Registration number 03904195
Vela Technologies PLC
Annual Report and Financial Statements 2023
vela technologies PLC
annual report and financial statements 2023
table of contents
Strategic report
01
02
03
chairman’s statement
strategic report
directors and advisers
Governance
05
10
11
corporate governance
report on remuneration
report of the directors
Financial Statements
16
21
25
26
27
28
29
independent auditor’s report
accounting policies
statement of comprehensive income
statement of financial position
cash flow statement
statement of changes in equity
notes to the financial statements
vela technologies PLC
annual report and financial statements 2023
chairman’s statement
for the year ended 31 March 2023
I am pleased to present the Chairman’s statement for the year ended 31 March 2023. In my half yearly statement for the
period ended 30 September 2022 I made reference to the continued war in Ukraine, political issues at home, rising inflation
and rising interest rates.
These have not abated as the war in Ukraine intensifies and the maelstrom surrounding the UK’s mini budget in September
2022 which crashed the Pound causing interest rates to rise to the highest levels we have seen in more than a decade. At
the year end, interest rates had reached 4.25% alongside high inflation rates of 10.1%. Both of which continued rising into
our new financial year.
With this backdrop of persistently high inflation and rising interest rates the excitement for listings on the public markets has
evaporated and many investors are choosing to place their funds in cash instruments for safety and the security of a
meaningful rate of return.
Despite these negatives we maintain our belief that the economic interest that the Company holds in AZD 1656 will create
value for shareholders. Post year end the Company invested a further £400,000 into a put option agreement to give Vela
the right, but not the obligation, to sell its economic interest in the commercialisation of the Covid-19 application of AZD1656
for a total consideration of £4.0 million. The option was granted by Conduit Pharmaceuticals Limited and its prospective
parent company, Murphy, a Company listed on NASDAQ. Conduit Pharmaceuticals completed the business combination
with Murphy and the enlarged group, being Conduit Pharmaceuticals Inc. (“Conduit Inc.”), began trading on NASDAQ on 25
September 2023. Further to the announcement made by the Company on 21 September 2023, the board intends to exercise
the option in due course, at the appropriate time. The option has an expiry date of 7 February 2024. As previously announced
by Vela the consideration of £4.0 million, payable upon exercise of the option, would be satisfied through the issue to Vela
of new shares in Conduit Inc. and the issue price of the consideration shares will be based on the volume-weighted average
price per share of Conduit Inc. over the ten business days prior to the date of notice of exercise, provided in no event shall
the issue price for the consideration shares be lower than $5 or higher than $15.
EnSilica plc listed in the early part of the financial year under review and its share price has proved resilient against poor
market conditions and at the appropriate junctures we have sold shares in EnSilica to realise a gain whilst maintaining a
sizeable shareholding position in the company.
Whilst a number of the Company’s stocks languish, such as Skillcast Group plc, Northcoders Group plc and MTI Wireless
Edge Limited, these are quality growth companies whose value is not truly reflected in their share price, which is a common
theme across the markets. And whilst the market appears sceptical of TruSpine Technologies plc we believe its product is
a game-changer in spinal stabilisation and we continue our support for the company.
Turning to the financials, Vela reported a loss for the year of £378,516 compared to a loss of £1,078,202 in the previous
comparable period. Almost all of this difference, from an accounting perspective, reflects a £25,780 reduction in fair value
of investments in the year being reported on, compared to a much larger reduction in fair value in the previous financial year.
Net assets decreased to £7,004,480 compared to £7,378,151 at 31 March 2022 and cash fell from £958,573 at the beginning
of the period to £723,576 at the balance sheet date. As at 21 September 2023 Vela’s cash reserves were approximately
£43,000.
Since 31 March 2023, the Company has made two new investments being a £250,000 pre-IPO investment in Tribe
Technology and the £400,000 investment made into the put option in relation to the possible sale of Vela’s economic interest
in AZD1656. The Board of Vela was pleased to see Tribe Technology successfully list on AIM in September 2023 in
conjunction with a £4.6m fundraising.
In August 2022 Antony Laiker rejoined the board, however, in October 2022, Antony decided to stand down and sell his
holding in the Company. We were very grateful for Antony’s input and market wisdom during his time with us.
The board will continue to update shareholders, in line with regulatory guidelines, via its quarterly investment updates and
regulatory announcements. The directors would like to thank shareholders for their continued support.
Brent Fitzpatrick MBE
Chairman
vela technologies PLC
annual report and financial statements 2023
1
strategic report
for the year ended 31 March 2023
Business review
At the period end, the Company held cash of approximately £724,000 (31 March 2022: £958,000). It continues to keep
administrative costs to a minimum so that it has sufficient resources to cover its ongoing running costs while retaining the
maximum funds for further investments.
The Company’s loss for the year was approximately £378,000 (2022: loss of £1,078,000). This loss has arisen primarily
from fair value movements on the Company’s investment portfolio. The valuation of the investment portfolio at 31 March
2023 was approximately £3,193,000 (31 March 2022: £2,603,000), an increase of £590,000 on 2022. This resulted from the
investment of £575,000 in new and ‘follow-on’ investments, conversion of the CLNs held in Ensilica plc, disposals generating
proceeds of £709,000, net of a decrease in the valuation of the portfolio of £26,000. In addition to these investments the
Company holds a financial asset (St George Street Capital) valued at £2,350,000 as at 31 March 2023 (31 March 2022:
£2,350,000).
We update shareholders on investee company performance through the dissemination of investee company regulatory
announcements, together with, when available, information from private companies which do not have the same disclosure
requirements as listed companies. Additionally, the Board has continued to publish quarterly investment updates on the
performance of the investment portfolio and on acquisitions and sales. The quarterly investment updates will continue.
Moreover, detailed information on the investment portfolio is maintained on the Company’s website.
