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Share Name Share Symbol Market Type Share ISIN Share Description
Vela Technologies Plc LSE:VELA London Ordinary Share GB00BYZ9XC29 ORD 0.01P
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Media 0.0 0.4 0.0 - 3

Vela Technologies PLC Final results for the year ended 31 March 2022

28/09/2022 7:02am

UK Regulatory (RNS & others)


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TIDMVELA

RNS Number : 9153A

Vela Technologies PLC

28 September 2022

28 September 2022

Vela Technologies PLC (AIM: VELA)

("Vela" or "the Company")

Final results for the year ended 31 March 2022

The Board of Vela Technologies plc (AIM: VELA) is pleased to announce the Company's final results for the year ended 31 March 2022.

Vela's Annual Report and Accounts for the year ended 31 March 2022 ("Annual Report") and the Notice of Annual General Meeting ("AGM") will be posted to shareholders today.

The Company's Annual Report and Notice of AGM will be available shortly on the Company's website at http://www.velatechplc.com/ .

The AGM will be held at 15 Victoria Mews, Mill Field Road, Cottingley Business Park, Bingley, West Yorkshire BD16 1PY at Noon on 25 October 2022.

Highlights:

Financial:

   --      Net assets increased to GBP7,378,151 compared to GBP7,201,812 at 31 March 2021. 

-- Cash fell to GBP958,000 from GBP2,147,000 with the main contributors being investments made (net of disposals) during the period of GBP2,069,000, administrative expenditure of GBP354,000 (2021- GBP394,000) and proceeds from shareholders' exercise of warrants of GBP1,234,000.

-- Loss of GBP1,078,202 (after GBP685,000 fair value reduction) compared to a profit of GBP379,775 (after GBP666,000 fair value increase in the previous comparable period), reflecting the changes in values within the Company's investment portfolio.

Operational:

-- Vela invested GBP2,331,000 in five companies and realised GBP262,000 from the sale of shares in two of its investee companies.

   --      Emma Wilson was appointed to the Board of Vela. 

Post Period Highlights:

-- On the listing on AIM of EnSilica in May 2022, Vela received shares worth GBP882,394 from its investment in January 2022 of GBP750,000 in convertible loans.

-- St George Street Capital is progressing with commercialisation talks for AZD1656 and also saw the ARCADIA Phase 2 clinical trial published in the Lancet eClinicalMedicine.

   --      Antony Laiker re-joined the board as a non-executive director. 

The Board will continue to update investors on the portfolio movements and valuation in the Company's quarterly updates, the next one being due for the quarter ended 30 September 2022.

chairman's statement

for the year ended 31 March 2022

I am pleased to present the Chairman's statement for the year ended 31 March 2022.

As shareholders will be aware, the period covered by these accounts was overshadowed by two significant events. First, the on / off Covid-19 restrictions which dominated much of the financial year, and second the invasion of Ukraine at the end of the financial year.

On top of this the macroeconomic headwinds were getting stronger with supply chain interruptions, the prospect of a substantial rise in interest rates coupled with the anticipation of a steep rise in inflation. These have weighed on stock markets in the last quarter of the period covered by these accounts, particularly impacting smaller companies and therefore had an impact on Vela's listed investment portfolio.

Despite these negatives, during the final quarter EnSilica was reaching the final phase of its listing on AIM, with the IPO completing soon after the end of the financial year. This resulted in Vela receiving shares worth GBP882,394 at the IPO price, compared to the original investment of GBP750,000 in convertible loan notes at the beginning of 2022.

As announced on 18 August 2022, the Board of Vela received a further update from St George Street Capital (SGSC) regarding ongoing progress with commercialisation talks for AZD1656 and also the positive news that the results from the ARCADIA Phase 2 clinical trial had been published in the Lancet eClincialMedicine. The Board of Vela continues to seek further representations from SGSC regarding the commercialisation and trials of AZD1656. Vela holds an economic interest in the commercialisation of AZD1656, details of which were included in the announcement published by Vela on 20 October 2020.

Set against this, the overall value of a number of Vela's listed investments are languishing. There have been some positive signs emanating from a few investee companies (including, EnSilica Plc, Northcoders Group plc, Skillcast Group plc and Cornerstone FS PLC), who have all produced upbeat news, which we anticipate will continue.

Just before the year end Vela acquired a 28.82% stake in Igraine Plc. Upon this acquisition, Vela became the largest single shareholder in Igraine.

During the year we welcomed Emma Wilson to the board. Emma is a Chartered Accountant and her experience and support has already proved extremely valuable to the Company.

Post the year end, Antony Laiker re-joined the board as a non-executive director. As a significant shareholder and with extensive experience and background in the small-cap market, as well as knowledge of Vela from previously being on the board as an executive director, he will have an important role as Vela seeks to create shareholder value.

Turning to the financials, Vela reported a loss of GBP1,078,202 compared to a profit of GBP379,775 in the previous comparable period. Almost all of this difference, from an accounting perspective, reflects a GBP685,000 reduction in fair value of investments in the year being reported on, compared to a similar level of upwards fair value adjustment in the previous financial year. Net assets increased to GBP7,378,151 compared to GBP7,201,812 at 31 March 2021 and cash fell from GBP2,147,000 at the beginning of the period to GBP958,000 at the balance sheet date, reflecting investments made (net of disposals) during the period of GBP1,318,776 and administrative expenses in the period.

Subsequent to the year end, on 2 September 2022, Vela announced a strategic update to shareholders in which, the board outlined the reinstatement of the previous strategic plans from 2019 in which Vela would be seeking other larger corporate transactions but would not divert from its current investing policy.

