successful, can improve the quality of life for the customers they
serve. The Company's key investments include:
-- Salarius ltd (www.salarius.co), of which Tekcapital owns
97.2%, owns approximately 73% of Microsalt Inc., its US operating
subsidiary, which owns a patented process for producing
nano-particle salt crystals ("MicroSalt(R)"), which can reduce
sodium content in snack foods by up to 50.0%, yet provide the same
level of salty flavour found in traditional snacks. Salarius' goal
is to make snack foods healthier. The global sodium reduction
ingredient market is currently estimated to have a market value of
US$ 5.5bn in 2022 and is estimated to show an approximate CAGR of
5.8%, reaching a market value of USD 9.6bn by 2032 [3] .
-- Lucyd ltd (www.lucyd.co), which is wholly owned by
Tekcapital, sells innovative Bluetooth enabled glasses, through its
US subsidiary Innovative Eyewear, Inc. (81% ownership). Innovative
Eyewear Inc. launched its first commercial product in January 2021
after test marketing several prototypes. The company owns 41
pending and granted, design and utility patents for its
Bluetooth(R) enabled sound glasses. We believe Lucyd was the first
company to offer proper prescription glasses online that allow the
wearer to connect to their smartphones and digital assistants.
Their mission is to Upgrade your Eyewear(R) with useful hands-free
technology. In 2019, the largest number of pedestrian injuries were
reported in the past 30 years [4] and every seven minutes a
pedestrian is struck by a car due primarily to both drivers and
pedestrian alike being distracted with their smart phones. Lucyd's
glasses have speakers built into the arms of the glasses which
allows users to make calls and listen to music, whilst maintaining
situational awareness of the traffic around them having nothing
placed in the ears. Additionally, Lucyd has developed a
voice-controlled app called Vyrb(TM) which will enable its
customers and others to respond to posts on Twitter with their
voice, obviating the need to look at their phones or type
responses. Lucyd products are positioned at the intersection of the
eyewear, hearables and digital assistant markets. The U.S. eyewear
market is projected to reach US$29.4bn in 2022 [5] .
-- Guident ltd (www.guident.co), which is wholly owned by
Tekcapital (Guident owns approximately 91% of shares in Guident
Corp., its US operating subsidiary), was established to
commercialise new technology to enhance the utility and safety of
autonomous vehicles ("AVs") and ground-based autonomous delivery
devices. Using its proprietary IP, Guident is developing software
Apps that allow operators of AV's to remotely monitor and control
their vehicles. Remote monitoring and control is a legal
requirement for AV operation in the State of Florida and many other
jurisdictions. We believe ,that in the future, most territories
with AV's will require remote monitoring and control. The
autonomous vehicle market is expected to reach US $65.3 billion by
2027 [6] .
-- Belluscura plc (www.belluscura.com), of which Tekcapital owns
approximately 14%, has developed an improved portable oxygen
concentrator (POC) to provide on-the-go supplemental oxygen. Their
device is smaller, lighter and quieter than most competitive
products and has a replaceable filter cartridge that will allow the
user to upgrade the unit as their disease progresses. The device
was recently cleared for sale by the Food and Drug Administration
("FDA") and Belluscura commenced sales in 2021. As a result of the
global prevalence of Chronic obstructive pulmonary disease (COPD),
the medical portable oxygen market is expected to grow from
US$1.4bn in 2018 to US$5bn by 2030 [7] . This large, anticipated
growth may have a positive impact on portfolio company
Belluscura.
Financial performance
Despite headwinds in the global economy and capital markets, in
H1 2022 Tekcapital continued to create value and increased its net
assets. This was largely due to enhancement of the values of both
MicroSalt and Lucyd. The Group has now demonstrated 5 + years of
consistent growth of Net Assets.
Fundraisings
On 30 May 2022, the Group announced that it had completed a
fundraising of GBP2million (approx.. US$2.5 million) gross proceeds
through the placing of 8,000,000 new ordinary shares with new and
existing investors at a price of 25 pence per share. These funds
are being utilised to further accelerate portfolio company growth
and for working capital.
