REG - Vela Technologies - Final results for the year ended 31 March 2023
28/09/2023 07:00
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RNS Number : 9151N Vela Technologies PLC 28 September 2023
28 September 2023
Vela Technologies plc
("Vela" or "the Company")
Final results for the year ended 31 March 2023
The Board of Vela (AIM:VELA), an AIM-quoted investing company focused on
early-stage and pre-IPO disruptive technology investments, is pleased to
announce the Company's final results for the year ended 31 March 2023.
Vela's Annual Report and Accounts for the year ended 31 March 2023 ("Annual
Report") will be sent to shareholders today.
The Company's Annual Report will be available shortly on the Company's website
at http://www.velatechplc.com/ (http://www.velatechplc.com/)
Highlights
Financial:
· Net assets decreased to £7,004,480 compared to £7,378,151 at 31
March 2022
· Cash fell from £958,573 at the beginning of the period to
£723,576 at the balance sheet date.
· Loss for the year of £378,516 compared to a loss of £1,078,202
in the previous comparable period reflecting a smaller reduction in the fair
value of the investment portfolio against the prior year.
Operational:
· Vela invested approximately £575,000 in four companies and
realised gross proceeds of approximately £712,000 from the sale of shares in
five of its investee companies.
Post Period Highlights:
· On 20 April Vela entered into a put option for the potential sale
of its economic interest in AZD1656 for a total consideration of £4.0
million. The option was granted by Conduit Pharmaceuticals Limited ("Conduit")
and Murphy Canyon Acquisition Corp ('Murphy'), a company listed on NASDAQ.
Should the option be exercised by Vela, the consideration that would be
payable to Vela would be satisfied through the issuance of new shares in the
combined company (now called Conduit Pharmaceuticals Inc.). Vela paid
Conduit £400,000 as the premium for the option.
· Also in September, Conduit completed its merger with Murphy and
its shares listed on NASDAQ on 25 September 2023 as Conduit Pharmaceuticals
Inc. ("Conduit Inc."). The put option referred to above is now exercisable.
Accordingly, it is now open to Vela to exchange its £2.75 million economic
interest in AZD1656 for £4 million worth of Conduit Inc. shares.
· In May 2023 the Company invested £250,000 in a pre-IPO
investment in Tribe Technology and the Board of Vela was pleased to see Tribe
Technology successfully list on AIM in September 2023 in conjunction with a
£4.6m fundraising.
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 2023.
chairman's statement
for the year ended 31 March 2023
I am pleased to present the Chairman's statement for the year ended 31 March
2023. In my half yearly statement for the period ended 30 September 2022 I
made reference to the continued war in Ukraine, political issues at home,
rising inflation and rising interest rates.
These have not abated as the war in Ukraine intensifies and the maelstrom
surrounding the UK's mini budget in September 2022 which crashed the Pound
causing interest rates to rise to the highest levels we have seen in more than
a decade. At the year end, interest rates had reached 4.25% alongside high
inflation rates of 10.1%. Both of which continued rising into our new
financial year.
With this backdrop of persistently high inflation and rising interest rates
the excitement for listings on the public markets has evaporated and many
investors are choosing to place their funds in cash instruments for safety and
the security of a meaningful rate of return.
Despite these negatives we maintain our belief that the economic interest that
the Company holds in AZD 1656 will create value for shareholders. Post year
end the Company invested a further £400,000 into a put option agreement to
give Vela the right, but not the obligation, to sell its economic interest in
the commercialisation of the Covid-19 application of AZD1656 for a total
consideration of £4.0 million. The option was granted by Conduit
Pharmaceuticals Limited and its prospective parent company, Murphy, a Company
listed on NASDAQ. Conduit Pharmaceuticals completed the business combination
with Murphy and the enlarged group, being Conduit Pharmaceuticals Inc.
