Registration number 03904195
Vela Technologies PLC
Annual Report and Financial Statements 2018
vela technologies PLC
annual report and financial statements 2018
table of contents
Strategic report
01
02
03
chairman’s statement
strategic report
directors and advisers
Governance
04
07
08
corporate governance
report on remuneration
report of the directors
Financial Statements
12
16
20
21
22
23
24
independent auditor’s report
accounting policies
statement of comprehensive income
balance sheet
cash flow statement
statement of changes in equity
notes to the financial statements
vela technologies PLC
annual report and financial statements 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.
investments,
Vela’s
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.
than Blockchain and businesses related
though, stretch much wider
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, in 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 have 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 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 £3.62m (31 March 2017: £3.85m) and investments were valued at
£2.76m (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 reviewed 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 of our findings, Vela is also now expanding its efforts to include
seeking opportunities within UK publicly listed
Nigel Brent Fitzpatrick MBE
Non-Executive Chairman
vela technologies PLC
annual report and financial statements 2018
1
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 of £750k (before expenses) 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 and an impairment charge of £1.254 million 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 of
Vibe 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 to the financial statements.
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
vela technologies PLC
annual report and financial statements 2018
2
vela technologies PLC
annual report and financial statements 2018
3
directors and advisers
Nigel Brent Fitzpatrick MBE
Non-Executive Chairman
Mr Fitzpatrick has over 20 years’ experience as a corporate finance consultant. In the last 15 years he
has been instrumental in advising a number of companies on their acquisitions, funding and subsequent
flotations. Mr Fitzpatrick was previously Chairman of Global Marine Energy PLC, a listed oil services
Company. He is currently Chairman of Risk Alliance Group Ltd, Halcyon Oil & Gas Limited and Aboyne-
Clyde Rubber Estates of Ceylon Limited. He is also non-executive Director of Powerhouse Energy Plc
and Acorn Minerals Plc. He is a member of the Audit Committee Institute. In the Queen’s Birthday
Honours List 2012, Mr Fitzpatrick was awarded an MBE.
Antony Jon Laiker
Chief Executive Officer
Mr Laiker has over 34 years of experience as a stockbroker, the last 24 years of which have been largely
focused on managing assets and advising a wide range of clients on UK equities as well as assisting
companies to raise funds. He is a member of the Chartered Institute for Securities and Investment.
Directors
Nigel Brent Fitzpatrick MBE
Non-Executive Chairman
Antony Jon Laiker
Chief Executive Officer
Registered office
10b Russell Court
Cottingley Business Park
Bingley
West Yorkshire
BD16 1PE
Company secretary
E K Wilson
Broker
Smaller Company Capital
Limited
4 Lombard Street
London
EC3V 9HD
Nominated adviser
Allenby Capital Limited
5 St Helen’s Place
London
EC3A 6AB
Auditors
Murray Harcourt Limited
6 Queen Street
Leeds
LS1 2TW
Registrars
Neville Registrars
Neville House
Steelpark Road
Halesowen
B62 8HD
Accountants
Bailey Wilson
10b Russell Court
Bingley BD16 1PE
Solicitors
Hewitsons LLP
Kildare House
3 Dorset Rise
London EC4Y 8EN
Bankers
Barclays Bank plc
27 Soho Square
London W1D 3QR
vela technologies PLC
annual report and financial statements 2018
4
corporate governance
for the year ended 31 March 2018
The Company is committed to applying the highest principles of corporate governance commensurate
with its size.
Compliance
The Board is committed to high standards of corporate governance so that the Company’s procedures
are transparent and clearly understood. From 28 September 2018 there is a requirement for AIM listed
companies to comply with a recognised Corporate Governance Code. The Board has adopted the QCA
Corporate Governance Code 2018 (the “QCA Code”) and will implement this from 28 September 2018.
Full details of the company’s approach to the principles in the QCA Code will be found on the company’s
website from 28 September 2018.
Directors
The Company supports the concept of an effective Board leading and controlling the Company. The Board
is responsible for approving Company policy and strategy and meets regularly. External advisers supply
the Board with appropriate and timely information and the Directors are free to seek any further information
they consider necessary. All Directors have access to advice from the Company Secretary and
independent professionals at the Company’s expense. Training is available for new Directors and other
Directors as necessary.
The Board consists of two Directors, who bring a breadth of experience and knowledge.
The Chairman of the Board is Brent Fitzpatrick. The Board members are described on page 3 to the
financial statements. All Directors are due to retire by rotation and stand for re-election at the AGM.
Board performance
The Board carries out an evaluation of its performance on a yearly basis. Performance criteria include:
contribution; strategy; sector experience; financial stewardship; and public company requirements. These
are related to the company's needs and projected needs at the time of each annual review. The directors
consider that the size of the company does not justify the use of third parties to evaluate the performance
of the board on an annual basis.
The effectiveness of each individual Director is benchmarked to directors at similar companies.
Should the size of the Company increase, the board will consider whether it is appropriate to put in place
a more prescribed evaluation process.
Succession planning is currently undertaken on an informal basis by the Board in consultation with outside
advisors. The Board is satisfied that this is appropriate for this stage of the Company’s development.
Committees
Due to the size of the Board, the Company has elected to not maintain a separate remuneration committee
and, as such, the Board as a whole undertakes the functions of such a committee. The Board as a whole
will instead review the scale and structure of Directors’ fees, taking into account the interests of
shareholders and the performance of the Company.
Due to the size of the Board, the Company does not maintain an audit committee and, as such, the Board
as a whole undertakes the functions of such a committee including reviewing the independence and
objectivity of the external auditor. This includes reviewing the nature and extent of non-audit services
supplied by the external auditor to the Company, seeking to balance objectivity and value for money.
