Final Results

RNS Number : 0898C

Vela Technologies PLC

27 September 2018

 

27 September 2018 

Vela Technologies plc

("Vela", the "Company" or the "Group")

Final Results for the year ended 31 March 2018

The Board of Vela (AIM: VELA), the investing company focused on early-stage and pre-IPO disruptive technology investments, is pleased to announce the Company's results for the year ended 31 March 2018.

chairman's statement

for the year ended 31 March 2018

The last financial year was one in which shareholders could be forgiven for thinking that Vela Technologies' fortunes were tied solely to the movement of cryptocurrencies. This perception brought the benefit of Vela becoming better known among the investment community. It also brought to Vela a significant number of new opportunities as well as an expanded shareholder base.

Vela's investments, though, stretch much wider than Blockchain and businesses related to cryptocurrency. Therefore, it is perhaps an opportune time to explain in more detail our activities in these areas and help shareholders understand our focus.

Vela's interest in Blockchain was initially via BTL Group, a company run by a highly knowledgeable management team in the Blockchain field. At that time, September 2015, the term Blockchain was hardly known among the investment community. However the merits of Blockchain in respect of cost savings, provenance and security were profound. BTL has since evolved from the early stage technology company that Vela invested in, to a highly regarded participant in the world of Blockchain and recently launched the Interbit platform.

Vela's recent investment in Argo Blockchain has provided Vela with the opportunity of investing in, at an early stage, what became the first crypto-mining company to be listed on the London Stock Exchange. The share price performance of Argo Blockchain since the listing in August 2018 has been disappointing, however, Argo Blockchain has made a number of positive announcements which give Vela cause for optimism.

The investment in BlockchainK2 was made with a similar approach to that of BTL, namely that of a TSX quoted cash shell company that had agreed to become a blockchain technology company. The shares are currently priced at around the cash on the balance sheet and we await news on management's plans for the future.

In summary, our focus is on Blockchain and Mining as a Service (MaaS). Vela does not have any direct exposure to the volatility of cryptocurrencies.

Outside of these three investments, our investee companies span a wide range of sectors. We will continue to communicate to shareholders as and when it is possible to do so.

Moving onto the financials, Vela's activities during the year produced a net loss of £160k. However, the total overall comprehensive income based on the latest accounting practices was a loss of £1.014m. This includes unrealised movements of £854k.

At 31 March 2018 gross assets were £3.621m (31 March 2017: £3.85m) and investments were valued at £2.761m (31 March 2017: £3.45m). Note 8 to the financial statements provides further details on the valuation of the investment portfolio together with additions and disposals made during year.

The Board of Vela considered a large number of new investment opportunities in the period under review and continues to do so. Several of these opportunities were very exciting and warranted further assessment. However, following due diligence and, in many cases, the valuation metrics that these companies were looking for, it was felt that the highly inflated valuations of these businesses could not be justified for a new investor. As a result, Vela is also now expanding its efforts to include seeking opportunities within UK publicly listed companies.

Nigel Brent Fitzpatrick MBE

Non-Executive Chairman  

strategic report

for the year ended 31 March 2018

Business review

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

At the period end the Company holds £847k of cash (31 March 2017: £383k) and continues to keep administration costs to a minimum so that the Company has sufficient resources to cover the Company's ongoing running costs and has maximum funds that can be dedicated to further investments.

Additional funds were raised during the period through the issue of shares. These funds have provided the Company with additional capital in order to acquire additional investments. Further details regarding the shares issued in the period are provided in note 12.

The Company's net loss for the year is £160k (12 months ended 31 March 2017: £72k). The overall total comprehensive income, which also includes the unrealised gains and losses on investments carried at fair value, was a loss of £1,014k (2017: £993k gain).

The valuation of the investment portfolio at 31 March 2018 was £2,761k (2017: £3,455k), a decrease of £694k on the prior year. During the year Vela invested £786k in disruptive technology businesses.  Further details of these investment additions are given in note 8. The Company also recorded an unrealised gain of £580k through Other Comprehensive Income on its estimate of the fair value of the investment portfolio at 31 March 2018.  We update shareholders regularly on investee company performance through the dissemination of regulatory announcements as information becomes available, and further detailed information can be found on our website.

