TIDMANIC
RNS Number : 3091K
Agronomics Limited
20 December 2022
20 December 2022
Agronomics Limited
("Agronomics" or the "Company")
Annual audited results for the year ending 30 June 2022
Notice of AGM
The Board of Agronomics, a leading listed investor in cellular
agriculture, is pleased to announce its annual results for the year
ending 30 June 2022.
Copies of the 2022 Audited Report and Financial Statements are
being posted to shareholders and will shortly be available from the
Company's website, https://agronomics.im/investors/ , in the
investor portal section, under the financial reports tab.
The Company will post its Notice of Annual General Meeting
("AGM") to Shareholders at the same time. The AGM will be held at
the Sanderson Suite, Claremont Hotel, Loch Promenade, Douglas, Isle
of Man IM1 2LX at 10:00 a.m. on Thursday, 02 February 2023.
The Board considers it important that all shareholders should
have the opportunity to exercise their voting rights at the AGM. To
this end, the Company invites shareholders to complete the voting
proxy form as early as possible. Shareholders may also submit
questions to the Company Secretary either in writing at the
registered office or by email to denham@burnbrae.com prior to the
meeting and as early as possible.
Financial Highlights
-- Net Asset Value per share on 30 June 2022 was 14.85 pence per
share, up 18.7% from a year earlier (2021: 12.51 pence per
share)
-- The carrying amount of invested assets is GBP94,813,088
(2021: GBP38,770,676) - an increase of 145%, and cash and
equivalents and cash deposits stood at GBP51,482,501 (2021:
GBP62,436,497)
-- During the year, the company completed a successful funding
round, raising total gross proceeds of GBP32 million, issuing
30,492,206 new ordinary shares, and receiving net proceeds of
GBP31.3 million
-- The total assets stand at GBP146,398,248 (2021: GBP101,652,840)
Operational Highlights
-- Agronomics made fifteen investments, leading nine deals,
seven of which were follow-ons, and eight of the investments were
made into new companies within the cellular agriculture sector
-- Agronomics formed its first two companies - cultivated pet
food company Good Dog Food, and a contract manufacturer in
precision fermentation - Liberation Labs
-- Agronomics participated in five Series A funding rounds with
an average investment of US$ 4.6 million, as well as two Seed
funding rounds and one pre-Seed bridge round with an average
investment of US$ 3.5 million.
-- Agronomics participated in its first Series C deal, investing
US$ 8 million in The EVERY Company in an oversubscribed Series C
Round totalling US$ 175m
Post-period End Highlights
-- Agronomics invested an additional US$ 3.5 million in the US$
20 million Seed round of Liberation Labs Holding, the precision
fermentation contract manufacturer. In June 2022, Agronomics
invested US$ 627,000 in the initial round of financing for
Liberation Labs
-- Led by Agronomics with an investment of approximately AU$15m
(GBP8.7m), All G Foods, an Australian precision fermentation dairy
company, announced it had raised AU$ 25m with completion of its
Series A
-- Bond Pet Foods completed its US$ 17.5m Series A financing,
led by ADM Ventures and Cavallo Ventures, with other prominent
investors also participating. Agronomics first invested GBP150k in
Bond Pet Foods in September 2019, and subject to audit will now
carry this position at a book value of US$ 933k, representing a
MOIC of 6.22x
Jim Mellon, Executive Director of Agronomics Limited,
commented:
"This financial year has been another strong year of growth for
Agronomics and its diverse portfolio within the field of cellular
agriculture. We have made investments in new and existing portfolio
companies across three main areas; cultivated meat and material,
precision fermentation and enabling technologies.
Our conservative valuation methodology leads us to believe that
there is significant intrinsic value within our portfolio, and we
remain well positioned to identify attractive opportunities in the
sector. Our strategy will continue to be to develop a platform for
investing in environmentally friendly alternatives to traditional
meat products and plant-based sources of nutrition in a way that is
both sustainable and profitable. Agronomics' NAV per share on 30
June 2022 rose 18.7% when compared to a year earlier and we now
have over 20 portfolio companies.
Looking ahead, the industry recently saw the first approval of
cultivated meat product in the US by the FDA. This was a landmark
event for the field of cellular agriculture and moves us further
along the path to full scale commercialisation. We look forward to
further approvals from within Agronomics' leading portfolio of
companies and we expect to start seeing regulatory approvals across
our portfolio in major protein categories from 2024."
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU No. 596/2014) AS IT FORMS PART
OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT
2018. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY
INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO
BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO
BE IN POSSESSION OF INSIDE INFORMATION.
For further information please contact:
Agronomics Beaumont Canaccord Cenkos Peterhouse
Limited Cornish Genuity Limited Securities Capital TB Cardew
Limited Plc Limited
The Company Nomad Joint Broker Joint Broker Joint Broker Public Relations
---------------- ----------------- --------------- --------------- -----------------------
Richard Roland Cornish Andrew Potts Giles Balleny Lucy Williams Ed Orlebar
Reed James Biddle Harry Rees Max Gould Charles Alistair Walker
Denham Eke Alex Aylen Michael Goodfellow
(Head of Johnson
Equities)
---------------- ----------------- --------------- --------------- -----------------------
+44 (0) 20
7930 0777
+44 (0) +44 (0) +44 (0) +44 (0) +44 (0) 7738
1624 639396 207 628 +44 (0) 207 207 397 207 469 724 630
info@agronomics.im 3396 523 8000 8900 0936 agronomics@tbcardew.com
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Chairman's statement
I am pleased to present the Annual Report for Agronomics Limited
("Agronomics" or the "Company") for the year ended 30 June
2022.
This financial year, Agronomics continued to enjoy rapid
expansion, establishing a strong and diverse portfolio within the
field of cellular agriculture, which now covers all major protein
categories. In the prior year's Chairman's statement, we commented
on the turmoil caused by the COVID-19 pandemic to global supply
chains and in 2022, we have seen even greater disruption caused by
Russia's invasion of Ukraine and the war that persists.
The progress within our portfolio has been somewhat overshadowed
by the material change in the macroeconomic environment. The war
has highlighted the fragility of our existing supply chains, and
the need for more consistent and sustainable methods of producing
traditional agricultural products such as meat and dairy. We are
currently in a period of surging global inflation, which is
particularly notable with the world-wide rise in food prices.
Recent reports from the Food and Agricultural Organisation of the
United Nations indicate that these rising prices manifest
themselves in the developing world by increasing hunger and
malnutrition.
We continue to recognise cellular agriculture as the only
technology with the potential to decarbonise the world's protein
production system, while meeting the protein needs of the growing
global population as it expands to 10 billion around 2050. Our
investments focus on the production of cultivated meat, directly
from cells, as opposed to slaughtering an animal, as well as
precision fermentation and enabling technologies to support these
categories. Precision fermentation is the use of microorganisms as
cell factories to produce valuable animal proteins such as dairy,
egg or collagen. We acknowledge that unless these production
methods can achieve cost parity with current conventional
production methods, then large scale production, broad based
adoption and resultant impact will be minimal. Thus, our key focus
is on large protein categories and companies with truly scalable
technologies and processes.
During the year, we increased our exposure to precision
fermentation companies, adding new names including two egg protein
producers - The EVERY Company and Onego Bio Limited, and contract
manufacturer for precision fermentation scale-up - Liberation Labs
Holdings Inc. These companies offer near term paths to revenue
generation and commercialisation, targeting multi-billion-dollar
global markets. It should be emphasised here that a number of
precision fermentation products are already on the market and
selling in the US, including The EVERY Company's egg protein,
following regulatory approval via the US Food and Drug
Administration's (FDA) Generally Recognised as Safe (GRAS)
framework. Post 30 June 2022, we also added All G Foods Pty Ltd to
the portfolio, which is a precision fermentation dairy company,
that has unique technology around the formation of casein micelles,
focused on the Asia-Pacific (APAC) market.
In November 2022, we witnessed what we consider to be a seminal
moment for the field of cellular agriculture, with the US FDA
issuing its first "No Questions" letter with respect to the safety
of UPSIDE Foods' cultivated chicken product. This is one of the
final steps in being able to commercialise cultivated meat in what
is one of the largest and highest value markets globally. In this
instance, the leadership demonstrated by the FDA (a globally
recognised regulator) in the regulation of novel food products is a
major step forward and paves the way for Agronomics' portfolio
companies and others to gain regulatory approval in the near
future.
The Biden administration recently unveiled a new strategy to
eliminate hunger in the US by 2030, which included a nutrition and
health investor coalition to catalyse a US$ 2.5 billion private
investment into start-up companies pioneering new ways of
addressing food security. In early 2022, we also saw China, the
world's largest consumer of meat, specify cultivated meat and
precision fermentation in its five-year agricultural plan for the
first time. Numerous new companies in the sector have been
receiving notable grant funding, including portfolio company Solar
Foods, which received EUR10 million from the Finnish Climate Fund.
Solar Foods Limited received regulatory approval from the Singapore
Food Agency (SFA) in October 2022, for the commercialisation of
Solein, grown from carbon dioxide and electricity. The Dutch
government has set aside EUR60 million to invest in cellular
agriculture. It is also encouraging that the cellular agriculture
sector continues to draw in investment and interest from renowned
sovereign wealth funds such as Temasek International Pte Limited in
Singapore as well as Middle Eastern sovereign wealth funds, as they
try to execute on their food security initiatives.
Plant-based meat companies have come under scrutiny in recent
months over evidence of flat-line sales and failure to capture
meaningful market share. This implies that plant-based meat
products have failed to date to deliver on acceptable taste and low
prices to compete against conventional products. Plant-based meat
sales have not met their targets in recent months, even
experiencing a 0.5% decrease year on year in the US in 2021 after
seeing a 46% increase in 2020, bringing into question its ability
to compete and ultimately replace conventional agriculture on a
meaningful scale. Whilst the plant-based sector has created
intrigue and a narrative for more sustainable food systems through
innovation, we identify cellular agriculture as the ultimate
solution for delivering the exact same sensory experience that
consumers are used to eating, while being produced in a much more
efficient manner.
It would be remiss not to comment on the significant change in
sentiment towards venture funding markets, and capital markets more
broadly, which has seen funding rounds taking longer to complete in
2022, and valuation expectations declining sharply when compared
with 2021. Fortunately, Agronomics' conservative valuation
methodology still leads us to believe that there is significant
intrinsic value within the portfolio, which has not yet been able
to be recognised under IFRS.
Further, with Agronomics having cash as at 30 June 2022 of GBP51
million following its successful last fundraise in December 2021 of
GBP32 million, we believe we are well positioned to capitalise on
this market environment, to identify attractive opportunities in
the sector, at lower valuations than previously contemplated, as
well as continuing to support our portfolio, with the ultimate goal
of creating value for our shareholders.
Within the portfolio, the leaders have validated their
technology at a small-scale, and demonstrated proof of concept,
with the ongoing focus now to reduce costs, scale-up and achieve
regulatory approval in a major jurisdiction for the sale of their
products if required. We expect to start seeing regulatory
approvals across our portfolio in major protein categories from
2024.
Details regarding principal risks and uncertainties that apply
to the Company can be found in Note 8.
Investment Review
During the financial year, Agronomics made a number of
investments in new and existing portfolio companies inclusive of
assisting in the formation of two companies and participating in
its first Series C deal. Agronomics made fifteen investments, seven
of which were follow-ons, and eight were into new companies within
the cellular agriculture sector and Agronomicsled ninedeals.
Agronomics participated in five Series A funding rounds with an
average investment of US$ 4.6 million, as well as two Seed funding
rounds and one pre-Seed bridge round with an average investment of
US$ 3.5 million.
Agronomics also had a number of positive revaluation events,
five in total, with an average multiple on invested capital (MOIC)
of 2.61x for these deals only.
In the first half of the financial year, Agronomics led three
funding rounds. This included leading existing portfolio company
and cultivated leather company VitroLabs Series A funding round,
one Seed funding round in cultivated cocoa company California
Cultured and one pre-Seed bridge round in the form of a SAFE
(Simple Agreement for Future Equity) in cultivated wagyu beef
company Ohayo Valley.
In second half of the financial year, Agronomics continued to
focus on leading deals to ensure achieving favourable terms and
controlling interest in its portfolio companies as well as securing
board representation. The Company led five deals including 2 Series
A funding rounds in existing cultivated poultry company SuperMeat
and cultivated meat company CellX, and one Seed funding round in
precision fermentation egg company Onego. In this period,
Agronomics formed its first two companies - a cultivated pet food
company Good Dog Food, and a contract manufacturer in precision
fermentation - Liberation Labs. Liberation Labs is Agronomics'
first investment in a supporting technology to help precision
fermentation companies to scale.
