Registration number 03904195
Vela Technologies PLC
Annual Report and Financial Statements 2021
vela technologies PLC
annual report and financial statements 2021
table of contents
Strategic report
01
04
05
chairman’s statement
strategic report
directors and advisers
Governance
07
12
13
corporate governance
report on remuneration
report of the directors
Financial Statements
17
22
26
27
28
29
30
independent auditor’s report
accounting policies
statement of comprehensive income
balance sheet
cash flow statement
statement of changes in equity
notes to the financial statements
vela technologies PLC
annual report and financial statements 2021
chairman’s statement
for the year ended 31 March 2021
I am pleased to present the Chairman’s statement for the year ended 31 March 2021.
The period under review has been one of significant change for Vela Technologies, including a
recapitalisation of the Company, board changes and new investments. During the period the Company
raised a total of £3,750,000 gross proceeds via placings and a number of warrant exercises contributed
gross funds of £1,063,000. James Normand joined the board on 26 August 2020 on completion of the
recapitalisation of the Company. James is a Chartered Accountant who has spent much of his career
advising on corporate acquisitions, disposals and capital raising, including a spell at 3i plc and is currently,
inter alia, the Chairman of All Active Asset Capital Limited and of Global Resources Investment Trust plc.
His experience is already proving an asset to Vela.
The Company reported a profit for the period of £379,775 compared to a loss of £1,412,100 in the previous
comparable period.
Net assets increased to £7,201,812 compared to £613,611 at the previous reporting date with cash at the
period end of £2,147,070 compared to £8,989 at the beginning of the period.
The Company’s improved position has quite naturally generated a significant flow through of new
investment opportunities and each is robustly reviewed by the board for its future benefit to the Vela
portfolio. We continue to remain open to new opportunities that fall within the constraints of the Company’s
investing policy.
PORTFOLIO REVIEW
Aeristech Limited
Aeristech is a producer and supplier of efficient, power-dense compressors, which are used to maximise
the power output and efficiency of hydrogen fuel cells. Aeristech's unique turn-key motor and controller
technology provides many benefits for hydrogen cells, including reducing high power switching events,
enabling high-speed and high-power motors, reducing heat loss and reducing costs by removing the need
for high-cost specialist components. In February 2021, Vela invested £350,000 as part of a pre-IPO
funding round at a price of £2.40 per share for 145,833 shares which gives Vela a holding of 0.92% on a
fully diluted basis. The Company was also issued with 36,458 warrants with a two-year term and an
exercise price of £2.40 per ordinary share.
Blockchain K2
During January, the Company sold its entire holding of 272,000 shares for a profit of circa £172,000.
Cornerstone FS PLC
Cornerstone is focused on the provision of cross border payment services for SMEs. In December, Vela
subscribed for 400,000 shares as part of a private funding round which equated to an investment of
£200,000. In addition, the Company was issued with 400,000 warrants with a 5-year term and an exercise
price of 50p per share.
Disruptive Tech Limited
Disruptive Tech Limited (“DTL”) is an investor in a number of technology businesses. We anticipate
minimal return from this investment and therefore the investment has been written off as at the reporting
date. The investment was valued at £50,000 in Vela’s last published accounts.
Revolve
The business provided engineering services for a number of OEM’s, and has had much success in the
development of low carbon technologies with applications in the passenger car, commercial vehicle and
rail applications. However, Revolve is undergoing a reorganisation and therefore the investment has been
vela technologies PLC
annual report and financial statements 2021
1
chairman’s statement
for the year ended 31 March 2021
written down to nil as at the reporting date. The investment was valued at £56,000 in Vela’s last published
accounts.
Kanabo Group PLC
Kanabo is an Israel based research and development company which currently sells a range of THC-free
retail cannabidiol (CBD) products in its primary markets of the UK and Germany. Kanabo's core strategy
is to increase revenues from the sale of Kanabo's existing retail CBD products (vaporisation devices) and
to grow the Kanabo brand through marketing initiatives. In February 2021, Vela invested £150,000 for
2,307,692 shares as part of a subscription and attained 0.6% of the issued share capital. On 19 February
2021, the company announced the sale of 1,000,000 shares generating proceeds of £233,801 at a sale
price of 23.5p per share compared to an investment price per share of 6.5p. The company retains
1,307,692 shares in Kanabo.
Mode Global Holdings PLC
Mode is a UK-based Fintech Group, building a modern financial services business to support an
increasingly digitised economy and financial system, combining the best of banking, payments,
investment, loyalty and digital assets. In October 2020, the company supported an IPO funding and
subscribed for 500,000 shares for a total investment of £250,000. In March 2021, a further investment of
£66,320 was made to subscribe for 120,651 shares. The investment was made to support additional
growth. Vela’s total holding equates to 0.68% of the issued share capital.
MTI Wireless
Headquartered in Israel, MTI is an AIM-listed technology group (AIM:MWE) focused on comprehensive
communication and radio frequency solutions across multiple sectors through three core divisions. In
March 2021, the Company acquired 250,000 shares at a price of 80p per share and total investment of
£200,000. The Company’s total holding represents 0.28% of MTI’s issued share capital.
Rural Broadband Solutions PLC
Rural Broadband Solutions PLC (formerly Sapo PLC), is a provider of ultrafast 5Gb connectivity to rural
broadband users across the UK. In October 2020, Vela invested £30,300 for 1,200,000 shares, in a total
fund raise of £2,500,900, at a subscription price of 2.5 pence per share.
St George Street Capital Limited
St George Street Capital Limited (“SGSC”) is a UK-based medical-charity led by a group of highly
decorated academics and ex-pharma executives formed to deliver much needed treatments to patients.
SGSC’s strategy is to take clinical-ready assets from pharmaceutical companies and to progress them
through Phase II medical trials, before licensing them on for Phase III trials and commercialisation in order
to create a return for investors and the charity alike.
Vela paid consideration of £2.35m (£1.25m in cash and £1.1m in the form of 1.1 billion new Vela shares)
to acquire an 8% economic interest in the potential commercialisation of SGSC’s asset to treat individuals
with diabetes who are suffering with COVID-19. The consideration was satisfied by a placing of 1.1 billion
new ordinary shares in Vela at a price of 0.1p per share and £1.25m in cash paid from Vela to SGSC. The
1.1 billion share issue gave SGSC a 9.37 % interest in Vela. Post-period, as of 16 September 2021, Vela
announced that SGSC had, through a placing via Peterhouse Capital, realised their holding in Vela. SGSC
no longer hold any shares in Vela.