The board will continue to update shareholders, in line with regulatory guidelines, via its quarterly investment updates and regulatory announcements.

The directors would like to thank shareholders for their continued support.

strategic report

for the year ended 31 March 2022

Business review

At the period end the Company held cash of GBP958,000 (31 March 2021: GBP2,147,000). It continues to keep administrative costs to a minimum so that it has sufficient resources to cover its ongoing running costs while retaining the maximum funds for further investments.

During the year, Vela received additional equity funding of GBP1,233,504 (net of directly attributable issue costs) as a result of the exercise of warrants by shareholders. Future equity funding can only be raised if shareholders grant the right to the Board at the next AGM (this is as a result of shareholders voting against certain resolutions at the AGM held in January 2022). Details of shares issued during the year are provided in notes 13 to the financial statements.

The Company's loss for the year was GBP1,078,202 (2021: profit of GBP380,000). This loss has arisen primarily from fair value movements on the Company's investment portfolio. The valuation of the investment portfolio at 31 March 2022 was GBP2,603,000 (31 March 2021: GBP1,969,000), an increase of GBP634,000 on 2021. This resulted from the investment of GBP1,580,705 in new and 'follow-on' investments, disposals generating proceeds of GBP261,929, net of a decrease in the valuation of the portfolio of GBP684,671. In addition to these investments the Company holds a financial asset (St George Street Capital) valued at GBP2,350,000 (31 March 2021: GBP2,350,000) and held at the year-end a GBP750,000 (2021: GBPnil) convertible loan note in EnSilica Plc.

We update shareholders on investee company performance through the dissemination of investee company regulatory announcements. Additionally, having started in February of this year, the Board has continued to publish quarterly investment updates on the performance of the investment portfolio and on acquisitions and sales. This quarterly investment update will continue. Moreover, detailed information on the investment portfolio is maintained on the Company's website.

During the year the company made significant investments in Cornerstone FS PLC (GBP150,000), Northcoders Group plc (GBP750,000), Skillcast Group plc (GBP250,000), EnSilica plc (GBP750,000) and Igraine plc (GBP430,705). Further details and key points of the investments made and of the performance of the Company's investee companies are detailed in note 8 to the financial statements.

The Company had two employees and during the period had a Board of one male Executive Director, one female Executive Director and one male Non-Executive Director.

Principal risks and uncertainties

The preservation of its cash balances and the management of its capital resources remain the key concerns for the Company. Further information about the Company's principal risks, covering currency, credit, liquidity and capital, is detailed in note 15 to the financial statements.

The Company remains committed to keeping operational costs to a minimum.

Approved by the Board of Directors on 27 September 2022; and signed on its behalf by:

Brent Fitzpatrick MBE

Non-Executive Chairman

For further information, please contact:

Vela Technologies plc Tel: +44 (0) 7410 886 830

   Brent Fitzpatrick, Non-Executive Chairman                   Email:info@velatechplc.com 

James Normand, Executive Director

   Allenby Capital Limited (Nominated Adviser)             Tel: +44 (0) 20 3328 5656 

Nick Athanas / Piers Shimwell

   Peterhouse Capital Limited (Broker)                            Tel: +44 (0) 20 7469 0930 

Lucy Williams / Duncan Vasey / Eran Zucker / Lauren Riley

 
 
 Novus Communications (PR and IR Adviser) Tel: 
  +44 (0) 20 7448 9839 
 Alan Green / Jacqueline Briscoe 
 

About Vela Technologies

Vela Technologies plc (AIM: VELA) is an investing company focused on early stage and pre-IPO long term disruptive technology investments. Vela's investee companies have either developed ways of utilising technology or are developing technology with a view to disrupting the businesses or sector in which they operate. Vela Technologies will also invest in already-listed companies where valuations offer additional opportunities.

For more information, please visit: https://www.velatechplc.com

Follow us on Twitter at @velatech_plc

statement of comprehensive income

for the year ended 31 March 2022

 
 
 
                                                Year ended   Year ended 
                                                  31 March     31 March 
                                                      2022         2021 
                                        Notes      GBP'000      GBP'000 
-------------------------------------  ------  -----------  ----------- 
 Revenue                                    1            -            - 
 Administrative expenses                    2        (347)        (421) 
 Fair value movements 
 - on investments                           8        (685)          666 
 - on derivative instruments               11         (75)          138 
 Operating ( loss) / profit                 2      (1,107)          383 
 Finance income                             4           29           16 
 Finance expense                            4            -         (19) 
-------------------------------------  ------  -----------  ----------- 
 (Loss) / profit before tax                        (1,078)          380 
 Income tax                                 6            -            - 
-------------------------------------  ------  -----------  ----------- 
 (Loss) / profit for the year 
  and total comprehensive income 
  attributable to the equity holders               (1,078)          380 
-------------------------------------  ------  -----------  ----------- 
 
 
 (Loss) / earnings per share 
 Basic and diluted (loss) / earnings 
  per share (pence)                         7      (0.007)        0.005 
-------------------------------------  ------  -----------  ----------- 
 

statement of financial position

as at 31 March 2022

 
                                             31 March   31 March 
                                                 2022       2021 
                                     Notes      GBP '   GBP '000 
                                                  000 
----------------------------------  ------  ---------  --------- 
 Non-current assets 
 Investments                             8      2,603      1,969 
 Trade and other receivables             9      3,024      2,995 
----------------------------------  ------  ---------  --------- 
 T otal non-current assets                      5,627      4,964 
 
