Registration number 03904195
Vela Technologies PLC
Annual Report and Financial Statements 2020
vela technologies PLC
annual report and financial statements 2020
table of contents
Strategic report
01
02
03
chairman’s statement
strategic report
directors and advisers
Governance
05
10
11
corporate governance
report on remuneration
report of the directors
Financial Statements
16
20
24
25
26
27
28
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
AGM
41
42
explanatory statements
notice of AGM
vela technologies PLC
annual report and financial statements 2020
chairman’s statement
for the year ended 31 March 2020
During the financial year, Vela was presented with a number of opportunities including a prospective
corporate transaction which unfortunately was a victim of the restrictive Covid19 lock down earlier this
year.
At the beginning of the financial year the company raised £400,000 with a warrant attached for every 4
placing shares subscribed for by investors. The funds enabled Vela to invest a further £91,341 in to Portr,
the baggage handling group in which the company was already a minority shareholder, and to redeem
certain outstanding convertible unsecured loan notes.
In May 2019, Argo Blockchain announced a strategic alliance with HIVE Blockchain Technologies Ltd
(“HIVE”) to create the world's largest purpose-built business-to-business mining service provider aimed
at large-scale enterprise with a conditionally agreed share swap arrangement, by which Argo would
receive 16,321,281 HIVE common shares, representing 5% of the existing outstanding share capital in
exchange for 44,062,500 ordinary shares in Argo, representing 15% of Argo's existing issued share
capital.
During February 2020, the company successfully renegotiated the terms of its then outstanding £550,000
bond supported by the security trustee and principal bondholders. Vela was able to extend the repayment
date on the bonds by 6 months to August 2020 whilst it continued discussions at that time with a view to
effecting a corporate transaction, which would result in a substantial investment or an acquisition to utilise
Vela as a reverse takeover vehicle. As noted above this transaction did not proceed due to the impact of
COVID-19.
The outlook altered as we entered the new financial year with the Covid-19 tsunami which engulfed
several companies. Vela was not immune and our investments in Portr and Vibe bore the brunt of lock
down. Portr was severely impacted by the lack of air travel whilst Vibe suffered through the closure of
entertainment venues both indoors and out. As outlined below the Company disposed of certain of its
investments following the period end, including Portr and Vibe.
But let us end on a happy note!
Following the period end, a number of changes have taken place. As announced in July 2020 and August
2020, the Company disposed of certain of its assets and investments and completed two share capital
reorganisations. As part of this transaction, Vela facilitated the conversion of £550,000 bonds into equity,
completed a fundraise of £1.0 million via Peterhouse Capital and appointed James Normand as Executive
director. As part of the transaction Antony Laiker resigned from the board of Vela. On completion of the
transaction the Company retained its interests in five investments (being North Peak Resources, WeShop,
BlockchainK2 Corp, Revolve Performance and Disruptive Tech Limited) and had net cash resources of
c.£890,000. Subsequent to the completion of the transaction, Vela has received a further c.£860,000 of
cash as a result of warrant exercises undertaken by certain of the placees from the aforementioned £1.0
million placing, which has further bolstered the company’s balance sheet.
As a result of these changes, the company and its shareholders can look forward to a much brighter
future. We continue to implement our investing policy of identifying and making a range of investments
within the technology field and remain open to various investment opportunities.
vela technologies PLC
annual report and financial statements 2020
1
strategic report
for the year ended 31 March 2020
Business review
At the period end, the Company held £9k of cash (31 March 2019: £23k) and continued to keep
administration costs to a minimum so that the Company has sufficient resources to cover its ongoing
running costs and has maximum funds that can be dedicated to further investments.
Subsequent to the period end, the Company completed a placing to raise gross proceeds of £1.0 million,
approved by shareholders in August 2020. Additional funds totalling £860k (before expenses) were
received in September 2020 through the issue of shares following the exercise of warrants. These funds
have provided the Company with additional capital in order to make additional investments and cover
running costs. Further details regarding the shares issued after the period end are provided in note 18 to
the financial statements.
The Company’s overall total comprehensive income for the year was a loss of £1,412k (2019: £1,554k
loss). This loss primarily arose due to fair value losses on the Company’s investment portfolio.
The valuation of the investment portfolio at 31 March 2020 was £1,196k (2019: £2,101k), a decrease of
£905k on the prior year. During the year, Vela invested £91k in Portr Limited. Further details of these
investment additions are given in note 8 to the financial statements. The Company also recorded a
reduction in the estimated fair value of the investment portfolio of £979k in the period. As appropriate 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.
Further details and key points of the investments made and the Company’s investee companies are
detailed in the Chairman’s statement and note 8 to the financial statements.
The Company has no employees and has a Board of one male executive director and one male non-
executive director.
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 28 September 2020.
Brent Fitzpatrick MBE
Non-Executive Chairman
vela technologies PLC
annual report and financial statements 2020
2
directors and advisers
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 Aboyne-Clyde Rubber Estates of Ceylon Limited. He is a member
of the Audit Committee Institute. In the Queen’s Birthday Honours List 2012, Mr Fitzpatrick was awarded
an MBE.
James Normand
Executive Director (appointed 26 August 2020)
Mr Normand qualified as a Chartered Accountant in 1978, having trained with Spicer and Pegler (now
part of Deloitte). Following a secondment to 3i plc, Mr Normand specialised for the next 15 years in the
provision of advice to management buy-out and buy-in teams and on private company acquisitions,
disposals and capital raisings.
Since 2002, Mr Normand has filled management and finance officer roles for a number of different
commercial and charitable organisations, mostly on a part-time basis. From 2009 to 2016, he was the full-
time finance director of Pathfinder Minerals Plc, an AIM-listed mining exploration company.
He is currently non-executive chairman of All Active Asset Capital Limited, an AIM-quoted investing
company, and of Global Resources Investment Trust plc, a premium-listed company on the London Stock
Exchange.
In an unremunerated extra-curricular capacity, Mr Normand is active in the governance of the Church of
England, being Chair of the London Diocesan Synod's House of Laity and Chair of the Finance and HR
Committees of the Bishop of London's Council (and a director of the London Diocesan Fund).
Directors
Brent Fitzpatrick MBE
Non-Executive Chairman
James Normand
Executive Director
vela technologies PLC
annual report and financial statements 2020
3
directors and advisers
Registered office
15 Victoria Mews
Mill Field Road
Cottingley Business Park
Bingley
West Yorkshire
BD16 1PY
Company secretary
E K Wilson
Joint Broker
Peterhouse Capital Limited
80 Cheapside
London
EC2V 6EE
Nominated adviser and joint
broker
Allenby Capital Limited
5 St Helen’s Place
London
EC3A 6AB
Auditors
Murray Harcourt Limited
6 Queen Street
Leeds
LS1 2TW
Solicitors
Hewitsons LLP
Kildare House
3 Dorset Rise
London EC4Y 8EN
Bankers
Barclays Bank plc
27 Soho Square
London W1D 3QR
Registrars
Neville Registrars
Neville House
Steelpark Road
Halesowen
B62 8HD
Accountants
Bailey Wilson
15 Victoria Mews
Mill Field Road
Cottingley Business Park
Bingley
West Yorkshire
BD16 1PY
vela technologies PLC
annual report and financial statements 2020
4
corporate governance
for the year ended 31 March 2020
The Directors recognise the importance of good corporate governance and are committed to business
integrity, high ethical values and professionalism in all its activities. AIM quoted companies are required
to comply with a recognised Corporate Governance Code. To this end the Directors have adopted the
Quoted Companies Alliance Corporate Governance Code (“QCA Code”), which the Board believes to be
the most appropriate corporate governance code given the Company’s size and stage of development.
