Blue Star Capital plc A year of significant activity

Blue Star Capital plc

Blue Star Capital plc (LON: BLU) has today announced its final results for the year ended 30 September 2018.


· Net assets increased from £3,513,262 to £5,459,581, which equates to a net asset value per share of approximately 0.29p compared with 0.21p.

· Profit for the period of £1,471,319 compared to a loss for the previous year of £188,713.

· The percentage shareholding in SatoshiPay ltd stood at 30.1% at the year end.

· Cash position at 30 September 2018 of £31,416 (2017: £37,970).

The Annual Report and notice of Annual General Meeting (“AGM”) will be posted to shareholders shortly and will be available to view on the Company’s website

Attention is drawn by the independent auditor to note 1 of the financial statements (included below), which indicates that the Company is reliant on future fund raisings to continue its activities as budgeted. Since the financial year-end, the Company has raised £200,000 before expenses through a further issue of equity for working capital purposes.

The AGM will be held at the offices of Cairn Financial Advisers LLP, Cheyne House, Crown Court, 62-63 Cheapside, London, EC2V 6AX on 29 March 2019 at 12.00 p.m.

Tony Fabrizi Chief Executive Officer of Blue Star Capital plc, commented:

“The last year has been one of significant activity for your Company and while we were ultimately unsuccessful in our attempt to acquire the entire issued share capital of SatoshiPay, the process proved valuable and was critical in SatoshiPay raising almost £1.7m in private funding in 2019. The valuation achieved by SatoshiPay on these recent private raises is significantly above your Company’s acquisition cost and this has resulted in a strong uplift in both net assets and profits over the year. The Board remains confident that SatoshiPay has the potential to deliver significant value for Blue Star shareholders and it looks forward to continuing to work with SatoshiPay’s management in unlocking that value.”

Chairman’s Statement

2018 has been a year of significant activity for the Company. On 26 July 2018 it was announced that the Company had entered into an exclusivity agreement with its investee company SatoshiPay. The nature of the agreement resulted in the suspension of the Company’s shares from trading on AIM while it pursued a potential reverse takeover (“RTO”) of SatoshiPay. Unfortunately, market conditions became difficult towards the end of 2018 and the decision was then taken by the Company and SatoshiPay to terminate the exclusivity agreement. The Company’s shares therefore recommenced trading on AIM on 24 January

2019. Despite this setback, the Company remains highly supportive of SatoshiPay and its management and is pleased to have seen the recent validation of this confidence through the raising of approximately £1.68m by SatoshiPay in 2019 at a pre money valuation of £15.0m, which has resulted in a significant uplift in the value of the Company’s holding, which now represents circa 27.9% of SatoshiPay’s issued share capital. The recent fund raises, together with the £500,000 raised in July 2018 have come from a number of blockchain foundations and other specialist investment groups that recognise the potential of SatoshiPay’s offering.

Apart from the significant uplift in value of SatoshiPay, the Company’s £50,000 investment in Sthaler has also shown a further uplift and now stands at a valuation at around £300,000 (based on the valuation of its most recently completed fundraising round).

Finally, the historic investment in Disruptive Tech Limited which was acquired in 2007, well before the current Board were in place, has been written down to its original cost of £300,000. This has resulted in a write down in the year of approximately £1.3m. The net effect of these changes on the Company’s net asset value per share has been an increase from 0.21p to 0.29p.


The Company reported a profit for the period of £1,471,319 compared to a loss of £188,713 in the corresponding period. This reflects the net revaluation of the portfolio with the significant gain on SatoshiPay being partially offset by the write down in carrying value of DTL. The operating expenses of the Company also increased during the year as a result of advisory fees incurred on the attempted RTO.

Net assets have increased to £5,459,581 at 30 September 2018, changing from £3,513,262 at 30 September 2017. Blue Star’s cash position at 30 September 2018 was £31,416 compared to a balance of £37,970 at 30 September 2017. The Company raised£200,000 before expenses through a further issue of equity in January 2019.

Portfolio Review


Company Description

SatoshiPay is a fintech company supplying micropayment infrastructure based on blockchain technology to digital industries. SatoshiPay’s infrastructure provides a frictionless online payment service, allowing digital content and service providers to monetise their products both efficiently and at a low cost across vendor platforms. The technology is offered both through in-house built products and as an application programming interface (“API”) upon which third party developers may build their own solutions.