 Current assets 
 Trade and other receivables            10        751          1 
 Derivative financial instruments       11         63        138 
 Cash and cash equivalents              14        958      2,147 
----------------------------------  ------  ---------  --------- 
 Total current assets                           1,772      2,286 
----------------------------------  ------  ---------  --------- 
 Total assets                                   7,399      7,250 
----------------------------------  ------  ---------  --------- 
 Equity and liabilities 
 Equity 
 Called up share capital                13      3,291      3,048 
 Share premium account                          7,594      6,603 
 Share option reserve                              65        151 
 Retained earnings                            (3,572)    (2,600) 
----------------------------------  ------  ---------  --------- 
 Total equity                                   7,378      7,202 
----------------------------------  ------  ---------  --------- 
 Current liabilities 
 Trade and other payables               12         21         48 
 Total current liabilities                         21         48 
----------------------------------  ------  ---------  --------- 
 Total equity and liabilities                   7,399      7,250 
----------------------------------  ------  ---------  --------- 
 

These financial statements were approved by the Board, authorised for issue and signed on their behalf on 27 September 2022 by:

Brent Fitzpatrick MBE

Non-Executive Chairman

Company registration number: 03904195

cash flow statement

for the year ended 31 March 2022

 
                                                  Year ended   Year ended 
                                                    31 March     31 March 
                                                        2022         2021 
                                          Notes      GBP'000      GBP'000 
---------------------------------------  ------  -----------  ----------- 
 Operating activities 
  (Loss) / profit before tax                         (1,078)          380 
 Share-based payment                                      20           21 
 Fair value movements on investments          8          685        (666) 
 Fair value movement on derivative 
  assets                                                  75        (138) 
 Finance expenses                                          -           19 
 Finance income                                         (29)         (16) 
 Decrease in receivables                                   -           12 
 Decrease in payables                                   (27)          (6) 
 Total cash flow from operating 
  activities                                           (354)        (394) 
---------------------------------------  ------  -----------  ----------- 
 Investing activities 
 Proceeds from disposal of investments                   262          512 
 Consideration for purchase of 
  financial asset                                          -      (1,250) 
 Acquisition of loan notes                             (750)            - 
 Consideration for purchase of 
  investments                                        (1,581)      (1,248) 
 Total cash flow from investing 
  activities                                         (2,069)      (1,986) 
---------------------------------------  ------  -----------  ----------- 
 Financing activities 
 I nterest paid                                            -         (19) 
 Proceeds from the issue of ordinary 
  share capital                                        1,234        4,537 
 Total cash flow from financing 
  activities                                           1,234        4,518 
---------------------------------------  ------  -----------  ----------- 
 Net (decrease) / increase in 
  cash and cash equivalents                          (1,189)        2,138 
 Cash and cash equivalents at 
  start of year                                        2,147            9 
---------------------------------------  ------  -----------  ----------- 
 Cash and cash equivalents at 
  the end of the year                        14          958        2,147 
---------------------------------------  ------  -----------  ----------- 
 
 Cash and cash equivalents comprise: 
 Cash at bank                                            958        2,147 
---------------------------------------  ------  -----------  ----------- 
 Cash and cash equivalents at 
  end of year                                14          958        2,147 
---------------------------------------  ------  -----------  ----------- 
 
 

statement of changes in equity

for the year ended 31 March 2022

 
 
                                                                   Share 
                                 Share      Share     Retained    Option     Total 
                               Capital    Premium     Earnings   Reserve    Equity 
                                   GBP   GBP '000          GBP   GBP'000       GBP 
                                  '000                    '000                '000 
----------------------------  --------  ---------  -----------  --------  -------- 
 Balance at 1 April 2021         3,048      6,603      (2,600)       151     7,202 
 Transactions with owners 
 Share-based payment                 -          -            -        20        20 
 Lapse of share options in 
  the period                         -          -          106     (106)         - 
 Issue of share capital            243        991            -         -     1,234 
----------------------------  --------  ---------  -----------  --------  -------- 
 Transactions with owners          243        991          106      (86)     1,254 
----------------------------  --------  ---------  -----------  --------  -------- 
 Total comprehensive income 
  for the year                       -          -      (1,078)         -   (1,078) 
 Balance at 31 March 2022        3,291      7,594      (3,572)        65     7,378 
----------------------------  --------  ---------  -----------  --------  -------- 
 
 Balance at 1 April 2020         1,749      1,715      (2,980)       130       614 
----------------------------  --------  ---------  -----------  --------  -------- 
 Transactions with owners 
 Share-based payment                 -          -            -        21        21 
 Issue of share capital          1,299      4,888            -         -     6,187 
 Transactions with owners        1,299      4,888            -        21     6,208 
 Total comprehensive income 
  for the year                       -          -          380         -       380 
 
 Balance at 31 March 2021        3,048      6,603      (2,600)       151     7,202 
----------------------------  --------  ---------  -----------  --------  -------- 
 

notes to the financial statements

for the year ended 31 March 2022

1 Revenue and segmental information

The Company is an investing company and as such there is only one identifiable operating segment, being the purchase, holding and sale of investments. Similarly, the Company operates in only a single geographic segment, being the United Kingdom. The results and balances and cash flows of the segment are as presented in the primary statements.