The Company is non-compliant with the QCA Code by virtue of not having separate audit or remuneration
committees.
No separate nominations committee has been formed and the Board collectively undertakes the function
of such a committee.
vela technologies PLC
annual report and financial statements 2018
5
corporate governance
for the year ended 31 March 2018
Relations with shareholders
The Company values the views of its shareholders and recognises their interest in the Company’s strategy
and performance, Board membership and quality of management. It therefore holds regular meetings with
its institutional shareholders to discuss objectives.
The AGM is used to communicate with investors and they are encouraged to participate. The Chairman
is available to answer questions. Separate resolutions are proposed on each issue so that they can be
given proper consideration and there is a resolution to approve the annual report and financial statements.
The Company counts all proxy votes and will indicate the level of proxies lodged on each resolution after
it has been dealt with by a show of hands.
Accountability and audit
The Board presents a balanced and understandable assessment of the Company’s position and prospects
in all interim and price-sensitive reports and reports to regulators, as well as in the information required to
be presented by statutory requirements.
The Company does not require a separate audit committee and, as such, the Board as a whole reviews
the independence and objectivity of the external auditor. This includes reviewing the nature and extent of
non-audit services supplied by the external auditor to the Company, seeking to balance objectivity and
value for money.
Internal controls
The Board is responsible for maintaining a sound system of internal controls to safeguard both the
shareholders’ investment and the Company’s assets.
The Board has reviewed its risk management framework to identify areas where procedures need to be
changed or installed.
The Board has considered the need for an internal audit function but has decided that the size of the
Company does not justify this at present. However, it will keep the decision under review. The Board has
reviewed the operation and effectiveness of the Company’s system of internal control for the financial
period and the period up to the date of approval of the financial statements.
vela technologies PLC
annual report and financial statements 2018
6
corporate governance
for the year ended 31 March 2018
The Directors are responsible for the Company’s system of internal control and reviewing its effectiveness.
The system of internal control is designed to provide reasonable, but not absolute, assurance against
material misstatement or loss.
The key features of the Company’s system of internal control are as follows:
Steps taken to ensure an appropriate control environment
The Board has put into place a management structure with clearly defined responsibilities for internal
financial control.
Process used to identify major business risks and to evaluate their financial implications
The identification of major business risks is carried out in conjunction with operational management and
steps are taken to mitigate or manage these risks where possible.
Major information systems that are in place
There are comprehensive financial management reporting systems in place, which involve the preparation
of detailed annual budgets by the Company and longer-term financial forecasting. The budgets are
generated by the responsible member of the management team and passed to the Board for approval.
The Board monitors performance against budget on a regular basis.
Main control procedures which address the financial implications of the major business risks
The Company maintains financial controls and procedures appropriate to the business environment
conforming to overall standards and guidelines, which are set by the Board.
Monitoring system the Board uses to check the system is operating effectively
The external auditors review the control procedures to the extent necessary for expressing their audit
opinion and report on any weakness arising during the course of their audit work. The Board has reviewed
the operation and effectiveness of the Company’s system of internal financial control for the financial
period and for the period up to the date of the approval of these financial statements.
Going concern
After making appropriate enquiries (described on page 9), the Directors have a reasonable expectation
that the Company will have adequate resources to continue in operational existence for the foreseeable
future. For this reason, they continue to adopt the going concern basis in preparing the financial
statements.
Nigel Brent Fitzpatrick MBE
Non-Executive Chairman
vela technologies PLC
annual report and financial statements 2018
7
report on remuneration
for the year ended 31 March 2018
Directors’ remuneration
The Board recognises that Directors’ remuneration is of legitimate concern to shareholders and is
committed to following current best practice. The Company operates within a competitive environment
and its performance depends on the individual contributions of the Directors and employees. It believes
in rewarding vision and innovation. The Board has decided to present this remuneration report for
shareholder approval.
Policy on Executive Directors’ remuneration
The policy of the Board is to provide an executive remuneration package designed to attract, motivate
and retain Directors of the calibre necessary to maintain the Company’s position and to reward them for
enhancing shareholder value and return. It aims to provide sufficient levels of remuneration to do this but
to avoid paying more than is necessary. The remuneration should also reflect the Directors’
responsibilities and include incentives to deliver the Company’s objectives. The notice period for
termination of the Executive Director’s service contract is 12 months.
As the Company is in the early stages of building an investment portfolio the Company has elected not to
have a separate remuneration committee. The Board as a whole will instead review the scale and structure
of Directors’ fees, taking into account the interests of shareholders and the performance of the Company.
Main elements of executive remuneration
There are three proposed elements of the Executive Director’s remuneration package:
i.
ii.
iii.
fees;
annual bonus payments; and
share-based payments.
Fees
The Executive Director’s basic salary is reviewed by the Board. In deciding upon appropriate levels of
remuneration, the Board believes that the Company should offer average levels of base pay reflecting
individual responsibilities compared to similar jobs in comparable companies, as well as internal factors
such as performance.
Annual bonus payments
The Board establishes the objectives which must be met for a bonus to be paid. A performance related
award scheme incorporating audited earnings per share, share price performance and Company
profitability has been established which recognises the success of the business for which the Executive
Director is responsible. Bonus payments are non-pensionable.
Share based payment
The Board establishes the objectives which must be met for a share based payment to be paid. An award
scheme has been established which recognises the success of the business for which the Executive
Director is responsible. All share based entitlements for the Directors are disclosed in note 5 to the
financial statements.
