Quarterly Investment Update

Vela Technologies PLC

06 June 2023

 

6 June 2023

Vela Technologies plc

("Vela" or "the Company")

Quarterly Investment Update

The Board of Vela (AIM:VELA), an AIM-quoted investing company focused on early-stage and pre-IPO disruptive technology investments, today announces an update for the quarter ended 31 March 2023.

Executive Director, James Normand, commented:

"The disappointing result for the quarter, reversing the positive result of the previous quarter, reflects the poor state of the quoted markets generally and the market's continuing abstention from the small cap sector in particular. Vela remains of the view that many of the businesses in which it is invested are materially undervalued.  As a result of these under-valuations and poor liquidity, Vela is of necessity taking a longer-term view than it would prefer.  Vela's ability to hold for the long term, however, will, the Board believes, enable it to reap the benefits when market conditions improve."

Key numbers as at 31 March 2023

·      The value of Vela's total assets decreased during the quarter by £660,000 (9.5%) to £6,273,000 (quarter to 31 December 2022 - increase of £532,000 to £6,933,000 (8.3%)).

·      Vela's portfolio comprised a total of 14 active investments (31 December 2022 - 13).  Two of these investments were unquoted, eleven were quoted, and the final investment was the interest in future royalties from the Covid-19 remedy being developed by St George's Street Capital Limited (which is held in the balance sheet as a financial asset).

·      The fair value of the investment portfolio was £5,552,000 (31 December 2022 - £6,068,000).

·      The change in the value of the investment portfolio reflects: (i) disposals of investments valued at £151,000 at 31 December 2022 or on subsequent acquisition (generating a realised loss of £7,000); (ii) a further investment of £126,000 in Ensilica plc; (iii) a new investment in Ethernity plc of £49,000; and (iv) a net unrealised decrease in the fair value of the investment portfolio of £540,000.

·      Vela's cash balances decreased to £721,000 as at 31 March 2023 (31 December 2022 - £864,000).

Key developments in the quarter

·      On 20 January Vela subscribed £49,000 for 700,000 shares in Ethernity Networks Limited, half of which it sold almost immediately at a profit of £600.

·      On 24 February Vela sold 150,000 Kanabo Group plc shares, generating gross proceeds of £5,000 and a realised profit of £2,500 over the valuation at 31 December 2022.  

·      On 9 March Vela subscribed £125,000 for 178,572 new shares in EnSilica plc and later sold an aggregate of 113,632 shares, generating gross proceeds of £114,000 and a realised profit of £13,000 over the valuation at 31 December 2022.

Key developments in investee companies in the quarter

·      On 26 January Skillcast Group plc published a positive trading update for the year ended 31 December 2022 and expressed confidence that it continues to expect to achieve the objectives set out at the time of its admission to trading on AIM in December 2021.

·      On 26 January Mode Global Holdings plc announced the cessation of activities, following the collapse of the crypto-currency markets. The residual management is endeavouring to salvage some value for shareholders.

·      On 6 February and on 8 March Cornerstone FS PLC ("Cornerstone") announced revised arrangements with holders of loan notes which Cornerstone expects will have the effect of materially improving its future cash flow.

·      0n 7 February Northcoders Group plc announced the acquisition of Tech Returners Limited, a complementary training business, for £1,576,000.

·      On 17 February EnSilica plc announced its interim results (for the six months ended 30 November 2022).  These showed improvements over the same period in the previous year in all of its key performance indicators.

·      On 9 March EnSilica plc announced that it had raised approximately £2,000,000 of additional equity at 70p per share. Vela participated in this subscription, as noted above.

·      On 13 March MTI Wireless Edge Limited announced its 2022 results, showing improvements in all its key performance indicators, and a 7% increase in its final dividend.

·      During the quarter TruSpine Technologies plc made a number of announcements concerning its funding, its Board and the status of its application for FDA approval for its products.

Developments since 31 March 2023

·      On 20 April Vela entered into a put option agreement for the potential sale of its economic interest in AZD 1656 for a total consideration of £4.0 million. The option has been granted by Conduit Pharmaceuticals Limited 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 would be satisfied through the issuance of new Murphy shares.  Vela paid Conduit £400,000 in cash as the premium for the option.

·      On 25 April 2023 Northcoders Group plc announced its final results for the year ended 31 December 2022 and reported an increase in group revenue of 86% to £5.6 million and an adjusted EBITDA slightly ahead of market expectations.

·      Mode Global Holdings plc shares were suspended from trading on 2 May 2023 due to the delayed completion of its annual audit.

·      On 5 May Vela sold 250,000 shares in Kanabo Group Plc, generating gross proceeds of £7,750; and 13,000 shares in EnSilica plc, generating gross proceeds of £8,970.

·      On 16 May 2023 Cornerstone FS PLC announced its final results for the year ended 31 December 2022 and reported a 110% increase in revenue to £4.8 million.

·      On 23 May Vela invested £250,000 from its cash resources in a £2 million pre-IPO funding for Tribe Technology Group Limited, a Belfast-based manufacturer of autonomous reverse circulation drilling rigs.

·      The investments made since the quarter end have reduced the Company's cash balances to c.£50,000 as at the date of this announcement.

The figures contained within this quarterly investment update at 31 March 2023, and those at 31 December 2022 are taken from unaudited management information.

Investments traded on a recognised stock market are valued using the accounting policies outlined in the notes to the annual financial statements.  Unlisted investments and other financial assets are stated at the values attributed to them in the audited balance sheet as at 31 March 2022, unless there has been a transaction since that date which suggests a materially different valuation.

Investment portfolio

At 31 March 2023 the Company's portfolio of investments was valued at £5,552,000 and comprised equity or loan interests in the following 14 companies:

·      Aeristech Limited

·      Community Social Investment Limited (formerly WeShop Limited)

·      Cornerstone FS PLC

·      Ethernity Networks Ltd

·      EnSilica plc

·      Igraine PLC

·      Kanabo Group Plc

·      MTI Wireless Edge Ltd.

·      Mode Global Holdings plc

·      Northcoders Group plc

·      Rural Broadband Solutions PLC

·      Skillcast Group plc

·      St George Street Capital Limited

·      TruSpine Technologies plc

Since the publication of the last quarterly update in February 2023, the Board of Vela has met with representatives of the following investee companies:

·      Aeristech Limited

·      Cornerstone FS PLC

·      EnSilica plc

·      Igraine PLC

·      MTI Wireless Edge Ltd

·      Northcoders Group plc

·      Skillcast Group plc

·      St George Street Capital Limited

·      TruSpine Technologies plc

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.

 

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