2 (Loss) / profit from operations

The (loss) / profit from operations is stated after charging / (crediting):

 
                                            31 March   31 March 
                                                2022       2021 
                                             GBP'000    GBP'000 
----------------------------------------   ---------  --------- 
 Auditor's remuneration for the 
  audit                                           18         16 
 Auditor's remuneration for corporation 
  tax compliance services                          2          2 
 Fair value movements on investments             685      (666) 
 Share-based payment                              20         21 
-----------------------------------------  ---------  --------- 
 

3 Staff costs

The average number of persons employed or engaged by the Company (including Directors) during the period was as follows:

 
                                    31 March   31 March 
                                        2022       2021 
---------------------------------  ---------  --------- 
 Directors and senior management           3          2 
 Total                                     3          2 
---------------------------------  ---------  --------- 
 

The above included two individuals (2021 - none) employed by the Company and one (2021 - two) engaged under the terms of a letter of appointment.

The aggregate amounts charged by these persons were as follows:

 
                                31 March   31 March 
                                    2022       2021 
                                 GBP'000    GBP'000 
----------------------------   ---------  --------- 
 Wages and salaries                   97          - 
 Social security costs                12          - 
 Amounts invoiced                     62        174 
 Share-based payment charge           20         21 
                                     191        195 
 ----------------------------  ---------  --------- 
 

The amounts noted above relate to the Company's directors. Further details of directors' remuneration is provided in note 5.

4 Finance income and expense

Finance income

 
                              31 March   31 March 
                                 2 022       2021 
                               GBP'000    GBP'000 
---------------------------  ---------  --------- 
 Other interest receivable          29         16 
 Total finance income               29         16 
---------------------------  ---------  --------- 
 

Income of GBP29,000 (2021: GBP16,000), represents the unwinding of the discount on the Company's loan receivable from BIXX Tech Limited. Further details are provided in note 9.

Finance expense

 
                           31 March   31 March 
                               2022       2021 
                            GBP'000    GBP'000 
-----------------------  ----------  --------- 
 Bond interest                    -         19 
 Total finance expense            -         19 
-----------------------  ----------  --------- 
 

5 Directors and senior management

Directors' remuneration

 
                                               Year ended 31 March 2022 
                                   ------------------------------------------------ 
                                     Salary      Fees   Pension    Equity     Total 
                                    GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
 N B Fitzpatrick                          -        62         -         -        62 
 J Normand                               62         -         -         -        62 
 E Wilson (appointed 1 September 
  2021)                                  35         -         -         -        35 
---------------------------------  --------  --------  --------  --------  -------- 
                                         97        62         -         -       159 
---------------------------------  --------  --------  --------  --------  -------- 
 
 
                                              Year ended 31 March 2021 
                                ---------------------------------------------------- 
                                   Salary       Fees   Pension    Equity       Total 
                                  GBP'000    GBP'000   GBP'000   GBP'000     GBP'000 
 N B Fitzpatrick                         -        62         -         -            62 
 A Laiker (resigned 26 August 
  2020)                                  -        67         -         -            67 
 J Normand (appointed 26 
  August 2020)                           -        45         -         -            45 
------------------------------  ----------  --------  --------  --------  ------------ 
                                         -       174         -         -           174 
 ----------                                 --------  --------  --------  ------------ 
 
 

Directors ' and senior management ' s interests in shares

The Directors who held office at 31 March 2022 held the following shares:

 
                                           31 March    31 March 
                                               2022        2021 
---------------------------------------  ----------  ---------- 
 N B Fitzpatrick                          1,500,000   1,500,000 
 J Normand                                        -           - 
 E Wilson (appointed 1 September 2021)            -           - 
---------------------------------------  ----------  ---------- 
 

The total share-based payment costs in respect of options granted are:

 
              31 March   31 March 
                  2022       2021 
               GBP'000    GBP'000 
 Directors          20         21 
-----------  ---------  --------- 
 

As at 31 March 2022, the total number of outstanding options held by the Directors over ordinary shares was 278,444,780 (2021: 284,562,427), representing 1.7 per cent of the Company's issued share capital. A total of 6,117,647 options lapsed in the period.

Further details regarding the options issued are provided in note 17.

6 Tax

There was no charge to current or deferred taxation in the current or prior period.

A deferred tax asset relating to losses carried forward has not been recognised due to uncertainty over the existence of future taxable profits against which the losses can be used. The Company has unused tax losses of approximately GBP5.3m (2021: GBP4.4m).

Tax reconciliation

 
                                            31 March   31 March 
                                                2022       2021 
                                             GBP'000    GBP'000 
-----------------------------------------  ---------  --------- 
 (Loss) / profit before tax                  (1,078)        380 
 Tax at 19% on (loss) / profit before 
  tax                                          (205)         72 
 Effects of: 
 Loss relief carried / (brought) forward         205       (72) 
-----------------------------------------  ---------  --------- 
 Total tax expense                                 -          - 
-----------------------------------------  ---------  --------- 
 

7 (Loss) / profit per share

(Loss) / profit per share has been calculated on a loss after tax of GBP1,078,000 (2021: profit after tax of GBP380,000) and the weighted average number of shares in issue for the year of 15,091,929,620 (2021: 7,383,146,119).

8 Investments

 
                                             31 March   31 March 
                                                 2022       2021 
                                              GBP'000    GBP'000 
------------------------------------------  ---------  --------- 
 Opening fair value                             1,969      1,196 
 Additions during the year at cost              1,581      1,248 
 Fair value of disposals made during 
  the year                                      (262)    (1,141) 
 Movement in fair value charged to profit 
  or loss                                       (685)        666 
------------------------------------------  ---------  --------- 
 Closing balance                                2,603      1,969 
------------------------------------------  ---------  --------- 
 
 

Investments are held at fair value through profit and loss using a three-level hierarchy for estimating fair value.