Non-Executive Directors
The Board as a whole determines the remuneration of the Non-Executive Director. The Non-Executive
Director does not have a contract of service but a letter of appointment.
Details of Directors’ remuneration
This report should be read in conjunction with note 5 to the financial statements, which also forms part of
this report. Full details of all elements of the remuneration package of each Director are given in note 5 to
the financial statements, together with details of Directors’ share interests.
Nigel Brent Fitzpatrick MBE
Non-Executive Chairman
vela technologies PLC
annual report and financial statements 2018
8
report of the directors
for the year ended 31 March 2018
The Directors present their report together with the financial statements for the year ended 31 March
2018.
General information
The Company is a public limited company incorporated and domiciled in England and Wales. The
Company’s ordinary shares are traded on the AIM market of the London Stock Exchange.
Results and dividends
The results of the Company are set out in the Statement of Comprehensive Income. The Directors do not
recommend payment of a dividend for the year ended 31 March 2018.
Directors
The Directors of the Company and their interests in the shares of the Company at the start of the period,
or when appointed, and at the end of the period, or on resignation, are set out in note 5 to the financial
statements.
In accordance with the terms of the Company’s Articles of Association, both Nigel Brent Fitzpatrick and
Antony Jon Laiker will retire and will offer themselves for re-election at the forthcoming AGM.
The Directors who served during the period under review are:
N B Fitzpatrick
A Laiker
Financial risk management objectives and policies
The Directors constantly monitor the financial risks and uncertainties facing the Company with particular
reference to the exposure to price, currency, credit, liquidity and cash flow risk. They are confident that
suitable policies are in place and that all material financial risks have been considered. More detail is
given in note 14 to the financial statements.
Substantial shareholders
At 31 March 2018 the following had notified the Company of disclosable interests in 3% or more of the
nominal value of the Company’s shares, save for the Directors whose interests are disclosed in note 5 to
the financial statements:
JIM Nominees Ltd Des:Jarvis
Hargreaves Lansdown (Nominees) Limited Des:VRA
Shareholding
287,012,309
87,255,506
Interactive Investor Services Nominees Limited Des:SMTKNOMS
63,683,128
Hargreaves Lansdown (Nominees) Limited Des:15942
Hargreaves Lansdown (Nominees) Limited Des:HLNOM
HSBC Client Holdings Nominee (UK) Limited Des:731504
Barclays Direct Investing Nominees Limited Des:Client1
JIM Nominees Ltd Des:ISA
Lynchwood Nominees Limited Des:2006459
51,028,534
39,400,307
28,777,894
26,692,765
26,634,582
25,614,000
%
34.29
10.43
7.61
6.10
4.71
3.44
3.19
3.18
3.06
Included within JIM Nominees Ltd Des:Jarvis are substantial shareholdings held by K. Sinclair
(106,449,000 – 12.72%) and S. Fletcher (63,944,656 – 7.64%).
vela technologies PLC
annual report and financial statements 2018
9
report of the directors
for the year ended 31 March 2018
Going concern
The Company’s business activities, together with the factors likely to affect its future development,
performance and position are set out in the Chairman’s Statement on page 1. In addition, note 14 includes
the Company’s objectives, policies and processes for managing its capital, details of its financial risk
management objectives, financial instruments and its exposures to credit risk and liquidity risks.
The Company has continued to progress as a long term investment Company seeking to invest in early
stage and pre-IPO businesses that want to develop. As a result of this the Company has reported a loss
for the current year and continues to maintain minimal running costs ensuring that such losses are kept
to a minimum. The current year loss has further increased the brought forward losses which are in line
with the expectations of the Directors as the Company moves to becoming an established investment
Company. Furthermore, the Company is reporting negative operating cash flows which the Directors are
continuing to minimise by managing the cash balances effectively ensuring that funds are preserved to
ensure the running costs are met. Availability of cash is key in making decisions for the Company. In
addition, liquidity can be maintained by selling some of the Company's quoted investments, for which
there is an active market. Additional funds have also been raised in the period through the issue of shares,
as detailed in note 12, in order to finance further investment.
The Directors have a reasonable expectation that the Company will have adequate resources to continue
in operational existence for the foreseeable future. Accordingly, they adopt the going concern basis in
preparing the annual report and financial statements.
Directors’ responsibilities statement
The Directors are responsible for preparing the Annual Report and financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that
law the Directors have elected to prepare the financial statements in accordance with International
Financial Reporting Standards as adopted by the European Union (IFRS). Under Company law the
Directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs and profit or loss of the Company for that period. In preparing these financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable IFRS have been followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Insofar as each of the Directors is aware:
•
•
there is no relevant audit information of which the Company’s auditors are unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of any
relevant audit information and to establish that the auditors are aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
vela technologies PLC
annual report and financial statements 2018
10
report of the directors
for the year ended 31 March 2018
Investing Policy
The Company’s investing policy is set out below:
The Directors believe that companies have become increasingly reliant on emergent technologies, hi-tech
engineering and scientific advances to drive growth. These technologies are applicable across a wide
range of sectors including anything from Oil & Gas E&P, internet based business to Aviation. The Directors
believe that an opportunity exists to acquire and consolidate holdings in Small and Medium sized
Enterprises (SME's) operating in these sectors, with the intention of creating value for Shareholders.
Initially, the Company's focus will be searching for companies which are based in the UK or Europe where
there may be a number of opportunities to acquire interests in undervalued or pre-commercialisation
technologies which, when applied, produce cost savings or revenue enhancement for customers. Early
acquisition of these innovative technologies should provide maximum returns for Shareholders.
