REG - Vela Technologies - Interim Results
22/12/2023 07:00
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RNS Number : 6851X Vela Technologies PLC 22 December 2023
22 December 2023
Vela Technologies plc
("Vela" or "the Company")
Interim results for the six months ended 30 September 2023
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 2023.
Overview
The last six months have continued to be challenging for capital markets with
political unrest continuing both at home and abroad, the continuing war in
Ukraine and rising inflation and interest rates continue to be factors
impacting the small-cap marketplace in the UK. 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.
Despite these negatives, post period end we were pleased to be able to
exercise the put option in the economic interest that the Company holds in AZD
1656 into shares in Conduit Pharmaceuticals Inc. ("Conduit"). As previously
reported Vela entered into a put option at a cost of £400,000. Following
the exercise Vela received 1,015,760 new shares in Conduit, valued at the date
of exercise at £3.75 million (the "Consideration Shares"). It is the
intention of the Board to sell these shares in due course to augment its cash
reserves. On 15 December 2023, Conduit issued a prospectus in connection with
various share issuances, including the issue of the Consideration Shares to
Vela. Following the publication of the prospectus Vela became able to trade
its Consideration Shares on NASDAQ.
Vela made one new investment during the period, investing £250,000 into Tribe
Technologies PLC as part of an IPO funding round. During the period we have
continued to monitor the investments and have made some small sales when the
prices were favourable.
Turning to the financials, I am pleased to say that Vela's balance sheet
remains strong with no debt and total assets amounting to £7.542 million as
at 30 September 2023 (30 September 2022: £7.268 million; 31 March 2023:
£7.043 million). Cash and cash equivalents as at 30 September 2023 were
£31,000 (31 March 2023: £724,000; 30 September 2022: £646,000). Since 31
March 2023 the decrease in Vela's cash reserves can be attributed to further
investments in line with the Company's investing policy (being Tribe
Technology Plc and the put option for Conduit), as well as the ongoing
administrative costs associated with the Company.
As at 30 September 2023, the investment portfolio comprises a total of 15
investee companies. 14 of these are held as investments and had a fair value
of £2.789 million as at 30 September 2023 (31 March 2023 £3.193 million; 30
September 2022: £3.546 million). The remaining and largest investment, St
George Street Capital, is held as a financial asset and is held on Vela's
balance sheet at a fair value of £4.0 million (30 September 2022: £2.35
million; 31 March 2023: £2.35 million) with a cost of £2.750 million,
including the previously acquired, and now exercised, put option. 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 2023, and, in line with this, investments have been
revalued to reflect the fair value at 30 September 2023.
Vela has made no new investments since the period end, as we continue to
monitor cash reserves and company expenses, but the Board continues to have
meaningful dialogue with engaging parties as a potential to enhancing the Vela
offering.
The Board looks forward to the remainder of the financial year ending 31 March
2024 with caution but ever mindful of potential new and follow-on investments
in line with its investing policy and the strategic update announced on 2
September 2022. 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
21 December 2023
Unaudited Statement of Comprehensive Income
for the six months ended 30 September 2023
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended Year
Ended
30 September 30 31
September March
2023 2022 2023
Notes £'000 £'000 £'000
Revenue - - -
Fair value movements
- on derivatives (55) (26) 9
- on financial asset 1,250 - -
- on investments (518) 55 (26)
Net surplus (deficit) arising from fair value movements 677 29 (17)
Administrative expenses (181) (171) (401)
Operating profit (loss) 496 (142) (418)
Finance income 6 15 40
Profit (loss) before tax 502 (127) (378)
Income tax - - -
Profit (loss) after tax 502 (127) (378)
Other comprehensive income for the year - - -
Total comprehensive profit (loss) 502 (127) (378)
Attributable to:
Equity holders of the company 502 (127) (378)
Profit (loss) per share
Basic and diluted profit (loss) per share (pence) 4 0.0031 (0.0008) (0.0023)
Unaudited Balance Sheet
as at 30 September 2023
(Unaudited) (Unaudited) (Audited)
30 September 30 September 31
March
2023 2022 2023
Notes £'000 £'000 £'000
Non-current assets
Investments 5 2,789 3,546 3,193
Trade and other receivables 6 4,704 3,039 3,054
Total non-current assets 7,493 6,585 6,247
Current assets
Derivative financial instruments 7 18 37 72
Cash and cash equivalents 31 646 724
Total current assets 49 683 796
Total assets 7,542 7,268 7,043
Equity and liabilities
Equity
Called-up share capital 8 3,291 3,291 3,291
Share premium reserve 7,594 7,594 7,594
Share-based payment reserve 46 65 46
Retained earnings (3,424) (3,699) (3,926)
Total equity 7,507 7,251 7,005
Current liabilities
Trade and other payables 35 17 38
Total current liabilities 35 17 38
Total equity and liabilities 7,542 7,268 7,043
Unaudited Cashflow Statement
for the six months ended 30 September 2023
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended year
ended
30 September 30 September 31
March
2023 2022 2023
£'000 £'000 £'000
Operating activities
Proft (loss) before tax 502 (127) (378)
Share based payment - - 5
Fair value movements on investments (732) (55) 26
Fair value movements on derivative instruments 55 26 (9)
Finance income (6) (15) (40)
Decrease in receivables - - 1
Increase (decrease) in payables 2 (4) (17)
Total cash flow from operating activities (179) (175) (378)
Investing activities
Interest received
- - 10
Proceeds from sale of investments 136 163 709
Payment for put option (400) - -
Purchase of investments (250) (300) (575)
Total cash flow from investing activities (514) (137) 144
Financing activities
Proceeds from exercise of warrants - - -
Proceeds from the issue of ordinary shares - - -
Total cash flow from financing activities - - -
Net decrease in cash and cash equivalents (693) (312) (234)
Cash and cash equivalents at start of year/period 724 958 958
Cash and cash equivalents at the end of the year/period 31 646 724
Cash and cash equivalents comprise:
Cash at bank 31 534 724
Cash held in trust - 112 -
Cash and cash equivalents at end of year/period 31 646 724
Unaudited Statement of Changes in Equity
for the six months ended 30 September 2023
Share capital Share Premium Share Option Reserve Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000
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 2022 3,291 7,594 65 (3,572) 7,378
Loss and total comprehensive income for the period - - - (127) (127)
Balance at 30 September 2022 3,291 7,594 65 (3,699) 7,251
Balance at 1 April 2022 3,291 7,594 65 (3,572) 7,378
Share-based payment - - 5 - 5
Lapse of options in the period - - (24) 24 -
Loss and total comprehensive income for the period - - - (378) (378)
Balance at 31 March 2023 3,291 7,594 46 (3,926) 7,005
Notes to the Interim Accounts
for the six months ended 30 September 2023
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 2023 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 2023 and are presented in pounds
sterling.