The full commentary on the activities for the financial year can
be found below.
On 13 September 2021, portfolio company Formo Bio GmbH (Formo,
previously LegenDairy Foods GmbH) raised a US$ 50 million Series A
funding round led by EQT Ventures. Agronomics participated in the
round, subscribing for 1,191 Series A Preferred Shares, with a
EUR3.15 million investment. Agronomics now holds a total of 4,030
shares in Formo, representing an equity ownership of 5.94% on a
fully diluted basis. Agronomics co-led Formo's EUR4 million Seed
round in December 2019, with a EUR1 million investment for 2,839
Series Seed Preferred Shares, which saw a 7.5x uplift on the
original investment.
Agronomics led cultivated leather company VitroLabs Inc's
(VitroLabs) Series A funding round with a US$ 7 million investment,
announced on 20 September 2021. With the completion of the US$ 46
million raise being announced on 4th May 2022. Agronomics holds a
11.15% equity ownership on a fully diluted basis and has the right
to a board seat. Investors who joined the round include
BESTSELLER's Invest FWD, global luxury group Kering, Khosla
Ventures, actor and environmentalist Leonardo DiCaprio, New
Agrarian and Regeneration.VC. Agronomics previously invested US$
3.5 million in VitroLabs via SAFEs and CLNs, which converted into
Series A shares on completion of this funding round.
Agronomics led California Cultured Inc.'s (California Cultured)
US$ 4 million Seed funding round with a US$ 2.2 million investment,
announced on 20 October 2021. The financing is in the form of a
SAFE (Simple Agreement for Future Equity). Joining the round
includes global venture firm SOSV's IndieBio. The SAFE is expected
to convert into Preferred Stock of California Cultured at a future
equity financing round by California Cultured of at least US$ 4
million, providing an approximate equity ownership of 18.33 per
cent on a fully diluted basis. Following the close of the round,
Agronomics will have the right to a directorship in California
Cultured. At the discretion of the Agronomics, the SAFE is
convertible into equity following 12 months from issue. California
Cultured is a food-tech company based in Davis, California, U.S.,
which harnesses cell culture technology to produce cocoa products.
The application of cellular agriculture to produce plants or
plant-derived ingredients has to date not been extensively
commercialised. Using cocoa cell cultures to produce valuable cocoa
products, such as cocoa powder, chocolate, cocoa butter and
flavanols is considered an exciting opportunity.
On 26 October 2021, Agronomics invested a further EUR3 million
into existing portfolio company Solar Foods Oy (Solar Foods) in its
EUR6 million bridge funding round, in the form of a Convertible
Loan Note (CLN). Also joining this round included existing
investors CPT Capital and Happiness Capital Limited and new
investor, LOSA Group. The CLN is expected to convert to give
Agronomics an approximate equity ownership of 5.3%, inclusive of
its prior investment announced in September 2020. In the past year,
Solar Foods has made strong R&D progress and is now focused on
building its new demonstration facility that is set to be
operational early 2023. Solar Foods' novel technology has recently
been recognised by NASA as part of their Deep Space Food Challenge
- looking for new solutions to feed astronauts.
Agronomics invested US$ 8 million in The EVERY Company (EVERY,
formerly Clara Foods Co.), for an equity stake on a fully diluted
basis of 1.31%, with the investment announced on 4 November 2021.
EVERY raised an oversubscribed Series C Round totalling US$ 175
million. EVERY is a leading precision fermentation company with a
key focus on the commercialisation of proteins traditionally
derived from animals. Recently, EVERY launched the world's first
animal-free egg protein and collaborated with the juice brand
Pressed to produce smoothies containing their protein. This recent
fundraise will help drive the scale up of its animal-free protein
platform.
On 19 November 2021, Agronomics led Ohayo Valley Inc's (Ohayo
Valley) Pre-Seed funding round with a subscription of US$ 1.5
million in the form of a Simple Agreement for Future Equity (SAFE),
Ohayo Valley is a cultivated meat company, initially focused on
producing cultivated Wagyu ribeye steak, before expanding to other
beef products. Ohayo Valley was founded in 2020 by Dr Jess Krieger.
Combined, the cofounding team brings 20 years of experience in the
cultivated meat sector, including Jess' previous position as CSO
for Artemys Foods, where Dr Krieger led the development of the
Artemys Burger prototype. The SAFE is expected to convert into
preferred shares in Ohayo Valley at a future equity financing round
of at least US$ 1.5 million, giving Agronomics an approximate
equity ownership of 18.75%. Agronomics has the right to a board
seat.
Agronomics acquired a stake in precision fermentation collagen
company Geltor, Inc (Geltor) via a secondary transaction announced
on 21 February 2022. Agronomics acquired from an existing
shareholder 1,069,593 Preferred Stock in Geltor, a company focused
on producing designer proteins for use in the cosmetic industry,
for total consideration of US$ 9,499,525. This represents an equity
stake in Geltor, on a fully diluted basis, of 2.20%. The
consideration paid to the vendor comprised US$ 6,785,375 in cash
from the Company's own resources and US$ 2,714,150 to be satisfied
through the issuance of 8,676,951 new Ordinary Shares in Agronomics
priced at 23 pence per share.
On 22 February 2022, Agronomics made a EUR6.9 million investment
in Onego Bio Ltd (Onego Bio), a company developing sustainable and
animal free egg protein, as part of a EUR10 million Seed
fundraising round. Agronomics today holds an equity stake on a
fully diluted basis of 19.94% and secured a board seat. Onego Bio
is a spin-out from VTT Technical Research Centre of Finland Ltd
(VTT), one of Europe's leading research institutions. The company
harnesses precision fermentation to develop egg proteins without
the need for traditional agriculture, with the aim of providing
people with sustainable, delicious and animal free egg protein. It
was founded in Helsinki in 2021 by CEO Maija Itkonen, CTO Chris
Landowski, and COO Jussi Joensuu, after many years of developing
and researching their precision fermentation technology whilst at
VTT. Demand for alternative egg white protein continues to grow,
due to the environmental and welfare concerns associated with
animal husbandry and continued global pressure on suppliers to go
cage-free.
Agronomics co-led the Series A financing for portfolio company
SuperMeat The Essence of Meat Ltd (SuperMeat) on 8 March 2022, with
a US$ 10 million investment, subscribing for 188,158 Series A
Preferred Shares. SuperMeat is a leading cultivated chicken meat
company based in Israel. The funding round was co-led alongside New
Agrarian Company Limited ("New Agrarian"). Following the close of
the funding round, Agronomics appointed a board member to SuperMeat
and owns a 9.82% equity interest on a fully diluted basis.
On 14 March 2022, GALY CO. (GALY) raised a Series A financing
where Agronomics has invested a further US$ 1 million subscribing
for 364,710 Series A Preferred Stock. Agronomics owns a 4.15%
equity stake in GALY on a fully diluted basis. GALY is a leading
plant cell culture company with disruptive technology for growing
cotton from cells in a laboratory facility rather than utilising
traditional soil-based methods. It is headquartered in Boston, US,
with research also in Sao Paulo, Brazil. Agronomics first invested
in GALY in 2020, with a US$ 500,000 investment in the form of a
SAFE. This SAFE converted to 909,090 Series A Preferred Shares,
representing a MOIC of 4.94x. In aggregate, Agronomics holds
1,273,800 Series A Preferred Stock in GALY.
Agronomics completed a follow-on investment on 6 May 2022,
investing a further US$ 2 million into Chinese cultivated meat
company CellX Limited (CellX), subscribing for 857,363 preferred
shares (the Subscription). CellX is a leading cultivated meat
company based in Shanghai. Agronomics first invested in CellX in
December 2020, with a US$ 50,000 investment in the form of a SAFE.
This SAFE converted to 230,681 preferred shares as stated in the
28th May 2021 announcement . Agronomics holds 1,088,044 preferred
shares, for a 5.14% equity ownership in CellX, on a fully diluted
basis.
On 20 June 2022, Agronomics led the founder's round of
Liberation Labs Holdings Inc (Liberation Labs) through an initial
investment of US$ 627k for a 47% equity stake. Liberation Labs aims
to become the global leader of precision fermentation with
purpose-built production facilities for industrial biotechnology.
As more companies approach commercialisation, the need for
large-scale, cost competitive manufacturing capacity will increase
dramatically. Liberation Labs was formed to address this
ever-widening gap in fermentation capacity. Liberation Labs is
currently evaluating 6 geographies to locate its first
fit-for-purpose facility which, once built, will have a total
fermentation capacity in the millions of litres. This will
hopefully be the first of many facilities around the world helping
precision fermentation companies with much needed precision
fermentation capacity.
Agronomics announced on 29 September 2021, the disposal of its
total holding of 40,000 shares in Oritain Global Limited (Oritain)
for NZ$ 1.36 million (approximately GBP0.7 million), representing
an IRR of 74%. Agronomics invested in Oritain in December 2019. The
proceeds have since been used to fund new and existing
opportunities within cellular agriculture.
At 30 June 2022, the following investments are held by the
Company:
Investee Invested capital Unrealised gain/(loss) from acquisition Fair value
GBP GBP GBP
BlueNalu 6,094,898 1,341,634 7,436,532
LIVEKINDLY Collective 2,329,916 2,239,695 4,569,611
Formo 3,523,812 5,684,792 9,208,604
New Age Eats 563,173 (563,173) -
Meatable 4,504,140 2,498,819 7,002,959
Mosa Meat 1,617,375 (110,962) 1,506,413
Solar Foods 5,273,739 (62,715) 5,211,024
Tropic Biosciences 2,300,610 169,447 2,470,057
Shiok Meats 396,447 (396,447) -
Rebellyous Foods 278,971 8,431 287,402
Vitrolabs 7,615,260 2,873,079 10,488,339
Bond Pet Foods 121,394 649,135 770,529
GALY 1,120,625 1,747,360 2,867,985
SuperMeat 9,406,135 6,238,654 15,644,789
Onego Bio 5,781,582 188,232 5,969,814
CellX 1,643,889 446,004 2,089,893
The EVERY Company 5,945,864 712,077 6,657,941
Ohayo Valley 1,114,849 118,815 1,233,664
California Cultured 1,608,521 209,902 1,818,423
Good Protein Fund 75,681 6,442 82,123
Clean Food Group 323,000 - 323,000
Geltor 7,211,284 637,704 7,848,988
Good Dog Food 500,000 - 500,000
Liberation Labs 514,589 - 514,589
Laverock Therapeutics - 15 15
Legacy investments 489,869 (179,475) 310,394
------------------- -------------------------------------------- ------------
70,355,623 24,457,465 94,813,088
Note - unrealised gains and losses include fair value adjustments, and foreign exchange adjustments
Financial Review
The Company recorded a net operating profit of GBP12,920,927 for
the year (2021: GBP9,743,418) - an increase of 32.61%, prior to
accounting for the Shellbay fee due. Taking into account a fee of
GBP4,562,548 (2021: GBP7,394,360) due to Shellbay, the Company
recorded a net profit after taxation of GBP8,358,379 (2021:
GBP1,019,841). Our investment income, including net unrealised
gains, reflected a gain of GBP6,423,869 (2021: GBP10,669,991).
Unrealised foreign exchange gains of GBP6,513,031 (2021: loss of
GBP107,275) have been recognised in profit and loss.
The carrying amount of invested assets is GBP94,813,088 (2021:
GBP38,770,676) - an increase of 144.55%, and cash and equivalents
and cash deposits stood at GBP51,482,501 (2021: GBP62,436,497). Our
total assets stood at GBP146,398,248 (2021: GBP101,652,840). Total
liabilities stood at GBP2,485,346 (2021: GBP1,623,024), which
includes the cash portion of the Shellbay fee due of GBP2,281,274.
As a result, the net asset value per share at 30 June 2022 was
14.85 pence (2021: 12.51 pence).
Financing activity
During the year, the Company completed a successful funding
round, raising total gross proceeds of GBP32 million, issuing
30,492,206 new ordinary shares, and receiving net proceeds of
GBP31.3 million. Funds totaling GBP42 million have been deployed in
making investments in line with the Company's investing policy.
Strategy and Outlook
Our current investment portfolio shows considerable promise for
future growth given the scale of opportunity to invest in the
cellular agriculture sector, and the Board will continue to seek
new opportunities in line with its Investing Policy, details of
which can be found on the Company website -
https://agronomics.im/investors/ .