It is planned that the Company will have its head offices based in England with the UK being at the
forefront of global technology, engineering and scientific advances. The Company intends the main focus
of the investment policy to be on the implementation of solutions to enhance businesses' profitability, as
well as to aid growth in new markets. This will include both pre-commercialisation and established
commercial technologies. The Directors will however ensure that any investments meet strict due
diligence criteria and the primary focus will be on companies post viability testing phase, to mitigate risk
associated with early stage investment. This will not preclude the Company from considering investments
in suitable projects in other regions and sectors where the Continuing Directors believe that there are
high-growth opportunities.
The Directors see technology as having considerable growth potential for the foreseeable future and many
of the prospects they have identified are in this sector. The Continuing Directors will focus on early stage
investments and believe that any investment target will have at least one of four key components: a strong
management team; an innovative product proposal; revenue enhancing or cost saving capabilities; and
high growth potential. It is anticipated that the main driver of success for the Company will be its focus,
during the investment screening process, on the management involved in the potential investee
companies and the potential value creation that the team of people is capable of realising. The Company
intends to be an active investor. Accordingly, where the Directors feel that an investee company would
benefit from their skills and expertise, they may look to seek representation on the board of the investee
company.
In the first instance, the new capital available to the Company will be used to locate, evaluate and select
the investment opportunities which would offer the greatest potential return for Shareholders in the long
term. Once the Continuing Directors have identified the most attractive investments, the Company may
require further funds in order to take up these opportunities. It is the intention of the Directors to undertake
further fundraising, if such an opportunity should arise. The Company does not currently intend to fund
any investments with debt or other borrowings but may do so if appropriate. Investments may be made
in all types of assets falling within the remit of the Investing Policy and there will be no investment
restrictions.
The Directors may consider it appropriate to take an equity interest in any proposed investment which
may range from a minority position to 100 per cent. ownership. Proposed investments may be made in
either quoted or unquoted companies and structured as a direct acquisition, joint venture or as a direct
interest in a project.
The Company will seek investment opportunities which can be developed through the investment of
capital or where part of or all of the consideration could be satisfied by the issue of new Ordinary Shares
or other securities in the Company. The opportunities would generally have some or all of the following
characteristics, namely:
•
•
a majority of their revenue or expected revenues derived from technology, hi-tech engineering or
scientific advances and strongly positioned to benefit from the sector's growth;
a trading history which reflects past profitability or potential for significant capital growth going
forward; and
• where all or part of the consideration could be satisfied by the issuance of new Ordinary Shares or
other securities in the Company.
vela technologies PLC
annual report and financial statements 2018
11
report of the directors
for the year ended 31 March 2018
The Directors believe that their collective business experience in the areas of investment will assist them
in the identification and evaluation of suitable opportunities and will enable the Company to achieve its
investing objectives.
New investments will be held for the medium to longer term, although shorter term disposal of any
investments cannot be ruled out. There will be no limit on the number of projects into which the Company
may invest and the Company's financial resources may be invested in a number of propositions or in just
one investment, which may be deemed to be a reverse takeover pursuant to Rule 14 of the AIM Rules.
Where the Company builds a portfolio of related assets it is possible that there may be cross-holdings
between such assets.
The Directors believe that the status of the Company as an Investing Company enables it to fund
investments or acquisitions using a mixture of cash, equity and/or debt and intend to actively monitor
these investments.
The Company will identify and assess potential investment targets and where it believes further
investigation is required, intends to appoint appropriately qualified advisers to assist. The Company will
not have a separate investment manager.
The Company intends to deliver Shareholder returns principally through capital growth rather than capital
distribution via dividends.
Post balance sheet events
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.
Auditors
Murray Harcourt Limited were re-appointed and their re-appointment will be proposed at the AGM in
accordance with Section 489(1) of the Companies Act 2006.
Strategic Report
In accordance with section 414C of the Companies Act 2006 (Strategic Report and Directors’ Report)
Regulations 2013, the Company has prepared a Strategic Report, which includes information that would
have been included in the Directors’ Report.
On behalf of the Board
Nigel Brent Fitzpatrick MBE
Non-Executive Chairman
26 September 2018
vela technologies PLC
annual report and financial statements 2018
12
independent auditor’s report
for the year ended 31 March 2018
Opinion
We have audited the financial statements of Vela Technologies plc (the ‘company’) for the year ended 31
March 2018 which comprise the accounting policies, the statement of comprehensive income, the balance
sheet, the cash flow statement, the statement of changes in equity and notes to the financial statements.
The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
•
•
•
give a true and fair view of the state of the company’s affairs as at 31 March 2018 and of its loss
for the year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us
to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties
that may cast significant doubt about the company’s ability to continue to adopt the going concern
basis.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Management override of internal controls
Under ISA (UK) 240 it is presumed that the
risk of management override of
internal
controls is present in all entities.
Additionally, the financial statements include
to significant
balances
judgement and estimation uncertainty.
that are subject
Our audit work included, but was not restricted to:
•
•
•
reviewing
the accounting estimates,
judgements and decisions made by
management;
performing testing of journal entries; and
reviewing
records
significant transactions.
company’s accounting
for evidence of any unusual
the
vela technologies PLC
annual report and financial statements 2018
13
independent auditor’s report
for the year ended 31 March 2018
Key audit matter
How our audit addressed the key audit matter
Investment activities
The company is investing in pre-growth
companies and investments represent a
significant portion of the total assets of the
company as at 31 March 2018.
included
The main risks
the accurate
recording of investment activity during the
year, valuation of investments held at the
year-end and classification of
those
investments.
