Final Results

RNS Number : 5277N

Vela Technologies PLC

30 September 2021

 

30 September 2021

Vela Technologies plc

("Vela" or "the Company")

Final results for the year ended 31 March 2021

The Board of Vela (AIM: VELA), an AIM quoted investing company focused on early stage and pre-IPO disruptive technology investments, announces its final results for the year ended 31 March 2021.

Vela's Annual Report and Financial Statements for the year ended 31 March 2021 will today be posted to shareholders and made available on the Company's website at http://www.velatechplc.com/ . The Company's notice of annual general meeting will be published separately and announced by the Company at that time.

chairman's statement

for the year ended 31 March 2021

I am pleased to present the Chairman's statement for the year ended 31 March 2021.

The period under review has been one of significant change for Vela Technologies, including a recapitalisation of the Company, board changes and new investments. During the period the Company raised a total of £3,750,000 gross proceeds via placings and a number of warrant exercises contributed gross funds of £1,063,000. James Normand joined the board on 26 August 2020 on completion of the recapitalisation of the Company. James is a Chartered Accountant who has spent much of his career advising on corporate acquisitions, disposals and capital raising, including a spell at 3i plc and is currently, inter alia, the Chairman of All Active Asset Capital Limited and of Global Resources Investment Trust plc. His experience is already proving an asset to Vela.

The Company reported a profit for the period of £379,775 compared to a loss of £1,412,100 in the previous comparable period.

Net assets increased to £7,201,812 compared to £613,611 at the previous reporting date with cash at the period end of £2,147,070 compared to £8,989 at the beginning of the period.

The Company's improved position has quite naturally generated a significant flow through of new investment opportunities and each is robustly reviewed by the board for its future benefit to the Vela portfolio. We continue to remain open to new opportunities that fall within the constraints of the Company's investing policy. 

PORTFOLIO REVIEW

Aeristech Limited

Aeristech is a producer and supplier of efficient, power-dense compressors, which are used to maximise the power output and efficiency of hydrogen fuel cells. Aeristech's unique turn-key motor and controller technology provides many benefits for hydrogen cells, including reducing high power switching events, enabling high-speed and high-power motors, reducing heat loss and reducing costs by removing the need for high-cost specialist components. In February 2021, Vela invested £350,000 as part of a pre-IPO funding round at a price of £2.40 per share for 145,833 shares which gives Vela a holding of 0.92% on a fully diluted basis. The Company was also issued with 36,458 warrants with a two-year term and an exercise price of £2.40 per ordinary share.

Blockchain K2

During January, the Company sold its entire holding of 272,000 shares for a profit of circa £172,000.

Cornerstone FS PLC

Cornerstone is focused on the provision of cross border payment services for SMEs. In December, Vela subscribed for 400,000 shares as part of a private funding round which equated to an investment of £200,000. In addition, the Company was issued with 400,000 warrants with a 5-year term and an exercise price of 50p per share.

Disruptive Tech Limited

Disruptive Tech Limited ("DTL") is an investor in a number of technology businesses. We anticipate minimal return from this investment and therefore the investment has been written off as at the reporting date. The investment was valued at £50,000 in Vela's last published accounts.

Revolve

The business provided engineering services for a number of OEM's, and has had much success in the development of low carbon technologies with applications in the passenger car, commercial vehicle and rail applications. However, Revolve is undergoing a reorganisation and therefore the investment has been written down to nil as at the reporting date. The investment was valued at £56,000 in Vela's last published accounts.

Kanabo Group PLC

Kanabo is an Israel based research and development company which currently sells a range of THC-free retail cannabidiol (CBD) products in its primary markets of the UK and Germany.  Kanabo's core strategy is to increase revenues from the sale of Kanabo's existing retail CBD products (vaporisation devices) and to grow the Kanabo brand through marketing initiatives. In February 2021, Vela invested £150,000 for 2,307,692 shares as part of a subscription and attained 0.6% of the issued share capital. On 19 February 2021, the company announced the sale of 1,000,000 shares generating proceeds of £233,801 at a sale price of 23.5p per share compared to an investment price per share of 6.5p. The company retains 1,307,692 shares in Kanabo.

