REG - Vela Technologies - Interim Results
15/12/2022 07:00
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RNS Number : 7622J Vela Technologies PLC 15 December 2022
15 December 2022
Vela Technologies plc
("Vela" or "the Company")
Interim results for the six months ended 30 September 2022
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 2022.
Overview
The last six months have been extremely challenging for capital markets with
political unrest both at home and abroad, the continuing war in Ukraine and
rising inflation and interest rates. These factors have impacted the small-cap
marketplace in the UK; and Vela and its investment portfolio have not been
immune to such pressures.
Against this backdrop investors have taken a cautious approach with the
resultant withdrawal of capital from the markets during the period under
review.
Despite such negative effects we remain cautiously optimistic regarding the
long-term future of the Company's overall investment portfolio and we remain
committed to the Company's stated investing strategy.
In the period under review we continued to review a variety of potential
investments many of which either fail the process of scrutiny or due
diligence.
I am pleased to say that Vela's balance sheet remains strong with no debt and
total assets amounting to £7.268 million as at 30 September 2022 (31 March
2022: £7.399 million; 30 September 2021: £8.063 million). Cash and cash
equivalents as at 30 September 2022 were £0.646 million - £0.534 million was
held in Vela's bank and the remaining £0.112 million was held in trust with
the Company's retail stockbroker and custodian following the disposal of
investments towards the period-end (31 March 2022: £0.958 million; 30
September 2021: £2.518 million). Since 30 September 2021 the decrease in
Vela's cash reserves can be attributed to further investments in line with the
Company's investing policy (being Skillcast Group plc, EnSilica plc, Igraine
plc and TruSpine Technologies plc), as well as the ongoing administrative
costs associated with the Company.
The investment portfolio comprises a total of 13 investee companies. 12 of
these are held as investments and had a fair value of £3.546 million as at 30
September 2022 (31 March 2022 £2.603 million; 30 September 2021: £2.412
million). The remaining and largest investment, St George Street Capital
("SGS"), is held as a financial asset and remains on Vela's balance sheet at
its cost of £2.350 million. 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 2022, and, in
line with this, investments have been revalued to reflect the fair value at 30
September 2022.
Investment purchases and sales
During the period the following transactions were undertaken:
Investment in EnSilica plc
During May EnSilica listed 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 issued share capital.
Between May 2022 and the end of September 2022 the Company disposed of 138,653
shares in EnSilica at an average price of 49p per share, generating gross
proceeds of £68,219 for the Company. Following the disposals Vela remained
interested in 1,626,135 ordinary shares representing 2.2% of the issued share
capital at the period end.
Further sales were undertaken post the period end resulting in the Company
selling a total of 568,653 shares in EnSilica since the IPO in May at an
average price of 61p per share and generating aggregate net proceeds of
£349,469 for the Company. The sales post period-end are expected to generate
a realised gain of £90,984 for Vela in the current financial year to 31 March
2023. Vela retains 1,196,135 shares in EnSilica representing 1.6% of the
issued share capital.
Investment in TruSpine Technologies Plc
In June 2022 the Company completed the subscription for 6,000,000 ordinary
shares in TruSpine Technologies plc for a cost of £300,000, representing
5.07% of TruSpine's issued share capital. TruSpine continues to be in a
pre-revenue development phase and remains loss-making at the current stage of
its development. TruSpine announced on 31 October 2022 that its financial
position remained weak and that it is seeking alternative sources of
additional finance.
Partial disposal of investment in Cornerstone FS PLC
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 remains interested in 595,902 shares representing 1.2% of the
current issued share capital.
Partial disposal of investment in Northcoders Group plc
In September 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 remained interested in 316,666 shares representing 4.6% of the
issued share capital.
Post period end, in November 2022, the Company invested an additional £99,999
in Northcoders at a price of £3 per share, satisfied from the Company's
existing cash resources. The investment was part of a secondary placing in
Northcoders which followed an oversubscribed placing that raised £2.1 million
for Northcoders. Following this investment, Vela holds 349,999 ordinary shares
in Northcoders representing 4.6% of the issued share capital of Northcoders.
Vela continues to hold an economic interest in the commercialisation of a
particular application of AZD1656 via St George Street Capital. AZD1656 is
one of the assets of Conduit Pharmaceuticals Limited ("Conduit"). Conduit
announced on 9 November 2022 that it intends to become a publicly traded
company on NASDAQ in the US via a merger with Murphy Cannon Acquisition Corp.
("Murphy"), a NASDAQ-listed special purpose acquisition company. The Board
understands that SGS continues its discussions with third parties with a view
to commercialise AZD1656.
Outlook
The Board looks forward to the remainder of the financial year with caution
but ever-mindful of potential new and follow-on investments in line with the
strategic update announced on 2 September 2022.