("Conduit Inc."), began trading on NASDAQ on 25 September 2023. Further to
the announcement made by the Company on 21 September 2023, the board intends
to exercise the option in due course, at the appropriate time. The option has
an expiry date of 7 February 2024. As previously announced by Vela the
consideration of £4.0 million, payable upon exercise of the option, would be
satisfied through the issue to Vela of new shares in Conduit Inc. and the
issue price of the consideration shares will be based on the volume-weighted
average price per share of Conduit Inc. over the ten business days prior to
the date of notice of exercise, provided in no event shall the issue price for
the consideration shares be lower than $5 or higher than $15.
EnSilica plc listed in the early part of the financial year under review and
its share price has proved resilient against poor market conditions and at the
appropriate junctures we have sold shares in EnSilica to realise a gain whilst
maintaining a sizeable shareholding position in the company.
Whilst a number of the Company's stocks languish, such as Skillcast Group plc,
Northcoders Group plc and MTI Wireless Edge Limited, these are quality growth
companies whose value is not truly reflected in their share price, which is a
common theme across the markets. And whilst the market appears sceptical of
TruSpine Technologies plc we believe its product is a game-changer in spinal
stabilisation and we continue our support for the company.
Turning to the financials, Vela reported a loss for the year of £378,516
compared to a loss of £1,078,202 in the previous comparable period. Almost
all of this difference, from an accounting perspective, reflects a £25,780
reduction in fair value of investments in the year being reported on, compared
to a much larger reduction in fair value in the previous financial year. Net
assets decreased to £7,004,480 compared to £7,378,151 at 31 March 2022 and
cash fell from £958,573 at the beginning of the period to £723,576 at the
balance sheet date. As at 21 September 2023 Vela's cash reserves were
approximately £43,000.
Since 31 March 2023, the Company has made two new investments being a
£250,000 pre-IPO investment in Tribe Technology and the £400,000 investment
made into the put option in relation to the possible sale of Vela's economic
interest in AZD1656. The Board of Vela was pleased to see Tribe Technology
successfully list on AIM in September 2023 in conjunction with a £4.6m
fundraising.
In August 2022 Antony Laiker rejoined the board, however, in October 2022,
Antony decided to stand down and sell his holding in the Company. We were very
grateful for Antony's input and market wisdom during his time with us.
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 2023
Business review
At the period end, the Company held cash of approximately £724,000 (31 March
2022: £958,000). 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.
The Company's loss for the year was approximately £378,000 (2022: loss of
£1,078,000). This loss has arisen primarily from fair value movements on the
Company's investment portfolio. The valuation of the investment portfolio at
31 March 2023 was approximately £3,193,000 (31 March 2022: £2,603,000), an
increase of £590,000 on 2022. This resulted from the investment of £575,000
in new and 'follow-on' investments, conversion of the CLNs held in Ensilica
plc, disposals generating proceeds of £709,000, net of a decrease in the
valuation of the portfolio of £26,000. In addition to these investments the
Company holds a financial asset (St George Street Capital) valued at
£2,350,000 as at 31 March 2023 (31 March 2022: £2,350,000).
We update shareholders on investee company performance through the
dissemination of investee company regulatory announcements, together with,
when available, information from private companies which do not have the same
disclosure requirements as listed companies. Additionally, the Board has
continued to publish quarterly investment updates on the performance of the
investment portfolio and on acquisitions and sales. The quarterly investment
updates will continue. Moreover, detailed information on the investment
portfolio is maintained on the Company's website.
During the year the Company made investments in TruSpine Technologies PLC
(£300,000), a secondary placing in Northcoders Group plc (£99,000), a
further investment in EnSilica plc (£125,000) and an investment in Ethernity
Networks Ltd (£49,000). 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 during the period (being two of the directors)
and a Board comprising 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 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 2023; and signed on its
behalf by:
Brent Fitzpatrick MBE
Chairman
For further information, please contact:
Vela Technologies plc Tel: +44 (0) 7421 728875
Brent Fitzpatrick, Non-Executive Chairman
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
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.