During the year the Company made investments in TruSpine Technologies PLC (£300,000), a secondary placing in
Northcoders Group plc (£99,000), a further investment in EnSilica plc (£125,000) and an investment in Ethernity Networks
Ltd (£49,000). Further details and key points of the investments made and of the performance of the Company’s investee
companies are detailed in note 8 to the financial statements.
The Company had two employees during the period (being two of the directors) and a Board comprising one male Executive
Director, one female Executive Director and one male Non-Executive Director.
Principal risks and uncertainties
The preservation of its cash balances and the management of its capital resources remain the key concerns for the
Company. Further information about the Company’s principal risks, covering credit, liquidity, and capital, is detailed in note
15 to the financial statements.
The Company remains committed to keeping operational costs to a minimum.
Approved by the Board of Directors on 27 September 2023 and signed on its behalf by:
Brent Fitzpatrick MBE
Chairman
vela technologies PLC
annual report and financial statements 2023
2
directors and advisers
Brent Fitzpatrick MBE
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
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 and a non-executive director of Ridgecrest plc,
both investing companies which, until recently, were listed on AIM. During the prior year, he stepped down from his position
as chairman of Global Resources Investment Trust plc, a premium-listed company on the main list of the London Stock
Exchange
In an unremunerated extra-curricular capacity, Mr Normand was, until the end of 2021, 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
Executive Director
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.
Antony Laiker
Non-executive director (appointed 21 July 2022; resigned 20 October 2022)
Antony Laiker is a stockbroker, investor and advisor with a focus on early stage private and small cap listed companies.
He was previously an Executive Director of Vela between 2013 and 2020.
vela technologies PLC
annual report and financial statements 2023
3
directors and advisers
Registered office
15 Victoria Mews
Mill Field Road
Cottingley Business Park
Bingley
West Yorkshire
BD16 1PY
Company secretary
Emma Wilson
Broker
Peterhouse Capital Limited
80 Cheapside
London
EC2V 6EE
Nominated adviser
Allenby Capital Limited
5 St Helen’s Place
London
EC3A 6AB
Auditors
TC Group
6 Queen Street
Leeds
LS1 2TW
Registrars
Neville Registrars
Neville House
Steelpark Road
Halesowen
B62 8HD
Solicitors
Harrison Clark Rickerbys
Limited
62 Cornhill
London EC3V 3NH
Bankers
Barclays Bank plc
27 Soho Square
London W1D 3QR
vela technologies PLC
annual report and financial statements 2023
4
corporate governance
for the year ended 31 March 2023
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 enterprises using disruptive technology either to gain an advantage in an
existing market or to create a new market 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. A
revised Investing Policy was adopted in January 2022 following approval by shareholders at the Company’s annual general
meeting.
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 15 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 meetings with its major shareholders to
discuss objectives, on an adhoc basis.
The Company communicates with its shareholders primarily through regulatory announcements. These contain the contact
details of the Company’s Chairman, Executive Director, its Broker and its 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.
vela technologies PLC
annual report and financial statements 2023
5
corporate governance
for the year ended 31 March 2023
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.
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. The Company engages the services of Novus Communications Ltd to assist with investor relations and shareholder
communication. 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 Directors also make themselves 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 in note 15 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.
At the beginning of the accounting year, the Board comprised three directors. Brent Fitzpatrick, the Chairman throughout
the period, is responsible for the running of the Board and, alongside James Normand and Emma Wilson, the Executive
Directors, is responsible for implementing the Company’s strategy. They were joined in this task on 21 July 2022 by Antony
Laiker who subsequently resigned on 19 October 2022. Under the terms of their contracts with the Company, each director
is contractually committed to dedicating a minimum of 42 days per annum to the Company and to be available on an ad-hoc
basis to the Company over and above their minimum contractual time commitments. Each Board member commits sufficient
time to fulfil their duties and obligations to the Board and the Company. The Board has publicly stated its intention to further
strengthen the Board through the appointment of an independent non-executive director.
vela technologies PLC
annual report and financial statements 2023
6
corporate governance
for the year ended 31 March 2023
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
James Normand
Brent Fitzpatrick MBE
Emma Wilson
Board meetings
8
8
8
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 in the Directors and Advisers section of this report.
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 re-appointment and subsequent resignation of Antony Laiker and is committed to making 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 2023
7
corporate governance
for the year ended 31 March 2023
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 Board considers 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 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 James Normand (Executive
Director), Emma Wilson (Executive Director), Brent Fitzpatrick (the Chairman) and Antony Laiker (from 21 July 2022 until
19 October 2022 as Non-Executive Director) is suitable for its purposes, size and complexity. The Board monitors its
structure on an ongoing basis to ensure it is effective. The Board has publicly stated the intention to further strengthen the
Board through the appointment of an independent non-executive director.
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 not to 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 reviews 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.
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.
vela technologies PLC
annual report and financial statements 2023
8
corporate governance
for the year ended 31 March 2023
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 its annual report), copies of which are available on the
Company’s website (www.velatechplc.com), and via its website which is regularly updated.
In addition, Brent Fitzpatrick, the chairman, 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 the last
five years can be found at: http://www.velatechplc.com/investor-relations/publications/
The Company did not have an audit committee or a remuneration committee during the period under review, 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 2023. However, the Directors have prepared a Report on Remuneration, which is set out on page 10. The
Company intends to put in place an audit committee and a remuneration committee before the end of 2023.
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
Chairman
vela technologies PLC
annual report and financial statements 2023
9
report on remuneration
for the year ended 31 March 2023
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.
Main elements of executive remuneration
There are three elements of the Executive Directors’ remuneration packages:
i.
ii.
iii.
salary and fees;
annual bonus payments; and
share-based payments.
Salary and fees
The Executive Directors’ basic salaries are 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 Directors are 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 Directors are responsible. All share-based
entitlements for the Directors are disclosed in notes 5 and 17 to the financial statements.
Non-Executive Directors
The Board as a whole determines the remuneration of the Non-Executive Directors. The Non-Executive Directors do 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
Chairman
vela technologies PLC
annual report and financial statements 2023
10
report of the directors
for the year ended 31 March 2023
The Directors present their report together with the financial statements for the year ended 31 March 2023.
