Vela Technologies - Interim Results
18/12/2024 15:57
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RNS Number : 6384Q Vela Technologies PLC 18 December 2024
18 December 2024
Vela Technologies plc
("Vela" or "the Company")
Interim results for the six months ended 30 September 2024
Vela Technologies plc (AIM: VELA), an AIM-quoted investing company focused on
early stage and pre-IPO disruptive technology investments, today announces its
unaudited interim results for the six months ended 30 September 2024.
Overview
The last six months have continued to be challenging for the small-cap
marketplace in the UK. As reported in its latest quarterly report, announced
on 28 November 2024, the Board has concluded that it cannot continue to wait
for the long-expected upturn in markets. Accordingly, the Board continues
proactively to look to realise certain of the existing investment portfolio,
where possible without crystallising material losses, with the intention of
recycling the proceeds into new investment opportunities. During the period
Vela sold all its holding in MTI Wireless Edge Limited and part holdings in
EnSilica plc and Skillcast Group plc, realising a profit on all sales.
During the period the Company reports a significant fair value loss on the
investment portfolio, predominately arising from the fall in the share price
of Conduit Pharmaceuticals Inc. ("Conduit"). As at 30 September 2024 Conduit's
share price had fallen to $0.12, giving a fair value of only £89,000, as
reported in the latest quarterly update. The share price has since sunk to
$0.10 as at the date of this announcement. On 16 August 2024 Conduit announced
that it had become aware that one of its directors had previously entered into
certain collateral pledge agreements that resulted in the disposition of a
substantial number of shares in Conduit and that it had appointed an
independent committee of the Conduit board to establish the facts. Another
independent committee of the Conduit board was formed to investigate and
review the trading patterns of certain of Conduit shareholders and to
determine if any action should be taken. It seems that the irregularities were
instrumental in the collapse of the share price. The Board of Vela is very
disappointed with the performance of the investment in Conduit and shares the
frustrations of shareholders.
Vela made one new investment during the period, issuing shares valued at
£300,000 to Hamak Gold Limited in exchange for a convertible loan note.
Under the terms of the investment in the convertible loan note in Hamak, Hamak
undertook to redeem £75,000 of the convertible loan note at a minimum rate of
£10,000 per month from 31 July 2024 onwards. At the date of this report Vela
is yet to receive any such payments and continues to be in discussions with
the Hamak board in order to reach a mutually beneficial longer-term solution.
Since the period-end Vela has made a further investment in Igraine Plc, an
existing investee company, by way of a convertible loan note of no less than
£250,000 in tranches of £50,000, the first of which had been advanced by the
date of this announcement. Since the period end Vela has also sold partial
holdings in both Finseta plc and EnSilica plc, generating gross proceeds of
£21,263 and £71,535 respectively.
Turning to the financials, the balance sheet has decreased, principally
because of the revaluation of Conduit, with total assets amounting to £3.804
million as at 30 September 2024 (30 September 2023: £7.542 million; 31 March
2024: £6.291 million). Cash and cash equivalents as at 30 September 2024 were
£103,000 (31 March 2024: £54,000; 30 September 2023: £31,000). The Board
remains committed to keeping running costs to a minimum.
As at 30 September 2024, the investment portfolio comprises a total of 14
active investee companies and two legacy investments which have been valued at
£nil for a number of years. 13 of the active investee companies are held as
investments on the balance sheet having a fair value of £2.652 million as at
30 September 2024 (31 March 2024: £5.487 million; 30 September 2023: £2.789
million). The remaining investment is a convertible loan note held at a cost
of £300,000 (30 September 2023: £nil; 31 March 2024 £nil). Investments are
held at fair value through profit and loss using a three-level hierarchy for
estimating fair value, as detailed in the audited financial statements for the
year ended 31 March 2024, and, in line with this, investments have been
revalued to reflect the fair value at 30 September 2024.
The Board looks forward to the remainder of the financial year ending 31 March
2025 with caution but ever mindful of potential new and follow-on investments
in line with its 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.