Note 15 provides details of the three-level hierarchy used.

Additions during the year:

Investment in Cornerstone FS Plc

In April 2021, the Company completed the subscription for an additional 245,902 new ordinary shares in Cornerstone at a cost of GBP150,000, as part of Cornerstone's admission to AIM. Following this transaction, Vela's aggregate shareholding in Cornerstone represented approximately 3.2% of its then issued share capital.

Investment in Northcoders Group PLC

In July 2021, the Company invested GBP750,000 in Northcoders Group PLC on its admission to AIM. The Company acquired 416,666 new ordinary shares of 1p each at a price of 180p per share. These shares represented 6% of the enlarged share capital of Northcoders on admission to AIM.

Investment in Skillcast Group PLC

In December 2021, the Company invested GBP250,000 in Skillcast Group PLC on the admission of its shares to trading on AIM. The Company acquired 675,676 new ordinary shares of 1p each at a price of 37p per share. These shares represented 0.76% of the then issued share capital of Skillcast.

Investment in Igraine PLC

In March 2022, the Company invested GBP430,705 to acquire 23,928,080 ordinary shares of 1p each in Igraine PLC at a price of 1.8p per share. These shares represented 28.8% of the share capital of Igraine. The directors have applied the exemption set out in paragraph 18 of IAS 28 to account for this investment at fair value in accordance with IFRS 9, rather than applying equity accounting under IAS 28.

Disposals during the year:

Disposal of North Peak Resources Ltd

In April 2021 the Company disposed of its remaining shares in North Peak Resources Ltd. The carrying value of the shares held as at 31 March 2021 was GBP74,858 and the sales proceeds amounted to approximately GBP80,000.

Part disposal of Northcoders Group Plc

In January 2022 the Company disposed of part of its shareholding in Northcoders Group Plc. The Company sold 25,000 of its holding of 416,666 shares at GBP2.40 per share and a further 50,000 at GBP2.45 per share. The sales proceeds amounted to GBP182,500 and generated a net profit of GBP46,398. Post disposal Vela was interested in 341,666 shares which represented 4.9 per cent of the issued share capital.

9 Trade and other receivables - non-current

 
                                    31 March   31 March 
                                        2022       2021 
                                     GBP'000    GBP'000 
---------------------------------  ---------  --------- 
 Loan due from BIXX Tech Limited         674        645 
 Other financial asset                 2,350      2,350 
                                       3,024      2,995 
---------------------------------  ---------  --------- 
 

Loan due from BIXX Tech Limited

The loan represents the consideration receivable for the disposal of certain investment assets in August 2020, as detailed in the prior year financial statements. The total consideration receivable is GBP855,000, which is receivable after seven years. The consideration has been discounted at a market interest rate of 4.5% to reflect the deferred payment term. Income of GBP29,000 (2021: GBP16,000), represents the unwinding of the discount and is recognised within finance income in note 4.

Under the terms of the loan agreement, the Company has provided an undertaking to distribute a sum equal to any repayment of the loan to the holders of the Special Deferred Shares (see note 13). This distribution will be by way of a dividend declared on the Special Deferred Shares ("the Special Dividend"). In the event that insufficient distributable reserves exist at the end of the seven-year loan term, the repayment of the loan will be deferred for a further year. This deferral will continue until such a time as the Company has sufficient distributable reserves to be able to pay the Special Dividend.

Other financial asset - Investment in St George Street Capital

On 20 October 2020, the Company entered into a contract with St George Street Capital ("SGSC") for an 8% economic interest in the potential future commercialisation of SGSC's asset to treat individuals with diabetes who are suffering with COVID-19 ("the Asset"). The consideration payable under the terms of the contract was GBP2.35m which was settled by cash of GBP1.25m and the issue of 1,100,000,000 locked-in consideration shares at a price of 0.1 pence per share. The directors considered that this represented the fair value of the contract at the date of investment.

The contract gives the Company a right to future economic benefits and has been classified as a financial asset measured at fair value through profit and loss. The directors estimate that the contract will not be realised within 12 months of the reporting date and so the asset has been classified as non-current.

At the time of the investment, SGSC was in the process of recruiting for Phase II clinical trials of the Asset and this recruitment was still ongoing as at the previous reporting date. In the current period, the Phase II trials were successfully completed and SGSC has moved on to the process of investigating options for funding Phase III clinical trials (which would involve a significantly larger sample of patients than Phase II) and onward commercialisation of the Asset. The development of the Asset continues to progress along the typical drug development pipeline. However, the need for SGSC to raise further funding in order to commence the Phase III trials, to successfully complete those trials and achieve commercialisation of the drug gives rise to an inherent level of risk in respect of the ultimate realisation of the Asset, which the directors have taken into consideration when estimating its fair value. The directors have considered the current position and are of the view that there have not been any major developments (either positive or negative) or milestones achieved between the date of investment and the reporting date which would give rise to a material change in the fair value of the contract during this time. Accordingly, the original consideration payable under the contract represents the directors' best estimate of its fair value as at 31 March 2022.

10 Trade and other receivables

 
                      31 March   31 March 
                          2022       2021 
                       GBP'000    GBP'000 
-------------------  ---------  --------- 
 Other receivables           1          1 
 Convertible loan          750          - 
                           751          1 
-------------------  ---------  --------- 
 

In January 2022, the Company invested GBP750,000 by way of a convertible loan note in EnSilica Limited. The loan notes attracted interest at a rate of 10 per cent per annum and were repayable on 9 January 2023 unless they had been repaid or converted before this date. The loan notes converted automatically on an IPO of Ensilica into new ordinary shares at a discount of 12% of the shares subscribed for in the IPO. Note 20 on events following the year end includes a note that EnSilica's shares were admitted to trading on AIM in May 2022, at which point the Company exercised its conversion rights.

