Agronomics Limited

In a world where the consequences of climate change are becoming increasingly evident, Agronomics Limited stands out as a pioneer, leading the way towards a more sustainable future. The founders' vision, rooted in a deep desire to combat climate change through innovative food production, positions the company as not just a profitable investment but also a crucial player in the global movement towards a greener, more sustainable future. Investing in Agronomics Limited is not just about financial returns; it's about being part of a solution that our planet desperately needs.

Operations

How did the idea behind the company come about?

The inception of Agronomics Limited can be traced back to a profound concern for our planet's future. As the world grapples with the escalating threats of climate change, the founders recognised a pressing need to address one of the most significant contributors to global warming: the food production industry.

Traditional agriculture, particularly animal farming, has long been identified as a major source of greenhouse gas emissions, deforestation, and water consumption. The environmental footprint of producing meat through conventional means is staggering. For instance, producing one kilogram of beef requires thousands of liters of water, vast tracts of land, and results in considerable CO2 emissions.

The founders of Agronomics Limited were not just alarmed by these statistics but were also driven by a vision to revolutionise the way we produce and consume food. They understood that the global population's growing demands for protein couldn't be met sustainably through traditional means. There was a need for innovation, a need to think beyond the conventional.

With a deep-rooted desire to combat climate change and its detrimental effects, the founders embarked on a journey to explore alternative, sustainable methods of food production. Their mission was clear: to produce food that is not only nutritious and delicious but also kind to our planet.

A Solution for the Future

Agronomics Limited emerged as a beacon of hope in this context. The company's focus on alternative proteins, particularly lab-grown meats and plant-based alternatives, offers a solution that can drastically reduce the environmental impact of food production. By harnessing the power of science and technology, Agronomics Limited aims to create foods that require a fraction of the resources compared to traditional farming.

The founders' commitment to this cause is evident in every facet of the company. From research and development to partnerships and investments, every decision is guided by the dual objectives of sustainability and innovation.

Investing policy

The company will invest in opportunities within the life sciences sector, concentrating on, but not being limited to, environmentally friendly alternatives to the traditional production of meat and plant-based nutrition sources (“Clean Food”). The company will focus on investments that provide scalable and commercially viable opportunities.

The company will invest in equity and equity related products in both quoted companies, which offer the benefits of liquidity, and in unquoted companies which offer the attraction of additional capital gains upon completion of a successful IPO. The company may also invest in shares of collective investment schemes with exposure to the life science sector and in long-term equity anticipation securities the underlying securities of which will be based on life science sector securities and/or indices relating to the life science sector. The Fund may invest in life science sector debt. Investments in life science sector debt shall not exceed 15 per cent. of the net asset value (NAV) of the company.

The company will be ungeared. The company will be a passive investor.

The company aims to deliver capital growth by realising capital gains when it considers that the valuation of individual investments looks to be excessive or, as is often the case in this sector, as a result of trade sales.

Assets and investments will be held by the company directly or through the individual share custodians of the brokers used by the company to acquire the shares.

Any material variation to the investing policy will require the approval of Shareholders at a general meeting of the company in accordance with the AIM rules for companies.

Portfolio companies

ccc

Company	Product Focus	NAV Weighting
Liberation Labs	Contract Manufacturer for Precision Fermentation	11.4%
SuperMeat	Cultivated Poultry	9.7%
VitroLabs	Cultivated Leather	6.9%
Formo	Precision Fermentation - Dairy Proteins	5.7%
All G Foods	Precision Fermentation - Dairy Proteins	5.2%
Geltor	Precision Fermentation - Collagen	4.9%
BlueNalu	Cultivated Bluefin Tuna	4.6%
Meatable	Cultivated Pork and Beef	4.3%
The EVERY Company	Precision Fermentation - Egg Proteins	4.3%
Onego Bio	Precision Fermentation - Egg Proteins	3.7%
Solar Foods	Novel Air Protein	3.2%
Good Dog Food	Cultivated Pet Food	3.1%
The LIVEKINDLY Collective	Plant-based Meat	3.0%
Clean Food Group	Fermentation - Palm Oil	2.3%
GALY	Cultivated Cotton	1.9%
Mosa Meat	Cultivated Beef	1.9%
Tropic	Gene-Edited Crops	1.6%
CellX	Cultivated Chicken	1.4%
California Cultured	Cultivated Coffee and Cocoa	1.1%
Ohayo Valley	Cultivated Beef	0.8%
Bond Pet Foods	Precision Fermentation - Pet Food	0.5%
Rebellyous Foods	Plant-based Chicken and Equipment	0.2%
Legacy Investments	N/A	0.2%

Team

ccc

Board of directors

Non-executive chairman

Richard Reed was the co-Founder of Innocent Drinks, Europe’s largest and most environmentally sustainable juice company, successfully exited to Coca Cola in 2013 for $600m. Now co-founder of Jam Jar Investments, a consumer goods VC, with early-stage investments in category defining companies such as Deliveroo, Blue Bottle Coffee, Graze.com and Tails.com.