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 2023.
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, Emma Wilson will retire by rotation and will offer
herself for re-election at the forthcoming AGM.
The Directors who served during the period under review are:
Brent Fitzpatrick
James Normand
Emma Wilson
Antony Laiker (appointed 21 July 2022; resigned 19 October 2022)
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 15 to the financial statements.
Substantial shareholders
At 31 March 2023 the Company’s Register of Shareholders included the following registered holders of more than 3% of the
Company’ s total issued ordinary shares:
Hargreaves Lansdown (Nominees) Limited
Interactive Investor Services Nominees Limited
HSDL Nominees Limited
Vidacos Nominees Limited
Thomas Grant & Company Nominees Limited
JIM Nominees Limited
Barclays Direct Investing Nominees Limited
Shareholding
4,152,265,983
3,132,880,793
1,775,405,456
1,173,417,248
1,104,982,833
1,104,518,571
1,099,948,832
%
25.55
19.28
10.92
7.22
6.80
6.80
6.77
The holdings of Interactive Investor Services Nominees Limited included 705,452,110 shares (representing 4.34% of the
Company’s total issued ordinary shares) beneficially owned by Mr Christopher Cooke. On 12 June 2023, the Company was
notified that Mr Christopher Cooke’s shareholding had increased to 1,114,306,333, representing 6.86% of the Company’s
total issued ordinary shares. No other individual beneficial holder held more than 3% of the Company’s total issued ordinary
shares.
vela technologies PLC
annual report and financial statements 2023
11
report of the directors
for the year ended 31 March 2023
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 15 to the financial statements includes the Company’s
objectives, policies and processes for managing its capital, details of its financial risk management objectives, financial
instruments and its exposures to credit risk and liquidity risks.
As set out in the investing policy 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. The board
continues to maintain minimal running costs and considers cash reserves when seeking new investments. When appropriate
and to service its cash requirements the board looks to realise investments into cash to enable it to fund working capital and
also to make new investments.
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 are
required to prepare the financial statements in accordance with United Kingdom adopted international accounting standards.
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 United Kingdom adopted international accounting standards have been followed, subject to any
material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable
them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
Insofar as each of the Directors is aware:
•
•
there is no relevant audit information of which the Company’s auditors are unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit
information and to establish that the auditors are aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
vela technologies PLC
annual report and financial statements 2023
12
report of the directors
for the year ended 31 March 2023
Investing Policy
The investing policy of Vela Technologies plc is focused on enterprises using disruptive technology either to gain an
advantage in an existing market or to create a new market. Within that over-arching strategy, Vela applies the following
criteria in reaching an investment decision.
Stage of development
Usually (but not necessarily) investee businesses will have been operating for a number of years. They may be established
businesses that are developing a new line of technology, or they may have been formed specifically in order to exploit a
particular product which is expected to disrupt the market or create a completely new one. The investee business may not
yet have achieved profitability.
Geographical focus
Investee companies will usually be based in the UK (including the Channel Islands) or derive a material proportion of their
business from the UK. Conversely, investee companies may derive a significant proportion of their income from overseas
but be based in the UK. It is unlikely that Vela would invest in a business headquartered overseas and deriving a majority
of its business from outside the UK.
Sector focus
Disruptive technology is not confined to the pure technology sector, but may be found in IT software businesses, including
SaaS (software as a service); or in ‘bricks and mortar’ businesses which use IT in innovative ways in order to disrupt the
sector in which they operate.
The definition of disruptive may also extend to pharmaceutical businesses where, for example, a new drug may have the
potential to make a beneficial impact on the treatment of medical conditions; as well as to companies operating in the
wellness and life sciences sectors.
Corporate status
Vela aims to have a mix of private and publicly-traded investments.
The private companies will generally need to have ambitions for a public listing in a relatively short time period (i.e. within
two years of investment); or, failing that, a plan to find a buyer for the business or to scale up the business (e.g. by merging
with or acquiring another or by raising material additional equity funding) within a similar timescale.
Investments in public companies will usually be made as part of a development capital financing designed to accelerate the
growth of the business.
Investment instruments
Vela will generally expect to make investments in the form of equity. It will also consider investing in loan stock which is
convertible (at Vela’s option) into equity shares. In certain cases (e.g. a new drug which may be one of a number being
developed by the promoter) it may be appropriate for Vela to take an interest in the future cash flows from that drug. Vela’s
investments will rarely be in the form of pure debt.
Investments will usually be in the form of cash but may also take the form of an issue of new Vela shares.
In the case of equity investments, the Directors intend to take minority positions and investments will therefore typically be
of a passive nature.
vela technologies PLC
annual report and financial statements 2023
13
report of the directors
for the year ended 31 March 2023
Holding period
Vela invests with the intention of realising its investment within three years of investment. Investments can be made at the
pre-IPO stage and in anticipation of a public listing for the shares, often within a few months. In such cases the whole or
part of the investment may be sold on admission of the investee company’s shares to trading on a stock exchange.
Investments in companies whose shares are not traded on a public exchange are, of course, inherently more difficult to
realise; and so, although there may be an intention to list the shares or to sell the business, Vela may need to hold an
investment in a private company for a longer time period.
The Directors intend to re-invest the proceeds of disposals in accordance with the Company’s investing policy unless, at the
relevant time, the Directors believe that there are no suitable investment opportunities in which case the Directors will
consider returning the proceeds to shareholders in a tax efficient manner.
Number and size of investments
There is no limit on the number of projects into which the Company may invest except the capacity of Vela’s investment
team to appraise and monitor them. Similarly, the monetary quantum of each investment is a factor of the funds available
to Vela at the point of investment. Both the number and size of investments will therefore vary according to Vela’s human
and monetary resources. Each of these will be referred to in Vela’s annual and interim reports. As investments are made
and new promising investment opportunities arise, further funding of the Company may be required to enable Vela to make
further investments.