The vision for the future of SatoshiPay is a fast, secure, cross-platform and login free global peer-to-peer micropayment system for the commercial internet which transforms the mainstream payment market and facilitates transparent value exchange between any internet-connected device.

SatoshiPay Technology

The SatoshiPay technology is designed to overcome existing issues with online micropayments that have prevented them from achieving mainstream adoption, primarily the high level of transaction costs driven by existing bank infrastructures that make such levels of payments commercially unfeasible.

The foundation of SatoshiPay’s platform is dependent upon blockchain technology. A blockchain is a decentralized database of transactions that exists on multiple computers at the same time. It is a record keeping technology that, in simple terms, is conceptually similar to a spreadsheet that is duplicated thousands of times across a network of computers and that is constantly updated.

The advantages of blockchain are that it is, by its inherent set up, independent, transparent and secure. Its security comes from the fact that its data cannot be altered, it cannot be controlled by any single entity and has no single point of failure that can be exploited by hackers. Encryption technology allows individuals’ digital assets to be kept anonymous and protected. Further, removing intermediaries from the process allows transactions on a blockchain to be carried out faster and cheaper than traditional methods.

SatoshiPay’s micropayment system is based on the Stellar blockchain protocol, a distributed ledger technology, and uses Stellar lumens (XLM) as the underlying settlement token.

Micropayments and the SatoshiPay Solution Existing issues relating to micropayments include financial costs (transaction costs being high in relation to the level of payment) and usability costs (cumbersome, multi-step online payment mechanisms for the end user).

SatoshiPay’s solution is able to overcome these issues by offering a P2P payment method which does not require download, installation or log in for the end user, and that is transferable across vendor platforms and facilitates instant transactions of very small amounts. This flexible, low cost solution allows for pricing strategies at a more granular level, and the board of Blue Star believe that it has many potential applications.

Potential Applications of SatoshiPay

The directors of SatoshiPay believe that its technology can be employed in a range of sectors. Wherever instant, login-free, granular payments open up the potential to improve existing revenue streams or generate new ones for online publishers and content providers, micropayments and the SatoshiPay technology have a potential application. Examples include purchase of digital goods, direct streaming of content, as a settlement mechanism for machine to machine transactions (i.e. toll payments) and in-app/game closed-loop systems.

Blue Star’s holding in SatoshiPay

As at 30 September 2018, Blue Star had invested £1.7m in SatoshiPay representing, at the time, approximately 30.1 per cent. of SatoshiPay’s share capital. As at the year end, Blue Star also held €200,000 of convertible loan notes (“CLNs”) issued by SatoshiPay, which were subsequently converted into equity on 6 February 2019 at a 15 per cent. discount to the valuation applied by SatoshiPay on its most recent fund raises. Following this conversion and the recent fund raises undertaken by SatoshiPay, the Company’s shareholding equated to 27.9 per cent and has a carrying value of £4.7m.

Sthaler Limited (“Sthaler”)

Company Description

In June 2015 the Company invested £50,000 in Sthaler Limited, an early stage identity and payments technology business which enables a consumer to identify themselves and pay using just their finger at retail points of sale.

Sthaler jointly developed Fingopay in conjunction with Hitachi, using VeinID technology. Infrared light maps the unique vein pattern in a customer’s finger. This biometric signature is matched to a template held in the cloud and verifies the payment in seconds. It is considered more secure than other biometrics such as fingerprint.

Over the last 18 months, Sthaler have been piloting Fingopay in different retail environments including convenience stores, restaurants, coffee shops and bars. Now thousands of students at Copenhagen Business School can use Fingopay in canteens and coffee shops across the campus. This world first biometric self-service restaurant is an excellent example of how the technology can be used. Sthaler worked with Denmark’s national debit card operators Nets to deliver the technology on behalf of the nineteen banks behind the Dankort scheme.

Nets / Dankort are working with Sthaler to look beyond mobile to biometrics as the future of payment to engage younger consumers across Denmark. The technology is being showcased to Scandinavian banks and businesses, with a view to wider adoption across the region.