WeShop
WeShop is a digital social network platform with ambitious plans to become a global leader in the rapidly
growing and highly valuable social e-commerce sector. Vela continues to hold the 71,429 shares it
acquired in May 2014.
vela technologies PLC
annual report and financial statements 2021
2
chairman’s statement
for the year ended 31 March 2021
Part disposal of portfolio
As part of the refinancing completed in August 2020, it was agreed to hive down to a wholly owned
subsidiary certain assets with a value of £855,000, financed by a loan. In turn it was agreed to sell the
subsidiary company to a new company formed for the purpose (Bixx Limited) for £1. In order to protect
the rights of Vela shareholders, the entire share capital of Bixx Limited is held by Vela’s shareholders at
the time of the reorganisation.
The assets transferred were as follows;
•
•
•
•
•
•
127,817 ordinary shares of 0.01p, 37,117 A ordinary shares of 0.01p, and 91,341 B ordinary
shares of 0.01p in Portr Limited
3,000,000 ordinary shares in Argo Blockchain plc
5,674 ordinary shares in Vibe Group Holdings Limited
114,564 ordinary shares and 333,335 warrants for Class A shares (at an exercise price of $1.50
per Class A common share) in Stream TV Networks, Inc
10,484 ordinary shares in Advanced Laser Imaging Limited
185,000 ordinary shares in Nektan plc (in administration)
The Directors considered these investments to have an aggregate current market value of not
more than £855,000 as at the date of the transaction.
I am pleased to report that your company is making excellent progress and we continue to review new
investment opportunities in line with our investing policy. The directors would like to thank shareholders
for their continued support.
Brent Fitzpatrick MBE
Non-Executive Chairman
vela technologies PLC
annual report and financial statements 2021
3
strategic report
for the year ended 31 March 2021
Business review
At the period end, the Company held £2.147 million of cash (31 March 2020: c.£9,000) 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.
During the period, the Company completed a placing to raise gross proceeds of £1.0 million, approved by
shareholders in August 2020, and a placing to raise gross proceeds of £1.5 million in March 2021.
Additional funds totalling £860k (before expenses) were received in mid-September 2020 through the
issue of shares following the exercise of warrants. These funds, together with other warrant exercises,
have provided the Company with additional capital in order to make additional investments and to cover
running costs. Further details regarding the shares issued during the period and after the period end are
provided in notes 14 and 21 to the financial statements.
The Company’s overall total comprehensive income for the year was a profit of £380,000 (2020:
£1,412,000 loss). This profit has primarily arisen from fair value movements on the Company’s investment
portfolio.
The valuation of the investment portfolio at 31 March 2021 was £1,969,000 (2020: £1,196,000), an
increase of £773,000 on 2020. During the year, Vela invested £1,248,000 in new investments. Further
details of these investment additions are provided in note 8 to the financial statements. The Company
also recorded an increase in the estimated fair value of the investment portfolio of £666,000 during the
period. As appropriate, we update shareholders on investee company performance through the
dissemination of regulatory announcements as information becomes available, and further detailed
information on the investment portfolio can be found on our website. The Company also made an
investment in a non-current asset, St George Street Capital, which is valued at £2,350,000.
Further details and key points of the investments made and of the Company’s investee companies are
detailed in the Chairman’s statement and in note 8 to the financial statements.
The Company had no employees and had a Board of one male Executive Director and one male Non-
Executive Director during the period.
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 minimal operational costs.
Further information about the Company’s principal risks are detailed in note 16, 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 29 September 2021.
Brent Fitzpatrick MBE
Non-Executive Chairman
vela technologies PLC
annual report and financial statements 2021
4
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 investing company until
recently listed on AIM, and of Global Resources Investment Trust plc, a premium-listed company on the
main list of the London Stock Exchange and is a non-executive director of Ridgecrest plc, a company
listed on AIM.
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).
Emma Wilson FCA
Executive Director (appointed 1 September 2021)
Mrs Wilson qualified as a Chartered Accountant in 2001. Since qualification Mrs Wilson has been
employed in industry in senior finance positions and in large and small practices. In 2010 she established
her own accounting practice, Bailey Wilson, which serves a variety of types and sizes of businesses,
including clients listed on AIM and on the main market of the London Stock Exchange.
Directors
Brent Fitzpatrick MBE
Non-Executive Chairman
James Normand
Executive Director
Emma Wilson
Executive Director
vela technologies PLC
annual report and financial statements 2021
5
directors and advisers
Registered office
15 Victoria Mews
Mill Field Road
Cottingley Business Park
Bingley
West Yorkshire
BD16 1PY
Company secretary
Emma 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
Registrars
Neville Registrars
Neville House
Steelpark Road
Halesowen
B62 8HD
Solicitors
Harrison Clark Rickerbys
Limited
Kildare House
3 Dorset Rise
London EC4Y 8EN
Bankers
Barclays Bank plc
27 Soho Square
London W1D 3QR
vela technologies PLC
annual report and financial statements 2021
6
corporate governance
for the year ended 31 March 2021
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 16 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 Chairman 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 2021
7
corporate governance
for the year ended 31 March 2021
The Board has previously 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. The Directors are 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 16 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 comprised two directors during the period. Brent Fitzpatrick, the Non-Executive Chairman
throughout the period, is responsible for the running of the Board and both he and James Normand, the
Executive Director from 26 August 2020, were responsible for implementing the Company’s strategy. Up
until his resignation on 26 August 2020, the Executive Director was Antony Laiker. 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 42 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. James Normand 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. On 1 September
2021, Emma Wilson joined the Board as an additional Executive Director. Further details are provided in
the Directors and Advisers section of this report.
vela technologies PLC
annual report and financial statements 2021
8
corporate governance
for the year ended 31 March 2021
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 their 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
James Normand (appointed 26 August 2020)
Brent Fitzpatrick MBE
Antony Laiker (resigned 26 August 2020)
24
28
4
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 5.
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 during the year with the resignation of Antony Laiker and
the appointment of James Normand and, after the year end, the appointment of Emma Wilson and is
committed to making a further appointments as required, including an additional independent non-
executive director.