The Company will pursue a balanced portfolio of an even mixture of early stage, pre-liquidity event and liquid investments.
While the aim is to have the portfolio split fairly evenly between the different stages of liquidity, there will be no set criteria
for the proportion of the portfolio which will be represented by each investment type.
Equity interests will rarely exceed 10% of an investee’s issued capital; and generally will be less than 3%.
Opportunistic investments
As a result of Vela’s network of contacts in the financial markets, it occasionally receives invitations to invest in businesses
which do not meet the core criteria of the investing policy. Nevertheless, if the Board considers that there is an opportunity
to benefit by investing in such a proposition and thus allowing its shareholders access to investments in which they may
otherwise not be able to participate, it may consider doing so. Such investments will be limited at 5% of the Company’s net
asset value and would usually be made on the strict understanding and expectation that any such investment would be held
for the short term only.
Investment appraisal
In order to mitigate investment risk, the Directors will carry out a thorough appraisal of each potential investment. This
appraisal may include site visits, analysis of financial, legal and operational aspects of each investment opportunity,
meetings with management, risk analysis, review of corporate governance and anti-corruption procedures and, where the
Directors see fit, the seeking of third-party expert opinions and valuation reports. Vela will not have a separate investment
manager.
Nature of returns
It is anticipated that returns to Vela will be delivered through a combination of capital gain, dividend income and interest on
convertible loans.
Given Vela’s expected percentage holdings in investee businesses, it will be unusual for Vela to seek or be offered a position
on the investee’s board of directors. However, in those instances where it is felt desirable and appropriate for Vela to appoint
a director, the fee earned from any such post held by a director or employee of Vela would be payable to Vela and form part
of the return earned by Vela on its investment.
vela technologies PLC
annual report and financial statements 2023
14
report of the directors
for the year ended 31 March 2023
Cash held by the Company pending investment, reinvestment or distribution will be managed by the Company and placed
on deposit with banks so as to protect the capital value of the Company’s cash assets. The Company may, where
appropriate, enter into agreements or contracts in order to hedge against interest rate or currency risks.
Review of investing policy
The Directors will keep the investing policy under continuous review and will make and announce any non-material changes
or variations as may be appropriate. Any material change or variation of the investing policy will be subject to prior approval
of shareholders.
Post balance sheet events
Full details of events after the balance sheet date are disclosed in note 20.
Auditors
TC Group was re-appointed auditor at the 2022 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
Chairman
27 September 2023
vela technologies PLC
annual report and financial statements 2023
15
independent auditor’s report
for the year ended 31 March 2023
Opinion
We have audited the financial statements of Vela Technologies plc (the ‘company’) for the year ended 31 March 2023 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 UK adopted international accounting standards.
In our opinion, the financial statements:
•
•
•
give a true and fair view of the state of the company’s affairs as at 31 March 2023 and of its loss for the year then
ended;
have been properly prepared in accordance with UK adopted international accounting standards; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for 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 reserves, other available liquid resources (such as listed investments that can be readily converted
to cash) 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 we have 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.
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 2023
16
independent auditor’s report
for the year ended 31 March 2023
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.
company’s accounting
for evidence of any unusual
the
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 2023. In addition, the
Company holds a contract to secure an 8%
interest in the commercialisation proceeds of an
ongoing medical drug development trial. These
trials have been successful to date and routes
to commercialisation of the drug were being
explored at the reporting date.
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
fair value of unquoted
Determining
investments and contracts involves a significant
level of management judgement and there is
therefore an increased risk of material errors in
investments and other
valuation of
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 2023;
in
to valuations of unquoted
investments in the year, ensuring that these
were based on
is
considered to be a reliable estimate in
accordance with the company’s accounting
policy and the accounting standards. Whilst
noting that in some instances the level of
information available on investee company
performance and prospects is limited, we
were satisfied that management utilised that
information in order to reach a reasonable
estimate of the year end valuation; 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 2023
17
independent auditor’s report
for the year ended 31 March 2023
Our application of materiality (continued)
We determined materiality for the financial statements as a whole to be £150,000, 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 £90,000.
We report to the Board of Directors all identified unadjusted errors in excess of £7,500. Errors below that threshold would
also be reported if, in our opinion as auditor, disclosure was required on qualitative grounds.
Other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report. 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. 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.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
•
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
vela technologies PLC
annual report and financial statements 2023
18
independent auditor’s report
for the year ended 31 March 2023
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 12, 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Extent to which the audit was capable of detecting irregularities, including fraud
The objectives of our audit, in respect of fraud, are: to identify and assess the risks of material misstatement of the financial
statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material
misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to
fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the entity and its management.
Our approach was as follows:
• We identified areas of laws and regulations that could reasonably be expected to have a material effect on the
financial statements from our general commercial and sector experience, and through discussion with the directors
and other management (as required by auditing standards), and discussed with the directors and other
management the policies and procedures regarding compliance with laws and regulations;
• We considered the legal and regulatory frameworks directly applicable to the financial statements reporting
framework (UK adopted international accounting standards, the Companies Act 2006 and AIM listing regulations)
and the relevant tax compliance regulations in the UK;
vela technologies PLC
annual report and financial statements 2023
19
independent auditor’s report
for the year ended 31 March 2023
• We considered the nature of the company’s activities, the control environment and business performance, including
key drivers for management's remuneration;
• We communicated identified laws and regulations throughout our team and remained alert to any indications of
non-compliance throughout the audit;
• We considered the procedures and controls that the company has established to address risks identified, or that
otherwise prevent, deter and detect fraud; and how senior management monitors those programmes.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations.