Further details of the company’s approach to the principles in the QCA Code can be found on the
company’s website.
The QCA Code is a practical, outcome-oriented approach to corporate governance that is tailored for
small and mid-size quoted companies in the UK and which provides the Company with the framework and
effective oversight to help ensure that a strong level of governance is maintained.
In the statements that follow, we explain our approach to corporate governance, how the Board and its
committees operate, and how we seek to comply with the QCA Code’s 10 principles.
Principle 1: Establish a strategy and business model which promote long-term value for
shareholders
The Company’s vision is to actively invest in fast growth technology companies and build a diverse
investment portfolio. Vela’s strategy is focused around its Investing Policy, which provides clear criteria
that the Company considers when considering investment opportunities.
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. This includes identifying and investing in inaccessible pre-IPO
companies.
The Company’s Investing Policy is set out in the Report of the Directors and on the Company’s website.
The Company’s strategy is also communicated in the Chairman’s Statement and in the Strategic Report.
Key challenges in the execution of Vela’s strategy include:
• Maintaining access, through the Company’s network, to investment opportunities that fit the
Company’s criteria;
• Access to capital resources to enable cash to be deployed to support both the Company’s
existing investment portfolio and new investment opportunities; and
•
Identifying investment opportunities, in accordance with the Company’s investing policy, that also
have attractive valuation parameters for incoming investors such as Vela.
The Company will use effective internal control systems to identify risks and implement appropriate
processes to monitor, manage and mitigate known risks. The Board is committed to the maintenance of
high standards of corporate governance and seeks to implement best practice as appropriate for smaller
listed companies by reference to the provisions of the QCA Code.
The key risks and challenges to the Company are also detailed in the Strategic Report and in note 14 to
the financial statements.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Board is conscious of the need to protect and balance the interests of minority shareholders with
those of major shareholders. The Board encourages two-way and open communication with its existing
shareholders and potential new investors. 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 major shareholders to discuss objectives.
The Company communicates with its shareholders primarily through regulatory announcements. These
contain the contact details of the Company’s Executive Director and the Nominated Adviser. In addition,
copies of the Annual Report and Accounts are issued to all shareholders who have requested them and
copies are available on the Company’s investor website www.velatechplc.com. The Company’s interim
results are also made available on the Company’s website. The Company also makes use of its investor
website and social media to provide non-regulatory information, including on its portfolio companies, to
shareholders and other interested parties.
vela technologies PLC
annual report and financial statements 2020
5
corporate governance
for the year ended 31 March 2020
The Board has historically presented at investor events and has engaged with shareholders through this
activity. In this way the Company ensures that the views of shareholders are communicated fully to the
Board.
Shareholders may also contact the Company in writing via email at info@velatechplc.com. Enquiries
that are received will be considered by the Board. The Company may be required to exercise discretion
as to which shareholder questions shall be responded to, and the information used to answer questions
will be information that is freely available in the public domain. As the Company is small, it does not have
a dedicated investor relations department. James Normand, Executive Director, is available to answer
investor relations queries and a contacts section is also available on the website for queries to be
addressed to the Company.
The Company’s AGM is used to communicate with investors and they are encouraged to participate. The
Chairman is available to answer questions at the AGM and the Executive Director also makes himself
available after the meeting for further discussions with shareholders.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications
for long-term success
The Company is aware of its corporate and social responsibilities and the need to maintain effective
working relationships across a range of stakeholders. These include partners, investee companies,
regulatory authorities and professional advisers.
The Company takes due account of any impact that its investee companies and their activities may have
on the environment or employees. Through maintaining a dialogue with stakeholders, the Company is
able to obtain feedback on the activities of its investee companies and act accordingly.
Principle 4: Embed effective risk management, considering both opportunities and threats,
throughout the organisation
The Board is responsible for reviewing and evaluating risk including investment performance, currency
and credit risk, budgets, cash flow and market volatility, and meets regularly to do so. The Board meets
regularly to review ongoing performance, discuss budgets and potential investments, and any other new
developments. The Board is also responsible for maintaining a sound system of internal controls to
safeguard both the shareholders’ investments and the Company’s assets.
A summary of the principal risks and uncertainties facing the Company is outlined in the Strategic Report
and note 14 to the financial statements.
The Board does not currently maintain a risk register but will monitor and assess the need to put one in
place going forward.
Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair
The Company sits within the category of an SME and as such relies on the input of its directors supported
by its professional advisers.
The Board currently comprises two directors. Brent Fitzpatrick, the non-executive Chairman, is
responsible for the running of the Board and both he and Antony Laiker, the Executive Director during the
period, were responsible for implementing the Company’s strategy. With effect from 26 August 2020,
James Normand has taken over the role of Executive Director. Brent Fitzpatrick is considered by the
Board to be independent. Under the terms of his contract with the Company, Brent Fitzpatrick is
contractually committed to dedicating a minimum of 15 days per annum to the Company and is available
on an ad-hoc basis to the Company over and above his minimum contractual time commitment. During
the period, Antony Laiker, Executive Director (and as one of the largest shareholders in Vela), committed
a considerable amount of his time to the Company, which included meeting with existing investee
companies and proposed investment opportunities. Each Board member commits sufficient time to fulfil
their duties and obligations to the Board and the Company. The Board is supported by its professional
advisors and an outsourced finance function.
vela technologies PLC
annual report and financial statements 2020
6
corporate governance
for the year ended 31 March 2020
The Board is satisfied that it has a suitable balance between independence and knowledge of the
Company to enable it to discharge its duties and responsibilities effectively, and all Directors are
encouraged to use their independent judgement to challenge any business matters.
The Directors receive regular and timely information on the Company’s operational and financial
performance. All Directors have direct access to the advice and services of the Company’s professional
advisers in the furtherance of the duties, if necessary, at the Company’s expense.
The directors retire by rotation and stand for re-election at the AGM.
Details of the directors’ meeting attendance during the period is summarised below:
Director
Board meetings
Antony Jon Laiker (stepped down 26 August 2020)
Brent Fitzpatrick MBE
12
12
Principle 6: Ensure that between them, the directors have the necessary up-to-date experience,
skills and capabilities
The Board considers the Directors are of sufficient competence and calibre to add strength and
objectivities to its activities and bring considerable experience, both financial and operational. The
Directors believe that their collective business experience in the areas of investment assist them in the
identification and evaluation of suitable opportunities and will enable the Company to achieve its investing
objectives. The ability of individual members and the Board as a whole to deliver the Company strategy
is reviewed regularly.