Determining the fair value of unquoted
investments involves a significant level of
management
is
therefore an increased risk of material errors
in valuation of these investments.
judgement and
there
Our audit work included, but was not restricted to:
•
•
•
•
•
relation
information which
confirmation of the existence of investments
through a combination of obtaining third-party
confirmation from the company’s investment
custodians, obtaining direct confirmation from
investee companies or agreement to other
supporting documentation, such as share
certificates;
agreement of valuations of listed investments
to quoted prices as at 31 March 2018;
in
to valuations of unquoted
investments in the year, ensuring that these
were based on
is
considered to be a reliable estimate in
accordance with the company’s accounting
policy and the accounting standards. These
were primarily based upon recent third-party
transactions in the equity of the investee
companies and, in each instance, we were
satisfied that the valuations to fair value were
based on appropriate information;
consideration as to whether the directors’
assessment was appropriate for investments
where they did not believe a reliable estimate
of fair value could be made based on the
information available. In each instance we
were satisfied with the directors’ approach
and these items were therefore held at cost
less any impairment; and
consideration of
the
investments as available-for-sale.
classification of
Our application of materiality
The scope and focus of our audit was influenced by our assessment and application of materiality. We
apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements on our audit and on the financial statements.
We define materiality as the magnitude of misstatements in the financial statements that makes it probable
that the economic decisions of a reasonably knowledgeable person would be changed or influenced.
We also determine a level of performance materiality which we use to determine the extent of testing
needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial statements as a whole.
We determined materiality for the financial statements as a whole to be £50,000, which was based on
gross assets of the company, representing 1.4% of the balance. This benchmark is considered the most
appropriate because, for an investment holding company, the value of investments, which represents the
most significant portion of gross assets, is the key performance indicator.
On the basis of our risk assessment, our judgement was that performance materiality for the financial
statements should be 80% of materiality, amounting to £40,000.
We report to the Board of Directors all identified unadjusted errors in excess of £1,500. Errors below that
threshold would also be reported if, in our opinion as auditor, disclosure was required on qualitative
grounds.
vela technologies PLC
annual report and financial statements 2018
14
independent auditor’s report
for the year ended 31 March 2018
An overview of the scope of our audit
As part of planning our audit approach, we determined materiality and assessed the risks of material
misstatement in the financial statements. In particular, we looked at where the directors made subjective
judgements, for example in respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion
on the financial statements as a whole, taking into account an understanding of the company’s activities,
the accounting processes and controls and the sectors in which it operates. Our planned audit testing was
directed accordingly and was focused on areas where we assessed there to be the highest risk of material
misstatement. During the audit, we reassessed and re-evaluated audit risks and tailored our approach
accordingly.
The audit procedures included substantive testing on significant transactions, balances and disclosures,
the extent of which was based on various factors such as our overall assessment of the control
environment, the effectiveness of controls and the management of specific risk.
We communicated with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant findings, including any significant deficiencies in internal
control that we identified during the audit.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In
connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
•
•
adequate accounting records have not been kept, or returns adequate for our audit have not
been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
vela technologies PLC
annual report and financial statements 2018
15
independent auditor’s report
for the year ended 31 March 2018
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 9, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website
https://www.frc.org.uk/Our-Work/Audit/Audit-and-
at:
assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-
audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor’s
report.
Steven Williams FCA
Senior Statutory Auditor
for and on behalf of Murray Harcourt Limited
Statutory Auditor, Chartered Accountants
6 Queen Street
Leeds
LS1 2TW
Date: 26 September 2018
vela technologies PLC
annual report and financial statements 2018
16
accounting policies
for the year ended 31 March 2018
1a Presentation of financial statements
The financial statements of the Company have been prepared in accordance with International Financial
Reporting Standards (IFRS), as adopted in the European Union and as applied in accordance with the
provisions of the Companies Act 2006, and under the historical cost convention, as modified by the
revaluation of certain available-for-sale financial assets. All values presented in the financial statements
are rounded to the nearest thousand pounds (£’000) except when otherwise indicated.
Changes in accounting policy
At the date of authorisation of these financial statements the following standards and interpretations were
in issue but not yet effective and therefore have not been applied in these financial statements:
• IFRS 9 Financial Instruments (effective 1 January 2018)
• IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018)
• IFRS 16 Leases (effective 1 January 2019)
The Company has identified that the adoption of IFRS 9, which replaces IAS 39 Financial Instruments:
Recognition and Measurement from 1 January 2018, will result in changes in the way in which impairment
charges and gains or losses on disposal of available-for-sale investments will accounted for.
The Company has classified all of its equity investments as being available-for-sale. Under IFRS 9,
changes in the fair value of such assets up to the point of disposal will be recorded in other comprehensive
income. Therefore, in contrast to the current accounting treatment, significant or prolonged declines in
value below cost will not be recognised in the income statement, and the income statement will not reflect
gains or losses on disposal because gains and losses recognised in other comprehensive income will not
be recycled to profit or loss on any such disposal.
In the year to 31 March 2018, the impairment charge attributable to available-for-sale assets was
£551,000 and the profit on disposal reclassified from other comprehensive income was £731,000.
Consequently, the pre-tax loss for the year ended 31 March 2018 would have been £180,000 higher.
In addition, the balance on the available-for-sale reserve at 31 March 2018 of £1,019,000, which
represents cumulative gains on available-for-sale assets held by the Company at that date, will not be
available for reclassification in future periods when those assets are sold.
It is expected that the adoption of IFRS 15 and IFRS 16 will not have a significant impact on the financial
statements.