11 Derivative financial instruments

 
             31 March   31 March 
                 2022       2021 
              GBP'000    GBP'000 
----------  ---------  --------- 
 Warrants          63        138 
                   63        138 
----------  ---------  --------- 
 
 

The Company holds warrants providing it with the right to acquire additional shares in certain of its investee companies at a fixed price in the future, should the directors decide to exercise them. The warrants have been recognised as an asset at fair value, which has been calculated using an appropriate option pricing model.

12 Trade and other payables

 
                   31 March   31 March 
                       2022       2021 
                    GBP'000    GBP'000 
----------------  ---------  --------- 
 Trade payables           1         24 
 Accruals                20         24 
                         21         48 
----------------  ---------  --------- 
 

13 Share capital

 
                                               31 March   31 March 
                                                  20 22       2021 
                                                GBP'000    GBP'000 
--------------------------------------------  ---------  --------- 
 Allotted, called up and fully paid capital 
 16,252,335,184 (2021:13,818,450,084) 
  Ordinary Shares of 0.01 pence each              1,625      1,382 
 1,748,943,717 Deferred Shares of 0.08 
  pence each                                      1,399      1,399 
 2,665,610,370 Special Deferred Shares 
  of 0.01 pence each                                267        267 
                                                  3,291      3,048 
--------------------------------------------  ---------  --------- 
 

Share issues in the period

Exercise of warrants and issue of equity

On 30 March 2021, the Company announced an application to issue 24,751,750 new ordinary shares of 0.01p pursuant to the exercise of warrants to subscribe for new Ordinary Shares at a price of 0.06p per Ordinary Share. The share allotment was completed on 7 April 2021, generating gross proceeds of GBP14,851.

On 6 July 2021, the Company issued 35,000,000 new ordinary shares of 0.01p pursuant to the exercise of warrants to subscribe for new Ordinary Shares at a price of 0.06p per Ordinary Share, generating gross proceeds of GBP21,000.

On 7 July 2021, the Company issued 44,079,000 new ordinary shares of 0.01p pursuant to the exercise of warrants to subscribe for new Ordinary Shares at a price of 0.06p per Ordinary Share, generating gross proceeds of GBP26,447.

On 19 July 2021, the Company issued 117,083,332 new ordinary shares of 0.01p pursuant to the exercise of warrants to subscribe for new Ordinary Shares at a price of 0.06p per Ordinary Share, generating gross proceeds of GBP70,250.

On 27 August 2021, the Company issued 1,391,421,209 new ordinary shares of 0.01p pursuant to the exercise of warrants to subscribe for new Ordinary Shares at a price of 0.06p per Ordinary Share, generating gross proceeds of GBP834,853.

On 7 September 2021, the Company issued 821,549,809 new ordinary shares of 0.01p pursuant to the exercise of warrants to subscribe for new Ordinary Shares at a price of 0.06p per Ordinary Share, generating gross proceeds of GBP362,530.

Share rights

The Deferred and Special Deferred Shares are not listed on AIM and do not carry any rights to receive notice of or attend or speak or vote at any general meeting or class meeting. There are also no dividend rights, other than the "Special Dividend" on the Special Deferred Shares. As described in note 9, upon repayment to the Company of any amount(s) owed to it pursuant to the loan agreement between the Company and BIXX Tech Limited, the Company shall, in priority to any payment of dividend to the holders of the ordinary shares or any other class of shares, declare and pay to the holders of the Special Deferred

Shares a Special Dividend of an aggregate amount equal to the amount of such sum repaid, pro rata according to the number of Special Deferred Shares paid up.

On a return of capital, the holders of the Special Deferred Shares shall be entitled to receive only the amount paid up on such shares up to a maximum of 0.01 pence per Special Deferred Share after (i) the holders of the Ordinary Shares have received the sum of GBP1,000,000 for each Ordinary Share held by them, and (ii) the holders of the Deferred Shares have received the sum equal to the amount paid up on such Deferred Shares.

14 Cash and cash equivalents

Cash and cash equivalents comprise the following:

 
                                             31 March   31 March 
                                                2 022       2021 
                                              GBP'000    GBP'000 
------------------------------------------  ---------  --------- 
 Cash and cash in bank: 
 Pound sterling                                   958      2,147 
 Cash and cash equivalents at end of year         958      2,147 
------------------------------------------  ---------  --------- 
 

15 Financial instruments

The Company uses various financial instruments which include cash and cash equivalents, loans and borrowings and various items such as trade receivables and trade payables that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Company's operations and manage its working capital requirements.

The fair values of all financial instruments are considered equal to their book values. The existence of these financial instruments exposes the Company to a number of financial risks which are described in more detail below.

The main risks arising from the Company's financial instruments are currency risk, credit risk and liquidity risk. The Directors review and agree the policies for managing each of these risks and they are summarised below. The Company does not have any borrowings on which interest is charged at a variable rate. The Directors, therefore, do not consider the Company to be exposed to material interest rate risk.

Currency risk

The Company's shareholdings in North Peak were denominated in Canadian Dollars, which, until their disposal in April 2021 (see note 8), gave rise to exposure to a foreign currency risk. The Directors considered the risk and did not deem it necessary to enter into any specific risk management arrangements.