The directors retire by rotation and stand for re-election at the AGM.
vela technologies PLC
annual report and financial statements 2021
9
corporate governance
for the year ended 31 March 2021
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 Company’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 comprised two directors throughout the period and the Board as a whole has overall
responsibility for promoting the success of the Company. The Executive Directors have 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 has concluded that, a Board
comprising Antony Laiker (up to 26 August 2020), James Normand (from 26 August 2020) (Executive
Director), Emma Wilson (from 1 September 2021) (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. As announced on 1 September 2021 the Board intends to
appoint a further non-executive director to the board in due course.
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 similarly 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 2021
10
corporate governance
for the year ended 31 March 2021
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 2021.
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 2021
11
report on remuneration
for the year ended 31 March 2021
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.
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 2021
12
report of the directors
for the year ended 31 March 2021
The Directors present their report together with the financial statements for the year ended 31 March
2021.
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 2021.
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, all three directors 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)
James Normand (appointed 26 August 2020)
The following director was appointed after the end of the period under review:
Emma Wilson (appointed 1 September 2021)
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 16 to the financial statements.
Substantial shareholders
At 31 March 2021 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:
Hargreaves Lansdown (Nominees) Limited
JIM Nominees Ltd
Interactive Investor Services Nominees Limited
Vidacos Nominees Limited
St George Street Capital Limited*
HSDL Nominees Limited
Barclays Direct Investing Nominees Limited
Shareholding
3,618,194,293
2,111,401,773
1,795,414,416
1,240,010,970
1,100,000,000
936,688,463
706,214,246
%
26.18
15.28
13.00
8.97
7.96
6.78
5.11
*As noted above St George Street Capital Limited no longer have an interest in
the shares of Vela as at 16 September 2021
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 16 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.
vela technologies PLC
annual report and financial statements 2021
13
report of the directors
for the year ended 31 March 2021
As set out in the investing policy below, the Company has continued to progress as a long-term investment
company seeking to invest in early stage and pre-IPO businesses as well as companies listed on the
London Stock Exchange. As a result of this, the Company has reported a profit for the current year and
continues to maintain minimal running costs. 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 have been received through various fundraising
activities since September 2020 following the exercise of warrants and issue of shares. 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.
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.
vela technologies PLC
annual report and financial statements 2021
14
report of the directors
for the year ended 31 March 2021
The Company has its head office in England with the UK being at the forefront of global technology,
engineering and scientific advances. The main focus of the Company’s investment policy is 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
ensure that any investments meet strict due diligence criteria and the primary focus is on companies post
viability testing phase, to mitigate risk associated with early stage investment. This does 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 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. 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 is 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.
The new capital available to the Company is being used to locate, evaluate and select the investment
opportunities which 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.
The Directors believe that their collective business experience in the areas of investment assists them in
the identification and evaluation of suitable opportunities and enables the Company to achieve its
investing objectives.
Investments are held for the medium to longer term, although shorter term disposal of any investments
may sometimes be appropriate. There is no limit on the number of projects in which the Company may
invest and the Company's financial resources will continue to be invested in a number of propositions.
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. The Board actively monitors its
investments.
The Company identifies and assesses potential investment targets and where it believes further
investigation is required, appoints appropriately qualified advisers to assist. The Company does have a
separate investment manager.
vela technologies PLC
annual report and financial statements 2021
15
report of the directors
for the year ended 31 March 2021
The Company intends to deliver Shareholder returns principally through capital growth rather than capital
distribution via dividends.
Post balance sheet events
Disposal of North Peak Resources Ltd
In April 2021 the Company disposed of its remaining shares in North Peak Resources Ltd. The carrying
value of the shares held as at 31 March 2021 was £74,858 and the sales proceeds after the reporting
date amounted to approximately CAD$140,000 (approximately £80,000).
Investment in Cornerstone FS Plc
In April 2021, the Company completed the subscription for 245,902 new ordinary shares in Cornerstone
for a cost of £150,000 as part of Cornerstone’s admission to AIM. Following this transaction, Vela's
aggregate shareholding in Cornerstone represented approximately 3.2% of its issued share capital.
Exercise of warrants and issue of equity
On 30 March 2021, the Company announced an application to issue 24,751,750 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. The share allotment was completed on 7 April 2021, generating proceeds of £14,851.
On 6 July 2021, the Company issued 35,000,000 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 £21,000.
On 7 July 2021, the Company issued 44,079,000 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 £26,447.
On 19 July 2021, the Company issued 117,083,332 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 £70,250.
On 27 August 2021, the Company issued 1,391,421,209 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 £834,853.
On 7 September 2021, the Company issued 821,549,809 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 £362,530.
Investment in Northcoders Group PLC
In July 2021 the Company invested £750,000 in Northcoders Group PLC. The Company acquired
416,666 new ordinary shares of 1p each at a price of 180p per share which represented an investment of
6% of the enlarged share capital.
Auditors
Murray Harcourt Limited was re-appointed auditor at the 2020 AGM and their re-appointment will be
proposed at the upcoming 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
29 September 2021
vela technologies PLC
annual report and financial statements 2021
16
independent auditor’s report
for the year ended 31 March 2021
Opinion
We have audited the financial statements of Vela Technologies plc (the ‘company’) for the year ended 31
March 2021 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 2021 and of its profit
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
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the entity’s ability to continue to adopt the going concern basis of accounting included
consideration of:
•
•
•
the current cash resources and expected future operating costs of the entity;
the directors’ investment plans and their ability to control cash outflows from future investing
activities; and
the adequacy of disclosures in relation to specific risks posed and the scenarios the directors
have considered in reaching their going concern assessment.
Based on the work performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the entity’s ability to continue as
a going concern for a period of at least twelve months from when the financial statements are authorised
for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described
in the relevant sections of this report.
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.
vela technologies PLC
annual report and financial statements 2021
17
independent auditor’s report
for the year ended 31 March 2021
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:
•
•
•
reviewing
the accounting estimates,
judgements and decisions made by
management;
performing testing of journal entries; and
reviewing
records
significant transactions.
the company’s accounting
for evidence of any unusual
Key audit matter
How our audit addressed the key audit matter
is
investing
investments
Investment activities
in pre-growth
The company
companies and
represent a
significant portion of the total assets of the
company as at 31 March 2021. In addition, the
Company entered into a contract to secure an
8% interest in the commercialisation proceeds
of an ongoing medical drug development trial in
the period.
