Quarterly Investment Update

Vela Technologies PLC

13 December 2023

 

13 December 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 September 2023.

Executive Director, James Normand, commented:

"The small and micro-cap sectors of the stock markets (in which Vela is largely invested) continue to mark time and so valuations remain depressed and liquidity remains very poor.  Offsetting this for Vela in the September quarter has been the listing on NASDAQ of the shares of Conduit Pharmaceuticals Inc., thus crystallising a market value for Vela's put option over its interest in the AZD1656 drug being developed by St George Street Capital.  This has offset the continued diminution in the values attributed by stock markets to some of Vela's very sound, indeed promising, investee companies. We remain hopeful that the market will resume an upward cycle before long."

Key numbers as at 30 September 2023*

·      The value of Vela's total assets (including cash) increased during the quarter by £942,000 (16.0%) to £6,819,000 (quarter to 30 June 2023 - decrease of £387,000 to £5,877,000 (6.2%)).

·      Vela's portfolio comprised a total of 15 active investments (30 June 2023 - 15).  Two of these investments were unquoted, twelve were quoted, and the final investment was the interest in future royalties from the Covid-19 remedy being developed by St George Street Capital Limited (which was held in the balance sheet as a financial asset prior to the exercise of the put option, details of which were announced by the Company on 1 December 2023).

·      The fair value of the investment portfolio was £6,789,000 (30 June 2023 - £5,843,000).

·      The change in the value of the investment portfolio reflects: (i) disposals of investments valued at £97,000 at 30 June 2023 (generating a realised profit of £5,000); and (ii) a net unrealised increase in the fair value of the investment portfolio of £1,043,000 (quarter to 30 June 2023 - an unrealised loss of £318,000).

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

*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 2023, unless there has been a transaction since that date which suggests a materially different valuation.

Key developments in the quarter

·      During the quarter Vela sold 150,000 shares in EnSilica plc ("EnSilica"), generating gross proceeds of £102,000.

·      In September Tribe Technology PLC ("Tribe Tech") successfully completed its IPO and as a result Vela is now interested in 3,125,000 ordinary shares in Tribe Tech representing 1.41% of Tribe Tech's issued share capital.

·      Also in September, Conduit Pharmaceuticals Limited completed its merger with Murphy Canyon and its shares were listed on NASDAQ as Conduit Pharmaceuticals Inc. ("Conduit"). Following the listing on NASDAQ the put option became exercisable. As a result, at 30 September Vela was in a position to exchange its £2.75 million economic interest in AZD1656 for £4 million worth of Conduit shares. This is reflected in the valuation of the investment portfolio at the quarter end and is the principal reason for the increase in the value of the portfolio at 30 September 2023. The put option was exercised subsequent to the quarter end, details of which were announced on 1 December 2023.

Key developments in investee companies in the quarter

·      Cornerstone FS plc published interim figures which confirmed the expectations made in May by the CEO, who commented in this announcement that he "expects to report full year results [for 2023] significantly ahead of market expectations".

·      Kanabo Group Plc ("Kanabo") announced that Kanabo Agritec, a 40% subsidiary, signed a major contract with Tamia Growth S.L., described as pivotal in Kanabo's road map.

·      MTI Wireless Edge Ltd. announced it had established a subsidiary in India to cater to the demand for India's 5G cellular market.

·      EnSilica announced that a further $2.4m contract had been agreed with one of its leading customers to develop next generation advanced networking ASIC and a $7m contract to supply a sensor ASIC within the e-mobility market.

·      Skillcast Group plc announced its interim results to 30 June 2023 reporting a 15% growth in revenue, driven by an increase in subscriptions, predominantly from new customers.  

·      Igraine plc reported its half year results to 30 June 2023 and remarked that, despite the challenging economic environment, it was encouraged by ongoing discussions and commercialisation.

·      TruSpine Technologies plc ("TruSpine") published its annual report for the year ended 29 March 2023.

Developments since 30 September 2023

·      Vela has sold 300,000 shares in Kanabo generating gross proceeds of £4,000.

·      Vela has sold 25,000 shares in EnSilica generating gross proceeds of £14,000.

·      TruSpine announced that it is making substantive progress in its efforts to confirm its rights to the intellectual property inherent in its products.

·      On 30 November 2023 Vela exercised its put option to sell its economic interest in AZD1656 to Conduit for 1,015,760 Conduit shares. As previously announced by the Company, it is the intention of Vela, subject to the necessary regulatory requirements of NASDAQ, to realise its holding in Conduit in order to augment the Company's cash reserves.

Investment portfolio

At 30 September 2023 the Company's portfolio of investments was valued at £6,789,000 and comprised equity or loan interests 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.

·      Mode Global Holdings plc

·      Northcoders Group plc

·      Rural Broadband Solutions PLC

·      Skillcast Group plc

·      St George Street Capital Limited

·      Tribe Technology Group PLC

·      TruSpine Technologies plc

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

·      Aeristech Limited

·      EnSilica plc

·      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 / Eran Zucker
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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