Credit risk

This section, along with the liquidity risk and capital risk management sections below, also forms part of the Strategic Report.

The Company's exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance sheet date, as summarised below:

 
                                            31 March   31 March 
                                                2022       2021 
 Classes of financial assets - carrying      GBP'000    GBP'000 
  amounts 
-----------------------------------------  ---------  --------- 
 Financial assets measured at fair value 
  through profit or loss                       5,016      4,457 
 Financial assets measured at amortised 
  cost                                         1,425        646 
-----------------------------------------  ---------  --------- 
                                               6,441      5,103 
-----------------------------------------  ---------  --------- 
 

The Company's management considers that all of the above financial assets that are not impaired for each of the reporting dates under review are of good credit quality.

The Company is required to report the category of fair value measurements used in determining the value of its financial assets measured at fair value through profit or loss, to be disclosed by the source of its inputs, using a three-level hierarchy. There have been no transfers between Levels in the fair value hierarchy.

Quoted market prices in active markets - "Level 1"

Inputs to Level 1 fair values are quoted prices in active markets for identical assets. An active market is one in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. The Company has eight (2021: six) investments classified in this category all of which are listed on a regulated exchange with publicly available market prices used to determine the year end value. The aggregate historic cost of the eight investments is GBP2,343,803 (2021: GBP1,270,672) and the fair value as at 31 March 2022 was GBP1,738,769 (2021: GBP1,192,164).

Valued using models with significant observable market parameters - "Level 2"

Inputs to Level 2 fair values are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly. The Company has two (2021: two) unquoted investments classified in this category. The historic cost of these investments is GBP450,000 (2021: GBP450,000) and the fair value as at 31 March 2022 was GBP864,644 (2021: GBP777,144). These investments were valued using the latest transaction prices for shares in the investee companies which were obtained through either (a) publicly available information (e.g. registrar), (b) information in respect of recent transactions which the Company was invited to participate or, where available, (c) direct liaison with the investee company. The Company also holds warrants for shares in three investee companies, which have been valued using an option pricing model with observable inputs. The fair value of these assets as at 31 March 2022 was GBP63,194 (2021: GBP138,246).

Valued using models with significant unobservable market parameters - "Level 3"

Inputs to Level 3 fair values are unobservable inputs for the asset. Unobservable inputs may have been used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date (or market information for the inputs to any valuation models). As such, unobservable inputs reflect the assumptions the Company considers that market participants would use in pricing the asset. The Company has two (2021: two) unquoted investments classified in this category. The historic cost of these investments is GBP300,000 (2021: GBP300,000) and the fair value as at 31 March 2022 was GBPnil (2021: GBPnil). The nature of some of the investments that the Company holds, i.e. minority shareholdings in private companies with limited publicly available information, means that significant judgement is required in estimating the value to be applied in the year end accounts. Management uses knowledge of the sector and any specific company information available to determine a valuation estimate. The Company also holds a non-current financial asset described in note 9 to the financial statements at a fair value of GBP2,350,000, which is also the historic cost of the asset. Further details regarding the determination of the fair value of this asset are provided in note 9.

Liquidity risk

The Company maintains sufficient cash to meet its liquidity requirements. Management monitors rolling forecasts of the Company's liquidity on the basis of expected cash flow in accordance with practice and limits set by the Company. In addition, the Company's liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these.

Maturity analysis for financial liabilities

 
                       31 March 2 022       31 March 2021 
                     ------------------  ------------------ 
                       Within     Later    Within     Later 
                                   than                than 
                       1 year    1 year    1 year    1 year 
                      GBP'000   GBP'000   GBP'000   GBP'000 
-------------------  --------  --------  --------  -------- 
 At amortised cost         21         -        48         - 
-------------------  --------  --------  --------  -------- 
 

Capital risk management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. This is achieved by making investments commensurate with the level of risk. The Company is performing in line with the expectations of the Directors.

The Company monitors capital on the basis of the carrying amount of equity. The Company policy is to set the amount of capital in proportion to its overall financing structure, i.e. equity and long-term loans. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, issue new shares or loan notes, or sell assets to reduce debt.

16 Reconciliation of net funds

 
                                  A s 
                                 at 1      Cash                   As at 
                                April      flow    Non-cash    31 March 
                                 2021              movement        2022 
                              GBP'000   GBP'000     GBP'000     GBP'000 
---------------------------  --------  --------  ----------  ---------- 
 Cash and cash equivalents      2,147   (1,189)           -         958 
                                2,147   (1,189)           -         958 
---------------------------  --------  --------  ----------  ---------- 
 

17 Share-based payments

On 26 August 2020 two of the Directors were granted equity settled share-based payments. The principal terms of these grants are as follows:

James Normand was granted 180,000,000 options to subscribe for ordinary shares of 0.01p each in the Company. The options have an exercise price of 0.024p and are exercisable for a period of ten years from the date of the grant. Half the options became exercisable 12 months after grant, subject to the Company's closing mid-market share price being at least 0.048p per Ordinary Share for 30 consecutive business days, and the remaining half become exercisable 24 months after grant, subject to the Company's closing mid-market share price being at least 0.072p per Ordinary Share for 30 consecutive business days.

In addition, on the same date, Brent Fitzpatrick, Non-Executive Chairman of the Company, was granted 90,000,000 options to subscribe for Ordinary Shares in the Company. The options have an exercise price of 0.024p and are exercisable for a period of ten years from the date of the grant. Half the options became exercisable 12 months after grant, subject to the Company's closing mid-market share price being at least 0.048p per Ordinary Share for 30 consecutive business days, and the remaining half become exercisable 24 months after grant, subject to the Company's closing mid-market share price being at least 0.072p per Ordinary Share for 30 consecutive business days. Following this grant of options, Brent Fitzpatrick now holds a total of 104,562,427 share options equivalent to 1.46 per cent. of the issued share capital of the Company.