Richard Reed
Non-Executive Chairman
19 December 2022
Directors' report
The Directors of Agronomics Limited (the "Company") take
pleasure in presenting the Directors' report and financial
statements for the year ended 30 June 2022.
Principal activity
Agronomics Limited is a Company domiciled in the Isle of Man.
The Company's strategy is to create value for Shareholders through
investing in companies that operate in the nascent industry of
modern foods, which are environmentally friendly alternatives to
the traditional production of meat and plant-based sources.
Further details of the investing policy can be found on the
Company's website at www.agronomics.im .
Results and transfer to reserves
The results and transfers to reserves for the year are set out
on pages 22 and 24.
The Company recorded a net operating profit of GBP12,920,927 for
the year (2021: GBP9,743,418), prior to accounting for any Shellbay
fee due. Taking into account a Shellbay fee of GBP4,562,548 (2021:
GBP7,394,360), the Company achieved a net profit after taxation of
GBP8,358,379 (2021: GBP1,019,841).
The net asset value per share at 30 June 2022 was 14.85 pence
(2021: 12.51 pence).
Dividend
The Directors do not propose the payment of a dividend (2021:
GBPnil).
Policy and practice on payment of creditors
It is the policy of the Company to agree appropriate terms and
conditions for its transactions with suppliers by means of standard
written terms to individually negotiated contracts. The Company
seeks to ensure that payments are always made in accordance with
these terms and conditions.
Financial risks
Details relating to the financial risk management are set out in
note 8 to the financial statements.
Directors
The Directors who served during the year and to date were:
James Mellon Executive
Denham Eke Executive Finance Director
Richard Reed Independent Non-Executive
Chairman
David Giampaolo Independent Non-Executive
Directors' interests
As at 30 June 2022, the interests of the Directors and their
families (as such term is defined in the AIM Rules for Companies)
in the share capital of the Company are as follows:
Ordinary shares
30 June
2022 30 June 2021
---------------- ------------ -------------
James Mellon(1) 149,145,611 113,426,242
Denham Eke(2) 213,445 -
Richard Reed 6,354,412 3,818,181
David Giampaolo 2,434,783 2,000,000
(1) Galloway Limited, a company where James Mellon is considered
to be the ultimate beneficial owner, holds 149,145,611 ordinary
shares .
(2) Denham Eke is Managing Director of Galloway Limited .
Significant shareholdings
Except for the interests disclosed in this note, the Directors
are not aware of any holding of ordinary shares as at 30 June 2022
representing 3% or more of the issued share capital of the
Company:
Number of Percentage
ordinary of total
shares issued capital
James Mellon (1) 149,145,611 15.25%
Chase Nominees Limited 39,533,515 4.08%
Hargreaves Lansdown (Nominees) 36,617,639 3.78%
HSBC Global Custody Nominee (UK) 35,000,000 3.61%
Note:
(1) James Mellon's shareholding consists of 149,145,611 shares
held by Galloway Limited. Galloway Limited is a company where James
Mellon is considered to be the ultimate beneficial owner. Denham
Eke is a director of Galloway Limited.
Auditors
KPMG Audit LLC, being eligible, have expressed their willingness
to continue in office.
On behalf of the Board
Denham Eke
Director
19 December 2022
1st Floor, Viking House
St Paul's Square
Ramsey, Isle of Man
IM8 1GB
Corporate Governance Statement
Corporate Governance Report
The Board of Agronomics (the "Board") is committed to best
practice in corporate governance throughout the Company (the
"Company"). The Directors have agreed to comply with the provisions
of the Quoted Companies Alliance ("QCA") Corporate Governance Code
for Small and Mid-Size Quoted Companies (2018) to the extent which
is appropriate to its nature and scale of operations. This report
illustrates how the Company complies with those principles.
QCA Principle 1: Establish a strategy and business model which
promotes long-term value for shareholders
The strategy and business operations of the Company are set out
in the Chairman's Statement on pages 2 to 6.
The Company's strategy and business model and amendments thereto
are developed by the Chairman and his senior management team and
approved by the Board. The management team is responsible for
implementing the strategy and managing the business at an
operational level.
The Company's overall strategic objective is to develop a
profitable and sustainable platform for investing in the nascent
industry of modern foods which are environmentally friendly
alternatives to the traditional production of meat and plant-based
sources of nutrition.
In executing the Company's strategy and operational plans,
management will typically confront a range of day-to-day challenges
associated with these key risks and uncertainties and will seek to
deploy the identified mitigation steps to manage these risks as
they manifest themselves.
QCA Principle 2: Seek to understand and meet shareholder needs
and expectations
The Company via the Chairman seeks to maintain a regular
dialogue with both existing and potential new shareholders in order
to communicate the Company's strategy and progress and to
understand the needs and expectations of shareholders.
Beyond the Annual General Meeting, the Chairman and, where
appropriate, other members of the senior management team or Board
will meet with investors and analysts to provide them with updates
on the Company's business and to obtain feedback regarding the
market's expectations of the Company.
The Company's investor relations activities encompass dialogue
with both institutional and private investors. From time to time,
the Company attends private investor events, providing an
opportunity for those investors to meet with representatives from
the Company in a more informal setting.
QCA Principle 3: Take into account wider stakeholder and social
responsibilities and their implications for long-term success
The Company is aware of its corporate social responsibilities
and the need to maintain effective working relationships across a
range of stakeholders. These include the Company's advisors,
suppliers and investee companies. The Company's operations and
working methodologies take account of the need to balance the needs
of all these stakeholders while maintaining focus on the Board's
primary responsibility to promote the success of the Company for
the benefit of its members as a whole. The Company endeavours to
take account of feedback received from stakeholders, and where
appropriate, ensures any amendments are consistent with the
Company's longer-term strategy.
The Company takes due account of any impact that its activities
may have on the environment and seeks to minimise this impact
wherever possible.
QCA Principle 4: Embed effective risk management, considering
both opportunities and threats, throughout the organisation
The Board is responsible for the systems of risk management and
internal control and for reviewing their effectiveness. Internal
controls are designed to manage rather than eliminate risk and
provide reasonable but not absolute assurance against material
misstatement or loss. Through the activities of the Company Audit,
Risk and Compliance Committee, the effectiveness of these internal
controls is reviewed annually.
A comprehensive budgeting process is completed once a year and
is reviewed and approved by the Board. The Company's results,
compared with the budget, are reported to the Board on a monthly
basis.
The Company maintains appropriate insurance cover in respect of
actions taken against the Directors because of their roles, as well
as against material loss or claims against the Company. The insured
values and type of cover are comprehensively reviewed on a periodic
basis.
The senior management team meets at least monthly to consider
new risks and opportunities presented to the Company, making
recommendations to the Board and/or Company Audit, Risk and
Compliance Committee as appropriate.
QCA Principle 5: Maintain the board as a well-functioning,
balanced team led by the chair
The Company's Board currently comprises two Non-executive
Directors and two Executive Directors.
All of the Directors are subject to election by shareholders at
the first Annual General Meeting after their appointment to the
Board and will continue to seek re-election at least once every
three years.
The Board is responsible to the shareholders for the proper
management of the Company and intends to meet at least four times a
year to set the overall direction and strategy of the Company, to
review operational and financial performance and to advise on
management appointments. All key operational decisions are subject
to Board approval.
Richard Reed and David Giampaolo, all Non-executive Directors,
are considered to be independent. The QCA Code suggests that a
board should have at least two independent Non-executive Directors.
The Board considers that the current composition and structure of
the Board of Directors is appropriate to maintain effective
oversight of the Company's activities for the time being.
Non-executive Directors receive their fees in the form of a
basic cash emolument. The current remuneration structure for the
Board's Executive and Non-executive Directors is deemed to be
proportionate.
QCA Principle 6: Ensure that between them the Directors have the
necessary up-to-date experience, skills and capabilities
The Board considers that the Executive Directors and
Non-executive Directors are of sufficient competence and calibre to
add strength and objectivity to its activities and bring
considerable experience in the operational and financial
development of the Company.
The Directors' biographies are detailed on the Company's website
www.agronomics.im .
The Board regularly reviews the composition of the Board to
ensure that it has the necessary breadth and depth of skills to
support the ongoing development of the Company.
The Chairman, in conjunction with the Finance Director, ensures
that the Directors' knowledge is kept up to date on key issues and
developments pertaining to the Company, its operational environment
and to the Directors' responsibilities as members of the Board.
During the course of the year, Directors received updates from the
Finance Director and various external advisers on a number of
corporate governance matters.
Directors' service contracts or appointment letters make
provision for a Director to seek professional advice in furtherance
of his or her duties and responsibilities, normally via the Company
Secretary.
QCA Principle 7: Evaluate board performance based on clear and
relevant objectives, seeking continuous improvement
Internal evaluation of the Board, the Committees and individual
Directors is undertaken on an annual basis in the form of peer
appraisal and discussions to determine their effectiveness and
performance as well as the Directors' continued independence.
The results and recommendations that come out of the appraisals
for the Directors shall identify the key corporate and financial
targets that are relevant to each Director and their personal
targets in terms of career development and training. Progress
against previous targets is also assessed where relevant.
QCA Principle 8: Promote a corporate culture that is based on
ethical values and behaviours
The Board seeks to maintain the highest standards of integrity
and probity in the conduct of the Company's operations. With the
Company being a vehicle for holding investment, it has no employees
and limited capacity to effect changes in culture in companies it
is affiliated with. However, the Board will strive to ensure that
the Company's in which it has an interest in, act in an ethical
manner.
The Board ensures that all portfolio companies have policies in
place to comply with applicable governance laws and regulations,
such as anti-bribery and modern-day slavery.
The Board has a zero-tolerance approach to breaches of these
laws and regulations. The Board promotes ethical behaviour
throughout the portfolio, through directions to the Company's
investment advisors in relation to the ethical management of the
portfolio.
QCA Principle 9: Maintain governance structures and processes
that are fit for purpose and support good decision- making by the
board
The Role of the Board
The Board is collectively responsible for the long-term success
of the organisation. Its principal function is to determine the
strategy and policies of the Company within an effective control
framework which enables risk to be assessed and managed.
The Board ensures that the necessary financial and human
resources are in place for the Company to meet its objectives and
that business and management performance is reviewed. Furthermore,
the Board ensures that the Company operates within its
constitution, relevant legislation and regulation and that proper
accounting records and effective systems of business control are
established, maintained, documented, and audited.
There are at least four formal Board meetings each year. All
Board members have the benefit, at the Company's expense, of
liability insurance in respect of their responsibilities as
Directors and have access to independent legal or other
professional advice if required. The Board has a formal schedule of
matters which are reserved for its consideration, and it has
established three committees to consider specific issues in greater
detail, being the Company Audit, Risk and Compliance, Remuneration
and Nomination Committees. The Terms of Reference for each of these
Committees are published on the Company's website.
The Chairman
The Chairman is responsible for leading the Board, ensuring its
effectiveness in all aspects of its role, promoting a culture of
openness of debate and communicating with the Company's members on
behalf of the Board. The Chairman sets the direction of the Board
and promotes a culture of openness and debate by facilitating the
effective contribution of Non-executive Directors and ensuring
constructive relations between Executive and Non-executive
Directors. The Chairman also ensures that Directors receive
accurate, timely and clear information. In doing so, this fosters a
positive corporate governance culture throughout the Company.
The Chief Executive Officer
At present, the Company does not have a Chief Executive Officer.
Instead, the responsibility for managing the Company's business and
operations within the parameters set by the Board is held by the
Finance Director.
Non-executive Directors
The Non-executive Directors are responsible for bringing
independent judgement to the discussions held by the Board, using
their breadth of experience and understanding of the business.
Their key responsibilities are to constructively challenge and
contribute to strategic proposals, and to monitor performance,
resources, and standards of conduct, compliance and control, whilst
providing support to executive management in developing the
Company.
The Board has established a Company Audit, Risk and Compliance
Committee ("ARCC"), a Remuneration Committee and a Nominations
Committee with formally delegated duties and responsibilities.
Richard Reed chairs the ARCC, James Mellon chairs the Remuneration
Committee, and the Nominations Committee is chaired by Richard Reed
and comprised of the whole board.