Where the risk was considered to be higher, we performed audit procedures to address each identified risk. These
procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting
documentation; performing analytical procedures; and enquiring of management, and were designed to provide reasonable
assurance that the financial statements were free from material fraud or error.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have properly planned and performed our audit in accordance
with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from
the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required
by auditing standards would identify it. The risk is also greater regarding irregularities occurring due to fraud rather than
error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible
for preventing non-compliance and cannot be expected to detect all non-compliance with laws and regulations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
https://www.frc.org.uk/auditors/audit-assurance/auditor-s-responsibilities-for-the-audit. This
Council’s website
description forms part of our auditor’s report.
at:
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 TC Group
Statutory Auditor
6 Queen Street
Leeds
LS1 2TW
27 September 2023
vela technologies PLC
annual report and financial statements 2023
20
accounting policies
for the year ended 31 March 2023
1a Presentation of financial statements
The financial statements of the Company have been prepared in accordance with United Kingdom adopted International
Financial Reporting Standards (IFRS) 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 2023 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. The financial position of the Company, its cash flows and
liquidity position are also described in the Chairman’s statement and the Strategic report. 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 15 to the financial statements.
The board continues to maintain minimal running costs and considers both immediate and medium-term cash reserves
when seeking new investments. When appropriate the board looks to realise investments into cash to enable it to fund
working capital and also make new investments.
The Directors have a reasonable expectation that the Company will have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the annual report
and financial statements. Further information is also provided on page 12.
1c Summary of significant accounting policies
Taxation
Current tax is the tax currently payable based on taxable profit for the period.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided
on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not
provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction
is a business combination or affects tax or accounting profit. Tax losses available to be carried forward as well as other
income tax credits to the Company are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is
probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except
where they relate to items that are recognised in other comprehensive income in which case the related deferred tax is also
charged or credited directly to other comprehensive income.
Financial instruments
A financial instrument refers to a contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity and is recognised on the Company’s balance sheet when the Company becomes a party to the
contractual terms of the instrument. Financial instruments include investments, cash and deposits, trade receivables and
payables, derivative assets, other financial assets, loans and borrowings and equity securities.
vela technologies PLC
annual report and financial statements 2023
21
accounting policies
for the year ended 31 March 2023
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 15 sets out the estimation basis on which fair value is derived.
The Board manages the investments and constantly reviews their performance.
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 2023
22
accounting policies
for the year ended 31 March 2023
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 valuing the Company’s other financial assets, with a carrying value of £2,350,000, as
the directors’ best estimate of fair value as at 31 March 2023. Further details are provided in note 9.
vela technologies PLC
annual report and financial statements 2023
23
accounting policies
for the year ended 31 March 2023
Investments – application of equity accounting or fair value accounting
The Directors have used their judgement in accounting for the Company’s investment in Igraine PLC. The Company’s
holding represents in excess of 20% of the voting rights in the investee company and so indicates that the Company has
significant influence over the investee company. Under such circumstances, IAS 28 would require the Company to account
for the investee company as an associate, applying equity accounting. However, the Directors’ view is that the Company
qualifies for the exemption set out in paragraph 18 of IAS 28, which allows a venture capital entity to account for such
holdings at fair value under IFRS 9. Accordingly, this investment is treated in a consistent manner to the Company’s other
investments, being measured at fair value at the reporting date.
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
15.
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 2023. Further details are provided in note 9.
vela technologies PLC
annual report and financial statements 2023
24
statement of comprehensive income
for the year ended 31 March 2023
Revenue
Administrative expenses
Fair value movements
– on investments
– on derivative instruments
Operating loss
Finance income
Loss before tax
Income tax
Year ended
31 March
2023
Year ended
31 March
2022
£’000
-
(401)
(26)
9
(418)
40
(378)
-
£’000
-
(347)
(685)
(75)
(1,107)
29
(1,078)
-
Notes
1
2
8
11
2
4
6
Loss for the year and total comprehensive income
attributable to the equity holders
(378)
(1,078)
Loss per share
Basic and diluted loss per share (pence)
7
(0.002)
(0.007)
vela technologies PLC
annual report and financial statements 2023
25
statement of financial position
as at 31 March 2023
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
Total current liabilities
Total equity and liabilities
Notes
8
9
10
11
14
13
12
31 March
31 March
2023
£’000
3,193
3,054
6,247
-
72
724
796
7,043
3,291
7,594
46
(3,926)
7,005
38
38
2022
£’000
2,603
3,024
5,627
751
63
958
1,772
7,399
3,291
7,594
65
(3,572)
7,378
21
21
7,043
7,399
These financial statements were approved by the Board, authorised for issue and signed on its behalf on 27 September
2023 by:
Brent Fitzpatrick MBE
Chairman
Company registration number: 03904195
vela technologies PLC
annual report and financial statements 2023
26
cash flow statement
for the year ended 31 March 2023
Operating activities
Loss before tax
Share-based payment
Fair value movements on investments
8
Fair value movement on derivative assets
Finance income
Decrease in receivables
Increase / (Decrease) in payables
Total cash flow from operating activities
Investing activities
Interest received
Proceeds from disposal of investments
Acquisition of loan notes
Consideration for purchase of investments
Total cash flow from investing activities
Financing activities
Proceeds from the issue of ordinary share capital
Total cash flow from financing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at the end of the year
14
Year ended
31 March
2023
Year ended
31 March
2022
Notes
£’000
£’000
(378)
(1,078)
5
26
(9)
(40)
1
17
(378)
10
709
-
(575)
144
-
-
(234)
958
724
20
685
75
(29)
-
(27)
(354)
-
262
(750)
(1,581)
(2,069)
1,234
1,234
(1,189)
2,147
958
Cash and cash equivalents comprise:
Cash at bank
Cash and cash equivalents at end of year
14
724
724
958
958
vela technologies PLC
annual report and financial statements 2023
27
statement of changes in equity
for the year ended 31 March 2023
Balance at 1 April 2022
Transactions with owners
Share-based payment
Lapse of share options in the period
Transactions with owners
Total comprehensive income for the year
Share
Capital
£’000
3,291
-
-
-
-
Share
Total
Premium Earnings Reserve Equity
Retained
Share
Option
£’000
£’000
£’000
£’000
7,594
(3,572)
65
7,378
-
-
-
-
-
24
24
(378)
5
(24)
(19)
-
46
5
-
5
(378)
7,005
Balance at 31 March 2023
3,291
7,594
(3,926)
Balance at 1 April 2021
Transactions with owners
Share-based payment
Lapse of share options in the period
Issue of share capital
Transactions with owners
Total comprehensive income for the year
3,048
6,603
(2,600)
151
7,202
-
-
243
243
-
-
-
991
991
-
106
-
106
20
(106)
20
-
-
1,234
(86)
1,254
-
(1,078)
-
(1,078)
Balance at 31 March 2022
3,291
7,594
(3,572)
65
7,378
vela technologies PLC
annual report and financial statements 2023
28
notes to the financial statements
for the year ended 31 March 2023
1 Revenue and segmental information
The Company is an investing company and as such there is only one identifiable operating segment, being the purchase,
holding and sale of investments. Similarly, the Company operates in only a single geographic segment, being the United
Kingdom. The results and balances and cash flows of the segment are as presented in the primary statements.