Sthaler’s Copenhagen launch follows a successful retail first at Brunel University, London. Students used Fingopay to buy groceries at the Costcutter convenience store, on campus. Sthaler installed Fingopay readers at points of sale and helped Brunel move towards the goal of a cashless campus. Worldpay processed the transactions enabling students to travel around campus without wallet or phone and pay securely using only their finger. The Brunel launch gained worldwide attention. Sthaler featured prominently on Fox Business, CNBC and ITN, with scores of articles in leading national newspapers.

Sthaler’s pioneering work with a major high street retailer proved the value of Fingopay in a new sector and lays the groundwork for a nationwide rollout. It significantly broadened the appeal of Fingopay by moving it from hospitality into the retail space.

The hospitality sector remains a strong vertical for Sthaler’s development of Fingopay. Sthaler has already proved its value, by showing it in action in a live bar environment. The London bar and music venue Proud Camden introduced Fingopay to its customers. It allowed Sthaler to introduce fast lanes for Fingopay users, instant e-receipts and an in-built loyalty scheme to reward repeat customers.

Sthaler has new launches in the pipeline scheduled for later in 2019.

Blue Star’s Shareholding in Sthaler

The Company’s shareholding in Sthaler is 0.9 per cent at 30 September 2018 and is valued on the basis of the last fund raise at around £300,000.

Disruptive Tech Limited (“DTL”)

Company Description

DTL is a Gibraltar-based investing company that has three active investments, which are:

· 8% shareholding in Nektan plc, which is an international B2B mobile gaming company;

· 10% shareholding in Freeformers, which helps companies fulfil the employee aspects of their digital strategies; and

· 1.8% shareholding in Bookingbug, which has developed a market-leading software platform to manage online bookings and appointments.

DTL’s board intends to exit all the existing positions as and when opportunities arise, with the disbursement of proceeds being made either through a distribution of shares (if a company is listed on a public market), or cash from the sale of DTL’s position. The DTL board cannot put a timeframe estimate on when all its positions will have been exited.

Blue Star’s holding in DTL

Blue Star’s £300,000 investment in DTL was made in 2007. Since its original investment, DTL has raised money at significantly higher valuations and as a result its carrying value had risen to £1.6m at 30 September 2017. Given the ongoing delays in realising the investments and having consulted in depth with DTL and the Company’s advisors, the Directors have decided it now prudent to write down in the carrying value of its investment in DTL to cost.


The Board believes the Company’s portfolio has the potential to create significant value for shareholders. Our investments in SatoshiPay and Sthaler are showing strong gains and while the RTO process was ultimately disappointing, it has strengthened SatoshiPay and the recent progress in the business has been impressive. Although the costs of the attempted RTO have led to an increase in operating costs this year, our overall running costs have remained low and are kept under strict control. The appointment of Sean King to the Board in January brings valuable knowledge of the media and tech sectors and we are delighted by his contribution to date. Overall, the Directors believe the Company remains in a strong position to examine opportunities to enhance shareholder value and the Board views the future outlook with confidence.

William Henbrey


5 March 2019#

Strategic Report

Review of Business and Analysis Using Key Performance Indicators

The full year’s pre-tax profit was £1,471,319 compared to a pre-tax loss of £188,713 for the year ended 30 September 2017.

The significant profit is due to the fair value gain adjustment in the Company’s investment in Satoshipay Limited and Sthaler Limited, offset by the write down in DTL as disclosed in the Chairman’s Statement.

Net assets have increased to £5,459,581 at 30 September 2018, changing from £3,513,262 at 30 September 2017, primarily due to the increase in value of the Company’s investment in SatoshiPay Limited.

The cash position at the end of the year decreased to £31,416 from £37,970 as at 30 September 2017.

Key Performance Indicators

The Board monitors the activities and performance of the Company on a regular basis. The indicators set out below have been used by the Board to assess performance over the year to 30 September 2018. The main KPIs for the Company are listed as follows:



Valuation of investments



Cash and cash equivalents



Net current assets



Profit/(loss) before tax



Investing Policy

The Company can invest in assets or companies in the following sectors:

· Technology;

· Gaming; and

· Media.

The Company’s geographical range is mainly UK companies but considers opportunities in the mainland EU and will actively co-invest in larger deals.

The Company can take positions in investee companies by way of equity, debt or convertible or hybrid securities.

The Company’s investments are passive in nature but may be actively managed. The Company may be represented on, or observe, the boards of its investee companies.

The Company’s investments are likely to be illiquid and consequently are to be held for the medium to long term.