On 30 April 2018 TheVibe Ltd was placed into administration following a failure to reach a decision on a further fundraise.  The business and assets of TheVibe Ltd were purchased by the former Chairman via his holding company Vibe Group Holdings Limited. As at 31 March 2018, the Company had invested £400,000 in TheVibe Ltd and this amount has been fully impaired in the financial statements presented for the year ended 31 March 2018.

The Company has no employees and has a Board of one male executive Director and one male non-executive Director.

Key performance indicators (KPIs)

Measuring performance is integral to the next phase of our strategic growth. The Directors have selected KPIs to benchmark to the Company's progress. The Directors consider investment income, profit before tax and investment growth as KPIs in measuring Company performance.

Investment income is detailed in the statement of comprehensive income.

Management is satisfied with the level of costs and that these have been maintained to a minimum level and the loss is as expected for the Company.

Investment movements are detailed above and in note 8.

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 its minimal operational costs.

Further information about the Company's principal risks are detailed in note 14, 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 26 September 2018.

Nigel Brent Fitzpatrick MBE

Non-Executive Chairman  

The annual report and accounts and notice of annual general meeting will be posted to shareholders on 28 September 2018 and will be made available on the Company's website, www.velatechplc.com. The Company's Annual General Meeting will be held at 10.00 a.m. on 23 October 2018 at the offices of Allenby Capital Limited, 5 St Helen's Place, London, EC3A 6AB.

For further information, please contact:

Vela Technologies plc Brent Fitzpatrick, Non-Executive Chairman Antony Laiker, Director Tel: [phone] Allenby Capital Limited (Nominated Adviser) Nick Athanas/Asha Chotai Tel: [phone] Smaller Company Capital Limited (Broker) Rupert Williams/Jeremy Woodgate Tel: [phone]

statement of comprehensive income

for the year ended 31 March 2018

		31 March	31 March
		2018	2017
	Notes	£'000	£'000
Revenue	1	-	7
Administrative expenses
- share-based payments		-	-
- other administrative expenses		(214)	(212)
- profit on disposal of available-for-sale assets		731	186
- impairment of available-for-sale assets		(551)	(25)
Total administrative expenses		(34)	(51)
Operating loss	2	(34)	(44)
Finance expense	4	(126)	(28)
Loss before tax		(160)	(72)
Income tax	6	-	-
Loss		(160)	(72)
Other comprehensive income:
Items that will or may be reclassified to profit or loss:
Fair value movement on available-for-sale investments		580	1,127
Reclassification of changes in fair value of available-for-sale investments to profit or loss		(1,434)	(62)
Other comprehensive income for the year		(854)	1,065
Total comprehensive income		(1,014)	993
Attributable to:
Equity holders of the Company		(1,014)	993
Earnings per share
Basic and diluted loss per share (pence)	7	(0.02)	(0.01)

balance sheet

as at 31 March 2018

		31 March	31 March
		2018	2017
	Notes	£'000	£'000
Non-current assets
Investments	8	2,761	3,455
Current assets
Trade and other receivables	9	13	13
Cash and cash equivalents	13	847	383
Total current assets		860	396
Total assets		3,621	3,851
Equity and liabilities
Equity
Called up share capital	12	837	722
Share premium account		1,715	1,117
Available-for-sale reserve		1,019	1,873
Share option reserve		130	130
Retained earnings		(1,033)	(873)
Total equity		2,668	2,969
Current liabilities
Trade and other payables	10	28	22
Loans and borrowings	11	445	-
Total current liabilities		473	22
Non current liabilities
Loans and borrowings	11	480	860
Total non current liabilities		480	860
Total equity and liabilities		3,621	3,851

These financial statements were approved by the Board, authorised for issue and signed on their behalf on 26 September 2018 by:

Nigel Brent Fitzpatrick MBE

Non-Executive Chairman

Company registration number: 03904195

cash flow statement

for the year ended 31 March 2018

		31 March	31 March
		2018	2017
	Notes	£'000	£'000
Operating activities
Loss before tax		(160)	(72)
Profit on disposal of available-for-sale assets		(731)	(186)
Impairment of available-for-sale assets		551	25
Finance expenses		126	28
Decrease in payables		-	(5)
Total cash flow from operating activities		(214)	(210)
Investing activities
Consideration for disposal of investments		806	247
Consideration for purchase of investments		(786)	(726)
Total cash flow from investing activities		20	(479)
Financing activities
Proceeds from issue of loans (net of issue costs)		-	872
Interest paid		(55)	-
Proceeds from the issue of ordinary share capital		713	-
Total cash flow from financing activities		658	872
Net increase in cash and cash equivalents		464	183
Cash and cash equivalents at start of year		383	200
Cash and cash equivalents at the end of the year	13	847	383
Cash and cash equivalents comprise:
Cash and cash in bank		847	383
Cash and cash equivalents at end of year	13	847	383