Company Audit, Risk and Compliance Committee
The Company Audit, Risk and Compliance Committee meets at least
two times each year is chaired by Richard Reed. The external
auditors attend by invitation. Its role is to be responsible for
reviewing the integrity of the financial statements and the balance
of information disclosed in the accompanying Directors' Report, to
review the effectiveness of internal controls and risk management
systems and recommend to the Board (for approval by the members)
the appointment or re-appointment of the external auditor. The ARCC
reviews and monitors the external auditor's objectivity,
competence, effectiveness and independence, ensuring that if it or
its associates are invited to undertake non-audit work it will not
compromise auditor objectivity and independence.
Further information can be found within the Company Audit, Risk
and Compliance Report contained within this Annual Report.
Remuneration Committee
The Remuneration Committee intends to meet at least once a year
and comprises of two Non-executive Directors and one Executive
Director. It is chaired by James Mellon and is responsible for
determining the remuneration of the Executive Director, the Company
Secretary and other members of the management. Committee members do
not take part in discussions concerning their own remuneration.
Further information can be found within the Remuneration Report
contained within this Annual Report.
Nomination Committee
The Nomination Committee is comprised of the whole Board. It is
chaired by the Chairman of the Board and is responsible for making
recommendations to the Board on matters relating to the composition
of the Board, including Executive and Non-executive Director
succession planning, the appointment of new Directors and the
election and re-election of Directors. The Nomination Committee
only meets as matters arise.
Appointments to the Board
The principal purpose of the Nomination Committee is to
undertake the assessment of the balance of skills, experience,
independence and knowledge on the Board against the requirements of
the business, with a view to determining whether any shortages
exist. Having completed the assessment, the Committee makes
recommendations to the Board accordingly. Appointments to the Board
are made on merit, with due regard to the benefits of diversity.
Within this context, the paramount objective is the selection of
the best candidate, irrespective of background, and it is the view
of the Board that establishing quotas or targets for the diversity
of the Board is not appropriate.
All Director appointments must be approved by the Company's
Nominated Adviser, as required under the AIM Rules, before they are
appointed to the Board.
Prior to appointment, Non-executive Directors are required to
demonstrate that they are able to allocate sufficient time to
undertake their duties.
Re-election
The Company's Rules require that all Directors are submitted for
election at the AGM following their first appointment to the Board.
Thereafter all directors will submit themselves for re-election at
least once every three years, irrespective of performance.
Board and committee attendance
The number of formal scheduled Board and committee meetings held
and attended by Directors during the year was as follows: -
Board ARCC Nomination Remuneration
Richard Reed 23/23 2/2 - 2/2
David Giampaolo 23/23 2/2 - 2/2
James Mellon 23/23 - - 2/2
Denham Eke 23/23 2/2 - 2/2
QCA Principle 10: Communicate how the company is governed and is
performing by maintaining a dialogue with shareholders and other
relevant stakeholders
The Company places a high priority on regular communications
with its various stakeholders and aims to ensure that all
communications concerning the Company's activities are clear, fair,
and accurate. The Company's website is regularly updated, and users
can register to be alerted when announcements or details of
presentations and events are posted onto the website.
Notices of General Meetings of the Company can be found here:
https://agronomics.im/latest-news/ .
The results of voting on all resolutions in general meetings are
posted to the Company's website, including any actions to be taken
as a result of resolutions for which votes against have been
received from at least 20 per cent of independent shareholders.
Approval
This report was approved by the Board of Directors on 19
December 2022 and signed on its behalf by:
Denham Eke
Finance Director
Audit, Risk and Compliance Committee Report
The Directors ensure the Company complies with the provisions of
the Quoted Companies Alliance ("QCA") Corporate Governance Code for
Small and Mid-Size Quoted Companies (2018) to the extent which is
appropriate to its nature and scale of operations.
This report illustrates how the Company complies with those
principles in relation to its Audit, Risk and Compliance Committee
(the "ARCC").
Membership
The Committee comprises of two Non-Executive Directors, being
Richard Reed and David Giampaolo, and one Executive Director, being
Denham Eke. The composition of the Committee has been reviewed
during the year and the Board is satisfied that the Committee
members have the relevant financial experience and the expertise to
resource and fulfil its responsibilities effectively, including
those relating to risk and controls.
Meetings
The Committee meets two times a year, including the review of
the interim and full year results. Other Directors and
representatives from the external auditors attend by
invitation.
Duties
The Committee carries out the duties below for the Company, as
appropriate:
-- Monitors the integrity of the financial statements of the
Company, including annual and half-yearly reports, interim
management statements, and any other formal announcement relating
to financial performance, reviewing significant financial reporting
issues and judgements which they contain.
-- Reviews and challenges the consistency of the information
presented within the financial statements, compliance with stock
exchange or other legal requirements, accounting policies and the
methods used to account for significant or unusual
transactions.
-- Keeps under review the effectiveness of the Company's
internal controls and risk management systems.
-- KPMG Audit LLC was appointed as auditor in 2011 and the ARCC
will oversee the relationship with them including meetings when
considered appropriate to discuss their remit and review the
findings and any issues with the annual audit. It will also review
their terms of appointment and plans to meet them once a year
independent of management and will consider and make
recommendations to the Board, to be put to the Company for approval
at the Annual General Meeting, in relation to the appointment,
re-appointment and removal of the Company's external auditor. There
are no contractual restrictions in place in respect of the auditor
choice.
-- The Committee is governed by a Terms of Reference and a copy
of this is available on the Company's website.
2022 Annual Report
During the year, ARCC confirms that it has received sufficient,
reliable and timely information from management and the external
auditors to enable it to fulfil its responsibilities.
The Committee has satisfied itself that there are no
relationships between the auditor and the Company which could
adversely affect the auditor's independence and objectivity.
All internal control and risk issues that have been brought to
the attention of ARCC by the external auditors have been considered
and the Committee confirms that it is satisfied that management has
addressed the issues or has plans to do so.
The Company has a number of policies and procedures in place as
part of its internal controls and these are subject to continuous
review and as a minimum are reviewed by ARCC on an annual
basis.
ARCC has reviewed and discussed together with management and the
external auditor the Company's financial statements for the year
ended 30 June 2022 and reports from the external auditor on the
planning for and outcome of their reviews and audit. The key
accounting issues and judgements considered relating to the
Company's financial statements and disclosures were as follows:
-- Valuation of unquoted investments GBP94,813,088;
-- Going concern - ARCC reviewed the going concern position of
the Company, taking into account the 12-month cash flow forecasts.
ARCC is satisfied that preparing the financial statements on a
going concern basis is appropriate.
Richard Reed
Chairman ARCC
19 December 2022
Report of the Remuneration Committee
As an Isle of Man registered company there is no requirement to
produce a Directors' Remuneration Report. However, the Board
follows best practice and therefore has prepared such a report.
The Directors have agreed to comply with the provisions of the
Quoted Companies Alliance ("QCA") Corporate Governance Code for
Small and Mid-Size Quoted Companies (2018) to the extent which is
appropriate to its nature and scale of operations.
This report illustrates how the Company complies with those
principles in relation to directors' remuneration.
The Level and Components of Non-Executive Directors
Remuneration
The Remuneration Policy reflects the Company's business strategy
and objectives as well as sustained and long-term value creation
for shareholders. In addition, the policy aims to be fair and
provide equality of opportunity, ensuring that:
-- the Company is able to attract, develop and retain
high-performing and motivated people in the competitive local and
wider markets;
-- The Company offers a competitive remuneration package to
encourage enhanced performance and rewards individual contributions
to the success of the Company, in a fair and responsible
manner;
-- it reflects the Company's culture and values; and
-- there is full transparency of the Remuneration Policy.
In line with the Board's approach, which reflects that adopted
within other comparable organisations, the Remuneration Policy
provides for the reward of the Non-Executive Directors through fees
and other benefits.
Non-Executive Directors Emoluments
The remuneration for the Non-Executive Directors reflects their
responsibilities. It comprises fees, and may include eligibility to
participate in an annual bonus scheme, private healthcare and share
option incentives, when any of these are considered
appropriate.
Annual bonus scheme payments are not pensionable and are not
contracted.
Non-executive Directors' Remuneration
Non-executive Directors do not receive any benefits other than
their fees and travelling expenses for which they are reimbursed.
The level of fees payable to Non-executive Directors is assessed
using benchmarks from a group of comparable organisations.
Executive Directors Remuneration
Executive Directors do not receive any benefits other than their
fees and travelling expenses for which they are reimbursed. The
level of fees payable to Executive Directors is assessed using
benchmarks from a group of comparable organisations.
The Committee believes that share ownership by executives
strengthens the link between their personal interests and those of
shareholders. Options will be granted to executives periodically at
the discretion of the Remuneration Committee. The grant of share
options is not subject to fixed performance criteria. This is
deemed to be appropriate as it allows the Committee to consider the
performance of the executives and the contribution of the
individual executives and, as with annual bonus payments,
illustrates the relative importance placed on performance-related
remuneration.
Except when required by statute, the Company does not intend to
contribute to the personal pension plans of Directors in the
forthcoming year.
Executive Directors' Contractual Terms
The service contract of the Executive Directors provides for a
notice period of six months.
The Procedure for Determining Remuneration
The Remuneration Committee, comprising two Non-executive
Directors and one Executive Director, is responsible for setting
the remuneration of the Executive Directors and is chaired by James
Mellon. Committee members do not take part in discussions
concerning their own remuneration. The basic Non-executive Director
fee is set by the Chairman. The Chairman of the Committee reports
at the Board meeting following a Committee meeting.
It is the view of the Committee that Directors' remuneration
awarded across the Company for the year has been in accordance with
the Company's stated Remuneration Policy and, on behalf of the
Committee I recommend that you endorse this report. An analysis of
Directors' emoluments is as follows:
2022 2021
GBP GBP
----------- ------------------------------------------- ------ ------
Emoluments - salaries, bonuses, and taxable benefits - -
- fees 85,000 24,167
------------------------------------------------------- ------ ------
85,000 24,167
------------------------------------------------------- ------ ------
Directors' Emoluments
Termination 2022 2021
Fees Bonus payments Benefits Total Total
GBP GBP GBP GBP GBP GBP
--------------------- ------- ------ ------------ ----------- ------- ------
Executive - salary
Denham Eke - - - - - -
James Mellon* 15,000 - - - 15,000 -
Non-executive - fees
Anderson Whamond** - - - - - 833
Richard Reed 40,000 - - - 40,000 11,667
David Giampaolo 30,000 - - - 30,000 11,667
Aggregate emoluments 85,000 - - - 85,000 24,167
--------------------- ------- ------ ------------ ----------- ------- ------
* In addition to director fees, further emoluments are subject
to an agreement with Shellbay Investments Limited ("Shellbay"),
whereby Shellbay shall be entitled to an annual fee equal to the
value of 15% of any increase between the Company's net asset value
("NAV") on a per issued share basis at the start of a reporting
period and 30 June each year during the term of the New Shellbay
Agreement (please see Note 2 to the Accounts).
** Resigned 31 July 2020
Approval
The report was approved by the Board of directors and signed on
behalf of the Board.
James Mellon
Chairman of Remuneration Committee
19 December 2022
Statement of Directors' Responsibilities in Respect of the
Directors' Report and the Financial Statements
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law they have
elected to prepare the financial statements in accordance with
International Financial Reporting Standards as applicable to an
Isle of Man company and applicable law.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of its profit or
loss for that period. In preparing the financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable, relevant and reliable;
-- state whether they have been prepared in accordance with IFRSs;
-- assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and
-- use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
its financial statements comply with the Isle of Man Companies Act
2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the Isle of Man governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Report of the Independent Auditors, KPMG Audit LLC, to the
members of Agronomics Limited
Our opinion is unmodified
We have audited the financial statements of Agronomics Limited
(the "Company"), which comprise the statement of financial position
as at 30 June 2022, the statements of comprehensive income, changes
in equity and cash flows for the year then ended, and notes,
comprising significant accounting policies and other explanatory
information.
In our opinion, the accompanying financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 30 June 2022 and of the Company's profit for the year
then ended;
-- have been properly prepared in accordance with UK-adopted
international accounting standards; and
-- have been properly prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities are described below. We have fulfilled our ethical
responsibilities under, and are independent of the Company in
accordance with, UK ethical requirements including the FRC Ethical
Standard as applied to listed entities. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion.
Key audit matters: our assessment of the risks of material
misstatement
Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In arriving at our
audit opinion above, the key audit matter was as follows (unchanged
from 2021):
The risk Our response
Valuation of unquoted investments Subjective Valuation: Our audit procedures included:
(including investment in subsidiary The Company's investment in Internal Controls: Documenting and
and other unquoted investments subsidiary is stated at fair value of assessing the design and
held) GBP91,171,230 (2021: GBP38,054,470). implementation of the investment
2022: GBP97,978,610, (2021 The underlying portfolio of valuation processes and controls.