Directors service contracts or letters of appointment make provision for a director to seek personal advice
in furtherance of his or her duties and responsibilities. The Directors keep their skillsets up to date through
maintaining a dialogue with the Company’s investee companies and through their general engagement
with the sectors in which the Company invests.
Further details on the Directors are given on page 3.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking
continuous improvement
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 its
advisers. The Board is satisfied that this is appropriate for this stage and size of the Company’s
development. The Board has seen changes post year end with the resignation of Antony Laiker and the
appointment of James Normand and is committed to making a further appointment before the end of 2020.
The directors retire by rotation and stand for re-election at the AGM.
vela technologies PLC
annual report and financial statements 2020
7
corporate governance
for the year ended 31 March 2020
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Company conducts its business in a socially responsible manner, acting with integrity and
professionalism. The Board is aware of the activities in which its investee companies are engaged and
the impact those activities have on the communities which they serve. A large part of the Group’s activities
is centred upon what needs to be an open and respectful dialogue with investee companies. This dialogue
enables the board to ensure the culture of the investee companies is consistent with that of the Company
itself. The importance of sound ethical values is vital to the ability of the Company to successfully achieve
its corporate objectives.
When seeking new investment opportunities, the Company will consider the potential investee company’s
ethical values and behaviours.
Principle 9: Maintain Governance structures and processes that are fit for purpose and support
decision-making by the Board
The Board currently comprises two directors and the Board as a whole has overall responsibility for
promoting the success of the Company. The Executive Director has day-to-day responsibility for the
operation of the Company and engagement with shareholders. The Non-Executive director is responsible
for bringing independent and objective judgement to Board decisions. Whilst there is no formal schedule
of matters specifically reserved for approval by the Board, the following would be considered by all
members of the board:
Formulating business strategy
•
• Determining policies and values
Investing decisions
•
•
Fundraising decisions
• Management appointments
The Company is a small investing company that takes minority stakes in a range of businesses and the
Company itself has minimal operational / trading activity. As such the Board concluded that, at this time,
a Board comprising Antony Laiker (up to 26 August 2020) and James Normand (from 26 August 2020)
(the Executive Director) and Brent Fitzpatrick (the Non-Executive Chairman) is suitable for its purposes,
size and complexity. The Board monitors its structure on an ongoing basis to ensure it is effective.
Notwithstanding the Company announced on 31 July 2020 the intention to appoint a further director to the
board by 31 December 2020.
The Board is confident that its processes and culture are appropriate for the Company’s size and
complexity but is aware that it must continue to review its practices as the Company evolves and grows.
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.
The Company proposes to keep its systems and controls under review to ensure compliance with best
practice having regard to its size and resources available.
The Articles of Association require each director to seek re-election after no more than three years in
office. In practice both the Executive Director and the Non-Executive Director are put up for re-election by
rotation at the AGM each year.
vela technologies PLC
annual report and financial statements 2020
8
corporate governance
for the year ended 31 March 2020
Principle 10: Communicate how the Company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders.
The Company encourages two-way communication with all its shareholders and aims to respond quickly
to all correspondence where relevant. The Board is committed to maintaining good communication and
having constructive dialogue with its shareholders.
The Board recognises the Annual General Meeting as an important opportunity to meet all shareholders,
in particular private shareholders, and the Board members make themselves available post the Annual
General Meeting to listen, on an informal basis, to the views of shareholders. The Company also discloses
relevant information on how it is governed and has performed through its regulatory announcements
(including
the Company’s website
(www.velatechplc.com), and via its website which is regularly updated.
report), copies of which are available on
its annual
In addition, James Normand, Executive Director, is available to answer investor relations queries and a
contact section is available on the website for queries to be addressed to the Company.
The historical accounts and other corporate governance-related material, including notice of general
meetings over
found at: http://www.velatechplc.com/investor-
relations/publications/
five years can be
last
the
Due to the size and stage of the Company, it does not have an audit committee or a remuneration
committee, and therefore has not included an audit committee report or remuneration committee report in
the annual report and accounts for the year ended 31 March 2020. Following the conclusion of the
restructuring transaction in August 2020 the Board intend to introduce the appropriate committees as soon
as practicable.
The Company announces, and posts on the Company’s website, the outcome of all resolutions tabled at
general meetings (including annual general meetings). If a significant proportion of independent votes
were to be cast against a resolution at any general meeting the Board’s policy would be to engage with
dissenting shareholders concerned in order to understand the reasons behind the voting results.
Following this process the Board may make an appropriate public statement regarding any different action
it has taken, or will take, as a result of the vote.
Brent Fitzpatrick MBE
Non-Executive Chairman
vela technologies PLC
annual report and financial statements 2020
9
report on remuneration
for the year ended 31 March 2020
Directors’ remuneration
The Board recognises that Directors’ remuneration is of legitimate interest 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 6 months.
Due to the size of the Board, the Company has to date elected not to have a separate remuneration
committee. Instead the Board has as a whole review the scale and structure of Directors’ fees, taking into
account the interests of shareholders and the performance of the Company. Following the conclusion of
the restructuring transaction in August 2020 the Board intend to put in place a remuneration committee
as soon as practicable.
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.
Brent Fitzpatrick MBE
Non-Executive Chairman
vela technologies PLC
annual report and financial statements 2020
10
report of the directors
for the year ended 31 March 2020
The Directors present their report together with the financial statements for the year ended 31 March
2020.
General information
The Company is a public limited company incorporated and domiciled in England and Wales. The
Company’s ordinary shares are traded on AIM, a market operated by 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 2020.
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 Brent Fitzpatrick and James
Normand will retire and will offer themselves for re-election at the forthcoming AGM.
The Directors who served during the period under review are:
Brent Fitzpatrick
Antony Laiker (resigned 26 August 2020)
The following director was appointed after the end of the period under review:
James Normand (appointed 26 August 2020)
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 2020 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*
Antony Laiker*
Hargreaves Lansdown (Nominees)
Limited
HSBC Client Holdings Nominee (UK)
Limited
HSDL Nominees Limited
Interactive Investor Services Nominees
Limited
Shareholding
653,216,879
265,985,301
225,470,060
105,353,944
89,195,003
83,314,353
%
37.35
15.20
12.89
6.02
5.10
4.76
*Included within JIM Nominees Ltd are substantial shareholdings held as at 31 March 2020 by Kevin
Sinclair (318,115,666 – 18.19 %) and Scott Fletcher (304,929,997 – 17.44%). Antony Laiker holds a
further 39,123,000 shares included in JIM Nominees Ltd therefore, his total shareholding as at 31 March
2020 was 305,108,301 representing 17.75% of the total shares in issue at 31 March 2020.
vela technologies PLC
annual report and financial statements 2020
11
report of the directors
for the year ended 31 March 2020
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 to the
financial statements 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.