Mode Global Holdings PLC

Mode is a UK-based Fintech Group, building a modern financial services business to support an increasingly digitised economy and financial system, combining the best of banking, payments, investment, loyalty and digital assets. In October 2020, the company supported an IPO funding and subscribed for 500,000 shares for a total investment of £250,000.  In March 2021, a further investment of £66,320 was made to subscribe for 120,651 shares. The investment was made to support additional growth. Vela's total holding equates to 0.68% of the issued share capital.

MTI Wireless

Headquartered in Israel, MTI is an AIM-listed technology group (AIM:MWE) focused on comprehensive communication and radio frequency solutions across multiple sectors through three core divisions. In March 2021, the Company acquired 250,000 shares at a price of 80p per share and total investment of £200,000. The Company's total holding represents 0.28% of MTI's issued share capital.

Rural Broadband Solutions PLC

Rural Broadband Solutions PLC (formerly Sapo PLC), is a provider of ultrafast 5Gb connectivity to rural broadband users across the UK.  In October 2020, Vela invested £30,300 for 1,200,000 shares, in a total fund raise of £2,500,900, at a subscription price of 2.5 pence per share.

St George Street Capital Limited

St George Street Capital Limited ("SGSC") is a UK-based medical-charity led by a group of highly decorated academics and ex-pharma executives formed to deliver much needed treatments to patients. SGSC's strategy is to take clinical-ready assets from pharmaceutical companies and to progress them through Phase II medical trials, before licensing them on for Phase III trials and commercialisation in order to create a return for investors and the charity alike.

Vela paid consideration of £2.35m (£1.25m in cash and £1.1m in the form of 1.1 billion new Vela shares) to acquire an 8% economic interest in the potential commercialisation of SGSC's asset to treat individuals with diabetes who are suffering with COVID-19. The consideration was satisfied by a placing of 1.1 billion new ordinary shares in Vela at a price of 0.1p per share and £1.25m in cash paid from Vela to SGSC. The 1.1 billion share issue gave SGSC a 9.37 % interest in Vela. Post-period, as of 16 September 2021, Vela announced that SGSC had, through a placing via Peterhouse Capital, realised their holding in Vela. SGSC no longer hold any shares in Vela.

WeShop

WeShop  is a digital social network platform with ambitious plans to become a global leader in the rapidly growing and highly valuable social e-commerce sector.  Vela continues to hold the 71,429 shares it acquired in May 2014.

Part disposal of portfolio

As part of the refinancing completed in August 2020, it was agreed to hive down to a wholly owned subsidiary certain assets with a value of £855,000, financed by a loan. In turn it was agreed to sell the subsidiary company to a new company formed for the purpose (Bixx Limited) for £1.  In order to protect the rights of Vela shareholders, the entire share capital of Bixx Limited is held by Vela's shareholders at the time of the reorganisation.

The assets transferred were as follows;

· 127,817 ordinary shares of 0.01p, 37,117 A ordinary shares of 0.01p, and 91,341 B ordinary shares of 0.01p in Portr Limited

· 3,000,000 ordinary shares in Argo Blockchain plc

· 5,674 ordinary shares in Vibe Group Holdings Limited

· 114,564 ordinary shares and 333,335 warrants for Class A shares (at an exercise price of $1.50 per Class A common share) in Stream TV Networks, Inc

· 10,484 ordinary shares in Advanced Laser Imaging Limited

· 185,000 ordinary shares in Nektan plc (in administration)

The Directors considered these investments to have an aggregate current market value of not more than £855,000 as at the date of the transaction.

I am pleased to report that your company is making excellent progress and we continue to review new investment opportunities in line with our investing policy. The directors would like to thank shareholders for their continued support.

strategic report

for the year ended 31 March 2021

Business review

At the period end, the Company held £2.147 million of cash (31 March 2020: c.£9,000) and continued to keep administration costs to a minimum so that the Company has sufficient resources to cover its ongoing running costs and has maximum funds that can be dedicated to further investments.

During the period, the Company completed a placing to raise gross proceeds of £1.0 million, approved by shareholders in August 2020, and a placing to raise gross proceeds of £1.5 million in March 2021. Additional funds totalling £860k (before expenses) were received in mid-September 2020 through the issue of shares following the exercise of warrants. These funds, together with other warrant exercises, have provided the Company with additional capital in order to make additional investments and to cover running costs. Further details regarding the shares issued during the period and after the period end are provided in notes 14 and 21 to the financial statements.