2 Loss from operations
The loss from operations is stated after charging:
Auditor’s remuneration for the audit
Auditor’s remuneration for corporation tax compliance
services
Fair value movements on investments
Share-based payment
31 March
31 March
2023
£’000
24
2
26
5
2022
£’000
18
2
685
20
3 Staff costs
The average number of persons employed or engaged by the Company (including Directors) during the period was as
follows:
Directors and senior management
Total
31 March
31 March
2023
2022
3
3
3
3
The above included two individuals (2022 – two) employed by the Company and one (2022 – one) engaged under the
terms of a letter of appointment.
The aggregate amounts charged by these persons were as follows:
Wages and salaries
Social security costs
Amounts invoiced
Share-based payment charge
31 March
2023
£’000
31 March
2022
£’000
124
10
69
5
208
97
12
62
20
191
The amounts noted above relate to 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
2023
£’000
31 March
2022
£’000
40
40
29
29
Finance income includes £30,000 (2022: £29,000), representing the unwinding of the discount on the Company’s loan
receivable from BIXX Tech Limited. Further details are provided in note 9.
vela technologies PLC
annual report and financial statements 2023
29
notes to the financial statements
for the year ended 31 March 2023
5 Directors and senior management
Directors’ remuneration
N B Fitzpatrick
A Laiker (appointed 21 July 2022 / resigned
19 October 2022)
J Normand
E Wilson
N B Fitzpatrick
J Normand
E Wilson (appointed 1 September 2021)
Year ended 31 March 2023
Salary
£’000
Fees Pension
Equity
£’000
£’000
£’000
Total
£’000
-
-
62
62
124
62
7
-
-
69
-
-
-
-
-
-
-
-
-
-
Year ended 31 March 2022
Salary
£’000
Fees
Pension
Equity
£’000
£’000
£’000
-
62
35
97
62
-
-
62
-
-
-
-
-
-
-
-
62
7
62
62
193
Total
£’000
62
62
35
159
Directors’ and senior management’s interests in shares
The Directors who held office at 31 March 2023 held the following shares:
N B Fitzpatrick
J Normand
E Wilson
31 March
2023
1,500,000
-
-
31 March
2022
1,500,000
-
-
The total share-based payment costs in respect of options granted are:
Directors
31 March
31 March
2023
£’000
5
2022
£’000
20
As at 31 March 2023, the total number of outstanding options held by the Directors over ordinary shares was 270,000,000
(2022: 278,444,780), representing 1.7 per cent of the Company’s issued share capital. A total of 8,444,780 options lapsed
in the period.
Further details regarding the options issued are provided in note 17.
vela technologies PLC
annual report and financial statements 2023
30
notes to the financial statements
for the year ended 31 March 2023
6 Tax
There was no charge to current or deferred taxation in the current or prior period.
A deferred tax asset relating to losses carried forward has not been recognised due to uncertainty over the existence of
future taxable profits against which the losses can be used. The Company has unused tax losses of approximately £6.7m
(2022: £6.5m).
Tax reconciliation
Loss before tax
Tax at 19% on loss before tax
Effects of:
Loss relief carried forward
Total tax expense
31 March
31 March
2023
£’000
(378)
2022
£’000
(1,078)
(72)
(205)
72
-
205
-
7 Loss per share
Loss per share has been calculated on a loss after tax of £378,000 (2022: loss after tax of £1,078,000) and the weighted
average number of shares in issue for the year of 16,252,335,184 (2022: 15,091,929,620).
8 Investments
Opening fair value
Additions during the year at cost
Fair value of disposals made during the year
Movement in fair value charged to profit or loss
Closing balance
31 March
2023
31 March
2022
£’000
2,603
1,325
(709)
(26)
3,193
£’000
1,969
1,581
(262)
(685)
2,603
Investments are held at fair value through profit and loss using a three-level hierarchy for estimating fair value. Note 15
provides details of the three-level hierarchy used.
Additions during the year:
Investment in EnSilica plc (“EnSilica”)
In May 2022 EnSilica plc’s shares were admitted to trading on AIM. Vela's investment of £750,000 in convertible loan notes,
together with the relevant interest, were converted into 1,764,788 shares representing 2.3% of the then issued share capital.
In March 2023, the Company invested an additional £125,000 in EnSilica through the purchase of 178,572 ordinary shares
at 70 pence per share. The investment was made as part of a £2.0 million placing undertaken by EnSilica.
Investment in TruSpine Technologies Plc (“TruSpine”)
In June 2022, the Company completed the subscription for 6,000,000 ordinary shares in TruSpine for a cost of £300,000,
representing 5.07% of TruSpine’s then issued share capital.
vela technologies PLC
annual report and financial statements 2023
31
notes to the financial statements
for the year ended 31 March 2023
8 Investments (continued)
Further Investment in Northcoders Plc (“Northcoders”)
In November 2022, the Company invested an additional £99,999 in Northcoders at a price of £3 per share. The investment
was part of a secondary placing in Northcoders which was undertaken as a result of excess demand following an
oversubscribed placing that raised £2.1 million for Northcoders. Following this investment, Vela held 349,999 ordinary shares
in Northcoders representing 4.6% of the issued share capital of Northcoders.