As set out in the Investing Policy on page 13, the Company has continued to progress as a long-term
investment company seeking to invest in early stage and pre-IPO businesses. 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. Furthermore, the Company is reporting negative
operating cash flows. The Directors are continuing to manage cash balances effectively, ensuring that
funds are available to meet running costs. As detailed in note 18, the Company raised additional funds in
August 2020 and, at the same time, entered into an agreement to redeem bonds totalling £550,000
through conversion of the bond principal into ordinary shares. Further funds were received in September
2020 following the exercise of warrants. The above has enabled the Company to recapitalise and ensure
that sufficient cash reserves exist to cover running costs and future investment activities for the
foreseeable future.
Based on the considerations above, 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 2020
12
report of the directors
for the year ended 31 March 2020
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.
The Company has 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 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 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 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 2020
13
report of the directors
for the year ended 31 March 2020
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
Disposal of investment in Rosslyn Data Technologies
Between 17 April 2020 and 27 April 2020 the Company disposed of a total of 1,100,000 ordinary shares
in Rosslyn Data Technologies plc at prices between 3.8 pence per share and 3.95 pence per share and
with an average price of 3.86 pence per share generating proceeds of £42,503 for the Company.
Following the Disposal, Vela no longer held any shares in Rosslyn Data.
Disposal of certain investments and recapitalisation
On 31 July 2020, the Company announced a series of proposals, the principal items being the disposal
of certain investments, two share capital reorganisations, a bond conversion and a share placing to raise
£1.0 million. These proposals were approved by shareholders and bondholders and executed in August
2020. Further details regarding these transactions is provided below:
• Disposal of certain investments
The Directors took the decision to dispose of its investments in Portr, Argo Blockchain, Vibe Group
Holdings, Stream TV, Advanced Laser Imaging and Nektan to a newly formed company (“NewCo”)
for consideration totalling £855,000 payable after ten years. When the proceeds are recognised in
next year’s financial statements, they will be recorded at a discounted amount, reflecting the deferred
payment term. The NewCo was incorporated on 24 July 2020 and its entire issued share capital was
held by existing shareholders of Vela, such that the Vela shareholders as at the respective record date
of the transaction had the same proportionate beneficial interest in NewCo as they had in Vela. These
investments had a carrying value of £555,000 in the financial statements at 31 March 2020.
• Conversion of £550,000 outstanding bonds to new ordinary shares
The Company announced that it had insufficient cash resources to settle its outstanding bonds
amounting to £550,000 on the scheduled repayment date of 17 August 2020. Furthermore, the security
trustee of the bonds was not in a position where it was able to further extend the repayment date for
the Bonds. Accordingly, it was proposed and later agreed that the outstanding bonds be converted to
new ordinary shares.
• Share placing
The Company announced it had conditionally raised £1.0 million via the placing of 4,166,666,875
ordinary shares in the Company at a price of 0.024 pence per share. In addition, 4,166,666,875
warrants to subscribe for new Ordinary Shares at a price of 0.06 pence per share were granted to the
subscribers in the Placing on a pro rata basis to the size of their subscriptions in the Placing. Broker
Warrants were also issued to cover certain fees incurred in connection with the placing.
vela technologies PLC
annual report and financial statements 2020
14
report of the directors
for the year ended 31 March 2020
To facilitate the above transactions, the Company also undertook a capital reorganisation involving the
subdivision of shares, further details of which can be seen in the Company’s RNS announcement on 31
July 2020.
Grant of Options
On 26 August 2020, the Company announced that James Normand, a newly appointed director, had been
granted 180,000,000 options to subscribe for ordinary shares of 0.01p each in the Company. The options
have an exercise price of 0.024p and are exercisable for a period of ten years from the date of the grant.
Half the options become exercisable 12 months after grant, subject to the Company's closing mid-market
share price being at least 0.048p per Ordinary Share for 30 consecutive business days, and the remaining
half become exercisable 24 months after grant, subject to the Company's closing mid-market share price
being at least 0.072p per Ordinary Share for 30 consecutive business days.
In addition, Brent Fitzpatrick, Non-Executive Chairman of the Company, was granted 90,000,000 options
to subscribe for Ordinary Shares in the Company. The options have an exercise price of 0.024p and are
exercisable for a period of ten years from the date of the grant. Half the options become exercisable 12
months after grant, subject to the Company's closing mid-market share price being at least 0.048p per
Ordinary Share for 30 consecutive business days, and the remaining half become exercisable 24 months
after grant, subject to the Company's closing mid-market share price being at least 0.072p per Ordinary
Share for 30 consecutive business days. Following this grant of options, Brent Fitzpatrick now holds a
total of 104,562,427 share options equivalent to 1.46 per cent. of the issued share capital of the Company.
Following the grant of the options detailed above and the issuance of the Placing Warrants and the Broker
Warrants (to cover certain fees incurred in connection with the placing) the Company had, as at 26 August
2020, a total of 299,124,854 share options outstanding representing approximately 4.17% of the
Company's issued share capital and a total of 4,481,822,692 warrants outstanding representing
approximately 62.49% of the Company's issued share capital.
Exercise of warrants and issue of equity
On 16 September 2020, the Company announced the issue of 1,434,967,250 new ordinary shares of
0.01p pursuant to the exercise of warrants to subscribe for new Ordinary Shares at a price of 0.06p per
Ordinary Share, generating proceeds of £860,980 for the Company.
The warrants were issued as part of the placing of new Ordinary Shares completed in conjunction
with, inter alia, the disposal of certain of Vela's assets and share capital reorganisations in August 2020.
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
Brent Fitzpatrick MBE
Non-Executive Chairman
28 September 2020
vela technologies PLC
annual report and financial statements 2020
15
independent auditor’s report
for the year ended 31 March 2020
Opinion
We have audited the financial statements of Vela Technologies plc (the ‘company’) for the year ended 31
March 2020 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 2020 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.
However, it is not possible to predict with certainty the potential impact of future developments in both the
company’s trading environment or in the broader economy. Because of this, the above statements should
not be interpreted as a guarantee that the company will continue to operate as a going concern.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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
balances
to significant
that are subject
judgement and estimation uncertainty.
Our audit work included, but was not restricted to:
•
•
•
the accounting estimates,
reviewing
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 2020
16
independent auditor’s report
for the year ended 31 March 2020
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 2020.
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
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 2020;
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. Whilst
noting that in some instances the level of
information available on investee company
performance and prospects is limited, we
were satisfied that management utilised that
information in order to reach a reasonable
estimate of the year end valuation.
information which
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 4.1% 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 70% of materiality, amounting to £35,000.
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 2020
17
independent auditor’s report
for the year ended 31 March 2020
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 2020
18
independent auditor’s report
for the year ended 31 March 2020
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 11, 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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company and the company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.
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: 28 September 2020
vela technologies PLC
annual report and financial statements 2020
19
accounting policies
for the year ended 31 March 2020
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 financial assets held at fair value. All values presented in the financial statements
are rounded to the nearest thousand pounds (£’000) except when otherwise indicated.
Changes in accounting policy
There are no new standards or amendments to standards which are mandatory for the first time for the
financial year ended 31 March 2020 which have a significant impact on the Company.