The Company's overall total comprehensive income for the year was a profit of £380,000 (2020: £1,412,000 loss). This profit has primarily arisen from fair value movements on the Company's investment portfolio.

The valuation of the investment portfolio at 31 March 2021 was £1,969,000 (2020: £1,196,000 ), an increase of £773,000 on 2020. During the year, Vela invested £1,248,000 in new investments. Further details of these investment additions are provided in note 8 to the financial statements. The Company also recorded an increase in the estimated fair value of the investment portfolio of £666,000 during the period. As appropriate, we update shareholders on investee company performance through the dissemination of regulatory announcements as information becomes available, and further detailed information on the investment portfolio can be found on our website.  The Company also made an investment in a non-current asset, St George Street Capital, which is valued at £2,350,000.

Further details and key points of the investments made and of the Company's investee companies are detailed in the Chairman's statement and in note 8 to the financial statements.

The Company had no employees and had a Board of one male Executive Director and one male Non-Executive Director during the period.

Principal risks and uncertainties

The preservation of its cash balances and management of the capital remain key risks for the Company, ensuring that investments are commensurate with the level of risk.

The Company is committed to maintaining minimal operational costs.

Further information about the Company's principal risks is detailed in note 16, specifically in the currency risk, credit risk, liquidity risk and capital risk management sections.

Approved by the Board of directors and signed on behalf of the Board on 29 September 2021.

Brent Fitzpatrick MBE

Non-Executive 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 and Joint Broker)	Tel: [phone]
Nick Athanas / Piers Shimwell
Peterhouse Capital Limited (Joint Broker)	Tel: [phone]
Lucy Williams / Duncan Vasey / Eran Zucker

About Vela Technologies plc 

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 2021

		31 March	31 March
		2021	2020
	Notes	£'000	£'000
Revenue	1	-	-
Administrative expenses
- other administrative expenses		(400)	(344)
- share based payments		(21)	-
- fair value movements on derivative instruments		138	-
- fair value movements on investments	8	666	(979)
Total administrative expenses		383	(1,323)
Operating Profit/( loss)	2	383	(1,323)
Finance income	4	16	-
Finance expense	4	(19)	(89)
Profit/(Loss) before tax		380	(1,412)
Income tax	6	-	-
Profit/( Loss)		380	(1,412)
Other comprehensive income		-	-
Total comprehensive income		380	(1,412)
Attributable to:
Equity holders of the Company		380	(1,412)
Earnings / (loss) per share
Basic and diluted earnings /(loss) per share (pence)	7	0.005	(0.092)

balance sheet

as at 31 March 2021

		31 March	31 March
		2021	2020
	Notes	£ '000	£'000
Non-current assets
Investments	8	1,969	1,196
Trade and other receivables	9	2,995	-
Total non-current assets		4 ,964	1,196
Current assets
Trade and other receivables	10	1	13
Derivative financial instruments	11	138	-
Cash and cash equivalents	15	2,147	9
Total current assets		2,286	22
Total assets		7,250	1,218
Equity and liabilities
Equity
Called up share capital	14	3,048	1,749
Share premium account		6,603	1,715
Share option reserve		151	130
Retained earnings		(2,600)	(2,980)
Total equity		7,202	614
Current liabilities
Trade and other payables	12	48	54
Loans and borrowings	13	-	550
Total current liabilities		48	604
Total equity and liabilities		7,250	1,218

These financial statements were approved by the Board, authorised for issue and signed on their behalf on 29 September 2021 by:

Brent Fitzpatrick MBE

Non-Executive Chairman

Company registration number: 03904195

cash flow statement

for the year ended 31 March 2021

		31 March	31 March
		2021	2020
	Notes	£'000	£'000
Operating activities
Profit/(Loss) before tax		380	(1,412)
Share based payment		21	-
Fair value movements on investments	8	(666)	979
Fair value movement on derivative assets		(138)	-
Finance expenses		19	89
Finance income		(16)	-
Decrease in receivables		12	-
(Decrease)/increase in payables		(6)	29
Total cash flow from operating activities		(394)	(315)
Investing activities
Consideration for disposal of investments		512	17
Consideration for purchase of financial asset		(1,250)	-
Consideration for purchase of investments		(1,248)	(91)
Total cash flow from investing activities		(1,986)	(74)
Financing activities
Interest paid		(19)	(55)
Repayment of loan notes		-	(240)
Proceeds from the issue of ordinary share capital		4,537	670
Total cash flow from financing activities		4,518	375
Net increase/(decrease) in cash and cash equivalents		2,138	(14)
Cash and cash equivalents at start of year		9	23
Cash and cash equivalents at the end of the year	15	2,147	9
Cash and cash equivalents comprise:
Cash and cash in bank		2,147	9
Cash and cash equivalents at end of year	15	2,147	9

statement of changes in equity

for the year ended 31 March 2021

	Share	Share	Retained	Share Option	Total
	Capital	Premium	Earnings	Reserve	Equity
	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2020	1,749	1,715	(2,980)	130	614
Transactions with owners
Share-based payment	-	-	-	21	21
Issue of share capital	1,299	4,888	-	-	6,187
Transactions with owners	1,299	4,888	-	21	6,208
Profit for the year	-	-	380	-	380
Total comprehensive income	-	-	380	-	380
Balance at 31 March 2021	3,048	6,603	(2,600)	151	7,202
Balance at 1 April 2019	837	1,715	(1,568)	130	1,114
Transactions with owners
Issue of share capital	912	-	-	-	912
Transactions with owners	912	-	-	-	912
Loss for the year	-	-	(1,412)	-	(1,412)
Other comprehensive income	-	-	-	-	-
Total comprehensive income	-	-	(1,412)	-	(1,412)
Balance at 31 March 2020	1,749	1,715	(2,980)	130	614

notes to the financial statements

for the year ended 31 March 2021

1 Revenue and segmental information

The Company is an investing company and as such there is only one identifiable operating segment, being the holding and support of investments.  Furthermore, the Company operates in 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 Profit/(loss) from operations

Profit/(loss) from operations is stated after charging/(crediting):

	31 March	31 March
	2021	2020
	£'000	£'000
Auditor's remuneration for auditing of accounts	16	12
Auditor's remuneration for non-audit services	2	1
Fair value movements on investments	(666)	979
Share-based payment	21	-

3 Staff costs

The average number of persons engaged by the Company (including Directors) during the period was as follows:

	31 March	31 March
	2021	2020
Directors and senior management	2	2
Total	2	2

The aggregate amounts charged by these persons were as follows:

		31 March 2021 £'000	31 March 2020 £'000
Aggregate wages and salaries		174	116
Share-based payment charge		21	-
		195	116

The amounts noted above relate to amounts invoiced by the Company's directors. Further details of directors' remuneration is provided in note 5.

4 Finance income and expense

Finance income

	31 March 2021	31 March 2020
	£'000	£'000
Other interest receivable	16	-
Total finance income	16	-

Finance expense

	31 March 2021	31 March 2020
	£'000	£'000
Bond interest	19	89
Total finance expense	19	89

Included in finance expenses is £nil (2020 - £34k) in respect of the amortisation of loan issue costs.

5 Directors and senior management

Directors' remuneration

	31 March 2021
	Salary	Fees	Pension	Equity	Total
	£'000	£'000	£'000	£'000	£'000
N B Fitzpatrick	-	62	-	-	62
A Laiker (resigned 26 August 2020)	-	67	-	-	67
J Normand (appointed 26 August 2020)		45			45
	-	174	-	-	174

	31 March 2020
	Salary	Fees		Pension		Equity		Total
	£'000	£'000		£'000		£'000		£'000
N B Fitzpatrick	-		52		-		-		52
A Laiker (resigned 26 August 2020)	-		64		-		-		64
J Normand (appointed 26 August 2020)	-		-		-		-		-
	-		116		-		-		116

Directors ' and senior management ' s interests in shares

The Directors who held office at 31 March 2021 held the following shares:

			31 March 2021	31 March 2020
N B Fitzpatrick			1,500,000	1,500,000
J Normand (appointed 26 August 2020)			-	-

The total share-based payment costs in respect of options granted are: 

	31 March	31 March
	2021	2020
	£'000	£'000
Directors	21	-

As at 31 March 2021, the total number of outstanding options held by the Directors over ordinary shares was 284,562,427, representing 2.0 per cent of the Company's issued share capital.