statement of changes in equity

for the year ended 31 March 2018

	Share	Share	Retained	Available-for-sale	Share Option	Total
	Capital	Premium	Earnings	reserve	Reserve	Equity
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2017	722	1,117	(873)	1,873	130	2,969
Transactions with owners
Issue of share capital	115	598	-	-	-	713
Transactions with owners	115	598	-	-	-	713
Loss for the year	-	-	(160)	-	-	(160)
Other comprehensive income	-	-	-	(854)	-	(854)
Total comprehensive income	-	-	(160)	(854)	-	(1,014)
Balance at 31 March 2018	837	1,715	(1,033)	1,019	130	2,668
Balance at 1 April 2016	722	1,117	(801)	808	130	1,976
Loss for the year	-	-	(72)	-	-	(72)
Other comprehensive income	-	-	-	1,065	-	1,065
Total comprehensive income	-	-	(72)	1,065	-	993
Balance at 31 March 2017	722	1,117	(873)	1,873	130	2,969

notes to the financial statements

for the year ended 31 March 2018

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.  Revenue received in the prior period represented the accrued value for interest receivable from loan notes held in investee company Stream TV Networks.

2 Loss from operations

Loss from operations is stated after charging/(crediting):

	31 March	31 March
	2018	2017
	£'000	£'000
Auditors' remuneration for auditing of accounts	10	10
Auditors' remuneration for non-audit services	1	1
Foreign exchange losses	-	4
Profit on disposal of available-for-sale assets	(731)	(186)
Impairment of available-for-sale assets	551	25

3 Staff costs

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

	31 March	31 March
	2018	2017
Directors and senior management	2	2
Total	2	2

The aggregate amounts charged by these persons were as follows:

		31 March 2018 £'000	31 March 2017 £'000
Aggregate wages and salaries		110	95
		110	95

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 expense

	31 March 2018	31 March 2017
	£'000	£'000
Loan note interest	37	18
Bond interest	89	10
Total finance expense	126	28

Included in finance expenses is £41k (2017 - £6k) in respect of the amortisation of loan issue costs.

5 Directors and senior management

Directors' remuneration

	31 March 2018
	Salary	Fees	Pension	Equity	Total
	£'000	£'000	£'000	£'000	£'000
N B Fitzpatrick	-	46	-	-	46
A Laiker	-	64	-	-	64
	-	110	-	-	110

	31 March 2017
	Salary	Fees	Pension	Equity	Total
	£'000	£'000	£'000	£'000	£'000
N B Fitzpatrick	-	40	-	-	40
A Laiker	-	55	-	-	55
	-	95	-	-	95

Directors' and senior management's interests in shares

The Directors who held office at 31 March 2018 held the following shares:

		31 March 2018	31 March 2017
N B Fitzpatrick		1,500,000	1,500,000
A Laiker		35,191,724	35,191,724

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

	31 March	31 March
	2018	2017
	£'000	£'000
Directors	-	-

As at 31 March 2018, the total number of outstanding options held by the Directors over ordinary shares is 29,124,854, representing 3.5 per cent of the Company's issued share capital. Each Director holds 14,562,427 options.

Further details regarding the options issued are provided in note 16.

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 £4.7m (2017: £4.5m). In addition, a deferred tax liability on the cumulative fair value gain of £1,019k on available-for-sale assets has not been recognised on the basis that it would be offset by available taxable losses.

Tax reconciliation

	31 March	31 March
	2018	2017
	£'000	£'000
Loss before tax	(160)	(72)
Tax at 19% (2017: 20%) on loss before tax	(30)	(14)
Effects of:
Unrelieved losses carried forward	30	14
Total tax (credit)/expense	-	-

The standard full rate of UK corporation tax applicable for the year ended 31 March 2018 was 19%. This is lower than the standard full rate of 20% applicable for the year ended 31 March 2017 due to changes implemented in the Finance (No2) Act 2015, which resulted in the rate of corporation tax reducing to 19% with effect from April 2017.

Legislation was announced in the Finance Act 2016 to reduce the rate of corporation tax to 17% with effect from 1 April 2020.

