Blue Star Capital PLC (LON:BLU) Chief Executive Officer Tony Fabrizi and SatoshiPay Founder Meinhard Benn caught up with DirectorsTalk for an exclusive interview to discuss the company’s final results and the relationship with SatoshiPay.
Q1: Tony, Blue Star Capital have announced their results this morning, what are the key highlights that we should focus on?
A1: Yes, we announced them this morning and we’re obviously very pleased with the results. Significant profit of just below £1.5 million and an increase in our Net Asset Value of just up to below 0.30p and that’s an almost 50% increase on the NAV at the end of last year so we think they’re obviously good results.
We had the disappointment during the year of the RTO process with SatoshiPay, not being able to complete that process, but I think it has made SatoshiPay a much stronger business and I’m sure Meinhard will cover that when you ask him more about the business later.
Overall, very pleased with the results and we believe it’s a good start for the current year.
Q2: As you mentioned, the NAV has increased by almost 50%, what’s caused this significant rise?
A2: We’ve had the increase in the valuation of SatoshiPay as the main contributor to the increase, so we invested, as you know, a couple of years ago initially and the valuation has risen steadily since that time. So, at the last valuation which SatoshiPay just raised some money on just a few days ago, £15 million, that has increased our NAV for SatoshiPay in our accounts to £4.7 million so that’s been the main factor.
We’ve also had a slight increase in the valuation of Sthaler which is a biometric payment business which is doing very well but we have a much smaller stake there, just under 1% but still, that’s doing well and we’re very happy with that company.
Finally, we’ve had the write down in Disruptive Tech Limited which we’ve had in the books since 2007, well before the current Board were in place. That’s unfortunately not delivered what we expected over the last few years and in particular in the last year there’s been quite a lot of negative news about DTL, so we’ve agreed with the advisors to write that down to its cost of £300,000.
So, that’s quite a significant write down in the year but overall our NAV is up quite significantly based on the SatoshiPay increase.
Q3: Investors will be aware of the planned reverse takeover of SatoshiPay which you’ve pulled out from, can you provide any background on the events that led up to that decision?
A3: We always felt SatoshiPay had the potential to be a listed company, and we still do, so it was always at the back of our minds that they might be potential reverse candidates. So, we were very encouraged at the beginning of last year that we were getting a lot of support from shareholders and investors to perhaps look at that, so we did take some soundings from potential investors during the middle of the year with a very positive response.
We took the decision in July last year to go ahead and do that transaction, unfortunately the market at the end of last year, as you all probably know, became quite difficult and in particular, blockchain, unfairly but because of cryptocurrencies, declined last year but that whole sector became somewhat unpopular.
So, rather than force a deal through, perhaps raise less money than we needed and at a lesser valuation than we felt was fair, we took the difficult decision to pull the RTO.
I think it has strengthened SatoshiPay and it’s now in a very good position. Internally it’s much stronger and it’s allowed the company to build up a very good strong team now. I think the end result, although disappointing, has been beneficial to SatoshiPay and obviously we know a lot more about the business now so overall, still negative but some very good things came out of it as well.
Q4: I think you mentioned this earlier, what is the current position with SatoshiPay because you announced a fundraise for them, that must be positive?
A4: Yes, perhaps Meinhard can talk about this, this is money raised by SatoshiPay of £1.7 million so far this year and they also raised £500,000 at the middle of last year on a £15 million valuation so that’s £2.2 million now they’ve raised. This is a very strong validation for our current value for SatoshiPay but perhaps Meinhard can carry on with that subject.
Q5: Meinhard, it has been a while since we last spoke, can you give our listeners a general update on how the business is doing and any changes in the business over the last year?
A5: Yes, so we have recently announced a partnership with Axel Springer which is the largest digital publisher in Europe, and we will work on micropayments for content with them so our core business product.
We’ve also released a wallet called Solar and it’s a wallet for the Stellar blockchain network which is open-source so everyone can review the code and make sure it’s safe and also, it’s easy to use and supports Stellar’s core features which is multi-signature and also the decentralised exchange that’s built into the Stellar network. So, we’re quite proud of that and we got very good feedback from the Stellar community and beyond and it’s also a very good sales tool to get into conversations with large companies.
In terms of the fundraise, we have quite an exciting new strategic investor which will be announced very shortly, in a few days, that was the biggest addition to this funding round essentially in the company. Things are going really well in terms of the fundraise despite quite bearish markets in the whole crypto and blockchain field in the recent months.
Q6: What are the plans for SatoshiPay in the current year?
A6: We appreciate that the blockchain market is evolving at a rapid pace and we are also adjusting our business to that.
We’ve identified a need for companies to use a platform, or businesses to use a platform that gives them easy access to blockchain technology in general and we will release a platform product that allows exactly that, so it translates business needs to a different blockchain ledger.
We will also support different blockchain, not just Stellar, and in the future, we will support AERGO which is a ledger mainly produced in South Korea and Aeternity which are friends of ours from Berlin and Liechtenstein. So, we will branch out into different blockchains and also give other companies access to our core technology, similar to an AWS, Amazon, for blockchain technology.
Q7: Just going back to the blockchain and crypto space, it was a difficult year last year, do you think we’ve reached the bottom, do you think we’ve turned a corner?
A7: It was a massive correction obviously throughout the year which was quite painful but well expected I think from everyone in the industry, we’re still at a higher level than we were before the massive spike at the beginning of last year.
I can’t give any investment advice, but I think we have reached some sort of bottom, it’s kind of clear when you look at all the graphs and the current market cap of all cryptocurrencies combined. The volumes are indicating that it’s not going away for sure and also, we see there’s more of a focus again on blockchain, not so much crypto, with the conversations we had with big enterprises are actually implementing blockchain parts in production products. They’re not just experimenting with it anymore, they use it in a way where it has higher efficiency for them and generates cost savings; so, it’s coming to the real world and we see that happening this year with a large number of announcements of actual production products by big companies.
Q8: Tony, Blue Star Capital’s shares have fallen over 40% since the company’s shares returned from suspension, do you feel this is fair or do you think the shares are undervalued?
A8: Well, I think if you look at what’s happened to our share price since we took the stake into SatoshiPay, it had a significant rise as people got very excited about blockchain and cryptocurrencies generally at the end of 2017. I think against the highs of 0.60p which probably in retrospect were too high, I think the current shares price, 0.15p does look undervalued.
Our shares in SatoshiPay are worth 0.23p, that’s been validated by SatoshiPay with a lot of private investors over the last 2 months, so I think that’s a very robust figure. Sthaler, the biometric payment business is doing very well, I think they’ll be raising more money very soon I suspect at a higher valuation than we have.
So, those two alone comes to 0.26p for us so I think at 0.15p, it does look very undervalued, obviously the market will dictate ultimately what’s it’s worth. Certainly, I can see quite a gap there between what we think these companies are worth and what the market is valuing them at.