Further details regarding the options issued are provided in note 18.

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 £4.4m (2020: £4.8m).

Tax reconciliation

	31 March	31 March
	2021	2020
	£'000	£'000
Profit/(Loss) before tax	380	(1,412)
Tax at 19% on profit/(loss) before tax	72	(268)
Effects of:
Unrelieved losses carried forward	-	268
Loss relief brought forward	(72)	-
Total tax (credit)/expense	-	-

7 Profit/(loss) per share

Profit/(loss) per share has been calculated on a profit after tax of £380,000 (2020: loss after tax of £1,412,000) and the weighted number of average shares in issue for the year of 7,383,146,119 (2020: 1,534,283,948).

The profit/(loss) per share is set out below:

	31 March  2021	31 March 2020
Profit/(loss) (£'000)	380	(1,412)
Profit/(loss) per share (pence)	0.005	(0.092)

8 Investments

	31 March	31 March
	2021	2020
	£'000	£'000
Opening balance	1,196	2,101
Additions during the year	1,248	91
Disposals during the year	(1,141)	(17)
Movement in fair value charged to profit or loss	666	(979)
Closing balance	1,969	1,196

Investments are held at fair value through profit and loss using a three-level hierarchy for estimating fair value.

Note 16 provides details of the three-level hierarchy used.

One investment, with a carrying value of £350,000, was held at cost as an approximation of fair value at 31 March 2021. This investment was acquired in February 2021.

Additions during the year:

Mode Global Holdings plc

On 5 October 2020 the Company invested £250,000 for 500,000 ordinary shares in Mode Global Holdings plc as part of an IPO funding round by Mode which raised an aggregate £7,500,000.

On 2 March 2021 the company subscribed for a further 120,581 new ordinary shares at a price of 55 pence per ordinary share at a cost of £66,319.

Following both investments the Company holds 620,581 ordinary shares in Mode representing 0.68% of the issued share capital.

Sapo Plc

On 20 October 2020, the Company subscribed for 1,200,000 ordinary shares in Sapo Plc at a price of 2.5 pence per ordinary share at a cost of £30,000. 

Cornerstone FS Plc

On 4 December 2020, the Company subscribed for 400,000 new ordinary shares of 0.01 pence each in Cornerstone at a price of 50 pence per ordinary share at a cost of £200,000. In addition, Cornerstone has issued Vela with 400,000 warrants with a 5-year term, each warrant carrying the right to subscribe for one Cornerstone share at a price of 50 pence.  This represents 2.4 per cent. of Cornerstone's share capital.

Kanabo Group Plc

On 16 February 2021, the Company completed the acquisition of 2,307,692 shares in Kanabo Group Plc for £150,000. This represented approximately 0.6 per cent. of the then issued share capital of Kanabo.

Aeristech Limited

On 25 February 2021, the Company subscribed for 145,833 new ordinary shares in Aeristech Limited at a price of £2.40 per ordinary share at a cost of £350,000.  Following completion of this funding round, Vela held 0.92% of the fully diluted issued share capital of Aeristech.

In addition, Aeristech has issued Vela with 36,458 warrants with a two-year term, each warrant carrying the right to subscribe for one ordinary share in Aeristech at the issue price of £2.40.

MTI Wireless Edge Limited (MTI)

On 25 March 2021, the Company purchased 250,000 new ordinary shares in MTI at a price of 80 pence per ordinary share at a cost of £200,000.  This represents 0.28% of the then issued share capital of MTI.

Disposals during the year:

Rosslyn Data Technologies plc

Between 17 April 2020 and 27 April 2020 the Company disposed of a total of 1,100,000 ordinary shares in Rosslyn Data Technologies plc at prices between 3.8 pence per share and 3.95 pence per share and with an average price of 3.86 pence per share, generating proceeds of £42,503 for the Company.   Following the disposal, Vela no longer held any shares in Rosslyn Data.