Current Trading and Outlook
Having continued to develop and expand Tekcapital's existing
business, the Board is confident that continued investment in our
portfolio companies remains the right approach for long-term value
creation. We believe that we are executing on our strategy and this
should result in increases in returns on invested capital as our
portfolio companies continue to mature and some achieve meaningful
exits, which we hope to see in the next 12 months. Whilst it is
clear that the Company is progressing very well, please note that
our net asset values and revenues will fluctuate from period to
period due to individual portfolio company performance, valuations
and changes in market conditions and macro-economic financial
conditions including the recent Coronavirus pandemic and the
Russian invasion of Ukraine. We are grateful for the patience and
support of our shareholders through these challenging events. We
are also sincerely appreciative of our dedicated, creative and
incredibly hardworking team without which, none of the results
reported herein would be possible.
Dr Clifford M Gross
Chairman and CEO
28 July 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 May 2022
Notes Six months Six months Year ended
ended ended 31 May 30 November
31 May 2021 2021
2022
Unaudited Unaudited Audited
US$ US$ US$
Continuing Operations
Revenue from services 368,928 646,770 815,989
Changes in fair value
on financial assets
at fair value though
profit or loss 7 7,478,419 13,780,423 28,096,340
Interest from financial
assets at fair value
through profit or
loss 186,012 - 142,399
Operating expenses (1,349,646) (1,538,923) (2,845,339)
Other income 7 - 68,982 161,094
--------------------------- ------
Operating profit
and profit before
tax 6,683,713 12,957,252 26,370,483
--------------------------- ------ ------------ ---------------------------- ------------------------
Income tax expense 5 (892) (93) (1,813)
--------------------------- ------ ------------ ---------------------------- ------------------------
Profit after tax
for the period 6,682,821 12,957,159 26,368,670
--------------------------- ------ ------------ ---------------------------- ------------------------
Other comprehensive
income
Translation of foreign
operations (272,756) 430,914 16,276
--------------------------- ------ ------------ ---------------------------- ------------------------
Total other comprehensive
income/(loss) (272,756) 430,914 16,276
--------------------------- ------ ------------ ---------------------------- ------------------------
Total comprehensive
income for the period 6,410,065 13,388,073 26,384,946
--------------------------- ------ ------------ ---------------------------- ------------------------
Earnings per share 6
Basic earnings per
share 0.05 0.12 0.22
Diluted earnings per
share 0.05 0.12 0.21
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 May 2022
Notes As at 31 As at 31 As at 30 November 2021
May 2022 May 2021
Unaudited Unaudited Audited
US$ US$ US$
Assets
Non-current assets
Intangible assets 322,463 838,770 364,401
Financial assets at fair value
through profit and loss 7 74,286,140 48,204,492 63,865,432
Property, plant and equipment 17,004 11,317 6,603
----------- ------------------------------- -----------------------
74,625,607 49,054,579 64,236,436
----------- ------------------------------- -----------------------
Current assets
Trade and other receivables 1,865,111 236,446 689,003
Cash and cash equivalents 1,148,375 2,456,493 3,543,762
----------- ------------------------------- -----------------------
3,013,486 2,692,939 4,232,765
Total a ssets 77,639,093 51,747,518 68,469,201
=========== =============================== =======================
Liabilities
Current liabilities
Trade and other payables 539,146 443,194 237,651
Deferred Revenue 169,283 155,221 169,283
----------- ------------------------------- -----------------------
Total liabilities 708,429 598,41 5 406,934
=========== =============================== =======================
Net assets 76,930,664 51,149,10 3 68,062,267
=========== =============================== =======================
Equity
Ordinary shares 834,549 735,625 793,792
Share premium 24,160,000 17,992,484 21,793,644
Retained earnings 51,993,867 31,791,802 45,259,827
Translation reserve 14,417 701,361 287,173
Other reserve (72,169) (72,169) (72,169)
Total equity 76,930,664 51,149,10 3 68,062,267
=========== =============================== =======================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 May 2022
Attributable to equity holders of the parent company
-------------------------------------------------------------------------
Ordinary Share Translation Other Retained Total