The main risks included the accurate recording
of investment activity during the year, valuation
of investments and other similar financial assets
held at the year-end and classification of those
investments and other financial assets.
the
Determining
fair value of unquoted
investments and contracts involves a significant
level of management judgement and there is
therefore an increased risk of material errors in
valuation of
investments and other
financial assets.
these
Our audit work included, but was not restricted to:
•
•
•
•
of
relation
confirmation of the existence of investments
through a
financial assets
and other
combination
third-party
obtaining
confirmation from the company’s investment
custodians, obtaining direct confirmation from
investee companies or agreement to other
supporting documentation, such as share
certificates and underlying contracts;
agreement of valuations of listed investments
to quoted prices as at 31 March 2021;
to valuations of unquoted
in
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; and
in relation to other financial assets held at fair
value, reviewing events after the date of initial
investment
corroborate
order
management’s explanations for changes in
fair value.
information which
to
in
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.
vela technologies PLC
annual report and financial statements 2021
18
independent auditor’s report
for the year ended 31 March 2021
Our application of materiality (continued)
We determined materiality for the financial statements as a whole to be £125,000, which was based on
gross assets of the company, representing approximately 2% 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 60% of materiality, amounting to £75,000.
We report to the Board of Directors all identified unadjusted errors in excess of £3,750. Errors below that
threshold would also be reported if, in our opinion as auditor, disclosure was required on qualitative
grounds.
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 course of 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 this gives rise to a material misstatement in the financial statements
themselves. 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.
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.
vela technologies PLC
annual report and financial statements 2021
19
independent auditor’s report
for the year ended 31 March 2021
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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 14, 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.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. In identifying
and assessing risks of material misstatement in respect of irregularities, including fraud and non-
compliance with laws and regulations, our procedures included the following:
•
•
•
enquiring of the directors on procedures relating to their processes for identifying, evaluating and
complying with laws and regulations and for detecting and responding to the risks of fraud;
obtaining an understanding of the legal and regulatory frameworks applicable to the entity. The
most significant considerations identified were the Companies Act 2006, corporation tax
legislation and compliance with AIM regulations; and
discussing among the engagement team how and where fraud might occur in the financial
statements and any potential indicators of fraud. As part of this discussion, we identified potential
risk for fraud through management override of controls.
We designed and executed procedures in line with our responsibilities to detect material misstatements
in respect of irregularities, including fraud. These procedures, together with the extent to which they are
capable of detecting irregularities, including fraud, are detailed below:
• We made enquiries of management and reviewed correspondence with the relevant authorities
to identify any irregularities or instances of non-compliance with laws and regulations and to
identify any irregularities or instances of fraud;
• We tested the appropriateness of a sample of accounting journals;
• We reviewed the Company’s accounting policies for non-compliance with relevant accounting
standards; and
• We considered significant accounting estimates for evidence of misstatement.
vela technologies PLC
annual report and financial statements 2021
20
independent auditor’s report
for the year ended 31 March 2021
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement
team members and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
•
Our audit procedures were designed to respond to risks of material misstatement in the financial
statements. There are inherent limitations in the audit procedures performed not least due to the following:
the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting a material misstatement resulting from error, as fraud may involve deliberate
concealment; and
the further removed the non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we are to become aware of it.
•
A further description of our responsibilities for the audit of the financial statements is located on the
https://www.frc.org.uk/Our-Work/Audit/Audit-and-
at:
Financial Reporting Council’s website
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.
Mark Hunter FCA
Senior Statutory Auditor
for and on behalf of Murray Harcourt Limited
Statutory Auditor, Chartered Accountants
6 Queen Street
Leeds
LS1 2TW
Date: 29 September 2021
vela technologies PLC
annual report and financial statements 2021
21
accounting policies
for the year ended 31 March 2021
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 2021 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 to
4. 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 to 4. 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 16 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 13.
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, derivative assets, other financial assets,
loans and borrowings and equity securities.
vela technologies PLC
annual report and financial statements 2021
22
accounting policies
for the year ended 31 March 2021
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 16 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 2021
23
accounting policies
for the year ended 31 March 2021
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 and other financial assets - Use of fair value or cost
Investments and other financial assets have been valued in accordance with the accounting policies set
out in section 1c. The Directors have used their judgement in determining whether to value certain
unquoted investments and other financial assets 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 has been applied in respect of one of the Company’s investments, with a carrying value
of £350,000 as at 31 March 2021. The investment was acquired in February 2021 and the directors
consider the cost paid continues to represent the best estimate of fair value as at 31 March 2021.
Other financial assets, with a carrying value of £2,350,000, have also been recorded at cost as the
directors’ best estimate of fair value as at 31 March 2021. Further details are provided in note 9.
vela technologies PLC
annual report and financial statements 2021
24
accounting policies
for the year ended 31 March 2021
Recognition of deferred tax assets
The Directors have also used their judgement in not recognising deferred tax assets as explained in note
6 to the financial statements.
Estimates
Fair value of investments
The fair value of certain investment holdings has been determined by the Directors using estimation
techniques. Further details regarding the carrying value of these investments and the methods used to
ascertain fair values is provided in note 16.
Other financial assets measured at fair value
The financial statements include other financial assets measured at fair value with a carrying value of
£2,350,000 as at 31 March 2021. Further details are provided in note 9.