At the date of authorisation of these financial statements the Company does not expect any other
standards issued by the IASB, but not yet effective, to have a material impact on the Company.
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 12.
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.
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.
vela technologies PLC
annual report and financial statements 2020
20
accounting policies
for the year ended 31 March 2020
Investments
Purchases of investments are initially recognised at cost at the date of the transaction, being the fair value
of the consideration.
Investments are subsequently valued at fair value, unless cost is deemed to be a reasonable
approximation to fair value, in which case cost is applied. Note 14 sets out the estimation basis on which
fair value is derived.
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.
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
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 charges for share based
payments
represents the accumulated retained profits
vela technologies PLC
annual report and financial statements 2020
21
accounting policies
for the year ended 31 March 2020
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.
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- Use of fair value or cost
Investments have been valued in accordance with the accounting policy set out in section 1c. The
Directors have used their judgement in determining whether to value certain unquoted investments at cost
as an estimate of fair value. The use of cost as an estimate of fair value is acceptable under IFRS 9 when
there is insufficient more recent information available to measure fair value, but that cost is still deemed
an appropriate estimate of fair value. This cost basis was not applied in respect of any investments at 31
March 2020, since in the view of the Directors, cost was not deemed a sufficiently reliable approximation
of fair value.
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.
vela technologies PLC
annual report and financial statements 2020
22
accounting policies
for the year ended 31 March 2020
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 2020
23
statement of comprehensive income
for the year ended 31 March 2020
Revenue
Administrative expenses
– other administrative expenses
– fair value movements on investments
Total administrative expenses
Operating loss
Finance expense
Loss before tax
Income tax
Loss
Notes
1
2
4
6
31 March
31 March
2020
£’000
-
(344)
(979)
(1,323)
(1,323)
(89)
(1,412)
-
2019
£’000
-
(234)
(1,193)
(1,427)
(1,427)
(127)
(1,554)
-
(1,412)
(1,554)
Other comprehensive income
-
-
Total comprehensive income
(1,412)
(1,554)
Attributable to:
Equity holders of the Company
Earnings / (loss) per share
(1,412)
(1,554)
Basic and diluted loss per share (pence)
7
(0.09)
(0.19)
vela technologies PLC
annual report and financial statements 2020
24
balance sheet
as at 31 March 2020
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
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
2020
£’000
2019
£’000
Notes
8
9
13
12
10
11
11
1,196
2,101
13
9
22
13
23
36
1,218
2,137
1,749
1,715
130
(2,980)
614
54
550
604
-
-
837
1,715
130
(1,568)
1,114
27
996
1,023
-
-
1,218
2,137
These financial statements were approved by the Board, authorised for issue and signed on their behalf
on 28 September 2020 by:
Brent Fitzpatrick MBE
Non-Executive Chairman
Company registration number: 03904195
vela technologies PLC
annual report and financial statements 2020
25
cash flow statement
for the year ended 31 March 2020
Operating activities
Loss before tax
Profit on disposal of available-for-sale assets
Fair value movements on investments
Finance expenses
Increase/(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
Interest paid
Repayment of loan notes
Proceeds from the issue of ordinary share capital
Total cash flow from financing activities
Net decrease 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
2020
£’000
2019
£’000
Notes
(1,412)
(1,554)
-
979
89
29
(315)
17
(91)
(74)
(55)
(240)
670
375
(14)
23
9
9
9
-
1,193
127
(1)
(235)
-
(533)
(533)
(56)
-
-
(56)
(824)
847
23
23
23
vela technologies PLC
annual report and financial statements 2020
26
statement of changes in equity
for the year ended 31 March 2020
Share
Retained
Share
Capital Premium Earnings
Available
Total
-for-sale
Reserve Reserve Equity
Share
Option
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 April 2019
Transactions with owners
Issue of share capital
Transactions with owners
Loss for the year
Other comprehensive income
Total comprehensive income
837
1,715
(1,568)
912
912
-
-
-
-
-
-
-
-
-
-
(1,412)
-
(1,412)
Balance at 31 March 2020
1,749
1,715
(2,980)
-
-
-
-
-
-
-
130
1,114
-
-
-
-
-
912
912
(1,412)
-
(1,412)
130
614
Balance at 1 April 2018
837
1,715
(1,033)
1,019
130
2,668
Change in accounting policy due to
adoption of IFRS 9
Transactions with owners
Issue of share capital
Transactions with owners
Loss for the year
Other comprehensive income
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,554)
-
(1,554)
1,019
(1,019)
Balance at 31 March 2019
837
1,715
(1,568)
-
-
-
-
-
-
-
-
-
(1,554)
-
(1,554)
130
1,114
-
-
-
-
-
-
vela technologies PLC
annual report and financial statements 2020
27
notes to the financial statements
for the year ended 31 March 2020
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.
2 Loss from operations
Loss from operations is stated after charging/(crediting):
Auditor’s remuneration for auditing of accounts
Auditor’s remuneration for non-audit services
Fair value movements on investments
31 March
31 March
2020
£’000
12
1
979
2019
£’000
10
1
1,193
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
2020
2019
2
2
2
2
31 March
2020
£’000
31 March
2019
£’000
116
116
110
110
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
2020
31 March
2019
£’000
£’000
-
89
89
36
91
127
Included in finance expenses is £34k (2019 - £41k) in respect of the amortisation of loan issue costs.
vela technologies PLC
annual report and financial statements 2020
28
notes to the financial statements
for the year ended 31 March 2020
5 Directors and senior management
Directors’ remuneration
N B Fitzpatrick
A Laiker (resigned 26 August 2020)
N B Fitzpatrick
A Laiker (resigned 26 August 2020)
31 March 2020
Salary
£’000
Fees Pension
Equity
£’000
£’000
£’000
-
-
-
52
64
116
-
-
-
-
-
-
31 March 2019
Salary
£’000
Fees
Pension
Equity
£’000
£’000
£’000
-
-
-
46
64
110
-
-
-
-
-
-
Total
£’000
52
64
116
Total
£’000
46
64
110
Directors’ and senior management’s interests in shares
The Directors who held office at 31 March 2020 held the following shares:
N B Fitzpatrick
A Laiker (resigned 26 August 2020)
31 March
2020
31 March
2019
1,500,000
1,500,000
305,108,301
35,190,000
The total share-based payment costs in respect of options granted are:
Directors
31 March
31 March
2020
£’000
-
2019
£’000
-
As at 31 March 2020, the total number of outstanding options held by the Directors over ordinary shares
was 29,124,854, representing 3.5 per cent of the Company’s issued share capital. Each Director held
14,562,427 options as a 31 March 2020.
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 £6.1m (2019: £5m).
vela technologies PLC
annual report and financial statements 2020
29
notes to the financial statements
for the year ended 31 March 2020
6 Tax (continued)
Tax reconciliation
Loss before tax
Tax at 19% on loss before tax
Effects of:
Unrelieved losses carried forward
Total tax (credit)/expense
31 March
31 March
2020
£’000
(1,412)
(268)
268
-
2019
£’000
(1,554)
(295)
295
-
7 Loss per share
Loss per share has been calculated on a loss after tax of £1,412,000 (2019: £1,554,000) and the weighted
number of average shares in issue for the year of 1,534,283,948 (2019: 836,973,115).