None of the options granted have been exercised.

The options issued in August 2020 have been valued using the Monte Carlo option pricing model. The amount of remuneration expense in respect of the share options granted amounts to GBP20,000 (2021: GBP21,000).

Options were also granted to directors in September and October 2015. If not exercised beforehand, these will lapse in September and October 2022. They have been valued using the Black Scholes option pricing model.

Details of the options outstanding at the year end and the inputs to the option pricing model are as follows:

 
                                      Options      Options        Options 
                                      granted      granted        granted 
                                    26 August   22 October   18 September 
                                         2020         2015           2015 
-------------------------------  ------------  -----------  ------------- 
 Share price at grant date 
  (pence)                                0.05         0.21           0.19 
 Exercise price (pence)                 0.024         0.21           0.15 
 Expected life (years)                     10            7              7 
 Annualised volatility (%)               86.9        79.47          70.98 
 Risk-free interest rate (%)              2.0          2.0            2.0 
 Fair value determined (pence)           0.03         0.15           0.13 
 Number of options granted        270,000,000    6,400,000     10,489,560 
 Options exercisable at 31 
  March 2022                      270,000,000    6,400,000     10,489,560 
-------------------------------  ------------  -----------  ------------- 
 

The expected future annualised volatility was calculated using historic volatility data for the Company's share price.

The options issued in 2015 are not subject to any performance criteria. However the options issued in 2020 are subject to performance criteria.

During the period, 8,235,294 options granted in April 2014 and 4,000,000 options granted in October 2014 lapsed. The fair value of these options recorded in the financial statements and processed as historic remuneration expense was GBP106,000.

The options granted in 2015 are set to lapse in 2022. The fair value of these options has been recorded in the financial statements as historic remuneration expense.

18 Contingent liabilities

Under the terms of the Company's loan receivable from BIXX Tech Limited, described in note 9, the Company has provided an undertaking to distribute a sum equal to any repayment of the loan to the holders of the Special Deferred Shares (see note 13). This distribution will be by way of a dividend declared on the Special Deferred Shares ("the Special Dividend"). In the event that insufficient distributable reserves exist at the end of the seven-year loan term, the repayment of the loan will be deferred for a further year. This deferral will continue until such a time as the Company has sufficient distributable reserves to be able to pay the Special Dividend. As at 31 March 2022, the carrying value of the loan receivable was GBP674,000 (2021: GBP645,000) and, at the scheduled maturity date, the final settlement value will be GBP855,000.

19 Related party transactions

During the period the Company entered into the following related party transactions. All transactions were made on an arm's length basis.

Ocean Park Developments Limited

Brent Fitzpatrick, Non-Executive Director, is also a Director of Ocean Park Developments Limited. During the year, the Company paid GBP62,000 (2021: GBP62,000) in respect of his Director's fees to the Company. The balance due to Ocean Park Developments Limited at the year-end was GBPnil (2021: GBPnil).

BIXX Tech Limited

Antony Laiker, a significant shareholder of Vela and recently appointed Director is also a director of BIXX Tech Limited.

On 26 August 2020, the Company transferred certain investments to a newly formed wholly owned subsidiary, BIXX Tech Limited, for consideration totalling GBP855,000 repayable after seven years. Following the transfer of the investments, BIXX Tech Limited was sold to a newly formed company, BIXX Limited, with the same shareholders as Vela Technology Plc for consideration of GBP1. As at 31 March 2022, the carrying value of the balance due from BIXX Tech Limited was GBP674,000 (2021: GBP645,000).

The disposal constituted a related party transaction under the AIM Rules as Antony Laiker, a director of the Company was the sole shareholder of BIXX Limited prior to the disposal.

20 Events after the balance sheet date

Investment in EnSilica Plc

In May 2022, EnSilica successfully completed its admission onto the AIM market. On admission Vela's investment of GBP750,000 in convertible loan notes and accrued interest were converted into 1,764,788 ordinary shares representing 2.3 per cent of the issued share capital.

Investment in TruSpine Plc

In June 2022, the Company completed the subscription for 6,000,000 ordinary shares in TruSpine for a cost of GBP300,000, representing 5.07 per cent of TruSpine's issued share capital.

Disposal of investment in Northcoders Plc

In September 2022, the Company disposed of 25,000 shares in Northcoders at a price of GBP3.50 generating gross proceeds of GBP87,500. Following the disposal Vela was interested in 316,666 shares representing 4.6 per cent of the issued share capital.

Extraction of information in this announcement

The financial information, which comprises the statement of comprehensive income, balance sheet, cashflow statement, statement of changes in equity, and related notes to the financial statements, is derived from the full Company financial statements for the year ended 31 March 2022, which have been prepared under UK endorsed International Financial Report Standards (IFRS) and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. It does not constitute full financial statements within the meaning of section 434 of the Companies Act 2006. This financial information has been agreed with the auditor for release.

The full annual report and financial statements for the year ended 31 March 2022, on which the auditor has given an unqualified report, and which does not contain a statement under section 498 of the Companies Act 2006, will be delivered to the Registrar of Companies in due course.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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END

FR SEUESWEESELU

(END) Dow Jones Newswires

September 28, 2022 02:02 ET (06:02 GMT)

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