statement of comprehensive income
for the year ended 31 March 2023
Year ended Year ended
31 March 31 March
2023 2022
Notes £'000 £'000
Revenue 1 - -
Administrative expenses 2 (401) (347)
Fair value movements
- on investments 8 (26) (685)
- on derivative instruments 11 9 (75)
Operating loss 2 (418) (1,107)
Finance income 4 40 29
Loss before tax (378) (1,078)
Income tax 6 - -
Loss for the year and total comprehensive income attributable to the equity
holders
(378) (1,078)
Loss per share
Basic and diluted loss per share (pence) 7 (0.002) (0.007)
statement of financial position
as at 31 March 2023
31 March 31 March
2023 2022
Notes £'000 £'000
Non-current assets
Investments 8 3,193 2,603
Trade and other receivables 9 3,054 3,024
Total non-current assets 6,247 5,627
Current assets
Trade and other receivables 10 - 751
Derivative financial instruments 11 72 63
Cash and cash equivalents 14 724 958
Total current assets 796 1,772
Total assets 7,043 7,399
Equity and liabilities
Equity
Called up share capital 13 3,291 3,291
Share premium account 7,594 7,594
Share option reserve 46 65
Retained earnings (3,926) (3,572)
Total equity 7,005 7,378
Current liabilities
Trade and other payables 12 38 21
Total current liabilities 38 21
Total equity and liabilities 7,043 7,399
These financial statements were approved by the Board, authorised for issue
and signed on their behalf on 27 September 2023 by:
Brent Fitzpatrick MBE
Chairman
Company registration number: 03904195
cash flow statement
for the year ended 31 March 2023
Year ended Year ended
31 March 31 March
2023 2022
Notes £'000 £'000
Operating activities
Loss before tax (378) (1,078)
Share-based payment 5 20
Fair value movements on investments 8 26 685
Fair value movement on derivative assets (9) 75
Finance income (40) (29)
Decrease in receivables 1 -
Increase / (Decrease) in payables 17 (27)
Total cash flow from operating activities (378) (354)
Investing activities
Interest received 10 -
Proceeds from disposal of investments 709 262
Acquisition of loan notes - (750)
Consideration for purchase of investments (575) (1,581)
Total cash flow from investing activities 144 (2,069)
Financing activities
Proceeds from the issue of ordinary share capital - 1,234
Total cash flow from financing activities - 1,234
Net (decrease) in cash and cash equivalents (234) (1,189)
Cash and cash equivalents at start of year 958 2,147
Cash and cash equivalents at the end of the year 14 724 958
Cash and cash equivalents comprise:
Cash at bank 724 958
Cash and cash equivalents at end of year 14 724 958
statement of changes in equity
for the year ended 31 March 2023
Share
Share Share Retained Option Total
Capital Premium Earnings Reserve Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2022 3,291 7,594 (3,572) 65 7,378
Transactions with owners
Share-based payment - - - 5 5
Lapse of share options in the period - - 24 (24) -
Transactions with owners - - 24 (19) 5
Total comprehensive income for the year - - (378) - (378)
Balance at 31 March 2023 3,291 7,594 (3,926) 46 7,005
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
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 from operations
The loss from operations is stated after charging:
31 March 31 March
2023 2022
£'000 £'000
Auditor's remuneration for the audit 24 18
Auditor's remuneration for corporation tax compliance services 2 2
Fair value movements on investments 26 685
Share-based payment 5 20
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
2023 2022
Directors and senior management 3 3
Total 3 3
The above included two individuals (2022 - two) employed by the Company and
one (2022 - one) engaged under the terms of a letter of appointment.
The aggregate amounts charged by these persons were as follows:
31 March 2023 31 March 2022
£'000 £'000
Wages and salaries 124 97
Social security costs 10 12
Amounts invoiced 69 62
Share-based payment charge 5 20
208 191
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 2023 31 March 2022
£'000 £'000
Other interest receivable 40 29
Total finance income 40 29
Finance income includes £30,000 (2022: £29,000), representing the unwinding
of the discount on the Company's loan receivable from BIXX Tech Limited.
Further details are provided in note 9.