vela technologies PLC
annual report and financial statements 2021
25
statement of comprehensive income
for the year ended 31 March 2021
Revenue
Administrative expenses
– other administrative expenses
– share based payments
– fair value movements on derivative instruments
– fair value movements on investments
Total administrative expenses
Operating Profit/(loss)
Finance income
Finance expense
Profit/(Loss) before tax
Income tax
Profit/(Loss)
Other comprehensive income
Notes
1
8
2
4
4
6
31 March
31 March
2021
£’000
-
2020
£’000
-
(400)
(344)
(21)
138
666
383
383
16
(19)
380
-
380
-
-
-
(979)
(1,323)
(1,323)
-
(89)
(1,412)
-
(1,412)
-
Total comprehensive income
380
(1,412)
Attributable to:
Equity holders of the Company
Earnings / (loss) per share
380
(1,412)
Basic and diluted earnings /(loss) per share (pence)
7
0.005
(0.092)
vela technologies PLC
annual report and financial statements 2021
26
balance sheet
as at 31 March 2021
Non-current assets
Investments
Trade and other receivables
Total non-current assets
Current assets
Trade and other receivables
Derivative financial instruments
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
Total equity and liabilities
Notes
8
9
10
11
15
14
12
13
31 March
31 March
2021
£’000
1,969
2,995
4,964
1
138
2,147
2,286
7,250
3,048
6,603
151
(2,600)
7,202
48
-
48
2020
£’000
1,196
-
1,196
13
-
9
22
1,218
1,749
1,715
130
(2,980)
614
54
550
604
7,250
1,218
These financial statements were approved by the Board, authorised for issue and signed on their behalf
on 29 September 2021 by:
Brent Fitzpatrick MBE
Non-Executive Chairman
Company registration number: 03904195
vela technologies PLC
annual report and financial statements 2021
27
cash flow statement
for the year ended 31 March 2021
Notes
Operating activities
Profit/(Loss) before tax
Share based payment
Fair value movements on investments
8
Fair value movement on derivative assets
Finance expenses
Finance income
Decrease in receivables
(Decrease)/increase in payables
Total cash flow from operating activities
Investing activities
Consideration for disposal of investments
Consideration for purchase of financial asset
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 increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at the end of the year
15
31 March
31 March
2021
£’000
380
21
(666)
(138)
19
(16)
12
(6)
(394)
512
(1,250)
(1,248)
(1,986)
(19)
-
4,537
4,518
2,138
9
2,147
2020
£’000
(1,412)
-
979
-
89
-
-
29
(315)
17
-
(91)
(74)
(55)
(240)
670
375
(14)
23
9
Cash and cash equivalents comprise:
Cash and cash in bank
Cash and cash equivalents at end of year
15
2,147
2,147
9
9
vela technologies PLC
annual report and financial statements 2021
28
statement of changes in equity
for the year ended 31 March 2021
Share
Total
Retained
Capital Premium Earnings Reserve Equity
Share
Share
Option
Balance at 1 April 2020
Transactions with owners
Share-based payment
Issue of share capital
Transactions with owners
Profit for the year
Total comprehensive income
£’000
£’000
£’000
£’000
£’000
1,749
1,715
(2,980)
130
614
-
1,299
1,299
-
-
-
4,888
4,888
-
-
-
-
-
380
380
21
-
21
-
-
21
6,187
6,208
380
380
Balance at 31 March 2021
3,048
6,603
(2,600)
151
7,202
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)
130
1,114
912
912
-
-
-
-
-
-
-
-
-
-
(1,412)
-
(1,412)
-
-
-
-
-
912
912
(1,412)
-
(1,412)
Balance at 31 March 2020
1,749
1,715
(2,980)
130
614
vela technologies PLC
annual report and financial statements 2021
29
notes to the financial statements
for the year ended 31 March 2021
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 Profit/(loss) from operations
Profit/(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
Share-based payment
31 March
31 March
2021
£’000
16
2
(666)
21
2020
£’000
12
1
979
-
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
Share-based payment charge
31 March
31 March
2021
2020
2
2
2
2
31 March
2021
£’000
31 March
2020
£’000
174
21
195
116
-
116
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 income and expense
Finance income
Other interest receivable
Total finance income
31 March
2021
£’000
31 March
2020
£’000
16
16
-
-
vela technologies PLC
annual report and financial statements 2021
30
notes to the financial statements
for the year ended 31 March 2021
4 Finance income and expense (continued)
Finance expense
Bond interest
Total finance expense
31 March
2021
£’000
31 March
2020
£’000
19
19
89
89
Included in finance expenses is £nil (2020 - £34k) in respect of the amortisation of loan issue costs.
5 Directors and senior management
Directors’ remuneration
N B Fitzpatrick
A Laiker (resigned 26 August 2020)
J Normand (appointed 26 August 2020)
N B Fitzpatrick
A Laiker (resigned 26 August 2020)
J Normand (appointed 26 August 2020)
31 March 2021
Salary
£’000
Fees Pension
Equity
£’000
£’000
£’000
-
-
-
62
67
45
174
-
-
-
-
-
-
31 March 2020
Salary
£’000
Fees
Pension
Equity
£’000
£’000
£’000
-
-
-
-
52
64
-
116
-
-
-
-
-
-
-
-
Total
£’000
62
67
45
174
Total
£’000
52
64
-
116
Directors’ and senior management’s interests in shares
The Directors who held office at 31 March 2021 held the following shares:
N B Fitzpatrick
J Normand (appointed 26 August 2020)
31 March
2021
31 March
2020
1,500,000
1,500,000
-
-
The total share-based payment costs in respect of options granted are:
Directors
31 March
31 March
2021
£’000
21
2020
£’000
-
As at 31 March 2021, the total number of outstanding options held by the Directors over ordinary shares
was 284,562,427, representing 2.0 per cent of the Company’s issued share capital.
Further details regarding the options issued are provided in note 18.
vela technologies PLC
annual report and financial statements 2021
31
notes to the financial statements
for the year ended 31 March 2021
6 Tax
There was no charge to current or deferred taxation in the current or prior period.
A deferred tax asset relating to losses carried forward has not been recognised due to uncertainty over
the existence of future taxable profits against which the losses can be used. The Company has unused
tax losses of approximately £4.4m (2020: £4.8m).
Tax reconciliation
Profit/(Loss) before tax
Tax at 19% on profit/(loss) before tax
Effects of:
Unrelieved losses carried forward
Loss relief brought forward
Total tax (credit)/expense
31 March
31 March
2021
£’000
380
72
-
(72)
-
2020
£’000
(1,412)
(268)
268
-
-
7 Profit/(loss) per share
Profit/(loss) per share has been calculated on a profit after tax of £380,000 (2020: loss after tax of
£1,412,000) and the weighted number of average shares in issue for the year of 7,383,146,119 (2020:
1,534,283,948).
The profit/(loss) per share is set out below:
Profit/(loss) (£’000)
Profit/(loss) per share (pence)
31 March
2021
380
0.005
31 March
2020
(1,412)
(0.092)
vela technologies PLC
annual report and financial statements 2021
32
notes to the financial statements
for the year ended 31 March 2021
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
2021
31 March
2020
£’000
1,196
1,248
(1,141)
666
1,969
£’000
2,101
91
(17)
(979)
1,196
Investments are held at fair value through profit and loss using a three-level hierarchy for estimating fair
value.
Note 16 provides details of the three-level hierarchy used.
One investment, with a carrying value of £350,000, was held at cost as an approximation of fair value at
31 March 2021. This investment was acquired in February 2021.
Additions during the year:
Mode Global Holdings plc
On 5 October 2020 the Company invested £250,000 for 500,000 ordinary shares in Mode Global Holdings
plc as part of an IPO funding round by Mode which raised an aggregate £7,500,000.