The loss and weighted average number of shares used in the calculations is set out below:
Loss (£’000)
Loss per share (pence)
31 March
2020
(1,412)
(0.09)
31 March
2019
(1,554)
(0.19)
vela technologies PLC
annual report and financial statements 2020
30
notes to the financial statements
for the year ended 31 March 2020
8 Investments
Opening balance
Additions during the year
Disposals during the year
Movement in fair value charged to profit or loss
Closing balance
31 March
2020
31 March
2019
£’000
2,101
91
(17)
(979)
1,196
£’000
2,761
533
-
(1,193)
2,101
Investments are held at fair value through profit and loss using a three-level hierarchy for estimating fair
value.
Note 14 provides details of the three-level hierarchy used.
No investments were held at cost as an approximation of fair value, at 31 March 2020.
Additions and disposals during the year:
Further investment in Portr Limited
On 12 August 2019, the Company completed a subscription for 91,341 shares in Portr Limited, equating
to an investment of £91,341. Following completion of the investment, the Company held approximately
3.6% of Portr Limited’s share capital.
Disposal in Rosslyn Data Technologies plc
On 19 February 2020, the Company sold 311,111 shares in Rosslyn Data Technologies plc for a
consideration of £16,488. Following the year end in August 2020, the company disposed of certain
investments held at 31 March 2020. Details are provided in note 18.
9 Trade and other receivables
Other receivables
10 Trade and other payables
Trade payables
Accruals and deferred income
31 March
2020
£’000
13
13
31 March
2019
£’000
13
13
31 March
2020
31 March
2019
£’000
£’000
28
26
54
4
23
27
vela technologies PLC
annual report and financial statements 2020
31
notes to the financial statements
for the year ended 31 March 2020
11 Loans and borrowings
Loans due within one year
Convertible loan notes
Bonds
31 March
2020
£’000
31 March
2019
£’000
-
550
550
480
516
996
In April 2019, the Company entered into an agreement with Scott Fletcher to vary the terms of his
£200,000 of loan notes, such that the principal and accrued interest were converted into new ordinary
shares at a conversion price of 0.10 pence per share, equivalent to the placing price. This resulted in
240,985,301 new shares being issued in full settlement of his loan notes.
On 24 April 2019, the Company entered into an agreement to repay Antony Laiker’s £200,000 loan notes,
together with accrued interest. As part of the agreement, it was intended that the entire proceeds of the
repayment would be used by Antony Laiker to subscribe for 240,985,301 new ordinary shares at a price
of 0.10 pence per share. The share subscription was approved by shareholders on 30 August 2019 and
his loan notes were settled in full.
On 1 February 2017, the Company launched the issue of secured bonds (the ‘Bonds’), through UK Bond
Network, to raise £550,000 for the Company. The Bonds have a coupon of 10% and an original term of
three years with full repayment in cash of the principal amount of the Bonds originally due on 17 February
2020. The Bonds are secured by way of fixed and floating charges over all assets of the Company present
and future.
On 13 February 2020, Jade State Wealth Limited (the ‘Security Trustee’) confirmed, in its capacity as
Security Trustee to the Bonds, and under the powers granted to it under the terms of the Bonds, that it
had no objection to granting an indulgence of six months to the Company on the repayment date, being
satisfied that it was in the interests of all parties to grant this period. Other than the repayment date of the
Bonds being extended to 17 August 2020, all other terms of the Bonds remained unchanged.
Following the end of the reporting period, the Bonds were converted into new ordinary shares, as detailed
in note 18.
vela technologies PLC
annual report and financial statements 2020
32
notes to the financial statements
for the year ended 31 March 2020
12 Share capital
Authorised capital
9,999,520,000 ordinary shares of 0.1 pence each
Allotted, called up and fully paid capital
1,748,943,717 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 2019
Shares issued during the year
Shares in issue at 31 March 2020
Shares in issue at 1 April 2018
Shares issued during the period
Shares in issue at 31 March 2019
31 March
2020
31 March
2019
£’000
£’000
10,000
10,000
1,749
1,749
10,000
10,000
837
837
31 March 2020
836,973,115
911,970,602
1,748,943,717
31 March 2019
836,973,115
-
836,973,115
On 2 May 2019, the Company issued 615,985,301 ordinary shares at a price of 0.10 pence per share.
On 19 August 2019, the Company issued 25,000,000 ordinary shares at a price of 0.10 pence per share.
On 2 September 2019, the Company issued 240,985,301 ordinary shares at a price of 0.10 pence per
share.
On 17 March 2020, the Company issued 30,000,000 ordinary shares at a price of 0.10 pence per share.
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
2020
£’000
9
9
2019
£’000
23
23
vela technologies PLC
annual report and financial statements 2020
33
notes to the financial statements
for the year ended 31 March 2020
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 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 below.
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 Interbit and BlockchainK2 are denominated in Canadian Dollars and the
investment in Stream TV is denominated in US Dollars, 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 forms 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
Financial assets measured at fair value through profit or loss
Financial assets measured at amortised cost
31 March
2020
31 March
2019
£’000
£’000
1,196
13
1,209
2,101
13
2,114
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 2020
34
notes to the financial statements
for the year ended 31 March 2020
14 Financial instruments (continued)
The Company is required to report the category of fair value measurements used in determining the value
of its financial assets measured at fair value through profit or loss, 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 five (2019: five) investments classified in this category all of which are
listed on a regulated exchange with publicly available market prices used to determine the year end value.
The aggregate historic cost of the five investments is £887,919 (2019: £904,284) and the fair value as at
31 March 2020 was £197,757 (2019: £657,337).
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 two (2019: five) unquoted investments
classified in this category. The historic cost of these investments is £276,103 (2019: £1,271,581) and the
fair value as at 31 March 2020 was £563,584 (2019: £1,293,380). These investments were valued using
the latest transaction prices for shares in the investee companies which were obtained through either (a)
publicly available information (e.g. registrar), (b) information in respect of recent transactions which the
Company was invited to participate or, where available, (c) direct liaison with the investee company.
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. The Company has five
(2019: three) unquoted investments classified in this category. The historic cost of these investments is
£1,411,819 (2019: £725,000) and the fair value as at 31 March 2020 was £434,137 (2019: £150,000).
One of these investments has been written down to £nil. The nature of some of the investments that the
Company holds, i.e. minority shareholdings in private companies with limited publicly available
information, is that significant judgement is required in estimating the value to be applied in the year end
accounts. Management uses knowledge of the sector and any specific company information available to
determine a valuation estimate. Shortly before the company’s year end of 31 March 2020 the global
Covid-19 outbreak occurred and resulted in further estimation uncertainty in relation to the carrying value
of these unlisted investments. The aggregate carrying value of four of the investments in this category
has been reduced by £537k in the period and a significant proportion of this reduction reflects the
Company’s estimate of the potential impact of the Covid-19 pandemic on the investee company as at 31
March 2020.