Investment in Ethernity Networks Ltd (“Ethernity”)
In January 2023, the Company completed the subscription for 700,000 ordinary shares in Ethernity for a cost of £49,000,
representing 0.68 per cent of Ethernity’s issued share capital.
Disposals during the year:
Part disposal of Northcoders Group Plc
In September 2022, the Company disposed of 25,000 shares in Northcoders at a price of £3.50 per share generating gross
proceeds of £87,500. Following the disposal Vela was interested in 316,666 shares representing 4.6 per cent of the issued
share capital.
Part disposal of investment in Cornerstone FS PLC (“Cornerstone”)
In July 2022 the Company disposed of 50,000 shares in Cornerstone at a price of 14.2p per share, generating gross
proceeds of £7,115. Following the disposal Vela remained interested in 595,902 shares representing 1.2% of the issued
share capital at the period end.
Part disposal of EnSilica Plc
Between May 2022 and the end of March 2023 the Company disposed of a total of 833,653 shares in EnSilica at an average
price of 61p per share, generating gross proceeds of £587,345 for the Company. Following the disposals and investment in
March 2023, Vela remained interested in 1,109,707 ordinary shares representing 1.42% of the issued share capital at the
period end.
Part disposal of investment in Ethernity Networks Ltd
In March 2023 the Company disposed of 350,000 shares in Ethernity generating gross proceeds of £25,222. Following the
disposal Vela remains interested in 350,000 shares representing 0.34% of the current issued share capital.
Part disposal of investment in Kanabo Group Plc (“Kanabo”)
In February 2023 the Company disposed of 150,000 shares in Kanabo, generating gross proceeds of £5,000. Following
the disposal Vela remains interested in 1,157,692 shares representing 1.1% of the current issued share capital.
9 Trade and other receivables – non-current
Loan due from BIXX Tech Limited
Other financial asset
31 March
2023
31 March
2022
£’000
704
2,350
3,054
£’000
674
2,350
3,024
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 previous financial statements. The total consideration receivable is £855,000, which is receivable after seven years. The
consideration has been discounted at a market interest rate at the time of the transaction of 4.5% to reflect the deferred
payment term. Income of £30,000 (2022: £29,000), represents 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 13). 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 2023
32
notes to the financial statements
for the year ended 31 March 2023
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
considered 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 contract does not include a defined exit date and so has been classified as non-current at the reporting date, as the
Company did not have an unconditional right to require settlement of the contract within 12 months.
At the previous reporting date, SGSC had successfully completed the Phase II trials and had moved on to the process of
investigating options for funding Phase III clinical trials (which would involve a significantly larger sample of patients than
Phase II) and onward commercialisation of the Asset. The development of the Asset continues to progress along the typical
drug development pipeline. However, the need for SGSC to raise further funding in order to commence the Phase III trials,
to successfully complete those trials and achieve commercialisation of the drug gives rise to an inherent level of risk in
respect of the ultimate realisation of the Asset, which the directors took into consideration when estimating its fair value as
at 31 March 2023. The directors considered the position at the balance sheet date and were of the view that there had not
been any major developments (either positive or negative) or milestones achieved in the period up to the reporting date
which would give rise to a material change in the fair value of the contract during this time. Accordingly, the original
consideration payable under the contract represents the directors’ best estimate of its fair value, as a standalone contract,
as at 31 March 2023.
Post year end the Company entered into a put option for the potential sale of its interest in the Asset. Further details are
disclosed at note 20.
10 Trade and other receivables
Other receivables
Convertible loan
31 March
2023
£’000
31 March
2022
£’000
-
-
-
1
750
751
In January 2022, the Company invested £750,000 by way of a convertible loan note in EnSilica Limited. The loan notes
attracted interest at a rate of 10 per cent per annum and were repayable on 9 January 2023 unless they had been repaid or
converted before this date. The loan notes converted automatically on an IPO of Ensilica into new ordinary shares at a
discount of 12% of the shares subscribed for in the IPO. EnSilica’s shares were admitted to trading on AIM in May 2022, at
which point the Company exercised its conversion rights and received 1,764,788 ordinary shares representing 2.3 per cent
of the issued share capital.
11 Derivative financial instruments
Warrants
31 March
2023
31 March
2022
£’000
£’000
72
72
63
63
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.
vela technologies PLC
annual report and financial statements 2023
33
notes to the financial statements
for the year ended 31 March 2023
12 Trade and other payables
Trade payables
Accruals
13 Share capital
Allotted, called up and fully paid capital
16,252,335,184 Ordinary Shares of 0.01 pence each
1,748,943,717 Deferred Shares of 0.08 pence each
2,665,610,370 Special Deferred Shares of 0.01 pence each
31 March
2023
31 March
2022
£’000
£’000
3
35
38
1
20
21
31 March
2023
31 March
2022
£’000
£’000
1,625
1,399
267
3,291
1,625
1,399
267
3,291
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.
14 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
2023
£’000
724
724
2022
£’000
958
958
vela technologies PLC
annual report and financial statements 2023
34
notes to the financial statements
for the year ended 31 March 2023
15 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 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.
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
2023
31 March
2022
£’000
£’000
5,615
704
6,319
5,016
1,425
6,441
The Company’s management considers that all of the above financial assets that are not impaired for each of the reporting
dates under review are of good credit quality.
The Company 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 eleven (2022: eight) 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 eleven investments is £3,145,110 (2022: £2,343,803) and the fair value as at 31 March
2023 was £2,364,534 (2022: £1,738,769).