7 Loss per share

Loss per share has been calculated on a loss after tax of £160,000 (2017: £72,000) and the weighted number of average shares in issue for the year of 756,045,343 (2017: 721,588,020).

The loss and weighted average number of shares used in the calculations is set out below:

	31 March  2018	31 March 2017
Loss (£'000)	(160)	(72)
Loss per share (pence)	(0.02)	(0.01)

8 Investments

	31 March	31 March
	2018	2017
	£'000	£'000
Opening balance	3,455	1,918
Additions during the year	786	602
Disposals during the year	(806)	(163)
Exchange rate differences	-	(4)
Gain included in Other Comprehensive Income	580	1,127
Current year impairment charged to profit or loss	(1,254)	(25)
Closing balance	2,761	3,455

Additions during the year:

Investment in Rosslyn Technologies plc

On 12 May 2017, the Company subscribed for 1,111,111 ordinary shares for a consideration of £50,375.  Following the investment the Company has an interest in approx. 0.75% of the total share capital.

Investment in Portr Ltd

On 10 October 2017, the Company acquired 2,198 ordinary shares for a consideration of £10,990.  Following the investment the Company had an interest in approx. 3.7% of the total share capital.

Investment in TheVIBE Ltd

On 16 October 2017, the Company acquired 245,822 ordinary shares for a consideration of £199,998. Following the investment the Company had an interest in approx. 5.17% of the total share capital.

Exercise of BTL warrants

On 24 November 2017, the Company exercised warrants to acquire 41,666 ordinary shares for a consideration of £38,102.  Following the investment the Company had an interest in approx. 2.81% of the total share capital.

Investment in BTL

On 22 December 2017, the Company acquired 15,000 ordinary shares for a consideration of £89,877.  Following the investment the Company had an interest in approx. 2.9% of the total share capital.

Exercise of BTL warrants

On 16 January 2018, the Company exercised warrants to acquire 25,000 ordinary shares for a consideration of £48,603.  Following the investment, the Company has an interest in approx. 2.91% of the total share capital.

Investment in Argo

On 2 February 2018, the Company acquired 2,500,000 ordinary shares for a consideration of £200,000.  Following the investment the Company has an interest in approx. 1.9% of the total share capital.

Investment in Portr Ltd

On 29 March 2018, the Company acquired 37,117 ordinary shares for a consideration of £148,466.  Following the investment, and a subsequent funding round completed by Argo Blockchain post period end, which Vela did not participate in, the Company has an interest in approx. 3.1% of the total share capital.

Disposals during the year:

Disposal of BTL shares

Between 6 April 2017 and 20 December 2017, the Company disposed of 198,566 shares in BTL generating net proceeds of CAN$1,375,000.

9 Trade and other receivables       

	31 March	31 March
	2018	2017
	£'000	£'000
Other receivables	13	13
	13	13

10 Trade and other payables

	31 March	31 March
	2018	2017
	£'000	£'000
Trade payables	4	5
Accruals and deferred income	24	17
	28	22

11 Loans and borrowings

Loans due within one year	31 March 2018 £'000	31 March 2017 £'000
Convertible loan notes	445	-
	445	-

Loans due after more than one year	31 March 2018 £'000	31 March 2017 £'000
Convertible loan notes	-	408
Bonds	480	452
	480	860

On 9 September 2016, the Company issued £400,000 of convertible unsecured loan notes to certain Shareholders, including Antony Laiker (a director of the Company).  The loan notes are repayable on 30 September 2018 and carry an annual interest rate of 8 per cent. 

The Loan Notes and accrued interest are, at the election of the loan-note holder and pursuant to the terms of the loan agreement, capable of conversion into Ordinary Shares at 0.15p per share, a discount of 6.25 per cent. to the closing bid price of 0.16p per share on 8 September 2016. The Directors consider the convertible loan notes to represent a compound financial instrument. The Directors consider the equity element of the instrument to be immaterial. Accordingly, the full balance is classified as a financial liability.

On 1 February 2017, the Company launched the issue of secured bonds, through UK Bond Network, to raise £550,000 for the Company.  The Bonds have a coupon of 10% and a term of 3 years with full repayment in cash of the principal amount of the Bonds due at maturity.  The Bonds may be repaid at the option of Vela together with all accrued (but unpaid) interest on the amount prepaid.  The Bonds will not be convertible into ordinary shares in the capital of the Company. The Bonds are secured by way of fixed and floating charges over all assets of the Company present and future.

