Final results for the year ended 31 March 2023

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/

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 Brent Fitzpatrick, Non-Executive Chairman James Normand, Executive Director	Tel: [phone]
Allenby Capital Limited (Nominated Adviser)	Tel: [phone]
Nick Athanas / Piers Shimwell
Peterhouse Capital Limited (Broker)	Tel: [phone]
Lucy Williams / Duncan Vasey
Novus Communications (PR and IR Adviser)	Tel: [phone]
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 31 March 2023	Year ended 31 March 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 31 March 2023	Year ended 31 March 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	Retained	Share 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 £'000	31 March 2022 £'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 2023	31 March 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	Cash flow	Non-cash movement	As at 31 March 2023
	£'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.

 

END