5 Directors and senior management
Directors' remuneration
Year ended 31 March 2023
Salary Fees Pension Equity Total
£'000 £'000 £'000 £'000 £'000
N B Fitzpatrick - 62 - - 62
A Laiker (appointed 21 July 2022 / resigned 19 October 2022)
- 7 - - 7
J Normand 62 - - - 62
E Wilson 62 - - - 62
124 69 - - 193
Year ended 31 March 2022
Salary Fees Pension Equity Total
£'000 £'000 £'000 £'000 £'000
N B Fitzpatrick - 62 - - 62
J Normand 62 - - - 62
E Wilson (appointed 1 September 2021) 35 - - - 35
97 62 - - 159
Directors' and senior management's interests in shares
The Directors who held office at 31 March 2023 held the following shares:
31 March 31 March
2023 2022
N B Fitzpatrick 1,500,000 1,500,000
J Normand - -
E Wilson - -
The total share-based payment costs in respect of options granted are:
31 March 31 March
2023 2022
£'000 £'000
Directors 5 20
As at 31 March 2023, the total number of outstanding options held by the
Directors over ordinary shares was 270,000,000 (2022: 278,444,780),
representing 1.7 per cent of the Company's issued share capital. A total of
8,444,780 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 £6.7m (2022: £6.5m).
Tax reconciliation
31 March 31 March
2023 2022
£'000 £'000
Loss before tax (378) (1,078)
Tax at 19% on loss before tax (72) (205)
Effects of:
Loss relief carried forward 72 205
Total tax expense - -
7 Loss per share
Loss per share has been calculated on a loss after tax of £378,000 (2022:
loss after tax of £1,078,000) and the weighted average number of shares in
issue for the year of 16,252,335,184 (2022: 15,091,929,620).
8 Investments
31 March 31 March
2023 2022
£'000 £'000
Opening fair value 2,603 1,969
Additions during the year at cost 1,325 1,581
Fair value of disposals made during the year (709) (262)
Movement in fair value charged to profit or loss (26) (685)
Closing balance 3,193 2,603
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 EnSilica plc ("EnSilica")
In May 2022 EnSilica plc's shares were admitted to trading on AIM. Vela's
investment of £750,000 in convertible loan notes, together with the relevant
interest, were converted into 1,764,788 shares representing 2.3% of the then
issued share capital. In March 2023, the Company invested an additional
£125,000 in EnSilica through the purchase of 178,572 ordinary shares at 70
pence per share. The investment was made as part of a £2.0 million placing
undertaken by EnSilica.
Investment in TruSpine Technologies Plc ("TruSpine")
In June 2022, the Company completed the subscription for 6,000,000 ordinary
shares in TruSpine for a cost of £300,000, representing 5.07% of TruSpine's
then issued share capital.
8 Investments (continued)
Further Investment in Northcoders Plc ("Northcoders")
In November 2022, the Company invested an additional £99,999 in Northcoders
at a price of £3 per share. The investment was part of a secondary placing in
Northcoders which was undertaken as a result of excess demand following an
oversubscribed placing that raised £2.1 million for Northcoders. Following
this investment, Vela held 349,999 ordinary shares in Northcoders representing
4.6% of the issued share capital of Northcoders.
Investment in Ethernity Networks Ltd ("Ethernity")
In January 2023, the Company completed the subscription for 700,000 ordinary
shares in Ethernity for a cost of £49,000, representing 0.68 per cent of
Ethernity's issued share capital.
Disposals during the year:
Part disposal of Northcoders Group Plc
In September 2022, the Company disposed of 25,000 shares in Northcoders at a
price of £3.50 per share generating gross proceeds of £87,500. Following the
disposal Vela was interested in 316,666 shares representing 4.6 per cent of
the issued share capital.
Part disposal of investment in Cornerstone FS PLC ("Cornerstone")
In July 2022 the Company disposed of 50,000 shares in Cornerstone at a price
of 14.2p per share, generating gross proceeds of £7,115. Following the
disposal Vela remained interested in 595,902 shares representing 1.2% of the
issued share capital at the period end.