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 (2022: two) unquoted investments classified in this category. The historic
cost of these investments is £450,000 (2022: £450,000) and the fair value as at 31 March 2023 was £828,186 (2022:
£864,644). 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 four investee companies, which have been valued using an option pricing
model with observable inputs. The fair value of these assets as at 31 March 2023 was £71,827 (2022: £63,194).
vela technologies PLC
annual report and financial statements 2023
35
notes to the financial statements
for the year ended 31 March 2023
15 Financial instruments (continued)
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 (2022: two) unquoted investments classified in this category. The historic cost of these
investments is £300,000 (2022: £300,000) and the fair value as at 31 March 2023 was £nil (2022: £nil). The nature of some
of the investments that the Company holds, i.e. minority shareholdings in private companies with limited publicly available
information, means 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
At amortised cost
31 March 2023
31 March 2022
Within
1 year
£’000
38
Later
than
1 year
£’000
-
Within
1 year
£’000
21
Later
than
1 year
£’000
-
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.
16 Reconciliation of net funds
Cash and cash equivalents
As at 1
April
2022
£’000
958
958
Cash
flow
£’000
(234)
(234)
Non-cash
movement
£’000
-
-
As at 31
March
2023
£’000
724
724
vela technologies PLC
annual report and financial statements 2023
36
notes to the financial statements
for the year ended 31 March 2023
17 Share-based payments
On 26 August 2020 two of the Directors were granted equity settled share-based payments. The principal terms of these
grants are as follows:
James Normand was 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
held a total of 104,562,427 share options equivalent to 1.46 per cent. of the issued share capital of the Company at the time.
None of the options granted have been exercised.
The options issued in August 2020 have been valued using the Monte Carlo option pricing model. The amount of
remuneration expense in respect of the share options granted amounts to £5,000 (2022: £20,000).
Options were also granted to directors in September and October 2015. These options were not exercised and lapsed in
September and October 2022 respectively.
Details of the options outstanding at the year end and the inputs to the option pricing model are as follows:
Share price at grant date (pence)
Exercise price (pence)
Expected life (years)
Annualised volatility (%)
Risk-free interest rate (%)
Fair value determined (pence)
Number of options granted
Options exercisable at 31 March 2022
Options
granted
26 August
2020
0.05
0.024
10
86.9
2.0
0.03
270,000,000
270,000,000
The expected future annualised volatility was calculated using historic volatility data for the Company’s share price.
During the period 6,400,000 options granted in October 2015 and 10,489,560 options granted in September 2015 lapsed.
The fair value of these options recorded in the financial statements and processed as historic remuneration expense was
£24,130.
vela technologies PLC
annual report and financial statements 2023
37
notes to the financial statements
for the year ended 31 March 2023
18 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 13). 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 2023, the carrying value of the loan receivable was £704,000
(2022: £674,000) and, at the scheduled maturity date, the final settlement value will be £855,000.
19 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 (2022: £62,000) in respect of his Director’s fees to the Company. The balance due to Ocean Park
Developments Limited at the year-end was £nil (2022: £nil).
Widdington Limited
Antony Laiker, Non-Executive Director, is also a Director of Widdington Limited. During the year, the Company paid £7,000
(2022: £nil) in respect of his Director’s fees to the Company. The balance due to Widdington Limited at the year-end was
£nil (2022: £nil).
BIXX Tech Limited
Antony Laiker, a significant shareholder of Vela and Director during the period under review is also a director of 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. Following the transfer of the investments, BIXX
Tech Limited was sold to a newly formed company, BIXX Limited, with the same shareholders as Vela Technologies Plc for
consideration of £1. As at 31 March 2023, the carrying value of the balance due from BIXX Tech Limited was £704,000
(2022: £674,000).
The disposal constituted a related party transaction under the AIM Rules as Antony Laiker, a director of the Company was
the sole shareholder of BIXX Limited prior to the disposal.
vela technologies PLC
annual report and financial statements 2023
38
notes to the financial statements
for the year ended 31 March 2023
20 Events after the balance sheet date
Put Option for potential sale of Economic Interest in AZD1656
In April 2023, the Company announced that it had entered into a put option agreement to give the Company the right, but
not the obligation, to sell its economic interest in the commercialisation of the Covid-19 application of AZD1656 for a total
consideration of £4.0 million. The Option was granted by Conduit Pharmaceuticals Limited (“Conduit”) and its prospective
parent company, Murphy Canyon Acquisition Corp (“Murphy”), a Company listed on NASDAQ. Should the Option be
exercised by Vela, the consideration that would be payable to Vela will be satisfied through the issuance of new shares of
authorised common stock of par value $0.001 of Murphy. The Option is exercisable solely at the discretion of Vela and Vela
paid Conduit £400,000 in cash as the premium for the Option, with the consideration settled from Vela's existing cash
resources.
The Option is exercisable in whole at any time from the completion of Conduit's merger with Murphy (being 25 September
2023) until 7th February 2024 at a price per share equal to the volume-weighted average price per share over the ten
business days prior to the date of notice of exercise, provided, however, in no event shall the price per share be lower than
$5 or higher than $15. Should Vela exercise the option, the Company will hold shares in Murphy (now re-named Conduit
Pharmaceuticals Inc.) as a publicly traded company on NASDAQ.
Investment in Tribe Technology Group Limited (“Tribe Tech”)
In May 2023, Vela invested £250,000 in Tribe Tech via an advance subscription agreement as part of a pre-IPO funding
round. The IPO completed on 5 September 2023 and Vela was issued with shares at a price of 8p per share which was
equivalent to 80% of the IPO issue price. Following the investment Vela is interested in 3,125,000 ordinary shares
representing 1.41 per cent of Tribe Tech’s issued share capital.
Part Disposal of EnSilica
Between May 2023 and September 2023 the Company disposed of a total of 163,000 shares at an average price of 68p per
share, generating gross proceeds of £110,537 for the Company. Following the disposals Vela remains interested in 946,707
ordinary shares representing 1.9% of EnSilica’s issued share capital.
Part Disposal of Kanabo Group Plc (“Kanabo")
In May 2023, Vela sold 500,000 shares in Kanabo, generating gross proceeds of £15,460 for the Company.
vela technologies PLC
annual report and financial statements 2023
39