Brent Fitzpatrick
Chairman
18 December 2024
Unaudited Statement of Comprehensive Income
for the six months ended 30 September 2024
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended Year
Ended
30 September 30 31
September March
2024 2023 2024
Notes £'000 £'000 £'000
Revenue - - -
Fair value movements
- on derivatives - (55) -
- on financial asset - 1,250 -
- on investments (2,603) (518) (357)
Net (deficit) / surplus arising from fair value movements (2,603) 677 (357)
Administrative expenses (127) (181) (443)
Operating (loss) / profit (2,742) 496 (800)
Finance income 6 6 23
(Loss) / profit before tax (2,736) 502 (777)
Income tax - - -
(Loss) / profit / after tax (2,736) 502 (777)
Other comprehensive income for the year - - -
Total comprehensive (loss) / profit (2,736) 502 (777)
Attributable to:
Equity holders of the company (2,736) 502 (777)
(Loss) / profit per share
Basic and diluted (loss) / profit per share (pence) 4 (0.016) 0.0031 (0.0050)
Unaudited Balance Sheet
as at 30 September 2024
(Unaudited) (Unaudited) (Audited)
30 September 30 September 31
March
2024 2023 2024
Notes £'000 £'000 £'000
Non-current assets
Investments 5 2,652 2,789 5,487
Trade and other receivables 6 718 4,704 718
Total non-current assets 3,370 7,493 6,205
Current assets
Trade and other receivables 300 - -
Derivative financial instruments 7 32 18 32
Cash and cash equivalents 103 31 54
Total current assets 435 49 86
Total assets 3,805 7,542 6,291
Equity and liabilities
Equity
Called-up share capital 8 3,563 3,291 3,320
Share premium reserve 7,672 7,594 7,615
Share-based payment reserve 6 46 6
Retained earnings (7,439) (3,424) (4,703)
Total equity 3,802 7,507 6,238
Current liabilities
Trade and other payables 3 35 53
Total current liabilities 3 35 53
Total equity and liabilities 3,805 7,542 6,291
Unaudited Cashflow Statement
for the six months ended 30 September 2024
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended year
ended
30 September 30 September 31
March
2024 2023 2024
£'000 £'000 £'000
Operating activities
Loss / profit before tax (2,736) 502 (777)
Share based payment - - -
Fair value movements on investments 2,603 (732) 357
Fair value movements on derivative instruments - 55 -
Finance income - (6) (23)
(Decrease) / increase in payables (50) 2 15
Total cash flow from operating activities (183) (179) (428)
Investing activities
Interest received - - 14
Proceeds from sale of investments 232 136 344
Payment for put option - (400) -
Purchase of investments - (250) (650)
Total cash flow from investing activities 232 (514) (292)
Financing activities
Proceeds from the issue of ordinary shares - - 50
Total cash flow from financing activities - - 50
Net increase / (decrease) in cash and cash equivalents 49 (693) (670)
Cash and cash equivalents at start of year/period 54 724 724
Cash and cash equivalents at the end of the year/period 103 31 54
Cash and cash equivalents comprise:
Cash at bank 103 31 54
Cash and cash equivalents at end of year / period 103 31 54
Unaudited Statement of Changes in Equity
for the six months ended 30 September 2024
Share capital Share Premium Share Option Reserve Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2024 3,320 7,615 6 (4,703) 6,238
Share issue 243 57 - - 300
Loss and total comprehensive income for the period - - - (2,736) (2,736)
Balance at 30 September 2024 3,563 7,672 6 (7,439) 3,802
Balance at 1 April 2023 3,291 7,594 46 (3,926) 7,005
Profit and total comprehensive income for the period - - - 502 502
Balance at 30 September 2023 3,291 7,594 46 (3,424) 7,507
Balance at 1 April 2023 3,291 7,594 46 (3,926) 7,005
Share-based payment - - (40) - (40)
Share issue 29 21 - - 50
Loss and total comprehensive income for the period - - - (777) (777)
Balance at 31 March 2024 3,320 7,615 6 (4,703) 6,238
Notes to the Interim Accounts
for the six months ended 30 September 2024
1. General information
Vela Technologies plc is a company incorporated in the United Kingdom.