Brent Fitzpatrick
Chairman
14 December 2022
Unaudited Statement of Comprehensive Income
for the six months ended 30 September 2022
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended Year Ended
30 September 30 September 31 March
2022 2021 2022
Notes £'000 £'000 £'000
Revenue - - -
Gross profit - - -
Administrative expenses
share-based payments - - -
other administrative expenses (171) (119) (347)
fair value movements on derivatives (26) - (75)
fair value movements on investments 55 (377) (685)
Total administrative expenses and loss from operations (142) (496) (1,107)
Finance income 15 - 29
Loss before tax (127) (496) (1,078)
Income tax - - -
Loss after tax (127) (496) (1,078)
Other comprehensive income for the year - - -
Total comprehensive loss (127) (496) (1,078)
Attributable to:
Equity holders of the company (127) (496) (1,078)
Loss per share
Basic and diluted loss per share (pence) 5 (0.0007) (0.0035) (0.0071)
Unaudited Balance Sheet
as at 30 September 2022
(Unaudited) (Unaudited) (Audited)
30 September 30 September 31 March
2022 2021 2022
Notes £'000 £'000 £'000
Assets
Investments 6 3,546 2,412 2,603
Non-current assets 7 3,039 2,995 3,024
Total non-current assets 6,585 5,407 5,627
Current assets
Trade and other receivables - - 751
Derivative financial instruments 8 37 138 63
Cash and cash equivalents 646 2,518 958
Total current assets 683 2,656 1,772
Total assets 7,268 8,063 7,399
Equity and liabilities
Equity
Called-up share capital 9 3,291 3,291 3,291
Share premium reserve 7,594 7,690 7,594
Share-based payment reserve 65 151 65
Retained earnings (3,699) (3,096) (3,572)
Total equity 7,251 8,036 7,378
Current liabilities
Trade and other payables 17 27 21
Total current liabilities 17 27 21
Total equity and liabilities 7,268 8,063 7,399
Unaudited Cashflow Statement
for the six months ended 30 September 2022
(Unaudited) (Unaudited) (Audited) Year ended
6 months ended 6 months ended
30 September 30 September 31
March
2022 2021 2022
£'000 £'000 £'000
Operating activities
Loss before tax (127) (496) (1,078)
Share based payment - - 20
Fair value movements on investments (55) 377 685
Fair value movements on derivative instruments 26 - 75
Finance income (15) - (29)
Decrease in receivables - 1 -
Decrease in payables (4) (21) (27)
Total cash flow from operating activities (175) (139) (354)
Investing activities
Acquisition of loan notes - - (750)
Acquisition of investments (300) (900) (1,581)
Proceeds from disposal of investments 163 80 262
Total cash flow from investing activities (137) (820) (2,069)
Financing activities
Proceeds from exercise of warrants - 1,330 -
Proceeds from the issue of ordinary shares - - 1,234
Total cash flow from financing activities - 1,330 1,234
Net (decrease)/increase in cash and cash equivalents (312) 317 (1,189)
Cash and cash equivalents at start of year/period 958 2,147 2,147
Cash and cash equivalents at the end of the year/period 646 2,518 958
Cash and cash equivalents comprise:
Cash at bank 534 2,518 958
Cash held in trust 112 - -
Cash and cash equivalents at end of year/period 646 2,518 958
Unaudited Statement of Changes in Equity
for the six months ended 30 September 2022
Share capital Share Premium Share Option Reserve Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2022 3,291 7,594 65 (3,572) 7,378
Loss for the period - - - (127) (127)
and total comprehensive income for the period
Balance at 30 September 2022 3,291 7,594 65 (3,699) 7,251
Balance at 1 April 2021 3,048 6,603 151 (2,600) 7,202
Issue of share capital - - - (496) (496)
Loss for the period
and total comprehensive income for the period 243 1,087 - - 1,330
Balance at 30 September 2021 3,291 7,690 151 3,096 8,036
Balance at 1 April 2021 3,048 6,603 151 (2,600) 7,202
Share-based payment - - 20 20
Lapse of options in the period - - (106) 106 -
Issue of share capital 243 991 - - 1,234
Loss for the period
and total comprehensive income for the period - - - (1,078) (1,078)
Balance at 31 March 2022 3,291 7,594 65 (3,572) 7,378
Notes to the Interim Accounts
for the six months ended 30 September 2022
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 2022 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 2022 and are presented in pounds
sterling.
The comparative figures for the financial year ended 31 March 2022 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. Loss per share
Loss per share has been calculated on a loss of £127,000 (six months to 30
September 2021: £496,000 loss; year to 31 March 2022: £1,078,000 loss) and
the weighted number of average shares in issue for the period of
16,252,335,184 (30 September 2021: 14,300,353,559; 31 March 2022:
15,091,929,620).