The comparative figures for the financial year ended 31 March 2023 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. Profit (loss) per share
Profit / (Loss) per share has been calculated on a profit of £502,000 (six
months to 30 September 2022: £127,000 loss; year to 31 March 2023: £378,000
loss) and the weighted number of average shares in issue for the period of
16,252,335,184 (30 September 2022: 16,252,335,184; 31 March 2023:
16,252,335,184).
6 months ended 6 months ended Year
30 September 30 September 2022 ended
2023 31 March
2023
Profit (loss) (£'000) 502 (127) (378)
Earnings (loss) per share (pence) 0.0031 (0.0008) (0.0023)
5. Investments
Other
Investments
£'000s
Fair value at 1 April 2023 3,193
Additions during the period 250
Disposals during the period (136)
Current period fair value movement charged to profit or loss (518)
Fair value at 30 September 2023 2,789
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 in 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 the issued share capital after
these disposals.
Part Disposal in Kanabo Group Plc
In May 2023 the Company disposed of a total of 500,000 shares at a price of 3p
per share, generating gross proceeds of £15,460 for the Company. Following
the disposals Vela remained interested in 657,692 ordinary shares.
Part Disposal in Northcoders Group Plc
In May 2023 the Company disposed of a total of 2,500 shares at a price of
£3.00 per share, generating gross proceeds of £7,189 for the Company.
Following the disposals Vela remained interested in 347,499 ordinary shares.
6. Trade and other receivables - non-current
30 30 31
September September March
2023 2022 2023
£'000 £'000 £'000
Loan due from Bixx Tech Limited 704 689 704
Other financial asset 4,000 2,350 2,350
4,704 3,039 3,054
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.
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.
In April 2023, the Company entered into a put option agreement (the "Option")
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 at that time.
On exercise of the Option 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.
On 21 September 2023 Conduit completed its merger with Murphy and its shares
were listed on NASDAQ. Following the listing on NASDAQ the put option became
exercisable. As a result, at 30 September 2023 Vela was in a position to
exchange its £2.75 million economic interest in AZD1656 for £4 million worth
of Conduit shares. This is reflected in the valuation of the 'other financial
asset' at the half-year end.
Subsequent to the half-year period end (on 1 December 2023) Vela exercised the
put option to sell its economic interest for shares in Conduit. Under the
terms of the put option Vela received 1,015,760 new shares of authorised
common stock of par value $0.001 in Conduit.
7. Derivative financial instruments
30 30 31
September September March
2023 2022 2023
£'000 £'000 £'000
Warrants 18 39 72
18 39 72
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
2023 2022 2023
16,252,335,184 Ordinary Shares of 0.01 pence each 1,625 1,625 1,625
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
3,291 3,291 3,291
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 twelve (30 September 2022: ten; 31 March 2022:
eleven) investments classified in this category. The aggregate historic cost
of these investments is £3,393,803 (30 September 2022: £3,393,803; 31 March
2022: £3,145,110) and the fair value as at 30 September 2023 was £1,961,310
(30 September 2022: £2,681,046; 31 March 2022: £2,364,534)
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 2022: two; 31 March 2023: two)
unquoted investments classified in this category. The historic cost of these
investments is £450,000 (30 September 2022: £450,000; 31 March 2023:
£450,000) and the fair value as at 30 September 2022 was £828,186 (30
September 2022; £764,644; 31 March 2023: £828,186).
Valued using models with significant unobservable market parameters - "Level
3"
The Company has two (30 September 2022: two; 31 March 2023: two) investments
that are held at cost less impairment because a reliable estimate of fair
value cannot be determined. As at 30 September 2023 the historical cost of
these investments amounted to £300,000 (30 September 2022: £300,000; 31
March 2023: £300,000) and the aggregate carrying value was £nil (30
September 2022: £nil; 31 March 2023: £nil).
The Company also holds a non-current financial asset described in note 9 to
the financial statements at a fair value of £4,000,000 (30 September 2022:
£2,350,000; 31 March 2023: £2,350,000). The historic cost of the asset is
£2,750,000 (30 September 2022: £2,350,000; 31 March 2023: £2,350,000).
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 2022: £24,000; year ended 31 March 2023: £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 2022 £nil; 31
March 2023: £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 15 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 2023 Annual Report and Accounts.
12. Board approval
These interim results were approved by the Board of Vela Technologies plc on
21 December 2023.
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