Disposal of certain investments

The Directors took the decision to dispose of its investments in Portr, Argo Blockchain, Vibe Group Holdings, Stream TV, Advanced Laser Imaging and Nektan to a newly formed company ("NewCo") for consideration totalling £855,000 payable after seven years. The proceeds have been recorded at a discounted amount of £629,000, reflecting the deferred payment term.  The NewCo was incorporated on 24 July 2020 and its entire issued share capital was held by existing shareholders of Vela, such that the Vela shareholders as at the respective record date of the transaction had the same proportionate beneficial interest in NewCo as they had in Vela. These investments had a carrying value of £555,000 in the financial statements at 31 March 2020.

BlockchainK2 Corp

Between 12 January 2021 and 20January 2021 the Company disposed of its entire shareholding of 272,000 ordinary shares in BlockchainK2 Corp at prices between CAD$0.86 per share and CAD$1.5255 per share and with an average price of CAD$1.19 per share, generating proceeds of   CAD$322,855 (approximately £186,390) for the Company.  

Kanabo Group Plc

On 17 February 2021 the Company disposed of 1,000,000 shares in Kanabo Group Plc at a price of 23.5p per share generating net proceeds of £233,801 for the Company. Following the disposal, the Company continued to hold 1,307,692 shares in Kanabo, equivalent to approximately 0.36 per cent. of Kanabo's then issued share capital.

North Peak Resources Ltd

In March 2021, the Company disposed of 123,500 shares in North Peak Resources Ltd for total proceeds of approximately CAD$86,000 (approximately £50,000).

9 Trade and other receivables - non-current 

	31 March	31 March
	2021	2020
	£'000	£'000
Loan due from Bixx Tech Limited	645	-
Other financial asset	2,350	-
	2,995	-

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 note 8. 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% to reflect the deferred payment term. Interest receivable in the period amounted to £16,000, representing 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 14). 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 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.

At the time of the investment, SGSC was in the process of recruiting for Phase II clinical trials of the Asset and this recruitment was still ongoing as at the reporting date. As there had not been any major developments or milestones achieved between the date of investment and the reporting date, the directors do not consider the fair value of the contract to have changed materially during this time. Accordingly, the original consideration payable under the contract represents the directors' best estimate of its fair value as at 31 March 2021.

10 Trade and other receivables 

	31 March	31 March
	2021	2020
	£'000	£'000
Other receivables	1	13
	1	13

11 Derivative financial instruments

	31 March	31 March
	2021	2020
	£'000	£'000
Warrants	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.

12 Trade and other payables

	31 March	31 March
	2021	2020
	£'000	£'000
Trade payables	24	28
Accruals and deferred income	24	26
	48	54

13 Loans and borrowings

Loans due within one year	31 March 2021 £'000	31 March 2020 £'000
Bonds	-	550
	-	550

On 26 August 2020, the Bonds were converted to ordinary shares in the Company as part of a share reorganisation detailed in note 14. The bonds were denominated in Sterling and interest was charged at 10%.

14 Share capital

	31 March	31 March
	2021	2020
	£'000	£'000
Allotted, called up and fully paid capital
0 (2020 - 1,748,943,717) Ordinary Shares of 0.1 pence each 13,818,450,084 (2020 - 0) Ordinary Shares of 0.01 pence each	- 1,382	1,749 -
1,748,943,717 (2020 - 0) Deferred Shares of 0.08 pence each	1,399	-
2,665,610,370 (2020 - 0) Special Deferred Shares of 0.01 pence each	267	-
	3,048	1,749

Share transactions during the year:

Share reorganisation

On 26 August 2020, the Company undertook a share reorganisation.

In order to facilitate the conversion of the Bonds detailed in note 13, the ordinary shares of 0.1p were subdivided into;

a.  one ordinary share of 0.02p each, and

b.  one deferred share of 0.08p each

The Bonds were then converted into 916,666,653 ordinary shares at an issue price of 0.06p per share.

Following the Bond conversion, and in order to facilitate a share placing to raise addition investment capital, the ordinary shares of 0.02p each, effected by the first share reorganisation, were sub-divided into;

a.  one new ordinary share of 0.01p each, and

b.  one special deferred share of 0.01p each.

The new ordinary shares have the same rights as the previous ordinary shares.

Following the reorganisation and the Bond conversion, the issued share capital of the Company consisted of 2,665,610,370 O rdinary S hare s of 0.01 pence each, 1,748,943,717 Deferred S hares of 0.08 pence each and 2,665,610,370 Special Deferred S hares of 0.01 pence each.