Group Note Shares Premium Reserve Reserve Earnings Equity
US $ US $ US $ US $ US $ US $
---------------------------- ------ --------- ----------- ------------ --------- ----------- -----------
Balance as at 30 November
2021 793,792 21,793,644 287,173 (72,169) 45,259,827 68,062,267
------------------------------------ --------- ----------- ------------ --------- ----------- -----------
Profit for the year - - - - 6,682,821 6,682,821
Other comprehensive
loss - - (272,756) - - (272,756)
Total comprehensive income
for the year - - (272,756) - 6,682,821 6,410,065
Transactions with owners,
recorded
directly in equity
Share issue 40,486 2,489,878 - - - 2,530,364
Share options exercised 271 4,135 - - - 4,406
Cost of share issue - (127,657) - - - (127,657)
Share based payments - - - - 51,219 51,219
Total transactions
with owners 40,757 2,366,356 - - 51,219 2,458,332
------------------------------------ --------- ----------- ------------ --------- ----------- -----------
At 31 May 2022 (unaudited) 834,549 24,160,000 14,417 (72,169) 51,993,867 76,930,664
------------------------------------ --------- ----------- ------------ --------- ----------- -----------
Balance as at 30 November
2020 521,830 13,211,344 270,447 (72,169) 18,780,012 32,711,464
Profit for the year - - - - 12,957,159 12,957,159
Other comprehensive
income - - 430,914 - - 430,914
Total comprehensive income
for the year - - 430,914 - 12,957,159 13,388,073
Transactions with owners,
recorded
directly in equity
Share issue 213,795 5,082,394 - - - 5,296,189
Cost of share issue - (301,254) - - - (301,254)
Share based payments - - - - 54,631 54,631
Total transactions
with owners 213,795 4,781,140 - - 54,631 5,049,566
------------------------------------ --------- ----------- ------------ --------- ----------- -----------
At 31 May 2021 (unaudited) 735,625 17,992,484 701,361 (72,169) 31,791,802 51,149,103
------------------------------------ --------- ----------- ------------ --------- ----------- -----------
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.
Translation reserve - foreign exchange differences recognised in
other comprehensive income.
Other reserve - historic other reserve outside of share premium
and translation reserve.
Retained earnings - cumulative net gains and losses recognised
in the consolidated statement of comprehensive income, net of
dividends paid.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 May 2022
Six months Six months For the
ended ended year ended
Group Note 31 May 2022 31 May 30 Nov 2021
2021
US $ US $ US $
Unaudited Unaudited
---------------------------------- -------- ------------- ------------------------- -------------
Cash flows from operating
activities
Cash outflows from operations (2,690,356) (1,306,438) (1,812,288)
Taxation paid (892) (94) (1,813)
Net cash outflows from operating
activities (2,691,248) (1,306,532) (1,814,101)
-------------------------------------------- ------------- ------------------------- -------------
Cash flows from investing
activities
Purchase of financial assets
at fair value through profit
and loss (1,058,317) (1,771,901) (3,968,339)
Purchases of property, plant
and equipment - - (2,389)
Net cash outflows from investing
activities (1,058,317) (1,771,901) (3,970,728)
Cash flows from financing
activities
Proceeds from issuance of
ordinary shares 1,396,067 5,296,189 9,416,593
Costs of raising finance (127,657) (301,252) (562,293)
Net cash inflows from financing
activities 1,268,410 4,994,937 8,854,300
-------------------------------------------- ------------- ------------------------- -------------
Net (decrease)/increase
in cash and cash equivalents (2,481,155) 1,916,504 3,069,471
Cash and cash equivalents
at beginning of period/year 3,543,762 538,473 538,473
Exchange gain/(loss) on cash
and cash equivalents 85,768 1,516 (64,182)
Cash and cash equivalents
at end of the period/year 1,148,375 2,456,493 3,543,762
-------------------------------------------- ------------- ------------------------- -------------
During the period Tekcapital plc issued new ordinary shares with
a total value of US$2,530,364. During the period US$1,391,661 was
received in cash and US$1,138,703 included in debtors as at 31 May
2022. Proceeds from the exercise of share options were US$4,406,
giving a total 'Proceeds from issuance of ordinary shares' in the
consolidated statement of cash flows of US$1,396,067.
Notes to the financial information
1. General information
Tekcapital PLC is a company incorporated in England and Wales
and domiciled in the UK. The address of the registered office is 12
New Fetter Lane, London, United Kingdom, EC4A 1JP. The Company is a
public limited company, which has been quoted on the AIM market of
the London Stock Exchange since 2014.