1b Going concern
The Company’s business activities, together with the factors likely to affect its future development,
performance and position are set out in the Chairman’s statement and the Strategic report on pages 1
and 2. The financial position of the Company, its cash flows and liquidity position are described in the
Chairman’s statement and the Strategic report on pages 1 and 2. In addition, the Company’s objectives,
policies and processes for managing its capital, its financial risk management objectives, details of
financial instruments and exposures to credit and liquidity risks are included in note 14 to the financial
statements.
The Directors have a reasonable expectation that the Company will have adequate resources to continue
in operational existence for the foreseeable future. Accordingly, they adopt the going concern basis in
preparing the annual report and financial statements. Further information is also provided on page 8.
1c Summary of significant accounting policies
Taxation
Current tax is the tax currently payable based on taxable profit for the period.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is
generally provided on the difference between the carrying amounts of assets and liabilities and their tax
bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial
recognition of an asset or liability unless the related transaction is a business combination or affects tax
or accounting profit. Tax losses available to be carried forward as well as other income tax credits to the
Company are assessed for recognition as deferred tax assets.
vela technologies PLC
annual report and financial statements 2018
17
accounting policies
for the year ended 31 March 2018
Taxation (continued)
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the
extent that it is probable that the underlying deductible temporary differences will be able to be offset
against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective period of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income
statement, except where they relate to items that are recognised in other comprehensive income in which
case the related deferred tax is also charged or credited directly to other comprehensive income.
Financial instruments
A financial instrument refers to a contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity and is recognised on the Company’s balance sheet when
the Company becomes a party to the contractual terms of the instrument. Financial instruments include
investments, cash and deposits, trade receivables and payables, loans and borrowings and equity
securities.
Investments
Purchases of investments are initially recognised at cost at the date of the transaction, being the fair value
of the consideration.
The basis on which investments are subsequently valued is detailed in note 14 to the accounts.
Investments held are classified as available-for-sale. Any gains or losses arising from the sale of such
assets are recognised through comprehensive income with the exception of impairment losses which are
charged directly to profit or loss. Weighted average cost is used to determine the cost of shares disposed
of in the period.
The investments are managed by the Board and their performance is reviewed internally.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and, subsequently, measured at
amortised cost using the effective interest method, less provision for impairment. A provision for
impairment of trade and other receivables is established when there is objective evidence that the
Company will not be able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and changes to debtor payment patterns are considered indicators that the trade receivable
may be impaired.
The amount of the provision is the difference between the asset’s carrying amount and the present value
of estimated future cash flows, discounted at the original effective interest rate.
Trade and other payables
Trade and other payables are not interest-bearing and are stated at their fair value on initial recognition.
They are then measured at amortised cost.
Loans and borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs)
and the redemption value is recognised in the statement of comprehensive income over the period of the
borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.
vela technologies PLC
annual report and financial statements 2018
18
accounting policies
for the year ended 31 March 2018
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks that are readily
convertible into known amounts of cash and bank overdrafts. Bank overdrafts are shown within borrowings
in current liabilities on the balance sheet.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct costs.
Equity
Equity comprises the following:
Share capital
Share premium
Available for sale reserve
Share option reserve
Retained earnings
–
–
–
–
–
represents the nominal value of equity shares
represents the excess over the nominal value of the fair
value of consideration for shares issued
represents the cumulative fair value movement on available
for sale investments held at the balance sheet date
represents the cumulative charges for share based
payments
represents the accumulated retained profits
Foreign currencies
The presentational currency is sterling. The Company’s functional currency is sterling.
Transactions in foreign currencies are translated into the functional currency at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities
that are denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet
date. Gains and losses arising on retranslation of monetary assets and liabilities are included in net profit
or loss for the period.
Segmental reporting
An operating segment is a component of the Company:
•
that engages in business activities from which it may earn revenues and incur expenses (including
revenues and expenses relating to transactions with other components of the Company);
• whose operating results are reviewed regularly by the Company’s chief decision maker to make
decisions about resources to be allocated to the segment and assess its performance; and
for which discrete financial information is available.
•
The Company comprises a single operating segment being an investment Company operating solely
within the United Kingdom. Further information on the segment is disclosed in note 1 to the financial
statements.
Share-based payments
Share-based payments that are within the scope of IFRS 2 Share-based Payment have been recognised
in the financial statements in accordance with that standard. Where employees are rewarded using share-
based payments, the fair value of employees’ services is determined indirectly by reference to the fair
value of the instrument granted to the employee. This fair value is appraised at the grant date and, in
accordance with IFRS 2, excludes the impact of non-market vesting conditions.
Equity-settled share-based payments are recognised as an expense in the income statement in
accordance with IFRS 2 with a corresponding credit to equity. If a service period or other non-market
vesting conditions apply, the expense is allocated over the vesting period based on the best available
estimate of the number of share options expected to vest. Estimates are subsequently revised if there is
any indication that the number of share options expected to vest differs from previous estimates. Any
cumulative adjustment prior to vesting is recognised in the current period.
No adjustment is made to any expense recognised in prior periods of share options ultimately exercised
that are different from the number that actually vested. Upon exercise of share options, the proceeds
received net of attributable transaction costs are credited to share capital and where appropriate share
premium. Fair values of share options or awards, measured at the date of the grant of the option or award,
are determined using a Black Scholes model methodology.
vela technologies PLC
annual report and financial statements 2018
19
accounting policies
for the year ended 31 March 2018
1d Accounting estimates and judgements
Significant judgements in applying the Company’s accounting polices
In the process of applying the Company’s accounting policies, management has made the following
judgements that have the most significant effect on the amounts recognised in the financial statements.
