REG - Vela Technologies - Half-year Report
31/12/2021 07:00
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RNS Number : 1117X Vela Technologies PLC 31 December 2021
31 December 2021
Vela Technologies plc
("Vela" or the "Company")
Interim Results for the six months ended 30 September 2021
Vela Technologies plc (AIM: VELA), an AIM quoted investing company focused on
early stage and pre-IPO disruptive technology investments, is pleased to
announce its interim results for the six months ended 30 September 2021.
Overview
Vela has a strong balance sheet with no debt and total assets amounting
to £8.06 million as at 30 September 2021 (31 March 2021: £7.25 million; 30
September 2020: £3.08 million). Cash and cash equivalents as at 30
September 2021 were £2.52 million (31 March 2021: £2.15 million; 30
September 2020: £1.63 million). The investment portfolio had a fair value of
£2.41 million as at 30 September 2021 (31 March 2021: £1.97 million; 30
September 2020: £0.86 million). This excludes the investment in St George
Street Capital ("SGSC") which is held in the balance sheet as a non-current
asset at a value of £2.35 million, the consideration payable by Vela for
their interest in SGSC in October 2020.
Whilst the six months have been a quieter period for Vela the Board spent a
good deal of time reviewing a variety of potential investments, many of which
were turned down following due diligence. The Company made two investments in
the period under review, being a £150,000 follow-on investment in Cornerstone
FS plc in April 2021 at the time of its admission to trading on AIM and a
significant new investment in Northcoders Group plc, as detailed below. The
Company now has a portfolio of 11 investments inclusive of its interest in
SGSC.
In April 2021 the Company completed the sale of 310,000 shares in North Peak
Resources resulting in a cash consideration of approximately £130,112.
The Company made a new and significant investment in Northcoders Group PLC at
the time of its admission to trading on AIM and as part of an overall £3.5
million fundraise. The investment has enabled Vela to gain exposure to online
and in person training in software coding. Vela invested £750,000 in cash
from its existing resources for a 6.01% shareholding.
During September 2021 the Company was pleased to appoint Emma Wilson to the
Board as an Executive Director. Emma qualified as a chartered accountant in
2001 and since qualification has been employed in senior finance positions in
large and small practices and commerce. Emma is taking principal
responsibility for Vela's finance and company secretarial functions as well as
playing a full part in other board responsibilities including investment
appraisal and monitoring.
Events since the end of the period
As at 30 September 2021 it was not possible to impute a value for Vela's
holding in WeShop Limited, a long standing investee company, and so no
amendment has been made in the half-year financial statements to the value
attributed to them in the 31 March 2021 financial statements. In November
2021, however, WeShop sold its name, business and assets to Boanerges Limited.
The consideration for the sale was Boanerges shares, which are traded on JP
Jenkins' matched-bargain exchange. The last traded price at which Boanerges
shares changed hands would give Vela's WeShop shares a value in excess of the
value which they are reflected in the last published annual balance sheet and
as at 30 September 2021. Any change in value will be reflected in the
financial statements for the year ended 31 March 2022.
At the beginning of December 2021, Vela subscribed £250,000 of a £4.5
million initial public offering of shares in Skillcast Group plc as part of
its admission to the AIM market of the London Stock Exchange. Skillcast
provides software and content subscriptions and related professional services
to enable companies to implement and maintain their staff compliance and
training obligations.
On 14 December 2021, SGSC, the charitable body responsible for the Arcadia
covid-19 drug trial, announced that, having successfully completed the phase
II clinical trial, it was now embarking on commercial discussions with
potential licensees and partners and examining options for the next stage of
the development and approval process.
Financial Results
The operating loss for the six months to 30 September 2021 was £496,000 (30
September 2020: £63,000) which includes impairments of
£377,000 (30 September 2020: £289,000 positive).
The net movement in the fair value of investments reflects the market value of
those investee companies that are listed on the stock exchange. The most
disappointing of these is Vela's investment in Cornerstone FS plc, shares in
which were listed on AIM in April 2021 at a price of 61p which at 30 September
2021 were trading at 27p. The Board of Vela has been in discussion with
Cornerstone's management and has received explanations for the delays in
Cornerstone achieving the plans set out in its admission document. Vela has
been encouraged by these discussions and by a research note recently issued by
Hardman & Co.
Outlook
The Board remains confident that significant investment opportunities exist
for the Company going forward and looks forward to the remainder of the
financial year being a period in which Vela can utilise the funds at
its disposal towards further investments, both new and follow-on
investments.