The principal accounting policies applied in the preparation of
this consolidated financial information are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
2. Basis of preparation
The financial information for the six months ended 31 May 2022
set out in this interim financial information is unaudited and does
not constitute statutory financial statements. The interim
condensed financial information has been presented in US Dollars
("$").
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 2021.
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 2021 accounts. The
estimates that changed since then are disclosed in Note 7.
4. Going concern
The Group and the Company meets its day to day working capital
requirements through its service offerings and monies raised
through the issues of equity. The Group's forecasts and projections
indicate that the Group and the Company have sufficient cash
reserves to operate within the level of its current facilities.
Whilst it is the Group's and the Company's intention to rely on the
available cash reserves, future income generated from its growing
service offerings and reductions in its cost base, a negative
variance in the forecasts and projections would make the Group's
ability to continue as a going concern dependent on monetisation of
quoted equity stakes or an additional fund raise. If the Group's
forecasts are not achieved, the Directors would seek to raise the
additional funds through monetisation of the portfolio or equity
issuances. Whilst the COVID-19 epidemic is contributing to
uncertainty in the markets, at the time of approving the accounts
after making enquiries, the Directors are satisfied that the Group
and the Company have adequate resources to continue in operational
existence for the foreseeable future. The Group and the Company
therefore continue to adopt the going concern basis in preparing
both its consolidated financial statements and its own financial
statements.
The Group therefore continues to adopt the going concern basis
for these interim financial statements.
5. Taxation
Immaterial charge of US$892 has arisen in the six-month period
ended 31 May 2022 (31 May 2021: US$94).
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 $0 at 31
May 2022:
Six months ended 31 May 2022 Six months ended 31 May 2021 Year ended 30 November 2021
US$ US$ US$
Profit
attributable
to equity
holders of
the Company 6,682,821 12,957,160 26,368,670
Weighted
average
number of
Ordinary
Shares in
issue:
Basic 141,542,328 108,363,954 120,128,629
Diluted 144,775,661 115,363,954 127,169,725
Basic profit
per share
($) 0.05 0.12 0.22
Diluted
profit per
share ($) 0.05 0.12 0.21
7. Financial Assets at Fair Value through Profit or Loss
The Group's financial assets at fair value through profit and
loss consist of equity investments (2022: US$ 71,060,393, 30
November 2021: US$62,523,658) and convertible loan notes (2022:
US$3,225,747, 30 November 2021: US$1,341,774) totaling
US$74,286,140 (30 November 2021: US$63,865,432).
31 May 1 December Additions Exchange Fair value 31 May
2021 2021 difference gain/(loss) 2022
US $ US $ US $ US $ US $ US $
Guident Limited 22,058,309 18,083,264 - - 18,083,264
Lucyd Ltd 7,910,036 17,345,195 - - 9,726,438 27,071,633
Belluscura
Limited 12,776,400 22,695,518 - - (3,818,321) 18,877,197
Salarius Ltd 3,638,304 4,356,520 1,058,315 - 1,570,303 6,985,138
Smart Food
Tek Limited 43,161 43,161 - - - 43,161
Total Balance 46,426,210 62,523,658 1,058,315 - 7,478,420 71,060,393
------------------------------------------------------------------ ----------- ----------- ---------- ------------ ------------- -----------
The valuation techniques used fall under, Level 1 - Observable
inputs, such as quoted prices, and Level 3- Other techniques as
defined by IFRS 13. These techniques were deemed to be the best
evidence of fair values considering early stage of portfolio
companies.
