Quarterly Investment Update

Vela Technologies PLC

27 September 2023

 

27 September 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, is pleased to report an update for the quarter ended 30 June 2023.

Executive Director, James Normand, commented:

"Market valuations of Vela's listed investee companies remain, like so many others in the small- and micro-cap sector, well below the valuations that one would expect to be applied in 'normal' stock market times. The directors of Vela believe, however, that a number of its investee companies have huge potential; and have therefore determined to hold the shares in those companies until the market cycle results in valuations that are more appropriate to their respective trading and prospects. The Board is particularly pleased that the risk taken nearly three years ago in investing in the development of the AZD1656 drug is at the point where a suitable reward can be reaped."

Key numbers as at 30 June 2023*

·      The value of Vela's total assets (including cash) decreased during the quarter by £387,000 (6.2%) to £5,877,000 (quarter to 31 March 2023 - decrease of £660,000 to £6,273,000 (9.5%)).

·      Vela's portfolio comprised a total of 15 active investments (31 March 2023 - 14).  Three 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 increased by £300,000 to £5,843,000 (31 March 2023 - £5,543,000).

·      The change in the value of the investment portfolio reflects: (i) disposals of investments valued at £31,000 at 31 March 2023 or on subsequent acquisition (generating a realised profit of under £1,000); (ii) a further investment of £400,000 for a put option for the potential sale of the Company's economic interest in AZD1656; (iii) a new investment in Tribe Technology Group plc ("Tribe") of £250,000; and (iv) a net unrealised decrease in the fair value of the investment portfolio of £319,000.

·      Vela's cash balances decreased to £34,000 as at 30 June 2023 (31 March 2023 - £721,000).

*The figures contained within this quarterly investment update at 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.

Key developments in the quarter

·      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.  

·      In April Vela received a dividend of £4,944 from MTI Wireless Edge Limited ("MTI").

·      In May Vela sold 500,000 shares in Kanabo Group Plc ("Kanabo"), generating gross proceeds of £15,460; 13,000 shares in EnSilica plc ("EnSilica"), generating gross proceeds of £8,806; and 2,500 shares in Northcoders Group plc ("Northcoders"), generating gross proceeds of £7,189.

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

Key developments in investee companies in the quarter

·      The principal news from Cornerstone FS PLC ("Cornerstone") during the quarter was the publication in May of its annual report for the year ended 31 December 2022.  This reported high levels of growth in gross margin, customers and cash and a reduction of losses. Cornerstone's CEO also commented in the company's results announcement of an expectation of continuing significant growth in 2023.

·      In April EnSilica published a trading update which anticipated that its results for the year ending 31 May 2023 would significantly exceed market expectations. This was underpinned by a number of new and expanded contracts (which themselves were the subject of separate announcements by EnSilica during the quarter).

·      In May Kanabo Group Plc published its Annual Report for the year ended 31 December 2022.  This reflected a material and increased operating loss which in turn prompted a £2.54 million placing being undertaken in May (in which Vela declined to participate).

·      MTI's results for the first quarter showed increases in all its key performance indicators.

·      In April, as a consequence of the collapse of the crypto market, Mode Global Holdings plc (now re-named R8 Capital plc) put its operating subsidiary into a company voluntary arrangement and ceased to trade.

·      In April Northcoders Group plc ("Northcoders") reported its results for the year ended 31 December 2022. These showed very positive results for all Northcoders' key performance indicators.

·      Skillcast Group Plc similarly announced its 2022 results in April. They experienced strong revenue growth and the CEO reported that he was confident that results for 2023 so far were consistent with achieving market expectations.

·      During the quarter TruSpine Technologies Plc ("TruSpine") suffered continued problems with funding while it experienced challenges to its rights to intellectual property. By the end of the quarter its short-term funding problems had been resolved.

Developments since 30 June 2023

·      In July Vela sold 100,000 shares in EnSilica, generating gross proceeds of £68,000.

·      In September Cornerstone published interim figures which confirmed the expectations made in May by the CEO with the company also announcing that they expect to report full year results for 2023 significantly ahead of market expectations.

·      In September Tribe successfully completed its AIM IPO in conjunction with a £4.6 million fundraise.

·      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 under 'key developments', 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.

Investment portfolio

At 30 June 2023 the Company's portfolio of investments was valued at £5,843,000 and comprised equity, or in the case of Tribe Technology Group Limited an agreement to receive equity, in the following 15 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.

·      Northcoders Group plc

·      R8 Capital Investments plc (formerly Mode Global Holdings plc)

·      Rural Broadband Solutions PLC

·      Skillcast Group plc

·      St George Street Capital Limited

·      Tribe Technology Group Limited

·      TruSpine Technologies plc

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

·      Aeristech Limited

·      EnSilica plc

·      MTI Wireless Edge Ltd

·      Northcoders 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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