Brent Fitzpatrick
Chairman
30 December 2021
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 and Joint Broker) Tel: +44 (0) 20 3328 5656
Nick Athanas/Piers Shimwell
Peterhouse Capital Limited (Joint Broker) Tel: +44 (0) 20 7469 0930
Lucy Williams / Duncan Vasey / Eran Zucker
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.
Unaudited Statement of Comprehensive Income
for the six months ended 30 September 2021
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended Year
Ended
30 September 30 31
September March
2021 2020 2021
Notes £'000 £'000 £'000
Revenue - - -
Gross profit - - -
Administrative expenses
share based payments - (57) (21)
other administrative expenses (119) (295) (400)
fair value movements on derivatives - - 138
fair value movements on investments (377) 289 666
Total administrative expenses and (loss) from operations (496) (63) 383
Finance income - - 16
Finance expense - - (19)
(Loss)/Profit before tax (496) (63) 380
Income tax - - -
(Loss)/Profit after tax (496) (63) 380
Other comprehensive income for the year - - -
Total comprehensive (loss)/income (496) (63) 380
Attributable to:
Equity holders of the company (496) (63) 380
Earnings / (loss) per share
Basic and diluted (loss) per share (pence) 5 (0.00) (0.00) 0.05
Unaudited Balance Sheet
as at 30 September 2021
(Unaudited) (Unaudited) (Audited)
30 September 30 September 31
March
2021 2020 2021
Notes £'000 £'000 £'000
Assets
Investments 6 2,412 586 1,969
Non-current assets 7 2,995 855 2,995
Total non-current assets 5,407 1,441 4,964
Current assets
Trade and other receivables - 13 1
Derivative financial instruments 8 138 - 138
Cash and cash equivalents 2,518 1,628 2,147
Total current assets 2,656 1,641 2,286
Total assets 8,063 3,082 7,250
Equity and liabilities
Equity
Called up share capital 9 3,291 2,445 3,048
Share premium reserve 7,690 3,459 6,603
Share-based payment reserve 151 130 151
Retained earnings (3,096) (3,043) (2,600)
Total equity 8,036 2,991 7,202
Current liabilities
Trade and other payables 27 91 48
Total current liabilities 27 91 48
Total equity and liabilities 8,063 3,082 7,250
Unaudited Cashflow Statement
for the six months ended 30 September 2021
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended year
ended
30 September 30 September 31
March
2021 2020 2021
£'000 £'000 £'000
Operating activities
(Loss)/Profit before tax (496) (63) 380
Share based payment - (289) 21
Fair value movements on investments 377 - (666)
Fair value movements on derivative instruments - - (138)
Finance expenses - - 19
Finance income - - (16)
Issue of shares in lieu of services - 57 -
Decrease/(Increase) in receivables 1 (855) 12
(Decrease)/Increase in payables (21) 37 (6)
Total cash flow from operating activities (139) (1,113) (394)
Investing activities
Consideration for disposal of investment 80 898 512
Consideration for purchase of financial asset - - (1,250)
Consideration for purchase of investment (900) - (1,248)
Total cash flow from investing activities (820) 898 (1,986)
Financing activities
Interest paid - - (19)
Proceeds from exercise of warrants 1,330 926 -
Proceeds from the issue of ordinary share - 917 4,537
Total cash flow from financing activities 1,330 1,843 4,518
Net increase in cash and cash equivalents 371 1,619 2,138
Cash and cash equivalents at start of year/period 2,147 9 9
Cash and cash equivalents at the end of the year/period 2,518 1,628 2,147
Cash and cash equivalents comprise:
Cash and cash in bank 2,518 1,628 2,147
Cash and cash equivalents at end of year/period 2,518 1,628 2,147
Unaudited Statement of Changes in Equity
for the six months ended 30 September 2021
Share capital Share Premium Share Option Reserve Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2021 3,048 6,603 151 (2,600) 7,202
Loss for the period - - - (496) (496)
and total comprehensive income for the period
Exercise of warrants 243 1,087 - - 1,330
Balance at 30 September 2021 3,291 7,690 151 3,096 8,036
Balance at 1 April 2020 1,749 1,715 130 (2,980) 614
Issue of share capital 696 1,744 - - 2,440
Loss for the period
and total comprehensive income for the period - - - (63) (63)
Balance at 30 September 2020 2,445 3,459 130 (2,917) 2,991
Balance at 1 April 2020 1,749 1,715 130 (2,980) 614
Share based payment - - 21 - 21
Issue of share capital 1,299 4,888 - - 6,187
Loss for the period
and total comprehensive income for the period - - - 380 380
Balance at 31 March 2021 3,048 6,603 151 (2,600) 7,202
Notes to the Interim Accounts
for the six months ended 30 September 2021
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 2021 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 2021 and are presented in pounds
sterling.