Executive chairman

Jim Mellon, based in the Isle of Man, is an author, entrepreneur and an investor with interests in a number of sectors. He has substantial real estate holdings in Germany and the Isle of Man, as well as holdings in private and public companies through his private investment company Burnbrae Group.

After leaving Oxford, where he studied Philosophy, Politics and Economics, he worked in Asia and the United States in two fund management companies, GT Management and Thornton Management (Asia) Limited, before founding Regent Pacific Group Limited in 1991, subsequently quoted on the Hong Kong Stock Exchange.

Mr. Mellon is the co-author of five books, all written with a view to identifying emerging thematic trends leading to investment opportunities. Notably, in his book Wake Up!, he forecast the global financial crisis of ’08-’09. His latest book played a small role in bringing ageing research into the mainstream, and lead to the formation of the company which is co-founder and Chairman, Juvenescence which is a leader in the field. Mr Mellon is a non-executive director of Condor Gold plc, the executive chairman of the board of Manx Financial Group plc, and the non-executive chairman of the board of SalvaRx Group Plc, all of which are listed on the Alternative Investment Market of the London Stock Exchange. He is also co-founder and Chairman of Regent Pacific Group Limited, (which is listed in Hong Kong), and a non-executive director of Portage Biotech Inc (which is dually listed on the Over the Counter Bulletin Board of NASDAQ of the United States and the Canadian Securities Exchange.

Non-executive director

Marisa Drew is the inaugural Chief Sustainability Officer (CSO) of Standard Chartered Bank Plc.  She assumed this role in July 2022 and is responsible for setting the bank’s sustainability strategy and the delivery of the firm’s commitment to net zero carbon emissions by 2050 as well as overseeing the sustainable finance client-facing activities of the bank.  At Standard Chartered, Ms Drew is a member of the Corporate, Commercial  Investment Banking (CCIB) Management Team and the Global Reputational Risk Committee.  She also serves as Chair of the Sustainability Forum and Co-Chair of the CCIB Diversity and Inclusion Council.

She previously held the CSO role for Credit Suisse and also held the role of CEO of the Sustainability Strategy, Advisory & Finance Group (SSAF) since 2020. Ms Drew Co-Chaired the Sustainability Leaders Committee and served on the ESG Steering Committee, the Climate Risk Strategy Steering Committee and the UK Reputational Risk Committee of the bank.

Before this, Ms Drew ran several businesses for Credit Suisse over her 19 years at the bank, including EMEA Investment Banking and Capital Markets.  Ms Drew also worked for Merrill Lynch for eleven years and relocated to London in 1999 where she was instrumental in the formation of their European Leveraged Finance Group. Prior to joining Merrill Lynch, Ms Drew worked for a private equity firm and the investment bank, Kidder Peabody.

Ms Drew serves as a Non-executive Director (NED) of Liberty Global Plc, the publicly listed telecoms and broadband operator, and was a NED for the Swiss publicly-listed telecoms company, Sunrise AG.

She further serves on the advisory boards of numerous leadership, sustainability, humanitarian, environmental and civil society organisations. She sits on the Advisory Board of the City of London Corporation, the Aspen Institute UK and the Milken Institute Center for Strategic  Philanthropy. She is also a member of the  FCA’s Markets Practitioner Panel and served on several High Level Working Groups (HLGs) sponsored  by the World Economic Forum and the UN, including as co-chair of the HLG for  Humanitarian Aid and the Oceans Panel. Ms Drew’s external activities also include the EMEA Advisory Board for the UK charity, Room-to-Read.

Ms Drew received a BA in Finance and Marketing with distinction from the University of Virginia’s McIntire School of Commerce in 1986 and an MBA with distinction from the University of Pennsylvania’s Wharton School in 1992.

Non-executive director

David Giampaolo is the founder and Chief Executive of Pi Capital. David previously founded, built up and sold several businesses and health club chains in the US and Europe. He has financial interests in several other businesses and industries and has been involved as an investor, advisor and board member of some of the largest and most successful health & fitness companies in the world including Fitness First, 24 Hour Fitness, Zumba Fitness and SARVA (India’s largest chain of yoga, mindfulness and beyond).