GBP38,770,676) investments held by the subsidiary Test of Detail: Auditing the accounts
Refer to Page 13 for Audit, Risk and comprises the entirety of its of the subsidiary as part of the
Compliance Committee Report, note net assets. The Company also holds audit of the Company,
1(b) (use of estimates unquoted investments directly including assessing the accounting
and judgement), 1(d) (accounting amounting to GBP6,807,380 policies adopted by the subsidiary to
policy for financial instruments) and (2021: GBP59,704). ensure these are
note 8 (fair value 65% (2021: 37%) of the Company's consistent with the Company's
of financial instruments) disclosures total assets (by value) are held in accounting policies. In particular,
investments where no ensuring that the portfolio
quoted market price is available. of investments held by the subsidiary
Unquoted investments held directly by is stated at fair value and ensuring
the Company, and indirectly net asset value
through the underlying portfolio in of the subsidiary represents fair
its subsidiary, are measured at fair value.
value, which is established Use of KPMG Specialists: Involving
in accordance with the International our own valuation specialists to
Private Equity and Venture Capital challenge management assumptions
Valuation Guidelines used to support the fair value
by using measurements of value such prices.
as comparison with prices of recent
orderly transactions,
where available, requires the use of
significant judgments and subjective
assumptions. The
preparation of the fair value
estimate for the unquoted investments
and related
disclosures is a significant area of our audit given Challenging managements' assumptions and inputs:
that it represents a significant portion Challenging the directors on key judgments
of the Company's total assets and involves the use of affecting investee company valuations, such as the
significant judgments and subjective achievement of key milestones or potential
assumptions. The effect of these matters is that as part dilution impacts of recent transactions. Our work
of our risk assessment, we determined included consideration of events which occurred
that the valuation of unquoted investments has a high subsequent to the year end up until the date of this
degree of estimation uncertainty, with report.
a potential range of reasonable outcomes greater than Assessing observable inputs: Where a recent transaction
our materiality for the financial statements has been used as a basis to value
as a whole and possibly many times that amount. a holding, we obtained an understanding of the
circumstances surrounding the transaction such
as whether it was considered to be on an arms-length
basis and suitable as an input into a
valuation.
Methodology choice: In the context of observed industry
best practice and the provisions of
the International Private Equity and Venture Capital
Valuation Guidelines, we challenged the
appropriateness of the valuation basis selected.
Assessing disclosures: Consideration of the
appropriateness, in accordance with relevant
accounting standards, of the disclosures in respect of
unquoted investments and the significant
inherent uncertainty associated with valuing such
investments.
Our application of materiality and an overview of the scope of
our audit
Materiality for the financial statements as a whole was set at
GBP1,200,000 (2021: GBP800,000), determined with reference to a
benchmark of total assets of GBP149,625,885, of which it represents
approximately 0.8% (2021: 0.8%).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an
acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material
amount across the financial statements as a whole. Performance
materiality for the Company was set at 65% (2021: 65%) of
materiality for the financial statements as a whole, which equates
to GBP780,000 (2021: GBP520,000). We applied this percentage in our
determination of performance materiality because we did not
identify any factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected
identified misstatements exceeding GBP60,000 (2021: GBP40,000), in
addition to other identified misstatements that warranted reporting
on qualitative grounds.
Our audit of the Company was undertaken to the materiality level
specified above, which has informed our identification of
significant risks of material misstatement and the associated audit
procedures performed in those areas as detailed above.
Going concern
The directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Company
or to cease its operations, and as they have concluded that the
Company's financial position means that this is realistic. They
have also concluded that there are no material uncertainties that
could have cast significant doubt over its ability to continue as a
going concern for at least a year from the date of approval of
thefinancial statements (the "going concern period").
In our evaluation of the directors' conclusions, we considered
the inherent risks to the Company's business model and analysed how
those risks might affect the Company's financial resources or
ability to continue operations over the going concern period. The
risks that we considered most likely to affect the Company's
financial resources or ability to continue operations over this
period were:
-- Availability of capital to meet operating costs and other financial commitments; and
-- The recoverability of financial assets subject to credit risk.
We considered whether these risks could plausibly affect
liquidity in the going concern period by comparing severe, but
plausible downside scenarios that could arise from these risks
individually and collectively against the level of available
financial resources indicated by the Company's financial
forecasts.
We considered whether the going concern disclosure in note 1(b)
to the financial statements gives a full and accurate description
of the directors' assessment of going concern.
Our conclusions based on this work:
-- we consider that the directors' use of the going concern
basis of accounting in the preparation of the financial statements
is appropriate;
-- we have not identified, and concur with the directors'
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast
significant doubt on the Company's ability to continue as a going
concern for the going concern period; and
-- we found the going concern disclosure in the notes to the
financial statements to be acceptable.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they
were made, the above conclusions are not a guarantee that the
Company will continue in operation.
Fraud and breaches of laws and regulations - ability to
detect
Identifying and responding to risks of material misstatement due
to fraud
To identify risks of material misstatement due to fraud ("fraud
risks") we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to
commit fraud. Our risk assessment procedures included:
-- enquiring of management as to the Company's policies and
procedures to prevent and detect fraud as well as enquiring whether
management have knowledge of any actual, suspected or alleged
fraud;
-- reading minutes of meetings of those charged with governance; and
-- using analytical procedures to identify any unusual or unexpected relationships.
As required by auditing standards and taking into account
possible incentives or pressures to misstate performance and our
overall knowledge of the control environment, we perform procedures
to address the risk of management override of controls, in
particular the risk that management may be in a position to make
inappropriate accounting entries, and the risk of bias in
accounting estimates such as valuation of unquoted investments. On
this audit we do not believe there is a fraud risk related to
revenue recognition because the Company's revenue streams are
simple in nature with respect to accounting policy choice and are
easily verifiable to external data sources or agreements with
little or no requirement for estimation from management. We did not
identify any additional fraud risks.
We performed procedures including:
-- identifying journal entries and other adjustments to test
based on risk criteria and comparing any identified entries to
supporting documentation;
-- incorporating an element of unpredictability in our audit procedures; and
-- assessing significant accounting estimates for bias.
Further detail in respect of valuation of unquoted investments
is set out in the key audit matter section of this report.
Identifying and responding to risks of material misstatement due
to non-compliance with laws and regulations
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the financial
statements from our sector experience and through discussion with
management (as required by auditing standards), and from inspection
of the Company's regulatory and legal correspondence, if any, and
discussed with management the policies and procedures regarding
compliance with laws and regulations. As the Company is regulated,
our assessment of risks involved gaining an understanding of the
control environment including the entity's procedures for complying
with regulatory requirements.
The Company is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation and taxation legislation and we assessed the extent of
compliance with these laws and regulations as part of our
procedures on the related financial statement items.
The Company is subject to other laws and regulations where the
consequences of non-compliance could have a material effect on
amounts or disclosures in the financial statements, for instance
through the imposition of fines or litigation or impacts on the
Company's ability to operate. We identified financial services
regulation as being the area most likely to have such an effect,
recognising the regulated nature of the Company's activities and
its legal form. Auditing standards limit the required audit
procedures to identify non-compliance with these laws and
regulations to enquiry of management and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-compliance
with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remains a higher risk of
non-detection of fraud, as this may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report 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 we do not express an audit
opinion or 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, 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.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 14,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; 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 they either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities
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 our
opinion in an auditor's report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) 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 the financial
statements.
A fuller description of our responsibilities is provided on the
FRC's website at www.frc.org.uk/auditorsresponsibilities.
The purpose of this report and restrictions on its use by
persons other than the Company's members, as a body
This report is made solely to the Company's members, as a body,
in accordance with section 80(C) of the Companies Act 2006. 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.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM1 1LA
19 December 2022
Statement of comprehensive income
for the year ended 30 June 2022
2022 2021
Note GBP GBP
Income
Net income from financial instruments at fair value through profit
and loss 3 6,423,869 10,669,991
---------------- ----------------
6,423,869 10,669,991
Operating expenses
Directors' fees 2 (85,000) (24,167)
Other operating costs 4 (1,753,868) (795,131)
Foreign exchange gains/(losses) 6,513,031 (107,275)
---------------- ----------------
Profit from operating activities 5 11,098,032 9,743,418
Other costs
Consulting fee 2 (4,562,548) (7,394,360)
Recoverable / (Irrecoverable) VAT 2 1,478,872 (1,478,872)
---------------- ----------------
Profit after consulting fee 8,014,356 870,186
Interest received 344,023 149,655
---------------- ----------------
Profit before taxation 8,358,379 1,019,841
Taxation 1(h) - -
---------------- ----------------
Profit for the year 8,358,379 1,019,841
Other comprehensive income - -
---------------- ----------------
Total comprehensive profit for the year 8,358,379 1,019,841
Basic profit per share (pence) 11 0.95 0.22
Diluted profit per share (pence) 11 0.91 0.20
The Directors consider that the Company's activities are
continuing.
The notes on pages 26 to 40 form an integral part of these
financial statements.
Statement of financial position
as at 30 June 2022
2022 2021
Note GBP GBP
Assets
Financial assets at fair value
through profit or loss 7,8 94,813,088 38,770,676
Cash deposits 20,024,175 -
Trade and other receivables 102,659 445,667
Cash and cash equivalents 31,458,326 62,436,497
---------------- ----------------
Total assets 146,398,248 101,652,840
Equity and liabilities
Capital and reserves
Share capital 6 968 799
Share premium 6 129,855,667 91,278,407
Share reserve 6 4,341,639 7,394,360
Accumulated earnings 9,714,629 1,356,250
---------------- ----------------
143,912,903 100,029,816
Liabilities
Trade and other payables 9 2,485,345 1,623,024
---------------- ----------------
Total liabilities 2,485,345 1,623,024
---------------- ----------------
Total equity and liabilities 146,398,248 101,652,840
The notes on pages 26 to 40 form an integral part of these
financial statements.
These financial statements were approved by the Board of
Directors on 19 December 2022 and were signed on their behalf
by:
Denham Eke
Director
Statement of changes in equity
for the year ended 30 June 2022
Note Share Share Share Accumulated
capital premium reserve earnings Total
GBP GBP GBP GBP GBP
Balance at 30
June 2020 6 331 19,080,138 - 336,409 19,416,878
Total
comprehensive
profit for the
year
Profit for the
year - - - 1,019,841 1,019,841
Transactions
with owners of
the company
Capitalised
share issue
costs - (3,451,025) - - (3,451,025)
Shares issued
during the
year 6 468 75,649,294 - - 75,649,762
Recognition of
share reserve 6 - - 7,394,360 - 7,394,360
---------------- ---------------- ---------------- ---------------- ----------------
Balance at 30
June 2021 6 799 91,278,407 7,394,360 1,356,250 100,029,816
Note Share Share Share Accumulated
capital premium reserve earnings Total
GBP GBP GBP GBP GBP
Balance at 30
June 2021 6 799 91,278,407 7,394,360 1,356,250 100,029,816
Total
comprehensive
profit for the
year
Profit for the
year - - - 8,358,379 8,358,379
Transactions
with owners of
the company
Shares issued
during the
year 6 169 39,439,051 (7,394,360) - 32,044,860
Capitalised
share issue
costs 6 - (861,791) - - (861,791)
Recognition of
share reserve 6 - - 4,341,639 - 4,341,639
---------------- ---------------- ---------------- ---------------- ----------------
Balance at 30
June 2022 6 968 129,855,667 4,341,639 9,714,629 143,912,903
The notes on pages 26 to 40 form an integral part of these
financial statements.
Statement of cash flows
for the year ended 30 June 2022
2022 2021
Note GBP GBP
Cash flows from operating activities
Operating profit for the year 8,358,379 1,019,841
Purchase of investments 8 (42,032,410) (11,839,007)
Proceeds from sale of investments 8 696,456 628,632
Interest income (341,329) (149,655)
Realised and unrealised gains on investments 3 (12,362,604) (10,669,991)
Consulting fee to be settled in shares 2 2,281,274 7,394,360
-------------- --------------
Operating outflows before changes in working capital (43,400,234) (13,615,820)
Change in trade and other receivables 318,395 (427,457)
Change in trade and other payables 9 873,841 1,687,123
Share issue costs settled in shares - 187,000
-------------- --------------
Net cash used in operating activities (42,207,998) (12,169,154)
-------------- --------------
Cash flows from financing activities
Proceeds from issue of shares 32,057,951 73,367,580
Proceeds from loan 10 - 1,900,000
Share issue commissions paid (861,791) (3,451,026)
Cash interest received 57,842 -
-------------- --------------
Net cash from financing activities 31,254,002 71,816,554
-------------- --------------
Cash flows from investing activities
Bank deposits not considered cash and cash equivalents (net) (20,024,175) -
-------------- --------------
Net cash from investing activities (20,024,175) -
-------------- --------------
(Decrease) / increase in cash and cash equivalents (30,978,171) 59,647,400
Cash and cash equivalents at beginning of year 62,436,497 2,789,097
-------------- --------------
Cash and cash equivalents at the end of year 31,458,326 62,436,497
The notes on pages 26 to 40 form an integral part of these
financial statements.