Investments
Investments have been valued in accordance with the accounting policy set out in section 1c. The
Directors have used their judgement in valuing certain unquoted investments at cost. The use of cost for
measurement is acceptable under IAS 39 when fair value cannot reliably be measured. From
consideration of the information available in respect of certain investments as at the year end, the
Directors' judgement was that fair value could not reliably be measured for certain unquoted investments
and hence using a cost less impairment approach was appropriate. Further details in respect of
investment valuations is provided in notes 8 and 14 to the financial statements.
Recognition of deferred tax assets
The Directors have also used their judgement in not recognising deferred tax assets as explained in note
6 to the financial statements.
Estimates
Fair value of investments
The fair value of certain investment holdings has been determined, by the Directors, using estimation
techniques. Further details regarding the carrying value of these investments and the methods used to
ascertain fair values is provided in note 14.
vela technologies PLC
annual report and financial statements 2018
20
statement of comprehensive income
for the year ended 31 March 2018
Revenue
Administrative expenses
– share-based payments
– other administrative expenses
– profit on disposal of available-for-sale assets
– impairment of available-for-sale assets
Total administrative expenses
Operating loss
Finance expense
Loss before tax
Income tax
Loss
Notes
1
2
4
6
31 March
31 March
2018
£’000
-
-
(214)
731
(551)
(34)
(34)
(126)
(160)
-
(160)
2017
£’000
7
-
(212)
186
(25)
(51)
(44)
(28)
(72)
-
(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
Other comprehensive income for the year
(1,434)
(854)
(62)
1,065
Total comprehensive income
(1,014)
993
Attributable to:
Equity holders of the Company
Earnings per share
(1,014)
993
Basic and diluted loss per share (pence)
7
(0.02)
(0.01)
vela technologies PLC
annual report and financial statements 2018
21
balance sheet
as at 31 March 2018
Non-current assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Called up share capital
Share premium account
Available-for-sale reserve
Share option reserve
Retained earnings
Total equity
Current liabilities
Trade and other payables
Loans and borrowings
Total current liabilities
Non current liabilities
Loans and borrowings
Total non current liabilities
Total equity and liabilities
31 March
31 March
2018
£’000
2017
£’000
Notes
8
9
13
12
10
11
11
2,761
3,455
13
847
860
13
383
396
3,621
3,851
837
1,715
1,019
130
(1,033)
2,668
28
445
473
480
480
3,621
722
1,117
1,873
130
(873)
2,969
22
-
22
860
860
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
vela technologies PLC
annual report and financial statements 2018
22
Notes
cash flow statement
for the year ended 31 March 2018
Operating activities
Loss before tax
Profit on disposal of available-for-sale assets
Impairment of available-for-sale assets
Finance expenses
Decrease in payables
Total cash flow from operating activities
Investing activities
Consideration for disposal of investments
Consideration for purchase of investments
Total cash flow from investing activities
Financing activities
Proceeds from issue of loans (net of issue costs)
Interest paid
Proceeds from the issue of ordinary share capital
Total cash flow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at the end of the year
13
Cash and cash equivalents comprise:
Cash and cash in bank
Cash and cash equivalents at end of year
13
31 March
31 March
2018
£’000
(160)
(731)
551
126
-
(214)
806
(786)
20
-
(55)
713
658
464
383
847
847
847
2017
£’000
(72)
(186)
25
28
(5)
(210)
247
(726)
(479)
872
-
-
872
183
200
383
383
383
vela technologies PLC
annual report and financial statements 2018
23
statement of changes in equity
for the year ended 31 March 2018
Balance at 1 April 2017
Transactions with owners
Issue of share capital
Transactions with owners
Loss for the year
Other comprehensive income
Total comprehensive income
Share
Retained
Share
Capital Premium Earnings
Available
Total
-for-sale
reserve Reserve Equity
Share
Option
£’000
£’000
722
1,117
115
115
-
-
-
598
598
-
-
-
£’000
(873)
-
-
(160)
-
(160)
£’000
1,873
-
-
-
(854)
(854)
£’000
£’000
130
2,969
-
-
-
-
-
713
713
(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)
Loss for the year
Other comprehensive income
Total comprehensive income
-
-
-
-
-
-
(72)
-
(72)
808
-
1,065
1,065
130
-
-
-
1,976
(72)
1,065
993
Balance at 31 March 2017
722
1,117
(873)
1,873
130
2,969
vela technologies PLC
annual report and financial statements 2018
24
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):
Auditors’ remuneration for auditing of accounts
Auditors’ remuneration for non-audit services
Foreign exchange losses
Profit on disposal of available-for-sale assets
Impairment of available-for-sale assets
31 March
31 March
2018
£’000
10
1
-
(731)
551
2017
£’000
10
1
4
(186)
25
3 Staff costs
The average number of persons engaged by the Company (including Directors) during the period was
as follows:
Directors and senior management
Total
The aggregate amounts charged by these persons were as follows:
Aggregate wages and salaries
31 March
31 March
2018
2017
2
2
2
2
31 March
2018
£’000
31 March
2017
£’000
110
110
95
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
Loan note interest
Bond interest
Total finance expense
31 March
2018
31 March
2017
£’000
£’000
37
89
126
18
10
28
Included in finance expenses is £41k (2017 - £6k) in respect of the amortisation of loan issue costs.