He is on the board of Coalition for Inclusive Capitalism, Chairman of Gousto and is a senior advisor to AMG (Affiliated Managers Group, Inc.) and BC Partners. David is a member of YPO and CEO global business organisations and a trustee of Speakers4Schools.org and Pro BonoEconomics.

Finance director

Denham Eke is the Managing Director of Burnbrae Group Limited, a private international asset management company. He began his career in stockbroking with Sheppards & Chase before moving into corporate planning for Hogg Robinson plc, a major multinational insurance broker. He is a director of many years’ standing of both public and private companies involved in the financial services, property, mining, and manufacturing sectors.

He is Chairman of Webis Holdings PLC, Co-Chairman of Billing Services Group Limited, and Chief Executive Officer of Manx Financial Group PLC – all quoted on the London AIM market.

Operations Team

Co-founder

Anthony Chow began his career working for ANZ Banking Group in Sydney Australia, where he worked as an analyst for four years in the corporate banking, leverage finance and private equity teams before moving to London in 2007 to work for Burnbrae Group. He has spent the past 15 years working directly with Jim Mellon, looking closely at investments within the field of biotech and pharma, inclusive of longevity. In 2018, he co-founded Agronomics alongside Jim Mellon. Anthony holds a Bachelor of Economics and Finance from The University of Sydney and a Post Graduate Diploma in Accounting from Macquarie University. He was awarded the CFA designation in 2010.

Anthony sits on the board or is a board observer to a number of cellular agriculture portfolio companies, including Formo, VitroLabs, California Cultured, Onego Bio, SuperMeat, All G Foods, HydGene and Meatable.

Principal

Laura Turner joined the team in July 2019. She holds a M.Chem Chemistry degree from the University of Oxford, and spent time during her fourth year masters project working in the Chemical Biology department at UC Berkeley, California, focused on the genetic modification of aldolase enzymes. This technology is identical to the precision fermentation tools utilised by companies within the field of cellular agriculture to produce valuable animal proteins via the genetic engineering of microbes. Laura conducts sector research, assists in due diligence of prospective companies and monitors deal flow amongst many other things.

Senior Associate

Hamood Al Fanna has a MBS in Finance from Massey University, BSc in Biotechnology from Sultan Qaboos University. Conducted research on production of cellulase from thermophilic bacteria. Over 5 years experience in venture capital, main focus in Biotechnology and Healthcare.

Head of investor relations

Melissa Moon joined Agronomics in January 2023 as Head of Investor Relations and Corporate Communications.

Previously Melissa held the post of Head of Marketing and Corporate Communications for Berkeley Energia, a Spanish uranium mining company, listed on LSE/ASX/BME which raised over $100 million of capital.

As an experienced Investor Relations Consultant in the Natural Resources sector, Melissa oversaw marketing strategy and corporate communications for numerous London and Australian listed companies – including the AIM IPO of Trident Royalties and the ASX IPO of GreenTech Metals.

Melissa holds an LLB Law (Hons) and the Certificate in Investor Relations from The IR Society.

Market

Total addressable market (TAM)

Here, the total addressable market (TAM) is defined as the global agricultural market, and based on a number of assumptions, it is estimated that the size of the market as of today (14th September 2023), in terms of revenue, is $2.7 trillion.

Serviceable addressable market (SAM)

Here, the serviceable available market (SAM) is defined as the global cultured agricultural market, and based on a number of assumptions, it is estimated that the size of the market as of today (14th September 2023) is $100 million in terms of revenue.

Serviceable obtainable market (SOM)

Here, the serviceable obtainable market (SOM) is defined as the US cultured agricultural market, and based on a number of assumptions, it is estimated that the size of the market as of today (14th September 2023), in terms of revenue, is $30 million.

Financials

ccc

Most recent

ccc

Interims

ccc

Profit and loss

	Period ended 31/12/2021 (unaudited) £	Period ended 31/12/2022 (unaudited) £
Income
Net income from financial instruments at fair value through profit and loss	3,492,270	19,374,741
	3,492,270	19,374,741
Operating expenses
Directors’ fees	(36,667)	(50,000)
Other operating costs	(769,363)	(800,227)
Unrealised foreign exchange losses	(299,579)	(437,700)
Profit from operating activities	2,386,661	18,086,814
Interest received	136,746	495,788
Profit before taxation	2,523,407	18,582,602
Taxation	-	-
Profit for the period	2,523,407	18,582,602
Other comprehensive income	-	-
Total comprehensive profit for the year	2,523,407	18,582,602
Basic profit per share (pence)	0.33	1.91
Diluted profit per share (pence)	0.21	1.32