The comparative figures for the financial year ended 31 March 2021 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. Investments
Fixed asset investments are stated at fair value.
5. Earnings / (loss) per share
Earnings per share have been calculated on a loss of £496,000 (six months to
30 September 2020: £63,000 loss; year to 31 March 2021: £380,000 profit) and
the weighted number of average shares in issue for the period of
14,300,353,559 (30 September 2020: 6,268,041,075; 31 March 2021:
7,383,146,119).
Reconciliation of the loss and weighted average number of shares used in the
calculations are set out below:
6 months ended 6 months ended Year
30 September 30 September 2020 ended
2021 31 March
2021
(Loss)/Profit (£'000) (496) (63) 380
Earnings per share (pence) (0.00) (0.00) 0.05
6. Investments
Other
Investments
Fair value at 1 April 2021 1,969
Additions during the period 900
Disposals during the period (80)
Current period fair value movement charged to profit or loss (376)
Fair value at 30 September 2021 2,413
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
£74,858 and the sales proceeds amounted to approximately CAD$138,942
(approximately £80,000).
Investment in Cornerstone FS Plc
In April 2021, the Company completed the subscription for 245,902 new ordinary
shares in Cornerstone for a cost of £150,000 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 £750,000 in Northcoders Group PLC. The
Company acquired 416,666 new ordinary shares of 1p each at a price of 180p per
share which represented an investment of 6% of its then issued share capital.
7. Non-current assets
30 30 31
September September March
2021 2020 2021
£'000 £'000 £'000
Loan due from Bixx Tech Limited 645 855 645
Other financial asset 2,350 - 2,350
2,995 855 2,995
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. 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 consideration shares at a price of 0.1 pence per share.
The directors consider 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.
8. Derivative financial instruments
30 30 31
September September March
2021 2020 2021
£'000 £'000 £'000
Warrants 138 - 138
138 - 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.
9. Share capital
Authorised capital 30 30 31
September September March
2021 2020 2021
9,999,520,000 ordinary shares of 0.1 pence each 10,000 10,000 10,000
10,000 10,000 10,000
Allotted, called up and fully paid capital
New Ordinary shares of 0.01 pence each 1,625 871 1,382
Deferred shares of 0.08 pence each 1,399 1,399 1,399
Special deferred shares of 0.01p 267 175 267
3,291 2,445 3,048
Allotments during the period
The Company allotted the following ordinary shares during the period:
6 months ended
30 September 2021
Shares in issue at 1 April 2021 13,818,450,084
Shares issued during the period 2,433,885,100
Shares in issue at 30 September 2021 16,252,335,184
6 months ended
30 September 2020
Shares in issue at 1 April 2020 1,718,943,717
Shares issued during the period 6,995,384,109
Shares in issue at 30 September 2020 8,714,327,826
Year ended
31 March 2021
Shares in issue at 1 April 2020 1,718,943,717
Shares issued during the year 12,099,506,367
Shares in issue at 31 March 2021 13,818,450,084
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 proceeds of £14,851.
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 proceeds of £21,000.
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 proceeds of £26,447.
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 proceeds of £70,250.
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 proceeds of
£834,853.
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 proceeds of
£362,530.
10. 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 six (31 March 2021: six) investments classified in
this category. The aggregate historic cost of the six investments is
£1,597,058 (31 March 2021: £1,270,672) and the fair value as at 30 September
2021 was £1,635,310 (31 March 2021: £1,192,164)
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 (31 March 2021: two) unquoted investment
classified in this category. The historic cost of this investment is £450,000
(31 March 2021: £450,000) and the fair value as at 30 September 2021 was
£777,144 (31 March 2021: £777,144).
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. None of
the Company's investments are valued using this technique.
The Company has two (31 March 2021: two) investments that are held at cost
less impairment because a reliable estimate of fair value cannot be
determined. As at 30 September 2021 the historical cost of these investments
amounted to £300,000 (31 March 2021: £300,000) and the aggregate carrying
value was £nil (31 March 2021: £nil).
11. 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
Nigel 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 2020: £21,000; year ended 31 March 2021: £62,000)
in respect of his director's fees to the Company. The balance due to Ocean
Park Developments at the period end was £nil (30 September 2020 £nil; 31
March 2021: £nil).
12. 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 2021 Annual Report and Accounts.
13. Post balance sheet events
Investment in Skillcast Group plc
The Company announced on 1 December 2021 that it had invested £250,000 in
Skillcast Group plc as part of an IPO funding round by Skillcast which raised
an aggregate £3,500,000 for the company.
14. Board approval
These interim results were approved by the Board of Vela Technologies PLC on
30 December 2021.
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