Further share issues in the period

On 26 August 2020 the Company raised £1.0 million via the placing of 4,166,666,875 ordinary shares in the Company at a price of 0.024 pence per share. In addition, 4,166,666,875 warrants to subscribe for new Ordinary Shares at a price of 0.06 pence per share were granted to the subscribers in the Placing on a pro rata basis to the size of their subscriptions in the Placing. 

On the same date, 104,166,666 ordinary shares were issued at the placing price of 0.024 pence per share to Peterhouse Capital Limited in lieu of corporate fees in relation to the transaction.  In addition, 215,155,817 broker warrants were granted to Peterhouse Capital Limited to subscribe for new ordinary shares, exercisable at the placing price and expiring on 1 September 2021.

On the same date, 235,416,666 ordinary shares were issued at the placing price of 0.024 pence per share to Antony Laiker, the former executive director of the Company, in lieu of part of his notice period and fees owed amounting to, in aggregate, £56,500.

On 21 September 2020, the Company issued 1,434,967,250 ordinary shares at a price of 0.06 pence per share.

On 5 October 2020, the Company issued 107,499,999 ordinary shares at a price of 0.06 pence per share. 

On 23 October 2020, the Company issued 1,923,076,923 ordinary shares at a price of 0.065 pence per share. 

On 26 October 2020, the Company issued 1,100,000,000 ordinary shares at a price of 0.1 pence per share as part of the SGS transaction detailed in note 9.

On 11 November 2020, the Company issued 336,666,668 ordinary shares at a price of 0.06 pence per share. 

On 24 February 2021, the Company issued 25,904,000 ordinary shares at a price of 0.06 pence per share. 

On 3 March 2021, the Company issued 51,808,000 ordinary shares at a price of 0.06 pence per share. 

On 16 March 2021, the Company issued 1,666,666,667 ordinary shares at a price of 0.09 pence per share. 

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.

15 Cash and cash equivalents

Cash and cash equivalents comprise the following:

	31 March	31 March
	2021	2020
	£'000	£'000
Cash and cash in bank:
Pound sterling	2,147	9
Cash and cash equivalents at end of year	2,147	9

16 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 currency risk, 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.

Currency risk

The Company's shareholdings in North Peak and Blockchain K2 were denominated in Canadian Dollars, which gave rise to exposure to foreign currency risk. The Directors considered the risk and did not deem it necessary to enter into any specific risk management arrangements.

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
	2021	2020
Classes of financial assets - carrying amounts	£'000	£'000
Financial assets measured at fair value through profit or loss	4,457	1,196
Financial assets measured at amortised cost	646	13
	5,103	1,209

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 six (2020: five) 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 five investments is £1,270,672 (2020: £887,919) and the fair value as at 31 March 2021 was £1,192,164   (2020: £197,757).

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 (2020: two) unquoted investments classified in this category. The historic cost of these investments is £450,000 (2020: £276,103) and the fair value as at 31 March 2021 was £777,144 (2020: £563,584). 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 three investee companies, which have been valued using an option pricing model with observable inputs. The fair value of these assets as at 31 March 2021 was £138,246.

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 (2020: five) unquoted investments classified in this category. The historic cost of these investments is £300,000 (2020: £1,411,819) and the fair value as at 31 March 2021 was £nil (2020: £434,137). The nature of some of the investments that the Company holds, i.e. minority shareholdings in private companies with limited publicly available information, is 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 2021			31 March 2020
	Within	Later than		Within	Later than
	1 year	1 year		1 year	1 year
	£'000	£'000		£'000	£'000
At amortised cost:
Financial liabilities at amortised cost	48	-		604	-
	48	-		604	-

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.

17 Reconciliation of net debt

	As at 1 April 2020	Cash flow	Non-cash movement	As at 31 March 2021
	£'000	£'000	£'000	£'000
Cash and cash equivalents	9	2,138	-	2,147
Bonds	(550)	-	550	-
	(541)	2,138	550	2,147

Non-cash movements on the Bonds relate to the conversion of amounts owed into Ordinary Shares in the period, as detailed in notes 13 and 14.