On 2 March 2021 the company subscribed for a further 120,581 new ordinary shares at a price of 55
pence per ordinary share at a cost of £66,319.
Following both investments the Company holds 620,581 ordinary shares in Mode representing 0.68% of
the issued share capital.
Sapo Plc
On 20 October 2020, the Company subscribed for 1,200,000 ordinary shares in Sapo Plc at a price of 2.5
pence per ordinary share at a cost of £30,000.
Cornerstone FS Plc
On 4 December 2020, the Company subscribed for 400,000 new ordinary shares of 0.01 pence each in
Cornerstone at a price of 50 pence per ordinary share at a cost of £200,000. In addition, Cornerstone has
issued Vela with 400,000 warrants with a 5-year term, each warrant carrying the right to subscribe for one
Cornerstone share at a price of 50 pence. This represents 2.4 per cent. of Cornerstone's share capital.
Kanabo Group Plc
On 16 February 2021, the Company completed the acquisition of 2,307,692 shares in Kanabo Group Plc
for £150,000. This represented approximately 0.6 per cent. of the then issued share capital of Kanabo.
Aeristech Limited
On 25 February 2021, the Company subscribed for 145,833 new ordinary shares in Aeristech Limited at
a price of £2.40 per ordinary share at a cost of £350,000. Following completion of this funding round,
Vela held 0.92% of the fully diluted issued share capital of Aeristech.
In addition, Aeristech has issued Vela with 36,458 warrants with a two-year term, each warrant carrying
the right to subscribe for one ordinary share in Aeristech at the issue price of £2.40.
MTI Wireless Edge Limited (MTI)
On 25 March 2021, the Company purchased 250,000 new ordinary shares in MTI at a price of 80 pence
per ordinary share at a cost of £200,000. This represents 0.28% of the then issued share capital of MTI.
vela technologies PLC
annual report and financial statements 2021
33
notes to the financial statements
for the year ended 31 March 2021
8 Investments (continued)
Disposals during the year:
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 held any shares in Rosslyn Data.
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 seven years. The proceeds have been recorded at a
discounted amount of £629,000, 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.
BlockchainK2 Corp
Between 12 January 2021 and 20January 2021 the Company disposed of its entire shareholding of
272,000 ordinary shares in BlockchainK2 Corp at prices between CAD$0.86 per share and CAD$1.5255
per share and with an average price of CAD$1.19 per share, generating proceeds of CAD$322,855
(approximately £186,390) for the Company.
Kanabo Group Plc
On 17 February 2021 the Company disposed of 1,000,000 shares in Kanabo Group Plc at a price of 23.5p
per share generating net proceeds of £233,801 for the Company. Following the disposal, the Company
continued to hold 1,307,692 shares in Kanabo, equivalent to approximately 0.36 per cent. of Kanabo’s
then issued share capital.
North Peak Resources Ltd
In March 2021, the Company disposed of 123,500 shares in North Peak Resources Ltd for total proceeds
of approximately CAD$86,000 (approximately £50,000).
9 Trade and other receivables – non-current
Loan due from Bixx Tech Limited
Other financial asset
31 March
2021
£’000
645
2,350
2,995
31 March
2020
£’000
-
-
-
Loan due from Bixx Tech Limited
The loan represents the consideration receivable for the disposal of certain investment assets in August
2020, as detailed in note 8. The total consideration receivable is £855,000, which is receivable after seven
years. The consideration has been discounted at a market interest rate of 4.5% to reflect the deferred
payment term. Interest receivable in the period amounted to £16,000, representing the unwinding of the
discount, and is recognised within finance income in note 4.
Under the terms of the loan agreement, the Company has provided an undertaking to distribute a sum
equal to any repayment of the loan to the holders of the Special Deferred Shares (see note 14). This
distribution will be by way of a dividend declared on the Special Deferred Shares (“the Special Dividend”).
In the event that insufficient distributable reserves exist at the end of the seven-year loan term, the
repayment of the loan will be deferred for a further year. This deferral will continue until such a time as
the Company has sufficient distributable reserves to be able to pay the Special Dividend.
vela technologies PLC
annual report and financial statements 2021
34
notes to the financial statements
for the year ended 31 March 2021
9 Trade and other receivables – non-current (continued)
Other financial asset - Investment in St George Street Capital
On 20 October 2020, the Company entered into a contract with St George Street Capital (“SGSC”) for an
8% economic interest in the potential future commercialisation of SGSC’s asset to treat individuals with
diabetes who are suffering with COVID-19 (“the Asset”). The consideration payable under the terms of
the contract was £2.35m which was settled by cash of £1.25m and the issue of 1,100,000,000 locked-in
consideration shares at a price of 0.1 pence per share. The directors consider that this represented the
fair value of the contract at the date of investment.
The contract gives the Company a right to future economic benefits and has been classified as a financial
asset measured at fair value through profit and loss. The directors estimate that the contract will not be
realised within 12 months of the reporting date and so the asset has been classified as non-current.
At the time of the investment, SGSC was in the process of recruiting for Phase II clinical trials of the Asset
and this recruitment was still ongoing as at the reporting date. As there had not been any major
developments or milestones achieved between the date of investment and the reporting date, the directors
do not consider the fair value of the contract to have changed materially during this time. Accordingly, the
original consideration payable under the contract represents the directors’ best estimate of its fair value
as at 31 March 2021.
10 Trade and other receivables
Other receivables
11 Derivative financial instruments
Warrants
31 March
2021
£’000
1
1
31 March
2020
£’000
13
13
31 March
2021
£’000
138
138
31 March
2020
£’000
-
-
The Company holds warrants providing it with the right to acquire additional shares in certain of its
investee companies at a fixed price in the future, should the directors decide to exercise them. The
warrants have been recognised as an asset at fair value, which has been calculated using an appropriate
option pricing model.
12 Trade and other payables
Trade payables
Accruals and deferred income
vela technologies PLC
annual report and financial statements 2021
31 March
2021
£’000
31 March
2020
£’000
24
24
48
28
26
54
35
notes to the financial statements
for the year ended 31 March 2021
13 Loans and borrowings
Loans due within one year
Bonds
31 March
2021
£’000
31 March
2020
£’000
-
-
550
550
On 26 August 2020, the Bonds were converted to ordinary shares in the Company as part of a share
reorganisation detailed in note 14. The bonds were denominated in Sterling and interest was charged at
10%.