Balance sheet

	Period ended 30/06/2022 (unaudited) £	Period ended 31/12/2022 (unaudited) £
Current assets
Financial assets at fair value through profit or loss	94,813,088	132,691,338
Cash deposits	20,024,175	8,109,785
Trade and other receivables	102,659	106,733
Cash and cash equivalents	31,458,326	21,715,465
Total assets	146,398,248	162,623,321
Equity
Share capital	968	991
Share premium	129,855,667	134,208,846
Share reserve	4,341,639	-
Accumulated earnings	9,714,629	28,297,231
Total equity	143,912,903	162,507,068
Current liabilities
Trade and other payables	2,485,345	116,253
Total liabilities	2,485,345	116,253
Total equity and liabilities	146,398,248	162,623,321

Cash flow

	Period ended 31/12/2021 (unaudited) £	Period ended 31/12/2022 (unaudited) £
Cash flows from operating activities
Profit for the period	2,523,407	18,582,602
Purchase of investments	(19,423,481)	(18,213,217)
Proceeds from sale of investments	696,456	-
Interest received – non-cash	(134,052)	(495,788)
Unrealised gains on investments	(3,492,270)	(19,374,741)
Unrealised foreign exchange losses on investments	245,537	(71,775)
Operating loss before changes in working capital	(19,584,403)	(19,572,919)
Change in trade and other receivables	378,324	(4,076)
Change in trade and other payables	87,813	(2,369,092)
Net cash flows from operating activities	(19,118,266)	(21,946,087)
Cash flows from financing activities
Proceeds from issue of shares	2,006,423	11,563
Share issue commissions paid	(43,600)	-
Cash interest received	-	277,273
Net cash flows from financing activities	1,962,823	288,836
Cash flows from investing activities
Bank deposits not considered cash and cash equivalents (net movement)		11,914,390
Net cash from investing activities	-	11,914,390
Decrease in cash and cash equivalents	(17,155,443)	(9,742,861)
Cash and cash equivalents at beginning of period	62,436,497	31,458,326
Cash and cash equivalents at the end of period	45,281,054	21,715,465

Full-year results

ccc

Profit and loss

	2021 £	2022 £
Income
Net income from financial instruments at fair value through profit and loss	10,669,991	6,423,869
	10,669,991	6,423,869
Operating expenses
Directors’ fees	(24,167)	(85,000)
Other operating costs	(795,131)	(1,753,868)
Foreign exchange gains/(losses)	(107,275)	6,513,031
Profit from operating activities	9,743,418	11,098,032
Other costs Consulting fee	(7,394,360)	(4,562,548)
Recoverable / (Irrecoverable) VAT	(1,478,872)	1,478,872
Profit after consulting fee	870,186	8,014,356
Interest received	149,655	344,023
Profit before taxation	1,019,841	8,358,379
Taxation	-	-
Profit for the year	1,019,841	8,358,379
Other comprehensive income	-	-
Total comprehensive profit for the year	1,019,841	8,358,379
Basic profit per share (pence)	0.22	0.95
Diluted profit per share (pence)	0.20	0.91

Balance sheet

	2021 £	2022 £
Assets
Financial assets at fair value through profit or loss	38,770,676	94,813,088
Cash deposits	-	20,024,175
Trade and other receivables	445,667	102,659
Cash and cash equivalents	62,436,497	31,458,326
Total assets	101,652,840	146,398,248
Equity and liabilities
Capital and reserves
Share capital	799	968
Share premium	91,278,407	129,855,667
Share reserve	7,394,360	4,341,639
Accumulated earnings	1,356,250	9,714,629
	100,029,816	143,912,903
Liabilities
Trade and other payables	1,623,024	2,485,345
Total liabilities	1,623,024	2,485,345
Total equity and liabilities	101,652,840	146,398,248

Cash flow

	2021 £	2022 £
Cash flows from operating activities
Operating profit for the year	1,019,841	8,358,379
Purchase of investments	(11,839,007)	(42,032,410)
Proceeds from sale of investments	628,632	696,456
Interest income	(149,655)	(341,329)
Realised and unrealised gains on investments	(10,669,991)	(12,362,604)
Consulting fee to be settled in shares	7,394,360	2,281,274
Operating outflows before changes in working capital	(13,615,820)	(43,400,234)
Change in trade and other receivables	(427,457)	318,395
Change in trade and other payables	1,687,123	873,841
Share issue costs settled in shares	187,000	-
Net cash used in operating activities	(12,169,154)	(42,207,998)
Cash flows from financing activities
Proceeds from issue of shares	73,367,580	32,057,951
Proceeds from loan	1,900,000	-
Share issue commissions paid	(3,451,026)	(861,791)
Cash interest received	-	57,842
Net cash from financing activities	71,816,554	31,254,002
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	59,647,400	(30,978,171)
Cash and cash equivalents at beginning of year	2,789,097	62,436,497
Cash and cash equivalents at the end of year	62,436,497	31,458,326

What are the assumptions used to estimate the financial forecasts?