1 Accounting policies
Agronomics Limited is a Company domiciled in the Isle of Man.
The Company's strategy is to create value for Shareholders through
investing in companies that operate in the nascent industry of
modern foods, which are environmentally friendly alternatives to
the traditional production of meat and plant-based sources.
The principal accounting policies are set out below.
a) Statement of compliance
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS").
There has been no material impact on the financial statements of
new standards/interpretations that have come into effect during the
current year.
b) Basis of preparation
The financial statements are prepared under the historical cost
convention except where assets and liabilities are required to be
stated at their fair value.
Use of estimates and judgment
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and 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 estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision only
affects that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
Judgements made by the Directors in the application of IFRS,
that have a significant impact on the financial statements and
estimates with a significant risk of material adjustment in the
next financial year relate to valuation of financial assets at fair
value through profit or loss. The determination of fair values for
financial assets for which there is no observable market price
requires judgment as to the selection of valuation techniques as
described in accounting policy 1(d). For financial instruments that
trade infrequently and have little price transparency, fair value
is less objective, and requires varying degrees of judgement and
estimation depending on liquidity, concentration, uncertainty of
market factors, pricing assumptions and other risks affecting the
specific instrument. The portfolio companies are all in the
start-up/development stage and in the biotechnology and
biopharmaceutical sector. By their nature, such companies are
difficult to value, as they have little or no track record
regarding sales and margins and may be subject to continued funding
being available in order to continue in operation. The eventual
outcome may differ materially from the value estimate. See also
note 8 in respect of the valuation of financial instruments.
Going concern
The financial statements have been prepared on a going concern
basis, taking into consideration the level of cash and liquid
investments held by the Company. The Directors have a reasonable
expectation that the Company will have adequate resources for its
continuing existence and projected activities for the foreseeable
future, and for these reasons, continue to adopt the going concern
basis in preparing the financial statements for the year ended 30
June 2022.
Functional and presentation currency
These financial statements are presented in Pound Sterling (GBP)
which is the Company's functional currency and rounded to the
nearest pound.
c) Net income from financial instruments at fair value through profit and loss
Any realised and unrealised gains and losses on investments are
presented within 'net income from financial instruments at fair
value through profit or loss'.
Interest income earned during the period, is accrued on a time
apportionment basis, by reference to the principal outstanding and
the effective rate applicable.
Dividend income is recognised when a security held goes
ex-dividend. Dividends are shown as net cash received, after the
deduction of withholding taxes.
d) Financial instruments
Recognition and initial measurement
The Company recognises financial assets and financial
liabilities at fair value through profit and loss ("FVTPL") on the
trade date, which is the date on which the Company becomes party to
the contractual provisions of the instrument. A financial asset or
financial liability is measured initially at fair value plus, for
an item not at FVTPL, transaction costs that are directly
attributable to its acquisition or issue.
Classification
On initial recognition, the Company classifies financial assets
as measured at amortised cost or 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
-- its contractual terms give rise on specified dates to cash
flows that are solely payment of principal and interest
("SPPI").
All other financial assets of the Company are measured at
FVTPL.
Business model assessment
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. These financial assets are held to collect contractual
cash flow.
Other business model: this includes debt securities, equity
investments both quoted and unquoted. These financial assets are
managed and their performance is evaluated, on a fair value
basis.
Fair value measurement principles
The fair value of investment holdings of listed investments is
based on their quoted market prices at the reporting date on a
recognised exchange or in the case of non-exchange traded
instruments, sourced from a reputable counterparty, without any
deduction for estimated future selling costs. Financial assets are
priced at their closing bid prices, while financial liabilities are
priced at their closing offer prices.
Company assets may, at any time include securities and other
financial instruments or obligations that are thinly traded or for
which no market exists and/or which are restricted as to their
transferability under securities laws.
If a quoted market price is not available on a recognised stock
exchange, or a market is not sufficiently active for the market
price to be considered reliable, or if a price is not available
from a reputable counterparty, fair value of the financial
instruments may be estimated by the Directors using valuation
techniques, including use of recent arm's length market
transactions, reference to the current fair value of another
instrument that is substantially the same, discounted cash flow
techniques, option pricing models or any other valuation technique
that provides a reliable estimate of prices obtained in actual
market transactions.
The Company recognizes transfers between levels of the fair
value hierarchy as at the end of the reporting period during which
the change occurred.
Reclassifications
Financial assets are not reclassified subsequent to their
initial recognition unless the Company were 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.
Impairment
The Company recognises loss allowances for Expected Credit
Losses ("ECLs") 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 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.
Derecognition
The Company derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of
the financial asset are transferred or in which the Company neither
transfers nor retains substantially all of the risks and rewards of
ownership and does not retain control of the financial asset.
On derecognition of a financial asset, the difference between
the carrying amount of the asset (or the carrying amount allocated
to the portion of the asset that is derecognised) and the
consideration received (including any new asset obtained less any
new liability assumed) is recognised in profit or loss. Any
interest in such transferred financial assets that is created or
retained by the Company is recognised as a separate asset or
liability.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with maturities of three months or less from the
acquisition date that are subject to an insignificant risk of
changes in fair value.
Trade and other receivables
Trade and other receivables originated by the Company are
initially recognised at fair value and subsequently stated at
amortised cost less impairment losses.
Trade and other payables
Trade and other payables are initially recognised at fair value
less directly attributable transaction costs. Subsequently they are
measured at amortised cost using the effective interest method.
e) Share capital and share premium
Ordinary shares are classified as equity. The ordinary shares of
the Company have a par value of GBP0.000001 each. Excess proceeds
received for the issue of shares has been credited to share
premium. Incremental costs directly attributable to the issue of
ordinary shares are recognised as a deduction from equity, net of
any tax effects.
f) Foreign currencies
Transactions in foreign currencies are translated into the
functional currency at the rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the
exchange rate at the reporting date. Non-monetary assets and
liabilities that are measured at fair value in a foreign exchange
currency are translated into the functional currency at the
exchange rate when the fair value was determined. Non-monetary
items that are measured based on historical cost in a foreign
currency are translated at the exchange rate at the date of the
transaction.
Foreign currency differences are generally recognised in profit
or loss and presented as foreign exchange gains / (losses).
g) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and
interpretations are not yet effective for the year, and have not
been applied in preparing these historical financial
statements:
New/revised International Accounting Standards EU Effective date
/ International Financial Reporting Standards (accounting periods
("IAS/IFRS") commencing on or
after)
-------------------------------------------------- -----------------------
Classification of liabilities as current 1 January 202 4
or non-current (Amendments to IAS 1)
------------------------------------------------ -----------------------
IFRS 17 Insurance Contracts 1 January 2023
------------------------------------------------ -----------------------
Amendments to IFRS 17 1 January 2023
------------------------------------------------ -----------------------
Disclosure of Accounting Policies (Amendments 1 January 2023
to IAS1 and IFRS Practice Statement 2)
------------------------------------------------ -----------------------
Definition of Accounting Estimate (Amendments 1 January 2023
to IAS 8)
------------------------------------------------ -----------------------
Deferred Tax related Asset and Liabilities 1 January 2023
Arising from a Single Transaction - Amendments
to IAS 12 Income Taxes
------------------------------------------------ -----------------------
Sale or Contribution of Assets between an 1 January 2023
Investor and its Associate or Joint Ventures
(Amendments to FRS 10 and IAS 28)
------------------------------------------------ -----------------------
The Directors do not expect the adoption of the standards and
interpretations to have a material impact on the financial
statements in the period of initial application. There are no other
standards, amendments or interpretations to existing standards that
are not yet effective, that would have a material impact on the
Company's reported results.
There has been no material impact on the Company's financial
statements of new standards or interpretations that have come into
effect during the current reporting period.
h) Taxation
The Company is subject to income tax at a rate of 0% in the Isle
of Man, and accordingly, no tax has been provided for in these
financial statements.
The Company may be subject to withholding taxes in relation to
income from investments, or investment realisation proceeds or
gains, and such amounts will be accounted for as incurred.
i) Segmental reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business,
being investing in companies that operate in the nascent
industry of modern foods, which are environmentally friendly
alternatives to the traditional production of meat and plant-based
sources. Information presented to the Board of Directors for the
purpose of decision making is based on this single segment and in
accordance with IFRS.
j) Investment entity
The Company is an investment entity and measures investments in
its subsidiaries at FVTPL. In determining whether the Company meets
the definition of an investment entity, management considered the
Company structure as a whole. In particular, when assessing the
existence of investment exit strategies and whether the Company or
its subsidiary has more than one investment, management took into
consideration the fact that the subsidiary was formed in order to
hold investments on behalf of the Company. Management concluded
that the Company and the subsidiary each meet the definition of an
investment entity. Consequently, management concluded that the
Company should not consolidate the subsidiary.
Where appropriate, figures in the comparative financial year
have been reclassified in order to present them in a manner
consistent with the current financial period.
2 Directors' and consulting fees
The fees of Directors who served during the year ended 30 June
2022 were as follows:
2022 2021
GBP GBP
Anderson Whamond (resigned 31 July 2020) - 833
Richard Reed 40,000 11,667
David Giampaolo 30,000 11,667
James Mellon 15,000 -
-------------- --------------
85,000 24,167
Denham Eke was appointed as a Director on 30 May 2012 and
currently receives no remuneration for providing his services.
On 6 May 2011, Shellbay Investments Limited ("Shellbay") entered
into a Letter of Appointment with the Company to provide certain
services to Agronomics. In May 2021, following shareholder feedback
and in consultation with the Company's advisers, the terms of this
agreement were altered, on the basis that from May 2021 new
arrangements would be put in place to (i) ensure the terms of
Shellbay's appointment were consistent with market standard terms
for commensurate services; (ii) provide greater transparency and
corporate governance regarding the role of Shellbay; and (iii)
establish a remuneration structure fully aligned with shareholders,
and acceptable to existing and future investors. The effective date
for the updated agreement is 01 July 2020.
Under the updated terms, Shellbay will provide certain services
to Agronomics, including:
- Reviewing prospective asset purchases;
- Procuring and coordinating due diligence in relation to any target approved by the Company;
- Providing appropriate information to the Board in relation to
any proposed acquisition or disposal opportunity;
- Providing transaction support services as requested by the Company;
- Assisting in operating, developing and commercialising any
intellectual property and/or assets of the Company (including by
way of joint venture, licensing agreement or other
partnership);
- Developing new markets and/or territories for assets and/or
intellectual property owned by the Company (including by way of
manufacturing, distribution and/or branding partnerships);
- Supplying the Board with regular reports on the progress of
companies and intellectual property where the Company has an
interest (including any financings);
- Assisting with recruitment of management teams and operational
supply chain partners for relevant products and intellectual
property; and
- The services of James Mellon as Executive Director of the Company.
Shellbay shall be entitled to an annual fee equal to the value
of 15% of any increase between the Company's net asset value
("NAV") on a per issued share basis at the start of a reporting
period and 30 June ("Closing NAV Date") each year during the term
of the New Shellbay Agreement, with the first reporting period
being from 1 July 2020 to 30 June 2021, and annually thereafter.
The opening and closing NAV for each period will be based on the
audited financial statements of the Company for the relevant
financial year, with the opening NAV for each reporting period
being the higher of (i) 5.86 pence per share (the highest annual
audited NAV per share since the Company adopted its current
investment policy and reported NAV per share in September 2019)),
and (ii) the highest NAV per share reported at a Closing Date for
the previous reporting periods during the term of the agreement
(establishing a rolling high-watermark for Shellbay to qualify for
such fee). Any increase in NAV per share will then be applied to
the total issued share capital at the end of the relevant period
for the purposes of determining the 15% fee. Any change in NAV per
share that arises from funds raised at a premium or discount to the
existing NAV per share will therefore be considered for the
purposes of calculating Shellbay's fee by reference to the annual
audited accounts (for clarity being an increase in respect of a
premium and a decrease in respect of a discount).