Part disposal of EnSilica Plc
Between May 2022 and the end of March 2023 the Company disposed of a total of
833,653 shares in EnSilica at an average price of 61p per share, generating
gross proceeds of £587,345 for the Company. Following the disposals and
investment in March 2023, Vela remained interested in 1,109,707 ordinary
shares representing 1.42% of the issued share capital at the period end.
Part disposal of investment in Ethernity Networks Ltd
In March 2023 the Company disposed of 350,000 shares in Ethernity generating
gross proceeds of £25,222. Following the disposal Vela remains interested in
350,000 shares representing 0.34% of the current issued share capital.
Part disposal of investment in Kanabo Group PLC ("Kanabo")
In February 2023 the Company disposed of 150,000 shares in Kanabo, generating
gross proceeds of £5,000. Following the disposal Vela remains interested in
1,157,692 shares representing 1.1% of the current issued share capital.
9 Trade and other receivables - non-current
31 March 31 March
2023 2022
£'000 £'000
Loan due from BIXX Tech Limited 704 674
Other financial asset 2,350 2,350
3,054 3,024
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 previous financial
statements. The total consideration receivable is £855,000, which is
receivable after seven years. The consideration has been discounted at a
market interest rate at the time of the transaction of 4.5% to reflect the
deferred payment term. Income of £30,000 (2022: £29,000), 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 £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 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 contract does not include
a defined exit date and so has been classified as non-current at the reporting
date, as the Company did not have an unconditional right to require settlement
of the contract within 12 months.
At the previous reporting date, SGSC had successfully completed the Phase II
trials and had 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
took into consideration when estimating its fair value as at 31 March 2023.
The directors considered the position at the balance sheet date and were of
the view that there had not been any major developments (either positive or
negative) or milestones achieved in the period up to 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 a standalone
contract, as at 31 March 2023.
Post year end the Company entered into a put option for the potential sale of
its interest in the Asset. Further details are disclosed at note 20.
10 Trade and other receivables
31 March 31 March
2023 2022
£'000 £'000
Other receivables - 1
Convertible loan - 750
- 751
In January 2022, the Company invested £750,000 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. EnSilica's shares were admitted
to trading on AIM in May 2022, at which point the Company exercised its
conversion rights and received 1,764,788 ordinary shares representing 2.3 per
cent of the issued share capital.
11 Derivative financial instruments
31 March 31 March
2023 2022
£'000 £'000
Warrants 72 63
72 63
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
2023 2022
£'000 £'000
Trade payables 3 1
Accruals 35 20
38 21
13 Share capital
31 March 31 March
2023 2022
£'000 £'000
Allotted, called up and fully paid capital
16,252,335,184 Ordinary Shares of 0.01 pence each 1,625 1,625
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 3,291
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 £1,000,000 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
2023 2022
£'000 £'000
Cash and cash in bank:
Pound sterling 724 958
Cash and cash equivalents at end of year 724 958
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 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.
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
2023 2022
Classes of financial assets - carrying amounts £'000 £'000
Financial assets measured at fair value through profit or loss
5,615 5,016
Financial assets measured at amortised cost 704 1,425
6,319 6,441
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 eleven (2022: eight) 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 eleven investments is £3,145,110 (2022:
£2,343,803) and the fair value as at 31 March 2023 was £2,364,534 (2022:
£1,738,769).
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 (2022: two) unquoted investments classified
in this category. The historic cost of these investments is £450,000 (2022:
£450,000) and the fair value as at 31 March 2023 was £828,186 (2022:
£864,644). 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 four investee companies, which have been valued
using an option pricing model with observable inputs. The fair value of these
assets as at 31 March 2023 was £71,827 (2022: £63,194).
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 (2022: two) unquoted investments classified in this category.
The historic cost of these investments is £300,000 (2022: £300,000) and the
fair value as at 31 March 2023 was £nil (2022: £nil). 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 £2,350,000, 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 2023 31 March 2022
Within Later than Within Later than
1 year 1 year 1 year 1 year
£'000 £'000 £'000 £'000
At amortised cost 38 - 21 -
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
As at 1 April 2022 Non-cash movement As at 31 March 2023
Cash
flow
£'000 £'000 £'000 £'000
Cash and cash equivalents 958 (234) - 724
958 (234) - 724
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, 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 held a total of 104,562,427 share options equivalent to 1.46 per
cent. of the issued share capital of the Company at the time.