Key inputs

Description	Value	Commentary
Revenue
What's the estimated current size of the total addressable market?	$2,700,000,000	Here, the total addressable market (TAM) is defined as the global agricultural market, and based on a number of assumptions, it is estimated that the size of the market as of today (14th September 2023), in terms of revenue, is $2.7 trillion.
What is the estimated company lifespan?	50 years	Currently, Agronomics employs around five people, making the company a small organisation (less than 10,000 employees). That said, given the company's mission, we expect the company to grow to a large organisation, and research shows that the average lifespan of a large corporation is around 50 years.
What's the estimated annual growth rate of the total addressable market over the lifecycle of the company?	3%	Research shows that the growth rate of the global agricultural market (i.e. the total addressable market) is similar to the growth rate of global gross domestic product, which has averaged (medium) around 3% per year in the last 20 years (2001 to 2022).
What's the estimated company peak market share?	0.10%	The Stockhub users estimate that especially given the leadership of the company, the peak market share of Agronomics is around 0.10%, and, therefore, suggests using the share amount here. As of 31st December 2022, Agronomics's current share of the market is estimated at around zero%.
Which distribution function do you want to use to estimate company revenue?	Gaussian	Research suggests that the revenue pattern of companies is similar to the pattern produced by the Gaussian distribution function (i.e. the revenue distribution is bell shaped), so the Stockhub users suggest using that function here.
What's the estimated standard deviation of company revenue?	5 years	Another way of asking this question is this way: within how many years either side of the mean does 68% of revenue occur? Based on Agronomics's current revenue amount (i.e. £12.68 million) and Agronomics's estimated lifespan (i.e. 50 years) and Agronomics's estimated current stage of its lifecycle (i.e. introduction stage), the Stockhub users suggest using five years (i.e. 68% of all sales happen within five years either side of the mean year), so that's what's used here.
Growth stages
How many main stages of growth is the company expected to go through?	4 stages	Research suggests that a company typically goes through four distinct stages of cash flow growth. Research also shows that incorporating those stages into the discounted cash flow model improves the quality of the model and, ultimately, the quality of the value estimation. In addition, research shows that a key way to determine the stage which a company is in is by examining the cash flow patterns of the company. A summary of the economic links to cash flow patterns can be found in the appendix of this report. The Stockhub users estimate that with Agronomics's operating cash flows negative (-), investing cash flows negative (-) and its financing cash flows positive (+), the company is in the first stage of growth (i.e. the 'introduction' stage), and, therefore, it has a total of four main stages of growth. Note, to account for one-off events, the three-year average (median) amount was used to calculate the cash flows.
What proportion of the company lifecycle is represented by growth stage 1?	30%	Research suggests 30%.
What proportion of the company lifecycle is represented by growth stage 2?	10%	Research suggests 10%.
What proportion of the company lifecycle is represented by growth stage 3?	20%	Research suggests 20%.
What proportion of the company lifecycle is represented by growth stage 4?	40%	Research suggests 40%.
Growth stage 1
Cost of goods sold as a proportion of revenue (%)	12.92%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Operating expenses as a proportion of revenue (%)	159.10%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Tax rate (%)	(3.07)%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Depreciation and amortisation rate (%)	56.26%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	8.59%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Working Capital Investment (WCInv) as a proportion of revenue (%)	50.93%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Net borrowing as a proportion of revenue (%)	21.75%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Interest expense as a proportion of revenue (%)	0.06%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 1). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Growth stage 2
Cost of goods sold as a proportion of revenue (%)	0.00%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Operating expenses as a proportion of revenue (%)	41.11%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Tax rate (%)	15.23%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Depreciation and amortisation rate (%)	79.52%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	1.13%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Working Capital Investment (WCInv) as a proportion of revenue (%)	52.01%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Net borrowing as a proportion of revenue (%)	0.27%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Interest expense as a proportion of revenue (%)	0.41%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Growth stage 3
Cost of goods sold as a proportion of revenue (%)	0.00%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Operating expenses as a proportion of revenue (%)	55.16%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Tax rate (%)	19.91%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Depreciation and amortisation rate (%)	18.93%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	2.21%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Working Capital Investment (WCInv) as a proportion of revenue (%)	(1.46)%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Net borrowing as a proportion of revenue (%)	(1.10)%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Interest expense as a proportion of revenue (%)	0.31%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Growth stage 4
Cost of goods sold as a proportion of revenue (%)	36.13%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Operating expenses as a proportion of revenue (%)	174.39%	Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Tax rate (%)	(1.94)%	Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 4). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Depreciation and amortisation rate (%)	47.29%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Fixed Capital Investment (FCInv) as a proportion of revenue (%)	6.25%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Working Capital Investment (WCInv) as a proportion of revenue (%)	2.13%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Net borrowing as a proportion of revenue (%)	0%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.
Interest expense as a proportion of revenue (%)	0%	Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4). Information on the peers and the calculation of the figure used here can be found in the appendix of this report.