At the election of the Company, the Shellbay fee shall be
payable either in whole or in part by the issue of new shares at a
price equal to the mid-price on the last day of the relevant
Qualifying Period (being the Company's accounting year from 1 July
to 30 June) or grant of nil price warrants over shares; or in cash;
or (with the agreement of Shellbay), in cash-equivalents (such as
shares), and other assets held by the Company.
Shellbay has agreed with the Company that any fee due for the
current reporting period will be settled 50% in cash and 50% in
shares (with shares issued at the mid-market price of Ordinary
Shares at close of markets on the last day of the Qualifying
Period, being 30 June 2022).
During the year, a fee of GBP4,562,548 (30 June 2021:
GBP7,394,360) was accrued for and recorded in profit and loss
(2021: GBP7,394,360). The Shellbay fee is calculated as
follows:
Audited net asset value at 30 June 2021 GBP100,029,816
Audited total issued shares at 30 June 2021 799,606,383
Audited net asset value per share at 30 June 12.51 pence
2021
Net asset value at 30 June 2022 (pre Shellbay GBP146,194,180
fee)
Total issued shares at 30 June 2022 969,269,715
Net asset value per share at 30 June 2022 15.08 pence
Increase in net asset value per share 2.57 pence
Increase in net asset value subject to Shellbay GBP24,939,686
fee
--------------
15% Shellbay fee based on Net Asset Value GBP3,740,953
per share increase
Add: 2021 Shellbay fee waived GBP821,595
--------------
Total Shellbay fee due GBP4,562,548
During the year, Agronomics completed its VAT registration.
Following this, the irrecoverable VAT amount of GBP1,478,872 was
recovered. The Shellbay fee waived in the prior year of GBP821,595
is therefore due to Shellbay for the current year.
At the election of Agronomics, the Shellbay fee will be equally
settled by issuing Agronomics shares and cash. Refer to note 6 and
note 9.
3 Net gain/(loss) from financial instruments at fair value through profit and loss
Derived from financial assets held mandatorily at fair value
through profit or loss at initial recognition:
2022 2021
GBP GBP
Realised gains on sale of investments 440,322 260,104
Unrealised gains on investments 9,655,460 10,409,886
Unrealised losses on investments (3,671,913) -
-------------- --------------
Net unrealised gains on investments 5,983,547 10,409,886
Net income from financial instruments at fair value through profit and loss 6,423,869 10,669,991
4 Other operating costs
2022 2021
GBP GBP
Auditors' fees 81,149 37,797
Marketing 141,083 41,569
Professional fees 1,031,973 639,706
Sundry expenses 499,663 76,059
-------------- --------------
1,753,868 795,131
The Company has no employees.
5 Profit/(loss) from operating activities
Profit/(loss) from operating activities is stated after
charging:
2022 2021
GBP GBP
Auditors' fees 81,149 37,797
Directors' fees 85,000 24,167
6 Share capital, share premium and share reserve
Each share in the Company confers upon the shareholder:
-- the right to one vote at a meeting of the shareholders or on any resolution of shareholders;
-- the right to an equal share in any dividend paid by the Company, and
-- the right to an equal share in the distribution of the
surplus assets of the Company on its liquidation.
The Company may by resolution of Directors redeem, purchase or
otherwise acquire all or any of the shares in the Company subject
to regulations set out in the Company's Articles of
Association.
2022 2021
GBP GBP
Authorised
2,000,000,000 Ordinary shares
of GBP0.000001 2,000 2,000
No. of Share Share Share
Shares Capital Premium Reserve
GBP GBP GBP
Issued
Balance at 30 June 2020 331,616,661 331 19,080,138 -
Issued during the year 467,989,722 468 75,649,294 -
Share issue costs capitalised - - (3,451,025) -
Recognition of share reserve - - - 7,394,360
-------------- -------------- -------------- --------------
Balance at 30 June 2021 799,606,383 799 91,278,407 7,394,360
Issued during the year for cash 139,171,126 139 32,044,721 -
Issued during the year to settle share reserve 30,492,206 30 7,394,330 (7,394,360)
Recognition of share reserve - - - 4,341,639
Share issue costs capitalised - - (861,791) -
-------------- -------------- -------------- --------------
Balance at 30 June 2022 969,269,715 968 129,855,667 4,341,639
Capital management
The Company manages its capital to maximise the return to
shareholders through the optimisation of equity. The capital
structure of the Company as at 30 June 2022 consists of equity
attributable to equity holders of the Company, comprising issued
capital, share premium and accumulated earnings as disclosed.
The Company manages its capital structure and makes adjustments
to it in light of economic conditions and the strategy approved by
shareholders. To maintain or adjust the capital structure, the
Company may make dividend payments to shareholders, return capital
to shareholders or issue new shares and release the share premium
account. No changes were made in the objectives, policies or
processes during the year under review.
Warrants
As part of the fundraise completed during June 2021, the Company
issued warrants attached to the fundraising shares on a 1-for-1
basis, and as such, 297,727,274 warrants were issued to investors
who participated in the fundraise. The warrants are exercisable
quarterly over a period of two years, at a price of 28.5 pence per
warrant. The warrants in issue at 30 June 2022 have no dilutive
effect on basic earnings per share.
As part of the fundraise completed during December 2021, the
Company issued warrants attached to the fundraising shares on a
1-for-1 basis, and as such, 138,368,193 warrants were issued to
investors who participated in the fundraise. The warrants are
exercisable quarterly over a period of two years, at a price of 30
pence per warrant. The warrants in issue at 30 June 2022 have no
dilutive effect on basic earnings per share.
Reconciliation of warrants in issue
2022 2021
Number Number
Balance at 1 July 297,727,274 -
Issued during the year 138,368,193 297,727,274
Exercised during the year (802,933) -
-------------- --------------
Balance at 30 June 435,292,534 297,727,274
Consulting fee due to Shellbay
In settlement of the Shellbay fee outstanding at 30 June 2021,
30,492,206 new ordinary shares were issued to Shellbay.
As discussed in note 2, a consulting fee due to Shellbay of
GBP4,562,548 has been recognised (2021: GBP7,394,360). Shellbay has
agreed with the Company that any fee due for the current reporting
period will be settled 50% in cash and 50% in shares (with shares
issued at the mid-market price of Ordinary Shares at close of
markets on the last day of the Qualifying Period, being 30 June
2022). As a result, 14,257,963 new ordinary shares (2021:
30,492,206 new ordinary shares) will be issued to Shellbay at a
price of 16 pence per share. A Share Reserve has been recognised
relating to these shares to be issued. The shares to be issued to
Shellbay have a dilutive effect on basic earnings per share. Refer
to Note 11.
Investment in Geltor, Inc
In part consideration of the investment, US$ 2,714,150 is to be
satisfied through the issuance of 8,676,951 new Ordinary Shares in
Agronomics priced at 23 pence per share. A Share Reserve has been
recognised relating to these shares to be issued. The shares to be
issued to Geltor, Inc have a dilutive effect on basic earnings per
share. Refer to Note 11.
Settlement of broker fee
Share issue costs incurred in relation to the fund raise
completed during December 2021 include commission fees which were
partly paid in the Company's shares, with no vesting conditions
attached to such shares. The fair value of the portion of the
commission fees which was settled in shares was determined
indirectly on the basis of the subscription price of such shares on
the subscription date. During the year, 524,325 shares with a fair
value of GBP0.23 per share, equal to subscription price, were
issued as part payment of commissions fees.
7 Financial assets at fair value through profit or loss
During the prior year, the Company established a new wholly
owned subsidiary entity, Agronomics Investment Holdings Limited
("the Subsidiary" or "AIHL"), which now holds the majority of the
portfolio of unquoted investments previously held directly by the
Company. Unquoted investments were transferred by the Company into
AIHL at their respective carrying amounts. The investment in
subsidiary is stated at fair value through profit or loss in
accordance with the IFRS 10 Investment Entity Consolidation
Exception. The fair value of the investment in Subsidiary is based
on the year-end net asset value of the Subsidiary. Additions and
disposals regarding the investment in subsidiary are recognised on
trade date.
2022 2021
GBP GBP
Quoted 250,691 656,502
Unquoted 6,795,650 59,704
Investment in subsidiary 87,766,747 38,054,470
-------------- --------------
94,813,088 38,770,676
7 Financial assets at fair value through profit or loss (continued)
The composition of the investments held, both directly and
indirectly through the Subsidiary in the underlying portfolio, is
as follows:
2022 2021
GBP GBP
Equities 84,942,939 28,349,567
Convertible loan notes and SAFEs* 9,870,149 10,421,109
-------------- --------------
94,813,088 38,770,676
* A SAFE is a Simple Agreement for Future Equity. SAFE
Agreements have similar characteristics to Convertible Loans and
are designed to provide an early investor with an "edge" ahead of a
larger planned funding. The edge is typically conversion of funds
advanced for new equity at a discount to the subsequent raise.
These financial instruments were mandatorily held as at fair
value through profit or loss on initial recognition. See note 8 -
Fair value of financial instruments section - regarding the
valuation of investments.
8 Financial instruments
Financial Risk Management
The Company has risk management policies that systematically
view the risks that could prevent it from achieving its objectives.
These policies are intended to manage risks identified in such a
way that opportunities to deliver the Company's objectives are
achieved. The Company's risk management takes place in the context
of day-to-day operations and normal business processes such as
strategic and business planning. The Directors have identified each
risk and are responsible for coordinating and continuously
improving risk strategies, processes and measures in accordance
with the Company's established business objectives.
The Company's principal financial instruments consist of
investments, cash, receivables and payables arising from its
operations and activities. The main risks arising from the
Company's financial instruments and the policies for managing each
of these risks are summarised below.
Credit Risk
Credit risk is the risk of loss associated with the
counterparty's inability to fulfil its obligations. The Company's
credit risk is primarily attributable to receivables, cash
balances, and cash deposits, with the maximum exposure being the
reported balance in the statement of financial position. The
Company has a nominal level of debtors and as such the Company
believes that the credit risk to these is minimal. The Company
holds available cash and cash deposits with licensed banks and
financial institutions. The Company considers the credit ratings of
banks in which it holds funds in order to reduce exposure to credit
risk. Cash balances are available on demand, with cash deposits
having varying maturities up to 6 months.
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at the
reporting date was:
Carrying amount Carrying amount
2022 2021
GBP GBP
Bank deposits 20,024,175 -
Cash and cash equivalents 31,458,326 62,436,497
Trade and other receivables 56,268 378,591
-------------- --------------
51,538,769 62,815,088
All of cash and cash equivalent and cash deposit balances are
held in A+ credit rated financial institutions. The Company
considers that ECL exposures have low credit risk based on the
external credit ratings of the financial institutions.
Market price risk
Market price risk is the risk that the market price will
fluctuate due to macro-economic issues such as changes in market
factors specific to that security, market interest rates and
foreign exchange rates.
The Company is exposed to significant market price risks as
financial instruments recognised directly by the Company and
indirectly by the Subsidiary are linked to market price
volatility.
A 10% increase/decrease in market value of investments held by
the Company and its subsidiary would increase/decrease equity and
profit by GBP9,481,309 (2021: GBP 3,877,068). Taking into account
the Shellbay consulting fee, the increase/decrease in equity and
profit would be GBP10,903,505 (2021: GBP4,458,628).
Liquidity risk
The Company is exposed to liquidity risk to the extent that it
holds investments that it may not be able to sell quickly at close
to fair value.
The risk is managed by the Company by means of cash flow
planning to ensure that future cash requirements are anticipated
and, where financial instruments have to be sold to meet these
requirements, the process is carried out in a controlled manner
intended to minimise the liquidity risk involved.