14 Share capital
31 March
2021
31 March
2020
£’000
£’000
-
1,382
1,399
267
3,048
1,749
-
-
-
1,749
Allotted, called up and fully paid capital
0 (2020 – 1,748,943,717) Ordinary Shares of 0.1 pence each
13,818,450,084 (2020 – 0) Ordinary Shares of 0.01 pence each
1,748,943,717 (2020 – 0) Deferred Shares of 0.08 pence each
2,665,610,370 (2020 – 0) Special Deferred Shares of 0.01 pence each
Share transactions during the year:
Share reorganisation
On 26 August 2020, the Company undertook a share reorganisation.
In order to facilitate the conversion of the Bonds detailed in note 13, the ordinary shares of 0.1p were
subdivided into;
a. one ordinary share of 0.02p each, and
b. one deferred share of 0.08p each
The Bonds were then converted into 916,666,653 ordinary shares at an issue price of 0.06p per share.
Following the Bond conversion, and in order to facilitate a share placing to raise addition investment
capital, the ordinary shares of 0.02p each, effected by the first share reorganisation, were sub-divided
into;
a. one new ordinary share of 0.01p each, and
b. one special deferred share of 0.01p each.
The new ordinary shares have the same rights as the previous ordinary shares.
Following the reorganisation and the Bond conversion, the issued share capital of the Company consisted
of 2,665,610,370 Ordinary Shares of 0.01 pence each, 1,748,943,717 Deferred Shares of 0.08 pence
each and 2,665,610,370 Special Deferred Shares of 0.01 pence each.
vela technologies PLC
annual report and financial statements 2021
36
notes to the financial statements
for the year ended 31 March 2021
14 Share capital (continued)
Further share issues in the period
On 26 August 2020 the Company 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.
On the same date, 104,166,666 ordinary shares were issued at the placing price of 0.024 pence per share
to Peterhouse Capital Limited in lieu of corporate fees in relation to the transaction. In addition,
215,155,817 broker warrants were granted to Peterhouse Capital Limited to subscribe for new ordinary
shares, exercisable at the placing price and expiring on 1 September 2021.
On the same date, 235,416,666 ordinary shares were issued at the placing price of 0.024 pence per share
to Antony Laiker, the former executive director of the Company, in lieu of part of his notice period and fees
owed amounting to, in aggregate, £56,500.
On 21 September 2020, the Company issued 1,434,967,250 ordinary shares at a price of 0.06 pence per
share.
On 5 October 2020, the Company issued 107,499,999 ordinary shares at a price of 0.06 pence per share.
On 23 October 2020, the Company issued 1,923,076,923 ordinary shares at a price of 0.065 pence per
share.
On 26 October 2020, the Company issued 1,100,000,000 ordinary shares at a price of 0.1 pence per
share as part of the SGS transaction detailed in note 9.
On 11 November 2020, the Company issued 336,666,668 ordinary shares at a price of 0.06 pence per
share.
On 24 February 2021, the Company issued 25,904,000 ordinary shares at a price of 0.06 pence per share.
On 3 March 2021, the Company issued 51,808,000 ordinary shares at a price of 0.06 pence per share.
On 16 March 2021, the Company issued 1,666,666,667 ordinary shares at a price of 0.09 pence per
share.
Share rights
The Deferred and Special Deferred Shares are not listed on AIM and do not carry any rights to receive
notice of or attend or speak or vote at any general meeting or class meeting. There are also no dividend
rights, other than the “Special Dividend” on the Special Deferred Shares. As described in note 9, upon
repayment to the Company of any amount(s) owed to it pursuant to the loan agreement between the
Company and Bixx Tech Limited, the Company shall, in priority to any payment of dividend to the holders
of the ordinary shares or any other class of shares, declare and pay to the holders of the Special Deferred
Shares a Special Dividend of an aggregate amount equal to the amount of such sum repaid, pro rata
according to the number of Special Deferred Shares paid up.
On a return of capital, the holders of the Special Deferred Shares shall be entitled to receive only the
amount paid up on such shares up to a maximum of 0.01 pence per Special Deferred Share after (i) the
holders of the Ordinary Shares have received the sum of £1,000,000 for each Ordinary Share held by
them, and (ii) the holders of the Deferred Shares have received the sum equal to the amount paid up on
such Deferred Shares.
vela technologies PLC
annual report and financial statements 2021
37
notes to the financial statements
for the year ended 31 March 2021
15 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
2021
£’000
2,147
2,147
2020
£’000
9
9
16 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 North Peak and Blockchain K2 were denominated in Canadian Dollars,
which gave rise to exposure to foreign currency risk. The Directors considered the risk and did not deem
it necessary to enter into any specific risk management arrangements.
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
2021
31 March
2020
£’000
£’000
4,457
646
5,103
1,196
13
1,209
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.
vela technologies PLC
annual report and financial statements 2021
38
notes to the financial statements
for the year ended 31 March 2021
16 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 six (2020: 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 £1,270,672 (2020: £887,919) and the fair value as
at 31 March 2021 was £1,192,164 (2020: £197,757).
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 (2020: two) unquoted investments
classified in this category. The historic cost of these investments is £450,000 (2020: £276,103) and the
fair value as at 31 March 2021 was £777,144 (2020: £563,584). 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. The
Company also holds warrants for shares in three investee companies, which have been valued using an
option pricing model with observable inputs. The fair value of these assets as at 31 March 2021 was
£138,246.
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 two
(2020: five) unquoted investments classified in this category. The historic cost of these investments is
£300,000 (2020: £1,411,819) and the fair value as at 31 March 2021 was £nil (2020: £434,137). 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. The Company also holds a
non-current financial asset described in note 9 to the financial statements at a fair value of £2,350,000,
which is also the historic cost of the asset. Further details regarding the determination of the fair value of
this asset are provided in note 9.
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 2021
31 March 2020
At amortised cost:
Financial liabilities at amortised cost
vela technologies PLC
annual report and financial statements 2021
Within
1 year
£’000
Later
than
1 year
£’000
48
48
-
-
Within
1 year
£’000
604
604
Later
than
1 year
£’000
-
-
39
notes to the financial statements
for the year ended 31 March 2021
16 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.