Risks

As with any investment, investing in Agronomics carries a level of risk. Overall, based on the Agronomics' adjusted beta (i.e. 1.40), the degree of risk associated with an investment in Agronomics is 'medium'.

Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.5 and 1.5. Further information about the beta ratings can be found in the appendix section of this report.

The key risks can be found below. For us, currently, the biggest risk to the valuation of the company relates to ccc.

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.

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 £9,481,309 (2021: £3,877,068). Taking into account the Shellbay consulting fee, the increase/decrease in equity and profit would be £10,903,505 (2021: £4,458,628).

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.

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.

Valuation

Absolute Valuation

What's the expected return of an investment in the company?

The Stockhub users estimate that the expected return of an investment in the company over the next five years is ccc%, which equates to an annual return of ccc%. In other words, an £1,000 investment in the company is expected to return £ccc in five years time. The assumptions used to estimate the return figure can be found in the table below.

Assuming that a suitable return level over five years is ccc% per year or less, and Agronomics achieves its expected return level (of ccc%), then an investment in the company is considered to be an 'suitable' one.

What are the assumptions used to estimate the return?

Key inputs

Description	Value	Commentary
Which valuation model do you want to use?	Discounted cash flow	Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach, so that's the approach that he Stockhub users suggest to use here; nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the using the relative valuation approach (the valuation based on the relative approach can be found in the appendix of this report). Agronomics has never paid cash dividends, and on 7th February 2022, it said that it currently does not anticipate paying any cash dividends in the foreseeable future. Accordingly, the Stockhub users suggest using the free cash flow valuation method (rather than the dividend discount model).
Which financial forecasts to use?	Stockhub	The only available long-term forecasts (i.e. >15 years) are the ones that are supplied by the Stockhub users (the forecasts can be found in the financials section of this report), so the Stockhub users suggest using those.
Growth stage 1
Discount rate (%)	30%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	70%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 1) is 70%.
Growth stage 2
Discount rate (%)	15%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	80%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 2) is 80%.
Growth stage 3
Discount rate (%)	10%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	100%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 3) is 100%.
Growth stage 4
Discount rate (%)	10%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
Probability of success (%)	100%	Research suggests that a suitable rate for a company in this growth stage (i.e. stage 4) is 100%.
Other key inputs
What's the current value of the company?	£225 million	As at 13th June 2023, the current value of its company at £225 million.
Which time period do you want to use to estimate the expected return?	Between now and five years time	Research suggests that following a market crash, the average amount of time it takes for the price of a stock market to return to its pre-crash level (i.e. the recovery period) is at least three years. Accordingly, Stockhub suggests that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time.

Sensitivity analysis

The main inputs that result in the greatest change in the expected return of the Agronomics investment are, in order of importance (from highest to lowest):

1. The size of the total addressable market (the default size is $2.7 trillion);
2. Agronomics peak market share (the default share is 0.10%); and
3. The discount rate (the default time-weighted average rate is 12.5%).

The impact of a 50% change in those main inputs to the expected return of the Agronomics investment is shown in the table below.

Agronomics investment expected return sensitivity analysis

Main input	50% worse	Unchanged	50% better
The discount rate	ccc%	ccc%	ccc%
The size of the total addressable market	ccc%	ccc%	ccc%
Agronomics peak market share	ccc%	ccc%	ccc%

Appendix

ccc

Transactions

Name	Funding type	Funded company	Funding amount raised (USD)	Investment	Funding round date	Funding round investor

Number of Securities in Issue

The company’s issued share capital consists of 993,152,034 fully paid Ordinary Shares of £0.000001 each (‘Ordinary Shares’), each share having equal voting rights.

The Company does not hold any Ordinary Shares in treasury and therefore the total number of Ordinary Shares with voting rights is 993,152,034.

(Last updated: 31st July 2023)

Name	Number of Ordinary Shares	% of Share Capital
Jim Mellon	154,553,366	15.56%
Hargreaves Lansdown (Nominees)	86,850,033	8.74%
BlackRock, Inc.	62,133,460	6.24%
Canaccord Genuity Wealth Management	54,970,000	5.53%
Interactive Investor Services	50,755,773	5.11%
JPMorgan Chase Bank	39,239,575	3.95%
Jupiter Asset Management	23,069,979	2.32%

Directors’ Shareholdings

As of 31st July 2023.