These unaudited condensed interim financial statements for the six months
ended 30 September 2024 have been prepared in accordance with International
Financial Reporting Standards (IFRS) and IAS 34 "Interim Financial Reporting"
as adopted by the European Union and do not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006. This condensed set of
financial statements has been prepared applying the accounting policies that
were applied in the preparation of the Company's published financial
statements for the year ended 31 March 2024 and are presented in pounds
sterling.
The comparative figures for the financial year ended 31 March 2024 have been
extracted from the Company's statutory accounts which have been delivered to
the Registrar of Companies and reported on by the Company's Auditors. Their
report was unqualified and contained no statement under section 298 (2) or (3)
of the Companies Act 2006.
2. Changes in accounting policy
The assessment of new standards, amendments and interpretations issued but not
effective are not anticipated to have a material impact on the interim
financial statements.
3. Going concern
The Directors have considered the Company's activities, together with the
factors likely to affect its future development and performance, the financial
position of the Company, and its cash flows and liquidity position, taking
account of the current market conditions. This review has demonstrated that
the Company shall continue to operate within its own resources.
The Directors believe that the Company is well placed to manage its business
risks successfully and that the Company has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they consider
it appropriate to adopt the going concern basis in preparing these condensed
financial statements.
4. (Loss) / profit per share
(Loss) / profit per share has been calculated on a loss of £2,736,000 (six
months to 30 September 2023: £502,000 profit; year to 31 March 2024:
£777,000 loss) and the weighted number of average shares in issue for the
period of 17,556,553,841 (30 September 2023: 16,252,335,184; 31 March 2024:
16,546,452,831).
6 months ended 6 months ended Year
30 September 30 September 2023 ended
2024 31 March
2024
(Loss) / profit (£'000) (2,736) 502 (777)
(Loss) / earnings per share (pence) (0.016) 0.0031 (0.005)
5. Investments
Other
Investments
£'000s
Fair value at 1 April 2024 5,487
Additions during the period -
Disposals during the period (232)
Current period fair value movement charged to profit or loss (2,603)
Fair value at 30 September 2024 2,652
Investment in Hamak Gold Limited and issuance of share capital
In July 2024 the Company entered into an unsecured convertible loan note
instrument with Hamak Gold Limited ("Hamak"), the Liberia-based gold
exploration and development company. Vela issued 2,424,242,424 new ordinary
shares of 0.01 pence each to Hamak at a deemed issue price of 0.012375 pence
per share in consideration of the issue to Vela by Hamak of £300,000 of
unsecured convertible loan notes of £1. The deemed issue price represented a
premium of 7.61 per cent. to Vela's closing mid-market price of 0.0115p on 16
July 2024.
Part disposal of shares in EnSilica plc
During the period the Company disposed of an aggregate of 160,000 shares at an
average price of 59p per share, generating gross proceeds of £94,029 for the
Company. Following the disposals Vela remained interested in 616,707 ordinary
shares as at 30 September 2024.
Part disposal of shares in Skillcast Group plc
During the period the Company disposed of a total of 100,000 shares at an
average price of 44p per share, generating gross proceeds of £44,685 for the
Company. Following the disposals Vela remained interested in 575,676 ordinary
shares as at 30 September 2024.
Disposal of holding in MTI Wireless Edge Ltd
In September 2024 the Company disposed of its entire holding of 200,000 shares
at a price of 46p per share, generating gross proceeds of £92,000 for the
Company.
6. Trade and other receivables - non-current
30 30 31
September September March
2024 2023 2024
£'000 £'000 £'000
Loan due from Bixx Tech Limited 718 704 718
Other financial asset - 4,000 -
718 4,704 718
Loan due from Bixx Tech Limited
The loan represents the consideration receivable for the disposal of certain
investment assets in August 2020. The total consideration receivable is
£855,000, which is receivable after seven years. The consideration has been
discounted at a market interest rate of 4.5%.
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. Details of these arrangements are set out in the
audited financial statements for the year ended 31 March 2024. 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 £2.35m which was settled by cash of £1.25m 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 gave the Company a
right to future economic benefits and was classified as a financial asset
measured at fair value through profit and loss. The contract did not include a
defined exit date and so was classified as non-current at previous reporting
dates, as the Company did not have an unconditional right to require
settlement of the contract within 12 months.