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 2020
31 March 2019
At amortised cost:
Financial liabilities at amortised cost
vela technologies PLC
annual report and financial statements 2020
Within
1 year
£’000
604
604
Later
than
1 year
£’000
-
-
Within
1 year
£’000
1,023
1,023
Later
than
1 year
£’000
-
-
35
notes to the financial statements
for the year ended 31 March 2020
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
2019
£’000
23
(480)
(516)
(973)
Cash
flow
£’000
Non-cash
movement
£’000
(14)
240
-
226
-
240
(34)
206
As at 31
March
2020
£’000
9
-
(550)
(541)
Non-cash movements on the Convertible loan notes, relates to the loan notes due to Scott Fletcher,
which were converted into ordinary shares, as detailed in note 11. The loan notes held by Antony Laiker
were repaid and the proceeds were immediately re-invested in new ordinary shares.
Non-cash movements on the Bonds relate to the amortisation of loan issue costs and rolled up unpaid
interest.
vela technologies PLC
annual report and financial statements 2020
36
notes to the financial statements
for the year ended 31 March 2020
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 2020 was 29,124,854 (2019: 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 (2019:
£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 2019
6,400,000
10,489,560
4,000,000
8,235,294
None of the options outstanding as at 31 March 2020 are subject to any performance criteria.
vela technologies PLC
annual report and financial statements 2020
37
notes to the financial statements
for the year ended 31 March 2020
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
Brent Fitzpatrick, Non-Executive Director, is also a Director of Ocean Park Developments Limited. During
the year, the Company paid £52,000 (2019: £46,000) in respect of his Directors fees to the Company.
The balance due to Ocean Park Developments Limited at the year-end was £8,500 (2019: £nil).
Risk Alliance Insurance Brokers Limited
Brent Fitzpatrick, Non-Executive Director, was also a Director of Risk Alliance Group Limited during the
year under review. He resigned on 26 September 2019. During the year the Company paid £5,551 (2019:
£5,551) in respect of insurance fees at arm’s length to Risk Alliance Limited, a wholly owned subsidiary
of Risk Alliance Group Limited. The balance due to Risk Alliance Limited at the year end was £nil (2019:
£nil).
Widdington Limited
Antony Laiker, Director, is also a Director of Widdington Limited. During the year the Company paid
£64,000 (2019: £64,000) in respect of his Directors fees to the Company. The balance due to Widdington
Limited at the year end was £9,500 (2019: £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 2020, Kevin Sinclair held 318,115,666 (18.19%) of the issued
share capital of the Company through JIM Nominees Ltd and is classified as a substantial shareholder
under the AIM Rules.
The Bonds were converted to ordinary shares after the year end as detailed in note 18.
Scott Fletcher
Scott Fletcher, a shareholder of the Company, holds £NIL (2019: £200,000) of the 8% convertible loan
notes issued by the company in September 2016.
The loan notes were converted to 240,985,301 new ordinary shares at a subscription price of 0.10 pence
per share.
Scott Fletcher held 304,929,997 Ordinary Shares at 31 March 2020 representing 17.44 per cent. of the
issued share capital of the Company at that time 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.
Antony Laiker loan notes
Antony Laiker, Director of the Company during the period under review (stepped down 26 August 2020),
holds £NIL (2019: £200,000) of the 8% convertible loan notes issued by the company in September 2016.
On 24 April 2019, the Company entered into an agreement to repay Antony Laiker’s £200,000 loan notes,
together with accrued interest. As part of the agreement, it was intended that the entire proceeds of the
repayment would be used by Antony Laiker to subscribe for 240,985,301 new ordinary shares at a price
of 0.10 pence per share. The share subscription was approved by shareholders on 30 August 2019.
Following admission of the new shares, Antony Laiker became beneficially interested in 305,108,301
Ordinary Shares, representing approximately 17.75 % of the Company’s enlarged share capital.
Disposal of investment in Rosslyn Data Technologies plc
Between 17 April 2020 and 27 April 2020 the Company disposed of a total of 1,100,000 ordinary shares
in Rosslyn Data Technologies plc at prices between 3.8 pence per share and 3.95 pence per share and
with an average price of 3.86 pence per share generating proceeds of £42,503 for the Company.
Following the Disposal, Vela no longer holds any shares in Rosslyn Data.
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annual report and financial statements 2020
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notes to the financial statements
for the year ended 31 March 2020
18 Events after the balance sheet date
Disposal of certain investments and recapitalisation
On 31 July 2020, the Company announced a series of proposals, the principal items being the disposal
of certain investments, two share capital reorganisations, a bond conversion and a share placing. These
proposals were approved and executed in August 2020. Further details regarding these transactions is
provided below:
• Disposal of certain investments
The Directors took the decision to dispose of its investments in Portr, Argo Blockchain, Vibe Group
Holdings, Stream TV, Advanced Laser Imaging and Nektan to a newly formed company (“NewCo”)
for consideration totalling £855,000 payable after ten years. When the proceeds are recognised in
next year’s financial statements, they will be recorded at a discounted amount, reflecting the
deferred payment term. The NewCo was incorporated on 24 July 2020 and its entire issued share
capital was held by existing shareholders of Vela, such that the Vela shareholders as at the
respective record date of the transaction had the same proportionate beneficial interest in NewCo as
they had in Vela. These investments had a carrying value of £555,000 in the financial statements at
31 March 2020.
• Conversion of £550,000 outstanding bonds to new ordinary shares
The Company announced that it had insufficient cash resources to settle its outstanding bonds
amounting to £550,000 on the scheduled repayment date of 17 August 2020. Furthermore, the security
trustee of the bonds was not in a position where it was able to further extend the repayment date for
the Bonds. Accordingly, it was proposed and later agreed that the outstanding bonds be converted to
new ordinary shares.
• Share placing
The Company announced it had conditionally raised £1.0 million via the placing of 4,166,666,875
ordinary shares in the Company at a price of 0.024 pence per share. In addition, 4,166,666,875
warrants to subscribe for new Ordinary Shares at a price of 0.06 pence per share were granted to the
subscribers in the Placing on a pro rata basis to the size of their subscriptions in the Placing. Broker
Warrants were also issued to cover certain fees incurred in connection with the placing.
To facilitate the above transactions, the Company also undertook capital reorganisations involving the
subdivision of shares, further details of which can be seen in the Company’s RNS announcement on 31
July 2020.
Grant of Options
On 26 August 2020, the Company announced that James Normand, a newly appointed director, had been
granted 180,000,000 options to subscribe for ordinary shares of 0.01p each in the Company. The options
have an exercise price of 0.024p and are exercisable for a period of ten years from the date of the grant.
Half the options become exercisable 12 months after grant, subject to the Company's closing mid-market
share price being at least 0.048p per Ordinary Share for 30 consecutive business days, and the remaining
half become exercisable 24 months after grant, subject to the Company's closing mid-market share price
being at least 0.072p per Ordinary Share for 30 consecutive business days.