Name	Number of Ordinary Shares	% of Share Capital
Jim Mellon	154,553,366	15.56%
Richard Reed	6,354,412	0.64%
David Giampaolo	2,434,783	0.25%
Denham Eke	739,390	0.07%

Cost of equity

Cost of equity

Input	Input value	Additional information
Risk-free rate (%)	4.297%	Here, the risk free rate is the US 30 year treasury bond, and is calculated as at 3rd September 2023. Research suggests that for the risk-free rate, it's best to use one that has the same or similar maturity to the estimated remaining lifespan of the company. Here, we have assumed that the estimated lifespan of the company is 30 years years or longer, so we have used the longest maturity, which is 30 years.
Beta	1.40	Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta.
Equity risk premium (%)	7.98%	Research suggests that for the region of equity risk premium, it's best to use one that is the same or similar to the region of the beta market portfolio. Here, the region of the beta market portfolio is the world/global, so we have used the world/global region for the equity risk premium, and is calculated as at 5th January 2023.
Cost of equity (%)	15.469%	Cost of equity = Risk-free rate + Beta x Equity risk premium.

Relative valuation

As noted earlier in this report, research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach, so that's the approach that Stockhub suggests using to determine the estimated value of the company (the valuation based on the discounted cash flow approach can be found in the valuation section of this report); nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the relative valuation approach.

What's the expected return of an investment in Agronomics using the relative valuation approach?

Stockhub estimates that the expected return of an investment in Agronomics over the next 12-months is ccc%. In other words, an £1,000 investment in the company is expected to return £ccc in one year time. The assumptions used to estimate the return figure can be found in the table below.

What are the assumptions used to estimate the return figure?

Key inputs

Description	Value	Commentary
Which type of multiple do you want to use?	Book value growth-adjusted price-to-book value metric	The price-to-book value is really the only available commonly used value, so we suggest using that. To help compare peers at different stages of their business lifecycle, we suggest using the book value growth-adjusted price-to-book value.
In regards to the book value growth-adjusted price-to-book value multiple, for the book value figure, which year to you want to use?	Year 1	Research suggests that when using the relative valuation approach, it's best to use a time period of 12 months or less. Accordingly, for the book value figure, we suggest using Year 1, which is on 12th September 2024.
In regards to the book value growth-adjusted price-to-book value multiple, what multiple figure do you want to use?	0.5x	Here, we suggest using a multiple of 0.50x, which is in-line with the multiples of Agronomics' peers (for details on the peers can be found in the table below).
What is the estimated compound annual growth rate of the book value between one year from now and the most recent value?	46.37%	One year from now is 12th September 2024, and the most recent book value date is 31st December 2022. For simplicity, we based the estimate on the CAGR of Agronomics over the last five years, which is 46.37%. The most recent value is $248,178,354 (as at 31st December 2022).
What's the current market capitalisation of the company?	£205.44 million	As at 12th September 2023, the market capitalisation of Agronomics is £205.44 million.
Which time period do you want to use to estimate the expected return?	Between now and one year time	Research suggests that when using the relative valuation approach, it's best to estimate the expected return of the company between now and one year time.

Sensitivity analysis

The main inputs that result in the greatest change in the expected return of the Agronomics investment are, in order of importance (from highest to lowest):

1. The compound annual growth rate of the Agronomics book value (the default figure is ccc%);
2. The price-to-book value multiple (the default multiple cccx); and
3. Agronomics most recent book value figure (the default figure is $ccc).

The impact of a 50% change in those main inputs to the expected return of the Agronomics investment is shown in the table below.

Agronomics investment expected return sensitivity analysis

Main input	50% worse	Unchanged	50% better
The compound annual growth rate of the Agronomics book value between one year ahead and the most recent value	113%	185%	266%
The price-to-book value multiple	42%	185%	327%
Agronomics most recent book value figure	42%	185%	327%

Local peers - BICS Best Fit (Algorithm)

Name	Ticker	2Y Corr	Mkt Cap (USD)	BF P/E	BF EV/EBITDA	BF EV/EBIT	BF EV/Rev	Last fiscal P/BV
Agronomics Limited	ANIC LN
Publicly listed companies in the broader alternative protein sector
Beyond Meat
Oatly
The Very Good Food Company
Investment firms or funds that focus on the alternative protein or cellular agriculture space
New Crop Capital	N/A
Blue Horizon Ventures	N/A
Stray Dog Capital	N/A
Companies in the cellular agriculture or alternative protein space which might be considered peers or competitors to the portfolio companies of Agronomics
Memphis Meats	N/A
Mosa Meat	N/A
Impossible Foods	N/A
Beyond Meat	N/A
Perfect Day	N/A
Geltor	N/A
Mean (Including ANIC LN)
Current Premium to Comps Mean