17 Reconciliation of net debt
Cash and cash equivalents
Bonds
As at 1
April
2020
£’000
9
(550)
(541)
Cash
flow
£’000
2,138
-
2,138
Non-cash
movement
£’000
-
550
550
As at 31
March
2021
£’000
2,147
-
2,147
Non-cash movements on the Bonds relate to the conversion of amounts owed into Ordinary Shares in
the period, as detailed in notes 13 and 14.
vela technologies PLC
annual report and financial statements 2021
40
notes to the financial statements
for the year ended 31 March 2021
18 Share-based payments
The Company rewards its Directors using equity settled share-based payments.
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 became 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, on the same date, 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 became
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 placing fees) the Company had a total of 299,124,854 (2020: 29,124,854) 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. A number of these warrants have since been exercised.
The options issued in August 2020 have been valued using the Monte Carlo option pricing model. The
options granted in 2014 and 2015 were valued using the Black Scholes option pricing model.
The amount of remuneration expense in respect of the share options granted amounts to £21,000 (2020:
£NIL).
Details of the options outstanding at the year end and the inputs to the option pricing model are as follows:
Options
granted
Options
Options
granted
granted
26 August 22 October 18 September
Options
granted
2 October
2020
2015
2015
2014
Options
granted
8 April
2014
0.05
0.024
10
86.9
2.0
0.21
0.21
7
79.47
2.0
0.19
0.15
7
70.98
2.0
0.33
0.33
7
95.16
2.0
1.50
0.85
7
74.23
2.0
0.03
0.15
0.13
0.26
1.17
270,000,000
6,400,000
10,489,560
4,000,000
8,235,294
270,000,000
6,400,000
10,489,560
4,000,000
8,235,294
Share price at grant date
(pence)
Exercise price (pence)
Expected life (years)
Annualised volatility (%)
Risk-free interest rate (%)
Fair value determined
(pence)
Number of options
granted
Options exercisable at 31
March 2021
The expected future annualised volatility was calculated using historic volatility data for the Company.
The options issued in 2014 and 2015 are not subject to any performance criteria. However the options
issued in 2020 are subject to performance criteria.
vela technologies PLC
annual report and financial statements 2021
41
notes to the financial statements
for the year ended 31 March 2021
19 Contingent liabilities
Under the terms of the Company’s loan receivable from Bixx Tech Limited, described in note 9, the
Company has provided an undertaking to distribute a sum equal to any repayment of the loan to the
holders of the Special Deferred Shares (see note 14). This distribution will be by way of a dividend
declared on the Special Deferred Shares (“the Special Dividend”). In the event that insufficient
distributable reserves exist at the end of the seven-year loan term, the repayment of the loan will be
deferred for a further year. This deferral will continue until such a time as the Company has sufficient
distributable reserves to be able to pay the Special Dividend. As at 31 March 2021, the carrying value of
the loan receivable was £645,000 and, at the scheduled maturity date, the final settlement value will be
£855,000.
20 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 £62,000 (2020: £52,000) in respect of his Directors fees to the Company.
The balance due to Ocean Park Developments Limited at the year-end was £nil (2020: £8,500).
Widdington Limited
Antony Laiker, a director who served during the year, is also a Director of Widdington Limited. During the
year the Company paid £67,000 (2020: £64,000) in respect of his Directors fees to the Company. The
balance due to Widdington Limited at the year end was £nil (2020: £9,500).
Issue of share options to directors
During the year, share options were issued to James Normand and Brent Fitzpatrick, directors of the
Company. Full details are disclosed in notes 5 and 18.
Antony Laiker
Antony Laiker, who is a former director and at the time was classified as a related party under the AIM
Rules, held £50,000 of the bonds which were originally issued under the Company’s 10% bond issue in
February 2017. The Bonds were converted to ordinary shares as part of the reorganisation on 26 August
2020.
In addition, 235,416,666 new ordinary shares were issued to Antony Laiker, a former director of Vela, in
August 2020 in consideration of accrued and unpaid fees and pursuant to part of his notice period under
his service agreement equivalent to, in aggregate £56,500.
Kevin Sinclair
Kevin Sinclair, who was a significant shareholder in the company in the 12 months prior to the date of the
reorganisation of the Company, held £100,000 of the bonds under the Company’s 10% bond issue in
February 2017.
The Bonds were converted to ordinary shares as part of the reorganisation on 26 August 2020. After this
date he ceased to be a significant shareholder.
Bixx Tech Limited
On 26 August 2020, the Company transferred certain investments to a newly formed wholly owned
subsidiary, Bixx Tech Limited, for consideration totalling £855,000 repayable after seven years. Further
details of this transaction are provided in notes 8 and 9. Following the transfer of the investments, Bixx
Tech Limited was sold to a newly formed company, Bixx Limited, with the same shareholders as Vela
Technology Plc for consideration of £1. As at 31 March 2021, the carrying value of the balance due from
Bixx Tech Limited was £645,000.
The disposal constituted a related party transaction under the AIM Rules as Antony Laiker was the sole
shareholder of Bixx Limited prior to the disposal
vela technologies PLC
annual report and financial statements 2021
42
notes to the financial statements
for the year ended 31 March 2021
21 Events after the balance sheet date
Disposal of North Peak Resources Ltd
In April 2021 the Company disposed of its remaining shares in North Peak Resources Ltd. The carrying
value of the shares held as at 31 March 2021 was £74,858 and the sales proceeds after the reporting
date amounted to approximately CAD$140,000 (approximately £80,000).
Investment in Cornerstone FS Plc
In April 2021, the Company completed the subscription for 245,902 new ordinary shares in Cornerstone
for a cost of £150,000 as part of Cornerstone’s admission to AIM. Following this transaction, Vela's
aggregate shareholding in Cornerstone represented approximately 3.2% of its then issued share capital.
Exercise of warrants and issue of equity
On 30 March 2021, the Company announced an application to issue 24,751,750 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. The share allotment was completed on 7 April 2021, generating proceeds of £14,851.
On 6 July 2021, the Company issued 35,000,000 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 £21,000.
On 7 July 2021, the Company issued 44,079,000 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 £26,447.
On 19 July 2021, the Company issued 117,083,332 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 £70,250.
On 27 August 2021, the Company issued 1,391,421,209 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 £834,853.
On 7 September 2021, the Company issued 821,549,809 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 £362,530.
Investment in Northcoders Group PLC
In July 2021 the Company invested £750,000 in Northcoders Group PLC. The Company acquired
416,666 new ordinary shares of 1p each at a price of 180p per share which represents an investment of
6% in the enlarged share capital.
vela technologies PLC
annual report and financial statements 2021
43