vela technologies PLC
annual report and financial statements 2018
25
notes to the financial statements
for the year ended 31 March 2018
5 Directors and senior management
Directors’ remuneration
N B Fitzpatrick
A Laiker
N B Fitzpatrick
A Laiker
31 March 2018
Salary
£’000
Fees Pension
Equity
£’000
£’000
£’000
-
-
-
46
64
110
-
-
-
-
-
-
31 March 2017
Salary
£’000
Fees
Pension
Equity
£’000
£’000
£’000
-
-
-
40
55
95
-
-
-
-
-
-
Total
£’000
46
64
110
Total
£’000
40
55
95
Directors’ and senior management’s interests in shares
The Directors who held office at 31 March 2018 held the following shares:
N B Fitzpatrick
A Laiker
31 March
2018
31 March
2017
1,500,000
1,500,000
35,191,724
35,191,724
The total share-based payment costs in respect of options granted are:
Directors
31 March
31 March
2018
£’000
-
2017
£’000
-
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.
vela technologies PLC
annual report and financial statements 2018
26
notes to the financial statements
for the year ended 31 March 2018
6 Tax (continued)
Tax reconciliation
Loss before tax
Tax at 19% (2017: 20%) on loss before tax
Effects of:
Unrelieved losses carried forward
Total tax (credit)/expense
31 March
31 March
2018
£’000
(160)
(30)
30
-
2017
£’000
(72)
(14)
14
-
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:
Loss (£’000)
Loss per share (pence)
31 March
2018
(160)
(0.02)
31 March
2017
(72)
(0.01)
vela technologies PLC
annual report and financial statements 2018
27
notes to the financial statements
for the year ended 31 March 2018
8 Investments
Opening balance
Additions during the year
Disposals during the year
Exchange rate differences
Gain included in Other Comprehensive Income
Current year impairment charged to profit or loss
Closing balance
Additions during the year:
31 March
2018
31 March
2017
£’000
3,455
786
(806)
-
580
(1,254)
2,761
£’000
1,918
602
(163)
(4)
1,127
(25)
3,455
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, 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. 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 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.
vela technologies PLC
annual report and financial statements 2018
28
notes to the financial statements
for the year ended 31 March 2018
9 Trade and other receivables
Other receivables
10 Trade and other payables
Trade payables
Accruals and deferred income
11 Loans and borrowings
Loans due within one year
Convertible loan notes
Loans due after more than one year
Convertible loan notes
Bonds
31 March
2018
£’000
13
13
31 March
2017
£’000
13
13
31 March
2018
31 March
2017
£’000
£’000
4
24
28
5
17
22
31 March
2018
£’000
31 March
2017
£’000
445
445
-
-
31 March
2018
£’000
31 March
2017
£’000
-
480
480
408
452
860
vela technologies PLC
annual report and financial statements 2018
29
notes to the financial statements
for the year ended 31 March 2018
11 Loans and borrowings (continued)
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
Authorised capital
9,999,520,000 ordinary shares of 0.1 pence each
Allotted, called up and fully paid capital
836,973,115 ordinary shares of 0.1 pence each
Allotments during the period
The Company allotted the following ordinary shares during the year:
Shares in issue at 1 April 2017
Shares issued during the year
Shares in issue at 31 March 2018
Shares in issue at 1 April 2016
Shares issued during the period
Shares in issue at 31 March 2017
31 March
2018
31 March
2017
£’000
£’000
10,000
10,000
10,000
10,000
837
837
722
722
31 March 2018
721,588,500
115,384,615
836,973,115
31 March 2017
721,588,020
480
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.
vela technologies PLC
annual report and financial statements 2018
30
notes to the financial statements
for the year ended 31 March 2018
13 Cash and cash equivalents
Cash and cash equivalents comprise the following:
Cash and cash in bank:
Pound sterling
Cash and cash equivalents at end of year
31 March
31 March
2018
£’000
847
847
2017
£’000
383
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:
Classes of financial assets – carrying amounts
Available-for-sale financial assets measured at fair value through other
comprehensive income (*)
Loans and receivables
31 March
2018
31 March
2017
£’000
£’000
2,761
13
2,774
3,455
13
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.
vela technologies PLC
annual report and financial statements 2018
31
notes to the financial statements
for the year ended 31 March 2018
14 Financial instruments (continued)
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
At amortised cost:
Financial liabilities at amortised cost
31 March 2018
31 March 2017
Within
1 year
£’000
473
473
Later
than
1 year
£’000
480
480
Within
1 year
£’000
22
22
Later
than
1 year
£’000
860
860
vela technologies PLC
annual report and financial statements 2018
32
notes to the financial statements
for the year ended 31 March 2018
14 Financial instruments (continued)
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
Cash and cash equivalents
Convertible loan notes
Bonds
As at 1
April
2017
£’000
383
(408)
(452)
(477)
Cash
flow
£’000
464
-
-
464
Non-cash
movement
£’000
-
(37)
(28)
(65)
As at 31
March
2018
£’000
847
(445)
(480)
(78)
Non-cash movements relate to the amortisation of loan issues costs and rolled up unpaid interest.
vela technologies PLC
annual report and financial statements 2018
33
notes to the financial statements
for the year ended 31 March 2018
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:
Share price at grant date (pence)
Exercise price (pence)
Expected life (years)
Annualised volatility (%)
Risk-free interest rate (%)
Fair value determined (pence)
Options
granted
Options
granted
22 October 18 September
Options
granted
2 October
Options
granted
8 April
2015
0.21
0.21
7
79.47
2.0
0.15
2015
0.19
0.15
7
70.98
2.0
0.13
2014
0.33
0.33
7
95.16
2.0
0.26
2014
1.50
0.85
7
74.23
2.0
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
vela technologies PLC
annual report and financial statements 2018
34
notes to the financial statements
for the year ended 31 March 2018
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.
vela technologies PLC
annual report and financial statements 2018
35