In addition, Brent Fitzpatrick, Non-Executive Chairman of the Company, was granted 90,000,000 options
to subscribe for Ordinary Shares in the Company. The options have an exercise price of 0.024p and are
exercisable for a period of ten years from the date of the grant. Half the options become exercisable 12
months after grant, subject to the Company's closing mid-market share price being at least 0.048p per
Ordinary Share for 30 consecutive business days, and the remaining half become exercisable 24 months
after grant, subject to the Company's closing mid-market share price being at least 0.072p per Ordinary
Share for 30 consecutive business days. Following this grant of options, Brent Fitzpatrick now holds a
total of 104,562,427 share options equivalent to 1.46 per cent. of the issued share capital of the Company.
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annual report and financial statements 2020
39
notes to the financial statements
for the year ended 31 March 2020
18 Events after the balance sheet date (continued)
Following the grant of the options detailed above and the issuance of the Placing Warrants and the Broker
Warrants (to cover placing fees) the Company has a total of 299,124,854 share options outstanding
representing approximately 4.17% of the Company's issued share capital and a total of 4,481,822,692
warrants outstanding representing approximately 62.49% of the Company's issued share capital.
Exercise of warrants and issue of equity
On 16 September 2020, the Company announced the issue of 1,434,967,250 new ordinary shares of
0.01p pursuant to the exercise of warrants to subscribe for new Ordinary Shares at a price of 0.06p per
Ordinary Share, generating proceeds of £860,980 for the Company.
The warrants were issued as part of the placing of new Ordinary Shares completed in conjunction
with, inter alia, the disposal of certain of Vela's assets and share capital reorganisations in August 2020.
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40
explanation of resolutions at the annual general meeting
Information relating to resolutions to be proposed at the Annual General Meeting (“AGM”) is set out
below. The notice of AGM is set out overleaf.
The following resolutions will be proposed at the AGM:
(a)
(b)
(c)
(d)
Resolution 1: to approve the annual report and accounts. The Directors are required to lay
before the Company at the AGM the accounts of the Company for the financial year ended 31
March 2020, the report of the Directors and the report of the Company's auditors on those
accounts.
Resolution 2: to approve the re-appointment of Murray Harcourt Limited as auditors of the
Company. The Company is required to appoint auditors at each general meeting at which
accounts are laid, to hold office until the next such meeting.
Resolution 3: to approve the remuneration of the auditors for the next year.
Resolution 4: to approve the re-appointment of James Normand as a Director. Under the
Articles of Association, Directors must be re-appointed at the first annual general meeting
following their appointment.
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41
Vela Technologies plc
(Registered in England No. 03904195)
notice of annual general meeting
NOTICE IS HEREBY GIVEN that the 2020 Annual General Meeting of the Company will be held at 15
Victoria Mews, Mill Field Road, Cottingley Business Park, Bingley, West Yorkshire BD16 1PY at 10.00
a.m. on 29 October 2020 for the following purposes:
RESOLUTIONS
Ordinary business
To consider and, if thought fit, to pass resolutions 1 to 4 (inclusive) as ordinary resolutions:
1
2
3
4
To receive and adopt the directors’ report, the auditor’s report and the Company’s accounts for
the year ended 31 March 2020.
To re-appoint Murray Harcourt Limited as auditor in accordance with section 489 of the
Companies Act 2006, to hold office until the conclusion of the Annual General Meeting of the
Company in 2020.
To authorise the Directors to determine the remuneration of the auditor.
To re-appoint James Normand as a Director of the Company.
Dated: 29 September 2020
Registered Office:
15 Victoria Mews
Mill Field Road
Cottingley Business Park
Cottingley
Bingley
West Yorkshire
BD16 1PY
By order of the Board
EK Wilson
Secretary
Notes:
1.
2.
3.
As a member of the Company, you are entitled to appoint a proxy to exercise all or any of your
rights to attend, speak and vote at the meeting and you should have received a proxy form with
this notice of meeting. You can only appoint a proxy using the procedures set out in these
notes and the notes to the proxy form.
Due to Covid-19 and related legal restrictions and guidance from government
authorities, shareholders may not physically attend the meeting, and will not be
permitted access to the venue on the day of the meeting. Shareholders are strongly
encouraged to participate in the meeting by voting by proxy ahead of the meeting.
A proxy does not need to be a member of the Company but must attend the meeting to
represent you. Details of how to appoint the Chairman of the meeting or another person as
your proxy using the proxy form are set out in the notes to the proxy form. Given the
restrictions on attendance in person, you are encouraged to appoint the Chairman of
the meeting to submit proxy votes at the meeting, rather than a named person who will
not be permitted to attend the physical meeting.
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42
4.
5.
6.
7.
8.
9.
You may appoint more than one proxy provided each proxy is appointed to exercise rights
attached to different shares. You may not appoint more than one proxy to exercise rights
attached to any one share. To appoint more than one proxy, you may photocopy the enclosed
proxy form.
If you do not give your proxy an indication of how to vote on any resolution, your proxy will vote
or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as
he or she thinks fit in relation to any other matter which is put before the meeting.
The notes to the proxy form explain how to direct your proxy how to vote on each resolution or
withhold their vote.
To appoint a proxy using the proxy form, the form must be:
(a)
(b)
(c)
completed and signed;
sent or delivered to the Company’s Registrars, Neville Registrars Limited, at
Neville House, Steelpark Road, Halesowen B62 8HD; and
received by no later than 10.00 a.m. on 27 October 2020.
Any power of attorney or any other authority under which the proxy form is signed (or a duly
certified copy of such power or authority) must be included with the proxy form.
To change your proxy appointment, simply submit a new proxy appointment using the methods
set out above. Note that the cut-off time for receipt of proxy appointments (see above) also
apply in relation to amended instructions; any amended proxy appointment received after the
relevant cut-off time will be disregarded.
Where you have appointed a proxy using the hard-copy proxy form and would like to change
the instructions using another hard-copy proxy form, you may photocopy the enclosed proxy
form.
If you submit more than one valid proxy appointment, the appointment received last before the
latest time for the receipt of proxies will take precedence.
In order to revoke a proxy appointment you will need to inform the Company by sending a
signed hard copy notice clearly stating that you revoke your proxy appointment to Neville
Registrars Limited, at Neville House, Steelpark Road, Halesowen B62 8HD. Any power of
attorney or any other authority under which the revocation notice is signed (or a duly certified
copy of such power or authority) must be included with the revocation notice.
The revocation notice must be received by no later than 10.00 a.m. on 27 October 2020.
If you attempt to revoke your proxy appointment but the revocation is received after the time
specified then, subject to the paragraph directly below, your proxy appointment will remain
valid.
Appointment of a proxy does not preclude you from attending the Meeting and voting in person.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, only those
members registered in the register of members of the Company as at 6.00 p.m. on 27 October
2020 or, if this meeting is adjourned, at 6.00 p.m. on the date two business days prior to the
adjourned meeting, shall be entitled to attend and vote at the meeting in respect of the number
of shares registered in their name at that time. Changes to entries on the relevant register of
securities after such time shall be disregarded in determining the rights of any person to attend
or vote at the meeting.
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