Beta risk profile

Beta value	Risk rating
0 to 0.50	Low
0.50 to 1.50	Medium
1.50 to 3.00	High
3.00 and above	Extremely high

Agronomics beta calculation

Agronomics beta calculation

Date	iShares MSCI World ETF unit price (USD)	Agronomics share price (GBP)	iShares MSCI World ETF unit price change (%)	Agronomics share price change (%)
01/10/2018	85.25	3.25
01/11/2018	86.21	3.25	1.13%	0.00%
01/12/2018	78.87	3.45	-8.51%	6.15%
01/01/2019	84.96	3.65	7.72%	5.80%
01/02/2019	87.49	4.15	2.98%	13.70%
01/03/2019	88.79	4.35	1.49%	4.82%
01/04/2019	92.09	4.5	3.72%	3.45%
01/05/2019	86.76	4.5	-5.79%	0.00%
01/06/2019	91.02	7.75	4.91%	72.22%
01/07/2019	91.86	8.375	0.92%	8.06%
01/08/2019	89.84	9.25	-2.20%	10.45%
01/09/2019	91.78	6.75	2.16%	-27.03%
01/10/2019	94.12	5.75	2.55%	-14.81%
01/11/2019	96.76	5.825	2.80%	1.30%
01/12/2019	98.78	9.25	2.09%	58.80%
01/01/2020	97.73	7.875	-1.06%	-14.86%
01/02/2020	89.67	6.125	-8.25%	-22.22%
01/03/2020	77.93	5.25	-13.09%	-14.29%
01/04/2020	86.36	6.85	10.82%	30.48%
01/05/2020	90.7	7.35	5.03%	7.30%
01/06/2020	92.14	5.25	1.59%	-28.57%
01/07/2020	96.65	5	4.89%	-4.76%
01/08/2020	102.96	4.85	6.53%	-3.00%
01/09/2020	99.52	5	-3.34%	3.09%
01/10/2020	96.53	5.5	-3.00%	10.00%
01/11/2020	108.94	7.1	12.86%	29.09%
01/12/2020	112.41	12	3.19%	69.01%
01/01/2021	111.49	13	-0.82%	8.33%
01/02/2021	114.27	17.2	2.49%	32.31%
01/03/2021	118.49	28.3	3.69%	64.53%
01/04/2021	123.61	28.8	4.32%	1.77%
01/05/2021	125.6	23.7	1.61%	-17.71%
01/06/2021	126.57	24	0.77%	1.27%
01/07/2021	128.83	23	1.79%	-4.17%
01/08/2021	132.02	19.1	2.48%	-16.96%
01/09/2021	126.46	27.5	-4.21%	43.98%
01/10/2021	133.84	28	5.84%	1.82%
01/11/2021	131.1	24.5	-2.05%	-12.50%
01/12/2021	135.32	22.5	3.22%	-8.16%
01/01/2022	128.32	18	-5.17%	-20.00%
01/02/2022	124.58	17.8	-2.91%	-1.11%
01/03/2022	128.16	19.2	2.87%	7.87%
01/04/2022	117.42	17.9	-8.38%	-6.77%
01/05/2022	117.94	19	0.44%	6.15%
01/06/2022	106.88	16	-9.38%	-15.79%
01/07/2022	115.57	17.64	8.13%	10.25%
01/08/2022	110.28	17.4	-4.58%	-1.36%
01/09/2022	99.95	12.5	-9.37%	-28.16%
01/10/2022	107.42	15	7.47%	20.00%
01/11/2022	115.44	14.5	7.47%	-3.33%
01/12/2022	109.25	11.75	-5.36%	-18.97%
01/01/2023	117.01	13.6	7.10%	15.74%
01/02/2023	113.98	12.25	-2.59%	-9.93%
01/03/2023	117.67	10.9	3.24%	-11.02%
01/04/2023	119.79	11.25	1.80%	3.21%
01/05/2023	118.6	10.25	-0.99%	-8.89%
01/06/2023	124.52	10.4	4.99%	1.46%
01/07/2023	128.54	10.15	3.23%	-2.40%
01/08/2023	125.7	9.7	-2.21%	-4.43%
14/09/2023	124.52	10	-0.94%	3.09%

Agronomics beta and adjusted beta

Beta type	Agronomics
Beta	1.60
Adjusted beta	1.40