There have been no transfers between Level 3 and Level 2 for
Group's investment in Lucyd Ltd during the period. Fair value
measurement hierarchy for financial assets as at 31 May 2022 with
comparative amounts as of 30 November 2021:
Total Level 1 Level 2 Level 3
31 May 2022 US$ US$ US$ US$
Belluscura 18,877,197 18,877,197 - -
Lucyd Limited 27,071,633 - - 27,071,633
Guident Limited 18,083,264 - - 18,083,264
Salarius Limited 6,985,138 - - 6,985,138
Smart Food Tek Limited 43,161 - - 43,161
Total Balance 71,060,393 18,877,197 - 52,183,196
------------------------ ------------------ -------------- ------------------------ -----------------
30 November 2021 US$ US$ US$ US$
Belluscura 22,695,518 22,695,518 - -
Lucyd Limited 17,345,195 - - 17,345,195
Guident Limited 18,083,264 - - 18,083,264
Salarius Limited 4,356,520 - - 4,356,520
Smart Food Tek Limited 43,161 - - 43,161
Total Balance 62,523,658 22,695,518 - 39,828,140
------------------------ ------------------ -------------- ------------------------ -----------------
Guident (Nil Gain / Nil loss)
The total fair value remains unchanged from 30 November 2021 and
is based on a Private Placement Memorandum outlining offering of
securities at $1 per unit, with 18,115,942 shares held. Upon review
of business updates in H1 2022, management noted no material events
necessitating revisions.
Salarius (US1.6m gain)
In January 2022, Tekcapital Europe converted $1,058,317 of
convertible loans for 1,058,317 shares at $1 resulting in the
addition of $1,058,317 to the cost basis of its holding in
Microsalt Inc.
In June 2022, Microsalt Inc received an investment of US$400,000
at $1.29 per share. As a result, the group recorded fair value gain
of US$1,570,303 as of 31 May 2022, to reflect the movement from the
previous valuation at $1 to the current valuation at $1.29 per
share.
Lucyd Ltd ($9.7m gain)
The total fair value increased by US$9.7m from 30 November 2021.
In January 2022, Innovative Eyewear Inc. submitted a draft
registration statement with the U.S. Securities and Exchange
Commission (the "SEC"), for a proposed initial public offering
("IPO") of shares of its common stock in the United States. The
agreed upon pricing range of $5.50-$7.50 was determined by the sole
bookrunner of the offering. As such, the management deemed it
appropriate and prudent to use the lower end of the range ($5.50
per share) to value the Group's 4,922,115 shares held in the
company through Lucyd Ltd.
Belluscura ($3.8m loss)
The Group recorded a loss on its holdings in Belluscura, driven
by change in the AIM market listed price of 98p as of 30 November
2021 to 89p as of 31 May 2022.
Other investments (Nil Gain / Nil loss)
Given early stage of commercialisation, the fair value of Smart
Food TEK was recorded based on the cost of acquired IP, as the
carrying amounts represent a reasonable approximation of fair
value.
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.
Convertible loan notes
The Group also held multiple convertible loans issued by its
portfolio companies, including:
-- Convertible note issued by Innovative Eyewear Inc, for the
total of US$3,000,000 that bears interest at 10% per annum, which
includes the option to convert the debt into the Company's common
stock at market price. As of May 31, 2022, US$1,801,240 was
outstanding as the convertible note receivable. No conversions
occurred during the period.
-- Convertible note issued by Guident Ltd, for the total of
US$1,000,000 that bears interest at 10% per annum, which includes
the option to convert the debt into the Company's common stock at
market price. As of May 31, 2022, US$972,037 was outstanding as the
convertible note receivable. No conversions occurred during the
period.
-- Convertible note issued by Microsalt Inc, for the total of
US$2,000,000 that bears interest at 10% per annum, which includes
the option to convert the debt into the Company's common stock at
market price. As of May 31, 2022, US$456,091 was outstanding as the
convertible note receivable. During the period, Microsalt Inc
converted related party borrowings totaling $1,058,317 into
1,058,317 shares of common stock at $1 each.
8. 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.
9. Interim results
The interim results for the six months ended 31 May 2022 will
not be sent to shareholders but will be available from the
Company's website at http://tekcapital.com/investors/.
- Ends -
[1]
https://www.sec.gov/Archives/edgar/data/0001808377/000182912622012073/innovativeeye_s1a.htm
[2]
https://www.supermarketnews.com/retail-financial/top-25-supermarket-operators-sales
[3]
https://www.futuremarketinsights.com/reports/sodium-reduction-ingredient-market
[4] https://www.caranddriver.com/news/a31136893/pedestrian-deaths-increase-2019/
[5]
https://www.statista.com/outlook/cmo/eyewear/united-states
[6]
https://www.statista.com/statistics/428692/projected-size-of-global-autonomous-vehicle-market-by-vehicle-type/
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IR RRMLTMTJTBTT
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