Further protection for bondholders has been provided through a personal guarantee being given by Scott Fletcher, an existing shareholder in the Company and the Chairman of UK Bond Network. As consideration for the provision of the personal guarantee, Scott Fletcher received a fee of £40,000 from the Company which was satisfied by the Company transferring 3,780 shares that it previously held in Portr Limited to Scott Fletcher.

The loan balances above are stated net of debt issue costs and rolled up interest amounting to £57,000 (2017 - £90,000).

12 Share capital

	31 March	31 March
	2018	2017
	£'000	£'000
Authorised capital
9,999,520,000 ordinary shares of 0.1 pence each	10,000	10,000
	10,000	10,000
Allotted, called up and fully paid capital
836,973,115 ordinary shares of 0.1 pence each	837	722
	837	722

Allotments during the period

The Company allotted the following ordinary shares during the year:

	31 March 2018
Shares in issue at 1 April 2017	721,588,500
Shares issued during the year	115,384,615
Shares in issue at 31 March 2018	836,973,115

	31 March 2017
Shares in issue at 1 April 2016	721,588,020
Shares issued during the period	480
Shares in issue at 31 March 2017	721,588,500

On 13 December 2017 the company issued 115,384,615 new ordinary 0.1p shares for a total gross consideration of £750,000.

13 Cash and cash equivalents

Cash and cash equivalents comprise the following:

	31 March	31 March
	2018	2017
	£'000	£'000
Cash and cash in bank:
Pound sterling	847	383
Cash and cash equivalents at end of year	847	383

Included within cash and cash equivalents is £201k that was held in an escrow account and used to purchase an investment in BlockchainK2 Corp, which completed on 30 May 2018.

14 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, other than certain investments recorded at cost, 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 overleaf.

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 BTL and Stream TV are denominated in Canadian Dollars and US Dollars respectively, which gives rise to exposure to foreign currency risk. The Directors have considered the risk and do not deem it necessary to enter into any specific risk management arrangements at the present time. The Directors will continue to review the position going forward to ensure this remains appropriate in the context of the Company's risk profile.

Credit risk

This section along with the liquidity risk and capital risk management sections below also form 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
	2018	2017
Classes of financial assets - carrying amounts	£'000	£'000
Available-for-sale financial assets measured at fair value through other comprehensive income (*)	2,761	3,455
Loans and receivables	13	13
	2,774	3,468

* where a reliable estimate of fair value cannot be determined, the investment is measured at cost less impairment (see below).

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's financial assets are pledged as security, as detailed in note 11.

The Company is required to report the category of fair value measurements used in determining the value of its investments, 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 two (2017: two) investments classified in this category. The aggregate historic cost of the two investments is £450,698 (2017: £299,393) and the fair value as at 31 March 2018 was £1,470,044 (2017: £1,446,713).

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 one (2017: one) unquoted investment classified in this category. The historic cost of this investment is £745,479 (2017: £586,034) and the fair value as at 31 March 2018 was £644,612 (2017: £1,289,058), giving rise to an impairment charge of £100,867 recognised directly in profit or loss in the period. The investment was valued using the transaction price ascribed to the shares following a placing by the investee Company in March 2018.

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.  None of the Company's investments are valued using this technique. In the prior year, the Company held 25,000 warrants, with an estimated fair value of £22,750, in relation to shares in one of its investee companies.

The Company has six (2017: six) investments that are held at cost less impairment as a reliable estimate of fair value cannot be determined. An impairment charge of £450,000 (2017: £25,000) has been recognised directly in profit or loss in respect of two of these investments. As at 31 March 2018 the historical cost of these investments amounted to £1,171,504 (2017: £771,501) and their aggregate carrying value was £646,504 (2017: £696,504).

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 2018			31 March 2017
	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	473	480		22	860
	473	480		22	860

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.

15 Reconciliation of net debt

	As at 1 April 2017	Cash flow	Non-cash movement	As at 31 March 2018
	£'000	£'000	£'000	£'000
Cash and cash equivalents	383	464	-	847
Convertible loan notes	(408)	-	(37)	(445)
Bonds	(452)	-	(28)	(480)
	(477)	464	(65)	(78)

Non-cash movements relate to the amortisation of loan issues costs and rolled up unpaid interest.