In April 2023, the Company announced that it had entered into a put option
agreement to give the Company the right, but not the obligation, to sell its
economic interest in the commercialisation of the Covid-19 application of
AZD1656 in return for shares in Conduit Pharmaceuticals Limited ("Conduit").
The Option was granted by Conduit and its prospective parent company, Murphy
Canyon Acquisition Corp, a Company listed on NASDAQ.
On 1 December 2023, Vela exercised the put option to sell its economic
interest in return for shares in Conduit. Under the terms of the option
agreement Vela received 1,015,760 new shares of authorised common stock of par
value $0.001. In accordance with Vela's accounting policy, these shares have
been revalued using the market price at the balance sheet date and is now
included at fair value with other listed investments.
7. Derivative financial instruments
30 30 31
September September March
2024 2023 2024
£'000 £'000 £'000
Warrants 32 18 32
32 18 32
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.
8. Share capital
Allotted, called up and fully paid capital 30 30 31
September September March
2024 2023 2024
18,970,695,255 Ordinary Shares of 0.01 pence each 1,897 1,625 1,654
1,748,943,717 Deferred Shares of 0.08 pence each 1,399 1,399 1,399
2,665,610,370 Special Deferred Shares of 0.01 pence each 267 267 267
3,563 3,291 3,320
On 22 July 2024, 2,424,242,242 Ordinary 0.01 Shares were issued at a deemed
issue price of 0.012375 pence per share in exchange for a convertible loan
note in Hamak Gold Limited valued at £300,000.
The number of shares in issue at 30 September 2024 were 18,970,695,255 (30
September 2023 and 31 March 2024: 16,546,452,831).
9. Financial instruments
The Company is required to report the category of fair value measurements used
in determining the value of its investments, 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 eleven (30 September 2023: twelve; 31 March 2024:
twelve) investments classified in this category. The aggregate historic cost
of these investments is £5,691,316 (30 September 2023: £3,393,803; 31 March
2024: £5,831,316) and the fair value as at 30 September 2024 was £1,823,795
(30 September 2023: £1,961,310; 31 March 2024: £4,658,581)
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 (30 September 2023: two; 31 March 2024: two)
unquoted investments classified in this category. The historic cost of these
investments is £450,000 (30 September 2023: £450,000; 31 March 2023:
£450,000) and the fair value as at 30 September 2023 was £828,186 (30
September 2023; £828,186; 31 March 2024: £828,186).
Valued using models with significant unobservable market parameters - "Level
3"
The Company has two (30 September 2023: two; 31 March 2024: two) legacy
investments that are held at an aggregate carrying value of £nil at 30
September 2024 (30 September 2023: £nil; 31 March 2024: £nil) because they
appear to be inactive, based on the information held by Vela. As at 30
September 2024 the historical cost of this investment amounted to £300,000
(30 September 2023: £300,000; 31 March 2024: £300,000).
The Company also holds a convertible loan note at a fair value of £300,000
(30 September 2023: £nil; 31 March 2024: £nil). The historic cost of the
asset is £300,000 (30 September 2023: £nil; 31 March 2024: £nil).
10. 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 chairman, is also a director of Ocean Park
Developments Limited. During the period the Company paid £24,000 (six
months ended 30 September 2023: £24,000; year ended 31 March 2024: £62,000)
in respect of his director's fees to Ocean Park Developments Limited. The
balance due to Ocean Park Developments Limited at the period end was £nil (30
September 2023 £nil; 31 March 2024: £nil).
11. Principal risks and uncertainties
Principal risks and uncertainties are set out in the annual financial
statements within the directors' report and also in note 14 to those financial
statements and are reviewed on an on-going basis.
The Board provides leadership within a framework of appropriate and effective
controls. The Board has set up, operates and monitors the corporate governance
values of the Company, and has overall responsibility for setting the
Company's strategic aims, defining the business objective, managing the
financial and operational resources of the Company and reviewing the
performance of the officers and management of the Company's business both
prior to and following an acquisition.
There have been no significant changes in the first six months of the
financial year to the principal risks and uncertainties as set out in the 31
March 2024 Annual Report and Accounts.
12. Board approval
These interim results were approved by the Board of Vela Technologies plc on
18 December 2024.
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