The Company does not have any maximum exposure limits, limits on cross-holdings or other investing restrictions. Under normal circumstances, it is the Directors intention not to invest more than 10% of the Company’s gross assets in any individual company (calculated at the time of investment). The Company has accumulated a 29.4% stake in SatoshiPay, which the Board believes represents a rare opportunity to generate significant shareholder value.

The Directors may exercise the powers of the Company to borrow money and to give security over its assets. The Company may also be indirectly exposed to the effects of gearing to the extent that investee companies have outstanding borrowings.

It is anticipated that returns from the Company’s investment portfolio will arise upon realisation or sale of its investee companies, rather than from dividends received. Whilst it is not possible to determine the timing of exits, the Board will seek to return capital to shareholders when appropriate.

The Company has an indefinite life dependent on obtaining sufficient funding.

Future Developments

The Company is continuing to develop an investment portfolio with the capacity for substantial growth and increases in value.

Principal Risks and Uncertainties

The Company seeks investments in late stage venture capital and early stage private equity opportunities, which by their very nature allow a diverse portfolio of investments within different sectors and geographic locations.

The Company’s primary risk is loss or impairment of investments. This is mitigated by careful management of the investment and in particular, only continuing to support those investments which demonstrate potential to achieve a positive exit and decisively determining those which do not. Portfolio and capital management techniques are fully applied according to industry standard practice.

It will be necessary to raise additional funds in the future by a further issue of new Ordinary shares or by other means. However, the ability to fund future investments and overheads in Blue Star Capital Plc as well as the ability of investments to return suitable profit cannot be guaranteed, particularly in the current economic climate.

The Company may not be able to identify suitable investment opportunities and there is no guarantee that investment opportunities will be available, and the Company may incur costs in conducting due diligence into potential investment opportunities that may not result in an investment being made.

The value of companies similar to those in Blue Star Capital’s portfolio and in particular those at an early stage of development, can be highly volatile. The price at which investments are made, and the price which the Company may realise for its investment, will be influenced by a large number of factors, some specific to the Company and its operations and some which may affect the sector.

William Henbrey


Directors’ Report

Results and dividends

The Directors present their report together with the audited financial statements for the year ended 30 September 2018.

The trading results for the year ended 30 September 2018 and the Company’s financial position at that date are shown in the attached financial statements.

The Directors do not recommend the payment of a dividend for the year (2017: £nil).

Principal activities and review of the business

The principal activity of the Company is to invest in the media, technology and gaming sectors. A review of the business is included within the Chairman’s Statement and Strategic Report.

Directors serving during the year

Anthony Fabrizi

William Henbrey

On 29 January 2019, Sean King was appointed as a director of the Company.

Directors’ Interests

The Directors at the date of these financial statements who served and their interest in the ordinary shares of the Company are as follows:

Number of Ordinary Shares


Anthony Fabrizi



William Henbrey


Sean King


Significant shareholders

As at 22 February 2019, so far as the Directors are aware, the parties (other than the interests held by Directors) who are directly or indirectly interested in 3% or more of the nominal value of the Company’s share capital is as follows:

Number of Ordinary Shares

Percentage of issued share capital

Nicolas Slater



Smaller Company Capital Limited



Highland Fund Management Limited



Related party transactions

The Company has entered into certain related party transactions and these are disclosed in note 16.

Events after the reporting date

On 20 December 2018 the redemption date for the €200,000 convertible loan notes issued by SatoshiPay Limited to the Company in the year was extended to become redeemable on or after 31 January 2019.

On 24 January 2019, the Company’s shares resumed trading on AIM following the Company’s decision not to proceed with the proposed acquisition of the entire issued share capital of SatoshiPay Limited by the Company.

On 24 January 2019 the Company placed 111,111,111 new Ordinary shares at a price of 0.18 pence per share.

On 6 February 2019, the Company announced that it has elected to convert the convertible loan notes into a further 249 shares in SatoshiPay Limited.

Political Donations

There were no political donations during the current or prior year.

Provision of information to Auditor

In so far as each of the Directors are aware:

· there is no relevant audit information of which the Company’s auditor is unaware; and

· the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.


Adler Shine LLP have expressed their willingness to continue as auditor and a resolution to re appoint Adler Shine LLP will be proposed at the Annual General Meeting.

On behalf of the board of Directors:

William Henbrey


5 March 2019

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