16 Share-based payments

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

No new share options have been issued in the current accounting period and the total number of options outstanding at 31 March 2018 was 29,124,854 (2017: 29,124,854). None of the options issued have either lapsed or been exercised in the period.

The options have historically been valued using the Black Scholes option pricing model.

The amount of remuneration expense in respect of the share options granted amounts to £NIL (2017: £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
		22 October	18 September	2 October	8 April
		2015	2015	2014	2014
Share price at grant date (pence)		0.21	0.19	0.33	1.50
Exercise price (pence)		0.21	0.15	0.33	0.85
Expected life (years)		7	7	7	7
Annualised volatility (%)		79.47	70.98	95.16	74.23
Risk-free interest rate (%)		2.0	2.0	2.0	2.0
Fair value determined (pence)		0.15	0.13	0.26	1.17
Number of options granted		6,400,000	10,489,560	4,000,000	8,235,294
Options exercisable at 31 March 2018		4,266,667	6,993,040	4,000,000	8,235,294

None of the options outstanding as at 31 March 2018 are subject to any performance criteria

17 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

Nigel Brent Fitzpatrick, Non-Executive Director, is also a Director of Ocean Park Developments Limited.  During the year the Company paid £46,000 (2017: £40,000) in respect of his Directors fees to the Company. The balance due to Ocean Park Developments Limited at the year end was £nil (2017: £nil).

Risk Alliance Insurance Brokers Limited

Nigel Brent Fitzpatrick, Non-Executive Director, is also a Director of Risk Alliance Insurance Brokers Limited.  During the year the Company paid £5,700 (2017: £5,756) in respect of insurance fees at arm's length.  The balance due to Risk Alliance Insurance Brokers Limited at the year end was £nil (2017: £nil).

Widdington Limited

Antony Laiker, Director, is also a Director of Widdington Limited. During the year the Company paid £64,000 (2017: £55,000) in respect of his Directors fees to the Company. The balance due to Widdington Limited at the year end was £nil (2017: £nil).

Kevin Sinclair

Kevin Sinclair, a shareholder of the Company, holds £100,000 of the bonds under the Company's 10% bond issue in February 2017.  At 31 March 2018, Kevin Sinclair held 106,449,000 (12.72%) of the issued share capital of the Company through JIM Nominees Ltd and is classified as a substantial shareholder under the AIM Rules.

Scott Fletcher

Scott Fletcher, a shareholder of the Company, holds £200,000 of the 8% convertible loan notes issued by the company in September 2016.

Scott Fletcher held 63,944,656 Ordinary Shares at 31 March 2018 representing 7.64 per cent. of the issued share capital of the Company in addition to the 8% convertible loan notes above.  He is also the chairman of UK Bond Network Limited, which acted on behalf of the Company in relation to the bond issue.

18 Events after the balance sheet date

Investment in TheVibe Ltd trading as Vibe Tickets

On 30 April 2018 TheVibe Ltd was placed into administration following a failure to reach a decision on a further fundraise.  The business and assets of TheVibe Ltd were purchased by the former Chairman via his holding company Vibe Group Holdings Limited. As at 31 March 2018, the Company had invested £400,000 in TheVibe Ltd and this amount has been fully impaired in the financial statements presented for the year ended 31 March 2018.

On 18 June 2018 the Company entered into a subscription agreement to invest £200,000 in Vibe Group Holdings Limited ("VGHL") as part of an overall fundraise by VGHL which has raised £700,000 for the company. Vela's investment is unconditional and irrevocable.  Following completion of the investment, Vela owns 5,674 ordinary shares in VGHL equivalent to approximately 4 per cent. of the issued share capital of VGHL.

Investment in BlockchainK2 Corp.

On 30 May 2018, the Company acquired 272,000 shares in BlockchainK2 Corp. for a subscription price of C$1.25 per share, equating to a total cost of £200,589.

19 Annual report and accounts

The annual report and accounts will be posted to shareholders on 28 September 2018 and will be made available on the Company's website, www.velatechplc.com.

20 Annual General Meeting 

The Company's Annual General Meeting will be held at 10.00 a.m. on 23 October 2018 at the offices of Allenby Capital, 5 St Helen's Place, London, EC3A 6AB. Notice of the Annual General Meeting will be sent to shareholders with the annual report and accounts.

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 2018, which have been prepared under European Union endorsed International Financial Reporting 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 2018, 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

 

 

FR LFMTTMBJTTFP