The residual undiscounted contractual maturities of financial
liabilities and financial assets are as follows:
30 June 2022 Less than 1-3 months 3 months 1-5 Over No stated Total
1 month GBP to 1 year years 5 years maturity
GBP GBP GBP GBP GBP
Financial liabilities
Trade and other
payables 204,071 - 2,281,274 - - - 2,485,345
----------- ----------- ----------- ------- --------- ----------- ------------
204,071 - 2,281,274 - - - 2,485,345
30 June 2021
Trade and other
payables 144,152 - 1,478,872 - - - 1,623,024
----------- ----------- ----------- ------- --------- ----------- ------------
144,152 - 1,478,872 - - - 1,623,024
30 June 2022
Financial assets
Financial assets
at fair value
through profit
or loss - - - - - 94,813,088 94,813,088
Bank deposits 10,024,175 - 10,000,000 - - - 20,024,175
Cash and cash
equivalents 23,458,326 8,000,000 - - - - 31,458,326
Trade and other
receivables 56,268 - - - - - 56,268
----------- ----------- ----------- ------- --------- ----------- ------------
33,538,769 8,000,000 10,000,000 - - 94,813,088 146,351,857
30 June 2021
Financial assets
Financial assets
at fair value
through profit
or loss - - - - - 38,770,676 38,770,676
Cash and cash
equivalents 62,436,497 - - - - - 62,436,497
Trade and other
receivables 378,591 - - - - - 378,591
----------- ----------- ----------- ------- --------- ----------- ------------
62,815,088 - - - - 38,770,676 101,585,764
Interest rate risk
A significant share of the Company's assets is comprised of cash
held at banks. As a result, the Company is subject to risk due to
fluctuations in the prevailing level of market interest rates.
However, income earned from bank interest is not considered
material to the Company's performance or financial position.
The Company holds investments in convertible loan notes ("CLN"),
which attract interest income. The rates of interest are fixed for
each CLN investment held, which results in a reduced interest rate
risk.
Fair values of financial assets and liabilities
At 30 June 2022, the carrying amounts of cash resources, trade
and other receivables, and trade and other payables approximate
fair value due to their short-term maturities.
Foreign currency risk
The Company is exposed to foreign currency risk on fluctuations
related to financial assets and liabilities held directly itself
and indirectly via its subsidiary that are denominated in a number
of currencies. The Investment in Subsidiary is held in Sterling.
The analysis below reflects the underlying currency exposure in the
Subsidiary's portfolio.
GBP equivalents as at 30 June 2022
Financial assets at Cash at Total by currency
fair value through bank
profit and loss
GBP GBP GBP
USD 65,031,554 81,983 65,113,537
EUR 28,898,815 - 28,898,815
-------------- -------------- --------------
93,930,369 81,983 94,012,352
GBP equivalents as at 30 June 2021
Financial assets at Cash at Total by
fair value through profit bank currency
and loss
GBP GBP GBP
USD 20,651,131 2,425,345 23,076,476
CAD 1,203 - 1,203
NZD 252,589 - 252,589
EUR 17,642,270 - 17,642,270
-------------- -------------- --------------
38,547,193 2,425,345 40,972,538
The following significant exchange rates applied during the
year:
Average Average
rate for rate for
active active year
year 2021
2022
USD 1.33208 1.34806
EUR 1.18085 1.12876
Year-end Year-end
rate rate
2022 2021
USD 1.21780 1.38310
EUR 1.16170 1.16670
Sensitivity analysis
A 10% percent strengthening of Sterling against the relevant
currencies above at 30 June 2022, and 5% at 30 June 2021, would
have decreased equity and profit for the year by the amounts shown
below. The analysis assumes that all other variables, in particular
interest rates, remain constant.
2022 Equity and Profit or loss
GBP
USD 6,511,354
EUR 2,889,882
2021 Equity and Profit or loss
GBP
USD (2,287,272)
CAD (57)
NZD (12,028)
EUR (2,507,507)
A 10% percent weakening of Sterling against the relevant
currencies above at 30 June 2022, and 5% at 30 June 2021, would
have the equal but opposite effect on the basis that all other
variables, in particular interest rates, remain constant.
Fair value of financial instruments
The fair values of financial assets and financial liabilities
that are traded in an active market are based on quoted market
prices. For all other financial instruments, the Company and its
subsidiary determine fair values using other valuation techniques
in compliance with IFRS9: Financial Instruments, IFRS13: Fair Value
Measurement, and based on the International Private Equity and
Venture Capital Valuation Guidelines ("IPEV").
For financial instruments that trade infrequently and have
little price transparency, fair value is less objective, and
requires varying degrees of judgement depending on liquidity,
uncertainty of market factors, pricing assumptions and other risks
affecting the specific instrument.
The Company measures fair values using the following fair value
hierarchy that reflects the significance of the inputs used in
making the measurements:
-- Level 1: Inputs that are quoted market prices (unadjusted) in
active markets for identical instruments;
-- Level 2: Inputs other than quoted prices included within
Level 1 that are observable either directly (i.e. as prices) or
indirectly (i.e. derived from prices). This category includes
instruments valued using; quoted market prices in active markets
for similar instruments; quoted prices for identical or similar
instruments in markets that are considered less than active; or
other valuation techniques in which all significant inputs are
directly or indirectly observable from market data;
-- Level 3: Inputs that are unobservable. This category includes
all instruments for which the valuation technique includes inputs
not based on observable data and the unobservable inputs have a
significant effect on the instrument's valuation. This category
includes instruments that are valued based on quoted prices for
similar instruments but for which significant unobservable
adjustments or assumptions are required to reflect differences
between the instruments.
Various valuation techniques may be applied in determining the
fair value of investments held as Level 3 in the fair value
hierarchy. The objective of valuation techniques is to arrive at a
fair value measurement that reflects the price that would be
received to sell the asset or paid to transfer the liability in an
orderly transaction between market participants at the measurement
date.
Fair value of financial instruments (continued)
Fair value hierarchy measurement at 30 June 2022
Investments in securities at fair value:
Quoted Significant Significant
prices other unobservable
In active observable Inputs
markets inputs
Total for identical (Level 3)
assets (Level 2)
(Level
1)
Investments
Quoted 250,691 250,691 - -
Unquoted 6,795,650 - - 6,795,650
Investment in subsidiary 87,766,747 87,766,747
-------------- -------------- -------------- --------------
94,813,088 250,691 - 94,562,397
The investment in subsidiary held by the Company is classified
as level 3 in the fair value hierarchy - being based on the net
asset value of the Subsidiary. All the underlying listed equity
investments held by the Subsidiary are classed as level 3
investments
Reconciliation of Level 3 investments:
Opening balance at 1 July
2021 38,126,352
Purchases 44,092,779
Disposals (256,133)
Unrealised foreign currency
gain 5,940,553
Unrealised fair value gain 9,655,460
Unrealised fair value loss (3,280,099)
Accrued interest on loan
note investments 283,485
--------------
Closing balance at 30 June
2022 94,562,397
Fair value hierarchy measurement at 30 June 2021
Investments in securities at fair value:
Quoted prices Significant Significant
In active other unobservable
markets observable Inputs
for identical inputs
Total assets (Level 3)
(Level 1) (Level 2)
Investments
Quoted 656,502 644,324 - 12,178
Unquoted 59,704 - - 59,704
Investment in subsidiary 38,054,470 - - 38,054,470
-------------- -------------- -------------- --------------
38,770,676 644,324 - 38,126,352
The investment in subsidiary held by the Company is classified
as level 3 in the fair value hierarchy - being based on the net
asset value of the Subsidiary. All the underlying listed equity
investments held by the Subsidiary are classed as level 3
investments.
Reconciliation of Level 3 investments:
Opening balance at 1 July
2020 16,237,975
Transfer from Level 1 to
Level 3 10,974
Purchases 11,839,007
Disposals (136,187)
Unrealised foreign currency
loss (1,953,413)
Unrealised fair value gain 11,978,341
Accrued interest on loan
note investments 149,655
--------------
Closing balance at 30 June
2021 38,126,352
Valuation technique
In the absence of observable prices or suitable unobservable
model inputs being available and, given level 3 portfolio companies
are in the start-up/development stage and in the biotechnology/
biopharmaceutical sector, the Board believes that a recent share
transaction cost represents the best available estimate of fair
value. The price of a recent investment valuation technique,
calibrated using both financial and technological milestones, is
commonly used in a seed, start-up or early-stage situations. Where
applicable, the Company's Level 3 investments are valued at the
price of each funding round of the respective companies entered
into with their shareholders, adjusted where necessary should the
Directors deem any adjustment is needed in order to determine the
fair value. The fair value of the relevant investee may also be
adjusted based on its performance against predetermined milestones.
The Directors deem all investments to be held at fair value. The
price of a recent transaction is deemed most appropriate for the
Company's and Subsidiary's unquoted investments. Although the Board
believes that its estimates of fair value are appropriate, the use
of different methodologies or assumptions could lead to different
measurements of fair value. The Board continues to monitor the
performance of the investee entities and the underlying information
available in order to assess whether the valuation technique
adopted and the fair value hierarchy remain appropriate.
No reasonably possible alternative assumptions
IFRS 13 requires disclosure, by class of financial instrument,
if the effect of changing one or more inputs to reasonably possible
alternative assumptions would result in a significant change to the
fair value measurement. However, where fair value is determined
with reference to the price of a recent transaction in the equity
shares of the unquoted company, such a sensitivity analysis is not
relevant. As such the Directors consider there are no reasonably
possible alternative assumptions in respect of the level 3
investments held at year end.
The valuation approach adopted for the years ended 30 June 2022
and 30 June 2021 is consistent.
9 Trade and other payables
2022 2021
GBP GBP
Provision for audit fee 55,000 37,797
Other provisions - 2,203
Trade creditors 149,071 104,152
Provision for irrecoverable VAT
(note 2) - 1,478,872
Provision for Shellbay fee (note 2,281,274 -
2)
------------ ------------
2,485,345 1,623,024
Following the Company's VAT registration during the year, the
irrecoverable VAT amount recognised during the previous year has
been recovered as part of returns submitted.
As disclosed in Note 2, the Shellbay fee recognised during the
year will be settled partly in cash totalling GBP2,281,274 (2021:
Nil).
10 Related party transactions
Under an agreement dated 1 December 2011, Burnbrae Limited, a
Company for which James Mellon is the ultimate beneficial owner and
Denham Eke is a Director, provide certain services, principally
accounting and administration, to the Company. This agreement may
be terminated by either party on three months' notice. The charge
for services provided in the year in accordance with the contract
was GBP31,500 (2021: GBP36,000) of which GBP3,000 was outstanding
as at the year-end (2021: GBP68).
Under an updated agreement dated May 2021, Shellbay Investments
Limited, a Company related to both James Mellon and Denham Eke,
provides certain services to the Company (see note 2). The charge
for services provided in the year was GBP 4,562,548 (2021:
GBP7,394,360), with the Company opting to settle the fee 50/50 in
cash and Agronomics shares.
In accordance with the published investing policy, James Mellon
holds personal interests both directly and indirectly in the
following investee companies: AgeX Therapeutics Inc, Endurance RP,
Portage Biotech Inc, SalvaRX Group PLC, Cytox Limited, Simply Foods
Inc, Shiok Meats Pte. Ltd, Good Dog Food Ltd and Bond Pets LLC.
Edgewater Associates Limited ("Edgewater")
During the year, Directors and Officers insurance was obtained
through Edgewater, which is a 100% subsidiary of Manx Financial
Group PLC ("MFG"). James Mellon and Denham Eke are Directors of MFG
and Denham Eke a Director of Edgewater.
The premium payable on the policy was GBP19,500 (2021:
GBP7,748), of which GBPnil was outstanding as at the year-end
(2021: GBPnil).
11 Basic and diluted earnings per share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year.
The calculation of diluted earnings per share is based on the
basic earnings per share, adjusted to allow for the issue of
shares, on the assumed conversion of all dilutive share
options.
2022 2021
GBP GBP
---------------------------------------------------- ----------- ------------
Profit for the year 8,358,379 GBP1,019,841
---------------------------------------------------- ----------- ------------
No. No.
---------------------------------------------------- ----------- ------------
Weighted average number of ordinary shares in issue 877,490,411 468,460,964
Dilutive effect of shares to be issued (Note 6) 37,192,877 30,492,206
---------------------------------------------------- ----------- ------------
Diluted number of ordinary shares 914,683,288 498,923,170
---------------------------------------------------- ----------- ------------
Basic earnings per share (pence) 0.95 0.22
---------------------------------------------------- ----------- ------------
Diluted earnings per share (pence) 0.91 0.20
---------------------------------------------------- ----------- ------------
12 The Subsidiary
The Company has one wholly-owned subsidiary entity, Agronomics
Investment Holdings Limited, which is incorporated in the British
Virgin Islands. The Subsidiary was incorporated on 8 July 2020
under the provisions of the BVI Business Companies Act, 2004, as a
limited liability company. The principal activity of the Subsidiary
is holding investments on behalf of the Company.
13 Subsequent events
No subsequent events have occurred that require disclosure.
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December 20, 2022 04:00 ET (09:00 GMT)
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