18 Share-based payments

The Company rewards its Directors using equity settled share-based payments.

Grant of Options

On 26 August 2020, the Company announced that James Normand, a newly appointed director, had been 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, Non-Executive 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 now holds a total of 104,562,427 share options equivalent to 1.46 per cent. of the issued share capital of the Company.

Following the grant of the options detailed above and the issuance of the Placing Warrants and the Broker Warrants (to cover placing fees) the Company had a total of 299,124,854 (2020: 29,124,854) share options outstanding representing approximately 4.17% of the Company's issued share capital and a total of 4,481,822,692 warrants outstanding representing approximately 62.49% of the Company's issued share capital. A number of these warrants have since been exercised.

The options issued in August 2020 have been valued using the Monte Carlo option pricing model. The options granted in 2014 and 2015 were valued using the Black Scholes option pricing model.

The amount of remuneration expense in respect of the share options granted amounts to £21,000 (2020: £NIL).

Details of the options outstanding at the year end and the inputs to the option pricing model are as follows:

	Options granted	Options granted	Options granted	Options granted	Options granted
	26 August	22 October	18 September	2 October	8 April
	2020	2015	2015	2014	2014
Share price at grant date (pence)	0.05	0.21	0.19	0.33	1.50
Exercise price (pence)	0.024	0.21	0.15	0.33	0.85
Expected life (years)	10	7	7	7	7
Annualised volatility (%)	86.9	79.47	70.98	95.16	74.23
Risk-free interest rate (%)	2.0	2.0	2.0	2.0	2.0
Fair value determined (pence)	0.03	0.15	0.13	0.26	1.17
Number of options granted	270,000,000	6,400,000	10,489,560	4,000,000	8,235,294
Options exercisable at 31 March 2021	270,000,000	6,400,000	10,489,560	4,000,000	8,235,294

The expected future annualised volatility was calculated using historic volatility data for the Company.

The options issued in 2014 and 2015 are not subject to any performance criteria. However the options issued in 2020 are subject to performance criteria.

19 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 14). 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 2021, the carrying value of the loan receivable was £645,000 and, at the scheduled maturity date, the final settlement value will be £855,000.

20 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 (2020: £52,000) in respect of his Directors fees to the Company. The balance due to Ocean Park Developments Limited at the year-end was £nil (2020: £8,500).

Widdington Limited

Antony Laiker, a director who served during the year, is also a Director of Widdington Limited. During the year the Company paid £67,000 (2020: £64,000) in respect of his Directors fees to the Company. The balance due to Widdington Limited at the year-end was £nil (2020: £9,500).

Issue of share options to directors

During the year, share options were issued to James Normand and Brent Fitzpatrick, directors of the Company. Full details are disclosed in notes 5 and 18.

Antony Laiker

Antony Laiker, who is a former director and at the time was classified as a related party under the AIM Rules, held £50,000 of the bonds which were originally issued under the Company's 10% bond issue in February 2017. The Bonds were converted to ordinary shares as part of the reorganisation on 26 August 2020. 

In addition, 235,416,666 new ordinary shares were issued to Antony Laiker, a former director of Vela, in August 2020 in consideration of accrued and unpaid fees and pursuant to part of his notice period under his service agreement equivalent to, in aggregate £56,500.

Kevin Sinclair

Kevin Sinclair, who was a significant shareholder in the company in the 12 months prior to the date of the reorganisation of the Company, held £100,000 of the bonds under the Company's 10% bond issue in February 2017.

The Bonds were converted to ordinary shares as part of the reorganisation on 26 August 2020.  After this date he ceased to be a significant shareholder.

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. Further details of this transaction are provided in notes 8 and 9. Following the transfer of the investments, Bixx Tech Limited was sold to a newly formed company, Bixx Limited, with the same shareholders as Vela Technology Plc for consideration of £1. As at 31 March 2021, the carrying value of the balance due from Bixx Tech Limited was £645,000.

The disposal constituted a related party transaction under the AIM Rules as Antony Laiker was the sole shareholder of Bixx Limited prior to the disposal

21 Events after the balance sheet date

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 after the reporting date amounted to approximately CAD$140,000 (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.

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.

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 represents an investment of 6% in the enlarged share capital.

 

END

 

 

FR LMMRTMTBJMFB