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 £5,000 (2022: £20,000).
Options were also granted to directors in September and October 2015. These
options were not exercised and lapsed in September and October 2022
respectively.
Details of the options outstanding at the year end and the inputs to the
option pricing model are as follows:
Options granted
26 August
2020
Share price at grant date (pence) 0.05
Exercise price (pence) 0.024
Expected life (years) 10
Annualised volatility (%) 86.9
Risk-free interest rate (%) 2.0
Fair value determined (pence) 0.03
Number of options granted 270,000,000
Options exercisable at 31 March 2022 270,000,000
The expected future annualised volatility was calculated using historic
volatility data for the Company's share price.
During the period 6,400,000 options granted in October 2015 and 10,489,560
options granted in September 2015 lapsed. The fair value of these options
recorded in the financial statements and processed as historic remuneration
expense was £24,130.
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
2023, the carrying value of the loan receivable was £704,000 (2022:
£674,000) and, at the scheduled maturity date, the final settlement value
will be £855,000.
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 £62,000 (2022:
£62,000) in respect of his Director's fees to the Company. The balance due to
Ocean Park Developments Limited at the year-end was £nil (2022: £nil).
Widdington Limited
Antony Laiker, Non-Executive Director, is also a Director of Widdington
Limited. During the year, the Company paid £7,000 (2022: £nil) in respect
of his Director's fees to the Company. The balance due to Widdington Limited
at the year-end was £nil (2022: £nil).
BIXX Tech Limited
Antony Laiker, a significant shareholder of Vela and Director during the
period under review 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
£855,000 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 Technologies Plc for consideration
of £1. As at 31 March 2023, the carrying value of the balance due from BIXX
Tech Limited was £704,000 (2022: £674,000).
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
Put Option for potential sale of Economic Interest in AZD1656
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 for a total consideration of £4.0 million. The Option was granted by
Conduit Pharmaceuticals Limited ("Conduit") and its prospective parent
company, Murphy Canyon Acquisition Corp ("Murphy"), a Company listed on
NASDAQ. Should the Option be exercised by Vela, the consideration that would
be payable to Vela will be satisfied through the issuance of new shares of
authorised common stock of par value $0.001 of Murphy. The Option is
exercisable solely at the discretion of Vela and Vela paid Conduit £400,000
in cash as the premium for the Option, with the consideration settled from
Vela's existing cash resources.
The Option is exercisable in whole at any time from the completion of
Conduit's merger with Murphy (being 25 September 2023) until 7(th) February
2024 at a price per share equal to the volume-weighted average price per share
over the ten business days prior to the date of notice of exercise, provided,
however, in no event shall the price per share be lower than $5 or higher than
$15. Should Vela exercise the option, the Company will hold shares in Murphy
(now re-named Conduit Pharmaceuticals Inc.) as a publicly traded company on
NASDAQ.
Investment in Tribe Technology Group Limited ("Tribe Tech")
In May 2023, Vela invested £250,000 in Tribe Tech via an advance subscription
agreement as part of a pre-IPO funding round. The IPO completed on 5
September 2023 and Vela was issued with shares at a price of 8p per share
which was equivalent to 80% of the IPO issue price. Following the investment
Vela is interested in 3,125,000 ordinary shares representing 1.41 per cent of
Tribe Tech's issued share capital.
Part Disposal of EnSilica Plc
Between May 2023 and September 2023 the Company disposed of a total of 163,000
shares at an average price of 68p per share, generating gross proceeds of
£110,537 for the Company. Following the disposals Vela remained interested in
946,707 ordinary shares representing 1.9% of EnSilica's issued share capital.
Part Disposal of Kanabo Group Plc ("Kanabo")
In May 2023, Vela sold 500,000 shares in Kanabo, generating gross proceeds of
£15,460 for the Company.
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 2023, 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
2023, 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.
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