6 months ended 30 September 2022 6 months ended 30 September 2021 Year ended 31 March 2022
Loss (£'000) (127) (496) (1,078)
Earnings per share (pence) (0.0007) (0.0035) (0.0071)
6. Investments
Other Investments
£'000s
Fair value at 1 April 2022 2,603
Additions during the period 300
Conversion of convertible loan stock 750
Disposals during the period (162)
Current period fair value movement charged to profit or loss 55
Fair value at 30 September 2022 3,546
Investment in EnSilica plc
In May 2022, EnSilica successfully completed its admission onto the AIM
market. On admission Vela's investment of £750,000 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.
Between 24 May 2022 and 16 September 2022, the Company disposed of 138,653
shares in EnSilica at an average price of 49p per shares generating total
proceeds of £68,219. Following these disposals Vela was interested in
1,626,135 ordinary shares representing 2.16 per cent of the issued share
capital. Post period end Vela has made subsequent disposals of shares in
EnSilica as announced by the Company on 6 December 2022.
Investment in TruSpine Technologies Plc
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 per cent of
TruSpine's issued share capital.
Disposal of investment in Cornerstone FS PLC
In July 2022, the Company disposed of 50,000 shares in Cornerstone at a price
of 14.2p, generating gross proceeds of £7,115. Following the disposal Vela
was interested in 595,902 shares representing 1.2 per cent of the issued share
capital.
Disposal of investment in Northcoders Group plc
In September 2022, the Company disposed of 25,000 shares in Northcoders at a
price of £3.50, 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. Post period end Vela made a follow-on investment of £99,999 in
Northcoders as announced by the Company on 28 November 2022.
7. Trade and other receivables - non-current
30 September 30 September 31 March
2022 2021 2022
£'000 £'000 £'000
Loan due from Bixx Tech Limited 689 645 674
Other financial asset 2,350 2,350 2,350
3,039 2,995 3,024
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 September 30 September 31 March
2022 2021 2022
£'000 £'000 £'000
Warrants 39 138 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.
9. Share capital
Authorised capital 30 September 2022 30 September 2021 31 March 2022
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 1,625 1,625
Deferred shares of 0.08 pence each 1,399 1,399 1,399
Special deferred shares of 0.01p 267 267 267
3,291 3,291 3,291
Allotments during the period
The Company allotted the following ordinary shares during the period:
6 months ended 30 September 2022
Shares in issue at 1 April 2022 16,252,335,184
Shares issued during the period -
Shares in issue at 30 September 2022 16,252,335,184
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
Year ended 31 March 2022
Shares in issue at 1 April 2021 13,818,450,084
Shares issued during the year 2,433,885,100
Shares in issue at 31 March 2022 16,252,335,184
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 ten (30 September 2021: six; 31 March 2022: eight)
investments classified in this category. The aggregate historic cost of the
six investments is £3,393,803 (30 September 2021: £1,597,058; 31 March 2022:
£2,343,803) and the fair value as at 30 September 2022 was £2,681,046 (30
September 2021: £1,635,210; 31 March 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 (30 September 2021: two; 31 March 2022: two)
unquoted investments classified in this category. The historic cost of these
investments is £450,000 (30 September 2021: £450,000; 31 March 2022:
£450,000) and the fair value as at 30 September 2022 was £864,644 (30
September 2021; £777,144; 31 March 2022: £864,644).
Valued using models with significant unobservable market parameters - "Level
3"
The Company has two (30 September 2021: two; 31 March 2022: two) investments
that are held at cost less impairment because a reliable estimate of fair
value cannot be determined. As at 30 September 2022 the historical cost of
these investments amounted to £300,000 (30 September 2021: £300,000; 31
March 2022: £300,000) and the aggregate carrying value was £nil (30
September 2021: £nil; 31 March 2022: £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 2021: £24,000; year ended 31 March 2022: £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 2021 £nil; 31
March 2022: £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 2022 Annual Report and Accounts.
13. Post balance sheet events
Disposals of EnSilica plc
Between 17 October 2022 and 2 December 2022, the Company disposed of 430,000
shares in EnSilica at an average price of 65p per share, generating total
proceeds of £281,250. Following the disposals Vela was interested in
1,196,135 ordinary shares representing 1.6 per cent of the issued share
capital.
Further investment in Northcoders Group plc
In November 2022, the Company purchased a further 33,333 ordinary 1p shares in
Northcoders for £99,999. Following the acquisition Vela was interested in
349,999 shares representing 4.55 per cent of the issued share capital.
14. Board approval
These interim results were approved by the Board of Vela Technologies plc on
14 December 2022.
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